TIDMCAN
RNS Number : 2029N
Central African Gold PLC
07 June 2010
Central African Gold Plc / Ticker: CAN / Market: AIM / Sub-sector: Gold Mining
7 June 2010
Central African Gold Plc ("CAG" or "the Company")
Preliminary Audited Annual Results
Central African Gold Plc, the AIM traded gold mining and exploration company,
announces its audited annual results for the year ended 31 December 2009.
Chief Executive Officer's Statement
Overview
The 2009 year under review has certainly proved to be one of the most
challenging in CAG's history. The challenges have continued into 2010, with the
Board's main focus being to secure the funding and significant cost reductions
that are required both to maintain the business in the short term and also to
develop the Group's quality gold mining properties in Zimbabwe in the medium to
long term. In order for the current debt resources to sustain the Group for the
next 12 months, significant cost reductions are required. The current position
of the Group, in terms of going concern, is considered more fully in the basis
of preparation to the financial statements.
As reported in the 2008 Annual Report, despite undertaking a number of
initiatives to improve the operational performance at the Company's Bibiani mine
in Ghana, the Company failed to commercialise the mine.
In January 2009, Central African Gold Ghana Limited ("CAG Ghana"), which owns
the Bibiani mine, received notice from Investec Bank ("Investec") regarding the
non-payment of monies due on the Investec project loan facility agreement and
the non-payment of monies due under various gold forward transaction agreements.
Investec demanded a full repayment of more than US$20 million from the Company.
Following the demand for repayment, Investec invoked its power of attorney under
the charge over the Company's shares in CAG Ghana and transferred the Company's
100 per cent. equity interest in CAG Ghana to Investec, making it the legal
owner of the Bibiani mine.
The Company undertook a placing in April 2009 to raise GBP5.7 million (US$8.0
million), before expenses, to contribute to the settlement of the US$5.0 million
guarantee to Investec.
Simultaneously with the placing, the Company negotiated a partial conversion of
the loan notes entered into in June and July 2008 (the "Loan Notes"). Investec
Asset Management converted US$1.0 million of the US$3.0 million advanced into
new ordinary shares at 0.9p immediately following the placing. Emerging Capital
Partners converted US$2.4 million of the US$3.94 million initially advanced into
new ordinary shares at 0.9p immediately following the placing.
As a consequence of the placement of shares and the partial conversion of the
Loan Notes, the majority of the shares in the Company are now held by three
shareholders - Emerging Capital Partners ("ECP") now own 50.02 per cent., HBD
Zim Investments Limited ("HBD") own 28.18 per cent. and Investec Asset
Management ("IAM") own 10.48 per cent.
During the year, the Board resolved to focus on the Zimbabwean assets, which, in
December 2008, the Company had announced had ceased operations in common with a
number of other mining operators in the country due to the adverse economic
climate that prevailed. This was exacerbated at the time by an inadequate system
of gold payment by the Reserve Bank of Zimbabwe and chronic shortages of
electricity. The mines remained on care and maintenance until March 2009 when
the Dalny and Old Nic mines were re-opened to test the new Zimbabwean gold
system.
The Board also announced its intention to dispose of the Mali exploration
portfolio, a decision based on the relatively early stage of development of
these assets, as well as the difficulty of managing them remotely.
CAG subsequently announced the disposal of the Mali portfolio for a total
consideration of US$5.0 million to Colonial Resources Limited, as announced on
21 December 2009.
IAM and ECP agreed to defer the payment of the shareholder loans of US$2.2
million (plus accrued interest) to the earlier of the sale of the Mali assets or
14 April 2010. Simultaneously with the provision of additional convertible loan
notes to the Company in December 2009, the maturity date was extended to April
2011. As announced on 4 June 2010, the maturity date has been further extended
to April 2012.
Zimbabwe
Following a decision to cease production in Zimbabwe and place the mines on care
and maintenance in December 2008, as a result of both the adverse economic
climate that prevailed in Zimbabwe at that time and the capital constrained
position of the Company, the year commenced relatively slowly. However, a number
of far reaching policy decisions have been taken at government level, which
could lead to the rejuvenation of the Zimbabwean gold industry.
On 2 February 2009, the Governor of the Reserve Bank of Zimbabwe ("RBZ")
released a Monetary Policy Statement ("MPS"). The proposed changes detailed in
the MPS have had a significant and positive impact on the Company's ability to
resume its Zimbabwe gold mining operations:
· Gold producers, after receipt of a Gold Export Permit, are permitted to
be in control of their gold sales: gold companies are able to produce and sell
gold and receive payment for their bullion within normal trade terms, as such
gold production may be marketed outside of the control of the RBZ.
· Proceeds from the sale of bullion in foreign exchange may be held
indefinitely, as compared to the previous requirement to convert any remaining
foreign exchange to local Zimbabwe currency within thirty days of receipt.
· Gold producers have been given the freedom to access certain financial
instruments, such as gold loans from offshore markets, that would then be
collaterised by their own physical gold inventory.
· All current outstanding receivables owed to gold producers, have been
converted into a "Special Tradable Gold-Backed Foreign Exchange Bond", which has
a term of 12 months and will pay interest at eight per cent. per annum upon
maturity. The interest owed is to be accrued from the time that the money has
been outstanding.
Furthermore, the RBZ has laid out certain measures to significantly de-regulate
Zimbabwe's exchange control policies. These measures include the ability of gold
producers to pay for goods and services offshore, as well as all genuine
external debts and dividends without prior Exchange Control approval.
The Directors believe that these reforms, together with political changes in
Zimbabwe, including, inter alia, the agreement by all parties in February 2009
to establish a Government of National Unity are promising and have enabled the
Company to restart gold production in Zimbabwe, albeit at limited levels
initially.
The Dalny and Old Nic mines were re-opened to test the system in the hope that
all Falcon and Olympus mines could be restarted. I am pleased to confirm that
the system is working and that realistic prices are being achieved. In June
2009, the Falcon and Olympus boards decided to reopen Golden Quarry and
Camperdown mines, and initiated negotiations to raise further funds to cover the
initial costs.
Unfortunately, the expected increase in foreign direct investment into Zimbabwe
did not materialise and this has severely affected the level of liquidity in the
Zimbabwean financial market. A lack of suitable credit lines and the
unsustainably high cost of capital have prevented the resumption of operations
at Golden Quarry and Camperdown and have also affected the level of operations
at Old Nic and Dalny.
It must be stated that the country is still a tough environment in which to
operate. The Board anticipates that electricity shortages will continue, the
country is short of skilled labour and the plant and equipment is very run down.
Furthermore, the country's decision to dispense with the Zimbabwe Dollar and use
US Dollar as the legal tender means that there is virtually no history of costs
in the "new" currency.
While noting that re-investment in the industry is becoming more attractive, the
Board has identified the need for a more coherent strategy for the rejuvenation
and recapitalisation of the mines, particularly in light of the operating
environment and the Company's financial position.
Subsequent to the Company's year end, the Board has engaged the services of a
mining engineering consultancy to conduct a high level review of the operations
in Zimbabwe, including a review of the mining practices in place. The quality of
the assets and the further exploration potential evident from an examination of
the Group's geological data was confirmed. A number of recommendations have been
made to assist in the optimisation of the assets going forward, which are
currently being assessed by the Directors.
In addition thereto, a 2D desktop structural study has also been commissioned,
utilising the services of Dr Robin Harris over the large 15km strike within the
Dalny claim portfolio, using processed Aster and Quickbird satellite imagery.
This will provide the necessary geological framework (lithology and structural
features) to allow for a greater understanding of the controlling features of
the numerous mineralized ore bodies within the claims. The results will allow
for a more optimised exploration program to be employed in the near future.
Once the initial production levels are achieved, plans will have to be put in
place, not only to update the plant, but also to increase gold production to
better reflect the potential of the extensive gold deposits owned by the
Company.
The Board is in the process of assessing where significant cost reductions can
be made throughout the Group. The Board believes that the achievement of these
reductions will be challenging, requiring close management and a further
improvement in controls over expenditure, that are necessary to put the Company
on a stronger financial footing.
In concluding this summary, I would like to record my appreciation of the hard
work and determination with which my fellow Directors and management have
addressed our problems this year.
Outlook
After a turbulent start to the year, we are now focused on advancing our assets
in Zimbabwe, which we believe offer good mid to longer term prospects. With this
in mind, our immediate aim is to move into a cash positive position and then
expand production at our Zimbabwe mines. Eventually, we will look at the wider
portfolio of existing assets, with a view to enhancing their value. External
approaches from potential investors and technical reviews have all confirmed the
potential of our assets. However, the Company remains significantly constrained
by the lack of capital and the Directors do not see this constraint lessening
during 2010.
The Board continues to remain cautiously optimistic about the recovery of
Zimbabwe's mining sector. The substitution of the US Dollar and other hard
currencies for the Zimbabwean Dollar seems to have vanquished hyperinflation, as
well as the recent World Bank grant, its first to Zimbabwe since 2001, all point
to an improvement in operational conditions.
Mines in Zimbabwe have suffered from years of under-capitalisation, as well as a
lack of development and exploration. The gold industry is very fragmented and
would benefit from a consolidation. The former hyper-inflationary environment,
together with the past state monopoly on gold sales, has eroded the working
capital of companies. Despite initial optimism, the expected flow of funds to
restore liquidity to the financial sector has not taken place. External
investors have avoided investing further, pending clarification of proposed
policy changes. The recapitalisation of the mines is therefore constrained by
the operating cash flows of those mines.
Power supplied to the mines remains erratic, which negatively affects production
and plant efficiencies. The frequency of unscheduled power outages has
decreased, although scheduled power outages have increased of late.
The exodus of skills from Zimbabwe has had a profound effect on operations,
which has resulted in a required premium to retain and attract suitably skilled
staff, particularly in the mining discipline. This has created an artificial
level of remuneration which is not sustainable in the longer term.
The political situation in Zimbabwe remains challenging. Statements regarding
the implementation of the Indigenisation Act, which requires that 51 per cent.
of all shares or interests in all companies with an asset value in excess of
US$0.5 million be held by indigenous Zimbabweans within a 5 year period from 1
March 2010, are confusing and further erode confidence in the policies of the
country. The Board continues to believe the mining sector has the ability to
play a leading role in the reconstruction of Zimbabwe.
Board Changes
In December 2009, Roy Lander stepped down from the Board and Bryce Fort replaced
Navaid Burney as Emerging Capital Partners' board representative. Bryce Fort
subsequently stepped down from the Board on 13 April 2010. I would like to take
this opportunity, on behalf of the Company, to thank Roy Lander, Navaid Burney
and Bryce Fort for their services to CAG and the support they have provided to
the Board, particularly during CAG's recent difficulties, and wish them well in
their future endeavours.
Annual report
The Annual Report and Accounts will be posted to shareholders shortly.
Appreciation
Finally, I would like to thank shareholders for their patience and continued
support, as well as the efforts of our streamlined team, as we look to grow the
business once more.
Roy Pitchford
Acting Chairman and Chief Executive
Financial Review
Analysis of results
Turnover from continuing operations in the year was GBP0.9 million (2008: GBP0.6
million), generated from the sale of 1,188 (2008: 3,990) ounces of gold
following recommencement of production at low levels in mid March 2009.
The production of gold resulted in a loss of GBP0.4 million. Operations were
adversely affected by power outages and breakdowns of aged equipment. The lack
of available spares and sufficient quantities of consumables compounded this
further.
Administrative expenses for continuing operations totalled GBP3.6 million (2008:
GBP3.4 million) with the total loss from continuing operations for the year
being GBP6.5 million (2008: GBP4.4 million). Impairments of the Mali assets
from their carrying value to the expected proceeds from the sale resulted in an
impairment charge of GBP2.5 million. Additional impairment charges relating to
gold-backed bonds and cash in Zimbabwe contributed a further GBP0.3 million to
the total loss for the year.
The dollarisation of costs in Zimbabwe has contributed to higher fixed costs for
the Group.
No share-based payment charge (2008: GBP0.76 million) has been reflected in the
current year, as the share options have substantially vested.
The loss of GBP3.1 million (2008: GBP11.6 million) from discontinued operations
includes the US$5.0 million (GBP3.398 million) guarantee settlement paid to
Investec Bank.
Impairments to the carrying value of assets at Bibiani in 2008 totalled GBP14.45
million.
The Group reported a loss attributable to shareholders for the year of GBP9.548
million (2008: GBP26.534 million) or a loss of 1.27p per share (2008: 15.91p).
Convertible loan agreements
The convertible loan agreements in existence at the beginning of the year were
partially converted into shares following shareholder approval in April 2009.
Following that partial conversion, the Company owed US$3.55 million, plus
accrued interest, in new loans to ECP and IAM. Repayment of these loans was
scheduled for April 2011, but, as announced on 4 June 2010, this has been
deferred to April 2012.
In November 2009, CAG entered into new convertible loan agreements with HBD, ECP
and IAM totalling GBP1.2 million (US$1.25 million). The funds received by the
Company under these convertible loan agreements carry interest at 10 per cent.
per annum, compounded monthly in arrears with the full amount payable on the
maturity date, 29 April 2011. Repayment of these convertible loans has been
further deferred to April 2012, as announced on 4 June 2010.
In February 2010, CAG entered into new convertible loan agreements with ECP and
HBD totalling US$1.0 million (GBP0.7 million). The funds received by the Company
under these new convertible loan agreements carry interest at 10 per cent. per
annum, compounded monthly in arrears, with the full amount payable on the
maturity date, 29 April 2011. Repayment of these new convertible loans has been
deferred to April 2012, as announced on 4 June 2010.
Malian Assets Disposal
The Company held an 80 per cent. interest in a highly prospective portfolio of
properties in Mali.
Given the Company's decision to focus on our Zimbabwean assets, the relatively
early stage of development of the Malian assets and the difficulties of
effectively managing them from our head office in South Africa, we took the
decision to sell these assets.
Accordingly, as announced on 21 December 2009, the Company entered into an
agreement to dispose of these assets for a consideration of US$4.0 million (of
which US$0.6 million was received prior to the year-end and US$3.4 million
received on 15 March 2010). The transaction was completed in March 2010, with a
final payment of US$1.0 million due, subject to the definition of a JORC
compliant indicated and measured resource of at least 500,000 ounces, being
achieved, within a 24 month period commencing on 15 March 2010.
Financial risk management
The Group's activities expose it to a variety of financial risks, including
liquidity risk and market risk.
Liquidity risk
Liquidity risk is the risk that the Group will not be able to meet its financial
obligations as they fall due.
It is the Group's policy to finance its business by means of externally
generated funds supported by the Group's bankers, other lenders and external
share capital.
The Group manages its cash flows on a day-to-day basis from the centre,
considering currencies in each market. As a result, the liquidity risk is
monitored closely throughout the Group.
The cash and debt resources of the business are limited and, at current levels
of cash outflow, would be consumed by the end of November 2010. The
consideration of this in the context of going concern is set out in the basis of
preparation in note 1 to these financial statements.
Market risk
Market risk is the risk that the fair value or future cash flows of a financial
instrument will fluctuate because of changes in market prices. Market risk
comprises three types of risks being foreign exchange risk, interest rate risk
and price risk.
Foreign Exchange risk
Foreign exchange risk is the risk that the fair value or future cash flows of a
financial instrument will fluctuate because of changes in foreign exchange
rates.
The Group is exposed to foreign currency risk on sales, purchases and
expenditures that are denominated in a currency other than the functional
currency. The currencies giving rise to this risk are primarily the US Dollar,
Malian FCFA's and the South African Rand.
In respect of other monetary assets and liabilities held in currencies other
than the functional currency, the Group ensures that the net exposure is kept to
an acceptable level, by buying or selling foreign currencies at spot rates where
necessary to address short-term imbalances.
Going Concern
For the reasons given below, the Directors consider it appropriate to prepare
the financial statements on the going concern basis, notwithstanding the
circumstances described below.
The Group sustained a loss in the year to 31 December 2009 of GBP9.5 million
(2008: GBP26.5 million) and the Group had net current assets of GBP0.6 million
(2008: GBP20.1 million net current liabilities). The Group's operating assets
now consist entirely of five gold mines and extensive claim holdings in
Zimbabwe; two of these mines are operating at a low level, but are remain loss
making, with the rest being on care and maintenance. The mines require
significant development and capital investment in order to become operational
and cash generative. While the situation in Zimbabwe remains challenging, the
Directors are now cautiously optimistic about the recovery prospects for the
mining sector, as a result of the formation of a government of national unity,
substitution of the US Dollar for the Zimbabwe Dollar, and the Monetary Policy
Statement issued in February 2009.
The Group has limited cash and debt facilities, which will only be sufficient to
allow the Group to trade as a going concern, that is, for at least 12 months
from the date of approval of these financial statements, if significant cost
reductions are achieved. The Group's overall viability is dependent upon it
being able to raise new funding in order to enhance the value of the Zimbabwean
assets. In terms of strengthening its current liquidity position, the Directors
have taken the following actions:
· Operating costs have been reduced, and which management expects to reduce
these even further.
· Concluded the disposal of its Malian assets, receiving US$3.4 million
(GBP2.3 million) in March 2010. A final instalment of US$1.0 million (GBP0.6
million) is contingent on reserves determination prior to March 2012.
· Deferring repayment of shareholder loans totalling US$4.6 million (GBP2.9
million) at year end and convertible loan notes totalling US$1.25 million
(GBP0.7 million) at year end, until April 2012.
· Shareholder loans totalling GBP0.6 million (US$1.0 million) raised
subsequent to year end have been deferred to April 2012.
Consequently, the Group has no significant debt repayment obligations before
April 2012.
At 30 May 2010, the Group's holds GBP1.2 million cash, which at current spending
would be consumed by the end of November 2010. If significant cost savings
cannot be achieved, and the Company were to run out of cash, the Company would
request further funding from its shareholders. If the support of the
shareholders is not forthcoming then the business would have a cash shortfall
and would face being wound up.
The Directors are currently seeking financial and other arrangements to take
forward the development of the Zimbabwean assets onto a commercial and
profitable production basis. As reported in December 2009, the new arrangement
may be through a joint arrangement, new equity invested in the Company,
exchanging some or all of the Zimbabwean assets for an equity stake in any
acquiring company or through outright acquisition of the Company itself.
Accordingly, the Directors are of the view that there is a realistic alternative
to an outright sale of the assets themselves, and a consequent cessation of
trading by the Group. Although discussions with interested parties have
advanced since December, there can be no certainty that a suitable arrangement
will be effected.
These factors indicate the existence of a material uncertainty which may cast
significant doubt on the Group's and the Company's ability to continue as a
going concern. The Group and Company may therefore be unable to continue
realising its assets and discharging its liabilities in the normal course of
business. The financial statements do not include any adjustments that might
result were the basis of preparation inappropriate.
+--------------------------------------+--------+-------------------------+--------------------------+
| audited consolidated statement of comprehensive incomeFor the year |
| ended 31 december 2009 |
+----------------------------------------------------------------------------------------------------+
| | | | |
| | | Audited | Audited1 |
| | | Year | Year |
| | | ended | ended |
| In thousands of pounds sterling | | 31 | 31 |
| | | December | December |
| | | 2009 | 2008 |
+--------------------------------------+--------+-------------------------+--------------------------+
| | | | |
+--------------------------------------+--------+-------------------------+--------------------------+
| Revenue | | 921 | 611 |
+--------------------------------------+--------+-------------------------+--------------------------+
| Cost of sales | | (1,304) | (1,246) |
+--------------------------------------+--------+-------------------------+--------------------------+
| Gross profit / (loss) | | (383) | (635) |
+--------------------------------------+--------+-------------------------+--------------------------+
| Other operating income | | 344 | |
| | | | - |
+--------------------------------------+--------+-------------------------+--------------------------+
| Administrative charges | | (3,597) | (3,439) |
+--------------------------------------+--------+-------------------------+--------------------------+
| Other administrative expenses | | (3,597) | (2,683) |
+--------------------------------------+--------+-------------------------+--------------------------+
| Share based payments | | (-) | (756) |
+--------------------------------------+--------+-------------------------+--------------------------+
| | | | |
+--------------------------------------+--------+-------------------------+--------------------------+
| Operating loss before impairment | | (3,636) | (4,074) |
+--------------------------------------+--------+-------------------------+--------------------------+
| Impairment | | (2,450) | (170) |
+--------------------------------------+--------+-------------------------+--------------------------+
| Loss on divestment of Ghana | | | |
| | | - | - |
+--------------------------------------+--------+-------------------------+--------------------------+
| Operating loss | | (6,086) | (4,244) |
+--------------------------------------+--------+-------------------------+--------------------------+
| Financial income | | 4 | 99 |
+--------------------------------------+--------+-------------------------+--------------------------+
| Financial expenses | | (462) | (192) |
+--------------------------------------+--------+-------------------------+--------------------------+
| Loss before taxation | | (6,544) | (4,337) |
+--------------------------------------+--------+-------------------------+--------------------------+
| Taxation | | 53 | (22) |
+--------------------------------------+--------+-------------------------+--------------------------+
| Loss from continuing operations | | (6,491) | (4,359) |
+--------------------------------------+--------+-------------------------+--------------------------+
| | | | |
+--------------------------------------+--------+-------------------------+--------------------------+
| Discontinued operations | | | |
+--------------------------------------+--------+-------------------------+--------------------------+
| Loss from discontinued operation | | (3,057) | (26,070) |
| (net of tax) | | | |
+--------------------------------------+--------+-------------------------+--------------------------+
| Loss for the year | | (9,548) | (30,429) |
+--------------------------------------+--------+-------------------------+--------------------------+
| Other comprehensive income | | | |
+--------------------------------------+--------+-------------------------+--------------------------+
| Foreign currency translation | | (290) | - |
| differences for foreign operations | | | |
+--------------------------------------+--------+-------------------------+--------------------------+
| Total comprehensive loss for the | | (9,838) | (30,429) |
| year | | | |
+--------------------------------------+--------+-------------------------+--------------------------+
| | | | |
+--------------------------------------+--------+-------------------------+--------------------------+
| Loss attributable to: | | | |
+--------------------------------------+--------+-------------------------+--------------------------+
| Equity holders of the parent | | (9,398) | (30,429) |
+--------------------------------------+--------+-------------------------+--------------------------+
| Non-controlling interest | | (150) | |
| | | | - |
+--------------------------------------+--------+-------------------------+--------------------------+
| Loss for the year | | (9,548) | (30,429) |
+--------------------------------------+--------+-------------------------+--------------------------+
| Total comprehensive loss | | | |
| attributable to: | | | |
+--------------------------------------+--------+-------------------------+--------------------------+
| Equity holders of the parent | | (9,688) | (26,684) |
+--------------------------------------+--------+-------------------------+--------------------------+
| Non-controlling interest | | (150) | 150 |
+--------------------------------------+--------+-------------------------+--------------------------+
| | | (9,838) | (26,534) |
+--------------------------------------+--------+-------------------------+--------------------------+
| | | | |
+--------------------------------------+--------+-------------------------+--------------------------+
| Loss per share | | | |
+--------------------------------------+--------+-------------------------+--------------------------+
| Basic and diluted loss per share | | (1.27) | (15.91p) |
| (pence) | | | |
+--------------------------------------+--------+-------------------------+--------------------------+
| Loss per share - continuing | | | |
| operations | | | |
+--------------------------------------+--------+-------------------------+--------------------------+
| Basic and diluted loss per share | | (0.86p) | (2.60p) |
| (pence) | | | |
+--------------------------------------+--------+-------------------------+--------------------------+
| | | | |
+--------------------------------------+--------+-------------------------+--------------------------+
12008 comparatives have been presented to show the results of the Ghanaian
business segment as discontinued as a result of its divestment in January 2006.
+------------------------------------+----------+-------------------------+-----------------------+
| AUDITED CONSOLIDATED STATEMENT OF FINANCIAL POSITIONAS AT 31 |
| DECEMBER 2009 |
+-------------------------------------------------------------------------------------------------+
| | | | |
| | | Audited | Audited |
| | | Year | Year |
| | | ended | ended |
| In thousands of pounds sterling | | 31 | 31 |
| | | December | December |
| | | 2009 | 2008 |
+------------------------------------+----------+-------------------------+-----------------------+
| | | | |
+------------------------------------+----------+-------------------------+-----------------------+
| ASSETS | | | |
+------------------------------------+----------+-------------------------+-----------------------+
| Goodwill | | 540 | 691 |
+------------------------------------+----------+-------------------------+-----------------------+
| Property, plant and equipment | | 6,700 | 37,424 |
+------------------------------------+----------+-------------------------+-----------------------+
| Exploration and other | | - | 4,405 |
| evaluation assets | | | |
+------------------------------------+----------+-------------------------+-----------------------+
| Total non-current assets | | 7,240 | 42,520 |
+------------------------------------+----------+-------------------------+-----------------------+
| Inventories | | 215 | 1,003 |
+------------------------------------+----------+-------------------------+-----------------------+
| Trade and other receivables | | 280 | 1,452 |
+------------------------------------+----------+-------------------------+-----------------------+
| Cash and cash equivalents | | 447 | 3,905 |
+------------------------------------+----------+-------------------------+-----------------------+
| Assets held for sale | | 2,560 | - |
+------------------------------------+----------+-------------------------+-----------------------+
| Total current assets | | 3,502 | 6,360 |
+------------------------------------+----------+-------------------------+-----------------------+
| Total assets | | 10,742 | 48,880 |
+------------------------------------+----------+-------------------------+-----------------------+
| | | | |
+------------------------------------+----------+-------------------------+-----------------------+
| EQUITY | | | |
+------------------------------------+----------+-------------------------+-----------------------+
| Share capital | | 5,020 | 854 |
+------------------------------------+----------+-------------------------+-----------------------+
| Share premium | | 47,076 | 43,625 |
+------------------------------------+----------+-------------------------+-----------------------+
| Foreign currency translation | | (521) | (231) |
| reserve | | | |
+------------------------------------+----------+-------------------------+-----------------------+
| Accumulated loss | | (50,082) | (40,684) |
+------------------------------------+----------+-------------------------+-----------------------+
| Total equity attributable to | | 1,493 | 3,564 |
| equity holders of the parent | | | |
+------------------------------------+----------+-------------------------+-----------------------+
| Minority interest | | | 150 |
| | | - | |
+------------------------------------+----------+-------------------------+-----------------------+
| Total equity | | 1,493 | 3,714 |
+------------------------------------+----------+-------------------------+-----------------------+
| | | | |
+------------------------------------+----------+-------------------------+-----------------------+
| LIABILITIES | | | |
+------------------------------------+----------+-------------------------+-----------------------+
| Loans and other borrowings | | 3,576 | - |
+------------------------------------+----------+-------------------------+-----------------------+
| Other financial liabilities | | - | 1,694 |
+------------------------------------+----------+-------------------------+-----------------------+
| Deferred taxation | | 501 | 563 |
+------------------------------------+----------+-------------------------+-----------------------+
| Provisions | | 2,394 | 5,260 |
+------------------------------------+----------+-------------------------+-----------------------+
| Total non-current liabilities | | 6,471 | 7,517 |
+------------------------------------+----------+-------------------------+-----------------------+
| | | | |
+------------------------------------+----------+-------------------------+-----------------------+
| Loans and borrowings - current | | 493 | 19,709 |
| portion | | | |
+------------------------------------+----------+-------------------------+-----------------------+
| Other financial liabilities - | | | 2,137 |
| current portion | | - | |
+------------------------------------+----------+-------------------------+-----------------------+
| Trade and other payables | | 2,250 | 14,729 |
+------------------------------------+----------+-------------------------+-----------------------+
| Bank overdraft | | | 1,061 |
| | | - | |
+------------------------------------+----------+-------------------------+-----------------------+
| Taxation | | (14) | 13 |
+------------------------------------+----------+-------------------------+-----------------------+
| Liabilities held for sale | | 49 | - |
+------------------------------------+----------+-------------------------+-----------------------+
| Total current liabilities | | 2,778 | 37,649 |
+------------------------------------+----------+-------------------------+-----------------------+
| Total liabilities | | 9,249 | 45,166 |
+------------------------------------+----------+-------------------------+-----------------------+
| Total equity and liabilities | | 10,742 | 48,880 |
+------------------------------------+----------+-------------------------+-----------------------+
| | | | |
+------------------------------------+----------+-------------------------+-----------------------+
+--------------------+---------+---------+--------------+-------------+-------------+------------+-------------+
| AUDITED CONSOLIDATED STATEMENT OF CHANGES IN EQUITYFOR THE YEAR |
| ENDED 31 DECEMBER 2009 |
+--------------------------------------------------------------------------------------------------------------+
| | | | | | | | |
+--------------------+---------+---------+--------------+-------------+-------------+------------+-------------+
| In thousands of | Share | Share | Foreign | Retained | Total | Minority | Total |
| pounds sterling |capital |premium | currency | earnings | | interest | equity |
| | | |transla-tion | | | | |
| | | | reserves | | | | |
+--------------------+---------+---------+--------------+-------------+-------------+------------+-------------+
| | | | | | | | |
+--------------------+---------+---------+--------------+-------------+-------------+------------+-------------+
| Balance at 1 | 854 | 43,625 | (231) | (40,684) | 3,564 | 150 | 3,714 |
| January 2009 | | | | | | | |
+--------------------+---------+---------+--------------+-------------+-------------+------------+-------------+
| Recognised income | - | - | | (9,398) | (9,398) | (150) | (9,548) |
| and expense | | | - | | | | |
+--------------------+---------+---------+--------------+-------------+-------------+------------+-------------+
| Share based | - | - | | | | | |
| payments | | | - | - | - | - | - |
+--------------------+---------+---------+--------------+-------------+-------------+------------+-------------+
| Shares issued | 4,166 | 3,451 | | | 7,617 | | 7,617 |
| | | | - | - | | - | |
+--------------------+---------+---------+--------------+-------------+-------------+------------+-------------+
| Translation | - | - | (290) | | (290) | | (290) |
| reserve | | | | - | | - | |
+--------------------+---------+---------+--------------+-------------+-------------+------------+-------------+
| Balance at 31 | 5,020 | 47,268 | (521) | (50,082) | 1,493 | | 1,493 |
| December 2009 | | | | | | - | |
+--------------------+---------+---------+--------------+-------------+-------------+------------+-------------+
| | | | | | | | |
+--------------------+---------+---------+--------------+-------------+-------------+------------+-------------+
| Balance at 1 | 530 | 28,352 | (221) | (14,756) | 13,905 | - | 13,905 |
| January 2008 | | | | | | | |
+--------------------+---------+---------+--------------+-------------+-------------+------------+-------------+
| Recognised income | - | | | (26,684) | (26,684) | 150 | (26,534) |
| and expense | | | | | | | |
+--------------------+---------+---------+--------------+-------------+-------------+------------+-------------+
| Share based | - | | | 756 | 756 | - | 756 |
| payments | | | | | | | |
+--------------------+---------+---------+--------------+-------------+-------------+------------+-------------+
| Shares issued | 324 | 15,273 | - | - | 15,597 | - | 15,597 |
+--------------------+---------+---------+--------------+-------------+-------------+------------+-------------+
| Translation | - | - | (10) | - | (10) | - | (10) |
| reserve | | | | | | | |
+--------------------+---------+---------+--------------+-------------+-------------+------------+-------------+
| Balance at 31 | 854 | 43,625 | (231) | (40,684) | 3,564 | 150 | 3,714 |
| December 2008 | | | | | | | |
+--------------------+---------+---------+--------------+-------------+-------------+------------+-------------+
| | | | | | | | |
+--------------------+---------+---------+--------------+-------------+-------------+------------+-------------+
+------------------------------------+----------+------------------------+--------------------------+
| AUDITED CONSOLIDATED STATEMENT OF CASH FLOWSFOR THE YEAR ENDED 31 |
| DECEMBER 2009 |
+---------------------------------------------------------------------------------------------------+
| | | Audited | Audited |
| | | Year | Year |
| | | ended | ended |
| | | 31 | 31 |
| In thousands of pounds sterling | | December | December |
| | | 2009 | 2008 |
+------------------------------------+----------+------------------------+--------------------------+
| | | | |
+------------------------------------+----------+------------------------+--------------------------+
| Cash flow from operating | | | |
| activities | | | |
+------------------------------------+----------+------------------------+--------------------------+
| Loss before tax | | (9,548) | (26,983) |
+------------------------------------+----------+------------------------+--------------------------+
| Adjusted for: | | | |
+------------------------------------+----------+------------------------+--------------------------+
| Financial income | | (4) | (5,785) |
+------------------------------------+----------+------------------------+--------------------------+
| Financial expenses (including gold | | 462 | 2,270 |
| sale agreement) | | | |
+------------------------------------+----------+------------------------+--------------------------+
| Share-based payment | | | 756 |
| | | - | |
+------------------------------------+----------+------------------------+--------------------------+
| Depreciation | | 211 | 2,084 |
+------------------------------------+----------+------------------------+--------------------------+
| Loss on disposal of property, | | 338 | |
| plant and equipment | | | - |
+------------------------------------+----------+------------------------+--------------------------+
| Impairment of assets held for sale | | 2,450 | |
| | | | - |
+------------------------------------+----------+------------------------+--------------------------+
| Loss on divestment of Ghana assets | | 3,057 | 14,620 |
+------------------------------------+----------+------------------------+--------------------------+
| Impairment loss on exploration | | | |
| assets | | - | - |
+------------------------------------+----------+------------------------+--------------------------+
| (Increase)/decrease in inventories | | (212) | (529) |
+------------------------------------+----------+------------------------+--------------------------+
| (Increase)/decrease in trade and | | 144 | (1,991) |
| other receivables | | | |
+------------------------------------+----------+------------------------+--------------------------+
| (Decrease)/increase in trade and | | 507 | 3,971 |
| other payables | | | |
+------------------------------------+----------+------------------------+--------------------------+
| Net cash (used in)/ from operating | | (2,595) | (11,587) |
| activities | | | |
+------------------------------------+----------+------------------------+--------------------------+
| Interest paid | | (19) | (192) |
+------------------------------------+----------+------------------------+--------------------------+
| Taxation paid | | (13) | |
| | | | - |
+------------------------------------+----------+------------------------+--------------------------+
| Operating cash flow | | (2,627) | (11,779) |
+------------------------------------+----------+------------------------+--------------------------+
| Cash flows from investing | | | |
| activities | | | |
+------------------------------------+----------+------------------------+--------------------------+
| Interest received | | 4 | 112 |
+------------------------------------+----------+------------------------+--------------------------+
| Cash cost of divestment in Ghana | | (5,975) | |
| | | | - |
+------------------------------------+----------+------------------------+--------------------------+
| Proceeds from sale of Mali | | 414 | |
| | | | - |
+------------------------------------+----------+------------------------+--------------------------+
| Acquisition of exploration assets | | (492) | (1,360) |
+------------------------------------+----------+------------------------+--------------------------+
| Acquisition of property, plant and | | | (4,901) |
| equipment | | - | |
+------------------------------------+----------+------------------------+--------------------------+
| Net cash used in investing | | (6,049) | (6,149) |
| activities | | | |
+------------------------------------+----------+------------------------+--------------------------+
| Cash flow from financing | | | |
| activities | | | |
+------------------------------------+----------+------------------------+--------------------------+
| Proceeds from issue of share | | 5,212 | 15,597 |
| capital | | | |
+------------------------------------+----------+------------------------+--------------------------+
| Loans and borrowings received | | 1,157 | 3,593 |
+------------------------------------+----------+------------------------+--------------------------+
| Repayment of loans | | | (1,946) |
| | | - | |
+------------------------------------+----------+------------------------+--------------------------+
| Net cash from financing activities | | 6,369 | 17,244 |
+------------------------------------+----------+------------------------+--------------------------+
| Net increase in cash and cash | | (2,307) | (684) |
| equivalents | | | |
+------------------------------------+----------+------------------------+--------------------------+
| Cash and cash equivalents at 1 | | 2,844 | 2,821 |
| January | | | |
+------------------------------------+----------+------------------------+--------------------------+
| Effect of exchange rate | | (90) | 707 |
| fluctuations on cash held | | | |
+------------------------------------+----------+------------------------+--------------------------+
| Cash and cash equivalents | | 447 | 2,844 |
+------------------------------------+----------+------------------------+--------------------------+
| Restricted cash include in cash | | | 2,978 |
| and cash equivalents | | - | |
+------------------------------------+----------+------------------------+--------------------------+
| | | | |
+------------------------------------+----------+------------------------+--------------------------+
NOTES TO THE FINANCIAL STATEMENTS
For the YEAR ended 31 DECEMBER 2009
1. Basis of preparation
Central African Gold Plc (the "Company") is a company domiciled and incorporated
in the United Kingdom. The condensed consolidated annual financial statements of
the Company as at and for the year ended 31 December 2009 comprise the Company
and its subsidiaries (together referred to as the "Group").
These preliminary financial statements do not include all of the information
required for full annual financial statements and should be read in conjunction
with the consolidated financial statements of the Group for the year ended 31
December 2009.
The financial information contained in this preliminary report does not
constitute statutory accounts within the meaning of section 240 of the Companies
Act 1985. The comparative figures for the financial year ended 31 December 2008
are not the Group's full statutory accounts for that financial year. The report
of the auditors was
(i) qualified based on the limitation of information available to
them in respect of one subsidiary, CAG Ghana. While KPMG's work was not limited
in respect of the other assets, liabilities, income and expenses of the Group
and they were able to obtain sufficient appropriate audit evidence over those
amounts, because of the significance of the CAG Ghana balances to the Group as a
whole, KPMG have been unable to form a view on the consolidated financial
statements;
(ii) drew attention to the going concern assumption by way of emphasis
of matter without qualifying their report; and
(iii) did not contain a statement under section 237(2) or (3) of the
Companies Act 1985.
These preliminary audited financial statements were approved by the Board of
Directors (the "Board") on 7 June 2010.
The consolidated financial statements incorporate those of the Company and its
subsidiary undertakings for the period. The current year financial statements to
December have been audited and have been prepared using accounting policies and
practices consistent with those adopted in the audited financial statements for
the year ended 31 December 2008.
The financial statements are presented in pounds sterling, rounded to the
nearest thousand. The preparation of financial statements in conformity with
adopted International Financial Reporting Standards ("IFRS") requires management
to make judgements, estimates and assumptions that affect the application of
policies and reported amounts of assets and liabilities, income and expenses.
The estimates and associated assumptions are based on historical experience and
various other factors that are believed to be reasonable under the
circumstances, the results of which form the basis of making the judgements
about carrying values of assets and liabilities that are not readily apparent
from other sources. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis.
Revisions to accounting estimates are recognised in the period in which the
estimate is revised if the revision affects only that period or in the period of
the revision and future periods if the revision affects both current and future
periods.
1. Basis of preparation (continued)
For the reasons given below, the Directors consider it appropriate to prepare
the financial statements on the going concern basis, notwithstanding the
circumstances described below.
The Group sustained a loss in the year to 31 December 2009 of GBP9.5 million
(2008: GBP26.5 million) and the Group had net current assets of GBP0.6 million
(2008: GBP20.1 million net current liabilities). The Group's operating assets
now consist entirely of five gold mines and extensive claim holdings in
Zimbabwe; two of these mines are operating at a low level, but are remain loss
making, with the rest being on care and maintenance. The mines require
significant development and capital investment in order to become operational
and cash generative. While the situation in Zimbabwe remains challenging, the
Directors are now cautiously optimistic about the recovery prospects for the
mining sector, as a result of the formation of a government of national unity,
substitution of the US Dollar for the Zimbabwe Dollar, and the Monetary Policy
Statement issued in February 2009.
The Group has limited cash and debt facilities, which will only be sufficient to
allow the Group to trade as a going concern, that is, for at least 12 months
from the date of approval of these financial statements, if significant cost
reductions are achieved. The Group's overall viability is dependent upon it
being able to raise new funding in order to enhance the value of the Zimbabwean
assets. In terms of strengthening its current liquidity position, the Directors
have taken the following actions:
· Operating costs have been reduced, and which management expects to reduce
these even further.
· Concluded the disposal of its Malian assets, receiving US$3.4 million
(GBP2.3 million) in March 2010. A final instalment of US$1.0 million (GBP0.6
million) is contingent on reserves determination prior to March 2012.
· Deferring repayment of shareholder loans totalling US$4.6 million (GBP2.9
million) at year end and convertible loan notes totalling US$1.25 million
(GBP0.7 million) at year end, until April 2012.
· Shareholder loans totalling GBP0.6 million (US$1.0 million) raised
subsequent to year end have been deferred to April 2012.
Consequently, the Group has no significant debt repayment obligations before
April 2012.
At 30 May 2010, the Group's holds GBP1.2 million cash, which at current spending
would be consumed by the end of November 2010. If significant cost savings
cannot be achieved, and the Company were to run out of cash, the Company would
request further funding from its shareholders. If the support of the
shareholders is not forthcoming then the business would have a cash shortfall
and would face being wound up.
The Directors are currently seeking financial and other arrangements to take
forward the development of the Zimbabwean assets onto a commercial and
profitable production basis. As reported in December 2009, the new arrangement
may be through a joint arrangement, new equity invested in the Company,
exchanging some or all of the Zimbabwean assets for an equity stake in any
acquiring company or through outright acquisition of the Company itself.
Accordingly, the Directors are of the view that there is a realistic alternative
to an outright sale of the assets themselves, and a consequent cessation of
trading by the Group. Although discussions with interested parties have
advanced since December, there can be no certainty that a suitable arrangement
will be effected.
1. Basis of preparation (continued)
These factors indicate the existence of a material uncertainty which may cast
significant doubt on the Group's and the Company's ability to continue as a
going concern. The Group and Company may therefore be unable to continue
realising its assets and discharging its liabilities in the normal course of
business. The financial statements do not include any adjustments that might
result were the basis of preparation inappropriate.
New standards, amendments and interpretations that are relevant to the Group
but have not yet been adopted
A number of new standards, amendments to standards and interpretations are not
yet effective for the period ended 31 December 2009, and have not been applied
in preparing these condensed consolidated financial statements. No new standards
are expected to have a significant effect on the financial statements of the
Group.
2. Segmental information
+------------------------------------+----------+----------+--------------------------+
| | | Audited | Audited |
| Ghana | | Year | Year |
| | | ended | ended |
| | | 31 | 31 |
| In thousands of pounds sterling | | December | December |
| | | 2009 | 2008 |
+------------------------------------+----------+----------+--------------------------+
| | | | |
+------------------------------------+----------+----------+--------------------------+
| Revenue | | | 13,490 |
| | | - | |
+------------------------------------+----------+----------+--------------------------+
| Profit / (loss) before tax | | - | (26,541) |
+------------------------------------+----------+----------+--------------------------+
| Income tax | | | 471 |
| | | - | |
+------------------------------------+----------+----------+--------------------------+
| Profit / (loss) for the period | | (3,057) | (26,070) |
+------------------------------------+----------+----------+--------------------------+
| | | | |
+------------------------------------+----------+----------+--------------------------+
| Segment assets | | - | 37,370 |
+------------------------------------+----------+----------+--------------------------+
| Segment liabilities | | - | (37,671) |
+------------------------------------+----------+----------+--------------------------+
| Total net assets | | - | (247) |
+------------------------------------+----------+----------+--------------------------+
| | | | |
+------------------------------------+----------+----------+--------------------------+
| Additions to non-current assets | | - | 4,608 |
+------------------------------------+----------+----------+--------------------------+
| Depreciation | | | 1,895 |
| | | - | |
+------------------------------------+----------+----------+--------------------------+
| Impairments | | | 14,450 |
| | | - | |
+------------------------------------+----------+----------+--------------------------+
| | | | |
+------------------------------------+----------+----------+--------------------------+
2. Segmental information (continued)
+------------------------------------+----------+-----------------------+--------------------------+
| | | Audited | Audited |
| Zimbabwe | | Year | Year |
| | | ended | ended |
| In thousands of pounds sterling | | 31 | 31 |
| | | December | December |
| | | 2009 | 2008 |
+------------------------------------+----------+-----------------------+--------------------------+
| | | | |
+------------------------------------+----------+-----------------------+--------------------------+
| Revenue | | 921 | 611 |
+------------------------------------+----------+-----------------------+--------------------------+
| Profit / (loss) before tax | | (2,332) | (683) |
+------------------------------------+----------+-----------------------+--------------------------+
| Income tax | | 53 | (22) |
+------------------------------------+----------+-----------------------+--------------------------+
| Profit / (loss) for the period | | (2,279) | (705) |
+------------------------------------+----------+-----------------------+--------------------------+
| | | | |
+------------------------------------+----------+-----------------------+--------------------------+
| Segment assets | | 2,908 | 6,268 |
+------------------------------------+----------+-----------------------+--------------------------+
| Segment liabilities | | (4,288) | (1,464) |
+------------------------------------+----------+-----------------------+--------------------------+
| Total net assets | | 1,380 | 4,804 |
+------------------------------------+----------+-----------------------+--------------------------+
| | | | |
+------------------------------------+----------+-----------------------+--------------------------+
| Additions to non-current assets | | 2,035 | 1 |
+------------------------------------+----------+-----------------------+--------------------------+
| Depreciation | | 77 | |
| | | | - |
+------------------------------------+----------+-----------------------+--------------------------+
| Impairments | | | |
| | | - | - |
+------------------------------------+----------+-----------------------+--------------------------+
| | | | |
+------------------------------------+----------+-----------------------+--------------------------+
+------------------------------------+----------+------------------------+---------------------------+
| | | Audited | Audited |
| Mali | | Year | Year |
| | | ended | ended |
| In thousands of pounds sterling | | 31 | 31 |
| | | December | December |
| | | 2009 | 2008 |
+------------------------------------+----------+------------------------+---------------------------+
| | | | |
+------------------------------------+----------+------------------------+---------------------------+
| Revenue | | | |
| | | - | - |
+------------------------------------+----------+------------------------+---------------------------+
| Profit / (loss) before tax | | 284 | 749 |
+------------------------------------+----------+------------------------+---------------------------+
| Income tax | | | - |
| | | - | |
+------------------------------------+----------+------------------------+---------------------------+
| Profit / (loss) for the period | | 284 | 749 |
+------------------------------------+----------+------------------------+---------------------------+
| | | | |
+------------------------------------+----------+------------------------+---------------------------+
| Segment assets | | 4,719 | 4,715 |
+------------------------------------+----------+------------------------+---------------------------+
| Segment liabilities | | (49) | (61) |
+------------------------------------+----------+------------------------+---------------------------+
| Total net assets | | 4,620 | 4,654 |
+------------------------------------+----------+------------------------+---------------------------+
| | | | |
+------------------------------------+----------+------------------------+---------------------------+
| Additions to non-current assets | | 306 | 1,377 |
+------------------------------------+----------+------------------------+---------------------------+
| Depreciation | | 59 | 53 |
+------------------------------------+----------+------------------------+---------------------------+
| Impairments | | 2,450 | |
| | | | - |
+------------------------------------+----------+------------------------+---------------------------+
2. Segmental information (continued)
+------------------------------------+----------+-----------------------+---------------------------+
| | | Audited | Audited |
| Other | | Year | Year |
| | | ended | ended |
| In thousands of pounds sterling | | 31 | 31 |
| | | December | December |
| | | 2009 | 2008 |
+------------------------------------+----------+-----------------------+---------------------------+
| | | | |
+------------------------------------+----------+-----------------------+---------------------------+
| Revenue | | | |
| | | - | - |
+------------------------------------+----------+-----------------------+---------------------------+
| Profit / (loss) before tax | | (7,553) | (508) |
+------------------------------------+----------+-----------------------+---------------------------+
| Income tax | | | - |
| | | - | |
+------------------------------------+----------+-----------------------+---------------------------+
| Profit / (loss) for the period | | (7,553) | (508) |
+------------------------------------+----------+-----------------------+---------------------------+
| | | | |
+------------------------------------+----------+-----------------------+---------------------------+
| Segment assets | | 5,274 | 528 |
+------------------------------------+----------+-----------------------+---------------------------+
| Segment liabilities | | (4,911) | (6,016) |
+------------------------------------+----------+-----------------------+---------------------------+
| Total net assets | | 363 | (5,488) |
+------------------------------------+----------+-----------------------+---------------------------+
| | | | |
+------------------------------------+----------+-----------------------+---------------------------+
| Additions to non-current assets | | (32,477) | 25 |
+------------------------------------+----------+-----------------------+---------------------------+
| Depreciation | | 75 | 136 |
+------------------------------------+----------+-----------------------+---------------------------+
| Impairments | | | 170 |
| | | - | |
+------------------------------------+----------+-----------------------+---------------------------+
+------------------------------------+----------+------------------------+------------------------+
| | | Audited | Audited |
| Group | | Year | Year |
| | | ended | ended |
| In thousands of pounds sterling | | 31 | 31 |
| | | December | December |
| | | 2009 | 2008 |
+------------------------------------+----------+------------------------+------------------------+
| | | | |
+------------------------------------+----------+------------------------+------------------------+
| Revenue | | 921 | 14,101 |
+------------------------------------+----------+------------------------+------------------------+
| Profit / (loss) before tax | | (9,601) | (26,983) |
+------------------------------------+----------+------------------------+------------------------+
| Income tax | | 53 | 449 |
+------------------------------------+----------+------------------------+------------------------+
| Profit / (loss) for the period | | (9,548) | (26,534) |
+------------------------------------+----------+------------------------+------------------------+
| | | | |
+------------------------------------+----------+------------------------+------------------------+
| Segment assets | | 10,742 | 48,880 |
+------------------------------------+----------+------------------------+------------------------+
| Segment liabilities | | (9,249) | (45,166) |
+------------------------------------+----------+------------------------+------------------------+
| Total net assets | | 1,493 | 3,714 |
+------------------------------------+----------+------------------------+------------------------+
| | | | |
+------------------------------------+----------+------------------------+------------------------+
| Additions to non-current assets | | (30,106) | 6,011 |
+------------------------------------+----------+------------------------+------------------------+
| Depreciation | | 75 | 2,084 |
+------------------------------------+----------+------------------------+------------------------+
| Impairments | | 2,450 | 14,620 |
+------------------------------------+----------+------------------------+------------------------+
3. Basic and diluted loss per share
Basic and diluted loss per share was based on the loss attributable to ordinary
equity holders of the Company of GBP9.548 million (December 2008: GBP26.684
million) and the weighted average number of ordinary shares outstanding during
the period of 752,974,029 (December 2008: 167,666,860).
4. Subsequent events
Loan agreements
The Company has entered into new loan agreements (the "Loan Agreements") with
HBD Zim Investments Limited ("HBD") and Emerging Capital Partners ("ECP"),
(together, "the Lenders"). The Loan Agreements total circa US$1.0 million
(approximately GBP0.6 million) and amount to US$0.3 million from HBD
(approximately GBP0.2 million), and US$0.7 million from ECP (approximately
GBP0.4 million). All loan amounts used the rate of exchange prevailing on the
date of the Loan Agreement. The funds received by the Company under the Loan
Agreements carry interest at 10 per cent. per annum, compounded monthly in
arrears with the full amount payable on the maturity date, 29 April 2011. There
is no penalty for early repayment of the loans.
As announced on 4 June 2010, the maturity date for these loans has been further
extended to 29 April 2012.
The US$0.5 million loan facility with a local Zimbabwean bank was extended for a
further period of three months on the same terms and conditions. As at the date
of the approval of these financial statements, the loan has been settled.
The Reserve Bank of Zimbabwe has extended the repayment date of the gold-backed
bond, which was due to mature on 1 February 2010, by a further six months. The
facility secured by the gold-backed bond was not renewed but converted to a
three month term loan that carries interest at a rate of 3.75 per cent. per
month.
Malian assets disposal
The Company entered into a binding agreement to dispose of its 80 per cent.
equity interests in each of Mali Goldfields SARL and Songhoï Resources SA
(together the "Malian Assets") (the "Disposal") to Colonial Resources Limited
("Colonial") (the "Agreement") for a total consideration of US$5.0 million (the
"Consideration"). As at 31 December 2009, the Malian Assets, which are early
stage gold exploration assets, consisting of 18 prospective permits spanning
circa 1,883km² of the Birimian strata, were recorded as having a book value of
GBP2.56 million (2008: GBP3.8 million).
The Consideration is made up of an initial non-refundable payment of US$0.5
million in cash, which was paid on signing of the agreement, and a further
US$3.5 million payable in cash to the Company on completion of the Disposal
("Completion"). A further US$1.0 million will be payable to the Company in cash
upon the achievement of a JORC compliant indicated and measured gold resource of
at least 500,000 ounces.
Shareholders approved the disposal of the Malian assets at a general meeting on
12 February 2010.
CAG is using the proceeds of the disposal to satisfy its working capital
requirements, to meet certain creditor balances that fell due on completion and
to develop its Zimbabwean gold assets.
Statutory Instrument 21 of 2010: Indigenisation and Economic Empowerment
Regulations
The Government of Zimbabwe promulgated Statutory Instrument 21 of 2010 on 29
January 2010. The statutory instrument requires that 51per cent. of all shares
or interests in businesses with an asset value in excess of US$0.5 million be
held by indigenous Zimbabweans within five years from 1 March 2010, on which
date the instrument became effective.
The Company is proposing to follow the plan created by the Chamber of Mines,
where an initial quantum of up to 15 per cent. is made available for purchase by
Indigenous Zimbabweans. The balance of the proposed 51 per cent. will be made up
by "credits" as defined in the scorecard also as proposed by the Chamber of
Mines and will be achieved from efforts directed primarily at empowerment. This
score card takes into account the corporate responsibility initiatives by the
Company.
The Company is investigating further additional components that make up the
score card including support of local industry. A review of the claims portfolio
has also been initiated. The company intends to expand upon the Skills Training
School already open at Venice Mine.
Employee share schemes that currently exist will be revised during the year.
5. Contingent liabilities
There were no contingent liabilities at 31 December 2009 required to be
disclosed in the Group's financial statements.
6. Approval of accounts
These preliminary annual financial statements were approved by the Directors on
7 June 2010.
RESPONSIBILITY STATEMENT OF THE DIRECTORS IN RESPECT OF THE CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS
The Board confirms that to the best of their knowledge and belief:
· the financial statements, prepared in accordance with the applicable set
of accounting standards, give a true and fair view of the assets, liabilities,
financial position and profit or loss of the Company and the undertakings
included in the consolidation taken as a whole; and
· the Directors' report includes a fair review of the development and
performance of the business and the position of the issuer and the undertakings
included in the consolidation taken as a whole, together with a description of
the principal risks and uncertainties that they face.
For and on behalf of the Board
Roy Pitchford
Craig Campbell
Acting Chairman and Chief Executive
Chief Financial Officer
* * ENDS * *
For further information please visit www.centralafricangold.com or contact:
+-------------+------------------------+---------------------+
| Roy | Central African Gold | Tel: +44(0)77 9390 |
| Pitchford / | Plc | 9985 |
| Craig | | Tel: +27(0)11 317 |
| Campbell | | 3654 |
| | | |
+-------------+------------------------+---------------------+
| Stuart | Strand Hanson Limited | Tel: +44(0)20 7409 |
| Faulkner / | | 3494 |
| James | | |
| Spinney | | |
| | | |
+-------------+------------------------+---------------------+
| Hugo de | St Brides Media and | Tel: +44(0)20 7236 |
| Salis / | Finance Ltd | 1177 |
| Felicity | | |
| Edwards | | |
+-------------+------------------------+---------------------+
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR LLFFRRDIDIII
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