RNS Number:6815L
Thistle Mining Inc.
29 May 2003
First Quarter Report
2003
First Quarter Report to 31 March 2003
Toronto, 29 May 2003 - THISTLE MINING INC. (TSX: THT and AIM: TMG) is pleased to
announce the first quarter results for the period ended 31 March 2003.
Highlights
* Production of 42,483 ounces at President Steyn in South Africa and 2,774
ounces in Kazakhstan.
* Rand production costs were held stable at R 2,846 per ounce, compared to
R 2,803 in the previous quarter.
* Closed the US$ 6.8 million private placement through a unit offering at
60 cents Canadian
* Completed the acquisition of President Steyn Gold Mines Limited, listed
on the JSE.
* South African sub-group cash EBITDA (earnings before interest, taxes,
depreciation and amortisation and foreign exchange losses) of US$ 0.9 million.
* Restructure of hedge programme to realise US$ 7.0 million surplus before
tax and since the end of the quarter has realized a further US$ 14.4 million
Achievements in South Africa
* The commissioning of the fourth Ball Mill at President Steyn Gold Mine
complex.
* Negotiation of 17 new agreements with the National Union of Mineworkers.
* Provisional scoping study to construct a process plant at the Northern
Section of the mine which will allow the doubling of output from the present
level.
* Increased throughput providing a significant reduction in unit cost per
ton treated.
* Commercial production will commence at 10,000 tonnes per month from the
Massives project on 1 June 2003.
All references to dollars in this quarterly report are United States dollars.
As at 28 May 2003, the South African Rand exchange rate was Rand 8.22 to the US
dollar.
Operations
SOUTH AFRICA
Thistle took ownership of the President Steyn operations and management
immediately following the completion of the acquisition on 15 February 2002.
The principal operating companies in South Africa are President Steyn Gold Mines
(Free State) (Pty) Ltd (PSGM) and TMTI (Pty) Ltd., which operate the mines and
training college attached to the mine site respectively.
Health and Safety
The Group remains committed to providing a healthy working environment and takes
a zero tolerance approach towards unsafe acts and conditions.
The Group also believes in an extended safety, health and environment protection
principle which encompasses the broader community.
South African Production at a Glance
As shareholders would be aware, the Group, in common with every South African
mining business, has suffered from the strengthening Rand. It was considered
prudent to restructure part of the hedge book in the second quarter of 2003.
This realised a cash surplus of approximately US$ 21.4 million, which was
primarily used to repay debt. The Rand is now beginning to weaken and the Group
has protection in place at ZAR 8.65 until the end of November 2003.
1st Quarter 2nd Quarter 3rd Quarter 4th Quarter 1st Quarter
2002 * 2002 2002 2002 2003
Tonnes Hoisted 306,566 281,283 347,691 294,664 325,564
Hoisted grade 4.60 5.24 4.61 5.22 4.03
Tonnes milled 303,941 311,070 320,070 310,647 332,024
Recovered grade 4.44 4.66 4.80 4.80 3.98
Plant recovery % 95.08 95.71 95.91 96.00 95.76
Ounces Sold 42,121 45,865 48,362 51,387 37,983
US$ realised ** 313 314 323 352
Hedge book 15 17 31 16
US$ received 328 331 354 368
Cash costs 199 248 290 341
Royalty 8 8 8 8
Margin 121 75 56 19
Ave gold price US$ 290 US$ 313 US$ 314 US$ 323 US$ 352
Ave exch rate ZAR 11.33 ZAR 10.69 ZAR 10.41 ZAR 9.64 ZAR 8.34
* Production figures are for the whole quarter although Thistle acquired the
mine on 15 Feb 2002
** Mine acquired 15 February 2002 hence no directly comparable quarterly
financials are relevant.
Production during this quarter was disappointing, mainly due to disruption
experienced with the National Union of Mineworkers, whose members were working
to rule and the loss of high grade panels at No 2 Shaft due to a localized fire.
The problems with the workforce have been resolved with the assistance of the
Regional Offices of the ANC Economic Forum and the NUM. The underground fire
was extinguished and production from high grade panels has resumed.
Financial
During the first quarter of 2003, the South African operations recorded a
received price of US$ 368 per ounce of gold sold compared to the average
market price over the same period last year of US$ 290. The price received
includes the premium from hedge transactions undertaken at the time of the
acquisition of President Steyn. The impact of the hedge is to limit the exposure
of the Company to a strengthening South African Rand.
Cash operating costs for the first quarter were US$ 341 per ounce of production,
compared with US$ 290 for the last quarter of 2002. The large increase in cash
operating costs for the first quarter is almost entirely due to the
strengthening of the Rand from an average of 9.64 to the US$ in the last quarter
of 2002 to an average of 8.34 to the US$ in the first quarter of 2003. The unit
cost in local currency was R 2,846 per ounce in the first quarter of 2003
compared to R 2,803 per ounce in the immediately preceding quarter.
The cash costs of production also include US$ 8 per ounce payable as a royalty
to President Steyn Gold Mines Ltd ("PS Gold"), the vendors of the mines. Thistle
Mining successfully completed its offer for the entire share capital of PS Gold
with a 97% acceptance as at 28 March 2003. The Group is moving forward to
compulsorily acquire the balance of the shares outstanding and PS Gold has now
been de-listed from the Johannesburg Stock Exchange. As well as PS Gold being
entitled to the royalty already mentioned of US$ 8 per ounce until January 2007
based on all gold produced at the Steyn mine complex, it also has a US$ 3.25
Million convertible loan note outstanding, which is convertible into 20.8
million shares of Thistle Mining Inc.
The South African government has recently proposed the introduction of a 3%
royalty payable on gold produced. It is recognized that most countries charge
some form of royalty on extractive industries, so South Africa is no different
in this regard. Thistle has recently bought back the royalty from PS Gold, which
was 3% of our revenue at the time of its creation, and so has already been
meeting the costs of the proposed royalty. The proposed royalty will clearly be
a factor in future investment decisions. However, the results of a preliminary
study suggest that this cost will be capable of being met. It is hoped that the
South African government will give consideration to a long-term phasing in of
the royalty and will recognise the impact on availability of funds, including
those allocated towards improving conditions in the community.
Production
A summary of production per shaft comparing the first quarter of 2003 with the
corresponding period in 2002 is as follows:
3 months 2003 3 months 2002
Steyn 1 Shaft
Tonnes milled tonnes 115,966 89,228
Recovered grade g/t 3.29 3.50
Gold recovered Kg 382.7 310.8
Gold recovered ounces 12,303 9,993
Steyn 2 Shaft
Tonnes milled tonnes 63,432 59,808
Recovered grade g/t 5.12 6.20
Gold recovered Kg 324.6 369.9
Gold recovered ounces 10,436 11,891
Steyn 3 Shaft
Tonnes milled tonnes 71,415 73,305
Recovered grade g/t 4.06 4.50
Gold recovered Kg 290.1 327.3
Gold recovered ounces 9,328 10,522
Steyn 7 Shaft
Tonnes milled tonnes 39,007 33,180
Recovered grade g/t 3.73 4.90
Gold recovered Kg 145.4 162.8
Gold recovered ounces 4,675 5,234
Steyn 9 Shaft
Tonnes milled tonnes 35,743 48,419
Recovered grade g/t 4.71 3.60
Gold recovered Kg 168.5 175.8
Gold recovered ounces 5,418 5,653
Summary of Results
Total shafts
Tonnes milled tonnes 325,564 303,941
Recovered grade g/t 4.03 4.40
Gold recovered Kg 1,311.3 1,346.6
Gold recovered ounces 42,160 43,293
Including Surface Ore
Total mine
Tonnes milled tonnes 332,024 306,566
Recovered grade g/t 3.98 4.44
Gold recovered Kg 1,321.4 1,360.2
Gold recovered ounces 42,486 43,730
It is the Group's policy to recognise sales when the gold is delivered to the
refinery. Accordingly, delivery cut-off arising at the end of the quarter has
resulted in lower ounces being recorded in the financial results than were
actually produced in the period. Gold sales for the quarter amounted to 37,983
ounces.
Improvements in efficiency have increased centares broken in the Northern
Section, from a monthly average in quarter one of 7,000 m(2), to 11,000 m(2) in
May 2003.
Grades
The gold grade recovered has fallen in the first quarter from around an average
of 4.67 g/t in 2002 to 4.03 g/t in 2003. This was mainly due to the processing
of a low-grade stockpile in the early part of the quarter. The grade achieved
has returned to its previous higher levels in the second quarter of 2003.
Human Resources
During the third quarter of 2002, the Group started the process of changing from
a workforce employed by a labour broker, which was then sub-contracted to the
mine, to a directly employed workforce. This change was completed in March 2003.
At the end of 2002, relationships with the Trades Union movement were strained
and the productivity of the workforce was affected, but since the year end, 17
of 18 union requests have been resolved to everyone's satisfaction, leading to a
much improved working position by the end of the first quarter.
Black Empowerment
During its negotiations to acquire the President Steyn operations, Thistle
recognised that "Black Empowerment" would become a key factor in the future
development of its business interests in South Africa.
The publication of the Minerals Bill and the Mining Charter has focused the
attention of international investors on the position of mineworkers in the
community. The Charter calls for broadly based worker participation of 15% over
the next five years and further 11% within ten years, with such transactions to
be at fair market value. It will be Thistle's intention to introduce a scheme
which will ensure compliance within the five year time horizon.
The Group has embraced the concept of workforce participation and the attempt to
eradicate poverty within the country. It will be important to attract the
support of a suitable Black Empowerment group as a cornerstone investor to any
scheme. The Group has already undertaken exploratory discussions with several
interested parties. The most important Black Empowerment group to the future
success of the Group is its own workforce. The final scheme brought forward will
be available to the entire workforce following detailed negotiations with the
unions involved.
Through its ownership of the TMTI training college in Welkom and the provision
of school facilities for the community at the minesite, Thistle has demonstrated
its commitment to realising the vision of the Charter.
Development
A total of 2,169 metres was developed during the three months ended 31 March
2003, compared to an average of 2,290 metres per quarter in 2002. The goal for
the current quarter is to improve development broken by a minimum of 20%.
The focus of development is to open up the potential of the "Golden Triangle", a
new mining area with the substantial resource identified to date of 4.4 million
ounces. This area is located between Steyn 3, 7 & 9 Shafts.
In the medium term, the challenge is to develop sufficient working areas to
allow the monthly tonnage hoisted from 3 shaft to increase to 135,000 tonnes
from the present 50,000 tonnes hoisted from all the shafts in the Northern
Section. The capital expenditure to achieve this level of production is
estimated at US$ 7 million.
Management is also examining the cost of constructing a new milling plant and
gold processing plant at the Northern Section. This investment has been
provisionally estimated by management at US$ 15 million. There is the
flexibility to transport the ore to the Southern Section rather than expend
capital in the Northern Section. However, preliminary studies suggest that the
cost of a process plant would be recovered from the cost saving of transporting
the ore between the mine sites, within two and a half years.
Exploration
The Company has identified a new exploration target to be accessed from the
Steyn 3 shaft at the 50 level, known as the Eldorado Massives.
Mobilisation of the production teams has begun. Deposits will be exploited using
semi-trackless mining methods with larger scale production expected early in the
third quarter of this year.
Commercial production will commence from 1 June 2003 in areas containing 7 to 8
grams per tonne in situ material.
The highlights of the verification and the exploration work completed to date,
are as follows:
* Several reef packages have been identified on all levels between 48 Level and
58 Level which are easily accessible for existing development.
* Drilling was suspended temporarily after the drilling contractor went into
liquidation. A new contractor has now been appointed and drilling restarted on
12 May 2003.
* Several thousand old borehole results have also been obtained and are being
evaluated in order to predict specific pay shoots within the different reef
packages. This will provide us with valuable historical information to enable
the optimisation of the resource to be mined.
PHILIPPINES
Philippine Gold Ltd. is a wholly owned subsidiary of Thistle Mining Inc. In the
Philippines, the company operates through a local subsidiary, Filminera. The
principal asset of Filminera is the Masbate gold deposit on the island of
Masbate, south east of Manila. The rise in the US $ gold price has significantly
altered the Masbate project economics and we are considering the next step in
the development of the site.
During the latter part of 2002 the Company undertook exploration drilling in the
proposed Colorado pit. The results of this drilling identified a 10% increase in
the contained gold as well as locating at least one additional ore zone within
the Colorado resource area. No new drilling was undertaken on the project during
the quarter.
The remainder of the drilling programme will be undertaken as cash surpluses
generated within the business allow. The Board is actively considering
refloating Philippine Gold as a listed entity following completion of the
drilling programme, to secure the cost of the bankable feasibility study and the
working capital to develop the mine.
EURASIA GOLD CORP. ("EURASIA")
Thistle Mining owns 52.9 % of the equity of Eurasia Gold Corp. and has not
traded in their shares during the period.
Operations Report
The Company continued its strategy of only conducting mining operations during
the winter months when the weather conditions are favourable. Gold precipitation
was maintained at both mine sites and leach pads during the winter months even
during low recovery periods. This prevents the leach pads from freezing.
This strategy proved to be extremely successful as the company's gold production
and sales in 2002 were the highest recorded since commercial operations started.
The amount of gold precipitated during the first 3 months of 2003 was 2,774
ounces.
In preparation for concentrating on mining ore during the second quarter, as
weather conditions permitted, over 660,000 tonnes of waste was removed during
the first quarter.
Over 100,000 tonnes of ore was also placed on the leach pads by the end of the
quarter. Due to the relatively mild winter it was also possible to carry out
machine maintenance in preparation for the start of full-scale mining by the end
of the current quarter.
Inventory of gold at the end of 2002 and at March 31, 2003 is as follows:
Inventory Items 31 December 2002 31 March 2003
Recoverable gold to pad ounces 7,671 7,697
Gold on resin ounces 2,126 1,881
Gold at resin plant ounces 770 35
Gold at refinery (for ounces 1,247 1,265
sale)
Total inventory ounces 11,814 10,878
It is important to recognise that the estimated amount of gold on inventory can
be subject to a significant margin of error.
Andas-Altyn LLP mine production for the first quarter for the combined mine
sites:
Monthly Operating Indices January February March Total
2003
Waste tonnes 118,149 251,126 299,616 668,891
Ore to pad tonnes 213 39,622 71,153 110,988
Gold grade in ore to pad Av. g/t 1.35 1.32 1.30 1.31
Gold in ore to pad ounces 6 1,678 2,981 4,665
Recoverable gold to pad ounces 4 1,007 1,790 2,801
Gold precipitated ounces 1,292 796 686 2,774
Andas-Altyn LLP is the 100% owned company carrying out operations on behalf of
Eurasia Gold Corp. in Kazakhstan.
It is anticipated that the rate of precipitation of ore during the second
quarter will improve as the temperature and mining conditions improve.
The estimated recoverable gold added to the pads during the first three months
was 2,801 ounces.
Gold Sales
Gold sales for the first quarter amounted to 3,744 ounces.
At 31 December 2002, the amount of 1,247 ounces of gold was already in process
at the refinery plant. This amount was sold during January to Reemex.
Management's Discussion and Analysis
For the three months ended 31 March 2003
This Management's Discussion and Analysis ("MD&A") updates the2002 Annual Report
MD&A in terms of any significant changes in Thistle Mining's business and
analyses the results of the operations for the three months ended 31 March 2003.
All references are to United States dollars except where otherwise indicated.
Financial Review
Financial Highlights
(in thousands of US dollars) Quarter 1 Quarter 1
2003 2002
Turnover 15,548 7,154
Gross profit 116 1,393
Operating (loss)/profit (1,118) 424
Retained loss (3,794) (625)
Cash flow from operating activities 3,939 539
Net assets 25,894 22,842
The Group achieved a gross profit of $0.1 million during the quarter compared to
a gross profit of $1.4 million in the first quarter of 2002. After accounting
for general and administrative expenses and other operating expenses, the Group
reported an operating loss of $1.1 million compared to a profit of $0.4 million
in the previous year. The total retained loss was $3.8 million, or 2 cents per
share, compared to $0.6 million, or 0 cents per share in 2002. As discussed
earlier in this Report, the continued strengthening of the Rand in the quarter
had a significant impact on the financial results of the Group.
South African Operations
The Group acquired the President Steyn complex on 15 February 2002 and the
contribution to the Group results from the South African operations commenced on
that date.
The South African sub-group cash EBITDA (i.e. earnings before interest, taxes,
depreciation and amortisation and foreign exchange losses on translation) in the
first quarter of 2003 was $0.9 million. After depreciation and amortisation of
$1.3 million and foreign exchange losses on translation of $0.6 million, an
operating loss of $1.0 million was recorded for the quarter.
Included in turnover for the quarter is the revenue from the Group's hedge
contracts of $0.6 million. On 1 April 2003, the Group announced that it had
restructured its hedge programme at the end of March to realise a cash surplus
of $7 million before tax. This $7 million has been classified as deferred income
on the balance sheet and will be released to the income statement over the time
period covered by the original hedge contracts.
Cost of sales includes $0.3 million in respect of a royalty of $8 per ounce of
gold produced payable to the vendors of PSGM from the date of acquisition until
January 2007. On 1 April 2003 the Group announced that it had acquired the
company owning the royalty. This acquisition will be included in the results of
the Group with effect from 1 April 2003.
Administrative and Other Operating Expenses
Administration costs increased by $0.2 million from the comparative period to
$1.2 million for the quarter, reflecting the increase in the scale of the
Group's business following the PSGM acquisition.
Other operating expenses relate primarily to advisory fees towards developing a
suitable Black Empowerment scheme.
Interest Payable and Similar Charges
The increase in interest and other financial charges, compared to the first
quarter of 2002, reflects the level of borrowing raised for the PSGM acquisition
giving an increase in interest expense of $0.4 million. This item also includes
a foreign exchange loss arising from cash flow management operations in a
strengthening currency of $1.2 million, together with amortisation of $0.3
million of deferred financing costs incurred in securing the acquisition debt.
Taxation
There is a current tax charge of $2.5 million principally arising from the Rand
denominated profit of the PSGM mining operations which, for tax purposes, has to
include the full amount of the hedge close out proceeds of $7 million. As
explained above, the Group is classifying this as deferred income and spreading
it over the period of the original hedge contracts. Therefore, a corresponding
deferred tax asset of $2.8 million relating to the $7 million hedge receipts has
been established, resulting in a reversal of deferred tax of $2.0 million for
the quarter. This asset will be released to income over the same period as the
deferred income, thereby matching the tax charge arising from the revenue.
Net Assets
The increase in the Group net assets of $5.3 million between 31 December 2002
and 31 March 2003 reflects the cash held to finance the acquisition of PS Gold,
payable in April 2003.
Cash Flows
Positive cash flow from the South African operations resulted in Group cash
inflow from operating activities (cash operating profit, adjusted for movements
in current assets and liabilities) of $3.9 million for the period against a cash
outflow of $0.5 million for the same period in 2002. $1.1 million of this cash
flow was reinvested in capital expenditure at the mines. The most significant
financing activity was the issue of $7.4 million of shares for cash.
Liquidity and Capital Resources
At 31 March 2003 the Group's net debt, excluding cash held to finance the
acquisition of PS Gold, was just under $27.5 million, analysed as follows:
$ million
Cash and cash equivalents 3.4
Debt due within one year (17.1)
Debt due after one year (15.0)
Debt issue cost 1.3
(27.4)
Cash to finance PS Gold acquisition 11.5
TOTAL (15.9)
The proceeds received from a hedge restructure subsequent to 31 March 2003 will
be used to repay the remaining balance on a secured term loan of $14.4 million,
which has been classified in the table above as debt due within one year. In
April 2003, the Group also acquired the company "PS Gold", owning $3.25 million
loan notes, using the funds identified above. This liability, reflected in the
balance sheet at 31 March 2003, will cease to be payable.
Standard Bank provided short-term facilities of approximately $7 million to
partially finance the cost of the acquisition of PS Gold which was then
subsequently re-paid from the proceeds of the first part of the hedge
restructure. The Group has subsequently re-arranged this facility onto a longer
term basis for working capital purposes.
The Company issued $9.1 million of shares during the first quarter of 2003 which
were applied for the following purposes:
$ million
Issued for cash 7.4
Debt conversion 1.7
TOTAL 9.1
The principal issue of shares in the period was the completion, on 13 January
2003, of a private placement of 19.2 million shares in the Company for gross
proceeds of $7.4 million (Cdn$ 11.5 million), net US$ 6.7 million.
The Company had 226,995,882 shares issued and outstanding as at 28 May 2003.
Hedging Programme
As a part of its facilities with Standard Bank, the Company entered into a hedge
programme to protect its South African revenue stream. The Company does not
speculate on the gold price using its hedge position. It is designed to reduce
the risks to the Company's revenues and operating profits and the Board monitors
the position on a regular basis. All hedging facilities have been undertaken
without any need to provide margin.
None of the gold available from the Philippines deposit is committed to a
hedging programme and Eurasia Gold Corp. is a completely un-hedged producer.
As announced on 1 April 2003 and then subsequently on 7 May 2003, the Group
twice restructured its hedging programme, producing an immediate cash surplus of
$21.4 million in total, before tax.
Details of the new hedge programme, in place from 7 May 2003, are as follows:
2003 2004 2005 2006 2007 Total
USD Gold put options
Forward sales contracts 8 12 12 12 - 44
Total ounces 17,562 10,065 5,592 18,666 - 51,885
Average price (US$ / oz) $290 $290 $290 $290 - $290
Contingent forward gold sales
Forward sales contracts - - - - 8 8
Total ounces - - - - 101,520 101,520
Average price (US$ / oz) - - - - $315 $315
Forward gold sales
Forward sales contracts 7 12 12 12 - 43
Total ounces 77,826 142,362 151,944 152,400 - 524,532
Average price (US$ / oz) $330 $330 $310 $310 - $318
Forward Rand purchases
Forward sales contracts 6 - - - - 6
Total USD (000's) 21,934 - - - - 21,934
Average price (Rand / US$) R 8.65 - - - - R 8.65
The Group's efforts are now focused on increasing overall production so that the
amount of gold committed to the forward sales programme becomes a lesser part of
the total revenue.
Consolidated Balance Sheet
Thousands of US dollars, unaudited 31 March 2003 31 December 2002
Fixed assets
Tangible assets $ 68,038 $ 68,261
Investments 2,580 2,483
70,618 70,744
Current assets
Stocks 6,920 4,708
Debtors 4,260 3,979
Investments 45 45
Cash at bank and in hand 14,879 2,106
26,104 10,838
Creditors: Amounts falling due within one year (45,527) (28,718)
Net current liabilities (19,423) (17,880)
Total assets less current liabilities 51,195 52,864
Creditors: Amounts falling due after more than one year
(including convertible debt) (18,314) (22,875)
Provisions for liabilities and charges (6,987) (9,351)
Net assets 25,894 20,638
Capital and reserves
Share capital 84,836 75,715
Profit and (loss) account (60,120) (56,333)
Equity shareholders' funds 24,716 19,382
Minority interests 1,178 1,256
$ 25,894 $ 20,638
Consolidated Profit And Loss Account
Three months ended Three months ended
(Thousands of US dollars, unaudited) 31 March 2003 31 March 2002
Turnover $ 15,548 $ 7,154
Cost of sales (15,432) (5,761)
Gross profit 116 1,393
General and administrative expenses (1,174) (969)
Other operating expenses (60) -
Total operating (loss)/ profit (1,118) 424
Interest receivable and similar income 95 83
Interest payable and similar charges (2,347) (403)
(Loss)/profit on ordinary activities before taxation (3,370) 104
Tax on loss on ordinary activities (502) (773)
Loss on ordinary activities after taxation (3,872) (669)
Equity minority interests 78 44
Retained loss for the period (3,794) (625)
Loss per common share for the period
(0.02) (0.00)
Consolidated Cash Flow Statement
Three months ended Three months ended
(Thousands of US dollars, unaudited) 31 March 2003 31 March 2002
Cash flow from operating activities 3,939 539
Returns on investments and servicing of finance (740) (320)
Capital expenditure and financial investment (1,157) (1,422)
Acquisitions - (34,293)
Cash inflow/(outflow) before financing 2,042 (35,496)
Financing 10,731 37,807
Increase in cash in the period 12,773 2,311
Reconciliation of net cash flow to movement in net debt
Increase in cash in the period 12,773 2,311
Cash inflow from increased debt (260) (31,959)
Conversion of debt to common shares 1,712 1,250
Translation differences (568) 5
Other non-cash movements (319) 3,043
Movement in net debt in the period 13,338 (25,350)
Net debt at the start of the period (29,253) (8,495)
Net debt at the end of the period (15,915) (33,845)
Notes
(Forming part of the financial statements)
(In thousands of US dollars unless specified, unaudited)
1. Significant Accounting policies
The Company prepares its financial statements in accordance with United Kingdom
generally accepted accounting principles ("UK GAAP") and under historical cost
accounting rules.
These unaudited interim consolidated financial statements ("the statements")
include the financial statements of the Company and its subsidiary undertakings.
The statements do not include all disclosures required for annual financial
statements, and accordingly, they should be read in conjunction with the
Company's most recent annual consolidated financial statements. These statements
follow the same accounting policies and methods of application used in the
Company's audited consolidated financial statements as at the year ended 31
December 2002.
2. Share capital
a) Authorised
Unlimited common shares without par value
Unlimited Class "A" preference shares
b) Issued
Common shares
Number
of shares Amount
1 January 2003 199,275,987 75,715
Private placement 19,166,667 6,737
Exercise of warrants 2,630,872 650
Conversions of loans 1,068,093 270
Retirement of debt 3,761,183 1,452
Options exercise 50,000 12
Balance 31 March 2003 225,952,802 84,836
On 13 January 2003, the Company issued 19.17 million units consisting of one
share and 1/2 share purchase warrant, under a private placement for gross cash
consideration of $7.4 million (Cdn $11.5 million), net $6,737,000. Each full
warrant entitles the holder to purchase one share at the price of Cdn $0.70
until 9 January 2004.
On various dates in the first quarter of 2003, 2,630,872 warrants were exercised
for 2,630,872 shares of the Company for a net cash consideration of $650,000.
On various dates in the first quarter of 2003, holders of loan notes converted
the outstanding amount of $270,000 for 1,068,093 shares of the Company.
On 28 February 2003, Standard Bank converted the amount and interest owing under
the overdraft facility of $1,452,000 into 3,761,183 shares of the Company.
On 27 March 2003, a holder of employee options converted 50,000 options into
50,000 shares of the Company for a recorded value of $12,000.
3. Reconciliation to Canadian GAAP
Under Canadian GAAP, the 1999 acquisition of CIDEM was accounted for as a
reverse takeover in accordance with EIC10. As a result, a purchase price
discrepancy of $2.0 million arising on the reverse takeover was allocated to the
Kazakhstan gold properties..
Under Canadian GAAP, the purchase price discrepancy of $21.5 million arising on
the 2002 acquisition of PSGM and the $2.0 million arising on the purchase of the
Kazakhstan gold properties, as noted above, are regarded as temporary
differences under EIC99 and tax effected. These amounts, net of respective tax
effects are being amortised over the life of the assets to which they relate.
In 2002, the Company issued convertible loan notes. Under HB 3860, Canadian GAAP
requires that the issuer of a convertible loan note should classify the value
into its component parts as to a liability and equity portion in accordance with
the substance of the contractual arrangement.
In addition, in 2002 the Company entered into a number of transactions to hedge
its exposure to the price of gold and the South African Rand. Certain of these
transactions do not qualify as hedges under Canadian GAAP and have been marked
to market as at 31 March 2003.
The application of Canadian GAAP would result in a (decrease) increase in
shareholders funds of $(11,386) at 31 March 2003 (2002 -$1,400) attributable to
tangible assets $22,411 (2002 - $ 24,663), increase in liabilities of $20,205
(2002 - nil) and deferred tax liability of $13,592 (2002 - $23,263).
The application of Canadian GAAP would have impacted the Company's reported
results for 1st quarter ended 31 March 2003 and 2002 as follows:
Three months ended 31 March (in thousands of US dollars, Unaudited) 2003 2002
Net loss under UK GAAP (3,794) (625)
Impact on net loss of Canadian GAAP adjustments:
Depreciation and write-down of assets (556) (320)
Incremental interest charge re convertible loan notes (72) -
Mark to market on gold contracts not regarded as hedges 10,056 -
Tax effect on above (947) 229
Net profit/(loss) under Canadian GAAP 4,687 (716)
Net profit/(loss) per share based on Canadian GAAP, for the period 0.04 (0.01)
Corporate Information
Head Office President & CEO Officers Legal Counsel
Richmond Adelaide Center William McLucas William McLucas Fogler Rubinoff
120 Adelaide Street West Edinburgh, Scotland President & C.E.O. Toronto, Ontario
Suite 2215
Toronto, ON Canada Group Finance Director Graham Bevan Dickson Minto
M5H 1T1 John Brown Vice-President Technical Edinburgh, Scotland
Tel: +1 416 594 3293 Edinburgh, Scotland & Mining Operations
Fax: +1 416 594 6462 Werksmans
Manaf Alhajeri John Brown Johannesburg, South Africa
UK Branch Office Kuwait City, Kuwait Group Finance Director
10 Dundas Street Auditors
Edinburgh, Scotland David Beatty, O.B.E. Harvey McKenzie KPMG Audit Plc
EH3 6HZ Toronto, Canada Chief Financial Officer London, United Kingdom
Tel: +44 131 557 6222
Fax: +44 131 557 6333 Simon Ingall Grant Sawiak Nominated Advisors
Castle Douglas, Corporate Secretary Grant Thornton Corporate
Scotland Finance
Corporate Structure London, United Kingdom
and Management Abeer Nasser Listing
Al-Shubaiki
Kuwait City, Kuwait Toronto Stock Exchange Bankers
Directors Symbol THT Royal Bank of Canada
Chairman of the Board Adrian Sykes Alternative Investment Toronto, Ontario
Market
The Right Honourable Colchester, England London, Symbol TMG
Lord Lang of Monkton Standard Bank London Ltd
Ayrshire, Scotland Steven Sharpe Registrar & Transfer Agent London, United Kingdom
London, England CIBC Mellon Trust Company
Deputy Chairman Toronto, Ontario Standard Corporate and Merchant
Dr. Adnan Al-Sultan Bank, Johannesburg, South
Africa
Kuwait City, Kuwait CIBC Mellon Trust Company
London, United Kingdom
Financial Information
Attached are Thistle Mining Inc's unaudited Consolidated Financial Statements
for the three months ended 31 March 2003. The statements are presented in
accordance with UK GAAP.
For Further Information, please contact:
Harvey McKenzie
Chief Financial Officer
120 Adelaide Street West, Suite 2215
Toronto, Ontario M5H 1T1
Tel: +1 416 594 3293
Fax: +1 416 594 6462
Email: Harvey.mckenzie@thistlemining.com
Willie McLucas Tim Brebner
President & CEO Financial Director - South Africa.
Tel: + 44 131 557 6222 Tel: + 27 57 391 9026
Fax: + 44 131 557 6333 Fax: + 27 57 391 9118
Email William.mclucas@thistlemining.com Email tbrebner@disselgroup.com
Cautionary Note
Some of the statements contained in this Quarterly Report are forward-looking
statements, such as estimates that describe the Company's future plans,
objectives or goals, including words to the effect that the Company or
management expects a stated condition or result to occur. Since forward-looking
statements address future events and conditions, by their very nature they
involve inherent risks and uncertainties. Actual results relating to, among
other things, reserves, resources, results of exploration, capital costs and
mine production costs could differ materially from those currently anticipated
in such statements by reason of factors such as the productivity of the
Company's mining properties, changes in general economic conditions in the
financial markets, changes in demand and prices for the minerals the Company
produces, litigation, legislative, environmental and other judicial, regulatory,
political and competitive developments in domestic and foreign areas in which
the Company operates, technological and operational difficulties encountered in
connection with the Company's mining activities, labour relations matters and
costs, and matters discussed under "Management's Discussion and Analysis".
Throughout this report, all amounts are in United States currency unless
specified.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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