RNS Number:7945R
Archipelago Resources PLC
27 September 2005
ARCHIPELAGO RESOURCES PLC
INTERIM REPORT FOR THE SIX MONTHS ENDED 30 JUNE 2005
CHIEF EXECUTIVE OFFICER'S STATEMENT
Results AND DIVIDEND
The consolidated loss for the half year after taxation and minority interests,
amounted to #127,693 (2004: #145,815). No dividends have been paid or
proposed.
Review of Business
The Company's 85% owned Toka Tindung Gold Project in Sulawesi, Indonesia has a
defined resource of 1.75m ounces (oz) gold equivalent of which 0.9m oz will
initially be mineable by open pit. The project has had 158 kilometres of
drilling conducted on it and has all of the major government approvals in place
to enable its development. Extensive technical due diligence has been
undertaken by consultants on behalf of prospective debt financiers.
In 2004 the Company acquired all of the core components of a complete gold
processing plant from the El Tambo Project in Chile previously operated by
Barrick Gold Corporation's Chilean subsidiary Compania Minera El Indio. The El
Tambo plant is in very good condition as a result of its climatic location and
previous short operational life. The crushing and grinding circuits are
particularly well engineered and more than adequate for the scale of operation
proposed for the Toka Tindung Gold Project.
In May 2005, the Company announced that it had granted N.M. Rothschild & Sons
(Australia) Limited ("Rothschild") an Exclusive Financing Mandate and accepted
an Indicative Term Sheet regarding the provision of debt finance and hedging
facilities to facilitate development of the Toka Tindung Gold Project. The
terms of the proposal are that US$35m will be provided by way of debt finance
together with a US$4m cost overrun facility. Finalisation of the financing
syndicate and debt facility terms are expected in November.
During the half year to 30th June the Company placed 25,279,448 shares
principally to North American and U.K. institutional investors to raise
#8,580,572. The proceeds of these equity raisings will together with the debt
facility be used by the Company to undertake construction of the Toka Tindung
Gold Project.
Mining at the Toka Tindung Gold Project will be by way of five open pits with
processing through a centralised plant. The mineralogy of the Toka Tindung
deposits is simple with indicated gold recoveries of approximately 94%.
Construction activities are underway with the target of production by late 2006
at an average 160,000 oz/annum gold equivalent over the initial 5 years of the
current 6 year project life. Given the excellent exploration potential existing
at Toka Tindung, the Company is confident of extending the mine life.
The Indicative Term Sheet includes a number of pre-conditions to finance
including completion of legal and financial due diligence and documentation, the
obtaining of necessary operating permits and an obligation to hedge of the order
of 50% of initially planned gold production subject to the prevailing gold price
and final debt level. As at the date of this report all gold reserves are
currently unhedged.
Events since the Balance Sheet Date
In July the Company commenced site excavations in preparation for construction
of the processing plant and in August the Company announced that PT Leighton
Contractors Indonesia had been awarded the mining contract.
Also in August 2005, Archipelago announced the placement of 6,521,739 shares
with RAB Special Situations (Master) Fund Limited, a fund managed by RAB Capital
plc and its related parties to raise #2,250,000.
By order of the board
J C Loosemore
Managing Director
27th September 2005
ARCHIPELAGO RESOURCES PLC
CONSOLIDATED PROFIT AND LOSS ACCOUNT
Half year ended Half year
ended
Notes 30 June 30 June
2005 2004
# #
TURNOVER - -
Administrative expenses (110,144) (145,874)
OPERATING LOSS (110,144) (145,874)
Interest payable and other similar charges (18,000) -
LOSS ON ORDINARY ACTIVITIES BEFORE TAXATION (128,144) (145,874)
Tax on loss on ordinary activities - -
LOSS ON ORDINARY ACTIVITIES AFTER TAXATION (128,144) (145,874)
Minority interests 451 59
LOSS FOR THE FINANCIAL PERIOD ATTRIBUTABLE TO MEMBERS OF THE PARENT
COMPANY
(127,693) (145,815)
RETAINED LOSS FOR THE PERIOD (127,693) (145,815)
Loss per share - basic 3 (0.17p) (0.30p)
Loss per share - diluted 3 (0.17p) (0.30p)
There are no other recognised gains and losses other than those shown above.
All the group's activities consist of continuing operations.
RECONCILIATION OF MOVEMENT IN SHAREHOLDERS' FUNDS
Total recognised gains and losses (127,693) (145,815)
Other movements:
New shares issued 4 8,580,572 500,000
Capital raising costs (394,285)
Total movements during the period 8,058,594 354,185
7,782,428 2,094,994
Shareholders' funds at beginning of period
Shareholders' funds at end of period 15,841,022 2,449,179
ARCHIPELAGO RESOURCES PLC
CONSOLIDATED BALANCE SHEET
Notes 30 June 30 June
2005 2004
# #
FIXED ASSETS
Tangible assets 8,370,348 5,373,550
Investments 195,575 195,575
8,565,923 5,569,125
CURRENT ASSETS
Debtors 84,164 15,376
Prepayments 143,568 -
Inventory 33,526 -
Cash at bank and in hand 7,310,379 548,435
7,571,637 563,811
Creditors: amounts falling due within one year 298,749 3,685,515
NET CURRENT ASSETS / (LIABIITIES) 7,272,888 (3,121,704)
TOTAL ASSETS LESS CURRENT LIABILITIES 15,838,811 2,447,421
MINORITY INTERESTS 2,211 1,758
15,841,022 2,449,179
CAPITAL AND RESERVES
Called up share capital 4 921,175 487,208
Share premium account 18,966,003 5,600,614
Profit and loss account (4,046,156) (3,638,643)
TOTAL EQUITY SHAREHOLDERS' FUNDS 15,841,022 2,449,179
ARCHIPELAGO RESOURCES PLC
CONSOLIDATED STATEMENT OF CASHFLOWS
Half year ended Half year
ended
30 June 30 June
2005 2004
Notes # #
NET CASH OUTFLOW FROM OPERATING ACTIVITIES 6(a) (268,476) (134,744)
CAPITAL EXPENDITURE AND FINANCIAL INVESTMENT
Payments to acquire tangible fixed assets (1,300,916) (497,086)
Proceeds from sale of plant 4,020 -
(1,296,896) (497,086)
RETURNS ON INVESTMENT AND SERVICING OF FINANCE
Interest paid (18,000) -
NET CASH OUTFLOW BEFORE FINANCING (1,583,372) (631,830)
FINANCING
Issue of ordinary share capital 8,068,492 -
Capital raising costs (675,702) -
7,392,790 -
MANAGEMENT OF LIQUID FUNDS
(Increase) in cash on short term deposit (6,900,000) -
DECREASE IN CASH 6(b) (1,090,582) (631,830)
RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET DEBT Half year ended Half year
30 June ended
2005 30 June
# 2004
#
(Decrease) in cash (1,090,582) (631,830)
Increase in cash on short term deposit 6,900,000 -
Decrease in loans 30,170 -
Change in net debt resulting from cash flows 6(b) 5,839,588 (631,830)
Non-cash movements in net debt 6(b) 512,080 (3,586,473)
Foreign exchange differences 6(b) (14,761) -
MOVEMENT IN NET DEBT 6,336,907 (4,218,303)
NET FUNDS AT BEGINNING OF PERIOD 6(b) 973,472 1,180,265
NET FUNDS / (DEBT) AT END OF PERIOD 6(b) 7,310,379 (3,038,038)
NOTES TO THE INTERIM RESULTS
1. ACCOUNTING POLICIES
Basis of Preparation
The unaudited non-statutory consolidated financial statements have been prepared
under the historical cost convention and in accordance with applicable
accounting standards generally accepted in the United Kingdom and where
relevant, Statements of Recommended Practice.
Basis of Consolidation
The Consolidated Financial Statements include the Financial Statements of the
Company and each of its subsidiary undertakings, having eliminated all
inter-company transactions.
Acquisitions are dealt with on the basis of acquisition accounting whereby the
identifiable net assets acquired are recorded at their fair value and compared
with the total cost of the acquisition. Goodwill arising on the acquisition of
shares in subsidiary undertakings is capitalised and written off over its useful
life in accordance with FRS 10.
Change in Accounting Policy
Costs associated with capital raisings are offset against the share premium
account. Previously capital raising costs were recognised in the profit and
loss. For the half year ended 30 June 2005 this has resulted #394,285 in costs
being debited to the share premium account rather than the profit and loss
account. The comparative balance sheet has also been adjusted to offset
#664,155 of historical capital raising costs originally debited to accumulated
losses against the share premium account.
Exploration, Evaluation and Development Expenditure
Costs arising from exploration and evaluation activities are carried forward
provided such costs are expected to be recouped through successful development
or by sale or where exploration and evaluation activities have not, at the
reporting date, reached a stage to allow a reasonable assessment regarding the
existence of economically recoverable reserves.
Costs are not carried forward where the directors believe the recovery of those
assets is not probable.
Costs carried forward in respect of an area of interest that is abandoned are
written off in the period in which the decision to abandon is made.
Annually the net book value of mineral interests is compared with their
estimated realisable value and any impairment is written off to the profit and
loss account.
Tangible Assets
Tangible assets are recorded at cost less accumulated depreciation.
Depreciation
Depreciation is provided on all tangible fixed assets, at rates calculated to
write off the cost, less estimated residual value based on prices prevailing at
the date of acquisition of each asset evenly over its expected useful life as
follows:
Plant and equipment - over 3 to 15 years
Exploration expenditure will be amortised over expected production volumes from
the date production commences.
Deferred taxation
Deferred taxation is recognised in respect of all timing differences that have
originated but not reversed at the balance sheet date where transactions or
events have occurred at that date which will result in an obligation to pay
more, or a right to pay less or to receive more, tax with the following
exceptions:
Deferred tax assets are recognised only to the extent that the directors
consider that it is more likely than not that there will be suitable taxable
profits from which the future reversal of the underlying timing differences can
be deducted.
Deferred tax liabilities are measured on an undiscounted basis at the tax rates
that are expected to apply in the periods in which the timing differences
reverse, based on tax rates and laws enacted or substantively enacted at the
balance sheet date.
Foreign currencies
Transactions in foreign currencies are recorded at the rate ruling at the date
of the transaction or at the contracted rate if the transaction is covered by a
forward exchange contract. Monetary assets and liabilities denominated in
foreign currencies are retranslated at the rate of exchange ruling at the
balance sheet date or if appropriate at the forward contract rate.
The accounts of overseas subsidiary undertakings are translated at the rate of
exchange ruling at the balance sheet date. The exchange difference arising on
the retranslation of opening net assets is capitalised where it is directly
linked to exploration or development expenditure. All other translation
differences are accounted for in the profit and loss account.
Capital instruments
Shares are included in shareholders' funds. Other instruments are classified as
liabilities if they contain an obligation to transfer economic benefits and if
not they are included in shareholders' funds. The finance cost recognised in
the profit and loss account in respect of capital instruments other than equity
shares is allocated to periods over the term of the instrument at a constant
rate on the carrying amount.
Comparatives
The comparative information in this financial report covers the half year ended
30 June 2004.
3. LOSS PER SHARE
The calculation of basic loss per share is based on a loss for the half year of
#127,693 (2004: #145,815), and on 73,524,643 (2004: 48,296,909) ordinary shares,
being the weighted average number of ordinary shares in issue during the year.
The loss attributable to ordinary shareholders and the weighted average number
of ordinary shares for the purpose of calculating the diluted earnings per share
are identical to those used for the basic earnings per share. This is because
the exercise of share options or conversion of loan notes would have the effect
of reducing the loss per ordinary share and is therefore not dilutive under the
terms of FRS 14.
4. Share capital
30 June 31 December 30 June 31 December
2005 2004 2005 2004
Shares Shares # #
Authorised
Ordinary shares of 1 pence each 150,000,000 150,000,000 1,500,000 1,500,000
30 June 31 December 30 June 31 December
2005 2004 2005 2004
Allotted, Called-up and Fully Paid Shares Shares # #
Opening balance 66,838,097 47,292,200 668,381 472,922
Issued during the period 25,279,448 19,545,897 252,794 195,459
Closing balance 92,117,545 66,838,097 921,175 668,381
In March 2005, the Company issued 2,062,888 ordinary shares at 33.3 pence to
raise #686,942. These shares were issued to Ocean Resources Capital Holdings
Plc, the Company's largest shareholder.
During May 2005, the Company issued 23,216,560 ordinary shares at 34p per share
principally with North American and UK institutions to raise #7,893,630.
5. OPTIONS
30 June 30 June
2005 2004
Number Number
Options exercisable at 20 pence expiring 31 December 2007
Beginning of the period 1,200,000 1,200,000
End of the period 1,200,000 1,200,000
Options exercisable at 20 pence expiring 9 September 2008
Beginning of the period 500,000 500,000
Options issued 100,000 -
Options cancelled or expired (100,000) -
End of the period 500,000 500,000
6. notes to the statement of cash flows
30 June 30 June
2005 2004
#
#
(a) Reconciliation of operating loss to net cash outflow from operating
activities
Operating loss (110,144) (145,874)
Non-cash items
Profit on sale of plant (4,020) -
Foreign exchange loss 8,834 -
Movement in assets and liabilities
(Increase) in debtors (35,813) (10)
(Increase) in prepayments (143,568) -
Increase in creditors 16,235 11,140
Net cash outflow from operating activities (268,476) (134,744)
(b) Analysis of net debt
At 31 Other Non-Cash At 30 June
December 2004 Movements
Exchange 2005
Cash Flow Differences
# # # #
Cash 1,515,722 (1,090,582) (14,761) - 410,379
Short term deposits - 6,900,000 - - 6,900,000
Short term borrowings (542,250) 30,170 - 512,080 -
973,472 5,839,588 (14,761) 512,080 7,310,379
(c) Major non-cash transactions
During the period short term borrowings totalling #512,080 were settled via the
issue of 1,505,118 shares at 34 pence.
7. Post balance sheet eventS
In August 2005, Archipelago announced the placement of 6,521,739 shares at 34.5
pence to raise #2,250,000 with RAB Special Situations (Master) Fund Limited, a
fund managed by RAB Capital plc and their related parties.
8. GENERAL
The financial information set out in this interim report does not constitute
statutory accounts as defined in Section 240 of the Companies Act 1985. The
figures for the period ended 31 December 2004 have been extracted from the
statutory financial statements which have been filed with the Registrar of
Companies. The auditors' report on those financial statements was unqualified
and did not contain a statement under Section 237(2) of the Companies Act 1985.
Further Information:
Colin Loosemore, Managing Director, Archipelago Resources Plc. Tel:
+6-18-9364-8301
Ron Marshman/John Greenhalgh, City of London PR Limited. Tel:
+44-20-7628-5518
For website see: www.mining-investor.com/arch
This information is provided by RNS
The company news service from the London Stock Exchange
END
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