Placing to Raise £4.7 million
African Consolidated Resources plc / Ticker: AFCR / Index: AIM / Sector: Mining
21 June 2011
African Consolidated Resources plc ('ACR' or the 'Company')
Placing to Raise £4.7 million to Advance Gadzema Gold Project
African Consolidated Resources plc, the AIM-listed southern African focused
resource development company, is pleased to announce that it has placed
78,334,000 shares at a price of 6 pence per share (the 'Placing Shares') to
raise gross proceeds of £4.7 million.
The Company will make an announcement of the issue of the Placing Shares once
the placing is completed save only for admission. Â The Placing Shares will rank
pari passu in all respects with the Company's existing ordinary shares in issue.
Following admission of the Placing Shares to trading on AIM, the Company's total
issued share capital will be 453,336,451 ordinary shares. Â The Placing Shares
will represent approximately 17% of the enlarged issued share capital of the
Company.
Background to and Reasons for the Placing
ACR has over 12 key projects covering gold, nickel, platinum, copper and
phosphate and is focussed on developing these assets up the development curve.
 The Company's key projects include:
Gadzema Gold Project
The Gadzema Gold Project ('Gadzema') is located on a 30km Greenstone Belt with
900 registered historical workings, and has a current JORC resource of 912,000
troy ounces of gold ('troz Au'). Â ACR controls the greater part of a total of
10km of this Greenstone Belt of which some 8km exhibits extensive
mineralisation. Â ACR's Gadzema project area also includes the Giant Mine, which
has had past production of 560,000troz Au at grades of in excess of 8g/t until
the mine's collapse and closure in 1967.
The Company has completed some 25,000 metres of drilling since May 2010. Â A JORC
resource upgrade was published in June 2011 and a further upgrade is expected in
July 2011, which is expected to take Gadzema's JORC resource to a level in
excess of 1 million troz Au. Â The Company has a longer term target of defining a
JORC resource in excess of 2 million troz Au by December 2012.
Pickstone-Peerless Gold Project
The Pickstone-Peerless Gold Project ('Pickstone-Peerless') is a brownfield site
with past production in excess of 400,000troz Au, which has a current JORC
compliant resource of 513,000troz Au, including 63,000troz Au of tailings. Â An
internal feasibility study has demonstrated the potential for near-term cash
flow from 28,000troz of sulphide high grade tailings, and the metallurgy and
design is now complete. Â The site also benefits from a partially constructed
plant and the infrastructure is near completion. Â In addition further elements
of the plant have been constructed by the TWP Investment Ltd Group ('TWP')
pursuant to a tolling agreement with the Company which was aborted as explained
in an announcement of 9 June 2010, and discussions are in process about the
possible purchase of this plant from TWP. Â The study results showed that $7.5
million and a six month development schedule would be required to bring the
sulphide tailings dump into production and a projected EBITDA of $18 million
over a 13 month project life was estimated. Â The internal feasibility study also
covered Phase 1 of developing the main mining operation towards production, and
demonstrated that the capital injection of $7.5 million for the sulphide dump
would also leave the main mining project largely funded. Â The Company are
currently in discussions with several parties regarding a strategic investment
into the Pickstone-Peerless project, and it is hoped that indigenous capital
would be utilised.
Additional Projects
The Company's other key projects include:
* Perseverance Nickel Sulphide Project: a sulphide-rich body with a 30km
strike - down-hole EM commenced
* Chishanya Rock Phosphate Project: first phase drilling completed on
carbonatite complex and flotation analysis pending
* Great Dyke PGM Project: exploration drilling to define resource drilling
targets to commence once EIA is completed
* Zambian Rare Earth Elements ('REE') and Iron-Ore-Copper-Gold ('IOCG')
Projects: joint venture agreement signed on REE project and core and rock
chip analysis results showed 4% to 22% TREO. Â IOCG target currently
undergoing geophysics and exploration holes being drilled
* The Chakari Gold Project & additional Greenfield and brownfield sites
Zimbabwe
The Company, or its predecessor, has operated in Zimbabwe since 2003 and the
Company has built strong local relationships and a first-mover advantage.
 However operating in Zimbabwe does pose unique challenges due to the improving,
yet still uncertain, political stability of the country. Â The use of the US
dollar and ability to sell gold at the international spot price prices continue
to improve the working and economic environment in Zimbabwe. Â However a lack of
clarity regarding the indigenisation legislation as promulgated on 25 March
2011 has proved problematic for all mining and development companies operating
in the country. Â In the case of ACR it has been advised that the 25 March 2011
Regulation does not affect the Company at present as all of its Zimbabwean
subsidiaries companies are in exploration phase financed by loans from the
parent company and so individually all have a net asset value of less than one
dollar. Â As developments regarding this legislation are released, ACR will keep
shareholders abreast of any material disclosures which may affect the Company.
Financial Overview
Year End 31 March 2011 - Summary:
+----------------------------------------------------------------+----------+
|Exploration costs |$5,507,338|
+----------------------------------------------------------------+----------+
|Administrative costs (includes $232,185 of share option expense)|$3,844,408|
+----------------------------------------------------------------+----------+
|Loss for the period |$3,803,177|
+----------------------------------------------------------------+----------+
|Cash at year end |$4,913,173|
+----------------------------------------------------------------+----------+
Notes:
The above numbers are provisional and subject to confirmation in the release of
final results for the year ended 31 March 2011.
There are 1 million outstanding options remaining for gold acquisition, with an
exercise price of 7 pence.
28 million options with exercise prices between 12 pence and 18 pence will
expire in June; no further Board options outstanding thereafter.
An issue of 25 million options with an exercise price of 10 pence is dependent
on a successful resolution of issues relating to the Marange diamond asset.
Cash Position & Use of Proceeds
Cash reserves:
+------------------------------------------------------------------+----------+
|Projected Cash Balance as at 1 August 2011 (before Placing funds) |$2,240,000|
+------------------------------------------------------------------+----------+
|Gross Proceeds of Placing |$7,500,000|
+------------------------------------------------------------------+----------+
|Cost of Placing | $320,000|
+------------------------------------------------------------------+----------+
|Â | Â |
+------------------------------------------------------------------+----------+
|NET AVAILABLE FUNDS AUGUST 2011 (post Placing and cost of Placing)|$9,420,000|
+------------------------------------------------------------------+----------+
The majority of the proceeds will be used to fund the Company's on-going
exploration programme with the greater part of that being used to fund the
Gadzema Gold Project drilling programme and ground consolidation.
Use of funds through to July 2012:
+-------------------------------------------------------------------+----------+
|Gadzema drilling and assay |$3,560,000|
+-------------------------------------------------------------------+----------+
|Ground consolidation - acquisition costs in Gadzema Gold Belt | $400,000 |
+-------------------------------------------------------------------+----------+
|Perseverance Nickel Sulphides - limited drilling and detailed | $300,000 |
|geophysics | |
+-------------------------------------------------------------------+----------+
|Zambian Iron Oxide Copper Gold - geophysics, exploratory drilling, | $300,000 |
|ground consolidation | |
+-------------------------------------------------------------------+----------+
|PGM projects - drilling and geophysics | $350,000 |
+-------------------------------------------------------------------+----------+
|Other commitments including phosphate metallurgy and tenure | $940,000 |
|protection | |
+-------------------------------------------------------------------+----------+
|Working capital; overhead; Pickstone mine-build project management |$3,570,000|
|/ cash reserve | |
+-------------------------------------------------------------------+----------+
|Total |$9,420,000|
+-------------------------------------------------------------------+----------+
Note EXCLUDES projected cash flow from 2012 gold production
Issue of Warrants
13,125,000 of the Placing Shares were placed with investors in Canada ('the
Canadian Placing Shares'). The arrangement of this tranche of the Placing Shares
was co-ordinated by PowerOne Capital Markets Limited ('PowerOne'), who, on
admission, will receive in return:
* 6% of the gross proceeds raised from Canadian subscribers in cash and
* warrants over 787,500 shares in the Company (being equal to 6% of the
Canadian Placing Shares) ('the Warrants').
Each Warrant shall entitle PowerOne to acquire one ordinary share of the Company
at an exercise price of 6 pence per share for a period of two years from
admission.
Director Participation
* Stuart Bottomley, Director of the Company, purchased 750,000 Placing Shares
* Julian Emery, Director of the Company, purchased 166,700 Placing Shares
The Directors' resultant holdings following the above transactions are as
follows:
+------------------+-----------------+------+---------------------+------+
| Director | Ordinary Shares | % | Outstanding Options | % |
+------------------+-----------------+------+---------------------+------+
| Stuart Bottomley | 4,876,000 | 1.08 | 2,650,000 | 8.3% |
+------------------+-----------------+------+---------------------+------+
| Julian Emery | 166,700 | 0.04 | - | - |
+------------------+-----------------+------+---------------------+------+
The holdings shown in the table above do not include interests over Shares held
through contracts with the Company's Employee Benefit Trust.
Roy Tucker, Chairman of ACR, said, "We are pleased to announce the £4.7 million
Placing that will allow the Company to strengthen its working capital and cash
positions and to continue developing the highly promising Gadzema site in
accordance with our long term strategy. Â We are delighted to have received
significant demand for the Placing Shares both from our existing investor base
and from new shareholders in the UK and in Canada."
Expected timetable of principal events
Applications will be made for the Placing Shares to be admitted to trading on
the Alternative Investments Market of the London Stock Exchange (together,
'Admission'). Â It is expected that Admission will take place at 8.00 a.m. on 27
June 2011.
**ENDS**
For further information visit www.acrplc.com or please contact:
Roy Tucker African Consolidated Resources plc +44 (0) 1622 816918
Andrew Cranswick African Consolidated Resources plc +44 (0) 7920 189 010
Andrew Godber Panmure Gordon (UK) Limited +44 (0) 207 459 3600
Callum Stewart Panmure Gordon (UK) Limited +44 (0) 207 459 3600
Abhishek Majumdar Panmure Gordon (UK) Limited +44 (0) 207 459 3600
Susie Geliher St Brides Media & Finance Ltd +44 (0) 20 7236 1177
This announcement is distributed by Thomson Reuters on behalf of
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(i) the releases contained herein are protected by copyright and
other applicable laws; and
(ii) they are solely responsible for the content, accuracy and
originality of the information contained therein.
Source: African Consolidated Resources Plc via Thomson Reuters ONE
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