The Mission Group Regulatory News (TMG)

1 Jul 2005 09:54

Thistle Mining Inc.01 July 2005 THISTLE MINING INC (the "Company") FINAL RESULTS FOR THE YEAR ENDED 31 DECEMBER 2004 The Company announces that following the completion of the Companies' CreditorsArrangement Act restructuring procedure in Canada announced today, its auditorshave now signed off on the Company's financial statements for the year ended 31December 2004. The full audited accounts are published and available to be downloaded from theCompany's website (www.thistlemining.com). The primary statements, comprisingconsolidated balance sheets, statement of operations and statement of cashflows, have been reproduced in this announcement. Your attention is drawn tothe going concern note which follows the financial information below. The financial information in this announcement has been extracted from but doesnot constitute full statutory accounts. The Annual Report and FinancialStatements for the year ended 31 December 2004 will be despatched toshareholders shortly. Consolidated Balance Sheets (in thousands of US dollars) 2004 2003At December 31 (restated - note 2)AssetsCurrent AssetsCash and cash equivalents 1,844 1,799Accounts receivable 1,654 5,643Investments 1,130 2,945Inventories 3,700 6,380Other assets 1,729 2,962 10,057 19,729Property, plant and equipment 16,365 20,139Mining properties 42,953 75,659 69,375 115,527 Liabilities and Shareholders' DeficiencyCurrent LiabilitiesAccounts payable and accrued liabilities 18,795 21,355Current debt 82,334 10,111Income taxes payable 3,989 4,945Total current liabilities 105,118 36,411 Long-term debt - 25,277Reclamation provision 3,000 2,738Derivative financial instruments - 59,406Future income tax liabilities 49 11,334 108,167 135,166 Minority interests - 1,164 Shareholders' Deficiency Common shares 108,883 85,133Contributed surplus 2,735 -Warrants 14,578 2,577Deficit (162,327) (105,854)Equity adjustment from foreign currency translation (2,661) (2,659)Total shareholders' deficiency (38,792) (20,803) 69,375 115,527 Going concern (note 1) Consolidated Statements of Operations (in thousands of US dollars) 2004 2003For the years ended 31 December (restated - note 2)Sales 65,949 67,481Net impact of derivative financial instruments 12,188 (2,322)Cost of sales (133,711) (83,535)Gross loss (55,574) (18,376) Costs and ExpensesGeneral and administrative expenses (8,006) (4,723)Depreciation (44) (38)Amortization of deferred charges (1,828) (1,682)Interest (3,146) (2,773)Foreign currency loss (4,711) (4,069)Write down of investments (1,482) (38)Other gains and losses 965 (1,416)Minority interest in net earnings 262 (24)Loss before income taxes and discontinued operations (73,564) (33,139)Discontinued operations 5,109 209Income tax recovery 11,982 6,332Net loss for the year (56,473) (26,598) Net loss per share before discontinued operations - basic and diluted (0.15) (0.12)Net loss per share - basic and diluted (0.14) (0.11) Statement of Deficit (in thousands of US dollars) 2004 2003 For the years ended 31 DecemberDeficitBalance, beginning of year (105,854) (79,256)Net loss for the year (56,473) (26,598) Balance, end of the year (162,327) (105,854) Statement of Cash Flows (in thousands of US dollars) 2004 2003At 31 December (restated - note 2)Operating activitiesNet loss for the year from continuing operations (61,582) (26,807) Add (deduct) items not affecting cash from operating activitiesDepletion and depreciation, and impairment 39,257 13,499Future income and mining tax provisions (10,794) (9,209)Foreign exchange 4,711 1,602Unrealized (gain) loss on derivative instruments (12,187) 2,381Gains/(losses) on investments 774 (944)Stock options issued 2,735 -Other non-cash items 567 31 (36,519) (19,447) Changes in non-cash working capital balancesAccounts receivable 2,602 (649)Inventories (112) (1,218)Other assets (595) -Accounts payable and accrued liabilities (904) 4,973Income and mining taxes recoverable and payable 273 (3,586) 1,264 (480) Cash flows provided by (used in) operating activities (35,255) (19,927) Net change in discontinued operations 1,202 1,615 Investing activitiesAdditions to mining properties (1,703) (817)Purchase of property, plant and equipment (6,464) (4,651)Sale (purchase) of investments 3,234 (842)Purchase of interest in subsidiary - (11,840)Cash flows provided by (used in) investing activities (4,933) (18,150) Financing activitiesCommon shares issued 23,622 9,451Warrants issued 12,001 -Net proceeds from borrowings 3,408 26,663Cash flows provided by (used in) financing activities 39,031 36,114 Net increase (decrease) in cash and cash equivalents 45 (348)Cash and cash equivalents, beginning of year 1,799 2,147Cash and cash equivalents, end of year 1,844 1,799 Interest Paid 3,437 2,696Taxes Paid 2,901 2,828Non Cash financing and investing activities:Conversion of convertible notes to share capital 128 1,102 Notes 1. Financial reorganization and going concern The accompanying consolidated financial statements have been prepared on a"going concern" basis in accordance with Canadian generally accepted accountingprinciples (''GAAP''). The going concern basis of presentation assumes that theCompany will continue in operation for the foreseeable future and will be ableto realize its assets and discharge its liabilities and commitments in thenormal course of business. There is substantial doubt about the appropriatenessof the use of the going concern assumption because of the Companies' CreditorsArrangement Act ("CCAA") reorganization proceedings (discussed below) andcircumstances relating to this event, including the Company's debt structure,recent losses and cash flow. As such, realization of the Company's assets anddischarge of its liabilities are subject to significant uncertainty. The consolidated financial statements do not reflect adjustments that would benecessary if the going concern basis was not appropriate. If the going concernbasis was not appropriate for these consolidated financial statements, thensignificant adjustments would be necessary in the carrying value of assets andliabilities, the reported revenues and expenses, and the balance sheetclassifications used. The appropriateness of the going concern basis isdependent upon, among other things, future profitable operations, and theability to generate sufficient cash from operations and financing arrangementsto meet obligations. Additionally, following implementation of the implementation of the Company'sbusiness plan implemented under the CCAA, the Company will be required to adopt"fresh start" accounting. This accounting will require that assets andliabilities be recorded at their fair values at the date of emergence from theCompany's reorganization proceedings. As a result, the reported amounts in theconsolidated financial statements could materially change, because they do notgive effect to the adjustments to the carrying value of assets and liabilitiesthat may ultimately result from the adoption of "fresh start" accounting. On January 7, 2005 (the "Filing Date"), the Company obtained protection underthe Companies' Creditors Arrangement Act from the Ontario Superior Court ofJustice (the "Court"). The Court subsequently granted extensions of the CCAAprotection to June 30, 2005. This allowed the Company to continue operating itsbusiness while it negotiated a restructuring plan with its creditors. On May 3, 2005 the Company's affected creditors approved the Company's Plan ("Plan") and the Plan was approved by the Court on May 10, 2005. The Companysubsequently emerged from CCAA protection and the Plan was implemented on June30, 2005. The Company's Plan provided, inter alia, for the following: 1. Two classes of creditors: • Class One, consisting of Meridian Creditors, the holders of claims inrespect of the Company's senior secured indebtedness; and • Class Two, consisting of the Note-holder Creditors, the holders ofclaims relating to notes issued by the Company; 2. The sale by Meridian Creditors to the Company, or its security agent,of: • Debt owing to Meridian Creditors by subsidiaries of the Company,guaranteed by the Company, and secured, totaling approximately $54.2 milliontogether with interest thereon; and • Debt owing to Meridian Creditors by a subsidiary of the Companytotaling approximately Cdn $3.93 million together with interest thereon; • 3. In consideration for such sale, the Meridian Creditors received fromthe Company, in aggregate: • Secured notes evidencing indebtedness of $20 million; • Secured notes evidencing indebtedness of Cdn $3.93 million; and • 70% of the post-implementation equity in the Company; 4. The release of all claims of Note holder Creditors, totaling principalof $24.85 million plus interest thereon, in consideration for which Note-holderCreditors received 25% of the post-implementation equity in the Company; 5. The consolidation of existing common shares of the Company so thatexisting shareholders retained 5% of the post-implementation equity in theCompany; 6. Payment in full by the Company of all proven claims of the Company'screditors as at the Filing Date (other than claims of Meridian Creditors andNote-holder Creditors); and 7. The delivery by the Company to the Meridian Creditors of secured notesevidencing the amount of the Company's outstanding debtor-in-possessionfinancing owing to them as at the Plan implementation date. Although the implementation of the Plan will significantly reduce the Company'sfinancial liabilities the Company will still require significant additionalfinancing through the remainder of 2005 to continue funding its South Africanoperations, complete the feasibility study of its Philippine operations, serviceits debt obligations and fund its corporate expenses. The Company has not secured this additional financing as at the date of thesefinancial statements, and does not have any additional sources of cash flow fromoperations. Until the Company is able to secure additional financing, eitherthrough additional debt or equity, the Company will be dependent on thecontinued financial support of Meridian, who have provided approximately $20million since January 1, 2005. Although the Company believes that Meridian willcontinue to support it through the balance of 2005 as it attempts to implementits revised business plan, there can be no assurances that Meridian will providesuch financing and that the Company will be able to continue as a going concern. 2. Basis of preparation and restatement of 2003 figures These consolidated financial statements are expressed in thousands of UnitedStates dollars and have been prepared in accordance with Canadian generallyaccepted accounting principles ("GAAP") and under historical cost accountingrules. A reconciliation to United States GAAP is provided in note 23 to thefull audited accounts which can be downloaded from the Company's websitewww.thistlemining.com. In 2003 the Company filed its financial statements in accordance with UnitedKingdom generally accepted accounting principles ("UK GAAP"). These 2003 UK GAAPstatements were restated in accordance with Canadian GAAP. For further information contact: Paul Marchand, Company Secretary, +44 207 494-6060 This information is provided by RNS The company news service from the London Stock Exchange