10th May 2012 07:00
MINERA IRL LIMITED
Interim Financial Accounts
For the First Quarter ended 31 March 2012
HIGHLIGHTS
Financial
·; Revenue up 1.3% to $11.1 million (Q1 2011: $10.9 million)
·; EBITDA down 8.5% to $4.4 million (Q1 2011: $4.7 million)
·; Profit after tax $1.7 million, up 35% million from $1.3 million in Q1 2011
·; Gold sales down 17% to 6,515 ounces (Q1 2011: 7,883 ounces). Average realised gold price up 22% to $1,699 per ounce (Q1: $1,389 per ounce)
·; Strong cash balance of $30.3 million at end of quarter (Q1 2011: $30.7 million)
Operational
·; Gold production from the Corihuarmi Gold Mine ahead of management expectations at 6,747 ounces compared with 7,952 ounces in the same period in 2011 ("Q1 2011"). Corihuarmi site cash operating costs US$502 per ounce, (Q1 2011: $401 per ounce)
·; Completion of a positive feasibility study on the Don Nicolas Project in Patagonia. Based on a gold price of US$1,250/oz, the study indicates a NPV (7% real) of US$40 million (pre-tax) and US$22 million (post tax); an IRR (real) of 34.6% (pretax) and 22.8% (post tax) and a payback period of 2.0 years (post tax). Permitting about to commence
·; Excavation of the exploration tunnel at the Ollachea Project commenced following the establishment of access to the portal site. Feasibility study on track for second half 2012 completion
Other
·; Completed a successful equity raising for gross proceeds of approximately CAD33.1 million by issuing 29,260,000 ordinary shares at CAD1.13 per share (equivalent to GBP72p based on exchange rate at pricing)
Note: $ = United States dollars
Chairman's Statement
The financial results for the March 2012 quarter exceeded management's expectations on the back of a solid performance from our Corihuarmi Gold Mine in Peru. The feasibility study on the Don Nicolas Project in Patagonia was completed and indicated that a viable mining operation can be developed. Good progress was made on the feasibility study at the Company's flagship project, Ollachea, in southern Peru. An equity raising of CAD33.1 million was completed and along with revenue from Corihuarmi, will provide funds for this year's programs.
Gold sales were a solid US$11.1 million on the back of a strong gold price, with spot sales averaging US$1,699 per ounce. Gross profit was US$5.4 million and EBITDA US$4.3 million. Profit before tax was US$3.1 million giving a profit after tax of US$1.7 million. The cash balance at the end of the quarter was US$30.3 million.
Our Corihuarmi Gold Mine continues to perform very well with gold production of 6,747 ounces, approximately 26% above the Company's budget. However, this was 15% below production in the first quarter of 2011, which is related to the expected falling grade which averaged 0.61g/t gold compared to 0.85g/t gold in the corresponding period of 2011. Mining continued to largely focus on the Susan outcrop and the broken scree material. Site cash operating costs averaged US$502 per ounce for the quarter.
We are very pleased with the results of the Feasibility Study from our Don Nicolas Project in Argentina. This was predicated upon open pittable Proven and Probable Mineral Reserves of 1.2 million tonnes grading 5.1g/t gold and 10g/t silver containing 197,000 ounces gold and 401,000 ounces silver. From this, gold production of 181,000 ounces and silver production of 190,000 ounces has been scheduled over the 3.6 year mine life. Up-front capital cost has been estimated at $55.5 million plus a sustaining capital of $7.3 million over the current estimated life of the project.
The project economics are compelling with a cash operation cost, after silver credit, of $528/ounce gold. Using a base case gold price of $1,250/ounce, the post tax net present value (NPV) using a 7% discount is $21.6 million with an internal rate of return (IRR) of 22.8%. With a higher gold price of $1,500 per ounce, the NPV increases to $41.4 million and the IRR to 38.1%. Whilst the mine life is relatively short, the payback period is only 2 years, and potentially less with a assumed higher gold price, and there exists much upside potential to extend the mine life. A new in-fill and extension drilling program commenced at the Martinetas area aimed at increasing the open-pit resource.
Following the successful feasibility study, the Environmental Impact Assessment has been completed and permitting was about to commence at the time of writing. Consideration of engineering companies is underway and financing options are being investigated. The Company's objective remains on track to bring Don Nicolas into production before the end of 2013.
The feasibility study on the Ollachea Project progressed throughout the quarter. Final in-fill drilling on the Minapampa Zone has been completed, advanced metallurgical and geotechnical testing continued, mining and process design advanced and archaeological clearance of the required sites progressed. The feasibility study remains on track for completion in the second half of 2012. The portal on the 1.2 kilometre exploration tunnel was established and the drive commenced.
The 2012 exploration field season commenced with mapping, surface sampling and geophysics in Patagonia. Exploration drilling is scheduled to commence during the second quarter at the high quality Michelle Prospect close to AngloGold Ashanti Limited's majority owned Cerro Vanguardia Mine.
We are well aware of the concern of the international investment community about recent political developments in Argentina and the resulting negative impact upon mining share prices including Minera IRL. However, we are confident that private mining assets are secure and that investment can proceed unimpeded. We are certainly receiving outstanding support for our activities in Patagonia from the officials in Santa Cruz Province.
In Peru, we are pleased with the management of the country by the government of President Ollanta Humala who was elected in 2011. The mining industry in Peru remains extremely vibrant with many capital development projects in progress.
Supported by resolute operational progress, a solid balance sheet and a strong resource base the management of Minera IRL continue to press ahead with the building of a mid-tier Latin American gold mining company.
In closing, I would like to extend my appreciation to our team for their outstanding efforts. I also thank our loyal shareholders for their ongoing patience and support as we build the Company.
Courtney Chamberlain
Executive Chairman
Minera IRL Limited 9 May 2012
Minera IRL Limited
Consolidated Statement of Comprehensive Income
3 months ended 31 March 2012 (unaudited) US$'000 | 3 months ended 31 March 2011 (unaudited) US$'000 | Year ended 31 December 2011 (audited) US$'000 | |||
Revenue | 11,073 | 10,929 | 53,002 | ||
Cost of sales | (5,710) | (6,459) | (27,955) | ||
Gross profit | 5,363 | 4,470 | 25,047 | ||
Other Income | 200 | ||||
Administration expenses | (2,090) | (2,071) | (8,211) | ||
Exploration costs | (95) | (222) | (1,014) | ||
Gain on disposal of available for sale investments | - | 386 | 403 | ||
Operating profit | 3,178 | 2,563 | 16,425 | ||
Finance income | 13 | 19 | 56 | ||
Finance expenses | (96) | (94) | (418) | ||
Net finance expense | (83) | (75) | (362) | ||
Profit before tax | 3,095 | 2,488 | 16,063 | ||
Income tax | (1,399) | (1,234) | (6,304) | ||
Profit for the period attributable to the equity shareholders of the parent | 1,696 | 1,253 | 9,759 | ||
Retranslation of foreign operations | 107 | - | 102 | ||
Gain (loss) on valuation of available for sale investments | (111) | 119 | 18 | ||
Recycled on disposal of available for sale investments | - | (260) | (288) | ||
Total Comprehensive Income | 1,692 | 1,113 | 9,591 | ||
Earnings per ordinary share (US cents) | |||||
Basic | 1.3 | 1.0 | 8.2 | ||
Diluted | 1.3 | 1.0 | 8.0 |
Minera IRL Limited
Consolidated Balance Sheet
As at 31 March 2012 (unaudited) US$'000 | As at 31 March 2011 (unaudited) US$'000 | As at 31 December 2011 (audited) US$'000 | |||
Assets | |||||
Property, plant and equipment | 19,239 | 23,303 | 19,989 | ||
Intangible assets | 97,627 | 57,726 | 88,474 | ||
Available for sale investments | 427 | 717 | 547 | ||
Deferred tax asset | 574 | - | 574 | ||
Other receivables | 7,505 | 5518 | 7,253 | ||
Total non-current assets | 125,372 | 87,264 | 116,837 | ||
Inventory | 2,667 | 2,263 | 2,809 | ||
Other receivables and prepayments | 6,698 | 3,824 | 5,330 | ||
Cash and cash equivalents | 30,285 | 30,734 | 11,134 | ||
39,650 | 36,821 | 19,273 | |||
Non-current assets held for sale | - | - | - | ||
Total current assets | 39,650 | 36,821 | 19,273 | ||
Total assets | 165,022 | 124,085 | 136,110 | ||
Equity | |||||
Share capital | 131,977 | 100,751 | 100,752 | ||
Foreign currency reserve | 338 | 129 | 231 | ||
Share option reserve | 1,917 | 1,918 | 1,917 | ||
Revaluation reserve | 217 | 457 | 328 | ||
Accumulated profits (losses) | 10,447 | 245 | 8,751 | ||
Total equity attributable to the equity shareholders of the parent | 144,896 | 103,500 | 111,979 | ||
Liabilities | |||||
Interest bearing loans | - | 10,000 | - | ||
Provisions | 2,464 | 2,391 | 2,443 | ||
Other long term liabilities | - | - | - | ||
Total non-current liabilities | 2,464 | 12,391 | 2,443 | ||
Interest bearing loans | 10,000 | - | 10,000 | ||
Current tax | 1,883 | 1,250 | 2,290 | ||
Trade and other payables | 5.779 | 6,944 | 9,398 | ||
Total current liabilities | 17,662 | 8,194 | 21,688 | ||
Total liabilities | 20,126 | 20,585 | 24,131 | ||
Total equity and liabilities | 165,022 | 124,085 | 136,110 | ||
Minera IRL Limited
Consolidated Statement of Changes in Equity
|
Share capital US$'000 | Foreign currency reserve US$'000 | Share Option reserve US$'000 | Reval-uation reserve US$'000 | Profit and loss account US$'000 |
Total US$'000 | ||||||
| Balance 1 January 2011
| 100,707 | 129 | 1,938 |
| 598 | (1,029) | 102,343 | ||||
| Profit for the period to 31 March 2011 | - | - | - | - | 1,254 | 1,254 | |||||
| ||||||||||||
| Gain on available for sale investments | - | - | - | 119 | - | 119 | |||||
| ||||||||||||
| Realised gain on available for sale investments | - | - | - | (260) | (260) | ||||||
| Total Comprehensive income | (141) | 1,254 | 1,113 | ||||||||
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| New share capital subscribed | 44 | - | - | - | - | 44 | |||||
| ||||||||||||
| Exercise of share options | - | - | (20) | - | 20 | - | |||||
| Balance 31 March 2011 | 100,751 | 129 | 1,918 | 457 | 245 | 103,500 | |||||
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| Balance 1 April 2011
| 100,751 | 129 | 1,918 | 457 | 245 | 103,500 | |||||
| Profit for the period to 31 Dec.2011 | - | - | - | - | 8,505 | 8,505 | |||||
| ||||||||||||
| Retranslation of foreign operations | - | 102 | - | - | - | 102 | |||||
| ||||||||||||
| Loss on available for sale financial assets | - | - | - | (101) | - | (101) | |||||
| ||||||||||||
| Recycled on disposal of available for sale investments | - | - | - | (28) | - | (28) | |||||
| Total Comprehensive Income | - | - | - | (129) | 8,505 | 8,478 | |||||
| ||||||||||||
| New share capital subscribed | 1 | - | - | - | - | 1 | |||||
| ||||||||||||
| Exercise of share options | - | - | (1) | - | 1 | - | |||||
| Balance 31 December 2011 | 100,752 | 231 | 1,917 | 328 | 8,751 | 111,979 | |||||
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| Balance 1 January 2012 | 100,752 | 231 | 1,917 | 328 | 8,751 | 111,979 | |||||
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| Profit for the period to 31 March 2012 | - | - | - | - | 1,696 | 1,696 | |||||
| ||||||||||||
| Loss on available for sale financial assets | - | - | - | (111) | - | (111) | |||||
| ||||||||||||
| Retranslation of foreign operations | - | 107 | - | - | - |
| 107 | ||||
| Total comprehensive income | - | 107 | - | (111) | 1,696 | 1,692 | |||||
| New share capital subscribed | 33,363 | - | - | - | - | 33,363 | |||||
| ||||||||||||
| Cost of raising share capital | (2,138) | (2,138) | |||||||||
| Balance 31 March 2012 | 131,977 | 338 | 1,917 | 217 | 10,447 | 144,896 | |||||
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Minera IRL Limited
Consolidated Cash Flow Statement
3 months ended 31 March 2012 (unaudited) US$'000 | 3 months ended 31 March 2011 (unaudited) US$'000 | Year ended 31 December 2011 (audited) US$'000
| |||
Cash flows from operating activities | |||||
Operating profit | 3,179 | 2,563 | 16,425 | ||
Depreciation | 1,155 | 2,145 | 8,349 | ||
Impairment of exploration assets | - | - | - | ||
Share option costs | - | - | - | ||
Provision for mine closure cost | 21 | 752 | 652 | ||
Profit on disposal of available for sale investments | (386) | (403) | |||
Loss on disposal of assets | - | - | 89 | ||
Available for sale investments impairment | 10 | - | 80 | ||
Foreign exchange losses relating to non-operating items | (313) | - | |||
Decrease/(increase) in inventory | 142 | 245 | (301) | ||
(Increase)/decrease in other receivables and prepayments | (1,621) | (1,262) | (4,999) | ||
(Decrease)/increase in trade and other payables | (3,618) | (1,853) | (752) | ||
Corporation tax paid | (1,808) | (1,644) | (5,751) | ||
Net cash flow from operations | (2,540) | 247 | 14,983 | ||
Interest received | 13 | 19 | 56 | ||
Interest paid | (96) | (94) | (418) | ||
Net cash flow from operating activities | (2,623) | 172 | 14,531 | ||
Cash flows from investing activities | |||||
Sale of available for sale investments | - | 642 | 672 | ||
Acquisition of property, plant and equipment | (404) | (1,005) | (3,984) | ||
Acquisition of available for sale investments | - | (152) | |||
Acquisition of intangible assets (exploration expenditure) | (9,154) | (4,080) | (34,728) | ||
Net cash outflow from investing activities | (9,558) | (4,443) | (38,192) | ||
Cash flows from financing activities | |||||
Proceeds from the issue of ordinary share capital | 33,363 | 44 | 45 | ||
Cost of raising share capital | (2,138) | - | - | ||
Receipt of loans | - | - | - | ||
Repayment of loans | - | - | - | ||
Net cash inflow from financing activities | 31,225 | 44 | 45 | ||
Net (decrease)/increase in cash and cash equivalents | 19,044 | (4,227) | (23,616) | ||
Cash and cash equivalents at beginning of the period | 11,134 | 34,648 | 34,648 | ||
Exchange rate movements | 107 | 313 | 102 | ||
Cash and cash equivalents at end of the period | 30,285 | 30,734 | 11,134 |
Minera IRL Limited
Notes to the Interim Report |
The financial information contained in this Interim Report does not constitute statutory accounts as defined by the Companies (Jersey) Law 1991. No statutory accounts for the period have been delivered to the Jersey Registrar of Companies. The financial information contained in this Interim Report has neither been audited nor reviewed by the auditors. |
The statutory accounts for the year ended 31 December 2011 have been filed with the Jersey Registrar of Companies. The auditors' report on these accounts was unqualified. The consolidated financial information contained in this Interim Report has been presented and prepared in accordance with interim reporting standards, in a form consistent with the annual accounts and in accordance with accounting policies and standards applicable to those annual accounts. However, these interim accounts do not include all the disclosures required for those annual accounts. Both the annual accounts and these interim accounts have been prepared in accordance with International Financial Reporting Standards. There have been no changes in the company's accounting policies since 31 December 2011. |
This Interim Report has been approved for issue by the Board of Directors on 9 May 2012. |
Going Concern Having taken into account the balance of cash at 31 March 2012 and the fact that the Corihuarmi mine has a positive cash flow, the Directors of the Company consider that it will have sufficient funds to continue as a going concern for the foreseeable future.
Earnings per share |
The earnings per share for the first quarter has been calculated using the profit attributable to ordinary shareholders of US$1,696,000 (first quarter 2011: US$1,253,000) and the weighted average number of ordinary shares in issue during the three months to 31 March 2012 of 128,448,240 (first quarter 2011: 119,571,273).
Issue of shares On 5 March 2012 the Company issued 29,260,000 ordinary shares at a price of CAD1.13 per share (equivalent to GBP72p based on exchange rate at pricing) as a private placement of shares.
Transactions of an unusual nature There were no transactions of an unusual nature during the three months to 31 March 2012.
Seasonal Influences The business of the Company is not generally subject to seasonal influences.
Related parties During the first quarter ended 31 March 2012 the Company had no related party transactions.
Subsequent events In April 2012, 3,060,000 options were exercised at a price of GBP45p per share. |
The Directors of Minera IRL are listed in the Group's Annual report for the year ended 31 December 2011.
By order of the board
C Chamberlain
Executive Chairman
Related Shares:
MIRL.L