Last checked at 24 Mar 2016 13:30
FinnAust Mining plc / EPIC: FAM / Market: AIM / Sector: Mining
24 March 2016
FinnAust Mining plc ('FinnAust' or the 'Company')
Interim Results
FinnAust Mining plc, the AIM and FSE listed exploration company with projects in Greenland, Finland and Austria, is pleased to announce its interim results for the six months ended 31 December 2015.
Chairman's Statement
In my inaugural statement as Chairman of the Company I am delighted to report on what has been a transformational period for FinnAust with the acquisition of the Pituffik Titanium Project in Greenland ('Pituffik' or the 'Project'). The Project hosts a titanium occurrence, which displays characteristics suggestive of a top percentile project in terms of grade.
Greenland is highly prospective, has a supportive government, transparent Minerals Act and a firm rule of law combined with a perceived low sovereign risk. We are excited by the fact we have acquired what appears to be globally significant titanium project and we expect to increase the Company's footprint in Greenland over the coming years.
Pittufik is located within the broader "Thule black sand province" in North West Greenland, comprising coastlines several hundred kilometres long that contain both ilmenite and magnetite-rich regions. Within these regions are localised higher concentrations of ilmenite, and it is these areas that FinnAust is targeting.
Based on work to date, the Company will focus its attention on three primary target types along more than 30km of prospective coastline. These target areas are broken down into Raised, Active, and Drowned beach targets. The Company has identified two key project areas for focus moving forward, Moriusaq and Interlak. Moriusaq is most advanced and has returned the highest ilmenite grades to date, whilst Interlak offers the largest volume of heavy mineral sands with grade upside potential.
We expect to shortly receive the results from the broad spaced, shallow marine sampling program and we remain optimistic as to the potential of the Project with initial results to date suggesting significant areas of mineralisation within the licence area. To support the development of this target we are also now working on extending the coastal boundary of the Pituffik Exploration Permit, as it currently covers onshore ground only. We are working with the Mineral Licence and Safety Authority in Greenland to this effect and expect to receive the extension to the Pituffik Exploration Permit around the middle of the year. In the meantime, the permit extension process is not expected to have any effect on the Company's ability to continue with its work programs, including off-shore work.
Looking ahead, whilst development plans remain subject to the aforementioned results, FinnAust continues to aim for a proof of concept "bulk sample" during 2017 which is in line with the Board's stated strategy of generating cash flow from Pituffik in as timely a manner as possible.
It is expected that the Moriusaq bay area will advance first, as there are a number of logistical and infrastructure benefits to support this approach such as existing power, communications and accommodation that will greatly assist in this initial development scenario.
To support its development strategy the Company has appointed a number of consultants post-period end in February and March 2016. SRK Exploration Services Limited ('SRK') has been appointed to review and standardise exploration activities, TZ Minerals International Pty Ltd ('TZMI'), a recognised leader in the provision of accurate and up to date technical, engineering and marketing support within the mineral sand industry, will also provide technical support on marketing, and independent expert Peter Waugh will assist the team in the overall management of the Pituffik development. Peter is a very welcome addition to the team and has broad industry management experience as well as valuable knowledge of the international titanium dioxide pigment industry.
Finally NIRAS Greenland A/S and Orbicon A/S will assume critical support roles for the completion of permitting and associated regulatory requirements. Importantly, both companies are Danish and have proven operating experience in Greenland and lastly but certainly not least is the involvement of the Geological Survey of Denmark and Greenland ('GEUS') whom have been commissioned to design and execute the 2016 field season alongside FinnAust personnel. Utilising a Danish institution such as GEUS means we get high quality deliverables for low cost, GEUS is considered crucial to the Company's development plans moving forward.
With a choice of two major port and logistics hubs both within a 5-minute helicopter ride the core operating area of Moriusaq also happens to be located at what is considered to be the highest grade area of the Company's licence area.
Wider Portfolio
Whilst Greenland is the primary focus of activity for FinnAust, the Company has a wider portfolio of prospective assets in Finland and Austria.
In Finland, the Company owns 100% of a portfolio of copper, zinc and nickel projects; the Hammaslahti Copper-Gold-Zinc Project, the Outokumpu Copper Project and the Kelkka Nickel Project.
Post period end in January 2016 FinnAust increased its licence coverage across these project areas by approximately 50%. The Company continues to see value in these project areas however will minimise expenditure until markets improve.
Corporate Updates
On 11 March 2016, Dan Lougher retired from the board as a Non-Executive Director having stepped down as Chairman on 9 December 2015. The Board would like to extend its thanks to Dan for the significant contribution he made during his time with the Company.
On 9 December 2015, I took the helm as Chairman of the Board and also welcomed Rod McIllree to the Board as Managing Director, Rod was initially appointed as the non-board interim Chief Executive Officer in July 2015. Rod has strong corporate and operational experience in Greenland and more than 20 years of experience working globally in both the resources and financial sectors. These skills will be invaluable as we focus on advancing Pituffik and our broader project portfolio.
With these corporate changes complete I am confident that we have the necessary team in place to achieve the fast-paced growth we are targeting.
Supporting our active growth strategy is ASX major Western Areas Limited, a cornerstone investor of FinnAust. FinnAust not only benefits from access to potential funding opportunities through this arrangement but also gains the experience of a proven management and technical team; Western Areas is one of Australia's leading nickel producers having advanced from greenfield exploration to a highly successful high grade nickel miner.
Finally, complementing our increased presence in Europe, we dual listed on the Frankfurt Stock Exchange post period end in February 2016, making the Company's shares more accessible to European investors following significant demand. These shares have been admitted to trading under the symbol 'S5WA', and will trade alongside our current AIM listing (under the symbol FAM).
Financials
As is to be expected with an exploration company, for the 6 month period ended 31 December 2015, the Company is reporting a pre-tax loss of £239,335 (six months ended 31 December 2014: £375,609). The Group's net cash balances as at 31 December 2015 were £334,661 (six months ended 31 December 2014: £1,806,785). The Group's cash position currently stands at £1.04 million.
Outlook
2016 is set to be an extremely active and exciting year for FinnAust. With our sights firmly set on achieving near term production at Pituffik our focus is on further defining the resource potential of the Project area. To this end we have already made excellent progress; three prospective target areas have been identified, including an unusually pure titanium occurrence, which demonstrates its potential to be in the top percentile of projects worldwide in terms of heavy mineral grade.
The new incoming management of FinnAust, in particular Rod McIllree, have operated successfully within Greenland for most of the past decade and I am confident that their proven skills and experience combined with a supportive Government, proximal infrastructure and targeted growth strategy ideally positions Pituffik for production.
The strategy of the Board is to generate cash flow from Pituffik to create a company that is capable of eventually self-funding exploration and development opportunities that it currently owns as well as continuing to evaluate other complementary opportunities. We look forward to keeping shareholders updated with developments relating to this.
Finally, I would like to thank shareholders for their on-going support. We remain committed to maintaining an active dialogue with the market and look forward to 2016 as we advance Pituffik.
Graham Marshall
Chairman
24 March 2016
For further information, please visit www.finnaust.com or contact:
Roderick McIllree | FinnAust Mining plc | +44 (0) 20 7907 9326 |
Ewan Leggat | Nominated Adviser and Broker SP Angel Corporate Finance LLP | +44 (0) 20 3470 0470 |
Laura Harrison | SP Angel Corporate Finance LLP | +44 (0) 20 3470 0470 |
Elisabeth Cowell | St Brides Partners Limited | +44 (0) 20 7236 1177 |
Charlotte Heap | St Brides Partners Limited | +44 (0) 20 7236 1177 |
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Notes | 6 months to 31 December 2015 Unaudited £ | 6 months to 31 December 2014 Unaudited £ | |
Continuing operations | |||
Revenue | - | - | |
Administration expenses | (239,446) | (311,812) | |
Foreign exchange | - | (65,185) | |
Other gains | - | 1,058 | |
Operating Loss | (239,446) | (375,939) | |
Finance income | 151 | 531 | |
Impairments | - | - | |
Finance Costs | (40) | (201) | |
Loss Before Taxation | (239,335) | (375,609) | |
Corporate tax expense | - | - | |
Loss for the period from continuing operations attributable to equity owners of the parent | (239,335) | (375,609) | |
Other comprehensive income | |||
Items that may be reclassified to profit or loss | |||
Currency translation differences | 640,278 | (91,323) | |
Total comprehensive income for the period attributable to equity owners of the parent | 400,943 | (466,932) | |
Loss per share from continuing operations attributable to the equity owners of the parent | |||
Basic and diluted (pence per share) | 7 | (0.097) | (0.143) |
CONDENSED CONSOLIDATED BALANCE SHEET
Notes | 31 December 2015 Unaudited £ | 30 June 2015 Audited £ | 31 December 2014 Unaudited £ | ||
Non-Current Assets | |||||
Property, plant and equipment | 11,050 | 12,327 | 14,772 | ||
Intangible assets | 5 | 9,266,014 | 8,432,062 | 8,569,678 | |
9,277,064 | 8,444,389 | 8,584,450 | |||
Current Assets | |||||
Trade and other receivables | 84,984 | 79,178 | 69,318 | ||
Cash and cash equivalents | 334,661 | 795,368 | 1,806,785 | ||
419,645 | 874,546 | 1,876,103 | |||
Total Assets | 9,696,709 | 9,318,935 | 10,460,553 | ||
Current Liabilities | |||||
Trade and other payables | 115,631 | 198,800 | 220,256 | ||
Borrowings | 6 | 122,500 | 62,500 | 62,500 | |
238,131 | 261,300 | 282,756 | |||
Total Liabilities | 238,131 | 261,300 | 282,756 | ||
Net Assets | 9,458,578 | 9,057,635 | 10,177,797 | ||
Capital and Reserves Attributable to Equity Holders of the Company | |||||
Share capital | 5,919,731 | 5,919,731 | 5,919,731 | ||
Share premium | 14,274,528 | 14,274,528 | 14,274,528 | ||
Deferred shares | 1,825,104 | 1,825,104 | 1,825,104 | ||
Reverse acquisition reserve | (8,071,001) | (8,071,001) | (8,071,001) | ||
Other reserves | (334,226) | (974,504) | (40,114) | ||
Retained losses | (4,155,558) | (3,916,223) | (3,730,451) | ||
Total Equity | 9,458,578 | 9,057,635 | 10,177,797 |
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
Attributable to Owners of the Parent | |||||||
Share capital £ | Share Premium £ | Deferred shares £ | Reverse acquisition reserve £ | Other reserves £ | Retained losses £ | Total equity £ | |
As at 1 July 2014 | 4,941,953 | 14,188,311 | 1,825,104 | (8,071,001) | 51,209 | (3,354,842) | 9,580,734 |
Loss for the period | - | - | - | - | - | (375,609) | (375,609) |
Other comprehensive income | |||||||
Currency translation differences | - | - | - | - | (91,323) | - | (91,323) |
Total comprehensive income for the period | - | - | - | - | (91,323) | (375,609) | (466,932) |
Issue of ordinary shares | 977,778 | 122,222 | - | - | - | - | 1,100,000 |
Issue costs | - | (36,005) | - | - | - | - | (36,005) |
Total contributions by and distributions to owners of the Parent recognised directly in equity | 977,778 | 86,217 | - | - | - | - | 1,063,995 |
As at 31 December 2014 | 5,919,731 | 14,274,528 | 1,825,104 | (8,071,001) | (40,114) | (3,730,451) | 10,177,797 |
Attributable to Owners of the Parent | |||||||
Share capital £ | Share Premium £ | Deferred shares £ | Reverse acquisition reserve £ | Other reserves £ | Retained losses £ | Total equity £ | |
As at 1 July 2015 | 5,919,731 | 14,274,528 | 1,825,104 | (8,071,001) | (974,504) | (3,916,223) | 9,057,635 |
Loss for the period | - | - | - | - | - | (239,335) | (239,335) |
Other comprehensive income | |||||||
Currency translation differences | - | - | - | - | 640,278 | - | 640,278 |
Total comprehensive income for the period | - | - | - | - | 640,278 | (239,335) | 400,943 |
Total contributions by and distributions to owners of the Parent recognised directly in equity | - | - | - | - | - | - | - |
As at 31 December 2015 | 5,919,731 | 14,274,528 | 1,825,104 | (8,071,001) | (334,226) | (4,155,558) | 9,458,578 |
CONDENSED CONSOLIDATED CASH FLOW STATEMENT
31 December 2015 Unaudited £ | 31 December 2014 Unaudited £ | |||
Cash flows from operating activities | ||||
Loss before taxation | (239,335) | (375,609) | ||
Adjustments for: | ||||
Net finance (income)/expense | (151) | (529) | ||
Depreciation | 1,759 | 1,226 | ||
Foreign exchange differences | 41,783 | 43,133 | ||
(Increase)/decrease in trade and other receivables | (5,805) | 51,535 | ||
(Decrease)/increase in trade and other payables | (83,170) | (18,767) | ||
Net cash used in operations | (284,919) | (299,011) | ||
Cash flows from investing activities | ||||
Interest received | 151 | 529 | ||
Acquisition of subsidiary, net of cash acquired | - | - | ||
Purchase of intangible assets | (236,204) | (602,042) | ||
Net cash generated from investing activities | (236,053) | (601,513) | ||
Cash flows from financing activities | ||||
Proceeds received from issue of shares | - | 1,100,000 | ||
Cost of issue | - | (36,005) | ||
Proceeds from borrowings | 60,000 | (62,500) | ||
Net cash generated from financing activities | 60,000 | 1,001,495 | ||
Net increase in cash and cash equivalents | (460,972) | 100,971 | ||
Cash and cash equivalents at beginning of period | 795,368 | 1,706,137 | ||
Exchange (losses)/gains on cash and cash equivalents | 265 | (323) | ||
Cash and cash equivalents at end of period | 334,661 | 1,806,785 |
NOTES TO THE INTERIM FINANCIAL STATEMENTS
1. General Information
The principal activity of FinnAust Mining Plc ('the Company') and its subsidiaries (together 'the Group') is the exploration and development of precious and base metals. The Company's shares are listed on the AIM Market of the London Stock Exchange ('AIM'). The Company is incorporated and domiciled in the UK.
The address of its registered office is 47 Charles Street, London, W1J 5EL.
2. Basis of Preparation
The condensed interim financial statements have been prepared in accordance with the requirements of the AIM Rules for Companies. As permitted, the Company has chosen not to adopt IAS 34 "Interim Financial Statements" in preparing this interim financial information. The condensed interim financial statements should be read in conjunction with the annual financial statements for the year ended 30 June 2015, which have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union.
The interim financial information set out above does not constitute statutory accounts within the meaning of the Companies Act 2006. It has been prepared on a going concern basis in accordance with the recognition and measurement criteria of International Financial Reporting Standards (IFRS) as adopted by the European Union.
Statutory financial statements for the period ended 30 June 2015 were approved by the Board of Directors on 19 August 2015 and delivered to the Registrar of Companies. The report of the auditors on those financial statements was unqualified.
The 2015 interim financial report of the Company is not required to be audited but has been reviewed by the Company's auditor, PKF Littlejohn LLP, although no independent review report is required to be included in this Interim financial report.
Going concern
The Directors, having made appropriate enquiries, consider that adequate resources exist for the Company to continue in operational existence for the foreseeable future and that, therefore, it is appropriate to adopt the going concern basis in preparing the condensed interim financial statements for the period ended 31 December 2015.
Risks and uncertainties
The Board continuously assesses and monitors the key risks of the business. The key risks that could affect the Company's medium term performance and the factors that mitigate those risks have not substantially changed from those set out in the Company's 2015 Annual Report and Financial Statements, a copy of which is available on the Company's website: www.finnaust.com. The key financial risks are liquidity risk, credit risk, interest rate risk and fair value estimation.
Critical accounting estimates
The preparation of condensed interim financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the end of the reporting period. Significant items subject to such estimates are set out in note 3 of the Company's 2015 Annual Report and Financial Statements. The nature and amounts of such estimates have not changed significantly during the interim period except for the following:
3. Accounting Policies
Except as described below, the same accounting policies, presentation and methods of computation have been followed in these condensed interim financial statements as were applied in the preparation of the Group's annual financial statements for the year ended 30 June 2015, except for the impact of the adoption of the Standards and interpretations described in para 3.1 below and the following which has been adopted for the first time as the Group had borrowings in this reporting period:
3.1 Changes in accounting policy and disclosures
(a) New and amended standards mandatory for the first time for the financial year beginning 1 July 2015
The following new IFRS standards and/or amendments to IFRS standards are mandatory for the first time for the Group:
Standard | Effective date | |
Annual Improvements | Annual Improvements to IFRSs 2010-2012 Cycle (Amendments to IFRS 2, IFRS 3, IFRS 8, IFRS 13, IAS 16, IAS 24, IAS 38) | 1 July 2014 |
Annual Improvements | Annual Improvements to IFRSs 2011-2013 Cycle (Amendments to IFRS 1, IFRS 3, IFRS 13, IAS 40) | 1 July 2014 |
The Directors believe that these new standards do not have a material impact on the Group's results or shareholders' funds.
(b) New standards and interpretations not yet adopted
Standards, amendments and interpretations that are not yet effective and have not been early adopted are as follows:
Standard | Effective date | |
IAS 39, IFRS 7 and IFRS 9 (amendment November 2013) | Hedge accounting | 1 January 2018*1 |
IFRS 7 and 9 (amendment December 2011) | Mandatory effective date and transition disclosures | 1 January 2018*1 |
IFRS 9 | Financial instruments | 1 January 2018*1 |
IAS 16 and IAS 38 (Amendments) | Clarification of acceptable methods of depreciation and Amortization | 1 January 2016*1 |
IFRS 11 (Amendment) | Accounting for acquisition of interests in joint operations Financial Reporting Standards" - Government Loans | 1 January 2016*1 |
IFRS 14 | Regulatory deferral accounts | 1 January 2016*1 |
IFRS 15 | Revenue from contracts with customers | 1 January 2018*1 |
IAS 1 (Amendment) | Disclosure initiative | 1 January 2016*1 |
IAS 16 and IAS 41 (Amendments) | Property, plant and equipment and Agriculture: Bearer Plants | 1 January 2016*1 |
IAS 27 (Amendment) | Equity method in separate financial statements | 1 January 2016*1 |
IFRS 10 and IAS 28 (Amendments | Sale or contribution of assets between an investor and its associate or joint venture | 1 January 2016*1 |
Annual improvements to IFRSs 2012-2014 Cycle | Separate financial statements - Investment entities | 1 January 2016*1 |
1. Not yet endorsed by the EU.
The Group is evaluating the impact of the new and amended standards above. The Directors believe that these new and amended standards are not expected to have a material impact on the Group's results or shareholders' funds.
4. Dividends
No dividend has been declared or paid by the Company during the six months ended 31 December 2015 (six months ended 31 December 2014: £nil).
5. Intangible Assets
Intangible assets comprise exploration and evaluation costs and goodwill. Exploration and evaluation costs comprise acquired and internally generated assets.
Cost and Net Book Value | Goodwill | Exploration & evaluation assets £ | Total £ |
Balance as at 1 July 2015 | - | 8,432,062 | 8,432,062 |
Additions | - | 252,087 | 252,087 |
Exchange rate movements | - | 581,865 | 581,865 |
As at period end | - | 9,266,014 | 9,266,014 |
6. Borrowings
Current | 31 December 2015 £ | ||
Unsecured borrowings at amortised cost | |||
Non-interest bearing loan | 122,500 | ||
122,500 |
Non-interest bearing loans relate to unsecured cash advances to the Group from its majority shareholder Western Areas Limited and loan from certain vendors of Bluejay Mining Limited which was converted to equity on 8 March 2016 after satisfaction of the conditions in the sale and purchase agreement entered into on 8 December 2015. No repayments were made during the period.
7. Loss per Share
The calculation of loss per share is based on a retained loss of £239,335 for the six months ended 31 December 2015 (six months ended 31 December 2014: £375,609) and the weighted average number of shares in issue in the period ended 31 December 2015 of 247,097,670 (six months ended 31 December 2014: 262,508,298).
No diluted earnings per share is presented for the six months ended 31 December 2015 or six months ended 31 December 2014 as the effect on the exercise of share options would be to decrease the loss per share.
8. Events after the Reporting Date
On 4 March 2016 the Company raised £1,000,000 via the issue of 50,000,000 new ordinary shares of 0.01 pence each in the Company at a price of 2p per share. On the same date the Company issued 4,032,316 new ordinary shares of 0.01 pence each in the Company to professional advisors in satisfaction of fees outstanding.
On the 4 March 2016 the Company issued the following options to advisers:
· 1 million options with an exercise price of 2 pence valid for 12 months from the date of grant;
· 1 million options with an exercise price of 4 pence valid for 24 months from the date of grant; and
· 1 million options with an exercise price of 6 pence valid for 36 months from the date of grant.
On 8 March 2016 the Company issued 123,900,000 new ordinary shares of 0.01 pence each in the Company as initial consideration for a 60.37% interest in Bluejay Mining Limited. On the same date the Company raised £200,000 via the issue of 10,000,000 new ordinary shares of 0.01 pence each in the Company at a price of 2p per share.
9. Approval of interim financial statements
The Condensed interim financial statements were approved by the Board of Directors on 24 March 2016.
**ENDS**