RNS Number:7195X
Kenmare Resources PLC
19 April 2004
Kenmare Resources plc ("Kenmare" or "the Company")
Kenmare Preliminary Results
For the year ended 31st December 2003
Chairman's Statement
Dear Shareholder,
The key objective we have been pursuing over the last 9 months has been the
signing of a Fixed Price Contract to develop the Moma project. I was very
pleased to announce on the 8th of April that we had entered into such a contract
with a Joint Venture formed between Multiplex Ltd and Bateman BV. I cannot think
of a more suitable combination of key skills to implement the project. Multiplex
is a large contracting group with operations stretching around the globe and
which specialises in large complex construction projects. Bateman is an
international engineering group with specific mineral sands expertise and
experience of working in Mozambique. These best in class companies are bringing
their expertise together to deliver the project for Kenmare under the agreed
terms of the contract.
The contract, which is denominated in a number of currencies, is established on
a base price of US$220 million with provisions for cost overruns up to US$240
million at which point it becomes totally fixed. Between US$220 and US$240
million the JV shoulders a progressively greater proportion of the costs. Hence
there is a great incentive for it to ensure overruns above US$220 million are
minimal. From commencement of the work programme under the contract it will take
two years to complete the construction of the Moma project.
The contract is subject to a number of conditions precedent before it becomes
effective. The most significant of the conditions precedent is the making
available of debt financing, which is itself conditional on the availability of
an equity financing component. Hence the next step is to complete the funding
process.
A debt funding package has been negotiated with a lender group comprising the
European Investment Bank (EIB), The African Development Bank (ADB), FMO (a Dutch
development finance institution), KfW (a German development finance institution)
and ABSA (a South African Commercial Bank) lending under an ECIC (Export Credit
Insurance Agency of South Africa) export guarantee. The EIB, and the ADB have
received board approvals for their loans to the project. The remaining lenders
required the signing of the construction contract before they could take it to
their boards. They are expected to do so in the coming weeks. Political risk
guarantees are being provided to the project by MIGA, an arm of the World Bank,
and are expecting to be supplemented by Hermes, an arm of the German Government.
It is intended that a placing to institutional investors will be performed to
cover the required equity component of the financing. All shareholders will also
be given an opportunity to participate in the equity financing component by way
of partial claw back of this placing.
Kenmare accounts for the year ended 31 December 2003 show a profit of US$120,551
arising mainly from deposit interest income net of an operating loss of
US$42,877.
Charles Carvill
Chairman
For more information:
Kenmare Resources plc
Michael Carvill, Managing Director
Tel: + 353 1 671 0411
Mob: + 353 87 6740110
Conduit PR Ltd
Leesa Peters
Tel: +44 (0) 207 936 9095
Mob: + 44 (0) 781 215 9885
Murray Consultants Ltd
Tom Byrne
Tel: + 353 1 498 0339
Mob: +353 86 810 4224
www.kenmareresources.com
CONSOLIDATED PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED 31st DECEMBER 2003
2003 2002
US$ US$
Turnover - -
Operating (Loss)/Income (42,877) 707,037
Operating (Loss)/Profit (42,877) 707,037
Interest Receivable 163,428 261,483
Profit On Ordinary Activities Before Taxation 120,551 968,520
Taxation - -
Profit On Ordinary Activities After Taxation 120,551 968,520
Earnings per share: Basic 0.05c 0.41c
Earnings per share: Diluted 0.04c 0.36c
CONSOLIDATED BALANCE SHEET
AS AT 31st DECEMBER 2003
2003 2002
US$ US$
FIXED ASSETS
Mineral Interests 27,431,163 18,618,309
Tangible Assets 41,622,440 41,630,810
69,053,603 60,249,119
CURRENT ASSETS
Debtors 90,322 95,473
Cash at Bank and In Hand 4,574,490 8,040,751
4,664,812 8,136,224
CREDITORS:
Amounts falling due within one year (3,224,907) (1,453,021)
NET CURRENT ASSETS 1,439,905 6,683,203
TOTAL ASSETS LESS CURRENT LIABILITIES 70,493,508 66,932,322
CREDITORS:
Amounts falling due after one year (1,730,161) (1,431,903)
PROVISION FOR LIABILITIES AND CHARGES - (2,826,000)
68,763,347 62,674,419
CAPITAL AND RESERVES
Called Up Share Capital - (Equity & Non-Equity) 26,269,539 24,556,528
Share Premium Account 29,848,262 25,592,896
Profit and Loss Account - (Deficit) (21,891,727) (22,012,278)
Revaluation Reserve 30,141,002 30,141,002
Other Reserve 3,642,080 3,642,080
Capital Conversion Reserve Fund 754,191 754,191
Shareholders' Funds 68,763,347 62,674,419
GROUP CASH FLOW STATEMENT
FOR THE YEAR ENDED 31st DECEMBER 2003
2003 2002
US$ US$
Net cash (outflow)/inflow from operating activities (1,092,221) 1,948,541
Returns on Investments & Servicing of Finance
Interest received 163,428 261,483
Net cash inflow from Returns on Investment &
Servicing of Finance 163,428 261,483
Capital expenditure & financial investment
Addition of Mineral Interests (8,812,854) (7,583,927)
Net cash outflow from capital expenditure &
financial investment (8,812,854) (7,583,927)
Net cash outflow before use of liquid resources & financing (9,741,647) (5,373,903)
Financing
Issue of Ordinary Share Capital 6,513,083 14,530,686
Cost of share issues (544,706) (1,369,388)
Finance Lease (2,254) (15,690)
Debt due within one year 11,005 (1,027,945)
Debt due beyond a year 298,258 57,461
Net cash inflow from financing 6,275,386 12,175,124
(Decrease)/Increase in cash (3,466,261) 6,801,221
STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES
FOR THE YEAR ENDED 31st DECEMBER 2003
2003 2002
US$ US$
Income attributable to Group shareholders 120,551 968,520
Movement in Revaluation Reserve - (1,408,750)
Total Recognised Gains/(Losses) for the year 120,551 (440,230)
RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS
FOR THE YEAR ENDED 31st DECEMBER 2003
2003 2002
US$ US$
Total Recognised Gains/(Losses) for the year 120,551 (440,230)
Issue of Shares - at par 1,713,011 3,872,024
Share premium, net of costs 4,255,366 9,289,274
Net change in Shareholders' funds 6,088,928 12,721,068
Opening Shareholders' funds 62,674,419 49,953,351
Closing Shareholders' funds 68,763,347 62,674,419
NOTES TO THE PRELIMINARY RESULTS
Note 1 Basis of Accounting
The preliminary results have been prepared in US Dollar under the historical
cost convention, as modified by the revaluation of certain fixed assets, and in
accordance with the accounting policies set out on page 23 of the 2002 Annual
Report and Accounts.
Note 2 Basis of Preparation
The financial information presented above does not constitute statutory accounts
within the meaning of the Companies Acts, 1963 to 2001. An audit report has not
yet been issued on the accounts for the year ended 31st December 2003, nor have
they been delivered to the Registrar of Companies. The comparative financial
information for the year ended 31st December 2002 has been derived from the
statutory accounts for the year. Those statutory accounts, upon which the
auditors have issued an unqualified opinion, have been filed with the Registrar
of Companies.
Note 3 Earnings and fully diluted earnings per share
The calculation of the earnings and fully diluted earnings per share is based on
the profit after taxation of US$120,551 (2002: Profit US$968,520) and the
weighted average number of shares in issue during 2003 of 270,684,123(2002 -
238,468,595 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 299,560,810.
Note 4 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 being made available. 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.
Note 5 Tangible Assets
Tangible Assets are stated at cost or valuation less accumulated depreciation.
GRD Minproc Limited, an independent Australian engineering group, has appraised
the Mining and Processing Plant on a depreciated replacement cost basis of
valuation as at 30 June 2000. An inspection of the Mining and Processing Plant
was carried out by GRD Minproc Limited in March 2002 concluding that no material
alteration to the plants had taken place. Confirmation of the existence of the
Processing Plant and the Mining Plant at the year end has been provided by
Bateman Engineering, an international engineering group.
The recovery of the plant valuation is dependent upon the successful development
of the Moma Titanium Minerals Project, which in turn depends on the availability
of adequate funding being made available. The historical cost net book value of
these assets at 31 December 2003 is US$11,473,067. The surplus arising on
revaluation amounts to US$30,141,002.
Note 6 Reconciliation of Operating Loss to Net Cash flow from Operating
Activities
2003 2002
US$ US$
Operating (Loss)/Income (42,877) 707,037
Depreciation 8,370 8,367
Decrease/(Increase) in Debtors 5,151 (18,647)
Increase in operating creditors 1,763,135 1,007,297
(Decrease)/Increase in Provision for Liabilities & Charges (2,826,000) 1,550,490
Impairment/Write off of Minerals Interests - 102,747
Decrease in Revaluation Reserve - (1,408,750)
Net Cash Flow from Operating Activities (1,092,221) 1,948,541
Note 7 Analysis of Net Debt
At 1 Jan 2003 Cash Flow At 31 Dec 2003
US$ US$ US$
Cash at Bank and in hand 8,040,751 (3,466,261) 4,574,490
Debt due after 1 year (1,431,903) (298,258) (1,730,161)
Debt due within 1 year (98,617) (11,005) (109,622)
6,510,231 (3,775,524) 2,734,707
Note 8 Reconciliation of Net Cash flow to Movement in Net Debt
2003 2002
US$ US$
(Decrease)/Increase in cash during the year (3,466,261) 6,801,221
(Inflow)/Outflow from movements in debt & lease financing (309,263) 970,484
Movement in net cash in the year (3,775,524) 7,771,705
Net cash/(debt) at start of year 6,510,231 (1,261,474)
Net cash at end of year 2,734,707 6,510,231
Note 9 2003 Annual Report and Accounts
The Annual Report and Accounts will be posted to shareholders in due course.
19 April, 2004
This information is provided by RNS
The company news service from the London Stock Exchange
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