Last checked at 8 Dec 2008 14:00
Tertiary Minerals plc
Final Results for the year ended 30 September 2008
Chairman's Statement
I have pleasure in presenting the Company's audited Financial Statements for the year ended 30 September 2008.
Storuman Fluorspar Project
The most significant development this year has been the acquisition in January 2008 of the Storuman fluorspar deposit in Sweden.
Fluorspar is the principal industrial source of fluorine for the manufacture of hydrofluoric acid and derivative fluorine chemicals and it is used as a flux in the manufacture of steel. Following years of oversupply from China, fluorspar is now in critically short supply as traditional Chinese sources become depleted and reserved for Chinese domestic use. The Company's evaluation of a new European source of fluorspar is therefore timely.
Storuman was defined as a multi-million tonne deposit in the 1970s when resource estimation, mine planning and metallurgical testwork outlined a potentially commercial deposit that was not subsequently developed.
In 2008, Tertiary fast-tracked further work on the deposit having completed a confirmatory drilling programme and initiated metallurgical testwork and a technical and economic scoping study. Whilst development of any mineral project faces challenges, particularly in the current financial environment, we have been encouraged by the high level of industry interest in our project.
Kolari Iron Project
The Kolari iron deposit sits at the heart of the Kolari-Pajala iron province in the border areas of northern Finland and Sweden where a number of iron deposits are being considered for development.
Our work during the year has validated the potential for a substantial tonnage of near surface bulk-mineable iron mineralisation on our Sivakkalehto claims in Finland that could be developed to produce high grade iron concentrates.
Tertiary's target is to define a resource of approximately 100 million tonnes grading 30% magnetite. An initial programme of metallurgical testwork has produced premium-grade magnetite concentrates averaging 70% iron.
Iron ore prices doubled in 2007 and early 2008, but more recently price pressures have been strongly downward with a number of iron ore companies announcing production cut-backs. Annual contract prices are expected to fall sharply.
Ghurayyah
At Ghurayyah, in Saudi Arabia, we have seen further progress towards the issue of the new exploration licence over the world class Ghurayyah tantalum-niobium rare-earth deposit, with the issue and agreement of draft licence terms and we hope that our patience will be rewarded before too long.
Sunrise Diamonds plc
The Company has maintained its shareholding in Sunrise Diamonds plc throughout the year and continues to provide management services and to share costs to the advantage of both companies. The Company currently holds 14% of the issued capital of Sunrise Diamonds plc.
Financials
The audited financial statements are prepared for the first time under International Reporting Standards (IFRS), as adopted by the European Union.
The Group is reported a loss of £791,965 for the year (2007: £871,964).
During the year we have secured a trading platform on PLUS markets and whilst our AIM trading facility is unaffected, it gives investors further choice and will lead, we hope, to increased trading liquidity once markets recover.
Outlook
The Company's progress during the year has been eclipsed by the 2008 financial crisis, the resulting stock market crash and a burgeoning recession. In response, the Board took immediate action to further reduce costs on an already low cost base.
In recent months many metal prices have collapsed as demand slows and financial institutions deleverage their commodity related financial instruments. However, the prices of some of the commodities in which we are involved, fluorspar, tantalum, niobium, and rare-earths have not yet been as badly affected as they are not speculatively traded and as a result demand and prices tend to track global GDP more closely than do the prices of those metals that trade on terminal markets such as the London Metal Exchange.
Commentators seem divided on the future level of real commodity demand depending on their view of the dependence of China on western world demand for its exports. Undoubtedly the trading picture is currently obscured as the collapse of shipping costs translates to lower delivered prices for many bulk minerals such as fluorspar. However it seems certain that "mine-gate" prices are softening on negative global economic demand and sentiment.
Iron ore prices doubled in 2007 and early 2008, but more recently price pressures have been strongly downward with a number of iron ore companies announcing production cut-backs. Annual contract prices are expected to be sharply down when next fixed.
Even allowing for the deepening recession, financial deleveraging has caused the prices of many metals to fall below the limits of sustainable economic production suggesting that medium term outlook should be positive.
In Conclusion
Amongst the current market gloom and uncertain outlook it is worth remembering that it is in such financial environments, when mines are closed and production lost, that the seeds of the next mining boom are being sown.
I remain optimistic that the quality of the Company's projects and the experience of the Board will carry the Company forward.
I would like to thank all my fellow directors and all shareholders for their support in 2008.
Patrick Cheetham
Executive Chairman
8 December 2008
Further Information:
Patrick Cheetham, Tertiary Minerals Plc. Tel: +44 (0)1625-626203.
Ron Marshman/John Greenhalgh, Lothbury Financial Tel: +44(0)20-7011 9411
Web-site: www.tertiaryminerals.com
Tertiary Minerals plc
Consolidated Income Statement
for the year ended 30 September 2008
| 2008 £ | 2007 £ | ||
| Pre-licence exploration costs | 53,292 | 22,269 | |
| Impairment of deferred exploration costs | 481,842 | 668,913 | |
| Administrative expenses | 289,768 | 244,528 | |
| Operating loss | (824,902) | (935,710) | |
| Share of operating loss of associate | - | (18,458) | |
| Profit arising from the increase in value of the Group's share of the net assets of Sunrise Diamonds resulting from share issues | - | 53,250 | |
| Interest receivable | 32,937 | 27,713 | |
| Share of interest receivable of associate | - | 1,241 | |
| Loss on ordinary activities before taxation | (791,965) | (871,964) | |
| Tax on loss on ordinary activities | - | - | |
| Loss for the year attributable to equity holders of the parent | (791,965) | (871,964) | |
| Loss per share - basic and diluted (pence) | (1.27) | (1.60) | |
All amounts relate to continuing activities.
Tertiary Minerals plc
Statements of Total Recognised Income and Expense
for the year ended 30 September 2008
| Group | Company | Group | Company | ||
| 2008 £ | 2008 £ | 2007 £ | 2007 £ | ||
| Loss for the year | (791,965) | (241,783) | (871,964) | (168,170) | |
| Movement in revaluation of available for sale investment | (317,035) | (317,035) | 291,825 | 334,350 | |
| Foreign exchange translation differences on foreign currency, net investments in subsidiaries | 105,348 | - | (27,884) | - | |
| Total recognised (expense)/income since last accounts | (1,003,652) | (558,818) | (608,023) | 166,180 | |
Tertiary Minerals plc
Balance sheets
at 30 September 2008
| Group | Company | Group | Company | ||
| 2008 | 2008 | 2007 | 2007 | ||
| £ | £ | £ | £ | ||
| Non-current assets | |||||
| Intangible assets | 504,823 | - | 688,170 | - | |
| Property, plant & equipment | 5,448 | 3,545 | 8,682 | 5,090 | |
| Investment in subsidiary | - | 3,719,351 | - | 3,386,656 | |
| Available for sale investment | 257,519 | 257,519 | 549,600 | 549,600 | |
| 767,790 | 3,980,415 | 1,246,452 | 3,941,346 | ||
| Current assets | |||||
| Receivables | 53,216 | 33,248 | 62,467 | 53,773 | |
| Cash and cash equivalents | 591,968 | 310,903 | 441,617 | 148,024 | |
| 645,184 | 344,151 | 504,084 | 201,797 | ||
| Current liabilities | |||||
| Trade and other payables | (94,280) | (48,209) | (78,307) | (40,902) | |
| Net current assets | 550,904 | 295,942 | 425,777 | 160,895 | |
| Net assets | 1,318,694 | 4,276,357 | 1,672,229 | 4,102,241 | |
| Equity | |||||
| Called up share capital | 636,037 | 636,037 | 545,127 | 545,127 | |
| Share premium account | 4,859,689 | 4,859,689 | 4,259,683 | 4,259,683 | |
| Merger reserve | 131,096 | 131,096 | 131,096 | 131,096 | |
| Share option reserve | 65,619 | 65,619 | 23,601 | 23,601 | |
| Available for sale revaluation reserve | (25,210) | 17,315 | 291,825 | 334,350 | |
| Foreign currency reserve | 77,464 | - | (27,884) | - | |
| Retained losses | (4,426,001) | (1,433,399) | (3,551,219) | (1,191,616) | |
| Shareholders' funds | 1,318,694 | 4,276,357 | 1,672,229 | 4,102,241 |
Tertiary Minerals plc
Cash Flow Statements
for the year ended 30 September 2008
| Group 2008 | Company 2008 | Group 2007 | Company 2007 | |
| £ | £ | £ | £ | |
| Operating activities | ||||
| Operating loss | (824,902) | (267,057) | (935,710) | (181,058) |
| Depreciation charge | 3,318 | 1,545 | 4,393 | 1,545 |
| Impairment charge | 481,842 | - | 691,182 | |
| Share based payment charge | 42,018 | 42,018 | 19,431 | 19,431 |
| (Increase)/Decrease in receivables | 9,252 | 20,525 | (5,270) | (7,007) |
| Increase in payables | 15,973 | 7,307 | 7,255 | 3,628 |
| Net cash outflow from operating activity | (272,499) | (195,662) | (218,719) | (163,461) |
| Investing activities | ||||
| Interest received | 32,937 | 25,274 | 27,713 | 12,348 |
| Purchase of intangible assets | (291,320) | - | (220,638) | - |
| Purchase of property, plant & equipment | (84) | - | (3,177) | (135) |
| Purchase of available for sale investments | (24,954) | (24,954) | - | - |
| Additional investment in subsidiaries | - | (332,695) | - | (86,033) |
| Net cash outflow from investing activity | (283,421) | (332,375) | (196,102) | (73,820) |
| Financing activity | ||||
| Issue of share capital (net of expenses) | 690,916 | 690,916 | - | - |
| Net cash inflow from financing activity | 690,916 | 690,916 | - | - |
| Net increase/(decrease) in cash and cash equivalents | 134,996 | 162,879 | (414,821) | (237,281) |
| Cash and cash equivalents at start of year | 441,617 | 148,024 | 884,110 | 385,305 |
| Exchange differences | 15,355 | - | (27,672) | - |
| Cash and cash equivalents at 30 September | 591,968 | 310,903 | 441,617 | 148,024 |
NOTES
1. Accounting Policies
The financial information set out in this announcement has been prepared on the basis of the recognition and measurement requirements of International Financial Reporting Standards (IFRSs), as adopted by the European Union, and their interpretations adopted by the International Accounting Standards Board (IASB). The Company has reviewed the accounting policies set out in the Company's financial statements for the year ended 30 September 2007, which were prepared in accordance with UK Generally Accepted Accounting Practice (UK GAAP). Consequently the opening IFRS balance sheet contains adjustments made to the amounts reported previously in financial statements prepared since the transition date to IFRS, 1 October 2006.
In common with many exploration companies, the Company raises finance for its exploration and appraisal activities in discrete tranches. Further funding is raised as and when required. When any of the Group's projects move to the development stage, specific project financing will be required.
The directors prepare annual budgets and cash flow projections that extend beyond 12 months from the date of this report. On the basis of these projections, which include the proceeds of future fundraising, the directors continue to adopt the "going concern" basis for preparing the accounts.
2. Publication of Non-Statutory Accounts
The financial information set out in this announcement does not constitute the Company's Statutory Accounts for the period ended 30 September 2008 or 2007. The financial information for 2007 is derived from the Statutory Accounts for 2007 and amended by the adoption of IFRSs. Full audited accounts in respect of that financial period prior to the adoption of IFRSs have been delivered to the Registrar of Companies.
The Statutory Accounts for 2008 will be delivered to the Registrar of Companies following the Company's Annual General Meeting. The auditors have reported on the 2008 and 2007 accounts. They did not contain a statement under Section 237(2) or (3) of the Companies Act 1985 and received an unqualified audit opinion. However there was an emphasis of matter in relation to a requirement that the Company raise funds in the future to continue as a going concern.
3. Loss per share
Loss per share has been calculated on the loss and the weighted average number of shares in issue during the year.
| 2008 | 2007 | ||
| Loss (£) | (791,965) | (871,964) | |
| Weighted average shares in issue (No.) | 62,560,506 | 54,512,736 | |
| Basic and diluted loss per share (pence) | (1.27) | (1.60) |
The loss attributable to ordinary shareholders and weighted average number of ordinary shares for the purpose of calculating the diluted earnings per ordinary share are identical to those used for the basic earnings per ordinary share. This is because the exercise of share warrants and options would have the effect of reducing the loss per ordinary share and is therefore not dilutive under the terms of IAS33.
4. Dividend
No dividend is proposed.
5. Annual Report
The Company's 2008 Annual Report will be published and sent to shareholders in due course and copies will be available to the public, free of charge, from the Registered Office of the Company at Sunrise House, Hulley Road, Macclesfield, Cheshire, SK10 2LP and will be downloadable from the Company's website at www.tertiaryminerals.com.