Half Yearly Report

RNS Number : 4271Z

Persian Gold PLC

22 September 2009

 



22nd September 2009

Persian Gold plc

Interim Results for the Six Month Period to 30th June 2009

Key Points:

• To date good exploration success has been achieved by Persian Gold in Iran:
  - the Chah-e-Zard gold discovery is believed to be commercial
  - Dalli could potentially be a small copper/gold mine

• Further progress and development has been frustrated by inaction on behalf of the authorities

• Persian Gold is looking to examine other opportunities and strategic directions 

John Teeling Chairman of Persian Gold Commented:

'The geology of Iran remains very attractive. Accessing the opportunity in Iran was the strategy behind setting up Persian Gold. Despite some considerable success on the ground, we have found it difficult to progress projects due to bureaucratic delays.  

Persian Gold is committed to Iran. We are examining other opportunities available to best serve the Company and shareholders, while continuing to address the problems of operating in Iran'.

Iran is a beautiful country with outstanding geological potential. The logic in establishing Persian Gold in 2004 was to take advantage of the opportunities. The geopolitical situation facing Iran - sanctions, Middle East politics, and lack of understanding - meant that few, if any, Western mining companies would venture into the country. The founders of Persian Gold, Irish and Iranian, were experienced international operators and had no political baggage. This gave us a major early-move advantage.  

The strategy worked very well in the early years. Persian Gold got every help from the Iranian Embassy in Dublin and from the geological and mining organisations in Iran. Persian Gold established a top class technical team in Iran. We had two quick discoveries, both joint ventures with local Iranians; Chah-e-Zard, a gold oxide resource, and Dalli, a copper / gold porphyry. Grass roots gold exploration at Takestan obtained good first phase exploration results and then ran into opposition when we wanted to move to the trenching / drilling phase.  

But, our experience in the past eighteen months has been frustrating. A detailed application to the Ministry of Mines for a Discovery Certificate on the Chah-e-Zard gold / silver discovery has lain dormant, although it has passed through various committees for technical and economic review. No explanation has come from the authorities. Under the relevant Mining Law, the authorities must rule on our application. Persian Gold staff have completed the necessary technical work prior to lodging a Discovery Certificate application for the Dalli copper / gold resource, but under the current circumstances, there is little point in submitting the application. Compounding the problem is the fact that visas are no longer available from the Iranian Embassy in Dublin. Again, no explanations are forthcoming.  

Let me remind you of our logic in selecting Iran. The country is very big, stretching over 2,000 kilometres. It is seriously underexplored but thought to contain significant percentages of the world's gold, copper, zinc and other metals. By bringing new thinking and new technology to the country, and by recruiting top quality internal staff, we hoped to make discoveries. In looking for gold, we applied the knowledge gained from discovering and developing gold mines in clay / alunite / silica minerals in the Andes. We employed satellite imagery in seeking exploration sites and used new interpretation techniques to evaluate findings. It worked. Our experience of gold mining in Africa enabled us to model and evaluate the Chah-e-Zard deposit, where we drilled over 40 holes to outline an oxide resource of at least 160,000 ounces of gold and 1 million ounces of silver. We know how to build and operate tank leach gold mines. We believe Chah-e-Zard is commercial.  

Our initial focus was on early stage gold exploration but we soon realised that Iran could and should contain very large copper gold porphyry deposits. Our first target was Dalli. This is a good and valuable deposit, but it is not the goal, it is not big enough. We looked at others, including Shadan in the East, but we have not found a big resource. Applying state of the art analytical / evaluation techniques added value to both resources. Dalli could be viable as a small gold / copper mine.  

We had excellent cooperation in Iran at local and national level. Individuals, state organisations, and even a bank, brought particular projects. We signed Memoranda of Understanding with a bank, a state mining company and with some local mining groups.  

For the past eighteen months, we persevered in our chosen strategy in Iran, though unable to make any progress with the authorities. We kept our top quality geological team together, we continued to examine new projects, and we pushed for answers to our application. It is unsatisfactory to report that we have made no progress and have received no explanations.  

The Way Forward

Facing reality, your board have taken the following steps:  

			1.	Continue to monitor opportunities in Iran;
			2.	Cut costs as far as possible. Unfortunately, some staff have lost their jobs, while our two top managers have seen their remuneration cut;
			3.	In recent months, we have conducted preliminary investigations into the mineral potential in Armenia, Azerbaijan, Kazakhstan and Tajikistan. We are now focusing on grass roots gold opportunities. These countries have large Persian / Azari-Turkic speaking populations. Our Iranian staff can work in these places;
			4.	We have identified two specific minerals which we believe have strong long term fundamentals. The board is examining exploration opportunities in these minerals. Early developments are expected;
			5.	The skills, expertise and contacts of directors and staff extend into hydrocarbons. For some time, we have been looking at opportunities to partner with local Iranian groups who have obtained exploration concessions. Iranian oil operates on a different regime to minerals so foreign investment is taking place. To date, the returns offered make financing difficult.

Outside of Iran, we have been offered and are examining exploration projects in both gas and oil. If we remain stalled in Iranian minerals, then such projects provide alternatives.  

The geology of Iran remains as attractive as ever. We are striving to find out why Persian Gold is not making progress with the authorities. If we can identify the problems, we will fix them. In the interim, we must ensure that shareholders have opportunities. This will lead to a redirection of activities, at least in the short term.  

John Teeling

Chairman

22nd September 2009 

Persian Gold PLC
	John Teeling, Chairman	[phone]
FinnCap
	Matthew Robinson	[phone]
College Hill
	Nick Elwes	[phone]

www.persiangoldplc.com

Persian Gold plc
Financial Information (Unaudited)
CONDENSED CONSOLIDATED INCOME STATEMENT
					Six Months Ended				Year Ended
					30 June 09		30 June08		31 Dec 08
					unaudited		unaudited		audited
					£'000		£'000		£'000
Revenue					0		0		0
Operating costs					(160)		(191)		(316)
OPERATING LOSS					(160)		(191)		(316)
Finance income					0		4		8
Finance costs					(1)		(1)		(2)
LOSS BEFORE TAXATION					(161)		(188)		(310)
Income tax expense					0		0		0
LOSS AFTER TAXATION					(161)		(188)		(310)
LOSS PER SHARE - Basic and diluted					(.22p)		(.30p)		(.48p)
CONDENSED CONSOLIDATED BALANCE SHEET
					30 June 09		30 June08		31 Dec 08
					unaudited		unaudited		audited
					£'000		£'000		£'000
NON-CURRENT ASSETS
Intangible assets					1,893		1,474		1,831
CURRENT ASSETS
Other receivables					10		12		13
Cash and cash equivalents					80		278		194
					90		290		207
TOTAL ASSETS					1,983		1,764		2,038
LIABILITIES
CURRENT LIABILITIES
Trade and other payables					(276)		(228)		(170)
NON-CURRENT LIABILITIES
Provisions					(10)		(10)		(10)
TOTAL LIABILITIES					(286)		(238)		(180)
NET ASSETS					1,697		1,526		1,858
EQUITY
Share Capital					2,841		2,472		2,841
Reserves					(1144)		(946)		(983)
TOTAL EQUITY					1,697		1,526		1,858
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
	Six Months Ended 30 June 09
					Share based
	Share		Share		Payments		Retained		Total
	Capital		Premium		Reserve		Losses		Equity
	£'000		£'000		£'000		£'000		£'000
As at 1 January 2008	158		2,314		130		(888)		1,714
Loss for the period							(188)		(188)
As at 30 June 2008	158		2,314		130		(1,076)		1,526
Share option costs recognised in reserves					85				85
Shares issued	28		422						450
Share issue expenses			(81)						(81)
Loss for the period							(122)		(122)
As at 31 December 2008	186		2,655		215		(1,198)		1,858
Loss for the period							(161)		(161)
As at 30 June 2009	186		2,655		215		(1,359)		1,697
CONDENSED CONSOLIDATED CASH FLOW STATEMENT
					Six Months Ended				Year Ended
					30 June 09		30 June08		31 Dec 08
					unaudited		unaudited		audited
					£'000		£'000		£'000
CASH FLOW FROM OPERATING ACTIVITIES
Loss for the period					(161)		(188)		(310)
Finance costs recognised in loss					1		1		2
Finance income recognised in loss					0		(4)		(8)
Exchange movements					5		(4)		11
Shares issued in lieu of fees					0		0		213
					(155)		(195)		(92)
Movements in working capital					109		(36)		(94)
CASH USED BY OPERATIONS					(46)		(231)		(186)
Finance costs					(1)		(1)		(2)
Finance income					0		4		8
NET CASH USED IN OPERATING ACTIVITIES					(47)		(228)		(180)
INVESTING ACTIVITIES
Payments for intangible assets					(62)		(191)		(545)
NET CASH USED IN INVESTING ACTIVITIES					(62)		(191)		(545)
FINANCING ACTIVITIES
Proceeds from issue of equity shares					0		0		237
NET CASH GENERATED FROM FINANCING ACTIVITIES					0		0		237
NET DECREASE IN CASH AND CASH EQUIVALENT					(109)		(419)		(488)
Cash and cash equivalent at beginning of the period					194		693		693
Effect of exchange rate changes on cash held					(5)		4		(11)
CASH AND CASH EQUIVALENT AT END OF THE PERIOD					80		278		194

Notes: 

1.    INFORMATION

The financial information for the six months ended June 30th, 2009 and the comparative amounts for the six months ended June 30th, 2008 are unaudited. The financial information above does not constitute full statutory accounts within the meaning of section 240 of the Companies Act 1985.

The Interim Financial Report has been prepared in accordance with IAS 34 Interim Financial Reporting as adopted by the European Union. The accounting policies and methods of computation used in the preparation of the Interim Financial Report are consistent with those used in the Group 2008 Annual Report, which is available at www.persiangoldplc.com

The interim financial statements have not been audited or reviewed by the auditors of the Group pursuant to the Auditing Practices board guidance on Review of Interim Financial Information.

2.    No dividend is proposed in respect of the period.

3.    LOSS PER SHARE

	30 June 09	30 June 08	31 Dec 08
	£	£	£
Loss per share - Basic and Diluted	(0.22p)	(0.30p)	(0.48p)
Basic loss per share
The earnings and weighted average number of ordinary shares used in the calculation of basic loss per share are as follows:
Loss for the year attributable to equity holders of the Parent	(161,024)	(188,291)	(310,367)
Weighted average number of ordinary shares for the purpose of basic earnings per share	74,662,198	63,412,198	64,090,280

4.    INTANGIBLE ASSETS

	30 June 09	30 June 08	31 Dec 08
Exploration and evaluation assets:	£'000	£'000	£'000
Cost at 1 January	1,831	1,283	1,283
Additions	62	191	548
	_________	_________	_________
Cost and net book value	1,893	1,474	1,831

    Exploration and evaluation assets relates to expenditure incurred during prospecting, exploring for gold and related expenditure in Iran.

The group's activities are subject to a number of significant 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

    - funding risks

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

The directors are aware that by its nature there is an inherent uncertainty in such development expenditure as to the value of the asset. Having reviewed the deferred exploration and evaluation development expenditure at 30 June 2009, the directors are satisfied that the value of the intangible asset is not less than carrying net book value.

	5.	The Interim Report for the six months to June 30th, 2009 was approved by the Directors on 22nd September 2009.
	6.	Copies of this announcement will be sent to shareholders and will be available for inspection at the Companies Registered Office at 20-22 Bedford Row, London WC1R 4JS. The Interim Report may also be viewed at Persian Gold plc's website at www.persiangoldplc.com

 

END

 

 

IR ILFFTAVILFIA