Rosebank Regulatory News (ROSE)

5 Sep 2005 07:00

Vane Minerals PLC05 September 2005 VANE Minerals Plc Interim Report - Six Months to 30th June 2005 Highlights • All work programmes proceeding under budget • Diablito gold-silver mine underground development and construction of ore production stopes commenced • Phase I drilling programme completed at prospective Guadalcazar gold prospect in Mexico • Phases II & III drilling programmes completed at Mina Charay gold-silver prospect in Mexico • Mineral Investigation Permits covering 3,445 square kilometres granted in Paraguay • As at 30th June the Group had cash balances of £1.53m • Exciting uranium prospects acquired in North America Post Period End Highlights: • Agreement signed on Choix Copper prospect in Mexico, containing many surface samples assaying between 1-3% copper • Diablito second phase development continues and ore production commenced Chairman's Statement I am pleased to present this review of your Company's activities for the sixmonths to 30th June, 2005. In January, we announced a further extension, to 30 June 2006, of the agreementwith Freeport- McMoRan Copper and Gold Inc. which gives VANE exclusive access toFreeport's global exploration database (excluding Indonesia). This provides oneof the cornerstones of VANE Minerals' ("VANE" or the Company") explorationstrategy: over 85% of the Freeport files have now been examined and a number ofattractive potential prospects are being pursued. In addition to project generation from both the database and from VANE's highlyexperienced team of geologists - as well as general corporate activity -exploration and development work during the first half of 2005 focused on sixprojects in Mexico, the US and Paraguay. Diablito Mining operations commenced during the period at the high-grade Diablitogold-silver project, located in Nayarit, west-central Mexico. VANE Minerals haddetermined the early generation of cash flow from this operation as a primarystrategic objective for the Company. A haulage/development tunnel has been driven into the Diablito vein, to produceore for mill testing in order to subsequently generate positive cash flow andthus contribute to covering development costs. The tunnel has been extended 200metres from the portal and stope development/mining of the 13,000 tonnessituated above the tunnel is now underway. The first 330-tonne test shipment has been successfully concentrated at theCosala mill, and 11 dry tonnes of concentrates have been delivered to theTorreon smelter. Under the revised milling/smelting arrangement, VANE will bemining a larger tonnage of slightly lower grade ore than originally scheduled.This material will be shipped a shorter distance, now only 350 km, from the mineto the Cosala mill and a much smaller tonnage of concentrate will be trucked theremaining 750km, from the mill to the Torreon smelter. The net financial resultwill differ only slightly from that expected originally from transporting thehigher grade flux ore a greater distance, 1,350 km, from the mine to theNacozari smelter. We are pleased with the progress now being made. A further 1,300 tonnes of orehave been transported to the Cosala mill for processing. The mining contractorsare currently working three faces of ore, so that the target production of 1,875tonnes per month is now achievable and there will now be regular shipments ofore and concentrates to the Cosala mill and the Torreon smelter respectively. Guadalcazar Evaluation of the Guadalcazar project in San Luis Potosi, Mexico, continuedduring this period. This is an opportunity from the Freeport database. Oncompletion of the initial geological appraisal, a 12-hole diamond drillingprogramme was carried out. From the 1,222 metres drilled, samples of sawn drillcore were analysed for gold, silver, tin and mercury. Although the analysis didnot indicate economic viability, the gold and silver values (and particularlymercury) were found to be consistently anomalous. These results have directedus towards a number of additional targets which we plan to drill this autumn. Mina Charay The Mina Charay Project near Los Mochis, Sinaloa, Mexico, continues to providevery encouraging results. An initial seven-hole drilling programme confirmedvery strong gold mineralisation locally, in a structurally complex vein system. A detailed ground geophysical survey (self-potential) was then carried out priorto a second round of drilling which began in March. This, together with a thirdround of drilling, completed a 27 hole programme, which was finished by the endof June. The nearly vertical vein system was intersected in 19 of the 27inclined holes, providing 32 mineralised intercepts over a strike length of some240 metres. The mineralised intercepts averaged 1.7 metres in width andcontained an average of 13 g/t gold and 93 g/t silver. While the deepestintercepts of the vein system are some 50 metres below surface, the systemremains open at depth. The drilling and analytical data being evaluated by IMC of Tucson, Arizona, willprovide the basis for a resource estimate and another small round of drillingwhich may be required to complete a preliminary feasibility report. Choix The Choix copper prospect in Sinaloa, Mexico, was acquired after the periodunder review in July 2005, following a prospect examination and a review ofprevious work done by Cambior Corporation. Choix is an undrilled copper targetlocated at the southern end of the prolific Arizona-Mexico porphyry copper belt.Despite easy access and outcrops showing strong (1% to 3%) coppermineralisation, the area appears to have never been systematically evaluated ordrilled. Field work - including mapping and sampling, followed by drilling - isscheduled to commence in September. Paraguay Project Despite its geological prospectivity, Paraguay is significantly under-exploredin comparison with its South American neighbours. Having applied for the mineralrights to three large blocks of land in south-eastern Paraguay in November 2004,three Investigation Permits for gold exploration were finally issued by theGovernment in July 2005. Preliminary field investigations have confirmedobservations made during a previous exploration programme that detrital goldexists in a number of streams. The Company now expects to move ahead withsystematic stream and soil sampling to define drilling targets. Uranium Programme VANE's entry into uranium exploration is a reflection of the Company's belief inthe renewed strength of the uranium market and growing predictions of long-termsupply shortages. The Company has identified a number of high-quality projectsin the south-western US. Including a number of previously drilled properties,17 target areas have been acquired in the breccia pipe district of northernArizona. Advanced negotiations are underway to acquire additional attractiveproperties in southern Utah, at least two of which are believed to contain adefined uranium resource. In addition to our aggressive programme of property acquisition, work is inprogress to utilise satellite imagery to define targets in areas not previouslyconsidered conducive to the recognition of pipe structures and to developgeochemical techniques to recognise mineralised breccia pipes. Outlook VANE Minerals remains on course towards achieving the strategic goals set at thetime of listing on AIM in June, 2004. Exploration work is proceeding onschedule for all of our properties in Mexico as well as in Paraguay and the US.With an excellent portfolio of projects and dedicated field teams we anticipatefurther busy and successful operations in the months ahead. At the end of June 2005, the Company's cash resources stood at £1.53 million.The rate of Group expenditure meanwhile is currently running at £143,000 permonth. The move towards development and production of saleable concentrate atDiablito is therefore very gratifying. Production is now expected to increaserapidly in the coming months and, with the redefined ore sales procedure, toprovide a secure and growing source of cash flow which it is anticipated willsubstantially offset exploration spending. The movement in VANE Minerals' share price in recent months has reflectedvolatile conditions in the AIM market. This period has seen an unprecedentedflow of new listings, keen competition for funds and ever closer marketscrutiny. Under these conditions, your Company's market performance can bejudged as encouraging. Underpinned by solid institutional support, we areconfident the share price will progressively reflect more accurately the growingimportance of the many attractive projects which are advancing satisfactorily. Michael Spriggs Chairman 2nd September 2005 Enquiries: VANE Minerals plc Seymour Pierce Limited Parkgreen CommunicationsMatthew Idiens Sarah Wharry Justine Howarth / Cathy Malins020 7667 6322 020 7107 8000 020 7493 3713 Consolidated Profit and Loss Account £'000's Notes Unaudited Unaudited Audited 6 months 6 months 15 months ended ended ended 30-Jun-05 30-Sep-04 31-Dec-04 Administrative Expenses (315) (316) (638)Operating Loss 3 (315) (316) (638) Interest receivable and similar 80 29 41income Interest payable and similar charges (1) (1) (2)Loss on ordinary activities before (236) (288) (599)taxation Taxation - - 36Loss on ordinary activities after (236) (288) (563)taxationLoss per share Basic and Diluted 4 (0.16p) (0.213p) (0.52p) Statement of Total Recognised Gains and Losses £'000's Notes Unaudited Unaudited Audited 6 months 6 months 15 months ended ended ended 30-Jun-05 30-Sep-04 31-Dec-04 Loss for the Financial Period (236) (288) (563)Currency translation differences on 114 9 (67)foreign subsidiariesTotal recognised gains and losses (122) (279) (630)relating to the period Consolidated Balance Sheet £'000's Notes Unaudited Unaudited Audited 6 months 6 months 15 months ended ended ended 30-Jun-05 30-Sep-04 31-Dec-04 Fixed Assets Intangible fixed assets 12,036 11,473 11,504Current Assets Debtors 308 103 116 Cash at bank 1,532 2,639 2,344 1,840 2,742 2,460Creditors: amounts falling due within 1 (100) (89) (66)yearNet Current Assets 1,740 2,653 2,394Total assets less current liabilities 13,776 14,126 13,898Capital and Reserves Called up share capital 14,614 14,614 14,614 Profit and Loss Account (838) (488) (716)Equity Shareholders' funds 13,776 14,126 13,898 Consolidated Cash Flow Statement £'000's Notes Unaudited Unaudited Audited 6 months 6 months 15 months ended ended ended 30-Jun-05 30-Sep-04 31-Dec-04Net cash outflow from operating 6 (472) (332) (584)activitiesReturns on investment and servicing offinance Interest received 80 29 41 Interest or similar charges paid (1) (1) (2)Net cash flow from returns on investment 79 28 39and servicing of financeCapital expenditure and financialinvestment Purchase of intangible fixed assets (533) (400) (382)Net cash flow from capital expenditure (533) (400) (382)and financial investmentAcquisitions and disposals Cash acquired with subsidiary 107 Acquisition of subsidiary - - (50)Net Cash Flow from acquisitions and - - 57disposalsManagement of Liquid Resources 896 (2,523) (2,286)FinancingProceeds of share issue - 3,705 3,705Expenses of share issue - (417) (423)Net cash flow for financing activities - 3,288 3,282(Decrease) / increase in cash for the (30) 61 126periodReconciliation of net cash flow tomovement in net funds (Decrease) / increase in cash in (30) 61 126period Translation Difference 114 9 (68) Management of Liquid Resources 896 2,523 2,286 Opening net funds 2,344 46 - Closing net funds 1,532 2,639 2,344 Notes to the Accounts 1. The financial information contained in this interim report does notconstitute statutory accounts within the meaning of section 240 of the CompaniesAct 1985. The consolidated financial statements incorporate those of VANE Minerals Plc andits subsidiary undertakings for the period. The six months figures for the period ended 30th June 2005, which have not beenaudited, use accounting policies that are consistent with those adopted in theaccounts for the period ended 31 December 2004 and with those that will beadopted in the accounts for the year ended 31 December 2005. The interimaccounts were approved by the Directors on 2nd September 2005. 2. The comparative figures are for the 6-month period to September 2004as these were the figures contained in the company's last Interim Report priorto the year-end being changed to 31st December. 3. The Group's operating loss is derived from its continuing operationswhere the principal activity is the evaluation, acquisition and development ofmineral exploration targets, principally gold and silver targets abroad, fromits base in the United Kingdom. 4. The calculation of the basic and diluted loss per ordinary share isbased on the loss after taxation of £236,000 (30 September 2004: £288,000, 31December 2004: £563,000) and on the weighted average number of ordinary sharesin issue during the period of 146,143,823 (30 September 2004: 134,916,549, 31December 2004: 107,745,590). 5. Reconciliation of Movement in Equity Shareholders' Funds £'000's Unaudited Unaudited Audited 6 months 6 months 15 months ended ended ended 30-Jun-05 30-Sep-04 31-Dec-04 Loss for Period (236) (203) (563)Effect of currency exchange 114 9 (68)movementsShare Issue - 3,705 14,951Expenses of share issue not shown - (422) (422)in Profit and Loss AccountNet increase / (decrease) in (122) 3,089 13,898shareholders' fundsOpening Shareholders' Funds 13,898 11,037 -Closing Shareholders' Funds 13,776 14,126 13,898 6. Reconciliation of operating loss to operating cash flow £'000's Unaudited Unaudited Audited 6 months 6 months 15 months ended ended ended 30-Jun-05 30-Sep-04 31-Dec-04 Operating loss (315) (236) (638)Increase in debtors (192) (79) 143Increase / (decrease) in creditors 35 (17) (89)Operating cash flow (472) (332) (584) This information is provided by RNS The company news service from the London Stock Exchange