4th Sep 2015 07:43
LONDON (Alliance News) - Kodal Minerals PLC on Friday said it will be cautious as it works on its projects, as the commodity sell-off puts pressure on the mining and exploration company developing the Kodal phosphate and iron deposit in southern Norway.
The company's pretax loss widened to GBP4.0 million in the year ended March 31 from GBP232,705 in the prior year, as impairment charges for exploration and evaluation assets appeared in its accounts. The impairments were largely connected to the slump in the price of iron, leading to a full write-off of the Kodal project's carrying value.
Chief Executive Luke Bryan said the company has reacted to commodity pressure by "diversifying" its project risk, and added that it has no plans to stop appraising low-cost opportunities.
Bryan said the group may apply for additional exploration licences in Norway or elsewhere because of the "initial success" at Grimeli Project, copper mines also in Norway, where "very encouraging" multiple high grade results from 4% to over 8% "seem to confirm the historic mines were very high grade by current standards".
"More importantly the discovery of a massive sulphide body with up to over 8% copper and almost 7% zinc show the project has exploration potential. The company will reassess the geophysical data in the light of the drill results and consider how best to move forward," Bryan said.
Having raised GBP400,000 in a share placing in May, the company said it had a GBP293,000 cash balance at the end of August.
The company said that cash flow forecasts up to the end of September 2016 have shown that the company has enough cash for at least 12 months, although further fundraising will be required at an "appropriate time" for completion of its Grimeli and Kodal projects.
Citing current market conditions, Bryan said the company has no current plans to commit "substantial further funds" for developing the Kodal project.
"The extraction licences at Kodal do not expire until July 2023 and the company may be able to renew them for a further 10 years. The company will continue to monitor both iron ore and phosphate prices and will recommence development of the Kodal Project once conditions support that decision. In the meantime the Kodal Project remains one of the most significant and technically advanced phosphate resources in Europe," Bryan said.
"Given the fall in iron ore prices the Kodal Project is not currently economically viable. Should iron ore prices recover to approximately USD130 per tonne or above the board will evaluate the project and may restart development. Until that time there is no capital requirement at the Kodal Project," Bryan added.
The company wants to retain the Kodal exploration licences because they are a "very good option" on world phosphate prices.
Kodal Minerals shares were down 39% at 0.0333 pence on Friday morning in London, comfortably the worst performer in the AIM All-Share.
By Samuel Agini; [email protected]; @samuelagini
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