Last checked at 28 Sep 2012 07:00
28 September 2012
Strategic Minerals Plc
("the Company")
Interim results for the six months ended 30 June 2012
Strategic Minerals Plc (AIM: SML; USOTC: SMCDY), the magnetite iron ore producer and exploration company is pleased to announce its interim results for the six months ended 30 June 2012.
Financial highlights
Operational highlights
Contact:
Company | |
Strategic Minerals plc | |
Paul Harrison, CEO | +44(0) 20 7930 6009 |
Nominated Adviser/Joint Broker | |
Allenby Capital Limited | |
Jeremy Porter / James Reeve | +44 (0) 20 3328 5656 |
Joint Broker | |
Daniel Stewart & Company Plc | |
Martin Lampshire / David Hart | +44 (0) 20 7776 6550 |
Financial Public Relations | |
GTH Communications Limited | |
Toby Hall / Suzanne Johnson Walsh | +44 (0) 20 3103 3903 |
Chairman's Statement
I am pleased to present our interim report for the 6-month financial period ended 30 June 2012, a period during which the Company generated its first revenues, albeit modest, from sales of its magnetite deposit at the Cobre Mine in New Mexico. These revenues were generated by sales at mine-gate to the USA domestic market and they have continued to grow strongly since 30 June 2012.
Financial Highlights
The Company incurred a loss for the financial period of £1,217k as compared to a loss of £1,584k for the 6-month period ended 31 May 2011, which included exceptional costs of £922k relating to share based payments and £407k relating to AIM admission costs. The financial report includes comparative information not only for the 6-month period ended 31 May 2011, but also for the period from 1 June 2011 to 31 December 2011. It is important to note that results for the 6-months ended 30 June 2012 include the CompanyÕs operations in New Mexico acquired in September 2011.
Basic and fully diluted loss per share for the period was 0.29 pence (0.96 pence for the six months ended 31 May 2011).
Cobre Mine, New Mexico
As announced on 25 June 2012, the Company completed the rehabilitation and upgrade of the rail link to the Cobre Mine in New Mexico which will enable rail shipments of its magnetite iron ore to begin. At full capacity the rail facility will be able to handle over 50,000 dry metric tonnes per month.
On 28 August we announced the successful completion of a test shipment by rail to the port of Guaymas in Mexico. The test, which comprised an eight rail car shipment, was undertaken to verify key processes and procedures ahead of commencement of 72-car unit train commercial shipments for the export market. This was a vital test ahead of full scale commercial rail shipments, essential to our fulfilment of export sales. We are delighted to have proved that our systems, procedures and equipment can deliver a robust and efficient rail freight operation and whilst some minor operational glitches and equipment problems were encountered, these were quickly resolved by the team.
Following the test shipment we have now commenced unit train rail shipments to port, an important milestone for the Company. The Company's rail freight operations include its loading facility inside the mine gate, railroad switching during the 900+ kilometre journey to port, border crossing from the United States into Mexico and unloading and storage at the port. Given our state of readiness to commence commercial shipments, the recent collapse in the iron ore price has been particularly disappointing. However, we have been exploring ways to operate and trade profitably in this volatile price environment and management are confident that the Company can commence exports shortly.
Australian Operations
Management has been working with its retained advisors with regard to its exploration properties in Australia. In June management embarked upon an extensive review of the Company's exploration assets to determine which are most promising. In that regard whilst the Iron Glen asset continues to show significant potential, some of the Company's other early stage exploration assets are still under review ahead of the Company committing exploration capital to the next stage of development. I look forward to reporting to you further going forward with regard to these assets.
The Company reported significant management changes during the financial period. Paul Harrison was appointed as Chief Executive Officer of the Company, whilst I accepted the role of Executive Chairman. The former Chairman of the Company, Steven Sanders, stepped down as Chairman but remains a non-executive director of the Company. Meanwhile former executive director, Matthew Bonthrone, and non-executive director, Alex Borrelli, did not offer themselves for re-election at the Company's Annual General Meeting in June 2012 in order to focus on their other business interests and therefore stood down at that time. On behalf of the Board I would like to thank Alex and Matthew for the contribution they both made in bringing the Company to the AIM market last year and its subsequent development. The Board wishes them well in their future endeavours.
Finally, I would like to take this opportunity to thank my fellow Directors, our management and staff in New Mexico and our advisers for their support and hard work on your behalf during the period.
James Fyfe
Executive Chairman
27 September 2012
Consolidated Comprehensive Income Statement
For the period to 30 June 2012
| 6 Months to 30 June 2012 Unaudited | 6 Months to 31 May 2011 Unaudited | 7 Months to 31 Dec 2011 Audited |
| £'000s | £'000s | £'000s |
| Revenue | 334 | - | - |
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Cost of sales | (173) | - | - |
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Gross Profit | 161 | - | - |
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-Recurring administrative expenses | (1,350) | (260) | (1,568) |
-Share based payments | - | (922) | (1,062) |
-AIM admission costs | - | (407) | (581) |
Administrative expenses | (1,350) | (1,589) | (3,211) |
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Operating Loss | (1,189) | (1,589) | (3,211) |
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Finance income Finance cost | - (28) | 5 - | 24 (33) |
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Loss before tax | (1,217) | (1,584) | (3,220) |
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Income tax charges | - | - | - |
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Loss for the period | (1,217) | (1,584) | (3,220) |
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Other comprehensive income | - | - | - |
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Total comprehensive loss for the period | (1,217) | (1,584) | (3,220) |
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Attributable to: | |||
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-Owners of the parent | (1,217) | (1,584) | (3,220) |
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Loss per share | |||
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From continuing operations: | |||
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Basic and diluted | (0.29p) | (0.96p) | (1.16p) |
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Consolidated Statement of Financial Position as at 30 June 2012
| As at 30 June 2012 Unaudited | As at 31 May 2011 Unaudited | As at 31 Dec 2011 Audited |
| £'000s | £'000s | £'000s |
| Assets | |||
Non-current assets | |||
Goodwill IntangiblesDeferred exploration and evaluation expenditure Property, plant and equipment | 8,744 8361,283 2,145 | - -350 1 | 8,744 1981,083 1,519 |
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| 13,008 | 351 | 11,544 |
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Current assets | |||
Inventories | 60 | - | - |
Trade and other receivables | 470 | 278 | 503 |
Cash and cash equivalents | 789 | 491 | 299 |
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1,319 | 769 | 802 | |
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Total assets | 14,327 | 1,120 | 12,346 |
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Equity and liabilities |
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Capital and reserves | |||
Issued capital | 448 | 281 | 399 |
Share premium | 30,272 | 15,549 | 26,408 |
Share based payment reserve | 1,062 | 922 | 1,062 |
Other reserves | (14,363) | (14,297) | (14,363) |
Currency translation reserve | (22) | (11) | (9) |
Accumulated deficit | (4,617) | (1,765) | (3,400) |
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Total equity | 12,780 | 679 | 10,097 |
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Current liabilities | |||
Borrowings | 1,333 | - | 1,104 |
Trade and other payables | 214 | 441 | 1,145 |
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| 1,547 | 441 | 2,249 |
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Total equity and liabilities | 14,327 | 1,120 | 12,346 |
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Consolidated Statement of Cash Flows
For the period to 30 June 2012
| 6 Months to 30 June 2012 Unaudited | 6 Months to 31 May 2011 Unaudited | 7 Months to 31 Dec 2011 Audited |
| £'000s | £'000s | £'000s |
| Operating activities | (2,177) | (532) | (1,703) |
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Investing activities | |||
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Acquisition of subsidiary , net of cash acquired | 122 | ||
Payment for exploration expenditure | (200) | (143) | (876) |
Purchases of plant and equipment | (637) | - | (1,436) |
Financing activities | |||
Proceeds from issue of shares Net proceeds from Issue of loan notes | 3,275 229 | 756 - | 2,283 1,499 |
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Net cash inflow | 490 | 81 | (111) |
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Cash and cash equivalents at the beginning of the period |
299 |
410 |
410 |
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Bank balances and cash | 789 | 491 | 299 |
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Reconciliation of operating loss to net cash outflow from operating activities.
| 6 Months to 30 June 2012 Unaudited | 6 Months to 31 May 2011 Unaudited | 7 Months to 31 Dec 2011 Unaudited |
| £'000s | £'000s | £'000s |
| Loss for the period | (1,189) | (1,584) | (3,211) |
Adjustments for: | |||
Finance income | - | 5 | 24 |
Finance cost Foreign exchange Share based payment reserve | (28) (13) - | - - 922 | (33) (9) 1,062 |
Depreciation and amortisation | 11 | 1 | 1 |
(increase)/decrease in inventories | (60) | ||
(increase)/decrease in receivables | 33 | (254) | (58) |
Increase/(decrease) in payables | (931) | 378 | 521 |
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Net cash outflow from operating activities | (2,177) | (532) | (1,703) |
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Consolidated statement of changes in equity
For period to 30 June 2012
Share capital | Share premium | Share based payment reserve | Accumulated deficit | Other Reserve | Currency translation reserve | Total | |
£'000s | £'000s | £'000s | £'000s | £'000s | £'000s | £'000s | |
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As at 30 November 2010 | - | 715 | 46 | (181) | - | - | 580 |
Share issued for period | 281 | 14,834 | - | - | - | - | 15,115 |
Loss after tax | - | - | - | (1,584) | - | - | (1,584) |
Share based payments | - | - | 876 | - | - | - | 876 |
Currency translation reserve | - | - | - | - | - | (11) | (11) |
Group reorganisation | - | - | - | - | (14,297) | - | (14,297) |
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Balance as at 31 May 2011 | 281 | 15,549 | 922 | (1,765) | (14,297) | (11) | 679 |
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Share issued for period | 118 | 10,859 | - | - | - | - | 10,977 |
Loss after tax | - | - | - | (1,635) | - | - | (1,635) |
Share based payments | - | - | 140 | - | - | - | 140 |
Currency translation reserve | - | - | - | - | - | 2 | 2 |
Group reorganisation | - | - | - | - | (66) | - | (66) |
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Balance as at 31 December 2011 |
399 |
26,408 |
1,062 |
(3,400) |
(14,363) |
(9) |
10,097 |
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Shares issued for period | 49 | 3,864 | - | - | - | - | 3,913 |
Loss after tax | - | - | - | (1,217) | - | - | (1,217) |
Currency translation reserve | - | - | - | - | - | (13) | (13) |
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Balance as at 30 June 2012 | 448 | 30,272 | 1,062 | (4,617) | (14,363) | (22) | (12,780) |
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Notes to the Interim Financial Information
1. General Information
Strategic Minerals Plc is a public limited company incorporated in England and Wales with company number 07440902 and quoted on the AIM market of the London Stock Exchange Plc.
2. Basis of Preparation
This interim report has been prepared using the historical cost convention, on a going concern basis and in accordance with International Financial Reporting Standards ("IFRS") as adopted by the European Union, using accounting policies which are consistent with those set out in the financial statement for the period ended 31 December 2011. This interim financial information for the six months ended 30 June 2012 was approved by the Board on 27 September 2012.
Taxes
Taxes on income in the interim periods are accrued using the tax rate that would be applicable to expected total annual earnings.
Standards and Interpretations adopted with no material effect on financial statements
The following new and revised Standards and Interpretations have been adopted in these financial statements. Their adoption has not had any significant impact on the amounts reported in these financial statements but may effect the accounting for future transactions and arrangements.
Title | Issued | Effective date
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IFRS 7 Financial instruments: disclosures (amendment) | Oct 10 | Accounting periods beginning on or after 1 July 2011 |
Standards and Interpretations issued but not effective on financial statements
The following new and revised Standards and Interpretations have not been adopted in these financial statements as they are not yet effective in the period being reported on.
Title | Issued | Effective date |
IFRS 9 Financial instruments: classification and measurement | Oct 10 | Accounting periods beginning on or after 1 January 2015 |
IFRS 11 joint Arrangements | May 11 | Accounting periods beginning on or after 1 January 2013 |
IFRS 12 Disclosures of Interests with Other Entities | May 11 | Accounting periods beginning on or after 1 January 2013 |
IFRS 13 Fair Value Measurement | May 11
| Accounting periods beginning on or after 1 January 2013 |
IFRS 10 Consolidated Financial Statements
| May 11 | Accounting periods beginning on or after 1 January 2013 |
IAS 1 Presentation of Items of Other Comprehensive Income Ð Amendments to IAS 1 | June 11 | Accounting periods beginning on or after 1 July 2012 |
IAS 19 Employee Benefits (Revised) | June 11 | Accounting periods beginning on or after 1 January 2013 |
3. Segmental Analysis
In the opinion of the Directors the group has one class of business, being the exploration for, and development and production of, Mineral, and other related activities.
The group's primary reporting format is determined by geographical segment according to the location of the exploration assets. There is currently two geographic reporting segments: Rest of the world involved in mineral exploration and development in Australia and USA, and the United Kingdom being the head office.
Mineral exploration and development | |||||||||
The segment information for the period ended 30 June 2012 is as follows: | |||||||||
United Kingdom | Rest of the World | Total | |||||||
£'000 | £'000 | £'000 | |||||||
Profit and loss account | |||||||||
Gross profit | - | 161 | 161 | ||||||
Administrative expenses | (482) | (868) | (1,350) | ||||||
Operating loss | (482) | (707) | (1,189) | ||||||
Finance income | - | - | - | ||||||
Finance costs | (28) | - | (28) | ||||||
Loss on ordinary activities before taxation | (510) | (707) | (1,217) | ||||||
Income tax benefit / (expense) | - | - | - | ||||||
Loss for the year | (510) | (707) | (1,217) | ||||||
Assets and liabilities | |||||||||
Segment assets | 33 | 13,505 | 13,538 | ||||||
Cash and cash equivalents | 737 | 52 | 789 | ||||||
Total assets | 770 | 13,557 | 14,327 | ||||||
Segment liabilities | 1,419 | 128 | 1,547 | ||||||
Total liabilities | 1,419 | 128 | 1,547 | ||||||
4. Operating loss for the period is stated after charging / (crediting)
| 6 months to 30 June 2012 Unaudited | 6 months to 31 May 2011 Unaudited | 7 months to 31 Dec 2011 Audited |
| £'000s | £'000s | £'000s |
Depreciation | 0 | 1 | 2 |
Foreign Exchange | (7) | 2 | (12) |
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5. Remuneration of key management personnel
The fees paid in the period to 30 June 2012 were. | SM | IGH | Ebony Iron | Total |
£ | £ | £ | £ | |
M Bonthrone | 24,000 | - | - | 24,000 |
S Sanders | 29,751 | - | - | 29,751 |
G Cardona | - | - | - | - |
J Fyfe | 20,000 | - | - | 20,000 |
P Griffiths
| -
| 58,659
| -
| 58,659
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A Borrelli | 17,500 | - | - | 17,500 |
J Peters | - | 29,329 | 23,844 | 53,173 |
P Harrison | 20,000 | - | - | 20,000 |
─────── | ─────── | ─────── | ─────── | |
Total | 111,251 | 87,988 | 23,844 | 223,083 |
6. Loss per share
| 6 months to 30 June 2012 Unaudited | 6 months to 31 May 2011 Unaudited | 7 months to 31 Dec 2011 Audited |
| £'000s | £'000s | £'000s |
| Loss per ordinary share | |||
Basic- pence | (0.29p) | (0.96p) | (1.16p) |
Diluted Ð pence | (0.29p) | (0.96p) | (1.16p) |
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The loss per ordinary share is based on the Company's loss for the period of £1,217,000 (31 May 2011 - £1,584,000: 31 December 2011 - £3,219,647) and a basic and diluted weighted average number of shares in issue of 420,687,484 (31 May 2011 - 164,358,168: 31 December 2011 - 278,716,703).
7. Called up Share Capital
The issued share capital as at 30 June 2012 was 448,158,893 Ordinary Shares of 0.1p each.
On 12th January 2012 3,700,000 shares were issued at a premium of 10p per share.
On 30th January 2012 5,000,000 shares were issued at a premium of 10.62p per share.
On 8th March 2012 1,000,000 shares were issued at a premium of 10.62p per share.
On 1st May 2012 7,500,000 shares were issued at a premium of 8p per share.
On 2nd May 2012 30,000,000 shares were issued at a premium of 8p per share.
On 3rd May 2012 1,562,500 shares were issued at a premium of 8p per share.
8. Related-party transactions
Transactions between the Group and its subsidiaries, which are related parties, have been eliminated on consolidation and are not disclosed in this note.
9. Events subsequent to 30 June 2012
On 28 August 2012, the Company announced the successful completion of a test shipment by rail of its magnetite material which was undertaken before commercial shipments to ensure key processes and procedures were in order.
10. The unaudited results for 6 months ended 30 June 2012 do not constitute statutory accounts within the meaning of Section 435 of the Companies Act 2006. The comparative figures for the period ended 31 December 2011 are extracted from the audited financial statements which contained an unqualified audit report and did not contain statements under Sections 498 to 502 of the Companies Act 2006.
11. This interim financial statement will be, in accordance with Rule 26 of the AIM Rules for Companies, available shortly on the Company's website at www.strategicminerals.co.uk.