Annual Financial Report

RNS Number : 9686G

African Mining & Exploration PLC

20 May 2011

 



African Mining & Exploration plc

("AME" or the "Company")

Financial Results for the Year Ended 31 December 2010

African Mining & Exploration plc (AIM: AME), the AIM listed gold exploration company operating in Mali, West Africa, announces its audited financial results for the year ended 31 December 2010.

Availability of Annual Report and Financial Statements

Copies of the Company's full Annual Report and Financial Statements are expected to be posted to shareholders today and will also be made available to download from the Company's website www.ameplc.co.uk.

The Annual Report and Financial Statements will also be made available for inspection at the Company's business office during normal business hours on any weekday.  The Company's business office is at 4^th Floor, 3 Shepherd Street, London, W1J 7HL.

Annual General Meeting

The Company's next Annual General Meeting ("AGM") will be held at the offices of the Company's solicitors Memery Crystal LLP, 44 Southampton Buildings, London, WC2A 1AP on 17 June 2011 at 11.00 a.m. and a formal Notice of AGM and proxy form are expected to be posted to shareholders today and will be available to download from the Company's website at www.ameplc.co.uk.

For further information, please contact:

African Mining & Exploration plc	[phone]
Mark Jones (Chief Executive Officer)
Singer Capital Markets Limited	[phone]
(Nomad and Broker)
James Maxwell/Jennifer Wyllie
Farm Street Communications	[phone]
	[phone]

The financial information set out below does not constitute the Company's statutory accounts for the years ended 31 December 2010 or 2009, but is derived from those accounts.  The auditors have reported on those accounts; their report was unqualified and did not draw attention to any matters by way of emphasis.

   CHAIRMAN'S STATEMEMENT FOR THE YEAR ENDED 31 DECEMBER 2010

I am delighted to present the inaugural Chairman's Statement for the Company following its admission to trading on the Alternative Investment Market ("Admission") on 1st November 2010. Our Company is focused on the exploration and subsequent development of gold assets in West Africa. Mali, our initial country of operation, is the third largest gold producer in Africa and has a long and rich history of gold discoveries. We believe that our current licenses have the potential for providing a significant resource base but also we are seeking opportunities to expand our areas of interest in additional geologically prospective areas.  Although we have only been a public company for a short time period, significant progress has been made in furthering our geological knowledge of our license areas through undertaking the proposed exploration programme.  On Admission the Company became the sole owner of New Mines which through Tobon Tondo, a company incorporated in Mali and a wholly owned subsidiary of New Mines, the Company holds the mining exploration permits for the Karan and Diatissan permit areas.

At the time of Admission, the Company raised £4.3 million net of expenses that is now being utilised principally to conduct a detailed exploration programme on the Company's two properties in Mali. As outlined in our Admission document our initial focus of activity has been on the Karan license which covers some 250 square kilometres. The Company has completed more than 100 line kilometres of ground magnetic geophysics and identified approximately 8km of highly prospective structures. These structures are consistent with what is found elsewhere in Mali in similar terrain. The fact that many of these structures are coincident with active artisanal mining suggests that the Company has identified highly prospective gold bearing targets. The first phase of the Company's planned drilling programme has been completed and in excess of 12,000 metres have been drilled with all samples having been assayed. It is apparent from the results of this first phase that gold mineralisation has been confirmed and large low grade gold halos have been intersected along with high grade intercepts of up to 11 g/t Au. Exploration remains at an early stage however and the next phase aims to improve our understanding of the structures controlling mineralization.

The Company and its management are cognisant of its social and environmental responsibilities in the areas in which it operates and is committed to the development and maintenance of good relationships with stakeholder communities. To this end the board has formulated a Community Relations policy which focuses on the positive interaction with the local community especially bearing in mind the significant artisanal mining which is taking place. This policy is being implemented and already forms the basis for effective community relations in our license areas as required by the Government.

The market in which we operate continues to be strong. The gold price has been rising in all currencies for the last 10 years. With the quantitative easing measures implemented in the US, the UK and elsewhere, and the debt crises in many developed economies, the investment interest in gold is high. New mine supply of gold is declining. The continent of Africa has a rich affinity with gold and many parts of it remain under-explored, including the southern and western parts of Mali where the Company's permits are located. New discoveries require focus and passion, a methodical approach to geological programmes as well as creative thinking and strong technical skills. I believe the Company has such attributes in its people.   

The speed at which progress on the ground has been made is very impressive and I would like to thank the Executive Directors and staff for their continued commitment. Mark Jones, our Chief Executive has built a strong management team and it is to his credit that the Company has developed so rapidly. Additionally, I would like to thank all the Company's stakeholders for their strong support both during and post the Company's Admission. I would also like to welcome Roger Williams to the Board of the Company as a Non-Executive Director, who now chairs the Company's Audit Committee. The addition of Roger will add to the Board's strength as he brings with him extensive experience in both the region and the gold industry. I look forward to the coming year, which I hope will be exciting and rewarding for the Company and its shareholders.

Stephen D Oke

Chairman

Date: 19 May 2011

CHIEF EXECUTIVE'S REPORT FOR THE YEAR ENDED 31 DECEMBER 2010

Since our initial fund raising and subsequent Admission to the Alternative Investment Market ("AIM"), we have achieved some significant milestones and I intend to give an operational update on each of our projects.

Social Responsibility

We have excellent relationships with the local population at both our exploration sites. This has developed over a period of almost 15 years at Diatissan and over 6 years at Karan, through our local subsidiary Tobon Tondo. The commencement of our drilling programme provided an opportunity to formally implement AME's Community Relations Policy on the ground to ensure we would meet both Malian requirements and international best practice.

An inaugural 'Town Hall' meeting was held in mid February at the local school attended by the deputy Mayor, the chief of Karan village, village elders and representatives of women and youth groups. We set out our proposed work programme and gave everyone a chance to discuss the potential impact. It was a tremendous success with each representative sharing their view on the benefits that will accrue to the local population from employment and the attendant economic injection should the programme deliver on its goals. All urged us to move ahead quickly, and gave us their full support.

Subsequent meetings have confirmed their ongoing support

Karan License

In March of this year, the Company announced that the Phase 1 drill programme had commenced on the Karan Exploration License. This followed a previous announcement issued on the 7th February 2011, when the Company stated that it was to drill an initial 12,400 metre reverse circulation drill programme focusing on a number of priority targets.

Evidence accumulated to date from recent and historic exploration suggests the presence of gold mineralisation associated with a regional shear zone that extends north to south across the Karan License with smaller cross-cutting and sub-parallel faults occurring within this structural corridor. The intent of the Phase 1 drill programme was firstly to establish and confirm the presence of gold mineralisation at a number of priority targets where artisanal gold mining has taken place and secondly, to broadly define those structures that may be controlling the distribution of gold mineralisation. The target area is substantial and gaining an understanding of the underlying geology is complicated by the presence of a laterite cover and a thick saprolite layer of highly weathered rocks extending in some cases to 100 metres in depth.

Fintakourouni Target

The drilling programme started in mid February and was completed in the second week of April. Drilling initially centred on the Fintakourouni target located in the north of the Karan License. A total of 11 RC holes were drilled of which 8 holes were drilled along a wide-spaced fence line over a strike length of approximately 500m specifically to test for the linear structure being followed by artisanal mining and the remaining three holes used to test a chargeability anomaly generated by an IP-resistivity survey and one hole drilled back across RC11FIN002 to test the mineralisation intersected between 142m and 156m depth.

Drilling has intersected a suite of highly weathered metasediments and volcanic intrusive rocks prevalent in the area, together with encouraging evidence of alteration, sulphide mineralisation and quartz veining.

The initial agreement with the Assay laboratory of a 10 day turnaround for assay results was highly compromised by their operational constraints, and unfortunately the turn around time extended to four weeks. However, the results are now in and show encouraging mineralization with intersections of 14m at 0.51 g/t, 6m at 1.02 g/t and 3m at 1.82

Kouroudjin Target

A fence of 12 holes was drilled across the target focusing on regional structure defined by airborne geophysics complemented by artisanal pits.

The local geology is dominated by a fine grained schist with moderate chlorite alteration intruded by a porphyritic unit. Silicification, quartz veining and pyrite are common throughout and appear to show more intensity proximal to the contact with the intrusion and schist. Encouragingly these areas show increased gold mineralisation.

Peak intersections of 17m at 1.03 g/t, 9m at 1.17 g/t, 6m at 1.04 g/t and 7m at 0.84g/t along with 2m at 3.9 g/t, 1m at 11.75 g/t and 1m at 8.62 g/t show the presence of both high-grade intersections generally associated with quartz veins and lower grade wider zones typically associated with disseminated sulphides and quartz stockwork alteration.  This is most encouraging and we look forward to results of our next phase of exploration.

According to geophysical data and interpretation, there are a substantial number of conjugate structures present which appear to be associated with mineralisation. Further work including diamond drilling is required to achieve a better understanding of the structures and the relationship with mineralisation.

Mana Target

5 holes were drilled to test the Mana target. Unfortunately, 3 holes collapsed and only 2 holes were completed to plan. However, the results were encouraging as drilling intersected a dark fine grained schist and porphyritic intrusion, giving significant intercepts of low grade mineralization; 39m at 0.21 g/t and 101m of 0.11 g/t. As intrusions are believed to be an important control in gold mineralisation in the region, the size of the intrusion and the addition of two higher grade intercepts of 3m at 1.22g/t and 1m at 5.88 g/t make this target most prospective.

Koukouroula Target

55 holes were drilled over Koukouroula which is an area dominated by artisanal workings. The geology of Koukouroula is predominantly made up of dark fine grained schist, with minor porphyritic intrusions and significant quartz veining is common throughout the area, reaching up to 20m wide intercepts and commonly associated with low-grade but anomalous gold mineralisation. Whilst the level of alteration is notable, the assay results showed little high grade mineralisation.

Diatissan License

The Diatissan License is located in the West of Mali in a greenstone belt that includes the world class Sadiola and Loulo mines.

At the time of Admission, the Directors disclosed that an application had been submitted to the Mali Ministry of Mines for renewal of an Exploration License over the 16 square kilometres Diatissan License. AME has now received notification by the Ministry of Mines in Mali that this licence has been renewed for an initial period of 3 years (in accordance with the Mali Mining Code) with two further 3 year extensions providing the Company meets its obligations in terms of reporting and work programme commitments over the licence period.

The Diatissan concession exhibits many attributes favourable for the discovery of economic gold deposits.  We have already reported that a number of gold in soil anomalies have been identified with peak soil samples returning in excess of 1g/t Au and impressive trench grades also being achieved with peak intersections of 14m at14.48 g/t; 14m at 43.76 g/t; and 30m at 22.85 g/t.

The Directors propose undertaking an initial 12-month work programme, commencing May this year for the Diatissan prospect starting with the compilation of all available reports and data to a centralised database. We then plan to complete a structural analysis of the tenement, mapping and sampling of the artisanal pits as well as re-sampling of the trenches. This will be followed by a programme of RAB drilling, which if the rainy season allows could start as early as June. The results of this will then allow us to target additional drilling programmes scheduled to commence at the end of the year when the rainy season has finished.

                  Coarse grained gold potential

Artisanal mining at Karan has shown the presence of coarse-grained gold (+ 0.1 mm) on the property. Routine sample preparation for fire assay can undervalue grades where coarse-grained gold is present. Now that we have completed assays using the routine process, it is our intention to check grades in representative mineralised holes using the significantly higher-cost screened fire assay method to ensure that we have not failed to capture coarse-grained gold in the results. This means that mineralised intersections may return higher grades than previously identified.

Screened fire assay takes considerably longer to complete, we therefore do not expect initial results for approximately 6 weeks. We will update shareholders and the general market once the programme is finished.

Mark C Jones

Chief Executive Officer

Date: 19 May 2011

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 DECEMBER 2010

		2010		2009
		£		£
Revenue		-		-
Administrative expenses		(761,865)		(295,381)
OPERATING LOSS		(761,865)		(295,381)
Finance income		2,090		-
LOSS BEFORE TAX		(759,775)		(295,381)
Taxation		-		-
LOSS FOR THE YEAR ATTRIBUTABLE TO EQUITY OWNERS OF THE PARENT		(759,775)		(295,381)
OTHER COMPREHENSIVE INCOME
Exchange losses rising on translation of foreign operations		(10,501)		(12,733)
OTHER COMPREHENSIVE INCOME FOR THE YEAR		(10,501)		(12,733)
TOTAL COMPREHENSIVE INCOME FOR THE YEAR ATTRIBUTABLE TO EQUITY OWNERS OF THE PARENT		(770,276)		(308,114)
Loss per share attributable to equity owners of the parent expressed in pence per share:
Basic and diluted		(2.88)		(2.85)

CONSOLIDATED STATEMENT OF FINANCIAL POSITION 31 DECEMBER 2010

		2010		2009
		£		£
ASSETS
NON-CURRENT ASSETS
Intangible assets		281,883		222,133
Property, plant and equipment		40,885		3,768
TOTAL NON-CURRENT ASSETS		322,768		225,901
CURRENT ASSETS
Trade and other receivables		78,849		29
Cash and cash equivalents		4,004,606		4,294
TOTAL CURRENT ASSETS		4,083,455		4,323
TOTAL ASSETS		4,406,223		230,224
EQUITY AND LIABILITIES SHAREHOLDERS' EQUITY
Share capital		708,115		123,615
Share premium		3,429,561		-
Foreign currency reserve		8,720		19,221
Warrant reserve		708,115		-
Share based payment reserve		67,771		-
Merger reserve		572,314		312,116
Retained earnings		(1,323,171)		(355,281)
TOTAL EQUITY ATTRIBUTABLE TO EQUITY HOLDERS OF THE PARENT		4,171,425		99,671
LIABILITIES
CURRENT LIABILITIES
Trade and other payables		234,798		130,553
TOTAL LIABILITIES		234,798		130,553
TOTAL EQUITY AND LIABILITIES		4,406,223		230,224

The financial statements were approved by the Board of Directors on 19 May 2011 and were signed on its behalf by:

........................................................................

Mark C. Jones

Chief Executive Officer

Company number: 07307107

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 31 DECEMBER 2010

	Share capital	Share premium	Foreign currency reserve	Warrant reserve	Share based payment reserve	Retained earnings	Merger reserve	Total equity
	£	£	£	£	£	£	£	£
At 1 January 2009	73,000	-	31,954	-	700	(59,900)	110,607	156,361
Issue of share capital	50,615	-	-	-	-	-	201,509	252,124
Total comprehensive expense for the year	-	-	(12,733)	-	-	(295,381)	-	(308,114)
Share based payments	-	-	-	-	(700)	-	-	(700)
At 31 December 2009	123,615	-	19,221	-	-	(355,281)	312,116	99,671
Issue of share capital	584,500	4,000,000	-	500,000	-	-	260,198	5,344,698
Fundraising costs	-	(570,439)	-	-	-	-	-	(570,439)
Bonus issue of warrants	-	-	-	208,115	-	(208,115)	-	-
Total comprehensive expense for the year	-	-	(10,501)	-	-	(759,775)	-	(770,276)
Share based payments	-	-	-	-	67,771	-	-	67,771
At 31 December 2010	708,115	3,429,561	8,720	708,115	67,771	(1,323,171)	572,314	4,171,425

                   The following describes the nature and purpose of each reserve within owners' equity

Reserve                                            Description and purpose

                   Share premium                                Amounts subscribed for share capital in excess of nominal value

                   Warrant reserve                              Fair value of the warrants issued.

                   Merger Reserve                              Amounts resulting from acquisitions under common control.

                   Foreign currency reserve              Gains/losses arising on retranslating the net assets of Group operations into Pound Sterling.

          Share based payment reserve      Represents the accumulated balance of share based payment charges recognised in respect of  share options granted by African Mining and Exploration Plc, less transfers to retained losses in respect of options exercised.

Retained earnings                          Cumulative net gains and losses recognised in the consolidated statement of comprehensive income.

CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 31 DECEMBER 2010

		2010		2009
		£		£
Cash flows used in operating activities

Loss for the year		(759,775)		(295,381)
Depreciation charges		3,363		980
Share based payments charge		237,508		92,555
Finance income		(2,090)		-
Cash flow from operating activities before changes in working capital		(520,994)		(201,846)
Increase in trade and other receivables		(78,820)		(29)
Increase in trade and other payables		114,844		27,734
Net cash used in operating activities		(484,970)		(174,141)

Cash flow used in investing activities
Purchase of intangible fixed assets		(68,010)		-
Purchase of tangible fixed assets		(40,480)		(4,748)
Interest received		2,090		-
Net cash from investing activities		(106,400)		(4,748)
Cash flow from financing activities
Amount advanced by Directors		-		10,599
Amount repaid to Directors		(10,599)		-
Issue of IPO shares net of costs		4,429,561		-
Issue of other shares		168,053		148,825
Share option exercised		-		784
Net cash from financing activities		4,587,015		160,208
Increase in cash and cash equivalents		3,995,645		(19,461)
Cash and cash equivalents at beginning of year		4,294		23,365
Effect of exchange rate changes on cash and cash equivalents		4,667		390
Cash and cash equivalents at end of year		4,004,606		4,294

 

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