28th Jun 2005 07:00
Eurasia Mining PLC28 June 2005 Eurasia Mining Plc 28 June 2005 PRELIMINARY ANNOUNCEMENT OF AUDITED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2004 Chairman's statement I reported in my interim statement that 2004 was to be a year of consolidationfor the company, and our progress in line with that objective during the yearhas left us well placed to exploit the opportunities we believe now offer thebest value for our shareholders. Having disposed of our South African interests,we are now clearly focused on projects within Russia, and events since theyear-end have already advanced our position significantly. In Russia, where Eurasia is now focusing its activity, the Government hasintroduced major changes designed to open up opportunities to a wider range oflocal and international investors. Whilst we welcome the intent of the changes,these have been accompanied by moratoria on licence renewals and have limitedour activities on existing licences. We have used the time when we could notconduct field work on our own projects to conduct field and data reviews on moreadvanced projects in Russia. In parallel, we have been working on securingfuture developments through further strategic alliances. This culminated in the agreement in April 2005 of an important new partnershipwith AngloGold Ashanti Limited ("AngloGold Ashanti"), the world's second-largestgold producer, which brings us affordable access to potential projects ineastern Siberia, currently one of the world's most promising areas ofprospectivity for hard-rock gold deposits. In the central Urals, where we havecontinued work on our exploration and development alliance with Anglo PlatinumLimited ("Anglo Platinum"), we have sharpened our focus of exploration on ourjoint prospects and applied for new exploration rights further to the north. Taken together, these developments reflect the continued expansion andstrengthening of our activities in both platinum group metals and gold, thelatter becoming an important new element in our development strategy for thecompany. Kola Eurasia is continuing with its plan to acquire three exploration licences on theKola Peninsula in north-west Russia, where early exploration results indicatethe presence of potentially commercial grades of platinum group metals (PGMs). Together, the licences cover a total area of 450 sq km on a geological trendwhere the Canadian mining groups Barrick Gold and Consolidated Puma MineralsCorporation are carrying out advanced exploration and feasibility studies onnearby deposits. Gold Fields Limited is completing feasibility studies ondeposits in similar trends across the border in Finland. The Company has considered several alternative ways to fund the acquisition asthird parties (both Russian and overseas) have expressed interest inparticipating in the projects. The company will select the best approach andagree to final acquisition terms that will realise the best value forshareholders. The Urals The Company continues to work on exploration and development of alluvialprojects in the Urals in a 50:50 joint venture with Anglo Platinum, who arecontributing 100% of the funding. Commencement of test mining to include bulk sampling and metallurgical test workplanned for this year at West Kytlim has been delayed while we await resolutionof administrative issues related to the extended licence. We remain optimisticfor a re-commencement of work in the second half of 2005. Successful geological reconnaissance well north of our current projects hasidentified several new prospective areas for which licence applications are inpreparation. Also in the Urals, the Company has applied for a new, reduced licence area tocover the drill defined bedrock PGM and gold discoveries at Kluevsky andBaronskoye in the Central Urals. Planned future work will focus on assessment ofmetallurgical and mining characteristics of potential near surface bulk mineablelow grade resources, particularly at Kluevsky. South Africa Following the completion of our first stage drilling programme and a carefulappraisal of the new minerals legislation, we announced the sale of the Group'smineral interests in South Africa in December 2004. The interests were sold toNkwe Platinum Limited, for a consideration in cash and shares, details of whichcan be found in the Financial Statements. A further rationale for this decisionwas to sharpen the company's focus on Russia, as well as provide additionalworking capital for expansion of our activities in the Russian Gold sector. AngloGold Ashanti and other alliances Eurasia has established an exploration alliance with AngloGold Ashanti Limited,the world's number two gold producer, covering gold and related mineralexploration and possible development projects in eastern Siberia. The alliancecombines our country experience and exploration management skills in the regionwith AngloGold Ashanti's resources. The Eastern Siberian geological environment, particularly in the vicinity of theintersection of the Siberian and Mongolia/China tectonic plate marginsrepresents one of the best endowed, yet least systematically explored regions ofthe world for hard rock gold deposits. Historic production in the region wasdominated by placer mining of alluvial gold. Since the mid 20th Century a numberof large hard rock deposits have been explored and developed, Total resources inthese deposits, including previous production and known reserves, stands well inexcess of 65 million ounces, or 2,000 tonnes of gold. The new agreement gives AngloGold Ashanti the exclusive right to participate inprojects proposed by Eurasia, which has been appraising potential prospects overa period of 18 months in conjunction with local companies and government in theregion. AngloGold Ashanti will pay an entry fee of $100,000 and fund the first$2 million of exploration spending in recognition of Eurasia's work to date.Subsequent spending will be shared equally. Our objective is to participate in the in the rapid advancement of a number ofprojects towards feasibility study. The exploration alliance very considerablyextends the range and type of projects in which Eurasia can participate withinthis highly prospective but increasingly more competitive environment for goldproject development. We look forward to early success. Your company also continues independently to seek projects that will add valueto our portfolio by reviewing and potentially bidding for both prospectivemineral ground as well as advanced stage projects elsewhere in the country. Inthis regard the company is working with a Russian partner to jointly acquireadvanced gold development and exploration properties. Board and Management The company is reorganising the board and will be adding new blood to strengthenour developments in Russia. Following the AGM, Dr Michael Martineau will takeover the position of Chairman while I will remain as non-executive director. Bill Anderson, our Operations director, has decided not to stand forre-election, to allow for the extra operational time he wishes to devote todeveloping the company's gold strategy for which he will now take the lead role.Mr Ed Slowey, a geologist with broad experience in exploration, mining andfeasibility study management, including at the giant Sukhoi Log gold deposit inSiberia, has been seconded to Eurasia from CSA Group Limited as part of analliance with this consulting group to supply key personnel in engineering andgeology. Ed will manage operations in Russia based out of our office inEkaterinburg. Corporate Issues The company is in the process of consolidating and simplifying the structure ofits holding companies in Cyprus. In anticipation of this we have written off theinvestment in historic gold projects dating from the 1990s and written down, inthe company balance sheet, the related intra group indebtedness. The changes aredesigned to reduce ongoing legal and management time and costs and provide astructure more relevant to our developing activities. Conclusion The alliance with AngloGold and our joint venture with Anglo Platinum add greatsubstance to our work and strengthen our presence in Russia. The new alliancealso recognizes the major progress we have made in Russia over the past twoyears and illustrates the importance of patience and persistence in a vast andwell mineralized country. Finally, I would like to thank the Board and staff for their continuing work andcontribution during the year, and also our advisors for their ongoing support.With continuing healthy price projections for both platinum and gold, combinedwith a steadily improving business environment in Russia, Eurasia is in astrengthened position to capitalise on its investment and maximize the optionsavailable to expand its business during 2005. John MitchellChairman Consolidated Profit and Loss AccountFor the year ended 31 December 2004 Continuing Discontinued Total Total operations operations 2004 2004 2004 2003 £ £ £ £ Impairment of assets (1,008,003) (453,374) (1,461,377) (52,337) Other administrative expenses (726,811) - (726,811) (472,406)_______________________________________________________________________________________________________________________ Total administrative expenses and operating loss (1,734,814) (453,374) (2,188,188) (524,743) Gain on disposal of subsidiaries 569,627 199,992 769,619 -_______________________________________________________________________________________________________________________ Loss after disposal of subsidiary (1,165,187) (253,382) (1,418,569) (524,743)______________________________________________________________________________________ Net interest payable / receivable & similar items (69,239) (103,285)_______________________________________________________________________________________________________________________ Loss on ordinary activities before taxation (1,487,808) (628,028) Taxation - -_______________________________________________________________________________________________________________________ Loss on ordinary activities after taxation (1,487,808) (628,028) Minority interest 16,018 18,563_______________________________________________________________________________________________________________________ Loss for the financial year (1,471,790) (609,465) Loss per share (1.74)p (1.01)p_______________________________________________________________________________________________________________________ There were no profits or losses in 2003 in respect of the operations discontinued in 2004 Consolidated Balance SheetAt 31 December 2004 2004 2003 £ £Fixed assets Intangible - exploration, development and production interests 1,316,485 2,803,835 Tangible 40,160 94,320 Investments Interest in joint venture _______________________ | | Share of gross assets | 735,326 - | | | Share of gross liabilities |(107,046) - | |_______________________| 628,280 - Other investments 154,018 1,108_______________________________________________________________________________________________________________________ Total fixed assets 2,138,943 2,899,263_______________________________________________________________________________________________________________________ Current assets Debtors 247,074 85,662 Cash at bank 83,162 1,005,632_______________________________________________________________________________________________________________________ Total current assets 330,236 1,091,294 Creditors - amounts falling due within one year (237,442) (225,959)_______________________________________________________________________________________________________________________ Net current assets 92,794 865,335_______________________________________________________________________________________________________________________ Total assets less current liabilities 2,231,737 3,764,598 Creditors - amounts falling due after more than one year (83,290) (89,638)_______________________________________________________________________________________________________________________ Net assets 2,148,447 3,674,960_______________________________________________________________________________________________________________________ Capital and reserves Called-up share capital 4,250,586 4,210,586 Share premium account 7,100,374 7,092,374 Capital redemption reserve 3,539,906 3,539,906 Profit and loss account (12,710,717) (11,150,416)_______________________________________________________________________________________________________________________Equity shareholders' funds 2,180,149 3,692,450 Minority interest (31,702) (17,490)_______________________________________________________________________________________________________________________ 2,148,447 3,674,960_______________________________________________________________________________________________________________________ Consolidated Cash Flow StatementFor the year ended 31 December 2004 2004 2003 £ £ Net cash outflow from operating activities (697,149) (306,994) Returns on investments and servicing of finance 12,763 649 Capital expenditure and financial investment (443,584) (489,760) Acquisitions and disposals 157,500 -_______________________________________________________________________________________________________________________ Net cash outflow before financing (970,470) (796,105) Financing: Issue of ordinary shares 48,000 1,726,951_______________________________________________________________________________________________________________________ (Decrease) / increase in cash in the period (922,470) 930,846_______________________________________________________________________________________________________________________ Reconciliation of net cash flow to movement in net funds (Decrease) / increase in cash in the period (922,470) 930,846_______________________________________________________________________________________________________________________ Change in net funds resulting from cash flows (922,470) 930,846 Translation difference - 4,142 Conversion of loan stock to equity - 394,981_______________________________________________________________________________________________________________________ Movement in net funds in the period (922,470) 1,329,969 Net funds/(debt) at 1 January 1,005,632 (324,337)_______________________________________________________________________________________________________________________ Net funds at 31 December 83,162 1,005,632_______________________________________________________________________________________________________________________ Notes 1. The financial information set out above does not constitute the Group's statutory accounts, as defined by section 240 of the Companies Act 1985, for the years ended 31 December 2004 or 2003 but is derived from those accounts. Statutory accounts for 2003 have been delivered to the Registrar of Companies and those for 2004 will be delivered before 31 July 2005. The auditors have reported on those accounts; their reports were unqualified and did not contain statements under section 237(2) or (3) of the Companies Act 1985. 2. The loss per share is calculated by reference to the loss for the year of £1,471,790 (2003: £609,465) and the weighted average number of Shares in issue during the year of 84,388,766 (2003: 60,476,830). There is no dilutive effect of share options or warrants. 3. The financial information has been prepared under the historical cost convention and in accordance with applicable accounting standards. In common with many exploration companies, the Company raises finance for its exploration and appraisal activities in discrete tranches to finance its activities for limited periods only. Further funding is raised as and when required. The Directors are of the opinion that the Company will require to raise additional financial resources to enable the Group to undertake an optimal programme of exploration and appraisal activity over the next twelve months. Accordingly, the Directors intend either to raise further funds or to engage an additional funding partner as appropriate during the course of the next twelve months. Whilst the Directors are confident that the Group will be able to secure additional funding to enable it to continue to meet its debts as they fall due and to undertake the programme described above for at least the next twelve months from the date of approval of these financial statements, there can be no guarantee that this will be the case. The financial statements do not include any adjustments, particularly in respect of tangible fixed assets, stocks, investments, loans and provisions for winding up which would be necessary if the Company and Group ceased to be a going concern. 4. Reconciliation of operating loss to operating cash outflows 2004 2003 £ £ Operating loss (2,188,188) (524,743) Depreciation charges 46,139 7,139 Impairment charge 1,461,377 52,337 (Increase)/decrease in debtors (27,960) 62,204 Increase/(decrease) in creditors 11,483 96,069_______________________________________________________________________________________________________________________ Net cash outflow from operating activities (697,149) (306,994)_______________________________________________________________________________________________________________________ 5. Copies of the Annual Report and Accounts for the year ended 31 December 2004 will be posted to shareholders by 30 June 2005 and will be available, free of charge, from the Company's registered office at 14 - 16 Regent Street, London, SW1Y 4PH, for a period of 14 days from the date of their posting. For further information contact: Michael Martineau/Christian Schaffalitzky, Eurasia Mining plc +44 (0) 207976 1222 Michael Devilliers, Eurasia Mining plc: +44 (0) 7899 917 096 Laurie Beevers, W H Ireland: +44 (0) 161 819 8724 Allan Piper, First City Financial Public Relations: +44 (0) 20 7436 7486 +44 (0) 7736 064 982 This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Eurasia Mining