Sable Mining Africa Regulatory News (SBLM)

RNS Number : 2336T

Sable Mining Africa Limited

24 September 2010

 

 Sable Mining Africa Ltd/ Index: AIM / Epic: SBLM / Sector: General Financial

24 September 2010

Sable Mining Africa Ltd ('Sable' or 'the Company')

Final Results

 

Sable Mining Africa Ltd, the AIM listed company focused in the mining sector in sub-Saharan Africa, announces its results for the year ended 31 March 2010.

 

Overview

 

·; Successful implementation of new strategy focussing on early stage mining opportunities in sub-Saharan Africa, with a particular focus on the coal and iron ore industries

·; Investments secured in two highly prospective opportunities:

o Delta Mining Consolidated Ltd - four major coal interests in South Africa and Botswana

o Monaf Investments (Private) Ltd which holds the Lubu Coal concession in Zimbabwe

·; South African & Botswana interests include:

o Rietkuil metallurgical and thermal coal resource estimate of 199.9 million tonnes

o Springbok Flats project, which has in-situ gross tonnages currently modelled at over 2 billion tonnes of metallurgical and thermal coal

o Limpopo coal project, which has a resource target of 400 million tonnes of metallurgical and thermal coal

o 12 greenfield concession blocks covering 8,682 sq km and straddling known coal bearing sediments in eastern Botswana, adjacent to CIC Energy Corp. land which is subject to a take-over by a major Indian group

·; Zimbabwean interests include:

o Prospective Lubu licence area where first step is to confirm the initial 330 million tonnes to SAMREC compliant status

·; Strong treasury following two separate fund raisings

·; Reinforced management team with two appointments to the Board

·; Actively evaluating additional projects in Southern, Central and West African countries

·; Strong news flow anticipated

 

Sable Mining CEO Andrew Groves said, "With our new strategy of investing in mining projects now implemented, we have already gained exposure to what we believe to be exceptional metallurgical and thermal coal assets in South Africa, Botswana and Zimbabwe.

We are actively evaluating a number of opportunities which we believe will enhance our portfolio and potentially contribute to a considerable re-rating of our stock. We have a strong treasury in which to implement our strategy and the support of key institutions providing us with a strong foundation to rapidly build shareholder value."

 

Chairman's Statement

 

As shareholders will be aware we have successfully transformed the business by implementing a new strategy to invest in early stage mining opportunities in sub-Saharan Africa, with a particular focus on the coal and iron ore industries. The realignment of our business away from developing bio-ethanol related assets, implemented due to the economic turmoil of late 2008 and early 2009 and effected in November 2009 following an Extraordinary General Meeting, has already been successful with two significant investments made in the coal sector.

 

Our investment in Delta Mining Consolidated Limited ('DMC'), which marked Sable's first venture into the sector, has provided us with exposure to four major coal interests in South Africa and Botswana and our subsequent investment into Monaf Investments (Private) Limited ('Monaf'), which holds the Lubu Coal concession ('Lubu Licence') in the Bulawayo Mining District of Zimbabwe, has further bolstered our portfolio of exploration and development assets.

 

Our new strategy has gained significant momentum with the investment community, gaining strong support from new and existing institutional investors. We raised an initial £27 million in December 2009 and then US$125 million in April this year providing us a strong treasury in excess of US$160 million. I believe that the support confirmed through this process underpins the confidence in Sable Mining's new strategy and conviction in its ability to deliver results to shareholders.

 

Our South African interests, through DMC, include the Rietkuil coal deposit, on which a Bankable Feasibility Study ('BFS') is due be completed in November 2010. This will be based on the Feasibility Study finalised by DMC in September 2009, which was completed to a +20% -20% accuracy for a 3 million tonne per annum Run of Mine operation. The project, which is adjacent to Exxaro Resources Limited's Leeuwpan Colliery and Kuyasa Mining (Pty) Limited's Delmas Colliery situated in the Mpumalanga Province, has an in situ metallurgical and thermal coal resource estimate of 199.9 million tonnes, of which 156.9 million tonnes is in the Measured category and 42 million tonnes in the Indicated category. The project has high quality thermal and metallurgical coal and is located in an established producing area with excellent infrastructure which will be beneficial both to the construction of the mine and the delivery of product to market. 

 

Additionally DMC is evaluating the Springbok Flats project, which has in situ gross tonnages currently modelled at over 2 billion tonnes of metallurgical and thermal coal, and developing the Limpopo coal project, which has a current provisional gross in situ tonnage estimate in excess of 135 million tonnes and a resource target of 400 million tonnes of metallurgical and thermal coal. In Botswana DMC has 12 greenfield concession blocks covering 8,682 sq km and straddling known coal bearing sediments in eastern Botswana which are currently being evaluated for development potential. These are continuous to the licences over CIC which has recently received a bid from a major Indian conglomerate.

 

The Lubu Licence, which we gained exposure to through the acquisition of Monaf, is a major undeveloped coal resource in Zimbabwe. The concession in the Mid-Zambezi Basin represents a good opportunity for Sable to explore and rapidly outline a major resource. The next step is to carry out an exploration drilling programme to confirm the initial 330 million tonnes to SAMREC compliant status, to underpin a scoping study on development. To this end Badger Mining and Consulting are being engaged to design an exploration programme the first phase of which is due to commence in October 2010.

 

Corporate Review

 

Our Board has been strengthened considerably to reflect our changing strategy and to build Sable's expertise in the mining sector. We recently appointed Andrew Burns as Finance Director and Jeremy Sanford as Executive Director, both of whom bring to Sable significant experience and expertise of developing resource companies in Africa. I look forward to working closely with both Andrew, who was a key figure in the development of CAMEC into a circa US$1 billion pan-African mining house, and Jeremy, who has already been of significant assistance in securing our position at Lubu and sourcing additional assets in Zimbabwe, as we continue to progress Sable's development.

 

Following the shift in the Company's strategy, Corne Holtzhausen stepped down from his position as non-executive director in January 2010.

 

Financial Review

 

Sable Mining is reporting for the year ended 31 March 2010 a pre-tax loss on continuing activities of US$3,9m (2009: US$7m) and a loss from discontinued activities of US$57,8m (2009: US$ 0.7m). At 31 March cash balances were $30.3m (2009: $11.3m).

 

Outlook

 

The Board is committed to identifying and evaluating additional suitable assets and businesses, which will provide shareholders with early exposure to mining projects in under-developed locations that can attract substantial foreign investment and have the potential for rapid sustainable growth. We are actively evaluating projects in a number of countries including Zimbabwe and South Africa as well as projects in West Africa which we believe have the ability to fulfil our investment criteria. 

 

Your Board collectively has a wealth of experience working with and for companies operating in Africa, and I believe it has the ability to achieve our rapid growth strategy. We have a blue chip investor base, a strong treasury and a progressive development and acquisition strategy which should provide for increased news flow and the unlocking of value for shareholders.

 

Finally I would like to take this opportunity to thank my fellow directors, our employees, advisers and our shareholders for their continued support as Sable moves into its next phase of growth.

 

 

 

Phil Edmonds

Chairman

 

23 September 2010

 

 

For further information please visit www.sablemining.com or contact:

Andrew Groves	Sable Mining Africa Ltd	Tel: 020 7408 9200
Jonathan Wright	Seymour Pierce Ltd	Tel: 020 7107 8000
Robin Henshall	Matrix Corporate Capital	Tel: 020 3206 7000
Hugo de Salis	St Brides Media & Finance Ltd	Tel: 020 7236 1177
Susie Callear	St Brides Media & Finance Ltd	Tel: 020 7236 1177

 

 

 

Consolidated Income Statement

For the Year Ended 31 March 2010

 

					23 month
			Year ended 31 March		period ended 31 March
			2010		2009
	Note		$'000		$'000
Continuing Operations
Operating expenses			(2,707)		(1,056)
Operating loss			(2,707)		(1,056)
Other gains and losses			(1,382)		(6,294)
Net finance income			161		342
Loss before taxation			(3,928)		(7,008)
Income tax expense			-		-
Loss for the year from continuing operations			(3,928)		(7,008)
Discontinued Operations
Loss for the year from discontinued operations	3		(57,804)		(734)
Loss for the year			(61,732)		(7,742)
Loss for the year attributable to owners of the parent company			(59,251)		(7,683)
Loss for the year attributable to minority interests			(2,481)		(59)
Loss for the year			(61,732)		(7,742)
Loss per share
- Basic and diluted (cents)	4		(15.0 cents)		(6.8 cents)
Loss per share from continuing operations
- Basic and diluted (cents)	4		( 1.0 cents)		(6.2 cents)

 

 

Consolidated Statement of Comprehensive Income

For the Year Ended 31 March 2010

 

		2010		2009
		$'000		$'000
Foreign exchange translation differences		(365)		(5,414)
Foreign exchange translation differences recycled to the income statement		5,454		-
Other comprehensive income for the year		5,089		(5,414)
Loss for the year		(61,732)		(7,742)
Total comprehensive income for the year		(56,643)		(13,156)
Total comprehensive income attributable to the owners of the parent company		(54,162)		(12,772)
Total comprehensive income attributable to minority interests		(2,481)		(384)
Total comprehensive income for the year		(56,643)		(13,156)

 

 

Consolidated Balance Sheet

As at 31 March 2010

 

			2010		2009
	Note		$'000		$'000
ASSETS
Non-current assets
Intangible assets			-		43,146
Property, plant and equipment			37		6,822
Financial asset investment	5		23,744		-
Total non-current assets			23,781		49,968
Current assets
Inventories			-		153
Trade and other receivables			66		1,951
Cash and cash equivalents			30,334		11,270
Total current assets			30,400		13,374
TOTAL ASSETS			54,181		63,342
LIABILITIES
Current liabilities
Trade and other payables			(1,654)		(784)
NET ASSETS			52,527		62,558
EQUITY
Issued capital	6		118,228		72,199
Share based payment reserve			1,233		650
Translation reserve			-		(5,089)
Retained earnings			(66,934)		(7,683)
Total equity attributable to the owners of the parent company			52,527		60,077
Minority Interests			-		2,481
TOTAL EQUITY			52,527		62,558

 

 

Consolidated Statement of Changes in Equity

 

	Share Capital $'000	Share-based payment reserve $'000	Translation reserve $'000	Retained earnings $'000	Minority interests $'000	Total $'000
Balances at 27 April 2007	-	-	-	-	-	-
Additions	-	-	-	-	2,865	2,865
Loss for the period	-	-	-	(7,683)	(59)	(7,742)
Other comprehensive income
Exchange translation differences on foreign operations	-	-	(5,089)	-	(325)	(5,414)
Total comprehensive income for the period	-	-	(5,089)	(7,683)	2,481	(10,291)
Transactions with owners
Share-based payment charge	-	650	-	-	-	650
Share issues	72,199	-	-	-	-	72,199
Total transactions with owners	72,199	650	(5,089)	(7,683)	2,481	62,558
Balances at 31 March 2009	72,199	650	(5,089)	(7,683)	2,481	62,558
Loss for the year	-	-	-	(59,251)	(2,481)	(61,732)
Other comprehensive income
Exchange translation differences on foreign operations	-	-	(365)	-	-	(365)
Recycled exchange translation difference on discontinued activities	-	-	5,454	-	-	5,454
Total comprehensive income for the year   Transactions with owners	-	-	5,089	(59,251)	(2,481)	(56,643)
Share based payment charge	(583)	583	-	-		-
Share issues	46,612	-	-	-	-	46,612
Total transactions with owners	46,029	583	-	-	-	46,612
Balance at 31 March 2010	118,228	1,233	-	(66,934)	-	52,527

 

 

Consolidated Cash Flow Statement

For the Year Ended 31 March 2010

 

			2010		2009
			$'000		$'000
OPERATING ACTIVITIES
Loss before tax			(3,928)		(7,008)
Adjustments for:
- Depreciation of property, plant and equipment			2		-
- Share based payment charge			-		650
- Other gains and losses			1,382		6,294
- Net interest income			(161)		(342)
Operating cash flow before movements in working capital			(2,705)		(406)
Working capital adjustments:
- Increase in receivables			(67)		-
- Increase in payables			5		333
Cash used in operations			(2,767)		(73)
Finance cost			(1)		-
Interest received			162		342
Net cash used in continuing operating activity			(2,606)		269
Net cash from / (used) in discontinued operating activity			(52)		(448)
Net cash used in operating activities			(2,658)		(179)
INVESTING ACTIVITIES
Purchase of property, plant and equipment			(39)		-
Purchase of investment			(23,744)		-
Net cash used in investing in continuing activities			(23,783)		-
Net cash used in investing in discontinued activities			(1,146)		(3,865)
Net cash used in investing activities			(24,929)		(3,865)
FINANCING ACTIVITIES
Proceeds from issue of share capital			49,915		28,557
Share issue costs			(1,882)		(2,065)
Repayment of debt			-		(4,884)
Net cash flow from financing activities			48,033		21,608
Net increase in cash and cash equivalents			20,446		17,564
Cash and cash equivalents at start of the year			11,270		-
Effect of foreign exchange rate changes			(1,382)		(6,294)
Cash and cash equivalents at end of the year			30,334		11,270

 

 

NOTES TO THE FINANCIAL STATEMENTS

For the year ended 31 March 2010

 

1.	General information

 

Sable Mining Africa Limited is incorporated in the British Virgin Islands under the British Virgin Islands Business Companies Act 2004. The nature of the Group's operations and its principal activities are set out in the Chairman's Statement above.

 

The financial information herein has been presented in US Dollars because this is the currency of the primary economic environment in which the Group operates. The full statutory accounts have been prepared in accordance with International Financial Reporting Standards ("IFRS") as adopted by the European Union.

 

The non statutory financial statements for the year ended 31 March 2010 have been reported on by Sable's auditors and contain an unqualified opinion.

 

The full audit report is contained in the Company's Annual Report, which will be available on the Company's website by 30 September 2010.

 

The comparative results for the 23 month period ended 28 February 2009 contained an unqualified audit report with an emphasis of matter in regard to the intangible assets held in the balance sheet as at the year end. These have been subsequently impaired in full as detailed in note 2.

 

 

2.	Critical accounting estimates and judgements

 

The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Group's accounting policies. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below:

 

Impairments

Impairment reviews on non-current assets are carried out on each cash-generating unit identified in accordance with IAS 36 "Impairment of Assets". At each reporting date, where there are indicators of impairment, the net book value of the cash generating unit is compared with the associated fair value.

 

At the Extraordinary General Meeting held on 4 November 2009 the shareholders approved a fundamental change in investment strategy entailing a move away from bio-ethanol related assets to focus on investing in early stage exploration and development mining businesses or assets located in sub-Saharan Africa. 

 

As a result of this change in strategy, the Group has impaired its bio-ethanol related assets. 

 

The Impairment charge comprises:

 

				2010
				$'000
Intangible Assets				43,146
Property, plant and equipment				8,233
Inventory				148
Other assets				534
				52,061

 

 

3.	Discontinued activities

 

As set out in note 2, on 4 November 2009 shareholders approved a change in investment strategy entailing a move away from bio-ethanol related assets to focus on investing in early stage exploration and development mining businesses or assets located in sub-Saharan Africa. Consequently, the bio-ethanol activities have been reclassified as a discontinued operation and this segment's trading results are included in the income statement as a single line below the loss after taxation from continuing operations, with the comparatives restated accordingly.

 

The results for the discontinued operations are as follows:

 

	2010		2009
	$'000		$'000
Operating expenses	(289)		(729)
Operating loss	(289)		(729)
Foreign exchange translation differences recycled to the income statement	(5,454)		-
Impairment of bio-ethanol interests (see note 2)	(52,061)		-
Net finance income	-		(5)
Loss before taxation	(57,804)		(734)
Taxation	-		-
Loss after taxation	(57,804)		(734)

 

Cash flows from discontinued operations included in the consolidated statement of cash flows are as follows:

	2010		2009
	$'000		$'000
Net cash out-flows from operating activities	(52)		(448)
Net cash out-flows from investing activities	(1,146)		(3,865)

 

 

4.	Loss per share

 

The calculation of the basic and diluted loss per share is based on the following data:

 

	2010		2009
	$'000		$'000
Loss for the purposes of basic earnings per share (loss for the year attributable to owners of the parent)	59,251		7,683
Loss for the purposes of basic earnings per share on continuing activities (loss for the year on continuing activities attributable to owners of the parent)	3,928		7,008
Loss for the purposes of basic earnings per share on discontinued activities (loss for the year on continuing activities attributable to owners of the parent)	55,323		734
Number of shares
Weighted average number of ordinary shares for the purposes of basic and diluted loss per share	394,822,345		112,643,383
Basic loss per share	15.0 cents		6.8 cents
Loss per share on continuing activities	1.0 cents		6.2 cents
Loss per share on discontinued activities	14.0 cents		0.6 cents

 

Due to the loss incurred in the year and prior period, there is no dilutive effect of share options.

 

5.	Financial Assets

 

 

			Available for sale		Loans and receivables	Total
31 March 2010			$'000		$'000	$'000
Non-current assets
Financial asset investment			23,744		-	23,744
Current assets
Other receivables			-		66	66
Cash and cash equivalents			-		30,334	30,334
Total financial assets at 31 March 2010			23,744		30,400	54,144

 

		Available for sale		Loans and receivables	Total
31 March 2009			$'000	$'000	$'000
Current assets
Other receivables			-	1,951	1,951
Cash and cash equivalents			-	11,270	11,270
Total financial assets at 31 March 2009			-	13,221	13,221

 

The financial asset investment comprises the 35.99% stake in Delta Mining Consolidated Limited ('DMC'). As the shares are not held for trading, the investment has been classified as an available for sale investment. At 31 March 2010, the directors consider that the ownership structure of DMC precludes their ability to exercise significant influence over the operating decisions of DMC and therefore do not consider DMC to be an associate.

 

6.	Share Capital

 

	Number	Ordinary shares  of no par value Allotted and fully paid $'000
At 27 April 2007	1,000	-
Issue of shares to fund group activities	127,250,200	27,814
Acquisition of Procana Limitada	185,180,000	44,385
At 1 April 2009	312,431,200	72,199
Issue of shares to fund group activities	295,334,822	46,029
At 31 March 2010	607,766,022	118,228
Shares held by nominee as detailed below	20,000,000	-
	627,766.022	118,228

 

On incorporation on 27 April 2007, the company had an authorised share capital of 500,000,000 ordinary shares of no par value. 

 

Between incorporation and 18 February 2008 20,000,000 ordinary shares were issued for nil consideration to Ely Place Nominees Limited to be held in trust to be allocated at the discretion of the board as incentives to employees or in connection with future transactions by the Company. These shares were still all held at 31 March 2010 and 31 March 2009.

 

Between 21 February 2008 and 12 August 2008, a further 58,425,600 ordinary shares were issued fully paid for cash at a price of 12.5 pence per ordinary share constituting the pre IPO funding round.

 

On 21 July 2008 at an extraordinary general meeting the authorised share capital was increased to 1,000,000,000 ordinary shares of no par value.

 

On 12 August 2008, 185,180,000 ordinary shares were issued fully paid in consideration for the acquisition of 94% of the issued share capital of ProCana Limitada.

 

On 1 September 2008, 68,825,600 ordinary shares were issued fully paid for cash at 12.5 pence per ordinary share.

 

On 15 December 2009, 270,000,000 ordinary shares were issued fully paid for cash at 10 pence per ordinary share.

 

On 22 January 2010, 25,334,822 ordinary shares were issued fully paid for cash at 11 pence per ordinary share.

 

Share capital issued during the period is stated net of issue costs of $2,465,000 (2009: $2,065,000).

 

The Company has one class of ordinary share which carries no right to fixed income.

 

 

7.	Post balance sheet events

 

 

Acquisition of Delta Mining Consolidated Limited ("DMC")

On 1 April 2010 the Company entered into an agreement to acquire, subject to the satisfaction of certain conditions and the operation of pre-emption rights, a further 36.5% of the share capital of DMC for a total consideration of $36,934,517 to be satisfied by the allotment of in aggregate 81,533,150 new ordinary shares, valuing each DMC share at $71.58.

 

In addition the Company made an offer on the same terms, as required by South African law, to acquire the 27.5% of DMC's share capital held by Rannerdale Limited, a wholly owned subsidiary of London Mining PLC. The offer included a cash alternative of $63.67 per DMC share. On 23 April 2010, Rannerdale accepted the offer and elected to receive cash consideration of $24.8m.

 

On 4 August 2010, the Company announced that it had received approval from the Mpumalanga regional office of the South African Department of Mineral Resources ('DMR') to the proposed change in control of DMC.

 

The principal outstanding regulatory condition precedent to completing the acquisition of these holdings in DMC is the receipt of similar approval from the Limpopo regional office of the DMR.

 

Fund raising

On 16 April 2010 the Company issued 299,707,452 new ordinary shares to new and existing institutional shareholders at a price of 28p per share, raising approximately $125m before expenses, some of which were satisfied by the issue of new ordinary shares.

 

Acquisition of mineral rights

On 20 May the company secured an 80% interest in Monaf Investments (Private) Limited which holds the Lubu Coal concession in Bulawayo Mining District of Zimbabwe for a cash consideration of $3m. 

 

 

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