RNS Number:6126B
Kenmare Resources PLC
25 September 2002
KENMARE RESOURCES PLC
REPORTS AND FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2002
Chairman's Statement and Results
for Six Months Ended 30 June, 2002
Dear Shareholder,
We have made considerable progress in advancing towards our first production at
the Moma Project since I last reported to you in June.
On 13 and 14 June, the Inaugural Meeting of the Lender Group for Moma was held
in London. It was attended by representatives of the African Development Bank,
the Development Bank of Southern Africa, ECIC (the South African Export Credit
Agency) and ABSA (the South African commercial bank which proposes to lead the
banks funding with the ECIC guarantee), the European Investment Bank, FMO (the
Dutch development finance institution) and KfW (the German development financing
institution). At this meeting the lenders agreed to appoint a common Independent
Engineer which, on behalf of the Lender Group, would review the previous work
done on the project. This is a normal part of the funding process and marks
seriousness on behalf of the Lender Group. SRK Consulting was appointed to the
role and it has spent the last three months reviewing all technical aspects of
the project, including visiting the plants bought from BHP, and visiting Moma.
SRK has recently released its report, which, I am very pleased to say, has
endorsed the project and Kenmare's general approach to its implementation while
also making several helpful recommendations upon which we are acting.
The Lender Group also appointed an Independent Marketing Analyst to assess the
market opportunity for the products which the Moma mine will produce and Moma's
long term competitiveness. IBMA was given this role and has also recently
released its report, which again is supportive of the project.
Earlier this month, representatives of the Lender Group and their advisors
visited the project site and this was followed by a four day series of meetings
in Mozambique. This process has resulted in the Lender Group agreeing to proceed
with preparation of loan documentation in parallel with completion of their
remaining due diligence and obtaining approvals from their respective
decision-making bodies.
Contracts in respect of a significant proportion of the Moma Project ilmenite
output have been signed and negotiations are ongoing to conclude other off-take
arrangements.
Concurrently with the development of a financing structure and marketing
arrangements, we have to organise the construction of the mine. In conjunction
with Kvaerner (Client Representative Engineer) we have prepared and issued an
Invitation to Bid to contractors. This Invitation to Bid was issued to a short
list of international contractors who have the experience and capability to
deliver the project. The document was issued on 9 September and the bidding
period is three months.
Work has also been undertaken to further refine and provide more detailed
information on certain aspects of the project. In July 2002, GRD Minproc
completed a DFS Addendum Report for the project. This work was commissioned in
order to optimise the waste handling system and integrate Moma into the national
electrical grid of Mozambique from the start of production. The work also
involved increasing the size of the roaster; thus allowing us to sell more
ilmenite into the stronger chloride market. In addition to the DFS Addendum, the
company has a number of other technical programmes underway, ranging from
groundwater pump tests to offshore geotechnical drilling, all aimed at ensuring
that no unwelcome surprises occur.
In line with Kenmare's continuing intent to develop Moma in compliance with best
environmental practices, an Environmental Management Plan (EMP) has been
developed and submitted to Government for approval. A construction EMP is being
developed for inclusion in the construction contract.
Since the Moma project companies' financial statements are denominated in US$,
the Board has decided that we should move to reporting in US$. This move allows
us to reflect the underlying US$ based cash flows with a minimum of accounting
exchange movements. During the six months ended 30 June, we have reported a
profit of US$542,558. This profit arises primarily from foreign exchange gains
and interest earned on the equity capital raised last May, net of Kenmare's
corporate operating costs.
The Directors remain committed to development of the Moma Project, and subject
to finalisation of financing, are confident that the Kenmare Group will be well
positioned to achieve production at Moma according to our targets.
Charles Carvill
Chairman
25 September 2002
INDEPENDENT AUDITORS' REVIEW REPORT
TO THE BOARD OF DIRECTORS OF KENMARE RESOURCES PLC
Interim Financial Information - Six months ended 30 June 2002
Introduction
We have been instructed by the Company to review the financial information for
the six months ended 30 June 2002 which comprises the Consolidated Profit and
Loss Account, the Consolidated Balance Sheet, the Group Cash Flow Statement,
Statement of Total Recognised Gains and Losses and Reconciliation of Movement in
Shareholders' Funds and related notes 1 to 6. We have read the other information
contained in the interim report and considered whether it contains any apparent
misstatements or material inconsistencies with the financial information.
Directors' responsibilities
The interim report, including the financial information contained therein, is
the responsibility of, and has been approved by the Directors. The Listing Rules
of the Irish Stock Exchange and of the UK Listing Authority require that the
accounting policies and presentation applied to the interim figures should be
consistent with those applied in preparing the preceding annual accounts except
where any changes, and the reasons for them, are disclosed.
Review work performed
We conducted our review in accordance with guidance contained in Bulletin 1999/4
issued by the Auditing Practices Board. A review consists principally of making
enquiries of management and applying analytical procedures to the financial
information and underlying financial data and based thereon, assessing whether
the accounting policies and presentation have been consistently applied unless
otherwise disclosed. A review excludes audit procedures such as tests of
controls and verification of assets, liabilities and transactions. It is
substantially less in scope than an audit performed in accordance with Auditing
Standards and therefore provides a lower level of assurance than an audit.
Accordingly we do not express an audit opinion on the financial information.
Review conclusion
On the basis of our review we are not aware of any material modifications that
should be made to the financial information as presented for the six months
ended 30 June 2002.
Deloitte & Touche
Chartered Accountants
and Registered Auditors
Deloitte & Touche House
Earlsfort Terrace
Dublin 2
25 September 2002
CONSOLIDATED PROFIT AND LOSS ACCOUNT
FOR THE SIX MONTHS ENDED 30 JUNE 2002
6 Months 6 Months 12 Months
30/06/02 30/06/01 31/12/01
Unaudited Unaudited Audited
US$ US$ US$
Turnover - - -
Operating Income/(Expenses) 470,825 (875,609) (983,638)
Operating Profit/(Loss) 470,825 (875,609) (983,638)
Interest Receivable 71,733 69,111 110,806
Profit/(Loss) On Ordinary Activities
Before Taxation 542,558 (806,498) (872,832)
Taxation - - -
Profit/(Loss) On Ordinary Activities
After Taxation 542,558 (806,498) (872,832)
Earnings/(Loss) per share: Basic 0.25c (0.43c) (0.47c)
Earnings/(Loss) per share: Diluted 0.22c (0.43c) (0.47c)
CONSOLIDATED BALANCE SHEET
AS AT 30 JUNE 2002
6 Months 6 Months 12 Months
30/06/02 30/06/01 31/12/01
Unaudited Unaudited Audited
US$ US$ US$
Fixed Assets
Mineral Interests 13,317,651 9,728,436 11,137,129
Tangible Assets 41,634,992 41,639,336 41,639,177
54,952,643 51,367,772 52,776,306
Current Assets
Debtors 84,879 95,399 76,826
Cash at Bank and In Hand 12,615,452 2,403,232 1,239,530
12,700,331 2,498,631 1,316,356
Creditors: Amounts falling
due within one year (1,171,149) (1,337,665) (1,484,230)
Net Current Assets/(Liabilities) 11,529,182 1,160,966 (167,874)
Total Assets Less Current Liabilities 66,481,825 52,528,738 52,608,432
Creditors: Amounts falling
due after one year (1,408,720) (1,009,610) (1,379,571)
Provision for liabilities and charges (2,817,500) (1,267,513) (1,275,510)
62,255,605 50,251,615 49,953,351
Capital and Reserves
Called Up Share Capital 24,556,528 20,589,581 20,684,504
Share Premium Account 25,600,044 15,613,682 16,303,622
Profit and Loss Account - (Deficit) (22,438,240) (22,078,747) (22,980,798)
Other Reserve 3,642,080 5,500,419 3,642,080
Revaluation Reserve 30,141,002 30,626,680 31,549,752
Capital Conversion Reserve Fund 754,191 - 754,191
Shareholders' Funds 62,255,605 50,251,615 49,953,351
GROUP CASH FLOW STATEMENT
FOR THE SIX MONTHS ENDED 30 JUNE 2002
6 Months 6 Months 12 Months
30/06/02 30/06/01 31/12/01
Unaudited Unaudited Audited
US$ US$ US$
Net cash inflow/(outflow) from
operating activities 1,316,303 181,943 (63,175)
Returns on investment
and servicing of finance
Interest received 71,733 69,111 110,806
Net cash inflow from returns on
investment & servicing of finance 71,733 69,111 110,806
Capital expenditure
& financial investment
Addition of Mineral Interests (2,180,522) (2,015,352) (3,502,168)
Net cash outflow from capital
expenditure & financial investment (2,180,522) (2,015,352) (3,502,168)
Net cash outflow before use of
liquid resources & financing (792,486) (1,764,298) (3,454,537)
Financing:
Issue of Ordinary Share Capital 14,530,720 5,089,101 5,409,437
Cost of share issue (1,362,274) (378,767) (397,304)
Finance Lease (7,296) - (15,405)
Decrease in debt due within a year (1,027,020) (1,865,457) (2,022,213)
Increase/(Decrease) in
debt due beyond a year 34,278 (20,682) 323,441
Net cash inflow from financing 12,168,408 2,824,195 3,297,956
Increase/(Decrease) in cash 11,375,922 1,059,897 (156,581)
STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES
FOR THE SIX MONTHS ENDED 30 JUNE 2002
6 Months 6 Months 12 Months
30/06/02 30/06/01 31/12/01
Unaudited Unaudited Audited
US$ US$ US$
Income (Loss) attributable to
Group shareholders 542,558 (806,498) (872,832)
Revaluation of Tangible Fixed Assets (1,408,750) - -
Currency Translation Movement - 5,068,830 2,913,385
Total Recognised Gains and
Losses for the period (866,192) 4,262,332 2,040,553
RECONCILIATION OF MOVEMENT IN SHAREHOLDERS' FUNDS
FOR THE SIX MONTHS ENDED 30 JUNE 2002
6 Months 6 Months 12 Months
30/06/02 30/06/01 31/12/01
Unaudited Unaudited Audited
US$ US$ US$
Total Recognised Gains and Losses -866,192 4,262,332 2,040,553
for the period
Issue of Shares - at par 3,872,024 1,064,764 1,146,812
Share Premium, net of costs 9,296,422 3,645,569 3,865,322
Net Change in Shareholders' funds 12,302,254 8,972,665 7,052,687
Opening Shareholders' funds 49,953,351 41,278,950 42,900,664
Closing Shareholders' funds 62,255,605 50,251,615 49,953,351
NOTES TO THE INTERIM FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2002
1. Basis of Preparation of Interim Financial Statements
The Interim Statement has been prepared applying the accounting policies set out
on page 23 of the 2001 Annual Report and Accounts, save that the financial
statements are prepared in US Dollars from 1 January 2002. The Directors view
the US Dollar as being the functional currency of the group. The comparative
figures are presented in US Dollars using the exchange rate at 1 January 2002.
The unaudited interim financial information in this statement has been reviewed
by the auditors in respect of the six months ended 30th June 2002 only and their
Report to the Directors is set out herein.
2. Earnings and Fully Diluted Earnings per Share
The calculation of the basic earnings per share is based on the profit after
taxation of US$542,558 (2001: Loss US$806,498) and the weighted average number
of shares in issue during the six months ended 30 June 2002 of 214,728,068
shares (2001: 187,201,875 shares).
The calculation of fully diluted earnings per share is based on the profit for
the period after taxation as for basic earnings per share. The number of shares
is adjusted to show the potential dilution if share options and share warrants
are converted into ordinary shares. The weighted average number of shares in
issue is increased to 243,306,384. For the 2001 comparatives, the fully diluted
earnings per share and the basic earnings per share figures are the same, as a
loss was made during each of those periods.
3. Mineral Interests
The recovery of deferred development expenditure is dependent upon the
successful development of economic ore reserves, which in turn depends on the
availability of adequate funding from financial institutions, a joint venture
party or other source.
The Directors are satisfied that deferred expenditure is worth not less than
cost less any amounts written off and that the exploration projects have the
potential to achieve mine production and positive cash flows.
4. Tangible Assets
Tangible Assets are stated at cost or valuation less accumulated depreciation.
GRD Minproc Limited, an independent Australian engineering group, has valued the
Mining and Processing Plant on a depreciated replacement cost basis as at 30
June 2000. The recovery of this amount is dependent upon the successful
development of the Moma Titanium Minerals Project, which in turn depends on the
availability of adequate funding from financial institutions, a joint venture
party or other source. The historical cost net book value of these assets at 30
June 2001 is US$8,118,350. The surplus arising on revaluation amounts to
US$30,141,002.
5. Non-Consolidation of Subsidiary Undertaking
As set out in detail in Note 7 of 2001 Annual Report, Grafites de Ancuabe,
S.A.R.L., a subsidiary company, has been excluded from consolidation from 31
December 1999.
6. Approval of Interim Financial Statements
The interim financial statements were approved by the Board on 25 September
2002.
25 September, 2002
This information is provided by RNS
The company news service from the London Stock Exchange
END
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