TIDMNGL
RNS Number : 9093B
Norseman Gold PLC
28 February 2011
Norseman Gold plc / Epic: NGL / Index: AIM / Sector: Mining
& Exploration
28 February 2011
NORSEMAN GOLD PLC
('Norseman Gold' or 'the Company')
Interim Report for the half year ended 31 December 2010
NORSEMAN GOLD PLC
Appendix 4D ASX Listing Rule 4.2A.3
Results for Announcement to the Market
Unaudited
Unaudited Period Period ended
ended 31 December 31 December
2010 200 9 Change
AUD$'000 AUD$'000 %
Group revenuefrom continuing
operations 30,150 37,946 20%
(Loss)/ profit before taxfrom
continuing operations (7,118) 680 -
(Loss) / profit after
taxattributable to members of
Norseman Gold plc (803) 610 -
Dividends
No Dividends have been declared or paid.
Net Tangible Assets per Security
Unaudited
Unaudited As As at
at 31 December 31 December
2010 2009
Cents / Share Cents / Share
Net tangible assets per security 37.2 31.3
1. Details of entities over which control has been gained or
lost during the period.
None
2. Details of individual and total dividends or distributions
and dividend or distribution payments. The details must include the
date on which each dividend or distribution is payable, and (if
known) the amount per security of foreign sourced dividend or
distribution.
Not applicable - no dividends have been declared or paid
3. Details of any dividend or distribution reinvestment plans in
operation and the last date for the receipt of an election notice
for participation in any dividend or distribution reinvestment
plan.
Not applicable
4. Details of associates and joint venture entities including
the name of the associate or joint venture entity and details of
the reporting entity's percentage holding in each of these entities
and - where material to an understanding of the report - aggregate
share of profits (losses) of these entities, details of
contributions to net profit for each of these entities, and with
comparative figures for each of these disclosures for the previous
corresponding period.
Not applicable
NORSEMAN GOLD PLC
CHAIRMAN AND MANAGING DIRECTOR'S STATEMENT
The interim financial results of the Group represent the results
of the Norseman Operations for the period 1 July 2010 to 31
December 2010. During this period in which the operations focussed
on the development of the two new mines, the Group produced 23,391
ounces of gold, which generated a loss after tax of AUD$0.8
million.
The average gold price achieved during the 6 months period was
AUD$1,369 per ounce.
Despite the low production performance, some major milestones
were achieved during the half year in pursuit of the Company's
"fill the mill" strategy.
Capital and normal development at both Harlequin and Bullen
achieved record levels and is the main reason behind the general
drop in mined grade during the half. These excellent levels of
development will enable more working areas to be opened up for
stoping in the future and provide more stability in terms of
production.
At the OK Decline rehabilitation and development continued, and
the mine fired the first production ore stopes in early 2011. The
reserve first used to justify reopening this mine has now been
increased with the addition of the Star of Erin and other reserve
delineation. Now that the mine has begun stoping, it is anticipated
production will increase steadily in the coming months.
Dewatering at the North Royal Open Pit has continued to the
point where mining activities were able to be commenced in
December. Dewatering of the bottom of the open pit is continuing in
conjunction with the commencement of mining. An earthmoving
contractor was appointed, as was a drill and blast contractor. In
early 2011, the first low grade ore was extracted and taken to the
ROM pad for processing.
Ore generated from these sources have enabled the mill to
recommence full time, seven days-a-week milling operations. As more
ore is generated, stockpiles will be created which will, in turn,
enable blending of different ores through the processing plant to
achieve optimal output and stabilise gold production.
Production for the half year was below the Group's target from
the Bullen and Harlequin Declines. Following the receipt of results
from grade control drilling in the North Royal open pit, a review
of the current full year production has been carried out, and the
full year forecast has been revised down to 65,000 ounces.
Although cash costs per ounce increased above targeted levels
during the half, this was a reflection of ounces produced from
lower grade ore as opposed to increasing total costs. The Group
managed to keep a tight rein on costs, and total costs were held to
within budget. The Group remains focussed on the productivity and
grade of the operating mines to ensure that the improvement in
performance and profitability continues. The Group has now shifted
from a development focus to production in the new year with the
emphasis on returning the operations to profitability in the June
quarter, as production ramps to maximum mill capacity.
From a balance sheet perspective, as at 31 December the group
remained in a positive cash position with AUD$15.6 million on hand.
Despite the positive cash at 31 December the Group considered it
prudent to raise approximately AUD$16.0 million in February 2011 to
ensure it has sufficient cash on hand for all the capital
expenditure needed to bring on the two new mines and allow for
unforeseen delays. In addition, the Group's production remains
unhedged, and is debt free aside from equipment finance funding
obligations.
During the half year, a strong balance sheet enabled the Group
to expend AUD$21.4m in capital investment, including AUD$8.6m in
mine development, AUD$5.0m in exploration activities, and AUD$8.0m
in plant, equipment and mine infrastructure.
The outlook for the Group in the coming year continues to be
positive and the Group is poised to see a significant increase in
gold production from the extensive capital investment program
undertaken in the past 18 or more months. The Group will continue
with its strategy to fill the mill by further advancing its
development projects with the aim of opening our fifth and
subsequent mines. The Group acknowledges that the performance of
the operations while in the current growth and development phase
has been difficult but the continued success of the growth strategy
that has been pursued will ensure positive returns to the Group
from the Norseman Operations in the medium and long term.
Vince Pendal Barry Cahill
Chairman Managing Director
25th February 2011
Responsibility Statement
The Directors confirm that to the best of their knowledge the
interim financial information for the six months ended 31 December
2010, which has been prepared in accordance with the applicable set
of accounting standards, gives a true and fair view of the assets,
liabilities, financial position and profit or loss of the Group as
required by DTR 4.2.4 R and the Chairman and CEO's Statement
includes a fair review of the information required by DTR 4.2.7 R
and DTR 4.2.8R.
By order of the board
Barry Cahill
Managing Director
25th February 2011
NORSEMAN GOLD PLC
INDEPENDENT REVIEW REPORT TO NORSEMAN GOLD PLC
Introduction
We have been engaged by the Company to review the condensed set
of financial statements in the half-yearly financial report for the
six months ended 31 December 2010 which comprises group statement
of comprehensive income, group statement of changes in equity,
group balance sheet, group cash flow statement and the related
explanatory notes. We have read the other information contained in
the half-yearly financial report and considered whether it contains
any apparent misstatements or material inconsistencies with the
information in the condensed set of financial statements.
Directors' Responsibilities
The half-yearly financial report is the responsibility of, and
has been approved by, the directors. The directors are responsible
for preparing the half-yearly financial report in accordance with
the AIM Rules For Companies.
As disclosed in note 1.1, the annual financial statements of the
group are prepared in accordance with IFRSs as adopted by the
European Union. The condensed set of financial statements included
in this half-yearly financial report has been prepared in
accordance with International Accounting Standard 34, Interim
Financial Reporting, as adopted by the European Union.
Our Responsibility
Our responsibility is to express to the Company a conclusion on
the condensed set of financial statements in the half-yearly
financial report based on our review.
Scope of review
We conducted our review in accordance with International
Standard on Review Engagements (UK and Ireland) 2410, Review of
Interim Financial Information Performed by the IndependentAuditor
of the Entity, issued by the Auditing Practices Board for use in
the United Kingdom. A review of interim financial information
consists of making enquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other
review procedures. A review is substantially less in scope than an
audit conducted in accordance with International Standards on
Auditing (UK and Ireland) and consequently does not enable us to
obtain assurance that we would become aware of all significant
matters that might be identified in an audit. Accordingly, we do
not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that
causes us to believe that the condensed set of financial statements
in the half-yearly financial report for the six months ended 31
December 2010 is not prepared, in all material respects, in
accordance with International Accounting Standard 34 as adopted by
the European Union and the AIM Rules For Companies.
UHY Hacker Young LLP
25 February 2011
Interim Financial Information of Norseman Gold plc
The following interim financial information of Norseman Gold plc
is for the period from 1 July 2010 to 31 December 2010. The
financial information was approved by the Directors on 25 February
2011.
NORSEMAN GOLD PLC
GROUP STATEMENT OF COMPREHENSIVE INCOME
FOR THE PERIOD ENDED 31 DECEMBER 2010
Unaudited Unaudited Audited
31 December 31 December 30 June
2010 2009 2010
Continuing operations AUD$ AUD$ AUD$
Group revenue 30,150,409 37,945,819 74,383,095
Cost of sales (29,653,503) (31,359,605) (60,750,919)
------------- ------------- -------------
Gross profit 496,906 6,586,214 13,632,176
Other operating income 956,325 - 2,199,180
Administrative expenses before
depreciation and amortisation,
exploration write off and
provision for rehabilitation
and charge for share-based
payments (3,377,489) (1,540,725) (5,494,400)
Exploration write off and
provision for rehabilitation - - 221,119
Depreciation and amortisation (5,586,495) (4,666,605) (10,165,447)
Share-based payments - (111,930) (162,710)
--------------------------------- ------------- ------------- -------------
Total administrative expenses (8,963,984) (6,319,260) (15,601,438)
------------- ------------- -------------
Group operating (loss)/profit (7,510,753) 266,954 229,918
Interest receivable 398,042 413,526 863,805
Interest payable (5,086) (8) (143)
------------- ------------- -------------
(Loss) /Profit before taxation (7,117,797) 680,472 1,093,580
Taxation 6,314,998 (70,942) 2,018,767
(Loss) /Profit for the period (802,799) 609,530 3,112,347
============= ============= =============
Other comprehensive income
Exchange differences on
translating foreign operations - - -
Total comprehensive income
for the period attributable
to equity holders of the
Company (802,799) 609,530 3,112,347
============= ============= =============
(Loss)/ Profit per share (cents)
Basic and diluted (0.4) 0.4 1.8
NORSEMAN GOLD PLC
GROUP STATEMENT OF CHANGES IN EQUITY
FOR THE PERIOD ENDED 31 DECEMBER 2010
Foreign
Share Share Currency Equity Retained Total
Capital Premium Reserve Reserve Losses Equity
AUD$ AUD$ AUD$ AUD$ AUD$ AUD$
Unaudited Period ended 31
December 2010
Balance at
1 July 2010 4,905,650 87,292,058 - - (20,489,104) 71,708,604
Net loss for
the period - - - - (802,799) (802,799)
---------- ------------ ---------- ------------ ------------- -----------
Total
comprehensive
income for
the period - - - - (802,799) (802,799)
Share issues 513,982 17,139,057 - - - 17,653,039
Balance at
31 December
2010 5,419,632 104,431,115 - - (21,291,903) 88,558,844
---------- ------------ ---------- ------------ ------------- -----------
Unaudited Period ended 31
December 2009
Balance at
1 July 2009 4,889,123 86,864,874 518,742 1,109,015 (25,391,918) 67,989,836
Net profit for
the period - - - - 609,530 609,530
---------- ------------ ---------- ------------ ------------- -----------
Total
comprehensive
income for
the period - - - - 609,530 609,530
Share issues 14,612 352,516 - - - 367,128
Share based
payments - - - 111,930 - 111,930
Transfer of
capitalised
share based
payment on
exercise of
options - - - (128,178) 128,178 -
---------- ------------ ---------- ------------ ------------- -----------
Balance at
31 December
2009 4,903,735 87,217,390 518,742 1,092,767 (24,654,210) 69,078,424
---------- ------------ ---------- ------------ ------------- -----------
Audited Year ended
30 June 2010
Balance at
1 July 2009 4,889,123 86,864,874 518,742 1,109,015 (25,391,918) 67,989,836
Net profit for
the period - - - - 3,112,347 3,112,347
---------- ------------ ---------- ------------ ------------- -----------
Total
comprehensive
income for
the period - - - - 3,112,347 3,112,347
Share issues 16,527 427,184 - - - 443,711
Transfer of
capitalised
share based
payment on
exercise of
options - - - (128,177) 128,177 -
Transfer of
capitalised
share based
payment on
expiry of
options - - - (1,143,548) 1,143,548 -
Share based
payments - - - 162,710 - 162,710
Transfer of
foreign
currency
reserve on
change of
functional
currency - - (518,742) - 518,742 (364,725)
---------- ------------ ---------- ------------ ------------- -----------
Balance at
30 June 2010 4,905,650 87,292,058 - - (20,489,104) 71,708,604
---------- ------------ ---------- ------------ ------------- -----------
NORSEMAN GOLD PLC
GROUP BALANCE SHEET
AS AT 31 DECEMBER 2010
Unaudited Unaudited Audited
31 December 31 December 30 June
2010 2009 2010
Notes AUD$ AUD$ AUD$
ASSETS
Non-Current Assets
Property, plant &
equipment 4 30,280,478 23,884,035 26,346,491
Mine properties in
production phase 5 34,585,297 17,995,619 27,631,850
Exploration & evaluation
expenditure 6 17,694,180 12,721,462 12,704,347
Goodwill 7 15,000,000 15,000,000 15,000,000
Deferred tax asset 16,840,338 6,754,979 8,387,094
------------- ------------- -------------
114,400,293 76,356,095 90,069,782
============= ============= =============
Current Assets
Trade and other
receivables 3,911,391 2,315,948 3,509,350
Inventories 8 6,570,060 6,736,672 7,332,810
Cash at bank and in hand 9 15,576,334 23,136,466 13,637,420
------------- ------------- -------------
26,057,785 32,189,086 24,479,580
============= ============= =============
Total Assets 140,458,078 108,545,181 114,549,362
============= ============= =============
LIABILITIES
Current Liabilities
Trade and other payables 10 19,386,046 12,749,268 13,502,050
Provisions 11 3,010,735 2,655,388 3,001,009
Interest-bearing loans
and borrowings 12 6,391,802 5,650,472 6,320,015
------------- ------------- -------------
28,788,583 21,055,128 22,823,074
============= ============= =============
Non-Current Liabilities
Provisions 11 6,420,364 6,496,234 6,450,114
Interest-bearing loans
and borrowings 12 7,622,171 6,143,312 6,637,700
Deferred tax liability 9,068,116 5,772,083 6,929,870
------------- ------------- -------------
23,110,651 18,411,629 20,017,684
============= ============= =============
Total Liabilities 51,899,234 39,466,757 42,840,758
============= ============= =============
Net Assets 88,558,844 69,078,424 71,708,604
============= ============= =============
EQUITY
Capital and Reserves
Share capital 13 5,419,632 4,903,735 4,905,650
Share premium account 104,431,115 87,217,390 87,292,058
Foreign currency reserve 14 - 518,742 -
Equity reserve 14 - 1,092,767 -
Retained losses (21,291,903) (24,654,210) (20,489,104)
------------- ------------- -------------
Shareholders' Equity 88,558,844 69,078,424 71,708,604
============= ============= =============
NORSEMAN GOLD PLC
GROUP CASH FLOW STATEMENT
FOR THE PERIOD ENDED 31 DECEMBER 2010
Unaudited Unaudited Audited
31 December 31 December 30 June
2010 2009 2010
Notes AUD$ AUD$ AUD$
Net cash inflow from
operating activities 17 4,218,887 7,621,716 8,399,669
------------- ------------- -------------
Investing activities
Funds used in mine properties (8,586,738) (4,764,303) (12,313,065)
Funds used in exploration
& production (4,899,319) (3,530,594) (7,515,708)
Payments to purchase plant
and equipment (7,977,355) (9,588,946) (14,732,333)
Interest received 479,228 413,526 717,469
Interest payable (5,086) (8) (143)
------------- ------------- -------------
Net cash used in investing
activities (20,989,270) (17,470,325) (33,843,780)
------------- ------------- -------------
Financing activities
Cash proceeds from issue of
shares 17,653,039 367,128 443,711
Equipment finance leases 1,056,258 - 6,019,873
Net cash from financing
activities 18,709,297 367,128 6,463,584
------------- ------------- -------------
Increase / (Decrease) in cash
and cash equivalents 1,938,914 (9,481,481) (18,980,527)
Cash and cash equivalents
at beginning of period 13,637,420 32,617,947 32,617,947
Cash and cash equivalents
at end of period 15,576,334 23,136,466 13,637,420
============= ============= =============
NORSEMAN GOLD PLC
NOTES TO THE FINANCIAL INFORMATION
FOR THE PERIOD ENDED 31 DECEMBER 2010
1. Accounting policies
The principal accounting policies applied in the preparation of
financial information are set out below. These policies have been
consistently applied to all the periods presented, unless otherwise
stated below.
1.1 Basis of preparation
This interim report, which incorporates the financial
information of the Company and its subsidiary undertakings ("the
Group"), has been prepared using the historical cost convention and
in accordance with International Financial Reporting Standards
("IFRS"), including IAS 34 'Interim Financial Reporting' and IFRS 6
'Exploration for and Evaluation of Mineral Resources', as adopted
by the European Union ("EU").
These interim results for the six months ended 31 December 2010
are unaudited and do not constitute statutory accounts as defined
in section 434 of the Companies Act 2006. They have been prepared
using accounting bases and policies consistent with those used in
the preparation of the financial statements of the Company and the
Group for the year ended 30 June 2010 and those to be used for the
year ending 30 June 2011. The financial statements for the year
ended 30 June 2010 have been delivered to the Registrar of
Companies and the auditors' report on those financial statements
was unqualified and did not contain a statement made under Section
498(2) or Section 498(3) of the Companies Act 2006.
1.2 Goodwill
Goodwill is the difference between the amount paid on the
acquisition of the subsidiary undertakings and the aggregate fair
value of their separable net assets. Goodwill is capitalised as an
intangible asset and in accordance with IAS 36 is not amortised but
tested for impairment annually and when there are any indications
that its carrying value is not recoverable. As such, goodwill is
stated at cost less any provision for impairment in value. If a
subsidiary undertaking is subsequently sold, goodwill arising on
acquisition is taken into account in determining the profit and
loss on sale.
1.3 Mine properties in production phase
Exploration and evaluation expenditure
Exploration, evaluation and development expenditure incurred is
accumulated in respect of each identifiable area of interest. These
costs are only carried forward to the extent that they are expected
to be recouped through the successful development of the area or
where activities in the area have not yet reached a stage which
permits reasonable assessment of the existence of economically
recoverable reserves. Accumulated costs in relation to an abandoned
area are written off in full against profit in the year in which
the decision to
abandon the area is made. When production commences, the
accumulated costs for the relevant area of interest are amortised
over the life of the area according to the rate of depletion of the
economically recoverable reserves. Economically recoverable
reserves are determined by the following: for open pit operations -
proven and probable reserves; and for underground operations -
proven and probable reserves and reasonably assured potential
additional reserves. Accumulated costs associated with underground
operations include an estimate of the future costs associated with
the conversion of 'indicated' and 'inferred' resources into the
'measured category'. This estimate is based on the historical cost
per ounce discovered. A regular review is undertaken of each area
of interest to determine the appropriateness of continuing to carry
forward costs in relation to that area of interest.
Costs of site restoration are provided when an obligating event
occurs from when exploration commences and are included in the
costs of that stage. Site restoration costs include the dismantling
and removal of mining plant, equipment and building structures,
waste removal and rehabilitation of the site in accordance with
clauses of the mining permits. Such costs have been determined
using estimates of future costs, current legal
NOTES TO THE FINANCIAL INFORMATION
FOR THE PERIOD ENDED 31 DECEMBER 2010
requirements and technology on a discounted basis. Any changes
in the estimates for the costs are accounted for on a prospective
basis. In determining the costs of site restoration, there is
uncertainty regarding the nature and extent of the restoration due
to community expectations and future legislation. Accordingly the
costs have been determined on the basis that the restoration will
be completed within one year of abandoning the site.
1.4 Inventories
(i) Raw Materials and Stores
Inventories of raw materials and stores expected to be used in
production are valued at average cost. Obsolete or damaged
inventories of such items are valued at net realisable value. There
is a regular and ongoing review of inventories for surplus items
and provision is made for any anticipated loss on their
disposal.
(ii) Work in Progress and Gold in Circuit
Inventories of broken ore, work in progress and gold in circuit
are valued at the lower of cost and net realisable value. Cost
comprises direct material, labour and transportation expenditure
incurred in getting inventories to their existing location and
condition, together with an appropriate portion of fixed and
variable overhead expenditure based on weighted average costs
incurred during the period in which such inventories were produced.
Net realisable value is the amount anticipated to be realised from
the sale of inventory in the normal course of business less any
anticipated costs to be incurred prior to its sale.
1.5 Revenue
Revenue from the sale of goods (precious metals) is recognised
upon production. Interest revenue is recognised on a proportional
basis taking into account the interest rates applicable to the
financial assets.
1.6 Share based payments
In prior periods, the Company made share-based payments to
certain Directors and advisers by way of issue of share options.
The fair value of these payments was calculated by the Company
using the Black-Scholes option pricing model. The expense was
recognised on a straight line basis over the period from the date
of award to the date of vesting, based on the Company's best
estimate of shares that will eventually vest. All options have now
either been exercised, or lapsed and been cancelled. The total
expense relating to these options was transferred to Retained
earnings in the year ended 30 June 2010.
1.7 Foreign currency transactions and balances
(i) Functional and presentational currency
Items included in the Group's financial information and
statements are measured using Australian Dollars ("AUD$"), which is
the currency of the primary economic environment in which the Group
operates ("the functional currency"). The financial information and
statements are also presented in AUD$ which is the Group's
presentation currency.
(ii) Transactions and balances
Foreign currency transactions are translated into the functional
currency using the exchange rates prevailing at the dates of the
transactions. Foreign exchange gains and losses resulting from the
settlement of such transactions and from the translation at year
end exchange rates of monetary assets and liabilities denominated
in foreign currencies are recognised in the income statement.
Transactions in the accounts of individual Group companies are
recorded at the rate of exchange ruling on the date of the
transaction. Monetary assets and liabilities denominated in foreign
currencies are translated at the rates ruling at the balance sheet
date. All differences are taken to the income statement.
For the purpose of presenting consolidated financial information
and statements, the assets and liabilities of the Group's foreign
operations are translated at exchange rates prevailing on the
balance sheet date. Income and expense items are translated at the
average exchange rates for the period. Exchange differences arising
are classified as equity and transferred to the Group's translation
reserve. Such translation differences are recognised as income or
as expenses in the period in which the operation is disposed
of.
NOTES TO THE FINANCIAL INFORMATION
FOR THE PERIOD ENDED 31 DECEMBER 2010
1.8 Capital management
The Group's objective when managing capital is to ensure that
adequate funding and resources are obtained to enable it to develop
its projects through to profitable production, while in the
meantime safeguarding the Group's ability to continue as a going
concern. This is aimed at enabling it, once the projects come to
fruition, to provide appropriate returns for shareholders and
benefits for other stakeholders. The Group manages the capital
structure in the light of changes in economic conditions and risk
characteristics of the underlying projects. Conditions attached to
borrowings are monitored regularly in the light of management
accounts. Capital will continue to be sourced from equity and from
borrowings as appropriate. During the period to 31 December 2010 no
debt covenants have been breached.
1.9 Leases
The determination of whether an arrangement is or contains a
lease is based on the substance of the arrangement and requires an
assessment of whether the fulfilment of the arrangement is
dependent on the use of a specific asset or assets and the
arrangement conveys a right to use the asset.
(i) Group as a lessee
Finance leases, which transfer to the Group substantially all
the risks and benefits incidental to ownership of the leased item,
are capitalised at the inception of the lease at the fair value of
the leased asset or, if lower, at the present value of the minimum
lease payments. Lease payments are apportioned between the finance
charges and reduction of the lease liability so as to achieve a
constant rate of interest on the remaining balance of the
liability. Finance charges are recognised as an expense in profit
or loss.
Capitalised leased assets are depreciated over the shorter of
the estimated useful life of the asset and the lease term if there
is no reasonable certainty that the Group will obtain ownership by
the end of the lease term.
Operating lease payments are recognised as an expense in the
income statement on a straight-line basis over the lease term.
Operating lease incentives are recognised as a liability when
received and subsequently reduced by allocating lease payments
between rental expense and reduction of the liability.
(ii) Group as a lessor
Leases in which the Group retains substantially all the risks
and benefits of ownership of the leased asset are classified as
operating leases. Initial direct costs incurred in negotiating an
operating lease are added to the carrying amount of the leased
asset and recognised as an expense over the lease term on the same
basis as rental income.
1.10 Critical accounting judgements and estimates
The preparation of financial information and statements in
conformity with International Financial Reporting Standards
requires the use of accounting estimates and assumptions that
affect the reported amounts of assets and liabilities at the date
of the financial information and statements and the reported
amounts of income and expenses during the reporting period.
Although these estimates are based on management's best knowledge
of current events and actions, actual results ultimately may differ
from those estimates. IFRSs also require management to exercise its
judgement in the process of applying the Group's accounting
policies.
The areas involving a higher degree of judgement or complexity,
or areas where assumptions and estimates are significant to the
financial information and statements are as follows:
Impairment of intangible assets
Determining whether an intangible asset is impaired requires an
estimation of whether there are any indications that its carrying
value is not recoverable.
At each reporting date, the company reviews the carrying value
of its tangible and intangible assets to determine whether there is
any indication that those assets have been impaired. If such an
indication exists, the recoverable amount of the asset, being the
higher of the asset's fair value less costs to sell and value in
use, is compared to the asset's carrying value. Any excess of the
asset's carrying value over its recoverable amount is expensed to
the income statement.
NOTES TO THE FINANCIAL INFORMATION
FOR THE PERIOD ENDED 31 DECEMBER 2010
Valuation of goodwill and investments
Management value goodwill and investments after taking into
account ore reserves, and cash-flow generated by estimated future
production, sales and costs. If the assumed factors vary from
actual occurrence, this will impact on the amount of the asset
which should be carried on the balance sheet.
Provision of restoration costs
Provisions for restoration are established in the consolidated
balance sheet when the obligating event occurs. Such costs have
been determined using estimates of future costs, current legal
requirements and technology on a discounted basis. In determining
the costs of site restoration, there is uncertainty regarding the
nature and extent of the restoration due to community expectations
and future legislation.
Exploration and Development
Exploration and development costs are amortised over the life of
the area according to the rate of depletion of the economically
recoverable reserves. If the amount of economically proven reserves
varies, this will impact on the amount of the asset which should be
carried on the balance sheet.
Share based payments
The Group records charges for share based payments.
For option based share based payments management estimate
certain factors used in the option pricing model, including
volatility, exercise date of options and number of options likely
to be exercised. If these estimates vary from actual occurrence,
this will impact on the value of the equity carried in the
reserves.
For conditional grants of shares at a discount management
estimate the expected actual issuance of those shares. If this
estimate varies from actual occurrence this will impact on the
value of the equity carried in the reserves.
NOTES TO THE FINANCIAL INFORMATION
FOR THE PERIOD ENDED 31 DECEMBER 2010
2. Profit / (Loss) per share
The basic (loss)/profit per ordinary share has been calculated
using the (loss)/profit for the period of AUD$(802,799) (31
December 2009: AUD$609,530, 30 June 2010: AUD$3,112,347) and the
weighted average number of ordinary shares in issue of 184,658,251
(31 December 2009: 172,157,717, 30 June 2010: 172,344,767).
The diluted (loss)/profit per share has been calculated using a
weighted average number of shares in issue and to be issued of
184,658,251 (31 December 2009: 172,157,717, 30 June 2010:
173,504,767). The diluted loss per share has been kept the same as
the basic loss per share, as the Company has no options on issue at
31 December 2010. The diluted profit per share in previous
reporting periods was kept the same as the basic profit per share
because the outstanding options on issue (31 December
2009:3,200,000, 30 June 2010: 1,160,000) were exercisable at a
price greater than the average market price of the Company's
Ordinary Shares in the period, thus being anti-dilutive.
3. Segmental reporting
For the purposes of segmental information, the Group has
determined that its operations are confined to a single operating
segment, located in a single geographical region, Australia. All
material revenue is derived from the development of mineral
resources from its Norseman Gold Project in Australia, which is the
Group's sole cash generating unit.
Revenues are generated from the production of precious metals,
principally gold, and to a lesser extent, silver. The precious
metals are sold to either the local, government controlled mint
directly, or through the trading desk of a large Australian based
trading bank.
4. Property, plant & equipment
Unaudited
31 December 2010
Mine
Infrastructure Capital
Land and Plant and and Mobile Works in
Buildings Equipment Equipment Progress Total
AUD$ AUD$ AUD$ AUD$ AUD$
Cost
At 1 July
2010 613,834 7,480,374 28,442,125 2,463,350 38,999,683
Additions 865,225 2,197,075 2,555,903 2,711,957 8,330,161
Disposals - (3,704) (1,534,514) (352,455) (1,890,043)
---------- ------------ --------------- ---------- -------------
At 31
December
2010 1,479,059 9,674,376 29,463,514 4,822,852 45,439,801
Depreciation
At 1 July
2010 (263,199) (3,402,726) (8,987,267) - (12,653,192)
Charge for
period (79,881) (873,932) (3,092,909) - (4,043,722)
Depreciation
on
disposals - 3,707 1,534,514 - 1,537,561
---------- ------------ --------------- ---------- -------------
At 31
December
2010 (343,080) (4,272,951) 10,545,662 - 15,159,323
Net book
value
31 December
2010 1,138,979 5,400,795 18,917,852 4,822,852 30,280,478
========== ============ =============== ========== =============
NOTES TO THE FINANCIAL INFORMATION
FOR THE PERIOD ENDED 31 DECEMBER 2010
4. Property, plant & equipment (continued)
Unaudited
31 December 2009
Mine
Infrastructure Capital
Land and Plant and and Mobile Works in
Buildings Equipment Equipment Progress Total
AUD$ AUD$ AUD$ AUD$ AUD$
Cost
At 1 July
2009 388,084 6,148,158 16,697,706 1,062,502 24,296,450
Additions - 313,193 7,316,475 2,122,909 9,752,577
Disposals - - (163,633) - (163,633)
---------- ------------ --------------- ---------- -------------
At 31
December
2009 388,084 6,461,351 23,850,548 3,185,411 33,885,394
Depreciation
At 1 July
2009 (200,366) (1,936,846) (5,208,748) - (7,345,960)
Charge for
period (26,776) (680,339) (2,098,804) - (2,805,919)
Depreciation
on
disposals - - 150,520 - 150,520
---------- ------------ --------------- ---------- -------------
At 31
December
2009 (227,142) (2,617,185) (7,157,032) - (10,001,359)
Net book
value
31 December
2009 160,942 3,844,166 16,693,516 3,185,411 23,884,035
========== ============ =============== ========== =============
Audited
30 June 2010
Mine
Infrastructure Capital
Land and Plant and and Mobile Works in
Buildings Equipment Equipment Progress Total
AUD$ AUD$ AUD$ AUD$ AUD$
Cost
At 1 July
2009 388,084 6,148,158 16,697,706 1,062,502 24,296,450
Additions 225,750 1,332,216 12,954,526 1,335,848 15,848,340
Disposals - - (1,210,107) 65,000 (1,145,107)
---------- ------------ --------------- ---------- -------------
At 30 June
2010 613,834 7,480,374 28,442,125 2,463,350 38,999,683
Depreciation
At 1 July
2009 (200,366) (1,936,846) (5,208,748) - (7,345,960)
Charge for
year (62,833) (1,465,880) (4,955,631) - (6,484,344)
Depreciation
on
disposals - - 1,177,112 - 1,177,112
---------- ------------ --------------- ---------- -------------
At 30 June
2010 (263,199) (3,402,726) (8,987,267) - (12,653,192)
Net book
value
30 June 2010 350,635 4,077,648 19,454,858 2,463,350 26,346,491
========== ============ =============== ========== =============
Plant and equipment pledged as security for liabilities
Included in mine infrastructure & mobile equipment is
$16,673,731 (30 June 2010: $15,896,289 December 2009: $17,890,037)
which has been pledged as security for the related finance lease
liabilities in current and non-current liabilities as disclosed in
Note 12.
NOTES TO THE FINANCIAL INFORMATION
FOR THE PERIOD ENDED 31 DECEMBER 2010
5. Mine properties in production phase
Unaudited Unaudited Audited
31 December 31 December 30 June
2010 2009 2010
AUD$ AUD$ AUD$
Opening balance 27,631,850 15,184,249 15,184,249
Mining expenditure incurred
during the period 8,586,738 4,764,303 12,313,065
Transferred from Exploration
& Evaluation - - 4,000,000
Amortisation during the period (1,633,291) (1,952,933) (3,865,464)
Closing balance 34,585,297 17,995,619 27,631,850
============= ============= ============
6. Exploration & evaluation expenditure
Costs carried forward in respect Unaudited Unaudited Audited
of areas of interest in: 31 December 31 December 30 June
Exploration and evaluation 2010 2009 2010
phases: AUD$ AUD$ AUD$
Opening balance 12,704,347 9,190,868 9,190,868
Exploration expenditure incurred
during the period 4,989,833 3,530,594 7,515,708
Transferred to Mine Properties
in production phase - - (4,000,000)
Exploration expenditure written
off - - (2,229)
Closing balance 17,694,180 12,721,462 12,704,347
============= ============= ============
The amounts for intangible exploration and evaluation ("E &
E") assets represent costs incurred in relation to the Group's
operations at Norseman. These amounts will be written off to the
income statement as exploration expenses unless commercial reserves
are established or the determination process is not completed and
there are no indicators of impairment. The outcome of ongoing
exploration and evaluation, and therefore whether the carrying
value of E & E assets will ultimately be recovered, is
inherently uncertain. The Directors have assessed the value of the
exploration and evaluation expenditure carried as intangible assets
and in their opinion no provision for impairment is currently
necessary.
7. Goodwill
Goodwill
AUD$
Cost
At 31 December 2010, 30 June 2010 and 31 December
2009 44,983,622
Amortisation and impairment
At 31 December 2010, 30 June 2010 and 31 December
2009 (29,983,622)
Net book value
At 31 December 2010, 30 June 2010 and 31 December
2009 15,000,000
=============
Goodwill arose on the acquisition of the Company's subsidiary
undertakings. The Group tests goodwill for impairment at least
annually.
NOTES TO THE FINANCIAL INFORMATION
FOR THE PERIOD ENDED 31 DECEMBER 2010
8. Inventories
Unaudited Unaudited Audited
31 December 31 December 30 June
2010 2009 2010
AUD$ AUD$ AUD$
Gold Bullion - at net realisable
value (NRV) 1,736,281 2,956,306 3,067,336
Work in Progress - lower of
cost and NRV
- Ore Stockpiles 983,969 697,233 1,237,287
- Gold in circuit 873,044 262,299 472,362
Raw materials and stores - at lower
of cost and net realisable value 2,976,766 2,820,834 2,555,825
6,570,060 6,736,672 7,332,810
============= ============= ==========
9. Cash at bank and in hand
The Group has total cash on hand of $15,576,334 of which
$6,140,829 is held as security against the obligations for
restoration and decommissioning expenditure under the mining
production and exploration licences.
10. Trade and other payables
Unaudited Unaudited Audited
31 December 31 December 30 June
2010 2009 2010
AUD$ AUD$ AUD$
Trade accruals 16,172,739 7,922,275 7,073,045
Other payables 3,313,307 4,826,993 6,429,005
Corporation tax (100,000) - -
19,386,046 12,749,268 13,502,050
============= ============= ===========
11. Provisions
Restoration
Unaudited Employee and
Group - 31 December 2010 Benefits decommissioning Total
Current: AUD$ AUD$ AUD$
At 1 July 2010 3,001,009 - 3,001,009
Charge to income statement 9,726 - 9,726
At 31 December 2010 3,010,735 - 3,010,735
========== ================= ==========
Restoration
Employee and
Benefits decommissioning Total
Non-current: AUD$ AUD$ AUD$
At 1 July 2010 107,789 6,342,325 6,450,114
Charge to income statement (29,750) - (29,750)
At 31 December 2010 78,039 6,342,325 6,420,364
========== ================= ==========
NOTES TO THE FINANCIAL INFORMATION
FOR THE PERIOD ENDED 31 DECEMBER 2010
11. Provisions (continued)
Restoration
Unaudited Employee and
Group - 31 December 2009 Benefits decommissioning Total
Current: AUD$ AUD$ AUD$
At 1 July 2009 2,075,704 180,909 2,256,613
Charge to income statement 398,775 - 398,775
At 31 December 2009 2,474,479 180,909 2,655,388
========== ================= ==========
Restoration
Employee and
Benefits decommissioning Total
Non-current: AUD$ AUD$ AUD$
At 1 July 2009 33,643 6,384,766 6,418,409
Charge to income statement 77,825 - 77,825
At 31 December 2009 111,468 6,384,766 6,496,234
========== ================= ==========
Restoration
Audited Employee and
Group - 30 June 2010 Benefits decommissioning Total
Current: AUD$ AUD$ AUD$
At 1 July 2009 2,075,704 180,909 2,256,613
Charge to income statement 925,305 (180,909) 744,396
At 30 June 2010 3,001,009 - 3,001,009
========== ================= ==========
Restoration
Employee and
Benefits decommissioning Total
Non-current: AUD$ AUD$ AUD$
At 1 July 2009 33,643 6,384,766 6,418,409
Charge to income statement 74,146 (42,441) 31,705
At 31 June 2010 107,789 6,342,325 6,450,114
========== ================= ==========
The Directors have considered environmental issues and the need
for any necessary provision for the cost of rectifying any
environmental damage, as might be required under local legislation
and the Group's license obligations, and have provided the above
provisions for any future costs of decommissioning or any
environmental damage.
NOTES TO THE FINANCIAL INFORMATION
FOR THE PERIOD ENDED 31 DECEMBER 2010
12. Interest-bearing loans and borrowings
Unaudited Unaudited Audited
31 December 31 December 30 June
2010 2009 2010
AUD$ AUD$ AUD$
Current:
Obligations under finance
lease (a) 6,391,802 5,650,472 6,320,015
Non-current:
Obligations under finance
lease (a) 7,622,171 6,143,312 6,637,700
============= ============= ==========
(a) Assets pledged as security
The carrying amounts of assets pledged as security for current
and non-current interest bearing liabilities are:
Unaudited Unaudited Audited
31 December 31 December 30 June
2010 2009 2010
AUD$ AUD$ AUD$
Non-current:
Finance lease - Mobile equipment 16,673,731 17,890,037 15,896,289
------------- ------------- -----------
Total assets pledged as security 16,673,731 17,890,037 15,896,289
============= ============= ===========
(b) Finance lease commitments
The Group has finance leases for various items of mine
infrastructure and mobile equipment with a carrying amount of
$16,673,731 (30 June 2010: $15,896,289, 31 December 2009:
$17,890,037). These lease contracts expire within 3 to 4 years with
no residual payable.
Unaudited Unaudited Audited
31 December 31 December 30 June
2010 2009 2010
AUD$ AUD$ AUD$
Within not more than one year 7,542,241 6,632,887 7,252,264
After one year but not more
than five years 8,062,922 6,519,873 7,161,014
------------- ------------- ------------
Total minimum lease payments 15,605,163 13,152,760 14,413,278
Less amount representing finance
charges (1,591,190) (1,358,976) (1,455,563)
------------- ------------- ------------
Present value of minimum lease
payments 14,013,973 11,793,784 12,957,715
============= ============= ============
NOTES TO THE FINANCIAL INFORMATION
FOR THE PERIOD ENDED 31 DECEMBER 2010
13. Share capital and options
Unaudited Unaudited Audited
31 December 31 December 30 June
2010 2009 2010
GBP GBP GBP
Allotted, called up and fully
paid
Ordinary shares of 1.25p each 2,471,500 2,156,500 2,157,625
============= ============= ==========
AUD$ AUD$ AUD$
Allotted, called up and fully
paid
Ordinary shares of 1.25p each 5,419,632 4,903,735 4,905,650
============= ============= ==========
The Ordinary Shares rank pari passu in all respects including
the right to receive all dividends and other distributions
declared, made or paid. At 31 December 2010, the number of ordinary
shares of GBP0.0125 each on issue is 197,720,000 (30 June 2010:
172,610,000, 31 December 2009: 172,520,000).
On 4 October 2010, the number of Ordinary shares issued and
fully paid was increased from 172,610,000 Ordinary shares of
GBP0.0125 each to 197,610,000 Ordinary shares of GBP0.0125. This
related to a private placement of shares, issued at GBP0.45: the
share price at the date of issue was GBP0.51.
On 29 October 2010, the number of Ordinary shares issued and
fully paid was increased from 197,610,000 Ordinary shares of
GBP0.0125 each to 197,660,000 Ordinary shares of GBP0.0125. This
related to the exercise of 50p share options; the share price at
the date of exercise was GBP0.6239.
On 3 December 2010, the number of Ordinary shares issued and
fully paid was increased from 197,660,000 Ordinary shares of
GBP0.0125 each to 197,720,000 Ordinary shares of GBP0.0125. This
related to the exercise of 50p share options; the share price at
the date of exercise was GBP0.7425.
Share options
The details of share options outstanding are as follows:
Unaudited Unaudited Audited
31 December 31 December 30 June
Number of share options 2010 2009 2010
- 3,200,000 1,160,000
======================================== ============= ==========
14. Reserves
Group
Foreign currency, movements: Unaudited Unaudited Audited
31 December 31 December 30 June
2010 2009 2010
AUD$ AUD$ AUD$
Opening balance - 518,742 -
Foreign currency transactions - - -
------------- ------------- ---------
Closing balance - 518,742 -
============= ============= =========
NOTES TO THE FINANCIAL INFORMATION
FOR THE PERIOD ENDED 31 DECEMBER 2010
14. Reserves (continued)
Unaudited Unaudited Audited
31 December 31 December 30 June
2010 2009 2010
Equity reserves, movements: AUD$ AUD$ AUD$
Opening balance - 1,109,015 1,109,015
-------------- ------------- ------------
Share based payments - charge - 111,930 162,710
Transfer to Retained Earnings
on conversion of share options
into Ordinary share capital - (128,177) (128,177)
Transfer to Retained earnings
on expiration and lapse of
share options - - (1,143,548)
Closing balance - 1,092,767 -
============== ============= ============
15. Share-based payments
Unaudited Unaudited Audited
31 December 31 December 30 June
2010 2009 2010
AUD$ AUD$ AUD$
The Group and Company recognised
the
following charge in the income
statement in
respect of its share based
payment plans:
Share option charge - 111,930 162,710
- 111,930 162,710
=================================================== ============= =========
16. Exploration expenditure commitments
In order to maintain an interest in the mineral assets in which
the Group is involved, the Group is committed to meet the
conditions under which the licences were granted. The timing and
amount of exploration expenditure commitments and obligations of
the Group are subject to the work programme required as per the
licence commitments and may vary significantly from the forecast
based upon the results of the work performed. Exploration results
in any of the projects may also result in variation of the forecast
programmes and resultant expenditure. Such activity may lead to
accelerated or decreased expenditure.
Unaudited Unaudited Audited
31 December 31 December 30 June
2010 2009 2010
AUD$ AUD$ AUD$
As at the balance sheet date
the
aggregate amount payable is:
Within not more than one year 6,475,680 6,651,940 6,627,980
============= ============= ==========
NOTES TO THE FINANCIAL INFORMATION
FOR THE PERIOD ENDED 31 DECEMBER 2010
17. Reconciliation of operating cash flows to net cash inflow
from operating activities
Unaudited Unaudited Audited
31 December 31 December 30 June
2010 2009 2010
Group: AUD$ AUD$ AUD$
Group operating (loss)/profit (7,510,753) 266,954 229,918
Adjustments for items not
requiring an outlay of funds:
Foreign currency - realised (4) - -
Depreciation and amortisation 5,586,495 4,608,334 7,991,689
Exploration expenditure written
off - - 2,229
Profit on sale of financial
assets available for sale (350) - 1,210,107
Provision for obsolescence
and rehabilitation - - (223,350)
Share-based payments charge - 111,930 162,710
Write down of warehouse
inventories - - 212,205
------------- ------------- ------------
Net cash (outflow)/inflow
before changes in working
capital (1,924,612) 4,987,218 9,585,508
Decrease/(Increase) in
inventories 762,750 (635,277) (1,443,620)
(Increase) in receivables
and
prepayments (Note a) (483,227) (972,208) (2,019,271)
(Decrease)/Increase in provisions (20,021) 476,600 999,451
Increase in trade and other
payables 5,983,997 6,670,383 2,566,914
Increase/(Decrease) in deferred
tax assets & liabilities - - 1,615,381
Taxation paid (100,000) (2,905,000) (2,904,694)
------------- ------------- ------------
Net cash inflow from operating
activities 4,218,887 7,621,716 8,399,669
============= ============= ============
Note a: Inventories includes AUD$1,736,281 of Gold Bullion on
hand at 31 December 2009 (31 December 2009: AUD$2,956,306, 30 June
2009: AUD$3,067,336).
18. Post balance sheet events
In February 2011 the Company raised GBP10,000,000 (approximately
AUD$16,000,000) before expenses by a private placement of
22,222,222 ordinary shares at GBP0.45 pence each.
The funds raised will be used by the Company to ensure the North
Royal open pit project continues to be brought into production, and
to provide additional working capital.
For further information visit www.norsemangoldplc.com or
contact:
Barry Cahill Norseman Gold Plc Tel: +61 (0) 8 9473
2200
------------------ -------------------------- --------------------
Guy Wilkes Ocean Equities Ltd Tel: +44 (0)20 7786
4370
------------------ -------------------------- --------------------
Nandita Sahgal Seymour Pierce Ltd Tel: +44 (0)20 7107
8000
------------------ -------------------------- --------------------
Jeremy Stephenson Seymour Pierce Ltd Tel: +44 (0)20 7107
8000
------------------ -------------------------- --------------------
Hugo de Salis St Brides Media & Finance Tel: +44 (0)20 7236
Ltd 1177
------------------ -------------------------- --------------------
Susie Geliher St Brides Media & Finance Tel: +44 (0)20 7236
Ltd 1177
------------------ -------------------------- --------------------
E-mail investors@ngold.com.au
------------------ -------------------------- --------------------
Note to editors:
Norseman Gold plc is an AIM listed and ASX listed Australian
gold production company, which acquired the Norseman Gold Project
in May 2007, Australia's longest continually running gold
operation. The Norseman Gold Project is located in the Eastern
Goldfields of Western Australia in the highly prospective
Norseman-Wiluna greenstone belt, 725km east of Perth and 186km from
Kalgoorlie.
Gold was first found on the Norseman field in 1894 and over the
last 65 years, it has produced over 5.5 million ounces of gold. The
mine is currently producing from three high-grade narrow-vein
underground mines - the Bullen, the Harlequin and the OK Declines
and developing the North Royal Open Pit. Currently, it has a total
resource inventory of 3.8 million ounces of gold at an average
grade of 5.3 g/t.
The tenements cover a 2,180 sq km area centred on the Norseman
Township. The landholding comprises 221 tenements consisting of 16
Exploration Licences, 107 Mining Licences, 64 Prospecting Licences,
15 Miscellaneous Licences, 5 Exploration Licence Applications, 13
Prospecting Licence Applications and 1 Mining Lease
Application.
The Company's strategy is focused on extending the mine life
through the conversion of resources into reserves and identifying
additional resources and obtaining additional ore for the operating
mill through the development of additional mines. The Company has
15 advanced resource projects under review of which three have
pre-development work being undertaken on them. It is anticipated
that at least one, if not all the pre-development projects will
develop into mining propositions.
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR EELFLFLFZBBV
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