RNS Number:9037J
Latitude Resources plc
14 December 2007
NEWS RELEASE 14-12-2007
Latitude Resources plc ("Latitude" or the "Company")
Preliminary Results
for the year ended 30 June 2007
HIGHLIGHTS
* Profit before taxation of �487,000 (2006: restated loss of �357,000)
* Profit on sale of fixed assets of �3.1 million
* Net assets increased to �7.4 million
* Sale of Latin American Copper Chile to Tamaya Resources Limited ("Tamaya")
post year end for 85 million shares and 15 million options
* �7.2 million realised to date from sales of Tamaya shares
For further information please contact:
Latitude Resources plc
Martyn Konig (Chief Executive Officer) Phone: +44 (0) 20 7493 9116
Fax: +44 (0) 20 7493 9118
Email: info@latituderesources.com
Evolution Securities Limited
Rob Collins Phone: +44 (0) 20 7071 4300
Fax: +44 (0) 20 7071 4451
Email: robert.collins@evosecurities.com
CHIEF EXECUTIVE OFFICER'S STATEMENT
I am pleased to present my review for the year ended 30 June 2007.
Throughout the year, the Company's principal activities were focused in the
Chilean coastal cordillera where the Company, through its interest in Latin
American Copper Chile ("LAC"), specifically explored for Iron Oxide Copper Gold
("IOCG") deposits. The most advanced of LAC's Chilean properties were acquired
in late 2003 and early 2004. Following the Company's admission to trading on AIM
("Admission") as Latitude Resources Plc, the Company's commitment to funding a
considered, commercially-focussed exploration campaign has seen two of these
IOCG properties (Filipina Grande and Santa Dominga) come to the fore.
Following a 3-year phased programme of geological modelling, geophysical testing
and exploration drilling, LAC progressed its Filipina Grande project from a
grassroots prospect to a property with considerable commercial promise. Filipina
Grande now has an inferred copper-gold resource and an independently validated
scoping study confirming the economic potential of the property, subject to
further investment and drilling.
In early 2006, LAC discovered a new, high-grade copper-gold body at Santa
Dominga, the results of which further added to the value of the LAC portfolio.
Notwithstanding the relative success of LAC's investments in Chile, the Filipina
Grande and Santa Dominga projects remain at the exploration stage of the mine
development cycle. In the Company's view, each project will need substantial
further development, requiring an ongoing commitment to invest considerable
resources over a number of years.
In order to best develop these properties and progress towards a production
decision, a range of financial, operational, country and market factors were
considered by the Company in a strategic review which commenced in the first
quarter of 2007. The Directors concluded that the operating environment in Chile
tends to favour larger companies with existing Chilean mining operations,
particularly in the negotiation of, transition to and commencement of mining
activities.
After the year end, this resulted in a decision by the Group to consider and, in
September 2007, approve the disposal of these Chilean assets to Tamaya Resources
Limited (ASX Code: TMR), an Australian junior mining company. On 5 September
2007 the Company's subsidiary Latitude Management Capital Inc ("LMC") entered
into an agreement to dispose of the entire issued shares of LAC Holdings to
Tamaya, in consideration of Tamaya granting to LMC 85 million shares and 15
million options. The shares were valued at approximately �8.86 million by
reference to Tamaya's market price on that date. Subsequently LMC has sold, for
cash, approximately 54 million shares in Tamaya, generating proceeds of
approximately �7.2 million.
Investment Activities
Although the historical principal focus has been on copper-gold prospects within
Chile, we have continued to manage a complimentary investment portfolio through
which we have sought to take minority stakes in other resource projects, with
the aim of adding value and maximising the return on shareholder's funds.
During the year, we sold 5 million shares in Western Goldfields which realised a
gain of approximately �3.1 million. Western Goldfields is a public company which
trades on the Toronto Stock Exchange (TSX: WGI) as well as the OTC bulletin
board. At the year end, Latitude continues to hold 2.5 million shares.
Financial
The consolidated net profit after taxation of the Group in respect of the year
ended 30 June 2007 amounted to �487,000 (earnings per share 0.3p) compared to
the restated consolidated net loss after taxation for 2006 of �357,000 (loss per
share 0.1p).
The Group's income during the year from advisory fees and the profit on sales of
fixed assets investments amounted to �38,000 and �3,133,000 respectively (2006:
�103,000 and �550,000 respectively), whilst bank deposit interest amounted to
�94,000 (2006: �117,000).
The net assets of the Group amounted to approximately �7,405,000 as at the year
end (2006 restated: �6,896,000) which includes intangible assets amounting to
approximately �3,467,000 (2006: �2,010,000). Intangible assets relate to
accumulated deferred exploration and evaluation costs in respect of the Group's
exploration interests in Chile. The Group's accounting policy is to capitalise
these costs pending determination of the feasibility of the project to which
they relate.
Principal Risks and Uncertainties
It should be noted that although the Company currently has sufficient funds in
cash and in the market value of its investments, these investments are subject
to market price fluctuations and, if sold, may not realise as much cash as
current market prices may indicate.
Outlook
Following the disposal, the Group has continued to explore new investment
opportunities in the mining sector in accordance with the Investing Strategy as
set out at Admission. The Investing Strategy has been to seek to identify,
evaluate and acquire interests in prospective projects and companies in the
resource sector with a view to providing expertise, management support and,
subject to further fundraising, capital to those projects and companies as
appropriate.
In closing I should like to take this opportunity to thank our staff,
shareholders, advisors and our corporate partners for their excellent support
during an exciting year.
Martyn Konig
Chief Executive Officer
Consolidated Profit and Loss Account
Restated
Year Year
Ended Ended
30 June 30 June
2007 2006
�'000 �'000
Note
Turnover - continuing operations 38 103
- discontinued operations - -
_______ ________
38 103
_______ ________
Cost of sales - -
Gross profit 38 103
Administrative expenses - normal (1,679) (1,322)
Administrative expenses - (provision)/ release of (509) 195
provision against fixed asset investment
_______ ________
Administrative expenses - total (2,188) (1,127)
_______ ________
Operating loss - continuing operations (1,833) (804)
- discontinued operations (317) (220)
_______ ________
(2,150) (1,024)
Profit on sale of fixed asset investments 3,133 550
Interest receivable and similar income 94 117
_______ ________
Profit/(loss) on ordinary activities before taxation 1,077 (357)
Tax on profit/(loss) on ordinary activities 6 (590) -
_______ ________
Profit/(loss) for the year after taxation 487 (357)
======= ========
Earnings/(loss) per share - from continuing 2
operations
- basic 0.3 (0.1)
- diluted 0.3 (0.1)
Total earnings/(loss) per share
- basic 0.2 (0.1)
- diluted 0.2 (0.1)
======= ========
CONSOLIDATED STATEMENT OF TOTAL
RECOGNISED GAINS AND LOSSES
Restated
2007 2006
�'000 �'000
Gain/(loss) for the year 487 (357)
Exchange loss on re-translation of net assets of (19) (102)
subsidiary undertaking
_______ ________
Total recognised gain/(loss) for the year 468 (459)
_______ ________
_______ ________
Prior year adjustment (as explained in note 2) 207 -
_______ ________
_______ ________
Total recognised gain since last annual report 675 -
======= ========
Consolidated Balance Sheet
Restated
As at As at
30 June 30 June
2007 2006
Note �'000 �'000
Fixed assets
Tangible assets 37 22
Intangible assets 3,467 2,010
Investments 7 1,266 1,207
_______ ________
4,770 3,239
_______ ________
Current assets
Debtors and prepayments 167 73
Cash at bank and short term deposits 3,657 3,801
_______ ________
3,824 3,874
Creditors
Amounts falling due within one year 1,189 217
_______ ________
Net current assets 2,635 3,657
_______ ________
Total assets less current liabilities 7,405 6,896
======= ========
Capital and reserves
Called up share capital 2,695 2,695
Share premium account 6,976 6,976
Share option reserve 112 71
Profit and loss account (2,378) (2,846)
_______ ________
Equity shareholders' funds 8 7,405 6,896
======= ========
Consolidated Cashflow Statement
Year Year
ended ended
30 June 30 June
2007 2006
�'000 �'000
Net cash outflow from operating activities (1,303) (1,303)
Returns on investment and servicing of finance 4,977 1,163
Capital expenditure and financial investment (3,818) (1,848)
_______ ________
Net cash outflow before management of liquid
resources and financing (144) (1,988)
Management of liquid resources 1,172 (3,004)
Financing - 5,329
_______ ________
Increase in cash during the year 1,028 337
======= ========
Reconciliation of net cash flow to movement in
net funds
�'000 �'000
Increase in cash during the year 1,028 337
Cash inflow/ (outflow) from (increase)/ decrease (1,172) 3,004
in short term deposits
_______ ________
Movement in net funds (144) 3,341
Net funds at 1 July 2006 3,801 460
_______ ________
Net funds at 30 June 2007 3,657 3,801
======= ========
Notes to the preliminary statements
1. Publication of non-statutory accounts
The financial information set out in this preliminary announcement does not
constitute statutory accounts as defined in Section 240 of the Companies Act
1985.
The consolidated balance sheet at 30 June, 2007 and the consolidated profit and
loss account, consolidated cash flow statement and associated notes for the
period then ended have been extracted from the Group's financial statements.
Those financial statements have not yet been delivered to the Registrar of
Companies.
2. Earnings per share
Restated
2007 2006
Basic earnings/(loss) per share - continuing operations 0.3 (0.1)
Basic earnings/(loss) per share - discontinued (0.1) -
operations
_______ ________
Basic earnings/(loss) per share - total 0.2 (0.1)
Diluted earnings/(loss) per share - continuing 0.3 (0.1)
operations
Diluted earnings/(loss) per share - discontinued (0.1) -
operations
_______ ________
Diluted earnings/(loss) per share - total 0.2 (0.1)
Basic earnings per share is calculated by dividing the earnings attributable to
equity shareholders of �487,000 (2006: restated loss �357,000) by the weighted
average number of ordinary shares in issue during the year.
The total attributable to equity shareholders is split between continuing and
discontinued activities as follows;
Restated
2007 2006
�'000 �'000
Continuing 804 (137)
Discontinued (317) (220)
_______ ________
487 (357)
======= ========
For diluted earnings per share, the weighted average number of ordinary shares
in issue during the year is adjusted to include the weighted average number of
ordinary shares that would be issued on the conversion of all the dilutive
potential ordinary shares into ordinary shares.
The reconciliation of basic and diluted weighted average number of ordinary
shares is as follows:
2007 2006
Basic weighted average shares 269,525,377 254,970,254
Adjustment for dilutive potential ordinary shares 25,664,384 n/a
___________ ___________
Diluted weighted average shares 295,189,761 n/a
There is no adjustment for dilutive potential ordinary shares for the preceding
period, as the effect of the exercise of share options would be to decrease the
loss per share.
3. Key Accounting Policies
(i) Basis of consolidation and accounting for goodwill
The Group accounts consolidate the accounts of Latitude Resources plc and all
its subsidiary undertakings. The latter are adjusted, where appropriate, to
conform to group accounting policies. Acquisitions are accounted for under the
acquisition method and goodwill on consolidation is capitalised and amortised
over its estimated useful life. The results of companies acquired or disposed of
are included in the profit and loss account after or up to the date that control
passes respectively.
(ii) Deferred exploration and evaluation costs
These comprise costs directly incurred in exploration and evaluation as well as
the cost of mineral licences. They are capitalised as intangible assets pending
determination of the feasibility of the project. When the existence of
economically recoverable reserves is established the related intangible assets
are transferred to tangible fixed assets and the exploration and evaluation
costs are amortised on a depletion percentage basis. Where a project is
abandoned or is determined to not be economically viable, the related costs are
written off.
The recoverability of deferred exploration and evaluation costs is dependent
upon a number of factors common to the natural resource sector. These include
the extent to which the Company can establish economically recoverable reserves
on its properties, the ability of the Company to obtain necessary financing to
complete the development of such reserves and future profitable production or
proceeds from the disposition thereof.
(iii) Share based payments and prior year adjustment
The group has applied the requirements of FRS 20 (Share Based Payments) in
accordance with the transitional provisions, to all equity instruments granted
after 7 November 2002 which had not vested at 1 July 2006. Share based payments
are measured at fair value at the date of grant which is expensed on a straight
line basis over the vesting period, based on the group's estimate of shares that
will eventually vest. Fair value is estimated using the Black Scholes model. The
estimated life of the instruments used in the model is adjusted for management's
best estimate of the effects of non-transferability, exercise restrictions and
behavioural considerations. As a result of this change in accounting policy
�41,000 has been charged in the current period and �71,000 has been restated in
the prior period.
(iv) Warrant costs and prior year adjustment
Warrants that are acquired in conjunction with shares have been measured at
their fair value at the date of acquisition, using the Black Scholes model. The
value of the associated shares has been measured as the excess of total purchase
price over the fair value of the warrants.
In previous years warrants that were acquired in conjunction with shares were
assigned a nil value, with all costs being attributed to the shares.
This constitutes a change in accounting policy, and the preceding period's
results have been restated to retrospectively apply this change.
The effect of which is that shares in Romarco Inc. that were disposed of during
the year ended 30 June 2006, have had their cost reduced by �207,000 to reflect
the value attributable to warrants acquired at the same time. This has resulted
in the profit realised on the share disposal being increased by �207,000 for the
year end 30 June 2006.
4. Going Concern
Historically, the Company has not generated any significant revenues and its
success has depended largely upon the outcome of both its exploration and
evaluation programmes and investments in mining companies.
The Directors have considered the forecasts for the 12 months from the date of
approval of these accounts. Based on these forecasts and the available cash and
traded investments, the directors consider that the company will be able to
continue as a going concern for the foreseeable future.
5. Dividend
The Directors are not proposing the payment of a dividend in respect of the
period ended 30th June, 2007.
6. Taxation
Restated
2007 2007 2007 2006
PLC Chile S A Total Total
�'000 �'000 �'000 �'000
________________________________
Profit on ordinary activities before tax 1,394 (317) 1,077 (357)
Tax on loss on ordinary activities at standard CT rate of 30% 418 (95) 323 (107)
Expenses not deductible for tax purposes 206 - 206 35
Capital allowances in excess of depreciation (15) - (15) -
Indexation (19) - (19) -
Tax losses arising in the period - 95 95 72
________________________________
590 - 590 -
________________________________
A deferred tax asset of �310,000 (2006: �350,000), relating primarily to
accumulated UK tax losses, has not been recognised in the financial statements
because there is insufficient evidence of the timing of suitable future taxable
profits against which it can be recovered.
7. Investments
Fixed Asset
Investments
�'000
Cost
At 1 July 2006 - as previously stated 1,000
Prior period adjustment 207
_______
At 1 July 2006 - as restated 1,207
Additions 2,320
Disposals (1,752)
_______
At 30 June 2007 1,775
=======
Provisions
At 1 July 2006 -
Provision for the year (509)
_______
At 30 June 2007 (509)
=======
Net book value
At 30 June 2007 1,266
=======
At 30 June 2006 1,207
=======
Latitude holds 2,500,000 shares of common stock at a par value of $0.01 in the
capital of Western Goldfields. At 30 June 2007 this represents a 2.1%
shareholding. Western Goldfields is a company incorporated in the United States
of America. The market value of this investment at the year end and on the date
of signing the financial statements was approximately �2,600,0000 and �4,400,000
respectively based on the number of shares held at year end.
Latitude also holds 9,800,000 shares of common stock at a par value of $0.01 in
the capital of Tanami Gold. At 30 June 2007 this represents a 1.15%
shareholding. Tanami Gold is a company incorporated in Australia. The market
value of this investment at the year end was approximately �540,000 based on the
number of shares held at year end. The directors remain satisfied with this
investment, but for financial reporting purposes, based on recent share price
information, believe it is prudent to make a provision of �509,000, reducing the
net book value to market value.
8. Equity Shareholders Funds
Group Company
Restated Restated
2007 2006 2007 2006
�'000 �'000 �'000 �'000
The movement in equity
shareholders' funds during
the year arose as follows:
Balance at 1 July 2006 - as 6,689 7,179
previously reported
Prior year adjustment (as 207 207
explained in note 2) ______ _____
Balance at 1 July 2006 - as 6,896 1,896 7,386 2,064
restated
Issue of share capital (see - 1,165 - 1,165
note 15)
Share option reserve 41 71 41 71
Share premium arising on
share issues (see note 16)
- 4,223 - 4,223
Exchange movement on reserves (19) (102) - -
Gain/(loss) arising in the 487 (357) 1,745 (137)
year _____ _____ _____ _____
At 30 June 2007 7,405 6,896 9,172 7,386
===== ===== ===== =====
9. Post Balance Sheet Events
On 5 September 2007, the Company announced the disposal of its Chilean
operations encompassing, Latin American Copper Chile and Latin American Copper
Chile Holdings to Tamaya Resources, a company listed on the Australian Stock
Exchange.
In connection with the sale of the Group received 85 million shares of Tamaya
and 15 million options to subscribe for shares of Tamaya, comprised of 5 million
options at a strike price of A$0.30 per share, 5 million options at a strike
price of A$0.40 per share and 5 million options at a strike price of A$0.50 per
share. The estimated profit arising from the sale is approximately �3.6 million.
Post the year end, the Group has subsequently sold, for cash, approximately 54
million shares in Tamaya, giving rise to proceeds of approximately �7.2 million.
Due to timing and other factors, it is not currently possible for the Board to
provide a materially accurate estimate of the tax charge arising on this
transaction. This tax charge will be calculated for inclusion in the Company's
interim results for the six months ended 31 December 2007.
In October 2007, the Company sold, for cash, its entire share holding in Tanami
Gold for gross proceeds of approximately �0.5 million and an estimated post tax
loss of �0.5 million, which has been fully provided for at the year end.
10. Report and Accounts
The Auditors have reported on these accounts; their report is unqualified and
does not contain statements under section 237(2) or (3) of the Companies Act
1985.
Statutory accounts for the year ended 30 June 2006 have been delivered to the
Registrar of Companies. The Auditors Report was unqualified and did not contain
any statements under section 237(2) or (3) of the Companies Act 1985.
Copies of the Report and Accounts will be sent to shareholders in due course and
will be available from the Company's registered office and on the Company's
website: www.latituderesources.com.
For further information please contact:
Martyn Konig, Director,
Latitude Resources plc
Phone +44 (0) 207 087 7971, Fax +44 (0) 207 734 3870
Email: info@latituderesources.com
Note:
Latitude's shares are traded on the London Stock Exchange Alternative Investment
Market (AIM) under the symbol LTR and are quoted in Sterling. No stock exchange,
securities commission or other regulatory authority has approved or disapproved
the information contained herein. The directors of Latitude Resources plc accept
responsibility for the contents of this announcement
This information is provided by RNS
The company news service from the London Stock Exchange
END
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