RNS Number : 0296K
Zambezi Resources Ltd
12 December 2008
12 December 2008
Zambezi Resources Limited
("Zambezi" or "the Company")
Interim results for the 6 months to 30 September 2008
Zambezi Resources Limited (AIM: ZRL) is pleased to announce its half year results for the 6 months ended 30 September 2008.
HIGHLIGHTS
Drilling at Kangaluwi and Chisawa has met the Company's expectations and continues to demonstrate the potential for a major copper
discovery.
The VTEM flown at Nkala, the Uranium joint venture with Rio Tinto, has proven to be a technical success. The commercial exploration
success is now dependent on the drill testing which is expected within the next six months.
CORPORATE
The majority of the six month period was focused on raising funds at both the corporate and the project level. The "credit crunch" and
its effect on capital markets provided a difficult environment within which to raise funds to continue the drilling operations. In the past
three months the collapse of the copper price has added to the already exceptionally difficult financial environment. A rights issue to
raise up to approximately AUD$4,100,000 was announced on 31 July 2008 to existing shareholders on the basis of one new share for every 5.7
held, together with one new option for every 3 shares issued. The offer closed on 1 September 2008 and, including placement of the
shortfall, raised approximately AUD$1.21 million. The shares were issued at AUD$0.124 (or �0.06) each. Application to have the options
quoted on the Australian Securities Exchange was successful and the options are exercisable at AUD$0.19 each with an expiry date of 31
August 2009. As a result Zambezi has 197,876,174 ordinary shares on issue and 3,230,214 listed options on issue.
Pursuant to shareholder approval, 1,000,000 employee options were issued during the period being 500,000 options to each of Brian Rear
and Jeremy Wrathall. 100,000 employee options lapsed. Zambezi has 13,150,000 unlisted employee options on issue.
The copper windfall taxes introduced in Zambia in April 2008 have severely impacted on the Company's ability to conclude a copper joint
venture agreement in the first half of the year. The Company's inability to successfully raise sufficient capital resulted in a major
strategic review and substantial reduction in drilling activities from August 2008 onwards. In mid September 2008, the last drill rig was
demobilized from the Kangaluwi Project.
During the period the mandate for the sale of Zambezi's shareholding in Lithic Metals and Energy Ltd (AIM : LMY) was given which
unfortunately coincided with a great deal of market uncertainty and volatility in UK capital markets. As a result, the shares were
ultimately realised at a tenth of their market value at the time the mandate was given.
Jeremy Wrathall resigned from the Board of Directors after the period end on 17 October 2008. Mr Wrathall had been with the Company
since its admission to the AIM market of the London Stock Exchange in 2004. Geoffrey Johnson also resigned as Executive Director at the end
of the period but remains on the board as a non executive director.
The prognosis for Kangaluwi remains very good and the drill testing of mineralization along the 28 km of identified strike length
indicates that this project is likely to progress towards development. The Board is currently reviewing options of how best to progress
Kangaluwi in view of the current extremely poor market conditions.
Glencore International AG ("Glencore")is expected to complete its 51% earn in of the Cheowa project prior to the end of 2008. Glencore
and Zambezi have agreed to combine the Cheowa and CCB Joint Ventures ("JVs") and will move the combined JV into an incorporated JV
structure.
Good progress continues to be made by Zambezi's JV uranium partners Lithic Metals and Energy and Rio Tinto plc. Zambezi is free carried
to the stage that the partners have earned a 51% interest by spending US$5 million and US$6 million respectively. In light of the current
poor financial market conditions, the directors believe this has proved to be a very prudent move.
STRATEGY
In the current business environment, the market valuation of Kangaluwi, based on valuations for underdeveloped copper assets, is at or
below the expected drill out cost for Kangaluwi. Despite the current severe copper mining business environment, the expected commissioning
of two new copper smelters in Zambia within the next quarter indicates that the prospect for copper sulphide concentrate production is
likely to improve substantially in the medium term.
The Company's strategy is to secure funding in the short term to secure the Company's financial future. In the medium term the Company
will look to preserve cash while progressing the Kangaluwi project in what the directors expect to be a substantially improved business
environment. The Company continues to review opportunities to secure near term cash flow from modest investments to allow the Company to
ride out the current major downturn.
FORWARD LOOKING
Events Subsequent to 30 September 2008
The Company requested, and was granted, permission to suspended its quotation on the ASX on 31 October 2008 and the AIM market of the
London Stock Exchange on 3 November 2008, in order to seek a "stand still" agreement with its creditors and raise sufficient working capital
to progress the Company's activities in an orderly manner. The Company has reached agreement with its significant creditors for a moratorium
on amounts payable to 31 March 2009 and continues to have discussions with potential investors and joint ventures parties. The successful
outcome of these discussions will be critical to the Company's future prosperity.
Forward Looking Statement
The Company is currently progressing a 50% reduction of its tenements as required by Zambian law. The new Zambian mines act also
requires that a maximum area of 5,000km2 be held under tenements by any one company. As a result the Company is currently reviewing
strategic options with respect to its tenement holdings and will announce these to the market once it has reached satisfactory agreement
with the Zambian government.
Financials
Following are extracts from the reviewed consolidated financial statements for the 6 months to 30 September 2008:
� Consolidated income statement.
� Consolidated balance sheet.
� Consolidated cashflow statement.
� Consolidated statement of changes in equity.
Downloads, including a full version of the financial statements for the 6 months ended 30 September 2008, are available from the Zambezi
website at: www.zambeziresources.com
For Further Information please contact:
Julian Ford, Managing Director Simon Edwards / Adam Lloyd
Zambezi Resources (Australia) Evolution Securities Ltd
+61 (08) 9216 9000 + 44 20 7071 4300
+61 (0) 418 949 580
Fiona Owen
Grant Thornton UK LLP
+44 20 7383 5100
CONDENSED CONSOLIDATED INCOME STATEMENT
FOR THE HALF-YEAR ENDED 30 SEPTEMBER 2008
NOTES SIX MONTHS SIX MONTHS
30 SEP 2008 30 SEP 2007
� �
Revenue 57,811 175,478
Gain on deconsolidation - Lithic Metals & - 327,188
Energy Limited
Share of losses of associates accounted for
using equity method - (174,013)
Change in fair value of non-current assets
classified as held for sale (946,975) -
Personnel costs (868,037) (967,717)
Depreciation expense (80,126) (77,608)
Travel costs (116,185) (140,692)
Consultants expense (77,706) (56,520)
Marketing costs (63,601) (89,641)
Leasing & hiring costs (100,542) (125,710)
Insurance costs (62,203) (55,105)
Legal & regulatory costs (72,303) (41,791)
Office administration costs (31,088) (55,887)
Director fees expense (25,000) (23,750)
Exploration expenditure written off (8,079,222) -
Other operating expenses (465,413) (320,695)
Loss before tax (10,930,590) (1,626,463)
Income tax expense - (10,836)
Loss after taxation for the financial (10,930,590) (1,637,299)
period
Loss attributable to minority equity - (51,959)
interest
Loss attributable to members of the Group (10,930,590) (1,585,340)
(10,930,590) (1,637,299)
Basic and diluted loss per share 4 (0.06) (0.01)
CONDENSED CONSOLIDATED BALANCE SHEET
AS AT 30 SEPTEMBER 2008
NOTES 30 SEP 2008 31 MAR 2008
� �
ASSETS
Non-current Assets
Property, plant and equipment 359,183 333,451
Mineral Interests 7 6,700,000 10,931,428
Investments in associates - 1,139,117
Total non-current assets 7,059,183 12,403,996
Current Assets
Trade and other receivables 807,831 678,843
Prepayments 216,388 157,919
Inventories 157,886 47,109
Cash and cash equivalents 964,209 4,410,615
2,146,314 5,294,486
Non-current assets classified as held for 133,168 -
sale
Total current assets 2,279,482 5,294,486
Total Assets 9,338,665 17,698,482
EQUITY AND LIABILITIES
Current Liabilities
Trade and other payables 1,981,105 1,083,752
Borrowings - 10,988
Tax liability 327,024 298,067
Provisions 591,485 452,479
Total current liabilities 2,899,614 1,845,286
Total liabilities 2,899,614 1,845,286
Equity
Issued capital 6 1,978,762 1,881,853
Share premium reserve 6 21,161,263 20,730,095
Options & warrants reserve 1,107,389 1,079,989
Foreign currency translation reserve 886,423 (74,545)
Accumulated loss (18,694,786) (7,764,196)
Equity attributable to equity holders of
the Parent 6,439,051 15,853,196
Total equity and liabilities 9,338,665 17,698,482
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE HALF-YEAR ENDED 30 SEPTEMBER 2008
NOTES SIX MONTHS SIX MONTHS
30 SEP 2008 30 SEP 2007
� �
Issued Capital
Opening balance 1,881,853 1,300,229
Issued during the period 96,909 579,624
Closing balance 6 1,978,762 1,879,853
Share Premium Reserve
Opening balance 20,730,095 11,225,456
Premium on shares 461,102 10,057,037
Less capital raising costs (29,934) (583,852)
Closing balance 6 21,161,263 20,698,641
Options & Warrants Reserve
Opening balance 1,079,989 518,677
Reversal on deconsolidation of Lithic
Metals & Energy Limited - (33,841)
Options issued during the period 27,400 475,088
Closing balance 1,107,389 959,924
Accumulated Losses
Opening balance (7,764,196) (4,580,267)
Reversal of dilution reserve on
deconsolidation of Lithic Metals & Energy - 267,448
Limited
Loss for the period (10,930,590) (1,585,340)
Closing balance (18,694,786) (5,898,159)
Foreign Currency Translation Reserve
Opening balance (74,545) (147,188)
Exchange differences arising on
translation of overseas operations 960,968 (141,854)
Closing balance 886,423 (289,042)
Dilution Reserve
Opening balance - 267,448
Reversal of dilution reserve on
deconsolidation of Lithic Metals & Energy - (267,448)
Limited
Closing balance - -
Total Equity attributable to equity
holders of the Parent 6,439,051 17,351,217
Minority Interest
Opening balance - 1,111,397
Changes in minority interest - (1,111,397)
Closing balance - -
Total Equity 6,439,051 17,351,217
CONDENSED CONSOLIDATED CASHFLOW STATEMENT
FOR THE HALF-YEAR ENDED 30 SEPTEMBER 2008
SIX MONTHS SIX MONTHS
30 SEP 2008 30 SEP 2007
� �
Net cash utilised in operating activities (1,404,381) (1,671,358)
Cash flows from investing activities
Payments for mineral interests (5,180,634) (3,747,097)
Purchase of property, plant and equipment (111,600) (74,260)
Proceeds from sale of property, plant and 9,394 -
equipment
Net cash utilised by investing activities (5,282,840) (3,821,357)
Cash flows from financing activities
Net proceeds from issue of share capital 528,077 10,052,809
Repayment of borrowings (10,067) (1,161)
Joint Venture Partner contributions 2,722,805 3,008,798
Net cash generated from financing activities 3,240,815 13,060,446
Net increase/(decrease) in cash and cash (3,446,406) 7,567,731
equivalents
Cash and Cash equivalents at beginning of 4,410,615 2,175,315
period
Cash and cash equivalents at the end of period 964,209 9,743,046
This information is provided by RNS
The company news service from the London Stock Exchange
END
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