Last checked at 9 Nov 2010 07:00
AURUM MINING PLC
("Aurum" or "the Company")
Interim Results for the six months ended 30 September 2010
Aurum Mining plc (AIM: AUR) is pleased to announce its interim results for the six months ended 30 September 2010.
Sean Finlay, Aurum's Chairman, said: "It has been a period of continued progress in the transformation of the Company. The process to return capital to Shareholders is now well underway and the Company is working to find an exit for those Shareholders who do not wish to continue as investors in the Company after the cash has been returned. We expect that a restructured Shareholder register will create an attractive cash shell with the potential to exploit some of the exciting investment opportunities that are currently available in the market.
We are extremely disappointed by the recent events in the Kyrgyz Republic that threaten the Company's residual 10% shareholding in the Andash asset, but we remain confident that, if given a fair hearing, we can, in time, successfully defend the claims. We are committed to pursuing actions against those who have been directly involved in bringing this adverse action against the Company's interests.''
A copy of these Interim results can also be found on the Company's website, www.aurummining.net
For further information:
Aurum Mining plc | Tel: 020 7499 4000 |
Mark Jones, Chief Executive Chris Eadie, Chief Financial Officer | |
Arbuthnot Securities | Tel: 020 7012 2000 |
James Steel/Richard Johnson |
Chairman's statement
In the Company's 2010 Annual Report, it was outlined that the Company was pursuing a twofold strategy for the benefit of its Shareholders. It is this twofold strategy that has driven the Company's activities over the past six months.
On the one hand the Company is seeking to satisfy the demands of a group of major Shareholders by returning a very substantial proportion of the Company's cash to all Shareholders. On the other hand the Company is working to ensure that, once the cash is returned, the Company can then be transformed into an attractive shell company that can be used to exploit some of the exciting investment opportunities that are currently available in the market.
In terms of the significant return of cash to Shareholders, this process is now well underway. The second Court hearing to approve the reduction of capital is scheduled for the beginning of December and it is expected that the 15 pence per share cash distribution will take place shortly thereafter.
With the return of cash completed and the capitalisation of the Company correspondingly reduced, the path will effectively be clear for investors to acquire the stakes of the Company's existing major Shareholders who no longer wish to remain Shareholders of Aurum. By replacing these major Shareholders, whose only objective has been to take as much cash as possible out of the Company, and by replacing them with Shareholders who are committed to the future growth and development of the Company, Aurum will become free and unencumbered to pursue a forward looking strategy.
The Board is looking at, and considering, a number of exciting proposals which could eventually be acquired by, or reversed, into the Company. However the key first step is undoubtedly the re-engineering of the Shareholder register. Without this, the Company will continue to be restricted and restrained from moving forward, and until these Shareholders have exited their holdings the Company will continue to be hamstrung in its discussions and negotiations on potential transactions.
The Board disputes the outcome of the recent litigation in the Kyrgyz Republic that threatens the Group's 10% residual shareholding in the Andash asset. Nonetheless, and based on previous experience, the Board considers that this type of groundless claim, is a consequence of operating in an unstable political environment.
The Company will be commencing legal action to protect its asset and will keep the market updated as the situation develops.
Financial Information
The Company currently has free net cash balances of approximately £8.4 million. This balance takes into account all known liabilities and takes into account all the costs of the return of capital process.
The return of capital to Shareholders will be approximately £7.5m and it is currently expected that this will take place in early December.
As a result of the on-going litigation in the Kyrgyz Republic, the Board has taken the prudent decision to write down the value of its residual 10% holding in the Andash asset to zero. As the litigation process continues, the Board will continually review the carrying value of this asset.
With the return of capital completed, the Company will be undergoing a rigorous cost cutting and cash preservation exercise. Measures to be undertaken will include changes to the Board structure and a renegotiation of contracts with all advisers and suppliers. Details of the Board changes will be announced to the market once the capital reduction process has been completed.
Summary
The Board looks forward to the next phase of Aurum's transformation with great confidence. With the return of capital completed and the anticipated restructure of the Shareholder register, the Board feels confident the Company will, at last, be able to pursue a forward looking strategy that will enable it to take advantage of some of the very exciting opportunities available in the market today.
Sean Finlay
Chairman
9 November 2010
Condensed consolidated income statementFor the six months ended 30 September 2010
Six months to 30 September | Six months to 30 September | Year ended 31 March | ||
2010 | 2009 | 2010 | ||
$'000 | $'000 | $'000 | ||
Notes | Unaudited | Unaudited | Audited | |
Impairment of available for sale investment | 5 | (1,250) | - | - |
Other administrative expenses | (1,332) | (1,612) | (2,428) | |
Administrative expenses | (2,582) | (1,612) | (2,428) | |
Operating loss | (2,582) | (1,612) | (2,428) | |
Finance income | 20 | 1 | 739 | |
Finance expenses | (258) | (3) | - | |
Loss for the period before taxation | (2,820) | (1,614) | (1,689) | |
Taxation | - | - | - | |
Loss for the period from continuing operations | (2,820) | (1,614) | (1,689) | |
(Loss)/profit for the period from discontinued operations | 3 | - | (166) | 726 |
Loss for the period attributable to equity shareholders of the parent company | (2,820) | (1,780) | (963) | |
Loss per share expressed in US cents per share | ||||
From continuing operations | ||||
Basic and Diluted | (5.85)c | (3.35)c | (3.51)c | |
From discontinued operations | ||||
Basic and Diluted | - | (0.34)c | 1.51c | |
Total operations | ||||
Basic and Diluted | 4 | (5.85)c | (3.69)c | (2.00)c |
Condensed consolidated statement of comprehensive income
For the six months ended 30 September 2010
Six months to 30 September | Six months to 30 September | Year ended 31 March | ||
2010 | 2009 | 2010 | ||
$'000 | $'000 | $'000 | ||
Unaudited | Unaudited | Audited | ||
Loss after taxation for the period | (2,820) | (1,780) | (963) | |
Other comprehensive income: | ||||
Exchange differences on translating foreign operations | 552 | 1,716 | (28) | |
Other comprehensive income for the period | 552 | 1,716 | (28) | |
Total comprehensive expense for the period attributable to the equity shareholders of the parent company | (2,268) | (64) | (991) | |
Condensed consolidated statement of financial position
As at 30 September 2010
30 September | 30 September | 31 March | ||
2010 | 2009 | 2010 | ||
Notes | $'000 | $'000 | $'000 | |
Unaudited | Unaudited | Audited | ||
Assets | ||||
Non-current assets | ||||
Available for sale financial asset | 5 | - | - | 1,250 |
Property, plant and equipment | 7 | 17 | 11 | |
Total non-current assets |
| 7 | 17 | 1,261 |
Current assets | ||||
Inventories | - | 32 | - | |
Receivables | 218 | 266 | 280 | |
Cash and cash equivalents | 13,398 | 3,439 | 14,584 | |
Assets classified as held for sale | 6 | - | 14,309 | - |
Total current assets | 13,616 | 18,046 | 14,864 | |
Total assets | 13,623 | 18,063 | 16,125 | |
Liabilities | ||||
Current liabilities | ||||
Trade and other payables | 253 | 1,563 | 503 | |
Total current liabilities | 253 | 1,563 | 503 | |
Total liabilities | 253 | 1,563 | 503 | |
Total net assets | 13,370 | 16,500 | 15,622 |
Capital and reserves attributable to the equity holders of the company | ||||
Share capital | 924 | 921 | 921 | |
Share premium reserve | 40,696 | 40,609 | 40,609 | |
Merger reserve | 5,816 | 5,816 | 5,816 | |
Presentational currency translation reserve |
| (12,943) | (11,751) | (13,495) |
Warrant reserve | 276 | 350 | 350 | |
Retained earnings | (21,399) | (19,445) | (18,579) | |
Total equity | 13,370 | 16,500 | 15,622 |
Condensed consolidated statement of changes in equity
For the six months ended 30 September 2010
Share capital | Share premium reserve | Merger reserve | Presentational currency translation reserve | Warrant reserve | Retained earnings | Total equity | |
Unaudited | $'000 | $'000 | $'000 | $'000 | $'000 | $'000 | $'000 |
At 1 April 2010 | 921 |
40,609 | 5,816 | (13,495) | 350 | (18,579) | 15,622 |
Total comprehensive Expense for the period | - |
- | - | 552 | - | (2,820) | (2,268) |
Conversion of warrants into ordinary shares | 3 |
87 | - | - | (74) | - | 16 |
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At 30 September 2010 | 924 | 40,696 | 5,816 | (12,943) | 276 | (21,399) | 13,370 |
For the six months ended 30 September 2009
Share capital | Share premium reserve | Merger reserve | Presentational currency translation reserve | Warrant reserve | Retained earnings | Total equity | |
Unaudited | $'000 | $'000 | $'000 | $'000 | $'000 | $'000 | $'000 |
At 1 April 2009 | 921 |
64,295 | 5,816 | (13,467) | 350 | (17,665) | 40,250 |
Total comprehensive Expense for the period | - |
- | - | 1,716 | - | (1,780) | (64) |
Issue of B shares | 23,686 |
(23,686) | - | - | - | - | - |
Capital repayment to Shareholders | 23,686 |
- | - | - | - | - | (23,686) |
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At 30 September 2009 | 921 | 40,609 | 5,816 | (11,751) | 350 | (19,445) | 16,500 |
Condensed consolidated statement of changes in equity
For the year ended 31 March 2010
Share capital | Share premium reserve | Merger reserve | Presentational currency translation reserve | Warrant reserve | Retained earnings | Total equity | |
Unaudited | $'000 | $'000 | $'000 | $'000 | $'000 | $'000 | $'000 |
At 1 April 2009 | 921 |
64,295 | 5,816 | (13,467) | 350 | (17,665) | 40,250 |
Total comprehensive Expense for the period | - | - | - | (28) | - | (963) | (991) |
Issue of B shares | 23,686 |
(23,686) | - | - | - | - | - |
Capital repayment to Shareholders | 23,686 |
- | - | - | - | - | (23,686) |
Share based payments | - |
- | - | - | - | 49 | 49 |
At 31 March 2010 | 921 | 40,609 | 5,816 | (13,495) | 350 | (18,579) | 15,622 |
Condensed consolidated cash flow statement
For the six months ended 30 September 2010
Six months to 30 September | Six months to 30 September | Year ended 31 March | |
2010 | 2009 | 2010 | |
$'000 | $'000 | $'000 | |
Unaudited | Unaudited | Audited | |
Cash flow from operating activities | |||
Loss for the period before tax | (2,820) | (1,780) | (963) |
Adjustments for: | |||
Depreciation of property, plant and equipment | 4 | 4 | 10 |
Finance income | (20) | (1) | (739) |
Finance expense | 258 | 3 | - |
Other operating income | - | (250) | - |
(Profit)/loss on sale of discontinued operations | - | - | (1,489) |
(Profit)/loss on disposal of property, plant and equipment | - | (34) | - |
Impairment of available for sale investment | 1,250 | - | - |
Share-based payments | - | - | 49 |
Foreign exchange differences | (258) | (3) | - |
Cash flow from operating activities before changes in working capital | (1,586) | (2,061) | (3,132) |
Increase / (decrease) in trade and other payables | (250) | 1,157 | 101 |
Decrease / (increase) in trade and other receivables | 62 | 696 | 671 |
Decrease / (increase) in inventories | - | 8 | - |
Taxation | - | - | - |
Net cash flow from operating activities | (1,774) | (200) | (2,360) |
Investing activities | |||
Purchase of property, plant and equipment | - | (3) | (26) |
Disposal of discontinued operations, net of cash disposed of | - | - | 1,473 |
Proceeds from sale of property, plant and equipment | - | 45 | - |
Purchase of available for sale financial asset | - | - | (1,250) |
Proceeds from sale of option | - | 250 | - |
Interest income | 20 | 1 | 5 |
Net cash flow from investing activities | 20 | 293 | 202 |
Financing activities | |||
Capital repayment to shareholders | - | (23,686) | (23,686) |
Repayment of loan | - | - | 13,500 |
Issue of ordinary shares | 16 | - | - |
Net cash flow from financing activities | 16 | (23,686) | (10,186) |
Net decrease in cash and cash equivalents | (1,738) | (23,593) | (12,344) |
Condensed consolidated cash flow statement
For the six months ended 30 September 2010
Six months to 30 September | Six months to 30 September | Year ended 31 March | |
2010 | 2009 | 2010 | |
$'000 | $'000 | $'000 | |
Unaudited | Unaudited | Audited |
Cash and cash equivalents at the beginning of the period | 14,584 | 25,680 | 25,680 |
Effect of exchange rate changes on cash and cash equivalents | 552 | 1,352 | 1,248 |
Cash and cash equivalents at the end of the period | 13,398 | 3,439 | 14,584 |
Notes to the condensed consolidated interim financial statements
For the half year ended 30 September 2010
1. Basis of preparation
The financial information set out in this report is based on the consolidated financial statements of Aurum Mining plc and its subsidiary companies (together referred to as the 'Group'). The accounts of the Group for the six months ended 30 September 2010, which are unaudited, were approved by the Board on 9 November 2010. The financial information contained in this interim report does not constitute statutory accounts as defined by s435 of the Companies Act 2006.
These accounts have been prepared in accordance with the accounting policies set out in the Report and Financial Statements of Aurum Mining plc for the year ended 31 March 2010. The statutory accounts for the year ended 31 March 2010 have been filed with the registrar of Companies. The auditors' report on those accounts was unqualified, did not draw attention to any matters by way of emphasis and did not contain a statement under section 498 (2) or 498 (3) of the Companies Act 2006. These accounts have not been audited by the Company's auditors.
The Group financial statements are presented in United States Dollars and all values are rounded to the nearest thousand Dollars ($'000) except when otherwise indicated.
Based upon cash flow projections the Directors are of the view that the Group has sufficient cash to fund overheads for the next 12 months.
2. Changes in accounting policies
There were no changes in accounting policies during the six months ended 30 September 2010.
3. Discontinued operations
On 22 December 2009 the Group completed the disposal of Kaldora Company Limited and the Andash Mining Company, which operated in the Kyrgyz Republic. The Group owned 100% of the Andash Mining Company until 22 October 2009, when it disposed of 20% of the Company to local interests as part of settlement of the Bishkek court case and to secure its mining rights. Gross proceeds for the disposal amounted to $15m which included repayment of a $13.5m intercompany loan by Andash Mining Company.
Financial information relating to the discontinued operations is set out below.
Consideration received: | Year ended 31 March 2010 $'000 | |
Consideration Cash | 1,501 | |
Consideration Option fee (cash) | 250 | |
Legal costs directly attributable to sale of Kaldora and Andash | (278) | |
Net consideration | 1,473 | |
Net assets disposed: | ||
Non-current assets | 14,051 | |
Inventories | 29 | |
Trade and other receivables | 79 | |
Trade and other payables | (2) | |
Repayment of intercompany loan | (13,500) | |
Total net assets disposed of | 657 | |
Recycling of cumulative translation reserve (Kaldora + Andash) | (673) | |
Total disposed of | (16) | |
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Gain on disposal of discontinued operations | 1,489 | |
Results of discontinued operations: | Year ended 31 March 2010 $'000 | Six months to 30 September 2009 $'000 |
Operating expenses | (763) | (166) |
Gain from selling operations after tax | 1,489 | - |
Profit/ (loss) from discontinued operations | 726 | (166) |
The cash flow statements includes the following amounts relating to discontinued operations: | ||
Cash flow used in operating activities | (763) | (166) |
Cash flow from investing activities | 1,473 | - |
Cash flow from financing activities | 13,500 | - |
Total cash flows from discontinued operations | 14,210 | (166) |
4. Loss per share
Basic loss per share is calculated by dividing the loss attributable to the ordinary shareholders by the weighted average number of ordinary shares outstanding during the period.
For diluted loss per share, the weighted average number of shares in issue is adjusted to assume conversion of all dilutive potential ordinary shares.
As at 30 September 2010 there were 3,135,000 (30 September 2009: 4,305,000, 31 March 2010: 3,805,000) potentially dilutive ordinary shares. Dilutive potential ordinary shares include share options and warrants.
The effect of all potential ordinary shares arising from the exercise of options and warrants is anti-dilutive and therefore diluted loss per share has not been calculated.
Six months to 30 September | Six months to 30 September | Year ended 31 March | |
2010 | 2009 | 2010 | |
$'000 | $'000 | $'000 | |
Unaudited | Unaudited | Audited | |
Net loss attributable to equity holders of the parent: | |||
From continuing operations | (2,820) | (1,614) | (1,689) |
From discontinued operations | - | (166) | 726 |
From total operations | (2,820) | (1,780) | (963) |
Six months to 30 September | Six months to 30 September | Year ended 31 March | |
2010 | 2009 | 2010 | |
Unaudited | Unaudited | Audited | |
Weighted average number of shares: | |||
Basic Loss per Share | 48,219,044 | 48,188,275 | 48,188,275 |
Effect of dilutive share options and warrants | - | - | - |
Diluted Loss per share | 48,219,044 | 48,188,275 | 48,188,275 |
5. Available-for-sale financial assets
In January 2010, the Company announced that its 100% owned subsidiary, Tryden International Limited, has acquired a 10% stake in the Andash asset from Investcentre Talas LLC ('ITL') for $1.25m.
In June 2010, the Company announced that it had given Kentor an option to acquire this residual 10% holding in the Andash asset for $1.8m. However, the Directors considered its fair value at 31 March 2010 to be $1.25m.
On 27 October 2010, Aurum announced that Tryden International Limited was named, amongst others, as a defendant to a civil case which has been heard in the Talas Inter-District Court (the "Court") in the Kyrgyz Republic. The key implication of the resulting Court ruling is that Tryden may be stripped of its residual 10 per cent stake in the Andash asset.
The Company strongly disputes the claim and will be appealing the decision of the Court. However, at this time the Board has taken the prudent view to fully provide against this investment and to write down its carrying value to zero. The Board will be continually reviewing the carrying value of this investment as the litigation process proceeds.
For further information on these transactions, see the Chairman's statement.
6. Assets classified as held for sale
On 12 November 2009 the Group disposed its subsidiary Kaldora which held the Company's stake in the Andash project. As a result of this transaction $14,309,000 of property, plant and equipment was classified as assets held for sale at the period ending 30 September 2009.
7. Post balance sheet events
Details of significant post balance sheet events are included within the Chairman's statement.