TIDMSMA
RNS Number : 3069P
Sovereign Mines of Africa PLC
05 June 2015
Sovereign Mines of Africa PLC
("SMA" or "the Company")
Sovereign Mines of Africa PLC (AIM:SML), the gold mining
exploration Company with properties in the Republic of Guinea in
West Africa, today announces its audited results for the year ended
31(st) December 2014.
Enquiries:
SOVEREIGN MINES OF AFRICA PLC
David Pearl, F.C.A. - Chairman +353 696 8961
david.pearl@pearlcp.com
Nathan Steinberg - Finance Director +44 20 7269 7680
Nathan@munslows.co.uk
SHORE CAPITAL - NOMINATED ADVISER & BROKER
Toby Gibbs/Bidhi Bhoma - Corporate Finance
Jerry Keen - Corporate Broking +44 20 7408 4090
SOVEREIGN MINES OF AFRICA PLC
Final Results for the Year ended 31 December 2014
CHAIRMAN'S STATEMENT
In my Statement last year I said that investors currently have
little appetite for supporting exploration projects. At current
gold prices there has been no change in sentiment and the Market
remains risk averse to the microcap gold sector regardless of how
compelling the exploration play. It is no consolation to your Board
or our shareholders, particularly substantial shareholders like
myself, that we have continued to suffer in line with our peers
despite the major potential of our flagship gold project at
Mandiana in Guinea.
During the last 14 months, our relentless search for sources of
finance to continue our drilling programme at the Mandiana Gold
Project has so far proved unsuccessful The situation was made more
challenging by the ebola outbreak in Guinea which curtailed
exploration activity throughout the country and made an already
difficult task of finding a partner very challenging.
It remains, however, our view that Mandiana still has the
potential to become a tier-one gold mine particularly with the
addition in November 2013 of the Mandiana South exploration
concession. We have a JORC-compliant inferred resource of 610,000
ozs of gold in very deep oxides averaging 1.2g/t (cut-off 0.3g/t
gold), including 420,000 ozs having an average grade of 2.3g/ton
(cut-off 1g/t gold) and the drilling so far has only covered less
than 10% of the potential strike.
For the last eight months your Board has been seeking a
strategic partner to fund the necessary and contingent expenditure
to advance the project to a definitive feasibility study. Although
a partnership deal has not yet been concluded, your Board remains
hopeful that an acceptable transaction can be concluded in the near
future. Bearing in mind this strategy, we have renewed the Mandiana
permits this March in order to protect your company's assets.
The discussions we have had with potential partners have
indicated to us that, due to the market conditions, the value of
assets needs to be impaired. As a result, we will show a loss for
the year of GBP3,879,625 compared to GBP923,075 in 2013, which
includes an impairment of GBP3,694,352. This impairment reduces the
net asset value of the Company's shares to just over 0.4p per
share, which is significantly below our par value of 1p per share.
As a result, the Board has decided that it is in the best interests
of Shareholders to reduce the par value of the shares to 0.01p per
share by carrying out a Deferred Share Scheme at the Annual General
Meeting, full details of which will be included in the Notice to be
sent to shareholders with the Accounts. The purpose of this will be
to enable the Company to issue shares at a par value to refinance
the company as appropriate at a price which reflects the current
market value and net asset value of the shares.
The financial statements have been prepared on a going concern
basis as set out in note 3. At 31 May the Company had cash
resources in the order of GBP100,000. This is expected to provide
sufficient funds until a refinancing can take place on the
assumption that future exploration expenditure will be funded by a
future partner. The Directors have also agreed to defer their
outstanding fees either until the Company is refinanced or until
settlement by capitalisation. However, shareholders should be aware
that without a transaction with a suitable strategic partner being
concluded and a refinancing in the short to medium term, the
Company may not be able to incur the expenditure necessary to
retain the exploration assets and continue in operation.
Accordingly, there is an emphasis of matter paragraph in the
Auditors' Report relating to going concern.
In view of the proposed deferred share scheme and the impairment
of our exploration assets your board now considers that the company
has lost more than 50 % of its issued share capital and
accordingly, the Notice convening the Annual General Meeting will
include a notice in accordance with section 656 of the Companies
Act 2006 to consider whether any, and if so, what steps should be
taken to deal with the situation.
In the Notice convening the company's Annual General Meeting
shareholders will note that the Company's Exploration Director,
John Barry, has decided not to stand for re- election. Whilst John
has provided considerable efforts in developing the Company's
exploration assets, his decision reflects the current market
conditions and will save the Company overheads. He has agreed to
provide ongoing support to the Company in its future negotiations
with potential partners. We thank John for his service and wish him
every success in his future activities.
Finally, I would like to thank our shareholders and staff for
their support at a time when we are experiencing the worst market
conditions for gold exploration companies for many years.
David B Pearl FCA (Chairman)
5 June 2015
SOVEREIGN MINES OF AFRICA PLC
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Year ended 31 December 2014
2014 2013
Note GBP GBP
-------- --- ------------------ ---------------------
Administrative costs
-------- ---
Impairment of intangible
fixed assets (3,694,352) -
-------- ---
Other administrative
expenses (185,027) (351,995)
-------- ---
(3,879,379) (351,995)
-------- --- ------------------ ---------------------
Losses on financial assets
at fair value (2,086) (574,006)
-------- --- ------------------ ---------------------
Finance income 7 1,840 2,926
-------- --- ------------------ ---------------------
Loss on ordinary activities
before taxation (3,879,625) (923,075)
-------- --- ------------------ ---------------------
Taxation - -
-------- --- ------------------ ---------------------
Loss for the year (3,879,625) (923,075)
-------- --- ------------------ ---------------------
Other comprehensive income - -
-------- --- ------------------ ---------------------
Total comprehensive loss
for the year (3,879,625) (923,075)
-------- --- ------------------ ---------------------
Loss for the period and
Total comprehensive loss
attributable to:
----------- -------------- -------------------
Owners of the parent (3,879,625) (923,075)
-------------- -------------------
Non-controlling interest - -
---- -------------
(3,879,625) (923,075)
------------------------------------------ -------------- -------------------
Loss per ordinary share
(pence)
From continuing operations:
basic and diluted (1.31)p (0.39)p
-------------- -------------------
SOVEREIGN MINES OF AFRICA PLC
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Year ended 31 December 2014
Share Share Reconstruction Share Profit Total
Capital Premium Reserve based & Loss
payment Account
reserve
GBP GBP GBP GBP GBP GBP
Balance at
1 January 2014 2,483,589 5,099,544 (586,100) 3,478 (2,367,112) 4,633,399
------------------
Loss and total
comprehensive
income for
the year - - - (3,879,625) (3,879,625)
------------ --------- -------------- --------------
Share-based
payment expense - - - 10,976 - 10,976
------------ --------- -------------- --------------
Issue of shares,
net of share
issue costs 625,000 - - - (39,360) 585,640
Balance at
31 December
2014 3,108,589 5,099,544 (586,100) 14,454 (6,286,097) 1,350,390
------------ ------------ --------------- --------- -------------- --------------
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Year ended 31 December 2013
Share Share Reconstruction Share Profit Total
Capital Premium Reserve based & Loss
payment Account
reserve
GBP GBP GBP GBP GBP GBP
Balance at
1 January 2013 1,946,922 4,152,508 (586,100) - (1,444,037) 4,069,293
------------------
Loss and total
comprehensive
income for
the year - - - (923,075) (923,075)
------------ --------- -------------- ------------
Share-based
payment expense - - - 3,478 - 3,478
------------ --------- -------------- ------------
Issue of shares,
net of share
issue costs 536,667 947,036 - - - 1,483,703
Balance at
31 December
2013 2,483,589 5,099,544 (586,100) 3,478 (2,367,112) 4,633,399
------------ ------------ --------------- --------- -------------- ------------
The Reconstruction Reserve represents the difference between the
investment in the subsidiary and the share capital in the
subsidiary on acquisition.
SOVEREIGN MINES OF AFRICA PLC
(registered in England & Wales with company number
07139678)
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 31 December 2014
2014 2013
Note GBP GBP
----- ------------ ------------
NON CURRENT ASSETS
Intangible assets 11 1,158,898 4,489,678
----- ------------
1,158,898 4,489,678
----- ------------ ------------
CURRENT ASSETS
----- ------------ ------------
Financial assets at fair
value through profit or
loss 13 - 18,000
----- ------------ ------------
Cash at bank 249,951 185,458
----- ------------ ------------
249,951 203,458
----- ------------ ------------
TOTAL ASSETS 1,408,849 4,693,136
----- ------------ ------------
LIABILITIES
----- ------------ ------------
CURRENT LIABILITIES
Trade and other payables 14 58,459 59,737
----- ------------ ------------
TOTAL LIABILITIES 58,459 59,737
----- ------------ ------------
NET ASSETS 1,350,390 4,633,399
----- ------------ ------------
SHAREHOLDERS EQUITY
----- ------------ ------------
Share capital 16 3,108,589 2,483,589
----- ------------ ------------
Share premium account 16 5,099,544 5,099,544
----- ------------ ------------
Reconstruction reserve (586,100) (586,100)
----- ------------ ------------
Share-based payment reserve 17 14,454 3,478
----- ------------ ------------
Profit and loss account (6,250,097) (2,367,112)
----- ------------ ------------
TOTAL EQUITY ATTRIBUTABLE
TO OWNERS OF THE PARENT 1,350,390 4,633,399
----- ------------ ------------
SOVEREIGN MINES OF AFRICA PLC
CONSOLIDATED STATEMENT OF CASH FLOWS
Year ended 31 December 2014
2014 2013
GBP GBP
------------ -------------
Cash flows from operating activities
------------ -------------
Loss before taxation (3,879,625) (923,075)
-------------
Impairment losses on intangible assets 3,694,352 -
------------------------------------------- -------------
Unrealised losses on financial assets
at fair value - 72,006
------------------------------------------- -------------
Realised losses on financial assets
at fair value 2,086 502,000
------------ -------------
Share-based payment expense 10,976 3,478
------------ -------------
Increase/(decrease) in trade and other
payables 5,409 (15,423)
------------ -------------
Net cash flows generated by/(used in)
operating activities (166,802) (361,014)
------------ -------------
Cash flows from investing activities
------------ -------------
Proceeds of disposal of financial assets
at fair value 15,914 397,994
Purchase of intangible fixed assets (370,258) (1,684,843)
------------ -------------
Net cash used in investing activities (354,344) (1,286,849)
------------ -------------
Cash flows from financing activities
------------ -------------
Issue of shares, net of share issue
costs 585,640 1,483,703
Net cash flows from financing activities 585,640 1,483,703
------------ -------------
Increase/(decrease) in cash and cash
equivalents
Cash and cash equivalents at beginning 64,494 (164,160)
of year
185,458 349,618
Cash and cash equivalents at end of
year 249,952 185,458
------------ -------------
Significant Non Cash movements
The financial assets at fair value were acquired in the year
ended 31 December 2012 by the issue of Ordinary shares of 0.01p
each with a total consideration of GBP1,100,000.
SOVEREIGN MINES OF AFRICA PLC
Notes to the final results
Year ended 31 December 2014
1. BASIS OF PREPARATION
The financial information set out in this announcement does not
constitute the Group's statutory financial statements for the years
ended 31 December 2014 or 2013 but is derived from those financial
statements. Statutory financial statements for 2013 have been
delivered to the Registrar of Companies, and those for 2014 will be
delivered in due course.
The auditors have reported on the financial statements for the
year ended 31 December 2014; their report was unqualified and did
not contain statements under section 498 (2) or (3) of the
Companies Act 2006.
But included the following emphasis of matter in respect of
going concern:
"In forming our opinion on the financial statements, which is
not modified, we have considered the adequacy of the disclosure
made in note 3 regarding the Group's ability to continue as a going
concern. The future operations of the Group are dependent on
raising additional funding required to cover working capital and
the assumption that future exploration expenditure will be funded
by a future strategic partner to meet the operational needs of the
Group's exploration activities. These conditions indicate the
existence of a material uncertainty which may cast significant
doubt about the Company's ability to continue as a going concern.
The financial statements do not include the adjustments that would
result if the Company were not to continue as a going concern."
While the financial information included in this announcement
has been prepared in accordance with the recognition and
measurement criteria of International Financial Reporting Standards
(IFRSs) as endorsed for use in the European Union, this
announcement does not itself contain sufficient information to
comply with IFRSs.
The principal accounting policies adopted in the preparation of
the financial information in this announcement are set out in the
Company's full financial statements for the year ended 31 December
2014 and are consistent with those adopted in the financial
statements for the year ended 31 December 2013.
The Directors do not recommend the payment of a dividend (2013:
nil).
The Board approved this announcement on 5 June 2014.
2. GOING CONCERN POLICY
Although the Group's assets are not generating revenues and an
operating loss has been reported, the Directors have formed the
opinion that the Group will have sufficient funds to undertake its
operations over the next 12 months from the date of signing these
financial statements. This is based on cash flow projections
prepared for that period, their ability to secure additional
funding required to cover working capital and the assumption that
future exploration expenditure will be funded by a future strategic
partner.
The Group's ability to continue its exploration programme is a
critical accounting assumption (as described further in note 3) and
as a result the directors have concluded that the combination of
these circumstances represents a material uncertainty that casts
significant doubt upon the company's ability to continue as a going
concern and that, therefore, the company may be unable to realise
its assets and discharge its liabilities in the normal course of
business.
Nevertheless, after making enquiries and considering the
uncertainties described above, the directors have a reasonable
expectation that the company has adequate resources to continue in
operational existence for the foreseeable future. The Directors
therefore continue to adopt the going concern basis of accounting
in preparing the annual financial statements.
The financial statements do not include any adjustments relating
to the recoverability and classification of assets and liabilities
that may be necessary if the going concern basis of preparation of
the financial statements is not appropriate.
3. OPERATING SEGMENTS
Operating Segments are based on internal reports about
components of the Group, which are regularly reviewed by the
Chairman being the Chief Operating Decision Makers ("CODM") for
strategic decision making and resource allocation in order to
allocate resources to the segment and to assess its
performance.
The group undertakes only one business activity as described in
the Director's report. All transactions between each reportable
segment are accounted for using the same accounting policies as the
Group uses, as set out in note 3. Accordingly, the Group's
operating segments have been determined based on geographical
areas.
The Group has not generated revenue during the either of the
years ended 31 December 2014 or 31 December 2013.
The Group's results by reportable segment are as follows:
Year ended 31 December 2014
UK Guinea Group
GBP GBP GBP
RESULTS
---------- ------------ ------------
Operating loss (181,523) (3,698,856) (3,879,379)
---------- ------------ ------------
Interest income 1,840 - 1,840
---------- ------------ ------------
Year ended 31 December 2013
UK Guinea Group
GBP GBP GBP
RESULTS
---------- -------- ----------
Operating loss (346,995) (5,000) (351,995)
---------- -------- ----------
Interest income 2,926 - 2,926
---------- -------- ----------
All transactions between each reportable segment are accounted
for using the same accounting policies as the Group uses, as set
out in note 3. The Group's assets and liabilities by reportable
segment are as follows :-
At 31 December 2014
UK Guinea Group
GBP GBP GBP
ASSETS
Cash 249,795 156 249,951
Intangible Assets - 1,158,898 1,158,898
--------------------
Total assets 249,795 1,159,054 1,408,849
--------------------
UK Guinea Group
GBP GBP GBP
LIABILITIES
------- ------------- -------
Total liabilities 58,459 - 58,459
------- ------------- -------
4. TAXATION
Analysis of the tax charge
2014 2013
GBP GBP
------------- -----------
Current tax:
Tax - -
------------- -----------
Total tax charge in income statement - -
------------- ----------- ------
Reconciliation of the tax charge
Loss before tax (3,861,625) (923,075)
------------ ------------
Loss before tax multiplied
by standard rate of corporation
tax
in the UK of 21% (2013:
23%) (810,941) (212,307)
------------ ------------
Effects of:
------------ ------------
Non-deductible costs 775,814 -
------------ ------------
Deferred tax not provided 35,127 212,307
------------ ------------
Total tax charge in income - -
statement
------------ ------------
A deferred tax asset has not been recognised in respect of
deductible temporary differences relating to losses carried forward
at the year end, as there is insufficient evidence that taxable
profits will be available in the foreseeable future against which
the deductible temporary difference can be utilised. The amount of
the asset not recognised is GBP521,914 (2013: GBP486,787). The
asset would be recovered if the Group made taxable profits in
future years.
5. LOSS PER SHARE
Basic earnings per share is calculated by dividing the earnings
attributable to ordinary shareholders by the weighted average
number of ordinary shares outstanding during the period.
2014 2013
Weighted average number of ordinary
shares in issue 296,646,521 233,678,522
Loss after taxation GBP(3,879,625) GBP(923,075)
---------------- --------------
Loss per share (pence) (1.31)p (0.39)p
---------------- --------------
======= =======
---------------- --------------
Due to there being a loss during the period there are no
dilutive transactions and therefore no diluted loss per share has
been presented.
6. INTANGIBLE ASSETS
Exploration costs
GBP
Group
----------------------
Cost
At 1 January 2014 4,608,531
-----------------------
Additions 363,572
----------------------
At 31 December 2014 4,972,103
----------------------
Impairment
----------------------
At 1 January 2014 118,853
----------------------
Provided in the year 3,694,352
At 31 December 2014 3,813,205
----------------------
Net Book Value
----------------------
At 31 December 2014 1,158,898
----------------------
At 31 December 2013 4,489,678
----------------------
Exploration activities are deferred until a reasonable
assessment can be made of the existence or otherwise of
economically recoverable reserves. The directors have reviewed the
carrying value of the exploration assets and an impairment
provision has been made to reflect their expected recoverable
value, in the light of discussions with potential strategic
partners.
The impairment losses brought forward of GBP118,853 represent
exploration costs written-off in 2012 where exploration licences
lapsed and were not renewed as work carried out in these areas had
not indicated obvious potential for major gold deposits.
Impairment costs are included under "Administrative expenses" in
the Consolidated Statement of Comprehensive Income.
7. FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS
2014 2013
GBP GBP
Listed investments - 18,000
------------ -------
Amounts presented in respect of listed investments have been
determined by reference to published price quotations on the London
Stock Exchange.
8. SHARE CAPITAL
a) Share Capital
The Company has one class of ordinary shares which carry no
right to fixed income nor have any preferences or restrictions
attached.
Issued and fully paid:
2014 2013
GBP GBP
310,858,850 (2013: 248,350,850) Ordinary
shares of GBP0.01 each 3,108,589 2,483,589
b) Share issues during the year
Number Share Share Total
of shares Capital premium
GBP GBP GBP
At 1 January
2014 248,358,850 2,483,589 5,099,544 7,583,133
-------------- -------------- -------------- --------------
Issued in the
year 62,500,000 625,000 - 625,000
-------------- -------------- -------------- --------------
Less share issue - - - -
costs
-------------- -------------- -------------- --------------
At 31 December
2014 310,858,850 3,108,589 5,099,544 8,208,133
-------------- -------------- -------------- --------------
On 25 March 2014, the company raised additional working capital
of GBP625,000 through a placing of 62,500,000 new ordinary shares
with institutional and other investors at a price of 1p each.
Following this placement the company's issued share capital is
increased to 310,858,850 ordinary shares of GBP0.01p.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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