Bellzone Mining Regulatory News (BZM)

1 September 2011

Bellzone Mining plc

("Bellzone" or the "Company")

Interim operations review and condensed financial statements

for the six months ended 30 June 2011

Bellzone Mining plc (AIM:BZM), the iron ore and nickel/copper company developing the Kalia Mine Project, the Forécariah JV and the Sadeka nickel/copper project in the Republic of Guinea, West Africa today announces its interim results for the six months ended 30 June 2011.

Highlights

·; $236m raised to fund the development of the Forécariah JV and ongoing work at Kalia. China International Fund's ("CIF") subsidiary, China Sonangol International (S) PTE subscribed to 79 million ordinary shares, for proceeds of $103 million and 102 million ordinary shares were placed with institutional investors providing $133 million

·; Development commenced at the Yomboyeli site of the fully funded Forécariah JV that remains on schedule for production in Q1 2012. Yomboyeli will commence production at a rate of 3-4 million tonnes per annum in 2012 increasing to a production rate of 10 million tonnes per annum in 2013

·; Office established in Beijing to facilitate Bellzone's interaction with CIF and CIF's engineering contractors (China Communications Construction Company Limited "CCCC" and China Rail Eryuan Engineering Company "CREEC"), which are involved in the implementation of the Forécariah JV project and are designing and implementing the 286km multi‐user rail and port infrastructure project, which will connect the Kalia Mine Project to the port of Matakan

·; Maiden JORC oxide resource announced of 111 million tonnes grading 38% Fe, from which 43 million tonnes of oxide product grading at 58% iron can be produced by standard beneficiation techniques. Oxide resource delineated from 2.3km2 directly overlaying the area of the magnetite JORC resource

·; 71% increase in the magnetite tonnage from a current JORC resource of 3.74 billion tonnes to a Company estimate of 6.4 billion tonnes on the central zone of Kalia I. This increase is based on results from the infill drilling programme and results arising from the oxide JORC resource programme

·; Cash balance at 30 August 2011 - $230 million

·; Bellzone remains fully funded to complete the bankable feasibility study on the Kalia Iron Project and bring the Forecariah JV project into production in Q1 2012.

The Interim Operations Review and Financial Report for the six months ended 30 June 2010 is available on the Company's website: www.bellzone.com.au

Nik Zuks, Chief Executive Officer, commented: "We are pleased with the progress made in all areas of Bellzone during the past six months. The tremendous effort by our team and the ongoing support of our business partner CIF and the Guinea government has delivered Bellzone to the stage where we have a project on schedule to deliver Guinea's first iron ore production in Q1 2012. This is an exciting prospect for all related parties and combined with Bellzone's strong cash balance positions the Company strongly as we move to develop Kalia which has a resource size of global significance. I look forward to keeping the market updated of our progress."

About Bellzone Mining Plc

Bellzone Mining plc is an exploration and resource development company with iron ore and nickel / copper permits in the Republic of Guinea, West Africa.

Kalia Mine

The Company's flagship project, the Kalia Mine Project, is planned to produce iron ore and iron ore concentrate at a rate of 50 million tonnes per annum in 2018. The Kalia Mine Project has a 3.74 billion tonne JORC resource and an initial oxide JORC resource producing 43 million tonnes of 58% product from just 4.2% of the 55km2 of the mapped surface oxides on the Kalia permit. Drilling results and internal estimates indicate that the Kalia Mine Project has the potential to host more than 10 billion tonne of magnetite and 2 billion tonne of oxide.

CIF - Project, Financing & Infrastructure Partner

Bellzone has a Definitive Agreement ("Agreement") with China International Fund Limited ("CIF"). The Agreement gives CIF right of first refusal to purchase the Kalia Mine Project's production at market rates and CIF commits to providing Bellzone commercially related funding for the development of the Kalia Mine Project.

The Agreement contains CIF's commitment to fund and build commercially operated rail and port infrastructure that will enable Bellzone to export production from the Kalia Mine Project. The infrastructure is being developed by Kalia Horizon Minerals Pte Limited, an entity that is 90% owned by CIF with Bellzone having a 10% carried interest. The Agreement provides for Bellzone to be the lowest cost user with permanent priority access.

Forécariah JV

Bellzone and CIF also have fully funded a joint venture to undertake the accelerated exploration and development programme at CIF's Forécariah iron permits that lie between 30 and 80 kilometres from the Guinea coast. Production is scheduled to start in Q1 2012 with an initial production rate of 3-4 mtpa of oxide ore, ramping to a rate of 10 mtpa in 2013.

Other activities

Bellzone has completed a mapping and surface sampling programme identifying highly prospective targets at its Sadeka Nickel/Copper Project. A VTEM aerial survey is currently being conducted to further define areas for a targeted drilling programme.

Bellzone has acquired the rights to buy 70% of Compagnie Miniere de L'Ouest Africain SA, incorporated and holding tenements in Mali. The company is undertaking geological studies on the tenements which are prospective for iron ore before making an investment decision.

Chairman's Statement

Over the past six months our Company continued building on its achievements of prior years. The outstanding progress on the Forécariah JV provides ample evidence of management's ability to deliver and we look forward to production in Q1 2012 in what remains a strong market for iron ore miners.

As I commented in our Annual Report for the year ended 31 December 2010, our focus for 2011 will be to continue to add value to the Company by:

·; completing the Kalia Mine Definitive Feasibility Study;

·; completing the maiden JORC for the oxide at Kalia;

·; commencing negotiations with CIF for the Kalia Mine financing, commercial off-take agreements and the transport agreement;

·; completing the magnetite metallurgical bulk sample;

·; ongoing oxide and magnetite resource development at Kalia with planned JORC upgrades to both;

·; developing the Forécariah JV project;

·; assessing the potential of the Sadeka Nickel / Copper targets; and

·; completing our assessment of the Mali targets.

The most significant corporate event addressed the important aspect of funding for the ongoing development of Kalia and the accelerated development of the Forécariah Joint Venture to achieve production in Q1 2012. The funding was secured both through a strategic placement with China Sonangol International (S) PTE, a subsidiary of our strategic partner, CIF, and an institutional equity placing. CIF subscribed for 79 million ordinary shares for proceeds of $103 million while the institutional placing of 102 million ordinary shares provided $133 million for a total capital raising of $236 million.

These funds will be utilised in the delivery of our focus areas as outlined above. We will continue to update the market on the progress made.

The interim operations and financial reports for 2011 clearly demonstrates how the management and staff of Bellzone have progressed in the focus areas. The staff, with the leadership of our experienced management team will continue to deliver the outcomes required to reduce the project risk, increase our resources and develop the opportunities that will add value to the Company.

Michael Farrow

Chairman

Operational and Financial Report

Introduction

The first half of 2011 has been eventful and the pace of development, particularly in the Forécariah region, has been outstanding. Bellzone is making very good progress with our partner, CIF, in implementing the Forécariah JV project and our Kalia and Sadeka projects remain on schedule.

The Guinea operations are managed from the in-country head office in Conakry, Guinea. The Conakry head office is focussed on providing the logistical and human resources support for the site based activities, government liaison and the financial services associated with the Guinea registered Bellzone subsidiary companies.

The Bellzone permits are located east of Conakry and accessed by an existing bitumen road.

·; The Kalia Iron Permit is approximately 360km east of Conakry, and is subject to the Mining Convention, which was decreed in law in August of 2010. The issue of the Convention and associated Concession application suspends the expiry of the research permit pending the issue of the Kalia Mine Concession. The Mining Concession is in the process of being issued. 50% of the Kalia II strike included on this permit is to be relinquished in accordance with the terms of the Company's definitive agreement with CIF.

·; The Kalia Polymetals Permit covered the same area as the Kalia Iron Permit and was awarded in May 2009 for a two year period. Under the terms of the Convention, Bellzone has first rights to any minerals or metals discovered on the Kalia permit.

·; The Faranah Iron Ore Permit which is immediately adjacent to the east of the Kalia Iron Permit was successfully renewed in October 2009 for a two year period and is to be relinquished in accordance with the terms of the Company's agreement with CIF.

·; The Sadeka Prospecting Permit location is approximately 150km south-east of Kalia and is centred on the town of Albadariah. The Sadeka Prospecting Permit covers an area of 2,086 km2 with the rights to explore for Ni, Cu, Co, Mn, Pt and Cr and has been renewed by Bellzone through to November 2012.

Guinea and the Mining Code

The Government of Guinea is reviewing the Mining Code that has been in place since 1995. Guinea has a long history of mining and this is not the first revision of a Mining Code in the Country's history.

The Kalia Mine has a valid Mining Convention based on Guinea's 1995 Mining Code at the time of application and our developments are proceeding in compliance with the requirements of the Mining Convention. The Mining Convention for the Kalia Mine and associated infrastructure was granted after three months of negotiation with a Government appointed multi-disciplinary committee and the subsequent due process where it was approved and signed by the Minister of Mines and Geology and the Minister of Finance on 27 July 2010. The Mining Convention was passed into Guinea law through Presidential Decree signed on 31 August 2010.

It is expected that the Mine Convention for the Forécariah JV will be subject to the conditions of the revised Mining Code.

Resource development

All resource development work is undertaken by experienced geologists to the standards required to support JORC resource statements. Bellzone increased the in-house geological expertise in Q2 2011 to include the capability to develop internal resource and grade models. The addition of this capability allows the Company to optimise resource development programmes and develop and define, to JORC standards, in-house resource estimates and forecasts.

CSA Global, based in the UK, are Bellzone's independent geologists and will continue to provide the independent services necessary to develop and validate the required JORC resource calculations and statements. 

Kalia Mine Project

The resource development for the Kalia Mine is managed from a well established exploration camp on the Kalia site, where all drilling and geological analysis occurs. The exploration camp has had additional facilities constructed and existing facilities upgraded to provide for improved amenities and additional accommodation required for the acceleration in resource development activity as well as the increase in visitors associated with the definitive studies that are being undertaken for the project.

The Kalia resource development continues to schedule. 

Magnetite resource development

The Kalia magnetites are amongst the largest in the world, measured over 6 kms of the 29 km 100% Bellzone owned Kalia strike and has yielded a 3.74 billion tonne magnetite JORC resource. 

An 18,000m diamond drilling ("DD") infill programme commenced in Q3 2010 with the objective of increasing the existing 690 million tonne measured and indicated ("M&I") component of the 3.74 billion tonne magnetite JORC resource to 1 billion tonnes. This work continues to plan and is on track to deliver an increased M&I JORC magnetite resource in Q3 2011.

The infill DD programme has defined an extension and thickening of the known magnetite mineralisation to the south and north of the 6 km central section of the 3.74 billion tonne magnetite JORC area.

The reverse circulation ("RC") oxide drilling programme has identified additional magnetite mineralisation and extensions to depths of 400m to the North West existing Kalia I magnetite JORC resource. This additional delineation of magnetite material along strike extends the previously delineated 6km Kalia I magnetite JORC resource by approximately 1 km.

Based on internal geological analysis and modelling of this latest data, the Company now estimates a magnetite tonnage increase from 3.74 billion tonnes to 6.4 billion tonnes, along approximately 7km of the 19km Kalia I strike. The criteria used to complete this estimation followed the process used by our independent consultants, CSA Global, in previous JORC compliant resource estimates. The Bellzone geological model will be provided to CSA Global for validation and will subsequently form the basis of the Q3 2011 JORC magnetite update.

Bellzone will continue with a 10,000m magnetite resource extension diamond drilling ("DD") programme during H2 2011. This extension programme is expected to add another 1 km to the currently projected 7km Kalia I magnetite strike length and will extend the forecast tonnage depths to the mine plan pit bottom at approximately the 100m relative level depth which translates to an effective depth of approximately 1,000 metres from the highest point of the Kalia range.

A Company estimation of the proposed extension programme has indicated potential to increase the Kalia I magnetite resource to more than 7 billion tonnes. The JORC statement on the H2 2011 extension drilling programme is expected to be announced in Q1 2012.

Magnetite metallurgy

A total to 16,997 samples (2m composites) were dispatched from Kalia to Australia for assay work. Grindability tests and concentrate recovery optimisation test work is ongoing and a bulk test to define the metallurgical parameters of the magnetite was completed in Q1 2011 and provided the following results:

 Further flow sheet optimisation test work is in progress in support of the definitive feasibility study.

Oxide

Bellzone has mapped 55 km2 of surface oxide material, which includes cangas, detritals and pisolites, over the Kalia permit area. The Company's oxide development plan aims to delineate approximately 1.5 billion tonnes (approximately 0.6 billion tonnes of saleable oxide product) of oxide material from five key target areas, which comprise 63% of Kalia's 55km2 surface oxide potential. The Company's objective is to have identified approximately 250 million tonnes of oxide product, which is sufficient to support 10 years of oxide production by year end.

The oxide development programme over the 5 target areas is set out in the following table:

The oxide development programme commenced on the Kalia central zone (Target 1) in May 2010 with the contracted RC drilling rig. The initial area drilled covered 2.3km2 directly overlaying the area of the magnetite JORC resource. The programme provided data that permitted an announcement of an initial inferred JORC oxide resource of 111 million tonnes grading at 38% Fe from which 43 million tonnes of oxide product grading at 58% iron could be produced by standard beneficiation techniques. 

The Kalia II detritals (Target 2) hold exciting potential due to their large area and easy access. The programme at Kalia II resulted in a 37% increase in the initial mapped area of 13.6km2 to 18.6km2. A wide space drilling campaign at the Kalia II detritals has been completed. Initial results are encouraging with detrital oxides present at depths of over 30 metres. The detrital material will require processing and test work is underway to establish this with results expected in Q4 2011.

Bellzone has purchased two new DD rigs and a second RC rig has been contracted to assist with the resource development programmes. These new rigs are expected to be fully operational in Q4 2011.

The oxide development programme is being further accelerated by implementing round the clock drilling and sampling. The programme will continue to the identified oxide targets and will quantify the economic oxides contained in the large area of mapped oxides on the Kalia site.

Oxide metallurgy

The JORC oxide resource established in Target 1 comprises varying grades of material related to different stages of oxidation and positions within the deposit. Areas of typical direct shipping ore ("DSO") style material, currently estimated at 10.8 million tonnes, exist along with oxide material of lower variable Fe grades. The oxides are draped over the ridge formations in the Kalia range where on the ridge summits we are typically finding higher grade in situ material and in the valleys where transported ore is present the grade drops off as more contaminants are prevalent.

This oxide zone will require removal prior to mining the magnetite resource. Composite samples were tested at an independent accredited laboratory in Perth, Australia to investigate maximising the oxide potential of the lower variable Fe grade zone through processing and beneficiation. The test work demonstrated that the low Fe content of the in situ oxide material can be readily beneficiated using standard gravity processes to produce 43 million tonnes of a consistent and quality saleable 58% Fe fines product.

A series of bulk sample from 3 test blasts have been sent to a laboratory in Perth, Western Australia, for processing to better define the beneficiation parameters, flow sheet and expected outcomes.

The ability to upgrade this variable oxide material provides for a larger resource base of saleable material and a revenue stream from the magnetite pre-strip. 

Forécariah Joint Venture

The Forécariah JV Permits are situated through an area between 30km and 80kms from the south coast of Guinea and have multiple iron ore targets. The Forécariah JV Permits are being jointly developed by both CIF and Bellzone. The JV partners have agreed that Bellzone will lead the resource and project development.

Following the positive results of the geologists report on the Forécariah JV Permits, announced on 31 January 2011, Bellzone and CIF have agreed to implement an accelerated programme to deliver initial production in Q1 2012. The operation is designed to achieve a production rate of 3-4 million tonnes per annum in 2012 and ramping up to a production rate of 10 million tonnes per annum in 2013.

First production will target the 2.0 million m3 of higher tenor material identified within the larger oxide cap at Yomboyeli. 

Resources and targets

The Forécariah JV has six main areas prospective for iron ore. The initial focus is on the Yomboyeli target with 3 further targets being earmarked for the next phase of evaluation.

Yomboyeli

Mapping, sampling of old pits, tunnels and trenches outlined multiple ridges of iron oxide with a total strike length of over 1200 metres. Surface samples from these areas and Niton Gun X-ray Fluorescent analysis ("XRF") have returned assays of 55% to 60% Fe. 2.7km2 of surface oxide has been mapped across the Yomboyeli target areas.

Resource development drilling completed to date indicate an iron oxide cap volume of 8 million m3 with bulk density readings ranging from 2.6t/m3 through 3.9t/m3. Parallel zones of iron schists beneath the oxide cap layer have been identified. This is based on wide space drilling over 1km2 of the mapped 2.7km2 oxide at surface. Ongoing exploration and mapping has identified additional prospective targets of oxide and magnetite that are outside the currently mapped 2.7km2.

The iron oxide in the mapped 2.7km2 area is a product of the Marampa beds that extend from within Sierra Leone to 8km NNW of Yomboyeli. The ongoing exploration programme will continue to assess and define this 8km strike of the prospective Marampa Beds within the JV license area.

Samples from the wide space drilling programme are being processed by an independent assay laboratory in Perth. Phase II of the RC drilling programme will infill the Phase I wide space drilling profiles. The results of the Phase II work and internal resource estimates based on ore body modelling with grades are expected to be announced in Q4 2011. 

Santiguiyah

The Santiguiyah prospect lies 12 kms north of Yomboyeli. Haematite/goethite clasts in loose iron fines in the form of scree have been mapped over 113km2. The surface samples and historic trenches indicate high potential for significant iron oxide tonnages across this area with the material lending itself to simple open pit mining and screening with minimal crushing. Test work is underway to assess the upgrade potential of this vast oxide area.

Layah

The area lies between Yomboyeli and Santiguiyah and is an extensive plain of surface iron oxides known locally as "cuirass", with sampling returning encouraging grades. The nature of the material and grades suggest it is potentially upgradeable to an exportable product.

Moussayah

The Moussayah prospect is near the regional centre of Doto and is prospective for both oxide and magnetite. The prospect was mapped over a length of 10 km with an oxide cuirass similar to the material mapped in the Layah area. Further work at Moussayah is expected to reveal the continuity of the oxide potential at this location.

Historical data indicates zones of banded iron formations and magnetite outcrops in the Moussayah area.

Development Strategy

The strategy to fast-track production from the Forécariah Iron Ore Project is based on using proven technology and methods in a scalable manner. By implementing a project based on mobile crushing and screening technology and a road and trans-shipping infrastructure concept, a production date target of Q1 2012 will be achieved.

Mining & Processing

The mining method will be a basic open pit, drill, blast, load and haul operation. The high grade oxide at Yomboyeli will then be crushed and screened for export. The crushing and screening will be done using modular, mobile plants that have already been purchased and have a delivery date of November 2011. 

Lower grade ore that could produce a saleable product through cost effective upgrading will be stockpiled for processing through beneficiation plants that will be constructed at a later date.

Mine to Port

Initial production will be moved by haul truck from the mine to the port. Construction of the 76.9km all weather haul road is slightly ahead of schedule. The 104 tonne prime mover and side-tip trailer combination have been ordered with delivery scheduled well ahead of the required date. 

The road haulage activity will eventually be replaced by the multi-user rail and port infrastructure, to be constructed by CIF. This will become available for use by the Forécariah sites in late 2013 / early 2014 allowing production to expand in excess of 10 million tonnes per annum and will reduce the operating costs.

Port to export vessel

A 10 million tonne per annum trans-shipping port facility has been designed and will be located at Konta on the Meloccoree River. The port construction is staged which allows for early production / export start in Q1 2012, with an expansion through 2012 to meet the forecast capacity of 10mtpa from a starting capacity of approximately 4 million tonnes per annum. The port facility will eventually be replaced by the multi-user export facility to be constructed by CIF at the Matakan site.

The product will be loaded onto bulk handling barges for towing down river by tug and out to sea to an anchored Panamax ship that has four grabs. The Panamax will provide an offshore stockpile and be in a position to unload barges and load export Cape size vessels. This method of operation will continue until the Matakan port is operational.

The marine fleet has been sourced and marine inspections and price negotiations are in progress with the fleet expected to be in place before they are required.

Sadeka Nickel-Copper Project

An exploration camp was established near Albadariah, approximately 56km north of the town Kissidougou that accommodates 20 people and is the base for exploration activities.

The Sadeka Prospecting Permit area is underlain by Archaean granite gneiss basement of the Dabola Group, greenstones of the Cambui Series and Late Archaean to Mesozoic intrusions of basite, hyperbasite, granitoid, pegmatite, gabbro and dolerite composition. The prospective rock units belong to the Cambui Series which contains nickel and copper bearing pyroxenites and ferruginous quartzite (metamorphosed banded iron formation ["BIF"]). Nickel and copper sulphides have been identified in pyroxenites at surface with quantities of up to 10% measured. These rocks are metamorphosed to upper amphibolite-granulite facies with a structural fabric to the north-west. The area has been intruded by Mesozoic gabbro-dolerite dykes with both north-west and east-west trends.

Highly prospective nickel-copper targets have been identified. The target zones incorporate nickel-copper bearing Pyroxenite that occur as scattered rafts within a "sea" of granitoids that both 'pre' and 'post-date' the Pyroxenite. The Pyroxenite is interpreted to have once been a mafic-ultramafic sequence of intrusive bodies prior to metamorphism. Examples of nickel-copper deposits within these rock types around the world include Noril'sk-Talnakh (Russia), Sudbury (Canada), Radio Hill (WA) and Mt Keith (WA).

The targets require further investigation and an investment of $1.5 million has been made to conduct an aerial VTEM survey. The survey will provide magnetic, electromagnetic and radiometric data to further define the 12 highly prospective targets and permit an optimised drilling programme. In addition, Bellzone has purchased a new DD rig that will be used target the results of the VTEM programme.

Bafing evaluation

In 2010 the Company entered into a contract with Compagnie Miniere De L'Ouest Africain SA, ("CMOA") which owns a number of the exploration and development rights to tenements in Mali.

In terms of the contract, Bellzone paid a $500,000 fee to obtain the exclusive rights to conduct due diligence on the 4,052km2 Bale Permits, which are 100% owned by CMOA, and to secure an option to acquire a 70% interest in CMOA. The due diligence will be conducted over a 12 month period and will include:

·; Gravity surveys

·; Geological mapping

·; Exploration drilling and sampling

·; Desktop study

·; Investment case development

Bellzone will decide whether to exercise the call option for acquiring the 70% interest in CMOA on completion of the due diligence studies. A further payment of $4,500,000 will be required should Bellzone exercise the option.

Bafing Holdings Limited, a 100% held subsidiary of Bellzone, was incorporated in Jersey to hold 100% of Bafing Iron SARL, incorporated in Mali to manage the due diligence process. Bellzone's evaluation of the Bale Permit has commenced and completion of the due diligence phase as well as the investment decision are expected in H2 2011.

Health and Safety

The health and safety of our employees is a key focus for Bellzone. The Company has maintained strong safety performance in a challenging working environment. Our performance is attributed to the focus of each individual, under strong management and supervision, being trained in and adhering to approved HSE management plans and processes that include correct use of personnel protective equipment and the importance of personal health and hygiene.

Our activities are focussed on every person being capable of risk assessment, hazard identification and taking appropriate control actions. Our working motto "Good Judgement Reduces Risk .... Bon Jugement Réduit Le Risque" reflects our strategy in this area. Management has a programme of continual monitoring and review that ensures that the processes are being effectively implemented.

Effective vector control measures outlined within our Malaria Control Policy, which including regular fogging, drainage and water exposure management, have also resulted in a significant decrease in cases of malaria on site, which in turn has increased productivity and well being amongst our employees.

A Job Safety Assessment programme has been implemented to define safe work procedures for dangerous tasks prior to tasks being undertaken. This will increase safety awareness and should focus the individual to think about what has to be done, prior to doing the task.

No lost time injuries have been recorded in 2011, maintaining our Total Recordable Injury Frequency Rate at 0.

Environment

Bellzone recognises the importance of minimising environmental impacts and is working effectively with the government to manage all environmental impacts associated with our project. Strict environmental procedures are in place to ensure appropriate environmental action plans and approvals are in place. Dedicated environmental management staff at a Company and site level ensures the effective implementation of plans and standards.

Our focus remains on control of erosion risks, soil bioremediation and rehabilitation, environmentally responsible drilling activities, waste management, minimal disturbance of vegetation, waterways, flora and fauna.

SGS Environment was awarded the tender for Environmental Impact Assessment ("EIA") studies for the Kalia mine site. Work started in May 2010 and was completed in Q2 2011 and has been submitted to the Government departments concerned for approval.

Community

Bellzone recognises the importance of working closely with the local community to ensure positive outcomes for all. Bellzone is working successfully with the local community and government to effectively manage and leverage the community impact aspects associated with our project. Our strategy centres on comprehensive and continuous community communication, involvement of the community in commercial and employment opportunities and active engagement on interface areas of traditional community activities and project activities.

The Company is held in high regard by the local community due to the longstanding practice of engagement that ensures community concerns are promptly addressed, goods and services are sourced locally, and employment opportunities are provided to the local community.

SGS Environment was awarded the tender for the Socio-Economic Impact Assessment ("SEIA") studies for the Kalia mine site. Work started in May 2010 and was completed in Q2 2011. The studies have established socio-economic baseline data which will feed into the local community development plans. Bellzone has been actively involved in these studies and continues to engage the community on scheduled activities and planned arrangements.

As we move quickly to the next phase in the Bellzone story, with the commencement of production in 2012, we will continue to keep all our stakeholders fully informed of developments. 

Capital raising

On 1 March 2011, the Company signed a definitive subscription agreement with CIF pursuant to which CIF subscribed for 79,000,000 ordinary shares in the capital of the Company at 80 pence per share (a premium of 1.9 per cent. over the closing price on 1 March 2011) to raise gross proceeds of £63.2 million (approximately $103 million). 

In addition, Bellzone launched a process to raise gross proceeds of up to US$100 million through the issue of new ordinary shares by way of the Institutional Placing with both new and existing institutional shareholders through an accelerated book-building process. Due to extremely strong institutional demand, the Company increased the size of the raise from $100 million to $133 million. Accordingly, a total of 102,000,000 new Ordinary Shares were placed at a price of 80 pence per share (a premium of 1.9 per cent. over the closing price on 1 March 2011), raising gross proceeds of £81.6 million (approximately $133 million).

The equity issues were approved at an Extraordinary General Meeting of Shareholders on 21 March 2011.

Cash

The Company had $246.2 million in cash and cash equivalents on hand at period end which is $207.1 million more on hand than at the start of the year. The increase is due to the equity placement in March 2011, less cash expenditure supporting asset acquisition and development during the period.

The management of cash and cash equivalents is a focal point for the Company and close control is exercised by management. Detailed budgets and expenditure authorisation processes exist to ensure all funds are applied only to planned and unplanned activities that contribute directly to the achievement of the Company objectives. 

Nikolajs Zuks

Chief Executive Officer and Managing Director

Condensed Consolidated Statement of Financial Position

Condensed Consolidated Statement of Comprehensive Incomefor the six months ended 30 June

Condensed Consolidated Statement of Changes in Equityfor the six months ended 30 June

Condensed Consolidated Statement of Cash Flowsfor the six months ended 30 June