Interim results for 6 months ended 30 June 2012

RNS Number : 3904N

Strategic Minerals PLC

28 September 2012

 



28 September 2012

Strategic Minerals Plc

("the Company")

Interim results for the six months ended 30 June 2012

Strategic Minerals Plc (AIM: SML; USOTC: SMCDY), the magnetite iron ore producer and exploration company is pleased to announce its interim results for the six months ended 30 June 2012.

Financial highlights

•   First revenues generated by the Company;
•   Loss of £1,217k (£1,584k in 2011) incurred; and
•   Loss per share decreased to 0.29 pence per share from 0.96 pence in 2011.

Operational highlights

•   Rail rehabilitation at the Cobre Mine in New Mexico completed;
•   Unit train shipments of magnetite to port commenced;
•   Facilitating export sales; and
•   Evaluation of Australian exploration assets nearing a conclusion.

Contact:

Company
Strategic Minerals plc
Paul Harrison, CEO	[phone]
Nominated Adviser/Joint Broker
Allenby Capital Limited
Jeremy Porter / James Reeve	[phone]
Joint Broker
Daniel Stewart & Company Plc
Martin Lampshire / David Hart	[phone]
Financial Public Relations
GTH Communications Limited
Toby Hall / Suzanne Johnson Walsh	[phone]

Chairman's Statement

I am pleased to present our interim report for the 6-month financial period ended 30 June 2012, a period during which the Company generated its first revenues, albeit modest, from sales of its magnetite deposit at the Cobre Mine in New Mexico. These revenues were generated by sales at mine-gate to the USA domestic market and they have continued to grow strongly since 30 June 2012.

Financial Highlights

The Company incurred a loss for the financial period of £1,217k as compared to a loss of £1,584k for the 6-month period ended 31 May 2011, which included exceptional costs of £922k relating to share based payments and £407k relating to AIM admission costs. The financial report includes comparative information not only for the 6-month period ended 31 May 2011, but also for the period from 1 June 2011 to 31 December 2011. It is important to note that results for the 6-months ended 30 June 2012 include the CompanyÕs operations in New Mexico acquired in September 2011.

Basic and fully diluted loss per share for the period was 0.29 pence (0.96 pence for the six months ended 31 May 2011).

Cobre Mine, New Mexico

As announced on 25 June 2012, the Company completed the rehabilitation and upgrade of the rail link to the Cobre Mine in New Mexico which will enable rail shipments of its magnetite iron ore to begin. At full capacity the rail facility will be able to handle over 50,000 dry metric tonnes per month.

On 28 August we announced the successful completion of a test shipment by rail to the port of Guaymas in Mexico. The test, which comprised an eight rail car shipment, was undertaken to verify key processes and procedures ahead of commencement of 72-car unit train commercial shipments for the export market. This was a vital test ahead of full scale commercial rail shipments, essential to our fulfilment of export sales. We are delighted to have proved that our systems, procedures and equipment can deliver a robust and efficient rail freight operation and whilst some minor operational glitches and equipment problems were encountered, these were quickly resolved by the team.

Following the test shipment we have now commenced unit train rail shipments to port, an important milestone for the Company. The Company's rail freight operations include its loading facility inside the mine gate, railroad switching during the 900+ kilometre journey to port, border crossing from the United States into Mexico and unloading and storage at the port. Given our state of readiness to commence commercial shipments, the recent collapse in the iron ore price has been particularly disappointing. However, we have been exploring ways to operate and trade profitably in this volatile price environment and management are confident that the Company can commence exports shortly.

Australian Operations

Management has been working with its retained advisors with regard to its exploration properties in Australia. In June management embarked upon an extensive review of the Company's exploration assets to determine which are most promising. In that regard whilst the Iron Glen asset continues to show significant potential, some of the Company's other early stage exploration assets are still under review ahead of the Company committing exploration capital to the next stage of development. I look forward to reporting to you further going forward with regard to these assets.

The Company reported significant management changes during the financial period. Paul Harrison was appointed as Chief Executive Officer of the Company, whilst I accepted the role of Executive Chairman. The former Chairman of the Company, Steven Sanders, stepped down as Chairman but remains a non-executive director of the Company. Meanwhile former executive director, Matthew Bonthrone, and non-executive director, Alex Borrelli, did not offer themselves for re-election at the Company's Annual General Meeting in June 2012 in order to focus on their other business interests and therefore stood down at that time. On behalf of the Board I would like to thank Alex and Matthew for the contribution they both made in bringing the Company to the AIM market last year and its subsequent development. The Board wishes them well in their future endeavours.

Finally, I would like to take this opportunity to thank my fellow Directors, our management and staff in New Mexico and our advisers for their support and hard work on your behalf during the period.

James Fyfe

Executive Chairman

27 September 2012

Consolidated Comprehensive Income Statement

For the period to 30 June 2012

	6 Months to 30 June 2012  Unaudited	6 Months to 31 May 2011 Unaudited	7 Months to 31 Dec 2011 Audited
	£'000s	£'000s	£'000s
Revenue	334	-	-
Cost of sales	(173)	-	-
Gross Profit	161	-	-
-Recurring administrative expenses	(1,350)	(260)	(1,568)
-Share based payments	-	(922)	(1,062)
-AIM admission costs	-	(407)	(581)
Administrative expenses	(1,350)	(1,589)	(3,211)
Operating Loss	(1,189)	(1,589)	(3,211)
Finance income Finance cost	- (28)	5 -	24 (33)
Loss before tax	(1,217)	(1,584)	(3,220)
Income tax charges	-	-	-
Loss for the period	(1,217)	(1,584)	(3,220)
Other comprehensive income	-	-	-
Total comprehensive loss for the period	(1,217)	(1,584)	(3,220)
Attributable to:
-Owners of the parent	(1,217)	(1,584)	(3,220)
Loss per share
From continuing operations:
Basic and diluted	(0.29p)	(0.96p)	(1.16p)

Consolidated Statement of Financial Position as at 30 June 2012

	As at 30 June 2012  Unaudited	As at 31 May 2011 Unaudited	As at 31 Dec 2011 Audited
	£'000s	£'000s	£'000s
Assets
Non-current assets
Goodwill    Intangibles Deferred exploration and evaluation expenditure                                                  Property, plant and equipment	8,744 836 1,283 2,145	- - 350 1	8,744 198 1,083 1,519
	13,008	351	11,544
Current assets
Inventories	60	-	-
Trade and other receivables	470	278	503
Cash and cash equivalents	789	491	299
	1,319	769	802
Total assets	14,327	1,120	12,346
Equity and liabilities
Capital and reserves
Issued capital	448	281	399
Share premium	30,272	15,549	26,408
Share based payment reserve	1,062	922	1,062
Other reserves	(14,363)	(14,297)	(14,363)
Currency translation reserve	(22)	(11)	(9)
Accumulated deficit	(4,617)	(1,765)	(3,400)
Total equity	12,780	679	10,097
Current liabilities
Borrowings	1,333	-	1,104
Trade and other payables	214	441	1,145
	1,547	441	2,249
Total equity and liabilities	14,327	1,120	12,346

Consolidated Statement of Cash Flows

For the period to 30 June 2012

	6 Months to 30 June 2012  Unaudited	6 Months to 31 May 2011 Unaudited	7 Months to 31 Dec 2011 Audited
	£'000s	£'000s	£'000s
Operating activities	(2,177)	(532)	(1,703)
Investing activities
Acquisition of subsidiary , net of cash acquired			122
Payment for exploration expenditure	(200)	(143)	(876)
Purchases of plant and equipment	(637)	-	(1,436)
Financing activities
Proceeds from issue of shares Net proceeds from Issue of loan notes	3,275 229	756 -	2,283 1,499
Net cash inflow	490	81	(111)
Cash and cash equivalents at the beginning of the period	299	410	410
Bank balances and cash	789	491	299

Reconciliation of operating loss to net cash outflow from operating activities.

	6 Months to 30 June 2012  Unaudited	6 Months to 31 May 2011 Unaudited	7 Months to 31 Dec 2011 Unaudited
	£'000s	£'000s	£'000s
Loss for the period	(1,189)	(1,584)	(3,211)
Adjustments for:
Finance income	-	5	24
Finance cost Foreign exchange Share based payment reserve	(28) (13) -	- -   922	(33) (9) 1,062
Depreciation and amortisation	11	1	1
(increase)/decrease in inventories	(60)
(increase)/decrease in receivables	33	(254)	(58)
Increase/(decrease) in payables	(931)	378	521
Net cash outflow from operating activities	(2,177)	(532)	(1,703)

 

Consolidated statement of changes in equity

For period to 30 June 2012

	Share capital	Share premium	Share based payment reserve	Accumulated deficit	Other Reserve	Currency translation reserve	Total
	£'000s	£'000s	£'000s	£'000s	£'000s	£'000s	£'000s
As at 30 November 2010	-	715	46	(181)	-	-	580
Share issued for period	281	14,834	-	-	-	-	15,115
Loss after tax	-	-	-	(1,584)	-	-	(1,584)
Share based payments	-	-	876	-	-	-	876
Currency translation reserve	-	-	-	-	-	(11)	(11)
Group reorganisation	-	-	-	-	(14,297)	-	(14,297)
Balance as at 31 May 2011	281	15,549	922	(1,765)	(14,297)	(11)	679
Share issued for period	118	10,859	-	-	-	-	10,977
Loss after tax	-	-	-	(1,635)	-	-	(1,635)
Share based payments	-	-	140	-	-	-	140
Currency translation reserve	-	-	-	-	-	2	2
Group reorganisation	-	-	-	-	(66)	-	(66)
Balance as at 31 December 2011	399	26,408	1,062	(3,400)	(14,363)	(9)	10,097
Shares issued for period	49	3,864	-	-	-	-	3,913
Loss after tax	-	-	-	(1,217)	-	-	(1,217)
Currency translation reserve	-	-	-	-	-	(13)	(13)
Balance as at 30 June 2012	448	30,272	1,062	(4,617)	(14,363)	(22)	(12,780)

Notes to the Interim Financial Information

1.   General Information

      Strategic Minerals Plc is a public limited company incorporated in England and Wales with       company number 07440902 and quoted on the AIM market of the London Stock Exchange Plc.

2.   Basis of Preparation

This interim report has been prepared using the historical cost convention, on a going concern basis and in accordance with International Financial Reporting Standards ("IFRS") as adopted by the European Union, using accounting policies which are consistent with those set out in the financial statement for the period ended 31 December 2011. This interim financial information for the six months ended 30 June 2012 was approved by the Board on 27 September 2012.

      Taxes

      Taxes on income in the interim periods are accrued using the tax rate that would be applicable to expected total annual earnings.

Standards and Interpretations adopted with no material effect on financial statements

The following new and revised Standards and Interpretations have been adopted in these financial statements. Their adoption has not had any significant impact on the amounts reported in these financial statements but may effect the accounting for future transactions and arrangements.

Title	Issued	Effective date
IFRS 7 Financial instruments: disclosures (amendment)	Oct 10	Accounting periods beginning on or after 1 July 2011

Standards and Interpretations issued but not effective on financial statements

The following new and revised Standards and Interpretations have not been adopted in these financial statements as they are not yet effective in the period being reported on.

Title	Issued	Effective date
IFRS 9 Financial instruments: classification and measurement	Oct 10	Accounting periods beginning on or after 1 January 2015
IFRS 11 joint Arrangements	May 11	Accounting periods beginning on or after 1 January 2013
IFRS 12 Disclosures of Interests with Other Entities	May 11	Accounting periods beginning on or after 1 January 2013
IFRS 13 Fair Value Measurement	May 11	Accounting periods beginning on or after 1 January 2013
IFRS 10 Consolidated Financial Statements	May 11	Accounting periods beginning on or after 1 January 2013
IAS 1 Presentation of Items of Other Comprehensive Income Ð Amendments to IAS 1	June 11	Accounting periods beginning on or after 1 July 2012
IAS 19 Employee Benefits (Revised)	June 11	Accounting periods beginning on or after 1 January 2013

3.   Segmental Analysis

In the opinion of the Directors the group has one class of business, being the exploration for, and development and production of, Mineral, and other related activities.

The group's primary reporting format is determined by geographical segment according to the location of the exploration assets. There is currently two geographic reporting segments: Rest of the world involved in mineral exploration and development in Australia and USA, and the United Kingdom being the head office.

Mineral exploration and development
The segment information for the period ended 30 June 2012 is as follows:
					United Kingdom		Rest of the World		Total
					£'000		£'000		£'000
Profit and loss account
Gross profit					-		161		161
Administrative expenses					(482)		(868)		(1,350)
Operating loss					(482)		(707)		(1,189)
Finance income					-		-		-
Finance costs					(28)		-		(28)
Loss on ordinary activities before taxation					(510)		(707)		(1,217)
Income tax benefit / (expense)					-		-		-
Loss for the year					(510)		(707)		(1,217)
Assets and liabilities
Segment assets					33		13,505		13,538
Cash and cash equivalents					737		52		789
Total assets					770		13,557		14,327
Segment liabilities					1,419		128		1,547
Total liabilities					1,419		128		1,547

4.    Operating loss for the period is stated after charging / (crediting)

	6 months to 30 June 2012  Unaudited	6 months to 31 May 2011 Unaudited	7 months to 31 Dec 2011 Audited
	£'000s	£'000s	£'000s
Depreciation	0	1	2
Foreign Exchange	(7)	2	(12)

5.       Remuneration of key management personnel

The fees paid in the period to 30 June 2012 were.	SM	IGH	Ebony Iron	Total
	£	£	£	£
M Bonthrone	24,000	-	-	24,000
S Sanders	29,751	-	-	29,751
G Cardona	-	-	-	-
J Fyfe	20,000	-	-	20,000
P Griffiths	-	58,659	-	58,659
A Borrelli	17,500	-	-	17,500
J Peters	-	29,329	23,844	53,173
P Harrison	20,000	-	-	20,000
	───────	───────	───────	───────
Total	111,251	87,988	23,844	223,083

6.    Loss per share

	6 months to 30 June 2012  Unaudited	6 months to 31 May 2011 Unaudited	7 months to 31 Dec 2011 Audited
	£'000s	£'000s	£'000s
Loss per ordinary share
Basic- pence	(0.29p)	(0.96p)	(1.16p)
Diluted Ð pence	(0.29p)	(0.96p)	(1.16p)

The loss per ordinary share is based on the Company's loss for the period of £1,217,000 (31 May 2011 - £1,584,000: 31 December 2011 - £3,219,647) and a basic and diluted weighted average number of shares in issue of 420,687,484 (31 May 2011 - 164,358,168: 31 December 2011 - 278,716,703).

7.   Called up Share Capital

    The issued share capital as at 30 June 2012 was 448,158,893 Ordinary Shares of 0.1p each.

    On 12^th January 2012 3,700,000 shares were issued at a premium of 10p per share.

On 30^th January 2012 5,000,000 shares were issued at a premium of 10.62p per share.

On 8^th March 2012 1,000,000 shares were issued at a premium of 10.62p per share.

On 1^st May 2012 7,500,000 shares were issued at a premium of 8p per share.

On 2^nd May 2012 30,000,000 shares were issued at a premium of 8p per share.

On 3^rd May 2012 1,562,500 shares were issued at a premium of 8p per share.

8.   Related-party transactions

    Transactions between the Group and its subsidiaries, which are related parties, have been eliminated on  consolidation and are not disclosed in this note.

9.   Events subsequent to 30 June 2012

On 28 August 2012, the Company announced the successful completion of a test shipment by rail of its magnetite material which was undertaken before commercial shipments to ensure key processes and procedures were in order.

10.   The unaudited results for 6 months ended 30 June 2012 do not constitute statutory accounts within the meaning of Section 435 of the Companies Act 2006. The comparative figures for the period ended 31 December 2011 are extracted from the audited financial statements which contained an unqualified audit report and did not contain statements under Sections 498 to 502 of the Companies Act 2006.

11. This interim financial statement will be, in accordance with Rule 26 of the AIM Rules for Companies, available shortly on the Company's website at www.strategicminerals.co.uk.

 

END

 

 

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