12th Jun 2007 07:00
Falkland Gold and Minerals Ltd12 June 2007 FALKLAND GOLD AND MINERALS LIMITED Chairman's interim statement for the 6 months period ended 31 March 2007 12 JUNE FALKLAND GOLD AND MINERALS LIMITED12 June 2007 Interim Results for the 6 months ended 31 March 2007 Highlights • "Falklands 1" drill rig relocated to West Falklands;• Cash balances of over £4.9 million;• Original target of 24,000 metres reached ahead of schedule. During the period, the Company returned a loss before tax of £531,124 (6 monthsto 31 March 2006: £533,577). Around £59,000 has been spent on tangible fixedassets this period, the majority of which was on operating plant and machineryand a second hand 4 wheel drive vehicle. At current levels, the totalexpenditure is approximately £150,000 per month. The Company is now well into the third year of its exploration programme in theFalkland Islands which is designed to establish the source of alluvial goldthat had been discovered in some of the streams in the Islands. At the end ofMay 2007 25,288 metres of core had been drilled across the various targets onEast Falklands with 5,087 metres of that total being drilled in 2007. In May 2007 we relocated one of our drill rigs, "Falklands 1", to WestFalklands. The sequence of targeting has optimised the logistics involved intransporting men and equipment between the islands. The rig was sited on Target20 and drilling has already commenced. In addition to the work outlined above,several other areas have been selected for review in West Falklands and theseinclude radiometric anomalies. Further work, involving geological mapping andsoil sampling is planned to check their mineral potential. On East Falklands we will continue our explorations programmes particularly onTarget 11 and in the region of Target 5. Going forward, we plan to drill anadditional 2,000 metres on East Falklands in the remainder of 2007. That willinclude 600 metres on Target 11, 400 metres on Target 10 (two x 200 metre holes)and 750 metres on the Cantera Prospect which is located immediately to the eastof Target 5. Drilling of some 1,900 metres is planned on West Falklands with650 metres on Target 20, 750 metres on Target 18 (subject to final soil sampleresults) and 500 metres on the Warrah Prospect. In order to test Target 20 atdepth, two deep holes (of 300 and 350 metres) have also been scheduled. In addition to the drilling campaign, our work on the Black Shale Prospect,which is an area of some 18 km2 to the north of Goose Green, continues toprogress well, increasing our geological and geochemical knowledge of the area.As has been previously reported, our internal review of the Falkland Islandsproject area and that of the British Geological Survey ("BGS") have generatedconceptual styled models of mineralisation for the Black Shale Prospect. It isbelieved the Black Shale Prospect could provide the environment, in terms ofsize and scope, to host these models. A key part of the models ofmineralisation are for fractures and dykes to intersect or cut through the blackshale to allow mineral rich fluid deposition. Structural mapping by the companyhas identified such areas and so 10 blocks (ranging in size from 0.5 km2 to 5km2 in area) have been drawn up to systematically cover the area. In total,some 6,000 soil samples will be collected. These samples will provide assayinformation that could indicate anomalous zones. Naturally, any such zoneswould be followed up with drilling if justified. Despite the extensive work programme, the lack of significant positive resultsis disappointing. Given the incidence of gold grains that have been found inthe stream sediments and the fact that the BGS has identified these as beingepithermal in origin and close to their source, we continue to believe in thepotential of the licence. Nevertheless the fact remains that a source of thegold has not been yet been located. To provide further input into our work programme, we have commissioned ProfessorRichard Viljoen of the University of the Witwatersrand in South Africa to reviewour target generation and work execution. Professor Viljoen and his twinbrother Maurice have over 80 years experience between them in SouthernHemisphere geology and target generation. We believe that they are wellequipped to review the approach the Company has taken and the results obtainedin order to assess whether the conclusions reached thus far are sound. Hisinitial findings support our belief and he has made a number of suggestions forfurther work which will be developed by our team in the field. The Board has continued to be very pleased by the performance of its competentand well equipped team in the Falklands. Richard LinnellChairman Enquiries: Falkland Gold and Minerals LimitedRichard Linnell (Chairman) +27 82 440 6710 FALKLAND GOLD AND MINERALS LIMITED Profit and loss account for the 6 months period ended 31 March 2007 6 months 6 months Period ended Period ended Year ended 31/03/07 31/03/06 30/09/06 (unaudited) (unaudited and (unaudited and re-stated) re-stated) Note £ £ £ Administrative expenses (684,506) (691,417) (1,610,920) Operating loss (684,506) (691,417) (1,610,920) Interest receivable 133,173 157,840 262,289Other income 20,209 - 22,820 Loss on ordinary activities before taxation (531,124) (533,577) (1,325,811) Tax on loss on ordinary activities 2 (25,303) (107,759) (127,103) Loss for the financial period after taxation (556,427) (641,336) (1,452,914) Retained loss for the period (556,427) (641,336) (1,452,914) 6 months 6 months Period ended Period ended Year ended 31/03/07 31/03/06 30/09/06 (unaudited) (unaudited and (unaudited and re-stated) re-stated) Pence Pence Pence Basic and diluted loss per ordinary share 3 (0.71) (0.82) (1.86) There were no recognised gains or losses in the year other than those dealt within the profit and loss account above. All of the activities of the Company are classified as continuing. FALKLAND GOLD AND MINERALS LIMITED Balance sheet as at 31 March 2007 6 months 6 months Period ended Period ended Year ended 31/03/07 31/03/06 30/09/06 Notes (unaudited) (unaudited and (unaudited and re-stated) re-stated) £ £ £ Fixed assetsIntangible assets 2,223,389 1,573,365 1,834,282Tangible assets 351,194 560,579 442,132 2,574,583 2,133,944 2,276,414 Current assetsDebtors 66,160 116,616 35,771Cash at bank and in hand 4,916,663 6,659,013 5,782,956 4,982,823 6,775,629 5,818,727 Creditors: amounts falling due within one year (112,059) (182,341) (136,427) Net current assets 4,870,764 6,593,288 5,682,300 7,445,347 8,727,232 7,958,714 Capital and reservesCalled up share capital 1,565 1,565 1,565Share premium account 10,209,182 10,209,182 10,209,182Other Reserves 5 199,020 112,900 155,960Profit and loss account (2,964,420) (1,596,415) (2,407,993) 7,445,347 8,727,232 7,958,714 FALKLAND GOLD AND MINERALS LIMITED Cash flow statement for the 6 months period ended 31 March 2007 6 months 6 months Period ended Period ended Year ended 31/03/07 31/03/06 30/09/06 (unaudited) (unaudited and (unaudited and re-stated) re-stated) £ £ £ Net cash outflow from operating activities (520,718) (589,413) (974,219) Returns on investments and servicing of financeInterest received 133,173 157,840 262,289Other income 20,209 - 22,820 Capital expenditurePurchase of intangible fixed assets (456,842) (454,363) (963,699)Purchase of tangible fixed assets (59,872) (158,104) (183,245) Net cash outflow before financing (884,050) (1,044,040) (1,836,054) FinancingShare based payment 43,060 43,060 86,120Taxation (25,303) (107,759) (127,103) (Decrease) in cash in period (866,293) (1,108,739) (1,877,037) FALKLAND GOLD AND MINERALS LIMITED Cash flow statement for the 6 months period ended 31 March 2007 Reconciliation of operating loss to net cash outflow from operating activities 6 months 6 months Period ended Period ended Year ended 31/03/07 31/03/06 30/09/06 (unaudited) (unaudited and (unaudited and re-stated) re-stated) £ £ £ Operating loss (684,506) (691,417) (1,610,920)Depreciation and amortisation 218,545 174,679 566,686Decrease/(increase) in debtors (30,389) (55,615) 25,230(Decrease)/increase in creditors (24,368) (17,060) 44,785 Net cash outflow from operating activities (520,718) (589,413) (974,219) Reconciliation of movements in shareholders' funds for the 6 months period ended 31 March 2007 6 months 6 months Period ended Period ended Year ended 31/03/07 31/03/06 30/09/06 (unaudited) (unaudited and (unaudited and re-stated) re-stated) £ £ £ Loss for the financial period (556,427) (641,336) (1,452,914)Share based payment 43,060 43,060 86,120 (513,367) (598,276) (1,366,794) Opening shareholders' equity funds 7,958,714 9,325,508 9,325,508 Closing shareholders' equity funds 7,445,347 8,727,232 7,958,714 FALKLAND GOLD AND MINERALS LIMITED Notes to the interim accountsfor the 6 months period ended 31 March 2007 1. Basis of preparation of the financial statement During this period, Financial Reporting Standard ("FRS") 20 "Share-based Payment" was adopted. The net effect of adopting FRS 20 is detailed at Note 5. In allother respects, the interim financial information set out above has beenprepared on the same basis and using the same accounting policies as wereapplied in drawing up the company's audited statutory financial statements forthe year ended 30 September 2006. The financial information for the 6 month periods ended 31 March 2007 and 31March 2006 are unaudited. The financial information for the full year ended 30September 2006 is extracted from the Company's audited financial statements forthat year as filed with the Registrar of companies and has been modified solelyto reflect the effects of adopting FRS 20. The auditors' report on thoseaccounts was unqualified. The financial information for the 6 month period ended 31 March 2006 and thefull year ended 30 September 2006 have been restated for the adoption of FRS 20. In the opinion of the directors, the financial information for the periodsfairly represents the financial position, results of the operations and cashflows for the periods in compliance with Falkland Island Company Law andgenerally accepted accounting principles. 2. Taxation Analysis of the tax charge The tax charge on the loss on ordinary activities for the period was as follows: 6 months 6 months Period ended Period ended Year ended 31/03/07 31/03/06 30/09/06 (unaudited) (unaudited and (unaudited and re-stated) re-stated) £ £ £Current tax:UK corporation tax on profits of the period 25,303 30,417 49,761Adjustments in respect of previous periods - 77,342 77,342 Tax on loss on ordinary activities 25,303 107,759 127,103 UK corporation tax has been charged at 30%. FALKLAND GOLD AND MINERALS LIMITED Notes to the interim accountsfor the 6 months period ended 31 March 2007 Factors affecting the tax charge The tax assessed for the period is higher than the standard rate of corporationtax in the UK. The difference is explained below: 6 months 6 months Period ended Period ended Year ended 31/03/07 31/03/06 30/09/06 (unaudited) (unaudited and (unaudited and re-stated) re-stated) £ £ £ Loss on ordinary activities before tax (531,124) (533,577) (1,325,811) Loss on ordinary activities multiplied by thestandard rate of corporation tax in the UK of30% (159,337) (160,073) (397,743) Effects of:Tax losses unavailable for current relief 133,275 120,497 303,608Depreciation and amortisation in excess ofcapital allowances 65,564 52,404 170,006Small companies relief (14,649) 16,339 (27,570)Expenses not deductible for tax purposes 450 1,250 1,460Adjustments in respect of previous periods - 77,342 77,342 Current tax charge 25,303 107,759 127,103 3. Loss per share The calculation of the basic loss per ordinary share is based on the losses of£556,427 (6 months to 31 March 2006: £641,336) and the weighted average numberof ordinary shares outstanding of 78,250,000 (6 months to 31 March 2006:78,250,000). There is no difference between the basic loss per share and thediluted loss per share presented. 4. Dividends The Directors do not recommend the payment of a dividend. 5. Share Based Incentives During the period, the Company adopted FRS 20. The Company has an unapprovedshare option plan and, in accordance with the requirements of FRS 20, theCompany recognises an expense based on the fair value of the options granted.This cost is spread over the vesting period for each grant. The net effect ofadopting FRS 20 is summarised as follows; 6 months 6 months Period ended Period ended Year ended 31/03/07 31/03/06 30/09/06 (unaudited) (unaudited and (unaudited and re-stated) re-stated) £ £ £Profit and loss accountAdministrative Expenses 43,060 43,060 86,120 Balance SheetOther Reserves 43,060 43,060 86,120Profit and loss account 155,960 69,840 69,840 199,020 112,900 155,960 This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
BPC.L