CGM.L Regulatory News (CGM)

26 Jun 2006 09:20

China Goldmines PLC26 June 2006 26 June 2006 China Goldmines plc China Goldmines plc listed on AIM (Code CGM) on 7th February 2006 as a goldresource company with a direct interest in a gold mining project in the provinceof Hunan China. We are pleased to announce our reviewed Interim Results for thesix months to 25 March 2006. Dear Shareholder Chairman's Statement The past six months has been a very active, productive and successful periodwhich has seen the company moving forward on a number of fronts. Heightenedinvestor interest in the mining sector, buoyed by strong metal pricesparticularly for gold, saw the company's share price on the London (AIM Board)increase from listing at £0.60 (per share) in February to a high of almost £1.40(per share) in May, before settling back to the £0.84 range recently. Financials We are pleased to announce our interim results for the 6 months to 25 March2006: • The company had adopted US dollar as the primary currency of measurement and display. • In accordance with the Joint Venture Agreement at 25 March 2005, the Group had a 53% interest in Hunan Westralian Mining Co. Ltd. On 6 June 2006 the company paid over the remaining $300,000 US required by the Agreement, bringing the interest held to 80% and the amount invested to $900,000 US. • Cash and short-term investments stood at $6.1million. • Operating loss for the 6 month period of ($267,000). Operations Highlights Since listing on the 7th February 2006, we have continued to make good progressin the development of the Guanzhuang Gold Prospect. The Company is well advanced in completing Stage 1 of its exploration program,being:- • Structural mapping, detailed sampling and re-surveying of the existing underground mine developments. • Preliminary metallurgical test work. • 3D computer modelling of all geology, assay and survey data to assist in identifying the controls on mineralisation. • Diamond drilling to test identified structural, geological and geophysical targets, along with more systematic resource definition drilling. The Guanzhuang Gold Project comprises two main prospects being the ShenjiayaProspect and Xiaotaoyuan Prospect. Of these, the Shenjiaya Prospect isconsidered by the Directors the most prospective and is the larger of the two. The geological results confirm high grade mineralisation at the ShenjiayaProspect (Hunan Province, Southwest China). The key highlights of ourexploration since listing to the end of May has indicated that:- • Underground sampling results of the Shenjiaya Gold Prospect confirms high grade of gold bearing quartz veins. • New discovery of gold bearing quartz veins in the southern portion of our exploration licence. • The company has established its operational office and logistic campsite in Guanzhuang. This site was well received by the local community and was officially opened on the 2nd April 2006 by Senior Chinese Local Government Officials. Outlook We expect substantial activity at the Shenjiaya Gold Prospect with explorationdrilling and bulk sampling planned to continue throughout the year. We believethat the project has the potential to develop into a major gold mining area. With the company's strong financial position, an experienced management team inplace and a highly prospective gold project, we are on track with our ongoingfeasibility study. On behalf of the Board of Directors Clive Donner Chairman Dated: Thursday, 22 June 2006 INDEPENDENT REVIEW REPORT TO CHINA GOLDMINES PLC Introduction We have been instructed by the company to review the financial information forthe six months ended 25 March 2006 which comprises the consolidated incomestatement, the group balance sheet, the consolidated cash flow statement andrelated notes 1 to 11. We have read the other information contained in theinterim report and considered whether it contains any apparent misstatements ormaterial inconsistencies with the financial information. This report is made solely to the company, in accordance with Bulletin 1999/4issued by the Auditing Practices Board. Our work has been undertaken so that wemight state to the company those matters we are required to state to them in anindependent review report and for no other purpose. To the fullest extentpermitted by law, we do not accept or assume responsibility to anyone other thanthe company, for our review work, for this report, or for the conclusions wehave formed. Directors' responsibilities The interim report, including the financial information contained therein, isthe responsibility of, and has been approved by, the directors. The directorsare also responsible for ensuring that the accounting policies and presentationapplied to the interim figures are consistent with those applied in preparingthe preceding annual accounts except where any changes, and the reasons forthem, are disclosed. International Financial Reporting Standards As disclosed in note 1, the next annual financial statements of the group willbe prepared in accordance with International Financial Reporting Standards asadopted for use in the EU. Accordingly, the interim report has been prepared inaccordance with the recognition and measurement criteria of IFRS and thedisclosure requirements of the Listing Rules. Review work performed We conducted our review in accordance with the guidance contained in Bulletin1999/4 issued by the Auditing Practices Board for use in the United Kingdom. Areview consists principally of making enquiries of group management and applyinganalytical procedures to the financial information and underlying financial dataand, based thereon, assessing whether the accounting policies and presentationhave been consistently applied unless otherwise disclosed. A review excludesaudit procedures such as tests of controls and verification of assets,liabilities and transactions. It is substantially less in scope than an auditperformed in accordance with International Standards on Auditing (UK andIreland) and therefore provides a lower level of assurance than an audit.Accordingly, we do not express an audit opinion on the financial information. Review conclusion On the basis of our review we are not aware of any material modifications thatshould be made to the financial information as presented for the six monthsended 25 March 2006. Deloitte & Touche LLP Chartered Accountants Leeds 23 June 2006 China Goldmines plc Consolidated income statementfor the six months ended 25 March 2006 Notes Six months 11 October 2004 ended 25 March to 25 March 2005 2006 US$ US$ Unaudited UnauditedContinuing operation Revenue - - Administrative expenses (278,490) (5,091) Share of joint venture losses 7 (16,257) - Operating Loss (294,747) (5,091) Finance income 27,747 728 Loss before taxation (267,000) (4,363) Taxation - - Loss for the period (267,000) (4,363) Attributable to: Equity holders of the parent (267,000) (4,363) Cents Cents Earnings per share (basic and diluted) (1.71) (0.04) There were no changes in equity (other than those arising from capital transactions or distributions to equityholders) other than as set out in the income statement above. Accordingly no consolidated statement of recognised income and expenses is presented. China Goldmines plc Consolidated balance sheetas at 25 March 2006 Notes 25/03/2006 25/03/2005 US$ US$ Unaudited UnauditedAssets Non-current assetsJoint venture investment 7 781,081 188,054Property, plant and equipment 22,856 - 803,937 188,054 Current assets Trade and other receivables 151,777 -Cash and cash equivalents 6,143,482 64,151 6,295,259 64,151 Current liabilities Trade and other payables (193,610) - Net current assets 6,101,649 64,151 Net assets 6,905,586 252,205 Shareholders equity Share capital 8 390,151 256,568Share premium 9 6,725,683 -Other reserves 9 61,344 -Retained earnings 9 (271,592) (4,363)Total shareholders' equity 6,905,586 252,205 China Goldmines plc Consolidated cash flow statementfor the period ended 25 March 2006 Six months ended 11 October 2004 25 March 2006 to 25 March 2005 US$ US$ Notes Unaudited Unaudited Net cash flows from operating activities Cash generated from operations (267,213) (5,091) Purchase of joint venture investment 7 (558,469) (188,054)Purchase of tangible assets (25,193) - (850,875) (193,145) Net cash flows from investing activities Interest received 27,747 728 Net cash flows from financing activities Share issue 8 194,927 256,568Premium on shares issued 9 8,440,166 -Legal and professional fees of listing 9 (1,714,483) - 6,920,610 256,568 Net increase in cash and cash equivalents 6,097,482 64,151 Cash and cash equivalents at beginningof period 46,000 - Cash and cash equivalents at end ofperiod 6,143,482 64,151 Reconciliation of operating loss to net cash outflow from operating losses Six months ended 11 October 2004 25 March 2006 to 25 March 2005 US$ US$ Unaudited Unaudited Operating loss (294,747) (5,091) Share of joint venture losses 16,257 - Depreciation charges 2,337 - Increase in trade debtors and other receivables (147,121) - Increase in trade creditors and other payables 156,061 - Net cash outflow from operating activities (267,213) (5,091) China Goldmines plc Notes to the consolidated financial statementsfor the period ended 25 March 2006 1 Basis of preparation The interim financial report has been prepared in accordance with International FinancialReporting Standards (IFRSs) with the exception of IAS34 which is not mandatory for UK Groups. The financial information is unaudited and does not amount to full statutory accounts withinthe meaning of the Companies Act 1985. 2 Significant accounting policies The accounting policies adopted are consistent with those that will be followed in thepreparation of the Group's annual financial statements. The same accounting policies and methods of computation are followed in the Placing andAdmission to the Alternative Investment Market report as set out in the notes to the financialinformation of Global Resource Ventures Limited on pages 64-5 which is available on thecompany's website on www.chinagoldmines.com. The treatment of the acquisition of Global Resource Ventures Limited is treated as a reverseacquisition as described more fully in note 11. As set out in note 7 the group's shareholding in Hunan Westralian Mining Co. Limited istreated as a joint venture and the group has adopted the equity method to account for thisentity. Assets and liabilities in foreign currencies are translated into US dollars at the rates ofexchange ruling at the balance sheet date. Transactions in foreign currencies are translatedinto US dollars at the rate of exchange ruling at the date of transaction. 3 Segment information All of the reported revenue and operational results for the period derive from the Group'scontinuing gold mine exploration and mining operations. 4 Taxation No liability to tax is expected to have arisen during this period. 5 Earnings per share The calculation of the earnings per share is based on the following data: Six months 11 October 2004 ended 25 March to 25 March 2005 2006 US$ US$ Earnings Earnings for the purposes of basic and diluted earnings pershare loss for the period attributable to the equity holdersof the parent (267,000) (4,363) Number of shares Weighted average number of ordinary shares for the purpose 15,644,842 11,383,339of basic earnings per share The above figures are not affected by any dilutive share options as no share options have been issuedin the period. 6 Dividends No dividends were declared in the period 7 Interests in joint ventures The investment represents the costs of assessing the viability of, and purchasing an interest in,Hunan Westralian Mining Co. Limited, a company incorporated under Joint Venture Law in thePeople's Republic of China. As at 25 March 2006, the group's shareholding amounted to 53.3 percent, which is held through Westralian Resources Pty Limited. Under the terms of the Joint Venture agreement, Westralian Resources Pty Limited must contributea further $300,000 capital investment, delineate at least 5 metric tonnes of gold resource, anddeliver a satisfactory feasibility study, before the other joint venture partner Brigade 407 isrequired to transfer various mining rights to the Joint Venture. Both sides currently have keyroles and responsibilities in the management of the company, and unanimous consent is requiredfor certain resolutions. Therefore at 25 March 2006 the group has taken exemption from includingthe assets and liabilities of Hunan Westralian Mining Co. Limited in the unaudited consolidatedfinancial figures for the period, despite the 53% shareholding, as it most accurately reflectsthe control held. The group has used the equity method of accounting to include $16,257 as the group share of theJoint Venture's loss for the year. The Balance sheet of the joint venture company, Hunan Westralian Mining Co. Limited as at 25March 2006 was as follows: US$ Unaudited Non current assets Fixed assets 90,237 Current assets Trade debtors and other receivables 12,722 Cash and cash equivalents 465,976 478,698 Net assets 568,935 Shareholders equity Share capital 600,000 Retained earnings (31,065) 568,935 8 Share capital On 23 November 2005 the 1 issued ordinary share, and 99 unissued ordinary shares were subdividedinto ordinary shares of £0.01 ($0.02). The share capital of the company was increased from £100($176) to £200,000 ($356,000) creating 19,990,000 new ordinary shares of £0.01 ($0.02) each rankingpari passu in all respects with the existing shares. On 23 November 2005 a rights issue was made issuing 2,333,233 ordinary shares of £0.01 ($0.02) eachto the company's shareholder and director K E Watkin for consideration at par of £23,332 ($41,531).K E Watkin on the same day transferred 333,333 ordinary shares to each of A D Worrall and L Browne,both fellow directors. On 24 November 2005 convertible unsecured loan stock was approved by the company and loan stock wasissued on 28 November 2005 to various parties amounting to £400,000 ($712,000). This stock wasconverted in line with the terms of the instrument on 30 November 2005 with one share issued forevery £0.30 ($0.53) paid over in loan stock. This amounted to 1,333,323 additional shares of £0.01($0.02) issued. On 28 November 2005, China Goldmines plc (CGM) issued 11,383,339 shares in exchange for 34,150,010shares in Global Resource Ventures Limited (GRV), being the entire share capital of GRV. On 12 December 2005 China Goldmines Limited was reregistered as a public limited company. On 30 January 2006, conditional upon admission to the Alternative Investment Market, the sharecapital of the company was reorganised, with the authorised share capital of the company beingincreased to £240,000 by the creation of an additional 4,000,000 shares of £0.01 ($0.02) each. On 7 February 2006, 7,500,000 shares of £0.01 ($0.02) each were placed at a premium of £0.59 ($1.04)each. 25/03/2006Authorised £ 24,000,000 (100) Ordinary shares of £0.01 240,000 Allotted, issued and fully paid US$22,549,995 (1) Ordinary shares of £0.01 390,151 9 Other reserves Retained Share Premium Other Reserves Earnings US$ US$ US$ Balance at 25 September 2005 (4,592) - - Profit for the period attributable to equity (267,000) - -holders of the parent Arising on reverse acquisition - - 61,344consolidation Cash raised over par value - 8,440,166 - Legal and professional costs of listing - (1,714,483) - Balance at 25 March 2006 (271,592) 6,725,683 61,344 10 Post balance sheet events In accordance with the Joint Venture agreement, the group paid an additional $300,000 on 6 June2006, taking its holding to 80 per cent. 11 Acquisition of subsidiaries On 28 November 2005, China Goldmines plc (CGM) issued 11,383,339 shares in exchange for 34,150,010shares in Global Resource Ventures Limited (GRV), being the entire share capital of GRV. On the samedate, five directors of GRV who, through their own shareholdings or interests, controlled GRV becamedirectors of CGM. The newly issued shares in CGM represented an 82.99 per cent holding, and thus the formershareholders of GRV owned the majority of shares, and controlled the majority of votes, in thecombined entity, together with making up the majority of the management of the combined entity.Therefore, under International Financial Reporting Standard 3, this share-for-share exchangefulfilled the criteria of a reverse acquisition. Accordingly, these financial statements prepared in the name of the legal parent, CGM, reflect theaccounts of GRV, which is the acquirer for accounting purposes. Copies of these Interim Results will be available to the public for at least onemonth, free of charge, from the offices of Bell Lawrie, 48 Vincent Street,Glasgow G2 5TS. Corporate Directory Directors: Clive Donner (Non-Executive Chairman) Frank Vanspeybroeck (Chief Executive) Marinko Vidovich (Finance Director) Lance Browne CBE (Non-Executive Director) Evan Kirby (Non-Executive Director) Karl Eric Watkin MBE (Non-Executive Director) Company Secretary: Alex Worrall Registered Office: Sandgate House 102 Quayside Newcastle-upon-Tyne NEI 3DX Perth Operations Office: 1st Floor 24 Outram Street West Perth WA 6005 Australia Nominated Adviser and Broker: Bell Lawrie (a division of Brewin Dolphin Securities Limited) 48 St Vincent Street Glasgow G2 5TS Auditors and Reporting Accountants: Deloitte & Touche LLP Gainsborough House 34-40 Grey Street Newcastle-upon-Tyne NEI 6AE Auditors of Subsidiaries in Australia: Rothsay Chartered Accountants Level 1, 21 Barrack Street Sydney NSW 2000 Australia Solicitors to the Company: United Kingdom: WardHadaway Sandgate House 102 Quayside Newcastle-upon-Tyne NEI 3DX Australia: Lawton Gillon 3rd Floor 19 Pier Street Perth Western Australia China: Chongqing Senswins Law Firm 5/F Office Tower Chongqing Marriott Hotel 77 Qingnian Road Yuzhong District Chongqing 400012, PRC Financial Public Relations: Brunswick Group Limited 16 Lincoln's Inn Fields London WC2A 3ED Registrars: Computershare Investor Services PLC Corporate Actions PO Box 859 The Pavilions Bridgwater Road Bristol BS99 1XZ This information is provided by RNS The company news service from the London Stock Exchange