AFRICAN MINING & EXPLORATION PLC

("AME" or "the Company")

 

INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2012

 

African Mining & Exploration plc (AIM: AME), the AIM listed gold exploration company operating in West Africa, announces its interim financial results for the six months ended 30 June 2012.

 

Copies of the Company's interim Financial Statements will be made available to download from the Company's website www.ameplc.co.uk.

 

For further information:

African Mining & Exploration plc.                                             44 (0)207 499 5881

Mark Jones (Chief Executive Officer)                

 

Singer Capital Markets Limited (Nomad and Broker)       44 (0)20 3205 7500

James Maxwell / Jenny Wyllie

 

OPERATIONAL HIGHLIGHTS FOR THE SIX MONTHS ENDED 30 JUNE 2012

 

We are pleased to announce, that since we reported in our 2011 Annual Report in May, the Company has acquired Caracal Gold Mali SARL ("Caracal Gold").  This is a significant milestone in the Company's history and has effectively doubled the Company's exploration footprint.

 

We are also pleased to report that there has been limited impact on the exploration activities subsequent to the coup in March 2012 in Mali. The Company's exploration team, with the enhanced capability provided by the RAB / auger drilling rig which commenced activity in April, has been active on both the Company's existing exploration permits and the recently acquired Caracal permits.

 

Acquisition of Caracal Gold

 

In July 2012 AME acquired Caracal Gold Mali SARL from the Caracal group which held 6 gold exploration licences covering 280km² in Mali that were included in the acquisition; all are in good standing with 3 awaiting Ministerial approval for the transfer from Caracal Gold LLC into Caracal. Caracal also has a 7th licence under a renewal application. The Sale and Purchase agreement gives AME beneficial rights to those permits awaiting approval.

 

The exploration licences encompass approximately 376 km². Two, Donbaleya and Daounabete are separate licences in west and south Mali respectively. Five licences are contiguous and collectively known as the 'Kossanto' permits (Kobokoto, Gourbassi, Farikounda, Koussikoto and Kobokoto-Est). These permits lie in the centre of the Kenieba inlier in western Mali, a block of ancient greenstones and granites hosting many significant gold deposits in Senegal and Mali making it one of the most important gold regions in Africa, with nearby producing mines Sadiola (12Moz) and Loulo (11Moz).

 

Kossanto geology includes all the key rock units that host the gold mineralisation in the major gold producing mines of Sadiola, Yatela, Loulo and Sabodala. They consist of a mix of basic and acidic volcanics with turbidites, and pervasive shearing and fracturing. There are extensive artisanal workings all over this region and the structure as indicated by airborne geophysics places Kossanto on the same major fracture system which controls the Sadiola mineralisation.

 

The acquisition came with a significant amount of geological information based on trenching, soil sampling, geophysics surveys, IP surveys and over 7,000 metres of RAB and RC drilling. The Exploration Update contains more specific technical information.

 

In consideration for Caracal, AME has paid an initial sum of £62,500, with a further £62,500 being payable once completion of Government approval of the transfer in respect of 3 of the 7 licences has occurred.

 

The Company envisages that it will spend up to US$1.5 million on exploration on the permits in the 18 month period following completion. At the end of the 18 month period, AME will have at its sole discretion the right to allot ordinary shares, make a payment in cash or a combination of both cash and ordinary shares to the value of £1.25 million or grant the Seller a right of first refusal to reacquire Caracal from AME on a 'cash free debt free' basis.

 

If AME elects to proceed with the payment of £1.25m as set out above and where a JORC compliant Proven and Probable reserve of greater than 500,000 oz is established, AME shall be liable to allot 3,515,000 ordinary shares to the Seller.

 

Exploration Update

 

Kossanto Permits

 

Following the acquisition of Caracal Gold Mali SARL in July 2012, AME is pleased to report on the positive progress made to date on the Kossanto permits in the West Mali greenstone belt.

 

The detailed study of the results of previous work and new fieldwork by AME's geologists has identified three targets that will be the main focus for exploration in the short term. The work has given a clear picture of the gold resource potential on two prospects within the Kossanto permit area and strong exploration potential on a third target. The latest programme of work conducted by AME of detailed soil geochemistry sampling, (RAB) drilling and ground magnetics surveys over the priority targets supports existing data that was derived from previous work programmes including Induced Polarisation (IP) measurements, trenching and RC drilling. The two resource prospects, Gourbassi East and Gourbassi West show clear mineralised trends that extend for more than 1 km and provide the greatest opportunity for the development of a resource in the short term.

 

Gourbassi East is a prospect characterised by a SE striking mineralised zone along a clear lithological contact. Soil sampling, trenching and RC drilling have identified a 900 metre strike length to the mineralised zone, which is open along strike in both directions. Previous results include 25m @ 1.11 g/t in one of the trenches and 22 metres @ 1.59 g/t (including 15m @ 2.18 g/t) in one of the RC drill holes. Mineralisation is related to the contact between Rhyolite and Rhyodacite units and a clear chargeable and resistive structure as indicated by IP surveys is present.

 

Despite heavy rains and difficult road conditions, the Company's own rig and support vehicles were able to access the target area and the first holes of a 4 fence RAB drilling plan were completed at Gourbassi East at the end of August. RAB drilling will be used to test the potential extensions along strike identified during previous RC drilling.

 

The Gourbassi West prospect lies approximately 3.7km WNW of Gourbassi East and appears to be analogous with its clear SSE striking zone of mineralisation associated with felsic volcanic rocks running for almost 1km. It was originally identified by anomalous Au values in soil geochemistry that was consistent with Gourbassi East. An IP Survey identified a highly anomalous chargeable structure, which correlates to the SSE to NNW trending mineralisation and was confirmed by positive trench results including 28 metres @ 0.96 g/t and 33 metres @ 1.08 g/t. RC drilling intersected significant mineralisation and areas of strong alteration and sulphidisation with peak intercepts of 17 metres @ 2.05 g/t, including 9m @ 3.06 g/t and 6 metres @ 1.8 g/t, including 3m @ 3.01 g/t. The structure is open along strike in both directions and represents AME's best opportunity for discovering a gold resource in the short term.

 

The third target is Massakama, which is in the Western portion of the Kossanto permit area. The mineralisation at Massakama is hosted by a strongly silicified green volcanic rock characterised by skarn-type alteration and is associated with quartz veins orientated SSE and along the sheared contacts between intrusive bodies and host rock. Previous trenching and RC drilling have both intersected anomalous gold grades. Trenching results across the alteration included intersections of 36m @ 0.55 g/t and 22m @0.74 g/t; RC drilling results included a high grade intersection of 16m @ 9.5 g/t just 13m below surface and 8m @ 18.5 g/t. The high grade mineralisation is not well understood at this stage, thus a programme of detailed geological mapping and RC chip re-logging will be completed along with a first pass close-spaced ground magnetic survey. The ground magnetic survey has shown a strong correlation between mineralisation and magnetic lows elsewhere on the permit providing an excellent tool for further understanding any additional targets within the permit area.

 

First pass orientation ground magnetic surveys of over 30 line km have been completed using AME's in house equipment and expertise. Clear correlations with the mineralisation identified in RC holes and trenching and magnetic anomalies have been made and are very encouraging for the identification of additional anomalous trends in future exploration programmes within the Kossanto permit area.

 

The Company has received the first results from two close spaced soil sampling grids over separate areas within the Kossanto block. The first is in the Kobokoto permit, where a soil grid has been placed to the South of the previously drilled zone and over highly anomalous regional soil sample results - higher than those in the drilled area and up to 7,441 ppb. Using a grid of 400 x 100 m, AME's field crew collected 263 samples, of which 196 soil sample results have been received with 18 of the values highly anomalous and above 100 ppb. The peak values of 748 and 746 ppb are very encouraging and provide excellent targets for follow up work. Secondly, the Farikounda permit which forms the eastern part of the Kossanto block has been chosen for soil sampling as it has not been subjected to previous exploration and as such it represents virgin ground. An initial soil sample grid of 400 x 100 m has been implemented over an area of interest as defined by anomalous regional geochemistry results correlating with geophysical structures. Results have been received for 95 of the 431 samples, with a peak value of 531 ppb. A more detailed analysis will be completed when all results have been received.

 

The work programme planned for the next 6 months for Gourbassi East and West is designed to better understand and trace the mineralised structure, commencing with 50 line km's of ground magnetic followed up by multiple RAB fences to test width, length and continuity of the mineralisation in the structure.

In addition, a RC drilling programme of approximately 5000m is planned for Gourbassi East and West that will focus on discovering the continuity and depth of the already proven mineralisation, along with extending these zones along strike.

 

Following the cessation of seasonal rains AME plans to upgrade the access road in October. Negotiations are underway with RC drilling sub-contractors and the proposed RC drilling programme is expected to commence in November.

 

Diatissan Permit

 

The 872 m of RAB drilling at Diatissan during June located low grade mineralisation of up to 0.4 g/t and intersected large amounts of quartz veining associated with the gold anomalies. Although no economic grades were discovered, the work proved the presence of low grade gold mineralisation with an associated hydrothermal system.

 

Map of AME's Exploration Permits and Significant Mines / Resources

 

http://www.rns-pdf.londonstockexchange.com/rns/3721N_-2012-9-27.pdf

 

Karan Permit

 

The sampling of in-situ saprolite using auger and short RAB drill holes was successfully completed over the Farague target, within the 250 km2 Karan exploration permit, in April 2012. Positive assay results from the 81 holes confirmed a bedrock source to the anomalous soil and termite geochemistry and indicate a clear trend of increasing gold values, over 50 ppb, towards the Karan Shear Zone. Further geochemical sampling is planned to test this trend.

 

Soil sampling over the northern part of the Karan Shear Zone is currently being implemented to locate the source of the most anomalous Bulk Leach Extractable Gold (BLEG) stream sediment sample in this area and also over a new and very active area of artisanal workings.

 

RAB drill fences have been planned and prepared to test the mineralisation, including 17m @ 1.03g/t, previously intercepted during RC drilling. Following detailed structural and geophysical analysis and re-interpretation, RAB fences will be positioned to drill across both proven mineralisation and E-W cross cutting structures, which may play an important role in the local concentration of mineralisation.

 

Warrants Extension

 

Upon admission to AIM, the Company issued 70,811,500 warrants, the '2010 Warrants'. Each warrant was issued as part of a share and warrant 'unit'. Each 2010 Warrant entitles the 2010 warrant holder to subscribe for one Ordinary Share at 12.5 pence at any time from the date of Admission until the second anniversary of Admission. During 2011 12,861,507 shares were issued in exchange for each '2010 warrant' exercised, leaving 57,949,993 unexercised '2010 warrants' at 31 December 2011, and providing approximately £1.6M of cash to the Company.

 

The Company would like to extend the 2010 Warrants by a further 2 years as it could provide a zero cost source of future funds up to £7.2M if all outstanding 2010 Warrants are exercised. The Company will, by separate notice, shortly convene a Warrant Holder Meeting to consider this proposal.

 

Outlook

 

AME continues to hold discussions with third parties to secure rights, through acquisition or joint venture, on additional licences in the region which will diversify the Company's country risk and enhance the Company's exploration portfolio.

 

The Company has a cash balance of £2.3M and having demonstrated the team's capability to manage effectively with its additional resources the Company expects exploration milestones to be achieved efficiently and economically. This will provide the necessary funds for high cost resource drilling where the geological opportunity is compelling, such as the opportunity identified at the Kossanto permits which we plan to drill in Q4 this year.

 

 

 

………………………………………………..

 

Board of Directors

African Mining & Exploration Plc

 

Date:  27 September 2012

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

FOR THE SIX MONTHS ENDED 30 JUNE 2012

 

 

 

	Notes	Unaudited Six months to 30 June 2012	Unaudited Six months to 30 June 2011	Audited Year ended 31 December 2011
		£	£	£
Revenue		-	-	-
Administrative expenses		(509,866)	(638,846)	(1,530,297)
Operating loss		(509,866)	(638,846)	(1,530,297)
Finance income		7,299	9,446	19,445
Loss for the period before tax		(502,567)	(629,400)	(1,510,852)
Taxation		-	-	-
Loss for the period  attributable to equity owners of the parent		(502,567)	(629,400)	(1,510,852)
Other comprehensive income
Exchange differences on translating foreign operations		(66,673)	(18,821)	5,166
Other comprehensive income for the period		(66,673)	(18,821)	5,166
Total comprehensive income for the period attributable to the equity owners of the parent		(569,240)	(648,221)	(1,505,686)
Loss per share attributable to equity owners of the parent expressed in pence per share
Basic and diluted	2	(0.60)	(0.78)	(1.84)

 

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

AS AT 30 JUNE 2012

 

 

 

	Notes	Unaudited 30 June	Unaudited 30 June	Audited 31 December
		2012	2011	2011
		£	£	£
Assets
Non-current assets
Intangible assets	4	1,415,737	931,520	1,167,560
Property, plant and equipment		188,320	33,310	182,726
Total non-current assets		1,604,057	964,830	1,350,286
Current assets
Receivables		74,987	111,933	49,881
Cash and cash equivalents		2,652,163	4,375,321	3,378,474
Total current assets		2,727,150	4,487,254	3,428,355
Total assets		4,331,207	5,452,084	4,778,641
Equity and liabilities
Shareholders' equity
Share capital	5	842,133	842,133	842,133
Share premium		4,997,699	4,989,232	4,997,699
Foreign currency reserve		(52,787)	(10,101)	13,886
Warrant reserve		579,500	579,500	579,500
Share-based payment reserve		507,376	205,586	407,133
Merger reserve		572,314	572,314	572,314
Retained earnings		(3,207,975)	(1,823,956)	(2,705,408)
Total equity		4,238,260	5,354,708	4,707,257
Liabilities
Current liabilities
Trade and other payables		92,947	97,376	71,384
Total liabilities		92,947	97,376	71,384
Total equity and liabilities		4,331,207	5,452,084	4,778,641

 

The interim financial statements on pages 4 to 11 were approved and authorised for issue by the Board of Directors on 27 September 2012 and were signed on its behalf by:

 

 

………………………………………………..

Mark C Jones

Chief Executive Officer

Company number: 07307107