TIDMTSTR
RNS Number : 5517Q
Tri-Star Resources PLC
13 September 2017
13 September 2017
TRI-STAR RESOURCES PLC
("Tri-Star" or the "Company")
Interim Results for the six month period ended 30 June 2017
Tri-Star (AIM: TSTR), the technology and minerals processing
company, is pleased to announce results for the six months ended 30
June 2017.
Financial highlights
- Expenses down 14% to GBP410,000 (30 June 2016: GBP478,000)
- Elimination of debt and derivative balances (31 December 2016: GBP11,398,000)
- Net assets of GBP2,161,000 (31 December 2016: net liabilities of GBP9,504,000)
Operational highlights
- Commencement of construction of Oman Antimony Roaster ("OAR") in Oman
- Strategic & Precious Metals Processing LLC ("SPMP") signed
multi-year agreement to supply antimony and antimony gold
concentrates to the OAR
- SPMP achieved process design freeze for overall project and
formally approved an increase in the capital budget for the
construction of OAR to $96.0 million
- Test-work has been completed for process issues and initial
independent test reports have confirmed good recoveries of antimony
and gold from the test process
Business review
The period under review has proved transformational for the
Company. In June 2017 Tri-Star enacted a debt for equity swap with
the owners of its Convertible Secured Loan Notes and following this
landmark transaction funds under the management of Odey Asset
Management LLP (the "Odey Funds") have become owners of 54% of the
Company's ordinary shares. As a consequence of the transaction, the
Company's debt and related derivative balances have been
extinguished, leaving the Company with net assets of GBP2.2 million
as at 30 June 2017 (31 December 2017: net liabilities GBP9.5
million). Under IFRS, the Company has been required to book a
resultant loss of GBP3.6 million in connection with the
transaction. This loss and how it is derived is explained in detail
in the accompanying notes to the interim financial statements.
At the same time as implementing the debt for equity swap with
the Odey Funds Tri-Star successfully raised GBP1.3 million, before
expenses, for general corporate purposes which has put the Company
on a stable financial footing. As at 31 August 2017 Tri-Star held
GBP1.0 million in cash.
Business activity during the first half has been focussed on the
continued development of the Oman Antimony Roaster Project ("OAR").
The OAR is being developed by Strategic & Precious Metals
Processing LLC ("SPMP"), an Omani company. The OAR is being built
by SPMP in Sohar, Oman. Tri-Star has a 40% interest in SPMP.
Oman Antimony Roaster update
The OAR has continued to show good progress during 2017.
In addition to the commencement of construction works early in
the year, in June 2017 Tri-Star announced that SPMP had entered
into a multi-year agreement with Traxys Europe SA to supply
antimony and gold concentrates to the OAR. Importantly, SPMP has
since achieved process design freeze for the overall OAR project
which enabled a more definitive appraisal of the costs to complete
to be undertaken. As such, SPMP formally approved an increase in
the capital budget for the construction of OAR to $96.0 million in
July 2017. The bulk of the increase in the approved capital budget
resulted from design changes increasing the capability of the plant
to accept a wider range of feedstock and expansion of the
downstream gold treatment and associated gas handling.
In recent months, antimony prices have increased amid tightening
supply of the metal over the summer months. Pricing for the metal
has been observed in the $8,300 to $8,650 per tonne range in August
2017, with production in China having been subdued by nationwide
environmental checks and generally weak demand in the off-season
summer period.
With respect to financing, SPMP's existing committed financing
facilities amount to $70 million, comprising senior debt of $40
million and shareholder loans and equity of a further $30 million.
As a result of the revised capital budget, SPMP is working closely
with its stakeholders to increase the size of these facilities to
accommodate the increased capital cost and associated working
capital requirements. These discussions are ongoing, however it is
likely that Tri-Star will be required to contribute significant
additional capital to SPMP in order to maintain the Company's 40%
stake in the OAR project. The debt for equity restructuring and the
strengthening of the Company's balance sheet completed earlier this
year have, the Directors believe, greatly enhanced the Company's
ability to raise additional capital in the short term to satisfy
these expected additional funding requests from SPMP.
Tri-Star will continue to keep the market updated with
developments in relation to this exciting project.
Enquiries:
Tri-Star Resources plc Tel: +44 (0) 20 3470 0470
Guy Eastaugh, Chief Executive Officer
SP Angel Corporate Finance (Nomad and Broker) Tel: +44 (0) 20 3470 0470
Robert Wooldridge / Jeff Keating
Yellow Jersey PR Limited (Media Relations) Tel: +44 (0) 7769
325254
Felicity Winkles / Joe Burgess
TRI-STAR RESOURCES PLC
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE SIX MONTHSED 30 JUNE 2017
Notes Unaudited Unaudited Audited
Period Period Year ended
ended ended 31 December
30 June 30 June 2016
2017 2016
GBP'000 GBP'000 GBP'000
Share based payment
charge (130) (5) (66)
Exploration expenditure
and other administrative
expenses (410) (478) (763)
Amortisation of intangibles (1) (2) (3)
Total administrative
expenses and loss from
operations (541) (485) (832)
Profit on sale of available
for sale asset 55 - -
Share of loss in associated
companies (370) (305) (769)
Finance income - 848 133
Loss on extinguishment
of debt (3,637) - -
Finance cost (1,228) (990) (2,111)
---------- ---------- -------------
Loss before taxation (5,721) (932) (3,579)
Taxation 4 62 - 179
Loss after taxation,
and loss attributable
to the equity holders
of the Company (5,659) (932) (3,400)
Loss before and after
taxation attributable
to
Non-controlling interest - - -
Equity holders of the
parent (5,659) (932) (3,400)
Other comprehensive
(expenditure)/income
Items that will be reclassified
subsequently to profit
and loss
Exchange differences
on translating foreign
operations (5) 1 (20)
Recycle to income statement
on disposal of available
for sale asset (47) - -
---------- ---------- -------------
Increase in value of
available for sale asset - - 47
Other comprehensive
(expenditure)/income
for the period, net
of tax (52) 1 27
---------- ---------- -------------
Total comprehensive
loss for the year, attributable
to owners of the company (5,711) (931) (3,373)
========== ========== =============
Total comprehensive
loss attributable to
Non-controlling interest - - -
Equity holders of the
parent (5,711) (931) (3,373)
Loss per share
Basic and diluted loss
per share (pence) 5 (0.06) (0.01) (0.04)
========== ========== =============
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AT 30 JUNE 2017
Unaudited Unaudited Audited
30 June 30 June 31 December
2017 2016 2016
Assets Notes GBP'000 GBP'000 GBP'000
Non-current
Intangible assets 15 20 17
Investment in associates 6 1,113 1,947 1,483
Property, plant and
equipment 32 57 43
---------- ---------- ------------
1,160 2,024 1,543
Current
Cash and cash equivalents 1,108 580 447
Available for sale
asset - 89
Trade and other receivables 104 59 37
Total current assets 1,212 639 573
Total assets 2,372 2,663 2,116
========== ========== ============
Liabilities
Current
Trade and other payables 63 49 74
Derivative financial
liability 7 - 253 969
Total current liabilities 63 302 1,043
Liabilities due after
one year
Loans 7 - 9,309 10,429
Deferred tax liability 148 176 148
Total liabilities 211 9,787 11,620
Equity
Issued share capital 3,160 2,601 2,601
Share premium 31,342 14,519 14,525
Share based payment
reserve 1,130 1,074 1,130
Other reserves (6,156) (6,156) (6,109)
Translation reserve (783) (757) (778)
Retained earnings (26,529) (18,402) (20,870)
---------- ---------- ------------
2,164 (7,121) (9,501)
---------- ---------- ------------
Non-controlling interest (3) (3) (3)
Total equity 2,161 (7,124) (9,504)
Total equity and
liabilities 2,372 2,663 2,116
========== ========== ============
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE SIX MONTHSED 30 JUNE 2017
Unaudited Unaudited Audited
Period Period Year ended
ended ended
30 June 30 June 31 December
2017 2016 2016
GBP'000 GBP'000 GBP'000
Cash flows from operating
activities
Loss after tax (5,659) (932) (3,400)
Amortisation of intangibles 1 2 3
Depreciation 10 10 20
Finance income - (1) (2)
Finance cost 1,176 991 2,111
Loss from associates 370 305 769
Fees paid by shares 130 5 10
Loss on extinguishment
of loans 3,637 - -
Equity settled share-based
payments - - 56
Movement on fair value
of derivatives 52 (847) (131)
Profit on disposal of
AFSA (55) - -
(Increase)/decrease
in trade and other receivables (67) 97 116
(Decrease) in trade
and other payables (11) (368) (448)
Net cash outflow from
operating activities (416) (738) (896)
---------- ---------- ------------
Cash flows from investing
activities
Purchase of property,
plant and equipment - (2) (1)
Purchase of intangible
assets - (22) (20)
Investment in available
for sale asset - - (41)
Net receipts on sale
of available for sale
asset 96 - -
Finance income - 1 2
Net cash inflow/(outflow)
from investing activities 96 (23) (60)
---------- ---------- ------------
Cash flows from financing
activities
Proceeds from issue
of share capital 1,300 - -
Share issue costs (54) - -
Finance costs (263) - -
Net cash inflow from
financing activities 983 - -
---------- ---------- ------------
Net increase/(decrease)
in cash and cash equivalents 663 (761) (956)
Cash and cash equivalents
at beginning of period 447 1,308 1,308
Exchange differences
on cash and cash equivalents (2) 33 95
Cash and cash equivalents
at end of period 1,108 580 447
---------- ---------- ------------
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE SIX MONTHSED 30 JUNE 2017
Share Share Other Share-based Translation Retained Total Non-controlling Total
capital premium reserves payment reserve earnings attributable interest equity
account reserve to
owners
of
parent
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balance at 1
January 2016
(audited) 2,601 14,515 (6,156) 1,074 (758) (17,470) (6,194) (3) (6,197)
Issue of share
capital - 4 - - - - 4 - 4
Transactions
with owners - 4 - - - - 4 - 4
------------- ------------------- ----------------- ------------------ ----------------------- ------------------ ------------------------- ---------------- ---------------------
Loss for the
period - - - - - (932) (932) - (932)
Exchange
difference
on translation
of foreign
operations - - - - 1 - 1 - 1
Total
comprehensive
loss for the
period - - - - 1 (932) (931) - (931)
------------- ------------------- ----------------- ------------------ ----------------------- ------------------ ------------------------- ---------------- ---------------------
Balance at 30
June 2016
(unaudited) 2,601 14,519 (6,156) 1,074 (757) (18,402) (7,121) (3) (7,124)
------------- ------------------- ----------------- ------------------ ----------------------- ------------------ ------------------------- ---------------- ---------------------
Issue of share
capital - 6 - - - - 6 - 6
Share based
payments - - - 56 - - 56 - 56
Transactions
with owners - 6 - 56 - - 62 - 62
------------- ------------------- ----------------- ------------------ ----------------------- ------------------ ------------------------- ---------------- ---------------------
Loss for the
period - - - - - (2,468) (2,468) - (2,468)
Increase in
value of
available
for sale asset - - 47 - - - 47 - 47
Exchange
difference
on translation
of foreign
operations - - - - (21) - (21) - (21)
Total
comprehensive
loss for the
period - - 47 - (21) (2,468) (2,442) - (2,442)
------------- ------------------- ----------------- ------------------ ----------------------- ------------------ ------------------------- ---------------- ---------------------
Balance at 31
December 2016
(audited) 2,601 14,525 (6,109) 1,130 (778) (20,870) (9,501) (3) (9,504)
------------- ------------------- ----------------- ------------------ ----------------------- ------------------ ------------------------- ---------------- ---------------------
Issue of share
capital 559 13,057 - - - - 13,616 - 13,616
Share issue
costs - (54) - - - - (54) - (54)
Fair value on
extinguishment
of loan - 3,814 - - - - 3,814 - 3,814
Transactions
with owners 559 16,817 - - - - 17,376 - 17,376
------------- ------------------- ----------------- ------------------ ----------------------- ------------------ ------------------------- ---------------- ---------------------
Loss for the
period - - - - - (5,659) (5,659) - (5,659)
Transfer on
sales of
available
for sale asset - - (47) - - - (47) - (47)
Exchange
difference
on translation
of foreign
operations - - - - (5) - (5) - (5)
Total
comprehensive
loss for the
period - - (47) - (5) (5,659) (5,711) - (5,711)
------------- ------------------- ----------------- ------------------ ----------------------- ------------------ ------------------------- ---------------- ---------------------
Balance at 30
June 2017
(unaudited) 3,160 31,342 (6,156) 1,130 (783) (26,529) 2,164 (3) 2,161
------------- ------------------- ----------------- ------------------ ----------------------- ------------------ ------------------------- ---------------- ---------------------
NOTES TO THE INTERIM REPORT
FOR THE SIX MONTHSED 30 JUNE 2017
1. GENERAL INFORMATION
The financial information set out in this interim report for the
Company, its subsidiaries and associates (the "Group") does not
constitute statutory accounts as defined in Section 434 of the
Companies Act 2006. The Group's statutory financial statements for
the year ended 31 December 2016 have been completed and filed at
Companies House. The auditor's report on the annual financial
statements was unqualified and did not contain statements under
section 498(2) or section 498(3) of the Companies Act 2006, but did
contain an emphasis of matter in respect of going concern.
2. ACCOUNTING POLICIES
BASIS OF PREPARATION
The Company's ordinary shares are quoted on the AIM market of
the London Stock Exchange and the Company applies the Companies Act
2006 when preparing its annual financial statements.
The annual financial statements for the year ended 31 December
2017 will be prepared under International Financial Reporting
Standards as adopted by the European Union (IFRS) and the principal
accounting policies adopted remain unchanged from those adopted in
preparing its financial statements for the year ended 31 December
2016.
The accounting policies have been applied consistently
throughout the Group for the purposes of preparation of these
condensed consolidated interim financial statements.
GOING CONCERN
The Directors have prepared cash flow forecasts for the period
ending 30 September 2018. The forecasts assume that the balance of
$2 million due from SPMP on successful commissioning of the Oman
Antimony Roaster in its pilot phase will be received, as described
further in Note 8. The forecasts demonstrate that the Group will
have sufficient cash resources available to allow it, assuming the
$2m is received, to continue in business for a period of at least
twelve months from the date of approval of these financial
statements. Accordingly, the accounts have been prepared on a going
concern basis.
3. SEGMENTAL REPORTING
An operating segment is a distinguishable component of the Group
that engages in business activities from which it may earn revenues
and incur expenses, whose operating results are regularly reviewed
by the Group's chief operating decision maker to make decisions
about the allocation of resources and assessment of performance and
about which discrete financial information is available. The chief
operating decision maker has defined that the Group's only
reportable operating segment during the period is mining.
In respect of the non-current assets as at 30 June 2017 of
GBP1,160,000, GBP20,000 arise in the UK (30 June 2016: GBP35,000,
31 December 2016: GBP27,000), and GBP1,140,000 arise in the rest of
the world (30 June 2016: GBP1,989,000, 31 December 2016:
GBP1,516,000).
4. TAXATION
As at 31 December 2016 Tri-Star Resources plc had unrelieved
Schedule D Case 1 corporation tax losses of GBP4.26 million. The
Directors expect these losses to be available to offset against
future taxable trading profits.
The Group has not recognised any deferred tax asset at 30 June
2017 (30 June and 31 December 2016: GBPnil) in respect of these
losses on the grounds that it is uncertain when taxable profits
will be generated by the Group to utilise any such losses.
5. (LOSS) PER SHARE
The calculation of the basic (loss) per share is based on the
(loss) attributable to ordinary shareholders divided by the
weighted average number of shares in issue during the period.
Unaudited Unaudited Audited
period period year ended
ended ended
30 June 30 June 31 December
2017 2016 2016
GBP'000 GBP'000 GBP'000
Loss on ordinary activities
after tax (GBP'000) (5,659) (932) (3,400)
------------------- ------------------- ------------------------
Weighted average number
of shares for calculating
basic loss per share 9,026,640,031 8,461,899,843 8,464,881,335
------------------- ------------------- ------------------------
Basic and diluted loss
per share (pence) (0.06) (0.01) (0.04)
------------------- ------------------- ------------------------
Diluted earnings per share is the same as basic loss per share
in each year because the potential shares arising under the share
option scheme, share warrants and convertible bonds are
anti-dilutive.
The weighted average number of ordinary shares excludes deferred
shares which have no voting rights and no entitlement to a
dividend.
6. INVESTMENT IN ASSOCIATES
Strategic & Precious Metals Processing LLC ("SPMP") was
incorporated in the Sultanate of Oman in 2014. Tri-Star has a 40%
interest in the company and accounts for its investment in SPMP as
an associate undertaking.
SPMP made a loss of GBP925,000 in the period to 30 June 2017 (30
June 2016: GBP762,000, 31 December 2016: GBP1,923,000) of which
Tri-Star's share in the Group accounts was GBP370,000 (30 June
2016: GBP305,000, 31 December 2016: 769,000). Tri-Star had a net
investment of GBP1,113,000 on consolidation as at 30 June 2017 (30
June 2016: GBP1,947,000, 31 December 2016: GBP1,483,000).
7. CONVERTIBLE SECURED LOAN NOTES
As at 31 December 2016, the Company had in issue three tranches
of convertible secured loan notes ("Loan Notes") held by funds
under the discretionary management of Odey Asset Management LLP.
The Loan Notes carried a non-cash coupon of 15% per annum which
compounded half yearly and were secured by way of a guarantee and
debenture granted by Tri-Star Antimony Canada Inc. The Loan Notes
were redeemable at 100% of their principal amount plus accrued
interest by way of the issue of new Tri-Star ordinary shares on
maturity on 19 June 2018 (unless otherwise converted prior to
maturity).
On 1 June 2017, Tri-Star announced that it has reached agreement
with Odey Asset Management LLP to restructure the Company's balance
sheet and raise additional working capital (the "Proposals"). The
Proposals, which were subject to shareholder approval, entailed all
of the outstanding Loan Notes being converted or redeemed. The
Company also raised GBP1.3 million, before expenses, for general
working capital purposes. Full details of the Proposals were set
out in the circular to Tri-Star shareholders dated 1 June 2017 and
were approved by shareholders at a general meeting on 20 June
2017.
The Proposals included a reduction in the conversion price of
the Loan Notes from 0.20 pence to 0.121855 pence per ordinary
share, unconditional and effective 1 June 2017. Under the
Proposals, funds under the discretionary management of Odey Asset
Management LLP converted approximately GBP4.4 million of Loan Notes
into 3,614 million new ordinary shares of the Company (the
"Conversion") and participated in a placing of 7,453 million new
ordinary shares in the Company (the "Placing") also at 0.121855p
per ordinary share (the "Placing Price"). Approximately GBP7.8
million of the Placing proceeds were then to be applied to redeem
the balance of the Loan Notes with the remaining GBP1.3 million of
proceeds being used to meet expenses of the transaction and for
general working capital purposes.
IFRS requires that the difference between the carrying amount of
financial liability (or part of financial liability) extinguished
or transferred to another party and the consideration paid,
including any non-cash assets transferred or liabilities assumed
should be recognised in profit and loss. Additionally equity
instruments issued to the creditor to extinguish the liability
should be measured at the fair value of the instruments issued. The
fair value of the shares issued in respect of both the Conversion
and the Placing in respect of the extinguishment of the Notes has
been measured at 0.16p per share, being the closing price on 31 May
2017, the day prior to the agreement with Odey Asset Management LLP
being reached. The difference between the Conversion and Placing
Price (0.121855 pence per ordinary share) and the fair value of the
ordinary shares so issued (0.16 pence per ordinary share) amounts
to GBP3,814,000. The loss on extinguishment recorded in the income
statement was measured as follows:
GBP'000
Book value of debt 12,626
Repaid by issue of 3,613,884,866
shares (4,404)
Repaid in cash (7,782)
Fair value adjustment
for shares issued for
conversion and repayment (3,814)
Costs incurred (263)
Loss on extinguishment
of loan (3,637)
========
8. CONTINGENT ASSET
Under the agreement to sell the Roaster intellectual property to
Strategic & Precious Metals Processing LLC, there is a balance
of $2million due to be paid to Tri-Star. This payment is contingent
upon the successful commissioning of the plant in its pilot phase.
The Directors have determined not to accrue this deferred income.
Therefore, there is a contingent asset of $2 million as at 30 June
2017 (30 June and 31 December 2016: $2 million).
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR SFMFIEFWSEEU
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