SRX.L Regulatory News (SRX)

4 Sep 2006 07:01

Titanium Resources Group Ltd04 September 2006 Titanium Resources Group Limited Interim Results 3 September: Titanium Resources Group ("TRG" or "the Group") announces interimresults for the six months ended 30 June 2006 ("the Period"). Highlights •Sales of US$14.9 million during the Period •Cash on hand at the end of the Period of more than US$62 million •Net assets of US$176 million at the end of the Period •Option to purchase a third dredge for Sierra Rutile mine exercised •To date 35,000 tonnes of rutile and over 600,000 tonnes of bauxite shipped •Acquisition of an Exclusive Prospecting Licence covering 1,742km2 and containing an extensive series of former beach strands Commenting on the results, TRG Chief Executive Len Comerford said: "We are now focusing on expanding operations and reducing costs throughproduction efficiencies. The outlook is extremely good, with solutions to ourcurrent problems in hand and expansion of our operations underway." "A key goal for the period ahead is completing Dredge D2. This will double ourrutile production, bringing it to more than 200,000 tonnes per annum. We havemade exceptional progress in the last few months toward that goal. We haveassembled a world-class team to deliver the project with completion scheduledfor the latter half of 2007." Contacts Len Comerford / Walter KansteinerTitanium Resources GroupTelephone: +44 20 7321 0000 Michael Oke / Andy MillsAura FinancialTelephone: +44 20 7321 0000 Chief Executive's Review Titanium Resources Group has had a very busy, challenging and rewarding firsthalf of 2006. We are now focusing on expanding operations and reducing coststhrough production efficiencies. The outlook is extremely good, with solutionsto our current problems in hand and expansion of our operations underway. As weannounced in May some management positions have been changed in response to thechallenges we faced. We continue to enjoy the support of the Sierra LeoneGovernment and this harmonious relationship has contributed to the significantstrides made by the mines. One of our main challenges was the industry-wide high cost of fuel whichadversely affected the Company's cash flow as was highlighted in the recenttrading and operational update. The changeover to more fuel efficient HFO powergenerators has begun and the new generators will be fully in place by mid 2007.The first delivery of HFO units is expected in the first Quarter of 2007 and theentire changeover should be completed by mid- 2007. The new power-house isprojected to cut fuel costs in half and provide enough capacity not only to meetour current requirements but also the additional power requirements for oursecond Dredge (D2) and our third Dredge (D3). The restart difficulties have now been overcome, and critical spares for some ofthe older technology items have been procured. This is minimising any downtimeand gives us the confidence that we will meet our targets for the second half of2006. A key goal for the period ahead is completing Dredge D2. This will double ourrutile production, bringing it to more than 200,000 tonnes per annum. We havemade exceptional progress in the last few months toward that goal and haveassembled a world-class team to deliver the project with completion scheduledfor the latter half of 2007. We are fast-tracking the project and have alreadycompleted all the enabling works for the deposits D2 will mine. At this time we are delighted to announce that we have exercised our option topurchase a third dredge (D3) from OCI Engineering of Malaysia. The ExistingBucket line Dredge will be reconfigured to increase its nominal operatingcapacity to 685 tonnes per hour. We intend to use the dredge initially to mineour Mobgwemo tailings area. The production of this dredge will add approximately30,000 tonnes of Rutile per annum and bring our annual production toapproximately 240,000 tonnes. We are finalising our contracts with OCI andcurrent indications are for a 17-month construction period. Once the tailingshave been mined, D3 will either be moved to other known deposits or to areascurrently being explored within the area of our mining lease. To date the company has exported 35,000 tonnes of Rutile We are on schedule toship 50,000 tonnes of Rutile in the second half of this year as previouslyannounced. Our exploration programme is expanding on our current licenses and we aredelighted to announce that we have acquired a further 1,742km2 area under a twoyear, renewable Exclusive Prospecting Licence. We have signed a contract with Wallis Drilling of Australia to carry outexploration drilling. To supplement this we have purchased a mechanical Bankarig to carry out exploration drilling in previously un-investigated areascovered by extensive swamps. We have an extensive infill drilling programme onour current lease following the identification of a number of potential targetareas. Our new prospecting licence along the southern coast of Sierra Leone isextremely exciting to us. We have identified an extensive series of former beachstrands. The heavy mineral potential of these beach strands is indicated fromdata collected by the Geological Survey of Sierra Leone ("GSSL") in the late1980's. This data was obtained from a preliminary bore and test pit programmeundertaken on part of the licence area The GSSL has previously reported mineralassemblages containing up to 15% heavy minerals (HM), comprising ilmenite,zircon, rutile and monazite with above 80% potential recorded in a number ofsamples. Encouraging levels of zircon were also observed with some samplereporting a ratio of nearly 1:1 ilmenite to zircon. Given the nature of thearea, slime content (-53 microns fraction) is expected to be low, an importantconsideration in any future exploitation of the area. We have not yet performedany of our own exploration work on this prospect, and the information availableto us does not include the depths of zones tested, drilling intervals or anaverage grade of mineralisation. Chris Mortimer BSc Hons, MSc DUC, SRL's ChiefGeologist and a mineral sands expert, has reviewed the GSSL's technicalmineralization, drilling and exploration data which is included within thisannouncement. We have also exercised the option described in the company's Admission Documentdated 19 August 2005 to use part of the US$74 million raised on Admission topurchase all of Nord Resources Corporation's interest to certain cash flow fromTRG's Sierra Rutile project. TRG's has also paid $0.6 million to resolvecommercial disputes and settle litigation between the parties that was delayingthe purchase. The additional cash flow and consolidation of TRG's control overthe entire corporate structure represent a significant benefit to TRG and itsshareholders. Sierra Minerals Limited The Bauxite mine continues to perform well with our operator, P W MiningInternational Limited, managing to increase production. To date the company has exported just over 600,000 tonnes of bauxite. We are onschedule to ship the balance of the target production of 1.2m tonnes of bauxitewhich is forward sold. At current levels we expect to export in the region of1.5m tonnes in 2007, a 25% increase over original projections. Marketing We have had no difficulty selling our production. Our current rutile productioncapacity is sold through 2008. On the bauxite side, we have forward salescontracts with Alcoa World Alumina LLC and Glencore AG for approximately 1.2mtonnes per annum and demand for the additional tonnage we expect to produce. Themarket continues to show strong demand for the Group's rutile and bauxiteproducts. The Company is positioning itself for solid performance bydiversifying its customer base and delivering a high-quality product. Currentlywe have contracts or are in negotiations with customers from around the world. Outlook The world markets for all TRG's products (rutile, ilmenite and bauxite) remainstrong and the Group has had no difficulty securing long-term off takeagreements for its production. At present, the Company has long-term rutilecontracts in place with Tronox, Huntsman and Kronos. The bauxite mine haslong-term sales agreements in place with Alcoa World Alumina LLC and Glencore AGto sell the mine's total estimated annual production. Having addressed the issues that have affected the performance of the Group sofar this year, I and the rest of the Board are confident that the Group is nowwell positioned to create significant value in the years ahead. TITANIUM RESOURCES GROUP LTD AND ITS SUBSIDIARIES CONSOLIDATED BALANCE SHEET - JUNE 30, 2006 June 30, 2006 December 31, 2005 ------- --------ASSETS USD'000 USD'000Non-current assetsProperty, plant and equipment 74,494 61,279Intangible assets 12,962 12,985Non-current receivables 1,393 1,367Deferred tax assets 50,304 50,304 -------- -------- 139,153 125,935 -------- -------- Current assetsInventories 12,232 7,155Trade and other receivables 13,523 8,777Cash and cash equivalents 62,425 79,682 -------- -------- 88,180 95,614 -------- -------- Total assets 227,333 221,549 ======== ======== EQUITY AND LIABILITIESCapital and reservesShare capital 194,951 194,951Revenue deficit (18,757) (13,577) -------- --------Equity holders' interest 176,194 181,374 -------- -------- LIABILITIESNon-current liabilitiesBorrowings 32,040 28,390Provision for liabilities and charges 2,150 2,150 -------- -------- 34,190 30,540 -------- -------- Current liabilitiesTrade and other payables 16,938 9,625Current tax liabilities 10 10Borrowings 1 - -------- -------- 16,949 9,635 -------- --------Total liabilities 51,139 40,175 -------- --------Total equity and liabilities 227,333 221,549 ======== ======== CONSOLIDATED INCOME STATEMENT FOR THE PERIOD ENDED JUNE 30, 2006 6 months to May 16, 2005 June 30, to December 31, 2006 2005 ------- --------Continuing operations USD'000 USD'000 Sales 14,888 337 Cost of sales (5,918) (98) -------- -------- Gross profit 8,970 239 Other income 1,340 1,721 Operating expense (448) (80) Administrative and marketing expenses (11,101) (14,828) Other expenses (2,737) (4,124) -------- -------- Operating loss (3,976) (17,072) Finance costs (1,204) (489) -------- --------Loss before taxation (5,180) (17,561) Income tax expense - 3,984 -------- -------- Loss for the period from continuing operations (5,180) (13,577) ======== ======== Loss attributable to equity holders of the Group (5,180) (13,577) ========== ========= Loss per share (USD)- basic (0.06) (0.16) ========== ========= CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE PERIOD ENDED JUNE 30, 2006 Share Revenue capital deficit Total ------- ------- ------- USD'000 USD'000 USD'000 Balance at January 1, 2006 194,951 (13,577) 181,374Loss for the period - (5,180) (5,180) -------- -------- --------Balance at June 30, 2006 194,951 (18,757) 176,194 ======== ======== ======== Balance at May 16, 2005 - - -Issue of share capital 194,951 - 194,951Loss for the period - (13,577) (13,577) -------- -------- --------Balance at December 31, 2005 194,951 (13,577) 181,374 ======== ======== ======== CONSOLIDATED CASH FLOW STATEMENT FOR THE PERIOD ENDED JUNE 30, 2006 6 months to May 16, 2005 to June 30, 2006 December 31, 2005 -------- --------- USD'000 USD'000Operating activitiesCash absorbed in operations (2,315) (26,974)Interest received 1,295 1,277 -------- ---------Net cash used in operating activities (1,020) (25,697) -------- --------- Investing activitiesAcquisition of subsidiaries net of cash acquired - 32,553Purchase of property, plant and equipment (16,212) (23,604)Loans and advance granted (26) (640) -------- ---------Net cash (used in)/generated from investingactivities (16,238) 8,309 -------- --------- Financing activitiesIssue of ordinary shares - 91,493Proceeds from long term borrowings - 5,577 -------- ---------Net cash from financing activities - 97,070 -------- --------- Net increase in cash and cashequivalents (17,258) 79,682 ======== ========= Movement in cash and cash equivalentsAt January 1, 2006 79,682 -Increase (17,258) 79,682 -------- ---------At June 30, 2006 62,424 79,682 ======== ========= TITANIUM RESOURCES GROUP LTD AND ITS SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE PERIOD ENDED JUNE 30, 2006 1. GENERAL INFORMATION Titanium Resources Group Ltd is a limited liability company incorporated anddomiciled in the British Virgin Islands. The address of its registered office isat P.O.Box 173, Kingston Chambers, Road Town, British Virgin Islands. 2. BASIS OF PREPARATION The financial statements have been prepared in accordance with InternationalFinancial Reporting Standards The financial statements have been prepared inaccordance with International Financial Reporting Standards (IFRS). Thefinancial statements are prepared under the historical cost convention. The interim financial statements for the half year ended June 30, 2006 areunaudited. The accounting policies used in the preparation of the interimunaudited financial statements are consistent with those used in the annualfinancial statements for the year ended December 31, 2005. The interim financialstatements comply with IAS 34. 3. LOSS PER SHARE June, 30 2006 December 31, 2005 ----------- ----------- USD'000 USD'000 Basic loss per shareLoss attributable to equity holders of the groupfrom continuing operations (thousand) (5,180) (13,577) ----------- ----------- Weighted average number of ordinary sharesin issue 82,397,742 82,397,742 ----------- ----------- Basic loss per share from continuingoperations (0.06) (0.16) =========== =========== 4. CAPITAL COMMITMENTS June, 30 December 2006 31, 2005 --------- --------- USD'000 USD'000Property, plant and equipment acquisition contracted for at theBalance sheet date but not yet incurred: 3,900 12,739 ========= ======== Sierra Rutile Limited, a subsidiary of Titanium Resources Group Ltd, enteredinto the above capital commitments. ENDS This information is provided by RNS The company news service from the London Stock Exchange