Clontarf Regulatory News (CLON)

RNS Number : 0727O

Persian Gold PLC

23 June 2010

 

 

Persian Gold PLC

Preliminary Results for Year Ended 31 December 2009

 

To say that the past 24 months have been frustrating is an understatement. Despite the best efforts of our team in Iran, our Iranian partners and the diplomatic service, no progress has been made in obtaining Discovery Certificates on our two joint-venture properties in Iran, the Chah-e-Zard gold oxide deposit and the Dalli gold/copper porphyry deposit. Representations have been made to the Iranian authorities at frequent intervals during 2009 and 2010 but to no avail. We were informed that all procedures were in order and that we could expect the issuance of the certificates. So far nothing has happened.

The delay impacts on Persian Gold in many ways. We have let staff go and our loyal geologists are surviving on a pittance. Our local partners are frustrated that nothing is happening and concerned that they could lose the licences. We have declared force majeure on the joint ventures.

Iran is a highly prospective country with vast mineral potential. We demonstrated this potential by having two successful discoveries in our first three projects. The workforce is excellent and most skills are available locally. Infrastructure is good. But the political system defies our best efforts. Title is guaranteed under the Mineral Acts and a fixed time to deal with discovery certificate applications is laid out clearly but not followed. There is a systematic but slow process of foreign investment approvals, which, incidentally, we have obtained. Despite all of the above, we have made no progress. We will continue to work in Iran, but to secure a future for Persian Gold and our shareholders, we are developing interests elsewhere.

The first and logical step was to utilise our technical staff in surrounding Farsi and Turkic speaking countries. We have evaluated gold projects in Kazakhstan and decided not to proceed. For some time, we have been in discussions with gold exploration licence holders in Azerbaijan. This is a country with significant gold potential. To date, our efforts have failed but we continue.

Some time ago, we identified lithium as a mineral with excellent market prospects, particularly the lithium mined from salt pan brines. This metal is used in lithium batteries. There is potential for lithium in Iranian salt flats but despite having discussions on a joint venture with the state owned holder of salt pan exploration licences, nothing has been achieved.

We then turned to Bolivia where 50% of the world's lithium is contained in five salt lakes, mainly in the massive Lake Uyuni and Coipasa salt pans high in the Andes. The directors of Persian Gold have many years experience operating in Bolivia. We have signed a Memorandum of Understanding (MOU) with Quimbabol, a company owned by the Bolivian armed forces, the state of Potosi and local communities around the pans. Our obligation is to prepare a scoping study on industrial projects associated with the lakes, namely soda ash plant and borax derived projects. This is very early stage and low cost.

In addition to the above, we are examining lithium projects on the Chile side of the Bolivia/Chilean border, as well as gold and base metal projects in Peru and Bolivia.

Hydrocarbon Projects

Iran is not only rich in minerals, it is one of the world's leading oil producers. All hydrocarbons are owned by the state and licensed to local and overseas investors. Persian Gold has undertaken work with local Iranian groups on potential gas projects near the Iran/Iraq border and oil on production enhancement schemes. There is a cap on the rate of return offered. The cap of 17% return on investment is insufficient to take the political, technical and exploration risks.

Some time ago we were offered an opportunity to participate in a consortium applying for an oil exploration licence in Africa. Persian Gold has acquired a 30 per cent interest in an onshore/offshore oil concession in Ghana. It is important to note that the concession is signed by the authorities but not yet ratified by the cabinet and parliament. The block covers 1,500 square kilometres in the Tano basin. It is held in joint venture with Hydrocarbon Exploration (30%), Petrel Resources (30%) and local interests (10%). Terms are competitive including an initial exploration period of three years and two extension periods of two years each. There is an oil royalty of 12.5%, a 10% carried interest for the state, a 35% income tax with surcharges related to Return on Investment. The work commitment will be $20 million for the first three years. Work on reviewing and reprocessing existing data has begun.

Acquisition of Hydrocarbon Exploration Plc

As announced on 22 June, Persian Gold has agreed to acquire Hydrocarbon Exploration plc. The directors of Persian Gold and Hydrocarbon Exploration Plc (HyEx) see merit in merging their interests. HyEx is a spin-off from Pan Andean Resources, an AIM listed company which was recently acquired by Petrominerales, a Canadian listed company. HyEx is an unlisted UK public company producing gas in Bolivia, and in the Gulf of Mexico, as well as having exploration licences. Persian Gold has entered into a binding agreement to acquire HyEx for shares. The acquisition agreement is subject to court approval, Persian Gold shareholders' approval for relisting the enlarged group and financing. It is expected that the transaction will be completed in October 2010; in the meantime, dealings in Persian Gold's shares have been suspended pending publication of an admission document. Persian Gold will pay £4.3m in shares for 25,537 HyEx shares at a price of 6.75p per Persian Gold share.

Not only will this increase the interest Persian Gold has in the Ghana oil concession to 60 per cent but it will bring a listing to HyEx and additional assets to Persian Gold.

Within months, the renamed Persian Gold will be transformed into a natural resources company with oil and gas production, cash flow and excellent exploration targets.

John Teeling

Chairman

 

23 June 2010

 

Persian Gold PLC

John Teeling, Chairman +353 1 833 2833

James Finn, Finance Director +353 1 833 2833

 

Nominated Adviser

Cairn Financial Advisers LLP +44(0) 20 7148 7900

James Caithie

 

Broker and Financial Adviser

Alexander David Securities Limited +44(0) 20 7448 9800

Ian Rice

 

College Hill +44(0) 20 7457 2020

Nick Elwes

 

www.persiangoldplc.com

 

 

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

FOR THE YEAR ENDED 31 DECEMBER 2009

	2009		2008
	£		£
REVENUE	-		-
Cost of sales	-		-
GROSS PROFIT	-		-
Administrative expenses	(315,118)		(316,524)
OPERATING LOSS	(315,118)		(316,524)
Finance income	134		7,957
Finance costs	(1,016)		(1,800)
LOSS BEFORE TAXATION	(316,000)		(310,367)
Income tax expense	-		-
LOSS FOR THE YEAR AND TOTAL
COMPREHENSIVE INCOME	(316,000)		(310,367)
LOSS PER SHARE - Basic and diluted	(0.42p)		(0.48p)

 

 

	2009		2008
	£		£
ASSETS:
NON CURRENT ASSETS
Intangible assets	1,910,073		1,831,551
CURRENT ASSETS
Other receivables	4,053		12,697
Cash and cash equivalents	23,714		194,125
	27,767		206,822
TOTAL ASSETS	1,937,840		2,038,373
LIABILITIES:
CURRENT LIABILITIES
Trade and other payables	(386,226)		(170,759)
NON-CURRENT LIABILITIES
Provision	(10,000)		(10,000)
TOTAL LIABILITIES	(396,226)		(180,759)
NET ASSETS	1,541,614		1,857,614
EQUITY
Called-up share capital	186,656		186,656
Share premium	2,654,764		2,654,764
Retained earnings - (deficit)	(1,514,442)		(1,198,442)
Share based payment reserve	214,636		214,636
TOTAL EQUITY	1,541,614		1,857,614

 

 

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE YEAR ENDED 31 DECEMBER 2009

	Called-up		Share Based	Retained
	Share	Share	Payment	Earnings-
	Capital	Premium	Reserve	Deficit	Total
	£	£	£	£	£
At 1 January 2008	158,531	2,314,113	129,977	(888,075)	1,714,546
Share based payments	-	-	84,659	-	84,659
Shares issued for cash	28,125	421,875	-	-	450,000
Share issue expenses		(81,224)	-	-	(81,224)
Loss for the year			-	(310,367)	(310,367)
At 31 December 2008	186,656	2,654,764	214,636	(1,198,442)	1,857,614
Share issue expenses	-	-	-	-	-
Loss for the year	-	-	-	(316,000)	(316,000)
At 31 December 2009	186,656	2,654,764	214,636	(1,514,442)	1,541,614

 

Share premium

The share premium reserve comprises of a premium arising on the issue of shares.

Share based payment reserve

The share based payment reserve arises on the grant of share options to directors under the share option plan.

Retained deficit

Retained deficit comprises of losses incurred in 2009 and prior years.

 

 

 

CONSOLIDATED CASH FLOW STATEMENT

FOR THE YEAR ENDED 31 DECEMBER 2009

	2009		2008
	£		£
CASH FLOW FROM OPERATING ACTIVITIES
Loss for financial year	(316,000)		(310,367)
Finance costs recognised in loss	1,016		1,800
Finance revenue recognised in loss	(134)		(7,957)
Exchange movement	4,217		10,549
Shares issued in lieu of fees	-		212,749
	(310,901)		(93,226)
MOVEMENTS IN WORKING CAPITAL
Increase/(decrease) in trade and other payables	215,467		(101,218)
Decrease in trade and other receivables	8,644		7,388
CASH USED BY OPERATIONS	(86,790)		(187,056)
Finance cost	(1,016)		(1,800)
Finance income	134		7,957
NET CASH USED IN OPERATING ACTIVITIES	(87,672)		(180,899)
CASH FLOWS FROM INVESTING ACTIVITIES
Payments for intangible assets	(78,522)		(544,754)
NET CASH USED IN INVESTING ACTIVITIES	(78,522)		(544,754)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issue of equity shares	-		237,251
NET CASH GENERATED FROM FINANCING ACTIVITIES	- -		237,251 237,251
NET DECREASE IN CASH AND CASH EQUIVALENTS	(166,194)		(488,402)
Cash and cash equivalents at beginning of the financial year	194,125		693,076
Effect of exchange rate changes on cash held in
foreign currencies	(4,217)		(10,549)
Cash and cash equivalents at end of the financial year	23,714		194,125

 

Notes:

1. Accounting Policies

There were no changes in accounting policies from those set out in the Group's Annual Report for financial year ended 31 December 2008. The financial statements have been prepared in accordance with International Financial Reporting Standards and IFRSs as adopted by the European Union.

2. Loss per Share

Basic loss per share is computed by dividing the loss after taxation for the year available to ordinary shareholders by the weighted average number of ordinary shares in issue and ranking for dividend during the year. Diluted earnings per share is computed by dividing the profit or loss after taxation for the year by the weighted average number of ordinary shares in issue, adjusted for the effect of all dilutive potential ordinary shares that were outstanding during the year.

The following table sets out the computation for basic and diluted earnings per share (EPS):

	2009		2008
	£		£
Numerator
For basic and diluted EPS retained loss	(316,000)		(310,367)
Denominator	No.		No.
For basic and diluted EPS	74,662,198		64,090,280
Basic EPS	(0.42p)		(0.48p)
Diluted EPS	(0.42p)		(0.48p)

 

Basic and diluted loss per share are the same as the effect of the outstanding share options is anti-dilutive and is therefore excluded.

3. Intangible Assets

	2009		2008
	Group		Group
	£		£
Exploration and evaluation assets:
Cost:
At 1 January	1,831,551		1,283,362
Additions during the year	78,522		548,189
Carrying Value:
At 31 December	1,910,073		1,831,551

 

Exploration and evaluation assets relates to expenditure incurred in prospecting and exploration for gold in Iran.

The realisation of this intangible asset is dependent on the discovery and successful development of economic mineral reserves which is affected by the risks outlined below. Should the realisation of the intangible asset prove unsuccessful the value included in the balance sheet would be written off to the income statement.

The group's exploration activities are subject to a number of significant and potential risks including:

·; price fluctuations;

·; foreign exchange risks;

·; uncertainties over development and operational risks;

·; operations and environmental risks;

·; political and legal risks, including arrangements with governments for licenses, profit sharing and taxation;

·; foreign investment risks including increases in taxes, royalties and renegotiation of contracts;

·; liquidity risks; and

·; funding risks.

 

The directors are aware that by its nature there is an inherent uncertainty in such development expenditure as to the value of the asset. The rate of progress in obtaining discovery certificates on two projects in Iran is slower than expected as outlined in the Chairman's statement. Notwithstanding these delays, the Directors are confident that the capitalised value of these projects is fully recoverable, either through progressing the projects after resolving delays with the Iranian authorities, or by realising value through disposal or part disposal to a larger mineral resource development group who can progress the project. Having reviewed the deferred exploration and evaluation expenditure at 31 December 2009, the directors are satisfied that the value of the intangible asset is not less than carrying value.

Included above is an amount of £Nil (2008: £3,435) of capitalised expenses related to equity-settled share-based payment transactions during the year.

4. Post Balance Sheet Events

On 22 June 2010, Persian Gold agreed to acquire Hydrocarbon Exploration plc for £4.3 million in shares at a price of 6.75p per Persian Gold share. The acquisition agreement is subject to court approval, Persian Gold shareholder approval for relisting the enlarged group and financing.

5. General Information

The financial information set out above does not constitute the Company's financial statements for the year ended 31 December 2009. The financial information for 2008 is derived from the financial statements for 2008 which have been delivered to the Registrar of Companies. The auditors have reported on 2008 statements; their report was unqualified with an emphasis of matter in respect of considering the adequacy of the disclosures made in the financial statements concerning the valuation of intangible assets, and did not contain a statement under section 237(2) or (3) of the Companies Act 1985. The financial statements for 2009 will be delivered to the Registrar of Companies following the Company's Annual General Meeting.

A copy of the Company's Annual Report and Accounts for 2009 will be mailed to all shareholders shortly and will also be available for collection from the Company's registered office, 20-22 Bedford Row, London WC1R 4JS. The Annual Report and Accounts may also be viewed on Persian Gold plc's website at www.persiangoldplc.com.

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