Glencar Mining plc
Interim Results for the six months ended 30 June 2006
Highlights
* Drilling to recommence on Komana West deposit in October 2006
* Resource estimate for the Komana West deposit planned for mid
2007
* Drilling to start at Kabaya South target at end October 2006
* Several new targets to be advanced to drill ready status by early
2007
* Company has cash reserves of US$2.44 million.
Chief Executive's Review
Dear Shareholder,
Our exploration programmes in Mali have progressed very well indeed
during the period under review.
We have announced some exceptionally positive assay results from our
Komana West drilling programme on the Yanfolila Project in southern
Mali and we are now about to embark on a sustained drilling campaign
there designed to permit the calculation of a mineral resource
estimate.
On the Sankarani Project, we have signed a Framework Agreement with a
subsidiary of Gold Fields Limited ("Gold Fields"), whereby Gold
Fields may spend up to US$12 million on exploration over the next
five years on three of our five licences in southern Mali. Drilling
has already taken place under this agreement and considerable
additional exploration work, including further drilling, will be
undertaken on up to six additional targets on these licences between
now and the end of 2007.
There will be a team of 30 people including geologists, technicians
and support staff working on our two Malian projects during the
upcoming field season and we expect to make rapid and exciting
progress. We will be reporting the results over the next 3-6 months
as our planned programmes are carried out.
We are hopeful that this additional exploration work will lead to the
delineation of further significant gold mineralization at a number of
targets, while at Komana West, we are already growing in confidence
that what we have discovered there will emerge as a commercial
deposit whose ultimate size is yet to be established.
MALI
The southern Mali region is a highly prospective part of the prolific
West African, gold hosting Birimian System. Mali itself hosts some
of Africa's most profitable mines, such as those at Sadiola, Morila,
Yatela and Loulo. Nearby, in neighbouring Guinea, but in the same
Birimian geological environment, is the Anglo Ashanti - owned Siguiri
gold mine. Glencar's licence holding in southern Mali represents one
of the larger holdings in this largely unexplored part of the
country.
The Yanfolila project incorporates the 95% owned Komana and Solona
licences. The Sankarani Project incorporates the Bokoro, Sanioumale
and Farasaba licences and these are the licences included within the
Framework Agreement with Gold Fields.
Yanfolila Project
At Komana West during the past field season, we have completed two
reverse circulation drilling programmes, totalling 4,720 metres, and
the next phase of drilling, expected to commence before the end of
October 2006, will involve diamond core drilling as well as
additional reverse circulation drilling. The diamond core drilling
is designed to give us detailed structural and geological
information. The drilling completed by the end of the coming field
season will provide the basis for the initial resource estimate at
Komana West. We expect that drilling at Komana West will now be
sustained throughout the coming field season. We are very encouraged
by results so far and we are now looking forward to the advancement
of this project through the resource definition stage of development.
At Komana East, the previous licencees had reported an unclassified
resource of 280,000 ounces of gold within brecciated, siliceous
metasediments. The Komana East target lies within a major regional
shear zone which shows extensive, high grade mineralization within
the sheared metasediments. Our geological and geophysical
reinterpretation of this area suggests that further drilling is
required to adequately test this exciting target and we expect to be
able to commence this drilling programme during the coming field
season.
In the Solona Licence, our field work has already established at
least three targets which will also require drilling.
Sankarani Project
We have recently drilled the Sanankoro target on the Bokoro licence
and intersected encouraging mineralization of 20 metres grading 1.12
grams/tonne. Further work is underway to expand our knowledge of the
controls on this mineralization and we plan complete a geophysical
induced polarisation survey there shortly, prior to embarking on
further drilling.
On the Farasaba licence, we have advanced five of the targets
identified by our reconnaissance work, some of which will be drilled
during the coming field season. The first of these is the Kabaya
South target. This is a shear hosted target, displaying extensive
kaolin alteration, porphyry development and both east-west and
north-south quartz veining. There is extensive artisanal activity in
this zone. We have excavated two trenches on this target which
intersected gold mineralization over considerable widths. The
north-south trench intersected 107 metres grading 0.63 grams/tonne
while the east-west trench intersected 28 metres grading 0.7
grams/tonne. These are very significant grades and widths in this
environment and we plan to commence a reverse circulation drilling
programme on this target before the end of October 2006. Further
targets have been discovered and progressed towards drilling at
Farasaba South, Farasaba West and Farasaba Main. It is expected that
at least one of these three targets will be drilled with reverse
circulation drilling during the coming field season.
On the Sanioumale licence, we will shortly be carrying out an
orientation drilling programme prior to embarking on extensive
concession-wide surveys to test areas where previously completed
regolith studies have identified laterite cover masking the
underlying geology and its geochemical response.
GHANA
We have continued to evaluate the results of our exploration
programmes on the Asheba concession in southwestern Ghana. While the
results obtained have delineated significant ore development, we have
not embarked on a drilling campaign to follow up on the positive
results from our 2005 drilling programme. We have taken the view
that our drilling budget may be more profitably focussed for the
present on the Komana West target. We do still hope, however, to be
able to recommence drilling the Asheba target as soon as possible.
Under the provisions of the Ghanaian Mining Code, we have recently
shed 50% of the original licence area in the course of renewal of the
licence. The ground shed is almost entirely within the Forest
Reserve area. The retained area of the licence contains all of the
priority target areas worked on in recent years, including Atinasi
North and South, Cheriaman and Tanaya.
UGANDA
We have carried out some further pitting and sampling on the Tira
licence, in southeastern Uganda. We are awaiting the assay results
from this sampling before deciding on the next phase of exploration.
IRELAND
A considerable amount of drilling has been done on our Laois licences
in the period up to 2005. While the technical results of that
drilling were favourable, no significant quantities of zinc
mineralization were found. No fieldwork was carried out in the
period under review.
FINANCIAL
The Company's unaudited profit and loss account, appended below, for
the six months ended 30 June 2006 shows a loss of US$781,312. This
loss includes, for the first time, the imputed cost of the issue of
share options to directors and others under the Company's share
option scheme. From 1 January 2006, Glencar has implemented FRS 20
Share Based Payments, which increased administrative expenses by
US$643,328 in the current period, being a notional charge in respect
of employee and director share options. Since there was no issue of
options in the corresponding period last year, there is no charge
arising in the comparative figures. The notional charge has no impact
on net assets, since the charge in the profit and loss account is
balanced by a credit in reserves. Group cashflow is also unaffected.
Excluding the notional charge in respect of the share options, the
loss for the period was US$137,984, which represents a significant
reduction on the corresponding period last year. This reduction in
loss is accounted for by gains on currency exchange, increased bank
interest received and the contribution received from the Sankarani
Joint Venture to administrative costs.
In February 2006, we completed a private placement of 18,002,000 new
shares at a price of Stg�0.07 per share for total proceeds of
Stg�1.26 million (US$ 2.19 million). These funds were raised to
allow continuation of the Company's exploration programme in Mali,
and Komana in particular. At 30 June 2006, the Company had cash funds
of US$2.44 million which, together with the exploration expenditures
being contributed by Gold Fields under the Framework Agreement, will
permit the continuation of our planned, aggressive exploration
programmes with a substantial drilling component, beyond the middle
of 2007.
OUTLOOK
Our exploration programmes in Mali are now entering a very exciting
phase. Diamond and reverse circulation drilling starting at Komana
West in October 2006 will represent the commencement of substantial
additional drilling programmes which will be carried out on this
deposit, with the objective of providing sufficient data to calculate
a mineral resource by mid 2007. Intensive exploration work will
also be commenced at the nearby Komana East target, to test potential
extensions to the already delineated, unclassified resource of
280,000 ounces of gold. Further drilling programmes will be carried
out on the Sankarani Project under the terms of the Framework
Agreement with Gold Fields. The coming field season will be very
interesting indeed, and we expect to be able to report regular
progress through to mid 2007, with attendant increase in shareholder
value.
Hugh McCullough
Chief Executive
For further information, please contact:
Glencar Mining plc
Hugh McCullough, Chief Executive
Tel: +353 1 661 9974
e-mail: info@glencarmining.ie
Heneghan PR
Rachel Watchorn
Tel: +353 1 6607395
e-mail: rachel@hpr.ie
GLENCAR MINING PLC
CONSOLIDATED PROFIT AND LOSS ACCOUNT (UNAUDITED)
FOR THE PERIOD ENDED 30 JUNE 2006
Unaudited Unaudited Audited
6 months 6 months Full year
ended ended Ended
30-Jun-06 30-Jun-05 31 Dec 2005
US$ US$ US$
ADMINISTRATIVE EXPENSES (282,135) (300,792) (725,654)
GAIN (LOSS) ON EXCHANGE 108,278 (46,461) (19,422)
BANK INTEREST RECEIVABLE 44,672 16,055 37,269
COST OF SHARE AWARDS (643,328) - -
INTEREST PAYABLE AND SIMILAR
CHARGES (8,799) (8,000) (23,213)
LOSS ON ORDINARY ACTIVITIES
BEFORE TAXATION (781,312) (339,198) (731,020)
TAXATION 0 0 (892)
LOSS ON ORDINARY ACTIVITIES
AFTER TAXATION (781,312) (339,198) (731,912)
MINORITY INTEREST 0 0 0
LOSS FOR THE FINANCIAL
PERIOD (781,312) (339,198) (731,912)
LOSS EARNINGS PER SHARE
(CENTS) (.36) (.20) (.39)
DILUTED LOSS PER SHARE
(CENTS) (.29) (.19) (.36)
CONSOLIDATED BALANCE SHEET AS AT 30 JUNE 2006
Unaudited Unaudited Audited
30 June 2006 30 June 2005 31 Dec 2005
US$ US$ US$
ASSETS
Non current assets
Intangible assets 4,365,129 2,783,639 3,183,205
Property plant and equipment 28,447 34,421 28,447
4,393,576 2,818,060 3,211,652
Current assets
Debtors 21,752 12,553 18,841
Cash 2,444,491 435,841 1,152,402
2,466,243 448,394 1,171,243
Total assets 6,859,819 3,266,454 4,382,895
EQUITY
Capital and reserves
attributable to the Group's
equity shareholders
Called up share capital 8,130,079 6,167,555 7,420,009
Capital conversion reserve
fund 82,092 82,092 82,092
Share premium account 37,669,125 36,136,693 36,215,883
Profit and loss account
(deficit) (40,286784) (39,755,013) (40,148,801)
5,594,512 2,631,327 3,569,183
Minority interest (112,910) (112,910) (112,910)
Total equity 5,481,602 2,518,417 3,456,273
LIABILITIES
Non current liabilities
Creditors and accrued expenses 1,081,975 436,156 436,156
Current liabilities
Trade and other payables 296,242 311,881 490,466
Current corporation tax
liabilities
Bank overdraft
296,242 311,881 490,466
Total liabilities 1,378,217 748,037 926,622
Total equity and liabilities 6,859,819 3,266,454 4,382,895
GROUP CASH FLOW FOR THE PERIOD ENDED 30 JUNE 2006
Unaudited Unaudited Audited
6 months ended 6 months ended Full year ended
30 June 2006 30 June 2005 31 Dec 2005
US$ US$ US$
Cash flows from
operating activities
Cash generated from
(used in) operations 266,028 (387,228) (621,067)
Corporation tax paid - - (869)
Net cash generated from
operating activities 266,028 (387,228) (621,936)
Cash flows from
investing activities
Purchases of property,
plant and equipment - - (2,020)
Purchase of intangible
assets (1,181,923) (194,731) (578,422)
Interest received 44,672 16,055 37,269
(1,137,251) (178,676) (543,173)
Cash flows from
financing activities
Proceeds from the
issuance of ordinary
shares 2,163,312 - 1,315,767
Net cash generated from
financing activities 2,163,312 - 1,315,767
Net increase in cash
and bank overdrafts 1,292,089 (565,904) 150,657
Cash and bank
overdrafts at beginning
of year 1,152,402 1,001,745 1,001,745
Cash and bank
overdrafts at end of
year 2,444,491 435,841 1,152,402
These results will be posted on the company's website. Copies of this
interim report will be available from the Company's registered
office at 71 lower Baggot Street, Dublin 2, Ireland.
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Copyright � Hugin ASA 2006. All rights reserved.
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