Interim Report
African Consolidated Resources Plc
("ACR" or the "Company")
Interim Report
Following the announcement made on 27 November 2007 the Company makes
a further announcement of its interim report this time with the
financial information set out in full rather than via a link to the
Company's website.
Financial Highlights
+-------------------------------------------------------------------+
| * | Loss of £0.578m to 31 August 2007 as exploration programmes |
| | progressed to plan. |
| | |
|---+---------------------------------------------------------------|
| * | Cash balance of £4.936m at 31 August 2007. |
| | |
|---+---------------------------------------------------------------|
| * | £4.5m raised through issue of 31,034,482 Ordinary Shares. |
| | |
+-------------------------------------------------------------------+
Highlights
+-------------------------------------------------------------------+
| * | Subject to results of planned tests at Snakes Head |
| | substantial progress in reaching agreement with a potential |
| | technical partner to introduce cost reducing advanced |
| | technology for platinum production. |
| | |
|---+---------------------------------------------------------------|
| * | Increased definition of nickel sulphide potential in the |
| | Perseverance nickel trend through electro-magnetic survey |
| | using SIROTEM. |
| | |
|---+---------------------------------------------------------------|
| * | New gold and silver anomalies which are being followed up. |
| | |
|---+---------------------------------------------------------------|
| * | Marange diamonds legal process and discussions ongoing. |
| | |
|---+---------------------------------------------------------------|
| * | Continued success in obtaining new exploration ground. |
| | |
|---+---------------------------------------------------------------|
| * | First phase targeting of exploration ground in Zambia and |
| | Mozambique. |
| | |
+-------------------------------------------------------------------+
Chief Executive's statement
It is a few short months since the compilation of my last report
incorporated into our Annual Report (still available on our web-site
at www.acrplc.com). I will endeavour to avoid too much repetition
and offer a slightly different perspective in summary of our
activities since then.
In order that the market may be better placed to understand the value
of ACR's assets and projects, I would like to point out that we are
in the process of compiling a detailed technical review incorporating
geochemical and geophysical data in the first quarter of the new
year.
A Regional View
As previously noted we have begun our anticipated broadening of
outlook to other Southern/Central African countries. First phase
targeting has been undertaken in three regional countries in this
regard and discussions have commenced with the relevant government
bodies to acquire appropriate exploration rights. Meanwhile, company
registration and negotiations with local partners in Mozambique and
Zambia are now at an advanced stage and exploration is expected to
commence in early 2008 in these two countries. Opportunities in
Malawi, DRC and Angola have also been discussed but decisions on
activities there are unlikely to be taken within the next 6 months.
We are hopeful that investors may expect announcements on
acquisitions and allocation of concessions in 2008.
In Zimbabwe, economic pressures continue to take a toll on the local
population and ACR continues to follow a social support policy to
help alleviate this wherever we are active. I am hopeful that the
economy may be turned around in the coming year and that we might be
able to play our part accordingly. An election in early 2008 will
hopefully not cause a material disruption to our operations in
country. ACR will always be committed to working productively and
constructively with the Government of the day. We note with
enthusiasm the rapid increase in interest shown by potential and
actual investors in Zimbabwe assets hailing from Western and Eastern
countries and operating in all sectors, not least mining and
exploration. Wherever possible ACR has encouraged this and we
believe stands to reap the benefit of our first-mover advantage.
Indeed the company has recently been in discussions with potential
project partners from several Asian, African and East European
countries, regarding financial, equity and technical associations.
Meanwhile we continue a slow and steady legal process on our Marange
diamond issue while simultaneously keeping open discussions on
possible JV operations with Government. I remain hopeful of an
outcome that will have all-round benefits to the local economy, to
this company and to the local community of the area who have suffered
from past illegal activities.
ACR has commissioned a legal consultant to provide detailed advice on
potential implications for the company's operations of the recently
tabled Indigenisation and Empowerment Bill (not yet passed into
law). I once again stress our support for the concept of a
long-term, rational re-balancing of economic power in favour of
Zimbabweans in all sectors, one without prejudice to future foreign
investment and without jeopardising prospects for nation-wide
economic and social advancement.
In short, my opinion is that the world needs the resources that
Zimbabwe has to offer, and Zimbabwe needs to regenerate a healthy
economy while regaining its stature in Africa and the world. No-one
will benefit from the exclusion of this country's resources and my
most ardent wish remains one for rapprochement all round.
Technology Benefits
One of the basic tenets of our strategy has been to implement the
latest technology and ideas in exploration. I would like to share
some of the successes that this has brought to date and the hopes we
have for further developments.
Firstly, perhaps we need to look at mining technology developments
that promise to change the viability of projects we have been working
upon and thereby draw us closer to feasibility and possible
production in these fields. I wrote recently about technology
advances in PGE refining and concentration. These have led us to
commit to the sinking of a small exploration shaft in our Snakes Head
project to procure trial samples of known PGE-bearing reefs. Coupled
with the recent rises in precious metal prices we look forward to
results which could lead to initial scoping studies in the region and
a drilling campaign to achieve a JORC resource. We have selected
potential technical partners with which to assist us in this regard
and are hopeful of signing a substantive agreement post-testing.
In a similar vein, the mining and treatment of nickel laterite ore
has advanced significantly in recent years and the resulting
reduction in CAPEX requirements has changed the economics of such
projects. More specifically, the size threshold of a laterite
deposit has dropped dramatically and I therefore note that we are far
more proactive in the analysis of our laterite targets. Again we
hope to release important results from our geochemical and
metallurgical work in this regard, which to date have been
encouraging and could lead to an eventual estimate of resource size.
We have worked with experts in the field to design and build a plant
for extraction of the uniquely-coated Marange style of diamonds which
avoids the pitfalls associated with these diamonds of traditional
extraction techniques. This is another example of embracing both new
technology and expert partners early, while using detailed research
to ensure minimal ramp-up time.
Turning to exploration technology, we have exploited the availability
of affordable XRF analysis and have acquired a second Niton analyser
for both field and laboratory use. This is proving invaluable in
detecting all the minerals we are chasing and has all but removed our
laboratory (pathfinder assay) bottleneck. Decision-making on
maintenance/expansion versus release of exploration areas has become
far more efficient. Our broad-brush geochem sampling effort has been
expanded and anomalies of all minerals are providing future targets
at an accelerated rate.
Our ongoing electro-magnetic survey using SIROTEM in the Perseverance
nickel trend has already yielded promising anomalies that indicate
both massive and disseminated nickel sulphide potential in keeping
with the style of the historically-exploited Perseverance ore body.
This gives me confidence of establishing firm drill targets for
2008. What's more, on the same trend, MMI geochem samples processed
in Canada from sampling several kms along strike from the old pit,
where suspected ultramafic is concealed under cover, has led to the
discovery of a previously unknown nickel-rich gossan with potential
for significant strike-length. The SIROTEM follow-up is expected to
define the dimensions of what appears to be another massive sulphide
body along strike.
Our in-house diamond laboratory is in operation and our sorters have
recently received training from a world-recognised specialist.
Together with the recent acquisition of a large electronic and
physical sample database, we are set to use the latest understanding
of diamond indicator minerals to re-process and analyse these
concentrates.
The philosophy guiding the early adoption of these techniques gives
us exactly the right edge to achieve results fast against a backdrop
of large-scale geochemical and geophysical research. I am hopeful
that the output from these initiatives will provide target generation
for development in the coming 18 months.
Coupled with this advantage we continue to benefit from our
first-mover advantage which has allowed us almost unfettered access
to ground which would be very difficult to obtain elsewhere in the
world. Our broad-brush gold geochem has yielded several important
gold and silver anomalies which are being followed up firstly by
consolidation of surrounding tenements, then by more detailed geochem
work over the anomalies and thereafter by geophysics to ultimately
define drill targets. This strategy is now generating entirely new
gold projects as intended. Fortuitously this comes at a time when
gold has reached record highs. This bodes well for our green-field
as well as our existing, advanced gold JORC resources in the
Pickstone-Peerless and Giant mines.
Cash Resources
As reported in the 2007 Annual Report we raised £4.5million cash by
the issue of ordinary shares in July 2007 the proceeds of which are
reflected in the Interim Results. Expenditure in the period has been
on progressing our planned exploration programme and as previously
explained. Meanwhile we maintain an adequate cash resource to
initiate diamond production at short notice at Marange should
circumstances allow.
Conclusion
I look forward to providing more detailed technical information on
the development of these and other projects in the near future and am
confident that 2008 will begin to offer reward for the faith our
shareholders have placed in the Board and management of ACR.
I wish you all a joyous festive season and a prosperous New Year.
Andrew Cranswick
CEO
The information in the Chief Executive's Statement in the Interim
Report that relates to exploration and technical matters has been
approved by Michael Kellow who takes responsibility for them.
Michael Kellow (BSc) is a Member of AIG and a full-time employee of
African Consolidated Resources plc. Mr. Kellow has sufficient
experience which is relevant to the style of mineralization and type
of deposit under consideration and to the activity which he is
undertaking to qualify as a Competent Person as defined in the 2004
Edition of the 'Australasian Code for Reporting of Exploration
Results, Mineral Resource and Ore Reserves' (JORC Code). Michael
Kellow consents to the inclusion in the report of the matters based
on his information in the form and context in which it appears.
27 November 2007
Consolidated income statement
for the half year ended 31 August 2007
For the half For the For the half
year ended year ended year ended
31 August 28 February 31 August
2007 2007 2006
Notes Group Group Group
Unaudited Audited Unaudited
£'000 £'000 £'000
Revenue - - -
Administrative expenses (611) (1,809) (1,132)
Operating loss (611) (1,809) (1,132)
Finance income 33 102 46
Loss on ordinary (578) (1,707) (1,086)
activities before and
after taxation
Loss attributable to the (578) (1,707) (1,086)
equity holders of the
parent company
Loss per share - basic 3 (0.30)pence (0.96) (0.66) pence
and diluted pence
Group balance sheet
As at 31 August 2007
31 August 2007 28 February 31 August
Note Group 2007 2006
Unaudited Group Group
£'000 Audited Unaudited
£'000 £'000
Assets
Non-current assets
Intangible assets 2 5,365 4,962 4,011
Property, plant and 2 357 373 209
equipment
Financial assets 7 7 20
5,729 5,342 4,240
Current assets
Inventory 34 32 87
Receivables 121 85 60
Other financial assets 7 21 -
Cash and cash equivalents 4,936 1,514 3,352
Total current assets 5,098 1,652 3,499
Total Assets 10,827 6,994 7,739
Equity and Liabilities
Capital and reserves
attributable to equity
holders of the company
Called-up share capital 4 2,210 1,900 1,900
Share premium account 4 10,489 6,435 6,622
Retained earnings 4 (2,626) (2,048) (1,427)
Available for sale reserve 4 (11) (11) -
Share option reserve 4 619 487 99
Total equity 10,681 6,763 7,194
Current liabilities
Trade and other payables 146 231 545
Total current liabilities 146 231 545
Total Equity and 10,827 6,994 7,739
Liabilities
Group cash flow statement
for the half year ended 31 August 2007
For the half year For the For the
ended year half
31 August ended year
2007 28 ended
February 31 August
Group 2007 2006
£'000 Group Group
£'000 £'000
CASH FLOW FROM OPERATING
ACTIVITES
Loss on ordinary activities (578) (1,707) (1,086)
Adjustments for:
Depreciation 53 60 22
Finance income (33) (102) (46)
Profit on sale of fixed (3) - -
assets
Profit on sale of financial - (38) -
assets
Share option charges 132 409 46
149 329 22
Changes in working capital:
Increase in receivables (36) (31) (6)
Decrease/(Increase) in (2) 17 (36)
inventories
(Decrease)/Increase in (85) (752) (438)
payables
(123) (766) (480)
Cash generated from operations (552) (2,144) (1,544)
Investing activities:
Payments to acquire (403) (2,633) (1,682)
intangible assets
Payments to acquire (41) (305) (89)
property, plant and
equipment
Payments to acquire - (120) 23
financial assets
Proceeds on disposal of 7 15 -
fixed assets
Proceeds on disposal of 14 164 -
financial assets
Interest received 33 102 46
(390) (2,777) (1,702)
Financing Activities:
Proceeds from the issue of 4,364 4,460 4,623
ordinary shares, net of
issue costs
(Decrease)/Increase in cash and 3,422 (461) 1,377
cash equivalents
Cash and cash equivalents at 1,514 1,975 1,975
beginning of period
Cash and cash equivalents at 4,936 1,514 3,352
end of period
Interim report notes
for the half year ended 31 August 2007
1 Interim Report
The information relates to the period from 1 March 2007 to 31 August
2007.
The interim report was approved by the Directors on the 23 November
2007.
The interim report is unaudited.
2 Basis of preparation
+-------------------------------------------------------------------+
| a) | | The report has been prepared using the same accounting |
| | | policies as stated in the 28 February 2007 Annual |
| | | Report. The information does not constitute statutory |
| | | accounts within the meaning of section 240 of the |
| | | Companies Act 1985. |
| | | |
|----+---+----------------------------------------------------------|
| b) | | These interim financial statements consolidate the |
| | | financial statements of the Company and all its |
| | | subsidiaries. |
| | | |
|----+---+----------------------------------------------------------|
| c) | | Intangible Fixed Assets |
| | | |
|----+---+----------------------------------------------------------|
| | * | In accordance with the full cost method, all costs |
| | | associated with mining property development and |
| | | investment are capitalized on a project-by-project basis |
| | | pending determination of the feasibility of the project. |
| | | |
|----+---+----------------------------------------------------------|
| | * | Depletion and amortisation of the full-cost pools is |
| | | computed using the units-of-production method based on |
| | | proved reserves as determined annually by management. |
| | | |
|----+---+----------------------------------------------------------|
| | * | Mineral rights are recorded at cost less amortisation |
| | | and provision for diminution in value. Amortisation will |
| | | be over the estimated life of the commercial ore |
| | | reserves on a unit of production basis. |
| | | |
|----+---+----------------------------------------------------------|
| | * | Where a licence is relinquished, a project is abandoned, |
| | | or is considered to be of no further commercial value to |
| | | the company, the related costs will be written off. |
| | | |
|----+---+----------------------------------------------------------|
| d) | | Property, plant and equipment are initially recognised |
| | | at cost. As well as the purchase price, cost includes |
| | | directly attributable costs and the estimated present |
| | | value of any future costs of dismantling and removing |
| | | items. The corresponding liability is recognised within |
| | | provisions. |
| | | |
|----+---+----------------------------------------------------------|
| e) | | The Company and Group will report again for the full |
| | | year to 28 February 2008. |
| | | |
+-------------------------------------------------------------------+
3 Loss per share
For the half For the For the
year ended year ended half year
31 August 28 February ended
2007 2007 31 August
Group Group 2006
£'000 Group
£'000 £'000
Loss per Ordinary Share has
been calculated using the
weighted average number of 193,140,059 177,289,260 164,791,364
Ordinary Shares in issue
during the relevant financial
period. The weighted average
number of Ordinary Shares in
issue for the period is.
Losses for the Group for the (578) (1,707) (1,086)
period are
Loss per share basic and (0.30p) (0.96p) (0.66p)
diluted
The effect of all
potentially dilutive share
options is anti-dilutive
4 Group Statement of Changes in Equity
Share Share
capital premium Share Available Retained Total
Group account account option for sale earnings/
reserve reserve (losses)
£ £ £ £ £ £
At 28 February 1,900 6,435 487 (11) (2,048) 6,763
2007
Loss for the year - - - - (578) (578)
Share options - - 132 - - 132
Total recognised 1,900 6,435 619 (11) (2,626) 6,317
income and
expenses for the
period
Issue of shares 310 4,054 - 4,364
(net of issue
costs £135,000 )
At 31 August 2007 2,210 10,489 619 (11) (2,626) 10,681
Enquiries:
+-------------------------------------------------------------------+
| African Consolidated Resources plc | |
| Andrew Cranswick | +44 7920 189010 |
| Roy Tucker | +44 1622 816918 / +44 7920 |
| | 189012 |
|------------------------------------+------------------------------|
| Ambrian Partners Limited | |
| Richard Brown | +44 20 7776 6417 |
| | |
|------------------------------------+------------------------------|
| | |
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