Final Results

RNS Number : 5987I

Obtala Resources Limited

17 June 2011

 



Obtala Resources Limited

("Obtala" or the "Company")

(AIM: OBT)

Final Results

Obtala Resources Limited (AIM:OBT), the natural resource investment, development and production company, today announces its audited final results for the year ended 31 December 2010.

A copy of the Annual Report and Accounts and Notice of AGM is being posted to shareholders shortly and will be available from the Company's website www.obtalaresources.com 

Highlights:

·     Cash balances of £8.8 million at the yearend as well as £8.9 million raised by the Group so far in 2011

·     £4.4 million gain generated since inception on sale of remaining interest in Kopane Diamonds 

·     46% (£13.8 million) increase in net assets to £44.1 million

·     Gain on the partial disposal on IPO of Paragon Diamonds Ltd of £5.6 million

·     Successful re-organisation into an international Group under an AIM listed Guernsey holding company

Frank Scolaro, Chairman of Obtala, commented "The year to 31 December 2010 was one of considerable development for Obtala and it is already evident that 2011 will be another eventful year for the Group. I look forward to the rest of 2011 with confidence as we rapidly develop our existing and newly acquired assets whilst also assessing any potential future opportunities. I am particularly optimistic that the Group will be able to report significant progress in exploiting the Mokopane Iron and Tin projects as well as development of Paragon's Lemphane Kimberlite project in Lesotho."

Obtala Resources Frank Scolaro - Chairman Simon Rollason - Managing Director www.obtalaresources.com	[phone]
ZAI Corporate Finance Ltd	[phone]
Marc Cramsie Sarang Shah
Threadneedle Communications
Beth Harris Laurence Read	[phone]

Chairman's Statement

I am pleased to present the annual report and consolidated financial statements for Obtala Resources Limited ("Obtala" or the "Company") for the year ended 31 December 2010.

This was an eventful year for Obtala, which successfully completed its re-organisation into an international Group under an AIM listed Guernsey holding company, Obtala Resources Limited, and also saw the commencement of diamond sales from its alluvial mining operation in Sierra Leone. The Sierra Leone Hard Rock diamond operation was combined with African Rock Resources, a privately held company with a diamond exploration licence in Tanzania, to create a new group which was listed on AIM as Paragon Diamonds Limited ("Paragon") in November 2010. In December 2010, Paragon acquired a 44.3% interest in International Diamond Consultants Limited ("IDC"), a private diamond exploration group holding licences in both Lesotho and Zambia. Obtala owned 61.3% of its Paragon subsidiary at 31 December 2010.

During the year, Obtala also acquired an 80% interest in a lithium brine exploration project in Argentina as well as continuing to conduct geological prospecting over its portfolio of assets in Tanzania, including its early stage gold, base metal and iron ore projects. In addition, the Group made good progress in developing its Tanzanian agricultural interests and trial farming to optimise crops will take place in 2011.

Subsequent to the year end, Obtala has further expanded its asset base with the conditional acquisition of a 37% interest in a near-term tin deposit in South Africa, together with interests of 32% and 34% in two South African iron ore projects and Paragon has increased its interest in IDC to 98.5%. In addition, both Obtala and Paragon completed successful fundraisings of £6million and £2.9million respectively in early 2011.

Financial results

The Group remained development focused in the year ended 31 December 2010 but did commence diamond production and sales in the final quarter which generated revenues of £0.8 million in addition to diamond distribution income of £0.2 million. The loss after tax for the year amounted to £5.8 million (2009: profit £1.8 million) after allowance for a £2.9 million non-cash impairment of intangible licence assets charge (2009: £1.8 million) and a £0.5 million loss on investing activities (2009: gain £5.7 million).    Also included in the results for the year are £0.7 million of one-off costs relating to the re-organisation of the Group under an AIM listed Guernsey holding company and the admission of Paragon on to the AIM market.

A gain of £5.6 million arising on the deemed partial disposal of the Group's interest in its Sierra Leone/Paragon operation which reduced from a holding of 100% to 61.3%, was recognised directly to equity during the year.

Net equity attributable to shareholders of Obtala at 31 December 2010 amounted to £38.3 million (2009: £30.3 million). Net assets, including those attributable to minority interests in Paragon, amounted to £44.1 million (2009: £30.3m) and Group cash balances amounted to £8.8 million (2009: £5.0 million).

Corporate investing activities

Obtala has augmented its pure exploration and development activities with complementary investment activities, focusing on opportunities in the natural resources sector. Whilst the Group has traded in numerous equity and derivative investments in order to enhance shareholder value, its primary investment has been in the combination of equity and derivative instruments that Obtala held in Kopane Diamonds Developments plc ("Kopane"). Kopane was acquired by Firestone Diamonds Plc under an all share offer in the second half of 2010. Obtala disposed of its entire remaining interests in this investment generating cash proceeds of £2.8 million during the year. Overall, Obtala realised a profit of £4.4 million on this investment, of which £5.7 million arose in 2009 inclusive of some unrealised gains which reversed in the current year to realise a loss in 2010 of £1.3 million. Gains of £0.8 million on other equity and derivative holdings reduced the reported loss on investing activities in the year to £0.5 million (2009: gain £5.7 million).

Paragon

Obtala successfully completed the Initial Public Offering of its diamond business during the year which saw the Group's wholly owned subsidiary, Sierra Leone Hard Rock Limited, combined with African Rock Resources Limited to create a new AIM listed group under the name of Paragon Diamonds Limited. At the same time Paragon raised gross funds of £3.8 million by way of issuing approximately 17 per cent of its enlarged issued share capital. Obtala held 61.3% of Paragon at the year end with a consolidated net asset value of £9 million after deduction of minority interests. The market value of this stake at that date was approximately £24 million.

Since listing, Paragon has successfully completed the acquisition of a 98.5% interest in IDC in two tranches, the first being in December 2010 which was settled by issuing 23,397,894 new ordinary shares in Paragon equivalent to £5.7 million. The second was in May 2011 and was settled by issuing 35,670,705 new ordinary shares in Paragon equivalent to £12.1 million.

IDC holds the Lemphane Prospecting Licence which covers a known kimberlite pipe in the world renowned diamondiferous region of the Kingdom of Lesotho. The Lemphane Prospecting Licence lies within the Botha-Buthe district of northern Lesotho, 29 km west of the Letseng Diamond Mine and 5 km north west of the Liqhobong Deposit. In addition, IDC holds the Kabale licence in Zambia, which is deemed prospective for kimberlites.

Greenhills (subsequent to year end)

In February 2011 Obtala agreed to purchase a 50% interest in Greenhills Resources Limited ("Greenhills") for US$4 million, with payments staggered over 12 months and funds being initially utilised to develop tin production in 2012. Completion is conditional on satisfactory due diligence by Obtala and is expected to take place by Q3 2011. 

Through the acquisition, Obtala will receive a 37% interest in the underlying Mokopane Tin Project, located in one of South Africa's most important historical tin fields, Zaaiplaats, lying within the northern limb of the Bushveld Complex of South Africa. The project already has 3,400 tonnes of near-surface open pittable tin identified by Greenhills in one of five target areas identified to date with significant scope to increase to 20,000 tonnes of open pittable tin. The immediate objective is to define a resource in excess of 10,000 tonnes of contained tin within the Mokopane Tin Project.

Bushveld (subsequent to year end)

In March 2011 the Group agreed to purchase a 50% interest in the issued share capital of Bushveld Resources Limited ("Bushveld ") for consideration of US$500,000 in cash and 11,949,378 new ordinary shares in Obtala. Completion is conditional on satisfactory renewal of the underlying prospecting licences and is expected to take place by Q3 2011. 

This acquisition will give the Group interests of 32 per cent and 34 per cent respectively in Bushveld's subsidiaries that hold the licences which comprise the Mokopane Iron Ore Project, which covers 7,409 hectares in South Africa. Mokopane has an estimated potential for approximately 2 billion tonnes of iron ore within a magnetite hosted deposit which also hosts some titanium and vanadium resource. The deposit is located in close proximity to the world's largest open pit platinum mine and associated infrastructure.

Directorate changes

The Obtala Board has been strengthened during the year with the addition of Lord St John of Bletso on 17 May 2010 and James Ede-Golightly on 14 September 2010, both as Non-executive Directors. I would like to take this opportunity to welcome them to the Board and thank them for their contributions to date.

Outlook

The year to 31 December 2010 was one of considerable development for Obtala and it is already evident that 2011 will be another eventful year for the Group. I look forward to the rest of 2011 with confidence as we rapidly develop our existing and newly acquired assets whilst also assessing any potential future opportunities. I am particularly optimistic that the Group will be able to report significant progress in exploiting its Mokopane Iron and Tin projects as well as development of Paragon's Lemphane Kimberlite project in Lesotho. 

The Group benefits from a strong balance sheet with cash balances of £8.8 million at 31 December 2010, which together with the subsequent fundraisings in early 2011of £6 million in Obtala and £2.9 million in Paragon, leaves it well placed to build businesses with great potential and generate further value for shareholders. 

Finally I would thank my colleagues and our employees for all their hard work throughout the year and look forward to a successful and eventful 2011.

Francesco Scolaro

Executive Chairman

Consolidated statement of comprehensive income

Year ended 31 December		2010	2009
		£000	£000
Revenue		832	-
(Loss)/gain on investments		(535)	5,691
Distribution fee income		177	-
Mine operating costs		(836)	-
Administrative expenses		(1,815)	(824)
Depreciation		(319)	(28)
Share based payments		(233)	(66)
Impairment of intangible assets		(2,856)	(1,787)
OPERATING (LOSS)/PROFIT		(5,585)	2,986
Listing costs for subsidiary		(336)	-
Cost of re-organisation		(323)	-
Profit on disposal of licences		-	305
Finance income		11	14
Finance costs		(18)	(3)
(LOSS)/PROFIT BEFORE TAXATION		(6,251)	3,302
Taxation		495	(1,477)
(LOSS)/PROFIT FOR THE YEAR		(5,756)	1,825
Other comprehensive income:
Exchange differences on translation of foreign operations		946	(2,430)
TOTAL COMPREHENSIVE INCOME FOR THE YEAR		(4,810)	(605)
ATTRIBUTABLE TO:
Owners of the parent		(4,430)	(605)
Non-controlling interests		(380)	-
		(4,810)	(605)
(LOSS)/EARNINGS PER SHARE
Basic (pence)		(2.65)	0.97
Diluted (pence)		(2.65)	0.97

The (loss)/profit for the year arises from the Group's continuing operations.

Consolidated statement of changes in equity for the year ended 31 December 2010

	Share capital	Share premium	Merger reserve	Foreign exchange reserve	Share based payment reserve	Revenue reserve	Total	Non-controlling interests	Total equity
	£000	£000	£000	£000	£000	£000	£000	£000	£000
AT 1 JANUARY 2009	1,775	2,828	16,400	7,452	23	(215)	28,263	-	28,263
Profit for the year	-	-	-	-	-	1,825	1,825	-	1,825
Other comprehensive income:
Exchange differences on translation of foreign operations	-	-	-	(2,430)	-	-	(2,430)	-	(2,430)
Total comprehensive income for the period	-	-	-	(2,430)	-	1,825	(605)	-	(605)
Transactions with owners:
Issue of shares	152	2,485	-	-	-	-	2,637	-	2,637
Expenses on issue of shares	-	(23)	-	-	-	-	(23)	-	(23)
Share based payment	-	-	-	-	66	-	66	-	66
At 31 December 2009	1,927	5,290	16,400	5,022	89	1,610	30,338	-	30,338
Loss for the year	-	-	-	-	-	(5,376)	(5,376)	(380)	(5,756)
Other comprehensive income:
Exchange differences on translation of foreign operations	-	-	-	946	-	-	946	-	946
Total comprehensive income for the year	-	-	-	946	-	(5,376)	(4,430)	(380)	(4,810)
Transactions with owners:
Issue of shares	314	6,988	-	-	-	-	7,302	-	7,302
Expenses on issue of shares	-	(4)	-	-	-	-	(4)	-	(4)
Transfer of share based payment on cancelled options	-	-	-	-	(45)	45	-	-	-
Share based payment	-	-	-	-	233	-	233	-	233
Purchase of own shares	-	-	-	-	-	(735)	(735)	-	(735)
Group re-organisation	-	(12,143)	12,143	-	-	-	-	-	-
Dilution of interest in subsidiary	-	-	-	-	-	5,579	5,579	6,218	11,797
At 31 December 2010	2,241	131	28,543	5,968	277	1,123	38,283	5,838	44,121

Consolidated statement of financial position as at 31 December 2010

		2010	2009
		£000	£000
ASSETS
Non-current assets
Investments in associates		5,927	-
Available for sale investments		317	-
Intangible exploration and evaluation assets		22,625	21,626
Property, plant and equipment		6,938	135
Total non-current assets		35,807	21,761
Current assets
Trade and other receivables		498	173
Inventory		197	-
Financial investment assets		180	5,133
Cash and cash equivalents		8,825	5,010
Total current assets		9,700	10,316
TOTAL ASSETS		45,507	32,077
LIABILITIES
Current liabilities
Trade and other payables		(457)	(102)
Current tax liabilities		(622)	(543)
Financial investment liabilities		-	(160)
TOTAL CURRENT LIABILITIES		(1,079)	(805)
NON-CURRENT LIABILITIES
Site restoration provision		(307)	-
Deferred tax		-	(934)
Total non-current liabilities		(307)	(934)
TOTAL LIABILITIES		(1,386)	(1,739)
NET ASSETS		44,121	30,338
EQUITY
Share capital		2,241	1,927
Share premium		131	5,290
Merger reserve		28,543	16,400
Foreign exchange reserve		5,968	5,022
Share based payment reserve		277	89
Revenue reserve		1,123	1,610
Equity attributable to the owners of the parent		38,283	30,338
Non-controlling interests		5,838	-
TOTAL EQUITY		44,121	30,338

Consolidated statement of cash flows for the year ended 31 December 2010

		2010	2009
		£000	£000
OPERATING ACTIVITIES
Operating (loss)/profit		(5,585)	2,986
Adjustment for:
Depreciation of plant and equipment		319	28
Foreign exchange (gains)/losses		(61)	19
Share based payments		233	66
Losses/(gains) on investments		535	(5,691)
Impairment of intangible assets		2,856	1,787
Increase in trade and other receivables		(325)	(136)
Increase/(decrease) in trade and other payables		355	(88)
Increase in inventory		(197)	-
Listing costs for subsidiary		(336)	-
Cost of re-organisation		(323)	-
CASH OUTFLOW FROM OPERATIONS		(2,529)	(1,029)
Income taxes paid		(365)	(16)
Net cash OUTFLOW from operations		(2,894)	(1,045)
INVESTING ACTIVITIES
Expenditure on property, plant and equipment		(2,431)	(94)
Expenditure on intangible exploration and evaluation assets		(694)	(802)
Proceeds from disposal of financial investment assets		5,754	5,137
Purchase of financial investment assets		(1,333)	(3,951)
Purchase of available for sale investments		(508)	-
Net cash INFLOW from investing activities		788	290
FINANCING ACTIVITIES
Proceeds from issue of share capital		2,306	2,637
Expenses of issue of share capital		(4)	(23)
Funds raised by subsidiary		3,797	-
Expenses of issue of subsidiary shares		(150)	-
Finance income		11	14
Finance costs		(18)	(3)
Net cash inflow from financing activities		5,942	2,625
INCREASE IN CASH AND CASH EQUIVALENTS		3,836	1,870
Cash and cash equivalents at beginning of year		5,010	3,184
Effect of foreign exchange rate variation		(21)	(44)
CASH AND CASH EQUIVALENTS AT end of YEAR		8,825	5,010

 

END

 

 

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