RNS Number : 5058B
Nufcor Uranium Limited
18 August 2008
18th August 2008
NUFCOR URANIUM LIMITED ("NUFCOR URANIUM" OR "THE COMPANY")
PRELIMINARY ANNOUNCEMENT OF FINAL RESULTS FOR THE YEAR ENDED 30 JUNE 2008
Nufcor Uranium today announces its final results for the year ended 30 June 2008.
Highlights
Highlights for the year ended 30 June 2008:
* Income US$4,207,326
* Loss for the year (US$33,461,102)
* Shareholders' equity US$147,422,690
* Net assets at market value US$174,756,690
* Diluted adjusted NAV per share at 30 June 2008 GBP2.12(US$4.23)
* Adjusted NAV per share at 30 June 2008 GBP2.13(US$4.24)
* Increase in adjusted NAV since admission to AIM on 21 July GBP0.24 (13%)
2006
Chairman's statement
The Company has completed its second year in particularly difficult market circumstances. After rising continuously since June 2003,
the spot price of uranium has, during the year under review, however, fallen from an opening level of $136.00/lb U3O8 to a low of $57.00/lb
U3O8 in mid June 2008. The adjusted net value of the Company reported monthly has reflected that fall, and the Company has reported
impairments to the value of its UF6 holdings both at the publication of the results from the first half of the financial year, and at the
end of the year.
Notwithstanding this substantial correction in the spot prices of uranium during this past year, we continue to believe that the
fundamental circumstances in the markets for nuclear energy and for uranium remain strongly favourable. With regard to demand, global
nuclear reactor growth continues to gain momentum, and certain countries have indicated an interest in acquiring strategic reserves of
uranium to support nuclear power programmes in the future. On the supply side, uranium from secondary sources remains a finite supply, and
there continues to be widespread problems in the uranium mining industry in respect of both existing and new mine sources of uranium.
These favourable market circumstances seem to be reflected in the long-term market for uranium, where price indicators have not suffered
the severe price correction experienced in the spot market, remaining relatively stable around a base price of $80/lb U3O8 for much of the
calendar year to date.
During the year under review, the Company has consistently loaned a portion of its uranium inventory to acceptable counterparties, and
revenue from lending amounted to some $3.9 million for the year. This income was sufficient to fund the investment advisory charges incurred
by the Company, as well as all other normal operating expenses of the Company.
Following the financial year end, short-term uranium prices have traded upwards. The Average U3O8 Published Price, for example, has
risen from $59.00/lb U3O8 at 30th June to $64.50/lb U3O8 at 31st July 2008. The Company's diluted adjusted NAV has consequently increased
from GBP2.12 ($4.23) per share at 30th June to GBP2.35 ($4.66) per share at 31st July. The 31st July diluted adjusted NAV includes the
market value of forward purchase contracts of $42.2 million (cost $38.9 million).
Nufcor International Limited (NIL) and its wholly-owned subsidiary, Nufcor Capital Limited (NCL), were sold by the founding shareholders
of NIL to Constellation Energy Commodities Group (CECG), a London-based subsidiary of the New York Stock Exchange - listed Constellation
Energy Group Inc. CECG have assured the Company of their commitment to the service agreements that the Company has with NIL and NCL, and we
believe that access to the greater resources of CECG could be of benefit to the Company.
Mr Peter Bonney, a partner and portfolio manager of QVT Financial LP, a significant shareholder, joined the board of the Company on 14th May
2008. Mr Bonney is actively involved in the management of QVT's uranium and uranium-related investments, and he is a welcome addition to the
resources of the Board.
On 20 March 2008 the Company commenced trading on the SETS platform. The Board also appointed Canaccord Adams Limited as the Company's joint
broker, and during the final quarter of the financial year, the Company commenced a process to secure admission for the shares of the
Company on the Toronto Stock Exchange. A preliminary long form prospectus was filed with the Securities Regulatory authorities in Canada on
27th June 2008, and we believe that the Company is close to securing the approval to issue a final prospectus. Once this has been secured,
the Company will take a decision on the timing of a fundraising and the issue of new shares in Canada to be listed on the Toronto Stock
Exchange.
In order to accommodate the notice period required by Canadian securities legislation, the second Annual General Meeting of the Company
will be held later in the year on 11th November 2008. The board will be seeking a continuing authority by special resolution to repurchase
up to 15% of the shares in issue. In addition, the Company will be requesting shareholders to approve amendments to the Articles of
Association of the Company which are intended to:
* Make changes to the articles required by the Toronto Stock Exchange in connection with the proposed offering of shares which was
announced on 27th June 2008;
* Comply with the AIM Rules in relation to the disclosure of significant interests in the Company's securities; and
* Reflect certain changes to Guernsey company law.
These amendments will be explained in more detail in a circular accompanying the annual report and financial statements.
Kelvin Williams
Chairman
18th August 2008
Report of the Adviser
For the year ended 30th June 2008
The uranium oxide ("U3O8") short-term price began the financial year at what eventually became this decade's highest price so far at
$136.00/lb (source: UxC). The price then declined steadily to a twelve month low of $57.00/lb U3O8 in mid June 2008 largely as a result of
some committed selling into a relatively volatile short-term market. However, by 30th June 2008, the short-term market began showing some
signs of leveling off with the price ticking up to $59.00/lb U3O8, the first price rise in several months.
In terms of volumes, the short-term market was relatively healthy in comparison with 2007 with 15.7m lbs of U3O8 having traded in the
first six months of 2008 in 77 transactions. This compares against a volume of 12.1m lbs of U3O8 traded in the first six months of 2007 in
51 transactions and a total annual short-term market volume of 19.8m lbs of U3O8 transacted in 2007 (source: UxC).
In the more dominant long-term market, the long-term price indicator remains relatively robust within the $80-$85/lb U3O8 mark, albeit
down from the $95/lb U3O8 price earlier in 2008. For the first six months of 2008, traded volumes in the long-term market reached 71.6m lbs
of U3O8 from 18 transactions against total annual long-term market volumes of 220m lbs of U3O8 in 2007 (source: UxC).
Concerning primary uranium supply, several uranium mining operations have underperformed against forecast with the exception of
operations in Kazakhstan. The South African mining sector is still struggling to make up lost production resulting from the electrical power
outages in early 2008. Some of those companies cited as having production or potential production issues include Cameco (Cigar Lake), Areva
(Niger operations), Uranium One (production downgrades in early 2008), ERA's Ranger mine (grade) and Palladin's Langer Heinrich (start-up
issues). Problems on the primary supply side are likely to persist for a while as evidenced by BHP Billiton's recent cautions about likely
increases in the labour and equipment costs of the substantial Olympic Dam expansion project. Notwithstanding these issues, there remains a
continued and growing recognition of the increasing dependence on the role of primary supply to meet the growth in nuclear energy
requirements.
A significant development in late 2007 on the secondary supply side was the initialing of an amendment to the Russian Suspension
Agreement that would give Russia direct access to the US market (source: UxC). If agreed, this will allow Russia to supply up to 20% of US
utility reactor requirements per annum from 2014 through 2020, satisfying in part the supply tightening in that market once the current
Russian HEU Programme terminates in 2013.
With regards uranium demand, global nuclear reactor growth continues as expected with UxC noting that in 2007 five reactors commenced
operation, ten were under construction and firm orders had been placed for twenty-two reactors. Also noteworthy on the demand side is the
potential for countries with aggressive nuclear energy growth programmes such as India, China and South Africa to build strategic reserves
of uranium in order to support those programmes. While the quantum and timing of such purchases is unknown, progress is being made by all
three countries: China successfully concluded a nuclear reactor purchase and interlinked uranium fuel procurement transaction with Areva;
India's Congress-led government is closer to concluding its civilian nuclear deal with the US (which deal should allow it access to the
products and services of the 45-nation Nuclear Suppliers Group); and the South African cabinet approved in June the country's nuclear policy
thereby both strengthening the country's commitment to developing its own nuclear fuel cycle and also acknowledging the country's requirement for an increasing nuclear energy contribution to the
total energy mix. Overall, the nuclear fuel demand side continues to look positive.
Notwithstanding the substantial fall in uranium prices over the last twelve months, we continue to believe that long-term uranium and
nuclear energy market fundamentals remain strong. Mine production issues continue to plague the industry while the demand side appears to be
more robust now than it was in mid 2007. More active buying interest is expected to return to the short-term market particularly from
financial players and market intermediaries, but also as nuclear utilities re-enter the market by end 2008 to continue rebuilding their
inventories. However, the commodity price remains volatile and susceptible to substantial movements in the short-term market on low traded
volumes. Fundamentally, the pricing performance of uranium will depend to a considerable extent on the sustainable participation in the
short-term market of the largest buying group, the utilities.
Nufcor Capital Limited
18th August 2008
For further information, please contact:
Nufcor Uranium Limited +27 82 788 0094
Kelvin Williams
(Chairman)
Nufcor Capital Limited +44 207 184 5202
Rian Raghavjee
Smithfield +44 20 7360 4900
Rupert Trefgarne
Income statement
For the year ended 30th June 2008
28th June 2006
Year ended to
30th June 30th June 2007
2008 US$
US$
Note
Income
Bank interest 315,329 1,119,923
Uranium loan fees 2 3,891,997 1,586,428
4,207,326 2,706,351
Expenses 2
Impairment charge 31,760,000 -
Investment advisory fees 2,280,375 1,917,077
Audit fees 70,776 54,543
Directors' fees 255,558 222,227
Listing expenses 10 2,641,325 -
Other administrative expenses 660,394 1,031,400
37,668,428 3,225,247
Loss for the financial year /
period attributable to equity (33,461,102) (518,896)
shareholders
Basic loss per share 7 US$0.811 US$0.015
Diluted loss per share US$0.798 US$0.015
The notes on pages 9 to 18 form part of these financial statements.
Balance sheet
At 30th June 2008
2008 2007
Note US$ US$
ASSETS
Non-current assets
Other assets - Uranium holdings 3 140,866,000 172,626,000
140,866,000 172,626,000
Current assets
Trade and other receivables 4 854,921 1,308,021
Cash and cash equivalents 8,182,291 7,447,215
9,037,212 8,755,236
Total assets 149,903,212 181,381,236
EQUITY
Share capital 5 412,500 412,500
Share premium account 2 - 180,990,188
Distributable reserve 2 180,990,188 -
Accumulated losses (33,979,998) (518,896)
Total Equity 147,422,690 180,883,792
LIABILTIES
Current liabilities
Trade and other payables 8 2,480,522 497,444
Total Liabilities 2,480,522 497,444
Total EQUITY AND LIABILITIES 149,903,212 181,381,236
The notes on pages 9 to 18 form part of these financial statements.
The financial statements were authorised for issue by the board of directors on 18th August 2008 and signed on its behalf by:
***************.. ***************..
K Williams W Scott
Director Director
Statement of changes in equity
For the year ended 30th June 2008
Note Ordinary Share Distributable Accumulated losses
shares premium reserve US$ Total
US$ US$ US$ US$
Balance at 30th June 2007 412,500 180,990,188 - (518,896) 180,883,792
Loss for the year - - - (33,461,102) (33,461,102)
Transfer to distributable
reserve 2 - (180,990,188) 180,990,188 - -
Balance at 30th June 2008 412,500 - 180,990,188 (33,979,998) 147,422,690
Balance at 28th June 2006 - - - - -
Issue of shares 412,500 188,610,338 - - 189,022,838
Loss for the period - - - (518,896) (518,896)
Fair value of equity-settled
share-option 6
granted
- 2,215,868 - - 2,215,868
Formation and listing expense
recognised directly in equity
in relation to the services of
the Custodian at admission 2
- (2,215,868) - - (2,215,868)
Other formation and listing
expenses recognised directly 2
in equity
- (7,620,150) - - (7,620,150)
Balance at 30th June 2007 412,500 180,990,188 - (518,896) 180,883,792
The notes on pages 9 to 18 form part of these financial statements.
Cash flow statement
For the year ended 30th June 2008
Year ended 30thJune 28thJune 2006to30thJune
2008US$ 2007US$
NETCASH FLOWS FROM OPERATING
ACTIVITIES
Loss from operations (33,461,102) (518,896)
Decrease / (increase) in 453,100 (1,308,021)
receivables
Increase in payables 1,983,078 497,444
Impairment charge 31,760,000 -
Purchase of uranium holdings - (172,626,000)
NETCASH INFLOW / (OUTFLOW) 735,076 (173,955,473)
FROM OPERATING ACTIVITIES
FINANCING ACTIVITIES
Proceeds from issue of - 189,022,838
ordinary shares
Formation and listing expenses - (7,620,150)
recognised directlyin equity
CASHINFLOW FROM FINANCING - 181,402,688
ACTIVITIES
NETINCREASE IN CASH AND CASH 735,076 7,447,215
EQUIVALENTS
CASHAND CASH EQUIVALENTSAT 7,447,215 -
BEGINNING OF YEAR / PERIOD
CASHAND CASH EQUIVALENTSAT END 8,182,291 7,447,215
OF YEAR / PERIOD
The notes on pages 9 to 18 form part of these financial statements.
Notes to the financial statements
For the year ended 30th June 2008
1. GENERAL INFORMATION
Nufcor Uranium Limited (the *Company*) was incorporated in Guernsey on 28th June 2006 and is a closed ended investment company.
The Company was admitted to the Alternative Investment Market of the London Stock Exchange (*AIM*) on 21st July 2006.
Activities
The Company*s activities include holding and lending uranium oxide concentrates (*U3O8 *) and uranium hexafluoride (*UF6*), with the primary
investment objective of achieving capital appreciation in the value of its uranium holdings.
2. SIGNIFICANT ACCOUNTING POLICIES
Basis of preparation
The financial statements have been prepared in accordance with International Financial Reporting Standards (*IFRS*) and IFRIC
interpretations as adopted by the European Union (EU) and with Section 64 of The Companies (Guernsey) Law, 1994 applicable to companies
reporting under IFRS. The financial statements have been prepared under the historical cost convention. A summary of the more important
accounting policies is set out below.
The preparation of financial statements in conformity with generally accepted accounting principles requires the use of estimates and
assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Although these estimates are based on management*s best knowledge of the amount, event or
actions, actual results ultimately may differ from those estimates.
(a) Published standards effective in 2007
IFRS 7, Financial Instruments: Disclosures, and a complementary amendment to IAS 1, Presentation of Financial Statements * Capital
Disclosures (effective for year ends beginning on or after 1st January 2007). IFRS 7 introduces new disclosures to improve the information
about financial instruments. It requires the disclosure of qualitative and quantitative information about exposure to risks arising from
financial instruments, including specified minimum disclosures about credit risk, liquidity risk and market risk, including sensitivity
analysis to market risk. It replaces disclosure requirements in IAS 32, Financial Instruments: Disclosure and Presentation. It is applicable
to all entities that report under IFRS. The amendment to IAS 1 introduces disclosures about the level of an entity*s capital and how it
manages capital.
(b) Standards and interpretations to existing standards in issue, relevant to the Company*s operations but not yet effective
A number of new Standards, amendments to Standards and Interpretations in issue are not yet effective for years ended 30th June 2008 and
have not been applied in preparing these financial statements. Of these pronouncements, the following will potentially have an impact on the
operations of the Company and it is planned to adopt these pronouncements when they become effective:
� IFRS 2, Share Based Payments (Vesting Conditions) - effective from 1st July 2009
� IAS 23, Borrowing Costs (Amendment) - effective from 1st January 2009
Notes to the financial statements
For the year ended 30th June 2008
SIGNIFICANT ACCOUNTING POLICIES (continued)
Foreign currency translation
(a) Functional and presentation currency
The functional currency of the Company is US Dollars. The Company*s investors are mainly from the United Kingdom and North America. The
primary activity of the Company is to invest in U3O8 andUF6 which are valued in US Dollars. The performance of the Company is measured and
reported to the investors in both Sterling and US Dollars.
The Board of Directors considers the US Dollar as the currency that most faithfully represents the economic effects of the underlying
transactions, events and conditions. The financial statements are presented in US Dollars which is the Company*s functional and presentation
currency.
(b) Transactions and balances
Transactions in foreign currencies are accounted for at the rates of exchange ruling at the dates of those transactions. Income statement
items in foreign currencies are translated into US Dollars at transaction date. Foreign currency balances at year end are translated at the
approximate rates of exchange ruling at that date. Gains and losses arising on the settlement of transactions and the translation at period
end exchange rates of monetary assets and liabilities balances denominated in foreign currencies are recognised in the income statement.
Segmental reporting
The Company has one main business segment and one main geographic segment.
A business segment is a group of assets and operations engaged in providing products or services that are subject to risks and returns that
are different from those of other business segments. A geographical segment is engaged in providing products or services within a particular
economic environment that are subject to risks and returns that are different from those of segments operating on other economic
environments.
Revenue recognition
Revenue is recognised only when it is probable that the economic benefits associated with a transaction will flow to the company and the
amount of revenue can be measured reliably.
Revenue on the sale of U3O8 andUF6 is recognised at the time of delivery.
Uranium loan fees
Fees from loans of U3O8 andUF6 to third parties are recognised in the income statement on an effective yield basis.
Formation and listing expenses recognised directly in equity
Formation and listing expenses which are directly attributable to the issue of shares are charged against share premium as they are
incurred.
Expenses
All operating expenses, including investment advisory fees, are recognised in the income statement on an accruals basis.
Holdings of U3O8 and UF6
Holdings of U3O8 andUF6 are initially recognised at cost, being the fair value of the consideration given.
After initial recognition, holdings of U3O8 andUF6 are carried at cost less impairment. Any impairment is recognised in the income
statement.
U3O8 andUF6 on loan to counterparties remain on the balance sheet as the Company retains substantially all of the risks and rewards of
ownership.
Notes to the financial statements
For the year ended 30th June 2008
SIGNIFICANT ACCOUNTING POLICIES (continued)
Forward contracts
From time to time, the Company may enter into contracts for the future delivery of U3O8 andUF6 at a fixed price. Such contracts are
*executory contracts* in that both parties are still to perform, to an equal degree, the actions required of them by the contract until the
day of final delivery under the contract. Executory contracts are not recognised in the balance sheet of the Company, but are noted as a
future financial commitment.
Financial instruments
Financial assets and liabilities carried on the balance sheet include cash and cash equivalents, trade and other accounts receivable and
payable.
Financial instruments are classified as assets, liabilities or equity in accordance with the substance of the contractual arrangement.
Interest, gains and losses relating to a financial instrument classified as an asset or liability are reported as an expense or income.
Financial instruments are offset when the Company has a legally enforceable right to offset and intends to settle either on a net basis or
to realise the asset and settle the liability simultaneously.
Trade receivables
Trade receivables are measured on initial recognition at fair value and subsequently measured at amortised cost less provision for
impairment. Appropriate allowances for estimated irrecoverable amounts are recognised in the income statement when there is objective
evidence that the asset is impaired. Any allowance recognised is measured as the difference between the asset*s carrying amount and the
present value of estimated future cash flows discounted at the effective interest rate computed on initial recognition of the asset.
Cash and cash equivalents
Cash and cash equivalents include cash in hand, demand deposits and deposits with original maturities of three months or less.
Provisions and contingent liabilities
Provisions are recognised when the Company has a present legal or constructive obligation as a result of past events, it is probable that an
outflow of resources will be required to settle the obligation, and a reliable estimate of the amount can be made.
Provisions are measured at the directors* best estimate of the expenditure required to settle the obligation at the balance sheet date, and
are discounted to present value where the effect is material.
The Company recognises a provision for onerous contracts when the expected benefits to be derived from a contract are less than the
unavoidable costs of meeting the obligations under the contract.
Contingent liabilities are disclosed if the future obligation is probable or the amount cannot be reasonably estimated.
Trade payables
Trade payables are initially measured at fair value, and are subsequently measured at amortised cost, using the effective interest rate
method. Trade payables are carried at the fair value of the consideration to be paid in future for services that have been received or
supplied and invoiced or formally agreed with the supplier.
Impairment of other assets
Other assets are reviewed for impairment losses whenever events or changes in circumstances indicate that the carrying amount may not be
recoverable. An impairment loss is recognised for the amount by which the carrying amount of the asset exceeds its recoverable amount (that
is, the higher of the asset*s net selling price and value in use). For the purposes of assessing impairment, assets are grouped at the
lowest level for which there are separately identifiable cash flows.
Notes to the financial statements
For the year ended 30th June 2008
SIGNIFICANT ACCOUNTING POLICIES (continued)
Taxation
The Company is incorporated and resident in Guernsey. With effect from 1st January 2008 Guernsey has implemented a zero tax system whereby
the Company will be taxed at a rate of zero percent. The Company will be liable to deduct tax at source from any distribution or deemed
distribution to Guernsey resident shareholders. A de minimus has been enacted so that deemed distributions will only apply to Guernsey
residents holding 1% or more of the issued share capital.
Share capital
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares are shown in equity as a
deduction from the proceeds, net of tax, and are disclosed in the statement of changes in equity.
Distributable reserve
On 12th October 2007, the Company was granted approval for a capital reduction by way of cancellation of the amount standing to the credit
of its share premium account on that date. The amount cancelled was transferred to distributable reserves.
Share-based payments
The Company has applied the requirements of IFRS 2, Share-Based Payments.
The Company issued equity share options which represent equity-settled share-based payments in connection with the admission of the Company
to AIM. Equity-settled share-based payments are measured at fair value at the date of grant. The fair value determined at the grant date of
the equity-settled share based payment is deemed to be an incremental cost directly attributable to the issue of the shares at admission and
as such is deducted from equity.
Fair value is measured by use of the Black-Scholes pricing model. The expected life used in the model is based on management*s best estimate
and is adjusted for the effects of non-transferability, exercise restrictions and behavioural considerations.
See Note 6 for further description of the equity-settled share option granted.
Risk management
The Company attempts to mitigate risks that may affect its performance through a process of identifying, assessing, reporting and managing
material risks. The principal risks to which the Company is exposed are uranium price risk, counterparty credit risk, custodian credit risk,
physical uranium loss risk and liquidity risk.
Uranium price risk
As an investor in uranium, the Company holds significant positions in uranium that are exposed to changes in market price. In addition, the
Company may enter into fixed price forward purchase and sales contracts. The price of uranium is volatile and is influenced by numerous
factors beyond the Company*s control, such as demand and supply fundamentals and geopolitical events.
The objective of the Company is capital appreciation, which it intends to achieve through a policy of acquiring uranium and a strategy of
holding such uranium for the long-term and not actively speculating or trading with regard to short-term changes in the price of uranium.
Accordingly, the Company does not hedge or otherwise protect against movements in uranium price.
Notes to the financial statements
For the year ended 30th June 2008
SIGNIFICANT ACCOUNTING POLICIES (continued)
The following table details the sensitivity of the Company*s published adjusted net asset value attributable to holders of ordinary
shares (NAV) to a 10% increase and decrease in the market price of uranium, with all other variables held constant.
30th June 2008US$ 30th June 2008US$ 30th June 2007US$ 30th June 2007US$
Change in NAV (US$) Change in NAV (%) Change in NAV (US$) Change in NAV (%)
10% increase in uranium market 16,820,000 +9.6% 38,345,000 +9.8%
price
10% decrease in uranium market (16,820,000) -9.6% (38,345,000) -9.8%
price
Counterparty credit risk
The Company*s purchase, sale and lending of uranium expose the Company to the risk of non-payment or non-performance. The directors review
credit issues associated with each and every transaction and consideration is given to credit worthiness and credit concentration issues,
the provision of appropriate security, and other risk mitigation measures.
Custodian credit risk
The Company is exposed to the credit risk of the Custodian, Nufcor International Limited, and that of the conversion and enrichment
facilities (*facilities*), the ultimate custodians of the Company*s uranium. The Custodian is required to give the Company immediate notice
of any material adverse change in its financial condition and has an obligation to notify the Company of any material adverse change in the
financial position of the facilities at which its uranium is held. The directors periodically review and manage the Company*s exposure to
the credit risk of facilities that hold its material by diversifying its uranium holdings across several facilities.
Physical uranium loss risk
The uranium owned by the Company could suffer damage or destruction by fire, chemical accident, leakage or other incidents beyond the
Company*s control. This may result in losses which are not compensated for either by the Custodian (through its contractual arrangements
with the conversion and enrichment facilities) or by insurance proceeds. The directors periodically review and manage the Company*s risk of
uranium loss by diversifying its uranium holding across several conversion and enrichment facilities, considering the availability of
indemnities from the facilities and/or the availability of external insurance cover.
Liquidity risk
The Company funds ongoing expenses from interest income, uranium loan fees, and from cash held on demand and on deposit. The Company could
be exposed to significant liquidity risk if it were to fully invest its cash balances and if income from uranium loan fees were to reduce,
and other sources of funding were to become unavailable. The directors review rolling forecasts of the Company*s cash requirements on an
ongoing basis and the Company currently maintains a cash balance adequate to meet expected cash requirements for the forward 12 month
period.
Notes to the financial statements
For the year ended 30th June 2008
3. URANIUM HOLDINGS
30th June 2008US$ 30thJune 2008US$
Cost Market value
2,300,000 lbs ofU3O8 108,366,000 135,700,000
200,000 kgU ofUF6 64,260,000
Impairment charge (31,760,000)
Recoverable amount 32,500,000 32,500,000
140,866,000 168,200,000
30th June 2007US$ 30thJune 2007US$
Cost Market value
2,300,000 lbs ofU3O8 108,366,000 311,650,000
200,000 kgU ofUF6 64,260,000 71,800,000
172,626,000 383,450,000
The market value of U3O8 is taken as the average of (i) the month end UxC U3O8 spot price indicator (as published by Ux Consulting Company,
LLC in its Ux weekly publication) and (ii) the month end TradeTech U3O8 exchange value (as published by TradeTech, LLC in the Nuclear Market
Review), (*the Average U3O8 Published Price*), and that of UF6 is taken as the average of (i) the month end UxC UF6 spot NA price and (ii)
the month end TradeTech UF6 value, (*the Average UF6 Published Price*).
Subsequent to the private placement of 8.25 million shares in May 2007, the Company purchased 200,000 kgU of UF6 at a price of US$321.30 for
a total consideration of US$64,260,000. As at 30th June 2008, the Average UF6 Published Price, as defined above, had fallen to US$162.50 per
kgU of UF6, and the market value of the Company*s UF6 holdings was accordingly US$32,500,000. In accordance with the Company*s stated
accounting policies and IFRS, the Company*s holdings of U3O8 andUF6 are separately valued at the lower of cost or net realisable value which
in IFRS is described as *cost less impairment*. Any impairment is recognised in the Income Statement and therefore the Company has
recognised an *impairment charge* of US$31,760,000. Shareholders should note that this has already been reflected in the published net asset
value released by the Company on a monthly basis (see reconciliation on page 24) where the Company*s Holdings of U3O8 andUF6 are valued at
market value nor does it imply that the physical condition of the Company*s material has deteriorated.
At 30th June 2008, 928,284 lbs of U3O8 (US$43,736,731 at cost; US$54,768,756 at market value) (2007: 642,000 lbs of U3O8 (US$32,853,000 at
cost; US$86,991,000 at market value)) was on loan to third parties. The uranium on loan was collateralised to its replacement value either
by way of a guarantee issued to the Company by the parent company of the borrower or by a standby letter of credit issued by a major
international bank.
Notes to the financial statements
For the year ended 30th June 2008
4. TRADE AND OTHER RECEIVABLES
30thJune 2008US$ 30thJune 2007US$
Accrued loan fee 848,247 1,308,021
Accrued bank interest 3,702 -
Prepayments 2,972 -
854,921 1,308,021
5. SHARE CAPITAL
30thJune 2008US$ 30thJune 2007US$
Authorised
85,000,000 Ordinary Shares of 850,000 850,000
US$0.01 each
Issued and fully paid
41,250,000 Ordinary Shares of 412,500 412,500
US$0.01 each
Rights of shareholders
The Ordinary Shares carry the right to vote, the right to receive all dividends declared by the Company and on a winding up will have the
right to share pro rata in the surplus assets of the Company. The shares carry no right to fixed income.
6. SHARE-BASED PAYMENTS
Equity-settled share option
The Company issued the Custodian an option over shares representing 2,475,000 of the Company*s issued ordinary share capital at the time of
admission to AIM. The option was granted to reward the Custodian for its services in relation to the Company issuing shares and obtaining
admission to AIM.
The grant of the option was conditional upon the Company*s admission to AIM and vested on the date of admission. The option may be exercised
at any time (or times) during the period commencing on 21st July 2008 and ending on 21st July 2011. The exercise price of the option is
fixed at GBP2.05 per share.
Options Weighted averageexercise
priceUS$
Outstanding at 1st July 2007 2,475,000 3.79
Granted during the year - -
Forfeited during the year - -
Exercised during the year - -
Expired during the year - -
Outstanding at 30th June 2008 2,475,000 3.79
Exercisable at 30th June 2008 - -
Notes to the financial statements
For the year ended 30th June 2008
SHARE-BASED PAYMENTS (continued)
The inputs into the Black-Scholes model are as follows:
Weighted average share price US$3.79
Weighted average exercise price US$3.79
Expected volatility 11.56%
Expected life 5 years
Risk free rate 4.84%
Expected dividends nil
Expected volatility was determined by calculating the historical volatility of U3O8, the underlying asset in which the Company is invested,
over the past 3 years. The expected life used in the model was based on management*s expectation that the option will be exercised at the
end of the life of the option.
7. EARNINGS PER SHARE
Year ended 30th 28th June 2006to30th June
June 2008US$ 2007US$
Earnings
Loss for the purposes of basic (33,461,102) (518,896)
and diluted earnings per share
Number of shares
Weighted average number of ordinary shares for the
purposes
of basic earnings per share 41,250,000 34,423,973
Effect of dilutive potential ordinary shares:
share options 687,713 921,161
Weighted average number of ordinary shares for the
purposes
of diluted earnings per share 41,937,713 35,345,134
Basic loss per share US$0.811 US$0.015
Diluted loss per share US$0.798 US$0.015
8. TRADE AND OTHER PAYABLES
30thJune 2008US$ 30thJune 2007US$
Advisory fee payable 140,167 319,542
Accrued listing expenses 2,074,384 -
Other accrued expenses 265,971 177,902
2,480,522 497,444
Notes to the financial statements
For the year ended 30th June 2008
9. RELATED PARTY TRANSACTIONS
The following are related parties to the Company:
A C Pickford * Director / Chief Executive Officer
W Scott * Non-executive Director
M S Travis * Non-executive Director
K H Williams * Non-executive Director
P Bonney * Non-executive Director
D E Preston * Chief Financial Officer
Nufcor International Limited * Custodian
Nufcor Capital Limited - Adviser
QVT Financial LP
At 30th June 2008, the Custodian held 3,300,000 shares (8% of issued shares) (2007: 3,300,000 shares (8% of issued shares)) in the Company
and the option to acquire a further 2,475,000 shares as per an option agreement dated 21st July 2006.
The Company entered into a location swap agreement with Nuclear Fuel Corporation of South Africa (Pty) Limited (*Nufcor SA*), a party
related to the Custodian, to swap 995,000 lbs of U3O8 held by the Company at one facility in exchange for an equal quantity of U3O8 held by
Nufcor SA at a different facility. The location swap was performed for mutual benefit and for no monetary consideration. As at 30th June
2008, the Company had swapped all 995,000 (2007: 639,000) lbs of U3O8 following the completion of the agreement on 23rd January 2008.
Mr K H Williams, the Chairman of the Company, was also a director of the Custodian until his resignation on 31st December 2007. The Adviser
is, in turn, a wholly owned subsidiary of the Custodian. The Company has an Advisory Services Agreement with the Adviser and the Custodian
pursuant to which the Adviser advises on regulated investment activities, provides market information to the Board and, on the instruction
of the Board, identifies opportunities to acquire, sell and lend uranium.
The Adviser provides advisory services to the Company. The Company pays the Adviser a monthly fee in arrears equal to one twelfth of 1% of
the total market value of the uranium owned by the Company. Advisory fees charged in the year totalled US$2,280,375 (2007: US$1,917,077),
and the sum of US$140,167 (2007: US$319,542) was outstanding as at 30th June 2008.
The Adviser and the Company are parties to the Letter Agreement engagement in respect of a contemplated share offering and listing of the
Company*s shares on the Toronto Stock Exchange pursuant to which the Adviser is entitled to a fee payable by the Company for services in
connection with future acquisitions of uranium, which services are contemplated to be significantly greater than the services which are
contemplated under the Advisory Services Agreement. Under the terms of the Letter Agreement, the Adviser is entitled to an aggregate fee of
$825,000 (assuming the net capital raised under this Offering is $94,000,000) payable by the Company in two equal instalments of $412,500,
the first of which payments was paid on May 13, 2008 and the second of which is accrued but unpaid at 30th June 2008. The Adviser is further
entitled to an aggregate fee of up to $675,000 provided that it successfully assists the Company in the investment of 90% of the net
proceeds of this Offering in uranium (subject to the successful completion of the Offering). In the event that the net amount raised by the Company pursuant to the Offering exceeds $94,000,000, the
fee payable under the Letter Agreement is subject to revision, as set out in the Letter Agreement. Pursuant to the terms of the Letter
Agreement, the Company agrees to pay the reasonable costs and expenses incidental to, or reasonably incurred by the Adviser in connection
with the provision of services under the Letter Agreement.
Non-executive directors are entitled to fees totalling GBP132,500 (2007: GBP117,000) per annum with effect from 31st December 2007. The
highest paid non-executive Director receives a fee of GBP50,000 per annum. During the year fees totalling US$255,558 (2007: US$222,227) were
charged.
Notes to the financial statements
For the year ended 30th June 2008
RELATED PARTY TRANSACTIONS CONTINUED
Mr A C Pickford, a director of the Company, was Chairman of Mercator Trust Company Limited (*Mercator*), the Company*s Administrator until
his resignation on 28th March 2008. Mercator is entitled to an annual administration fee. During the year fees totalling US$176,873 (2007:
US$125,022) were charged and the sum of US$39,646 (2007: US$50,000) was outstanding as at 30th June 2008. Mr A C Pickford holds 12,195
shares (0.03%) (2007: 12,195 shares (0.03%)) in the Company.
Mr D E Preston, the Chief Financial Officer, is also Managing Director of Mercator and is entitled to an annual fee of �12,500 with effect
from his appointment on 23rd June 2008.
At 30th June 2008, QVT Financial LP held 11,134,028 shares (27% of issued shares) in the Company.
10. POST BALANCE SHEET EVENTS
The Company announced on 30th June that it had filed a preliminary long form prospectus in each of the provinces and territories of Canada
to qualify the distribution for the sale to the public (the "Offering") of new ordinary shares in the capital of the Company. The Company's
preliminary prospectus is currently being reviewed by the Canadian regulator and it is expected that regulatory clearance to file a final
prospectus will be obtained shortly. The Offering may also occur by way of private placement in the United Kingdom and in certain other
jurisdictions in Europe, and in the United States pursuant to applicable exemptions from registration under the United States Securities Act
of 1933, as amended. Subject to the Company's Articles of Association, no share (including the new shares) shall be issued at a discount to
its prevailing net asset value. As at 30th June 2008, the Company had recognised listing expenses of $2,641,325 in connection with this
project.
In July 2008, the Company agreed to purchase 237,000 kgs of UF6 for US$38.9 million from a major international counterparty for payment and
delivery in the fourth quarter of 2008. The purchase is equivalent to approximately 620,532 lbs of U3O8 at an inferred price of $59.03/lb of
U3O8 (assuming a conversion service price of $9.50/kg). Within the agreements to purchase the uranium, there is an additional liability
clause whereby if either party does not fulfil their contractual obligations, they may be liable to an additional amount not exceeding 10%
of the total consideration.
Reconciliation of net assets to published net asset value (*NAV*)
For the year ended 30th June 2008
30thJune 2008US$ Per ShareUS$
Total net assets per financial 147,422,690 3.57
statements
Market value adjustment for U3O8andUF6 27,334,000 0.66
holdings
Published and adjusted NAV 174,756,690 4.24
Converted to Sterling at GBP2.13
US$1.9901 / GBP1.00
Diluted adjusted NAV
Number of shares in issue 41,250,000
Exercise of options at GBP2.05 2,475,000 10,097,270
Diluted adjusted NAV 184,853,960 4.23
Converted to Sterling at GBP2.12
US$1.9901 / GBP1.00
The market value of U3O8 is taken asthe Average U3O8 Published Price, and that of UF6 as the Average UF6 Published Price.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR GUUWGRUPRURR
Nufcor Uranium (LSE:NU.)
Gráfico Histórico do Ativo
De Mai 2024 até Jun 2024
Nufcor Uranium (LSE:NU.)
Gráfico Histórico do Ativo
De Jun 2023 até Jun 2024
