TIDMCAN
RNS Number : 6872E
Central African Gold PLC
24 December 2009
Central African Gold Plc / Ticker: CAN / Market: AIM / Sub-sector: Gold Mining
24 December 2009
Central African Gold Plc ('CAG' or 'the Company')
Final Results
Central African Gold Plc, the AIM quoted gold mining and exploration company,
announces its results for the year ended 31 December 2008.
Chief Executive Officers statement
Summary
At the start of 2008 the Company had mining rights in four countries in Africa
and had increased its gold resources in both Ghana and Mali. However, as the
year progressed, it became increasingly necessary to devote virtually all of
management's attention to the Bibiani Mine in Ghana ('Bibiani') due to its
continual poor operational performance.
The Bibiani mine is an old mine, with large reserves of ore and a good treatment
plant on the surface. It was the Company's intention to re-open the mine with
an initial injection of capital and thereafter finance further development from
the proceeds of gold sales. However, even by the end of 2007, it was clear that
gold production from dump retreatment, opencast and underground mining
operations were well below expectations. Reasons for this included the
challenges associated with mining an old mine, shortages of electricity and
other inputs, a shortage of pre-production development and finally a transport
fleet insufficiently robust to move the ore to surface.
In order to fund the poor operational performance and necessary capital
expenditure of Bibiani, the Company had to raise additional capital via a loan
from Investec Bank to its Ghanaian subsidiary and two equity placements in
Central African Gold Plc, the parent company. Despite the additional capital
expenditure, mine production of gold did not increase and it was decided to
refine the management team. A new Chief Executive Officer, Roy Pitchford was
appointed in November 2008, although by this point the Company's shares had
already been suspended from trading on AIM pending clarification of the
Company's financial position.
Early in 2009 CAG Ghana received a notice of default from Investec Bank, which
held a charge over the entire issued share capital of CAG Ghana, regarding the
non-payment of monies due to it. This resulted in Investec Bank becoming the
legal owners of Bibiani through its 100 per cent. ownership of CAG Ghana. The
Company therefore no longer holds an interest in Bibiani.
Prospecting operations were continuing on a modest scale in Mali. However, in
Zimbabwe, the Company's subsidiaries, Falcon Gold Zimbabwe Limited ('Falgold')
and Olympus Gold Mines Limited ('Olympus') were forced to cease operations due
to the adverse political and economic climate, principally a hopelessly
inadequate system of gold payment by the Reserve Bank of Zimbabwe and chronic
shortages of electricity.
Following intensive negotiations on various fronts in March 2009, the Company
successfully placed sufficient shares to raise GBP5.7m. A consequence of this,
when allied to the conversion of the loan notes already in issue, was that
Emerging Capital Partners LLC held a 50.02 per cent. shareholding in the Company
and HBD Zim Investments Limited, a new investor, held a 28.18 per cent. stake in
the Company. This cash injection, together with the expected proceeds arising
from the sale of the Company's Malian assets, were deemed adequate to satisfy
the remaining obligations to Investec Bank and provide the working capital that
the Board believed was required for the Company to enhance the value of its
remaining assets, especially in Zimbabwe.
During February 2009, the new Zimbabwe government announced a new scheme to pay
for gold sales. Consequently the Company decided to reopen the Dalny and Old Nic
mines to test the system in the hope that all Falcon and Olympus mines could be
restarted. Operations to date indicate that the system is working and that
realistic prices are being achieved. In June 2009, the Falcon and Olympus
boards agreed to reopen the Golden Quarry and Camperdown mines and the Company
is currently in negotiations with a number of parties to raise further funds to
cover the initial costs.
The Board's experience remains that Zimbabwe is still a challenging environment
in which to operate with ongoing and anticipated electricity shortages
a limited supply of skilled labour and very run down plant and
equipment. Furthermore, the country's decision to dispense with the Zimbabwe
dollar and use US$ as the legal tender means that there is virtually no history
of costs in the 'new' currency.
Once the initial production levels are achieved, plans will have to be put in
place, not only to update the plant, but also to increase gold production better
to reflect the potential of the extensive gold deposits owned by the Company.
In concluding this summary I would like to record my appreciation of the hard
work and determination with which my fellow Directors have addressed our
problems this year. I would like to take this opportunity to apologise to
shareholders for the late publishing of this Annual Report and the highly
unfortunate circumstances that have arisen.
Detailed comment on the affairs of the company follows:
Zimbabwe
The Company has interests in two producing entities with extensive claim
holdings in Zimbabwe: Falgold (84.7 per cent.) and Olympus (100 per cent.).
Between them, these companies have a number of previously operational gold
mines. Whilst all production ceased in December 2008, due to the adverse
political and economic climate in Zimbabwe, recent reforms by the Government
have provided us with the confidence to restart gold production, exploration and
development programmes at the Dalny and Old Nic mines which took place in March
2009. Subject to financing, we anticipate bringing Golden Quarry and Camperdown
into production during 2010, before developing various other target properties.
Reserves and resources for the Zimbabwean assets are as follows:
+------------------+--------+-------+-------+------------------+--------+-------+-------+
| Ore reserve category | Mineral resource category |
+-------------------------------------------+-------------------------------------------+
| Category | Kt | Au | Au | Category | Kt | Au | Au |
| | | g/t | Koz | | | g/t | Koz |
+------------------+--------+-------+-------+------------------+--------+-------+-------+
| Proven | 3,340 | 2.09 | 224 | Measured | 18,882 | 1.49 | 903 |
+------------------+--------+-------+-------+------------------+--------+-------+-------+
| Probable | 8,368 | 1.50 | 404 | Indicated | 7,265 | 2.68 | 625 |
+------------------+--------+-------+-------+------------------+--------+-------+-------+
| | | | | Subtotal M and | 26,147 | 1.82 | 1,528 |
| | | | | I | | | |
+------------------+--------+-------+-------+------------------+--------+-------+-------+
| | | | | Inferred | 2,177 | 3.88 | 272 |
+------------------+--------+-------+-------+------------------+--------+-------+-------+
| Total reserves | 11,708 | 1.67 | 628 | Total resources | 28,323 | 1.98 | 1,800 |
+------------------+--------+-------+-------+------------------+--------+-------+-------+
Mali
The Company held an 80 per cent. interest in a highly prospective portfolio of
18 properties in Mali. Our portfolio, as at 31 December 2008, spans
approximately 2,137 sq km of Birimian strata in west and south Mali at 31
December 2008. At 30 November 2009 this has been reduced to 1,883 sq km.
During 2008, work was undertaken at our most advanced project: the 150 sq km
Medinandi and Bokolobi permits in the prospective Kenieba district. These
permits currently have a combined mineral resource of approximately 500,000 oz
of gold grading 4.55g/t Au from the Fadougou Main Zone target. Further reverse
circulation ('RC') drilling was also completed at Medinandi. A total of 33 RC
boreholes totalling 3,948m were drilled over a number of target areas outside
the Fadougou Main Zone.
As at 28 February 2009, the Malian assets had a carrying book value of GBP3.3
million. Given our decision to focus on our Zimbabwean assets, the relatively
early stage of development of the Malian assets and the difficulties of
effectively managing them from our head office in South Africa, we took the
decision to sell these assets in the short to medium term.
Accordingly, as announced on 21 December 2009, the Company has entered into an
agreement to dispose of these assets for a consideration of US$ 4 million (of
which $0.6m has been received), with a further US$ 1 million payable on
achievement of a JORC compliant indicated and measured gold resource of at least
500,000 ounces. Completion of this disposal is expected in March 2010.
Botswana
Our 100 per cent. owned subsidiary, Matoko Limited, held the rights to the 436
sq km Kraaipan prospecting licence in Botswana, which spans the highly
prospective Achaean Kraaipan greenstone belt.
These assets, which had a carrying book value of GBPnil as at 31 December 2008
(2007: GBP0.17 million) are under review by the Board, whilst we decide whether
to continue the current exploration programme, find a suitable joint venture
partner or dispose of them.
Financial Review
During the period to 31 December 2008, the total loss for the period was GBP26.5
million (2007: GBP14.7 million) or a loss of 15.91p per share (2007: loss of
15.31p per share). Administrative expenses were GBP5.7 million (2007: GBP9.6
million).
The Company's subsidiary CAG Ghana, held a loan facility with Investec Bank. On
14 January 2009, the Company announced that CAG Ghana had defaulted on payment
of monies due on the loan. The security on the loan was the shareholding in CAG
Ghana, which owned the Bibiani mine, as well as a $5 million guarantee from
Central African Gold Plc, the parent company. Subsequently, Investec took
control of CAG Ghana. A placing was subsequently undertaken in April 2009 to
raise GBP5.7 million (US$ 8.0 million) before expenses to contribute towards the
settlement of the parent company guarantee and also to provide working capital
for the development of the Company's remaining assets.
As announced on 8 July 2008, the Company also arranged two Convertible Loan
Agreements in June and July 2008. By the terms of the convertible loans, the
Company borrowed $3.94 million (approximately GBP2.17 million using the rate of
exchange prevailing on the date of the agreement) from Emerging Capital Partners
('ECP') and $3.0 million (approximately GBP1.67 million, using the rate of
exchange prevailing on the date of the agreement) from Investec Asset Management
('IAM').
The Company has agreed with IAM to amend and supersede the terms of the IAM
Convertible Loan Agreement so that $1.0 million (being approximately GBP0.7
million) of the monies lent pursuant to the IAM Convertible Loan Agreement was
converted into new Ordinary Shares at 0.9p per share immediately following the
Placing. The outstanding amount of $2.2 million (plus interest accruing at a
rate of 10 per cent. per annum) was repayable in cash on the earlier of the sale
of the Malian assets or 14 April 2010.
The Company has also agreed with ECP to amend and supersede the terms of the ECP
Convertible Loan Agreement so that $2.4 million (being approximately GBP1.7
million) of the monies lent pursuant to the ECP Convertible Loan Agreement was
converted into new Ordinary Shares at 0.9p per share immediately following the
Placing. The outstanding amount of $1.8 million (plus interest accruing at a
rate of 10 per cent. per annum) is repayable in cash on the earlier of the sale
of the Malian assets or 14 April 2010.
As a result of the IAM and ECP Convertible Loan Agreements, 267,264,079 new
Ordinary Shares were issued representing 26.62 per cent. of the Resulting Share
Capital. ECP now has a beneficial interest in 50.02 per cent. of the Resulting
Share Capital and IAM, associated funds and segregated discretionary portfolios
have a beneficial interest in 10.48 per cent. of the Resulting Share Capital.
The total number of Ordinary Shares in issue is 1,004,085,968.
IAM and ECP have agreed to further extend the terms of the loans made available
to the Company by extending the maturity date of the loans, as described in the
March 2009 circular to shareholders, from the earlier of the disposal of Mali or
14 April 2010, to 29 April 2011.
In addition thereto, in December 2009, CAG has entered into new convertible loan
agreements with its three major shareholders for a total of $1.25 million. The
loan notes mature on 29 April 2011.
Board
During the year, a number of changes were made to the Board, in order to build a
team with a wide cross-section of expertise and a proven track record to take
the business forward.
Roy Lander joined as Chairman of the Company in May 2008 at the same time as
Thomas Gibian who assumed a Non-executive Director role. Thomas was appointed as
a representative for Emerging Capital Partners LLC, a substantial shareholder in
CAG, but stepped down from the position in December and was replaced by Navaid
Burney, who had periodically attended meetings as Thomas' alternate, so knew the
Company well.
Charles Prentice, Finance Director, stepped down from the Board in July 2008 and
Greg Hunter, CEO, resigned in November 2008. Navaid Burney resigned in November
2009. Roy Lander resigned as Chairman in December 2009. We are grateful for
their contributions to the Company and wish them every success in the future.
I joined as CEO in November 2008 and following Roy Lander's resignation as
Chairman, I will act as Chairman and CEO until such time as a new Chairman has
been appointed.
We were also delighted to welcome Craig Campbell to the team who joined first as
Chief Financial Officer in September 2008 before being appointed to the Board in
December 2008 as Finance Director.
In November 2009, we welcomed Bryce Fort to the Board who replaces Navaid Burney
as Emerging Capital Partners LLC representative.
We reduced the headcount in South Africa and in May 2009 moved our offices to
smaller premises. Our team in South Africa now consists of three employees.
Outlook
After a turbulent start to the year, we are now focused on advancing our assets
in Zimbabwe, which we believe offer excellent mid to longer term prospects. The
political situation in Zimbabwe remains challenging; however we believe we are
seeing the first green shoots of recovery since Morgan Tsvangirai's appointment
as Prime Minister in February 2009. The substitution of U.S. dollars and other
hard currencies for the Zimbabwean dollar seems to have vanquished
hyperinflation and the recent World Bank grant, its first to Zimbabwe since
2001, all point to an improvement in operational conditions. With this in mind,
our immediate aim is to move into a cash positive position and then expand
production at our Zimbabwe mines. Eventually we will look at the wider portfolio
of existing assets with a view to enhancing their value and potentially take
advantage of our first mover position in the country to acquire additional
projects.
Finally, I would like to thank shareholders for their patience and continued
support as well as the efforts of our streamlined team as we look to grow the
business once more and deliver value to shareholders.
Roy Pitchford
Acting Chairman and Chief Executive
23 December 2009
Board of Directors
The board of directors comprises:
Roy Pitchford (57)
CEO and executive director
Roy has more than 20 years' senior management experience and executive
experience in Southern Africa, 13 years of which were in the mining industry.
He was CEO of Cluff Resources Zimbabwe Limited, Delta Gold Zimbabwe (Pty)
Limited, and more recently African Platinum plc.
Bryce Fort (30)
Non-executive director
Bryce is a Managing Director and founding partner of Emerging Capital Partners
and has a wealth of experience managing private equity funds and overseeing
investment banking activities. He serves on the board of various companies.
Craig Campbell (39)
CFO and executive director
Craig is a South African chartered accountant with over 12 years of financial
experience predominantly within the mining arena. Most recently he served as
chief financial officer and executive director of a diamond exploration and
mining company. During this time he had substantial exposure to the development
of significant exploration projects, corporate governance and corporate finance,
where he was instrumental in closing and implementing the C$100 million merger
between BRC Diamond Core and Diamond Core. Additionally, Craig has held other
financial directorships and financial management positions for various
companies, including BRC Diamond Core and Diamond Core, as well as companies
operating in the retail and manufacturing sectors.
Group Reserves and Resources
Central African Gold uses the Australian Code for the Reporting of Mineral
Resources and Ore Reserves (JORC) of the Australian Institute of Mining
and Metallurgy (AIMM), which sets out the internationally recognised procedures
and standards for the reporting of ore reserves and mineral resources in
Australia, and is recognised as a recommended guideline for reserve and resource
reporting for companies listed on AIM.
The JORC code also recognises the South African Mineral Resources Code (SAMREC)
and South African Council for Natural Scientific Professions (SACNASP) on a
reciprocal basis.
Definitions as per the JORC code
Mineral resources
A mineral resource is a concentration (or occurrence) of material and economic
interest in or on the earth's crust in such form, quality and quantity that
there are reasonable and realistic prospects for eventual economic extraction.
The location, quantity, grade, continuity and other geological characteristics
of a mineral resource are known, estimated from specific geological evidence and
knowledge, or are interpreted from a well-constrained and portrayed geological
model. Mineral resources are sub-divided in order of increasing confidence in
respect of geoscientific evidence into inferred, indicated and measured
categories.
An inferred mineral resource is that part of a mineral resource for which
tonnage, grade and mineral content can be estimated with a low level of
confidence. It is inferred from geological evidence and assumed but not
verified geological and/or grade continuity. It is based on information
gathered through appropriate techniques from locations such as outcrops,
trenches, pits, workings and drill holes that may be limited or of uncertain
quality and reliability.
An indicated mineral resource is that part of a mineral resource for which
tonnage, densities, shape, physical characteristics, grade and mineral content
can be estimated with a reasonable level of confidence. It is based on
exploration, sampling and the testing of information gathered through
appropriate techniques from locations such as outcrops, trenches, pits, workings
and drill holes. The locations are too widely or inappropriately spaced to
confirm geological and/or grade continuity but are spaced closely enough for
continuity to be assumed.
A measured mineral resource is that part of a mineral resource for which
tonnage, densities, shape, physical characteristics, grade and mineral content
can be estimated with a high level of confidence. It is based on detailed and
reliable exploration, sampling and testing information gathered through
appropriate techniques from locations such as outcrops, trenches, pits, workings
and drill holes. The locations are spaced closely enough to confirm geological
and grade continuity.
Ore reserves
An ore reserve is the economically mineable material derived from a measured
and/or indicated mineral resource. It is inclusive of diluting materials and
allows for losses that may occur when the material is mined. Mineral reserves
are subdivided in order of increasing confidence into probable mineral reserves
and proven mineral reserves.
The probable ore reserve is the economically mineable material derived from the
indicated mineral resource. It is estimated with a lower level of confidence
than a proven mineral reserve, is inclusive of diluting materials and allows for
losses that may occur when the material is mined.
The proven ore reserve is the economically mineable material derived from the
measured mineral resource and is estimated with a high level of confidence. It
is inclusive of diluting materials and allows for losses that may occur when
the material is mined.
Central African Gold reporting in compliance with JORC
In order to meet the requirements of the JORC code that the material reported as
a mineral resource should have "reasonable and realistic prospects for eventual
economic extraction", CAG has determined an appropriate cut-off grade which has
been applied to the quantified mineralised body according to a process
incorporating the following parameters:
* the life-of-mine plan, which currently is based on the depletion of ore reserves
and 40% of the measured and indicated mineral resources;
* a consensus derived gold price (in US$ per ounce); and
* appropriate consideration of mining, metallurgical, economic, marketing, legal,
environmental, social and governmental factors in terms of the modifying factors
for the conversion of mineral resources to ore reserves.
By applying this process, CAG used a gold price of $750 per ounce of gold to
derive an appropriate pay limit for ore reserves (variable for each
deposit), and a cut-off grade for mineral resources which provides an in-situ
grade above cut-off that exceeds the pay limit for that deposit.
Mineral resources have been estimated on the basis of geoscientific knowledge
with input from the Company's mineral resource geologists. Each operation's
mineral resources are categorised, blocked-out and ascribed an estimated value.
Competent persons
The ore reserves and mineral resources have been prepared under the guidance of
the Company's competent persons who are duly registered with the South African
Council for Natural Scientific Professions (SACNASP) and the Geological
Society of South Africa (GSSA). SACNASP and GSSA are recognised by the
Australian Institute of Mining and Metallurgy (AIMM) as organisations to
which competent persons must be affiliated.
The Company's competent persons took into account the definitions in the JORC
code, and the ore reserves and mineral resources quantities reported here are
considered to be fully compliant in all material respects. The competent
persons had over 30 years' experience in the evaluation and resource estimation
of gold deposits. The Company does not have a competent person as defined.
These roles were fulfilled previously by:
* P.N. Bentley (M.Sc., M.Sc. (Minex), Pr.SCI.Nat. 400208/05, GSSA 40866)
* D. Richards (BSc. Hons. (Geo.), GDE (Min. Eng.), Pri. Sci. Nat.)
* F. Dooge ( BSc (Hons), Pr.SCI.Nat. 400003/86)
Auditing
Independent consultant Snowden Mining Consultants (Snowden) audited the CAG ore
reserves and mineral resources as part of the September 2006 readmission
document. Advice has subsequently been taken from Snowden for subsequent
mineral resource statements. Ore reserves have been erected based on Ukwazi
Mining consultants' mine planning and scheduling studies.
Ore reserves and mineral resources
During 2007 the Company undertook ore reserve and mineral resource estimations
on properties in Ghana, Mali and Zimbabwe. These estimations are a part of an
evolving process, and methodology varies from
* computerised three-dimensional geology and orebody modelling, with
geostatistical estimation of mineral resources and ore reserves as at Bibiani
mine, Ghana;
* manual polygonal estimation of non-computerised ore block and development plans
as at the Falgold operations in Zimbabwe; and
* computerised mineral resource estimation of exploration drilling data, as at
Medinandi in Mali and Bibiani in Ghana.
The consolidated ore reserves and mineral resources for the group, excluding
Ghana, following its divestment in January 2009, are given below. As per JORC
guidelines, the ore reserves are reported as a modified subset of the mineral
resource estimate, and reflect appropriate modification to account for dilution,
pillars, mining losses and mine call factors.
Pay limits have been erected for each operation, and incorporate fixed and
variable working costs, metallurgical recoveries and mine call factors. The
economic viability of the ore at a gold price of US$750 per ounce of gold
mineral resources has a stated cut-off of 1.00g/t gold at Falgold. The
cut-off grade for the resources reflects that grade above where the average
grade of ore exceeds pay limit, and is generated by creating a grade:
tonnage curve for all the mineral resources.
The Falgold operations produce gold from a variety of ore sources and
metallurgical flow processes, for example, tailings/slime
retreatment, underground hard rock, and oxide opencast that is milled or heap
leached.
Group consolidated ore reserves and mineral resources
Attributable and consolidated reserves and resources now owned by the Company
are shown below:
+-------------+-------------+-------------+--------------+-------------+--------------+
| | | Ore reserves | Mineral resources |
+-------------+-------------+----------------------------+----------------------------+
| Mineral | Equity % | Total |Attributable | Total |Attributable |
| asset | | Au Koz | Au Koz | Au Koz | Au Koz |
+-------------+-------------+-------------+--------------+-------------+--------------+
| Falcon Gold | 85 | 388 | 329 | 1,165 | 986 |
+-------------+-------------+-------------+--------------+-------------+--------------+
| Olympus | 100 | 240 | 240 | 364 | 364 |
+-------------+-------------+-------------+--------------+-------------+--------------+
| Medinandi | 80 | - | - | 505 | 404 |
+-------------+-------------+-------------+--------------+-------------+--------------+
| | | 628 | 569 | 2,034 | 1,754 |
+-------------+-------------+-------------+--------------+-------------+--------------+
The following summarises the reserves and resources now owned by the Company.
The reserves and resources of the Bibiani gold mine in Ghana are no longer
considered relevant to the Company since the forced divestment of CAG Ghana on
14 January 2009.
Falgold, Zimbabwe
The Falgold operations comprise two producing mines Dalny and Old Nic, and three
mines, Venice, Camperdown and Golden Quarry, currently on care and maintenance.
When CAG acquired the Falgold and Olympus assets, reserve and resource
estimations existed for the properties, although they were not JORC compliant.
An initial re-categorisation of the reserves and resources was undertaken late
in 2006 as part of an independent competent person's report which formed part of
the due diligence on the assets.
The revised Falgold statement is now JORC compliant. Estimations are polygonal,
and are generated from mine plans and block listings, and categorised according
to the degree of development/availability for mining and economic viability.
Pay limit calculations have been revised for each facet of each operation, and,
due to the hyperinflationary economic environment, have been erected to enable
normalisation of operating costs to US$ using the Imara Edwards Old Mutual
exchange rate. The pay limits also include a factor (70%) to include the
reduced gold revenue received due to the Zimbabwe fiscus (65:35 US$: Zim$ for
gold sales, where the price received is 65% of US$ spot plus 35% spot converted
at a Zim$ rate/gram).
The categorisation of proven reserves is included, but any interested party
should be aware that it is 'sensu stricto' difficult, given the uncertainty
of actually being paid the US$ component of revenue into a foreign currency
account by the Zimbabwe government, to ascertain the 100% economic viability of
proven reserves. Downgrading of these ore reserves to probable status may be
warranted and is being monitored by CAG.
CAG has initiated the electronic capture of orebody data for Dalny and
Camperdown projects, which have been prioritised for expansion studies.
Medinandi project, Mali
The mineral resources currently established at Medinandi were estimated
subsequent to a phase of RC drilling conducted by CAG during Q1 and Q2 2007,
combined with three shallow drilling programmes conducted by previous workers.
The ore zones have largely been classified as inferred mineral resources due to
complex structure and uncertainty in some areas of the geological continuity of
mineralised zones. Further drilling was halted in Q3 2008.
+----------------+----+----+----+----+----+-------+------------+----+----+----+----+----+----+----+
| Zimbabwe | | | | | | | |
+----------------+---------+---------+------------+------------+---------+---------+---------+
| Ore reserve category | Mineral resource category |
+-------------------------------------------------+-----------------------------------------------+
| Proven | Kt | Au g/t | Au | Measured | Kt | Au g/t | Au Koz |
| | | | Koz | | | | |
+---------------------+---------+---------+-------+-----------------+---------+---------+---------+
| Ug blocks | 584 | 2.74 | 52 | Ug blocks | 2,460 | 3.47 | 274 |
+---------------------+---------+---------+-------+-----------------+---------+---------+---------+
| Ug pillars | 1,040 | 2.25 | 75 | Ug pillars | 2,778 | 3.20 | 286 |
+---------------------+---------+---------+-------+-----------------+---------+---------+---------+
| Subtotal ug | 1,624 | 2.43 | 127 | Subtotal ug | 5,238 | 3.33 | 560 |
+---------------------+---------+---------+-------+-----------------+---------+---------+---------+
| Open pit milling | 871 | 1.95 | 55 | Open pit | 845 | 2.10 | 57 |
| | | | | milling | | | |
+---------------------+---------+---------+-------+-----------------+---------+---------+---------+
| Open pit heap leach | 379 | 0.72 | 9 | Open pit heap | 379 | 0.79 | 10 |
| | | | | leach | | | |
+---------------------+---------+---------+-------+-----------------+---------+---------+---------+
| Slimes/tailings | 466 | 2.27 | 34 | Slimes/tailings | 12,420 | 0.69 | 276 |
| dumps | | | | dumps | | | |
+---------------------+---------+---------+-------+-----------------+---------+---------+---------+
| Subtotal surface | 1,716 | 1.76 | 98 | Subtotal | 13,644 | 0.78 | 343 |
| | | | | surface | | | |
+---------------------+---------+---------+-------+-----------------+---------+---------+---------+
| Total proven | 3,340 | 2.09 | 225 | Total measured | 18,882 | 1.49 | 903 |
+---------------------+---------+---------+-------+-----------------+---------+---------+---------+
| | | | | | | | |
+---------------------+---------+---------+-------+-----------------+---------+---------+---------+
| Ore reserve category | Mineral resource category |
+-------------------------------------------------+-----------------------------------------------+
| Probable | Kt | Au g/t | Au | Indicated | Kt | Au g/t | Au Koz |
| | | | Koz | | | | |
+---------------------+---------+---------+-------+-----------------+---------+---------+---------+
| Ug blocks | 2,025 | 3.19 | 207 | Ug blocks | 4,160 | 3.54 | 473 |
+---------------------+---------+---------+-------+-----------------+---------+---------+---------+
| Ug pillars | 327 | 5.04 | 53 | Ug pillars | 616 | 1.91 | 38 |
+---------------------+---------+---------+-------+-----------------+---------+---------+---------+
| Subtotal ug | 2,352 | 3.44 | 260 | Subtotal ug | 4,776 | 3.33 | 511 |
+---------------------+---------+---------+-------+-----------------+---------+---------+---------+
| Open pit milling | 658 | 1.94 | 41 | Open pit | 686 | 2.00 | 44 |
| | | | | milling | | | |
+---------------------+---------+---------+-------+-----------------+---------+---------+---------+
| Open pit heap leach | - | - | - | Open pit heap | - | - | - |
| | | | | leach | | | |
+---------------------+---------+---------+-------+-----------------+---------+---------+---------+
| Rock dumps | 1,758 | 1.17 | 66 | Rock dumps | 7 | 1.21 | - |
+---------------------+---------+---------+-------+-----------------+---------+---------+---------+
| Slimes/tailings | 3,600 | 0.32 | 37 | Slimes/tailings | 1,797 | 1.21 | 70 |
| dumps | | | | dumps | | | |
+---------------------+---------+---------+-------+-----------------+---------+---------+---------+
| Subtotal surface | 6,016 | 0.76 | 144 | Subtotal | 2,490 | 1.43 | 114 |
| | | | | surface | | | |
+---------------------+---------+---------+-------+-----------------+---------+---------+---------+
| Total probable | 8,368 | 1.50 | 404 | Total | 7,266 | 2.68 | 625 |
| | | | | indicated | | | |
+---------------------+---------+---------+-------+-----------------+---------+---------+---------+
| Total reserves | 11,708 | 1.67 | 629 | Total M and I | 26,148 | 1.82 | 1,528 |
+---------------------+---------+---------+-------+-----------------+---------+---------+---------+
| | | | | | | | |
+---------------------+---------+---------+-------+-----------------+---------+---------+---------+
| | | | | Inferred | Kt | Au g/t | Au Koz |
+---------------------+---------+---------+-------+-----------------+---------+---------+---------+
| | | | | Ug blocks | 1,670 | 4.35 | 234 |
+---------------------+---------+---------+-------+-----------------+---------+---------+---------+
| | | | | Subtotal ug | 1,670 | 4.35 | 234 |
+---------------------+---------+---------+-------+-----------------+---------+---------+---------+
| | | | | Open pit | 507 | 2.34 | 38 |
| | | | | milling | | | |
+---------------------+---------+---------+-------+-----------------+---------+---------+---------+
| | | | | Rock dumps | - | - | - |
+---------------------+---------+---------+-------+-----------------+---------+---------+---------+
| | | | | Subtotal | 507 | 2.34 | 38 |
| | | | | surface | | | |
+---------------------+---------+---------+-------+-----------------+---------+---------+---------+
| | | | | Total inferred | 2,177 | 3.88 | 272 |
+---------------------+---------+---------+-------+-----------------+---------+---------+---------+
| | | | | Total | 28,325 | 1.98 | 1,800 |
| | | | | resources | | | |
+---------------------+---------+---------+-------+-----------------+---------+---------+---------+
| | | | | | | | |
+---------------------+---------+---------+-------+-----------------+---------+---------+---------+
| Mali | | | | | | | |
+---------------------+---------+---------+-------+-----------------+---------+---------+---------+
| Ore reserve category | Mineral resource category |
+-------------------------------------------------+-----------------------------------------------+
| | Kt | Au g/t | Au | | Kt | Au g/t | Au Koz |
| | | | Koz | | | | |
+---------------------+---------+---------+-------+-----------------+---------+---------+---------+
| Proven | - | - | - | Measured | - | - | - |
+---------------------+---------+---------+-------+-----------------+---------+---------+---------+
| Probable | - | - | - | Indicated | 341 | 4.25 | 47 |
+---------------------+---------+---------+-------+-----------------+---------+---------+---------+
| | | | | Inferred | 3,111 | 4.58 | 458 |
+---------------------+---------+---------+-------+-----------------+---------+---------+---------+
| Total reserves | - | - | - | Total | 3,452 | 4.55 | 505 |
| | | | | resources | | | |
+----------------+----+----+----+----+----+-------+------------+----+----+----+----+----+----+----+
Corporate Governance Statement
The board of directors is accountable to the Company's shareholders for good
corporate governance and the directors support the Combined Code as far as it is
appropriate to the group's stage of development. Whilst not mandatory for an
AIM company, the directors have implemented, where practical for a company of
this size and nature, the main provisions of the principles of good governance
and code of best practices.
The board has also considered the guidance published by the Institute of
Chartered Accountants in England and Wales concerning the internal control
requirements of the Combined Code, in line with the Turnbull Report. The board
regularly reviews key business risks, via a number of properly constituted
committees, in addition to the financial risks facing the group in the
operations of the business.
The board of directors
The Company is led and controlled by a board comprising two executive directors
and a number of non-executive directors. In May 2008, three additional
directors were appointed, namely Roy Lander (newly appointed independent
non-executive chairman), David Glennie (independent non-executive director) and
Thomas Gibian (non-executive director). Navaid Burney was appointed as Thomas
Gibian's alternate director.
In July 2008, the Company's chief financial officer, Charles Prentice, resigned.
David Glennie resigned in November 2008. In December 2008, Thomas Gibian
resigned and Navaid Burney was appointed as a non-executive director. Craig
Campbell, appointed as the Company's chief financial officer in September 2008,
was appointed to the board in December 2008.
Navaid Burney succeeded Tom Gibian as a non-executive director in December 2008.
In December 2009, Bryce Fort was appointed as a non-executive director to fill
the role vacated by Navaid Burney.
There are no matters specifically reserved to the board for its decision
although effectively no decision of any consequence is made other than by the
directors. Board meetings are held when required. All directors participate in
the key areas of decision making, including the appointment of new directors.
There is no separate Nomination Committee due to the current size of the board.
The board receives timely information on all material aspects about the group to
enable it to discharge its liabilities.
While all directors have equal responsibility in law for managing the Company's
affairs, it is the role of executive management to run the business within the
parameters laid down by the board and to produce clear and accurate reports to
enable the board to assess their performance. The executives make full use of
the expertise and experience that the non-executive directors bring from their
business careers.
There is no agreed formal procedure for the directors to take independent
professional advice at the group's expense.
All directors submit themselves for re-election at the Annual General Meeting
(AGM) at regular intervals. There are no specific terms of appointment for
non-executive directors.
A Technical Committee was established comprising Roy Pitchford (chairman) and
Roy Lander. The technical committee did not meet during the year.
Director remuneration
The Company established a Remuneration Committee, chaired by David Glennie and
assisted by Thomas Gibian. The remuneration committee did not meet during the
year. There is currently no remuneration committee due to the current size of
the board. The chairman is responsible for the consideration and approval of
terms of service, remuneration, bonuses, share options and other benefits of the
other two directors and they, in turn, are responsible for his, all decisions
are made after giving due consideration to the size and nature of the business
and the importance of retaining and motivating management.
All directors have service contracts with the Company.
Accountability and audit
The Company has established an Audit Committee, which met once in 2008 and once
in 2007. The Audit Committee was chaired by Roy Pitchford until his appointment
as chief executive officer and comprised David Glennie and Roy Lander. There is
currently no audit committee due to the current size of the board. The chairman
and chief financial officer are responsible for reviewing the scope and results
of the audit, its cost effectiveness and the independence and objectivity of the
auditors. A formal statement of independence is received from the external
auditor each year.
Relations with shareholders
The chairman and chief executive officer are the Company's principal
spokespeople with investors, fund managers, the press and other interested
parties. At the AGM, private investors are given the opportunity to question
the board.
Internal control
The board acknowledges its responsibility for establishing and maintaining the
group's systems of internal control. Although no system of internal control can
provide absolute assurance against material misstatement or loss, the Company's
systems are designed to provide the directors with reasonable assurance that
problems are identified on a timely basis and dealt with appropriately.
The key procedures that have been established and which are designed to provide
effective control are as follows:
* Management structure - the board meets when required to discuss all issues
affecting the group
* Investment appraisal - the group has a framework for investment appraisal, and
approval is required by the board where appropriate
The board reviews the effectiveness of the systems of internal control and
considers the major business risks and the control environment. No significant
control deficiencies have come to light during the period and no weakness in
internal financial control has resulted in any material losses, contingencies or
uncertainties which would require disclosure as recommended by the guidance for
directors on reporting on internal financial control.
Going concern
Having made appropriate enquiries and having examined the major areas which
could affect the group's financial position, the directors are satisfied that
the group has adequate resources to continue in operation for the foreseeable
future. For this reason and as set out in Note 1 to these financial statements,
they consider it appropriate to adopt the going concern basis in preparing the
financial statements.
Directors Report
The directors submit their report and the financial statements of Central
African Gold Plc ("CAG" or "the company") for the year ended 31 December 2008.
Principal activities
The principal activities of the group during the year were those of gold
exploration, mining, investment and development.
Review of the business and future developments
The year under review was not without its challenges.
In Ghana, a number of initiatives were undertaken during the first half of 2008
with a view to increasing the production tonnages and recovered grades at
Bibiani. In June 2008, the Company contracted an affiliate of Barminco to sink
a second decline to access the ore body and achieve ramp-up to an initial
100,000 tonnes per month ("tpm") target more quickly than CAG could achieve on
its own.
Development of the Company's mine at Bibiani continued to lag behind its planned
schedule with a consequential shortfall in gold production compared with budget.
This, in conjunction with ongoing capital expenditure, utilised the cash
resources of the group and resulted in an accumulation of trade payables.
The operations at Bibiani had an immediate requirement for funding in order to
provide it with the cash resource necessary to settle the accumulated trade
payables, and to fund operational expenses and mine optimisation of the existing
shaft over the period until production reached a satisfactory level and
generated positive net cash flows, which was expected in August 2008.
The Company's future viability was dependent on achieving acceptable performance
levels from the existing decline shaft and a second decline shaft at Bibiani.
The second decline shaft was scheduled to be operational in January 2009. The
purchase of a new mining fleet was anticipated to have a marked improvement on
output for the remainder of 2008, and into 2009.
On 8 July 2008, the board announced that, in addition to $6.94 million raised
from ECP and Investec Asset Management in the form of convertible loan
agreements, the Company required a further $10.0 million of funds, which it
intended to raise via an equity placing to be undertaken in August 2008. It
also identified additional sources of funding in the form of an overdraft
facility of $1.0 million and lease finance of equipment at Bibiani of $1.5
million, which the directors had no reason to believe would not be forthcoming.
However, on 25 September 2008, in the interim results statement of the company
for the period ended on 30 June 2008, the board announced that, as a result of
the general market turbulence, including a volatile gold price and weak and
deteriorating equity markets, the board had decided to conduct a more wide
ranging review of funding options, including examining options for a capital
injection aimed at maximising shareholder returns. Unfortunately, the board was
unable to identify a suitable option and, on 12 November 2008, the company's
shares were suspended from trading on AIM pending clarification of the Company's
financial position and the requirement for further short and medium term funding
to enable the company to continue operating.
Following this announcement, Greg Hunter, the then chief executive of the
Company, resigned and the role of chief executive was assumed by Roy Pitchford,
one of the then non executive directors, who had served on the board since
January 2004.
On 4 December 2008, the Company announced that, in common with a number of other
mining operators in Zimbabwe, its subsidiaries had ceased all operations in
Zimbabwe due to the adverse political and economic climate, but the group would
continue to maintain its assets there, to the extent practicable.
On 14 January 2009, the company's wholly owned subsidiary, Central African Gold
Ghana Limited, received a notice of default from Investec Bank in regarding the
non-payment of monies due on the Investec Bank project loan facility agreement
(the "PLFA") and the non-payment of monies due under various gold forward
transaction agreements (the "HFA") with Investec Bank. Investec demanded a full
repayment of more than $20 million from the company.
In addition to the demand for repayment, Investec invoked its power of attorney
under the charge over the company's shares in the Central African Gold Ghana
Limited and transferred the 90,000 shares in CAG Ghana to Investec Bank, making
it the legal owner of Bibiani.
Faced with the prospect of liquidation, the board assessed the company's
remaining assets and, with the continued support of the company's major
shareholder, decided to focus its efforts on the Zimbabwean assets. A settlement
agreement was entered into between the company and Investec Bank which limited
the company's liability to $5 million. Pursuant to this, the company announced
that subject to shareholder approval, CAG proposed to raise $8.0 million (before
expenses) and to proceed with the partial conversion of the convertible loan
notes issued in July 2008.
Shareholder approval was sought and received for an increase in the authorised
share capital to accommodate the issue of 565,970,992 new ordinary shares at
1.00 pence (the "Placing") and to issue shares at 0.9 pence per share in respect
of the partial conversion of the loan notes (the "Conversion"). The net
proceeds of approximately GBP5.7 million before costs were used predominantly to
settle the outstanding liability to Investec Bank.
Investor confidence and fund raising
At the end of 2007, CAG announced that subject to shareholder approval, the
Company proposed to raise GBP15.6 million (before expenses) through the issue of
60,000,000 new ordinary shares at a price of GBP0.26 per share. This was duly
approved at an extraordinary general meeting ("EGM") in early January 2008 and
the funds raised together with the additional flexibility provided by the
extension to the Company's existing debt facility, secured in November 2007,
were designated to fund the development of CAG's African production and
exploration portfolio in Ghana, Mali, Zimbabwe and Botswana.
The much slower than anticipated build up in production of Bibiani placed
considerable pressure on the cash resources of the group during 2008 and the
board of directors identified a need to raise further capital to support
operations. Immediate support was offered by two significant shareholders who
agreed to advance US$6.94 million in the form of convertible notes with a
6-month term and the issue of US$1 million of new ordinary shares. The Company
announced that it would seek to raise an additional US$10 million via an equity
placing in the third quarter of 2008.
Negotiations at Central African Gold Ghana for an overdraft facility of US$1
million and lease finance for mine equipment (US$3.5 million) were ultimately
not successful.
In April 2009, the company raised $8 million before expenses which was primarily
used to settle the liability to Investec Bank of $5 million in terms of the
settlement agreement entered into.
KPI's
The Company previously reported that it would use 2008 as the reference (base)
year, through the capitalisation of its various development and exploration
projects, to initiate a KPI system aimed at helping CAG measure its performance
on an annual basis. This was regrettably not achieved but it is anticipated to
be implemented as part of the development of the Zimbabwean mines.
Financial Results
Turnover in the year was GBP14.1 million (2007: GBP11.0 million) from the sale
of 32,250 (2007: 33,637) ounces of gold.
Administrative expenses totaled GBP5.7 million (2007: GBP9.6 million). The
total operating loss for the period was GBP15.9 million (2007: GBP14.7 million).
The poor operating result was primarily the result of lower than budget
production from tailings operations and a slower than expected build up of
production from underground at Bibiani.
The carrying value of assets at Bibiani was impaired by GBP14.45 million (2007:
GBPnil) resulting in a loss for the year of GBP26.534 million or a loss of
15.91p per share (2007: 15.31p).
The results for 2008 reflect the movement in the "fair value of the gold
agreement" of GBP0.2 million (2007: GBP3.8 million) applying a gold price of
US$866.55/oz at 31 December 2008 (2007: US$833.20/oz). This arises as a result
of the gold sale agreement which was entered into as part of the US$25 million
loan facility taken out with Investec Bank Limited in 2007. At 31 December
2008, the gold sale agreement reflected a cumulative mark to market loss of
GBP3.8 million (2007: GBP6.9 million) by reference to a gold price at the time
of US$866.55/oz.
The results also reflect a share-based payment charge of GBP0.76m (2007:
GBP2.2m).
The group reported in 2007 that the functional currency of the Zimbabwean
entities had been deemed to be US dollars. Where transactions had occurred in
Zimbabwe dollars, the results and assets were translated using the Old Mutual
Implied Rate. The Old Mutual Implied Rate was used rather than the official
rate, since the Company believed that the Old Mutual Implied Rate gave a more
accurate representation of the purchasing power of the Zimbabwean dollar. All
trade on the Zimbabwean Stock Exchange ceased in November 2008 rendering the Old
Mutual Implied Rate obsolete. The rate of inflation in Zimbabwe reached
extraordinary levels to the extent that inflation indices were outdated as soon
as they became available. When inflation indices were available, there was a
high level of subjectivity with respect to measurement, resulting in inflation
measures that varied considerably depending on the methods applied and the
inputs into the inflation measurement model. Inflation adjusted financial
statements were considered unreliable in the circumstances.
Transactions in local currency were based on a pricing criteria that was
dependent on the method of settlement, that is, depending on whether the
transaction was settled in cash, by bank transfer, by cheque or in kind. The
accumulation of transactions settled by different modes of payment produces
annual results that are misleading, and would also have an effect on inflation
adjusted financial statements.
Given the current economic situation in Zimbabwe coupled to the decision to
suspend operations in early December 2008, the directors have to apply
considerable judgment in assessing the recoverable amount of goodwill and other
assets in Zimbabwe. The directors have assessed that no impairment of the
overall asset value is required.
Financial position post Ghana
The board of directors considers that in light of the divestment of the Ghana
subsidiary, settlement of the guarantee to Investec and the share placement, it
would be useful for shareholders to understand the balance sheet position
reported at 31 December 2008 as if these events had taken place on 31 December
2008:
+-----------------------+-----------+------------+------------+------------+----------+
| In thousands of | Balance | CAG Ghana | Net | Settlement | Total |
| pounds sterling | sheet | divestment | proceeds | of | |
| | | | of capital | guarantee | |
| | | | raise | | |
+-----------------------+-----------+------------+------------+------------+----------+
| | | | | | |
+-----------------------+-----------+------------+------------+------------+----------+
| | | | | | |
+-----------------------+-----------+------------+------------+------------+----------+
| Non current assets | 42,270 | (31,703) | | | 10,567 |
+-----------------------+-----------+------------+------------+------------+----------+
| Current assets | 2,455 | (2,028) | | | 427 |
+-----------------------+-----------+------------+------------+------------+----------+
| Cash | 3,048 | (2,781) | 5,400 | (3,562) | 2,105 |
+-----------------------+-----------+------------+------------+------------+----------+
| Total assets | 47,773 | (36,512) | 5,400 | (3,562) | 13,099 |
+-----------------------+-----------+------------+------------+------------+----------+
| | | | | | |
+-----------------------+-----------+------------+------------+------------+----------+
| Equity | (3,714) | 3,150 | (5,400) | | (5,964) |
+-----------------------+-----------+------------+------------+------------+----------+
| | | | | | |
+-----------------------+-----------+------------+------------+------------+----------+
| Non current | (7,267) | 6,616 | | | (651) |
| liabilities | | | | | |
+-----------------------+-----------+------------+------------+------------+----------+
| Current liabilities | (36,792) | 26,746 | | 3,562 | (6,535) |
+-----------------------+-----------+------------+------------+------------+----------+
| Total liabilities | (44,059) | 33,362 | | 3,562 | (7,135) |
+-----------------------+-----------+------------+------------+------------+----------+
| | | | | | |
+-----------------------+-----------+------------+------------+------------+----------+
| Total equity and | (47,773) | 36,512 | (5,400) | 3,562 | (13,099) |
| liabilities | | | | | |
+-----------------------+-----------+------------+------------+------------+----------+
| | | | | | |
+-----------------------+-----------+------------+------------+------------+----------+
Notes:
1. The disposal of Ghana reflects the disposal of the net liabilities of Central
African Gold Ghana Limited.
2. The proceeds of the capital raise have been included after the deduction of
costs.
3. The liability of $5 million, plus interest in terms of the guarantee, was
settled.
Going Concern
The financial statements are prepared on a going concern basis, which is
considered in more detail in the basis of preparation in note 1 of the financial
statements.
The Directors believe this to be appropriate for the following reasons:
* The repayment of interim funding advanced during the period leading up to the
capital raise has been deferred by the company's major shareholder.
* CAG has disposed of its Mali assets as announced on 21 December 2009 for a
consideration of $5 million.
* The Company has no significant debt repayment obligations in the short term. The
liability to Investec Bank has been settled. Repayment of the convertible loan
notes, deferred until the sale of the Mali assets or April 2010, whichever is
the earlier, has been deferred to April 2011.
* The major shareholders have committed additional funding to the Company in the
form of new convertible loan notes.
* Management has prepared projected cash flow information for the period ending
twelve months from the date of the board's approval of the financial statements.
* Cash resources at the date of reporting are sufficient to maintain the corporate
overhead structure as well as to make limited investment in Zimbabwe. Operating
costs have been minimised to the extent possible.
* The remaining funds after settlement of the liability to Investec Bank are being
used in the enhancement in value of the Company's remaining assets.
On the basis of this cash flow information, the directors consider that the
company will be able to continue in operational existence for the foreseeable
future. However, beyond this period of time, the Company requires additional
funding. The directors are currently examining a number of initiatives for
developing the Company in the short to medium term. The financial statements do
not include any adjustments that might result from the basis of preparation
being inappropriate.
Ghana
A number of initiatives were undertaken in Ghana with a view to increasing
production tonnages and recovered grades. Work commenced on the sinking of a
second decline to access the orebody and achieve ramp up to an initial 100,000
tonnes per month target more quickly than CAG could achieve on its own.
Development of the Bibiani mine continued to lag behind schedule with a
consequential shortfall in gold production compared with budget. This, in
conjunction with ongoing capital expenditure, continued to utilise the cash
resources and resulted in an accumulation of trade payables.
The directors reported that the future viability of the Company was dependent
upon achieving acceptable performance levels for the existing decline shaft and
a second decline shaft. As the expected decline shaft was only expected to be
operational in January 2009, the directors took the following steps to improve
the immediate production at Bibiani:
* 3 new trucks were purchased to increase the fleet to 9, which trucks were
expected to be on site in July 2008.
* 2 new loaders were ordered and were anticipated on site by September 2008,
bringing the total fleet size to 7.
* A letter of intent was signed with Barminco to develop the second decline shaft.
* Management consultants were retained to introduce short interval controls to
improve upon production efficiencies.
The Company continued to seek resolution of the liquidity issues, culminating in
a site visit with representatives from its major shareholder and Investec Bank
to the Bibiani mine in December 2008. A number of meetings were held with the
key stakeholders and creditors to the Company.
However, on 14 January 2009, Investec Bank demanded the repayment of the project
finance facility in full and notified CAG that it had exercised its power of
attorney in respect of the charge over the shares in CAG Ghana, making it the
legal owner of the Bibiani mine.
Zimbabwe
The Company is the majority owner of two subsidiaries in Zimbabwe: Falcon Gold
Zimbabwe Limited ("Falgold") (84.7 per cent.) and Olympus Gold Mines Limited
("Olympus") (100 per cent.). Falgold and Olympus between them include a number
of previously operational gold mines and extensive claim holdings. However, all
production ceased in December 2008 due to the adverse political and economic
climate in Zimbabwe and related issues at the four mines owned by the Company.
On 2 February 2009, the Governor of the Reserve Bank of Zimbabwe ("RBZ")
released a Monetary Policy Statement ("MPS"). The proposed changes detailed in
the MPS are far reaching and the directors believe they may potentially, if
actioned as described, have a significant and positive impact on the Company's
ability to resume its Zimbabwe gold mining operations in the near term. Amongst
other changes, the MPS contemplates specific improvements for gold producers
that are designed to counter the factors that contributed to the Zimbabwe gold
sector decline over the last 18 months. Under the MPS, the proposed changes
include:
* permitting gold producers, after receipt of a Gold Export Permit, to be in
control of their gold sales: gold companies will be able to produce and sell
gold and be reasonably assured that they will be paid for their bullion within
normal trade terms, as such gold production may be marketed outside of the
control of the RBZ. This is one of the most significant changes in the MPS;
* permitting gold producers to retain 92.5 per cent. of their sales in foreign
exchange (increased from the previous level of 85 per cent.).These funds may be
held indefinitely, as compared to the previous requirement to convert any
remaining foreign exchange to local Zimbabwe currency within thirty days of
receipt;
* giving gold producers the freedom to access certain financial instruments, such
as gold loans from offshore markets, that would then be collaterised by their
own physical gold inventory, thus, in the opinion of the board, making access to
operating capital and new project financing significantly easier; and
* converting all current outstanding receivables owed to gold producers, such as
CAG, into a "Special Tradable Gold-Backed Foreign Exchange Bond", which will
have a term of 12 months and will pay interest at eight per cent. per annum upon
maturity. The interest owed is to be accrued from the time that the money has
been outstanding and the RBZ will honour the full principal plus interest on
maturity.
Furthermore, the RBZ has laid out certain measures to significantly de-regulate
Zimbabwe's exchange control policies. These measures include the ability of
gold producers to pay for goods and services offshore, as well as all genuine
external debts and dividends without prior Exchange Control approval. The
directors believe that this step should, if actioned, make the flow of
operational capital more efficient, and allow for the unfettered transfer of
operational proceeds.
The directors believe that these reforms, together with political changes in
Zimbabwe, including, inter alia, the agreement by all parties in February 2009
to establish a Government of National Unity, should enable the Company to
restart gold production in Zimbabwe relatively quickly following the completion
of the Placing.
In the medium to long term, the directors believe that CAG may, subject to
financing availability, amongst other factors, be in a position to act as a
consolidator for other Zimbabwean producing assets.
Mali
The Company has an 80 per cent. interest in 11 permits in southern Mali and
seven permits in western Mali through its subsidiary companies Mali Goldfields
SA and SonghoÏ Resources SA, the remaining 20 per cent being owned by the Malian
Government. This highly prospective portfolio of 18 properties spanned
approximately 2,137 km2 of Birimian strata at 31 December 2008.
The most advanced projects are on the 150 km2 Medinandi and Bokolobi permits
(held by SonghoÏ Resources SA) in the prospective Kenieba district, which
together currently have a combined mineral resource of approximately 500,000 oz
of gold grading 4.55g/t Au at the Fadougou Main Zone target. During 2008,
further reverse circulation ("RC") drilling was completed at Medinandi. A total
of 33 RC boreholes for 3,948m were drilled over a number of target areas outside
the Fadougou Main Zone.
In view of the board's desire to focus on the Company's Zimbabwean assets, the
relatively early stage of development of the Malian assets and the difficulties
of effectively managing the Malian assets from the Company's office in South
Africa, the board decided to sell the Malian assets in the short to medium term
in order to augment the group's working capital and specifically to generate
funds to satisfy the liability totaling US$4.01 million owed to Investec Asset
Management and ECP Africa together under the new convertible loan agreements,
details of which are set out in the section entitled 'Convertible Loan
Agreements' below.
Accordingly, as announced on 21 December 2009, the Company has entered into a
binding agreement to dispose of its 80 per cent. equity interests in each of
Mali Goldfields SARL and Songhoï Resources SA (together 'the Malian Assets')
('the Disposal') to Prairie Downs Metals Limited ('Prairie Downs') ('the
Agreement') for a total consideration of US$5.0 million ('the Consideration').
As at 31 December 2008, the Malian Assets, which are early stage gold
exploration assets, consisting of 18 prospective permits spanning circa 2,137km²
of the Birimian strata, were recorded as having a book value of GBP3.8 million.
The Consideration is made up of an initial non-refundable payment of US$0.5
million in cash, which was paid on signing of the Agreement, and a further
US$3.5 million payable in cash to the Company on completion of the Disposal
('Completion'). A further US$1.0 million will be payable to the Company in cash
upon the achievement of a JORC compliant indicated and measured gold resource of
at least 500,000 ounces.
Completion must occur on or before 3 March 2010 and is subject to, inter alia,
shareholder approval. A Circular containing notice of the General Meeting will
be sent to shareholders for approval shortly. The time between signing the
Agreement and Completion will also be used by Prairie Downs to raise sufficient
funds to satisfy the Consideration and to seek shareholder approval for the
necessary issue of equity.
Botswana
The Company owns a 100 per cent. interest in Matoko Limited, which holds the
rights to the Kraaipan prospecting licence. The permit area overlies the
north-westward strike continuation of the Archaean Kraaipan greenstone belt from
South Africa. The licence is underlain by the extension of the eastern arm of
the Archaean Kraaipan greenstone terrain into southern Botswana. The Prospecting
Licence over 436 sq km was renewed in July 2007 for two years (after a 50 per
cent. surface area reduction) and is renewable again in July 2009 for a further
period of two years with a further area reduction of 50 per cent. The Botswana
assets had a carrying book value of GBP0.4 million (approximately $0.56 million)
as at 28 February 2009.
The board intends to review the exploration programme in Botswana and will
decide whether to continue the programme through its subsidiaries, find a
suitable joint venture partner or to dispose of the Botswana assets.
Dividends
The results of the group appear in detail in the financial statements. The
directors do not recommend paying a dividend (2007: nil).
Directors
The following directors have held office during the year under review and up to
the date of this report:
+----------------------------------+---------------------------------------------+
| RP Lander (Non Executive | appointed 5 May 2008 |
| Chairman) | |
+----------------------------------+---------------------------------------------+
| RA Pitchford (Chief Executive | appointed on 12 November 2008 |
| Officer) | |
+----------------------------------+---------------------------------------------+
| | resigned as non-executive director 12 |
| | November 2008 |
+----------------------------------+---------------------------------------------+
| B Fort (Non Executive Director) | appointed 13 November 2009 |
+----------------------------------+---------------------------------------------+
| CI Campbell (Chief Financial | appointed 15 December 2008 |
| Officer) | |
+----------------------------------+---------------------------------------------+
| N Burney (Non Executive | appointed 15 December 2008 |
| Director) | resigned 13 November 2009 |
+----------------------------------+---------------------------------------------+
| T Gibian (Non Executive | resigned 15 December 2008 |
| Director) | appointed 8 May 2008 |
+----------------------------------+---------------------------------------------+
| D Glennie (Non Executive | resigned 12 December 2008 |
| Director) | appointed 5 May 2008 |
+----------------------------------+---------------------------------------------+
| GD Hunter (Executive Director) | resigned as Chief Executive Officer 12 |
| | November 2008 |
| | resigned as Chairman 5 May 2008 |
+----------------------------------+---------------------------------------------+
| CMW Prentice (Executive | resigned as Chief Financial Officer 1 July |
| Director) | 2008 |
+----------------------------------+---------------------------------------------+
Substantial shareholdings
The Company has been notified of the following substantial interests as at
25 November 2009:
+------------------------------------+-----------------+-----------------+
| | Number of | Percentage of |
| | ordinary | shares of 0.5p |
| | shares of | each issued |
| | 0.5p each | share capital |
+------------------------------------+-----------------+-----------------+
| Emerging Capital Partners LLC | 502,242,493 | 50.02 |
+------------------------------------+-----------------+-----------------+
| HBD Zim Investments Limited | 282,985,496 | 28.18 |
+------------------------------------+-----------------+-----------------+
| Investec Asset Management | 105,184,269 | 10.48 |
+------------------------------------+-----------------+-----------------+
| Cipher 06 Llc | 18,343,100 | 1.83 |
+------------------------------------+-----------------+-----------------+
| Thomas Kaplan Family | 7,000,000 | 0.70 |
+------------------------------------+-----------------+-----------------+
| Pitchford R A Esq. | 6,400,000 | 0.64 |
+------------------------------------+-----------------+-----------------+
| Central African Mining & | 6,222,222 | 0.62 |
| Exploration Co Plc | | |
+------------------------------------+-----------------+-----------------+
| Enso Capital Management | 6,066,662 | 0.60 |
+------------------------------------+-----------------+-----------------+
| Patria Direct | 5,110,000 | 0.51 |
+------------------------------------+-----------------+-----------------+
| Barclays Stockbrokers Limited | 4,534,809 | 0.45 |
+------------------------------------+-----------------+-----------------+
Board and management
During the year under review CAG has strengthened its board and management team
as part of its strategy of assembling a board with the relevant experience and
contacts to advance the existing gold production and exploration assets. In May
2008, Roy Lander joined the board as an independent non executive chairman,
David Glennie and Tom Gibian as non-executive directors and Navaid Burney, as an
alternate non-executive director to Tom Gibian. Together they have solid
understandings of the financial markets and possess strong relationships within
the African resource sector, which will help CAG as it looks to acquire further
assets and strengthen its portfolio of gold assets across Africa. Charles
Prentice resigned as chief financial officer in July 2008 and was replaced by
Craig Campbell in September 2008. In November 2008, Greg Hunter resigned as
chief executive and was replaced by Roy Pitchford, who was a long serving non
executive director. David Glennie and Tom Gibian also resigned their
directorships, with Navaid Burney assuming the role of a non-executive director
in Tom Gibian's stead. Following Navaid Burney's resignation in November 2009,
Bryce Fort was welcomed to the Board.
Creditor payment policy
The group policy is to ensure that, in the absence of a dispute, all suppliers
are dealt with in accordance with its standard payment practice whereby as far
as reasonably possible all outstanding trade accounts are settled within the
term agreed with the supplier at the time of the supply or otherwise 30 days
from receipt of the relevant invoice.
Disclosure of information to auditors
The directors who hold office at the date of approval of this directors' report
confirm that, so far as they are each aware, there is no relevant audit
information of which the Company's auditors are unaware and that each director
has taken all the steps that he ought to take as a director to make himself
aware of any relevant audit information and to establish that the Company's
auditors are aware of that information.
Auditors
KPMG have confirmed their willingness to continue in office, and a resolution
for their reappointment will be proposed at the forthcoming Annual General
Meeting.
Risks and uncertainties
Cash flow management
Cash resources at the date of reporting are limited and will remain so until the
consideration for the sale of the Malian assets are received. The Company has
satisfied the $5 million liability owing to Investec Bank.
Project development risk
There can be no assurance that the group's projects will be fully developed in
accordance with current plans or completed on time or to budget. Future work on
the development of these projects, the levels of production and financial
returns arising therefrom may be adversely affected by factors outside the
control of the group.
Ore body yield
In arriving at the predicted mill feed ore grade and metallurgical recovery, a
statistical approach has been adopted according to industry norms (JORC
compliant). However there is a risk that the actual delivered grades and plant
recoveries may vary from month to month depending on which part of the ore
reserve is currently being mined. This is particularly true when mining in
remnant areas.
Equipment availability
Despite the careful selection of suppliers with representation in the countries
in which CAG operates there is always a risk that certain parts and spares
required will be unavailable and will be subject to import and clearing delays.
Power
Gold mines, and in particular the plant, are large consumers of power and
unscheduled load shedding may result in a decrease in gold output.
Gold prices
The activities of the group, and particularly the viability of its gold mines,
will be subject to fluctuations in demand and prices for all minerals generally
and in particular gold prices. A significant reduction in global demand for
gold, leading to a fall in gold prices could lead to a significant fall in the
cash flow of the gold mines and/or a delay in exploration and production or even
abandonment of these gold mines should it prove uneconomical to develop. This
would have an adverse material impact on the operating results and financial
condition of the group.
Insurance risks
The group has insurance cover to mitigate any substantial losses that could
arise from major catastrophes. The occurrence of an event that is partially
covered by insurance would not have an adverse effect on the business, financial
condition and results of operations of the group.
Exploration and development risks
Most exploration projects do not result in the discovery of commercially
mineable deposits. While discovery of a base metal or precious metal bearing
structure may result in substantial rewards, few properties that are explored
are ultimately developed into producing mines. It is not possible to ensure
that exploration programmes carried out by the group will result in profitable
commercial mining operations.
Resource and reserve estimation
The group has estimated its resources and reserves on data and information
provided by the operating entities and has relied on the accuracy of the
information provided. It has also taken a view of the future of commodity prices
in determining the economic recoverability of the resources and reserves.
Should, however, this information and the associated economic assumption prove
to be incorrect, it may impact the estimation made in these financial
statements.
Political risk
African countries experience varying degrees of political instability. There
can be no assurance that political stability will continue in those countries
where the group currently has, or may have, operations. In the event of
political instability or changes in government policies in those countries where
the group operates, the operations and financial condition of the group could be
adversely affected. In some jurisdictions the local government is entitled to a
free carried interest on conversion of prospecting permits to mining licenses.
See note 24 for further details.
Economic risk
In general, the economies in which we operate have also experienced
devaluations, high inflation and high interest rates. All these economic risks
may from time to time adversely affect the group's operations.
Zimbabwe
The situation in Zimbabwe has been well covered in the media. Hyperinflation,
currency risk and the indigenisation programme all contribute toward a
significant risk being attached to CAG's investment in that country.
Financial instruments
The values of financial instruments reflected in these financial statements have
been based on the fact that estimates reflect the fair value. This is primarily
in the valuation of assets and liabilities acquired during the period and also
the valuation of the gold sale agreement. However, should this assumption prove
to be incorrect, the fair values reflected in these financial statements may
change.
Exchange controls
Some of the countries in which the group operates have maintained strict
controls on access to foreign currency and the repatriation of funds.
Currency and exchange rate fluctuations
All the group's revenues from its African operations are either denominated in,
or priced by reference to, US Dollars. The group conducts its operations in a
number of jurisdictions and therefore, notwithstanding the use of US Dollars in
relation to its African operations, is subject to fluctuations in exchange rates
between these countries in relation to the relative costs of inputs, labour and
returns received from production. A significant fluctuation in any of the
group's key operating currencies could have a material adverse effect on the
business, financial condition and results of operations of the group.
Director's indemnities
All directors and officers benefit from qualifying third party indemnity
provisions in place during the financial year and at the date of this report.
Contributions
Political contributions and charitable donations
The group made no charitable donations or political contributions for the 2008
year (2007: GBPnil).
Post-balance sheet events
Extraordinary General Meeting
CAG held an extraordinary general meeting ("EGM") on 20 April 2009. The purpose
of the meeting was to consider and if thought fit, to approve the following
ordinary and special resolutions in connection with the proposed placing of new
ordinary shares and the proposed partial conversion of convertible loan
agreements:
Ordinary Resolutions
+----------+----------+----------+--------------+
| | | (i) | increase |
| | | | the |
| | | | authorised |
| | | | share |
| | | | capital of |
| | | | the |
| | | | company |
| | | | from |
| | | | GBP5,000,000 |
| | | | to |
| | | | GBP5,500,000 |
| | | | by the |
| | | | creation of |
| | | | 100,000,000 |
| | | | ordinary |
| | | | shares of |
| | | | 0.5 pence |
| | | | each; |
+----------+----------+----------+--------------+
| | | (ii) | give the |
| | | | directors |
| | | | the |
| | | | authority |
| | | | to allot |
| | | | the |
| | | | _uthorized |
| | | | but |
| | | | unissued |
| | | | share |
| | | | capital of |
| | | | the |
| | | | company; |
+----------+----------+----------+--------------+
Special Resolutions
+----------+----------+----------+-----------------+
| | | (iii) | specifically |
| | | | disapply |
| | | | pre-emption |
| | | | rights up to |
| | | | a nominal |
| | | | value of |
| | | | GBP2,829,855 |
| | | | of share |
| | | | capital |
| | | | pursuant to |
| | | | Section 95 |
| | | | of the Act |
| | | | in respect |
| | | | of the |
| | | | Placing; |
+----------+----------+----------+-----------------+
| | | (iv) | specifically |
| | | | disapply |
| | | | pre-emption |
| | | | rights up to |
| | | | a nominal |
| | | | value of |
| | | | GBP1,336,321 |
| | | | of share |
| | | | capital |
| | | | pursuant to |
| | | | Section 95 |
| | | | of the Act |
| | | | in respect |
| | | | of the |
| | | | Conversion; |
| | | | and |
+----------+----------+----------+-----------------+
| | | (v) | generally |
| | | | disapply |
| | | | pre-emption |
| | | | rights up |
| | | | to a |
| | | | nominal |
| | | | value of |
| | | | GBP479,569 |
| | | | of share |
| | | | capital, |
| | | | being all |
| | | | of the |
| | | | company's |
| | | | authorised |
| | | | but |
| | | | unissued |
| | | | share |
| | | | capital |
| | | | following |
| | | | the Placing |
| | | | and the |
| | | | Conversion, |
| | | | pursuant to |
| | | | Section 95 |
| | | | of the Act |
| | | | in addition |
| | | | to the |
| | | | disapplications |
| | | | referred to at |
| | | | (iii) and (iv) |
| | | | above. |
+----------+----------+----------+-----------------+
The company has conditionally placed 565,970,992 new ordinary shares with ECP
Africa and HBD at 1.00 penny per share to raise net proceeds of approximately
GBP5.7 million, before total costs of approximately GBP0.5 million.
The primary reason for the placing was to raise sufficient funds to meet the
Investec Bank Debt and, along with the proceeds from the sale of the Malian
assets, to provide sufficient working capital for the Company to continue to
enhance the value of its assets in Zimbabwe and Botswana.
Convertible Loan Agreements
In June and July 2008, the Company entered into the convertible loan agreements,
under the terms of which the company borrowed $3.94 million (approximately
GBP2.28 million using the rate of exchange prevailing on the date of the
agreement) from ECP Africa ("ECP") and $3 million (approximately GBP1.7 million,
using the rate of exchange prevailing on the date of the agreement) from
Investec Asset Management ("IAM"). The funds received by the company under the
convertible loan agreements carried interest at 10 per cent. per annum,
compounded monthly in arrears and payable on maturity.
The terms of the convertible loan agreements provide that the monies received by
the Company under the convertible loan agreements can be converted, at the
election of the lender, in the event that the Company allotted any new shares
prior to the date for repayment of the loan. The convertible loan agreements
further provided that they would be automatically converted in the event that
the company raised at least $10 million (approximately GBP5.7 million, using the
rate of exchange prevailing at the date that the convertible loan agreements
were announced to the market) in an equity fundraising prior to the date for
repayment of the loan, in which case the convertible loan agreements and accrued
interest would convert automatically at a price which is 10 per cent. below the
issue price of such fundraising. The repayment date for the loans under the
terms of the convertible loan agreements was in January 2009 but the loans have
not been repaid and therefore the $6.94 million (being $3.94 million due to ECP
and $3.0 million due to IAM respectively) and accrued interest thereon (being
approximately $0.5 million) is due and payable by the Company. While the
proceeds under the placing will, in the directors' opinion, be both sufficient
to repay the $5 million owed to Investec Bank and in the directors' opinion, for
the company's working capital needs, it will not be sufficient to repay the
monies due under the convertible loan agreements. Accordingly, the Company
entered into the new loan agreements with IAM and ECP as detailed below.
Under the terms of the new IAM loan agreement, the Company has agreed with
Investec Asset Management, subject to Shareholder approval for the
disapplication of pre-emption rights and the granting of the authority to
directors to allot shares, to amend and supercede the terms of the IAM
Convertible Loan Agreement so that $1 million (being approximately GBP0.7
million) of the monies lent pursuant to the IAM Convertible Loan Agreement shall
convert into new Ordinary Shares at 0.9p per share immediately following the
Placing, with the outstanding amount of $2.2 million (plus interest accruing at
a rate of 10 per cent. per annum) being repayable in cash on the earlier of the
sale of the Mali assets or 14 April 2010.
Under the terms of the New ECP Loan Agreement, the Company has agreed with ECP
Africa, subject to Shareholder approval for the disapplication of pre-emption
rights and the granting of the authority to directors to allot shares, to amend
and supercede the terms of the ECP Convertible Loan Agreement so that $2.4
million (being approximately GBP1.7 million) of the monies lent pursuant to the
ECP Convertible Loan Agreement shall convert into new Ordinary Shares at 0.9p
per share immediately following the Placing with the outstanding amount of $1.8
million (plus interest accruing at a rate of 10 per cent. per annum) being
repayable in cash on the earlier of the sale of the Mali assets or 14 April
2010.
Following the Conversion the Company owed $1.8 million (plus accrued interest)
to ECP Africa and $2.2 million (plus accrued interest) to Investec Asset
Management.
Subject to Shareholder approval for the disapplication of pre-emption rights and
the granting of the authority to directors to allot shares, the Conversion will
give rise to the issue of a further 267,264,081 new Ordinary Shares representing
26.62 per cent. of the Resulting Share Capital. Following the Conversion, ECP
Africa will have a beneficial interest in 50.02 per cent. of the Resulting Share
Capital and Investec Asset Management will have a beneficial interest in 10.48
per cent. of the Resulting Share Capital.
The resolutions were duly passed and admission of the placing shares and the
conversion shares to trading on AIM resulted in the lifting of the suspension on
the company's shares on 22 April 2009.
Investec Asset Management (Pty) Limited ('IAM') and ECP have agreed to extend
the terms of the loans made available to the Company as described in a circular
sent to shareholders on 27 March 2009, amounting to US$2.2 million and US$1.8
million respectively. These loans now have a new maturity date of 29 April 2011
(previously the earlier date of 14 April 2010 or within five days of the receipt
of funds by the Company from the sale of its entire shareholding in Mali
Goldfields SA and Songhoï Resources SA).
Additionally, CAG has entered into new Convertible Loan Agreements ('the
Convertible Loan Agreements') with HBD Zim Investments Limited ('HBD'), ECP and
IAM, (together, 'the Lenders'). The Convertible Loan Agreements total circa
US$1.25 million (approximately GBP816,000) and amount to US$397,267 from HBD
(approximately GBP238,924), US$705,070 from EPC (approximately GBP424,048) and
US$147,662 from IAM (approximately GBP88,808). All loan amounts used the rate of
exchange prevailing on the date of the agreement. The funds received by the
Company under the Convertible Loan Agreements carry interest at 10 per cent. per
annum, compounded monthly in arrears with the full amount payable on the
maturity date, 29 April 2011. There is no penalty for early repayment of the
loans.
The terms of the Convertible Loan Agreements provide that the Lenders have the
right to convert all but not part only of the loans at the conversion price of
the lesser of 0.9 pence per ordinary share and ten (10) percent below the USD
equivalent of any price at which the Borrower issues Shares while any amount of
the Loan remains repayable to the Lender. Under the terms of the Convertible
Loan Agreements each of the Lenders acknowledge that the Company does not have
the capacity to issue the full number of shares issuable should they wish to
convert the loans and that, should the Company not receive the required
shareholders approval needed to create and issue all of the shares issuable on
conversion, the Lenders shall only be able to exercise their conversion rights
to the extent that such shares exist and the directors have the relevant
authorities.
Malian Assets Disposal
The Company has entered into a binding agreement to dispose of its 80 per cent.
equity interests in each of Mali Goldfields SARL and Songhoï Resources SA
(together 'the Malian Assets') ('the Disposal') to Colonial Resources Limited
('Colonial') ('the Agreement') for a total consideration of US$5.0 million ('the
Consideration'). As at 31 December 2008, the Malian Assets, which are early
stage gold exploration assets, consisting of 18 prospective permits spanning
circa 2,137km² of the Birimian strata, were recorded as having a book value of
GBP3.8 million.
The Consideration is made up of an initial non-refundable payment of US$0.5
million in cash, which was paid on signing of the Agreement, and a further
US$3.5 million payable in cash to the Company on completion of the Disposal
('Completion'). A further US$1.0 million will be payable to the Company in cash
upon the achievement of a JORC compliant indicated and measured gold resource of
at least 500,000 ounces.
Completion must occur on or before 3 March 2010 and is subject to, inter alia,
shareholder approval. A Circular containing notice of the General Meeting will
be sent to shareholders for approval shortly. The time between signing the
Agreement and Completion will also be used by Colonial to raise sufficient funds
to satisfy the Consideration and to seek shareholder approval for the necessary
issue of equity.
CAG will use the proceeds of the disposal to satisfy its working capital
requirements, to meet certain creditor balances that will fall due on Completion
and to develop its Zimbabwean gold assets.
By order of the board
Philip Enoch
Company Secretary
23 December 2009
Statement of Directors Responsibilities
The directors are responsible for preparing the directors' report and the
financial statements in accordance with applicable law and regulations. Company
law requires the directors to prepare group and parent company financial
statements for each financial year. Under that law they have elected to prepare
both the group and the parent company financial statements in accordance with
IFRS as adopted by the EU and applicable laws.
The group and parent company financial statements are required by law and IFRSs
as adopted by the EU to present fairly the financial position of the group and
the parent company performance for the year. The Companies Act 1985 provides in
relation to such financial statements that references in the relevant part of
that Act to financial statements giving a true and fair view are references to
their achieving a fair presentation.
In preparing both the group and parent company financial statements, the
directors are required to:
* Select suitable accounting policies and then apply them consistently;
* Make judgments and estimates that are reasonable and prudent;
* State whether they have been prepared in accordance with IFRSs as adopted by the
EU; and
* Prepare the financial statements on the going concern basis unless it is
inappropriate to presume that the group and parent company will continue in
business.
The directors are responsible for keeping proper accounting records that
disclose with reasonable accuracy at any time the financial position of the
parent company and enable them to ensure that its financial statements comply
with the Companies Act 1985.They have general responsibility for taking such
steps as are reasonably open to them to safeguard the assets of the group and to
prevent and detect fraud and other irregularities.
Independent Auditors report
We have audited the group and parent company financial statements (the
"financial statements") of Central African Gold plc ("the Company") for the
year ended 31 December 2008 which comprise the Group Income Statement, the Group
and Parent Company Balance Sheets, the Group Cash Flow Statement, the Group and
Parent Company Statements of Changes in Equity and Statements of Recognised
Income and Expense and the related notes. These financial statements have been
prepared under the accounting policies set out therein.
This report is made solely to the company's members, as a body, in accordance
with section 235 of the Companies Act 1985. Our audit work has been undertaken
so that we might state to the company's members those matters we are required to
state to them in an auditor's 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 and the company's members as a body, for our audit work,
for this report, or for the opinions we have formed.
Respective responsibilities of directors and auditors
The directors' responsibilities for preparing the Annual Report and the
financial statements in accordance with applicable law and International
Financial Reporting Standards (IFRSs) as adopted by the EU are set out in the
Statement of Directors' Responsibilities on page 31.
Our responsibility is to audit the financial statements in accordance with
relevant legal and regulatory requirements and International Standards on
Auditing (UK and Ireland).
We report to you our opinion as to whether the financial statements give a true
and fair view and are properly prepared in accordance with the Companies Act
1985. We also report to you whether in our opinion the information given in the
Directors' Report is consistent with the financial statements.
In addition we report to you if, in our opinion, the Company has not kept proper
accounting records, if we have not received all the information and explanations
we require for our audit, or if information specified by law regarding
directors' remuneration and other transactions is not disclosed.
We read the other information contained in the Annual Report and consider
whether it is consistent with the audited financial statements. We consider the
implications for our report if we become aware of any apparent misstatements or
material inconsistencies with the financial statements
Basis of Audit Opinion
We conducted our audit in accordance with International Standards on Auditing
(UK and Ireland) issued by the Auditing Practices Board, except that the scope
of our work was limited as explained below.
An audit includes examination, on a test basis, of evidence relevant to the
amounts and disclosures in the financial statements. It also includes an
assessment of the significant estimates and judgments made by the directors in
the preparation of the financial statements, and of whether the accounting
policies are appropriate to the company's circumstances, consistently applied
and adequately disclosed.
We planned our audit so as to obtain all the information and explanations which
we considered necessary in order to provide us with sufficient evidence to give
reasonable assurance that the financial statements are free from material
misstatement, whether caused by fraud or other irregularity or error.
However, in relation to the assets, liabilities, income and expenses of the
group solely in relation to one subsidiary, Central African Gold Ghana [Limited]
("CAG Ghana"), the information available to us was limited. As explained in the
basis of preparation (see note 1), Investec Bank exercised its charge and took
control of CAG Ghana on 14 January 2009 and the accounting records in respect of
the year ended 31 December 2008 of CAG Ghana have not been made not available to
us. Accordingly, we were unable to obtain sufficient appropriate audit evidence
in respect of: the assets and liabilities (as separately analysed on page 35)
amounting to total assets of GBP36.5 million and total liabilities of GBP36.8
million; and of each item of income and expense (as separately analysed on page
33) resulting in a net loss for the year of GBP26.1m. The assets, liabilities
and items of income and expense are included in the consolidated financial
statements in respect of that subsidiary.
While our work was not limited in respect of the other assets, liabilities,
income and expenses of the group and we were able to obtain sufficient
appropriate audit evidence over those amounts, because of the significance of
the CAG Ghana balances to the group as a whole, we have been unable to form a
view on the consolidated financial statements.
In determining the form of our opinion we also evaluate the overall adequacy of
the presentation of information in the financial statements.
Opinion: disclaimer of opinion on the consolidated financial statements of the
group
Because of the possible effect of the limitations in evidence available to us,
we are unable to form an opinion as to whether the consolidated financial
statements:
* give a true and fair view in accordance with International Financial Reporting
Standards as adopted by the EU of the consolidated financial position of the
Group as at 31 December 2008 and of its consolidated financial performance and
its consolidated cash flows for the year then ended;
* have been properly prepared in accordance with the Companies Act 1985
As a consequence of the limitation on our work in relation to CAG Ghana referred
to above, we have not obtained all the information and explanations that we
considered necessary for the purpose of our audit of the consolidated financial
statements of the group;
Opinion on the financial statements of the company
In our opinion:
* the parent company financial statements give a true and fair view in accordance
with International Financial Reporting Standards as adopted by the EU as applied
in accordance with the provisions of the Companies Act of the state of the
parent company's affairs as at 31 December 2008; the information contained in
the Directors' Report is consistent with the financial statements.
Emphasis of matter - Going Concern
In determining the form of our opinion on the financial statements, we have
considered the adequacy of the disclosures made in note 1 to the financial
statements concerning the Group's and the Company's ability to continue as a
going concern. In particular, the ability to continue as a going concern is
dependent upon the Group effecting suitable financial and other arrangements to
enable the development of the Zimbabwean assets and also to the successful
completion of the sale of the Mali assets. These conditions, along with other
matters explained in note 1 to the financial statements, indicate the existence
of a material uncertainty which cast significant doubt on the Group's and the
Company's ability to continue as a going concern. The financial statements do
not include the adjustments that would result if the Group and Company were
unable to continue as a going concern.
KPMG Audit Plc
Chartered Accountants
Registered Auditor
23 December 2009
Consolidated income statement
for the year ended 31 December 2008
+-----------------------------------+------+----------+----------+----------+----------+
| | | | 2008 | | 2007 |
+-----------------------------------+------+----------+----------+----------+----------+
| in thousands of pounds sterling |Note |Group ex | Ghana | Total | Total |
| | | Ghana | | | |
+-----------------------------------+------+----------+----------+----------+----------+
| | | | | | |
+-----------------------------------+------+----------+----------+----------+----------+
| Revenue | | 611 | 13,490 | 14,101 | 10,965 |
+-----------------------------------+------+----------+----------+----------+----------+
| Cost of sales | | (1,246) | (23,066) | (24,312) | (11,945) |
+-----------------------------------+------+----------+----------+----------+----------+
| Gross loss | | (635) | (9,576) | (10,211) | (980) |
+-----------------------------------+------+----------+----------+----------+----------+
| | | | | | |
+-----------------------------------+------+----------+----------+----------+----------+
| Other operating income | | - | 4 | 4 | 41 |
+-----------------------------------+------+----------+----------+----------+----------+
| Administrative charges | | (3,439) | (2,232) | (5,671) | (9,647) |
+-----------------------------------+------+----------+----------+----------+----------+
| Other administrative expenses | | (2,683) | (2,232) | (4,915) | (7,455) |
+-----------------------------------+------+----------+----------+----------+----------+
| Share based payments | 7,9 | (756) | - | (756) | (2,192) |
+-----------------------------------+------+----------+----------+----------+----------+
| | | | | | |
+-----------------------------------+------+----------+----------+----------+----------+
| Operating loss before impairment | | (4,074) | (11,804) | (15,878) | (10,586) |
+-----------------------------------+------+----------+----------+----------+----------+
| | | | | | |
+-----------------------------------+------+----------+----------+----------+----------+
| Impairment | | (170) | (14,450) | (14,620) | - |
+-----------------------------------+------+----------+----------+----------+----------+
| | | | | | |
+-----------------------------------+------+----------+----------+----------+----------+
| Operating loss | | (4,244) | (26,254) | (30,498) | (10,586) |
+-----------------------------------+------+----------+----------+----------+----------+
| | | | | | |
+-----------------------------------+------+----------+----------+----------+----------+
| Financial income | 3 | 5,457 | 328 | 5,785 | 306 |
+-----------------------------------+------+----------+----------+----------+----------+
| Financial expenses | 4 | (1,655) | (615) | (2,270) | (4,495) |
+-----------------------------------+------+----------+----------+----------+----------+
| Other financial expenses | | (1,655) | (617) | (2,272) | (662) |
+-----------------------------------+------+----------+----------+----------+----------+
| Gold sale agreement valuation | | - | 2 | 2 | (3,833) |
+-----------------------------------+------+----------+----------+----------+----------+
| | | | | | |
+-----------------------------------+------+----------+----------+----------+----------+
| Loss before tax | | (442) | (26,541) | (26,983) | (14,775) |
+-----------------------------------+------+----------+----------+----------+----------+
| Taxation | 5 | (22) | 471 | 449 | 38 |
+-----------------------------------+------+----------+----------+----------+----------+
| Loss for the year | | (464) | (26,070) | (26,534) | (14,737) |
+-----------------------------------+------+----------+----------+----------+----------+
| | | | | | |
+-----------------------------------+------+----------+----------+----------+----------+
| Attributable to: | | | | | |
+-----------------------------------+------+----------+----------+----------+----------+
| Equity holders of the parent | | | | (26,684) | (14,732) |
+-----------------------------------+------+----------+----------+----------+----------+
| Minority interest | | | | 150 | (5) |
+-----------------------------------+------+----------+----------+----------+----------+
| Loss for the year | | | | (26,534) | (14,737) |
+-----------------------------------+------+----------+----------+----------+----------+
| | | | | | |
+-----------------------------------+------+----------+----------+----------+----------+
| Basic and diluted loss per share | 17 | | | (15.91p) | (15.31p) |
+-----------------------------------+------+----------+----------+----------+----------+
Statements of recognised income and expense
for the year ended 31 December 2008
+-----------------------------------+-------------+-------------+-------------+-------------+
| | Group | Company |
+-----------------------------------+---------------------------+---------------------------+
| | 2008 | 2007 | 2008 | 2007 |
+-----------------------------------+-------------+-------------+-------------+-------------+
| in thousands of pounds sterling | Total | Total | Total | Total |
+-----------------------------------+-------------+-------------+-------------+-------------+
| Foreign exchange translation | (10) | (284) | - | - |
| differences | | | | |
+-----------------------------------+-------------+-------------+-------------+-------------+
| Income and expenses recognised | (10) | (284) | - | - |
| directly in equity | | | | |
+-----------------------------------+-------------+-------------+-------------+-------------+
| Loss for the year | (26,534) | (14,737) | (35,541) | (6,924) |
+-----------------------------------+-------------+-------------+-------------+-------------+
| Total recognised income and | (26,544) | (15,021) | (35,541) | (6,924) |
| expense for the year | | | | |
+-----------------------------------+-------------+-------------+-------------+-------------+
| Attributable to: | | | | |
+-----------------------------------+-------------+-------------+-------------+-------------+
| Equity holders of the parent | (26,694) | (15,016) | (35,541) | (6,924) |
+-----------------------------------+-------------+-------------+-------------+-------------+
| Minority interest | 150 | (5) | - | - |
+-----------------------------------+-------------+-------------+-------------+-------------+
| Total recognised income and | (26,544) | (15,021) | (35,541) | (6,924) |
| expense for the year | | | | |
+-----------------------------------+-------------+-------------+-------------+-------------+
Consolidated balance sheet
as at 31 December 2008
+-----------------------------------+------+----------+----------+----------+----------+
| | | | 2008 | | 2007 |
+-----------------------------------+------+----------+----------+----------+----------+
| in thousands of pounds sterling |Note |Group ex | Ghana | Total | Total |
| | | Ghana | | | |
+-----------------------------------+------+----------+----------+----------+----------+
| | | | | | |
+-----------------------------------+------+----------+----------+----------+----------+
| Assets | | | | | |
+-----------------------------------+------+----------+----------+----------+----------+
| Goodwill | 10 | 691 | - | 691 | 501 |
+-----------------------------------+------+----------+----------+----------+----------+
| Property, plant and equipment | 11 | 5,721 | 31,703 | 37,424 | 31,582 |
+-----------------------------------+------+----------+----------+----------+----------+
| Exploration and other | 12 | 4,405 | - | 4,405 | 1,957 |
| evaluation assets | | | | | |
+-----------------------------------+------+----------+----------+----------+----------+
| Total non-current assets | | 10,817 | 31,703 | 42,520 | 34,040 |
+-----------------------------------+------+----------+----------+----------+----------+
| Inventories | 13 | 3 | 1,000 | 1,003 | 2,957 |
+-----------------------------------+------+----------+----------+----------+----------+
| Trade and other receivables | 14 | 424 | 1,028 | 1,452 | 580 |
+-----------------------------------+------+----------+----------+----------+----------+
| Cash and cash equivalents | 15 | 267 | 3,638 | 3,905 | 2,821 |
+-----------------------------------+------+----------+----------+----------+----------+
| Total current assets | | 694 | 5,666 | 6,360 | 6,358 |
+-----------------------------------+------+----------+----------+----------+----------+
| Total assets | | 11,511 | 37,369 | 48,880 | 40,398 |
+-----------------------------------+------+----------+----------+----------+----------+
| | | | | | |
+-----------------------------------+------+----------+----------+----------+----------+
| Equity | | | | | |
+-----------------------------------+------+----------+----------+----------+----------+
| Share capital | 16 | 854 | - | 854 | 530 |
+-----------------------------------+------+----------+----------+----------+----------+
| Share premium | 16 | 43,625 | - | 43,625 | 28,352 |
+-----------------------------------+------+----------+----------+----------+----------+
| Foreign currency translation | 16 | 3,763 | (3,994) | (231) | (221) |
| reserve | | | | | |
+-----------------------------------+------+----------+----------+----------+----------+
| Accumulated (loss) / profit | 16 | (44,430) | 3,746 | (40,684) | (14,756) |
+-----------------------------------+------+----------+----------+----------+----------+
| Total equity attributable to | | 3,812 | (248) | 3,564 | 13,905 |
| equity holders of the parent | | | | | |
+-----------------------------------+------+----------+----------+----------+----------+
| Minority interest | | 150 | - | 150 | - |
+-----------------------------------+------+----------+----------+----------+----------+
| Total equity | | 3,962 | (248) | 3,714 | 13,905 |
+-----------------------------------+------+----------+----------+----------+----------+
| | | | | | |
+-----------------------------------+------+----------+----------+----------+----------+
| Liabilities | | | | | |
+-----------------------------------+------+----------+----------+----------+----------+
| Loans and other borrowings | 18 | - | - | - | 9,701 |
+-----------------------------------+------+----------+----------+----------+----------+
| Other financial liabilities | 19 | - | 1,694 | 1,694 | 2,654 |
+-----------------------------------+------+----------+----------+----------+----------+
| Deferred taxation | 20 | 563 | - | 563 | 855 |
+-----------------------------------+------+----------+----------+----------+----------+
| Provisions | 21 | 338 | 4,922 | 5,260 | 3,253 |
+-----------------------------------+------+----------+----------+----------+----------+
| Total non-current liabilities | | 901 | 6,616 | 7,517 | 16,463 |
+-----------------------------------+------+----------+----------+----------+----------+
| | | | | | |
+-----------------------------------+------+----------+----------+----------+----------+
| Loans and borrowings - current | 18 | 4,995 | 14,714 | 19,709 | 3,143 |
| portion | | | | | |
+-----------------------------------+------+----------+----------+----------+----------+
| Other financial liabilities - | 19 | - | 2,137 | 2,137 | 1,179 |
| current portion | | | | | |
+-----------------------------------+------+----------+----------+----------+----------+
| Trade and other payables | 22 | 1,652 | 13,077 | 14,729 | 5,694 |
+-----------------------------------+------+----------+----------+----------+----------+
| Bank overdraft | 15 | - | 1,061 | 1,061 | - |
+-----------------------------------+------+----------+----------+----------+----------+
| Taxation | | 1 | 12 | 13 | 14 |
+-----------------------------------+------+----------+----------+----------+----------+
| Total current liabilities | | 6,648 | 31,001 | 37,649 | 10,030 |
+-----------------------------------+------+----------+----------+----------+----------+
| Total liabilities | | 7,549 | 37,617 | 45,166 | 26,493 |
+-----------------------------------+------+----------+----------+----------+----------+
| Total equity and liabilities | | 11,511 | 37,369 | 48,880 | 40,398 |
+-----------------------------------+------+----------+----------+----------+----------+
+------------------------------------+------+------------+------------+------------+
| Company balance sheet |
| as at 31 December 2008 |
| |
+---------------------------------------------------------------------+
| | | | 2008 | 2007 |
+------------------------------------+------+------------+------------+------------+
| in thousands of pounds sterling |Note | | Total | Total |
+------------------------------------+------+------------+------------+------------+
| | | | | |
+------------------------------------+------+------------+------------+------------+
| Assets | | | | |
+------------------------------------+------+------------+------------+------------+
| Investment in subsidiaries | 26 | | 3,434 | 10,339 |
+------------------------------------+------+------------+------------+------------+
| Total non-current assets | | | 3,434 | 10,339 |
+------------------------------------+------+------------+------------+------------+
| Trade and other receivables | 14 | | 35 | 36 |
+------------------------------------+------+------------+------------+------------+
| Amount due from subsidiaries | 25 | | 5,775 | 15,575 |
+------------------------------------+------+------------+------------+------------+
| Cash and cash equivalents | 15 | | 161 | 22 |
+------------------------------------+------+------------+------------+------------+
| Total current assets | | | 5,971 | 15,633 |
+------------------------------------+------+------------+------------+------------+
| Total assets | | | 9,405 | 25,972 |
+------------------------------------+------+------------+------------+------------+
| | | | | |
+------------------------------------+------+------------+------------+------------+
| Equity | | | | |
+------------------------------------+------+------------+------------+------------+
| Share capital | 16 | | 854 | 530 |
+------------------------------------+------+------------+------------+------------+
| Share premium | 16 | | 43,625 | 28,352 |
+------------------------------------+------+------------+------------+------------+
| Accumulated loss | 16 | | (40,560) | (5,775) |
+------------------------------------+------+------------+------------+------------+
| Total equity attributable to | | | 3,919 | 23,107 |
| equity holders of the parent | | | | |
+------------------------------------+------+------------+------------+------------+
| Total equity | | | 3,919 | 23,107 |
+------------------------------------+------+------------+------------+------------+
| | | | | |
+------------------------------------+------+------------+------------+------------+
| Liabilities | | | | |
+------------------------------------+------+------------+------------+------------+
| Provisions | 21 | | 78 | 38 |
+------------------------------------+------+------------+------------+------------+
| Total non-current liabilities | | | 78 | 38 |
+------------------------------------+------+------------+------------+------------+
| | | | | |
+------------------------------------+------+------------+------------+------------+
| Loans and other borrowings | 18 | | 4,995 | - |
+------------------------------------+------+------------+------------+------------+
| Amount due to subsidiaries | 25 | | - | 1,763 |
+------------------------------------+------+------------+------------+------------+
| Trade and other payables | 22 | | 413 | 1,064 |
+------------------------------------+------+------------+------------+------------+
| Total current liabilities | | | 5,408 | 2,827 |
+------------------------------------+------+------------+------------+------------+
| Total liabilities | | | 5,486 | 2,865 |
+------------------------------------+------+------------+------------+------------+
| Total equity and liabilities | | | 9,405 | 25,972 |
+------------------------------------+------+------------+------------+------------+
Statement of cash flows
for the year ended 31 December 2008
+-----------------------------------+------+------------+------------+----------+---------+
| | | Group | Company |
+-----------------------------------+------+-------------------------+--------------------+
| | | 2008 | 2007 | 2008 | 2007 |
+-----------------------------------+------+------------+------------+----------+---------+
| in thousands of pounds sterling |Note | Total | Total | Total | Total |
+-----------------------------------+------+------------+------------+----------+---------+
| | | | | | |
+-----------------------------------+------+------------+------------+----------+---------+
| Cash flows from operating | | | | | |
| activities | | | | | |
+-----------------------------------+------+------------+------------+----------+---------+
| Loss before tax | | (26,983) | (14,775) | (35,541) | (6,924) |
+-----------------------------------+------+------------+------------+----------+---------+
| Adjusted for: | | | | | |
+-----------------------------------+------+------------+------------+----------+---------+
| Financial income | | (5,785) | (306) | (97) | (10) |
+-----------------------------------+------+------------+------------+----------+---------+
| Financial expense (including | | 2,270 | 4,495 | 174 | 1 |
| gold sale | | | | | |
+-----------------------------------+------+------------+------------+----------+---------+
| agreement) | | | | | |
+-----------------------------------+------+------------+------------+----------+---------+
| Share-based payments | | 756 | 2,192 | 756 | 2,192 |
+-----------------------------------+------+------------+------------+----------+---------+
| Depreciation | | 2,084 | 1,263 | - | - |
+-----------------------------------+------+------------+------------+----------+---------+
| Loss on disposal of property, | | - | 17 | - | - |
| plant and | | | | | |
+-----------------------------------+------+------------+------------+----------+---------+
| Equipment | | | | | |
+-----------------------------------+------+------------+------------+----------+---------+
| Impairment loss on exploration | | | 300 | - | - |
| assets | | | | | |
+-----------------------------------+------+------------+------------+----------+---------+
| Impairment of Ghana assets | | 14,620 | - | - | - |
+-----------------------------------+------+------------+------------+----------+---------+
| Impairment of exploration | | | - | 36,207 | |
| assets and property, plant | | | | | |
| and equipment | | | | | |
+-----------------------------------+------+------------+------------+----------+---------+
| Decrease/(increase) in | | (529) | 39 | - | - |
| inventories | | | | | |
+-----------------------------------+------+------------+------------+----------+---------+
| Decrease/(increase) in trade and | | (1,991) | 1,781 | 1 | 299 |
| other | | | | | |
+-----------------------------------+------+------------+------------+----------+---------+
| Receivables | | | | | |
+-----------------------------------+------+------------+------------+----------+---------+
| (Decrease)/increase in trade and | | 3,971 | 4,326 | (611) | 2,750 |
| other | | | | | |
+-----------------------------------+------+------------+------------+----------+---------+
| payables and provisions | | | | | |
+-----------------------------------+------+------------+------------+----------+---------+
| Net cash from operating | | (11,587) | (668) | 889 | (1,692) |
| activities | | | | | |
+-----------------------------------+------+------------+------------+----------+---------+
| Cash flows from investing | | | | | |
| activities | | | | | |
+-----------------------------------+------+------------+------------+----------+---------+
| Interest received | | 112 | 29 | 97 | 10 |
+-----------------------------------+------+------------+------------+----------+---------+
| Interest expense | | (192) | (245) | (174) | (1) |
+-----------------------------------+------+------------+------------+----------+---------+
| Acquisition of business net of | | - | (2,330) | - | - |
| cash | | | | | |
+-----------------------------------+------+------------+------------+----------+---------+
| Acquisition of exploration | | (1,360) | (1,657) | - | - |
| assets | | | | | |
+-----------------------------------+------+------------+------------+----------+---------+
| Acquisition of property, plant | | (4,901) | (10,806) | - | - |
| and equipment | | | | | |
+-----------------------------------+------+------------+------------+----------+---------+
| Investment in subsidiaries | | | | (21,265) | (3,536) |
+-----------------------------------+------+------------+------------+----------+---------+
| Net cash from investing | | (6,341) | (15,009) | (21,342) | (3,527) |
| activities | | | | | |
+-----------------------------------+------+------------+------------+----------+---------+
| Cash flows from financing | | | | | |
| activities | | | | | |
+-----------------------------------+------+------------+------------+----------+---------+
| Proceeds from the issue of | | 15,597 | 932 | 15,597 | 2,034 |
| share capital | | | | | |
+-----------------------------------+------+------------+------------+----------+---------+
| Loan and borrowing received | | 3,593 | 12,517 | 4,995 | - |
+-----------------------------------+------+------------+------------+----------+---------+
| Repayment of loans | | (1,946) | - | - | - |
+-----------------------------------+------+------------+------------+----------+---------+
| Net cash from financing | | 17,244 | 13,449 | 20,592 | 2,034 |
| activities | | | | | |
+-----------------------------------+------+------------+------------+----------+---------+
| Net increase in cash and cash | | (684) | (2,228) | 139 | (3,185) |
| equivalents | | | | | |
+-----------------------------------+------+------------+------------+----------+---------+
| Cash and cash equivalents at 1 | | 2,821 | 5,076 | 22 | 3,207 |
| January | | | | | |
+-----------------------------------+------+------------+------------+----------+---------+
| Cash acquired (restricted) | | - | - | - | - |
+-----------------------------------+------+------------+------------+----------+---------+
| Effect of exchange rate | | 707 | (27) | - | - |
| fluctuations on cash held | | | | | |
+-----------------------------------+------+------------+------------+----------+---------+
| Cash and cash equivalents at 31 | 15 | 2,844 | 2,821 | 161 | 22 |
| December | | | | | |
+-----------------------------------+------+------------+------------+----------+---------+
| Restricted cash included in cash | | 2,978 | 2,332 | - | - |
| and cash equivalents at 31 | | | | | |
| December | | | | | |
+-----------------------------------+------+------------+------------+----------+---------+
Notes to the financial statements
1. Significant accounting policies
(a)Going concern basis
The financial statements have been prepared on the going concern basis,
notwithstanding the loss in the year to 31 December 2008 of GBP26.4 million and
the group's net current liabilities of GBP20.1 million (2007: GBP3.7 million),
which the directors believe to be appropriate for the following reasons.
The directors have taken the following actions to secure funding for
the operations of the Group while they seek new financial and other arrangements
to take forward the development of the Zimbabwean assets:
* In January 2009 the group raised GBP5.4 million (net of fees) which was used in
part to repay the outstanding liability to Investec Bank.
* The repayment of the GBP2.5m of convertible loan notes has been deferred by the
company's major shareholders until April 2011.
* Additional convertible loan notes, also repayable in Aril 2011, have been raised
in the sum of GBP0.8 million.
* CAG is in the process of finalising the disposal of its Mali assets. This is
subject inter alia to approval by shareholders. In addition, the purchaser is in
the process of raising finance to cover the main instalment of the sale price in
March 2010 and a final instalment in May 2011 which is also contingent on
reserves determination.
* The company now has no significant debt repayment obligations before April 2011.
The company has uncommitted facilities for a further $1.25m (GBP0.8m)which will
be drawn on in the form of convertible and other loan notes and that would be
repayable in April 2011.
* Operating costs have been minimized to the extent possible.
Based on this and on the director's detailed review of current operations for
the foreseeable future, the Directors are of the view that cash resources at the
date of reporting and funding arrangements agreed are sufficient to maintain the
corporate overhead structure as well as to make limited investment in Zimbabwe
for the foreseeable future.
The company's future viability is dependent upon the enhancement of value of the
Zimbabwean assets. It is the director's view that the group has sufficient funds
to keep the Zimbabwean mines operating at current low levels while they seek
financial and other arrangements to take forward the development of the
Zimbabwean assets onto a commercial and profitable production scale basis. The
new arrangements may be through a joint arrangement, through new equity invested
in the company or through exchanging some or all of the Zimbabwean assets for an
equity stake in any acquiring company. The convertible loan notes due in April
2011 would also need to be repaid or converted as part of the new arrangements.
Although discussions with interested parties have begun, there can be no
certainty that a suitable arrangement will be effected.
There are also uncertainties surrounding the completion of the sale of the Mali
assets as, as explained above, this is subject to approval by shareholders,
availability of purchaser finance and the contingent instalment.
Should the disposal of the Mali assets not proceed as planned, the directors
will have to seek an alternative purchaser. Based on the level of interest
displayed in the company's Mali assets, the directors have no reason to believe
that this will not be possible.
These factors indicate the existence of a material uncertainly which may cast
significant doubt on the Group and Company's ability to continue as a going
concern. The Group and Company may therefore be unable to continue realising its
assets and discharging its liabilities in the normal course of business. The
financial statements do not include any adjustments that might result were the
basis of preparation inappropriate.
(b)Basis of preparation
Central African Gold Plc ("the Company") is a company domiciled and incorporated
in the United Kingdom. The consolidated financial statements of the Company for
the year ended 31 December 2008 comprise the company and its subsidiaries
(together referred to as the "group").
Both the parent company financial statements and the group financial statements
have been prepared and approved by the directors in accordance with
International Financial Reporting Standards as adopted by the EU ("Adopted
IFRSs"). On publishing the parent company financial statements here together
with the Group financial statements, the Company is taking advantage of the
exemption in Section 230 of the Companies Act 1985 not to present its individual
income statement and related notes that form a part of these approved financial
statements.
The financial statements are presented in pounds sterling, rounded to the
nearest thousand, which is the functional currency of the company and the
presentation currency for the group. The functional currency for the
subsidiaries is primarily the US dollar.
The preparation of financial statements in conformity with adopted IFRS requires
management to make judgements, estimates and assumptions that affect the
application of policies and reported amounts of assets and liabilities, income
and expenses. The estimates and associated assumptions are based on historical
experience and various other factors that are believed to be reasonable under
the circumstances, the results of which form the basis of making the judgements
about carrying values of assets and liabilities that are not readily apparent
from other sources. Actual results may differ from these estimates. The
accounting policies have been applied consistently by group entities.
The estimates and underlying assumptions are reviewed on an ongoing basis.
Revisions to accounting estimates are recognised in the period in which the
estimate is revised if the revision affects only that period, or in the period
of the revision and future periods if the revision affects both current and
future periods.
(c)Statement of compliance
The accounting policies set out below have been applied consistently to all
periods presented in these consolidated financial statements.
Judgements made by the directors, in the application of these accounting
policies that have significant effect on the financial statements and estimates
with a significant risk of material adjustment in the next year are discussed
below.
Measurement convention
The financial statements are prepared on the historical cost basis except that
the following assets and liabilities are stated at their fair value.
Non-current assets and disposal groups held for sale are stated at the lower of
previous carrying amount and fair value less costs to sell. Other financial
liabilities are initially recognised at fair value at the date the contract is
entered into, with the corresponding fair value adjustment being recognised
through the income statement. Subsequent remeasurement to fair value is
performed at each balance sheet date with the any further adjustments being
recognised through the income statement.
(d)Significant accounting and estimates
i.Impairment of Central African Gold Ghana Limited
As part of the annual impairment review of asset carrying values a charge of
GBP14.5 million was recorded in relation to Central African Gold Ghana Limited's
Bibiani mine. The group carried out an impairment review of the related cash
generating unit. The review determined that the commercial viability of the mine
has decreased significantly. As a result an impairment charge was charged to the
income statement.
ii.Reserves and resources
Reserves and resources are determined by Competent Persons. The principal
reserves and resources held by the Group at the time of signing the Annual
Report are contained on page 8 of the Annual Report and were last assessed
during 2008. The determination of reserves and resources requires a wide variety
of assessments regarding the geology of the ore body, mining plans and economic
viability which are all subject to inherent uncertainties.
iii.Rehabilitation provisions
The nature of the mining operations of the Group gives rise to environmental
obligations which are reflected in the rehabilitation provision. The level of
provision needs to reflect the present value of the future remediation costs.
Estimating the future remediation costs involves significant judgements
including for example the local geography and geology, whether contamination has
occurred and, if so the nature of the contaminants involved and the remediation
approach to be taken and the likely costs to be incurred. In addition, the
outflows in respect of rehabilitation are generally far into the future.
Judgment is therefore also involved in estimating the timing of the cash flow
and in the discounting factors to determine the present value. In particular,
because of the recent economic history of
(e) Basis of consolidation
(i)Subsidiaries
Subsidiaries are entities controlled by the Company. Control exists when the
Company has the power, directly or indirectly, to govern the financial and
operating policies of an entity so as to obtain benefits from its activities.
In assessing control, potential voting rights that presently are exercisable or
convertible are taken into account. The financial statements of subsidiaries
are included in the consolidated financial statements from the date that control
commences until the date that control ceases.
CAG Ghana
Following the resignation of the chief executive on November 12, the Company's
senior management withdrew from the Ghanaian operations placing control of the
operations in the hands of the local management. The Company initiated
discussions with its major shareholders as well as with Investec Bank Limited,
who provided the project finance facility. Pending the recapitalisation of the
company and consequently the group, the flow of economic benefits from CAG Ghana
was effectively controlled by Investec Bank through the Debt Service Reserve
Account. Despite legal ownership of CAG Ghana vesting in the company at year
end, the Company has determined that with effect from 30 November 2008, CAG
Ghana ceased to meet the definition of a subsidiary.
In formulating the group's consolidated position, the management accounts as at
30 November 2008, adjusted for certain items, were used as the basis for
consolidating the CAG Ghana results of operations and financial position.
On 14 January 2009, the company received a notification from Investec Bank
stating that it had invoked the power of attorney created over the 90,000 shares
in CAG Ghana held by the Company and that Investec Bank was the legal owner of
CAG Ghana.
(ii)Transactions eliminated on consolidation
Intragroup balances and any unrealised gains and losses or income and expenses
arising from intragroup transactions, are eliminated in preparing the
consolidated financial statements.
(iii) Acquisitions
The results of business acquired in the year are consolidated from the effective
date of acquisition. The net assets and contingent liabilities acquired are
incorporated in the consolidated financial statements at their fair values at
the date of acquisition. Any excess of fair value of net assets above
consideration is recognised in the income statement.
(f) Foreign currency
(i) Foreign currency transactions
Transactions in foreign currencies are translated at the foreign exchange rate
ruling at the date of the transaction. Monetary assets and liabilities
denominated in foreign currencies at the balance sheet date are translated to
pounds sterling at the foreign exchange rate ruling at that date. Foreign
exchange differences arising on translation are recognised in the income
statement. Non-monetary assets and liabilities that are measured in terms of
historical cost in a foreign currency are translated using the exchange rate at
the date of the transaction. Non-monetary assets and liabilities denominated in
foreign currencies that are stated at fair value are translated to pounds
sterling at foreign exchange rates ruling at the dates the fair value was
determined.
(ii) Financial statements of foreign operations
The assets and liabilities of foreign operations, including goodwill and fair
value adjustments arising on consolidation, are translated to pounds sterling,
the group's reporting currency, at foreign exchange rates ruling at the balance
sheet date. The revenues and expenses of foreign operations, excluding foreign
operations in hyperinflationary economies, are translated to pounds sterling at
rates approximating to the foreign exchange rates ruling at the dates of the
transactions. Foreign exchange differences arising on retranslation are
recognised directly in a separate component of equity.
(iii) Functional currency of Zimbabwean subsidiaries
The Company's policy is to assess and determine the functional currency of
subsidiaries. The Zimbabwe subsidiaries have been determined to have a US
dollar functional currency. Transactions denominated in Zimbabwean dollars and
other currencies are translated into US dollars at the rate prevailing at the
date of the transaction or the average exchange rate as appropriate. Monetary
assets and liabilities are retranslated into US dollars at the rate prevailing
at the balance sheet date. The resulting exchange differences are recorded in
the income statement.
In 2008 the rate of inflation in Zimbabwe reached extraordinary levels to the
extent that inflation indices were outdated as soon as they became available.
When inflation indices were available, there was a high level of subjectivity
with respect to measurement, resulting in inflation measures that varied
considerably depending on the methods applied and the inputs into the inflation
measurement model.
(iv) Net investment in foreign operations
Exchange differences arising from the translation of the net investment in
foreign operations, and of related hedges are taken to a translation reserve.
They are released into the income statement upon disposal.
(g) Borrowing costs
Borrowing costs directly attributable to the acquisition, construction or
production of qualifying assets, which are assets that necessarily take a
substantial period of time to get ready for their intended use or sale, are
added to the cost of those assets, until such time as the assets are
substantially ready for their intended use or sale provided that future economic
benefit is considered probable.
Investment income earned on the temporary investment of specific borrowings
pending their expenditure on qualifying assets is deducted from the borrowing
costs eligible for capitalisation.
All other borrowing costs are recognised in profit or loss in the period in
which they are incurred.
(h) Goodwill
Goodwill arises on the acquisition of subsidiaries and associates.
Goodwill represents the excess of the cost of the acquisition over the Group's
interest in the net fair value of the identifiable assets, liabilities and
contingent liabilities of the acquiree. When the excess is negative (negative
goodwill), it is recognised immediately in profit or loss.
Goodwill is measured at cost less accumulated impairment losses.
Goodwill is assessed by management for impairment on a yearly basis.
The Company has one cash generating unit to which goodwill has been attached:
Zimbabwe.
(i)Property, plant and equipment
(i)Development costs
Development costs relating to major programmes at a mine are capitalised.
Development costs consist primarily of expenditure to expand the capacity of the
mine. Day-to-day mine development costs to maintain production are expensed as
incurred. Initial development and pre-production costs relating to a new ore
body, including amortisation, depreciation and interest on borrowed funds used
to develop the ore body, are capitalised until commissioning of production
facilities.
The group reviews the carrying amount of mining assets and development costs
when circumstances suggest the carrying amount may not be recoverable.
Recoverability is assessed using estimates of future cash flows on a discounted
basis, including revenues, operating costs and future capital expenditures.
Where necessary a reduction in carrying amount is recorded.
(ii)Property, plant and equipment
Property, plant and equipment are included at cost. Cost includes costs
directly attributable to bringing an asset to working condition for its intended
use. Gains and losses on disposal of property, plant and equipment are
determined by reference to their carrying amount and are taken into account in
determining operating profit. The group reviews the carrying amount of property,
plant and equipment when circumstances suggest that the carrying amount may not
be recoverable. Recoverability is assessed using estimates of future cash flows
on a discounted basis, including revenues, operating costs and restoration
costs. Where necessary a reduction is recorded.
(iii)Depreciation
Depreciation of property, plant and equipment is calculated on a straight line
basis using rates which are designed to write off the assets over their
estimated useful lives as follows:
+----------+-------------------------------------------------+----+---------------------------+
| | * land | | 10 years |
| | and | | |
| | buildings | | |
+----------+-------------------------------------------------+----+---------------------------+
| | * plant | | 3 - 8 years |
| | and | | |
| | equipment | | |
+----------+-------------------------------------------------+----+---------------------------+
| | * fixtures | | 3 years |
| | and | | |
| | fittings | | |
+----------+-------------------------------------------------+----+---------------------------+
| | * mine | | life-of-mine |
| | development | | |
| | and mineral | | |
| | reserves | | |
+----------+-------------------------------------------------+----+---------------------------+
The residual value, if not insignificant, is reassessed annually.
(j) Investments
Investments in subsidiaries are stated in the parent company's accounts at cost
less any provision for impairment.
(k) Exploration and evaluation assets
Expenditure related to acquisition, exploration and development of exploration
properties, net of any recoveries, and including an appropriate allocation of
administration costs are capitalised. If an exploration property is abandoned,
continued exploration is not planned in the foreseeable future or when other
events and circumstances indicate that the carrying amount may not be recovered,
the accumulated costs and expenditures are written-off. Capitalised expenditure
relating to exploration projects represents costs to be charged to operations in
the future and do not necessarily reflect the present or future values of the
particular projects.
(l) Trade and other receivables
Trade and other receivables are stated initially at fair value at acquisition or
at their cost less impairment losses (see accounting policy m).
(m) Inventories
Stores and materials are valued at the lower of cost and net realisable value on
a weighted average cost basis. Obsolete, redundant and slow moving stock is
identified and written down to recoverable amounts / net realisable values.
Gold inventories are valued at the lower of average cost of production or net
realisable value. Stock-pile and in-process inventories are valued at the lower
of moving average cost of production and estimated net realisable value. The
average cost of production is taken as total cost incurred on mining, including
amortisation costs, and is allocated to inventory on a unit of production basis.
(n)Cash and cash equivalents
Cash and cash equivalents comprise cash balances and call deposits. Bank
overdrafts that are repayable on demand and form an integral part of the group's
cash management are included as a component of cash and cash equivalents for the
purpose of the statement of cash flows.
(o) Impairment
The carrying amounts of the group's assets are reviewed at each balance sheet
date to determine whether there is any indication of impairment. If any such
indication exists, the asset's recoverable amount is estimated.
For goodwill, the recoverable amount is estimated at each balance sheet date.
An impairment loss is recognised whenever the carrying amount of an asset or its
cash-generating unit exceeds its recoverable amount. Impairment losses are
recognised in the income statement.
Impairment losses recognised in respect of cash-generating units (group of
units) are allocated first to reduce the carrying amount of any goodwill
allocated to cash-generating units and then, to reduce the carrying amount of
the other assets in the unit (group of units) on a pro rata basis.
(i) Calculation of recoverable amount
The recoverable amount of the group's receivables carried at amortised cost is
calculated as the present value of estimated future cash flows, discounted at
the original effective interest rate (i.e., the effective interest rate computed
at initial recognition of these financial assets). Receivables with a short
duration are not discounted.
The recoverable amount of other assets is the greater of their value in use or
fair value less costs to sell. In assessing value in use, the estimated future
cash flows are discounted to their present value using a pre-tax discount rate
that reflects current market assessments of the time value of money and the
risks specific to the asset. For an asset that does not generate largely
independent cash inflows, the recoverable amount is determined for the
cash-generating unit to which the asset belongs. In assessing fair value less
costs to sell, the directors have sought valuations from independent
specialists, except in their assessment of Ghana where they made a commercial
assessment.
(ii) Reversals of impairment
An impairment loss in respect of a receivable carried at amortised cost is
reversed if the subsequent increase in recoverable amount can be related
objectively to an event occurring after the impairment loss was recognised.
An impairment loss in respect of goodwill is not reversed.
In respect of other assets, an impairment loss is reversed if there has been a
change in the estimates used to determine the recoverable amount.
An impairment loss is reversed only to the extent that the asset's carrying
amount does not exceed the carrying amount that would have been determined, net
of depreciation or amortisation, if no impairment loss had been recognised. In
respect of other assets, an impairment loss is reversed if there has been a
change in the estimates used to determine the recoverable amount.
(p)Share-based payment transactions
The share option programme allows Company and Group employees to acquire shares
of the Company. The fair value of options granted is recognised as an employee
expense with a corresponding increase in equity. The fair value is measured at
grant date and spread over the period during which the employees become
unconditionally entitled to the options. The fair value of the options granted
is measured using a Black Scholes model, taking into account the terms and
conditions upon which the options were granted. The amount recognised as an
expense is adjusted to reflect the actual number of share options that vest
except where forfeiture is only due to share prices not achieving the threshold
for vesting. During the year the Company has applied IFRIC 8: Scope of IFRS2.
This has resulted in the parent company recognising the benefit that it
receives from subsidiary employees receiving share options. This resulted in
the restatement of the 2006 Company balance sheet.
(q)Provisions
A provision is a liability of uncertain amount and/or timing. A provision is
recognised in the balance sheet when the group has a present legal or
constructive obligation as a result of a past event, and it is probable that an
outflow of economic benefits will be required to settle the obligation. If the
effect is material, provisions are determined by discounting the expected future
cash flows at a pre-tax rate that reflects current market assessments of the
time value of money and, where appropriate, the risks specific to the liability.
(i)Environmental rehabilitation recognition
Long-term environmental obligations are based on the group's environmental
management plans, in compliance with current environmental and regulatory
requirements in the jurisdiction in which the group operates. Full provision is
made based on the estimated cost of restoring the environmental disturbance that
has occurred up to the balance sheet date with a corresponding increase in the
related property, plant and equipment. Increases due to additional
environmental disturbances are capitalised and amortised over the life of the
mine.
Annual increases in the provision relating to the change in the provision and
inflationary increases are shown separately in the income statement, except
where the related mine is under development and has not yet reached commercial
levels of production, in which case such adjustment is charged or credited to
the balance sheet carrying value of mining assets.
The estimated costs of rehabilitation is reviewed annually and adjusted as
appropriate for changes in legislation or technology.
Annual contributions are made to fund the estimated cost of rehabilitation
during and at the end of the life of the mine. The funds contributed are
included under cash and cash equivalents and shown as restricted cash.
(r)Trade and other payables
Trade and other payables are stated at cost.
(s)Revenue
Revenue from the sale of precious metal is recognised in the income statement
when the significant risks and rewards of ownership have been transferred to the
buyer.
(t)Income tax
Income tax on the profit or loss for the year comprises current and deferred
tax. Income tax is recognised in the income statement except to the extent that
it relates to items recognised directly in equity, in which case it is
recognised in equity.
Current tax is the expected tax payable on the taxable income for the year,
using tax rates enacted or substantively enacted at the balance sheet date, and
any adjustment to tax payable in respect of previous years.
Additional income taxes that arise from the distribution of dividends are
recognised at the same time as the liability to pay the related dividend.
(i)Deferred tax
Deferred tax is provided using the balance sheet liability method, providing for
temporary differences between the carrying amounts of assets and liabilities for
financial reporting purposes and the amounts used for taxation purposes. The
following temporary differences are not provided for: goodwill not deductible
for tax purposes, the initial recognition of assets or liabilities that affect
neither accounting nor taxable profit, and differences relating to investments
in subsidiaries to the extent that they will probably not reverse in the
foreseeable future. The amount of deferred tax provided is based on the
expected manner of realisation or settlement of the carrying amount of assets
and liabilities, using tax rates enacted or substantively enacted at the balance
sheet date.
A deferred tax asset is recognised only to the extent that it is probable that
future taxable profits will be available against which the asset can be
utilised. Deferred tax assets are reduced to the extent that it is no longer
probable that the related tax benefit will be realised.
(u)Financial instruments
Financial assets and liabilities are recognised on the group's balance sheet
when the group becomes a party to the contractual provisions of the instrument.
(i)Loans and borrowings
Financial liabilities are initially measured at fair value, and are subsequently
measured at amortised cost, using the effective interest method.
(ii)Measurement
Financial assets are initially measured at fair value plus, in the case of
financial assets and liabilities not at fair value through the income statement,
transaction costs that are directly attributable to acquisition or issue of the
financial asset or liability. Subsequent to initial recognition, these
instruments are measured as set out in the relevant accounting policy previously
described.
(iii)Offset
Where a legally enforceable right of offset exists for recognised financial
assets and financial liabilities, and there is an intention to settle the
liability and realise the asset simultaneously or to settle on a net basis, all
related financial effects are offset.
Where the group retains substantially all the risks and benefits of ownership of
the financial asset, the group continues to recognise the financial asset.
(iv)Derivative financial instruments
Derivative financial instruments are measure at fair value through the income
statement.
(v)Comparative results
Comparative results have been regrouped and restated where necessary.
(w)Segment reporting
A segment is a distinguishable component of the group that is engaged either in
providing products or services (business segment), or in providing products or
services within a particular economic environment (geographical segment), which
is subject to risks and rewards that are different from those of other segments.
(x)New standards, amendments and interpretations
A number of new standards, amendments to standards and interpretations are not
yet effective for the year ended 31 December 2008, and have not been applied in
preparing these consolidated financial statements. The new standards that
management believes will not have a significant effect on the financial
statements of the group.
+-----------------------------------+----------------------+----------------------+
| Title | Type | Effective date |
+-----------------------------------+----------------------+----------------------+
| IAS 1 - Presentation of Financial | Standard | Financial year |
| Statements | | commencing on or |
| | | after 1 January 2009 |
+-----------------------------------+----------------------+----------------------+
| IAS 23 - Borrowing Costs | Amendment to | Financial year |
| (revised) | existing standard | commencing on or |
| | | after 1 January 2009 |
+-----------------------------------+----------------------+----------------------+
| IFRS 8 - Operating Segments | Standard | Financial year |
| | | commencing on or |
| | | after 1 January 2009 |
+-----------------------------------+----------------------+----------------------+
| IFRIC 11 - IFRS 2 Group and | IFRIC interpretation | Financial year |
| Treasury Share Transactions | | commencing on or |
| | | after 1 March 2007 |
+-----------------------------------+----------------------+----------------------+
2.Segment reporting
Segment information is presented in respect of the group's geographical
segments. Inter-segment pricing is determined on an arm's length basis.
Segment results, assets and liabilities include items directly attributable to a
segment as well as those that can be allocated on a reasonable basis.
Unallocated items comprise mainly income-earning assets and revenue,
interest-bearing loans, borrowings and expenses, and corporate assets and
expenses.
Segment capital expenditure is the total cost incurred during the period to
acquire segment assets that are expected to be used for more than one period.
Geographical segments
The operating and exploration segments are managed on a worldwide basis, through
corporate offices in the United Kingdom and South Africa, but operate in four
principal geographical areas of Ghana, Mali, Botswana and Zimbabwe. In
presenting information on the basis of geographical segments, segment profit is
based on the geographical location of operations and customers. Segment assets
are based on the geographical location of the assets.
+--------------+----------+----------+-------+---------+------+-------+---------+-------+---------+---------+----------+----------+
| | Ghana | Mali | Botswana | Zimbabwe | Corporate | Group |
+--------------+---------------------+-----------------+--------------+-----------------+-------------------+---------------------+
| In | 2008 | 2007 | 2008 | 2007 | 2008 | 2007 | 2008 | 2007 | 2008 | 2007 | 2008 | 2007 |
| thousands | | | | | | | | | | | | |
| of pounds | | | | | | | | | | | | |
| sterling | | | | | | | | | | | | |
+--------------+----------+----------+-------+---------+------+-------+---------+-------+---------+---------+----------+----------+
| Revenue | 13,490 | 8,362 | - | - | - | - | 611 | 2,603 | - | - | 14,101 | 10,965 |
+--------------+----------+----------+-------+---------+------+-------+---------+-------+---------+---------+----------+----------+
| Loss | (26,541) | (6,427) | 749 | (31) | -- | (33) | (683) | (471) | (508) | (7,813) | (26,983) | (14,775) |
| before | | | | | | | | | | | | |
| tax | | | | | | | | | | | | |
+--------------+----------+----------+-------+---------+------+-------+---------+-------+---------+---------+----------+----------+
| Income | 471 | 48 | - | - | - | - | (22) | (10) | - | - | 449 | 38 |
| tax | | | | | | | | | | | | |
| expense | | | | | | | | | | | | |
+--------------+----------+----------+-------+---------+------+-------+---------+-------+---------+---------+----------+----------+
| Loss | (26,070) | (6,379) | 749 | (31) | - | (33) | (705) | (481) | (508)) | (7,813) | (26,534) | (14,737) |
| for the | | | | | | | | | | | | |
| year | | | | | | | | | | | | |
+--------------+----------+----------+-------+---------+------+-------+---------+-------+---------+---------+----------+----------+
| | | | | | | | | | | | | |
+--------------+----------+----------+-------+---------+------+-------+---------+-------+---------+---------+----------+----------+
| Segment | 37,369 | 35,641 | 4,715 | 2,888 | - | - | 6,268 | 346 | 528 | 1,523 | 48,880 | 40,398 |
| assets | | | | | | | | | | | | |
+--------------+----------+----------+-------+---------+------+-------+---------+-------+---------+---------+----------+----------+
| Segment | (37,617) | (20,123) | (61) | (3,179) | (8) | (160) | (1,464) | (733) | (6,016) | (2,424) | (45,106) | (26,493) |
| liabilities | | | | | | | | | | | | |
+--------------+----------+----------+-------+---------+------+-------+---------+-------+---------+---------+----------+----------+
| Total | (248) | 15,518 | 4,654 | (291) | (8) | (160) | 4,804 | (387) | (5,488) | (775) | 3,714 | 13,905 |
| net | | | | | | | | | | | | |
| assets | | | | | | | | | | | | |
+--------------+----------+----------+-------+---------+------+-------+---------+-------+---------+---------+----------+----------+
| | | | | | | | | | | | | |
+--------------+----------+----------+-------+---------+------+-------+---------+-------+---------+---------+----------+----------+
| Additions | 4,608 | 10,547 | 1,377 | 1,814 | - | - | 1 | 117 | 25 | 312 | 6,011 | 12,790 |
| to | | | | | | | | | | | | |
| non-current | | | | | | | | | | | | |
| assets | | | | | | | | | | | | |
+--------------+----------+----------+-------+---------+------+-------+---------+-------+---------+---------+----------+----------+
| Depreciation | 1,895 | 1,086 | 53 | 34 | - | - | - | 20 | 136 | 123 | 2,084 | 1,263 |
+--------------+----------+----------+-------+---------+------+-------+---------+-------+---------+---------+----------+----------+
| Impairment | 14,450 | - | - | - | - | 300 | - | - | 170 | - | 14,620 | 300 |
+--------------+----------+----------+-------+---------+------+-------+---------+-------+---------+---------+----------+----------+
Revenue is in respect of gold bullion sales
+---------------------------------+-----------+-----------+-----------+-----------+
| | | | Group |
+---------------------------------+-----------+-----------+-----------------------+
| in thousands of pounds sterling | | | 2008 | 2007 |
+---------------------------------+-----------+-----------+-----------+-----------+
| 3. Financial income | | | | |
+---------------------------------+-----------+-----------+-----------+-----------+
| Interest income | | | 112 | 29 |
+---------------------------------+-----------+-----------+-----------+-----------+
| Foreign exchange gain | | | 5,673 | 277 |
+---------------------------------+-----------+-----------+-----------+-----------+
| Financial income | | | 5,785 | 306 |
+---------------------------------+-----------+-----------+-----------+-----------+
| | | | | |
+---------------------------------+-----------+-----------+-----------+-----------+
| 4. Financial expenses | | | | |
+---------------------------------+-----------+-----------+-----------+-----------+
| Interest expense | | | 192 | 245 |
+---------------------------------+-----------+-----------+-----------+-----------+
| Unwinding of interest on rehabilitation provision (note | - | 68 |
| 21) | | |
+---------------------------------------------------------+-----------+-----------+
| Foreign exchange loss | | | 2,080 | 349 |
+---------------------------------+-----------+-----------+-----------+-----------+
| Other financial expenses | | | 2,272 | 662 |
+---------------------------------+-----------+-----------+-----------+-----------+
| Gold sale agreement fair valuation (note | | (2) | 3,833 |
| 19) | | | |
+---------------------------------------------+-----------+-----------+-----------+
| Financial expenses | | | 2,270 | 4,495 |
+---------------------------------+-----------+-----------+-----------+-----------+
| | | | | |
+---------------------------------+-----------+-----------+-----------+-----------+
| 5. Taxation | | | | |
+---------------------------------+-----------+-----------+-----------+-----------+
| Recognised in the income | | | | |
| statement | | | | |
+---------------------------------+-----------+-----------+-----------+-----------+
| Current tax | | | | |
+---------------------------------+-----------+-----------+-----------+-----------+
| Current year | | | 22 | 4 |
+---------------------------------+-----------+-----------+-----------+-----------+
| Total current tax | | | 22 | 4 |
+---------------------------------+-----------+-----------+-----------+-----------+
| Deferred tax | | | | |
+---------------------------------+-----------+-----------+-----------+-----------+
| Current year | | | (471) | (42) |
+---------------------------------+-----------+-----------+-----------+-----------+
| Total deferred tax (credit) / | | | (471) | (42) |
| charge | | | | |
+---------------------------------+-----------+-----------+-----------+-----------+
| Total income tax in income | | | (449) | (38) |
| statement | | | | |
+---------------------------------+-----------+-----------+-----------+-----------+
| Reconciliation of effective tax | | | | |
| rate | | | | |
+---------------------------------+-----------+-----------+-----------+-----------+
| Loss before tax | | | (26,813) | (14,775) |
+---------------------------------+-----------+-----------+-----------+-----------+
| Income tax credit using the domestic corporation tax | (5,362) | (2,995) |
| rate of 20% (2007: 20%) | | |
+---------------------------------------------------------+-----------+-----------+
| Unrecognised deferred tax | | | 4,913 | 2,917 |
| assets | | | | |
+---------------------------------+-----------+-----------+-----------+-----------+
| Current year tax (credit) / | | | (449) | (38) |
| charge | | | | |
+---------------------------------+-----------+-----------+-----------+-----------+
| | | | | |
+---------------------------------+-----------+-----------+-----------+-----------+
+---------------------------------+-----------+-----------+-----------+-----------+
| | | Group |
+---------------------------------+-----------------------+-----------------------+
| in thousands of pounds sterling | | | 2008 | 2007 |
+---------------------------------+-----------+-----------+-----------+-----------+
| 6. Expenses and auditors remuneration | | |
+---------------------------------------------------------+-----------+-----------+
| Included in the loss before tax are the | | | |
| following: | | | |
+---------------------------------------------+-----------+-----------+-----------+
| Depreciation of property, plant and | | 2,084 | 1,263 |
| equipment (note 11) | | | |
+---------------------------------------------+-----------+-----------+-----------+
| Loss on disposal of property, plant and equipment | - | 17 |
+---------------------------------------------------------+-----------+-----------+
| Impairment loss on current assets | | 6,450 | - |
+---------------------------------------------+-----------+-----------+-----------+
| Impairment loss on exploration assets (note | | 170 | 300 |
| 12) | | | |
+---------------------------------------------+-----------+-----------+-----------+
| Impairment loss on property, | | | 8,000 | - |
| plant and equipment (note 11) | | | | |
+---------------------------------+-----------+-----------+-----------+-----------+
| Impairment loss on inventory | | | 3,804 | - |
+---------------------------------+-----------+-----------+-----------+-----------+
| Impairment loss of trade | | | 2,646 | - |
| receivables | | | | |
+---------------------------------+-----------+-----------+-----------+-----------+
| Audit fees - Audit of these financial | | 133 | 119 |
| statements | | | |
+---------------------------------------------+-----------+-----------+-----------+
| - Audit of the financial statements of | | 56 | 56 |
| subsidiaries | | | |
+---------------------------------------------+-----------+-----------+-----------+
| pursuant to legislation | | | |
+---------------------------------------------+-----------+-----------+-----------+
| |
+---------------------------------------------------------------------------------+
| | Group | Company |
+---------------------------------+-----------------------+-----------------------+
| | 2008 | 2007 | 2008 | 2007 |
+---------------------------------+-----------+-----------+-----------+-----------+
| 7. Staff expenses | | | | |
+---------------------------------+-----------+-----------+-----------+-----------+
| The average number of persons | | | | |
| employed by the group | | | | |
| (including directors) during | | | | |
| the year, analysed by category, | | | | |
| was as follows: | | | | |
+---------------------------------+-----------+-----------+-----------+-----------+
| Number of employees | | | | |
+---------------------------------+-----------+-----------+-----------+-----------+
| Senior employees | 19 | 16 | 9 | 6 |
+---------------------------------+-----------+-----------+-----------+-----------+
| Other employees | 1,207 | 1,708 | 3 | 3 |
+---------------------------------+-----------+-----------+-----------+-----------+
| | | | | |
+---------------------------------+-----------+-----------+-----------+-----------+
| The aggregate payroll costs | | | | |
| were as follows: | | | | |
+---------------------------------+-----------+-----------+-----------+-----------+
| Wages and salaries | 6,699 | 4,922 | 1,256 | 1,878 |
+---------------------------------+-----------+-----------+-----------+-----------+
| Share-based payments (See note | 756 | 2,192 | 756 | 2,192 |
| 9) | | | | |
+---------------------------------+-----------+-----------+-----------+-----------+
+---------------------------------+-----------+-----------+-----------+-----------+
| in thousands of pounds sterling | | | 2008 | 2007 |
+---------------------------------+-----------+-----------+-----------+-----------+
| 8. Directors' emoluments | | | | |
+---------------------------------+-----------+-----------+-----------+-----------+
| GD Hunter - Remuneration and | | | 324 | 300 |
| bonus1 | | | | |
+---------------------------------+-----------+-----------+-----------+-----------+
| MW Rosslee - Remuneration and | | | - | 144 |
| bonus | | | | |
+---------------------------------+-----------+-----------+-----------+-----------+
| CMW Prentice - remuneration | | | 75 | 22 |
+---------------------------------+-----------+-----------+-----------+-----------+
| CI Campbell - remuneration2 | | | 4 | - |
+---------------------------------+-----------+-----------+-----------+-----------+
| RP Lander - fees | | | 32 | - |
+---------------------------------+-----------+-----------+-----------+-----------+
| N Burney - fees | | | - | - |
+---------------------------------+-----------+-----------+-----------+-----------+
| T Gibian - fees | | | - | - |
+---------------------------------+-----------+-----------+-----------+-----------+
| D Glennie - fees3 | | | 64 | - |
+---------------------------------+-----------+-----------+-----------+-----------+
| RA Pitchford - fees | | | 42 | 24 |
+---------------------------------+-----------+-----------+-----------+-----------+
| | | | 541 | 490 |
+---------------------------------+-----------+-----------+-----------+-----------+
1 Includes remuneration to November 2008, accrued leave pay and termination
payment (GBP63,000) which amount had not been paid at year end
2 Pro rata from date of appointment as director
3 Includes amounts billed by Blake Cassels Graydon, of which Mr Glennie is a
partner
9.Employee benefits
The share option schemes of the Group are substantially vested or conditions
have not been met. As a result, the directors do not feel it relevant to provide
detailed information on the schemes.
+--------------------------------------+----------+-----------+-----------+----------+
| | Group | Company |
+--------------------------------------+----------------------+----------------------+
| in thousands of pounds sterling | 2008 | 2007 | 2008 | 2007 |
+--------------------------------------+----------+-----------+-----------+----------+
| 10. Goodwill | | | | |
+--------------------------------------+----------+-----------+-----------+----------+
| Balance at beginning of year | 501 | - | - | - |
+--------------------------------------+----------+-----------+-----------+----------+
| Arising on the acquisition of | - | 501 | - | - |
| subsidiaries (note 27) | | | | |
+--------------------------------------+----------+-----------+-----------+----------+
| Effects of movement in foreign | 190 | - | - | - |
| exchange | | | | |
+--------------------------------------+----------+-----------+-----------+----------+
| Balance at end of year | 691 | 501 | - | - |
+--------------------------------------+----------+-----------+-----------+----------+
In terms of IAS 36: Impairment of assets, group management will reassess
impairment of goodwill on an annual basis or more frequently if there are
indications of it being impaired. The goodwill will be considered on the cash
generating unit of Zimbabwe as a whole using projected cash flows on a life of
the mine basis. Gold price sensitivity will be included in those projections.
Given the current economic situation, in Zimbabwe, the directors have to apply
considerable judgement in assessing the recoverable amount of goodwill and other
assets in Zimbabwe. At this stage, the directors do not believe that there has
been an impairment of the overall asset value.
The goodwill arose out of the business combination during the acquisition of
Falcon Gold Zimbabwe Limited and Olympus Gold Mines Limited in Zimbabwe as a
result of the raising of a deferred tax liability against the fair value uplift
of the property, plant and equipment balance.
+------------------------------+------+----+----------+-----------+----------+-------------+--------+
| 11. Property, plant and equipment |
+-------------------------------------+
| in thousands of pounds | Land | Mineral | Plant |Fixtures | Mine | Total |
| sterling | and |reserves | and | and |development | |
| |buildings | |equipment |fittings | | |
+------------------------------+-----------+----------+-----------+----------+-------------+--------+
| Cost | | | | | | |
+------------------------------+-----------+----------+-----------+----------+-------------+--------+
| Balance at 1 January 2007 | 2,045 | 1,532 | 7,527 | 80 | 7,433 | 18,617 |
+------------------------------+-----------+----------+-----------+----------+-------------+--------+
| Additions | 292 | 5 | 1,713 | 44 | 9,079 | 11,133 |
+------------------------------+-----------+----------+-----------+----------+-------------+--------+
| Acquisitions through | 37 | 3,340 | 152 | - | 10 | 3,539 |
| business combinations | | | | | | |
+------------------------------+-----------+----------+-----------+----------+-------------+--------+
| Disposals | - | - | (7) | (13) | - | (20) |
+------------------------------+-----------+----------+-----------+----------+-------------+--------+
| Effects of movement in | (40) | (30) | (106) | 2 | (146) | (320) |
| foreign exchange | | | | | | |
+------------------------------+-----------+----------+-----------+----------+-------------+--------+
| Balance at 31 December 2007 | 2,334 | 4,847 | 9,279 | 113 | 16,376 | 32,949 |
+------------------------------+-----------+----------+-----------+----------+-------------+--------+
| | | | | | | |
+------------------------------+-----------+----------+-----------+----------+-------------+--------+
| Balance at 1 January 2008 | 2,334 | 4,847 | 9,279 | 113 | 16,376 | 32,949 |
+------------------------------+-----------+----------+-----------+----------+-------------+--------+
| Additions | 76 | - | 4,360 | 2 | 463 | 4,901 |
+------------------------------+-----------+----------+-----------+----------+-------------+--------+
| Disposals | - | - | - | - | (18) | (18) |
+------------------------------+-----------+----------+-----------+----------+-------------+--------+
| Transfers | - | - | - | - | (40) | (40) |
+------------------------------+-----------+----------+-----------+----------+-------------+--------+
| Effects of movement in | 885 | 572 | 4,586 | 11 | 6,210 | 12,264 |
| foreign exchange | | | | | | |
+------------------------------+-----------+----------+-----------+----------+-------------+--------+
| Balance at 31 December 2008 | 3,295 | 5,419 | 18,225 | 126 | 22,991 | 50,056 |
+------------------------------+-----------+----------+-----------+----------+-------------+--------+
| Depreciation | | | | | | |
+------------------------------+-----------+----------+-----------+----------+-------------+--------+
| Balance at 1 January 2007 | 17 | - | 72 | 8 | - | 97 |
+------------------------------+-----------+----------+-----------+----------+-------------+--------+
| Depreciation charge for the | 209 | 193 | 836 | 20 | 5 | 1,263 |
| year | | | | | | |
+------------------------------+-----------+----------+-----------+----------+-------------+--------+
| Accumulated depreciation on | - | - | - | (3) | - | (3) |
| disposal | | | | | | |
+------------------------------+-----------+----------+-----------+----------+-------------+--------+
| Effects of movement in | 1 | - | 8 | 1 | - | 10 |
| foreign exchange | | | | | | |
+------------------------------+-----------+----------+-----------+----------+-------------+--------+
| Balance at 31 December 2007 | 227 | 193 | 916 | 26 | 5 | 1,367 |
+------------------------------+-----------+----------+-----------+----------+-------------+--------+
| | | | | | | |
+------------------------------+-----------+----------+-----------+----------+-------------+--------+
| Balance at 1 January 2008 | 227 | 193 | 916 | 26 | 5 | 1,367 |
+------------------------------+-----------+----------+-----------+----------+-------------+--------+
| Depreciation charge for the | 219 | 189 | 1,533 | 24 | 119 | 2,084 |
| year | | | | | | |
+------------------------------+-----------+----------+-----------+----------+-------------+--------+
| Accumulated depreciation on | - | - | (7) | - | - | (7) |
| disposal | | | | | | |
+------------------------------+-----------+----------+-----------+----------+-------------+--------+
| Impairment | - | - | 2,000 | - | 6,000 | 8,000 |
+------------------------------+-----------+----------+-----------+----------+-------------+--------+
| Effects of movement in | 148 | 2 | 1,011 | 4 | 23 | 1,188 |
| foreign exchange | | | | | | |
+------------------------------+-----------+----------+-----------+----------+-------------+--------+
| Balance at 31 December 2008 | 594 | 384 | 5,453 | 54 | 6,147 | 12,632 |
+------------------------------+-----------+----------+-----------+----------+-------------+--------+
| Net book value | | | | | | |
+------------------------------+-----------+----------+-----------+----------+-------------+--------+
| At 31 December 2007 | 2,107 | 4,654 | 8,363 | 87 | 16,371 | 31,582 |
+------------------------------+-----------+----------+-----------+----------+-------------+--------+
| At 31 December 2008 | 2,701 | 5,035 | 12,772 | 72 | 16,844 | 37,424 |
+------------------------------+------+----+----------+-----------+----------+-------------+--------+
The impairment of the Ghanaian assets has arisen as a result of the poor
operational performance in the year and its forced divestment post year end. The
recoverable amount has been assessed on a fair value less cost to sell basis
which has been determined by reference to the directors' estimates of the
consideration that would be received if sold on the open market.
+--------------------------------+-----------+-----------+-----------+-----------+
| | Group | Company |
+--------------------------------+-----------------------+-----------------------+
| | 2008 | 2007 | 2008 | 2007 |
+--------------------------------+-----------+-----------+-----------+-----------+
| 12. Exploration and evaluation | | | | |
| assets | | | | |
+--------------------------------+-----------+-----------+-----------+-----------+
| in thousands of pounds | | | | |
| sterling | | | | |
+--------------------------------+-----------+-----------+-----------+-----------+
| Cost | | | | |
+--------------------------------+-----------+-----------+-----------+-----------+
| Balance at 1 January | 2,282 | 585 | - | - |
+--------------------------------+-----------+-----------+-----------+-----------+
| Additions | 1,360 | 1,657 | - | - |
+--------------------------------+-----------+-----------+-----------+-----------+
| Effects of movement in foreign | 1,322 | 40 | - | - |
| exchange | | | | |
+--------------------------------+-----------+-----------+-----------+-----------+
| Balance at 31 December | 4,964 | 2,282 | - | - |
+--------------------------------+-----------+-----------+-----------+-----------+
| Amortisation and impairment | | | | |
| losses | | | | |
+--------------------------------+-----------+-----------+-----------+-----------+
| Balance at 1 January | 325 | 25 | - | - |
+--------------------------------+-----------+-----------+-----------+-----------+
| Impairment charge | 170 | 300 | - | - |
+--------------------------------+-----------+-----------+-----------+-----------+
| Effects of movement in foreign | 64 | - | - | - |
| exchange | | | | |
+--------------------------------+-----------+-----------+-----------+-----------+
| Balance at 31 December | 559 | 325 | - | - |
+--------------------------------+-----------+-----------+-----------+-----------+
| | | | | |
+--------------------------------+-----------+-----------+-----------+-----------+
| Carrying value | 4,405 | 1,957 | - | - |
+--------------------------------+-----------+-----------+-----------+-----------+
In Mali, at 31 December 2006 the Company held 43 prospecting titles under Mali
Goldfields SA, and 3 under SonghoÏ Resources SA. These prospecting titles
comprised a combination of Exploration Authorisations ("ADE" - Authorisation
d'exploration) and Prospecting Permits ("PDR" - Permis de Recherche). Further
regional geological studies, ground follow up mapping and soil geochemistry
surveys were completed on all these properties during 2007. Due to a combination
of a lack of geological prospectivity and poor results, 29 of these properties
were deemed unprospective, and were released back to Mali Mineral Holdings,
leaving a total of 18 licences.
The prior year impairment charge is therefore in relation to capital expenditure
incurred on the 29 prospecting licences that were deemed unprospective during
the prior year, that were released back to Mali Mineral Holdings.
+---------------------------------+-----------+-----------+-----------+-----------+
| | Group | Company |
+---------------------------------+-----------------------+-----------------------+
| In thousands of pounds sterling | 2008 | 2007 | 2008 | 2007 |
+---------------------------------+-----------+-----------+-----------+-----------+
| | | | | |
+---------------------------------+-----------+-----------+-----------+-----------+
| 13. Inventories | | | | |
+---------------------------------+-----------+-----------+-----------+-----------+
| Gold | - | 540 | - | - |
+---------------------------------+-----------+-----------+-----------+-----------+
| Consumable stores | 1,003 | 2,417 | - | - |
+---------------------------------+-----------+-----------+-----------+-----------+
| | 1,003 | 2,957 | - | - |
+---------------------------------+-----------+-----------+-----------+-----------+
| | | | | |
+---------------------------------+-----------+-----------+-----------+-----------+
| 14. Trade and other receivables | | | | |
+---------------------------------+-----------+-----------+-----------+-----------+
| Other trade receivables and | 1,452 | 580 | 35 | 36 |
| pre-payments | | | | |
+---------------------------------+-----------+-----------+-----------+-----------+
| | 1,452 | 580 | 35 | 36 |
+---------------------------------+-----------+-----------+-----------+-----------+
| | | | | |
+---------------------------------+-----------+-----------+-----------+-----------+
| 15. Cash and cash equivalents | | | | |
+---------------------------------+-----------+-----------+-----------+-----------+
| Bank balances | 927 | 489 | 161 | 22 |
+---------------------------------+-----------+-----------+-----------+-----------+
| | | | | |
+---------------------------------+-----------+-----------+-----------+-----------+
| Restricted cash | 2,978 | 2,332 | - | - |
+---------------------------------+-----------+-----------+-----------+-----------+
| | 3,905 | 2,821 | 161 | 22 |
+---------------------------------+-----------+-----------+-----------+-----------+
| Bank overdraft | (1,061) | - | - | - |
+---------------------------------+-----------+-----------+-----------+-----------+
| | 2,844 | 2,821 | 161 | 22 |
+---------------------------------+-----------+-----------+-----------+-----------+
The restricted cash balance of GBP2.978 million (2007: GBP2.332 million) is held
in respect of the rehabilitation liability of GBP1.880 million (2007: GBP1.363
million) and a debt covenant with Investec Private Bank of GBP1.098 million
(2007: GBP 0.969 million). This cash is not available for use other than for
these specific purposes.
+----------------------------+---------+---------+--------------+----------+----------+----------+----------+
| 16. Capital and reserves | | | | | | | |
+----------------------------+---------+---------+--------------+----------+----------+----------+----------+
| Reconciliation of movement | | | | | | | |
| in capital and reserves | | | | | | | |
+----------------------------+---------+---------+--------------+----------+----------+----------+----------+
| In thousands of pounds | Share | Share | Foreign |Retained | Total |Minority | Total |
| sterling |capital |premium | currency |earnings | |interest | equity |
| | | |transla-tion | | | | |
| | | | reserves | | | | |
+----------------------------+---------+---------+--------------+----------+----------+----------+----------+
| Group | | | | | | | |
+----------------------------+---------+---------+--------------+----------+----------+----------+----------+
| Balance at 1 January 2007 | 459 | 26,389 | 68 | (2,216) | 24,700 | 39 | 24,739 |
+----------------------------+---------+---------+--------------+----------+----------+----------+----------+
| Acquisition of minority | - | - | - | - | - | (34) | (34) |
| interest relating to | | | | | | | |
| Motako Limited (note 27) | | | | | | | |
+----------------------------+---------+---------+--------------+----------+----------+----------+----------+
| Total recognised expense | - | - | - | (14,732) | (14,732) | (5) |(14,737) |
+----------------------------+---------+---------+--------------+----------+----------+----------+----------+
| Share-based payments | - | - | - | 2,192 | 2,192 | - | 2,192 |
+----------------------------+---------+---------+--------------+----------+----------+----------+----------+
| Translation reserve | - | - | (289) | - | (289) | - | (289) |
+----------------------------+---------+---------+--------------+----------+----------+----------+----------+
| Shares issued | 71 | 1,963 | - | - | 2,034 | - | 2,034 |
+----------------------------+---------+---------+--------------+----------+----------+----------+----------+
| Balance at 31 December | 530 | 28,352 | (221) | (14,756) | 13,905 | - | 13,905 |
| 2007 | | | | | | | |
+----------------------------+---------+---------+--------------+----------+----------+----------+----------+
| Balance at 1 January 2008 | 530 | 28,352 | (221) | (14,756) | 13,905 | - | 13,905 |
+----------------------------+---------+---------+--------------+----------+----------+----------+----------+
| Total recognised expense | - | - | - | (26,684) | (26,684) | 150 |(26,534) |
+----------------------------+---------+---------+--------------+----------+----------+----------+----------+
| Share-based payments | - | - | - | 756 | 756 | - | 756 |
+----------------------------+---------+---------+--------------+----------+----------+----------+----------+
| Shares issued | 324 | 15,273 | - | - | 15,597 | - | 15,597 |
+----------------------------+---------+---------+--------------+----------+----------+----------+----------+
| Translation reserve | - | - | (10) | - | (10) | - | (10) |
+----------------------------+---------+---------+--------------+----------+----------+----------+----------+
| Balance at 31 December | 854 | 43,625 | (231) | (40,684) | 3,564 | 150 | 3,714 |
| 2008 | | | | | | | |
+----------------------------+---------+---------+--------------+----------+----------+----------+----------+
| Company | | | | | | | |
+----------------------------+---------+---------+--------------+----------+----------+----------+----------+
| Balance at 1 January 2007 | 459 | 26,389 | - | (1,043) | 25,805 | - | 25,805 |
+----------------------------+---------+---------+--------------+----------+----------+----------+----------+
| Total recognised expense | - | - | - | (6,924) | (6,924) | - | (6,924) |
+----------------------------+---------+---------+--------------+----------+----------+----------+----------+
| Share-based payments | - | - | - | 2,192 | 2,192 | - | 2,192 |
+----------------------------+---------+---------+--------------+----------+----------+----------+----------+
| Shares issued | 71 | 1,963 | - | - | 2,034 | - | 2,034 |
+----------------------------+---------+---------+--------------+----------+----------+----------+----------+
| Balance at 31 December | 530 | 28,352 | - | (5,775) | 23,107 | - | 23,107 |
| 2007 | | | | | | | |
+----------------------------+---------+---------+--------------+----------+----------+----------+----------+
| Balance at 1 January 2008 | 530 | 28,352 | - | (5,775) | 23,107 | - | 23,107 |
+----------------------------+---------+---------+--------------+----------+----------+----------+----------+
| Total recognised expense | - | - | - | (35,541) | (35,541) | - |(35,541) |
+----------------------------+---------+---------+--------------+----------+----------+----------+----------+
| Share-based payments | - | - | - | 756 | 756 | - | 756 |
+----------------------------+---------+---------+--------------+----------+----------+----------+----------+
| Shares issued | 324 | 15,273 | - | - | 15,597 | - | 15,597 |
+----------------------------+---------+---------+--------------+----------+----------+----------+----------+
| Balance at 31 December | 854 | 43,625 | - | (40,560) | 3,919 | - | 3,919 |
| 2008 | | | | | | | |
+----------------------------+---------+---------+--------------+----------+----------+----------+----------+
+---------------------------------+-----------+-----------+---+-----------+-----------+
| Share capital and share premium | | | 2008 | 2007 |
+---------------------------------+-----------+---------------+-----------+-----------+
| In thousands of pounds sterling | | | | |
+---------------------------------+-----------+---------------+-----------+-----------+
| At 31 December 2008, the authorised share capital comprised | | |
| 200,000,000 ordinary shares of 0.5p (2007: 200,000,000 of | | |
| 0.5p) | | |
+-------------------------------------------------------------+-----------+-----------+
| | | | | |
+---------------------------------+-----------+---------------+-----------+-----------+
| In issue at 1 January 2008: 106,079,962 shares (2007: | 530 | 459 |
| 459,519,495) | | |
+-------------------------------------------------------------+-----------+-----------+
| Issued for acquisition of subsidiary (2007: 9,000,000) | - | 9 |
+-------------------------------------------------------------+-----------+-----------+
| Issued for cash 2008: 64,779,935 (2007: | | 324 | 3 |
| 25,000,000) | | | |
+---------------------------------------------+-----------+---------------+-----------+
| Issued for cash after 5 for 1 consolidation (2007: | - | 59 |
| 11,876,063) | | |
+-------------------------------------------------------------+-----------+-----------+
| In issue at 31 December 2008 : 170,859,897 (2007: | 854 | 530 |
| 106,079,962) | | |
+---------------------------------+-----------+-----------+---+-----------+-----------+
The holders of ordinary shares are entitled to receive dividends as declared
from time to time and are entitled to one vote per share at meetings of the
company. The Company also has quoted warrants in issue, and at 31 December 2008,
12.6 million were still outstanding in issue (31 December 2007: 17.6 million).
The exercise price of the warrants is 1.0 p each with 5 warrants needing to be
exercised per 1 ordinary share, after the 5 for 1 share consolidation that
occurred after 15 June 2007, and the expiry date is 31 March 2011. A warrant is
exercisable by the holder lodging a notice of subscription at the registered
office of the Company accompanied by the remittance for the total subscription
price of the ordinary shares in respect of which the subscription rights are
being exercised. Once lodged, a notice of subscription is irrevocable save with
the consent of the directors.
+-----------+----------+------------+----------+----------+----------+----------+
| In | | Number | Share | Share | Share | |
| thousands | | | | | | |
| of pounds | | | | | | |
| sterling | | | | | | |
+-----------+----------+------------+----------+----------+----------+----------+
| Date of | Notes | of | price | Capital | Premium | Total |
| issue | | shares | | | | |
+-----------+----------+------------+----------+----------+----------+----------+
| 1 March | (i) | 9,000,000 | 12.25p | 9 | 1,093 | 1,102 |
| 2007 | | | | | | |
+-----------+----------+------------+----------+----------+----------+----------+
| 11 April | (ii) | 2,500,000 | 1.00p | 3 | 22 | 25 |
| 2007 | | | | | | |
+-----------+----------+------------+----------+----------+----------+----------+
| 6 August | (iii) | 2,700,054 | 15.77p | 13 | 413 | 426 |
| 2007 | | | | | | |
+-----------+----------+------------+----------+----------+----------+----------+
| 22 | (iv) | 1,175,513 | 5.00p | 6 | 54 | 60 |
| August | | | | | | |
| 2007 | | | | | | |
+-----------+----------+------------+----------+----------+----------+----------+
| 19 | (v) | 8,000,496 | 5.26p | 40 | 381 | 421 |
| November | | | | | | |
| 2007 | | | | | | |
+-----------+----------+------------+----------+----------+----------+----------+
| | | | | 71 | 1,963 | 2,034 |
+-----------+----------+------------+----------+----------+----------+----------+
| 8 | (vi) | 60,000,000 | 26.00p | 300 | 14,566 | 14,866 |
| January | | | | | | |
| 2008 | | | | | | |
+-----------+----------+------------+----------+----------+----------+----------+
| 21 | (vii) | 200,000 | 15.55p | 1 | 30 | 31 |
| January | | | | | | |
| 2008 | | | | | | |
+-----------+----------+------------+----------+----------+----------+----------+
| 21 | (viii) | 250,000 | 18.75p | 1 | 46 | 47 |
| January | | | | | | |
| 2008 | | | | | | |
+-----------+----------+------------+----------+----------+----------+----------+
| 18 March | (ix) | 407,074 | 15.55p | 2 | 61 | 63 |
| 2008 | | | | | | |
+-----------+----------+------------+----------+----------+----------+----------+
| 2 June | (x) | 1,000,000 | 5.00p | 5 | 45 | 50 |
| 2008 | | | | | | |
+-----------+----------+------------+----------+----------+----------+----------+
| 20 June | (xi) | 170,000 | 18.75p | 1 | 31 | 32 |
| 2008 | | | | | | |
+-----------+----------+------------+----------+----------+----------+----------+
| 9 July | (xii) | 2,752,861 | 18.75p | 14 | 494 | 508 |
| 2008 | | | | | | |
+-----------+----------+------------+----------+----------+----------+----------+
| | | | | 324 | 15,273 | 15,597 |
+-----------+----------+------------+----------+----------+----------+----------+
(i)The shares were issued to partly fund the acquisition of Falcon Gold Zimbabwe
Limited and Olympus Gold Mine Limited in Zimbabwe. Refer to note 27.
(ii)The shares were issued though the exercise of 2,500,000 warrants of 0.1p. A
share based payment of GBP224k was accounted for on this transaction and
included in share-based payments. Refer to notes 7 and 9.
(iii)The shares were issued though the exercise of 2,700,054 share options of
0.5p, after the 5 for 1 share consolidation.
(iv)The shares were issued though the exercise of 5,877,565 warrants of 0.1 p,
after the 5 for 1 share consolidation.
(v)The shares were issued though the exercise of 34,002,484 warrants of 0.1p and
1,200,000 share options of 0.5p, after the 5 for 1 share consolidation.
(vi)The shares were issued to fund ongoing operations
(vii) The shares were issued through the exercise of 200,000 options
(viii) The shares were issued through the exercise of 250,000 options
(ix) The shares were issued through the exercise of 407,074 options
(x) The shares were issued through the exercise of 5,000,000 warrants, after the
5 for 1 share consolidation
(xi) The shares were issued through the exercise of 170,000 options
(xii)The shares were issued to fund ongoing operations together with the
convertible loan notes
Foreign currency translation reserve
This reserve comprises all foreign exchange differences arising from the
translation of the financial statements of foreign operations that are not
integral to the operations of the Company.
17.Basic and diluted loss per share
Basic loss per share
The calculation of basic loss per share at 31 December 2008 was based on the
loss attributable to ordinary equity holders of the parent of GBP26.684 million
(2007: GBP14.732 million) and a weighted average number of ordinary shares
outstanding during the year ended 31 December 2008 of 167,666,860 (2007:
96,199,572), calculated as follows:
+---------------------------------+-----------+-----------+---+-------------+---------------+
| Loss for the year attributable to equity holders of the | 2008 | 2007 |
| parent | | |
+-------------------------------------------------------------+-------------+---------------+
| In thousands of pounds sterling | | | | |
+---------------------------------+-----------+---------------+-------------+---------------+
| Loss for the year attributable to equity holders of the | (26,684) | (14,732) |
| parent | | |
+-------------------------------------------------------------+-------------+---------------+
| Weighted number of ordinary shares | | |
+-------------------------------------------------------------+-------------+---------------+
| Issued shares at 1 January | 106,079,962 | 459,519,495 |
+-------------------------------------------------------------+-------------+---------------+
| Effect of shares issued in January | | 59,274,657 | - |
+---------------------------------------------+-----------+-----------------+---------------+
| Effect of shares issued in March | | 321,198 | 7,520,548 |
+---------------------------------------------+-----------+-----------------+---------------+
| Effect of shares issued in April | | - | 1,808,219 |
+---------------------------------------------+-----------+-----------------+---------------+
| Effect of consolidation of shares (5 for 1) | | - | (375,078,610) |
| in June 2007 | | | |
+---------------------------------------------+-----------+-----------------+---------------+
| Effect of shares issued in June | | 671,178 | - |
+---------------------------------------------+-----------+-----------------+---------------+
| Effect of shares issued in July | | 1,319,865 | - |
+---------------------------------------------+-----------+-----------------+---------------+
| Effect of shares issued in August | | - | 1,509,315 |
+---------------------------------------------+-----------+-----------------+---------------+
| Effect of shares issued in November | | - | 920,605 |
+---------------------------------------------+-----------+-----------------+---------------+
| Weighted number of ordinary shares at 31 | | 167,666,860 | 96,199,572 |
| December | | | |
+---------------------------------------------+-----------+-----------------+---------------+
| | | |
+-------------------------------------------------------------+-------------+---------------+
| Basic loss per share (pence) | (15.91p) | (15.31p) |
+---------------------------------+-----------+-----------+---+-------------+---------------+
Diluted loss per share
Due to the loss incurred, there is no dilutive effect from share options and
warrants.
+----------------------------+----------+----------+----------+----------+----------+
| | Group | | Company |
+----------------------------+---------------------+----------+---------------------+
| In thousands of pounds | 2008 | 2007 | | 2008 | 2007 |
| sterling | | | | | |
+----------------------------+----------+----------+----------+----------+----------+
| | | | | | |
+----------------------------+----------+----------+----------+----------+----------+
| 18. Loans and borrowings | | | | | |
+----------------------------+----------+----------+----------+----------+----------+
| | | | | | |
+----------------------------+----------+----------+----------+----------+----------+
| Non current liabilities | | | | | |
+----------------------------+----------+----------+----------+----------+----------+
| Secured loan | - | 9,701 | | - | - |
+----------------------------+----------+----------+----------+----------+----------+
| | - | 9,701 | | - | - |
+----------------------------+----------+----------+----------+----------+----------+
| Current liabilities | | | | | |
+----------------------------+----------+----------+----------+----------+----------+
| Secured loan | 14,714 | 3,143 | | - | - |
+----------------------------+----------+----------+----------+----------+----------+
| Convertible loan notes | 4,995 | - | | 4,995 | - |
+----------------------------+----------+----------+----------+----------+----------+
| | 19,709 | 3,143 | | 4,995 | - |
+----------------------------+----------+----------+----------+----------+----------+
| Total | 19,709 | 12,844 | | 4,995 | - |
+----------------------------+----------+----------+----------+----------+----------+
| | | | | | |
+----------------------------+----------+----------+----------+----------+----------+
Secured bank loan
On 31 January 2007 Central African Gold Ghana Limited entered into a GBP7.510
million (US$15 million) facility with Investec Bank Limited. The size of the
facility was increased on 29 November 2007 by a further GBP 5.007 million (US$10
million) with GBP0.327 million (US$0.655 million) being recognised as
capitalised interest.
The main terms of the secured bank loan include:
* a loan period of 5 years;
* quarterly loan repayments (capital and interest) commencing in March 2008;
* interest rate at LIBOR plus 2.5%;
* various loan covenants;
* a limit on other borrowing by Central African Gold Ghana Limited to the amount
of US$5 million (GBP3.453 million; 2007: GBP2.503 million), except with Investec
Bank Limited prior approval;
* the loan is secured by means of pledges on shares in Central African Gold Ghana
Limited, debentures granted by Central African Gold Ghana Limited over its
assets and a subordination of a loan by Central African Gold Plc to Central
African Gold Ghana Limited. Central African Gold Plc's guarantee is limited to
US$5 million, or GBP3.453 million (2007: GBP2.503 million) plus capitalised
interest; and
* a gold sale agreement, refer to note 19.
Due to the delay in the publication of the 2007 annual report, the Company was
not in compliance with the loan covenants governing the existing borrowings
provided by Investec Bank Limited. The covenant in question required the annual
report to be delivered within 90 days of the balance sheet date.
As a consequence of an instalment not being met on the project finance facility,
the liability has been classified as a current liability in accordance with the
requirements of IAS1.
Unsecured convertible loan notes
The first of the Convertible Loan Notes has been issued to Emerging Capital
Partners Africa Fund II ("ECP") for $3.94 million (GBP2.17 million) and carries
an interest coupon of 10 per cent. per annum, compounded monthly and payable
within six months of the draw down date. Under the terms of this Convertible
Loan Note, ECP may convert the Convertible Loan Note into new Ordinary Shares in
the Company at the time of the next equity fundraising undertaken by the
Company, at a price which is 10 per cent. below the issue price of such
fundraising. In the event that the Company raises at least $10 million (GBP5.56
million) in such fundraising, the Convertible Loan Note and accrued interest
will convert automatically. In addition, ECP has been granted options over
761,137 Ordinary Shares exercisable at a price of 0.5 pence per share for a
period of 2 years from the date of their grant.
The second of the Convertible Loan Notes has been issued to Investec Asset
Management (Proprietary) Limited ("Investec") for $3 million (GBP1.67 million)
and also carries an interest coupon of 10 per cent. per annum, compounded
monthly and payable on maturity. Under the terms of this Convertible Loan Note,
Investec may convert the Convertible Loan Note into new Ordinary Shares in the
Company at the time of the next equity fundraising undertaken by the Company, at
a price which is 10 per cent. below the issue price of such fundraising. In the
event that the Company raises at least $10 million (GBP5.56 million) in such
fundraising, the Convertible Loan Note and accrued interest will convert
automatically. In addition, Investec has been granted a warrant over 1,150,000
new Ordinary Shares at a price of 25 pence per share for a term of 2 years.
Investec Asset Management and ECP Africa agreed in December 2009 to defer the
obligation to repay the loan notes to April 2011.
+---------------------------------+-----------+-----------+-----------+-----------+
| | Group | | Company | |
+---------------------------------+-----------+-----------+-----------+-----------+
| In thousands of pounds sterling | 2008 | 2007 | 2008 | 2007 |
+---------------------------------+-----------+-----------+-----------+-----------+
| | | | | |
+---------------------------------+-----------+-----------+-----------+-----------+
| 19. Other financial liabilities | | | | |
+---------------------------------+-----------+-----------+-----------+-----------+
| | | | | |
+---------------------------------+-----------+-----------+-----------+-----------+
| Non current liabilities | | | | |
+---------------------------------+-----------+-----------+-----------+-----------+
| Gold sale agreement | 1,694 | 2,654 | - | - |
+---------------------------------+-----------+-----------+-----------+-----------+
| | 1,694 | 2,654 | - | - |
+---------------------------------+-----------+-----------+-----------+-----------+
| Current liabilities | | | | |
+---------------------------------+-----------+-----------+-----------+-----------+
| Gold sale agreement | 2,137 | 1,179 | - | - |
+---------------------------------+-----------+-----------+-----------+-----------+
| | 2,137 | 1,179 | - | - |
+---------------------------------+-----------+-----------+-----------+-----------+
| | | | | |
+---------------------------------+-----------+-----------+-----------+-----------+
| | 3,831 | 3,833 | - | - |
+---------------------------------+-----------+-----------+-----------+-----------+
Gold sale agreement
Central African Gold Ghana Limited entered into various gold sale agreements
with Investec Bank Limited, in which the contract price of gold per ounce was
fixed. On initial recognition the fair value of the derivatives was recognised
in the income statement and a liability created since the normal purchase and
sales exemption as allowed in terms of IAS 39 could not be applied. Subsequently
the fair value of the derivative is accounted for at fair value through the
income statement.
As at 31 December 2008, Central African Gold Ghana Limited had outstanding gold
sale agreements with Investec Bank Limited for 18,320 ounces (2007: 55,660
ounces), maturing between 30 January 2009 and 26 February 2010). The average
contract price of these agreements was at US$748.11 (2007: US$732.05) per ounce.
The spot rate as at 31 December 2008 was US$866.55 per ounce (2007: US$833.20).
As a result of these gold sale agreements a financial liability has been
recognised to the amount of GBP3.831 million (US$7.654 million).
+---------------------------------+-----------+-----------+-----------+-----------+
| 20. Deferred tax liability |
+---------------------------------+
| | Group | Company |
+---------------------------------+-----------------------+-----------------------+
| In thousands of pounds sterling | 2008 | 2007 | 2008 | 2007 |
+---------------------------------+-----------+-----------+-----------+-----------+
| | | | | |
+---------------------------------+-----------+-----------+-----------+-----------+
| Arising on property, plant and | - | 318 | - | - |
| equipment on Bibiani | | | | |
+---------------------------------+-----------+-----------+-----------+-----------+
| Arising on property, plant and | 563 | 537 | - | - |
| equipment on Falcon Gold and | | | | |
| Olympus | | | | |
+---------------------------------+-----------+-----------+-----------+-----------+
| | 563 | 855 | - | - |
+---------------------------------+-----------+-----------+-----------+-----------+
The group has unrecognised deferred tax assets of GBP10.6 million (2007: GBP10.6
million) in respect of estimated tax losses carried forward.
The Company has not recognised deferred tax assets in respect of estimated tax
as the directors currently do not believe utilisation of those losses to be
sufficiently certain.
+---------------------------------+-----------+-----------+-----------+-----------+
| 21. Provisions |
+---------------------------------------------------------------------------------+
| | Group | Company |
+---------------------------------+-----------------------+-----------------------+
| In thousands of pounds sterling | 2008 | 2007 | 2008 | 2007 |
+---------------------------------+-----------+-----------+-----------+-----------+
| Rehabilitation provision | | | | |
+---------------------------------+-----------+-----------+-----------+-----------+
| Balance at 1 January | 1,773 | 1,389 | - | - |
+---------------------------------+-----------+-----------+-----------+-----------+
| Additional provision for the | 675 | 340 | - | - |
| year | | | | |
+---------------------------------+-----------+-----------+-----------+-----------+
| Unwinding of interest for the | - | 68 | - | - |
| year (note 4) | | | | |
+---------------------------------+-----------+-----------+-----------+-----------+
| Effect of movements in foreign | 792 | (24) | - | - |
| exchange | | | | |
+---------------------------------+-----------+-----------+-----------+-----------+
| Balance at 31 December | 3,240 | 1,773 | - | - |
+---------------------------------+-----------+-----------+-----------+-----------+
+---------------------------------+-----------+-----------+-----------+-----------+
| Decommissioning provision | | | | |
+---------------------------------+-----------+-----------+-----------+-----------+
| Balance at 1 January | 1,389 | 1,389 | - | - |
+---------------------------------+-----------+-----------+-----------+-----------+
| Additional provision for the | 150 | - | - | - |
| year | | | | |
+---------------------------------+-----------+-----------+-----------+-----------+
| Reductions from re-measurement | (65) | - | - | - |
+---------------------------------+-----------+-----------+-----------+-----------+
| Interest charge | (73) | - | - | - |
+---------------------------------+-----------+-----------+-----------+-----------+
| Effects of movement in foreign | 531 | - | - | - |
| exchange | | | | |
+---------------------------------+-----------+-----------+-----------+-----------+
| Balance at 31 December | 1,932 | 1,389 | - | - |
+---------------------------------+-----------+-----------+-----------+-----------+
+---------------------------------+-----------+-----------+-----------+-----------+
| Other provisions | | | | |
+---------------------------------+-----------+-----------+-----------+-----------+
| Balance at 1 January | 91 | - | 38 | - |
+---------------------------------+-----------+-----------+-----------+-----------+
| Additional provision for the | 41 | 91 | 40 | 38 |
| year | | | | |
+---------------------------------+-----------+-----------+-----------+-----------+
| Reductions arising from | (48) | - | - | - |
| payments | | | | |
+---------------------------------+-----------+-----------+-----------+-----------+
| Effects of movement in foreign | 4 | - | - | - |
| exchange | | | | |
+---------------------------------+-----------+-----------+-----------+-----------+
| Balance at 31 December | 88 | 91 | 78 | 38 |
+---------------------------------+-----------+-----------+-----------+-----------+
| | | | | |
+---------------------------------+-----------+-----------+-----------+-----------+
| Total provisions | 5,260 | 3,253 | 78 | 38 |
+---------------------------------+-----------+-----------+-----------+-----------+
The rehabilitation provision relates to environmental obligations arising from
mine development and has to be settled on mine closure. The cost is capitalised
as part of the related asset to be amortised over the life of the mine. The
expected timing of the outflow is after 10 years.
The decommissioning provision relates to environmental obligations during the
development phase and has to be settled on mine closure. The cost is
capitalised as part of the related asset to be amortised over the life of the
mine. The expected timing of the outflow is after 10 years.
The amounts provided for the rehabilitation provision and the decommissioning
provision have been adjusted for inflation and the time value of money. A 10%
variation, either up or down, is a reasonable measure of uncertainty regarding
the provisions. The provisions do not take into account future events and are
based on estimated liabilities already incurred.
The leave pay provision is based on the leave days due as at the end of the
current year multiplied by the per day cost to the Company.
+---------------------------------+-----------+-----------+-----------+-----------+
| | Group | Company |
+---------------------------------+-----------------------+-----------------------+
| In thousands of pounds sterling | 2008 | 2007 | 2008 | 2007 |
+---------------------------------+-----------+-----------+-----------+-----------+
22. Trade and other payables
+---------------------------------+-----------+-----------+-----------+-----------+
| Other trade payables | 14,729 | 5,694 | 413 | 1,064 |
+---------------------------------+-----------+-----------+-----------+-----------+
| | 14,729 | 5,694 | 413 | 1,064 |
+---------------------------------+-----------+-----------+-----------+-----------+
23. Financial risk management
The group has exposure to the following risks from its use of financial
instruments in the normal course of the groups' business: credit risk, liquidity
risk and market risk. This note presents information about the group's exposure
to each of the above risks, the group's objectives, policies and process for
measuring and managing risk and the group's management of capital. Further
quantitative disclosures are included throughout these consolidated financial
statements.
Credit risk
Credit risk is the risk of financial loss to the group if a customer or
counterparty to a financial instrument fails to meet its contractual obligation,
and arises principally from the group's receivables from customers and
investment securities.
Trade and other receivables
Management has a credit policy in place and the exposure to credit risk is
monitored on an ongoing basis. Credit evaluations are performed on all customers
requiring credit over a certain amount. The group does not require collateral in
respect of financial assets.
At the balance sheet date there were no significant concentrations of credit
risk. The maximum exposure to credit risk is represented by the carrying amount
of each financial asset, including derivative financial instruments, in the
balance sheet.
The age analysis of trade and other receivables not impaired at reporting date:
+---------------------------------+-----------+-----------+-----------+-----------+
| | Group | Company |
+---------------------------------+-----------------------+-----------------------+
| In thousands of pounds sterling | 2008 | 2007 | 2008 | 2007 |
+---------------------------------+-----------+-----------+-----------+-----------+
| Current | | 275 | - | - |
+---------------------------------+-----------+-----------+-----------+-----------+
| 30 days past due date | - | 5 | - | - |
+---------------------------------+-----------+-----------+-----------+-----------+
| 31 - 60 days past due date | - | 53 | - | 2 |
+---------------------------------+-----------+-----------+-----------+-----------+
| 61 - 90 days past due date | - | 55 | - | - |
+---------------------------------+-----------+-----------+-----------+-----------+
| More than 91 days past due date | 1,452 | 192 | 34 | 34 |
+---------------------------------+-----------+-----------+-----------+-----------+
| | 1,452 | 580 | 34 | 36 |
+---------------------------------+-----------+-----------+-----------+-----------+
Investments
Investments are allowed only in liquid securities and only with counterparties
that have a credit rating equal to or better than the group. Transactions
involving derivative financial instruments are with counterparties with whom the
Group has a signed netting agreement as well as sound credit ratings. Given
their high credit ratings, management does not expect any counterparty to fail
to meet its obligations.
Liquidity risk
Liquidity risk is the risk that the group will not be able meet its financial
obligations as they fall due.
It is the group's policy to finance its business by means of internally
generated funds supported by the groups' bankers, other lenders and external
share capital. Facilities are regularly reviewed by the Board.
The group manages its cash flows on a day to day basis from the centre,
considering currencies in each market. As a result the liquidity risk is
monitored closely throughout the group.
The table that follows summarises the group's exposure to liquidity risk.
Included in the table are the group's financial assets and liabilities at
carrying amounts, categorised by the earlier of contractual repricing or
maturity dates.
+------------------------------+----------+-----------+---------+----------+----------+
| Group | Up to 1 | 1 - 3 | 3 - 12 | Beyond | Total |
| In thousands of pounds | month | months | | 12 | |
| sterling | | | months | months | |
+------------------------------+----------+-----------+---------+----------+----------+
| 2008 | | | | | |
+------------------------------+----------+-----------+---------+----------+----------+
| Financial assets | | | | | |
+------------------------------+----------+-----------+---------+----------+----------+
| Current assets | | | | | |
+------------------------------+----------+-----------+---------+----------+----------+
| Trade and other receivables | - | - | 1,452 | - | 1,452 |
+------------------------------+----------+-----------+---------+----------+----------+
| Cash and cash equivalents | 927 | - | - | - | 927 |
+------------------------------+----------+-----------+---------+----------+----------+
| Total financial assets | 927 | - | 1,452 | - | 2,379 |
+------------------------------+----------+-----------+---------+----------+----------+
| Financial liabilities | | | | | |
+------------------------------+----------+-----------+---------+----------+----------+
| Current liabilities | | | | | |
+------------------------------+----------+-----------+---------+----------+----------+
| Loans and borrowings - | (4,995) | (902) | (2,708) | (11,104) | (19,709) |
| current portion | | | | | |
+------------------------------+----------+-----------+---------+----------+----------+
| Other liabilities - current | (232) | (343) | (1,562) | | (2,137) |
| portion | | | | | |
+------------------------------+----------+-----------+---------+----------+----------+
| non current portion | | | | (1,694) | (1,694) |
+------------------------------+----------+-----------+---------+----------+----------+
| Trade and other payables | (14,729) | - | - | | (14,729) |
+------------------------------+----------+-----------+---------+----------+----------+
| Cash and cash equivalents | (1,061) | - | - | - | (1,061) |
+------------------------------+----------+-----------+---------+----------+----------+
| Total financial liabilities | (21,017) | (1,245) | (4,270) | (12,798) | (39,330) |
+------------------------------+----------+-----------+---------+----------+----------+
| Net liquidity gap analysis | (20,090) | (1,245) | (2,818) | (12,798) | (36,951) |
+------------------------------+----------+-----------+---------+----------+----------+
+------------------------------+------------+------------+------------+------------+
| In thousands of pounds | Up to 1 | 1 - 3 | 3 - 12 | Total |
| sterling | month | months | months | |
+------------------------------+------------+------------+------------+------------+
| 2007 | | | | |
+------------------------------+------------+------------+------------+------------+
| Financial assets | | | | |
+------------------------------+------------+------------+------------+------------+
| Current assets | | | | |
+------------------------------+------------+------------+------------+------------+
| Trade and other receivables | 275 | 113 | 192 | 580 |
+------------------------------+------------+------------+------------+------------+
| Cash and cash equivalents | 2,769 | (77) | 129 | 2,821 |
+------------------------------+------------+------------+------------+------------+
| Total financial assets | 3,044 | 36 | 321 | 3,401 |
+------------------------------+------------+------------+------------+------------+
| Financial liabilities | | | | |
+------------------------------+------------+------------+------------+------------+
| Current liabilities | | | | |
+------------------------------+------------+------------+------------+------------+
| Loans and borrowings - | - | (811) | (2,332) | (3,143) |
| current portion | | | | |
+------------------------------+------------+------------+------------+------------+
| Other liabilities - current | - | - | (1,179) | (1,179) |
| portion | | | | |
+------------------------------+------------+------------+------------+------------+
| Trade and other payables | (5,694) | - | - | (5,694) |
+------------------------------+------------+------------+------------+------------+
| Total financial liabilities | (5,694) | (811) | (3,511) | (10,016) |
+------------------------------+------------+------------+------------+------------+
| Net liquidity gap analysis | (2,650) | (775) | (3,190) | (6,615) |
+------------------------------+------------+------------+------------+------------+
+------------------------------+----------+-----------+--------+----------+---------+
| Company | Up to 1 | 1 - 3 | 3 - 12 | Beyond | Total |
| In thousands of pounds | month | months | | 12 | |
| sterling | | | months | months | |
+------------------------------+----------+-----------+--------+----------+---------+
| 2008 | | | | | |
+------------------------------+----------+-----------+--------+----------+---------+
| Financial assets | | | | | |
+------------------------------+----------+-----------+--------+----------+---------+
| Current assets | | | | | |
+------------------------------+----------+-----------+--------+----------+---------+
| Trade and other receivables | - | - | 35 | - | 35 |
+------------------------------+----------+-----------+--------+----------+---------+
| Cash and cash equivalents | 161 | - | - | - | 161 |
+------------------------------+----------+-----------+--------+----------+---------+
| Total financial assets | 161 | - | 35 | - | 196 |
+------------------------------+----------+-----------+--------+----------+---------+
| Financial liabilities | | | | | |
+------------------------------+----------+-----------+--------+----------+---------+
| Current liabilities | | | | | |
+------------------------------+----------+-----------+--------+----------+---------+
| Loans and borrowings - | (4,995) | - | - | - | (4,995) |
| current portion | | | | | |
+------------------------------+----------+-----------+--------+----------+---------+
| Trade and other payables | (413) | - | - | - | (413) |
+------------------------------+----------+-----------+--------+----------+---------+
| Total financial liabilities | (5,408) | - | - | - | (5,408) |
+------------------------------+----------+-----------+--------+----------+---------+
| Net liquidity gap analysis | (5,247) | - | - | - | (5,212) |
+------------------------------+----------+-----------+--------+----------+---------+
+------------------------------+------------+------------+------------+------------+
| In thousands of pounds | Up to 1 | 1 - 3 | 3 - 12 | Total |
| sterling | month | months | months | |
+------------------------------+------------+------------+------------+------------+
| 2007 | | | | |
+------------------------------+------------+------------+------------+------------+
| Financial assets | | | | |
+------------------------------+------------+------------+------------+------------+
| Current assets | | | | |
+------------------------------+------------+------------+------------+------------+
| Trade and other receivables | - | - | 36 | 36 |
+------------------------------+------------+------------+------------+------------+
| Cash and cash equivalents | 22 | - | - | 22 |
+------------------------------+------------+------------+------------+------------+
| Total financial assets | 22 | - | 36 | 58 |
+------------------------------+------------+------------+------------+------------+
| Financial liabilities | | | | |
+------------------------------+------------+------------+------------+------------+
| Current liabilities | | | | |
+------------------------------+------------+------------+------------+------------+
| Trade and other payables | (1,064) | - | - | (1,064) |
+------------------------------+------------+------------+------------+------------+
| Total financial liabilities | (1,064) | - | - | (1,064) |
+------------------------------+------------+------------+------------+------------+
| Net liquidity gap analysis | (1,042) | - | - | (1,006) |
+------------------------------+------------+------------+------------+------------+
Market risk
Market risk is the risk that the fair value or future cash flows of a financial
instrument will fluctuate because of changes in market prices. Market risk
comprises three types of risks being currency risk, interest rate risk and price
risk.
Currency risk
Currency risk is the risk that the fair value or future cash flows of a
financial instrument will fluctuate because of changes in foreign exchange
rates.
The group is exposed to foreign currency risk on sales, purchases and
expenditures that are denominated in a currency other than the functional
currency. The currencies giving rise to this risk are primarily the U.S. Dollar,
Malian FCFA's and the South African Rand.
In respect of other monetary assets and liabilities held in currencies other
than the functional currency, the Group ensures that the net exposure is kept to
an acceptable level, by buying or selling foreign currencies at spot rates where
necessary to address short-term imbalances.
The following significant exchange rates applied during the year:
+-------------------------+------------+-------------+-------------+--------------+
| | Average rate | Reporting date spot rate |
+-------------------------+--------------------------+----------------------------+
| Against GBP sterling | 2008 | 2007 | 2008 | 2007 |
+-------------------------+------------+-------------+-------------+--------------+
| US dollars | 1.86 | 2.01 | 1.45 | 1.99 |
+-------------------------+------------+-------------+-------------+--------------+
| FCFA | 842.78 | 955.10 | 684.59 | 890.18 |
+-------------------------+------------+-------------+-------------+--------------+
| ZAR | 15.18 | 14.11 | 13.70 | 13.69 |
+-------------------------+------------+-------------+-------------+--------------+
Sensitivity analysis
A 10 percent strengthening of the pound sterling against the following
currencies at 31 December 2008 would have increased (decreased) equity and
profit and loss by the amount shown below. This analysis assumes that all other
variables, in particular interest rates, remain constant. The analysis is
performed on the same basis for 2007.
+-------------------------+------------+-------------+-------------+--------------+
| In thousands of pounds | | | Equity | Profit and |
| sterling | | | | loss |
+-------------------------+------------+-------------+-------------+--------------+
| 31 December 2008 | | | | |
+-------------------------+------------+-------------+-------------+--------------+
| US dollars | | | 1,703 | 1,082 |
+-------------------------+------------+-------------+-------------+--------------+
| FCFA | | | (45) | (68) |
+-------------------------+------------+-------------+-------------+--------------+
| ZAR | | | 301 | 96 |
+-------------------------+------------+-------------+-------------+--------------+
| 31 December 2007 | | | | |
+-------------------------+------------+-------------+-------------+--------------+
| US dollars | | | (306) | (306) |
+-------------------------+------------+-------------+-------------+--------------+
| FCFA | | | (3) | (3) |
+-------------------------+------------+-------------+-------------+--------------+
| ZAR | | | (75) | (75) |
+-------------------------+------------+-------------+-------------+--------------+
A 10 percent weakening of the pound sterling against the above currencies at 31
December 2008 would have had the equal but opposite effect on the above
currencies to the amounts shown above, on the basis that all other variables
remain constant.
Interest rate risk
Interest rate risk is the risk that the fair value or future cash flows of a
financial instrument will fluctuate because of changes in market interest rates.
The interest rate risk profile of the group's financial assets as at 31 December
2008 was
+-------------------------+------------+-------------+-------------+--------------+
| In thousands of pounds | | Fixed rate | Floating | Total |
| sterling | | | rate | |
+-------------------------+------------+-------------+-------------+--------------+
| US dollars | | - | 2,819 | 2,819 |
+-------------------------+------------+-------------+-------------+--------------+
| Sterling | | - | - | - |
+-------------------------+------------+-------------+-------------+--------------+
| FCFA | | - | 12 | 12 |
+-------------------------+------------+-------------+-------------+--------------+
| ZAR | | - | 13 | 13 |
+-------------------------+------------+-------------+-------------+--------------+
| Cash at bank and in | | - | 2,844 | 2,844 |
| hand | | | | |
+-------------------------+------------+-------------+-------------+--------------+
| The interest rate risk profile of the group's financial assets | |
| as at 31 December 2007 was | |
+------------------------------------------------------------------+--------------+
| US dollars | | - | 2,698 | 2,698 |
+-------------------------+------------+-------------+-------------+--------------+
| Sterling | | - | 22 | 22 |
+-------------------------+------------+-------------+-------------+--------------+
| FCFA | | - | 78 | 78 |
+-------------------------+------------+-------------+-------------+--------------+
| ZAR | | - | 23 | 23 |
+-------------------------+------------+-------------+-------------+--------------+
| Cash at bank and in | | - | 2,821 | 2,821 |
| hand | | | | |
+-------------------------+------------+-------------+-------------+--------------+
Floating rate deposits earn interest at prevailing bank rates.
The group's policy on interest rate management is agreed at board level and is
reviewed on an ongoing basis.
Capital management
The board's policy is to maintain a capital base that is appropriate to
retaining investor and creditor confidence and sustain operations. The board
monitors long-term internal rates of return (IRR) and net present values (NPVs)
at varying hurdle rates to be satisfied that any project is commercially viable.
The board seeks a return of 20% on equity on new projects. This is defined as
the present value of net operating income on shareholders' equity.
There were no changes in the group's approach to capital management during the
year.
Central African Gold Ghana Limited is not permitted to borrow more than of
GBP2.5 million (US$5 million) without the prior permission of Investec Bank
Limited.
Fair value
The face values less any estimated credit adjustments for financial assets and
liabilities with a maturity of less than one year are assumed to approximate
their fair values. The fair value of financial liabilities for disclosure
purposes is estimated by discounting the future contractual cash flows at the
current market interest rate available to the scheme for similar financial
instruments.
There is no material difference between the fair value of borrowings and other
financial instruments and their book value at the balance sheet date.
24. Commitments and contingencies
* Mali
The Company and Mali Mining House (MMH) entered into an agreement on 9 December
2005. The agreement provides that the subsidiary, Mali Goldfields SA, will be
initially owned as to 80% by the Company and 20% by MMH, subject to a potential
reduction in the interest of each party by 5% (ie to 75% and 15% respectively)
in the event that the Government of Mali exercises its right to receive a
10% free-carried interest.
The Company also entered into an agreement with Mani on 26 July 2006, to explore
three gold exploration permits in western Mali. The agreement provided for the
establishment of a subsidiary, SonghoÏ Resources SA, which would initially be
owned as to 80% by the Company and 20% by Mani. The Company is to provide the
required funding for the subsidiary, subject to the reimbursement of amounts
spent before the repayment of dividends. With respect to one permit
(Medinandi), the Company provided the finance for the purchase of the permit and
an option for the Malian company to acquire at a price determined by an expert
to be 2.5% of the capital of any company established to exploit Medinandi (in
which case the interest of the parties would be 77.5% for the Company, 20% Mani
and 2.5% the vendor, or if the Government of Mali exercised its right to obtain
a 10% free-carried interest, 72.5% for the Company, 15% for Mani, 2.5% the
vendor and 10% the Government of Mali). These agreements will form part of the
consideration for the disposal of the Company's Malian assets referred to in
note 29.
25. Related parties
+---------------------------------+-----------+-----------+-----------+-----------+
| | | | Company |
+---------------------------------+-----------+-----------+-----------------------+
| In thousands of pounds sterling | | | 2008 | 2007 |
+---------------------------------+-----------+-----------+-----------+-----------+
| Amount due from subsidiaries | | | | |
+---------------------------------+-----------+-----------+-----------+-----------+
| Central African Gold Technical Services (Pty) Ltd | 1,254 | 601 |
+---------------------------------------------------------+-----------+-----------+
| Mali Goldfields SA | | | 2,202 | 1,657 |
+---------------------------------+-----------+-----------+-----------+-----------+
| SonghoÏ Resources SA | | | 935 | 646 |
+---------------------------------+-----------+-----------+-----------+-----------+
| Central African Gold Ghana | | | 12,700 | 12,016 |
| Limited | | | | |
+---------------------------------+-----------+-----------+-----------+-----------+
| Falcon Gold Mines Limited | | | 1,384 | 654 |
+---------------------------------+-----------+-----------+-----------+-----------+
| Motako Limited | | | 17 | 1 |
+---------------------------------+-----------+-----------+-----------+-----------+
| | | | 18,492 | 15,575 |
+---------------------------------+-----------+-----------+-----------+-----------+
| Impairment | | | (12,717) | - |
+---------------------------------+-----------+-----------+-----------+-----------+
| | | | 5,775 | 15,575 |
+---------------------------------+-----------+-----------+-----------+-----------+
| | | | | |
+---------------------------------+-----------+-----------+-----------+-----------+
| The amounts due by subsidiaries and the amount due to subsidiaries are interest |
| free, immediately repayable and therefore have been classified as current |
| assets and current liabilities respectively. No other payment terms are in |
| place. |
| The impairment relates to Central African Gold Ghana Limited and Motako |
| Limited. |
+---------------------------------+-----------+-----------+-----------+-----------+
+---------------------------------+-----------+-----------+-----------+-----------+
| | | | Company |
+---------------------------------+-----------+-----------+-----------------------+
| | | | 2008 | 2007 |
+---------------------------------+-----------+-----------+-----------+-----------+
| | | | | |
+---------------------------------+-----------+-----------+-----------+-----------+
| Amount due to subsidiaries | | | | |
+---------------------------------+-----------+-----------+-----------+-----------+
| Central African Gold Ghana | | | - | 1,763 |
| Limited | | | | |
+---------------------------------+-----------+-----------+-----------+-----------+
| | | | - | 1,763 |
+---------------------------------+-----------+-----------+-----------+-----------+
| | | | | |
+---------------------------------+-----------+-----------+-----------+-----------+
| Transaction with key management | | | | |
| personnel | | | | |
+---------------------------------+-----------+-----------+-----------+-----------+
| The compensation of key management personnel including | | |
| the directors is as follows: | | |
+---------------------------------------------------------+-----------+-----------+
| Key management emoluments | | | 466 | 490 |
+---------------------------------+-----------+-----------+-----------+-----------+
| Share based payment expense | | | 756 | 2,192 |
+---------------------------------+-----------+-----------+-----------+-----------+
| | | | | |
+---------------------------------+-----------+-----------+-----------+-----------+
26. Investment in subsidiaries
+----------------------------+---------------+------------+--------+--------+---------+--------+
| In thousands of pounds | Country of | Functional | Ownership | Company |
| sterling | | | | |
+----------------------------+---------------+------------+-----------------+------------------+
| | incorporation | currency | Interest | Investment |
+----------------------------+---------------+------------+-----------------+------------------+
| | | | 2008 | 2007 | 2008 | 2007 |
+----------------------------+---------------+------------+--------+--------+---------+--------+
| Central African Gold | South | Rands | 100% | 100% | - | - |
| Technical Services (Pty) | Africa | | | | | |
| Ltd | | | | | | |
+----------------------------+---------------+------------+--------+--------+---------+--------+
| Mali Gold Fields SA | Mali | FCFA's | 80% | 80% | 20 | 20 |
+----------------------------+---------------+------------+--------+--------+---------+--------+
| SonghoÏ Resources SA | Mali | FCFA's | 80% | 80% | 11 | 11 |
+----------------------------+---------------+------------+--------+--------+---------+--------+
| Central African Gold Ghana | Ghana | US$ | 100% | 100% | 6,549 | 6,549 |
| Limited | | | | | | |
+----------------------------+---------------+------------+--------+--------+---------+--------+
| Falcon Gold Zimbabwe | Zimbabwe | US$ | 84.7% | 84.7% | 3,402 | 3,402 |
| Limited | | | | | | |
+----------------------------+---------------+------------+--------+--------+---------+--------+
| Olympus Gold Mines (Pvt) | Zimbabwe | US$ | 100% | 100% | - | - |
| Ltd | | | | | | |
+----------------------------+---------------+------------+--------+--------+---------+--------+
| Motako Limited | Botswana | BWP | 100% | 100% | 357 | 357 |
+----------------------------+---------------+------------+--------+--------+---------+--------+
| | | | | | 10,339 | 10,339 |
+----------------------------+---------------+------------+--------+--------+---------+--------+
| Company investment | | | | | | |
+----------------------------+---------------+------------+--------+--------+---------+--------+
| Cost at beginning of year | | | | | 10,339 | 6,803 |
+----------------------------+---------------+------------+--------+--------+---------+--------+
| Additions | | | | | - | 3,536 |
+----------------------------+---------------+------------+--------+--------+---------+--------+
| Impairments | | | | | (6,905) | - |
+----------------------------+---------------+------------+--------+--------+---------+--------+
| Carrying value at end of | | | | | 3,434 | 10,339 |
| year | | | | | | |
+----------------------------+---------------+------------+--------+--------+---------+--------+
27.6 per cent. of the investment in Falcon Gold Zimbabwe Limited is held via a
trustee arrangement for the benefit of CAG.
The investments in Central African Gold Ghana Limited and Motako Limited have
been impaired.
27. Acquisitions
Zimbabwe
During the 2007 financial year the group acquired 84.7% of Falcon Gold Zimbabwe
Limited and 100% of Olympus Gold Mines (Pvt) Limited in Zimbabwe.
The values of the net assets acquired are as follows:
+---------------------------------------+--------------+--------------+--------------+
| In thousands of pounds sterling | Book value | Fair value | Estimated |
| | at date of | adjustment | fair value |
| | acquisition | | at time of |
| | | | acquisition |
+---------------------------------------+--------------+--------------+--------------+
| Property, plant and equipment | 199 | 3,340 | 3,539 |
+---------------------------------------+--------------+--------------+--------------+
| Inventory | 169 | | 169 |
+---------------------------------------+--------------+--------------+--------------+
| Receivables | 31 | | 31 |
+---------------------------------------+--------------+--------------+--------------+
| Cash and cash equivalents | 81 | | 81 |
+---------------------------------------+--------------+--------------+--------------+
| Payables and accruals | (387) | | (387) |
+---------------------------------------+--------------+--------------+--------------+
| Deferred tax | (31) | (501) | (532) |
+---------------------------------------+--------------+--------------+--------------+
| Total fair value of net assets | 62 | 2,839 | 2,901 |
| acquired | | | |
+---------------------------------------+--------------+--------------+--------------+
| Goodwill (note 10) | | | 501 |
+---------------------------------------+--------------+--------------+--------------+
| | | | 3,402 |
+---------------------------------------+--------------+--------------+--------------+
| The purchase consideration was | | | |
| settled as follows: | | | |
+---------------------------------------+--------------+--------------+--------------+
| Cash | | | 2,300 |
+---------------------------------------+--------------+--------------+--------------+
| Shares | | | 1,102 |
+---------------------------------------+--------------+--------------+--------------+
| | | | 3,402 |
+---------------------------------------+--------------+--------------+--------------+
9,000,000 shares were issued to satisfy the purchase consideration at a price of
12.25p. Refer to note 16.
From 1 March 2007, the results of Falcon Gold Zimbabwe Limited and Olympus Gold
Mines (Private) Limited included in the financial statements were:
+---------------------------------------+--------------+--------------+--------------+
| Net loss before tax | | | 472 |
+---------------------------------------+--------------+--------------+--------------+
| Taxation | | | 9 |
+---------------------------------------+--------------+--------------+--------------+
| Net loss | | | 481 |
+---------------------------------------+--------------+--------------+--------------+
Botswana
On 1 October 2007 the group acquired the remaining 47.94% of Matoko (Pty)
Limited. Further details of the operations are disclosed in the directors'
report.
At the point of acquisition the book value of assets was GBP109,000. After fair
value adjustments of GBP129,000 the total fair value of the asset base was
GBP232,000. The company acquired the 47.94% of the assets for GBP111,000.
From 1 October 2007, the results of Matoko Limited included in the financial
statements were
+---------------------------------------+--------------+--------------+--------------+
| Net loss before tax | | | 239 |
+---------------------------------------+--------------+--------------+--------------+
| Taxation | | | - |
+---------------------------------------+--------------+--------------+--------------+
| Net loss | | | 239 |
+---------------------------------------+--------------+--------------+--------------+
On 1 October 2007, the group acquired 100% of the issued shares and liabilities
in Matoko Limited. Matoko Limited was a wholly owned subsidiary of Golden Tau
Limited. The group already controlled 52.06% of Golden Tau Limited. Following
the acquisition of all shares held by the group in Golden Tau Limited were
cancelled. As part of the transaction Golden Tau Limited assigned to the group
an unsecured interest free loan of GBP157,000 (AU$363,000) extended by Golden
Tau Limited to Matoko Limited to fund its exploration activities to date on the
tenement.
The remaining minority interest in Golden Tau Limited was reversed as part of
the transaction. Refer to note 16.
28. Post balance sheet events
On 14 January 2009, the Company's wholly owned subsidiary, Central African Gold
Ghana Limited received a notice of default from Investec Bank regarding the
non-payment of monies due on the Investec Bank project loan facility agreement
(the "PLFA") and the non-payment of monies due under various gold forward
transaction agreements (the "HFA") with Investec Bank. Investec demanded a full
repayment of more than $20 million from the company.
In addition to the demand for repayment, Investec invoked its power of attorney
under the charge over the Company's shares in Central African Gold Ghana Limited
and transferred the 90,000 shares in CAG Ghana to Investec Bank, making it the
legal owner of Bibiani.
A settlement agreement was entered into between the Company and Investec Bank
which limited the company's liability to $5.0 million. Pursuant to this, the
Company announced that subject to shareholder approval, CAG proposed to raise
$8.0 million (before expenses) and to proceed with the partial conversion of the
convertible loan notes issued in July 2008.
Shareholder approval was sought and received for an increase in the authorised
share capital to accommodate the issue of 565,970,992 new ordinary shares at
1.00 pence (the "Placing") and to issue shares at 0.9 pence per share in respect
of the partial conversion of the loan notes (the "Conversion"). The net
proceeds of approximately GBP5.7 million before costs were used predominantly to
settle the outstanding liability to Investec Bank.
The board of directors announced that it would dispose of the Mali assets on 21
December 2009. Whilst a number of offers were received, the cash component of
the offers was considerably less than the board anticipated. As a result, the
board believed that the cash likely to be available to the Company, subsequent
to the disposal, would not be sufficient to repay the amounts due to Investec
Asset Management and ECP Africa under the new loan agreements, together with the
other creditors of the company as they fell due.
29. Post Balance Sheet events (continued)
To this end, CAG approached both Investec Asset Management and ECP Africa
seeking a deferral of the Company's obligations under the new loan agreements.
Investec Asset Management (Pty) Limited ('IAM') and ECP have agreed to extend
the terms of the loans made available to the Company as described in a circular
sent to shareholders on 27 March 2009, amounting to US$2.2 million and US$1.8
million respectively. These loans now have a new maturity date of 29 April 2011
(previously the earlier date of 14 April 2010 or within five days of the receipt
of funds by the Company from the sale of its entire shareholding in Mali
Goldfields SA and Songhoï Resources SA).
Additionally, CAG has entered into new Convertible Loan Agreements ('the
Convertible Loan Agreements') with HBD Zim Investments Limited ('HBD'), ECP and
IAM, (together, 'the Lenders'). The Convertible Loan Agreements total circa
US$1.25 million (approximately GBP814,000) and amount to US$397,267 from HBD
(approximately GBP238,924), US$705,070 from EPC (approximately GBP424,048) and
US$147,662 from IAM (approximately GBP88,808). Sterling loan amounts are
calculated using the rate of exchange prevailing on the date of the agreements.
The funds received by the Company under the Convertible Loan Agreements carry
interest at 10 per cent. per annum, compounded monthly in arrears with the full
amount payable on the maturity date, 29 April 2011. There is no penalty for
early repayment of the loans.
The terms of the Convertible Loan Agreements provide that the Lenders have the
right to convert all, but not part, of the loans at the conversion price of the
lesser of 0.9 pence per ordinary share and ten (10) percent below the USD
equivalent of any price at which the Borrower issues Shares while any amount of
the Loan remains repayable to the Lender. Under the terms of the Convertible
Loan Agreements each of the Lenders acknowledge that the Company does not have
the capacity to issue the full number of shares issuable should they wish to
convert the loans and that, should the Company not receive the required
shareholder approval needed to create and issue all of the shares issuable on
conversion, the Lenders shall only be able to exercise their conversion rights
to the extent that such shares exist and the directors have the relevant
authorities.
As announced on 21 December 2010, the Company has entered into a binding
agreement to dispose of its 80 per cent. equity interests in each of Mali
Goldfields SARL and Songhoï Resources SA (together 'the Malian Assets') ('the
Disposal') to Colonial Resources Limited ('Colonial') ('the Agreement') for a
total consideration of US$5.0 million ('the Consideration'). As at 31 December
2008, the Malian Assets, which are early stage gold exploration assets,
consisting of 18 prospective permits spanning circa 2,137 sqkm of the Birimian
strata, were recorded as having a book value of GBP3.8 million. By 30
November 2009 this had reduced to 18 prospective permits covering an area of
1,883 sq km.
30. 2007 Comparative numbers
+-----------------------------------+------+----------+----------+----------+----------+
| | | | | | 2007 |
+-----------------------------------+------+----------+----------+----------+----------+
| Income statement |Note | |Group ex | Ghana | Total |
| in thousands of pounds sterling | | | Ghana | | |
+-----------------------------------+------+----------+----------+----------+----------+
| | | | | | |
+-----------------------------------+------+----------+----------+----------+----------+
| Revenue | | | 2,603 | 8,362 | 10,965 |
+-----------------------------------+------+----------+----------+----------+----------+
| Cost of sales | | | (2,819) | (9,126) | (11,945) |
+-----------------------------------+------+----------+----------+----------+----------+
| Gross loss | | | (216) | (764) | (980) |
+-----------------------------------+------+----------+----------+----------+----------+
| | | | | | |
+-----------------------------------+------+----------+----------+----------+----------+
| Other operating income | | | - | 41 | 41 |
+-----------------------------------+------+----------+----------+----------+----------+
| Administrative charges | | | (7,971) | (1,676) | (9,647) |
+-----------------------------------+------+----------+----------+----------+----------+
| Other administrative expenses | | | (5,779) | (1,676) | (7,455) |
+-----------------------------------+------+----------+----------+----------+----------+
| Share based payments | 7,9 | | (2,192) | - | (2,192) |
+-----------------------------------+------+----------+----------+----------+----------+
| | | | | | |
+-----------------------------------+------+----------+----------+----------+----------+
| Operating loss | | | (8,187) | (2,399) | (10,586) |
+-----------------------------------+------+----------+----------+----------+----------+
| | | | | | |
+-----------------------------------+------+----------+----------+----------+----------+
| Financial income | 3 | | 169 | 137 | 306 |
+-----------------------------------+------+----------+----------+----------+----------+
| Financial expenses | 4 | | (330) | (4,165) | (4,495) |
+-----------------------------------+------+----------+----------+----------+----------+
| Other financial expenses | | | (330) | (332) | (662) |
+-----------------------------------+------+----------+----------+----------+----------+
| Gold sale agreement valuation | | | - | (3,833) | (3,833) |
+-----------------------------------+------+----------+----------+----------+----------+
| | | | | | |
+-----------------------------------+------+----------+----------+----------+----------+
| Loss before tax | | | (8,348) | (6,427) | (14,775) |
+-----------------------------------+------+----------+----------+----------+----------+
| Taxation | 5 | | (10) | 48 | 38 |
+-----------------------------------+------+----------+----------+----------+----------+
| Loss for the year | | | (8,358) | (6,379) | (14,737) |
+-----------------------------------+------+----------+----------+----------+----------+
+-----------------------------------+------+----------+----------+----------+----------+
| | | | | | 2007 |
+-----------------------------------+------+----------+----------+----------+----------+
| in thousands of pounds sterling |Note | |Group ex | Ghana | Total |
| | | | Ghana | | |
+-----------------------------------+------+----------+----------+----------+----------+
| | | | | | |
+-----------------------------------+------+----------+----------+----------+----------+
| Assets | | | | | |
+-----------------------------------+------+----------+----------+----------+----------+
| Goodwill | 10 | | 501 | - | 501 |
+-----------------------------------+------+----------+----------+----------+----------+
| Property, plant and equipment | 11 | | 1,833 | 29,749 | 31,582 |
+-----------------------------------+------+----------+----------+----------+----------+
| Exploration and other | 12 | | 1,957 | - | 1,957 |
| evaluation assets | | | | | |
+-----------------------------------+------+----------+----------+----------+----------+
| Total non-current assets | | | 4,291 | 29,749 | 34,040 |
+-----------------------------------+------+----------+----------+----------+----------+
| Inventories | 13 | | 30 | 2,927 | 2,957 |
+-----------------------------------+------+----------+----------+----------+----------+
| Trade and other receivables | 14 | | 301 | 279 | 580 |
+-----------------------------------+------+----------+----------+----------+----------+
| Cash and cash equivalents | 15 | | 135 | 2,686 | 2,821 |
+-----------------------------------+------+----------+----------+----------+----------+
| Total current assets | | | 466 | 5,892 | 6,358 |
+-----------------------------------+------+----------+----------+----------+----------+
| Total assets | | | 4,757 | 35,641 | 40,398 |
+-----------------------------------+------+----------+----------+----------+----------+
| | | | | | |
+-----------------------------------+------+----------+----------+----------+----------+
| Equity | | | | | |
+-----------------------------------+------+----------+----------+----------+----------+
| Share capital | 16 | | 530 | - | 530 |
+-----------------------------------+------+----------+----------+----------+----------+
| Share premium | 16 | | 28,352 | - | 28,352 |
+-----------------------------------+------+----------+----------+----------+----------+
| Foreign currency translation | 16 | | (211) | (10) | (221) |
| reserve | | | | | |
+-----------------------------------+------+----------+----------+----------+----------+
| Accumulated loss | 16 | | (26,232) | (40,684) | (14,756) |
+-----------------------------------+------+----------+----------+----------+----------+
| Total equity attributable to | | | 2,623 | 11,281 | 13,905 |
| equity holders of the parent | | | | | |
+-----------------------------------+------+----------+----------+----------+----------+
| Minority interest | | | - | - | - |
+-----------------------------------+------+----------+----------+----------+----------+
| Total equity | | | 2,625 | 11,281 | 13,905 |
+-----------------------------------+------+----------+----------+----------+----------+
| | | | | | |
+-----------------------------------+------+----------+----------+----------+----------+
| Liabilities | | | | | |
+-----------------------------------+------+----------+----------+----------+----------+
| Loans and other borrowings | 18 | | - | 9,701 | 9,701 |
+-----------------------------------+------+----------+----------+----------+----------+
| Other financial liabilities | 19 | | - | 2,654 | 2,654 |
+-----------------------------------+------+----------+----------+----------+----------+
| Deferred taxation | 20 | | 406 | 449 | 855 |
+-----------------------------------+------+----------+----------+----------+----------+
| Provisions | 21 | | 91 | 3,162 | 3,253 |
+-----------------------------------+------+----------+----------+----------+----------+
| Total non-current liabilities | | | 497 | 15,966 | 16,463 |
+-----------------------------------+------+----------+----------+----------+----------+
| | | | | | |
+-----------------------------------+------+----------+----------+----------+----------+
| Loans and borrowings - current | 18 | | - | 3,143 | 3,143 |
| portion | | | | | |
+-----------------------------------+------+----------+----------+----------+----------+
| Other financial liabilities - | 19 | | - | 1,179 | 1,179 |
| current portion | | | | | |
+-----------------------------------+------+----------+----------+----------+----------+
| Trade and other payables | 22 | | 1,635 | 4,059 | 5,694 |
+-----------------------------------+------+----------+----------+----------+----------+
| Taxation | | | 1 | 13 | 14 |
+-----------------------------------+------+----------+----------+----------+----------+
| Total current liabilities | | | 1,636 | 8,394 | 10,030 |
+-----------------------------------+------+----------+----------+----------+----------+
| Total liabilities | | | 2,132 | 24,360 | 26,493 |
+-----------------------------------+------+----------+----------+----------+----------+
| Total equity and liabilities | | | 4,757 | 35,641 | 40,398 |
+-----------------------------------+------+----------+----------+----------+----------+
Glossary
AGA AngloGold Ashanti
AIM Alternative Investment Market
Au gold
Ba billion years
bcm bank cubic metres
Bibiani Bibiani gold mine
BIF Banded Iron Formation
CAG Central African Gold PLC
CIL Carbon-in-Leach
CPR Competent Person's Report
DCF Discounted Cash Flow
DD diamond drilling
EM electro-magnetic
EPA Environmental Protection Agency
EPO exclusive prospecting order
g/t grams per tonne
GAAP Generally Accepted Accounting Principles
GIS Geographical Information Systems
GTML Golden Tau Mining Limited
Ha hectare
Hr hour
IFRS International Financial Reporting Standards
Koz thousand ounces
Kt thousand tonnes
JORC Joint Ore Reserves Committee of the Australian Institute of Mining and
Metallurgy, Australian Institute of Geoscientists and Minerals Council of
Australia
JV joint venture
km kilometre
Kt thousand tonnes
Ktpa thousand tonnes per annum
Ktpm thousand tonnes per month
kV thousand volts
kW thousand watts
LHD Load-Haul-Dump
LSE London Stock Exchange
M million
m metre
Ma million years
MMH Mali Mining House
Moz million ounces
Mtpa million tonnes per annum
MW mega watts (1 mega watt = 1 million watts)
N north
N/A not applicable or not available
NPV net present value
oz ounce
RC reverse circulation percussion drilling
ROM run-of-mine
SAG semi-autogenous grinding
SGMC State Gold Mining Corporation
Snowden Snowden Mining Industry Consultants (Pty) Ltd
t tonne
tpa tonnes per annum
UG underground
US$ United States dollar
Definitions
Acid rock An igneous rock with 10% or more of free quartz.
Adit A horizontal entrance or passage in a mine.
Albite A variety of feldspar found in felsic rocks.
Alteration Change in mineral and chemical composition of rock, commonly brought
about by reactions to weathering or to hydrothermal solutions.
Anomaly An area where exploration has revealed results higher (or sometimes
lower) than the local background level.
Anomalous A departure from the expected norm. In mineral exploration this term
is generally applied to either geochemical or geophysical values higher or lower
than the norm.
Archaean The oldest rocks of the Earth's crust -older than 2,400Ma.
Aeromagnetics Geophysical technique utilized from an airborne aircraft.
Arsenopyrite Ore mineral of arsenic (FeAsS).
Basalt A dark, fine-grained volcanic rock of low silica (<55%) and high iron and
magnesium composition, composed primarily of plagioclase and pyroxene. Important
types include tholeiitic, high magnesian and komatiitic basalts.
Basement The igneous and metamorphic crust of the earth, underlying sedimentary
deposits. Birimian Volcanic arc, metasedimentary and granitoid terranes
prevalent in west Africa aged 2,200-1,800Ma.
Breccia Rock comprising angular fragments enclosed in a matrix.
Bulk density The weight of a material divided by the volume it occupies
(including pore spaces).
Carbonate Common mineral type consisting of carbonates of calcium, iron, and/or
magnesium.
Chalcopyrite A common sulphide ore of copper,CuFeS2
Channel sampling Sampling taken from the wall of a mine opening, or along a
surface exposure, trench or costean, in which a furrow is made and the entire
sample combined for analysis. Channel samples are commonly, but not always,
collected over continuous one metre intervals.
Chert A hard, extremely fine grained sedimentary rock consisting almost entirely
of interlocking quartz crystals, of which flint is a dark variety.
Craton Large, and usually ancient, stable mass of the earth's crust.
Cyanidation A method of extracting gold by dissolving it in a weak cyanide
solution.
Diamond drilling Mineral exploration hole completed using a diamond set or
diamond impregnated drill bit for retrieving a cylindrical core of rock.
Diorite A dark, coarse grained intrusive igneous rock composed of feldspar and
iron and magnesium rich minerals.
Dip The angle at which a rock stratum or structure is inclined from the
horizontal.
Disseminated Said of particles distributed finely and evenly throughout a
matrix.
Dolerite A medium grained basic intrusive rock composed mainly of pyroxenes and
sodium calcium feldspar.
Dyke A tabular intrusion of igneous rock that cuts across the planar structure
of the surrounding rock.
Epigenetic Mineralisation deposited later than the enveloping rocks.
Fault A fracture or fracture zone, along which displacement of opposing sides
has occurred.
Feasibility study An advanced study undertaken to determine the economic
viability of a mineral deposit to a high degree of accuracy.
Felsic Light colour rocks containing an abundance of any of the minerals
feldspar, feldspathoid and silica.
Fire assay Analytical technique that extracts precious metals under high
temperatures in a furnace.
Foliation The banding or lamination of metamorphic rocks as distinguished from
stratification in sedimentary rocks.
Footwall The underlying side of a fault, orebody or mine working.
Geochemical exploration Used in this report to describe a prospecting technique
which measures the content of certain metals in soils and rocks and defines
anomalies for further testing.
Geophysical exploration The exploration of an area in which physical properties
(e.g. resistivity, gravity, conductivity, magnetic properties) unique to the
rocks in the area are quantitatively measured by one or more geophysical
methods.
Geophysical survey A survey measuring the physical properties of a rock mass,
typically recording the magnetic, electrical or radiometric properties. Commonly
used to assist in determining the nature of the sub-surface rock mass.
Gneiss A metamorphic rock of coarse grain size, usually exhibiting banding.
Granitoid A general term to describe coarse grained felsic intrusive igneous
rocks, resembling granite.
Granodiorite A coarse-grained igneous rock containing quartz, plagioclase
(sodium-calcium) feldspar and potassium feldspar with biotite, hornblende or
pyroxene.
Gravimetric concentration The quantitative determination of a substance by
precipitation followed by isolation and weighing of the precipitate.
Greenschist facies Conditions of metamorphism characterised by chlorite, epidote
and/actinolite.
Greenstone A collective term for slightly altered mafic igneous rocks.
Haematite (hematite) Common iron oxide mineral (Fe2O3).
Hangingwall The overlying side of a fault, orebody or mine working.
Hydrothermal A term applied to magmatic emanations rich in water and to the
alteration products and mineral deposits produced by them.
Igneous A rock that has solidified from molten material or magma.
Intermediate A rock unit which contains a mix of felsic and mafic minerals.
Intrusion/intrusive A body of igneous rock that invades older rocks.
JORC The Joint Ore Reserves Committee (Australia).
Laterite A cemented residuum of weathering generally leached in silica with a
high alumina and/or iron content.
Limestone A sedimentary rock containing at least 50% calcium or
calcium-magnesium carbonates.
Lineament A significant linear feature of the earth's crust, usually equating a
major fault or shear structure.
Lithology A term pertaining to the general characteristics of rocks. It
generally relates to descriptions based on hand sized specimens and outcrops
rather than microscopic or chemical features.
Lode deposit A vein or other tabular mineral deposit with distinct boundaries.
Mafic Pertaining to, or composed dominantly of, the dark coloured ferromagnesian
rock forming silicates.
Mafic volcanic Volcanic rocks dominantly comprised of ferromagnesian minerals.
Mesozoic The era of geologic time that encompasses the Jurassic, Triassic and
Cretaceous (i.e. 195 to 64Ma ago)
Metallogenic Association of metal ores that is peculiar to a particular region,
or period of time.
Metamorphism The process of altering a rock by temperature and/or pressure.
Metasediments Metamorphosed sedimentary rocks.
Mineral resource A mineral resource is a concentration (or occurrence) of
material and economic interest in or on the earth's crust in such form, quality
and quantity that there are reasonable and realistic prospects for
eventual economic extraction. The location, quantity, grade, continuity and
other geological characteristics of a mineral resource are known, estimated from
specific geological evidence and knowledge, or are interpreted from a
well-constrained and portrayed geological model. Mineral resources are
subdivided in order of increasing confidence in respect of geoscientific
evidence into inferred, indicated and measured categories.
Miocene A period of geological time from 5 to 23.5Ma.
Nappe A large, sheet-like body of rock which has been transported from its
original position.
Ore reserve An ore reserve is the economically mineable material derived from a
measured and/or indicated mineral resource. It is inclusive of
diluting materials and allows for losses that may occur when the material is
mined. Mineral reserves are subdivided in order of increasing confidence into
probable mineral reserves and proven mineral reserves.
Orogeny A deformation and/or magmatic event in the earth's crust, usually caused
by collision between tectonic plates. The process of mountain making especially
by folding of the earth's crust.
Oxide zone Near surface material affected by weathering and leaching of
minerals.
Palaeozoic The era ranging from 600 to 230Ma ago.
Phyllite A metasedimentary rock displaying a platy cleavage and low sheen.
Pleistocene The period of time basically covering the glacial periods extending
from 1.8 to 0.01Ma ago.
Plunge The inclination of a linear geological structure from the horizontal.
Pluton A general term for a large igneous intrusion.
Porphyry An igneous rock that contains conspicuous crystals in a fine grained
matrix.
Potassic alteration The chemical alteration of a rock by potassium-rich fluids
to produce potassium rich minerals.
Precambrian The period of time between the consolidation of the Earth's crust
and the beginning of life - approximately 4.5Ba ago to 530 ± 40Ma ago.
Proterozoic Between 2,500Ma and 542Ma ago. Divided into the Paleoproterozoic
(2,500-1,600Ma), Mesoproterozoic (1,600-1,000Ma) and Neoproterozoic (1,000 -
542Ma) periods.
Pyrite An iron sulphide mineral FeS2
Pyrrhotite An iron sulphide mineral, FeS (n-1).
Quartz Mineral species composed of crystalline silica.
Quartzite A quartz-rich sandstone that has been metamorphosed or indurated by
the recrystallisation of silica.
Quartzofeldspathic Compositional term relating to rocks containing abundant
quartz and feldspar, commonly applied to metamorphic and sedimentary rocks.
Radiometric survey Survey measuring the gamma radiation emitted from the
isotopes or daughter products of potassium, uranium and thorium. Often done in
conjunction with airborne magnetic surveys.
Regolith The layer of weathered and transported material overlying fresh
rock. The regolith includes such things as weathered and fractured
bedrock, saprolite, alluvium and colluvium.
Sandstone A sedimentary rock composed of cemented or compacted detrital
minerals, principally quartz grains.
Schist A micaceous crystalline metamorphic rock having a foliated structure due
to the recrystallisation of the constituent minerals.
Sediment A rock formed of particles which were deposited from suspension in
water, wind or ice. Sericite A white or pale apple green potassium mica, very
common as an alteration product in metamorphic and hydrothermally altered rocks.
Shaft A vertical or inclined tunnel from the surface, through which underground
excavations can be entered and by which ore and waste may be removed.
Shear zone A zone in which shearing has occurred on a large scale, such that the
rock is deformed dominantly by ductile deformation.
Silicification Replacement by, or introduction of, appreciable quantities of
silicon dioxide minerals.
Siltstone A rock intermediate in character between shale and sandstone. Composed
of silt sized grains. Skarn An alteration halo of iron-rich minerals formed
in carbonate rocks by contact metasomatic replacement of the original
carbonate-rich rock mass.
Stockwork A network of (usually) quartz veinlets of varying orientation,
produced during pervasive brittle fracture.
Stratabound Restricted to a particular stratigraphic unit or part of the
stratigraphic column.
Stratiform Parallel to bedding and with limited development perpendicular to it.
Strike The direction of bearing of a bed or layer of rock in the horizontal
plane.
Strike-slip The horizontal component of the slip parallel with the fault strike.
Subduction Term to describe plates of oceanic crust descending beneath
continental crust.
Sulphide ore Mineralisation characterised by compounds of metals and sulphur.
Tertiary A period of geological time from 1.8 to 66 Ma ago.
Thrust fault A low angle (shallowly inclined) fault or shear on which the rocks
on the top have moved up and over the rocks on the bottom.
Treated Processed through the mine's process plant.
Turbidite Sedimentary deposits formed through fluidised flow.
Ultramafic Referring to an igneous rock in which more than 90% of the minerals
are ferromagnesium minerals, with only trace quartz and feldspar.
Vein A thin infill of a fissure or crack, commonly bearing quartz.
+------------------------------+-----------------------------------------------+
| | |
+------------------------------+-----------------------------------------------+
| Registered and Head Office | Millennium Bridge House |
| | 2 Lambeth Hill |
| | London EC4V 4AJ |
| | United Kingdom |
+------------------------------+-----------------------------------------------+
| | |
+------------------------------+-----------------------------------------------+
| Company Secretary | Philip Enoch |
+------------------------------+-----------------------------------------------+
| | |
+------------------------------+-----------------------------------------------+
| Nominated Adviser and Broker | Strand Hanson Limited |
| | 26 Mount Row |
| | London W1K 3SQ |
| | United Kingdom |
+------------------------------+-----------------------------------------------+
| | |
+------------------------------+-----------------------------------------------+
| Solicitors to the Company | Salans LLP |
| | Millennium Bridge House |
| | 2 Lambeth Hill |
| | London EC4V 4AJ |
| | United Kingdom |
+------------------------------+-----------------------------------------------+
| | |
+------------------------------+-----------------------------------------------+
| Auditors, Reporting | KPMG Audit Plc |
| Accountants and Tax Advisers | Mining and Metals |
| | 8 Salisbury Square |
| | London |
| | EC4Y 8BB |
| | United Kingdom |
+------------------------------+-----------------------------------------------+
| | |
+------------------------------+-----------------------------------------------+
| Registrars | Capita Registrars |
| | Northern House |
| | Woodsome Park |
| | Fenay Bridge |
| | Huddersfield |
| | Yorkshire |
| | HD8 0GA |
| | United Kingdom |
+------------------------------+-----------------------------------------------+
This information is provided by RNS
The company news service from the London Stock Exchange
END
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