Interim Results
Landore Resources Limited
15 September 2006
15 September 2006
Landore Resources Limited
('Landore Resources or the 'Company')
Interim Results
MANAGEMENT DISCUSSION AND ANALYSIS FOR THE SIX MONTHS ENDED 30 JUNE 2006
General
The following discussion of performance, financial condition and future
prospects should be read in conjunction with the interim consolidated financial
statements of the Company and notes thereto for the period from 1 January 2006
to 30 June 2006. All amounts are stated in sterling.
Overview
Landore Resources Limited is listed on the Alternative Investment Market in
London, with the trading symbol of LND.L The Company is based in Guernsey in the
Channel Islands and its operating subsidiary, Landore Resources Canada Inc. is
engaged in the exploration and development of a portfolio of precious and base
metal properties in North America.
Results of Operations
The financial results for the six months to 30 June 2006 show a loss of £613,260
(2005 loss of £4,147,507). These results are in line with expectations. During
the six month period exploration costs were £424,835 and administrative expenses
were £344,527.
It should be noted that the comparative figures have been restated in respect of
IFRS 2 share based payments. Full details are set out in note 2 and it should
also be noted that this does not impact the financial statements for the year
ended 31 December 2005.
Mineral Exploration Activities
The Group's exploration activities have been mainly focused on the Junior Lake
nickel project and the Lessard copper project. In addition, exploration
continues on the West Graham property by our joint venture partner, First Nickel
Inc.
The Junior Lake Project - Nickel
The Junior Lake properties are located in the province of Ontario, approximately
235 kilometres north-northeast of Thunder Bay and are situated within the
Caribou-O-Sullivan Greenstone Belt in the Wabigoon Subprovince.
Two drilling campaigns, completed in 2005, successfully identified numerous
nickel occurrences, including the significant discovery at the VW zone, which
reported grades of up to 3.7% nickel and 1.18% copper with gold of up to 0.68g/t
in separate intersections.
A diamond drilling campaign, proposed at 10,000 metres of NQ sized core, is in
progress on the Junior Lake properties comprising 6,800 metres of infill
drilling on the VW zone, 1,200 metres of infill drilling on the B4-7 Zone and
2,000 metres of exploration drilling to test prospective trends along strike
from the VW zone and other favourable targets.
The drilling on the VW zone has consistently intersected wide intervals of
sulphide mineralisation with assay results returning grades in excess of 1%
nickel. The drilling programme is in progress and further results will be
reported in the 3rd and 4th quarters of 2006.
In addition SGS Lakefield Research Ltd of Lakefield, Ontario is carrying out
metallurgical testing on the VW zone Nickel ore. On completion of the drilling
and metallurgical testing an independent consultant will prepare a NI 43-101
compliant technical report. It is anticipated that the report will be completed
by year end.
Full details of the drilling results can be viewed on the Company's website
www.landore.com
Lessard Property - Copper Zinc
The Lessard property, comprising 91 claims for 1,456 hectares is located
approximately 107 kilometres north of the town of Chibougamau, in the province
of Quebec. Access is by an all weather gravel road that passes through the
property.
The property hosts a copper-zinc-silver deposit with a historic resource
reported in a feasibility study in 1975 by Selco Mining Corporation Ltd of
1,463,835 tons at 1.73%Cu, 2.96%Zn, 1.1oz/t Ag and 0.019oz/t Au after allowance
for dilution. The resource is not compliant with National Instrument 43-101.
A Geotech VTEM penetrating time-domain airborne electromagnetic and magnetic
survey has been carried out over the Lessard copper-zinc-silver property. This
survey has highlighted possible strike extensions of the deposit and has
developed new targets for follow-up exploration.
A confirmation drilling campaign consisting of 7 holes of NQ size core for 1,731
metres has recently been completed along the historic resource. Results are
awaited.
West Graham / First Nickel option - Nickel
First Nickel has entered into an option/joint venture agreement with Landore
Resources Canada Inc. to acquire a 70% interest in the West Graham property
which is strategically located immediately to the south of the East Zone of the
Lockerby Mine. The West Graham property contains the historic Conwest Deposit
which represents the up- plunge extension of First Nickel's Lockerby East
Deposit.
A resource estimate completed by the Conwest Exploration Company Limited in the
1960's yielded 4.3 million tons at 0.52% nickel and 0.33% copper. This resource
should be considered non-compliant with National Instrument 43-101.
First Nickel's published drilling results indicated broad zones of modest grade
nickel sulphides, similar to those identified by Conwest, including a 42.7 metre
(140.1 feet) core length grading 0.63% Ni and 0.32% Cu in hold FNI2006. Higher
grade zones that assayed up to 3.22% Ni and 0.14% Cu over a 0.57 metre core
length in FNI2006 and 1.24% Ni and 0.35% Cu over 6.0 metre core length in
FNI2007 are present within the broader zones of lower grade mineralisation.
These results, when coupled with the previously reported results indicate the
potential to define a higher grade zone or zones within the currently outlined
mineralised system.
For further information on Landore and its projects please visit the Company's
website www.landore.com
Accounting Policies
The Company has adopted accounting policies which are in line with International
Financial Reporting Standards. A full set of these policies were included in the
financial statements to 31 December 2005.
Use of Financial Instruments
The Company has not entered any specialised financial agreements to minimise its
investment risk, currency risk or commodity risk. There are no off-balance sheet
arrangements. The principal financial instruments affecting the Company's
financial condition and results of operations is currently its cash and
short-term money market investments.
Forward Looking Statements
The above contains forward looking statements that are subject to a number of
known and unknown risks, uncertainties and other factors that may cause actual
results to differ materially from those anticipated in our forward looking
statements. Factors that could cause such differences include: changes in world
gold markets, equity markets, costs and supply of material relevant to the
mining industry, change in government and changes to regulations affecting the
mining industry. Although we believe the expectations reflected in our forward
looking statements are reasonable, results may vary, and we cannot guarantee
future results, levels of activity, performance or achievements.
UNAUDITED CONSOLIDATED INCOME STATEMENT
FOR THE SIX MONTHS ENDED 30 JUNE 2006
Notes Six months As restated
ended 30 June period ended
2006 30 June 2005
£ £
Exploration costs 3 424,835 313,989
Administrative expenses 344,527 368,297
Impairment of goodwill - 3,486,377
---------- -----------
Operating loss 769,362 4,168,663
Finance income (32,859) (21,156)
Other income 4 (123,243) -
---------- -----------
Loss before income tax 613,260 4,147,507
Income tax expense - -
---------- -----------
Loss for the period 613,260 4,147,507
========== ===========
Attributable to:
Equity holders of the
Company 613,260 4,147,507
========== ===========
Loss per share attributable to the equity
holders of the Company during the year
- basic 5 (£0.01) (£0.08)
---------- -----------
- diluted 5 (£0.01) (£0.08)
========== ===========
The Group's operating loss relates to continuing operations.
UNAUDITED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE SIX MONTHS ENDED 30 JUNE 2006
Six months As restated
ended 30 June Period ended
2006 30 June 2005
£ £
Loss for the period as
previously reported (613,260) (3,878,153)
Prior period adjustment to
interim financial results - (269,354)
---------- -----------
Loss for the period as restated (613,260) (4,147,507)
Translation adjustment on
consolidation 9,742 16,072
---------- -----------
Net loss recognised directly in
equity (603,518) (4,131,435)
Issue of ordinary share capital - 858,813
Share premium arising on issue
of ordinary share capital - 5,152,877
Issue costs - (461,612)
Issue of share options 247,531
Issue of warrants - 65,394
---------- -----------
Net (decrease)/increase in
shareholders' funds (603,518) 1,731,568
Opening shareholders' funds at 1
January 2006 1,792,546 -
---------- -----------
Closing shareholders' funds 1,189,028 1,731,568
========== ===========
UNAUDITED CONSOLIDATED BALANCE SHEET
AS AT SIX MONTHS ENDED 30 JUNE 2006
As restated
As at 30 June As at 30 June
2006 2005
£ £
Assets
Non current assets
Property, plant and equipment 62,126 41,804
62,126 41,804
---------- -----------
Current assets
Trade and other receivables 44,088 25,145
Cash and cash equivalents 1,242,258 1,958,398
---------- -----------
1,286,346 1,983,543
---------- -----------
Total assets 1,348,472 2,025,347
---------- -----------
Equity
Capital and reserves attributable the Company's
equity holders
Share capital 930,033 858,813
Share premium 5,410,126 4,691,265
Share options 247,531 247,531
Warrants 43,571 65,394
Retained earnings (5,474,597) (4,147,507)
Cumulative translation adjustment 32,364 16,072
---------- -----------
Total equity 1,189,028 1,731,568
---------- -----------
Liabilities
Current liabilities
Trade and other payables 159,444 293,779
---------- -----------
159,444 293,779
---------- -----------
Total liabilities 159,444 293,779
---------- -----------
Total equity and liabilities 1,348,472 2,025,347
========== ===========
UNAUDITED CONSOLIDATED CASH FLOW STATEMENT
FOR THE SIX MONTHS ENDED 30 JUNE 2006
Notes Six months Period ended 30
ended 30 June June
2006 2005
£ £
Cash flows from
operating activities
Cash generated
from
operations 6 (606,453) (307,292)
Cash flows from
investing activities
Acquisition of
subsidiary,
net of cash
acquired - 693,642
Purchases of
property,
plant and
equipment (9,667) (25,818)
------ ---------
(9,667) 667,824
Cash flows from
financing activities
Issue of
ordinary share
capital - 2,000,000
Issue costs - (418,043)
------ ---------
- 1,581,957
Net increase in cash
and cash equivalents
Cash and cash
equivalents at
beginning of
period 1,848,807 -
Exchange gains
on cash and
cash
equivalents 9,571 15,909
--------- ---------
Cash and cash
equivalents at
end of period 1,242,258 1,958,398
========= =========
NOTES TO THE FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2006
1 Accounting Policies
Basis of accounting
The financial statements have been prepared in accordance with those
International Financial Reporting Standards ('IFRS') standards and International
Financial Reporting Interpretations Committee ('IFRIC') interpretations issued
and effective or issued and early adopted as at the time of preparing these
financial statements (July 2005).
The financial statements have not been audited and have been prepared on the
historical cost basis. The principal accounting policies adopted are consistent
with those adopted in the annual accounts to 31 December 2005.
2 Restatement of interim results to 30 June 2005
An adjustment has been made in respect of the interim results to 30 June 2005 as
previously reported in order to allow comparability between the two interim
financial periods. The effect of this adjustment has already been recognised in
the group's full financial statements to 31 December 2005.
The restatement is in respect of the recognition of the requirements of IFRS 2
Share-based Payments which was fully adopted by the group in its full financial
statements to 31 December 2005. Application of this accounting standard to the
interim results to 30 June 2005 has resulted in additional costs of £169,855
being charged to the profit and loss account in respect of directors' and
employees' remuneration in respect of options and warrants granted. It has also
resulted in an increase in the goodwill amortisation charge by £99,499, being
the fair value of share options and warrants issued in consideration for the
purchase of the share capital of Landore Resources Canada Inc. on 1 April 2005.
3 Exploration expenditure and mineral properties
1 January 2006 Expenditure in Accumulated
period expenditure 30
June 2006
£ £ £
Miminiska Lake 1,127,214 1,763 1,128,977
Junior Lake 940,179 394,947 1,335,126
Frond Lake 57,791 716 58,507
Wottam 61,558 - 61,558
Lamaune 271,362 23 271,385
Seeley Lake 80,431 5,830 86,261
Other 11,992 21,556 33,548
-------- --------- ----------
2,550,527 424,835 2,975,362
======== ========= ==========
Mineral properties at 30 June 2006 represent accumulated costs to date incurred
by Landore Resources Canada Inc., a subsidiary of Landore Resources Limited. On
acquisition of Landore Resources Canada Inc. on 5 April 2005 the fair value of
those costs incurred to date was considered to be £Nil. All subsequent
expenditure in the period has been charged to the income statement in accordance
with the group accounting policy.
4 Other income
Other income represents income receivable from the sale of property and option
payment income.
5 Loss per share
The loss per share is based on the loss for the period and the weighted number
of ordinary shares in issue during the period, being 93,003,310 (2005:
54,476,950).
The fully diluted loss per share is based on the loss for the financial period
divided by the weighted average number of shares and potential shares being
93,003,310 in issue during the period:
30 June 2006 30 June 2005
£ £
Ordinary shares 93,003,310 54,476,950
Effect of options and warrants issued at fair
value 1,634,941 -
-------- ---------
94,638,251 54,476,950
======== =========
6 Cash generated from operations
Six months Period ended 30
ended 30 June June 2005
2006
£ £
Operating loss (613,260) (3,878,153)
Impairment of
goodwill - 3,386,878
Depreciation of
property, plant
and equipment 9,632 5,091
Decrease in
receivables (19,990) 5,684
Increase in
payables 17,165 173,208
-------- ---------
Net cash outflow
from operating
activities (606,453) (307,292)
======== =========
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