31 May 2012 07:00
30 May 2012 Sovereign Mines of Africa PLC ("SMA" or "the Company") Final Results for the year ended 31 December 2011
Sovereign Mines of Africa, the gold mining exploration company with properties in the Republic of Guinea in West Africa, announces final audited results for the year ended 31 December 2011.
Highlights
- Two equity placings last year raised just over £2.5m to fund initial
drilling programmes
- Company moved from Plus Markets onto AIM
- Loss of £0.33m (2010: £0.53m) with cash balances of £1.2m at the year end
- Early focus put on Mandiana Magana property - one of five SMA concessions in
Guinea
- Maiden 3,000 metre RC drilling campaign testing 2 zones of gold
mineralisation at Mandiana Magana with encouraging results announced in
January 2012
- Board believes that the Dalagna and Marela concessions also have the
potential to become significant assets
David Pearl, Chairman of SMA, said:
"The initial drilling programme at Mandiana Magana confirmed gold mineralisation at depth and the weathering and oxidisation to depths of up to 200 metres indicate major potential for low cost, open pit, bulk mining.
In April this year, we completed Phase 2 - the testing of strike extensions - involving 4,590 metres of RC drilling with 228 metres of diamond tails in 3 holes. We expect to be able to announce full assay results for this programme in June."
The Company will convene its AGM on Wednesday 27 June 2012 at 3pm at the offices of Ambrian Capital PLC, 3rd Floor, Old Change House, 128 Queen Victoria Street, London EC4V 4BJ and the accounts are in process of being printed and posted to shareholders.
Enquiries:SOVEREIGN MINES OF AFRICA PLCDavid B Pearl FCA - Chairman 07932 919980david.pearl@sovmines.com
John Barry - Exploration Director +353 87 669 5608
Nathan Steinberg - Finance Director +44 207 269 7680
SHORE CAPITAL - NOMINATED ADVISER & BROKER
Toby Gibbs/Bidhi Bhoma - Corporate Finance
Jerry Keen - Corporate Broking +44 207 408 4090
RIVINGTON STREET CORPORATE FINANCE, JOINT BROKER
Jon Levinson - Corporate Broking +44 207 562 3357
SQUARE1 CONSULTING LIMITEDDavid Bick/Mark Longson +44 207 929 5599Chairman's Statement
Since the idea for the business was conceived at the end of 2007, we have focussed on our primary goal, which is to maximise shareholder value. With a portfolio of highly prospective properties, and an excellent geological team, which has a strong track record of multi-million-ounce gold discoveries, I believe we are ideally placed to develop the Company.
A placing in March 2011 raised £1.329m, followed by a further £1.2m in July 2011. Since the incorporation of the company's main operating subsidiary, Sovereign Mines of Guinea Limited, we have carried out extensive exploration at five properties, completed nearly 8,000 metres of drilling, floated the Company on AIM, and proved that we can control costs and deliver results in a timely fashion. During the period the Group incurred a loss of £327,979 (2010: £532,374) and at the end of the year had a cash balance of £1.2m.
Our original strategy had been to give equal attention to all our five concessions. However, we decided to focus the bulk of our resources at Mandiana Magana after discovering the extent and intensity of artisanal activity there, particularly given the Property's strong analogy to Goldfields' nearby Yanfolila gold project.
The Property is located within the productive Siguiri gold region and had never been drilled or evaluated by modern exploration methods, prior to Sovereign's initial exploration programme and our subsequent maiden drilling in November 2011. This comprised 3,000 metres of RC drilling and tested 2 zones of gold mineralisation.
The results, which were announced in January 2012, were very encouraging. Over 9,000 artisanal pits had already indicated the length and width of gold mineralisation and this initial drilling programme also confirmed gold mineralisation at depth. Equally important - the deep weathering and oxidisation to depths of up to 200 metres indicate major potential for low cost, open pit, bulk mining. This relatively small initial drilling programme, together with the extensive footprint of shallow artisanal excavations confirms the view of our geologists, that we are exploring in a very large gold bearing system which clearly warrants a major programme of resource delineation drilling.
In April this year, we completed Phase 2 - the testing of strike extensions - and this involved 4,590 metres of RC drilling with 228 metres of diamond tails in 3 holes. We expect to be able to announce full assay results for this programme in June. It is also worth mentioning that since constructing the camp at Mandiana, we have built up excellent relations with the local community and have reason to be proud of our record on health and safety and the environment.
Whilst we have been moving forward as fast as our resources will allow at our flagship property at Mandiana, we have not been neglecting our other four concessions. Based on stream sediment sampling and the location of artisanal gold mining, we believe that the Dalagna and Marela concessions both have the potential to become significant assets. Further soil geochemical sampling will be completed this year, which we are confident will identify compelling drill targets. Meanwhile work carried out at Bagui and Kouroussa has not indicated obvious potential for major gold deposits.
High government debt levels, slow economic recovery and inflation expectations continue to be factors supportive of the gold sector. We believe that SMA offers a compelling valuation relative to its peers and by focussing on the exploration, discovery and delineation of major gold deposits in West Africa we can rapidly reward our shareholders.
Finally, I would like to take this opportunity to congratulate Dr. Yamoussa Bangoura - a non-Executive Director of SMG - on his promotion to Mining Advisor to the President of Guinea and also to thank my fellow directors, management and advisors for their valuable efforts during the past year as well as our shareholders for their support. I believe that SMA has the foundations in place from which to deliver significant value and I look forward to updating the market on our progress in 2012.
David B Pearl FCA (Chairman)29 May 2012 SOVEREIGN MINES OF AFRICA PLC CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME Year ended 31 December 2011 Year ended 31 Pro forma 13 December 2011 month period ended 31 December 2010 £ £Administrative expenses -(operating loss) (334,016) (533,859) Finance income 6,037 1,596 Interest payable - (111)Loss on ordinary activitiesbefore taxation (327,979) (532,374)Taxation - -Loss for the period (327,979) (532,374) Other comprehensive income - -Total comprehensive incomefor the period (327,979) (532,374) Loss for the period and Totalcomprehensive loss attributableto: Owners of the parent (327,979) (532,374)Non-controlling interest - - (327,979) (532,374) Loss per ordinary share (pence)From continuing operations:basic and diluted (0.21)p (0.41)p SOVEREIGN MINES OF AFRICA PLC CONSOLIDATED STATEMENT OF FINANCIAL POSITION As at 31 December 2011 2011 2010 £ £ NON CURRENT ASSETSIntangible assets 1,763,249 427,912 1,763,249 427,912CURRENT ASSETSCash at bank 1,219,947 915,222TOTAL ASSETS 2,983,196 1,343,134 LIABILITIESCURRENT LIABILITIESTrade and other payables 50,219 43,594 TOTAL LIABILITIES 50,219 43,594 NET ASSETS 2,932,977 1,299,540 SHAREHOLDERS EQUITYShare capital 1,656,922 1,399,022Share premium account 2,722,508 1,018,992Reconstruction reserve (586,100) (586,100)Profit and loss account (860,353) (532,374) TOTAL EQUITY ATTRIBUTABLE TOOWNERS OF THE PARENT 2,932,977 1,299,540 SOVEREIGN MINES OF AFRICA PLC CONSOLIDATED STATEMENT OF CHANGES IN EQUITY Year ended 31 December 2011 Share Share Reconstruction Profit & Total Capital Premium Reserve Loss Account £ £ £ £ £Balance at 1 January2011 1,399,022 1,018,992 (586,100) (532,374) 1,299,540Loss and totalcomprehensive incomefor the year - - - (327,979) (327,979) Issue of shares, netof share issue costs 257,900 1,703,516 - - 1,961,416Balance at 31December 2011 1,656,922 2,722,508 (586,100) (860,353) 2,932,977 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY Pro forma period from 13 October 2009 to 31 December 2010 Share Share Reconstruction Profit & Total Capital Premium Reserve Loss Account £ £ £ £ £Other comprehensiveincome - - - - -Loss for the period - - - (532,374) (532,374)Total comprehensiveincome - - - (532,374) (532,374)Issue of shares,net of shareissue costs 1,399,022 1,018,992 - - 2,418,014Group reconstruction(note 3) - - (586,100) - (586,100)Balance at 31December 2010 1,399,022 1,018,992 (586,100) (532,374) 1,299,540 SOVEREIGN MINES OF AFRICA PLC CONSOLIDATED STATEMENT OF CASH FLOWS Year ended 31 December 2011 Year ended 31 Pro forma 13 December month period 2011 ended 31 December 2010 £ £
Cash flows from operating activities
Loss before taxation (327,979) (532,374)Increase in trade and other payables 6,625 43,594
Net cash flows used in operating activities (321,354) (488,780)
Cash flows from investing activities
Purchase of intangible fixed assets (1,335,337) (427,912) Net cash used in investing activities (1,335,337) (427,912)
Cash flows from financing activities
Issue of shares, net of share issue costs 1,961,416 1,311,014
Issue of shares prior to incorporation ofSovereign Mines of Africa Plc - 520,900Net cash used in financing activities 1,961,416 1,831,914 Increase in cash and cash equivalents 304,725 915,222 Cash and cash equivalents at beginning of period 915,222 -
Cash and cash equivalents at end of period 1,219,947 915,222
SOVEREIGN MINES OF AFRICA PLC Year ended 31 December 2011 Notes
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 2011 or 2010 but is derived from those financial statements. Statutory financial statements for 2010 have been delivered to the Registrar of Companies, and those for 2011 will be delivered in due course.
The auditors have reported on those financial statements; their reports were (i) unqualified, (ii) the report for 2011 contained an emphasis of matter due to an uncertainty in relation to the group's ability to raise additional capital to fund the groups exploration activities (iii) the report for 2010 did not include a reference to any matters to which the auditors drew attention by way of emphasis without qualifying their report and (iv) did not contain statements under section 498 (2) or (3) of the Companies Act 2006. The results for the year ended 31 December 2011 were approved by the Board of Directors on 29 May 2012 and are audited.
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 2011 and are consistent with those adopted in the financial statements for the period ended 31 December 2010.
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 Makers ("CODM") for strategic decision making and resource allocation in order to allocate resources to the segment and to assess its performance. The group's operating segments have been determined based on geographical areas.
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.
The Group has not generated revenue during the either the year ended 31 December 2011 or the period ended 31 December 2010.
The Group's results by reportable segment is as follows:
Year ended 31 December 2011 UK Guinea Group £ £ £RESULTSOperating loss (261,424) (72,592) (334,016) Interest income 6,031 7 6,037
Pro forma Period ended 31 December 2010
UK Guinea Group £ £ £RESULTSOperating loss (90,215) (443,644) (533,859) Interest income 1,537 59 1,596 Interest expense - (111) (111)AssetsThe Group's assets and liabilities by reportable segment are asfollows:At 31 December 2011 UK Guinea Group £ £ £ASSETSCash 1,219,792 155 1,219,947Intangible Assets - 1,763,249 1,763,249Total assets 1,219,792 1,763,404 2,983,196 UK Guinea Group £ £ £LIABILITIESTotal liabilities 50,038 18 50,219 At 31 December 2010 UK Guinea Group £ £ £ASSETSCash 909,648 5,574 915,222Intangible Assets - 427,912 427,912Total assets 909,648 433,486 1,343,134 UK Guinea Group £ £ £LIABILITIESTotal liabilities 43,594 - 43,5943. 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.
Year ended 31 Pro forma 13 December month period 2011 ended 31 December 2010 £Weighted average number of ordinary 155,838,073 128,918,746shares in issue ------------- ------------Loss after taxation £(327,979) £(532,374) ---------- ------------Loss per share (pence) (0.21)p (0.41)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.
4. SHARE CAPITAL
On 17 March 2011, the Company raised £1,329,000 by the issue of 13,290,000 new ordinary shares.
On 28 July 2011, the Company raised £1,250,000 by the issue of 12,500,000 new ordinary shares.
5. OTHER MATTERS
The directors do not propose a dividend in respect of the year ended 31 December 2011 (2010: nil).
This announcement was approved by the Board on 30 May 2012.
Copies of the 2011 Report and Financial Statements will be posted to shareholders in due course. Copies of this announcement are available from the Company at New Penderel House, 2nd Floor, 283-288 High Holborn WC1V 7HP.