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Axactor SE Interim / Quarterly Report 2010
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Interim / Quarterly Report
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FIRST QUARTER REPORT, 2010
IGE
IGE RESOURCES AB (PUBL)
Org. Reg. No 556227-8043
IGE Resources AB (former International Gold Exploration IGE AB) ("IGE" or the "Company") announces results for the first quarter 2010, ended March 31, 2010.
Summary first quarter:
-
For the first quarter of 2010 IGE reports a net loss of MSEK -21,7 or SEK -0.03 per share, compared to a loss of MSEK -5.3 or SEK -0.01 per share in the first quarter of 2009. The result includes non recurring costs of SEK 10.8 million related to the purchase of the activities of Pangea Diamondfields and a loss of SEK 4.9 million from sale of exploration permits.
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IGE announced on the 22nd of February 2010, that it has entered into a conditional sales and purchase agreement whereby IGE acquires all assets and activities of Pangea DiamondFields plc (AIM:PDF) through the purchase of the entire issued share capital of Pangea's subsidiary Efidium Ltd. This effective merger creates a significant diamond exploration and mining company with resources spread across three Southern African countries. The transaction was completed on the 31st of March 2010.
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IGE reached a new milestone in Angola, with Endiama announcing that IGE has fulfilled the obligations required to move towards commercialisation of the Luxinge project. According to Endiama, IGE has fulfilled the requirements set out in the executive decree 49/2008 in the Luxinge joint venture, which implies that IGE is one step closer to the commercialisation of the project.
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IGE announces encouraging results from exploration trenching at its Kenyan gold license. The preliminary results of a reconnaissance trenching and drilling program at the Atieli target (Kisii Special License 209) in Kenya, fully owned by IGE, are encouraging as they suggest a potential high-tonnage, low-grade mineralized system that could be exploited open-cast. The results indicate the presence of a gold-mineralized system, including both high-grade narrow mineralization and low-grade wider mineralization.
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IGE submitted its applications for Exploitation Concessions for the Rönnbäcken Nickel Project to the Mining Inspectorate of Sweden ("Bergsstaten"). The applications for Exploitation Concessions, including Environmental Impact Assessments were submitted on the 12th of February 2010. The application process is estimated to take three to six months. An Exploitation Concession is granted if there is a probability for an economic exploitation of the deposit and if the site is considered appropriate from an environmental point of view. The latter requirement calls for an Environmental Impact Assessment (EIA) to be included in the application. The Exploitation Concession grants the right to carry out mineral exploitation for a twenty-five year period.
Financial Summary
| (TSEK, except per share data) | Q1 2010 | Q1 2009 | Twelve months ended Dec 31, 2009 |
|---|---|---|---|
| Other income | - | 16,201 | 15,169 |
| Operating result | -21,681 | -3,301 | -66,859 |
| Net result | -21,680 | -5,309 | -65,782 |
| Investments | 454,981 | 32,045 | 35,463 |
| Cash at the end of the period | 16,388 | 23,730 | 40,807 |
| Interest bearing loans at the end of the period | 25,755 | 48,307 | 12,065 |
| Result per share before and after dilution | -0.03 | -0.01 | -0.12 |
IGE Resources AB (PUBL) KUNGSGATAN 44, LEVEL 7, 111 35 STOCKHOLM SWEDEN TEL: +46 8 402 28 00 FAX: +46 8 402 28 01
WWW.IGE.SE [email protected]
FIRST QUARTER REPORT, 2010
IGE
Other important events and events after the reporting period:
- IGE announced its first diamonds sale. IGE Resources AB announced the completion of its first diamond sale, marking a significant milestone in the Company's development as a diamond exploration and production company in Africa. The subsidiary IGE Diamonds sold, by the end of April, 3,407 carats of rough diamonds in Luanda, Angola. The sale yielded an average price of USD 162 per carat before sales taxes. The price is slightly above the most recent diamonds sale from Pangea DiamondFields plc, the Southern African group IGE acquired in March 2010.
- IGE announced that the Company has raised NOK 31.0 million of new equity in a private placement. The Board of Directors of IGE Resources AB yesterday resolved to issue a total of 64,632,664 new shares at a subscription price of NOK 0.48 per share, representing gross proceeds of NOK 31,023,679. The total number of outstanding shares in IGE Resources AB after this share issue will be 1,355,741,674, of which shares issued in the Private Placement represent 4.8 per cent. The proceeds from the equity issue will mainly be used to accelerate IGE's diamonds operations in Southern Africa.
- The Company changed its name as per April 8th 2010, based on a resolution made by the Extra General Meeting held on March 26th 2010. The former name of the Group was International Gold Exploration IGE AB.
The acquisition of the activities of Pangea DiamondFields plc
IGE announced on the 22nd of February 2010 that it had entered into a sales and purchase agreement whereby IGE acquired all activities of Pangea DiamondFields plc through its subsidiary Efidium Ltd. The consideration amounts to approximately 495 million new IGE shares. Below follows a brief description of the activities of Pangea Diamondfields Plc, the deal and the rationale behind it.
Background and Rationale behind the transaction
IGE Resources AB has defined diamond exploration and production as its core business, and the Company currently operates four projects in Angola. Authorization from the Angolan authorities for the sale of diamonds from IGE Resources AB's project Luxinge is expected in the near future.
Pangea, through Efidium, is currently engaged in five diamond projects, of which one is in commercial operation in Angola, only 50 kilometres from IGE's Luxinge project. With a monthly output of 2,000 carats and it is poised to grow rapidly. The company has a verified resource base of 8.4 million carats.
The acquisition of Pangea's activities represents a milestone in IGE Resources development towards becoming a significant diamond exploration and production mining company. Diamonds represent a core business for IGE Resources. The transaction provides IGE Resources AB with the following:
- Significantly increased diamond reserve base;
- Cash flow from ongoing operations and diamond sales;
- Stronger diamond exploration and production mining expertise;
- Broader and more diversified African presence (diversification into three key diamond countries);
- Strengthened management;
- Operational synergies in Africa (project management, operations, equipment, logistics);
- Broader shareholder base.
The current operations of IGE Resources AB in Angola will be merged with Pangea's operations to form the subsidiary IGE Diamonds. This business unit will be headed by Pangea's existing management.
"Pangea represents extensive diamond exploration and mining experience and a well-established presence in Africa. The merger of the two companies creates a considerable resource base and a growing cash flow from diamond mining. Within the next twelve months we expect three diamond projects to generate revenue" said IGE Resources' CEO, Tomas Fellbom.
IGE Resources AB (PUBL) KUNGSIGATAN 44, LEVEL 7, 111 35 STOCKHOLM SWEDEN TEL: +46 8 402 28 00 FAX: +46 8 402 28 01
WWW.IGE.SE [email protected]
FIRST QUARTER REPORT, 2010
IGE
experienced exploration and operational staff, and sufficient critical mass to be an important player in African diamond mining going forward. In particular, combining our respective operations in Southern Africa creates opportunities to maximize the efficiency and reach of the merged organisation" stated Pangea's CEO, Boris Kamstra.
The Pangea Group in Brief
Pangea was officially established in its current format in 2005 through the merger of the diamond assets of Efidium and Dorado. Pangea and its principals, have more than twenty years experience in exploration and mine development throughout Africa, including titanium and gold in Mozambique, gold in Tanzania and gold, diamonds and vanadium in South Africa. Exploration and selected administrative services are performed for the group under the direction of the Pangea board.
Pangea's diamond assets are at various stages of exploration development, ranging from early exploration, through bulk sampling, to an operating mine situated in Angola. Pangea's projects are held through Efidium and Efidium's subsidiaries, and are all located within highly prospective diamond-bearing geological environments. Whilst alluvial deposits constitute the primary focus of the company; a number of the target areas are also located within regions of kimberlite potential. This potential will be evaluated later, on an opportunistic basis. The Group is managed primarily from its head office in Johannesburg in South Africa. Pangea also has offices in Luanda, Angola and Kinshasa, DR Congo.
The founding shareholders, executives and affiliates of Pangea have, over the last twenty years, established a successful track record for the creation of shareholder value in mineral exploration and mine development throughout the African Continent. The recent financial crisis affected the short term demand and price for rough diamonds, however, Pangea believes the future supply/demand fundamentals of diamonds are favourable, and foresees a positive medium to longer term prognosis for the industry. Over the next several years, diamond jewellery demand is predicted to grow at a healthy rate in line with the real GDP growth for the major diamond consuming countries and new emerging diamond markets. At the same time, world rough diamond production is expected to remain unchanged or even diminish. The resultant supply/demand deficit should ensure that rough prices continue to increase in the medium to longer term.
The African continent is responsible for over 65 percent of global diamond production. Geologically, highly prospective countries for diamond exploration such as Angola, the DR Congo and South Africa have recently undergone significant positive political, social and fiscal changes. Pangea, as a consequence, is concentrating its diamond exploration efforts within Africa, and specifically within these countries. Since 2003, and prior to the IPO of Pangea, Pangea has raised approximately USD 20 million, comprising initial seed capital from its founders and subsequent capital raisings from prominent international resource and private equity funds.
Pangea's short-term mission has been to develop the two most advanced projects in its portfolio to cash flow positive positions by mid 2010, and to reduce any unnecessary expenditure throughout the Pangea group of companies. The strategy to achieve this mission is summarised as follows:
- Develop the Cassanguidi project in Angola to full capacity by mid-2010;
- Optimize the capacity of the Bakerville project pilot mining facilities and if funding and markets permit, expand this project to full capacity;
- Cease all unnecessary expenditure on all other projects in the portfolio;
- Critically evaluate all other projects to determine whether Pangea should continue to hold these projects, even on a "care & maintenance" basis;
- Reduce overhead expenditure to a level consistent with the reduced level of activity planned.
Below follows a table showing the diamond projects within the portfolio of Efidium Ltd and their verified diamond resources (SAMREC compliant):
IGE Resources AB (PUBL) KUNGSGATAN 44, LEVEL 7, 111 35 STOCKHOLM SWEDEN TEL: +46 8 402 28 00 FAX: +46 8 402 28 01
WWW.IGE.SE [email protected]
FIRST QUARTER REPORT, 2010
IGE
| Country | Project Name | Gravel Volume | Carats | USD/ct Range | |
|---|---|---|---|---|---|
| Verified | Additional | ||||
| Democratic Republic of Congo | Tshikapa River | 16,528,000 | 3,353,000 | 1,102,000 | USD/Ct 120 - 160 |
| Longatshimo River | 18,378,000 | 3,567,000 | 1,164,000 | USD/Ct 120 - 160 | |
| Angola | Cassanguidi | 4,103,000 | 902,000 | 440,000 | USD/Ct 140 - 180 |
| Luxinge | 2,686,000 | - | 750,000 | To be ascertained USD/Ct 80 - 110 | |
| South Africa | Bakerville | 13,297,000 | 455,000 | 579,000 | USD/Ct 340 - 500 |
| Harts River | 14,115,000 | 78,000 | 790,000 | USD/Ct 1,500 - 2,000 | |
| Total | 69,107,000 | 8,355,000 | 4,825,000 |
The approximate total value of Diamond resources in the ground amounts to between USD 2.9 to 3.9 Bn.
Update on the 2010 work program:
Angola:
Luxinge project
Following a meeting with the Minister of Mines and various meetings with PCA (President of the Council of Administrators), Eng. Sumbula, a number of promises have been given verbally on the progress and the speed of which the EVTE (Estudode Viabilidade Tecnico-Economico, financial and technical feasibility report) can be processed. The PCA, issued an instruction to his administrators to process a Pilot Mining License, allowing Project Luxinge to mine virgin areas and an allowance to sell the diamonds from these areas to assist. The verbal instruction has at present still not been confirmed by the following signed letter granting IGE the right to sell Diamonds recovered in Luxinge.
Following a meeting held in the end of March, minutes were drafted and signed by the various participants on the Pilot Mining and our obligations to the EVTE. A team from Endiama and a team from Luxinge were put together to finalise the EVTE. This has been done and the procedures have changed on a daily basis, following advice from Endiama, however, the Final approved version of the ETVE, as decided by the teams from Endiama and Luxinge has been drafted, and has been presented to the Council Of Associates (CoA) on April 27th 2010 and approved on May 3rd 2010.
The EVTE will then be presented as approved by the CoA, and off to be presented to the Ministry of Mines and Geology for final decree. IGE have been in constant discussions with the MoM to ensure the process is followed and the acceptance is a formality.
Cariango, Lacage and Luanguinga Projects
IGE is still waiting for information about the ratification of the projects with regard to the Kimberlite contracts. IGE has been verbally advised that the contracts are within the Council of Ministers, but IGE is waiting for written confirmation to be received before starting activities.
IGE Resources AB (PUBL) KUNGSGATAN 44, LEVEL 7, 111 35 STOCKHOLM SWEDEN TEL: +46 8 402 28 00 FAX: +46 8 402 28 01
WWW.IGE.SE [email protected]
FIRST QUARTER REPORT, 2010
IGE
IGE Nordic AB:
Highlights during the first quarter:
- A series of consultative meetings were held with local communities in January, to update on exploration activities and review detailed development plans for the Rönnbäcken nickel project.
- Applications for Exploitation Concessions for the Rönnbäcken Nickel Project were submitted on February 12, 2010.
- First assay results were received from the winter drill program focused on the new area of mineralization at Sundsberget, and on increasing resources at the Vinberget deposit.
- At Sundsberget, assay results over a large area of ultramafic rock suggest the area hosts a substantial tonnage of mineralized serpentine.
- At Vinberget, nickel sulphide mineralization is located on either side of the main deposit and could be expected to add some resources.
- Lab optimization test work aimed at raising nickel in sulphide recoveries was concluded.
- Mini-pilot testwork to assess steady-state closed circuit performance, commenced in March at the Outotec Research Center in Finland.
- IGE Nordic sold its interest in the licenses of the Bidjovagge Gold Copper Project in northern Norway to Arctic Gold AB for 2.4 million SEK and a 9.2% interest in Alcaston Exploration AB.
In January, a series of separate meetings were held with the following stakeholder groups: the Vapsten Sami village, the County Administrative Board of Västerbotten, representatives from the Storuman Municipality, and local landowners. On January 19, 2010 a meeting was held for landowners to come and express their concerns with the project team. This was followed on January 20th with a meeting open to the general public held in the village of Tärnaby in Västerbotten County, which was well attended. The meetings were convened to present in detail the layout of the project and proposed alternatives, as well as to review the development plans for the project. These meetings were part of IGE Nordic's efforts at maintaining on-going dialogue with local communities.
The applications for Exploitation Concessions, including Environmental Impact Assessments were submitted to the Mining Inspectorate of Sweden ("Bergsstaten") on February 12, 2010. The application process is estimated to take three to six months. An Exploitation Concession is granted if there is a probability for an economic exploitation of the deposit and if the site is considered appropriate from an environmental point of view. The latter requirement calls for an Environmental Impact Assessment to be included in the application. The Exploitation Concession grants the right to carry out mineral exploitation for a 25 year period.
The focus of the 2009 winter drill program was to test for nickel sulphide mineralization at Sundsberget, and to identify areas of potential for adding resources to the Vinberget deposit. This end a total of 30 drill holes were completed, comprising 3,683 metres at Sundsberget, and 1,189 metres around Vinberget. The first results from these additional areas at Rönnbäcken are encouraging. The most significant result from the drilling is the identification of extensive tonnage of the mineralized ultramafic host rock at Sundsberget, where a thick sequence of nickel sulphide mineralization was intersected in the first holes. Core drilling on two satellite zones at Vinberget revealed that nickel sulphide mineralization is located on either side of the main deposit and could be expected to add some resources at the edge of the planned open-pit.
IGE Nordic AB entered into an agreement to sell its 100% interest in the exploration licences comprising the Bidjovagge Gold Copper Project in the Finnmark plain in northern Norway. Under the terms of the agreement, IGE Nordic received 2.4 million SEK in cash payable over the duration of 2010, plus a 9.2% stake in Alcaston. The sale of the exploration license resulted in a loss of SEK -4.9 million.
Highlights after the interim period:
- An update of the Mineral Resource Estimate of the Rönnbäcken Nickel Project was carried out by SRK Consulting (Sweden) AB.
- The Project Mineral Resource represents a significant increase to the previous Mineral Resource Estimate prepared in April 2009, and now includes a total of:
- Measured and Indicated Mineral Resources of 257.1 million tonnes (Mt) with an average total nickel content of 0.180% of which 0.110% is nickel in sulphide (Ni-AC);
IGE Resources AB (PUBL) KUNGSGATAN 44, LEVEL 7, 111 35 STOCKHOLM SWEDEN TEL: +46 8 402 28 00 FAX: +46 8 402 28 01
WWW.IGE.SE [email protected]
FIRST QUARTER REPORT, 2010
IGE
-
Inferred Mineral Resources of 83.5 Mt with an average total nickel content of 0.177% of which 0.103% is nickel in sulphide (Ni-AC).
-
The resource upgrade will have a positive impact on the cost of the Prefeasibility Study (PFS). The extent of further exploration and infill drilling required has been reduced, thus lowering the overall cost of the PFS by approximately USD3 million to an estimated USD10.5 million to complete the PFS.
An update of Mineral Resources of the Rönnbäcknäset and Vinberget deposits was undertaken by SRK Consulting (Sweden) AB. Using all available and valid date, geological contacts to the serpentine body were remodelled and SRK extended the model at depth to enable the evaluation of the down dip potential of the deposits. SRK utilized a metal price of USD9/lb and applied a cut off grade of 0.048% Ni-AC. The Mineral Resource Statement was classified in accordance with the Guidelines of National Instrument 43-101, and accompanying documents 43-101.F1 and 43-101.CP.
The updated Mineral Resource shown in Table 1, imparts a greater confidence in the nickel resources underlying the Rönnbäcken Nickel project, and significantly reduces the amount of infill drilling required to complete the current Prefeasibility Study. In addition, SRK noted that there is potential for an additional 40 and 80 million tonnes at the Rönnbäcksnäset deposit, when applying a metal price of USD9/lb to the optimization, which could be identified by drilling next to the existing resources.
Table 1: Mineral Resource Statement
| DEPOSIT | CLASSIFICATION | TONNES (Mt) | TOTAL NI % | NI-AC % | NI TONNES (000'S) | NI-AC TONNES (000's) |
|---|---|---|---|---|---|---|
| Rönnbäcksnäset | Measured | - | - | |||
| Indicated | 206.6 | 0.178 | 0.104 | 368 | 214 | |
| Measured +Indicated | 206.6 | 0.178 | 0.104 | 368 | 214 | |
| Inferred | 76.9 | 0.176 | 0.100 | 135 | 77 | |
| Vinberget | Measured | 28.2 | 0.188 | 0.132 | 53 | 37 |
| Indicated | 22.4 | 0.183 | 0.134 | 41 | 30 | |
| Measured +Indicated | 50.6 | 0.186 | 0.133 | 94 | 67 | |
| Inferred | 6.6 | 0.183 | 0.138 | 12 | 9 | |
| TOTAL | Measured | 28.2 | 0.188 | 0.132 | 53 | 37 |
| Indicated | 228.9 | 0.179 | 0.107 | 409 | 244 | |
| Measured +Indicated | 257.1 | 0.180 | 0.110 | 462 | 282 | |
| Inferred | 83.5 | 0.177 | 0.103 | 147 | 86 |
Kenya:
IGE Kenya's activities during the first quarter of 2010 were geared towards supporting Kilimapesa Gold (Pty) Ltd's mining license application, and continuing exploration activities on the South-West Kenya licenses at a low cost, using IGE Kenya Ltd's own drilling and trenching equipment. More progress was made towards the grant of the mining license to Kilimapesa Gold (Pty) Ltd, which was formally approved by the Licensing Committee of the Kenya Government. The balance of the payment of 2.7 M$ for the sale of IGE's share in the company is payable in instalments commencing when the mining license is issued by the authorities.
Exploration results from both the Akala and Atieli licenses were encouraging and warrant further work. Both licenses are located close to each other (about 40 minutes drive) and have good access to water, electricity and road infrastructure.
During this period, the company continued its strategic review of possible opportunities for short term gold mine development in Africa. Several projects in Uganda and Ghana were reviewed in detail but did not meet IGE's selection criteria. This review of opportunities will continue through early 2010.
IGE Resources AB (PUBL) KUNGSGATAN 44, LEVEL 7, 111 35 STOCKHOLM SWEDEN TEL: +46 8 402 28 00 FAX: +46 8 402 28 01
WWW.IGE.SE [email protected]
FIRST QUARTER REPORT, 2010
IGE
The Administration of IGE Resources AB (publ) hereby submit the interim report for the period January 1st to March 31st 2010, with comparable figures from the corresponding period of the previous year and the most recent annual report.
Business description
The Company's activities consist of exploration for mineral deposits and mining. The Company operates in Scandinavia and Africa.
Investments during the period
Net investments during the period amount to SEK 455.0 million (32.0). The investments during the period are mainly related to the purchase of the activities of Pangea Diamondfields, the operations in the Luxinge diamond project and expenditures related to the advancement of the Rönnbäcken nickel project.
Financial position
Cash flow during the period was MSEK -24.5 million (-16.0). Cash and cash equivalents at period end amounted to SEK 16.4 million (23.7). Shareholders Equity amounted to SEK 709.8 million (241.6) at the end of the reporting period, resulting in an equity ratio of 78 percent (80.0).
The long-term liabilities of the Group are related to a loan given by Svenska Handelsbanken AB for the purchase of equipment for the production site in Luxinge from Volvo. The remaining amount to be paid is MSEK 8,9. The loan is guaranteed by the Swedish Credit Exports Guarantee Board (EKN) and has a duration of 3 years. The loan was raised in June 2008. In addition SEK 16.8 million is related to a loan given to Efidium Ltd, which was included in the purchase of the activities of Pangea Diamondfields.
Parent Company
The operation of the Parent Company is referable to direction and management of the Group's operations.
Result before tax amounted during first quarter 2010 to SEK -2.1 million (-13.4) and cash and cash equivalents amounted to SEK 2.2 million (19.4). Investments in the Parent Company during the reporting period amounted to SEK 436.5 million (-8.7).
Pledged assets and contingent liabilities
Pledged assets are MSEK 0.1 (0.2) and contingent liabilities are MSEK 0 (0).
IGE's share
The IGE share is listed on the Oslo Stock Exchange (OB Match). The ticker symbol of the share is IGE.
Upcoming reports:
Q2 and 6 months interim report 2010: 26 August 2010
Q3 and 9 months interim report 2010: 18 November 2010
Q4 and Year End report 2010: 18 February 2011
This Interim report has not been subject to audit by the Company's auditors.
Stockholm May 7th, 2010
IGE Resources AB (PUBL) KUNGSGATAN 44, LEVEL 7, 111 35 STOCKHOLM SWEDEN TEL: +46 8 402 28 00 FAX: +46 8 402 28 01
WWW.IGE.SE [email protected]
FIRST QUARTER REPORT, 2010
IGE
Income statement – Group
| (TSEK) | Note | Q1 2010 | Q1 2009 | 2009 |
|---|---|---|---|---|
| Revenue from sales | - | - | - | |
| Other income | - | 16,201 | 15,169 | |
| Other external expenses* | -11,931 | -8,368 | -51,918 | |
| Personnel expenses | -4,607 | -6,809 | -23,110 | |
| Other operating expenses | 5 | -4,923 | - | -1,069 |
| Depreciations and writedowns | -220 | -4,325 | -5,931 | |
| Operating result | -21,681 | -3,301 | -66,859 | |
| Financial revenue | 3 | 251 | 1,175 | 6,136 |
| Financial expenses | 3 | -250 | -3,183 | -5,059 |
| Total financial items | 1 | -2,008 | 1,077 | |
| Result before tax | -21,680 | -5,309 | -65,782 | |
| Income tax | 0 | 0 | 0 | |
| Result for the period | -21,680 | -5,309 | -65,782 | |
| Result per share before dilution | -0.03 | -0.01 | -0.12 | |
| Result per share after dilution | -0.03 | -0.01 | -0.12 |
*Of which 10.8 MSEK are expenses related to the purchase of Efidium Ltd.
Group – Statement of comprehensive income Summary
| TSEK | Q1 2010 | Q1 2009 | 2009 |
|---|---|---|---|
| Net result for the year | -21,680 | -5,309 | -65,782 |
| Other comprehensive income | |||
| Exchange differences during the year | -282 | -2,728 | 6,798 |
| Total other comprehensive income | -21,962 | -8,037 | -58,984 |
| Total comprehensive income for the year | -21,962 | -8,037 | -58,984 |
| Attributable to: | |||
| Equity holders of the Parent Company | -21,962 | -8,037 | -58,984 |
IGE Resources AB (PUBL) KUNGSGATAN 44, LEVEL 7, 111 35 STOCKHOLM SWEDEN TEL: +46 8 402 28 00 FAX: +46 8 402 28 01
WWW.IGE.SE [email protected]
FIRST QUARTER REPORT, 2010
IGE
Balance sheet – Group
| (TSEK) | Note | 31/03/2010 | 31/03/2009 | 31/12/2009 |
|---|---|---|---|---|
| ASSETS | ||||
| Fixed assets | ||||
| Intangible fixed assets | ||||
| Mineral interests | 10 | 721,115 | 134,090 | 154,257 |
| Tangible fixed assets | ||||
| Plant and machinery | 85,466 | 59,220 | 47,700 | |
| Mine and other development assets | 59,597 | - | - | |
| Long-term financial assets | ||||
| Shares in associated companies | 25,517 | 25,851 | 25,593 | |
| Long-term receivables | 40,774 | 46,945 | 40,370 | |
| Total fixed assets | 932,470 | 266,106 | 267,920 | |
| Current Assets | 10 | |||
| Inventory | 2,155 | - | - | |
| Account receivables | 246 | 688 | 262 | |
| Other receivables | 23,174 | 9,345 | 17,249 | |
| Prepaid expenses and accrued income | 2,518 | 2,379 | 1,038 | |
| Short term investments | 5,678 | - | - | |
| Cash and cash equivalents | 16,388 | 23,730 | 40,807 | |
| Total current assets | 50,159 | 36,142 | 59,356 | |
| TOTAL ASSETS | 982,628 | 302,248 | 327,276 | |
| EQUITY | ||||
| Equity attributable to equityholders of the parent company | 10 | |||
| Share capital | 64,555 | 21,474 | 39,785 | |
| Other capital-contribution | 851,868 | 353,604 | 451,041 | |
| Reserves | 563 | -8,681 | 845 | |
| Retained earnings and profit for the period | -207,186 | -124,816 | -185,506 | |
| Total equity | 709,800 | 241,581 | 306,165 | |
| Liabilities | ||||
| Deferred tax liabilities | 7,10 | 215,259 | - | - |
| Other provisions | 7 | 5,000 | - | - |
| Long term liabilities | ||||
| Convertible loan | - | 25,000 | - | |
| Interest bearing long term liabilities | 9,10 | 25,682 | 17,350 | 11,974 |
| Other long term liabilities | 73 | 5,956 | 91 | |
| Total long term liabilities | 246,014 | 48,306 | 12,065 | |
| Current liabilities | ||||
| Account payables | 5,585 | 2,609 | 2,297 | |
| Other liabilities | 1,941 | 3,423 | 2,386 | |
| Accrued expenses and prepaid income | 19,288 | 6,329 | 4,363 | |
| Total current liabilities | 26,814 | 12,361 | 9,046 | |
| TOTAL EQUITY AND LIABILITIES | 982,628 | 302,248 | 327,276 |
IGE Resources AB (PUBL) KUNGSGATAN 44, LEVEL 7, 111 35 STOCKHOLM SWEDEN TEL: +46 8 402 28 00 FAX: +46 8 402 28 01
WWW.IGE.SE [email protected]
FIRST QUARTER REPORT, 2010
IGE
Changes in Equity – Group
| (TSEK) | Equity related to the shareholders of the parent company | ||||
|---|---|---|---|---|---|
| 2009 | Share capital | Other paid in capital | Exchange differences | Retained earnings and profit for the year | Total |
| Balance at 1 January 2009 | 20,908 | 348,277 | -5,954 | -119,507 | 243,724 |
| Net result for the period | -5,309 | -5,309 | |||
| Other comprehensive income | |||||
| Exchange differences | -2,727 | -2,727 | |||
| Transactions with shareholders: | |||||
| Issued call options | 120 | 120 | |||
| New share issue | 566 | 5,207 | 5,773 | ||
| Closing balance at 31 March 2009 | 21,474 | 353,604 | -8,681 | -124,816 | 241,581 |
| Net result for the period April to December | -60,473 | -60,473 | |||
| Other comprehensive income | |||||
| Exchange differences | 9,526 | 9,526 | |||
| Transactions with shareholders: | |||||
| Acquisition of minority interest in subsidiary | -217 | -217 | |||
| Costs referable to fundraising | -5,984 | -5,984 | |||
| New share issue | 18,311 | 103,421 | 121,732 | ||
| Closing balance at 31 December 2009 | 39,785 | 451,041 | 845 | -185,506 | 306,165 |
| Net result for the period | -21,680 | -21,680 | |||
| Other comprehensive income | |||||
| Exchange differences | -282 | -282 | |||
| Transactions with shareholders: | |||||
| New share issue | 24,770 | 400,827 | 425,597 | ||
| Closing balance at 31 March 2010 | 64,555 | 851,868 | 563 | -207,186 | 709,800 |
Total number of shares amounts to 1,291,109,010 as per 2010-03-31. Existing reserves refer to exchange differences due to operations in foreign currency. The accumulated exchange difference amounted to SEK 563 (-8,681) thousands.
IGE Resources AB (PUBL) KUNGSGATAN 44, LEVEL 7, 111 35 STOCKHOLM SWEDEN TEL: +46 8 402 28 00 FAX: +46 8 402 28 01
WWW.IGE.SE [email protected]
FIRST QUARTER REPORT, 2010
IGE
Cash flow statement – Group
| (TSEK) Note | Jan-March 2010 | Jan-March 2009 | 2009 |
|---|---|---|---|
| Cash flow from operations | |||
| Result after financial items | -21,680 | -5,309 | -65,782 |
| Adjustments for items not included in cash flow* | 5,030 | -11,974 | 11,644 |
| Income tax paid | - | - | - |
| Total cash flow from operations before change in working capital | -16,650 | -17,283 | -54,138 |
| Change in working capital | |||
| Increase/decrease receivables | -60 | 1,688 | 689 |
| Increase/decrease in liabilities | 9,980 | -5,787 | -8,098 |
| Total cash flow from operations | -6,730 | -21,382 | -61,547 |
| Cash flow used for investments | |||
| Cash holdings in acquired subsidiary 8 | 1,922 | 799 | - |
| Sale of associated company | - | - | 7,829 |
| Acquisition of intangible assets | -16,898 | -16,890 | -56,227 |
| Sale of intangible assets | 376 | - | 2,000 |
| Acquisition of tangible assets | -5 | -168 | -223 |
| Sale of tangible assets | - | - | 226 |
| Acquisition of financial assets | - | -335 | - |
| Total cash flow used for investments | -14,605 | -16,594 | -46,396 |
| Financial activities | |||
| New share issue | - | 120 | 115,681 |
| Raised credits | - | 25,325 | 91 |
| Amortization of debt | -3,116 | -3,455 | -6,387 |
| Total cash flow from financial activities | -3,116 | 21,990 | 109,385 |
| Change in cash and bank | -24,451 | -15,986 | 1,443 |
| Cash and bank at 1 January | 40,807 | 39,639 | 39,639 |
| Currency exchange difference | 32 | 77 | -275 |
| Cash and bank at the end of reporting period | 16,387 | 23,730 | 40,807 |
| *Adjustments for items not included in cash flow | |||
| Depreciations and writedowns on intangible assets | - | 4,079 | 4,123 |
| Depreciations and writedowns of tangible assets | 220 | 246 | 1,480 |
| Exchange gain | -189 | -16,397 | - |
| Exchange loss | - | - | 19,134 |
| Change in minority interest | - | - | -217 |
| Capital gain | - | - | -13,843 |
| Capital loss | 4,923 | - | - |
| Change of interest receivable | - | -54 | - |
| Change in value of shares in associated companies | 76 | -121 | 507 |
| Change of equity due to issue in kind | - | 273 | 461 |
| Total | 5,030 | -11,974 | 11,644 |
IGE Resources AB (PUBL) KUNGSGATAN 44, LEVEL 7, 111 35 STOCKHOLM SWEDEN TEL: +46 8 402 28 00 FAX: +46 8 402 28 01
WWW.IGE.SE [email protected]
FIRST QUARTER REPORT, 2010
IGE
Income statement – Parent company
| (TSEK) | Q1 2010 | Q1 2009 | 2009 |
|---|---|---|---|
| Revenue | - | - | 10,646 |
| Other external expenses | -1,434 | -3,471 | -15,182 |
| Personnel expenses | -799 | -1,625 | -8,250 |
| Depreciations | -16 | -31 | -110 |
| Operating result | -2,249 | -5,127 | -12,896 |
| Financial revenue | 119 | 134 | 1,159 |
| Financial expenses | -14 | -8,426 | -11,825 |
| Total financial items | 105 | -8,292 | -10,666 |
| Result before tax | -2,144 | -13,419 | -23,562 |
| Income tax | 0 | 0 | 62 |
| Result for the period | -2,144 | -13,419 | -23,500 |
IGE Resources AB (PUBL) KUNGSGATAN 44, LEVEL 7, 111 35 STOCKHOLM SWEDEN TEL: +46 8 402 28 00 FAX: +46 8 402 28 01
WWW.IGE.SE [email protected]
FIRST QUARTER REPORT, 2010
IGE
Balance Sheet – Parent company
| (TSEK) | Note | 31/03/2010 | 31/03/2009 | 2009 |
|---|---|---|---|---|
| ASSETS | ||||
| Tangible fixed assets | ||||
| Plant and machinery | 96 | 205 | 112 | |
| Long-term financial assets | ||||
| Shares in subsidiaries | 522,105 | 85,419 | 85,635 | |
| Receivables related to subsidiaries | 265,374 | 214,089 | 276,497 | |
| Total fixed assets | 787,575 | 299,713 | 362,244 | |
| Current Assets | ||||
| Account receivables | 66 | 252 | 14 | |
| Other receivables | 11,834 | 137 | 11,353 | |
| Prepaid expenses and accrued income | 415 | 389 | 248 | |
| Cash and cash equivalents | 2,201 | 19,445 | 1,207 | |
| Total current assets | 14,516 | 20,223 | 12,822 | |
| TOTAL ASSETS | 802,091 | 319,936 | 375,066 | |
| SHAREHOLDERS EQUITY | ||||
| Restricted equity | ||||
| Share capital | 64,555 | 21,474 | 39,785 | |
| Statutory reserve | 111,345 | 111,345 | 111,345 | |
| Total restricted equity | 175,900 | 132,819 | 151,130 | |
| Non restricted equity | ||||
| Share premium reserve | 716,658 | 218,189 | 315,830 | |
| Retained earnings and profit for the period | -121,191 | -108,966 | -119,047 | |
| Total non restricted equity | 595,467 | 109,223 | 196,783 | |
| Total shareholders equity | 771,367 | 242,042 | 347,913 | |
| Long term liabilities | ||||
| Convertible loan | - | 25,000 | - | |
| Interest bearing long term liabilities | 9 | 8,875 | 17,351 | 11,974 |
| Long term intercompany liabilities | 8,678 | 30,931 | 9,678 | |
| Total long term liabilities | 17,553 | 73,282 | 21,652 | |
| Current liabilities | ||||
| Account payables | 1,143 | 1,463 | 2,063 | |
| Other liabilities | 91 | 85 | 640 | |
| Accrued expenses and prepaid income | 11,937 | 3,064 | 2,798 | |
| Total current liabilities | 13,171 | 4,612 | 5,501 | |
| TOTAL SHAREHOLDERS EQUITY AND LIABILITIES | 802,091 | 319,936 | 375,066 |
IGE Resources AB (PUBL) KUNGSGATAN 44, LEVEL 7, 111 35 STOCKHOLM SWEDEN TEL: +46 8 402 28 00 FAX: +46 8 402 28 01
WWW.IGE.SE [email protected]
FIRST QUARTER REPORT, 2010
IGE
Changes in Equity – Parent Company
| (TSEK) | Restricted Equity | Non restricted Equity | |||
|---|---|---|---|---|---|
| 2009 | Share capital | Statutory reserve | Share premium reserves | Retained earnings and result for the year | Total Equity |
| Balance as at 1 January 2009 | 20,908 | 111,345 | 212,891 | -95,547 | 249,597 |
| Result for the year | -13,419 | -13,419 | |||
| Transactions with shareholders: | |||||
| Payment of call options | 120 | 120 | |||
| New share issue | 566 | 5,178 | 5,744 | ||
| Closing balance at March 31 2009 | 21,474 | 111,345 | 218,189 | -108,966 | 242,042 |
| Net result for the period April to December | -10,081 | -10,081 | |||
| Received Group contribution | 174 | 174 | |||
| Transactions with shareholders: | |||||
| Costs referable to fundraising | -5,984 | -5,984 | |||
| New share issue | 18,311 | 103,451 | 121,762 | ||
| Closing balance at December 31 2009 | 39,785 | 111,345 | 315,830 | -119,047 | 347,913 |
| Balance as at 1 January 2010 | 39,785 | 111,345 | 315,830 | -119,047 | 347,913 |
| Result for the year | -2,144 | -2,144 | |||
| Transactions with shareholders: | |||||
| Acquisition of subsidiary | 400,828 | 400,828 | |||
| New share issue | 24,770 | 24,770 | |||
| Closing balance at March 31 2009 | 64,555 | 111,345 | 716,658 | -121,191 | 771,367 |
Key ratios and shares data
| 31/03/2010 | 31/03/2009 | 2009 | 2008 | 2007 | ||
|---|---|---|---|---|---|---|
| Number of outstanding shares at beginning of reporting period | Number | 795,709,953 | 418,161,828 | 418,161,828 | 341,000,000 | 341,000,000 |
| New share issue | Number | 495,399,057 | 11,312,000 | 377,548,125 | 77,161,828 | - |
| Number of outstanding shares at the end of reporting period | Number | 1,291,109,010 | 429,473,828 | 795,709,953 | 418,161,828 | 341,000,000 |
| Average number of shares | Number | 795,709,953 | 424,028,495 | 538,509,297 | 364,988,889 | 341,000,000 |
| Operating result | TSEK | -21,681 | -3,301 | -66,859 | -49,800 | -66,023 |
| Result after tax | TSEK | -21,680 | -5,309 | -65,782 | -56,787 | -62,529 |
| Operating result per share | SEK | -0.027 | -0.008 | -0.124 | -0.136 | -0.194 |
| Result after financial items per share | SEK | -0.027 | -0.013 | -0.122 | -0.156 | -0.181 |
| Result per share after tax | SEK | -0.027 | -0.013 | -0.122 | -0.156 | -0.181 |
| Shareholders equity per share before dilution | SEK | 0.550 | 0.563 | 0.000 | 0.668 | 0.718 |
| Dividend | TSEK | - | - | - | - | - |
| Price per share at the end of reporting period | SEK | 0.86 | 0.71 | 0.58 | 0.65 | 2.34 |
In calculating income and cash flow per share the average number of shares has been used, whereas in calculating shareholders' equity the number of outstanding shares has been used.
IGE possesses none of its own shares at the end of the reporting period.
Further information regarding key ratio definitions can be obtained from the annual report for the financial year 2009.
Total number of outstanding shares in IGE are 1,291,109,010.
IGE Resources AB (PUBL) KUNGSGATAN 44, LEVEL 7, 111 35 STOCKHOLM SWEDEN TEL: +46 8 402 28 00 FAX: +46 8 402 28 01
WWW.IGE.SE [email protected]
FIRST QUARTER REPORT, 2010
IGE
NOTES TO THE FINANCIAL REPORTS
1. Accounting principles
This interim report has been prepared according to Annual Accounts Act and IAS 34 Interim Reporting. The interim report has also been prepared in accordance with the rules in the Swedish Financial Accounting Standard RFR2. During 2010, the same accounting principles have been applied in this report as in the annual report prepared for the financial year 2009 with the following exceptions (see below) referring to new or revised standards, interpretations and changes adopted by the European Union (EU) which are applied from 1 January, 2010. Only the new or revised standards which have had an impact on the Group are described below. The Interim report does not contain all the information and disclosures available in the annual report and the interim report should be read together with the annual report for 2009.
New or revised standards
IFRS 3R, Business Combinations and IAS 27R, Consolidated and Separate Financial Statements adopted by the EU on 3 June 2009). IFRS 3R introduces a number of changes in the reporting of business combinations that will affect the level of reported goodwill, the reported result in the period in which the combination takes place as well as future reported results. IAS 27R requires changes in shareholdings in a subsidiary whereby the majority shareholder does not lose its control to be recognised in equity. This means that such transactions no longer give rise to goodwill or result in any gains or losses. In addition, IAS 27R changes the reporting of losses arising in subsidiaries and measurement when control of a subsidiary is lost. IGE intends to apply this standard as of 1 January 2010. The revisions to IFRS 3R and IAS 27R will affect the reporting of future acquisitions and divestitures as well as transactions with minority shareholders.
Other standards and interpretations of existing standards that have come in to effect as from January 1st 2010 are appraised not to have any impact on the account of IGE.
2. Risks and Uncertainties
The operations of IGE involve certain significant risks, including but not limited to credit risk, foreign exchange risk, and political risk. For a complete discussion of the aforementioned risks, refer to the Company's 2009 annual report, available on the IGE website, www.ige.se. The management of IGE does not consider that any additional risk has become current since the expiration of the previous year of operation.
3. Financial items
| Financial revenue (TSEK) | Group | ||
|---|---|---|---|
| 31/03/2010 | 31/03/2009 | 31/12/2009 | |
| Income from interest | 251 | 56 | 80 |
| Exchange rate gains | - | 1,119 | 6,056 |
| Total financial revenue | 251 | 1,175 | 6,136 |
| Financial expenses (TSEK) | 31/03/2010 | 31/03/2009 | 31/12/2009 |
| --- | --- | --- | --- |
| Loss from shares in associated companies | -76 | -102 | - |
| Cost of interest | -66 | -893 | -1,932 |
| Other financial costs | - | - | -59 |
| Exchange rate losses | -108 | -2,188 | -3,068 |
| Total financial expenses | -250 | -3,183 | -5,059 |
The adjustments as result of revaluation of all short term investments are accounted for in gross amounts.
IGE Resources AB (PUBL) KUNGSGATAN 44, LEVEL 7, 111 35 STOCKHOLM SWEDEN TEL: +46 8 402 28 00 FAX: +46 8 402 28 01
WWW.IGE.SE [email protected]
FIRST QUARTER REPORT, 2010
IGE
- Segment reporting
| (TSEK) | Gold | Jan-March 2010 | |||
|---|---|---|---|---|---|
| Diamonds | Nickel | Other | Total | ||
| Other revenues | - | - | - | - | 0 |
| Depreciation of concessions | - | - | - | - | 0 |
| Depreciation according to plan | -72 | -80 | -52 | -16 | -220 |
| Operating result | -672 | -3,991 | -6,093 | -10,925 | -21,681 |
| Result before tax | -648 | -4,048 | -6,089 | -10,895 | -21,680 |
| Fixed assets | 17,602 | 832,819 | 81,953 | 96 | 932,470 |
| Current assets | 2,060 | 22,675 | 10,907 | 14,517 | 50,159 |
| Long term liabilities | 73 | 237,065 | - | 8,876 | 246,014 |
| Short term liabilities | 156 | 8,184 | 5,304 | 13,170 | 26,814 |
| Investments (gross) | 488 | 445,112 | 9,381 | 454,981 | |
| Jan-March 2009 | |||||
| (TSEK) | Gold | Diamonds | Nickel | Other | Total |
| Other revenues | - | - | - | 16,201 | 16,201 |
| Depreciation of concessions | - | - | - | -4,079 | -4,079 |
| Depreciation according to plan | -66 | - | -149 | -31 | -246 |
| Operating result | -2,151 | -4,532 | -5,851 | 9,233 | -3,301 |
| Result before tax | -2,509 | -6,471 | -5,022 | 8,693 | -5,309 |
| Fixed assets | 21,590 | 170,294 | 73,744 | 478 | 266,106 |
| Current assets | 6,850 | 3,624 | 4,137 | 21,531 | 36,142 |
| Long term liabilities | 5,955 | 17,351 | - | 25,000 | 48,306 |
| Current liabilities | 1,733 | 3,401 | 2,614 | 4,613 | 12,361 |
| Investments (gross amounts) | 7,416 | 20,426 | 5,024 | -821 | 32,045 |
- Other operating expenses
Other operating expenses are referable to a capital loss from sales of an exploration permit in IGE Nordic.
- Share warrants – incentive programs
For information about currently outstanding share warrants and call options, other than the 3,000,000 described in note 9, the Company refers to the latest annual report of the Group (2009). The 3 million warrants are "in the money" at present which results in a potential dilution of 3,000,000 new issued shares if the warrants are exercised.
- Provisions
It is inherent in the recognition of an asset that its carrying amount will be recovered in the form of economic benefits that flow to the entity in future periods. When the carrying amount of the asset exceeds its tax base, the amount of taxable economic benefits will exceed the amount that will be allowed as a deduction for tax purposes. This difference is a temporary difference and the obligation to pay the resulting income taxes in future periods is a deferred tax liability. As the entity recovers the carrying amount of the asset, the taxable temporary difference will reverse and the entity will have taxable profit. This makes it probable that economic benefits will flow from the entity in the form of tax payments.
The deferred tax liabilities are calculated as the local tax rate of each project times the surplus value referable to each acquired project.
Other Provisions are related to an estimated cost of mine site reclamation.
IGE Resources AB (PUBL) KUNGSGATAN 44, LEVEL 7, 111 35 STOCKHOLM SWEDEN TEL: +46 8 402 28 00 FAX: +46 8 402 28 01
WWW.IGE.SE [email protected]
FIRST QUARTER REPORT, 2010
IGE
8. Cash holdings in acquired subsidiary
The payment of the purchased subsidiary Efidium Ltd was settled in new issued shares in IGE. The cash balance in Efidium Ltd at the date of the purchase amounted to SEK 1,9 million.
9. Interest bearing long-term liabilities
Interest bearing long-term liabilities refer to a loan given by Svenska Handelsbanken AB for the purchase of equipment from Volvo to the production site in Luxinge, Angola. The loan is guaranteed by the Swedish Credit Exports Guarantee Board (EKN) and has a duration of 3 years. The loan was raised in June 2008.
In addition Efidium Ltd has a loan of SEK 16.8 million to Pangea Exploration (Pty) Ltd, a South African registered company, that agreed to provide a loan facility to the Company for the purposes of funding the running costs and any required capital expenditure of the group.
This loan bears interest at the South African Prime Overdraft Rate compounded on a monthly basis and is repayable by 30 November 2011.
10. Purchase of Efidium Ltd
IGE concluded a purchase of Efidium Ltd after the expiration of the reporting period. The purchase was completed on March 31st 2010. The purchase price amounted to 495,399,057 shares, which corresponds to a value of SEK 429 million as per the last trade on March 31 2010.
Efidium Ltd is a Group with assets and operations within the diamond sector in Angola, South Africa and the DRC (Democratic Republic of Congo). The Directors and management of IGE consider this purchase to be of great value to IGE, it strengthens the position of the Group significantly within the industry of diamond production and exploration. Efidium has got independently verified, SAMREC compliant, diamond resources of about 8.4 million carat. Cost reductions as a result of synergies between the two groups are also considered to be achieved after the merger of the two operations.
Below follows a summary of the balance sheet effects for the consolidated IGE Group that the purchase of Efidium gives rise to as per March 31 2010.
| (TSEK) | Efidium according to IFRS | Acquisition adjustment | Acquisition balance |
|---|---|---|---|
| Fixed assets | 55,851 | 598,303 | 645,154 |
| Current Assets | 9,576 | - | 9,576 |
| Equity | -362,159 | 404,712 | 42,553 |
| Deferred tax liabilities | - | 215,259 | 215,259 |
| Liabilities | 427,585 | -404,712 | 22,673 |
11. Related party transactions
Mace Consulting has invoiced IGE SEK 112 thousands during the reporting period for services related to management assistance and market communication. Mace Consulting is a related party on behalf of its Managing Director, Magne Aaby who is a member of the board in IGE.
The creditor of the long term liability of SEK 16,8 million is Pangea Exploration (Pty) Ltd. Pangea Exploration (Pty) Ltd is owned by a trust of which Robert Still is a trustee and a potential beneficiary and Anton Esterhuizen. Robert Still and Anton Esterhuizen are directors of the Lender and IGE Resources. The borrower is a member of the IGE Group. As a consequence, this loan is considered to be between related parties, and is thus deemed a related party transaction
IGE Resources AB (PUBL) KUNGSGATAN 44, LEVEL 7, 111 35 STOCKHOLM SWEDEN TEL: +46 8 402 28 00 FAX: +46 8 402 28 01
WWW.IGE.SE [email protected]