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RNS Number : 3848X
Sable Mining Africa Limited
28 August 2015
Sable Mining Africa Ltd / Index: AIM / Epic: SBLM / Sector:
Natural Resources
28 August 2015
Sable Mining Africa Ltd ('Sable Mining' or 'the Company')
Annual Results
Sable Mining, the AIM-listed exploration and development
company, presents its results for the year ended 31 March 2015.
Highlights
-- Operations focussed on advancing iron ore and coal portfolios in Africa
-- Nimba iron ore project in south-east Guinea continues to
reach key milestones and demonstrate value as a high-grade,
high-margin, low-capital asset
-- Nimba total JORC Resource raised to 205.2 million tonnes at
an average in-situ grade of 57.8% iron at a 40% cut-off
-- Improved resource confidence during the period, with the
measured and indicated portion increasing by 31% to 195.0Mt
-- Landmark 25 year infrastructure development agreement with
the Government of Liberia to facilitate the export of iron ore from
Nimba through Liberia utilising the established rail line from
Yekepa to the port of Buchanan
-- Technical studies underway to update the operational and
economic viability of Nimba, taking into account ongoing detailed
studies relating to mine and haul road design in Guinea, and
metallurgical work
-- Full Bankable Feasibility Study to be issued following technical studies
-- Evaluating opportunities to monetise strategic coal portfolio
in light of energy and power dynamic in southern Africa
Sable Mining Chief Executive Andrew Groves said, "In spite of
the general back drop to resource development being tough, projects
such as our Nimba Iron Project retain considerable commercial value
and we believe warrant advancement. We have therefore continued to
invest to reach development milestones, which have included
resource expansion, the granting of an export licence, government
backed infrastructure agreements and the advancement of a bankable
feasibility study. Furthermore, we are evaluating the potential of
our coal assets, which again, we believe have long term value
especially considering the energy and power dynamic in southern
Africa. We will continue to look at how best to build value and
will keep the market abreast of developments in the coming months
as we advance our portfolio."
Chairman's Statement and Operational Review
During the period under review, the Company continued to
evaluate and advance its iron ore and coal assets in Africa in
spite of the challenging environment. The backdrop to resource
development has been tough but we have made progress on a number of
fronts on what we believe are long-term strategic assets.
Iron Ore, Guinea
Notwithstanding the challenges faced, the Board believes the
Company's Nimba iron ore project in south-east Guinea ('Nimba' or
the 'Project') continues to hold considerable commercial value as a
high-grade, high-margin, low-capital prospect. Despite the current
market appetite for iron ore plays, the Board believes that Nimba
remains a highly compelling iron ore development project due to a
unique combination of factors, which are outlined below.
Geology
Nimba boasts high grade hard lumpy direct shipping ore ('DSO')
material, a key differentiator from other similar projects.
Following the completion of 231 Reverse Circulation ('RC') drill
holes totalling 5,345 metres (in addition to 373 diamond core
('DC') drill holes totalling 7,167.86 metres) across Plateau 2 and
Plateau 3, we increased the total JORC Resource for the Project to
205.2 million tonnes ('Mt') at an average in-situ grade of 57.8%
iron ('Fe') at a Fe cut-off of 40%. Importantly we also improved
the resource confidence, with the measured and indicated portion
increasing by 31% to 195.0Mt.
Whilst both of these increases are significant in further
defining Nimba's commercial value, I would like to highlight that
the drill work also identified very low clay content within the
upper portion of the unconsolidated domain, increasing the Direct
Shipping Ore ('DSO') product stream.
Metallurgy
Metallurgical test work has demonstrated an overall lump
fraction of 37%, and confirmed a DSO yield of 86% from simple, low
cost, crush and screen processing, with easily fragmented rock
identified (UCS averaging 20Mpa and CWI averaging 3kWh/t). This
will allow for high crushing rates at low power consumption,
positively impacting capex.
Detailed mine scheduling has highlighted the Project's ability
to sustain the production of both high quality premium grade lump
and fines products over an initial ten year life of mine,
exclusively from the Plateau 2 area. With grades of 63.33% and
62.11% Fe returned from the lump and fines product respectively,
and the mechanical and thermal properties of the proposed premium
lump proven to be excellent, we believe the Nimba product has
significant commercial value. Furthermore, the results of this mine
scheduling has the potential to further enhance the total
operational and capital expenditure of the Project, as potential
revenue generation from Plateau 2 could support the continued
development of the wider Project, including Plateau 3 and the
larger Plateau 1, which has been the subject of limited
reconnaissance drilling.
Further metallurgical test work is now underway to determine the
sinter characteristics of the fines product for processing and
further define the quality of the end product. This improved
resource understanding will assist the Company in identifying
future export opportunities into markets such as Europe and
China.
Location
Nimba is located close to established infrastructure in Liberia;
an operating rail line is located approximately 80km from the
Project at Tokedah, near Yekepa, which runs 240km to the deep water
Port Buchanan on the Liberian coast. Whilst some investment will
need to be made to connect Nimba to this line, mainly the
construction of a 65km haul road to Yekepa, and the refurbishment
of an 18km railway extension to connect Yekepa to the existing
shared rail line at Tokedah, this established rail route
significantly enhances Nimba's economics. Secure access to this
export route ensures the viability of the Project because - as
compared to its peer group - Nimba's capex requirement is greatly
reduced. This export route will also provide an immeasurable boost
to the mining industry in south-eastern Guinea.
Strong Governmental Support
On 23 January 2015 the Company's 80% subsidiary, West Africa
Exploration SA, entered into a landmark 25 year infrastructure
development agreement with the Government of Liberia ('IDA'),
relating to the development, ownership rights, financing, use and
operation of rail and port infrastructure in Liberia necessary to
facilitate the export of iron ore from the Project through Liberia
utilising the established rail line from Yekepa to the port of
Buchanan.
The spirit of co-operation between Guinea and Liberia in respect
of the Project has not only meant a defined development path can be
established for this strategic asset, but also provides a clear
signal to other international enterprises that the Mano River Union
region is an attractive investment destination.
The Company is expected to begin implementation as soon as
practicable after the IDA is ratified by the National Legislature
of Liberia and we will continue to work closely with the
Governments of both Liberia and Guinea to develop this export route
for the benefit of all parties.
With these factors in mind, the Board remains focused on
delivering on the major project milestones needed to ensure that,
when conditions permit, Nimba is ready to be advanced and can
deliver on its commercial potential.
Importantly, Nimba has a relatively modest projected capex of
approximately $300 million (for a 3-3.5 Mtpa operation), which
distinguishes the Project when set against the current backdrop of
a depressed iron ore market, which makes many iron ore plays
unviable due to high capital costs. With an enhanced resource
established during the past year, there is significant opportunity
to improve the fundamentals of Nimba further, in particular the
operating cost to reflect the current downward price trends.
We are now working towards completing technical studies, which
will provide an update of the operational and economic viability of
Nimba, taking into account ongoing detailed studies relating to
mine and haul road design in Guinea, the aforementioned
metallurgical work, plus further refinement of concepts where
appropriate. Given that the resource has now been increased by 15%
since the time of the PFS, and there remains a considerable amount
of resource upside including potential tonnages from Plateau 1, the
opportunity for further material economic improvements is clearly
evident. Following this, we are aiming for a full Bankable
Feasibility Study ('BFS') to be issued, which will also calculate
any infrastructure development requirements in Liberia. Schedules
for our technical studies and BFS are currently being evaluated and
further updates on projected timescales will be made in due course.
During this period, where work on the Project focuses on refining
the necessary studies, our non-core workforce in country has been
reduced to conserve funds in readiness for moving into the next
phase of development when we will again ramp up quickly.
(MORE TO FOLLOW) Dow Jones Newswires
August 28, 2015 02:02 ET (06:02 GMT)
As with many other bulk commodities, the iron ore price came
under severe pressure during the year; from a high of US$114.58 in
April 2014, the price ended at US$58.00 at the end of March 2015 (a
fall of 49%) (note these are Consensus Economics spot numbers and
don't consider Value In Use premiums). The fall in price resulted
from a slowdown of economic growth in China and the strengthening
US dollar against a backdrop of a sustained period of high prices
which had elevated production levels. Indeed at the time of
writing, the price has deteriorated further. These lower prices
have caused a number of mine closures and further reductions in
production at other operations can be expected. However, the
consensus long term price forecast remains above current prices and
that, coupled with continued strength in lump premiums, means there
is still room for optimism as far as Sable's prospects are
concerned.
On a more positive note, we are delighted that the region is now
showing positive signs of recovery from the Ebola crisis. The
Company was active in supporting preventative initiatives in the
locality of the Project to limit the spread of the disease and also
assisting the community in dealing with the situation. With
increased awareness we truly hope that the disease will not return
and the region can focus on its development.
Coal, Zimbabwe
Aside from Nimba, we also hold a portfolio of Zimbabwean coal
assets located in the Mid Karoo Zambezi coal basin in the
established Hwange mining district of north-western Zimbabwe (being
the 19,236 hectares Lubu Coal Project) and in the adjacent Lusulu
area of the Kariba Coal Basin.
We are currently assessing ways in which to best generate value
from these assets and in line with this, have recently commissioned
international consultants Aurecon, to conduct a scoping study to
assess the potential of establishing a coal fired power plant to
generate electricity in our project area. The electricity generated
by the plant would be available for domestic industrial use and/or
export to neighbouring countries of South Africa, Namibia, Botswana
and Zambia, via connection to the established grid.
Initial findings of this scoping study are positive and as a
result we have recently met with senior members of the Zimbabwean
government and civil service, with a view to developing framework
agreements for the establishment of the plant and potential
off-take arrangements. In addition, we have commenced the process
of discussions with potential international off-take partners and
investors. We look forward to providing further information on
these exciting and potentially transformative developments in due
course.
Financial Review
Sable Mining is a resource development operation and as such
does not generate revenues. Accordingly, Sable Mining is reporting
for the year ended 31 March 2015 a pre-tax loss on continuing
activities of US$11.2 million (2014: US$39.6 million). As at 31
March 2015 cash balances were US$6.25 million (2014: US$20.1
million).
Outlook
Our principal aim remains to advance Nimba towards production as
swiftly as possible, whilst seeking to maximise stakeholder value
throughout our asset portfolio as demonstrated by the recently
announced sale of non-core assets, which have boosted cash reserves
by nearly $2 million. The factors set out above clearly demonstrate
Nimba is a unique iron ore asset with commercial potential, even
during periods of depressed spot prices. The next milestone
developments will be completing our technical studies and
thereafter publishing our BFS. We are confident that the BFS will
further enhance the already attractive economics of the Project. At
the same time we also look forward to exploring the possibilities
for developing our coal assets in Zimbabwe and the power plant
potential referred to above.
I would like to take this opportunity to thank our team,
together with our investors and stakeholders, for their continued
support and commitment.
Jim Cochrane
Non-Executive Chairman
28 August 2015
For further information please visit www.sablemining.com or
contact:
Andrew Groves Sable Mining Africa Tel: 020 7408
Ltd 9200
David Foreman Cantor Fitzgerald Tel: 020 7894
Europe 7000
Stewart Dickson Cantor Fitzgerald Tel: 020 7894
Europe 7000
Richard Greenfield GMP Securities Tel: 020 7647
2836
Hugo de Salis St Brides Partners Tel: 020 7236
Ltd 1177
Charlotte St Brides Partners Tel: 020 7236
Heap Ltd 1177
CONSOLIDATED INCOME STATEMENT
For the year ended 31 March 2015
Year ended Year ended
31 March 31 March
2015 2014
Note $'000 $'000
------------- -------------
Continuing Operations
Operating expenses (6,010) (8,561)
Impairment of
plant and equipment - (3,750)
Impairment of
intangible assets (6,511) (27,786)
Impairment of (70) -
other receivables
Operating loss (12,591) (40,097)
Other gains and
losses 1,296 381
Finance income 58 97
Finance cost - -
Loss before taxation (11,237) (39,619)
Income tax expense 2 - -
Loss for the year
from continuing
operations (11,237) (39,619)
Discontinued Operations
(Loss) for the
year from discontinued
operations (11) (10,194)
------ ------------- -------------
Loss for the year (11,248) (49,813)
------------- -------------
Loss for the year
attributable to
owners of the
parent company (10,339) (47,827)
Loss for the year
attributable to
non-controlling
interests (909) (1,986)
Loss for the year (11,248) (49,813)
------------- -------------
Loss per share
- Basic and diluted 3 (0.9 cents) (4.8 cents)
Loss per share
from continuing
operations
- Basic and diluted 3 (0.9 cents) (3.8 cents)
Loss per share
from discontinued
operations
- Basic and diluted 3 (0 cents) (1.0 cents)
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the year ended 31 March 2015
2015 2014
$'000 $'000
---------- ----------------------
Loss for the year (11,248) (49,813)
Items that may be subsequently
reclassified to profit or loss
Foreign exchange translation
differences (1,184) (1,829)
Other comprehensive income
for the year (1,184) (1,829)
Total comprehensive income
for the year (12,432) (51,642)
========== ======================
Attributable to the owners
of the parent company (11,523) (49,656)
Attributable to non-controlling
interests (909) (1,986)
---------- ----------------------
Total comprehensive income
for the year (12,432) (51,642)
========== ======================
CONSOLIDATED BALANCE SHEET
As at 31 March 2015
2015 2014
Note $'000 $'000
---------- ----------
ASSETS
Non-current assets
Intangible assets 29,910 28,609
Property, plant and
equipment 3,418 4,272
Loans and other receivables - -
----------
Total non-current
assets 33,328 32,881
---------- ----------
Current assets
Trade and other receivables 1,021 671
Cash and cash equivalents 6,249 20,075
----------
Total current assets 7,270 20,746
---------- ----------
Disposal group assets 12,448 13,671
TOTAL ASSETS 53,046 67,298
---------- ----------
LIABILITIES
Non-current liabilities
Long-term borrowings - -
Deferred tax liability - -
---------- ----------
Total non-current - -
liabilities
---------- ----------
Current liabilities
Trade and other payables (1,640) (2,766)
Total current liabilities (1,640) (2,766)
(MORE TO FOLLOW) Dow Jones Newswires
August 28, 2015 02:02 ET (06:02 GMT)
---------- ----------
Disposal group liabilities (11,379) (12,171)
TOTAL LIABILITIES (13,019) (14,937)
---------- ----------
NET ASSETS 40,027 52,361
========== ==========
EQUITY
Issued capital 4 274,754 274,754
Share based payment
reserve 1,194 1,096
Warrant reserve 7,462 8,395
Translation reserve (10,391) (9,207)
Retained earnings (233,811) (224,405)
---------- ----------
Total equity attributable
to the owners of
the parent company 39,208 50,633
Non-controlling interests 819 1,728
TOTAL EQUITY 40,027 52,361
---------- ----------
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Attributable to the equity holders of
the parent
------------------------------------------------------------------------
Share-based Non-controlling
Share payment Warrant Translation Retained interests
capital reserve reserve reserve earnings Total $'000 Total
$'000 $'000 $'000 $'000 $'000 $'000 $'000
--------- ------------ --------- ------------- ---------- --------- ---------------- ---------
Balances at
01 April
2013 248,798 1,064 7,484 (7,378) (176,578) 73,390 3,714 77,104
Loss for the
year - - - - (47,827) (47,827) (1,986) (49,813)
Other
comprehensive
income
Exchange
translation
differences
on foreign
operations - - - (1,829) - (1,829) - (1,829)
Total
comprehensive
income for
the year - - - (1,829) (47,827) (49,656) (1,986) (51,642)
Transactions
with owners
Share issues -
cash
received 25,910 - - - - 25,910 - 25,910
Share issues -
warrants
exercised 46 - (46) - - - - -
Share based
payment
charge - 32 957 - - 989 - 989
--------- ------------ --------- ------------- ---------- --------- ---------------- ---------
Total
transactions
with
owners 25,956 32 911 - - 26,899 - 26,899
Balances at
31 March
2014 274,754 1,096 8,395 (9,207) (224,405) 50,633 1,728 52,361
Loss for the
year - - - - (10,339) (10,339) (909) (11,248)
Other
comprehensive
income
Exchange
translation
differences
on foreign
operations - - - (1,184) - (1,184) - (1,184)
--------- ------------ --------- ------------- ---------- --------- ---------------- ---------
Total
comprehensive
income for
the year - - - (1,184) (10,339) (11,523) (909) (12,432)
Transactions
with owners
Share issues -
warrants
lapsed - - (933) - 933 - - -
Share based
payment
charge - 98 - - - 98 - 98
Total
transactions
with
owners - 98 (933) - 933 98 - 98
Balance at 31
March
2015 274,754 1,194 7,462 (10,391) (233,811) 39,208 819 40,027
--------- ------------ --------- ------------- ---------- --------- ---------------- ---------
CONSOLIDATED CASH FLOW STATEMENT
For the year ended 31 March 2015
2015 2014
$'000 $'000
--------- ---------
OPERATING ACTIVITIES
Loss before tax (11,248) (39,619)
Adjustments for:
- Depreciation of property,
plant and equipment 1,077 809
- Amortisation of intangible
assets - 3
- Share based payment charge 98 989
- Other (gains) (1,296) (381)
- Loss/(gain) on foreign exchange 862 (1,724)
- Net interest (income) (58) (97)
- Write off of plant and equipment - 3,750
- Impairment of intangible assets 6,511 27,786
- Impairment of other receivables 70 -
Operating cash flow before movements
in working capital (3,984) (8,484)
Working capital adjustments:
- Decrease in inventories - 4
- (Increase)/decrease in receivables (351) 95
- (Decrease) in payables (1,125) (1,611)
Net cash used in continuing
operating activity (5,460) (9,996)
Net cash used in discontinued
operating activity (98) (572)
--------- ---------
Net cash used in operating activities (5,558) (10,568)
--------- ---------
INVESTING ACTIVITIES
Purchase of intangible assets
arising from exploration and
evaluation of mineral resources (7,791) (11,130)
Purchase of property, plant
and equipment (264) -
Proceeds from disposal of property,
plant and equipment 3 41
Net cash used in investing in
continuing activities (8,052) (11,089)
Net cash used in investing activities (8,052) (11,089)
--------- ---------
Proceeds from issue of share
capital - 27,412
Share issue costs - (1,456)
Net (decrease)/increase) in
cash and cash equivalents (13,610) 4,299
Cash and cash equivalents at
start of the year 20,075 15,899
Effect of foreign exchange rate
changes (216) (123)
Cash and cash equivalents at
end of the year 6,249 20,075
========= =========
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 March 2015
1. General information
Sable Mining Africa Limited is incorporated and domiciled in the
British Virgin Islands under the British Virgin Islands Business
Companies Act 2004. The address of the registered office is given
on page 1. The nature of the Group's operations and its principal
activities are set out in the Chairman's Statement on pages 2 to
6.
These financial statements have been presented in US Dollars
because this is the currency of the primary economic environment in
which the Group operates. Foreign operations are included in
accordance with the policies set out in note 2.
The financial statements have been prepared in accordance with
International Financial Reporting Standards ("IFRS") as adopted by
the European Union ("EU").
The non statutory financial statements for the year ended 31
March 2015 have been reported on by Sable Mining's auditors and
contain an unqualified opinion (31 March 2014: unqualified
opinion).
The full audit report is contained in the Company's Annual
Report, which will be available on the Company's website by 30
September 2015.
The financial information contained in this document does not
constitute statutory financial statements.
2. Income tax expense
2015 2014
$'000 $'000
--------- ---------
Loss before tax: (11,237) (39,619)
========= =========
Expected tax at the weighted
average tax rate 18.20% (2014:23.55%) (2,045) (9,330)
Tax effect of expenses that
are not deductible in determining
taxable profit 9 21
Tax effect of losses not allowable 668 974
Tax effect of losses not recognised
in overseas subsidiaries 1,368 8,335
Tax charge for the period - -
========= =========
The tax reconciliation has been prepared using the weighted
average tax rates of the jurisdictions where the principal assets
of its continuing activities are located.
(MORE TO FOLLOW) Dow Jones Newswires
August 28, 2015 02:02 ET (06:02 GMT)
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