RNS Number:0652S
Moydow Mines International Inc
30 September 2005
Second Quarter
Interim Report
Three Months Ended June 30, 2005
Dublin Office Toronto Office
74 Haddington Road Suite 1220, 20 Toronto Street
Dublin 4, Ireland Toronto, Ontario M5C 2B8
Tel : (353) 1-667-7611 Tel : (416) 703-3751
Fax : (353) 1-667-7622 Fax : (416) 367-3638
E-mail : www.moydow.com E-mail : info@moydow.com
Message to Shareholders
Dear Shareholder,
In the second quarter of 2005, Moydow continued its aggressive exploration on
its gold and diamond properties in Ghana and Angola. The Company also continued
its drilling and sampling at the Port Loko bauxite project in Sierra Leone.
Limited work was done during the quarter in Newfoundland and the Company is
evaluating the work done to date before deciding future plans.
At the Okumpreko gold mining lease, located on the eastern flank of the Ashanti
gold belt in southwest Ghana, line cutting, soil sampling and geological mapping
continued. A total of 17 soil anomalies have been identified to date.
Additional sampling and mapping will be required before trenching, pit sampling
and drilling commences.
Moydow and its 50/50 joint venture partner, Concord Minerals LLC, continued to
advance the Dala diamond project near the town of Saurimo in north eastern
Angola. This 3000 square kilometre property is situated in a well known diamond
province and there are several diamondiferous kimberlite pipes nearby. Work to
date has consisted of mobilizing crews and equipment and initiating sampling and
mapping. In mid-August 2005, the Company will commence an aeromagnetic and
topographic survey on the property.
The Port Loko bauxite concession is located in north eastern Sierra Leone and
covers 650 square kilometres. Surface sampling and drilling continues. It is
expected that this phase of the work will be completed by the end of August
2005. Sample processing will continue for the next several weeks. The railway
to Port Loko has been cleared of underbrush and it will shortly be inspected by
railway experts. The joint venture parties are presently in discussion with
regard to the extension to the delivery date of the feasibility study.
The Company would like to thank its loyal shareholders for their continued
support. Moydow Mines has an experienced management team with a proven track
record of mining discoveries and we fully expect that our exploration efforts
will result in mining projects that add real value for the shareholders.
Signed on behalf of the Board:
Brian Kiernan
President and Chief Executive officer August 8, 2005
Management's Discussion and Analysis of Financial Condition
and Results of Operations
(All results are expressed in United States dollars unless otherwise stated)
General
This interim management discussion and analysis ("MD&A") is a review of Moydow's
financial and operating results for the second quarter and six months ended June
30, 2005 and are compared with those for the corresponding periods of 2004. In
order to better understand the MD&A, it should be read in conjunction with the
audited consolidated financial statements of the Company and notes thereto for
the year ended December 31, 2004. The consolidated financial statements have
been prepared in accordance with Canadian generally accepted accounting
principles. The reporting currency for the Company is the United States dollar,
and all amounts in the following discussion are in United States dollars unless
otherwise noted. The attached financial statements have not been reviewed by
the Company's auditors. This discussion is based on information available to
August 8, 2005.
Company Overview
Moydow Mines International Inc. ("Moydow" or the "Company") is an international
exploration company with primary interests in precious and industrial minerals
and diamonds. Exploration activities are focused principally in Africa and
Canada. Moydow Mines' common shares are listed on the Toronto Stock Exchange
(symbol "MOY"). For further information on the Company please visit our website
at www.moydow.com or view our public filings on the SEDAR website at
www.sedar.com.
Subsidiaries and affiliated companies of Moydow are organized internationally so
that each has a specific geographic area or mineral project interest. Moydow
provides administrative, technical and financial assistance to these companies.
Forward-Looking Statements
This MD&A may contain forward-looking statements. Such statements are subject
to a number of known and unknown risks and uncertainties and other factors that
may cause actual results to differ materially from those anticipated in such
forward-looking statements.
Application of Critical Accounting Estimates
Moydow's accounting policies are described in note 2 to the Consolidated
Financial Statements for the year ended December 31, 2004. Set out below is a
discussion of the application of Moydow's critical accounting policies that
require the Company to make assumptions about matters that are uncertain at the
time the accounting estimate is made, and where different estimates that could
reasonably have been used in the current period, or changes in the accounting
estimate that are reasonably likely to occur from period to period, would have a
material impact on Moydow's financial statements.
Carrying value of mineral properties
Acquisition costs of mineral properties, together with direct exploration and
development expenses incurred thereon, are deferred and capitalized on a
property by property basis. Upon reaching commercial production, these
capitalized costs are transferred from exploration properties to producing
properties on the consolidated balance sheets and are amortized into operations
using the unit-of-production method over the estimated useful life of the
estimated related ore reserves.
In the event that the long-term expectation is that the net carrying amount of
these capitalized exploration costs will not be recovered, the carrying amount
is written down accordingly and the write-down amount charged to operations.
Such would be indicated where:
* Exploration activities have ceased;
* Exploration results are not promising such that exploration will not be
planned for the foreseeable future;
* Lease ownership rights expire; or
* Insufficient funding is available to complete the exploration program.
The amount shown for mineral properties represents costs incurred to date net of
recoveries from option or joint venture participants and write-downs, and does
not necessarily reflect present or future values.
Segmented Information
The Company has one reportable operating segment, being exploration of mineral
properties in geographic areas as reported in Note 3.
Overview of Exploration Activities and Commitments
Port Loko property, Sierra Leone (Other West Africa)
During the second quarter of 2005, the Company's principal focus was on the Port
Loko bauxite deposit in Sierra Leone. In September 2004, the Company entered
into an option agreement, with respect to this property with Gondwana
Investments Limited ("Gondwana"), a company incorporated in Luxembourg. The
agreement allows Moydow to acquire up to a 60% interest in the property by
incurring exploration expenditure of $1 million and delivering a feasibility
study on or before August 1, 2005. The joint venture parties are presently in
discussion with regard to the extension to the delivery date of the feasibility
study. The agreement only covers bauxite and no other minerals on the property.
Cumulative expenditures to June 30, 2005 amounted to $1.0 million of which
$0.32 million was spent in the second quarter of 2005.
Okumpreko property, Ghana (Other West Africa)
Exploration work continued on the Okumpreko gold property in Ghana where the
Company carried out mapping, geochemical and geophysical studies with a view to
lining up drill targets. The Company can earn a 40% interest in this gold
project in return for direct expenditures of $250,000 incurred within one year
of signing the agreement (September 2004). The Company can increase its
interest to 51% by incurring additional exploration expenditure of $250,000
within two years of signing the agreement. Cumulative expenditures to June 30,
2005 amounted to $0.14 million of which $0.07 million was spent in the second
quarter of 2005.
Dala project, Angola (Other Africa)
In October 2004, Moydow and its partner, Concord Minerals LLC (Concord"), a
private Nevada company, signed an agreement with Empresa Nacional De Diamantes
De Angola ("Endiama"), the Angolan state diamond mining company and
Cimader-Comercio Geral Limitada, ("Cimader") an Angolan company, to explore for
alluvial diamonds on the Dala concession. Under the terms of the agreement,
Moydow and Concord each have a 16.5% interest in the concession with the
remaining percentages held by Endiama and Cimader. To maintain their interest,
Moydow and Concord will have to incur aggregate expenditures of not less than
$5,000,000 on or before October 1, 2007. Cimader and Endiama have a free
carried interest in the project.
On August 15, 2005, the Company will commence an aeromagnetic and topographic
survey on the Dala concession which is located near the town of Saurimo in north
eastern Angola. The concession covers 3,000 square kilometres. Cumulative
expenditures to June 30, 2005 amounted to $0.60 million of which $0.21 million
was spent in the second quarter of 2005.
Newfoundland and Labrador (North America)
Moydow has earned a 51% interest in the True Grit claims. Moydow is the
operator of the joint venture. Cumulative expenditures to June 30, 2005
amounted to $0.86 million of which $0.01 million was spent in the second quarter
of 2005. The Company is currently evaluating the results of all its work to
date on these claims before deciding on future plans.
Results of Operations
Net loss for the second quarter of 2005 was $0.68 million or $0.023 per share
compared to a loss of $1.87 million in the same period in 2004 or $0.065 per
share.
During the second quarter of 2005, the Company sold 20,000 Newmont Mining
Corporation ("Newmont") common shares for proceeds of $0.73 million. The
Company recognized a loss of $0.11 million on the sale of these shares. The
Company also recorded a loss of $0.23 million on the write-down of its remaining
70,000 Newmont common shares to their market value on June 30, 2005. In the
same period of 2004, the Company sold 20,000 Newmont common shares for proceeds
of $0.80 million. The Company recognized a loss of $0.13 million on the sale of
these shares. During the quarter the Company also recorded a loss of $1.42
million on the write-down of its remaining 180,000 Newmont common shares to
their market value on June 30, 2004.
General and administrative expenses were $0.35 million in the second quarter of
2005 as compared with $0.30 million in the same period in 2004. The increase in
2005 is a result of increased cost indirectly associated with the higher level
of exploration activities during the second quarter of 2005.
The Company earned dividend income of $0.006 million and $0.01 million during
the second quarters of 2005 and 2004, respectively. The dividend income relates
to the Company's shareholding in Newmont.
The Company earned deposit interest income of $0.001 million and $0.001 in the
second quarters of 2005 and 2004, respectively.
Net loss for the six months to June 30, 2005 was $1.21 million or $0.042 per
share compared to a loss of $2.63 million in the same period in 2004 or $0.091
per share.
During the six month period ended June 30, 2005, the Company sold 70,000 Newmont
common shares for proceeds of $2.86 million. The Company recognized a loss of
$0.20 million on the sale of these shares. The Company also recorded losses of
$0.42 million on the write-down of its remaining Newmont common shares to their
respective market value at March 31, and June 30, 2005. In the same period of
2004, the Company sold 620,000 Newmont common shares for proceeds of $28.38
million. The Company recognized a loss of $0.13 million on the sale of these
shares. During the six month period ending June 30, 2004 the Company also
recorded losses of $1.81 million on the write-down of its then remaining Newmont
common shares to their respective market value at March 31 and June 30, 2004.
General and administrative expenses were $0.62 million during the first six
months of 2005 as compared with $0.64 million in the same period in 2004.
During the first six months of 2004 the operating currencies strengthened
against the United States dollars together with increased travel cost associated
with property appraisals, investor relations cost and professional fees
associated with the conclusion of the sale of Moydow Limited (Isle of Man) to
Newmont.
The Company earned dividend income of $0.01 million and $0.02 million during the
period ended June 30, 2005 and 2004, respectively. The dividend income relates
to the Company's shareholding in Newmont.
The Company earned deposit interest income of $0.005 million and $0.005 million
in the first half of 2005 and 2004, respectively.
Liquidity and Capital Resources
At June 30, 2005, the Company had working capital of $3.20 million (December 31,
2004 - $5.55 million). Cash and cash equivalents at June 30, 2005 amounted to
$0.29 million compared to $0.81 million at December 31, 2004.
At June 30, 2005, the Company held 70,000 Newmont common shares with a market
value of $2.73 million. The primary factor that could potentially adversely
affect the Company's liquidity is the realisable value of these Newmont common
shares.
Cash Flow Statements
Cash flow used in operating activities for the second quarter of 2005, including
increases in non-cash working capital of $0.04 million, totalled $0.30 million
as compared to $1.02 million in the same period of 2004. In the three months
ended June 30, 2005 cash provided by investing activities was $0.12 million
representing the proceeds from the sale of 20,000 Newmont common shares less
$0.62 million (2004 - $0.34 million) expended on exploration of mineral
properties, principally on the Port Loko bauxite property in Sierra Leone and
the Dala diamond project in Angola.
Cash flow used in operating activities for the six months of 2005, including
decreases in non-cash working capital of $1.65 million, totalled $2.23 million
as compared to $1.11 million in the same period of 2004. During the six months
ended June 30, 2005 cash provided by investing activities was $1.72 million
representing the proceeds from the sale of 70,000 Newmont common shares less
$1.15 million (2004 - $0.51 million) expended on exploration of mineral
properties, principally on the Port Loko bauxite property in Sierra Leone and
the Dala diamond project in Angola.
Cash flow used in financing activities for the period ended June 30, 2004 was
$27.58 million, being a distribution to the shareholders resulting from the sale
of the Company's 50% interest in the Ntotoroso property in December 2003.
Use of Financial Instruments
The Company has not entered into any specialized financial agreements to
minimize its investment risk, currency risk or commodity risk. There are no
off-balance sheet arrangements.
Changes in Accounting Policies
There was no change in accounting policies during the first half of 2005.
Outstanding Share Data
As at August 8, 2005, the Company has 28,964,382 common shares issued. Holders
of common shares are entitled to one vote on any ballot at meetings in respect
of each common share held. The Company has 2,000,000 stock options outstanding
at a weighted average price of CAN$0.33 per option and 200,000 warrants
outstanding at a price of CAN$0.38 per warrant. On January 14, 2005, 1,235,000
stock options expired at a weighted average price of CAN$1.80 per option.
Transactions with Related Parties
Related party transactions relate primarily to the payment of fees under
contracts for drilling and administration services with companies in which two
Company directors are shareholders and/or directors. The Company was charged a
total of $0.07 million during the second quarter of 2005 with respect to these
services (2004 - $0.07 million). Included in accounts payable and accrued
liabilities at June 30, 2005 is $nil (2004 - $0.05 million) payable to these
related parties for such services.
The Company's primary legal counsel is with a firm in which a director of the
Company is a partner. The Company was charged $0.13 million during the second
quarter of 2005 (2004 - $nil) for legal services provided by this firm.
Included in accounts payable and accrued liabilities as at June 30, 2005 is
$0.13 million (2004 - $nil) with respect to such services.
The remuneration of executive directors comprises all of the fees, salaries,
other benefits and emoluments paid to executive directors under employment
contracts and consulting agreements. The remuneration of the executive
directors is fixed by the Compensation Committee, which is comprised solely of
non-executive directors of the Company. The Company was charged $0.06 million
during the second quarter of 2005 (2004 - $0.04 million) pursuant to such
agreements with three executive directors. Included in accounts payable and
accrued liabilities as at June 30, 2005 is $0.08 million (2004 - $nil) with
respect to such remuneration. During the six month period to June 30, 2005 the
Company was charged $0.12 million (2004 - $0.11 million).
Quarterly Information
The following table summaries the results of the Company for each of the most
recent eight quarters:
June2005 March2005 Dec2004 Sept2004 June2004 March2004 Dec2003 Sept2003
$ $ $ $ $ $ $ $
Revenues - - - - - - (9,624) -
Net profit/ (678,423) (529,462) 126,053 562,407 (1,868,233) (758,992) 32,748,121 (184,894)
loss
Basic and (0.023) (0.018) 0.004 0.020 (0.065) (0.026) 1.14 (0.007)
diluted
(loss)/
earnings per
common share
Total assets 6,821,886 7,225,175 9,296,704 9,714,493 8,869,545 11,247,041 39,712,942 4,359,320
Number of 28,964,382 28,964,382 28,814,382 28,814,382 28,784,382 28,784,382 28,784,382 28,145,046
common shares
outstanding
Regulatory, Environmental and Other Risk Factors
The Company intends to fulfil all statutory commitments on its current licences
over the next year and will apply for licence renewals in the normal course of
business.
The Company's operating income and cash flow are affected by changes in the U.S.
/Canadian dollar exchange rate together with movement in the local currencies in
Africa and Ireland, as a portion of the Company's costs are incurred in these
currencies.
The profitability of any mining operation will be significantly affected by
changes in the market price of commodities. Commodity prices fluctuate on a
daily basis and are affected by numerous factors such as world supply, Central
Bank selling, stability of exchange rates, forward sales and inflationary
forces, among other factors beyond Moydow's control.
Moydow has sufficient cash and marketable securities to meet its contractual
obligations for the foreseeable future. No exploration company can guarantee
that the current or proposed exploration or development programs on properties
will result in the discovery of gold or other mineralization or will result in a
profitable commercial mining operation.
In addition, exploration companies are subject to various laws and regulations
including but not limited to environmental and, health and safety matters
together with political risks, which are outside the Company's control. Moydow
is committed to a program of environmental protection at all of its projects and
exploration sites.
Outlook
The Company has acquired projects outside its usual focus of gold exploration
and development projects. These opportunities, although at an early exploration
stage, are in line with Company strategy to capitalize on its long experience in
Africa to grow shareholder value. The Company will continue to seek gold
projects of merit with exploration and development potential.
MOYDOW MINES INTERNATIONAL INC.
CONSOLIDATED BALANCE SHEETS
(expressed in United States dollars, unless otherwise stated)
June 30, Decmeber 31,
2005 2004
(unaudited) (audited)
Assets
Current assets
Cash and cash equivalents $292,020 $808,321
Newmont common shares (note 2) 2,732,100 6,217,400
Accounts receivable and prepaid expenses 563,457 177,786
3,587,577 7,203.507
Mineral properties (note 3) 3,209,584 2,064,293
Other assets 24,725 28, 904
6,821,886 9,296,704
Liabilities
Current liabilities
Current income taxes - 1,274,481
Accounts payable and accrued liabilities 386,706 379,158
386,706 1,653,639
Future income taxes 740,546 740,546
1,127,252 2,394,185
Shareholders' Equity
Capital stock 16,480,245 16,480,245
Contributed surplus 402,406 402,406
Deficit (11,188,017) (9,980,132)
5,694,634 6,902,519
6,821,886 9,296,704
MOYDOW MINES INTERNATIONAL INC.
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(expressed in United States dollars, unless otherwise stated)
Three months ended Six months ended
June 30, 2005 June 30, 2004 June 30, 2005 June 30, 2004
$ $ $ $
Expenses:
Write-down of mineral properties - (728) - 21,273
General and administrative expenses 354,781 298,340 618,078 635,143
Amortization of plant & equipment 1,550 1,664 3,131 3,327
Foreign exchange loss/ (gain) (6,840) 32,891 (16,798) 47,681
349,491 332,167 604,411 707,424
Other income and expenses:
Loss on Newmont common shares
(note 2) (336,498) (1,549,176) (622,168) (1,945,176)
Interest income 1,616 1,634 5,094 5,399
Dividend income 5,950 11,476 13,600 19,976
(328,932) (1,536,066) (603,474) (1,919,801)
Net loss for period (678,423) (1,868,233) (1,207,885) (2,627,225)
Basic and diluted loss per common
share $(0.023) $(0.065) $(0.042) $(0.091)
Weighted average number of common
shares outstanding 28,964,382 28,784,382 28,964,382 28,784,382
Consolidated statements of
Deficit:
Deficit, beginning of period (10,509,594) (8,800,359) (9,980,132) (8,041,367)
Net loss for period (678,423) (1,868,233) (1,207,885) (2,627,225)
Deficit, end of period $(11,188,017) $(10,668,592) $(11,188,017) $(10,668,592)
MOYDOW MINES INTERNATIONAL INC.
CONSOLIDATED STATEMENTS OF CASH FLOW (UNAUDITED)
(expressed in United States dollars, unless otherwise stated)
Three months ended Six months ended
June 30, 2005 June 30, 2004 June 30, 2005 June 30, 2004
Cash provided by(used in)
Operating activities
Net loss for the period
$(678,423) $(1,868,233) $(1,207,885) $(2,627,225)
Adjustments for non-cash items:
Future income taxes - (1,245,641) - (1,245,641)
Loss on Newmont common shares 336,498 1,549,176 622,168 1,945,176
Write-down of mineral properties - (728) - 21,273
Loss on other asset 518 1,007 1,048 1,397
Amortization of capital assets 1,550 1,664 3,131 3,327
(339,857) (1,562,755) (581,538) (1,901,693)
Changes in non-cash working capital:
Loan receivable - 70,445 - 200,000
Accounts receivable and prepaid expenses (238,543) (261,475) (385,671) (194,180)
Accounts payable and accrued liabilities 275,134 736,378 (1,266,933) 781,736
36,591 545,348 (1,652,604) 787,556
Cash flow used in
operating activities (303,266) (1,017,407) (2,234,142) (1,114,137)
Investing activities:
Exploration of mineral
Properties
Purchase of fixed assets (616,491) (344,280) (1,145,291) (512,070)
Proceeds from sale of Newmont shares - - - (5,763)
733,902 800,023 2,863,132 28,376,023
Cash flow provided by investing
activities 117,411 455,743 1,717,841 27,858,190
Financing activities
Distribution to shareholders (27,576,000)
Cash flow used in financing activities (27,576,000)
(Decrease) in cash and cash equivalents (185,855) (561,664) (516,301) (831,947)
Cash and cash equivalents
at beginning of period 477,875 843,787 808,321 1,114,070
Cash and cash equivalents
at end of period $292,020 $282,123 $292,020 $282,123
MOYDOW MINES INTERNATIONAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(expressed in United States dollars, unless otherwise stated)
1) Basis of presentation and consolidation
These consolidated financial statements have been prepared in accordance with
Canadian generally accepted accounting principles. The consolidated financial
statements include the accounts of the Company and its subsidiaries. All
significant inter-company accounts and transactions have been eliminated. In
the opinion of management, all adjustments considered necessary for fair
presentation have been included in these financial statements. Operating
results for the period ended June 30, 2005 are not necessarily indicative of the
results that may be expected for the full year ended December 31, 2005. For
further information, see the Company's consolidated financial statements
including the notes thereto included in the Annual Report for the year ended
December 31, 2004.
2) Newmont common shares
Loss on Newmont common shares comprises: 2005 2004
$ $
Loss on sale of 50,000 shares (2004-nil) (91,270) -
Write-down of remaining Newmont shares to market at March 31, (194,400) (396,000)
Loss on Newmont common shares for the three months to March 31, (285,670) (396,000)
Loss on sale of 20,000 shares (2004-20,000) (111,098) (132,576)
Write-down of remaining Newmont shares to market at June 30, (225,400) (1,416,600)
Loss on Newmont common shares for the three months to June 30, (336,498) (1,549,176)
Cummulative losses for the six months to June 30, (622,168) (1,945,176)
The Company's investment in Newmont common shares is carried at the lower of
cost and market value. The market value of the 70,000 Newmont common shares
held at June 30, 2005 was $2,732,100 (2004 - 180,000 at $6,976,800).
3) Mineral properties
The Company, either directly or through certain joint ventures, has obligations
to expend various amounts on its mineral properties and projects in order to
keep its mineral property rights in good standing. All agreements are in the
normal course of business.
Mineral exploration properties in Africa and North America are recorded with
their carrying values as follows:
West Africa Other Other North Total
Kanyankaw West Africa Africa America
$ $ $ $ $
Balance-December 31, 2004 299,415 574,610 371,840 818,428 2,064,293
Costs-March 31, 2005 6,074 479,316 16,563 26,847 528,800
Balance-March 31, 2005 305,489 1,053,926 388,403 845,275 2,593,093
Costs-June 30,2005 8,284 398,330 206,752 3,125 616,491
Balance-June 30, 2005 313,773 1,452,256 595,155 848,400 3,209,584
Corporate Information.
Directors and Officers
Noel P. Kiernan - Director, Chairman
Brian P. Kiernan - Director, President & CEO
Sylvester P. Boland - Director, Member of the Audit Committee
Albert C. Gourley - Director
Richard J. Linnell - Director, Member of the Audit Committee
Victor J. E. Jones - Director, Member of the Audit Committee
Michael E. Power - Director, Vice President & Secretary
J. Joseph Breen - COO
Rosemary G. O'Mongain - CFO
Toronto Office and Registered Office
12th Floor
20 Toronto Street
Toronto, Ontario
Canada M5C 2B8
Tel: (416) 703 3751 Fax: (416) 367 3638
Dublin Office
74 Haddington Road
Dublin 4, Ireland
Tel: (353) 1 667 7611 Fax: (353) 1 667 7622
Transfer Agent
Computershare Trust Company of Canada
100 University Avenue, 8th Floor
Toronto, Ontario
Canada M5J 2YI
Exchange Listing
The Toronto Stock Exchange
Symbol: MOY
CUSIP: 62472V 100
Shares outstanding: 28,964382
Shares fully diluted: 31,164.382
To contact the Company
In order to contact the Company or to request to be added to our mailing list
please email info@moydow.com
website: www.moydow.com
This information is provided by RNS
The company news service from the London Stock Exchange
END
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