18th Dec 2007 12:27
North River Resources Plc18 December 2007 NORTH RIVER RESOURCES PLC (the "Company" or "North River") Annual Results to 30 June 2007 CHAIRMAN'S STATEMENT The Company was successfully listed on the Alternative Investment Market on 27December 2006, with the Coronet Hill Tenement as our initial project. North River has contributed £100,000 to the Farm-In Agreement on theCoronet Hill Tenement to date and we await initial results for the first year'sprogram. While our primary objective is to earn an initial interest in the Coronet HillTenement, the Directors have been reviewing other resource projects forparticipation. The search for other resource investments is a paradox as whilemarkets have been buoyant for resource companies and projects, pricing of assetsand competition has made investment more difficult. The Board has been flexible in its approach to acquisition and investmentstrategy and has not outlined size, geographic or class of commodityrestrictions with regard to its acquisition criteria. However, a suitableproject has not yet been secured. A wider strategy of the Directors has been to bring together a group ofShareholders that could assist the Company in sourcing new projects andpotential new finance for an acquisition. The Board believes that the presenceof the existing small group of Shareholders in the Company will enhance thegrowth potential of North River by virtue of the capacity to introduce and thenfinance these new projects we are seeking. The year ahead looks more positive for resource opportunities and I look forwardto finally advising shareholders of an attractive new project. DIRECTORS' REPORT FOR THE PERIOD ENDED 30 JUNE 2007 The Directors present their first report, together with the audited financialstatements of North River Resources plc and its subsidiary undertakings(together "the Group") for the period from the date of incorporation on 13 July2006 until 30 June 2007. The Company is registered in England and Wales, having been incorporated on 13July 2006 under the Companies Act with registered number 5875525 as a publiccompany limited by shares. The Company was first listed on the Alternative Investment Market ("AIM") of theLondon Stock Exchange on 27 December 2006. Review of the Business and Future Prospects North River Resources plc is the holding company of North River Resources PtyLtd ("NRRPL") which was incorporated for the purpose of earning an interest inthe Coronet Hill Tenement and making acquisitions in resource projects. On 26 July 2006, NRRPL entered into a Farm-In Agreement with Segue ResourcesLimited ("Segue"), the holder of the Coronet Hill Tenement ("the Tenement" or "EL 10004"). The Farm-In Agreement was amended and restated on 6 November 2006.Under the Farm-In Agreement, NRRPL is entitled to earn a 20% interest in theTenement by expending such amount as the parties may agree (currently being£400,000) up to a maximum of £500,000 on the Tenement on or before the secondanniversary of the admission to AIM. Subject to having expended this initial expenditure, NRRPL is entitled to earn afurther 31% interest (in aggregate a 51% interest) in the Tenement by expendinga further amount equal to £2,000,000 less the initial agreed expenditure on theTenement on or before the fourth anniversary of the admission to AIM. Between 13 July 2006 and 8 December 2006, the Company raised £754,000 (beforeexpenses) by the issue of 68,000,000 new Ordinary Shares to fund an explorationprogramme for the Coronet Hill Tenement which satisfies the maximum expenditurerequired to earn the initial 20% interest in the Coronet Hill Tenement and toprovide working capital for the Company's introduction to AIM. North River's primary objective is to earn its initial 20% interest in EL 10004. Should results from this initial expenditure warrant further investment, theDirectors will look to source additional funding to earn a further 31% interest. Owing to the nature of this type of business and the Directors' contacts in theresources sector, it may be that NRRPL will also identify other resourceprojects to acquire or invest in through other farm-in agreements, jointventures, partnerships or shareholdings. The Group currently has one project in Australia, being the right to earn up toa 51% interest in the Coronet Hill Tenement. Details of the Coronet HillTenement are outlined below: Asset Holder Interest (%) Status License Expiry Date License Area EL10004 Segue 100 Exploration 19/08/2008 29.25 Kilometres2 (However subject to possible renewal) Northern Territory Australia The Coronet Hill Tenement is situated in the southern part of the Pine CreekInlier, 220 kilometres south east of Darwin in the Northern Territory ofAustralia. This major mineral province of the Northern Territory covers about66,000 kilometres2 and is centred 170 kilometres south of Darwin. Coronet Hill is located on a major mineralised structure known as the CoronetFault that trends northwest-southeast. Past exploration has shown the CoronetFault zone and parallel structures to be anomalous in tin, tungsten and basemetals over 10 kilometres of strike within the Tenement. Recent exploration hasbeen principally directed towards base and precious metals, and exploration fortin and tungsten was only peripheral, however there is good evidence that thetin and tungsten mineralisation is not only of greater strike extent thanpreviously tested, but also may occur in the alteration zones laterally adjacentto the lodes. Geological models of tin occurrences commonly involve mineralisation withinclose proximity to igneous margins. In this respect the Coronet Hill Tenement isprospective because its setting is proximal to a granitic intrusion known to beresponsible for poly-metallic mineralisation in the area. Geophysical evidenceclearly demonstrates the presence of a sub-surface intrusive body in parts ofthe Tenement. Pursuant to the Farm-In Agreement, the Company (through NRRPL) and Segue intendto undertake a significant program of exploration work on the Tenement. It is also intended to investigate the possibility of hydrothermally-sourcedplatinum group element ("PGE") mineralisation in the Tenement. This particularstyle of PGE mineralisation is extremely rare around the world but has beenidentified at Coronation Hill, a significant gold-platinum-palladium resourcelocated about 25km to the north-west of the Tenement. The Group's Exploration Programme and Strategy The Directors' immediate intention is for the Group to satisfy its expenditurerequirements under the Farm-In Agreement. The Farm-In Agreement provides that all expenditure on the Tenement shall bepursuant to budgets agreed or to be agreed between NRRPL and Segue. The work program for the Tenement under the budgets agreed between NRRPL andSegue for the two years following Admission will include some or all of thefollowing: 1. Ongoing compilation of historical data and conversion of that data into a digital format. This information can then be merged with current exploration data in a GIS database so its relevance can be applied and more fully understood. The effective capture of data increases exploration efficiency to generate targets in the future; 2. Regional and local geological reconnaissance / mapping to gain a better understanding of the structural and stratigraphic nature of the mineralisation. Comparison with mineralisation styles in the district will assist in developing models or exploration; 3. Surface rock chip and / or soil sampling to identify areas of geochemical anomalism and metal distribution; 4. Geophysical surveying using multiple techniques, including initially both gradient array and dipole-dipole induced polarisation to assist with the identification of near surface massive and disseminated sulphides for drill targeting; 5. Ground disturbing activities to create sufficient access for field work; and 6. Auger, RAB, RC and/or diamond drilling to test generated targets and define resources. The agreed budgets provide that NRRPL shall spend £100,000 in Year one followingAdmission and £300,000 in Year two, in order to earn the initial 20% interest inthe Tenement under the Farm-In Agreement. Future Acquisitions and Investments Whilst the Directors' primary focus for the Group is to earn the initial 20%interest in the Tenement, the Directors intend to identify and evaluate otherresource properties for possible acquisition or investment in order to increasethe activities of the Company in the commodities field. The Board will be flexible regarding its acquisition and investment strategy andhas not outlined size, geographic or class of commodity restrictions with regardto acquisition criteria. A wider strategy of the Directors has been to bring together a group ofshareholders that could assist the Company in sourcing acquisitions andpotential new finance for these acquisitions. The Board believes that the presence of the existing small group of shareholdersin the Company will enhance the growth potential of North River Resources Plc byvirtue of the capacity to introduce new projects to the Company. Results and Dividends The Directors do not propose to recommend any dividends for the reporting periodended 30 June 2007. The Group made a loss of £251,954 for the period from incorporation on 13 July2006 to 30 June 2007. Due to the early stage of development of the Group, it is not meaningful toconsider a review of key performance indicators in respect of the period underreview. Annual General Meeting The Annual General Meeting of North River will be held at the offices ofSprecher Grier Halberstam LLP at 30 Farringdon Street, London EC4A 4HJ onThursday 10 January 2008 at 11 am. The Company's annual report and notice ofAnnual General Meeting will be posted to shareholders shortly. GROUP INCOME STATEMENT FOR THE PERIOD ENDED 30 JUNE 2007 Period ended 30 June 2007 £ Administrative expenses (259,982) Loss on operating activities (259,982) Interest payable (34)Interest receivable 8,062Loss on ordinary activities before taxation (251,954)Taxation - Loss on ordinary activities after taxation (251,954) Total recognised loss for the period (251,954) Loss per share PenceBasic and diluted 0.64 The above are the results for the period from the date of incorporation on 13July 2006 to 30 June 2007. All of the above amounts are in respect of continuing operations. GROUP AND COMPANY BALANCE SHEETS AS AT 30 JUNE 2007 Group Company 30 June 2007 30 June 2007 £ £Non Current AssetsExploration costs 100,000 -Debtors - 100,000 100,000 100,000Current Assets Cash and cash equivalents 387,797 387,797 387,797 387,797 TOTAL ASSETS 487,797 487,797 Current LiabilitiesCreditors: amounts falling due within one year (35,738) (35,738) (35,738) (35,738) TOTAL LIABILITIES (35,738) (35,738) NET ASSETS 452,059 452,059 Capital and Reserves Attributable to EquityHolders Called up share capital 68,000 68,000Share premium account 481,238 481,238Option premium reserve 154,775 154,775Retained losses (251,954) (251,954) TOTAL EQUITY 452,059 452,059 GROUP AND COMPANY CASH FLOW STATEMENTS FOR THE PERIOD ENDED 30 JUNE 2007 Group Company period ended period ended 30 June 2007 30 June 2007 £ £ Net cash outflow from operating activities (69,469) (69,469) Returns on investments and servicing of financeInterest payable (34) (34)Interest income 8,062 8,062Net cash inflow from returns on investment andservicing of finance (8,028) (8,028) Investing Capitalised costs - Farm-In costs Coronet Hill (100,000) - Net cash outflow from investing (100,000) - FinancingLoan to subsidiary - (100,000)Proceeds from issue of shares 754,000 754,000Costs of the issue of shares (204,762) (204,762) Net cash inflow from financing 549,238 449,238 Increase in cash and cash equivalents 387,797 387,797 Cash and cash equivalents at the beginning ofthe period - - Cash and cash equivalents at the end of theperiod 387,797 387,797 NOTES TO THE FINANCIAL STATEMENTS FOR THE PERIOD ENDED 30 JUNE 2007 1. Accounting Policies The Group has adopted the accounting policies set out below in preparation ofthe financial statements. All of these policies have been applied consistentlythroughout the period unless otherwise stated. 1.1 Basis of Preparation The financial statements are prepared in accordance with the historical costconvention and in accordance with the International Financial ReportingStandards ("IFRSs") including IFRS 6, Exploration for and Evaluation of MineralResources, as adopted by the European Union ("EU") and in accordance with theprovisions of the Companies Act 1985. The Group's financial statements for the period ended 30 June 2007 wereauthorised for issue by the board of directors on 18 December 2007 and thebalance sheets were signed on the board's behalf by David Steinepreis. The Groupfinancial statements are presented in UK pounds sterling. In accordance with the provisions of section 230 of the Companies Act 1985, theparent company has not presented a profit and loss account. A loss for theperiod ended 30 June 2007 of £251,954 has been included in the incomestatement.. 1.2 Basis of Consolidation The consolidated financial statements are prepared by combining the financialstatements of all the entities that comprise the consolidated entity, being thecompany (the parent entity) and its subsidiaries. A list of subsidiaries appearsin Note 7. Consistent accounting policies are employed in the preparation andpresentation of the consolidated financial statements. On acquisition, the assets, liabilities and contingent liabilities of asubsidiary are measured at their fair values at the date of acquisition. Anyexcess of the cost of acquisition over the fair values of the identifiable netassets acquired is recognised as goodwill. If, after reassessment, the fairvalues of the identifiable net assets acquired exceeds the cost of acquisition,the deficiency is credited to profit and loss in the period of acquisition. The consolidated financial statements include the information and results ofeach subsidiary from the date on which the company obtains control and untilsuch time as the company ceases to control such entity. In preparing the consolidated financial statements, all intercompany balancesand transactions, and unrealised profits arising within the consolidated entityare eliminated in full. 1.3 Revenue Revenue is recognised to the extent that it is probable that the economicbenefits will flow to the Group and the revenue is capable of being reliablymeasured. Interest Income Revenue is recognised as the interest accrues 1.4 Foreign Currency Transactions Items included in the Group's financial statements are measured using thecurrency of the primary economic environment in which the Group operates ("thefunctional currency"). The financial statements are presented in PoundsSterling ("£"), which is the functional and presentation currency of the Companyand the presentation currency of the Group. Transactions in foreign currencies are recorded using the rate of exchangeruling at the date of the transaction. Monetary assets and liabilitiesdenominated in foreign currencies are translated using the rate of exchangeruling at the balance sheet date and the gains or losses on translation areincluded in the profit and loss account. The assets, liabilities and the results of the foreign subsidiary undertakingsare translated into sterling at the rates of exchange ruling at the year end.Exchange differences resulting from the retranslation of net investments insubsidiary undertakings are treated as movements on reserves. 1.5 Cash and Cash Equivalents Cash and cash equivalents in the balance sheet comprise cash at bank and in handand short term deposits held at call with banks and other short term highlyliquid investments with original maturities of three months or less that arereadily convertible to known amounts of cash and which are subject to aninsignificant risk of changes in value. 1.6 Trade and other payables Trade payables and other payables are carried at amortised cost. They representliabilities for goods and services provided to the Company prior to the end ofthe financial period that are unpaid and arise when the Company becomes obligedto make future payments in respect of the purchase of these goods and services.The amounts are unsecured and are usually paid within 30 days of recognition. 1.7 Deferred taxation Deferred tax is provided in full, using the liability method, on temporarydifferences arising between the tax bases of assets and liabilities and theircarrying amounts in the financial statements. Deferred tax is determined usingtax rates (and laws) that have been enacted or substantially enacted by thebalance sheet date and are expected to apply when the related deferred tax isrealised or the deferred liability is settled. Deferred tax assets are recognised to the extent that it is probable that thefuture taxable profit will be available against which the temporary differencescan be utilised 1.8 Exploration and Evaluation Expenditure Expenditure on exploration and evaluation incurred is accumulated either tomaintain an interest or in earning an interest and is accounted for inaccordance with the 'area of interest' method. Exploration and evaluationexpenditure is capitalised provided the rights to tenure of the area of interestare current and either: • the exploration and evaluation activities are expected to be recouped through successful development and exploitation of the area of interest or, alternatively, by its sale; or • exploration and evaluation activities in the area of interest have not at the reporting date reached a stage that permits a reasonable assessment of the existence or otherwise of economically recoverable reserves, and active significant operations in, or relating to, the area of interest are continuing. When the technical feasibility and commercial viability of extracting a mineralresource have been demonstrated then any capitalised exploration and evaluationexpenditure is reclassified as capitalised development. Prior toreclassification, capitalised exploration and evaluation expenditure is assessedfor impairment. The carrying value of capitalised exploration and evaluationexpenditure is assessed for impairment at the cash generating unit levelwhenever facts and circumstances suggest that the carrying amount of the assetmay exceed its recoverable amount. An impairment exists when the carrying amount of an asset or cash-generatingunit exceeds its estimated recoverable amount. The asset or cash-generating unitis then written down to its recoverable amount. Any impairment losses arerecognised in the income statement. 1.9 Contributed Equity Ordinary shares are classified as equity. Incremental costs directlyattributable to the issue of new shares or options are shown in equity as adeduction, net of tax, from the proceeds. 1.10 Significant Accounting Estimates and Assumptions The carrying amounts of certain assets and liabilities are often determinedbased on estimates and assumptions of future events. Estimates and judgementsare continually evaluated and are based on historical experience and otherfactors, including expectations of future events that may have a financialimpact on the entity and that are believed to be reasonable under thecircumstances. No significant accounting estimates and / or assumptions havebeen made during the preparation of the financial report. 1.11 Share Based Payments The group issued share based payments to certain parties (including directors orentities related to directors) by way of issue of share warrants. The fair valueof these payments is calculated by the Group using the Black-Scholes optionpricing model. The expense is recognised on a straight line basis over theperiod from the date of award to the date of vesting, based on the Group's bestestimate of shares that will eventually vest. 1.12 Financial instruments International Accounting Standard 32 requires information to be disclosed aboutthe impact of financial instruments on the Group's risk profile, how the risksarising from financial instruments might affect the entity's performance, andhow these risks are being managed. These disclosures have been made in note 15to the accounts. The Group's policies include that no trading in derivativefinancial instruments shall be undertaken. 1.13 Earnings per share Basic earnings per share is calculated by dividing the profit / (loss)attributable to equity holders of the company, excluding any costs of servicingequity other than dividends, by the weighted average number of ordinary sharesin issue, adjusted for any bonus elements. Diluted earnings per share is calculated as net profit / (loss) attributable tomembers of the parent, adjusted for: • costs of servicing equity (other than dividends); • the after tax effect of dividends and interest associated with dilutive potential ordinary shares that have been recognised as expenses; and • other non-discretionary changes in revenues or expenses during the period that would result from the dilution of potential ordinary shares. Share options are considered anti-dilutive as the Company is in a loss makingposition. 1.14 New standards and interpretations not applied During the year, the IASB and IFRIC have issued a number of new standards,amendments and interpretations with an effective date after the date of thesefinancial statements. Of these, only the following are expected to be relevantto the Group: IFRS 7 Financial instruments: Disclosures 1 January 2007 IFRS 8 Operating segments 1 January 2009 IAS1 Presentation of Financial Statements: Capital Disclosures 1 January 2007 IFRIC 10 Interim Financial Information and Impairment 1 November 2006 The directors do not anticipate that the adoption of these standards andinterpretations will have a material impact on the Group's financial statementsin the period of initial application. 2 Segment Reporting A business segment is a distinguishable component of the entity that is engagedin providing products or services that are subject to risks and returns that aredifferent from those of other business segments. A geographical segment is adistinguishable component of the entity that is engaged in providing products orservices within a particular economic environment and is subject to risks andreturns that are different from those of segments operating in other economicenvironments. The Company operates in one business segment, that being, mineral explorationand evaluation and currently operates within the United Kingdom and Australia. Geographical Segment - Group United Kingdom Australia Total £ £ £Administration expenses (259,982) - (259,982)Interest payable (34) - (34)Interest receivable 8,062 - 8,062Loss before taxation (251,954) - (251,954) Farm-In costs Coronet Hill - 100,000 100,000Cash and cash equivalents 387,797 - 387,797Accrued expenditure and provisions (35,738) - (35,738)Net Assets 352,059 100,000 452,059 At the end of the period on 30 June 2007, the Group had not commenced commercialproduction from its exploration sites and therefore had no turnover in theperiod. 3 Share Capital Group Group 30 June 2007 30 June 2007 Number of Shares £a) Authorised 10,000,000,000 Ordinary shares of 0.1p each 10,000,000,000 10,000,000 b) Issued and Fully Paid Ordinary shares of 0.1p each 68,000,000 68,000 c) Share Premium Reserve Ordinary shares at 4.9p each 13,999,998 686,000Costs of the issue of capital - (204,762) 13,999,998 481,238 Issued and fully Share premium paid capital reserved) Movement in issued and fully paidcapital and share premium reserve Number £ £ Issued on incorporation, 13 July 2006 2 - -Issued on 30 November 2006 54,000,000 54,000 - 54,000,002 54,000 -Issued on 8 December 2006 13,999,998 14,000 686,000 68,000,000 68,000 686,000Costs of the issue of capital - - (204,762) 68,000,000 68,000 481,238 e) Options Option Agreements were issued dated 18 December 2006 between the Company andeach of Westwind Capital, Corporate Synergy and Ascent Capital pursuant to whichthe Company has granted Westwind Capital, Corporate Synergy and Ascent CapitalOptions to subscribe for 2,000,000 Ordinary Shares, exercisable at any time fromAdmission and from time to time until the fifth anniversary of Admission. Theexercise price is 5 pence per ordinary share and there are a total of 6,000,000options in issue. Group Group 30 June 2007 30 June 2007 Number of Options £Share options in issue 6,000,000 -Option premium reserve - 154,775 6,000,000 154,775 Included with administration expenses is a charge for issuing share options. Group Company 30 June 2007 30 June 2007 £ £ Cost of issuing share options 154,775 154,775 4 Cash Flow Statement Group Company 30 June 2007 30 June 2007Reconciliation of operating loss to net cash £ £outflow from operating activities Net (loss) after tax (259,982) (259,982)Share option costs 154,775 154,775Changes in assets and liabilities: Increase in trade and other payables 35,738 35,738Net cash outflow used in operating activities (69,469) (69,469) 5 Expenditure Commitments Group Company 30 June 2007 30 June 2007Expenditure Commitments £ £ Commitments contracted for at reporting date butnot recognised as liabilities are as follows:Within one year 300,000 300,000 Under the terms and conditions of the Farm-In agreement, the Company has acommitment to contribute a percentage of the cost of exploration expenditure toearn its interest in the project. The Company can however withdraw from thefarm-in agreement at anytime by giving notice in writing to Segue of itsintention to withdraw and upon withdrawal the farm-in agreement shall terminate. 6 Earnings Per Share Group Company 30 June 2007 30 June 2007(a) Basic and diluted earnings per share £ £Loss from continuing operations attributable tothe ordinary equity holders (251,954) (251,954) Basic earnings per shareLoss from continuing operations attributable tothe ordinary equity holders (0.0064) (0.0064) (b) Weighted Average Number of Shares Used asthe Denominator Weighted average number of ordinary shares usedas the denominator in calculating basic earningsper share 39,375,343 39,375,343 Options on issue are not considered diluting to the earnings per share as theCompany is in a loss making position. 7 Related Party Transactions On 12th January 2007 Ascent Capital Holdings Pty Ltd, a company associated withDavid Steinepreis, was paid fees in the amount of £20,000 for corporate adviceprovided with regard to the listing of the company on AIM. It was paid a further£7,000, during the period, for the provisions of the services of DavidSteinepreis pursuant to a services agreement between the Company and MrSteinepreis. Ord Street Services, an entity associated with David Steinepreis was paid £6,000for office rent and outgoings provided to the Company in Australia. On 27th February 2007 Westwind Capital Pty Ltd, a company associated with RobertDowney, was paid £20,000 for corporate advice. Quantum Vis Pty Ltd, a company associated with Robert Downey, was paid feespursuant to a services agreement between Mr Downey and the Company of £7,000.Quantum Vis Pty Ltd was paid a further £3,636 for corporate advice provided withregard to the admission to the Company to AIM. Share based payments made to Directors or entities related to Directors ascompensation for their services for the period ended 30 June 2007 amounted to£103,184. Ascent Capital Holdings Pty Ltd was issued 2 million share options,which when valued with the Black-Scholes Model amounted to a value of £51,592.Westwind Capital Limited, was issued 2 million share options, which when valuedwith the Black-Scholes Model amounted to a value of £51,592. During the period North River Resources PLC lent North River Pty Ltd, a 100%owned subsidiary of North River Resources PLC, £100,000. At the period end£100,000 remained outstanding. On 26 July 2006, North River Resources Pty Ltd entered into a Farm-In Agreementwith Segue Resources Limited ("Segue"), the holder of the Coronet Hill Tenement("the Tenement" or "EL 10004"), a company associated with Robert Downey. TheFarm-In Agreement was amended and restated on 6 November 2006. Under the Farm-InAgreement, NRRPL is entitled to earn a 20% interest in the Tenement by expendingsuch amount as the parties may agree (currently being £400,000) up to a maximumof £500,000 on the Tenement on or before the second anniversary of the admissionto AIM. £100,000 was paid to Segue by NRRPL during the period. - ends - For further information contact: David Steinepreis Norseman Gold Plc 07913 402727 Romil Patel Blue Oar Securities Plc 020 7448 4400 This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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