Half Yearly Report

RNS Number : 3604N

Amur Minerals Corporation

28 September 2012

 



28 September 2012

AMUR MINERALS CORPORATION

(AIM: AMC)

2012 Interim Financial Report

Amur Minerals Corporation ("Amur" or the "Company"), a nickel-copper sulphide mineral exploration and resource development company focused on the far east of Russia, announces the interim financial results for the first half of 2012.  Financially, the Company is debt free, funded, and continues to cut costs where possible.

Technically, the first six months of 2012 have been productive for Amur and include the following:

·     The new LF90 diamond core drill rig was delivered to the project site and has been drilling constantly since June of this year.  This has resulted in a substantial reduction in exploration costs.

·     Drilling has confirmed that the Maly Kurumkon deposit is larger than presently defined thereby indicating that there should be an increase in both resources and reserves.  This could extend the life of the planned operation.

·     Improved metallurgical recoveries of all metals contained in the ore are now defined and could possibly be further improved.  This indicates that the Company can expect greater revenues from each tonne of ore mined and processed.

·     We continue to work with the federal and state agencies in obtaining our mining licence and an extension on our exploration rights.

Robin Young, CEO of Amur Minerals, commented:

"The first half of this year has seen our Company continue to advance our project in the technical arena and continue to raise funds for exploration and the ultimate advancement toward production.  Presently, the nickel price is improving with the projected long term price being $2 per pound higher than used in our 2007 pre feasibility study.  The projected addition of resources and reserves, lowered exploration costs, and improved metallurgical recoveries should result in an improvement in projected cash flow models to be examined in upcoming study work and re-evaluation of the pre feasibility study.  This is an exciting time for the Company and our shareholders."

Enquiries:

Company Amur Minerals Corp.	Nomad and Joint Broker RBC Capital Markets	Joint Broker Merchant Securities	Public Relations Tavistock
Robin Young CEO	Martin Eales	Lindsay Mair	Jos Simson / Jessica Fontaine
[phone]	[phone]	[phone]	[phone]

Notes to Editor

The 1H 2012 financial review is on www.amurminerals.com.

Chairman's Statement

Dear Shareholder,

I am pleased to have this opportunity to update you on the Company's progress over the first six months of 2012. Exploration of our Kun-Manie nickel copper sulphide project in the Russian Far East has been the primary focus over this period. This has included drilling of mineralisation to the east of the Maly Kurumkon deposit and in the area of Gorney. This covers a substantial portion of a three kilometre long area that had not been previously drilled and where resources and reserves have not yet been defined. We continue to work with the various Russian Federation officials and agencies in advancing our application for the mining licence at Kun-Manie and obtaining an extension of our rights on the 950 square kilometre exploration licence.

2012 Highlights

·      Cash and cash equivalents at 30 June 2012 totalled US$3.1 million (H1 2011. US$5.1 million).

·      The Company completed an additional fund raising in February 2012 with Lanstead Capital LLP (Lanstead) for US$7.67 million (£4.8 million). After recognising a loss on the financial derivative asset in the period - the value of this fund raising has reduced to US$3.2 million.

·      The diamond core drilling rig purchased late in 2011 went into operation in June 2012 and has been successful in reducing our exploration drill costs from US$290 per metre to a projected US$165.

·      Analytical results from the first drill holes are available and indicate that the drill defined mineralisation of Maly Kurumkon continues to the east. Additional holes also confirm the mineralisation could extend for an additional 1,000 metres.

·      Reconnaissance exploration work as well as drill site preparation also continue throughout the exploration licence area.

Financial Overview

The Company remained debt free with cash reserves of US$3.1 million as at 30 June 2012 (H1 2011: US$5.1 million).

During the first six months of 2012 the Company received five settlements of the (Lanstead financing first entered into in March 2011 totalling US$817 k, which brings total proceeds to date from this financing to US$2.1 million. There are 12 settlements remaining which valued at the share price as at 30 June 2012 of 4.83p will provide expected proceeds of US$706 k.

The Company entered into another placing and equity price mechanism with Lanstead in February 2012 for US$7.67 million (£4.87 million) by placing 60.7 million new shares. During the period the Company received one settlement with proceeds of US$348 k.  

A further US$972 k was raised through a private placing of 7.81 million new shares at 8p in February 2012.

During the first six months of 2012 the Company recognised a loss on financial derivative assets of US$4.5 million (H1 2011: US$0.7 million). Each financial derivative asset has been designated at fair value at reporting date through the profit and loss account, with the fair value determined by reference to the Company's share price as at reporting date.

Exploration Overview

West Zone

The West Zone contains the Maly Kurumkon deposit which has a length of approximately 1,000 metres and contains a JORC drilled resource and reserve. Immediately to the east of Maly Kurumkon is an area identified as Flangovy which is being drilled during this field season. Drill results for the first four holes confirm that the Maly Kurumkon deposit continues to the east. Additional drill holes completed over an additional 800 metres to the east confirm the presence of nickel enriched sulphides and the Company is awaiting final analytical results from these newly completed drill holes. Positive drill results could result in defining a single continuous mineralised zone up to nearly two kilometres in length. This would represent a near doubling of the length of the drill defined resource at Maly Kurumkon.

Also located approximately one kilometre to the east of Maly Kurumkon and along the western zone is the Gorney deposit. Drilling commenced late in the second quarter and nickel mineralisation has been identified in this area confirming the results of two previously completed holes. Analytical results are not yet available but geological logging confirms potential economic thicknesses of nickel and copper mineralisation near the existing holes.  Additional drilling is on going in this area which could ultimately be linked to the now larger Maly Kurumkon.

The Chorney Ispelene area is located at the western end of the Kurumkon trend to the north and west of the Maly Kurumkon deposit. Geological mapping, rock chip and soil geochemical sampling, as well as geophysical work has identified that the structure is approximately six kilometres long, making it the longest continuous potential nickel and copper host structure defined by the Company to date. Road construction to this area has been completed allowing the Company to drill a part of this target in the future.

Eastern Zone

The Eastern Zone contains the drill resources and reserves of Vodorazdelny and Ikenskoe. This is also the Company's base camp where all equipment is marshalled at the end of the field season. It is our intention to complete additional drilling to the south and east of the Ikenskoe deposit at the end of the drill season. Trench, geochemical and geophysical results indicate that the Ikenskoe deposit could continue to the south and nearly double this size of the Ikenskoe deposit. This requires drilling to confirm the presence of economic levels of mineralisation.

Located four kilometres to the east of Ikenskoe is the Kubuk drill target which has been trenched and additional geochemical soil sampling has been completed.  Results are not yet available but it is interpreted that this area could be an extension of Ikenskoe. This is a prime drill target for the Company and was planned for drilling this season. However, excessive rains and warmer than usual weather may preclude our drilling of this area this season due to the excessively high water levels that must be forded with the drill rig to access the site. If access is not safe, the Company will continue to drill in the Western zone near the Maly Kurumkon deposit.

Other Exploration News

In the last quarter of 2011, the Company acquired a new LF-70 Boart Longyear diamond core drilling rig. The rig was transported to site via the newly completed 320 kilometre Ice Road in March 2012 and began drilling in June 2012.

Also in the last quarter of 2011 and the first four months of 2012, SGS began a second phase of metallurgical test work. Flotation test work of the sulphide ores was conducted on 24 samples representing six grade ranges distributed throughout the JORC drilled reserves of the Maly Kurumkon, Vodorazdelney and Ikenskoe deposits. The results of this work predicts an increased nickel recovery from 75.9% as indicated in the 2007 SRK Consulting prefeasibility study to 77.8%. The test work has also predicted increases in the recovery of copper from 72.9% to 90.4%, cobalt from 57.0% to 68.6%, platinum from 51.1% to 73.9% and palladium from 40.8% to 82.4%. The increased recoveries for all metals have a positive effect on the Pre Feasibility cash flow model completed in 2007.  The Company is presently reviewing proposals from independent companies to upgrade the pre-feasibility study.

Given the metallurgical recovery improvements, the Company now considers that it may be possible to construct its own captive smelter to process concentrate in-house and therefore capture lost revenues that contract smelters keep as a part of the fee structure. Upon completion of the update to the cash flow models, the Company will examine the impact on the project economics based on the newly acquired SGS recovery information and will assess the potential impact on the project scope of the work to determine the viability of an owner operated smelter option.

Licences

The current exploration license for Kun-Maine expires on 31 December 2012 and an application for the licence extension has been submitted in May 2012, six months prior to the expiry date as prescribed by the licence terms. The application is submitted to Amurnedra in Blagoveshchensk which then forwards the application to Rosnedra in Moscow, the Russian Mining Agency responsible for the approval of the extension. The Company has requested extensions of the exploration licence in the past and they have always been granted.

Application for the mining licence has been reviewed by the Ministry of Defence (MOD), Anti-Monopoly Board (FAS), and State Security (FSB) with each of these agencies reporting to Rosnedra their acceptance of the application. The Ministry of Economic Development (MED) is the final agency to report to Rosnedra, which is in the process of developing pricing data to set the value of the concentrate based on available metallurgical test work. No delivery date for the final report to Rosnedra has been provided by MED. The Company maintains regular contact with both MED and Rosnedra and believe that the mining licence will ultimately be awarded.

Outlook

The Company is entering an exciting period in its history, built on the foundation of many years of hard work and continued shareholder support.  We are optimistic the 2012 drilling programme will show significant increase in resource and reserves within the Maly Kurumkon Trend. The metallurgical test work results obtained by SGS have further shown significant potential for increased metal recovery making this a significant commercial discovery and we look forward to receiving approval for the mining license.

On behalf of the Board of Directors, I would like to thank all the staff for their dedication and hard work, throught this period and continued focus as we enter the next stage of the Company's development.

I look forward to updating you further in the Company's annual financial report next year.

Robert W. Schafer

Chairman

27 September 2012

Independent Review Report

To the shareholders of Amur Minerals Corporation

Introduction

We have been engaged by the Company to review the consolidated financial information in the interim financial report for the six months ended 30 June 2012 which comprises the Consolidated Statement of Financial Position, the Consolidated Statement of Comprehensive Income, the Consolidated Statement of Cash Flows, the Consolidated Statement of Changes in Equity and the related notes.

We have read the other information contained in the interim financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the financial information.

Directors' responsibilities

The interim report, including the financial information contained therein, is the responsibility of and has been approved by the Directors.  The Directors are responsible for preparing the interim report in accordance with the rules of the London Stock Exchange for companies trading securities on the Alternative Investment Market which require that the interim report be presented and prepared in a form consistent with that which will be adopted in the Company's annual accounts having regard to the accounting standards applicable to such annual accounts.

Our responsibility

Our responsibility is to express to the Company a conclusion on the consolidated financial information in the interim financial report based on our review.

Our report has been prepared in accordance with the terms of our engagement to assist the Company in meeting the requirements of the rules of the London Stock Exchange for companies trading securities on the Alternative Investment Market and for no other purpose.  No person is entitled to rely on this report unless such a person is a person entitled to rely upon this report by virtue of and for the purpose of our terms of engagement or has been expressly authorised to do so by our prior written consent.  Save as above, we do not accept responsibility for this report to any other person or for any other purpose and we hereby expressly disclaim any and all such liability.

Scope of review

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410, ''Review of Interim Financial Information Performed by the Independent Auditor of the Entity'', issued by the Auditing Practices Board for use in the United Kingdom.  A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures.  A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit.  Accordingly, we do not express an audit opinion.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the consolidated financial information in the interim financial report for the six months ended 30 June 2012 are not prepared, in all material respects, in accordance with the rules of the London Stock Exchange for companies trading securities on the Alternative Investment Market.

BDO LLP

Chartered Accountants and Registered Auditors

London,

United Kingdom

BDO LLP is a limited liability partnership registered in England and Wales (with registered number OC305127).

	Note	Unaudited 30 June 2012		Unaudited 30 June 2011		Audited 31 December 2011
NON-CURRENT ASSETS
Capitalised exploration costs	5	14,178		13,985		13,503
Property, plant and equipment		868		419		400
Total non-current assets		15,046		14,404		13,903
CURRENT ASSETS
Cash and cash equivalents		3,150		5,067		4,436
Prepayments and other receivables		22		82		711
Derivative financial asset	7	3,981		3,785		2,001
VAT receivable	8	263		1,236		73
Inventories		648		270		165
Total current assets		8,064		10,440		7,386
Total assets		23,110		24,844		21,289
CURRENT LIABILITIES
Trade and other payables		269		159		102
Total current liabilities		269		159		102
SHAREHOLDERS' EQUITY
Share capital	9	40,902		32,227		32,265
Share premium		6,632		7,071		7,071
Share options reserve	11	1,256		1,226		1,604
Retained deficit		(22,504)		(14,034)		(16,686)
Foreign exchange translation  reserve		(3,445)		(1,805)	(	(3,067)
Total shareholders' equity		22,841		24,685		21,187
Total liabilities and shareholders' equity		23,110		24,844		21,289

	Note	Unaudited 6 Months ended 30 June 2012		Unaudited 6 Months ended 30 June 2011		Audited Year ended 31 December 2011
Other administrative expenses		(1,131)		(627)		(2,892)
Share based payment		(202)		(562)		-
Total administrative expenses		(1,333)		(1,189)		(2,892)
Loss from operations		(1,333)		(1,189)		(2,892)
Finance income		-		20		20
Finance expense		(514)		(71)		(231)
Fair value loss on derivative financial assets	7	(4,521)		(716)		(1,505)
(Loss)/Profit before tax		(6,368)		(1,956)		(4,608)
Taxation	6	-		-		-
Loss for the period attributable to owners of the parent		(6,368)		(1,956)		(4,608)
Other Comprehensive income:
Exchange differences on translation of foreign operations		(378)		641		(621)
Total comprehensive loss for the period attributable to owners of the parent		(6,746)		(1,315)		(5,229)
Loss per share: basic & diluted	4	US$ (0.019)		US$ (0.007)		US$ (0.017)

		Unaudited 6 Months ended 30 June 2012		Unaudited 6 Months ended 30 June 2011		Audited Year ended 31 December 2011
Cash flow from operating activities:
Payments to suppliers and employees		(2,042)		(1,689)		(2,761)
Net cash used in operating activities		(2,042)		(1,689)		(2,761)
Cash flow from investing activities:
Payment for capitalized exploration expenditure		(524)		-		(1,256)
Recovery of VAT receivable	8	55		223		1,236
Net cash used in investing activities		(469)		223		(20)
Cash flow from financing activities:
Proceeds from issue of equity shares	7	1,165		3,349		4,344
Net cash from financing activities		1,165		3,349		4,344
Net change in cash and cash equivalents		(1,346)		1,883		1,563
Cash and cash equivalents brought forward		4,436		3,066		3,066
Foreign exchange effects		60		118		(193)
Cash and cash equivalents carried forward		3,150		5,067		4,436

.

	Share capital	Share premium	Retained deficit	Share options reserve	Foreign exchange translation reserve	Total
Balance at 31 December 2010 (audited)	28,183	7,233	(12,804)	1,390	(2,446)	21,556
Loss for the period	-	-	(1,956)	-	-	(1,956)
Other comprehensive income for the period	-	-	-	-	641	641
Share options expired in the period	-	-	726	(726)	-	-
Equity settled share based payments	-	-	-	562	-	562
Shares Issued	4,044	-	-	-	-	4,044
Costs associated with issue of share capital	-	(162)	-	-	-	(162)
Balance at 30 June 2011 (unaudited)	32,227	7,071	(14,034)	1,226	(1,805)	24,685
Loss for the period	-	-	(2,652)	-	-	(2,652)
Other comprehensive income for the period	-	-	-	-	(1,262)	(1,262)
Equity settled share based payments	-	-	-	378	-	378
Shares Issued	38	-	-	-	-	38
Balance at 31 December 2011 (audited)	32,265	7,071	(16,686)	1,604	(3,067)	21,187
Loss for the period	-	-	(6,368)	-	-	(6,368)
Other comprehensive income for the period	-	-	-	-	(378)	(378)
Share options expired in the period	-	-	550	(550)	-	-
Equity settled share based payments	-	-	-	202	-	202
Shares Issued	8,637	-	-	-	-	8,637
Costs associated with issue of share capital	-	(439)	-	-	-	(439)
Balance at 30 June 2012 (unaudited)	40,902	6,632	(22,504)	1,256	(3,445)	22,841

1.             Reporting Entity 

Amur Minerals Corporation (the "Company") is a company domiciled in the British Virgin Islands. The consolidated interim financial information as at and for the six months ended 30 June 2012 comprise the Company and its subsidiaries (together referred to as the "Group").

The consolidated financial information of the Group as at and for the year ended 31 December 2011 are available upon request from the Company's registered office at Kingston Chambers, P.O. Box 173, Road Town, Tortola, British Virgin Islands, from offices of RBC Europe Limited, Riverbank House, 2 Swan Lane London EC4R 3BF or at www.amurminerals.com.

2.             BASIS OF PREPARATION

The financial information set out in this report is based on the consolidated financial information of Amur Minerals Corporation and its subsidiary companies (together referred to as the 'Group').  The financial information of the Group for the 6 months ended 30 June 2012 was approved and authorised for issue by the Board on ?? September 2012.  The interim results have not been audited, but were the subject to an independent review carried out by the Company's auditors, BDO. LLP. This financial information has been prepared in accordance with the accounting policies that are expected to be applied in the Report and Accounts of Amur Minerals Corporation for the year ended 31 December 2012 and are consistent with IFRS as adopted by the European Union. The auditor's report on the group accounts to 31 December 2011 was unqualified and did not draw attention to any matters by way of emphasis. The comparative information for the full year ended 31 December 2011 is not the Group's full annual accounts for that period but has been derived from the annual financial information for that period. 

The consolidated financial information incorporates the results of Amur Minerals Corporation and its subsidiaries undertakings as at 30 June 2012, using the acquisition method of accounting as appropriate.  The corresponding amounts are for the year ended 31 December 2011 and for the 6 month period ended 30 June 2011.

The Group financial information is presented in US Dollars ('US$') and values are rounded to the nearest thousand Dollars. 

3.             GOING CONCERN 

In the absence of production revenues, the Group is currently dependent upon its existing financial resources which comprises cash and derivative financial asset (note 7), and its ability to raise additional finance through share placings to satisfy its obligations and fully finance its exploration and evaluation programme for Kun-Manie. Failure to meet these exploration and evaluation commitments could put the related licence interest at risk of forfeiture.

The Directors have reviewed future cash forecasts, with particular reference to the minimum expenditure requirements on the licences and the intended work programme for the next 12 months, and have reasonable expectation that the Group will have adequate resources to meet its commitments. Accordingly the financial information has been prepared on a going concern basis.

4.             LOSS PER SHARE

Basic and fully diluted loss per share are calculated and set out below.  The effects of warrants and share options outstanding at the period ends are anti-dilutive and have therefore been excluded from the following calculations.

	Unaudited 6 Months ended 30 June 2012		Unaudited 6 Months ended 30 June 2011		Audited Year ended 31 December 2011
Net loss for the period	(6,368)		(1,956)		(4,608)
Average number of shares for the period	337,049,245		265,555,482		271,788,676
Basic and diluted loss per share	US$ (0.019)		US$ (0.007)		US$ (0.017)

The Group had no dilutive potential ordinary shares in either period that would serve to increase the loss per ordinary share. There is therefore no difference between the basic and diluted loss per share for either period.  A total of 11,600,000 (2011: 13,847,000) potential ordinary shares have therefore been excluded from the above calculations.

5.             FORWARD LOOKING STATEMENTS

This report contains certain forward looking statements, which include assumptions with respect to future plans, results and capital expenditures. The reader is cautioned that assumptions used in the preparation of such information may prove to be incorrect. All such forward looking statements involve substantial known and unknown risks and uncertainties, certain of which are beyond the Company's control. Please refer to the Company's Admission Document available from the Company's web site for a list of risk factors. The Company's actual results could differ materially from those expressed in, or implied by, these forward-looking statements and, accordingly, no assurances can be given that any of the events anticipated by the forward-looking statements will transpire or occur, or if any of them do so, what benefits the Company will derive therefrom. All subsequent forward-looking statements, whether written or oral, attributable to the Company or persons acting on its behalf are expressly qualified in their entirety by these cautionary statements. Furthermore, the forward-looking statements contained in this report are made as at the date of this report.

 

6.             INTERIM REPORT

Copies of this interim report for the six months ended 30 June 2012 will be available from the company's website www.amurminerals.com.   

 

END

 

 

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