Interim Results - six months

RNS Number : 8197V

Aurum Mining PLC

09 November 2010

 



AURUM MINING PLC

("Aurum" or "the Company")

Interim Results for the six months ended 30 September 2010

Aurum Mining plc (AIM: AUR) is pleased to announce its interim results for the six months ended 30 September 2010.

Sean Finlay, Aurum's Chairman, said: "It has been a period of continued progress in the transformation of the Company. The process to return capital to Shareholders is now well underway and the Company is working to find an exit for those Shareholders who do not wish to continue as investors in the Company after the cash has been returned. We expect that a restructured Shareholder register will create an attractive cash shell with the potential to exploit some of the exciting investment opportunities that are currently available in the market.

We are extremely disappointed by the recent events in the Kyrgyz Republic that threaten the Company's residual 10% shareholding in the Andash asset, but we remain confident that, if given a fair hearing, we can, in time, successfully defend the claims. We are committed to pursuing actions against those who have been directly involved in bringing this adverse action against the Company's interests.''

A copy of these Interim results can also be found on the Company's website, www.aurummining.net

For further information:

Aurum Mining plc	Tel: [phone]
Mark Jones, Chief Executive Chris Eadie, Chief Financial Officer
Arbuthnot Securities	Tel: [phone]
James Steel/Richard Johnson

Chairman's statement

In the Company's 2010 Annual Report, it was outlined that the Company was pursuing a twofold strategy for the benefit of its Shareholders. It is this twofold strategy that has driven the Company's activities over the past six months.

On the one hand the Company is seeking to satisfy the demands of a group of major Shareholders by returning a very substantial proportion of the Company's cash to all Shareholders. On the other hand the Company is working to ensure that, once the cash is returned, the Company can then be transformed into an attractive shell company that can be used to exploit some of the exciting investment opportunities that are currently available in the market.

In terms of the significant return of cash to Shareholders, this process is now well underway. The second Court hearing to approve the reduction of capital is scheduled for the beginning of December and it is expected that the 15 pence per share cash distribution will take place shortly thereafter.

With the return of cash completed and the capitalisation of the Company correspondingly reduced, the path will effectively be clear for investors to acquire the stakes of the Company's existing major Shareholders who no longer wish to remain Shareholders of Aurum. By replacing these major Shareholders, whose only objective has been to take as much cash as possible out of the Company, and by replacing them with Shareholders who are committed to the future growth and development of the Company, Aurum will become free and unencumbered to pursue a forward looking strategy.

The Board is looking at, and considering, a number of exciting proposals which could eventually be acquired by, or reversed, into the Company. However the key first step is undoubtedly the re-engineering of the Shareholder register. Without this, the Company will continue to be restricted and restrained from moving forward, and until these Shareholders have exited their holdings the Company will continue to be hamstrung in its discussions and negotiations on potential transactions.

The Board disputes the outcome of the recent litigation in the Kyrgyz Republic that threatens the Group's 10% residual shareholding in the Andash asset. Nonetheless, and based on previous experience, the Board considers that this type of groundless claim, is a consequence of operating in an unstable political environment.

The Company will be commencing legal action to protect its asset and will keep the market updated as the situation develops.

Financial Information

The Company currently has free net cash balances of approximately £8.4 million. This balance takes into account all known liabilities and takes into account all the costs of the return of capital process.

The return of capital to Shareholders will be approximately £7.5m and it is currently expected that this will take place in early December.

As a result of the on-going litigation in the Kyrgyz Republic, the Board has taken the prudent decision to write down the value of its residual 10% holding in the Andash asset to zero. As the litigation process continues, the Board will continually review the carrying value of this asset.

With the return of capital completed, the Company will be undergoing a rigorous cost cutting and cash preservation exercise. Measures to be undertaken will include changes to the Board structure and a renegotiation of contracts with all advisers and suppliers. Details of the Board changes will be announced to the market once the capital reduction process has been completed.

Summary

The Board looks forward to the next phase of Aurum's transformation with great confidence. With the return of capital completed and the anticipated restructure of the Shareholder register, the Board feels confident the Company will, at last, be able to pursue a forward looking strategy that will enable it to take advantage of some of the very exciting opportunities available in the market today.

Sean Finlay

Chairman

9 November 2010

Condensed consolidated income statementFor the six months ended 30 September 2010

		Six months to 30 September	Six months to 30 September	Year ended 31 March
		2010	2009	2010
		$'000	$'000	$'000
	Notes	Unaudited	Unaudited	Audited
Impairment of available for sale investment	5	(1,250)	-	-
Other administrative expenses		(1,332)	(1,612)	(2,428)
Administrative expenses		(2,582)	(1,612)	(2,428)
Operating loss		(2,582)	(1,612)	(2,428)
Finance income		20	1	739
Finance expenses		(258)	(3)	-
Loss for the period before taxation		(2,820)	(1,614)	(1,689)
Taxation		-	-	-
Loss for the period from continuing operations		(2,820)	(1,614)	(1,689)
(Loss)/profit for the period from discontinued operations	3	-	(166)	726
Loss for the period attributable to equity shareholders of the parent company		(2,820)	(1,780)	(963)
Loss per share expressed in US cents per share
From continuing operations
Basic and Diluted		(5.85)c	(3.35)c	(3.51)c
From discontinued operations
Basic and Diluted		-	(0.34)c	1.51c
Total operations
Basic and Diluted	4	(5.85)c	(3.69)c	(2.00)c

Condensed consolidated statement of comprehensive income

For the six months ended 30 September 2010

		Six months to 30 September	Six months to 30 September	Year ended 31 March
		2010	2009	2010
		$'000	$'000	$'000
		Unaudited	Unaudited	Audited
Loss after taxation for the period		(2,820)	(1,780)	(963)
Other comprehensive income:
Exchange differences on translating foreign operations		552	1,716	(28)
Other comprehensive income for the period		552	1,716	(28)
Total comprehensive expense for the period attributable to the equity shareholders of the parent company		(2,268)	(64)	(991)

Condensed consolidated statement of financial position

As at 30 September 2010

		30 September	30 September	31 March
		2010	2009	2010
	Notes	$'000	$'000	$'000
		Unaudited	Unaudited	Audited
Assets
Non-current assets
Available for sale financial asset	5	-	-	1,250
Property, plant and equipment		7	17	11
Total non-current assets		7	17	1,261
Current assets
Inventories		-	32	-
Receivables		218	266	280
Cash and cash equivalents		13,398	3,439	14,584
Assets classified as held for sale	6	-	14,309	-
Total current assets		13,616	18,046	14,864
Total assets		13,623	18,063	16,125
Liabilities
Current liabilities
Trade and other payables		253	1,563	503
Total current liabilities		253	1,563	503
Total liabilities		253	1,563	503
Total net assets		13,370	16,500	15,622

Capital and reserves attributable to the equity holders of the company
Share capital		924	921	921
Share premium reserve		40,696	40,609	40,609
Merger reserve		5,816	5,816	5,816
Presentational currency translation reserve		(12,943)	(11,751)	(13,495)
Warrant reserve		276	350	350
Retained earnings		(21,399)	(19,445)	(18,579)
Total equity		13,370	16,500	15,622

Condensed consolidated statement of changes in equity

For the six months ended 30 September 2010

	Share capital	Share premium reserve	Merger reserve	Presentational currency translation reserve	Warrant reserve	Retained earnings	Total equity
Unaudited	$'000	$'000	$'000	$'000	$'000	$'000	$'000
At 1 April 2010	921	40,609	5,816	(13,495)	350	(18,579)	15,622
Total comprehensive Expense for the period	-	-	-	552	-	(2,820)	(2,268)
Conversion of warrants into ordinary shares	3	87	-	-	(74)	-	16
At 30 September 2010	924	40,696	5,816	(12,943)	276	(21,399)	13,370

For the six months ended 30 September 2009

	Share capital	Share premium reserve	Merger reserve	Presentational currency translation reserve	Warrant reserve	Retained earnings	Total equity
Unaudited	$'000	$'000	$'000	$'000	$'000	$'000	$'000
At 1 April 2009	921	64,295	5,816	(13,467)	350	(17,665)	40,250
Total comprehensive Expense for the period	-	-	-	1,716	-	(1,780)	(64)
Issue of B shares	23,686	(23,686)	-	-	-	-	-
Capital repayment to Shareholders	23,686	-	-	-	-	-	(23,686)
At 30 September 2009	921	40,609	5,816	(11,751)	350	(19,445)	16,500

Condensed consolidated statement of changes in equity

For the year ended 31 March 2010

	Share capital	Share premium reserve	Merger reserve	Presentational currency translation reserve	Warrant reserve	Retained earnings	Total equity
Unaudited	$'000	$'000	$'000	$'000	$'000	$'000	$'000
At 1 April 2009	921	64,295	5,816	(13,467)	350	(17,665)	40,250
Total comprehensive Expense for the period	-	-	-	(28)	-	(963)	(991)
Issue of B shares	23,686	(23,686)	-	-	-	-	-
Capital repayment to Shareholders	23,686	-	-	-	-	-	(23,686)
Share based payments	-	-	-	-	-	49	49
At 31 March 2010	921	40,609	5,816	(13,495)	350	(18,579)	15,622

Condensed consolidated cash flow statement

For the six months ended 30 September 2010

	Six months to 30 September	Six months  to 30 September	Year ended 31 March
	2010	2009	2010
	$'000	$'000	$'000
	Unaudited	Unaudited	Audited
Cash flow from operating activities
Loss for the period before tax	(2,820)	(1,780)	(963)
Adjustments for:
Depreciation of property, plant and equipment	4	4	10
Finance income	(20)	(1)	(739)
Finance expense	258	3	-
Other operating income	-	(250)	-
(Profit)/loss on sale of discontinued operations	-	-	(1,489)
(Profit)/loss on disposal of property, plant and equipment	-	(34)	-
Impairment of available for sale investment	1,250	-	-
Share-based payments	-	-	49
Foreign exchange differences	(258)	(3)	-
Cash flow from operating activities before changes in working capital	(1,586)	(2,061)	(3,132)
Increase / (decrease) in trade and other payables	(250)	1,157	101
Decrease / (increase) in trade and other receivables	62	696	671
Decrease / (increase) in inventories	-	8	-
Taxation	-	-	-
Net cash flow from operating activities	(1,774)	(200)	(2,360)
Investing activities
Purchase of property, plant and equipment	-	(3)	(26)
Disposal of discontinued operations, net of cash disposed of	-	-	1,473
Proceeds from sale of property, plant and equipment	-	45	-
Purchase of available for sale financial asset	-	-	(1,250)
Proceeds from sale of option	-	250	-
Interest income	20	1	5
Net cash flow from investing activities	20	293	202
Financing activities
Capital repayment to shareholders	-	(23,686)	(23,686)
Repayment of loan	-	-	13,500
Issue of ordinary shares	16	-	-
Net cash flow from financing activities	16	(23,686)	(10,186)
Net decrease in cash and cash equivalents	(1,738)	(23,593)	(12,344)

Condensed consolidated cash flow statement

For the six months ended 30 September 2010

	Six months to 30 September	Six months   to 30 September	Year ended 31 March
	2010	2009	2010
	$'000	$'000	$'000
	Unaudited	Unaudited	Audited

Cash and cash equivalents at the beginning of the period	14,584	25,680	25,680
Effect of exchange rate changes on cash and cash equivalents	552	1,352	1,248
Cash and cash equivalents at the end of the period	13,398	3,439	14,584

Notes to the condensed consolidated interim financial statements

For the half year ended 30 September 2010

1. Basis of preparation

The financial information set out in this report is based on the consolidated financial statements of Aurum Mining plc and its subsidiary companies (together referred to as the 'Group'). The accounts of the Group for the six months ended 30 September 2010, which are unaudited, were approved by the Board on 9 November 2010. The financial information contained in this interim report does not constitute statutory accounts as defined by s435 of the Companies Act 2006. 

These accounts have been prepared in accordance with the accounting policies set out in the Report and Financial Statements of Aurum Mining plc for the year ended 31 March 2010. The statutory accounts for the year ended 31 March 2010 have been filed with the registrar of Companies. The auditors' report on those accounts was unqualified, did not draw attention to any matters by way of emphasis and did not contain a statement under section 498 (2) or 498 (3) of the Companies Act 2006. These accounts have not been audited by the Company's auditors.

The Group financial statements are presented in United States Dollars and all values are rounded to the nearest thousand Dollars ($'000) except when otherwise indicated.

Based upon cash flow projections the Directors are of the view that the Group has sufficient cash to fund overheads for the next 12 months.

2. Changes in accounting policies

There were no changes in accounting policies during the six months ended 30 September 2010.

3. Discontinued operations

On 22 December 2009 the Group completed the disposal of Kaldora Company Limited and the Andash Mining Company, which operated in the Kyrgyz Republic. The Group owned 100% of the Andash Mining Company until 22 October 2009, when it disposed of 20% of the Company to local interests as part of settlement of the Bishkek court case and to secure its mining rights. Gross proceeds for the disposal amounted to $15m which included repayment of a $13.5m intercompany loan by Andash Mining Company.

Financial information relating to the discontinued operations is set out below.

Consideration received:	Year ended 31 March 2010 $'000
Consideration Cash	1,501
Consideration Option fee (cash)	250
Legal costs directly attributable to sale of Kaldora and Andash	(278)
Net consideration	1,473
Net assets disposed:
Non-current assets	14,051
Inventories	29
Trade and other receivables	79
Trade and other payables	(2)
Repayment of intercompany loan	(13,500)
Total net assets disposed of	657
Recycling of cumulative translation reserve (Kaldora + Andash)	(673)
Total disposed of	(16)
Gain on disposal of discontinued operations	1,489
Results of discontinued operations:	Year ended 31 March 2010 $'000	Six months to 30 September 2009 $'000
Operating expenses	(763)	(166)
Gain from selling operations after tax	1,489	-
Profit/ (loss) from discontinued operations	726	(166)
The cash flow statements includes the following amounts relating to discontinued operations:
Cash flow used in operating activities	(763)	(166)
Cash flow from investing activities	1,473	-
Cash flow from financing activities	13,500	-
Total cash flows from discontinued operations	14,210	(166)

4. Loss per share

Basic loss per share is calculated by dividing the loss attributable to the ordinary shareholders by the weighted average number of ordinary shares outstanding during the period.

For diluted loss per share, the weighted average number of shares in issue is adjusted to assume conversion of all dilutive potential ordinary shares. 

As at 30 September 2010 there were 3,135,000 (30 September 2009: 4,305,000, 31 March 2010: 3,805,000) potentially dilutive ordinary shares. Dilutive potential ordinary shares include share options and warrants.

The effect of all potential ordinary shares arising from the exercise of options and warrants is       anti-dilutive and therefore diluted loss per share has not been calculated.

	Six months to 30 September	Six months to  30 September	Year ended 31 March
	2010	2009	2010
	$'000	$'000	$'000
	Unaudited	Unaudited	Audited
Net loss attributable to equity holders of the parent:
From continuing operations	(2,820)	(1,614)	(1,689)
From discontinued operations	-	(166)	726
From total operations	(2,820)	(1,780)	(963)

	Six months to 30 September	Six months to 30 September	Year ended 31 March
	2010	2009	2010
	Unaudited	Unaudited	Audited
Weighted average number of shares:
Basic Loss per Share	48,219,044	48,188,275	48,188,275
Effect of dilutive share options and warrants	-	-	-
Diluted Loss per share	48,219,044	48,188,275	48,188,275

5. Available-for-sale financial assets

In January 2010, the Company announced that its 100% owned subsidiary, Tryden International Limited, has acquired a 10% stake in the Andash asset from Investcentre Talas LLC ('ITL') for $1.25m.

In June 2010, the Company announced that it had given Kentor an option to acquire this residual 10% holding in the Andash asset for $1.8m. However, the Directors considered its fair value at 31 March 2010 to be $1.25m.

On 27 October 2010, Aurum announced that Tryden International Limited was named, amongst others, as a defendant to a civil case which has been heard in the Talas Inter-District Court (the "Court") in the Kyrgyz Republic. The key implication of the resulting Court ruling is that Tryden may be stripped of its residual 10 per cent stake in the Andash asset.

The Company strongly disputes the claim and will be appealing the decision of the Court. However, at this time the Board has taken the prudent view to fully provide against this investment and to write down its carrying value to zero. The Board will be continually reviewing the carrying value of this investment as the litigation process proceeds.

For further information on these transactions, see the Chairman's statement.

6. Assets classified as held for sale

On 12 November 2009 the Group disposed its subsidiary Kaldora which held the Company's stake in the Andash project. As a result of this transaction $14,309,000 of property, plant and equipment was classified as assets held for sale at the period ending 30 September 2009.

7. Post balance sheet events

Details of significant post balance sheet events are included within the Chairman's statement.

 

END

 

 

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