30th Apr 2007 07:02
Alexander Mining PLC30 April 2007 Alexander Mining plc 30 April 2007 Preliminary Results for the year ended 31 December 2006 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 2006. Key points: • Metals market conditions and outlook remain favourable • Strong cash position of £14 million at 31 December 2006 • JORC Code copper resource determined for Leon Project of 6.43Mt at 0.64% copper and 17.9g/t silver; for contained metal of 41,100t copper and 3.7Moz silver • Feasibility study on Leon copper project in north-west Argentina nearing completion • Leon regional copper exploration programme successful in identifying mineralised targets leading to preparation for drilling • Encouraging initial exploration results from Arbol Solo copper prospect as part of Leon regional exploration programme • Molinetes gold property in Peru ready for first stage exploration Operations Update The Company is pleased to provide an update on its activities in Argentina atthe Leon copper project and the Leon regional copper exploration programme, and at the Trinidad silver prospect; and in Peru at its Molinetes gold property. • Critical path expenditure has been committed to Leon • Leon final feasibility study due in June 2007 • New LS copper discovery and imminent drilling at El Salto • Geological consultant has visited Molinetes gold property Leon Copper Project The final feasibility study is scheduled to be completed in June 2007. Prior tothis, and in parallel, certain critical path expenditure has been approved toensure an optimised and streamlined project schedule in anticipation of apositive mine construction decision. This encompasses the placing of an orderfor the long-lead DC voltage rectifier for the electro-winning section of theprocessing plant; the commencement of access road upgrade work; initial siteground clearance work; and the start of engineering procurement andconstruction management (EPCM) contract negotiations and design work. Inaddition, appropriate personnel appointments continue. Leon Regional Copper Exploration Programme Now that the unusually wet weather in north-west Argentina has passed, theCompany is able to gear up its regional copper exploration programme. In orderto accelerate the evaluation of discoveries, a new man portable diamond drillingrig has been ordered. The work planned in the next few months is as follows: El Salto, S block Surface mapping and sampling on El Salto has defined mineralisation with values of up to 4.0m at 1.71% copper and 13.42g/t silver. This will be drill tested using the new portable diamond drilling rig. Arbol Solo Trenching continues at Arbol Solo, 23km due south of Leon, and where results from the first three trenches consistently gave values of between 0.42% and 0.50% copper over widths ranging between 17m to 32m. The mapping has indicated a potential mineralised strike of greater than 3,000m. The access road is currently being upgraded, ready for the planned first phase drilling programme. LS Discovery A new outcrop discovery has been made only 9.3km south-west of Leon. It has a potential strike length of 150m and a width of 20m. Los Negros At the Los Negros area, 10km to the north-west of Leon, exploration has recommenced. The project covers a surface area of approximately 260km2 and has been subdivided into four smaller areas and where a stream sediment sampling programme and restricted rock chip sampling have been carried out. The rock chip sampling collected from two zones of outcrop had average values of 11.2% copper and 10.6g/t silver in one outcrop area and 0.90% copper and 3.2g/t silver in the other. More recently, a new mineralised outcrop has been discovered which lies 900m to the north of one of the other zones and along the projected strike of the mineralised structure. Trinidad Silver Prospect Subsequent to completion of the recent drilling programme, a geological consultant has recently visited Salta to prepare a report for management on the results. Molinetes Gold Property Following the successful grant of the supreme decree, the company has completedthe outright purchase of the Molinetes gold property. Bonanza high grade goldmineralisation, reportedly up to several ounces per tonne, is being exploited by artisanal mining activity. A geological consultant has just visited the property in order to advise the Company on the programme for the first stage ofexploration involving geological mapping of the area, soil and rock chipsampling and systematic grid drilling. Matt Sutcliffe, Chairman and Chief Executive Officer, said: "I am very pleasedwith the excellent progress being made with the Company's assets. We havecommitted capital to ensure an efficient construction timetable in anticipationof a mining go-ahead decision. Meanwhile, the drilling proposed for our excitingcopper discoveries in the Salta Basin has the potential to increasesignificantly our resource base." For further information please contact: Matt Sutcliffe, Chairman and Chief Executive OfficerAlexander Mining plc1st Floor35 PiccadillyLondonW1J 0DWTel: +44 (0) 20 7292 1300Fax: +44 (0) 20 7292 1313Mobile: +44 (0) 7887 930 758Email: [email protected]: www.alexandermining.com Nominated Advisor and BrokerArbuthnot Securities Limited,Arbuthnot House,20 Ropemaker Street,London, EC2Y 9ARTel: +44 (0) 20 7012 2000 Public/Media RelationsTim BlackstoneBritton Financial PR,62 Britton StreetLondonEC1M 5UYTel: +44 (0) 20 7251 2544Mobile : +44 (0) 7957 140 416 Chairman's Statement It is with pleasure that I can report to shareholders significant progress madeby the Company during 2006. I am confident that the Company is on target toachieve its corporate growth objective to build a low cost, highly profitableand diversified mid-tier base and precious metals mining company. This will bebased on our existing properties, which may lead to economic developmentthereof, plus the acquisition of new prospects, projects and producingoperations. Importantly, our finances remain strong, as at the 31st December,2006 we had a cash position of £14.0m. Extraordinarily favourable markets for base and precious metals, and in turnmining equities, continued to prevail in 2006. This was on the back of thebooming economies in China and India, which together account for 38%of theworld's population. At the beginning of 2007, base metals prices pulled back butthis has been shown to be a healthy correction as prices since have recoveredstrongly. Gold and silver prices have remained in a powerful bull market. During the year, our main efforts have been devoted to finalising thefeasibility study for our most advanced asset, the Leon Copper Project inArgentina. Although our initial optimised schedule for completing thefeasibility study has slipped, due to delays beyond our direct control in thearrival of the pilot plant, several critical and notable milestones have beenpassed. We have completed the resource definition drilling programme and announcedindependently calculated resources to the JORC Code standard. This showed atotal combined in situ copper resource for El Cobre and El Plomo of 6.43Mt at0.64%copper and 17.9g/t silver, for contained metal of 41,100t copper and 3.7Mozsilver. A pilot solvent extraction electro winning (SXEW) processing plant wassuccessfully commissioned to treat a bulk sample of run of mine (ROM) ore. Weare particularly proud to say that it has produced what we believe is the firstcopper cathode in Argentina. Indeed, I had the honour of presenting a specialdisplay cathode to the Governor of Salta Province. We have received excellent support at a local, provincial and national level.Consistent with our policy of having a social licence to operate, it isgratifying that we have been able to source goods and services locally and toemploy local workers and national professionals commensurate with our transitiontowards potential mine development. In parallel with conducting the Leon feasibility study, we have taken theopportunity to optimise our regional land holding in the highly prospectiveSalta Basin. The taking out of additional land claims now means that we have adominant prospective land position of some 145,000 hectares for coppermineralisation. Accordingly, we have been actively searching for potential Leonsatellite or standalone regional copper deposits. Several promising targets havebeen generated and exploration programmes will gear up during 2007. At the Company's other prospects in northwest Argentina, we completed an initialdiamond drilling programme at the Rachaite polymetallic porphyry targetproperty, and commenced diamond drilling at Trinidad for silver mineralisation.Results from the former were inconclusive in the context of a decision to commitfurther funds on our own and we hope to be able to secure a joint venturepartner. At Trinidad we expect to announce results soon. In northern Peru at Molinetes, we have received the Supreme Decree allowing usto purchase this highly exciting gold property. Artisanal miners have beenactive due to reported spectacular bonanza gold grades and we look forward tostarting exploration. Results from drilling at the Sulcha gold prospect inOtuzco Province were disappointing and we have relinquished our interest in theproperty. Outlook Market sentiment and fundamentals look highly favourable for another rewardingyear and beyond for the mining industry and investors. With the standard ofliving in China and India roughly a fifth and one tenth respectively of that ofthe high income countries, this bodes well for the pace of their economic growthto continue at exceptional levels for many years to come. Our preference for seeking exposure to copper, gold and silver appears wellplaced. All are enjoying strong current price levels, with healthy outlooks,which should allow an exceptional return on capital for good quality projects.Consistent with our business objective we have investigated numerous newopportunities. The challenge has been to find those which are value accretive ina market where vendor expectations are often unrealistic. Nevertheless, weremain confident that we will be successful. In the prevailing industry environment, where it is increasingly difficult tosecure high quality professionals, we are particularly fortunate to haverecruited a first class mine building and operating team in Argentina. Thisgives us the capability to grow into a significant mining company. The Company prides itself on the quality of all of its employees and I wouldlike to thank them and my fellow directors, consultants and advisors for theirdedication and support. We look forward to the year ahead with considerableoptimism. Matt SutcliffeChairman and CEO Consolidated profit and loss account Pro-forma year ended 31 December Year ended restated 31 December 2005 2006 £'000 £'000 Administrative expenses (2,495) (1,889)Exploration and development expenses (931) - ------- ------ Operating loss (3,426) (1,889) Provision against investment in Associate - (73)Interest receivable 784 708Interest payable and similar charges (669) (6) ------- -------- Loss on ordinary activities before taxation (3,311) (1,260)Tax on loss on ordinary activities (20) - ------- -------- Loss on ordinary activities after taxation and retained for the period (3,331) (1,260) ------- ------- Basic and diluted loss per share (pence) (2.48)p (1.08)p ------- ------- All amounts relate to continuing operations. Consolidated statement of total recognised gains and losses Pro-forma year ended Year ended 31 December 31 December restated 2006 2005 £'000 £'000 Loss for the period (3,331) (1,260)Exchange loss on foreign currency net investments (47) - ------- -------Total recognised loss for the period (3,378) (1,260) ------- ------- Consolidated reconciliation of movements in shareholders' funds Pro-forma year ended Year ended 31 December 31 December restated 2006 2005 £'000 £'000 Loss for the period (3,331) (1,260)Exchange loss on foreign currency net investments (47) -Share option charge recognised in reserves 496 337Share capital subscribed - Alexander Mining plc - 18,516Share capital subscribed - Alexander Gold Group Limited - 3,506 ------- ------- Movement in shareholders' funds (2,882) 21,099 Shareholders' funds at start of period 21,597 498 ------- -------Shareholders' funds at end of period 18,715 21,597 ======= ====== Consolidated Balance Sheet As at As at 31 December 31 December restated Notes 2006 2005 £'000 £'000 Fixed assetsIntangible fixed assets 3 4,716 2,253Tangible fixed assets 54 73Investments 100 100 -------- ------- 4,870 2,426 ------- -------Current assetsDebtors 222 539Cash at bank and in hand 2,184 1,982Short term bank deposits 11,814 17,018 ------- ------ 14,220 19,539 Creditors: amounts falling due within one year (375) (368) ------- ------ Net current assets 13,845 19,171 ------- ------Total assets less current liabilities 18,715 21,597 ======= ====== Capital and reservesCalled up share capital 13,453 13,453Share premium account 11,850 11,850Merger reserve (2,487) (2,487)Share option reserve 833 337Profit and loss account (4,934) (1,556) ------- -------Shareholders' funds 18,715 21,597 ======= ======= Consolidated Cash Flow Statement Pro-forma Year ended year ended 31 December 31 December Notes 2006 2005 £'000 £'000 Net cash outflow from operating activities 5 (1,574) (1,756) Returns on investment and servicing of financeInterest received 887 494Interest paid and similar charges - (6) ------- ------- Net cash inflow from returns on investment and servicing of finance 887 488 ------- -------Taxation (3) - Capital expenditure and financialinvestmentPurchase of tangible fixed assets (24) (107)Purchase of intangible fixed assets (3,572) (1,940)Investment in associated undertaking - (32)Acquisition of other investments - (100) -------- ------- Net cash outflow from capital expenditure and financial investment (3,596) (2,179) -------- -------Management of liquid resourcesTransfer from/(to) short term bank deposits 4,580 (16,498) -------- -------- Net cash inflow/(outflow) before financing 294 (19,945) -------- -------- FinancingIssue of shares by Alexander Mining plc - 20,000Issue of shares by Alexander Gold Group Limited - 3,371Share issue costs - (1,483) -------- ------- Net cash inflow from financing - 21,888 -------- ------- Increase in cash 6 294 1,943 ======== ====== Notes 1. Financial statementsThe financial information set out above does not constitute the Group'sstatutory information for the year ended 31 December 2006, but is derived fromthose accounts. The financial statements for 2006 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 statementsThe 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 merger accountingprinciples set out in Financial Reporting Standard 6 and Schedule 4(A) to theCompanies 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 and cash flows of AGGL from 1 January 2005. Thecomparative period is presented as pro-forma information because this periodcommences prior to the date of formation of the Company. 3. Intangible fixed assetsIntangible 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. Deferred exploration costs £'000Cost and net book valueAs at 1 January 2006 2,253Additions 3,394Written-off1 (610)Provision2 (321) ------As at 31 December 2006 4,716 ====== 1 Costs incurred to date at the Group's Sulcha project were written-off during the year together with some of the costs associated with the Leon Regional exploration programme.2 A provision has been made against costs associated with the Group's Rachaite project pending the outcome of joint venture negotiations and subsequent further exploration results. 4. Adoption of FRS20 - Share-based payment The Group has adopted Financial Reporting Standard (FRS) 20 'Share-basedPayment' during the year. The adoption of this standard constitutes a change inaccounting policy. Therefore, the impact has been reflected as a prior yearadjustment in accordance with Financial Reporting Standard 3. The standard requires that where shares or rights to shares are granted to thirdparties, including employees, a charge should be recognised in the profit andloss account based on the fair value of the shares at the date the grant ofshares or right to shares is made. For the year ended 31 December 2006, the adoption of FRS 20 has increasedoperating loss and retained loss for the year by £496,000, and increased lossper share by 0.37p. The effect of the adoption of FRS 20 on prior year consolidated comparatives forthe year ended 31 December 2005 is as follows: As previously Impact of As restated reported FRS 20 £'000 £'000 £'000Operating loss (1,552) (337) (1,889)Loss for the year (923) (337) (1,260)Loss per share (pence) (0.79)p (0.29)p (1.08)p ======== ======= ======= There is no effect on the net assets of the Group at 31 December 2005. 5. Net cash outflow from operating activities 31 December 31 December 2006 2005 £'000 £'000 Operating loss (3,426) (1,889)Depreciation and amortisation charge 42 36Decrease/(increase) in debtors 210 (299)Increase in creditors 172 54Non-cash expenditure 497 342Intangible fixed assets written-off or provided for 931 - ------- -------Net cash outflow from operating activities (1,574) (1,756) ======= ======= 6. Reconciliation of net cash flow to movements in net funds As at Cash flows Foreign As at 31 December currency 31 December 2005 translation 2006 differences £'000 £'000 £'000 £'000 Cash at bank and in hand 1,982 294 (92) 2,184Short term bank deposits 17,018 (4,580) (624) 11,814 ------ ------- ------ ------Total 19,000 (4,286) (716) 13,998 ====== ======= ====== ======= 7. DividendsNo dividend is proposed Annual ReportThe Annual Report will be sent to all shareholders on or around 14 May 2007.Additional copies will be made available to the public, free of charge, from theCompany's registered office at 35 Piccadilly, London, W1J 0DW. Annual General MeetingThe Company's Annual General Meeting will be held on 13 June 2007 at 10am at theHoliday Inn London-Mayfair, 3 Berkeley Street, London, W1J 8NE. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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