Half Yearly Report

RNS Number : 1794P

Obtala Resources Limited

30 September 2013

 



30 September 2013

Obtala Resources Limited

("Obtala" or the "Company")

(AIM: OBT)

Unaudited Interim Results

Obtala Resources Limited (AIM:OBT), the natural resource investment and development company, announces unaudited interim results for the 6 month period to 30 June 2013.

Highlights

Financials

·    Strong balance sheet with net assets of £76.6 million (Dec 2012: £79.5 million)

·    Group cash position of £2.2 million (Dec 2012: £2.0 million) with no debt

·    Operating loss of £1.8 million for the period including all costs from Paragon and Montara.

Montara

·    Development and investment in new sun dried tomato project on course for first sales in November 2013

·    Off-take agreement in place with European buyer

·    22 hectares of seeds planted in nursery facility, 100 hectares cleared with phase 2 underway

·    Indications are for monthly product yield estimates to exceed previous estimates of 100 tonnes per month of dried product

·    Project will produce between 30-40 tonnes of final dried product for export on a weekly basis, 52 weeks a year.

·    Heads of Agreement signed for control of a fruit and vegetable canning facility in Lesotho and entry into the branded goods market

·    Railway sleeper contract completed, additional contacts pending

Investments

Paragon Diamonds

·    Conclusion of bulk sampling activities by Paragon at the Lemphane Kimberlite

·    Trial mining to process an additional 500,000 tonne per annum scheduled upon receipt of pending mining lease award

·    Early indications are for an initial grade in the order of 2-3 cpht with average diamond values in excess of US$1,000-1,500 per carat

·    Stones have been exported for valuation purposes, including an 8.86 carat yellow dodecahedron stone recovered in May, 2013.

Bushveld Minerals

·    Positive results from metallurgical test-work and a highly encouraging Scoping Study reported

·    JORC compliant 12,452 tons of contained tin at an average grade of 0.11% tin from the Zaaiplaats tin deposit

·    Groenfontein and Zaaiplaats deposits now host a combined 18,447 tons of tin

·    Acquisition of a 50% interest in new tin project

·    Bushveld now a controlling shareholder in take-over target, Lemur Resources

Chairman's statement

I am pleased to present the interim report of Obtala Resources Limited ("Obtala" or "Company" and its subsidiaries (the "Group")) for the six months to 30 June 2013.  

During the half year, Obtala continued to make good progress in developing its principal interest which comprises a self-sustainable forestry and agriculture business through Montara Continental Limited ("Montara") (75.0% owned subsidiary), with the focus being on building a significant horticultural project in Tanzania. The investments held by the Company in the diamond exploration and production company Paragon Diamonds Limited ("Paragon") (38.7% owned subsidiary), and the iron and tin developer Bushveld Minerals Limited ("Bushveld") (30.35% owned investment) have both performed well over the period with developments discussed below.

Financial results

Group Operating loss before tax for the six months to June 2013 was £1.8 million (2012: £2.2 million loss) comprising administration and operating costs of Montara and Paragon Diamonds. In addition there was a non cash loss of £4.9 million recognised in respect of buying back shares from Bushveld Minerals and share of losses from Bushveld of £0.3m. In the prior period there was £20.2 million of income arising from pre-IPO services provided to Bushveld. 

Group net assets have stayed broadly consistent with the prior year end at £76.6 million, the only movement comprising the loss for the period offset by £1.4 million of funds raised by Paragon and foreign exchange gains arising on the retranslation of foreign assets of £2.2 million.

The Group held a cash balance of £2.2 million as at the 30 June 2013 period end (31 December 2012: £2.0 million).

Montara Continental

Since the beginning of the year, Montara has made good progress in developing its sustainable agricultural and forestry operations in Tanzania and Mozambique, respectively.

Agriculture

During the period, Montara has focused on the development and investment into its new horticultural business in Tanzania where the infrastructure is being created for a new sun-dried tomato farm. Land acquired under lease has been cleared and drip irrigation installed covering 30 hectares. In total over 100 hectares have been cleared which allows for the 30 hectares crop to be rotated three times a year. As of today, 22 hectares of seedlings have been planted in the nursery with an initial block of 4 hectares now being planted-out into the irrigated fields. Additional infrastructure completed includes the construction of the processing house, installation of 3 water boreholes, a 5,500m³ reservoir, nursery facility, workers accommodation block and connection to mainline electricity. Washing, processing and drying equipment manufacturing is in progress with installation and commissioning in October 2013. Once the farm is fully operational and running at capacity, the project will produce between 30-40 tonnes of final dried product for export on a weekly basis, 52 weeks a year.

First sales will be in November 2013 (initial production estimates have been exceeded) through our off-take agreement which was signed in April with a European based vegetable and fruit trading company. A significant post reporting event is the signing of a Head of Agreement with the Lesotho National Development Corporation which will lead to the Company managing and operating the only existing fruit and vegetable cannery in the Kingdom. The Company will hold a 70% interest in the new holding company and sees this as an excellent opportunity to enter into the branded goods market.

Forestry

The Company's main focus in Mozambique was directed towards the manufacture and supply of wooden railway sleepers to a private Mozambican entity which had been commissioned by Vale, the Brazilian mining conglomerate, to upgrade the railway infrastructure in Mozambique. The Company has successfully completed a contract for 7,500 units and has negotiated additional contracts which will start once the clients funding has been released from the main funding partner. These contracts will allow production to continue well into 2014.

The Company is also experiencing an upsurge in demand for timber from the domestic Mozambican market in response to the expected growth associated with recent oil and gas discoveries in the north of the country. Additional concessions awarded to the Company at the end of 2012 place the Company in a strong position to meet the increase in local demand.

Our forestry business is committed to working with high levels of sustainability. In terms of forestry this means obeying all local laws such as ensuring all timber is legally harvested and relevant taxes are paid. This also means the development and implementation of replanting and reforestation programmes, where we have focused on employing local women in this important role.

Paragon Diamonds

It has been a productive period for Paragon with steady progress being made on the flagship Lemphane Kimberlite project. There is currently strong demand for the type of stones that are being produced from Lemphane and with current global market supply constraints, this positions Paragon well to continue its' evaluation programme. Paragon has established a 1 million carat resource on the Motete Dyke project, and on the Lemphane Kimberlite has achieved valuations of individual stones in excess of $2,300 per carat from bulk sampling.

Lemphane Kimberlite - Lesotho

Lemphane is one of five major diamondiferous kimberlite pipes in Lesotho and Paragon has been undertaking an extensive evaluation programme in the pipe. The early indications are for an initial grade in the order of 2-3 cpht with average diamond values in excess of US$1,000-1,500 per carat with an initial tonnage estimate of 27 million tonnes, and the scope to increase this for the next mining stage. The high average stone size reported is populated with many high quality clear white, yellow and pink-brown diamonds.

Paragon completed the processing of 18,387 tonnes from pit samples taken across the pipe, producing 301.44 carats for an average grade of 1.87 cpht. These stones have been exported for valuation purposes and include an 8.86 carat yellow dodecahedron stone recovered in May, 2013. Deep delineation drilling was completed with favourable initial results. An independent report and a volumetric and tonnage estimate is expected from AMEC in due course.

Paragon expects to be awarded a mining lease imminently with trial mining to process an additional 500,000 tonne per annum to be scheduled upon receipt of the lease.   

Bushveld Resources

Bushveld continues to make steady progress upgrading and expanding the known resource on both iron and tin projects, reporting a JORC compliant resource in excess of 770 million tonnes of iron ore and is on track to meet its 1 billion tonnes resource target. Positive results were returned from metallurgical test-work and a highly encouraging Scoping Study indicates that a small start-up operation of 5 million tonnes per annum, producing 2.2 million tonnes per annum of concentrate, will have an IRR of 34.2% and an NPV of $140 million at a 12.5% discount rate. The payback period from the start of mining is only 2 years. Well noted in the Study is that the project is located close to supportive bulk commodity infrastructure, and importantly, sufficient water resources have been identified.

Bushveld recently announced a JORC compliant 12,452 tons of contained tin at an average grade of 0.11% tin from the Zaaiplaats tin deposit. This represents a 208% resource upgrade in the overall tin inventory from the Groenfontein and Zaaiplaats deposits from 5,995 tons tin to 18,447 tons tin. A metallurgical test-work programme is underway on both targets and will be completed together with the resource definition work and consolidated into a Scoping Study towards the end of 2013. A post period event is the acquisition of a 50% interest in the Marble Hall tin deposit which is believed to contain an additional 12,000 tonnes of tin.

In April, Bushveld announced a take-over bid for ASX listed Lemur Resources which if successful will create a diversified African junior mining company with a portfolio of mineral assets in South Africa and Madagascar. At the time of reporting Bushveld holds 52% of Lemur and is the effective controller of Lemur.

Also in April, the Company entered into an agreement to sell part of its shareholding in Bushveld to a private unrelated entity. At the time of reporting the Company has been informed that the proposed purchaser is still seeking final approval from its funding partner.

Outlook

The outlook for the Group remains very positive with the development of the new horticultural project in Tanzania progressing on track for production and revenues this year. We remain extremely optimistic with development plans to re-position the Company as a self-sustainable, profitable agribusiness and timber trading company with the objective of utilising our current land holdings as a platform for the creation of a vertically integrated company. We continue to evaluate expansion opportunities elsewhere in Africa as we seek to grow the Company. An example of our determination is the recent signing of a Heads of Agreement to assume control over a cannery in Lesotho at zero cost and not taking on any debt in exchange for the operatorship of the cannery, thus allowing us to enter the branded goods market. Our investments, Paragon and Bushveld, have both performed well operationally over the period and have attractive futures presenting near term production opportunities. In the meantime, we will seek strategic partners for our investments who have strong balance sheets and who will actively develop the projects to achieve production goals and revenues. The growth and development that we have witnessed in Tanzania and Mozambique over the reporting period bodes well for the future of the Company with the business fundamentals of Montara remaining highly attractive in an exciting and growing investment sector. Finally, I would like to thank our shareholders for their continued support and also all of our employees across the Group for their hard work and commitment in the period.

Francesco Scolaro

Executive Chairman

27   September 2013

Obtala Resources Francesco Scolaro - Chairman Simon Rollason - Managing Director www.obtalaresources.com	[phone]
Macquarie Capital (Europe) Limited (Nomad and Broker)
Nicholas Harland	[phone]
Steve Baldwin

Consolidated condensed statement of comprehensive income

Continuing operations	Notes	Six months to 30 June 2013 (Unaudited) £'000	Six months to 30 June 2012 (Unaudited) £'000	Year to 31 December 2012 (Audited) £'000
Revenue		148	175	929
Gain/(loss) on investments	3	(125)	130	(276)
Operating costs		(652)	(634)	(1,352)
Administrative expenses		(825)	(1,605)	(2,955)
Impairment of intangible assets		-	-	(961)
Depreciation		(211)	(29)	(251)
Share based payment		(124)	(249)	(306)
Operating profit/(loss)		(1,789)	(2,212)	(5,172)
Share of losses of associate		(308)		(736)
Provision of pre IPO services			20,221	20,280
Loss on disposal of associate		(4,904)
Finance income			-	-
Finance costs		-	(4)	(11)
Profit/(loss) before tax		(7,001)	18,005	14,361
Taxation	5	-	-	155
Profit/(loss) for the period/year from continuing operations		(7,001)	18,005	14,516
Discontinued operations
Loss for the year from discontinued operations		-	(479)	(3,954)
Total profit/loss for the period/year		(7,001)	17,526	10,562
Attributable to:
Owners of the parent		(6,536)	18,269	13,475
Non-controlling interests		(465)	(743)	(2,913)
		(7,001)	17,526	10,562
Other comprehensive income:
Exchange differences of re-translation of foreign operations		2,244	(611)	(3,916)
Total comprehensive income for the period:		(4,756)	16,915	6,646
Attributable to:
Owners of the parent		(4,656)	17,707	10,989
Non-controlling interests		(101)	(792)	(4,343)
		(4,757)	16,915	6,646
Earnings/(loss) per share
From continuing and discontinued operations
Basic and diluted (pence)	6	(2.59)	7.28	4.34
From continuing operations
Basic and diluted (pence)	6	(2.59)	7.48	5.97

The loss for the period arises from the Group's continuing operations.

Consolidated condensed statement of changes in equity

	Share capital	Share premium	Merger reserve	Foreign exchange reserve	Share based payment reserve	Revenue reserve/ (deficit)	Total	Non-controlling interests	Total equity
	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000
At 1 January 2012	2,382	6,677	28,543	6,353	677	1,565	46,197	20,428	66,625
Profit/(loss) for the period	-	-	-	-	-	18,269	18,269	(743)	17,526
Exchange differences on retranslation of foreign operations	-	-	-	(562)	-	-	(562)	(49)	(611)
Total comprehensive income for the period	-	-	-	(562)	-	18,269	17,707	(792)	16,915
Issue of shares	119	3,764	-	-	-	-	3,883	-	3,883
Share based payment	-	-	-	-	249	-	249	-	249
Transfer of share based payment on cancelled options	-	-	-	-	(16)	16	-	-	-
Dilution of interest in subsidiary	-	-	-	-	-	528	528	997	1,525
At 30 June 2012	2,501	10,441	28,543	5,791	910	20,378	68,564	20,633	89,197
Profit/(loss) for the period	-	-	-	-	-	(4,796)	(4,796)	(2,170)	(6,966)
Exchange differences on retranslation of foreign operations	-	-	-	(1,924)	-	-	(1,924)	(1,381)	(3,305)
Total comprehensive income for the period	-	-	-	(1,924)	-	(4,796)	(6,720)	(3,551)	(10,271)
Issue of shares	-	-	-	-	-	-	-	-
Share based payment	-	-	-	-	59	-	59	-	59
Dilution of interest in subsidiary	-	-	-	-	-	11	11	464	475
At 31 December 2012	2,501	10,441	28,543	3,867	969	15,593	61,914	17,546	79,460
Profit/(loss) for the period	-	-	-	-	-	(6,536)	(6,536)	(465)	(7,001)
Exchange differences on retranslation of foreign operations	-	-	-	1,880	-	-	1,880	364	2,244
Total comprehensive income for the period	-	-	-	1,880	-	(6,536)	(4,656)	(101)	(4,757)
Issue of shares	131	1,084	-		-	-	1,215	-	1,215
Share based payment	-	-	-		124	-	124	-	124
Purchase of own shares	-	-	-		-	(881)	(881)	-	(881)
Dilution of interest in subsidiary	-	-	-			(1,372)	(1,372)	2,782	1,410
At 30 June 2013	2,632	11,525	28,543	5,747	1,093	6,804	56,344	20,227	76,571

Consolidated condensed statement of financial position

	Notes	30 June 2013 (Unaudited)	30 June 2012 (Unaudited)	31 December 2012 (Audited)
		£'000	£'000	£'000
ASSETS
Non-current assets
Available for sale investments		273	251	261
Investment in associate	8	19,277	26,105	25,370
Intangible exploration and evaluation assets	7	62,583	61,137	58,957
Plant and equipment		2,904	6,455	2,830
Total non-current assets		85,037	93,948	87,418
Current assets
Trade and other receivables		323	38	477
Inventory		58	66	55
Financial investment assets		-	230	-
Cash and cash equivalents		2,169	5,433	1,994
Total current assets		2,550	5,767	2,526
TOTAL ASSETS		87,587	99,715	89,944
LIABILITIES
Current liabilities
Trade and other payables		(307)	(239)	(390)
Financial investment  liabilities		(168)	(9)	(43)
Current tax liabilities		(2)	-	(2)
Total current liabilities		(477)	(248)	(435)
Non-current liabilities
Deferred tax	5	(9,698)	(9,450)	(9,127)
Loans		(706)	(359)	(774)
Site restoration provision		(135)	(461)	(148)
Total non-current liabilities		(10,539)	(10,270)	(10,049)
TOTAL LIABILITIES		(11,016)	(10,518)	(10,484)
NET ASSETS		76,571	89,197	79,460
EQUITY
Share capital	10	2,632	2,501	2501
Share premium	11	11,525	10,441	10441
Merger reserve		28,543	28,543	28543
Foreign exchange reserve		5,747	5,791	3,867
Share based payment reserve		1,093	910	969
Revenue reserve/(deficit)	12	6,804	20,378	15,593
Equity attributable to the owners of the parent		56,344	68,564	61,914
Non-controlling interests	14	20,227	20,633	17,546
TOTAL EQUITY		76,571	89,197	79,460

Approved by the board and authorised for issue on 27 September 2013

F Scolaro                                                                    P Cohen

Executive Chairman                                                      Finance Director

Consolidated condensed statement of cash flows

	Notes	Six months to 30 June 2013 (Unaudited)	Six months to 30 June 2012 (Unaudited)		Year to 31 December 2012 (Audited)
		£'000	£'000		£'000
OPERATING ACTIVITIES
Operating profit/(loss)		(7,001)		18,005		14,361
Adjustment for non-cash items:
Provision of pre-IPO services	9	-		(20,221)		(20,280)
(Gains)/loss on investments		125		(130)		43
Foreign exchange (gains)/losses		(412)		(136)		(19)
Depreciation of plant and equipment		211		29		251
Share based payments		124		249		306
Impairment of assets		4,904		-		961
Decrease/(increase) in trade and other receivables		154		182		736
(Decrease)/increase in trade and other payables		(79)		-		248
Decrease/(Increase) in inventory		3		1		(55)
Finance expense/(income)		-		4		11
Share of losses of associate		308		-		736
Cash outflow from continuing operations		(1,663)		(2,017)		(3,694)
Income taxes paid		-		(504)		(502)
Net cash outflow from continuing operations		(1,663)		(2,521)		(4,196)
Net cash outflow from discontinued operations				(216)		(281)
Net cash flow from operating activities		(1,663)		(2,737)		(4,477)
INVESTING ACTIVITIES
Purchases of property, plant and equipment		(406)		(583)		(1,528)
Purchase of exploration licences				-		(62)
Expenditure on exploration licences	7	(381)		(535)		(1,805)
Purchase of investments	8	-		(275)		(126)
Disposal of investments	8	-		223		253
Loans received/(advanced )		-		-		405
Net cash inflow/(outflow) from investing activities		(787)		(1,170)		(2,863)
FINANCING ACTIVITIES
Proceeds from issue of share capital	10	1,215		-		-
Expenses of issue of share capital	11			-		-
Funds raised by subsidiary		1,410		1,725		1,725
Expenses of issue of subsidiary shares		-		-		-
Finance income		-		-		-
Finance expense		-		(4)		(11)
Net cash inflow from financing activities		2,625		1,721		1,714
(Decrease)/Increase in cash and cash equivalents		175		(2,186)		(5,626)
Cash and cash equivalents at start of period		1,994		7,625		7,625
Effect of foreign exchange rate variation				(6)		(5)
Net cash and cash equivalents at end of period		2,169	5,433		1,994

Note to the consolidated condensed interim financial statements

1. BASIS OF PREPARATION

The interim financial statements of Obtala Resources Limited are unaudited condensed consolidated financial statements for the six months to 30 June 2013. These include unaudited comparatives for the six month period to 30 June 2012 together with audited comparatives for the year to 31 December 2012.

2. SIGNIFICANT ACCOUNTING POLICIES

The condensed consolidated financial statements have been prepared under the historical cost convention except for the revaluation of certain financial investments, available for sale investments and financial assets and liabilities which are included at fair value.

The accounting policies adopted are consistent with those followed in the preparation of the Group's annual financial statements for the period ended 31 December 2012.

The condensed consolidated financial statements do not constitute statutory accounts. The statutory accounts for the period to 31 December 2012 have been reported on by the Company's auditors and were unqualified.

3. (Loss)/GAINs ON INVESTMENTS 

	Six months to 30 June 2013	Six months to 30 June 2012	Year to 31 December 2012
	£000	£000	£000
Gain/(loss) on disposal of investments	-	(30)	(233)
(Decrease)/increase in fair value of financial investments	(125)	160	(43)
Gain/(loss) from investing activities	(125)	130	(276)

4.  SEGMENTAL REPORTING

The Group is currently in the process of production of diamonds, as well as exploration and development of mineral projects, as well as agriculture and forestry. In addition, the Group undertakes investing activities, which are now based principally in Guernsey. These are the Group's primary reporting segments.

The following table shows the geographic segment analysis of the Group's loss after tax for the period and balance sheet net assets:

	Six months to 30 June 2013
	Production	Exploration and development	Agriculture and forestry	Central costs and Investing activities	Inter-group elimination	Total
	£'000	£'000	£'000	£'000	£'000	£'000
Revenue	-	-	148	-	-	148
Gain on investments	-	-	-	(125)	-	(125)
Share of losses of associate	-	-	-	(308)	-	(308)
Operating costs	-	-	(649)	-	-	(649)
Administrative expenses	-	-	-	(824)	-	(824)
Depreciation	-	-	(211)	-	-	(211)
Share based payment charge	-	-	-	(124)	-	(124)
Impairment of assets	-	-	-	(4,904)	-	(4,904)
Segment profit/(loss) before interest	-	-	(713)	(6,286)	-	(7,001)
Finance income	-	-	-	-	-	-
Finance expense	-	-	-	-	-	-
Profit/(loss) before tax	-	-	(713)	(6,286)	-	(7,001)
Taxation	-	-	-	-	-	-
Profit/(loss) after tax	-	-	(713)	(6,286)	-	(7,001)
Balance sheet
Assets		64,590	2,386	32,735	(12,122)	87,589
Liabilities:
Current tax liability
Deferred taxation		(9,698)	-	-	-	(9,698)
Other		(7,664)	(4,241)	(1,537)	12,122	(1,320)
Net assets		47,228	(1,855)	31,198	-	76,571
Other segment items:
Depreciation		-	211	-	-	211
Foreign exchange		2,385	(532)	26		1,879
Capital expenditure
Plant and equipment		101	203	-	-	304
Intangible exploration and evaluation assets		504	-	-	-	504

	Six months to 30 June 2012
	Discontinued Operations - Production	Exploration and development	Agriculture and forestry	Central costs and Investing activities	Inter-group elimination	Total
	£'000	£'000	£'000	£'000	£'000	£'000
Revenue	-	-	175	-	-	175
Gain on investments	-	-	-	130	-	130
Gain on acquisition of associate	-	-	-	20,221	-	20,221
Management charge	-	-	-	-	-	-
Operating costs	(216)	(25)	(609)	-	-	(850)
Administrative expenses	-	-	-	(1,605)	-	(1,605)
Depreciation	(263)	-	(27)	(2)	-	(292)
Share based payment charge	-	-	-	(249)	-	(249)
Impairment of assets	-	-	-	-	-	-
Segment profit/(loss) before interest	(479)	(25)	(461)	18,495	-	17,530
Finance income	-	-	-	-	-	-
Finance expense	(4)	-	-	-	-	(4)
Profit/(loss) before tax	(483)	(25)	(461)	18,495	-	17,526
Taxation	-	-	-	-	-	-
Profit/(loss) after tax	(483)	(25)	(461)	18,495	-	17,526
Balance sheet
Assets	4,305	61,922	1,686	41,613	(9,811)	99,715
Liabilities:
Current tax liability	-	-	-	-	-	-
Deferred taxation	-	(9,450)	-	-	-	(9,450)
Other	(1,986)	(4,788)	(2,526)	(1,579)	9,811	(1,068)
Net assets	2,319	47,684	(840)	40,034	-	89,197
Other segment items:
Depreciation	(263)	-	(27)	(2)	-	(292)
Foreign exchange	49	(611)	-	-	-	(562)
Capital expenditure
Plant and equipment	-	35	548	-	-	583
Intangible exploration and evaluation assets	-	470	-	-	-	470

                                                                                           Year ending 31 December 2012

	Discontinued Operations - Production	Exploration and development	Agriculture and Forestry	Central Costs and Investing activities	Inter-group elimination	Total
	£'000	£'000	£'000	£'000	£'000	£'000
Income statement
Revenue	-	-	929	-	-	929
Losses on investments	-	-	-	(276)	-	(276)
Provision of pre IPO services	-	-	-	20,280	-	20,280
Share of losses of associate	-	-	-	(736)	-	(736)
Operating costs	-	(20)	(1,332)	-	-	(1,332)
Administrative expenses	-	-	-	(2,955)	-	(2,955)
Depreciation	-	-	(247)	(4)	-	(251)
Share based payment	-	-	-	(306)	-	(306)
Disposal	(3,954)	-	-	-	-	(3,954)
Impairment of assets	-	(961)	-	-	-	(961)
Segment loss before interest	(3,954)	(981)	(650)	16,003	-	10,418
Finance income	-	-	-	-	-	-
Finance expense	-	-	-	(11)	-	(11)
Loss before tax	(3,954)	(981)	(650)	15,992	-	10,407
Taxation						155
Loss after tax						10,562
Net Assets
Assets	-	61,017	2,202	37,674	(10,950)	89,942
Liabilities:
Deferred tax liability	-	(9,127)	-	-	-	(9,127)
Other	-	(7,274)	(3,484)	(1,547)	10,950	(1,355)
Net assets	-	44,616	(1,282)	36,127	-	79,460
Other segment items:
Capital expenditure
Plant and equipment	-	272	1,310	-	-	1,582
Intangible exploration and evaluation assets	-	2,103	-	-	-	2,103

5.  TAXATION                                                                                                                 

The accrued tax charge for the six month interim period is based on an estimated worldwide average effective tax rate of nil per cent. after allowance for utilisation of tax losses brought forward in UK based subsidiaries (six months to 31 June 2012: nil%)

The Group has recognised a deferred tax liability of £9,698,000 at 30 June 2013 (30 June 2012: £9,450,000 31 December 2012: £9,127,000) which arose on the difference between the book value and the fair value of assets acquired on the acquisition of a subsidiary.

6.  EARNINGS PER SHARE

Basic earnings per share is based on the loss for the six months of £6,536,000 attributable to equity holders of the parent divided by the weighted average number of ordinary shares in issue during the period of 251,921,807 exclusive of ordinary shares purchased by the Obtala Resources Employee Share Trust and held jointly by the Trust and certain employees (period to 30 June 2012 : profit £17,526,000 divided by the weighted average of 240,855,158 shares; year to 31 December 2012: profit £10,562,000 divided by the weighted average of 243,330,709 shares).

Dilutive earnings per share is calculated by adjusting the weighted average number of shares in issue during the year to assume conversion of all dilutive potential ordinary shares, being share options and the shares held by the Trust and certain employees. There were no potentially dilutive shares in issue in the six months to 30 June 2013 (period to 30 June 2012: nil, year to 31 December 2012: nil).

7.  INTANGIBLE EXPLORATION AND EVALUATION ASSETS

	Renholn Licences	Mindex Licences	Paragon Licences	Uragold Licences	Montara Licences	Total Licences
	£'000	£'000	£'000	£'000	£'000	£'000
Cost and book value at 1 January 2012	156	19,421	41,147	682	-	61,406
Expenditure on exploration and evaluation	-	-	470	-	65	535
Foreign Exchange	-	(217)	(361)	(226)	-	(804)
Cost and book value at 30 June 2012	156	19,204	41,256	456	65	61,137
Expenditure on exploration and evaluation	-	-	1,571	-	-	1,571
Foreign Exchange	-	(964)	(1,676)	(147)	(3)	(2,790)
Impairment charge	(156)	(496)	-	(309)	-	(961)
Cost and book value at 31 December 2012	-	17,744	41,151	-	62	58,957
Expenditure on exploration and evaluation	-	-	504	-	-	504
Foreign Exchange	-	1,092	2,026	-	4	3,122
Cost and book value at 30 June 2013	-	18,836	43,681	-	66	62,583

Purchase of mining licences

The above values of intangible exploration assets acquired represent the cash and non-cash consideration paid by the Group at the time of their acquisition, together with any subsequent expenditure, net of any effects of foreign exchange and impairment charges.

Impairment

The Directors have considered the following factors when undertaking their impairment review of the intangible assets:

a)   Geology and lithology on each licence as outlined in the most recent CPRs (Independent Competent Person's Reports)

b)   The expected useful lives of the licences and the ability to retain the license interests when they come up for renewal

c)   Comparable information for large mining and exploration companies in the vicinity of each of the licences

d)   History of exploration success in the regions being explored

e)   Local infrastructure

f)    Climatic and logistical issues

g)   Geopolitical environment

After considering these factors the Directors have chosen not to make an impairment charge to the carrying value of the intangible exploration and evaluation assets as at 30 June 2013.

8. INVESTMENTS IN ASSOCIATES

During the period the Group's interest in Bushveld was reduced from 46% to 30% as a result of disposing of 30,120,482 as consideration for buying back 11,949,378 shares in the Company. A non cash loss on this disposal has been recorded of £4.9 million in the current period. 

9. SHARE CAPITAL

	Number	£'000
Authorised ordinary shares of £0.01 each:
At 1 January 2012, 31 December 2012 and 30 June 2013	Unlimited	Unlimited
Allotted, issued and fully paid ordinary shares of £0.01 each:
At 1 January 2012	238,179,974	2,382
Issued in the period	11,949,378	119
At 30 June 2012	250,129,352	2,501
Issued in the period	-	-
At 31 December 2012	250,129,352	2,501
Issued in the period	13,131,312	131
At 30 June 2013	263,260,664	2,632

On 21 February 2013 the Company issued 4,377,104 new ordinary shares at a price of 14.85 pence per share for a cash consideration of £650,000.

On 6 April 2013 the Company purchased 11,949,378 of its own shares and disposed of 30,120,482 shares in Bushveld Minerals Limited as consideration. The market prices for the shares at completion date were 7.375p and 11.75 p respectively. The shares are currently held in treasury.

On 9 April 2013 the Company issued 4,377,104 new ordinary shares at a price of 6.75 pence per share for a cash consideration of £295,541.

On 22 May 2013 the Company issued 4,377,104 new ordinary shares at a price of 6.15 pence per share for a cash consideration of £269,192.

10.  SHARE PREMIUM

	£'000
At 1 January 2012	6,677
Premium on issue of shares	3,764
At 30 June 2012	10,441
Premium on issue of shares	-
At 31 December 2012	10,441
Premium on issue of shares	1,084
At 30 June 2013	11,525

See note 10 for details of shares issued in the six month period to 30 June 2013.

11. MOVEMENT IN REVENUE RESERVE AND OWN SHARES

	Retained earnings/(deficit)	Own shares	Revenue Reserve
	£'000	£'000	£'000
At 1 January 2012	2,981	(1,416)	1,565
Profit for the period	18,269	-	18,269
Transfer from share based payment reserve	16	-	16
Dilution of interest in subsidiary (see note 13)	528	-	528
At 30 June 2012	21,794	(1,416)	20,378
Profit for the period	(4,796)	-	(4,796)
Dilution of interest in subsidiary (see note 13)	11	-	11
At 31 December 2012	17,009	(1,416)	15,593
Profit for the period	(6,536)		(6,652)
Purchase of own shares	-	(882)	(882)
Dilution of interest in subsidiary (see note 13)	(1,372)	-	(1,372)
At 30 June 2013	9,101	(2,298)	6,804

Own shares held by the Trust represent the cost of Obtala Resources Limited shares purchased in the market and through subscription and held by the Obtala Resources Limited Employee Share Trust jointly with a number of the Group's employees. At 30 June 2013 4,350,000 shares were held by the trust (June 2012: 2,250,000 December 12: 4,350,000)

During the six month period to 30 June 2013 the Group acquired 11,949,378 Ordinary Shares in the in Obtala Resources Limited. Consideration was settled by way of transferring 30,120,482 shares the Group held in Bushveld Minerals Limited. The own shares have been included at the prevailing market price of the date of the transaction. 

12. DEEMED PARTIAL DISPOSAL OF SUBSIDIARY UNDERTAKING

In the six months to 30 June 2013 the Company's listed subsidiary Paragon Diamonds Limited ("Paragon") issued 28,200,000 new shares to non-controlling interests raising gross cash proceeds of £1.41 million.

This diluted Obtala's interest in Paragon to 39.6% and created a deemed disposal for the Group resulting in a loss recognised in equity of £1.4 million.

After the reporting date Obtala subscribed for 2,000,000 new ordinary shares in Paragon Diamonds Limited - the effect of this has not been included in these condensed financial statements.

13. NON-CONTROLLING INTEREST

	£'000
At 1 January 2012	20,428
Non-controlling interests in net assets on partial disposal (see note 12)	997
Non-controlling interests in share of losses post acquisition	(743)
Non-controlling interests in foreign exchange gains	(49)
At 30 June 2012	20,633
Non-controlling interests in net assets on partial disposal (see note 12)	464
Non-controlling interests in share of losses post acquisition	(2,170)
Non-controlling interests in foreign exchange gains	(1,381)
At 31 December 2012	17,546
Non-controlling interests in net assets on partial disposal (see note 12)	2,782
Non-controlling interests in share of losses post acquisition	(465)
Non-controlling interests in foreign exchange gains	364
At 30 June 2013	20,227

14.  INTERIM FINANCIAL REPORT

A copy of this interim report will be distributed to shareholders and is also available on the Company's website at www.obtalaresources.com

 

END

 

 

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