Kibo Mining plc (“Kibo” or the “Company” (AIM: KIBO; AltX: KBO), the mineral exploration and development company focused on gold nickel, coal and uranium projects in Tanzania is pleased to announce its audited 15 month financial results for the period ending 31 December 2012. The Company’s Annual Report, which contains the financial statements accompanying this announcement, is in the process of being printed and mailed to shareholders. Details of the date and venue for this year’s AGM, which will take place towards the end of July, will be announced shortly.
Louis Coetzee, CEO of the Company, commented today:
“These audited accounts show an increase in our issued share capital following an equity investment by Mzuri Gold Limited in February 2012, the acquisitions of Mzuri Energy Limited and Mayborn Investments (Pty) Limited completed in October 2012 and set up costs settled by equity in relation to our SEDA with Yorkville, also in October 2012. The Mzuri Energy and Mayborn acquisitions are particularly pleasing as they provide us with a large thermal coal resource on which we are now actively negotiating with multi-national state owned Korean East-West Power on the terms for their joint participation in the development of a mouth-of-mine thermal power plant”.
Highlights from the Chairman, Christian Schaffalitzky’s statement:
• Completion of a 100% acquisition of Mzuri Gold Limited and Mayborn Resources Limited which re-position Kibo as a major multi-commodity mineral explorer and developer in Tanzania;
• Completion of a JV agreement with Brazilian industrial conglomerate Votorantim on the Haneti project and the commencement of a £0.5m field programme being the initial tranche of a proposed £2.7M expenditure by Votorantim to acquire a 50% interest in the project;
• Securing of Tanzanian Government support for the Rukwa Coal to Power project and the commencement of negotiations with Korean East-West Power to participate as a partner in the development;
• Prioritisation of the Rukwa and Haneti projects, deferral of exploration on the Company’s other projects and on-going rationalization of its large early stage mineral licence portfolio.
I am pleased to report that your Company has made significant progress during 2012 on both the corporate and exploration fronts. In April 2012 we announced the acquisition of two private companies, Mzuri Energy Ltd and Mayborn Resource Investments (Pty) Limited. These acquisitions required the suspension of our shares on AIM and the JSE on the 11th May 2012, re-admission on the 15th August 2012 and approval by Shareholders at EGM on the 6th September 2012. The transaction was formally completed on the 1st October 2012 and brings to your Company substantial coal and uranium assets which complement our existing gold and base metal projects. Kibo is now positioned as a major multi-commodity mineral explorer and developer in Tanzania. The transaction was accompanied by changes on our Board with the resignation of William Payne and Des Burke (Des resigned in January 2013) and the appointment of Cecil Bond and Bernard Poznanski. I wish to thank William and Des for their valuable contribution to Kibo during their directorships.
Exploration on our Tanzanian mineral projects continued throughout the 15 month reporting period commencing with the implementation of a Stage 1 exploration programme in the last quarter of 2011 and continuing throughout 2012. Our exploration teams have now defined trenching and drill targets at the Lake Victoria, Haneti and Morogoro projects. I am particularly pleased that our Haneti NiPGM-Gold project has attracted the attention of major Brazilian industrial group, Votorantim Metaís Participações Ltda (“Votorantim”), resulting in our announcement of a Joint Venture on the 12 December 2012. The joint venture provides an option for Votorantim to expend GBP 2.7 million on exploration over a three-year period to earn a 50% interest in the project and I am glad to report that as I write (June 2013), our field team in conjunction with Votorantim have commenced field operations. A budget of £0.5M will be expended at Haneti during the remainder 2013.
Equally encouraging is the recent inclusion of the Company’s Rukwa Coal to Power Project (“Rukwa”) as a strategic component of the Tanzanian Government’s National Energy Strategy and its commitment to proactively support development of the infrastructure to support the project. Securing Tanzanian Government support for the project has been a major milestone in our development path and this has increased the level of interest from third parties wishing to become partners in the project. Therefore, the Company’s announcement on the 24th April 2013 that it has selected Korean East West Power Co. Ltd (“EWP”), a globally operating power company owned by the South Korean Government, as its preferred development partner at Rukwa is another major step. The board looks forward to negotiating a definitive partnership agreement with EWP to the benefit of all stakeholders, not least for Tanzania for which Rukwa should make a valuable contribution towards addressing the country’s future energy needs.
In order to best manage its resources for 2013, your Company has prioritised the Rukwa and Haneti projects and is deferring any significant exploration work at Lake Victoria, Morogoro and Pinewood to 2014. A Scoping Study at Rukwa will commence during the second half of 2013 which will run in parallel with completing a full strategic partnership agreement with EWP. Exploration at Haneti, fully funded by Votorantim, will continue for the remainder of 2013 and it is planned to commence initial drilling at the project later in 2013 or early in 2014. As a further measure to reduce costs and focus on priority areas, the Board has recently elected to relinquish almost 50% of its grass roots exploration interests (includes licences, offers and applications) across all projects save for Rukwa. The majority of this ground comprises early stage licence applications considered by Company geologists as low priority from desktop and field assessments. This need for the Company to implement this reduction in our licence portfolio results both from recent substantial increases in licence rental costs in Tanzania and the imperative to focus resources on priority areas which offer the greatest chance of exploration success.
The financial accounts cover the 15-month period to the 31 December 2012. This follows our decision to change the Company’s financial year end from 30 September to 31 December and so align it with the calendar year and with the financial year ends of the Group’s non-Irish subsidiaries. The challenging global economic conditions and turbulent markets of 2011 continued into 2012, making it a difficult year for the exploration and mining sector. Junior exploration companies found it particularly difficult to raise equity funds and had to accept funding at severely discounted prices or through alternative funding methods, all of which contributed to significant shareholder dilution and value erosion in many instances. Unfortunately, Kibo was not immune to this adverse macroeconomic environment and we saw a decline in our share price during the year to levels that we do not believe reflect the inherent value in our mineral assets. Consequently, we found it increasingly difficult throughout 2012 to raise funds for our exploration and development programmes to match our ambitious implementation schedule. However, we are fortunate to have the support of our largest shareholder, Mzuri Capital Group Limited, which fully subscribed to a £750,000 Placing in February 2012. This allowed us to implement first stage exploration programmes over our substantial Tanzanian mineral licence portfolio over the reporting period. Broker sponsored placings of £750,000 in January 2013 and £780,000 in April 2013, together with funds of £50,000 drawn downs
under our SEDA agreement with Yorkville Advisors, are allowing us to continue advancing both our near-term corporate and exploration objectives in the early part of 2013, albeit at a slower pace that we had planned.
In conclusion, while acknowledging the challenging economic environment in which your company now operates, I remain confident that our mineral assets present an attractive investment option, particularly bolstered by our 109 million tonne Rukwa coal deposit and plans to develop a mouth of mine thermal coal plant. I would like to thank our shareholders for their continued support as we strive to bring this project to fruition. Also I would like to thank our CEO, Louis Coetzee and his management team for their substantial work in successfully completing our corporate acquisitions during 2012 while simultaneously keeping field exploration moving forward. Louis now has the challenging task of leading the team in realising value across all our commodity streams in 2013 and beyond.
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