LONDON (Alliance News) - Tri-Star Resources PLC shares dropped on Wednesday after it reported a wider pretax loss in 2015 due to an impairment against one of its non-core assets in Canada, as the company continues to focus on its project in Oman which is set to enter the construction phase this year.
Tri-Star shares were down 22% to 0.0701 pence per share on Wednesday morning.
The exploratory miner, which has a particular focus on antimony, said its loss widened to GBP7.1 million in 2015 from the GBP2.4 million loss in 2014 after booking more impairments and reporting higher exploration costs.
Tri-Star said exploration and administrative expenses rose to GBP2.7 million in 2015 from GBP2.3 million a year earlier whilst impairment and amortisation costs increased to GBP4.2 million from a tiny GBP6,000.
The impairments relate to the Bald Hill deposit, which is one of the largest undeveloped antimony projects in Canada that joined Tri-Star's portfolio from the acquisition of Portage Minerals Inc in 2013. That asset has now been impaired in full.
The pretax loss before exceptional items, including the impairment, amounted to GBP1.8 million compared to the GBP2.5 million loss in 2014.
Tri-Star made a GBP1.6 million profit in 2015 from selling its intellectual property rights covering its clean antimony roasting and refractory gold clean roasting processes to Strategic & Precious Metals Processing LLC. Tri-Star sold the rights for a total of USD6.0 million, of which USD2.0 million remains contingent and has not yet been received.
Importantly, Strategic & Precious Metals Processing is the joint venture company that holds the Oman Antimony Roaster project, and Tri-Star holds a stake in that project through its 40% shareholding in the vehicle.
Tri-Star's partners in Oman are Oman Investment Fund, which also owns a 40% stake in the joint venture vehicle, and DNR Industries Ltd, which owns the remaining 20%.
Tri-Star has provided its share of the equity funding for the project after paying Strategic & Precious Metals Processing USD6.0 million in the year, partly funded by the proceeds generated from the sale of intellectual property rights.
The partners reached financial closure at the project last September, securing overall funding of USD70.0 million. That funding is comprised of USD15.0 million in equity funding, which includes Tri-Star's USD6.0 million contribution, alongside USD15.0 million of shareholder loans and USD40.0 million of committed, non-recourse project debt.
The Oman project is aiming to deliver an antimony production facility capable of delivering 20,000 tonnes of antimony production a year once up and running, and the current focus is on finalising the necessary contracts to allow construction to begin.
Full commissioning of the project is expected to occur before the end of 2017, with commercial production following in 2018.
Tri-Star has other assets in Canada and Turkey, but has scaled back its operations to focus on the project in Oman, which it said is the company's "number one priority".
However, without production or revenue as of yet, the company has joined the wider natural resource market by focusing on cost reduction. The salaries paid to the board are less than half what they were in 2014 and operating expenses were down by 21% year-on-year
The board, which is comprised of five directors including one non-executive, were paid a total of GBP26,500 in December compared to GBP54,000 in January 2015. On average, that means each board member was paid around GBP5,300 in December compared to GBP10,800 each in January.
However, Tri-Star's cash balance only amounted to GBP1.0 million at the end of February, but it has already fulfilled its funding commitments for the project in Oman.
"The company's financial position entering 2016 is sound, given we have GBP1.0 million in cash and our operating costs greatly reduced going forward, the result of extensive cost cutting measures implemented towards the latter part of 2015 and into 2016," said Chief Executive Guy Eastaugh, who only joined the board back in September.
"We expect the remainder of the year to be challenging given worldwide strong economic headwinds for the mining sector as a whole, but Tri-Star will remain focussed on its being also a period of significant advancement for the company as Strategic & Precious Metals Processing takes the Oman Antimony Roaster [project] forward into the construction phase," the company added.
By Joshua Warner; joshuawarner@alliancenews.com; @JoshAlliance
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