RNS Number:8075D
Zambezi Nickel Ltd
31 May 2006
Zambezi Nickel Limited
Annual Report
Year to 31 March 2006
HIGHLIGHTS
* African focused pure nickel exploration/development company
* Admitted to AIM in October 2005, raising #1.6 million
* Exploration rights over 3 prospects on 2 project areas (Mitaba &
Paulwi) in Zambia
* Identified a major nickel sulphide-bearing structure which has been
trenched & is currently being drilled (Mitaba)
* Strategy to aggressively explore and evaluate currently identified
mineralisation
* Strong position from which to evaluate and possibly acquire nickel
prospects in the region
* 4,540 metres diamond drill programme commenced on 28 April 2006
* First stage target - JORC Resource - Q4 2006
* Exploiting shared cost/infrastructure opportunities with AIM quoted
Zambezi Resources
CHAIRMAN'S REVIEW
I am pleased to present my first report as Chairman of Zambezi Nickel Limited.
The last twelve months has seen Zambezi Nickel Limited develop from
incorporation in July 2005 to completing a successful admission to AIM, a market
operated by the London Stock Exchange, in October 2005.
Although the Company has grown since incorporation, great care has been taken in
ensuring that growth has been managed in a controlled way to ensure that risks
associated with operations are fully considered before commitment is made to
projects and capital expenditure.
Corporate Governance is a very important issue for the Directors and management
of Zambezi Nickel Limited. To ensure that matters of governance are given due
consideration, a formal Corporate Governance framework and policy has been
established and appropriate committees of the Board have been formed to consider
audit and remuneration matters. In addition, a formal risk review has been
undertaken and its conclusions and recommendations have been presented to the
Board.
After a successful first field season in Zambia, the Company has now established
a modern operations centre in Lusaka which will serve as a base for all projects
in the country. This will provide logistical and administrative support for
geological teams as they work in the field.
The Company's declared exploration strategy has been followed successfully. The
work planned to be carried out in the 2006/07 field season has already commenced
and will build on the initial achievements in confirming the Company's
exploration models at Mitaba and Paulwi.
Since establishing itself in Zambia the Company has made considerable efforts to
ensure that it understands the local business and legislative environment of the
country. Zambezi Nickel is particularly pleased with the level of communication
and assistance it has received from the Minister of Mines the Hon. Dr Kalombo T.
Mwansa and his department.
I would like to conclude my report by recognising the hard work and efforts of
Zambezi Nickel's management team, led by Paul Rankine, at all levels in ensuring
that the Company is now positioned to build on the exploration success of last
year.
Jeremy Wrathall
Chairman
INCOME STATEMENTS FOR THE PERIOD ENDED 31 MARCH 2006
Notes Group 2006
#
Operating income 13,981
Expenses (148,585)
Group operating Loss (134,604)
Income tax expense -
Loss after taxation for the financial period (134,604)
Basic and diluted loss per share - pence 2 (0.01)
BALANCE SHEETS AS AT 31 MARCH 2006
Notes Group 2006
#
ASSETS
Non-current Assets
Property, plant and equipment 3,579
Mineral Interests 1,161,754
Investment in subsidiaries -
Owing by subsidiaries -
Total non-current assets 1,165,333
Current Assets
Other Receivables 3,000
Prepayments 9,253
Cash and cash equivalents 1,156,873
Total current assets 1,169,126
Total Assets 2,334,459
EQUITY AND LIABILITIES
Current Liabilities
Trade and other payables 17,200
Accruals and provisions 6,491
Total current liabilities 23,691
Total liabilities 23,691
Equity
Issued capital 3 335,342
Share premium reserve 2,068,485
Options & Warrants reserve 50,353
Translation reserve (8,808)
Accumulated loss (134,604)
Total equity 2,310,768
Total equity and liabilities 2,334,459
STATEMENT OF CHANGES IN EQUITY FOR THE PERIOD ENDED 31 MARCH 2006
Group 2006
#
Issued Capital
Opening balance as at 1 April 2005 -
Issued during the period 335,342
Closing balance as at 31 March 2006 335,342
Share Premium Reserve
Opening balance as at 1 April 2005 -
Premium on shares 2,443,915
Less flotation costs (375,430)
Closing balance as at 31 March 2006 2,068,485
Options & Warrants Reserve
Opening balance as at 1 April 2005 -
Charged during the period 50,353
Closing balance as at 31 March 2006 50,353
Accumulated Losses
Opening balance as at 1 April 2005 -
Loss for the period (134,604)
Closing balance as at 31 March 2006 (134,604)
Translation Reserve
Opening balance as at 1 April 2005 -
Loss for the period (8,808)
Closing balance as at 31 March 2006 (8,808)
Total 2,310,768
CASH FLOW STATEMENTS FOR THE PERIOD ENDED 31 MARCH 2006
Group 2006
#
Cash flows from operating activities
Payments to suppliers and employees (113,065)
Interest received 13,981
Net cash utilised by operating activities (99,084)
Cash flows from investing activities
Payments for mineral interests (183,124)
Purchase of property, plant and equipment (3,671)
Net cash utilised by investing activities (186,795)
Cash flows from financing activities
Advances to Subsidiaries -
Net proceeds from issue of share capital 1,461,004
Loan repayment (18,252)
Net cash generated from financing activities 1,442,752
Net increase in cash and cash equivalents 1,156,873
Cash and Cash equivalents at beginning of the period -
Cash and cash equivalents at the end of period 1,156,873
NOTES TO THE ANNUAL FINANCIAL STATEMENTS
1. Accounting Policies
Zambezi Nickel Limited is a company registered and domiciled in Bermuda. The
financial statements incorporate the principal accounting policies set out
below. The accounting policies of the subsidiaries are consistent with those of
the holding company.
The company was incorporated 8 July 2005. (No last period comparatives since
Zambezi Nickel did not commence operations until 11 July 2005 and accordingly it
did not prepare financial statements for previous periods).
1.1. Statement of compliance
The Group financial statements are prepared in accordance with International
Accounting Standards (IAS) adopted by the International Accounting Standards
Board (IASB) that are mandatory for accounting periods ended 31 March 2006, and
interpretations issued by the Standing Interpretations Committee of the IASB.
1.2. Basis of preparation
The Group financial statements are prepared on the historical cost basis.
2. Loss Per Share
The calculation of loss per share is based on the loss for the financial period
of #134,604 and on a weighted average of ordinary shares 33,534,697 plus
4,729,167 options issued during the period.
SHARES GROUP 2006
Basic weighted average number of ordinary shares on issue 33,534,697
#
Basic loss per share - pence (0.01)
The diluted loss per share is the same as the basic loss per share.
The share options are anti dilutive.
3. Issued Capital
Authorised 302 million ordinary shares of par #0.01 each.
Number of Shares # Issued Capital # Share Premium #
Issued and fully paid
As at 1 April 2005 - - -
18 July 2005 700,000 7,000 -
22 August 2005 15,933,621 159,336 1,003,818
31 October 2005 900,000 9,000 -
31 October 2005 15,981,322 159,813 1,438,319
Jan-March 06 19,754 193 1,778
Allotments during the period 33,534,697 335,342 2,443,915
Costs associated with equity raising (375,430)
Balance as at 31 March 2006 2,068,485
The following changes to the issued share capital of the Company have occurred
during the period:
1. On18 July 2005 Zambezi Nickel Limited (the Company) issued a total of
700,000 ordinary fully paid shares of par value #0.01 each. The issue of the
shares had received approval from the Bermuda Monetary Authority (BMA).
2. On 24 July 2005, the Company allotted 15,933,661 ordinary fully paid
shares of par value #0.01at #0.073 to Zambezi Resources Limited in consideration
of the purchase of the entire share capital of MR Nickel (Bermuda) Limited and
MR Nickel Limited, and US$500,000 for funding of exploration expenditure. BMA
approval having been received, the shares were issued on 22 August 2005.
3. On 31 October 2005, a total of 15,981,322 ordinary fully paid shares of
par value #0.01 were allotted to shareholders upon admission of the shares to
the London Stock Exchange Alternative Investment market (AIM) at a price of
#0.10. All other shares on issue at that time were listed the same day.
4. On 8 August 2005, the Company allotted a total of 900,000 preference
shares of par value #0.01 to Paul Rankine, Geoffrey Johnson, Jeremy Wrathall,
Harpendon Nominees Pty Ltd, Hakainde Hichilema and Stewart Taylor (150,000
preference shares each) in consideration of providing services in relation to
the initial public offering of the company's securities. Having obtained BMA
approval, the shares were issued on 19 August 2005. On flotation, these
preference shares were converted into ordinary shares on 31 October 2005.
5. Between January and March 2006, a total of 19,754 shareholder options
were exercised and the same number of ordinary fully paid shares of par value
#0.01 were issued. The exercise price of the options was #0.10.
Options
Shareholder options
i. On 31 October 2005, a total of 4,729,167 options over
par value #0.01 were issued to shareholders as part of shares. The options have
an exercise price of #0.10 and they expire on 31 October 2006.
ii. During the period 19,754 options were exercised.
Director options
On 8 August 2005, the Company granted a total of 800,000 options to Paul Rankine
and all relevant information fully disclosed in the Prospectus dated 28
September 2005. Details are:
Number Exercise price Expiry
Tranche A options(commencement date 31 October 2006)
Holder
Paul Rankine 400,000 #0.15 31 October 2010
Tranche B options(commencement date 31 October 2007)
Holder
Paul Rankine 400,000 #0.20 31 October 2011
Notes
1. There were no share options outstanding at the beginning of the period.
2. No share options were forfeited during the period.
3. 19,754 options were exercised during the period.
4. No share options expired during the period.
5. The total of share options outstanding at the end of the period was
4,709,413.
6. The weighted average price of the share options outstanding at the end
of the period was #0.10.
7. An amount of #14,760 was expensed during the period in recognition of
the fair value of options over ordinary fully paid shares granted to Paul
Rankine.
8. The share price factored into the fair value calculation model was:
#0.085.
9. The expected volatility factored into the fair value calculation model
was 45%.
10. The option life factored into the fair value calculation was: 5.23
periods
11. No expected dividends were factored into the fair value calculation
model.
12. The assumed period before options will be exercised was: 4.5 periods.
13. The model used in the fair value calculation was an adjusted Black
Scholes model.
Share warrants
The Company has issued 1,005,448 Warrants, equivalent to 3 per cent of the then
fully diluted enlarged share capital of the Company as at Admission, to W H
Ireland. The Warrants are exercisable at the Placing Price of # 0.10 pursuant to
and on the terms of the Warrant Instrument dated 28 September 2005 between the
Company and WH Ireland whereby the Company is bound to create and grant a
warrant to subscribe in cash for up to 1,005,448 Ordinary Shares in the capital
of the Company at the Placing Price, payable in full upon exercise. The warrant
is exercisable in whole or in part at any time during the period commencing on
Admission until the third anniversary of the date of Admission. The warrant may
be assigned by WH Ireland in whole or in part, subject to BMA approval. These
warrants were issued as part of the placing consideration for WH Ireland for
handling the share float on behalf of the Company and represents a non-cash
transaction. The fair value attributed to the Warrants was #35,593. The model
used in the fair value calculation of the warrants was an adjusted Black Scholes
model.
4. Availability of Annual Report
Copies of the Annual Report will be despatched to shareholders on 5 June 2006.
Additional copies are available to the public, free of charge, from Little
Stone Cottage, Bell Vale Lane, Haslemere, GU27 3DJ, United Kingdom. The Annual
Report is also available on the company's website: www.zambezinickel.com.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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