RNS Number:7886D
AfriOre Limited
30 May 2006
Further to the announcement released today at 07.29. This announcement contains
the full results for the year end 28 February 2006
AFRIORE LIMITED
AFRIORE REPORTS EARNINGS FOR THE YEAR ENDED FEBRUARY 28, 2006
TORTOLA, British Virgin Islands, May 30 /CNW/ - AfriOre Limited (TSX/AIM: AFO),
the minerals exploration company, reported a loss for the year ended February
28, 2006 of ($3,511,934) or ($0.10) per share (basic and diluted), as compared
to earnings of $1,418,009 or $0.04 per share (basic and diluted) for the year
ended February 28, 2005.
The loss for the year is attributable to the fact that in the past year the
company has increased expenditure significantly as a result of exploration
activity on its Akanani Platinum Project. Furthermore, as a result of the
disposal by AfriOre of its 50% interest in the Springlake Colliery and
Springlake Marketing Joint Venture in the year ended February 28, 2005, AfriOre
has elected to focus solely on precious metal exploration and no longer has a
source of revenue. Other extraordinary costs incurred during the year were
attributable to the listing on the Alternative Investment Market ("AIM") of the
London Stock Exchange on July 11, 2005, as well as the write-down of certain
exploration properties previously capitalised.
Capitalised exploration for the year increased to $10,783,257 from $6,132,183,
with $8,384,499 being expended on AfriOre's gold and platinum group metals
("PGM") exploration projects in Kenya, Namibia and South Africa. The main focus
being on the Akanani Platinum Project in South Africa, where some $7,716,924 was
capitalized. The increase in expenditure at the Akanani project followed the
receipt of positive results from the initial exploration program.
As announced on November 15, 2005, the disposal of the Banankoro Project in
Malifor US$1,500,000 to Societe en Commandite Par Actions ("Pacifico") resulted
in a recovery of $1,788,509 on the project. During the year Wits Basin Precious
Minerals Inc. elected to take a 35% equity stake in the FSC Gold Project in
South Africa and this resulted in an adjustment (recovery) of $1,944,509 to the
capitalised expenditure on this project as well as the reversal of long-term and
short-term advances previously reported.
AfriOre continues to concentrate on its gold and PGM projects and to engage in
the acquisition, exploration and development of resource properties in Africa
and elsewhere, in particular gold and PGM projects.
AfriOre is listed in Standard & Poor's Corporation Records SEC 12g 3-2(b)
exemption 82-4514.
For further information: please contact: Fiona Childe, Tel:
(416) 361-0636, Fax: (416) 361-0330, e-mail: FChilde(at)taucapital.com
AFRIORE LIMITED
CONSOLIDATED FINANCIAL STATEMENTS
YEAR ENDED 28 FEBRUARY 2006
Consolidated Balance Sheets
February 28, 2006 and 2005 Expressed in Canadian Dollars
2006 2005
Assets Note
Current assets
Cash and cash equivalents $30,099,090 $ 2,852,875
Cash - project specific 4 - 779,412
Accounts receivable 8 1,089,300 267,187
Other receivables 306,194 159,748
Prepayments 131,621 8,828
Discontinued operations 3 - 3,156,707
31,626,205 7,224,757
Non-current assets
Property and equipment 6 143,621 69,134
Exploration properties 7 10,783,257 6,132,183
$ 42,553,083 $ 13,426,074
Liabilities and shareholders'
equity
Current liabilities
Accounts payable and accrued 9 $ 1,647,018 $ 1,048,940
liabilities
Current portion of advances 4 - 779,412
Discontinued operations 3 - 1,062,500
1,647,018 2,890,852
Long-term liabilities
Long-term portion of advances 4 - 1,812,882
Long-term debt 10 72,766 -
72,766 1,812,882
Shareholders' equity 11 40,833,299 8,722,340
$ 42,553,083 $ 13,426,074
Commitments 7,13,17
Subsequent event 18
See accompanying notes to the consolidated financial statements.
Consolidated Statements of Operations
Years ended February 28, 2006 and 2005 Expressed in Canadian Dollars
Note 2006 2005
Other income and expenses
Other income 16 $ 175,468 $ 276,698
Interest expense - (100,629)
(Loss) / gain on foreign exchange (457,364) 174,944
(281,896) 351,013
Corporate and exploration expenses
Administrative costs (2,516,234) (2,686,885)
Listing expenses (509,506) -
Exploration and project evaluation (72,044) (64,718)
Loss on sale of exploration (52,363) -
properties
Loss on deregistration of (53,435) -
subsidiaries
Depreciation (26,456) (20,764)
(3,230,038) (2,772,367)
Net loss from continuing operations (3,511,934) (2,421,354)
before income taxes
Income taxes 12 - (93,324)
Net loss from continuing operations (3,511,934) (2,514,678)
Net income from discontinued 3 - 3,932,687
operations, net of tax
Net (loss) / income $ (3,511,934) $ 1,418,009
Basic (loss) / earnings per share 14
Continuing operations $ (0.10) $ (0.08)
Net (loss) / income $ (0.10) $ 0.04
Diluted (loss) / earnings per share 14
Continuing operations $ (0.10) $ (0.08)
Net (loss) / income $ (0.10) $ 0.04
See accompanying notes to the consolidated financial statements.
Consolidated Statements of Retained Deficit
Years ended February 28, 2006 and 2005 Expressed in Canadian Dollars
2006 2005
Deficit, beginning of year, as $ (19,354,471) $ (20,109,007)
previously reported
Stock-based compensation 2(k) - (663,473)
Deficit, beginning of year, as (19,354,471) (20,772,480)
restated
Net (loss) / income for the year (3,511,934) 1,418,009
Share issue costs (2,043,640) -
Deficit, end of year $ (24,910,045) $ (19,354,471)
See accompanying notes to the consolidated financial statements.
Consolidated Statements of Cash Flows
Years ended February 28, 2006 and 2005 Expressed in Canadian Dollars
Note 2006 2005
Cash flows used in operating
activities
Net loss from continued operations $ (3,511,934) $ (2,514,678)
Items not involving cash:
Depreciation expense 26,456 20,764
Debenture interest - 84,136
Loss on sale of exploration 35,621 -
properties
Loss on deregistration of 53,435 -
subsidiaries
Stock based compensation expense 434,720 357,641
Foreign exchange loss 457,364 20,537
Warrant amendment - 124,300
Change in non-cash working capital 15(a) (546,709) 590,844
Continuing operations (3,051,047) (1,316,456)
Cash flows used in investing
activities
Expenditures on property and (100,943) (89,898)
equipment
Proceeds on sale of exploration 1,753,295 -
properties
Expenditures on exploration (6,711,609) (3,157,186)
properties
(5,059,257) (3,247,084)
Cash flows from (used in)
financing activities
Common shares issued (net of issue 33,808,529 58,139
costs)
Advances (647,785) (15,779)
Long-term debt 72,766 -
Restricted cash (project specific) - 619,248
Debenture - (793,219)
33,233,510 (131,611)
Net cash from (applied to) 25,123,206 (4,695,151)
continuing operations
Net cash from discontinued 3 2,094,207 4,801,975
operations
Foreign exchange profit / (loss) 28,802 (29,682)
on cash held in foreign currency
Increase in cash and cash 27,246,215 77,142
equivalents
Cash and cash equivalents, 2,852,875 2,775,733
beginning of year
Cash and cash equivalents, end of $ 30,099,090 $ 2,852,875
year
See supplementary cash flow information (note 14).
See accompanying notes to the consolidated financial statements.
Notes to Consolidated Financial Statements
Years ended February 28, 2006 and 2005 Expressed in Canadian Dollars
1. NATURE OF OPERATIONS
AfriOre Limited (the "Company" or "AfriOre") was incorporated under the Company
Act (British Columbia) on July 11, 1986, and subsequently continued under the
Canada Business Corporations Act. On July 30, 1997, the Company was continued
under the New Brunswick Business Corporations Act. On July 31, 2001 the Company
was continued under the provisions of the Companies Act Cap. 308 of the Laws of
Barbados. The Company was continued from Barbados to British Virgin Isles on May
19, 2005.
The Company is engaged in the acquisition, exploration and development of
resource properties in Africa and elsewhere.
As an exploration stage company, the recoverability of amounts shown for
exploration expenditures is dependent upon the discovery of reserves that can be
economically mined, the securing and maintenance of the interests in the
properties, the ability of the Company to obtain the necessary financing to
complete the development, and future production or proceeds from the disposition
thereof. The Company is also actively reviewing additional opportunities within
Africa.
2. SIGNIFICANT ACCOUNTING POLICIES
(a) Basis of presentation
The consolidated financial statements are prepared in accordance with accounting
principles generally accepted in Canada.
(b) Principles of consolidation
These financial statements consolidate the financial statements of all
controlled companies. Inter-company transactions and balances have been
eliminated in consolidation. Subsidiaries with different year-end dates are
consolidated taking into account transactions between the subsidiaries' year end
to the Group's financial year end.
(c) Translation of foreign currencies
The Company's exploration subsidiaries are accounted for as integrated foreign
operations and are translated into Canadian dollars using the temporal method.
Monetary assets and liabilities denominated in foreign currencies are translated
into Canadian dollars at the year-end exchange rates, while non-monetary items
are translated at the exchange rate in effect at the transaction date. Income
and expense items are translated at the exchange rates in effect on the date of
the transaction. Exchange gains and losses resulting from the translation of
these amounts are included in the consolidated statements of operations.
(d) Property and equipment
Property and equipment are stated at cost and depreciated on a straight-line
basis over five years.
(e) Exploration properties
The Company considers its exploration costs to have the characteristics of plant
and equipment. As such, the Company capitalizes all exploration costs that
result in the acquisition and retention of resource properties or an interest
therein. The amounts shown for exploration properties represents costs to date
and do not necessarily reflect present or future values. If the properties are
sold, allowed to lapse or are no longer of interest, accumulated costs are
written down. Once a project reaches commercial production, the exploration
costs are amortized over the estimated useful life of the producing properties.
The recoverability of the carrying values of the properties is dependent on the
ability of AfriOre to obtain the necessary financing and permits to continue
exploration, the establishment of economically recoverable reserves, future
profitable production and/or proceeds from the disposition thereof.
(f) Income taxes
The Company accounts for income taxes using the asset and liability method.
Under the asset and liability method, future tax assets and liabilities are
recognized for future tax consequences attributable to differences between the
financial statement carrying amounts and the tax bases of existing assets and
liabilities.
Future tax assets and liabilities are measured using tax rates enacted or
substantially enacted and expected to apply to taxable income in the years in
which those temporary differences are expected to be recovered or settled. The
effect on future tax assets and liabilities of a change in tax rates is
recognized in income in the year that includes the enactment or substantive
enactment date.
A valuation allowance is provided to reduce future tax assets to the amount that
is more likely than not to be recovered.
(g) Use of estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the dates of the consolidated financial
statements and the reported amounts of revenues and expenses during the years.
Significant items subject to such estimates and assumptions include the carrying
amount of property and equipment, exploration properties, valuation allowances
of receivables and stock-based compensation. Actual results could differ from
those estimates.
(h) (Loss) / earnings per share
Basic (loss) / earnings per share ("EPS") are calculated by dividing net (loss)
/ income by the weighted average number of shares outstanding during the year.
Diluted EPS data is calculated using the treasury stock method. The calculation
of diluted (loss) / earnings per share assumes that options and warrants with an
exercise price lower than the average quoted market price were exercised at the
later of the beginning of the period or time of issue. In applying the treasury
stock method, options with an exercise price greater than the average quoted
market price of the common shares are not included in the calculation of diluted
earnings per share, as the effect is anti-dilutive.
(i) Cash
Cash includes those short-term money market instruments which, on acquisition,
have a remaining term to maturity at acquisition of three months or less.
(j) Impairment of long-lived assets
Long-lived assets, including property and equipment and exploration properties,
are reviewed for impairment whenever events or changes in circumstances indicate
that the carrying amount of an asset may not be recoverable. Recoverability of
assets to be held and used is measured by a comparison of the carrying amount of
an asset to estimated undiscounted cash future cash flows expected to be
generated by the asset. If the carrying amount of an asset exceeds its estimated
future cash flows, an impairment charge is recognized by the amount by which the
carrying amount of the asset exceeds the fair value of the asset. Assets to be
disposed of would be separately presented in the balance sheet and reported at
the lower of the carrying amount or fair value less costs to sell, and are no
longer depreciated. The assets and liabilities of disposed group classified as
held for sale would be presented separately in the appropriate asset and
liability sections of the balance sheet.
(k) Stock-based compensation
The Company has a stock-based compensation plan for agent options and
compensation warrants, employees and property acquisition agreements, which is
described in note 10. The Company accounts for all stock-based payments to
non-employees, and employee awards that are direct awards of stock granted on or
after March 1, 2004 under the fair value based method and accounts for all
stock-based employee awards that call for settlement by the issuance of equity
instruments under that method.
Effective March 1, 2004, the Company adopted the amended recommendations of the
Canadian Institute of Chartered Accountants ("CICA") with respect to stock-based
compensation and other stock payments. Under these recommendations, a fair
value-based method of accounting is required for all stock-based payments to
non-employees and employees that are directly affected by stock appreciation
rights. The Company has applied the new recommendations retroactively, without
restatement of prior periods, for awards granted in the years ended February 28,
2003 and February 29 2004. As a result, the Company has recorded a charge to
opening retained earnings of $663,473 on March 1, 2004, for awards granted in
2003 and 2004.
Under the fair value-based method, compensation cost for equity settled stock
options and direct awards of stock is measured at fair value at the grant date,
while compensation costs for awards that call for settlement in cash or other
assets, or are stock appreciation rights that call for settlement in cash or
other assets, or are stock appreciation rights that call for settlement by the
issuance of equity instruments, is measured at the ultimate settlement amount.
Compensation cost is recognized in earnings on a straight-line basis over the
relevant vesting period. The counterpart is recognized in contributed surplus.
Upon exercise of a stock option, share capital is recorded at the sum of the
proceeds received and the related amount of contributed surplus.
(l) Environmental rehabilitation
Provision for environmental rehabilitation is provided as exploration work is
conducted. Estimates are based on management's estimates of costs to restore the
exploration site to comply with the respective country's environmental
legislation. Estimates are based on undiscounted future cash flows.
3. DISCONTINUED OPERATIONS
All assets and liabilities for the coal operations were sold and transferred
under the terms of a purchase agreement effective October 29, 2004. AfriOre
provided vendor finance for the sale of the coal mining operation under a
short-term loan agreement. $3,156,707 and $1,062,500 represent the outstanding
balances due to and due by AfriOre at February 28, 2005. All outstanding
balances were fully recovered and settled before May 31, 2005.
4. CASH - PROJECT SPECIFIC
In terms of the FSC gold project joint venture agreement, Wits Basin Precious
Minerals Inc. ("Wits Basin") is to provide funding of up to United States
dollars ("US")$3.5 million. This funding is project specific and may only be
spent on the FSC project. No cash balances held at February 28, 2006 are
specific to the FSC gold project (2005 - $779,412).
Wits Basin earned a 35% equity stake in the FSC gold project through the final
payment of the first phase funding of US$2.1 million. This resulted in the
reversal of the long-term and short-term advances previously reported, as well
as the appropriate adjustments to the deferred exploration expenditure in the
FSC project.
5. FINANCIAL ASSETS AND LIABILITIES
(i) Fair values
The fair values of the Company's cash and cash equivalents, receivables, other
current assets, accounts payable and accrued liabilities approximate their
carrying values due to the relatively short-term nature of these amounts.
(ii) Foreign exchange risk
The Company carries out a significant portion of its transactions in currencies
other than its reporting currency. No hedging instruments are used as
uncertainty exists as to the exact settlement dates of these transactions. Cash
is held in the currency of the expected payment to reduce risks related to
short-term fluctuations in foreign currencies.
(iii) Interest rate risk
The Company is not exposed to significant interest rate risk as borrowings are
interest free.
(iv) Credit risk
The Company's financial instruments do not represent a concentration of credit
risk, as the Company deals with a number of reputable banks. Credit risk related
to accounts receivable is not significant.
6. PROPERTY AND EQUIPMENT
2006
Accumulated Net book
Cost depreciation value
Office equipment and $ 229,723 $ 107,534 $ 122,189
furniture
Vehicles 60,460 39,028 21,432
$ 290,183 $ 146,562 $ 143,621
2005
Accumulated Net book
Cost depreciation value
Office equipment and $ 143,185 $ 88,085 $ 55,100
furniture
Vehicles 46,055 32,021 14,034
$ 189,240 $ 120,106 $ 69,134
Depreciation expense for the year is $26,456 (2005 - $20,764)
7. EXPLORATION PROPERTIES
Balance,
beginning Additions (Recovered) Balance, end
2006 of year of year
South Africa-FSC (Gold) $ 2,243,738 $ $(1,944,509) $ 299,229
South Africa-Dwaalboom 176,333 73,558 249,891
(Gold)
Mali-Banankoro (Gold) 1,788,916 (1,788,916) -
Kenya-Ndori (Gold) 358,585 201,801 560,386
Kenya-Siaya (Gold) 397,234 196,621 593,855
Namibia-Capricorn (Gold) 305,267 195,595 500,862
South Africa-Akanani 862,110 7,716,924 8,579,034
(Platinum
Group Metals ("PGM"))
$ 6,132,183 $ 8,384,499 $( 3,733,425) $ 10,783,257
Balance,
beginning Balance, end
2005 of year Additions of year
South Africa-FSC (Gold) $ 1,362,191 $ 881,547 $ 2,243,738
South Africa-Dwaalboom 128,373 47,960 176,333
(Gold)
Mali-Banankoro (Gold) 939,899 849,017 1,788,916
Kenya-Ndori (Gold) 139,261 219,324 358,585
Kenya-Siaya (Gold) 201,105 196,129 397,234
Namibia-Capricorn (Gold) 25,356 279,911 305,267
South Africa-Akanani (PGM) - 862,110 862,110
$ 2,796,185 $ 3,335,998 $ 6,132,183
FSC (Gold)-South Africa
In 1999 AfriOre was granted exclusive Prospecting Contracts for precious metals
on certain properties in South Africa. The Contracts are valid for six years and
AfriOre has the right to renew the contracts for an additional three years. On
October 8, 1999, AfriOre acquired an exploration model and information relating
to the property in exchange for 125,000 common shares (value $122,500). Under
the terms of the acquisition agreement, an additional 350,000 AfriOre common
shares will be issued upon the earlier of the commencement of a final
feasibility study on the property or the making of a takeover bid for AfriOre as
a result of exploration activities on the property.
AfriOre has a joint venture agreement with Wits Basin in which Wits Basin may
earn up to a 50% interest in the FSC project through providing expenditures of
up to US$ 3.5 million to the FSC project.
Wits Basin earned a 35% equity stake in the FSC gold project. This resulted in
the reversal of long and short term advances previously reported as well as the
appropriate adjustments to the deferred exploration expenditure in the FSC
project. Refer to note 4.
Dwaalboom (Gold)-South Africa
AfriOre has a joint venture agreement with African Pioneer Mining (Pty) Ltd
("APM") of South Africa, whereby AfriOre acquired a 25% interest in APM's
advanced stage Dwaalboom gold project in the North-West Province of South
Africa.
In terms of the agreement, AfriOre will manage the project and may earn a 51%
interest in the project, either by contributing expenditures of R4.5 million
(approximately $0.9 million) or by completing a bankable feasibility study,
within two years from May 8 2005. AfriOre may further elect, upon earning 51%,
to pay R3.8 million (approximately $0.8 million) to APM and acquire an
additional 19% (total 70%) interest in the project.
Banankoro (Gold)-Mali
AfriOre had a joint venture agreement with New Gold Mali SA ("NGM"), a
subsidiary of the Paris-based company, Maurel & Prom, whereby AfriOre had the
right to earn a 60% interest in NGM's Banankoro gold exploration project near
Kangaba in southern Mali. The Mali Government has a statutory right to a 10%
interest and a subscription right for an additional 10% contributing interest in
the project at the exploration stage. In the event that the Government exercises
its subscription right, AfriOre had the right to acquire an additional 3.75%
interest from NGM under the same terms as the Government, thereby providing for
a 50.4% ownership by AfriOre in the project at the mining stage.
Banankoro was sold to Pacifico during the three months ended November 30, 2005.
The purchase consideration for Banankoro is payable by Pacifico in three
tranches, being US$750,000 received during December 2005 followed by payments of
US$500,000 and US$250,000 at six and twelve months, respectively, after date of
signature on November 4, 2005. In the event of any payment default, the
Banankoro JV will be reinstated and AfriOre will again have the right to earn up
to 60% interest in the Banankoro project. At February 28, 2006, US$750,000 of
the purchase consideration is outstanding and is reflected in accounts
receivable.
Ndori (Gold)-Kenya
An agreement with San Martin Mining Research and Investment Company Limited
gives AfriOre an option to purchase a 100% interest in the Ndori project for
US$1 million. The option period extends for five years from February 2002 and is
subject to option payments of US$12,000 per annum. AfriOre will undertake
management and funding of exploration in the area. At February 28, 2006 option
payments to the value of US$48,000 had been made and have been recorded in
Exploration Properties.
Siaya (Gold)-Kenya
A special prospecting licence was awarded to AfriOre for the Siaya project area
in western Kenya. The project area is adjacent to the northern and eastern
boundaries of the Ndori gold project.
Capricorn (Gold)-Namibia
AfriOre holds six exclusive prospecting licenses at its Capricorn project in
northern Namibia where elsewhere in the region, coincident gold-in-soil and
aeromagnetic anomalies are closely associated with mineralized gold-bearing
veins.
Akanani (PGM) - South Africa
During the year AfriOre issued 750,000 common shares at $1.77 per share for the
purchase of 100% of the shares in Metals Technology Inc ("MTI").
AfriOre, by exercise of an option, granted to its wholly-owned subsidiary, MTI
had the right to acquire up to 74% of Akanani Mining (Pty) Ltd. ("Akanani
Mining"), the exclusive holder of the prospecting permit to the prospecting
area, subject to compliance with the Mineral and Petroleum Resources Development
Act ("MPRDA"). Akanani Mining is a Black Economic Empowerment ("BEE") entity.
AfriOre could exercise its option in staggered tranches for a total cost of R9.5
million ($1,783,395), payable to the current shareholders of Akanani Mining, and
providing initial exploration expenditure on the project of R14.0 million
($2,975,000). In addition, in terms of the agreement a payment of R500,000
($99,532) was made to the Akanani Mining shareholders on signature of the
agreement, in fiscal 2005.
A further R2,000,000 would be payable should a Bankable Feasibility Study
indicate that the project will or may achieve an internal rate of return after
tax of not less than 20% per annum over the Life of Mine at a weighted average
of the Platinum Price and Other Metals Price.
On April 14, 2005, and based on the positive initial drilling results, AfriOre
exercised its first option to acquire a 20% interest in Akanani Mining, through
the payment of R1,500,000 ($309,795).
Following further drilling results, on September 29, 2005, AfriOre, elected to
increase its shareholding in Akanani from 20% to 74% at an amount of R8,000,000
($1,473,600). At the date of acquisition of the 74% interest the assets and
liabilities of Akanani Mining (Pty) Limited were as follows:
ZAR CAD
Bank balance 34,149 6,299
Shareholders' loans (394,845) (72,835)
VAT payable (343,705) (63,402)
Trade creditors (20,541) ( 3,789)
Net liabilities acquired (724,942) (133,727)
74% thereof (536,457)
Total purchase consideration 9,500,000
The excess paid has been allocated to exploration properties.
Akanani Mining has applied for the conversion of its old order prospecting
permit to a new order prospecting rights in terms of South Africa's MPRDA.
8. ACCOUNTS RECEIVABLE
Accounts receivable are made up of the following:
2006 2005
CIBC $267,187
Pacifico $860,508
Coal Investments Corp Services 228,792 -
(Pty) Limited
$1,089,300 $267,187
9. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
Accounts payable and accrued liabilities are comprised as follows:
2006 2005
Trade creditors $ 1,617,042 $ 1,048,940
Provision for environmental
rehabilitation 29,976 -
$ 1,647,018 $ 1,048,940
Bank Guarantees have been provided to the Department of Minerals and Energy and
may be used only for environmental rehabilitation purposes.
10. LONG-TERM DEBT
The loans from shareholders of Akanani (Proprietary) Limited to the Group are
unsecured, bear no interest and shall be repaid as may be agreed from time to
time between the Group and the Shareholders.
11. SHAREHOLDERS' EQUITY
Shareholders' equity is comprised as follows:
2006 2005
Capital stock (a) $ 62,323,955 $ 25,325,680
Agents' options and compensation 246,365 64,971
warrants (b)(i)
Warrants (b)(ii) 782,566 782,566
Contributed surplus (c) 2,390,458 1,955,738
Deficit (24,910,045) (19,354,471)
Cumulative translation adjustment - (52,144)
$ 40,833,299 $ 8,722,340
(a) Capital stock
The authorized capital of the Company consists of an unlimited number of common
shares without par value.
Number Amount
Balance February 29, 2004 31,714,656 $ 24,673,903
Debenture interest 278,803 233,315
Warrants brokered and private 65,000 57,562
placement
Exercise of agent options and
compensation warrants 100,000 111,789
Warrants with debenture 44,137 26,286
Cancellation of Purity 270,000 186,300
agreement
Stock based compensation - 36,525
Balance February 28, 2005 32,472,596 $ 25,325,680
Exercise of options 923,600 541,126
Warrants brokered and private 1,538,453 1,230,762
placement
Warrants with debenture 855,862 346,110
Private placement 13,337,409 33,552,776
Investment in MTI 750,000 1,327,500
Balance February
28, 2006 49,877,920 $ 62,323,955
(b) Warrants
(i)Agent options and compensation warrants
The outstanding broker's compensation warrants, totalling 499,082 at a weighted
average exercise price of $3.03 per share expire on August 24, 2007 (125,882)
and February 9, 2007 (373,200) respectively. During August 2005, AfriOre
completed an offering on the private placement of 4,666,640 Units at $1.50 each
to raise an amount totalling $6,999,960. Each whole common share purchase
warrant entitles the holder thereof to purchase one common share of AfriOre. The
offering allowed for the creation and issuance of 2,333,320 warrants at an
exercise price of $1.85 per warrant with the expiry date of August 24, 2007. All
of these warrants were exercised and expired during the last quarter of 2006.
The offering also allowed for the creation and issuance of 303,331 broker
warrants, entitling the agent to acquire broker warrant shares at $1.50 per
share with an expiry date of August 24, 2007. 177,449 of these warrants were
exercised during the last quarter of 2006.
During February 2006, AfriOre completed private placement offering of 6,220,000
shares at $3.55 each to raise aggregate proceeds of $22,081,000. The offering
allowed for the creation and issuance of 373,200 warrants (6% of the gross
proceeds of the Offering) at an exercise price of $3.55 per warrant with the
expiry date of February 9, 2007. In consideration for assistance with the
private placement the Company paid to the agents a cash commission of $1,324,860
(6% of the gross proceeds). Refer to note 10(a).
Weighted average
Warrants price
Balance February 28, 2005 1,538,454 $0.80
Exercised (1,538,454) $0.80
August private placement
Issued:
Warrants 2,333,320 $1.85
Brokers warrants 303,331 $1.50
Exercised
Warrants (2,273,320) $1.85
Brokers warrants (177,449) $1.50
Expired (60,000) $1.85
February private placement
Issued:
Brokers warrants 373,200 $3.55
Balance February 28, 2006 499,082 $3.03
(ii) Warrants
During the year, 855,863 of these warrants have been exercised, leaving 400,000
outstanding warrants at February 28, 2006 with an expiry date of April 4, 2006.
Weighted average
Warrants price
Balance February 28, 2005 1,255,863 $0.39
Issued (200,000) $0.55
Issued (655,863) $0.36
Balance February 28, 2006 400,000 $0.36
Warrants are valued at the closing price of the share of the date of issue.
As at February 28, 2006 warrants outstanding due to previous debentures as well
as brokers' compensation warrants were as follows:
Number of Common Shares Exercise
Subject to Warrants Price Expiry Date
400,000 $0.36 04-Apr-2006
125,882 $1.50 24-Aug-2007
373,200 $3.55 9-Feb-2007
899,082
(c) Options
The Company has a rolling ten percent stock option plan in terms of which stock
options are issued to directors, officers, employees and key consultants from
time to time. Options granted may be exercised during a period not exceeding
five years, subject to earlier termination under various circumstances. The
options are non-transferable and vest immediately. The exercise price may not be
less than the minimum price stipulated by applicable regulators. The stock
options issued in 2006 expire as follows:
+------------------------+-----------+-----------+
| | Price | Number of |
| | | options |
+------------------------+-----------+-----------+
|January 16, 2011 | $3.38| 1,235,000|
+------------------------+-----------+-----------+
The fair value of the options issued has been determined using the Black-Scholes
option pricing model using the following assumptions:
Risk-free interest rate 5%
Dividend yield 0%
Volatility factor of the expected market price of the 65%
Company's shares
Average expected option life (years) 5
Weighted-average grant date fair value of options $ 0.35
granted during the year
The movement in options granted, cancelled and exercised can be summarized as
follows:
Weighted
average
Options price
Balance February
28, 2005 2,815,000 $0.65
Granted 1,235,000 $3.38
Expired (5,000) $0.80
Exercised (145,000) $0.50
Exercised (455,000) $0.54
Exercised (75,000) $0.60
Exercised (58,600) $0.66
Exercised (50,000) $0.67
Exercised (125,000) $0.75
Exercised (15,000) $0.80
Balance February
28, 2006 3,121,400 $1.75
At February 28, 2006, the following options to acquire common shares of the
Company are outstanding and exercisable:
Number of
common shares Exercise
subject to price Expiry date
option
130,000 $0.50 06-Aug-2006
265,000 $0.54 16-Aug-2006
25,000 $0.67 13-May-2007
150,000 $0.75 12-Sep-2007
500,000 $0.80 03-Jun-2008
100,000 $0.91 17-Dec-2008
466,400 $0.66 26-Jan-2010
250,000 $0.66 28-Jan-2010
1,235,000 $3.38 16-Jan-2011
3,121,400
The fair value of options are included in contributed surplus.
(d) Property Acquisition Agreements
At February 28, 2006, 390,000 common shares are issuable (2005 - 390,000) by the
Company for exploration properties if the properties reach an advanced stage.
During the first quarter of fiscal 2006, an additional 750,000 common shares
were set aside for property acquisition agreements with Akanani Mining. These
shares were transferred during the last quarter of 2006 as part of the
acquisition agreement. Refer note 7.
12. INCOME TAXES
(a) The difference between the amount of the reported consolidated income tax
provision and the amount computed by multiplying the consolidated earnings
before income taxes at the Company's applicable South African (being the
principal country in which the Company operates) tax rate of 29% (2005 - 30%) is
reconciled as follows:
2006 2005
Income taxes computed using the Company's $ $
tax rate (1,018,461) (726,406)
Adjust for:
Non-deductible items 12,864 65,218
Valuation allowance 1,005,597 754,512
Income tax $ - $ 93,324
(b) The tax basis of the Company's South African assets converted at year-end
exchange rates results in a temporary difference, whereby the translated tax
base is different than the Company's carrying value for accounting purposes. The
tax effect of this temporary difference has not been recognized as a deferred
tax assets, as future taxable income is not certain due to the risks associated
with exploration ventures. These losses do not have expiry dates.
13. RELATED PARTY TRANSACTIONS
Included in the accounts are payments made to companies under the control or
significant influence of officers and directors of the Company. These
transactions are recorded at the exchange amount, being the amount agreed to by
the parties and are in the ordinary course of business. A summary of these
transactions follows:
2006 2005
Administrative services (1) $ 309,000 $ 309,000
Consulting fees (2) - 2,009
Loans to original Akanani shareholers (3) $72,766
1. AfriOre carries on business outside Canada. AfriOre purchases
administrative, advisory and investor relation services from a company that
shares a common director to assist in fulfilling its ongoing obligations as a
reporting issuer listed for trading on a stock exchange in Canada. A contract
effective August 2001 provides for monthly payments of $25,750 by AfriOre. The
contract was renewed in August 2004 for a further two years and automatically
renews for one year unless either party provides notice to the other of non
renewal. The contract may be terminated after the first year by AfriOre giving
12 months written notice or 90 days written notice and paying $77,250.
2. Paid to companies sharing a common director.
3. Loans outstanding to the original shareholders of Akanani Mining.
4. AfriOre maintains its bank account in Barbados with a company managed by a
director that provides general banking services at market rates.
5. AfriOre (Pty) Limited shares offices with Coal Investment Corp Services (Pty)
Limited, the holding companies of both have a common director.
14. (LOSS) / EARNINGS PER COMMON SHARE
The following table sets forth the computation of basic and diluted (loss) /
earnings per share.
2006 2005
Numerator - Basic and Diluted
Net loss from continuing $ (3,511,934) $ (2,514,678)
operations
Net income from discontinued
operations, net of tax - 3,932,687
Net (loss) / income $ (3,511,934) $ 1,418,009
(i) Basic
Denominator
Weighted average number of 36,907,092 31,950,272
shares
Basic (loss) / earnings per share:
-Continued operations $ (0.10) $ (0.08)
-Net (loss) /income $ (0.10) $ 0.04
(ii) Diluted
Denominator
Weighted average number of
shares 36,907,092 31,950,272
Basic (loss) / earnings per share:
-Continued operations $ (0.10) $ (0.08)
-Net (loss) / income
$ (0.10) $ 0.04
3,121,400 share options (2005 - 2,815,000) and 899,082 warrants (2005 -
3,040,470) have been excluded in the calculation as their exercise would be
anti-dilutive. Shares issuable in respect of property acquisition agreements
have also been excluded from the calculation of diluted EPS.
15. SUPPLEMENTARY CASH FLOW INFORMATION
(a) Change in non-cash working capital items
2006 2005
$(822,113) $(267,187)
Accounts receivable
Other receivables (146,446) (8,290)
Prepayments (122,793) (2,207)
Accounts payable and accrued 544,643 868,528
liabilities
Change in non-cash working $ (546,709) $ 590,844
capital
(b) Cash paid for taxes and interest
2006 2005
Cash paid for taxes $ - $ -
Cash paid for interest - 88,767
16. OTHER INCOME
Other income is comprised as follows:
2006 2005
Interest received $ 175,468 $ 220,032
Other income - 56,666
$ 175,468 $ 276,698
17. COMMITMENTS
Future operating lease commitments for equipment and buildings amount to
$733,884, ending February 28, 2011. Annual payments are:
2007 $125,584
2008 $134,028
2009 $145,394
2010 $157,737
2011 $171,141
$733,884
Total lease payments for the year ended February 28, 2006 amounted to $88,046
(2005 - $87,930).
18. SUBSEQUENT EVENT
On March 23, 2006, after Catalyst Investment CC ("Catalyst") had been
restructured so that its sole asset comprises its shareholding in Akanani
Mining, AfriOre's wholly-owned subsidiary, AfriOre Precious Metals Inc,
purchased 100% of the members' interest in Catalyst for R32,000,000 ($5,871,040)
in order to facilitate the restructuring of the Black Empowerment interests in
the Akanani Project.
At date of acquisition the assets were
Long term investment
- Akanani Mining
(Pty) Ltd R97,710 $18,024
19. SEGMENT REPORTING
The Company comprises of one significant business segment which relates to the
acquisition, exploration and development of PGM and gold exploration properties
in Africa. The geographical segments of these activities are reflected in note
7.
20. INTERNATIONAL FINANCIAL REPORTING STANDARDS
The consolidated financial statements have been prepared in accordance with
accounting principles generally accepted in Canada ("Canadian GAAP") which
conform in all material respects with International Financial Reporting
Standards ("IFRS") except as set forth below:
Consolidated Balance Sheets 2006 2005
Total assets under Canadian GAAP and IFRS $ 42,553,083 $ 13,426,074
Total liabilities under Canadian GAAP 1,719,784 4,703,734
Future income tax (b) 212,741 151,929
Total liabilities under IFRS $ 1,932,525 $ 4,855,663
Total shareholders' equity under Canadian GAAP 40,833,299 8,722,340
Future income tax (b) (212,741) (151,929)
Total shareholders' equity under IFRS $ 40,620,558 $ 8,570,411
Consolidated Statements of Operations
Net (loss) from continuing operations under $ (3,511,934) $(2,514,678)
Canadian GAAP
Adjustment stock-based compensation (a) 427,475 -
Future income tax (b) (60,812) (60,207)
Net (loss) from continuing operations under IFRS (3,145,271) (2,574,885)
Net income from discontinued operations, net of - 3,932,687
tax
Net (loss) / income under IFRS $ (3,145,271) $ 1,357,802
Basic (loss) / earnings per share under IFRS
-Continued operations $ (0.09) $ (0.08)
-Net (loss) / income $ (0.09) $ 0.04
Diluted (loss) / earnings per share under IFRS
-Continued operations $ (0.09) $ (0.08)
-Net (loss) / income $ (0.09) $ 0.04
Consolidated Statements of Retained Deficits
Deficit, beginning of year, as previously $ (19,354,471)$(20,109,007)
reported under Canadian GAAP
Stock-based compensation (a) - (663,473)
Future income tax (b) (151,929) (91,722)
Deficit, beginning of year, as restated (19,506,400) (20,864,202)
Share issue costs (2,043,640) -
Net (loss) / income for the year (3,145,271) 1,357,802
Deficit, end of year under IFRS $ (24,695,311)$(19,506,400)
(a) International Financial Reporting Standard 2 ("IFRS 2") dealing with
stock-based compensation is effective for periods beginning on or after
January 1, 2005. Earlier adoption is encouraged. IFRS 2 relates to grants of
shares, share options or equity instruments granted after November 7, 2002.
If IFRS 2 is adopted early then for all grants of equity instruments which
fall under IFRS 2, an entity shall restate comparative information and where
applicable, adjust the opening balance of retained earnings/deficit for the
earliest period presented.
(b) The non-monetary assets and liabilities of an entity are measured in
its functional currency (IAS21 The Effects of Changes in Foreign Exchange
Rates). If the entity's taxable profit or tax loss (and, hence, the tax base
of its non-monetary assets and liabilities) is determined in a different
currency, changes in the exchange rate give rise to temporary differences
that result in a recognized deferred tax liability or (subject to paragraph
24) asset. The resulting deferred tax is charged or credited to profit or
loss (paragraph 58).
This report contains forward-looking statements based on current expectations.
These forward-looking statements entail various risks and uncertainties that
could cause actual results to differ materially from those reflected in these
forward-looking statements. Risk and uncertainties about the Company's business
are more fully discussed in the Management Discussion and Analysis published in
the Company's Annual Report and in AfriOre's Annual Information Form.
MANAGEMENT'S DISCUSSION AND ANALYSIS
For the year ended February 28, 2006
1. Introduction
Management's Discussion and Analysis ("MD&A") of the consolidated financial
position for the year ended February 28, 2006 should be read in conjunction with
the Company's consolidated financial statements and notes thereto for the year
ended February 28, 2006. Historical results, including trends which might
appear, should not be taken as indicative of future results.
Certain information in this MD&A contains forward-looking statements that are
based on the Company's current expectations and estimates that the Company
believes, expects or anticipates will or may occur in the future (including,
without limitation, statements regarding the Company's plans with respect to the
exploration and development of the Akanani Platinum Project). Forward-looking
statements are frequently characterized by words such as "plan," "expect",
"project", "intend", "believe", "anticipate", "estimate" and other similar words
or statements that certain events or conditions "may" or "will" occur, and
include, without limitation, statements regarding potential mineralization and
resources, exploration results and future plans and objectives of the Company.
Such forward-looking statements involve known and unknown risks, uncertainties
and other factors that could cause actual events or results to differ materially
from estimated or anticipated events or results implied or expressed in such
forward-looking statements. Factors that could cause such differences include
changes in world platinum group metals and gold markets and equity markets,
political developments in South Africa, changes to regulations affecting the
Company's activities, uncertainties relating to the availability and costs of
financing needed in the future, the uncertainties involved in interpreting
drilling results and other ecological data and the other risks involved in the
platinum group metals and gold exploration and development industries. Any
forward-looking statement speaks only as of the date on which it is made and,
except as may be required by applicable securities laws, the Company disclaims
any intent or obligation to update any forward-looking statement, whether as a
result of new information, future events or results or otherwise.
Forward-looking statements are not guarantees of future performance and
accordingly undue reliance should not be put on such statements due to the
inherent uncertainty therein.
The MD&A has been prepared to give shareholders an assessment of not only what
the Company has accomplished in the past fiscal period but also what management
initiatives have been taken to increase shareholder value for the future.
2. Overview
AfriOre was previously a multi-commodity exploration company whose assets
included coal mining and precious metals exploration properties. The Company
disposed of its coal assets in October 2004 and now has a sole focus on precious
metals and is engaged in the acquisition, exploration and development of
platinum group metals ("PGM") and gold exploration properties in Africa.
The Company is currently engaged in the exploration and evaluation of a single
substantial project where there is the potential to establish a PGM mine. In
addition rights are held to four gold exploration projects where there is
potential to establish gold mines and where exploration is being undertaken
currently.
Management believes that the long-term fundamentals of the PGM and gold
industries remain positive and that the African continent, with its attractive
geology and opportunities, particularly in respect of PGMs and gold, is ideally
suited to exploration and mining for these commodities. AfriOre has established
a well-balanced gold and PGM exploration portfolio, which comprises projects
from early to advanced stages of development.
The strategy is to continue to focus the Company's activities on PGM and gold
exploration and mining and particularly on the Akanani Platinum Project
("Akanani"). In excess of 80% of the world's known PGM resources are
concentrated in southern Africa and it is management's intention to continue to
intensively prospect Akanani and to identify projects in this area and to
acquire interests in any potential projects that may be available. Southern
Africa has numerous gold fields and we will continue to review, identify and
acquire an interest in available gold projects with potential. Management is
continually reviewing the current projects and jurisdictions in which we
operate, and will endeavour to apply the shareholders' funds in the most cost
effective manner to those projects with highest perceived potential, such as
Akanani, where it believes there should be a favourable return to shareholders.
AfriOre's strategy of establishing a portfolio of PGM and gold projects at
different stages of development, in various jurisdictions, is aimed to provide
benefit from both exploration success and any rise in the PGM or gold prices,
while reducing any sovereign and exploration risk, to the extent that is
possible.
AfriOre's PGM and gold exploration program is based on the ability to identify
targets, which have the potential to host significant economic mineralization
and to select and execute exploration methods and programs, which will discover,
delineate and extend the mineralization to determine mineable resources and
reserves.
AfriOre's management team has extensive experience in the PGM and gold
industries of southern Africa and we continue to find, or be invited to invest
in, precious metal opportunities. Management is confident that the
mineralization that has been identified within the portfolio of PGM and gold
projects in the past year has the potential to continue to deliver positive
exploration results.
AfriOre commenced trading on the Vancouver Stock Exchange ("TSX Venture
Exchange") in 1995 and has been quoted on the Toronto Stock Exchange ("TSX")
since 2001.
On the May 19, 2005, the Company was continued to the British Virgin Islands.
The new company number is 657509.
On the July 11, 2005, AfriOre was admitted to the Alternative Investment Market
of the London Stock Exchange ("AIM"). Charles Stanley and Co. Limited is acting
as Nominated Adviser and Broker.
3. Exploration Projects
Michael van Aswegen, Chief Operating Officer of the Company and a "qualified
person" as such term is defined in National Instrument 43-101, has reviewed and
approved the technical information in this MD&A.
Akanani Platinum Project, South Africa
Akanani is situated on the Northern Limb of the Bushveld Complex in South
Africa. The Bushveld Complex is host to the world's most important PGM producing
operations and resources. Akanani is 4,095 hectares ("ha") (10,119 acres) in
extent and is adjacent to Anglo American Platinum Corporation Limited holdings
and its open pit operations, within the central sector of the Platreef unit,
which hosts the PGM and base metal mineralization in the area.
On September 27, 2004, AfriOre signed an option agreement which allowed it to
acquire an indirect 74% interest in Akanani Mining (Pty) Ltd. ("Akanani Mining")
in staggered tranches, over a thirty six month period, for the total cost of
South African Rand ("R")9,500,000 ($1,783,395). In addition, in terms of the
agreement, a payment of R500,000 was made to the Akanani shareholders on signing
of the agreement. A further R2,000,000 is payable should a Bankable Feasibility
Study indicate that the project will or may achieve an internal rate of return
after tax of not less than 20% per annum over the life of mine at weighted
average of the platinum price and other relevant metals prices. Akanani Mining
is the holder of the exclusive rights to all precious and base metals and
minerals in respect of the Akanani project area, which comprise the two farms
Moordkopje 813LR and Zwartfontein 814LR, which are some 25 kilometres ("km")
north of Mokopane (formerly Potgietersrus) in the Limpopo Province of South
Africa. On April 14, 2005, based on the initial positive drilling results
received, AfriOre, through its wholly-owned subsidiary, Metals Technology Inc.
("MTI"), exercised its first option to earn a 20% interest in Akanani Mining,
through the payment of R1,500,000 ($309,795) to the original shareholders of
Akanani Mining and issued 750,000 common shares at $1.77 per share for the
purchase of 100% of the shares in MTI. With continuing positive results being
received from the drilling operations, AfriOre elected to advance the exercise
of its option to acquire a further 54% interest in Akanani Mining on September
29, 2005 for a consideration of R8,000,000 ($1,473,600). With the second
exercise of AfriOre's option right, AfriOre vested its complete entitlement of
the 74% interest in Akanani Mining, in terms of its option agreement of
September 27, 2004.
Exploration at Akanani commenced in November 2004 with the initial aim of
establishing a PGM resource with associated gold, copper and nickel
mineralization in the Platreef downdip to a selected depth limit of 2,000 metres
("m") below surface in the west, being within the current depth of economic
mining operations on the platinum mines in the Western Limb of the Bushveld
Complex.
The first phase, nine hole, (approximately 13,000 m) diamond drilling program
was completed during the second quarter and was followed by the second phase (17
hole, 31,000 m) drilling program. All the holes in the initial drilling programs
were collared vertically and spaced approximately 500 m apart. The initial
program on the first line of drilling extended along the eastern boundary of the
project area over a strike length of the Platreef of 6,500 m (of the total 9,000
m of strike length within the project area).
At the end of the period under review, 22 drill holes (including one historical
hole) had been completed on the project area, with a 100% success rate in
intersecting PGM mineralization within the Platreef. Most drill holes
intersected multiple zones of mineralization, some with high grade PGM
intersections over several metres, and the results of most holes exceeded
AfriOre's initial minimum exploration target of intersecting zones with a
minimum PGM grade of some four grammes per tonne ("g/t") platinum + palladium +
rhodium + gold ("4E") over an intersection width of at least five metres.
A provisional compilation of assay results of the first 12 drill holes on the
project area was completed and identified a broad zone of PGM mineralization,
which is developed towards the upper part of the Platreef unit and which had
been intersected in all the drill holes. The compilation of the assay results in
the broad upper zone at or near the hanging wall contact indicated an average
PGM grade of the drill hole intersections of some four g/t 4E, over an
uncorrected intersection width of some 28 m. In addition, within this broad
mineralized zone, there is a persistent higher-grade zone, intersected in all
drill holes, where the average PGM grade of the intersections is approximately
six g/t 4E over an uncorrected intersection width of some six m. The average
grade of the base metal mineralization for the drill intersections in the
selected higher-grade zone is 0.30% nickel and 0.17% copper. These provisional
estimates of grade and widths of the mineralized intersections represented a
preliminary assessment of the tenor of mineralization, which would be subject to
change in a subsequent more rigorous analysis of the data in a mineral resource
estimation study.
The drilling results also confirmed the minimum projected depth of the Platreef
on the eastern boundary of the property of some 750 m and identified two
priority areas, one in the south of the project area and the other in the north
of the area drilled, both of which are characterized by higher-grade drill
intersections over substantial widths.
By the end of the year, the number of diamond drill rigs deployed on the project
had increased from six to 10 as positive results continued to be received. The
drilling program increasingly focused on the southern of the two priority areas,
and in particular on the area to the west, and down dip, of the first drilling
line. This drilling, covering four lines parallel to the strike of the Platreef,
has extended the area in which the mineralization has been intersected for a
horizontal distance of up to 1,400 m to the west.
A high resolution aeromagnetic survey was completed, and preliminary conceptual
mining and metallurgical studies were commissioned. The aeromagnetic survey was
flown at a line spacing of 100 m and a mean survey elevation of 28 m. An initial
interpretation of the results was completed and the survey has proved to be
successful in delineating lithological and structural features as a guide to the
ongoing drilling program.
In addition, towards the end of the year, preparations were in hand to commence
an initial inferred mineral resource estimate study, based on the drill holes in
the Southern Priority Area ("SPA"). This mineral resource estimate was released
on May 11, 2006 subsequent to year end. Furthermore, additional studies were in
progress at the end of the year, which included photo and surface geological
mapping, and preliminary mineralogical and geochemical studies of the Platreef
mineralization, which are also scheduled for completion during the first quarter
of 2007.
The results of the drilling and aeromagnetic survey have indicated that the
Platreef unit is developed at shallower than expected depths in parts of the
SPA. Whereas regional dips at outcrop to the east of the project are indicated
to be 45 degrees towards the west, a number of AfriOre's holes drilled to date
in the SPA have intersected the Platreef unit at shallower depths than
originally predicted from the dips as reported at surface. This reduction in
depth of the Platreef unit is due, in part, to a projected flattening in the dip
of the Platreef unit to some 20 to 30 degrees to the west. As a result of this
development, the immediate drilling program has been modified to focus on the
area where the depths of the Platreef mineralization extend from depths in the
range of some 800 m to some 1,700 m below surface.
Drilling will continue during the coming year at a similar rate to that attained
late in the year, based on a complement of 10 drill rigs, with an aim to extend
the drilling to the northern areas and to drill over the entire 9,000 metres of
the Platreef unit strike length at Akanani. Based on the continuing positive
results, the Company entered into an agreement, in February 2006, with SRK
Consulting Johannesburg ("SRK") to undertake and complete a Pre-Feasibility
Study during the forthcoming financial year, which results are anticipated by
early 2007. SRK is an international consulting firm, independent of AfriOre.
Further studies will also be implemented to enhance the understanding of the
controls and distribution of the PGM mineralization within the Platreef on the
project area.
In terms of South Africa's Mineral and Petroleum Resources Development Act
("MPRDA"), application for conversion of the "old order used right" to new order
prospecting right has been submitted on April 29, 2005, and approval was still
pending as at February 2006.
Subsequent Event.
On May 11, 2006, subsequent to the year end the Company released the results of
an initial inferred resource estimate for Akanani of 183.0 Mt at a grade of 4.5
g/t 4E, which equates to 26.4 million ounces of 4E. This mineral resource
estimate was prepared by Snowden Mining Industry Consultants, an international
minerals consultancy group, independent of AfriOre and was based on the results
of 17 diamond drill holes at nominal 500 x 500 m spacing within a 329 ha area
within the SPA. This mineral resource estimate extends for 3.6 km of the total
nine km strike length of the Platreef on the project area, over a 0.6 km to 1.4
km width (projected to surface, not on the plane of the mineralized zone) in a
unit of the Platreef termed the "P2". An average true thickness of 16.6 m for
the resource area is based on using the top of the P2 unit for the upper limit
of the resource and a PGM assay threshold of 2 g/t (4E) for the lower limit. A
technical report entitled "AfriOre Limited: Akanani Platinum Project, Limpopo
Province, South Africa Project No. J883", prepared by Snowden Mining Industry
Consultants dated May 29, 2006 with respect to the Akanani Platinum Project has
been filed on SEDAR and may be viewed on the Internet at www.sedar.com.
FSC Gold Project, South Africa
On the 117,268 ha FSC Project where the aim is to discover a major, buried
extension to the Witwatersrand Basin, AfriOre has a joint venture agreement in
which Wits Basin Precious Minerals Inc. ("Wits Basin") is funding the current
stage of exploration and has a 35% interest in the project after contributing
United States dollars ("US")$2,100,000 to the project. Wits Basin has the right
to earn an additional 15% interest for the additional expenditure of
US$1,400,000. During the year AfriOre, as managers of the project, completed the
drilling of drill hole BH 48, one of the range finding drill holes. BH 48
succeeded in intersecting Witwatersrand quartzite rocks between the depths of
1,936 m and the end-of-hole depth of 2,560 m. Although the drilling was
successful in confirming the model that there is indeed an extension to the
Witwatersrand basin within the FSC project area, the rocks intersected were
lower in the stratigraphy than the Central Rand Group rocks, in which most of
the economic gold reefs in the main Witwatersrand basin are developed.
The interpretation of the data from the drilling, together with the available
geophysical data in the area, identified three sites close to BH 48 where there
is a possibility of the gold bearing Central Rand Group rocks being preserved.
AfriOre has identified an additional source of geophysical data for these
potential drilling areas and attempts will be made to acquire and interpret the
data in order to define the highest priority drill target. Prospecting rights to
these areas were applied for during the transition period from the previous
Minerals Act of 1991 to the MPRDA and the granting of these prospecting rights
is awaited. Our joint venture partner, Wits Basin, has been advised of the
results and of the developments and has been notified of the funding
requirements of the next phase of exploration.
In terms of the MPRDA, application has been made for conversion of all old order
rights that were held prior to the introduction of the MPRDA. The future
drilling program will depend on the successful granting of new order prospecting
rights.
Ndori and Siaya Gold Projects, Kenya
During the year, the gold exploration program continued with much of the focus
being on the Masumbi target in the Ndori licence area (2,822 sq km), where an
initial program of diamond drilling was completed, following the Company's 67
hole percussion drilling program on this target during 2004. Although the deep
level of weathering in the area and highly fractured rock resulted in a less
than satisfactory level of core recovery, the drilling confirmed the wide and
low grade tenor of gold mineralization over the considerable widths drilled. The
drilling also allowed for the reinterpretation of the host rock drilled, which
has been interpreted as a highly sheared diorite body within a major regional
shear zone. Further drilling is required and this will be undertaken in the
coming year in conjunction with drilling programs on other priority targets.
Preliminary surface mapping and sampling continued on five additional gold
targets, namely Ramba-Lumba, Ngiga, Kerebe, Kitson and Viyala in preparation for
geophysical surveys and drilling in the forthcoming year. The aim of exploration
on these licences continues to be the identification of shallow-wide zones of
mineralization that could support an open pit mining operation.
Capricorn Gold Project, Namibia
The Capricorn Project comprises six exclusive prospecting licences ("EPL"),
covering an area of some 236,265 ha in northern Namibia. Field activity has
focused on continuing gold-in-soil geochemical surveys over 13 geophysical
anomalies with an objective of delineating targets with subcropping gold
mineralization. Low level gold anomalies have been identified over certain
targets where results have been received. Elsewhere in the region, coincident
gold-in-soil and aeromagnetic anomalies are closely associated with mineralized
gold-bearing sheeted veins. Such is the case at the Otjikoto gold discovery on
the adjacent property.
At year end the results of most of sampling surveys had been completed and the
higher priority targets were being be prepared for a drilling program which will
be undertaken in the coming year.
Banankoro Gold Project, Mali
During the third quarter of 2006, AfriOre concluded an agreement to sell its
rights in the Banankoro Project in Mali to a private French company, Societe en
Commandite par Actions ("Pacifico"), for the sum of US$1.5 million.
Previously, in September 2002, AfriOre entered into a joint venture agreement
(the "Banankoro JV") with New Gold Mali SA ("NGM"), a subsidiary of Paris-listed
company Maurel and Prom, to explore and develop NGM's exploration licence areas
in the Banankoro area of the Kangaba district in south-western Mali. By 2004,
AfriOre had drilled approximately 4,500 m in 23 holes, confirming the presence
of gold mineralization at the Bagama high-grade prospect and identifying other
targets for follow-up exploration. However, the acquisition of rights in late
2004 of the promising Akanani Platinum Project in South Africa prompted a review
of the Company's exploration priorities and a decision was taken to dispose of
the Company's rights in Banankoro.
The purchase consideration for Banankoro is payable by Pacifico in three
tranches, being US$750,000 upon signature of the agreement, followed by payments
of US$500,000 and US$250,000 at six and twelve months, respectively, after date
of signature on November 4, 2005. In the event of any payment default, the
Banankoro JV will be reinstated and AfriOre will again have the right to earn up
to a 60% interest in the Banankoro project.
The first payment of US$750,000 was received on December 2, 2005.
Dwaalboom Gold Project, South Africa
Located north of Rustenburg in South Africa, the 31,621 ha Dwaalboom Project is
an advanced-stage gold project, which was originally held and extensively
prospected by Anglo American Corporation Ltd. ("Anglo American"), which
subsequently ceded the rights to African Pioneer Mining (Pty) Ltd. ("APM").
Anglo American drilled in excess of 600 drill holes and reportedly delineated
gold mineralization, which was developed in wide mineralized zones in a number
of targets over a widespread area. AfriOre has a joint venture with APM and is
managing the project and has the right to acquire a 70% interest in the project.
Limited progress has been made on this project, initially due to delays in the
issuance of new order prospecting rights. As at the end of the year, the
existing data is being analysed in an extensive revision and recompilation, with
an aim of identifying the optimum targets to extend the mineralization and where
possible, identify the higher-grade areas. This phase of exploration has
included a field program to resample and map the area and has continued in the
recent quarter.
4. Critical Accounting Estimates and Accounting Policies
The consolidated financial statements are prepared by management in accordance
with
accounting principles generally accepted in Canada.
(a) Principles of consolidation
These financial statements consolidate the financial statements of all
controlled companies. Inter-company transactions and balances have been
eliminated on consolidation. Subsidiaries with different year-end dates are
consolidated taking into account transactions between the subsidiaries' year end
to the Group's financial year end.
(b) Translation of foreign currencies
The Company's exploration subsidiaries are accounted for as integrated foreign
operations and are translated into Canadian dollars using the temporal method.
Monetary assets and liabilities denominated in foreign currencies are translated
into Canadian dollars at the year-end exchange rates, while non-monetary items
are translated at the exchange rate in effect at the transaction date. Income
and expense items are translated at the exchange rates in effect on the date of
the transaction. Exchange gains and losses resulting from the translation of
these amounts are included in the consolidated statements of operations.
(c) Property and equipment
Property and equipment are stated at cost and depreciated on a straight-line
basis over five years.
(d) Exploration properties
The Company considers its exploration costs to have the characteristics of plant
and equipment. As such, the Company capitalizes all exploration costs that
result in the acquisition and retention of resource properties or an interest
therein. The amounts shown for exploration properties represents costs to date
and do not necessarily reflect present or future values. If the properties are
sold, allowed to lapse or are no longer of interest, accumulated costs are
written down. Once a project reaches commercial production, the exploration
costs are amortized over the estimated useful life of the producing properties.
The recoverability of the carrying values of the properties is dependent on the
ability of AfriOre to obtain the necessary financing and permits to continue
exploration, the establishment of economically recoverable reserves, future
profitable production and/or proceeds from the disposition thereof.
(e) Income taxes
The Company accounts for income taxes using the asset and liability method.
Under the asset and liability method, future tax assets and liabilities are
recognized for future tax consequences attributable to differences between the
financial statement carrying amount and the tax basis of assets and liabilities.
Future tax assets and liabilities are measured using tax rates enacted or
substantially enacted and expected to apply to taxable income in the years in
which those temporary differences are expected to be recovered or settled. The
effect on future tax assets and liabilities of a change in tax rates is
recognized in income in the year that includes the enactment or substantive
enactment date.
A valuation allowance is provided to reduce future tax assets to the amount that
is more likely than not to be recovered.
(f) Use of estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the consolidated financial
statements and the reported amounts of revenues and expenses during the years.
Significant items subject to such estimates and assumptions include the carrying
amount of property and equipment, exploration properties, valuation allowances
of receivables and stock based compensation. Actual results could differ from
those estimates.
(g) Comparative figures
Certain prior year's figures have been reclassified to conform to the
presentation adopted in 2005.
(h) Earnings (loss) per share
Earnings (loss) per share ("EPS") are calculated using the weighted average
number of shares outstanding during the period. Diluted EPS data is calculated
using the treasury stock method. The calculation of diluted earnings per share
assumes that options and warrants with an exercise price lower than the average
quoted market price were exercised at the later of the beginning of the period
or time of issue. In applying the treasury stock method, options with an
exercise price greater than the average quoted market price of the common shares
are not included in the calculation of diluted earnings per share, as the effect
is anti-dilutive.
(i) Cash
Cash includes those short-term money market instruments which, on acquisition,
have a remaining term to maturity at acquisition of three months or less.
(j) Stock-based compensation
The Company has a rolling ten percent stock option plan and under that plan
issues stock options to directors, officers, employees and key consultants from
time to time. Options granted may be exercised during a period not exceeding
five years, subject to earlier termination under various circumstances. The
options are non-transferable. The exercise price may not be less than the
minimum price stipulated by applicable regulators.
The Company uses the Black-Scholes option pricing model to estimate a value for
these options. This model, and other models which are used to value options,
require inputs such as expected volatility, expected life to exercise and
interest rates. Changes in any of these inputs could cause a significant change
in the stock-based compensation expense charged in a period.
5. Disclosure of Outstanding Share Data
The following details the share capital structure as at May 16, 2006. These
figures may be subject to minor accounting adjustments prior to presentation in
future consolidated financial statements.
Expiry Date Exercise Number Total
Price
Common Shares 50,352,920
Share options 06 Aug 2006 $0.50 130,000
16 Aug 2006 $0.54 265,000
13 May 2007 $0.67 25,000
12 Sep 2007 $0.75 150,000
03 June 2008 $0.80 425,000
17 Dec 2008 $0.91 100,000
26 Jan 2010 $0.66 466,400
28 Jan 2010 $0.66 250,000
16 Jan 2011 $3.38 1,235,000
02 Mar 2011 $4.00 230,000
04 April 2011 $4.25 80,000 3,356,400
Common shares
subject to 27 Aug 2007 $1.50 125,882
Warrants
09 Feb 2007 $3.55 373,200 499,082
Common shares set
aside for property
acquisition as per
agreements 390,000
Total fully
diluted number of 54,598,402
shares
6. Financing
In August 2005, the Company completed a private placement of 4,666,640 Units at
a price of $1.50 per unit for total gross proceeds of $6,999,690. Each Unit
consisted of one common share of AfriOre and one-half of a common share purchase
warrant. Each whole common share purchase warrant entitled the holder thereof to
acquire one common share of AfriOre at an exercise price of $1.85 per share
until August 24, 2007. In consideration for assistance with the private
placement, the Company paid to the agents a cash commission of $515,579.
In February 2006, the Company completed a private placement of 6,220,000 shares
at a price of $3.55 per share for the total gross proceeds of $22,081,000. In
consideration for assistance with the private placement, the Company issued to
the agents "Compensation Options" equal to 6% of the number of common shares
issued. Each Compensation Option will be exercisable to acquire one common share
at an exercise price of $3.55 per share before February 9, 2007.
7. Capital expenditure on exploration projects
February 28, Additions (Recovered) February 28,
2005 2006
South Africa-FSC (Gold) $ 2,243,738 $ $(1,944,509) $ 299,229
South Africa-Dwaalboom 176,333 73,558 249,891
(Gold)
Mali-Banankoro (Gold) 1,788,916 (1,788,916)
Kenya-Ndori (Gold) 358,585 201,801 560,386
Kenya-Siaya (Gold) 397,234 196,621 593,855
Namibia-Capricorn 305,267 195,595 500,862
(Gold)
South Africa-Akanani 862,110 7,716,924 8,579,034
(PGM)
$ 6,132,183 $ 8,384,499 $(3,733,425) $10,783,257
Wits Basin earned a 35% equity stake in the FSC gold project. This resulted in
the reversal of long-term and short-term advances previously reported as well as
the appropriate adjustments to the deferred exploration expenditure in the FSC
project.
Banankoro was sold to Pacifico (Societe en Commandite par Actions) ("Pacifico")
during the three months ended November 30, 2005, for the value of US$1,500,000
($1,753,295).
8. Results of Operations
(in thousands of $)
Review of Certain Operating Expenses
+-------------------------------+----------------------+----------------------+
| | Year to February 28, | Year to February 28, |
| | 2006 | 2005 |
+-------------------------------+----------------------+----------------------+
|Administration | 2,516 | 2,686 |
+-------------------------------+----------------------+----------------------+
|Foreign exchange (loss)/ gain | (457) | 175 |
+-------------------------------+----------------------+----------------------+
|Exploration and project | 72 | 65 |
|evaluation | | |
+-------------------------------+----------------------+----------------------+
* Administration costs decreased due to the reduction in administrative
staff and office expenditures as a result of the sale of the coal assets in
the financial year 2005.
* Foreign exchange loss increased significantly due to the appreciation of
the South African Rand ("Rand") and Canadian dollar ("CAD") versus the
United States dollar ("USD").
* Exploration and project evaluation costs relate to the expenditure on
preliminary assessments of possible exploration projects, which are not
eligible to be capitalized.
The loss of the year ended February 28, 2006, was $3,511,934 compared to a loss
of $2,514,678 for the year ended February 28, 2005. This increase is primarily
due to the fact that AfriOre disposed of all of its coal assets in October 2004,
and no longer receives revenue from coal sales from Springlake Colliery, as well
as an increase in the level of exploration and project evaluation and the write
down of exploration properties and deregistration of subsidiary companies,
together with the extraordinary cost attributable to the listing on AIM. The
Company recorded a basic loss per share from continuing operations of $0.10 per
share for the year ended February 28, 2006, compared to a loss of $0.08 per
share for the year ended February 28, 2005.
Capitalized exploration costs total $10,783,257 with exploration costs for year
ended February 28, 2006 totalling $8,384,499 compared to $3,335,998 for the same
period in 2005. This increase is due to the expenditure on the Akanani project.
The acquisition by Wits Basin, AfriOre's joint venture partner on the FSC
project, of a 35% equity stake in the South African FSC gold project resulted in
an adjustment to exploration expenditure in the FSC project of $2,592,294, as
well as the sale of the Banankoro gold project in Mali for $1,753,295
(US$1,500,000). Exploration activities continued during the period on the
Akanani platinum project in South Africa's Bushveld Complex as well as on gold
projects in Kenya, Namibia and in South Africa.
9. Financial Condition, Cash flow, Liquidity and Capital Resources
(in thousands of $)
Cash Flow Highlights
+-----------------------+--------------------+--------------------+
| |Year to February 28,| |
| | 2006 |Year to February 28,|
| | | 2005 |
| | | |
+-----------------------+--------------------+--------------------+
|Operating activities | $ (3,051) | $ (1,316) |
+-----------------------+--------------------+--------------------+
|Financing activities | 33,234 | 132 |
+-----------------------+--------------------+--------------------+
|Investing activities | (5,059) | (3,247) |
+-----------------------+--------------------+--------------------+
| | | |
+-----------------------+--------------------+--------------------+
|Beginning cash balance | 2,853 | 2,776 |
+-----------------------+--------------------+--------------------+
|Net cash for the period| 27,246 | 77 |
+-----------------------+--------------------+--------------------+
|Ending cash balance | 30,099 | 2,853 |
+-----------------------+--------------------+--------------------+
* Operating activities utilized $3,051,047 of cash for the year, primarily
due to a net operating loss of $3,511,934.
* Financing activities generated $33,233,510 of cash for the year, through
the issuance of common shares and the decrease of loans payable as well as
project specific funding for the FSC project.
* Investing activities utilized $5,059,257 of cash for the year due to
expenditure on exploration properties, offset by the proceeds from the sale
of the Banankoro gold project, the purchase of 74% shares in Akanani Mining
and the purchase of computer equipment and software.
10. Summary of selected quarterly results
Expressed in Canadian Dollars.
+--------------------+-----------+---------+-----------+-------------+
| | Feb | Nov | Aug | May |
| | 2006 | 2005 | 2005 | 2005 |
+--------------------+-----------+---------+-----------+-------------+
|Net loss from | | | | |
|continued operations|(1,071,987)|(869,749)|(1,235,173)| (335,025) |
+--------------------+-----------+---------+-----------+-------------+
|Basic and diluted | | | | |
|loss per share | (0.03) | (0.02) | (0.03) | (0.01) |
+--------------------+-----------+---------+-----------+-------------+
11. Related Party Transactions
Included in the consolidated financial statements are payments made to companies
under the control or significant influence of officers and directors of the
Company. These transactions are recorded at the exchange amount, being the
amount agreed to by the parties and are in the ordinary course of business. A
summary of these transactions follows:
For the year ended
February February
28, 2006 28, 2005
Administrative services (1) $ 309,000 $ 309,000
Consulting fees (2) 2,009
Loans to original Shareholders of $72,766
Akanani (3)
1. AfriOre carries on business outside Canada. AfriOre purchases administrative,
advisory and investor relations services from a company that shares a common
director to assist in fulfilling its ongoing obligations as a reporting issuer
listed for trading on a stock exchange in Canada. A contract effective August
2001 provides for monthly payments of $25,750 by AfriOre. The contract was
renewed in August 2004 for a further two years and automatically renews for one
year unless either party provides notice to the other of non renewal. The
contract may be terminated after the first year by AfriOre giving 12 months'
written notice or 90 days' written notice and paying $77,250.
2. Paid to companies sharing a common director.
3. Loans outstanding to the original shareholders of Akanani Mining.
4. AfriOre maintains its bank account in Barbados with a company managed by a
director that provides general banking services at market rates.
5. AfriOre (Pty) Limited shares offices with Coal Investment Corporation
Services (Pty) Limited the holding companies of both share a common director.
12. Risks
The Company's operations are speculative due to the high-risk nature of its
business, which is the acquisition, financing, exploration and development of
PGM and gold exploration properties in South Africa. The risks below affect the
financial statements of the Company and may materially affect the Company's
future performance. These risks are not the only ones facing the Company.
Additional risks not currently known to the Company, or that the Company
currently deems trivial, may also impair the Company's operations. If any of the
following risks actually occur, the Company's business, financial condition and
operating results could be adversely affected.
The exploration for PGM and gold deposits involves significant risks, which even
a combination of careful evaluation, experience and knowledge may not eliminate.
While the discovery of an ore body may result in substantial rewards, few
properties that are explored are ultimately developed into profitable mines.
Major expenses may be required to locate and establish mineral reserves to
develop metallurgical processes and to construct mining and processing
facilities at a particular site. It is impossible to ensure that the exploration
or development programs planned by the Company will result in a profitable
commercial mining operation and there is no assurance that, even if commercial
quantities of mineral resources are developed, a profitable market will exist
for sale of such product. Precious metal prices fluctuate on a daily basis and
are affected by numerous factors beyond the Company's control.
The Company's operations are subject to all the hazards and risks normally
encountered in the exploration and evaluation of PGM and gold projects,
including unusual and unexpected geological formations, disruption of the
mineralized zones by faulting, folding and intrusions, variations in the depth,
width and lateral and strike extent of the mineralized zones and in the
mineralogy and grade of the mineralized areas. Prospecting operations are also
subject to equipment failure, adverse weather conditions, disruption or
destruction of infrastructure and landowner disputes. In the future, any mining
operation may be subject to rock falls, cave-ins, equipment failure, and other
conditions associated with mining which could result in the damage to life,
operating infrastructure, property, environment damage and possible legal
liability.
Although the Company maintains insurance to protect against certain risks in
such amounts as it considers to be reasonable, its insurance will not cover all
the potential risks and costs associated with the Company's exploration
activities.
Mining, processing, development and exploration activities depend, to one degree
or another, on adequate infrastructure. Reliable roads, bridges, power sources
and water supply are important determinants, which affect capital and operating
costs. Unusual or infrequent weather phenomena, sabotage, government or other
interference in the maintenance or provision of such infrastructure could
adversely affect the Company's operations, financial condition and result of
operations.
The construction of mining facilities and commencement of mining operations,
will require substantial additional financing. Failure to obtain sufficient
financing will result in a delay or indefinite postponement of exploration,
development or production on the Company's two properties or even a loss of a
property interest. Additional financing may not be available when needed or if
available, the terms of such financing might not be favourable to the Company.
The justification for exploration for PGMs and gold is dependent on the price
of, and the demand for, those commodities, which fluctuate over time and there
is no assurance that the price and demand for any one commodity will be
sustained over time in order to justify the continuation of exploration in the
future.
A significant portion of our operating costs and expenses are incurred in Rand.
AfriOre reports its financials results and incurs expenses in CAD. Fluctuations
in exchange rate between the Rand and the USD and between the Rand and the CAD
gives rise to foreign currency exposure, either favourable or unfavourable,
which has materially affected and is expected to continue to impact our future
results of operations and financial condition. Our primary foreign exchange risk
is to changes in the Rand to USD. AfriOre has not entered into any hedging
activities to limit this.
13 Subsequent Event
On March 23, 2006, after Catalyst Investments CC ("Catalyst") had been
restructured so that its sole asset comprises its shareholding in Akanani
Mining, AfriOre's wholly-owned subsidiary, AfriOre Precious Metals Inc.,
purchased 100% of the members' interest in Catalyst for R32,000,000
($5,871,040), in order to facilitate the restructuring of the Black Empowerment
interests in the Akanani Platinum Project.
14 Outlook
The Company will continue to pursue the PGM and gold exploration program in the
year to February 2007 with much of the focus being directed towards the Akanani
PGM project in South Africa. Exploration will also continue at the appropriate
level on the Company's gold projects in South Africa, Namibia and Kenya. The
Company continues to search for PGM and gold exploration opportunities in Africa
and, where possible, those with potential will be acquired.
15 Management's Responsibility for Financial Reporting and Controls
The consolidated financial statements of the Company have been prepared by
management in accordance with Canadian generally accepted accounting principles
and have been approved by the Company's board of directors (the "Board"). The
integrity and objectivity of these Consolidated financial statements are the
responsibility of management. In addition, management is responsible for
ensuring that the information contained in this MD&A is consistent, where
appropriate, with the information contained in the Consolidated financial
statements.
In support of this responsibility, the Company's management maintains a system
of internal accounting and administrative controls to provide reasonable
assurance that the financial information is relevant, reliable and accurate and
that the Company's assets are appropriately accounted for and adequately
safeguarded. When alternative accounting methods exist, management has chosen
those methods it deems most appropriate in the circumstances. The Consolidated
financial statements may contain certain amounts based on estimates and
judgements. Management has determined such amounts on a reasonable basis to
ensure that the Consolidated financial statements are presented fairly in all
material respects. The Board is responsible for ensuring that management fulfils
its responsibilities for financial reporting and internal control. The Board
carries out this responsibility principally through its audit committee. The
audit committee is appointed by the Board and has several financial experts who
are not involved in the Company's daily operations. The audit committee meets
periodically with management and the external auditor to discuss internal
controls over the financial reporting process, auditing matters and financial
reporting issues, to satisfy itself that each party is properly discharging its
responsibilities and to review the Consolidated financial statements with the
external auditors.
16 Evaluation of Disclosure Controls and Procedures
Disclosure controls and procedures are designed to provide reasonable assurance
that all relevant information is gathered and reported to senior management,
including the Company's Chief Executive Officer and Chief Financial Officer, on
a timely basis so that appropriate decisions can be made regarding public
disclosure. As at the end of the period covered by this MD&A, management of the
Company, with the participation of the Chief Executive Officer and the Chief
Financial Officer, evaluated the effectiveness of the Company's disclosure
controls and procedures as required by Canadian securities laws. Based on that
evaluation, the Chief Executive Officer and the Chief Financial Officer have
concluded that, as of the end of the period covered by this MD&A, the disclosure
controls and procedures were effective to provide reasonable assurance that
information required to be disclosed in the Company's annual filings and interim
filings (as such terms are defined under Multilateral Instrument 52-109 -
Certification of Disclosure in Issuers' Annual and Interim Filings of the
Canadian Securities Administrators) and other reports filed or submitted under
Canadian securities laws is recorded, processed, summarized and reported within
the time periods specified by those laws and that material information is
accumulated and communicated to management of the Company, including the Chief
Executive Officer and the Chief Financial Officer, as appropriate to allow
timely decisions regarding required disclosure.
17 Other MD&A Requirements
Additional information relating to the Company, including the Company's Annual
Information Form, is available on SEDAR at www.sedar.com
This quarterly report contains forward-looking statements based on current
expectations. These forward-looking statements entail various risks and
uncertainties that could cause actual results to differ materially from those
reflected in these forward-looking statements. Risk and uncertainties about the
Company's business are more fully discussed in the Management Discussion and
Analysis published in the Company's Annual Report and in AfriOre's Annual
Information Form.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR WUUAGAUPQGMU
Grafico Azioni Afriore (LSE:AFO)
Storico
Da Mag 2024 a Giu 2024
Grafico Azioni Afriore (LSE:AFO)
Storico
Da Giu 2023 a Giu 2024
