25 May 2010 07:01
AIM: CLF / TSX: CFG
For release on 25 May 2010 at 7.01am
Cluff Gold plc
("Cluff Gold" or the "Company")
Preliminary Results for the year ended 31 December 2009
Cluff Gold, the dual AIM/TSX listed West African focused gold mining company, announces its results for the year ended 31 December 2009.
Highlights:
Corporate:
·; Cash at 31 December 2009 amounted to US$2.3 million;
·; Positive cash flow of US$8.8m in first 4 months of 2010 increasing the Company's cash position to US$11.1 million; and
·; Appointment of new senior management team members including Chief Operating Officer, Chief Financial Officer and Commercial Manager.
Baomahun Gold Project, Sierra Leone (100% ownership)
·; Preliminary Assessment (Scoping Study) for the Baomahun gold project in Sierra Leone is near completion, with initial mine optimisation results indicating that current defined resources are capable of sustaining a conventional CIP/CIL processing facility to profitably recover more than 1 million ounces of gold;
·; Further drilling has been ongoing since Q4 2009, with new mineralised structures discovered offering potential for additional resources;
·; A VTEM airborne geophysical survey commenced at the beginning of May to explore the remainder of the 12km prospective belt, and identify potential drilling targets;
·; Work for the final feasibility study is ongoing; and
·; Current NI43-101 compliant Mineral Resource Estimate is 1,103,000ozs (12.0 million tonnes grading 2.9g/t Au) (measured and indicated) and 957,000ozs (9.2 million tonnes grading 3.2 g/t Au) (inferred) as announced on 22 October 2009.
Kalsaka Gold Mine, Burkina Faso (78% ownership)
·; 54,428ozs of fine gold was poured in 2009 at an average cash cost (excluding refining costs) of US$767 per ounce;
·; 21,481ozs of fine gold was poured in Q1 2010 at an average cash cost (excluding royalties) of US$663/oz;
·; The mine exited commissioning on 30 June 2009; and
·; Initial drilling programme of 10,000m of reverse circulation drilling is planned to begin in Q2 2010 to increase resources.
Angovia Gold Mine, Côte d'Ivoire (90% ownership)
·; 21,632ozs of fine gold was poured in 2009 at an average cash cost (excluding royalties) of US$1,113/oz, including a strong Q4 2009 when 9,640ozs of fine gold was poured at an average cash cost (excluding royalties) of US$783/oz;
·; 6,709ozs of fine gold was poured in Q1 2010 at an average cash cost of US$750/oz;
·; An ongoing drilling programme is currently being undertaken to increase overall resources and reserves;
·; The mine exited commissioning on 30 September 2009; and
·; US$21.9m impairment charge was recognised in the year as a result of unexpected delays and cost overruns during commissioning.
Comment:
Algy Cluff, Chairman and Chief Executive, said today "2009 saw the Company make positive progress with both the Kalsaka and Angovia mines, following their commissioning, producing gold very near to our 100,000ozs annualized target. In 2010, we are confident that total production will meet this target and we intend to make additional progress on proving up our Baomahun gold project. The strengthened management team is already delivering improving results, evidenced by the production figures at reduced cash operating costs in 2010 to date, and I am delighted that our cash position continues to improve. Our intention in 2009 was to consolidate our position from where we could move forward. We have certainly achieved this judging from the progress we have already made in 2010."
Chairman and Chief Executive's Statement
Dear Shareholder,
2009 was a year of consolidation with regard to our two mines, Kalsaka and Angovia, and of marked resource increase at the Baomahun gold deposit.
Operations
Following the successful commissioning of the Kalsaka and Angovia mines, the Company's annualised production rate was close to our 100,000 ounces target. We are confident that the total production for 2010 will meet this target, the result of a comprehensive review of all aspects of our mining operation which occupied management during 2009. Experience demonstrates that heap leach projects do take time to establish themselves.
Our exploration programme at Angovia continues and we expect this initiative to extend Angovia's oxide life. As a consequence, the Directors believe that the Company could be in a position to write back part of the impairment charge that was taken in 2009 to reflect the unexpected delays and cost overruns. We anticipate the overall exploration potential for further oxide and sulphide material to be good.
Kalsaka has evolved into a consistent performer and is operating to budget so far this year. We remain focused on extending the life of Kalsaka and will be conducting an exploration programme during the course of this year centred on a number of defined and drill-tested targets.
Exploration
Baomahun continues to confirm your Directors' view that the project could become a world class gold deposit. Resources increased significantly in 2009 to 1.1 million ounces (measured and indicated), and 1 million ounces (inferred). A draft preliminary assessment (scoping study) has been delivered to the Company and we are now engaged in the process of finalising this, whilst simultaneously pressing ahead with the full feasibility study.
We believe that the potential at Baomahun is considerably greater than our current understanding, and whilst we wish to conclude the development of a mine based on the current resource area, we are also focusing on extending our knowledge across the remainder of the 12km prospective belt in 2010. Our exploration efforts here are fundamental to delivering Baomahun's full value for our shareholders.
Corporate
In February 2010 we were approached by a number of companies which expressed an interest in acquiring the Company and asked for permission to carry out a due diligence process. On the basis that the Directors and senior management have the responsibility to maximise value for shareholders, permission was granted. However, it is the view of the Board and senior management that this is not the appropriate moment for the Company to be sold, unless it is at a significant premium to its recent three month trading average.
We are consistently adding value to your Company through our programme of optimising operations and further exploration drilling and we believe that the Company's value will be further re-rated when our exploration in 2010 adds more ounces at all three of our projects. We are determined to avoid any temptation to acquire additional interests in other countries until our cash flow can be relied upon to support such a move as well as funding our exploration plans.
In 2009, Cluff Gold's management was strengthened in an effort to add experience and push the Company into the next stage of growth. As a consequence, a number of additions have been made to the senior management team. In particular, we are fortunate to have secured Peter Spivey as our Chief Operating Officer who is stationed in West Africa. His experience is rapidly being translated into improved performance at our operating mines, whilst freeing other senior technical personnel to focus on exploration, which continues to be a vital part of our future strategy to add increased value. I would like to thank all of our Company's staff for their hard work and dedication throughout the last year, and look forward to growing success.
Finally, our destiny is naturally allied to the gold price, which currently (at over US$1,200 per ounce) renders our margins attractive. There are signs that some governments, most notably and regrettably in Australia, are mounting an opportunistic attack on the mining industry's profits, which we urge the governments of West African nations not to follow. These countries have established sensible mining investment codes which have resulted in West Africa being perhaps the most compelling mining destination in the world at present as the geology is complemented by workable tax environments. To change this formula would, I submit, be dangerous except insofar as any royalty increases be accompanied by the introduction of a sliding royalty scale to protect profit at lower prices.
J.G Cluff
Chairman and Chief Executive
24 May 2010
Financial review
The Group's operating loss before impairment charges for the year is US$12.5 million, which is not easily comparable to the US$248,000 loss in 2008 due to a number of factors including a one-off credit of US$9 million in respect of the acquisition of the remaining 40 per cent of the Baomahun gold project in 2008.
Following the successful commissioning of the Kalsaka gold mine on 30 June 2009 and the Angovia gold mine on 30 September 2009 the consolidated income statement includes, for the first time, the revenue and gross profit from these operations in the post commissioning period, which total US$39.7 million and US$4.6 million respectively. For the majority of the year, the gross profit from Kalsaka and Angovia has been capitalised within non-current assets, with only operating costs that are not directly attributable to mine commissioning included in the income statement. Such operating costs have resulted in an increase to the loss for the year of US$7.6 million compared to 2008. This reflects the fact that significant improvements in supporting infrastructure were put in place in the latter part of 2008, and the 2009 costs reflect a full year for such expenditure. A significant provision against VAT recoverable in Côte d'Ivoire is also included within this amount, which is discussed in more detail below.
In 2009, for the first time, the financial statements include detailed information on the financial results of the Group in the format presented to management. This disclosure, which is set out in note 4, ignores the impact of the commissioning phase for the Group's operating mines, including all revenue and costs within the earnings figures presented. Using this method of reporting the Group's earnings before interest, tax, depreciation and amortisation for 2009 has increased by US$17.9m compared to 2008, from a loss of US$13.6m to a gain of US$4.3m.
The assets of the Group at 31 December 2009 totalled US$113.9 million, compared to US$128.5 million at 31 December 2008. The most significant change in assets in the year was the US$21.9 million impairment charge recognised against the Angovia mine.
Non-current assets reduced by a total of US$33.9 million in 2009. As well as the US$21.9 million impairment charge, the commissioning of the Angovia and Kalsaka mines in 2009 had a significant impact, with the transfer of US$11.6 million from mine development costs to inventories at the end of the commissioning period, together with a transfer of US$1.2 million to trade and other receivables relating to VAT recoverable in Burkina Faso.
Delays in the repayment of VAT in both Burkina Faso and Côte d'Ivoire have had a significant impact on the balance sheet at 31 December 2009. In Burkina Faso, a total of US$7.3 million was recoverable, whilst in Côte d'Ivoire US$3.9 million was due at the year-end. These delays had a marked impact on the year-end cash balance, which totalled US$2.3 million at 31 December 2009 (2008: US$5.2 million). Significant progress has been made with recovery in Burkina Faso since the year end, with US$4.4 million recovered in February and March 2010. No amounts have yet been recovered in Côte d'Ivoire. Due to the uncertainty on the recovery thereof, the Directors have increased the provision against irrecoverable VAT in Côte d'Ivoire to US$1.9 million at 31 December 2009, representing 48 per cent of the total amount due, and classified the balance as recoverable in more than one year.
For further information, please contact:
| Cluff Gold plc J.G. Cluff - Chairman and Chief Executive Pete Gardner - Chief Finance Officer Tel: +44 (0) 20 7340 9790 | Evolution Securities Limited Rob Collins Tim Redfern Tel: +44 (0) 20 7071 4300 |
| Pelham Bell Pottinger
Investor Relations (Global) Charles Vivian Klara Kaczmarek Tel: +44 (0) 20 7861 3800 | Farm Street Communications Ltd
Press Relations (U.K.) Simon Robinson +44 (0) 7593 340 107 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.
Douglas D. Chikohora has reviewed and approved the information contained in this announcement. Mr Chikohora (MSc, MIMMM, CEng) is Technical Director of the Company. Further information regarding Group resources may be found in tabular form on the Company's website and in the Annual Report. A technical report prepared by SRK Consulting (UK) Limited entitled "Technical Review of the Baomahun Gold Exploration Project, Sierra Leone," was filed on 17 February 2009 at www.sedar.com.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the year ended 31 December 2009
|
|
| 2009 | 2008 |
|
|
| US$000 | US$000 |
| Continuing operations Revenue |
| 39,659 | - |
| Cost of Sales |
| (35,085) | - |
|
|
|
|
|
| Gross Profit |
| 4,574 | - |
|
General and administrative expenses |
| (7,533) | (7,121) |
| Other operating costs |
| (8,893) | (1,302) |
| Exploration and development expenses |
| (656) | (781) |
| Impairment of mining properties |
| (21,914) | - |
| Negative goodwill arising on acquisition of subsidiary |
| - | 8,956 |
| Profit on disposal of property, plant & equipment |
| 7 | - |
|
|
|
|
|
| Operating loss |
| (34,415) | (248) |
|
|
|
|
|
| Investment income |
| 727 | 403 |
| Finance costs |
| (1,807) | (1,100) |
|
|
|
|
|
| Loss before taxation |
| (35,495) | (945) |
|
|
|
|
|
| Income tax |
| 1,228 | - |
|
|
|
|
|
| Loss for the period attributable to owners of the parent |
| (34,267) | (945) |
|
|
|
|
|
| Other comprehensive income |
|
|
|
| Exchange differences on translating foreign operations |
| 1,974 | (6,015) |
| Profit on partial disposal of subsidiaries |
| - | 8,415 |
|
|
|
|
|
| Other comprehensive income for the year, net of taxation |
| 1,974 | 2,400 |
|
|
|
|
|
|
|
|
|
|
| Total comprehensive income for the year attributable to owners of the parent |
| (32,293) | 1,455 |
|
|
|
|
|
|
|
|
|
|
| Loss per share from continuing operations Basic and diluted (cents) |
| (30.25) | (1.08) |
|
|
|
|
|
|
|
|
|
|
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 31 December 2009
|
|
| 2009 | 2008 |
|
|
| US$000 | US$000 |
| ASSETS |
|
|
|
| Non-current assets |
|
|
|
| Intangible fixed assets |
| 44,695 | 43,071 |
| Property, plant and equipment |
| 39,485 | 78,252 |
| Other receivables |
| 2,043 | - |
| Deferred tax asset |
| 1,228 | - |
|
|
|
|
|
| Total non-current assets |
| 87,451 | 121,323 |
|
|
|
|
|
| Current assets |
|
|
|
| Trade and other receivables |
| 8,357 | 1,957 |
| Inventories |
| 15,790 | - |
| Cash and cash equivalents |
| 2,273 | 5,171 |
|
|
|
|
|
| Total current assets |
| 26,420 | 7,128 |
|
|
|
|
|
| TOTAL ASSETS |
| 113,871 | 128,451 |
|
|
|
|
|
|
|
|
|
|
| CAPITAL AND RESERVES |
|
|
|
| Share capital |
| 2,224 | 1,841 |
| Share premium |
| 101,993 | 89,407 |
| Merger reserve |
| 15,107 | 15,107 |
| Share option reserve |
| 3,952 | 3,152 |
| Currency translation reserve |
| 2,674 | 700 |
| Accumulated losses |
| (39,643) | (5,376) |
|
|
|
|
|
| total equity attributable to owners of the parent |
| 86,307 | 104,831 |
|
|
|
|
|
| NON-Current liabilities |
|
|
|
| Provisions |
| 4,578 | 4,103 |
|
|
|
|
|
| Total non-current liabilities |
| 4,578 | 4,103 |
|
|
|
|
|
|
|
|
|
|
| Current liabilities |
|
|
|
| Trade and other payables |
| 22,986 | 19,517 |
|
|
|
|
|
| Total current liabilities |
| 22,986 | 19,517 |
|
|
|
|
|
|
|
|
|
|
| TOTAL LIABILITIES |
| 27,564 | 23,620 |
|
|
|
|
|
| TOTAL EQUITY AND LIABILITIES |
| 113,871 | 128,451 |
|
|
|
|
|
|
|
|
|
|
| consolidated statement of changes in equity For the year ended 31 December 2009
|
consolidated statement of cash flows
For the year ended 31 December 2009
|
| 2009 | 2008 |
|
| US$000 | US$000 |
| CASH FLOWS USED IN OPERATING ACTIVITIES |
|
|
| Operating loss for the period | (34,415) | (248) |
| Depreciation | 7,385 | 79 |
| Impairment of mineral properties | 21,914 | - |
| Increase/(decrease) in trade and other payables | 3,545 | (39) |
| (Increase)/decrease in trade and other receivables | (7,132) | 218 |
| Increase in inventories | (3,108) | - |
| Increase in provisions | 248 | - |
| Share option charge | 742 | 766 |
| Exploration costs written off | 621 | 781 |
| Negative goodwill on acquisition | - | (8,956) |
| Profit on disposal of property, plant and equipment | (7) | - |
| Exchange loss | 1,391 | 718 |
|
|
|
|
| NET CASH FLOWS USED IN OPERATING ACTIVITIES | (8,816) | (6,681) |
|
|
|
|
| CASH FLOWS USED IN INVESTING ACTIVITIES |
|
|
| Interest receivable | 23 | 397 |
| Interest payable | (1,035) | (73) |
| Purchase of property, plant and equipment | (2,290) | (25,703) |
| Purchase of intangible assets | (2,920) | (6,659) |
| Proceeds from sale of property, plant and equipment | 15 | - |
|
|
|
|
| NET CASH FLOWS USED IN INVESTING ACTIVITIES | (6,207) | (32,038) |
|
|
|
|
| CASH FLOWS FROM financing ACTIVITIES |
|
|
| Proceeds from the issue of share capital | 13,931 | 26,602 |
| Issue costs paid | (962) | (1,878) |
| Net proceeds from, loan | - | 5,929 |
|
|
|
|
| NET CASH FLOWS FROM FINANCING ACTIVITIES | 12,969 | 30,653 |
|
|
|
|
|
|
|
|
|
|
|
|
| NET DECREASE IN CASH AND CASH EQUIVALENTS | (2,054) | (8,066) |
| Cash and cash equivalents at start of period | 4,416 | 13,922 |
| Exchange losses on cash and cash equivalents | (89) | (1,440) |
|
|
|
|
| CASH AND CASH EQUIVALENTS AT END OF PERIOD | 2,273 | 4,416 |
|
|
|
|
|
|
|
|
|
|
|
|
| CASH AND CASH EQUIVALENTS COMPRISE |
|
|
| Cash at bank | 2,273 | 3,151 |
| Short term deposits | - | 2,020 |
|
|
|
|
|
| 2,273 | 5,171 |
| Bank overdraft | - | (755) |
|
|
|
|
| Cash and cash equivalents | 2,273 | 4,416 |
|
|
|
|
Notes
1. Financial statements
The financial information set out in this preliminary announcement does not constitute statutory accounts within the meaning of Section 434 of the Companies Act 2006 for the year ended 31 December 2009 or for the year ended 31 December 2008, but is derived from those accounts. The financial statements for 2009 will be delivered to the Registrar of Companies following the Company's Annual General Meeting. The auditors have issued an unqualified report on these accounts.
2. Summary of significant accounting policies
Basis of preparation and going concern
The consolidated financial statements have been prepared in accordance with applicable International Financial Reporting Standards as adopted by the European Union and with those parts of the UK Companies Act 2006 applicable to companies reporting under IFRS.
The directors regularly review cashflow forecasts to determine whether the Group has sufficient cash reserves to meet future working capital requirements, progress its exploration projects and to be able to take advantage of business opportunities that may arise.
The Group's cashflows from mining operations have improved since the year end; based on this performance and the forecast cashflows for the next twelve months, the directors are satisfied that the Group has sufficient cash resources to continue its operations and meet its commitments for the foreseeable future. They have therefore concluded that it is appropriate for the financial statements to be prepared on the going concern basis. In arriving at this conclusion they have taken into consideration that the group has currently drawn US$6m on a borrowing facility which ends on 31 August 2010 and which, although renewal discussion are ongoing, may be repaid.
The consolidated financial statements incorporate the financial statements of the Company and enterprises controlled by the Company (its subsidiaries) made up to 31 December each year.
Mining and development costs
Mining and development costs include appropriate deferred exploration and evaluation costs transferred on development of an exploration property. Before reclassification such costs are assessed for impairment, with any impairment loss recognised in the statement of comprehensive income.
All subsequent development costs are capitalised, including all costs incurred during the commissioning of the project that are directly related to that operation. Any revenues generated during this period are treated as a contribution against those costs and credited against mining and development costs. At the end of the commissioning phase, when the mine is capable of substantially operating in the manner intended by management, capitalisation ceases and the mining assets are amortised over the estimated life of the commercial ore reserves on a unit of production basis.
Deferred exploration and evaluation costs
All costs incurred prior to obtaining the legal right to undertake exploration and evaluation activities on a project are written off as incurred.
All costs associated with mineral exploration and investments are capitalised on a project by project basis, pending determination of the feasibility of the project. Costs incurred include appropriate technical and administrative expenses. If an exploration project is successful, the related costs will be transferred to mining assets and amortised over the estimated life of the commercial ore reserves on a unit of production basis. Where a project is relinquished, abandoned, or is considered to be of no further commercial value to the Group, the related costs are written off.
The recoverability of deferred exploration costs is dependent upon the discovery of economically recoverable ore reserves, the ability of the Group to obtain necessary financing to complete the development of the ore reserves and future profitable production or proceeds from the disposal thereof.
3. Dividends
The directors do not recommend the payment of a dividend (2008: nil).
4. Segment reporting
The Group has implemented IFRS 8 'Operating Segments' with effect from 1 January 2009. Operating segments have been identified on the basis of internal reports about components of the Group that are regularly reviewed by the Group's chief operating decision maker. The Group's chief operating decision maker is considered by management to be the board of directors. The operating segments included in internal reports are determined on the basis of their significance to the Group. In particular, operating mines are reported as separate segments together with exploration projects that have significant capitalised expenditure. An analysis of the Group's business segments is set out below.
|
| Kalsaka | Angovia | Baomahun | All other segments | Total |
|
| US$000 | US$000 | US$000 | US$000 | US$000 |
| Year ended 31 December 2009 |
|
|
|
|
|
| External revenue - sale of gold and silver | 54,107 | 22,823 | - | - | 76,930 |
| Direct costs of production | (38,155) | (21,006) | - | - | (59,161) |
| Other operating and administrative costs | (5,162) | (3,752) | - | (4,594) | (13,508) |
|
|
|
|
|
|
|
| Segmental result | 10,790 | (1,935) | - | (4,594) | 4,261 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total assets | 60,761 | 35,431 | 38,732 | 2,031 | 136,955 |
| Capital expenditure | 5,700 | 1,844 | 3,353 | 34 | 10,931 |
|
|
|
|
|
|
|
|
| Kalsaka | Angovia | Baomahun | All other segments | Total |
|
| US$000 | US$000 | US$000 | US$000 | US$000 |
| Year ended 31 December 2008 |
|
|
|
|
|
| External revenue - sale of gold and silver | 7,081 | 5,664 | - | - | 12,745 |
| Direct costs of production | (6,891) | (13,357) | - | - | (20,248) |
| Other operating and administrative costs | (336) | (549) | - | (5,200) | (6,085) |
|
|
|
|
|
|
|
| Segmental result | (146) | (8,242) | - | (5,200) | (13,588) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total assets | 49,588 | 30,436 | 33,925 | 3,114 | 117,063 |
| Capital expenditure | 26,356 | 13,956 | 28,053 | 784 | 69,149 |
|
|
|
|
|
|
|
In 2009 the Group had one customer (2008: one).
The segmental result reported represents earnings before interest, tax, depreciation and amortisation (EBITDA) and excludes share option charges, which is the measure of segmental profit regularly reported to the board of directors. The accounting policies of the reporting segments are different from the Group's accounting policies as follows:
·; Pre-commissioning income and expenditure at operating mines is not capitalised in the segmental results.
·; Income is accrued for gold bullion on hand at the period end in segmental results and, accordingly, no stock is recognised for this item.
·; The depreciation charge against segmental assets is based on a different total asset cost compared to the statutory accounts due to the fact that income and expenditure is not capitalised during the commissioning period. In addition, the total asset cost is depreciated from the commencement of mining operations.
A reconciliation of segmental revenue to the statutory financial statements is as follows:
|
| 2009 US$000 | 2008 US$000 |
|
|
|
|
| Revenue for reportable segments | 76,930 | 12,745 |
| Revenue capitalised during commissioning phase of mining operations | (37,271) | (12,745) |
|
|
|
|
| Revenue for statutory accounts | 39,659 | - |
|
|
|
|
A reconciliation of EBITDA to loss before taxation is as follows:
|
| 2009 US$000 | 2008 US$000 |
|
|
|
|
| EBITDA for reportable segments | 4,261 | (13,588) |
| Depreciation and amortisation | (7,385) | (79) |
| Impairment of non-current assets | (21,914) | - |
| Share based payments | (742) | (766) |
| Net interest payable | (1,080) | (697) |
| Profit on disposal of fixed assets | 7 | - |
| EBITDA capitalised during commissioning phase of mining operations | (5,583) | 6,728 |
| Accrued profit for gold bullion stock at year-end | (1,047) | - |
| Exploration costs written-off | (621) | (781) |
| Exchange rate variance | (1,391) | (718) |
| Negative goodwill arising on acquisition of subsidiary | - | 8,956 |
|
|
|
|
| Profit before taxation | (35,495) | (945) |
|
|
|
|
A reconciliation of segmental assets to the statutory financial statements is as follows:
|
| 2009 US$000 | 2008 US$000 |
|
|
|
|
| Total assets for reportable segments | 136,955 | 117,063 |
| EBITDA capitalised during commissioning phase of mining operations | 5,962 | 11,545 |
| Differences in depreciation and amortisation | (6,085) | (157) |
| Impairment of non-current assets | (21,914) | - |
| Accrued profit for gold bullion stock at year-end | (1,047) | - |
|
|
|
|
| Total assets | 113,871 | 128,451 |
|
|
|
|
A reconciliation of segmental capital expenditure to the statutory financial statements is as follows:
|
| 2009 US$000 | 2008 US$000 |
|
|
|
|
| Capital expenditure for reportable segments | 10,931 | 69,149 |
| EBITDA capitalised during commissioning phase of mining operations | (5,583) | 6,728 |
|
|
|
|
| Capital expenditure | 5,348 | 75,877 |
|
|
|
|
5. Loss per share
|
| 2009 | 2008 |
| The calculation of the basic and diluted earnings per share is based on the following data: | US$000 | US$000 |
|
|
|
|
| Losses for the purposes of earnings per share (net loss for the year attributable to equity holders of the parent) | (34,267) | (945) |
|
|
|
|
| Number of shares |
|
|
| Weighted average number of ordinary shares for the purposes of earnings per share ('000's) | 113,280 | 87,231 |
|
|
|
|
There is no difference between the diluted loss per share and the basic loss per share presented. Due to the loss incurred in the period the effect of the share options in issue is anti-dilutive.
At 31 December 2009 there were 5,969,050 (31 December 2008: 9,710,100) share options in issue which would have a potentially dilutive effect on the basic profit per share in the future.
6. Intangible fixed assets
|
| Exploration and mining rights
US$000 | Deferred exploration and evaluation costs US$000 | Total
US$000 |
| COST |
|
|
|
| At 1 January 2008 | - | 10,693 | 10,693 |
| Additions | 30,223 | 7,401 | 37,624 |
| Transfer to property, plant and equipment | - | (446) | (446) |
| Exploration costs written off | - | (781) | (781) |
| Exchange differences | - | (4,019) | (4,019) |
|
|
|
|
|
| At 31 December 2008 | 30,223 | 12,848 | 43,071 |
| Additions | - | 2,988 | 2,988 |
| Exploration costs written off | - | (621) | (621) |
| Exchange differences | - | 1,439 | 1,439 |
|
|
|
|
|
| At 31 December 2009 | 30,223 | 16,654 | 46,877 |
|
|
|
|
|
| AMORTISATION |
|
|
|
| At 1 January 2008 and 31 December 2008 | - | - | - |
| Charge for the year | 1,034 | - | 1,034 |
| Impairment charge | 1,148 | - | 1,148 |
|
|
|
|
|
| At 31 December 2009 | 2,182 | - | 2,182 |
|
|
|
|
|
| NET BOOK VALUE |
|
|
|
| At 31 December 2009 | 28,041 | 16,654 | 44,695 |
|
|
|
|
|
|
|
|
|
|
| At 31 December 2008 | 30,223 | 12,848 | 43,071 |
|
|
|
|
|
|
|
|
|
|
Included within Exploration and mining rights is an amount of US$21.8 million in relation to the Baomahun Gold Project. This amount is recoverable through the exploitation of the project.
In addition, the Group holds two mining licences relating to the Kalsaka and Angovia Gold Mines. The value assigned to these licences amount to US$6 million and US$2.4 million respectively. Details of the impairment of the Angovia mining licence recognised during the year are set out in note 7.
7. Property, plant & equipment
|
| Mining, development and associated property, plant and equipment cost US$000 | Motor vehicles, office equipment, fixtures & computers US$000 | Total
US$000 | ||
| COST |
|
|
| ||
| At 1 January 2008 | 41,395 | 1,798 | 43,193 |
| |
| Additions | 37,744 | 509 | 38,253 |
| |
| Transfer from intangible assets | 446 | - | 446 |
| |
| Exchange differences | (2,212) | (245) | (2,457) |
| |
|
|
|
|
|
| |
| At 31 December 2008 | 77,373 | 2,062 | 79,435 |
| |
| Additions, net of results from commissioning phase1 | 1,521 | 839 | 2,360 |
| |
| Transfer to inventories2 | (11,621) | - | (11,621) |
| |
| Transfer to trade and other receivables2 | (1,189) | - | (1,189) |
| |
| Disposals | - | (9) | (9) |
| |
| Transfer between asset categories3 | (1,047) | 1,047 | - |
| |
| Exchange differences | 10 | 60 | 70 |
| |
|
|
|
|
|
| |
| At 31 December 2009 | 65,047 | 3,999 | 69,046 |
| |
|
|
|
|
|
| |
| DEPRECIATION |
|
|
|
| |
| At 1 January 2008 | - | 523 | 523 |
| |
| Charge for the year | - | 822 | 822 |
| |
| Exchange differences | - | (162) | (162) |
| |
|
|
|
|
|
| |
| At 31 December 2008 | - | 1,183 | 1,183 |
| |
| Charge for the year | 6,809 | 761 | 7,570 |
| |
| Impairment charge4 | 20,766 | - | 20,766 |
| |
| Exchange differences | - | 42 | 42 |
| |
|
|
|
|
|
| |
| At 31 December 2009 | 27,575 | 1,986 | 29,561 |
| |
|
|
|
|
|
| |
| NET BOOK VALUE |
|
|
|
| |
| At 31 December 2009 | 37,472 | 2,013 | 39,485 |
| |
|
|
|
|
|
| |
|
|
|
|
|
| |
| At 31 December 2008 | 77,373 | 879 | 78,252 |
| |
|
|
|
|
|
| |
|
|
|
|
|
| |
1. In accordance with industry practice all costs and revenues during the commissioning phase of the operation are capitalised that are directly attributable to the operations.
2. At 30 June 2009 the commissioning of the Kalsaka mine in Burkina Faso was completed and at 30 September 2009 the commissioning of the Angovia mine in Côte d'Ivoire 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 during the period.
3. During 2009 certain of the Group's tangible fixed assets located at the Kalsaka and Angovia mines have been reclassified from mine development costs to equipment as the directors consider that this is a more appropriate asset classification. The prior period has not been adjusted for this change in accounting policy on the basis that this change would have no effect on the total value of tangible fixed assets or cumulative depreciation thereon at 1 January 2008 or 31 December 2008.
4. The impairment loss has been recognised in respect of the Group's Angovia mine, which is a cash generating unit identified as a reportable segment under IFRS 8. Indirect taxes recoverable in Côte d'Ivoire has been excluded from the impairment loss calculation for the Angovia mine as this balance will be recovered in a different manner from the other net assets. A separate impairment provision has been made against indirect taxes recoverable.
A number of factors led to the recognition of the impairment loss, including the rate of losses incurred at the Angovia Mine during the first half of 2009 and operational issues relating to the processing of transitional ore. The recoverable amount of the Angovia mine has been calculated as its value in use based on the updated mineral resource estimate announced on 8 March 2010, using a discount rate of 10% and an assumed gold price for the duration of the 28 month mine life of $1,000 per oz.
This resulted in an impairment charge of US$21.9 million recognised in profit or loss, of which US$1.1 million has been treated as an impairment of intangible fixed assets and US$20.8 million has been treated as an impairment of tangible fixed assets.
Adverse changes in the key assumptions used in the calculation of the value in use could result in a further impairment charge. The table below indicates the additional impairment that would be required from adverse changes to key assumptions:
|
|
| US$'000 |
|
| Reduce gold price by 10% to US$900/oz | 5,216 |
|
| Increase operation costs by 10% | 3,656 |
|
|
|
|
8. Post balance sheet events
In March 2010, 300,000 share options of 1p each were exercised. These shares were admitted to AIM on 8 April 2010.
Annual Report
The Annual Report will be sent to all shareholders on or around 4 June 2010 and will be available on the Company's website at www.cluffgold.com. Additional copies will be made available to the public, free of charge, from the Company's registered office at 15 Carteret Street, London SW1H 9DJ.
Annual General Meeting
The Company's Annual General Meeting will be held at the offices of Maclay Murray & Spens LLP, 12th floor, One London Wall, London EC2Y 5AB on 28 June 2010 at 10.00a.m.