RNS Number:4961D
Archipelago Resources PLC
30 September 2004
ARCHIPELAGO RESOURCES PLC
INTERIM REPORT FOR THE SIX MONTHS ENDED 30 JUNE 2004
CHIEF EXECUTIVE OFFICER'S STATEMENT
RESULTS AND DIVIDEND
The consolidated loss for the half year after taxation and minority interests,
amounted to #145,815 (2003 Year: #3,526,560). No dividends have been paid or
proposed.
REVIEW OF BUSINESS
The Company owns an 85% interest in the Toka Tindung Gold Project in Indonesia
and proposes to raise additional funds for the development of the project.
The previous majority owner of the Project, Australia's Aurora Gold Limited ("
Aurora"), had spent US$56 million on the property and established a resource of
1.75 million gold equivalent ounces containing a mining inventory of 0.9 million
gold equivalent ounces which is amenable to open pit mining.
During the period Archipelago secured the right to acquire the crushing and
grinding sections of the El Tambo gold processing plant located in Chile. The
plant has been dismantled and transported to a coastal port ready for export.
Following confirmation of project financing the machinery will be shipped to
Indonesia and re-erected at the Company's Toka Tindung Gold Project in Sulawesi.
Arlington Group Plc ("Arlington") acquired the plant and undertook the
dismantling, transportation and refurbishment. Archipelago will purchase the
mining equipment from Arlington and finance the purchase by way of the placement
of ordinary shares in the Company to the value of #4.5 million to Ocean
Resources Capital Holdings Plc ("Ocean").
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. Negotiations are also
underway with Barrick Gold Corporations' Chilean subsidiary, Compania Minera El
Indio, regarding the acquisition of other sections of the El Tambo gold
processing plant. This acquisition of refurbished, high quality, high cost and
long lead time plant and machinery constitutes a substantial saving in cost and
time over new equipment.
The Company has now completed its feasibility study review and is currently in
negotiations to raise both debt and equity finance to fund the development and
plant constructions costs of the Toka Tindung Gold Project.
In June 2004 the Company applied for two contiguous exploration licences
covering the Cam Thuy - Ba Thuoc gold district in northern Vietnam.
EVENTS SINCE THE BALANCE SHEET DATE
Ocean has agreed to fund the cost of Archipelago purchasing the El Tambo gold
processing plant from Arlington. Archipelago will reimburse Ocean by way of the
issue of 13,513,514 Ordinary Shares of 1p each in the Company at an issue price
of 33.3 pence per share in accordance with the previously announced terms of the
Guarantee Fee Agreement. This will bring Ocean's total holding in the Company
to 33,092,085 ordinary shares, representing 53.17% of the issued share capital.
The shares will be issued in two tranches with the first anticipated in early
October 2004 and the second in late October 2004. Application will be made for
these shares to be traded on AIM. Archipelago will pay Ocean a share placement
fee of #200,000.
(+) By order of the board
J C Loosemore
Managing Director
30th September 2004
ARCHIPELAGO RESOURCES PLC
CONSOLIDATED profit and loss account
Half year ended Year ended
Notes 30 June 31 December
2004 2003
# #
TURNOVER - -
Administrative expenses (145,874) (651,484)
OPERATING LOSS
Continuing operations (145,874) (651,484)
Loss on sale of investments - (2,301,401)
Interest payable and other similar charges - convertible loan notes - (573,787)
LOSS ON ORDINARY ACTIVITIES BEFORE TAXATION (145,874) (3,526,672)
Tax on loss on ordinary activities - -
LOSS ON ORDINARY ACTIVITIES AFTER TAXATION (145,874) (3,526,672)
Minority interests
Equity 59 112
LOSS FOR THE FINANCIAL PERIOD ATTRIBUTABLE TO MEMBERS OF THE PARENT
COMPANY (145,815) (3,526,560)
RETAINED LOSS FOR THE PERIOD (145,815) (3,526,560)
Loss per share - basic 3 (0.30p) (11.48p)
Loss per share - diluted 3 (0.30p) (11.48p)
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 (145,815) (3,526,560)
Other movements:
New shares issued 4 500,000 6,036,900
Total movements during the period (145,815) 2,510,340
2,094,994 (415,346)
Shareholders' funds / (deficit) at end of period
Shareholders' funds at end of period 2,449,179 2,094,994
ARCHIPELAGO RESOURCES PLC
CONSOLIDATED BALANCE SHEET
Notes 30 June 31 December
2004 2003
# #
FIXED ASSETS
Tangible assets 5,373,550 831,742
Investments 195,575 195,575
5,569,125 1,027,317
CURRENT ASSETS
Debtors 15,376 4,855
Cash at bank and in hand 548,435 1,180,265
563,811 1,185,120
Creditors: amounts falling due within one year 3,685,515 119,142
NET CURRENT (LIABILITIES) / ASSETS (3,121,704) 1,065,978
TOTAL ASSETS LESS CURRENT LIABILITIES 2,447,421 2,093,295
2,447,421 2,093,295
MINORITY INTERESTS
Equity 1,758 1,699
2,449,179 2,094,994
CAPITAL AND RESERVES
Called up share capital 4 487,208 472,922
Share premium account 6,264,769 5,779,055
Profit and loss account (4,302,798) (4,156,983)
TOTAL EQUITY SHAREHOLDERS' FUNDS 2,449,179 2,094,994
ARCHIPELAGO RESOURCES PLC
CONSOLIDATED STATEMENT OF CASHFLOWS
Half year ended Year ended
30 June 31 December
2004 2003
Notes # #
NET CASH OUTFLOW FROM OPERATING ACTIVITIES 6(a) (134,744) (379,006)
CAPITAL EXPENDITURE AND FINANCIAL INVESTMENT
Payments to acquire tangible fixed assets (497,086) (681,608)
RETURNS ON INVESTMENT AND SERVICING OF FINANCE
Interest paid - (123,787)
ACQUISITIONS AND DISPOSALS
Consideration on sale of investment - 1,480,000
Fees on sale of investment - (81,401)
- 1,398,599
NET CASH INFLOW / (OUTFLOW) BEFORE FINANCING (631,830) 214,198
FINANCING
Issue of ordinary share capital - 550,000
New long term loans - 300,000
Repayment of long term loans - (200,000)
Repayment of loan funds from directors - (83,649)
- 566,351
(DECREASE) / INCREASE IN CASH 6(b) (631,830) 780,549
RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET DEBT Half year ended Year ended
30 June 31 December
2004 2003
# #
(Decrease) / increase in cash (631,830) 780,549
Payment of loan funds from directors - 83,649
(Increase) in loans - (100,000)
Change in net debt resulting from cash flows 6(b) (631,830) 764,198
Non-cash movements in net debt 6(b) (3,586,473) 1,100,000
MOVEMENT IN NET DEBT (4,218,303) 1,864,198
NET FUNDS / (DEBT) AT BEGINNING OF PERIOD 6(b) 1,180,265 (683,933)
NET FUNDS AT END OF PERIOD 6(b) (3,038,038) 1,180,265
NOTES TO THE INTERIM RESULTS
1. Fundamental Accounting Concept - Going Concern
The Group intends to develop and commission the Toka Tindung Gold Project.
During the period, Archipelago secured the rights to acquire the crushing and
grinding sections of the El Tambo gold processing plant located in Chile.
Arlington acquired the plant, dismantled, transported and refurbished it.
Ocean has agreed to provide the funding necessary to allow Archipelago to
purchase the El Tambo plant and equipment from Arlington. Archipelago will
settle its obligations to Ocean by way of the issue of 13,513,514 ordinary
shares in the Company at an issue price of 33.3 pence per share.
To fund further project development related costs the Company intends to raise
additional funds through a mixture of debt and equity. The company is working
with several prospective debt financiers and has the support of its broker
Durlacher and Ocean Equities which has offered to place stock with institutional
and private clients as part of the proposed total project finance facility.
Based on progress to date with due diligence being undertaken by the prospective
debt financiers, the directors have a reasonable expectation that they will be
able to effect the development financing successfully and take the project to
commercial production.
At the date of this report the Group has approximately #450,000 in cash. These
funds are sufficient to meet all current commitments until end December 2004. In
addition the company's major shareholder Ocean Resources Capital Holdings Plc
has advised that additional working capital will be made available to the
company if required. In the event that project financing is significantly
delayed, the Company has the option of making an interim placement to raise
additional working capital.
The financial statements do not include any adjustments that would result from
the failure to affect the financial matters described above, to secure future
funding and to develop the properties for commercial production. Should the
going concern basis prove to be inappropriate, a reassessment of the carrying
value of assets and liabilities would have to be undertaken. Under such a
reassessment the value of assets would need to be reviewed to reflect their
realisable amount, further liabilities provided for, and fixed assets and long
term liabilities reclassified as current assets and liabilities.
2. 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.
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 that will result in an obligation to pay more,
or a right to pay less or to receive more, tax with the following exceptions:
Provision is made for tax on gains arising from the revaluation (and similar
fair value adjustments) of fixed assets and gains on disposal of fixed assets
that have been rolled over into replacement assets, only to the extent that, at
the balance sheet date, there is a binding agreement to dispose of the assets
concerned. However, no provision is made where, on the bases of all available
evidence at the balance sheet date, it is more likely than not that the taxable
gain will be rolled over into replacement assets and charged to tax only where
the replacement assets are sold.
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 is 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 were it is directly
linked to exploration or development expenditure. All other translation
differences are taken to 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 year ended 31
December 2003. The Company listed in September 2003 therefore was not required
to prepare an Interim Report for 30 June 2003.
3. LOSS PER SHARE
The calculation of basic loss per share is based on a loss for the half year of
#145,815 (2003 Year: ##3,526,560), and on 48,296,909 (2003 Year: 30,715,529)
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
2004 2003
# #
Authorised
100,000,000 (2003: 100,000,000) Ordinary shares
of 1 pence each 1,000,000 1,000,000
30 June 31 December 30 June 31 December
2004 2003 2004 2003
Allotted, Called-up and Fully Paid Shares Shares # #
Opening balance 47,292,200 21,507,700 472,922 215,077
Issued during the period 1,428,571 25,784,500 14,286 257,845
Closing balance 48,720,771 47,292,200 487,208 472,922
On 24 February 2004, Ocean was issued 1,428,571 ordinary shares at a price of 35
pence per share, in consideration for acting as guarantor for the loan from
Arlington.
5. OPTIONS
30 June 31 December
2004 2003
Number Number
Options exercisable at 20 pence expiring 31 December 2007
Beginning of the period 1,200,000 -
End of the period 1,200,000 -
Options exercisable at 20 pence expiring 9 September 2008
Beginning of the period 500,000 -
End of the period 500,000 -
6. NOTES TO THE STATEMENT OF CASH FLOWS
30 June 31 December
2004 2003
# #
(a) Reconciliation of operating loss to net cash outflow from operating
activities
Operating loss (145,874) (651,484)
(Increase) / decrease in debtors (10) (3,135)
Increase / (decrease) in creditors 11,140 49,977
Exploration expenditure written off - 225,636
Net cash outflow from operating activities (134,744) (379,006)
(b) Analysis of net debt
At 31 Exchange Other Non-Cash At 30 June
December 2003 Cash Flow Differences Movements 2004
# # # #
Cash 1,180,265 (631,830) - - 548,435
Short term borrowings - - - (3,586,473) (3,586,473)
1,180,265 (631,830) - (3,586,473) (3,038,038)
(c) Major non-cash transactions
The Group did not enter into any major non-cash transactions other than the
purchase of the El Tambo gold processing plant.
7. POST BALANCE SHEET EVENTS
Ocean has agreed to fund the cost of Archipelago purchasing the El Tambo gold
processing plant from Arlington. Archipelago will reimburse Ocean by way of the
issue of 13,513,514 Ordinary Shares of 1p each in the Company at an issue price
of 33.3 pence per share in accordance with the previously announced terms of the
Guarantee Fee Agreement. This will bring Ocean's total holding in the Company
to 33,092,085 ordinary shares, representing 53.17% of the issued share capital.
The shares will be issued in two tranches with the first anticipated in early
October 2004 and the second in late October 2004. Application will be made for
these shares to be traded on AIM. Archipelago will pay Ocean a share placement
fee of #200,000.
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 2003 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: 00-618-9364-8301
Ron Marshman/John Greenhalgh, City of London PR Limited.
Tel: 020-7628-5518
This information is provided by RNS
The company news service from the London Stock Exchange
END
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