Quarterly Results to 30 September 2014

RNS Number : 7770X

Tri-Star Resources PLC

24 November 2014

 



TRI-STAR RESOURCES PLC

("Tri-Star Resources" or the "Company")

Results for the three and nine month periods ended 30 September 2014

Tri-Star Resources (AIM: TSTR), the integrated antimony development company, is pleased to announce results for the three and nine months ended 30 September 2014.

A copy of these results and the Management Discussion and Analysis in respect of these results will be uploaded to the Company's website www.tri-starresources.com shortly.

Results for the Period

In the three months to 30 September 2014, the Company recorded a reduced loss after taxation of £1,146,000 (2013: loss of £1,232,000) and a total comprehensive loss of £1,132,000 (2013: loss of £1,052,000).  In the nine months to 30 September 2014, the Company recorded a loss after taxation of £1,913,000 (2013: loss of £2,464,000) and a total comprehensive loss of £2,014,000 (2013: loss of £2,258,000).

Roaster Project

On 14 April 2014, the Company announced that it had entered into a shareholders' agreement in respect of Strategic & Precious Metals Processing LLC ("SPMP"), a joint venture company which is intended will construct and operate a 20,000 tonne per annum nameplate capacity antimony metal and tri-oxide manufacturing roasting facility in the Sultanate of Oman (the "Roaster Project").

SPMP has since been incorporated in the Sohar Free Trade Zone in Oman.  During the period under review, SPMP extended its existing option over to enter into a land lease over a 22 hectare plot in Sohar FTZ to 31 March 2015 to allow for complex negotiations regarding the finalisation of the Roaster Project to continue.  The Roaster Project remains subject to a number of conditions including securing banking finance and obtaining the necessary permits to operate the Roaster, including environmental approvals, which management are vigorously pursuing. 

Canada

On 31 October 2014, Tri-Star announced that it had received an updated independent Technical Report on the Bald Hill Antimony Project.  On 24 November 2014, the Company provided a further update detailing that reconnaissance exploration programs had highlighted two new prospective antimony trends in the Bald Hill area which had returned prospecting assays of 4.61% Sb and 21.7% Sb, respectively.  These new areas together with the existing 3 trend areas are within a 4 km radius of the original Bald Hill deposit. 

The Bald Hill deposit, one of the largest undeveloped antimony projects in Canada, is located within the Annidale Belt, approximately 40 kilometres northwest of Sussex, New Brunswick.

Financing

On 26 August 2014, the Company successfully completed a private placing of a further £2.0 million secured convertible bonds due June 2018 with Odey European Inc.  This financing strengthened the Company's financial position and will assist the Company in further developing the Roaster Project and meeting other working capital requirements.

Outlook

The Company is entering a phase of highly intensive activity as it seeks to bring to a successful conclusion a number of related work-streams underway with respect to the Roaster Project in Oman.  The Company is also pro-actively investigating the recent new discovery at Bald Hill South and hopes to be able to update shareholders in the New Year.

Enquiries:

Tri-Star Resources Plc Emin Eyi, Managing Director Guy Eastaugh, Chief Financial Officer	Tel: [phone]
SP Angel Corporate Finance (Nomad and Broker) Robert Wooldridge / Katy Birkin	Tel: [phone]
Yellow Jersey PR Limited (Financial PR) Dominic Barretto / Kelsey Traynor	Tel: [phone]
Keith, Bayley Roger & Co (Joint Broker) Brinsley Holman	Tel: [phone]

This news releasemay contain "forward-looking information", as definedunder applicable Canadian securities laws. Forward-looking information typically contains statements that relate to future, notpast, events and often contains words such as "anticipate", "believe", "plan", "estimate", "expect", and "intend", statements that an action or event "may", "might", "could", "should", or "will" be taken or occur, or other similar expressions. There can be no assurance that the forward-looking information contained in this releasewill prove to be accurate, and actualresults and futureevents could differ materially from those anticipated in such information.

All statements, other than statements of historical fact, included in this releaseincluding, withoutlimitation, the viability of chemicalprocesses, the financial assumptions, bases and outputsmentioned, constitute forward-looking information. Forward-looking information is based on a numberof factors and assumptions which have been used to develop such information but which may prove to be incorrect, including, but not limitedto, assumptions in connection with the abilityto deliver any of the outcomes referred to, the availability of financingand general economic and market conditions. Forward-looking information involves known and unknownrisks, uncertainties and other factorswhich may cause actual results, performance or achievements, or other futureevents, to be materially different from any future results,performance or achievements expressed or implied by such forward-looking information. Such factors include, among others, risks associated with changes in laws, the ability to raise financeon acceptable terms for any of the projects or facilities mentioned, the volatility of commodityand raw materialprices, currency exchange rates and interestrates, global economic conditions and the additional risks identified in the Company'sAnnual Report and Financial Statements for the year ended 31 December 2013 or other reportsand filings with applicable securities regulators. Forward-looking information in this releaseis based on the Directors' beliefs, estimates and opinionson the date of this release and the Companydoes not undertaketo update publiclyor revise the forward-looking information contained in this release, except as required by applicable securities laws.

Any financial outlook or future-oriented financial information in this release,as defined by applicable Canadian securities laws, has been approvedby the Directorsas of the date of this release.Such financial outlookor future oriented financial information is providedfor the purpose of providinginformation about the Company's current expectations and plans relatingto the future.Readers are cautionedthat such outlook or information should not be used for purposes other than for which it is disclosed in this release.

TRI-STAR RESOURCES PLC

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

FOR THE 3 AND 9 MONTHS ENDED 30 SEPTEMBER 2014

	Notes	Unaudited 3 months  ended 30 September 2014		Unaudited 3 months  ended 30 September 2013		Unaudited 9 months ended 30 September 2014		Unaudited 9 months ended 30 September 2013
		£'000		£'000		£'000		£'000
Share based payment charge		(4)		-		(16)		(400)
Exploration expenditure and other administrative expenses		(382)		(1,173)		(1,597)		(1,991)
Share of losses of jointly controlled entity	7	(164)		-		(164)		-
Amortisation of intangibles		(1)		(5)		(4)		(14)
Total administrative expenses		(551)		(1,178)		(1,781)		(2,405)
Finance income		1		-		433		1
Finance cost		(596)		(54)		(565)		(60)
Loss after taxation and loss attributable to the equity holders of the Company		(1,146)		(1,232)		(1,913)		(2,464)
Loss before and after taxation attributable to
Non-controlling interest		(9)		-		(53)		-
Equity holders of the parent		(1,137)		(1,232)		(1,860)		(2,464)
Other comprehensive income
Items that will be reclassified subsequently to profit and loss
Exchange differences on translating foreign operations		14		180		(101)		206
Other comprehensive (expenditure)/income for the period, net of tax		14		180		(101)		206
Total comprehensive loss for the period, attributable to owners of the company		(1,132)		(1,052)		(2,014)		(2,258)
Total comprehensive loss attributable to
Non-controlling interest		(9)		-		(53)		-
Equity holders of the parent		(1,123)		(1,052)		(1,961)		(2,258)
Loss per share
Basic and diluted (pence per share)	5	(0.02)		(0.02)		(0.03)		(0.04)

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE 3 AND 9 MONTHS ENDED 30 SEPTEMBER 2014

	Share capital	Share premium account	Other reserves	Share-based payment reserve	Translation reserve	Retained earnings	Total attributable to owners of parent	Non-controlling interest	Total equity
	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000
Balance at 31 December 2013	2,520	13,162	(6,156)	1,072	(152)	(8,131)	2,315	(173)	2,142
Issue of share capital		10		-	-	-	10	-	10
Share based payments	-	-	-	12	-	-	12	-	12
Transactions with owners	-	10	-	12	-	-	22	-	22
Loss for the period	-	-	-	-	-	(723)	(723)	(44)	(767)
Other comprehensive income for the period	-	-	-	-	(115)	-	(115)	-	(115)
Total comprehensive loss for the period	-	-	-	-	(115)	(723)	(838)	(44)	(882)
Balance at 30 June 2014 (unaudited)	2,520	13,172	(6,156)	1,084	(267)	(8,854)	1,499	(217)	1,282
Issue of share capital	4	-	-	-	-	-	4	-	4
Transfer on exercise of options	-	-	-	(347)	-	347	-	-	-
Share based payments	-	-	-	4	-	-	4	-	4
Transactions with owners	4	-	-	(343)	-	347	8	-	8
Loss for the period	-	-	-	-	-	(1,137)	(1,137)	(9)	(1,146)
Other comprehensive income for the period	-	-	-	-	14	-	14	-	14
Total comprehensive loss for the period	-	-	-	-	14	(1,137)	(1,123)	(9)	(1,132)
Balance at 30 September 2014 (unaudited)	2,524	13,172	(6,156)	741	(253)	(9,644)	384	(226)	158

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

AS AT 30 SEPTEMBER 2014

		Unaudited		Audited
		30 September 2014		31 December 2013
Assets	Notes	£'000		£'000
Non-current
Intangible assets	6	4,763		4,897
Property, plant and equipment		72		87
		4,835		4,984
Current
Cash and cash equivalents		2,322		2,101
Trade and other receivables		107		87
Total current assets		2,429		2,188
Total assets		7,264		7,172
Liabilities
Current
Trade and other payables		451		413
Owed to jointly controlled entity		11		-
Financial liability		1,050		1,234
Total current liabilities		1,512		1,647
Liabilities due after one year
Loans	8	4,800		2,568
Deferred tax liability		794		815
Total liabilities		7,106		5,030
Equity
Issued share capital	9	2,524		2,520
Share premium		13,172		13,162
Share based payment reserve		741		1,072
Other reserves		(6,409)		(6,308)
Retained earnings		(9,644)		(8,131)
		384		2,315
Non-controlling interest		(226)		(173)
Total equity		158		2,142
Total equity and liabilities		7,264		7,172

CONSOLIDATED STATEMENT OF CASH FLOWS

FOR THE 3 AND 9 MONTHS ENDED 30 SEPTEMBER 2014

	Unaudited 3 months  ended 30 September 2014		Unaudited 3 months  ended 30 September 2013		Unaudited 9 months ended 30 September 2014		Unaudited 9 months ended 30 September 2013
	£'000		£'000		£'000		£'000
Cash flows from operating activities
Loss after tax	(1,146)		(1,232)		(1,913)		(2,464)
Amortisation of intangibles	1		5		4		14
Depreciation	6		6		19		19
Share of losses of jointly controlled entity	164		-		164		-
Finance income	(1)		-		(3)		(1)
Finance cost	218		54		565		60
Fees paid in shares	-		-		10		-
Equity settled share-based payments	4		-		16		400
Movement on fair value of derivatives	378		-		(430)		-
(Increase)/decrease in trade and other receivables	25		(97)		(14)		(141)
(Decrease)/increase in trade and other payables	(74)		269		(49)		354
Net cash outflow from operating activities	(425)		(995)		(1,631)		(1,759)
Cash flows from investing activities
Purchase of property, plant and equipment	-		-		(9)		(8)
Proceeds from sale of property, plant and equipment	-		-		11		-
Investment in jointly controlled entity	(153)		-		(153)		-
Finance income	1		-		3		1
Net cash outflow from investing activities	(152)		-		(148)		(7)
Cash flows from financing activities
Proceeds from issue of share capital	4		-		4		500
Share issue costs	-		-		-		(32)
Finance cost	-		(54)		-		(60)
New loans	2,000		2,667		2,000		4,000
Net cash inflow from financing activities	2,004		2,613		2,004		4,408
Net increase/(decrease) in cash and cash equivalents	1,427		1,618		225		2,642
Cash and cash equivalents at beginning of period	896		1,632		2,101		601
Exchange differences on cash and cash equivalents	(1)		202		(4)		209
Cash and cash equivalents at end of period	2,322		3,452		2,322		3,452

NOTES TO THE INTERIM REPORT

FOR THE PERIOD ENDED 30 SEPTEMBER 2014

1. GENERAL INFORMATION

The financial information set out in this interim report does not constitute statutory accounts as defined in Section 434 of the Companies Act 2006.  The Group's statutory financial statements for the year ended 31 December 2013 have been delivered to the Registrar of Companies.  The auditors report on these financial statements was unqualified and did not contain statements under section 498(2) or section 498(3) of the Companies Act 2006.

2. ACCOUNTING POLICIES

BASIS OF PREPARATION

The Company's ordinary shares are quoted on the AIM market of the London Stock Exchange and the Company applies the Companies Act 2006 when preparing its annual financial statements.

The annual financial statements for the year ended 31 December 2014 will be prepared under International Financial Reporting Standards as adopted by the European Union (IFRS) and the principal accounting policies adopted remain unchanged from those adopted in preparing its financial statements for the year ended 31 December 2013.

The accounting policies have been applied consistently throughout the Group for the purposes of preparation of these condensed consolidated interim financial statements.

GOING CONCERN

The Directors have prepared cash flow forecasts for the period ending 30 November 2015.  The forecasts identify unavoidable third party running costs of the Company and demonstrate that the Company has sufficient cash resources available to allow it to continue in business for a period of at least twelve months from the date of approval of these interim financial statements.  Further development of the Company's exploration and investment activities, including any direct investment in the Roaster Project, will continue as and when finance is available.  Accordingly, the accounts have been prepared on a going concern basis.

3. SEGMENTAL REPORTING

An operating segment is a distinguishable component of the Group that engages in business activities from which it may earn revenues and incur expenses, whose operating results are regularly reviewed by the Group's chief operating decision maker to make decisions about the allocation of resources and assessment of performance and about which discrete financial information is available.  The chief operating decision maker has defined that the Group's only reportable operating segment during the period is mining.

The Group has not generated any revenues from external customers during the period.

In respect of the non-current assets, £55,000 (31 December 2013: £70,000) arise in the UK, and £4,780,000 (31 December 2013: £4,914,000) arise in the rest of the world.

4.  TAXATION

Unrelieved tax losses of approximately £6.30 million (31 December 2013: £5.09 million) remain available to offset against future taxable trading profits.  The unprovided deferred tax asset at 30 September 2014 is £1,501,000 (31  December 2013: £1,239,000) which has not been provided on the grounds that it is uncertain when taxable profits will be generated by the Group to utilise those losses.

5.  LOSS PER SHARE

The calculation of the basic loss per share is based on the loss attributable to ordinary shareholders divided by the weighted average number of shares in issue during the period.

	Unaudited		Unaudited		Unaudited		Unaudited
	3 months ended		3 months ended		9 months ended		9 months ended
	30 September 2014		30 September 2013		30 September 2014		30 September 2013
	£'000		£'000		£'000		£'000
Loss on ordinary activities after tax (£'000)	(1,146)		(1,232)		(1,913)		(2,464)
Weighted average number of shares for calculating basic loss per share	6,933,405,029		5,723,546,688		6,854,886,500		5,501,324,464
Basic and diluted loss per share (pence)	(0.02)		(0.02)		(0.03)		(0.04)

Diluted earnings per share is the same as basic loss per share in each year because the potential shares arising under the share option scheme, share warrants and convertible bonds are anti-dilutive.

The weighted average number of ordinary shares excludes deferred shares which have no voting rights and no entitlement to a dividend.

6.   INTANGIBLE ASSETS

	Exploration Asset		Mining & Mineral Licences		Goodwill		Total
	£'000		£'000		£'000		£'000
Cost
At 1 January 2014	4,076		102		815		4,993
Exchange Difference	(108)		(1)		(21)		(130)
At 30 September 2014	3,968		101		794		4,863
Amortisation and impairment
At 1 January 2014	-		96		-		96
Amortisation charge in the period	-		4		-		4
At 30 September 2014	-		100		-		100
Net book value
At 30 September 2014	3,968		1		794		4,763
At 1 January 2014	4,076		6		815		4,897

The exploration asset relates to the acquisition of Portage Minerals Inc. during 2013.  The exploration asset has not been amortised in the year as actual exploitation or material development of the asset have yet to commence.  The exploration asset is not required to be reviewed for impairment unless there are any indications that the carrying amount exceeds the recoverable amount.  The directors consider that there are no indications that the carrying amount exceeds the recoverable amount as at 30 September 2014.

Goodwill on acquisition relates to goodwill arising on the acquisition of Portage Minerals Inc.  Goodwill is not amortised but is reviewed for impairment on an annual basis or more frequently if there are any indications that goodwill may be impaired.  The directors consider that there are no indications that the goodwill is impaired as at 30 September 2014.

Mining and mineral licenses are amortised on a straight line basis over the life of the licenses.

7.  INVESTMENT IN JOINTLY CONTROLLED ENTITY

Tri-Star owns 40% of Strategic & Precious Metals Processing LLC ("SPMP") a company incorporated in the Sultanate of Oman.  The Company accounts for its interest in SPMP using the equity method of accounting whereby the investment is initially recognised at cost and adjusted thereafter for the change in the Company's share of SPMP's net assets.  As at 30 September 2014, the Company had invested £153,000 in SPMP and its share of losses of SPMP amounted to £164,000.

8.  LOANS

On 27 August 2014 the Company completed a private placing of £2.0 million secured convertible bonds due June 2018 with Odey European Inc. in addition to the £4.0 million of secured convertible bonds also issued to Odey European Inc. in June 2013 (together, the "Convertible Bond").

The Convertible Bond is issued and redeemable at 100% of the principal amount plus accrued interest and, unless previously redeemed, converted or cancelled, mature in June 2018.

The Convertible Bond is convertible at 100% of the principal amount plus accrued interest at the holder's option into ordinary shares at a conversion price which is fixed at the time of conversion at a 10% discount to the lower of:

(i)           the latest equity funding round completed prior to the issue of the conversion notice; and

(ii)          any equity funding round completed within 10 days of the conversion notice.

As at 30 September 2014, 30 June 2014 and 31 December 2013, the conversion price stood at 0.27p per Tri-Star ordinary share.

The carrying value of the host debt component of the Convertible Bond at 30 September 2014 amounted to £4,800,000 (31 December 2013: £2,568,000, 30 June 2014: £2,915,000).

The conversion option (limited by the early repayment clause) is an embedded derivative treated as a liability at fair value through profit and loss.  The fair value of the embedded derivative, calculated using the Black-Scholes option valuation model, was £1,137,000 (31 December 2013: £1,234,000, 30 June 2014: £426,000).  The (decrease)/increase in fair value in the 3 and 9 month periods, amounting to (£378,000) and £430,000, respectively, has been recorded in finance cost/income in the Consolidated Income Statement for the period ended 30 September 2014 (31 December 2013: (£171,000), 30 June 2014: (£808,000)).

The Convertible Bonds are recorded in the Consolidated Statement of Financial Position as:

2013 Bonds

Asset/(liability)	On Issue	Profit and loss movement	At 31 December 2013	Profit and loss movement	At 30 June 2014	Profit and loss movement	At 30 September 2014
	£'000	£'000	£'000	£'000	£'000	£'000	£'000
Carrying value of host debt instrument	(2,343)	(225)	(2,568)	(347)	(2,915)	(187)	(3,102)
Fair value of derivative	(1,405)	171	(1,234)	808	(426)	(368)	(794)
TOTAL	(3,748)	(54)	(3,802)	461	(3,341)	(555)	(3,896)

2014 Bonds

Asset/(liability)	On Issue	Profit and loss movement	At 31 December 2013	Profit and loss movement	At 30 June 2014	Profit and loss movement	At 30 September 2014
	£'000	£'000	£'000	£'000	£'000	£'000	£'000
Carrying value of host debt instrument	(1,667)	-	-	-	-	(31)	(1,698)
Fair value of derivative	(333)	-	-	-	-	(10)	(343)
TOTAL	(2,000)	-	-	-	-	(41)	(2,041)

The movement in the carrying value of the host debt instrument relates to accrued interest.

The key data for the valuation model were the share price and number of shares, expected option maturity life, risk free interest rate and underlying volatility as set out in the table below.

		31 December 2013		30 June 2014		30 September 2014
"Spot Tri-Star" price, in £		0.0028		0.0019		0.0016
"Strike" conversion price, in £		0.0027		0.0027		0.0027
Maturity		31 December 2014		31 December 2014		31 December 2015
Volatility		58%		86%		87%
Number of shares		1,803,010,994		1,803,010,994		2,984,370,116

On issue the host debt instrument liability for the 2013 bond was recorded at £2,343,000 being the difference between the fair value of the derivative and the proceeds.  Thereafter, in line with accounting standards, the host debt instrument is carried at amortised cost with an effective interest rate of 27.24%.

On issue the host debt instrument liability for the 2014 bond was recorded at £1,667,000 being the difference between the fair value of the derivative and the proceeds.  Thereafter in line with accounting standards the host debt instrument is carried at amortised cost with an effective interest rate of 20.18%.

9.  SHARE CAPITAL

	Unaudited		Audited
	30 September 2014		31 December 2013
	£'000		£'000
Allotted, issued and fully paid
1,363,925,475 deferred shares of 0.1p (30 September and 31 December 2012: 1,363,925,475)	1,364		1,364
856,547,275 deferred shares of 0.095p (31 December 2013: 856,547,275)	814		814
6,937,257,889 ordinary shares of 0.005p (31 December 2013: 6,843,546,532)	346		342
	2,524		2,520

The deferred shares have no voting rights and are not eligible for dividends.

 

END

 

 

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