Landore Regulatory News (LND)

15 Sep 2006 07:00

Landore Resources Limited15 September 2006 15 September 2006 Landore Resources Limited ("Landore Resources or the "Company") Interim Results MANAGEMENT DISCUSSION AND ANALYSIS FOR THE SIX MONTHS ENDED 30 JUNE 2006 General The following discussion of performance, financial condition and futureprospects should be read in conjunction with the interim consolidated financialstatements of the Company and notes thereto for the period from 1 January 2006to 30 June 2006. All amounts are stated in sterling. Overview Landore Resources Limited is listed on the Alternative Investment Market inLondon, with the trading symbol of LND.L The Company is based in Guernsey in theChannel Islands and its operating subsidiary, Landore Resources Canada Inc. isengaged in the exploration and development of a portfolio of precious and basemetal properties in North America. Results of Operations The financial results for the six months to 30 June 2006 show a loss of £613,260(2005 loss of £4,147,507). These results are in line with expectations. Duringthe six month period exploration costs were £424,835 and administrative expenseswere £344,527. It should be noted that the comparative figures have been restated in respect ofIFRS 2 share based payments. Full details are set out in note 2 and it shouldalso be noted that this does not impact the financial statements for the yearended 31 December 2005. Mineral Exploration Activities The Group's exploration activities have been mainly focused on the Junior Lakenickel project and the Lessard copper project. In addition, explorationcontinues on the West Graham property by our joint venture partner, First NickelInc. The Junior Lake Project - Nickel The Junior Lake properties are located in the province of Ontario, approximately235 kilometres north-northeast of Thunder Bay and are situated within theCaribou-O-Sullivan Greenstone Belt in the Wabigoon Subprovince. Two drilling campaigns, completed in 2005, successfully identified numerousnickel occurrences, including the significant discovery at the VW zone, whichreported grades of up to 3.7% nickel and 1.18% copper with gold of up to 0.68g/tin separate intersections. A diamond drilling campaign, proposed at 10,000 metres of NQ sized core, is inprogress on the Junior Lake properties comprising 6,800 metres of infilldrilling on the VW zone, 1,200 metres of infill drilling on the B4-7 Zone and2,000 metres of exploration drilling to test prospective trends along strikefrom the VW zone and other favourable targets. The drilling on the VW zone has consistently intersected wide intervals ofsulphide mineralisation with assay results returning grades in excess of 1%nickel. The drilling programme is in progress and further results will bereported in the 3rd and 4th quarters of 2006. In addition SGS Lakefield Research Ltd of Lakefield, Ontario is carrying outmetallurgical testing on the VW zone Nickel ore. On completion of the drillingand metallurgical testing an independent consultant will prepare a NI 43-101compliant technical report. It is anticipated that the report will be completedby year end. Full details of the drilling results can be viewed on the Company's websitewww.landore.com Lessard Property - Copper Zinc The Lessard property, comprising 91 claims for 1,456 hectares is locatedapproximately 107 kilometres north of the town of Chibougamau, in the provinceof Quebec. Access is by an all weather gravel road that passes through theproperty. The property hosts a copper-zinc-silver deposit with a historic resourcereported in a feasibility study in 1975 by Selco Mining Corporation Ltd of1,463,835 tons at 1.73%Cu, 2.96%Zn, 1.1oz/t Ag and 0.019oz/t Au after allowancefor dilution. The resource is not compliant with National Instrument 43-101. A Geotech VTEM penetrating time-domain airborne electromagnetic and magneticsurvey has been carried out over the Lessard copper-zinc-silver property. Thissurvey has highlighted possible strike extensions of the deposit and hasdeveloped new targets for follow-up exploration. A confirmation drilling campaign consisting of 7 holes of NQ size core for 1,731metres has recently been completed along the historic resource. Results areawaited. West Graham / First Nickel option - Nickel First Nickel has entered into an option/joint venture agreement with LandoreResources Canada Inc. to acquire a 70% interest in the West Graham propertywhich is strategically located immediately to the south of the East Zone of theLockerby Mine. The West Graham property contains the historic Conwest Depositwhich represents the up- plunge extension of First Nickel's Lockerby EastDeposit. A resource estimate completed by the Conwest Exploration Company Limited in the1960's yielded 4.3 million tons at 0.52% nickel and 0.33% copper. This resourceshould be considered non-compliant with National Instrument 43-101. First Nickel's published drilling results indicated broad zones of modest gradenickel sulphides, similar to those identified by Conwest, including a 42.7 metre(140.1 feet) core length grading 0.63% Ni and 0.32% Cu in hold FNI2006. Highergrade zones that assayed up to 3.22% Ni and 0.14% Cu over a 0.57 metre corelength in FNI2006 and 1.24% Ni and 0.35% Cu over 6.0 metre core length inFNI2007 are present within the broader zones of lower grade mineralisation.These results, when coupled with the previously reported results indicate thepotential to define a higher grade zone or zones within the currently outlinedmineralised system. For further information on Landore and its projects please visit the Company'swebsite www.landore.com Accounting Policies The Company has adopted accounting policies which are in line with InternationalFinancial Reporting Standards. A full set of these policies were included in thefinancial statements to 31 December 2005. Use of Financial Instruments The Company has not entered any specialised financial agreements to minimise itsinvestment risk, currency risk or commodity risk. There are no off-balance sheetarrangements. The principal financial instruments affecting the Company'sfinancial condition and results of operations is currently its cash andshort-term money market investments. Forward Looking Statements The above contains forward looking statements that are subject to a number ofknown and unknown risks, uncertainties and other factors that may cause actualresults to differ materially from those anticipated in our forward lookingstatements. Factors that could cause such differences include: changes in worldgold markets, equity markets, costs and supply of material relevant to themining industry, change in government and changes to regulations affecting themining industry. Although we believe the expectations reflected in our forwardlooking statements are reasonable, results may vary, and we cannot guaranteefuture results, levels of activity, performance or achievements. UNAUDITED CONSOLIDATED INCOME STATEMENTFOR THE SIX MONTHS ENDED 30 JUNE 2006 Notes Six months As restated ended 30 June period ended 2006 30 June 2005 £ £Exploration costs 3 424,835 313,989Administrative expenses 344,527 368,297Impairment of goodwill - 3,486,377 ---------- -----------Operating loss 769,362 4,168,663 Finance income (32,859) (21,156)Other income 4 (123,243) - ---------- -----------Loss before income tax 613,260 4,147,507 Income tax expense - - ---------- -----------Loss for the period 613,260 4,147,507 ========== ===========Attributable to:Equity holders of theCompany 613,260 4,147,507 ========== ===========Loss per share attributable to the equityholders of the Company during the year- basic 5 (£0.01) (£0.08) ---------- ------------ diluted 5 (£0.01) (£0.08) ========== =========== The Group's operating loss relates to continuing operations. UNAUDITED CONSOLIDATED STATEMENT OF CHANGES IN EQUITYFOR THE SIX MONTHS ENDED 30 JUNE 2006 Six months As restated ended 30 June Period ended 2006 30 June 2005 £ £Loss for the period aspreviously reported (613,260) (3,878,153)Prior period adjustment tointerim financial results - (269,354) ---------- -----------Loss for the period as restated (613,260) (4,147,507)Translation adjustment onconsolidation 9,742 16,072 ---------- -----------Net loss recognised directly inequity (603,518) (4,131,435)Issue of ordinary share capital - 858,813Share premium arising on issueof ordinary share capital - 5,152,877 Issue costs - (461,612)Issue of share options 247,531Issue of warrants - 65,394 ---------- -----------Net (decrease)/increase inshareholders' funds (603,518) 1,731,568 Opening shareholders' funds at 1January 2006 1,792,546 - ---------- -----------Closing shareholders' funds 1,189,028 1,731,568 ========== =========== UNAUDITED CONSOLIDATED BALANCE SHEET AS AT SIX MONTHS ENDED 30 JUNE 2006 As restated As at 30 June As at 30 June 2006 2005 £ £AssetsNon current assetsProperty, plant and equipment 62,126 41,804 62,126 41,804 ---------- -----------Current assetsTrade and other receivables 44,088 25,145Cash and cash equivalents 1,242,258 1,958,398 ---------- ----------- 1,286,346 1,983,543 ---------- -----------Total assets 1,348,472 2,025,347 ---------- -----------EquityCapital and reserves attributable the Company'sequity holdersShare capital 930,033 858,813Share premium 5,410,126 4,691,265Share options 247,531 247,531Warrants 43,571 65,394Retained earnings (5,474,597) (4,147,507)Cumulative translation adjustment 32,364 16,072 ---------- -----------Total equity 1,189,028 1,731,568 ---------- -----------LiabilitiesCurrent liabilitiesTrade and other payables 159,444 293,779 ---------- ----------- 159,444 293,779 ---------- -----------Total liabilities 159,444 293,779 ---------- -----------Total equity and liabilities 1,348,472 2,025,347 ========== =========== UNAUDITED CONSOLIDATED CASH FLOW STATEMENTFOR THE SIX MONTHS ENDED 30 JUNE 2006 Notes Six months Period ended 30 ended 30 June June 2006 2005 £ £Cash flows fromoperating activitiesCash generatedfromoperations 6 (606,453) (307,292)Cash flows frominvesting activitiesAcquisition ofsubsidiary,net of cashacquired - 693,642Purchases ofproperty,plant andequipment (9,667) (25,818) ------ --------- (9,667) 667,824Cash flows fromfinancing activitiesIssue ofordinary sharecapital - 2,000,000Issue costs - (418,043) ------ --------- - 1,581,957Net increase in cashand cash equivalentsCash and cashequivalents atbeginning ofperiod 1,848,807 -Exchange gainson cash andcashequivalents 9,571 15,909 --------- ---------Cash and cashequivalents atend of period 1,242,258 1,958,398 ========= ========= NOTES TO THE FINANCIAL STATEMENTSFOR THE SIX MONTHS ENDED 30 JUNE 2006 1 Accounting Policies Basis of accounting The financial statements have been prepared in accordance with thoseInternational Financial Reporting Standards ("IFRS") standards and InternationalFinancial Reporting Interpretations Committee ("IFRIC") interpretations issuedand effective or issued and early adopted as at the time of preparing thesefinancial statements (July 2005). The financial statements have not been audited and have been prepared on thehistorical cost basis. The principal accounting policies adopted are consistentwith those adopted in the annual accounts to 31 December 2005. 2 Restatement of interim results to 30 June 2005 An adjustment has been made in respect of the interim results to 30 June 2005 aspreviously reported in order to allow comparability between the two interimfinancial periods. The effect of this adjustment has already been recognised inthe group's full financial statements to 31 December 2005. The restatement is in respect of the recognition of the requirements of IFRS 2Share-based Payments which was fully adopted by the group in its full financialstatements to 31 December 2005. Application of this accounting standard to theinterim results to 30 June 2005 has resulted in additional costs of £169,855being charged to the profit and loss account in respect of directors' andemployees' remuneration in respect of options and warrants granted. It has alsoresulted in an increase in the goodwill amortisation charge by £99,499, beingthe fair value of share options and warrants issued in consideration for thepurchase of the share capital of Landore Resources Canada Inc. on 1 April 2005. 3 Exploration expenditure and mineral properties 1 January 2006 Expenditure in Accumulated period expenditure 30 June 2006 £ £ £Miminiska Lake 1,127,214 1,763 1,128,977Junior Lake 940,179 394,947 1,335,126Frond Lake 57,791 716 58,507Wottam 61,558 - 61,558Lamaune 271,362 23 271,385Seeley Lake 80,431 5,830 86,261Other 11,992 21,556 33,548 -------- --------- ---------- 2,550,527 424,835 2,975,362 ======== ========= ========== Mineral properties at 30 June 2006 represent accumulated costs to date incurredby Landore Resources Canada Inc., a subsidiary of Landore Resources Limited. Onacquisition of Landore Resources Canada Inc. on 5 April 2005 the fair value ofthose costs incurred to date was considered to be £Nil. All subsequentexpenditure in the period has been charged to the income statement in accordancewith the group accounting policy. 4 Other income Other income represents income receivable from the sale of property and optionpayment income. 5 Loss per share The loss per share is based on the loss for the period and the weighted numberof ordinary shares in issue during the period, being 93,003,310 (2005:54,476,950). The fully diluted loss per share is based on the loss for the financial perioddivided by the weighted average number of shares and potential shares being93,003,310 in issue during the period: 30 June 2006 30 June 2005 £ £Ordinary shares 93,003,310 54,476,950Effect of options and warrants issued at fairvalue 1,634,941 - -------- --------- 94,638,251 54,476,950 ======== ========= 6 Cash generated from operations Six months Period ended 30 ended 30 June June 2005 2006 £ £Operating loss (613,260) (3,878,153)Impairment ofgoodwill - 3,386,878Depreciation ofproperty, plantand equipment 9,632 5,091Decrease inreceivables (19,990) 5,684Increase inpayables 17,165 173,208 -------- ---------Net cash outflowfrom operatingactivities (606,453) (307,292) ======== ========= This information is provided by RNS The company news service from the London Stock Exchange