23rd Apr 2009 07:00
Alexander Mining plc
23 April 2009
Preliminary Results for the year ended 31 December 2008
Alexander Mining plc ("Alexander", the "Company"), the AIM-listed mining and mineral processing technologies company, announces its preliminary results for the year ended 31 December 2008.
Key points:
Growing interest in proprietary MetaLeach technology as mining companies look to cut costs.
Eleven revenue-generating agreements with mining companies, including majors, signed to date and discussions for many more.
Third parties to use technology in exchange for royalties, licence fees or minority project interests.
Healthy cash position of £4.9m at 31 December 2008, equivalent to 3.7p per share, with significantly reduced costs.
Chairman's Statement
In my statement last year, I stressed that the most important development for Alexander had been the creation of its wholly owned subsidiary, MetaLeach Limited ("MetaLeach"). I am pleased to report that the subsequent transformation of the Company's business to focus solely on MetaLeach has seen notable and growing success. Moreover, this has been achieved against the difficult backdrop of the global economic crisis.
MetaLeach was formed for the commercialisation of Alexander's innovative and exciting proprietary mineral processing technologies. These technologies are focused on hydrometallurgical leaching processes that give a greater economic return to the mine owner.
Making comments on the state of the global economy and its impact on the mining sector may seem superfluous. However, ironically, there has been a silver lining for the MetaLeach business. With the precipitous fall in base metals prices during the last year, especially from mid-2008, the deleterious impact on operating margins has forced companies to cut costs wherever possible. The halcyon days of large margins and accompanying financial complacency have long gone. In this environment, MetaLeach has found that the scope for major operating and capital cost savings for existing and potential mines is of even greater interest.
All of our work has centred on our most advanced processing technology, the AmmLeach® ammonia based process, initially developed at our Leon project in Argentina. It is especially suited to the leaching and selective extraction of metals from high acid consuming copper and zinc oxide ores. Our efforts have been devoted to forming a database of companies with suitable deposits and mines worldwide that are probable candidates and a direct marketing campaign to those companies about using the process. As a result, we have secured keen interest from a number of parties, which has led to amenability testwork programmes conducted by MetaLeach and, importantly, our first revenues.
To date, we have eleven revenue generating testwork agreements signed with parties, including multinational mining groups, as well as intermediate and junior companies. The stated commercialisation objective of increasing this revenue stream is well under way, with the ultimate aim of securing future royalties/licence payments in attractive base metals projects and/or mines. The other major commercialisation opportunity for the Company is in the acquisition of equity stakes in attractive base metals deposits, either as free carried interests from assigning rights to use the technology, or, on a prudent basis, via other means. It is important to stress that, from a MetaLeach perspective, the aforementioned silver lining also embraces the valuation of mineral deposits. From the exaggerated asset prices of recent times, there has been a major collapse to what one can, as a 'buyer', call bargain basement prices. This has greatly enhanced the leverage that we can subsequently enjoy through equity in base metals deposits amenable to MetaLeach technologies.
At our Leon copper project in Argentina, our caution, expressed over a year ago, about the fiscal regime for foreign mining company investment has been shown to be well founded. Naturally, overarching this situation has been the parlous state of the global economy and the damaging impact on the base metal mining sector's profitability, and the scant or non availability of project financing. Hence, our decision during the year to cut all expenditure in Argentina to a nominal level necessary to maintain legal ownership of the core Leon project licences has been fortuitous as, at current and foreseeable copper prices, the project is uneconomic. This has included the cessation of all exploration and the relinquishment of the bulk of our exploration properties in Argentina.
During 2008, significant effort was made to find a partner or outright buyer for Leon, especially one with the benefit of provincial and/or national connections. Although interest was received, and several site visits held, the concurrent sharp fall in the copper price and the deteriorating world financial crisis unfortunately saw this interest diminish.
Accordingly, all costs associated with the Leon project have been provided for at 31st December 2008. In the event of a significant appreciation in the copper price, together with an improvement in the fiscal regime in Argentina, we will endeavour to sell the project to a new investor, and also create a royalty and/or free carried interest from the use of the AmmLeach® process. Importantly, the costs incurred at Leon include the bulk of the research and development costs for the AmmLeach® process and although all costs have been provided for in the year, we are continuing to enjoy the benefit of this expenditure.
In these difficult times, the continued prudent management of our cash is paramount and, having implemented various cost cutting measures, we will keep our expenditure to a level commensurate with that necessary to grow the Company. Importantly, over and above the requisite general administration costs needed to maintain an AIM quoted company, the costs of running our MetaLeach business are modest. Moreover, growing testwork revenues will provide a valuable contribution to costs.
Outlook
Alexander is better placed than most in the junior sector of the mining industry. We still have a healthy cash position, significantly reduced costs, an innovative revenue generating technology business and opportunities to leverage into equity positions in attractive mining assets. Whilst global economic recovery may be some time ahead, the Company will continue to work hard to grow and reap the rewards as the commercialisation of its technology continues.
As always, I would like to thank the Company's employees and directors for their highly valued contribution to the Company's success during the last year.
Matt Sutcliffe
Executive Chairman
For further information please contact:
Martin Rosser Matt Sutcliffe
Chief Executive Officer Executive Chairman
Mobile: + 44 (0) 7770 865 341 Mobile: +44 (0) 7887 930 758
Alexander Mining plc
1st Floor
35 Piccadilly
London
W1J 0DW
Tel: +44 (0) 20 7292 1300
Fax: +44 (0) 20 7292 1313
Email: [email protected]
Website: www.alexandermining.com
Nominated Adviser and Broker
Alasdair Younie/John Prior
Arbuthnot Securities Limited
Arbuthnot House
20 Ropemaker Street
London, EC2Y 9AR
Tel: +44 (0) 20 7012 2000
Public/Media Relations
Tim Blackstone
Britton Financial PR
43 Lambs Conduit Street
London
EC1N 3NG
Tel: +44 (0) 20 7242 9786
Mobile: +44 (0) 7957 140 416
Preliminary financial information for the year ended 31 December 2008
Consolidated income statement
for the year ended 31 December 2008
|
2008 |
2007 |
||
|
£'000 |
£'000 |
||
|
Continuing operations |
|||
|
Revenue |
12 |
- |
|
|
Cost of sales |
- |
- |
|
|
|
|
||
|
Gross profit |
12 |
- |
|
|
Administrative expenses |
(1,618) |
(2,122) |
|
|
Exploration and development expenses |
(10,575) |
(1,351) |
|
|
Research and development expenses |
(597) |
(410) |
|
|
|
|
||
|
Operating loss |
(12,778) |
(3,883) |
|
|
Profit on disposal of fixed assets |
22 |
- |
|
|
Exchange gain on liquidation of subsidiaries |
20 |
- |
|
|
Impairment of available for sale financial assets |
(68) |
- |
|
|
Investment income |
749 |
593 |
|
|
Finance costs |
- |
(144) |
|
|
|
|
||
|
Loss before tax |
(12,055) |
(3,434) |
|
|
Income tax expense |
- |
(58) |
|
|
|
|
||
|
Loss for the year attributable to equity holders of the parent |
(12,055) |
(3,492) |
|
|
|
|
||
|
Basic and diluted loss per share (pence) |
(8.96)p |
(2.60)p |
|
|
|
|
Consolidated Balance Sheet
as at 31 December 2008
|
2008 |
2007 |
||
|
£'000 |
£'000 |
||
|
Assets |
|||
|
Property, plant & equipment |
3 |
178 |
|
|
Intangible fixed assets |
- |
6,857 |
|
|
Available for sale investments |
32 |
122 |
|
|
|
|
||
|
Total non-current assets |
35 |
7,157 |
|
|
|
|
||
|
Other receivables and prepayments |
144 |
153 |
|
|
Cash and cash equivalents |
4,986 |
8,442 |
|
|
|
|
||
|
Total current assets |
5,130 |
8,595 |
|
|
|
|
||
|
Total assets |
5,165 |
15,752 |
|
|
|
|
||
|
Equity |
|||
|
Issued share capital |
13,453 |
13,453 |
|
|
Share premium |
11,850 |
11,850 |
|
|
Merger reserve |
(2,487) |
(2,487) |
|
|
Share option reserve |
703 |
1,005 |
|
|
Translation reserve |
1,389 |
(357) |
|
|
Fair value reserve |
- |
22 |
|
|
Retained losses |
(20,048) |
(8,370) |
|
|
|
|
||
|
Total equity |
4,860 |
15,116 |
|
|
|
|
||
|
Liabilities |
|||
|
Current liabilities |
|||
|
Trade and other payables |
211 |
597 |
|
|
Provisions |
38 |
- |
|
|
|
|
||
|
249 |
597 |
||
|
Non-current liabilities |
|||
|
Provisions |
56 |
39 |
|
|
|
|
||
|
Total Liabilities |
305 |
636 |
|
|
|
|
||
|
Total equity and liabilities |
5,165 |
15,752 |
|
|
|
|
||
Consolidated Cash Flow Statement
for the year ended 31 December 2008
|
2008 |
2007 |
||
|
£'000 |
£'000 |
||
|
Cash flows from operating activities |
|||
|
Operating loss |
(12,778) |
(3,883) |
|
|
Depreciation and amortisation charge |
15 |
51 |
|
|
Impairment of property, plant and equipment |
92 |
- |
|
|
Increase in other receivables and prepayments |
(7) |
(20) |
|
|
(Decrease)/increase in trade and other payables |
(329) |
228 |
|
|
Share option charge |
75 |
172 |
|
|
Intangible fixed assets written-off or provided for |
10,250 |
1,351 |
|
|
Income taxes paid |
- |
(75) |
|
|
|
|
||
|
Net cash outflow from operating activities |
(2,682) |
(2,176) |
|
|
|
|
||
|
Cash flows from investing activities |
|||
|
Interest received |
254 |
682 |
|
|
Interest paid |
- |
(19) |
|
|
Acquisition of property, plant and equipment |
(7) |
(238) |
|
|
Proceeds from sale of property, plant and equipment |
40 |
- |
|
|
Acquisition of intangible fixed assets |
(1,650) |
(3,768) |
|
|
|
|
||
|
Net cash outflow from investing activities |
(1,363) |
(3,343) |
|
|
|
|
||
|
Net decrease in cash and cash equivalents |
(4,045) |
(5,519) |
|
|
Cash and cash equivalents at beginning of period |
8,442 |
13,998 |
|
|
Exchange differences |
589 |
(37) |
|
|
|
|
||
|
Cash and cash equivalents at end of period |
4,986 |
8,442 |
|
|
|
|
Consolidated statement of recognised income and expense
for the year ended 31 December 2008
|
2008 |
2007 |
|
|
£'000 |
£'000 |
|
|
Exchange differences on translation of foreign operations |
1,746 |
42 |
|
Impairment of available for sale investments |
(22) |
(29) |
|
|
|
|
|
Amounts recognised directly in equity |
1,724 |
13 |
|
Loss for the period |
(12,055) |
(3,492) |
|
|
|
|
|
Total recognised income and expense for the period |
(10,331) |
(3,479) |
|
|
|
All recognised income and expense is attributable to the equity holders of the parent.
Notes
1. Financial statements
The financial information set out in this preliminary announcement does not constitute statutory accounts within the meaning of Section 240 of the Companies Act 1985 for the year ended 31 December 2008 or for the year ended 31 December 2007, but is derived from those accounts. The financial statements for 2008 will be delivered to the Registrar of Companies following the Company's Annual General Meeting. The auditors have reported on these accounts, their report was unqualified and did not contain statements under the Companies Act 1985, s237 (2) or (3).
2. Summary of significant accounting policies
a) Basis of preparation
The 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 1985 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 December each year. Control is recognised where the Company has the power to govern the financial and operating policies of an investee entity so as to obtain benefits from its activities.
b) Intangible fixed assets
Deferred exploration and evaluation costs
All costs incurred prior to obtaining the legal right to undertake exploration and evaluation activities on a project are written-off as incurred. Costs associated with large scale early stage exploration activity to identify specific targets for detailed exploration and evaluation work are recognised in the income statement as incurred.
Exploration and evaluation costs arising following the acquisition of an exploration licence are capitalised on a project-by-project basis, pending determination of the technical feasibility and commercial viability of the project. Costs incurred include appropriate technical and administrative overheads. Deferred exploration costs are carried at historical cost less any impairment losses recognised.
If an exploration project is successful, the related expenditures will be transferred to mining assets and amortised over the estimated life of the ore reserves on a unit of production basis.
The recoverability of deferred exploration and evaluation costs is dependent upon the discovery of economically recoverable ore reserves, the ability of the Group to obtain the necessary financing to complete the development of ore reserves and future profitable production or proceeds from the disposal thereof.
c) Research and development expenditure
Research costs are recognised in the income statement as an expense as incurred. Development costs are recognised in the income statement as an expense as incurred unless the development project meets specific criteria for deferral and amortisation. No development costs have been deferred to date because there is insufficient information at the balance sheet date to quantify the expected future economic benefits from the proprietary leaching technologies.
3. Dividends
The directors do not recommend the payment of a dividend (2007: nil)
4. Intangible fixed assets
|
2007 |
2006 |
|
|
£'000 |
£'000 |
|
|
Deferred exploration costs |
||
|
At beginning of period |
6,857 |
4,260 |
|
Additions |
1,773 |
3,978 |
|
Provision1 |
(9,201) |
(35) |
|
Written-off2 |
(1,049) |
(1,316) |
|
Exchange difference |
1,620 |
(30) |
|
|
|
|
|
At end of period |
- |
6,857 |
|
|
|
1. Due to the continuing uncertainty about the fiscal regime for mining companies in Argentina, together with the significant fall in base metal prices in the second half of 2008, the Company decided to reduce significantly the scale of its expenditure in Argentina, suspend all project work and not proceed to the mine development decision stage. As a result, a full provision has been made for all capitalised deferred exploration costs at the Group's Leon project in Argentina during 2008.
2. Exploration work has been halted at the Group's other exploration properties in Argentina and the majority of the underlying licences are being allowed to lapse as they fall due for renewal. Initial exploration work has not yet commenced at the Group's Molinetes prospect in Peru. Accordingly, all costs associated with these prospects have been written-off during 2008.
Section 142 Companies Act 1985
The Company's results show that the Company's net assets currently represent less than half of its called up share capital. In such circumstances, section 142 of the Companies Act 1985 obliges the directors of the Company to convene an Extraordinary General Meeting in order to consider whether any, and if so what, steps should be taken to deal with the situation. An Extraordinary General Meeting of the Company is proposed to be held on 3rd June 2009, immediately following the Annual General Meeting, to comply with this statutory requirement.
Annual Report
The Annual Report will be sent to all shareholders on or around 5 May 2009. Additional copies will be made available to the public, free of charge, from the Company's registered office at 35 Piccadilly, London W1J 0DW.
Annual and Extraordinary General Meetings
The Company's Annual General Meeting will be held on 3 June 2009 at 10.00 a.m. at the Chesterfield Mayfair, 35 Charles Street, Mayfair, London W1J 5EB. Immediately following the Annual General Meeting, an Extraordinary General Meeting of the Company will be held to ensure compliance with section 142 of the Companies Act 1985.
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