RNS Number:4224D
Kenmare Resources PLC
28 September 2004
Kenmare Resources plc ("Kenmare" or "the Company")
Kenmare Interim Results
For the period ended 30th June 2004
Chairman's Statement
Dear Shareholder,
I mentioned at the last Annual General Meeting that we were in discussion with
three separate groups in relation to the final tranche of capital to complete
the Moma Project financing plan. I am now pleased to say that we have signed a
mandate to do so. All the commercial points have been agreed with the Emerging
Africa Infrastructure Fund and while some legal documentation remains to be
processed, every effort is being made to get this completed forthwith.
Completion of these arrangements, under which Stg#6.5 million will be raised by
way of an issue of Ordinary Shares and Warrants on the same terms as under the
original Placing and Open Offer, will mean that 100% of the planned Stg#53
million equity to be raised by Kenmare under the Moma Project financing plan is
achieved.
In the 2003 Annual Report, I stated that Kenmare had signed loan agreements for
US$269 million of loan finance for the Moma Titanium Minerals Project. I also
referred to the successful placing of Stg#30 million of equity with
institutional shareholders and the commencement of an Open Offer to shareholders
on the same terms as those provided to the institutions. This Open Offer was
very well supported by shareholders who contributed Stg#10.1 million, with a
further Stg#6.4 million having been raised by way of a supplementary placing.
The final component of the equity necessary to achieve lenders' minimum equity
requirement was provided by way of commitments from underwriters. These
commitments allowed Kenmare clear the lenders' minimum equity requirement and
gave access to the capital already raised. To facilitate participation by an
important investor such as the Emerging Africa Infrastructure Fund, the
underwriters have extended their existing commitment to 1 November in order to
complete the legal documentation required to execute the signed mandate referred
to above.
In the meantime the contract to build the mine was declared effective on the 5th
of August. Our Project Implementation Director, Ron Williams, and his staff have
now relocated to the office of the contractor in Johannesburg and work has
commenced. At site the first task has been the clearing of a space (servitude)
on either side of our 170km powerline. On completion of this task, the
contractor will assume responsibility for the site, expected late October. While
the main focus of the contractor over the next few months will be on planning,
detailed design, and procurement in Johannesburg, an advance team will also go
to site to open up the quarries and perform initial civil works. As part of the
transformation into a production company we are in the process of appointing a
new Chief Operating Officer, who will assume day-to-day management of
operational issues.
During the six months ended 30th June 2004 we reported a profit of US$71,880.
This profit arises primarily from foreign exchange gains and interest earned,
net of Kenmare's corporate operating costs.
With the last part of our financing agreed we are looking forward to getting on
with building the mine and investigating market possibilities for incremental
sales contracts.
Charles Carvill
Chairman
27th September 2004
For further information:
Kenmare Resources plc
Tony McCluskey
Financial Director
Tel: +353-1-671 0411 or +353-87-6740346
Deirdre Corcoran
Financial Controller
Tel: +353-1-671 0411 or +353-87-6383742
Murray Consultants
Elizabeth Headon
Tel: +353-1-498 0300 or +353-87 989 7234
Conduit plc
Leesa Peters
Tel: +44 (0) 207 936 9095 or + 44 (0) 781 215 9885
www.kenmareresources.com
INDEPENDENT AUDITORS' REVIEW REPORT
TO THE BOARD OF DIRECTORS OF KENMARE RESOURCES PLC
Interim Financial Information - Six months ended 30th June 2004
Introduction
We have been instructed by the Company to review the financial information for
the six months ended 30th June 2004 which comprises the Consolidated Profit and
Loss Account, the Consolidated Balance Sheet, the Group Cash Flow Statement, the
Statement of Total Recognised Gains and Losses and Reconciliation of Movement in
Shareholders' Funds and related notes 1 to 8. 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.
This report is made solely to the company in accordance with the terms of our
engagement to assist the company in meeting the requirements of the Listing
Rules of the Irish Stock Exchange and of the UK Listing Authority. Our review
has been undertaken so that we might state to the company those matters we are
required to state to it in this report and for no other purpose. To the fullest
extent permitted by law, we do not accept or assume responsibility to anyone
other than the company for our review work, for this report or for the
conclusions we have reached.
Directors' responsibilities
The interim report, including the financial information contained therein, is
the responsibility of, and has been approved by, the Directors. The directors
are responsible for preparing the interim report in accordance with the Listing
Rules of the Irish Stock Exchange and of the UK Listing Authority which 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 30th June 2004.
Deloitte & Touche
Chartered Accountants
and Registered Auditors
Deloitte & Touche House
Earlsfort Terrace
Dublin 2
27th September 2004
CONSOLIDATED PROFIT AND LOSS ACCOUNT
FOR THE SIX MONTHS ENDED 30th JUNE 2004
6 Months 6 Months 12 Months
30/06/2004 30/06/2003 31/12/2003
Unaudited Unaudited Audited
US$ US$ US$
Turnover - - -
Operating Gains/(Expenses) 46,750 (323,647) (42,877)
Operating Profit/(Loss) 46,750 (323,647) (42,877)
Interest Receivable 25,130 101,881 163,428
Profit/(Loss)On Ordinary Activities
Before Taxation 71,880 (221,766) 120,551
Taxation - - -
Profit/(Loss) On Ordinary
Activities
After Taxation 71,880 (221,766) 120,551
Earnings/(Loss) per share: Basic 0.03c (0.85)c 0.05c
Earnings/(Loss) per share: Diluted 0.02c (0.85)c 0.04c
CONSOLIDATED BALANCE SHEET
AS AT 30th JUNE 2004
6 Months 6 Months 12 Months
30/06/2004 30/06/2003 31/12/2003
Unaudited Unaudited Audited
US$ US$ US$
Fixed Assets
Mineral Interests 42,036,267 24,468,280 27,431,163
Tangible Assets 41,618,255 41,626,625 41,622,440
83,654,522 66,094,905 69,053,603
Current Assets
Debtors 751,985 132,400 90,322
Investment in Shares - 158,505 -
Cash at Bank and In Hand 538,203 3,442,389 4,574,490
1,290,188 3,733,294 4,664,812
Creditors: Amounts falling
due within one year (14,479,864) (2,493,995) (3,224,907)
Net Current Assets (13,189,676) 1,239,299 1,439,905
Total Assets Less Current 70,464,846 67,334,204 70,493,508
Liabilities
Creditors: Amounts falling
due after one year (1,502,582) (1,543,551) (1,730,161)
Provision for liabilities and - (3,338,000) -
charges
68,962,264 62,452,653 68,763,347
Capital and Reserves
Called Up Share Capital 26,327,993 24,556,528 26,269,539
Share Premium Account 29,916,845 25,592,896 29,848,262
Profit and Loss Account - (21,819,847) (22,234,044) (21,891,727)
(Deficit)
Revaluation Reserve 30,141,002 30,141,002 30,141,002
Other Reserve 3,642,080 3,642,080 3,642,080
Capital Conversion Reserve 754,191 754,191 754,191
Fund
Shareholders' Funds 68,962,264 62,452,653 68,763,347
GROUP CASH FLOW STATEMENT
FOR THE SIX MONTHS ENDED 30th JUNE 2004
6 Months 6 Months 12 Months
30/06/2004 30/06/2003 31/12/2003
Unaudited Unaudited Audited
US$ US$ US$
Net cash inflow/(outflow) from
operating activities 10,644,229 1,038,113 (1,092,221)
Returns on investment and
servicing of finance
Interest received 25,130 101,881 163,428
Net cash inflow from returns on
investment & servicing of
finance 25,130 101,881 163,428
Capital expenditure & financial
investment
Addition of Mineral Interests (14,605,104) (5,849,971) (8,812,854)
Net cash outflow from capital
expenditure & financial
investment (14,605,104) (5,849,971) (8,812,854)
Net cash outflow before use of
liquid resources & financing (3,935,745) (4,709,977) (9,741,647)
Financing:
Issue of Ordinary Share Capital 127,037 - 6,513,083
Cost of share issue - - (544,706)
Finance Lease - (2,254) (2,254)
Increase in debt due within a
year - 2,221 11,005
(Decrease)/Increase in debt due
beyond a year (227,579) 111,648 298,258
Net cash (outflow)/inflow from
financing (100,542) 111,615 6,275,386
Decrease in cash (4,036,287) (4,598,362) (3,466,261)
STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES
FOR THE SIX MONTHS ENDED 30th JUNE 2004
6 Months 6 Months 12 Months
30/06/2004 30/06/2003 31/12/2003
Unaudited Unaudited Audited
US$ US$ US$
Profit/(Loss) attributable to
Group shareholders 71,880 (221,766) 120,551
Total Recognised Gains/(Losses) for
the period 71,880 (221,766) 120,551
RECONCILIATION OF MOVEMENT IN SHAREHOLDERS' FUNDS
FOR THE SIX MONTHS ENDED 30th JUNE 2004
6 Months 6 Months 12 Months
30/06/2004 30/06/2003 31/12/2003
Unaudited Unaudited Audited
US$ US$ US$
Total Recognised Gains/(Losses) for
the period 71,880 (221,766) 120,551
Issue of Shares - at par 58,454 - 1,713,011
Share Premium, net of costs 68,583 - 4,255,366
Net Change in Shareholders' funds 198,917 (221,766) 6,088,928
Opening Shareholders' funds 68,763,347 62,674,419 62,674,419
Closing Shareholders' funds 68,962,264 62,452,653 68,763,347
NOTES TO THE INTERIM FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30th JUNE 2004
1. Basis of Preparation of Interim Financial Statements
The Interim Statement has been prepared on the going concern basis applying the
accounting policies set out on page 23 of the 2003 Annual Report and Accounts.
The unaudited interim financial information in this statement has been reviewed
by the auditors in respect of the six months ended 30th June 2004 only and
their Report to the Directors is set out on page 4.
2. 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$71,880 (2003: Loss US$221,766) and the
weighted average number of shares in issue during the six months ended 30th
June 2004 of 288,212,873 shares (2003: 262,209,123 shares).
The calculation of fully diluted earnings per share for 2004 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. This increases the
weighted average number of shares in issue to 316,064,560.
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
continued availability of adequate funding.
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 appraised
the Mining and Processing Plant on a depreciated replacement cost basis of
valuation as at 30th 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 31st December 2003
was provided by Bateman Engineering, an international engineering group.
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 30th June 2004 is
US$11,473,067. The surplus arising on revaluation amounts to US$30,141,002.
5. Non-Consolidation of Subsidiary Undertaking
As set out in detail in Note 7 of 2003 Annual Report, Grafites de Ancuabe,
S.A.R.L., a subsidiary company, has been excluded from consolidation from 31st
December 1999.
6. Reconciliation of operating profit/(loss) to net cashflow from operating
activities
6 Months 6 Months 12 Months
30/06/2004 30/06/2003 31/12/2003
Unaudited Unaudited Audited
US$ US$ US$
OPERATING ACTIVITIES
Operating Profit/(Loss) 46,750 (323,647) (42,877)
Depreciation 4,185 4,185 8,370
(Increase)/Decrease in Debtors (661,663) (36,927) 5,151
Increase in Investment in Shares - (158,505) -
Increase in operating creditors 11,254,957 1,041,007 1,763,135
Increase/(Decrease) in Provision
for Liabilities & Charges - 512,000 (2,826,000)
Net Cash Flow from Operating
Activities 10,644,229 1,038,113 (1,092,221)
7. Subsequent Events
On 18 June 2004 Kenmare announced details of a Placing and Open offer to raise
up to Stg#53 million, representing the last major step in the financing of
project implementation at Moma. Stg#30 million of this amount was secured
through a placing arranged by the Companies brokers, Canaccord Capital (Europe)
Limited and J&E Davy, Stg#10.1 million was received in response to an open
offer to shareholders with a further Stg#6.4 million raised by way of a
supplementary placing. The final component of the equity necessary to achieve
lenders' minimum equity requirement was provided by way of commitments from
underwriters. These commitments allowed Kenmare clear the lenders' minimum
equity requirement and gave access to the capital already raised. Kenmare has
now signed a mandate with an investor in relation to the balance of the
supplemental placing and the underwriters have extended their existing
commitment to 1 November in order to facilitate this.
8. Approval of Interim Financial Statements
The interim financial statements were approved on 27th September 2004.
28 September, 20
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