Shearwater Regulatory News (SWG)

20 Dec 2006 07:01

Aurum Mining PLC20 December 2006 For Immediate Release 20th December 2006 AURUM MINING PLC ("Aurum" or "the Company") Interim Results for the six month period ended 30 September 2006 Aurum Mining plc (AIM: AUR), the company formed to acquire gold and othermineral extraction projects in the Former Soviet Union (FSU) and whose principalasset is the Andash project in the Kyrgyz Republic, is pleased to announce itsinterim results for the six months ended 30 September 2006. Highlights in the year to date •Award of Mining Licence from the Kyrgyz authorities for Andash Zone 1 •Completion of fully bankable feasibility study for Andash open cast mine, with initial production expected in 2008, showing: • Measured and indicated resource base increased to 19.2 million tons at 1.1g/t gold and 0.4% copper • Additional low grade measured and indicated resource of 5.74 million tonnes at 0.44g/t and 0.15 % copper • Proven and probable reserve of 16 million tonnes, containing over 1.2 million ozs of Gold and Gold equivalent in copper giving an in-ground value of over $750m • Mining rate of 2m tpa with a pit life of 8.5 years • Stripping ratio of 0.8 tonnes of waste to 1 tonne of ore • Average cash operating costs of $223 per oz of gold and gold equivalent • Capital cost of $55.5 million including contingencies • Payback period of 3.3 years and an IRR of 39.7%, • New opportunities identified at the Tokhtonysay and Nakhodka exploration targets within the Andash licence area • Net loss of £702,000 (H1 2005: net loss of £389,000) Sean Finlay, Aurum Mining's Chairman, said: "We have made tremendous progress inthe year to date and approach the New Year with a 1.2 million ozs reserve, aMining Licence and a bankable feasibility study for just one of the zones in ourAndash exploration area. We look forward to arranging project finance for ourplanned open cast operation at Andash Zone 1 and are also excited by thepotential of our other exploration areas. "We expect to begin our first gold and copper production in 2008 and are now,therefore, on the threshold of making the transition from a junior explorer to aproducer with the many benefits, including cash generation, that it will bring." For further information: Aurum Mining plc Tel: 020 7478 9050Mark Jones, Chief Executive Arbuthnot Securities Tel: 020 7012 2000Graham SwindellsJohn Toll Buchanan Communications Tel: 020 7466 5000Mark Court / Rebecca Skye Dietrich Notes to editors About Aurum MiningAurum Mining joined the AIM market of the London Stock Exchange in May 2004 withthe strategy of seeking, evaluating and acquiring gold and other mineralextraction projects in the Former Soviet Union (FSU). In January 2005 theCompany completed its first acquisition, giving the Company an explorationlicence over the Andash gold and copper project in the Kyrgyz Republic. Miningconsultant Wardell Armstrong International has confirmed a JORC resourceestimate of 1.49 million ozs of gold and gold equivalent in Andash Zone 1 inMeasured and Indicated categories. A Mining Licence for the Andash area wasawarded by the Kyrgyz authorities in November 2006. The feasibility study forZone 1 is scheduled for completion by the end of this year, allowing productionto begin in 2008. The Andash project also includes the Zone 2 and Zone 3 alongwith Tokhtonysay, Nakhodka and three other additional exploration areas. CHAIRMAN'S STATEMENT I am pleased to announce the interim results for the six month period ended 30September 2006. It was another period of significant progress at Aurumparticularly in terms of the development of Andash Zone 1, the most advancedexploration zone in our Andash licence area in the Kyrgyz Republic. I am alsopleased to report that this progress has continued strongly post the period end,putting the Company into the most exciting period of its development so far. During the period, and as announced on 5 September 2006, the JORC resourceestimate at Andash Zone 1 was upgraded following an infill drilling programmeand analysis of the results by Wardell Armstrong International (WAI), a leadingUK mining consultant with specific expertise in the FSU. As a result of the drilling programme WAI upgraded the JORC resource estimate,to a Measured and Indicated resource of 17.1 million tonnes, with a further200,000 tonnes in the inferred category. Our primary focus in the year to date has been preparing for the start ofproduction in 2008 and I am pleased to report that we have made very substantialprogress. We were awarded a Mining Licence for Andash in November, whichunderlines the willingness of the Kyrgyz authorities to work with the Company.We have also announced the successful completion of the bankable feasibilitystudy for the project financing and construction of the proposed mine. Thefeasibility study was compiled by WAI in association with engineeringconsultants GBM and ground engineering and environmental services group, GolderAssociates. The study also takes into account the local feasibility studyprepared earlier this year by Ken-Too Design and Research Centre, the leadingKyrgyz mining consultancy. The bankable feasibility study has allowed us to increase our JORC resource to19.2 million tonnes, with an additional low grade resource of 5.74 milliontonnes. It has also defined a proven and probable mining reserve of 16 milliontonnes containing over 1.2 million ozs of Gold and Gold equivalent in coppergiving an in-ground value of over $750m. Pit design allows us to mine at a rate of 2 million tonnes per annum, giving apit life of 8.5 years. The pit has a very low stripping ratio of 0.8 tonnes ofwaste to 1 tonne of ore, allowing us to mine at a cash cost of $223 per oz ofgold and gold equivalent. With a capital cost of $55.5 million includingcontingencies, the project payback is 3.3 years with an IRR of 39.7% As detailed in our preliminary results statement on 26 September 2006, ourstrategy is to begin production at the earliest opportunity at Zone 1, thisstudy coupled with the mining licence allows us to feel bullish about commencingproduction on target in 2008. Aurum takes great pride in its strategic intent of mining responsibly, and wehave continued our proactive interaction with local community groups andprogressed all aspects of the environmental study. While Zone 1 is our primary focus, owing to its ability to generate near-termcashflow, I am delighted to report that we have also made progress with theother exploration zones within the Andash licence area. Of particular note areTokhtonysay, where a recent geophysical study revealed highly promising results,which were announced on 16 November 2006, and Nakhodka, where recent geologicalmapping suggests a possible faulted extension of Zone 1. We intend to commencedrilling programmes at these new prospects during the New Year to establish aresource base at the earliest opportunity. Tokhtonysay and Nakhodka both have the advantage of being in close proximity tothe proposed mine at Zone 1, hence offering the potential to extend mine lifeand production rates when mining begins. PeopleI was delighted to welcome Chris Eadie to the newly created position of ChiefFinancial Officer, as announced on 17 November 2006. Chris, who has also joinedAurum's Board, is a Chartered Accountant who qualified withPricewaterhouseCoopers and whose broad financial experience will be of greatvalue to Aurum in the future. FinancialsThe net loss in the six months to 30 September 2006 was £702,000, compared witha net loss of £389,000 in the first half of 2005. The major reason for thisincreased 'year on year' financial loss is the significant additionalexpenditure incurred in completing the Bankable Feasibility Study for AndashZone 1. The basic and diluted loss per share was 5.99p (H1 2005: loss of 4.09p). OutlookWe have made tremendous progress in the year to date and approach the New Yearwith a 1.2 million oz reserve, a Mining Licence and a bankable feasibility studyfor just one of the zones in our Andash exploration area. We look forward toarranging project finance for our planned open cast operation at Andash Zone 1and are also excited by the potential of our other exploration areas. We expect to begin our first gold and copper production in 2008 and are now,therefore, on the threshold of making the transition from a junior explorer to aproducer with the many benefits, including cash generation that it will bring.We look forward to the future with both confidence and excitement. Sean FinlayChairman19th December 2006 Consolidated Profit and Loss Account For the six months ended 30 September 2006 (unaudited) Notes 6 months ended 6 months ended 12 months to 31 30 September 30 September March 2006 2006 2005 (audited) (unaudited) (unaudited) £000 £000 £000 Administrative expenses- exceptionalitems - - (252)Administrative expenses-other (645) (397) (1,006) --------------------- -------- --------- --------- -------- Totaladministrative expenses andoperating loss (645) (397) (1,258)--------------------- -------- --------- --------- -------- Net interest receivable andsimilar income 24 8 21 Interest payable and similar (81) - (14) Loss on ordinary activitiesbefore taxation (702) (389) (1,251) Tax on loss on ordinaryactivities 2 - - - --------------------- -------- --------- --------- --------Loss on ordinary activitiesafter taxation (702) (389) (1,251)--------------------- -------- --------- --------- ----------------------------- -------- --------- --------- --------Retained loss (702) (389) (1,251) --------------------- -------- --------- --------- --------Loss per share- basicand diluted 4 (5.99)p (4.09)p (13.16p) --------------------- -------- --------- --------- -------- All amounts relate to continuing activities.All recognised gains and losses are included in the profit and loss account. Consolidated Balance Sheet As at 30 September 2006 (unaudited) 6 months ended 6 months ended 12 months to 31 30 September 30 September March 2006 2006 2005 (audited) (unaudited) (unaudited) £000 £000 £000 Fixed AssetsIntangiblefixed assets 1,946 986 1,305Tangibleassets 257 277 263Investmentsother 55 - -Investments in subsidiary - - -undertakings --------------------- --------- --------- --------Total FixedAssets 2,258 1,263 1,568--------------------- --------- --------- -------- Current AssetsStocks 56 9 11Debtors: amounts falling duewithin oneyear 216 289 85 Cash at bankand in hand 1,034 127 321 Creditors: amounts falling duewithin one year (288) (141) (339)--------------------- --------- --------- --------Net current assets 1,018 284 78--------------------- --------- --------- -------- Convertibleloan notes (643) - (643)--------------------- --------- --------- --------Net Assets 2,633 1,547 1,003--------------------- --------- --------- -------- Capital and reservesCalled upshare capital 124 95 95Other reserve 304 - 304Share premium 4,062 1,687 1,687Merger Reserve 498 498 498Profit andloss account (2,355) (733) (1,581)--------------------- --------- --------- --------Shareholders'fund 2,633 1,547 1,003--------------------- --------- --------- -------- Consolidated cash flow statement For the 6 months ended 30 September 2006 (unaudited) 6 months ended 6 months ended 12 months to 31 30 September 30 September March 2006 2006 2005 (audited) (unaudited) (unaudited) £000 £000 £000 Net cashoutflow fromoperatingactivities (915) (562) (953)--------------------- --------- --------- -------- Returns on investments andservicing of financeInterestreceived andsimilar income 24 8 21Interest paid (81) (14)--------------------- --------- --------- --------Net cash(outflow)inflow fromreturns oninvestmentsand servicingof finance (57) 8 7--------------------- --------- --------- -------- Capital expenditure and financialinvestment Payments to acquire investments (55) - -Purchase of tangible fixed assets (23) (96) (138)Deferred exploration expenditure (640) (167) (486)--------------------- --------- --------- ----------------------------- --------- --------- --------Net cash outflow from capitalexpenditure and financial investment (718) (263) (624)--------------------- --------- --------- --------Cash outflow before management ofliquid resources and financing (1,690) (817) (1,570)--------------------- --------- --------- -------- FinancingIssue ofordinaryshares (net ofissued costs) 2,403 - -Issue ofconvertibleloan note (netof issuedcosts) - 947--------------------- --------- --------- --------Net cashinflow fromfinancing 2,403 - 947--------------------- --------- --------- ----------------------------- --------- --------- --------Increase/(Decrease) in cash 713 (817) (623)--------------------- --------- --------- ----------------------------- --------- --------- -------- Notes to the Interim Report 1. Basis of preparation The interim accounts for the six months ended 30 September 2006 are unauditedand do not constitute statutory accounts in accordance with section 240 of theCompanies Act 1985. The financial statements have been prepared in accordance with currentlyapplicable Accounting Standards in the United Kingdom, which have been appliedconsistently, and under the historical cost convention. Accounting policies consistent with those applied in the financial statementsfor the year ended 31 March 2006 have been used in preparing the unauditedinterim financial statements for the 6 months ended 30 September 2006. 2. Taxation There is no tax charge for the period due to the loss arising. 3. Dividends The Directors are not declaring a dividend for the six months ended 30 September2006. 4. Loss per ordinary share The calculation of basic and diluted loss per share of 5.99 pence is based onthe loss for the period of £702,000 and on 11,714,991 ordinary shares, being theweighted average number of ordinary shares in issue during the period ended 30September 2006.The effect of all potential ordinary shares is antidilutive and thereforediluted EPS is the same as basic EPS. 5. COPIES OF INTERIM RESULTS Copies of the interim results will be sent to shareholders and will be availablefrom the company's registered office, 26 Curzon Street, London W1J 7TQ This information is provided by RNS The company news service from the London Stock Exchange