Last checked at 22 Sep 2009 07:00
22nd September 2009
Persian Gold plc
Interim Results for the Six Month Period to 30th June 2009
Key Points:
To date good exploration success has been achieved by Persian Gold in Iran: - the Chah-e-Zard gold discovery is believed to be commercial - Dalli could potentially be a small copper/gold mine
Further progress and development has been frustrated by inaction on behalf of the authorities
Persian Gold is looking to examine other opportunities and strategic directions
John Teeling Chairman of Persian Gold Commented:
"The geology of Iran remains very attractive. Accessing the opportunity in Iran was the strategy behind setting up Persian Gold. Despite some considerable success on the ground, we have found it difficult to progress projects due to bureaucratic delays.
Persian Gold is committed to Iran. We are examining other opportunities available to best serve the Company and shareholders, while continuing to address the problems of operating in Iran".
Iran is a beautiful country with outstanding geological potential. The logic in establishing Persian Gold in 2004 was to take advantage of the opportunities. The geopolitical situation facing Iran - sanctions, Middle East politics, and lack of understanding - meant that few, if any, Western mining companies would venture into the country. The founders of Persian Gold, Irish and Iranian, were experienced international operators and had no political baggage. This gave us a major early-move advantage.
The strategy worked very well in the early years. Persian Gold got every help from the Iranian Embassy in Dublin and from the geological and mining organisations in Iran. Persian Gold established a top class technical team in Iran. We had two quick discoveries, both joint ventures with local Iranians; Chah-e-Zard, a gold oxide resource, and Dalli, a copper / gold porphyry. Grass roots gold exploration at Takestan obtained good first phase exploration results and then ran into opposition when we wanted to move to the trenching / drilling phase.
But, our experience in the past eighteen months has been frustrating. A detailed application to the Ministry of Mines for a Discovery Certificate on the Chah-e-Zard gold / silver discovery has lain dormant, although it has passed through various committees for technical and economic review. No explanation has come from the authorities. Under the relevant Mining Law, the authorities must rule on our application. Persian Gold staff have completed the necessary technical work prior to lodging a Discovery Certificate application for the Dalli copper / gold resource, but under the current circumstances, there is little point in submitting the application. Compounding the problem is the fact that visas are no longer available from the Iranian Embassy in Dublin. Again, no explanations are forthcoming.
Let me remind you of our logic in selecting Iran. The country is very big, stretching over 2,000 kilometres. It is seriously underexplored but thought to contain significant percentages of the world's gold, copper, zinc and other metals. By bringing new thinking and new technology to the country, and by recruiting top quality internal staff, we hoped to make discoveries. In looking for gold, we applied the knowledge gained from discovering and developing gold mines in clay / alunite / silica minerals in the Andes. We employed satellite imagery in seeking exploration sites and used new interpretation techniques to evaluate findings. It worked. Our experience of gold mining in Africa enabled us to model and evaluate the Chah-e-Zard deposit, where we drilled over 40 holes to outline an oxide resource of at least 160,000 ounces of gold and 1 million ounces of silver. We know how to build and operate tank leach gold mines. We believe Chah-e-Zard is commercial.
Our initial focus was on early stage gold exploration but we soon realised that Iran could and should contain very large copper gold porphyry deposits. Our first target was Dalli. This is a good and valuable deposit, but it is not the goal, it is not big enough. We looked at others, including Shadan in the East, but we have not found a big resource. Applying state of the art analytical / evaluation techniques added value to both resources. Dalli could be viable as a small gold / copper mine.
We had excellent cooperation in Iran at local and national level. Individuals, state organisations, and even a bank, brought particular projects. We signed Memoranda of Understanding with a bank, a state mining company and with some local mining groups.
For the past eighteen months, we persevered in our chosen strategy in Iran, though unable to make any progress with the authorities. We kept our top quality geological team together, we continued to examine new projects, and we pushed for answers to our application. It is unsatisfactory to report that we have made no progress and have received no explanations.
The Way Forward
Facing reality, your board have taken the following steps:
| 1. | Continue to monitor opportunities in Iran; | |||
| 2. | Cut costs as far as possible. Unfortunately, some staff have lost their jobs, while our two top managers have seen their remuneration cut; | |||
| 3. | In recent months, we have conducted preliminary investigations into the mineral potential in Armenia, Azerbaijan, Kazakhstan and Tajikistan. We are now focusing on grass roots gold opportunities. These countries have large Persian / Azari-Turkic speaking populations. Our Iranian staff can work in these places; | |||
| 4. | We have identified two specific minerals which we believe have strong long term fundamentals. The board is examining exploration opportunities in these minerals. Early developments are expected; | |||
| 5. | The skills, expertise and contacts of directors and staff extend into hydrocarbons. For some time, we have been looking at opportunities to partner with local Iranian groups who have obtained exploration concessions. Iranian oil operates on a different regime to minerals so foreign investment is taking place. To date, the returns offered make financing difficult. |
Outside of Iran, we have been offered and are examining exploration projects in both gas and oil. If we remain stalled in Iranian minerals, then such projects provide alternatives.
The geology of Iran remains as attractive as ever. We are striving to find out why Persian Gold is not making progress with the authorities. If we can identify the problems, we will fix them. In the interim, we must ensure that shareholders have opportunities. This will lead to a redirection of activities, at least in the short term.
John Teeling
Chairman
22nd September 2009
| Persian Gold PLC | ||
| John Teeling, Chairman | +353 (0) 1 833 2833 | |
| FinnCap | ||
| Matthew Robinson | +44 (0) 20 7600 1658 | |
| College Hill | ||
| Nick Elwes | +44 (0) 20 7457 2020 | |
www.persiangoldplc.com
| Persian Gold plc | |||||||||
| Financial Information (Unaudited) | |||||||||
| CONDENSED CONSOLIDATED INCOME STATEMENT | |||||||||
| Six Months Ended | Year Ended | ||||||||
| 30 June 09 | 30 June08 | 31 Dec 08 | |||||||
| unaudited | unaudited | audited | |||||||
| £'000 | £'000 | £'000 | |||||||
| Revenue | 0 | 0 | 0 | ||||||
| Operating costs | (160) | (191) | (316) | ||||||
| OPERATING LOSS | (160) | (191) | (316) | ||||||
| Finance income | 0 | 4 | 8 | ||||||
| Finance costs | (1) | (1) | (2) | ||||||
| LOSS BEFORE TAXATION | (161) | (188) | (310) | ||||||
| Income tax expense | 0 | 0 | 0 | ||||||
| LOSS AFTER TAXATION | (161) | (188) | (310) | ||||||
| LOSS PER SHARE - Basic and diluted | (.22p) | (.30p) | (.48p) | ||||||
| CONDENSED CONSOLIDATED BALANCE SHEET | |||||||||
| 30 June 09 | 30 June08 | 31 Dec 08 | |||||||
| unaudited | unaudited | audited | |||||||
| £'000 | £'000 | £'000 | |||||||
| NON-CURRENT ASSETS | |||||||||
| Intangible assets | 1,893 | 1,474 | 1,831 | ||||||
| CURRENT ASSETS | |||||||||
| Other receivables | 10 | 12 | 13 | ||||||
| Cash and cash equivalents | 80 | 278 | 194 | ||||||
|
| 90 | 290 | 207 | ||||||
| TOTAL ASSETS | 1,983 | 1,764 | 2,038 | ||||||
| LIABILITIES | |||||||||
| CURRENT LIABILITIES | |||||||||
| Trade and other payables | (276) | (228) | (170) | ||||||
| NON-CURRENT LIABILITIES | |||||||||
| Provisions | (10) | (10) | (10) | ||||||
| TOTAL LIABILITIES | (286) | (238) | (180) | ||||||
|
| |||||||||
| NET ASSETS | 1,697 | 1,526 | 1,858 | ||||||
| EQUITY | |||||||||
| Share Capital | 2,841 | 2,472 | 2,841 | ||||||
| Reserves | (1144) | (946) | (983) | ||||||
| TOTAL EQUITY | 1,697 | 1,526 | 1,858 | ||||||
| CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY | |||||||||
| Six Months Ended 30 June 09 | |||||||||
| Share based | |||||||||
| Share | Share | Payments | Retained | Total | |||||
| Capital | Premium | Reserve | Losses | Equity | |||||
| £'000 | £'000 | £'000 | £'000 | £'000 | |||||
| As at 1 January 2008 | 158 | 2,314 | 130 | (888) | 1,714 | ||||
| Loss for the period |
|
|
| (188) | (188) | ||||
| As at 30 June 2008 | 158 | 2,314 | 130 | (1,076) | 1,526 | ||||
| Share option costs recognised in reserves | 85 | 85 | |||||||
| Shares issued | 28 | 422 | 450 | ||||||
| Share issue expenses | (81) | (81) | |||||||
| Loss for the period |
|
|
| (122) | (122) | ||||
| As at 31 December 2008 | 186 | 2,655 | 215 | (1,198) | 1,858 | ||||
| Loss for the period | (161) | (161) | |||||||
| As at 30 June 2009 | 186 | 2,655 | 215 | (1,359) | 1,697 | ||||
| CONDENSED CONSOLIDATED CASH FLOW STATEMENT | |||||||||
| Six Months Ended | Year Ended | ||||||||
| 30 June 09 | 30 June08 | 31 Dec 08 | |||||||
| unaudited | unaudited | audited | |||||||
| £'000 | £'000 | £'000 | |||||||
| CASH FLOW FROM OPERATING ACTIVITIES | |||||||||
| Loss for the period | (161) | (188) | (310) | ||||||
| Finance costs recognised in loss | 1 | 1 | 2 | ||||||
| Finance income recognised in loss | 0 | (4) | (8) | ||||||
| Exchange movements | 5 | (4) | 11 | ||||||
| Shares issued in lieu of fees | 0 | 0 | 213 | ||||||
| (155) | (195) | (92) | |||||||
| Movements in working capital | 109 | (36) | (94) | ||||||
| CASH USED BY OPERATIONS | (46) | (231) | (186) | ||||||
| Finance costs | (1) | (1) | (2) | ||||||
| Finance income | 0 | 4 | 8 | ||||||
| NET CASH USED IN OPERATING ACTIVITIES | (47) | (228) | (180) | ||||||
| INVESTING ACTIVITIES | |||||||||
| Payments for intangible assets | (62) | (191) | (545) | ||||||
| NET CASH USED IN INVESTING ACTIVITIES | (62) | (191) | (545) | ||||||
| FINANCING ACTIVITIES | |||||||||
| Proceeds from issue of equity shares | 0 | 0 | 237 | ||||||
| NET CASH GENERATED FROM FINANCING ACTIVITIES | 0 | 0 | 237 | ||||||
| NET DECREASE IN CASH AND CASH EQUIVALENT | (109) | (419) | (488) | ||||||
| Cash and cash equivalent at beginning of the period | 194 | 693 | 693 | ||||||
| Effect of exchange rate changes on cash held | (5) | 4 | (11) | ||||||
| CASH AND CASH EQUIVALENT AT END OF THE PERIOD | 80 | 278 | 194 | ||||||
Notes:
1. INFORMATION
The financial information for the six months ended June 30th, 2009 and the comparative amounts for the six months ended June 30th, 2008 are unaudited. The financial information above does not constitute full statutory accounts within the meaning of section 240 of the Companies Act 1985.
The Interim Financial Report has been prepared in accordance with IAS 34 Interim Financial Reporting as adopted by the European Union. The accounting policies and methods of computation used in the preparation of the Interim Financial Report are consistent with those used in the Group 2008 Annual Report, which is available at www.persiangoldplc.com
The interim financial statements have not been audited or reviewed by the auditors of the Group pursuant to the Auditing Practices board guidance on Review of Interim Financial Information.
2. No dividend is proposed in respect of the period.
3. LOSS PER SHARE
| 30 June 09 | 30 June 08 | 31 Dec 08 | |
| £ | £ | £ | |
| Loss per share - Basic and Diluted | (0.22p) | (0.30p) | (0.48p) |
|
|
|
| |
| Basic loss per share | |||
| The earnings and weighted average number of ordinary shares used in the calculation of basic loss per share are as follows: | |||
| Loss for the year attributable to equity holders of the Parent | (161,024) | (188,291) | (310,367) |
|
|
|
| |
| Weighted average number of ordinary shares for the purpose of basic earnings per share | 74,662,198 | 63,412,198 | 64,090,280 |
|
|
|
| |
4. INTANGIBLE ASSETS
| 30 June 09 | 30 June 08 | 31 Dec 08 | |
| Exploration and evaluation assets: | £'000 | £'000 | £'000 |
| Cost at 1 January | 1,831 | 1,283 | 1,283 |
| Additions | 62 | 191 | 548 |
| _________ | _________ | _________ | |
| Cost and net book value | 1,893 | 1,474 | 1,831 |
|
|
|
|
Exploration and evaluation assets relates to expenditure incurred during prospecting, exploring for gold and related expenditure in Iran.
The group's activities are subject to a number of significant potential risks including:
- price fluctuations
- foreign exchange risks
- uncertainties over development and operational risks
- operations and environmental risks
- political and legal risks, including arrangements with governments for licenses, profit sharing
and taxation.
- foreign investment risks including increases in taxes, royalties and renegotiation of contracts
- liquidity risks
- funding risks
The realisation of this intangible asset is dependent on the successful discovery and development of economic mineral reserves which is affected by these and other risks. Should this prove unsuccessful the value included in the balance sheet would be written off to the income statement.
The directors are aware that by its nature there is an inherent uncertainty in such development expenditure as to the value of the asset. Having reviewed the deferred exploration and evaluation development expenditure at 30 June 2009, the directors are satisfied that the value of the intangible asset is not less than carrying net book value.
| 5. | The Interim Report for the six months to June 30th, 2009 was approved by the Directors on 22nd September 2009. | |
| 6. | Copies of this announcement will be sent to shareholders and will be available for inspection at the Companies Registered Office at 20-22 Bedford Row, London WC1R 4JS. The Interim Report may also be viewed at Persian Gold plc's website at www.persiangoldplc.com |