27th Sep 2006 07:01
Triple Plate Junction Plc27 September 2006 For Immediate Release 26 September 2006 Triple Plate Junction PLC ("TPJ" or the "Company") Preliminary Results for the Year ended 31 March 2006 Triple Plate Junction PLC (AIM : TPJ), the gold exploration company is pleasedto announce preliminary results for the year ended 31 March 2006. Summary of key points: Vietnam • BLEG stream sediment sampling programme completed at Pu Sam Cap, highlighting anomalous areas • 3 Diamond Drill holes into the Bai Bang prospect, Pu Sam Cap intersecting 12.4 g/t gold over one metre (7.9 g/t gold over two metres), establishing continuation at depth of the high grade gold zones mined by artisanal miners at surface over several kilometres. • Samples taken from inside an adit driven by the Bai Bang artisanal miners for 200 metres along the mineralised structure near surface returned an average value of 13.4 g/t gold, ranging from 2.6 g/t gold to 30.7 g/t gold. • Completed 3,165 line km of helicopter-borne magnetic/radiometric survey • Geophysical interpretation highlighted number of significant magnetic features pointing to intrusive-related targets and alteration areas for follow-up. Papua New Guinea • Target identification and prioritisation completed on the Wau-Morobe- Kainantu licences areas. Many high grade gold results from extensive field work programmes within these areas. • Completion of 11 diamond drill holes at Crater Mountain confirmed very large gold-bearing system • Crater Mountain remains an attractive target with work continuing to convert into economic discovery. • Field work at Manus Island produced bonanza gold grades in trenching at Kisi Drill Rigs • Purchased two Ingetrol Explorer MD rigs designed to operate at very high altitudes, with a power to weight ratio that makes them truly man-portable but capable of drilling depths of 250 metres or more with NQ core size. • Rigs enable the design of flexible and cost effective drilling programmes and increase the rate of drilling Ian Gowrie-Smith, Chairman, commented: "During 2006 the Board has progressed on the exploration of existing assets andidentified new targets within our exploration acreage with world-class potentialfor gold, copper and copper-gold deposits. We have consolidated a substantialfoothold on an emerging mineral province. Our cash position remains robust whichwill allow the Company to continue to aggressively explore exciting targets andbuild on our strong foundations. We look forward to reporting on our progress." For further information please contact: Triple Plate Junction PLC 020 73409970Geoff Walsh, Chief ExecutiveDavid Lees, Finance Director Buchanan Communications 020 7466 5000Tim AndersonIsabel Podda Chairman's Statement Triple Plate Junction PLC (TPJ) has continued a focused campaign of systematicexploration programmes in the year to 31 March 2006. TPJ has highly prospectiveexploration areas in both Vietnam and Papua New Guinea. During the year, the appointment of additional dedicated and professional peoplehas strengthened our geological teams and enabled a more effective spend of ourexploration capital. Capital expenditure to 31 March, 2006 was £2,547,000 with £474,000 spent onexploration activities in Vietnam and the balance in Papua New Guinea. VIETNAM Pu Sam Cap (PSC) - The exploration licences for the PSC prospect area innorthern Vietnam were issued at the end of March 2005 as the first newexploration licences for gold issued by the Government of Vietnam since June2001. The area has long been regarded as prospective because of the highlyanomalous gold in streams found under a prospecting permit by Newmont MiningCorporation's predecessor Normany Mining in the early 1990s. Full exploration field programmes commenced in September 2005 and significantprogress has been made. No systematic exploration had ever been carried out atPSC prior to TPJ's work. In the last year, TPJ has • Established an operational base in the regional capital of Lai Chau Province and a network of logistical supply lines and bases to support the field teams; • Drilled three diamond drill holes in the Bai Bang prospect at PSC; • Completed a BLEG (Bulk Leach Extractable Gold) stream sediment sampling programme over most of the licence area, and conducted an aggressive programme of geological mapping, both ridge-and-spur and grid soil sampling and rock-chip sampling; • Undertaken an airborne geophysical survey using equipment and personnel sourced from Newmont Mining Corporation through our PSC partner Newmont Vietnam Pty Limited. The first and most obvious drill target at PSC was at the artisanal mining fieldat Bai Bang, where local miners have been winning spectacular gold grades fromsurface or near-surface workings along several kilometres of gold-bearingstructures for many years. Angled diamond drill holes BB-1 and BB-2 drilled fromnorth to south failed to intersect the gold-bearing zone. However, Hole BB-3drilled from south to north beneath the workings of the artisanal minersintersected mineralisation and confirmed that the zone had steepenedconsiderably from near surface so that it was running almost parallel with thefirst two holes or had bifurcated. The mineralised zone intersected in BB-3 is restricted to a two metre intervalfrom 122.5-124.5m returning 7.9 g/t gold. This two metre interval is compositedfrom adjacent 1m sample intervals running 12.4 g/t and 3.04 g/t. Other elementsare present in elevated values, namely copper at 0.74%, silver at 6.5 g/t andanomalous bismuth (113ppm) and antimony (63ppm). Six samples taken from insidean adit driven by the artisanal miners for 200 metres along the mineralisedstructure near surface returned an average value of 13.4 g/t gold, ranging from2.6 g/t gold to 30.7 g/t gold. The drilling result confirms the continuation at depth of the high grade goldzones mined by the artisanal miners at surface. However, although mineralisationin this structural zone extends over a strike length of several kilometres it isrelatively narrow and tightly constrained. TPJ is currently investigating theusefulness of ground IP geophysics as a method of determining where there may beany zones of significant dilation that could host greater widths of golddeposition, thus reducing the need for speculative drilling to locate suchzones. A world expert consulting for Newmont has visited the exploration licence areasand confirmed that the PSC geological complex consists of an alkaline suite ofphreatomagmatic breccias and maar-diatreme systems and intrusives, a favourableenvironment for gold mineralisation. The large volumes of potassicfeldspar-hematite alteration are similar to those seen in majorIron-oxide-Copper-Gold (IOCG) systems, and there are also some similarities toalteration characteristics of a number of alkaline epithermal gold systems. To explore the larger potential of PSC for a major IOCG or epithermal golddeposit, TPJ and Newmont have completed a helicopter-borne magnetic/radiometricsurvey. The survey was conducted on 200m spaced lines over the licences andtheir surrounds and on 100m spaced lines over the central PSC complex itself.Mean magnetometer ground clearance was 70m, a significant achievement in terrainthat ranged from 240m to 2,520m ASL along the flight lines. Approximately 3,165line km were completed. The geophysical interpretation has highlighted a number of intrusive-relatedtargets and magnetic features, both within and adjacent to the PSC complex. Oneof the magnetic anomalies in the south-central part of the PSC complex has asubdued response characteristic of a number of known major porphyry systems suchas at Alumbrera. In addition, several zones have been recognised in sedimentswhich appear to be due to alteration and are targets for replacement-style goldmineralisation. Encouragingly, some of the lower order BLEG stream sediment goldanomalies lie outside the areas of influence of local mining activity, and onein particular is coincident with a large area of low magnetic signatureinterpreted as a possible alteration zone. Full interpretation of theradiometrics is still being carried out. After such a long period of waiting for the PSC exploration licences to begranted, TPJ has received excellent co-operation from the central, provincialand district authorities, its Vietnamese partners, and Newmont Vietnam Pty Ltdas it has established its exploration base and operations. The Company has avery capable team of Vietnamese and expatriate geologists and support staff toprogressively investigate the anomalies generated by the geophysical and fieldprograms in preparation for new drilling campaigns. Papua New Guinea (PNG) In early 2006 TPJ appointed as its General Manager in PNG a senior Australiangeologist with many years of experience in PNG both in industry and ingovernment, including holding the position of Director of the Department ofMining until the end of 2004. TPJ has also strengthened its exploration teamwith additional experienced geologists and in-country logistical support. Nowwith a staff of 40 in PNG, the Company is aggressively tackling exploration ofits very large ground holdings, with excellent mineral potential. The ground wasapplied for in 2004 prior to the current resurgence of interest in PNG. Wau-Morobe-Kainantu - Around 10,000 sq.km of the total area of 14,000 sq.km ofTPJ's exploration licences in PNG are located in the Wau-Morobe-Kainantumineralised corridor which hosts major multi million ounce gold deposits likeHidden Valley, Wafi, Golpu and Kainantu. All of these deposits have recentlyeither come into production, or soon will be, prompting many to believe thecorridor constitutes an emerging new major mineral province. TPJ holds a verysignificant share of this exciting ground. In the past 12 months, TPJ has painstakingly evaluated existing data on a numberof criteria to prioritise targets in its Wau-Morobe-Kainantu licences.Prioritisation was completed in April 2006 and identified 186 targets, 35 withhigh priority and 16 areas for immediate investigation. Work is now moving aheadwith ground exploration to generate drill targets for testing in 2007. Some initial targets with encouraging results being worked up are: • The Wamum-Idzan Ck Cu-Au prospect located some 30km NW of Wafi has been drilled and sampled by previous companies. CRA made a non-JORC compliant resource estimate of 45Mt grading 0.3% Cu and 0.12 g/t Au. TPJ's strategy is to examine and test the higher grade zones associated with this low-grade volume of gold-copper mineralisation. Sampling by TPJ field geologists has confirmed and extended the surface assay results of previous workers. Individual assay results up to 4.97% Cu and 5.04 ppm Au indicate that higher grade zones occur within the system that warrant drilling. TPJ is trenching and mapping the altered mineralised zones and other untested extensions to better define future drill targets. • The Waits Ck Au prospect lies on the edge of the Markham Valley and is associated with an iron-rich skarn. TPJ's reconnaissance sampling has returned assay values up to 5.56g/t Au and 1.72% Cu from rock float with highly anomalous tellurium and arsenic values. This is typical of the signature of mineralisation related to Elandora porphyry intrusives in the Kainantu goldmine (1 Moz deposit). • The Otibanda Au prospect is centred on a 5-10m wide, east-west trending mineralised zone that can be traced along strike for about 650m, but is only exposed intermittently in stream banks. The highest grades of gold and copper mineralisation are associated with carbonate veins possibly controlled by a regional east-west shear system. The best rock chip samples from trenches, many oblique to mineralisation, were as follows: o 35m at 5.0 g/t Au o 2m at 4.6 g/t Au o 26m at 11.2 g/t Au o 3m at 11% Cu o 5m at 1.85 g/t Au. Sampling and mapping by TPJ has verified the surface results of previous workersand has uncovered significant extensions to these zones. The knownmineralisation outlined has the size and tenor to be commercially significant,and will warrant drill testing in 2007. • The Bayematu prospect consists of at least five widely spaced (50-100m apart) quartz veins with gold mineralisation, each 1-1.5m thick. One vein can be traced intermittently for about 800m, the others for about 100-200m, but ongoing mapping currently indicates longer strike lengths are likely. The mineralised veins can be followed down dip 100-150m due to the high relief, and host visible gold that is being actively mined by the locals. Channel samples collected from the veins returned 13.4g/t Au, 21.1 g/t Au and 9.9 g/t Au and 53g/t Au in a grab sample. Silver values vary widely with the highest grade sample being 3,000 g/t. This is an exciting prospect with results reminiscent of the famous gold -silver rich veins at Edie Creek. Crater Mountain - Crater Mountain remains an important project for TPJ in PNG.Drilling as a means to see beneath an ash blanket that covers the Neveramineralized zone has confirmed a very large gold-bearing system. This isindicated by low grade gold mineralisation occurring over wide zones around theNevera Fault which contains higher grade mineralisation such as 2 metres of 14.5g/t, 3.5 metres of 7.32 g/t and 1.5 metres of 12.55 g/t gold. However due to theerratic nature of the high grade gold mineralisation, economic viability has notbeen proven at this stage. Drilling has now been suspended after eleven diamonddrill holes to allow consolidation, interpretation and the collection of furtherfield data. On-going field mapping and sampling has returned an area of veryhigh silver-lead-zinc mineralisation in trenches with values up to 668 g/tsilver, 17.6% lead and 21.7% zinc. This and another vein with visible gold arebeing traced out at present. In any large multi-phased system such as Nevera, eleven holes are far too few totest its potential, and the area remains an attractive target. Manus Island - TPJ has made significant progress on Manus Island during thecourse of the year, focussing on a 12km long belt of mineral occurrences on thesouthern part of the Manus Licence that includes the Mt Kren copper prospect,and the Njekel, Kisi and East Worei epithermal gold prospects. At Mt Kren, continuous rock chip sampling over the copper-in-soil anomaly hasconfirmed the presence of a 600m long, shallow NE dipping slab of coppermineralisation. which gave 120m at 0.12% Cu, 60m at 0.18% Cu, and 25m at 0.3% Cuat the surface. The highest rock chip assay was 0.22 g/t gold and the highestcopper was 0.77%. Previous drilling has shown that copper values in this dippingblanket are higher grade proximal to near-vertical structures. Higher gradecopper (2.5%) and gold (0.6g/t) are also found as structurally controlled zonesat lower elevations. These structures are considered by TPJ as a valid targetfor future drilling. Re-interpretation of existing geophysical information over the Kren area by ourconsultant geophysicist indicates that the anticipated target type is an almostvertical dipping mineralised and silicified zone. Re-interpretation of the northKren data has resulted in the recommendation to drill test the postulatedwidespread sulphide mineralisation at depth. Regional mapping is continuing on epithermal style mineralisation east of Krenat Njekel and at Kisi. Njekel prospect area is defined by multi-element drainageanomalies with scattered epithermal quartz float trains in the creeks drainingNjekel. The hard rock source of these anomalies has yet to be identified. Kisi prospect located east of Njekel has scattered epithermal quartz floatcobbles assaying up to 44 g/t gold in a thick colluvial blanket that overlies ageneral north trending epithermal vein. Trenching is ongoing at Kisi and iscentred on the epithermal vein which has returned channel chip assays of 16mgrading 40 g/t gold including 2m grading 303 g/t Au. This is the highest goldvalue to ever come from Manus island and supports TPJ's concept that there is agood chance to find gold rich epithermal mineralisation. DRILL RIGS Due to the continued lack of drilling capacity globally, TPJ has purchased twoIngetrol Explorer MD diamond drill rigs. These lightweight rigs, designedoriginally to operate at very high altitudes in the Andes have a power to weightratio that makes them truly man-portable and serious exploration tools. This isan invaluable advantage in areas like Vietnam and Papua New Guinea wherehelicopters are either unavailable on a regular basis, in high demand by othersor expensive to operate. Such rigs also reduce the drilling "footprint" - thearea at a drilling site required to be cleared to service helicopter operations,particularly in forested areas. Under the management and supervision of a highly experienced drill operatorengaged by TPJ, the rigs will allow us to design drilling programs that areflexible and cost-effective, and give us the ability to increase our rate ofdrilling on multiple high quality targets that are emerging. During 2006 the Board has followed up on existing targets and identified newtargets within our exploration acreage with world-class potential for gold,copper and copper-gold deposits and consolidated a substantial foothold on anemerging mineral province. The treasury remains robust with £9.3m as at 31 March2006 available which allows the Company to continue to aggressively exploreexciting targets and build on our strong base. IAN GOWRIE-SMITH Chairman 26 September 2006 Consolidated Profit and Loss AccountFor the year ended 31 March 2006 2006 2005 Note £'000 £'000------------------------------------- ------ ------ ------Turnover 1 - -Administrative expenses (806) (788)------------------------------------- ------ ------ ------Operating loss (806) (788)Net interest 2 425 79------------------------------------- ------ ------ ------Loss on ordinary activities before taxation 5 (381) (709)Minority interest - 8------------------------------------- ------ ------ ------Loss sustained for the year 14,15 (381) (701)Loss per share 6 (0.42)p (1.81)p------------------------------------- ------ ------ ------ All operations are continuing. There were no recognised gains or losses other than the loss for the financialyear. Balance Sheets At 31 March 2006 Company Company Company Company 2006 2005 2006 2005 Note £'000 £'000 £'000 £'000----------------------- ------ ------- ------- ------- ------- Fixed assetsIntangible assets 7 13,353 10,806 - -Tangible assets 8 292 102 37 13Investments 9 - - 9,611 9,611 13,645 10,926 9,648 9,624----------------------- ------ ------- ------- ------- -------Current assetsDebtors 10 265 317 4,714 1,971Cash at bank and in hand 9,284 1,245 9,049 1,098 9,549 1,562 13,763 3,069Creditors: amounts falling duewithin one year 11 (394) (227) (203) (165) ------ ------- ------- ------- ------- Net current assets 9,155 1,335 13,560 2,904----------------------- ------ ------- ------- ------- -------Total assets less current 22,800 12,261 23,208 12,528liabilities ------ ------- ------- ------- ------------------------------ Capital and reservesCalled up share capital 13 944 609 944 609Share premium account 14 16,969 6,384 16,969 6,384Profit and loss account 14 4,895 5,276 5,295 5,535Minority interest (8) (8) - ------------------------ ------ ------- ------- ------- -------Shareholders' funds 15 22,800 12,261 23,208 12,528----------------------- ------ ------- ------- ------- ------- The financial statements were approved by the Board of Directors on 26 September2006. D J LEES Director Consolidated Cash Flow Statement For the year ended 31 March 2006 2006 2006 2005 2005 Note £'000 £'000 £'000 £'000----------------------------- ----- ------ ------ ------ ------Net cash outflow fromoperating activities 16 (506) (869) Returns on investments andservicing of financeInterest received 425 79----------------------------- ----- ------ ------ ------ ------Net cash inflow fromreturns on investments andservicing of finance 425 79 Capital expenditurePurchase of tangible fixedassets (253) (131)Purchase of intangiblefixed assets (2,547) (785)----------------------------- ----- ------ ------ ------ ------Net cash outflow fromcapital expenditure (2,800) (916) Management of liquid resourcesPurchase of short-termdeposits (7,500) - FinancingIssue of ordinary sharecapital 11,735 107Expenses paid in connectionwith share issues (815) -Net cash inflow fromfinancing 10,920 107----------------------------- ----- ------ ------ ------ ------ Increase/(decrease) in cash 17,18 539 (1,599)----------------------------- ----- ------ ------ ------ ------ Notes to the Financial Statements For the year ended 31 March 2006 1 TURNOVER AND LOSS ON ORDINARY ACTIVITIES BEFORE TAXATION No segmental analysis of net assets has been provided, as the assets andliabilities attributable to overseas activities are not separately identified.The activity was due to one segment and hence no segmental analysis is required. The loss on ordinary activities before taxation is stated after charging: 2006 2005 £'000 £'000------------------------------------------- ------ ------Operating lease rentals on land and buildings 35 55Auditors' remuneration- audit services 22 18- non audit services - tax compliance services 17 9 Depreciation- tangible fixed assets, owned 81 20------------------------------------------- ------ ------ 2 NET INTEREST 2006 2005 £'000 £'000------------------------------------------- ------ ------Bank interest receivable 425 79------------------------------------------- ------ ------ 3 DIRECTORS AND EMPLOYEESStaff costsStaff costs during the year (including directors' emoluments)were as follows: 2006 2005 £'000 £'000------------------------------------------- ------ ------Wages and salaries 312 432Social security costs 46 26Pension costs 25 32------------------------------------------- ------ ------ 383 490------------------------------------------- ------ ------ The average number of employees of the Company (including directors) during theyear was seven (2005: seven). 4 TAX ON LOSS ON ORDINARY ACTIVITIES There is no tax charge or credit for the year. An explanation of the taxposition compared to the Group reported results is set out below: 2006 2005 £'000 £'000------------------------------------------- ------ ------Loss on ordinary activities before taxation (381) (709)------------------------------------------- ------ ------Loss on ordinary activities before taxation multiplied by smallcompanies corporation tax rate of 19% (72) (135)Effect of:Expenses not deductible 40 55Movement in general provisions (3) 3Tax losses not recognised 35 77------------------------------------------- ------ ------Current tax charge for the year - -------------------------------------------- ------ ------ There are tax losses of approximately £899,000 (2005: £715,000) to carry forwardand use against future profits of the same trade. 5 LOSS FOR THE FINANCIAL YEAR The Company has taken advantage of section 230 of the Companies Act 1985 and hasnot included its own profit and loss account in these financial statements. Theparent company's loss after tax for the year was £240,000 (2005 : £442,000). 6 LOSS PER SHARE The calculation for the basic loss per share is based upon the loss attributableto ordinary shareholders divided by the weighted average number of shares inissue during the year. Reconciliation of the loss and weighted average number of shares used in thecalculations are set out below: 2006 2005------------------------------------------- ------ ------Basic loss per shareLoss on ordinary activities before tax (£'000) (381) (701)Weighted average number of shares (£'000) 90,924 38,728Amount of loss per share (pence) (0.42) (1.81)------------------------------------------ ------ ------ The options and warrants are anti-dilutive so there is no diluted loss pershare. 7 INTANGIBLE FIXED ASSETS Mineral exploration Licence costsGroup £'000------------------------------------------- ------------Cost and net book amountAt 1 April 2005 10,806Additions 2,547------------------------------------------- ------------At 31 March 2006 13,353------------------------------------------- ------------ 8 TANGIBLE FIXED ASSETS Camp, Long field and Office and leasehold Motor geological Computer property vechicles equipment equipment TotalGroup £'000 £'000 £'000 £'000 £'000--------------------- ------- ------- ------- -------- --------CostAt 1 April 2005 64 16 17 46 143Additions 2 105 52 94 253At 31 March 2006 66 121 69 140 396--------------------- ------- ------- ------- -------- -------- DepreciationAt 1 April 2005 1 4 4 14 23Charge for the year 1 30 17 33 81At 31 March 2006 2 34 21 47 104--------------------- ------- ------- ------- -------- -------- Net book amount at 31March 2006 64 87 48 93 292--------------------- ------- ------- ------- -------- -------- Net book amount at 31March 2005 63 12 13 32 120--------------------- ------- ------- ------- -------- -------- Office and Computer equipmentCompany £'000--------------------- ------- ------- ------- -------- --------CostAt 1 April 2005 21Additions 39At 31 March 2006 60--------------------- ------- ------- ------- -------- -------- DepreciationAt 1 April 2005 8Charge for the year 15At 31 March 2006 23--------------------- ------- ------- ------- -------- -------- Net book amount at 31March 2006 37--------------------- ------- ------- ------- -------- --------Net book amount at 31March 2005 13--------------------- ------- ------- ------- -------- -------- 9 INVESTMENTS Investments in subsidiary undertakingCompany £'000--------------------------- ------------ -------- ---------Cost and net book valueAt 1 April 2005 and 31 March 2006 9,611--------------------------- ------------ -------- --------- At 31 March 2006 the subsidiaryundertakings were Contry of Class of ProportionSubsidiary undertaking incorporation Share held held--------------------------- ------------ -------- ---------Crater Mountain Resources Limited British Virgin Ordinary 68% IslandsLarchland Limited* British Virgin Ordinary 100% IslandsTriple Plate Junction (PNG) Limited British Virgin Ordinary 100%--------------------------- Islands -------- --------- ------------Vietnam Resources Corporation (PSCHoldings) Pty Ltd(a subsidiary of Larchland Limited)* Australia Ordinary 100%Takara Limited (a subsidiary ofLarchland Limited)* Bahamas Ordinary 100%Terenure Limited (a subsidiary ofTriple Plate Junction(PNG) Limited) Papua New Ordinary 100% GuineaTriple Plate Junction Limited (asubsidiary of VietnamResources Corporation (PSCHoldings) Pty Ltd* British Virgin Ordinary 51%--------------------------- Islands -------- --------- ------------Vietnam Resources Corporation (PSC)Pty Ltd (asubsidiary of Vietnam ResourcesCorporation (PSCHoldings) Pty Ltd)* Australia Ordinary 100%--------------------------- ------------ -------- --------- \* These companies form the Larchland group. The only subsidiaries which traded during the year were Terenure Limited andTriple Plate Junction Limited. All the other subsidiaries were managementcompanies incurring administrative expenses. 10 DEBTORS 2006 2005Group £,000 £'000------------------------------------------- ------ ------VAT recoverable 30 104Prepayments 77 41Other debtors 158 172------------------------------------------- ------ ------ 265 317------------------------------------------- ------ ------ 2006 2005Company £,000 £'000------------------------------------------- ------ ------Amounts owed by Group undertakings 4,590 1,853VAT recoverable 30 104Prepayments 31 12Other debtors 63 2 4,714 1,971------------------------------------------- ------ ------ 11 CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR 2006 2005Group £,000 £'000------------------------------------------- ------ ------Trade creditors 222 127Social security and other taxes 43 13Other creditors - 9Accruals and deferred income 129 78------------------------------------------- ------ ------ 394 227------------------------------------------- ------ ------ 2006 2005Company £,000 £'000------------------------------------------- ------ ------Trade creditors 132 72Social security and other taxes 8 10Other creditors - 7Accruals and deferred income 63 76------------------------------------------- ------ ------ 203 165------------------------------------------- ------ ------ 12 FINANCIAL INSTRUMENTS The Group uses financial instruments comprising only cash balances that arisefrom its operations. The main purpose of these financial instruments is to raisefinance for the Group's operations and new acquisitions. Short-term debtors and creditors Short-term debtors and creditors have been excluded from all the followingdisclosures, other than the currency risk disclosure. Currency risk The Group operates within the UK, Papua New Guinea (PNG) and Vietnam and alltransactions are denominated in sterling, PNG kinas, Vietnamese dong, Australiandollars or US dollars. As such the Company is exposed to transaction foreignexchange risk. The mix of currencies and terms of trade is such that thedirectors believe that the Company's exposure is minimal and consequently theydo not specifically seek to hedge that exposure. At 31 March 2006, the Companyhad cash balances of £119,000 (2005: £21,000) in US dollars, £24,000 (2005:£125,000) in PNG kinas and £3,000 (2005: nil) in Vietnamese dong. Most of theGroup's funds are in sterling with only sufficient funds held overseas to meetlocal costs. Funds are periodically transferred overseas to meet local costswhen required. Fair values The fair values of the Group's instruments are considered equal to the bookvalue. Liquidity risk Liquidity risk is the risk that the Group will have insufficient funds to meetits liabilities as they fall due. The directors monitor cash flow on a dailybasis and at monthly Board meetings in the context of their expectations for thebusiness to ensure sufficient liquidity is available to meet foreseeable needs. Interest rate risk The directors do not consider that the business is exposed to material interestrate risk. The Group finances its operations through cash reserves. The cashreserves held by the Group during the year have negated the need to use anyinterest bearing short-term borrowings. The directors' policy on surplus cash isto invest it safely to obtain the best rate of return and ensure it is availablefor operations when necessary. The cash is invested with two or three banks atany one time and accrues interest at a fixed or floating rate. 13 SHARE CAPITAL 2006 2005Company £'000 £'000------------------------------------------- ------ ------Authorised187,855,557 ordinary shares of 1p each 1,879 1,879------------------------------------------- ------ ------Allotted, called up and fully paid94,414,795 (2005: 60,884,445) ordinary shares of 1p each 944 609------------------------------------------- ------ ------ Issue of new sharesThe Company made allotments of 33,530,350 ordinary 1p sharesduring the year for cash. Aggtegate Number Average Consideration nominal value of shares price £'000 £'000 ------------------ ---------- ---------- ---------- ----------9 May 2005 21,308,350 35p 7,458 2139 May 2005 12,222,000 35p 4,277 122------------------ ---------- ---------- ---------- ---------- 33,530,350 11,735 335 ------------------ ---------- ---------- ---------- ---------- 14 SHARE PREMIUM ACCOUNT AND RESERVES Share premium Profit and loss account accountGroup £'000 £'000------------------------------------- -------- ---------At 1 April 2005 6,384 5,276Retained loss for the year - (381)Premium on issue of new shares 11,4000 -Expenses for share issue (815) -------------------------------------- -------- ---------At 31 March 2006 16,969 4,895------------------------------------- -------- --------- Share premium Profit and loss account accountCompany £'000 £'000------------------------------------- -------- ---------At 1 April 2005 6,384 5,535Retained loss for the year - (240)Premium on issue of new shares 11,400 -Expenses for share issue (815) -------------------------------------- -------- ---------At 31 March 2006 16,969 5,295------------------------------------- -------- --------- 15 RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS 2006 2005Group £'000 £'000------------------------------------- -------- ---------Loss for the financial year (381) (701)Issue of shares 11,735 6,607Issue costs (815) -Minority interest - (8)------------------------------------- -------- ---------Net increase in shareholders' funds 10,539 5,898Shareholders' funds at 1 April 12,261 6,363------------------------------------- -------- ---------Shareholders' funds at 31 March 22,800 12,261------------------------------------- -------- --------- 16 NET CASH OUTFLOW FROM OPERATING ACTIVITIES 2006 2005 £'000 £'000------------------------------------- -------- ---------Operating loss (806) (788)Depreciation 81 20Decrease/(increase) in debtors 52 (139)Increase in creditors 167 38------------------------------------- -------- ---------Net cash outflow from operating activities (506) (869)------------------------------------- -------- --------- 17 RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET FUNDS 2006 2005 £'000 £'000---------------------------------------- ------- -------Increase/(decrease) in cash in the year 539 (1,599)Purchase of short-term deposit liquid resources 7,500 ----------------------------------------- ------- -------Change in net funds during the year 8,039 (1,599)Net funds at 1 April 1,245 2,844---------------------------------------- ------- -------Net funds at 31 March 9,284 1,245---------------------------------------- ------- ------- 18 ANALYSIS OF CHANGES IN NET FUNDS At 1 April 2005 Cash flow At 31 March 2006 £'000 £'000 £'000 ------------------------- ---------- -------- ------------Cash in hand and at bank 1,245 8,039 9,284------------------------- ---------- -------- ------------ 19 CAPITAL COMMITMENTS Neither the Group nor the Company had any capital commitments at 31 March 2006or 31 March 2005. 20 CONTINGENT LIABILITIES There were no contingent liabilities at 31 March 2006 or 31 March 2005 otherthan contingent deferred consideration estimated at £10 million (2005: £10million) which becomes payable if either of the following events crystallise: a. any member of the Larchland Group having discovered a proven deposit of atleast three million ounces of gold or gold equivalent and such deposit havingbeen proven to be capable of extraction by bulk-mining methods; or b. a bona fide takeover offer having been made for the entire issued sharecapital of the Company which values the Company at no less than £133,333,333 In the event either of the above events crystallise any liability would besettled by further payment in the form of a share issue is due equal to thelesser of: • 33,333,333 consideration shares of 1p each issued at the market value at the date of issue; or • such number of consideration shares as will be equal to 7.5% of the number of ordinary shares in issue. As none of these events had happened at the year end the deferred considerationhas not been recognised as a liability. The contingency arose when the Company acquired the Larchland Group from thevendors in the year ended 31 March 2005 and was part of the terms of the saleand purchase agreement. 21 RELATED PARTY TRANSACTIONS During the year the Group entered into transactions with the followingorganisations, which were related by virtue of common directors and officers: During the year Namesco Limited, a company in which director D J Lees was adirector and shareholder, charged the Company £4,000 (2005: £21,000) for ITservices. Included in other creditors was an amount of £49,000 (2005: £27,000) due toThornaby Limited, a company controlled by a director, I R Gowrie Smith. 22 STATUS OF ACCOUNTS The financial information set out above does not constitute the Group'sstatutory accounts for the years ended 31 March 2006 or 31 March 2005 but isderived from those accounts. Statutory accounts for the year ended 31 March 2005have been delivered to the Registrar of Companies, and those for the year ended31 March 2006 will be delivered following the Company's Annual General Meeting.The auditors have reported on those accounts; their reports were unqualified anddid not contain statements under Section 237(2) or (3) of the Companies Act1985. The statutory accounts for the year ended 31 March 2006 will be posted toshareholders shortly. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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