Minco PLC Regulatory News (MIO)

31 Jan 2005 07:00

Minco PLC31 January 2005 MINCO PLC Interim Report for the Six months from 1st May to 31st October 2004 Minco Plc, the international precious metals development and exploration companyis pleased to announce its interim, unaudited, results for the six months ended31 October 2004. Highlights •Significant progress towards precious metals production •Raised £4.5m in November 2004, the majority from institutional investors •Drilling programme and feasibility study concluded on Laguna silver tailings project, showing 2.35 million ounces of silver production a year at an operating cost of US$2.28 per ounce (current silver price US$6.50 to US$7.00 per ounce) for an initial 8 year period. •Finalising the award of a bankable feasibility study on Laguna project with a view to reaching a production decision in the second half of 2005. •Secured a 50% stake in potential world class silver, gold and copper property in Mexico, Minera Sisa (subject to completion), which has a small fully equipped underground mine and process plant requiring refurbishment, together with substantial potential inferred silver, gold and copper resources. •Ongoing evaluations of precious metal projects in Mexico and elsewhere with near term production or advanced exploration to add to the excellent existing project portfolio. Minco Strategy Your Company's strategy is to develop world class resources and to generateearly cash flow through low cost per ounce silver and gold production. Theevaluation of new opportunities with the view to acquisition and management isan integral part of the strategy to accelerating these objectives.Our strategic focus on silver and gold projects has been validated by the risein these metal prices over the last 18 months, with silver prices of overUS$6.00 per ounce and gold of over US$400 per ounce. Our new project, MineraSisa, with its near term production capability, will help add to our silver andgold portfolio whilst adding copper - another metal with an exciting price riseover the last 18 months - to our metals portfolio.Going into 2005 we are well funded with an exciting portfolio of Mexican silver,gold and copper assets and we believe our ability to achieve our objectives hasbeen significantly enhanced over the past six months. Operating Activities Laguna - Mexico Following completion of the feasibility report in October 2004 on the Lagunasilver tailings project, which shows a very attractive return on investment, weare finalising the award of the bankable study contract. This contract should becompleted during the second half of 2005 and will allow us to make a productiondecision and secure project finance to construct the production facilities.Initial discussions with banks to supply project finance for construction havebeen positive. The feasibility study, which included a 216 drillhole programme, reports thatthe project will produce 2.35 million ounces of silver a year at an operatingcost of $2.28 an ounce of silver over an 8 year project life. This shouldgenerate US$10 million a year in operating profit from an initial capitalrequirement of US$ 20 million. These figures may be enhanced if the tailings onthe surrounding dry land are also included. Minera Sisa - Mexico As this interim statement was being finalised, Minco secured a 50% share inMinera Sisa in the Sierra Madre gold and silver belt in Durango, Mexico, aregion which has seen historical production of 40 million ounces of gold andover a billion ounces of silver. A small family owned underground mine has beenworking intermittently on the property since 1967. The mine includes 17 levelsfrom a 220 metre deep shaft and is equipped with a 100 ton a day process plant,trackless mining equipment and support buildings. An independent study in 2002indicated a resource potential of 10 million tonnes at average grades of 480grammes per tonne silver and 4.2 grammes per tonne gold together with coppercredits, in total equivalent to over 12 grammes per tonne gold. These resourceshave not been classified to JORC standards, and may change when classified tothese standards. Our technical personnel are now working on programmes to meet three immediateobjectives: • To qualify the resources as soon as practicable • A regional exploration programme looking for major open pit deposits • Studies for the rehabilitation and expansion of the underground mine. We believe that this project is potentially well ahead of anything else we haveseen in Mexico or Russia and have committed an initial US$2 million towards itsinitial development in addition to acquisition costs of US$2.4 million. Theagreement includes Minco acquiring Board control and provisions for increasingthe shareholding in the event that one shareholder is unable to meet any futurefunding requirement in advance of the initial US$2 million. The contract isconditional, inter alia, upon the transfer of certain properties from our newco-shareholders into Minera Sisa. Russia and Ireland In Russia we are finalising plans for our Vodorazdelnoye project, however overthe past months management has needed to focus on the Minera Sisa acquisitionresulting in the development of our Russian property - and our Zacatecasexploration properties - being delayed. In Ireland, drilling continued with ourjoint venture partner Noranda at Pallas Green, and they have proposed asignificant drilling programme in 2005. Drilling results demonstrated anincrease to the already known mineralised zone. Recent increases in zinc andother base metal prices make us hopeful that demands for zinc will stimulaterenewed interest in this and our other base metals projects. Corporate We have changed the year end to 31 December so as to align the Company'saccounting reference date with certain of its subsidiary companies which own andoperate the majority of the Company's operations and which are registered incountries where the statutory accounting reference date is 31 December. Thismeans that we will be producing financial statements for the eight months from1st May to 31 December 2004 which will be sent to shareholders by 30 June 2005. Outlook The bankable study on Laguna will be completed during the second half of 2005and the initial discussions with banks to provide project finance forconstruction are positive. Elsewhere in Mexico, our new 50% owned Minera Sisaproject will become the focus of a good deal of our activity. In Russia, we arefinalising plans for Vodorazdelnoye and in Ireland steady progress is being madeon our base metal projects. The outlook for the Company is very positive with a management, focussed on thecreation of shareholder value, continuing to pursue its strategy. Minco is nowbuilt on the solid foundations of an excellent portfolio of projects and is wellfunded to continue development of the projects. Roger W. Turner Chairman.28 January 2005 Financial Information (unaudited) 6 Months 6 Months ended ended 31 Oct, 2004 31 Oct, 2003 •'000 •'000 OPERATING LOSS - Continuing activities (276) (61)- Acquired activities - (4) (276) (65) Exceptional item PROFIT ON DISPOSAL OF ASSETS - 77Interest income 29 - (LOSS)/PROFIT BEFORE TAXATION (247) 12 Taxation - - (LOSS)/PROFIT AFTER TAXATION (247) 12 (Loss) / Profit per Share (0.26c) 0.03c Group Profit and Loss There were no recognised gains or losses other than those included in the profitand loss account. Group Balance Sheet 6 Months 6 Months ended ended 31 Oct, 2004 31 Oct, 2003 •'000 •'000 FIXED ASSETS Intangible assets 6,586 5,433 CURRENT ASSETS Bank (Note 8) 1,016 460 Debtors 13 104 1,029 564 CREDITORS Amounts falling due within one year (485) (457) NET CURRENT ASSETS/(LIABILITIES) 544 107 NET ASSETS 7,130 5,540 CAPITAL AND RESERVES Called-up share capital 3,562 3,340Share premium account 8,351 6,564Profit and loss account - (deficit) (4,787) (4,409) Capital conversion reserve fund 45 45Currency translation reserve (41) - SHAREHOLDERS' FUNDS 7,130 5,540 EQUITY 4717 3,137NON-EQUITY 2,413 2,413 7,130 5,540 Group Cash Flow Statement 6 Months 6 Months ended ended 31 Oct, 2004 31 Oct, 2003 •'000 •'000 Net Cash outflow from operating activities (176) (264) Returns on investments and servicing of finance Interest Received 29 0 C Capital expenditure and financial investment Payment in respect of intangible assets (785) (2,415) Net Cash Outflow from capital investment andfinancial investment (756) (2,415) Acquisitions and disposals Purchase of subsidiaries - (203)Net cash acquired with subsidiaries - 433Sale of subsidiaries - 77 Net Cash Outflow from acquisitions and disposals - 307 Net Cash outflow before use of liquid resourcesand financing (932) (2,372) FinancingShare capital issued for cash - 2,809Cost of issue of share capital - - Net Cash Flow from financing - 2,809 Increase / (decrease) in cash (932) 437 Notes: 1 No dividend is proposed in respect of the period. 2 The results for the period are all derived from continuing activities (2003 - includes a €4,000 operating loss for the period 10th - 31st October 2003 for Orca Group acquired in October 2003) 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 94,975,287 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 which will be adopted in the audited accounts for the eight month period ending 31 December 2004. 5 The interim report is unaudited and does not constitute Statutory Accounts as defined in S.148 of the Companies Act 1963. A copy of the Group's 2004 Statutory Accounts has been filed with the Companies Registration Office. The auditors' opinion on these Statutory Accounts was unqualified. 6 The Interim Report for the six months to 30 October 2004 was approved by the Directors on 28 January 2005. 7 In 2003, the profit on sale reflects the sale on 25 June 2003 of Minco's 100 per cent interest in a subsidiary, which contributed to the Company's profit before tax of €12,000. 8 In November 2004, Minco announced it had completed a placing for cash of £4.5m which will increase the figure held in these financial statements at 31 October 2004. Copies of this announcement will be sent to shareholders and will be available for inspection at the Company's registered office at 162 Clontarf Road, Dublin 3, Ireland For further information Matthew Dorman, CEO. Tel: +44 20 7947 3238/mldorman@minco.ie Roger Turner, Chairman. Tel +44 (0) 1273 495500/rwturner@minco.ie Richard Thornton, Director Tel.+44 (0) 20 7947 3238/rfthornton@minco.ie Laurence Read, Conduit PR Tel +44(0) 20 7936 9095/laurence@conduitpr.com (0)797 995 5923 MINCO is a precious metals development and exploration company listed on the AIM market in London. Ticker symbol (MIO), www.minco.ie This information is provided by RNS The company news service from the London Stock Exchange