TIDMGGG
Central China Goldfields plc
(`GGG' or `the Company')
LONDON 5 June 2009
Central China Goldfields plc, (AIM: GGG), the mineral exploration
and development company operating in China, is pleased to report its audited
results for the twelve months ended 31 December 2008.
Highlights:
- In April we sold the Company's interest in the Snow Mountain
Project to our partner, the Sichuan Bureau of Metallurgy and Geological
Exploration, for cash consideration of RMB 38 million. This represents a
profit of RMB 14 million (approximately GBP1.1 million). The proceeds were
then used to advance the Nimu Project and to earn in our initial 30% in
Nimu.
- GBP899,520 was raised during the year, including GBP150,751 from
Directors and employees of the Company.
- Twenty one holes have been drilled in the Gangjiang Licence in
Nimu over the last two years with eighteen hitting significant
mineralisation and many yielding good grades over considerable widths.
- At the Dong Mao Huo gold project resource definition drilling was
completed and large scale bulk sampling was successfully carried out.
- On 2nd June 2009 the Company announced that the Sichuan Bureau of
Metallurgy and Geological Exploration has approached Central China
Goldfields plc with a view to acquiring the Company's interest in the Nimu
Project. At the present time the terms of any transaction, including the
level of consideration, is unclear and there is no certainty that a formal
offer will be forthcoming. Given the material uncertainties the shares
were suspended from trading on AIM. A further announcement will be made in
due course following clarification of the situation, at which point the
Board hopes that trading in the Company's shares can be resumed.
The annual report and financial statements together with the Notice
of AGM and Proxy form will be despatched to shareholders shortly. The annual
general meeting will be held at The Geological Society, Burlington House,
Piccadilly, London W1J 0BG on 30 July 2009 at 09:30 am.
Additional copies of the Annual Report and Accounts, Notice of AGM
and Proxy Form may be requested directly from the Company and will be
available following distribution to shareholders on the Company's website
www.ccgoldfields.com.
For further information, please contact:
Central China Goldfields plc Hanson Westhouse Limited
Dr. Jeffrey Malaihollo Tim Metcalfe / Martin Davison
Tel: 020 7621 0200 Tel: 020 7601 6100
Email: info@ccgoldfields.com
www.ccgoldfields.com Alexander David Securities
Limited
Nick Bealer / David Scott
Tel: 020 7448 9820
CHAIRMAN'S STATEMENT
2008 has been a year of challenges set against a number of clear
successes for the Company.
In terms of our successes, we have made significant progress at
Nimu where we believe we may have discovered a potentially world class
porphyry copper deposit. Our second major success was the sale of the Snow
Mountain gold project for RMB 38 million resulting in a profit of RMB 14
million ( approximately GBP1.1 million). Sadly the success of that sale was soon
tempered by the sadness of the subsequent major earthquake in the direct
locality of the project. Progress has also been made at the Dong Mao Huo gold
deposit to the point that this can be moved on to its next stage.
In March, after careful deliberation of the strategic direction of
the company, we sold the Snow Mountain prospect to our joint venture partners
Sichuan Bureau of Metallurgy and Geology Exploration (SBMGE) for a total of
RMB 38 million which represents a profit of approximately GBP1.1 million. Our
decision was based on a desire to focus on projects which have the capacity to
transform shareholder value. We, therefore, are focusing on our potential
world class copper porphyry deposit at Nimu and, to a lesser extent, early
cashflow prospects at the Dong Mao Huo gold project.
Twenty one holes have been drilled in the Gangjiang Licence in Nimu
over the last two years with eighteen hitting significant mineralisation and
many yielding good grades over considerable widths. Three areas of
mineralisation have been the focus of our drilling: Guqing, East Nading and
Gelong. At Guqing the mineralisation is contained in an area of 400m x 300m x
250m. Between East Nading and Gelong (now called Doulie) the mineralisation
area covers 1000m x 700m with depths from surface up to 576m. There are also
areas with copper oxides at surface which could be very attractive for future
low-cost solvent extraction- electrowinning (SX/EW) techniques.
The mineralisation is contained in quartz monzonite rocks
surrounding a rhyodacite porphyry. Further trench sampling at the end of 2008
lead us to believe that much of this `annulus' is mineralised and that we have
only drilled a portion of it to date. The tonnage indications are significant,
representing a potentially world class deposit which could be open-pittable
with oxides at surface. We now feel that the geological risks of this project
have been reduced significantly.
At the Dong Mao Huo gold project resource definition drilling was
completed and large scale bulk sampling was successfully carried out. Although
this is a relatively modest resource it is situated in a very easily
accessible area with roads and power on the property.
Central China Goldfields has continued to ensure good community
relations at Nimu, visiting each house, explaining the programmes and
negotiating appropriate land compensation for our activities. We have also
ensured employment of the local people and that local cultures are fully
respected. All staff have been given thorough training in community relations
issues prior to the 2008 field season which helped enormously and we have
continued to emphasise the importance of health, safety and environmental
work.
Given the current economic downturn, the company has adjusted its
cost base to reflect ongoing economic realities whilst retaining the
flexibility to respond as circumstances change.
Our progress throughout the year could not have been achieved
without the hard work of all our employees. Therefore, in closing, on behalf
of the Board of Directors, I would like to thank all of them for their
dedication over the past period and also our investors for their support in
these challenging times.
Latest developments:
The company completed the transaction for the sale of the Snow
Mountain Project and has since secured the vesting of the initial 30% interest
in the Nimu project. Given the current market situation we are looking at
alternate strategies for Dong Mao Huo and we are actively talking to potential
strategic partners to develop Nimu.
In line with the strategy outlined above, in early May 2009, we
concluded a Contract Mining deal with a subsidiary of CITIC-Anhua, part of a
large Chinese Government Investment Company, to develop and mine the Dong Mao
Huo deposit. Central China Goldfields will receive a fixed income of RMB 1.5
million per annum during the oxide phase of the mining and 30% of the net
profit during the potentially more lucrative sulphide phase, as well as
recovering some past expenditure.
On 2nd June 2009, the Company announced that the Sichuan Bureau of
Metallurgy and Geological Exploration has approached the Company with a view
to acquiring the Company's interest in the Nimu Project. At the present time
the terms of any transaction, including the level of consideration, is unclear
and there is no certainty that a formal offer will be forthcoming. Should a
formal offer be made this is likely to constitute a fundamental change of
business as defined by the AIM Rules for Companies and will therefore be
subject to shareholder approval.
Nigel Clark
Beijing
5 June 2009
CONSOLIDATED INCOME STATEMENT
Year ended 31 December 2008
1 Jan to 31 1 Jan to 31
Dec 2008 Dec 2007
Note GBP GBP
Administrative expenses (1,182,100) (2,114,637)
OPERATING LOSS 1 (1,182,100) (2,114,637)
Investment revenues - interest on bank deposits 15,519 128,052
LOSS BEFORE TAX (1,166,581) (1,986,585)
Tax 2 - -
LOSS FOR THE FINANCIAL PERIOD (1,166,581) (1,986,585)
ATTRIBUTABLE TO THE EQUITY HOLDERS
OF THE PARENT (1,166,581) (1,986,585)
BASIC LOSS PER SHARE 3 (0.009) (0.017)
All of the activities of the Group are classed as continuing.
CONSOLIDATED BALANCE SHEET
31 December 2008
2008 2007
Note GBP GBP
NON-CURRENT ASSETS
Goodwill 4 126,148 46,887
Other intangible assets 4 7,726,808 4,288,066
Property, plant and equipment 5 83,525 62,420
Marketable securities 6 - 428,266
7,936,481 4,825,639
CURRENT ASSETS
Other receivables 7 3,763,815 65,322
Cash and cash equivalents 63,598 1,620,463
3,827,413 1,685,785
TOTAL ASSETS 11,763,894 6,511,424
CURRENT LIABILITIES
Other payables 8 (4,185,291) (360,067)
TOTAL LIABILITIES (4,185,291) (360,067)
NET ASSETS 7,578,603 6,151,357
EQUITY
Share capital 10 1,455,339 1,206,819
Share premium account 11 8,105,920 7,471,937
Warrant reserve 11 492,329 517,743
Share option reserve 11 310,400 494,079
Translation reserve 11 1,649,176 6,710
Retained losses 11 (4,707,240) (3,751,292)
EQUITY ATTRIBUTABLE TO
EQUITY HOLDERS OF THE
PARENT 7,305,924 5,945,996
Minority Interest 272,679 205,361
TOTAL EQUITY 7,578,603 6,151,357
CONSOLIDATED CASH FLOW STATEMENT
Year ended 31 December 2008
1 Jan to 31 1 Jan to 31
Dec 2008 Dec 2008
GBP GBP
Operating loss (1,182,100) (2,114,637)
Depreciation 14,354 6,285
Impairment charge on intangible assets
and goodwill 378,402 -
Non-cash loss on impairment of marketable
securities 13,207 258,722
Loss on disposal of marketable securities 295,422
Gain on disposal of intangible assets (1,114,011) -
Effect of foreign exchange translation (3,627) 82,595
Loss on disposal of property, plant and
equipment - 1,962
Stock option expense 1,540 240,000
Non-cash cost of warrants exercised - 129,476
Change in receivables and other current
assets - (Increase) / Decrease (3,698,493) 841,488
Change in payables - Increase / (Decrease) 3,825,224 222,682
NET CASH USED IN OPERATING
ACTIVITIES (1,470,082) (331,427)
INVESTING ACTIVITIES
Proceeds on sale of intangible assets 3,423,365 -
Proceeds on sale of marketable securities 115,995 -
Investment in marketable securities - (686,988)
Acquisitions of property, plant and
equipment (10,207) (68,705)
Acquisitions of other intangible assets (4,452,521) (2,081,396)
Interest received 15,519 128,052
Acquisitions of subsidiaries and
minority interests (61,436) -
NET CASH USED IN INVESTING
ACTIVITIES (969,285) (2,709,037)
FINANCING ACTIVITIES
Issue of equity share capital 248,520 63,828
Share premium on issue of equity
share capital 651,000 564,456
Share issue costs (17,018) 19,226
NET CASH FROM FINANCING
ACTIVITIES 882,502 647,510
NET (DECREASE) / INCREASE IN
CASH AND CASH EQUIVALENTS (1,556,865) (2,392,954)
CASH AND CASH EQUIVALENTS
AT BEGINNING OF PERIOD 1,620,463 4,013,417
CASH AND CASH EQUIVALENTS
AT END OF PERIOD 63,598 1,620,463
NOTES TO THE FINANCIAL STATEMENTS
Year ended 31 December 2008
1. OPERATING LOSS
1 Jan to 31 1 Jan to 31
Dec 2008 Dec 2008
GBP GBP
Operating loss is after charging
Auditors' remuneration - as auditors 16,524 20,338
Loss on disposal of marketable securities 295,422 258,722
Impairment charges for the year 391,609 -
Stock option expense 1,540 240,000
Foreign exchange (gains) / losses (331,224) 82,595
Depreciation of tangible assets 14,354 6,285
Loss on disposal of fixed assets - 1,962
Gain on disposal of other intangible assets 1,114,011 -
The analysis of auditors' remuneration
is as follows:
Fees payable to the Company's auditors
for the audit of Company's accounts
15,000 18,000
Fees payable to the Company's auditors
and their associates for other services to
the Group -
The audit of the Company's subsidiaries* 1,524 2,338
Total audit fees 16,524 20,338
TOTAL 16,524 20,338
* The audits of Zhongcheng Limited, Lhasa Tianli Mining Company
Limited, Baotou Ltd and United Kingdom Central China Goldfields plc Beijing
Representative Office were carried out by the subsidiaries' local auditors in
the People's Republic of China.
2. Tax
1 Jan to 1 Jan to
31 Dec 31 Dec
2008 2008
GBP GBP
Current tax - -
Deferred tax - -
Tax expense for the year - -
Until it is probable that sufficient taxable profits will be
available to allow all or partial recovery of deferred tax assets of
GBP1,334,209 (2007 - GBP984,235), the accounting benefit of tax losses will not be
reflected in the accounts.
The charge for the year can be reconciled to the loss per the
income statement as follows:
1 Jan to 31 1 Jan to 31
Dec 2008 Dec 2008
GBP GBP
Loss for the year (1,166,581) (1,986,585)
Tax at the UK corporation tax rate of 30% (349,974) (595,976)
Tax losses carried forward 349,974 595,976
Tax expense for the year - -
3. LOSS PER SHARE
a) Basic loss per share
Basic loss per share is calculated by dividing the profit for the
year by the weighted average number of shares in issue during the year. The
weighted average number of shares used is 131,113,392 (2007 - 118,357,323).
b) Diluted loss per share
International Accounting Standard 33 requires presentation of
diluted earnings per share when a Company could be called upon to issues
shares that would decrease the net profit or increase the net loss per share.
For a loss making Company with outstanding options, net loss per share would
only be increased by the exercise of out-of-money options. Since it seems
inappropriate to assume that option holders would exercise out-of-money
options, no adjustment has been made to diluted loss per share for
out-of-money share options.
c) Headline loss per share
The Group presents an alternative measure of loss per share after
excluding all capital gains and losses from the loss attributable to ordinary
shareholders. The impact of this is as follows:
2008 2007
Basic
Loss per share (0.009) (0.017)
Effect of loss on disposal of property, plant and - -
equipment
Adjusted loss per share (0.009) (0.017)
4. INTANGIBLE FIXED ASSETS
For the year ended 31 December 2008
Group Deferred
Exploration
Goodwill Costs Total
GBP GBP GBP
Cost and carrying amount
At 1 January 2008 46,887 4,288,066 4,334,953
Additions 126,148 4,452,521 4,578,669
Disposals - (2,309,354) (2,309,354)
Impairment charge for the year (46,887) (331,515) (378,402)
Effect of foreign exchange translation - 1,627,090 1,627,090
At 31 December 2008 126,148 7,726,808 7,852,956
The Goodwill addition relates to Baotou Inc. which has been
included in the consolidation for the first time, details of this are included
in note 20.
5. PROPERTY, PLANT AND EQUIPMENT
For the year ended 31 December 2008
Fixtures, fittings &
software
Group
GBP
Cost
At 1 January 2008 68,705
Additions 10,207
Acquisitions 2,566
Disposals -
Effect of foreign exchange translation 26,071
At 31 December 2008 107,549
Accumulated depreciation
At 1 January 2008 6,285
Charge for the year 14,354
Disposals -
Effect of foreign exchange translation 3,385
At 31 December 2008 24,024
Carrying amount
At 31 December 2008 83,525
Carrying amount
At 31 December 2007 62,420
6. MARKETABLE SECURITIES
For the year ended 31 December 2008
Group and Company Year ended Year ended
31 Dec 31 Dec
2008 2007
GBP GBP
Cost and carrying amount
Opening balance 428,266 -
Additions - 686,988
Disposals (411,417) -
Impairment charge for the year (13,207) (258,722)
Effect of foreign exchange translation (3,642) -
Closing balance - 428,266
Net book value
Closing balance - 428,266
7. Other RECEIVABLES
Group Group Company Company
2008 2007 2008 2007
GBP GBP GBP GBP
Receivables due from Group - - 5,233,945 4,246,686
undertakings
Prepayments and other 3,763,815 65,322 8,453 22,752
receivables
3,763,815 65,322 5,242,398 4,269,438
Included in prepayments and other receivables of the Group at 31
December 2008, is GBP3,436,011 receivable from the sale of the Snow Mountain
project (RMB 35,000,000) (2007 - nil).
8. OTHER PAYABLES
Group Group Company Company
2008 2007 2008 2007
GBP GBP GBP GBP
Trade payables 120,291 76,809 17,345 65,484
Payables due to Minority 3,989,193 257,399 - -
Shareholders
Non-trade payables and 75,807 25,859 68,992 23,587
accrued expenses
4,185,291 360,067 86,337 89,071
Included in payables due to Minority Shareholders of the Group at
31 December 2008, is property payment payables of GBP2,901,998 (RMB 28,800,000)
(2007 - nil) and drilling payables of GBP1,087,195 (RMB 10,789,532) (2007 -
nil).
9. RELATED PARTY TRANSACTIONS
No individual party had overall control of the Company or Group
during the period and no transactions were undertaken with related parties,
neither during the current nor comparative financial years, being of a nature
requiring disclosure under IFRS's.
10. SHARE CAPITAL
2008 2007
GBP GBP
Authorised share capital
500,000,000 ordinary shares 5,000,000 5,000,000
of GBP0.01 each
No. GBP No. GBP
Called up, allotted and
fully paid
Ordinary shares of GBP0.01 145,533,858 1,455,339 120,681,873 1,206,819
each
Issue of shares
During 2008, 24,851,985 1p ordinary shares were issued, as follows:
(i) 3,136,000 shares at 7 pence
(ii) 17,641,633 shares at 3 pence
(iii) 4,074,352 shares at 3.7 pence
Share Warrants
The group has 15,067,250 (2007- 16,067,250) share purchase warrants
outstanding at a weighted average exercise price of 10.06 pence (2007 - 9.94
pence).
11. RESERVES
For the year ended 31 December 2008
Group Share Share
premium
Warrant option account Retained Translation
reserve losses reserve
reserve
GBP GBP GBP GBP GBP
At 1 January 2008 517,743 494,079 7,471,937 (3,751,292) 6,710
Loss for the year - - - (1,166,581) -
Premium arising on issue
of equity shares
- - 651,000 - -
Grant of share options - 1,540 - - -
Movement during the year - - - - 1,642,466
Cost of lapsed warrants / (25,414) (185,219) - 210,633 -
options
Issue costs - - (17,017) - -
At 31 December 2008 492,329 310,400 8,105,920 (4,707,240) 1,649,176
Company Share Share
premium
Warrant option account Retained
reserve losses
reserve
GBP GBP GBP GBP
At 1 January 2008 517,743 494,079 7,471,937 (3,620,993)
Loss for the year - - - (1,382,298)
Premium arising on issue of - - 651,000 -
equity shares
Grant of share options - 1,540 - -
Cost of lapsed warrants / (25,414) (185,219) - 210,633
options
Issue costs - - (17,017) -
At 31 December 2008 492,329 310,400 8,105,920 4,792,658
Warrant reserve
Warrant
reserve
Warrants
in issue GBP
Group and Company
At 31 December 2008 15,067,250 492,329
Group and Company
At 31 December 2007 16,067,250 517,743
Stock Option Reserve
Stock
option
Stock reserve
options
in issue GBP
Group and Company
At 31 December 2008 10,000,000 310,400
Group and Company
At 31 December 2007 12,520,000 494,079
(i) Share options granted during the year ended 31 December 2008
were valued by the Directors using the Black-Scholes valuation model, based
upon the following assumptions:
- Term range of three years
- Expected dividend yield of nil
- Risk free interest rate of 2%
- Share price volatility of 50%
- Current share price of 4 pence.
12. post balance sheet events
(i) At the end of December 2008, the Company announced placements
for a combination of 13,833,333 shares at 1.5 pence. These shares were not
issued until January 2009 and are therefore not included in these accounts.
END
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