Preliminary Financial Results

RNS Number : 1334U

China Goldmines PLC

11 October 2010

 

CHINA GOLDMINES PLC

("China Goldmines", "CGM", the "Company", or the "Group")

PRELIMINARY FINANCIAL RESULTS

FOR THE YEAR ENDED 30 JUNE 2010

 

Highlights

 

•	Cash position as at year end USD$22.0m
•	Net assets for the Group amounted to USD$22.0m
•	Net loss for the year amounted to USD$2.2m
•	The Group has no long term debts or borrowings.
•	Disposal of 100% interest in Westralian Resources (WES) Pty Ltd on 29th Sept 2009.
•	USD$23.4m net proceeds received by the Company on disposal of WES.
•	The Company has no further interest in mining operations within China or elsewhere.
•	The Company is regarded as an investing company under the AIM Rules for Companies.

 

Post Year End:

 

•	The guarantee and indemnity associated with the disposal expired on 29 September 2010, without any antecedent breaches claimed by Cosmos.
•	As notified on 30 September 2010 the Company's shares have been suspended from trading on AIM.

 

 

 

For further information contact:

 

China Goldmines plc
Frank Vanspeybroeck (CEO)	+61 8 6216 5200
Marinko Vidovich (CFO)	+61 8 6216 5200
Brewin Dolphin Ltd (Nomad)
Alex Dewar (Nominated Adviser)   Threadneedle Communications Laurence Read/ Beth Harris	+44 (0)131 529 0276     +44 (0)20 7653 9855

 

 

CHAIRMAN'S REVIEW

 

This is my first year end review having been appointed to the Board of China Goldmines, in December 2009.

 

In August 2009, prior to my appointment, the Board made the decision to dispose of the Guanzhuang Gold Project which had been hampered by site security issues and the requirement for significant further investment. The disposal was effected in September 2009 via the sale of Westralian Resources Pty Ltd, the Company's gold mining subsidiary, to Cosmos Castle Management Limited for a net consideration of USD$23.4m.

 

As at 30 June 2010, the Group and Company had net assets of USD$22.0m.

 

In January 2010, and in conjunction with the Board, I undertook a comprehensive strategic review to determine how best to exploit the Company's strong cash position for the benefit of shareholders. Following this review, the Board has established a rigorous framework by which it will assess future, potential investment opportunities. CGM will continue to work alongside its advisors to identify opportunities within the mining and oil and gas sectors as well as sectors outside of natural resources, providing key parameters are met.

 

The criteria for new projects are as follows:

 

•	Resource propositions:
	▫	Producing or near production assets
	▫	Third party resource validation
	▫	Medium to low political risk
•	Non-resource propositions:
	▫	Revenue generating
	▫	Profitable or near to profit
	▫	Market leader or recognised as one of the market leaders
	▫	High barriers to entry
	▫	Strong UK/European market position

 

As announced on 10 September 2010, the Company is continuing to evaluate investment propositions but acknowledges that it was unable to obtain shareholder approval of any particular proposition in sufficient time to complete an acquisition prior to the 29 September 2010 deadline under the AIM Rules. As a result trading of the Company's shares on AIM were suspended on the 30 September 2010. The Company will remain subject to the AIM Rules for Companies and any decision regarding a new project specific acquisition will remain subject to shareholder approval. In the event that the Company is unable to complete an acquisition by 31 March 2011 the admission of its ordinary shares to AIM will be cancelled.

 

A key objective for the year, following the disposal of the Guanzhuang Gold Project, was to protect the Company's assets from claims under the guarantee and warranties that were given to Cosmos Castle Management Limited as part of the disposal of Hunan Westralian Resources Pty Ltd. To this end it was gratifying that the Group received $2.2m of deferred consideration in January against payments incurred in connection with the disposal, and that the guarantee and warranties have expired without any claim being made against them.

 

I will be providing an update to shareholders in the near future, by which time we hope to be able to have identified suitably attractive opportunities to put to shareholders for their approval. In the event that the Board are unable to identify a suitable investment opportunity then a return of capital will be proposed to shareholders.

 

I would like to thank both the Board and our shareholders for their ongoing commitment and support to the Company.

 

Robert Adair

Non-Executive Chairman

 

 

CORPORATE OVERVIEW

 

The Company's proposed investing strategy is to create shareholder value by identifying and acquiring holdings in natural resources, minerals and/or metals companies and/or assets which the Directors believe are undervalued. The Company expects to be an active investor but it will depend on the terms of each transaction before any such investment is made.

The Company will seek to acquire interests in natural resources, minerals and/or metals projects such as (without limit) exploration permits and licences, mining and production licences or processing and development projects, which may be achieved through acquisitions, partnerships or joint venture arrangements. Such investments may result in CGM acquiring the whole or part of a company or project. CGM's investments may take the form of equity, joint venture debt, convertible instruments, licence rights, or other financial instruments as the Directors deem appropriate.

 

The Directors believe that their collective experience in the areas of natural resources, acquisitions, corporate and financial management together with the opinion of consultant experts in the evaluation of natural resources, minerals or metals projects, will assist them in the identification and assessment of suitable opportunities. Where the Directors consider it necessary suitably qualified persons will be commissioned to prepare reports on the projects being considered by the Company. The Directors may undertake the initial project assessments themselves with additional independent technical advice as required. If the strategy is approved, there is no limit on the number or location of projects into which the Company may invest.

 

 

DIRECTORS' REPORT

The Directors present their preliminary accounts of China Goldmines plc for the year ended 30 June 2010.

 

 

 

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

	Note		Year Ended 30 June 2010 $		Year Ended 30 June 2009 $
Continuing operations
Revenue			-		-
Salaries and employee benefits			(250,628)		(230,889)
Office expenses and professional fees			(779,018)		(295,258)
Consulting expenses			(623,152)		(715,588)
Travel and accommodation expenses			-		(21,249)
Operating loss			(1,652,798)		(1,262,984)
Other gains and losses	1		(1,026,579)		(11,978,782)
Financial income			71,892		337,712
Loss before tax			(2,607,485)		(12,904,054)
Tax			-		-
Loss for the year from continuing operations			(2,607,485)		(12,904,054)
Discontinued operations
Loss for the year from discontinued operations	11		(289,314)		(23,299,807)
Loss for the year			(2,896,799)		(36,203,861)
Other comprehensive (loss)/income
Exchange differences on translation of foreign operations			(4,094,887)		5,681,438
Exchange gain recognised on disposal of foreign operations			(147,712)		-
Other comprehensive (loss)/income for the year (net of tax)			(4,242,599)		5,681,438
Total comprehensive loss for the year			(7,139,398)		(30,522,423)
Loss for the year attributable to:
Owners of China Goldmines plc Non-controlling interests			(2,259,527) (637,272)		(36,203,861) -
			(2,896,799)		(36,203,861)
Total comprehensive loss for the year attributable to:
Owners of China Goldmines plc Non-controlling interests			(6,509,035) (630,363)		(30,522,423) -
			(7,139,398)		(30,522,423)
Earnings per share				2010 Cents		2009 Cents
From continuing operations
Basic and diluted loss per share		2		(5.38)		(26.62)

 

From continuing and discontinued operations
Basic and diluted loss per share	2	(4.66)	(74.68)

 

 

 

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

	Note	Year Ended 30 June 2010 $	Year Ended 30 June 2009 $
Non-current Assets
Intangible assets	3	-	5,898
Mining properties	4	-	21,385,440
Property, plant and equipment	5	-	2,350,920
Trade and other receivables	6	-	319,760
		-	24,062,018
Current Assets
Inventories	7	-	1,246,749
Trade and other receivables	8	276,201	151,082
Cash and cash equivalents		21,974,606	6,192,290
		22,250,807	7,590,121
Total Assets		22,250,807	31,652,139
Current Liabilities
Trade and other payables		(234,636)	(3,139,086)
Total Liabilities		(234,636)	(3,139,086)
Net Assets		22,016,171	28,513,053
Equity
Share capital	9	919,975	919,975
Share premium account		66,169,804	66,169,804
Foreign exchange reserve		-	4,249,508
Reverse acquisition reserve		-	61,344
Retained earnings		(45,073,608)	(42,875,425)
Equity attributable to equity holders of the parent company		22,016,171	28,525,206
Non-controlling interests		-	(12,153)
Total Equity		22,016,171	28,513,053

 

 

 

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

 

	Attributable to Members of China Goldmines
	Share Capital $	Share Premium Reserve $	Foreign Exchange Reserve $	Reverse Acquisition Reserve $	Retained Earnings $	Total	Non- Controlling Interest $		Total Equity
Balance at 30 June 2008	919,975	66,169,804	(1,431,930)	61,344	(6,671,564)	59,047,629	(12,153)		59,035,476
Loss for the year	-	-	-	-	(36,203,861)	(36,203,861)	-		(36,203,861)
Other comprehensive income:
Exchange differences on translation of foreign operations	-	-	5,681,438	-	-	5,681,438	-		5,681,438
Total comprehensive loss for the year	-	-	5,681,438	-	(36,203,861)	(30,522,423)	-		(30,522,423)
Balance at 30 June 2009	919,975	66,169,804	4,249,508	61,344	(42,875,425)	28,525,206	(12,153)		28,513,053
Loss for the year	-	-	-	-	(2,259,527)	(2,259,527)	(637,272)		(2,896,799)
Other comprehensive loss:
Exchange differences on translation of foreign operations	-	-	(4,101,796)	-	-	(4,101,796)	6,909		(4,094,887)
Exchange gain recognised on disposal of foreign operations	-	-	(147,712)	-	-	(147,712)	-		(147,712)
Total comprehensive loss for the year	-	-	(4,249,508)	-	(2,259,527)	(6,509,035)	(630,363)		(7,139,398)
Reverse acquisition loss recognised on disposal of GRV	-	-	-	(61,344)	61,344	-	-		-
De-recognition of non-controlling interest on sale of Westralian	-	-	-	-	-	-	642,516		642,516
Balance at 30 June 2010	919,975	66,169,804	-	-	(45,073,608)	22,016,171	-		22,016,171

 

 

 

CONSOLIDATED STATEMENT OF CASH FLOWS

 

		Notes	Year Ended 30 June 2010 $	Year Ended 30 June 2009 $
	Operating Loss		(1,652,799)	(1,262,984)
	Adjustments for:
	Discontinued operations		(289,314)	(23,299,802)
	Depreciation		768,274	19,883,957
	Net foreign exchange movements		(720,389)	(1,624,224)
	Operating cash flows before movements in working capital net of effects of discontinued operations		(1,894,228)	(6,303,053)
	Decrease/(increase) in inventory		1,246,749	(741,999)
	(Increase)/decrease in trade and other receivables		(1,315)	484,198
	(Decrease)/increase in trade and other payables		(3,206,284)	1,422,962
	Net cash outflow from operating activities		(3,855,078)	(5,137,892)
Investing activities
Proceeds on sale of subsidiaries, net of cash disposed23			23,381,753	-
Interest received			71,892	337,712
Payments for licences, exploration and development expenditure			(3,299,985)	(8,940,449)
Payments for environmental deposits			-	(14,907)
Purchases of property, plant and equipment			(80,696)	(1,529,522)
Net cash inflow/(outflow) from investing activities			20,072,964	(10,147,166)
Net increase/(decrease) in cash and cash equivalents			16,217,886	(15,285,058)
Cash and cash equivalents at beginning of year			6,192,290	25,147,806
Movement in foreign exchange rate			(435,570)	(3,670,458)
Cash and cash equivalents at end of year			21,974,606	6,192,290

 

 

 

AN EXTRACT OF APPLICATION NOTES

 

Basis of Preparation

The financial information set out in this announcement does not constitute the Company's statutory accounts as defined in section 343 of the Companies Act 2006 for the years ended 30 June 2010 and 2008. Except as shown below, the financial information for the year ended 30 June 2010 has been prepared using the accounting policies which are consistent with those adopted in the audited accounts for the year ended 30 June 2009. The financial information for the year ended 30 June 2009 is derived from the statutory accounts for that year, which have been delivered to the Registrar of Companies.

 

The auditors have reported on the 2009 accounts; their report was unqualified and did not contain a statement under 498(2) or (3) of the Companies Act 2006. Whilst the auditors have not yet reported on the financial statements for the year ended 30 June 2010, they anticipate issuing a qualified report which will contain statements under section 498(2) and (3) of the Companies Act 2006 due to a limitation in audit scope arising from lack of access to accounting records following the disposal of Westralian Resources Pty Ltd. The impact of this limitation of scope is that the auditors were unable to obtain sufficient audit evidence as to the completeness and categorisation of certain expenses included in the consolidated statement of comprehensive income and consolidated statement of cash flows, being mining and exploration expenses amounting to $159,304, employee costs of $123,116, depreciation charge of $16,701, administration and other income of $2,464, foreign exchange losses of $2,889,921, loss attributable to the non-controlling interest of £637,272 and the loss on disposal of the subsidiary. The statutory accounts for the year ended 30 June 2010 will be finalised on the basis of the financial information presented by the Directors in this preliminary announcement and will be delivered to the Registrar of Companies following the Company's Annual General Meeting. The financial information set out in this announcement was approved by the Board of Directors on 8 October 2010.

Summary of significant accounting policies

 

Basis of accounting

The financial statements have been prepared on the going concern basis, and a historic cost basis.

 

The company adopted IAS1 (revised 2007) Presentation of Financial Statements effective for annual periods beginning on or after 1 January 2009. The impact of this standard is purely presentational.

 

Basis of consolidation

The consolidated financial statements incorporate the financial statements of the Company and enterprises controlled by the Company (its subsidiaries) made up to 30 June ach year. Control is achieved where the Company has the power to govern the financial and operating policies of a subsidiary.

 

Non-controlling interests in the net assets of consolidated subsidiaries are identified separately from the group's equity therein. Non-controlling interests consist of the amount of those interests at the date of the original business combination and the non-controlling interests' share of changes in equity since the date of the combination. Losses applicable to the non-controlling party's interests in excess of the non-controlling interests' interest in the subsidiary's equity are allocated against the interests of the group except to the extent that the non-controlling interests has a binding obligation and is able to make additional investment to cover the losses.

 

The results of subsidiaries acquired or disposed of during the period are included in the consolidated income statement from the effective date of acquisition or up to the effective date of disposal, as appropriate.

 

All intra-group transactions and balances are eliminated on consolidation.

 

1. Other gains and losses

	Year ended 30 June 2010 $	Year ended 30 June 2009 $
Foreign exchange (losses)	(1,026,579)	(11,978,782)

 

 

Taxation

The tax charge represents the sum of current and deferred tax.

 

Current tax payable is based on taxable profits for the year. Taxable profits differ from net profits as reported in the income statement because it excludes items that are taxable or deductible in other years and items that are not taxable or deductible. The group's liability for current tax is calculated using tax rates that have been enacted or substantively enacted at the balance sheet date.

 

Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit, and is accounted for using the liability method. Deferred tax liabilities are recognised for all temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which temporary differences can be utilised.

 

The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.

 

Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability or the asset is realised.

 

2. Earnings per share

 

(a) Basic and diluted earnings per share

		Year Ended 30 June 2010 Cents	Year Ended 30 June 2009 Cents
From continuing operations attributable to the ordinary equity holders of the company		(5.38)	(26.62)
From discontinued operations		0.72	(48.06)
Total basic and diluted earnings per share attributable to the ordinary equity holders of the company		(4.66)	(74.68)

 

(b) The calculation of the basic and diluted earnings per share is based on the following data:

 

			Year Ended 30 June 2010 $			Year Ended 30 June 2009 $
Loss from continuing operations Earnings for the purposes of basic and diluted earnings per share being net profit attributable to equity holders of the parent			(2,607,485)			(12,904,054)
Loss from continuing and discontinued operations Earnings for the purposes of basic and diluted earnings per share being net profit attributable to equity holders of the parent			(2,259,527)			(36,203,861)
				Number	Number
Number of shares
Weighted average number of ordinary shares for the purposes of basic and diluted earnings per share				48,475,411	48,475,411

 

There are no dilutive instruments.

 

3. Intangible assets

 

	Business Licences Held $	Software $	Total $
Cost
At 30 June 2008	441,394	507,796	949,190
Additions	-	41,310	41,310
Exchange differences	-	(79,623)	(79,623)
At 30 June 2009	441,394	469,483	910,877
Disposals on sale of subsidiaries	(441,394)	(469,483)	(910,877)
At 30 June 2010	-	-	-
Accumulated Amortisation
At 30 June 2008	(29,426)	(214,790)	(244,216)
Charge for the year	(14,713)	(280,666)	(295,379)
Impairment	(397,255)	-	(397,255)
Exchange differences	-	31,871	31,871
At 30 June 2009	(441,394)	(463,585)	(904,979)
Charge for the year	-	(5,898)	(5,898)
Disposals on sale of subsidiaries	441,394	469,483	910,877
At 30 June 2010	-	-	-
Carrying Amount
At 30 June 2010	-	-	-
At 30 June 2009	-	5,898	5,898

 

 

4. Mining properties

 

	Land Comp. Costs $		Explor. Expend. $		Mine Develop. Expend. $		Mining Licences $		Total $
At 30 June 2008	126,912		2,604,801		3,645,980		26,001,641		32,379,334
Additions	534,523		2,082,265		5,341,995		-		7,958,783
Exchange differences	522		(113,316)		(405,843)		106,930		(411,707)
At 30 June 2009	661,957		4,573,750		8,582,132		26,108,571		39,926,410
Additions	-		1,055,878		997,358		-		2,053,236
Exchange differences	885		13,578		5,365		35,643		55,471
Disposals on sale of subsidiaries	(662,842)		(5,643,206)		(9,584,855)		(26,144,214)		(42,035,117)
At 30 June 2010	-		-		-		-		-
Accumulated Amortisation and Impairment
At 30 June 2008	(6,732)		-		-		-		(6,732)
Charge for the year	(145,869)		-		-		-		(145,869)
Impairment	-		(4,573,750)		(8,582,132)		(5,232,459)		(18,388,341)
Exchange differences	(28)		-		-		-		(28)
At 30 June 2009	(152,629)		(4,573,750)		(8,582,132)		(5,232,459)		(18,540,970)
Charge for the year	(54,882)		-		-		-		(54,882)
Impairment	(32,010)		(681,382)		-		-		(713,392)
Exchange differences	(243)		-		-		-		(243)
Disposals on sale of subsidiaries	239,764		5,255,132		8,582,132		5,232,459		19,309,487
At 30 June 2010	-	-		-		-		-
Carrying Amount
At 30 June 2010	-	-		-		-		-
At 30 June 2009	509,328	-		-		20,876,112		21,385,440

 

 

5. Property Plant and Equipment

 

		Construction in progress $	Motor vehicles $	Furniture, fittings and equipment $		Total $
Cost
At 30 June 2008		-	132,152	1,428,755		1,560,907
Additions		208,497	185,847	1,114,896		1,509,240
Exchange differences		-	(532)	(96,095)		(96,627)
At 30 June 2009		208,497	317,467	2,447,556		2,973,520
Additions/transfers		(208,497)	-	289,193		80,696
Exchange differences		-	433	(638)		(205)
Disposal on sale of subsidiaries		-	(317,900)	(2,736,111)		(3,054,011)
At 30 June 2010		-	-	-		-
Accumulated depreciation
At 30 June 2008		-	(16,781)	(172,398)	(189,179)
Charge for the year		-	(16,127)	(228,601)	(244,728)
Exchange differences		-	58	(14,299)	(14,241)
Impairment		-	-	(174,452)	(174,452)
At 30 June 2009		-	(32,850)	(589,750)	(622,600)
Charge for the year		-	(5,030)	(240,164)	(245,194)
Exchange differences		-	(48)	(55,987)	(56,035)
Disposal on sale of subsidiaries		-	37,928	885,901	923,829
At 30 June 2010		-	-	-	-
Carrying amount
At 30 June 2010		-	-	-	-
At 30 June 2009		208,497	284,617	1,857,806	2,350,920

 

No assets are pledged as security for liabilities.

 

 

6. Trade and other receivables

Amounts due after more than one year

			30 June 2010 $	30 June 2009 $
Environmental remediation deposits			-	319,760
			-	319,760

 

7. Inventories

			30 June 2010 $	30 June 2009 $
Raw materials and stores - at cost Work in progress - at cost Finished goods - at cost			- - -	596,274 82,908 567,567
			-	1,246,749

 

8. Trade and other receivables

Amounts due within one year

			30 June 2010 $	30 June 2009 $
Other debtors			276,201	146,621
Prepayments and accrued income			-	4,461
			276,201	151,082

 

 

9. Share Capital

	30 June 2010 $	30 June 2009 $
Authorised:
55,000,000 ordinary shares of £0.01 each	1,043,678	1,043,678
(2009: 55,000,000 ordinary shares of £0.01 each)
Issued and fully paid:
48,475,411 ordinary shares of £0.01 each	919,975	919,975

 (2009: 48,475,411 ordinary shares of £0.01 each)

 

10. Related party transactions

 

Transactions between the Company and its subsidiaries, which are related parties, have been eliminated on consolidation and are not disclosed in this note.

 

Transactions between the Group and other related parties are disclosed below.

 

Trading transactions

During the year, Group companies entered into the following transactions with related parties who are not members of the Group:

	Purchase of goods / services		Amounts owed to related parties
	2010 $	2009 $	2010 $	2009 $
Bowlane Nominees Ltd	326,535	343,200	-	-
Jinan Limited	288,000	288,000	-	-
Metallurgical Management Services (Pty) Ltd	4,282	32,800	-	-
Wildewood Limited	-	19,000	-	-
Linq Corporate Pty Ltd	374,682	113,200	-	-

 

Bowlane Nominees Ltd and Immo Services (WA) Pty Ltd are companies that provide managerial services to the Group, on behalf of Frank Vanspeybroeck, a director of China Goldmines plc. $326,535 (2009: $343,200) was paid in accordance with his agreed service agreement.

 

Jinan Limited is a company that provides financial and accounting services to the Group, on behalf of Marinko Vidovich, a director of China Goldmines plc. $288,000 (2009: $288,000) was paid in accordance with his agreed service agreement.

 

Metallurgical Management Services (Pty) Ltd is a company that provides metallurgical consultancy services to the Group. Evan Kirby is a director of this company and China Goldmines plc. $4,282 (2009: $32,800) was paid in accordance with commercial rates.

 

Linq Corporate Pty Ltd, a company of which Mr Donner is a director, has provided in the period corporate consultancy services utilising a number of Linq Corporate employees amounting to $374,682 (2009 : $113,200).

All services were provided under normal commercial terms.

 

The amounts outstanding are unsecured and will be settled in cash. No guarantees have been given or received.

 

Remuneration of key management personnel

The emoluments of the Directors, who are the key management personnel of the Group, were $155,038 (2009: $253,000). These do not include the amounts paid in consultancy fees noted above.

 

11. Disposals

 

(a) Description

 

On 26 August 2009 the Company's 100% owned subsidiary, Global Resource Ventures Limited ("GRV"), signed a Share Purchase Agreement with Cosmos Castle Management Limited, a company incorporated in the British Virgin Islands, to sell all of the issued securities of Westralian Resources Pty Ltd ("Westralian"). Settlement of the sale occurred on 29 September 2009, from which date Westralian and its 80% owned subsidiary Hunan Westralian Mining Co., Ltd ceased to be consolidated into the Group. GRV will receive total net cash consideration of USD$23,381,753 for the sale of Westralian. At balance date there is still USD$100,000 being held on trust by Hunan Westralian Mining/Cosmos to which the Company is now entitled to as a result of the warranty period expiring.

 

On 12 May 2010 GRV was placed in voluntary administration, from which date GRV ceased to be consolidated into the Group. Prior to GRV being liquidated all outstanding loan balances were forgiven by China Goldmines, which resulted in the writing off of all remaining loan balances. An amount of USD$125,000 has been recognised as a receivable being the amount expected to be released by the administrator on completion of the liquidation process.

 

Financial information relating to the discontinued operations for the period to the respective dates of disposal are set out below.

 

(b) Financial performance and cashflow information

		Year Ended 30 June 2010 $	Year Ended 30 June 2009 $
Revenue		-	396,740
Expenses		(3,821,611)	(25,014,607)
Operating loss		(3,821,611)	(24,617,867)
Foreign exchange gains		3,936,175	1,290,452
Financial income		3,647	27,608
Profit/(loss) before income tax		118,211	(23,299,807)
Income tax expense		-	-
Profit/(loss) after income tax expense of discontinued operation		118,211	(23,299,807)
Loss on deconsolidation of subsidiaries before income tax		(407,525)	-
Income tax expense		-	-
Loss on deconsolidation of subsidiaries after income tax expense		(407,525)	-
Loss of discontinued operation		(289,314)	(23,299,807)
Loss from discontinued operation is attributable to:- Owners of China Goldmines plc Non-controlling interests		347,958 (637,272)	(23,299,807) -
		(289,314)	(23,299,807)
Net cash outflow from operating activities		(2,315,633)	(3,143,811)
Net cash inflow/(outflow) from investing activities (2010 includes a net inflow of $23,381,753 from the sale of subsidiaries)		1,204,967	(651,478)
Net (decrease) in cash generated by the discontinued operation		(1,110,666)	(3,795,289)

 

 

(c) Details of the sale of subsidiaries

 

		Year Ended 30 June 2010 $	Year Ended 30 June 2009 $
Consideration received or receivable:
Net cash (after costs of disposal) on sale of Westralian		23,992,217	-
Total disposal consideration		23,992,217	-
Carrying amount of net assets sold of Westralian		(23,748,645)	-
Carrying amount of net assets disposed of GRV		(156,291)	-
Recognition of foreign exchange reserve on sale of Westralian		5,152,296	-
Recognition of foreign exchange reserve on deconsolidation of GRV		(5,004,586)	-
Recognition of non-controlling interest on sale of Westralian		(642,516)	-
Loss on sale and deconsolidation before income tax		(407,525)	-
Income tax expense		-	-
Loss on sale and deconsolidation after income tax		(407,525)	-

 

 

At 30 June 2009 the carrying value of Mining Properties and other consolidated assets were impaired to reflect the disposal of the subsidiaries. A total write-down of $18,388,341 was recognised against the Mining Properties of the disposed subsidiaries, with the amount reported below being net of this impairment.

 

The carrying amounts of assets and liabilities at the date of sale/deconsolidation were:

			Date of Sale / Deconsolidation $
Sale of Westralian: Cash			485,938
Trade and other receivables			442,047
Plant and equipment			2,130,182
Mining properties			22,725,630
Total assets			25,783,797
Trade and other liabilities			(2,035,152)
Total liabilities			(2,035,152)
Net assets of Westralian			23,748,645
Liquidation of GRV: Cash			148,355
Trade and other receivables			9,996
Total assets			158,351
Trade and other liabilities			(2,060)
Total liabilities			(2,060)
Net assets of GRV			156,291

 

 

 

12. Events After the Balance Sheet Date

 

The guarantee and indemnity associated with the disposal expired on 28 September 2010, without any antecedent breaches claimed by Cosmos.

 

The Company has no further interest in mining operations within China or elsewhere, and as such is regarded as an investment company under the AIM listing rules for companies. Furthermore, under such listing rules, the company was required to complete an acquisition or an implementation of investment strategy no later than 28 September 2010. The company was unable to implement an investing strategy and accordingly, the company's shares on AIM have been suspended. If the company was required to complete an acquisition by 31 March 2011, the admission of its shares to AIM will be cancelled.

 

 

Availability of this announcement

Copies of this announcement will be available from the Company's registered office, Sandgate House, 102 Quayside, Newcastle-Upon-Tyne, NE1 3DX, England, and on the Company's website, www.chinagoldmines.com.

 

 

 

This information is provided by RNS

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