SOURCE: African Platinum PLC

September 27, 2005 05:56 ET

African Platinum PLC announces Preliminary results

London -- (MARKET WIRE) -- September 27, 2005 --

African Platinum plc
Ticker: APP
Index: AIM
Sector: Exploration

Preliminary results for the year ended 31 March 2005

African Platinum plc (the "company") announces its preliminary results for the year ended 31 March 2005.


* A positive pre-feasibility study confirms that Leeuwkop is one of the most
attractive development opportunities in the world's prime platinum region.

* Continued exploration puts Afplats well on the way to achieving its goal of
controlling a +100 million ounce PGM resource base.

* The company extends its presence by acquiring exploration rights in other
prospective regions of Southern Africa.

* The board and management are strengthened through the appointment of
executives with a record of technical success and value creation.

* Continued marketing further enhances and extends the company's blue-chip share


"In the past year Afplats has taken great strides forward - it has undergone a transformation from an entrepreneurial entity into an asset-rich investment vehicle. With a top class executive team in place and an eminent board to support and advise, your company now has the platform to achieve its immediate goal of developing the first phase of the Leeuwkop project and its longer-term objective of building a premier platinum company on our world-class asset base.

The highlight of this busy period was the completion of a positive pre-feasibility study on Leeuwkop - detailed elsewhere in this report - which confirmed that the size, grade and location of this deposit make it one of the more prospective development opportunities on the Western Limb of South Africa's Bushveld Complex, the world's prime platinum region. The Afplats in-house technical team supervised the programme of work in which individual components were undertaken by a suite of five independent consultancy firms widely acknowledged in the industry as among the best in their fields. A definitive or bankable feasibility study is now under way.

The pre-feasibility study essentially indicates that proven mining methods could generate robust returns at Leeuwkop. It envisages a first-phase operation producing 300 000 ounces of 4E concentrate per year with a mine life in excess of 20 years. We expect that the current 50 million ounce resource base will be significantly increased by continuing exploration, but even at its present size the resource is a very substantial one, which will more than adequately support Leeuwkop as a stand-alone producer.

While management's focus has been on advancing this project, it has also been active on other fronts, notably the development of the greater Leeuwkop area. The first drill results from the Imbasa property, which is adjacent to Leeuwkop, have been very exciting, confirming the continuity of the Merensky and UG2 reefs into this area and more than doubling the lateral mineralisation from 6 kilometres to 13 kilometres. In another significant development, Afplats has been granted the prospecting right for the Inkosi property, which lies adjacent to its existing prospecting rights.

At the corporate level, there has been a sustained emphasis on marketing the company to prospective investors. Afplats already has a strong shareholder base, which includes a number of blue-chip institutions, particularly in North America. As part of a strategy to improve access to the North American market, the company has made an initial filing for a secondary listing on the American Stock Exchange and in the meantime, Afplats is also actively seeking to extend its following in the United Kingdom and Europe.

An exceptional investment opportunity

In a market characterised by the number of junior platinum companies competing for investor attention, Afplats is clearly differentiated by the unique quality of its flagship asset, which cogently underwrites its ambition of elevating itself to the top of the mid-tier PGM companies.

The company's objective of controlling a resource base of more than 100 million ounces on the Bushveld Complex has been made increasingly attainable by the exploration results from Imbasa and the acquisition of the Inkosi prospecting right. It has also advanced significantly towards its aim of defining an orebody that is capable of producing 1 million ounces of 4E per year.

Afplats's greater Leeuwkop project area has a sufficient strike length to eventually accommodate three shaft systems all exploiting the deposit at the same depth and with a potential life of around 50 years. The infrastructure which will be put in place for the mining areas will support and service an extended operation, thus reducing the level of additional expenditure required in the future. Not surprisingly, the aggregate production which Afplats can potentially look forward to from the various phases of the Leeuwkop development, combined with a resource base unique for a company of its size, has enhanced our profile as an exciting investment prospect.

It should be noted that Afplats has also been acquiring a range of greenfield exploration prospects in countries neighbouring South Africa - including Molopo in Botswana and Snakes Head in Zimbabwe - and that it continues to look for further PGM opportunities throughout the region.

A substantial asset base combined with a clear and practicable growth strategy, and managed by a team with a record of technical success and value creation in this industry, make Afplats an exceptional early-stage investment opportunity. Its huge resource base, priced at less than US$5 per PGM ounce in the ground, and its long production life represent a substantial embedded call option on the platinum price. These properties, we believe, will also in due course make Afplats a premier institutional-quality counter in the global PGM market.

A robust PGM market

Although platinum supplies expanded more rapidly than demand in 2004, the year still ended with a market deficit of 80 000 ounces, according to Johnson Matthey's industry review. Against this background, institutional investment in the metal pushed the price to a peak of US$937 per ounce in April 2004. Since then the price has eased back, but has remained well supported by both investor and physical demand, and broke through the US$900 level again in June this year.

During 2004, purchases of platinum for autocatalysts reached a new high and consumption of platinum in industrial applications also grew strongly. Jewellery demand diminished in response to higher prices. Autocatalyst purchases are forecast to rise again this year and in the future, if forecasts for a new market for diesels in the US should materialise, demand for platinum will grow correspondingly, jewellery demand may also improve.

Demand for palladium increased sharply in 2004 but was offset by a corresponding rise in production. Consequently the price was soft for most of the year. It remains at the year-end level of US$184.

We expect current market dynamics to be sustained in the short term. In the longer term, there could be a narrowing of the price differential between platinum and palladium, driven by the substitution of palladium for platinum in the automotive sector. The basket price for the metals is likely to remain robust, however.

Strengthening the team

Another strategic objective achieved over the past year was the strengthening of the board of directors and the management team.

This process has included the appointment of three doyens of the global precious metals mining industry as non-executive directors. Mark Bristow is the chief executive of Randgold Resources, which he built from scratch into a highly regarded billion-dollar business. (Co-incidentally, Mark was involved in Rand Mines' original exploration of the Leeuwkop area as a geologist 20 years ago.) Roy Lander was a director of Anglo American and chief executive of its Zimbabwean operations. John Smithies is a former chief executive of Impala Platinum, the world's second-largest producer. Their collective expertise has added substantial weight to the board.

The two founders of Southern African Resources (as Afplats was formerly known), Messrs Edmonds and Groves, have both relinquished their executive positions and retired as directors. We thank them for the substantial contribution they made to its development.

In Roy Pitchford, Afplats has a chief executive with a track record of achievement at the head of a number of southern African resources companies, including Zimbabwe Platinum Mines. He has been joined by three highly experienced managers - Charles Prentice, Russell Lamming and David Reeves - in a small but potent executive team.

Looking ahead

This team's current priorities are

* to complete the feasibility study on Leeuwkop in order for the board to make a
development decision;

* to complete the drilling at Imbasa and Inkosi during the first quarter of

* to upgrade the indicated resource to the measured category and convert more of
the inferred ounces to indicated status;

* to initiate a scoping study for expanding production to 1 million ounces once
this has been done;

* to convert all prospecting rights to "new order" as defined in South African

* to finalise the agreement with the company's black economic empowerment
partners in accordance with the requirements of the South African Mining
Charter; and

* to complete the secondary listing on the American Stock Exchange currently in

Further down the road, the focus is on significantly increasing the size of the Bushveld resource base, finding and developing other attractive PGM opportunities, and continuing to improve market awareness of the company and its prospects.

It is worth noting at this point that Afplats has the equivalent of approximately US$25 million in cash and no debt, and is, therefore, well placed to continue with the bankable feasibility study as well as to invest further in exploration opportunities until project funding has been secured.


I should like to thank my colleagues on the board, past and present, for their wise counsel; the Afplats management team for their strong performance; our shareholders for their support; and the company's advisors and suppliers for their assistance."

Charles Hansard Chairman

27 September 2005

for the year ended 31 March 2005

                                               2005      2004
                                            GBP'000   GBP'000
TURNOVER                                        -          -

Net operating expenses                     (2,213)      (497)
OPERATING LOSS                             (2,213)      (497)

Interest receivable                           452         12
Interest payable and similar charges            -         (3)

LOSS ON ORDINARY ACTIVITIES BEFORE         (1,761)      (488)

Taxation                                        -          -

LOSS ON ORDINARY ACTIVITIES AFTER          (1,761)      (488)
Minority interests                             13          -

LOSS FOR THE FINANCIAL YEAR                (1,748)      (488)

Basic and diluted                           (0.54p)    (0.27p)

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

31 March 2005

                                             2005       2004
                                          GBP'000    GBP'000
Loss for the financial year                (1,748)      (488)

Foreign currency translation adjustments
relating to subsidiary undertakings           (79)         9

Total recognised gains and losses for      (1,827)      (479)
the year     

31 March 2005

                                      2005       2004
                                   GBP'000    GBP'000
Intangible assets                     9,951      3,183
Tangible assets                         123         30
Investments                             307          -

                                     10,381      3,213

Debtors                                 521      1,345
Cash at bank and in hand and on      17,718      2,497
                                     18,239      3,842

CREDITORS: Amounts falling due       (1,210)      (702)
within one year
NET CURRENT ASSETS                   17,029      3,140
NET ASSETS                           27,410      6,353

Called up share capital                 395        255
Share premium account                29,458      5,904
Other reserves                           56         67
Profit and loss account              (2,499)      (672)
EQUITY SHAREHOLDERS' FUNDS           27,410      5,554

Minority interests                        -        799
                                     27,410      6,353

for the year ended 31 March 2005
                                              2005       2004
                                           GBP'000    GBP'000
Cash outflow from operating activities       (1,942)      (198)
Returns on investments and servicing of         452          9
Capital expenditure and financial            (4,034)      (613)
Acquisitions and disposals                      (43)      (492)
RESOURCES AND                                (5,567)    (1,294)
Management of liquid resources              (13,765)      (800)
Financing                                    20,788      3,606
INCREASE IN CASH IN THE PERIOD                1,456      1,512
MOVEMENT IN NET FUNDS                        
Increase in cash in the period                1,456      1,512
Cash outflow from increase in liquid         13,765        800
NET FUNDS AT 1 APRIL 2004                     2,497        185
NET FUNDS AT 31 MARCH 2005                   17,718      2,497


1. Basis of Accounting - The financial statements have been prepared under the historical cost convention and in accordance with applicable accounting United Kingdom standards

2. Basis of Consolidation - The consolidated financial statements incorporate those of African Platinum plc and all its subsidiary undertakings. Subsidiaries acquired during the year are consolidated using the acquisition method. The difference between the cost of acquisition of shares in subsidiaries and the fair value of the separable net assets acquired is capitalised and written off on a straight-line basis over its estimated economic life. Provision is made for impairment. All financial statements are made up to 31 March 2005.

3. The calculation of basic loss per share is based on the loss attributable to ordinary shareholders GBP1,748,000 (2004: GBP488,000) divided by the weighted average number of shares in issue during the year 318,465,750 (2004: 180,739,821).

4. No dividend has been declared for the period or in the previous year.

5. See the Company's Annual Report for the year ended 31 March 2005 for a full set of notes to these accounts, including details of additional accounting policies and post balance sheet events. The report will be available to download from 30 September 2005 at

6. The financial information set out above does not constitute statutory accounts of the group as defined in section 240 of the Companies Act 1985. The consolidated profit and loss account and balance sheet have been extracted from the Company's 2005 statutory financial statements which are to be filed with the Registrar of Companies. The auditors report on these financial statements is unqualified and were prepared under accounting practices generally accepted in the UK.


The company intends to publish and distribute its Annual Report and Accounts for the year ended 31 March 2005 on Friday 30 September 2005.

The accounts, which will be posted on 30 September 2005 on the company's website at for viewing and downloading, will contain more detailed analysis of the work undertaken by the company during the period, a report on the company's projects and Ore Reserves and Mineral Resources, comprehensive notes to the accounts and list post-balance sheet events.

Kathy du Plessis, Investor & Media Relations
Tel: +27 (0)11 728 4701 Fax: +27 (0)11 728 2547 E-mail:

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