TIDMCAN
RNS Number : 1531T
Central African Gold PLC
23 September 2010
Central African Gold Plc / Ticker: CAN / Market: AIM / Sub-sector: Gold Mining
23 September 2010
Central African Gold Plc ('CAG' or 'the Company')
Interim Results for the six months ended 30 June 2010
Central African Gold Plc, the AIM listed gold mining and exploration company, is
pleased to announce its interim results, for the six months ended 30 June 2010.
Chief Executive Officer's Statement
Overview
The six months ended 30 June 2010 commenced with the continued difficult
operating conditions in Zimbabwe as previously described in the Company's 2009
Annual Report. The closing of the transaction to dispose of CAG's Mali
properties occurred in February 2010 and the proceeds received from this
transaction, together with additional funding received from certain major
shareholders of the Company, allowed CAG to continue its gold mining operations
in Zimbabwe, albeit at very low levels. However, in May 2010, the Company was
forced to place its two operating gold mines, Old Nic and Dalny, in Zimbabwe on
care and maintenance.
In the early part of the period under review, it was clear to CAG's board of
directors (the 'Board') that a comprehensive review of the business, its funding
options and its current operating structure was necessary if the Company was
going to address its problems and move forward. To this end, CAG's management
and directors began a detailed review of the Company's operations and various
options to bring fresh capital into the Company and commenced discussions with a
number of parties to that end. However, before any of these initiatives could
be finalised and implemented, the three major shareholders of the Company, ECP
Africa Fund II PCC ('ECP'), HBD Zim Investments Limited ('HBD') and Investec
Asset Management (Pty) Limited ('IAM') (which held approximately 88.7% of the
outstanding common shares) announced that, effective of 16 June 2010, they had
disposed of their investments in CAG, namely their ordinary shares and debt
instruments, to New Dawn Mining Corp. ('New Dawn'), a Toronto Stock Exchange
listed mining company with operations in Zimbabwe. At this point, the Company
halted all its initiatives to bring fresh investment into the Company.
New Dawn subsequently requested two seats on the Board and this request was
granted with Messer's Robert Weingarten, as Non Executive Director, and Ian
Saunders, as an Executive Director, both joining the Board on 8 July
2010.Subsequent to these new appointments, the Board has initiated a
comprehensive strategic review of the various aspects of the Company's
operations and a further announcement will be made, in due course, following
completion of this review.
Zimbabwe
As noted in CAG's 2009 Annual Report, during 2009, the Company resumed
production, from June 2009, at two of its mining properties, on a limited scale.
However, even with the cash resources provided by the Mali sale and additional
funding received from certain major shareholders, by May 2010, the Company was
forced to close their producing properties, as a result of insufficient working
capital. The various aspects of all CAG's Zimbabwean operations are currently
being subject to a systematic and detailed review as part of the strategic
review referred to above. Subsequent to the period end, limited gold production
has resumed at the Old Nic and Dalny mines, as announced on 10 September 2010.
Mali Property
As previously announced, the disposal of the Mali properties occurred in
February 2010, pursuant to an agreement signed in December 2009. The
consideration of US$5,000,000 consisted of cash of US$4,000,000, of which
US$600,000 was paid on signing of the agreement in December 2009 and the balance
of US$3,400,000 was paid on closing. In addition, a further US$1,000,000 will
be payable by the purchaser providing that, by February 2012, mineral resources
of at least 500,000 ounces of gold, calculated in accordance with the Australian
mineral resource standards, are declared. In accordance with IFRS requirements,
the contingent payment amount of US$1,000,000 has not been recognised as an
asset in these interim financial statements. The Company has no further
interest in the Mali properties.
Botswana
The Company does not intend pursuing the claims in Botswana and will allow them
to expire.
Investment to Acquire Controlling Interest in CAG by New Dawn Mining Corp.
As set out above, effective as of 16 June 2010, New Dawn made an investment to
acquire the approximate 88.7% equity holdings in the Company of the three major
shareholders, ECP, IAM and HBD, and, concurrently, acquired all the indebtedness
owed by the Company to the three major shareholders, via debt assignment
agreements. The monies that the Company owed to the three previous major
shareholders are now owed to New Dawn.
The Company is currently working with New Dawn as it engages in discussions with
and submission of documentation to the Zimbabwe Competition and Tariffs
Commission in respect of New Dawn's June 16, 2010 investment in the Company and
the review of related competition and indigenization issues by the Zimbabwe
authorities. The Company has filed the specific information called for under
the Indigenization and Empowerment Act regulations. The Company is advised that
New Dawn's plans with respect to the Company's assets and operations are being
developed taking into account New Dawn's ongoing discussions with and
submissions to the Zimbabwe authorities.
Subsequent to the period end on 17 August 2010, New Dawn provided a US$2,000,000
loan facility, payable on demand and with interest calculated by reference to
the London Interbank Offered Rates, to provide the short-term funds necessary to
stabilise the operation of the Company and its subsidiaries. As of the date of
this report, US$1,250,000 of that loan facility has been utilised. New Dawn has
agreed not to demand payment of amounts advanced for the next twelve months
The Company has informed New Dawn that CAG and its subsidiaries will require
funds in excess of the current facility agreement in order to achieve commercial
levels of production and to further develop the operations of the Company's
assets. However, the amount required will not be determined until the
completion of the detailed review that is currently in process. New Dawn has
informed the Company that it is in the process of seeking to source and arrange
additional financing, subject to the appropriate terms and conditions,
consistent with the objectives noted above.
Board and Management Changes
On 13 April 2010, Mr. Bryce Fort resigned as Non-Executive Director of the
Company. Mr. Campbell, CAG's Chief Financial Officer, resigned on 18 June 2010.
Subsequent to the period end, on 8 July 2010, Mr. Ian Saunders and Mr. Robert
Weingarten joined the Board as representatives of New Dawn.
On 28 July 2010, Graham Clow joined the Company as Chief Financial Officer, but
did not join the Board of CAG.
Outlook
With the in-country operating skills that New Dawn has, coupled to its access to
capital, and in conjunction with a new and appropriate operating strategy for
the Company's asset base in a recovering Zimbabwe, the Company's way forward is
becoming clearer. Although management is becoming more optimistic, there are
still significant and complex hurdles that need to be addressed over the short
and medium term. However, the Board remains committed to building CAG, in
conjunction with its major shareholder, New Dawn, into a leading gold producer
within Zimbabwe.
I would like to thank all the shareholders for their continued support and
patience.
Roy Pitchford
CEO and Acting Chairman
17 September 2010
Financial Review
Introduction
The first half of 2010 was impacted by a number of significant events:
· In February 2010, the Company completed the transaction for the sale of its
Mali gold exploration properties and received the balance of the consideration
amounting to US$3,400,000 (US$600,000 had been previously received as an advance
in December 2009). A further US$1,000,000 will be receivable provided that, by
February 2012, mineral resources of at least 500,000 ounces of gold, calculated
in accordance with the Australian mineral resource standards, are declared by
February 2012.
· Additional financing was arranged in February 2010 with ECP and HBD, then
major shareholders of the Company. A total of approximately US$1 million
(approximately GBP0.6 million) was advanced in the form of demand loans with
interest at 10% per annum and maturing in April 2011. In June 2010, the
maturity dates of these loans and other shareholder loans also maturing in April
2011 were extended to April 2012.
· In May 2010, as a result of working capital restrictions, the Company was
forced to put the Old Nic and Dalny mines back onto care and maintenance.
· On 16 June 2010, New Dawn, a Toronto Stock Exchange listed company with
mining operations in Zimbabwe, acquired approximately 88.7% of the common shares
held by the former three major shareholders of the Company (ECP, HBD and IAM),
as well as the debt that the Company owed to those shareholders.
Subsequent to 30 June 2010, New Dawn provided a US$2,000,000 loan facility, of
which, as at the date of this report, US$1,250,000 has been utilised. Using
this resource, the Company is managing to mitigate its working capital shortage
and resume limited mining operations.
Analysis of results
The Company had nominal turnover for the six months to 30 June 2010, reflecting
the limited production during the period and termination of production in May
2010. All revenue was generated by the Company's Zimbabwe subsidiaries.
The Company incurred a gross loss (revenue less cost of sales) of GBP0.4 million
for the six months to 30 June 2010. Cost of sales was adversely affected by
power outages and breakdowns of aged equipment. The lack of capital to purchase
new and spare equipment, components and sufficient quantities of consumables
resulting in significant inefficiencies contributed to this loss.
Administrative expenses totalled GBP1.9 million (30 June 2009: GBP1.6 million)
and are reflective of the measures taken to address the Company's difficulties.
The Company generated marginal interest income as cash resources were diminished
compared to the prior period due to its attempts to deal with the challenging
operational issues. Interest costs increased as CAG accessed additional debt
financing primarily through its then major shareholders and bank sources.
The increase in the carrying cost of the property plant and equipment during the
year ended December 31, 2009 reflects the recognition, effective 31 December
2009, of the rehabilitation liability that must be met when, in the future, the
mine is exhausted and closes. At that point, environmental legislation mandates
site remediation. Accounting standards require that this future liability be
estimated and discounted back to the current period. The amount so obtained is
added to the relevant property, plant and equipment and also recorded as a
liability included within provisions on the consolidated statement of financial
position. During the six months ended 30 June 2010, except for emergency
underground pump installation, there were minimal additions to property, plant
and equipment at the Zimbabwe properties.
As a result of a change in accounting standards applicable for 2010, the
non-controlling interest may now be attributed its full share of the loss for
the period even if the result is a deficit on the consolidated statement of
financial position. Therefore, their share of the loss for the period and their
deficit at the end of the period amounted to GBP192,000 as at 30 June 2010.
+--------------------------------------+----------------------+------------------+------------------------+
| CENTRAL AFRICAN GOLD PLCUnaudited consolidated STATEMENT of |
| comprehensive income For the 6 months ended 30 June 2010 |
| |
+---------------------------------------------------------------------------------------------------------+
| | Unaudited | Unaudited | Audited |
| | Six | Six | Twelve |
| | months | months | months |
| | ended | ended | ended |
| In thousands of pounds sterling | 30 June | 30 June | 31 |
| | 2010 | 2009 | December |
| | | | 2009 |
+--------------------------------------+----------------------+------------------+------------------------+
| | | | |
+--------------------------------------+----------------------+------------------+------------------------+
| Revenue | 722 | 293 | 921 |
+--------------------------------------+----------------------+------------------+------------------------+
| Cost of sales | (1,116) | (908) | (1,304) |
+--------------------------------------+----------------------+------------------+------------------------+
| Loss | (394) | (615) | (383) |
+--------------------------------------+----------------------+------------------+------------------------+
| | | | |
+--------------------------------------+----------------------+------------------+------------------------+
| Other operating income | 163 | 564 | 344 |
+--------------------------------------+----------------------+------------------+------------------------+
| Administrative charges | (1,898) | (1,589) | (3,597) |
+--------------------------------------+----------------------+------------------+------------------------+
| | | | |
+--------------------------------------+----------------------+------------------+------------------------+
| Operating loss before impairment and | | | |
| divestment of Mali and Ghana | (2,129) | (1,640) | (3,636) |
+--------------------------------------+----------------------+------------------+------------------------+
| Impairment | | | (2,450) |
| | - | - | |
+--------------------------------------+----------------------+------------------+------------------------+
| Operating loss | (2,129) | (1,640) | (6,086) |
+--------------------------------------+----------------------+------------------+------------------------+
| | | | |
+--------------------------------------+----------------------+------------------+------------------------+
| Finance costs | (464) | 555 | (458) |
+--------------------------------------+----------------------+------------------+------------------------+
| Financial income | 69 | 781 | 4 |
+--------------------------------------+----------------------+------------------+------------------------+
| Financial expenses | (533) | (226) | (462) |
+--------------------------------------+----------------------+------------------+------------------------+
| | | | |
+--------------------------------------+----------------------+------------------+------------------------+
| Loss before taxation | (2,593) | (1,085) | (6,544) |
+--------------------------------------+----------------------+------------------+------------------------+
| Taxation | 4 | | 53 |
| | | - | |
+--------------------------------------+----------------------+------------------+------------------------+
| Loss for the period | (2,589) | (1,085) | (6,491) |
+--------------------------------------+----------------------+------------------+------------------------+
| | | | |
+--------------------------------------+----------------------+------------------+------------------------+
| Discontinued operations | | | |
+--------------------------------------+----------------------+------------------+------------------------+
| Loss from discontinued operation | | | |
| (net of tax) | | | |
+--------------------------------------+----------------------+------------------+------------------------+
| Mali | 929 | - | - |
+--------------------------------------+----------------------+------------------+------------------------+
| Ghana | - | (8,147) | (3,057) |
+--------------------------------------+----------------------+------------------+------------------------+
| Loss for the period | (1,660) | (9,232) | (9,548) |
+--------------------------------------+----------------------+------------------+------------------------+
| Other comprehensive income (expense) | | | |
+--------------------------------------+----------------------+------------------+------------------------+
| Foreign currency translation | | | |
| differences for foreign operations | (830) | (991) | (290) |
+--------------------------------------+----------------------+------------------+------------------------+
| Total comprehensive loss for the | (2,490) | (8,241) | (9,838) |
| period | | | |
+--------------------------------------+----------------------+------------------+------------------------+
| | | | |
+--------------------------------------+----------------------+------------------+------------------------+
| Loss attributable to: | | | |
+--------------------------------------+----------------------+------------------+------------------------+
| Owners of the company | (1,533) | (9,150) | (9,398) |
+--------------------------------------+----------------------+------------------+------------------------+
| Non-controlling interest | (127) | (82) | (150) |
+--------------------------------------+----------------------+------------------+------------------------+
| Loss for the period | (1,660) | (9,232) | (9,548) |
+--------------------------------------+----------------------+------------------+------------------------+
| Total comprehensive loss | | | |
| attributable to: | | | |
+--------------------------------------+----------------------+------------------+------------------------+
| Owners of the company | (2,298) | (8,159) | (9,688) |
+--------------------------------------+----------------------+------------------+------------------------+
| Non-controlling interest | (192) | (82) | (150) |
+--------------------------------------+----------------------+------------------+------------------------+
| Loss for the period | (2,490) | (8,241) | (9,838) |
+--------------------------------------+----------------------+------------------+------------------------+
| | | | |
+--------------------------------------+----------------------+------------------+------------------------+
| Loss per share (Note 7) | | | |
+--------------------------------------+----------------------+------------------+------------------------+
| Basic and diluted loss per share | (0.25p) | (1.64p) | (1.27p) |
+--------------------------------------+----------------------+------------------+------------------------+
+-------------------+---------+---------+---------------+-----------+-----------+-------------+-----------+
| CENTRAL AFRICAN GOLD PLCUNAUDITED CONSOLIDATED STATEMENT OF |
| CHANGES IN EQUITY (DEFICIT) |
| FOR THE 6 MONTHS ENDED 30 JUNE 2010 |
| |
+---------------------------------------------------------------------------------------------------------+
| | Share | Share | Foreign | Retained | Total | Minority | Total |
| |capital |premium | currency | earnings | | interest | equity |
| | | | translation |(deficit) | | |(deficit) |
| | | | reserves | | | | |
| In thousands of | | | | | | | |
| pounds sterling | | | | | | | |
+-------------------+---------+---------+---------------+-----------+-----------+-------------+-----------+
| | | | | | | | |
+-------------------+---------+---------+---------------+-----------+-----------+-------------+-----------+
| Balance at 1 | 5,020 | 47,076 | (521) | (50,082) | 1,493 | - | 1,493 |
| January 2010 | | | | | | | |
+-------------------+---------+---------+---------------+-----------+-----------+-------------+-----------+
| Comprehensive | | | (765) | | | | |
| loss for the | - | - | | (1,533) | (2,300) | (192) | (2,490) |
| period | | | | | | | |
+-------------------+---------+---------+---------------+-----------+-----------+-------------+-----------+
| Shares issued | - | - | | | | | - |
| | | | - | - | - | - | |
+-------------------+---------+---------+---------------+-----------+-----------+-------------+-----------+
| Balance at 30 | 5,020 | 47,076 | ( 1,286) | (51,615) | (805) | (192) | (997) |
| June 2010 | | | | | | | |
+-------------------+---------+---------+---------------+-----------+-----------+-------------+-----------+
| | | | | | | | |
+-------------------+---------+---------+---------------+-----------+-----------+-------------+-----------+
| Balance at 1 | 854 | 43,625 | (231) | (40,684) | 3,564 | 150 | 3,714 |
| January 2009 | | | | | | | |
+-------------------+---------+---------+---------------+-----------+-----------+-------------+-----------+
| Comprehensive | | | 991 | | | | |
| loss for the | - | - | | (8,159) | (7,168) | (82) | (7,250) |
| period | | | | | | | |
+-------------------+---------+---------+---------------+-----------+-----------+-------------+-----------+
| Shares issued | 4,166 | 3,643 | | | 7,809 | | 7,809 |
| | | | - | - | | - | |
+-------------------+---------+---------+---------------+-----------+-----------+-------------+-----------+
| Balance at 30 | 5,020 | 47,268 | 760 | (48,843) | 4,205 | 68 | 4,273 |
| June 2009 | | | | | | | |
+-------------------+---------+---------+---------------+-----------+-----------+-------------+-----------+
| | | | | | | | |
+-------------------+---------+---------+---------------+-----------+-----------+-------------+-----------+
| Balance at 1 | 854 | 43,625 | (231) | (40,684) | 3,564 | 150 | 3,714 |
| January 2009 | | | | | | | |
+-------------------+---------+---------+---------------+-----------+-----------+-------------+-----------+
| Comprehensive | | | | | | | |
| loss for the | - | - | (290) | (9,398) | (9,688) | (150) | (9,838) |
| period | | | | | | | |
+-------------------+---------+---------+---------------+-----------+-----------+-------------+-----------+
| Shares issued | 4,166 | 3,451 | - | | 7,617 | - | 7,617 |
| | | | | - | | | |
+-------------------+---------+---------+---------------+-----------+-----------+-------------+-----------+
| Balance at 31 | 5,020 | 47,076 | (521) | (50,082) | 1,493 | - | 1,493 |
| December 2009 | | | | | | | |
+-------------------+---------+---------+---------------+-----------+-----------+-------------+-----------+
| | | | | | | | |
+-------------------+---------+---------+---------------+-----------+-----------+-------------+-----------+
+------------------------------------+-------------------------+------------------------+------------------------+
| CENTRAL AFRICAN GOLD PLCUNAUDITED CONSOLIDATED STATEMENT OF |
| FINANCIAL POSITIONAS AT 30 JUNE 2010 |
| |
+----------------------------------------------------------------------------------------------------------------+
| | Unaudited | Unaudited | Audited |
| | Six | Six | Twelve |
| | months | months | months |
| | ended | ended | ended |
| In thousands of pounds sterling | 30 June | 30 June | 31 |
| | 2010 | 2009 | December |
| | | | 2009 |
+------------------------------------+-------------------------+------------------------+------------------------+
| | | | |
+------------------------------------+-------------------------+------------------------+------------------------+
| Assets | | | |
+------------------------------------+-------------------------+------------------------+------------------------+
| Goodwill | 583 | 620 | 540 |
+------------------------------------+-------------------------+------------------------+------------------------+
| Property, plant and equipment | 7,170 | 3,960 | 6,700 |
+------------------------------------+-------------------------+------------------------+------------------------+
| Exploration and other | | 3,577 | - |
| evaluation assets | - | | |
+------------------------------------+-------------------------+------------------------+------------------------+
| Total non-current assets | 7,753 | 8,157 | 7,240 |
+------------------------------------+-------------------------+------------------------+------------------------+
| Inventories | 187 | 48 | 215 |
+------------------------------------+-------------------------+------------------------+------------------------+
| Trade and other receivables | 230 | 414 | 280 |
+------------------------------------+-------------------------+------------------------+------------------------+
| Cash and cash equivalents | 698 | 962 | 447 |
+------------------------------------+-------------------------+------------------------+------------------------+
| Assets held for sale | - | - | 2,560 |
+------------------------------------+-------------------------+------------------------+------------------------+
| Total current assets | 1,115 | 1,424 | 3,502 |
+------------------------------------+-------------------------+------------------------+------------------------+
| Total assets | 8,868 | 9,581 | 10,742 |
+------------------------------------+-------------------------+------------------------+------------------------+
| | | | |
+------------------------------------+-------------------------+------------------------+------------------------+
| Equity (Deficit) | | | |
+------------------------------------+-------------------------+------------------------+------------------------+
| Share capital | 5,020 | 5,020 | 5,020 |
+------------------------------------+-------------------------+------------------------+------------------------+
| Share premium | 47,076 | 47,268 | 47,076 |
+------------------------------------+-------------------------+------------------------+------------------------+
| Foreign currency translation | (1,286) | 760 | (332) |
| reserve | | | |
+------------------------------------+-------------------------+------------------------+------------------------+
| Accumulated loss | (51,615) | (48,843) | (50,271) |
+------------------------------------+-------------------------+------------------------+------------------------+
| Total equity attributable to | (805) | 4,205 | 1,493 |
| equity holders of the parent | | | |
+------------------------------------+-------------------------+------------------------+------------------------+
| Non-controlling interest (deficit) | (192) | 68 | |
| | | | - |
+------------------------------------+-------------------------+------------------------+------------------------+
| Total equity (deficit) | (997) | 4,273 | 1,493 |
+------------------------------------+-------------------------+------------------------+------------------------+
| | | | |
+------------------------------------+-------------------------+------------------------+------------------------+
| Liabilities | | | |
+------------------------------------+-------------------------+------------------------+------------------------+
| Loans and other borrowings | 4,735 | | 3,576 |
| (Note 4) | | - | |
+------------------------------------+-------------------------+------------------------+------------------------+
| Deferred taxation | 583 | 556 | 501 |
+------------------------------------+-------------------------+------------------------+------------------------+
| Provisions | 2,363 | 14 | 2,394 |
+------------------------------------+-------------------------+------------------------+------------------------+
| Total non-current liabilities | 7,681 | 570 | 6,471 |
+------------------------------------+-------------------------+------------------------+------------------------+
| Loans and borrowings - current | 328 | 2,502 | 493 |
| portion | | | |
+------------------------------------+-------------------------+------------------------+------------------------+
| Trade and other payables | 1,856 | 2,253 | 2,250 |
+------------------------------------+-------------------------+------------------------+------------------------+
| Taxation | - | (17) | (14) |
+------------------------------------+-------------------------+------------------------+------------------------+
| Liabilities held for sale | - | - | 49 |
+------------------------------------+-------------------------+------------------------+------------------------+
| Total current liabilities | 2,184 | 4,738 | 2,778 |
+------------------------------------+-------------------------+------------------------+------------------------+
| Total liabilities | 9,865 | 5,308 | 9,249 |
+------------------------------------+-------------------------+------------------------+------------------------+
| Total equity and liabilities | 8,868 | 9,581 | 10,742 |
+------------------------------------+-------------------------+------------------------+------------------------+
| | | | |
+------------------------------------+-------------------------+------------------------+------------------------+
+------------------------------------+-----------+------------------------+-----------------------+
| CENTRAL AFRICAN GOLD PLCUNAUDITED CONSOLIDATED STATEMENT OF CASH |
| FLOWSFOR THE 6 MONTHS ENDED 30 JUNE 2010 |
| |
+-------------------------------------------------------------------------------------------------+
| | Unaudited | Unaudited | Audited |
| | Six | Six | Twelve |
| | months | months | months |
| | ended | ended | ended |
| In thousands of pounds sterling | 30 June | 30 June | 31 |
| | 2010 | 2009 | December |
| | | | 2009 |
+------------------------------------+-----------+------------------------+-----------------------+
| | | | |
+------------------------------------+-----------+------------------------+-----------------------+
| Cash flow (used in) operating | | | |
| activities | | | |
+------------------------------------+-----------+------------------------+-----------------------+
| Loss for the period | (1,660) | (7,250) | (9,548) |
+------------------------------------+-----------+------------------------+-----------------------+
| Adjusted for: | | | |
+------------------------------------+-----------+------------------------+-----------------------+
| Financial income | (69) | (781) | (4) |
+------------------------------------+-----------+------------------------+-----------------------+
| Financial expenses (including gold | 526 | 226 | 462 |
| sale agreement) | | | |
+------------------------------------+-----------+------------------------+-----------------------+
| Depreciation | 77 | - | 211 |
+------------------------------------+-----------+------------------------+-----------------------+
| Loss on disposal of property, | - | - | 338 |
| plant and equipment | | | |
+------------------------------------+-----------+------------------------+-----------------------+
| Impairment of assets held for sale | - | - | 2,450 |
+------------------------------------+-----------+------------------------+-----------------------+
| Loss on divestment of CAG Ghana | - | 6,165 | 3,057 |
+------------------------------------+-----------+------------------------+-----------------------+
| Profit on disposal of CAG Mali | (929) | | |
| | | - | - |
+------------------------------------+-----------+------------------------+-----------------------+
| (Increase)/decrease in inventories | 28 | (45) | (212) |
+------------------------------------+-----------+------------------------+-----------------------+
| (Increase)/decrease in trade and | 50 | 10 | 144 |
| other receivables | | | |
+------------------------------------+-----------+------------------------+-----------------------+
| (Decrease)/increase in trade and | (109) | 605 | 507 |
| other payables | | | |
+------------------------------------+-----------+------------------------+-----------------------+
| Net cash (used in) from operating | (2,086) | (1,070) | (2,595) |
| activities | | | |
+------------------------------------+-----------+------------------------+-----------------------+
| Interest received | 27 | - | 4 |
+------------------------------------+-----------+------------------------+-----------------------+
| Interest expense | (22) | (226) | (19) |
+------------------------------------+-----------+------------------------+-----------------------+
| Cash flow provided by (used in) | (2,081) | (1,296) | (2,610) |
| operations | | | |
+------------------------------------+-----------+------------------------+-----------------------+
| Cash flows from investing | | | |
| activities | | | |
+------------------------------------+-----------+------------------------+-----------------------+
| Cash cost of divestment in Ghana | - | (2,377) | (5,975) |
+------------------------------------+-----------+------------------------+-----------------------+
| Proceeds on divestment of CAG Mali | 2,250 | - | - |
+------------------------------------+-----------+------------------------+-----------------------+
| Non-refundable deposit from | - | - | 414 |
| disposal of Mali | | | |
+------------------------------------+-----------+------------------------+-----------------------+
| Acquisition of exploration assets | - | (215) | (492) |
+------------------------------------+-----------+------------------------+-----------------------+
| Acquisition of property, plant and | (185) | - | - |
| equipment | | | |
+------------------------------------+-----------+------------------------+-----------------------+
| Taxation (paid)/refunded | 14 | - | (13) |
+------------------------------------+-----------+------------------------+-----------------------+
| Net cash provided by (used in) | 2,079 | (2,592) | (6,066) |
| investing activities | | | |
+------------------------------------+-----------+------------------------+-----------------------+
| Cash flow from financing | | | |
| activities | | | |
+------------------------------------+-----------+------------------------+-----------------------+
| Proceeds from issue of share | - | 5,404 | 5,212 |
| capital | | | |
+------------------------------------+-----------+------------------------+-----------------------+
| Loans and borrowings received | 558 | | 1,157 |
| | | - | |
+------------------------------------+-----------+------------------------+-----------------------+
| Repayment of loans | (298) | (3,398) | - |
+------------------------------------+-----------+------------------------+-----------------------+
| Net cash provided by financing | 260 | 2,006 | 6,369 |
| activities | | | |
+------------------------------------+-----------+------------------------+-----------------------+
| Net increase (decrease) in cash | 258 | (1,882) | (2,307) |
| and cash equivalents | | | |
+------------------------------------+-----------+------------------------+-----------------------+
| Cash and cash equivalents at 1 | 447 | 2,844 | 2,844 |
| January | | | |
+------------------------------------+-----------+------------------------+-----------------------+
| Effect of exchange rate | (7) | | (90) |
| fluctuations on cash held | | - | |
+------------------------------------+-----------+------------------------+-----------------------+
| Cash and cash equivalents | 698 | 962 | 447 |
+------------------------------------+-----------+------------------------+-----------------------+
| | | | |
+------------------------------------+-----------+------------------------+-----------------------+
CENTRAL AFRICAN GOLD PLC
NOTES TO THE UNAUDITED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
For the 6 MONTHS ended 30 June 2010
1. Basis of preparation
The Company is domiciled and incorporated in the United Kingdom. The condensed
consolidated interim financial statements of the Company for the six months
ended 30 June 2010 comprise the Company and its subsidiaries (together referred
to as 'the Group'). These financial statements have not been audited and have
been prepared using accounting policies that are in accordance with
International Financial Reporting Standards ('IFRS') as adopted by the EU.
Except as noted below, these accounting policies are consistent with and fully
described in the audited consolidated financial statements for the year ended 31
December 2009. Accordingly, these unaudited consolidated financial statements
should be read in conjunction with the consolidated financial statements for the
year ended 31 December 2009.
As a result of the acquisition of a controlling interest in the Company by New
Dawn Mining Corp. ('New Dawn') (Note 2) and after making inquiries that they
consider to be appropriate, the Directors believe that the Company has access to
adequate resources to continue in operational existence for the foreseeable
future.
The ability of the Company to continue as a going concern depends on continued
support from New Dawn and securing the necessary funding from New Dawn to
achieve production levels and operate profitably. Significant capital
investment in excess of $2 million is expected to be required in order for the
Company to achieve commercial levels of production. The directors of the parent
company, New Dawn, have identified several sources of financing and negotiations
to raise the required capital investments have begun. New Dawn is aiming to
complete these negotiations so that financing can be made available to the
Company by the end of the year. Should the Company not receive the support from
New Dawn and resume profitable operations, there exists a material uncertainty
which may cast significant doubt on the Company's ability to continue as a going
concern and, therefore it may be unable to realise its assets and discharge its
liabilities in the normal course of business. The directors of the Company have
assessed the Company's ability to continue operating as a going concern and have
concluded that the preparation of these financial statements on a going concern
basis is appropriate
During the six months ended 30 June 2010, the following changes to IFRS as
adopted by the EU have been enacted:
IAS 27 IAS 27 was amended and the section relevant to the Company, IAS 27,
paragraph 28, is applicable for the year commencing January 1, 2010 on a
prospective basis. Prior to the amendment, losses attributable to the
non-controlling interest could be recognised only to the extent that the
non-controlling interest did not become a deficit. Effective for the fiscal
year ending 31 December 2010, non-controlling interests are treated as equity
holders with the result that the loss attributable to the non-controlling
interest is now recognised even though a deficit balance is incurred.
As a result of this change, the share of the loss for the period
ended 30 June 2010 attributable to the non-controlling interest of GBP192,000
has been allocated accordingly and not absorbed by the equity holders of the
Company.
.
2. New Dawn Mining Corp.
On 16 June 2010, the Board was informed that New Dawn, a Canadian corporation
listed on the Toronto Stock Exchange, had acquired all of the common shares of
the Company held by the Company's previous three major shareholders amounting to
approximately 88.7% of the Company's issued share capital. The Board was also
informed that, concurrently, New Dawn had acquired, by way of deeds of
assignment, all of the outstanding advances and indebtedness owed by the Company
to those three major shareholders.
3. Share capital and share premium
During the period there were no share issues. Therefore, share capital and
share premium accounts are unchanged from the balances at 31 December 2009 and
similarly, the number of issued shares is unchanged.
4. Loans and other borrowings
+------------------------------------+-----------+-----------+----------+
| | Unaudited | Unaudited | Audited |
| | Six | Six | Twelve |
| | months | months | months |
| | ended | ended | ended |
| In thousands of pounds sterling | 30 June | 30 June | 31 |
| | 2010 | 2009 | December |
| | | | 2009 |
+------------------------------------+-----------+-----------+----------+
| Other borrowings | | | |
+------------------------------------+-----------+-----------+----------+
| Due to shareholders (payable in | 4,735 | 2,502 | 3,576 |
| US$) | | | |
+------------------------------------+-----------+-----------+----------+
| | | | |
+------------------------------------+-----------+-----------+----------+
| Loans and other borrowings | 4,735 | 2,502 | 3,576 |
+------------------------------------+-----------+-----------+----------+
| | | | |
+------------------------------------+-----------+-----------+----------+
| Due to shareholders | | | |
+------------------------------------+-----------+-----------+----------+
| Balance at start of period | 3,576 | 4,995 | 4,995 |
+------------------------------------+-----------+-----------+----------+
| Advances during the period | 735 | 138 | 799 |
| (interest at 10% compounded | | | |
| monthly) | | | |
+------------------------------------+-----------+-----------+----------+
| Conversion of loans into equity | - | (2,405) | (2,405) |
+------------------------------------+-----------+-----------+----------+
| Interest charged during the | 187 | 228 | 373 |
| period | | | |
+------------------------------------+-----------+-----------+----------+
| Translation adjustment | 237 | (454) | (186) |
+------------------------------------+-----------+-----------+----------+
| | | | |
+------------------------------------+-----------+-----------+----------+
| Balance, end of period | 4,735 | 2,502 | 3,576 |
+------------------------------------+-----------+-----------+----------+
The amounts due to shareholders are payable on demand, but the shareholders have
agreed not to demand payment for the foreseeable future.
In February 2010, additional financing was arranged with two of the former major
shareholders of the Company. A total of approximately US$1.0 million
(approximately GBP0.6 million) was advanced in the form of demand loans with
interest at 10% per annum and maturing in April 2011. In June 2010, the
maturity dates of these loans and other shareholder loans also maturing in April
2011 were extended to April 2012.
New Dawn acquired the amounts due to shareholders effective 16 June 2010 (Note
2) and has similarly agreed not to demand repayment on the same basis,
5. Discontinued operations - Mali
The Company entered into a binding agreement to dispose of its 80% equity
interests in each of Mali Goldfields SARL and Songhoï Resources SA (together
'the Malian Assets') to Papillon Resources Limited (formerly Colonial Resources
Limited) for a total consideration of US$5.0 million 'the Consideration'). The
transaction closed in February 2010. The Malian assets, which are early stage
gold exploration assets, consisted of 18 prospective permits.
The consideration for the Malian Assets included an initial non-refundable
payment of US$0.6 million in cash, which was paid on signing of the Agreement in
December 2009, and a further US$3.4 million paid in cash to the Company on
completion of the disposal in February 2010. A further US$1.0 million will be
payable to the Company in cash if a JORC compliant indicated and measured gold
resource of at least 500,000 ounces is established by February 2012. Because of
the contingent nature of this receivable, no amount will be recognised until
conditions for its payment have been met and receipt appears probable.
6. Segmental information
+------------------------------------+-----------+-----------+--------------------------+
| | Unaudited | Unaudited | Audited |
| | Six | Six | Twelve |
| Ghana | months | months | months |
| (discontinued) | ended | ended | ended |
| In thousands of pounds sterling | 30 June | 30 June | 31 |
| | 2010 | 2009 | December |
| | | | 2009 |
+------------------------------------+-----------+-----------+--------------------------+
| | | | |
+------------------------------------+-----------+-----------+--------------------------+
| Revenue | - | - | |
| | | | - |
+------------------------------------+-----------+-----------+--------------------------+
| | | | |
+------------------------------------+-----------+-----------+--------------------------+
| Profit / (loss) before tax | - | - | (3,057) |
+------------------------------------+-----------+-----------+--------------------------+
| Income tax | - | - | |
| | | | - |
+------------------------------------+-----------+-----------+--------------------------+
| Profit / (loss) for the period | - | - | (3,057) |
+------------------------------------+-----------+-----------+--------------------------+
| | | | |
+------------------------------------+-----------+-----------+--------------------------+
| Segment assets | - | - | |
| | | | - |
+------------------------------------+-----------+-----------+--------------------------+
| Segment liabilities | - | - | |
| | | | - |
+------------------------------------+-----------+-----------+--------------------------+
| Total net assets | - | - | - |
+------------------------------------+-----------+-----------+--------------------------+
| | | | |
+------------------------------------+-----------+-----------+--------------------------+
| Additions to non-current assets | - | - | - |
+------------------------------------+-----------+-----------+--------------------------+
| Depreciation | - | - | - |
+------------------------------------+-----------+-----------+--------------------------+
| Impairments | - | (7,156) | - |
+------------------------------------+-----------+-----------+--------------------------+
6. Segmental information (continued)
+------------------------------------+--------------------------+----------------------+----------------------------+
| | Unaudited | Unaudited | Audited |
| | Six | Six | Twelve |
| | months | months | months |
| Zimbabwe | ended | ended | ended |
| In thousands of pounds sterling | 30 June | 30 June | 31 |
| | 2010 | 2009 | December |
| | | | 2009 |
+------------------------------------+--------------------------+----------------------+----------------------------+
| | | | |
+------------------------------------+--------------------------+----------------------+----------------------------+
| Revenue | 722 | 293 | 921 |
+------------------------------------+--------------------------+----------------------+----------------------------+
| | | | |
+------------------------------------+--------------------------+----------------------+----------------------------+
| Profit / (loss) before tax | (946) | (1,001) | (2,332) |
+------------------------------------+--------------------------+----------------------+----------------------------+
| Income tax | | | 53 |
| | - | - | |
+------------------------------------+--------------------------+----------------------+----------------------------+
| Profit / (loss) for the period | (946) | (1,001) | (2,279) |
+------------------------------------+--------------------------+----------------------+----------------------------+
| | | | |
+------------------------------------+--------------------------+----------------------+----------------------------+
| Segment assets | 8,211 | 4,684 | 2,908 |
+------------------------------------+--------------------------+----------------------+----------------------------+
| Segment liabilities | (4,799) | (2,104) | (4,288) |
+------------------------------------+--------------------------+----------------------+----------------------------+
| Total net (liabilities) / assets | 3,412 | 2,580 | (1,380) |
+------------------------------------+--------------------------+----------------------+----------------------------+
| | | | |
+------------------------------------+--------------------------+----------------------+----------------------------+
| Additions to non-current assets | 122 | - | 1,836 |
+------------------------------------+--------------------------+----------------------+----------------------------+
| Depreciation | 51 | - | 77 |
+------------------------------------+--------------------------+----------------------+----------------------------+
| Impairments | - | - | |
| | | | - |
+------------------------------------+--------------------------+----------------------+----------------------------+
+------------------------------------+-------------------------+------------------------+---------------------------+
| | | | |
| Mali | | | |
| In thousands of pounds sterling | | | |
+------------------------------------+-------------------------+------------------------+---------------------------+
| | | | |
+------------------------------------+-------------------------+------------------------+---------------------------+
| Revenue | | | |
| | - | - | - |
+------------------------------------+-------------------------+------------------------+---------------------------+
| | | | |
+------------------------------------+-------------------------+------------------------+---------------------------+
| Profit / (loss) before tax | 79 | (411) | (248) |
+------------------------------------+-------------------------+------------------------+---------------------------+
| Income tax | | | - |
| | - | - | |
+------------------------------------+-------------------------+------------------------+---------------------------+
| Profit / (loss) for the period | 79 | ( 411) | (284) |
+------------------------------------+-------------------------+------------------------+---------------------------+
| | | | |
+------------------------------------+-------------------------+------------------------+---------------------------+
| Segment assets | | 3,702 | 4,719 |
| | - | | |
+------------------------------------+-------------------------+------------------------+---------------------------+
| Segment liabilities | - | (65) | (49) |
+------------------------------------+-------------------------+------------------------+---------------------------+
| Total net assets | | 3,637 | 4,670 |
| | - | | |
+------------------------------------+-------------------------+------------------------+---------------------------+
| | | | |
+------------------------------------+-------------------------+------------------------+---------------------------+
| Additions to non-current assets | 63 | 199 | 492 |
+------------------------------------+-------------------------+------------------------+---------------------------+
| Depreciation | | 26 | 59 |
| | - | | |
+------------------------------------+-------------------------+------------------------+---------------------------+
| Impairments | | | 2,450 |
| | - | - | |
+------------------------------------+-------------------------+------------------------+---------------------------+
6. Segmental information (continued)
+------------------------------------+-----------------------+------------------+------------------------+
| | Unaudited | Unaudited | Audited |
| | Six | Six | Twelve |
| | months | months | months |
| Other | ended | ended | ended |
| In thousands of pounds sterling | 30 June | 30 June | 31 |
| | 2010 | 2009 | December |
| | | | 2009 |
+------------------------------------+-----------------------+------------------+------------------------+
| | | | |
+------------------------------------+-----------------------+------------------+------------------------+
| Revenue | - | - | |
| | | | - |
+------------------------------------+-----------------------+------------------+------------------------+
| | | | |
+------------------------------------+-----------------------+------------------+------------------------+
| Profit / (loss) before tax | (1,647) | 327 | (4,496) |
+------------------------------------+-----------------------+------------------+------------------------+
| Income tax | 4 | - | - |
+------------------------------------+-----------------------+------------------+------------------------+
| Profit / (loss) for the period | (1,643) | 327 | (4,496) |
+------------------------------------+-----------------------+------------------+------------------------+
| | | | |
+------------------------------------+-----------------------+------------------+------------------------+
| Segment assets | 657 | 1,195 | 5,274 |
+------------------------------------+-----------------------+------------------+------------------------+
| Segment liabilities | (4,984) | (3,139) | (4,911) |
+------------------------------------+-----------------------+------------------+------------------------+
| Total net assets | (4,327) | (1,944) | 362 |
+------------------------------------+-----------------------+------------------+------------------------+
| | | | |
+------------------------------------+-----------------------+------------------+------------------------+
| Additions to non-current assets | - | - | - |
+------------------------------------+-----------------------+------------------+------------------------+
| Depreciation | 26 | - | 75 |
+------------------------------------+-----------------------+------------------+------------------------+
| Impairments | - | - | |
| | | | - |
+------------------------------------+-----------------------+------------------+------------------------+
+------------------------------------+---------------------------+------------------------+----------+
| | | | |
| | | | |
| Group | | | |
| In thousands of pounds sterling | | | |
+------------------------------------+---------------------------+------------------------+----------+
| | | | |
+------------------------------------+---------------------------+------------------------+----------+
| Revenue | 722 | 293 | 921 |
+------------------------------------+---------------------------+------------------------+----------+
| | | | |
+------------------------------------+---------------------------+------------------------+----------+
| Profit / (loss) before tax | (2,514) | (1,085) | (9,601) |
+------------------------------------+---------------------------+------------------------+----------+
| Income tax | 4 | | 53 |
| | | - | |
+------------------------------------+---------------------------+------------------------+----------+
| Profit / (loss) for the period | (2,510) | (1,085) | (9,548) |
+------------------------------------+---------------------------+------------------------+----------+
| | | | |
+------------------------------------+---------------------------+------------------------+----------+
| Total assets | 8,868 | 9,581 | 10,742 |
+------------------------------------+---------------------------+------------------------+----------+
| Total liabilities | (9,783) | (5,308) | (9,249) |
+------------------------------------+---------------------------+------------------------+----------+
| Total net assets | (915) | 4,273 | 1,493 |
+------------------------------------+---------------------------+------------------------+----------+
| | | | |
+------------------------------------+---------------------------+------------------------+----------+
| Additions to non-current assets | 185 | 158 | 2,328 |
+------------------------------------+---------------------------+------------------------+----------+
| Depreciation | 77 | 114 | 211 |
+------------------------------------+---------------------------+------------------------+----------+
| Impairments | - | (7,156) | 2,450 |
+------------------------------------+---------------------------+------------------------+----------+
7. Basic and diluted loss per share
Basic and diluted loss per share was based on the loss attributable to ordinary
equity holders of the Company of GBP2.3 million (June 2009: GBP8.2 million;
December 2009: GBP9.6 million) and the weighted average number of ordinary
shares outstanding during the period of 1,004,085,968 (June 2009: 495,319,139;
December 2009: 752,974,029).
8. Indigenization
On 18 April 2008, the Indigenization and Empowerment Act of Zimbabwe proscribed
the general concepts for indigenization, including the requirement that 51% of
all businesses in Zimbabwe should be owned or controlled by entities or
individuals that qualify as representatives of historically disadvantaged
Zimbabweans, within five years.
On 29 January 2010, the Zimbabwe Government released Regulations ('the
Regulations') to the Indigenization and Empowerment Act ('the Act') that specify
that the Act applies to all businesses with a value exceeding $500,000. These
Regulations include the requirement for those businesses to provide specified
information to the Minister of Youth Development, Indigenization and Empowerment
('the Minister'), including an indigenization implementation plan, originally by
14 April 2010 subsequently extended to 15 May 2010. That information, together
with responses from all sectors of the Zimbabwe economy, will be used as a basis
for determining what reduction, if any, from 51% shall apply to each industry
sector or subsector and the maximum period for achieving indigenization.
In addition, for individual businesses, the weighting that may be given for
socially and economically desirable activities may be taken into account for a
business to be said to be compliant without necessarily indigenizing 51% or the
lesser prescribed percentage for its sector or subsector.
The Company filed the information specified in the Regulations within the
required deadline. The Regulations require the Minister to complete the
determinations, taking into account information filed under the Regulations, by
28 February 2011.
9. Subsequent event
Effective 12 August 2010, New Dawn and the Company signed a loan facility
agreement whereby the Company was provided with a US$2,000,000 loan facility to
assist with its operation of the Zimbabwe subsidiaries. At the same time, the
Company and Falcon Gold Zimbabwe Limited, the Company's major subsidiary in
Zimbabwe, signed a similar loan facility agreement whereby the Company provided
its subsidiary a US$2,000,000 loan facility. Both facilities are demand
instruments with interest charged at a rate based on the London Inter Bank
Offered Rate. As of 17 September 2010, US$1,250,000 had been drawn on the
facility with New Dawn and the proceeds advanced to Falcon Gold Zimbabwe
Limited.
The Company has informed New Dawn that the Group will require funds in excess of
the current facility agreement and understands that New Dawn is in the process
of seeking to source and arrange additional financing, subject to the
appropriate terms and conditions.
APPROVAL
These interim financial statements were approved by the Directors on 21
September 2010.
For further information please visit www.centralafricangold.comor contact:
+-------------+------------------------+---------------------+
| Roy | Central African Gold | Tel: +44(0)77 9390 |
| Pitchford/ | Plc | 9985 |
| Ian | | Tel: +(263) 9 |
| Saunders | | 76826/7/8 |
| | | |
+-------------+------------------------+---------------------+
| Stuart | Strand Hanson Partners | Tel: +44(0)20 7409 |
| Faulkner/ | Limited | 3494 |
| James | | |
| Spinney | | |
| | | |
+-------------+------------------------+---------------------+
| Hugo de | St Brides Media and | Tel: +44(0)20 7236 |
| Salis / | Finance Ltd | 1177 |
| Felicity | | |
| Edwards | | |
+-------------+------------------------+---------------------+
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR QLLFLBKFZBBL
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