African Copper Plc
TSX : ACU
AIM : ACU

African Copper Plc

April 03, 2006 01:00 ET

African Copper Plc: Preliminary Results for the Year Ended 31 December 2005

LONDON, UNITED KINGDOM--(CCNMatthews - April 3, 2006) - African Copper Plc (TSX:ACU)(AIM:ACU)(BSE:African Copper)("African Copper" or "the Company") announces preliminary results for the year ended 31 December 2005.

Highlights

Corporate

- Admission to the Botswana Stock Exchange in February 2005 and the Toronto Stock Exchange in July 2005

- Raised a total of Pounds Sterling 1,021,192 from the exercise of 2,012,967 warrants to purchase ordinary shares at 50p and 28,015 warrants to purchase ordinary shares at 52.5p.

Dukwe deposit

- The Company's goal is to develop the Dukwe deposit as its first mine in the Matsitama Belt of Botswana. In order to achieve its stated goal, the Company focused its fiscal 2005 operational plan on completing the detailed engineering for a heap leach operation at the Dukwe oxide deposit while concurrently working on a feasibility study for the proposed Dukwe sulphide underground mining operation. The initial development strategy envisaged the open pit operation being constructed first, with the underground mine commencing production in the third year of operations.

- Dukwe Oxide - during 2005 the feasibility study was completed on the Dukwe oxide heap leach operation. Several factors, including the high strip ratio in the open pit, excessive acid consumption in the heap, cost escalation in mining, fuel, acid and explosives, combined to render the open pit mining of the oxide deposit marginal at prices less than US$1.30 per pound of copper. The board of directors of the Company elected to defer the development decision on the oxide deposit until sufficient engineering had been completed on the sulphide underground portion of the Dukwe deposit.

- Dukwe Sulphide - during 2005, a major resource definition drill programme was initiated comprising of metallurgical holes, twinned and scissor verification holes, and outline and infill holes to provide a resource estimate for the deeper sulphides. At the same time metallurgical test work studies, including bench scale flotation batch tests and locked cycle tests, were commenced and ultimately showed that the near surface supergene and transition material could be treated through a flotation concentrator. Since the flotation concentrator would also be needed for the underground sulphides, the board elected to accelerate the detailed engineering of a flotation plant and concentrator in parallel with the sulphide drilling programme.

Matsitama Project

- During 2005, the Company completed two drill holes, one at each of the Thakadu deposit and the Makala deposit, twinning historical holes. The drilling showed the presence of a strataform, stratabound disseminated copper deposit. On the basis of these drill results, the Company will initiate a twin-hole drilling programme aimed at validating the historical database prior to commencing a 10,000 metre in-fill drilling programme.

- The Company believes that Thakadu-Makala deposits represents an advanced exploration project that might develop into a mining project in its own right or, alternatively, as a complementary project running either in parallel or in series with the development of the Dukwe deposit.

Post year end highlights

On 31 March 2006, the Company released the details of the Technical Report dated 30 March 2006 by A.C.A. Howe International Limited entitled "Technical Report on the Dukwe Copper Project and Matsitama Prospecting Licences Botswana, Africa" (the "Technical Report") a copy of which may be found on the Company's website at www.africancopper.com or SEDAR at www.sedar.com. The Technical Report provided the following recommendations:

1. pursue a trial mining and underground exploration programme (the "Underground Trial Mining Programme") to mine the four near surface discrete higher grade zones, specified in the Technical Report as Zones A,B,C and D and test the Dukwe deposit resource model and mineability of the deeper sulphide resources;

2. in order to take advantage of short to medium term high copper prices, construct a production scale flotation concentrator plant in conjunction with the Underground Trial Mining Programme;

3. Thakadu-Makala deposits represent an advanced exploration project that might develop into a mining project in its own right or, alternatively, as a complementary project running either in parallel or in series with the Dukwe project. The Company is justified in undertaking a major advanced exploration programme at the Thakadu-Makala deposits and since this work might impact to some extent on the current development plan at the Dukwe project it should be completed without delay; and

4. the Matsitama project has a wealth of systematic multidisciplinary exploration data that indicate substantial areas of highly prospective terrain especially for sediment-hosted copper and zinc deposits. Recent compilation work by the Company has brought several prospects outside of the Dukwe and Thakadu-Makala deposits to the forefront as locations deserving substantial exploration efforts. These areas include:

a. Thakadu-Makala-Dihudi-Mukutsu;

b. Tholo-Lepashe-Tau;

c. Nakalakwana; and

d. along strike extensions of the Dukwe deposit.

During fiscal 2006 the Company intends to seek the necessary finance to undertake the recommendations contained in the Technical Report.

Further information about our properties, to download a copy of the Technical Report or to access our Press Release Archive please visit.www.sedar.com or our website at www.africancopper.com

CHAIRMAN'S STATEMENT

Dear Shareholder,

African Copper was extremely busy in fiscal 2005. The first quarter of 2005 saw the recruitment of key executives, the formation of our presence in Botswana and the signing of a number of key contracts that signalled the commencement of work.

The second quarter of 2005 saw the commencement of a sulphide delineation drilling programme, the kick-off of engineering work on the open-pit, heap-leach, SX-EW project at Dukwe, metallurgical testing of the sulphides and the start of updated environmental, archaeological and water studies.

In Q3, sufficient encouragement was obtained from early metallurgical results and engineering work that engineering for an underground mine and flotation concentrator was initiated. The third quarter of 2005 was probably the most intense period of parallel and concurrent work during the year with up to eight contractors engaged by the Company to complete the various studies required to bring Dukwe to a production decision. The shareholders of African Copper can be proud of the dedication and concentration shown by the employees of African Copper during this period.

The fourth quarter of 2005 saw a number of key decisions and encouraging results delivered from our on-going studies. Capital and operating cost estimates for the open-pit, heap-leach, SX-EW project were delivered early in the fourth quarter. Several factors, including the high strip ratio in the open pit, excessive acid consumption in the heap and cost escalation in mining, fuel, acid and explosives, combined to render the open pit mining of the oxide deposit marginal at copper prices of less than US$1.30/lb. While the open pit option is still economic at prevailing copper prices, the board elected to defer a development decision until the results of the capital and operating cost parameters for an underground mine and flotation concentrator were established.

Encouraging drill results from the sulphide delineation programme became available late in Q3, and these were announced to the public in Q4. The intensive drill effort at Mapanipani North resulted in new geological interpretations and the discovery of a new footwall zone of mineralization. Preliminary metallurgical results from the sulphides were delivered in Q4 and these showed excellent recoveries that could produce marketable concentrates. The start of the permitting process was marked by the delivery of the Environmental, Archaeological and Water Studies to the government in Q4.

The first quarter of 2006 saw the finalization of the permitting studies, the effective completion of the infill drilling at Dukwe and the delivery of preliminary sulphide resources for a portion of the deposit utilizing an updated geological interpretation.

While the Board's goal is to develop the Dukwe deposit as its first mine, it is also excited about the prospects within the Matsitama and Thakadu and Makala exploration licenses. Two drill holes tested our geological model for these deposits after an extensive compilation effort. The stratabound-strataform copper-silver mineralization encountered at Thakadu and Makala appears to be more consistent and higher-grade than the hydrothermal shear hosted mineralization found at Dukwe. A 10,000 metre Phase 1 diamond drill programme is expected to commence in Q2 2006. African Copper hopes to complete a feasibility study on these deposits over the course of the next year.

As African Copper continues to grow towards production the Board will continue to seek growth in shareholder value and to sensibly use the resources that shareholders have entrusted to us. The Company will be aggressive in pursuing exploration, production and acquisition opportunities while remaining cognizant of market conditions and shareholder interests.

As a shareholder, you can be assured that the Board will protect your interests, will push management to achieve ever greater goals, will require the Company to develop projects in a sensible and environmentally sustainable manner, and will ensure the engagement of communities and stakeholders at all stages. The Board will remain active in the Company and will ensure the enforcement of the extensive Corporate Governance Policies and Procedures that have been put in place.

On behalf of the Board, I would like to thank the shareholders and employees of African Copper for their support and loyalty in 2005 and through early 2006. I would also like to thank my fellow Directors for their active participation and contributions to the Company in its formative year. I expect that 2006 will be
an exciting year for the Company, and for our shareholders.

Roy Corrans

Chairman

31 March 2006

PRELIMINARY STATEMENT

This preliminary statement was approved by the Board of Directors on 31 March 2006 and has been agreed by the auditors. It does not constitute statutory accounts within the meaning of the section 240 of the Companies Act 1985. The statutory accounts will be sent to shareholders shortly and will be filed following the Company's Annual General Meeting. The Auditors have reported on these accounts; their report is unqualified and does not contain statements under section 237(2) or (3) of the Companies Act 1985.



Consolidated Profit and Loss Account
for the year ended 31 December 2005

Year ended Period from
31 December 11 February 2004 to
2005 31 December 2004
Pounds Sterling '000 Pounds Sterling '000

(as restated)(i)

Administrative expenses (1,121) (743)
Unrealized exchange (loss)/
gain (4) 8
--------------------- --------------------
Operating loss (1,125) (735)
Bank interest receivable 530 83
--------------------- --------------------
Loss before tax (595) (652)
Tax (17) -
--------------------- --------------------
Loss after tax (612) (652)
--------------------- --------------------
Basic and diluted loss per
share 1.19p 3.07p
--------------------- --------------------
--------------------- --------------------

All amounts relate to continuing operations.

(i) see note 2(c) Share based payment

Consolidated Statement of Total Recognised Gains and Losses
for the year ended 31 December 2005

Year ended Period from
31 December 11 February 2004 to
2005 31 December 2004
Pounds Sterling '000 Pounds Sterling '000

(as restated)(i)

Loss after tax for the
financial period (612) (652)
Currency translation
differences (315) -
------------------------------------------
Total recognised losses
for the period (927) (652)
------------------------------------------
Prior period adjustment(i) (332)
---------------------
Total recognised losses
since last Annual Report (1,259)
---------------------
(i)see note 2(c) Share based payment

Balance Sheet
As at 31 December 2005

As at As at
31 December 31 December
2005 2004
Pounds Sterling '000 Pounds Sterling '000

(as restated)(i)
Fixed Assets

Intangible Assets

Goodwill 8,684 8,684
Deferred exploration costs 7,159 2,330
--------------------- ---------------------
Total Intangible Assets 15,843 11,014

Tangible assets 120 28
Investments - -
--------------------- ---------------------
15,963 11,042
--------------------- ---------------------
Current Assets

Debtors 227 160
Cash at bank and short
term deposits 10,676 13,410
--------------------- ---------------------
10,903 13,570

Creditors

Amounts falling due
within one year (1,913) (261)
--------------------- ---------------------
Net Current Assets 8,990 13,309
--------------------- ---------------------
Net Assets 24,953 24,351
--------------------- ---------------------
--------------------- ---------------------
Share capital 520 500
Share premium 16,158 15,157
Merger reserve 8,606 8,606
Other reserve 1,248 740
Profit and loss account (1,579) (652)
--------------------- ---------------------
Equity Shareholders' Funds 24,953 24,351
--------------------- ---------------------
--------------------- ---------------------
(i)see note 2(c) Share based payment

Consolidated Cash Flow Statement
For the year ended 31 December 2005

Year ended Period from
31 December 11 February 2004 to
2005 31 December 2004
Pounds Sterling '000 Pounds Sterling '000
Net cash outflow from
operating activities (1,006) (547)
Return on investment and
servicing of finance 530 83
Capital expenditure (3,279) (85)
Acquisitions - (296)
Management of liquid
resources 2,621 (13,000)
Financing - issue of
equity shares during
the year 1,021 14,255
--------------------- ---------------------
Cash (outflow)/inflow
during the year (113) 410
--------------------- ---------------------

Reconciliation of net cash flow to movement in net funds

Year ended Period from
31 December 11 February 2004 to
2005 31 December 2004
Pounds Sterling '000 Pounds Sterling '000
(Decrease)/ increase in
cash in the period (113) 410
Cash (inflow)/outflow
from (decrease)/increase
in liquid resources (2,621) 13,000
-------------------------------------------
Change in net funds
arising from cash flows (2,734) 13,410
Opening net funds 13,410 -
-------------------------------------------
Closing net funds 10,676 13,410
-------------------------------------------


1. Nature of Operations, Going Concern and Availability of Project Finance

African Copper Plc ("African Copper" or the "Company") is the holding company of a mineral exploration and development group of companies (the "Group"). The Group is involved in the exploration and development of copper deposits in Botswana and is currently in the feasibility evaluation of an undeveloped copper deposit (the "Dukwe Project") and a large-scale exploration project (the "Matsitama Project"). The Dukwe Project is located in the northeastern portion of Botswana and the Matsitama Project is contiguous to the southern boundary of the Dukwe Project.

To fund its past exploration activities, the Company has raised equity capital to achieve specific milestones set out in its business plan. In November 2004, the Company raised funds to complete the bankable feasibility studies for the oxide and sulphide zones of the Dukwe Project and complete a phase-one exploration programme for the Matsitama Project. The Company's cash resources are expected to be sufficient to fund the Company's planned exploration and development activities in 2006 and fund general and administration costs until the end of 2007. The Directors therefore consider it appropriate to prepare these financial statements on the going concern basis.

However, the Company's current cash resources will not be sufficient to bring the Dukwe Project and the Matsitama Project into production and further funding will be required. During 2006 the Company intends to seek the necessary project or equity finance to commence production at the Dukwe Project and further exploration at the Matsitama Project. In the event that the Company is unable to secure the further finance required, the Company will not be able to fully develop these projects and their carrying values and the investment of the parent company may become impaired.

2. Principal accounting policies

a) Basis of preparation

The financial statements have been prepared under the historical cost convention and in accordance with applicable United Kingdom Accounting Standards ("UK GAAP"). These principles differ in certain material respects from Canadian generally accepted accounting principles ("CDN GAAP"). Significant differences between UK GAAP and CDN GAAP applicable to the Company are described in Note 22 of the Company's audited consolidated financial statements for the financial year ended 31 December 2005 and can be found on SEDAR at www.sedar.com or the Company's website at www.africancopper.com.

b) Deferred exploration costs

All costs related to the exploration of mineral properties are capitalised until either the properties are brought into production, at which time they are depleted on a unit of production basis, or until the properties are sold, allowed to lapse, abandoned or determined not to be economically viable, at which time they are charged to the profit and loss account.

Assets acquired in relation to the exploration of mineral properties are capitalised in the same manner as exploration costs.

c) Share based payment

The Company has elected to adopt Financial Reporting Standards 20 ("FRS 20"), "Share Based Payments", with effect from 11 February 2004 (date of incorporation), which represents early adoption of this standard and a change in accounting policy. Under FRS 20, the Group either charges the profit and loss account or capitalises as deferred exploration costs with the fair value of share options issued, depending on the nature of the grant. The fair value is calculated using the Black-Scholes method, which is then spread over the vesting period after allowing for any expected lapses. An exemption applies for options which were granted prior to 7 November 2002. The effect of this change in accounting policy is to increase the loss before tax for the period ended 31 December 2004 by oe331,800 and increase the net assets of the Group at 31 December 2004 by oe96,500. The effect during the current year is to increase the loss before taxation by oe120,277 and to increase net assets at 31 December 2005 by oe388,048.

3. Basic and Diluted Loss Per Share

The calculation of basic loss per ordinary share on the net basis is based on the loss on ordinary activities after taxation of Pounds Sterling 612,206 (2004:Pounds Sterling 652,139) and on 51,500,444 (2004:21,209,021) ordinary shares being the weighted average of ordinary shares in issue and ranking for dividend during the year. No diluted loss per share is presented as the effect of the exercise of share options would be to decrease the loss per share.

Contact Information

  • African Copper Plc
    David Jones / Joseph Hamilton
    +44 (0) 20 7321 3721
    or
    Numis Securities Limited (NOMAD)
    John Harrison / Nick Westlake
    +44 (0) 20 7776 1590
    or
    Parkgreen Communications
    Justine Howarth / Ana Ribeiro
    +44 (0) 20 7493 3713