16th Nov 2005 09:34
Avocet Mining PLC16 November 2005 The 'Interim Results' announcement released today at 07:00 under RNS No 1896U has been reformatted. All material details remain unchanged. The full text is shown below. Avocet Mining PLC 7th Floor 9 Berkeley Street London W1J 8DW Tel +44 (0) 20 7907 9000 Fax +44 (0) 20 7907 9019 E-mail [email protected] www.avocet.co.uk Avocet Mining Plc ("Avocet" or the "Company")16 November 2005 INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2005 AVOCET'S HALF YEAR GOLD PRODUCTION EXCEEDS 100,000 OUNCESASIAN GOLD RESERVES AND PROSPECTS IMPROVED SIGNIFICANTLY HIGHLIGHTS •Gold production up 27% to 104,270 ounces •Penjom reserves up 41% to 559,200 ozs: resources at 989,900 ozs •North Lanut producing at forecast levels and profitability •Low cost dump leach project completed at ZGC •Significant drill results from 2 exploration prospects in Indonesia •Gross profit down 22% •Hedge position down 30%, increased costs at ZGC for waste stripping Nigel McNair Scott, Chairman commented: "Strong cash flow from our South-East Asian operations, progress towards turningaround our operation in Central Asia and substantial successes from ourexploration programmes in those regions gives me confidence in the Company'sfuture." 6 months to 6 months to Variance Year to 30 September 30 September 31 March 2005 2004 2005 US$'000 US$'000 US$'000 Turnover 42,697 32,588 +31% 71,060Operating cash flow 8,886 10,258 -13% 17,092 Gross profit 5,680 7,260 -22% 18,559Pre-tax profit 4,567 6,148 -26% 15,803Retained profit 3,444 4,572 -25% 11,686Earnings per share 3.30c 4.41c -25% 11.26c Average spot gold price US$433/oz US$397/oz +9% US$414/ozAverage realised gold price US$402/oz US$397/oz +1% US$414/ozGold production (ozs) 104,270 82,000 +27% 172,938Average total cash cost US$289/oz US$271/oz +7% US$278/oz________________________________________________________________________________________________________________________ For further information please contact:Avocet Mining PLCJohn Catchpole (Chief Executive)Jonathan Henry (Finance Director)020 7907 9000www.avocet.co.uk CHAIRMAN'S STATEMENT Avocet Mining recorded first half gold production in excess of 100,000 ouncesfor the first time in its history. Strong cash flow from our South-East Asianoperations, progress towards turning around our operation in Central Asia andsubstantial successes from our exploration programmes in those regions gives meconfidence in the Company's future. I am also pleased to note that since theperiod end, as recently announced, Avocet has expanded its presence in CentralAsia with a strategic investment in Western China. We are experiencing anenvironment of increasing costs in our industry; nevertheless, I believe thiswill be countered by a strong future gold price. Financial Results For the six months ended 30 September 2005 turnover was US$42.7 million (2004:US$32.6 million). Total gold sales were 105,010 ozs (2004: 81,965 ozs), with anaverage realised price of US$402/oz (2004: US$397/oz). Sales were below theaverage spot gold price on account of the delivery of 24,000 ounces to reduce agold hedging position the Company has had in place for a number of years inorder to satisfy financial covenants on debt now repaid in full. As part of aUS$10 million revolving credit facility from Macquarie Bank of Australia theCompany has agreed to liquidate at least 4,000 ounces of this gold hedge permonth commencing April 2005. As of today's date 50,000 hedged ounces (2004:80,000 ounces) remain outstanding with an average delivery price of US$305/oz. Gross profit was US$5.7 million (2004: US$7.3 million) giving a gross margin forthe period of 13% (2004: 22%). The reduced margin was caused by higherproduction costs which included US$3 million for increased waste stripping atZGC's operations in Tajikistan. The Penjom mine in Malaysia incurred a cost ofgold sold of US$271/oz (2004: US$270/oz). This cost included depreciation ofUS$30/oz (2004: US$44/oz) and an additional charge of US$8/oz (2004: US$15/oz)representing waste stripping costs that had been deferred but are now beingamortised over the mine's life. ZGC's cost of gold sold was US$625/oz (2004:US$448/oz) inclusive of US$12/oz of depreciation (2004: US$20/oz). Our new mineat North Lanut in Indonesia reported its first interim results which included acost of gold sold of US$270/oz inclusive of US$78/oz of depreciation. Pre-tax profit was down 26% to US$4.6 million (2004: US$6.1 million).Administrative costs remained at US$1.1 million. The Group made a profit after tax and minority interests of US$3.4 million(2004: US$4.6 million). As a result, basic earnings per share were 3.30 cents(2004: 4.41 cents). Operating cash flow was US$8.9 million (2004: US$10.3 million). Cash usesincluded tax payments of US$4.2 million (2004: US$1.8 million) and investmentsin fixed assets and exploration totalling US$7.2 million (2004: US$14.3million), mainly for expansion activities at ZGC and the purchase of a miningfleet for North Lanut. Overall, the Group's cash resources decreased by US$2.8million during the period to US$9.3 million. The Group has access to US$10million under a revolving credit facility which was undrawn at the end of theperiod under review. Apart from equipment leases totalling US$1.6 million, theCompany had no debt outstanding at the end of the period. Penjom, Malaysia 6 months to 6 months to Year to 30 September 30 September 31 March 2005 2004 2005Production Statistics:Tonnes Mined (ore andwaste) 10,461,000 6,503,400 14,076,000Tonnes Processed 285,400 254,600 527,500Grade Processed (g/t) 7.39 8.24 7.92Recovery Rate 90% 87% 89%Gold Produced (ozs) 60,530 59,000 119,850Cash Costs (US$/oz):Mining 135 115 109Processing 62 59 57Admin. & Royalties 37 37 37Total Cash Costs 234 211 203 Gold production from the Penjom mine in Malaysia continued to exceedexpectations as ore tonnages were in excess of reserves scheduled by the lastreported resource model dated October 2004. As we reported at the time of ourlast annual results we have committed to a larger interim open pit requiring ahigher rate of waste stripping with a corresponding rise in unit mining costs.The balance of gold in stockpiles, at 150,200 ounces, remains at a similar levelto that reported in March 2005. These stockpiles will reduce overall cash costsin the future. Various projects for improving plant performance were completedwhich increased both throughput and gold recoveries. Considering the highnatural carbon content of Penjom's ores, we are not aware of any other miningoperation in the world that produces equivalent gold recoveries from such orewithout the much higher capital and operating costs of pre-treating the ore withother methods. At Penjom, as elsewhere in the Group and the mining business globally, we haveseen a sharp rise in many of the key costs of production including for labour,fuel, steel and other consumables. Even so, the 11% rise in Penjom's total unitcash cost for the period compares favourably with those reported by the rest ofthe world's gold mining industry which have typically increased by more than20%. In July 2005 the Malaysian government announced that it was removing thepeg between the US Dollar and the Malaysian Ringgit. So far this has had nomaterial effect of Penjom's costs but we are looking at ways to hedge this risk. The results from exploration drilling over the last 12 months, which are furtherdetailed below, have resulted in a significant improvement in Penjom's future. Anew production plan from the update of Penjom's resources shows that, at 30September 2005, mineable reserves from a further open pit expansion contain409,000 ounces of gold (2,213,000 tonnes at 5.75 g/t). Together with gold instockpiles this gives 559,200 ounces of gold (3,598,000 tonnes at 4.83 g/t)available for processing, an increase of 41% compared to that reported for 31March 2005 excluding those reserves mined during the interim period. 25% ofthese updated reserves are derived from inferred resources. Zeravshan Gold Company, Tajikistan 6 months to 6 months to Year to 30 September 30 September 31 March 2005 2004 2005Production Statistics:Tonnes Mined (ore andwaste) 3,771,700 3,067,300 6,434,000Tonnes Processed 780,600 803,750 1,627,000Grade Processed (g/t) 0.80 0.98 0.93Recovery Rate 86% 90% 89%Gold Produced (ozs) 18,000 23,000 44,240Cash Costs (US$/oz):Mining 308 175 190Processing 183 144 148Admin. & Royalties 122 108 101Total Cash Costs 613* 427* 439* *Includes the costs of mining waste from the Jilau Main high wall which was theequivalent of US$41/oz and US$165/oz for the six months ending 30 September 2004and 30 September 2005, respectively, and US$64/oz for the year to 31 March 2005. Since reopening the Jilau Main open pit in June 2004, ZGC's mining operations atthe Jilau mine have focused on stripping waste from that pit in order to accessthe higher grade ores that will constitute the bulk of Jilau's future goldproduction from its existing carbon-in-leach (CIL) plant. For the period underreview, this activity accounted for 73% of Jilau's total ore and wasteproduction which caused a shortfall in ore for processing from the smallerKhirskhona and Jilau North open pits. Therefore, 63% of ore processed wassourced from low grade stockpiles which reduced head grades to the plant by over18%. Also, despite completion of needed repairs to the CIL plant, processingthroughput and gold recoveries were both below prior results. Reasons includedreliance on harder ores from Khirskhona and the influence of refractory oresfrom our nearby Taror project which were processed for testing purposes.Treatment from the latter included about 17,500 tonnes at a grade of 4.39 g/t.Despite these factors, and after excluding the extraordinary costs of wastestripping at Jilau Main which were all expensed, the Jilau mine's performancewas close to breakeven. So far we have spent approximately US$5 million of a reported US$10 millionbudget for Jilau's improvement and expansion. Some of these expenditures,particularly on replacing and adding to Jilau's mining fleet, have been delayeddue to world-wide demand for such equipment. Nevertheless, we have completedJilau's essential dump leach facilities on schedule and with at least a US$1million saving over our original estimate. The first gold pour from thesefacilities occurred in September. We have also installed a new expatriatemanagement team which has made significant improvements to operations and workpractices. As a result we are already experiencing increases in mine productionrates with significant declines in unit tonnage costs despite the increasesexperienced in the costs of consumables and labour. Testwork on the Taror and Chore underground mining projects, with a combinedreserve base of three million ounces, based on prior feasibility studies, hascommenced at two independent laboratories. Amongst various options, the Companyis exploring the Geobiotics treatment process which utilises an inexpensivebacterial heap leach process for pre-treating refractory ores. A pilot plant fortesting this process is under construction at Jilau. North Lanut, Indonesia 6 months to 6 months to Year to 30 September 30 September 31 March 2005 2004* 2005*Production Statistics:Tonnes Mined (ore andwaste) 1,338,000 n/a 985,250Tonnes Leached 536,000 n/a 301,700Average ore head grade(g/t) 1.81 n/a 1.45Recovery Rate 83% n/a 63%Gold Produced (ozs) 25,740 n/a 8,852Cash Costs (US$/oz): Mining 95 n/a 274Processing 31 n/a 69Admin. & Royalties 65 n/a 157Total Cash Costs 191 n/a 500* Operation commenced in October 2004 Since the start of the year North Lanut has overcome its start-up problems withthe benefit of a new and experienced management team. The mine is now operatingat close to design capacity and gold production is running at an annualised rateof over 50,000 ounces with cash costs at below US$200/oz. The Indonesiangovernment has come under pressure recently over its large budget deficit and ithas been forced to reduce fuel price subsidies. By purchasing a new mining fleetto largely replace expensive and inefficient mining contractors, we have reducedthis negative impact on costs. Reported gold recovery from the leach pads appears to be above the feasibilitystudy's assumptions that averaged 75%. However a dump leach operation of thisnature needs more time to settle down before we can confidently ascertain actualand prospective recoveries. Exploration The Group budgeted just under US$5 million for exploration this financial yearand to the end of September 2005 we had spent US$2.3 million. This included over30,000 metres of drilling at existing operations and at two new prospects. A major focus for Penjom has been updating its gold resources and developing anew gold production schedule. The revised October 2005 resource model representsa substantial increase in the resource base at Penjom. It increased the mineralinventory by 348,700 ounces from that last quoted as at 31 March 2005, to989,900 ounces (9,029,000 tonnes at 3.41 g/t), before the depletion of theorebody by 68,350 ounces in the half year period. This equates to a like forlike 36% increase in the last reported resource at Penjom which has benefitedfrom the addition of 283 new drill holes (36,100 metres) in the Kalampong openpit area at a cost of US$1.6 million, or US$4.60 per ounce of resource added.Approximately 40% of the revised resource is in the inferred category and a newphase of drilling has commenced to upgrade this and to bring in furtherresources. Our resource evaluation continues to assure us that there isunderground mining potential that could substantially increase Penjom'slongevity. Elsewhere in Malaysia, we continue to undertake metallurgical testwork on theBuffalo Reef prospect, near Penjom. Given our significant presence in Malaysia,where we produce over 85% of the country's gold, we are confident of newopportunities which we are currently pursuing. Exploration at ZGC has focused on infill drilling at the current open pits ofKhirskhona and Jilau North where the majority of ore being mined is in theinferred category. The results from this work will be assembled into a revisedresource model which we expect to finalise before the end of the currentfinancial year. We have commenced an exploration programme at Saursai in thesame geologic environment as Jilau. We have also lodged an application with theTajikistan government for the commencement of exploration work at Chore where,aside from a million ounce pre-feasibility estimate by previous western owners;there is a 5.3 million ounce gold resource identified by the Russians and Tajiksbased largely on underground development. Receipt of a licence has been slowedby bureaucracy, but we remain confident we will receive this so that explorationwork can commence in the spring. Exploration activities in Indonesia have included drilling of extensions to theRiska orebody at the North Lanut mine in North Sulawesi. These extensions, whererecent drilling has included 68m at 1.46 g/t, have been uncovered during miningoperations and we are confident that they will extend the mine life. We willalso revise the mine plan to add the resources at Effendi where we havepreviously reported 118,000 ounces of gold. This resource excludes high-gradeintercepts in more recently drilled holes which will result in an upgrade of theresource. As we announced in July examples of these include 57m at 2.99 g/t Au,65m at 2.54 g/t Au, 15m at 7.70 g/t Au and 26m at 4.39 g/t Au. Also within the North Lanut Contract of Work (CoW), recent drilling results fromthe Bakan prospects, most noticeably Osela and Durian, have been particularlyencouraging since their geology is similar to the area around North Lanut.Further to exploration results announced in July 2005, we have received thefollowing significant drill results: ------- ------- ------ ----- ------ -------Prospect Hole From To Length Grade ID (m) (m) (m) (g/t Au)-------- ------- ------ ----- ------- -------Durian BKD31 6.0 61.0 55.0 2.35Durian and 38.0 52.0 14.0 5.76Durian incl 43.0 48.0 5.0 9.33-------- ------- ------ ------ ------- -------Osela OSD032 0.0 47.0 47.0 16.2Osela incl 4.0 8.0 4.0 149Osela OSD033 3.0 53.0 50.0 1.45Osela incl 49.0 51.0 2.0 12.8Osela OSD034 0.0 65.0 65.0 2.49Osela incl 40.0 44.0 4.0 13.0Osela OSD036 10.0 24.0 14.0 2.16Osela incl 18.9 24.0 5.1 4.59-------- -------- ------ ------ ------- ------- We are confident that the Bakan district will exceed our initial target of a500,000 ounce resource and we have initiated a second phase drilling campaign tofurther evaluate these resources in order to bring them to a pre-feasibilitydevelopment status in 2006. Also on the North Lanut CoW, at the Pusian prospect, we have received resultsfrom initial drilling that followed on from the successful trenching earlierthis year. Drill results are very encouraging, as shown in the table below, andwarrant further work on this prospect. ------- ------ ------ ------ -------Hole From To Length GradeID (m) (m) (m) (g/t Au)------- ------ ------ ------- -------PSD002 0.0 5.0 5.0 4.85incl 2.0 5.0 3.0 7.44and 20.0 33.0 13.0 1.56-------- ------ ------ ------- -------PSD004 29.4 40.5 11.1 12.4incl 33.6 37.6 4.0 29.9PSD005 38.0 50.0 12.0 1.73incl 42.0 48.0 6.0 2.73and 70.0 76.0 6.0 2.09and 109.5 117.0 7.5 1.98-------- ------ ------ ------- ------- Elsewhere in Indonesia, we are continuing surface exploration work at our SouthSulawesi prospect and we have now received all results from the initial 10 holescout drilling campaign at Idenburg. We will report on these shortly in aseparate news release. Outlook The gold price continues to hold strong with 18 year highs having been broken ona number of occasions in the last three months. Continued strong performancefrom our two mines in South-East Asia will generate strong cash flows for theGroup sufficient for us to reinvest in the excellent opportunities in thatregion. We remain focused on establishing a strong presence in Central Asia andto ensure that ZGC's Jilau operation will become profitable by June 2006 andthat we will start to realise the upside from its projects at Taror and Chore aswell as the exploration prospects that it holds. Without a further uplift in the gold price, inflation with respect to our costsof production may affect negatively our future performance in relation toprofitability. However, the strength and experience of our operations'management has already proved that we are highly capable of containing thesecosts. Even taking into account the high cash costs we have attributed to ZGC'soperations, we remain competitive in an industry where global median cash costsfor the production of gold are approaching US$300/oz. It is pleasing to report, as we anticipated, that our gold resources andreserves have once again been increased significantly at Penjom. We will move tothe new mine plan and continue further exploration drilling to firm up some ofthe inferred portion of the new resource as well as further definition work onadditional resources both to the north and south of the current pit. We expectPenjom's open pit operations to produce in excess of 110,000 ounces for thecurrent year. Our exploration portfolio has grown rapidly. With recent results at Bakan andPusian in Indonesia, and further surface work at a number of other projects, wehave a diversified pipeline of projects to bring into future production.Meanwhile, a number of excellent acquisition opportunities have been brought toour attention as a result of our reputation as a company that delivers on ourpromises for both our shareholders and industry partners. We recently announced the acquisition of a major interest in Dynasty GoldCorporation of Canada. Following completion of this deal, we will work withDynasty in developing their three exploration properties in western China, whichrepresent one of the largest land positions of any foreign mining company. Weare particularly interested in Dynasty's Hatu gold project and believe this canbe brought into production in a relatively short period of time. We also believethis acquisition is a first step in advancing our presence in Central Asia withpotential synergies with our existing business in Tajikistan, a country thatborders China to the west. The cost of entry is US$6 per ounce of resource ownedby Dynasty. Following approval by shareholders at a recent EGM, we are proceeding with thecourt approved process to restructure our balance sheet in order to allow theCompany to use distributable reserves for dividend payments in the future, ifdeemed appropriate. We expect to have court approval in December 2005. In the current environment, where top quality mining professionals are in highdemand, I am extremely pleased that we have acquired and retained the highestquality of people for the realisation of Avocet's full potential. On behalf ofthe Company's shareholders I offer them our thanks for their dedication towardsthe Company's performance to date and to its future which I believe will be bothexciting and prosperous. Nigel McNair Scott16 November 2005 Avocet Mining PLC Consolidated Profit and Loss Account 6 months to 6 months to Year to 30 September 30 September 31 March 2005 2004 2005 Unaudited Unaudited Audited US$000 US$000 US$000 Turnover 42,697 32,588 71,060Cost of sales (37,017) (25,328) (52,501)---------------------- ---------- ---------- --------Gross profit 5,680 7,260 18,559Administrative expenses (1,078) (1,115) (2,623)---------------------- ---------- ---------- --------Operating profit 4,602 6,145 15,936Net interest and similar charges (35) 3 (133)---------------------- ---------- ---------- --------Profit on ordinary activities beforetaxation 4,567 6,148 15,803Tax on profit on ordinary activities (1,775) (2,392) (5,601)--------------------- ---------- ---------- --------Profit on ordinary activities aftertaxation 2,792 3,756 10,202Equity minority interest 652 816 1,484------------------- ---------- ---------- --------Profit for the financial periodretained 3,444 4,572 11,686------------------- ---------- ---------- --------Basic earnings per share (note 1) 3.30c 4.41c 11.26c------------------- ---------- ---------- --------Diluted earnings per share (note 1) 3.25c 4.33c 11.06c------------------- ---------- ---------- -------- Avocet Mining PLC Consolidated Balance Sheet 30 September 30 September 31 March 2005 2004 2005 Unaudited Unaudited Audited US$000 US$000 US$000Fixed assetsNegative goodwill (1,463) - (1,501)Positive goodwill (note 2) 3,482 661 637------------------------ ---------- ---------- -------- 2,019 661 (864)Intangible assets 5,986 3,984 3,644Tangible assets 36,428 34,843 35,770------------------------ ---------- ---------- -------- 44,433 39,488 38,550------------------------ ---------- ---------- --------Current assets 21,066 16,384 19,563Stocks 4,335 1,695 3,392Debtors due within one year 2,216 3,156 2,685Debtors due after more than one year 9,298 17,243 12,079Cash at bank and in hand------------------------ ---------- ---------- -------- 36,915 38,478 37,719Creditors: amounts falling due inless than one year (14,223) (21,772) (14,808)------------------------ ---------- ---------- --------Net current assets 22,692 16,706 22,911------------------------ ---------- ---------- --------Total assets less current liabilities 67,125 56,194 61,461Creditors: amounts falling due aftermore than one year (1,049) - -Provision for liabilities and charges (4,130) (2,468) (2,453)-------------------- ---------- ---------- -------- 61,946 53,726 59,008-------------------- ---------- ---------- --------Capital and reservesCalled up share capital 41,547 41,070 41,389Share premium account 43,280 43,210 43,258Other reserves 17,909 17,909 17,909Investments in own shares (748) (722) (713)Profit and loss account (41,053) (51,604) (44,497)-------------------- ---------- ---------- --------Equity shareholders' funds 60,935 49,863 57,346Equity minority interests 1,011 3,863 1,662-------------------- ---------- ---------- -------- 61,946 53,726 59,008-------------------- ---------- ---------- -------- Avocet Mining PLC Consolidated Cash Flow Statement 6 months to 6 months to Year to 30 September 30 September 31 March 2005 2004 2005 Unaudited Unaudited Audited US$000 US$000 US$000------------------------ ---------- ---------- --------Net cash inflow from operatingactivities 8,886 10,258 17,092------------------------ ---------- ---------- --------Returns on investment and servicingof finance 112 177 311Interest received (74) (171) (411)Interest paid------------------------ ---------- ---------- --------Net cash inflow/(outflow) fromreturns on investment and servicingof finance 38 6 (100)------------------------ ---------- ---------- --------Taxation (4,165) (1,752) (5,219)Capital expenditure and financialinvestment (4,764) (11,957) (12,785)Purchase of fixed assets (2,422) (2,373) (4,395)Deferred exploration costs - (317) 367Purchase of investments------------------------ ---------- ---------- --------Net cash outflow from capitalexpenditure and financial investment (7,186) (14,647) (16,813)------------------------ ---------- ---------- --------Acquisitions and disposalsPurchase of investments - - (476)Net cash movement from disposal ofsubsidiary undertakings - (22) (22)------------------------ ---------- ---------- --------Net cash outflow from acquisitionsand disposals - (22) (498)------------------------ ---------- ---------- --------FinancingProceeds from issue of ordinaryshares 180 - 367Investment in own shares (306) - (311)Repayment of borrowings - (181) (6,020)Capital repayments on finance leases (164) (23) (23)-------------------- ---------- ---------- --------Net cash outflow from financing (290) (204) (5,987)-------------------- ---------- ---------- --------Decrease in cash (2,717) (6,361) (11,525)-------------------- ---------- ---------- -------- Avocet Mining PLC Other Primary Statements 6 months to 6 months to Year to 30 September 30 September 31 March 2005 2004 2005 Unaudited Unaudited Audited US$000 US$000 US$000Statement of total recognised gains andlosses ---------- ---------- --------------------------------Profit attributable to shareholders 3,444 4,572 11,686Exchange translation adjustments - 88 43------------------------ ---------- ---------- --------Total recognised gains and losses 3,444 4,660 11,729------------------------ ---------- ---------- --------Reconciliation of movements in Group 3,444 4,660 11,729shareholdersO funds 180 - 367Total recognised gains and losses (35) (317) (270)New capital subscribed (net of costs)Investment in own shares------------------------ ---------- ---------- --------Net change in shareholdersO funds 3,589 4,343 11,826Opening shareholdersO funds 57,346 45,520 45,520------------------------ ---------- ---------- --------Closing shareholdersO funds 60,935 49,863 57,346------------------------ ---------- ---------- -------- Notes: 1. The calculation of earnings per share is based on after-tax profits ofUS$3,444,000 (2004: US$4,572,000) and on the weighted average number of104,396,306 shares in issue (2004: 103,696,530). The fully diluted calculation of earnings per share is based on after-taxprofits of US$3,444,000 (2004: US$4,572,000) and on the weighted average numberof shares in issue and exercisable under share options of 106,014,075 (2004:107,259,107). 2. In March 2002 the Group acquired an 80% interest in PT Avocet BolaangMongondow. This acquisition included a deferred consideration of a 4% royalty onrevenues from the first 500,000 ounces of gold produced. As the mine productionis now more certain, the directors have included in goodwill their best estimateof contingent consideration at a discounted value of $2.937 million, which willbe re-assessed in future periods. 3. The interim financial information complies with the relevant financialreporting standards and the accounting policies are applied on a basisconsistent with those applied in the annual financial statements. 4. The financial information contained in this interim statement does notconstitute statutory accounts as defined in section 240 of the Companies Act1985.The financial information for the year ended 31 March 2005 is an abridgedversion of the full accounts, which received an unqualified auditors' report andhave been filed with the Registrar of Companies. 5. This statement is being sent to Shareholders and will be available from theCompany's Registered Office. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
AVM.L