23 May 2013 07:00
23 May, 2013
Sovereign Mines of Africa PLC
("SMA" or "the Company")
Sovereign Mines of Africa PLC (AIM:SML), the gold mining exploration Company with properties in the Republic of Guinea in West Africa, today announces its audited results for the year ended 31st December 2012.
Operational Highlights
Multi-million ounce gold potential identified at the Mandiana Magana ("Mandiana") flagship gold project.
·; 5,000 metre drilling programme completed confirming and extending gold mineralisation discovered in 2011 - including 6 metres averaging 10.66 g/t gold from 50 metres depth and a 76 metre interval averaging 2.62 g/t gold.
·; 9,000 artisanal pits mapped outlining length and width of mineralised corridor.
·; 8,500 metre RC drilling programme underway to delineate a resource.
Initial exploration work carried out at the Dalagna and Marela properties.
·; Drill targets identified for maiden drill programmes.
Funding
£640,000 raised in July through share placing/share swap with Praetorian Resources.
£1.25 million raised in January 2013 to fund next stage of drilling at Mandiana.
David Pearl, Chairman of SMA, commented today "The work programme carried out in 2012 at Mandiana has provided the Company with the necessary data and confidence to aggressively target a delineated resource in 2013 at our flagship project. The third-phase drill programme has commenced and we will keep the market regularly updated with what is a key stage of the Company's exploration programme.
We are confident that the coming year will continue to see further value delivered to shareholders".
Enquiries:
Sovereign Mines of Africa PLC:
David Pearl F.C.A. - Chairman +353 696 8961
David.pearl@pearlcp.com
John Barry - Exploration Director +353 8 7669 5608
Nathan Steinberg - Finance Director +44 20 7269 7680
Shore Capital - Nominated Adviser & Broker
Toby Gibbs / Bidhi Bhoma - Corporate Finance
Jerry Keen - Corporate Broking +44 20 7408 4090
Square 1 Consulting Limited
David Bick / Mark Longson +44 20 7929 5599
Newgate Threadneedle
Graham Herring / Richard Gotla +44 20 7653 9858
SOVEREIGN MINES OF AFRICA PLC
Final Results for the year ended 31 December 2012
CHAIRMAN'S STATEMENT
We are pleased to report that during 2012, the Company has continued to make encouraging progress and in particular, built on the success of its maiden drilling programme in 2011 at its flagship property at Mandiana in the Republic of Guinea.
Results and funding
In order to fund on-going financial requirements, the Company issued 29 million new ordinary shares to Praetorian Resources Limited, in exchange for 2,200,000 Praetorian shares and £640,000 in cash on the 4th of July 2012. During the year, the company incurred a loss of £583,684 (2011: £327,979), which includes the impairment loss of £118,853 from the non-renewal of the licences at Bagui and Kouroussa. Shortly after the year-end, in very challenging market conditions, it raised another £1.25 million from a placing of 41,666,667 new ordinary shares with institutional and other investors. The money raised from this latest issue will largely be used with the intention of delineating a significant preliminary resource at a potentially economic tonnage and grade at Mandiana, with the objective of establishing a bulk mineable open pit gold mining operation at the project. Importantly this drilling will also include the first drill-testing of an additional four gold prospects as we continue to develop the full potential of this very large gold mineralisation system.
Mandiana Magana - gold mineralization at depth confirmed
The Mandiana property is located within the Siguiri Basin. This is a gold region with enormous potential based on the geology and disconnect between the widespread artisanal activity in the region and the very small amount of commercial production. The Mandiana gold property is the site of historic extensive artisanal mining, which prior to this programme had never been drilled or evaluated by modern exploration methods. Since the acquisition of the licence area, over 9,000 artisanal pits have been mapped by our team, outlining the length and width of the mineralised corridor. This initial drilling programme confirmed gold mineralisation at depth beneath the small-scale workings and indicates a multi-million-ounce gold potential.
Encouraging 2nd phase drilling results - 3rd phase commencing
Last August, the Company reported the results of its second phase of drilling, which consisted of 35 reverse circulation holes totalling nearly 5,000 metres. These very encouraging results confirmed strike extensions to gold mineralisation discovered in the maiden drilling programme. 34 out of 35 drill holes intercepted potentially economic gold mineralisation, extending to an impressive depth of approximately 120 metres, still within the highly weathered oxide zone. The third phase of drilling is currently underway. This will involve a further 8,000 metres of reverse circulation drilling and it is anticipated that drilling results will be announced in the third quarter of this year.
Excellent local community relations
In-country we continue to maintain excellent relations with the local community and have reason to be proud of our record on health and safety and the environment.
SOVEREIGN MINES OF AFRICA PLC
CHAIRMAN'S STATEMENT (continued)
Drill targets identified at Dalagna and Marela
At Dalagna and Marela we have identified compelling drill targets and continue to carry out initial exploration work, which will involve infill soil geochemical sampling. Following the completion of this initial drill programme, the Company will be in a position to determine the potential for economically viable large-scale mining moving forward at both project areas.
Valued shareholder support
Whilst it is frustrating that small-cap gold exploration companies are finding it difficult to attract widespread Stock Market support at the current time, we expect that by delivering on our aim of establishing a preliminary resource at Mandiana in the coming year we will positively distinguish ourselves from our peers, and this will be positively reflected in our share price.
In the meantime, we would like to thank our shareholders for their continuing support.
David B Pearl FCA (Chairman)
22 May 2013
SOVEREIGN MINES OF AFRICA PLC
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Year ended 31 December 2012
2012 | 2011 | |||||
Note | £ | £ | ||||
Administrative expenses - (operating loss) |
|
(477,410) |
(334,016) | |||
Losses on financial assets at fair value
|
(110,000) |
- | ||||
Finance income | 3,726 | 6,037 | ||||
|
| |||||
Loss on ordinary activities before taxation |
|
(583,684) |
(327,979) | |||
Taxation | 3 | - | - | |||
Loss for the year | (583,684) | (327,979) | ||||
Other comprehensive income | - | - | ||||
Total comprehensive income for the year |
(583,684) |
(327,979) | ||||
| ||||||
Loss for the period and Total comprehensive loss attributable to: | |||||
Owners of the parent | (583,684) | (327,979) | |||
Non-controlling interest | - | - | |||
(583,684) | (327,979) | ||||
| |||||
Loss per ordinary share (pence) From continuing operations: basic and diluted |
4 |
(0.32)p |
(0.21)p | ||
SOVEREIGN MINES OF AFRICA PLC
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Year ended 31 December 2012
Share Capital | Share Premium | Reconstruction Reserve | Profit & Loss Account | Total | |
£ | £ | £ | £ | £ | |
Balance at 1 January 2012 | 1,656,922 | 2,722,508 | (586,100) | (860,353) | 2,932,977 |
Loss and total comprehensive income for the year |
- |
- |
- |
(583,684) |
(583,684) |
Issue of shares, net of share issue costs |
290,000 |
1,430,000 |
- |
- |
1,720,000 |
Balance at 31 December 2012 |
1,946,922 |
4,152,508 |
(586,100) |
(1,444,037) |
4,069,293 |
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Year ended 31 December 2011
Share Capital | Share Premium | Reconstruction Reserve | Profit & Loss Account | Total | |
£ | £ | £ | £ | £ | |
Balance at 1 January 2011 | 1,399,022 | 1,018,992 | (586,100) | (532,374) | 1,299,540 |
Loss and total comprehensive income for the year |
- |
- |
- |
(327,979) |
(327,979) |
Issue of shares, net of share issue costs |
257,900 |
1,703,516 |
- |
- |
1,961,416 |
Balance at 31 December 2011 |
1,656,922 |
2,722,508 |
(586,100) |
(860,353) |
2,932,977 |
The Reconstruction Reserve represents the difference between the investment in the subsidiary and the share capital in the subsidiary on acquisition.
SOVEREIGN MINES OF AFRICA PLC
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 31 December 2012
2012 | 2011 | ||
Note | £ | £ | |
NON CURRENT ASSETS Intangible assets |
5 |
2,804,835
|
1,763,249
|
2,804,835 | 1,763,249 | ||
CURRENT ASSETS | |||
Financial assets at fair value through profit or loss |
7 |
990,000 |
- |
Cash at bank | 349,618 | 1,219,947 | |
1,339,618 | 1,219,947 | ||
TOTAL ASSETS | 4,144,453 | 2,983,196 | |
LIABILITIES | |||
CURRENT LIABILITIES Trade and other payables |
|
75,160 |
50,219 |
TOTAL LIABILITIES | 75,160 | 50,219 | |
NET ASSETS | 4,069,293 | 2,932,977 | |
SHAREHOLDERS EQUITY | |||
Share capital | 6 | 1,946,922 | 1,656,922 |
Share premium account | 6 | 4,152,508 | 2,722,508 |
Reconstruction reserve | (586,100) | (586,100) | |
Profit and loss account | (1,444,037) | (860,353) | |
TOTAL EQUITY ATTRIBUTABLE TO OWNERS OF THE PARENT |
4,069,293 |
2,932,977 |
SOVEREIGN MINES OF AFRICA PLC
CONSOLIDATED STATEMENT OF CASH FLOWS
Year ended 31 December 2012
2012 |
2011 | |
£ | £ | |
Cash flows from operating activities | ||
Loss before taxation | (583,684) | (327,979) |
Impairment losses on intangible assets | 118,853 | - |
Unrealised losses on financial assets at fair value | 110,000 | - |
Increase in trade and other payables | 24,941 | 6,625 |
Net cash flows used in operating activities | (329,890) | (321,354) |
Cash flows from investing activities | ||
Purchase of intangible fixed assets
| (1,160,439)
| (1,335,337)
|
Net cash used in investing activities | (1,160,439)
| (1,335,337) |
Cash flows from financing activities | ||
Issue of shares, net of share issue costs
Net cash used in financing activities | 620,000
620,000 | 1,961,416
1,961,416
|
(Decrease)/increase in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year |
(870,329)
1,219,947
349,618 |
304,725
915,222
1,219,947 |
Significant Non Cash movements
The financial assets at fair value were acquired by the issue of Ordinary shares of 0.01p each with a total consideration of £1,100,000.
NOTES TO THE FINAL RESULTS
1. BASIS OF PREPARATION
The financial information set out in this announcement does not constitute the Group's statutory financial statements for the years ended 31 December 2012 or 2011 but is derived from those financial statements. Statutory financial statements for 2011 have been delivered to the Registrar of Companies, and those for 2012 will be delivered in due course.
The auditors have reported on the financial statements for the year ended 31 December 2012; their report was unqualified and did not contain statements under section 498 (2) or (3) of the Companies Act 2006.
While the financial information included in this preliminary announcement has been prepared in accordance with the recognition and measurement criteria of International Financial Reporting Standards (IFRSs) as endorsed for use in the European Union, this announcement does not itself contain sufficient information to comply with IFRSs.
The principal accounting policies adopted in the preparation of the financial information in this announcement are set out in the Company's full financial statements for the year ended 31 December 2012 and are consistent with those adopted in the financial statements for the period ended 31 December 2011 with the exception of the following new accounting policy that was adopted during the year:
Financial assets at fair value through profit or loss
Financial assets at fair value through profit or loss comprise listed equity securities. They are carried in the statement of financial position at fair value with changes in fair value recognised in the consolidated statement of comprehensive income. Fair value is determined by current bid prices.
The Directors do not recommend the payment of a dividend (2011: nil).
The Board approved this announcement on 22 May 2013.
2. OPERATING SEGMENTS
Operating Segments are based on internal reports about components of the Group, which are regularly reviewed by the Chairman being the Chief Operating Decision Maker ("CODM") for strategic decision making and resource allocation in order to allocate resources to the segment and to assess its performance.
The group undertakes only one business activity as described in the Director's report. All transactions between each reportable segment are accounted for using the same accounting policies as the Group uses. Accordingly, the Group's operating segments have been determined based on geographical areas.
The Group has not generated revenue during the either of the years ended 31 December 2012 or 31 December 2011.
The Group's results by reportable segment is as follows:
Year ended 31 December 2012
UK £ | Guinea £ | Group £ | |
RESULTS | |||
Operating loss | (348,507) | (238,903) | (587,410) |
Interest income | 3,726 | - | 3,726 |
Year ended 31 December 2011
UK £ | Guinea £ | Group £ | |
RESULTS | |||
Operating loss | (261,424) | (72,592) | (334,016) |
Interest income | 6,031 | 7 | 6,037 |
2. OPERATING SEGMENTS (continued)
All transactions between each reportable segment are accounted for using the same accounting policies as the Group uses. The Group's assets and liabilities by reportable segment are as follows:-
At 31 December 2012
UK £ | Guinea £ | Group £ | |
ASSETS Cash Financial assets at fair value Intangible Assets |
349,462 990,000 - |
156 - 2,804,835 |
349,618 990,000 2,804,835 |
Total assets | 1,339,462 | 2,804.991 | 4,144,453 |
UK £ | Guinea £ | Group £ | |
LIABILITIES | |||
Total liabilities | 74,160 | 1,000 | 75,160 |
At 31 December 2011
UK £ | Guinea £ | Group £ | |
ASSETS Cash Intangible Assets |
1,219,792 - |
155 1,763,249 |
1,219,947 1,763,249 |
Total assets | 1,219,792 | 1,763,404 | 2,983,196 |
UK £ | Guinea £ | Group £ | |
LIABILITIES | |||
Total liabilities | 50,038 | 18 | 50,056 |
3. TAXATION
Analysis of the tax charge |
| |||||
2012 £ | 2011 £ |
| ||||
Current tax: Tax |
- |
- |
| |||
| ||||||
Total tax charge in income statement | - | - |
| |||
Reconciliation of the tax charge
2012 £ |
2011 £ | |||
Loss before tax | (583,684) | (327,979) | ||
Loss before tax multiplied by standard rate of corporation tax in the UK of 24% (2011: 26%) | (140,084) | (85,278) | ||
Effects of: | ||||
Deferred tax not provided | 140,084 | 85,278 | ||
Total tax charge in income statement | - | - | ||
A deferred tax asset has not been recognised in respect of deductible temporary differences relating to losses carried forward at the year end, as there is insufficient evidence that taxable profits will be available in the foreseeable future against which the deductible temporary difference can be utilised. The amount of the asset not recognised is £374,427 (2011: £234,343). The asset would be recovered if the Group made taxable profits in future years.
4. LOSS PER SHARE
Basic earnings per share is calculated by dividing the earnings attributable to ordinary shareholders by the weighted average number of ordinary shares outstanding during the period.
2012
|
2011
| |
Weighted average number of ordinary shares in issue | 179,716,773 | 155,838,073 |
------------- | ------------- | |
Loss after taxation | £(583,684) | £(327,979) |
---------- | ---------- | |
Loss per share (pence) | (0.32)p | (0.21)p |
======= | ======= |
Due to there being a loss during the period there are no dilutive transactions and therefore no diluted loss per share has been presented. Details of shares issued since the year end are set out in note 6 below.
5. INTANGIBLE ASSETS
Exploration costs £ | ||
Group | ||
Cost: | ||
At 1 January 2012 | 1,763,249 | |
Additions | 1,160,439 | |
At 31 December 2012 | 2,923,688 | |
Impairment: | ||
At 1 January 2012 | - | |
Additions | 118,853 | |
At 31 December 2012 | 118,853 | |
Net Book Value | ||
At 31 December 2012 | 2,804,835 | |
At 31 December 2011 |
1,763,249 |
Exploration activities are deferred until a reasonable assessment can be made of the existence or otherwise of economically recoverable reserves. No amortisation has been charged in the period. The directors have reviewed the carrying value of the exploration assets and consider them to be fairly stated and not impaired at 31 December 2012. The recoverability of the intangible assets is dependent upon the future realisation or disposal of the gold or other mineral resources.
The impairment losses of £118,853 relate to Dinguiraye and Kouroussa where management have taken the decision to not renew the exploration licences in those areas.
Work carried out in these areas had not indicated obvious potential for major gold deposits, and hence the exploration costs capitalised under IFRS 6 for these areas have been written off.
Impairment costs are included under "Administrative expenses" in the Consolidated Statement of Comprehensive Income.
6. SHARE CAPITAL
a) Share Capital
The Company has one class of ordinary shares which carry no right to fixed income nor have any preferences or restrictions attached.
Issued and fully paid:
2012 | 2011 | ||
£ | £ | ||
194,692,183 Ordinary shares of 0.01p each | 1,946,922 | 1,656,922 |
b) Share issues during the year
Number of shares | Share Capital £ | Share premium £ | Total
£ | ||
At 1 January 2012 | 165,692,183 | 1,656,922 | 2,722,508 | 4,379,430 | |
On 4 July 2012 | 29,000,000 | 290,000 | 1,450,000 | 1,740,000 | |
Less share issue costs | - | - | (20,000) | (20,000) | |
At 31 December 2012 | 194,692,183 | 1,946,922 | 4,152,508 | 6,099,430 |
On 4 July 2012, pursuant to an Exchange Agreement with Praetorian Resources Limited (Praetorian), the Company issued 18,333,333 ordinary shares of 1p each at a premium of 5p per share to Praetorian in exchange for 2,200,000 Praetorian ordinary shares of nil par value and pursuant to a Subscription Agreement with Praetorian, the Company issued 10,666,667 ordinary shares of 1p each for cash at a premium of 5p per share.
7 FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS
2012 £ | 2011 £ | |||
Listed investments | 990,000 | - | ||
Amounts presented in respect of listed investments have been determined by reference to published price quotations on the London Stock Exchange.
8 EVENTS SINCE THE YEAR END
On 22 January 2013, the company raised additional working capital of £1,250,000 through a placing of 41,666,667 new ordinary shares with institutional and other investors at a price of 3p each. Following this placement the company's issued share capital is increased to 236,358,850 ordinary shares of 0.01p.