18th Mar 2005 11:58
Oxus Gold PLC18 March 2005 news release For immediate release: 18 March 2005 Interim Results for the six months ended 31 December 2004. LONDON: Friday 18th March 2005 - Oxus Gold plc ("Oxus) or the "Company") ispleased to report on its interim results for the 6 months ended 31 December2004. Highlights • Net profit on ordinary activities of $3.615 million • Net Assets rise to $133.9 million • AGF produced 88,822 ounces of gold in period • AGF reports $15.8m profit for the year to 31 December 2004, after tax and debt service • Construction underway at AGF's Vysokovoltnoye silver / gold heap leach project • The Kyrgyz licensing authorities recommend that the Jerooy mining licence be reinstated • 16.49% strategic shareholding in Eurogold Limited acquired • £30.6m raised for the development of the Jerooy mine, by placement of £13.6m of equity and £17m in convertible redeemable loan notes, of which 99.9% converted by due date Report on Activities Financial Results The Group reported an unaudited profit on ordinary activities of $3.615 millionfor the six month period ended 31 December 2004, and $2.981 million after taxand minority interests. Net assets increased to $133.9 million during the periodand cash balances to $26.97 million, excluding $32.96 million of convertibleredeemable loan notes held in escrow at 31 December 2004, 99.9% of which havesubsequently been converted into the Company's ordinary shares, significantlyfurther increasing the cash resources of the Group. As a result of theconversion Oxus issued 33,970,000 new ordinary shares to holders of the loannotes and the total number of shares in issue increased to 286,928,836. Amantaytau Goldfields (AGF) in Uzbekistan, contributed $4.168 million towardsthe consolidated turnover, being the Group's 50% attributable share of profitsfor the six month period. AGF itself reported a profit of $15.8m for the year to31 December 2004 after tax and debt service, having commenced commercial goldproduction in February 2004. Operations Amantaytau Goldfields AGF commenced production in February 2004 and the following table summarises theresults for the first period of operations to 31 December 2004: 6 months to 31 December 2004 12 Months to 31 December 2004Ore mined 586,300 1,062,100Ore processed 555,600 968,700Average Grade (g/t) 6.2 5.8Gold produced - ounces 88,822 148,511Average Gold price received $ $340 $334Net Profit after tax and debt service $8.336 million $15.812 million During the period February to December 2004, AGF achieved an average cashoperating cost, calculated in accordance with the Gold Institute's ProductionCost Standard, of $159 per ounce and an average total production cost of $201per ounce. Gold recovery averaged 82.6%. As at 28 February 2005 the AGF hedge book has been reduced to 120,229 ouncesrepresenting 46% of the original commitment. In addition, $16m (46%) of theoriginal $35m project finance loan has been repaid to the lending syndicate. Itis expected that both the gold hedge and the project loan will be repaid inaccordance with the original schedule, by the end of January 2006. Work continued on the AGF sulphide feasibility study, a first draft of which hasnow been completed. The final study is expected to be completed during April.Construction commenced at the Vysokovoltnoye silver/gold heap leach project andfirst production is expected early in the second half of this year at an annualrate of 50,000 ounces gold equivalent at a cash operating cost of approximately$150 per ounce. The detailed designs for the proposed AGF oxide mill expansionhave also been completed and submitted to the relevant permitting authoritiesfor approval. In September 2004 AGF issued UZS 5 billion (US$5m) in corporate bonds on thesecurities market in Uzbekistan to assist with the funding of Vysokovoltnoye andthe sulphide feasibility study. This represented the largest issue yet placed onthe Tashkent based exchange. Jerooy The six months under review culminated with Oxus raising £30.6 million primarilyto construct the Jerooy gold mine in the Kyrgyz Republic. The government of theKyrgyz Republic purportedly cancelled the licence to operate this mine in August2004. Oxus immediately repudiated this action, whilst simultaneously announcingthat it would continue to build the mine. In November, the government advisedTalas Gold Mining Company, the project operating subsidiary that provided it wasable to show that it had raised adequate funds to construct the mine, and hadmet certain additional technical requirements, the licence would be re-instated.Having raised the appropriate funds, the detailed technical work has also nowbeen completed to the satisfaction of the relevant licensing authorities whohave recommended to the government that the licence be reinstated. A new licenceagreement is therefore expected to be signed soon. Construction at the minecontinued throughout the period and first gold production is still targeted forthe end of the year. Other Activity In February 2005 the Group acquired a 16.49% strategic shareholding in EurogoldLimited, an Australian Company with gold exploration and mining operations inRomania and the Ukraine. Discussions continue with the management of Eurogoldwith a view to developing this alliance to the benefit of the shareholders ofboth companies. In March 2005 the Group signed a co-operation agreement with the Navoi Miningand Metallurgical Combinat to work together with a view to developing theKosmanachi silver / gold deposit situated near the AGF mine. The project hasbeen extensively explored and is estimated to contain Soviet classifiedresources in the C1 and C2 categories of at least 40 million ounces of silver atan average grade of 105 grammes per tonne and 270,000 ounces of gold at anaverage grade of 0.5 grammes per tonne. Oxus intends to carry out a detailedreview of all the existing data and to undertake a drilling programme to confirmthe earlier exploration results in order to complete the pre-feasibility study.Kosmanachi also has additional resources in the Soviet P category. Exploration A total of 11,367 metres of reverse circulation (RC) drilling and 637 metres ofdiamond core drilling was completed within the AGF exploration area, whichfocused on deposit mining preparation and increasing resource confidence. Insummary the work completed was: • 3,413m of RC drilling at the Asaukak deposit. High grade mineralisation has been encountered within existing mineralised zones, e.g. BH SRA44 intersecting 6m at 9.97g/t gold. • 7,569m of RC drilling at the Vysokovoltnoye deposit defined mineralised zones in more detail. Higher than average gold veins have been identified within mineralised zones, e.g. BH SRV27 intersecting 9m at 4.97g/t gold. • 385m was drilled in the Northern Uzunbulak/Zapadny Amantaytau area with the aim of extending known mineralised zones. The results show that mineralisation is present and further work on these extensions is planned. • 344m of diamond drilling was focussed on recovering sulphide ore from Amantaytau Centralny for metallurgical testwork. • As part of the aim to develop 500,000 ounces of additional reserves on the AGF balance sheet, all Soviet data for four deposits within the AGF exploration area was input into digital form. These deposits are being remodelled using Datamine(R) resource evaluation software and will be drilled in 2005. Directors Following the board restructuring, Douglas Sutherland and Oliver Prior joinedthe board as non-executive directors and after the departure of certaindirectors there remain vacancies which the Company expect to fill in the near future. Outlook The significant increase in shareholders' funds, the Group's strong cashflow andthe strength of the balance sheet will provide the springboard for the nextphase of the Company's development. The Company looks forward to operating as an unhedged producer at both AGF andJerooy from 2006 onwards. The Company also remains committed to achieving anannual attributable gold production of at least 500,000 ounces by 2008, and withthis objective firmly in mind the Group will continue to pursue an aggressiveexploration programme and to identify and develop strategic and other alliances. Consolidated Profit and Loss Account Six months to Twelve months to 31 December 2004 30 June 2004 (Unaudited) (Audited) $'000 $'000Consolidated turnover 1,328 1,932Interest in joint venture Income attributable 3,668 3,738 Dividend receivable 500 0 4,168 3,738Administration expenses (1,102) (5,287)Deferred revenue expenditure - incurred by Marakand Minerals (1,187) (1,198)Limited Consolidated operating profit (loss) 3,207 (815)Net interest receivable Group 155 212 Joint venture 363 575 518 787 Profit (loss) on ordinary activities beforeexceptional items and taxation 3,725 (28)Exceptional items re abortive 2002 project financing (110) (634) re application to court to convert the share premium to distributable reserves 0 (156) (110) (790)Profit (loss) on ordinary activities 3,615 (818)Net gain on disposal of minority interest in Marakand Minerals Limited 0 12,252Profit (loss) on ordinary activities before taxation 3,615 11,434Tax on profit (loss) on ordinary activities (5) (5)Profit on ordinary activities after taxation 3,610 11,429Minority interests - Group (629) (539)Retained profit for the financial period/year 2,981 10,890 Earnings per share- basic profit (per share cents) 1.61 5.32- diluted profit (per share cents) 1.58 5.20 Turnover is wholly derived from continuing activities. Notes: 1 The financial statements have been prepared in accordancewith applicable UK accounting standards and under the historical costconvention. The principle accounting policies of the group are set out in thegroup's annual report and financial statements. 2 The interim financial information does not constitutestatutory accounts as defined in Section 240 of the Companies Act 1985.Statutory accounts for the year ended 30 June 2004 have been filed with theregistrar of Companies. 3 Basic earnings per share is based on the weighted averagenumber of shares in issue for the period of 224,048,919. Diluted earnings pershare is based on the weighted average number of shares in issue for the periodplus potential dilutive ordinary shares arising from share options and warrantsfor the period of 228,514,269. 4 The directors are not declaring a dividend for the period. 5 On 3 March 2005 99.9% of the convertible redeemable loannotes were converted to equity and 33,970,000 new ordinary shares out of apossible 34,000,000 shares were issued. 6 The consolidated profit and loss account includes OxusGold plc and its attributable shares of subsidiaries and joint ventures. 7 Copies of this report are being sent to all shareholders.Additional copies will be available to the public at the registered office, 105Piccadilly, London, W1J 7NJ and will be posted on the company's website atwww.oxusgold.co.uk Consolidated Balance Sheet At 31 December At 30 June 2004 2004 (Unaudited) (Audited) $'000 $'000Fixed assetsTangible assets 214 193Exploration and mining rights 28,456 28,456Exploration and evaluation properties 18,549 12,354 47,219 41,003InvestmentsInterest in joint venture Share of gross assets 27,338 25,844 Share of gross liabilities (15,812) (17,987) 11,526 7,857Loan to joint venture 15,294 14,438 26,820 22,295Total fixed assets 74,039 63,298Current assetsDebtors 5,415 7,107Monies receivable for convertible redeemable loan notes held in escrow 32,963 0Cash at bank and in hand 26,974 5,541 65,352 12,648Creditors - amounts falling due within one year (695) (741)Net current assets 64,657 11,907Total assets less current liabilities 138,696 75,205Creditors - amounts falling due after one yearAGF Phase 2 Project development Fund (4,789) (1,761)Total assets less liabilities 133,907 73,444 Capital and reservesCalled up share capital 3,825 3,289Share premium account 29,842 5,861Merger reserve 34,929 34,929Capital reserve 19,658 19,656Profit and loss account (806) (4,416)Equity shareholders' funds 87,448 59,319Convertible redeemable loan notes 32,963 0Minority interests 13,496 14,125Capital employed 133,907 73,444 Consolidated Cash Flow Statement Six months to Twelve months to 31 December 2004 30 June 2004 (Unaudited) (Audited) $'000 $'000 Net cash inflow (outflow) from operating activities 3,513 (11,787)Returns on investments - Interest received 518 787Taxation (1) 0Capital expenditure and financial investmentPurchase of tangible fixed assets (49) (241)Exploration and evaluation expenditure (6,195) (3,167)Funding of joint venture's capital expenditure (856) (1,632)Net cash outflow for capital expenditure and financial (7,100) (5,040)investmentDisposalsSale of minority shares in subsidiary on flotation 0 5,846Sale of minority shares in subsidiary 0 689Net cash inflow from disposals 0 6,535Net cash outflow before use of liquid resources and (3,070) (9,505)financingFinancingIssue of ordinary share capital 26,485 11,413Expenses of share issues (1,982) (222)Net cash inflow from financing 24,503 11,191Increase in cash 21,433 1,686 Reconciliation to net cashNet cash at 1 July 5,541 3,855Increase in net funds from cash flows 21,433 1,686Net cash 26,974 5,541 Reconciliation of operating profit (loss) to net cash flow from operating activities Six months to Twelve months to 31 December 2004 30 June 2004 (Unaudited) (Audited) $'000 $'000 Operating profit (loss) including exceptional items and minority interests Operating profit (loss) 3,207 (815) Exceptional items (110) (790) Minority interests (629) (539) 2,468 (2,144) Depreciation 28 48 Decrease (increase) in debtors and prepayments 1,692 (6,842) Increase in creditors and 2,982 344 accruals Salaries and bonuses converted to shares 15 529 Income attributable to joint (3,668) (3,738) venture (Profit) loss on foreign (4) 16 exchange Net cash inflow (outflow) from operating activities 3,513 (11,787) Reconciliation of Movements in Group Shareholders Funds Profit for the year/period 3,610 11,429 Net proceeds of ordinary shares issued 24,517 11,720 Distribution of Marakand Minerals Limited shares 0 (17,490) Capital reserve arising on revaluation of exploration 0 16,296 and mining rights Capital reserve arising on issue of shares in Marakand Minerals 2 3,360 Limited Minority interest adjustment 0 14 Net change in shareholders' 28,129 25,329 funds Shareholders' funds at beginning of period/year 59,319 33,990 Shareholders' 87,448 59,319 funds Statement of Total Consolidated Recognised Gains and Losses Group profit for the financial period/ 3,610 11,429 year Unrealised surplus arising from the revaluation of exploration - and mining rights on flotation of Marakand Minerals Limited 0 16,296 Total recognised profit for the period - 3,610 27,725 year CORPORATE DETAILS: Company: Oxus Gold plc 105 Piccadilly, London, W1J 7NJ, United Kingdom Phone: +44 (0)207 907 2000 Fax: +44 (0)207 907 2001 Email: [email protected] Web: www.oxusgold.co.uk Board of Directors: William Trew - Chief Executive Officer Jonathan Kipps - Finance Director Richard Wilkins - Executive Director Oliver Prior - Non-executive Director Douglas Sutherland - Non-executiveDirector Company Secretary: Richard Wilkins Nominated Adviser Canaccord Capital (Europe) Limitedand Broker: 1st Floor Brooke House, 27 Upper Brook Street, London W1K 7QF, United Kingdom Phone: +44 (0)207 518 2777 Auditors: BDO (Isle of Man) 9 Myrtle Street, Douglas, Isle of Man, IM1 1ED, British Isles Registrars: Capita Registrars The Registry, 34 Beckenham Road, Beckenham, Kent BR3 4TU, United Kingdom For further information please visit www.oxusgold.co.uk or contact: Oxus Gold plc Jonathan Kipps - Finance Director Tel: +44 (0)207 907 2000 Joanna Solino - Investor Relations Tel: +44 (0)207 907 2005 Bankside Consultants Keith Irons - Chairman Tel: +44 (0)207 444 4155 Simon Rothschild Tel: + 44 (0)207 444 4153 This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Oxus Gold Plc