TSG.L Regulatory News (TSG)

11 May 2005 07:00

Trans-Siberian Gold PLC11 May 2005 news release For immediate release: 11 May 2005 Trans-Siberian Gold plc Preliminary Results for the year ended 31 December 2004 Highlights • AngloGold Ashanti set to increase stake to 29.9%• Asacha project on target for first gold production in late 2006• Veduga resources upgraded and feasibility study under way• Bogunay licence in Krasnoyarsk acquired LONDON: 11 May 2005 - Trans-Siberian Gold plc ("Trans-Siberian") (TSG.L) ispleased to report its preliminary results for 2004 and on developments since theyear-end. Trans-Siberian is in the development phase of its two gold projects in Russiaand therefore received no operating income during 2004. Administration expensesamounted to US$6.1 million compared to US$2.2 million in 2003, reflecting theincrease in activities and the consequential higher overheads in Russia. The operating loss was US$4.4 million (2003: US$1.3 million), after creditingUS$1.6 million of exchange gains from the impact of a weaker US dollar onsterling denominated bank deposits. Interest earned was US$678,000 (2003:US$92,000). Capitalised exploration and evaluation expenditure increased to US$17.8 millionfrom US$9.3 million. Tangible assets increased from US$2.1m to US$9.0 million,of which assets under construction accounted for US$5.7 million (2003: US$1.0million), including US$3.0m spent on the access road to the Asacha deposit inKamchatka in far east Russia. At the year end TSG had cash at bank and in hand of US$20.4m (2003: US$27.4m). The Company received US$14.8 million, net of expenses, from the firstsubscription for Trans-Siberian shares by AngloGold Ashanti Limited ("AGA")under the subscription agreement dated 30 June 2004. On 28 April 2005 theCompany announced that AGA's second subscription for Trans-Siberian shares(involving 6,131,585 new ordinary shares for a consideration of US$15.1 million,assuming an exchange rate of US$1.90:£1) will be completed after shareholderapproval has been obtained to authorise the directors to allot the secondsubscription shares to AGA on the basis of the amended subscription agreement.An extraordinary general meeting has been called for 27 May 2005 for thispurpose. AGA's current 17.5% equity interest in TSG will increase to 29.9% uponcompletion of the second subscription. Asacha On 4 May 2005 the Company reported that the estimated capital cost of the Asachaproject had increased to US$82.5 million net of VAT, including US$11.7 millionspent up to the end of 2004 on construction of the access road, accommodation atsite, site preparation and engineering studies and US$10.5 million which will bespent post start-up, principally on mine development. The capital cost tostart-up from the beginning of 2005 is therefore estimated to be US$60.3million. Orders are ready to be placed for all major equipment items for the mine,process plant and power plant. The permanent camp for the Asacha site has beenpurchased and the majority of the accommodation units are in transit toKamchatka. Detailed engineering will be undertaken by the Russian institutesVNIPI (mine and infrastructure) and IRGIRIDMET (process plant). The revisedschedule envisages first gold production towards the end of 2006. An applicationfor an amendment to the Asacha licence to extend the requirement to produce1,000 kg of gold by 30 June 2006 to 31 December 2007 has been filed with therequisite authorities. The process of due diligence and negotiation with Standard Bank London and EBRDwho are jointly mandated to arrange project finance for Asacha of up to US$35million is continuing. Veduga The first phase of the feasibility study for the Veduga project commenced inOctober 2004. Two engineering companies have been engaged, Aker Kvaerner and theRussian institute, Giprotsvetmet. Aker Kvaerner's principal task in this phaseis to establish the optimal processing method for the partially refractoryVeduga ores. Two methods, both established as viable by earlier testwork, namelybiological oxidation of flotation concentrates and pressure oxidation offlotation concentrates, are being assessed with further testwork. Whole orepressure oxidation is also being studied. Aker Kvaerner will also preparecapital and operating cost estimates to scoping study level of accuracy. Therole of Giprotsvetmet is to complete the "Substantiation of Investment" phase ofthe Russian feasibility study (TEO) necessary for permitting. The twoassignments are scheduled for completion by mid 2005. As part of the Aker Kvaerner work the Veduga resource has been independentlyre-estimated by Deutsche Montan Technologie Gmbh ("DMT"). DMT's estimate hastotal resources of all categories of 16.65 million tonnes of ore at an averagegrade of 5.21 g/t containing 2,790,168 oz of gold. Compared to the Vedugaresource reported in September 2004, the tonnage is 1.8% lower, the grade ishigher by 2% and the overall gold content is 1% higher. The confidence level hasrisen in that measured resources at 5.09 million tonnes have increased from21.8% of the total to 30.6% and measured and indicated combined at 11.78 milliontonnes have risen from 66.2% of the total to 70.8%. Much of the inferredresources represent deeper ore that will not be included in the open pit miningplan. Bogunay On 30 November 2004 the Company announced the completion of the acquisition ofthe Bogunayevskoye (Bogunay) gold exploration property, a 47.5km(2) area in theYenisei Ridge gold district of Krasnoyarsk Krai, 150km east of the city ofKrasnoyarsk. Prospecting during the latter part of the 2004 season revealed agold geochemical anomalous zone that is now being examined. Organisation As reported on 28 April 2005 TSG is strengthening its management team by theappointment of an executive Operations Director. A suitable candidate has beenselected and an announcement concerning his appointment will be made shortly. Jeremy Marshall, Trans-Siberian's Chairman, commented: "It has been anothermomentous year in this young company's development. Of great significance hasbeen the crystallisation of the involvement in the company of the world's numbertwo gold producer, AngloGold Ashanti. With their technical and financial backingwe can look to the future with added confidence. I look forward to the firstgold pour in Kamchatka before the end of next year, with Veduga following in2007 or 2008. It is an exciting prospect. Most of our 260 employees are Russianand much credit must go to them for the achievements to date and the prospectsto come." Contacts: Jocelyn Waller,Managing Director, Trans-Siberian Gold plc 01223 265 761/ 07778 164 376 Simon Olsen,Finance Director, Trans-Siberian Gold plc 01223 265 768/ 07770 484 965 Keith Irons, Bankside Consultants 020 7444 4155/ 07885 356 639 (Please see the following unaudited financial statements for the year ended 31December 2004.) TRANS-SIBERIAN GOLD PLC unaudited consolidated profit and loss account for the year ended 31 December2004 Year Year ended ended 31 December 31 December 2004 2003 $ $TURNOVER - -Administration expenses (6,055,468) (2,150,067)Exchange gain (i) 1,635,704 880,904 OPERATING LOSS (4,419,764) (1,269,163) Interest receivable and similar income 677,861 91,606Loss on ordinary activities before taxation (3,741,903) (1,177,557)Tax on loss on ordinary activities (50,340) - (3,792,243) (1,177,557)Minority interest - equity 134,518 42,105LOSS FOR THE YEAR (3,657,725) (1,135,452) Basic loss per ordinary share (cents) 11.60 7.10 There is no difference between the loss on ordinary activities before taxationand the loss for the year stated above and their historical cost equivalents. There are no recognised gains or losses other than those stated above. i. Exchange gain of $1,635,704 (2003: $880,904) principally reflects thedepreciation of the US dollar during the year ended 31 December 2004 on sterlingcash deposits. TRANS-SIBERIAN GOLD PLC unaudited consolidated balance sheet at 31 December 2004 As at As at 31 December 31 December 2004 2003 Note $ $ FIXED ASSETSExploration and evaluation properties 1 17,787,680 9,279,810Tangible assets 2 9,016,252 2,106,706TOTAL FIXED ASSETS 26,803,932 11,386,516 CURRENT ASSETSDebtorsAmounts falling due within one year 1,253,597 524,522Amounts falling due after more than one year 3,198,513 950,083 4,452,110 1,474,605Cash at bank 20,419,335 27,383,015 24,871,445 28,857,620 CREDITORS - AMOUNTS FALLING DUE WITHIN ONE YEAR (1,473,270) (1,222,690) NET CURRENT ASSETS 23,398,175 27,634,930 TOTAL ASSETS LESS CURRENT LIABILITIES 50,202,107 39,021,446 Provisions for liabilities and charges (83,177) - NET ASSETS 50,118,930 39,021,446 CAPITAL AND RESERVESCalled up share capital 3 5,815,464 4,675,704Share premium account 4 47,471,157 33,721,190Profit and loss account 4 (3,167,691) 490,034SHAREHOLDERS' FUNDS 50,118,930 38,886,928Minority Interest - 134,518CAPITAL EMPLOYED 50,118,930 39,021,446 TRANS-SIBERIAN GOLD PLCunaudited consolidated cash flow statement for the year ended 31 December 2004 Year Year ended ended 31 December 31 December 2004 2003 Note $ $ NET CASH OUTFLOW FROM OPERATING ACTIVITIES 5 (8,272,983) (2,289,541) RETURNS ON INVESTMENTS AND SERVICING OF FINANCEInterest received 706,465 42,811Interest paid - -Net cash inflow from returns on investments and servicing of 706,465 42,811finance CORPORATION TAX PAID (48,234) - CAPITAL EXPENDITURE AND FINANCIAL INVESTMENTPurchase of tangible fixed assets (7,686,456) (1,568,159)Receipts from disposal of tangible fixed assets 1,000 -Exploration and evaluation expenditure (8,013,515) (4,189,135)Net cash outflow from capital expenditure and financial (15,698,971) (5,757,294)investment ACQUISITIONSPayments to acquire subsidiary undertakings (120,951) -Cash held by subsidiaries acquired - -Net cash outflow from acquisitions (120,951) - NET CASH OUTFLOW BEFORE USE OF LIQUID RESOURCES AND (23,434,674) (8,004,024)FINANCING MANAGEMENT OF LIQUID RESOURCESDecrease (increase) in bank deposits 8,703,504 (23,460,436) FINANCINGIssue of ordinary shares, net of expenses 14,948,892 31,842,280 INCREASE IN CASH FOR THE PERIOD 217,722 377,820 RECONCILIATION OF CASH BALANCESCash at start of period 846,369 463,855Currency exchange differences 1,981 4,694Increase in cash for the period 217,722 377,820CASH AT END OF PERIOD 1,066,072 846,369 Notes 1. EXPLORATION AND EVALUATION PROPERTIES Movements on deferred exploration and evaluation expenditure, by location of theproperty, are as follows: 1 January Additions 31 December 2004 $ 2004 $ $Kamchatka - Asacha 4,642,113 3,114,828 7,756,941Krasnoyarsk - Veduga 4,637,697 5,064,191 9,701,888Krasnoyarsk - Bogunay - 328,851 328,851 9,279,810 8,507,870 17,787,680 2. TANGIBLE FIXED ASSETS Office equipment (a) Plant and Motor and Assets under Buildings machinery vehicles furniture construction Total $ $ $ $ $ $COSTAt 1 January 2004 325,774 578,562 126,300 155,927 996,756 2,183,319Additions 516,960 1,140,176 515,205 346,523 4,723,136 7,242,001Net arising on - - - 337 - 337acquisitionDisposals (3,024) (5,012) - (3,317) - (11,353)At 31 December 2004 839,710 1,713,727 641,505 499,470 5,719,892 9,414,304 ACCUMULATED DEPRECIATIONAt 1 January 2004 (1,518) (24,187) (18,090) (32,818) - (76,613)Charge for year (b) (40,941) (123,337) (64,512) (97,957) - (326,747)Disposals 594 2,321 - 2,393 - 5,308At 31 December 2004 (41,865) (145,203) (82,602) (128,382) - (398,052) NET BOOK VALUEAt 31 December 2003 324,256 554,375 108,210 123,109 996,756 2,106,706At 31 December 2004 797,845 1,568,524 558,903 371,088 5,719,892 9,016,252 a. Assets under construction comprises $2,996,560 in relation to theconstruction of an access road to Asacha; $1,953,458 for building constructionand $493,145 for plant and equipment at Asacha, Veduga and Bogunay; and $276,729for design work at Asacha. b. $197,945 of the depreciation charge related to fixed assets used onexploration and evaluation projects and was charged to deferred costs inaccordance with the group's accounting policy. 3. CALLED UP SHARE CAPITAL 31 December 31 December Number 2004 Number 2003 £ £ AUTHORISEDOrdinary shares of 10p each 100,000,000 10,000,000 50,000,000 5,000,000 31 December 31 December Number 2004 Number 2003 $ $ ALLOTTED AND FULLY PAIDAt the beginning of the year 28,650,779 4,675,704 6,672,930 985,227Shares issued:Placing for cash 6,131,585 1,112,147 12,652,902 2,145,208Placing for non-cash consideration - - 262,891 40,181Options exercised 150,000 27,613 120,000 20,707Bonus issue - - 8,942,056 1,484,381At the end of the year 34,932,364 5,815,464 28,650,779 4,675,704 On 30 July 2004, 6,131,585 ordinary shares of 10p each were issued at 136.95pfor a total cash consideration, before issuing costs, of £8.4m ($15,230,852) toAngloGold Ashanti Limited, being the first subscription under the SubscriptionAgreement, which was approved by the Company's shareholders at the AGM on 27July 2004. During the year, share options over 150,000 shares were exercised (total value$124,259). 4. RESERVESSHARE PREMIUM 31 December 31 December 2004 2003 $ $At the beginning of the year 33,721,190 8,571,044Capital reduction - (3,500,000)Shares issued:Placing for cash - gross 14,118,705 32,911,253- costs (465,384) (3,456,940) 13,653,321 29,454,313Placing for non-cash consideration - 593,611Options exercised 96,646 86,603Bonus issue - (1,484,381)At the end of the year 47,471,157 33,721,190 PROFIT AND LOSS ACCOUNT 31 December 31 December 2004 2003 $ $At the beginning of the year 490,034 (1,874,514)Capital reduction - 3,500,000Loss for the year (3,657,725) (1,135,452)At the end of the year (3,167,691) 490,034 5. RECONCILIATION OF OPERATING LOSS TO NET CASH OUTFLOW FROM OPERATINGACTIVITIES Year ended Year ended 31 December 31 December 2004 2003 $ $Operating loss (4,419,764) (1,269,163)Depreciation 128,802 61,000Loss on disposal of fixed assets 5,045 10,638Provision for liabilities and charges 83,177 -Decrease in stocks - 14,055Increase in debtors and prepayments (615,485) (56,864)Increase in VAT debtor (2,195,467) (896,267)Increase in creditors and accruals 262,811 291,947Profit on foreign exchange (1,522,102) (880,904)Expenses paid through issue of shares - 436,017Net cash outflow from operating activities (8,272,983) (2,289,541) This information is provided by RNS The company news service from the London Stock Exchange