RNS Number:4598T
River Diamonds PLC
30 April 2008
30 April 2008
River Diamonds plc
("River Diamonds" or "the Company")
Interim Results for Westech Gold Limited (Fiji) to 31 December 2007
River Diamonds announces today, in compliance with rule 18 of the AIM Rules for
Companies, the un-audited interim results for Westech Gold Limited (Fiji) ("
Westech") for the six months ended 31 December 2007. Westech is the principle
subsidiary of the Company which runs the Vatukoula Gold Mine in Fiji. During the
period River Diamonds did not wholly own Westech but indirectly held 19% of its
share capital.
The results are not reflective of current operations as they do not cover a
period in which the mine was in full production, rather the results reflect the
first six months of the recommissioning of the mine inclusive of initial mining
in the months of November and December 2007. The comparative numbers in 2006 are
also not reflective of full production, as this represents the period in which
Emperor Gold Mines Ltd, the previous owner of the mine, were in the process of
terminating production at the mine.
Since the period end, River Diamonds acquired 100% of Westech on 1 April 2008.
Mining has continued post 31 December 2007 and on the 18 April 2008 gold
processing commenced at the Vatukoula Gold Mine. The first gold from continuous
operations is expected to be poured over the next few weeks. The mine is
budgeted to produce some 28,000 ounces of gold to 30 June 2008 and 111,000
ounces of gold for year ending 30 June 2009.
River Diamonds expects to release its consolidated accounts for the six month
period ending 29 February 2008 at the end of May 2008.
The results are reported in Fijian Dollars ('$'), and all references to $ are to
Fijian Dollars unless otherwise stated.
Westech Gold Limited
Directors' report
The directors present their report together with the financial statements of
Westech for the six months ended 31 December 2007.
Directors
The Directors in office at the date of this report are:
Amelia Wesson
Brian Wesson
David Anthony Lenigas
Donald Ian George Layman Strang
Kiran Caldas Morzaria
State of affairs
In the opinion of the Directors the accompanying balance sheet gives a true and
fair view of the state of affairs of the company as at 31 December 2007 and the
accompanying income statement, statement of changes in equity and statement of
cash flows give a true and fair view of the results and cash flows of the
company for the six months then ended.
Principal activity
The principal activity of the company during the period was the operation of a
gold mine. On the 5th December 2006 the company ceased active mining; however
the mine continued to operate on a care and maintenance basis until the end of
June 2007. From July 2007 to December 2007 the mine was recommissioned with gold
being produced late October 2007.
Result
The operating loss after income tax amounted to $12,297,000 (2006: Net loss of
$24,780,000). Refer to note 1 (a) for a description of the financial viability
of the company.
Reserves
The directors recommend that no amounts be transferred to reserves within the
meaning of the Seventh Schedule of the Companies Act, 1983.
Dividends
It is recommended that no amount be paid by way of dividend.
Subsequent events
At the date these financial statements were approved, being 30 April 20-08, the
Directors were not aware of any significant post balance sheet events other than
those set out in the notes to the financial statements.
Enquiries:
Colin Orr-Ewing Dave Paxton Laura Llewelyn David Porter/ James
Joyce
River Diamonds plc Hichens Harrison & Co. plc Parkgreen Communications W.H. Ireland Limited
Tel: 020 7016 5100 Tel: 020 7832 7785 Tel: 020 7851 7480 Tel: 020 7220 1666
Westech Gold Limited
Income statement
For the six months ended 31 December 2007
Six months ended Six months ended
31 December 31 December
Note 2007 2006
$'000 $'000
Revenue - 26,904
Cost of sales (7,408) (33,677)
Gross loss from trading (7,408) (6,773)
Allowance for mine rehabilitation - 88
Allowance for stock obsolescence - 3,972
Depreciation and amortisation expense 2,460 4,979
Exploration costs 22 147
Mine administration expenses 885 5,779
Other operating expenses 1,688 600
Allowance for hedge restructure - (2,409)
Loss from operations 2 (12,463) (19,929)
Net financing (gain) / cost 4 (166) 4,851
Loss before income tax (12,297) (24,780)
Income tax expense 5 - -
Net loss after income tax (12,297) (24,780)
Westech Gold Limited
Statement of changes in equity
For the six months ended 31 December 2007
Share Share Asset Other reserves Accumulated Total
Capital Premium Revaluation - obligations losses
Reserve Reserve no longer due
$'000 $'000 $'000 $'000 $'000 $'000
Balance at 1
July 2006 4,000 49,792 4,769 - (222,925) (164,364)
Net loss for the
period - - - - (24,780) (24,780)
Shareholders &
other debts
forgiven - - - 25,764 - 25,764
(refer to note
6)
Balance at 31
December 2006 4,000 49,792 4,769 25,764 (247,705) (163,380)
Balance at 1
July 2007 4,000 49,792 4,769 260,305 (295,656) 23,210
Net loss for the
period - - - - (12,297) (12,297)
Balance at 31
December 2007 4,000 49,792 4,769 260,305 (307,953) 10,913
Westech Gold Limited
Balance sheet
As at 31 December 2007
Note 2007 2006
$'000 $'000
Assets
Current assets
Cash 618 1,518
Inventories 8 5,426 7,392
Other receivables and prepayments 7 2,482 3,661
Deferred expenditure 9 - 234
Total current assets 8,526 12,805
Non-current assets
Property, plant and equipment 10 36,899 75,804
Investment 16 1 1
Other receivable 5,350 -
Deferred expenditure 9 - 195
Total non-current assets 42,250 76,000
Total assets 50,776 88,805
Current liabilities
Trade and other payables 12 19,375 17,073
Interest-bearing loans and borrowings 14 - 17,372
Total current liabilities 19,375 34,445
Non-current liabilities
Trade and other payables 12 - 4,410
Provision for hedge restructure - 10,873
Provision for mine rehabilitation 432 432
Unsecured loans 13 20,056 202,025
Total non-current liabilities 20,488 217,740
Total liabilities 39,863 252,185
Westech Gold Limited
Statement of cash flows
For the six months ended 31 December 2007
Six months ended Six months ended
31 December 2007 31 December 2006
$'000 $'000
Cash flows from operating activities
Cash paid to suppliers and employees (12,837) (26,421)
Proceeds from gold derivatives - 26,726
Net cash (used in) / from operating activities (12,837) 305
Cash flows from investing activities
Payments for property, plant and equipment (198) (15,507)
Net cash used in investing activities (198) (15,507)
Cash flows from financing activities
Proceeds from borrowings - related entity 13,629 14,756
Repayment of secured loan - (667)
Repayment of lease liabilities - (55)
Net cash provided by financing activities 13,629 14,034
Net increase / (decrease) in cash and cash 594 (1,168)
equivalents
Cash and cash equivalents at 1 July 24 2,686
Cash and cash equivalents at 31 December 618 1,518
Westech Gold Limited
Notes to and forming part of the financial statements
For the six months ended 31 December 2007
1. Statement of significant accounting policies
Westech Gold Limited is a company domiciled in Fiji. The principal accounting
policies adopted by Westech Gold Limited are stated to assist in a general
understanding of the accounts. These policies have been consistently applied
except where otherwise indicated.
(a) Going concern
It is the opinion of the Board of Directors that there are reasonable grounds to
believe that the plans put in place are achievable and accordingly the Westech
Gold Limited is a going concern and will realise its assets and settle its
liabilities and commitments in the normal course of business for at least the
amounts stated in the financial statements.
(b) Statement of compliance
The financial statements have been drawn up in accordance with the International
Financial Reporting Standards used by the International Accounting Standards
Board and the requirements of Fiji law.
(c) Basis of measurement
The financial statements are prepared on the historical cost basis except where
stated.
(d) Functional and presentation currency
The financial statements are presented in Fiji dollars. All financial
information presented in Fiji dollars has been rounded off to the nearest
thousand.
(e) Foreign currency transactions
Transactions in foreign currencies are translated to Fiji dollars at the rates
of exchange ruling at the date of the transaction. Monetary assets and
liabilities denominated in foreign currencies at reporting date are translated
to Fiji dollars at the foreign exchange rate ruling at that date. Foreign
exchange differences arising on translation are recognised in the income
statement.
(f) Inventories
Inventories are valued as follows:
(i) Stores comprising plant spares and consumable stores are valued on
the basis of weighted average cost after providing for obsolescence.
(ii) Work in progress, including ore stock, consists of stocks on which
further processing is required to convert them to trading stocks, and is valued
at the lower of cost and net realisable value. The work in progress is valued
on the basis of First In First Out (FIFO) and includes direct costs,
depreciation and amortisation.
(iii) Insurance spares are depreciated over the same remaining life as
the equipment with which they are associated.
(g) Income tax
Income tax expense comprises current and deferred tax. Income tax expense is
recognised in the income statement except to the extent that it relates to items
recognised directly in equity, in which case it is recognised in equity.
Current tax is the expected tax payable on the taxable income for the year,
using tax rates enacted at the reporting date, and any adjustment to tax payable
in respect of previous years.
Deferred tax is recognised using the balance sheet method, providing for
temporary differences between the carrying amounts of assets and liabilities for
financial reporting purposes and amounts used for taxation purposes. Deferred
tax is measured at the tax rates that are expected to be applied to the
temporary differences when they reverse based on the Income Tax Act.
A deferred tax asset is recognised to the extent that it is probable that future
taxable profits will be available against which temporary differences can be
utilised. Deferred tax assets are reviewed at each reporting date and are
reduced to the extent that it is no longer probable that the related benefit
will be realised.
(h) Mine properties and development
This represents the accumulation of all exploration, evaluation, development and
acquisition expenditure incurred in relation to areas of interest in which
economically recoverable reserves exist.
The capitalised value of mine properties and development is amortised on a life
of mine basis. The life of the mine has been calculated on a units of
production method based on economically recoverable reserves and resources.
The net carrying value of mine assets is reviewed regularly and, to the extent
to which this amount exceeds its recoverable amount (based on the higher of the
net present value of estimated future net cash flows and the mines asset's
current realisable value) that excess is fully provided against in the financial
period in which this is determined.
(i) Property, plant & equipment
(i) Owned assets
Items of Plant and equipment are stated at cost less accumulated depreciation
(refer below).
(ii) Depreciation
The annual charge for depreciation on plant, equipment, property and buildings
is based upon the lesser of the estimated remaining useful lives of the assets
concerned or the life of the mine. The life of the mine has been calculated on
a units of production method based on economically recoverable reserves and
resources.
(j) Exploration expenditure
Exploration and evaluation expenditure incurred by the company is accumulated
separately for each area of interest. Such expenditure comprises net direct
costs and an appropriate portion of related overhead expenditure, but does not
include general overheads or administrative expenditure not having a specific
nexus with a particular area of interest.
Exploration expenditure for each area of interest is carried forward as an asset
provided that one of the following conditions is met:
(i) such costs are expected to be recouped through successful
development and exploitation of the area of interest or alternatively by its
sale; or
(ii) the activities have not established whether or not economically
recoverable resources exist; and
(iii) active and significant operations in relation to the area are
continuing.
Exploration expenditure that does not meet the above criteria is written off to
the income statement.
(k) Cash and cash equivalents
Cash and cash equivalents comprises cash balances and call deposits.
(l) Trade and other receivables
Trade and other receivables are stated at cost less impairment losses. The
collectibility of debts is assessed at reporting date and an allowance is made
for any specific doubtful accounts. Bad debts are written off during the period
in which they are identified.
(m) Trade and other payables
Liabilities are recognised for amounts to be paid in the future for goods and
services received, whether or not billed to the company.
(n) Mine rehabilitation
Expenditures relating to ongoing rehabilitation and restoration programs,
including for exploration areas on non-freehold land, are provided for or
charged to costs of production as incurred. A provision for future
rehabilitation and restoration relating to mine closure is accrued on the
estimated life of mine.
2007 2006
$'000 $'000
2. Loss from operations
Loss from operations has been arrived at after including the following items:
Auditors' remuneration 14,500
-
Depreciation 2,461
4,979
Directors emoluments
- 45
Gold tax - 836
Rehabilitation trust 1,688
-
3. Staff costs
Salaries and wages 1,722 9,782
Contributions for superannuation 129 986
Other overheads 141 1,030
Redundancy payments 259
-
1,992 12,057
The average number of employees during the period was: 209 1468
4. Net financing costs
Finance costs
Interest - holding company - 4,404
Interest - related company - 455
Interest - secured loan - 777
Net foreign exchange losses - 685
- 6,321
Finance income
Interest - bank - (8)
Net foreign exchange gains (166) (1,462)
(166) (1,470)
Net financing (gain) / costs (166) 4,851
5. Income tax
The prima facie credit on the loss is reconciled to the amount provided in the financial
statements as follows:
2007 2006
$'000 $'000
Loss before income tax (12,297) (24,780)
Prima facie tax credit at 31% (3,812) (7,682)
Tax effect of tax losses not brought to account 3,812 7,682
Income tax - -
The directors believe the company has substantial carried forward tax losses available. However,
the Fiji Islands Revenue & Customs Authority have issued assessments totalling $11.5m against the
company. The company does not believe any amounts are payable and is vigorously defending the
claim. No amounts have been provided in the accounts in respect of this claim. Given the material
uncertainty in regards to the quantum of available losses, the directors have not provided an
estimate of the losses for the purposes of these accounts.
6. Shareholders and third party debts forgiven
During the intervening period, there was a change in ownership of the company. As part of this
change in ownership, the company was released from a number of financial obligations to related
and third parties by the previous parent entity. Since the previous parent entity released the
company from their obligations in its capacity as a shareholder, the benefit of this release has
been credited directly to equity.
2007 2006
$'000 $'000
7. Other receivables and prepayments
Other receivables and prepayments 2,494 3,661
Less: Allowance for uncollectibility (12) -
2,482 3,661
8. Inventories
Consumables and insurance spares 4,897 5,514
Work in progress and ore stocks 529 1,878
5,426 7,392
2007 2006
$'000 $'000
9. Deferred expenditure
Deferred expenditure - at cost - 429
Disclosed as:
Current deferred expenditure - 234
Non current deferred expenditure - 195
- 429
Prior year deferred expenditure was in respect of the ancillary costs related to borrowings from
ANZ Bank. These borrowings were forgiven in the subsequent period and the balance of the deferred
expenditure written off.
10. Property, Plant & equipment
Freehold & Mine properties & Buildings, Work in Total
leasehold land development plant & progress
equipment
$'000 $'000 $'000 $'000 $'000
31 December 2006
Cost
Balance as at 1 July 2006 1,912 64,172 77,163 - 143,247
Net transfers from related - 11,606 5,753 - 17,359
entities and adjustments
during the period
Additions during the period 4,186 3,336 7,614 15,136
Disposals during the period - - - - -
Balance as at 31 December 1,912 79,964 86,252 7,614 175,742
2006
Depreciation
Balance as at 1 July 2006 - 50,186 44,773 - 94,959
Depreciation for the period - 2,738 2,241 - 4,979
Balance as at 31 December - 52,924 47,014 - 99,938
2006
31 December 2007
Cost
Balance as at 1 July 2007 2,388 129,977 79,600 7,865 219,830
Additions during the period 490 182 688
- 16
Balance as at 31 December 2,388 129,993 80,090 8,047 220,518
2007
Depreciation
Balance as at 1 July 2007 - 129,977 51,182 - 181,159
Depreciation for the period - - 2,460 2,460
Impairment losses - - - - -
Balance as at 31 December - 129,977 53,642 - 183,619
2007
Carrying amount
Balance as at 31 December 1,912 27,040 39,238 7,614 75,804
2006
Balance as at 31 December 2,388 16 26,448 8,047 36,899
2007
11. Share capital 2007 2006
$'000 $'000
(a) Authorised capital
8,000,000 shares at $0.50 each 4,000 4,000
(b) Issued and paid up
8,000,000 shares at $0.50 each 4,000 4,000
12. Trade and other payables
Employee benefits 3,605 3,285
Other payables 3,298 5,158
Trade creditors 12,472 13,040
19,375 21,483
Disclosed as:
Current 19,375 17,073
Non current - 4,410
19,375 21,483
13. Unsecured loans
Emperor Mines Limited - 202,025
Sovereign Insurance Company Limited 5,350 -
Viso Gero International 14,706 -
20,056 202,025
The above loans are unsecured and interest free and the terms of repayment are at the
discretion of the lender.
14. Interest-bearing loans and borrowings
Current liabilities
Lease liabilities - 259
Secured loan - ANZ - 17,113
- 17,372
The loan facility from ANZ Bank was secured by:
(i) a first registered deed of charge over all present and future assets and undertakings
of the company other than excluded assets (SPL's 1283, 1296, 1418, 1360, 1411 and CX
626 and all the shares in Tuvatu Gold Mining Company Limited);
(ii) a first registered mortgage over all freehold and leasehold land;
(iii) a first registered mortgage over all Special Site Rights (SSR) 6, 7, 8 and Special
Mining Lease (SPL 54, 55 and 56); and
(iv) a first registered bill of sale over its motor vehicles.
The company has been released from all obligations to the ANZ Bank in the intervening period
(refer note 6).
2007 2006
$'000 $'000
15. Commitments
Commitments in relation to finance leases are payable as follows:
Not later than one year - 109
Later than one year and not later than two years - 109
Later than two years and not later than five years - 67
Later than five years - 6
Minimum lease payments - 291
Future interest charges - (32)
Net finance lease liability - 259
Disclosed as follows:
Current liabilities (Note 14) - 259
Non-current liabilities (Note 14) - -
- 259
16. Investment
Shares in subsidiary 1 1
Shares in subsidiary comprises 1,000 ordinary shares of $1 each in Tuvatu Gold Mining Company
Limited.
17. Related parties
(a) Directors
The names of the persons who are directors of the company at the date of this
report are as follows:
Amelia Wesson
Brian Wesson
David Anthony Lenigas
Donald Ian George Layman Strang
Kiran Caldas Morzaria
Directors emoluments are disclosed under note 2.
(b) Transactions with related parties - interest
Interest paid to as well as received from the ultimate holding company is set
out in note 4.
(c) Joint venture arrangements
The company's operations at Vatukoula were previously carried on through joint
ventures with Koula Mining Company Limited (KMC). The company's interest in the
results, assets and liabilities of the joint ventures was included in the
relevant profit and loss and balance sheet items. In the intervening period, all
activities were undertaken by the company and all assets and liabilities of the
joint venture are included in the balance sheet of the company.
(i) Vatukoula joint venture
The agreement provided for the company to hold 80% and Koula Mining Company
Limited 20% interest in the existing mine at Vatukoula and all related
facilities. The joint venture was responsible for exploring, developing, mining
and processing ore extracted from the joint venture area. In the current period,
the company has 100% control over the operations and therefore, all assets and
liabilities of the joint venture are now included in the balance sheet of the
company.
(ii) Tavua Basin joint venture
The agreement provided for the company and Koula Mining Company Limited with
equal interests to explore the Tavua Basin for minerals.
(iii) Tavua Basin Mining joint venture
In accordance with an agreement dated 1 July 1994, the 50% interest in the Tavua
Basin Mining joint venture was transferred to the company from a related
company, Jubilee Mining Company Limited.
(d) Holding company
Viso Gero International Inc. was the ultimate parent on the 14th December 2007.
On the 1st April 2008 River Diamonds plc completed acquisition of the remaining
shares in Viso Gero International and became the ultimate parent of Westech Gold
Limited.
Amounts receivable from the holding company are unsecured and no fixed terms of
repayment have been arranged. Interest is charged at a variable rate of
interest, which averaged 8.0% at 31 December 2006.
18. Capital commitments
At reporting date, the company had commitments for the purchase of plant and
equipment amounting to $208,000 (2006: $Nil).
19. Contingent liabilities
The Fiji Islands Revenue & Customs Authority has issued taxation assessments
against the company in the amount of $11.5million. The company does not believe
any amounts are payable and is vigorously defending the claim. No amounts have
been provided in the accounts in respect of this claim.
The company is a plaintiff in several litigations with respect to potential
claims of creditors, workers compensation and industrial action. The Directors
believe these litigations will not have a material effect on the financial
statements.
20. Subsequent events
(a) The company is in the process of entering a scheme of arrangement
with creditors that were owed a total of $14,970,879 as at period end.
On legal advice, a proposed compromise between Westech Gold Limited and its
creditors ("Proposed Scheme") under section 208 of the Companies Act (Fiji) has
been planned. The intention is to register the Scheme of Arrangement with the
High Court to ensure all creditors abide by the arrangement and to prevent any
winding-up actions from being taken.
In order to obtain support for the Proposed Scheme, a letter was written
addressed to each of the known creditors outlining the Proposed Scheme
requesting them to respond with an indication as to whether they would support
the Proposed Scheme.
The letter forwarded to creditors indicated the intention of Westech Gold
Limited to pay to all creditors a 10% instalment of the total outstanding
liabilities commencing on December 7, 2007. Further, the balance of the
outstanding liabilities would be paid in four equal instalments on March 31,
2008, June 30, 2008, September 30, 2008 and December 31, 2008.
No payment was made on March 31, 2008, however given the continued level of
support for the Proposed Scheme, Westech Gold Limited intends to apply to the
High Court through counsel, to have the Proposed Scheme registered.
No further action has been advanced from any creditor since payment was made
(although no notification has been received of any action being withdrawn
entirely.)
(b) The company entered into a deed on the 10 August 2007 between the
Government of the Republic of Fiji and Westech whereby the company was granted
certain tax concessions and in particular:
(i) a reduction in tax royalty payments from 6% to 3% on ore extracted
for a period of five years;
(ii) a two year exemption on import duties on automotive diesel and
industrial diesel oil for use at the mine;
(iii) a five year exemption form export tax;
(iv) an exemption from fiscal duty on the import duties on the import of
plant equipment, machinery and motor vehicles required to operate the mine for a
period of three years;
(v) eligibility to seek exemption from payment of withholding tax on
overseas payments of interests, consultants fees and dividends;
In addition, the 10 August 2007 Deed confirmed that the special mining leases,
Special Site Rights and Special Prospecting Licenses remained valid and
notwithstanding any previous breaches of the Fiji Mining Act. Under the terms of
the Deed the company agreed to contribute funds to the Vatukoula rehabilitation
trust fund aimed at the remediation of the environmental and social aspects of
the local community around the mine. The contribution is a total of F$6,000,000
over 5 years.
(c) By a letter agreement dated the 21 February 2008 between FIRCA and the
company, the company is required to make certain without prejudice payments out
of revenue in respect of a disputed tax assessment and relating penalties and
FIRCA would permit further gold exports pending the courts decision in relation
to the tax dispute.
(d) On the 14th December 2007 River Diamonds plc (Incorporated and registered
in England and Wales) signed a conditional agreement to acquire from Viso Gero
Global Inc., (Incorporated in the British Virgin Islands) the 80% of the share
capital of Viso Gero International Inc., (Incorporated in the British Virgin
Islands) not already held by River Diamonds plc. Viso Gero International Inc.
was the ultimate parent on the 14th December 2007. On the 1st April 2008 River
Diamonds plc completed acquisition of the remaining shares in Viso Gero
International and became the ultimate parent of Westech Gold Limited.
21. Principal business activity
The principal activity of the company during the period was the operation of a
gold mine. On the 5th December 2006 the company ceased active mining; however
the mine continued to operate on a Care and Maintenance basis until the end of
June 2007. From July 2007 to December 2007 the mine was recommissioned with gold
being produced late October 2007.
22. Principal place of business and registered office
The principal place of business and registered office is located at:
Vatukoula
Fiji Islands.
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR BDGDSLXXGGIG
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