AFRICAN Gold, the small gold mining company run by Dr John Teeling, has "reported a sharp rise in pretax profits to £374,905 in the year to the end of last March, compared with £22,446 in 1995.

All of the company's profits were generated from the Inez gold mine in Zimbabwe, purchased for £800,000 in July 1995, it said yesterday.

Despite the sharp improvement in its financial position, the company's shares, which are traded on the Alternative Investment Market, slipped to 80p in London yesterday.

When last traded, African Gold dosed at 88p having hit a high of 110p so far this year.

In the eight months to the end of the last financial year the Inez mine produced 4,000 ounces of gold, according to the company.

The mine, which has estimated reserves of 225,000 ounces, is currently being expanded to increase monthly production to 900 ounces, it said, with increased output expected to come on stream from July.

African Gold is also developing a 250 ton per day mine and milling complex at the nearby Beehive project it purchased earlier this year.

The estimated reserves at the Beehive properties are 400 000 tons containing 130,000 ounces of gold.

This mine will come on stream in 1997 and is expected to produce more than 800 ounces of gold at full production. African Gold says the cost of the new Beehive mine will be met from the company's own cash flow.

In a statement yesterday, the company said the board had decided, however, not to pay a dividend to shareholders until it developed sufficient recurrent cash flow to support such a payment.

"The board feels that better value can be obtained for share holders by retaining cash within the business," it said.