Minco PLC Regulatory News (MIO)

28 Sep 2006 11:19

Minco PLC28 September 2006 Minco plc Interim Report for the six months ended 30 June 2006 London: Thursday, 28 September 2006 - AIM-quoted precious and base metalsexplorer and developer Minco plc ("Minco" or the "Company") is pleased to reportits interim results for the six months ended 30 June 2006. HIGHLIGHTS ZACATECAS - MEXICO - EXPLORATION • Major zinc and silver sulphide zones discovered below the "near surface" resources at Bilbao. Three drillholes have now intersected a major zone of sulphide mineralisation approximately 25 to 30 metres wide at a depth of approximately 150 metres below surface. • 14 additional silver-zinc drill targets at El Morro discovered by geochemical surveys and prospecting. • 4,000 metres of planned 8,000 metre diamond drill programme completed to-date to upgrade and increase Bilbao resources and investigate geochemical targets. Majority of assay results awaited. • Three drills currently working on Bilbao and El Milagros. • Exploration licence holdings in Zacatecas region of Mexico increased from 5,700 hectares to 7,100 hectares with the acquisition of up to 75% interest in the Bilbao property in March 2006. Bilbao adjoins the 5,200 hectare 100% owned El Morro property. • Bilbao historic "near surface" open pit oxide resources at 2.44 million tonnes of 93 grammes per tonne silver and 7.4% combined zinc, copper and lead. ZACATECAS - MEXICO - LAGUNA SILVER TAILINGS • Micon International feasibility study completed. • 7.93 million tonnes measured and indicated tonnes of resource at 58.76 grammes per tonne silver and 317 grammes per tonne mercury. • Lower capital cost VAT leach process alternative being pursued for targeted 2007 construction and production. Behre Dolbear consultants review of alternative completed. MINERA SISA - DURANGO - MEXICO • Large claim holding on Sierra Madre epithermal silver gold belt • 50% shareholding and management with earn-in rights to 90% • Historic bonanza grade silver deposits and 7,000 metre zone of alteration with silver, zinc, copper, gold mineralization PALLAS GREEN - IRELAND • Extensive zinc - lead massive sulphide mineralization intersected in the Pallas Green Trend, a similar geological setting to the Lisheen and Galmoy mines. • 4 drills currently working • 100 drill holes completed to-date with extensive sulphide mineralization over 10 metres in thickness with up to 28.8% zinc and 3.7% lead over 3.7 metre intersection. • Pallas Green comprises 9 prospecting licences over a 315 square kilometre area in Limerck & Tipperary • Minco has a 23.6% interest in Pallas Green with JV partner Falconbridge (now Xstrata). • Minco is one of the largest exploration concession holders in Ireland. OUTLOOK Commenting on the results, Minco's Chairman, Roger Turner, said "Minco has madeconsiderable advances during the first half of 2006. "We recently acquired the Bilbao property near Zacatecas in Mexico which hasopen pit zinc, silver and copper resources. The initial drilling programmeintersected 30 metres of massive sulphides beneath the existing resources and wenow have three drills working on an 8,000 metre drill programme, 4,000 metres ofwhich has been completed. Assay results are slow but the visual intersectionsare clear. This, we believe, could be a world class deposit. In Ireland thereare four drills working on Pallas Green drilling on a regional basis within thetotal 315 square kilometre licence area. The understanding of the regionalgeology is clearer and the machines will now be probing the known areas ofmineralisation. We have two potentially world class zinc and silver explorationprojects in Ireland and Mexico and all exploration activities are nowconcentrated on these two properties. We have been investigating the potentialof VAT leaching the Laguna tailings and the results of this low capital costalternative look good. This will resolve some of the environmental and tailingsdisposal issues we were faced with earlier in the year. During the year thewater level in the lake dropped dramatically and an alternative to the dredgingoperation is now proposed. We are working towards initial silver production bymid 2007. We are also investigating other near term production acquisitions.There have been some disappointments over the early part of the year but Ibelieve the new approach to Laguna and the results from Bilbao and Pallas Greenputs these behind us and the future is exciting " MINCO OPERATIONS ZACATECAS - MEXICO - EXPLORATION Minco signed the acquisition agreement with Shoshone Silver Mining Company toacquire a 75% interest in the Bilbao property in March 2006. This property,covering some 1,396 hectares adjoins the 100% owned 5,214 hectare El Morroproperty already owned by Minco. Bilbao had been a producing mine until it closed in 1945. Watts, Griffis andMcOuat Limited, consulting geologists in Toronto, had estimated the remainingoxide resources at Bilbao, to a depth of 76 metres, to be 2.44 million tonnescontaining 3.73 % zinc, 93 grammes per tonne silver, 0.4% copper and 3.27% lead.An open pit mine, with a 2.6:1 stripping ratio, was designed. On closing the acquisition Minco decided to investigate the potential below the76 metre horizon for primary sulphide mineralization. Major sulphide and oxidemineralization was encountered. Three drillholes have now intersected a majorzone of sulphide mineralisation approximately 25 to 30 metres wide at a depth ofapproximately 150 metres below surface. These zones contain strongly developedzinc, silver, lead and copper mineralisation which ranges up to approximately10% combined lead and zinc and as high as 25% combined lead and zinc over morelimited widths. To date a total of 4,000 metres in 18 holes has been completed of a planned8,000 metre drilling programme. Most of the assay results have not yet beenreceived due to the overload of assay laboratories worldwide. We are followingup on this success with three drilling rigs currently deployed at Bilbao and thenearby El Morro / Milagros licences. Minco now controls a dominant 7,100 hectare land position, within this highlyprospective area and our geochemical exploration programme has already located14 additional drill targets on the El Morro licence which will be followed bydrilling. Minco is excited about this recent development and believe we may havediscovered a major "volcanogenic massive sulphide" (VMS) deposit in the vicinityof the Teck Cominco 87 million tonne San Nicolas zinc, silver copper property. ZACATECAS - MEXICO - LAGUNA SILVER TAILINGS Over the period, Minco has reviewed the Laguna project in order to optimisefinancial returns through reduced capital and operating costs. Minco has beenable to simplify the project flowsheet through examination of vat-leachingtechnology which is already well established in the Zacatecas area. At the endof the recent wet-season, the lake remains largely dry and consequently Minco isreviewing the appropriateness of conventional mining in preference to thehydraulic mining methods originally envisaged. As a result of its reviews, Minco considers that a smaller scale vat-leachingproject processing 325,000 tonnes per year of tailings offers the opportunity tomove rapidly to project construction and to production from Laguna by mid 2007.As well as providing Minco with a production base, the modular nature of thevat-leaching process lends itself to subsequent incremental expansions fundedfrom cash-flow while maintaining the flexibility to pursue other opportunitiesas they arise. MINERA SISA - DURANGO - MEXICO During the first quarter of the year work at Minco's 50% owned Minera Sisaproperty in Durango State of Mexico continued with refurbishing and samplingunderground workings, drilling and geochemical surveys. Having closed theacquisition of the Bilbao property from the Shoshone Silver Mining Company inMarch 2006 drilling activity was diverted from Minera Sisa to Bilbao whereresources had already been determined by Watts Griffiths & McQuat. PALLAS GREEN - IRELAND Drilling at Pallas Green has outlined extensive zinc mineralisation underlyingour Pallas Green exploration licences in Ireland. In conjunction with ourpartner, Falconbridge (now Xtrata), we currently have four drilling rigs inoperation to test a portion of the Pallas Green Alteration Trend, a zone ofstructural and hydrothermal complexity which extends over a distance of morethan 20 km. This zone is analogous to the Rathdowney Trend which hosts theLisheen and Galmoy zinc deposits. Significant zinc mineralisation has now beendiscovered at the eastern end of the Pallas Green Alteration Trend atCastlegarde and near the western end adjacent to Srahane and Caherconlish. METAL PRICES During the period under review, the London silver price rose by 18% to $10.70/ozon 30th June. Since then, despite continuing volatility, silver prices havestabilised and currently stand at approximately $11/oz. Most base metals priceshave also performed strongly with zinc and copper prices rising by 71% and 65%respectively during the six months to 30th June 2006. Both zinc and copperprices have continued on a rising trend in recent weeks and currently stand at$3,430/t and $7,679/t - respectively some 79% and 69% above the prices at thebeginning of 2006. Although the lead price exhibited a seasonal decline in price during the firsthalf of the year, lead currently stands at $1,413/tonne, 28% above the price atthe beginning of the year. QUALIFIED PERSON The information presented in this press release has been reviewed and verifiedby Mr. Terence N McKillen, B.A. (mod), M.A., M.Sc., P.Geo, Director ofExploration and Business Development. Mr. McKillen is the Qualified Person forthe purposes of the AIM Guidance Note on Mining, Oil and Gas Companies datedMarch 2006. Mr. McKillen is a graduate in Geology from Trinity College Dublinand holds a Master of Science degree in Economic Geology from the University ofLeicester in the UK. He has over 38 years of exploration experience. Roger Turner Chairman 28 September 2006 Financial Information (unaudited) Consolidated Profit & LossAccount6 Months Ended June 2006 6 Months ended 6 Months ended Year ended Friday, June 30, Thursday, June 30, Saturday, December 2006 2005 31, 2005 €000 $000 €000 $000 €000 $000 General and administration (424) (519) (482) (679) (1,029) (1,314)expenses Foreign exchange gain/ (118) (145) 320 488 376 479(loss) (542) (664) (162) (191) (653) (835) Operating loss- Continuing activities (542) (664) (162) (191) (653) (835) Interest income 86 105 86 108 132 169 Loss before taxation (456) (559) (76) (83) (521) (666) Taxation (22) (28) LOSS AFTER TAXATION (456) (559) (76) (83) (543) (694) Loss per share (0.29c) (0.35c) (0.01c) (0.01c) (0.39c) (0.50c) Consolidated BalanceSheetAs at 30 June 2006 30 June 2006 30 June 2005 31 December 2005 Notes €000 $000 €000 $000 €000 $000 FIXED ASSETSIntangible Assets 12,650 14,164 9,864 10,947 11,310 12,674 CURRENT ASSETSCash and bank 3,782 4,757 3,779 4,486 5,562 6,643Debtors 197 248 58 69 88 104 3,979 5,005 3,837 4,555 5,650 6,747CREDITORSAmount falling due (598) (752) (826) (992) (666) (795)within one year NET CURRENT ASSETS 3,381 4,253 3,011 3,563 4,984 5,952 NET ASSETS 16,031 18,417 12,875 14,510 16,294 18,626 CAPITAL & RESERVESCalled-up share 4,380 4,449 4,106 4,126 4,365 4,431capital Share premium 17,850 20,936 14,133 16,554 17,604 20,639account Share option reserve 6 165 208 104 125 132 158Profit and loss (6,410) (7,218) (5,512) (6,334) (5,853) (6,644)account - deficitCapital conversion 44 39 44 39 44 39reserve fund SHAREHOLDERS' FUNDS 16,029 18,414 12,875 14,510 16,292 18,623 MINORITY INTEREST 2 3 - - 2 3 16,031 18,417 12,875 14,510 16,294 18,626 Analysed as: EQUITY 13,618 15,383 10,462 11,476 13,881 15,592NON-EQUITY 2,413 3,034 2,413 3,034 2,413 3,034 16,031 18,417 12,875 14,510 16,294 18,626 Consolidated Cash FlowStatementAs at 30 June 2006 6 Months ended 6 Months ended Year ended Friday, June 30, Thursday, June Saturday, December 2006 30, 2005 31, 2005 Notes €000 $000 €000 $000 €000 $000 Operating loss (542) (664) (162) (191) (653) (835)Add: Share based payments 6 33 50 28 35 56 71 Operating Cash flow before movements (509) (614) (134) (156) (597) (764)in working capital (Decrease)/Increase in (68) (44) 283 252 102 28Creditors(Increase)/decrease in Debtors (109) (143) (14) (10) (44) (45) Net Cash Outflow from (686) (801) 135 86 (539) (781)operatingactivities Returns on investments andservicingof financeInterest received 86 105 86 108 132 169 Capital expenditure andfinancial investment Payment in respect of (1,079) (1,175) (3,334) (4,181) (4,781) (5,908)intangible assets Net Cash outflow from capital (993) (1,070) (3,248) (4,073) (4,649) (5,739)investment and financialinvestment Acquisitions and disposalsPurchase of subsidiaries - - (2) (2) (2) (2) Net Cash Outflow from - - (2) (2) (2) (2)acquisitions and disposals Net Cash Outflow before use of (1,679) (1,871) (3,115) (3,989) (5,190) (6,522)liquid resources and financing FinancingShare Capital issued for cash - - 296 429 4,026 4,819 Net Cash In Flow from - - 296 429 4,026 4,819financing Effect of foreign exchange (100) (15) (46) (1,106) 82 (803)rate changes Decrease in cash (1,779) (1,886) (2,865) (4,666) (1,082) (2,506) Consolidated Statement of Total Recognised Gains and LossesAs at 30 June 2006 6 Months ended 6 Months ended Year ended Friday, June 30, Thursday, June Saturday, December 2006 30, 2005 31, 2005 •'000 $'000 •'000 $'000 •'000 $'000 Loss for the period (456) (559) (76) (83) (521) (666)Exchange (losses) / gains on foreign (100) (15) (46) (1,106) 82 (803)currency net investments Total recognised losses for the (556) (574) (122) (1,189) (439) (1,469)period Notes: 1. The company has changed the reporting currency from Euros to US Dollarseffective January 1, 2006 and the resulting increase in Total Recognised Gainsof $ 483,000 have been credited to the Profit and loss account - deficit. 2. No dividend is proposed in respect of the period. 3. The calculations of loss per share have been based on the retained lossafter taxation for the period and on a weighted average ordinary shares of159,673,580 (Jun 2005 - 136,129,847 & Dec 2005- 139,801,640 ordinary shares) inissue during the period. 4. The un-audited results have been prepared on a going concern basis andon the basis of the accounting policies adopted in the audited accounts for theyear ended 31 December 2005 presented for ease of comparison in Euros and USDollars. 5. The interim report is un-audited and does not constitute StatutoryAccounts as defined in S.148 of the Companies Act 1963. A copy of the Group's2005 Statutory Accounts has been filed with the Irish authorities. The auditors'opinion on these statutory Financial Statements was unqualified. 6. FRS 20 'Share-based Payments' requires the recognition of share-basedpayments (which in the case of the group during the period are share optionsonly) at fair value at the date of grant. Prior to the adoption of FRS 20, thegroup did not recognise the financial effect of share-based payments. Inaccordance with the transitional provisions of FRS 20, the standard has beenapplied retrospectively to all grants of share options after 29 July 2003 whichhad not vested by 1 January 2006. The fair value of the options to be expensedhas been determined by a Black-Scholes option pricing model using a volatilityfactor of 69.16% and an option life of 7 years as the significant assumptions. For the 6 months ended 30 June 2006, the adoption of the new accounting policyhas resulted in a charge of US$ 50,000 (€33,000) (2005 - originally nil, US$71,000 or • 56,000 when restated) to the profit and loss account. The balancesheet at 31 December 2005 has been restated to reflect share-based paymentsprior to 1 January 2006 of US$ 158,000 (• 132,000), resulting in a cumulativeadjustment of US$ 208,000 (• 165,000) in June 2006 shown as share optionreserve in the Balance Sheet under Capital & Reserves. 7. The Interim Report for the six months to 30 June 2006 was approved bythe Directors on 25 September 2006. Copies of this announcement will be sent to shareholders and will be availablefor inspection at the Company's registered office at 65-68 St Stephen's Green,Dublin 2, Ireland. For further information please contact: Roger Turner, CEO & Chairman +44 (0)7739 92 813 Danesh Varma, CFO +44 (0)20 7397 8154 / (0)7740 932 766 Terence McKillen, Exploration & Business Director +1 416 362 8243 / +1 416 362 6686 Chris Rollason, Collins Stewart +44 (0)20 7523 8308 Alex Buck, BuckBias +44 (0)7932 740 452 This information is provided by RNS The company news service from the London Stock Exchange