Final Results
Falkland Gold and Minerals Ltd
05 December 2006
Falkland Gold and Minerals Limited
AUDITED PRELIMINARY RESULTS
for the year ended 30 September 2006
Falkland Gold and Minerals Limited an AIM Company exploring for gold in the
Falkland Islands announces its preliminary results for the year ended 30
September 2006.
Highlights
• Exploration work now focusing on three areas - Target 11 (Glorious
Hill), Target 25 and Black Shale Project;
• Project review with British Geological Survey confirms Black Shale
mineral potential;
• Second major ground magnetic survey completed - December 2005;
• July to September - drilling continued through the winter with 11,445
metres drilled in the year to Sept 2006;
• Sample Preparation Laboratory upgrade finished in Q2 2006 with new
drying oven, crusher and pulveriser;
• Cash balances just under £5.8m as at 30 Sept 2006;
Enquiries:
Falkland Gold & Minerals Limited
Richard Linnell (Chairman) +27 82 440 6710
Chairman's Statement
This year has seen solid progress from the team in the Falkland Islands which
has continued to conduct a professional exploration programme through the use of
geochemical, geophysical and drilling techniques.
The ground geochemistry work has continued with the use of a probe which
penetrates the peat to take a sample of the soil and clay immediately below. The
results of this help refine target definition (improving our ability to drill
anomalies accurately).
As at the end of October 2006, twelve of the original twenty three targets had
been drill tested and a total of 18,034 metres drilled with 7,856 samples sent
for analysis.
As reported last year, the drilling has given our team a much better
appreciation of the geology. As a result, three new targets T22, T23, and T24
were generated to the south of Area 6. The work completed on T22, T23 and T24
involved ground magnetic surveys that provided definition of the intersection of
the linear dykes with the carbonaceous shale that resulted in the drilling of 5
holes in T22, 6 holes in T23 and 4 holes in T24.
While it is not possible to claim that we have discovered any economic
quantities of gold we have made good progress in focusing our attention on three
targets. These are Glorious Hill (Target 11), Target 25 (a new target located
within Area 6 north east of Goose Green) and the Black Shale Project which is
continuing to develop and here our focus is to confirm the potential of this
prospect.
Drilling on these targets commenced in November 2006.
The drilling programme, sub peat soil sampling, geochemical and a variety of
geophysical programmes have isolated encouraging anomalies that, coupled with
the distribution of gold grains found during stream sediment sampling, give us
cause to believe we are getting much closer to establishing the source of some
of the gold.
As was referred to in last year's Annual Report, the new Mining Legislation was
promulgated on 27 May 2005 and, as a result of our admission to AIM, our licence
was extended to 31 July 2009. We are required to relinquish 50 per cent of the
licence area by 16 January 2007 and the Board met in the Falklands in November
to discuss this and our plan has been submitted. Based on the work to date, we
believe the ground that we are releasing is sterile and that there is no purpose
in reapplying for it.
Under the new legislation, the Company is also applying for three Exploration
Licences that will cover the three areas the work programme is now focused on
while retaining our Prospecting Licence over the remaining land. The Exploration
Licences will provide the Company with new tenure that can be converted to
mining licences in the future if required.
We continue to pay close attention to the environment in which we operate and
careful rehabilitation takes place at all our work sites. The health and safety
of our team remains a high priority and our performance in the past year has
been good.
Relationships, both with the local administration and with the local community,
remain excellent and, as our Operations Manager reports, the new Governor has
already been apprised of the exploration programme.
Financially, your Company remains in a healthy position with good financial
controls. The average monthly cash burn is £155,000 and cash balances at the end
of the year were just under £5.8 million.
During the year, funds associated with RAB Capital plc acquired the entire
shareholdings of Falkland Islands Mineral Development Limited and South Atlantic
Resources Limited raising their stake to 62%. This matter was reported in our
press release of 16 December 2005.
While the performance of the share price has reflected our inability to release
positive results, your Board's view is that the original premise for exploration
remains valid and that this coming year could not only delineate the sources of
the gold but also establish their potential viability.
I would like to thank my deputy Chairman, David Hudd for his support and work in
the audit committee and the rest of the directors Mark Fresson, Rob Weinberg and
Peter Bojtos.
Special thanks go to Derek Reeves who heads up the Falkland operations and has
maintained high levels of morale and performance during a long exploration
period.
Richard Linnell
Executive Chairman
OPERATING REVIEW
The exploration programme for the period 1 October 2005 to 30 September 2006 has
involved:
• drilling 64 holes across 11 of the identified targets (11,445 m);
• ground geophysical surveys;
• soil geochemical sampling;
• stream sediment geochemical sampling;
• gold particle sample collection from streams and characterisation
studies;
• British Geological Survey (BGS) data review; and
• shallow trenching at T11 and Area 6.
Drilling Programme
In total we have drill tested twelve of the original twenty three targets being
T1N, T2N, T2S, T5, T6, T7, T8W, T8E, T9N, T10, T12, and T15E. As a result of
this work, four further targets have been identified - T22, T23, T24 and T25
which have already been partially drilled. As a result of drilling targets T22
and T23 and the review conducted by the BGS, the prospectivity for a mineral
deposit hosted by an identified zone within a carbonaceous black shale
associated with a regional sedimentary unit has been highlighted. The Black
Shale Project activities have led to the selection of ten key prospective areas
which are being reviewed for further work in the forthcoming year.
By the end of October 2006, a cumulative total of 18,034 metres of predominantly
HQ core had been drilled and 7,856 samples had been sent for assaying.
Ground Magnetics and Geophysics
The groundwork programme has extended beyond that originally planned at the date
of the November 2004 prospectus. So far, outside contractors have been used to
conduct 2 major surveys. Between March and May 2005, a 1,500 line km survey was
performed across targets T2S, T2N, T8E, T9N, T9S-1 to 3, T10, T18 and T20. A
second, 1,676 line km survey was conducted in late 2005 across targets T1, T5,
T7, T8W, T12, T15, T23 and T24. These surveys have allowed the refinement of
prospective targets and developed our understanding of the underlying geology
and structures.
Further ground geophysics was planned over three areas with the methods to be
used being Electro-Magnetic ('EM'), Induced Polarisation ('IP') and gravity. The
surveys on Target 11 (Glorious Hill Prospect) and Target 25 were completed in
October 2006. The surveys identified new anomalies in the target areas and the
Company has commenced the methodical testing of these anomalies by drilling.
Sampling and Trenching
We have been acquiring geochemical data on the soil/clay horizon in four of six
planned areas being Target 11 ('Glorious Hill Prospect'), Target 9S, Area 6 and
the Warrah prospect. We are looking for a geochemical signature or 'halo' of
mineralised zones that are related to weathered mineral deposits. We have been
assaying for a range of minerals to identify concentration spikes of pathfinder
elements such as arsenic, mercury, silver, antimony, copper and lead.
This sampling method was successful in delineating a gold soil anomaly over
Target 11 that was confirmed by shallow trenching (nine trenches and over 2,400
trench samples taken). This has been followed up with the ground geophysical
surveys to delineate sub-surface targets that are currently being drill tested.
Regional stream sediment geochemical sampling from streams to the north, south
and west of the Target 11 area have identified several key areas that, on
current understanding, could represent an extension of a similar zone to that
identified at Target 11. Work has been scheduled to follow up on these new
areas.
Five parcels of particulate gold have been collected from the streams draining
from Target 25 and Target 11 and were delivered to the BGS for characterisation
study. A similar study was completed in the early stages of the Falkland Islands
exploration and this additional study has provided confirmation on the findings
of that earlier work. The studies have assisted in developing our understanding
of the source of the gold. Both pieces of work concluded that the gold particles
are derived from an epithermal source and that in most cases the transport
distance is minimal indicating the source should be nearby.
Review of Prospects
The Board visited the Falkland Islands operations in November 2006 to review the
relinquishment plan and the exploration prospects including viewing the three
key areas now being focused on - Target 25, Target 11 and the Black Shale
Project. Those prospects are considered in more detail below.
Target 25
Target 25 is located at the base of Mt Usborne within the regional prospect
known as Area 6 and was originally identified from ground magnetic data acquired
in November 2005. This ground magnetic data identified an area of structural
interest in association with a displaced north-south dolerite dyke. Target 25
also 'straddles' the upper reaches of two major streams from which gold
particles have been recovered. These particles have been characterised by the
British Geological Survey as having a likely epithermal source. The current area
under investigation is some 2.5 square kilometres in size.
The recent ground geophysical survey was commissioned to provide additional data
of the structure and geology beneath the peat covered terrain that will allow
further drilling to be planned to identify the source of the gold in this
prospect.
The geophysical survey identified several conductors three of which exhibit
strong readings compared to the surrounding tillite rock unit. These conductors
have been classified as T25 Central, T25 North and T25 East and coincide with
geophysical gravity lows. The Company is now drilling to determine the source of
the conductors. This should ascertain if the new targets are the source of the
gold from this area or provide further geological data to assist in the
delineation of the gold source. An assessment of areas of low conductivity is
also in progress.
The current drilling schedule allows for the drilling of several preliminary
holes in each of the three conductors. Once drilled the Company will then assess
the geology in the recovered core and be able to plan the follow-up drilling
according to the prospectivity of each conductor.
Target 11 - Glorious Hill Prospect
As reported in the last operational update a gold in soils anomaly over Target
11 was to be followed up with ground geophysical surveys to delineate a
sub-surface target that could be tested with the drill. The geophysical survey
was completed in October 2006 with the electromagnetic (EM) survey proving to be
the most effective in acquiring quality data due to the survey conditions and
ground conditions.
The Company is currently focusing on an area of some 20 square kilometres within
which gold in soils anomalies exist. It is within this area that the conductors
have been identified from the EM survey.
Five key conductors numbered from 1 to 5 in priority order have been segregated
from the survey. A drilling programme has been designed to commence testing of
the anomalies, beginning with Anomaly 1. Drilling commenced in mid November with
results expected to be received in a progressive manner. The Company will
re-design the drilling programme as and when required in order to continue the
work to delineate the source of the gold.
Work is continuing to compare the latest geophysical data to the existing
database in order to evaluate the extension of the gold anomalies to the north
and south of the current defined area.
Black Shale Project
The Black Shale Project covers an area of some 16 square kilometres lying in a
low valley to the South of the Area 6 region. The current database of geological
findings and assay results have allowed the generation of three conceptual
styled models of mineralisation:
• 'saddle-reef' like structures in the vicinity of the identified dolerite
dykes and the major Goose Green Lineament that extends to and near Target
11;
• mesothermal quartz veins - on contact with dykes and on contacts with the
tillite and the shale;
• black-shale hosted nickel-zinc-molybdenum-platinum group elements
The work to date, including the drilling of 19 holes, has confirmed zones of
anomalous mineral chemistry that could be expected to exist in the vicinity of
the conceptual models. The anomalous mineralisation is associated with a unique
zone varying from some 40 metres to 100 metres in width within the black shale
(250 metres to some 380 metres thick). This zone is characterised by an
increased concentration of sulphides chiefly pyrite, high levels of carbonaceous
material, quartz and carbonate veining as well as folding and brecciation. The
zone has been termed the Carbonaceous Shale zone (CSH) and it is this zone that
will be the focus of the Company's work in order to explore for and delineate an
economic mineral concentration.
The exploration focus will be where dykes and large fractures traverse the CSH.
They act as conduits for fluids that can precipitate minerals immediately
adjacent to the dykes and fractures within the CSH. Ten such areas have been
selected for exploration involving sub-peat soil sampling on closely spaced
sample grids as well as possible electromagnetic surveys.
Health and Safety
The Company has maintained a high level of health and safety compliance in the
period. Management continues to refine and amend policies as and when needed in
order to maintain the required standards of a company in the exploration
industry. It is pleasing to report that only 8 minor incidents have been
documented since the start of operations with no lost time injuries to date.
Government Relations
The Company continues to develop the excellent working relationship with the
Falkland Islands Government by inviting government officials to inspect the
operations on a regular basis.
The newly appointed Governor of the Falkland Islands, HE Governor Alan Huckle,
has been briefed on the operations and an invitation to inspect the exploration
sites during the summer period has also been extended.
Outline of Work in progress
The exploration work underway and planned for the coming months comprises:
• Drilling the newly identified geophysical anomalies at Target 25 and
Target 11;
• Collecting soil samples to confirm the extension of the gold anomaly
identified at Target 11;
• Collecting soil samples from West Falkland targets - Target 18;
• Assessment and review of the data associated with the Black Shale
Project to confirm the potential of this unit to host a mineral deposit. The
review will also involve the collection of sub-peat soil samples from areas of
structural interest as well as conducting geophysical tests over a small
selected area to gauge the effectiveness of the geophysical techniques.
Derek Reeves
Operations Manager
Profit and loss account
for the year ended 30 September 2006
Note Year ended Year ended
30.9.06 30.9.05
£ £
Administrative expenses (1,524,800) (1,108,203)
Operating loss 2 (1,524,800) (1,108,203)
Interest receivable and similar income 262,289 324,843
Interest payable and similar charges - (2,133)
Other Income 22,820 -
Loss on ordinary activities before (1,239,691) (785,493)
taxation
Tax on loss on ordinary activities 4 (127,103) -
Loss for the financial year after taxation (1,366,794) (785,493)
Loss for the year (1,366,794) (785,493)
Year ended Year ended
30.9.06 30.9.05
Loss per ordinary share basic and diluted (1.75) p (1.09)p
Continuing operations
None of the Company's activities were acquired or discontinued during the
current year or previous period.
Total recognised gains and losses
The Company has no recognised gains or losses other than the losses for the
current year or previous period.
Balance sheet
at 30 September 2006
2006 2006 2005 2005
£ £ £ £
Fixed assets
Intangible assets 1,834,282 1,158,218
Tangible assets 442,132 537,938
2,276,414 1,696,156
Current assets
Debtors 35,771 61,001
Cash at bank and in hand 5,782,956 7,659,993
5,818,727 7,720,994
Creditors: amounts falling due within
one year (136,427) (91,642)
Net current assets 5,682,300 7,629,352
Net assets 7,958,714 9,325,508
Capital and reserves
Called up share capital 1,565 1,565
Share premium 10,209,182 10,209,182
Profit and loss account (2,252,033) (885,239)
Shareholders' equity funds 7,958,714 9,325,508
Cash flow statement
for the year ended 30 September 2006
Year ended Year ended
30.9.06 30.9.05
£ £
Net cash outflow from operating (888,099) (869,413)
activities
Returns on investments and servicing of
finance
Interest received 262,289 324,843
Other Income 22,820 -
Capital expenditure
Purchase of intangible fixed assets (963,699) (534,127)
Purchase of tangible fixed assets (183,245) (686,886)
Cash outflow before financing (1,749,934) (1,765,583)
Financing
Issue of Ordinary shares - 10,362,925
Share issue costs - (1,113,482)
Taxation (127,103) -
(Decrease)/Increase in cash in the period (1,877,037) 7,483,860
Reconciliation of operating loss to net cash outflow from operating activities
Year ended Year ended
30.9.06 30.9.05
£ £
Operating loss (1,524,800) (1,108,203)
Depreciation and Amortisation 566,686 225,778
Decrease/(increase) in debtors 25,230 (55,586)
Increase in creditors 44,785 68,598
Net cash outflow from operating (888,099) (869,413)
activities
Reconciliation of movements in shareholders' equity funds
for the year ended 30 September 2006
Year ended Year ended
30.9.06 30.9.05
£ £
Loss for the financial year (1,366,794) (785,493)
New share capital subscribed (net of issue costs) - 9,300,693
Net addition to shareholders' equity funds (1,366,794) 8,515,200
Opening shareholders' equity funds 9,325,508 810,308
Closing shareholders' equity funds 7,958,714 9,325,508
Notes to the Financial Statements
for the year ended 30 September 2006
1. Basis for financial information
The financial information has been prepared in accordance with UK accounting
standards as adopted by the Company, using the accounting policies set out in
the Annual Report for the year ended 30 September 2006.
The financial information set out above does not constitute the Company's
statutory accounts for the year ended 30 September 2006 or 2005 but is derived
from those accounts. Statutory accounts for 2005 have been delivered to the
Registrar of Companies, and those for 2006 will be delivered following the
Company's Annual General Meeting. The auditors have reported on these accounts;
their reports were unqualified and did not contain statements under the
Companies Act 1948, as applied in the Falkland Islands.
2. Loss per share
The basic and diluted loss per ordinary share is based on losses of £1,366,794
(12 months to 30 September 2005: £785,493) and the weighted average number of
ordinary shares outstanding of 78,250,000 (30 September 2005: 72,227,260).
There is no difference between the diluted loss per share and the basic loss per
share presented as the Company reported a loss for the period, in accordance
with Financial Reporting Standard Number 22 (FRS22), the share options in issue
are not considered dilutive.
3. Dividends
The Directors do not recommend payment of a dividend (2005: £nil).
4 Taxation
Analysis of the tax charge
Year ended Year ended
30.9.06 30.9.05
£ £
Current tax:
UK corporation tax: -
- current 49,761 -
- prior year 77,342 -
Tax on loss on ordinary activities 127,103 -
Factors that may affect future tax charges
The Company has accumulated pre-trading expenditure carried forward amounting to
approximately £1.8m (2005: £0.9m). This may affect future tax charges should the
Company produce taxable trading profits in future periods.
Copies of the Annual Report and Accounts will be posted to all shareholders.
Further copies will be available from the Company's head office at 5
Charterhouse Square, London, EC1M 6PX, United Kingdom. Telephone +44 (0) 20 7253
7670. The Report will also be published on the Corporate website at
www.fgml.co.uk
This information is provided by RNS
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Friday, 17th May 2024
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