18th May 2005 07:00
Patagonia Gold PLC18 May 2005 18 May 2005 PATAGONIA GOLD PLC ("Patagonia Gold" or "the Company") FINAL RESULTS for the year ended 31 December 2004 Patagonia Gold announces its results for the year ended 31 December 2004. Chairman's statementThe financial result for the year showed a loss after amortisation of goodwillin the sum of £757,520, of £3,018,092 (2003: £1,738,351) representing a loss pershare of 1.3p (2003: 1.3p). The increase in the loss over the comparative periodis a result of the acquisition in December 2003 of the remaining 50 per cent.interest in the Argentinean Joint Venture Company of which we now own 100 percent. Our budget for exploration and administrative costs runs at approximately US$5million per annum and has been funded from equity fund raisings. A placing ofnew shares to raise £2.8 million (approximately US$5.25 million) was carried outin November 2004 at a price of 10p per share. Your directors and theirassociates contributed over half of the funds raised in order to maintain theirpositions and to underline their confidence in the Company's strategy. During the year under review the Company has been actively exploring in SouthAmerica and New Zealand with an emphasis and focus on several new and excitingproperties. Full details of the Company's explorations are set out in the attachedOperations Report, the highlights being: • The discovery of significant copper values and mineralisation at the Gastreproperty in the north central Chubut province of Argentina. • Sample values being returned up to 28.1g/t gold at the Cerro Colorado Projectin Chubut province south of the Esquel Gold Project. • A mineralised structure at the Cerro el Morro Project being traced for over akilometre showing values of up to 24.6 g/t gold. This project is in the RioNegro province of Argentina. • The already established Crespo Project in the Chubut Province of Argentina hasidentified discovery veins which confirm this as a gold rich district of highpotential. In December 2004 we announced the acquisition of Minamal SA from the Miguens/Bemberg family. The assets of this company are a 40 per cent. interest in theland adjacent to the Esquel Gold Project. This is a significant new asset forthe Company in exploration properties which are located in a highly prospectivenew gold district. We are most fortunate to have a strong local shareholder base through theMiguens/Bemberg family led by Carlos Miguens and Gonzalo Tanoira. Theirinvolvement and local expertise has assured that we have maintained a sociallicence for our activities and in addition we adhere to very high environmentalstandards. Demand for gold from around the world has put ever more pressure on supply, fewmajor gold projects are coming on stream and the existing projects in productionhave finite reserves. As a result the gold price has remained strong and aboveUS$400 per oz. We are fortunate to have a dedicated and professional team running ouroperations in South America. The Company's objective is to create shareholdervalue through the discovery of economic mineral deposits and by bringing theseto production. Sir John CravenChairman18 May 2005 Executive summary During 2004 Patagonia Gold Plc ("PGD") has continued to consolidate its strongposition in the Southern region of South America, maintaining a disciplinedapproach towards the exploration and development of its substantial propertyportfolio, the acquisition of new properties and relinquishment of propertiesthat fail to meet expectations. At the height of the current exploration season PGD had eleven geologicalexploration teams, supported by two independent Consulting Geologists, workingin Southern Argentina in the Rio Negro, Chubut and Santa Cruz provinces and inSouthern Chile. Two substantial exploratory drilling campaigns were completed on properties 600kilometres apart, in Coyhaique (Chile), and Crespo (Argentina), a commendableachievement for both management and technical staff in just the second full yearsince the Company's formation. In addition the geological exploration teamscontinued with the exploration of PGD's other properties bringing several to thepoint where exploration drilling is now required. The Crespo project, located in south central Chubut (Argentina), remains themost advanced prospective property in PGD's large portfolio. Exploratory drilling on the Cabana and Jasper vein zones, completed in November2004, returned significant high-grade gold intersections. These values weresubsequently established to be associated with supergene enrichment and weregenerally restricted to the intersection of two main structures. Thus theexploration effort was refocused on other targets of merit within the Project,which now require drilling. Results from a property wide stream sediment sampling programme has led to thediscovery of five additional large vein zones, returning grades of up to 14g/tgold, further confirming Crespo as a gold rich district of high potential. Drill testing of several of the new discoveries will be carried out in the 2005/6 season. PGD's other advanced exploration property, showing high potential, is Cerro ElMorro, located in the Rio Negro province, where sampling of the many vein setscontained within the property has returned values up to 24.6 g/t gold and 233 g/t silver. An Environmental Impact Study has been completed and submitted for aplanned 2,000 metres scout drilling campaign. There are several other highly prospective properties that have direct drillingtargets for next season including Cerro Colorado, located in the Andeancordillera in the Chubut province, where significant values have been returnedincluding 28.1 g/t gold and 233 g/t silver over 2 metres. The highlight of the period was the exciting discovery at Gastre of significantdisseminated copper mineralisation with values of $am3 per cent. copper andassociated silver values of 170g/t along strike and to the west of IMA's Navidadsilver project. PGD's Gastre Block, consists of 10 cateos covering 950 squarekilometres, and is located in north central Chubut within the proven mineralisedbelt that extends from IMA's Navidad silver project in the south east toAquiline's tenements, containing the Calcatreu gold project, in the north westand is considered extremely prospective to host both base metal and preciousmetal mineralisation. Exploration has been intensified at Gastre with two geological teams currentlyworking to prove continuity of mineralisation along the 4.5 kilometre structurethat joins the two discoveries, 'Copper Hill' and 'Copper Dome'. Early in 2004 PGD formed a Public Relations team, located both in Buenos Airesand Chubut, specifically to deal with access for our properties. The team hasbeen working with Federal and Provincial Governments, local authorities andlandowners and has been successful in gaining access to many of the areaspreviously denied. In December 2004 PGD acquired the entire issued capital of Minamal SA whichholds 40 per cent. interests in three exploration companies, Huemules SA with 14mineral properties, Leleque Exploration SA with 20 mineral properties and MineraNahual Pan SA with 11 mineral properties. Meridian Gold Inc. holds the remaining60 per cent. of these companies. By acquiring Minamal SA, PGD gained a significant interest in a highlyprospective area that is host to the Esquel Gold Project one of the world'slargest high-grade gold deposits. Intensive property wide exploration of the Coyhaique Project, including drillingof the four main veins, failed to meet expectations. PGD's target at Coyhaiquewas to identify a substantial economic deposit. Results did not providesufficient confidence that this target would be achieved. Accordingly the optionto purchase was relinquished. PGD maintains a strong awareness of its responsibilities towards the environmentand existing social structures. Careful attention is given to ensure that allexploration work is carried out strictly within the guidelines of the relevantmining and environmental acts. PGD attempts, where possible, to hire localpersonnel and use local contractors and suppliers. PGD maintains a professional and extensive exploration commitment in SouthAmerica with the prime objective of discovering and developing an economicalmining project. Bill HumphriesManaging Director18 May 2005 Operations reportLand PGD through its three 100 per cent. controlled subsidiaries, Patagonia Gold SAin Argentina, Patagonia Gold SCM in Chile and HPD New Zealand Inc, holdexploration or mineral exploitation permits or has under application or optionto purchase the following property areas: ArgentinaRio Negro 154 square kilometresChubut 3,156 square kilometresSanta Cruz 70 square kilometres ChileRegion XI 104 square kilometres New ZealandNorth and South Islands 4,630 square kilometres Exploration PGD is maintaining a high level of exploration activity in southern Argentinaand Chile with up to eleven geologists and supporting technical staff, includingconsultants Nick Callan and Damien Koerber, operating in the Chubut, Rio Negroand Santa Cruz Provinces of Argentina and across the border in Chile. Internationally renowned consultants Dick Sillitoe and Greg Corbett are used onan as needs basis. Argentina Crespo Project: Located in south western Chubut 200 kilometres south east ofEsquel, the nearest town is Gobernador Costa immediately to the north of theproject. The area is predominantly arid and low scrub with the main activitybeing sheep farming. The project area consists of six cateos and three minas under option, coveringan area of 535 square kilometres. The dominant geology of the area is Jurassicandesite volcanics forming a gentle undulating topography giving a subduedoutcrop character and offering good access. Jurassic volcanics is a proven hostfor low sulphidation epithermal gold veins, as seen at Esquel and CerroVanguardia Continued exploration of this established gold district has maintained themomentum of discovery. Following successful exploration drilling of the Cabana vein on the CrespoProject in early 2004, which produced encouraging results with a high gradeshoot being identified at the intersection of the main structure and aneast-west vein-set, a follow-up programme was conducted in late 2004. Significant results include Hole From To Interval Gold Silver (m) ppm ppmCR-69 7.0 10.0 3.0 13.78 6.7CR-70 4.0 6.0 2.0 12.03 2.5CR-70 14.0 16.0 2.0 5.65 0.7CD-86 28.0 33.6 5.6 8.82 27.1CD-86 58.5 60.0 1.5 3.02 3.0CD-86 65.2 67.0 1.8 2.23 1.6 The follow-up exploration drill programme targeted not only the Cabana vein butalso mapped extensions to this and the Jasper vein which had, subsequent to thefirst programme, been mapped in detail, sampled, trenched and shown to beauriferous. This programme, comprising 45 holes for 2,168 metres, alsosuccessfully tested the anomalies defined by a geophysics programme in theCabana, Jasper and intervening areas. Buried (hidden) quartz vein structureswere intersected but gold tenure was below expectations. Appraisal of the results of both programmes indicated that the high gold valuesencountered were associated with supergene enrichment and were generallyrestricted to the intersection of the two main structures with the remainder ofthe zones tested returning lower grades and inconsistent depth potential. The Crespo Project area contains a number of veins other than Cabana and Jasperand exploration is continuing with interrogation of the newly acquired highdefinition 'Quickbird Landsat' in association with the BLEG (Bulk LeachExtractable Gold) anomalies generated from the stream sediment survey. This verysuccessful exploration approach, combined with field investigation continues toreveal targets requiring detailed mapping and sampling. The BLEG survey hasproved successful leading to the discovery of the Northern veins, extending over2.2 kilometres, returning values up to 7.57 g/t gold and the Western veinsreturning values up to 14.2 g/t gold. Continued exploration of this established gold district has maintained themomentum of discovery with two new sub parallel veins, extending for over 2.3kilometres, having recently been discovered in the central southern part of theproperty. Mapping and sampling of these veins ('V' and 'Y') is currently inprogress. Additionally the Pedro vein has now been extended to over 2 kilometres with anumber of grades $am3g/t gold. The recently completed geophysics survey conducted over the 'Paleosurface'successfully defined a 300 metres x 100 metres resistive zone with co-incidentchargeability linking the two highest anomalous gold samples. The resistor maybe the geophysical signature of a buried vein as it sits under a paleosurfacecontaining fossilized plant remains potentially indicating a hot springenvironment related to epithermal mineralisation. The discovery of new veins and the extension of known mineralisation in theCrespo Project area confirm this as a gold rich district of high potential.Further discoveries are anticipated. Environmental Impact Studies are currently being prepared for submission inadvance of drill testing several of the above targets, anticipated early in theforthcoming field season. The Gastre Block: Consisting of 10 cateos covering 950 square kilometres, islocated in north central Chubut within the proven mineralised belt extendingfrom IMA's Navidad silver project in the south east to Aquiline's tenementscontaining the Calcatreu gold project in the north west and is consideredextremely prospective to host both base metal and precious metal mineralisation. Mapping and sampling of the southern section of the claims, in a zone namedCopper Hill, has identified significant disseminated copper mineralisation withvalues of $am3 per cent. copper and associated silver values of 170g/t. Themineralisation is related to a robust linear structure in the same orientationand along strike from one of the major Navidad mineralised zones to the east.Over 4,500 metres to the west of Copper Hill, along the same trend, in anextensive area called Copper Dome, copper mineralisation has also beenidentified with values over 1 per cent. copper and 50g/t silver. Significant samples include Property Sample Copper Silver percentage ppm 33957 3.10 71.7Gastre 33958 1.63 37.0 33959 2.29 47.7 33962 3.23 170.0 33964 1.84 89.9 300 metres south east of Copper Hill at the base of the Canadon Asfaltosequence, (host to the Navidad deposit), rock chip samples have reported resultsof $am3 per cent. copper and 71g/t silver as disseminated mineralisation at theFenceline Prospect. In addition previous prospecting in an area adjacent to thiscopper rich trend returned values of up to 5.1g/t gold and 52g/t silver. Mapping and sampling of this large area is continuing, expanding from the knownmineralisation centres around Copper Hill. Modelling suggests metal zonationwith increasing gold potential to the north. Further definition of themineralised structure will be enhanced by a planned geophysics survey. Cerro Colorado: This exciting prospect, comprising two 'minas' and a cateocovering almost 200 square kilometres, is located in the Andean cordillera tothe south of Esquel, and contains mineralisation and extensive alterationtypically associated with a hi-sulphidation gold system. Extensive chip channelsampling over the central zone, 700 metres long by 300 metres wide, of advancedargillic alteration has returned very significant gold results, including: • 28.1g/t gold and 88.1g/t silver over 2 metres • 6.22g/t gold and 28.3g/t silver over 7 metres • 7.31g/t gold and 32.2g/t silver over 5 metres • 6.65g/t gold and 65.6g/t silver over 7 metres The tenor of these results continues to maintain this prospect's importance. Themineralised system is postulated to have a stratigraphic control being fed by NEstriking structures. A report on all available information both recent andhistoric is being collated to assist in planning further infill sampling anddetailed mapping prior to drill programme preparation. Cerro El Morro: Further exploration of this cateo has identified additionalveining. Sampling has increased the tenor of the mineralisation with a samplefrom the last programme returning 24.6g/t gold and 233g/t silver. A recentlycompleted geophysics (combine magnetic, IP and chargeability) survey over thevein field has enabled better definition of the structures, which in places haveno surface expression. One of these structures is now traceable for over akilometre and contains values in the south east of 3.67g/t gold and 269g/tsilver increasing to 24.6g/t gold and 233g/t silver in the north west, withgeophysics also indicating the structure to be considerably wider in the northwest. An Environmental Impact Study has been submitted to the Rio Negro Province andon receipt of the approval a 2,000 metres scout drill programme will commence.The Cerro El Morro property of 10,000 hectares in eastern Rio Negro isconsidered a 'year round' location. Carrenleufu Block: This block of six cateos, covering 600 square kilometres, islocated in the Andean cordillera along the border with Chile in south westernChubut. A stream sediment survey including panned concentration of streambedmaterial and large sediment samples for BLEG analysis over this remote area wascompleted early in the season. The results from this first pass drainagesampling survey included several panned concentrate samples with values up to 6g/t gold as well as anomalous BLEG samples in different drainages. Visible gold in panned concentrates was observed. Initial follow-up work of thesouthern anomalous drainage covering an area of approximately 16 squarekilometres has, in a further four localities, identified visible gold in pannedconcentrates. Exploration efforts are currently focused on identifying thesource of this gold mineralisation as well as investigating other anomalies. PGD is actively exploring the Patagonia regions of Argentina and Chile with anexperienced technical exploration manager leading a large team of competentgeologists. In association with in the 'field exploration' PGD is also pursuingacquisition opportunities by option or joint venture: Currently fourConfidentiality Agreements are in force in order that PGD can review data onother company's properties. Considerable effort by PGD staff has been exerted in community relations. Thishas produced more efficient co-ordination with Provincial authorities as well asenhancing landowner relations. Minamal SA: In late December PGD acquired the entire issued capital of MinamalSA which holds 40 per cent. interests in three exploration companies, HuemulesSA with 14 mineral properties, Leleque Exploracion SA with 20 mineral propertiesand Minera Nahual Pan SA with 11 mineral properties. Meridian Gold holds theremaining 60 per cent. of these companies. Minamal SA has a shareholders' agreement with Meridian Gold Inc. for theexploration of the above properties, which has been on hold for the past twoyears. Huemules, located 25 kilometres to the west of the Esquel Gold Project in northwest Chubut, contains an historic mine, which produced bonanza grade gold in theearly 1990's. Leleque and Nahual Pan, located to the north and southrespectively of the Esquel Gold Project, are highly prospective explorationproperties. Chile Exploration: Exploration remains focused in the Puerto Ibanez area and to thesouth of the Cerro Bayo mine of Coeur which has posted Reserves of 336,000 tonsat 7.53 ozs silver and 3g/t gold. Reconnaissance sampling of the latterexploration area has identified geology prospective for both epithermal goldmineralisation as well as gold-silver-base metal mineralisation, with values$am5g/t gold and $am500g/t silver (separate samples) and as a result 25 newpedimentos have been staked in the Jeinimeni area. Further detailed mapping andsampling is ongoing. Significant samples include Property Sample Gold Silver ppm ppm 40058 5.15 148.0Jeinimeni area 40042 4.00 533.0 40050 3.38 2.5 40051 2.21 138.0 40046 2.16 152.0 40053 0.36 48.5 Coyhaique: Intensive property wide exploration of the Coyhaique projectconducted over the 18 months to December 2004, including the drilling of themain veins, failed to meet PGD's expectations. A revised proposal was made to WestMag Ltd but after no revision was agreed theywere advised that PGD no longer wished to proceed with the Option to Purchasethe Coyhaique mining concessions. Inspection of the Coyhaique Project area has recently been undertaken by theChile environmental agency CONEMA as a requirement to finalise therehabilitation in line with the approved environmental report. New Zealand New Zealand: HPD New Zealand has revised and increased the landholding in boththe North and South Islands. Currently under licence or application are 19Permits totalling 4,630 square kilometres. Exploration on HPD New Zealand's Permits at Bendigo, Macetown and Nenthorncontinues, with extensive soil sampling programmes being carried out on allthree properties. Bendigo Permit-soil sampling has identified the north western extension to theRise and Shine shear zone. Coincident gold and arsenic results define a strikelength of 3 kilometres with a width of 400 metres. Soil sampling is currentlyunderway on the south eastern extension of the zone. Macetown Permit-soil sampling, with results of up to 11.3g/t gold, has definedthe possible extension of the Premier lode, with mineralisation present over the1,500 metres tested to date. In addition, the sampling identified a sub-parallelzone. A further 4.5 kilometres of the zone remains to be tested. Nenthorn Permit-soil sampling has outlined extensions to the Bonanza lode (LotsWife) and it is clearly defined by over 3.7 kilometres strike of mapped quartz.Two sub parallel linear anomalies have also been defined at Redbank with thesouthern anomaly extending over 3.6 kilometres. The Nenthorn Permits are adjacent to the Macraes gold mine Operated by OceanaGold, which since commissioning in 1990 has produced 1.7 million ozs of gold. HPD New Zealand has programmed for a 3,000 metres Reverse Circulationexploratory drilling campaign to be carried out prior to winter on one of theabove properties, subject to the results of infill soil sampling andsatisfactory access arrangements being completed. Consolidated profit and loss account 1 October Year to 2002 to 31 December 31 December 2004 2003 £ £Administrative expenses and exploration costs (2,314,904) (1,250,605)Amortisation of goodwill (757,520) (62,550) ----- ----- (3,072,424) (1,313,155)AIM listing expenses - (297,798) ----- -----Operating loss (3,072,424) (1,610,953)Share of operating loss in Patagonian jointventure - (433,100)Share of operating loss in Canadian associate - (253,540) ----- -----Total operating loss:Group and share of joint venture and associate (3,072,424) (2,297,593)Net profit on disposal of interest in associate - 486,178Interest receivable:- Group 54,332 64,951- Share of associates and joint venture - 8,113 ----- ----- 54,332 73,064 ----- -----Loss on ordinary activities before taxation (3,018,092) (1,738,351)Tax on loss on ordinary activities - - ----- -----Retained loss for the year/period (3,018,092) (1,738,351) Loss per share (1.3p) (1.3p)Diluted loss per share (1.3p) (1.3p) Consolidated balance sheetat 31 December 2004 2004 2003 £ £Fixed assetsIntangible fixed assets 14,865,923 15,044,831Tangible fixed assets 45,240 54,171Investments 85,210 85,210 ----- -----Total fixed assets 14,996,373 15,184,212 ----- -----Current assetsDebtors 342,355 145,251Cash at bank and in hand 3,299,916 3,083,419 ----- ----- 3,642,271 3,228,670Creditors: amounts falling due within one year (787,134) (181,815) ----- -----Net current assets 2,855,137 3,046,855 ----- -----Total assets less current liabilities 17,851,510 18,231,067Provision for deficit of associates (61,340) - ----- -----Net assets 17,790,170 18,231,067 Capital and reservesCalled up share capital 2,522,814 2,242,314Share premium account 20,577,439 18,092,425Profit and loss account (5,310,083) (2,103,672) ----- -----Equity shareholders' funds 17,790,170 18,231,067 Company balance sheetat 31 December 2004 2004 2003 £ £Fixed assetsTangible fixed assets 4,103 7,729Investments 17,836,775 15,881,359 ----- ----- 17,840,878 15,889,088 ----- -----Current assetsDebtors 500,357 225,689Cash at bank and in hand 3,200,992 2,952,778 ----- ----- 3,701,349 3,178,467Creditors: amounts falling due within one year (653,806) (134,817) ----- -----Net current assets 3,047,543 3,043,650 ----- -----Net assets 20,888,421 18,932,738 Capital and reservesCalled up share capital 2,522,814 2,242,314Share premium account 20,577,439 18,092,425Profit and loss account (2,211,832) (1,402,001) ----- -----Equity shareholders' funds 20,888,421 18,932,738 Consolidated statement of total recognised gains and losses Year to 31 1 October December 2002 to 2004 31 December £ 2003 £Loss attributable to shareholders of PatagoniaGold Plc (3,018,092) (1,738,351)Unrealised exchange rate movements (188,319) (69,348) ----- -----Total recognised losses for the year/period (3,206,411) (1,807,699) Consolidated cash flow statement 1 October Year to 2002 to 31 December 31 December 2004 2003 £ £Net cash outflow from operating activities (2,590,954) (1,486,914)Returns on investments and servicing of finance 54,332 64,951Capital expenditure and financial investment (12,465) (2,760)Acquisitions and disposals 70 (37,757) ---- ----Net cash outflow before use of liquid resources andfinancing (2,549,017) (1,462,480)Management of liquid resources (138,630) (2,406,796)Financing 2,765,514 4,015,049 ----- -----Increase in cash in the year/period 77,867 145,773 Notes 1. The financial information set out above does not constitute the company's statutory accounts for the period ended 31 December 2004 or the period ended 31 December 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 following the company's annual general meeting. 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 Annual Report for the year ended 31 December 2004 will be posted today to shareholders. The Annual General Meeting of the Company will be held at 11.00am on 22 June 2005 at The Cavalry & Guards Club, 127 Piccadilly, London W1V 0PX. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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