Minco PLC Regulatory News (MIO)

28 Sep 2007 07:03

Minco PLC28 September 2007 MINCO PLC Interim Report for the six months ended 30 June 2007 London, 28 September, 2007 - Minco plc (MIO), the London AIM quoted precious andbase metals exploration and development company is pleased to report its interimresults for the six months ended 30 June 2007. MINCO OPERATIONS Minco is involved with exploration and project developments in Ireland andMexico and has focused on base metals and also precious metals, namely lead,zinc, copper and silver. There has been a dramatic upward trend in the prices ofthese metals. At the time of writing, the silver price is US$13.50 an ounce,zinc US$2,860 a tonne, lead $3,450 a tonne and copper US$7,930 a tonne. Twoyears ago these prices were $7.50, $1,200, $1,000 and $4,000 respectively. It has been an important year for Minco, a year in which the consolidation ofactivities in Mexico was started, and through the advancement of the Bilbaoproject, the goal of transforming Minco from essentially a single projectcompany to one with several near-term production opportunities was achieved.Exploration efforts at Bilbao have been rewarding and have resulted in thedefinition of a significant precious and base metal resource within a shortperiod of time. Bilbao Project During the first half of 2007, following the completion of the drillingprogramme that discovered the sulphide resources below the oxides, Mincocompleted a pre-feasibility study on the deeper sulphide deposits and updated anearlier pre-feasibility study on the near-surface oxide resource. These studiesshow that both the open pit mine oxide and underground mine sulphide projectsare economically robust. Minco plans to carry out further infill drilling toupgrade both the sulphide and oxide resources and bring them to conformity withNI 43-101/JORC standards. This will continue with a programme of step-outdrilling to add additional tonnage to the resource and complete furthermetallurgical testing. This work will form part of two detailed feasibilitystudies, the open pit oxide mine and underground mine on the underlying sulphidedeposit. Laguna Project At Laguna, alternatives for mining, processing and tailings disposal have beenstudied but the rapid advancement of the Bilbao project and necessity to husbandfinancial resources carefully meant that a definitive conclusion on a number ofthese issues has not yet been reached but will be addressed in the coming monthswith a view to finally bringing Laguna to a construction financing decision. Mexican Exploration Minco has acquired a number of additional exploration licences in the PanfiloNatera district surrounding Bilbao and now has over 18,000 hectares ofprospective exploration ground on which a number of targets have been identifiedthat are ready for initial drill testing. These targets could represent a numberof different types of mineral deposit for which the area has potential,including replacement-type massive sulphides (as found at Bilbao), volcanogenicmassive sulphides (as found at the nearby San Nicholas deposit), and high gradesilver-zinc vein systems (as encountered already at Bilbao and at the nearbySanta Rita and San Jose mines). Minera Sisa (Santa Cruz Project) As part of the rationalization of its Mexican interests Minco recently announcedthe sale of its 50% interest in Minera Sisa, S.A. de C.V. to a local partner fora consideration of US$3.5 million to be received in tranches over the next twoyears. The first payment of US$400,000 was received in July. In the event thatany of the payments are not made, Minco has the right to reacquire the full 50%interest for a consideration of US$2,500. Pallas Green Project At Pallas Green, in Co. Limerick, results obtained from the drilling carried outin 2006 were particularly encouraging and clearly indicated that theCaherconlish area had the potential to host a major zinc deposit. This has beenborne out during the first 8 months of 2007 as drilling has continued to deliververy promising results with some very wide intervals of sulphide mineralizationbeing intersected at the Tobermalug prospect (Caherconlish North) and with someof the highest zinc and lead values ever reported from any of the Irish basemetal deposits. In May the number of diamond drills employed was increased fromtwo to five rigs. A recent evaluation of the drilling carried out by Peter Tyler, Minco'sconsulting geologist, suggests that the size and extent of the mineralizingprocess at Tobermalug appears to be significantly persistent and widespread.Minco believes that the main "core" zones of high grade mineralization expectedto be associated with such mineralization will be located in an area to thesouth and west of the current drilling. Minco believes that these potentialareas of "core" mineralization will contain thicker and higher grademineralization than encountered to date and will occur adjacent to majorcontrolling fault structures. Financing & Restructuring Minco completed a small financing in London in July 2007 when 7,500,000 shareswere placed for total proceeds of £525,000. On September 19th 2007 the outcome of negotiations with Pacific Road CapitalManagement Pty Limited (PRCM), an Australian based private resource equity fund,was announced pursuant to which Minco had entered into an agreement for thefinancing of Minco's Mexican projects. As part of the arrangements, the companyhas placed its Mexican assets into a newly registered Ontario company known asOrca Minerals Limited (Orca) in which Minco owns 30 million shares. PCRCM has invested CAN$2.12 million by way of CAN$0.50 Special Warrants in Orcawhich will convert into 4.24 million shares in Orca if it secures a listing onor before March 31st 2008 in Toronto, or other exchange. Subject to further due diligence PRCM will make an initial direct projectinvestment of US$2.75 million in the Bilbao and Laguna projects and have anoption to provide between CAN$2 and CAN$5 million of additional financing or toprovide further project financing which will be convertible into shares of Orcabased on the 30 day average trading price at the time of conversion. Roger Turner, John Kearney, Terence McKillen, Danesh Varma and Ian Smith formthe initial board of directors of Orca Minerals, with Terence McKillen andDanesh Varma, having been appointed President and Chief Executive Officer andChief Financial Officer respectively. Mr. Lee Graber, representing PRCM, willjoin the board of Orca as an independent Director subject to regulatory andother approvals. Under the Agreement with PRCM, if Orca has not achieved a listing of its shareson the TSXV or other Exchange prior to March 31, 2008 the CAN$2.12 million andother investment held by PRCM to a minimum of US$2.75million, will beconvertible at PRCM's option into ordinary shares of Minco at a 10% discount tothe average 30 day trading price at the time of conversion. PCRM has irrevocably and unconditionally undertaken that PCRM shall not conductany activities or effect any transaction pursuant to the Agreement which wouldresult in an event exceeding 75% in any of the class tests provided for in theAIM Rules of the London Stock Exchange plc ('AIM Rules'), to which Minco issubject. PCRM and Minco have also irrevocably and unconditionally undertakenthat if PCRM and Minco agree to conduct any activities or effect any transactionpursuant to the Agreement which would result in a figure exceeding 75% in any ofthe class tests provided for in the AIM Rules, that they will ensure that ameeting of the shareholders of Minco is held in order to approve any suchtransaction in accordance with the AIM Rules. In addition, PRCM and Minco haveconfirmed their commitment to fulfil the terms of the Agreement subject to allregulatory and other consents and authorizations required in all relevantjurisdictions, including but not limited to the AIM Rules and the Irish TakeoverCode. The Future Minco is now positioned to reap the benefit of significant and sustainablefinancing for its Mexican assets which should lead to an early productiondecision on one or more of the development projects, to continue with itsexploration programmes in Zacatecas and to be in a position to participate fullyin the development of the ongoing discoveries at Pallas Green. Roger Turner Chairman & CEO Financial Information (unaudited) Consolidated Income Statement6 Months Ended June 2007 6 Months ended 6 Months ended 30 June 2007 30 June 2006 $000 $000 General and administration expenses (441) (664) Foreign exchange loss - (145) (441) (664) Operating loss (441) (664) Interest income 10 105 Loss before taxation (431) (559) Taxation - - LOSS AFTER TAXATION (431) (559) Loss per share (0.27c) (0.35c) Consolidated Balance Sheet As at 30 June 2007 30 June 2007 31 Dec 2006 Notes $000 $000 FIXED ASSETSIntangible assets 5 14,979 17,057Sale proceeds receivable 5 3,150 CURRENT ASSETSCash and bank 274 1,842Debtors 5 145 91 419 1,933CREDITORSAmount falling due within one year (539) (694) NET CURRENT ASSETS (120) 1,239 NET ASSETS 18,009 18,296 CAPITAL & RESERVESCalled-up share capital 4,465 4,449Share premium account 21,049 20,936Share option reserve 6 291 168Foreign currency translation reserve 1,098 1,159Profit and loss account - deficit (8,933) (8,458)Capital conversion reserve fund 39 39 SHAREHOLDER'S FUNDS 18,009 18,293 MINORITY INTEREST 3 - 18,009 18,296 Analysed as: EQUITY 15,903 16,190NON-EQUITY 2,106 2,106 18,009 18,296 Consolidated Cash Flow Statement As at 30 June 2007 6 Months ended 6 Months ended 30 June 2007 30 June 2006 Notes $000 $000 Operating loss (441) (664)Add: Share-based payment charge 6 123 50 Operating cash flow before movements in (318) (614)working capital Decrease in creditors (155) (44)(Increase)/decrease in trade debtors (54) (143) Net cash outflow from operating activities (527) (801) Returns on investments and servicing offinance Interest received 10 105 Capital expenditure and financial investment Payment in respect of intangible assets (1,072) (1,175) Net cash outflow from capital investment and (1,062) (1,070)financial investment Net cash outflow before use of liquid (1,589) (1,871)resources and financing FinancingShare capital issued for cash 129 - Net cash in flow from financing 129 - Effect of foreign exchange rate changes (108) (15) Decrease in cash (1,568) (1,886) Consolidated Statement of Changes in Equity 6 months ended 30 June 2007 Called-up Share Capital Foreign Share Retained Total Share Premium Conversion Currency Option Earnings Capital Account Reserve Fund Translation Reserve Reserve $000 $000 $000 $000 $000 $000 $000 Balance as at 1January 2006 4,431 20,639 39 360 158 (7,152) 18,475 Proceeds on shareissue 18 297 - - - - 315 Share-based payments - - - - 50 - 50charge Movement in Foreign - - - 474 - - 474Currency TranslationReserve Loss for the period - - - - - (559) (559) Other recognised - - - - - (341) (341)income and expense Balance as at 30 June2006 4,449 20,936 39 834 208 (8,052) 18,414 Balance as at 1January 2007 4,449 20,936 39 1,159 168 (8,458) 18,293 Proceeds on shareissue 16 113 - - - - 129 Share-based paymentscharge - - - - 123 - 123 Movement in Foreign -Currency TranslationReserve - - - 61 - - 61 Loss for the period - - - - - - - 431 431 Other recognised - -income and expense - - - - - 44 44 Balance as at 30 June 4,465 21,049 39 1,098 291 (8,933) 18,0092007 Notes: 1. No dividend is proposed in respect of the period. 2. The calculations of loss per share have been based on the retained loss after taxation for theperiod and on a weighted average ordinary shares of 160,428,857 (June 2006 - 159,673,580) in issueduring the period. 3. The interim unaudited results have been prepared on a going concern basis and in accordance withInternational Financial Reporting Standards (IFRSs). The comparative financial information set out inthis report is based on the financial statements of the Group which were prepared in accordance withaccounting policies adopted in the audit accounts for the year ended 31 December 2006. The underlyingfinancial information has been restated in accordance with IFRSs. The adoption of IFRSs has nosignificant impact on the accounting policies and resulted in no adjustments to the results and netassets of the group for the 6 months ended 30 June 2007. 4. The interim report is un-audited and does not constitute Statutory Accounts as defined in S.148 ofthe Companies Act 1963. A copy of the Group's 2006 Statutory Accounts has been filed with theIrish authorities. The auditors' opinion on these statutory Financial Statements was unqualified. 5. On 14 June 2007 the Company sold its 50% interest in Minera Sisa for US$ 3.5 million to SilverexSA de CV, a Mexican Company allied to the partner on the project. Accordingly $3.15m (net ofcommission) has been shown as receivable.The main features of the agreement are:> US$400,000 was payable on or before July 2, 2007> A further US$400,000 is payable on or before 15th June 2008> A further US$ 2,200,000 is payable on or before 31st December 2009> In addition, two cash payments of US$250,000 each due respectively on or before 31st December 2010and 31st Dec 2011, or at Minco's election, a net smelter royalty of 0.5% on production from theMinera Sisa properties> In the event of non payment of the above payments, Minco has the right to reacquire a 50% interest inMinera Sisa for a consideration of MN$25,000 (US$2,500). 6. IFRS 2 'Share-based Payments' requires the recognition of share-based payments (which in the caseof the group during the period are share options only) at fair value at the date of grant. The fairvalue of the options to be expensed has been determined by a Black-Scholes option pricing model using avolatility factor of 69.16% and an option life of 7 years as the significant assumptions. 7. The following is an analysis of the total recognised income and expenses. 30 June 2007 30 June 2006 $000 $000 Loss for the period (431) (1,018) Exchange losses on foreign currency net investments (44) (288) Prior year adjustment (158) Total recognised losses for the period (475) (1,464) 8. On 30 July 2007 the company raised gross proceeds of £525,000 following the issue of 7,500,000shares for cash. 9. The Interim Report for the six months to 30 June 2007 was approved by the Directors on 21September 2007. Copies of this announcement will be sent to shareholders and will be available for inspection atthe Company's registered office at Connaught House, Burlington Road, Ballsbridge, Dublin 4, Ireland. About Minco: Minco PLC is an AIM quoted precious and base metals exploration and developmentcompany with silver projects in Mexico and zinc exploration in Ireland. For further information, www.minco.ie or contact:Roger Turner: Executive Chairman & CEO +44 (0)20 7397 8155Terence McKillen: Director of Exploration & Business Development +1 416 362 6686/8243Danesh Varma, CFO & Company Secretary +44 (0)20 7397 8154Oliver Quarmby / Mark Connelly: (UK NOMAD) Collins Stewart +44 (0)20 7523 8350Nick Bias: (UK IR & PR) BuckBias +44 (0)7887 920 530Tom McCormack (Ireland PR) ConneXions +353 (0)1 230 3015 This information is provided by RNS The company news service from the London Stock Exchange