30 Sep 2008 18:15
Copper Resources Corporation ("CRC" or the "Company") Unaudited Interim Report For the six months ended 30 June 2008
Copper Resources Corporation (AIM: CRC), the minerals and mining company, today announces its unaudited interim report and accounts for the six months ended 30 June 2008.
REVIEW OF OPERATIONSTitle Reviews
The Revisitation Committee appointed by the Government of the DRC has been mandated to review 61 mining titles which include PE101 and PE102 held by CRC's 75% subsidiary, MMK, which has a partnership agreement with Sodimico. Further to the Company's announcement on 3 March 2008, MMK has responded to the Revisitation documents submitted to it with regard to the equity split between CRC and Sodimico, the involvement by Sodimico in MMK's management and a summary of the social programmes undertaken by MMK. The Board of CRC believes that the titles held by MMK are in good standing and that MMK is progressing the development of the various projects as expeditiously as possible. Subsequent to June 2008, negotiations have commenced between the MMK shareholders and the Government on the title to these assets.
Kinsenda Project
The Kinsenda mine resource amounts to 17 million tons grading 5% copper. The mine is planned to produce and treat 960,000 tonnes of ore per annum at full capacity, yielding 35,000 tonnes of contained copper in the form of concentrate. The life of the mine is estimated to be 15 years at the planned production rate. Further exploration work is planned to investigate areas of interest in the deeper sections of the mine.
Since the completion of the dewatering programme, the plans to develop the ramp decline and to access the first production level are expected to commence shortly. Conventional room and pillar stoping operations are planned in the areas above the 285 level in Quarter 2 of 2009. The mechanised stoping operations are planned to commence in Quarter 3 2009 and full production is expected to be achieved in mid/late 2010.
The design of the Kinsenda concentrator is at an advanced stage and construction of the plant is planned to commence in Quarter 4 2008. The planned start-up of the concentrator envisages a build-up in parallel with the proposedmining rate.
The procurement of long lead items such as the mechanised mining equipment and the equipment for the concentrator plant is progressing well.
Lubembe Deposit
The Lubembe mineral deposit is estimated to contain 47.5 million tons grading 2.2% copper. A geological team has been appointed to evaluate this deposit and a drilling programme has been implemented to verify prior geological information and upgrade the resource to a higher category.
Musoshi Mine
The mine reserves are being evaluated with a view to establishing whether this project is commercially feasible. The cobalt smelter on-site continues to treat the Kimonto dumps and produces approximately 12 to 15 tons of contained cobalt per month.
Hinoba-an Copper Project
CRC has an effective 92.5% economic interest in the Hinoba-an Porphyry Copper Project through Selenga Mining Corporation (a Philippines registered company), subject to a 3% net benefits royalty payable to the original claim owners. The Project is located on the island of Negros Occidental in the Philippines, approximately 700 km south of Manila.
The Hinoba-an property has been subject to 70,076 metres of diamond drilling and 10,372 metres of reverse circulation drilling, totalling 80,448 metres of drilling.
The Hinoba-an project has a positive NPV at a copper price above US$2/lb. A Philippines based consultant has been engaged to complete a review of this project, which is expected to be completed by the end of Quarter 4 2008. The review has been commissioned to highlight the engineering design and operational areas that can be optimized to improve the project return, specifically focusing on by-product credits such as pyrite and capital savings.
Funding of CRC
Subsequent to June 2008, Metorex Limited agreed to provide the Company with a US$15 million project finance facility at commercial terms. This facility is repayable on the arranging of suitable alternative funding by the Company. This facility has been extended in order to expedite the Kinsenda mine development. Various alternatives to funding the development of this project, including equity funding and consumer finance, are under review. The involvement of Central African Mining & Exploration Company plc as a major investor in CRC has impacted on these alternatives. Shareholders will be kept informed of the results of discussions currently in progress.
Appreciation
The support of the management and staff of both MMK and CRC as well as the board of directors of the two companies during the past 12 months has been considerable and is appreciated.
A S MALONEChairman30 September 2008
Consolidated income statements
For the six months ended 30 June 2008
Six months ended Year ended Notes Jun 2008 Jun 2007 Dec 2007 Dec 2006 Unaudited Audited $'000 $'000 $'000 $'000 Revenue 2,790 3,974 5,559 11,740 Cost of sales (3,095) (1,494) (5,332) (11,932) Gross (loss)/profit (305) 2,480 227 (192)
Interest receivable and similar 3 437 154 158
income Other income 413 - 465 - Unrealised foreign exchange 1 923 1,861 (4,195)gain/(loss) Administrative expenses (5,283) (7,400) (10,358) 661 Share based transactions - (115) - (243) Impairment of mining assets - (650) (1,528) - Loss on ordinary activities (5,171) (4,325) (9,179) (3,811)before taxation Income tax credit/(expense) 12 (83) (574) - Loss on ordinary activities 2 (5,159) (4,408) (9,753) (3,811)after taxation Minority interest 1,199 398 1,141 722 Loss for the financial period (3,960) (4,010) (8,612) (3,089) Loss per share Basic 5 (4.6c) (5.9c) (11.9c) (5.4c)
All results derive from continuing activities
There were no recognised gains and losses other than those included in the consolidated income statement.
Consolidated balance sheetsAs at 30 June 2008 Six months ended Year ended Notes Jun 2008 Jun 2007 Dec 2007 Dec 2006 Unaudited Audited $'000 $'000 $'000 $'000 Assets Non-current assets
Property, plant and equipment 6 7,329 6,640 7,046 6,941
Development exploration and 7 58,314 44,067 49,863 37,820 evaluation costs
Available for sale investments - - - 200
65,643 50,707 56,909 44,961 Current assets Inventories 8 9,767 7,801 8,893 7,483 Trade and other receivables 9 5,793 6,135 4,294 4,487 Deferred tax asset 173 - 161 - Cash and cash equivalents 10 2,728 5,386 8,738 1,334 18,461 19,322 22,086 13,304 Total assets 84,104 70,029 78,995 58,265 Equity and liabilities Shareholder's equity Issued capital 11 79,774 57,469 78,719 42,969 Contributed surplus 2,817 2,817 2,817 2,817 Other reserves 838 1,750 792 736 Retained earnings (19,634) (11,072) (15,674) (7,062) 63,795 50,964 66,654 39,460 Minority interests 1,211 3,184 2,410 3,582 Total equity 65,006 54,148 69,064 43,042 Current liabilities Trade and other payables 12 9,000 8,342 7,389 7,059 Deferred tax liability 610 - 662 - Bank overdraft 10 880 - 880 - Borrowings 13 1,000 7,539 1,000 7,539 Shareholder's loan 14 7,608 - - -
Deferred purchase consideration - - - 625
Total current liabilities 19,098 15,881 9,931 15,223 Total liabilities 19,098 15,881 9,931 15,223 Total equity and liabilities 84,104 70,029 78,995 58,265
Consolidated statements of changes in equity
For the six months ended 30 June 2008
Share Contributed Other Retained Total capital surplus reserves earnings $'000 $'000 $'000 $'000 $'000 Balance at 31 December 2006 42,969 2,817 736 (7,062) 39,460 Loss for the period - - - (4,010) (4,010) Additional contributions of 14,500 - - - 14,500capital Foreign exchange gain - - 1,014 - 1,014 Balance at 30 June 2007 57,469 2,817 1,750 (11,072) 50,964 Loss for the period - - - (4,602) (4,602) Additional contributions of 21,950 - - - 21,950capital Cost of issued capital (700) - - - (700) Foreign exchange loss - - (958) - (958) Balance at 31 December 2007 78,719 2,817 792 (15,674) 66,654 Loss for the period - - - (3,960) (3,960) Additional contributions of 1,055 - - - 1,055capital Foreign exchange gain - - 46 - 46 Balance at 30 June 2008 79,774 2,817 838 (19,634) 63,795
Consolidated cash flow statements
For the six months ended 30 June 2008
Notes Six months ended Year ended Jun 2008 Jun 2007 Dec 2007 Dec 2006 Unaudited Audited $'000 $'000 $'000 $'000 Cash flows from operating activities Loss from operations (5,174) (4,765) (9,333) (3,969) Adjustments for: Share based transactions - - - 243
Depreciation on property, plant 550 1,160 1,298 722and equipment Gain on disposal of investment - - (75) -
Loss on disposal of plant, - - 70 -property and equipment Impairment of mining asset - 650 1,528 - Minority interest 1,199 - 1,141 - Operating cash flows before (3,425) (2,955) (5,371) (3,004)movement in working capital Change in inventories (874) - (1,410) - Change in receivables (1,511) (1,965) 32 (4,248) Change in payables 1,559 1,285 (207) 1,949 Tax paid 12 (83) - - Net cash used in operations (814) (763) (1,585) (2,299) Net cash used in operating (4,239) (3,718) (6,956) (5,303)activities Cash flows from investing activities Interest received 3 437 154 158 Disposal of investment - 200 275 -
Investment in development and (8,451) (7,163) (14,196) (11,342)exploration costs Purchase of property, plant and (833) (1,218) (1,473) (2,137)
equipment Net cash used in investment (9,281) (7,744) (15,240) (13,321)activities Cash flows from financing activities Share capital issued (net of 1,055 14,500 35,750 12,604costs)
Increase in shareholder's loans 7,608 - - -
Minority interest (1,199) - (1,172) - Loans repaid - - (6,539) (3,128) Deferred consideration lapsed - - 625 - Net cash generated from 7,464 14,500 28,664 9,476financing activities
Effect of exchange rate changes 46 1,014 56 (1,083)on cash Net (decrease)/increase in cash (6,010) 4,052 6,524 (10,231)and cash equivalents Cash and cash equivalents at 7,858 1,334 1,334 11,565beginning of period Cash and cash equivalents at 11 1,848 5,386 7,858 1,334end of period
Notes to the unaudited interim report
For the six months ended 30 June 2008
1. Nature of operations
Copper Resources Corporation ("CRC" or the "Company") is the holding company of a mineral exploration and development group of companies (the "Group"). The Group is involved in the exploration, evaluation and development of copper deposits in the Democratic Republic of the Congo ("DRC") and Philippines. The accompanying interim consolidated financial information is prepared by management in accordance with International Financial Reporting Standards ("IFRS"). Selected information and disclosures required in notes to annual consolidated financial statements has been condensed or omitted. This interim consolidated financial information does not constitute full accounts and should be read in conjunction with the Company's audited annual consolidated financial statements and notes for the year ended 31 December 2007. The interim financial information has been prepared following the same accounting policies and methods of computation as the annual consolidated financial statements for the year ended 31 December 2007.
Basic and Diluted Loss per Share
The calculation of basic and diluted loss per ordinary share for the six months ended 30 June 2008 is based on the loss for the period after minorities of $3.960 million (2007: $4.010 million) and on 85,739,861 ordinary shares being the weighted average of ordinary shares in issue and ranking for dividend during the period. Details of share options in issue, which could potentially dilute earnings per share in the future are shown in Note 15.
Impairment
The Company assesses whether impairment exists in any of its exploration projects and writes down that project to its estimated recoverable value when such impairment is found to exist.
Risks
The exploration and exploitation of natural resources are speculative activities that involve a high degree of risk for the Company and its shareholders. The risk factors which should be taken into account in assessing the Company's activities should include, but are not limited to, those set out below:
¢â‚¬¢ Copper price volatility¢â‚¬¢ Currency fluctuations
¢â‚¬¢ Normal risks of mining operations
¢â‚¬¢ Political risks
¢â‚¬¢ Government regulations
2. Loss on ordinary activities
Six months ended Year ended Jun 2008 Jun 2007 Dec 2007 Dec 2006 $'000 $'000 $'000 $'000 Loss on ordinary activities has been arrived at after charging: Auditor's remuneration 8 - 186 140
Depreciation of property, plant and 550 1,160 1,298 722 equipment
Staff costs (note 3) 4,665 3,385 6,680 4,069 Director's remuneration (note 4) 100 302 563 727
3. Staff costs
The costs of employing staff were:
Six months ended Year ended Jun 2008 Jun 2007 Dec 2007 Dec 2006 $'000 $'000 $'000 $'000 Wages and salaries 4,516 3,301 6,513 3,457 Social security costs 149 84 167 612 4,665 3,385 6,680 4,069 Number Number Number Number
Average employees during the period: 1,144 1,068 1,125 780 Key management personnel included 7 7 7 7
above: 4. Directors' remuneration
Remuneration paid to Directors during the period was as follows:
Six months ended Year ended Jun 2008 Jun 2007 Dec 2007 Dec 2006 $'000 $'000 $'000 $'000 Salaries 100 302 563 727
The remuneration of directors and key executives is decided by the remuneration committee having regard to comparable market statistics. The Directors consider the key management personnel to consist entirely of the Directors and therefore no additional disclosure has been made.
The emoluments (including pension contributions) of the highest paid directorwere as follows: Six months ended Year ended Jun 2008 Jun 2007 Dec 2007 Dec 2006 $'000 $'000 $'000 $'000 Salaries 25 120 231 2405. Loss per shareThe calculations of the basic and diluted loss per share are based on thefollowing data: Six months ended Year ended Jun 2008 Jun 2007 Dec 2007 Dec 2006 $'000 $'000 $'000 $'000 Loss for the period (3,960) (4,010) (8,612) (3,089) Number of shares
Weighted average number of ordinary 85,739,861 70,008,857 72,565,634 57,152,562 shares in issue during the period
There were no dilutive instruments in place in the current and preceding years as defined by IAS33 `Earnings per share'.
6. Property, plant and equipment
Group Freehold Plant and Total properties equipment $'000 $'000 $'000 Cost At 1 January 2008 862 8,378 9,240 Additions 37 796 833 At 30 June 2008 899 9,174 10,073 Depreciation At 1 January 2008 120 2,074 2,194 Charge for the period 10 540 550 At 30 June 2008 130 2,614 2,744 Net book value At 30 June 2008 769 6,560 7,329 At 31 December 2007 742 6,304 7,046
7. Exploration, evaluation and development costs
$'000 At 31 December 2006 37,820 Additions 14,196
Write off on termination of HAIB project (2,153)
At 31 December 2007 49,863 Additions 8,451 At 30 June 2008 58,314
Intangible assets consist of capitalised exploration, evaluation and development costs in relation to each of the Company's mining assets.
8. InventoriesGroup Six months ended Year ended Jun 2008 Jun 2007 Dec 2007 Dec 2006 $'000 $'000 $'000 $'000 Raw materials 2,046 2,386 2,096 2,546 Wrappings 19 16 23 12 Work in progress 5,427 4,063 4,772 3,847 Finished products 631 982 1,134 957 Stocks in transit 1,644 354 868 121 9,767 7,801 8,893 7,483
9. Trade and other receivables
Six months ended Year ended Jun 2008 Jun 2007 Dec 2007 Dec 2006 $'000 $'000 $'000 $'000 Trade receivables 202 398 326 348 Other receivables 5,591 5,737 3,968 4,139 5,793 6,135 4,294 4,487
The average credit period taken on sales of services was 90 days (2007: 90 days). The amounts presented in the financial statements are net of allowances for doubtful receivables, estimated by the Group's management based on prior experience and their assessment of the current economic environment. The Directors consider that the carrying amount of trade and other receivables approximates to their fair value.
Credit risk
The Group and Company have no significant concentration of credit risk, with exposure spread over a large number of counterparties.
10. Cash and cash equivalents Six months ended Year ended Jun 2008 Jun 2007 Dec 2007 Dec 2006 $'000 $'000 $'000 $'000 Cash at bank and in hand 2,728 5,386 8,738 1,334 Bank overdraft (880) - (880) - Cash and cash equivalents 1,848 5,386 7,858 1,334
Bank balances and cash comprise cash held by the Group and Company and short-term bank deposits with an original maturity of three months or less. The carrying value of these assets approximates their fair value. The credit risk on liquid funds is limited because the counterparties are banks with high credit ratings assigned by international credit-rating agencies. The bank overdraft is secured by a charge on MMK's operating assets.
11. Share Capital Six months ended Six months ended Jun 2008 June 2007 $'000 Number of $'000 Number of Shares Shares Authorised:
Ordinary shares of no par value - 500,000,000 - 500,000,000 Called up, allotted and fully paid: Ordinary shares of no par value 79,774 86,002,961 57,469 75,720,065and share premium Year ended Year ended Dec 2007 Dec 2006 $'000 Number of $'000 Number of Shares Shares Authorised:
Ordinary shares of no par value - 500,000,000 - 500,000,000 Called up, allotted and fully paid:
Ordinary shares of no par value 78,719 85,240,815 42,969 60,594,192 and share premium
12. Trade and other payables
Six months ended Year ended Jun 2008 Jun 2007 Dec 2007 Dec 2006 $'000 $'000 $'000 $'000 Trade payables 6,654 6,270 5,542 5,286
Other payables and accruals 2,346 2,162 1,847 1,773
9,000 8,432 7,389 7,05913. Borrowings Six months ended Year ended Jun 2008 Jun 2007 Dec 2007 Dec 2006 GFIA 1,000 - 1,000 - EGMF - 7,539 - 7,539
Net position at end of period 1,000 7,539 1,000 7,539
The GFIA loan is interest free and has no fixed terms of repayment
14. Shareholder's Loan Six months ended Year ended Jun 2008 Jun 2007 Dec 2007 Dec 2006 $'000 $'000 $'000 $'000 Shareholder's Loans 7,608 - - - 7,608 - - -
This relates to a project finance loan from Metorex Ltd to the Company as well as to the operation in the Congo in respect of ongoing development, operations and exploration costs.
15. Share Options and Warrants
The total number of warrants outstanding at 30 June 2008 Nil
At 30 June 2008, the group had the following vested share options in issue:
Options exercisable at 75 pence, expiring 31 December 2010 375,000
16. Subsequent events
There are no material subsequent events.
17.Related party transactions
a. Transactions between group companies are eliminated on consolidation and
are not disclosed in this note.
b. Advances paid to SODIMICO (a 20% shareholder in MMK) as at 30 June 2008
amount to $2,506,743 (2007: $1,531,818), and which are recoverable by way
of future royalties.
18. Parent company of the Group
During May 2008, Metorex Ltd, listed on both the London and Johannesburg Stock Exchanges, acquired outright control of the group.
Copper Resources Corporation is the Parent Company of the group consolidated herein, and is registered in The British Virgin Islands.
Registered office: Craigmuir Chambers, P.O.Box 71, Road Town, Tortola, British Virgin Islands
Registered number: 626550Enquiries:
Copper Resources Nabarro Wells & Co. Fox-Davies Capital GTH Communications
Corporation Limited Limited Jeff Carel Hugh Oram Richard Hail Toby Hall Company Secretary +27 (0) 11 803 1073 +44 (0) 20 7634 +44 (0) 207 936 +44 (0) 20 7153 4700 5200 8035
vendor