10th Dec 2007 07:01
Aurum Mining PLC10 December 2007 For immediate release 10 December 2007 A meeting for analysts will be held at 10am on the morning of the results, 10December 2007, at the offices of Buchanan Communications, 45 Moorfields, LondonEC2Y 9AE. The investor presentation, which will be used at the analyst meeting,will be made available on Aurum's website, www.aurummining.net. AURUM MINING PLC ("Aurum" or "the Company") Interim Results for the six months ended 30 September 2007 Aurum Mining plc (AIM: AUR), the gold-mining company focussed on the FormerSoviet Union (FSU) and whose principal asset is the Andash Project in the KyrgyzRepublic, is pleased to announce its interim results for the six months ended 30September 2007. This is the first set of accounts that the Company has released adoptingInternational Financial Reporting Standards (IFRS) and therefore the format ofthese results is different to recent reports. The adoption of IFRS represents anaccounting policy change only, the details of which are included in the notes tothese accounts. Highlights • Substantial progress in the period ensuring that the Andash Zone I mine remains on time and within budget for initial production of gold and copper in H2 2008 • Appointment of Professor Muratbek Imanaliev, the President of the Institute of Public Policy in the Kyrgyz Republic, as Chairman of the local advisory board to the Andash Mining Company, Aurum's Kyrgyz subsidiary • Commitment to the Talas Valley underlined by plans for a $1 million social fund to be launched after production commences at Zone 1 • Exploration work on-going with initial assay results from the Tokhtonysay opportunity expected imminently along with the final report from geophysical work at Nakhodka • Strong balance sheet with net cash of £25.5 million (H1 2006: £1 million). Pre-tax loss for the half year of £325,000 (H1 2006: loss of £834,000) Sean Finlay, Aurum's Chairman, commented: "We have entered the second half ofour financial year in a strong position and we look forward to calendar year2008 with confidence and excitement. The Andash Project is becoming increasinglyde-risked, which, together with our significant exploration opportunities andthe continuing strength of metal prices, underlines the increasing and on-goingattractiveness of our business." For further information: Aurum Mining plc Tel: 020 7478 9050Mark Jones, Chief Executive OfficerChris Eadie, Chief Financial Officer Arbuthnot Securities Tel: 020 7012 2000John PriorJohn Toll Buchanan Communications Tel: 020 7466 5000Mark Court / Rebecca Skye Dietrich Notes to editors Aurum Mining, which joined the AIM market of the London Stock Exchange in May2004, is a mining company focussed on gold opportunities in the Former SovietUnion. Its principal asset is an exploration licence over the Andash gold andcopper project in the Kyrgyz Republic. A mining licence for Andash Zone 1 wasawarded by the Kyrgyz authorities in 2006. The feasibility study compiled byWardell Armstrong International, also in 2006, confirmed a measured andindicated resource base of 19.2 million tonnes at 1.1 grams per tonne of goldand 0.4% copper, which equates to 1.1 million ozs of gold and gold equivalent.Initial production at Andash Zone 1 is expected in the second half of 2008. TheAndash project also includes Zone 2 and Zone 3 along with Tokhtonysay, Nakhodkaand three other additional exploration areas. Aurum Mining plc Chairman's and Chief Executive's statement _____________________________________________________________________________ The six month period to 30 September 2007 has been another period of sustainedprogress at Aurum. This progress has increased in momentum since the period endand we are entering the 2008 calendar year with a business confidentlypositioned to deliver our strategic objective of becoming a copper and goldproducer during the second half of next year. From the outset of the Andash project we were committed to taking a responsibleapproach to mining in the region and we are delighted to be able to announceplans for a $1 million social fund to benefit the local population within theTalas Valley. This fund, which will be managed by local trustees and bededicated to social, educational and cultural development projects in the Andasharea, will be initiated after production commences at the Zone 1 mine. Webelieve the success of the Andash project can be achieved only through ensuringa commonality of interests between ourselves and local, regional and nationalgroups. Our proposed social fund underlines our objective of making a verypositive on-going contribution to the Kyrgyz Republic. To ensure that local people are fully informed about all aspects of the project,we have opened an information centre in Kupero Bazaar, the nearest village tothe mine. This centre will be a focal point for information sharing betweenAurum's wholly owned subsidiary the Andash Mining Company (AMC) and the localcommunity. AMC is itself becoming an increasingly important employer in theregion, with current staff numbers totalling around 115. To further strengthen our position in the region, we are also establishing alocal advisory board for AMC and, in respect of this, we are delighted toannounce the appointment of Professor Muratbek Imanaliev as the Chairman of thisboard. Professor Imanaliev is currently the President of the Institute forPublic Policy in the Kyrgyz Republic, and he is also a Professor at the AmericanUniversity of Central Asia. Professor Imanaliev is a former Ambassador of theKyrgyz Republic to the People's Republic of China, and he has twice held theposition of the Minister for Foreign Affairs. He also holds the diplomatic rankof Ambassador Extraordinaire and Plenipotentiary of both the former USSR and theKyrgyz Republic. We are both delighted and very proud that he has decided tojoin AMC, and we are convinced that he will assist us in our objective ofdeveloping the AMC into a world class, socially responsible and economical goldand copper producer. We will update the market further when the structure of theAMC advisory board has been finalised and all relevant appointments made. As the Andash mine development progresses we are able to determine our capitalexpenditure (capex) requirements for the Zone 1 mine in much greater detail, andwe remain on track to complete the Zone 1 mine within our forecast timeline andin-line with our forecast capex budget. In addition, we are in negotiations tosecure leasing arrangements over our mining fleet and drilling equipment withthe overall objective of optimising and preserving the Group's cash positionahead of cash generation from the Zone 1 mine. As announced in our AGM statement in November 2007 we have been granted anextension to the time period for the completion of the technical design work forthe Andash mine. This extension, from the end of November 2007 to the end of May2008, further demonstrates the quality of our working relationship with theKyrgyz authorities and has given us additional flexibility in finalising somekey design features of the mine, including the tailings dam and the open pit,while allowing us to initiate the primary construction phase. Concurrently with the finalisation of the design details, we have sourced andidentified a substantial amount of the mining and processing plant for the Zone1 mine. The first phase of construction has now started, with the primary accessroad contract now underway. Ball mills have been ordered with delivery next yearin line with our requirements, and the mining fleet is already en route fromAustralia and the US. We do not foresee any problems in procuring the remainingplant required to meet our timeline commitments. A further milestone for the Group will be the signing of an Investment Agreementbetween ourselves and the Kyrgyz Government. As it currently stands, theAgreement sets out the framework of our investment in the Kyrgyz Republic andthe signing of the Agreement will show our ability to work efficiently andeffectively in the Kyrgyz Republic. In order to get the Investment Agreementratified by Government it is necessary to first get approval from 16 differentministries. AMC's Investment Agreement has now been approved by all 16 of theseministries and the agreement has now been passed back to Government for finalapproval. This whole process highlights the significant support we havedeveloped within the Government. Exploration update The local geophysical exploration work at Nakhodka has been completed, and weawait the final report which we hope to announce before the end of the year. Ourinitial drilling programme at Tokhtonysay has struck mineralisation and the corehas been prepared and sent in for independent assay. We will update the marketimminently on the results of this work. Financials The Board of Aurum is pleased to announce the Group's results for the half yearto 30 September 2007. This is the first set of accounts that the Group hasreleased adopting International Financial Reporting Standards (IFRS) andtherefore the format of these results is different to recent reports and thereare some changes to the accounting policies, details of which are in the notes. On a Group basis, loss before tax for the half year was £325,000 (H1 2006: lossof £834,000) with loss per share of 0.71p (H1 2006: loss per share of 7.12p).The balance sheet remains strong following the fundraising in February this yearwith net cash at the balance sheet date of £25.5 million (30 September 2006: £1million). Outlook We have entered the second half of our financial year in a strong position andwe look forward to calendar year 2008 with confidence and excitement. The AndashProject is becoming increasingly de-risked, which, together with our significantexploration opportunities and the continuing strength of metal prices,underlines the increasing and on-going attractiveness of our business. Sean Finlay Chairman Mark Jones Chief Executive Officer Aurum Mining plc Consolidated interim income statement for the six months ended 30 September 2007 Note 6 months ended 6 months Year ended 30 September ended 31 2007 30 September March Unaudited 2006 2007 £'000 Unaudited Unaudited* £'000 £'000Operating expenses (1,069) (777) (1,938) -------- -------- --------Operating loss (1,069) (777) (1,938) Finance income 774 24 154Finance expenses (30) (81) (175) -------- -------- --------Net loss for the (325) (834) (1,959)financial period -------- -------- -------- Attributable to:Equity shareholders (325) (834) (1,959)of the parent -------- -------- --------Loss per shareBasic and diluted 2 (0.71p) (7.12p) (13.38p) -------- -------- -------- All amounts relate to continuing activities. * As stated in note 1, the comparative figures for the financial year ended 31March 2007 have been abridged from the Group's statutory accounts for thatfinancial year, translated from UK Generally Accepted Accounting Principles (UKGAAP) to IFRS. The UK GAAP version of those accounts have been reported on bythe Group's auditors and delivered to the Registrar of Companies. Aurum Mining plc Consolidated interim balance sheet at 30 September 2007 At 30 September At 30 September At 31 March 2007 2006 2007 Unaudited Unaudited Unaudited £'000 £'000 £'000ASSETSNon-current assetsProperty, plant and equipment 7,304 257 5,123Exploration and evaluation assets - 1,946 - ------- -------- --------Total non-current assets 7,304 2,203 5,123 ------- -------- --------Current assetsInventories 200 56 184Trade and other receivables 540 271 94Cash and cash equivalents 25,472 1,034 28,356 ------- -------- --------Total current assets 26,212 1,361 28,634 ------- -------- -------- Total assets 33,516 3,564 33,757 -------- -------- --------EQUITY AND LIABILITIESNon-Current liabilitiesConvertible loan notes - 643 - ------- -------- --------Total non-current liabilities - 643 - ------- -------- --------Current liabilitiesTrade and other payables 312 288 351 ------- -------- --------Total current liabilities 312 288 351 ------- -------- --------Total liabilities 312 931 351 -------- -------- -------- Net assets 33,204 2,633 33,406 -------- -------- --------EquityCalled up share capital 480 124 455Other reserve 250 304 250Share premium account 35,473 4,062 32,941Merger Reserve 498 498 498Shares to be issued - - 2,548Foreign currency translation (26) (58) (79)reserveRetained earnings (3,471) (2,297) (3,207) ------- -------- --------Equity attributable to 33,204 2,633 33,406shareholders of the parent ------- -------- -------- Total equity and liabilities 33,516 3,564 33,757 Aurum Mining plc Consolidated interim cash flow statement for the six months ended 30 September2007 6 months ended 6 months ended Year ended 30 September 2007 30 September 30 March Unaudited 2006 2007 £'000 Unaudited Unaudited £'000 £'000 Cash flows from operating activitiesNet loss for the financial period (325) (834) (1,959)Adjustments for:Depreciation of property, plant and equipment 61 29 77Loss on disposal of property, plant and 8 - 5equipmentShare based payments 61 132 347Finance income net (744) 57 21Foreign exchange differences 114 (72) 7 ------- ------- -------Cash flow from operating activities before (825) (688) (1,502)changes in working capital Increase in trade and other receivables (446) (187) (9)Increase in inventories (16) (45) (173)(decrease)/increase in trade and other (39) (50) 12payables ------- ------- -------Cash used by operations (1,326) (970) (1,672)Interest paid (30) (81) (175)Income tax paid - - - ------- ------- -------Net cash used in operating activities (1,356) (1,051) (1,847) ------- ------- -------Investing activitiesPurchase of property, plant and equipment (2,315) (23) (111)Proceeds from sale of property, plant and 4 - 2equipmentPurchases of intangible assets - (640) (1,080)Interest income 774 24 154 ------- ------- -------Cash flow from investing activities (1,537) (639) (1,035) ------- ------- -------Financing activitiesIssue of ordinary shares (Net of issue cost) 9 2,403 30,917 ------- ------- -------Cash flows from financing activities 9 2,403 30,917 ------- ------- -------(Decrease)/increase in cash (2,884) 713 28,035Cash and cash equivalents at beginning of 28,356 321 321periodEffect of exchange rate changes on cash and - - -cash equivalents ------- ------- -------Cash and cash equivalents at end of period 25,472 1,034 28,356 ------- ------- ------- Aurum Mining plc Consolidated interim statement of recognised income and expense for the sixmonths ended 30 September 2007 6 months ended 6 months Year ended 30 September ended 31 2007 30 September March Unaudited 2006 2007 £'000 Unaudited Unaudited £'000 £'000 Exchange translation differences 53 (72) (93)on consolidation of Groupentities -------- -------- --------Net profit recognised directly 53 (72) (93)in equity Loss for the financial period (325) (834) (1,959) -------- -------- -------- Total recognised income and (272) (906) (2,052)expense for the financial period -------- -------- -------- Attributable to:Equity shareholders of the (272) (906) (2,052)parent -------- -------- -------- Aurum Mining plc Notes forming part of the interim report for the six months ended 30 September2007 _____________________________________________________________________________ 1 Accounting policies Accounting policies adopted under IFRS These interim financial statements have been prepared in accordance withInternational Financial Reporting Standards as adopted by the European Union ("IFRS"). The basis of preparation and accounting policies used in preparing the interimaccounts for the six months ended 30 September 2007 are set out below. The basisof preparation describes how IFRS has been applied under IFRS 1, the assumptionsmade by the Group about the Standards and Interpretations expected to beeffective, and the policies expected to be adopted, when the Group issues itsfirst complete set of IFRS financial statements for the year ending 31 March2008. Basis of preparation The financial information for the six months ended 30 September 2007, six monthsended 30 September 2006 and the year ended 31 March 2007 is unaudited and withinthe meaning of section 240 of the Companies Act 1985, such accounts do notconstitute full statutory accounts of the Group. The accounting policies which follow set out those policies which are expectedto apply in preparing the financial statements for the year ended 31 March 2008.These policies have been followed in producing these interim statements The Group financial statements are presented in sterling and all values arerounded to the nearest thousand Pounds (£'000) except when otherwise indicated. The financial statements have been prepared under the historical costconvention, except for financial assets, which are carried at fair value. The comparative figures for the financial year ended 31 March 2007 have beenabridged from the Group's statutory accounts for that financial year, translatedfrom United Kingdom Generally Accepted Accounting Principles (UK GAAP) to IFRS.The UK GAAP version of those accounts have been reported on by the Group'sauditors and delivered to the Registrar of Companies. The auditors' report onthose UK GAAP accounts was unqualified, did not include references to anymatters to which the auditors drew attention by way of emphasis withoutqualifying their report and did not contain any statement under section 237(2)or (3) of the Companies Act 1985. Significant accounting judgements and estimates The preparation of these financial statements require management to makeestimates and assumptions that affect the reported amounts of assets andliabilities at the date of the financial statements and reported amounts ofrevenues and expenses during the reporting period. These judgements andestimates are based on managements' best knowledge of the relevant facts andcircumstances, having regard to prior experience, but actual results may differfrom the amounts included in the financial statements. Information about suchjudgements and estimates is contained in the accounting policies andaccompanying notes to the financial statements. Basis of consolidation The consolidated financial statements incorporate the results of Aurum MiningPlc and its subsidiaries as at 30 September 2007. The subsidiaries are consolidated from the date of their acquisition, being thedate on which the Group obtains control, and continue to be consolidated untilthe date that such control ceases. The financial statements of subsidiaries are prepared for the same reportingyear as the parent company, using consistent accounting policies. Allinter-company balances and transactions, including unrealised profits arisingfrom them, are eliminated. Foreign currency transactions Transactions in foreign currencies are initially recorded in the functionalcurrency by applying the spot exchange rate ruling at the date of transaction.Monetary assets and liabilities denominated in foreign currencies areretranslated at the functional currency rate of exchange ruling at the balancesheet date. All differences are taken to the income statement, except fordifferences on monetary assets and liabilities that form part of the Group's netinvestment in a foreign operation. These are taken directly to equity until thedisposal of the net investment, at which time they are recognised in profit orloss. Non-monetary items that are measured in terms of historical cost in a foreigncurrency are translated using the exchange rates as at the dates of the initialtransactions. Non-monetary items measured at the fair value in a foreigncurrency are translated using exchange rates at the date when the fair value wasdetermined. The income statements results of individual Group companies with functionalcurrencies other than sterling are translated into sterling at the average ratesof exchange during the period and the balance sheet translated at the rate ofexchange ruling on the balance sheet date. Exchange differences which arise fromtranslation of the opening net assets and results of such subsidiaryundertakings are taken to reserves. On disposal of such entities, the deferredcumulative amount recognised in equity relating to that particular operation isrecognised in the income statement. All other differences are taken to the income statement with the exception ofdifferences on foreign currency borrowings, which, to the extent that they areused to finance or provide a hedge against foreign equity investments, are takendirectly to reserves to the extent of the exchange difference arising on the netinvestment in these enterprises. Tax charges or credits that are directly andsolely attributable to such exchange differences are also taken to reserves. Business combinations Business combinations are accounted for under IFRS 3 using the purchase method.Any excess of the cost of the business combination over the Group's interest inthe net fair value of the identifiable assets, liabilities and contingentliabilities is recognised in the balance sheet as goodwill and is regularlyreviewed for impairment. To the extent that the net fair value of the acquiredentity's identifiable assets, liabilities and contingent liabilities is greaterthan the cost of the investment, a gain is recognised immediately in the incomestatement. Mining properties Once a decision is made to proceed with the development of a mining project,exploration and evaluation expenditure other than that on buildings, machineryand equipment is capitalised under tangible fixed assets as mining properties,together with any amount transferred from exploration and evaluation assets.Mining properties are amortised over the estimated life of the reserves on a 'unit of production' basis. Exploration and evaluation assets All costs associated with mining development and investment are capitalised on aproject-by-project basis pending determination of the feasibility of theproject. Costs incurred include appropriate technical and administrativeexpenses but not general overheads. When a decision is made to proceed todevelopment, the related expenditures will be transferred to mining properties.Where a licence is relinquished, a project is abandoned, or is considered tobe of no further commercial value to the company, the related costs will bewritten off. The recoverability of deferred mining costs and mining interests is dependentupon the discovery of economically recoverable reserves, the ability of thecompany to obtain necessary financing to complete the development of reservesand future profitable production or proceeds from the disposition of recoverablereserves. Costs on productive areas are amortised over the life of the area of interest towhich such costs relate on a unit of production output basis. Property, plant and equipment Property, plant and equipment, is stated at cost less depreciation andimpairment losses. Cost includes the purchase price plus any directlyattributable costs to bring the asset into working condition and location forits intended use. Depreciation is provided on all property, plant and equipment at ratescalculated to write off the cost of each asset over its useful life: Office and computer equipment 20% to 33% per annum Plant and Equipment: 20% to 33% per annum Vehicles 33% per annum The carrying values of property, plant and equipment are reviewed for impairmentwhen events or changes in circumstances indicate the carrying value may not berecoverable. Leases Leases where the lessor retains substantially all the risks and benefits ofownership of the asset are classified as operating leases and rentals payableare charged to the income statement on a straight line basis over the term ofthe lease. Inventories Inventory is valued at lower of cost and net realisable value. Cost is based onthe cost of purchase on a first in, first out basis. Net realisable value isbased on estimated selling price less additional costs to disposal. Impairment of assets The Group assesses at each reporting date whether there is an indication that anasset may be impaired. If any such indication exists, or when annual impairmenttesting for an asset is required, the Group makes an estimate of the asset'srecoverable amount. An asset's recoverable amount is the higher of an asset's orcash-generating unit's fair value less costs to sell and its value in use and isdetermined for an individual asset, unless the asset does not generate cashinflows that are largely independent of those from other assets or groups ofassets. Where the carrying amount of an asset exceeds its recoverable amount,the asset is considered impaired and is written down to its recoverable amount.In assessing value in use, the estimated future cash flows are discounted totheir present value using a pre-tax discount rate that reflects current marketassessments of the time value of money and the risks specific to the asset.Impairment losses of continuing operations are recognised in the profit and lossaccount in those expense categories consistent with the function of the impairedasset. An assessment is made at each reporting date as to whether there is anyindication that previously recognised impairment losses may no longer exist ormay have decreased. If such indication exists, the recoverable amount isestimated. A previously recognised impairment loss is reversed only if there hasbeen a change in the estimates used to determine the asset's recoverable amountsince the last impairment loss was recognised. If that is the case the carryingamount of the asset is increased to its recoverable amount. That increasedamount cannot exceed the carrying amount that would have been determined, net ofdepreciation or amortisation, had no impairment loss been recognised for theasset in prior years. Such reversal is recognised in the profit and lossaccount. After such a reversal the depreciation or amortisation charge isadjusted in future periods to allocate the asset's revised carrying amount, lessany residual value, on a systematic basis over its remaining useful life. Financial instruments Financial assets and financial liabilities are recognised in the group's balancesheet when the group becomes a party to the contractual provisions of theinstrument. Trade and other receivables Trade receivables are measured at initial recognition at fair value, and aresubsequently measured at amortised cost using the effective interest ratemethod. Appropriate allowances for estimated irrecoverable amounts arerecognised in profit or loss when there is objective evidence that the asset isimpaired. The allowance recognised is measured as the difference between theasset's carrying amount and the present value of estimated future cash flowsdiscounted at the effective interest rate computed at initial recognition. Cash and cash equivalents Cash and cash equivalents comprise cash on hand and demand deposits, and othershort-term highly liquid investments that are readily convertible to a knownamount of cash and are subject to an insignificant risk of changes in value. Financial liabilities and equity Financial liabilities and equity instruments are classified according to thesubstance of the contractual arrangements entered into. An equity instrument isany contract that evidences a residual interest in the assets of the group afterdeducting all of its liabilities. Bank borrowings Interest-bearing bank loans and overdrafts are recorded at the proceedsreceived, net of direct issue costs. Finance charges, including premiums payableon settlement or redemption and direct issue costs, are accounted for on anaccrual basis in profit or loss using the effective interest rate method and areadded to the carrying amount of the instrument to the extent that they are notsettled in the period in which they arise. Convertible loan notes Convertible loan notes are regarded as compound instruments, consisting of aliability component and an equity component. At the date of issue, the fairvalue of the liability component is estimated using the prevailing marketinterest rate for similar non-convertible debt. The difference between theproceeds of issue of the convertible loan notes and the fair value assigned tothe liability component, representing the embedded option to convert theliability into equity of the group, is included in equity. Issue costs are apportioned between the liability and equity components of theconvertible loan notes based on their relative carrying amounts at the date ofissue. The portion relating to the equity component is charged directly againstequity. The interest expense on the liability component is calculated by applying theprevailing market interest rate for similar non-convertible debt to theliability component of the instrument. The difference between this amount andthe interest paid is added to the carrying amount of the convertible loan note. Trade payables Trade payables are initially measured at fair value, and are subsequentlymeasured at amortised cost, using the effective interest rate method. Equity instruments Equity instruments issued by the Company are recorded at the proceeds received,net of direct issue costs. Provisions Provisions are recognised when the Group has a present obligation as a result ofa past event, and it is probable that the Group will be required to settle thatobligation. Provisions are measured at the directors' best estimate of theexpenditure required to settle the obligation at the balance sheet date, and arediscounted to present value where the effect is material. Finance income and expense Finance income comprises interest income on funds invested and foreign exchangegains. Interest income is recognised as it accrues, calculated in accordancewith the effective interest rate method. Finance costs comprise interest expense on borrowings, the accumulation ofinterest on provisions and foreign exchange losses. All interest and other costsincurred in connection with borrowings are expensed as incurred as part offinance costs. Income taxes Deferred income tax is recognised on all temporary differences arising betweenthe tax bases of assets and liabilities and their carrying amounts in thefinancial statements, with the following exceptions: • where the temporary difference arises from the initial recognition ofgoodwill or of an asset or liability in a transaction that is not a businesscombination that at the time of the transaction affect neither accounting nortaxable profit or loss; • deferred income tax assets are recognised only to the extent that itis probable that taxable profit will be available against which the deductibletemporary differences, carried forward tax credits or losses can be utilised. Deferred income tax assets and liabilities are measured on an undiscounted basisat the tax rates that are expected to apply when the related asset is realisedor liability is settled, based on tax rates and laws enacted or substantivelyenacted at the balance sheet date. Income tax is charged or credited directly to equity if it relates to items thatare credited or charge to equity. Otherwise income tax is recognised in theincome statement. Rehabilitation obligations Rehabilitation obligations include future estimated costs of closure andrestoration in returning disturbed areas to their original state. Estimatedrehabilitation obligations are provided for in the accounting period when theobligation arising from the related disturbance occurs and is based on the netpresent value of estimated future costs. The unwinding of the discount isincluded in finance costs. At the time of establishing the provision, acorresponding asset is capitalised, where it gives rise to a future benefit, andis depreciated over the future production from the mine to which it relates. The provision is reviewed on an annual basis for changes to obligations anddiscount rates that effect cost estimates or life of operations. The cost of therelated asset is adjusted for such changes in the provision and the adjustedcost of the asset is depreciated prospectively. National Insurance on share options To the extent that the share price as at balance sheet date is greater than theexercise price of outstanding options, provision for any National Insurancecontributions has been made based on the prevailing rate. The provision isaccrued over the performance period attaching to the award. Share-based payments The cost of equity-settled transactions with suppliers of goods and services ismeasured by reference to the fair value of the good or service received, unlessthat fair value cannot be estimated reliably. The fair value of the good orservice received is recognised as an expense as the Group receives the good orservice. The cost of equity-settled transactions with employees, andtransactions with suppliers where fair value cannot be estimated reliably, ismeasured by reference to the fair value of the equity instrument. The fair valueof equity-settled transactions with employees is recognised as an expense overthe vesting period. The fair value of the equity instrument is determined at thedate of grant, taking into account market based vesting conditions. The fairvalue is determined using an option pricing model. No expense is recognised for awards that do not ultimately vest, except forawards where vesting is conditional upon a market condition, which are treatedas vesting irrespective of whether or not the market condition is satisfied,provided that all other performance conditions are satisfied. At each balance sheet date before vesting, the cumulative expense is calculated,representing the extent to which the vesting period has expired and management'sbest estimate of the achievement or otherwise of non-market conditions, thenumber of equity instruments that will ultimately vest, or in the case of aninstrument subject to a market condition, be treated as vesting as describedabove. The movement in cumulative expense since the previous balance sheet dateis recognised in the income statement, with a corresponding entry in equity. 2 Loss per share The basic loss per share is calculated on the loss attributable to equityshareholders of the parent and on ordinary shares being the weighted averagenumber of ordinary shares on issue during the period. The diluted loss per share is calculated on the loss attributable to equityshareholders and on the weighted average diluted number of ordinary sharesoutstanding during the period plus the weighted average number of ordinaryshares that would be issued on the conversion of all the dilutive potentialordinary shares into ordinary shares. In 2007 and 2006 the potential ordinary shares are anti-dilutive and thereforediluted loss per share has not been calculated. 30 September 30 September 31 2007 2006 March Unaudited Unaudited 2007 Unaudited (Loss) per share-basic and diluted (0.71p) (7.12p) (13.38p) £'000 £'000 £'000(Loss) attributable to equity (325) (834) (1,959)shareholders of the parent Number Number NumberWeighted average number of 45,467,005 11,714,991 14,645,392ordinary shares -basic and diluted 3 Transition to IFRS The consolidated financial information for the six months ended 30 September2007 and the year ended 31 March 2007 and the opening balance sheet at 1 April2007 have been prepared in accordance with International Financial ReportingStandards (IFRS) for the first time. The Group's transition date to IFRS is 1 April 2006. The rules for thefirst-time adopting of IFRS are set out in IFRS1 "First time adoption ofinternational reporting standards". In preparing the IFRS financial information,these transition rules have been applied to the amounts reported previouslyunder generally accepted accounting principles in the United Kingdom (UK GAAP).IFRS1 generally requires full retrospective application of the Standards andInterpretations in force at the first reporting date. However IFRS1 allowscertain exemptions in the application of particular Standards to prior periodsin order to assist companies with the transition process. The only exemption applied by the Group on first time adoption of IFRS relatesto cumulative translation differences (under IAS 21 "The effects of changes inforeign exchange rates"). This exemption allows cumulative foreign exchangedifferences for all foreign operations to be set at zero on the date oftransition. The transition from UK GAAP to IFRS has no effect on the Group's financialresults, net assets or reported cash flows. The IFRS Income statement, balancesheet and cash flow statements are presented in a different format from thatrequired under UK GAAP. The presentation of the primary statements has been amended to comply with IAS1. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Shearwater