RNS Number:2018Q
Monterrico Metals PLC
26 September 2003
MONTERRICO METALS PLC
INTERIM REPORT 2003
For the period ended 30 June 2003
CHIEF EXECUTIVE OFFICER'S STATEMENT
Monterrico Metals plc ("Monterrico" or the "Company") is a London based resource
development company that operates exclusively in Peru. The Company's shares are
quoted on the Alternative Investment Market (AIM) of the London Stock Exchange
(ticker code - MNA.L).
Monterrico holds a 100% interest in a number of base and precious metals
projects over the length of the Peruvian Andes. The Company's principal project
is the Rio Blanco Copper Project ("Rio Blanco") located in the north of Peru.
The first half of 2003 has seen continued development of Rio Blanco and in the
share price valuation of the Company, which at 19 September 2003 stands at 135p
(a 150% increase on the June 2002 listing price), underpinning the success
achieved to date.
Capital Raising and Acquisition of Rio Blanco
In April 2003, Monterrico successfully increased its interest in Rio Blanco to
100%. The purchase price of this transaction was US$1 million and 412,092
Monterrico shares. The Company placed 1.33 million ordinary shares at 75p,
raising #1 million to fund this acquisition, with the balance of the proceeds
providing additional working capital.
Project Development
In late 2002, Monterrico commissioned a pre-feasibility study to assess a number
of alternative scenarios for the development of the Henry's Hill prospect at Rio
Blanco; results from this pre-feasibility study are expected in late September
of this year.
As part of this pre-feasibility study, an independent resource estimate of the
Henry's Hill prospect was prepared by Snowden Mining Industry Consultants in
Canada; a summary of the Resource Statement follows:
Cut-off Combined Resource Indicated Resource Inferred Resource
Grade
% Cu Tonnes'000 Grade% Cu Tonnes'000 Grade% Cu Tonnes'000 Grade% Cu
0.70 176,700 0.98 161,000 0.98 15,700 0.98
0.50 662,200 0.69 476,300 0.72 185,900 0.63
0.30 1,071,700 0.58 723,100 0.61 348,600 0.52
The resource at Henry's Hill includes a high-grade core within a larger
mineralized envelope, containing 65 million tonnes grading 1.26% copper.
Furthermore, the Henry's Hill target remains open in several directions and it
is anticipated that a follow-up drill programme, designed to test the continuity
and extensions to the copper mineralization in order to further qualify and
potentially expand the resource, will commence before the end of this year.
Monterrico has also completed a 171 metre long exploration tunnel, which
intersected the principal enriched copper zone at the eastern slope of Henry's
Hill. The objectives of the tunnel were to allow geologists to view the ore zone
directly, to provide bulk samples for comparison with drilling data and to
extract a bulk metallurgical sample for detailed testwork. Results from the
copper assays returned a continuous mineralised run of 90 metres at 1.10% copper
including 16 metres at 2.37% copper. The tunnel is anticipated to be extended by
an additional 150 metres during the next phase of development.
Farm-out Agreements
In accordance with Monterrico's stated objective, farm-out agreements have been
signed on two of the Company's other projects during the reporting period. A
farm-out agreement with Minera Calipuy S.A.C. ("Calipuy") was signed in January
2003, whereby Calipuy may earn up to a 75% interest in Monterrico's wholly owned
Pico Machay gold project located in southern central Peru by spending US$4
million on exploration. Calipuy will provide management and funding to advance
the project, whilst Monterrico will retain an initial carried interest with the
right to participate in the development of Pico Machay.
A second farm-out agreement was signed with Newmont Peru Limited ("Newmont"), a
subsidiary of one of the world's largest gold producers, Newmont Mining
Corporation, in April 2003. Newmont is committed to drill a minimum of 1,500
metres in the initial 12 month period and may spend US$4 million over a four
year period to earn a 60% interest in Monterrico's wholly owned Conaviri gold
project located in southern Peru. Newmont may elect to increase their interest
to 75% by spending an additional US$6 million over the following two years.
Results
During the six months to 30 June 2003, the Company made a loss before and after
tax of #324,601 compared to a loss of #99,624 in the three months to 30 June
2002. This increase in administrative costs is due to the fact that the Company
listed on AIM in June 2002 and activity prior to that date was kept to a
minimum.
The proceeds received from the AIM listing and from the subsequent placing in
April 2003 have funded the work programme on the Rio Blanco project and its
outright acquisition in April of this year. Intangible assets total #1.7
million at 30 June 2003, compared to #0.2 million at the end of June 2002. The
increase in exploration costs includes #614,768 incurred in 2002 on Rio Blanco.
These exploration costs were previously shown in the balance sheet as a fixed
asset investment, but on the acquisition of the remaining share of Rio Blanco,
these expenses have now been reclassified into intangible assets. In addition to
these reclassified costs, intangible assets also includes the exploration costs
associated with the drilling programme on Henry's Hill, the drilling of the
exploration tunnel and costs relating to the pre-feasibility study.
Goodwill of #978,488 arose on the acquisition of 100% of Rio Blanco and the
cancellation of the Option Agreement entered into in 2001. The goodwill is being
amortised over a period of 20 years.
In Summary
The results from the first six months of 2003 have been most encouraging and
have met or exceeded our expectations. The Combined Resource of 177 million
tonnes at 0.98% copper at 0.7% cut off validates our belief in the Rio Blanco
project. The acquisition of the remaining share of Rio Blanco brings with it our
total control of the project at a much earlier stage than initially anticipated
and adds enormously to the asset base of the Company.
Monterrico continues to work on the Rio Blanco project and continues to seek
attractive joint ventures elsewhere in Peru.
C J EAGER
CHIEF EXECUTIVE OFFICER
25 September 2003
INDEPENDENT REVIEW REPORT TO MONTERRICO METALS PLC
Introduction
We have been instructed by the company to review the financial information for
the six months ended
30 June 2003 which comprise the profit and loss account, the balance sheet, the
cash flow and the related notes on pages 7 and 8. We have read the other
information contained in the interim report which comprises only the Chairman's
statement and considered whether it contained any apparent misstatements or
material inconsistencies with the financial information. Our responsibilities
do not extend to any other information.
Directors' responsibilities
The interim report including the financial information contained therein is the
responsibility of, and has been approved by, the directors. The directors are
responsible for preparing the interim report in accordance with the AIM Rules
which require that the accounting policies and presentation applied to the
interim figures should be consistent with those applied in preparing the
preceding annual accounts except where any changes, and the reasons for them,
are disclosed.
Review work performed
We conducted our review in accordance with guidance contained in Bulletin 1999/4
"Review of Interim Financial Information" issued by the Auditing Practices Board
for use in the United Kingdom. A review consists primarily of making enquiries
of management and applying analytical procedures to the financial information
and underlying financial data and based thereon, assessing whether the
accounting policies and presentation have been consistently applied unless
otherwise disclosed. A review excludes audit procedures such as test of
controls and verification of assets, liabilities and transactions. It is
substantially less in scope than an audit performed in accordance with United
Kingdom auditing standards and therefore provides a lower level of assurance
than an audit. Accordingly, we do not express an audit opinion on the financial
information.
Review conclusion
On the basis of our review we are not aware of any material modifications that
should be made to the financial information as presented for the six months
ended 30 June 2003.
GRANT THORNTON
CHARTERED ACCOUNTANTS
LONDON
25 September 2003
MONTERRICO METALS PLC
CONSOLIDATED PROFIT AND LOSS ACCOUNT
For the period ended 30 JUNE 2003
Note 9 months
6 months to 3 months to to 31
30 June 30 June December
2003 2002 2002
(unaudited) (unaudited)
# # #
Administrative expenses (335,760) (99,620) (366,433)
Exploration costs written off - - (29,000)
Operating loss (335,760) (99,620) (395,433)
Net interest 11,641 (4) 27,717
Loss on ordinary activities before taxation (324,119) (99,624) (367,716)
Tax on loss on ordinary activities - - -
Loss on ordinary activities after taxation (324,119) (99,624) (367,716)
Equity minority interests (482) - 482
Loss retained and transferred from reserves (324,601) (99,624) (367,234)
Basic and diluted loss per share (pence) 2 (2.9)p (1.9)p (4.2)p
CONSOLIDATED STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES
9 months
6 months to 3 months to to 31
30 June 30 June December
2003 2002 2002
(unaudited) (unaudited)
# # #
Loss for the financial period (324,601) (99,624) (367,234)
Exchange gain / (loss) on foreign currency net 40,572 (19,028) (34,927)
investments
Total recognised loss for the period (284,029) (118,652) (402,161)
All transactions arise from continuing operations.
MONTERRICO METALS PLC
CONSOLIDATED BALANCE SHEET AT 30 JUNE 2003
Note At 30 At 30 At 31
June June December
2003 2002 2002
(unaudited) (unaudited)
# # #
Fixed assets
Intangible assets 1,729,034 239,299 329,032
Tangible assets 42,273 1,152 18,043
Investments 7,260 - 614,768
Goodwill 969,330 - -
2,747,897 240,451 961,843
Current assets
Debtors 356,454 229,961 246,205
Cash at bank and in hand 625,622 2,520,013 1,462,982
982,076 2,749,974 1,709,186
Creditors: amounts falling due within one year (97,147) (97,694) (60,728)
Net current assets 884,929 2,652,280 1,648,459
Total assets less current liabilities 3,632,826 2,892,731 2,610,302
Capital and reserves
Called up share capital 1,210,264 1,030,472 1,030,472
Share premium account 3,170,962 2,043,121 2,044,683
Profit and loss account (748,400) (180,862) (464,371)
Shareholders' funds 5 3,632,826 2,892,731 2,610,784
Minority interest - - (482)
3,632,826 2,892,731 2,610,302
MONTERRICO METALS PLC
CONSOLIDATED CASH FLOW STATEMENT
For the period ended 30 JUNE 2003
9 months
Note 6 months to 3 months to to 31
30 June 30 June December
2003 2002 2002
(unaudited) (unaudited)
# # #
Net cash outflow from operating activities 3 (360,343) (99,502) (434,965)
Returns on investments and servicing of finance
Interest received 11,974 1,496 29,217
Interest paid (333) (1,500) (1,500)
Net cash inflow / (outflow) from returns on investments 11,641 (4) 27,717
and servicing of finance
Taxation - - -
Capital expenditure and financial investment
Purchase of tangible fixed assets (25,171) (294) (17,644)
Purchase of intangible fixed assets (785,234) (25,709) (144,442)
Acquisition of other investment (7,260) - (614,768)
Net cash outflow from capital expenditure and financial (817,665) (26,003) (776,854)
investment
Acquisitions and disposals
Purchase of investments (658,105) - -
Net cash outflow from acquisitions (658,105) - -
Management of liquid resources
Short term deposits - (2,400,000) (1,403,288)
Net cash outflow before financing (1,824,472) (2,525,509) (2,587,390)
Financing
Issue of shares 1,040,162 3,015,336 3,002,840
Share issue costs (53,050) (445,895) (431,837)
Net cash inflow from financing 987,112 2,569,441 2,571,003
(Decrease) / increase in cash 4 (837,360) 43,932 (16,387)
MONTERRICO METALS PLC
NOTES TO THE INTERIM REPORT
For the period ended 30 JUNE 2003
1. BASIS OF PREPARATION
The interim financial statements have been prepared in accordance with
applicable accounting standards and under the historical cost convention. The
principal accounting policies of the group have remained unchanged from those
set out in the group's 31 December 2002 annual report and financial statements.
The year end of the holding company Monterrico Metals plc was previously 31
March. With effect from 20 May 2002 the year end was changed to 31 December, to
be coterminous with that of the trading subsidiaries. Consequently, this
interim report presents current period information for the 6 months to 30 June
2003 whereas the comparative results include those of the company for the 3
months to 30 June 2002.
2. LOSS PER SHARE
The calculation of the loss per share is based on a loss of #324,601 to 30 June
2003 (loss of #99,624 to 30 June 2002; loss of #367,234 to 31 December 2002) and
the weighted average number of ordinary shares outstanding of 11,095,230 at 30
June 2003 (5,336,879 at 30 June 2002; 8,660,814 at 31 December 2002). There is
no difference between the diluted loss per share and the loss per share
presented.
3. NET CASH OUTFLOW FROM OPERATING ACTIVITIES
6 months to 3 months to 9 months to 31
30 June 30 June December
2003 2002 2002
(unaudited) (unaudited)
# # #
Operating loss (335,760) (99,620) (395,433)
Depreciation and amortisation charge 8,675 77 536
(Increase) in debtors (110,249) (37,792) (54,036)
Increase in creditors 36,419 56,860 19,895
Exploration costs written off - - 29,000
Foreign exchange loss 40,572 (19,027) (34,927)
Net cash used in operating activities (360,343) (99,502) (434,965)
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR NKPKDOBKDDCB