TIDMBZM
RNS Number : 3947N
Bellzone Mining PLC
01 September 2011
1 September 2011
Bellzone Mining plc
("Bellzone" or the "Company")
Interim operations review and condensed financial statements
for the six months ended 30 June 2011
Bellzone Mining plc (AIM:BZM), the iron ore and nickel/copper
company developing the Kalia Mine Project, the Forecariah JV and
the Sadeka nickel/copper project in the Republic of Guinea, West
Africa today announces its interim results for the six months ended
30 June 2011.
Highlights
-- $236m raised to fund the development of the Forecariah JV and
ongoing work at Kalia. China International Fund's ("CIF")
subsidiary, China Sonangol International (S) PTE subscribed to 79
million ordinary shares, for proceeds of $103 million and 102
million ordinary shares were placed with institutional investors
providing $133 million
-- Development commenced at the Yomboyeli site of the fully
funded Forecariah JV that remains on schedule for production in Q1
2012. Yomboyeli will commence production at a rate of 3-4 million
tonnes per annum in 2012 increasing to a production rate of 10
million tonnes per annum in 2013
-- Office established in Beijing to facilitate Bellzone's
interaction with CIF and CIF's engineering contractors (China
Communications Construction Company Limited "CCCC" and China Rail
Eryuan Engineering Company "CREEC"), which are involved in the
implementation of the Forecariah JV project and are designing and
implementing the 286km multi--user rail and port infrastructure
project, which will connect the Kalia Mine Project to the port of
Matakan
-- Maiden JORC oxide resource announced of 111 million tonnes
grading 38% Fe, from which 43 million tonnes of oxide product
grading at 58% iron can be produced by standard beneficiation
techniques. Oxide resource delineated from 2.3km(2) directly
overlaying the area of the magnetite JORC resource
-- 71% increase in the magnetite tonnage from a current JORC
resource of 3.74 billion tonnes to a Company estimate of 6.4
billion tonnes on the central zone of Kalia I. This increase is
based on results from the infill drilling programme and results
arising from the oxide JORC resource programme
-- Cash balance at 30 August 2011 - $230 million
-- Bellzone remains fully funded to complete the bankable
feasibility study on the Kalia Iron Project and bring the
Forecariah JV project into production in Q1 2012.
The Interim Operations Review and Financial Report for the six
months ended 30 June 2010 is available on the Company's website:
www.bellzone.com.au
Nik Zuks, Chief Executive Officer, commented: "We are pleased
with the progress made in all areas of Bellzone during the past six
months. The tremendous effort by our team and the ongoing support
of our business partner CIF and the Guinea government has delivered
Bellzone to the stage where we have a project on schedule to
deliver Guinea's first iron ore production in Q1 2012. This is an
exciting prospect for all related parties and combined with
Bellzone's strong cash balance positions the Company strongly as we
move to develop Kalia which has a resource size of global
significance. I look forward to keeping the market updated of our
progress."
Enquiries:
Bellzone Mining plc
Nik Zuks / Terry Larkan +61 (0) 8 9420 8900
Canaccord Genuity Limited
Nominated Adviser and Joint Broker
to Bellzone +44 (0)20 7050 6500
Andrew Chubb/Tarica Mpinga
Renaissance Capital Limited
Joint Broker to Bellzone +44 (0)20 7367 7777
Jeremy Wrathall
Tavistock (UK PR)
Jos Simson/Paul Youens +44 (0)20 7 9203 150 / +44 (0)7899
870 450
PPR (Australian PR)
David Ikin +61 (0) 8 9388 0944 / +61 (0)
408 438 772
About Bellzone Mining Plc
Bellzone Mining plc is an exploration and resource development
company with iron ore and nickel / copper permits in the Republic
of Guinea, West Africa.
Kalia Mine
The Company's flagship project, the Kalia Mine Project, is
planned to produce iron ore and iron ore concentrate at a rate of
50 million tonnes per annum in 2018. The Kalia Mine Project has a
3.74 billion tonne JORC resource and an initial oxide JORC resource
producing 43 million tonnes of 58% product from just 4.2% of the
55km(2) of the mapped surface oxides on the Kalia permit. Drilling
results and internal estimates indicate that the Kalia Mine Project
has the potential to host more than 10 billion tonne of magnetite
and 2 billion tonne of oxide.
CIF - Project, Financing & Infrastructure Partner
Bellzone has a Definitive Agreement ("Agreement") with China
International Fund Limited ("CIF"). The Agreement gives CIF right
of first refusal to purchase the Kalia Mine Project's production at
market rates and CIF commits to providing Bellzone commercially
related funding for the development of the Kalia Mine Project.
The Agreement contains CIF's commitment to fund and build
commercially operated rail and port infrastructure that will enable
Bellzone to export production from the Kalia Mine Project. The
infrastructure is being developed by Kalia Horizon Minerals Pte
Limited, an entity that is 90% owned by CIF with Bellzone having a
10% carried interest. The Agreement provides for Bellzone to be the
lowest cost user with permanent priority access.
Forecariah JV
Bellzone and CIF also have fully funded a joint venture to
undertake the accelerated exploration and development programme at
CIF's Forecariah iron permits that lie between 30 and 80 kilometres
from the Guinea coast. Production is scheduled to start in Q1 2012
with an initial production rate of 3-4 mtpa of oxide ore, ramping
to a rate of 10 mtpa in 2013.
Other activities
Bellzone has completed a mapping and surface sampling programme
identifying highly prospective targets at its Sadeka Nickel/Copper
Project. A VTEM aerial survey is currently being conducted to
further define areas for a targeted drilling programme.
Bellzone has acquired the rights to buy 70% of Compagnie Miniere
de L'Ouest Africain SA, incorporated and holding tenements in Mali.
The company is undertaking geological studies on the tenements
which are prospective for iron ore before making an investment
decision.
Chairman's Statement
Over the past six months our Company continued building on its
achievements of prior years. The outstanding progress on the
Forecariah JV provides ample evidence of management's ability to
deliver and we look forward to production in Q1 2012 in what
remains a strong market for iron ore miners.
As I commented in our Annual Report for the year ended 31
December 2010, our focus for 2011 will be to continue to add value
to the Company by:
-- completing the Kalia Mine Definitive Feasibility Study;
-- completing the maiden JORC for the oxide at Kalia;
-- commencing negotiations with CIF for the Kalia Mine
financing, commercial off-take agreements and the transport
agreement;
-- completing the magnetite metallurgical bulk sample;
-- ongoing oxide and magnetite resource development at Kalia
with planned JORC upgrades to both;
-- developing the Forecariah JV project;
-- assessing the potential of the Sadeka Nickel / Copper
targets; and
-- completing our assessment of the Mali targets.
The most significant corporate event addressed the important
aspect of funding for the ongoing development of Kalia and the
accelerated development of the Forecariah Joint Venture to achieve
production in Q1 2012. The funding was secured both through a
strategic placement with China Sonangol International (S) PTE, a
subsidiary of our strategic partner, CIF, and an institutional
equity placing. CIF subscribed for 79 million ordinary shares for
proceeds of $103 million while the institutional placing of 102
million ordinary shares provided $133 million for a total capital
raising of $236 million.
These funds will be utilised in the delivery of our focus areas
as outlined above. We will continue to update the market on the
progress made.
The interim operations and financial reports for 2011 clearly
demonstrates how the management and staff of Bellzone have
progressed in the focus areas. The staff, with the leadership of
our experienced management team will continue to deliver the
outcomes required to reduce the project risk, increase our
resources and develop the opportunities that will add value to the
Company.
Michael Farrow
Chairman
Operational and Financial Report
Introduction
The first half of 2011 has been eventful and the pace of
development, particularly in the Forecariah region, has been
outstanding. Bellzone is making very good progress with our
partner, CIF, in implementing the Forecariah JV project and our
Kalia and Sadeka projects remain on schedule.
The Guinea operations are managed from the in-country head
office in Conakry, Guinea. The Conakry head office is focussed on
providing the logistical and human resources support for the site
based activities, government liaison and the financial services
associated with the Guinea registered Bellzone subsidiary
companies.
The Bellzone permits are located east of Conakry and accessed by
an existing bitumen road.
-- The Kalia Iron Permit is approximately 360km east of Conakry,
and is subject to the Mining Convention, which was decreed in law
in August of 2010. The issue of the Convention and associated
Concession application suspends the expiry of the research permit
pending the issue of the Kalia Mine Concession. The Mining
Concession is in the process of being issued. 50% of the Kalia II
strike included on this permit is to be relinquished in accordance
with the terms of the Company's definitive agreement with CIF.
-- The Kalia Polymetals Permit covered the same area as the
Kalia Iron Permit and was awarded in May 2009 for a two year
period. Under the terms of the Convention, Bellzone has first
rights to any minerals or metals discovered on the Kalia
permit.
-- The Faranah Iron Ore Permit which is immediately adjacent to
the east of the Kalia Iron Permit was successfully renewed in
October 2009 for a two year period and is to be relinquished in
accordance with the terms of the Company's agreement with CIF.
-- The Sadeka Prospecting Permit location is approximately 150km
south-east of Kalia and is centred on the town of Albadariah. The
Sadeka Prospecting Permit covers an area of 2,086 km(2) with the
rights to explore for Ni, Cu, Co, Mn, Pt and Cr and has been
renewed by Bellzone through to November 2012.
Guinea and the Mining Code
The Government of Guinea is reviewing the Mining Code that has
been in place since 1995. Guinea has a long history of mining and
this is not the first revision of a Mining Code in the Country's
history.
The Kalia Mine has a valid Mining Convention based on Guinea's
1995 Mining Code at the time of application and our developments
are proceeding in compliance with the requirements of the Mining
Convention. The Mining Convention for the Kalia Mine and associated
infrastructure was granted after three months of negotiation with a
Government appointed multi-disciplinary committee and the
subsequent due process where it was approved and signed by the
Minister of Mines and Geology and the Minister of Finance on 27
July 2010. The Mining Convention was passed into Guinea law through
Presidential Decree signed on 31 August 2010.
It is expected that the Mine Convention for the Forecariah JV
will be subject to the conditions of the revised Mining Code.
Resource development
All resource development work is undertaken by experienced
geologists to the standards required to support JORC resource
statements. Bellzone increased the in-house geological expertise in
Q2 2011 to include the capability to develop internal resource and
grade models. The addition of this capability allows the Company to
optimise resource development programmes and develop and define, to
JORC standards, in-house resource estimates and forecasts.
CSA Global, based in the UK, are Bellzone's independent
geologists and will continue to provide the independent services
necessary to develop and validate the required JORC resource
calculations and statements.
Kalia Mine Project
The resource development for the Kalia Mine is managed from a
well established exploration camp on the Kalia site, where all
drilling and geological analysis occurs. The exploration camp has
had additional facilities constructed and existing facilities
upgraded to provide for improved amenities and additional
accommodation required for the acceleration in resource development
activity as well as the increase in visitors associated with the
definitive studies that are being undertaken for the project.
The Kalia resource development continues to schedule.
Magnetite resource development
The Kalia magnetites are amongst the largest in the world,
measured over 6 kms of the 29 km 100% Bellzone owned Kalia strike
and has yielded a 3.74 billion tonne magnetite JORC resource.
An 18,000m diamond drilling ("DD") infill programme commenced in
Q3 2010 with the objective of increasing the existing 690 million
tonne measured and indicated ("M&I") component of the 3.74
billion tonne magnetite JORC resource to 1 billion tonnes. This
work continues to plan and is on track to deliver an increased
M&I JORC magnetite resource in Q3 2011.
The infill DD programme has defined an extension and thickening
of the known magnetite mineralisation to the south and north of the
6 km central section of the 3.74 billion tonne magnetite JORC
area.
The reverse circulation ("RC") oxide drilling programme has
identified additional magnetite mineralisation and extensions to
depths of 400m to the North West existing Kalia I magnetite JORC
resource. This additional delineation of magnetite material along
strike extends the previously delineated 6km Kalia I magnetite JORC
resource by approximately 1 km.
Based on internal geological analysis and modelling of this
latest data, the Company now estimates a magnetite tonnage increase
from 3.74 billion tonnes to 6.4 billion tonnes, along approximately
7km of the 19km Kalia I strike. The criteria used to complete this
estimation followed the process used by our independent
consultants, CSA Global, in previous JORC compliant resource
estimates. The Bellzone geological model will be provided to CSA
Global for validation and will subsequently form the basis of the
Q3 2011 JORC magnetite update.
Bellzone will continue with a 10,000m magnetite resource
extension diamond drilling ("DD") programme during H2 2011. This
extension programme is expected to add another 1 km to the
currently projected 7km Kalia I magnetite strike length and will
extend the forecast tonnage depths to the mine plan pit bottom at
approximately the 100m relative level depth which translates to an
effective depth of approximately 1,000 metres from the highest
point of the Kalia range.
A Company estimation of the proposed extension programme has
indicated potential to increase the Kalia I magnetite resource to
more than 7 billion tonnes. The JORC statement on the H2 2011
extension drilling programme is expected to be announced in Q1
2012.
Magnetite metallurgy
A total to 16,997 samples (2m composites) were dispatched from
Kalia to Australia for assay work. Grindability tests and
concentrate recovery optimisation test work is ongoing and a bulk
test to define the metallurgical parameters of the magnetite was
completed in Q1 2011 and provided the following results:
Mass Recovery SiO(2) AL(2) SO(3)
% Fe% % % P % S %
31.69 68.33 3.65 0.25 0.02 0.29
Further flow sheet optimisation test work is in progress in
support of the definitive feasibility study.
Oxide
Bellzone has mapped 55 km(2) of surface oxide material, which
includes cangas, detritals and pisolites, over the Kalia permit
area. The Company's oxide development plan aims to delineate
approximately 1.5 billion tonnes (approximately 0.6 billion tonnes
of saleable oxide product) of oxide material from five key target
areas, which comprise 63% of Kalia's 55km(2) surface oxide
potential. The Company's objective is to have identified
approximately 250 million tonnes of oxide product, which is
sufficient to support 10 years of oxide production by year end.
The oxide development programme over the 5 target areas is set
out in the following table:
Target Kalia Central Area 2.3km(2) 111 million tonne inferred
1 I JORC resource
------- ------ ------------- --------------- ---------------------------
Target Kalia Detritals 13.6 km(2) Results expected in Q4
2 II now 18.6km(2) 2011
------- ------ ------------- --------------- ---------------------------
Target Kalia NW Central 4.4 km(2) Planned
3 I Area
------- ------ ------------- --------------- ---------------------------
Target Kalia NW Oxides 7.3 km(2) Planned
4 I
------- ------ ------------- --------------- ---------------------------
Target Kalia SE Detritals 6.9 km(2) Planned
5 I
------- ------ ------------- --------------- ---------------------------
The oxide development programme commenced on the Kalia central
zone (Target 1) in May 2010 with the contracted RC drilling rig.
The initial area drilled covered 2.3km(2) directly overlaying the
area of the magnetite JORC resource. The programme provided data
that permitted an announcement of an initial inferred JORC oxide
resource of 111 million tonnes grading at 38% Fe from which 43
million tonnes of oxide product grading at 58% iron could be
produced by standard beneficiation techniques.
The Kalia II detritals (Target 2) hold exciting potential due to
their large area and easy access. The programme at Kalia II
resulted in a 37% increase in the initial mapped area of 13.6km(2)
to 18.6km(2) . A wide space drilling campaign at the Kalia II
detritals has been completed. Initial results are encouraging with
detrital oxides present at depths of over 30 metres. The detrital
material will require processing and test work is underway to
establish this with results expected in Q4 2011.
Bellzone has purchased two new DD rigs and a second RC rig has
been contracted to assist with the resource development programmes.
These new rigs are expected to be fully operational in Q4 2011.
The oxide development programme is being further accelerated by
implementing round the clock drilling and sampling. The programme
will continue to the identified oxide targets and will quantify the
economic oxides contained in the large area of mapped oxides on the
Kalia site.
Oxide metallurgy
The JORC oxide resource established in Target 1 comprises
varying grades of material related to different stages of oxidation
and positions within the deposit. Areas of typical direct shipping
ore ("DSO") style material, currently estimated at 10.8 million
tonnes, exist along with oxide material of lower variable Fe
grades. The oxides are draped over the ridge formations in the
Kalia range where on the ridge summits we are typically finding
higher grade in situ material and in the valleys where transported
ore is present the grade drops off as more contaminants are
prevalent.
This oxide zone will require removal prior to mining the
magnetite resource. Composite samples were tested at an independent
accredited laboratory in Perth, Australia to investigate maximising
the oxide potential of the lower variable Fe grade zone through
processing and beneficiation. The test work demonstrated that the
low Fe content of the in situ oxide material can be readily
beneficiated using standard gravity processes to produce 43 million
tonnes of a consistent and quality saleable 58% Fe fines
product.
Average Beneficiated Product
Grade Fe for Target 1 material Fe Al2O3 SiO2 P LOI
--------------------------------- ------ ------ ----- ------ -----
58.0% 5.70% 4.0% 0.10% 6.2%
--------------------------------- ------ ------ ----- ------ -----
A series of bulk sample from 3 test blasts have been sent to a
laboratory in Perth, Western Australia, for processing to better
define the beneficiation parameters, flow sheet and expected
outcomes.
The ability to upgrade this variable oxide material provides for
a larger resource base of saleable material and a revenue stream
from the magnetite pre-strip.
Forecariah Joint Venture
The Forecariah JV Permits are situated through an area between
30km and 80kms from the south coast of Guinea and have multiple
iron ore targets. The Forecariah JV Permits are being jointly
developed by both CIF and Bellzone. The JV partners have agreed
that Bellzone will lead the resource and project development.
Following the positive results of the geologists report on the
Forecariah JV Permits, announced on 31 January 2011, Bellzone and
CIF have agreed to implement an accelerated programme to deliver
initial production in Q1 2012. The operation is designed to achieve
a production rate of 3-4 million tonnes per annum in 2012 and
ramping up to a production rate of 10 million tonnes per annum in
2013.
First production will target the 2.0 million m(3) of higher
tenor material identified within the larger oxide cap at
Yomboyeli.
Resources and targets
The Forecariah JV has six main areas prospective for iron ore.
The initial focus is on the Yomboyeli target with 3 further targets
being earmarked for the next phase of evaluation.
Yomboyeli
Mapping, sampling of old pits, tunnels and trenches outlined
multiple ridges of iron oxide with a total strike length of over
1200 metres. Surface samples from these areas and Niton Gun X-ray
Fluorescent analysis ("XRF") have returned assays of 55% to 60% Fe.
2.7km(2) of surface oxide has been mapped across the Yomboyeli
target areas.
Resource development drilling completed to date indicate an iron
oxide cap volume of 8 million m(3) with bulk density readings
ranging from 2.6t/m(3) through 3.9t/m(3) . Parallel zones of iron
schists beneath the oxide cap layer have been identified. This is
based on wide space drilling over 1km(2) of the mapped 2.7km(2)
oxide at surface. Ongoing exploration and mapping has identified
additional prospective targets of oxide and magnetite that are
outside the currently mapped 2.7km(2) .
The iron oxide in the mapped 2.7km(2) area is a product of the
Marampa beds that extend from within Sierra Leone to 8km NNW of
Yomboyeli. The ongoing exploration programme will continue to
assess and define this 8km strike of the prospective Marampa Beds
within the JV license area.
Samples from the wide space drilling programme are being
processed by an independent assay laboratory in Perth. Phase II of
the RC drilling programme will infill the Phase I wide space
drilling profiles. The results of the Phase II work and internal
resource estimates based on ore body modelling with grades are
expected to be announced in Q4 2011.
Santiguiyah
The Santiguiyah prospect lies 12 kms north of Yomboyeli.
Haematite/goethite clasts in loose iron fines in the form of scree
have been mapped over 113km(2) . The surface samples and historic
trenches indicate high potential for significant iron oxide
tonnages across this area with the material lending itself to
simple open pit mining and screening with minimal crushing. Test
work is underway to assess the upgrade potential of this vast oxide
area.
Layah
The area lies between Yomboyeli and Santiguiyah and is an
extensive plain of surface iron oxides known locally as "cuirass",
with sampling returning encouraging grades. The nature of the
material and grades suggest it is potentially upgradeable to an
exportable product.
Moussayah
The Moussayah prospect is near the regional centre of Doto and
is prospective for both oxide and magnetite. The prospect was
mapped over a length of 10 km with an oxide cuirass similar to the
material mapped in the Layah area. Further work at Moussayah is
expected to reveal the continuity of the oxide potential at this
location.
Historical data indicates zones of banded iron formations and
magnetite outcrops in the Moussayah area.
Development Strategy
The strategy to fast-track production from the Forecariah Iron
Ore Project is based on using proven technology and methods in a
scalable manner. By implementing a project based on mobile crushing
and screening technology and a road and trans-shipping
infrastructure concept, a production date target of Q1 2012 will be
achieved.
Mining & Processing
The mining method will be a basic open pit, drill, blast, load
and haul operation. The high grade oxide at Yomboyeli will then be
crushed and screened for export. The crushing and screening will be
done using modular, mobile plants that have already been purchased
and have a delivery date of November 2011.
Lower grade ore that could produce a saleable product through
cost effective upgrading will be stockpiled for processing through
beneficiation plants that will be constructed at a later date.
Mine to Port
Initial production will be moved by haul truck from the mine to
the port. Construction of the 76.9km all weather haul road is
slightly ahead of schedule. The 104 tonne prime mover and side-tip
trailer combination have been ordered with delivery scheduled well
ahead of the required date.
The road haulage activity will eventually be replaced by the
multi-user rail and port infrastructure, to be constructed by CIF.
This will become available for use by the Forecariah sites in late
2013 / early 2014 allowing production to expand in excess of 10
million tonnes per annum and will reduce the operating costs.
Port to export vessel
A 10 million tonne per annum trans-shipping port facility has
been designed and will be located at Konta on the Meloccoree River.
The port construction is staged which allows for early production /
export start in Q1 2012, with an expansion through 2012 to meet the
forecast capacity of 10mtpa from a starting capacity of
approximately 4 million tonnes per annum. The port facility will
eventually be replaced by the multi-user export facility to be
constructed by CIF at the Matakan site.
The product will be loaded onto bulk handling barges for towing
down river by tug and out to sea to an anchored Panamax ship that
has four grabs. The Panamax will provide an offshore stockpile and
be in a position to unload barges and load export Cape size
vessels. This method of operation will continue until the Matakan
port is operational.
The marine fleet has been sourced and marine inspections and
price negotiations are in progress with the fleet expected to be in
place before they are required.
Sadeka Nickel-Copper Project
An exploration camp was established near Albadariah,
approximately 56km north of the town Kissidougou that accommodates
20 people and is the base for exploration activities.
The Sadeka Prospecting Permit area is underlain by Archaean
granite gneiss basement of the Dabola Group, greenstones of the
Cambui Series and Late Archaean to Mesozoic intrusions of basite,
hyperbasite, granitoid, pegmatite, gabbro and dolerite composition.
The prospective rock units belong to the Cambui Series which
contains nickel and copper bearing pyroxenites and ferruginous
quartzite (metamorphosed banded iron formation ["BIF"]). Nickel and
copper sulphides have been identified in pyroxenites at surface
with quantities of up to 10% measured. These rocks are
metamorphosed to upper amphibolite-granulite facies with a
structural fabric to the north-west. The area has been intruded by
Mesozoic gabbro-dolerite dykes with both north-west and east-west
trends.
Highly prospective nickel-copper targets have been identified.
The target zones incorporate nickel-copper bearing Pyroxenite that
occur as scattered rafts within a "sea" of granitoids that both
'pre' and 'post-date' the Pyroxenite. The Pyroxenite is interpreted
to have once been a mafic-ultramafic sequence of intrusive bodies
prior to metamorphism. Examples of nickel-copper deposits within
these rock types around the world include Noril'sk-Talnakh
(Russia), Sudbury (Canada), Radio Hill (WA) and Mt Keith (WA).
The targets require further investigation and an investment of
$1.5 million has been made to conduct an aerial VTEM survey. The
survey will provide magnetic, electromagnetic and radiometric data
to further define the 12 highly prospective targets and permit an
optimised drilling programme. In addition, Bellzone has purchased a
new DD rig that will be used target the results of the VTEM
programme.
Bafing evaluation
In 2010 the Company entered into a contract with Compagnie
Miniere De L'Ouest Africain SA, ("CMOA") which owns a number of the
exploration and development rights to tenements in Mali.
In terms of the contract, Bellzone paid a $500,000 fee to obtain
the exclusive rights to conduct due diligence on the 4,052km(2)
Bale Permits, which are 100% owned by CMOA, and to secure an option
to acquire a 70% interest in CMOA. The due diligence will be
conducted over a 12 month period and will include:
-- Gravity surveys
-- Geological mapping
-- Exploration drilling and sampling
-- Desktop study
-- Investment case development
Bellzone will decide whether to exercise the call option for
acquiring the 70% interest in CMOA on completion of the due
diligence studies. A further payment of $4,500,000 will be required
should Bellzone exercise the option.
Bafing Holdings Limited, a 100% held subsidiary of Bellzone, was
incorporated in Jersey to hold 100% of Bafing Iron SARL,
incorporated in Mali to manage the due diligence process.
Bellzone's evaluation of the Bale Permit has commenced and
completion of the due diligence phase as well as the investment
decision are expected in H2 2011.
Health and Safety
The health and safety of our employees is a key focus for
Bellzone. The Company has maintained strong safety performance in a
challenging working environment. Our performance is attributed to
the focus of each individual, under strong management and
supervision, being trained in and adhering to approved HSE
management plans and processes that include correct use of
personnel protective equipment and the importance of personal
health and hygiene.
Our activities are focussed on every person being capable of
risk assessment, hazard identification and taking appropriate
control actions. Our working motto "Good Judgement Reduces Risk
.... Bon Jugement Reduit Le Risque" reflects our strategy in this
area. Management has a programme of continual monitoring and review
that ensures that the processes are being effectively
implemented.
Effective vector control measures outlined within our Malaria
Control Policy, which including regular fogging, drainage and water
exposure management, have also resulted in a significant decrease
in cases of malaria on site, which in turn has increased
productivity and well being amongst our employees.
A Job Safety Assessment programme has been implemented to define
safe work procedures for dangerous tasks prior to tasks being
undertaken. This will increase safety awareness and should focus
the individual to think about what has to be done, prior to doing
the task.
No lost time injuries have been recorded in 2011, maintaining
our Total Recordable Injury Frequency Rate at 0.
Environment
Bellzone recognises the importance of minimising environmental
impacts and is working effectively with the government to manage
all environmental impacts associated with our project. Strict
environmental procedures are in place to ensure appropriate
environmental action plans and approvals are in place. Dedicated
environmental management staff at a Company and site level ensures
the effective implementation of plans and standards.
Our focus remains on control of erosion risks, soil
bioremediation and rehabilitation, environmentally responsible
drilling activities, waste management, minimal disturbance of
vegetation, waterways, flora and fauna.
SGS Environment was awarded the tender for Environmental Impact
Assessment ("EIA") studies for the Kalia mine site. Work started in
May 2010 and was completed in Q2 2011 and has been submitted to the
Government departments concerned for approval.
Community
Bellzone recognises the importance of working closely with the
local community to ensure positive outcomes for all. Bellzone is
working successfully with the local community and government to
effectively manage and leverage the community impact aspects
associated with our project. Our strategy centres on comprehensive
and continuous community communication, involvement of the
community in commercial and employment opportunities and active
engagement on interface areas of traditional community activities
and project activities.
The Company is held in high regard by the local community due to
the longstanding practice of engagement that ensures community
concerns are promptly addressed, goods and services are sourced
locally, and employment opportunities are provided to the local
community.
SGS Environment was awarded the tender for the Socio-Economic
Impact Assessment ("SEIA") studies for the Kalia mine site. Work
started in May 2010 and was completed in Q2 2011. The studies have
established socio-economic baseline data which will feed into the
local community development plans. Bellzone has been actively
involved in these studies and continues to engage the community on
scheduled activities and planned arrangements.
As we move quickly to the next phase in the Bellzone story, with
the commencement of production in 2012, we will continue to keep
all our stakeholders fully informed of developments.
Capital raising
On 1 March 2011, the Company signed a definitive subscription
agreement with CIF pursuant to which CIF subscribed for 79,000,000
ordinary shares in the capital of the Company at 80 pence per share
(a premium of 1.9 per cent. over the closing price on 1 March 2011)
to raise gross proceeds of GBP63.2 million (approximately $103
million).
In addition, Bellzone launched a process to raise gross proceeds
of up to US$100 million through the issue of new ordinary shares by
way of the Institutional Placing with both new and existing
institutional shareholders through an accelerated book-building
process. Due to extremely strong institutional demand, the Company
increased the size of the raise from $100 million to $133 million.
Accordingly, a total of 102,000,000 new Ordinary Shares were placed
at a price of 80 pence per share (a premium of 1.9 per cent. over
the closing price on 1 March 2011), raising gross proceeds of
GBP81.6 million (approximately $133 million).
The equity issues were approved at an Extraordinary General
Meeting of Shareholders on 21 March 2011.
Cash
The Company had $246.2 million in cash and cash equivalents on
hand at period end which is $207.1 million more on hand than at the
start of the year. The increase is due to the equity placement in
March 2011, less cash expenditure supporting asset acquisition and
development during the period.
The management of cash and cash equivalents is a focal point for
the Company and close control is exercised by management. Detailed
budgets and expenditure authorisation processes exist to ensure all
funds are applied only to planned and unplanned activities that
contribute directly to the achievement of the Company
objectives.
Nikolajs Zuks
Chief Executive Officer and Managing Director
Condensed Consolidated Statement of Financial Position
30 June 2011 31 December 2010
(Unaudited) (Audited)
Notes $'000 $'000
ASSETS
Non--current assets
Property, plant and equipment 5 3,054 2,275
Mineral properties 9,277 9,277
------------------------------ ----- ------------ ----------------
Total non--current assets 12,331 11,552
------------------------------ ----- ------------ ----------------
Current assets
Cash and cash equivalents 246,177 39,107
Trade and other receivables 6 4,226 835
Inventories - 62
Total current assets 250,403 40,004
------------------------------ ----- ------------ ----------------
Total assets 262,734 51,556
------------------------------ ----- ------------ ----------------
EQUITY
Stated Capital 7 327,368 99,674
Retained losses (69,018) (50,286)
Reserves 1,793 1,065
------------------------------ ----- ------------ ----------------
Total equity 260,143 50,453
------------------------------ ----- ------------ ----------------
LIABILITIES
Current liabilities
Trade and other payables 2,294 901
Provisions 297 202
------------------------------ ----- ------------ ----------------
Total current liabilities 2,591 1,103
------------------------------ ----- ------------ ----------------
Total liabilities 2,591 1,103
------------------------------ ----- ------------ ----------------
Total equity and liabilities 262,734 51,556
------------------------------ ----- ------------ ----------------
Condensed Consolidated Statement of Comprehensive Income for the
six months ended 30 June
2011 2010
(Unaudited) (Unaudited)
Notes $'000 $'000
Continuing Operations:
Other income - 2
Employee benefits expense (4,872) (5,530)
Depreciation and amortisation expense (1,062) (1,322)
General expenses (1,469) (385)
Consulting expenses (1,466) (972)
Exploration expenses (9,660) (2,629)
Legal expenses (113) (258)
Occupancy expenses (455) (302)
Travel and accommodation expenses (1,347) (777)
Loss on disposal of assets (9) -
Foreign exchange gain 1,487 379
Results from operating activities (18,966) (11,794)
Finance income net of finance costs 234 192
Finance income 277 208
Finance costs (43) (16)
------------ ------------
Loss before income tax (18,732) (11,602)
Income tax expense - (16)
-------------------------------------------------- ------------ ------------
Loss for the period from continuing
operations (18,732) (11,618)
-------------------------------------------------- ------------ ------------
Other comprehensive income for the period,
net of tax:
Foreign currency translation differences
- foreign operations (98) (877)
-------------------------------------------------- ------------ ------------
Total comprehensive loss for the period (18,830) (12,495)
-------------------------------------------------- ------------ ------------
Total comprehensive loss for the period
attributable to:
Equity holders of Bellzone Mining plc (18,830) (12,495)
-------------------------------------------------- ------------ ------------
Loss per share
Basic loss per share (2.915) (2.443)
-------------------------------------------------- ------------ ------------
Diluted loss per share (2.915) (2.443)
-------------------------------------------------- ------------ ------------
Condensed Consolidated Statement of Changes in Equity for the
six months ended 30 June
Ordinary Retained Total
Notes shares Reserves losses equity
$'000 $'000 $'000 $'000
Attributable to equity holders of the Company
Balance at 1 January 2010 49,897 (3,166) (26,175) 20,556
Total comprehensive loss
for the period
Loss for the period - - (11,618) (11,618)
Other comprehensive income - (877) - (877)
Transactions with owners
direct in equity
Contributions of equity,
net of transaction costs 49,623 - - 49,623
Share-based payment
expenses - 3,616 - 3,616
--------------------------- ----- --------- --------- --------- ---------
Balance at 30 June 2010 99,520 (427) (37,793) 61,300
--------------------------- ----- --------- --------- --------- ---------
Balance at 1 January 2011 99,674 1,065 (50,286) 50,453
Total comprehensive loss
for the period
Loss for the period - - (18,732) (18,732)
Other comprehensive income - (98) - (98)
Transactions with owners
direct in equity
Contributions of equity,
net of transaction costs 7 226,990 - - 226,990
Share-based payment
transaction - exercise of
warrants 8 704 (704) - -
Share-based payment
transactions - new issue 8 - 1,530 - 1,530
--------------------------- ----- --------- --------- --------- ---------
Balance at 30 June 2011 327,368 1,793 (69,018) 260,143
--------------------------- ----- --------- --------- --------- ---------
Condensed Consolidated Statement of Cash Flows for the six
months ended 30 June
2011 2010
Notes $'000 $'000
Cash flows from operating
activities
Loss for the period (18,732) (11,602)
Share- based payment 8 - 2,557
Depreciation and
amortisation 5 1,062 1,322
Unrealised foreign exchange
gain (106) (2,247)
Loss on disposal of assets 5 9 -
Change in operating assets
and liabilities
(Increase) in
receivables (3,391) (189)
Decrease/(Increase)
in inventories 62 (12)
Increase/(Decrease)
in trade and other
payables 1,395 (477)
Increase in
provisions 95 34
----------------------------------- ----- ----------------- ----------------------
Net cash used in operating
activities (19,606) (10,614)
Cash flows from investing
activities
Payments for property, plant and
equipment 5 (1,844) (369)
Net cash used in investing
activities (1,844) (369)
----------------------------------- ----- ----------------- ----------------------
Cash flows from financing
activities
Proceeds from issues of shares
and other equity securities 7 237,408 50,907
Payments for share issue costs 7 (8,888) (4,577)
----------------------------------- ----- ----------------- ----------------------
Net cash inflow from financing
activities 228,520 46,330
----------------------------------- ----- ----------------- ----------------------
Net increase / (decrease) in
cash and cash equivalents 207,070 35,347
Cash and cash equivalents at 1
January 39,107 12,982
Effect of exchange rate changes
on cash and cash equivalents - 1,698
----------------------------------- ----- ----------------- ----------------------
Cash and cash equivalents at 30
June 246,177 50,027
----------------------------------- ----- ----------------- ----------------------
Notes to the condensed consolidated financial statements
1. Reporting entity
Bellzone Mining plc ("the Company") is a listed public company incorporated
and registered in Jersey, Channel Islands. The condensed consolidated
interim financial statements of the Company as at and for the period
ended 30 June 2011 comprise the Company and its subsidiaries (together
referred to as "the Group" and individually as "group entities").
The Company's registered address and principal place of business is:
Channel House
Green Street
St Helier
Jersey, JE2 4UH
The nature of the principal activities of the Group is described in
the directors' report.
2. Basis of preparation
(i) Statement of compliance
These condensed consolidated interim financial statements have been prepared in accordance with IAS 34 Interim
Financial Reporting and do not include all of the information required for full annual financial statements and should
be read in conjunction with the annual report for the year ended 31 December 2010 and any public announcements made by
the Company during the interim reporting period. The consolidated financial statements of the Group as at and for the
year ended 31 December 2010 prepared in accordance with International Financial Reporting Standards, are available on
request from the Company's registered office or at www.bellzone.com.au These condensed consolidated interim financial
statements were approved by the Board of Directors on 30 August 2011.
(ii) Estimates
The preparation of interim financial statements requires management
to make judgements, estimates and assumptions that affect the application
of accounting policies and the reported amounts of assets, liabilities,
income and expenses. Actual results may differ from these estimates.
In preparing these condensed consolidated interim financial statement,
the significant judgements made by management in applying the Group's
accounting policies and the key sources of estimation uncertainty were
the same as those that applied to the consolidated financial statements
as at and for the year ended 31 December 2010.
3. Significant accounting policies
The accounting policies applied by the Group in these condensed consolidated
interim financial statements are the same as those applied by the Group
in its consolidated financial statements as at and for the year ended
31 December 2010.
4. Segment information
The Group determines and presents operating segments based on the information
that is internally provided to the Group's chief operating decision
maker. The chief operating decision maker has been identified as the
Board of Directors that makes the strategic decisions. The Board currently
considers the business from a consolidated perspective and has identified
one reportable segment. The Group operates in one industry in which
the principal activity is mineral exploration.
5. Property, plant and equipment
Furniture,
Freehold Plant and fittings Motor Work in
buildings equipment and equipment vehicles progress Total
Consolidated $'000 $'000 $'000 $'000 $'000 $'000
Opening net book value 167 968 262 612 266 2,275
Additions 237 177 146 171 1,113 1,844
Disposals - - (9) - - (9)
Depreciation charges (41) (837) (88) (96) - (1,062)
Exchange differences (net) 6 6
------------- -------------- --------------- ------------- -------------- -------------
Closing net book value 363 308 317 687 1,379 3,054
------------- -------------- --------------- ------------- -------------- -------------
At 30 June 2011
Cost 591 8,578 722 1,229 1,379 12,499
Accumulated depreciation (228) (8,270) (405) (542) - (9,445)
------------- -------------- --------------- ------------- -------------- -------------
Net book value 363 308 317 687 1,379 3,054
------------- -------------- --------------- ------------- -------------- -------------
At 31 December 2010
Cost 354 8,401 575 1,059 266 10,655
Accumulated depreciation (187) (7,433) (313) (447) - (8,380)
------------- -------------- --------------- ------------- -------------- -------------
Net book value 167 968 262 612 266 2,275
------------- -------------- --------------- ------------- -------------- -------------
6. Other receivables
Included in Other receivables is an amount of $3.2 million for purchases
made on behalf of and cash advanced to Forecariah Mining Guinea SA
in connection with the Forecariah JV project.
7. Capital and reserves
a. Stated Capital
30 June 2011 31 December 2010
(Unaudited) (Audited)
Shares $'000 Shares $'000
Ordinary
shares
of no
par
value 721,324,485 345,610 537,124,485 107,498
Share
issue
costs (18,242) (7,824)
---------- ---------
327,368 99,674
---------- ---------
b. Movements in ordinary shares:
Date Details Number of shares $'000
1 January 2011 Opening balance 537,124,485 107,498
Shares issued on exercise of
warrants at 50 pence per share
8 March 2011 (see note 8) 3,200,000 2,515
Shares issued to CIF at 80
14 March 2011 pence per share 79,000,000 103,000
Institutional Placing at 80 pence
21 March 2011 share 102,000,000 132,597
721,324,485 345,610
--------------------- --------------
Ordinary shares carry one vote per share and carry the right to dividends.
All shares have been fully paid.
c. Reconciliation of net cash
inflow from financing activities
The above figures are reconciled
to the statement of cash flows
as follows:
$'000
Increase in ordinary share capital
per above 238,112
Warrants exercised (see note 8) (704)
--------
Proceeds from issue of shares 237,408
--------
Increase in share issue cost per
above (10,418)
Share based payment expense (see
note 8) 1,530
--------
Payments for share issue costs (8,888)
--------
8. Share-based payment transactions
a) Options
No options were issued or exercised during the period.
b) Warrants
An additional 5,100,000 warrants were issued to the joint brokers on
the successful conclusion of the Institutional Placing (being 5% of
the number of shares placed).
31 December
30 June 2011 2010
(Unaudited) (Audited)
Number of Number of
warrants warrants
Outstanding at
the beginning
of the
period/year 4,800,000 -
Granted during
the
period/year 5,100,000 4,800,000
Exercised
during the
period/year (3,200,000) -
-------------- ---------------
Outstanding
at the end
of the
period/year 6,700,000 4,800,000
-------------- ---------------
c) Fair value of options granted
The value of warrants capitalised as part of share issue costs in equity
amounted to $1,530,000.
d) Fair value of options granted
Estimated
Description Grant date Expiry date Exercise price value
21 September
Series 2 warrants 22 March 2011 2012 GBP0.80 GBP0.185
The assessed fair value per option at grant date of warrants granted
during the period ended 30 June 2011 is set out in the table above.
The fair value at grant date is independently determined using a Black-Scholes
option pricing model that takes into account the exercise price, the
term of the option, the impact of dilution, the share price at grant
date and expected price volatility of the underlying share, the expected
dividend yield rate and the risk-free interest rate for the term of
the option.
The model inputs for options and warrants granted during the period
ended 30 June 2011 included:
Series 2 Warrants
Underlying share price at grant date GBP0.72
Exercise price GBP0.80
Risk-free rate 1.1%
Volatility factor 50% to 70%
Dividend yield (assumed no dividend payments -
over life)
Legal life 1.5 years
Effective life 1.5 years
This information is provided by RNS
The company news service from the London Stock Exchange
END
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