26th Sep 2006 07:02
Amur Minerals Corporation26 September 2006 26 September 2006 Amur Minerals Corporation ("Amur" or "the Company") Interim Results Amur Minerals Corporation (AIM : AMC), an AIM-listed mineral resource companydeveloping metal deposits in Russia, announces its interim results for the 6months period ended 30 June 2006: Highlights • £ 4.1 million raised in placement and successful admission to trading on AIM • Confirmed open-pit potential of Vodorazdelny and Ikenskoe ore bodies • Discovered new mineralized zone at Kun-Manie • Awarded Anadjakan gold, copper exploration licence Robin Young, CEO of Amur Minerals Corporation, commented, "Amur has moved fromstrength to strength so far in 2006 and we have delivered on every point of thebusiness strategy we outlined in our Admission document. The funding we raisedin March has enabled us to invest in evaluating the feasibility of our flagshipKun-Manie project, while expanding resources both at Kun-Manie and through theacquisition of the Anadjakan licence. "Recent drilling results at Kun-Manie have been outstanding. During the firstpart of the season we established the presence of the new zone, Maly Krumkon,approximately 4 kilometers to the west of Vodorazdelny. Our infill drillingprogramme at Vodorazdelny and Ikenskoe has confirmed previous drill results andwe believe we may have the luxury of drilling some additional holes before theseason is over. "We have moved a step closer to establishing the feasibility of Kun-Manie byconfirming the open-pit potential of the first two ore bodies discovered. SRK'spreliminary model indicates that up to 90% of the indicated resource will minein an open pit, which would provide an efficient, rapid route to production.Whilst our focus remains on Kun-Manie, our management team has been working onexpanding the project portfolio. The first concrete result of these efforts wasthe award of the Anadjakan gold-copper licence. "We are on track to deliver a pre-feasibility report on Kun-Manie next year, andfully expect to continue to expand the resource there while upgrading existingresources to the measured category. We also continue to look at selected growthopportunities." ENDS Full Chairman's Statement and Financial Statements follow. Enquiries: Amur Minerals Corp. Nabarro Wells & Co. Limited Parkgreen CommunicationsRobin Young John Wilkes Justine HowarthCEO Director Victoria Thomas+44 (0) 7981 126 818 +44 (0) 20 7710 7400 +44 (0) 20 7493 3713+7 917 520 3491 Notes to Editors Amur Minerals Corporation (AIM : AMC) is an mineral resource company with assetsin the far east of Russia. Principal asset is the Kun-Manie nickel-copperlicence which covers approximately 950km(2). An independently calculatedresource estimate compiled by SRK Consulting on this asset, and as at 31December 2005, comprises an Indicated Mineral Resource of 28.4Mt with meangrades of 0.47% nickel and 0.13% copper and an Inferred Mineral Resource of17.7Mt with mean grades of 0.43% nickel and 0.12% copper, together containingapproximately 209,000 tonnes of nickel and 58,500 tonnes of copper. In addition,the Group has now been awarded a five year exploration licence on the Anadjakangold and copper project located in the territory of Khabarovsk. Chairman's Statement Introduction Results for the half year to 30 June 2006 With commercial production yet to commence at Kun-Manie, no revenue was earnedduring this period. Amur Minerals capitalised direct project-relatedexpenditure amounting to US $615,974 during the period. Additional expenditureof $731,911, including some overheads relating to raising £4.1 million on AIMwas charged as an expense. No profits taxes were payable over the period. Admission to AIM In March, Amur Minerals successfully placed 12.36 million new Ordinary Shares ata price of 33p per Ordinary Share to raise approximately £4.1m gross. The fundsinvested will support our development of the Kun-Manie nickel copper project, aswell as other selected projects in the Russian Far East. Amur Mineralsrestructured the original partnership agreements to eliminate ongoingobligations to the founding partners and has now settled all obligations underthose agreements. Furthermore, prior to the AIM listing, AMC put a new board inplace and adopted a new Memorandum and Articles of Association to strengthencorporate governance. Pre-Feasibility Study Immediately following the company's floatation, we commenced a pre-feasibilitystudy of Kun-Manie. The study is a complex undertaking, involving a number ofseparate trade-off studies. All phases of the pre-feasibility study have beeninitiated, including ecology, mining, milling, infrastructure and transportationcosts. Reputable and experienced Western consulting groups have been contractedto develop conceptual design, engineering and cost information for use in thefinal study. Local firms were contracted for an environmental baseline study,the first phase of which was completed in May. We will prepare the finalpre-feasibility study documents in-house, incorporating reports and informationfrom all participants. We have already received the results of one initial - but very important - stepin the pre-feasibility work. SRK Consulting has provided us with an initialstudy confirming that the indicated and inferred resources within theVodorazdelny and Ikenskoe ore bodies have the potential to be recovered usingconventional open pit mining methods. This conceptual study provides thebeginning of the basis for establishing several of the key operating parametersincluding potential nominal plant capacities, mining production fleets andschedules and infrastructure requirements. New Zone at Kun-Manie As a result of drilling in the Maly Krumkon area to the west of Vodorazdelny,Amur has announced the discovery of a major new zone at Kun-Manie. The MalyKrumkon discovery is based on four diamond drill holes which have been drilledon two separate sections located approximately 600 metres apart. Within eachdrill section, the holes are spaced approximately 100 metres apart. Geologicalmapping and trenching indicate this trend is continuous between the drillsections and extends beyond the limits of the area encompassed by the four drillholes. Drill results indicate an average true thickness of 16.3 metres having anaverage nickel grade of 0.63% and a copper grade of 0.17%. The dip of the zoneranges from 35 to 50 degrees. Atomic adsorption analytical results have beenderived by the Central Laboratory located in Khabarovsk. Anadjakan In August, we were able to announce that we have expanded our asset base bybeing awarded the Anadjakan gold-copper project exploration licence. The licencecovers an area of 250 square kilometres and is valid for a term of five years,convertible to a 20 year mining licence following a commercial discovery. Thelicence is located in the Khabarovsk region and is readily accessible bymaintained roads with abundant infrastructure located nearby. The area wasexplored by various groups during Soviet times, most recently in 1991. Anadjakan is the first tangible result of our efforts to expand our resourcebase in the region. We are confident that we will be able to secure otherlicences, and that our efforts to grow the resource base - including projectscloser to production - will bear fruit in the future. Outlook As we enter the fall, we are looking forward to wrapping up another field seasonat Kun-Manie. We have asked SRK to compile a revised resource estimate onIkenskoe and Vodorazdelny, as well as a resource estimate for the new zone ofMaly Krumkon, and the Falcon zone which was not included in previous resourceestimates. While the drills may be silent at Kun-Manie, our work will continue fullthrottle on the pre-feasibility study, as well as on reviewing the data fromthis summer and planning a detailed programme for 2007. Perhaps mostimportantly, we are already compiling our submission to the Russian StateCommittee for Reserves (known as GKZ) to have parts of the Kun-Manie licencearea classified as C1 reserves under the Russian system. We will also bereviewing all of the available data on Anadjakan in order to craft a plan ofworks for 2007, leading up to drilling on this new license area. Robert W. SchaferChairman25 September 2006 AMUR MINERALS CORPORATION AND ITS SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETAS OF 30 JUNE 2006(Amounts in US Dollars) 30 June 31 December 30 June Note 2006 2005 2005 NON-CURRENT ASSETSCapitalised exploration costs 4,530,878 3,914,904 2,342,541Property, plant and equipment 15,842 11,346 14,597 Total non-current assets 4,546,720 3,926,250 2,357,138 CURRENT ASSETSCash and cash equivalents 5,071,041 2,042,008 645,766Other receivables 339,487 251,705 88,277Total current assets 5,410,528 2,293,713 734,043 Total assets 9,957,248 6,219,963 3,091,181 CURRENT LIABILITIESTrade and other payables 96,134 1,709,724 3,868,229 Total current liabilities 96,134 1,709,724 3,868,229 SHAREHOLDERS' EQUITYShare capital 7 5,575,553 14,690 8,297Share premium 10,423,818 10,107,939 3,794,940Accumulated losses (6,759,257) (5,612,390) (4,580,285)Options reserve 8 621,000 - -Total shareholders' equity 9,861,114 4,510,239 (777,048) Total liabilities and shareholders' 9,957,248 6,219,963 3,091,181equity Approved on behalf of the Board on 25 September 2006. David Wood The accompanying notes form an integral part of these financial statements. AMUR MINERALS CORPORATION AND ITS SUBSIDIARIES CONDENSED CONSOLIDATED INCOME STATEMENTFOR THE SIX MONTHS ENDED 30 JUNE 2006 (Amounts in US Dollars) Note 6 Months Year ended 6 Months ended 31 December ended 30 June 2006 2005 30 June 2005 Administrative expenses 9 (731,911) (863,372) (431,803)Grant of options 8 (373,000)Partnership agreement termination - (666,875) (84,375) Operating loss (1,104,911) (1,530,247) (516,178) Investment provision 10 (110,000) - - Foreign currency exchange adjustment 26,081 (36,662) (10,003) Bank interest received 41,963 9,478 855 Loss before tax (1,557,431) (525,326) (1,146,867) Taxation - - - Loss for the period (1,557,431) (525,326) (1,146,867) Loss per share: basic & diluted (0.02) (0.05) (0.02) AMUR MINERALS CORPORATION AND ITS SUBSIDIARIES CONDENSED CONSOLIDATED CASH FLOW STATEMENTFOR THE SIX MONTHS ENDED 30 JUNE 2006(Amounts in US Dollars) 6 Months ended Year 6 Months ended 30 June 2006 ended 30 June 2005 31 December 2005 NoteCash flow from operating activities:Net Loss before Taxation (1,146,867) (1,557,431) (525,326)Adjustments to reconcile loss before tax to netcash used in operating activities:Depreciation 5,320 8,434 3,839Share based payment - 67,000 102,035Grant of options 8 373,000 - -Interest income (41,963) (9,478) (855)Investment provision 10 110,000 - -Decrease/(increase) in accounts receivable (116,591) 52 (1,384)Increase / (decrease) in accounts payable (595,064) 321,983 112,068 Net cash used in operating activities (1,412,165) (1,169,440) (309,623) Cash flow from investing activities:Exploration expenditure (1,042,647) (2,342,670) (1,078,414)Purchase of property, plant and equipment (9,816) (8,209) (6,865)Interest received 41,963 9,478 855Investment 10 (110,000) - - Net cash used in investing activities (1,120,500) (2,341,401) (1,084,424) Cash flow from financing activities:Proceeds from issue of share capital 6,432,875 5,086,200 340,500Proceeds / repayment of prepaid share capital (125,000) 459,500 1,607,700Financing costs associated with share issues* (746,177) (117,464) (33,000) Net cash from financing activities 5,561,698 5,428,236 1,915,200 Net change in cash and cash equivalents 3,029,033 1,917,395 521,153 Cash and cash equivalents brought forward 2,042,008 124,613 124,613 Cash and cash equivalents carried forward 5,071,041 2,042,008 645,766 Material non-cash transactions Financing costs satisfied by the issue of shares - 125,300 92,300Proceeds from issue of shares retained by broker 686,288 - -Expenses paid by broker (686,288) - - * 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 SUBSIDIARIES CONDENSED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITYFOR THE SIX MONTHS ENDED 30 JUNE 2006(Amounts in US Dollars) Share premium Accumulated Options Notes Share capital account losses Reserve Total Balance at31 December 2004 4,417 2, 089,085 (4,054,959) - (1,961,457) Net loss for the period - - (525,326) - (525,326) Shares issued 3,880 - - - 3,880 Premium on shares issued - 1,798,155 - - 1,798,155 Costs associated with - (92,300) - - (92,300)issue of share capital Balance at (777,048)30 June 2005 8,297 3,794,940 (4,580,285) - Net loss for the period - - (1,032,105) - (1,032,105) Shares issued 6,393 - - - 6,393 Premium on shares issued - 3,476,175 - - 3,476,175 Premium on share options - 3,045,397 - - 3,045,397 Costs associated with issue of share capital - (208,573) - - (208,573) Balance at 31 December 2005 14,690 10,107,939 (5,612,390) - 4,510,239 Net loss for the period - - (1,146,867) - (1,146,867) Shares issued 7,127,561 - - - 7,127,561 Premium on shares issued - 334,277 - - 334,277 Costs associated with issue of share capital (1,566,698) (18,398) - - (1,585,096) Issue of options 8 - - - 621,000 621,000 Balance at 30 June 2006 5,575,553 10,423,818 (6,759,257) 621,000 9,861,114 The accompanying notes form an integral part of these financial statements. AMUR MINERALS CORPORATION AND ITS SUBSIDIARIES NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTSFOR THE SIX MONTHS ENDED 30 JUNE 2006(Amounts in US Dollars) 1. REPORTING ENTITY Amur Minerals Corporation (the "Company") is a company domiciled in the British Virgin Islands. The condensed consolidated interim financial statements of the Company as at and for the six months ended 30 June 2006 comprise the Company and its subsidiaries (together referred to as the "Group"). The consolidated financial statements of the Group as at and for the year ended 31 December 2005 are available upon request from the Company's registered office at Kingston Chambers, P.O. Box 173, Road Town, Tortola, British Virgin Islands, from offices of Nabarro Wells & Co. Limited, Saddlers House, Gutter Lane, London EC2V 6HS or at www.amurminerals.com. 2. STATEMENT OF COMPLIANCE These condensed consolidated interim financial statements have been prepared in accordance with International Accounting Standard (IAS) 34 Interim Financial Reporting. They do not include all of the information required for full annual financial statements, and should be read in conjunction with the consolidated financial statements of the Group as at and for the year ended 31 December 2005. These condensed consolidated interim financial statements were approved by the Board of Directors on 25 September 2006. 3. SIGNIFICANT ACCOUNTING POLICIES Except as described below, the accounting policies applied by the Group in these condensed consolidated financial statements are the same as those applied by the Group in its consolidated financial statements as at and for the year ended 31 December 2005. In preparing the financial statements of the Group, transactions in currencies other than the entity's functional currency (foreign currencies) are recorded at the average rates of exchange prevailing during the month of the transactions. At each balance sheet date, monetary items denominated in foreign currencies are retranslated 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 March at the prevailing exchange rate on that date, which was US$1.74 / GBP. The Group has taken advantage of early adoption of IFRS 7, Financial instruments: Disclosures. IFRS 7 requires more disclosures in relation to all risks arising from financial instruments, including credit risk and liquidity risk. The standard also requires a sensitivity analysis of market risks and how changes for each type of market risk would have impacted profit or loss in the period. The following new standards are effective but are not applicable to the 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 have been issued but are not effective for 2006 and need not be early adopted: • IFRIC 7, 'Applying the Restatement Approach under IAS 29' • IFRIC 8, 'Scope of IFRS 2' • IFRIC 9, 'Reassessment of Embedded Derivatives' 4. ESTIMATES The preparation of interim financial statements requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expense. Actual results may differ from these estimates 5. FINANCIAL RISK MANAGEMENT During the six months ended 30 June 2006 the Group changed its policy in respect of the hedging of foreign currency denominated items. The Group now buys and holds on deposit Roubles in order to cover a proportion of the current year's anticipated Rouble expenditures. Other aspects of the Group's financial risk management objectives and policies are consistent with that disclosed in the consolidated financial statements as at and for the year ended 31 December 2005. 6. CAPITAL COMMITMENTS The Group entered into a contract for geological works with Dalgeophysica on 16 January 2006. This agreement commenced in February 2006 and finishes in March 2007. The total value of the contract is approximately USD 1.95 million. As at 30 June 2006, the Group had incurred $562,664 in respect of this commitment (2005: $710,127 of a total contract value of $2.3 million) 7. SHARE CAPITAL 30 June 2006 31 December 2005 30 June 2005 Number of Shares (no par value): Authorised 150,000,000 50,000 50,000 Issued and fully paid 86,195,938 14,688 4,415 Issued but not fully paid 8000 2 2 Total issued 86,203,938 14,690 4,417 On 10 January 2006 the Company issued the remaining 223 shares which had beensubscribed for and paid for in December 2005. These shares had a par value ofUSD 1 and were issued at a premium of USD 1,499 each raising USD 334,500. On 21February 2006, prepaid capital of $125,000 was returned to a subscriber whoelected for the cashless exercise of warrants (see below). General shareholders' meeting At a meeting of the members on 10 February 2006, the members approved inconnection with the proposed Admission: (a) an increase in the Company's authorised number of shares from 50,000 ordinary shares of $1.00 par value each to 150,000,000 ordinary shares of no par value; (b) the adoption by the Company of new amended and restated memorandum and articles of association of the Company ("New Articles"); (c) following adoption of the New Articles, to grant the directors the necessary power to allot relevant securities as contemplated in Regulation 14 of the New Articles; and (d) in order to increase marketability of all existing issued shares in the Company to divide each Member's issued shares pursuant to a 4,000:1 split so that for each issued and outstanding share the record holder thereof would receive an additional 3,999 shares in the Company. Warrant holders In January 2006 the warrant agreement was amended to allow the warrants to beconverted into shares on a cashless basis. Holders of 4,506.1 warrants (postshare split 18,024,400 warrants) outstanding have elected to exercise theirwarrants as follows: • Holders of approximately 4,431.1 warrants (post share split 17,724,400 warrants) elected to exercise their warrants through a cashless exchange, receiving 13,887,952 ordinary shares contingent on Admission. These shares have now been issued. • Holders of approximately 75 warrants (post share split 300,000 warrants) elected to exercise their warrants for cash at the exercise price of $500 per ordinary share (post share split $0.125 per ordinary share). Shares outstanding and AIM listing Following the share split and warrant exercise, the Group had 73,839,552 sharesissued and outstanding. On 15 March 2006, the Company issued 12,364,386ordinary shares of no par value at GBP 0.33 each, and listed its entire issuedshare capital on the AIM market of London Stock Exchange plc. The resultantnumber of shares in issue is 86,203,938. 8. SHARE-BASED PAYMENTS In 2006 the Group established a share option programme that entitles Directors and key management personnel to purchase shares in the entity. Grants made during the six months ended 30 June 2006, all of which vest 1/3 on listing, 1/3 on the first anniversary of listing, and 1/3 on the second anniversary of listing, and are exercisable within five years of listing, are as follows: Grantee Grant Date Number of Instruments Robin Young 10 March 2006 2,700,000 David Wood 10 March 2006 1,800,000 Robert Schafer 10 March 2006 300,000 George Eccles 10 March 2006 300,000 David Straker-Smith 10 March 2006 300,000 The Group also made two other grants of options in relation to its placement ofnew shares and admission to trading on AIM. Those made during the six monthsended 30 June 2006, all of which are fully vested and exercisable within fiveyears of listing, are as follows: Grantee Grant Date Number of Instruments Fox-Davies Capital 10 March 2006 766,667 NWCF LP 10 March 2006 877,789 The fair value of all the above share options is $621,000, based on thefollowing assumptions: Share price: 33pExercise price: 33pExpected volatility: 30%Option life (expressed as weighted average life used in the modeling 3under Black-Scholes model)Expected dividends 0Risk free rate (US treasury 5yr) 4.67% 9. ADMINISTRATIVE EXPENSES 6 Months Year 6 Months ended ended ended 30 June 2005 31 December 2005 30 June 2005 Salaries & wages 246,807 308,948 128,134Management fees 0 105,000 82,000Travel and subsistence 138,659 159,162 88,824Professional fees 105,729 134,738 47,309Depreciation 5,320 8,434 3,839Bank charges 5,072 6,793 2,561Rent 28,570 28,044 10,667Other expenses 201,754 112,253 68,469 731,911 863,372 431,803 The average number of employees of the Group was 11 (2004:6) 10. INVESTMENT PROVISION In April 2006, the Company entered into a loan agreement to fund exploration ofa mineral deposit in the Amur province. Subsequent to granting the loan,additional laboratory analyses revealed that the potential of the deposit wasmore limited than originally anticipated. The $110,000 loan bears interest at12% and matures five years from the date of funding and is unsecured. As thedeposit has been deemed to be of limited value, the borrower may faceconsiderable difficulty in repaying the loan. Management has taken the viewthat it is prudent to provide 100% for this loan. 11. RELATED PARTIES Key management personnel and directors received total compensation of $563,504for the six months ended 30 June 2006 (six months ended 30 June 2005 $111,200),including the value of options granted (see note 8). As at 30 June 2006, therewere no balances owing to directors or management. Other related party matters During the six months ended 30 June 2006, the Group repaid $582,000 to theRussian Partners and Foxley Associates, representing the total amounts owing tothese parties at year end. There were no new transactions with these parties. 12. EVENTS AFTER THE BALANCE SHEET DATE a. New Discovery at Kun-Manie On 16 July 2006, the Company announced that a fourth mineralised zone had beendiscovered through drilling completed in May and early June of this year. Thezone is identified as Maly Krumkon and lies approximately 4.5 kilometresnorthwest of Vodorazdelny. The zone occurs within the 40 kilometre long KrumkonTrend which is the primary exploration target within Amur's 950 square kilometrelicence. Results indicate that the zone has a minimum length of 600 meters andaverage intersects for nickel and copper grades of 0.63% and 0.17% respectively.These results indicate that Maly Krumkon represents a new target potentiallycontaining higher average grades than most of the mineralisation drilled to datewithin the licence area. b. A ward of New Licence The Group has been awarded the Anadjakan gold- copper project explorationlicence (KhAB 13702 TP). The licence covers an area of 250 square kilometres andis valid for a term of five years, convertible to a 20 year mining licencefollowing a commercial discovery. This information is provided by RNS The company news service from the London Stock Exchange