26th May 2016 10:33
LONDON (Alliance News) - Rare Earth Minerals PLC on Thursday said a loss on equity swap settlements in 2015 saw its pretax loss widen, as it noted the high trend volatility in resource equities, but said looking beyond these "short-term factors", its current share price does not reflect "the true value" of its assets.
Shares in Rare Earth Minerals were up 4.6% at 0.539 pence on Thursday.
The natural resource investment company reported a pretax loss of GBP3.3 million for 2015, greater than the GBP3.1 million loss it reported in 2014, despite administrative expenses dropping to GBP2.3 million from GBP3.2 million.
The widened loss came as finance costs grew to GBP419,000 from GBP342,000 and the company posted a GBP545,000 loss on equity swap settlements from the GBP456,000 gain it made a year earlier.
The equity swap settlements relate to an equity swap agreement it entered into with YA Global Master SPV Ltd in 2014, to fund its 2015 exploration programme and to raise its shareholding in key projects.
Rare Earth's main investment is in the Sonora lithium project in Mexico, and said it was involved in "intense activity and substantial progress" during the year.
In 2015, it continued to invest in Bacanora Minerals which operates the Sonora project, with Rare Earth now holding 15.6% stake in the company, whilst its overall economic interest in the Mexalit SA de CV and Megalit SA de CV portions of the Sonora project grew to 40.1%.
"There is currently high trend volatility in resource equities. The board's view, looking beyond these short-term factors, is that the current share price of Rare Earth does not reflect the true value of our assets," said Non-Executive Chairman Andrew Suckling.
"Our strategy for delivering long-term material value to shareholders will stay focused on two things. First, to support existing projects through to production. Second, to identify new strategic investments, principally, further lithium exploration assets which demonstrate a high potential to be brought into commercial production," Suckling added.
By Hannah Boland; [email protected]; @Hannaheboland
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