Half Yearly Report

RNS Number : 5930H

Norseman Gold PLC

24 February 2010

 

Norseman Gold plc / Epic: NGL / Index: AIM & ASX / Sector: Mining & Exploration

24 February 2010

 

NORSEMAN GOLD PLC

('Norseman Gold' or 'the Company')

Interim Report for the half year ended 31 December 2009

 

 

NORSEMAN GOLD PLC

 

 

Results for Announcement to the Market

 

	Unaudited Period ended 31 December 2009	Unaudited Period ended 31 December 2008	Change
	AUD$'000	AUD$'000	%
Group revenue from continuing operations	37,946	42,828	11%↓
Profit / (loss) before tax from continuing operations	680	897	24%↓
Profit / (loss) after tax attributable to members of Norseman Gold plc	610	897	32%↓

Dividends

No Dividends have been declared or paid.

 

Net Tangible Assets per Security

	Unaudited As at 31 December 2009	Unaudited As at 31 December 2008
	Cents / Share	Cents / Share
Net tangible assets per security	$0.313	$0.178

1. Details of entities over which control has been gained or lost during the period.

None

 

2. Details of individual and total dividends or distributions and dividend or distribution payments. The details must include the date on which each dividend or distribution is payable, and (if known) the amount per security of foreign sourced dividend or distribution.

Not applicable - no dividends have been declared or paid

 

3. Details of any dividend or distribution reinvestment plans in operation and the last date for the receipt of an election notice for participation in any dividend or distribution reinvestment plan.

Not applicable

 

4. Details of associates and joint venture entities including the name of the associate or joint venture entity and details of the reporting entity's percentage holding in each of these entities and - where material to an understanding of the report - aggregate share of profits (losses) of these entities, details of contributions to net profit for each of these entities, and with comparative figures for each of these disclosures for the previous corresponding period.

Not applicable

NORSEMAN GOLD PLC

CHAIRMAN AND MANAGING DIRECTOR'S STATEMENT

 

The interim financial results of the Group represent the results of the Norseman Operations for the period 1 July 2009 to 31 December 2009. During this period, the Group produced 31,881 ounces of gold at a cash cost of A$917 per ounce, and generated a profit after tax of A$0.6 million. Production is expected to increase steadily in the second half of the financial year.

 

The average gold price achieved during the six months period was A$1,277 per ounce.

 

A major milestone was achieved during the half with the commencement of development at OK Decline. The first low grade development ore has been delivered to the surface stockpile and was treated in January 2010. This is the first gold to be recovered from the Group's third mine under its fill-the-mill strategy and demonstrates the Group's ability to find and develop further gold assets within the Norseman project area. In addition, underground drilling at the OK Decline has identified a new ore body, the Star of Erin, which the Group expects will substantially increase the reserve of this mine.

 

Dewatering at North Royal Open Pit, the potential fourth mine, has commenced and over 21% of the water volume was pumped by the end of the half. The first stage drilling programme has been completed at the southern end of the open pit. The results of this program are currently being analysed and it appears that a footwall reef underneath the historically mined reef may have been intersected. The Group is currently planning drill programmes that will further test the footwall reef, as well as other targets to the south, with a plan to extend the current resource base prior to the completion of pit dewatering.

 

Production for the first half was below the Group's target production from the Bullen and Harlequin Declines. As a consequence the Group revised its guidance for the 2009/10 financial year to 75,000 to 80,000 ounces recovered (previously 80,000 to 85,000 ounces of gold) at a cash cost of A$800 to A$850 per ounce (previously A$720 to A$780 per ounce) from the Bullen, OK and Harlequin Declines.

 

Although cash costs per ounce increased above targeted levels during the half, this was a reflection of ounces produced from lower grade ore as opposed to increasing total costs. The Group managed to keep a tight rein on costs, and total costs were held to within budget. The Group remains focussed on the productivity and grade of the operating mines to ensure that the improvement in performance and profitability continues.

 

From a balance sheet perspective, the Group remains in a strong position, with cash on hand (including gold bullion) of A$26.1m. In addition, the Group is debt free aside from equipment finance funding obligations and its production remains unhedged.

 

During the half, a strong balance sheet enabled the Group to spend A$17.3m on capital investment, including A$4.8m on mine development, A$3.5m on exploration activities, and A$9.6m on plant, equipment and mine infrastructure.

 

The Group will continue with its strategy to fill the mill by further advancing its development projects particularly at North Royal and the Crown Reef where the first surface program will commence this month. Although there will continue to be day-to-day operating difficulties during the current growth and development phase, the outlook for the Group for the coming year continues to be positive. The extensive capital investment program undertaken in the last 12 months should begin to provide increasing returns through the year 2010 and in the longer term.

 

 

 

Vince Pendal Barry Cahill

Chairman Managing Director

 

 

NORSEMAN GOLD PLC

INDEPENDENT REVIEW REPORT TO NORSEMAN GOLD PLC

 

Introduction

We have been engaged by the Company to review the condensed set of financial statements in the half-yearly financial report for the six months ended 31 December 2009 which comprises group statement of comprehensive income, group statement of changes in equity, group balance sheet, group cash flow statement and the related explanatory notes.  We have read the other information contained in the half-yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.

 

Directors' Responsibilities

The half-yearly financial report is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the half-yearly financial report in accordance with the AIM Rules For Companies.

 

As disclosed in note 1.1, the annual financial statements of the group are prepared in accordance with IFRSs as adopted by the European Union. The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with International Accounting Standard 34, Interim Financial Reporting, as adopted by the European Union.

 

Our Responsibility

Our responsibility isto express to the Company a conclusion on the condensed set of financial statements in the half-yearly financial report based on our review.

 

Scope of review

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410, Review of Interim Financial Information Performed by the Independent Auditor of the Entity, issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

 

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 31 December 2009 is not prepared, in all material respects, in accordance with International Accounting Standard 34 as adopted by the European Union and the AIM Rules For Companies.

 

 

 

UHY Hacker Young LLP

 

22 February 2010

Interim Financial Information of Norseman Gold plc

The following interim financial information of Norseman Gold plc is for the period from 1 July 2009 to 31 December 2009. The financial information was approved by the Directors on 22 February 2010.

NORSEMAN GOLD PLC

GROUP STATEMENT OF COMPREHENSIVE INCOME

FOR THE PERIOD ENDED 31 DECEMBER 2009

 

Unaudited Unaudited Audited

Period ended Period ended Year ended

31 December 2009 31 December 2008 30 June 2009

AUD$ AUD$ AUD$

Continuing operations

 

Group revenue 37,945,819 42,827,971 96,685,085

 

Cost of sales (31,359,605) (31,938,524) (61,817,764)

__________ __________ __________

 

Gross profit 6,586,214 10,889,447 34,867,321

 

Other operating income - - 1,213,366

 

Total administrative expenses (6,319,260) (9,677,484) (18,815,967)

__________ __________ __________

 

Group operating profit 266,954 1,211,963 17,264,720

 

Gain on purchase of convertible notes - - 5,000,000

Interest receivable 413,526 251,807 520,563

Interest payable (8) (566,317) (575,418)

__________ __________ __________

Profit before taxation 680,472 897,453 22,209,865

 

Taxation (70,942) - (1,850,856)

__________ __________ __________

 

Profit for the period 609,530 897,453 20,359,009

========= ========= =========

Other comprehensive income 609,530 897,453 20,359,009

 

Exchange differences on translating foreign

operations - 54,519 54,519

__________ __________ __________

Total comprehensive income for the period

attributable to equity holders of the Company 609,530 951,972 20,413,528

========= ========= =========

Profit per share (cents)

Basic and diluted 0.4 1.1 19.7

========= ========= =========

 

NORSEMAN GOLD PLC

GROUP STATEMENT OF CHANGES IN EQUITY

FOR THE PERIOD ENDED 31 DECEMBER 2009

 

Foreign

Share Share Currency Equity Retained Total

Capital Premium Reserve Reserve Losses Equity

AUD$ AUD$ AUD$ AUD$ AUD$ AUD$

Unaudited Period ended 31 December 2009
Balance at 1 July 2009	4,889,123	86,864,874	518,742	1,109,015	(25,391,918)	67,989,836
Net profit for the period	-	-	-	-	609,530	609,530
Total comprehensive income for the period	-	-	-	-	609,530	609,530
Share issues	14,612	352,516	-	-	-	367,128
Share based payments	-	-	-	111,930	-	111,930
Transfer of equity reserve to Retained profit reserve on exercise of share options	-	-	-	(128,178)	128,178	-
Balance at 31 December 2009	4,903,735	87,217,390	518,742	1,092,767	(24,654,210)	69,078,424

 

Unaudited Period ended 31 December 2008
Balance at 1 July 2008	2,446,963	67,848,356	454,019	4,379,376	(49,714,697)	25,414,017
Net profit for the period	-	-	-	-	897,453	897,453
Other comprehensive income:
Foreign currency	-	-	54,519	-	-	54,519
Total comprehensive income for the period	-	-	54,519	-	897,453	951,972
Share based payments	-	-	-	2,984,144	-	2,984,144
Balance at 31 December 2008	2,446,963	67,848,356	508,538	7,363,520	(48,817,244)	29,350,133

Audited Year ended 30 June 2009
Balance at 1 July 2008	2,446,963	67,848,356	454,019	4,379,376	(49,714,697)	25,414,017
Net profit for the period	-	-	-	-	20,359,009	20,359,009
Other comprehensive income:
Foreign currency	-	-	64,723	(10,204)	-	54,519
Total comprehensive income for the period	-	-	64,723	(10,204)	20,359,009	20,413,528
Share issues	2,292,160	17,126,518	-	-	-	19,418,678
Excess of share based payment charge over market value of Management Shares	-	-	-	(3,963,770)	3,963,770	-
Conversion of Management equity in Capital	150,000	1,890,000	-	(2,040,000)	-	-
Share based payments	-	-	-	3,108,338	-	3,108,338
Unwinding equity component of convertible notes	-	-	-	(364,725)	-	(364,725)
Balance at 30 June 2009	4,889,123	86,864,874	518,742	1,109,015	(25,391,918)	67,989,836

NORSEMAN GOLD PLC

GROUP BALANCE SHEET

AS AT 31 DECEMBER 2009

 

As at As at As at

31 December 31 December 30 June

2009 2008 2009

Notes AUD$ AUD$ AUD$

ASSETS

Non-Current Assets

Property, plant & equipment 4 23,884,035 15,853,888 16,950,490

Mine properties in production phase 5 17,995,619 12,639,154 15,184,249

Exploration & evaluation expenditure 6 12,721,462 7,970,065 9,190,868

Goodwill 7 15,000,000 15,000,000 15,000,000

Deferred tax asset 6,754,979 - 5,863,444

__________ __________ __________

76,356,095 51,463,107 62,189,051

__________ __________ __________

Current Assets

Trade and other receivables 2,315,948 3,673,827 1,343,743

Inventories 8 6,736,672 7,038,142 6,101,395

Financial assets available for sale - 18,560 -

Cash at bank and in hand 9 23,136,466 6,665,703 32,617,947

__________ __________ __________

32,189,086 17,396,232 40,063,085

__________ __________ __________

Total Assets 108,545,181 68,859,339 102,252,136

__________ __________ __________

LIABILITIES

Current Liabilities

Trade and other payables 10 12,749,268 9,656,042 13,839,830

Provisions 11 2,655,388 2,041,425 2,256,613

Convertible Notes 12 - 4,620,000 -

Interest-bearing loans and borrowings 13 5,650,472 4,092,748 3,712,343

__________ __________ __________

21,055,128 20,410,215 19,808,786

__________ __________ __________

Non-Current Liabilities

Provisions 11 6,496,234 5,424,148 6,418,409

Convertible Notes 12 - 10,015,275 -

Interest-bearing loans and borrowings 13 6,143,312 3,659,568 3,225,499

Deferred tax liability 5,772,083 - 4,809,606

__________ __________ __________

18,411,629 19,098,991 14,453,514

__________ __________ __________

Total Liabilities 39,466,757 39,509,206 34,262,300

__________ __________ __________

Net Assets 69,078,424 29,350,133 67,989,836

========= ========= =========

EQUITY

Capital and Reserves

Share capital 14 4,903,735 2,446,963 4,889,123

Share premium account 87,217,390 67,848,356 86,864,874

Foreign currency reserve 15 518,742 508,538 518,742

Equity reserve 15 1,092,767 7,363,520 1,109,015

Retained losses (24,654,210) (48,817,244) (25,391,918)

__________ __________ __________

Shareholders' Equity 69,078,424 29,350,133 67,989,836

========= ========= =========

 

NORSEMAN GOLD PLC

GROUP CASH FLOW STATEMENT

FOR THE PERIOD ENDED 31 DECEMBER 2009

 

Period ended Period ended Year ended

31 December 31 December 30 June

2009 2008 2009

Notes AUD$ AUD$ AUD$

 

Net cash inflow from operating activities 18 7,621,716 5,784,425 33,203,243

__________ __________ __________

Investing activities

Funds used in mine properties (4,764,303) (2,672,374) (7,088,108)

Funds used in exploration & production (3,530,594) (2,767,524) (5,032,457)

Payments to purchase plant and equipment (9,588,946) (1,992,446) (4,988,046)

Proceeds from sale of financial assets available for sale - 7,040 38,400

Interest received 413,526 251,807 520,563

Interest payable (8) (566,317) (575,418)

__________ __________ __________

Net cash used in investing activities (17,470,325) (7,739,814) (17,125,066)

__________ __________ __________

 

Financing activities

Cash proceeds from issue of shares 367,128 - 19,937,500

Share issue costs - - (1,018,822)

Loans from directors - 1,500,000 1,500,000

Repayment of loans from directors - - (1,000,000)

Purchase and cancellation of convertible notes - - (10,000,000)

__________ __________ __________

Net cash from financing activities 367,128 1,500,000 9,418,678

__________ __________ __________

 

Increase (decrease) in cash and cash equivalents (9,481,481) (455,389) 25,496,855

 

Cash and cash equivalents at beginning of period 32,617,947 7,121,092 7,121,092

__________ __________ __________

 

Cash and cash equivalents at end of period 23,136,466 6,665,703 32,617,947

========= ========= =========

NORSEMAN GOLD PLC

NOTES TO THE FINANCIAL INFORMATION

FOR THE PERIOD ENDED 31 DECEMBER 2009

1. Accounting policies

 

The principal accounting policies applied in the preparation of financial information are set out below. These policies have been consistently applied to all the periods presented, unless otherwise stated below.

 

1.1 Basis of preparation

 

This interim report, which incorporates the financial information of the Company and its subsidiary undertakings ("the Group"), has been prepared using the historical cost convention and in accordance with the International Financial Reporting Standards ("IFRS") including IAS 34 'Interim Financial Reporting' and IFRS 6 'Exploration for and Evaluation of Mineral Resources', as adopted by the European Union ("EU").

 

These interim results for the six months ended 31 December 2009 are unaudited and do not constitute statutory accounts as defined in section 434 of the Companies Act 2006. They have been prepared using accounting bases and policies consistent with those used in the preparation of the financial statements of the Company and the Group for the year ended 30 June 2009 and those to be used for the year ending 30 June 2010. The financial statements for the year ended 30 June 2009 have been delivered to the Registrar of Companies and the auditors' report on those financial statements was unqualified and did not contain a statement made under Section 498(2) or Section 498(3) of the Companies Act 2006.

 

1.2 New standards and amendments

 

The following amendments to standards are mandatory for the first time for the financial periods commencing on or after 1 January 2009:

 

IAS1 (revised) 'Presentation of financial statements' includes the requirement to present a Statement of Changes in Equity as a primary statement and introduces the possibility of either a single Statement of Comprehensive Income (combining the Income Statement and a Statement of Comprehensive Income) or to retain the Income Statement with a supplementary Statement of Comprehensive Income. The Directors have chosen the first option. As this standard is concerned with presentation only it does not have any impact on the results or net assets of the Group.

 

IFRS8 'Operating segments'. IFRS8 replaces IAS 14 'Segment reporting'. It requires a 'management approach' under which segment information is presented on the same basis as that used for internal reporting purposes. Following a review of the Group's internal management information, the Group maintains that it only has one class of business, the production, exploration and development of mineral resources and that primary segmental reporting is determined by geography according to the location of assets.

 

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker. The chief operating decision maker has been identified as the Board of Directors.

 

1.3 Goodwill

 

Goodwill is the difference between the amount paid on the acquisition of the subsidiary undertakings and the aggregate fair value of their separable net assets. Goodwill is capitalised as an intangible asset and in accordance with IFRS3 'Business Combinations' is not amortised but tested for impairment when there are any indications that its carrying value is not recoverable. As such, goodwill is stated at cost less any provision for impairment in value. If a subsidiary undertaking is subsequently sold, goodwill arising on acquisition is taken into account in determining the profit and loss on sale.

 

1.4 Mine properties in production phase

Exploration and evaluation expenditure

 

Exploration, evaluation and development expenditure incurred is accumulated in respect of each identifiable area of interest. These costs are only carried forward to the extent that they are expected to be recouped through the successful development of the area or where activities in the area have not yet reached a stage which permits reasonable assessment of the existence of economically recoverable reserves. Accumulated costs in relation to an abandoned area are written off in full against profit in the year in which the decision to

 

 

NOTES TO THE FINANCIAL INFORMATION

FOR THE PERIOD ENDED 31 DECEMBER 2009

 

1.4 Mine properties in production phase

Exploration and evaluation expenditure (continued)

 

abandon the area is made. When production commences, the accumulated costs for the relevant area of interest are amortised over the life of the area according to the rate of depletion of the economically recoverable reserves. Economically recoverable reserves are determined by the following: for open pit operations - proven and probable reserves; and for underground operations - proven and probable reserves and reasonably assured potential additional reserves. Accumulated costs associated with underground operations include an estimate of the future costs associated with the conversion of 'indicated' and 'inferred' resources into the 'measured category'. This estimate is based on the historical cost per ounce discovered. A regular review is undertaken of each area of interest to determine the appropriateness of continuing to carry forward costs in relation to that area of interest.

 

Costs of site restoration are provided when an obligating event occurs from when exploration commences and are included in the costs of that stage. Site restoration costs include the dismantling and removal of mining plant, equipment and building structures, waste removal and rehabilitation of the site in accordance with clauses of the mining permits. Such costs have been determined using estimates of future costs, current legal requirements and technology on a discounted basis. Any changes in the estimates for the costs are accounted for on a prospective basis. In determining the costs of site restoration, there is uncertainty regarding the nature and extent of the restoration due to community expectations and future legislation. Accordingly the costs have been determined on the basis that the restoration will be completed within one year of abandoning the site.

 

1.5 Inventories

(i) Raw Materials and Stores

Inventories of raw materials and stores expected to be used in production are valued at average cost. Obsolete or damaged inventories of such items are valued at net realisable value. There is a regular and ongoing review of inventories for surplus items and provision is made for any anticipated loss on their disposal.

 

(ii) Work in Progress and Gold in Circuit

Inventories of broken ore, work in progress and gold in circuit are valued at the lower of cost and net realisable value. Cost comprises direct material, labour and transportation expenditure incurred in getting inventories to their existing location and condition, together with an appropriate portion of fixed and variable overhead expenditure based on weighted average costs incurred during the period in which such inventories were produced. Net realisable value is the amount anticipated to be realised from the sale of inventory in the normal course of business less any anticipated costs to be incurred prior to its sale.

 

1.6 Revenue

 

Revenue from the sale of goods (precious metals) is recognised upon production. Interest revenue is recognised on a proportional basis taking into account the interest rates applicable to the financial assets.

 

1.7 Share based payments

 

The Company made share-based payments to certain Directors and advisers by way of issue of share options. The fair value of these payments is calculated by the Company using the Black-Scholes option pricing model. The expense is recognised on a straight line basis over the period from the date of award to the date of vesting, based on the Company's best estimate of shares that will eventually vest.

 

The Company has issued shares to management which will vest in one and two years following readmission, provided certain requirements are met. The Company records an expense, based upon the market price at date of issue of shares expected to vest, on a straight line basis over the vesting period.

NOTES TO THE FINANCIAL INFORMATION

FOR THE PERIOD ENDED 31 DECEMBER 2009

1.8 Foreign currency transactions and balances

 

(i) Functional and presentational currency

Items included in the Group's financial information and statements are measured using Australian Dollars ("AUD$"), which is the currency of the primary economic environment in which the Group operates ("the functional currency"). The financial information and statements are also presented in AUD$ which is the Group's presentation currency.

 

(ii) Transactions and balances

Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the income statement.

 

Transactions in the accounts of individual Group companies are recorded at the rate of exchange ruling on the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are translated at the rates ruling at the balance sheet date. All differences are taken to the income statement.

 

For the purpose of presenting consolidated financial information and statements, the assets and liabilities of the Group's foreign operations are translated at exchange rates prevailing on the balance sheet date. Income and expense items are translated at the average exchange rates for the period. Exchange differences arising are classified as equity and transferred to the Group's translation reserve. Such translation differences are recognised as income or as expenses in the period in which the operation is disposed of.

 

1.9 Capital management

 

The Group's objective when managing capital is to ensure that adequate funding and resources are obtained to enable it to develop its projects through to profitable production, while in the meantime safeguarding the Group's ability to continue as a going concern. This is aimed at enabling it, once the projects come to fruition, to provide appropriate returns for shareholders and benefits for other stakeholders. The Group manages the capital structure in the light of changes in economic conditions and risk characteristics of the underlying projects. Conditions attached to borrowings are monitored regularly in the light of management accounts. Capital will continue to be sourced from equity and from borrowings as appropriate. During the period to 31 December 2009 no debt covenants have been breached.

 

1.10 Leases

 

The determination of whether an arrangement is or contains a lease is based on the substance of the arrangement and requires an assessment of whether the fulfilment of the arrangement is dependent on the use of a specific asset or assets and the arrangement conveys a right to use the asset.

 

(i) Group as a lessee

Finance leases, which transfer to the Group substantially all the risks and benefits incidental to ownership of the leased item, are capitalised at the inception of the lease at the fair value of the leased asset or, if lower, at the present value of the minimum lease payments. Lease payments are apportioned between the finance charges and reduction of the lease liability so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are recognised as an expense in profit or loss.

 

Capitalised leased assets are depreciated over the shorter of the estimated useful life of the asset and the lease term if there is no reasonable certainty that the Group will obtain ownership by the end of the lease term.

Operating lease payments are recognised as an expense in the income statement on a straight-line basis over the lease term. Operating lease incentives are recognised as a liability when received and subsequently reduced by allocating lease payments between rental expense and reduction of the liability.

 

 (ii) Group as a lessor

Leases in which the Group retains substantially all the risks and benefits of ownership of the leased asset are classified as operating leases. Initial direct costs incurred in negotiating an operating lease are added to the carrying amount of the leased asset and recognised as an expense over the lease term on the same basis as rental income. 

 

NOTES TO THE FINANCIAL INFORMATION

FOR THE PERIOD ENDED 31 DECEMBER 2009

1.11 Critical accounting judgements and estimates

 

The preparation of financial information and statements in conformity with International Financial Reporting Standards requires the use of accounting estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial information and statements and the reported amounts of income and expenses during the reporting period. Although these estimates are based on management's best knowledge of current events and actions, actual results ultimately may differ from those estimates. IFRSs also require management to exercise its judgement in the process of applying the Group's accounting policies.

 

The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial information and statements are as follows:

 

Impairment of intangible assets

Determining whether an intangible asset is impaired requires an estimation of whether there are any indications that its carrying value is not recoverable.

 

At each reporting date, the company reviews the carrying value of its tangible and intangible assets to determine whether there is any indication that those assets have been impaired. If such an indication exists, the recoverable amount of the asset, being the higher of the asset's fair value less costs to sell and value in use, is compared to the asset's carrying value. Any excess of the asset's carrying value over its recoverable amount is expensed to the income statement.

 

Valuation of goodwill and investments

Management value goodwill and investments after taking into account ore reserves, and cash-flow generated by estimated future production, sales and costs. If the assumed factors vary from actual occurrence, this will impact on the amount of the asset which should be carried on the balance sheet.

 

Provision of restoration costs

Provisions for restoration are established in the consolidated balance sheet when the obligating event occurs. Such costs have been determined using estimates of future costs, current legal requirements and technology on a discounted basis. In determining the costs of site restoration, there is uncertainty regarding the nature and extent of the restoration due to community expectations and future legislation.

 

Exploration and Development

Exploration and development costs are amortised over the life of the area according to the rate of depletion of the economically recoverable reserves. If the amount of economically proven reserves varies, this will impact on the amount of the asset which should be carried on the balance sheet.

 

Share based payments

The Group records charges for share based payments.

 

For option based share based payments management estimate certain factors used in the option pricing model, including volatility, exercise date of options and number of options likely to be exercised. If these estimates vary from actual occurrence, this will impact on the value of the equity carried in the reserves.

 

For conditional grants of shares at a discount management estimate the expected actual issuance of those shares. If this estimate varies from actual occurrence this will impact on the value of the equity carried in the reserves.

 

2. Profit / (Loss) per share

 

The basic profit per ordinary share has been calculated using the profit for the period of AUD$609,531 (31 December 2008: AUD$897,453, 30 June 2009: AUD$20,359,009) and the weighted average number of ordinary shares in issue of 172,157,717 (31 December 2008: 80,690,000, 30 June 2009: 103,603,178).

 

The diluted profit per share has been calculated using a weighted average number of shares in issue and to be issued of 172,157,717 (31 December 2008: 80,690,000, 30 June 2009: 103,603,178). The diluted profit per share has been kept the same as the basic profit per share as the Company's 3,200,000 (31 December 2008 and 30 June 2009: 3,860,000) outstanding share options are exercisable at a price greater than the average market price of the Company's Ordinary Shares in the period, thus being anti-dilutive.

NOTES TO THE FINANCIAL INFORMATION

FOR THE PERIOD ENDED 31 DECEMBER 2009

 

3. Segmental reporting

 

For the purposes of segmental information, the operations of the Group are focused on Australia and comprise one class of business: the production, exploration, evaluation and development of mineral resources.

The Company acts as a holding company.

The Group's operating profit for the period arose from its operations in Australia. In addition, all the Group's assets are based in Australia.

 

 

4. Property, plant & equipment

 

Unaudited

31 December 2009

	Land and Buildings		Plant and Equipment		Mine Infrastructure and Mobile Equipment		Capital Works in Progress		Total
	AUD$		AUD$		AUD$		AUD$		AUD$
Cost
At 1 July 2009	388,084		6,148,158		16,697,706		1,062,502		24,296,450
Additions	-		313,193		7,316,475		2,122,909		9,752,577
Transfers	-		-		-		-		-
Disposals	-		-		(163,633)		-		(163,633)
At 31 December 2009	388,084		6,461,351		23,850,548		3,185,411		33,885,394
Depreciation
At 1 July 2009	(200,366)		(1,936,846)		(5,208,748)		-		(7,345,960)
Charge for period	(26,776)		(680,339)		(2,098,804)		-		(2,805,919)
Depreciation on disposals	-		-		150,520		-		150,520
At 31 December 2009	(227,142)		(2,617,185)		(7,157,032)		-		(10,001,359)
Net book value
31 December 2009	160,942		3,844,166		16,693,516		3,185,411		23,884,035

 

NOTES TO THE FINANCIAL INFORMATION

FOR THE PERIOD ENDED 31 DECEMBER 2009

 

4. Property, plant & equipment (continued)

 

Unaudited

31 December 2008

	Land and Buildings		Plant and Equipment		Mine Infrastructure and Mobile Equipment		Capital Works in Progress		Total
	AUD$		AUD$		AUD$		AUD$		AUD$
Cost
At 1 July 2008	388,084		3,726,078		11,828,856		3,365,384		19,308,402
Additions	-		968,282		971,513		-		1,939,795
Transfers	-		-		1,498,347		(1,498,347)		-
Disposals	-		-		-		-		-
At 31 December 2008	388,084		4,694,360		14,298,716		1,867,037		21,248,197
Depreciation
At 1 July 2008	(132,412)		(909,369)		(2,376,321)		-		(3,418,102)
Charge for period	(37,798)		(501,113)		(1,437,296)		-		(1,976,207)
Depreciation on disposals	-		-		-		-		-
At 31 December 2008	(170,210)		(1,410,482)		(3,813,617)		-		(5,394,309)
Net book value
31 December 2008	217,874		3,283,878		10,485,099		1,867,037		15,853,888

 

Audited

30 June 2009

	Land and Buildings		Plant and Equipment		Mine Infrastructure and Mobile Equipment		Capital Works in Progress		Total
	AUD$		AUD$		AUD$		AUD$		AUD$
Cost
At 1 July 2008	388,084		3,726,078		11,828,856		3,365,384		19,308,402
Additions	-		2,422,080		5,367,870		-		7,789,950
Disposals	-		-		(499,020)		(2,302,882)		(2,801,902)
At 30 June 2009	388,084		6,148,158		16,697,706		1,062,502		24,296,450
Depreciation
At 1 July 2008	(132,412)		(909,369)		(2,376,321)		-		(3,418,102)
Charge for year	(67,954)		(1,027,477)		(3,216,790)		-		(4,312,221)
Depreciation on disposals	-		-		384,363		-		384,363
At 30 June 2009	(200,366)		(1,936,846)		(5,208,748)		-		(7,345,960)
Net book value
30 June 2009	187,718		4,211,312		11,488,958		1,062,502		16,950,490

 

Plant and equipment pledged as security for liabilities

Included in mobile equipment is $17,890,037 (30 June 2009: $9,942,926, 31 December 2008: $7,958,091) which has been pledged as security for the related finance lease liabilities in current and non-current liabilities as disclosed in Note 13.

NOTES TO THE FINANCIAL INFORMATION

FOR THE PERIOD ENDED 31 DECEMBER 2009

 

5. Mine properties in production phase

 

	Unaudited 31 December 2009 AUD$		Unaudited 31 December 2008 AUD$		Audited 30 June 2009 AUD$
Opening balance	15,184,249		12,564,952		12,564,952
Mining expenditure incurred during the period	4,764,303		2,672,374		6,290,546
Transferred from Exploration & evaluation	-		-		1,750,000
Amortisation during the period	(1,952,933)		(2,598,172)		(5,421,249)
Closing balance	17,995,619		12,639,154		15,184,249

 

6. Exploration & evaluation expenditure

 

Costs carried forward in respect of areas of interest in: Exploration and evaluation phases:	Unaudited 31 December 2009 AUD$		Unaudited 31 December 2008 AUD$		Audited 30 June 2009 AUD$
Opening balance	9,190,868		5,202,541		5,202,541
Exploration expenditure incurred during the period	3,530,594		2,767,524		6,782,457
Transferred to Mine Properties in production phase	-		-		(1,750,000)
Exploration expenditure written off	-		-		(1,044,130)
Closing balance	12,721,462		7,970,065		9,190,868

 

 

The amounts for intangible exploration and evaluation ("E & E") assets represent costs incurred in relation to the Group's operations at Norseman. These amounts will be written off to the income statement as exploration expenses unless commercial reserves are established or the determination process is not completed and there are no indicators of impairment. The outcome of ongoing exploration and evaluation, and therefore whether the carrying value of E & E assets will ultimately be recovered, is inherently uncertain. The Directors have assessed the value of the exploration and evaluation expenditure carried as intangible assets and in their opinion no provision for impairment is currently necessary.

 

7. Goodwill

Goodwill

AUD$

Cost

At 31 December 2009, 30 June 2009 and 31 December 2008 44,983,622

Amortisation and impairment

At 31 December 2009, 30 June 2009 and 31 December 2008 (29,983,622)

__________

Net book value

At 31 December 2009, 30 June 2009 and 31 December 2008 15,000,000

=========

Goodwill arose on the acquisition of the Company's subsidiary undertakings. The Group tests goodwill for impairment at least annually.

NOTES TO THE FINANCIAL INFORMATION

FOR THE PERIOD ENDED 31 DECEMBER 2009

8. Inventories

Unaudited Unaudited Audited

31 December 31 December 30 June

2009 2008 2009

AUD$ AUD$ AUD$

Gold Bullion 2,956,306 3,612,379 2,716,396

Work in Progress - at cost

- Ore Stockpiles 697,233 564,052 948,289

- Gold in circuit 262,299 283,567 274,186

Raw materials and stores - at net realisable value 2,820,834 2,578,144 2,162,524

__________ __________ __________

 

6,736,672 7,038,142 6,101,395

========= ========= =========

9. Cash at bank and in hand

 

The Group has total cash on hand of $23,136,466 of which $5,835,465 is held as security against the obligations for restoration and decommissioning expenditure under the mining production and exploration licences.

 

 

10. Trade and other payables

Unaudited Unaudited Audited

31 December 31 December 30 June

2009 2008 2009

AUD$ AUD$ AUD$

Trade accruals 7,922,275 6,290,074 7,619,108

Other payables 4,826,993 3,365,968 3,316,028

Corporation tax - - 2,904,694

__________ __________ __________

 

12,749,268 9,656,042 13,839,830

========= ========= =========

 

11. Provisions

 

Unaudited

Group - 31 December 2009

Current: Employee Restoration and Total

benefits decommissioning

AUD$ AUD$ AUD$

At 1 July 2009 2,075,704 180,909 2,256,613

Charge to income statement 398,775 - 398,775

Transfer to non-current - - -

__________ __________ __________

 

At 31 December 2009 2,474,479 180,909 2,655,388

========= ========= =========

Non-current: Employee Restoration and Total

benefits decommissioning

AUD$ AUD$ AUD$

At 1 July 2009 33,643 6,384,766 6,418,409

Charge to income statement 77,825 - 77,825

Transfer from current - - -

__________ __________ __________

 

At 31 December 2009 111,468 6,384,766 6,496,234

========= ========= =========

NOTES TO THE FINANCIAL INFORMATION

FOR THE PERIOD ENDED 31 DECEMBER 2009

 

11. Provisions (continued)

 

Unaudited

Group - 31 December 2008

Current: Employee Restoration and Total

benefits decommissioning

AUD$ AUD$ AUD$

At 1 July 2008 1,741,623 980,920 2,722,543

Charge to income statement 134,677 - 134,677

Transfer to non-current - (815,795) (815,795)

__________ __________ __________

 

At 31 December 2008 1,876,300 165,125 2,041,425

========= ========= =========

Non-current: Employee Restoration and Total

benefits decommissioning

AUD$ AUD$ AUD$

At 1 July 2008 14,516 4,553,892 4,568,408

Charge to income statement 39,945 - 39,945

Transfer from current - 815,795 815,795

__________ __________ __________

 

At 31 December 2008 54,461 5,369,687 5,424,148

========= ========= =========

Audited

Group - 30 June 2009

Current:

Employee Restoration and Total

benefits decommissioning

AUD$ AUD$ AUD$

At 1 July 2008 1,741,623 980,920 2,722,543

Charge to income statement 334,081 (800,011) (465,930)

__________ __________ __________

 

At 30 June 2009 2,075,704 180,909 2,256,613

========= ========= =========

Non-current:

Employee Restoration and Total

benefits decommissioning

AUD$ AUD$ AUD$

At 1 July 2008 14,516 4,553,892 4,568,408

Charge to income statement 19,127 1,830,874 1,850,001

__________ __________ __________

 

At 30 June 2009 33,643 6,384,766 6,418,409

========= ========= =========

 

The Directors have considered environmental issues and the need for any necessary provision for the cost of rectifying any environmental damage, as might be required under local legislation and the Group's license obligations, and have provided the above provisions for any future costs of decommissioning or any environmental damage.

NOTES TO THE FINANCIAL INFORMATION

FOR THE PERIOD ENDED 31 DECEMBER 2009

12. Convertible Notes

Unaudited Unaudited Audited

31 December 31 December 30 June

2009 2008 2009

AUD$ AUD$ AUD$

Current:

Convertible note, unsecured - 4,620,000 -

========= ========= =========

Non-current:

Convertible notes, unsecured - 10,015,275 -

========= ========= =========

Within not more than one year - 4,620,000 -

Payable between 1 and 2 years - 4,620,000 -

Payable between 2 to 5 years - 5,395,275 -

__________ __________ __________

 

- 14,635,275 -

========= ========= =========

 

 

13. Interest-bearing loans and borrowings

Unaudited Unaudited Audited

31 December 31 December 30 June

2009 2008 2009

AUD$ AUD$ AUD$

Current:

Obligations under finance lease (a) 5,650,472 2,592,748 3,712,343

Loans from Directors, secured - 1,500,000 -

__________ __________ __________

 

5,650,472 4,092,748 3,712,343

========= ========= =========

Non-current:

Obligations under finance lease (a) 6,143,312 3,659,568 3,225,499

========= ========= =========

 

 (a) Assets pledged as security

The carrying amounts of assets pledged as security for current and non-current interest bearing liabilities are:

 

Unaudited Unaudited Audited

31 December 31 December 30 June

2009 2008 2009

AUD$ AUD$ AUD$

Non-current:

Finance lease - Mobile equipment 17,890,037 7,958,091 9,942,926

__________ __________ __________

 

Total assets pledged as security 17,890,037 7,958,091 9,942,926

========= ========= =========

NOTES TO THE FINANCIAL INFORMATION

FOR THE PERIOD ENDED 31 DECEMBER 2009

 

13. Interest-bearing loans and borrowings (continued)

 (b) Finance lease commitments 

The Group has finance leases for various items of mobile equipment with a carrying amount of $17,890,037 (30 June 2009: $9,942,926, 31 December 2008: $7,958,091). These lease contracts expire within 3 to 4 years with no residual payable.

 

Unaudited Unaudited Audited

31 December 31 December 30 June

2009 2008 2009

AUD$ AUD$ AUD$

 

Within not more than one year 6,632,887 3,131,916 4,181,826

After one year but not more than five years 6,519,873 3,910,846 3,473,591

__________ __________ __________

 

Total minimum lease payments 13,152,760 7,042,762 7,655,417

Less amount representing finance charges (1,358,976) (790,447) (717,575)

__________ __________ __________

 

Present value of minimum lease payments 11,793,784 6,252,315 6,937,842

========= ========= =========

14. Share capital and options Unaudited Unaudited Audited

31 December 31 December 30 June

2009 2008 2009

£ £ £

Authorised

800,000,000 Ordinary shares of 1.25p each 10,000,000 10,000,000 10,000,000

========= ========= =========

Allotted, called up and fully paid

Ordinary shares of 1.25p each 2,156,500 1,008,625 2,148,250

========= ========= =========

AUD$ AUD$ AUD$

Allotted, called up and fully paid

Ordinary shares of 1.25p each 4,903,735 2,446,963 4,889,123

========= ========= =========

 

The Ordinary Shares rank pari passu in all respects including the right to receive all dividends and other distributions declared, made or paid. At 31 December 2009, the number of ordinary shares of 1.25p each on issue is 172,520,000 (30 June 2009: 171,860,000, 31 December 2008: 80,690,000).

 

Share options

 

The details of share options outstanding are as follows:

Number of share options	Unaudited 31 December 2009	Unaudited 31 December  2008	Audited 30 June 2009
	3,200,000	3,860,000	3,860,000

========= ========= =========

 

 

NOTES TO THE FINANCIAL INFORMATION

FOR THE PERIOD ENDED 31 DECEMBER 2009

 

15. Reserves

Group

Foreign currency, movements:	Unaudited 31 December 2009 AUD$	Unaudited 31 December 2008 AUD$	Audited 30 June 2009 AUD$
Opening balance	518,742	454,019	454,019
Foreign currency transactions	-	54,519	64,723
Closing balance	518,742	508,538	518,742

 

 

Equity reserves, movements:	Unaudited 31 December  2009 AUD$	Unaudited 31 December  2008 AUD$	Audited 30 June 2009 AUD$
Opening balance	1,109,015	4,379,376	2,841,396
Restatement	-	-	1,537,980
Opening balance, restated	1,109,015	4,379,376	4,379,376
Foreign currency	-	-	(10,204)
Share based payments - charge	111,930	2,984,144	3,108,338
Unwinding equity component of convertible notes	-	-	(364,725)
Excess of share based payment charge over market value of management shares	-	-	(3,963,770)
Conversion of management shares into ordinary share capital	-	-	(2,040,000)
Transfer to Retained Earnings	(128,178)	-	-
Closing balance	1,092,767	7,363,520	1,109,015

 

16. Share-based payments

Unaudited Unaudited Audited

31 December 31 December 30 June

2009 2008 2009

AUD$ AUD$ AUD$

The Group and Company recognised the

following charge in the income statement in

respect of its share based payment plans:

Share option charge 111,930 266,020 257,194

Management share charge - 2,809,278 2,851,144

__________ __________ __________

 

111,930 3,075,298 3,108,338

========= ========= =========

NOTES TO THE FINANCIAL INFORMATION

FOR THE PERIOD ENDED 31 DECEMBER 2009

 

17. Exploration expenditure commitments

 

In order to maintain an interest in the mineral assets in which the Group is involved, the Group is committed to meet the conditions under which the licences were granted. The timing and amount of exploration expenditure commitments and obligations of the Group are subject to the work programme required as per the licence commitments and may vary significantly from the forecast based upon the results of the work performed. Exploration results in any of the projects may also result in variation of the forecast programmes and resultant expenditure. Such activity may lead to accelerated or decreased expenditure.

 

 

Unaudited 31 December  2009 AUD$

Unaudited 31 December  2008 AUD$

Audited 30 June 2009 AUD$

As at the balance sheet date the

aggregate amount payable is:

 

Within not more than one year 6,651,940 5,805,140 6,610,060

========= ========= =========

18. Reconciliation of operating cash flows to net cash inflow from operating activities

 

Group:

Unaudited 31 December  2009 AUD$

Unaudited 31 December  2008 AUD$

Audited 30 June 2009 AUD$

 

Group operating profit 266,954 1,211,963 17,264,720

 

Adjustments for items not requiring an outlay

of funds:

Foreign currency - unrealised - 54,520 54,520

Depreciation and amortisation 4,608,334 4,627,030 8,396,667

Exploration expenditure written off - - 1,044,130

Profit on sale of financial assets available for sale - (33,600) (46,400)

Provision for obsolescence and rehabilitation - - 1,087,110

Share-based payments charge 111,930 2,984,144 3,108,338

Impairment of other assets - 40,000 40,000

__________ __________ __________

Operating profit before changes

in working capital 4,987,218 8,884,057 30,949,085

 

(Increase) Decrease in inventories (635,277) 1,749,404 2,629,903

Decrease (Increase) in receivables and

prepayments (Note a) (972,208) (2,172,608) 157,476

Increase in provisions 476,600 174,620 353,207

Increase (Decrease) in trade and other payables 6,670,383 (2,851,048) (886,428)

Taxation paid (2,905,000) - -

__________ __________ __________

Net cash inflow from operating activities 7,621,716 5,784,425 33,203,243

========= ========= =========

Note a: Inventories includes AUD$2,956,306 of Gold Bullion on hand at 31 December 2009 (31 December 2008: AUD$3,612,379, 30 June 2009: AUD$2,716,396).

 

 

**ENDS**

 

For further information visit www.norsemangoldplc.com or contact:

Barry Cahill	Norseman Gold Plc	Tel: +61 (0) 8 9473 2222 E-mail: [email protected]
Guy Wilkes	Ocean Equities Ltd	Tel: +44 (0) 20 7786 4370
William Vandyk	Astaire Securities plc	Tel: +44 (0) 20 7448 4400

 

 

 

Note to editors:

 

Norseman Gold plc is a dual AIM and ASX listed Australian gold production company, which acquired the Norseman Gold Project in May 2007, Australia's longest continually running gold operation. The Norseman Gold Project is located in the Eastern Goldfields of Western Australia in the highly prospective Norseman-Wiluna greenstone belt, 725km east of Perth and 186km from Kalgoorlie.

 

Gold was first found on the Norseman field in 1894 and over the last 65 years it has produced over 5.5 million oz of gold. The mine is currently producing from two high-grade narrow-vein underground gold mines - the Bullen and the Harlequin. Currently, it has a total resource inventory of 20.0 Mt at a grade of 5.5 g/t gold for 3.7 Moz of gold.

 

The tenements cover a 1,614 sq km area centred on the Norseman Township. The landholding comprises 179 contiguous tenements consisting of 13 Exploration Licences, 106 Mining Licences, 45 Prospecting Licences, 15 Miscellaneous Licences and 29 Mining Lease Applications.

 

The Company's strategy is focused on extending the mine life through the conversion of resources into reserves and identifying additional resources and obtaining additional ore for the operating mill through re-treatment of tailings or acquisitions of alternative sources of ore.

 

This information is provided by RNS

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