Interim Results

3rd Sep 2007 07:01

Amur Minerals Corporation03 September 2007 3 September 2007 AIM: AMC Amur Minerals Corporation ("Amur" or "the Company") Interim Results for the six months to 30 June 2007 and Operations Update Amur Minerals Corporation ("Amur" or the "Company"), the AIM quotednickel-copper resource development company with assets in Russia, announces itsinterim results for the 6 month period ended 30 June 2007: Highlights • Initiated the fourth exploration field season at Kun-Manie. • Identified 2 new drill targets at Kun-Manie • Continued in fill and resource expansion drilling with focus on the four previously identified deposits. • Acquired the Kustakskaya exploration and mining licence with nickel, copper and copper-molybdenum targets located adjacent to and immediately east of Kun-Manie • Initiated its first field exploration season at the copper-gold Anadjakan licence • Completed a £2.79 million private placement of 15.5 million new Ordinary Shares at a price of 18p per Ordinary Share Robin Young, CEO of Amur Minerals Corporation, commented, "The first half ofthis year has been focused on increasing and consolidating our knowledge withinthe Kun-Manie and Anadjakan licences. We will have some very tangible resultsof this work in the coming months as our analytical results become available.We remain confident in our ability to continue to build shareholder valuethrough effective exploration and detailed examination of our explorationresults. " ENDS Full Chairman's Statement and Financial Statements follow. Enquiries: Amur Minerals Corp. Fox-Davies Capital RBC Capital Markets Parkgreen CommunicationsRobin Young, CEO Daniel Fox-Davies Andrew Smith/Martin Eales Justine Howarth/Erica Nelson+7 495 629 4418 +44 (0) 20 7936 5200 +44 (0) 20 7029 7881 +44 (0) 20 7851 7480 Chairman's Statement and Operations Update Introduction Results for the half year to 30 June 2007 As our knowledge and database expand, we continue to advance Kun-Manie towarddevelopment with our pre-feasibility studies and additional metallurgicaloptimisation expected to be ready by year end. Amur Minerals capitalised directproject-related expenditure amounting to US$1.9 million during the period,compared to US$616,000 during the same period in 2006. These capitalisedexploration costs will be amortised against future income once the mine is inproduction. With commercial production yet to commence at any of Amur Minerals'projects, no revenue was earned during this period. Additional expenditure ofUS$1.1 million was charged as an expense. The Group ended the period with US$5.8million in cash versus US$740,000 in accounts payable, resulting in a quickratio of a very healthy 7.8:1 No profits taxes were payable over the period. Additional Financing In April, Amur Minerals placed 15.5 million new Ordinary Shares at a price of18p per Ordinary Share to raise approximately £2.79 million gross. The fundsinvested will support the continued development of both the Kun-Manie nickelcopper project and exploration of the Anadjakan copper-gold project, as well asother selected projects in the Russian Far East. Following the financing, AmurMinerals has 101,703,938 shares outstanding (fully diluted, 110,995,394). Amuris confident it will continue to identify, acquire and finance high qualityprojects such as Kun-Manie and Anadjakan. Pre-Feasibility Study During the first half of 2006, the Company continued the work initiated in late2005 on a pre-feasibility study for Kun-Manie. When we began the study, we hadcompleted a total of 12 months of field work on site at Kun-Manie, providing agood indication of how rapidly we have advanced this challenging project. Thework undertaken during the period by the Company and our contractors hasincluded: • Metallurgical test work to develop a flow sheet and material balances, assuming standard Russian processes • Identification of road and power access options • On site study of rock mechanics to determine ultimate pit slope stability parameters • Advanced on site studies of structural geology • Siting studies for processing plant, tailings dam and mine waste rock dump • Drilling to acquire samples for additional metallurgical test work to optimise the flow sheet parameters and assess the feasibility of additional processing on site As we release these interim results, we have asked SRK, our primary contractoron the pre-feasibility study, to include data from a separate study on thepreliminary commerciality of a flash smelter or electric arc furnace. Thisseparate scoping study, which is being compiled by a leading internationalengineering firm in the metals processing business, is expected to be availablein the near term. SRK will incorporate these results in the prefeasibilitystudy targeted for release in October of this year. On Going Exploration Exploration drilling continues within existing drilled targets. Both in filland step out drill programmes are being conducted. The work is designed toincrease the Company's confidence in the continuity of the mineralisation and todefine the limits of mineralisation. This work is focused within theVodorazdelny, Ikenskoe and Maly Krumkon deposits. Results will be utilised inthe first filings with the State Committee on Reserves (GKZ) to convert theexploration licence into a mining licence. New Drill Targets at Kun-Manie During the first half of 2007, we announced that two new drill targets atKun-Manie have been identified. These new areas are known as Yan Hegd andKubuk. Yan Hegd is located 8 kilometres north of the Ikenskoe deposit and isthe Company's first discovery outside the main Krumkon Trend opening new terrainfor discovery potential. In Yan Hegd, geophysics, geochemistry and geology are mutually supportive overan area covering at least two square kilometres. We have 48 rock chip samplesaveraging 0.18% Ni with grades up to 0.4% from the leached surface outcrops,while our geological mapping indicates that the formation in the area isvertical. The next phase of exploration will include detailed geologicalmapping, ground based geophysics and additional geochemical sampling, with laterexploratory drilling to confirm the structure and near-surface potential to hostnickel-copper mineralisation. Kubuk is located four kilometres to the east of the Ikenskoe deposit. Detailedgeological mapping has identified a series of three to four, layered shallowdipping ultramafic sills extending along the Krumkon Trend. Anomalous rock chipsamples as well as stream sediment samples indicate grades up to 1.0% nickel.Within one of the sills, two channel sampled trenches located about 170 metresapart confirm the presence of nickel mineralisation similar to that derived inthe previous sampling programmes. Both trenches begin and end in strongmineralisation indicating the zone could be thicker exposed in the trenches.The first trench contains 33.9 metres averaging 0.63% Ni and 0.17% Cu while thesecond has a mineralised length of 11.0 metres at 0.51% Ni and 0.12% Cu. Anadjakan This year sees our first field work at the Anadjakan copper-gold project. Wecompleted a site visit, including specialists from SRK, to certify the fieldprocedures we are to use. In late May, we began a comprehensive soil samplingprogramme designed to confirm historical data in the area and to assesspreviously untested areas. The programme for the year also includes geologicalmapping. Kustakskaya Kustakskaya was acquired for 6.3m Russian Roubles (US$240,000) in February 2007,to explore for nickel, copper, platinum and associated metals. Located near tothe Kun-Manie project, the area contains two separate geological terrains. Thesouthern half of the licence exhibits the same geologic settings and containsthe same types of rock and similar nickel mineralization observed along theKrumkon Trend. The northern half of the licence is characterised by Mesozoicporphyry copper style intrusions that have seen little historic exploration.The licence was registered in April 2007 and runs for 25 years. Exploration willbe conducted in a phased approach with work on the ground beginning in 2008. Outlook As of the date of this announcement, we have drilled approximately 4,000 metresof this year's programme and are awaiting the final analytical results. Duringthe autumn we will complete the pre-feasibility study at Kun-Manie with anexpanded scope assessing the potential of producing a final saleable nickelcopper product on or near the site. This includes examining the viability ofusing a flash smelting and / or electric arc furnace to produce a nickel matte.We will also make the first filings to the Russian State Committee for Reserves(known as GKZ) to have parts of the Kun-Manie licence area classified as C1 andC2 reserves under the Russian system. As with previous years, we will compilean updated resource estimate and valuation taking into account the results ofthis year's exploration work. We will also review the data collected from anextensive sampling programme undertaken at Anadjakan. Results will be used toguide the planning for the appropriate follow-on exploration phases to beconducted in 2008 and ensuing years. The results of this work will be a clearroadmap for getting Kun-Manie from the development stage to production. Robert W. SchaferChairman3 September 2007 Notes to Editors About Amur Minerals Amur Minerals Corporation (AMC) is a rapidly-growing mineral resourceexploration and development company focused on base metal projects located inthe far east of Russia. Growth has been the result of the acquisition of anadditional exploration property and the continued exploration within theKun-Manie nickel copper flagship property. The Company has three properties inthe region with its principal asset being the Kun-Manie sulphide nickel, copperproject located in Amur Oblast. The associated JORC compliant resource containsmore than a quarter of a million tonnes of contained nickel, Kun-Manie is one ofthe five largest new nickel sulphide discoveries since Voisey's Bay. AMUR MINERALS CORPORATION AND ITS SUBSIDIARIESCONDENSED CONSOLIDATED BALANCE SHEETAS OF 30 JUNE 2007(Amounts in '000s US Dollars) Note 30 June 31 December 2007 2006 ________ ________NON-CURRENT ASSETSCapitalised exploration costs 7,993 6,275Property, plant and equipment 103 12 ________ ________ Total non-current assets 8,096 6,287 ________ ________CURRENT ASSETSCash and cash equivalents 5,836 2,999Other receivables 579 61 ________ ________Total current assets 6,415 3,060 ________ ________Total assets 14,511 9,347 ________ ________CURRENT LIABILITIESTrade and other payables 740 15 ________ ________Total current liabilities 740 15 ________ ________SHAREHOLDERS' EQUITY Share capital 8 12,719 7,143 Share premium 8,310 8,838 Accumulated losses (8,279) (7,121) Options reserve 9 1,021 472 ________ ________Total shareholders' equity 13,771 9,332 ________ ________Total liabilities and shareholders' equity 14,511 9,347 ________ ________ Approved on behalf of the Board on 31 August 2007. Robin Young David Wood The accompanying notes form an integral part of these financial statements. AMUR MINERALS CORPORATION AND ITS SUBSIDIARIESCONDENSED CONSOLIDATED BALANCE SHEETAS OF 30 JUNE 2007 (Amounts in '000s US Dollars) Note 6 Months ended 6 Months ended 30 June 2007 30 June 2006 ________ ________ Administrative expenses (873) (731)Grant of options 9 (349) (373) ________ ________Operating loss (1,222) (1,104) Investment provision - (110) Foreign currency exchange adjustment 33 26 Bank interest received 31 42 ________ ________Loss before tax (1,158) (1,146) Taxation - - ________ ________Loss for the period (1,158) (1,146) ________ ________ Loss per share: basic & diluted USD (0.01) USD (0.02) The accompanying notes form an integral part of these financial statements. AMUR MINERALS CORPORATION AND ITS SUBSIDIARIESCONDENSED CONSOLIDATED BALANCE SHEETAS OF 30 JUNE 2007(Amounts in '000s US Dollars) 6 Months ended 6 Months ended 30 June 2007 30 June 2006 Note ________ ________Cash flow from operating activities:Net Loss before Taxation (1,158) (1,146)Adjustments to reconcile loss before tax to net cash used inoperating activities:Depreciation 4 5Grant of options 9 349 373Interest income (31) (42)Investment provision - 110Decrease/(increase) in accounts receivable 114 (117)Increase / (decrease) in accounts payable 66 (595) ________ ________Net cash used in operating activities (656) (1,412) ________ ________ Cash flow from investing activities:Exploration expenditure (1,692) (1,043)Purchase of property, plant and equipment (95) (10)Interest received 31 42Investment - (110) ________ ________Net cash used in investing activities (1,756) (1,121) ________ ________ Cash flow from financing activities:Proceeds from issue of share capital 5,283 6,433Repayment of prepaid share capital - (125)Financing costs associated with share issues* (35) (746) ________ ________Net cash from financing activities 5,248 5,562 ________ ________ Net change in cash and cash equivalents 2,836 3,029 Cash and cash equivalents brought forward 2,999 2,042 ________ ________Cash and cash equivalents carried forward 5,836 5,071 ________ ________ Material non-cash transactions Proceeds from issue of shares retained by broker 293 686Expenses paid by broker (293) (686) ________ ________ * Includes commissions paid on financing raised and costs associated withlisting. The accompanying notes form an integral part of these financial statements. AMUR MINERALS CORPORATION AND ITS SUBSIDIARIESCONDENSED CONSOLIDATED BALANCE SHEETAS OF 30 JUNE 2007(Amounts in '000s US Dollars) Share Accumulated Options Share capital premium account losses Reserve Total Notes _________ _________ _________ _________ _______ Balance at 31 December 2005 15 10,108 (5,613) - 4,510 _________ _________ _________ _________ _______ Net loss for the period - - (1,146) - (1,146) Shares issued 7,128 - - - 7,128 Premium on shares issued - 334 - - 334 Premium on share options - - - 621 621 Costs associated with issue of share capital - (1,586) - - (1,586) _________ _________ _________ _________ _______ Balance at 30 June 2006 7,143 8,856 (6,759) 621 9,861 _________ _________ _________ _________ _______ Net loss for the period (362) - (362) Costs associated with issue of share capital - (18) - - (18) Adjustment to premium on share options - - - (149) (149) _________ _________ _________ _________ _______ Balance at 31 December 2006 7,143 8,838 (7,121) 472 9,332 _________ _________ _________ _________ _______ Net loss for the period - - (1,158) - (1,158) Shares issued 8 5,576 - - - 5,576 Premium on shares issued - - - - - Costs associated with issue 8 - (328) - - (328)of share capital Issue of options 9 - (200) - 549 349 _________ _________ _________ _________ _______ Balance at 30 June 2007 12,719 8,310 (8,279) 1,021 13,771 _________ _________ _________ _________ _______ The accompanying notes form an integral part of these financial statements. AMUR MINERALS CORPORATION AND ITS SUBSIDIARIESCONDENSED CONSOLIDATED BALANCE SHEETAS OF 30 JUNE 2007(Amounts in '000s US Dollars) 1. REPORTING ENTITY Amur Minerals Corporation (the "Company") is a company domiciled in the BritishVirgin Islands. The condensed consolidated interim financial statements as atand for the six months ended 30 June 2007 comprise the Company and itssubsidiaries (together referred to as the "Group"). The consolidated financial statements of the Group as at and for the year ended31 December 2006 are available upon request from the Company's registered officeat Kingston Chambers, P.O. Box 173, Road Town, Tortola, British Virgin Islands,from offices of RBC Capital Markets, One Queenhithe EC4V 4DE, London or atwww.amurminerals.com. 2. STATEMENT OF COMPLIANCE These condensed consolidated interim financial statements have been prepared inaccordance with International Accounting Standard (IAS) 34 Interim FinancialReporting. They do not include all of the information required for full annualfinancial statements, and should be read in conjunction with the consolidatedfinancial statements of the Group as at and for the year ended 31 December 2006. 3. SIGNIFICANT ACCOUNTING POLICIES Except as described below, the accounting policies applied by the Group in thesecondensed consolidated financial statements are the same as those applied by theGroup in its consolidated financial statements as at and for the year ended 31December 2006. In preparing the financial statements of the Group, transactions in currenciesother than the entity's functional currency (foreign currencies) are recorded atthe average rates of exchange prevailing during the month of the transactions.At each balance sheet date, monetary items denominated in foreign currencies areretranslated at the rates prevailing on the balance sheet date. Notwithstanding the foregoing, the Group has recorded the receipt of proceeds,which were denominated in British Pounds for the placement of shares on 15 March2006 and 27 April 2007 at the prevailing exchange rates on those dates, whichwere US$1.74 and $1.99 / GBP, respectively. The following new standards are effective but are considered not applicable tothe Group: • Amendment to IAS 19, 'Actuarial gains and losses, group plans and disclosures'• Amendment to IAS 39, Amendment to 'The fair value option'• Amendment to IAS 21, Amendment 'Net investment in a foreign operation'• Amendment to IAS 39, Amendment 'Cash flow hedge accounting of forecast intragroup transactions'• Amendment to IAS 39 and IFRS 4, Amendment 'Financial guarantee contracts'• IFRIC 4, 'Determining whether an arrangement contains a lease'• IFRIC 5, 'Rights to interests arising from decommissioning, restoration and environmental rehabilitation funds'• IFRIC 6, 'Liabilities arising from participating in a specific market - waste electrical and electronic equipment' The following new standards, amendments to standards and interpretations havebeen issued but are not effective for 2007 and need not be early adopted: • IFRS 8, 'Operating Segments'• IFRIC 7, 'Applying the Restatement Approach under IAS 29'• IFRIC 8, 'Scope of IFRS 2'• IFRIC 9, 'Reassessment of Embedded Derivatives' Management has considered the above standards and interpretations and decidednot to adopt them for the year ended 31 December 2007, and hence they have notbeen adopted in these interim financial statements. AMUR MINERALS CORPORATION AND ITS SUBSIDIARIESCondensed consolidated balance sheetAS OF 30 June 2007(Amounts in '000s US Dollars) 4. SEASONALITY OF OPERATIONS Due to the seasonal nature of exploration work in the region where the Groupoperates, prepayments have been made at 30 June 2007, which will be capitalisedin the second half of the year, when the work is performed. 5. ESTIMATES The preparation of interim financial statements requires management to makejudgments, estimates and assumptions that affect the application of accountingpolicies and the reported amounts of assets and liabilities, income and expense.Actual results may differ from these estimates. The most significant assumption in the preparation of these financial statementsrelates to the recoverability of capitalised exploration costs included innon-current assets. Management have prepared a cashflow, estimating costs ofdevelopment of the mine and net profits once the mine has been put intooperation. The main estimates required in calculating the future cashflows are: • Development costs to date of operations• Future sale price of metals extracted• Amount of reserves available for extraction• Operating expenses per tonne of metal extracted Based on the cashflow prepared, there is no impairment of the capitalisedexpenditure to date. However, the exploration is still at an early stage and achange in any of the above areas could result in a significant impact on theestimated future cashflows. 6. FINANCIAL RISK MANAGEMENT The Group faces exposure to currency fluctuations of the US Dollar (the Group'sfunctional currency) against both the British Pound and the Russian Rouble. TheGroup buys and holds on deposit Roubles and Pounds in order to cover aproportion of the current year's anticipated expenditures in those currencies. 7. CAPITAL COMMITMENTS The Group entered into a contract for geological works with Dalgeophysica inMarch 2007. The total value of the contract is approximately USD 3.5 million.As at 30 June 2007, the Group had incurred USD 850 thousand in respect of thiscommitment (2006: USD 563 thousand of a total contract value of USD 1.9 million) 8. SHARE CAPITAL 30 June 2007 31 December 2006 30 June 2006 ____________ ____________ ____________Number of Shares (no par value):Authorised 150,000,000 150,000,000 150,000,000 ____________ ____________ ____________Issued and fully paid 101,703,938 86,203,938 86,195,938Issued but not fully paid - - 8,000 ____________ ____________ ____________Total issued 101,703,938 86,203,938 86,203,938 ____________ ____________ ____________ AMUR MINERALS CORPORATION AND ITS SUBSIDIARIESCondensed consolidated balance sheetAS OF 30 June 2007(Amounts in '000s US Dollars) 8. share Capital Share Placement On 27 April 2007 the Company issued 15,500,000 ordinary shares of no par valueat GBP 0.18 each in a private placement to institutional and select qualifiedretail investors raising financing of USD 5.6 million. These shares have beenadmitted to the AIM market of London Stock Exchange plc. The resultant numberof shares in issue is 101,703,938. The costs associated with the issue of USD328 thousand have been taken to the share premium reserve. 9. SHARE-BASED PAYMENTS 30 June 2007 30 June 2006 Vesting of share options declared in 2006 62 373Share options issued in May 2007 (see below) 287 - Grant of options included in Income Statement 349 373 In May 2007, 1,472,000 share options were granted to executive and non-executivedirectors and employees. In addition, 775,000 share options were granted toFox-Davies Capital pursuant to an engagement letter for fundraising datedFebruary 2007. The exercise price of the options of GBP 0.18 is equal to theprice at the share placement in late April 2007. There are no vestingprovisions for the options. The fair value of the options is estimated at thegrant date using a Black-Scholes model, taking into account the terms andconditions on which the options were granted. The contractual life of eachoption is five years. There is a "best efforts" cash settlement option whichdoes not obligate the Group to settle the options in cash. The fair value ofoptions granted during the six months ended 30 June 2007 was estimated on thegrant date using the following assumptions: Share price: 18pExercise price: 18pExpected volatility: 39%Option life (expressed as weighted average life used in the modeling 5under Black-Scholes model)Expected dividends 0Risk free rate (US treasury 5yr) 4.59% The resulting charge for 2,247,000 options is USD 487 thousand, of which USD 287thousand is recorded in administrative expenses and USD 200 thousand has beenrecorded as a charge against share premium. 10. RELATED PARTIES Key management personnel and directors received total compensation of USD 547thousand for the six months ended 30 June 2007 (six months ended 30 June 2006USD 582 thousand), including the value of options granted (see note 9). As at30 June 2006, there were no balances owing to directors or management. This information is provided by RNS The company news service from the London Stock Exchange