Interim Results

RNS Number : 5261E

Eurasia Mining PLC

29 September 2008

 



Eurasia Mining Plc.

('Eurasia' or the 'Company')

Interim report for the six months ended 30 June 2008

Chairman's Statement

During the first six months of 2008, the Company has continued to make steady progress in its exploration programmes in Kola and in the Urals. We continued drilling on two of the projects in Kola and on our alluvial platinum project at West Kytlim in the Urals. Both projects form part of joint ventures held with Anglo Platinum Limited ('Anglo').

In Kola at Monchetundra, two open pittable resources had been outlined in 2007 on which more detailed drilling is underway. This drilling is targeted at defining a resource that could be the focus for early mining. Other targets in the licence area remain to be tested, where narrow high grade results were obtained in 2006. This programme will be completed shortly and analytical results are awaited.  

At Volchetundra, two areas of PGM mineralization, discovered in 2007 were followed up, coupled with an assessment of the potential along the entire 40km long intrusion hosting the mineralization. Drill results have continued to intersect low grade PGM values but have also identified a new zone of interest related to a new geological target for which we have received preliminary results. Again low grade PGMs have been intersected at this new zone. The wide high grade results obtained in 2007 at Olche and Yukspor have not been repeated but the recent geophysical results suggest that these zones are related to a cross-cutting trend which has not, as yet been tested or defined.

The Volchetundra licence has been successfully extended for a further three years. The third licence at West Imandra will be relinquished as only low grade PGM values were obtained from drilling in this area.

As the drill programme nears completion for 2008, a key change will take place in the joint venture with Anglo. Based on current planned expenditure, it is expected that Anglo will have fully expended the $10 million to complete the earn-in of a 40% interest in the Kola projects during the third quarter but after completion of drilling. At this point, Anglo has the right to purchase a further 20% interest in the Kola projects, valid for a period of 60 days. In the event that Eurasia retains its 60% interest, the Company has sufficient working capital to meet its commitments under the 2008 budget.

In the Urals at West Kytlim, Eurasia has continued drilling on several new areas with potential to host alluvial platinum. To date this work has proved successful. In parallel, resource drilling in the Bolshaya Sosvnovka area was completed and a Russian feasibility study has been submitted and approved by the authorities. We continue to advance the permitting process so mining may commence in 2009. However recent changes to the mining law have introduced new procedures, some of which have not yet been formalised into structured regulatory steps. We are hopeful that this process will be clarified in November and that further delays to this permitting process can be avoided.

Anglo is earning a 50% interest in the West Kytlim joint venture by funding work up to the point of the completion of a bankable feasibility study. It is expected that this should coincide with any award of mining permits and the commencement of mining. 

In summary, your Company has advanced West Kytlim, completed a first stage resource drilling programme at Monchetundra and continued exploration work at Volchetundra. 

CORPORATE DEVELOPMENTS 

For the six months to the end of the June 2008 the Company reduced its loss by £170,000 to £325,000 compared to £495,000 for the same period last year. This was largely due to a reduction in administrative costs which has been brought about by costs savings across the board.

In May the Company announced an agreement that has secured a new partner to invest in its platinum group mining projects in Russia. As I stated at the time, your board believe we have positioned the Company to advance our projects to development and production without recourse to shareholders. The new partner, Deloan Investments Limited ('Deloan'), has agreed to invest a minimum of £1 million through the issue of a series of convertible loan notes and warrants, Agreed at a strike price of 5p per share, the arrangement means that following conversion of the loan, and assuming the exercise of all the warrants, Eurasia will have raised a total of £3 million through the issue of ordinary shares to Deloan, which would then hold 60 million ordinary shares in the Company, representing 29.87% of the enlarged share capital. In the meantime tranches of £250,000 can be drawn down quarterly until the conversion option is exercised. We were also pleased to welcome Dmitry Suschov to the board, who brings Russian corporate finance expertise to the Company as we advance the Company's business from exploration to mining. 

Dr. Michael Martineau

Chairman

26 September 2008 

For more information please contact:

Eurasia Mining

Christian Schaffalitzky / Michael de Villiers	Tel: [phone]
David Youngman, WH Ireland Limited	Tel: [phone]

Condensed consolidated interim income statement 

		6 months to 30 June 2008 (unaudited)	6 months to 30 June 2007 (unaudited)
		£	£
Administrative costs		(281,743)	(438,878)
Result from equity accounted investees		(19,532)	(6,339)
Finance income		9,550	14,931
Finance costs		(61,564)	(38,683)
Other financial results		28,585	(25,860)
Loss before tax		(324,704)	(494,829)
Income tax expense		-	-
Loss for the period		(324,704)	(494,829)
Attributable to:
Equity holders of the parent		(324,950)	(486,058)
Minority interest		246	(8,771)
Loss for the period		(324,704)	(494,829)
Loss per share:
Basic loss (pence per share)		(0.23)	(0.40)

Condensed consolidated balance sheet

		30 June 2008 (unaudited)	31 December 2007 (audited)	30 June 2007 (unaudited) restated
		£	£	£
ASSETS
Non-current assets
Property, plant and equipment		28,711	28,128	33,082
Intangible assets		888,681	863,348	847,702
Investments in equity accounted investees		1,326,732	1,257,297	1,208,326
Assets available for sale		125	125	127
Total non-current assets		2,244,249	2,148,898	2,089,237
Current assets
Inventories		2,027	-
Trade and other receivables		40,472	193,426	250,189
Cash and bank balances		538,428	106,729	1,127,164
Total current assets		580,927	300,155	1,377,353
Total assets		2,825,176	2,449,053	3,466,590
EQUITY
Issued capital		7,053,819	7,053,819	7,042,805
Share premium		7,069,716	7,020,549	7,020,549
Reserves		4,083,818	3,696,209	3,659,039
Accumulated losses		(16,346,376)	(16,021,426)	(15,733,643)
Equity attributable to equity holders  of the parent		1,860,977	1,749,151	1,988,750
Minority interest		(59,239)	(59,401)	(62,379)
Total equity		1,801,746	1,689,750	1,926,371
LIABILITIES
Non-current liabilities
Long-term borrowings		272,511	80,341	80,077
Total non-current liabilities		272,511	80,341	80,077
Current liabilities
Trade and other payables		541,350	210,358	1,007,642
Short-term borrowings		209,569	468,604	452,500
Total current liabilities		750,919	678,962	1,460,142
Total liabilities		1,023,430	759,303	1,540,219
Total equity and liability		2,825,176	2,449,053	3,466,590

Condensed consolidated interim statement of changes in equity

		Share capital	Share premium	Capital redemption and other reserves	Foreign currency translation reserve	Accumulated losses	Attributable to equity holders of the parent	Minority interest	Total
		£	£	£	£	£	£	£	£
Balance at 31 December 2006		7,042,805	7,020,549	3,589,073	55,729	(15,247,585)	2,460,571	(54,934)	2,405,637
Changes in equity for the first half of 2007
Exchange differences on translation of  foreign operations		-	-	-	(838)	-	(838)	1,326	488
Loss for the period		-	-	-	-	(486,058)	(486,058)	(8,771)	(494,826)
Total recognised income and  expense for the period		-	-	-	(838)	(486,058)	(486,896)	(7,445)	(494,341)
Recognition of share-based payments		-	-	15,075	-	-	15,075	-	15,075
Balance at 30 June 2007		7,042,805	7,020,549	3,604,148	54,891	(15,733,643)	1,988,750	(62,379)	1,926,371

Condensed consolidated interim statement of changes in equity (continued)

	Note	Share capital	Share premium	Capital redemption and other reserves	Foreign currency translation reserve	Accumulated losses	Attributable to equity holders of the parent	Minority interest	Total
		£	£	£	£	£	£	£	£
Balance at 31 December 2007		7,053,819	7,020,549	3,624,721	71,488	(16,021,426)	1,749,151	(59,401)	1,689,750
Changes in equity for the first half of 2008
Exchange differences on translation of  foreign operations		-	-	-	87,407	-	87,407	(76)	87,331
Loss for the period		-	-	-	-	(324,950)	(324,950)	246	(324,704)
Total recognised income and  expense for the period		-	-	-	87,407	(324,950)	(237,543)	170	(237,373)
Un-used equity component of convertible loan notes		-	49,167	(49,167)	-	-	-	-	-
Recognition of equity component of convertible loan note		-	-	104,876	-	-	104,876	-	104,876
Recognition of warrants granted		-	-	244,493	-	-	244,493	-	244,493
Balance at 30 June 2008		7,053,819	7,069,716	3,924,923	158,895	(16,346,376)	1,860,977	(59,231)	1,801,746

Condensed consolidated interim cash flow statement

		6 months to 30 June 2008 (unaudited)	6 months to 30 June 2007 (unaudited)
		£	£
Cash flows from operating activities
Loss for the period		(324,704)	(494,829)
Adjustments for:
Depreciation of non-current assets		1,484	1,353
Gain on disposal of investments		(26,427)	-
Share of loss of joint venture		18,278	4,054
Share of loss of associates		1,254	2,285
Net foreign exchange loss		(2,158)	25,860
Investment income		(9,550)	(14,931)
Finance costs		61,564	38,683
Share based payments		-	15,075
Increase in inventories		(2,027)	-
Decrease/(increase) in trade and other receivables		87,003	(32,504)
Increase in trade payables		329,736	471,991
Cash inflow from operations		134,453	17,037
Interest paid		(22,408)	(13,751)
Net cash from operating activities		112,045	3,286
Cash flows from investing activities
Proceeds from sale of investment securities		92,379	-
Purchase of property, plant and equipment		(1,199)	(2,148)
Payments for intangible assets		(24,338)	(7,307)
Interest received		9,550	14,931
Net cash generated in investing activities		76,392	5,476
Cash flows from financing activities
Net proceeds from issue of convertible loan notes		243,250	-
Net cash proceeds from financing activities		243,250	-
Effects of exchange rate changes on the balance of cash held in foreign currencies		12	(12,579)
Net increase/(decrease) in cash and cash equivalents		431,699	(3,817)
Cash and cash equivalents at beginning of period		106,729	1,130,981
Cash and cash equivalents at end of period		538,428	1,127,164

Notes to the condensed consolidated financial statements

1. General information

Eurasia Mining Plc (the 'Company') is a public limited company incorporated and domiciled in Great Britain with its registered office and principal place of business at Suite 139, Grosvenor Gardens House, 35-37 Grosvenor Gardens, London SW1W 0BS. The Company's shares are listed on the Alternative Investment Market of the London Stock Exchange. The principal activities of the Company and its subsidiaries (the 'Group') are related to the exploration for and development of platinum group metals, gold and other minerals in Russia.

Eurasia Mining Plc's condensed consolidated interim financial statements are presented in Pounds Sterling (£), which is also the functional currency of the parent company.

The financial information set out in this condensed consolidated interim financial statements does not constitute statutory accounts as defined in Section 240 of the Companies Act 1985. The Group's statutory financial statements for the year ended 31 December 2007, prepared under International Financial Reporting Standards (the 'IFRS'), have been filed with the Registrar of Companies. The auditor's report on those financial statements was unqualified and did not contain a statement under Section 237(2) of the Companies Act 1985.

2. Basis of preparation

The Group prepares consolidated financial statements in accordance with the IFRS as adopted by the European Union (EU) and implemented in the UK. These condensed consolidated interim financial statements for the period ended 30 June 2008 have been prepared by applying the recognition and measurement provisions of IFRS and the accounting policies adopted in the audited accounts for the year ended 31 December 2007

These financial statements have been prepared under the historical cost convention, except for revaluation of certain properties and financial instruments.

The accounting policies have been applied consistently throughout the Group for the purposes of preparation of these condensed consolidated interim financial statements.

3. Additions and disposals of property, plant and equipment

	6 months to 30 June  2008	12 months to 31 December 2007	6 months to 30 June 2007 restated
	£	£	£
Net book value at the beginning of period	28,128	33,601	33,601
Additions	1,199	2,825	2,148
Disposals	-	(4,571)	(604)
Depreciation	(1,484)	(3,120)	(1,353)
Exchange differences	868	(607)	(710)
Net book value at the end of period	28,711	28,128	33,082

4. Additions and disposals of intangible assets

	6 months to 30 June  2008	12 months to 31 December 2007	6 months to 30 June 2007
	£	£	£
Net book value at the beginning of period	863,348	859,613	859,613
Additions	24,338	20,176	7,307
Exchange differences	995	(16,441)	(19,218)
Net book value at the end of period	888,681	863,348	847,702

5. Investments in equity accounted investees

Equity accounted investees represent (i) 50% interests in a Urals Alluvial Platinum Limited (the 'UAP') group and (ii) 20% direct interest in certain companies, which in turn 80% owned by the UAP. By arrangements between the parties the Company does not have the power to exert control in proportion to its total holding in those companies and therefore 20% interest is being accounted as interest in associates.

	6 months to 30 June  2008	12 months to 31 December 2007	6 months to 30 June 2007
	£	£	£
Investments in joint venture
Net book value 1 January	911,839	895,310	895,310
Invested in the period	-		-
Reimbursed by partner in joint venture
Group's share of losses in joint venture	(18,278)	(30,025)	(4,054)
Exchange differences	60,088	46,554	(5,389)
	953,649	911,839	885,867
Investments in associates
Net book value 1 January	345,458	324,744	324,744
Group's share of losses in associates	(1,254)	(2,869)	(2,285)
Exchange differences	28,879	23,583	-
	373,083	345,458	322,459
Total at the end of period	1,326,732	1,257,297	1,208,326

6. Reserves

	30 June  2008	31 December  2007	30 June 2007 restated
	£	£	£
Capital redemption reserve	3,539,906	3,539,906	3,539,906
Foreign currency translation reserve	158,895	71,488	54,891
Share-based payments reserve	280,141	35,648	15,075
Equity component of convertible loan notes	104,876	49,167	49,167
	4,083,818	3,696,209	3,659,039

The capital redemption reserve was created as result of share capital restructure in early years. There is no policy of regular transactions affecting capital redemption reserve.

The foreign currency translation reserve represents exchange differences relating to the translation from the functional currencies of the Group's foreign subsidiaries into GBP. 

Share-based payment reserve arises on (i) the grant of share options to employees under the employee share option plan and (ii) grant of warrants in lieu of payment for professional services and for subscription to convertible loan notes.

The equity component on convertible loan notes represents the value of conversion rights of the (i) 12% convertible loan notes issued in March 2006 and extended for another 12-24 months in March 2008 (see note 7) and (ii) 0% convertible loan notes issued in May 2008.

  7. Borrowings 

	30 June  2008	31 December  2007	30 June 2007
	£	£	£
Non-current:
Minority shareholder loan	80,434	80,341	80,077
Convertible loan notes	192,072	-	-
	272,506	80,341	80,077
Current:
Convertible loan notes	209,569	468,604	452,500
	482,075	548,945	532,577

All borrowings held by the Group are unsecured

The minority shareholder loan relates to long term funding advanced by the 20% minority shareholder in Eurasia PGM Limited in connection with the Company's Baronskoye PGM-gold project. The minority shareholder loan is interest free and is repayable when the project reaches such an advanced stage of development that it can be repaid out of the proceeds of either the project's cash flow or through the direct or indirect disposal to a third party of an interest in the project.

Convertible loan notes: 

Series 1 - 47 GBP denominated convertible loan notes were issued by the Company at an issue price of £10,000 per note in March 2008 as an extension of matured convertible loan notes of 2006 issue. Each note entitles the holder to convert it to the ordinary shares at a cost of 5 pence per share.

Conversion may occur at any time between 01/04/08 and 31/03/10. If the notes have not been converted, they will be redeemed by 31/03/10. Interest of 12% will be paid quarterly up until that settlement date. 

Subscribers to loan notes were granted warrants over 20 ordinary shares in the share capital of the Company in respect of each £1 of Loan Note held. These warrants can be exercised at any time up to 36 months at a price of 5 p per ordinary share.

Series 2 - in May 2008 the Company entered into the agreement pursuant to which four GBP nominated convertible loan notes to be issued at an issue price of £250,000 each within 12 months at three months interval. By the 30 June 2008 one loan note had been issued. Loan notes bear 0% interest.

Conversion has to occur at any time between 03/06/08 and 31/05/09. 

Subscribers to loan notes were granted warrants over 40 ordinary shares in the share capital of the Company in respect of each £1 of Loan Note held. These warrants can be exercised at any time until 31/05/09 at a price of 5 p per ordinary share.

The net proceeds received from the issue of the convertible loan notes have been split between the liability element and an equity component, representing the residual attributable to the option to convert the liability into equity of the Group, as follows:

	Series1	Series 2	Total
Liability component	£	£	£
Proceeds of issue	-	250,000	250,000
Deemed proceeds on the extension of existing loan notes	470,000	-	470,000
Issue cost:
Professional fees	(4,250)	(2,500)	(6,750)
Warrants valuation	(171,906)	(72,587)	244,493
Equity component	(79,483)	(25,393)	(104,876)
Liability component at the date of issue	214,361	149,520	363,881

Movement in the convertible loan notes is analyzed as follows:

	30 June  2008	31 December  2007	30 June 2007
Balance at 01 January	468,604	427,567	427,567
Liability component of loan notes issued	363,881	-	-
Deemed repayment of the extended loan notes	(470,000)	-	-
Interest charged	61,564	78,637	38,683
Interest paid in cash	(22,408)	(25,586)	(13,751)
Shares issued in lieu of interest payment	-	(11,014)	-
Closing balance of liability component	401,641	468,604	452,500
Equity component
Balance at 01 January	49,167	49,167	49,167
Transferred to share premium account	(49,167)	-	-
Equity component on the date of issue	104,876	-	-
	104,876	49,167	49,167

8. Authorisation of financial statements 

These condensed consolidated interim financial statements were approved by the board on 26 September 2008

 

END

 

 

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