30th Nov 2007 07:00
Norseman Gold PLC30 November 2007 Norseman Gold plc / Epic: NGL / Index: AIM / Sector: Mining & Exploration Norseman Gold plc ("Norseman" or the "Company") Preliminary results for the year ended 30 June 2007 Norseman Gold plc, the AIM listed Australian gold production company, is pleasedto announce the unaudited results for the year ended 30 June 2007 relating tothe acquisition and two months of trading of the Norseman Gold Project inWestern Australia. Highlights during year and following the completion of the year • Successful re-Admission in April 2007 following the acquisition of Central Norseman Gold Corporation Ltd and smooth takeover of the Norseman Gold Mine in Western Australia. • Considerable progress at the mine, particularly in relation to mine development and improving production profile. • New operating equipment ordered expected to result in annual savings in excess of $AUD3.1m per annum. • Regional drilling programme commenced November 2007, focused on discovering a third mine that would allow mining to increase to approx. 700,000 tonnes of ore per annum leading to a 150,000 ounce production capacity by 30 June 2010. • Major upgrade works on the Treatment Plant completed ahead of schedule. • Successful aggressive recruitment programme undertaken aimed at maximising underground production. • Negotiations underway to provide the most economical supply of power to the site. • Continual monitoring of regional area for corporate opportunities that can add to shareholder value. • Intention to dual list on the Australian Stock Exchange by March 2008 to facilitate an increased shareholder base and create a wider interest in the Company. • Proposed 1 for 5 share consolidation For further information visit www.norsemangoldplc.com or contact: David Steinepreis Norseman Gold Plc Tel: +61 (0) 89 420 9300Romil Patel Blue Oar Securities Plc Tel: 020 7448 4400Guy Wilkes Ocean Equities Ltd Tel: 020 7786 4370Hugo de Salis St Brides Media & Finance Ltd Tel: 020 7242 4477 Chairman's Statement The financial results of the Company represent only two months of operationssince the acquisition of the Central Norseman Gold Mine on 30 April 2007.Therefore, the trading results are not meaningful on an annual basis. The takeover of the mine was as smooth as could be anticipated considering thatit had been operated under administration for over 11 months and a number ofcritical mining issues needed to be addressed due to the short term outlook thatexternal administrators normally adopt, particularly in relation to minedevelopment which is the long term future of any mining operation. We arepleased to report that significant progress has been made in this area as morestoping faces are now available for mining. The Board believe that catch up indevelopment will take up to a year to reach our planned level. Following the acquisition of Central Norseman Gold Corporation Ltd ("CNGC"), theBoard undertook a review of the carrying values of the mine properties inproduction and future amortisation rates. This resulted in an accountingwritedown to provide a more realistic matching of revenue with on-going capitaldevelopment and expenditure. This in no way impacts on the operation on a cashbasis and purely reflects modern accounting standards and a conservativeapproach by the Board. The accounting treatment of goodwill on acquisition is complex and impairmentreviews difficult. The mine has been operating for more than 65 years yetimpairment reviews would consider only a 3 year future period which had thepotential to distort results. Therefore the Board took a conservative view andpost-acquisition reduced the capitalised goodwill but this does not affect theunderlying potential of the Norseman Gold Project. Looking forward, which is the Board's primary focus, we can confirm that, sincethe acquisition of CNGC and in accordance with the stated strategies in theAdmission Document that accompanied the Re-Admission to trading on AIM in April2007, the following positive steps have and are being taken: • A total review of operating equipment has resulted in the placing of an order for $AUD10.3m of new equipment (subject to finance) to be delivered over the next six months to replace part of the ageing fleet which was built up by the previous owners. This is expected to deliver annual savings in excess of $AUD3.1m per annum when fully implemented in May 2008. • A regional drilling programme commenced in November 2007 with the aim of discovering a third mine on site (current mines are Bullen and Harlequin) that would allow mining to increase to approx 700,000 tonnes of ore per annum leading to a 150,000 ounce production capacity. • Major upgrade works on the Treatment Plant originally scheduled for December 2007 have been completed ahead of schedule in September and October 2007. • A successful aggressive recruitment programme aimed at maximising underground production was undertaken despite the intense pressure associated with the critical shortage of manpower being experienced in the mining industry in Western Australia. • Negotiations continue for the most economical supply of power to the site. There are savings that have been identified but the timing of this are as yet uncertain. • Continual monitoring of our regional area for corporate opportunities that can add to shareholder value. The Board intends to press for the dual listing of the Company on the AustralianStock Exchange to facilitate an increased shareholder base and create a widerinterest in the Company. The Board hopes to achieve this by March 2008. As previously stated, our task has just begun and the ensuing twelve months willbe one of re-fitting the mine and stabilisation of the workforce that we hopewill lead to a substantially improved production profile that will limit some ofour risks although the risk of mined grade is still one of the most exactingtasks management faces. We look forward to a prosperous 2007/8 as the mine and its highly motivatedmanagement team re-establish Norseman as a premier gold mine. Vince Pendal Chairman UNAUDITED GROUP INCOME STATEMENTFOR THE YEAR ENDED 30 JUNE 2007 --------------------------------------------------------------------------------------------------------------------- Year ended Period ended 30 June 2007 30 June 2006 £ £ Continuing operations Group revenue 4,869,941 - Cost of sales (4,324,273) - __________ __________ Gross profit 545,668 - ---------------------------------------------------------------------------------------------------------------------Administrative expenses before impairmentof goodwill, depreciation and amortisationand charge for share-based payments (723,261) - Impairment of Goodwill on acquisition (15,927,910) -Depreciation and Amortisation (641,431) -Share-based payments (531,370) ---------------------------------------------------------------------------------------------------------------------- Total administrative expenses (17,823,972) - __________ __________ Group operating loss (17,278,304) - Interest receivable 49,517 -Interest payable (149,430) - __________ __________ Loss before taxation (17,378,217) - Taxation - __________ __________ Loss for the period (17,378,217) - ========= =========Attributable to:Equity holders of the Company (17,378,217) - ========= ========= Loss per share (pence) NoteBasic 2 (13.4) -Diluted 2 (13.4) - ========= ========= UNAUDITED GROUP BALANCE SHEETAS AT 30 JUNE 2007 --------------------------------------------------------------------------------------------------------------------- As at As at 30 June 2007 30 June 2006 £ £ASSETSNon-Current AssetsProperty, plant and equipment 3,514,913 -Mine properties in production phase 4,965,563 -Exploration and evaluation expenditure 421,487 -Goodwill 6,247,500 - __________ __________ 15,149,463 - __________ __________Current AssetsTrade and other receivables 827,200 -Inventories 2,886,069 -Cash at bank and in hand 7,347,233 1 __________ __________ 11,060,502 1 __________ __________Total Assets 26,209,965 1 __________ __________LIABILITIESCurrent LiabilitiesTrade and other payables 2,382,238 -Provisions 1,080,688 -Convertible Notes 1,955,258 - __________ __________ 5,418,184 - __________ __________Non-Current LiabilitiesProvisions 1,927,280 -Convertible Notes 6,280,800 - __________ __________ 8,208,080 - __________ __________Total Liabilities 13,626,264 - __________ __________Net Assets 12,583,701 1 ========= =========EQUITYCapital and Reserves NotesShare capital 3 994,500 1Share premium account 3 27,807,030 -Currency translation reserve 4 400,756 -Equity reserve 4 759,632 -Retained losses (17,378,217) - __________ __________Shareholders' Equity 12,583,701 1 ========= ========= UNAUDITED GROUP CASH FLOW STATEMENTFOR THE YEAR ENDED 30 JUNE 2007 --------------------------------------------------------------------------------------------------------------------- Year ended Period ended 30 June 2007 30 June 2006 £ £ Net cash outflow from operating activities (699,210) - __________ __________Investing activitiesFunds used in mine properties & production (367,451) -Payments to purchase plant and equipment (20,992) -Costs of acquiring subsidiaries (17,409,487) -Interest received 49,517 -Interest payable (149,430) - __________ __________ Net cash used in investing activities (17,897,843) - __________ __________ Financing activitiesCash proceeds from issue of shares 27,225,999 -Share issue costs (1,682,470) - __________ __________ Net cash from financing activities 25,543,529 - __________ __________ Increase in cash and cash equivalents 6,946,476 - Effect of foreign currency translation reserve 400,756 - Cash and cash equivalents at beginning of year 1 1 __________ __________ Cash and cash equivalents at end of year 7,347,233 1 ========= ========= NOTES TO THE PRELIMINARY RESULTSFOR THE YEAR ENDED 30 JUNE 2007 --------------------------------------------------------------------------------------------------------------------- 1. Basis of preparation The financial information in this announcement has been prepared on a going concern basis, under the historical cost convention and in accordance with International Financial Reporting Standards, as adopted by the European Union ("IFRS"), including IFRS6 'Exploration for and Evaluation of Mineral Resources' and in accordance with the Companies Act 1985. The financial information set out in this announcement does not constitute the Company's statutory accounts for the year ended 30 June 2007. The statutory accounts for the year ended 30 June 2007 will be finalised on the basis of the financial information presented by the directors in this preliminary announcement and will be delivered to the Registrar of Companies following the Company's general meeting. 2. Loss per share The basic loss per ordinary share has been calculated using the loss for the financial year of £17,378,217 (2006: nil) and the weighted average number of ordinary shares in issue of 129,517,317 (2006: 2). The diluted loss per share has been calculated using a weighted average number of shares in issue and to be issued of 129,517,317 (2006: 2). The diluted loss per share has been kept the same as the basic loss per share as the conversion of share options decreases the basic loss per share, thus being anti-dilutive. 3. Share capital and options 30 June 2007 30 June 2006 £ £ Authorised 4,000,000,000 Ordinary shares of 0.25p each 10,000,000 10,000,000 ======== ======== Allotted, called up and fully paid Ordinary shares of 0.25p each 994,500 1 ======== ======== Issued and fully Share premium ------------------------------------------------- paid capital reserve Movement in issued and fully paid capital and Number £ £ share premium reserve Issued on incorporation 2 1 - Issued on 4 July 2006 18 - - ---------------- ------------------- -------------------- 20 1 - Subdivision of capital on 4 July 2006 (12) - - ---------------- ------------------- -------------------- On issue after subdivision of capital 8 1 - Issued on 14 August 2006 22,000,000 55,000 - Issued on 28 September 2006 22,000,000 55,000 55,000 Issued on 5 October 2006 10,999,992 27,499 522,500 Issued on 8 January 2007 61,440,000 153,600 2,918,400 Issued on 22 February 2007 28,780,000 71,950 1,367,050 Issued on 24 April 2007 - Placing 220,000,000 550,000 21,450,000 Issued on 24 April 2007 - Consideration Shares 8,330,000 20,825 812,175 Issued on 24 April 2007 - Consortium Shares 24,250,000 60,625 2,364,375 Costs of the issue - - (1,682,470) ---------------- ------------------- -------------------- 397,800,000 994,500 27,807,030 ================ =================== ==================== Share options: The details of share options outstanding at 30 June 2007 are as follows: Number of Share options At 1 July 2006 - Granted during the period 19,300,000 Exercised during the period - Lapsed during the period - _________ At 30 June 2007 19,300,000 ========4. Reserves Equity reserve Foreign Total Reserves, movements: £ currency reserve £ £ At 1 July 2006 - - - Share based payments 531,370 - 531,370 Equity component of convertible note 228,262 - 228,262 Foreign currency transactions - 400,756 400,756 ------------------ ----------------- ------------------ At 30 June 2007 759,632 400,756 1,160,388 ================== ================= ================== 5. Intangible assets - Goodwill Group: Goodwill £ Cost At 1 July 2006 - Arising on acquisition of subsidiaries (note 6) 22,175,410 __________ At 30 June 2007 22,175,410 __________ Amortisation and impairment At 1 July 2006 - Provision for amortisation and impairment (15,927,910) ________ At 30 June 2007 (15,927,910) __________ Net book value At 30 June 2007 6,247,500 ======== Goodwill arose on the acquisition of the Company's subsidiary undertakings (Note 6). The Group tests goodwill for impairment if there are indicators that goodwill might be impaired. The Board impaired the value of goodwill at 30 April 2007. 6. Investments - subsidiary undertakings Loans to Shares in Subsidiary Subsidiary Undertakings Undertakings Total £ £ £ Company Cost At 1 July 2006 - - - Additions - at cost - 28,997,487 28,997,487 Loans to subsidiaries in period 3,495,542 - 3,495,542 Impairment - (15,927,910) (15,927,910) __________ __________ __________ At 30 June 2007 3,495,542 13,069,577 16,565,119 ========= ========= ========= The loans due from subsidiaries are repayable to the Company in more than one year with no fixed repayment terms. Subsidiary undertakings: The Company incorporated its subsidiaries, Davos Resources Pty Ltd and Norseman Gold Pty Ltd on 28 August 2006, and 22 December 2006 respectively. The Company acquired the entire share capital of its subsidiary Central Norseman Gold Corporation Ltd on 30 April 2007. Name of company Country Holding Proportion held Nature of business Central Norseman Gold Ordinary Corporation Ltd Australia Shares 100% Gold mining company Davos Resources Pty Ltd Australia Ordinary 100% Mineral exploration Shares Norseman Gold Pty Ltd Australia Ordinary 100% Holding company Shares The acquisition of the subsidiary undertakings has been accounted for using acquisition accounting ("the purchase method"). The aggregate assets and liabilities acquired were as follows: Book and fair values £ £ Non-Current Assets Property, plant & equipment 3,807,190 Mine properties in production 4,998,000 Exploration and evaluation assets 504,233 __________ 9,309,423 Current Assets Inventories 436,073 Current Liabilities Provisions 1,026,723 __________ Total net current assets (590,650) Non-Current Liabilities Provisions 1,896,696 __________ Net assets acquired 6,822,077 Goodwill arising on acquisition (note 5) 22,175,410 __________ Total cost of acquisition 28,997,487 ========= Satisfied by: Cash 16,595,703 Shares issued as Consideration Shares 833,000 Convertible loan notes 8,330,000 Shares issued as Consortium Shares 2,425,000 Costs of the acquisition 813,784 __________ 28,997,487 ========= 7. Proposed consolidation of capital The Company proposes to seek shareholder approval at an extraordinary general meeting the consolidation of the Company's ordinary share capital resulting in every 5 Existing Ordinary Shares being consolidated into 1 New Ordinary Share. 8. Dividend The Directors do not propose the payment of a dividend. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Norseman Gold