TIDMKENV
RNS Number : 0240B
Kennedy Ventures PLC
30 March 2017
30 March 2017
Kennedy Ventures plc
Kennedy Ventures plc
Interim Results for the six months ended 31 December 2016
Kennedy Ventures plc ("Kennedy Ventures" or "the Company"), the
AIM quoted investing company which is focussed on tantalite
production through its stake in African Tantalum (Pty) Limited
("Aftan"), which owns and manages the Tantalite Valley Mine ("TVM")
in Namibia, is pleased to announce its unaudited interim results
for the six months ended 31 December 2016 ("the Period").
Highlights:
Operational
-- Successfully raised GBP2.0 million through a placing
with the proceeds invested in Aftan to allow it to
upgrade and expand the plant at the TVM and open
up the Lepidolite Orebody
-- Aftan's TVM plant upgrade programme was initiated.
The programme is designed to improve the overall
performance of the mine, generating improved utilisation
rates, improved recovery rates and higher throughput
levels, ensuring long-term value creation. The programme
involves:
o Improving overall tantalite recovery rates through
the installation of a new fine recovery plant, allowing
for the re-processing of all tailings
o Increasing both the target throughput to 15,000
tonnes per month and production to 15 tonnes of tantalite
concentrate per month, with improved ore sourcing
and grades
o Installation of a milling circuit to liberate fine
grains
-- During the Period, Aftan reported improved mining
face availability and flexibility in ore sourcing
as a direct result of more consistent blasting and
the generation of new adits in line with the mine
plan under the new explosive programme
-- Ongoing work within Tantalite Valley on the lithium
potential
Financial
-- At 31 December 2016, cash at bank amounted to GBP315,000
and, in addition with the investment in TVM, property
plant & equipment and other intangible assets amounted
in aggregate to GBP2,188,000
-- Net Current Assets at 31 December 2016 amounted to
GBP338,000 which is an improvement on the net current
liability position at 30 June 2016 of GBP306,000
-- Overall Net Assets at 31 December 2016 amounted to
GBP3,168,000, up from the 30 June 2016 balance of
GBP1,405,000
Post Period
-- Appointment of Larry Johnson as CEO
-- Raised GBP1.25 million in January 2017 through a
placing, with the proceeds invested in Aftan to allow
it to implement essential plant enhancements that
were identified as necessary after the Period-end.
Aftan expects that enhancements will deliver improved
utilisation rates, recoveries and production levels
that involve:
o improving water retention through the new plant
by upgrading pumping systems, water storage facilities
and installing a thickener; and
o the installation of the milling circuit to follow
the water system.
Aftan has advised that the proceeds will also be
applied to:
o accelerate ongoing lithium studies; and
o facilitate the on-going negotiations with major
purchasers of tantalum
-- Aftan has advised that mining has continued during
the upgrade, with stockpiles increasing in line with
increased volumes of ore moved
-- Positive onsite visit by one of the largest tantalum
consumers in the world, in line with Aftan's objective
to secure improved offtake terms
-- Aftan's lithium programme continues, with the Lepidolite
sampling programme nearing completion and a maiden
JORC compliant mineral resource estimate expected
in Q2 this calendar year
-- Positive review of Aftan's procurement functions,
stock control and general management of TVM to deliver
maximum mine productivity and profitability as the
mine approaches higher output levels
-- Resignation of Caroline McLeod in March 2017 as a
Non-executive Director of the Company
-- Successful visit to TVM by a leading manufacturer
of tantalum capacitors
-- One metric tonne of product sold by Aftan with a
further six metric tonnes requested for delivery
as part of a potential offtake sample programme
-- A meeting between Aftan and local unions was successful,
with full approval for an extended shift granted
-- Full commercial production at TVM expected by the
end of Q2 2017
Outlook for Aftan's operations
-- The pumping system and upgrade of the water management
system took place in March and the new milling circuit
installation is expected to be completed in May 2017.
The fines recovery circuit is being completed and
once completed will be coupled to the existing circuit.
-- Aftan expects a throughput rate at TVM of 15,000
tonnes per month by the end of Q2 2017 which is expected
to be followed by positive cash generation by the
calendar year end.
Larry Johnson, CEO of Kennedy Ventures said:
"I am pleased to announce that Aftan and Kennedy are now poised
to take advantage of the initiatives launched during the Period.
When Kennedy invested in Aftan, it was known that the TVM plant
required an upgrade in order for it to extract maximum value from
the mine. The subsequent timing of the upgrade has proven to be to
our advantage as support and demand begins to flow back into global
commodities.
Post Period-end we assisted Aftan to identify further, necessary
enhancements for the plant and Aftan is busy implementing these. In
anticipation of the higher levels of production and in recognition
of the enhanced processing, TVM has now opened itself up to the
global market and Aftan is in advanced discussions geared towards
securing new and positive offtake terms for its product.
The Board continues to look at other investment opportunities
and we hope to provide further details on these in due course."
For further information on the Company, visit:
www.kvplc.com:
Kennedy Ventures plc
Larry Johnson (CEO), c/o Tel: +44 (0)203 757
Camarco 4983
Grant Thornton UK LLP (Nominated Tel: +44 (0)20 7383
Adviser) 5100
Colin Aaronson
Richard Tonthat
Daniel Bush
Shore Capital (Joint Broker) Tel: +44 (0) 207 408
Mark Percy / Toby Gibbs (corporate 4090
finance)
Jerry Keen (corporate broking)
Camarco (PR) Tel: +44 (0) 203 757
Billy Clegg / Gordon Poole 4980
James Crothers
The information contained within this announcement is deemed to
constitute inside information as stipulated under the Market Abuse
Regulations (EU) No. 596/2014. Upon the publication of this
announcement, this inside information is now considered to be in
the public domain.
Notes to Editors:
Tantalite concentrates form the vast majority of feedstock for
all tantalum products. As such they are critical parts of a wide
range of modern electronics including computers, tablets, mobile
phones, motor components and video game systems.
Aside from electronics, tantalum has significant usage in super
alloys, specialised steels, corrosion resistant equipment and
medicine.
Tantalum's applications are based on its unique physico -
chemical properties. The oxides and metal have extremely high
melting points, high heat conductivity and strong resistance to
corrosive environments. Combined, these factors have entrenched its
international demand and made it an important component of numerous
research projects and new technologies.
Trade pricing is following tantalum markets as per Asian Metals
and Metal Pages.
In August 2012, the US Securities and Exchange Commission
adopted a rule mandated by the Dodd-Frank Wall Street Reform and
Consumer Protection Act to require companies reporting to the SEC
to publicly disclose the origins of the tantalum they buy in order
to restrict the use of conflict minerals that originated in the
Democratic Republic of the Congo or an adjoining country. As a
result, users of tantalum are encouraged to demonstrate that their
supply chain is transparent to ensure that conflict-free tantalum
is procured.
It is intended that the tantalum produced by Aftan will be
conflict-free.
CHAIRMAN'S STATEMENT
Kennedy continues to work closely with Aftan to fully understand
the full potential at TVM. With the appointment of Larry Johnson
after the Period-end in January 2017, Kennedy is now well placed to
take advantage of an improving commodity environment. Following the
completion of the plant upgrade and associated enhancements, we
expect Aftan to become a high margin tantalum producer.
Review of the Period
When Kennedy Ventures acquired 75% of Aftan in January 2015,
there was a clear strategy around TVM to upgrade the plant. This
upgrade was essential for Aftan to extract the maximum value from
the mine and its surrounding licences, and ensuring that higher
levels of throughput and recovery were achieved. During the first
half of this financial year, we have made important strides towards
supporting Aftan to complete these upgrades, firstly by raising the
required funds (GBP2.0 million) to invest in the plant upgrade.
Later in the Period, Aftan initiated and completed the
reorganisation of the existing modules, the installation of a pre
concentration plant to reduce table loads and specialist tables for
the recovery of fine tantalite. As the improvements were
implemented and production was ramping up, it became clear post
Period-end that the management and storage of water within the new
plant was a constraining issue and a thickener was required to
improve water retention. Consequently, the scheduled installation
of the milling circuit to liberate fine tantalite is delayed until
after the upgraded water pumping systems, water storage facilities
and new thickener arrive on site and are installed, which is
expected by first week of April.
During the Period, the Company was very pleased to receive
notification from Aftan that the mine performance was improving
with improved mining face availability and flexibility in ore
sourcing. This was as a direct result of more consistent blasting
and the generation of new adits in line with the mine plan under
the new explosive programme.
The first half of the financial year saw Aftan begin its lithium
programme, designed to evaluate the lithium potential at TVM and
within the Lepidolite Ore Body where studies identified lithium
bearing mineralisation. Initial sampling took place during the
Period and proceeded well, with the sampling programme nearing
completion post Period. The test work programme is underway and is
proceeding as planned at SGS's laboratory in Johannesburg, with
first results received and an initial plant design being scoped.
Aftan expects to produce a maiden JORC compliant mineral resource
estimate in Q2 this year.
Post Period end, the Company appointed Larry Johnson as CEO and
successfully raised GBP1.25 million to invest in Aftan to allow it
to carry out the enhancements relating to the water management
system. Larry is uniquely qualified having spent 35 years in the
tantalum industry with two large US based publicly listed companies
with core interests in tantalum. Larry's knowledge of the global
tantalum market has enabled the Company to consider its future
investment strategy as it grows, facilitating further investments
in the sector.
Additionally, Larry has been working closely with Aftan,
reviewing processes and providing Aftan with guidance around
further plant processing optimisation, as well as reviewing
existing commercial contracts to ensure Aftan receives optimal
revenues from the TVM. This review will seek further efficiencies
at the mine to ensure stockpile levels are maintained and old
stockpiles are incorporated into the mine plan, potentially
creating an additional economic source of tonnage.
In mid-February, the leading manufacturer of tantalum capacitors
(the "Customer") visited TVM to assess the progress that Aftan has
made. Following the meeting, the Customer purchased one metric
tonne of end product for testing. The customer has now followed
this initial purchase with a request for 6 metric tonnes for the
quarter to June 2017 as part of a quality sampling programme to
make certain the product suits their facilities and requirements.
Subject to the product meeting the Customer's required
specifications, Aftan hopes to agree a permanent offtake agreement
with the Customer. Furthermore, the Customer has introduced Aftan
to the leading global tantalum powder smelter from Germany. The
Customer has indicated that it will assist Aftan with developing
this relationship.
Upon completion of Aftan's upgrade work, production rates should
be significantly higher than 18 months ago and the plant capacity
and efficiency are expected to be markedly improved. This will
ensure Aftan is in a position of strength to deliver high quality
tantalum into a growing demand market, generating high cash
margins.
Demand for tantalum is driven by the electronics and technology
industries, where tantalum capacitors are used in nearly all
electronic equipment and mobile devices. Furthermore, tantalum is
used to produce super alloys that can be used to manufacture high
temperature cutting tools. Tantalum is a conflict mineral and the
Company remains committed to ensuring that the tantalum produced by
Aftan will be conflict-free.
Furthermore, the Company is currently exploring new revenue
generation streams and investment opportunities which could include
investing in new purchasing and supply chains for tantalite and
other speciality minerals in Africa and globally.
Financials
The Company recorded a loss before tax of GBP418,000 (2015:
GBP368,000) and had cash balances of GBP315,000 (2015: GBP233,000)
at the end of the Period. The Company does not plan to pay an
interim dividend for the six months ended 31 December 2016.
Outlook
The TVM upgrade, as well as enhancements to the water management
system, have been essential to ensure that Aftan can extract
optimal value from TVM. Aftan is now strategically placed to
increase levels of high grade product and to negotiate improved
offtake terms. Additionally, its lithium programme continues at
pace and Aftan expects to be able to announce a maiden mineral
resource estimate by the end of Q2 this year. The arrival of Larry
Johnson as CEO has further enhanced Kennedy's ability to explore
new investments and acquisition opportunities, supply chain
extensions and trade opportunities.
With the plant upgrade capex now sunk at TVM, Kennedy, through
the investment in Aftan, hopes to be able to take advantage of the
high margin cash generation anticipated this calendar year.
Giles Clarke
Chairman
30 March 2017
UNAUDITED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE SIX MONTHSED 31 DECEMBER 2016
Unaudited Unaudited Audited
Six months Six months year
ended ended ended
31 December 31 December 30 June
2016 2015 2016
Notes GBP'000 GBP'000 GBP'000
------------------------------- ------ ------------ ------------ --------
Administrative expenses (418) (368) (788)
Operating loss and loss
before tax (418) (368) (788)
Tax on profit on ordinary
activities - - -
Loss for the period (418) (368) (788)
------------------------------- ------ ------------ ------------ --------
Loss attributable to
owners of the Company (421) (368) (676)
Profit / (loss) attributable
to non-controlling interests 3 - (112)
(418) (368) (788)
------------------------------- ------ ------------ ------------ --------
Loss per share
Basic (loss) per share (0.26)p (0.36)p (0.6)p
Fully diluted (loss)
per share 3 (0.26)p (0.36)p (0.6)p
------------------------------- ------ ------------ ------------ --------
Loss for the year (421) (368) (676)
Exchange differences on translation
of foreign operations 358 31 21
Total comprehensive loss
for the year attributable
to equity holders of the
parent (63) (337) (655)
------------------------------------- ------ ------ ------
UNAUDITED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2016
Unaudited Unaudited Audited
As at As at As at
31 December 31 December 30 June
2016 2015 2016
GBP'000 GBP'000 GBP'000
------------------------------- ------------ ------------ ---------
Non-current assets
Goodwill 642 571 571
Other intangible assets 1,377 444 674
Property, plant & equipment 811 762 466
Total non-current assets 2,830 1,777 1,711
------------------------------- ------------ ------------ ---------
Current assets
Trade and other receivables 165 31 70
Cash and cash equivalents 315 233 60
Total current assets 480 264 130
------------------------------- ------------ ------------ ---------
Current liabilities
Trade and other payables (142) (37) (286)
Short term borrowings - - (150)
Total current liabilities (142) (37) (436)
------------------------------- ------------ ------------ ---------
Net assets 3,168 2,004 1,405
------------------------------- ------------ ------------ ---------
Capital and reserves
Called up share capital 1,751 1,052 1,084
Share premium account 10,281 9,004 9,125
Share based payment reserve - 251 -
Capital redemption reserve 2,077 2,077 2,077
Currency translation reserve 23 27 17
Profit and loss account (10,842) (10,550) (10,773)
------------------------------- ------------ ------------ ---------
Equity attributable to owners
of the Company 3,290 1,861 1,530
Non-controlling interests (122) 143 (125)
------------------------------- ------------ ------------ ---------
Shareholder funds 3,168 2,004 1,405
------------------------------- ------------ ------------ ---------
UNAUDITED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE SIX MONTHS ENDED 31 DECEMBER 2016
Unaudited Unaudited Audited
Six months Six months year
ended ended ended
31 December 31 December 30 June
2016 2015 2016
GBP'000 GBP'000 GBP'000
-------------------------------- ------------ ------------ --------
Balance at beginning of period 1,405 646 646
Loss for the financial period (66) (368) (788)
Issue of share capital 1,823 1,444 1,597
Share based payment expense - 251 85
Acquisition of subsidiary
undertakings - - (156)
Foreign exchange reserve
movement 6 31 21
Balance at end of period 3,168 2,004 1,405
-------------------------------- ------------ ------------ --------
UNAUDITED CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE SIX MONTHS ENDED 31 DECEMBER 2016
Unaudited Unaudited Audited
Six months Six months year
ended ended ended
31 December 31 December 30 June
2016 2015 2016
GBP'000 GBP'000 GBP'000
----------------------------- ------------ ------------ --------
Cash flows from operating
activities
Operating loss (66) (368) (788)
Adjustments for:
Depreciation 11 - 17
Share based payment charge
for year - 251 197
Shares issued in settlement
of fees - - 20
------------------------------ ------------ ------------ --------
Operating cashflow before
working capital changes (55) (117) (554)
(Increase) in receivables (95) (18) (57)
(Decrease) / increase
in payables (144) (61) 188
------------------------------ ------------ ------------ --------
Net cash outflow from
operating activities (294) (196) (423)
------------------------------ ------------ ------------ --------
Investing activities
Purchase of property,
plant & equipment (356) (367) (88)
Development costs (703) (265) (664)
Acquisition of subsidiary
undertakings - (181) (336)
Net cash outflow from
investing activities (1,059) (813) (1,088)
------------------------------ ------------ ------------ --------
Financing activities
Net proceeds from share
issues 1,823 1,358 1,365
Repayment of loan (245) (142) -
Loans from associates 95 - 108
------------------------------ ------------ ------------ --------
Net cash inflow from
financing activities 1,673 1,216 1,473
------------------------------ ------------ ------------ --------
Net increase/(decrease)
in cash in the period 320 207 (38)
Exchange rate translation
adjustment (65) - 72
Cash and cash equivalents
at beginning of period 60 26 26
------------------------------ ------------ ------------ --------
Cash and cash equivalents
at end of period 315 233 60
------------------------------ ------------ ------------ --------
NOTES TO THE UNAUDITED INTERIM ACCOUNTS
FOR THE SIX MONTHS ENDED 31 DECEMBER 2016
1. Basis of preparation
The financial statements included in the interim accounts have
been prepared under the historical cost convention and in
accordance with International Financial Reporting Standards (IFRS).
The comparative figures for the six months ended 31 December 2015
are also included in these interim accounts under the historical
cost convention.
The principal accounting policies used in preparing these
interim accounts are those expected to apply in the Company's
Financial Statements for the year ending 30 June 2017 and are
unchanged from those disclosed in the Company's Annual Report for
the year ended 30 June 2016.
The interim accounts were approved by the Board of Kennedy on 30
March 2017. The interim financial information for the six months
ended 31 December 2016 does not constitute statutory accounts
within the meaning of section 434 of the Companies Act 2006 and is
unaudited. The comparatives for the year ended 30 June 2016 are not
the Company's full statutory accounts for that period. A copy of
the statutory accounts for that year has been delivered to the
Registrar of Companies. The auditors' report on those accounts was
unqualified, and did not contain statements under sections 498(2)
or (3) of the Companies Act 2006. Copies of the accounts for the
year ended 30 June 2016 are available on the Company's website
(www.kvplc.com).
2. Accounting policies
The principal accounting policies are:
Basis of preparation
The comparative figures for the six months ended 31 December
2015 have been presented on the same basis as the interim accounts
for the six months ended 31 December 2016.
Going concern
The interim financial statements have been prepared on the going
concern basis as, in the opinion of the Directors, at the time of
approving the interim financial statements, there is a reasonable
expectation that the Company will continue in operational existence
for the foreseeable future. The interim financial statements do not
include any adjustments that would result from the going concern
basis of preparation being inappropriate.
3. Loss per share
Unaudited Unaudited Audited
6 months 6 months
ended ended Year ended
31 December 31 December 30 June
2016 2015 2016
GBP'000 GBP'000 GBP'000
-------------------------------- ------------ ------------ ------------
Loss used for calculation
of basic and diluted EPS (421) (368) (676)
Loss for the year attributable
to owners of the Company (421) (368) (676)
-------------------------------- ------------ ------------ ------------
Weighted average number
of ordinary shares in issue
used for calculation of
basic and diluted EPS* 161,979,587 102,889,458 104,756,967
Loss per share (pence per
share)
Basic and fully diluted*:
-from continuing and total
operations (0.26) (0.36) (0.6)
-------------------------------- ------------ ------------ ------------
*The Company has outstanding warrants and options which may be
dilutive in future periods. The effect in respect of the current
year would have been anti-dilutive (i.e. reducing the loss per
share) and accordingly is not presented.
4. Distribution of Interim Report and Registered Office
A copy of the Interim Report will be available shortly on the
Company's website, www.kvplc.com, in accordance with rule 26 of the
AIM Rules for Companies; and copies will be available from the
Company's registered office, Lakeside Fountain Lane, St.Mellons,
Cardiff, CF3 0FB.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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