RNS Number:5218J
Cluff Mining PLC
02 April 2003
CLUFF MINING PLC
Preliminary results for the year ended 31 December 2002
Cluff Mining PLC ("the Company") is a UK-based mining and exploration group. The
Company has an aggressive exploration campaign underway in South Africa focused
on its Platinum Group Metals ("PGM") projects.
* Preliminary results of phase II exploration suggest that Sheba's
Ridge resources will exceed previous estimates
* Joint venture agreement with Anglo Platinum for Sheba's Ridge
completed
* Blue Ridge feasibility close to completion
* Publication of South African Minerals Act and proposed mining
royalties regime brings greater certainty to operating environment
Mr. J. G. Cluff, Chairman and Chief Executive, commented:
"We have made enormous strides in progressing the feasibility study at Blue
Ridge since the initial delay (communicated to shareholders in November) and are
on course to report the results by June 2003. Meanwhile, we have accelerated the
drilling programme at Sheba's Ridge following encouraging initial results there.
This will be an exciting year for the Company and I look forward to reporting
further progress in due course."
2 April 2003
ENQUIRIES:
Cluff Mining PLC Tel: +44 20 7495 2030
J.G.Cluff (Chairman & Chief Executive)
Terence Wilkinson (Group Operations Director)
Donald McAlister (Finance Director)
College Hill Associates Tel: +44 20 7457 2020
Mark Garraway
Michael Spriggs
Chairman's Statement
Since I last reported to shareholders at the interim stage in September last
year, the Company has made progress on a number of fronts. Following the very
successful placing and open offer in July 2002 we have applied part of the funds
raised to our drilling campaigns and as a result have been able, strikingly, to
upgrade our resource at Blue Ridge and have progressed the Blue Ridge
feasibility study to the stage where we can be confident that we will have at
least one platinum mine in our portfolio.
In addition, exploration at Sheba's Ridge and the conclusion of a joint venture
agreement with Anglo Platinum reinforces our belief that this project has the
potential to be significantly larger than Blue Ridge.
Blue Ridge
It was our intention when I wrote to you at the interim stage to have completed
the feasibility study by now. In the event, certain unforeseen circumstances
have prevailed over this timetable. In particular there were permitting delays
concerning approval to extract a bulk sample for pilot scale metallurgical test
work and additional planning has arisen from the acquisition of further mineral
rights in the area as announced in December 2002 and the incorporation of these
additional resources into the feasibility study. All sample permitting issues
have been resolved and pilot scale testwork has now been completed.
The feasibility study is continuing on schedule with few surprises and some
improvements, and is expected to be completed towards the end of June 2003. The
acquisition of the contiguous Portion 15 has enabled drilling to commence and
this will potentially add significantly to the resource base.
Furthermore, the bulk samples that have been processed under pilot plant
conditions have returned higher recoveries (82% to 86%) than originally assumed
(76%), with clean concentrate containing levels of deleterious elements far
below penalty levels
Sheba's Ridge
Earlier this year, we concluded the joint venture agreement with Anglo Platinum.
Our exploration programme had already progressed in anticipation of this and
we have been sufficiently encouraged by the preliminary results from our Phase
II drilling programme that we recently took the decision to accelerate this
programme by increasing the number of drill rigs on site from five to seven.
Drilling on Sheba's Ridge recommenced in early January. Whereas previous work on
the deposit has focused on the UG2-like Platchro layer and the UMP, the current
focus of activity is the considerably shallower Platreef.
The strike length, defined by mapping, geophysics, geochemistry and drilling, of
the Platreef across the Cluff controlled property is around 11km, 5km of which
underlies the ground under joint venture with Amplats.
Amplats' previous work on the area had intersected the Platreef from surface to
depths of around 200 metres in the up-dip northern domain. The Cluff drilling
and trenching programme has intersected the Platreef from surface to a depth of
650 metres beneath the southern domain. The internal structure of the Sheba's
Ridge Platreef contains three distinct styles of mineralisation. The Platreef as
a whole is 50-130 metres thick, and has a bulk grade of about 1.5 g/t PGE. There
are a number of intervals within the body of the Platreef, between 6 and 22
metres thick, that grade at 2-3 g/t PGE. Within these lie the highest grade
units, of approximately 4 metres thickness, with grades of 2.8 to 6.4 g/t. Cluff
and Amplats drilling has confirmed that this structure occurs more than 4
kilometres apart in the core part of the property, and it carries to depth.
The ongoing drilling programme, now with 32 holes completed but assays returned
only from 11, has already sampled a 1,500 metre strike at centres of 200 m to
400 m, to depths up to 400 metres. Intersections range from 5 to 130 metres. The
thicker intersections generally carry lower grades (Pt+Pd) of around 2 g/t,
while the thinner intersections carry elevated grades of up to 5 g/t in the data
so far. The Pt:Pd ratio is between 0.5 and 1.3, and base metal contents are
between 0.15% and 0.45% for both copper and nickel. The Platreef is sulphide
rich.
This phase of the drilling programme is planned to total 25,000m, and is
expected to be completed in November.
Our current state of knowledge on the extent of the potential resource at
Sheba's Ridge precludes the publication of an audited resource update at this
stage. However, we are becoming increasingly confident that the project contains
resources in excess of our previously published estimates with the growing
possibility of a large-scale bulk open pit operation on the Platreef
mineralisation. It is because of that potential scale that more work has to be
done to verify our expectations. The current phase of drilling and associated
assay work is expected to be concluded in November 2003, following which
shareholders will be advised of progress.
Gold
The definitive feasibility study for the Kalsaka Gold Deposit in Burkina Faso
has now been completed. We continue to determine the appropriate way forward
and are finalising plans either for a sale or for a demerger.
General
The loss reported for the year was US$9.6 million and this is after providing
US$6.8 million against our non-core assets.
I expect 2003 to be an important year in achieving our aim to become a
significant platinum producer with the completion of the Blue Ridge feasibility
study followed by the sourcing of project finance and commencement of
construction of the mine at Blue Ridge. In addition we should achieve a clearer
definition of Sheba's Ridge which has the potential to be substantially larger
than Blue Ridge.
Mzi Khumalo joined our Board last year following his welcome support for our
placing in July and the further confidence he evinced by buying the Sperrylite
Group's rights to additional Cluff shares as and when certain defined targets
are reached. Mr. Khumalo's investment virtually secures for us the level of
transfer of ownership to Historically Disadvantaged South Africans which the
South African Mining Charter requires us to achieve within five years. The
Company is, I am pleased to say, in the vanguard of companies engaging in black
empowerment provisions.
I am also pleased to welcome Dr. Robert Danchin to our board. Dr Danchin,
previously head of new business projects at Anglo American, brings further
welcome technical strength to our non-executive team.
Mining in South Africa has developed a political dimension since the
introduction of the Minerals' Act - and of its handmaiden the Mining Charter
last year - as well as the more recent publication of the Royalty Bill.
A degree of anxiety about the increased political risk of investing in South
Africa arose amongst many professional investors. Whilst conceding that the
means by which the government proposals became public could have been more
coherently managed, I have no doubt whatever that both the Bill and the Charter
should be welcomed by investors as a clear sign that Black Empowerment means
genuine participation and not confiscation and that it will herald a stable
outcome for the mining industry which the absence of such legislation would
certainly not have achieved.
I am pleased to announce that N. M. Rothschild and Sons have been appointed
corporate adviser to the Company alongside Investec Bank (UK) Limited which
remains the Company's Nominated Adviser. Canaccord Capital (Europe) Limited has
been appointed as the Company's Nominated Broker.
I would like to thank shareholders and staff for their continued commitment and
look forward to what should prove a very exciting year for your Company.
J.G. Cluff
Chairman & Chief Executive
Consolidated profit and loss account
for the year ended 31 December 2002
Note 2002 2001
US$000 US$000
Turnover including share of joint
venture turnover 414 3,832
Less: share of joint venture turnover -
continuing operations
(198) (2,169)
Turnover from Group production 216 1,663
Continuing operations - -
Discontinued operations 216 1,663
Cost of sales (317) (2,183)
Gross loss (101) (520)
Administrative expenses (3,900) (3,404)
Exploration costs written off 2 (6,760) (3,082)
Exchange loss on monetary assets in Zimbabwe (59) (589)
Total administrative expenses (10,719) (7,075)
Other operating income 1 -
Group operating loss (10,819) (7,595)
Continuing operations (10,592) (6,831)
Discontinued operations (227) (764)
Share of operating loss of joint venture -
continuing (110) (252)
Operations
Share of operating loss of associate -
continuing
Operations (684) -
Total operating loss (11,613) (7,847)
Profit on sale of discontinued operation 1,733 -
Net interest receivable/(payable) and similar 258 (329)
items
Loss on ordinary activities before and after
taxation, and loss retained for the year (9,622) (8,176)
2002 2001
US cents US cents
Basic and diluted loss per ordinary share (46) (59)
Consolidated balance sheet
at 31 December 2002
2002 2001
US$000 US$000 US$000 US$000
Fixed assets
Tangible fixed assets 22,123 16,804
Investments:
Joint ventures - share of gross assets 149 186
- share of gross (149) (60)
liabilities
- 126
Associates 800 1,484
Total investments 800 1,610
22,923 18,414
Current assets
Stocks - 3
Debtors 424 313
Cash at bank and in hand 26,147 5,778
26,571 6,094
Creditors: amounts falling due within one year
(including convertible debt) (9,213) (5,643)
Net current assets 17,358 451
Total assets less current liabilities 40,281 18,865
Creditors: amounts falling due after more than
one year (including convertible debt in 2001) - (3,044)
Provisions for liabilities and charges - (182)
Net assets 40,281 15,639
Capital and reserves
Called up share capital 1,378 922
Shares to be issued - 965
Share premium account 56,350 27,045
Merger reserve 29,197 23,856
Profit and loss account (46,644) (37,149)
40,281 15,639
Analysis of shareholders' funds
Equity 40,201 15,566
Non-equity 80 73
40,281 15,639
Consolidated cash flow statement
for the year ended 31 December 2002
2002 2001
US$000 US$000 US$000 US$000
Net cash outflow from operating activities (3,282) (3,849)
Dividends from joint ventures 16 1,032
Returns on investments and servicing
of finance
Interest received 662 190
Interest paid - (15)
662 175
Capital expenditure and financial investment
Expenditure in respect of fixed assets (9,565) (2,958)
Contribution to associates - (1,877)
(9,565) (4,835)
Acquisitions and disposals
Acquisition of subsidiary - (1,209)
Cash acquired with subsidiary - 124
Disposal of subsidiary 3,013 -
Cash disposed of with subsidiary (100) -
2,913 (1,085)
Net cash outflow before financing (9,256) (8,562)
Financing
Issue of ordinary share capital 31,404 14,488
Issue costs (1,720) (1,024)
Repayment of leases - (13)
29,684 13,451
Increase in cash in the year 20,428 4,889
Reconciliation of net cashflows to movement in net debt
for the year ended 31 December 2002
Note 2002 2001
US$000 US$000
Increase in cash 20,428 4,889
Repayment of leases - 13
Change in net debt arising from cash flows 20,428 4,902
Disposal of finance lease 8 -
Inception of finance leases - (8)
Interest rolled-up into loans (403) (485)
Exchange (59) (589)
Movement in net funds/(debt) 19,974 3,820
Net debt at start of year (2,131) (5,951)
Net funds/(debt) at end of year 3 17,843 (2,131)
Consolidated statement of total recognised gains and losses
for the year ended 31 December 2002
2002 2001
US$000 US$000
Loss for year (9,622) (8,176)
Exchange gains/(losses) on foreign currency net investments 127 (432)
Total recognised loss for the year (9,495) (8,608)
Reconciliation of movements in shareholders' funds
for the year ended 31 December 2002
2002 2001
US$000 US$000
Loss for the year (9,622) (8,176)
Exchange gains/(losses) on foreign currency net investments 127 (432)
New share capital subscribed 35,102 15,977
Shares to be issued (965) (1,642)
Net increase in shareholders' funds 24,642 5,727
Shareholders' funds at beginning of year 15,639 9,912
Shareholders' funds at end of year 40,281 15,639
1. Basis of financial information
The financial information in this announcement has been extracted from the
audited financial statements for the two years ended 31 December 2002. This
information does not represent the statutory accounts of the Company for either
of the two years ended 31 December 2002. The statutory accounts for the year
ended 31 December 2001 have been filed with the registrar of companies.
The auditors' reports on the statutory accounts for the two years ended 31
December 2002 were unqualified and did not contain statements under Section 237
(2) (regarding adequacy of accounting records and returns) or under Section 237
(3) (provision of necessary information and explanations) of the United Kingdom
Companies Act 1985.
2. Exploration Costs Written Off
During the year the Group has increased the provision for impairment against its
deferred exploration asset relating to the Kalsaka project in Burkina Faso by
US$6,378,000, resulting in a total provision of US$7,185,000 against Kalsaka
assets. The remaining US$382,000 of the provision for impairment is against the
Group's deferred exploration asset relating to the Seripe project in Ghana
3. Analysis of net funds/(debt)
At Interest
beginning Disposal rolled-up Exchange At end
of year of subsidiary Cash flow into loans Movements of year
US$000 US$000 US$000 US$000 US$000 US$000
Cash at bank 5,778 - 20,428 - (59) 26,147
Finance leases (8) 8 - - - -
Other debt (7,901) - - (403) - (8,304)
Total (2,131) 8 20,428 (403) (59) 17,843
The exchange movement relates to the Zimbabwean dollar devaluation relative to
the US$ specifically relating to cash dividends received in Zimbabwe.
4. Dividends
No dividend is proposed.
5. Post balance sheet events
On 14 February 2003 Cluff Mining PLC entered into a joint venture agreement with
Anglo Platinum to prospect and develop the Sheba's Ridge Platinum Project in the
Mpumulanga province, South Africa. Cluff Mining PLC paid consideration of
US$5,000,000 in cash and a further US$3,000,000 in shares or cash is payable to
Anglo Platinum prior to 6 September 2003 to increase the Group's interest in the
joint venture to 65%.
On 14 January 2003 the Group repaid its loan from Anmercosa African Ventures
Limited. The balance of this loan at the year end was US$3,157,000.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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