15th Mar 2006 08:02
Alexander Mining PLC15 March 2006 Alexander Mining plc 15 March 2006 Preliminary Results for the year ended 31 December 2005 Alexander Mining plc ("Alexander", the "Company"), the AIM-listed copper, goldand silver mining company with projects in Argentina and Peru, is pleased toannounce its preliminary results for the year ended 31 December 2005. Key points • Successful Admission to AIM in April 2005, in conjunction with a well supported and over-subscribed equity placement, predominantly to UK investment institutions, which raised net proceeds of £18.5m. • Established main office in London and a regional office in the City of Salta, Salta Province, north-west Argentina. • Key appointments of skilled and experienced personnel, necessary to run and grow the Company. • A major technical and diamond core drilling programme, designed to delineate the resources and reserves of the Leon copper and silver project to the JORC Code standard, commenced in August 2005. • Preliminary Leon engineering work has determined many positive aspects for the construction of a mine. • Other exploration projects advanced, with accelerated activity planned for 2006. • Effective local community and regional government relations established. Full use made of local labour, supplies and services. • Strong balance sheet; at the end of 2005 our net cash was £19m. • Active evaluation of new business opportunities to achieve our growth objective. For further information please contact Matt Sutcliffe, Chairman and Chief Executive OfficerAlexander Mining plc1st Floor35 PiccadillyLondonW1J 0DW Tel +44 (0) 20 7292 1300Fax +44 (0) 20 7292 1313Mobile +44 (0) 7887 930 758Email [email protected] www.alexandermining.com Nominated Advisor and BrokerEvolution Securities Limited100 Wood StreetLondonEC2V 7ANTel +44 (0) 20 7071 4300 Public/Media RelationsGary MiddletonSt Swithins Public RelationsTel +44 (0) 20 7929 4391Mobile +44 (0) 7951 603 289 Chairman's Statement A company's first annual report is a notable milestone in its corporate history.Accordingly, it gives me great pleasure to be able to report to shareholders onour activities during the past year. It has been a year of significantachievement. In 2005, the global mining industry enjoyed a year of excellent marketconditions. Across the board, base, precious and speciality metals, and bulkminerals nearly all had exceptional price appreciation, many reaching levels notseen for a considerable period or indeed making new all time absolute highs.This in turn fuelled a high level of institutional and retail investor interestin the mining sector and equity investment therein. Reflecting these fortuitous market conditions and the specific appeal of theCompany, the admission to AIM in April 2005 was most successful. This was inconjunction with a well supported and over-subscribed equity placement,predominantly to UK investment institutions, which raised net proceeds ofapproximately £18.5m. We thus started life as a listed company in soundfinancial health ready to progress our projects in South America and to advanceour medium-term objective to build a low cost, highly profitable and diversifiedmid-tier base and precious metals mining company. This will be achieved by acombination of exploration of our existing properties, which may lead toeconomic development thereof, and the acquisition of advanced projects andproducing operations. We have established our main office in London and a regional office in the Cityof Salta, Salta Province, north-west Argentina. Key appointments of skilled andexperienced personnel, necessary to run and grow the Company, encompassingadministration, exploration, mine development, production and new business, havebeen made, based both in London and Argentina. We are committed, wherever practicable, to employing local professionals andothers in those countries where we are active, and are pleased that this hasalready been achieved. I am pleased to welcome our Chief Operating Officer, Gordon Lewis, who joinedthe board in November 2005. His considerable experience as a mining engineer,with extensive senior management and practical experience in planning, buildingand managing mining operations in developing countries, will strengthen theBoard. During the last year, and particularly since the listing, we have devoted ourefforts to undertaking the proposed work programmes on the initial projectsdetailed in the AIM Admission document. The Company's three core projects are located in north-west Argentina. Ourbelief that the country offers mining companies appealing geology and miningpotential, in conjunction with a favourable operating environment, has beenconfirmed by the growing level of interest and activity on the ground from bothjunior and major mining companies. As a result, the country as a whole is in themidst of a burgeoning foreign mining company investment boom. The planned majorinward investment will build on an already impressive base of existing worldclass mines producing copper, gold, industrial metals and minerals. Our initial focus has been on the Leon (formerly known as Juramento) copper/silver project in Salta Province, north-west Argentina. A major technical and10,000m diamond core drilling programme, designed to delineate the resources andreserves of the Leon mineralisation to the JORC Code standard, commenced inAugust 2005 and is still under way. At 28 February 2006, 109 holes had been drilled, totalling 9,152 m. Out ofthese, over 75% have intersected the copper and silver mineralisation. ALSChemex Laboratories is analysing the cores and results are expected to bereleased in the near term. ACA Howe has been engaged to start, in April 2006, anindependent audit and resource calculation to JORC standard, with completionexpected in the second quarter of 2006. Once the resources at Leon have been calculated, a feasibility study should becompleted in the second quarter of 2006. A decision to proceed with the construction of a mine, subject to the findingsof the feasibility study, is expected to be made in the middle of 2006. Oncepermitting has been completed, mine construction is scheduled to commence inlate 2006, with commissioning in 2007. Concurrent with the commencement of drilling, a site camp was established andconstructed using local labour, services and materials. Preliminary engineering work has determined many positive aspects for theconstruction of a mine regarding location, metallurgy, mining, infrastructure,labour and the environment. Moreover, in order fully to investigate and to beable to exploit the regional copper and silver mineralisation potential,significant extra land claims of just over 100,000 hectares have been taken out. At the Rachaite polymetallic porphyry target property in Jujuy Province,north-west Argentina, drilling commenced in early October 2005 and assay resultsare pending. At the Trinidad silver project, also in Jujuy Province, a drillingprogramme is planned within the next few months. In Peru, the Sulcha gold exploration project in Otuzco Province, wherefavourable rock chip samples have been reported, is progressing towards a 3,400mdiamond drilling programme planned to commence next month. The Company also hasa second gold exploration property in the country which is being progressed. Financial During the 12 months ended 31 December 2005, the Group made a consolidated netloss after taxation of £923,000, compared to a loss for the period ended 31December 2004 of £296,000. Interest earned during the period totalled £708,000due to our strong cash position, which totalled £19.0m at the end of December.During the period, £2.2m of exploration costs have been capitalised,representing costs associated with the acquisition and initial exploration onthe Company's projects in South America. Outlook At the time of writing, 2006 has seen metal prices continue with their powerfulbull market of several years' duration. Moreover, market sentiment andfundamentals look favourable for another rewarding year for the industry andinvestors. Our preference for seeking exposure to copper, gold and silverappears well placed, as all three prices are near multi-year highs which, evenat significantly lower levels, are highly conducive to healthy operatingeconomics for good quality projects. Accordingly, we have devoted a considerableamount of our efforts on new business opportunities. Whilst we have demandingstandards on seeking quality opportunities at advantageous prices, we remainconfident that, in addition to our existing projects, the current year willyield significant new business deals to enable us to achieve our growthobjective. On behalf of the board, I would like to thank our shareholders for theircontinued support. In addition, I would like to thank my fellow directors,employees, consultants and advisors, in the UK, Peru and Argentina for theirhard work and commitment. It is gratifying to look back on a year of excellentprogress for the Company with the knowledge that the year ahead holds greatpromise. Matt Sutcliffe Chairman and CEO Consolidated profit and loss account Pro-forma information Year ended Period ended 31 December 2005 31 December 2004 £'000 £'000 Administrative expenses (1,552) (309) Operating loss (1,552) (309) Provision against investment in Associate (73) -Net interest receivable 702 13 Loss on ordinary activities before taxation (923) (296)Tax on loss on ordinary activities - - Loss on ordinary activities after taxation and retained for (923) (296)the period Basic and diluted loss per share (pence) (0.79)p (0.44)p All amounts relate to continuing operations.All recognised gains and losses are included in the profit and loss account. Consolidated reconciliation of movements in shareholders' fundsPro-forma information Year ended Period ended 31 December 2005 31 December 2004 £'000 £'000 Loss for the period (923) (296)New share capital subscribed - Alexander Mining plc 18,516 -New share capital subscribed - Alexander Gold Group Limited 3,506 794 Movement in shareholders' funds 21,099 498 Shareholders' funds at start of period 498 - Shareholders' funds at end of period 21,597 498 Consolidated Balance Sheet As at Pro-forma as at 31 December 31 December 2004 2005 £'000 £'000 Fixed assetsIntangible fixed assets 2,253 25Tangible fixed assets 73 -Investments 100 41 2,426 66 Current assetsDebtors 539 51Cash at bank and in hand 1,982 39Short term bank deposits 17,018 520 19,539 610 Creditors amounts falling due within one year (368) (178) Net current assets 19,171 432 Total assets less current liabilities 21,597 498 Capital and reservesCalled up share capital 13,453 6,787Share premium account 11,850 -Adjustment for shares in subsidiary not yet issued - (3,506)Merger reserve (2,487) (2,487)Profit and loss account (1,219) (296) Shareholders' funds 21,597 498 Consolidated Cash Flow StatementPro-forma information Year ended Period ended 31 December 2005 31 December 2004 £'000 £'000 Net cash outflow from operating activities (1,756) (210) Returns on investment and servicing of finance Interest received 494 13Interest paid (6) - Net cash inflow from returns on investment and servicing of finance 488 13 Capital expenditure and financial investmentPurchase of tangible fixed assets (107) -Purchase of intangible fixed assets (1,940) (25)Investment in associated undertaking (32) (41)Acquisition of other investments (100) - Net cash outflow from capital expenditure and financial (2,179) (66)investment Management of liquid resourcesTransfer to short term bank deposits (16,498) (520) Net cash outflow before financing (19,945) (783) Financing Issue of shares by Alexander Mining plc 20,000 -Issue of shares by Alexander Gold Group Limited 3,371 822Share issue costs (1,483) - Net cash inflow from financing 21,888 822 Increase in cash 1,943 39 Cash brought forward 39 - Cash carried forward 1,982 39 Notes 1. Financial statements The financial information set out above does not constitute the Group'sstatutory information for the years ending 31 December 2005, but is derived fromthose accounts. The financial statements for 2005 will be delivered to theRegistrar of Companies following the Company's Annual General Meeting. Theauditors have reported on these accounts, their report was unqualified and didnot contain statements under the Companies Act 1985, s237 (2) or (3). 2. Basis of preparation of financial statements The financial statements have been prepared on a going concern basis under thehistorical cost convention and in accordance with applicable accountingstandards. The Company was incorporated on 8 February 2005. On 22 March 2005 the Companyacquired Alexander Gold Group Limited ("AGGL"), a company incorporated in theBritish Virgin Islands on 8 December 2003, by way of a share for share exchange. This acquisition has been consolidated in accordance with the mergeraccounting principles set out in Financial Reporting Standard 6 and Schedule 4(A) to the Companies Act 1985. Merger accounting requires consolidated financial statements to be presented asif the companies had been combined throughout the current and previous periodsand at the previous balance sheet dates. Accordingly, the consolidated financialstatements include the results of AGGL from 1 January 2005. The comparativeinformation set out with the consolidated financial statements represents theassets, liabilities, results and cash flows of AGGL for the period from itsincorporation to 31 December 2004, adjusted to reflect the capital structure ofthe Company immediately after the share for share exchange. This is presentedas pro-forma information because the periods differ from the accountingreference date of the Company. 3. Intangible fixed assets Intangible fixed assets represent costs associated with mineral exploration andinvestments, which are capitalised on a project-by-project basis, pendingdetermination of the feasibility of the project. Costs incurred includeappropriate technical and administrative expenses but not general overheads. Ifan exploration project is successful, the related expenditures will betransferred to mining assets and amortised over the estimated life of thecommercial ore reserves on a unit of production basis. Where a project isrelinquished, abandoned, or is considered to be of no further commercial valueto the Group, the related costs are written off. The recoverability of these deferred exploration costs is dependent upon thediscovery of economically recoverable ore reserves, the ability of the Group toobtain necessary permitting and financing to complete the development of orereserves and future profitable production or proceeds from the dispositionthereof. 4. Net cash outflow from operating activities 31 December 2005 31 December 2004 £'000 £'000 Operating loss (1,552) (309)Depreciation and amortisation charge 36 -Increase in debtors (299) (24)Increase in creditors 54 123Non-cash expenditure 5 - Net cash outflow from operating activities (1,756) (210) 5. Reconciliation of net cash flow to movements in net funds 31 December 2005 31 December 2004 £'000 £'000 Increase in cash in the period 1,943 39Increase in short term bank deposits 16,498 520 Increase in funds in the period 18,441 559 Net funds at start of period 559 - Net funds at end of period 19,000 559 Represented byCash at bank and in hand 1,982 39Short term bank deposits 17,018 520 Net funds at end of period 19,000 559 6. Dividends No dividend is proposed This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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