Interim Results

RNS Number : 5566T
Amur Minerals Corporation
30 September 2010
 



 

30 September 2010

 

AMUR MINERALS CORPORATION

(AIM: AMC)

 

RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2010

(Amounts in US Dollars unless otherwise stated)

 

Amur Minerals Corporation ("Amur" or the "Company"), a nickel-copper sulphide mineral exploration and resource development company focused on far east Russia, announces its Interim results for the half year ended 30 June 2010, a period of continued progress.

 

Highlights:

·     Discovery of a significant new drill target in close proximity to two previously drilled deposits at Kun-Manie

·     Reduction of administrative expenses

·     Indication of abundant sulphides from newly exposed outcrops near existing deposits

 

Post period accomplishments:

·     £1.2 million raised

·     Appointment of Hybridan LLP as Joint Broker

·     Appointment of Brian Savage as non-executive Director

·     Granted an extension to the Kun-Manie exploration licence through 2012

 

Robin Young, CEO of Amur Minerals, commented:

 

"Amur Minerals has made excellent progress with the identification of  new drill targets at Kun-Manie and has obtained an extension to the Kun-Manie exploration licence.  The Company is more financially secure and we are confident as we move forward in our  mining licence application."

 

 

Enquiries:

 

Company

Amur Minerals Corp.

Nomad and Joint Broker

RBC Capital Markets

Joint Broker

Hybridan LLP

Public Relations

Lothbury Financial Services

Robin Young

Martin Eales

Claire Noyce

Michael Padley

CEO



Libby Moss

+44 (0) 7981 126 818

+44 (0) 20 7029 7881

+44 (0) 20 7947 4350

+44 (0) 20 7868 2010

 

 



 

CHAIRMAN'S STATEMENT

 

Dear Shareholder,

 

Amur Minerals Corporation continues to advance and thrive in what is still a very difficult financing environment for the junior mining sector. During the period, we have identified two significant targets for the potential expansion of resources at Kun-Manie.  Due to a combination of good planning, existing inventory of supplies at the site and aggressive pursuit of VAT refunds, we have been able to initiate a field campaign, as opposed to 2009 where our focus was on preparing the documentation for our mining licence submission.  The limited field work we have performed already in 2010 has paid dividends, with a new drill target confirmed and other potential expansions adjacent to our existing deposits identified at Kun-Manie. We have continued to reduce our administrative expenses, as well as reducing our current payables in line with our cash resources.  Subsequent to the reporting period, we attracted additional capital, some of which was through an innovative structure.  We have now received an extension to our Kun-Manie exploration licence to the end of 2012 and remain confident that the mining licence will be awarded in due course. 

 

Success in the Field

 

Whilst the mining licence application works its way through the Russian regulators prior to approval, we have undertaken a limited field campaign at Kun-Manie.  We planned this work carefully over many months.  We were able to finance the programme by the receipt of a significant VAT refund and by utilizing our existing inventory of fuel remaining on site.  The work has focused on the areas between the drilled deposits where successful results could increase the stated resource and reserve.  We have engaged in reconnaissance and road building on site to prepare for more active drilling in 2011 and 2012. 

 

Results from two previously drilled - but unsampled - wild cat drill holes confirmed a new drill target.  This target lies along strike between two previously drilled deposits known as Maly Krumkon and Vodorazdelny.   Drilling and assays identified potentially economic levels of nickel and copper mineralisation within a 15 to 30 metre thick layer of websterite rock.  The configuration of the intersected mineralisation suggests similar orientations, styles of mineralisation and thicknesses as those encountered in the proposed Maly Krumkon pit located to the west. Successful step out drilling along strike and down dip within the immediate area could result in an increase in both resources and near surface open pit recoverable reserves.

 

We have also exposed additional nickel sulphide mineralisation on a road cut immediately to the south of the Ikenskoe deposit, which is the largest of the three drilled deposits within the Kun Manie exploration licence identified to date.  The nickel and copper mineralisation is expected to continue to the east and south of the drilled area of the deposit. During construction of the access road, the projected mineralised zone was exposed and visual inspection indicates the newly exposed outcrop contains abundant sulphides.   This find confirms our belief that Ikenskoe could be substantially larger than presently reported, and our initial expectations are that the mineralisation extends both to the east and south of the known deposits.  We look forward to announcing the laboratory results when they are available.

 

Financial Highlights

 

Our loss for the period was US$1.4million, up from US$1.1 million in the first half of 2009.  Whilst we reduced our administrative expenses through salary reductions, we had larger impairment charges than incurred in the previous period.  The impairment charges are one-time in nature.  Our cash position at 30 June was US$249,000 versus US$997,000 at year end 2009. This reflects our seasonal cash flows and the fact that we completed a financing after the reporting date of 30 June. Our outstanding payables at 30 June were $312,000 versus $290,000 at year end 2009.  Of these amounts, US$210,000 was owed to directors and key management personnel.  This figure has been further reduced since the reporting date by Robin Young taking shares in lieu of US$76,000 of back pay.  This transaction will significantly reduce the amount of Accounts Payable for the full year.

 

The Directors continue to seek further funds to finance the exploration work programme and satisfy general corporate needs.  Whilst several parties have expressed an interest in providing additional finance for the Group, there are currently no binding agreements in place.

 

These conditions indicate the existence of a material uncertainty which may cast significant doubt over the group's ability to continue as a going concern. Based on the current progress of the negotiations with potential providers of finance and discussions with potential investors the Directors believe that the necessary funds to provide adequate financing for continued exploration work will be raised as required and accordingly they are confident that the Group will continue as a going concern and have prepared the financial statements on that basis.

 

 

Kustak and Grafton Provisions

 

These financial statements contain non-cash charges for two items we have carried within our financial statements. 

 

We acquired the Kustak licence in 2007 for 6.4 million Roubles (then, approximately US$250,000) and committed subsequent exploration resources totalling US$141,000 at current exchange rates.  We have closely examined the data we have collected on Kustak.  While we still believe the data supports our assertion that the area represents the potential for new nickel discoveries, it is not the best use of shareholder capital at this time.  Kustak is an early stage, green field area requiring an extensive funding to explore the project area due to significant exploration requirements remaining under the terms of the Kustak licence.  These include drilling which is expensive in the Russian far east. As we anticipate considerable future investment at Kun-Manie, which is much further advanced, the Company has opted to impair our capitalised expenditures and endeavour to either sell the Kustak licence or return it to the Russian government.  Given the uncertainty over the ability to realise any value in a sale, farm-out, or joint venture of Kustak, we have opted to take the conservative approach of recognising an impairment of US$321,000 representing a write down of our full investment in Kustak to date.

 

Also, on the eve of publishing these financial statements, we were offered a chance to sell our shares in Grafton Resources Limited. We acquired the shares via a share swap in June 2009 as part of a larger transaction that enabled a separate cash placement in a difficult environment.  The Directors' understanding at the time was that Grafton would become listed and traded as an investment fund.  While Grafton was listed on The Irish stock exchange within six weeks of the transaction, its shares have never traded.  At year end, the Directors made reasonable enquiries and assessed the value of the holding by reference to other comparable, publicly traded funds in European and North American markets. The Directors have decided that in the current environment, adding cash to the balance sheet outweighs continuing to wait for Grafton shares to have a quoted value nearer to their carrying value.  We are therefore taking a non-cash charge of US$331,000 to reflect the sale value we anticipate realising versus our carrying value of US$691,000 at year end. 

 

Board changes

 

We are pleased to welcome Brian Savage to the Board as a non-executive director as of 23 July 2010.  Brian is a founder of Frontier Mining Ltd and served as a Director since that company's formation in 1998, acting as Chief Executive Officer between 2001 and 2009. Brian has 30 years' experience in all aspects of the mining industry, having held senior positions in the Bank of New York, Sharps Pixley and the Bank of Montreal. He also has extensive experience in the former Soviet Union.  He has a BSc in Mining Engineering and an MSc in Mineral Economics from the Colorado School of Mines.

 

As mentioned in the annual report produced in June, David Wood resigned as a director on April 22 2010 and continued to serve as a consultant to Amur Minerals during the remainder of the period.  He has continued on a full time basis until the end of September and thereafter will provide consulting support on an as required basis.  In addition, Willie McLucas and Eric McAuslan resigned with effect from 22 July 2010.  We thank each of these gentlemen for their contribution to the development of the company and wish them success in their future endeavours. 

 

Outlook

We are excited to have the opportunity to meet the challenges that lie ahead.  We will continue to work with the Russian government to secure the mining licence for Kun-Manie and obtain waivers from the appropriate Russian agencies which allow for less restrictive ownership constraints.

 

During the remaining months of this year and early 2011, we will study the results we have collected during our field season.  We will continue our internal efforts to update the pre-feasibility report originally prepared in 2007.  Potential improvements to the study include an improved tax structure, new infill drilling, resource and reserve updates, optimisation of production, improved metallurgical recoveries and the alternative of producing a final metal product for sale in place of concentrate sales.

 

We will continue to seek financing to grow and advance Kun Manie and we will be ever watchful of opportunities for partnerships.  In all, we remain positive about our prospects and diligent in making sure those prospects come to fruition. 

 

Robert W. Schafer

Chairman

29 September 2010

 


 

AMUR MINERALS CORPORATION AND ITS SUBSIDIARIES
consolidated STATEMENT OF FINANCIAL POSITION
AS AT 30 June 2010

(Amounts in thousands of US Dollars)

 

 

 

 

Unaudited

30 June 2010


 

Unaudited

30 June 2009


 

Audited

31 December 2009













NON-CURRENT ASSETS




Capitalised exploration costs

13,194

12,951

13,525

Property, plant and equipment

514

853

629

VAT Receivable

330

-

341





Total non-current assets

14,038

13,804

14,495





CURRENT ASSETS




    Cash and cash equivalents

249

294

997

    Available for Sale Investments

360

927

691

    Prepayments and other receivables

110

565

125

    VAT Receivable

-

-

253

    Inventories

218

233

247

Total current assets

937


2,019


2,313





Total assets

14,975


15,823


16,808





CURRENT LIABILITIES




Trade and other payables

313

757

290







Total current liabilities

313


757


290





SHAREHOLDERS' EQUITY




Share capital

22,990

20,999

22,990

Share premium

7,786

7,686

7,620

Share options reserve

1,224

1,390

1,390

Shares to be issued

-

54

-

Retained deficit

(14,586)

(12,508)

(13,169)

Foreign exchange translation reserve

(2,752)


(2,791)


(2,313)

Available-for-Sale reserve

-

236

-

Total shareholders' equity

14,662


15,066


16,518







Total liabilities and shareholders' equity

14,975


15,823


16,808







 

 



 

AMUR MINERALS CORPORATION AND ITS SUBSIDIARIES
CONSOLIDATED INCOME STATEMENT
FOR THE six months ENDED 30 June 2010

(Amounts in thousands of US Dollars)

 

 


Unaudited

6 Months ended

30 June 2010


Unaudited

6 Months ended

30 June 2009


Audited

Year ended

31 December 2009













(765)


(688)


(1,397)

Impairment of capitalised exploration costs

(321)


(233)


(240)

Impairment of assets held for sale

(331)


-


-







Total administrative expenses

(1,417)


(921)


(1,637)







Loss from operations

(1,417)


(921)


(1,637)







Finance expense

-


(179)


(179)

Gain on sale of property, plant & equipment

-


-


55






Loss before tax

(1,417)


(1,100)


(1,761)






Taxation                                                            

-


-


-







Loss for the period attributable to equity shareholders of the parent

(1,417)


(1,100)


(1,761)













Loss per share: basic & diluted

US$ (0.01)


US$ (0.01)


US$ (0.01)

 



 

AMUR MINERALS CORPORATION AND ITS SUBSIDIARIES
CONSOLIDATED STATEMENT of COMPREHENSIVE INCOME
FOR THE six months ENDED 30 June 2010

(Amounts in thousands of US Dollars)

 

 


Unaudited

6 Months ended

30 June 2010


Unaudited

6 Months ended

30 June 2009


Audited

Year ended

31 December 2009













Loss for the period

(1,417)


(1,100)


(1,761)







Other comprehensive income:






Exchange differences on translating foreign operations

(439)


(885)


(407)

Valuation changes on Available-for-sale financial assets

-


236


-






Other comprehensive income for the period, net of tax

(439)


(649)


(407)












Total comprehensive income for the period attributable to equity shareholders of the parent

(1,856)


(1,749)


(2,168)







 



 

AMUR MINERALS CORPORATION  AND ITS SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE SIX MONTHS ENDED 30 JUNE 2010

(Amounts in thousands of US Dollars)

 


Unaudited

6 Months ended

30 June 2010


Unaudited

6 Months ended

30 June 2009


Year ended

31 December 2009

Cash flow from operating activities:






Payments to suppliers and employees

(683)


(366)


(1,366)

Receipts of VAT refunds

268


-


-







Net cash used in operating activities

(415)


(366)


(1,366)













Cash flow from investing activities:






Payment for capitalised exploration expenditure

(273)


(192)


(532)

Payment to acquire financial assets

-


-


(10)

Sale of property, plant and equipment

-


10


214







Net cash used in investing activities

(273)


(182)


(328)













Cash flow from financing activities:






Proceeds from issue of equity shares

-


473


2,260







Net cash from financing activities

-


473


2,260













Net change in cash and cash equivalents

(688)


(75)


566







Cash and cash equivalents brought forward

997


442


442

Foreign exchange effects

(60)


(73)


(11)







Cash and cash equivalents carried forward

249


294


997

 



 

AMUR MINERALS CORPORATION AND ITS SUBSIDIARIES
CONSOLIDATED Statement of CHANGES IN EQUITY
FOR THE SIX MONTHS ENDED 30 JUNE 2010

(Amounts in thousands of US Dollars)

 

 

 

 


Share capital

Share

premium

 

Retained deficit

 

Share

options reserve

 

 

Shares to be issued

Foreign exchange translation reserve

 

Available for sale reserve

 

 

Total

Balance at

31 December 2008

19,719

7,707

(11,408)

1,390

-

(1,906)

-

15,502










Total comprehensive income for the period

-

-

(1,100)

-

-

(885)

236

(1,749)










Shares issued

1,280

-

-

-

-

-

-

1,280










Costs associated with issue of share capital

-

(21)

-

-

-

-

-

(21)










Shares to be issued

-

-

-

-

54

-

-

54

Balance at

30 June 2009

20,999

7,686

(12,508)

1,390

54

(2,791)

236

15,066

Total comprehensive income for the period

-

-

(661)

-

-

478

(236)

(419)










Shares issued

1,991

-

-

-

(54)

-

-

1,937










Costs associated with issue of share capital

-

(66)

-

-

-

-

-

(66)

Balance at 31 December 2009

22,990

7,620

(13,169)

1,390

-

(2,313)

-

16,518

Total comprehensive income for the period

-

-

(1,417)

-

-

(439)

-

(1,856)










Lapsed share options

-

166


(166)

-

-

-

-










Balance at

30 June 2010

22,990

7,786

(14,586)

1,224

-

(2,752)

-

14,662

 



AMUR MINERALS CORPORATION AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL StatementS
FOR THE SIX MONTHS ENDED 30 JUNE 2010

(Amounts in '000s US Dollars)

 

1.         BASIS OF PREPARATION

 

The financial information set out in this report is based on the consolidated financial statements of Amur Minerals Corporation and its subsidiary companies (together referred to as the 'Group').  The accounts of the Group of the 6 months ended 30 June 2010 were approved and authorised for issue by the Board on 29 September 2010.  The interim results have not been audited, but were the subject of an independent review carried out by the Company's auditors, BDO LLP. Such unaudited results do not constitute statutory accounts of the Company or the Group.  These accounts have 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 2010.  The auditor's report on the group accounts to 31 December 2009 was unqualified, but did include an emphasis of matter on going concern.  The comparative information for the full year ended 31 December 2009 is not the Group's full annual accounts for that period but has been derived from the annual financial statements for that period. 

 

The consolidated financial statements incorporate the results of Amur Minerals Corporation and its subsidiaries undertakings as at 30 June 2010, using the acquisition method of accounting as appropriate.  The corresponding amounts are for the year ended 31 December 2009 and for the 6 month period ended 30 June 2009.

 

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

 

 

2.         GOING CONCERN

 

The Group operates as a natural resources exploration and development company.  To date, the Group has not earned significant revenues and is considered to be in the exploration and development stage.  The Directors anticipate that a production licence will eventually be granted for the Kun-Manie deposit, but cannot estimate a date for commercial production to commence.  The Group is currently dependent upon its existing financial resources which comprises cash and available-for-sale investments, 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. A minimum work program has been agreed as part of the Kun-Manie licence extension and failure to meet these exploration and evaluation commitments could put the related licence interests at risk of forfeiture.

 

The Directors continue to seek further funds to finance the exploration work programme and satisfy general corporate needs.  Whilst several parties have expressed an interest in providing additional finance for the Group, there are currently no binding agreements in place.

 

These conditions indicate the existence of a material uncertainty which may cast significant doubt over the Group's ability to continue as a going concern. Based on the current progress of the negotiations with potential providers of finance and discussions with potential investors the Directors believe that, in addition to the expected imminent cash receipts from the sale of shares of Grafton Resources Investment Limited, the necessary additional funds to provide adequate financing for continued exploration work will be raised as required and accordingly they are confident that the Group will continue as a going concern and have prepared the financial statements on that basis.

 

The condensed consolidated financial statements do not include the adjustments that would result if the Group was not able to continue as a going concern.

 

3.         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 2010


Unaudited

6 Months ended

30 June 2009


Audited

Year ended

31 December 2009







Net loss for the period

(1,417)


(1,100)


(1,761)

Average number of shares for

the period

171,019,582


126,902,833


145,825,418

Basic and diluted loss per

Share

US$ (0.01)


US$ (0.01)


US$ (0.01)

 

The Group had no potentially dilutive 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 12,868,379 (2009: 17,291,456) potential ordinary shares have therefore been excluded from the above calculations.

 

4.         Available for sale investment

 

On 1 June 2009, the Company entered into a share exchange transaction with Grafton Resource Investments Ltd ("Grafton").  The shares and acquisition costs of US$63,000 were capitalised as Available-for-sale investments in the statement of financial position at 31 December 2009 totalling US$691,000.  Subsequent to the reporting date, the Company accepted an offer to sell its shares in Grafton for US$363,000.  These financial statements include an impairment of US$331,000 (1H 2009: nil) to reduce the carrying value to the sales value less a provision for costs associated with the transaction of US$4,000.

 

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 2010 will be available on the company's website www.amurminerals.com.

 


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