Cerillion Regulatory News (CER)

19 Jun 2007 07:01

Celtic Resources Holdings PLC19 June 2007 FOR IMMEDIATE RELEASE 19th June 2007 Celtic Resources Holdings Plc ("Celtic" or "the Company") Full Year Results for the year ending 31 December 2006 • An increase of 62% in gold production for the Group to 61,520 ounces in 2006 compared with 37,991 ounces in 2005. This included a 152% increase in production at Suzdal from 20,585 ounces in 2005 to 51,785 ounces in 2006 • Forecast gold production at Suzdal for 2007 of c.83,000 ounces at cash operating cost of $340/ounce. Group forecast production of c.90,000 ounces • Acquired Eureka Mining Plc including the Shorskoye molybdenum mine and the Chelyabinsk Copper Company in Russia • Doubled attributable gold resources (JORC) to 4.02 million ounces and added new resources of 2.62 million tonnes of copper and 21.6 million pounds of molybdenum • Group profit before tax and minority interests, was $39.8 million compared to a loss of $0.3 million in 2005. • Gross proceeds from the sale of the interest in the Nezhdaninskoye gold mine in Russia of $80 million were collected in May 2006 • Shareholders' funds increased by $69 million to $182 million • Cash position at year end was $53.3 million • Signed the first contract for the acquisition of refractory gold concentrates to utilise surplus capacity at Suzdal BIOX(R) plant in December • Commissioned the Stepnogorsk molybdenum plant in May 2006, with a total of 577,710 pounds of concentrate produced in 2006 and a current production rate of 1.5 million pounds per annum • Signed two Joint Ventures with AGL, a subsidiary of Russian investment group ICT for the development of the Chelyabinsk, Miheevskoye and Tominskoye copper and gold projects using Polymetal Engineering as prime contractor The Company's annual report and accounts are being sent to shareholders and willbe available on our website shortly. For further information please contact: Kevin Foo / Jonathan Scott-Barrett Leesa PetersCeltic Resources Holdings Plc Conduit PRTel: + 44 (0)20 7921 8800 Tel: +44 (0)20 7429 6666 / (0)781 215 9885Investors@celticresources.com leesa@conduitpr.com Frank Moxon / Simon EdwardsEvolution Securities LimitedTel: +44 (0) 20 7071 4300 www.celticresources.com CHAIRMANS STATEMENTFOR THE YEAR ENDED 31ST DECEMBER 2006 Dear ShareholderI am delighted to present your Company's Annual Report for 2006. Looking BackAfter the past four years of intense corporate activity the company continued tolook for opportunities to expand and consolidate its capital and production andprotect its interests where threatened. Last year we were at last allowed tofocus on our core assets in Kazakhstan and to increase production at ourflagship Suzdal gold mine. As a result, 2006 was a year of significant achievements for our Company. Groupgold production increased by 62% from 2005 to 61,520 ounces, turnover increased120% to $34.5million and we delivered record pre-tax profits of c. $40 million.We completed the year with the acquisition of Eureka Mining Plc. Thisacquisition enriched our asset base, adding a revenue generating molybdenum mineat Shorskoye in Kazakhstan, two copper/gold deposits in Southern Russia, twoexploration projects in Kazakhstan and experienced local and internationalmanagement and technical teams, to create a larger, stronger company. With theseassets, we have been presented with excellent opportunities to create andstrengthen meaningful relationships with major regional players which willbenefit our corporate position in these locations. Through the year the Company and its advisors continued to identify otherpromising corporate or licensing opportunities but could find nothing else thatsuited as we believed that many potential targets were fully priced or overpriced. However, the search continues. KazakhstanThe encouraging investment climate in Kazakhstan under the leadership ofPresident Nursultan Nazarbayev makes it a particularly attractive country inwhich to do business. We are delighted that our determined efforts at the Suzdal gold mine haveresulted in a 152% increase in gold production and that the BIOX(R) plant isstarting to realise its full potential and we expect continued improvements. Inaddition to processing refractory ores mined at Suzdal, this plant is now beingused to treat third party gold concentrates. This is the first step in Celtic'splan to capitalise on our hard earned experience at Suzdal in treatingrefractory ores, a process which we have now mastered. With all the past background noise, in relation to Nezhdaninskoye, it is easy toforget that Celtic has built a unique asset which I am sure will pay off wellinto the future. We are the only sulphide refractory gold processor in CentralAsia and all railroads go past our door at Semipalatinsk, 75 kilometres away.Importantly, the Government of Kazakhstan intends to make the Semipalatinskregion the focus of importing and exporting of products and resources to Chinaand Russia. We are cutting costs and investing in capital items that can add significantlyto throughput and efficiencies. 2007 year will also see the completion of ourlife of mine study and recent updates of our resource inventory at Suzdal havebeen very encouraging. Many incremental developments will come. We expect production from Suzdal to beabout 83,000 oz this year and approximately 90,000 oz for the group. Trials willfinish on other outside concentrates that we may be able to utilise andtherefore drive down our fixed costs. Our Joint Venture with Stepnogorsk GOK, an affiliate of KazAtomProm producedover 577,000 lbs in 2006 and production in 2007 is expected to be 1,500,000 lbs.Molybdenum is enjoying sustained record prices at present and the decision to"fast track" this project in 2005 was correct. RussiaIn Russia, we have two active Joint Ventures on the Chelyabinsk copper-goldproject with AGL, a subsidiary of the large Russian ICT Group. We are assessingthe next steps towards development of Miheevskoye and Tominskoye, two very largecopper-gold deposits. Supported by this strong partner, these projects are wellpositioned for further development through to Bankable Feasibility Studies. Financial ResultsProfit after tax for the year, with no contribution from the Eureka assets whichwere acquired in late December, was an outstanding US$37 million (85 cents pershare). This profit is primarily due to the sale of our interest in theNezhdaninskoye gold mine in Russia. At year end, shareholders' funds stood atUS$182 million of which US$53.3 million was in cash. Turnover for 2006 atUS$34.5 million was 120% higher than the US$15.7 million achieved in 2005 and isa reflection of both the substantially increased production and the high goldprice which has continued into 2007. The FutureWe believe that there are still excellent prospects for mining in the FSU andopportunities abound in gold and base metals. In the public markets, there are many small companies which are undercapitalisedand therefore have limited opportunities for growth. Some of these havepotentially valuable assets. In contrast, Celtic has a strong balance sheet,long standing experience in the region, proven technology and the expertise toadd to our asset base. Although Celtic's focus is gold, we have diversified withthree joint ventures in base metals and are ready for further opportunities inthis sector. With encouraging improvements in gold production, strong gold and molybdenumprices, our technological edge and cash reserves, the outlook for the next 12months is very promising. We are committed to delivering significant sustainableprofits and look forward to your continued support. Thank youI would like to take this opportunity to thank both Michael Nesbitt and EuanWorthington, who have recently retired and resigned respectively, for theircontributions to the Company. Michael was a founding director of Celtic and gaveover 10 years of service to the Company whilst Euan served for almost 6 yearsand was instrumental in the corporate development of Celtic. Euan has agreed toremain available as a consultant for the next 6 months. I wish them both well intheir future endeavours. I would like to thank all of you for your support and the staff and employeesfor another year of outstanding effort and look forward to the future with highhopes that we can achieve significant sustainable profitable production and witha strong balance sheet move forward in growing the company. Peter Hannen18th June 2007 MANAGING DIRECTORS REVIEW OF OPERATIONSFOR THE YEAR ENDED 31ST DECEMBER 2006 Our company made substantial progress in 2006. Group gold production increasedby 62% and with the acquisition of Eureka Mining Plc in December 2006, we havedoubled our gold resources and become a molybdenum producer and a developer oftwo copper projects. Operating highlights were: • An increase of 62% in gold production for the Group to 61,520 ounces in 2006 compared with 37,991 ounces in 2005. This included a 152% increase in production at Suzdal from 20,585 ounces in 2005 to 51,785 ounces in 2006, signalling the beginning of the Suzdal turnaround • Attributable gold resources (JORC) doubled to 4.02 million ounces, including an increase in gold resources at Suzdal and new resources of 2.62 million tonnes of copper and 21.6 million pounds of molybdenum • First contract for the acquisition of refractory gold concentrates to utilise surplus capacity at Suzdal BIOX(R) plant was signed in December • Commissioning of the Stepnogorsk molybdenum plant in May 2006, with a total of 577,710 pounds of concentrate produced in 2006 and current production rate at 1.5 million pounds per annum • Two Joint Ventures signed with AGL, a subsidiary of Russian investment group ICT for the development of the Chelyabinsk Miheevskoye and Tominskoye porphyry copper and gold projects • The award of three exciting molybdenum exploration licenses in central and northern Kazakhstan Resource BaseTotal resources attributable to the Company are • 4.02 million ounces of gold• 2.62 million tonnes of copper• 21.6 million pounds of molybdenum We report our resources to JORC standard or equivalent Russian C1 and C2category resources and reserves. We do not report any Russian "P" categoryresources as we believe that such classifications are open to very wide andoften misleading interpretation. Importantly, significant potential forresources increase at Suzdal has been found following surface drilling andunderground development. Group Resource Tables: Suzdal +--------------------+-------------+-------------+-------------+| Classification | Tonnes | Au | Au |+--------------------+-------------+-------------+-------------+| | Mt | g/t | Moz |+--------------------+-------------+-------------+-------------+| Measured | 0.388| 25.2| 0.314|+--------------------+-------------+-------------+-------------+| Indicated | 2.340| 6.7| 0.502|+--------------------+-------------+-------------+-------------+| Inferred | 2.512| 6.9| 0.559|+--------------------+-------------+-------------+-------------+|Measured + Indicated| 2.729| 9.3| 0.817|+--------------------+-------------+-------------+-------------+| Total | 5.240| 8.2| 1.376|+--------------------+-------------+-------------+-------------+ Resource Evaluations Pty Ltd - Company Resource update 31st March 2007 * Zherek +------------------------------+-------------+-------------+-------------+| Classification | Tonnes | Au | Au |+------------------------------+-------------+-------------+-------------+| | Mt | g/t | Moz |+------------------------------+-------------+-------------+-------------+| Measured | -| -| -|+------------------------------+-------------+-------------+-------------+| Indicated (Oxide Ore) | 0.550| 2.1| 0.037|+------------------------------+-------------+-------------+-------------+| Inferred (Sulphide Ore) | 4.880| 5.1| 0.804|+------------------------------+-------------+-------------+-------------+| Measured& Indicated | 0.550| 2.1| 0.037|+------------------------------+-------------+-------------+-------------+| Total | 5.430| 4.8| 0.841|+------------------------------+-------------+-------------+-------------+ SRK Audited Zherek Ore Reserve Statement 1st Jan 2006**Total ore mined in 2006 was 0.391Mt at 2.0g/t gold. Shorskoye +--------------------+--------------+-------------+------------+| Classification | Tonnes | Mo | Mo |+--------------------+--------------+-------------+------------+| | Mt | % | Mlbs |+--------------------+--------------+-------------+------------+| Measured | 0.74| 0.091| 1.5|+--------------------+--------------+-------------+------------+| Indicated | 15.8| 0.097| 33.9|+--------------------+--------------+-------------+------------+| Inferred | 4.07| 0.086| 7.7|+--------------------+--------------+-------------+------------+| Total | 20.6| 0.095| 43.1|+--------------------+--------------+-------------+------------+ Resource Evaluations Pty Ltd Mineral Statement as at 31st May 2007 at a 0.04% Mocut-off grade * Miheevskoye +-----------------------+-----------+----------+---------+-----------+---------+| Classification | Tonnes | Cu | Au | Cu | Au |+-----------------------+-----------+----------+---------+-----------+---------+| | Mt | % | g/t | Mt | Moz |+-----------------------+-----------+----------+---------+-----------+---------+| Indicated | 373.5| 0.38| 0.10| 1.42| 1.2|+-----------------------+-----------+----------+---------+-----------+---------+| Inferred | 53.1| 0.31| 0.07| 0.16| 0.12|+-----------------------+-----------+----------+---------+-----------+---------+| Total Indicated and | 426.6| 0.37| 0.10| 1.58| 1.32|| Inferred | | | | | |+-----------------------+-----------+----------+---------+-----------+---------+ Resource Evaluations Pty Ltd Resource Estimate as at June 2006 at a 0.2% Cucut-off ** Tominskoye +-------------------+----------+---------+--------+--------+--------+| Classification | Tonnes | Cu | Au | Cu | Au |+-------------------+----------+---------+--------+--------+--------+| | Mt | % | g/t | Mt | Moz |+-------------------+----------+---------+--------+--------+--------+| Russian C1 & C2 | 241| 0.58| 0.12| 1.40| 0.93|+-------------------+----------+---------+--------+--------+--------+ December 2006 at a 0.2% Cu cut-off Suzdal Gold MineThe Suzdal gold mine is located 75 km south-west of Semipalatinsk in northernKazakhstan. We mined 386,765 tonnes of sulphide ore at 9.15 g/t Au from open pitand underground operations. The plant treated 264,750 tonnes at 9.84g/t Au torecover 51,785 ounces, equating to about 61% recovery. This 152% productionincrease was due to greater plant availability following the commissioning of anew air supply system for the BIOX(R) plant and overall improvements in plantoperation. Commissioning and optimising this plant cost considerably more thanexpected and took over 12 months longer than scheduled. Cash costs of US$456/ounce were somewhat higher than desired due to the inclusion of some workingcapital costs associated with the longer commissioning time of the sulphideplant. I am pleased to say that production and recovery levels have improvedmonth by month since late last year and we are forecasting total production fromSuzdal for 2007 of some 83,000 ounces. Expected cash operating costs, if thistarget is met, will be c. $340/ounce. Our investment of more than $80 million inmine development and plant equipment is paying off, with substantial undergrounddevelopment of 7,247 metres achieved in 2006 and over 250,000 tonnes of ore atan average grade of 20g/t Au in stopes. Extensions to Suzdal ResourceRecent surface drilling at Suzdal has defined high grade extensions to theresource and underground development which has increased our confidence in thehigh grade nature and continuity of the deposit. The additional drillingdemonstrated the potential for the discovery of additional high grade resourcesin close proximity to the operation. In a developed and extensively drilleddeposit such as Suzdal, the delineation of a substantial lode extension close toexisting workings is exciting. Likewise, the recognition of high grade splays ofgold in excess of 20g/t present over strike lengths of up to 300m from the mainstructures provides potential to define additional high grade mineralisationclose to the existing workings. Results from the recent drilling are summarised in Table 1. Table 1: Results from Recent Surface Drilling - Suzdal Gold MineHole Number From (m) To (m) Length (m) Au g/t520 190 194 4 8.50522 246 262 16 17.13523 199 220 21 4.80524 182 187 5 14.74528 146 148 2 12.75 The intersections are from five holes on two cross sections with a spacing of100m. No previous drilling is present in the 300m interval along strike to thesouth west of holes 522 and 523 and a rig is currently operating at the site totest this interval. An independent resource estimate was also completed at Suzdal. It utilised thenew drilling and development data and has resulted in an increase of over50,000oz compared to the January 2006 resource statement. This is in addition togold produced during 2006 and the first quarter 2007. In addition the estimatemoved 388,000 t of ore at 25.2g/t Au into the measured category. Suzdal PlansSuzdal has the potential to regularly deliver 100,000 ounces per annum of goldat costs lower than $350/oz. Our mastering of this complex orebody is continuingand the exciting potential for high grade extensions to the orebody increasesour confidence. As the only BIOX(R) plant in the FSU, we are well placed totreat third party refractory ores and products. Treatment of gold concentratesfrom Greece commenced in April 2007 and additional concentrate from there andother sources will be contracted following successful trials. Furthersubstantial capital expenditure at Suzdal is planned so that we will be able totreat a variety of ores from within and outside of Kazakhstan and therefore bein a prime position to be a leading developer of high grade refractoryorebodies. Zherek Gold MineZherek is situated 28km from Suzdal and is 75% owned by Celtic. The oxide oreopen pit and heap leach operation produced 9,735 ounces of gold in 2006,compared with 17,416 ounces in 2005. This 44% decrease was due to lower gradeoxide and transition ores delivered to the heap. Oxide ore supplies willdiminish this year and plans are to treat transition ores in 2008 and sulphideore in 2009. At 1st Jan, 2006, Zherek had Measured, Indicated and Inferred sulphide oreresources of 5.43 million tonnes at 4.8 grammes per tonne gold containing c.841,000 ounces. We expect to produce about 7,000 ounces from Zherek in 2007. Group Gold Production 2004 - 2008 Gold 2004 2005 2006 2007 2008ProductionOz ('000s) Actual Actual Actual Forecast ForecastSuzdal 12 21 51.8 83 120(100%)Zherek 20 17 9.7 7 10(75%)TOTAL 32 38 61.5 90 130 Cash Costs US$/ozSuzdal 216 306 456 340 300Zherek 254 370 520 450 430Weighted 239 334 466 348 310Av. The Shorskoye Molybdenum Project The Shorskoye Molybdenum mine, situated 90 kilometres from Semipalatinsk, is amolybdenum deposit with a JORC categorised resource of 20.6 million tonnes ofore at 0.10% molybdenum. A high grade zone of 3.1 million tonnes at 0.20% Mo wasidentified and mining operations started in this zone in September 2005. A 15 year, 50:50 joint venture agreement with Stepnogorsk GOK, an affiliatecompany of KazAtomProm, the state owned uranium company, was signed in June2005. Plant facilities at Stepnogorsk, which the JV controls, were modified toprocess the ore mined at Shorskoye and the first concentrates were produced inMay 2006. The JV currently uses 500,000 tonnes per annum of its 1.3mtpa plantcapacity. A total of 247,000 tonnes of ore at 0.16%Mo was treated to recover577,710 pounds of molybdenum in concentrate in 2006. Average recovery for theyear was 65%. Production cost in 2006 was c. $13/lb. Celtic's share of production in 2007 is estimated to be approximately 750,000pounds of molybdenum. The JV has a $9m debt from a Kazakhstan bank to repay fromcash flow. Tightening supply, due to lack of roasting capacity and high demandis responsible for the current consistent molybdenum prices of $25/$28/lb andexpansion of production to 3 Mlbs/ year is under consideration. We receiveapproximately 80% of the spot molybdenum price for our molybdenum sulphideconcentrate. The Chelyabinsk Copper/Gold Project The project comprises two copper/porphyry deposits, Miheevskoye and Tominskoye,located 250km and 40km respectively from Chelyabinsk, which is in the largeSouth Urals copper belt. Miheevskoye has a JORC resource of 427 Mt @ 0.37% Cu and 0.10 g/t Au containing1.58 million tonnes of copper and 1.32 million ounces of gold. In January 2007, Celtic announced a 50:50 joint venture agreement with Anime Global Limited (AGL), a company associated with the ICT Group of companies for the development of the Miheevskoye Project. AGL will earn it's 50% interest by contributing cash and performing services with a total value of $16m. Celtic willincur no additional capital costs until a Bankable Feasibility Study is completed in 2007/8. Polymetal Engineering, a wholly owned subsidiary of Polymetal, has beencontracted to execute the plans of the JV and discussions regarding future plansfor this resource are ongoing. In March 2007 Celtic entered into a second joint venture agreement with AGL for the development of the Tominskoye deposit also on a part cash and part performancestructure to earn up to 50%, with $3.56m paid for an initial 25.5%. Celtic will incur no additional capital costs until the completion of the BFS in mid 2008. Tominskoye has a Russian C1/C2 resource of 241Mt at 0.58% copper and 0.12 g/t gold,containing 1.4Mt copper and 0.93Moz gold. A pre-feasibility study is underway and examination of fast track development of the oxide ores at Tominskoye is part of this study. Exploration Projects We believe that selective acquisition of late stage exploration properties inKazakhstan and Russia are valid activities as the market is now providinggreater recognition and value to this sector. We intend to spend approximately$3million/ year on drilling and developing existing and new properties that willultimately enhance our balance sheet. Kentau ProjectKentau Exploration & Mining LLP holds two licences in the Kentau district, firstgranted in 1997. It is a large and highly prospective area from which largevolumes of geological data have been accrued. Additional surveys (including RCdrilling) as well as an extensive data review have been completed, with acomprehensive Geographic Information System database created. DostykThe Dostyk mining area covers 14,000 km2 in central Kazakhstan comprising fiveselected base metal drill targets. Historic drilling of 4,641m in 19 bore holeswas completed prior to Celtic's acquisition of Eureka Mining Plc's acquisition.A farm out agreement was signed with Cigma Metals Corporation in January 2007 tocarry out further exploration work in three stages, with a guaranteed $2millionspend on exploration. Stage one was completed in June 2007, with Cigma acquiring51%. Four diamond drilling rigs have drilled 1,300 meters to date. The remainingtwo stages, at Cigma's option, will result in them having a 90% interest. Molybdenum ProjectsThe company has been awarded three attractive molybdenum licenses in central andnorthern Kazakhstan. We secured these licenses in response to our increasinginterest in molybdenum and the sustained high price of this metal. The depositsare: Akkuduk (Mo)This deposit is located in the Shetski region of Karaganda, central Kazakhstanand occurs as stockworks and mineralised granite porphyry intrusives in volcanicstratigraphy. Selected drill results gave 69.4m at 0.12% Molybdenum (Mo) from111.1m, 26m at 0.10% Mo from 29m and 33.4m at 0.12% Mo from 74.4m. Zhilandy (Mo, Cu, Au)This deposit is near Kurchatov in the Pavlodar region, in northern Kazakhstanand occurs as Mo and Cu mineralisation associated with a porphyry intrusivesystem within volcanic host rocks. The intrusives also carry gold, silver, leadand uranium. Significant molybdenum intersections include 8m at 0.11% Mo from86m, 0.5m at 1.0% Mo from 69m and 2.5m at 0.8% Mo from 109m. Gold mineralisationintersections included 15m at 2.23g/t Au from 4m and 27m at 0.2-9.7 g/t Au from2m. Itmuryn (Mo)This deposit is located 155km from Stepnogorsk in northern Kazakhstan, whereCeltic Resources Shorskoye molybdenum ore is treated. The mineralisation ishydrothermal stockwork in volcanics that has been extensively altered andcovered with 18-24m of sediments. Limited shallow core drilling was completedbut a single drill hole of 167m intersected molybdenum mineralisation overalmost its entire length. Selected intersections were 4.3m at 0.106% Mo from43.5m, 3.6m at 0.199% Mo from 86.4m and 2.7m at 0.136% Mo from 160.3m. These acquisitions are reasonably well advanced exploration properties that maybe fast tracked to production if the planned resource definition programme meetsour expectations. The Future Celtic's experience in the FSU has enabled us to identify and develop assetsthat deliver substantial profits. Our growth plan is to expand existing minesand to acquire new assets via purchase, joint venture or M&A. Our focus will begold but profitable opportunities in base metals will be pursued. It is also ourintention to leverage our expertise in the FSU as the only BIOX(R) treatmentoperator of refractory ores. We have a substantial resource base of 4.02 million ounces of gold, 2.62 milliontonnes of copper and 21.6 million pounds of molybdenum. The FSU has numerousresource opportunities at all levels of the gold and base metals industry.Undeveloped assets can be acquired cheaply, especially refractory ore types.Securing such projects and then enhancing them with finance, technology andmanagement will be a priority. To this end we have established a separateproject acquisition team within the Company that will travel all over the FSU insearch of such opportunities. Celtic Resources is in position for further success in 2007, ready to takeadvantage of the buoyant gold and molybdenum prices and our hard earnedexperience. We are relishing the challenge and are determined to continue todeliver high profits. My sincere thanks to the Board, all employees in the FSU regions and in ouroffices in, Kazakhstan, Russia and London for helping to make this company thestrong and profitable enterprise that it is today. Kevin Foo19th June 2007 Attibutions * Information compiled by Mr Paul Payne who is a member of The AustralasianInstitute of Mining and Metallurgy. Mr Payne is the Principal of ResourceEvaluations Pty Ltd, and a consultant to Celtic and has sufficient experiencewhich is relevant to the style of mineralisation and type of deposit underconsideration and to the activity which he is undertaking to qualify as aCompetent Person as defined in the 2004 Edition of the 'Australasian Code forReporting of Exploration Results, Mineral Resources and Ore Reserves'. Mr Payneconsents to the inclusion in the report of the matters based on his informationin the form and context in which it appears. ** Information extracted from an independent report prepared by SRK Consulting(UK) Ltd (SRK) which was prepared under the direction of Dr. Mike Armitage,CEng, CGeol. Dr Mike Armitage is a full time employee, and the ManagingDirector, of SRK and a Member of the Institute of Materials, Metals and Mining(IMMM) which is a "recognised Overseas Professional Organisation (ROPO) includedin a list promulgated by the Australian Stock exchange from time to time. DrMike Armitage has sufficient experience which is relevant to the style ofmineralisation and type of deposit under consideration and to the activity whichhe is undertaking to qualify as a competent Person as defined in the 2004Edition of the 'Australasian Code for Reporting of Exploration Results, MineralResources and Ore Reserves'. Dr Mike Armitage consents to the inclusion in thereport of the matters based on his information. Consolidated profit and loss accountfor the year ended 31 December 2006 2006 2005 As restated $000 $000 Turnover from continuing operations 34,500 15,662Cost of sales 24,201 (9,973) __________________Gross profit 10,299 5,689Administrative expenses (7,724) (4,624)Aborted project costs (1,193) -Foreign currency exchange gains/(losses) 3,946 (1,342) __________________Operating profit/ (loss) from continuing 5,328 (277)operationsProfit on disposal of investments 35,427 -Loan interest payable (3,480) (450)Interest receivable 2,503 396 __________________profit/ (loss) on ordinary activities before 39,778 (331)taxationTaxation (2,762) (1,458) __________________profit/ (loss) on ordinary activities after 37,016 (1,789)taxationMinority interest (157) (186) __________________Group profit/ (loss) for the year 36,859 (1,975) __________________All income and expenditure arises from continuing operations. US Cents US Cents Earnings/(Loss) per share 78.65 (4.79)Fully diluted Earnings/(Loss) per share 78.02 (4.79) Consolidated balance sheetas at 31 December 2006 2006 2005 As restated $000 $000Fixed assetsIntangible assets 45,823 20,567Tangible assets 58,511 44,630Joint venture interests - - Share of gross assets 18,794 - Share of gross liabilities (7,807) - _______________________ 10,987 - _______________________Financial assets 3,595 11,423 _______________________ 118,916 76,620 _______________________Current assetsStock 21,980 11,822Debtors 25,478 7,552Financial assets - 49,623Cash at bank and in hand 53,313 10,532 _______________________ 100,771 79,529Creditors (amounts falling due within (27,343) (19,959)one year) _______________________Net current assets 73,428 59,570Creditors (amounts falling due after (7,272) (20,183)more than one year)Provision for liabilities and charges (1,610) (1,766) _______________________Net assets 183,462 114,241 _______________________Capital and reservesCalled up share capital 15,950 12,564Capital conversion reserve 61 61Share premium 128,303 100,480Profit and loss account 52,128 13,882Employee Benefit Trust Reserve (13,996) (13,562) _______________________EQUITY Shareholders' funds 182,446 113,425Minority Interests 1,016 816 _______________________ 183,462 114,241 _______________________ Consolidated cash flow statementfor the year ended 31 December 2006 Notes 2006 2005 As $000 restated $000Net cash outflow from operating activities (a) (4,053) (3,974)Returns on investments and servicing of finance __________________Interest received 2,503 396Interest paid (3,480) (3,687) __________________Net cash outflow from returns on investments (977) (3,291)and servicing of finance __________________Taxation paid (960) (1,263) __________________Capital expenditure and financial investmentPayments to acquire intangible fixed assets (1,712) (2,922)Proceeds on disposal of tangible assets - 37Payments to acquire tangible fixed assets (16,938) (13,549)Payments to acquire subsidiaries (880) -Proceeds on disposal of investment net of costs 73,185 -Additions to financial assets - (7,710) __________________Net cash flow/(outflow) from capital expenditure 53,655 (24,144)and financial investment __________________Net cash flow/(outflow) before financing 47,665 (32,672) __________________FinancingIssue of ordinary share capital 8,000 12,270Costs associated with shares issued during the - (96)year __________________ 8,000 12,174Net (decrease)/increase in loans (13,326) 536 __________________Net cash (outflow)/inflow from financing (5,326) 12,710 __________________Increase/(Decrease) in cash (c) 42,339 (19,962) __________________ Notes to the consolidated cash flow statementfor the year ended 31 December 2006 (A) Reconciliation of operating profit to net cash outflow from operatingactivities 2006 2005 As restated $000 $000Operating profit/(loss) 5,328 (277)Depreciation and fixed asset write down 10,799 1,588Increase in stocks (10,154) (885)Increase in debtors (3,740) (2,086)Decrease in creditors (4,209) (1,841)Settled on Employee Benefit Trust (438) (626)Exchange movements (1,639) 153 _______________________ (4,053) (3,974) _______________________ (B) Analysis of net funds 31 December Subsidiaries Cash 31 2005 acquired flow December $000 $000 2006 $000Cash in hand and at bank 10,532 442 42,339 53,313 ________________________________________________Loans falling due within one (15,622) - 732 (14,890)yearLoans falling due in more (16,564) - 12,594 (3,970)than one year ________________________________________________ (32,186) - 13,326 (18,860) ________________________________________________Total (21,654) 442 55,665 34,453 ________________________________________________ (C) Reconciliation of net cash flow to movement in net funds 2006 2005 $000 $000 Increase/(decrease) in cash in the period 42,339 (19,962)Cash outflow/(inflow) from decrease/(increase) 13,326 (536)in debtCash inflow on acquisition of subsidiaries 442 -Net deficit at start of year (21,654) (1,156) ________________________Net surplus/(deficit) at end of year 34,453 (21,654) ________________________ This information is provided by RNS The company news service from the London Stock Exchange