African Mining and Exploration plc.

("AME" or "the Company")

Financial Results for the Year Ended 31 December 2012

 

 

African Mining & Exploration plc (AIM: AME), the AIM listed gold exploration and development company operating in West Africa, announces its audited financial results for the year ended 31 December 2012.

 

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 in the next few days and will also be made available to download today 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 2^nd Floor, 3 Shepherd Street, W1J 7HL.

 

Annual General Meeting

 

The Company's next Annual General Meeting ("AGM") will be held the offices of Arlington Group, 2nd Floor, 18 Pall Mall, SW1Y 5LU on 17 June 2013 at 4:30 p.m. A formal Notice of AGM and proxy form are expected to be posted to shareholders in the next few days and will be available to download today from the Company's website at www.ameplc.co.uk.

 

 

For further information please visit www.ameplc.co.uk or contact:

Mark Jones	African Mining & Exploration plc	Tel: 44 (0)20 7499 5881
James Maxwell / Jenny Wyllie	N 1 Singer	Tel: 44 (0)20 7496 3000

 

The financial information set out below does not constitute the Company's statutory accounts for the years ended 31 December 2012 or 2011, but is derived from those accounts.  The auditors have reported on those accounts; their report was unqualified but did draw attention to the going concern by way of emphasis of matter.

 

 

CHAIRMAN'S STATEMENT FOR THE YEAR ENDED 31 DECEMBER 2012

 

It is with positive reflection that I write my first Chairman's Statement for this Company which has the potential to offer so much to investors. By rapidly advancing towards its maiden gold JORC resource, significant progress has been made by the Company on its journey to becoming a leading junior mining and exploration company. This is especially pleasing considering the limited budget expended to achieve the progress.

 

Exploration

Following the acquisition of Caracal Gold Mali SARL ("Caracal") in July 2012, the Company's exploration focus changed significantly towards the licences acquired as part of the purchase which are in a prime location in a world-class gold mining district. The change in focus was rewarded with very positive results from a drilling programme in December 2012 at the Kossanto permit area, which we expect to provide the Company's maiden resource in 2013.

 

West Africa Operations

Our Company's primary area of operation is Mali in Western Africa where we are focused on the exploration and subsequent development of gold assets. Mali is the third largest gold producer in Africa. Following a military coup in March 2012 Tuareg and Islamist rebels used the political vacuum to take control of a large area of North Eastern Mali. In response to Islamist territorial gains, the French military launched Opération Serval in January 2013. Within a month, Malian and French forces with the assistance of troops from West African regional states recaptured most of the north. Sufficient stability has been returned for Presidential elections to be scheduled for 7 July and legislative elections for 21 July this year. Our regional headquarters and exploration locations are located many hundreds of miles from the problem areas and Company operations continued with minimal disruption during the year. Since the coup d'etat Randgold Resources, one of our neighbours at our Kossanto permits reported its highest ever gold production in Mali in Quarter 3 2012.

 

Annual General Meeting

At the forthcoming AGM the Shareholders will be asked to renew the usual equity securities issue authorities, which this year include a resolution in respect of the discretionary deferred consideration in respect of the Caracal acquisition. I hope you will once again support the Board by putting these authorities in place.

Additionally, the recently appointed Directors, including myself, are required to be offered for re-election in line with the Company's Articles of Association. I commend the re-election as an endorsement of the Company's stewardship.

 

Financial

Whilst the Company had a cash position of £1.76 million at 31 December 2012, the Board recognised the current financing difficulties amongst the junior exploration sector and as a result took the pro-active decision, announced on 1 March 2013, to implement prudent cash preservation measures expected to save over £350,000 between March and December 2013. Where additional cost-saving opportunities are recognised, they will be implemented as part of an on-going cost management process as the Company continually reviews its cost base. In line with the prudent management concepts, the Company is regularly focussing on a review of cash flow projections and will regularly assess the timing of potential future fundraising activity to minimise the risk of the Company experiencing financial distress. The Company's cash balance at 2 May 2013 was £1.18m.

 

Social Responsibility

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

 

Board Changes

In February 2013, following discussions between the Company and its two largest Shareholders, Praetorian Resources Limited ("Praetorian") and Fiske plc ("Fiske") concerning the future direction of the Company, and the composition of the Board due to the market and operational climate, a major change in the composition of the Board was agreed. The Non-Executive Directors, Stephen Oke, Roger Williams and Douglas Chikohora resigned and myself, Charles Cannon-Brookes (nominee for Praetorian) and Clive Harrison (nominee for Fiske) were appointed to the Board alongside Mark Jones, the existing Chief Executive Officer. The recently appointed Directors are working closely with the excellent management team to significantly enhance Shareholder value.  I would like to thank Stephen Oke, Roger Williams and Douglas Chikohora for their hard work in establishing AME as a well-run Company in its formative years. Additionally, special thanks and recognition are deserved for their foresight in the acquisition of Caracal, combined with the favourable low risk commercial terms negotiated for that acquisition, which has significantly bolstered the Company's long term prospects.

 

Outlook

Following the recent Board change our goal remains broadly the same as previously. Specifically, we continue to establish a leading exploration company, utilising the strengths of experienced professionals and partners to deliver significant investment return with managed risk, but with a more expansive approach to geographical coverage. We will continue to look to build Shareholder value by further development of the Company's flagship Kossanto asset in Mali and by utilising the Board and management team's global experience to continue to expand AME's portfolio of assets through the judicious selection and acquisition of projects with low entry costs.

 

The organisation's significant progress towards a maiden JORC resource provides a firm foundation that allows the Company to move forward positively in 2013 and I believe that we are in a much stronger position compared with the same time last year. Finally, we have a small team of dedicated staff and on behalf of the Company I would like to thank them for their significant efforts during the year and I look forward to the coming year, which I hope will be exciting and rewarding for the Company and all its Shareholders.

 

 

Mike Johnson

Chairman

 

Date: 3 May 2013

 

 

CHIEF EXECUTIVE'S REPORT FOR THE YEAR ENDED 31 DECEMBER 2012

 

During the period the Company maintained a clear focus on its strategy of creating a gold focussed exploration company concentrating on quality early exploration opportunities in West Africa. A key milestone in achieving this objective was the acquisition of Caracal which has provided us with our flagship asset, Kossanto. This successful acquisition was just one of a number of opportunities we have investigated to diversify our exploration portfolio in West Africa and we will also seek additional opportunities outside West Africa as we move forwards.

 

Acquisition of Caracal Gold Mali SARL

On 2 July 2012 the Company signed a Sale and Purchase agreement  under which AME, through one of its subsidiaries, acquired the entire issued share capital of Caracal on a 'cash free debt free' basis. Caracal holds 6 gold exploration licences in Mali and a 7th licence is under a renewal application.

 

The exploration licences encompass approximately 376 km2. Five of the licences are contiguous and collectively known as the 'Kossanto' permits (Kobokoto, Gourbassi, Farikounda, Koussikoto and Kobokoto-Est). These permits lie in the centre of the Kenieba inlier in western Mali, a block of ancient greenstones and granites hosting many significant gold deposits in Senegal and Mali making it one of the most important gold regions in Africa. Kossanto geology includes all the key rock units that host the gold mineralisation in the major gold producing mines of Sadiola, Yatela, Loulo and Sabodala. They consist of a mix of basic and acidic volcanics with turbidites, and pervasive shearing and fracturing. There are extensive artisanal workings all over this region and the structure as indicated by airborne geophysics places Kossanto on the same major fracture system which controls the Sadiola mineralisation.

 

In consideration for Caracal, AME paid £125,000 and is conducting exploration on the permits for an 18 month period from July 2012. At the end of the 18 month period, AME will have at its sole discretion the right to allot ordinary shares, make a payment in cash or a combination of both cash and ordinary shares to the value of £1.25 million to the seller or to grant the Seller a right of first refusal to reacquire Caracal from AME on a 'cash free debt free' basis.

 

If AME elects to proceed with the payment of £1.25m as set out above and where a JORC compliant Proven and Probable reserve of greater than 500,000 oz is established, AME shall be liable to allot 3,515,000 ordinary shares to the Seller.

 

Operations

Kossanto Permits

Following the acquisition of Caracal Gold Mali SARL in July 2012, the Company has been actively evaluating historic data including check-assaying analysis of mineralised intercepts and conducting reverse air blast ('RAB') drilling in order to further ascertain the prospectivity of the Kossanto licence area. This was considered essential before planning for, and committing funds to a reverse circulation ("RC") programme. The Company was pleased to announce positive check-assay results and subsequently a 3,126m RC resource definition drilling programme was completed in December 2012 and the samples sent to an accredited laboratory for analysis. The results of the drilling campaign were very positive and include intersects of 75m @ 2.04 g/t Au, 46m @ 2.16 g/t Au, 17m @ 3.86 g/t Au and 11m @ 6.16 g/t Au.

 

The Company continues to actively advance the resource opportunities identified by the recent drilling programme, with particular emphasis on defining extensions at Gourbassi East and additional trenching and pitting at Gourbassi West to define drill targets.

 

Other Permits

In addition to the Company's flagship Kossanto permits work was carried out on the existing permits, Karan and Diatissan which are both located in prospective areas. Due to its large size and geological results to date, Karan, which is located in Southern Mali, exhibits the potential for providing a significant resource base in the medium term but as the minimum spending requirements have been met already the prudent portfolio management decision is to focus on this at a later date.

 

Social Responsibility

We continue to enjoy excellent relationships with the local population at our exploration permits. This has developed through our local subsidiary Tobon Tondo over a period of 16 years. In co-operation with other mining companies in Mali AME was able to participate in a programme which demonstrated how the mining fraternity can support the communities it works in. The programme, run by the non-governmental organisation, END Fund, targeted to provide access to treatment for neglected tropical diseases, such as Malaria, which are prevalent in Mali. This provided much needed support for the local community following the interruption of the Mass Drug Administration program supported by USAID which was suspended following the coup d'état.

 

Outlook

With the expectation of adding a maiden resource to our portfolio we have significantly enhanced our long term sustainability and the recent changes to the Board confirm the confidence of our major investors in the Company's potential. As I thank the recently departed Directors for their significant contributions in developing a strong asset base in Mali that has great potential to be transformational for AME, I also look forward to working with the new Directors to continue the growth of the Company.  

 

Our existing commitment to getting value for money as we seek to identify potential resources at low cost has served the Company well, yet we are very mindful of the current market conditions hence the implementation of prudent cash conservation measures announced in March 2013. I believe these have moved us from a lean cost base to a very lean cost base, whilst retaining the vital competences, capacity and flexibility to advance the Company in line with stakeholders' expectations. Thus, I am confident that the traction that the Company has demonstrated will continue to drive it forwards into a leading junior mining and exploration company.

 

Mark C Jones    

 

Chief Executive Officer

Date 3 May 2013

 

 

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 DECEMBER 2012

 

 

	Notes			2012 £		2011                 £
Revenue				-		-
Administrative expenses				(954,184)		(1,530,297)
OPERATING LOSS				(954,184)		(1,530,297)
Finance income		4		12,763		19,445
LOSS BEFORE TAX		5		(941,421)		(1,510,852)
Taxation		6		-		-
LOSS FOR THE YEAR ATTRIBUTABLE TO EQUITY OWNERS OF THE PARENT				(941,421)		(1,510,852)
OTHER COMPREHENSIVE INCOME
Exchange (losses)/gains arising on translation of foreign operations				(30,298)		5,166
OTHER COMPREHENSIVE INCOME FOR THE YEAR				(30,298)		5,166
TOTAL COMPREHENSIVE INCOME FOR THE YEAR
ATTRIBUTABLE TO EQUITY OWNERS OF THE PARENT				(971,719)		(1,505,686)
Loss per share attributable to equity owners of the parent expressed in pence per share: Basic and diluted		8		(1.12)		(1.84)

 

 

CONSOLIDATED STATEMENT OF FINANCIAL POSITION 31 DECEMBER 2012

 

	Notes		2012 £		2011 £
ASSETS
NON-CURRENT ASSETS
Intangible assets	9		2,086,667		1,167,560
Property, plant and equipment	10		177,174		182,726
TOTAL NON-CURRENT ASSETS			2,263,841		1,350,286
CURRENT ASSETS
Trade and other receivables	12		73,133		49,881
Cash and cash equivalents	13		1,767,381		3,378,474
TOTAL CURRENT ASSETS			1,840,514		3,428,355
TOTAL ASSETS			4,104,355		4,778,641
EQUITY AND LIABILITIES
SHAREHOLDERS' EQUITY
Share capital	14		842,133		842,133
Share premium			4,997,699		4,997,699
Foreign currency reserve			(16,412)		13,886
Warrant reserve			579,500		579,500
Share based payment reserve			577,260		407,133
Merger reserve			572,314		572,314
Retained earnings			(3,646,829)		(2,705,408)
TOTAL EQUITY ATTRIBUTABLE TO EQUITY HOLDERS OF THE PARENT			3,905,665		4,707,257
LIABILITIES
CURRENT LIABILITIES
Trade and other payables	15		198,690		71,384
TOTAL LIABILITIES			198,690		71,384
TOTAL EQUITY AND LIABILITIES			4,104,355		4,778,641

 

The financial statements were approved by the Board of Directors on 3 May 2013 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 2012

 

 

	Share capital	Share premium	Foreign currency reserve	Warrant reserve	Share based payment reserve	Retained earnings	Merger reserve	Total equity
	£	£	£	£	£	£	£	£
At 1 January 2011	708,115	3,429,561	8,720	708,115	67,771	(1,323,171)	572,314	4,171,425
Issue of share capital	134,018	1,559,670	-	-	-	-	-	1,693,688
Fundraising costs	-	8,468	-	-	-	-	-	8,468
Exercise of warrants	-	-	-	(128,615)	-	128,615	-	-
Total comprehensive income for the year	-	-	5,166	-	-	(1,510,852)	-	(1,505,686)
Share based payments	-	-	-	-	339,362	-	-	339,362
At 31 December 2011	842,133	4,997,699	13,886	579,500	407,133	(2,705,408)	572,314	4,707,257
Loss for the year	-	-	-	-	-	(941,421)	-	(941,421)
Other comprehensive income	-	-	(30,298)	-	-	-	-	(30,298)
Total comprehensive income for the year	-	-	(30,298)	-	-	(941,421)	-	(971,719)
Share based payments	-	-	-	-	170,127	-	-	170,127
At 31 December 2012	842,133	4,997,699	(16,412)	579,500	577,260	(3,646,829)	572,314	3,905,665

 

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

         

Reserve                                                             Description and purpose

 

Share capital                                                     Amounts subscribed for share capital at nominal value.

                                                                            

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

                                                                            

Foreign currency reserve                                Gains/losses arising on retranslating the net assets of Group                                  

                                                                             operations into Pound Sterling.

 

Warrant reserve                                               Fair value of the warrants issued.

 

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.

 

Merger reserve                                                  Amounts resulting from acquisitions under common control.

                                                                                                          

 

CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 31 DECEMBER 2012

 

			2012 £		2011 £
Cash flows used in operating activities
Loss for the year			(941,421)		(1,510,852)
Depreciation and amortisation charges			39,172		19,690
Share based payment reserve charge			170,127		339,362
Shares issued in lieu of payment to extinguish liabilities			-		86,000
Finance income			(12,763)		(19,445)
Cash flow from operating activities before changes in working capital			(744,885)		(1,085,245)
(Increase)/decrease in trade and other receivables			(23,273)		28,968
Decrease in trade and other payables			(9,037)		(154,946)
Net cash used in operating activities			(777,195)		(1,211,223)
Cash flow used in investing activities
Purchase of intangible assets (exploration expenditure) Purchase of tangible fixed assets			(808,588) (35,209)		(920,476) (165,085)
Interest received			12,763		19,445
Net cash used in investing activities			(831,034)		(1,066,116)
Cash flow from financing activities
Exercise of warrants			-		1,607,688
Net cash from financing activities			-		1,607,688
Decrease in cash and cash equivalents			(1,608,229)		(669,651)
Cash and cash equivalents at beginning of year			3,378,474		4,004,606
Exchange differences			(2,864)		43,519
Cash and cash equivalents at end of year			1,767,381		3,378,474

 

**Ends**

 

Notes

About AME

African Mining and Exploration plc (AIM:AME) is a gold focussed exploration company. AME currently has a number of prospective gold projects in Mali including its flagship 207 sq km Kossanto Gold Project located in the centre of the prospective Kenieba inlier in western Mali. It is currently exploring and developing the Kossanto Gold Project with a view to delineating its maiden JORC compliant resource. The Company is also evaluating additional opportunities to expand its portfolio and geographical focus.