22nd Sep 2006 07:00
Alexander Mining PLC22 September 2006 Alexander Mining plc 22 September 2006 Interim Results for the six months ended 30 June 2006 Highlights • Good progress made with feasibility study on Leon copper and silver project in northern Argentina. • Leon regional exploration programme successful in identifying mineralised targets leading to preparation for drilling. • Metals market conditions and outlook remain favourable for new business efforts to build a diversified mining company. • Strong cash position totalling £16.3 million at the end of June. Post Period Events • Independent JORC Code compliant resource calculation reported for Leon. • Additional phase of resource drilling in Leon valley and newly discovered talus zone underway. • Pilot SX/EW (solvent extraction/electro-winning) processing plant on site. • Drilling on two of the already identified Leon regional exploration targets imminent. Chairman's Review I am pleased to report on Alexander Mining plc's interim results for the sixmonths ended 30 June 2006. Operations During the period, the Company has devoted most of its efforts in advancing itsLeon project towards completion of a feasibility study and a decision to proceedwith mine construction. The planned programme of resource definition drilling has now been completed atthe Leon project. A total of 15,296m were drilled in 192 holes, including 857mof large diameter PQ drilling for metallurgical purposes. A.C.A. HoweInternational was contracted as independent technical/resource auditors and alsoto make an independent JORC Code compliant resource calculation. Mining engineering open pit design and planning work has commenced. This will bebased upon the report submitted by independent consultant Adam Wheeler followinghis visit to the site during the first week in June. Meanwhile, the pilot plant preparations have proceeded at site. A large bulksample from El Cobre, the zone targeted for initial mining, has been stacked onthe leach pad. All reticulation systems are in place for processing by thesolvent extraction-electrowinning (SX-EW) pilot plant brought in from Chile. Metallurgical testwork has continued at SGS Lakefield in Canada and column testsare underway in Chile at Sociedad Terral and at SGS Lakefield to refine theprocess flowsheet. This is principally aimed at determining the ultimateparticle size for the leach pad ore and hence the mine operating cost per tonne. Most of the environmental base line work has been completed and will beincorporated as part of the full environmental impact study by VectorEngineering. This is the key document required for starting work at the siteand for the mine to proceed to full scale construction. We are excited about the potential of the reconnaissance exploration in the Leonarea that commenced in April 2006 after receipt of necessary environmentalpermits. Work to date has consisted of geological and structural mappingcombined with rock chip and sediment geochemical sampling. To date,approximately 30% of the area has been reconnoitred and nine mineralised targetshave been identified. More detailed exploration has been completed or is inprogress on six of the targets in preparation for drill evaluation. Work at our other properties encompassed: drilling at Rachaite, Argentina, whichshowed it was anomalous in silver, lead and zinc - the Company is in discussionsregarding a joint venture to continue drilling; at Sulcha, Peru, results fromthe exploration drilling programme were disappointing and the decision toterminate the project has been taken - the associated costs have been writtenoff; and at the Molinetes gold project in Peru, we are awaiting necessaryapprovals prior to commencing exploration activities. Financial During the six months ended 30 June 2006, the Company made a consolidated netloss after taxation of £1,530,000, compared to a restated loss for the yearended 31 December 2005 of £1,260,000. The loss after tax in the period includes£405,000 of expenditure (both property acquisition and exploration) written-offfrom the Sulcha project in Peru; £237,000 representing the fair value of shareoptions issued by the Company, which have been calculated in accordance with FRS 20, a new accounting standard adopted for the first time in the period; and£287,000 of foreign exchange losses due to fluctuations in the Sterling/USDollar exchange rate following the Company's decision to hold approximately halfof its cash reserves in US Dollars, the currency of the majority of theCompany's exploration expenditure, at the start of 2006. Interest earned during the period totalled £407,000 due to our strong cashposition, which totalled £16.3 million at the end of June. During the period afurther £1,678,000 of exploration costs have been capitalised, representingcosts associated with the ongoing exploration on the Company's projects in SouthAmerica. Outlook Metal prices, both base and precious, have remained near historic absolutehighs. The benefits of a diversified approach to building a mining companycontinue to remain compelling. With this objective, we look forward toprogressing our existing activities and to identifying, and consummating,attractive new business opportunities. We are pleased to have secured the services of Fred van Dongen as ChiefOperating Officer, a mining engineer who has considerable experience in buildingmines in South America. Also I am delighted that Roger Davey and Martin Rosserhave recently joined the board. I would like to thank, on behalf of the board, our shareholders for theircontinued strong support and to thank my fellow directors and employees fortheir hard work. We look forward to reporting on our activities in due course. Matt Sutcliffe21 September 2006 Independent Review Report to Alexander Mining plc Introduction We have been instructed by the Company to review the financial information forthe six months ended 30 June 2006, which comprises the consolidated profit andloss account, the consolidated statement of total recognised gains and losses,the consolidated balance sheet, the consolidated cash flow statement and relatednotes. We have read the other information contained in the interim report andconsidered whether it contains any apparent misstatements or materialinconsistencies with the financial information. This report is made solely to the Company and in accordance with Bulletin 1999/4issued by the Auditing Practices Board. Our work has been undertaken so that wemight state to the Company those matters we are required to state to them in anindependent review report and for no other purpose. To the fullest extentpermitted by law, we do not accept or assume responsibility to anyone other thanthe Company, for our review work, for this report, or for the conclusions wehave formed. Directors' responsibilities The interim report, including the financial information contained therein, isthe responsibility of, and has been approved by the directors. The directorsare responsible for preparing the interim report in accordance with the rules ofthe London Stock Exchange for companies trading securities on AIM which requirethat the half-yearly report be presented and prepared in a form consistent withthat which will be adopted in the Company's annual accounts having regard to theaccounting standards applicable to such annual accounts. Review work performed We conducted our review in accordance with guidance contained in Bulletin 1999/4issued by the Auditing Practices Board. A review consists principally of makingenquiries of group management and applying analytical procedures to thefinancial information and underlying financial data based thereon, assessingwhether the accounting policies and presentation have been consistently appliedunless otherwise disclosed. A review excludes audit procedures such as tests ofcontrols and verification of assets, liabilities and transactions. It issubstantially less in scope than an audit performed in accordance with AuditingStandards and therefore provides a lower level of assurance than an audit.Accordingly we do not express an audit opinion on the financial information. Review conclusion On the basis of our review we are not aware of any material modifications thatshould be made to the financial information as presented for the six monthsended 30 June 2006. PKF (UK) LLPChartered AccountantsLondon, UK21 September 2006 Consolidated Profit and Loss Account Notes Six months Restated Restated ended pro-forma pro-forma 30 June 2006 Six months Year ended ended 31 December 30 June 2005 2005 £'000 £'000 £'000 Administrative expensesExpenses (1,295) (604) (1,552)Exploration costs written-off (405) - -Share option costs 1 (237) (104) (337) ________ ________ ________Operating loss (1,937) (708) (1,889) Provision against investment in Associate - (73) (73)Net interest receivable 407 241 702 ________ ________ ________Loss on ordinary activities before taxation (1,530) (540) (1,260)Tax on loss on ordinary activities - - - ________ ________ ________Loss on ordinary activities after taxation and (1,530) (540) (1,260)retained for the period ________ ________ ________ Basic and diluted loss per share (pence) 2 (1.14)p (0.54)p (1.07)p ________ ________ ________ All amounts relate to continuing operations. Consolidated statement of total recognised gains and losses Six months Restated Restated ended pro-forma pro-forma 30 June 2006 Six months Year ended ended 31 December 30 June 2005 2005 £'000 £'000 £'000 Loss for the period (1,530) (540) (1,260)Exchange loss on foreign currency net investments (166) - - ________ ________ ________Total recognised loss for the period (1,696) (540) (1,260) ________ ________ ________Prior year adjustment (note 1) (337) - - ________ ________ ________Total recognised loss since last financial statements (2,033) - - ________ ________ ________ Consolidated Balance Sheet Notes As at Restated Restated 30 June as at as at 2006 30 June 31 December 2005 2005 £'000 £'000 £'000 Fixed assetsIntangible fixed assets 3,931 507 2,253Tangible fixed assets 54 17 73Investments 100 - 100 ________ ________ ________ 4,085 524 2,426 ________ ________ ________ Current assetsDebtors 290 203 539Cash at bank and in hand 2,416 117 1,982Short term bank deposits 13,863 21,407 17,018 ________ ________ ________ 16,569 21,727 19,539 Creditors: amounts falling due within one year (516) (167) (368) ________ ________ ________ Net current assets 16,053 21,560 19,171 ________ ________ ________ Total assets less current liabilities 20,138 22,084 21,597 ________ ________ ________ Capital and reservesCalled up share capital 13,453 13,453 13,453Share premium account 11,850 11,850 11,850Merger reserve (2,487) (2,487) (2,487)Share option reserve 1 574 104 337Profit and loss account (3,252) (836) (1,556) ________ ________ ________ Shareholders' funds 5 20,138 22,084 21,597 ________ ________ ________ Consolidated Cash Flow Statement Notes Six months Pro-forma Pro-forma ended Six months Year ended 30 June 2006 ended 31 December 30 June 2005 2005 £'000 £'000 £'000 Net cash outflow from operating activities 3 (592) (662) (1,776) Returns on investment and servicing of finance - - -Interest received 466 224 494Interest paid - (5) (6) ________ ________ ________ Net cash inflow from returns on investment and 466 219 488servicing of finance ________ ________ ________ Capital expenditure and financial investmentPurchase of tangible fixed assets (1) (55) (107)Purchase of intangible fixed assets (2,307) (397) (1,940)Investment in associated undertaking - (32) (32)Acquisition of other investments - - (100) ________ ________ ________ Net cash outflow from capital expenditure and (2,308) (484) (2,179)financial investment ________ ________ ________ Management of liquid resourcesTransfer from/(to) short term bank deposits 2,874 (20,883) (16,478) ________ ________ ________ Net cash inflow/(outflow) before financing 440 (21,810) (19,945) ________ ________ ________ Financing - - -Issue of shares by Alexander Mining plc - 20,000 20,000Issue of shares by Alexander Gold Group - 3,371 3,371LimitedShare issue costs - (1,483) (1,483) ________ ________ ________ Net cash inflow from financing - 21,888 21,888 ________ ________ ________ Increase in cash 4 440 78 1,943 ________ ________ ________ Notes to the interim financial information: 1. Basis of preparation The interim financial information has been prepared on a consistent basis andusing the same accounting policies as were applied in drawing up the Company'sstatutory financial statements for the year ended 31 December 2005, except asset out below. The financial information for the six months ended 30 June 2005 and 30 June 2006is unaudited. In the opinion of the directors the financial information forthese periods presents fairly the financial position, results of operations andcash flows for the periods in conformity with generally accepted accountingprinciples. The financial period for the year ended 31 December 2005 has beenderived from the Group's audited financial statements for that period as filedwith the Registrar of Companies and does not constitute the statutory financialstatements for that period. The auditors' report on the statutory financialstatements for the year ended 31 December 2005 was unqualified and did notcontain any statement under Section 273 (2) or (3) of the Companies Act 1985. Pro-forma information The Company was incorporated on 8 February 2005 and on 22 March 2005 acquiredAlexander Gold Group Limited ("AGGL") by way of a share for share exchange.This acquisition has been consolidated in accordance with the merger accountingprinciples set out in Financial Reporting Standard 6 and Schedule 4(A) to theCompanies Act 1985, which requires consolidated financial information to bepresented as if the companies had been combined throughout the financial period. Accordingly, the comparative financial information for the periods ended 30June 2005 and 31 December 2005 includes the results and cash flows of AGGL from1 January 2005. This is presented as pro-forma information because it includesa period prior to the formation of the Company. Intangible fixed assets Intangible fixed assets represent costs associated with mineral exploration andinvestments, which are capitalised on a project-by-project basis, pendingdetermination of the feasibility of the project. Costs incurred includeappropriate technical and administrative expenses but not general overheads. Ifan exploration project is successful, the related expenditures will betransferred to mining assets and amortised over the estimated life of thecommercial ore reserves on a unit of production basis. Where a project isrelinquished, abandoned, or is considered to be of no further commercial valueto the Group, the related costs are written off. Adoption of FRS 20 The Group has applied the requirements of FRS 20 (share based payments), inaccordance with the transitional provisions, to all equity instruments grantedafter 7 November 2002 and unvested at 1 January 2006. The Group issues share based payments to certain individuals, which are measuredat fair value at date of grant. The fair value determined at the grant date isexpensed on a straight line basis over the vesting period, based on the Group'sestimate of shares that will eventually vest. Fair value is measured by use of either a binomial or a Black-Scholes valuationmodel, whichever is more appropriate to the instrument granted. The expectedlife of the instrument used in the model is adjusted, based on management's bestestimate, for the effects of non-transferability, exercise restrictions andbehavioural considerations. The adoption of FRS 20 has resulted in a change in the accounting policy forshare based payments. Until 31 December 2005 the provision of share options toindividuals did not result in a charge in the profit and loss account. A prioryear adjustment has been made to the financial information set out for theperiod ended 30 June 2005 and 31 December 2005 to apply charges to the profitand loss account for share options granted at these dates. Between 23 March 2005 and 29 September 2005 the Company granted 9,183,333 shareoptions in six tranches at an exercise price of £0.30 each. A total of8,683,333 options had not vested at 1 January 2006 and, in accordance with FRS20, have been valued at between 6.1p and 12.4p each. Publication of non-statutory accounts The financial information set out in this interim report does not constitutestatutory accounts as defined in section 240 of the Companies Act 1985. Copies of this report are being sent to all shareholders. Additional copies areavailable from the Company's office at 35 Piccadilly, London, W1J 0DW or theCompany's website. 2. Loss per share The calculation of loss per share is based on a loss of £1,530,000 for theperiod ended 30 June 2006 (30 June 2005: loss of £540,000; 31 December 2005:loss of £1,260,000) and the weighted average number of shares in issue in theperiod to 30 June 2006 of 134,534,667 (30 June 2005: 99,719,852, 31 December2005: 117,127,000). There is no difference between the diluted loss per shareand the loss per share presented. 3. Net cash outflow from operating activities Six months ended Restated Restated 30 June 2006 period ended 30 period ended 31 June 2005 December 2005 £'000 £'000 £'000 Operating loss (1,937) (708) (1,889)Depreciation and amortisation charge 18 3 36Decrease/(increase) in debtors 191 (43) (299)Increase/(decrease) in creditors 207 (19) 54Foreign exchange loss/(gain) on cash balances 287 (4) (20)Write down of intangibles 405 - -Share option and share settled costs 237 109 342 ________ ________ ________ Net cash outflow from operating activities (592) (662) (1,776) ________ ________ ________ 4. Reconciliation of net cash flow to movements in net funds Six months ended Period ended 30 Period ended 31 30 June 2006 June 2005 December 2005 £'000 £'000 £'000 Increase in cash in the period 440 78 1,943(Decrease)/increase in short term bank deposits (2,874) 20,883 16,478 ________ ________ ________ Movement in net funds resulting from cash flows (2,434) 20,961 18,421 Foreign exchange (loss)/gain on cash balances (287) 4 20 ________ ________ ________ Movement in net funds (2,721) 20,965 (18,441) Net funds at start of period 19,000 559 559 ________ ________ ________ Net funds at end of period 16,279 21,524 19,000 ________ ________ ________ Represented by:Cash at bank and in hand 2,416 117 1,982Short term bank deposits 13,863 21,407 17,018 ________ ________ ________ Net funds at end of period 16,279 21,524 19,000 ________ ________ ________ 5. Reconciliation of movements in shareholders' funds Six months ended Restated Restated 30 June 2006 period ended 30 period ended 31 June 2005 December 2005 £'000 £'000 £'000 Loss for the period (1,530) (540) (1,260)Exchange loss on foreign currency net investments (166) - -Share option costs recognised in reserves 237 104 337New share capital subscribed - Alexander Mining - 18,516 18,516plcNew share capital subscribed - Alexander Gold - 3,506 3,506Group Limited ________ ________ ________ Movement in shareholders' funds (1,459) 21,586 21,099 Shareholders' funds at start of period 21,597 498 498 ________ ________ ________ Shareholders' funds at end of period 20,138 22,084 21,597 ________ ________ ________ For further information please contact: Alexander Mining plcMatt Sutcliffe, Chairman and Chief Executive Officer1st Floor, 35 PiccadillyLondon, W1J 0DW Tel: +44 (0) 20 7292 1300Fax: +44 (0) 20 7292 1313Mobile: +44 (0) 7887 930 758Email: [email protected]: www.alexandermining.com Nominated Advisor and Broker Graham SwindellsArbuthnot Securities LimitedArbuthnot House, 20 Ropemaker StreetLondon, EC2Y 9AR Tel: +44 (0) 20 7012 2000 Public/Media Relations Gary MiddletonSt Swithins Public Relations Tel: +44 (0) 20 7929 4391Mobile: +44 (0) 7951 603 289 Notes for editors Alexander Mining plc is a mining company that intends to grow rapidly into a lowcost and highly profitable diversified metal producer. The Company has a highlyskilled management team with expertise in both natural resources and finance. END This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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