15 Mar 2011 07:00
Scotgold Resources Limited
INTERIM FINANCIAL REPORT
31 DECEMBER 2010
DIRECTORS' REPORT
Your directors submit the financial report of the consolidated entity for the half-year ended 31 December 2010. In order to comply with the provisions of the Corporations Act 2001, the directors report as follows:
DIRECTORS
The following persons were Directors of Scotgold Resources Limited during the half year and up to the date of this report unless otherwise stated:
In office from | In office to | ||
John Bentley | Non-Executive Chairman | 17/02/2009 | present |
Chris Sangster | CEO/Managing Director | 17/10/2007 | present |
Phillip Jackson | Non Executive Director | 14/08/2007 | present |
Edmond Edwards | Non Executive Director | 27/01/2009 | 25/10/2010 |
Shane Sadleir | Non Executive Director | 12/03/2009 | present |
Adam Davey | Non Executive Director | 12/03/2009 | 25/10/2010 |
REVIEW OF OPERATIONS
The Company's strategy in Scotland continues to focus on advancing the 100% owned Cononish Gold and Silver Project to production whilst continuing to explore its large, highly prospective land position around Cononish and elsewhere in Scotland. The Company's land position extends to some 3200km2.
Background
Scotgold Resources Limited (ASX:SGZ) was established in 2007 and listed on the ASX in January 2008 after raising $A4.9M through an IPO, with the objective of advancing the Cononish Gold and Silver Project in Scotland's Grampian Highlands to a production decision and to explore the highly prospective tenements comprising the Grampian Gold Project for additional deposits. The Company's shares were also admitted to trading on the AIM market (AIM:SGZ) of the London Stock Exchange in February 2010.
Scotgold has focused initially on exploration and development of the Cononish Gold and Silver Project and has identified resources (estimated in accordance with the JORC Code) in the Measured, Indicated and Inferred categories (see tables 1 and 2 below for breakdown) of 163,000 oz of gold and 596,000oz of silver (at 3.5g/t gold cut-off).
Table 1: Cononish Main Vein Gold Mineral Resources (reported at a 3.5 g/t Au cut-off). Reported using the 2004 JORC Code (JORC, 2004). Tonnages and contained ounces rounded to the nearest 1,000 t or 1,000 oz. Grade rounded to the nearest 0.1 g/t Au. The Inferred Resource grade is reported with a grade range to indicate the likely upside due to the information effect.
Classification | Tonnes (t) | Grade (g/t) | Ounces (oz) |
Gold | Gold | ||
Measured | 53,000 | 17.9 | 31,000 |
Indicated | 73,000 | 10.2 | 24,000 |
Inferred | 311,000 | 10.8 (10 - 16) | 108,000 |
Scotgold Note: Incorporating the grade range, the Inferred Mineral Resource is estimated to lie between 100,000 oz Au and 160,000 oz Au. It should be noted that any upside may not exist or it may only be present in a portion of the resource.
Table 2: Cononish Main Vein Silver Mineral Resources (reported at a 3.5 g/t Au cut-off). Reported using the 2004 JORC Code (JORC, 2004). Tonnages and contained ounces rounded to the nearest 1,000 t or 1,000 oz.
Classification | Tonnes (t) | Grade (g/t) | Ounces (oz) |
Silver | Silver | ||
Measured | 53,000 | 75.0 | 128,000 |
Indicated | 73,000 | 43.1 | 101,000 |
Inferred | 285,000 | 40.1 | 367,000 |
Subject to the grant of planning approval, production of gold and silver is expected to begin within about 15 months of that date based on the positive outcome of a scoping study conducted by Australian Mining Consultants UK Limited (AMC) in 2009 which used a long term gold price of US$720/oz.
The Grampian Gold Project comprises relevant Crown Licences of some 3200km2 surrounding the Cononish deposit and covers some of the most prospective areas of the Dalradian geological sequence in the Scotland. This mineralized sequence, which extends westward from the UK to Greenland, the eastern seaboard of Canada and the Appalachian belt in the US, and eastward into Sweden and Norway has been identified by the British Geological Survey as being highly prospective for both significant gold and base metal deposits. On a more local scale, the Dalradian sequence extends to the south west from Scotland into the north of Ireland where it hosts other gold deposits at Omagh (Cavancaw) (399,800 oz of gold) which has been operating as an open cut mine since 2006, Curraghinalt (1,560,000 oz of gold), and at Clontibret deposit (1,030,000 oz of gold).
On acquisition of the Cononish Gold and Silver Project, Scotgold acquired significant amounts of historic exploration information over the Grampian Gold Project area. This information has been assimilated into a GIS database and forms the basis for ongoing exploration initiatives.
Cononish Gold and Silver Project
The scoping study on the Cononish Project completed by Australian Mining Consultants Ltd (AMC) in mid 2009 indicated positive returns using a gold price of US$ 720 / oz (GBP£450 /oz). At the current gold price of around US$ 1380 / oz (GBP £840 / oz), the Project has the potential to generate significant cashflows for the Company. Based on this 2009 study, at a gold price of US$ 1270 / oz (GBP£800 / oz), the Project would generate around US$ 87 million (GBP £55 million) free cashflow over its lifetime. The Company is in the process of updating that study in order to advance the Project to a production decision pending planning permission. A revised tailings management facility design is being evaluated (see below) to feasibility level, discussions are ongoing regarding the processing plant layout and feasibility costing and the revised mining study will be continued shortly.
In January 2010, subsequent to the extensive public and other consultation processes, the Company submitted its application for planning permission at Cononish. On 11th August 2010, the Parks Authority's Director of Planning recommended refusal of the application largely on landscape and visual impact issues and this refusal was upheld by a narrow margin of 12 to 10 at the National Parks Board meeting on 18th August 2010. An appeal against the refusal was lodged with the Scottish Ministers on 17th November and remains 'live' at present.
Since 18th August, Scotgold directors have met on several occasions with senior representatives of the Parks Authority to discuss the issues surrounding their recommendation for refusal and the Company believes encouraging progress is now being made. The principal changes to the previous application would involve a reduction in the volume of the Tailings Management Facility, accompanied by some underground disposal of tailings, thereby facilitating a design which would have significantly less visual impact whilst accommodating development of the current resource at the same annual rate of production.
On 22nd December 2010, the Company submitted a Planning Application Notice to the Parks Authority indicating its intention to re-apply for planning permission. The re-application again involves the statutory 12 week period for Pre Application Consultation prior to submission, subsequent to which it is likely a non binding processing agreement would be signed with the Parks Authority to indicate the likely decision date. The Company believes this could be in Q3 2011.
Exploration Update
The Company continues to actively pursue exploration activities on its substantial land position outside the National Park at the Beinn Udlaidh and Auch project areas. It is noted that 85% of the area currently under license to Scotgold is located outside the National Park (see figure 1 available at www.scotgoldresources.com under ASX releases).
Beinn Udlaidh
Scotgold considers the veins systems in the Beinn Udlaidh area to be valid exploration targets in their own right in addition to the already identified breccia pipe target (see Press Release 18th February 2010 - Beinn Udlaidh - Breccia Pipes - Exploration Target Confirmation).
An extensive mapping and rock chip sampling program has identified a number of high grade, narrow vein systems, in addition to a significant strike extension to the Beinn Udlaidh Vein.
Beinn Udlaidh River Vein area
The River Vein area is located five kilometres northwest of the Cononish gold and silver deposit and outside the boundaries of the Loch Lomond and Trossachs National Park (see figure 1 available at www.scotgoldresources.com under ASX releases).
Outcrop is confined to rivers and burns due to extensive glacial till cover which is, in many places, deeper than 10 metres throughout Glen Orchy.
Previous exploration in this area by Ennex International plc in the 1980s identified high grade boulders, up to 358.9 g/t Au, and which are now thought to be linked to the identified veins. Lamprophyre sills and dykes have also been mapped in close proximity to these veins by Scotgold and previous explorers.
Initial mapping and outcrop sampling in the River Orchy by Scotgold in 2010, following up previous explorers' rock chip sampling results returned exceptional values of 383.2 g/t Au, 321.5 g/t Au and 197.3 g/t Au in rock chip samples at Area A (Figure 2 available at www.scotgoldresources.com under ASX releases). High grade values were also recorded from rock chip samples at two additional new veins located upstream of the River Vein at Area B, including 171.8 g/t Au, 59.0 g/t Au and 1.89 g/t Au.
The veins trend at 3000 - 3200 and are perpendicular to the normal Caledonide trend (2200 - 2400). Observed vein widths are between 10cms and 65cms and exhibit typical pinch and swell characteristics. The veins occur individually and in groups.
Further sampling by Scotgold in 2010 over Area B has confirmed the high grade nature of the gold mineralisation, including a grab sample between veins one metre apart, assaying 145.5 g/t Au and 28.5 g/t Ag. Other high gold values in grab samples from the narrow quartz veins in this area included 134.5 g/t Au, 31.8 g/t Ag and 15.0 g/t Au and 7.7 g/t Ag (Figure 3 available at www.scotgoldresources.com under ASX releases).
Subsequent detailed mapping and sampling over a portion of Area A has defined a quartz sulphide vein rich in gold as well as several aplitic fracture zones, rich in molybdenum.
A total of 27 rock chip samples were collected from separate areas in order to trace the gold bearing vein across the river as well as to test the extent and grade of the molybdenum mineralisation across the zone (Figure 4 available at www.scotgoldresources.com under ASX releases).
The gold bearing vein has now been traced from its discovery location, northwest, across the river to the bank for a distance of 30 metres, where it disappears under several meters of glacial till. The seven samples on the gold vein returned peak values of 194.6 g/t Au with >200 g/t Ag and 103.2 g/t Au with 76.6 g/t Ag.
The narrow molybdenum bearing fractures are currently only exposed in the river bed before disappearing under glacial till. They trend approximately northeast - southwest and are spaced at 1 - 5 metre intervals. The aplitic margins containing the molybdenum mineralisation vary from 1cm to 20cms wide. Seven samples (from twenty) of the aplitic fractures reported values of molybdenum in excess 500g/t (the upper calibration limit of the assay method used (ICP - MA/UT)) and were submitted for re-assay at a higher upper calibration limit - all seven samples returned in excess of 1000 ppm (0.1%) Mo.
Since 2009 Scotgold has been collaborating in a research project with Dr Robert Chapman of the University of Leeds, studying mineralogical signatures in placer gold grains from various localities in the rivers around Tyndrum. Sampling was extended to new areas of interest including the Glen Orchy area.
During Q3 2010, Dr Chapman informed Scotgold that the grains of gold collected and studied from River Orchy tributaries showed two clear contributing signatures, both distinctive to the Beinn Udlaidh area (in comparison with other localities) by virtue of their anomalous bismuth signature. Further sampling is required to ascertain the nature of the variation in the local gold signatures.
Scotgold is further researching a possible genetic model for gold and molybdenum occurrences in order to guide future exploration in the area. Of particular interest are the Molybdenum and Tungsten showings in the nearby Starav Granite complex and a large gravity low possibly associated with the granite and trending into the River Vein and Beinn Udlaidh areas (Figure 6 available at www.scotgoldresources.com under ASX releases).
Further mapping of the high grade gold mineralization in the area to determine the orientation of any possible extensions under the adjoining glacial till cover, initial AQ drilling and possible geophysics and deeper (NQ) drilling is planned for 2011.
Beinn Udlaidh vein
Previous explorers identified a 900 metre long mineralized vein structure at Beinn Udlaidh (Figure 7 available at www.scotgoldresources.com under ASX releases).
Eleven diamond core holes were drilled into this structure in 1989 to a vertical depth of around 100 metres. The drilling intersected gold and silver mineralization over a 500 metre strike length with better results including:
GO 88-01 2.57 metres @ 3.8 g/t gold and 221 g/t silver from 51.97 metres
GO 88-04 1.02 metres @ 2.9 g/t gold and 109 g/t silver from 104.73 metres
GO 88-05 1.47 metres @ 3.3 g/t gold and 21 g/t silver from 102.54 metres
GO 88-09 1.56 metres @ 1.2 g/t gold and 36 g/t silver from 123.30 metres
GO 88-11 0.53 metres @ 2.2 g/t gold and 95 g/t silver from 60.97 metres
In 2009, Scotgold drilled three 13 to 20 metre-deep, AQ holes into the outcrop of the vein to check previous results. All 3 holes intersected significant gold values with better results (>0.5 g/t gold) including:
BUAQ1 1 metre @ 1.98g/t gold and 83.6g/t silver from 1.5 metres
2 metres @ 12.85g/t gold and >200g/t silver from 4 metres
1 metre @ 2.43g/t gold and 31.3g/t silver from 7 metres
Or 6.5m @ 4.75g/t gold and 87.0g/t silver
BUAQ2 1.5 metres @ 1.93g/t gold and 69.1g/t silver from 18 metres
BUAQ3 1 metre @ 3.53g/t gold and 135g/t silver from 3.5 metres0.5 metres @ 1.87g/t gold and 43.4g/t silver from 6 metres
A rock chip sample taken by previous explorers to the north east of the drilled section of the then identified vein extent returned 16.1 g/t gold and 2520 g/t silver.
As part of Scotgold's initial reconnaissance of the potential north east extension in 2009, a confirmatory sample of 16.6 g/t gold, >200g/t silver was returned.
In Q3 2010, four further AQ holes (Figure 8 available at www.scotgoldresources.com under ASX releases) were drilled into various potential outcrop locations to the north east of the previously identified structure. Best drill intercepts on the vein include:
§ BUAQ100 - 11.1 g/t Au, 167g/t Ag over 1.0m
§ BUAQ101 - 2.39 g/t Au, 139.6g/t Ag over 3.2m
Two other holes (BUAQ102 and 103) did not intersect significant mineralisation and appear to have been collared in the hanging wall of the vein.
Further rock chip sampling and mapping on the vein structure in the lower reaches of Coire Ghamhnain area in Q3/4 2010 have now confirmed the strike extent of the vein to around 1900m with encouraging gold and silver grades. Initial samples of 47.58 g/t Au with >200 g/t Ag and 46.28 g/t Au with >200 g/t Ag were returned with further follow up across the vein returning samples of 73.2 g/t Au with >200 g/t Ag and 17.7 g/t Au with >200 g/t Ag.
Further AQ drilling and possible geophysics and deeper (NQ) drilling is planned for 2011.
Auch Project Area
The Auch Project Area is situated 10km north east of the Cononish Gold and Silver Project (Figure 1 available at www.scotgoldresources.com under ASX releases).
Previous explorers had identified a number of high grade boulders and outcrops at four locations (Coire Ghabhalach, Creag Sheileach, Beinn Odhar and Crom Allt) within the project area.
In late 2010, Scotgold conducted further field reconnaissance mapping and follow-up outcrop sampling at these prospects and three new prospects were identified at Clach Bhadach, Leitir Tharsuinn and the Auch Breccia pipe. Limited initial short AQ diamond drilling was conducted at Coire Ghabhalach and Creag Sheileach.
Rockchip sampling (Figure 9 available at www.scotgoldresources.com under ASX releases) from the vein systems continue to return high grade gold and silver values over significant strike lengths including:
·; Coire Ghabhalach - 23.4g/t gold, 29.6g/t silver
·; Creag Sheileach - 13.2g/t gold, 36.6g/t silver (previously reported in 2009)
·; Clach Bhadach- 62.4g/t gold, >200g/t silver
·; Beinn Odhar - Beinn Odhar vein - 2.1g/t gold, 13.4g/t silver
·; Beinn Odhar - Coire Thon vein - 9.8g/t gold, 80.4g/t silver
·; Beinn Odhar - Coire Thon vein - 8.9g/t gold, >200g/t silver, 47 g/t tellurium
Ten small diameter (AQ) holes drilled into two vein structures at Auch have returned encouraging gold and silver values, including:
·; Coire Ghabhalach - 2.1 metres averaging 15.2g/t gold, 36.1g/t silver
·; Creag Sheileach - 1.0 metres averaging 25.5g/t gold and 14.3g/t silver
Fieldwork in 2010 has also identified a large explosion breccia, possibly similar to the mineralized pipes encountered at Beinn Udlaidh. This occurrence appears to consist of two rounded pipe-like breccias approximately 10,000m² in extent, and occur in close association with lamprophyre.
Thirty two rockchip samples were taken across the exposed extremities of the breccia and a single sample returned a highly anomalous gold value of 1.7g/t Au.
Aurum Exploration Services conducted a ground based magnetic and EM survey over the breccia occurrence and towards a large regional silicified fault zone to the east. The results clearly indicate two strong magnetic anomalies coincident with the shape of the mapped breccia pipes.
Corporate activities
On 16 September 2010, the Company announced a non-renounceable rights issue of shares on the basis of one Share for every four Shares held at the record date of 28 September 2010 at an issue price of A$0.035 per Share together with one free attaching Option for every two shares subscribed for, exercisable at A$0.08 and expiring on 30 April 2012. The rights issue closed oversubscribed on 3 November 2010.
On 11 November 2010, the Company allotted 29,133,284 shares to raise a total of A$1,019,665 and 14,566,586 free attaching options were issued in accordance with the offer.
Competent Persons' Statements:
The information in this report that relates to Exploration Results is based on information compiled by Mr David Catterall. Pr Sci Nat, who is a member of the South African Council for Natural Scientific Professions. Mr Catterall is employed as a consultant to Scotgold Resources Ltd. Mr Catterall has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2004 Edition of the 'Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves'. Mr Catterall consents to the inclusion in the report of the matters based on his information in the form and context in which it appears.
The Information in this report that relates to Mineral Resources and Exploration Results is based on information compiled by EurGeol Dr S C Dominy FAusIMM (CP), FGS (CGeol), MAIG, General Manager (UK) and Executive Consultant with Snowden based in the London, England Office. Dr. Dominy has sufficient experience that is relevant to the style of deposit under consideration and to the activity which he is undertaking to qualify as Competent Person as defined in the 2004 Edition of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore reserves. Dr Dominy consents to the inclusion in the report of the matters based on this information in the form and context in which it appears.
EVENTS SUBSEQUENT TO REPORTING DATE
On 19 January 2011, the Company advised that it has raised £616,250 (A$986,000) through the placement of 14.5 million ordinary fully-paid shares in the Company (the "Placing Shares"), at a consideration of £0.0425 (A$0.068) per share. The Placing Shares were issued together with one free attaching option for every two Placing Shares subscribed for. The options are exercisable at a price of $0.08 per share and expire on 30 April 2012.
The Placing Shares were placed with Kenglo One Limited ("Kenglo") an investment company incorporated in Jersey, Channel Islands specialising in natural resources. Kenglo already has significant holdings in Galantas Gold Corporation which operates a gold mine in Northern Ireland.
Following the placing Kenglo has an interest in 14,500,000 shares representing 9% of the Company's enlarged share capital.
AUDITORS' INDEPENDENCE DECLARATION
Section 307C of the Corporations Act 2001 requires our auditors, HLB Mann Judd, to provide the directors of the company with an Independence Declaration in relation to the review of the interim financial report. This Independence Declaration is set out on page 17 and forms part of this directors' report for the half-year ended 31 December 2010.
This report is signed in accordance with a resolution of the Board of Directors made pursuant to section 306(3) of the Corporations Act 2001.
AUDITOR'S INDEPENDENCE DECLARATION
As lead auditor for the review of the financial report of Scotgold Resources Limited for the half-year ended 31 December 2010, I declare that to the best of my knowledge and belief, there have been no contraventions of:
a) the auditor independence requirements of the Corporations Act 2001 in relation to the review; and
b) any applicable code of professional conduct in relation to the review.
CONDENSED STATEMENT OF COMPREHENSIVE INCOME
FOR THE HALF-YEAR ENDED 31 DECEMBER 2010
Consolidated | |||||
31 December 2010 | 31 December 2009 | ||||
$ | $ | ||||
Interest Revenue | (16,189) | (17,006) | |||
Employee costs | 69,133 | 95,852 | |||
Directors fees | 118,665 | 154,500 | |||
Investor and public relations | 71,598 | 107,030 | |||
Travel and accommodation | 22,640 | 39,882 | |||
Professional fees | 24,897 | 20,421 | |||
Listing and Stock Exchange fees | 100,007 | 56,801 | |||
Insurances and other financial costs | 24,374 | 31,174 | |||
Office and administration | 79,256 | 87,345 | |||
Depreciation | 19,694 | 24,432 | |||
514,075 | 600,431 | ||||
Exchange loss | 41,951 | 12,773 | |||
Loss before income tax expense | 556,026 | 613,204 | |||
Income tax expense | - | - | |||
Net loss for the period | 556,026 | 225,722 | |||
Other comprehensive income | - | - | |||
Total comprehensive loss for the period | 556,026 | 613,204 | |||
Basic loss per share (cents per share) | 0.48 | 0.82 | |||
CONDENSED STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2010
Consolidated | |||||
Note | 31 December | 30 June | |||
2010 | 2010 | ||||
$ | $ | ||||
CURRENT ASSETS | |||||
Cash and cash equivalents | 1,100,758 | 1,592,997 | |||
Trade and other receivables | 15,002 | 122,548 | |||
Other current assets | 10,092 | 6,527 | |||
Total Current Assets | 1,125,852 | 1,722,072 | |||
NON CURRENT ASSETS | |||||
Trade and other receivables | 76,923 | 87,719 | |||
Property, plant and equipment | 192,226 | 199,573 | |||
Deferred exploration and evaluation expenditure | 2 | 9,789,351 | 8,917,502 | ||
Total Non Current assets | 10,058,500 | 9,204,794 | |||
TOTAL ASSETS | 11,184,352 | 10,926,866 | |||
CURRENT LIABILITIES | |||||
Trade and other payables | 166,688 | 298,948 | |||
Other current liabilities | 27,681 | 36,189 | |||
Interest bearing liabilities | 1,663 | 7,478 | |||
Total Current Liabilities | 196,032 | 342,615 | |||
TOTAL LIABILITIES | 196,032 | 342,615 | |||
NET ASSETS | 10,988,320 | 10,584,251 | |||
EQUITY | |||||
Issued capital | 3 | 13,284,114 | 12,324,019 | ||
Accumulated losses | (2,295,794) | (1,739,768) | |||
TOTAL EQUITY | 10,988,320 | 10,584,251 | |||
CONDENSED STATEMENT OF
CHANGES IN EQUITY
FOR THE HALF-YEAR ENDED 31 DECEMBER 2010
Issued Capital | Accumulated Losses | Option Reserve | Total Equity | |
Half-year to 31 December 2009 | $ | $ | $ | $ |
Balance at 1 July 2009 | 7,731,885 | (1,203,912) | 602,304 | 7,130,277 |
Issue of shares | 4,007,500 | - | - | 4,007,500 |
Share issue expenses | (240,467) | - | - | (240,467) |
Loss for the period | - | (613,205) | - | (613,205) |
As at 31 December 2009 | 11,498,918 | (1,817,117) | 602,304 | 10,284,105 |
Half-year to 31 December 2010 | ||||
Balance at 1 July 2010 | 12,324,019 | (1,739,768) | - | 10,584,251 |
Issue of shares | 1,020,005 | - | - | 1,020,005 |
Share issue expenses | (59,910) | - | - | (59,910) |
Loss for the period | - | (556,026) | - | (556,026) |
As at 31 December 2010 | 13,284,114 | (2,295,794) | - | 10,988,320 |
CONDENSED STATEMENT OF CASH FLOWS
FOR THE HALF-YEAR ENDED 31 DECEMBER 2010
Consolidated | |||||
6 months to | 6 months to | ||||
31 December 2010 | 31 December 2009 | ||||
$ | $ | ||||
CASH FLOWS FROM OPERATING ACTIVITIES | |||||
Payments to suppliers | (526,453) | (714,198) | |||
Interest income received | 16,189 | 16,959 | |||
Interest and other finance costs paid | - | (684) | |||
Net cash used in operating activities | (510,264) | (697,923) | |||
CASH FLOWS FROM INVESTING ACTIVITIES | |||||
Payments for exploration expenditure | (903,721) | (1,149,441) | |||
Payment for property, plant and equipment | (12,347) | - | |||
Net cash used in investing activities | (916,068) | (1,149,441) | |||
CASH FLOWS FROM FINANCING ACTIVITIES | |||||
Proceeds from issue of shares and options | 1,020,005 | 4,007,500 | |||
Share and option issue transaction costs | (59,910) | (240,467) | |||
Hire purchase repayments | (5,625) | (6,285) | |||
Net cash provided by financing activities | 954,470 | 3,760,748 | |||
Net increase/(decrease) in cash held | (471,862) | 1,913,385 | |||
Cash and cash equivalents at the beginning of the period | 1,592,997 | 695,461 | |||
Effect of exchange rate fluctuations on cash held | (20,377) | (15,001) | |||
Cash and cash equivalents at the end of the period | 1,100,758 | 2,593,845 | |||
NOTES TO THE FINANCIAL STATEMENTS
FOR THE HALF-YEAR ENDED 31 DECEMBER 2010
NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES
Statement of compliance
These interim consolidated financial statements are a general purpose financial report prepared in accordance with the requirements of the Corporations Act 2001, applicable accounting standards including AASB 134 'Interim Financial Reporting', Accounting Interpretations and other authoritative pronouncements of the Australian Accounting Standards Board ('AASB'). Compliance with AASB 134 ensures compliance with IAS 34 'Interim Financial Reporting'.
This condensed half-year report does not include full disclosures of the type normally included in an annual financial report. Therefore, it cannot be expected to provide as full an understanding of the financial performance, financial position and cash flows of the group as in the full financial report.
It is recommended that this financial report be read in conjunction with the annual financial report for the year ended 30 June 2010 and any public announcements made by Scotgold Resources Limited and its subsidiaries during the half-year in accordance with continuous disclosure requirements arising under the Corporations Act 2001 and the ASX Listing Rules.
The accounting policies adopted are consistent with those of the previous financial year and corresponding interim reporting period.
Basis of preparation
The interim report has been prepared on a historical cost basis. Cost is based on the fair value of the consideration given in exchange for assets. The company is domiciled in Australia and all amounts are presented in Australian dollars, unless otherwise noted.
For the purpose of preparing the interim report, the half-year has been treated as a discrete reporting period.
Reporting Basis and Conventions
The financial report has been prepared on the basis of accounting principles applicable to a going concern, which assumes the commercial realisation of the future potential of the Group's assets and the discharge of their liabilities in the normal course of business.
The financial report has also been prepared on an accruals basis and is based on historical costs modified by the revaluation of selected non-current assets, and financial assets and financial liabilities for which the fair value basis of accounting has been applied.
Significant accounting judgements and key estimates
The preparation of interim financial reports requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expense. Actual results may differ from these estimates.
Except as described below, in preparing this interim report, the significant judgements made by management in applying the Group's accounting policies and the key sources of estimation uncertainty were the same as those that applied to the consolidated financial report for the year ended 30 June 2010.
In the half-year ended 31 December 2010, management reassessed its estimates in respect of:
Adoption of new and revised Accounting Standards
In the half-year ended 31 December 2010, the Group has reviewed all of the new and revised Standards and interpretations issued by the AASB that are relevant to its operations and effective for annual reporting periods beginning on or after 1 July 2010.
It has been determined by the Group that there is no impact, material or otherwise, of the new and revised Standards and Interpretations on its business and, therefore, no change is necessary to Group accounting policies.
The Group has also reviewed all new Standards and Interpretations that have been issued but are not yet effective for the half-year ended 31 December 2010. As a result of this review the Directors have determined that there is no impact, material or otherwise, of the new and revised Standards and Interpretations on its business and, therefore, no change necessary to Group accounting policies.
NOTE 2 - DEFERRED EXPLORATION AND EVALUATION | Consolidated | ||||
Half year to | Year to | ||||
31 December | 30 June | ||||
2010 | 2010 | ||||
$ | $ | ||||
Balance at beginning of period | 8,917,502 | 6,331,773 | |||
Expenditure incurred during the period | 871,849 | 2,585,729 | |||
Total deferred exploration and evaluation expenditure | 9,789,351 | 8,917,502 | |||
The recoupment of costs carried forward in relation to areas of interest in the exploration and evaluation phases is dependent upon the successful development and commercial exploitation or sale of the respective areas.
NOTE 3 - ISSUED CAPITAL | Consolidated | ||||
31 December | 30 June | ||||
2010 | 2010 | ||||
Ordinary Shares | $ | $ | |||
Issued and fully paid | 13,284,114 | 12,324,019 | |||
Movements in ordinary share capital of the Company were as follows:
Number | $ | ||||
Opening balance at July 1 2010 | 117,306,762 | 12,324,019 | |||
Rights Issue November 2010 | 29,133,284 | 1,020,005 | |||
Transaction costs | - | (59,910) | |||
Closing balance at 31 December 2010 | 146,440,046 | 13,284,114 | |||
Movements in options were as follows:
Number | $ | ||||
Opening balance at July 1 2010 | - | - | |||
Rights Issue November 2010 | 14,566,586 | - | |||
Closing balance at 31 December 2010 | 14,566,586 | - | |||
Options are exercisable at $0.08 on or before 30 April 2012.
NOTE 4 - CONTINGENT LIABILITIES
Scotgold Resources Limited and its controlled entities have no known material contingent liabilities as at 31 December 2010.
NOTE 5 - SEGMENT INFORMATION
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker. The chief operating decision maker, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the Board of Directors of Scotgold Resources Limited.
NOTE 6 - EVENTS SUBSEQUENT TO REPORTING DATE
On 19 January 2011, the Company advised that it has raised £616,250 (A$986,000) through the placement of 14.5 million ordinary fully-paid shares in the Company (the "Placing Shares"), at a consideration of £0.0425 (A$0.068) per share. The Placing Shares were issued together with one free attaching option for every two Placing Shares subscribed for. The options are exercisable at a price of $0.08 per share and expire on 30 April 2012.
The Placing Shares were placed with Kenglo One Limited ("Kenglo") an investment company incorporated in Jersey, Channel Islands specialising in natural resources. Kenglo already has significant holdings in Galantas Gold Corporation which operates a gold mine in Northern Ireland.
Following the placing Kenglo has an interest in 14,500,000 shares representing 9% of the Company's enlarged share capital.
In the opinion of the directors of Scotgold Resources Limited ("the company"):
1) The attached financial statements and notes thereto are in accordance with the Corporations Act 2001 including:
(a) complying with Accounting Standards, the Corporations Regulations 2001 and other mandatory professional reporting requirements; and
(b) giving a true and fair view of the consolidated entity's financial position as at 31 December 2010 and of its performance for the half-year then ended.
2) there are reasonable grounds to believe that the company will be able to pay its debts as and when they become due and payable.
This declaration is signed in accordance with a resolution of the Board of Directors made pursuant to s.303(5) of the Corporations Act 2001.
INDEPENDENT AUDITOR'S REVIEW REPORT
To the members of Scotgold Resources Limited
Report on the Condensed Half-Year Financial Report
We have reviewed the accompanying half-year financial report of Scotgold Resources Limited ("the Company") which comprises the condensed statement of financial position as at 31 December 2010, the condensed statement of comprehensive income, condensed statement of changes in equity and condensed statement of cash flows for the half-year ended on that date, notes comprising a summary of significant accounting policies and other explanatory notes and the directors' declaration of the consolidated entity comprising the Company and the entities it controlled at the half-year end or from time to time during the half-year.
Directors' Responsibility for the Half-Year Financial Report
The directors of the Company are responsible for the preparation of the half-year financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such control as the directors determine is necessary to enable the preparation of the half-year financial report that is free from material misstatement, whether due to fraud or error.
Auditor's Responsibility
Our responsibility is to express a conclusion on the half-year financial report based on our review. We conducted our review in accordance with Auditing Standard on Review Engagements ASRE 2410 Review of a Financial Report Performed by the Independent Auditor of the Entity, in order to state whether, on the basis of the procedures described, we have become aware of any matter that makes us believe that the financial report is not in accordance with the Corporations Act 2001 including: giving a true and fair view of the consolidated entity's financial position as at 31 December 2010 and its performance for the half-year ended on that date; and complying with Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations 2001. As the auditor of Scotgold Resources Limited, ASRE 2410 requires that we comply with the ethical requirements relevant to the audit of the annual financial report.
HLB MANN JUDD
A review of a half-year financial report consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with Australian Auditing Standards and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.
Independence
In conducting our review, we have complied with the independence requirements of the Corporations Act 2001.
Conclusion
Based on our review, which is not an audit, we have not become aware of any matter that makes us believe that the half-year financial report of Scotgold Resources Limited is not in accordance with the Corporations Act 2001 including:
(a) giving a true and fair view of the consolidated entity's financial position as at 31 December 2010 and of its performance for the half-year ended on that date; and
(b) complying with Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations 2001.
HLB MANN JUDD
Chartered Accountants
Perth, Western Australia N G NEILL
14 March 2011 Partner