Final Results
Pantheon Resources PLC
27 December 2006
Pantheon Resources plc - Preliminary Results
Preliminary Results for the Period Ended 30 June 2006
Pantheon Resources plc ('Pantheon' or 'the Company'), the UK based independent
oil and gas exploration company focused on the U.S. Gulf of Mexico region, today
announces its maiden preliminary results for the period ended 30 June 2006.
HIGHLIGHTS
• Successful placing and listing on AIM in April 2006
• Farm-into Padre Island Joint venture in south Texas with exposure to six
high impact, high-quality natural gas prospects
• Exploration portfolio balanced by farm-in to Project Wharton, south Texas
comprising smaller, lower risk natural gas prospects
• Commercial success registered on Project Wharton
• First well on Padre Island yields encouraging results from logging
• Pre-tax loss of £339,314
Executive Chairman, Sue Graham commented:
'Pantheon has experienced an eventful and exciting period since the Company was
incorporated in 2005. A successful listing on AIM was completed in April 2006,
raising £10 million before expenses. The proceeds are being used primarily to
satisfy most of Pantheon's obligations under its farm-into six large,
high-quality prospects within the Padre Island Project Area ('PI Project Area').
In June 2006 the Company also farmed into a natural gas venture in south Texas
to provide balance to its portfolio. Both projects are consistent with the
Company's strategy of focussing initially onshore or near shore the US Gulf of
Mexico ('GoM').
Since the period end Pantheon has drilled on the Plum Deep prospect, one of six
within the PI Project Area. The well reached target depth on November 15.
Logging identified four natural gas bearing zones over a 1,000 feet interval. An
extensive testing programme remains to be completed.
Preliminary results of the first stage of this programme have been received.
This entailed cutting and retrieval of a conventional core in the shallowest of
three potential zones. A drillstem test was also conducted in this zone. The
results from this test are consistent with the Joint Venture's pre-drill view
that these potential reservoirs are tight and water wet. Preliminary
determination of porosity and permeability show that this zone is unlikely to be
productive as a reservoir. Drilling to the next planned core point is now
underway.
Pantheon has registered commercial success on its Project Wharton venture with
three wells encountering natural gas. Of these, two are on-stream producing
early cash flow for Pantheon. The third is due on-stream early in the New Year.
This increasing natural gas production occurs at a time of improved US natural
gas prices and represents an important income stream for a small company such as
Pantheon. With easy access to infrastructure and the shallow depth of the wells,
the near term financial returns are very attractive.
The Company has at least a further 13 prospects on its Project Wharton venture
remaining to be drilled. The 75% success rate of the initial drilling campaign
has provided sufficient confidence to boost exploration in the Project Wharton
area. In addition to three wells in and around the recent discoveries, a further
two exploration wells are currently scheduled for 2007. The current three
discoveries, combined with the increased exploration efforts, hopefully will
yield higher natural gas production in 2007.
Pantheon has built an exciting portfolio in its short existence as a public
company. It is well-balanced between smaller lower risk, early cash flow
generating prospects (Project Wharton) and high impact, high-quality natural gas
plays (PI Project Area). Moreover, Pantheon's projects are located within the
energy-thirsty, geopolitically and fiscally stable market of the U.S.. With
abundant infrastructure available to both projects, Pantheon would benefit from
any discoveries coming on-stream quickly, affording early cash flow generation.
This has already been achieved with two of the Company's three Project Wharton
discoveries.'
Chairman's Report
Pantheon Resources plc ('Pantheon') was formed in 2005 to be an independent UK
based oil and gas exploration company focused on hydrocarbon producing basins
onshore or near shore the GoM. Specifically, its initial focus was on the deep
geological plays under and around Padre Island, south Texas. Pantheon entered
into a Farmout Agreement which provided the right to participate initially in
six specific, defined exploration targets which were ready for drilling from a
geological and geophysical perspective. Importantly, the joint venture secured a
drilling rig contract for one year with options to extend for a further two
years.
The six prospects are considered to be large, high quality natural gas plays in
an under-explored deep section of the GoM. Reserve potential is deemed
significant with estimated prospect sizes ranging up to 337 bcf on a most likely
basis (previously referred to as P50). Pantheon is paying 33.33% of the costs
associated to casing point with each of the wells to earn a 25% working
interest. These terms are considered favourable for a prolific oil and natural
gas region in the current environment.
In June 2006, Pantheon expanded its operations by farming-into a natural gas
exploration venture in Wharton County, south Texas, located broadly between
Houston and Corpus Christi. This venture is operated by the Everest Resource
Company ('Everest') which has a long and successful history in the Texas Gulf
Coast Area. This farm-in was considered complementary in terms of risk to the
high impact PI Project Area. The Project Wharton farm-in comprised three
prospects initially. Each of these is of an order of magnitude lower in terms of
estimated size and of lower risk.
Post-balance sheet events
Subsequent to the financial year-end, Pantheon commenced drilling operations for
both its projects
PI Project Area
The Kindee ST 212#1 well on the Plum Deep structure commenced drilling on August
1, 2006. This well reached target depth of 16,392 feet (measure depth) on
November 15, 2006. Well logging identified four natural gas bearing zones
spanning 1,000 feet. Flow testing and a coring programme are now underway. The
final outcome remains dependent on the testing programme.
Initial results of the first stage of the testing programme are now available.
The first conventional core in the sidetrack well has been successfully
retrieved and is under analysis. Initial interpretation of the core shows the
interval primarily to be inter-bedded silty sandstone and siltstone, with thin
beds of sand and shale.
Preliminary interpretation of the DST in the shallowest of three potential zones
confirms the presence of a tight reservoir formation. This is consistent with
the Joint Venture's pre-drill reservoir models. Preliminary determination of
porosity and permeability show this zone to be primarily water wet, and unlikely
to be productive as a reservoir.
Drilling to the next planned core point is now underway. This will initiate the
collection of a second core. This second core will be taken in the deepest zone
which spans over 800 gross feet. Once the second core is collected drilling will
proceed to a TD of 15,450'feet ('ft') measured depth, At this stage a
comprehensive logging and sampling programme will be undertaken before a 4.5inch
production liner is set.
The current drilling programme for the PI Project Area is shown in table 1.
Table SEQ Table /* ARABIC 1: PI Project Area - Status
Prospect Pantheon Working Most Likely (P50) Reserve Size Current Drilling
Interest (Gross)* Programme
Plum Deep 25% 161-293 Testing
Manzano 25% 178-337 December 2006
Wilson 25% 9 First Half 2007
Murdock South 25% 94-227 Second half 2007
Lemonseed 25% 67 Second Half 2007
Kingsway 25% 21 TBA
* This range is based on studies conducted on the acreage by Golden Gate Petroleum ltd and Pantheon's I
Independent Technical Adviser to the Initial Public Offering
Project Wharton
Since the financial year-end, Pantheon has farmed into three more prospects and
drilled four wells. The Company is now producing from two recently discovered
natural gas fields, Zebu and Mohawk. A third, Caddo, is scheduled to be
commissioned early in the New Year. When combined together, these fields will
make up an attractive and growing income stream for Pantheon. This increasing
natural gas production occurs at a time of improved US natural gas prices. It
represents an important income stream for a small company such as Pantheon with
attractive near term financial returns.
This initial drilling campaign has delivered effectively a 75% success rate.
This has provided sufficient confidence to boost exploration in the Project
Wharton area. Pantheon has now agreed to drill two additional exploration wells,
Baptist and Kant, over coming months. A further three wells in and around the
recent discoveries are currently scheduled for 2007. The current three
discoveries, combined with the increased exploration efforts, hopefully will
yield higher natural gas production in 2007.
The current interests and status of all prospects in which Pantheon has an
interest are shown in table 2
Table SEQ Table /* ARABIC 2:Project Wharton and Pantheon's Interests
Prospect Pantheon Working Interest Status
Zebu #1 9.375% Producing
Caddo #1 18.75% Due on-stream early 2007
Dakota #1 18.75% P&A non-commercial shows
Mohawk #1 18.75% Producing
Baptist #1 11.50% Drilling scheduled for 1Q 2007
Kant #1 18.75% Drilling scheduled for 1Q 2007
Source: Everest resource Company
Environmental Policy Statement
While at 30 June 2006, the company is not an operator of any exploration
projects, it closely monitors activities to ensure to the best of its knowledge
there is no potential for any such breach. Some farm-out projects are located in
the Padre Island National Seashore ('PINS') and each of these projects requires
a PINS permit which involves rigorous conditions to be met. To achieve this the
operator works closely with PINS.
DIRECTORS' REPORT FOR THE PERIOD ENDED 30 JUNE 2006
The Directors present their report together with the audited accounts of
Pantheon Resources Plc ('Pantheon' or 'the Company') and its subsidiary
undertakings (together 'the Group') for the period from incorporation on 8 March
2005 until 30 June 2006.
Principal activity
The Company is registered in England and Wales, having been incorporated on 8
March 2005 under the Companies Act with registered number 5385506 as a public
company limited by shares.
The principal activity of the Group is mineral exploration. The Group operates
in its parent undertaking and through subsidiary companies, details of which are
set out in the note 8 to these accounts.
Results and dividends
The Group results for the period are set out on the following pages. The
Directors do not propose to recommend any distribution by way of a dividend for
the period ended 30 June 2006.
Group structure and changes in share capital
Details of movements in share capital during the period are set out in note 13
to these accounts.
Report on Directors' remuneration and service contracts
The service contracts of all the Directors are subject to a six month
termination period. Under the contracts, each executive Director will be paid
£50,000 per annum and each non-executive Director £25,000 per annum.
Pensions
The Group does not operate a pension scheme for Directors or employees.
Directors' remuneration
Remuneration of Directors was as follows:
Fees/basic Employers Benefits 2006
salary NI in kind Total
Executive £ £ £ £
S Graham 35,417 3,877 - 39,294
R Rosenthal 23,958 2,422 - 26,380
Non-Executive
J Hondris 31,250 3,343 - 34,593
A Waller 31,250 - - 31,250
121,875 9,642 - 131,517
Supplier payment policy
The Company's policy is that payments to suppliers are made in accordance with
those terms and conditions agreed between the Company and its suppliers,
providing that all trading terms and conditions have been complied with.
Political and charitable contributions
There were no political or charitable contributions made by the Company during
the period ended 30 June 2006.
DIRECTORS' REPORT FOR THE PERIOD ENDED 30 JUNE 2006
Statement of directors' responsibilities
The Directors are responsible for preparing the financial statements in
accordance with applicable law and International Financial Reporting Standards
('IFRSs').
Company law requires the Directors to prepare financial statements for each
financial year which give a true and fair view of the state of affairs of the
Company and of the profit or loss of the Company for that period. In preparing
these financial statements, the Directors are required to:
• select suitable accounting policies and then apply them consistently;
• make judgements and estimates that are reasonable and prudent;
• state whether applicable accounting standards have been followed, subject
to any material departures disclosed and explained in the financial
statements;
• prepare the financial statements on the going concern basis unless it is
inappropriate to presume that the Company will continue in business.
The Directors are responsible for keeping proper accounting records that
disclose with reasonable accuracy at any time the financial position of the
Company and enable them to ensure that the financial statements comply with the
Companies Act 1985. They are also responsible for safeguarding the assets of the
Company and hence for taking reasonable steps for the prevention and detection
of fraud and other irregularities.
So far as the Directors at the time of approval of the report are aware:
1. there is no relevant audit information of which the Company's auditors are
unaware; and
2. the Directors have taken all steps that they ought to have taken to make
themselves aware of any relevant audit information and to establish that the
auditors are aware of that information.
Auditors
UHY Hacker Young were appointed auditors to the Company, and in accordance with
Section 385 of the Companies Act 1985, a resolution proposing that UHY Hacker
Young be re-appointed as auditors of the Company and that the Directors be
authorised to fix their remuneration will be put to the next Annual General
Meeting.
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF PANTHEON RESOURCES PLC FOR THE
PERIOD ENDED 30 JUNE 2006
We have audited the Group and Parent company financial statements (the
'financial statements') of Pantheon Resources plc for the period ended 30 June
2006 which comprise the Group income statement, the Group and Parent company
balance sheets, the Group and Parent company cash flow statements and the
related notes. These financial statements have been prepared under the
accounting policies set out therein.
This report is made solely to the company's members, as a body, in accordance
with section 235 of the Companies Act 1985. Our audit work has been undertaken
so that we might state to the company's members those matters we are required to
state to them in an auditor's report and for no other purpose. To the fullest
extent permitted by law, we do not accept or assume responsibility to anyone
other than the company and the company's members as a body, for our audit work,
for this report, or for the opinions we have formed.
Respective responsibilities of directors and auditors
The Directors' responsibilities for preparing the Annual Report and the
financial statements in accordance with applicable law and those International
Financial Reporting Standards ('IFRSs') as adopted for use in the European Union
are set out in the Statement of Directors' Responsibilities.
Our responsibility is to audit the financial statements in accordance with
relevant legal and regulatory requirements and International Standards on
Auditing (UK and Ireland).
We report to you our opinion as to whether the financial statements give a true
and fair view and are properly prepared in accordance with the Companies Act
1985. We also report to you whether, in our opinion, the Directors' Report is
consistent with the financial statements, if the Company has not kept proper
accounting records, if we have not received all the information and explanations
we require for our audit, or if information specified by law regarding
directors' remuneration and other transactions is not disclosed.
We read other information contained in the Annual Report and consider whether it
is consistent with the audited financial statements. The other information
comprises the Chairman's Statement and the Directors' Report. We consider the
implications for our report if we become aware of any apparent misstatements or
material inconsistencies with the financial statements. Our responsibilities do
not extend to any other information.
Basis of audit opinion
We conducted our audit in accordance with International Standards on Auditing
(UK and Ireland) issued by the Auditing Practices Board. An audit includes
examination, on a test basis, of evidence relevant to the amounts and
disclosures in the financial statements. It also includes an assessment of the
significant estimates and judgments made by the Directors in the preparation of
the financial statements, and of whether the accounting policies are appropriate
to the Group's and Company's circumstances, consistently applied and adequately
disclosed.
We planned and performed our audit so as to obtain all the information and
explanations which we considered necessary in order to provide us with
sufficient evidence to give reasonable assurance that the financial statements
are free from material misstatement, whether caused by fraud or other
irregularity or error. In forming our opinion we also evaluated the overall
adequacy of the presentation of information in the financial statements.
Opinion
In our opinion:
• the Group financial statements give a true and fair view, in accordance
with IFRSs as adopted for use in the European Union, of the state of the
Group's affairs as at 30 June 2006 and of its loss for the period then
ended;
• the Parent Company financial statements give a true and fair view, in
accordance with IFRSs as adopted for use in the European Union as applied in
accordance with the provisions of the Companies Act 1985, of the state of
the parent company's affairs as at 30 June 2006;
• the financial statements have been properly prepared in accordance with
the Companies Act 1985;
• the information given in the Directors' report is consistent with the
financial statements.
UHY Hacker Young
21 December 2006
Chartered Accountants
Registered Auditors
St. Alphage House
2 Fore Street
London EC2Y 5DH
GROUP INCOME STATEMENT FOR THE PERIOD ENDED 30 JUNE 2006
Notes 2006
£
Revenue -
Cost of sales -
Gross profit -
Administration expenses 16 (400,049)
Operating loss 4 (400,049)
Finance revenue 6 60,535
Loss before taxation (339,514)
Taxation 7 -
Loss for the period (339,514)
Earnings per ordinary share - basic and diluted 2 (8.33)p
The above are the results for the period from the date of incorporation on 8
March 2005 to 30 June 2006.
All of the above amounts are in respect of continuing operations.
There are no recognised gains and losses other than those passing through the
income statement.
GROUP AND COMPANY BALANCE SHEETS AS AT 30 JUNE 2006
Group Company
Notes 2006 2006
£ £
ASSETS
Non current assets
Intangible assets 12 1,818,024 -
Other receivables 9 - 1,240,113
1,818,024 1,240,112
Current assets
Trade and other receivables 9 109,907 109,907
Cash and cash equivalents 10 8,409,699 8,409,699
8,519,606 8,519,606
Total assets 10,337,630 9,759,719
EQUITY AND LIABILITIES
Capital and Reserves attributable to
Equity holders
Called up share capital 13 155,524 155,524
Share premium account 13 9,698,748 9,698,748
Retained losses 14 (339,514) (301,025)
Other reserve 14 161,513 161,513
Total equity 9,676,271 9,714,760
Current liabilities
Trade and other payables 11 661,359 44,959
Total liabilities 661,359 44,959
Total equity and liabilities 10,337,630 9,759,719
GROUP AND COMPANY CASH FLOW STATEMENT FOR THE PERIOD ENDED 30 JUNE 2006
Group Company
Notes 2006 2006
£ £
Net cash inflow/(outflows) from operating activities 15 312,916 (1,505,108)
Cash flows from investing activities
Interest received 60,535 60,535
Net funds used for investing in exploration (1,818,024) -
Net cash inflow from investing activities (1,757,489) 60,535
Cash flows from financing activities
Proceeds from issue of shares 14 10,420,061 10,420,061
Issue costs (565,789) (565,789)
Net cash inflow from financing activities 9,854,272 9,854,272
Net increase in cash and cash equivalents 8,409,699 8,409,699
Cash and cash equivalents at the beginning of the period - -
Cash and cash equivalents at the end of the period 10 8,409,699 8,409,699
NOTES TO THE FINANCIAL STATEMENTS FOR THE PERIOD ENDED 30 JUNE 2006
1.Accounting policies
A summary of the principal accounting policies, all of which have been applied
consistently throughout the period, is set out below.
1.1 Basis of preparation
The financial statements have been prepared using the historical cost
convention. In addition, the financial statements have been prepared in
accordance with the International Financial Reporting Standards ('IFRS')
including IFRS 6, Exploration for and Evaluation of Mineral Resources, as
adopted by the European Union ('EU') and in accordance with the provisions of
the Companies Act 1985.
The group's financial statements for the period ended 30 June 2006 were
authorised for issue by the board of Directors on 21 December 2006 and the
balance sheets were signed on the Board's behalf by Mr J Hondris.
The group financial statements are presented in UK pound sterling.
In accordance with the provisions of the Section 230 of the Companies Act 1985,
the Parent Company has not presented a profit and loss account. A loss for the
period ended 30 June 2006 of £301,025 has been included in the income and
expenditure account.
1.2 Basis of consolidation
Subsidiaries are fully consolidated from the date on which control is
transferred to the Group. They are de-consolidated from the date that control
ceases. The purchase method of accounting is used to account for the acquisition
of subsidiaries by the Group. The cost of an acquisition is measured as the fair
value of the assets given, equity instruments issued and liabilities incurred or
assumed at the date of exchange, plus costs directly attributable to the
acquisition. Identifiable assets acquired and liabilities and contingent
liabilities assumed in a business combination are measured initially at their
fair values at the acquisition date, irrespective of the extent of any minority
interest. The excess of the cost of acquisition over the fair value of the
Group's share of the identifiable net assets acquired is recorded as goodwill.
Goodwill arising on acquisitions is capitalised and subject to
impairment review, both annually and when there are indications that the
carrying value may not be recoverable.
Inter-company transactions, balances and unrealised gains on transactions
between group companies are eliminated.
All the companies over which the Company has control apply, where appropriate,
the same accounting policies as the Company.
1.3 Foreign currency translation
Transactions in foreign currencies are translated into sterling at the rate of
exchange ruling at the date of the transaction. Monetary assets and liabilities
denominated in foreign currencies are translated at the rate of exchange ruling
at the balance sheet date. The resulting exchange gain or loss is dealt with in
the income statement.
The assets, liabilities and the results of the foreign subsidiary undertakings
are translated into Sterling at the rates of exchange ruling at the year end.
Exchange differences resulting from the retranslation of net investments in
subsidiary undertakings are treated as movements on reserves.
1.4 Cash and cash equivalents
The company considers all highly liquid investments, with a maturity of 90 days
or less to be cash equivalents, carried at the lower of cost or market value.
1.5 Deferred taxation
Deferred tax is provided in full, using the liability method, on temporary
differences arising between the tax bases of assets and liabilities and their
carrying amounts in the financial statements. Deferred tax is determined using
tax rates (and laws) that have been enacted or substantially enacted by the
balance sheet date and expected to apply when the related deferred tax is
realised or the deferred liability is settled.
Deferred tax assets are recognised to the extent that it is probable that the
future taxable profit will be available against which the temporary differences
can be utilized.
1.6 Exploration and development costs
All costs associated with oil, gas and mineral exploration and investments are
capitalised on a project by project basis, pending determination of the
feasibility of the project. Costs incurred include appropriate technical and
administrative expenses but not general corporate overheads. If an exploration
project is successful, the related expenditures will be transferred to mining
assets and amortised over the estimated life of the commercial reserves on a
unit of production basis. Where a licence is relinquished or project abandoned,
the related costs are written off. Where the Group maintains an interest in a
project, but the value of the project is considered to be impaired, a provision
against the relevant capitalised costs will be raised.
The recoverability of all exploration and development costs is dependent upon
the discovery of economically recoverable reserves, the ability of the group to
obtain necessary financing to complete the development of the reserves and
future profitable production or proceeds from the disposition thereof.
Amounts recorded for these assets represent costs and are not intended to
reflect present or future values.
1.7 Impairment of exploration and development costs
The carrying value of unevaluated areas is assessed on at least an annual basis
or when there has been an indication that impairment in value may have occurred.
The impairment of unevaluated prospects is assessed based on the Directors'
intention with regard to future exploration and development of individual
significant areas and the ability to obtain funds to finance such exploration
and development.
1.8 Share based payments
The Group issued share-based payments to certain employees (including directors)
by way of issues of share warrants. The fair value of these payments is
calculated by the Group using the Black Scholes option pricing model. The
expense is recognised on a straight line basis over the period from the date of
award to the date of vesting, based on the Group's best estimate of shares that
will eventually vest.
1.9 Financial instruments
International Accounting Standard 32 requires information to be disclosed about
the impact of financial instruments on the Group's risk profile, how the risks
arising from financial instruments might affect the entity's performance, and
how these risks are being managed.
The Group's policies include that no trading in derivative financial instruments
shall be undertaken.
These disclosures have been made in Note 19 to the accounts.
2. Earnings per share
Basic earnings per share of (8.33)p for the Group is calculated by dividing the
loss for the period by the weighted average number of ordinary shares in issue
of 4,074,045.
Share options issued on 4 April 2006 are anti-dilutive. Full details of the
share options issued are set out in note 16.
3. Segmental information
The primary segmental reporting is determined to be geographical segment
according to the location of the assets. The Directors do not believe that there
is a secondary segment that could be reported. There are two reporting segments.
Geographical segment (Group) United Kingdom United Total
States
£ £ £
Administration expenses (400,049) - (400,049)
Finance revenue 60,535 - 60,535
Loss before taxation (339,514) - (339,514)
Intangible assets - 1,818,024 1,818,024
Trade and other receivables 109,907 - 109,907
Cash and cash equivalents 8,409,699 - 8,409,699
Trade and other payables (44,960) (616,399) (661,359)
Net assets 8,474,646 1,201,625 9,676,271
At the end of the financial period, the Group had not commenced commercial
production from its exploration sites and therefore had no turnover in the
period.
Group Company
2006 2006
£ £
4. Operating loss
This is stated after charging:
Auditors' remuneration 8,000 8,000
- Audit 8,000 8,000
- Non-audit - -
Foreign exchange loss 38,489 -
Group Company
2006 2006
£ £
5. Directors' emoluments
Wages and salaries 121,875 121,875
Social security costs 9,642 9,642
131,517 131,517
There are no employees other than the Directors.
Group Company
2006 2006
£ £
6. Finance revenue
Bank interest 60,535 60,535
Group
2006
£
7. Taxation
Factors affecting the tax charge for the period
Loss on ordinary activities before taxation (339,514)
Loss on ordinary activities before taxation
multiplied by standard rate of corporation
tax of 30.00% (101,854)
Effects of:
Non deductible expenses 12,445
Timing differences not recognised 48,454
Tax losses carried forward 40,955
Current tax charge -
Factors that may affect future tax charges
At the balance sheet date, the Group has unused United Kingdom tax losses
available for offset against suitable future profits in the United Kingdom. A
deferred tax asset has not been recognised in respect of such losses due to
uncertainty of future profit streams. The contingent deferred tax asset is
estimated to be £40,900.
8. Subsidiary entities
The Company currently has the following wholly owned subsidiaries all of which
were incorporated on 3 February 2006:
Country of Percentage
Name Incorporation ownership
Hadrian Oil & Gas LLC United States 100%
Agrippa LLC United States 100%
Pantheon Oil & Gas LP United States 100%
Pantheon Oil & Gas LP is 99% owned by Agrippa LLC as its limited partner and 1%
by Hadrian Oil & Gas LLC as its general partner.
Group Company
2006 2006
£ £
9. Trade and other receivables
Other receivables 36,450 36,450
Amount due from subsidiary undertakings - 1,240,114
Prepayments and accrued income 73,457 73,457
109,907 1,350,021
Amounts falling due after more than one year and included
in the debtors above are
Group Company
2006 2006
£ £
Amount due from subsidiary undertakings - 1,240,113
Group Company
2006 2006
£ £
10. Cash and cash equivalents
Cash at bank and in hand 8,033,232 8,033,232
Cash equivalents 376,467 376,467
8,409,699 8,409,699
Group Company
2006 2006
£ £
11. Trade and other payables
Other payables 36,959 36,959
Accruals 624,400 8,000
661,359 44,959
12. Intangible assets
Exploration and
development
costs
£
Cost
Additions 1,818,024
At 30 June 2006 1,818,024
Impairment
Impairment during the period -
At 30 June 2006 -
Net book value
At 30 June 2006 1,818,024
In accordance with the accounting policy, the Directors have assessed the value of the exploration and
development costs carried in the accounts as intangible fixed assets. In the opinion of the Directors, no
impairment provision is considered necessary.
Group Company
2006 2006
£ £
13. Called up share capital
Authorised: 10,000,000 10,000,000
1,000,000,000 ordinary shares of £0.01 each
Allotted, issued and fully paid:
15,552,329 ordinary shares of £0.01 each 155,524 155,524
The following shares in the Company were issued during the period:
The Company was incorporated on 8 March 2005 with an authorised share capital of
£10,000,000 divided into 10,000,000,000 ordinary shares of £0.001 each, of which
2 shares were issued fully paid, on incorporation.
On 15 December 2005 a further 18 shares were issued at £0.001.
On the same date all issued and unissued ordinary shares were consolidated on
the basis of 10 ordinary shares of £0.001 each converting to 1 new ordinary
share of £0.01 each.
On 15 December 2005 a further 4,999,998 new ordinary shares were issued at £0.01
each.
On 3 March 2006 a further 552,329 shares were issued at £0.67 each.
On admission to AIM, 5 April 2006, 10,000,000 ordinary shares were issued at
£1.00 each.
The movements in the share capital are summarised below:
Number of
shares
Issue for cash - founder members 5,555,329
Issue for cash - placement 10,000,000
As at 30 June 2006 15,552,329
The share premiums arising as a result of above transactions were
as follows:
2006
£
Issue for cash - 3 March 2006 364,537
Issue for cash - 5 April 2006 9,900,000
Costs (565,789)
As at 30 June 2006 9,698,748
14. Shareholders' funds and changes in shareholders' equity
Share Share Retained Other Total
capital premium earnings reserve
£ £ £ £ £
ompany
Issue of shares 155,524 10,264,537 - - 10,420,061
Issue costs - (565,789) - - (565,789)
Share option charge - - - 161,513 161,513
Net loss for the period - - (301,025) - (301,025)
Balance at 30 June 2006 155,524 9,698,748 (301,025) 161,513 9,714,760
Group
Issue of shares 155,524 10,264,537 - - 10,420,061
Issue costs - (565,789) - - (565,789)
Share option charge - - - 161,513 161,513
Net loss for the period - - (339,514) - (339,514)
Balance at 30 June 2006 155,524 9,698,748 (339,514) 161,513 9,676,271
15. Net cash inflow (outflow) from operating activities
Group Company
2006 2006
£ £
Operating loss (400,049) (361,560)
Cost of issuing share options 161,513 161,513
Increase in trade and other
receivables
(109,907) (1,350,021)
Increase in trade and other payables 661,359 44,960
Net cash inflow/(outflow) from operating activities 312,916 (1,505,108)
16. Cost of issuing share options
Included within administration expenses is a charge for issuing share options.
Group Company
2006 2006
£ £
Cost of issuing share options 161,513 161,513
Number of
Exercise price Value Options granted and
Pounds Pence held at 30 June 2006
1.00 42.474 483,284
1.25 35.116 250,000
1.50 31.116 650,000
2.00 23.806 650,000
The share options, detailed above, were granted on 4 April 2006 and will be exercisable between the first and fifth
anniversary of Admission to AIM and are non-transferable.
No options were exercised, forfeited or expired during the period.
The option values were calculated with reference to the Black-Scholes option pricing model taking into account the
following input assumptions:
Share price £1.00
Exercise Price As stated above
Expected volatility 50%
Option life 1 year
Expected dividends Nil
Risk free interest rate 5.42%
The volatility percentage is an estimation of the expected volatility in the share price for a junior exploration
Company which is listed on AIM having regard to comparative companies, quantum of cash raised, targeted (institutional)
investment group and risk profile.
17. Control
No one party is identified as controlling the Company.
18. Decommissioning expenditure
The Directors have considered the environmental issues and the need for any
necessary provision for the cost of rectifying any environmental damage, as
might be required under local legislation. In their view, no provision is
necessary for any future costs of decommissioning or any environmental damage.
19. Financial instruments
Interest Rate Risk
At 30 June 2006, the Group had cash on one month term deposits of £7,000,000.
The Company's exposure to interest rate risk, which is the risk that a financial
instrument's value will fluctuate as a result of changes in market interest
rates and the effective weighted average interest rates on classes of financial
assets and financial liabilities, was as follows:
Weighted Average Fixed Non - Interest
Interest Rate interest rate Bearing
2006 2006 2006
Financial assets: % £ £
Cash on Deposit 4.34 7,000,000 -
Net Fair Value
The net fair value of financial assets and financial liabilities approximates to
their carrying amount as disclosed in the balance sheet and in the related
notes.
Currency Risk
The functional currency for the Group's operating activities is the Pound
Sterling and for exploration activities the United States of America dollar.
The Group has not hedged against currency depreciation but continues to keep the
matter under review.
Financial risk management
The Directors recognise that this is an area in which they may need to develop
specific policies should the Group become exposed to wider financial risks as
the business develops.
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