RNS Number:8352H
Falkland Gold and Minerals Ltd
16 November 2007
Falkland Gold and Minerals Limited
16 November 2007
AUDITED PRELIMINARY RESULTS
for the year ended 30 September 2007
Highlights of the Financial Period
* Completed the original work programme ahead of schedule;
* 9,894 metres drilled in the year to September 2007;
* Final work programme through to December 2007;
* Cash balances just under #4.2 million as at 30 September 2007.
Enquiries:
Falkland Gold & Minerals Limited
Richard Linnell (Chairman) +27 82 440 6710
WH Ireland Ltd
James Joyce / Sarang Shah +44 207 220 1666
Chairman's Statement
Dear Shareholder
This year has been disappointing in that despite the application of much effort,
analysis and thought, we have not as yet been able to identify the source of the
coarse gold particles evident in some of the streams in East Falklands.
It is now evident that even if we should now achieve this objective, then the
likely occurrence will be too small to exploit economically. We are currently
carrying out seismic studies to see if we can identify below the peat, the small
saddle reef structures which are possible hosts to the gold.
Derek Reeves's operational report outlines in greater detail the work that has
been carried out this year. He will continue with this until the end of the year
when the programmes are expected to be complete. This work has been rigorous and
detailed and the results have been shared with our consultants who have not been
able to fault its range and scope.
I am satisfied that we have fulfilled our mandate in the Falklands and would
like to express my appreciation to the Government and people of the Falklands
for their support and encouragement over the past three years.
Your Directors have decided that if by the year end no economically significant
mineralisation has been identified then they intend to deploy the remaining cash
balances, expected to be in the region of #3.5 million, and a fully equipped and
experienced exploration team with two drills and sample processing equipment to
prospective areas elsewhere in the world.
This resource base will enable us to seek out projects that have high potential
and are relatively early phase as this would complement our skills base. This
also implies that we will probably seek projects that are in previously
unexplored or lightly explored areas and that are relatively difficult to
access.
From a commodity point of view we will actively seek gold and associated metals
such as uranium but will not ignore any base metal opportunities that may
present themselves.
This coming year may therefore see us acquiring new partners and tackling new
targets with fresh eyes and eagerness together with some solid professional
experience.
I am very excited by these concepts and anticipate an exciting year going
forward.
In closing I would like to thank all our stakeholders, my colleagues for their
continued support and Derek Reeves and his team for their dedication and
commitment.
Richard Linnell
Executive Chairman
Operating Review
The exploration programme for the period 1 October 2006 to 30 September 2007 has
involved:
* Drilling 84 holes across 6 key target areas (9,894 metres);
* Ground geophysical surveys;
* Structural interpretation and mapping;
* Data reviews by independent consultant;
* Soil geochemical sampling; and
* Ground radiometric surveys.
Drilling programme
In total we have drill tested 14 of the original 23 targets being T1N, T2N, T2S,
T5, T6, T7, T8W, T8E, T9N, T10, T11, T12, T15E and T20. This work and other
exploration strategies down-graded the remainder of the original targets to
non-drillable targets while new additional targets discovered and drilled being
T22, T23, T24, T25, Black Shale Project, Lafonia A1 and Lafonia A2. Drilling of
these targets identified structures and features that in conjunction with
structural interpretation, mapping and data reviews by Professor Richard Viljoen
have led the company to focus on key areas for the remainder of the work
programme.
By the end of September 2007, a cumulative total of 27,289 metres of
predominantly HQ core has been drilled and 11,604 samples had been sent for
assaying.
Ground geophysics
The groundwork programme for this year has focused on Electro-Magnetic ("EM"),
Induced Polarisation ("IP") and gravity surveys. Between September 2006 and
January 2007, a total of 545 line-km of EM and 30 line-km of IP were collected
from Target 25 and Target 11. Of the different methods trialed, EM proved to be
the more applicable to detecting targets within the sediments on the target
areas, while IP and gravity were less successful. The EM identified targets on
T25 were subsequently and methodically tested by the drill and favourable
structures were intersected, but these were devoid of significant
mineralisation. For T11, EM detected several near surface targets (>100 m) while
the IP although penetrating deeper, detected similar structures to that of those
detected by the EM. The T11 anomalies (EM and IP) were tested by the drill and
narrow structures were intersected, but these were devoid of significant
mineralisation.
Data review and structural mapping and interpretation
A review of all data and subsequent new structural mapping and interpretation
identified that the alluvial gold recovered from the streams is associated with
a zone of tight, east-west folding which has affected the Bluff Cove and Port
Sussex formations other rock formations. These formations contain favourable
interbedded shales and sandstone units that could, given the correct structural
traps, be targets for Slate Belt type gold and in particular "Saddle Reef"
styled mineralisation. Past drilling has drilled structures (i.e. T25) but these
only contained weak or no mineralisation and the recent interpretation has
focused on potential "Saddle Reef" locations to the east of T25 known as the
Ceritos Project. In addition the interpretation identified structurally
favourable targets in Lafonia (T11) that could be the source of the gold
recovered in streams of which targets being A-1, A-2, and B-2 are currently the
focus of work.
Soil and stream sampling
Geochemical data on the soil/clay horizon over targets T18 and T20 (West
Falklands) resulted in an anomaly on T20 that was drilled while negative results
from T18 down graded this target. The geochemical anomaly from T20 was
attributed to a wide intrusive unit that was tested by the drill but though a
significant geological intersection was identified it is devoid of
mineralisation.
East Falklands target Lafonia A-2 was recently sampled with 1,196 soil samples
collected from a grid that covers the identified structural system and even
though the results are pending, initial sub-surface drilling targeting
structures suggests that the intersected structures will not be mineralised.
Ground radiometric surveys
A review of the uranium potential within the licence identified a number of
anomalies with the Karoo type sediments that were subsequently checked with a
newly acquired modern scintillometer. A total of some 300 line-km of surveys
were undertaken of which only minor uranium anomalies were encountered though
none were of economic interest.
Review of prospects
The exploration work has been focused on the three key project areas - Black
Shale Project, Ceritos Project and Lafonia targets A-1, A-2 and B-2 with a
drilling programme designed to test for deposits of potential commercial
interest scheduled for completion by end of 2007.
Black Shale Project
Following on from the work outlined last year, the exploration focus has been on
nine key areas where structures (shears, faults and fractures) and dykes
traverse the unique anomalous Carbonaceous Shale zone ("CSH"). Sub-peat soil
sampling utilising the method pioneered by the Company has resulted in some
5,000 samples collected. All of the blocks sampled have identified key anomalies
with the two more prospective blocks being B and E, with the Block E anomaly
rated the higher (gold = 0.018 ppm). Drilling of the gold anomaly within Block E
is under way to test for a deposit of commercial interest that if successful
will also give encouragement to follow-up on the remainder of the Black Shale
blocks where anomalies have been detected by this method.
Ceritos Project
The review highlighted that if bedrock gold is to be found then it is likely to
conform to one of the various forms of gold vein emplacement styles found in "
Slate Belt" goldfields. The alluvial gold recovered in the streams in the
project area is associated with a zone of tight, east-west folding which has
affected amongst other rock sequences the Bluff Cove and Port Sussex Formations
and it is these formations that contain favourable interbedded shale's and
sandstone units that could, given the correct structural traps, be favourable
targets for Slate Belt type gold, in particular "Saddle Reef" styled
mineralisation. Gold veins associated with "Saddle Reefs" are to be found in the
anticlinal hinges of tight folds in a sequence of alternating shale's and
sandstones which provide the competency contrast for the emplacement of the
veins. An example of the proposed "Saddle Reef" styled environment was located
at the L'Antioja Arroyo cutting to the east of the Ceritos Project confirming
that the proposed model exits. This style of mineralisation is generally
restricted to small localised areas of less than 25 metres width but "stacked"
to give multiple mineralised zones.
In order to pin-point these potential "Saddle Reefs" within the anticlinal
hinges beneath the peat and to test with the drill, the Company has commissioned
geophysical contractors to acquire 4.2 line-km of ground reflection seismic
within the Ceritos Project. Successful target generation by this method will see
results of commercial interest if present, tested by year end.
Lafonia Project
Structural interpretation of the Lafonia region utilising satellite imagery,
aerial magnetic data, aerial radiometrics and digital terrain models (DTM)
matched with the study of the gold anomalies in the streams identified three
structural corridors each with structural zones - The Eastern Structural
Corridor comprising the Goose Green Fracture Zone (GGFZ), and Darwin Fracture
Zone (DFZ); The Central Structural Corridor comprising the Central Fracture Zone
(CFZ) and The Western Structural Corridor comprising the West One Fracture Zone
and West Two Fracture Zone.
Within the Eastern Structural Corridor and Central Structural Corridor several
targets were identified of which three targets are of priority these being A-1,
A-2 and B-2.
Exploration work including drilling of structural features to test for
commercial potential is scheduled for completion by the year's end.
Derek Reeves
Operations Manager
Financial Review
Operating loss
The operating loss for the year under review was #3,995,347 (2006: #1,610,920).
After interest and other income, the loss on ordinary activities before tax was
#3,701,589 (2006: #1,325,811). The dramatic increase in the loss, as compared to
2006, arose because of the need to write off the Intangible Fixed Assets. The
Company has a policy of capitalising costs associated with exploration projects.
In the event of licence relinquishment, project abandonment or a project being
assessed as having no further commercial value, the related costs must be
written off. As there is insufficient evidence to suggest there is an economic
mineral resource within the Company's licence area, the Board has written off
all of the costs associated with the Falkland Islands exploration project. That
write off amounted to #2,642,882 for the year to 30 September 2007 (2006:
#208,224) and means the Company is no longer carrying an intangible asset in its
balance sheet.
Cash flow
Despite the increase in the loss for the period, the year to 30 September 2007
has actually seen a reduction in the cash outflow being #1,605,740 as compared
to #1,877,037 for the year to 30 September 2006. This resulted from three
factors. First, there was a significant drop in the operational capital
expenditure, because most of the operational equipment had been acquired in the
prior periods. Second, the survey costs were not as high as in 2006 and third,
the tax charge was lower (a direct result of the expected reduction in interest
income).
Outlook
The Company still has valuable operational equipment and expertise. That,
coupled with the cash resources available to it (#4,177,216 as at 30 September
2007) means FGML should be well placed to continue its exploration activity
elsewhere. It is in this light that the Board continues to view the Company as a
going concern.
Mark Fresson
Finance Director
Profit and Loss Account
for the year ended 30 September 2007
Note Year ended Restated
30.9.07 Year ended
30.9.06
# #
Administrative expenses (3,995,347) (1,610,920)
Operating loss (3,995,347) (1,610,920)
Interest receivable and similar income 257,612 262,289
Other income 36,146 22,820
Loss on ordinary activities before (3,701,589) (1,325,811)
taxation
Tax on loss on ordinary activities 4 (48,935) (127,103)
Loss for the financial year after (3,750,524) (1,452,914)
taxation
Loss for the year (3,750,524) (1,452,914)
Year ended Year ended
30.9.07 30.9.06
Loss per ordinary share basic and diluted 2 (4.79)p (1.86)p
Continuing operations
None of the Company's activities were acquired or discontinued during the
current year or previous period.
Total recognised gains and losses
The Company has no recognised gains or losses other than the losses for the
current year or previous period.
Balance Sheet
at 30 September 2007
At At Restated Restated
30.9.07 30.9.07 At At
30.9.06 30.9.06
# # # #
Fixed assets
Intangible assets - 1,834,282
Tangible assets 217,898 442,132
217,898 2,276,414
Current assets
Debtors 39,469 35,771
Cash at bank and in hand 4,177,216 5,782,956
4,216,685 5,818,727
Creditors: amounts falling due within
one year (140,273) (136,427)
Net current assets 4,076,412 5,682,300
Net assets 4,294,310 7,958,714
Capital and reserves
Called up share capital 1,565 1,565
Share premium 10,209,182 10,209,182
Other reserves 242,080 155,960
Profit and loss account (6,158,517) (2,407,993)
Shareholders' equity funds 4,294,310 7,958,714
Cash Flow Statement
for the year ended 30 September 2007
Note Year ended Restated
30.9.07 Year ended
30.9.06
# #
Net cash flow from operating activities (916,577) (888,099)
Returns on investments and servicing of
finance
Interest received 257,612 262,289
Other income 36,146 22,820
Capital expenditure
Purchase of intangible fixed assets (850,075) (963,699)
Purchase of tangible fixed assets (83,911) (183,245)
Cash outflow before financing (1,556,805) (1,749,934)
Taxation 4 (48,935) (127,103)
(Decrease) in cash in the period (1,605,740) (1,877,037)
Reconciliation of operating loss to net cash outflow from operating activities
Year ended Restated
30.9.07 Year ended
30.9.06
# #
Operating loss (3,995,347) (1,610,920)
Share based payment 86,120 86,120
Depreciation, amortisation and impairment 2,992,502 566,686
(Increase)/decrease in debtors (3,698) 25,230
Increase in creditors 3,846 44,785
Net cash outflow from operating (916,577) (888,099)
activities
Reconciliation of movements in shareholders' equity funds
Year ended Restated
30.9.07 Year ended
30.9.06
# #
Loss for the financial year (3,750,524) (1,452,914)
Share based payment expense 86,120 86,120
Net reduction in equity (3,664,404) (1,366,794)
Opening shareholders' equity funds 7,958,714 9,325,508
Closing shareholders' equity funds 4,294,310 7,958,714
Notes to the Financial Statements
for the year ended 30 September 2007
1. Basis of preparation
The financial statements are prepared in accordance with UK accounting standards
as adopted by the Company under the historical cost convention on a going
concern basis.
Going concern
The financial statements are prepared on a going concern basis which the
Directors believe to be appropriate for the following reasons. The Directors
have decided that unless the remaining work program in the Falkland Islands
identifies deposits likely to be of commercial interest by the end of 2007, it
will cease its exploration activities in the Falklands. However, the Company
will continue with its on going purpose of exploration activities and the
Directors are actively pursuing and considering alternative prospects outside
the Falkland Islands. The Company has a pool of staff with a good skill set and
is well equipped with the appropriate hardware which can be deployed to other
mineral prospects.
The Directors have prepared projected cash flow information for the period
ending twelve months from the date of their approval of these financial
statements. If the decision is made to cease exploration in the Falkland Islands
in December 2007, the Company will have cash balances of approximately #3.5
million. This would be sufficient to support an annual level of exploration
activity, similar to what FGML has undertaken on the Falkland Islands over the
last few years, for between 18 months and 2 years. Therefore, on the basis of
this cash flow information, the Directors consider that the company will be able
to continue in operational existence for the foreseeable future by meeting its
liabilities as they fall due. As is common with many exploration companies, the
company may need to raise additional funds for exploration and capital projects
as and when required.
However, there can be no certainty in relation to these matters, which may cast
significant doubt on the company's ability to continue as a going concern. The
company may, therefore, be unable to continue realising its assets and
discharging its liabilities in the normal course of business but the financial
statements do not include any adjustments that might result from the basis of
preparation being inappropriate.
2. Loss per share
The basic and diluted loss per ordinary share is based on losses of #3,750,524
(12 months to 30 September 2006: #1,452,914) and the weighted average number of
ordinary shares outstanding of 78,250,000 (30 September 2006: 78,250,000).
3. Dividends
The Directors do not recommend payment of a dividend (2006: #nil).
4 Taxation
Analysis of the tax charge:
Year ended Year ended
30.9.07 30.9.06
# #
Current tax:
UK corporation tax Current 48,946 49,761
prior year (11) 77,342
Tax on loss on ordinary activities 48,935 127,103
Factors that may affect future tax charges
The Company has accumulated pre-trading expenditure carried forward amounting to
approximately #2.68m (2006: #1.81m).
This may affect future tax charges should the Company produce taxable trading
profits in future periods.
5 Statutory information
The financial information set out above does not constitute the Company's
statutory accounts for the years ended 30 September 2006 and 2007 but is derived
from those accounts. Statutory accounts for 2006 have been delivered to the
Registrar of Companies and those for 2007 will be delivered following the
Company's Annual General Meeting. The auditors have reported on these accounts;
their reports were unqualified and did not contain statements under the Falkland
Islands Companies Act 1948.
Copies of the Annual Report and Accounts will be posted to all shareholders with
the AGM circulars. Further copies will be available from the Company's head
office at 5 Charterhouse Square, London, EC1M 6PX, United Kingdom. Telephone +44
(0) 20 7253 7670. The Report will also be published on the Corporate website at
www.fgml.co.uk.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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