Final Results

RNS Number : 4566X

Eurasia Mining PLC

24 June 2008

 



Eurasia Mining Plc

('Eurasia' or the 'Company')

PRELIMINARY ANNOUNCEMENT OF AUDITED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2007

Chairman's statement

As I write this report, Eurasia has recently announced that Deloan Investment Limited, has agreed to invest a minimum of £1 million through the issue of a series of convertible loan notes and warrants. Agreed at a strike price of 5p per share, the arrangement means that following conversion of the loan, and assuming the exercise of all the warrants, Eurasia will have raised a total of £3 million through the issue of ordinary shares to Deloan. The Directors and I believe this transaction represents a successful first step in securing a new Russian partner and that with Deloan's support Eurasia can look forward to exploring potential new acquisitions in Russia.

I am also pleased to be able to report this brand new development in this latest statement to shareholders because it shows how, following the end of the year under review, Eurasia has now successfully positioned itself to advance further towards the planned development phases of the projects we have been working on so patiently over recent years. Our balance sheet for the year end does not reflect these resources we now have at our disposal, but our successful exploration results and the terms of the transaction with Deloan mean that we believe we can now look forward to further solid progress with renewed confidence.

In addition to our work on existing developments, as I have already mentioned, we are confident the relationship with Deloan will also assist in our moves towards acquiring new projects, further strengthening our long-term asset base. This transaction has been long in the making, and it underscores our intention to establish a firm production base, while continuing our exploration efforts in a country where so much untapped potential remains. 

During 2007, Eurasia has made solid progress on its platinum projects, with drilling confirming earlier indications of economic grades on two of our projects on the Kola Peninsula in north-west Russia. This area of Russia, together with neighbouring Finland, has potential to become a new region in the world to challenge South Africa and the Norilsk district in Russia in the production of platinum group metals (PGM). A number of industry majors are working in the region, including Barrick Gold Corp., which has recently announced progress with feasibility studies for mine development. In the central Urals, our second area of activity in Russia, we successfully completed reserve drilling of the first area we plan to mine at our West Kytlim project, and the process of acquiring permits for mining is now well underway. 

Kola Projects

Eurasia holds three exploration licences on the Kola Peninsula, together covering 450 square kilometres. They form part of a joint venture with Anglo Platinum, in which Anglo is earning an initial 40% interest in the three projects by funding the first $10 million of exploration expenditure. Under the agreement, work entered its second year during 2007, and by December approximately $5.8 million had been invested into direct exploration work. The most advanced project is Monchetundra, where a discovery made in 2006 was followed up with 4,004 metres of drilling during 2007. This work confirmed the presence of two mineralised zones, one of which should be drilled to resource status in 2008. At Volchetundra, the second of the three concessions, two separate mineralised zones have been identified in two areas approximately three kilometres apart. Continued work during 2008 is focusing on establishing the continuity of the mineralisation we have identified, as there remains much untested ground between the two areas.

Although still early stage, both licence areas have generated potential bulk mineable targets. Drilling recently recommenced following the end of winter at Monchetundra and Volchetundra and will continue throughout 2008. Drilling on the less-advanced third licence area at West Imandra has located anomalous PGM values. 

Urals Projects

In the Urals, Eurasia has since 2001 also been working in joint venture with Anglo Platinum on alluvial platinum projects. There, the joint venture is based on Anglo completing a bankable feasibility study to complete an earn-in of 50% in our part of the project. Our local partner, Yuzhno-Zaozeorsky Priisk, retains a 25% interest. Our work to date has advanced the West Kytlim project to the mining stage. Drilling during the period continued in the Bolshaya Sosnovka area, with the objective of delineating at least five years of production. This target has been achieved, and a Russian feasibility study known as a TEO has been submitted to the authorities for approval. We remain ready to commence mining once all the relevant statutory processes have been completed. However, at the time of writing it seems unlikely that we will be able to commence mining in 2008 as was planned, reflecting the challenges of working through the lengthy permitting processes in place in Russia. We of course remain confident that with our well-developed understanding of the permitting system, and our careful approach, we shall in due course achieve our objectives and clear the way for mining to begin. Also at West Kytlim, we are continuing with our appraisal work on the Tylai Terrace areas and have been identifying increases to the overall resource base of the licence area. Although initial production will be small scale, it can provide early cash flow and importantly, valuable experience for the local workforce.

Elsewhere in the Urals, the joint venture intends to apply for further exploration licences, and this process is well advanced. Again, the licence acquisition process requires patience, partly as a result of ongoing changes in the administrative system, as well as to proposed revisions to mining legislation. But we understand this has affected all mining companies working in Russia, and we are working steadily towards our objectives within this changing environment. 

Gold projects

Work completed during the year has identified a number of new exploration opportunities. The Company currently has seven gold projects at the application stage, all of which have been affected by the ongoing statutory changes referred to above. 

Corporately, while the company has worked mainly on the Anglo Platinum-funded joint venture projects during 2007, it has also funded its own work on gold exploration. In the Urals, a metallurgical bulk sample study is underway at the Baronskoe palladium gold project to identify an optimum ore processing route. 

We have also focused heavily on establishing a strategic partnership with a Russian company to strengthen and enlarge our mineral development activities. As previously mentioned, we announced the completion of a transaction with Deloan in May 2008, marking the first step in this process. I am also pleased to welcome Dmitry Suschov to the board; Dimitry has worked with Eurasia on business development for the last two years and we look forward to benefiting from his experience. 

During the coming year, your Board anticipates that we shall continue to add value to our PGM portfolio, especially by way of the major drilling programmes underway at Kola. We also look forward to advancing to the production stage at West Kytlim. Both projects are currently fully funded by Anglo Platinum. In parallel, we expect to achieve a significant broadening of our Russian activities and portfolio, working alongside our strategic partners. We look forward with considerable anticipation to announcing further developments as these partnerships develop.

I would like to conclude by thanking our team in Russia and London who continue to work tirelessly on progressing the company's many areas of development.

Dr. Michael Martineau

Chairman

For further information contact:

Christian Schaffalitzky/Michael de Villiers, Eurasia Mining plc:    [phone] 

Laurie Beevers/Katy Mitchell, W H Ireland Ltd:                              [phone]

Duncan McCormick, Tavistock Communications:             [phone]

Projects summary and locations for 2007

Project/location	Description	Status	Work plan 2008	Target / objectives
Urals
West Kytlim	Alluvial Platinum	Feasibility study	Complete permitting for mining	Mining in 2009
Baronskoye	Bedrock Gold-Palladium	Pre-feasibility study	Metallurgical test-work	Potential low grade bulk mining target
Kola
Monchetundra	Bedrock PGM	Detailed appraisal	Resource Drilling	Advance to feasibility study in 2009
Volchetundra	Bedrock PGM	Appraisal on 5km sub-area; Exploration over 27km	Drilling	Define initial resource target; Assess potential on favourable horizon
West Imandra	Bedrock PGM	Exploration	Assess results and program

Consolidated income statement 

		Year to 31 December 2007	Year to 31 December 2006
		£	£
Impairment of assets		-	(29,129)
Gross loss		-	(29,129)
Administrative costs		(727,077)	(649,810)
Result from equity accounted investments		(32,894)	(98,017)
Finance income		24,926	22,715
Finance costs		(78, 637)	(88,632)
Other financial result		(71,266)	(173,623)
Loss before tax		(884,948)	(1,016,496)
Income tax expense		-	-
Loss for the period		(884,948)	(1,016,496)
Attributable to:
Equity holders of the parent		(879,442)	(989,522)
Minority interest		(5,506)	(26,974)
Loss for the period		(884,948)	(1,016,496)
Loss per share:
Basic and diluted loss (pence per share)		(0.62)	(0.81)

Consolidated balance sheet 

		31 December 2007	31 December 2006
		£	£
ASSETS
Non-current assets
Property, plant and equipment		28,128	33,601
Intangible assets		863,348	859,613
Investments in equity accounted investees		1,257,297	1,220,054
Assets available for sale		125	127
Total non-current assets		2,148,898	2,113,395
Current assets
Trade and other receivables		193,426	217,685
Cash and cash equivalents		106,729	1,130,981
Total current assets		300,155	1,348,666
Total assets		2,449,053	3,462,061
EQUITY
Issued capital		7,053,819	7,042,805
Share premium		7,020,549	7,020,549
Reserves		3,696,209	3,539,201
Accumulated losses		(16,021,426)	(15,141,984)
Equity attributable to equity holders  of the parent		1,749,151	2,460,571
Minority interest		(59,401)	(54,934)
Total equity		1, 689,750	2,405,637
LIABILITIES
Non-current liabilities
Borrowings		80,341	509,475
Total non-current liabilities		80,341	509,475
Current liabilities
Trade and other payables		210,358	546,949
Borrowings		468,604	-
Total current liabilities		678,962	546,949
Total liabilities		759,303	1,056,424
Total equity and liability		2,449, 053	3,462,061

Consolidated statement of changes in equity

	Share capital	Share premium	Capital redemption and other reserves	Foreign currency translation reserve	Accumulated losses	Attributable to equity holders of the parent	Minority interest	Total
	£	£	£	£	£	£	£	£
Balance at 31 December 2005	5,188,086	7,034,374	3,539,906	37,675	(14,152,462)	1,647,579	(33,700)	1,613,879
Exchange differences on translation of  foreign operations	-	-	-	(87,547)	-	(87,547)	5,741	(81,806)
Loss for the period	-	-	-	-	(989,522)	(989,522)	(26,974)	(1,016,496)
Total recognised income and  expense for the period	-	-	-	(87,547)	(989,522)	(1,077,069)	(21,233)	(1,098,302)
Issue of share capital	1,854,719	52,879	-	-	-	1,907,598	-	1,907,598
Share issue cost	-	(66,704)	-	-	-	(66,704)	-	(66,704)
Equity component of convertible loan notes	-	-	49,167	-	-	49,167	-	49,167
Balance at 31 December 2006	7,042,805	7,020,549	3,589,073	(49,872)	(15,141,984)	2,460,571	(54,933)	2,405,638
Exchange differences on translation of  foreign operations	-	-	-	121,360	-	121,360	1,038	122,398
Loss for the period	-	-	-	-	(879,442)	(879,442)	(5,506)	(884,948)
Total recognised income and  expense for the period	-	-	-	121,360	(879,442)	(758,082)	(4,468)	(762,550)
Issue of share capital	11,014	-	-	-	-	11,014	-	11,014
Recognition of share-based payments	-	-	36,648	-	-	36,648	-	36,648
Balance at 31 December 2007	7,053,819	7,020,549	3,624,721	71,448	(16,127,426)	1,749,151	(59,401)	1,689,750

Consolidated cash flow statement

		Year to 31 December 2007	Year to 31 December 2006
		£	£
Cash flows from operating activities
Loss for the period		(884, 948)	(1,016,496)
Adjustments for:
Depreciation of non-current assets		3,120	6,413
Impairment of non-current assets		-	29,129
Loss on disposal of non-current assets		3,742	-
Loss on disposal of subsidiaries		4,338	-
Share of loss of joint venture		30,025	98,017
Share of loss of associates		2,869	-
Net foreign exchange loss		63,186	173,623
Investment income		(24,926)	(22,715)
Finance costs		78,637	88,632
Share-based payments		35,648	-
		(688,309)	(643,397)
Movement in working capital
Decrease/(increase) in trade and other receivables		24,232	(15,275)
(Decrease)/increase in trade payables		(336,357)	333,931
Cash outflow from operations		(1,000,434)	(324,741)
Interest paid		(26,586)	(31,046)
Net cash flow from operating activities		(1,027,020)	(355,787)
Cash flows from investing activities
Contributed to joint venture		-	(367,570)
Purchase of property, plant and equipment		(2,825)	(3,215)
Proceeds from disposal of property, plant and equipment		829	-
Payments for intangible assets		(20,176)	(49,116)
Interest received		24,926	22,715
Net cash generated/(used) in investing activities		2,754	(397,186)
Cash flows from financing activities
Proceeds from issue of share capital		-	1,067,542
Net proceeds from issue of convertible loan notes		-	655,000
Net cash proceeds from financing activities		-	1,722,542
Effects of exchange rate changes on the balance of cash held in foreign currencies		14	(36,789)
Net increase in cash and cash equivalents		(1,024,252)	932,780
Cash and cash equivalents at beginning of period		1,130,981	198,201
Cash and cash equivalents at end of period		106,729	1,130,981

Notes:

1.    Basis of preparation

Prior to 2007, the Group prepared its audited financial statements and unaudited financial statements under UK Generally Accepted Accounting principles (UK GAAP). From 1 January 2007, the Group consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union (EU) and implemented in the UK. As the 2007 annual financial statements will include comparatives for 2006, the Group's date of transition to IFRS is 1 January 2006 with the 2006 comparatives restated to IFRS. Thus these consolidated financial statements for the period ended 31 December 2007 have been prepared by applying the recognition and measurement provisions of IFRS and the accounting policies to be adopted for the annual accounts. These policies are summarised in note 3 below.

An exercise to assess the full impact that the change to IFRS has had on the Group's reported equity, reported losses and accounting policies, has been completed. In preparing its opening IFRS balance sheet, the Group has adjusted amounts reported previously in financial statements prepared in accordance with its previous basis of accounting (UK GAAP). Adoption of IFRS resulted in no changes in the reported numbers from UK GAAP.

2.    Loss per share

The loss per share is calculated by reference to the loss for the year of £879,442 (2006: £989,522) and the weighted average number of Shares in issue during the year of 150,281,454 (2005: 122,848,396). There is no dilutive effect of share options or warrants.

3.    Events after the balance sheet date

Convertible loan notes maturing on 31 March 2008 were extended for another 12 to 24 months at note holders' option.

In May 2008 the Company entered into the agreement to issue loan notes for the total of £1,000,000 in stages over the 12 month period convertible into ordinary shares at the rate of £0.05 per share and to grant 40,000,000 warrants over the same period, exercisable at £0.05 per share.

4.    Summary accounts

The summary accounts set out above do not constitute statutory accounts as defined by Section 240 of the UK Companies Act 1985. The summarised consolidated balance sheet at 31 December 2007 and the summarised consolidated income statement, summarised consolidated statement of changes in equity and the summarised consolidated cash flow statement for the year then ended have been extracted from the Group's 2007 audited statutory financial statements. The auditor's report on the statutory financial statements for the year ended 31 December 2007 was unqualified and did not contain any statement under Section 237(2) or (3) of the Companies Act 1985.

5.    Annual Report

Copies of the Annual Report and Accounts for the year ended 31 December 2007 will be posted to shareholders by 30 June 2008 and will be available, free of charge, from the Company's registered office at 139 Grosvenor Gardens House, 35-37 Grosvenor Gardens, London, SW1W 0BS, for a period of 14 days from the date of their posting and, at any time from the date of posting, from the Company's website - www.eurasiamining.co.uk. The Company's Annual General Meeting will be held at The East India Club, 16 St James Square, London SW1Y 4LH on 23 July 2008 at 11:00 am.

 

END

 

 

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