TIDMZIOC
RNS Number : 0352O
Zanaga Iron Ore Company Ltd
30 September 2019
30 September 2019
INTERIM RESULTS FOR THE SIX MONTHSED 30 JUNE 2019
Zanaga Iron Ore Company Limited ("ZIOC" or the "Company") (AIM:
ZIOC) is pleased to announce its unaudited interim results for the
six months ended 30 June 2019 and an update on post reporting
period end events to September 2019.
Highlights
-- Infrastructure improvements announced in recent weeks in the
Republic of Congo ("RoC") including further progress on the
development of the Pointe Noire Special Economic Zone ("SEZ")
o Increasing activity in infrastructure development in RoC with
the potential to provide a positive impact to the economy of the
RoC, including the development of mineral resource projects
o Significant rail, port and power projects under investigation
with the support of large Chinese government funding institutions
and infrastructure companies
o The SEZ has the potential to provide critical infrastructure
to facilitate the advancement of mineral resource projects in
RoC
o The Zanaga Project Team have increased engagement with the
entities involved in developing various infrastructure projects in
RoC with the objective of exploring potential synergies that could
support the development of the Zanaga Iron Ore Project (the
"Project")
-- Early Production Project ("EPP Project" or "EPP")
o Brownfield logistics scenarios advancing well
-- Evaluation of both Congo and Gabon export routes continue
-- Preferred trucking contractors identified
o Gabon export route
-- Railway excess capacity currently limited to 1 million tons
per annum ("Mtpa")
-- Targeting c.US$110m capital cost estimate for 1Mtpa iron ore
pellet project using conventional pelletisation process
-- Pellet feed process plant cost estimation increased to US$40m
from US$38m following adjustments to the process flow sheet to
ensure achievement of target 65% Fe product grade
-- Bolt-on conventional pellet plant cost estimate expected to
be finalised in Q4 2019
-- Rail and port costs in negotiation
-- Engagement of third party contractors to assess customs and
legal framework
-- Gabon export scenario evaluation expected to conclude in Q4
2019
o Congo export route
-- Under further consideration due to the impact of potential
third party upgrades to railway, port and power infrastructure in
RoC
o Direct Shipping Ore ("DSO") scenario evaluation expected to
conclude in Q4 2019
o On completion of assessment and evaluation work, outcomes to
be presented to the board of Jumelles Ltd, the joint venture
company ("Jumelles") for consideration
-- 30Mtpa staged development project (12Mtpa Stage One ("Stage
One"), plus 18Mtpa Stage Two expansion ("Stage Two")):
o Value engineering opportunities continue to show potential to
reduce construction time and reduce capital and operating cost
estimates associated with the Zanaga Project
o Zanaga Project Team engaging with third party contractors and
consultants to evaluate value engineering options to a higher
degree of confidence
-- Management incentivisation scheme approved and announced on
30 August 2019 ensuring strong alignment with shareholder
interests
-- Cold pelletisation technology remains under evaluation
-- Cash balance of US$1.4m as at 30 June 2019 and US$1.2m at 31 August 2019
Clifford Elphick, Non-Executive Chairman of ZIOC, commented:
"The first half of 2019 has been very positive for the Zanaga
Iron Ore Project and the Company. Supported by its shareholders,
Jumelles has made substantial progress in progressing the Zanaga
Project through the definition of a small scale early production
project solution (the EPP Project) while simultaneously engaging
with large infrastructure and financing entities on the improved
development case for the 30Mtpa staged development project.
The combination of higher iron ore prices in 2019 as well as
simultaneous supply shocks from the major iron ore producers has
led to more encouraging conditions for the Zanaga Project's
development as a tier one iron ore project.
The Zanaga Early Production Project has the potential to produce
iron ore in a shorter period of time, at low capital cost,
utilising existing brownfield logistics solutions, while the
substantial value of the larger 30Mtpa project provides strong
foundations for a larger development case.
We look forward to updating our shareholders on these exciting
developments towards the end of 2019."
Copies of the unaudited interim results for the six months ended
30 June 2019 are available on the Company's website at
www.zanagairon.com
The Zanaga Iron Ore Company Limited LEI number is
21380085XNXEX6NL6L23.
For further information, please contact:
Zanaga Iron Ore
Corporate Development and Andrew Trahar
Investor Relations Manager +44 20 7399 1105
Liberum Capital Limited
Nominated Adviser, Financial Andrew Godber, Edward Thomas
Adviser and Corporate Broker +44 20 3100 2000
About us:
Zanaga Iron Ore Company Limited (AIM ticker: ZIOC) is the owner
of 50% less one share in the Zanaga Iron Ore Project based in the
Republic of Congo (Congo Brazzaville) through its investment in its
associate Jumelles Limited. The Zanaga Iron Ore Project is one of
the largest iron ore deposits in Africa and has the potential to
become a world-class iron ore producer.
This announcement contains inside information for the purposes
of Article 7 of Regulation (EU) No 596/2014.
Business Review - Operations
Cash Reserves and Project Funding
As already reported in the Company's annual results published on
29 June 2019, Glencore and ZIOC agreed a 2019 Project Work
Programme and Budget for the Zanaga Project of US$1.3m plus
US$0.13m of discretionary spend, dependent on certain workstreams
requiring capital. ZIOC agreed to contribute towards the work
programme and budget an amount comprising US$0.65m plus 49.99% of
all discretionary items approved jointly with Glencore. Ignoring
any entitlement to savings, ZIOC's potential contribution to the
Zanaga Project in 2019 is US$0.73m in total.
We are pleased to report that the Zanaga Project's activities
are currently running in line with the 2019 budget forecast.
As at 31 August 2019, ZIOC had cash reserves of US$1.2m and the
Board continues to take a very prudent approach to the management
of the business.
Infrastructure developments in Republic of Congo and the Pointe
Noire SEZ
The Zanaga Project Team have been monitoring evolving
developments in infrastructure improvements in the Republic of
Congo ("RoC") including the progress made in progressing the
development of the Pointe Noire Special Economic Zone ("SEZ").
There has been a particular increase in activity surrounding
infrastructure developments in RoC in recent weeks, as evidenced by
a number of announcements involving the progression of multiple
large scale infrastructure projects. Many of these projects involve
significant rail, port and power projects which are under
investigation with the support of large government funding
institutions and infrastructure companies with the potential to
provide a positive impact to the economy of the RoC, including the
development of its mineral resource projects.
The Zanaga Project Team are encouraged by its discussions with
these large infrastructure and financing institutions,
predominantly from China, as well as discussions with institutions
involved in the development of the Pointe Noire SEZ, which has the
potential to provide critical infrastructure to facilitate the
advancement of mineral resource projects in RoC.
The Zanaga Project Team are engaging with a number of the
entities involved in developing these infrastructure projects in
RoC with the objective of exploring potential synergies that could
support the development of the Zanaga Iron Ore Project. The Zanaga
Project Team have been particularly impressed with the extensive
experience these entities have in developing large scale
infrastructure projects in Africa including railways, process
plants, multiple power plants, ports, and transshipping
operations.
The discussions thus far could potentially substantially improve
the development prospects of both the EPP Project as well as the
30Mtpa staged development project through debt and equity financing
solutions, accelerated development timeframes for key logistics
infrastructure, and collaboration on power and port alternatives
associated with the Zanaga Project.
Early Production Project Assessment
The Zanaga Project Team's work continues in evaluating the
potential for an early production project that would produce a
minimum of 1Mtpa of high quality iron ore product at a capital cost
of approximately US$110m. If the early production project is judged
viable and is successfully proceeded with, it potentially provides
a low cost platform for the Zanaga Project to enter into
production. It could also lead to the evaluation of a number of
alternative options for the development of the larger 30Mtpa staged
development project.
The EPP Project is envisaged as an initial development stage for
the Zanaga Project, targeting an operating scale of 1Mtpa of pellet
feed iron ore concentrate and/or iron ore pellets with
transportation of the product via existing logistics
infrastructure.
The Zanaga Project Team has adopted a strategy towards the EPP
Project of engaging with experienced third party contractors for
mining and for all logistical aspects of the EPP Project such as
the trucking, rail and port solutions. As a result, Zanaga's
operating company would only be required to undertake the EPP
Project's processing activities. Through this approach, it is
believed capital expenditure can be minimised and limited
predominantly to the processing plant solution required for the
beneficiation of Zanaga iron ore into a high grade iron ore product
pellet feed/pellet product.
A comprehensive update on the EPP Project's evaluation process
as well as recent developments on the 30Mtpa staged development
project was provided to shareholders in a project update on 28
March 2019 as well as the Company's 2018 Annual Results announced
on 30 June 2019. A further update is provided below on specific
aspects of the EPP's development.
1) Pellet Feed Concentrate Plant update
Together with the Project's preferred EPC contractor for the
pellet feed concentrate plant, the Zanaga Project Team have
reviewed the planned process flow sheet and decided to make some
minor adjustments in order to have a high degree of comfort in
achieving the targeted product grade. As a result the estimated
capital cost associated with the pellet feed concentrate plant has
increased slightly to US$40m, however the estimated operating cost
remains unchanged at US$3.75/t Run of Mine (excluding power).
2) Trucking Contract
The Zanaga Project Team is evaluating the optimal solution for
the export of the EPP Project's iron ore via either Gabon or RoC.
In order to export the material it needs to be trucked to a railway
siding in either RoC or Gabon. Two potential rail sidings are
currently under consideration, either (a) Franceville in Gabon,
which is approximately 173km from the Zanaga Project, or (b)
Mossendjo in RoC, which is approximately 160km from the Zanaga mine
site.
The Zanaga Project Team have evaluated proposals from multiple
trucking companies capable of trucking Zanaga product to the rail
siding alternatives. A shortlist of preferred trucking contractors
has now been identified and the Project Team are now engaged in
detailed discussions to optimise the commercial terms of the
contract.
3) Rail and Port
The Zanaga Project Team are discussing a potential solution for
the rail and port logistics solutions with the relevant service
providers in Gabon and RoC. The Gabonese route has to date been the
preferred route due to upgrades of capacity on the Transgabonais
railway line as well as the significant port expansion underway in
Libreville.
However, due to the potential for significant rail and port
infrastructure improvements in RoC, through upgrades announced to
the railway line and improvements planned by the SEZ to the
existing port of Pointe Noire, the Zanaga Project Team are working
to ensure these potential scenarios are also considered in the
appraisal of the EPP Project.
4) Potential DSO stage
The board of Jumelles has approved a process to evaluate the
potential for the production of up to 1Mtpa of DSO iron ore
product. The evaluation of this option leverages the extensive
study work already completed on the EPP Project.
The intention is to consider this interim production phase as a
potential solution during the construction of the EPP Project;
however the board of Jumelles is not ruling out the possibility of
this option being a standalone project albeit with a shorter
expected life of production.
Depending on how this initiative proceeds, it is the intention
to provide further information in due course alongside information
provided on the progress of the assessment of the EPP Project.
30Mtpa Staged Development Project
The ultimate objective of Jumelles remains to develop the larger
30Mtpa staged development mining project. The Stage One project
plans to produce 12Mtpa of premium quality 66% Fe content iron ore
pellet feed product at bottom quartile operating costs for more
than 30 years on a standalone basis. The capital cost associated
with this Stage One phase was estimated at US$2.2bn, including
contingency, on completion of the 2014 FS.
The Stage Two expansion of 18Mtpa is nominally scheduled to suit
the project mine development, construction timing and forecast cash
flow generation, and would increase the Project's total production
capacity to 30Mtpa. The product grade would increase to an even
higher premium quality 67.5% Fe content iron ore pellet feed at
even lower operating cost. The US$2.5bn capital expenditure for the
additional 18Mtpa production, including contingency, could
potentially be financed from the cash flows from the Stage One
phase.
1) Economic evaluation exercise
In view of changes in the pricing of iron ore products in the
market and the emergence of a high grade pricing index which has
been developed in recent years, in March 2019 the Company carried
out the exercise of inputting updated assumptions into the economic
model produced as part of the 2014 FS in two specific areas focused
entirely on freight and iron ore pricing. This exercise was carried
out for illustrative purposes as a high level evaluation
exercise.
As part of the 2014 FS on the 30Mtpa (12+18Mtpa) staged
development Project, the potential economic outcomes of the Project
were reviewed across a range of prices based on a long term 62% Fe
benchmark index structure. However, in recent years the 65%
concentrate index has become established and this should be seen as
a more appropriate index on which to benchmark pellet feed
concentrate products such as that which would be produced by the
12+18Mtpa staged development project.
Earlier this year, as explained above, the Company re-ran the
2014 FS model with a new range of prices from US$70/dmt to
US$110/dmt for the 65% concentrate index, and these results were
reported to shareholders on 28 March 2019.
2) Infrastructure opportunities
The Zanaga Project Team continue to engage with a number of
entities on the potential to develop the infrastructure associated
with the staged 30Mtpa Project. A number of enquiries have been
made by third party experienced infrastructure builders capable of
developing all areas of infrastructure associated with the Project.
A process is underway to evaluate potential financing solutions
with these parties as well as possible value engineering
opportunities such as reduced capital cost and shorter delivery
times for key infrastructure components of the Project.
Power
The Zanaga Project Team are engaging on a variety of solutions
for off-grid power suitable for the EPP Project. The EPP Project
requires approximately 10 megawatts of power and a number of
entities have expressed an interest in providing this power
solution. The Zanaga Project Team are evaluating the option of
sourcing third party power with Independent Power Producers
("IPPs"), as well as the option of incorporating an owned power
solution into the project.
In addition to the evaluation of diesel generator solutions, the
Zanaga Project Team are also investigating multiple power solutions
that would provide power to the mine site within a short timeframe,
including a new heavy fuel oil (HFO) solution which may have the
potential to further lower energy costs.
This is in addition to the continued investigations into the
potential for the inclusion of small scale hydro power into the EPP
Project which would increase capital costs but could provide very
low cost power as regards operating costs, or potential
transmission line connections to existing grid infrastructure.
As regards the 30Mtpa staged development project, the strategy
is to connect the Zanaga Project to the national grid network. The
Project's 100MW power requirement would be supplied by existing and
planned power generation capacity in the country. It is encouraging
to note the progress in advancing the Sounda and Mourala dam
projects which have the potential to supply all of the power
required for the Zanaga Project's development phases.
Power would be delivered to the mine site through two connection
points to the current 220kV transmission network within 160km and
200km of a proposed new transmission line to the east and south of
the mine site respectively. The Zanaga Project Team has been
engaging with potential IPPs and Government departments in order to
develop a power supply for the Project.
The Zanaga Project Team have also been working with a number of
third parties to investigate the potential for optimisation of the
power solution designed for the staged 30Mtpa Project outlined the
2014 FS. A number of projects in the RoC are under investigation
and could form part of the power solution for the Project. In
addition, a number of areas of optimisation of the initial design
are under investigation today.
In addition, the Zanaga Project Team have been working with some
of China's largest and most experienced hydropower developers on
the development of hydro power solutions capable of providing power
for the Zanaga Project's development phases.
The team will be conducting further work during the remainder of
2019 on the definition of potential power solutions.
Iron Ore Market
The iron ore market has experienced significant volatility in
recent months. Substantial movements in price has been driven by
evolving demand for different iron ore products, strong base demand
from China, and significant iron ore supply shocks from the major
iron ore producers.
As highlighted by ZIOC in the past, the crackdown by the Chinese
government on the level of pollution resulting from domestic steel
production plants has caused a change in the purchasing behaviour
of the iron ore market's biggest consumer. This has led to a
substantial increase in prices of high quality iron ore products,
with high iron content itself (improving yield in a steel plant)
and lower impurity levels, requiring less coking coal and having a
significantly reduced environmental impact.
New Mineral Port in Pointe-Indienne
In March 2013, the RoC signed a Memorandum of Understanding with
China Communications Construction Company ("CCCC"), and its
subsidiary China Road and Bridge Corporation ("CRBC"), for the
development of a new multi-user port facility 9km north of the
existing port of Pointe-Noire at Pointe Indienne, including a
deepwater bulk export facility for the iron ore industry. CRBC has
conducted a significant amount of work on this major project,
including a feasibility study on the port development.
ZIOC notes that there are ongoing discussions between the
government of RoC, China EXIM Bank and CRBC on the financing and
development plan for the new bulk materials port development north
of Pointe Noire.
The Zanaga Project Team continue to engage with the authorities
and CRBC to determine an economically and technically viable model
for the development of the new port in alignment with the needs of
the mining companies.
Permitting
It is recognised by the Zanaga Project Team that the current
permitting regime which applies to the development of the Zanaga
Project would need to be supplemented in the event of an early
stage production process proceeding. Initial consideration has
already been given to the supplemental regime which would need to
be put in place.
As part of the continuing assessment of the EPP Project, the
Zanaga Project Team is engaging with the relevant authorities in
the RoC and Gabon in order to enable appropriate cross-border
agreements between the RoC and Gabon to be prepared.
Management incentivisation scheme
As announced on 30 August 2019, in view of the significant work
being undertaken on the Zanaga Project by the ZIOC management team
in relation to investigations into the potential for delivery of an
early production project (EPP) solution as well as options for
enhancement of the 30Mtpa staged development Project, the Board of
ZIOC approved an incentivisation package for the ZIOC management
team.
The incentivisation scheme for three members of the management
team comprises two components: (a) a milestone based Long Term
Incentive Scheme (LTIP) for share options; and (b) a short term
retention fee package. These were described in the announcement of
30 August 2019.
Outlook
As a result of the appraisal work being undertaken on the EPP
Project, significant progress has been made in taking steps towards
potentially repositioning the Zanaga Project to be developed
initially on the basis of a smaller start-up with a relatively low
capital cost investment requirement. This appraisal work, including
an assessment of the economic viability of the EPP, is ongoing and
is subject to the review of the Jumelles board. The objective is to
establish a viable way of bringing the Zanaga resource into
production at an early date.
In addition, in relation to recent announcements made for the
advancement of infrastructure projects in the RoC, including the
Pointe Noire SEZ, the Zanaga Project Team are focusing on the
opportunities that might arise in relation to these initiatives in
the context of the advancement of the infrastructure needed in
relation to the Zanaga Project.
We look forward to providing further information to shareholders
towards the end of 2019.
Financial review
Results from operations
The financial statements contain the results for ZIOC for the
first half of 2019. ZIOC made a loss in the half-year of US$0.6m
compared to a loss of US$1.8m in the full year ended December 2018.
The loss for the 2019 half-year period comprised:
1 January to 1 January to 1 January to
30 June 30 June 31 December
2019 2018 2018
Unaudited Unaudited Audited
US$000 US$000 US$000
-------------------------------------------------------------------- ------------ ------------ ------------
General expenses (281) (416) (919)
Net foreign exchange (loss)/gain (5) (64) (152)
Share of loss of associate (330) (354) (795)
Interest income 4 3 9
(Loss)/Gain before tax (606) (831) (1,857)
Tax - - -
Currency translation (3) (13) (8)
Share of other comprehensive income of associate - foreign exchange (21) (9) -
-------------------------------------------------------------------- ------------ ------------ ------------
Total Comprehensive income (630) (853) (1,865)
-------------------------------------------------------------------- ------------ ------------ ------------
General expenses of US$0.3m (2018: US$0.4m), consisting of:
Directors' fees of US$Nil (2018: US$0.1m), professional fees of
US$0.2m (2018: US$0.2m) and US$0.1m (2018: US$0.1m) of other
general operating expenses.
The share of loss of associate of US$0.3m (2018: US$0.3m)
relates to ZIOC's investment in Jumelles Limited ("Jumelles"), the
joint venture company in respect of the Zanaga Project. From May
2014, as a result of the completion of the Feasibility Study and
thus consideration to complete the Glencore share option, only 50%
(less one share) of the Jumelles results are now included
above.
During the half year period, Jumelles' project expenditure was
US$0.7 including the effects of currency translation of $0.04m
loss. Capitalised exploration assets however, remain at
US$80.0m.
Financial position
ZIOC's net asset value ("NAV") of US$38.8m is comprised of a
US$37.4m investment in Jumelles and US$1.4m of cash balances.
30 June 2019 30 June 2018 31 December 2018
Unaudited Unaudited Audited
US$m US$m US$m
--------------------------------------- ------------ ------------ ----------------
Investment in associate 37.4 37.5 37.5
Fixed assets - - -
Cash 1.4 3.0 2.0
Other net current assets/(liabilities) - - (0.1)
--------------------------------------- ------------ ------------ ----------------
Net assets 38.8 40.5 39.4
--------------------------------------- ------------ ------------ ----------------
Cost of investment
The investment in associate relates to the carrying value of the
investment in Jumelles, which as at 30 June 2019 owned 50% less one
share of the Project. The carrying value of this investment is
unchanged in 2019 due to:
-- Company funding per the Funding Agreement of US$0.3m; and
-- The Company's US$0.3m share of the comprehensive loss US$
0.6m made by Jumelles during the half-year.
As at 30 June 2019, Jumelles had aggregated assets of US$81.2m
(June 2018: US$81.7m) and aggregated liabilities of US$0.9m (June
2018: US$0.8m). Non-current assets consisted of US$80.0m (June
2018: US$80.0m) of capitalised exploration assets and US$1.2m (June
2018: US$1.4m) of other fixed assets including property, plant and
equipment. Cash balances amounted to US$0.5m (June 2018: US$0.3m)
and other current assets were US$Nil (June 2018: US$0.1m).
Cash flow
Cash balances have decreased by US$0.6m since 31 December 2018.
Additional investment in Jumelles required under the Funding
Agreement (details set out in note 1 to the financial statements)
utilised US$0.3m, operating activities US$0.3m.
30 June 2019 30 June 2018 31 December 2018
Unaudited Unaudited Audited
US$000 US$000 US$000
------------------------------ ------------ ------------ ----------------
GBP Balances 1.1 2.3 1.6
USD value of GBP balances 1.4 3.0 2.0
USD value of other currencies - - -
USD balances - - -
------------------------------ ------------ ------------ ----------------
Cash Total 1.4 3.0 2.0
------------------------------ ------------ ------------ ----------------
Consolidated Statement of Comprehensive Income for the six
months ended 30 June 2019
1 January 1 January 1 January
to to to
30 June 30 June 31 December
2019 2018 2018
Unaudited Unaudited Audited
Note US$000 US$000 US$000
-------------------------------------------------- ---- ---------- ---------- ------------
Administrative expenses (280) (480) (1,071)
Share of (loss)/profit associate (330) (354) (795)
-------------------------------------------------- ---- ---------- ---------- ------------
Operating loss (610) (834) (1866)
Interest Income 4 3 9
(Loss) before tax (606) (831) (1,857)
Taxation 5 - - -
-------------------------------------------------- ---- ---------- ---------- ------------
(Loss) for the period (606) (831) (1,857)
Foreign exchange translation - foreign operations (3) (13) (8)
Share of other comprehensive (loss)/income
of associate - foreign exchange translation (21) (9) -
-------------------------------------------------- ---- ---------- ---------- ------------
Other comprehensive (loss)/gain (24) (22) (8)
-------------------------------------------------- ---- ---------- ---------- ------------
Total comprehensive (loss)/gain (630) (853) (1,865)
-------------------------------------------------- ---- ---------- ---------- ------------
(Loss)/Earnings per share (Cents)
Basic 7 (0.2) (0.3) (0.6)
Diluted 7 (0.2) (0.3) (0.6)
The loss for the period is attributable to the equity holders of
the parent company. All other comprehensive income may be
classified as profit and loss in the future.
Consolidated Statement of changes in equity
for the six months ended 30 June 2019
Foreign
currency
Share Retained translation Total
capital earnings reserve Equity
US$000 US$000 US$000 US$000
-------------------------------------------------------- ------------- --------------- ----------- ------------
Balance at 1 January 2018 267,012 (229,055) 3,326 41,283
-------------------------------------------------------- ------------- --------------- ----------- ------------
Consideration for share-based payments - other services - - - -
Share buy backs - - - -
Loss for the period - (831) - (831)
Other comprehensive (loss)/ income - - (22) (22)
-------------------------------------------------------- ------------- --------------- ----------- ------------
Total comprehensive (loss)/income - (831) (22) (853)
-------------------------------------------------------- ------------- --------------- ----------- ------------
Balance at 30 June 2018 267,012 (229,886) 3,304 40,430
-------------------------------------------------------- ------------- --------------- ----------- ------------
Consideration for share-based payments - other services - -
Share buy backs - - - -
Loss for the period - (1,026) - (1,026)
Other comprehensive (loss)/income - - 15 15
-------------------------------------------------------- ------------- --------------- ----------- ------------
Total comprehensive (loss)/income - (1,026) 15 (1,011)
-------------------------------------------------------- ------------- --------------- ----------- ------------
Balance at 31 December 2018 267,012 (230.912) 3,319 39,419
-------------------------------------------------------- ------------- --------------- ----------- ------------
Consideration for share-based payments - other services - - - -
Share buy backs - - - -
Loss for the period - (606) - (609)
Other comprehensive (loss)/income - - (24) (21)
-------------------------------------------------------- ------------- --------------- ----------- ------------
Total comprehensive loss - (606) (24) (630)
-------------------------------------------------------- ------------- --------------- ----------- ------------
Balance at 30 June 2019 267,012 (231,518) 3,295 38,789
-------------------------------------------------------- ------------- --------------- ----------- ------------
Consolidated Balance sheet
as at 30 June 2019
30 June 31 December
30 June 2018 2018
2019 Unaudited Unaudited Audited
Note US$000 US$000 US$000
----------------------------------------- ---- --------------- --------------- -----------
Non-current asset
Property, plant and equipment - - -
Investment in associate 6 37,429 37,518 37,450
----------------------------------------- ---- --------------- --------------- -----------
37,429 37,518 37,450
----------------------------------------- ---- --------------- --------------- -----------
Current assets
Other receivables 94 38 89
Cash and cash equivalents 1,341 2,949 1,955
----------------------------------------- ---- --------------- --------------- -----------
1,435 2,987 2,044
----------------------------------------- ---- --------------- --------------- -----------
Total Assets 38,864 40,505 39,494
----------------------------------------- ---- --------------- --------------- -----------
Current liabilities
Trade and other payables (75) (75) (75)
----------------------------------------- ---- --------------- --------------- -----------
Net assets 38,789 40,430 39,419
----------------------------------------- ---- --------------- --------------- -----------
Equity attributable to equity holders of
the parent
Share capital 267,012 267,012 267,012
Retained earnings (231,518) (229,886) (230,912)
Foreign currency translation reserve 3,295 3,304 3,319
----------------------------------------- ---- --------------- --------------- -----------
Total equity 38.789 40,430 39,419
----------------------------------------- ---- --------------- --------------- -----------
These financial statements were approved by the Board of
Directors on 29 September 2019.
Consolidated Cash flow statement
for the six months ended 30 June 2019
1 January 1 January 1 January
to to To
30 June 30 June 31 Dec
2019 2018 2018
Unaudited Unaudited Audited
US$000 US$000 US$000
------------------------------------------------- ---------- ---------- ---------
Cash flows from operating activities
Loss for the year (606) (831) (1,857)
Adjustments for:
Depreciation - - -
Interest received (4) (3) (9)
Taxation expense - - -
Increase in other receivables 5 (3) (40)
Decrease in trade and other payables - - -
Net exchange (profit)/loss (3) 64 144
Gain on part sale of associate - - -
Share of Total Comprehensive income of associate 351 354 795
Impairment to share of investment in associate - - -
Share-based payments - - -
Tax paid - - -
------------------------------------------------- ---------- ---------- ---------
Net cash from operating activities (257) (419) 967
Cash flows from financing activities
Repurchase of own shares - - -
Net cash from financing activities - - -
------------------------------------------------- ---------- ---------- ---------
Cash flows from investing activities
Interest received 4 3 9
Acquisition of property, plant and equipment - - -
Investment in associate (330) (292) (656)
Net cash from investing activities (326) (289) (647)
Net decrease in cash and cash equivalents (583) (708) (1,614)
Cash and cash equivalents at beginning of period 1,955 3,721 3,721
Effect of exchange rate difference (31) (64) (152)
-------------------------------------------------- ---------- ---------- ---------
Cash and cash equivalents at end of period 1,341 2,949 1,955
-------------------------------------------------- ---------- ---------- ---------
Notes to the financial statements
1. Business information and going concern basis of
preparation
In common with many exploration and development companies in the
mining sector, the Company raises funding in phases as its projects
develop.
Under the 2019 Funding Agreement entered into by the Company and
Glencore, the Company's funding obligations for the 2019 work
programme and budget are for a sum of US$0.65m, plus a percentage
share of discretionary costs. Such share for the Company would be
US$0.13m if all the discretionary costs were approved jointly by
the Company and Glencore. On current projections, it is estimated
that the cash amounts payable by the Company to Jumelles during
2019 will be between approximately US$0.65m and US$0.78m. As
regards ZIOC's corporate costs for the 2019 financial year, it is
estimated that such costs will be of the order of US$0.4m and
US$0.5m.
As part of the Company's ongoing review to preserve its cash
resources, each of the individuals who is a Director and each
person who provides services to the Company in relation to the
day-to-day operations of the Company have commenced discussions
with the Company regarding the re-negotiation of each person's
contractual arrangements so as to provide for payments of fees in
shares and/or options in lieu of cash. This course of action has
been determined to be necessary by the Board and it is contemplated
that the revised arrangements will take effect retrospectively from
the beginning of Q4 2019. Although it is the case that until such
arrangements are agreed there can be no certainty that the Company
will be able to preserve its cash balances in this manner, the
Board of Directors is of the view that this cash preservation
exercise will be successfully concluded in the near future, with
agreement being reached between the Company and the persons
mentioned above. Additionally, each of the individuals who is a
Director has informed the Company that, in order to assist the
Company in preserving its cash balances of the Company, he would
not claim the fees due to him under his Director's Services
Agreement in the period 1 January 2019 to 30 September 2019unless
agreement is reached to apply such fees in the subscription for
shares in the Company. .
The directors have a reasonable expectation that the Company has
adequate financial resources to continue in operational existence
for the foreseeable future, being a period of at least twelve
months from the date of approval of these half-yearly financial
statements. For these reasons, the financial statements of the
Company have been prepared on a going concern basis.
2. Accounting policies
The principal accounting policies applied in the preparation of
these financial statements are set out below. These policies have
been consistently applied to all the periods presented, unless
otherwise stated.
3. Basis of preparation
The condensed set of financial statements has been prepared in
accordance with IAS 34 Interim Financial Reporting as adopted by
the EU.
In accordance with the AIM Rules for Companies, the condensed
set of financial statements has been prepared in applying the
accounting policies and presentation that were applied in the
preparation of the Company's published consolidated financial
statements for the year ended 31 December 2018. The comparative
figures for the financial year ended 31 December 2018 are not the
Company's statutory accounts for that financial year. The 2018
accounts have been reported on by the Company's auditors. The
report of the auditors was (i) unqualified and (ii) did not include
a reference to any matter to which the auditors drew attention by
way of emphasis without qualifying their report.
Up until 30 April 2014, the Company accounted for 100% of the
Jumelles group Comprehensive Income. From May 2014, as a result of
completion of the Feasibility Study (note 1 above) and thus
consideration to complete the Call Option, the Company has
accounted for 50% less one share shareholding portion of that
Comprehensive Income.
4. Segmental reporting
The Company has one operating segment, being its investment in
the Zanaga Project, held through Jumelles. Financial information
regarding this segment is provided in note 6.
5. Taxation
The Company is exempt from most forms of taxation in the British
Virgin Islands ("BVI"), provided the Company does not trade in the
BVI and does not have any employees working in the BVI. All
dividends, interest, rents, royalties and other expense amounts
paid by the Company, and capital gains realised with respect to any
shares, debt obligations or other securities of the Company, are
exempt from taxation in the BVI.
The effective tax rate for the Group is 0.00% (December 2018:
0.00%).
6. Investment in associate
US$000
---------------------------- ------
Balance at 1 January 2018 37,589
Additions 292
Share of comprehensive loss (363)
---------------------------- ------
Balance at 30 June 2018 37,518
---------------------------- ------
Additions 364
Share of comprehensive loss (432)
Balance at 31 December 2018 37,450
---------------------------- ------
Additions 330
Share of comprehensive loss (351)
---------------------------- ------
Balance at 30 June 2019 37,429
---------------------------- ------
From 30 April 2014, the investment represents a 50% less one
share shareholding (previously 100%) in Jumelles for 2,000,000
shares of 4,000,001 total shares in issue.
On 11 February 2011, Xstrata Projects (now renamed Glencore
Projects) exercised the Xstrata Call Option and from that date owns
50% plus one share of Jumelles and Jumelles is controlled at both a
shareholder and director level by Glencore Projects. However, as
the shares issued on exercise of the option were not considered to
vest until provision of the services relating to the Preliminary
Feasibility Study and the Feasibility Study had been completed, the
Group continued to account for a 100% interest in Jumelles until
the Feasibility Study was completed in April 2014. From May 2014
the Group has accounted for the reduction of its interest in
Jumelles. The Group's interest remains accounted for as an
associate using the equity method of accounting.
The Group financial statements account for the Glencore Projects
transaction as an in-substance equity-settled share-based payment
for the provision of services by Glencore Projects to Jumelles in
relation to the Preliminary Feasibility Study and the Feasibility
Study. These services largely were provided through third party
contractors and were measured at the cost of the services
provided.
As at 30 June 2019, Jumelles had aggregated assets of US$81.7m
(June 2018: US$82.1m) and aggregated liabilities of US$0.8m (June
2018: US$0.8m). For the 6 months ended 30 June 2019, Jumelles
incurred no taxation charge (June 2018: US$nil). A summarised
consolidated balance sheet of Jumelles for the 6 months ended 30
June 2019, including adjustments made for equity accounting, is
included below:
30 June 30 June 31 December
2019 2018 2018
Unaudited Unaudited Audited
US$000 US$000 US$000
---------------------------------------- ---------- ---------- ------------
Non-current assets
Property, plant and equipment 1,193 1,403 1,270
Exploration and other evaluation assets 80,000 80,000 80,000
Total non-current assets 81,193 81,403 81,270
---------------------------------------- ---------- ---------- ------------
Current assets 477 320 323
3Current liabilities (886) (763) (768)
---------------------------------------- ---------- ---------- ------------
Net current liabilities (409) (443) (444)
---------------------------------------- ---------- ---------- ------------
Net assets 80,784 80,960 80,825
---------------------------------------- ---------- ---------- ------------
Share capital 340,164 337,627 339,502
Translation reserve (4,867) (4,841) (4,824)
Retained earnings (254,513) (251,826) (253,853)
---------------------------------------- ---------- ---------- ------------
80,784 80,960 80,825
---------------------------------------- ---------- ---------- ------------
30 June 30 June
2019 2018 31 December 2018
Unaudited Unaudited Audited
7. Earnings per share US$000 US$000 US$000
----------------------------------------------------------- ---------- ---------- ----------------
Profit/(Loss) (Basic and diluted) (US$000) (606) (831) (1,857)
Weighted average number of shares (thousands)
Basic and diluted
Issued shares at beginning of period 283,201 283,201 278,777
Effect of shares issued - - 4,424
Effect of share repurchase - - -
Effect of own shares - - -
Effect of share split - - -
----------------------------------------------------------- ---------- ---------- ----------------
Weighted average number of shares at end of period - basic 283,201 283,201 283,201
----------------------------------------------------------- ---------- ---------- ----------------
(Loss)/Earnings per share (Cents)
Basic (0.2) (0.3) (0.6)
Diluted (0.2) (0.3) (0.6)
----------------------------------------------------------- ---------- ---------- ----------------
8. Related parties
The following transactions occurred with related parties during
the period:
Transactions for the period Closing balance
---------- ----------------------------- ----------- -----------------------
30 June 30 June 31 December 30 June 30 June 31 December
2019 2018 2018 2019 2018 2018
Unaudited Unaudited Audited Unaudited Unaudited Audited
US$000 US$000 US$000 US$000 US$000 US$000
--------------------- ---------- ------------- -------------- ----------- ---------- -----------
Funding:
To Jumelles Limited 338 292 656 34 35 34
--------------------- ---------- ------------- -------------- ----------- ---------- -----------
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
IR UBVNRKRAKUAR
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September 30, 2019 02:01 ET (06:01 GMT)
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