27th Aug 2010 07:00
27th August 2010
AIM: TPJ
Triple Plate Junction PLC
(the "Company" or "TPJ")
RESULTS FOR THE YEAR ENDED 31ST MARCH 2010
Highlights:
·; TPJ has some exceptional exploration opportunities in Papua New Guinea, working with some of the best possible joint venture partners, including Newmont and Barrick. Any one of these joint ventures, if successful, could have a material uplift on the prospects of the Company.
·; Provided that funding becomes available, then, overall, the newly reconstituted board is optimistic about the opportunities that lie ahead.
·; Resolutions will be proposed at the Annual General Meeting on 30th September 2010 to enable the Board to allot shares to give the opportunity, inter alia, for a fund raising in the autumn.
TPJ the AIM listed gold exploration company focussed on South East Asia today announces its results for the year ended 31st March 2010.
Tony Shearer, Chairman of TPJ said "Any one of our joint ventures with Newmont, Barrick or Golden Anomaly, if successful, could have a material uplift on the prospects of the Company. "
Enquiries:
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Triple Plate Junction PLC |
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Tony Shearer, |
020-7602-1570 |
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Arbuthnot Securities |
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Nick Tulloch/Richard Johnson |
020 7012 2000 |
Chairman's Statement
I am pleased to present my first Annual Report statement since being appointed Chairman of Triple Plate Junction three months ago. Since that time there has been a significant restructure in the composition of your Board.
The new Board has undertaken an initial review of the Company, and on 30th July 2010 I wrote to shareholders sayingthat:
1. The Board's initial assessment was that the Company has some exceptional exploration opportunities in Papua New Guinea ("PNG"), working with some of the best possible joint venture partners, including Newmont and Barrick. Any one of these joint ventures, if successful, could have a material uplift on the prospects of the Company. We are assessing these joint ventures to understand better the potential they offer to TPJ, and are looking at the scope for additional opportunities for TPJ beyond these JVs.
2. It would take us longer to assess the opportunities in Vietnam where we are finalising the re-issue of the Company's exploration licences.
3. Provided that funding becomes available, then, overall, the newly reconstituted board was optimistic about the opportunities that lie ahead.
4. In order to develop these opportunities, it was likely that the Company would need to gain access to further funds. We estimated that we would need to raise, in the autumn of 2010, a substantial amount of new funding in relation to the Company's market value to fund its activities through to the spring of 2011. This was in addition to the £230,000 of shareholders' loans that we raised at the beginning of July 2010.
Financial position
The Company's financial position as at 26th August 2010 is that bank balances stand at approximately £175,000 and liabilities are estimated at £320,000. These liabilities include all amounts claimed by the former Directors and also those owing to Bill Howell, as set out in the Remuneration Report.
The attached financial statements for the Group for the year ended 31st March 2010 have been prepared based on the information that is available to us, though we do not yet have a full understanding of the legal agreements relating to the joint ventures: We simply have not had the time or the resources to understand them fully. Accordingly the audit report is modified on the grounds of doubts over whether the Company is a "going concern" (similar to last year's qualified audit report), and also because we are not yet able to provide the auditors with certainty over our interpretation of these agreements. The Directors do not regard these qualifications as serious. The important aspects are the Company's cash position and creditors, and also the state of the exploration projects.
Review of Exploration
At the beginning of August, Bill Howell had a very successful and encouraging trip to see our joint venture partners, and to make our first visit to PNG since 2008. He and Patrick Gorman are making another visit during the first half of September, and at the same time ACA Howe International Ltd ("ACA Howe") have been engaged to carry out an independent desk top review of the projects. ACA Howe were selected to prepare this review since Dr Dave Patrick, Principal Geologist and Director, has extensive knowledge of most of the Company's' properties and on behalf of the Company has previously visited and reported on Pu Sam Cap, Morobe and Crater Mountain projects. I expect that Patrick and Bill will be in a position to report on these at the Annual General Meeting, and that we will issue a further written report at about that time or else in October.
Composition of the Board and Officers
The Board now comprises Bill Howell (interim CEO and Exploration Director) who lives in Vietnam, Terry Cross (Finance Director who lives in England), and three Non-Executive Directors (Patrick Gorman, Chris Goss and me) who all live in England.
Resolutions to be proposed at the Annual General Meeting
As well as the usual resolutions, we are proposing certain other important resolutions to the Annual General meeting to:
1. Grant the Directors the authority to allot new ordinary shares (by way of Ordinary Resolution) and to disapply statutory pre-emption rights on the allotment of such new ordinary shares (by way of Special Resolutions). These resolutions would enable the Board to raise new funds (subject to market conditions), to allow the shareholders who lent us essential money in July to convert those loans into shares, and to allow the allotment of ordinary shares to warrant and option holders should they choose to exercise their warrants and options. If these resolutions are not passed the Company has agreed to provide the lending shareholders with such security as the parties may agree. Resolution 8 gives authority to allot shares up to an aggregate nominal amount of £10 million. We do not expect to allot anything like this amount of shares, but this authority needs to last for a year, and we have to set a maximum on the amount, so have taken the side of extreme caution.
2. Make certain changes (by way of Special Resolution) to the Company's Memorandum and Articles of Association in line with the Companies Act 2006, including the removal of the concept of "authorised share capital" from the Articles (thus allowing the Board, subject to existing shareholder authority, to allot an unrestricted number of shares in the future without having to increase the authorised share capital).
If these resolutions are not passed by the requisite majorities then the future of the Company looks very bleak indeed. In particular, the Special Resolutions require at least 75% of those shareholders voting to vote in favour in order for them to be carried.
The authorities to allot new ordinary shares and to disapply statutory pre-emption rights on the allotment of such new ordinary shares will allow shares to be allotted, under the terms of their remuneration packages, to three of the non-executive directors (I use this term lightly as on average Patrick Gorman, Chris Goss and I each spend at least half our time on the Company's business). When we agreed to join the Board the Company had no money to pay us and we agreed to defer any fees to October. Furthermore, there is no current authority to allow shares to be allotted on exercise of our share options. Accordingly, and following consultation with some major shareholders, we created a remuneration package that included an element of equity allotment. The terms of these packages are summarised in the Remuneration Report set out below, and copies of the relevant agreements will be available for inspection by shareholders at the Annual general meeting.
If these resolutions are passed it is therefore likely that, in order to develop the opportunities, the Company will need to gain access to further funds. We currently estimate that we will need to raise, in the autumn of 2010, a substantial amount of new funding in relation to the Company's market value to fund its activities through to the spring of 2011. This is in addition to the £230,000 of shareholders' loans that we raised at the beginning of July 2010. We expect that in late September we will know how much money we will seek to raise, and we hope to be in a position to announce this at, or shortly after, the Annual General Meeting.
Conclusion
Our findings, plans and recommendations are:
1. To complete our assessment of the exploration projects, including delivery of an independent geological report;
2. At the Annual General Meeting at the end of September 2010, or shortly thereafter, to update shareholders with the latest information including the results of our assessment of the exploration projects;
3. To raise adequate funds in the autumn of 2010 to enable the Company to continue to operate into 2011 pursuant to the Directors' determined strategy;
4. To continue with the programme that we have already re-introduced of continuous reviews and monitoring of the joint ventures in PNG;
5. To make a decision as to whether to re-commence exploration work in Vietnam;
6. To continue to keep shareholders informed of developments at the Company and on its projects.
I hope that you will be able to attend the Annual General Meeting on 30th September 2010, when my colleagues and I hope to meet you and to update you on our progress.
Tony Shearer, 27th August 2010
Review of the Group
The Company explores for gold in Papua New Guinea ("PNG") and Vietnam. The more advanced projects are in PNG, where TPJ has three active joint ventures. The ownership of the projects is, according to our current understanding, as set out below. The legal agreements are complex, and we are currently reviewing them to make sure we have a full understanding of their exact terms and obligations.
Papua New Guinea
- Newmont (Morobe)
Newmont will earn 51% in the joint venture if they spend US$ 6 million by 23rd December 2012. They have so far spent approximately $ 5.4 million. They would earn an extra 19% if they spend a further US$ 9 million within the six years up to 23rd December 2014 or by completing a feasibility study report. After that time TPJ (through its wholly owned PNG subsidiary Terenure Limited) may elect to have Newmont solely fund all project expenditure until commencement of commercial production and Newmont's interest would increase from 70% to 75% and TPJ's 25% share of development expenditures would be repaid with interest out of venture distributions. Alternatively TPJ may elect to provide its 30% share of the funding. If a party dilutes to below 10%, the diluting party's interest would convert to a Net Smelter Return of 1%.
- Barrick (Wamum)
Barrick earned 80% in the joint venture for which they had to spend A$ 5 million. They have spent just under A$ 8.9 million to date, and TPJ, through Terenure, has not been providing its pro rata share of its funding beyond the A$5 million and hence has been diluted below its 20%. It held about 12.8% of the project at end 2009. It now holds approximately 12%, but this will be down to approximately 11.7% if Barrick spend the A$ 970,000 that they have budgeted for the approved programme in 2010. If TPJ does not provide its share of the funding going forward it would continue to be diluted; if TPJ dilutes below 5% then the interest converts into a Net Smelter Return of 1%
- Gold Anomaly (Crater Mountain)
Gold Anomaly are currently engaged on Phase 2 of the work programme, which when completed will earn them 70% of the project. TPJ, through Terenure, will then own 20% and a TSX-V listed company New Guinea Gold Corporation 10%. TPJ will need thereafter to contribute its share of expenditure to maintain its interest in the project. If TPJ does not contribute and so dilutes further, it has a minimum non-dilutable share of 10% up to feasibility stage.
Vietnam
Significant exploration was carried out at the Pu Sam Cap project in Vietnam from 2005 to 2009. Under Vietnam's Mineral Law the Company's licences then expired in accordance with a maximum four year exploration term but may be re-issued for a further two years if additional work can be justified. The Vietnamese authorities have told the Company that they are in the process of preparing to re-issue documents. On being offered the new licence, TPJ would need to pay a performance deposit of about £150,000 before the licence is formally issued, and this deposit would be repaid after 6 months if TPJ has commenced an agreed exploration work programme. The scope and cost of the work programme is subject to our internal review and that of the independent geologist. TPJ has 70% of the project, with various central and provincial Government agencies holding 30%.
Before TPJ pays the deposit we need to be satisfied that the political and investment conditions of operating in Vietnam represent an acceptable risk. Soundings are being taken through the Company's networks and through discussions on the ground, and the Directors hope to provide shareholders with some initial views on this aspect in due course.
Consolidated income statement
For the year ended 31 March 2010
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2010 |
2009 |
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£'000 |
£'000 |
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Revenue from provision of office management services |
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97 |
122 |
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Cost of sales |
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- |
- |
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Gross profit |
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97 |
122 |
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Administrative expenses |
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(935) |
(573) |
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Impairment of assets |
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- |
(19,040) |
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Operating loss |
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(838) |
(19,491) |
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Investment income |
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6 |
10 |
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Finance cost |
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(14) |
- |
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Loss before taxation |
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(846) |
(19,481) |
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Income tax expense |
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- |
- |
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Loss for the year from continuing operations |
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(846) |
(19,481) |
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Profit for the year from discontinued operations |
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1,542 |
905 |
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Profit / (loss) for the year attributable to equity holders of the parent |
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696 |
(18,576) |
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Basic and diluted profit / (loss) per share (pence): |
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On continuing operations |
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(0.53)p |
(14.77)p |
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On discontinued operations |
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0.96p |
0.68p |
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Total |
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0.43p |
(14.09)p |
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Consolidated statement of comprehensive income
For the year ended 31 March 2010
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2010 |
2009 |
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£'000 |
£'000 |
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Profit / (loss) for the year |
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696 |
(18,576) |
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|
|
Other comprehensive income: |
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Exchange differences on translating foreign operations |
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(864) |
3,108 |
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Exchange differences on disposal of subsidiaries reclassified through income statement |
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(802) |
- |
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Total comprehensive income for the year attributable to equity holders of the parent |
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(970) |
(15,468) |
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Consolidated balance sheet
As at 31 March 2010
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2010 |
2009 |
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£'000 |
£'000 |
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Assets |
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Property, plant & equipment |
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- |
56 |
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Intangible assets |
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9,180 |
9,295 |
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Total non-current assets |
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9,180 |
9,351 |
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Trade and other receivables |
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2 |
409 |
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Cash and cash equivalents |
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58 |
203 |
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Total current assets |
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60 |
612 |
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Total assets |
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9,240 |
9,963 |
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Equity attributable to owners of the parent |
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Issued share capital |
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1,688 |
1,518 |
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Shares to be issued |
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- |
251 |
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Share premium |
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21,212 |
20,623 |
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Share option reserve |
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1,327 |
1,327 |
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Translation reserve |
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1,405 |
3,071 |
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Retained earnings |
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(17,191) |
(17,887) |
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Total equity |
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8,441 |
8,903 |
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Liabilities |
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Current liabilities |
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Trade and other payables |
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799 |
1,060 |
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Total Liabilities |
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799 |
1,060 |
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Total equity and liabilities |
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9,240 |
9,963 |
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Consolidated statement of cash flows
For the year ended 31 March 2010
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2010 |
2009 |
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£'000 |
£'000
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|
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Cash flows from operating activities |
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|
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Profit / (loss) before and after tax |
|
696 |
(18,576) |
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Interest received |
|
(6) |
(10) |
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Finance cost |
|
14 |
- |
|
Operating profit / (loss) |
|
704 |
(18,586) |
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Depreciation and amortisation charge |
|
56 |
229 |
|
Impairment of property, plant and equipment |
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- |
1,996 |
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Intangible assets written-off or provided for |
|
- |
15,224 |
|
Profit on disposal of property, plant and equipment |
|
- |
(220) |
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Profit on disposal of subsidiaries |
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(740) |
- |
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Exchange gain on disposal of subsidiaries |
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(802) |
- |
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(Increase) / decrease in inventories |
|
- |
83 |
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Decrease /(increase) in trade and other receivables |
|
407 |
134 |
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Increase / (decrease) in trade and other payables |
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(261) |
653 |
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|
|
|
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Net cash outflow from operating activities |
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(636) |
(487) |
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|
|
|
|
|
Cash flows from investing activities |
|
|
|
|
Interest received |
|
6 |
10 |
|
Acquisition of property, plant and equipment |
|
- |
(501) |
|
Acquisition of intangible assets |
|
- |
(2,811) |
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Proceeds from sale of property, plant and equipment |
|
- |
338 |
|
|
|
|
|
|
Net cash inflow/(outflow) outflow from investing activities |
|
6 |
(2,964) |
|
|
|
|
|
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Financing activities |
|
|
|
|
Proceeds from issue of equity shares |
|
508 |
2,285 |
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Proceeds from shares to be issued |
|
- |
251 |
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Net cash raised from financing activities |
|
508 |
2,536 |
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|
|
|
|
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Net decrease in cash and cash equivalents |
|
(122) |
(915) |
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Cash and cash equivalents at beginning of period |
|
203 |
1,177 |
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Exchange differences |
|
(23) |
(59) |
|
|
|
|
|
|
Cash and cash equivalents at end of period |
|
58 |
203 |
|
|
|
|
|
Consolidated statement of changes in equity
For the year ended 31 March 2010
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|
Share capital |
Shares to be issued |
Share premium |
Share option reserve |
Trans-lation reserve |
Retained earnings |
Total equity |
|
|
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
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At 1 April 2008 |
1,049 |
- |
18,807 |
1,327 |
(37) |
689 |
21,835 |
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Loss for the year |
- |
- |
- |
- |
- |
(18,576) |
(18,576) |
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Exchange difference on translating foreign operations |
- |
- |
- |
- |
3,108 |
- |
3,108 |
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Total comprehensive income for the year attributable to equity holders of the parent |
- |
- |
- |
- |
3,108 |
(18,576) |
(15,468) |
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Shares issued |
469 |
251 |
1,816 |
- |
- |
- |
2,536 |
|
At 31 March 2009 |
1,518 |
251 |
20,623 |
1,327 |
3,071 |
(17,887) |
8,903 |
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Profit for the year |
- |
- |
- |
- |
- |
696 |
696 |
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Exchange difference on translating foreign operations |
- |
- |
- |
- |
(864) |
- |
(864) |
|
Exchange differences reclassified through income statement |
- |
- |
- |
- |
(802) |
- |
(802) |
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Total comprehensive income for the year attributable to equity holders of the parent |
- |
- |
- |
- |
(1,666) |
696 |
(970) |
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Shares issued |
170 |
(251) |
589 |
- |
- |
- |
508 |
|
At 31 March 2010 |
1,688 |
- |
21,212 |
1,327 |
1,405 |
(17,191) |
8,441 |
Notes
1. Financial statements
The financial information set out in this preliminary announcement does not constitute statutory accounts within the meaning of Section 434 of the Companies Act 2006 for the year ended 31 March 2010 or for the years ended 31 March 2009 or 31 March 2008, but is derived from those accounts. The financial statements for 2010 will be delivered to the Registrar of Companies prior to the Company's Annual General Meeting. The auditors have issued a qualified report on the 2010 accounts, with a limitation of audit scope and an "Emphasis of Matter - Going concern" note, as quoted in the extract from the auditor's report below.
2. Extract from auditor's report
Qualified opinion on financial statements arising from limitation in audit scope
"The audit evidence available to us was limited in respect of amounts and disclosures reflected in the financial statements relating to the Group's joint ventures in Papua New Guinea. The Group has disclosed an intangible asset of £9,180,000 representing deferred exploration costs on these joint ventures (note 13). As described in note 2 (a), the Group has three active joint ventures in Papua New Guinea and the Board have stated that the legal agreements are complex and they are currently reviewing them to make sure they have a full understanding of the exact terms and obligations. Accordingly, we have not obtained all the information and explanations that we considered necessary for the purpose of our audit and we are unable to determine whether the valuation of the intangible asset is accurate and / or whether disclosures in the financial statements are complete with regard to financial or other obligations under the joint venture agreements. There were no other satisfactory audit procedures that we could adopt to satisfy ourselves with regard to the valuation of the intangible asset and disclosures related to obligations under the joint ventures. Had this information been available to us we might have formed a different opinion on the financial statements.
Except for the financial effects of the adjustments, if any, as might have been determined to be necessary had we been able to obtain complete information on the joint venture projects, in our opinion:
·; the financial statements give a true and fair view of the state of the group's and parent company's affairs as at 31 March 2010 and of the group's profit for the year then ended;
·; the group financial statements have been properly prepared in accordance with IFRS as adopted by the European Union;
·; the parent company financial statements have been properly prepared in accordance with IFRS as adopted by the European Union and as applied in accordance with the provisions of the Companies Act 2006; and
·; the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.
"Emphasis of Matter - Going concern
In forming our opinion on the financial statements we have considered the adequacy of the disclosure made in note 2(b) to the financial statements concerning the company's ability to continue as a going concern. As described in that note, the company has raised funds subsequent to the balance sheet date and is proposing to raise further funds in the autumn. However, there is no guarantee that that these funds will become available and these conditions, along with the other matters explained in note 2(b) to the financial statements, indicate the existence of a material uncertainty which may cast significant doubt about the company's ability to continue as a going concern. The financial statements do not include the adjustments that would result if the company was unable to continue as a going concern."
Note 2b) in the financial statements, referred to in the above extract from the auditor's report, reads as follows:
"Going concern
The Chairman's Statement explains that the group had cash balances of approximately £175,000 as at 26 August 2010 with total estimated liabilities at that date of £320,000, including amounts claimed by former directors.
Whilst the exploration work in Papua New Guinea is currently being funded by our joint venture partners, Barrick, Newmont, and Gold Anomaly, the Directors are aware that the Group needs future funding to continue its operations and pay its liabilities. It has had preliminary discussions with certain shareholders, and believes that adequate funds will become available over the next few months and in the first part of 2011, and intends to propose resolutions at the Annual General Meeting on 30th September 2010 to enable these funds to be raised. Details of these resolutions are set out in the Notice of Annual General Meeting, and explained in the Chairman's Statement. Accordingly the Directors believe that the Group will be able to obtain sufficient cash resources to continue its operations and to meet its commitments for the foreseeable future.
The financial statements have been prepared on the going concern basis, notwithstanding the above, and do not reflect any adjustments that would be required if this was not appropriate. Such adjustments might include provisions to write down the remaining assets to net realisable values. This indicates the existence of a material uncertainty which may cast significant doubt about the Company's ability to continue as a going concern".
3. Summary of significant accounting policies
a) Basis of preparation
These financial statements have been prepared in accordance with International Financial Reporting Standards ("IFRS") as adopted by the European Union, and with those parts of the Companies Act 2006 applicable to companies reporting under IFRS.
The consolidated financial statements incorporate the financial statements of the Company and entities controlled by the Company (its subsidiaries) made up to 31 March each year.
b) Intangible fixed assets
Deferred exploration and evaluation costs
Exploration and evaluation (E & E) expenditure costs comprise costs associated with the acquisition of mineral rights and mineral exploration, including those incurred through jointly held assets, and are capitalised as intangible assets pending determination of the feasibility of the project. They also include certain administrative costs that are allocated to the extent that those costs can be related directly to operational activities.
If an exploration project is deemed successful based on feasibility studies, the related expenditures are transferred to development and production (D & P) assets and amortised over the estimated life of the ore reserves on a unit of production basis. Where a project is abandoned or considered to be no longer economically viable, the related costs are written off in the income statement.
To date the Group has not progressed to the development and production stage in any areas of operation.
4. Dividends
The directors do not recommend the payment of a dividend (2009: nil)
5. Intangible fixed assets
|
|
2010 |
2009 |
|
|
£'000 |
£'000 |
|
Deferred exploration costs |
|
|
|
At beginning of the year |
9,295 |
18,741 |
|
Additions |
- |
2,811 |
|
Written off |
- |
(15,224) |
|
Exchange difference |
(115) |
2,967 |
|
At end of the year |
9,180 |
9,295 |
|
|
|
|
Annual Report
The Annual Report will be sent to all shareholders on or around 6 September 2010 and will be available on the Company's website at www.tpjunction.com. Additional copies will be made available to the public, free of charge, from the Company's registered office at Cobbetts LLP, 70 Gray's Inn Road, London, WC1X 8BT.
Annual General Meeting
The Company's Annual General Meeting will be held at the Little Ship Club, Bell Wharf Lane, Upper Thames Street, London, EC4R 3TB at 2:30pm on Thursday 30th September 2010.
Related Shares:
Tethyan Resources