29th Sep 2005 15:41
Alexander Mining PLC29 September 2005 Alexander Mining plc 29th September 2005 Operational Update and Interim Results for the six months ended 30 June 2005 Operational Update Alexander Mining plc ("Alexander", "the Company" or "the Group") is pleased torelease the following update report on its projects in northwest Argentina andPeru. Highlights • Encouraging initial drilling results from the first two holes assayed at Leon show higher true width intersections and grades of copper mineralisation than previously reported averages. • Fourteen out of the fifteen holes drilled to date have intersected the orebody, with additional results pending samples sent for assaying. • Approximately 100,000 hectares of additional exploration claims have been taken out in the Leon region. • Rachaite drilling scheduled to start by the second week of October, 2005 Leon Copper/Silver Project, Salta Province, NW Argentina The initial 10,000m diamond core drilling programme at Leon, being undertaken byFalcon Drilling, is progressing rapidly. To date, fifteen holes have beencompleted, of which all but one have intersected the orebody. Whilst these areearly results, the first two holes, for which assays are available from ALSChemex Laboratories, show significantly better than expected grades and truewidths of intersected mineralisation when compared to the average resourceresults reported by the previous operator. These two holes were drilled onseparate vertical sections (or 'fence lines') spaced 100m apart and at an angleof -50 degrees from surface. As shown in the table below, hole LP05-002 intersected from almost surface (0.09metres - "m") 45.14m of mineralisation - a calculated true width of 29.01m, at1.13% copper and 39 grammes per tonne (g/t) silver. The copper grade for thecomplete intersection is 41% higher than the average resource grade reported of0.80% calculated from previous drilling in the 1990's. Moreover, the calculatedtrue width for this hole is substantially thicker than the estimated orebodyaverage of 15.5m from previous work. Hole LP05-003, drilled on the next fence line 100m to the south of that for holeLP05-002, intersected 47.87m of mineralisation from 66.26m, with a calculatedtrue width of 30.75m, at 0.95% copper (with silver assays pending). Hole Angle from Intersection Calculated true Copper assay Silver assay No surface from to width grade grade degrees m m m % g/tLP05-002 -50 0.09 45.23 29.01 1.13 39LP05-003 -50 66.26 114.13 30.75 0.95 pending Alexander has also taken out an additional 19 exploration claims, totallingapproximately 100,000 hectares (ha; approximately 250,000 acres), over areas tothe north and south of the licences that the Company is currently drilling.These claims have the potential for significant near surface copper and silvermineralisation similar to that at the Leon system. Rachaite, Copper/Molybdenum/Gold Project, Jujuy Province, NW Argentina Good progress has been made and mapping and sampling have been completed,resulting in the definition of a major copper/molybdenum/gold porphyry target.Road construction and drill site preparation has been finished and communityrelations work has advanced successfully. A drilling contract has been awardedand is scheduled to start by the second week of October, 2005. Sulcha, Gold/Silver Project, Otuzco Province, Peru Topographical survey work and surface sampling are being carried out.Additional geological work is underway in anticipation of commencing drilling inlate 2005. In addition, Alexander's Peruvian subsidiary was granted anadditional 400ha (988 acres) of exploration claims adjacent to the Sulcha block. Matt Sutcliffe, Chairman and Chief Executive Officer, said that he was "delighted with the highly encouraging progress to date at Leon and excited bythe potential of the additional exploration claims taken out in the Leon region.I look forward to the commencement of drilling at Rachaite and the reportingof drilling results from both projects in due course." Interim Results for the six months ended 30 June 2005 The Company is pleased to report that excellent progress has been made in itsobjective of growing into a mid-tier mining company and that the marketconditions remain favourable for the exploration and production of base andprecious metals. Highlights • Listing on AIM in conjunction with a successful and oversubscribed equity placement raising £20m• Establishment of the main office in London and a regional office in northwest Argentina• Good progress with projects in Argentina and Peru• New senior management appointments• Strong financial position Chairman's Review It gives me great pleasure to report on Alexander interim results for the sixmonths ended 30 June 2005. During the period, the Company listed on the AIMmarket of the London Stock Exchange on 4 April, 2005. In conjunction with theAIM listing, a successful and oversubscribed equity placement, predominantly toUK investment institutions, which raised gross proceeds of £20m, was completed.In the course of our transformation from being a private to public company, wehave established our main office in London, regional office in the City ofSalta, Salta Province, northwest Argentina and made key staff appointments. Operations Encouraging progress has been made in the last few months with our SouthAmerican projects. The Company's focus has been its Leon copper/silver projectin northwest Argentina, where a major technical and 10,000m diamond coredrilling programme, designed to delineate the mineable resources of the Leondeposit to the JORC Code standard, is underway. At the Rachaite property,drilling will commence in early October 2005. The Sulcha project in Peru isprogressing towards drilling. Financial During the six months ended 30 June 2005, the Company made a consolidated netloss after taxation of £436,000, compared to a loss for the period ended 31December 2004 of £296,000. Interest earned during the period totalled £241,000due to our strong cash position, which totalled £21.5m at the end of June.During the period, £482,000 of exploration costs have been capitalised,representing costs associated with the acquisition and initial exploration onthe Company's projects in South America. Outlook The mining sector continues to enjoy strong investment interest, reflectingstrong precious and base metals markets. The strength in base metals has beenlargely fuelled by the extraordinary growth of the Chinese economy and, ofmounting importance, increasing demand for commodities from India. Thisfavourable scenario, as well as our significant cash position, provides theCompany with an excellent outlook. On behalf of the board, I would like to thank our shareholders for their strongsupport and to thank my fellow directors and employees for their hard work anddedication during what has been an excellent and satisfying period of progressfor the Company. Matt Sutcliffe 29 September 2005 Independent Review Report to Alexander Mining plc Introduction We have been instructed by the Company to review the financial information forthe six months ended 30 June 2005, which comprises the profit and loss account,the balance sheet, the cash flow statement and related notes. We have read theother information contained in the interim report and considered whether itcontains any apparent misstatements or material inconsistencies with thefinancial information. This report is made solely to the Company and in accordance with Bulletin 1999/4issued by the Auditing Practices Board. Our work has been undertaken so that wemight state to the Company those matters we are required to state to them in anindependent review report and for no other purpose. To the fullest extentpermitted by law, we do not accept or assume responsibility to anyone other thanthe Company, for our review work, for this report, or for the conclusions wehave formed. Directors' responsibilities The interim report, including the financial information contained therein, isthe responsibility of, and has been approved by the directors. The directors areresponsible for preparing the interim report in accordance with the rules of theLondon Stock Exchange for companies trading securities on the AlternativeInvestment Market which require that the half-yearly report be presented andprepared in a form consistent with that which will be adopted in the Company'sannual accounts having regard to the accounting standards applicable to suchannual accounts. Review work performed We conducted our review in accordance with guidance contained in Bulletin 1999/4issued by the Auditing Practices Board. A review consists principally of makingenquiries of group management and applying analytical procedures to thefinancial information and underlying financial data based thereon, assessingwhether the accounting policies and presentation have been consistently appliedunless otherwise disclosed. A review excludes audit procedures such as tests ofcontrols and verification of assets, liabilities and transactions. It issubstantially less in scope than an audit performed in accordance with AuditingStandards and therefore provides a lower level of assurance than an audit.Accordingly we do not express an audit opinion on the financial information. Review conclusion On the basis of our review we are not aware of any material modifications thatshould be made to the financial information as presented for the six monthsended 30 June 2005. PKF (UK) LLPChartered AccountantsLondon, UK29 September 2005 Consolidated Profit and Loss AccountUnaudited, pro-forma for the six months ended 30 June 2005 Notes Six months Period Period ended ended ended 30 June 30 June 31 December 2005 2004 2004 £'000 £'000 £'000 Administrative expenses (604) (39) (309) ----- ----- -----Operating loss (604) (39) (309) Share of operating loss of Associate - - -Provision against investment in Associate 1 (73) - -Net interest receivable 241 1 13 ----- ----- -----Loss on ordinary activities before taxation (436) (38) (296)Tax on loss on ordinary activities - - - ----- ----- -----Loss on ordinary activities after taxation and (436) (38) (296)retained for the period ----- ----- -----Basic and diluted loss per share (pence) 2 (0.44)p (0.06)p (0.44)p ----- ----- ----- All amounts relate to continuing operations. All recognised gains and losses are included in the profit and loss account. Consolidated Balance SheetUnaudited, pro-forma as at 30 June 2005 Notes As at As at As at 30 June 30 June 31 December 2005 2004 2004 £'000 £'000 £'000 Fixed assetsIntangible fixed assets 507 5 25Tangible fixed assets 17 - -Investment in associated undertaking - - 41 -------- ------- ------- 524 5 66 -------- ------- -------Current assetsDebtors 203 37 51Cash at bank and in hand 117 84 39Short term bank deposits 21,407 601 520 -------- ------- ------- 21,727 722 610 Creditors: amounts falling due within one year (167) (683) (178) Net current assets 21,560 39 432 -------- ------- -------Total assets less current liabilities 22,084 44 498 -------- ------- -------Capital and reservesCalled up share capital 6 13,453 6,787 6,787Share premium account 6 11,850 - -Adjustment for shares in subsidiary not yet - (4,218) (3,506)issuedMerger reserve (2,487) (2,487) (2,487)Profit and loss account (732) (38) (296) -------- ------- -------Shareholders' funds 5 22,084 44 498 -------- ------- ------- Consolidated Cash Flow StatementUnaudited, pro-forma for the six months ended 30 June 2005 Notes Six months Period Period ended ended ended 30 June 30 June 31 December 2005 2004 2004 £'000 £'000 £'000 Net cash outflow from operating activities 3 (658) (49) (210) Returns on investment and servicing of finance Interest received 224 1 13Interest paid (5) - - -------- ------- -------Net cash inflow from returns on investment and servicing of finance 219 1 13 -------- ------- ------- Taxation - - - Capital expenditure and financial investmentPurchase of tangible fixed assets (55) - -Purchase of intangible fixed assets (397) (5) (25)Investment in associated undertaking (32) - (41) -------- ------- -------Net cash outflow from capital expenditure and financial investment (484) (5) (66) -------- ------- -------Management of liquid resourcesTransfer to short term bank deposits (20,887) (601) (520) -------- ------- -------Net cash outflow before financing (21,810) (654) (783) -------- ------- ------- Financing Issue of shares by Alexander Mining plc 6 20,000 - -Issue of shares by Alexander Gold Group Limited 6 3,372 738 822Share issue costs 6 (1,484) - - -------- ------- -------Net cash inflow from financing 21,888 738 822 -------- ------- ------- Increase in cash 4 78 84 39 Cash brought forward 39 - - -------- ------- -------Cash carried forward 117 84 39 -------- ------- ------- Notes to the interim financial informationFor the six months ended 30 June 2005 1 Basis of preparation The interim financial information set out in this report has been prepared on agoing concern basis under the historical cost convention in accordance withapplicable accounting standards. The principal accounting policies applied on a consistent basis in thepreparation of the interim financial information are set out below. Basis of consolidation and pro-forma information The interim financial information includes the financial information ofAlexander Mining plc (the "Company") and all its subsidiaries (together, the "Group") for the period from 8 December 2003 to 30 June 2005. The Company was incorporated on 8 February 2005. On 22 March 2005 the Companyacquired Alexander Gold Group Limited ("AGGL") a company incorporated in theBritish Virgin Islands on 8 December 2003, by way of a share for share exchange.This acquisition has been consolidated in accordance with the merger accountingprinciples set out in Financial Reporting Standard 6 and Schedule 4(A) to theCompanies Act 1985. In the Company's balance sheet, the investment in AGGL is stated at the nominalvalue of the shares issued in consideration for that company. As permitted bythe Companies Act 1985, no premium has been recorded on the shares issued inconsideration. On consolidation, the difference between the value of the sharesissued and received has been debited directly to the merger reserve. Merger accounting requires consolidated financial information to be presented asif the companies had been combined throughout the current and previous periodsand at the previous balance sheet dates. Accordingly, the interim financialinformation includes the results of AGGL from 1 January 2005. The comparativeinformation set out with the interim financial information represents theassets, liabilities, results and cash flows of AGGL for the period from itsincorporation to 30 June 2004 and 31 December 2004, adjusted to reflect thecapital structure of the Company immediately after the share for share exchange.This is presented as pro-forma information because the periods differ from theaccounting reference date of the Company. The consolidated financial information includes the financial information of theCompany's other subsidiary undertakings using the acquisition method ofaccounting. Under this method the results of the acquired entity are included inthe consolidated profit and loss account from the date of acquisition. Duringthe period the Group established two wholly owned subsidiary companies in Peru. The Group's share of the profits less losses of associates is included in theconsolidated profit and loss account and its interest in their net assets isincluded in investments in the consolidated balance sheet. During the period theGroup acquired a 45% interest in an associate, TMAP Investments Limited ("TMAPI"), a company registered in the British Virgin Islands. Since acquisition TMAPIhas operated on a break even basis and at 30 June 2005 its net assets areestimated at nil. Consequently, the cost of investment totalling £73,000, whichrepresents goodwill, has been fully provided for. Intangible fixed assets Intangible fixed assets represent costs associated with mineral exploration andinvestments, which are capitalised on a project-by-project basis, pendingdetermination of the feasibility of the project. Costs incurred includeappropriate technical and administrative expenses but not general overheads. Ifan exploration project is successful, the related expenditures will betransferred to mining assets and amortised over the estimated life of thecommercial ore reserves on a unit of production basis. Where a project isrelinquished, abandoned, or is considered to be of no further commercial valueto the Group, the related costs are written off. The recoverability of these deferred exploration costs is dependent upon thediscovery of economically recoverable ore reserves, the ability of the Group toobtain necessary permitting and financing to complete the development of orereserves and future profitable production or proceeds from the dispositionthereof. 2 Loss per share The calculation of loss per share is based on a loss of £436,000 for the periodended 30 June 2005 (30 June 2004: loss of £38,000; 31 December 2004: loss of£296,000) and the weighted average number of shares in issue in the period to 30June 2005 of 99,719,852 (30 June 2004 and 31 December 2004: 67,868,000). Thereis no difference between the diluted loss per share and the loss per sharepresented. 3 Net cash outflow from operating activities Six months ended Period ended Period ended 30 June 2005 30 June 2004 31 December 2004 £'000 £'000 £'000 Operating loss (604) (39) (309)Depreciation and amortisation charge 3 - -(Increase) in debtors (43) (10) (24)(Decrease)/increase in creditors (19) - 123Non-cash expenditure 5 - - ------ ---- ------Net cash outflow from operating activities (658) (49) (210) ------ ---- ------ 4 Reconciliation of net cash flow to movements in net funds Six months ended Period ended Period ended 30 June 2005 30 June 2004 31 December 2004 £'000 £'000 £'000 Increase in cash in the period 78 84 39Increase in short term bank deposits 20,887 601 520 ------ ---- ------Increase in funds in the period 20,965 685 559 Net funds at start of period 559 - - ------ ---- ------Net funds at end of period 21,524 685 559 ------ ---- ------Represented by:Cash at bank and in hand 117 84 39Short term bank deposits 21,407 601 520 ------ ---- ------Net funds at end of period 21,524 685 559 ------ ---- ------ 5 Reconciliation of movements in shareholders' funds Notes Six months ended Period ended Period ended 30 June 2005 30 June 2004 31 December 2004 £'000 £'000 £'000 Loss for the period (436) (38) (296)New share capital subscribed - Alexander Mining plc 6 18,516 - -New share capital subscribed - Alexander Gold Group Limited 6 3,506 82 794 ------ ---- ------Movement in shareholders' funds 21,586 44 498 Shareholders' funds at start of period 498 - - ------ ---- ------Shareholders' funds at end of period 22,084 44 498 ------ ---- ------ 6 Issue of share capital In the period from January to April 2005 AGGL raised approximately £3.4 millionin cash by the issue of 455,000 ordinary shares. During this period AGGL issueda further 21,000 ordinary shares for non cash consideration at a fair value of£5 per share. In April 2005, at the time of admission of the Company's shares to trading onAIM, the Company raised approximately £18.5 million in cash, net of expenses,from a placing of 66,666,667 ordinary shares at 30p per share. 7 Publication of non-statutory accounts The financial information set out in this interim report does not constitutestatutory accounts as defined in section 240 of the Companies Act 1985. The Company was incorporated on 8 February 2005 and has not yet preparedstatutory accounts for filing with the Registrar of Companies. Copies of this report are being sent to all shareholders. Additional copies areavailable from the Company's office at 35 Piccadilly, London, W1J 0DW or theCompany's website. Company InformationCompany registration number:5357433 Registered office1st Floor35 PiccadillyLondonW1J 0DJ DirectorsM L SutcliffeJ R HodderJ S BunyanD R NorwoodJ W Ashcroft Company SecretaryE Carr RegistrarsCapita registrarsThe Registry34 Beckenham RoadBeckenhamKent BR3 4TU BankersHSBC455 StrandLondon WC2R 0RH AuditorsPKFFarringdon Place20 Farringdon RoadLondon EC1M 3AP Nominated Advisor and BrokerEvolution Securities Limited100 Wood StreetLondon EC2V 7AN SolicitorsNorton RoseKempson HouseCamomile StreetLondon EC2V 7AN For further information please contact: Matt Sutcliffe, Chairman and Chief Executive OfficerAlexander Mining plc1st Floor35 PiccadillyLondonW1J 0DWTel: +44 (0) 20 7292 1300Fax: +44 (0) 20 7292 1313Mobile: +44 (0) 7887 930 758Email: [email protected]: www.alexandermining.com Nominated Advisor and BrokerEvolution Securities Limited100 Wood StreetLondonEC2V 7ANTel: +44 (0) 20 7071 4300 Public/Media RelationsGary MiddletonSt Swithins Public RelationsTel: +44 (0) 20 7929 4391Mobile: +44 (0) 7951 603 289 This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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