SRX.L Regulatory News (SRX)

30 Sep 2005 07:02

Titanium Resources Group Ltd30 September 2005 TITANIUM RESOURCES GROUP LTD Interim Results 30 September, 2005 Titanium Resources Group ("TRG" or "the Group") today announces maiden interimresults for the six months ended 30 June 2005. Highlights • Financial results in line with the Board's expectations at the time of the Group's IPO in August 2005. • Successful admission to the Alternative Investment Market of the London Stock Exchange and raising of £41 million. • Demand for the Group's rutile and bauxite remains strong. • Refurbishment plans for the Group's rutile and bauxite mines are on budget and on schedule, with production from both projects expected to commence in the first quarter of 2006. • Offtake agreements signed for more than half of the Group's production of rutile and negotiations continue with a number of other buyers for the remaining production. Interest from buyers exceeds the Group's current production capacity. • Long term offtake agreements for the Group's entire bauxite production already in place. Commenting on the results, TRG Chairman Walter Kansteiner said: "The successful IPO provides TRG with the financial strength to accelerate itsrestart programme at its flagship mine, Sierra Rutile Limited, and expedite thecompletion of Dredge No. 2." "Sierra Minerals Holdings' refurbishment of the bauxite operation is wellunderway. PW Mining International Limited is completing the refurbishmentprogramme and will operate the mine following commissioning." "Both operations are on track to begin production first quarter 2006." ContactsWalter KansteinerTitanium Resources GroupTelephone: +44 20 7321 0000 Michael Oke / Andy MillsAura FinancialTelephone: +44 20 7321 0000Mobile: +44 7841 748 911 CHAIRMAN'S REVIEW The first six months of 2005 proved a pivotal period for Titanium ResourcesGroup following the Group's listing on the Alternative Investment Market ("AIM") of the London Stock Exchange in August. The successful IPO provided TRG withthe financial strength to accelerate the restart programme at its flagshiprutile mine, Sierra Rutile Limited, and to fund the restart of the Group's SMLBauxite Project. With the successful completion of the IPO, the TRG Board willbe able to make operational decisions, independent of any single shareholder. TRG successfully raised approximately £41 million through an institutionalplacing of 87.1 million shares at 47p per share. TRG's shares were admitted toAIM for trading on 25 August 2005. The AIM offering increased the Group'sfinancial resources and raised its profile in the mineral sands industry. Consolidated financial statements have been prepared for the first six monthsended 30 June 2005. As indicated in the accountants' report contained in theGroup's AIM admission document, as of 31 December 2004 the combined companiesdid not constitute a legal group and the individual financial accounts of thecompanies were aggregated. Accordingly, historical comparative consolidatedfinancial information is not available for this period. However, the Boardregards these results as having been prepared under IFRS and as in line with thefinancial statements for the full year set out in the Group's AIM AdmissionDocument. Expenditures during the period relate mainly to ongoing restart activities withfull-scale refurbishment of the Sierra Rutile Project beginning May 2005.Full-scale bauxite refurbishment started in June 2005 and is scheduled forcompletion by the first quarter of 2006. As previously reported, on 1 March 2005, Sierra Rutile Limited ("SRL") receivedthe first disbursement amounting to Euro 18 million of the EU borrowing facilitysecured through the Government of Sierra Leone. Interest is payable at the rateof 8% per annum with the first interest payment due in 2008. The repayment isin 10 equal instalments with the first repayment due on 1 March 2012. REFURBISHMENT PLAN The Group has successfully accelerated the restart of the rutile mine withoutimpeding restart operations of the bauxite mine. Both operations are on trackto begin production in the first quarter of 2006. Dredge D1 is expected toproduce 100,000 tonnes of product in 2006. The bauxite mine is expected toproduce at least 1.2 million tonnes in 2006. Sierra Minerals Holdings' refurbishment of the bauxite operation is wellunderway. PW Mining International Limited is completing the refurbishmentprogramme and will operate the mine following commissioning. MARKET OUTLOOK Titanium Demand for SRL's high quality rutile is strong and SRL has signed salescontracts for more than half of its production and is negotiating with a numberof buyers for the remainder of its production. Interest from buyers exceedsSRL's current production capacity. 2004 saw a major increase in world titanium dioxide pigment demand toapproximately 4.6 million tonnes with a number of pigment producers seeking toimplement additional production capacity through the de-bottlenecking andbrown-field expansion of existing manufacturing facilities. In addition, theindustry witnessed additional demand for high-titanium bearing minerals as aresult of increased requirements from titanium sponge producers and otherindustrial markets such as welding rods because of higher construction activity.While overall pigment demand eased in the first half of 2005, plants usinghigh-titanium ores, such as those produced at SRL, are operating at or near fullcapacity. SRL will produce two grades of rutile, namely Standard Grade rutile andIndustrial Grade rutile. Standard Grade rutile is principally destined forconsumption in the manufacturing of titanium dioxide pigments via the chlorideprocess and titanium sponge. Industrial Grade rutile is specifically producedfor the welding rod, thermal insulation and ceramics markets. At the current pace of sales, the production of Standard Grade rutile from SRL'soperation should be fully committed on contract shortly, with terms extending upto five years. In addition, the Group has received considerable interest fromthe industrial market segment, with extensive product testing and evaluationcurrently being undertaken by potential customers throughout the world.Commercial negotiations to secure long-term contracts are being undertaken byThe Natural Rutile Company Limited, the marketing business which is a whollyowned subsidiary of TRG. Bauxite Sierra Minerals Holdings 1, Ltd will produce 1.2 million tonnes ofmetallurgical-grade bauxite in 2006, which has been sold on contract to twomajor producers of aluminium. World demand for bauxite for the first half of2005 continues to be very strong, and the Group is evaluating ways to increaseproduction to take advantage of the strong market. TITANIUM RESOURCES GROUP LTDUNAUDITED CONSOLIDATED BALANCE SHEET AS AT 30 JUNE 2005 Note 2005 USD'000ASSETS Non-current assetsIntangible assets 4 6,720Property, plant and equipment 47,021Non-current receivables 741Deferred tax assets 5 43,680 98,162 Current assetsInventories 7,059Trade and other receivables 70Bank balances and cash 30,323 37,452 TOTAL ASSETS 135,614 EQUITY AND LIABILITIES Capital and reservesShare capital 1,050Share consideration 6 99,000Revenue deficit (2,632)Shareholders' interests 97,418 Non-current liabilitiesProvision for liabilities and charges 2,017Borrowings 24,990Non-current payables 3,855 30,862 Current liabilitiesTrade and other payables 6,760Provisions for liabilities and charges 358Current tax liability 216 7,334 TOTAL EQUITY AND LIABILITIES 135,614 TITANIUM RESOURCES GROUP LTD UNAUDITED CONSOLIDATED PROFIT AND LOSS STATEMENT FOR THE SIX MONTHS ENDED 30 JUNE 2005 2005 USD'000 Operating revenue - Cost of sales - Gross profit - Other income - Operating expense - Administrative expenses (820) Other operating expenses (227) Exceptional item (663) Operating loss (1,710) Finance costs (872) Net loss (2,582) Taxation - Net loss for the period (2,582) TITANIUM RESOURCES GROUP LTD UNAUDITED CONSOLIDATED CASH FLOW STATEMENT FOR THE PERIOD SIX MONTHS ENDED 30 JUNE 2005 2005 USD'000 Cash flows from operating activitiesNet generated from operations 13,558 Investing activitiesPurchase of property, plant and equipment (7,212) Net cash used in investing activities (7,212) Financing activitiesProceeds from long-term borrowings 23,875Net cash provided by financing activities 23,875 Net increase in cash and cash equivalents 30,221 Movement in cash and cash equivalents At January 1, 102Increase 30,221 At June 30, 30,323 TITANIUM RESOURCES GROUP LTD NOTES TO THE FINANCIAL STATEMENTS - 30 JUNE 2005 1. BASIS OF PREPARATION The financial statements have been prepared in accordance with InternationalFinancial Reporting Standards. 2. CONSOLIDATED FINANCIAL STATEMENTS The consolidated financial statements incorporate the financial statements ofthe Group and enterprises controlled by the Group (its subsidiaries). Controlis achieved where the Group has the power to govern the financial and operatingpolicies of an investee enterprise so as to obtain benefits from its activities.The results of subsidiaries acquired or disposed of during the year areincluded in the consolidated profit and loss account from the date of theiracquisition or up to the date of their disposal. The consolidated financial statements have been prepared in accordance with thepurchase method. Goodwill is initially measured at cost. After initialrecognition, goodwill is measured at cost less any accumulated losses. Theresults of subsidiaries which are not consolidated are brought into thefinancial statements to the extent of dividends received. All significant inter company transactions, balances and unrealised gains ontransactions are eliminated. Unrealised losses are also eliminated unless costcannot be recovered. 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. 3. INVESTMENTS IN SUBSIDIARIES The subsidiary companies are as follows: % Holding• Global Aluminium Ltd 100• Sierra Mineral Holdings 1, Ltd 100• Bauxite Marketing Ltd 100• Titanium Fields Resources Ltd 100• SRL Acquisition No.1 Ltd "A" Share* 100• The Natural Rutile Company Ltd 100• SRL Acquisition No.3, Ltd 100• Sierra Rutile Holdings Ltd 100• Sierra Rutile Ltd 100 4. INTANGIBLE ASSETS Intangible assets represent goodwill arising on the acquisition of thesubsidiaries. USD'000 Fair value of shares issued 1,000Convertible into shares 99,000 100,000Fair value of net assets acquired (93,280)Goodwill 6,720 5. DEFERRED TAX ASSET Deferred tax asset is made up as follows: USD'000 Sierra Rutile Limited 43,579Sierra Mineral Holdings 1 Ltd 101 43,680 6. SHARE CONSIDERATION The share consideration represents the balance of convertible shares which willbe issued in TRG after the period end in respect of the acquisition of GlobalAluminium Ltd and Titanium Fields Resources Ltd. 7. PAR VALUE OF SHARES The common shares have no par value. * Nord Resources Corp. holds one "B" share under an agreement dated 16 June1999, the details of which are set in paragraph 10.9 of Part 5 of the TRG AIMAdmission Document (p. 103). This information is provided by RNS The company news service from the London Stock Exchange