28th Feb 2008 07:00
Thor Mining PLC28 February 2008 THOR MINING PLC Interim report for the six months to 31 December 2007 Dated: 28 February 2008 Thor Mining PLC ("Thor" or the "Company") ") the specialist metals companyfocussed on advancing tungsten-molybdenum and uranium projects in the NorthernTerritory of Australia, today announced its interim results for the period ended31 December 2007. CEO Report The CEO presents his review together with the consolidated financial report forthe six months ended 31 December 2007. The first half of the 2008 financial year has been one of solid progress. TheCompany has continued to focus on the development of its 100% owned MolyhilTungsten-Molybdenum Project located in Central Australia. The strategy of moving the Molyhil Project in to production requires an off-takeagreement for the planned production and suitable financing to be completed, aswell as securing all necessary mining approvals. Progress on all matterscontinues. During the period Thor expended in excess of £210,000 on mine development and£430,000 on exploration of the extensive portfolio of tenements. OPERATING REVIEW MOLYHIL TUNGSTEN-MOLYBDENUM PROJECT In August 2007, following the receipt of the final results from the resourcedrilling program independent geological consultants completed a revised resourcefor the Molyhil Project. The revised resource represented a 55% increase in overall tonnage to 3.73million tonnes at 0.51% combined tungsten (WO3) and molybdenum (MoS2) with asubstantial tonnage upgrade to the Measured and Indicated categories -increasing the overall level of confidence in the resource. The revised resourcenow comprises: • Measured Resource of 530,000 tonnes at 0.42% WO3 and 0.27% MoS2, a 43% tonnage increase over the previous Measured resource;• Indicated Resource of 2.4 million tonnes at 0.39% WO3 and 0.17% MoS2, a 37% tonnage increase over the previous Indicated resource; and• Inferred Resource of 800,000 tonnes at 0.15% WO3 and 0.1% MoS2, more than three times higher than the previous resource. Mining ReserveA new mining reserve was then completed. The new mining reserve is based on theMeasured and Indicated categories of the revised resource. Approximately 73% ofthese resource tonnages converted to reserve status, which now totals: Tonnes Grade WO3 Grade MoS2Proven 456,000 0.47% 0.30%Probable 1,690,000 0.49% 0.20 %Total 2.15 million tonnes 0.49% 0.22% This represents a reserve tonnage increase of 98%. The mining reserve contains a total of 4.9 million pounds of molybdenum metaland 700,000 mtu's of tungsten which will be produced over the expected 5.7 yearlife of the open pit design. Financial Model The previous financial model has been updated, using new input parameters,including costs based on a processing throughput of 400,000 tonnes per annum. Anumber of assumptions were used based on current industry available information,including prices of USD$32 per lb of Molybdenum and USD$240 per mtu, withconservative industry discounts of 15% and 28% for concentrate salesrespectively. The financial model uses a USD$/AUD$ exchange rate of 0.85.Importantly included in this detailed model is expected tax and royalties. The capital expenditure totals AUD$71m, including additional working capital andoperator fleet, power and camp. This outright purchase of equipment has theeffect of significantly reducing operating costs, now estimated to be AUD$76 pertonne of ore treated. The net cashflow (prior to capex) of the project is estimated to be AUD$116m,after tax and royalties. Engineering Review Perth-based consulting engineering group, GR Engineering Pty Ltd, has completeda review of the capital cost estimate for the Molyhil Project. The reviewincluded the previously announced, proposed upgrade in the processing capacityof the plant to 400,000 tonnes per annum. This, plus the purchased additionalcapital equipment has reduced forecast processing and mining operating costs. Off-take Negotiations Thor has focused on a strategy of securing an off-take agreement for Molyhil andachieving assistance in funding of the project. Financing alternatives arecurrently being considered with several interested parties from Australia andChina. Environmental and Notice of Intent (NOI) The Mining Management Plan has been submitted to the Northern Territory minesdepartment for approval along with the granting of the mining leases. Native Title Thor recently signed a landmark Native Title Mining Agreement which shouldenable the Molyhil Mining Leases to be granted. The Agreement was signed withrepresentatives of the community of the Eastern Arrernte people of the NorthernTerritory, one of the largest Indigenous groups in Central Australia. Molyhil IP Survey An extensive Induced Polarisation ("IP") Geophysical Survey was completed atMolyhil. This survey successfully identified the Molyhil skarn mineralisation. The completion of this IP survey represents the first stage in increasing theregional exploration effort at Molyhil to target additional deposits. Chargeableresponses have been identified south, along strike beyond current drilling and500m to the west of the Molyhil mineralisation. The Molyhil deposit itself remains open at depth with potential to increaseresources with deeper drilling. A plan to drill these deeper targets will befinalised once results from the underground conceptual study are completed.Drilling of these and regional targets will commence in 2008. Oorabra Reefs A total of 58 rock chip samples were collected during the quarter from barite/fluorite veining east of Molyhil near Gap Bore. Assay results have confirmedsignificant barite (Ba) mineralisation with assays up to 9.37% Ba returned. Manyothers range between 3.5 to 4.5% Ba. Visually massive fluorite (CaF2) was notedin most samples. Historically values ranged from 5.7% CaF2 to 85% CaF2 (CentralPacific Minerals). Further check assaying for other elements will need to becarried out including F as CaF2 (fluorite or fluorspar). In 1972 Central PacificMinerals identified an inferred resource of 250,000 short tonnes at 37% CaF2,this resource is excised from the Molyhil tenement EL23825. The area in general seems to be under explored and has potential for rare earth("REE"), barite, fluorite, gold, silver and base metals. Given the recent priceincreases of barite and fluorite and the proximity to infrastructure at Molyhilthe area is worthy of further investigation. URANIUM EXPLORATION Hale River Uranium Project An air core drilling program was completed in the September quarter at the HaleRiver Uranium Project with a total of 28 holes completed for 1,829 metres ofdrilling. Geological logging of the drill holes confirmed the presence ofdownward coarsening sandy sequences and carbonaceous horizons within thetargeted channels. Results from the upper carbonaceous horizon returned valuesup to 100ppm U confirming the presence of weak redox style mineralisation.Existing anomalies need further drill testing and work to date has confirmed thepresence of suitable "trap sites" for roll front style Uranium mineralization. Plenty Highway Project During the last quarter of 2007 a program of reconnaissance air core drillingwas completed at the Plenty Highway Uranium Project with a total of 16 holescompleted for 1,582 metres drilled. A number of the holes did not reach bedrock due to the intersection of deep clayhorizons which exceeded the capabilities of the drill rig. The HoistEM dataappears to have correctly defined the extent and approximate depth of thepalaeo-channels in the area. Further analysis of the EM survey is required todevelop new drilling targets in this area. Harts Range Project The Harts Range project area lies on the eastern margin of the Entia Dome. TheEntia Gneiss forms the core of the Entia Dome, which is located on the westernpart of the Exploration License area. Reconnaissance rock chip samples were taken on pegmatite veins mapped at theDaicos prospect area returned a best assay of 19.37% U from highly radioactivesamples with visible uraninite and columbite. Other highly anomalous elementsassociated with these samples included assays up to 28.32% Nb and 25.52% Ta. A total of 374-80 mesh soil samples were collected over a 100m x 50m contactzone covering the Daicos prospect area during October. A further 24 additionalrock chip samples were collected from veining in the area. No results have beenreceived as yet. Drilling is being planned to determine the thickness and strikeextent of the individual zones. Bundey River Project An airborne EM survey was scheduled to be flown in late 2007. The survey wascompleted by the end of January 2008 by Geoforce using the latest generationSkyTEM equipment. Montana GIS have been contracted to model the data as soon as it becomesavailable. OTHER PROJECTS Exploration has been held up at Hatches Creek, as the Central Land Council wasunable to organise a final clearance meeting with traditional owners. This isnow expected to occur prior to June 2008. No work has been completed at the Hatches Creek and Curtis Pound Projects. CORPORATE Capital Raising During July 2007 a placement of 6,800,000 shares at 11 pence per share wascompleted on the Alternative Investment Market ("AIM") of the London StockExchange. These shares have been placed with Sophisticated Investors based inthe UK for trading on the AIM market. The funds raised, approximating $1.7m after costs, and have been used tosupplement short term working capital requirements and provide additionalfinance for the development of the Molyhil Project. Yours faithfullyTHOR MINING PLC John A YoungChief Executive Officer 15 February 2008 INDEPENDENT REVIEW REPORT TO THOR MINING PLC Introduction We have been engaged by the company to review the financial information for thesix months ended 31 December 2007 which comprises the Consolidated IncomeStatement, Consolidated Statement of Changes in Equity, Consolidated BalanceSheet, Consolidated Cash Flow Statement, and the related notes. We have readthe other information contained in the half-year report and considered whetherit contains any apparent misstatements or material inconsistencies with thefinancial information. This report is made solely to the company in accordance with guidance containedin ISRE 2410 (UK and Ireland) "Review of Interim Financial Information Performedby the Independent Auditor of the Entity" issued by the Auditing PracticesBoard. To the fullest extent permitted by law, we do not accept or assumeresponsibility to anyone other than the company, for our work, for this report,or for the conclusions we have formed. Directors' responsibilities The half-yearly financial report is the responsibility of, and has been approvedby, the directors. The directors are responsible for preparing the half-yearlyfinancial report in accordance with the Disclosure and Transparency Rules of theUnited Kingdom's Financial Services Authority. As disclosed in Note 1, the accounting policies are consistent with those thatthe directors intend to use in the next financial statements. The condensed setof financial statements included in this half-yearly financial report has beenprepared in accordance with the International Accounting Standard 34, "InterimFinancial Reporting", as adopted by the European Union. Our Responsibility Our responsibility is to express to the Company a conclusion on the condensedset of financial statements in the half-yearly financial report based on ourreview. Scope of Review We conducted our review in accordance with International Standard on ReviewEngagements (UK and Ireland) 2410, "Review of Interim Financial InformationPerformed by the Independent Auditor of the Entity" issued by the AuditingPractices Board for use in the United Kingdom. A review of interim financialinformation consists of making enquiries, primarily of persons responsible forfinancial and accounting matters, and applying analytical and other reviewprocedures. A review is substantially less in scope than an audit conducted inaccordance with International Standards on Auditing (UK and Ireland) andconsequently does not enable us to obtain assurance that we would become awareof 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 believethat the condensed set of financial statements in the half-yearly financial report for the six months ended 31 December 2007 is not prepared, in all material respects, in accordance with International Accounting Standard 34 as adopted by the European Union and the Disclosure and Transparency Rules of the United Kingdom's Financial Services Authority. CHAPMAN DAVIS LLPChartered Accountants2 Chapel CourtLondon SE1 1HH15 February 2008 The maintenance and integrity of the Thor Mining Plc website is theresponsibility of the directors; the work carried out by the auditors does not involve consideration of these matters and, accordingly, the auditors accept no responsibility for any changes that may have occurred to the financial information since it was initially presented on the website. Consolidated Income StatementFor the 6 months ended 31 December 2007 Notes £'000 £'000 £'000 Six months ended Six months ended 31 Year ended 30 31 December 2007 December 2006 June 2007 (Unaudited) (Unaudited) (Audited) Administrative expenses (205) (130) (323)Corporate expenses (315) (671) (1,190)Other expenses (67) - -OPERATING LOSS (587) (801) (1,513) Interest receivable 50 19 126Other income 35 - -LOSS BEFORE TAXATION (502) (782) (1,387) Taxation - - - LOSS ON ORDINARY ACTIVITIES AFTERTAXATION (502) (782) (1,387) Loss per share : Basic 2 (0.36)p (0.80)p (1.27)p Consolidated Statement of Changes in EquityFor the 6 months ended 31 December 2007 Foreign Currency Issued Share Retained Translation Merger Option Capital Premium Earnings Reserve Reserve Reserve Total £'000 £'000 £'000 £'000 £'000 £'000 £'000 At 1 July 2006 192 1,928 (783) 59 405 100 1,901Loss for the period - - (782) - - - (782)Foreign currency - - - 47 - - 47translation reserveTotal recognised income and - - (782) 47 - - (735)expense Share based payments - - - - - 413 413expenseShares issued 198 3,482 - - 1,229 - 4,909At 31 December 2006 390 5,410 (1,565) 106 1,634 513 6,488 At 1 July 2006 192 1,928 (783) 59 405 100 1,901Loss for the period - - (1,387) - - - (1,387)Foreign currency - - - 372 - - 372translation reserveTotal recognised income and - - (1,387) 372 - - (1,015)expense Share based payments - - - - - 683 683expenseShares issued 207 3,688 - - 1,229 - 5,124At 30 June 2007 399 5,616 (2,170) 431 1,634 783 6,693 At 1 July 2007 399 5,616 (2,170) 431 1,634 783 6,693Loss for the period - - (502) - - - (502)Foreign currency - - - 327 - - 327translation reserveTotal recognised income and - - (502) 327 - - (175)expense Share based payments - - - - - 79 79expenseShares issued 22 775 - - - - 797At 31 December 2007 421 6,391 (2,672) 758 1,634 862 7,394 Consolidated Balance SheetAt 31 December 2007 Notes £'000 £'000 £'000 31 December 2007 31 December 2006 30 June 2007 (Unaudited) (Unaudited) (Audited) NON-CURRENT ASSETSIntangible assets - deferred exploration costs 4,621 3,582 4,191Mine development costs 939 231 726Property and equipment 3 92 24 95TOTAL NON-CURRENT ASSETS 5,652 3,837 5,012 CURRENT ASSETSCash and cash equivalents 1,871 2,603 1,836Trade and other receivables 71 94 96Other 20 14 10TOTAL CURRENT ASSETS 1,962 2,711 1,942TOTAL ASSETS 7,614 6,548 6,954 NON-CURRENT LIABILITIESInterest bearing liabilities (57) - (60)Total non-current liabilities (57) - (60) CURRENT LIABILITIESTrade and other payables (133) (60) (181)Provisions (18) - (9)Interest bearing liabilities (12) - (11)TOTAL CURRENT LIABILITIES (163) (60) (201)Total liabilities (220) (60) (261)NET ASSETS 7,394 6,488 6,693 EQUITYIssued share capital 421 390 399Share premium 6,391 5,410 5,616Merger reserve 1,634 1,634 1,634Foreign exchange reserve 758 106 431Option revaluation reserve 862 513 783Retained losses (2,672) (1,565) (2,170)TOTAL EQUITY 5 7,394 6,488 6,693 Consolidated Cash Flow StatementFor the 6 months ended 31 December 2007 Notes £'000 £'000 £'000 Six months ended Six months ended Year ended 30 31 December 2007 31 December 2006 June 2007 (Unaudited) (Unaudited) (Audited) CASH FLOWS FROM OPERATING ACTIVITIESOperating loss (502) (782) (1,387)(Increase)/decrease in trade and other receivables 17 (80) (56)Increase/(decrease) in trade and other payables (191) (31) 22Depreciation 17 4 29Share options expensed 79 413 683Unrealised exchange gain 327 46 372Net cash flow from operating activities (253) (430) (337) CASH FLOWS FROM INVESTING ACTIVITIESPurchase of property, plant and equipment (10) (19) (38)Payments for mine development (175) (231) (727)Payments for exploration expenditure (317) (833) (1,389)Net cash flows from investing activities (502) (1,083) (2,154) CASH FLOWS FROM FINANCING ACTIVITIESRepayment of borrowings (6) - (5)Issue of ordinary share capital 814 3,991 4,209Share issue costs (18) (359) (361)Net cash flow from financing activities 790 3,632 3,843NET INCREASE IN CASH AND CASH EQUIVALENTS 35 2,119 1,352Cash and cash equivalents at beginning of period 1,836 484 484Cash and cash equivalents at end of period 1,871 2,603 1,836 Notes to the Half-yearly ReportFor the 6 months ended 31 December 2007 1. PRINCIPAL ACCOUNTING POLICIES (a) Presentation of Half-yearly results This half-yearly report was approved by the Directors on 15 February 2008. The half-yearly results have not been audited, but were the subject of an independent review carried out by the Company's auditors, Chapman Davis LLP. Their review confirmed that the figures were prepared using applicable accounting policies and practices consistent with those adopted in the 2007 annual report and to be adopted in the 2008 annual report. The financial information contained in this half-yearly report does not constitute statutory accounts as defined by Section 240 of the Companies Act 1985. This half year report does not include all the notes of the type normally included in an annual financial report. Accordingly, this report is to be read in conjunction with the annual report for the year ended 30 June 2007, which was prepared in accordance with International Financial Reporting Standards, including IAS 34 'Interim Financial Statements', and complies with the listing requirements for companies trading securities on the AIM market. The half-yearly report has been prepared under the historical cost convention. (b) Basis of consolidation The consolidated financial statements comprise the financial statements of Thor Mining PLC and its controlled entities. The financial statements of controlled entities are included in the consolidated financial statements from the date control commences until the date control ceases. The financial statements of subsidiaries are prepared for the same reporting period as the parent company, using consistent accounting policies. All inter-company balances and transactions have been eliminated in full. Notes to the Half-yearly ReportFor the 6 months ended 31 December 2007 2. LOSS PER SHARE Six months ending Six months ending Year ending 31 December 2007 31 December 2006 30 June 2007 (Unaudited) (Unaudited) (Audited) £'000 £'000 £'000Basic loss per share for the period Loss (502) (782) (1,387)Weighted average number of shares 139,116,507 97,250,362 114,014,198 Loss per share - pence (0.36) (0.80) (1.27) No diluted loss per share is presented as the effect of exercise of outstandingoptions is to decrease the loss per share. 3. PROPERTY, PLANT AND EQUIPMENT During the six months ended 31 December 2007 the group assets with a cost of£92,000 (six months ending 31 December 2007: £24,000). Thiscomprised of motor vehicles and other equipment amounting to £54,000 and£38,000 respectively. 4. SHARE-BASED PAYMENTS In September 2007 a grant of unlisted options was made to staff and a consultantof Thor Mining PLC. The terms and conditions of the grant made during the six months ended 31December 2007 are as follows: Number Grant Date Expiry Date Exercise Price 2,750,000 26 September 2007 15 June 2009 11.25p Fair value of share option and assumptions for the six months ended 31 December 2007: Underlying security mid-market value £0.0913Exercise Price £0.1125Dividend rate -Standard deviation of returns 70.00%Risk free rate 5.15%Expiration period (years) 1.7248Black Scholes valuation £0.0289 The basis of measuring fair value is consistent with that disclosed in theconsolidated financial report as at and for the year ended 30 June 2007. Notes to the Half-yearly ReportFor the 6 months ended 31 December 2007 5. CAPITAL The movements in issued share capital during the period were as follows: 31 December 2007 30 June 2007 Issued and paid-up share capitalOrdinary shares 421 399 Number £'000Movements in shares on issueBalance as at 1 July 2007 132,859,508 399Share issue 7,596,395 22Balance as at 31 December 2007 140,455,903 421 6. SEGMENT REPORTING The consolidated entities only business segment, which relates to theexploration and development on tenements, operates solely in Australia. Thor Mining PLCCompany Information Directors John W Barr (Executive Chairman) John A Young (Chief Executive Officer) P Mark Smyth (Non-executive Director) Gregory M Durack (Non-executive Director) Secretary Stephen F Ronaldson (United Kingdom) Damian P Delaney (Australia) Registered office 3rd Floor 55 Gower Street London WC1E 6HQ Australian office c/o Molyhil Mining Pty Ltd Level 1 282 Rokeby Road Subiaco Western Australia 6008 Telephone: + 618 9327 0900 Fax: + 618 9327 0901 Shareholder Enquires Damian P Delaney [email protected] Shareholders are encouraged to register on the Company's website to receive updates by email. Web site: www.thormining.com Nominated Adviser and Blomfield Corporate Finance LimitedBroker London Telephone: + 44 (0) 20 7512 0191 Fax: + 44 (0) 20 7512 0747 Auditors Chapman Davis LLP London Solicitors Ronaldsons London Hardy Bowen Australia Registrar Computershare Investor Services plc PO Box 82 The Pavilions Bridgwater Road Bristol BS99 7NH Telephone: + 44 (0) 870 702 0002 Fax: + 44 (0) 870703 6116 Registered number 05276414 Enquiries: John Young + 61 (0)419 954 020 Thor Mining PLC Chief Executive OfficerJohn Simpson 020 7512 0191 Blomfield Corporate Nominated Adviser Finance LimitedLeesa Peters 020 7429 6600 Conduit PR Limited Public Relations/UK or -Jos Simson 020 7429 6603Nicolas Read + 61 (0) 8 9388 1474 Jan Hope & Public Relations/Australia Partners Updates on the Company's activities are regularly posted on Thor's websitewww.thormining.com, which includes a facility to register to receive theseupdates by email. 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