RNS Number:3531R
Marakand Minerals Limited
16 September 2005
16 September 2005
Final results for the year ended 30 June 2005
Marakand Minerals Limited ("Marakand" or "the Company") is pleased to announce
its preliminary results for the year ended 30 June 2005.
Highlights include:
* Completion of the Khandiza Feasibility Study and receipt of technical
approval from the Uzbek Government
* Khandiza Project "Act of Site Selection" prepared and approved
* Positive independent review completed on the Feasibility Study,
indicating areas of upside potential
* Environmental and Social Impact Assessment (to World Bank standards)
completed, following successful public consultation
* Uzbek State Committee of Nature Protection approvals received for the
Khandiza underground mine, ore transfer pipeline and processing plant
* Framework agreements concluded for treatment of zinc, lead and copper
concentrates
* Further reconnaissance mapping, outcrop sampling and analyses of key
exploration targets in South East Uzbekistan continue to confirm high grade
polymetallic mineralisation in locations surrounding Khandiza
* Compilation of data on the Tajik Akjilga Project confirms high silver
grades and encouraging results from metallurgical test-work
Khandiza
Following the submission of the Khandiza Feasibility Study to the Uzbek
Government in September 2004, Marakand has focused on advancing the permitting
stage and negotiating the final form of project development for the Khandiza
Project.
Good progress has been made on obtaining key Government approvals and permits
for Khandiza. Technical approvals that have been granted include: acceptance of
the Feasibility Study by the Uzbek State Committee for Architecture and
Construction, and signing off of the Act of Site Selection. The latter details
the whole project and proposed land allocation for mining, ore processing and
mine infrastructure. The Act of Site Selection is a critical step in the
permitting process as it demonstrates acceptance of the project by all the
relevant local government organisations in the Surkhandarya Region, as well as
the central government.
Marakand commissioned independent UK consultants Wardell Armstrong International
("WAI") to carry out an independent review of the Khandiza Feasibility Study.
This review identified a number of potential upside opportunities for the
project, particularly with regard to increasing production and improving metal
recoveries. These recommendations will be taken into account during the detailed
design and development phases.
The environmental and social aspects have been addressed from both an
international and a local perspective. Following final review of all the
environmental baseline data and successful public consultation, the
Environmental and Social Impact Assessment ("ESIA") was prepared by WAI and
completed in accordance with World Bank and international standards. The key
finding was WAI's conclusion that there are no significant effects to the
environment with respect to water, air and land that would inhibit project
development. Furthermore, there is potential to enhance local infrastructure
through mine development, as well as economic and employment contributions to
the local and regional economy. The Uzbek State Committee of Nature Protection
has also granted all the local environmental approvals required at this stage of
project development, relating to the mine, ore transfer pipeline and processing
plant. Preliminary approval has also been given for the mine backfill quarry and
the tailings facility.
Uzgeotechliti, a local engineering institute, was commissioned to commence
geotechnical investigation of the tailings facility and the plant site.
Boreholes, trial pits and associated geotechnical test-work have indicated
favourable engineering conditions at both locations.
Marakand has also invited, received and screened pre-qualification documentation
from a number of international detailed mine design and EPCM contractors.
Framework agreements have been concluded for the toll smelting and sale of zinc,
lead and copper concentrates. Demand for concentrates and metals continues to be
in excess of planned production and the Company is well positioned to benefit
from its proximity to high growth developing economies.
The Company's primary focus has been to secure agreement with the Uzbek
Government on the commercial structure of the project. Under the terms of the
Government Decree 359 (issued in 2002), which granted Marakand exclusive rights
to negotiate the form of project development for the Khandiza Project, two
options were set out - a concession or a production sharing agreement. Marakand,
following discussion with the Uzbek State Committee of Geology
("Goscomgeology"), initially selected the concession option, as the production
sharing option is more suited to single product operations such as oil or gas,
whereas Khandiza produces three concentrates containing five payable metals.
During the detailed review process the Government has concluded there are
weaknesses with the Law on Concessions in its interaction with the relevant
Foreign Investment Laws and the tax regime. Due to these weaknesses, it was felt
the concession structure did not afford the appropriate level of legal
protection that Marakand required. The Uzbek Government has therefore proposed
that the more commonly used joint venture structure be considered, whilst
acknowledging the need for Marakand to maintain the attractive project
economics. A number of successful joint ventures are already operating in the
mining sector in Uzbekistan (Zarafshan-Newmont Joint Venture and Oxus Gold's
Amantaytau Goldfields Joint Venture). Accordingly Marakand has submitted joint
venture documentation to Goscomgeology who await final authorisation from the
Uzbek Government to proceed on this basis. The Khandiza Project remains in
Uzbekistan's Foreign Investment Programme and is high on the Government's agenda
with engagement continuing at all levels. It is anticipated that this process
will now be concluded in the fourth quarter of 2005.
Khandiza - Resources and reserves
* The Soviet resource for the Khandiza Project was estimated in
1974 at 20.9Mt at an average grade of 6.63% zinc, 3.28% lead, 0.84% copper, 114
g/t silver and 0.35 g/t gold.
* The JORC classified measured and indicated resource above a 2%
zinc cut-off has been estimated in 2004 at 11.83Mt at an average grade of 7.66%
zinc, 3.65% lead, 0.921% copper, 129 g/t silver and 0.38 g/t gold.
* The mineable reserve above a 4% zinc break-even cut-off, for the
first 15 years of production, totals 9.61Mt at an average grade of 7.90% zinc,
3.78% lead, 0.95% copper, 129 g/t silver and 0.37 g/t gold.
South East Uzbekistan Exploration
With the primary focus of the Marakand team in Tashkent being the Khandiza
development process, geological resources have continued to carry out
reconnaissance works, rock sampling and analyses on the priority exploration
targets in South East Uzbekistan. Commencement of further drilling has been
deferred until agreement is secured on the commercial structure of the Khandiza
project.
Marakand has sampled three zones of outcropping mineralisation at Sulukul on the
Yakkabag Ridge, where assays of massive sulphide grab samples average 19.6%
zinc, 3.2% lead and 0.9% copper. Samples of oxidised mineralisation in two of
the zones, assayed on average 6.0% lead and 241 g/t silver. These high grade
results warrant further detailed exploration.
In addition to Sulukul on the Yakkabag Ridge, Marakand has carried out further
sampling and multi-element analyses of both volcanic host rocks and outcropping
mineralisation associated with the Chornova Volcanic Centre, also near Khandiza,
namely the Yangaklik, Maidansai and Chinarsai VMS occurrences / anomalies.
Samples have been selected for multi-element analyses enabling comparisons to be
drawn between Khandiza and other less well explored target areas.
Initial results confirm consistency of the volcanic host rocks throughout the
region. Analogies are being drawn with the well known Bathurst mining district
in Eastern Canada confirming the region's excellent exploration potential.
Akjilga Silver Project
Compilation of data on the Akjilga Silver Project in Tajikistan illustrates high
silver grades encountered during Soviet adit development and encouraging results
from metallurgical testwork on Akjilga silver ores.
The Soviet resource for the Akjilga Project was estimated at 988,300t at an
average grade of 2,114 g/t silver, 0.71% copper and 0.78% antimony. A number of
high grade veins, of 0.5 to 2.0m in width, were explored by two adits and
associated drives.
Preliminary metallurgical testwork carried out in Moscow, on a sample with
average grade 996 g/t silver, indicated that 97.2% of the silver could be
recovered to a gravity and flotation concentrate grading 30,410 g/t silver,
23.0% copper and 3.5% antimony.
The Company is preparing an exploration programme for 2006.
Corporate
Marakand has continued to evaluate a number of projects in Turkey, the former
Soviet Union and Eastern Europe with a view to considering future acquisition.
In Turkey, Marakand has signed a Cooperation Agreement with a local partner
regarding exploration, development and existing production properties. The
Company is in the process of technical and legal reviews.
In the former Soviet Union and Eastern Europe, Marakand has had discussions with
a number of potential partners regarding collaboration over development of
polymetallic licences.
Financial Results
The Company had $1.7million available at the end of the review period and
continues to operate within budget.
Outlook
The Company has made good progress in advancing the permitting process for the
project and now expects an agreement to be reached on Khandiza with the Uzbek
Government in Q4,2005. This will initiate the project funding process, detailed
design and the commencement of construction with a view to starting production
in 2007.
Concurrently Marakand will continue to add value through its exploration efforts
in Uzbekistan and Tajikistan as well as seeking other opportunities within its
target regions.
Marakand Minerals is a mining exploration and development company focused in
Central Asia and listed on the Alternative Investment Market (AIM) in London,
stock exchange symbol MKD.L.
For further information please visit www.marakand.co.uk or contact:
Marakand Minerals Limited
Alasdair Stuart, CEO Tel: + 998 71 120 7162
Joanna Solino, Investor Relations Officer Tel: +44 (0)20 7907 2000
Buck-Bias Limited
Alex Buck / Nick Bias Tel: +44 (0)7932 740 452
CONSOLIDATED INCOME STATEMENT
------------------------------ ------------ ------------
(US$000) Year ended Year ended
30 June 2005 30 June 2004
------------------------------ ------------ ------------
Revenue
Gross revenue 25 9
Expenses
Administration expenses (720) (702)
Deferred exploration and
evaluation expenditure (2,281) (1,198)
------------------------------- ------------ ------------
Gross loss (2,976) (1,891)
Stock-based compensation - -
Foreign exchange gain 55 327
------------------------------- ------------ ------------
Loss from operations (2,921) (1,564)
Interest receivable 136 108
------------------------------- ------------ ------------
Loss before taxation (2,785) (1,456)
Taxation (1) (2)
------------------------------- ------------ ------------
Loss for the year (2,786) (1,458)
------------------------------- ------------ ------------
Loss per share (US cents)
Basic (2.76) (2.09)
------------------------------- ------------ ------------
Diluted (2.76) (1.77)
------------------------------- ------------ ------------
CONSOLIDATED BALANCE SHEET
-------------------------------- ------------ ------------
(US$000) As at 30 June 2005 As at 30 June
2004
-------------------------------- ------------ ------------
ASSETS
Current assets
Cash and cash equivalents 1,715 4,223
Trade and other receivables 1 218
-------------------------------- ------------ ------------
1,716 4,441
Non-current assets
Exploration and mining properties 28,456 28,456
-------------------------------- ------------ ------------
30,172 32,897
-------------------------------- ------------ ------------
LIABILITIES
Current liabilities
Trade and other payables 96 46
Shareholders' Equity
Capital stock 1,781 1,781
Reserves 28,295 31,070
-------------------------------- ------------ ------------
30,076 32,851
-------------------------------- ------------ ------------
30,172 32,897
-------------------------------- ------------ ------------
CONSOLIDATED STATEMENT OF CASH FLOWS
------------------------------- ------------ ------------
(US$000) Year ended Year ended
30 June 2005 30 June 2004
------------------------------- ------------ ------------
CASH FLOWS FROM OPERATING ACTIVITIES
Loss for the year (2,786) (1,458)
Adjustments for:
Depreciation and assets written off - -
Stock-based compensation - -
Salaries and bonuses
converted to shares 11 4
------------------------------- ------------ ------------
Operating loss before
working capital changes (2,775) (1,454)
Decrease /(increase) in
trade and other receivables 217 (216)
Increase in trade and other
payables 50 46
------------------------------- ------------ ------------
Cash used for operations (2,508) (1,624)
------------------------------- ------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES
Warrants and options exercised - -
Shares issued - 5,847
------------------------------- ------------ ------------
Net cash provided by
financing activities - 5,847
------------------------------- ------------ ------------
Net (decrease) increase in
cash and cash equivalents (2,508) 4,223
------------------------------- ------------ ------------
Cash and cash equivalents as
at 1 July 4,223 -
------------------------------- ------------ ------------
Cash and cash equivalents as
at 30 June 1,715 4,223
------------------------------- ------------ ------------
STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
-------- --------- ---------- --------
(US$000) Share capital Capital reserve Accumulated loss Total
------------------------- -------- --------- ---------- --------
Balance as at 1
July 2003 17 - (15) 2
Share premium account
--------------------------- -------- --------- ---------- --------
Shares issued 341 5,506 - 5,847
Warrants and options - - - -
exercised
Conversion of
directors'
remuneration to
shares 1 3 - 4
Shares issued to
Oxus Gold plc on
22 October 2003
in consideration
for the warranty
deed in respect
of the Khandiza
project 1,422 - - 1,422
Capital reserve
Capital reserve
arising on
revaluation of
exploration
rights in
Marakand Minerals
Limited - 27,034 - 27,034
Loss for the year - - (1,458) (1,458)
--------------------------- -------- --------- ---------- --------
Balance as at 1
July 2004 1,781 32,543 (1,473) 32,851
Shares issued - - - -
Warrants and options - - - -
exercised
Conversion of
directors'
remuneration to
shares - 11 - 11
Stock-based compensation - - - -
Loss for the year - - (2,786) (2,786)
--------------------------- -------- --------- ---------- --------
Balance as at 30
June 2005 1,781 32,554 (4,259) 30,076
--------------------------- -------- --------- ---------- --------
NOTES
1. The above financial information for the year ended 30 June
2005 is audited, with an unqualified opinion, and does not constitute statutory
accounts within the meaning of section 240 of the Companies Act 1985. The
financial information for the year ended 30 June 2004 has been extracted from
the accounts for that year, which has been delivered to the Registrar of
Companies and on which the auditors gave an unqualified opinion. Statutory
accounts for the year ended 30 June 2005 will be delivered to the Registrar of
Companies. The Annual Report will be posted to shareholders in mid-October 2004
and the Annual General Meeting will be held on 17 November 2005.
2. The basic and diluted loss per share has been calculated by
reference to a loss, after taxation, of $2,786,000 (2004: $1,458,000 loss) and
the weighted average number of ordinary shares in issue of 101,015,157 (2004:
69,853,282).
3. The Directors do not recommend the payment of a dividend in
respect of this period (2004 - nil).
4. The Consolidated Financial Statements, including
comparatives, have been prepared in accordance with International Financial
Reporting Standards (''IFRS'') issued by the International Accounting Standards
Board (''IASB'') and the interpretations issued by the Standing Interpretations
Committee of the IASB.
5. Khandiza Services Limited, a 100% subsidiary, has been
consolidated within the financial statements.
6. The company will account for stock-based compensation under
the rules of IFRS 2, accounting for Share-Based Payments, with effect from 1
July 2005, whereby the fair value of such options is expensed to the income
statement in accordance with the specific vesting periods. The Company has not
taken any charge in its financial statements this year, but had IFRS 2 been
implemented a charge of $93,000 would have been made to the income statement and
an adjustment to capital reserves of $93,000.This charge will be made as a prior
year adjustment in the 2006 accounts, in accordance with IFRS 2. The basic and
diluted loss per share, taking this adjustment into account, is US cents (2.85)
per share.
This information is provided by RNS
The company news service from the London Stock Exchange
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