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Titanium Resources (SRX)

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Tuesday 25 September, 2007

Titanium Resources

Interim Results

Titanium Resources Group Ltd
25 September 2007


                        Titanium Resources Group Limited

                                Interim Results

25 September 2007: Titanium Resources Group ('TRG' or 'the Group') announces
interim results for the six months ended 30 June 2007 ('the Period').

Highlights

  • Sales of USD 34.7 million during the Period  (USD 14.9 million H1 2006,
    USD 51.3 million Year to December 2006)
  • EBITDA of USD 2.8 million (before placing costs)
  • Loss after tax of USD 5.6 million
  • Net assets of USD 248 million at the end of the Period (USD 176 million H1
    2006, USD 219 million Year to December 2006)
  • Successful placing of 27,077,000 shares raised USD 34.7 million (before
    expenses) as announced in May 2007
  • 42,005 tonnes of rutile produced in the Period (23,281 tonnes H1 2006,
    73,802 tonnes Year to December 2006)
  • 46,253 tonnes of rutile shipped in the Period (18,072 tonnes H1 2006,
    61,891 tonnes Year to December 2006)
  • 656,603 tonnes of bauxite produced in the Period (442,141 tonnes H1 2006,
    1,072,159 Year to December 2006)
  • 590,555 tonnes of bauxite shipped in the Period (579,869 tonnes H1 2006,
    1,021,869 tonnes Year to December 2006).
  • Production negatively impacted by power supply problems
  • Dredge D2 on schedule for commission in Q4 2007
  • New Government of Sierra Leone now in place
  • Robust outlook for bauxite and rutile markets


Commenting on the results, TRG Chief Executive Len Comerford said:

'The first six months of 2007 have seen progress on many of the Group's
development projects and on updating and improving mine planning and modelling
systems at Sierra Rutile.   The introduction of new IT programmes and associated
training programmes for staff has resulted in operational efficiencies as a
result of improved interpretation of exploration and mining data and mine
sequencing.

The considerable activity related to the capital expenditure and drilling
programmes in rutile and bauxite means that at an operational level the Group is
busier than at any time in its history.  We have a number of challenges in
meeting targets for the next six months but our experience in African mining
makes many of these familiar to our team.

In addition, there are a number of strategic developments in our market which we
believe the Group is well placed to benefit from as the industrial minerals
market consolidates. Demand for our products remains strong and the expected
doubling of capacity in rutile should leave the Group in a strong position to
play a role in this process.'

Enquiries:

Len Comerford Chief Executive
Walter Kansteiner, Chairman
Titanium Resources Group
Telephone: +44 20 7321 0000
www.titaniumresources.com

Michael Oke / Andy Mills
Aura Financial
Telephone: +44 20 7321 0000

David Nabarro / John Wilkes
Nabarro Wells & Co. Limited
Telephone: +44 20 7710 7400



Chief Executive's Review

The first six months of 2007 have seen progress on many of the Group's
development projects.  The Group reported earnings before interest, tax,
depreciation, amortisation (EBITDA) and before placement costs of USD 2.8
million and a loss after tax of USD 5.6 million for the Period, largely as a
result of continued high fuel costs combined with production shortfalls in
rutile caused by failures at our temporary power plants.

The Group is well placed to fund its capital expenditure programme following a
successful placing of 27,077,000 common shares primarily to existing
shareholders in May 2007, raising USD 34.7 million (before expenses).

Considerable progress has also been made on updating and improving mine planning
and modelling systems at our subsidiary company, Sierra Rutile.   The
introduction of new IT programmes and associated training programmes for staff
has resulted in operational efficiencies as a result of improved interpretation
of exploration and mining data and mine sequencing.

We shipped 46,253 tonnes of rutile, which was only 2.5% below our shipping
schedule for the Period.  In the Period we also shipped 590,555 tonnes of
bauxite.

Exploration during the half year has been concentrated in and around current or
planned future mining areas within the Group's mining licences, with work at our
Turners' Peninsular project expected to recommence shortly.

Sierra Rutile

The first six months of the year were characterised by an unexpected shortfall
in rutile production as a result of power failures during the ongoing transition
to our new heavy fuel oil ('HFO') power plant. This disruption led to the dredge
being offline and rutile production was approximately 15% lower than expected.
Total rutile production for the Period was 42,005 tonnes (23,281 tonnes H1
2006), while ilmenite production was 6,408 tonnes (4,177 tonnes H1 2006).

The failure of the temporary generators during the period also led to higher
operating costs than were anticipated. The temporary units are now operational
again, but the Company has also reconditioned the original diesel power plant to
ensure a back-up power supply for rutile production.  Investigations are
continuing with the suppliers of the temporary units to establish the cause of
their failure.

The HFO generators are now being assembled at the mine site despite some delays
in shipping and we now anticipate that they will be operational in mid 2008.

Construction of the second dredge (D2) at Sierra Rutile is proceeding well, with
the project on schedule to be commissioned in the 4th quarter of this year.  The
second dredge is expected to double the Group's rutile production capacity to
approximately 200,000 tonnes per annum and we expect to begin shipping the
material produced in Q1 2008. D2 will be considerably more technologically
advanced than D1 and will enable us to monitor production levels and carry out
diagnostic and repair work remotely.

Construction of the third dredge has commenced since the arrival of the entire
dredge superstructure at the mine site.  This dredge has the capacity to produce
a further 40,000 tonnes per annum and is expected to commence production in mid
2008.

The upgrading of the mineral separation plant is on schedule to increase total
processing capacity for rutile production to 300,000 tonnes per annum. This
project should be sufficiently advanced to process the material which is
anticipated from our two initial dredges (D1 and D2) in January 2008.

The markets for each of Sierra Rutile's industrial mineral products (rutile,
ilmenite and zircon) remain strong and the premium quality of the deposit
underpins the Company's price position. Our marketing department has achieved
the sales targets for standard grade rutile and ilmenite in line with this
year's production to date, and has maintained the stockholding positions
required to meet our customers' shipping schedules.  Sales of industrial grade
rutile continue to be developed through an increasing number of both direct and
distributor sales.

Currently, the marketing department is negotiating sales contracts for all
products with new and existing customers, taking into account our anticipated
forward production schedules. Given the high demand for our products, the
department fully expects to meet its sales targets for the foreseeable future.

Exploration work will recommence shortly on the Group's large Turners'
Peninsular concession (1,742 km2), following the end of the rainy season.
Preparation work for access for drill rigs into the area is currently being
carried out. Very preliminary drilling using a mechanical banka rig has
confirmed the presence of heavy mineral bearing sands in the western part of the
Peninsular - this was based on visual field panning results undertaken prior to
the onset of the rains in June 2007. Specific mineralogical analysis of these
samples is currently in progress.

Sierra Minerals

During the period, the mine produced 656,603 tonnes of bauxite (442,141 tonnes,
H1 2006) and shipped 590,555 tonnes from Nitti (579,869 tonnes, H1 2006).
Bauxite production has been impressive due to an increase in both quantity and
grade.

The costs of the operations at the Bauxite mine have increased to some extent
due to rising fuel costs. A burner running on HFO has been ordered to bring the
dryer cost in line with the budget.

In June of this year, we commenced a major drilling campaign near to the current
bauxite mining operations - but which is not within current mining plans. This
is progressing well.

Financial

Turnover of USD 34.7 million was significantly higher than in the first half of
2006, reflecting the fact that dredge D1 was operating for a longer period.
Total capital expenditure for the Period was USD 35.7 million, with the
conversion to HFO power, continued development of Dredge D2, and expansion of
the mineral separation plant representing the majority of expenditure.
Conversion to HFO is expected to halve fuel costs, which currently represent 37%
of operating costs.

Gross profit margin for the Period was lower than expected. This was partly as a
result of continued high fuel costs combined with production shortfalls in
rutile caused by failures at our temporary power plants. It was further impacted
by increased mining and shipping costs amounting to approximately USD 4 million.
EBITDA before placement fees for the period stood at USD 2.8 million.(H1 2006
loss of USD 956,000).

Interest costs increased to USD 2.2 million as a result of an adverse exchange
rate movement of USD 1.1 million impacting upon the EURO denominated EU loan.

Total capital expenditure for the Period was USD 35.7 million, with the
conversion to HFO power, continued development of Dredge D2, and expansion of
the mineral separation plant representing the majority of expenditure.
Conversion to HFO is expected to halve fuel costs, which currently represent 37%
of operating costs.

During the first half of the year, USD 34.7 million (before expenses) was raised
by the placing of new shares to finance TRG's capital projects (slightly lower
than the figure of USD 35.2 million as announced on 8 May 2007 due to exchange
rate differences). Following the issue of new shares, TRG's gearing now stands
at 14%.  Debt at the period end stood at USD 39.4 million which was made up
entirely of the EU loan.

Outlook

The considerable activity related to the capital expenditure and drilling
programmes in rutile and bauxite means that at an operational level the Group is
busier than at any time in its history. We have a number of challenges in
meeting targets for the next six months but our experience in African mining
makes many of these familiar to our team.

In addition, there are a number of strategic developments in our market which we
believe the Group is well placed to benefit from as the industrial minerals
market consolidates. Demand for our products remains strong and the expected
doubling of capacity in rutile should leave the Group in a strong position to
play a role in this process.

After the end of the Period, Sierra Leone successfully held Parliamentary and
Presidential elections and a transfer of power is underway.  This marks a
further landmark in the development of Sierra Leone and we look forward to
working with the new Government as they implement their programme.

The information pertaining to exploration has been prepared by Mr C. P. Mortimer
(BSc (Hons Geology), MSc, DUC, MAusIMM) who is a member of The Australasian
Institute of Mining and Metallurgy and a full time employee of Titanium
Resources Group. Mr Mortimer has sufficient experience which is relevant to this
style of mineralisation and type of deposit under consideration to qualify as a
Competent Person as defined in the 2004 Edition of the 'Australasian Code for
Reporting of Exploration Results, Mineral Resources and Ore Reserves' (the JORC
Code). Mr C. P. Mortimer consents in writing to the inclusion in this report of
the matters based on information in the form and context in which it appears.


TITANIUM RESOURCES GROUP LTD AND ITS SUBSIDIARIES
CONSOLIDATED BALANCE SHEET - JUNE 30, 2007

                                                                    
                                               June 30,  June 30,  December 31,  
                                                   2007      2006          2006
                                                USD'000   USD'000       USD'000
ASSETS
Non-current assets
Property, plant and equipment                   125,029    74,494        92,665
Intangible assets                                13,099    12,962        13,115
Non -current receivables                            753     1,393           753
Deferred tax assets                              86,373    50,304        86,373
                                                225,254   139,153       192,906

Current assets
Inventories                                      14,642    12,232        15,054
Trade and other receivables                      20,862    13,523        14,275
Cash and cash equivalents                        47,341    62,425        52,393
                                                 82,845    88,180        81,722

Total assets                                    308,099   227,333       274,628

EQUITY AND LIABILITIES
Capital and reserves
Share capital                                   232,818   194,951       198,160
Revenue reserve/(deficit)                        15,263  (18,757)        20,869
Equity holders' interest                        248,081   176,194       219,029

LIABILITIES
Non-current liabilities
Borrowings                                       39,382    32,040        36,856
Provision for liabilities and
charges                                           2,150     2,150         2,150
                                                 41,532    34,190        39,006

Current liabilities
Trade and other payables                         18,264    16,938        16,464
Current tax liabilities                             215        10            85
Borrowings                                            7         1            44
                                                 18,486    16,949        16,593
Total liabilities                                60,018    51,139        55,599
Total equity and liabilities                    308,099   227,333       274,628



TITANIUM RESOURCES GROUP LTD AND ITS SUBSIDIARIES
CONSOLIDATED INCOME STATEMENT
FOR THE SIX MONTHS ENDED JUNE 30, 2007


                                               6 months  6 months 
                                                     to        to   Year Ended
                                               June 30,  June 30,  December 31,  
                                                   2007      2006          2006
                                                USD'000   USD'000       USD'000

Sales                                            34,740    14,888        51,304
Cost of sales                                   (25,004)   (6,366)      (29,764)
Gross profit                                      9,736     8,522        21,540
Other income                                      1,208     1,340         2,812
Administrative and marketing
expenses                                        (10,593)  (10,818)      (16,069)
Other expenses                                   (3,391)   (3,020)       (5,866) 
                                                 (3,040)   (3,976)        2,417
Exceptional item                                      -         -        (2,200)
Finance costs                                    (2,227)   (1,204)       (1,694)
Loss before taxation                             (5,267)   (5,180)       (1,477)
Taxation                                           (339)        -        35,923
(Loss)/profit for the period/year
attributable to equity
holders of the group                             (5,606)   (5,180)       34,446
(Loss)/earning per share (USD)
- basic                                           (0.03)    (0.06)         0.16
- diluted                                         (0.03)    (0.06)         0.15



TITANIUM RESOURCES GROUP LTD AND ITS SUBSIDIARIES
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE SIX MONTHS ENDED JUNE 30, 2007


                                                           Revenue
                                           Share          reserve/
                                         capital          (deficit)       Total
                                         USD'000           USD'000      USD'000

Balance at January 1, 2007                198,160           20,869      219,029
Issue of share capital                     34,658                -       34,658
Loss for the period                             -           (5,606)      (5,606)
Balance at June 30, 2007                  232,818           15,263      248,081

Balance at July 1, 2006                   194,951          (18,757)     176,194
Issue of share capital                      3,209                -        3,209
Profit for the period                           -           39,626       39,626
Balance at December 31, 2006              198,160           20,869      219,029

Balance at January 1, 2006                194,951          (13,577)     181,374
Loss for the period                             -           (5,180)     (5,180)
Balance at June 30, 2006                  194,951          (18,757)     176,194



TITANIUM RESOURCES GROUP LTD AND ITS SUBSIDIARIES
CONSOLIDATED CASH FLOW STATEMENT
FOR THE SIX MONTHS ENDED JUNE 30, 2007

                                               6 months  6 months 
                                                     to        to   Year Ended
                                               June 30,  June 30,  December 31,  
                                                   2007      2006          2006
                                                USD'000   USD'000       USD'000

Operating activities
Cash (absorbed in)/generated from
operations                                       (4,881)   (2,315)        7,308
Interest received                                 1,192     1,295         2,542
Interest paid                                       (35)        -           (60)
Tax paid                                           (209)        -           (71)
Net cash (used in)/generated from
operating activities                             (3,933)   (1,020)        9,719

Investing activities
Purchase of property, plant and equipment       (35,736)  (16,212)      (37,215)
Purchase of intangible assets                        (4)        -          (167)
Loans and advance granted                             -       (26)          (26)
Investments in financial assets                       -         -        (2,200)
Net cash used in investing activities           (35,740)  (16,238)      (39,608)

Financial activities
Issue of common shares                           34,658         -             -
Proceeds from long term borrowings                    -         -         2,556
Net cash used in investing activities            34,658         -         2,556

Net decrease in cash and cash equivalents        (5,015)  (17,258)      (27,333)

Movement in cash and cash equivalents
At January 1,                                    52,349    79,682        79,682
Decrease                                         (5,015)  (17,258)      (27,333)
At June 30/ December 31,                         47,334    62,424        52,349



TITANIUM RESOURCES GROUP LTD AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED JUNE 30, 2007

1.  GENERAL INFORMATION

Titanium Resources Group Ltd (TRG) is a limited liability company incorporated
and domiciled in the British Virgin Islands. The address of its registered
office is P.O. Box 173, Kingston Chambers, Road Town, British Virgin Islands.

2.   BASIS OF PREPARATION

The financial statements have been prepared in accordance with International
Financial Reporting Standards (IFSR). The financial statements are prepared
under the historical cost convention.

The interim financial statements for the half year ended June 30, 2007 are
unaudited. The accounting policies used in the preparation of the interim
unaudited financial statements are consistent with those used in the annual
financial statements for the year ended December 31, 2006. The interim financial
statements comply with IAS 34.

3.   EARNINGS/(LOSS) PER SHARE

                                               6 months  6 months 
                                                     to        to   Year Ended
                                               June 30,  June 30,  December 31,  
                                                   2007      2006          2006
                                                USD'000   USD'000       USD'000

(a) Basic (loss)/earnings per share

(Loss)/Profit attributed to equity holders 
of the Group (thousand)                          (5,606)   (5,180)       34,466

Weighted average number of common shares    220,480,961 82,397,742  212,513,731
in issue including options vested

Basic (loss)/earnings per share                   (0.03)     (0.06)        0.16

(b) Diluted (loss)/earnings per share

(Loss)/Profit attributable to equity 
holders of the Group used to determine 
diluted (loss)/ earnings per share
(thousand)                                       (5,606)    (5,180)      34,446


Number of shares

Weighted average number of common shares    220,480,961  82,397,742 212,513,731
in issue including options vested
Adjustments for unvested share options        3,264,985   3,389,985   3,264,985
Weighted average number of common shares    223,745,946  85,787,727 215,778,716
for diluted (loss)/ earnings per share 
including options vested and unvested
Diluted (loss)/earnings per share                 (0.03)     (0.06)        0.15


TITANIUM RESOURCES GROUP LTD AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED JUNE 30, 2007

4.  CAPITAL COMMITMENTS

                                              As at           As at       As at
                                      June 30, 2007   June 30, 2006  Dec.  2007
                                            USD'000         USD'000     USD'000

Property, plant and equipment 
acquisition contracted for at the 
balance sheet date but not yet 
incurred:                                    15,800           3,900      37,720

(a) Sierra Rutile Limited, a subsidiary of Titanium Resources Group Ltd, entered
into the above capital commitments.

5.     SHARE CAPITAL

                                              Number of                 Common
                                                 shares                 shares
                                                                       USD'000

At December 14, 2004                                  -                      -
Issued in exchange for 100% holding in 
Global Aluminium Limited and Titanium 
Fields Resources Ltd                        100,000,000                100,000
Proceeds from other new issues              107,201,553                 91,493
Share option scheme:
- Employee - value of service provided        2,989,985                  2,634
- Professional services                         936,007                    824

At December 31, 2005 & June 30, 2006        211,127,545                194,951

Share option scheme:
- Employee - value of service provided        3,389,985                  3,209

At December 31, 2006                        214,517,530                198,160

Proceeds from new issues (See note below)    27,077,000                 34,658

At June 30, 2007                            241,594,530                232,818


(a) Share options - Employees

Share options were granted to directors and to selected employees.  The exercise
price of the granted options were equal to 47 p each, being the market price of
the shares on the date of placement on the AIM market of the London Stock
Exchange. One third of the options vested immediately, that is on 15 August
2005, one third vested on the first anniversary of the date of grant, that is on
15 August 2006 and the remaining third will vest on the second anniversary of
the date of grant. The options will lapse and may not in any event be exercised
later than the day before the fifth anniversary of the date of grant.

Certain employees and directors, who joined the company after the above share
options grant date, were also granted share options at exercise prices of 52.5 p
and 77.75 p each, varying on the vesting date. The intervals between the vesting
dates are the same as the above, that is, one third immediately and the
remaining two third within the next two years.

Exercise of these options are not subject to performance-related conditions.

(b) Share options - Professional services

In consideration of services given to TRG by Nabarro Wells & Co Ltd, (NWCF LLP),
TRG granted to NWCF LLP an option to subscribe for 936,007 common shares of no
par value at a subscription price of 47p each.

(c)    Placement of common shares

At the beginning of May 2007, TRG made a new placement of 27,077,000 common
shares. The placing with institutional investors at a price of 65 pence per
share raised £ 17,600,050 (USD 34.7 million) before expenses.

(d)    Reconciliation of number of shares

                                            Number of                Common
                                              shares                 shares
                                                                    USD'000

Issued shares                            234,278,553                226,151

Options vested but not yet exercised       7,315,977                  6,667

Total shares used for basic EPS 
calculation                              241,594,530                232,818


TITANIUM RESOURCES GROUP LTD AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED JUNE 30, 2007

6.   OTHER EXPENSES
                                                             6 months to June    6 months to June         Year ended
                                                                     30, 2007            30, 2006   December 31, 2006
                                                                      USD'000             USD'000             USD'000

Other expenses include:
 - Depreciation                                                         3,373               2,997              5,829
 - Amortisation                                                            18                  23                 37

                                                                        3,391               3,020              5,866

7.   CASH AND CASH EQUIVALENTS
                                                             6 months to June    6 months to June          Year ended
                                                                     30, 2007            30, 2006   December 31, 2006
                                                                      USD'000             USD'000             USD'000

Cash at Bank and Short Term Bank Deposits                              47,341              62,425             52,394

Bank Overdraft                                                             (7)                 (1)               (44)
Consolidation Adjustment on Disposal of 0.4% shares in                      
Subsidiary                                                                  -                                    (1)

Cash and Cash Equivalents                                              47,334              62,424             52,349


Certain statements contained in this announcement, including estimates of
production capacity and production as well as other statements about anticipated
future events or results, are forward-looking statements. The forward-looking
statements that are contained in this announcement involve a number of risks and
uncertainties. As a consequence, actual results might differ materially from
results forecast or suggested in these forward-looking statements. Accordingly,
readers are cautioned that events or circumstances could cause results to differ
materially from those predicted.



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