26 Sep 2008 07:00
AIM: CLF
Cluff Gold plc
("Cluff Gold" or the "Company")
Interim Results for the six months ended 30 June 2008.
| Cluff Gold | WH Ireland | Farm Street Communications |
| J.G. Cluff | David Youngman / Katy Mitchell | Simon Robinson/Ana Ribeiro |
| Chairman | | |
| Tel: +44 (0) 20 7340 9790 | Tel: +44 (0) 161 832 2174 | Tel: +44 (0) 20 7099 2212. |
Cluff Gold plc
CHAIRMAN AND CHIEF EXECUTIVE'S STATEMENT
Since my last report, markets worldwide have experienced a major downturn with forecast growth estimates for most economies being significantly reduced. The reduction in growth forecasts has led to falls in both precious and base metal prices which we believe has fuelled negative sentiment towards mining stocks across the globe. Despite these difficult market conditions, I am happy to report that your company has continued to marshal its resources and develop its asset base from an explorer to a producer.
Operations Update:
Since the beginning of the year, two gold mines have been brought into commissioning; the Angovia heap leach gold mine in Cote d'Ivoire and the Kalsaka heap leach gold mine in Burkina Faso. Once fully commissioned, these mines are expected to produce 100,000 ounces of gold annually.
Although both mines experienced some delays in construction, for the most part due to extended shipping times and customs procedures, the total capital cost of construction amounted to US$42 million which, in this period of rampant cost inflation, can be considered more than satisfactory.
Since commencement of commissioning, the Angovia gold mine has faced challenges with its re-conditioned plant and equipment which has required replacement parts, including two conveyor belts and a new stacker, with delivery expected in October. The mining contractor has also experienced delays with the importation of equipment and spares which has resulted in less ore being mined and stacked than forecast. However, with the arrival of a second drill and blast rig, mining is expected to increase in the last quarter of this year.
The stacking of ore on pads commenced at the Kalsaka gold mine at the end of August and a first gold pour is expected in October. The plant and equipment at Kalsaka is for the most part new and commissioning is expected to be completed by the end of this year.
Exploration:
The Baomahun gold project, our flagship exploration venture in Sierra Leone, has advanced during the period under review, with independent technical auditors signing off a JORC compliant resource of approximately 1.4 million ounces of gold, representing a seven fold increase in the Measured and Indicated Resource categories. Deeper holes have indicated the possibility of the open pit resource being supported by an underground deposit. A pre-feasibility study commenced at the beginning of the year and, should confidence continue to obtain, we expect to complete a full feasibility study by the end of next year. If positive, we contemplate a project with the capacity to produce annually between 100,000 to 150,000 ounces of gold.
Acquisition after the Period End:
The acquisition of the remaining 40% holding in Baomahun was concluded in August with the issue of 12,390,909 ordinary shares. Cluff is now the sole owner of this exciting gold project over which a twenty five year Mining Lease has recently been granted.
Results:
Due in part to the commencement of operations, the Group's consolidated operating loss for the six month period to 30 June 2008 was US$4.4 million compared to an operating loss of US$2.2 million in the six months to 30 June 2007. Assets increased to US$96.8 million compared to US$68.0 million at 30 June 2007, reflecting development costs of both gold mines and continued exploration spend at Baomahun. The cash position at the end of June stood at US$13.3 million with no debt. Revenues and operating costs for both mines will be capitalised until the end of their respective commissioning phases.
Financing:
In March, the Company successfully placed 14,570,000 ordinary shares at a price of 88pence per share, raising US$25.4 million before expenses. The proceeds have been used to fund the construction costs of both the Angovia and Kalsaka gold mines as well as fund continuing exploration at Baomahun. In September, a US$10 million standby facility was arranged with RMB Australia Holdings Ltd to ensure adequate working capital during the commissioning phase of both gold mines.
Conclusion:
Although these are exacting times for stock markets, we have remained focused on our objective of becoming a significant and increasing gold producer for 2009 and beyond. Finally, I should like to thank you, the shareholders, for your support as well as my Board colleagues and Cluff personnel both in London and West Africa for their efforts in taking this Company from explorer to producer.
J G Cluff
Chairman and Chief Executive
25 September 2008
Cluff Gold Plc
INDEPENDENT REVIEW REPORT TO CLUFF GOLD PLC
For the six months ended 30 June 2008
We have been engaged by the company to review the financial information in the half-yearly financial report for the six months ended 30 June 2008 which comprises the consolidated income statement, balance sheet, statement of changes in equity, cash flow statement and the related explanatory notes. We have read the other information contained in the half-yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.
This report is made solely to the company in accordance with the terms of our engagement. Our review has been undertaken so that we might state to the company those matters we are required to state to it in this report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company for our review work, for this report, or for the conclusions we have reached.
Directors' responsibilities
The half-yearly financial report is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the half-yearly financial report in accordance with the AIM Rules of the London Stock Exchange.
As disclosed in note 1, the annual financial statements of the Company are prepared in accordance with IFRSs as adopted by the European Union. The financial information included in this half-yearly financial report has been prepared using accounting policies consistent with those to be applied in the next annual financial statements.
Our responsibility
Our responsibility is to express to the company a conclusion on the financial information in the half-yearly financial report based on our review.
Scope of review
We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410, "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to believe that the financial information in the half-yearly financial report for the six months ended 30 June 2008 is not prepared, in all material respects, in accordance with the AIM Rules of the London Stock Exchange.
Cluff Gold Plc
CONSOLIDATED INCOME STATEMENT
For the six months ended 30 June 2008
| Notes | 6 months to 30 june 2008 | 6 months to 30 june 2007 | 12 months to 31 December 2007 | |
|
|
| US$ | US$ | US$ |
| Unaudited | Unaudited | Audited | ||
| Operating costs | ||||
| General and administrative |
| (4,366,757) | (2,154,149) | (5,629,533) |
|
|
|
|
| |
| OPERATING LOSS |
| (4,366,757) | (2,154,149) | (5,629,533) |
| Interest payable and similar charges | (305,947) | (441,207) | (742,933) | |
| Interest receivable and similar income |
| 334,510 | 823,497 | 1,591,507 |
|
|
|
|
| |
| Loss on ordinary activities before taxATION |
| (4,338,194) | (1,771,859) | (4,780,959) |
| TAXATION | - | - | - | |
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|
|
|
| |
| Loss on ordinary activities after taxation | (4,338,194) | (1,771,859) | (4,780,959) | |
|
|
|
|
| |
|
|
| |||
| Loss per share (Cents) - Basic and diluted | 6 | (5.48) | (3.01) | (7.47) |
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| |
Cluff Gold Plc
CONSOLIDATED BALANCE SHEET
As at 30 June 2008
|
| Notes | At 30 June 2008 | At 30 June 2007 | At 31 December 2007 |
|
| US$ | US$ | US$ | |
| Unaudited | Unaudited | Audited | ||
| ASSETS | ||||
| Non-current assets | ||||
| Intangible assets | ||||
| - exploration costs | 15,653,923 | 9,389,968 | 10,693,223 | |
| Property, plant and equipment | ||||
| - mine development costs | 62,402,453 | 19,567,441 | 41,395,030 | |
| - other | 1,313,806 | 522,197 | 1,275,479 | |
| Trade and other receivables | 135,621 | 17,662 | - | |
|
|
|
| ||
| TOTAL NON-CURRENT ASSETS | 79,505,803 | 29,497,268 | 53,363,732 | |
|
|
|
|
| |
| Current assets | ||||
| Trade and other receivables | 7 | 3,817,280 | 2,111,462 | 2,174,099 |
| Inventories of mined ore and consumables | 211,020 | - | 103,575 | |
| Cash and cash equivalents | 13,280,725 | 36,414,459 | 13,921,966 | |
|
|
|
| ||
| TOTAL CURRENT ASSETS | 17,309,025 | 38,525,921 | 16,199,640 | |
|
|
|
|
| |
| TOTAL ASSETS | 96,814,828 | 68,023,189 | 69,563,372 | |
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|
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| |
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| ||||
| CAPITAL AND RESERVES | ||||
| Equity | ||||
| Share capital | 4 | 1,591,688 | 1,297,882 | 1,288,558 |
| Share premium | 89,322,731 | 65,690,386 | 64,990,510 | |
| Share option reserve | 1,808,351 | 1,299,572 | 1,611,500 | |
| Merger reserve | 2,500,366 | 2,500,366 | 2,500,366 | |
| Retained losses | (17,184,149) | (9,836,855) | (12,845,955) | |
| Currency translation reserve | 9,089,380 | 3,148,857 | 6,715,029 | |
|
|
|
| ||
| Total equity | 87,128,367 | 64,100,208 | 64,260,008 | |
|
|
|
| ||
| NON-Current liabilities | ||||
| Provisions for other liabilities and charges | 1,875,700 | - | 1,250,620 | |
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|
|
| ||
| Total non-current liabilities | 1,875,700 | - | 1,250,620 | |
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|
|
| ||
| Current liabilities | ||||
| Trade and other payables | 7,810,761 | 3,922,981 | 4,052,744 | |
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|
| ||
| Total current liabilities | 7,810,761 | 3,922,981 | 4,052,744 | |
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|
| ||
| TOTAL EQUITY AND LIABILITIES | 96,814,828 | 68,023,189 | 69,563,372 | |
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Cluff Gold Plc
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the six months ended 30 June 2008
| Share capital | Share premium | Share option reserve | Merger reserve | Cumulative translation reserve | Retained losses | Total equity | |
| US$ | US$ | US$ | US$ | US$ | US$ | US$ | |
| BALANCE AT 1 jANUARY 2007 | 844,104 | 37,282,361 | 1,326,884 | 2,500,366 | 2,568,705 | (8,064,996) | 36,457,424 |
| Loss for the period | - | - | - | - | - | (1,771,859) | (1,771,859) |
| Exchange translation differences on consolidation | - | - | - | - | 580,152 | - | 580,152 |
| Total recognised income and expense | - | - | - | - | 580,152 | (1,771,859) | (1,191,707) |
| Issue of ordinary share capital | 453,778 | 30,425,038 | - | - | - | - | 30,878,816 |
| Issue costs | - | (2,017,013) | - | - | - | - | (2,017,013) |
| Share option credit | - | - | (27,312) | - | - | - | (27,312) |
| BALANCE AT 30 JUNE 2007 | 1,297,882 | 65,690,386 | 1,299,572 | 2,500,366 | 3,148,857 | (9,836,855) | 64,100,208 |
| BALANCE AT 1 jANUARY 2007 | 844,104 | 37,282,361 | 1,326,884 | 2,500,366 | 2,568,705 | (8,064,996) | 36,457,424 |
| Loss for the period | - | - | - | - | (4,780,959) | (4,780,959) | |
| Exchange translation differences on consolidation | - | - | - | - | 4,146,324 | - | 4,146,324 |
| Total recognised income and expense | - | - | - | - | 4,146,324 | (4,780,959) | (634,635) |
| Issue of ordinary share capital | 444,454 | 29,735,227 | - | - | - | - | 30,179,681 |
| Issue costs | - | (2,027,078) | - | - | - | - | (2,027,078) |
| Share option charge | - | - | 284,616 | - | - | - | 284,616 |
| BALANCE AT 31 DECEMBER 2007 | 1,288,558 | 64,990,510 | 1,611,500 | 2,500,366 | 6,715,029 | (12,845,955) | 64,260,008 |
| BALANCE AT 1 JANUARY 2008 | 1,288,558 | 64,990,510 | 1,611,500 | 2,500,366 | 6,715,029 | (12,845,955) | 64,260,008 |
| Loss for the period | - | - | - | - | - | (4,338,194) | (4,338,194) |
| Exchange translation differences on consolidation | - | - | - | - | 2,374,351 | - | 2,374,351 |
| Total recognised income and expense | - | - | - | - | 2,374,351 | (4,338,194) | (1,963,843) |
| Issue of ordinary share capital | 303,130 | 26,096,093 | - | - | - | - | 26,399,223 |
| Issue costs | (1,763,872) | - | - | - | - | (1,763,872) | |
| Share option charge | - | - | 196,851 | - | - | - | 196,851 |
| BALANCE AT 30 JUNE 2008 | 1,591,688 | 89,322,731 | 1,808,351 | 2,500,366 | 9,089,380 | (17,184,149) | 87,128,367 |
Cluff Gold Plc
CONSOLIDATED CASH FLOW STATEMENT
For the six months ended 30 June 2008
|
| 6 months to 30 June 2008 | 6 months to 30 June 2007 | 12 months to 31 December 2007 | ||||
|
| US$ | US$ | US$ | ||||
| Unaudited | Unaudited | Audited | |||||
| CASH FLOWS USED IN OPERATING ACTIVITIES | |||||||
| Operating loss for the period | (4,366,757) | (2,154,149) | (5,629,533) | ||||
| Depreciation | 38,234 | 9,311 | 58,191 | ||||
| Increase in trade and other payables | 3,833,097 | 2,237,591 | 4,354,850 | ||||
| (Increase) in trade and other receivables | (1,778,803) | (418,550) | (463,524) | ||||
| (Increase) in inventories | (107,444) | - | (103,575) | ||||
| Share option charge/(credit) | 196,851 | (27,312) | 284,616 | ||||
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| |||||
| NET CASH FLOWS USED IN OPERATING ACTIVITIES | (2,184,822) | (353,109) | (1,498,975) | ||||
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| CASH FLOWS USED IN INVESTING ACTIVITIES | |||||||
| Interest receivable | 333,947 | 823,497 | 1,499,725 | ||||
| Interest payable | (45,014) | - | (662) | ||||
| Purchase of property, plant and equipment | (17,901,085) | (8,596,655) | (22,537,283) | ||||
| Purchase of intangible assets | (4,869,620) | (3,708,575) | (10,801,495) | ||||
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| NET CASH FLOWS USED IN INVESTING ACTIVITIES | (22,481,772) | (11,481,733) | (31,839,715) | ||||
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| CASH FLOWS FROM financing ACTIVITIES | |||||||
| Proceeds from the issue of share capital | 26,399,223 | 30,878,816 | 30,179,681 | ||||
| Issue costs paid | (1,763,872) | (2,017,013) | (2,027,078) | ||||
| Amount funded on behalf of joint venture party | - | (1,170,000) | (1,170,000) | ||||
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| |||||
| NET CASH FLOWS FROM FINANCING ACTIVITIES | 24,635,351 | 27,691,803 | 26,982,603 | ||||
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| NET INCREASE IN CASH AND CASH EQUIVALENTS | (31,243) | 15,856,961 | (6,356,087) | ||||
| Cash and cash equivalents at start of period | 13,921,966 | 21,180,012 | 21,180,012 | ||||
| Exchange losses on cash | (609,998) | (622,514) | (901,959) | ||||
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| CASH AND CASH EQUIVALENTS AT END OF PERIOD | 13,280,725 | 36,414,459 | 13,921,966 | ||||
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| CASH AND CASH EQUIVALENT COMPRISE | |||||||
| Cash at bank | 2,717,979 | 488,304 | 622,504 | ||||
| Short term deposits | 10,562,746 | 35,926,155 | 13,299,462 | ||||
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| 13,280,725 | 36,414,459 | 13,921,966 | |||||
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Cluff Gold Plc
NOTES TO THE INTERIM FINANCIAL INFORMATION
For the six months ended 30 June 2008
1. BASIS OF PREPARATION
The accounting policies and methods of computation used in the preparation of the unaudited consolidated financial information are the same as those described in the Company's audited consolidated financial statements and notes thereto for the year ended 31 December 2007 and are consistent with the principles of International Financial Reporting Standards ("IFRS") and its interpretations adopted by the International Accounting Standards Board ("IASB"), which are the same as those adopted by the European Union. In the opinion of management, the accompanying interim financial information includes all adjustments considered necessary for fair and consistent presentation of financial statements. This interim consolidated financial information should be read in conjunction with the Company's audited consolidated financial statements and notes for the year ended 31 December 2007.
The financial information for the six months ended 30 June 2008 and 2007 is unaudited but has been reviewed by the auditors. The financial information for the twelve months ended 31 December 2007 has been derived from the Group's audited financial statements for the period as filed with the Registrar of Companies. This financial information does not constitute statutory financial statements. The auditors' report on the statutory financial statements for the year ended 31 December 2007 was unqualified and did not contain any statement under Section 237(2) or (3) of the Companies Act 1985.
Rates of Exchange to US$1 were as follows:
| | At 30 June 2008 | 2008 6 Month Average | At 31 December 2007 | 2007 12 Month Average | At 30 June 2007 | 2007 6 Month Average |
| Sterling | 0.50140 | 0.50337 | 0.50068 | 0.49853 | 0.49903 | 0.50648 |
2. NATURE OF BUSINESS AND GOING CONCERN
The Company is a public limited company incorporated and domiciled in England. The address of the registered office is 24 Queen Anne's Gate, London, SW1H 9AA.
The Group is involved in the acquisition, exploration and development of gold deposits in West Africa.
In common with many exploration and development companies, the Group has to date raised equity funds in discrete tranches in order to fund its activities. The Company raised US$25.4 million on 3 March 2008 by way of placement of 14,570,000 shares at 88p per share. The proceeds from this placing were used to fund development of both the Angovia and the Kalsaka heap leach gold mines, and continuing exploration spend on the Baomahun gold project. On 24 September, Cluff secured a standby loan facility of US$10 million from RMB Australia Holdings Ltd in order to ensure adequate working capital cover during the commissioning phase of both gold mines. The loan facility, which is secured, is repayable by 31 August 2009 and is made up of two tranches; an initial tranche of US$6.5 million and a further tranche of US$3.5 million which, if required, will be subject to additional conditions precedent.
Given these financial resources, the strength of the assets currently in the Company's portfolio and the strong gold price, the Directors consider it appropriate to prepare these financial statements on the going concern basis. The use of that basis assumes that the Company meets its commitments as they fall due.
3. Segment reporting
Business segments
The Group has only one business segment, namely the exploration for, and development of and production of, projects focused on gold. This is considered to be the primary reporting segment for the Group.
Geographical segment
The Group reports by geographical segment as its secondary reporting segment. All the Group's activities are related to exploration for, and production of, gold in Africa with indirect support provided by the UK office. In presenting information on the basis of geographical segments, segment assets and cost of acquiring them are based on the geographical location of the assets. Segment capital expenditure is the total cost incurred during the period to acquire segment assets that are expected to be used for more than one period.
There was no Group turnover in the period.
| | | 6 months to 30 June 2008 | 6 months to 30 June 2007 | 12 months to 31 December 2007 |
| | | US$ | US$ | US$ |
| | | Unaudited | Unaudited | Audited |
| | Total assets | | | |
| | UK | 11,136,545 | 47,443,145 | 15,287,418 |
| | Burkina Faso | 35,948,965 | 7,522,975 | 23,960,133 |
| | Sierra Leone | 15,622,598 | 9,539,485 | 9,564,918 |
| | Cote d’Ivoire | 32,905,445 | 3,218,695 | 19,910,732 |
| | Mali | 865,678 | 298,889 | 612,055 |
| | Other | 335,597 | - | 228,116 |
| | | | | |
| | Total | 96,814,828 | 68,023,189 | 69,563,372 |
| | | | | |
| | Capital expenditure on property, plant and equipment | | | |
| | UK | 3,201 | 10,151 | 10,313 |
| | Burkina Faso | 10,040,949 | 6,353,162 | 13,187,346 |
| | Sierra Leone | 62,385 | 78,557 | 115,938 |
| | Cote d’Ivoire | 8,670,172 | 2,946,848 | 9,426,014 |
| | Mali | 6,147 | 49,882 | 65,959 |
| | Other | - | - | 13,778 |
| | | | | |
| | Total | 18,782,854 | 9,438,600 | 22,819,348 |
| | | | | |
| | Capital expenditure on intangibles | | | |
| | UK | - | - | - |
| | Burkina Faso | 87,345 | (71,362) | 291,385 |
| | Sierra Leone | 4,426,182 | 2,110,313 | 4,481,788 |
| | Cote d’Ivoire | 4,176 | 1,428,353 | 5,409,438 |
| | Mali | 228,152 | 157,238 | 429,000 |
| | Other | 123,765 | 84,033 | 189,884 |
| | | | | |
| | Total | 4,869,620 | 3,708,575 | 10,801,495 |
| | | | | |
4. Capital and reserves
| At 30 June 2008 | At 30 June 2007 | At 31 December 2007 | ||
| US$ | US$ | US$ | ||
| Unaudited | Unaudited | Audited | ||
| Authorised: | ||||
| 100,000,000 Ordinary shares of 1p each | 1,894,000 | 1,894,000 | 1,894,000 | |
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| No. | No | No | ||
| Issued and Fully Paid: | ||||
| Ordinary shares of 1p each | 84,228,391 | 68,727,531 | 68,950,391 | |
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|
|
| ||
| US$ | US$ | US$ | ||
| Issued and Fully Paid: | ||||
| Ordinary shares of 1p each | 1,591,688 | 1,297,882 | 1,288,558 | |
|
|
|
|
Shares issued
On 19 February 2008, the Company issued 30,000 new ordinary shares of 1p at the option price of 74p each to L Lloyd Jones which represents the exercise of options granted on 27 April 2006.
On 3 March 2008, by way of placing, the Company issued 14,570,000 new ordinary shares of 1p for cash consideration of 88p each.
On 17 April 2008, the Company issued 678,000 new ordinary shares of 1p each at the option price of 68p each to BMO Nesbitt Burns which represents the exercise of options granted on 27 April 2006.
On 31 July 2008, the Company issued 150,000 new ordinary shares of 1p each at the option price of 55p each to F Z Haller which represents the exercise of options granted on 1 September 2005.
On 8 August 2008, the Company issued in aggregate 12,390,909 ordinary shares in the Company to Dumarchal Nominee Limited in consideration for the acquisition of the 40% interest in the Baomahun Gold Project. The total number of ordinary shares of the Company in issue following the issue of the Consideration Shares will be 96,769,300.
5. Share based payments
The Company granted 1,682,100 share options between 1 January 2008 and 30 June 2008, (908,000 between 1 January 2007 and 30 June 2007, 933,000 between 1 January 2007 and 31 December 2007). The options are exercisable between 15 December 2004 and 4 June 2018 subject to the vesting conditions set by the Board at the time of grant. The share options are valued bi-annually and take into account options that have lapsed during the period. The share options in issue at 30 June 2008 had a fair value, under IFRS 2 Share-based Payments, of between 5.5p and 68.6p each.
At 30 June 2008 the amount charged/(credited) to the accounts was US$196,851 (30 June 2007: (US$27,312), 31 December 2007: US$284,616).
6. Loss per share
The calculation of loss per ordinary share on total operations is based on losses of US$4,338,194 (30 June 2007: US$1,771,859, 31 December 2007: US$4,780,959) and the weighted average number of ordinary shares outstanding of 79,094,424 (30 June 2007: 58,857,480, 31 December 2007: 64,037,103). There is no difference between the diluted loss per share and the basic loss per share presented.
At 30 June 2008 there were 5,228,893 share options in issue which have a potentially dilutive effect on a basic profit per share in the future.
7. Trade and other receivables
The Company entered into a conditional agreement on 27 February 2008 to acquire the remaining 40% of the Baomahun project. All conditions relating to the acquisition were satisfied on 4 August 2008 and US$1,170,000 was received as full and final settlement of all monies owed in relation to the Baomahun project. The consideration for the acquisition was through the issue of ordinary shares and is detailed in note 4.
8. POST BALANCE SHEET EVENTS
On 24 September, a US$10 million standby facility was agreed with RMB Australia Holdings Ltd. The facility, which is secured, is repayable on 31 August 2009 and is made up of two tranches; an initial tranche of US$6.5 million for funding corporate, development and working capital costs and a further tranche of US$3.5 million which, if required, will be subject to additional conditions precedent. Both the initial tranche and the further tranche can be drawn down in such smaller tranches, as required by the Company. Interest on the loan is at 5% per annum above US LIBOR with commitment fees of 1.75% per annum on amounts undrawn. An arrangement fee of US$400,000 was paid on signature. An initial option over 500,000 ordinary shares of the Company was granted to RMB Australia at an exercise price of 36.9 pence per share for a period of 3 years. RMB Australia will also be granted further options at the same exercise price over an additional 100,000 shares for each tranche of US$1 million drawn, up to a maximum of 1.5 million shares in total (including the initial grant). These options can be exercised at any time from the date of grant.