29th Sep 2005 07:03
Aurum Mining PLC29 September 2005 For immediate release 29 September 2005 AURUM MINING plc ("Aurum" or "the Company") Preliminary Results for the 12 month period ended 31 March 2005 Aurum Mining plc (AIM: AUR), the company formed last year to acquire gold andother mineral extraction projects in the Former Soviet Union (FSU), is pleasedto announce its preliminary results for the 12 month period ended 31 March 2005. Highlights to date • Aurum has today announced that it has entered a conditional agreement to purchase a 51 per cent stake in Open Joint-Stock Company Geocentr ("Geocentr "), a Russian company that owns an exploration licence and abandoned gold mine in the Russian Far East (see separate release) • Aurum successfully completed its first acquisition in January 2005 by acquiring Kaldora Company Ltd whose wholly owned subsidiary, Andash Mining Company, holds an exploration licence over the Andash Project in the Kyrgyz Republic • The State Commission of Resources of the Kyrgyz Republic has included 21.7 million tonnes of C1+C2 reserves at Andash into the State Register, containing total gold and gold equivalent of more than 1.5 million ozs. • A leading UK mining consultant has confirmed a JORC resources estimate for one of the Andash orebodies of 1.15 million ozs of gold and gold equivalent • To ensure the timely development of the Andash asset, and to put the Company into a position to exploit other opportunities, a further issue of shares is planned Sean Finlay, the Chairman of Aurum Mining, commented: "I am delighted by theprogress we have made since the Company's flotation on AIM last year. Throughthe acquisition of the Andash Project we have shown that we can deliver on ourstrategy of identifying and acquiring assets in the FSU and we look forward tocontinuing this strategy through the purchase of a majority stake in Geocentr." For further information: Aurum Mining plc Tel: 020 7478 9050Sean Finlay, ChairmanMark Jones, Chief Executive W H Ireland Tel: 0121 616 2101Tim Cofman Buchanan Communications Tel: 020 7466 5000Mark Court Notes for editors About Aurum Mining Aurum Mining joined the AIM market of the London Stock Exchange in May 2004 withthe strategy of seeking, evaluating and acquiring gold and other mineralextraction projects in the Former Soviet Union (FSU). In January 2005 theCompany completed its first acquisition, giving the Company an explorationlicence over a gold and copper project in the Kyrgyz Republic. In its StateRegister, the State Commission of Resources of the Kyrgyz Republic has included21.7 million tonnes of C1 and C2 reserves from the project, amounting to goldand gold equivalent of more than 1.5 million ozs. CHAIRMAN'S STATEMENT Introduction I am delighted to present the results of Aurum Mining plc ("Aurum") for theperiod ended 31 March 2005. These are Aurum's maiden full year results and covera period in which considerable progress has been made both as a company and as amanagement team. Aurum was formed in March last year with the objective of acquiring anddeveloping undervalued gold and mineral resources in the Former Soviet Union(FSU), a region that offers significant potential. We were attracted to the FSUfor compelling reasons including the history of gold production in the region,the extensive geological records from the Soviet era, the availability ofunexploited and underdeveloped assets and the much improved business andpolitical climate. When Aurum was formed, it comprised a management team with experience of miningin the FSU and a clear strategy for generating value. I am pleased to reportthat just one-and-a-half years later we have made significant progress inrealising our strategy. We have a resource of an estimated 1.5 million ozs (C2)of gold and gold equivalent, a quotation on the London Stock Exchange and asignificantly strengthened management team. Aurum joined the Alternative Investment Market (AIM) market of the London StockExchange in May 2004, having successfully raised £1.5 million in a Placing tofinance the identification and evaluation of potential acquisitions in the FSU.At the time of the flotation, the Directors of the Company highlighted theirbelief that gold prices would remain buoyant, contributing to the attractivenessof the company as an investment proposition. Acquisition After a period of systematic project identification and evaluation in the FSU,we identified our first acquisition, a gold and copper project in the KyrgyzRepublic. The Kyrgyz Republic, which was once part of the Soviet Union, sitswithin a broad band of gold mineralisation that stretches through Central Asia.This band is commonly known as the Tien Shan gold belt and is one of the largestproven gold provinces in the world. The acquisition, called the Andash Project,is located in the Talas valley, close to the north western border of the KyrgyzRepublic. In January 2005 we raised £600,000 via a Placing to acquire Kaldora Company Ltdwhose wholly owned subsidiary, Andash Mining Company, holds an explorationlicence over the Andash Project. The deal was structured to include a deferredconsideration of up to $5 million in shares, conditional on the project's levelof gold reserves. Progress at Andash We have identified significant mineralisation at Andash. The State Commission ofResources of the Kyrgyz Republic included 21.7 million tonnes of C1+C2 reservesat Andash into the State Register, containing total gold and gold equivalent ofover 1.5 million ozs. In addition, Wardell Armstrong International (WAI), aleading UK based independent mining consultancy, has confirmed a JORC resourcesestimate, for one of the Andash orebodies of 1.15 million ozs. of gold and goldequivalent. Additional drilling is planned for Andash in the near future which will enhancethe resources estimate and facilitate the completion of a Feasibility Study forthe project. This study, which is underway, includes an open pit design, a process flow sheet and an environmental assessment. People We have strengthened our team considerably since flotation. I am particularlypleased to welcome Mark Jones, who has considerable mining and managementexperience, as Chief Executive. Mark was appointed on 1 July 2005. I am alsodelighted to welcome Colin Knight, a highly experienced mining professional, tothe Board as a Non-Executive Director. Dr Knight was appointed to the Board on 6September 2005. We now have a formidable team of Executive and Non-ExecutiveDirectors supported by consulting partners to drive the business forward. Post Balance Sheet event On 29 September the Company entered into a conditional agreement with LoyalWealthy Limited ("Seller") to purchase 51 per cent of the share capital in OpenJoint-Stock Company Geocentr ("Geocentr"), a Russian company that owns anexploration licence and abandoned gold mine in the Russian Far East, for aninitial consideration of $371,000. The agreement is conditional upon, interalia, the completion of satisfactory due diligence by Aurum on Geocentr. Inaddition to the initial consideration of US$371,000, further consideration of upto a total of US$2.35 million is payable in two stages dependent on the measuredand indicated ore reserves of gold at the project as stated in the finalfeasibility report. Outlook Aurum has become a significant player in mining within Central Asia and wecontinue to believe that the Andash Project is an exciting gold opportunity. Inaddition we are evaluating several other projects as potential acquisitions tofurther develop our platform for future growth. To ensure the timely developmentof the Andash Project, and to put the Company into a position to exploit otheropportunities, we are embarking on a further issue of shares to finance Andashthrough to the completion of a bankable feasibility study. Sean FinlayChairman29 September 2005 CHIEF EXECUTIVE'S REVIEW Since our admission to trading on AIM in May 2004, Aurum Mining plc ("Aurum")has pursued opportunities in Central Asia, culminating in the acquisition ofKaldora Company Ltd ("Kaldora") in January of this year. Kaldora's principalasset is an exploration licence held by its wholly owned subsidiary, AndashMining Company, over the Andash gold and copper exploration project ("AndashProject") in the Talas valley in the north west of the Kyrgyz Republic on theborder with Kazakhstan. The deposit is located on the southern slope of theKyrgyz ridge, lying above the Karakol river. The region is well served with infrastructure. Transport links to the site aregood with gravel and asphalt roads to the oblast capital town of Talas and toBishkek via the Susamyr Valley. Electricity is available at Kupre-Bazar village(10kV) and a main power line (500kV) with a sub-station is located within 15kmof the deposit. Water is readily available from the Karakol river. The mineralisation at the Andash Au-Cu (gold-copper) deposit comprises anorthwest-southeast striking, gentle southeast plunging mineralised porphyrybody. The deposit has been explored and evaluated from a series of surfacetrenches, surface drilling and channel sampling from a main adit underground. Progress at the Andash project Since acquisition, Aurum has progressed the Andash project through localpre-feasibility study, approval of C1+C2 reserves and primary metallurgicalassessment. Key activities included: Exploration Drilling Two series of diamond drill holes were drilled in zone 1, the P series (size NQ)used for delineation of mineralization on the ore body flanks and the TX series(size HQ) drilled within the ore body for metallurgical purposes. A total of2300m were drilled. Resource Audit Wardell Armstrong International (WAI) were contracted to generate a new resourceestimation for zone 1 in digital format in accordance with western resourceclassification codes (CIM and JORC). WAI used geostatistical methods withinGemcom mining software at a 0.5 g/t Au cut-off grade. Category Million Tonnes Au g/t Cu% Measured 1.75 0.99 0.40Indicated 8.19 1.12 0.41Inferred 7.61 1.08 0.37Total 17.55 1.09 0.39 At 1 tonne of Cu = 7.5 oz of Au, the total Au and 'Au equivalent' is: Measured and Indicated 670, 000 ozInferred 485, 200 oz Total 1, 155, 800 oz Mineralogy A sample from the TX holes was sent to WAI, where a programme of head assay,mineralogy and flotation and leach test work was undertaken. Head assay results were consistent with those established from all the drillholes: Cu Total % 0.59Au g/t 1.50 The mineralogy can be summarised as follows: - Main minerals present were silicates and quartz and iron oxides.- The principle sulphide minerals were pyrite and chalcopyrite.- The copper bearing minerals were chalcopyrite and the secondary copper carbonates were malachite and azurite. A scoping test work programme demonstrated satisfactory recoveries of copper andgold by flotation of copper/gold followed by cyanide leaching of the flotationtailings. Gold recoveries were in excess of 91%, and copper recovery was over70%. WAI believe that further optimisation of the flotation process shouldincrease copper recovery to 75-80% and lower cyanide consumption duringleaching. A 2100 kg bulk sample from holes TX 1 to 4 is at WAI, where a scope of works toconfirm and refine the initial test work will be completed by the end of October2005. Mining Licence The results from the exploration drilling programme entitled Andash to initiatea local pre-feasibility study with resource estimation to the Kyrgyz StateCommission of Resources. The standards achieved allow the resource to beapproved and entered into the State Register as C1+C2 category. AMC now has therights to exclusively develop and mine the deposit, and has been granted atemporary mining licence. Environmental study A programme of work was started in May to monitor the environment so AMC canobtain OVOS and DVOS as well as develop a Plan of Reclamation for a BankableFeasibility Study. A complete hydrogeological study was completed and the reportis available. WAI have been commissioned to provide Aurum with resource andreserve statements, mineralogy studies, assessment of process parameters, mineand plant capital and operating cost estimates and environmental studystatements. Four further mineralised zones have been identified in the Andash licence areawith similar geological, geophysical and structural setting, including elevatedgold and copper grades; they are Malaya Kokkia, Jeganak, Chonkyshto and Karakol.A work programme of geophysical survey, trenching and some DD and RC holes isincluded in the exploration programme to establish resource profiles in theseareas. Andash has many positives which make the project attractive: it is a relativelyhigh-grade porphyry, very amenable to surface mining and appears to have afairly simple process metallurgy. The programme of work outlined will enable usto establish the final parameters so that we can work on bringing a low costmine on stream as early as 2007. Further work at Andash In-fill drilling programme WAI have provided Andash with a 3000m RC drilling programme which will up ratethe resource to the indicated level of confidence as a minimum as well as place25% of the resource into the measured category. Bulk samples will be used forfurther optimisation of mineral processing and Au and Cu recovery. This willgive the project a sound basis for going to a feasibility study. Diamond drilling programme Zone 1 extension. Drilling is expected to confirm approximately 2 million tonesof ore on the northern and eastern flanks of the orebody. Zones 2 and 3. Drilling will determine localization of the additional oreresource and the relationship between each Zone and Zone 1. RC drilling willalso be required. Soviet work showed the possibility of 8-10 million tons inthis area. One hole, DDH# 27, intersected 119.2 metres of mineralisation at anaverage grade of 2.16 g/t, with similar mineralogy to Zone 1. Additional exploration Four further mineralised zones have been identified in the Andash licence areawith similar geological, geophysical and structural setting, including elevatedgold and copper grades; they are Malaya Kokkia, Jeganak, Chonkyshto and Karakol.A work programme of geophysical survey, trenching and some DD and RC holes isincluded to establish resource profiles in these areas. Working through winter AMC has purchased exploration support equipment, including tracked Hagglundswhich will allow the exploration programme to continue throughout the winter. Mark JonesChief Executive29 September 2005 CONSOLIDATED PROFIT AND LOSS ACCOUNTFOR THE PERIOD ENDED 31 MARCH 2005 £'000 Administrative expenses (389) --------Total administration expenses and operating loss (389) Net interest receivable and similar income 45 --------Loss on ordinary activities before taxation (344) Tax on loss on ordinary activities - --------Loss on ordinary activities after taxation (344) Retained loss for the financial period (344) ========Loss per share - basic and diluted (4.23p) ======== All amounts relate to continuing activities, which were acquired in the period. CONSOLIDATED AND COMPANY BALANCE SHEETAS AT 31 MARCH 2005 Group Company £'000 £'000 Fixed assetsIntangible fixed assets 819 -Tangible fixed assets 189 9Investments in subsidiary undertakings - 665 -------- -------- 1,008 674Current assets -------- --------Debtors: amounts falling due within one year 265 257Debtors: amounts falling due after one year - 335 -------- --------Total Debtors 265 592Cash at bank and in hand 944 937 -------- -------- 1,209 1,529 Creditors: amounts falling due within one year (281) (258) -------- --------Net current assets 928 1,271 -------- --------Total assets less current liabilities 1,936 1,945 ======== ========Capital and reservesCalled up share capital 95 95Share premium 1,681 1,681Merger Reserve 504 504Profit and loss account - deficit (344) (335) -------- --------Total equity shareholders' funds 1,936 1,945 ======== ======== CONSOLIDATED CASH FLOW STATEMENT FOR THE PERIOD ENDED 31 MARCH 2005 £'000 Net cash outflow from continuing operating activities (487) --------Returns on investments and servicing of financeInterest received 45 -------- Net cash inflow from returns on investments and servicing of finance 45 --------Capital expenditure and financial investmentPurchase of tangible fixed assets (179)Payments to acquire intangible assets (56) --------Net cash outflow for capital expenditure and financial investment (235) --------AcquisitionsPurchase of subsidiary undertaking (160)Cash acquired with subsidiary 5 --------Net cash outflow from acquisitions (155) --------Cash outflow before management of liquid resources & financing (832) --------FinancingIssue of ordinary shares 2,150Expenses paid in connection with share issues (374) --------Cash inflow from financing 1,776 --------Increase in net cash in the period 944 ======== Notes to the Preliminary Results 1 Accounting policies Basis of preparation The financial statements have been prepared in accordance with currentlyapplicable Accounting Standards in the United Kingdom, which have been appliedconsistently, and under the historical cost convention. Basis of consolidation Aurum Mining Plc, together with it's subsidiaries as listed in note 9, is a goldexploration group that is focused on opportunities in the territories of theFormer Soviet Union. The consolidated financial statements incorporate the results of Aurum MiningPlc and all of its subsidiaries as at 31 March 2005 using the acquisition methodof accounting as required. Under the acquisition method, the results ofsubsidiary undertakings are included from the date of acquisition. Merger accounting Where merger accounting is used, the investment is recorded in the Company'sbalance sheet at the nominal value of the shares issued together with the fairvalue of any additional consideration paid. In the Group financial statement, merged subsidiary undertakings are treated asif they had always been a member of the Group. The corresponding figures for theprevious year include its results for that period, the assets and liabilities atthe previous balance sheet date and the shares issued by the Company asconsideration as if they had always been in issue. Any difference between thenominal value of the shares acquired by the Company and those issued by theCompany to acquire them is taken to reserves. Goodwill Goodwill arising on acquisition of a subsidiary undertaking is the differencebetween the fair value of the consideration paid and the fair value of theassets and liabilities acquired. Fixed asset investments Investments held as fixed assets are stated at cost less provision for anyimpairment to their carrying value. Tangible fixed assets Tangible fixed assets are stated at cost less depreciation. Depreciation isprovided at rates calculated to write off the cost less the estimated residualvalue of each asset over its expected useful economic life, as follows: Office and computer equipment: 3-5 years on a straight-line basis Plant and Equipment: 3-5 years on a straight-line basis Unevaluated mining properties All costs associated with mining development and investment are capitalised on aproject-by-project basis pending determination of the feasibility of theproject. Costs incurred include appropriate technical and administrativeexpenses but not general overheads. If a mining development project issuccessful, the related expenditures will be amortised over the estimated lifeof the commercial ore reserves on a unit of production basis. Where a licenceis relinquished, a project is abandoned, or is considered to be of no furthercommercial value to the company, the related costs will be written off. The recoverability of deferred mining costs and mining interests is dependentupon the discovery of economically recoverable reserves, the ability of thecompany to obtain necessary financing to complete the development of reservesand future profitable production or proceeds from the disposition of recoverablereserves. Costs on productive areas are amortised over the life of the area of interest towhich such costs relate on a unit of production output basis. Environmental provisions Appropriate and adequate provision is made for rehabilitation costs over theestimated period of exploration activity. As at 31 March 2005 no environmentaldamage had occurred and hence no provision has been made. Operating leases Amounts payable under operating leases are charged against income on astraight-line basis over the lease term. Foreign currency transactions Monetary assets and liabilities denominated in foreign currencies are translatedinto sterling at rates of exchange ruling at the balance sheet date.Transactions in foreign currencies are translated into sterling at the rate ofexchange ruling at the date of the transaction. Exchange differences are takento the profit and loss account as they arise. Results of overseas subsidiariesand their balance sheets are translated at year end rate. Exchange differenceswhich arise from the translation of the opening net assets of foreignsubsidiaries are taken to reserves. Deferred Taxation FRS 19 'Deferred tax' requires deferred taxation to be recognised in full inrespect of transactions or events that have taken place by the balance sheetdate and which could give rise to an obligation to pay more or less taxation inthe future. Deferred tax assets are only recognised to the extent they aredeemed recoverable. The group has chosen not to discount deferred tax balances,as permitted by FRS 19. Financial instruments In relation to the disclosures made in note 17: short term debtors and creditors are not treated as financial assets orfinancial liabilities except for the currency disclosures; and the group does not hold or issue derivative financial instruments for tradingpurposes. Share based employee remuneration When shares and share options are awarded to employees a charge is made to theprofit and loss account based on the difference between the market value of thecompany's shares at the date of grant and the option exercise price inaccordance with UITF Abstract 17 (Revised 2004) 'Employee Share Schemes'. Liquid resources For the purposes of the cash flow statement, liquid resources are defined asshort term deposits. 2. Loss per ordinary share The calculation of loss per share of 4.23 pence is based on the loss for theyear of £344,000 and on 8,144,579 ordinary shares, being the weighted averagenumber of ordinary shares in issue during the period ended 31 March 2005. The effect of all potential ordinary shares is anti-dilutive and thereforedilutive EPS is the same as basic EPS. Basis of preparation The figures for the year ended 31 March 2005 do not constitute full accountswithin the meaning of Section 240 of the Companies Act 1985. They have beenprepared under the accounting policies set out on the Company's statutoryaccounts for the year ended 31 March 2004. The figures for the year ended 31March 2004 have been extracted from the full accounts for that period, whichhave been delivered to the Registrar of Companies and on which the auditors gavea qualified report in relation to limitation of scope and included a statementunder section 237 (2) and (3). A copy of the Company's annual report is available on Aurum Mining's website,www.aurummining.net. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Shearwater