Oriole Resources Regulatory News (ORR)

30 Jul 2007 07:01

Stratex International PLC30 July 2007 Stratex International Plc / Index: AIM / Epic: STI / Sector: Mining 30 July 2007 Stratex International Plc, ('Stratex' or 'the Company') Interim Results Stratex International Plc, the AIM-quoted international exploration anddevelopment company currently focusing on gold and base metal opportunities inTurkey, announces its results for the period ended 30 June 2007. Overview • Continued to build on early successes in Turkey, with strategic control over a major emerging gold belt • Advanced flagship Inlice gold discovery to an initial mineral resource estimation of 372,971 contained ounces of gold • Continuing exploration on the Inlice property with further drilling and the completion of prospect-wide soil geochemistry and ground geophysics surveys • Strategic partners, Teck Cominco Limited, optioning Altintepe gold project near the Black Sea coast • Defined gold-silver mineralisation present at Altintepe in large zone of alteration extending over an area in excess of 8 sq km • Advanced strategic association with Teck Cominco through earn-in into three further projects to fast-track exploration and identification of drilling targets in the Konya Volcanic Belt • Raised £7 million following an oversubscribed new share placing in early June 2007 • Strengthened technical team to support growing portfolio with appointment of two senior Turkish geologists • Well positioned to respond to demand of majors looking to grow resource bases Stratex CEO Bob Foster said, "This has been a great six months for Stratex as itcontinues to develop its extensive portfolio of exploration assets in Turkey. Agold resource has been declared at our flagship Inlice discovery and we havesecured Teck Cominco's agreement to fund the next steps of the Konya explorationprogramme; we have optioned the exciting Altintepe gold project from TeckCominco; we have commenced drilling the Muratdere porphyry prospect; and we havesecured substantial funding that will allow us to fast-track exploration of theother licence areas in our excellent portfolio." Chairman's statement The first half of 2007 has been an excellent one for your Company as we havecontinued to build on our early successes in Turkey, where we have strategiccontrol over a major emerging gold belt which we believe has multi-million ozpotential. During the period we advanced the flagship Inlice gold discovery to an initialmineral resource estimation of 372,971 contained ounces of gold in May. Thisresource relates to only a small area of the prospect (the Ana Zone) and as wedrill the prospect, we believe this resource estimate has the potential to beincreased significantly. Importantly, the discovery rate and cost at Inlice of,97 ounces per metre drilled and an overall discovery cost of less than US$2 perounce is something we are very proud of. We are continuing our exploration on the Inlice property with further drillingand also the completion of prospect-wide soil geochemistry and ground geophysicssurveys. Completion of the ground geophysical surveys will enable us todetermine whether the extensive soil-covered areas of the prospect areconcealing gold-bearing material similar to the gold-rich silica ledgeidentified beneath the "Gap" portion of the Ana Zone. We have alreadycommissioned environmental baseline studies and further metallurgical tests onthe gold-bearing material as part of a scoping study of the economics ofexploitation. As we evaluate the resource further, we intend to deliver regularnews on the project. The second major event of the year to date was agreeing, with our strategicpartners Teck Cominco Limited, the optioning of the exciting Altintepe goldproject near the Black Sea coast. We have already reviewed in detail theexisting drill core from the project in tandem with leading consultant Dr.Richard Sillitoe and as a result have defined gold-silver mineralisation asbeing present in a very large zone of alteration extending over an area inexcess of 8 square kilometres. The mineralisation consists of juxtaposedhigh-sulphidation silica zones similar to Inlice and intermediate-sulphidationquartz veins that tend to contain higher concentrations of gold. We areconfident that we have been able to put the existing defined resource, estimatedby Teck Cominco, of 311,543 ounces of gold, into a coherent geological modelthat will drive our exploration of the property. In addition, there is alsogeological evidence to suggest the potential for the discovery of porphyrygold-copper mineralisation. Post reporting period we announced the advancing of the strategic associationwith Teck Cominco which I believe is a strong endorsement of the greaterpotential of the Konya Volcanic Belt that hosts Inlice and numerous otherexciting targets. The Inlice project, being well advanced, has been excludedfrom the agreement, although Teck Cominco retains the right to earn-back in,once Stratex has expended US$2.5 million. The Konya Volcanic Belt hosts a numberof lithocaps, confirmed following exploration work conducted by Stratex for acost of circa £100,000. This deal potentially values the project at £3 millionand advances the strategic association considerably, allowing Teck Cominco toearn back into a further three projects. Exploration and Development ('E&D') isabout adding value. Rather than expending US$2.5 million on three projectsbefore reaching the exercise point, this deal has allowed your Company toachieve an uplift in value for far less expenditure, while remaining exposed tothe high upside potential of the project. We will work closely with Teck Cominco in applying state-of-the-art airbornegeophysics and more importantly their high level of in-house processing andinterpretation expertise. We are also applying regional minus 200 mesh streamsediment sampling, to integrate with the geophysics, to achieve rapid targetidentification. In addition, we have agreed to a 1,000 metre reconnaissancedrill programme at Doganbey, which will add to our geological understanding andporphyry potential of the belt. However more importantly, this agreement allows your Company to focus on whereit can achieve maximum added value in the short and medium term - resourcedrilling at Inlice and Altintepe and definition of porphyry grade at Muratdere. Last but not least, it is clear that our successes in making new discoveries andadding value in this critical E&D business is being recognised by the marketplace. We raised £7 million following an oversubscribed new share placing inearly June, to enable us to fast-track the quality portfolio put together by ourtechnical team. We believe that this reflects the market's acceptance of ourtwo-pronged business model: (i) that Stratex is a true E&D company that adds value at the low-cost end of the resource sector; and (ii) that significant discoveries will be recognised by our strategic partner (Teck Cominco), which has the capability to accept the increased financial exposure and technical risk to take the projects through feasibility and into production. If a new discovery does not have the potential to meet the grade/tonnage criteria that fits Teck Cominco's corporate vision, then there is a large number of other resource-hungry mid-tier mining companies ready and waiting to take on new mining opportunities. We are adding to our excellent technical team led by Bahri Yildiz in Turkey inorder to support our growing portfolio. In line with this, we have justrecruited two senior Turkish geologists with excellent exploration credentialsto assist with managing our exploration programmes. Having firmly established ourselves in Turkey, we now plan to look at new areasoutside the country where your management believes it can repeat its earlysuccesses. This of course will not be a simple task. Areas of genuine geologicalpotential that also have favourable logistical and legal/fiscal regimes are achallenge. However, working with our strategic partners Teck Cominco, we arediligently reviewing where and how Stratex can best operate and achieve rapidsuccess. Rest assured, however, that our major focus will remain on Turkey andon taking forward the excellent projects already established in our portfolio. As we enter the second half of 2007, the strong demand for metals continues. Ibelieve this is not a boom-or-bust cycle. The continuing consolidation ofcompanies within the mining sector is very much a reflection of their need togrow their resource base. However the bottom line is that new discoveries ofgold, silver, zinc, copper, and nickel deposits are urgently needed to supplythis continuing and increasing demand. Stratex is extremely well positioned withits current discoveries and portfolio to respond to this demand, and has thefunds and vision to develop new ideas and projects - the lifeblood of the miningbusiness. I would like to thank wholeheartedly my fellow board members and management ofthe Company for their superb efforts and, most importantly, you the shareholderfor your continuing support for Stratex. David J. HallChairman30 July 2007 Consolidated Income Statement Restated 6 months to 6 months to 12 months to 31 30 June 07 30 June 06 December 2006 Unaudited Unaudited Audited £ £ £Turnover - - -Other operating expenses (573,605) (255,803) (652,474) ---------- ----------- -----------Loss from operations (573,605) (255,803) (652,474)Finance income 43,809 28,726 66,351 ---------- ----------- -----------Loss from ordinaryactivities before tax (529,796) (227,077) (586,123) Tax credit on profiton ordinary activities - - 16,158 ---------- ----------- -----------Retained loss forthe period attributable toshareholders (529,796) (227,077) (569,965) ---------- ----------- ----------- Loss per share -basic and diluted (0.33)p (0.17)p (0.40)p Consolidated balance sheet Restated 30 June 07 30 June 06 31 December 06 Unaudited Unaudited Audited £ £ £ASSETSNon-current assetsProperty, plant & equipment 47,252 16,594 27,961Intangible assets 1,268,849 205,283 731,701Trade and other receivables 67,912 23,842 41,457Deferred tax assets 17,075 - 16,151 ---------- ----------- ----------- 1,401,088 245,719 817,270 ---------- ----------- -----------Current assetsTrade and other receivables 192,593 11,729 140,550Bank balances and cash 7,425,210 1,337,011 1 ,563,170 ---------- ----------- ----------- 7,617,803 1,348,740 1 ,703,720 ----------- ----------- ------------Total assets 9,018,891 1,594,459 2,520,990 ---------- ----------- ----------- EQUITY & LIABILITIES EquityIssued capital 2,335,669 1,374,000 1,536,167Share premium account 8,151,326 1,166,060 2,101,342Other reserves (219,423) (541,151) (368,012)Accumulated losses (1,346,732) (461,454) (816,936) ---------- ----------- ----------- 8,920,840 1,537,455 2,452,561 ---------- ----------- -----------Non-current liabilitiesEmployee termination benefits 1,218 - 1,152Deferred tax liabilities 626 - 593 ---------- ----------- ----------- 1,844 - 1,745 ---------- ----------- -----------Current liabilitiesTrade and other payables 96,207 57,004 66,684 ---------- ----------- ----------- 96,207 57,004 66,684 ---------- ----------- -----------Total equity and liabilities 9,018,891 1,594,459 2,520,990 ---------- ----------- ----------- Consolidated Statement of Changes in Equity Shares Share Share Merger under Accumul- Translation Capital Premium Reserve option ated loss reserve Total £ £ £ £ £ £ £ As at 1January 2007 1,536,167 2,170,743 (485,400) 14,304 (733,997) (49,256) 2,452,561aspreviouslystated Shareoptions- value ofemployee - - - 82,939 (82,939) - -services Shareoptions- expenses - (69,401) - 69,401 - - -ofshare issue As at 1January 2007as restated 1,536,167 2,101,342 (485,400) 166,644 (816,936) (49,256) 2,452,561 Issue ofordinaryshares 799,502 6,309,122 - - - - 7,108,624 Shareoptions- value ofemployee - - - 117,922 - - 117,922services Shareoptions- value of - 36,571 - (36,571) - - -sharesissued Costs ofshare - (295,709) - - - - (295,709)issue Consolidatedloss for theperiod - - - - (529,796) - (529,796) Movement ontranslationreserve - - - - - 67,238 67,238 . . . . . . . As at 30June 2,335,669 8,151,326 (485,400) 247,995 (1,346,732) 17,982 8,920,8402007 Consolidated cash flow statement Restated 6 months to 6 months to 12 months to 31 30 June 07 30 June 06 December 2006 Unaudited Unaudited Audited £ £ £ Cash inflow from operating activities Loss before tax (529,796) (227,077) (586,123)Interest income (43,809) (28,726) (66,351)Depreciation 6,742 2,555 4,600Employee servicesfor grant of shareoptions 117,922 12,594 97,243Exchange (loss)/gain 7,913 (17,673) (5,504) ---------- ----------- ----------- Operating lossbefore changes inworking capital (441,028) (258,327) (556,135)(Increase)/decreasein other receivablesand prepayments (78,498) 7,139 (139,297)Increase in tradepayables 29,588 22,336 33,168 ---------- ----------- -----------Net cash outflowfrom operatingactivities (489,938) (228,852) (662,264) ----------- ----------- -----------Cash flows from investing activitiesPurchase ofintangible assets (480,333) (163,275) (644,592)Purchase ofproperty, plant andequipment (24,413) (17,625) (30,612)Interest received 43,809 28,726 66,351 ---------- ----------- -----------Net cash used ininvesting activities (460,937) (152,174) (608,853) ---------- ----------- -----------Cash flows from financing activitiesProceeds from theissue of shares 6,812,915 1,540,060 2,656,310 ---------- ----------- -----------Net cash inflow fromfinancing activities 6,812,915 1,540,060 2,656,310 ---------- ----------- -----------Net increase 5,862,040 1,159,034 1,358,193in cash and cash equivalentsCash and cashequivalents at thebeginning of theperiod 1,563,170 177,977 177,977 ---------- ----------- -----------Cash and cashequivalents at theend of the period 7,425,210 1,337,011 1,563,170 ---------- ----------- ----------- Notes to the unaudited financial statements 1. General information The principal activity of Stratex International plc ('the Company') and itssubsidiaries (together 'the Group') is base metal exploration and development.The Company completed a listing on AIM on 4 January 2006. The address of its registered office is 212 Piccadilly, London, W1J 9HG. 2. Financial information The financial information set out above does not constitute statutory accountswithin the meaning of Section 240 of the Companies Act 1985. It has beenprepared on a going concern basis in accordance with International FinancialReporting Standards (IFRS). The accounting policies applied in preparing thefinancial information are consistent with those that have been adopted in theGroup's 2006 statutory accounts. The financial information for the 6 months ended 30 June 2007, the 6 monthsended 30 June 2006 has not been audited. 3. Accounting policies A summary of the principal accounting policies applied in the preparation ofthese consolidated financial statements are set out below. These policies havebeen consistently applied to all the periods presented. Basis of preparation This financial information has been prepared in accordance with InternationalFinancial Reporting Standards (IFRS) as adopted by the European Union (EU) andIFRIC interpretations. The financial information has been prepared underhistorical cost convention. The preparation of this financial information in conformity with generallyaccepted accounting principles requires the use of estimates and assumptionsthat affect the reported amounts of assets and liabilities at the date of thefinancial information and the reported amounts of revenues and expenses duringthe reporting period. Although these estimates are based on management's bestknowledge of the amount, event or actions, actual results ultimately may differfrom those estimates. Basis of consolidation Stratex International plc was incorporated on 24 October 2005. On 21 November2005 Stratex International plc acquired the entire issued share capital of StratexExploration Ltd by way of a share for share exchange. The transaction has beentreated as a Group reconstruction, and has been accounted for using the mergeraccounting method. Where necessary, adjustments are made to the financial statements ofsubsidiaries to bring the accounting policies used into line with those used byother members of the Group. All significant intercompany transactions andbalances between group enterprises are eliminated on consolidation. All significant intercompany transactions and balances between group enterprisesare eliminated on consolidation. Foreign currency translation • Functional and presentation currency Items included in the financial statements of each of the Group's entities aremeasured using the currency of the primary economic environment in which theentity operates (the 'functional currency'). The consolidated financialstatements are presented in sterling, which is the Group's presentationcurrency. • Transactions and balances Foreign currency transactions are translated into the functional currency usingthe exchange rates prevailing at the dates of the transactions. Foreign exchangegains and losses resulting from the settlement of such transactions and from thetranslation at year-end exchange rates of monetary assets and liabilitiesdenominated in foreign currencies are recognised in the income statement. • Group companies The results and financial position of all the Group entities (none of which hasthe currency of a hyperinflationary economy) that have a functional currencydifferent from the presentation currency are translated into the presentationcurrency as follows: - assets and liabilities for each balance sheet presented are translated at the closing rate at the date of that balance sheet; - income and expenses for each income statement are translated at average exchange rates (unless this average is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated at the dates of the transactions); and - all resulting exchange differences are recognised as a separate component of equity. On consolidation, exchange differences arising from the translation of the net investment in foreign entities, and of monetary items receivable from foreign subsidiaries for which settlement is neither planned nor likely to occur in the foreseeable future are taken to shareholders' equity. When a foreign operation is sold, such exchange differences are recognised in the income statement as part of the gain or loss on sale. Intangible assets The Group recognises expenditure as exploration and evaluation assets when itdetermines that those assets will be successful in finding specific mineralresources. Expenditure included in the initial measurement of exploration andevaluation assets and which are classified as intangible assets relate to theacquisition of rights to explore topographical, geological, geochemical andgeophysical studies, exploratory drilling, trenching, sampling and activities toevaluate the technical feasibility and commercial viability of extracting amineral resource. Exploration and evaluation asset are assessed for impairment when facts andcircumstances suggest that the carrying amount of any asset may exceed itsrecoverable amount. The assessment is carried out by allocating exploration andevaluation assets to cash generating units which are based on geographicalareas. Where the exploration for and evaluation of mineral resources in cash generatingunits does no lead to the discovery of commercially viable quantities of mineralresources and the Company has decided to discontinue such activities at thatunit, the associated expenditures will be written off to the Income Statement. Share based incentives The fair value of the employee services received in exchange for the grant ofshare options is recognised as an expense. The total amount to be expensed overthe vesting period is determined by reference to the fair value of the optionsgranted. At each balance sheet date the Group revises its estimate of the numberof options that are expected to become exercisable. It recognises the impact ofthe revision of original estimates, if any, in the income statement, and acorresponding adjustment to equity over the remaining vesting period. The proceeds received net of any directly attributable transaction costs arecredited to share capital (nominal value) and share premium when the options areexercised. 4. Dividends No dividend is proposed for the period. 5. Loss per share The calculation of loss per share is based on a retained loss of £529,796 forthe period ended 30 June 2007 (30 June 2006: £227,077; 31 December 2006:£569,965) and the weighted average number of shares in issue in the period 30June 2007 of 160,127,317 (30 June 2006: 137,400,000; 31 December 2006:142,811,781). There is no difference between the diluted loss per share and theloss per share shown. The number of shares used to calculate the loss per share for the period ended30 June 2005 is based on the 100,000,000 shares, which were issued as part ofthe business combination, weighted in accordance with the dates of issue of theunderlying shares which were exchanged. 6. Restatement in prior period The amounts previously reported as at 31 December 2006 have been restated inrespect of share based payments to employees and for certain expenses inrelation to the issue of shares. In carrying out the initial calculation,certain information was incorrectly applied and this has given rise to therestatement. The correction of this is reflected in operating expenses, share premium andaccumulated reserves of 31 December 2006. Independent review report to the Directors of Stratex International plc Introduction We have been instructed by the Company to review the financial information forthe six months ended 30 June 2007 which comprises the consolidated incomestatement, the consolidated balance sheet, the consolidated statement of changesin equity and the consolidated cash flow statement and the related notes to theaccounts and we have read the other information contained in the interim reportand considered whether it contains any apparent misstatements or materialinconsistencies with the financial information. This report, including the conclusion, has been prepared for and only for theCompany for the purpose of the AIM Rules of the London Stock Exchange and for noother purpose. We do not, in producing this report, accept or assumeresponsibility for any other purpose or to any other person to whom this reportis shown or into whose hands it may come save where expressly agreed by ourprior consent in writing. Directors' Responsibilities The interim report, including the financial information contained therein, isthe responsibility of, and has been approved by the Directors. The Directors areresponsible for preparing the interim report in accordance with the AIM Rules ofthe London Stock Exchange which require that the accounting policies andpresentation applied to the interim figures should be consistent with thoseapplied in preparing the annual accounts except where any changes, and thereasons for them, are disclosed. Review Work Performed We conducted our review in accordance with the guidance contained in Bulletin1999/4; the review of interim financial information issued by the AuditingPractices Board for use in the United Kingdom. A review consists principally ofmaking enquiries of management and applying analytical procedures to thefinancial information and underlying financial data and, based thereon,assessing whether the accounting policies and presentation have beenconsistently applied unless otherwise disclosed. A review excludes auditprocedures such as tests of controls and verification of assets, liabilities andtransactions. It is substantially less in scope than an audit performed inaccordance with International Standards on Auditing (UK and Ireland) andtherefore provides a lower level of assurance than an audit. Accordingly, we donot express an audit opinion on the financial information. Review Conclusion On the basis of our review we are not aware of any material modifications thatshould be made to the financial information as presented for the six monthsended 30 June 2007. CLB Littlejohn FrazerChartered Accountants1 Park PlaceCanary WharfLondon E14 4HJ * * ENDS * * For further information please visit www.stratexinternational.com or contact: David Hall Stratex International Plc Tel: +44 (0)20 7830 9650Bob Foster Stratex International Plc Tel: +44 (0)20 7830 9650Anita Ghanekar Hanson Westhouse Limited Tel: +44(0)20 7601 6100Hugo de Salis St Brides Media & Finance Ltd Tel: +44 (0)20 7242 4477 This information is provided by RNS The company news service from the London Stock Exchange