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24 Sep 2009 11:00
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24 September 2009
Triple Plate Junction plcΒ ("TPJ" or the "Company")
Trading update
Triple Plate Junction, (AIM:TPJ)Β has completed a strategic review ofΒ itsΒ activities inΒ Papua New Guinea ("PNG"),Β VietnamΒ andΒ Zambia.Β It was hoped that the gold prospects in Vietnam and copper production in Zambia could both yield substantial returns to shareholders, however this potential has not been realized.Β TPJ is cash constrained and therefore must concentrate its resources on PNG where it has the prospects of the fastest return on investment.Β
PNG
TPJ's great strength inΒ PNGΒ is the fact that almost all the cost of theΒ continuingΒ exploration activities are being paid by the Company's joint venture partners, Barrick Gold Corporation and Newmont Ventures LimitedΒ ("Newmont").
Barrick hasΒ recently completed expenditure of AU$5m onΒ itsΒ joint venture areasΒ with TPJΒ thereby earningΒ itΒ an 80% stake in the area. TPJ has indicated to Barrick that it is not intending to pay its share of theΒ nextΒ work program and will diluteΒ itsΒ interest in the JVΒ from 20% to 13.72%.Β
TheΒ Company's joint venture with NewmontΒ is progressing and as the cost is undertaken by Newmont,Β Newmont'sΒ interest in a number of the Company's exploration licences and licence applications in the Morobe area ofΒ PNGΒ is increasing.Β
Further to TPJ's announcement dated 24 December 2008Β the final conditions relating to the issue of 17,000,000 new ordinary shares of 1p each in the Company ("Shares") to Newmont, pursuant toΒ the agreement between TPJ and Newmont dated 23 December 2008, have been satisfied.Β The newΒ SharesΒ have been issuedΒ at $0.073Β per Share, and the subscription funds have, with the agreement of Newmont, been used to offset exploration costs borne by Newmont, on the Company's behalf, inΒ PNG.Β Following this issue,Β NewmontΒ will have aΒ 10.07%Β interestΒ in TPJΒ Shares, and holds a further 17,000,000 warrants in the Company. This JV envisagesΒ Newmont potentially spendingΒ up to US$15mΒ over the next few years to earn a 70% interest in the Wau-Morobe licences.
Application has therefore been made for the admission to trading onΒ AIMΒ of 17,000,000 new Shares, and dealings are expected to commence onΒ 29Β September 2009, at which time the Company shall have a total ofΒ 168,769,912Β Shares in issue.
Vietnam
The Company's activitiesΒ have beenΒ centeredΒ onΒ two explorationΒ licences atΒ Pu Sam Cap in NW Vietnam. TheΒ CompanyΒ was granted theΒ licencesΒ inΒ 2005Β andΒ theyΒ wereΒ the formation asset of the Company in a joint venture with Newmont Vietnam Pty Ltd. Since that date some US$4.6mΒ has been spent on exploration of these areas without establishing a commercialΒ resource.Β Β Under Vietnam's Mineral Law, theΒ licences haveΒ nowΒ expired, but the Law provides that they may be re-issued for a further two years. If the application for re-issue is granted,Β an estimated expenditure ofΒ approximately US$3mΒ would be requiredΒ toΒ take the project through the next licence term without certainty of continuity of tenure beyond that point.Β
It isΒ alsoΒ not clear whether investment in explorationΒ and miningΒ in Vietnam is as secure as previously perceived.Β Recent moves in Vietnam against an unrelatedΒ tungsten project haveΒ caused particular concern.Β The Company isΒ thereforeΒ currently considering how it can minimize its exposureΒ in VietnamΒ in view of these uncertainties and the Company's present financial constraints.Β
Zambia
TheΒ Company investedΒ in a smelting plant and some mining of copper activities in Zambia as a means of supporting the continuing exploration activities being carried out in Vietnam and PNGΒ from the cash flow that the mine was expected to generate.Β
Regrettably, this cash flow was never forthcoming as a result of a number of factors:
TheΒ supply of copper ore from theΒ DemocraticΒ Republic of Congo ("DRC") was stopped overnight mid-way throughΒ the construction ofΒ aΒ smelter. Whilst this smelter was intended to ultimately beneficiate copper fromΒ TPJ'sΒ own mines, its design and purpose was to smelt the imported ore for cash flow during the initial stages.
TheΒ area that the Company believed it had an exclusive licence toΒ mine was contested and it took two years for the Company to successfully establish its rights,Β through the Zambian legal system. This meant that during the period of record prices for copperΒ the Company had no production.
WhenΒ the area was finally granted and a mining operation commenced,Β particularly severe weather conditions brought the fledgling mining operation to a halt,Β and it has never reopened due to severe cash restrictionsΒ at TPJ.
Regrettably, at the operating level in Zambia, matters have deteriorated to an alarming state where miners and others have seized equipment and restricted access to theΒ Company's pit site. Outstanding creditors to the Zambian subsidiaryΒ now total some US$550,000 andΒ inΒ addition theΒ working capitalΒ requirementΒ to restartΒ operations is estimated atΒ more thanΒ US$400,000.
The Board has taken the view that,Β in the current financial climate, finding the finances to continue operations in Zambia are beyond thisΒ Company and as a consequence have decided to withdraw from any further activities in Zambia and to sell the subsidiary, Triple Plate Junction (Africa) LimitedΒ ("TPJAL"),Β to theΒ Company's Zambian-resident former directorΒ GeoffΒ WalshΒ for a nominal sum of Β£1,Β together with guarantees to take over all liabilities and contingent liabilitiesΒ as well as forgiveness of unpaid salary fromΒ TPJΒ ("the Disposal").Β TPJAL'sΒ netΒ assetsΒ as at 31 March 2009Β wereΒ Β£1,308,000, and in the year to 31 March 2009Β generatedΒ a loss of Β£2,360,000Β on revenue ofΒ Β£122,076.
Related Party TransactionΒ
Geoff Walsh was, until 25 August 2009, Chief Executive Officer of TPJ, and is therefore classed as a related party under theΒ AIMΒ Rules for Companies. The entering into of the Disposal withΒ Mr.Β Walsh is therefore classified as a transaction with a related party for the purposes of theΒ AIMΒ Rules. In accordance, therefore, with theΒ AIMΒ Rules, the directors of the Company, having consulted with the Company's nominated adviser, Arbuthnot Securities Limited, consider that the terms of the Disposal are fair and reasonable insofar as the Company's shareholders are concerned.
It is not clear whetherΒ the Company'sΒ remaining activitiesΒ will be sufficient forΒ itΒ to maintain a listing onΒ AIMΒ with all the associatedΒ costs.Β During the forthcoming months, the directors will be examining whether to raise funds and expand or change activities,Β delist, orΒ ceaseΒ trading.Β
For more information please contact:
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Triple Plate Junction PLC |
020 73409970 |
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Peter Wright, Finance Director |
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Buchanan Communications |
020 7466 5000 |
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Tim Anderson,Β Miranda Higham |
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Arbuthnot SecuritiesΒ |
020 7012 2000 |
|
John Prior |
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