Eurasia Mining Regulatory News (EUA)

28 Jun 2007 07:01

Eurasia Mining PLC28 June 2007 Eurasia Mining Plc ("Eurasia" or the "Company) PRELIMINARY ANNOUNCEMENT OF AUDITED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2006 Chairman's Statement This year it is my pleasure to report that your Company has made major progressboth on its platinum and its gold projects. On the platinum front we completed the acquisition of three exploration licenceson the Kola Peninsula in NW Russia where Barrick and Puma have both outlinedimportant resources on which they are currently completing feasibility studieswith a view to initiating production. Through our joint venture with AngloPlatinum, we immediately initiated drilling. Early in 2007 we reported thatthrough this drilling we have already made discoveries of platinummineralisation of potentially economic grade on two of these three areas. Thisis a remarkably fast and unusually high success rate and we await the results ofthe follow-up work to be conducted this year. Anglo Platinum has agreed to fundthe US$3 million programme for 2007 to define the size of these potentiallyimportant resources. This expenditure forms part of their commitment to spend$10 million to earn an initial 40% in the Kola projects. In the Urals, also covered by the joint venture with Anglo Platinum, yourCompany's drilling has provided the basis for achieving near term production atthe West Kytlim project. The key items on our agenda here are to obtain approvalfrom the Russian authorities for our reserves and for the production plan andfrom this to obtain a mining licence. Whilst we receive every co-operation fromthe Russian authorities and are grateful for this, the precise timing is not inour hands. We have the authority for bulk sampling and can usefully use the timeto test and improve our equipment, to work with our Russian partner ArtelYuzhno-Zaoersky Priisk, to plan a power supply and equipment utilisation andalso to expand the reserves through continued exploration along the previouslyuntested river terraces. On the gold side, your Company has continued with the programme that itinitiated through a joint venture with AngloGold Limited. Whilst we regrettedtheir departure to pursue an alliance with the Russian gold producer Polymetal,we greatly benefitted from the US$1 million that they contributed to fund ourdata compilation and field studies. We have recently applied for a number oflicences in areas that we believe to be highly prospective for gold. Competitionfor areas, even at the exploration stage, is becoming intense so we are alsoworking with Russian partners to look to jointly acquire both advancedproperties with identified reserves or resources and key exploration properties. In summary, the Directors of your Company believe Eurasia has made excellentprogress in 2006, which continues in 2007. We are confident that the continuingsuccess on the technical side will be reflected in the enhancement of value inthe company. The support of Anglo Platinum in our platinum projects has been akey to our survival and to our recent successes and is gratefully acknowledged. It remains for me to thank our hard working staff, particularly those in Russiawho, excepting our tireless manager Bill Anderson, are almost exclusivelyRussian, for their efforts and to congratulate them on their successes. Withouttheir efforts your Company would be nothing; with them I believe that Eurasiahas a great future. Dr. Michael MartineauChairman Operations Report Kola projects We selected our three licence areas in the Monchegorsk region of the KolaPeninsula on the basis of the presence of rocks containing platinum values inexcess of 1 gram/tonne. The mineralisation is characteristic of a recently defined newclass of PGM (platinum group metals) deposit known as low sulphide,contact-related and breccia-hosted type. The similarity in the geologicalsetting and style of mineralisation at Monchetundra to that developed in theFinnish deposits is striking, especially that developed in the Portimo Complex.Also, there are some similarities with 'Platreef' rocks seen in the Bushveldcomplex of South Africa. The Kola region has a long history of mining and metal refining, principally ofnickel and copper with PGM as a by-product, but PGM exploration has only beencarried out since the mid 1990s. Monchetundra The Monchetundra licence covers an area of 36.2 km2 and is situated immediatelyto the west of the town of Monchegorsk. Much of the licence area is covered byglacial till which hides the geology. Three mineralised zones are recognised within the project area, two of whichhave been prioritised for exploration; namely zones 2 and 3. Zone 2 comprises a sequence of ultramafic rocks; the highest-grade intersectionin the zone is 8.4 grams/tonne (g/t) PGM over 3.6m with a Palladium (Pd):Platinum (Pt) ratio of 2:1 (Hole UM-3). The highest single grades obtained byfire assay in this intersection included 26g/t Pd and 12g/t Pt over 0.4m. Zone 3 is characterised by frequent interlayering of ultramafic rocks of varyinggrain-size; anomalous PGM values are generally associated with sulphidedisseminations. Thickness of the zone is up to 70m, with PGM values ranging from0.1 to 19.6 g/t. Intersections define at least two separate PGM bearing horizonswhich have been traced for more than 1 kilometre to date and remain open both atdepth and along strike. In view of the broad widths, apparent continuity and lowsulphide content the Joint Venture is targeting open pit resources withconcentration by flotation to produce a marketable high grade concentrate. Drill results received to date include the following intercepts: Hole No Interval (m) Pt+Pd (g/t) Pd:Pt ratio MT-14 11.3 2.93 1.3 MT-13 1.2 5.8 1.4 MT-12 21.1 1.06 1.6 UM-9 21.3 1.92 1.4 MT-15 6.0 1.12 2.3 MT-6 18.0 1.66 2.4 MT-11 6.9 2.40 1.8 MT-11 11.1 2.54 1.7 UM-7 6.7 1.81 1.9 UM-39 5.5 1.37 2.2 MT-17 13.1 1.9 1.9 A programme of 4,500m of diamond drilling is planned for 2007, including acombination of reconnaissance traverses along strike to the southeast andnorthwest of the main Loypishnyun target, as well as some infill drilling withinthe main target to help define the limits and continuity of the mineralisationdiscovered to date. Volchetundra The Volchetundra licence area, which covers approximately 210km2, lies to thenorthwest of Monchegorsk town. The host mafic intrusion is some 40km long and varies in width from 1-4km. Theprincipal target for PGM is a 20-300 m wide sulphide bearing (approximately 2%),Marginal Zone which runs along the eastern contact of the massif. Work carriedout in 2006 included mapping and trenching at Nickel Creek, Yukspor and Kutskol;and deep geochemical sampling at the Somnitelny site and drilling at the Olcheand Kutskol locations. Wide zones of PGM mineralisation were first discovered in Drill-hole VT-17located in the northern part of the licence area during the 2006 programme. Thehole intersected three zones of mineralisation. The shallowest extends from68.35 to 112.95 metres (44.6m at an average grade of 1.7 g/t Pt+Pd, within thisinterval, 27.55m averaged 2.2g/t). The Pd: Pt ratio varies from 1.5 to 3:1. A second intersection extends from 144.9 to 163.4m (18.5 metres at 1.9 g/tPt+Pd, including 4.4m at 3.6g/t Pt+Pd and 7.3 m grading 2.6 g/t). The ratio ofPd: Pt varies from 0.3-1.1:1. A third zone of interest was located at 170.2m, with a 1m section assaying 11g/tPt+Pd. The ratio Pd: Pt is 0.8:1. Systematic drilling in the vicinity of VT-17 will be prioritised in 2007.Mapping, trenching and drilling will also continue along the untested remaining27km of the Marginal Zone with emphasis on the Yukspor and Olche areas. West Imandra The West Imandra licence covers an area of 229km2 situated to the S-SW ofMonchegorsk, adjacent to the Murmansk to St Petersburg highway; it covers thewesterly strike extensions of the Imandra layered intrusion which has beenbroken by faulting into the Ostrovskoy, Yalgeny and Mayavr-Devichya Massifs. In 2006 the exploration which included mapping, trenching, drilling, tillgeochemistry and magnetic surveys was focused on the Mayavr-Devichya Massif.Trench sampling of the Upper Zone returned values of 1g/t Pt+Pd over 4m.Drilling in 2007 will test this zone as well as the un-explored lower contact ofthe Ostrovsky Massif. Urals West Kytlim Ore reserve delineation drilling (Russian category C2) continued throughout 2006on the 171km2 licence area at West Kytlim. West Kytlim is located in the CentralUrals, a region which has yielded some 500 tonnes (16 million ounces), ofalluvial platinum since production first commenced in 1824. The Kytlim districtitself has produced approximately 50 tonnes (1.6 million ounces) to date. Alluvial mining has always been a significant component of the mining industryin Russia, with currently over forty operators in gold and less than six inplatinum. Approximately 120,000 ounces of platinum was produced from alluvialmining in 2006, while alluvial gold production was estimated at 2 million ouncesduring the same period. Processing of alluvial sediment is simple in principle,usually based on gravity separation by washing and production of a heavy minerals concentrate which is sold directlyto refineries; payment is based on the recovered metal. The simplicity of oreprocessing generally contributes to very low unit capital and operating costs. As was reported in April 2006, the Joint Venture has discovered previouslyunworked alluvial platinum occurrences, as well as extensions of previouslyworked deposits and associated tailings deposits which can be reworked torecover residual platinum. To expedite production it has been necessary to complete sufficient drilling andtrenching work on close spaced traverses matching the requirements for orereserve approval under Russian regulations as the basis to apply for reissue ofthe entire licence area as a comprehensive mining licence. This detailed workhas been focused on the Bolshaya Sosnovka area which hosts a combination of newdiscovery buried placers as well as extensions of known shallow placers andtailings. The area selected for detailed ore reserve assessment measuresapproximately 2000m x 200m width with potential to contain between 500 and1000kg platinum. Work during 2006 progressed well, with 194 holes completed totalling 2,220metres of drilling: this was by far the most productive period in the history ofthe Joint Venture. Detailed reserve delineation drilling will be completed inearly 2007 after which a reserve report will be prepared and lodged for approvalby the relevant authorities. The Joint Venture is aiming to commence pilotproduction in 2007 however this is dependent on obtaining all the necessaryfederal and local government permits in a timely way. Bulk sample processing through the Joint Venture test plant, conducted inparallel with detailed drilling during 2006, indicates that double deck sluicingwould provide a satisfactory processing method for near surface placers atBolshoya Sosnovka. The tests indicated the grain size of more than 80% of thecontained platinum exceeded 0.25mm and up to 90% of it was recovered by twostages of sluicing. This plant is designed to simulate the recoveries of afull-scale operation. Bulk testing of deeper placer material is continuing. We are continuing with feasibility studies into how best to implement theproject. Issues currently under consideration include the use of mining plantowned by our local partner, investment in a new washing plant and projectfinance options. Detailed close spaced ore reserve delineation is now in progress on the Tylaiterraces to the south of the Bolshaya Sosnovka area; numerous additional targetareas within the licence area have yet to be assessed. The Joint Venture is also actively seeking new alluvial and hard rock platinumopportunities in the Urals. Other Urals Projects Eurasia continues to work on its own account at the 75% owned Baronskoye projectwhere the company discovered Palladium-Gold mineralisation in 2001. Testing ofmetallurgical options for an area that may have potential as a small open pitproject has been deferred till 2007 due to a requirement for summer access toobtain sufficiently representative sample material. Gold Exploration The company has remained a participant in the application process for fivelicences in the highly prospective Trans Baikalian Region of Eastern Siberia.The prospects were identified prior to and during the alliance with Anglo GoldAshanti. This alliance was terminated in 2006, after expenditure by Anglo GoldAshanti of approximately $1 million, due to a possible conflict of interestafter they formed a new Russia wide venture with the country's second largestgold producer Polymetal. Three of the five areas have been listed for licencing in mid 2007. Ourobjective is participation in the rapid advancement of a number of projectstowards feasibility study on our own account or with partners. The company alsocontinues to seek projects that will add value to our portfolio by reviewing andpotentially bidding for both prospective mineral ground as well as advancedstage projects elsewhere in the country. We continue to work with severalpotential Russian partners to jointly acquire advanced gold development andexploration properties. C Schaffalitzky Managing Director For further information contact:Michael Martineau / Christian Schaffalitzky, EurasiaMining Plc +44 (0) 20 7495 4877Michael De Villiers, Eurasia Mining plc: +44 (0) 7899 917 096David Youngman/Katy Mitchell, W H Ireland: +44 (0) 161 819 8724Nick Bealer, King & Shaxson Capital Ltd +44 (0) 7426 5950Allan Piper, First City Financial Public Relations +44 (0) 20 7242 2666 Consolidated Profit and Loss Account For the year ended 31 December 2006 Total Total 2006 2005 £ £Impairment of assets (29,129) (156,925)Other administrative expenses (649,810) (933,374)----------------------------- -------- --------Administrative expenses and operating loss (678,939) (1,090,299)Share of operating loss in joint venture (98,017) (477,602)----------------------------- -------- --------Total operating loss: group and share of jointventures (776,956) (1,567,901)Interest receivable and similar items 22,715 127,849Interest payable and similar items (262,255) ------------------------------ -------- --------Loss on ordinary activities before taxation (1,016,496) (1,440,052)Taxation - ------------------------------ -------- --------Loss on ordinary activities after taxation (1,016,496) (1,440,052)Minority interest 26,974 (1,693)----------------------------- -------- --------Loss for the financial year (989,522) (1,441,745)Loss per share (basic and diluted) (0.81)p (1.43)p----------------------------- -------- --------All the operations of the group are classed as continuing. Consolidated Balance Sheet At 31 December 2006 2006 2005 £ £Fixed assetsIntangible - exploration, development andproduction interests 859,613 1,280,810Tangible 33,601 41,172InvestmentsInterest in joint venture -------- --------Share of gross assets 2,126,251 502,855Share of gross liabilities (1,230,941) (305,445) -------- -------- 895,310 197,410Other investments 324,871 146----------------------------- -------- --------Total fixed assets 2,113,395 1,519,538----------------------------- -------- --------Current assetsDebtors 217,685 202,410Cash at bank 1,130,981 198,201----------------------------- -------- --------Total current assets 1,348,666 400,611Creditors - amounts falling due within one year (556,426) (213,019)----------------------------- -------- --------Net current assets 792,240 187,592----------------------------- -------- --------Total assets less current liabilities 2,905,635 1,707,130----------------------------- -------- --------Creditors - amounts falling due after more thanone year (499,998) (93,251)----------------------------- -------- --------Net assets 2,405,637 1,613,879----------------------------- -------- --------Capital and reservesCalled-up share capital 7,042,805 5,188,086Share premium account 7,020,549 7,034,374Other reserves 49,167 -Capital redemption reserve 3,539,906 3,539,906Profit and loss account (15,191,856) (14,114,787)----------------------------- -------- --------Equity shareholders' funds 2,460,571 1,647,579Minority interest (54,934) (33,700)----------------------------- -------- -------- 2,405,637 1,613,879 ----------------------------- -------- -------- Consolidated Cash Flow Statement For the year ended 31 December 2006 2006 2005 £ £Net cash outflow from operating activities (315,265) (902,244)Returns on investments and servicing of finance (17,807) 6,257Capital expenditure and financial investment (419,901) 132,901----------------------------- -------- --------Net cash outflow before financing (752,973) (763,086)Financing:Issue of ordinary shares 1,067,542 871,500Issue of convertible loan stock 655,000 ------------------------------ -------- --------Increase in cash in the period 969,569 108,414----------------------------- -------- -------- Reconciliation of net cash flow to movement in net fundsIncrease in cash in the period 969,569 108,414Translation difference (36,789) 6,625----------------------------- -------- --------Movement in net funds in the period 932,780 115,039Net funds at 1 January 198,201 83,162----------------------------- -------- --------Net funds at 31 December 1,130,981 198,201----------------------------- -------- -------- Reconciliation of Operating Loss to Operating Cash FlowsOperating loss (776,956) (1,567,901)Depreciation charges 6,413 5,413Loss on sale of marketable securities - 5,476Impairment charge 29,129 156,925Loss attributable to joint venture 98,017 477,602(Increase) / decrease in debtors (15,275) 44,664Increase / (decrease) in creditors 343,407 (24,423)----------------------------- -------- --------Net cash outflow from operating activities (315,265) (902,244)----------------------------- -------- --------Notes: 1 The financial information set out above does not constitute statutory accounts as defined in section 240 of the Companies Act 1985. The consolidated profit and loss account, balance sheet and cash flow statement have been extracted from the Group's 2006 statutory financial statements upon which the auditors' opinion is unqualified. 2 The loss per share is calculated by reference to the loss for the year of £989,522 (2005: £1,441,745) and the weighted average number of Shares in issue during the year of 122,848,396 (2005: 100,644,594). There is no dilutive effect of share options or warrants. 3 The financial information has been prepared under the historical cost convention and in accordance with applicable accounting standards. In common with many exploration companies, the Company raises finance for its exploration and appraisal activities in discrete tranches to finance its activities for limited periods only. Further funding is raised as and when required. The Directors are of the opinion that the Company will require to raise additional financial resources to enable the group to undertake an optimal programme of exploration and appraisal activity over the next twelve months. Accordingly, the Directors intend either to raise further funds or to engage an additional funding partner as appropriate during the course of the next twelve months. Whilst the Directors are confident that the Group will be able to secure additional funding to enable it to continue to meet its debts as they fall due and to undertake the programme described above for at least the next twelve months from the date of approval of these financial statements, there can be no guarantee that this will be the case. The financial statements do not include any adjustments, particularly in respect of fixed assets, investments, loans and provisions for winding up, which would be necessary if the Company and Group ceased to be a going concern. 4 Copies of the Annual Report and Accounts for the year ended 31 December 2006 will be posted to shareholders by 30 June 2007 and will be available, free of charge, from the Company's registered office at 1 Hay Hill, London, W1J 6DH, for a period of 14 days from the date of their posting and, at any time from the date of posting, from the Company's website - www.eurasiamining.co.uk. The Company's Annual General Meeting will be held at The East India Club, 16 St James Square, London SW1Y 4LH on 8 August 2007 at 11:00 am. This information is provided by RNS The company news service from the London Stock Exchange