24th Mar 2006 07:02
Herencia Resources PLC24 March 2006 Interim Financial Information For the six months ended 31 December 2005 Chairman's Statement On behalf of the board of Herencia Resources plc, I am pleased to present theCompany's results for the six months ended 31 December 2005. On 21 November 2005 the Company announced that it had completed the acquisitionof the entire issued share capital of Tarapaca Resources (Bermuda) Limited ("Tarapaca") from Australian listed Mineral Securities Limited ("MinSec") tosecure the ownership of a portfolio of silver-zinc-copper-gold explorationproperties in South America. Wholly owned subsidiaries of Tarapaca, Iquique Resources and Paguanta Resources,have entered into joint ventures in respect of the prospective Iquique andPaguanta silver-zinc-copper-gold projects in northern Chile. The IquiqueProject and the Paguanta Project occupy an area with known mineralised systemsand the Directors believe they represent a compelling exploration opportunity. The Iquique and Paguanta Projects contain numerous ancient workings, some ofwhich date back to the Inca Empire and more recent European settlement.Importantly, the Projects appear to have had no significant modern exploration.The Iquique and Paguanta Projects are prospective for open pit bulk tonnageresources comprising vein, stockwork, manto, skarn and porphyry stylesilver-zinc-copper-gold mineralization. Exploration in Chile commenced in November 2005 with preliminary sampling in theIquique project area. The exploration activities currently being undertaken arefocussed on the prospective old mine sites at the Iquique project and thewalk-up drill targets at Paguanta. A drilling program is currently in progressand results will be announced as soon as possible. Anthony BartonChairman23 March 2006 The following financial information of Herencia Resources plc is for the sixmonth period from 1 July 2005 to 31 December 2005. GROUP INCOME STATEMENT For the period ended 31 December 2005 Note 31 December 2005 (un-audited)CONTINUING OPERATIONS £ Administrative expenses (163,189)Operating loss (163,189) Investment income 9,846 Loss before taxation (153,343)Income tax expense - Loss for the period (153,343) Basic loss per share 2 (0.13)pDiluted loss per share (0.13)p GROUP BALANCE SHEET As at 31 December 2005 Note 31 December 2005 (un-audited) £ASSETSNon current assetsIntangible assets 3 660,005 660,005 Current assetsCash and cash equivalents 693,654 693,654 Total assets 1,353,659 LIABILITIESCurrent liabilitiesTrade and other payables (56,147) (56,147) Net assets 1,297,512 EQUITYShare capital 5 200,000Share premium 5 1,350,000Retained earnings 8 (252,488)Total shareholders' equity 1,297,512 GROUP CASH FLOW STATEMENT For the period ended 31 December 2005 31 December 2005 (un-audited) £ Net cash outflow from operating activities 7 (108,117) Cash flow from Investing activitiesInterest received 9,846Funds acquired on acquisition of subsidiary undertakings 500,000Exploration expenditure (160,005) Net increase in cash and cash equivalents 241,724 Cash and cash equivalents as at 1 July 2005 451,930Cash and cash equivalents as at 31 December 2005 693,654 NOTES TO THE FINANCIAL INFORMATION For the period ended 31 December 2005 1. Accounting Policies Basis of Accounting The interim financial information for the six months ended 31 December 2005 isun-audited and does not constitute statutory accounts within the meaning ofsection 240 of the Companies Act 1985. The interim financial statements wereapproved by the Board of Directors on 23 March 2006. The financial information has been prepared under the historical cost conventionand in accordance with International Financial Reporting Standards ("IFRS") asadopted by the European Union (including IFRS 6 "Exploration for and Evaluationof Mineral Resources"). The financial information has been prepared on the basisof a going concern. The interim financial information for the six months ended 31 December 2005 hasbeen prepared pursuant to AIM rule 18 and represents the half yearly report forthe six months then ended. AIM rule 18 states "An AIM company must prepare ahalf-yearly report in respect of the six month period from the end of thefinancial period for which financial information has been disclosed in itsadmission document and at least every subsequent six months thereafter (apartfrom the final period of six months preceding its accounting reference date forits annual audited accounts)." The last half yearly report prepared for this company covered a six month periodto 31 August 2005. As the company's first statutory accounts will be for the period ending 30 June2006, being its accounting reference date, this financial information needs toreflect a six month period to 31 December 2005. Basis of Consolidation The interim financial information includes the results and financial position ofthe company and its subsidiary undertakings made up to the 6 months ended 31December 2005. Details of the subsidiaries are given in note 4. Subsidiaries are fully consolidated from the date on which control istransferred to the Group. They are de-consolidated from the date that controlceases. The purchase method of accounting is used to account for the acquisitionof subsidiaries by the Group. The cost of an acquisition is measured as the fairvalue of the assets given, equity instruments issued and liabilities incurred orassumed at the date of exchange, plus costs directly attributable to theacquisition. Identifiable assets acquired and liabilities and contingentliabilities assumed in a business combination are measured initially at theirfair values at the acquisition date, irrespective of the extent of any minorityinterest. The excess of the cost of acquisition over the fair value of theGroup's share of the identifiable net assets acquired is recorded as goodwill. Inter-company transactions, balances and unrealised gains on transactionsbetween group companies are eliminated. Unrealised losses are also eliminatedbut considered an impairment indicator of the asset transferred. Foreign Currencies Transactions in the accounts of individual Group companies are recorded at therate of exchange ruling on the date of the transaction. Monetary assets andliabilities denominated in foreign currencies are translated at the rates rulingat the balance sheet date. All differences are taken to the profit and lossaccount. The assets, liabilities and the results of the foreign subsidiary undertakingsare translated into Sterling at the rates of exchange ruling at the year end.Exchange differences resulting from the retranslation of net investments insubsidiary undertakings are treated as movements of reserves. Exploration and Development Costs All costs associated with mineral exploration and investments are capitalised ona project by project basis, pending determination of the feasibility of theproject. Costs incurred include appropriate technical and administrativeexpenses but not general corporate overheads. If an exploration project issuccessful, the related expenditures will be transferred to mining assets andamortised over the estimated life of the commercial ore reserves on a unit ofproduction basis. Where a licence is relinquished or project abandoned, therelated costs are written off. Where the Group maintains and interest in aproject, but the value of the project is considered to be impaired, a provisionagainst the relevant capitalised costs will be raised. The recoverability of all exploration and development costs is dependent uponthe discovery of economically recoverable reserves, the ability of the group toobtain necessary financing to complete the development of the reserves andfuture profitable production or proceeds from the disposition thereof. Deferred Taxation Deferred tax is provided in full, using the liability method, on temporarydifferences arising between the tax bases of assets and liabilities and theircarrying amounts in the interim financial information. Deferred tax isdetermined using tax rates (and laws) that have been enacted or substantiallyenacted by the balance sheet date and expected to apply when the relateddeferred tax is realised or the deferred liability is settled. Deferred tax assets are recognised to the extent that it is probable that thefuture taxable profit will be available against which the temporary differencescan be utilized. Impairment of Exploration and Development Costs The carrying value of unevaluated areas is assessed on at least an annual basisor when there has been an indication that impairment in value may have occurred.The impairment of unevaluated prospects is assessed based on the Directors'intention with regard to future exploration and development of individualsignificant areas and the ability to obtain funds to finance such explorationand development. 2. Earnings per share Earnings per share of (0.13)p is calculated by dividing the loss for the periodof £153,343 by the weighted average number of ordinary shares on issue of121,857,923. 3. Intangible AssetsExploration and development costs Total £CostAcquired with subsidiary undertakings (note 4) 500,000Additions 160,005 660,005ImpairmentImpairment during the period - Net Book value31 December 2005 660,005 The exploration and development costs relate to the Iquique and Paguantaprojects located in Chile, South America. 4. Subsidiaries Company name Country of registration or Class Shares incorporation held % DirectTarapaca Resources (Bermuda) Limited Bermuda Ordinary 100IndirectTarapaca Holdings (BVI) Ltd British Virgin Islands Ordinary 100Iquique Resources (Chile) SA Chile Ordinary 100Paguanta Resources (Chile) SA Chile Ordinary 100 The principal activity of these subsidiaries (the Tarapaca Group of Companies)for the last relevant financial period was mineral exploration. On 21 November 2005 the Company acquired the entire issued capital of TarapacaResources (Bermuda) Limited, a company incorporated in Bermuda, via a share forshare exchange. In accordance with the terms of the acquisition agreement on 21November 2005 the Company issued 100,000,000 ordinary shares of £0.01 each forthe purchase of the company. As at the date of acquisition the Tarapaca Group of Companies had net assets of£1,000,000 comprising cash and joint venture agreements through it wholly ownedChilean subsidiaries to earn up to a 70% interest in the Iquique and Paguantaprojects in Chile. Details of net assets acquired and goodwill are as follows: Purchase consideration £Issue of shares 1,000,000Total purchase consideration 1,000,000 Fair value of net assets acquired (1,000,000)Goodwill - The fair value of assets and liabilities arising from the acquisition are asfollows. Cash at bank 500,000Iquique and Paguanta projects - exploration and development costs 500,000Net assets acquired 1,000,000 5. Share capital Period ended 31 December 2005 £Authorised10,000,000,000 Ordinary shares of £0.001 each 10,000,000 Issued and fully paid Number of sharesAs at 1 July 2005 100,000,000 100,000Shares issued on acquisition of subsidiary undertakings 100,000,000 100,000As at 31 December 2005 200,000,000 200,000 Share PremiumAs at 1 July 2005 450,000Acquisition of subsidiary undertakings 900,000As at 31 December 2005 1,350,000 On 21 November 2005 the Company allotted 100,000,000 Ordinary Shares at £0.01per share (based on the agreed price of the Company's ordinary share between theparties) for consideration of the acquisition of the Tarapaca Group of Companiespursuant to shareholder approval received on 21 November 2005. The deemedconsideration for the acquisition is £1,000,000 comprising the issue of100,000,000 Ordinary Shares at par of £0.001 per share (£100,000) and SharePremium of £0.009 per share (£900,000). Pursuant to the agreement for the acquisition of the Tarapaca Group ofCompanies, there are a further 50,000,000 Ordinary Shares at £0.01 per sharethat may be allotted subject to certain performance criteria. The performancecriteria are the investment by the Group of at least US$2,000,000 in theProjects within 36 months of the date of the Acquisition Agreement or the Groupdisposing of a majority interest in either of the Projects. 6. Dividends No dividends were paid or proposed in respect of the period ended 31 December2005. 7. Notes to the Cash Flow Statement Period ended 31 December 2005 £Cash generated from operationsNet operating loss (163,189) Changes in working capital:Increase in payables 55,072Cash generated from operating activities (108,117) 8. Profit and Loss account At 1 July 2005 (99,145) Loss for the period (153,343) At 31 December 2005 (252,488) This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Herencia Resources