MMS.L Regulatory News (MMS)

23 Sep 2005 07:00

Maghreb Minerals PLC23 September 2005 MAGHREB MINERALS PLC FINAL RESULTS FOR THE YEAR ENDED 30 JUNE 2005 HIGHLIGHTS • Raised £2.5 million through a placing of ordinary shares and warrants on admission to the Alternative Investment Market ("AIM") of the London Stock Exchange in December 2004. • Commenced drilling and exploration in Tunisia in late November 2004. • Completed 12 drill holes totaling in excess of 2,900 metres. • The Company has announced results for one hole, which revealed grades of between 0.7% and 23.9% combined lead and zinc over three separate intervals, totaling 23 metres. This includes 8 metres grading 9.9%, 3 metres of 13.8% and 2 metres of 9.7% combined lead and zinc. • Significantly the results support earlier drilling results of the Office National Des Mines of Tunisia that indicated a measured resource of 400,000t grading 13.3% combined lead and zinc at the Dar N'Hal Sud deposit at Fej Lahdoum. • Samples for four holes at Fej Lahdoum have been sent for assay, including hole MFL8, drilled in July 2005, which revealed interesting mineralisation over an interval of 66 metres starting at a depth of 319 metres. Assay results are expected soon. • Acquired an 85% interest in the Tan Chafao Cu-Au prospect in Algeria in July 2005. • Net cash balances of £1.7 million as at 30 June 2005. CHAIRMAN'S STATEMENTINTRODUCTION Maghreb Minerals Plc (the "Company" or "Maghreb") was formed on 7 June 2004 toacquire and exploit lead and zinc ("Pb and Zn") mineral exploration assets inTunisia and the neighbouring region. In August 2004, the Company acquired a 100%interest in High Marsh Holdings Limited ("HMH") and as a result acquired nineexploration permits in Tunisia and conditional options to acquire two mines fromthe Government of Tunisia. In October 2004 it took delivery of its drilling rigin Tunisia to enable it to prove up (to the extent possible) these options andexploration permits in a cost efficient manner. On 23 December 2004, the Company was admitted to the AIM market of The LondonStock Exchange and raised £2.5 million through the issue of new ordinary sharesand warrants to provide working capital for its exploration programme.Exploration and operations in Tunisia are conducted through High Marsh HoldingsTunisia, a branch of HMH. I am pleased to report that after an unusually bitter winter, when access to ourrig was impossible at times, the Company has made significant progress inTunisia where it has drilled in excess of 2,900 metres during the period underreview. Since the year end, the Company has acquired an interest in an excitingexploration prospect in Algeria. TUNISIAN MINE CONCESSIONS AND EXPLORATION PERMITS MINE CONCESSIONS The Company has a conditional option to acquire the producing mine at the FejLahdoum - Dar N'Hal mine concession. Subject to completing the requisitedrilling, the Company will also have a conditional option to acquire the BouJabeur mine concession, a mine that is currently on a care and maintenanceprogramme. Both mines are owned by the Tunisian Government and located within or adjacentto the Company's exploration permits. The terms of the conditional option werethat having completed a 5,000 metres drilling programme over the two optionareas, the Company would have the right to acquire the Mine Concessions,infrastructure and tailings on a basis to be agreed with the TunisianGovernment. The Company commenced drilling in mid-November at Fej Lahdoum. By 30 June 2005,the Company had drilled seven holes totaling slightly in excess of 1,000 metreson this property. One hole was abandoned with much fragmented ground but thesecond hole revealed grades of between 0.69% and 23.94% combined lead and zincover three separate intervals, totaling 23 metres. This includes 8 metresgrading 9.9%, 3 metres of 13.8% and 2 metres of 9.7% combined lead and zinc. Samples from three holes (MFL 5,6 and 7) completed in late May and in June 2005have been sent for assay and an eighth hole (MFL 8) in July 2005 revealedinteresting mineralisation over an interval of 66 metres starting at a depth of319 metres and it too is under assay. Significantly these drill holes confirm earlier drilling results of the OfficeNational Des Mines of Tunisia that indicated a measured resource of 400,000tgrading 13.3% combined lead and zinc at the Dar N' Hal Sud deposit at FejLahdoum. The Dar N'Hal Sud deposit is a fault offset extension, situated some100 metres south-east, of the main Dar N'Hal Nord orebody where work in 1991estimated a reserve of 1.4Mt grading 5.7% Pb and 6.1% Zn. As a result of thisdrilling programme, the option on the Fej Lahdoum - Dar N'Hal mine concessionhas been extended to October 2005 and our efforts in July through September 2005are focused on concentrated drilling on this property. Given that there was no other available operating rig in Tunisia, no explorationwas possible on the Bou Jabeur mine concession. However following discussionswith the Tunisian Mining Authorities, the Directors believe that the option onthe Bou Jabeur mine concession will be extended once exploratory drillingcommences on that property. A summary of the reported ore reserves and mineral resources for these mineconcessions, which are currently held and operated by the Ministry of Mines, areincluded in the table below. Mine Concessions Area (km2 ) Reported reserves/resources (not confirmed to JORC standards)Fej Lahdoum 3.06 Dar N'Hal Nord: Estimated ore reserve of 1.42Mt at 6.06% Zn, 5.65% Pb. Dar N'Hal Sud: Measured mineral resource estimated at 400,000t at 7.70% Zn, 5.60% Pb.Bou Jabeur c.4.50 Gite de l'Est: Estimated ore reserve of 5.8Mt at 3.60% Zn, 1.50% Pb, 33.80% BaSO4 9.30% CaF2. THE RESOURCE POTENTIAL OF THE FEJ LAHDOUM - DJEBBA REGION In May 2005 the Company commissioned an independent report by ResourceEngineering & Development Limited to review the resource potential of the FejLahdoum - Djebba region. The report advised that there are several factors in favour of continuedexploration of the Fej Ladhoum area to determine an increase in the resourcebase at Fej Lahdoum and its nearby deposits and to undertake the necessarytechnical, engineering and economic studies to seek to convert mineral resourcesto ore reserves. It is considered that further exploration could succeed indefining resources in relation to the four principal targets as tabled below. Deposit Resource Target (Mt) Selected Intersections *Dar N'Hal Nord 1.2 DNH16-4m @ 19.34% Pb/Zn DNH25-8m @ 14.22% Pb/Zn DNH26-6.8m @ 18.58% Pb/Zn DNH34-17m @ 8.43% Pb/Zn S6-3m @ 15.45% Pb/ZnDar N'Hal Sud 0.4 DNS2-7.2m @ 18.73% Pb/Zn DNS2-10m @ 12.23% Pb/Zn DNS5-16m @16.53% Pb/ZnSatellite Deposits 1.5 BK1-6m @ 4.90% Pb/Zn SB1-4m @ 6.32% Pb/Zn ZL1-3.1m @ 15.38% Pb/ZnDjebba 1.8All Deposits 4.9 * Downhole intersection width. On this basis, the model for exploration would be to identify a cluster ofsmaller deposits (as identified above) that collectively could contribute to acentralised mining and milling complex. This situation is most likely to favoura site to the Northwest of Fej Lahdoum, for example on the slopes of the OuedArcou in the vicinity of where an adit development was formerly started. The Company has a planned exploration programme at Dar N'Hal Nord to testmineralisation below the 571 metre level. On the estimated 1.2Mt of reportedresources remaining at Dar N'Hal Nord, questions remain about their precisespatial distribution, grade, Pb/Zn ratio and viability. The Dar N'Hal Nordmineralisation is interpreted to be contained in progressively smaller separatedlenses below the 646 metre level. The grade of the lead and zinc at Dar N'HalNord is also reported to decrease with depth from 12% combined lead and zinc(down to about the 646 metre level) to about 8% combined at lower levels. Moredrilling is required to clarify the structure and grade of mineralisation atdepth. A 17 hole drill programme is planned to the southwest of the current Fej Lahdoummine concession boundary, to test the mineralisation at depth of 500 metres.Included in this programme are several drill holes which are expected to satisfythe balance of the Company's undertaking to the Tunisian Government to drill3,000 metres on the Fej Lahdoum mine concession. Mineralised zones outcrop at several localities in the Fej Lahdoum area overabout a 2km strike length. These zones include: Sidi Belgacem, Fernana, BouKcherida and Zone Lutetienne. To date, very little exploration work has beenconducted on the open pit potential of these satellite deposits and fieldwork isplanned to give a better understanding of the geology and to identify potentialdrilling targets on these satellite areas. EXPLORATION PERMITS The Company's exploration permits give it the right to explore for lead and zincdeposits over 241km2 in areas of active mines and past production. These areascover the same host rocks and structures that control the distribution of knowndeposits. A summary of the exploration permits is tabled below:Exploration Permits Area (km2) Permit No. (PRN) Expiry Date Maghreb Expenditure Commitment (US$)Jebel Fej Lahdoum 60.9 642110-642125 04/01/2006 Kef Dougga 64.0 642126-642141 04/01/2006 Kef Adhama 36.0 642142-642150 04/01/2006 321,000 (between 4 Fej Lahdoum-Ain Jemmala Permits)Ain Jemmala 36.0 642151-642159 04/01/2006 Ouled Moussa 16.0 640397-640400 13/07/2005 96,300 Djebba 16.0 640391-640394 13/07/2005 120,375 Koudiat El Louatia 4.0 640396 13/07/2005 100,313 Koudiat Sidii 4.0 640395 13/07/2005 120,375 Hammala 4.0 638002 29/06/2007 120,375 Total Area 240.9 Drilling work at Fej Lahdoum was temporarily suspended in April 2005 when theCompany was required to commence a regional drilling programme on certain of itsexploration permits to satisfy commitments made to the Tunisian Government torenew these permits. Five holes totaling some 1,690 metres were completed inApril and May 2005 on Ouled Moussa, Koudiat El Louatia, Koudiat Sidii and Djebbawith no signs of mineralisation but which confirmed the prospectivity of thesepermits to host significant lead-zinc mineralisation. Possibly with theexception of Koudiat Sidii, our exploration team believes these properties needfurther examination and the Company applied for the renewal of these permits. According to the Canadian Government funded preliminary feasibility study, theDjebba deposit is reported to have an open-pit resource of about 800,000t (witha further potential resource of over 1Mt). Open-pit mining on the known depositat Djebba may necessitate the re-location and re-settlement of part of a smallvillage community. Although, the Tunisian authorities are reported to be infavour of the development of the Djebba deposit, social and environmental issueswill have to be addressed. An exploration programme at Djebba, planned for 2006,will include a detailed gravity survey, structural geology and further drillingin the southwest near an old shaft (on lead-zinc mineralisation), and in thenortheast (near the old "Carriere du Bey" open pit lead-zinc mine) of the Djebbaexploration license. ALGERIAN EXPLORATION PROSPECT In line with its planned strategy to extend its exploration efforts throughoutthe Maghreb region, the Company has acquired an 85% interest in the Tan Chafaogold rich, base metal project, and a 100sq. km Exploration Licence, in Algeria.Maghreb Minerals will commence an exploration programme at Tan Chafao at thebeginning of the field season (late September 2005). Tan Chafao occurs adjacent to the deep North-South fault with which the golddeposits of Tirek and Amesmessa and Pb-Zn mineralisation in the south of Algeriaare associated. Mineralisation at Tan Chafao occurs as disseminated and massivesulphide within volcano-sedimentary formations of upper Proterozoic age. A small resource mineralised in Pb, Zn, Cu and Au has been identified during the1970's by the Algerian Office National de Recherche Geologique et Miniere ("theO.R.G.M".) The O.R.G.M. has estimated a resource at Tan Chafao of 6.6Mt grading1.6 g/t Au (300,000 ounces contained gold), 0.55% Cu, 1% Pb and 1.6% Zn. The objective of the exploration programme at Tan Chafao is to find economicsulphide mineralisation firstly in the already known mineralised area andsecondly within the rest of the exploration licence area. After the compilationand digitising of the existing data and a study of spectral and radar satelliteimages, the proposed programme will involve detailed geophysical survey (IP andmagnetometric) associated to geochemical and geological ground survey over theknown orebody in order to define drilling targets. A reconnaissancegeophysical, geochemical and geological survey will be conducted over theremainder of the licence area to identify additional areas of potentialmineralisation and test those other occurrences already known. Trenching and drilling, to start late 2005, will test the targets defined in thetwo surveys. The drilling will be carried out in two phases, before and aftersummer 2006, and should continue until the beginning of 2007. Each phase willinvolve a minimum of 3,000 metres of diamond drilling. The field activitieswill be carried out by O.R.G.M. under supervision of Maghreb Minerals and withchecking from outside consultants. MANAGEMENT Your Board is conscious of the need to focus resources effectively and tominimise administration costs in favour of increasing exploration activity. Toachieve this some management changes have been made. In March 2005, I was pleased to welcome Dr Carlos Nascimento as Country Managerin Tunisia. He brings to the Company a long track record of effective projectmanagement and relevant geological knowledge. With effect from 1 October 2005, I will be assuming an executive role with theCompany especially in the exploration activities in Tunisia and Algeria. Richard Collier becomes a non-executive Director, retaining responsibility forthe corporate finance function and has stepped down as Company Secretary. Jane Hywood, joined the Company on 1 August 2005 and has been appointed CompanySecretary and Financial Controller. In September 2005, Jean-Paul Bout will join the Company as Country Manager inAlgeria. Mr Bout as a consulting geologist to The CSA Group has, for thepast three years, been working closely with the O.R.G.M. He has a comprehensiveexperience in mineral exploration worldwide and an extensive knowledge ofAlgerian geology and brings to Maghreb further experience operating in NorthAfrica. PROSPECTS The Company's exploration strategy is focused on exploring those areas mostlikely to result in the earliest economic exploitation potential in Tunisia.Consequently we will be focusing on the Fej Lahdoum - Dar N'Hal mine concession,the Bou Jabeur mine concession or permits and on those exploration permits thathave the greatest potential for success. The Company is working closely with personnel from the Office National Des Minesand with the Tunisian authorities who continue to provide the Company withexemplary support, in particular with skilled and experienced geologicalexpertise, logistical support and generally in all areas, for which I am mostgrateful. In Algeria, the Company greatly appreciates the support it hasreceived from the Office National de Recherche Geologique et Miniere. The Company has made significant progress in establishing its projects,strengthening its management and drilling teams and has overcome the expecteddifficulties during startup. I fully expect that our rate of progress inevaluating our exciting prospect portfolio will now move to match ourexpectations. G P RIDDLER CHAIRMAN CONSOLIDATED PROFIT AND LOSS ACCOUNT Notes 13 Months Ended 30 June 2005 £'000 Turnover - Exploration expenses (446) Gross loss (446) Administrative expenses (403) Exceptional administrative expenses Listing and company formation expenses (496) (899) Operating loss (1,345) Interest receivable 32 Loss on ordinary activities before tax (1,313) Taxation on ordinary activities - Loss for the period from continuing operations (1,313) Loss per share from continuing operations Basic loss per share (pence) 1 (3.32) Diluted loss per share (pence) 1 (2.60) All amounts derive from continuing activities. All losses are attributable to the equity holders of the parent. There are no recognised gains or losses other than the loss for the period.CONSOLIDATED AND COMPANY BALANCE SHEETS As at 30 June Notes Group Company 2005 2005 £'000 £'000Fixed assets Intangible fixed assets - exploration permits 82 - Tangible fixed assets 200 3Investments - 84 282 87Current assetsDebtors 19 216Cash at bank 1,766 1,750 1,785 1,966 Creditors: Amounts falling due within one yearTrade creditors and accruals (76) (53) Net current assets 1,709 1,913 Total assets less current liabilities 1,991 2,000 Net assets 1,991 2,000 Capital and reservesCalled up share capital 237 237Share premium account 3,067 3,067 Profit and loss account (1,313) (1,304) Total equity shareholders' funds 1,991 2,000 CONSOLIDATED CASH FLOW STATEMENT Notes 13 Months Ended 30 June 2005 £'000Net cash outflow from operating activitiesNet cash outflow from operating activities (1,266) Returns on investment and servicing of financeInterest received 32 Net returns on investment and servicing of finance (1,234) Capital expenditure Payments to acquire tangible fixed assets (222) Net cash outflow before financing (1,456) Financing Share capital issues 3,222 Net financing 3,222 Increase in cash 1,766 CONSOLIDATED CASH FLOW STATEMENT Reconciliation of operating loss to 13 MonthsNet cash from operating activities Ended 30 June 2005 £'000Operating loss (1,345) Depreciation of tangible fixed assets 22(Increase) in debtors (19)Increase in creditors 76 Net cash outflow from operating activities (1,266) NOTES 1. Loss per share The calculation of the basic and the diluted loss per share attributable to theordinary equity holders of the parent has been calculated on the net loss aftertax of £1,313,000 , using the following weighted averages : Loss from continuing operations 13 Months Ended 30 June 2005 Pence Loss for the purposes of basic loss per share (3.32) Loss for the purposes of diluted loss per share (2.60) Weighted average number of ordinary shares for the purposes of basic loss per share 39,559,002Effect of dilutive potential ordinary shares; Warrants 8,529,501 Share options 2,450,000Weighted average number of ordinary shares forthe purposes of diluted loss per share 50,538,503 This information is provided by RNS The company news service from the London Stock Exchange