LONDON (Alliance News) - Alecto Minerals PLC Monday said it turned to profit in 2015 following the acquisition of two mines in Zambia as the company continues to progress its flagship operation whilst sourcing partners for the rest of its portfolio.
The gold and base metal miner operating in Africa reported a pretax profit of GBP3.3 million in 2015 compared to the GBP965,262 loss booked in 2014 despite only delivering an insignificant amount of maiden revenue in the year totalling GBP14,921.
A GBP4.1 million gain booked from the fair value adjustment of the exploration and evaluation assets acquired by the company in November through its takeover of Luiri Ltd was the main driver of the profit whilst administrative expenses fell by a small amount year-on-year.
Although the profit in 2015 will be welcomed, the company is still in the pre-production phase and is still aiming to become a commercial miner "at the earliest opportunity" through its Matala gold project in Zambia whilst advancing its other assets in Africa.
"We made great strides towards becoming an African gold producer in 2015. The strong economics and low costs associated with delivering production at the historical Matala Gold Mine in Zambia, which was acquired alongside the Dunrobin Mine late last year, have been demonstrated and with vendor financing progressing we are in a solid position to execute on our production plans in the near term," said Chief Executive Mark Jones.
"With production targeted in the near to mid-term and exposure to a prospective exploration portfolio in proven gold regions at no cost to Alecto, I am confident that the coming months will prove to be both busy and positive for the company as we seek to build value in our business for shareholders," he added.
Alecto reached a milestone earlier this year by publishing the feasibility study for the Matala project that outlined the company's plan to build an operation capable of producing around 33,000 ounces of gold per year at a cost of around USD14.4 million. That financing will be sourced from vendor financing and the company is progressing talks with Yantai Xinhai Machinery Co Ltd about the supply of that finance and constructing the project.
"With a recent strengthening of the price of gold, excellent project economics, and a financing route that minimises shareholder dilution, Alecto has established a solid backbone for a profitable and successful future mining operation that will define the group as a producer in the near to mid-term," said Alecto.
Unlike many of its peers, Alecto is not solely advancing one project in the hope of transitioning to a cash-generative producer by pairing up with other companies for two of its other projects in Africa.
Alecto is pairing up with fellow London-listed Randgold Resources Ltd on the Kossanto West project which will see Randgold solely fund all of the required work up to the pre-feasibility study whilst Alecto retains a 35% interest. At the Karan gold project, Alecto has teamed up with Kola Gold, who will also solely fund exploration and development costs and the scoping study until a bankable feasibility study is completed.
Both of those projects lie in Mali and by introducing partners into both projects, Alecto can progress the assets without being exposed to further costs in the near future.
Alecto has other assets in Africa and plans to secure similar partnership agreements so those assets can also be advanced whilst leaving Alecto financially-focused on bringing Matala into commercial production.
Alecto's other projects include Kossanto East in Mali, which is being progressed through a co-operation agreement with Desert Gold Ventures Inc, and the company said it is still trying to decide on the best development approach for the asset. Additional assets include the Kerboule gold project in Burkino Faso alongside projects in Ethiopia and Mauritania.
Alecto shares were up 3.3% to 0.0930 pence per share on Monday morning.
By Joshua Warner; joshuawarner@alliancenews.com; @JoshAlliance
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