23 Sep 2008 09:47
23 September 2008 AIM: GMA
GMA Resources plc
("the Company")
Interim results for the six month period ended 30 June 2008
The Company announces its interim results for the six month period ended 30 June 2008.
CHAIRMAN'S STATEMENT
Production
Production for the six month period ended 30 June 2008 was a total of 10,536 ounces, however this result is really a tale of two quarters. Following the start-up of commercial operations at Amesmessa, production got off to a very promising start. The first quarter's production of 5,906 ounces exceeded expectations. However, as announced on 16 June 2008, production during the second quarter was disappointing, mostly as a result of inadequate supply of explosives, which prevented the Company from performing proper stripping of waste in order to access higher grade mineralisation. Total production for the second quarter was 4,630 ounces, well below the projections in the Amesmessa feasibility study. While some progress has been made on assuring adequate supplies of explosives and other key consumables, it is expected that third quarter production will not reach expected levels.
Financial Results
The Company generated a loss of £3,986,000 or 1.1p per share for the first six months of 2008. This compares with a loss of £2,276,000 or 0.4p per share for the first six months of 2007. Losses for 2008 are directly attributable to the slower than expected ramp-up of production from the Amesmessa mine. Losses for the similar period in 2007 were the result of losses at the Tirek CIL processing facility prior to the Company's decision to shut down that facility in June 2007. The Company now expects to generate a loss for the full year 2008.
Higher than expected gold prices have partially offset the impact of lower gold production volumes. The Company realised average sales revenue of $908 per ounce for the first six months of 2008. Prices have come down from recent highs and this will moderate the positive impact expected from improving production. Nevertheless, the long term outlook for gold prices is still strong.
A summary of operating and financial results for the first six months of 2008 is presented below:
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| 6 months to 30 June 2008 | 6 months to 30 June 2007 | Year to 31 December 2007 |
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| Gold Production (ounces) | 10,536 | 7,517 | 7,517 |
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| Sales revenue (£'000) | 4,320 | 2,284 | 2,923 |
| Loss before tax (£'000) | (3,986) | (2,276) | (5,988) |
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| Loss per share - basic (pence) | (1.1p) | (0.4p) | (1.2p) |
Financings and Liquidity
As announced on 15 July 2008, the Company raised £955,080 before expenses through the issue of 13,644,000 new ordinary shares at 7 pence per share. These shares were placed with existing shareholders and the proceeds are being used to fund the general working capital needs of the Company and of its Algerian affiliate, ENOR spa.
Exploration
The exploration team continued the sampling program started in 2007. Two of the identified targets on the concession have been trench channel sampled resulting in approximately 15,000 samples to be assayed. The operations team has also sampled many of the known ancillary veins around Amesmessa in order to find free-dig ore in the periods when explosives were not available. This sampling work was done using blast-hole drills.
The Company's exploration drill rig that was purchased and customised in late 2007 is now ready for shipping to Algeria. Unfortunately, the shortage of qualified drilling manpower worldwide has made it extremely difficult to find qualified personnel to operate this equipment. The Company began a search for a drilling company to take over the drill and provide ENOR with drilling services. We are currently in discussions with a drilling company to this effect. Once the drill is in place, the plan will be to drill promising targets within range of the Amesmessa mine to prolong the life of this operation. While we continue forward with exploration, it is imperative that our management resources remain focused on solving the supply chain issues, including explosives, required for mining.
While the production start-up difficulties we have experienced to date this year have been disappointing and frustrating, the technical and economic fundamentals of the Amesmessa project are still strong. In particular, the long term production cost at $400-500 per ounce still appears very favourable in comparison to other gold mining companies and the exploration potential on the concession is still exciting. We remain confident of achieving planned production targets in the near future. We thank our shareholders, employees and partners for their continued support.
Douglas Perkins
Chief Executive Officer
23 September 2008
Enquiries:
| GMA Resources Plc | John East & Partners Limited |
| Douglas Perkins Chief Executive Officer | Bidhi Bhoma |
| +44 (0) 20 7253 7670 +1 514 806 6788 | +44 (0) 20 7628 2200 |
CONDENSED CONSOLIDATED INTERIM INCOME STATEMENT
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| Note | 6 months to 30 June 2008 £'000s | 6 months to 30 June 2007 £'000s | Year to 31 December 2007 £'000s |
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| Continuing operations |
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| Revenue |
| 4,320 | 2,284 | 2,923 |
| Cost of sales |
| (6,240) | (3,619) | (6,193) |
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| Gross loss |
| (1,920) | (1,335) | (3,270) |
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| Finance income |
| 40 | 76 | 180 |
| Administrative costs |
| (647) | (651) | (1,195) |
| Finance costs |
| (1,459) | (366) | (1,703) |
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| Loss before tax |
| (3,986) | (2,276) | (5,988) |
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| Income tax expense |
| - | - | - |
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| Loss for the period |
| (3,986) | (2,276) | (5,988) |
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| Attributable to: |
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| Equity holders of the parent |
| (3,986) | (1,460) | (4,246) |
| Minority interest |
| - | (816) | (1,742) |
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| (3,986) | (2,276) | (5,988) |
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| Loss per share: |
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| Basic and diluted loss per share | 4 | (1.1p) | (0.4p) | (1.2p) |
CONDENSED CONSOLIDATED INTERIM BALANCE SHEET
| Note | 30 June 2008 £'000s | 30 June 2007 £'000s | 31 December 2007 £'000s | |
| ASSETS |
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| Non-current assets |
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| Property, plant and equipment |
| 37,680 | 30,873 | 34,115 |
| Other intangible assets |
| 32 | 27 | 29 |
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| 37,712 | 30,900 | 34,144 |
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| Current assets |
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| Inventories |
| 8,076 | 2,361 | 5,423 |
| Trade and other receivables |
| 8,748 | 5,638 | 5,633 |
| Cash and cash equivalents |
| 1,779 | 7,307 | 5,381 |
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| 18,603 | 15,306 | 16,437 |
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| Total assets |
| 56,315 | 46,206 | 50,581 |
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| LIABILITIES |
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| Current liabilities |
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| Trade and other payables |
| 9,522 | 8,466 | 7,376 |
| Short-term borrowings |
| 3,993 | 1,568 | 851 |
| Short-term finance lease |
| 5,453 | 1,215 | 4,125 |
| Loan from minority shareholder |
| 9,949 | - | 9,381 |
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| 28,917 | 11,249 | 21,733 |
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| Non-current liabilities |
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| Long-term borrowing |
| 4,665 | 1,940 | 4,204 |
| Long-term finance lease |
| 2,963 | 3,883 | 3,460 |
| Unsecured convertible loan stock |
| 5,854 | 4,829 | 5,353 |
| Loan from minority shareholder |
| 5,365 | 8,041 | 3,334 |
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| Total non-current liabilities |
| 18,847 | 18,693 | 16,351 |
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| Total liabilities |
| 47,764 | 29,942 | 38,084 |
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| Net assets |
| 8,551 | 16,264 | 12,497 |
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| EQUITY |
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| Equity attributable to equity holders of the parent | ||||
| Share capital | 3 | 3,544 | 3,544 | 3,544 |
| Share premium account |
| 23,810 | 23,810 | 23,810 |
| Other reserves - share options |
| 420 | 203 | 330 |
| Other reserves |
| 923 | 871 | 923 |
| Cumulative currency translation reserve |
| (964) | (655) | (914) |
| Retained earnings |
| (19,182) | (12,410) | (15,196) |
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| 8,551 | 15,363 | 12,497 |
| Minority interest |
| - | 901 | - |
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| Total equity |
| 8,551 | 16,264 | 12,497 |
CONDENSED CONSOLIDATED INTERIM STATEMENT OF CHANGES IN EQUITY
| Share capital | Share premium account | Share options | Other reserves | Currency reserve | Retained earnings | Total | Minority interest | Total equity | |
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| £'000s | £'000s | £'000s | £'000s | £'000s | £'000s | £'000s | £'000s | £'000s |
| Balance at 31 December 2006 | 3,171 | 20,469 | 106 | - | (710) | (10,950) | 12,086 | 1,676 | 13,762 |
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| Changes in equity for first half of 2007 |
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| Exchange differences on translation of foreign operations | - | - | - | - | 55 | - | 55 | 41 | 96 |
| Net income recognised directly in equity | - | - | - | 55 | - | 55 | 41 | 96 | |
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| Loss for the period | - | - | - | - | - | (1,460) | (1,460) | (816) | (2,276) |
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| Total recognised income and expense for the period | - | - | - | - | 55 | (1,460) | (1,405) | (775) | (2,180) |
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| Issue of share capital | 373 | 3,341 | - | - | - | - | 3,714 | - | 3,714 |
| Share based payment charges | - | - |
97 |
- |
- |
97 |
- |
97 | |
| Other reserve charges | - | - | - | 871 | - | - | 871 | - | 871 |
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| Balance at 30 June 2007 | 3,544 | 23,810 | 203 | 871 | (655) | (12,410) | 15,363 | 901 | 16,264 |
| Share capital | Share premium account | Share options | Other reserves | Currency reserve | Retained earnings | Total | Minority interest | Total equity | |
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| £'000s | £'000s | £'000s | £'000s | £'000s | £'000s | £'000s | £'000s | £'000s |
| Balance at 31 December 2006 | 3,171 | 20,469 | 106 | - | (710) | (10,950) | 12,086 | 1,676 | 13,762 |
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| Changes in equity for 2007 |
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| Exchange differences on translation of foreign operations | - | - | - | - | (204) | - | (204) | 66 | (138) |
| Net income recognised directly in equity | - | - | - | - | (204) | - | (204) | 66 | (138) |
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| Loss for the period | - | - | - | - | - | (4,246) | (4,246) | (1,742) | (5,988) |
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| Total recognised income and expense for the period | - | - | - | - | (204) | (4,246) | (4,450) | (1,676) | (6,126) |
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| Issue of share capital | 373 | 3,727 |
| - | - | - | 4,100 | - | 4,100 |
| Share issue costs | - | (386) | - | - |
|
| (386) |
| (386) |
| Share based payment charges | - | - |
224 |
- |
- |
- |
224 |
- |
224 |
| Equity element of unsecured convertible loan stock | - | 923 | - | - | 923 | 923 | |||
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| Balance at 31 December 2007 | 3,544 | 23,810 |
330 |
923 |
(914) |
(15,196) |
12,497 |
- |
12,497 |
| Share capital | Share premium account | Share options | Other reserves | Currency reserve | Retained earnings | Total | Minority interest | Total equity | |
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| £'000s | £'000s | £'000s | £'000s | £'000s | £'000s | £'000s | £'000s | £'000s |
| Balance at 31 December 2007 | 3,544 | 23,810 | 330 | 923 | (914) | (15,196) | 12,497 | - | 12,497 |
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| Changes in equity for 2008 |
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| Exchange differences on translation of foreign operations | - | - | - | - | (50) | - | (50) | - | (50) |
| Net income recognised directly in equity | - | - | - | - | (50) | - | (50) | - | (50) |
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| Loss for the period | - | - | - | - | - | (3,986) | (3,986) | - | (3,986) |
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| Total recognised income and expense for the period | - | - | - | - | (50) | (3,986) | (4,036) | - | (4,036) |
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| Share based payment charges | - | - |
90 |
- |
- |
- |
90 |
- |
90 |
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| Balance at 30 June 2008 | 3,544 | 23,810 | 420 | 923 | (964) | (19,182) | 8,551 | - | 8,551 |
CONDENSED CONSOLIDATED INTERIM CASH FLOW STATEMENT
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| 6 months to 30 June 2008 £'000s | 6 months to 30 June 2007 £'000s | Year to 31 December 2007 £'000s | ||
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| Cash flows from operating activities |
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| Loss after taxation |
| (3,986) | (2,276) | (5,988) | |
| Adjustments for: |
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| Depreciation |
| 1,595 | 1,293 | 3,916 | |
| Foreign exchange loss |
| (3,877) | (349) | (758) | |
| Share based payments |
| 90 | 97 | 224 | |
| Investment income |
| (40) | (76) | (180) | |
| Interest expense |
| 1,459 | 366 | 1,703 | |
| Increase in trade and other receivables |
| (3,115) | (3,047) | (3,042) | |
| Increase in inventories |
| (2,653) | (569) | (3,631) | |
| Increase in trade payables |
| 2,146 | 4,474 | 3,375 | |
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| |
| Cash generated from operations |
| (8,381) | (87) | (4,381) | |
| Interest paid |
| (958) | (366) | (268) | |
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| |
| Net cash from operating activities |
| (9,339) | (453) | (4,649) | |
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| Cash flows from investing activities |
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| Purchase of property, plant and equipment | (656) | (10,654) | (15,478) | ||
| Purchase of intangible asset | (3) | - | (11) | ||
| Interest received | 40 | 76 | 180 | ||
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| Net cash used in investing activities | (619) | (10,578) | (15,309) |
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| Cash flows from financing activities |
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| Proceeds from issue of share capital | - | 3,714 | 3,714 | ||
| Proceeds from long-term borrowing | 3,143 | 1,910 | (135) | ||
| Payment of finance lease liabilities | 153 | (621) | (51) | ||
| Unsecured convertible loan stock | - | 5,700 | 5,700 |
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| Loan from minority interest | 2,599 | 191 | 4,865 | ||
| Proceeds from bank borrowings | 461 | - | 3,592 | ||
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| Net cash used in financing activities | 6,356 | 10,894 | 17,685 |
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| Net increase in cash and cash equivalents | (3,602) | (137) | (2,273) |
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| Foreign exchange movements | - | - | 210 |
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| Cash and cash equivalents at beginning of period |
5,381 | 7,444 | 7,444 |
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| Cash and cash equivalents at end of period | 1,779 | 7,307 | 5,381 |
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NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
1. Nature of operations and general information
The Group's principal activity is that of gold mining, exploration and mine development in Algeria. GMA Resources plc is the Group's ultimate parent company. It is incorporated in England and has its registered office at One America Square, Crosswall, London EC3N 2SG and its business address at 30, Princess Elizabeth Street, Ta'Xbiex, XBX 1104, Malta. The Group operates from its business address as well as locations in Algeria. The shares of GMA Resources plc are quoted on the AIM market which is operated by the London Stock Exchange.
2. Basis of preparation
These unaudited interim consolidated financial statements are for the six month period ended 30 June 2008. They have been prepared based on the recognition and measurement principles of International Financial Reporting Standards (IFRS) adopted by the European Union. They do not constitute statutory accounts for the purposes of s.240 of the Companies Act 1985 (s.404 of the Companies Act 2006) and should be read in conjunction with the consolidated audited financial statements of the Group for the year ended 31 December 2007.
The consolidated financial statements have been prepared under the historical cost convention except for financial instruments which have been measured at fair value. They are presented in UK Sterling and are rounded to the nearest thousand (£000) except where otherwise noted. They have been prepared on the going concern basis and do not include any adjustment that would result from the inability of the Group to raise additional funding if needed.
3. Share issue
During the period to 30 June 2008, no shares were issued.
| 6 months to 30 June 2008 |
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| Number | £'000s |
| At 1 January 2008 | 354,418,493 | 3,544 |
| Issue of shares | - | - |
| At 30 June 2008 | 354,418,493 | 3,544 |
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| 6 months to 30 June 2007 |
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| Number | £'000s |
| At 1 January 2007 | 317,145,493 | 3,171 |
| Issue of shares | 37,273,000 | 373 |
| At 30 June 2007 | 354,418,493 | 3,544 |
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| Year to 31 December 2007 |
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| Number | £'000s |
| At 1 January 2007 | 317,145,493 | 3,171 |
| Issue of shares | 37,273,000 | 373 |
| At 31 December 2007 | 354,418,493 | 3,544 |
4. Loss per share
| 6 months to 30 June 2008 |
Loss £'000s | Weighted average number of shares | Per share amount Pence |
| Loss for the year attributable to the equity holders of the parent entity | (3,986) | ||
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| Weighted average number of shares |
| 354,418 |
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| Basic and diluted loss per share |
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| (1.12p) |
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| 6 months to 30 June 2007 | Loss £'000s | Weighted average number of shares | Per share amount Pence |
| Loss for the year attributable to the equity holders of the parent entity | (1,460) | ||
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| Weighted average number of shares |
| 348,206 |
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| Basic and diluted loss per share |
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| (0.42p) |
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| Year to 31 December 2007 | Loss £'000s | Weighted average number of shares | Per share amount Pence |
| Loss for the year attributable to the equity holders of the parent entity | (4,246) | ||
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| Weighted average number of shares |
| 351,312 |
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| Basic and diluted loss per share |
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| (1.21p) |
5. Subsequent event - share issue
On 15 July 2008 the Company announced that pursuant to a placing agreement entered into with Mirabaud Securities Limited, it had raised £955,080 before expenses by way of a placing of 13,644,000 new ordinary shares of £0.01 each ("Placing Shares") at 7 pence per share ("Placing"). The Placing shares were purchased by existing shareholders and represent approximately 3.8 per cent of the enlarged issued share capital of the Company. Funds from the Placing were received during the last week of July.
The proceeds of the Placing are being used for general working capital purposes. The Placing Shares were issued utilising the authority to issue new ordinary shares in existence prior to the annual general meeting of the Company held on 25 July 2008. Following the placement, the Company has 368,062,493 ordinary shares in issue.
6. Dividend
No dividend has been declared for the six month period ended 30 June 2008.
7. Copies of half-yearly results
Copies of the half-yearly results will be available from the Company's website, www.gmaresources.plc.uk.