TIDMBAO
RNS Number : 3624I
Baobab Resources PLC
25 March 2015
25 March 2015
Baobab Resources plc
Interim Results for the Six Months Ended 31 December 2014
Baobab Resources plc (AIM: BAO) ("Baobab" or the "Company" and
together with its subsidiaries the "Group") is pleased to announce
its unaudited consolidated interim results for the six months ended
31 December 2014.
The 31 December 2014 Interim Financial Report is available for
download from the Company's website (www.baobabresources.com).
Extracts from these financial statements are set out below.
For further information please contact:
Baobab Resources plc
Ben James, Managing Director Tel: +258 21 415 200
Frank Eagar, Finance Tel: +258 21 415 200
Director
Jeremy Dowler, Chairman Tel: +44 1372 450 529
Canaccord Genuity Limited
(Nomad and Broker) Tel: +44 20 7523 8000
Henry Fitzgerald-O'Connor
Chris Fincken
Tavistock (Financial
PR) Tel: +44 207 920 3150
Emily Fenton / Nuala
Gallagher / Jos Simson
ABOUT BAOBAB RESOURCES PLC
Baobab Resources is an exploration and development company
focused on the Tete pig iron and ferro-vanadium project in
Mozambique, in which the International Finance Corporation holds a
12.89% participatory interest. The Company has been listed on the
AIM market of the London Stock Exchange (ticker BAO) since
2007.
BAOBAB RESOURCES PLC
INTERIM RESULTS FOR THE SIX MONTHS ENDED
31 DECEMBER 2014
DIRECTORS' REPORT
PROJECT OVERVIEW
Baobab is wholly focused in Mozambique where it discovered and
defined a 759 million tonne ("Mt") iron ore resource in the Tete
province, one of Africa's fastest growing mining and industrial
centres. Baobab is developing the Tete pig iron and ferro-vanadium
project (the "Tete Project" or the "Project") in partnership with
the International Finance Corporation ("IFC"), which holds a 12.89%
participatory interest.
Due to the Project's strategic access to core iron and steel
making commodities of iron ore, coal, power, water and other raw
materials, Baobab is pursuing a unique opportunity to add value in
country.
As previously highlighted in the Company's annual results
announced on 22 December 2014, Baobab has been investigating
reduced production scenarios with smaller capital requirements and
has engaged with leading Chinese Engineering Procurement and
Construction ("EPC") contractors to further reduce capital costs
and fast-track the Project's execution.
As part of these investigations the Company, alongside potential
EPC contractors, has been assessing the viability of full vertical
integration beyond pig iron and into production of high demand
steel products for growing domestic and regional markets. This
would involve the addition of a basic oxygen furnace, ladle
furnace, continuous casting machine and rolling mill to the current
pig iron flow sheet.
DEFINTIVE FEASIBILITY STUDY
During the period under review the Company has progressed key
elements of the Definitive Feasibility Study ("DFS") on its Tete
Project:
-- A 25 year mining concession was granted by the Minister of Mines during December 2014.
-- Following the appointment of a new Minister of Mines in
January 2015, progress on completing the Mining Contract has been
slightly delayed. The Company however expects the new Minister to
present the contract to the Council of Ministers in due course.
-- Confirmation of the pre-feasibility rotary kiln and smelting
flow sheet through metallurgical pilot scale and bench scale test
work at FLSmidt and Mintek laboratories respectively.
-- Further bench scale pelletising, reduction and smelting test
work with Beijing Shenwu Environment and Energy Technology Company
Limited ("Shenwu") is ongoing with the Company awaiting the final
results.
-- 450 tonne bulk sample has arrived in China and has been routed to China Metallurgical Group Corporation's ("MCC") test work facility whilst the Company is awaiting the outcome of the Offer (defined below).
-- The appointment of an EPC contractor has been put on hold
awaiting the outcome of the Offer (defined below).
-- Discussions with Electricidade de Moçambique ("EDM") and
other Government Departments are ongoing to negotiate the term
sheet received from EDM during December 2014, with all parties
committed towards working to achieve a bankable Power Purchase
Agreement.
-- Although the Company is investigating a vertically integrated
steel complex which will result in a much reduced requirement for
rail and port allocation, the working relationship with Cornelder
de Moçambique, S.A. ("CdM"), is ongoing to ensure any potential
TiO2 slag exports will be handled economically.
DE-LISTING PROPOSAL AND REDBIRD TAKOVER OFFER
It was announced on 27 February 2015, that the Independent
Directors had reached agreement with Baobab's major shareholder,
Redbird Investments Limited ("Redbird"), a wholly owned investment
vehicle of African Minerals Exploration & Development Fund
SICAR, S.C.A. ("Fund I"), on the terms of a proposal for seeking
the cancellation of the admission of the Company's ordinary shares
of 1 pence each ("Shares") to trading on AIM (the "De-Listing") and
the making of a cash offer for all of the Company's Shares not
already owned by Redbird for a cash consideration of 6.0 pence per
Share (the "Offer").
The Independent Directors are unanimously of the view that the
proposed De-Listing is in the best interests of all shareholders,
and will, even if the Offer does not complete, propose a General
Meeting and unanimously recommend that shareholders vote in favour
of the proposed De-Listing. The Independent Directors, who have
been so advised by Canaccord Genuity Limited, as the independent
financial adviser for the purposes of Rule 3 of the Code, when
taking into account the current financial status of the Company,
believe the terms of the Offer to be fair and reasonable and
recommend that Shareholders accept the Offer. In providing its
advice to the Independent Directors, Canaccord Genuity Limited has
taken into account the commercial assessments of the Independent
Directors. The recommendation is further set out in the
announcement dated 27 February 2015, (the "Announcement") and the
Offer Document which is expected to be posted to Baobab
shareholders on or before 27 March 2015.
The Announcement is available for download from the Company's
website at:
http://www.baobabresources.com/investor/delisting-proposal.
FINANCING UPDATE
As at the date of the Announcement, the Company had a working
capital deficit, excluding its existing loans, and therefore
required immediate additional funding. To address this near-term
financing requirement, an affiliate of Redbird agreed to extend
additional bridge financing to Baobab of US$1 million. The extended
bridging loan provided, which now totals US$2 million, is repayable
upon the earlier of (i) the completion of a capital raising by
Baobab if, in the sole discretion of Redbird, the financial
position of Baobab is such that the bridging loan can be repaid in
full; (ii) a change of control of the Company (other than to
Redbird or an Affiliated entity); or (iii) 31 December 2015.
In order to finance the completion of the Bankable Feasibility
Study ("BFS") for the Tete Project, to repay its existing, and
future, indebtedness to Redbird and affiliated entities and to
finance its near term working capital requirements, the Company
requires additional equity in the amount of at least US$12 million.
It is likely that any such equity funding would require the support
of Redbird, which has indicated to the Company that it is no longer
willing to provide further funding to the Company while its Shares
remain publicly quoted but is willing to provide continuing support
to the Company, and thereby safeguard shareholder value, as an
unquoted company. Following the completion of the proposed
De-Listing, the Company intends that an equity financing of at
least US$12 million will proceed as soon as practicable and it is
anticipated to be conducted at a discount to the recent trading
price, and as far as practicable on a pre-emptive basis without
triggering a requirement to file a prospectus or making the offer
available in jurisdictions where regulatory or filing requirements
would be unduly onerous. Redbird intends to fully support such
equity financing.
Should the Offer and subsequent De-Listing not complete by 31
May 2015, a material uncertainty will persist over the Group's
ability to continue as a going concern and the Company is likely to
require further funding to meet its financial obligations.
Ben James
Managing Director
Maputo, Mozambique
25 March 2015
Competent Persons Statement
The information in this release that relates to Exploration
Results is based on information compiled by Managing Director Ben
James (BSc). Mr James is a Member of the Australasian Institute of
Mining and Metallurgy, is a Competent Person as defined in the
Australasian Code for Reporting of exploration results and Mineral
Resources and Ore Reserves, and consents to the inclusion in the
report of the matters based on the information in the form and
context in which it appears.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE SIX MONTHS ENDED 31 DECEMBER 2014
Consolidated Consolidated
Six Months Six Months
Ended Ended
31-Dec-14 31-Dec-13
(Unaudited) (Unaudited)
GBP GBP
Continuing operations
Exploration expenses (1,040,742) (1,691,454)
Administrative expenses (494,741) (1,612,887)
------------- -------------
Loss from operations before
tax (1,535,483) (3,304,341)
Interest received 1,375 6,025
Other income 5,355 31,546
Loss before tax (1,528,753) (3,266,770)
Income tax expense - -
Loss for the period attributable
to equity holders (1,528,753) (3,266,770)
============= =============
Other comprehensive income
Items that may be reclassified
subsequently to profit or
loss
Foreign currency translation
differences (80,834) (26,438)
Total comprehensive loss
for the period attributable
to equity holders (1,609,587) (3,293,208)
============= =============
Loss per share (basic and
diluted) (0.58) (1.26)
============= =============
Total number of shares on
issue 342,338,426 315,338,426
Weighted average number of
shares 275,418,829 261,933,458
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
31 DECEMBER 2014
Consolidated Consolidated
31-Dec-14 30-Jun-14
(Unaudited) (Audited)
GBP GBP
Non-current assets
Property, plant and equipment 140,425 147,897
Loans 33,378 148,550
------------- -------------
Total non-current assets 173,802 296,448
------------- -------------
Current assets
Trade and other receivables 985,752 617,638
Cash and cash equivalents 959,993 2,153,087
------------- -------------
Total current assets 1,945,745 2,770,725
------------- -------------
Total assets 2,119,548 3,067,173
============= =============
Equity attributable to the
equity holders of the parent
Share capital 3,423,384 3,423,384
Share premium 27,304,703 27,304,703
Reserves - options and warrants 2,289,022 2,289,023
Reserves - foreign currency
translation (90,536) (52,406)
Accumulated losses (32,582,517) (30,971,848)
------------- -------------
Total equity 344,056 1,992,856
============= =============
Current liabilities
Trade and other payables 642,162 1,074,317
Loans payable 1,133,330 -
------------- -------------
Total liabilities 1,775,492 1,074,317
============= =============
Total equity and liabilities 2,119,548 3,067,173
============= =============
CONDENSED CONSOLIDATED CASH FLOW STATEMENT
FOR THE SIX MONTHS ENDED 31 DECEMBER 2014
Consolidated Consolidated
Six Months Six Months
Ended Ended
31-Dec-14 30-Dec-13
(Unaudited) (Unaudited)
GBP GBP
Cash flows from operating
activities
Net loss for the period (1,528,753) (3,266,770)
Movement in trade and other
receivables (393,302) (905,915)
Depreciation 20,458 46,017
Movement in trade and other
payables 84,201 541,848
Exchange difference (80,834) (89,321)
Share-based payments - 521,017
------------- -------------
Net cash used in operating
activities (1,898,230) (3,153,124)
------------- -------------
Cash flows from investing
activities
Acquisition of property, plant
and equipment - (11,414)
------------- -------------
Net cash flows used in investing - (11,414)
------------- -------------
activities
------------- -------------
Cash flows from financing
activities
Proceeds from loans 1,133,300 -
Loan repayment (115,172) -
Proceeds from issue of shares - 2,126,500
Share issue costs - (43,590)
Net cash flows from financing
activities 1,018,128 2,082,910
------------- -------------
Net (decrease)/increase in
cash and cash equivalents (880,102) (1,081,628)
Cash and cash equivalents
at beginning of the period 2,153,087 1,425,582
Exchange differences (312,992) 66,422
------------- -------------
Cash and cash equivalents
at end of the period 959,993 410,376
============= =============
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Share Share Warrants Foreign Retained Total
Capital Premium & Option Currency Earnings Equity
Reserve Translation
Reserve
GBP GBP GBP GBP GBP GBP
Balance at 1 July
2013 (audited) 3,011,134 23,229,741 1,257,938 (27,284) (25,610,594) 1,860,935
Loss for the year - - - - (5,373,228) (5,373,228)
---------- ----------- ---------- ------------- ------------- ------------
Foreign exchange
translation differences - - - (25,122) - (25,122)
---------- ----------- ---------- ------------- ------------- ------------
Total other comprehensive
loss - - - (25,122) - (25,122)
---------- ----------- ---------- ------------- ------------- ------------
Total comprehensive
loss for the year - - - (25,122) (5,373,228) (5,398,350)
---------- ----------- ---------- ------------- ------------- ------------
Shares issued 412,250 4,317,269 522,042 - - 5,251,561
Share issue expenses - (242,307) - - - (242,307)
Share based payments - - 521,017 - - 521,017
Share options
and warrants - - (11,974) - 11,974
---------- ------------- ------------- ------------
exercised/forfeited
---------- ------------- ------------- ------------
Balance at 30
June 2014 (audited) 3,423,384 27,304,703 2,289,023 (52,406) (30,971,848) 1,992,856
========== =========== ========== ============= ============= ============
Share Share Warrants Foreign Retained Total
Capital Premium & Option Currency Earnings Equity
Reserve Translation
Reserve
GBP GBP GBP GBP GBP GBP
Balance at 1 July
2014 (audited) 3,423,384 27,304,703 2,289,023 (52,406) (30,971,848) 1,992,856
Loss for the year - - - - (1,528,753) (1,528,753)
---------- ----------- ---------- ------------- ------------- ------------
Foreign exchange
translation differences - - - (38,130) (81,917) (120,047)
---------- ----------- ---------- ------------- ------------- ------------
Total other comprehensive
loss - - - (38,130) (81,917) (120,047)
---------- ----------- ---------- ------------- ------------- ------------
Total comprehensive
loss for the year - - - (38,130) (1,610,670) (1,648,800)
---------- ----------- ---------- ------------- ------------- ------------
Shares issued - - - - -
Share issue expenses - - - - - -
Share based payments - - - - - -
Share options - - - - - -
and warrants
---------- ------------- ------------- ------------
exercised/forfeited
---------- ------------- ------------- ------------
Balance at 31
December 2014
(unaudited) 3,423,384 27,304,703 2,289,023 (90,536) (32,582,518) 344,056
========== =========== ========== ============= ============= ============
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL
STATEMENTS
Note 1 ACCOUNTING POLICIES
The interim statements of the Company for the period ended 31
December 2014 comprise the Company and its subsidiaries (together
referred to as the "Group"). The Group is primarily involved in the
acquisition and development of mineral resource assets.
The financial information contained in this interim report does
not constitute statutory accounts as defined in section 434(3) of
the Companies Act 2006. No statutory accounts for the period have
been delivered to the Registrar of Companies. The financial
information contained in this interim report has not been reviewed
or audited by the auditor.
The accounting policies and methods of computation used in the
preparation of the unaudited consolidated financial information are
the same as those described in the Company's audited consolidated
financial statements and notes thereto for the year ended 30 June
2014.
These interim consolidated financial statements should be read
in conjunction with the Company's audited financial statements and
notes for the year ended 30 June 2014. The annual financial
statements are prepared in accordance with International Financial
Reporting Standards as adopted by the European Union ('IFRSs').
The Group's results are not materially affected by seasonal
variations.
Going concern
The financial statements have been prepared in accordance with
the going concern basis of accounting.
The Group meets its day-to-day working capital requirements
through a positive cash balance. The Group entered into a US$1m
bridge loan facility on 31 October 2014 with AMED in order to
further support cash resources. This bridge loan facility was
extended an increased to US$2m on 27 February 2015. The Group has
incurred losses in the six months to 31 December 2014.
In order to finance the completion of the Bankable Feasibility
Study ("BFS") for the Tete Project, to repay its existing (and
future) indebtedness to Redbird and affiliated entities and to
finance its near term working capital requirements, the Company
requires additional equity in the amount of at least US$12 million.
It is likely that any such equity funding would require the support
of Redbird, which has indicated to the Company that it is no longer
willing to provide further funding to the Company while its Shares
remain publicly quoted but is willing to provide continuing support
to the Company, and thereby safeguard shareholder value, as an
unquoted company. Following the completion of the proposed
De-Listing, the Company intends that an equity financing of at
least US$12 million will proceed as soon as practicable and it is
anticipated to be conducted at a discount to the recent trading
price, and as far as practicable on a pre-emptive basis without
triggering a requirement to file a prospectus or making the offer
available in jurisdictions where regulatory or filing requirements
would be unduly onerous. Redbird intends to fully support such
equity financing.
Should the Offer and subsequent De-Listing not complete by 31
May 2015, a material uncertainty will persist over the Group's
ability to continue as a going concern and the Company is likely to
require further funding to meet its financial obligations.
Note 2 SUBSEQUENT EVENTS
Change in Tete Unincorporated Joint Venture participation
Subsequent to the Balance Sheet date the IFC decided not to
contribute its 15 per cent of project expenses towards the
Unincorporated Joint Venture ("UJV") for the 2014 calendar
year.
In terms of the provisions of the Unincorporated Joint Venture
Agreement between Baobab and the IFC, the IFC will suffer a
dilution in their percentage UJV rights from 15 per cent to 12.89
per cent.
As at 31 December 2014, an amount of GBP985,752 was receivable
from the IFC. This represented the IFC's contribution towards Joint
Venture project expenses for the 2014 calendar year. This
receivable will not be recovered, but rather utilised to increase
the Company's economic interest in the UJV to 87.11 per cent.
De-Listing Proposal and Redbird Takeover Offer
It was announced on 27 February 2015 that the Independent
Directors had reached agreement with Baobab's major shareholder,
Redbird Investments Limited ("Redbird"), a wholly owned investment
vehicle of African Minerals Exploration & Development Fund
SICAR, S.C.A. ("Fund I"), on the terms of a proposal for seeking
the cancellation of the admission of the Company's ordinary shares
of 1 pence each ("Shares") to trading on AIM (the "De-Listing") and
the making of a cash offer for all of the Company's Shares not
already owned by Redbird for a cash consideration of 6.0 pence per
Share (the "Offer").
The Independent Directors are unanimously of the view that the
proposed De-Listing is in the best interests of all shareholders,
and will, even if the Offer does not complete, propose a General
Meeting and unanimously recommend that shareholders vote in favour
of the proposed De-Listing. The Independent Directors, who have
been so advised by Canaccord Genuity Limited, as the independent
financial adviser for the purposes of Rule 3 of the Code, when
taking into account the current financial status of the Company,
believe the terms of the Offer to be fair and reasonable and
recommend that Shareholders accept the Offer. In providing its
advice to the Independent Directors, Canaccord Genuity Limited has
taken into account the commercial assessments of the Independent
Directors. The recommendation is further set out in the
announcement dated 27 February 2015 (the "Announcement") and the
Offer Document which is expected to be posted to Baobab
shareholders on or before 27 March 2015.
Note 3 DIVIDENDS
No interim dividend is being paid or proposed.
Note 4 LOSS PER SHARE
Loss per share has been calculated on the weighted average
number of Ordinary Shares in issue.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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