RNS Number:4383O
Aricom PLC
21 February 2008
Press Release 21 February 2008
Aricom plc ("Aricom" or the "Group")
Preliminary Results for the year ended 31 December 2007
Aricom plc (LSE:ORE, OREW), the Anglo-Russian developer of mineral resources,
today announces its financial results for the year ended 31 December 2007. The
complete Annual Report 2007 will be available on the Aricom website following
this announcement.
Financial Highlights
* Profit after tax for 2007 of US$0.1 million (2006: loss after tax of
US$2.6 million)
* Net assets at year end of US$1,142 million (2006: US$527 million)
* Group cash equivalents and short term investments at year end of US$498
million (2006: US$90 million)
* Total gross funds raised of US$640 million during the period
* Main listing moved from AIM to LSE Main Market and inclusion in FTSE 250
Operational Highlights
* Mining process commenced at Kuranakh - 83,000 tonnes of material moved in
2007
* K&S
o Initial feasibility study reviewed by WAI - value estimated at
US$1.7 billion
o 3,700m of drilling completed
o 18,000m(3) of trenches completed
* Garinskoye
* Scoping study completed and reviewed by WAI
* 8,400m of drilling completed
* 3,500m(3) of trenches completed
* Bolshoi Seym exploration commenced. 70,000m(3) of trenches completed
* Titanium Sponge plant feasibility study completed
* Initial discussions on the proposed Russia-China bridge over the Amur
River ongoing
Jay Hambro, Chief Executive of Aricom plc, commented:
"Aricom has achieved another year of significant development and I am pleased to
announce Aricom reports a maiden profit. The Group commenced 2007 with one
project due to start mining within the year and a number of other assets needing
confirmation and subsequent funding. I am delighted to report that during 2007,
we have presented to the market independent studies on our two most valuable
assets and have also secured the equity funding required for their development.
Further to this, we have also made excellent progress at each of the other
assets."
Production Outlook
The Board reconfirms its belief that Aricom will produce saleable concentrate at
Kuranakh in the first half of 2008. It is estimated that Kuranakh will produce
titanomagnetite from June 2008 and this will total c.225,000 tonnes in 2008. It
is also estimated that ilmenite sales will commence in October 2008 and will
total c.36,000 tonnes for the year.
Conference Call
A conference call to discuss the announcement will be hosted by Aricom plc, on
Thursday, 21 February 2008 at 11:00 UK time.
Details to access the conference call are as follows:
- The dial-in number in the UK will be: 020 3140 9064 and internationally
will be +44 20 3140 9064
- with the Participant PIN code in both cases: 176444#
In advance of this call, participants should find the results presentation on
Aricom's website from 10:00 UK time.
- Ends -
For further information:
Aricom plc
Charles Gordon, Investor Relations Officer Tel: +44 (0) 20 7201 8921
www.aricom.plc.uk
Abchurch
Charlie Jack/George Parker Tel: +44 (0) 20 7398 7700
www.abchurch-group.com
Statement of the Chairman, Dr Pavel Maslovskiy
"I am delighted to report on another year of evolution for Aricom. The Group has
grown from being an explorer to a developer and now to a miner - the next
crucial step towards delivering shareholder value.
Whilst the Kuranakh project made the significant step forward to become an
operational mine, the rest of the portfolio also made critical advances. We have
published a prefeasibility study on K&S which demonstrates both the ability of
the project to operate and its economic potential. We have also established the
value inherent in the Garinskoye project with a scoping study suggesting
approximately US$2 billion of net present value. It has also been a year where
we cemented our market position with the completion of the second largest
secondary fundraising on London's AIM whilst subsequently moving from AIM to the
Main Market of the LSE. The fundraising has allowed the Group to make capital
and investment commitments with increased confidence considering the required
long lead times for major mining and processing equipment. Aricom's warm welcome
from the Main Market and the FTSE 250 has shown how the Group has not just
evolved internally but has managed to demonstrate transparency and strong
corporate governance.
I would like to thank all the people who work within the Group and to welcome
those who joined during 2007. I still believe that one of the most valuable
assets that we have in the portfolio is our human resource and this has expanded
significantly as we move towards production. At a senior level we were fortunate
to benefit from the arrival of Brian Egan as Chief Financial Officer. Brian
brings with him an impressive track record of management within large
organisations operating in Russia and we are glad to have him on board.
In a market where the price of both bulk commodities and their transport costs
seem to appreciate daily it is an enviable position to be holding a number of
large deposits, within a full spectrum of mining, development and delineation
that are situated in close proximity to the border of one of the world's largest
growth markets. We are fortunate with both our geography and our geology and I
look forward to further bringing the two together to create value for all my
fellow Aricom shareholders.
Dr Pavel Maslovskiy
Chairman
Aricom plc
Consolidated Income Statement
at 31 December 2007
2007 2006
Notes US$'000 US$'000
Continuing operations
Revenue 4,938 -
Cost of sales (3,153) -
Gross profit 1,785 -
Administrative expenses:
Listing costs (3,951) -
Share based payments (1,086) (429)
Other administrative costs (19,900) (6,907)
Other operating income 475 (140)
Share of associate's loss (59) -
Operating loss (22,736) (7,476)
Investment revenues 21,453
5,043
Finance costs (602) (122)
Loss before tax (1,885) (2,555)
Tax credit/(charge) 1,996
(135)
Profit/(loss) for the year from continuing 111 (2,690)
operations
Discontinued operations
Profit for the year from discontinued operations - 108
Profit/(loss) for the year 111 (2,582)
Attributable to:
Equity holders of the parent 1,040 (1,905)
Minority interest (929) (677)
111 (2,582)
Earnings/(loss) per share
From continuing operations
Basic 10 US$0.00 US$(0.01)
Diluted 10 US$0.00 US$(0.01)
From continuing and discontinued operations
Basic 10 US$0.00 US$(0.01)
Diluted 10 US$0.00 US$(0.01)
Aricom plc
Consolidated statement of recognised income and expense
for the year ended 31 December 2007
2007 2006
US$'000 US$'000
Exchange differences on translation of foreign operations 2,168 -
Equity element of deferred tax arising on share options 199 -
Net income recognised directly in equity 2,367 -
Profit/(loss) for the year 111 (2,582)
Total recognised income and expense for the year 2,478 (2,582)
Attributable to:
Equity holders of the parent 3,208 (1,905)
Minority interests (730) (677)
2,478 (2,582)
Aricom plc
Consolidated balance sheet
at 31 December 2007
Restated(1)
2007 2006
Notes US$'000 US$'000
Non-current assets
Goodwill 58 58
Other intangible assets 427 -
Property, plant and equipment 561,438 420,978
Investment in associates 2,854 -
Financial asset investments - 2,981
Deferred tax asset 4,879 -
Other non-current assets 112 105
569,768 424,122
Current assets
Inventories 2,015 180
Trade and other receivables 29,077 6,873
Loan receivable from a related party 65,111 -
Short-term investments 91,791 -
Cash and cash equivalents 406,687 89,668
Derivative financial instruments - 18,474
594,681 115,195
Total assets 1,164,449 539,317
Current liabilities
Trade and other payables (12,728) (11,813)
Current tax liability (446) -
(13,174) (11,813)
Net current assets 581,507 103,382
Non-current liabilities
Deferred tax liability (5,014) -
Other non-current liabilities (1,571) (99)
Long-term provisions (2,294) -
(8,879) (99)
Total liabilities (22,053) (11,912)
Net assets 1,142,396 527,405
Aricom plc
Consolidated balance sheet (continued)
at 31 December 2007
Restated(1)
Notes 2007 2006
US$'000 US$'000
Equity
Share capital 2,147 816
Share premium account 1,130,638 263,800
Own shares (20,256) -
Shares to be issued - 83,798
Share option reserve 10,378 9,857
Translation reserve 1,969 -
Other reserves 9,900 -
Retained earnings (8,307) (9,628)
Equity attributable to equity holders of the parent 1,126,469 348,643
Minority interest 9 15,927 178,762
Total equity 9 1,142,396 527,405
(1) The 2006 balance sheet has been restated as described in note 2.
The financial statements were approved by the Board of Directors and authorised
for issue on 20 February 2008. They were signed on its behalf by:
G J Hambro, Director B Egan, Director
20 February 2008 20 February 2008
Notes to the financial information for the year ended 31 December 2007
1. Financial information
The financial information has been prepared in accordance with International
Financial Reporting Standards.
The financial information set out above does not constitute the Group's
statutory accounts for the year ended 31 December 2007 but is derived from the
Group's statutory accounts for that period. The auditors' report on the
statutory accounts for the year ended 31 December 2007 was unqualified and did
not contain statements under section 237(2) of the Companies Act 1985 (regarding
adequacy of accounting records and returns) or under section 237(3) (regarding
provision of necessary information and explanations).
The statutory accounts for the year ended 31 December 2007 have not yet been
delivered to the Registrar of Companies.
2. Restatement of comparatives
During the current year the Directors have re-assessed the accounting treatment
of the deferred consideration payable in respect of the acquisition of LLC
Kimkano-Sutarskiy Gorno-Obogatitelniy Kombinat ("KS GOK") in the 31 December
2006 balance sheet. This has no effect on the value attributed to the asset, the
loss for the year or the cash flows reported in the published 2006 Financial
Statements.
The deferred consideration in relation to the first 50% interest in KS GOK
acquired from Malavasia Enterprises Inc. comprised ordinary shares, at an amount
dependent on the outcome of the valuation. Therefore, the consideration has now
been accounted for in accordance with IFRS 2 "Share-based Payments" as an
equity-settled share-based payment and been classified as equity (shares to be
issued) rather than as a current liability as previously reported. This
increased reported net assets as at 31 December 2006 by US$83.8 million.
These ordinary shares were issued during the current year, and hence this
balance is no longer recognised at the balance sheet date.
3. Dividends
There is no current intention to pay a dividend. In due course, the Board of
Directors will consider the payment of dividends, if and when it is in a
position to do so.
4. Reconciliation of operating loss to net cash outflow from operating
activities
2007 2006
US$'000 US$'000
Operating loss from continuing operations (22,736) (7,476)
Operating profit from discontinued operations - 32
Adjustments for:
Depreciation of property, plant and equipment 859 430
Depreciation capitalised (390) (319)
Loss on disposal of fixed assets 134 9
Share option expense 1,086 429
Share of associates' loss 59 -
Listing costs 3,951 -
Other non-cash adjustments 6 (109)
Operating cash flows before movements in working capital (17,031) (7,004)
(Increase)/decrease in inventories (1,811) 298
Decrease/(increase) in receivables 14,785 (2,936)
(Decrease)/increase in payables (8,619) 2,519
Cash used in operations before interest and tax (12,676) (7,123)
Interest paid - (1,290)
Income tax paid (190) (44)
Net cash used in operating activities (12,866) (8,457)
5. Currency of financial statements
The currency rates used in the preparation of the financial information set out
herein are as follows:
2007 2006
Closing Average Closing Average
Russian Rouble: GB� 49.01 51.04 51.59 50.03
Russian Rouble: US$ 24.55 25.58 26.33 27.18
US$: GB� 1.98 1.98 1.96 1.86
6. Asset acquisitions
Acquisition of minority interest in Olekma
On 11 January 2007 the Group acquired the 26% interest in LLC Olekminsky Rudnik
("Olekma") that it did not already own, taking its interest in the Kuranakh
project to 100%. The purchase price of US$11 million was paid in January 2007.
It was concluded that the US$11 million paid reflected the fair value of 26% of
the Kuranakh project. In accordance with the Group's accounting policy for
acquiring minority interests, the percentage of the assets and liabilities
acquired have been recognised at this fair value, resulting in an US$12.1
million increase in the carrying value of Kuranakh.
Acquisition of minority interest in KS GOK
On 4 April 2007, the Company notified Philotus Holdings Limited that it wanted
to exercise the option to purchase the 50% interest in KS GOK it did not already
own. Following the receipt of
approval from the Russian Federal Antimonopoly Service ('FAS') on 9 August 2007,
the Company acquired the remaining 50% interest in KS GOK, in consideration for
the issue of
123,782,467 ordinary shares to Philotus. The number of ordinary shares issued
was determined in accordance with the option agreement, and approved by the
Independent Directors, following a valuation report from Wardell Armstrong
International Ltd ("WAI").
The cost of the net assets acquired at this date was considered to be the fair
value determined as at 20 April 2007, this being the date of the settlement of
the deferred consideration outstanding with respect to the acquisition of the
first 50% controlling interest in KS GOK, which closely followed the date the
Company served notice to Philotus in respect of the exercise of the option to
acquire the remaining 50% interest.
The total consideration for the acquisition of the 50% interest held by Philotus
Holdings Ltd was comprised of the following:
US$'000
Cash consideration 9,000
Issue of an option to Philotus 9,200
Issue of 123,782,467 ordinary shares in Aricom to Philotus at market value (�0.52) 131,077
149,277
Following the completion of the acquisition of this asset in August 2007, the
difference between the fair value of the net assets acquired, determined as at
20 April 2007, based on the agreed number of ordinary shares to be issued and
the share price at that date, and the fair value of the purchase consideration
based on the share price when the shares were actually issued, has been
recognised in equity. Following the acquisition of this 50% interest, the
Company now indirectly holds 100% of KS GOK. The net impact of the acquisition
of this 50% interest was the recognition of a credit of $41.4 million to equity.
Acquisition of Garinskoye Deposit
On 24 September 2007, Aricom UK Limited ("Aricom UK"), a wholly owned subsidiary
of Aricom, subscribed for ordinary shares in Lapwing Limited ("Lapwing"),
pursuant to an agreement dated 29 March 2007. At the time of this subscription,
Aricom UK Limited expected to obtain a 60% ownership interest in Lapwing, and
additional subscriptions were required to be made by Aricom UK's co-shareholders
at the same price. There were expected to be four further shareholders in
Lapwing, namely Olis Constructions Limited ("Olis") with 25% and three other
shareholders with the remaining 15% (the "Additional Holders"). The Additional
Holders did not subscribe for any additional shares and consequently their
interest in Lapwing was diluted to a total of 0.52% with Aricom UK holding
70.22% and Olis holding 29.26%.
Consideration for the acquisition of this asset was the settlement of a loan
issued by the Group to Lapwing for Euro20.22 million, in exchange for 20,220,000
shares at Euro1 each in Lapwing and it was accounted for as an asset acquisition
rather than a business combination.
Under the same agreement, Aricom UK acquired for a premium of US$19.7 million an
option to purchase a further 25% interest. The exercise period of the option was
two years from the date of subscription but could be shortened in certain
circumstances. This option was
terminated in December 2007, and the original terms varied under an agreement
dated 13 December 2007, (the "Acquisition Agreement"). Under this Acquisition
Agreement, Olis conditionally agreed to sell to Aricom its entire 29.26%
interest in Lapwing, the acquisition being subject to Aricom obtaining
Shareholder approval. Aricom Shareholders approval was obtained on 15 February
2008 and the 29.26% interest in Lapwing was acquired on the same date.
Set out in the table below is a summary of the assets and liabilities acquired
at 24 September 2007:
US$'000
Net assets acquired
Mining properties and leases 49,641
Assets under construction 2,185
Other fixed assets 10
Inventories 10
Receivables 12,496
Cash and cash equivalents 427
Payables (19,354)
Amounts payable in respect of mineral licence (1,963)
Short-term loans from Group company (2,892)
Net assets 40,560
Aricom share of net assets acquired 28,481
Total consideration 28,481
Satisfied by:
Settlement of loan in exchange for 20,220,000 shares at Euro1 per share 28,481
Net cash inflow arising on acquisition
Cash and cash equivalents acquired 427
7. Business Combination
On 28 May 2007, the Group's acquisition of a 68.49% interest in Giproruda
received FAS approval. A cash consideration of $8,148,000 was paid and transfer
of ownership was effected on 8 June 2007.
Gipropruda is a highly respected Russian engineering company based in St
Petersburg specialising in non-precious metals mine and processing plant design.
Russian legislation limited the Group's voting power until such time that the
Russian Federal Financial Market Service approved Aricom's mandatory offer to
minority shareholders. Accordingly, Giproruda was recognised as an associate
between 8 June and 12 July 2007. On 13 July 2007, the Group obtained the full
voting rights in respect of its 68.49% interest in Giproruda after a mandatory
offer to minority shareholders was made in accordance with Russian legislation.
Subsequent to this date Giproruda is considered to be a subsidiary of Aricom.
Set out in the table below is a summary of the fair values of the assets and
liabilities acquired in the business combination.
Book value Fair value Fair value
adjustments
US$'000 US$'000 US$'000
Net assets acquired
Property, plant and equipment 1,211 10,954 12,165
Deferred tax asset 49 - 49
Other non-current assets 21 - 21
Inventories 11 - 11
Contracts in progress 1,661 - 1,661
Trade and other receivable 1,494 - 1,494
Cash and cash equivalents 1,800 - 1,800
Trade and other payables (2,416) - (2,416)
Deferred tax liability (259) (2,629) (2,888)
Net assets 3,572 8,325 11,897
Aricom share of net assets acquired 8,148
Total consideration 8,148
Satisfied by:
Cash 8,148
Net cash outflow arising on acquisition
Cash consideration 8,148
Less cash and cash equivalents acquired (1,800)
6,348
The fair values set out above were determined as at 8 June 2007, this being the
date the consideration for the 68.49% interest was paid and the transfer of
ownership effective. The Directors consider that these fair values substantially
reflect the fair values of the net assets acquired as at 13 July 2007, the date
at which the mandatory offer to minority shareholders was made and the Group
received full voting rights.
No goodwill arose on acquisition as the consideration payable was equal to
Aricom's share of the fair value of the net assets acquired. The fair value of
the net assets includes the Directors' valuation of the Company's interest in
the property that Giproruda occupies.
On 21 September 2007, the mandatory offer to minority shareholders lapsed. A
total of 2,073 shares were tendered under the offer, at a total cost of
US$232,000. The majority of the shares tendered were purchased by 1 October
2007, increasing the Group's interest in Giproruda to 70.28% from 68.49%.
In accordance with the Group's accounting policy for acquiring minority
interests, the percentage of the assets and liabilities acquired should be
recognised at their value. A fair value exercise was undertaken at 1 October
2007, and there was no significant change in the fair values of the net assets
acquired, in comparison to the fair values set out above.
Giproruda added US$4,938,000 to the Group's revenue and US$1,224,000 positive
contribution to the Group's loss before tax for the period between the date of
the business combination and the balance sheet date.
If the acquisition of Giproruda had been completed on the first day of the
financial year, Group revenues for the period would have been US$7,938,000 and
group profit attributable to equity holders of US$1,266,000.
8. Post balance sheet events
Acquisition of additional shareholder interests in Lapwing
On 25 January 2008, Aricom acquired the 0.1% ownership interest in Lapwing held
by PBO Handelsges M.B.H. ("PBOH"), one of the additional shareholder's.
Consideration for the acquisition of this minority interest was the issue by
Aricom of 8.43 ordinary shares for every 1 Lapwing Share held by PBOH, resulting
in the issue of 252,900 ordinary shares on 5 February 2008 when the market value
was �0.6875 per ordinary share. The total purchase consideration for the
acquisition of this minority interest was US$0.3 million.
Acquisition of 29.26% minority interest in Lapwing and settlement of amounts
owed by Olis
On 15 February 2008, shareholder approval was obtained for the acquisition of
Olis' 29.26% interest in the issued share capital of Lapwing, the holding
company that owns Garinskiy, which in turn holds the Garinskoye licence. The
acquisition was completed on 15 February 2008, resulting in an increase in the
70.22% interest in the project held by Aricom UK at 31 December 2007 to 99.58%,
including the 0.1% interest acquired on 25 January 2008 detailed above. The
events leading to the acquisition of this additional 29.26% interest and the
purchase consideration are set out below.
Pursuant to an agreement dated 29 March 2007, Aricom UK paid US$19.7 million to
acquire an option over Olis' expected 25% interest in Lapwing for US$100
million. Subsequent to this, Olis' interest in Lapwing increased to 29.26%.
The Option had an exercise period of two years which commenced when Aricom UK
subscribed for shares in Lapwing. However this exercise period could be brought
forward following the receipt of a positive feasibility study for Garinskoye,
the generation of US$50 million in aggregate net profit or a change of control
of the Company.
Aricom UK and Olis subsequently terminated the option under the Acquisition
Agreement and Olis conditionally agreed to sell its entire 29.26% interest in
Lapwing, the acquisition being subject to the Company obtaining Shareholders
approval.
The consideration for the acquisition of this additional interest comprised the
issue of 28,265,903 ordinary shares in the Company and cash consideration
comprising the net proceeds of the placing of the 42,750,000 ordinary shares
completed by the Company on 18 December 2007, less an agreed allocation of costs
incurred in respect of this Placing.
Following entry into the Acquisition Agreement, under a separate agreement dated
19 December 2007, another member of the Aricom Group, Aricom Treasury Limited,
agreed to advance a secured loan of up to US$65 million to Olis on commercial
terms. The loan was drawndown in two tranches on 19 and 20 December 2007, and
was repayable at the earlier of the completion of the Acquisition Agreement and
the maturity date of the loan, being 30 June 2008.
The acquisition of this additional interest has taken place following the
receipt of Shareholder approval on 15 February 2008. The total consideration
comprised the issue of 28,265,903
ordinary shares at a market value of �0.705 per ordinary share on 15 February
2008, and the cash consideration payable under the Acquisition Agreement which
was offset against the loan and interest receivable from Olis. The total
purchase consideration for the acquisition of this minority interest was
US$122.3 million.
9. Group combined statement of reserves and reconciliation of movement in
shareholders' funds
Restated Restated
Share Share (1) (2) Retained Share Translation Minority (1)
capital premium Own Shares to loss option reserve interests Total
account shares be issued reserve equity
US$'000 US$'000 US'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
Balance at
1 January 2006 242 24,526 - - (7,723) 553 - 90 17,688
Acquisition of minority
interest - - - - - - - 179,351 179,351
Disposal of minority
interest - - - - - - - (2) (2)
Total recognised income
and expense - - - - (1,476) - - (677) (2,153)
Share-based payments - 326 - - (429) 9,304 - - 9,201
Shares issued 574 245,363 - - - - - - 245,937
Shares to be issued - - - 83,798 - - - - 83,798
Expenses on issue of
equity shares - (6,415) - - - - - - (6,415)
Balance at 31 December
2006 816 263,800 - 83,798 (9,628) 9,857 - 178,762 527,405
Share Share Retained Share Translation Other Minority
capital premium Own Shares to loss option reserve reserves interests Total
account shares be issued reserve equity
US$'000 US$'000 US'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
Balance at
1 January
2007 816 263,800 - 83,798 (9,628) 9,857 - - 178,762 527,405
Revaluation
of minority
interest - - - - - - - (9,246) 9,246 -
Acquisition
of minority
interest - - - - - - - 42,575 (183,481) (140,906)
Minority
interest at
date
of acquisition - - - - - - - - 15,859 15,859
Total recognised
income
and expense - - - - 1,040 - 1,969 - (730) 2,279
Option purchased
over
minority interest - - - - - - - (19,700) - (19,700)
Equity element of
deferred tax
arising on
share
options - - - - - 199 - - - 199
Share-based
payments - - - - - 603 - - - 603
Directors' options
exercised - - - - 281 (281) - - - -
Shares issued in
respect of
of deferred
consideration 130 102,160 - (83,798) - - - - - 18,492
Shares acquired by
EBT 33 20,223 (20,256) - - - - - - -
Other shares
issued 1,168 769,371 - - - - - - - 770,539
Expenses on
issue of
equity shares - (24,916) - - - - - - - (24,916)
Change in
purchase
consideration of
KS GOK - - - - - - - (3,729) (3,729) (7,458)
Balance at 31
December 2,147 1,130,638 (20,256) - (8,307) 10,378 1,969 9,900 15,927 1,142,396
2007
(1) The Own shares reserve represents the cost of shares in Aricom plc held
by the EBT to satisfy the awards under the Group's Long Term Incentive plan.
(2) During the current year the Directors have re-assessed the accounting
treatment of the deferred consideration payable in respect of KS GOK in the 31
December 2006 balance sheet. The deferred consideration payable has been
re-classified as equity (shares to be issued) rather than as a current liability
as previously reported.
10. Profit per ordinary share
The calculation of the basic and diluted earnings/(loss) per share is based on
the following data:
2007 2006
US$'000 US$'000
Earnings/(loss)
Profit/(loss) for the purposes of basic and diluted profit/(loss) per share 1,040 (1,905)
being net loss attributable to equity holders of the parent
Number Number
Number of shares
'000 '000
Weighted average number of ordinary shares for the 791,263 336,081
purposes of basic profit/(loss) per share
Effect of dilutive potential ordinary shares 12,447 -
Weighted average number of ordinary shares for the 803,710 336,081
purposes of diluted earnings/(loss) per share
US$ US$
Basic earnings/(loss) per share 0.00 (0.01)
Diluted earnings/(loss) per share 0.00 (0.01)
From continuing operations
2007 2006
US$'000
US$'000
Profit/(loss) attributable to equity holders of the parent 1,040 (1,905)
Adjustments to exclude profit for the year from discontinued operations - (108)
Profit/(loss) from continuing operations for the purpose of basic loss per share 1,040 (2,013)
excluding discontinued operations
Effect of dilutive potential ordinary shares - -
Profit/(loss) from continuing operations for the purpose of diluted earnings per 1,040 (2,013)
share excluding discontinued operations
US$ US$
Basic earnings/(loss) per share 0.00 (0.01)
Diluted earnings/(loss) per share 0.00 (0.01)
The Company had financial instruments issued as at 31 December 2007 which are
potentially dilutive: 21,176,372 options and 133,000,000 warrants.
From discontinued operations
2007 2006
US$'000 US$'000
Basic loss per share - 0.00
Diluted loss per share - 0.00
11. Contingent Liabilities
The Group was involved in two related legal proceedings in which LLC AREK '
Geologiya' (the 'Claimant'), an unsuccessful bidder in the tender through which
the Garinskoye licence (the 'Licence') was awarded, sought to void the grant of
the Licence to LLC Amurmining (now LLC Garinskiy Mining and Metallurgical
Complex, a Group subsidiary).
The first action (the 'Amur action') was filed in a commercial court in Amur
Region of Russia where the Garinskoye deposit is located. The second action (the
'Moscow action') was filed in a commercial court in Moscow where Rosnedra, the
authority which issued the Licence, is located. Rosnedra is named as a defendant
in both actions; Garinskiy is named as defendant in the Amur action and as an
interested party in the Moscow action.
In November 2007 the court of first instance dismissed the Claimant's claim and
refused to recognise the decision of the tender committee on the results of the
tender as unlawful, Rosnedra's order approving the results of the tender as void
and the Licence as invalid. The Claimant appealed this decision, however on 28
January 2008 the Moscow court of appeal upheld the decision of the court of
first instance. Therefore, the claims of LLC AREK 'Geologiya' to challenge the
tender results were rejected. This decision may be appealed within two months
from the date of the decision.
Initially, the Amur action was suspended pending the outcome of the Moscow
action. After the decision in the Moscow action the Amur action was revived and
the Company expects that the decision in the Amur action will follow the
decision in the Moscow action.
The Company believes that the Claimant's claims are of a limited merit and that
therefore these proceedings do not represent a material threat to the Garinskoye
licence or the Group.
-Ends-
This information is provided by RNS
The company news service from the London Stock Exchange
END
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