30 Sep 2009 07:00
AIM: CLF / TSX: CFG
Cluff Gold plc
("Cluff Gold" or the "Company")
Interim Results for the six months ended 30 June 2009
Cluff Gold, the West African focused gold mining group, announces its results for the six months ended 30 June 2009. The Company is on course to achieving its forecast annualised production rate of 100,000 ounces of gold by the end of the current financial year.
Highlights:
Baomahun gold deposit, Sierra Leone (100% ownership)
7,000 metre drilling programme successfully completed to test potential at depth
Nine out of eleven holes intersect mineralisation in Central and Eastern Zones
Resource update underway, expected publication in October 2009
Kalsaka Gold Mine, Burkina Faso (78% ownership)
New mining contractor commenced work in January
Mining operation commissioned at the end of June
Gold production for the first six months amounted to 26,772 ounces
Cash operating cost for the period averaged US$595 per ounce
Angovia Gold Mine, Cote d'Ivoire (90% ownership)
Larger mining fleet deployed in January
Upgrade to agglomeration drum completed in April
New oxide deposit identified within 2 km of plant site
Impairment charge of US$21.9m at period end
Corporate/Finance:
Listing on the Toronto Stock exchange in February (symbol "CFG")
Successful placing raised gross proceeds of US$11.4m in March to further develop the Baomahun gold deposit in Sierra Leone
Cash at 30 June amounted to US$7.6m
Comment:
Algy Cluff, Chairman and Chief Executive, said today "I am pleased to report good progress by the Company in the first six months of this year. Operations at the Kalsaka Gold Mine reached standards set for successful commissioning with gold production of 26,772 ounces. Production for the full year is expected to be in the order of 60,000 ounces of gold. Whilst the Angovia Gold Mine did not meet forecast production in this period, I am pleased to report that both mining performance and grade are on the increase and I am confident that this operation will shortly exit commissioning. Unfortunately, the turn around has come too late to prevent the impairment of this operation and we have taken the prudent decision to write this asset down by US$21.9m at the period end.
The 7,000 metre drilling programme at the Baomahun gold deposit in Sierra Leone was successful in that nine out of the eleven holes drilled encountered mineralisation in both the Central and Eastern Zones. The results from the drilling demonstrate the down dip continuity of the mineralisation at grades and widths which we believe shows strong potential to support the development of an underground operation either alongside or subsequent to an open pit operation. A resource update is expected to be published in October 2009 and a revised scoping study will follow later in the first quarter of next year.
In the last quarter of this year I expect that the Company will be producing at an annualised rate of 100,000 ounces of gold. With this level of production, a robust gold price and continued success at Baomahun, I am optimistic about our future in West Africa."
Results:
The Group's operating loss before impairment charge is US$7.7 million. This operating loss has increased in the period due to an increase in the operating costs at Kalsaka and Angovia that are not directly attributable to mine commissioning, and are therefore included in the income statement rather than being capitalised within mine development costs.
Non-current assets have fallen since 31 December 2008, from US$121.3 million to US$89.7 million, due to a number of factors including the impairment charge for the Angovia Gold Mine, US$9 million of profits realised during the commissioning phase of the Kalsaka Gold Mine, and a transfer of inventories and tax receivables totalling US$8 million to current assets at the period end, reflecting the successful completion of the commissioning phase.
The Group's cash at 30 June 2009 totalled US$7.6 million, with debt of US$6 million drawn down from a US$10 million working capital facility with RMB Australia Holdings Ltd.
For further information, please contact:
| Cluff Gold plc J.G. Cluff/ E.Carr Chairman and Chief Executive/Finance Director Tel: +44 (0) 20 7340 9790 | Evolution Securities Limited Rob Collins Tim Redfern Tel: +44 (0) 20 7071 4300
|
| Joanna Longo Investor Relations (Canada) The Equicom Group +1 416 815 0700 ext 233 jlongo@equicomgroup.com | Simon Robinson Investor Relations (U.K.) Farm Street Communications Ltd +44 (0) 20 7099 2212 simon.robinson@farmstreetmedia.com |
NO REGULATORY AUTHORITY HAS APPROVED OR DISAPPROVED THE CONTENT OF THIS PRESS RELEASE.
This News Release includes certain "forward-looking information" within the meaning of applicable Canadian securities legislation. All statements other than statements of historical fact, included in this release, including, without limitation, the positioning of the Company for future success, statements regarding potential future production at Angovia and Kalsaka, exploration and drilling results at Baomahun, and future capital plans and objectives of Cluff Gold, are forward-looking information that involve various risks and uncertainties. There can be no assurance that such statements will prove to be accurate and actual results and future events could differ materially from those anticipated in such statements. Important factors that could cause actual results to differ materially from Cluff Gold's expectations include, among others, risks related to international operations, the actual results of current exploration and drilling activities, changes in project parameters as plans continue to be refined as well as future price of gold. Although Cluff Gold has attempted to identify important factors that could cause actual results to differ materially, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such statements will prove to be accurate as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements. Cluff Gold does not undertake to update any forward-looking statements that are included herein, except in accordance with applicable securities laws.
In this New Release the term "cash operating cost" is used as a performance measure. Cash operating cost is used on a per ounce of gold basis. Cash operating cost per ounce is equivalent to mining operations expenses for the period divided by the number of ounces of gold sold during the period.
Cluff Gold plc
Chairman and Chief Executive's Statement
I am pleased to report that we have now established an organisation with a production capacity for 2010 and beyond of over 100,000 ounces of gold per annum, together with a real advance in our understanding of the undoubted potential for our principal asset, the Baomahun gold discovery in Sierra Leone. Recent drilling results support our aspiration that Baomahun will become a significant open pit and underground mining development.
Kalsaka
Operations at the Kalsaka Gold Mine have progressed well during the period with the mine being fully commissioned at 30 June. Gold production in the first six months amounted to 26,772 ounces, at an average cash operating cost of US$595 per ounce (US$632 per ounce including royalty and refining charges).
Although the new mining contractor did experience certain problems with its plant in the early months of the year, only achieving the target mining rate towards the end of the period, I am pleased to report that the additional mining fleet now deployed should allow the catch up of forecast mined tonnes by year end. Mining commenced in the West pit at Kalsaka, where grade has generally exceeded expectations. The East pit has now been opened up which will allow for greater flexibility in mining going forward.
The processing plant has generally operated well throughout the period, although the agglomeration drum was down for 10 days in July due to tyre failure. Although it is still early days for a heap leach operation, recovery to date is approximately 84% which is the life of mine estimate as used in the feasibility study. Throughput is currently 1.5mtpa, and plans are being prepared to increase this to 1.8mtpa and, potentially, still further to 2mtpa.
Two social initiatives have been worked on during the period: a maternity hospital which is in the final stages of construction; and a training scheme which offers construction, carpentry and mechanical engineering classes to the local population. Both initiatives were developed in collaboration with the local community and have been extremely well received. Generally, the operating environment is good in Burkina Faso, although due to its landlocked position there are sometimes delays in receiving spares and consumables.
Angovia
The Angovia Gold Mine did not meet forecast production in the first six months of this year, although it must be said that mining performance has increased significantly from that seen in 2008. However, due to early, heavy rains, mining was forced to focus on profiling of the pits to ensure efficient drainage, with the installation of a large sump pump completed in June of this year. The areas mined for enhanced drainage contained a lower grade of ore and, as a consequence, production suffered and operational losses persisted. Since the installation of the drainage pump, mining has been able to focus on the higher grade areas and it has been a pleasure to see grades slowly but surely rise.
The operational difficulties at Angovia have been compounded by transitional ore encountered during the period, which was of a harder nature than anticipated. Whilst attempting to process this harder ore, the MMD sizer experienced higher mechanical wear and tear, which culminated in the failure of the gear box and breakdown of the unit for almost one month. A decision was taken that this transitional ore should, wherever possible, be left in-situ until such time as a crusher could be sourced. Work continues on this option and processing test-work on a representative bulk sample is due to be undertaken by the year-end. As a result of these operational challenges, an impairment review was undertaken at the period end and the Directors have decided to take the prudent approach of writing down the investment currently held on the balance sheet by US$21.9 million. This write down is primarily due to the exclusion of mineral resources from the valuation model of the project for which further exploration work is required.
It should be noted that subsequent to the period end, mining performance has continued to increase and a rise in grade has been evident. Also a small oxide deposit has been found approximately 2km from the processing plant, which should add to production in the coming months. Due to these factors, it is anticipated that the Angovia Gold Mine will exit commissioning shortly. Management will continue to focus its efforts to ensure the future success of this operation.
A social programme has been agreed with the local community and the first initiative is the building of a school, with construction expected to commence by year-end. Generally, the operating environment in Cote d'Ivoire has improved from last year.
Baomahun
Our exploration efforts during the period continued to focus on our principal asset, the Baomahun gold deposit in Sierra Leone, where a 7,000 metre drilling programme was completed in July. Results from this programme were released in September and demonstrated the down dip continuity of mineralisation at grades and widths which we consider to show strong potential to support the development of an underground operation, either alongside or subsequent to an open pit operation. Nine holes out of the eleven hole programme intersected mineralisation at depth in both the Eastern and the Central Zones, and these results will be incorporated into a resource update which is expected to be published in October 2009. This will be followed by an updated scoping study which should be completed in the first quarter of 2010.
Results
The Group's operating loss before impairment charges is US$7.7 million. This operating loss has increased in the period due to an increase in the operating costs at Kalsaka and Angovia that are not directly attributable to mine commissioning, and are therefore included in the income statement rather than being capitalised within mine development costs.
Non-current assets have fallen since 31 December 2008 due to a number of factors. At the Angovia Gold Mine, the US$21.9 million impairment charge has reduced the carrying value of non-current assets at the period-end. At Kalsaka, mine development costs have fallen in the period due to US$9 million of profits realised during the period, which reduce the carrying value of the development costs, and a transfer of inventories and tax receivables totalling US$8 million to current assets at the period end, reflecting the successful completion of the commissioning phase.
The transfer of inventories and tax receivables to current assets for Kalsaka is also the main reason for the increase in current assets in the period. Finally, there has been a small reduction in total liabilities in the period due to a US$0.7 million reduction in the Group's overdraft and a US$1.2m reduction of trade creditors, off-set by a US$0.9m increase in the environmental provision for the Group's operations.
Financing
In March, the Company successfully placed 20,285,000 ordinary shares at a price of 40 pence per share, raising US$11.4 million before expenses. The proceeds so far have been used to fund the drilling programme at the Baomahun gold deposit in Sierra Leone and the working capital requirements of the Angovia Gold Mine, and will also be used to finance further drilling around the Kalsaka Gold Mine in order to increase the mineral resource, thereby supporting increased throughout at that mine. Cash at 30 June amounted to US$7.6 million. In September, the US$10 million working capital facility previously arranged with RMB Australia Holdings Ltd was renewed for a period of one year.
Corporate
In February, the Toronto Stock Exchange granted approval for the listing of our shares on that Exchange under the symbol "CFG". Our shares will continue to be quoted and traded on AIM. In May, we appointed Evolution Securities Limited as our Nominated Adviser and also Joint Broker alongside BMO Capital Markets Limited.
Conclusion
In the last quarter of this year I expect that the Company will be producing at an annualised rate of 100,000 ounces of gold. With this level of production, a robust gold price and continued success at Baomahun, I am optimistic about our future in West Africa.
JG Cluff
Chairman and Chief Executive Officer
30 September 2009
Cluff Gold plc
Independent Review Report to Cluff Gold plc
We have been engaged by the company to review the financial information in the half-yearly financial report for the six months ended 30 June 2009 which comprises the consolidated income statement, statement of other comprehensive income, balance sheet, statement of changes in equity, statement of cash flows and the related explanatory notes. We have read the other information contained in the half-yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.
This report is made solely to the company in accordance with the terms of our engagement. Our review has been undertaken so that we might state to the company those matters we are required to state to it in this report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company for our review work, for this report, or for the conclusions we have reached.
Directors' responsibilities
The half-yearly financial report is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the half-yearly financial report in accordance with the AIM Rules of the London Stock Exchange.
As disclosed in note 1, the annual financial statements of the Group are prepared in accordance with IFRSs as adopted by the European Union. The financial information included in this half-yearly financial report has been prepared using accounting policies consistent with those to be applied in the next annual financial statements.
Our responsibility
Our responsibility is to express to the company a conclusion on the financial information in the half-yearly financial report based on our review.
Scope of review
We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410, "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to believe that the financial information in the half-yearly financial report for the six months ended 30 June 2009 is not prepared, in all material respects, in accordance with the AIM Rules of the London Stock Exchange.
PKF (UK) LLP
London
30 September 2009
CONSOLIDATED INCOME statement
For the six months ended 30 June 2009
| Notes | 6 months to 30 june 2009 | 6 months to 30 june 2008 | 12 months to 31 December 2008 | |
|
|
| US$ | US$ | US$ |
| Unaudited | Unaudited | Audited | ||
| Continuing Operations | ||||
| Revenue |
| - | - | - |
| Cost of Sales | - | - | - | |
|
|
|
|
| |
| Gross Profit |
| - | - | - |
| Operating Expenses |
| (7,616,334) | (4,366,757) | (8,422,750) |
| Exploration costs written off | (43,185) | - | (781,256) | |
| Impairment of mining properties | 3 | (21,941,000) | - | - |
| Negative goodwill arising on acquisition of subsidiary | - | - | 8,956,273 | |
|
|
|
|
| |
| Operating Loss |
| (29,600,519) | (4,366,757) | (247,733) |
| Finance Costs | (759,069) | (305,947) | (1,099,839) | |
| Investment Income |
| 846,786 | 334,510 | 402,567 |
|
|
|
|
| |
| Loss before taxation |
| (29,512,802) | (4,338,194) | (945,005) |
| Income tax expense | - | - | - | |
|
|
|
|
| |
| Loss for the period attributable to equity holders of the parent | (29,512,802) | (4,338,194) | (945,005) | |
|
|
|
|
| |
| Basic and diluted loss per share (cents) | 6 | (27.35) | (5.48) | (1.08) |
|
|
|
|
| |
|
|
|
|
|
CONSOLIDATED Statement of OTHER comprehensive INCOME
For the six months ended 30 June 2009
| 6 months to 30 june 2009 | 6 months to 30 june 2008 | 12 months to 31 December 2008 | ||
|
| US$ | US$ | US$ | |
| Unaudited | Unaudited | Audited | ||
| Loss for the Period | (29,512,802) | (4,338,194) | (945,005) | |
| Other comprehensive income | ||||
| Exchange difference on translation of foreign operations |
| 359,945 | 2,374,351 | (6,015,314) |
| Profit on partial disposal of subsidiaries | - | - | 8,414,997 | |
|
|
|
|
| |
| Total comprehensive income for the period attributable to equity holders of the parent | (29,152,857) | (1,963,843) | 1,454,678 | |
|
|
|
|
|
consolidated balance sheet
As at 30 June 2009
|
| Notes | At 30 June 2009 | At 30 June 2008 | At 31 December 2008 |
|
| US$ | US$ | US$ | |
| Unaudited | Unaudited | Audited | ||
| Assets | ||||
| Intangible assets | ||||
| - exploration costs | 45,406,167 | 15,653,923 | 43,071,310 | |
| Property, plant and equipment | ||||
| - mine development costs | 3 | 43,557,421 | 62,402,453 | 77,372,771 |
| - other | 756,234 | 1,313,806 | 879,254 | |
| Trade and other receivables | - | 135,621 | - | |
|
|
|
| ||
| Total non-current assets | 89,719,822 | 79,505,803 | 121,323,335 | |
|
|
|
|
| |
| Trade and other receivables | 5,255,302 | 3,817,280 | 1,956,427 | |
| Inventories | 7,024,829 | 211,020 | - | |
| Cash and cash equivalents | 7,642,345 | 13,280,725 | 5,171,404 | |
|
|
|
| ||
| Total current assets | 19,922,476 | 17,309,025 | 7,127,831 | |
|
|
|
|
| |
| Total assets | 109,642,298 | 96,814,828 | 128,451,166 | |
|
|
|
|
| |
|
| ||||
| Equity | ||||
| Share capital | 4 | 2,135,966 | 1,591,688 | 1,840,697 |
| Share premium | 99,961,523 | 89,322,731 | 89,407,388 | |
| Share option reserve | 3,633,985 | 1,808,351 | 3,151,989 | |
| Merger reserve | 15,107,298 | 2,500,366 | 15,107,298 | |
| Accumulated losses | (34,888,765) | (17,184,149) | (5,375,963) | |
| Currency translation reserve | 1,059,660 | 9,089,380 | 699,715 | |
|
|
|
| ||
| Total Equity | 87,009,667 | 87,128,367 | 104,831,124 | |
|
|
|
| ||
| Liabilities Current liabilities | ||||
| Trade and other payables | 17,579,261 | 7,810,761 | 19,517,389 | |
|
|
|
| ||
| 17,579,261 | 7,810,761 | 19,517,389 | ||
| Non-current liabilities | ||||
| Provisions for other liabilities and charges | 5,053,370 | 1,875,700 | 4,102,653 | |
|
|
|
| ||
| Total liabilities | 22,632,631 | 9,686,461 | 23,620,042 | |
|
|
|
| ||
| Total equity and liabilities | 109,642,298 | 96,814,828 | 128,451,166 | |
|
|
|
| ||
| consolidated statement of changes in equity For the six months ended 30 June 2009 | |||||||||
| Share capital | Share premium | Share option reserve | Merger reserve | Cumulative translation reserve | Accumulated Losses | Total Equity | |||
| US$ | US$ | US$ | US$ | US$ | US$ | US$ | |||
| BALANCE AT 1 jANUARY 2008 | 1,288,558 | 64,990,510 | 1,611,500 | 2,500,366 | 6,715,029 | (12,845,955) | 64,260,008 | ||
| Loss for the period | - | - | - | - | - | (4,338,194) | (4,338,194) | ||
| Exchange translation differences on consolidation | - | - | - | - | 2,374,351 | - | 2,374,351 | ||
| Total comprehensive income for the period attributable to equity holders of the parent | - | - | - | - | 2,374,351 | (4,338,194) | (1,963,843) | ||
| Issue of ordinary share capital | 303,130 | 26,096,093 | - | - | - | - | 26,399,223 | ||
| Issue costs | (1,763,872) | - | - | - | - | (1,763,872) | |||
| Share option credit | - | - | 196,851 | - | - | - | 196,851 | ||
| BALANCE AT 30 JUNE 2008 | 1,591,688 | 89,322,731 | 1,808,351 | 2,500,366 | 9,089,380 | (17,184,149) | 87,128,367 | ||
| BALANCE AT 1 jANUARY 2008 | 1,288,558 | 64,990,510 | 1,611,500 | 2,500,366 | 6,715,029 | (12,845,955) | 64,260,008 | ||
| Loss for the period | - | - | - | - | - | (945,005) | (945,005) | ||
| Profit on partial disposal of subsidiaries | - | - | - | - | - | 8,414,997 | 8,414,997 | ||
| Exchange translation differences on consolidation | - | - | - | - | (6,015,314) | - | (6,015,314) | ||
| Total comprehensive income for the period attributable to equity holders of the parent | - | - | - | - | (6,015,314) | 7,469,992 | 1,454,678 | ||
| Issue of ordinary share capital | 552,139 | 26,295,077 | - | 12,606,932 | - | - | 39,454,148 | ||
| Issue costs | - | (1,878,199) | - | - | - | - | (1,878,199) | ||
| Share option charge | - | - | 1,540,489 | - | - | - | 1,540,489 | ||
| BALANCE AT 31 DECEMBER 2008 | 1,840,697 | 89,407,388 | 3,151,989 | 15,107,298 | 699,715 | (5,375,963) | 104,831,124 | ||
| BALANCE AT 1 jANUARY 2009 | 1,840,697 | 89,407,388 | 3,151,989 | 15,107,298 | 699,715 | (5,375,963) | 104,831,124 | ||
| Loss for the period | - | - | - | - | - | (29,512,802) | (29,512,802) | ||
| Exchange translation differences on consolidation | - | - | - | - | 359,945 | - | 359,945 | ||
| Total comprehensive income for the period attributable to equity holders of the parent | - | - | - | - | 359,945 | (29,512,802) | (29,152,857) | ||
| Issue of ordinary share capital | 295,269 | 11,515,470 | - | - | - | - | 11,810,739 | ||
| Issue costs | - | (961,335) | - | - | - | - | (961,335) | ||
| Share option charge | - | - | 481,996 | - | - | - | 481,996 | ||
| BALANCE AT 30 JUNE 2009 | 2,135,966 | 99,961,523 | 3,633,985 | 15,107,298 | 1,059,660 | (34,888,765) | 87,009,667 | ||
consolidated cash flow statement
For the six months ended 30 June 2009
| 6 months to 30 June 2009 | 6 months to 30 June 2008 | 12 months to 31 December 2008 | ||||
| US$ | US$ | US$ | ||||
| Unaudited | Unaudited | Audited | ||||
| CASH FLOWS USED IN OPERATING ACTIVITIES | ||||||
| Operating loss for the period | (29,600,519) | (4,366,757) | (247,733) | |||
| Depreciation | 225,183 | 38,234 | 79,056 | |||
| (Increase)/Decrease in trade and other payables | (6,779) | 3,833,097 | (39,706) | |||
| Increase/(Decrease) in trade and other receivables | 58,207 | (1,778,803) | 217,672 | |||
| Increase in inventories | - | (107,444) | - | |||
| Share option charge | 954,956 | 196,851 | 766,494 | |||
| Exploration costs written off | 43,185 | - | 781,256 | |||
| Impairment of mineral properties | 21,941,000 | - | - | |||
| Negative goodwill on acquisition | - | - | (8,956,273) | |||
| Exchange losses | - | - | 718,079 | |||
| Loss on disposal of fixed assets | 26,987 | - | - | |||
| Other non cash movements | 194,002 | - | - | |||
|
|
|
| ||||
| NET CASH FLOWS USED IN OPERATING ACTIVITIES | (6,163,778) | (2,184,822) | (6,681,155) | |||
|
|
|
|
| |||
| CASH FLOWS USED IN INVESTING ACTIVITIES | ||||||
| Interest receivable | 17,150 | 333,947 | 397,409 | |||
| Interest payable | (224,451) | (45,014) | (73,232) | |||
| Purchase of property, plant and equipment net of profit from plant commissioning | 556,453 | (17,901,085) | (25,703,554) | |||
| Purchase of intangible assets | (1,438,224) | (4,869,620) | (6,658,766) | |||
|
|
|
| ||||
| NET CASH FLOWS USED IN INVESTING ACTIVITIES | (1,089,072) | (22,481,772) | (32,038,143) | |||
|
|
|
| ||||
| CASH FLOWS FROM financing ACTIVITIES | ||||||
| Proceeds from the issue of share capital | 11,810,739 | 26,399,223 | 26,602,422 | |||
| Issue costs paid | (961,335) | (1,763,872) | (1,878,199) | |||
| Net proceeds from loan | - | - | 5,929,042 | |||
|
|
|
| ||||
| NET CASH FLOWS FROM FINANCING ACTIVITIES | 10,849,404 | 24,635,351 | 30,653,265 | |||
|
|
|
|
| |||
| NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS | 3,596,554 | (31,243) | (8,066,033) | |||
| Cash and cash equivalents at start of period | 4,415,711 | 13,921,966 | 13,921,966 | |||
| Exchange losses on cash | (391,298) | (609,998) | (1,440,222) | |||
|
|
|
| ||||
| CASH AND CASH EQUIVALENTS AT END OF PERIOD | 7,620,967 | 13,280,725 | 4,415,711 | |||
|
|
|
|
| |||
| CASH AND CASH EQUIVALENT COMPRISE | ||||||
| Cash at bank | 1,144,912 | 2,717,979 | 3,151,512 | |||
| Short term deposits | 6,497,433 | 10,562,746 | 2,019,892 | |||
|
|
|
| ||||
| 7,642,345 | 13,280,725 | 5,171,404 | ||||
| Bank overdraft | (21,378) | - | (755,693) | |||
|
|
|
| ||||
| Cash and cash equivalents | 7,620,967 | 13,280,725 | 4,415,711 | |||
|
|
|
| ||||
notes to the interim financial information
For the six months ended 30 June 2009
| 1. | BASIS OF PREPARATION The interim financial information has been prepared on the basis of the recognition and measurement requirements of International Financial Reporting Standards (IFRS) as adopted by the European Union (EU) and implemented in the UK. The accounting policies, methods of computation and presentation used in the preparation of the interim financial information are the same as those used in the Group's audited financial statements for the year ended 31 December 2008 except for IAS 1 - Presentation of financial statements (revised), the adoption of which is mandatory for 2009. This new standard relates to presentation only. In the opinion of management, the accompanying interim financial information includes all adjustments considered necessary for fair and consistent presentation of financial statements. This interim consolidated financial information should be read in conjunction with the Company's audited consolidated financial statements and notes for the year ended 31 December 2008. The financial information in this statement does not constitute full statutory accounts within the meaning of Section 434 of the Companies Act 2006. The financial information for the six months ended 30 June 2009 and 30 June 2008 is unaudited, but has been reviewed by the auditors. The financial information for the year ended 31 December 2008 has been derived from the Group's audited financial statements for the period as filed with the Registrar of Companies. It does not constitute the financial statements for that period. The auditors' report on the statutory financial statements for the year ended 31 December 2008 was unqualified and did not contain any statement under Section 237(2) or (3) of the Companies Act 1985. An emphasis of matter paragraph was included in their audit report regarding the carrying value of the Angovia Gold Mine. Rates of Exchange to US$1 used in the preparation of the interim financial information are as follows: |
| At 30 June 2009 | 2009 6 Month Average | At 31 December 2008 | 2008 12 Month Average | At 30 June 2008 | 2008 6 Month Average | |
| Sterling | 0.60550 | 0.66790 | 0.69100 | 0.54793 | 0.50140 | 0.50337 |
| 2. | NATURE OF BUSINESS AND GOING CONCERN The Company is a public limited company incorporated and domiciled in England. The address of the registered office is 15 Carteret Street, London, SW1H 9DJ. The Group is involved in the acquisition, exploration, development and operation of gold deposits in West Africa. The Group has raised equity funds in discrete tranches in order to fund both its exploration and development activities. The Company raised US$11.4 million on 27 March 2009 by way of placement of 20,285,000 shares at 40p per share and at 30 June 2009 has US$7.6m of cash resources available. In addition, at 30 June 2009 the Group maintains a US$10 million facility with RMB Australia Holdings Limited, of which US$6 million has been drawn down. In September 2009 this facility was renewed for a period of 12 months. As stated elsewhere in this report, the Kalsaka Gold Mine was commissioned at 30 June 2009 and is meeting operating criteria. The Angovia Gold Mine faced operational challenges during the period under review but production and grade have increased since the period end and it is expected to exit commissioning shortly. The gold price remains strong and indications are that this will continue. Given these financial resources, the current and anticipated performance of the Group's operations and the strong gold price, the Directors consider it appropriate to prepare these financial statements on the going concern basis. The use of that basis assumes that the Company meets its commitments as they fall due. |
| 3. | PROPERTY, PLANT & EQUIPMENT |
| Mining, development and associated property, plant and equipment cost | Motor vehicles, office equipment, fixtures & computers | Total | ||
| GROUP | US$ | US$ | US$ | |
| COST | ||||
| At 1 January 2009 | 77,372,771 | 2,062,483 | 79,435,254 | |
| Additions less results from commissioning phase | (3,806,598) | 26,876 | (3,779,722) | |
| Transfer to inventories1 | (7,024,829) | - | (7,024,829) | |
| Transfer to trade and other receivables1 | (1,105,518) | - | (1,105,518) | |
| Disposals | - | (10,804) | (10,804) | |
| Exchange difference on retranslation | (1,365,405) | 39,543 | (1,325,862) | |
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| At 30 June 2009 | 64,070,421 | 2,118,098 | 66,188,519 | |
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| DEPRECIATION | ||||
| At 1 January 2009 | - | 1,183,229 | 1,183,229 | |
| Charge for the year | - | 316,837 | 316,837 | |
| Exchange difference on retranslation | - | (391,202) | (391,202) | |
| Impairment of mining properties2 | 20,513,000 | 253,000 | 20,766,000 | |
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| At 30 June 2009 | 20,513,000 | 1,361,864 | 21,874,864 | |
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| NET BOOK VALUE | ||||
| At 30 June 2009 | 43,557,421 | 756,234 | 44,313,655 | |
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| At 31 December 2008 | 77,372,771 | 879,254 | 78,252,025 | |
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| 1. | At 30 June 2009 the commissioning of the Kalsaka mine in Burkina Faso was completed. Accordingly, amounts relating to the inventory of mined ore and recoverable taxes relating to the mine have been transferred from mining development costs to current assets at the period end. |
| 2. | In accordance with IAS 36, when events or circumstances suggest that the carrying value of assets may not be fully recoverable the Group carries out an impairment review. At 30 June 2009, and based on a number of factors, including continued underperformance at the Angovia Mine during the first half of 2009 and operational issues relating to the processing of transitional ore, management determined that impairment indicators did exist, and completed an impairment assessment of its Angovia Mine based on its value in use. The impairment assessment included revising the mineral resource estimates, excluding from the mine plan resources which require further technical assessment before the economic returns from the development thereof can be reliably estimated. As a result, the estimated Angovia life of mine has reduced to 30 months from 1 July 2009. The Company's estimated operational cash flows arising over the shortened life of mine were discounted to a net present value using a discount rate of 10% and an assumed gold price for the duration of the 30 month mine life of $950 per oz. This resulted in an impairment charge of US$21.9 million recognised in the income statement, of which US$1.1 million has been treated as an impairment of intangible fixed assets and US$20.8 million has been treated as an impairment of tangible fixed assets. Adverse changes in the key assumptions used in the calculation of the impairment review could result in a further impairment charge. The impairment test is particularly sensitive to the commodity price used. A reduction in the commodity price used in the impairment review of US$50 per oz would result in a further impairment of the Angovia mine of US$3.8 million at 30 June 2009. |
| 4. | SHARE CAPITAL |
| At 30 June 2009 | At 30 June 2008 | At 31 December 2008 | ||
| US$ | US$ | US$ | ||
| Authorised: | ||||
| 200,000,000 Ordinary shares of 1p each | 1,894,000 | 1,894,000 | 1,894,000 | |
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| No. | No | No | ||
| Issued and Fully Paid: | ||||
| Ordinary shares of 1p each | 117,136,331 | 84,228,391 | 96,851,331 | |
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| US$ | US$ | US$ | ||
| Issued and Fully Paid: | ||||
| Ordinary shares of 1p each | 2,135,966 | 1,591,688 | 1,840,697 | |
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Shares issued
On 27 March 2009, by way of placing, the Company issued 20,285,000 new ordinary shares of 1p for cash consideration of 40p each.
| 5. | Share based payments |
| The Company granted 858,550 options between 1 January 2009 and 30 June 2009 (1,682,100 between 1 January 2008 and 30 June 2008; 6,657,100 between 1 January 2008 and 31 December 2008). The options are exercisable between 15 December 2004 and 4 June 2018 subject to the vesting conditions set by the Board at the time of grant. The share options are valued bi-annually and take into account options that have lapsed during the period. The share options in issue at 30 June 2009 had a fair value, under IFRS 2 Share-based Payments, of between 11.6p and 68.6p each. At 30 June 2009 the amount charged/(credited) to the accounts was US$954,956 (30 June 2008: (US$196,851); 31 December 2008: US$766,494). |
| 6. | Loss per share |
| The calculation of loss per ordinary share on total operations is based on losses of US$29,512,802 (30 June 2008: US$4,338,194; 31 December 2008: US$945,005) and the weighted average number of ordinary shares outstanding of 108,041,919 (30 June 2008: 79,094,424; 31 December 2008: 87,230,853). There is no difference between the diluted loss per share and the basic loss per share presented. At 30 June 2009 there were 8,559,050 share options in issue which have a potentially dilutive effect on a basic profit per share in the future. |
| 7. | POST BALANCE SHEET EVENTS | |
| i) | In July 2009, it was announced that by the end of June, the operations at the Kalsaka Gold Mine had reached the required standard at which successful commissioning had been achieved, and the operation had now exited the commissioning phase. | |
| ii) | In September 2009, the US$10 million working capital facility previously arranged with RMB Australia Holdings Ltd was renewed for a period of 12 months. | |
Board of Directors
Algy Cluff Chairman and Chief Executive
Nicholas Berry Non-Executive Joint Deputy Chairman
Eileen Carr Finance Director and Joint Deputy Chairman
Douglas Chikohora Technical Director
Bobby Danchin Non-Executive Director
Tim Wadeson Non-Executive Director
Peter Cowley Non-Executive Director
Ronald Winston Non-Executive Director
Geoff Stanley Non-Executive Director
Company Secretary
Catherine Apthorpe
Registered office15 Carteret Street, London, SW1H 9DJ
Company Number
4822520
Website
www.cluffgold.com
Principal bankers
Adam and Company plc22 King Street, London SW1Y 6QY
Nominated adviser and joint broker
Evolution Securities Ltd100 Wood Street, London, EC2V 7AN
Joint broker
BMO Capital Markets Limited
95 Queen Victoria Street, London, EC4V 4HG
Solicitors
Maclay Murray and Spens LLP
One London Wall, London EC2Y 5AB
Fasken Martineau Du Moulin LLP
Toronto Dominion Bank TowerPO Box 20 Toronto, ON M5K 1N6
Auditors
PKF (UK) LLP Farringdon Place, 20 Farringdon Road, London EC1M 3AP
Registrars
Capita Registrars The Registry, 34 Beckenham Road, Beckenham, Kent BR3 4TU
Corporate/IR adviser
Smiths Corporate Advisory Limited
20 Northdown Road, London, N1 9BG
PR adviser
Farm Street Media 6 Marylebone Passage, London, W1W 8EX