Eurasia Mining Regulatory News (EUA)

29 Sep 2006 07:01

Eurasia Mining PLC29 September 2006 29 September 2006 Eurasia Mining Plc ("Eurasia" or the "Company") Ticker- AIM:EUA Chairman's Interim Statement The six months to June of 2006 have been the most active in recent years foryour company and are already yielding positive results. We finalised thepurchase of our Kola projects in northwest Russia, we are progressing well onfeasibility study work for platinum production in the Urals and we continue withour gold exploration work in eastern Siberia. Kola In May 2006, Eurasia announced an agreement whereby Anglo Platinum Limited("Anglo Platinum") is providing funding of up to $10 million for the Kolaprojects in return for an initial interest of 40%, representing 50% of an 80%interest held in our jointly owned company, Urals Alluvial Platinum Limited.Once this work is complete or if a bankable feasibility study has been completedat that stage, Anglo Platinum has an option for 90 days to buy Eurasia'sdirectly held 20% holding in Kola for $6 million or $5 per ounce of platinumgroup metals ("PGM") resource, whichever is the lesser. Anglo Platinum also hasthe option of requiring Urals Alluvial Platinum Limited to acquire the 20%interest, thereby maintaining the 50:50 ownership. In the Kola Peninsula of north-west Russia, drilling programmes were commencedon all three projects: West Imandra, Volchetundra and Monchetundra. Each hasintersected horizons where geological conditions suggest PGM may be present.While drilling has progressed well, delays in obtaining assay results havearisen due to the scarcity of approved laboratories in Russia coupled withrestrictions on the export from the country of samples for assay. Drilling work is underway on two of the Kola projects, Volchetundra andMonchetundra. In both of these areas, sulphide mineralisation has beenencountered. Eurasia plans to drill a total of 4,000 metres on the two areasduring 2006, of which 2,974 m had been completed by early September. To date noassays have been returned from this years drilling programmes but to highlighttheir potential, it is worth restating the results that have been obtained andpublished previously. At Monchetundra, 7 earlier drill holes have returned mineralised intercepts,with two main styles identified. A narrow zone, with intercepts of 0.8-3.6metres at grades of 6 to 8.4 g/t of platinum and palladium ("Pt+Pd") at depthsof 78 - 232 metres; and wider zones of lower grade mineralisation, withintercepts ranging from 11.6-19.9 metres of 1.7 to 2.4 g/t Pt+Pd at depths of 38- 181 metres. The current drilling programme, which will continue into 2007,will focus on confirming these zones and determining their continuity, in orderto build resource blocks. On the Volchetundra area, this year's drilling has focused on areas withanomalous Pd and Pt till geochemistry, located along strike from zones wheretrenching and grab sampling had previously produced several assays of 0.5 to 10g/t Pt+Pd. At West Imandra in the Kola Peninsula, Eurasia completed drilling a total of2,300 metres in eight drill holes, representing the first drill profile acrossthe ultramafic intrusion. The profile was designed to locate PGM-bearinghorizons in bedrock beneath the glacial cover soils. The first target tested azone of PGM mineralisation, the presence of which was suggested in at least onehorizon from surface outcrop sampling. Here a chromite layer gave an assay of 1gram per tonne of platinum prior to the commencement of Eurasia's drillprogramme. Near this location, two drill holes intersected four chromitehorizons, with associated disseminated sulphide mineralisation. The assayresults from these holes returned PGM values of 0.1 to 0.65 g/t Pt overintervals of 0.3 to 1.3 metres. Exploration work continues on a number of othertargets in the licence area, including an area where a trench value returned 2.4g/t Pt over one metre. Urals In the Urals, Eurasia has a 50-50 joint venture with Anglo Platinum which isfunding all the work up to the completion of a feasibility study. Our mainproject is at West Kytlim in the central Urals, where three drill rigs have beenworking on two areas defined for resource drilling as part of a feasibilitystudy underway since October 2005. Work is progressing well, with 154 holescompleted in the first six months of 2006 totaling 2,100 metres of drilling.Bulk sampling has been completed on material stockpiled at the end of the 2005field season, following modifications to the wash plant aimed at improving therecovery of fine platinum. This plant is designed to simulate the recoveries ofa full-scale operation. This has resulted in concentrates that are now beingprocessed for their platinum content and assay work is underway to produce aresource calculation. The joint venture is aiming to commence pilot productionin 2007 but this is dependent on obtaining all the necessary federal and localgovernment permits in time for the field season, which begins early next summer. Other Prospects and New Opportunities Elsewhere Eurasia continues to work on projects on its own account. In theUrals, follow up drilling was completed in September on the Baronskoye project,where a licence for palladium-gold mineralization discovered by the company wassuccessfully renewed. Here Eurasia holds a 75% interest with the localexpedition holding the balance. Also, we continue to work on gold projects thatwe have targeted as having the potential to be mined in the near term, workingwith Russian partners. Gold exploration projects have also been advanced underour exploration alliance with AngloGold Ashanti, with their expenditure ofapproximately $1 million. AngloGold recently announced their intention towithdraw from our alliance as they had formed a new venture with the Russiangold producer Polymetal, which could cause future conflicts of interest. Eurasiaplans to continue these projects on its own account or with a new partner. Financing During February 2006 the company raised £700,000 via a convertible loan note.These funds were used by the company to pay for its 60% participation in theKola acquisition. During August 2006 the company raised approximately $1.7 million (£900,000) forworking capital and to pursue new opportunities. This funding is in addition tothe $3 million being expended on exploration work through the Anglo Platinumjoint ventures during the 2006 financial year. I look forward to presenting theresults of all this work in the coming months. Michael MartineauChairman 28 September 2006 Consolidated Profit and Loss AccountFor the six months ended 30 June 2006 6 months to 6 months to 12 months to 30 June 30 June 31 December 2006 2005 2005 (unaudited) (unaudited) (audited) £ £ £Impairment of assets (29,129) (58,942) (156,925)Other administrative expenses (356,699) (540,481) (933,374)Administrative expenses and operating loss (385,828) (599,423) (1,090,299)Share of operating loss in joint venture (83,530) - (477,602)Total operating loss: group and share of joint (469,358) (599,423) (1,567,901)venturesInterest receivable 4,328 4,554 6,257Interest payable (39,169) - -Foreign exchange (loss) / gain (50,118) 69,101 121,592Loss on ordinary activities before taxation (554,317) (525,768) (1,440,052)Taxation - - -Loss on ordinary activities after taxation (554,317) (525,768) (1,440,052)Minority interest 12,693 (11,481) (1,693)Retained loss for the period (541,624) (537,249) (1,441,745)Loss per share (0.49)p (0.57)p (1.43)p Consolidated Statement of Total Recognised Gains and LossesFor the six months ended 30 June 2006 6 months to 6 months to 12 months to 30 June 30 June 31 December 2006 2005 2005 (unaudited) (unaudited) (audited) £ £ £Loss for the financial period (541,624) (537,249) (1,441,745)Exchange adjustments on foreign currency net investments (734) 41,617 37,675Total recognised gains and losses for the period (542,358) (495,632) (1,404,070) Shareholders' FundsFor the six months ended 30 June 2006 6 months to 6 months to 12 months to 30 June 30 June 31 December 2006 2005 2005 (unaudited) (unaudited) (audited) £ £ £Total recognised gains and losses for the period (542,358) (495,632) (1,404,070)New share capital issued 962,379 871,500 871,500Convertible loan notes issued - equity component 54,288 - -Net addition / (reduction) in shareholders' funds 474,309 375,868 (532,570)Opening shareholders' funds 1,647,579 2,180,149 2,180,149Closing shareholders' funds 2,121,888 2,556,017 1,647,579 Consolidated Balance SheetAs at 30 June 2006 30 June 2006 30 June 2005 31 December 2005 (unaudited) (unaudited) (audited) £ £Fixed assetsIntangible - exploration, development and production interests 887,673 1,383,275 1,280,810Tangible 37,089 40,729 41,172Interest in joint venture 104,609 670,680 197,410Other investments 2,393,138 110,059 146Total fixed assets 3,422,509 2,204,743 1,519,538Current assetsDebtors 227,464 300,222 202,410Cash at bank 739,510 265,387 198,201Total current assets 966,974 565,609 400,611Creditors - amounts falling due within one year (1,824,937) (147,398) (213,019)Net current (liabilities) / assets (857,963) 418,211 187,592Total assets less current liabilities 2,564,546 2,622,954 1,707,130Creditors - amounts falling due after more than one year (486,665) (88,911) (93,251)Net assets 2,077,881 2,534,043 1,613,879Capital and reservesCalled-up share capital 6,155,586 5,188,086 5,188,086Share premium account 7,029,253 7,034,374 7,034,374Other reserves 54,288 - -Capital redemption reserve 3,539,906 3,539,906 3,539,906Profit and loss account (14,657,145) (13,206,349) (14,114,787)Equity shareholders' funds 2,121,888 2,556,,017 1,647,579Minority interest (44,007) (21,974) (33,700) 2,077,881 2,534,043 1,613,879 Consolidated Cash Flow StatementFor the six months ended 30 June 2006 6 months to 6 months to 12 months to 30 June 30 June 31 December 2006 2005 2005 (unaudited) (unaudited) (audited) £ £ £Net cash outflow from operating activities (262,704) (680,188) (902,244)Returns on investments and servicing of finance (11,705) 4,554 6,257Capital expenditure and financial investment (1,562,424) (16,320) 132,901Net cash outflow before financing (1,836,833) (691,954) (763,086)Financing:Issue of ordinary shares 200,000 871,500 871,500Issue of convertible loan stock 655,000 - -Short term loan 1,525,330 - -Increase in cash in the period 543,497 179,546 108,414 Reconciliation of net cash flow to movement innet fundsIncrease in cash in the period 543,497 179,546 108,414Increase in long term debt (398,969) - -Translation difference (2,188) 2,679 6,625Movement in funds in the period 142,340 182,225 115,039Net funds at 1 January 198,201 83,162 83,162Net funds at 30 June 340,541 265,387 198,201Reconciliation of operating loss to operatingcash flowsOperating loss (469,358) (599,423) (1,567,901)Depreciation charges 3,009 2,561 5,413Loss on sale of marketable securities - - 5,476Impairment charge 29,129 58,942 156,925Loss attributable to joint venture 83,530 - 477,602(Increase)/decrease in debtors (25,053) (52,076) 44,664Increase/(decrease) in creditors 116,039 (90,192) (24,423)Net cash outflow from operating activities (262,704) (680,188) (902,244) Notes: 1 No dividend is proposed in respect of the period 2 The results for the period are derived from continuing activities. 3 The calculations of loss per share have been based on the retained loss after taxation for the period and on a weighted average of 110,589,618 ordinary shares in issue during the period. 4 The unaudited results have been prepared on a going concern basis and on the basis of the accounting policies adopted in the audited accounts for the year ended 31 December 2005. 5 Intangible assets - exploration, development and production interests 30 June 31 December 2006 2005 £ £ Balance prior to re-allocation to other 1,212,417 1,280,210 investments Re-allocated to other investments (note 6 (324,744) - below) Balance at end of period 887,673 1,280,210 During the period ended 30 June 2006, an amount of £324,744 in respect of the Company's Kola Peninsula deferred expenditure exploration interests was transferred to 'Other investments'. Refer to note 6, below. 6 Other investments 30 June 31 December 2006 2005 £ £ Balance at beginning of period 146 154,018 Disposals - (153,888) Kola expenditure re-allocated from intangible 324,744 assets (note 5) Purchase of Kola Companies 1,419,130 - Advances to Kola Companies for exploration 661,899 - expenditure Exchange (12,781) 16 Balance at end of period 2,393,138 146 Other investments during 2006 relate to the Company's acquisition of ZAO Terskaya Mining Company and ZAO Yuksporskaya Mining Company (the 'Kola Companies'), together with deferred expenditure incurred prior to the acquisition and funds subsequently advanced for 2006 exploration expenditure. In terms of the Company's agreement with its joint venture partner Anglo Platinum Limited, 80% of the Kola Companies investment will be transferred to the Group's Urals Alluvial Platinum joint venture, while the Company will retain 20% of the investment. Completion of these transfers is expected before 30 September 2006. 7 Creditors falling due within one year 30 June 31 December 2006 2005 £ £ Short term creditors 329,058 213,019 Short term loan due within one year 1,495,879 - 1,824,937 213,019 The short term loan is in respect of funds advanced by Anglo Platinum Limited for its share of the purchase price of the Kola Companies, together with funds advanced for 2006 exploration expenditure of those companies. In return for the transfer of an 80% interest in the Kola Companies by Eurasia Mining Plc to its joint venture, Urals Alluvial Platinum Limited, this loan will be assumed by Urals Alluvial Platinum. This is expected to complete before 30 September 2006. 8 Creditors falling due after more than one year 30 June 31 December 2006 2005 Convertible unsecured loan stock: £ £ Redemption value at 30 June 2006 470,000 - Un-amortised issue costs and equity reserve (71,031) - Convertible loan stock balance at end of 398,969 - period Minority shareholder loan: 87,696 93,251 486,665 93,251 Loan stock with a face value of £700,000 was issued on 31 March 2006, bearing interest at a rate of 8%. The stock is convertible, at the holders' option at any time before maturity on 31 March 2008, into ordinary shares at the rate of £0.05 per share. Loan stock to the face value of £230,000 was converted to ordinary shares during April 2006. Any unconverted stock is redeemable at maturity on 31 March 2008. The allocation of redemption face value between liability and equity components has been accounted for in accordance with Financial Reporting Standard FRS 25. 9 The interim report is unaudited and does not constitute Statutory Accounts as defined in section 240 of the Companies Act 1985. A copy of the Group's 2005 Statutory Accounts has been filed with the Registrar of Companies. The auditors' opinion on these Statutory Accounts was unqualified. 10 The Interim Report for the six months to 30 June 2006 was approved by the Directors on 28 September 2006. For further information, please contact: Company InformationCompany Number 3010091 Directors RegistrarsM P Martineau (Chairman) Capita IRG Plc The RegistryC Schaffalitzky (Managing 34 Beckenham RoadDirector) Beckenham Kent BR3 4TUG C FitzGerald (NonExecutive) Secretary Bankers M J de Villiers National Westminster Bank plc 1 Princes Street London EC2R 8PH Head Office and Registered SolicitorsOffice 1 Hay Hill Eversheds LLPLondon W1J 6DH Senator HouseTelephone: +44 (0) 20 7495 85 Queen Victoria Street4877 London EC4V 4JL Facsimile: +44 (0) 207493 8858 E-mail:info@eurasia-mining.plc.uk www.eurasiamining.co.uk Nominated Adviser and Stockbroker W H Ireland Limited 24 martin Lane London EC4R 0DR And 11 St. James's Square Manchester M2 6WH +44 (0) 161 8322174Russian Office Joint stockbroker1 Lunacharsky Street King & Shaxson LimitedEkaterinburg 6th Floor, Candlewick HouseRussia 120 Cannon StreetTelephone: +(7) 3432 London EC4N 6AS615187 Facsimile: +(7) 3432615924 AuditorsGrant Thornton UK LLPManor CourtBarnes Wallis RoadSegensworthFarehamHampshire PO15 5GT This information is provided by RNS The company news service from the London Stock Exchange