Ariana Regulatory News (AAU)

26 Jun 2007 09:00

Ariana Resources PLC26 June 2007 ARIANA RESOURCES PLC PRELIMINARY RESULTS FOR THE YEAR ENDED 31ST DECEMBER 2006 A Year of Significant Progress Ariana Resources plc ("Ariana" or "the Company"), the gold exploration companyfocused exclusively on Turkey, announces its preliminary unaudited results forthe period ended 31st December 2006. Highlights: • All targets set for the year have been met • Licence holdings almost doubled to 114 exploration properties (1,820km(2) across Turkey) • Two corporate transactions successfully finalised • Highly successful drill programme, over 5,500 metres completed • Management team re-structured: UK-based CFO appointed Post Period Event: • JORC compliant resource established at Kiziltepe prospect, Sindirgi Michael Spriggs, Chairman, commented: "2006 has been a year of exceptional progress in Ariana Resources' explorationand development programmes in Turkey, every one of its targets for the yearhaving been achieved. The Company is now well positioned strategically forfurther growth. "Our highly focused exploration strategy has concentrated primarily on theincreasingly promising Sindirgi Gold Project in western Turkey, where a JORCcompliant resource has been established at the Kiziltepe prospect, post period. "Ariana has made the successful transition in a short space of time fromgreenfields explorer to resource developer. The year ahead promises furtherpositive developments and we retain a clear focus to add value through furthergrowth of the Company." 26 June 2007 Contacts:Ariana Resources plcMichael Spriggs, Chairman Tel: 07887 998252Kerim Sener, Managing Director Tel: 07709 011954 Beaumont Cornish LimitedRoland Cornish Tel: 020 7628 3396 Ambrian Partners LimitedRichard Chase Tel: 020 7776 6461 Bankside ConsultantsMichael Padley / Louise Davis Tel: 020 7367 8888 About Ariana Resources Ariana is a technology-driven exploration company focused on the discovery ofepithermal gold-silver and porphyry copper-gold deposits with multi-millionounce potential within the Tethyan metallogenic belt of Turkey. The Company hasa portfolio of prospective licences covering approximately 1,820km2, selected onthe basis of its advanced in-house remote sensing database. Ariana's broker isAmbrian Partners Limited and Beaumont Cornish Limited is the Company's nominatedadviser. For further information on Ariana you are invited to visit theCompany's website at www.arianaresources.com. CHAIRMAN'S STATEMENT As Chairman of Ariana Resources, it is my great pleasure to provide an overviewof the exceptional progress made by your Company in 2006. It is particularlygratifying to report that your Company achieved every one of its targets for theyear and has now positioned itself strategically for further growth. As a junior Company with limited but very carefully managed financial resources,Ariana has a highly focused exploration strategy. As in the previous year, wehave concentrated primarily on the increasingly promising Sindirgi Gold Projectin western Turkey, which we acquired in early 2005 from Newmont Mining. In 2006, attention centred on two advanced prospects in the Sindirgi Project:Kiziltepe and Kepez, and at the Kinik prospect in the Ivrindi Project. Surfaceexploration gave sufficient encouragement to warrant drilling all threeprospects and a diamond drilling programme was initiated in August 2006. Duringthe year, the Company completed a total of over 5,500m of drilling at theselocations. We are particularly pleased with progress at the Kiziltepe prospect, which is alarge vein field containing a combined vein length of over 20km in outcrop, inaddition to several new and previously untested targets. Drilling on portions ofthe high-grade Arzu South and Arzu North veins at Kiziltepe resulted in thedefinition of a potentially open-pittable JORC compliant resource of 135,000 ozgold equivalent. It is particularly important to emphasise that this resourceestimate was based on only 5% of the mapped veins at Kiziltepe and that alldrill-tested veins remain open at depth and along strike. Consultants SRK consider there to be good potential to upgrade this resource andto test additional 'blind' vein targets. The Company will carry out furtherdrilling on these areas in the second half of 2007. These preliminary resultsare also judged sufficiently encouraging for SRK to have recommended a scopingstudy for production options at Kiziltepe. Possible options include an operationon site (either heap leach or a conventional milling / treatment plant), ortrucking ore / concentrate for processing by an operating gold mine. Either ofthese routes would provide Ariana with 'first mover' advantage in the region. Continual evolution of Ariana's exploration databank is a cornerstone of theCompany's strategy, and by using this database we almost doubled our licenceholdings to around 1,820km2 during the year. Ariana operates an extremelycost-efficient approach to exploration and is able to identify and evaluateprospective areas very rapidly. This initiative is led by an effective andwell-trained Turkish team, supported by strong local management, andstrengthened during the year by the appointment of more experienced personnel.We are very proud to have such a high-quality team and their contribution to oursuccessful development has been tremendous. In recognition of this contribution, the Company took the decision to shiftemphasis away from UK-based remote-management to the direct management of ouroperations in Turkey. In parallel with this change of strategic focus some keypersonnel changes also occurred during the year under review. The structure ofthe Executive Board was modified following the departure of our colleaguesMatthew Grainger and Steven Poulton. Both contributed greatly to the foundationof the business and were instrumental in our introduction to AIM in 2005. Wewant to thank them sincerely for helping to develop Ariana to this point and wewish them equal success in the future. With the need to meet the growing demands of ever more stringent formalfinancial obligations and to monitor closely our cash resources, we are pleasedto have appointed part-time CFO, William Payne, of UK accountants WilkinsKennedy. The Company continues to keep a tight rein on spending to ensure thatoptimal amounts are devoted to exploration in Turkey. With the exciting achievements of 2006, Ariana has made the successfultransition in a short space of time from greenfields explorer to resourcedeveloper. The year ahead promises further positive developments for Ariana. Weretain a clear, focused strategy, whose object is to add value for shareholdersby: • Increasing mineral resources at our advanced projects through drilling • Targeting an aggregate resource of 1Moz gold through exploration • Identifying and developing joint venture opportunities with international and local partners • Developing opportunities for early cash-flow We thank our energetic and focused team of employees for their tireless hardwork and commitment, and our shareholders for their invaluable and continuingsupport. We are confident that Ariana Resources represents one of the bestlong-term investment opportunities for gold in Turkey. Ariana is poised forfurther success in 2007. Michael Spriggs Chairman OPERATING REVIEW SUMMARY During the year, Ariana achieved solid progress on its exploration anddevelopment programmes in Turkey. In western Turkey, the Company evolved aregional strategy surrounding our core Sindirgi Project, and continues to growits resource base through focused exploration and acquisition in this region.The information in this report reviews results up to May 2007. Drilling programmes were undertaken with considerable success in the Sindirgiand Ivrindi projects. At Sindirgi, this work led to JORC-compliant resourcesbeing established for the first time on the Kiziltepe prospect. Meanwhile, workat Ivrindi defined additional potential at the Kinik prospect. The Company was successful in finalising two corporate transactions. A packageof licences, which now comprise the Demirci Project, were acquired from NewmontMining Corporation in August. An agreement to explore eastern Turkey with thesupport of a Turkish partner was also finalised in October. This partnercontributed several prospective licences to Ariana during the year. Ariana has continued reconnaissance exploration in western and eastern Turkey.Target generation lead to the acquisition of many new exploration licences andsubsequent field investigations provided very positive results. The Company nowholds 114 exploration properties covering an area of 1,820km2 across Turkey. 2006-7 Highlights May Mineral resource (JORC) estimate for Kiziltepe March Positive exploration drilling results at Kinik February Positive drilling results at Vein 4: Kiziltepe January Positive drilling results at Banu Vein: Kiziltepe December Positive exploration results at Goveli November Significant drilling results at Arzu South Vein: Kiziltepe October Agreement entered into for exploration in Eastern Turkey Licence portfolio almost doubled in area August Exploration licences acquired from Newmont Mining Corporation WAVE PROJECT AREA The Company has dedicated much of its exploration effort on the WesternAnatolian Volcanic and Extensional (WAVE) Province in western Turkey. Thisprovince hosts the largest operating gold mines in Turkey and remains highlyprospective for new porphyry and epithermal deposits. Ariana is exploring three principal projects within the WAVE Province: Sindirgi,Ivrindi and Demirci. The region surrounding these projects is named the WAVEProject Area, with our base of operations at Sindirgi located strategically atits core. In addition to containing our advanced projects, the Project Area encompassesthe majority of our exploration tenements in western Turkey. The exploration anddevelopment risk to future gold resources in this region is reduced due toexcellent infrastructure and established local mining operations. Ariana envisages that an aggregate resource of 1Moz of gold can be achievedwithin the Project Area and our strategy is designed to build on our existingresource base via exploration and future acquisitions. Sindirgi Gold Project The Sindirgi Gold Project ("Sindirgi") comprises two operating and elevenexploration licences which cover a contiguous area of 258 km2 in BalikesirProvince, western Turkey. The project lies 130km northeast of the costal city ofIzmir and 100km east of the Ovacik gold mine. Sindirgi was acquired in early2005 from Newmont for US$400,000, with a retained royalty of up to 2.5% onfuture gold production from the project. The project encompasses an important regional trend of epithermal goldmineralisation, known as the Sindirgi Gold Corridor, which contains fourdistinct prospects: Kiziltepe, Kepez, Karakavak and Kizilcukur South. To date, atotal of 45km of veins have been identified in outcrop on the project. Theproject area has also been expanded during the year with the acquisition of newlicences in the region. Since May 2006, 4970m of diamond-drilling, 450m of trenching and rock-sawchannel sampling in addition to the collection of 770 rock-chip and 280 soilsamples has been completed on the project. Most of this work was undertaken onthe Kiziltepe and Kepez prospects. Kiziltepe Prospect The Kiziltepe prospect contains 20km of outcropping low-sulphidation epithermalquartz veins, which are hosted by dacitic volcanic units of Miocene age. Thevein field occurs in an area covering approximately 3 x 1km and is well servicedby asphalt road and forestry tracks. Individual veins are exposed at surface for750m in strike length and are between 1 and 14m wide. Five of these vein systemswere drilled during the year totalling 10% of the total veins. Several of the veins contain mineralisation which is potentially open-pittableand, in time, the Company envisages establishing several small pits across theprospect. A scoping study will be pursued in 2007 to evaluate several differentmining and processing scenarios. Arzu Vein The northwest-trending and steeply northeast dipping Arzu Vein system iscomprised of two sections: Arzu South and Arzu North. These two sections areseparated over a strike length 650m by rhyodacitic ignimbrite cover rocks, whichobscure the vein system beneath. Both southern and northern sections weredrilled in 2006, but no drill-testing was undertaken in the covered area. During the year, a JORC-compliant mineral resource was established by SRK UK Ltd("SRK") based on our drilling results for both the southern (750m long) andnorthern (300m long) sections of this vein system (Table 1). Ten mineralisedvein segments were modelled for Arzu South, with vein widths typically between1.5 and 5m. The mineral resource was established to a depth of 125m from surfaceand at a cut-off grade of 3 g/t Au (Table 2). The drilling determined that there is an overall grade improvement towards thesouthern part of the Arzu South system and that the structure contains at leasttwo high grade shoots which plunge moderately to the southeast. This work hasdetermined that the southern part of the vein system requires additional drilltesting in 2007. Table 1: High grade and wide intercepts from 2006 drilling. Hole ID From To (m) Apparent Width Grade Au Grade Ag Grade (m) (m) (g/t) (g/t) Au + Au equiv. (g/t)D03a-06 51.5 58.1 6.7 6.2 62 7.41D04a-06 42.6 49.0 6.4 5.9 156 9.06D07a-06 41.3 51.8 10.5 7.5 97 9.43D08b-06 56.0 62.6 6.6 13.1 122 15.52 and 72.5 78.7 6.2 5.8 83 7.49D10a-06 32.6 38.9 6.3 6.5 111 8.74 Table 2: SRK resource statement ---------- ----------- ------- ------------ -------------- Classification Vein Tonnage Grade Metal ------ ------- ------- --------- (Kt) (Au g/t) (Ag g/t) (oz Au) (oz Ag) ---------- ----------- ------- ------ ------- ------- ---------Indicated Arzu South (C) 200 5.8 98 37,300 630,225---------- ----------- ------- ------ ------- ------- --------- Arzu South (N) 70 4.0 70 9000 157,555Inferred Arzu South (S) 180 8.0 160 46,300 926,045 Arzu North 50 4.0 65 6,430 104,500 ---------- ----------- ------- ------ ------- ------- --------- Other Veins Exploratory drilling was undertaken on three additional veins at the Kiziltepeprospect as part of our first phase strategy to drill-test many previouslyundrilled veins at the Kiziltepe prospect. This work provided results which weresufficiently encouraging to warrant follow-up drilling on two of these veins. At the Banu Vein, three drill holes on a 100m section of vein providedintercepts of 2.10 g/t Au over 4.8m, 2.09 g/t Au over 2.10m and 4.62g/t Au over2.0m. Silver grades in these intersections range from 64 g/t Ag to 159 g/t Agwhich increase the gold equivalent grades significantly. At Vein 4, three drillholes on a 100m section of vein provided intersects of 1.42 g/t Au over 6.0m,1.26 g/t Au over 7.10m and 1.56 g/t Au over 5.0m. Silver grades in theseintersections range from 19 to 49 g/t Ag which increase the gold equivalentgrades. At Banu Vein and Vein 4, certain geological features allow us to conclude thatboth veins are positioned high in the epithermal system. We predict that theseveins represent some of the least eroded veins on the Kiziltepe prospect andthat deeper drilling will yield better grades. In 2007 further drilling on theseveins will be undertaken. The drilling of six holes at Vein 5 provided several low-grade and narrowintercepts. It is also clear that the vein system at this location isstructurally complex and vein segments are erratic. In 2007 no further work isplanned on this vein. Other Prospects Exploration within the Sindirgi Project is continuing. A total of four prospectareas have been identified within the project and work has progressed on each ofthese during the year. Work at the Kepez prospect identified a 100m long section of the Karakaya Veinwhich contains high-grade gold mineralisation at surface. This area was drilledin 2006 and the results of this work provided several low-grade and narrowintercepts. Despite this, a new area was identified to the north west of theKarakaya Vein, which has provided several high grade (~10 g/t Au) rock-chips insurface sampling. This area has been named the Umurlar Target and drilling inthis area is planned for 2007. Work at the Karakavak prospect focused on detailed geological mapping of thearea and was successful in the identification several additional veins. Thereare approximately 10km of veins contained by the prospect area. Rock chipsampling in this area yielded a best result of ~10 g/t Au and several targetswere identified for potential drill-testing. Work at the Kizilcukur South prospect involved a soil sampling programme whichidentified a modest gold anomaly (max. >1000ppb Au) in rhyodacitic ignimbriteand adjacent to an area containing historic workings. Follow-up work in thisarea is now planned. Ivrindi Gold Project The Ivrindi Project ("Ivrindi") comprises seven exploration licences which covera semi-contiguous area of 91km2 in Balikesir Province, western Turkey. Theproject lies 130km north of Izmir and 70km northwest of Sindirgi. Ivrindi wasidentified as a target area using remote-sensing methods in early 2004 byAriana. The project is located in a region of epithermal gold and antimonymineralisation and contains the Kinik prospect. Kinik Prospect The Kinik prospect contains several outcrops of gold-bearing clay-alteredporphyitic andesite of Miocene age, which lie adjacent to a faulted contact withPermian limestone. The mineralisation is defined by a 750m long and 50m widegold in soil anomaly, which was drill-tested in early 2007 by eight drill holestotalling 425m. A further two drill holes were undertaken in an area 900m to thenortheast to test silicified areas containing gold and antimony mineralisation. The drilling provided several encouraging but narrow intersections such as 1.41g/t Au over 6.2m, 4.17 g/t Au over 1.9m and 4.91 g/t Au over 1.7m. Peak goldgrades of 10.4g/t Au in surface channel sampling and 7.6g/t in drilling suggestthat there is an opportunity to define high grade areas within the prospect.Further work on this prospect and elsewhere in the Ivrindi Project is plannedfor 2007. Demirci Gold Project The Demirci Project ("Demirci") comprises three exploration licences which covera contiguous area of 44km2 in Manisa Province, western Turkey. The project lies130km northeast of Izmir and 60km southeast of Sindirgi. Demirci was acquired inmid-2006 from Newmont for a retained royalty of 2% on future gold productionfrom the project. The project is located in a region of epithermal goldmineralisation and present day geothermal activity. The project contains theGoveli prospect. Goveli Prospect The Goveli prospect occurs within a 5km long by up to 1km wide northeaststriking alteration system occurring along a discontinuous thrust zone between aCretaceous ophiolitic sequence, Palaeozoic schists and Precambrian gneissicbasement. Much of the gold mineralisation in this corridor is of low grade, buthigher grade areas are structurally controlled and these have been targetedduring our exploration. Since May 2006, 150m of trenching and rock-saw channel sampling and 600rock-chip samples have been completed on the project. Detailed geologicalmapping and systematic rock-chip sampling defined several areas of higher gradegold mineralisation at the prospect (peak grade of 4.2 g/t). Rock-saw channelsampling along a road cut provided results including 0.49 g/t Au over 23m and0.34 g/t Au over 22m. Follow up exploration is underway to define drill targets. OTHER EXPLORATION Eastern Turkey Ariana is continuing to explore for large porphyry Cu-Au and related deposits ineastern and northeastern Turkey. The region represents an under explored part ofthe Tethyan metallogenic belt known for its porphyry-related deposits. Inaddition to undertaking greenfields exploration of its own, the Company is alsopursuing opportunities for the acquisition of advanced projects in this region. Following an extensive remote-sensing programme and subsequent target generationin 2006, the Company increased its licence holding in this region to 777 km2.Ariana also entered into an exploration agreement over a designated area ofinterest in eastern Turkey with a Turkish mining company. This has increasedAriana's operational capability even in the remotest parts of the region and hasensured strong local support for our work. Within the area of interest, exploration undertaken to date includes theidentification of: • Gold-bearing high-sulphidation style epithermal mineralisation • Skarn-hosted Cu-Au mineralisation • Cyprus-type Au-bearing massive sulphides • Porphyry-related alteration systems The early identification of such occurrences from reconnaissance explorationconfirms that this region warrants further work. Ariana is seeking a jointventure partner to support and further enhance our capacity for exploration inthis region. We believe this is necessary to avoid overstretching our human andfinancial resources, while ensuring we maintain exposure to the explorationupside of this highly prospective region. CONSOLIDATED PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31 DECEMBER 2006 2006 2005 Unaudited Audited Notes £'000 £'000 Administrative expenses and operating loss (424) (397) ------- ------- Interest receivable and similar income 69 16 ---- ---- LOSS ON ORDINARY ACTIVITIES BEFORE TAXATION (355) (381) ------- ------- Tax on loss on ordinary activities - - ---- ---- LOSS FOR FINANCIAL YEAR 2 (355) (381) ------- ------- LOSS PER SHARE (pence) 4 - basic and diluted 0.86 1.35 ------ ------ CONTINUING OPERATIONS None of the group's activities were acquired or discontinued during the currentyear or previous year. CONSOLIDATED STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES FOR THE YEAR ENDED 31 DECEMBER 2006 - 2006 2005 Unaudited Audited £'000 £'000 Loss for the financial year (355) (381) Currency differences on foreign currency net investments (11) (6) ------ ----- TOTAL RECOGNISED GAINS AND LOSSES FOR THE YEAR (366) (387) ------- ------- CONSOLIDATED BALANCE SHEET FOR THE YEAR ENDED 31 DECEMBER 2006 - 2006 2005 Unaudited Audited Notes £'000 £'000 £'000 £'000FIXED ASSETS 1Intangible assets 1,297 498Tangible assets 42 33 ---- ---- 1,339 531 CURRRENT ASSETSDebtors 252 131Cash at bank and in hand 1,547 771 ------- ----- 1,799 902CREDITORSAmounts falling due within one year (205) (68) ------- ------ NET CURRENT ASSETS 1,594 834 ------- ----- TOTAL ASSETS LESS CURRENT 2,933 1,365LIABILITIES ======= ======= CAPITAL RESERVESCalled up share capital 470 315Share premium 2,738 966Merger reserve 720 720Profit and loss account (995) (636) ------- ------- SHAREHOLDERS' FUNDS 2,933 1,365 ======= ======= CASH FLOW STATEMENT FOR THE YEAR ENDED 31 DECEMBER 2006 2006 2005 Unaudited Audited Notes £'000 £'000Net cash outflow from operating activities 3 (393) (528) Return on investments and 56 16servicing of finance Capital expenditure (814) (463)and financial investment ------- ------- (1,151) (975) Financing 1,927 1,064 ------- ------- Increase in cash in the year 776 89 ----- ---- Reconciliation of net cash flowto movement in net funds Increase in cash in the year 776 89 ----- -----Net funds at 1 January 771 682 ----- -----Net funds at 31 December 1,547 771 ======= ===== NOTES TO THE FINANCIAL STATEMENTS 1. ACCOUNTING POLICIES Accounting convention The financial statements have been prepared under the historical cost conventionand in accordance with applicable accounting standards and the Statement ofRecommended Practice Accounting for Oil and Gas Exploration, Development andProduction and Decommissioning Activities revised in 2001 (the SORP). The accounting policies have remained unchanged from the previous year otherthan share based payments which are now accounted for in accordance with FRS20. Basis of consolidation On 25th July 2005 Ariana Resources Plc acquired the entire issued share capitalof Ariana Exploration and Development Limited by way of a share for shareexchange. The transaction qualified as a group reconstruction within the meaningof FRS 6, and has been accounted for using the merger accounting method. The group financial statements consolidate those of the company and itsprincipal subsidiary undertakings for the year ended 31st December 2006. Exploration and development costs In accordance with the full cost method as set out in the SORP, expenditureincluding directly attributable overheads on the acquisition, exploration andevaluation of interests in licences not yet transferred to a cost pool iscapitalised under intangible assets. Cost pools are established on the basis ofgeographic area. When it is determined that such costs will be recouped throughsuccessful development and exploitation or alternatively by sale of theinterest, expenditure will be transferred to tangible assets and depreciatedover the expected productive life of the asset. Whenever a project is consideredno longer viable the associated exploration expenditure is written off to theprofit and loss account. Tangible fixed assets Depreciation is provided at the following annual rates in order to write offeach asset over its estimated useful life. Fixtures and fittings - between 5% - to - 33% on costMotor vehicles - between 20% - to - 25% on cost Deferred tax Deferred tax is recognised in respect of all timing differences that haveoriginated but not reversed at the balance sheet date. Foreign currencies Transactions in foreign currencies are translated at the exchange rate ruling atthe date of the transaction. Monetary assets and liabilities in foreigncurrencies are translated at the rates of exchange ruling at the balance sheetdate. The financial statements of foreign subsidiaries are translated at therate of exchange ruling at the balance sheet date. The exchange differencesarising from the retranslation of the opening net investment in subsidiaries aretaken directly to reserves. All other exchange differences are dealt withthrough the profit and loss account. Financial instruments The group uses financial instruments to manage exposures to fluctuations ininterest rates. Financial assets are recognised in the balance sheet at the lower of cost andnet realisable value. Provision is made for diminution in value whereappropriate. Interest receivable and payable is accrued and credited/charged to the profitand loss account in the period to which it relates. Liquid resources Liquid resources comprise cash on short term deposit at not less than 24 hoursnotice. Share-based payments During the year the group has adopted FRS 20 "Share Based Payments" to shareoptions granted during the year. For such grants of share options, the fairvalue as at the date of grant is calculated using the Black-Scholes optionpricing model, taking into account the terms and conditions upon which theoptions were granted. The amount recognised as an expense is adjusted to reflectthe actual number of share options that are likely to vest, except whereforfeiture is only due to market-based conditions not achieving the thresholdfor vesting. The first time adoption of FRS 20 has resulted in a charge to operating profitas detailed in notes 2 and 14. The share option expense has been credited to theprofit and loss account reserve and consequently the adoption of FRS 20 has notimpacted upon net assets. Pensions The group pays contributions to the personal pension schemes of some employees.These contributions are charged to the profit & loss account in the year inwhich they become payable. 2. OPERATING LOSS The operating loss is stated after charging/(crediting) 2006 2005 £'000 £'000 Depreciation - owned assets 5 3Net foreign exchange losses/ (gains) 23 (1)Fees payable to the company's auditors for 10 8the audit of the company's annual accounts:Fees payable to the company's auditors forother services:The audit of the company's subsidiaries 2 2Other services pursuant to legislation 1 - === === Exceptional item Costs of £142,000 in connection with the company's admission to AIM wereincluded in operating costs in 2005. 3. RECONCILIATION OF OPERATING LOSS TO NET CASH OUTFLOW FROM OPERATINGACTIVITIES 2006 2005 £'000 £'000 Operating loss (424) (397)Depreciation charge 6 3Share based payments 7 -Foreign Exchange differences (11) (6)Increase in debtors (108) (124)Increase in creditors 137 (4) -------------- ------------- Net cash outflow from operating activities (393) (528) -------------- ------------- 4. LOSS PER SHARE The calculation of basic loss per share is based on the loss attributable toordinary shareholders of £355,000 (2005: £381,000) divided by the weightedaverage number of shares issued during the year 41,404,229 (2005: £29,007,625)in issue. There is no dilutive effect of share options or warrants on the basicloss per share. The financial information set out in this Preliminary announcement does notconstitute statutory accounts within the meaning of s.240 of the Companies Act1985. The Report and Accounts for the year to 31 December 2006 are being posted toshareholders and are available to the public, for at least one month, free ofcharge at Wilkins Kennedy, Bridge House, London Bridge, London, SE1 9QR. This information is provided by RNS The company news service from the London Stock Exchange