RNS Number:5308R
Trans-Siberian Gold PLC
21 September 2005
news release
For release: 07:00, 21 September 2005
Trans-Siberian Gold plc
Results for the half year ended 30 June 2005
Highlights
* Second subscription by AngloGold Ashanti completed
* Revised mining and metallurgical plans completed at Asacha
* Asacha project financing discussions continue with international and
Russian banks
* Veduga pre-feasibility study nearing completion
* Geological structural model of Veduga project area completed
* Promising exploration indications at Bogunay
Trans-Siberian Gold plc ("Trans-Siberian") (TSG.L) is pleased to report with its
interim results to 30 June 2005, on a period of further progress in the
development of its two gold projects at Asacha in Kamchatka, far east Russia,
and at Veduga in Krasnoyarsk Krai, central Siberia.
Trans-Siberian is in the development phase of its two projects and therefore
received no operating income in the period. Administration expenses for the half
year amounted to US$3.2m compared to US$2.6m for the corresponding period of
2004 and US$6.1m for 2004 as a whole.
The operating loss was US$4.3m (US$2.3m), after charging US$1.1m of exchange
losses (US$340,000 gain) from the impact of a strengthening US dollar on
sterling denominated bank deposits. Interest earned was US$314,000 (US$282,000).
Capitalised exploration and evaluation expenditure and tangible assets increased
by US$4.4m and US$0.7m respectively (US$4.0m and US$0.3m respectively).
Prepayments of US$1.8m relating to the purchase of construction materials for
the Asacha camp were also made. Cash in hand and at bank increased from US$20.4m
to US$22.9m, including the receipt of US$14.5m net of issuing costs, from the
second subscription for Trans-Siberian shares by AngloGold Ashanti Limited
("AGA") under the Subscription Agreement dated 30 June 2004 and subsequently
amended.
Asacha Project, Kamchatka Oblast
Work continues in a number of areas to advance the project; however a full
go-ahead decision for construction of the mine and processing facility has yet
to be made.
Raising the debt finance for the project is now in process with the mandated
banks (Standard Bank/EBRD) continuing their due diligence. Their consultants
Hatch have reviewed the revised mining plan prepared by the Russian institute,
VNIPIPromtechnologi. This revised mining plan took the mining plan prepared by
AMC in the May 2004 feasibility study and adapted it to conform to Russian
regulations. There are some outstanding issues in reconciling the State approved
reserves with the JORC resource prepared by AMC, and there are concerns about
the mining methods to be used in certain ground conditions and the amount of
waste removal in the plan. Although these issues have yet to be resolved, the
VNIPI plan has built-in flexibility to allow the mine operator to adapt mining
methods to suit actual conditions.
Hatch also expressed concerns about certain elements of the metallurgical
testwork on which the MDM feasibility study flowsheet was based. Consequently
new samples were collected from across the orebody, and sent to the Russian
institute, IRGIRIDMET, in Irkutsk for a programme of testwork. The MDM design
for crushing and grinding was based on a bond index value of 23.0 kW.h/t, which
was considered high. The new testwork has shown an average value of 14.6 kW.h/t,
which will permit the utilisation of a smaller mill and reduce power
consumption. In other respects the testwork has validated the design approach of
MDM and allowed for some optimisation. A re-design of the proposed tailings
facility based on a study of the options by IRGIRIDMET is in train.
In parallel with the dialogue with Standard Bank and EBRD, alternative debt
finance sources from within Russia have been actively pursued. Discussions are
advanced with two leading Russian State-owned banks, Sberbank and Vneshtorgbank.
In Kamchatka work is in progress to finish and upgrade the 60 km access road to
the mine which was constructed in 2004. The General Contractor has been
mobilised to assemble the prefabricated camp which was acquired in 2004 and
shipped to Kamchatka. Following environmental approval by the State Expertise in
Moscow, reclassification of forest land for industrial purposes has begun,
initially with category three forest covering the main site area. Plans are in
hand to start the rehabilitation of the existing underground workings as a
prelude to mining.
Major equipment items for the mine, power generation plant and processing
facility have been sourced and are ready to be ordered.
An application for an amendment to the Asacha licence condition covering the
timing of the first 1,000 kg of gold production has been lodged with the
requisite authorities and is being processed.
The diamond drilling programme started in July 2004 was finished in July 2005.
The principal reason for the drilling was to upgrade the inferred resources to
measured and indicated and to delineate the orebody at depth. In total some
24,500 metres were drilled, 9,000 metres by contractors and 15,500 metres by the
Company's own Boart Longyear LM55 wireline rig. The majority of the drilling has
been either in-fill or step-out from the main vein zone containing the current
resources. There have been 19 intersections above 5 g/t gold of which 13 had
values in excess of 10 g/t and 5 over 20 g/t. There have also been 35 low grade
(between 1 and 5 g/t) intersections. All intersections were narrow (average 1.66
m) and have associated silver values. The local geologists calculate that the
drilling has added about 30,000 oz or about 5% to the current Asacha Russian
resource figure and some reclassification will also result. Although these
results have been input to the Datamine database for Asacha no new resource
calculation has, as yet, been made.
Plans have been drawn up by the Company's geologists for an exploration drilling
programme designed to delineate new resources within the 24 sq km Asacha licence
from targets separate from the current ore zone. Eight prospective targets have
been identified based on the recommendations of Dr Greg Corbett, who visited the
area in 2001 and 2003, and also of AGA's geologist Eric Roth who was there in
February 2005.
Veduga Project, Krasnoyarsk Krai
The pre-feasibility study being undertaken by Aker Kvaerner is close to
completion. The parallel 'Substantiation of Investment' study by the Moscow
institute Giprotsvetmet, required for Russian permitting purposes, is also
nearing completion. Based on testwork results, three viable processing options
for the partially refractory Veduga ore are being evaluated - whole ore pressure
oxidation, concentrate pressure oxidation and concentrate bio-oxidation. All
three routes are energy intensive and it is evident that the availabilities and
costs of power are going to be key drivers in the economic evaluation. Open
pittable ore reserve estimates for all three options have been established by
DMT, together with an oxide reserve and options for underground mining. A
throughput rate of the order of 850,000 tpa is envisaged. Associated laboratory
testwork for the three processing options, geotechnical work and environmental
base line studies have also been carried out.
During the year to the end of August 2005 a total of some 11,800 metres of
drilling has been completed at Veduga, 4,000 by a contractor and 7,800 by the
Company's own rigs. About 5,800 metres of the drilling has been directly linked
to the pre-feasibility study (data verification, hydrogeological/geotechnical
and sterilisation). 6,000 metres have been exploratory but in and around
existing orebodies to delineate these and to improve the resource definition.
Grade has been encountered in 34 holes, with values in line with previous
results.
Under the auspices of the AGA Technical Consultancy Agreement a major
re-interpretation of the structural controls of the Veduga orebodies has been
carried out by the Company's geologists and AGA's Dr Rod Holcombe. This has
involved extensive new mechanical trenching (of the order of 5,000 metres) and
re-logging of 8,500 metres of old drill core. This new structural model explains
the main features of the geology of the Veduga area in the vicinity of the
orebodies. The timing of mineralization in relation to deformation and the
formation of key faults can now be determined with confidence. This and
preliminary results from the trenching has opened up new possibilities in a
number of areas.
In the Greater Licence Area field work has continued. In the area immediately to
the south and southwest of the main Veduga orebodies (the Interessny and Western
zones) where low grade mineralisation in metasediments was encountered in 2004 a
systematic trenching programme has been completed with some promising visible
indications. To the north (about 2 km from the main Veduga ore zones) in the
Powerline prospect a recently drilled diamond drill hole over a soil anomaly
encountered a 30 metre interval of sulphide mineralisation (pyrite and
arsenopyrite).
Bogunay, Krasnoyarsk Krai
Exploration activity in the 47.5 sq km Bogunay licence 150 km east of
Krasnoyarsk city, which was acquired in 2004, has been concentrated in two
areas, the Krasnoyarsky zone, the location of mining activity in the 1940s, and
the new Bogunay Vostochny prospect in the eastern part of the property. Some
promising indications have resulted.
In the Krasnoyarsky zone 20 trenches have been cut across the 2.3 km known
strike extent. Mineralisation is associated with 'beresitic' alteration with
widths of the order of 10 metres. Few results of sampling are yet to hand
however in one trench, K 26, located in the vicinity of an old adit (no. 16) a
12 metre auriferous zone has been identified with economic mineralisation over 5
metres including a 1.25 metre section assaying 16 g/t gold. It is evident that
the Krasnoyarsky zone has high grade sections however it appears that they may
be sporadic. More results are needed before any conclusions can be drawn.
The metalliferous potential of the Vostochny prospect area was confirmed by a
soil geochemical survey carried out in May 2005 from which the presence of gold,
zinc and lead at levels 50 to 100 times above background were detected. The
anomaly, as defined geochemically, has a strike length of over 1 km, trending NW
and conformable with the regional structure of the Bogunay sector of the
Angara-Kansk Block, and a width of some 300 metres. Using the plans of the
geochemical and geophysical surveys, a series of 6 trench lines have been cut
across the anomalous zone in a NE direction exposing segments along 700m of the
anomaly. The exposures in the trenches reveal a zone of strongly developed and
continuous beresitic alteration with a width of 80 to 100m. This is very well
exposed in trenches 41 and 44. Within the zone of beresitic alteration finely
disseminated pyrite is ubiquitous. Locally there are zones up to 1-2m wide with
chalcopyrite and associated galena. 100 channel samples are being sent to
IRGIRIDMET for analysis. As the Vostochny prospect lies within a well-developed
system of hydrothermal alteration with a paragenesis of sulphide minerals more
or less identical to that found in the main Bogunay workings the Company's
geologists are optimistic that significant gold values will be returned. If that
is confirmed, a follow-up drilling programme would be justified.
Ends
Contacts:
Jocelyn Waller
Managing Director
Trans-Siberian Gold 07778 164376
Simon Olsen
Finance Director,
Trans-Siberian Gold 01223 265768
Keith Irons
Bankside Consultants 020 7367 8873 / 07885 356639
Trans-Siberian Gold plc
Consolidated profit and loss account for the 6 months ended 30 June 2005
Reviewed Unaudited Audited
6 months to 6 months to 12 months to
30.06.2005 30.06.2004 31.12.2004
US$ US$ US$
TURNOVER - - -
Administration expenses (3,200,832) (2,641,890) (6,055,468)
Exchange (loss) gain (i) (1,140,911) 340,924 1,635,704
OPERATING LOSS (4,341,743) (2,300,966) (4,419,764)
Interest receivable and similar income 313,521 282,466 677,861
Loss on ordinary activities before taxation (4,028,222) (2,018,500) (3,741,903)
Tax on loss on ordinary activities (6,781) - (50,340)
(4,035,003) (2,018,500) (3,792,243)
Minority interest - equity - 73,770 134,518
LOSS FOR THE PERIOD (4,035,003) (1,944,730) (3,657,725)
Basic loss per ordinary share (cents) 10.41 6.79 11.60
There is no difference between the loss on ordinary activities before taxation
and the loss for the financial period stated above and their historical cost
equivalents.
There are no recognised gains or losses other than those stated above.
i. Exchange loss of $1,140,911 principally reflects the appreciation of the
US dollar on sterling cash deposits.
Trans-Siberian Gold plc Note Reviewed Unaudited Audited
Consolidated balance sheet at 30 June 2005 30.06.2005 30.06.2004 31.12.2004
US$ US$ US$
FIXED ASSETS
Exploration and evaluation properties 1 22,158,368 13,100,521 17,787,680
Tangible assets 2 9,743,571 2,946,993 9,016,252
TOTAL FIXED ASSETS 31,901,939 16,047,514 26,803,932
CURRENT ASSETS
Debtors
Amounts falling due within one year 3,312,943 1,027,425 1,253,597
Amounts falling due after more than one year 4,105,215 1,689,182 3,198,513
7,418,158 2,716,607 4,452,110
Cash at bank 22,866,955 19,440,305 20,419,335
30,285,113 22,156,912 24,871,445
CREDITORS - AMOUNTS FALLING DUE WITHIN ONE YEAR (1,526,250) (1,119,263) (1,473,270)
NET CURRENT ASSETS 28,758,863 21,037,649 23,398,175
TOTAL ASSETS LESS CURRENT LIABILITIES 60,660,802 37,085,163 50,202,107
Provisions for liabilities and charges (83,177) - (83,177)
NET ASSETS 60,577,625 37,085,163 50,118,930
CAPITAL AND RESERVES
Called up share capital 3 6,933,497 4,693,974 5,815,464
Share premium account 4 60,846,822 33,785,135 47,471,157
Profit and loss account 4 (7,202,694) (1,454,696) (3,167,691)
SHAREHOLDERS' FUNDS 60,577,625 37,024,413 50,118,930
Minority Interest - 60,750 -
CAPITAL EMPLOYED 60,577,625 37,085,163 50,118,930
Trans-Siberian Gold plc
Consolidated cash flow statement for the 6 months ended 30 June 2005
Note Reviewed Unaudited Audited
6 months to 6 months to 12 months to
30.06.2005 30.06.2004 31.12.2004
US$ US$ US$
NET CASH OUTFLOW FROM OPERATING ACTIVITIES 5 (4,065,762) (3,366,884) (8,272,983)
RETURNS ON INVESTMENTS AND SERVICING OF
FINANCE
Interest received 331,337 331,262 706,465
Interest paid - - -
Net cash inflow from returns on investments 331,337 331,262 706,465
and servicing of finance
CORPORATION TAX PAID (8,887) - (48,234)
CAPITAL EXPENDITURE AND FINANCIAL INVESTMENT
Purchase of tangible fixed assets (ii) (2,947,471) (1,424,940) (7,686,456)
Receipts from disposal of tangible fixed - - 1,000
assets
Exploration and evaluation expenditure (4,486,921) (3,964,452) (8,013,515)
Net cash outflow from capital expenditure and (7,434,392) (5,389,392) (15,698,971)
financial investment
ACQUISITIONS
Payments to acquire subsidiary undertakings - - (120,951)
Cash held by subsidiaries acquired - - -
Net cash outflow from acquisitions - - (120,951)
NET CASH OUTFLOW BEFORE USE OF LIQUID (11,177,704) (8,425,014) (23,434,674)
RESOURCES AND FINANCING
MANAGEMENT OF LIQUID RESOURCES
(Increase) decrease in bank deposits (2,343,758) 10,110,714 8,703,504
FINANCING
Issue of ordinary shares, net of expenses 14,493,698 141,380 14,948,892
INCREASE IN CASH FOR THE PERIOD 972,236 1,827,080 217,722
RECONCILIATION OF CASH BALANCES
Cash at start of period 1,066,072 846,369 846,369
Currency exchange differences (1,993) (19,272) 1,981
Increase in cash for the period 972,236 1,827,080 217,722
CASH AT END OF PERIOD 2,036,315 2,654,177 1,066,072
ii. Purchase of tangible fixed assets of $2,947,471 includes prepayments of
$1,839,969 relating to the purchase of construction materials for the
Asacha camp.
Notes to the financial statements
1. EXPLORATION AND EVALUATION PROPERTIES
Movements on deferred exploration and evaluation expenditure, by location
of the property, are as follows:
01.01.2005 Additions 30.06.2005
US$ US$ US$
Kamchatka - Asacha 7,756,941 1,804,007 9,560,948
Krasnoyarsk - Veduga 9,701,888 2,395,540 12,097,428
Krasnoyarsk - Bogunay 328,851 171,141 499,992
17,787,680 4,370,688 22,158,368
2. TANGIBLE FIXED ASSETS
Office
equipment (a)
Plant and Motor and Assets under
Buildings machinery vehicles furniture construction Total
US$ US$ US$ US$ US$ US$
COST
At 01.01.2005 839,710 1,713,727 641,505 499,470 5,719,892 9,414,304
Additions 5,680 82,407 501,419 41,932 476,064 1,107,502
Disposals (2,182) (4,115) - (335) - (6,632)
At 30.06.2005 843,208 1,792,019 1,142,924 541,067 6,195,956 10,515,174
ACCUMULATED DEPRECIATION
At 01.01.2005 (41,865) (145,203) (82,602) (128,382) - (398,052)
Charge for period (79,859) (142,446) (71,429) (81,133) - (374,867)
(b)
Disposals 436 857 - 23 - 1,316
At 30.06.2005 (121,288) (286,792) (154,031) (209,492) - (771,603)
NET BOOK VALUE
At 31.12.2004 797,845 1,568,524 558,903 371,088 5,719,892 9,016,252
At 30.06.2005 721,920 1,505,227 988,893 331,575 6,195,956 9,743,571
a. Assets under construction comprises $3,474,526 in relation to the
construction of an access road to Asacha, and $2,684,552 for building
construction and $36,878 for plant and equipment at Asacha, Veduga and
Bogunay.
b. $293,424 of the depreciation charge related to fixed assets used on
exploration and evaluation projects and was charged to deferred costs in
accordance with the group's accounting policy.
Notes to the financial statements (continued)
3. CALLED UP SHARE CAPITAL
30.06.2005 31.12.2004
Number # Number #
AUTHORISED
Ordinary shares of 10p each 100,000,000 10,000,000 100,000,000 10,000,000
30.06.2005 31.12.2004
Number US$ Number US$
ALLOTTED AND FULLY PAID
At the beginning of period 34,932,364 5,815,464 28,650,779 4,675,704
Shares issued:
Placing for cash 6,131,585 1,118,033 6,131,585 1,112,147
Options exercised - - 150,000 27,613
At the end of period 41,063,949 6,933,497 34,932,364 5,815,464
On 31 May 2005, 6,131,585 ordinary shares of 10p each were issued at 130p for a
total cash consideration, before issuing costs, of #8.0m ($14,534,432) to
AngloGold Ashanti Limited, being the second subscription under the Subscription
Agreement dated 30 June 2004 as amended on 22 December 2004, 15 April 2005 and
27 April 2005. The revised terms of the Subscription Agreement were approved by
the Company's shareholders at the EGM on 27 May 2005.
4. RESERVES
SHARE PREMIUM 30.06.2005 31.12.2004
US$ US$
At the beginning of period 47,471,157 33,721,190
Shares issued:
Placing for cash - gross 13,416,399 14,118,705
- costs (40,734) (465,384)
13,375,665 13,653,321
Options exercised - 96,646
At the end of period 60,846,822 47,471,157
PROFIT AND LOSS ACCOUNT 30.06.2005 31.12.2004
US$ US$
At the beginning of period (3,167,691) 490,034
Loss for the period (4,035,003) (3,657,725)
At the end of period (7,202,694) (3,167,691)
Notes to the financial statements (continued)
5. RECONCILIATION OF OPERATING LOSS TO NET CASH OUTFLOW FROM OPERATING
ACTIVITIES
6 months to 6 months to 12 months to
30.06.2005 30.06.2004 31.12.2004
US$ US$ US$
Operating loss (4,341,743) (2,300,966) (4,419,764)
Depreciation 81,443 90,948 128,802
Loss on disposal of fixed assets 5,316 49,250 5,045
Provision for liabilities and charges - - 83,177
Increase in debtors and prepayments (151,016) (287,949) (615,485)
Increase in VAT debtor (833,774) (596,901) (2,195,467)
Increase in creditors and accruals 305,638 19,658 262,811
Loss (profit) on foreign exchange 868,374 (340,924) (1,522,102)
Net cash outflow from operating activities (4,065,762) (3,366,884) (8,272,983)
This information is provided by RNS
The company news service from the London Stock Exchange
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