2014 Interim Results

RNS Number : 9172S

Ncondezi Energy Limited

30 September 2014

 



News Release

Interim Results for the six months ended 30 June 2014

30 September 2014: Ncondezi Energy Limited (formerly Ncondezi Coal Company Limited) ("Ncondezi" or the "Company") (AIM: NCCL) announces its interim results for the six months ended 30 June 2014.

Highlights:

·       PPA - Commercial deal reached on sale of electricity to EdM

·       Power Plant EPC binding bids received

·       Mine EPC and contract mining binding bids received

·       Common infrastructure and transmission line binding bid EPC processes initiated

·       Project Insurance Advisor to be appointed

·       Board streamlined from nine to six Directors

Financial highlights:

		6 months to                30 June 2014                         US$'000	6 months to          30 June 2013 US$'000
Loss for the period		(2,925)	(3,816)
Loss per share - cents		(1.6)	(3.2)
Cash at bank (including restricted cash)		3,313	6,644

Enquiries:

For further information please visit www.ncondezienergy.com or contact:

Ncondezi Energy:	Hanno Pengilly Alex Buck	[phone]
Liberum Capital Limited: NOMAD & Broker	Richard Crawley Christopher Britton	[phone]
finnCap: Joint Broker	Matthew Robinson Elizabeth Johnson Joanna Weaving	[phone]
Bell Pottinger:	Daniel Thöle Marianna Bowes	[phone]

Ncondezi Energy owns 100% of the Ncondezi Project which is strategically located in the power generating hub of the country, the Tete Province in northern Mozambique. The Company is developing an integrated thermal coal mine and power plant in phases of 300MW, up to 1,800MW. The first 300MW phase is targeting domestic consumption in Mozambique using existing transmission capacity to meet current demand.

Chief Executive Officer's Statement

The first half of 2014 has seen continued progress at Ncondezi on the development of its 300 mega watt ("MW") integrated thermal coal power plant and mine (the "Ncondezi Project" or "300MW Project"), near Tete in Northern Mozambique.

Following the fulfilment of all conditions precedent of the Power Framework Agreement ("PFA") with the Department of Energy ("DoE") in December 2013, the Company was able to initiate formal negotiations on the key commercial agreements for the Ncondezi Project, namely the Power Purchase Agreement ("PPA") and Power Concession Agreement ("PCA"), with state power utility Electricidade de Mozambique ("EdM") and the DoE respectively. These negotiations have progressed well, with the latest milestone of reaching a commercial deal with EdM on power offtake being achieved in September 2014.

Following agreement of a commercial deal with EdM, the Company is now working closely with EDM and DoE on agreeing a detailed timetable and work schedule to reach financial close and first power to the Mozambican grid.

A key element in progressing the PPA and PCA during the reporting period was receiving firm engineering, procurement and construction ("EPC") bids to provide turn-key contracts to build both the power plant and mine projects. The Company received a number of EPC bids for both power plant and mine projects confirming the bulk of capital costs for both the mine and power plant.  An evaluation process is underway to select preferred bidders.

Discussions with potential co-developers are continuing and the recent EdM approval of the commercial deal has been an important step in this regard.

The development of new generation capacity in Mozambique is still a key focus area for the Mozambican Government. The recent EdM Board approval of the commercial deal further highlights internal support for the Ncondezi Project in Mozambique, and we look forward to continuing to work with both EdM and DoE as we move to towards Financial Close.

In summary, the first half of 2014 has seen significant progress on the Ncondezi Project and we look forward to building on this during the second half of 2014.

Paul Venter

Chief Executive Officer

Operational and Financial Review

Ncondezi holds 100% of Mining Concession 5967C in the Tete Province of Mozambique. The Company has discovered a large, long life, thermal coal deposit on its concession area and is focused on the phased development of an integrated thermal coal fired power plant and mine, commencing with 300MW as Phase 1. The Project is located near Tete in Northern Mozambique.

Mine Development

During the first half of 2014, the focus was largely on completing a binding bid process to appoint a mining contractor to provide a turnkey solution for the design, engineering, commissioning, operation and maintenance of the Ncondezi coal mine, including the coal processing plant, associated coal handling facilities and infrastructure. This follows completion and publication of the optimised mine feasibility study in December 2013.

11 firms submitted expressions of interest, following site visits, and binding bids were received during Q2 2014. For the mine infrastructure, mine establishment and mine operation, 3 bids were received. For the coal handling and processing establishment and operation, 5 bids were received. The bids were reviewed by technical and commercial team led by KPMG Services (Pty) Ltd in South Africa, and two preferred bidders have been selected. From these two bidders a single preferred bidder is expected to be selected.

The bids will provide Ncondezi with a binding input coal price for the Coal Sales Agreement ("CSA") between the mine and power station. The CSA, in turn, will form a key part of the PPA between the Ncondezi power station and EdM. The Final Form CSA will be completed in parallel with the PPA.

The planned open pit mine is located within Ncondezi's South Block concession (the "South Mine"), and as such has been termed the South Pit. This designated mining block was chosen due to the proximity of the coal to surface resulting in favourable strip ratios, as well as higher yielding coal than some of the adjacent areas. At present, the target product for the power plant is a 16 - 17 MJ/kg (NAR) domestic grade thermal coal product.

The South Mine covers 200 ha and has the resources to provide coal to the 2x150MW Circulating Fluidised Bed power station for a period of 25 years, plus a contingency of approximately 50% or an additional 15 years.

Mining will be an open pit, truck and shovel, contractor mining operation supplying domestic grade coal to

the Ncondezi power station with an average annual production of 1.5 million tonnes of domestic grade coal,

a Life of Mine ("LoM") average strip ratio of 0.6 BCM/tonne and a LoM average yield of 92%.

Power Plant Development

Progress on Key Commercial Agreements

Negotiations are continuing with both EdM and DoE to finalise the PPA and PCA and the documents are well advanced following discussions that initiated at the beginning of the year that built on the parameters agreed in the Power Purchase Agreement Heads of Terms with EdM and the Power Framework Agreement with the DoE, which were signed and made effective in October and December of 2013 respectively.

On September 10th 2014, the Company announced that it had reached a commercial deal with EdM on the sale of electricity from the Ncondezi Project.

The agreed commercial deal includes the range for the starting electricity tariff to be paid by EdM, which will then be subject to adjustments during the 25 year operational life of the Project. The commercial deal is subject to a number of conditions precedent, to be satisfied by the end of 2014, including the introduction of a strategic investor acceptable to EdM, confirmation of the availability of political and commercial risk cover, bankable EPC contracts, bankable and acceptable O&M operator arrangements and agreeing a timetable for the substantial completion of all key project agreements involving EdM. Ncondezi and EdM are working towards an agreed timetable in relation to the above.

The commercial deal was the result of negotiations and progress over the last six months between Ncondezi, EdM and the DoE on critical matters to the Project's viability, including the structure and content of key project agreements (in particular the PPA and the PCA), the PPA tariff (level, structure and indexation) and the terms of credit support to be provided for the Project.

The EdM Board of Directors has approved the commercial deal and conditions precedent and endorsed continued negotiations between the parties. The PPA and PCA are both anticipated to be finalised in conjunction with the EPC contract and O&M operator arrangements.

EPC Selection Process

On March 4th, 2014, the Company announced that it had received four bids from internationally recognised firms for the EPC contract for its 300MW power plant project. The bidders all submitted fixed price lump sum turnkey contracts for the engineering, procurement, construction and commissioning of a 300MW power plant consisting of two 150MW generating units using CFB technology.

The initial evaluation of the bids has confirmed that the power plant's capital costs and build times are in line with expectations previously announced to the market, and project financing up to 85% of the EPC contract price may be achievable.  The EPC's project capital expenditure binding quotes form a key part of the PPA. 

Common Infrastructure Tender Processes

The common infrastructure tender process commenced in Q1 2014 and included infrastructure that will be shared between the mine and the power plant including, but not limited to, accommodation and other service buildings, water services, electrical reticulation, roads and general earthworks. Currently, the company has received firm offers on approximately half of the total budgeted cost, and expects to receive the balance by the end of 2014 financial year.

Transmission EPC Tender Process

During the reporting period, the Company launched the transmission line EPC tender process for the dedicated transmission infrastructure to connect the Ncondezi Project with the Mozambican national transmission network. The tender process includes a 91km 2x400kV transmission line and 220/33kV substation. The Company has appointed Norconsult Africa (Pty) Ltd to run the process and binding bids are due in early Q4 2014

Social & Environmental

The transmission line ESIA report undertaken by Parsons Brinkerhoff and Consultec, a local Mozambican company is close to completion and submission to the Ministry for Coordination of Environmental Action ("MICOA") for approval.  Public consultations were conducted by Consultec at Chueza, Kambulatsisi and Moatize where the project was positively accepted by the local population and there will be no cases of resettlement.

The continuation of Water Supply studies took place in the second quarter of 2014 with continued research on the catchment areas of Ncondezi, Monga and Mameme rivers. The second part of the studies will take place in the 'dry season' at the end of October.  No issues related to insufficiency or retention of water have been identified so far in any of the catchment areas considered.

The Social Development Programme for the first half of 2014 built on the success of 2013 and maintained its focus on sustainability and community development. The Agricultural Project, implemented by Ncondezi itself with the support of the local government, has already made a substantial contribution in these areas in 2014.

For the period under review, the following projects were implemented:

·      Agricultural Project has expanded from 1.5 ha to 10 ha and has involved over 40 recipients from two different communities affecting approximately 400 individuals and is to be continued during the second half of 2014.

·      The brand new fully-equipped ambulance was delivered to the Community of Zobwe at the end of June 2014.

·      Construction of Waenera Primary School is nearing completion. The school will consist of 3 new fully furnished blocks with capacity to accommodate over 150 children. The inauguration of the school is schedule for end of September 2014.

·      Two company-sponsored students are continuing their studies and are scheduled to finish their Masters in Geological and Mining Engineering in Portugal by the end of August 2014.

·      The total cost of these activities was US$87,000.

Insurance Advisor Appointed

The Company has appointed Marsh Ltd ("Marsh") as the Ncondezi Project's Insurance Advisor, one of the global leaders in insurance broking and risk management. Marsh have been mandated to advise on the design and procurement of the complete insurance program required for the Ncondezi Project during the construction and operational phases.

Corporate

As part of its transformation from a coal mining company into an integrated coal mine and power developer, the Company has undergone further Board restructuring during the period. In light of Ncondezi's focus on the Southern African energy sector and the strengthening of the Board during the 2013 financial year with experienced power professionals, Messrs Graham Mascall, Mark Trevan and Nigel Sutherland tendered their resignations as Non-Executive Directors during Q1 2014.

Financial overview

Results from operations

The Group made a loss after tax for the year of US$2.9m compared to a loss of US$3.8m for the previous interim period.  The basic loss per share for the interim period was 1.6 cents (2013 H1: 3.2 cents).

Administrative expenses totalled US$2.9m (2013 H1: US$3.8m). This included a share based payments charge of US$0.1m (2013 H1: US$0.2m). 

Cash Flows

The net cash outflow from operating activities for the interim period was US$1.5m (2013 H1: US$4.0m).

The resulting period end cash held totalled US$3.3m (2013 H1: US$6.6m) of which US$0.4m (2013 H1: US$0.4) was restricted use cash relating to a bank guarantee provided on the Group's corporate offices in London.

Outlook

On 10 September 2014 Ncondezi announced that it had reached a commercial deal with EdM on the sale of electricity from the Ncondezi Project.

This announcement is a result of negotiations and progress over the last six months between Ncondezi, EdM and the Mozambique Department of Energy ("DoE") on critical matters to the Project's viability, including the structure and content of key project agreements (in particular the PPA and the PCA), the PPA tariff level, structure and indexation) and the terms of credit support to be provided for the Project.

During this period negotiations with potential co-developers and strategic investors have continued but the Group does not at this stage have any binding funding commitments.

The work required to reach project close and financial close will require either additional funds to be raised or a co funder to take over the majority of the funding requirements. The Group may additionally need to raise funds to cover ongoing overheads.

As at 25 September the Group had cash resources of $1.5m and will seek to raise additional funds in 2014 to cover its overheads for the foreseeable future. All project commitments for this phase are fully funded and no further project costs will be incurred until a co funding agreement is reached or additional funds for project development are raised. Having reached a commercial deal with EdM, the Directors believe that the necessary funds in either equity or debt can be raised within the necessary timescale to continue the development programme for the Ncondezi Project. Accordingly they are confident that the Group will continue as a going concern and have prepared the financial statements on that basis.

Independent review report to Ncondezi Energy Limited

Introduction

We have been engaged by the Company to review the financial statements in the half-yearly report for the six months ended 30 June 2014 which comprises the consolidated income statement, the consolidated statement of comprehensive income, the consolidated statement of financial position, the consolidated statement of changes in equity, the consolidated statement of cash flows and the related explanatory notes.

We have read the other information contained in the half-yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the half-yearly financial statements.

Directors' responsibilities

The interim report, including the financial information contained therein, is the responsibility of and has been approved by the directors.  The directors are responsible for preparing the interim report in accordance with the rules of the London Stock Exchange for companies trading securities on AIM which require that the half-yearly report be presented and prepared in a form consistent with that which will be adopted in the company's annual accounts having regard to the accounting standards applicable to such annual accounts.

Our responsibility

Our responsibility is to express to the Company a conclusion onthe set of financial statements in the half-yearly financial report based on our review.

Our report has been prepared in accordance with the terms of our engagement to assist the Company in meeting the requirements of the rules of the London Stock Exchange for companies trading securities on AIM and for no other purpose.  No person is entitled to rely on this report unless such a person is a person entitled to rely upon this report by virtue of and for the purpose of our terms of engagement or has been expressly authorised to do so by our prior written consent.  Save as above, we do not accept responsibility for this report to any other person or for any other purpose and we hereby expressly disclaim any and all such liability.

Scope of review

We conducted our review in accordance with International Standard on Review Engagements 2410, ''Review of Interim Financial Information Performed by the Independent Auditor of the Entity'', issued by the Auditing Practices Board for use in the United Kingdom.  A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures.  A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit.  Accordingly, we do not express an audit opinion.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the  financial statements in the half-yearly financial report for the six months ended 30 June 2014 is not prepared, in all material respects, in accordance with the rules of the London Stock Exchange for companies trading securities on AIM.

Emphasis of matter - going concern

In forming our review conclusion, which is not modified, we have considered the adequacy of the disclosures made in note 1 to the financial statements in the half-yearly report concerning the Group's ability to continue as a going concern which is dependent on the Group's ability to raise further funds through debt or new equity placing. The Directors believe that the Group will secure the necessary funds. While the Directors are continuing funding negotiations with certain third parties there are currently no binding agreements in place. These conditions together with the other matters referred to in note 1 indicate the existence of a material uncertainty which may cast significant doubt over the Group's ability to continue as a going concern. The financial statements do not include any adjustments that would result if the Group was unable to continue as a going concern.

BDO LLP

Chartered Accountants and Registered Auditors

London

United Kingdom

BDO LLP is a limited liability partnership registered in England and Wales (with registered number OC305127).

Consolidated statement of profit or loss

for the six months ended 30 June 2014

	Note	6 months ended 30 June 2014 Unaudited	6 months ended 30 June 2013 Unaudited	Year ended 31 December 2013 Audited
		US$'000	US$'000	US$'000
Other administrative expenses	2	(2,746)	(3,573)	(6,368)
Share-based payments charge	2	(135)	(211)	(673)
Total administrative expenses and loss from operations		(2,881)	(3,784)	(7,041)
Finance income		2	30	38
Finance expense		(24)	(20)	(42)
Loss for the period before taxation		(2,903)	(3,774)	(7,045)
Taxation		(22)	(42)	(65)
Loss for the period attributable to
equity shareholders of the parent company		(2,925)	(3,816)	(7,110)
Loss per share expressed in cents
Basic and diluted	3	(1.6)	(3.2)	(5.8)

Consolidated statement of profit or loss and other comprehensive income

for the six months ended 30 June 2014

		6 months ended 30 June 2014 Unaudited	6 months ended 30 June 2013 Unaudited	Year ended 31 December 2013 Audited
		US$'000	US$'000	US$'000
Loss after taxation		(2,925)	(3,816)	(7,110)
Other comprehensive income:
Exchange differences on translating foreign operations*		(26)	(35)	20
Total comprehensive income for the period		(2,951)	(3,851)	(7,090)

*items that may be reclassified to profit or loss

Consolidated statement of financial position

at 30 June 2014

	Note	30 June 2014 Unaudited	30 June 2013 Unaudited	31 December 2013 Audited
		US$'000	US$'000	US$'000
Assets
Non-current assets
Intangible assets	4	8	40,416	16
Property, plant and equipment	5	48,578	2,116	45,154
Restricted cash deposits		443	395	429
Total non-current assets		49,029	42,927	45,599
Current assets
Inventory		28	12	29
Trade and other receivables		804	3,090	2,324
Cash and cash equivalents		2,870	6,249	6,756
Total current assets		3,702	9,351	9,109
Total assets		52,731	52,278	54,708
Liabilities
Current liabilities
Current tax payable		93	95	68
Trade and other payables		3,445	2,037	2,684
Total current liabilities		3,538	2,132	2,752
Total liabilities		3,538	2,132	2,752
Capital and reserves attributable to shareholders
Share capital	6	80,695	76,108	80,695
Foreign currency translation reserve		90	9	64
Retained earnings		(31,592)	(25,971)	(28,803)
Total capital and reserves		49,193	50,146	51,956
Total equity and liabilities		52,731	52,278	54,708

Approved on behalf of the Board on 29 September 2014

Paul Venter

Chief Executive Officer

Consolidated statement of changes in equity

for the six months ended 30 June 2014

		Share      capital    US$'000	Foreign   Currency Translation     reserve      US$'000	Retained earnings    US$'000	Total      US$'000
At 1 January 2014		80,695	64	(28,803)	51,956
Loss for the period		-	-	(2,925)	(2,925)
Other comprehensive income for the period		-	26	-	26
Equity settled share based payments		-	-	135	135
At 30 June 2014 (Unaudited)		80,695	90	(31,593)	49,192
		Share capital US$'000	Foreign     Currency Translation       reserve       US$'000	Retained    earnings     US$'000	Total      US$'000
At 1 January 2013		76,108	44	(22,366)	53,786
Loss for the period		-	-	(3,816)	(3,816)
Other comprehensive income for the period		-	(35)	-	(35)
Equity settled share based payments		-	-	211	211
At 30 June 2013 (Unaudited)		76,108	9	(25,971)	50,146
		Share       capital    US$'000	Foreign     Currency Translation       reserve       US$'000	Retained    earnings     US$'000	Total      US$'000
At 1 January 2013		76,108	44	(22,366)	53,786
Loss for the period		-	-	(7,110)	(7,110)
Other comprehensive income for the period		-	20	-	20
Issue of shares		4,951	-		4,951
Costs associated with issue of shares		(364)	-		(364)
Equity settled share based payments		-	-	673	673
At 31 December 2013 (Audited)		80,695	64	(28,803)	51,956

Consolidated statement of cash flows

for the six months ended 30 June 2014

	6 months to 30 June 2014 Unaudited	6 months to 30 June 2013 Unaudited	Year ended  31 December 2013  Audited
	US$'000	US$'000	US$'000
Cash flow from operating activities
Loss before taxation	(2,903)	(3,774)	(7,045)
Adjustments for:
Finance income	(2)	(30)	(38)
Finance expense	24	20	42
Share based payments charge	135	211	673
Foreign exchange movements	13	(43)	19
Disposal of property plant and equipment	-	30	45
Depreciation and amortisation	164	206	396
Net cash flow from operating activities before changes in working capital	(2,569)	(3,380)	(5,908)
Decrease/(increase) in inventory	1	14	(3)
(Decrease)/increase in receivables	1,520	(60)	706
Increase/(decrease) in payables	(424)	(585)	53
Net cash flow from operating activities before tax	(1,472)	(4,011)	(5,152)
Income taxes paid	-	-	(53)
Net cash flow from operating activities after tax	(1,472)	(4,011)	(5,205)
Investing activities
Payments for property, plant and equipment	(1)	-	(1)
Sale proceeds from disposal of property, plant and equipment	-	-	4
Interest received	2	30	38
Power development costs capitalised	(1,639)	(440)	(1,627)
Mine exploration and evaluation costs capitalised	(752)	(923)	(2,577)
Transfer to restricted cash	-	(395)	(429)
Net cash flow from investing activities	(2,390)	(1,728)	(4,592)
Financing activities
Issue of ordinary shares	-	-	4,951
Cost of share issue	-	-	(364)
Bank charges	(24)	(20)	(42)
Net cash flow from financing activities	(24)	(20)	4,545
Net increase/(decrease) in cash and cash equivalents in the period	(3,886)	(5,759)	(5,252)
Cash and cash equivalents at the beginning of the period	6,756	12,008	12,008
Cash and cash equivalents at the end of the period	2,870	6,249	6,756

Notes to the consolidated financial information

1.  Basis of preparation

The consolidated interim financial statements have been prepared using policies based on International Financial Reporting Standards (IFRS and IFRIC interpretations) issued by the International Accounting Standards Board ("IASB") as adopted for use in the EU. The consolidated interim financial statements have been prepared using the accounting policies which will be applied in the Group's financial statements for the year ended 31 December 2014.

The consolidated interim financial statements for the period 1 January 2014 to 30 June 2014 are unaudited and incorporate unaudited comparative figures for the interim period 1 January 2013 to 30 June 2013 and the audited financial statements for the year to 31 December 2013. It does not include all disclosures that would otherwise be required in a complete set of financial statements and should be read in conjunction with the 2013 Annual Report.

The same accounting policies, presentation and methods of computation are followed in the consolidated financial statements as were applied in the Group's latest annual audited financial statements except that in the current financial year, the Group has adopted a number of revised Standards and Interpretations. However, none of these has had a material impact on the Group's reporting.

In addition, the IASB has issued a number of IFRS and IFRIC amendments or interpretations since the last annual report was published. It is not expected that any of these will have a material impact on the Group.

Going Concern

On 10 September 2014 Ncondezi announced that it had reached a commercial deal with EdM on the sale of electricity from the Ncondezi Project.

This announcement is a result of negotiations and progress over the last six months between Ncondezi, EdM and the Mozambique Department of Energy ("DoE") on critical matters to the Project's viability, including the structure and content of key project agreements (in particular the PPA and the PCA), the PPA tariff level, structure and indexation) and the terms of credit support to be provided for the Project.

During this period negotiations with potential co-developers and strategic investors have continued but the Group does not at this stage have any binding funding commitments.

The work required to reach project close and financial close will require either additional funds to be raised or a co funder to take over the majority of the funding requirements. The Group may additionally need to raise funds to cover ongoing overheads.

As at 25 September the Group had cash resources of $1.5m and will seek to raise additional funds in 2014 to cover its overheads for the foreseeable future. All project commitments for this phase are fully funded and no further project costs will be incurred until a co funding agreement is reached or additional funds for project development are raised. Having reached a commercial deal with EdM, the Directors believe that the necessary funds in either equity or debt can be raised within the necessary timescale to continue the development programme for the Ncondezi Project. Accordingly they are confident that the Group will continue as a going concern and have prepared the financial statements on that basis.

Whilst the Directors believe that the necessary funds will be raised there is no guarantee that this can be achieved. Should the Group be unable to raise the necessary finance, it may be unable to realise its assets and discharge its liabilities in the normal course of business.

Notes to the consolidated financial information (continued)

1.    Basis of preparation (continued)

These conditions indicate the existence of a material uncertainty that may cast significant doubt over the Group's ability to continue as a going concern. These financial statements do not include the adjustments that would result if the Group was not able to continue as a going concern.

2.   Administrative expenses

		6 months to 30 June 2014 Unaudited	6 months to 30 June 2013 Unaudited	Year ended  31 December 2013  Audited
		US$'000	US$'000	US$'000
Staff costs		1,156	1,562	2,806
Professional and consultancy		497	711	1,168
Office expenses		573	371	717
Travel and accommodation		207	230	457
Other expenses		273	472	991
Foreign exchange loss/(gain)		40	227	229
Other administrative expenses		2,746	3,573	6,368
Share-based payments		135	211	673
Total administrative expenses		2,881	3,784	7,041

3.   Loss per share

Basic loss per share is calculated by dividing the loss attributable to the ordinary shareholders by the weighted average number of ordinary shares outstanding during the period.

Share incentives were outstanding at the end of the period that could potentially dilute basic earnings per share in the future. However, due to losses incurred during the current period, the impact of these incentives would not be dilutive.

		Unaudited 30 June 2014				Unaudited 30 June 2013				Audited 31 December 2013
	Loss US$'000		Weighted average number of shares (thousands)	Per share amount (cents)	Loss US$'000		Weighted average number of shares (thousands)	Per share amount (cents)	Loss US$'000	Weighted average number of shares (thousands)	Per share amount (cents)
Basic and diluted EPS	(2,925)		181,674	(1.6)	(3,816)		121,116	(3.2)	(7,110)	122,447	(5.8)

Notes to the consolidated financial information (continued)

4.   Intangible assets              

	Exploration and evaluation costs US$'000	Other intangible assets US$'000	Total US$'000
Cost
At 1 January 2013	39,024	154	39,178
Additions	1,363	-	1,363
Exchange adjustment	-	(4)	(4)
At 30 June 2013	40,387	150	40,537
At 1 January 2014	-	159	159
Additions	-	-	-
At 30 June 2014	-	159	159
At 1 January 2013	39,024	154	39,178
Additions	2,577	-	2,577
Transfer to property, plant and equipment	(41,601)	-	(41,601)
Foreign exchange	-	5	5
At 31 December 2013	-	159	159
Amortisation
At 1 January 2013	-	97	97
Amortisation charge	-	24	24
At 30 June 2013	-	121	121
Amortisation
At 1 January 2014	-	143	143
Amortisation charge	-	8	8
At 30 June 2014	-	151	151
At 1 January 2013	-	97	97
Amortisation	-	42	42
Foreign exchange		4	4
At 31 December 2013	-	143	143

Net book value 30 June 2014	-	8	8
Net book value 30 June 2013	40,387	29	40,416
Net book value 31 December 2013	-	16	16

Mine exploration and evaluation costs relate to the initial acquisition of the licences and subsequent expenditure incurred in evaluating the Ncondezi mine project.

In December 2012 the Group completed a feasibility study of Ncondezi Mining project and following the grant of the mine concession on 28 August 2013 the related exploration and evaluation costs have been transferred to property, plant and equipment. On transfer an impairment review was completed and  it was concluded that no impairment was required.

Notes to the consolidated financial information (continued)

5.   Property, plant and equipment

	Power assets US$'000	Mining assets US$'000	Buildings US$'000	Plant and equipment US$'000	Other US$'000	Total US$'000
Cost
At 1 January 2013	-	-	1,757	513	789	3,059
Additions	-	-	-	1	-	1
Disposals	-	-	-	-	(31)	(31)
At 30 June 2013	-	-	1,757	514	758	3,029
Cost
At 1 January 2014	1,627	41,601	1,736	514	723	46,200
Additions	2,825	751	-	-	31	3,607
At 30 June 2014	4,452	42,353	1,736	514	754	49,808
Cost
At 1 January 2013	-	-	1,757	513	789	3,059
Additions	1,627	-	-	1	-	1,628
Transfer from intangible assets (note 4)		41,601	-	-	-	41,601
Disposals	-	-	(21)	-	(67)	(88)
At 31 December 2013	1,627	41,601	1,736	514	722	46,200
Depreciation
At 1 January 2013	-	-	134	161	436	731
Depreciation charge	-	-	38	42	102	182
At 30 June 2013	-	-	172	203	538	913
At 1 January 2014	-	-	210	232	605	1,047
Depreciation charge	-	-	37	40	108	185
Disposals	-	-	-	-	(1)	(1)
At 30 June 2014	-	-	247	272	713	1,231
At 1 January 2013	-	-	134	161	436	731
Depreciation charge	-	-	80	71	204	355
Disposals	-	-	(4)	-	(35)	(39)
At 31 December 2013	-	-	210	232	605	1,046
Net Book value 30 June 2014	4,452	42,353	1,489	242	41	48,578
Net Book value 30 June 2013	-	-	1,585	311	220	2,116
Net book value 31 December 2013	1,627	41,601	1,526	282	118	45,154

Notes to the consolidated financial information (continued)

6.   Share capital

Number of shares	6 months to 30 June 2014 Unaudited		6 months to 30 June 2013 Unaudited		Year ended  31 December 2013 Audited
Allotted, called up and fully paid
Ordinary shares of no par value	181,673,522		121,115,682		181,673,522
Unaudited				Shares issued		Share capital
				Number		US$'000
At 1 January 2014				181,673,522		80,695
At 30 June 2014				181,673,522		80,695

Unaudited		Shares issued	Share capital
		Number	US$'000
At 1 January 2013		121,115,682	76,108
At 30 June 2013		121,115,682	76,108

Audited		Shares issued	Share capital
		Number	US$'000
At 1 January 2013		121,115,682	76,108
Issue of shares		60,577,840	4,951
Issue costs			(364)
At 31 December 2013		181,673,522	80,695

Notes to the consolidated financial information (continued)

7.   Segmental analysis

The Group has three reportable segments:

·      Mine - this segment is involved in the exploration and development of coal within the Group's licence areas in Mozambique

·      Power - this segment is involved in the development of a coal fired power station within Mozambique

·      Corporate               - this segment comprises head office operations and the provision of services to Group companies

The operating results of each of these segments are regularly reviewed by the Group's chief operating decision makers in order to make decisions about the allocation of resources and assess their performance.

The segment results for the six months ended 30 June 2014 are as follows:

Income statement	Mine US$'000	Power US$'000	Corporate US$'000	Group US$'000
For the six months ended 30 June 2014 (unaudited)
Segment result before and after allocation of central costs	(889)	(100)	(1,892)	(2881)
Finance expense	(7)	(4)	(13)	(24)
Finance income	-	-	2	2
Loss before taxation	(896)	(104)	(1,903)	(2,903)
Taxation	-	-	(22)	(22)
Loss for the year	(896)	(104)	(1,925)	(2,925)

Income statement	Mine US$'000	Power US$'000	Corporate US$'000	Group US$'000
For the six months ended 30 June 2013 (unaudited)
Segment result before and after allocation of central costs	(1,043)	(128)	(2,613)	(3,784)
Finance expense	(9)	(1)	(10)	(20)
Finance income	-	1	29	30
Loss before taxation	(1,052)	(128)	(2,594)	(3,774)
Taxation	-	-	(42)	(42)
Loss for the year	(1,052)	(128)	(2,636)	(3,816)

Notes to the consolidated financial information (continued)

7.   Segmental analysis (continued)

The segment results for the year ended 31 December 2013 are as follows:

Income statement	Mine US$'000	Power US$'000	Corporate US$'000	Group US$'000
For the year ended 31 December 2013 (audited)
Segment result before and after allocation of central costs	(2,265)	(62)	(4,714)	(7,041)
Finance expense	(16)	(5)	(21)	(42)
Finance income	-	2	36	38
Loss before taxation	(2,281)	(65)	(4,699)	(7,045)
Taxation	-	-	(65)	(65)
Loss for the year	(2,281)	(65)	(4,764)	(7,110)

Other segment items included in the Income statement are as follows:

Income statement	Mine US$'000	Power US$'000	Corporate US$'000	Group US$'000
For the six months ended 30 June 2014 (unaudited)
Depreciation charged to the income statement	153	-	11	164
Share based payments	-	-	135	135
Income tax expense	-	-	(22)	(22)

Income statement	Mine US$'000	Power US$'000	Corporate US$'000	Group US$'000
For the six months ended 30 June 2013 (unaudited)
Depreciation charged to the income statement	176	-	30	206
Share based payments	-	-	211	211
Income tax expense	-	-	(42)	(42)

Income statement	Mine US$'000	Power US$'000	Corporate US$'000	Group US$'000
For the year ended 31 December 2013 (audited)
Depreciation charged to the income statement	(347)	-	(49)	(396)
Share based payments	-	-	(673)	(673)
Income tax expense	-	-	(65)	(65)

Notes to the consolidated financial information (continued)

7.   Segmental analysis (continued)

The segment assets and liabilities at 30 June 2014 and capital expenditure for the six months then ended are as follows:

Statement of financial position	Mine US$'000	Power US$'000	Corporate US$'000	Group US$'000
At 30 June 2014 (unaudited)
Segment assets	41,471	5,612	5,648	52,731
Segment liabilities	533	1,191	1,814	3,538
Segment net assets/(liabilities)	40,938	4,421	3,834	49,193
Property plant and equipment capital expenditure	753	2,825	-	3,578

The segment assets and liabilities at 30 June 2013 and capital expenditure for the six months then ended are as follows:

Statement of financial position	Mine US$'000	Power US$'000	Corporate US$'000	Group US$'000
At 30 June 2013 (unaudited)
Segment assets	40,461	1,898	9,919	52,278
Segment liabilities	528	295	1,309	2,132
Segment net assets	39,933	1,603	8,610	50,146
Property plant and equipment capital expenditure	-	-	-	-
Exploration capital expenditure	923	440	-	1,363

The segment assets and liabilities at 31 December 2013 and capital expenditure for the year then ended are as follows:

Statement of financial position	Mine US$'000	Power US$'000	Corporate US$'000	Group US$'000
At 31 December 2013 (unaudited)
Segment assets	43,443	1,627	9,638	54,708
Segment liabilities	(590)	(770)	(1,392)	(2,752)
Segment net assets	42,853	857	8,246	51,956
Property plant and equipment capital expenditure	1	-	-	1
Exploration capital expenditure	2,577	1,627	-	4,204

Notes to the consolidated financial information (continued)

8.   Events after the reporting period

There were no significant transactions after the reporting date.

Company details

Directors                                                          Michael Haworth (Non-Executive Chairman)

                                                                        Paul Venter (Chief Executive Officer)

                                                                        Christiaan Schutte (Non-Executive Director)

                                                                        Peter O'Connor (Non-Executive Director)

                                                                        Estevão Pale (Non-Executive Director)

                                    Jacek Glowacki (Non-Executive Director)

Company Secretary                                      Elysium Fund Management Limited

                                                                        PO Box 650, 1^st Floor, Royal Chambers

                                                                        St Julian's Avenue

                                                                        St Peter Port

                                                                        Guernsey

                                                                        GY1 3JX

Registered Office                                          2nd Floor

                                                                        Wickham's Cay II

                                                                        PO Box 2221

                                                                        Road Town

                                                                        Tortola

                                                                        British Virgin Islands

Company number                                         1019077

Nominated Advisor and Joint Broker         Liberum Capital Limited

                                                                        Ropemaker Place

                                                                        Level 12

                                                                        25 Ropemaker Street

                                                                        London

                                                                        EC2Y 9AR

Joint Broker                                                   finnCap

                                                                        60 New Broad Street

                                                                        London

                                                                        EC2M 1JJ

Auditors                                                         BDO LLP

                                                                        55 Baker Street

                                                                        London

                                                                        W1U 7EU

Registrar                                                        Computershare Investor Services (BVI) Limited

                                                                        Woodbourne Hall

                                                                        PO Box 3162

                                                                        Road Town

                                                                        Tortola

                                                                        British Virgin Islands

Legal advisor to the Company                     Ogier LLP

as to BVI law                                                  41 Lothbury

                                                                        London

                                                                        EC2R 7HF

Legal advisor to the Company                    Berwin Leighton Paisner LLP

as to English law                                           Adelaide House

                                                                        London Bridge

                                                                        London

                                                                        EC4R 9HA

 

END

 

 

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