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Interim Results

RNS Number : 7797I
African Potash Ltd
30 March 2015
 

African Potash Limited / Index: AIM / Epic: AFPO / Sector: Mining

30 March 2015

African Potash Limited ('African Potash' or 'the Company')

Interim Results

 

African Potash Limited, the AIM listed African exploration company, is pleased to announce its unaudited results for the six months ended 31 December 2014.

 

HIGHLIGHTS:

 

·     Focus on the Lac Dinga Potash Project - an  exploration licence in the Republic of Congo in one of the world's premier potash basins

·     Commercial potential of Lac Dinga further demonstrated through the completion of a maiden drilling campaign which intersected uniform potash mineralisation in three laterally continuous horizons

·     Strategy to evaluate potential funding mechanisms and strategic partnerships to fund the next phase of exploration and drive onward development

 

CHAIRMAN'S STATEMENT

 

It gives me great pleasure to deliver my introductory statement as African Potash's new Chairman, following my appointment earlier this month.  Firstly, I would like to take this opportunity to thank Ed Marlow and Jean-Pierre Conrad, the Company's previous leadership team, for their excellent work in identifying and delivering our flagship Lac Dinga Potash Project in the Republic of Congo ('Lac Dinga' or 'the Project') to the group.  In line with this, the main thrust of the Company's activities and attention during the past year have focused on the appraisal of the resource potential of Lac Dinga; I am pleased to report that the asset that I have inherited as Chairman has considerable commercial and strategic worth, and we are well placed to begin translating this potential into crystallised value.

 

Lac Dinga is located in one of the premier potash bearing regions globally - not only does this basin host high grade sylvinite mineralisation at attractive depths, but its location close to key infrastructure supports lowest-quartile cash costs for exploitation.  These key attributes have made this particular coastal basin in the Republic of Congo an area of considerable interest to private and state-run enterprises internationally, as key decision makers look to secure long term potash supplies to support fertiliser production and agricultural development.

 

The Company holds its interest in Lac Dinga through its 70% interest in La Société des Potasses et des Mines S.A. ('SPM') which holds the exclusive right to conduct mining research activities for potash salts over the Project.  The Project encompasses 702.5 sq km of prime coastal potash basin in the Kouilou region, extending 57km NW-SE, and is adjacent to the Dougou Potash Deposit, part of the Sintoukola Potash Permit, held by Elemental Minerals Limited (ASX/TSX: ELM) and the Makola licence of Evergreen Resources Holdings (BVI) Ltd.  The Dougou Potash Deposit has a JORC compliant Measured and Indicated mineral resource of 1.1Bt grading 22% KCl.

 

With such a dominant position in this strategically important potash region, the Company's focus during the period under review has been to begin to prove up the resource potential of the Project, moving it up through the development curve to provide further exposure in the global marketplace and open up potential tactical discussions with prospective off-takers, investors or joint venture partners.  The first step in this process was to plan and initiate a drilling campaign.  Preparations for this began in early-2014 following the acquisition and interpretation of 415 line kilometres of oil exploration 2D seismic data covering 470km2 on and around the Project.  This interpretation delineated two areas prioritised for immediate drilling.  The targets were identified near the basin margin where favourable conditions are interpreted for the formation of high-grade potash mineralisation.

 

Drilling of the first hole, LDDH_001, began in August 2014.  This hole intersected a 120m thick salt sequence from about 415m below surface; this salt sequence hosts multiple potash seams totaling approximately 40m, representing 35% of the total interval and confirmed the laterally extensive salt and potash mineralisation in the Congolese costal basin, supporting the Company's confidence that approximately 250km2 of the licence area is underlain by salt-bearing strata.  The second hole (LDDH_002), which intersected a 112m thick salt sequence, was completed in October 2014.  This salt sequence also included multiple potash seams totaling about 48m, representing 43% of the total interval.  Together with the results from LDDH_001, this second hole further underpins the laterally extensive salt and potash mineralisation, which is characteristic of the Congolese costal basin, and reinforces the Project's potential to host a significant commercial deposit.

 

In the light of these highly encouraging results the Board is currently evaluating its various options to maximise the value of the asset whilst conserving its cash resources.  As shareholders will be aware, in August 2014 the Company entered into a convertible securities issuance deed with Bergen Opportunity Fund, LP ('Bergen'), whereby Bergen could invest up to US$3,750,000 payable in four tranches.  This agreement enabled the Company to complete its initial drilling campaign at Lac Dinga, however in order to minimise the potential dilution under the facility, the Company elected to terminate the facility on 9 February 2015. The Company continues to evaluate alternative funding mechanisms and strategic partnerships with the objective of funding the next phase of exploration.  It should be reiterated that shareholder value remains of paramount importance to the Board, and this remains at the forefront of our negotiations with regards to future funding opportunities.

 

Financial Results

The Group is reporting a loss attributable to equity shareholders of US$660,000 (2013: US$554,000).  At 31 December 2014 cash balances were US$679,000 (30 June 2014: US$2,170,000).

 

Outlook

My involvement in African Potash comes at a pivotal time for the Company, as we look to build on the exploration progress made in 2014 and try to translate this into tangible value moving forward.  We are exploring a number of different strategic opportunities through which to do this, and I plan to leverage my corporate experience, built over many years' of operating in Africa, to deliver to the optimum route for crystallising the value for shareholders.

 

I would like to thank both our shareholders and our team for their support and look forward to providing updates on the Company's activities as we look to advance the Project and evaluate additional opportunities which we believe offer material value.

 

Chris Cleverly

Chairman

27 March 2015

 

For further information visit www.africanpotash.com or contact the following:

Chris Cleverly

African Potash Limited

+44 (0) 20 7236 1177

David Foreman

Cantor Fitzgerald Europe

+44 (0) 20 7894 7000      

Stewart Dickson

Cantor Fitzgerald Europe

+44 (0) 20 7894 7000      

Susie Geliher

St Brides Partners Ltd

+44 (0) 20 7236 1177      

Charlotte Heap

St Brides Partners Ltd

+44 (0) 20 7236 1177      

 

 

Unaudited Consolidated Income Statement

For the half year to 31 December 2014

 



Unaudited

6 months to

31 December

2014

Unaudited

6 months to

31 December

2013

Unaudited

Year ended

30 June

2014


Note

$'000

$'000

$'000





Operating expenses


(545)

(555)

(1,020)

Operating loss


(545)

(555)

(1,020)

Net finance (expense) / income

5

(115)

1

1

Loss before taxation


(660)

(554)

(1,019)

Income tax expense


-

-

-

Loss for the period


(660)

(554)

(1,019)






Attributable to :





Owners of the parent company


(660)

(554)

(1,019)

Non-controlling interests


-

-

-



(660)

(554)

(1,019)

Loss per share: basic and diluted

 

6

(0.22 cents)

(0.24 cents)

 

(0.44 cents)






All results relate to continuing activities

 

Unaudited Consolidated Comprehensive Income Statement

For the half year to 31 December 2014

 



Unaudited

6 months to

31 December

2014

Unaudited

6 months to

31 December

2013

Unaudited

Year ended

30 June

2014



$'000

$'000

$'000

Loss for the period


(660)

(554)

(1,019)

Other comprehensive income





Exchange translation differences on foreign operations


213

(28)

11

Total comprehensive income for the period


(447)

(582)

(1,008)






Attributable to :





Owners of the parent company


(447)

(582)

(1,008)

Non-controlling interests


-

-

-



(447)

(582)

(1,008)






 

 

Unaudited Consolidated Statement of Financial Position

As at 31 December 2014

 



Unaudited

31 December

2014

Unaudited

31 December

2013

Unaudited

30 June

2014


Note

$'000

$'000

$'000






Non-current assets





Intangible assets: exploration activities

17,684

13,609

14,523

Property plant and equipment

153

52

56

Total non-current assets


17,837

13,661

14,579






Current assets





Trade and other receivables


353

105

576

Cash and cash equivalents


679

2,563

2,170

Total current assets


1,032

2,668

2,746






Total assets


18,869

16,329

17,325






Current liabilities





Trade and other payables


(659)

(749)

(396)

Deferred consideration


(800)

(800)

(800)






Net assets


17,410

14,780

16,129






Equity





Issued capital

7

14,571

12,456

13,897

Shares to be issued


2,800

2,800

2,800

Convertible securities

8

1,030

-

-

Share based payment reserve


380

22

356

Foreign exchange translation reserve

191

(61)

(22)

Retained earnings


(4,709)

(3,584)

(4,049)

Total equity attributable to equity holders


 

14,263

 

11,633

 

12,982

Non controlling interests


3,147

3,147

3,147

Total equity


17,410

14,780

16,129











 

Unaudited Statement of Changes in Equity

 


 

Ordinary share capital

$'000

 

Shares

 to be issued $'000

 

 

Convertible securities $'000

Share based payment reserve $'000

Foreign exchange translation reserve $'000

 

 

Retained earnings

$'000

 

 

 

Total

$'000

 

Non-

controlling interest $'000

 

 

 

Total

$'000

Balance at 1 July 2013

12,456

2,800

-

12

(33)

(3,030)

12,205

3,147

15,352

Loss for the period

-

-

-

-

-

(554)

(554)

-

(554)

Other comprehensive income










Exchange translation differences on foreign operations

-

-

-

-

(28)

-

(28)

-

(28)

Total comprehensive income for the period

-

-

-

-

(28)

(554)

(582)

-

(582)

Transactions with owners










Share based payment charge

-

-

-

10

-

-

10

-

10

Total transactions with owners

-

-

-

10

-

-

10

-

10

Balance at 31 December 2013

12,456

2,800

-

22

(61)

(3,584)

11,633

3,147

14,780

Loss for the period

-

-


-

-

(465)

(465)

-

(465)

Other comprehensive income










Exchange translation differences on foreign operations

-

-

-

-

39

-

39

-

39

Total comprehensive income for the period

-

-

-

-

39

(465)

(426)

-

(426)

Transactions with owners










Issue of shares

1,441

-

-

-

-

-

1,441

-

1,441

Share based payment charge

-

-

-

334

-

-

334

-

334

Total transactions with owners

1,441

-

-

334

-

-

1,775


1,775

Balance at 1 July 2014

13,897

2,800

-

356

(22)

(4,049)

12,982

3,147

16,129

Loss for the period

-

-

-

-

-

(660)

(660)

-

(660)

Other comprehensive income










Exchange translation differences on foreign operations

-

-

-

-

213

-

213

-

213

Total comprehensive income for the period

-

-

-

-

213

(660)

(447)

-

(447)

Transactions with owners










Issue of shares

674

-

-

-

-

-

674

-

674

Issue of convertible loan note

-

-

1,030

-

-

-

1,030

-

1,030

Share based payment charge

-

-

-

24

-

-

24

-

24

Total transactions with owners

674

-

1,030

24

-

-

1,728

-

1,728

Balance at 31 December 2014

14,571

2,800

1,030

380

191

(4,709)

14,263

3,147

17,410











 

 

Unaudited Consolidated Statement of Cash Flows

 

For the half year to 31 December 2014

Unaudited

6 months to

31 December

2014

Unaudited

6 months to

31 December

2013

Unaudited

year ended

30 June

2014

Operating activities


$'000

$'000

$'000

Loss before tax


(660)

(554)

(1,019)

Adjustments for:





Loss on disposal of property, plant and equipment

-

-

4

Share based payment change

-

10

12

Movements in exchange

(1)

(29)

(31)

Net interest expense / (income)


115

(1)

(1)

Operating cash flow before movements in working capital


(546)

(574)

(1,035)

Working capital adjustments:





- Decrease / (increase)  in receivables

14

(5)

(475)

- Increase / (decrease) in payables


127

192

(157)

Cash used in operations


(405)

(387)

(1,667)

Net interest received


-

1

1

Net cash outflow from operating activities

(405)

(386)

(1,666)






Investing activities





Purchase of intangible assets


(2,196)

(536)

(1,253)

Purchase of property, plant and equipment


(122)

(2)

(15)

Net cash flow from investing activities

(2,318)

(538)

(1,268)





Financing activities




Issue of shares

-

-

1,615

Issue of convertible securities

1,237

-

-

Net cash flow from financing activities

1,237

-

1,615

Net decrease in cash and cash equivalents

(1,486)

(924)

(1,319)

Cash and cash equivalents at start of the period

2,170

3,488

3,488

Effect of foreign exchange rates

(5)

(1)

1

Cash and cash equivalents at end of the period


679

2,563

2,170

 

 

 

Notes to the Unaudited Interim Financial Statements

 

1.

General information

 

African Potash Limited ('African Potash' or the 'Company') has an investing policy to acquire potash (and associated minerals) assets in Africa.  African Potash is a public limited company incorporated and domiciled in the Guernsey.  The address of its registered office is Richmond House, St Julians Avenue, St Peter Port, Guernsey GY1 1GZ.

 

The Company is listed on the AIM Market of London Stock Exchange plc.

 

The unaudited interim financial statements for the 6 months ended 31 December 2014 were approved for issue by the board on 27 March 2015.

 

The interim financial statements for the 6 months ended 31 December 2014 and the 6 months ended 31 December 2013 are unaudited and do not constitute full accounts.  The comparative figures for the period ended 30 June are extracts from the annual report and do not constitute statutory accounts.

 

The unaudited interim financial statements have been prepared in US Dollars as this is the currency of the primary economic environment in which the Group operates.

 

2.

Basis of preparation

 

The condensed consolidated financial statements of the Group for the six months ended 31 December 2014, which are unaudited and have not been reviewed by the Company's auditor, have been prepared in accordance with the International Financial Reporting Standards ('IFRS'), as adopted by the European Union, accounting policies adopted by the Group and set out in the annual report for the year ended 30 June 2014 (available at www.africanpotash.com). The Group does not anticipate any significant change in these accounting policies for the year ended 30 June 2015. References to 'IFRS' hereafter should be construed as references to IFRSs as adopted by the EU.

 

This interim report has been prepared to comply with the requirements of the AIM rules of the London Stock Exchange (the 'AIM Rules'). In preparing this report, the Group has adopted the guidance in the AIM Rules for interim accounts which do not require that the interim condensed consolidated financial statements are prepared in accordance with IAS 34, 'Interim financial reporting'. While the financial figures included in this report have been computed in accordance with IFRSs applicable to interim periods, this report does not contain sufficient information to constitute an interim financial report as that term is defined in IFRSs.

 

The financial information contained in this report also does not constitute statutory accounts under the Companies (Guernsey) Law 2008, as amended. The financial information for the year ended 30 June is based on the statutory accounts for the year then ended. The auditors reported on those accounts. Their report was unqualified and did not include any statements of emphasis of matter.

 

3.

Significant accounting policies

 

Basis of accounting

The unaudited interim financial statements have been prepared on the historical cost basis except for financial instruments measured at fair value.  The principal accounting policies adopted are consistent with those of the financial statements for the year ended 30 June 2014.

 

4.

Segment information

 

The directors consider that the Company operates in a single segment, Potash exploration and in one geographical segment, Africa.

 

5.

Finance costs

 



Unaudited

6 months to

31 December

2014

Unaudited

6 months to

31 December

2013

Unaudited

Year ended

30 June

2014



$'000

$'000

$'000

Net finance (expense) / income


(115)

1

1

 

The finance costs arising in the period ending 31 December 2014 are the facility fees incurred in arranging the Bergen convertible loan note facility (see note 8).

 

6.

Earnings per share

 

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

 



Unaudited

6 months to

31 December

2014

Unaudited

6 months to

31 December

2013

Unaudited

year ended

30 June

2014



$'000

$'000

$'000

Loss for the purpose of calculating basic loss per share attributable to equity holders

 

(660)

 

(554)

 

(1,019)

Number of shares





Weighted average number of ordinary shares for the purposes of calculating basic and diluted loss per share

 

 

294,849,389

 

 

226,583,062

 

 

233,784,359





Basic and diluted loss per share (cents)

(0.22c)

(0.24c)

(0.44c)

 

7.

Share Capital

 




Ordinary shares of no par value




Allotted and fully paid




Number

$'000






At 1 June 2013 and 31 December 2013


226,583,062

12,456

Issue of shares



58,410,520

1,441

At 1 July 2014


284,993,582

13,897

Issue of shares


16,347,351

674

At 31 December 2014


301,340,933

14,571






 

On 12 May 2014, 58.4 million ordinary shares were issued at 1.9p per share to fund the Phase 1 drilling and exploration program.

 

On 8 August 2014, the company issued 6.3m at 3.5p shares in connection with the Bergen convertible securities facility (see note 8) and 1.4m  shares at 3.5p in lieu of payment to an advisor.

 

On 12 September 2014, 4.9m shares were issued upon conversion of $200,000 of convertible securities.

 

On 20 November 2014 a further 3.7m shares were issued upon conversion of $100,000 of convertible securities.

 

8.

Convertible securities

 

On 8 August 2014, the company entered into a facility with Bergen Global Opportunity Fund, LP, whereby convertible securities will (subject to the satisfaction of certain conditions) be issued in four tranches up to a nominal value of $3,830,000. The initial Convertible Security had a nominal value of US$830,000 was issued on 14 August 2014.  Each of the three subsequent tranches of Convertible Securities will be issued 90 days after the date of issuance of the previous Convertible Security and have the nominal value of between US$500,000 and US$1,000,000.

 

On 13 November 2014 the second convertible security was issued with a nominal value of $500,000.

 

On 9 February 2015, the company exercised its option to terminate the agreement and no further securities will be issued.

 

The conversion price of the securities is 91% of the average of five daily volume-weighted average prices of the Shares on AIM during a specified period preceding the relevant conversion.


This information is provided by RNS
The company news service from the London Stock Exchange
 
END
 
 
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