Interim Report
African Consolidated Resources Plc
("ACR" or the "Company")
Interim Report
African Consolidated Resources Plc., the Zimbabwe focused mineral
exploration company today announces its Interim Report for the half
year ended 31 August 2008. The Company expects to send copies of the
Interim Report to shareholders in early December 2008.
The full Interim Report is as follows:-
Financial Highlights
+-------------------------------------------------------------------+
| * | Loss of £0.537 million to 31 August 2008 as exploration |
| | programmes continue. |
| | |
|---+---------------------------------------------------------------|
| * | Cash balance of £2.856 million at 31 August 2008. |
| | |
+-------------------------------------------------------------------+
Exploration Highlights
+-------------------------------------------------------------------+
| * | Significant gold intercepts in Gadzema Greenstone Belt. |
| | |
|---+---------------------------------------------------------------|
| * | Completion of detailed airborne geophysical survey on |
| | Perseverance Nickel Sulphide |
| | project. |
| | |
|---+---------------------------------------------------------------|
| * | PGM exploration postponed pending price recovery. |
| | |
|---+---------------------------------------------------------------|
| * | Acquisition of substantial database and physical samples of |
| | kimberlitic anomalies. |
| | |
|---+---------------------------------------------------------------|
| * | Growing establishment of targets from greenfield exploration. |
| | |
+-------------------------------------------------------------------+
Chief Executive's statement
Since my last report the world has experienced, and indeed continues
to experience, financial turmoil of a level not seen for decades. As
a result the industry and African Consolidated Resources Plc ('ACR'
or the 'Company') face a very different short and medium term future
than recently anticipated. In a positive vein, the completion of this
great de-leveraging of world markets will ultimately give rise to a
more rationalised, less speculative environment in which the real
economy will find rational balance on the good old fundamentals of
supply and demand. The mining industry can take heart from that and
from the fact that the bubble was not from over-optimism in mining
stocks as happened in the dot-com crash of 2000. In my opinion the
market's reaction to the unwinding of untenable, poorly secured debt
levels has left an unqualified pessimism in its wake. A pessimism
that will be reversed only on stocks with strong fundamentals; again
a long-term positive sign for the mining sector.
Against that background, Zimbabwe languishes in a political limbo as
the nation attempts to negotiate a future. Uncertainty, hope,
failure, more hope, more failure has a debilitating effect. Precious
man-hours squandered on political analysis and hand-wringing over
endless vacillation. Medium term planning is rendered almost
impossible. For ACR staff and management, remaining focused in this
environment is challenging to say the least but I am proud to report
that the attitude and mentality on display at all levels of the
Company provide me with a daily inspiration. I am satisfied that our
day-to-day exploration operations are affected only minimally by the
state of the domestic economy and again this is a credit to the
willingness and "can-do" approach from the staff and management.
The strategy of ACR and the sound reasoning upon which that strategy
is based remain unchanged. We have undertaken to garner a
significant stake in the minerals and mineral prospectivity of
Zimbabwe. With a low cost and efficient operation we are processing
promising ground, relinquishing ground that does not prove up and
preparing to define multi-mineral resources for development and
production in a stable environment once it returns. While the
capital markets have begun to demand the rapid transition of
exploration juniors to producers, ACR is an obvious exception as a
large and wide-scale approach to excellent geology with a
geo-political turnaround play the big step in the reward chain. We
are determined to keep our focus on this strategy. With that and
potential budgetary constraints in mind, I note again that we do have
a broadened regional view, partly for a spread in the sovereign risk
profile but also for commercial opportunity. We have recently been
granted significant tenements in Zambia while some bureaucratic
delays are slowing our Mozambican venture.
In the field we continue to march samplers through large tracts of
greenfield ground producing precious and base metal anomalies. Our
base-metal laboratory processes these samples quietly and
efficiently, our diamond / diamond-indicator laboratories and
microscopes sort heavy minerals diligently and we continue to send
our precious metal samples to domestic laboratories. Such activities
continue at an astonishing pace yet at a fraction of the cost that
might be expected in a traditional first-world environment.
A Brief Project Summary
+-------------------------------------------------------------------+
| | |
| * | PGM's |
| | Even amidst deflated commodity prices, the drop in PGM prices |
| | has been dramatic by comparison to others. In such a thinly |
| | supplied, versus heavily weighted demand structure, it is |
| | obvious that volatility is a reality that will remain a |
| | factor in this sub-sector and miners / explorers need to |
| | somehow factor that into long-term exploration plans. As a |
| | result of this volatility, ACR has shifted priority to other |
| | minerals and down-scaled activities at the Snakes Head PGM |
| | prospect while we await more certainty in that market. |
| | Nevertheless, planning for a large bulk sample is complete |
| | and planning for a drilling campaign on the newly discovered |
| | Northern facies is being contemplated. However, large-scale |
| | expenditure has all been postponed. |
| | |
|---+---------------------------------------------------------------|
| | |
| * | GOLD |
| | Amidst the general financial uncertainty there is a clear |
| | support in parts for gold as a safe haven. While the |
| | unwinding of short dollar positions may be distorting this |
| | upward momentum in the short term, the gold price does seem |
| | steadier than that of most metals. ACR was established and |
| | floated very much on the back of its gold assets. The |
| | consolidation of regional gold assets and application of |
| | modern ideas in exploration and exploitation have remained |
| | fundamental cornerstones of the Company's philosophy. Indeed |
| | we have spent significant capital in re-classifying and |
| | confirming legacy resources in compliance with the latest |
| | JORC standards. As a result, between two of its mature gold |
| | projects, ACR has 813,000 JORC oz Au (combined Inferred, |
| | Indicated and Measured). In the past two years our |
| | greenfield and brownfield projects have developed well. This |
| | is reflected in the steady progress achieved drilling and |
| | mapping of the Gadzema Greenstone Belt, within which the Blue |
| | Rock / Shlegani areas are showing particular promise where |
| | large felsic porphyry pods appear widely and |
| | well-mineralised. A 26-hole Reverse Circulation drilling |
| | programme at Blue Rock returned best intercepts of 22m @ |
| | 6.5g/t in hole BRRC17, and 24m @ 2.7 g/t in hole BRRC11, with |
| | semi-consistent mineralisation intersected over 600m of |
| | strike, open both north and south. Ground-proofing and |
| | drilling have identified several look-alike bodies within the |
| | magnetic survey area and these sit largely within ACR |
| | tenement holdings. An expanded exploratory drilling campaign |
| | is being planned to confirm the existence of extensions to |
| | the body. Drilling in the One-Step prospect also continues |
| | as do negotiations with neighbouring tenement holders |
| | therein. We hope to provide a more detailed exploration |
| | report on the unfolding midlands gold deposit story by |
| | February 2009, but there is a leaning toward an increased |
| | prioritisation of our gold prospects. |
| | |
|---+---------------------------------------------------------------|
| | |
| * | DIAMONDS |
| | With the completion of the acquisition of a very large |
| | database containing substantial kimberlitic anomalies, our |
| | diamond exploration has gathered pace. This coupled with the |
| | commissioning of our DMS (dense media separation) plant in |
| | Bulawayo has given a new impetus and we have already begun |
| | yielding positive indicator proofs of ground identified by |
| | the database. |
| | |
| | The Marange diamond fields remain in a mess. Illegal digging |
| | and smuggling is rife. This is tragic for Zimbabwe as well |
| | as for the social fabric of the province and we continue to |
| | urge Government to engage ACR in dialogue that will lead to |
| | commencement of a fair and equitable mining project to |
| | benefit the nation, the local community and our |
| | shareholders. Matters are not helped by the fact that there |
| | remains no formally constituted cabinet pending the outcome |
| | of political negotiations. The progress of the legal action |
| | is slow but steady and remains the course of absolute last |
| | resort in the event that our continuing efforts to engage |
| | Government do fail. Should an agreement be reached we |
| | consider it possible to commission a plant into first-phase |
| | production within a short space of time - possibly as quickly |
| | as two months. |
| | |
|---+---------------------------------------------------------------|
| | |
| * | NICKEL |
| | While nickel prices have dropped sharply over the past year, |
| | a recent resurgence in prices is encouraging. We believe |
| | that the fundamentals of demand for the metal will eventually |
| | restore a respectable price. In the meantime we continue to |
| | progress our primary nickel exploration projects. The nickel |
| | sulphide prospect around and along strike of the closed |
| | Perseverance mine remains of foremost significance. Detailed |
| | ground-based electromagnetic survey work continues and 13 |
| | conductive bodies have been identified to date along some 35% |
| | of the structure. We have recently completed a |
| | high-definition aerial magnetic survey of the 30km long |
| | structure flying some 5,000 line-kilometres at a spacing of |
| | 50 metres apart and at a height of 30 metres from the |
| | ground. Interpretation has provided an excellent insight and |
| | has assisted with a new geological model for the area which |
| | will hopefully assist in speeding up the identification of |
| | economic ore-bodies. It is likely that there are actually |
| | two geological models at play in the greater structure: A |
| | serpentinite sill containing disseminated sulphides overlying |
| | a Komatiitic flow containing massive-sulphides. This |
| | corresponds with the two ore-bodies found concurrently in the |
| | original mine and in essence it would appear that we have a |
| | Kambalda-style lava flow deposit overlain by a Mt Keith-style |
| | intrusive deposit. While these are exciting concepts, what |
| | now remains is to confirm drill targets in detail, and |
| | complete drilling to locate massive sulphides. |
| | |
| | Like others around the world, the viability of our laterite |
| | deposit is called into question with the current low price of |
| | the metal and high cost of sulphuric acid. With this in mind |
| | we have pursued a cheap source of sulphur to complement the |
| | deposit. Three possible sources have been identified of |
| | which one is now controlled by ACR. This deposit appears to |
| | be substantial and is a pyrite deposit that historical |
| | results indicate ranges between 23% and 28% sulphur. The |
| | other two sources would be closer to the laterite but are |
| | controlled by third parties with whom ACR has commenced |
| | preliminary discussions. Meantime, ACR has commissioned |
| | local metallurgical consultants to complete basic atmospheric |
| | leach trials on sample ore from the deposit with encouraging |
| | initial results on recovery and leach times. Like the PGM |
| | deposit, work will continue but at a very low spend rate on |
| | this project pending improvement in nickel prices. |
| | |
+-------------------------------------------------------------------+
All other projects are continuing but in a low-spend manner.
Management believes that the best bang for our exploration buck will
most likely emanate from our gold and nickel sulphide prospects.
Administration overhead remains highly efficient with a low base burn
rate. All expenses have been cut to a minimum and the Board will
continue to manage cash flow extremely tightly. In the event that a
major resource definition drilling campaign on our gold or nickel
were considered justified, it would be dependent on the ability to
raise funding against that campaign.
Andrew Cranswick
CEO
26 November 2008
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.
Consolidated income statement
for the half year ended 31 August 2008
For the half For the year For the half
year ended ended year ended
31 August 29 February 31 August
2008 2008 2007
Notes Group Group Group
Unaudited Audited Unaudited
£'000 £'000 £'000
Revenue - - -
Administrative expenses (609) (1,153) (611)
Operating loss (609) (1,153) (611)
Finance income 72 161 33
Loss on ordinary
activities before and (537) (992) (578)
after taxation
Loss attributable to the
equity holders of (537) (992) (578)
the parent company
Loss per share - basic 3 (0.24)pence (0.48) pence (0.30)pence
and diluted
Consolidated balance sheet
As at 31 August 2008
31 August 2008 29 February 31 August
Note Group 2008 2007
Unaudited Group Group
£'000 Audited Unaudited
£'000 £'000
Assets
Non-current assets
Intangible assets 6,760 5,842 5,365
Property, plant and 487 403 357
equipment 57 35 7
Available for sale
investments
7,304 6,280 5,729
Current assets
Inventory 63 25 34
Receivables 87 163 121
Available for sale 9 37 7
investments 2,856 4,142 4,936
Cash and cash equivalents
Total current assets 3,015 4,367 5,098
Total Assets 10,319 10,647 10,827
Equity and Liabilities
Capital and reserves
attributable to equity
holders of the company 4 2,221 2,210 2,210
Called-up share capital 4 10,541 10,489 10,489
Share premium account 4 25 5 (11)
Available for sale reserve 4 800 732 619
Share option reserve 4 (3,569) (3,040) (2,626)
Retained earnings
Total equity 10,018 10,396 10,681
Current liabilities
Trade and other payables 301 251 146
Total current liabilities 301 251 146
Total Equity and 10,319 10,647 10,827
Liabilities
Consolidated cash flow statement
for the period ended 31 February 2008
For the half For the For the
year year half year
ended ended ended
31 August 29 February 31 August
2008 2008 2007
Group Group Group
£'000 £'000 £'000
CASH FLOW FROM OPERATING ACTIVITES
Loss on ordinary activities (537) (992) (578)
Adjustments for:
Depreciation 81 117 53
Write-off of deferred - 32 -
expenditure/intangible assets
Finance income (72) (161) (33)
(Profit)/loss on sale of
available for sale (20) 2 (3)
investments
(Profit) on sale of property, (21) - -
plant and equipment
Share option charges 76 244 132
44 234 149
Changes in working capital:
Decrease/(Increase) in 76 (78) (36)
receivables
(Increase)/Decrease in (38) 7 (2)
inventories
Increase/(Decrease) in payables 50 20 (85)
88 (51) (123)
Cash generated from operations (405) (809) (552)
Investing activities:
Payments to acquire intangible (918) (911) (403)
assets
Payments to acquire property, (186) (152) (41)
plant and equipment
Payments to acquire available - (60) -
for sale investments
Proceeds on disposal of
property, plant and 43 5 7
equipment
Proceeds on disposal of
available for sale 45 29 14
investments
Interest received 72 161 33
(944) (928) (390)
Financing Activities:
Proceeds from the issue of
ordinary shares, net of 63 4,365 4,364
issue costs
(Decrease)/Increase in cash and (1,286) 2,628 3,422
cash equivalents
Cash and cash equivalents at 4,142 1,514 1,514
beginning of period
Cash and cash equivalents at end 2,856 4,142 4,936
of period
Interim report notes
for the period ended 31 August 2008
1 Interim Report
The information relates to the period from 1 March 2008 to 31 August
2008.
The interim report was approved by the Directors on 26 November 2008.
The interim report is unaudited.
2 Basis of preparation
+-------------------------------------------------------------------+
| | | |
| a) | | The report has been prepared using the same accounting |
| | | policies as stated in the 29 February 2008 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 intends to change its Accounting Reference |
| | | Date and the Company and Group will report again for the |
| | | 13 month period to 31 March 2009. |
| | | |
+-------------------------------------------------------------------+
3 Loss per share
For the half For the year For the half
year ended year
ended 29 February ended
31 August 2008 31 August
2008 Group 2007
Group £'000 Group
£'000 £'000
Loss per Ordinary Share has
been calculated
using the weighted average
number of
Ordinary Shares in issue
during the relevant
financial period.
The weighted average number of
Ordinary
Shares in issue for the year
is. 221,409,142 208,614,788 193,140,059
Losses for the Group for the (537) (992) (578)
period are
(£'000)
Loss per share basic and (0.24p) (0.48p) (0.30p)
diluted
The effect of all potentially
dilutive share
options is anti-dilutive
4 Group Statement of Changes in Equity
Share Share Share Available Retained
capital premium option for sale earnings/ Total
Group account account reserve reserve (losses)
£'000 £'000 £'000 £'000 £'000 £'000
At 29 February 2,210 10,489 732 5 (3,040) 10,396
2008
Issue of shares 11 52 - - - 63
Share option - - 76 - - 76
provision
Share options - - (8) - 8 -
exercised
Available for
sale - - - 20 - 20
investments
- valuation
losses
Loss for the - - - - (537) (537)
year
At 31 August 2,221 10,541 800 25 (3,569) (10,018)
2008
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 7634 4700 |
| Richard Greenfield | |
| | |
| | |
+-------------------------------------------------------------------+
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