RNS Number : 9167X
Van Dieman Mines plc
30 June 2008
VAN DIEMAN MINES PLC
30 June 2008
Annual Report and Accounts
Van Dieman Mines plc ("Van Dieman" or "the Company"), an AIM-listed mining and exploration company developing tin and sapphire resources
in Tasmania, announces its results for the year ended 31 December 2007. Extracts from the financial statements appear below.
The financial information set out in this announcement does not constitute statutory financial statements within the meaning of Section
240 of the Companies Act 1985 for the year ended 31 December 2007 or for the year ended 31 December 2006, but is derived from those
financial statements. The financial statements for 2007 have not yet been delivered to the Registrar of Companies. The auditors have
reported on these financial statements, their report was qualified and contained a statement under the Companies Act 1985, s237(3).
Notice of AGM
The Annual General Meeting of Van Dieman Mines plc will be held at the offices of Lawrence Graham LLP, 4 More London Riverside, London
SE1 2AU on 29 August 2008 at 10 am.
The annual report and notice of AGM is being posted to shareholders and is available on the Company's website www.vandiemanmines.com
VAN DIEMAN MINES plc Tel: +61 (0) 2 8908 5111
Mike Etheridge, Chairman Email:
Ken Frey, Managing ken.frey@vandiemanmines.com
Director
GRANT THORNTON UK LLP Tel: +44 (0) 20 7383 5100
Gerry Beaney / Fiona Owen
FOX DAVIES CAPITAL LIMITED Tel: +44 (0) 20 7936 5230
Richard Hail, Corporate
Finance
BANKSIDE CONSULTANTS Tel: +44 (0) 20 7367 8888
Michael Padley / Libby
Moss
CHAIRMAN'S STATEMENT
This is my first Annual Report as Chairman of Van Dieman Mines Plc ("Van Dieman" or "the Company"). Having joined the Board in August
2007, I took over as Interim Chairman in October 2007, and was confirmed as Chairman in February 2008.
The year to 31 December 2007 was a challenging one for Van Dieman, with ongoing delays in permitting for and construction of the
Company's flagship Scotia tin-sapphire project resulting in further postponement of production. Thus far, 2008 has been even more difficult,
with a wholesale restructuring of the Board and Management of the Company, the departure of two of the founding Executive Directors, and the
realisation that there are significant flaws in the mining and processing plan put in place by the previous operational management. In March
2008, the Board instituted a thorough review of all aspects of the Scotia Project and related operations. The initial outcomes of that
review were announced to the market on 16 May 2008, and plans have been put in place to achieve full production at Scotia by the end of
2008.
Progress during 2007
Despite the challenges, 2007 saw a number of key milestones achieved by the Company as it moved closer to production at its Tasmanian
tin-sapphire projects.
In mid-2007, the Company received development and environmental approvals for the Scotia mine from the Tasmanian Board of Environmental
Management and Pollution Control and from Dorset Council. These approvals resulted in the Company being able to raise the necessary funds to
commence mine construction and development. �5.5million in equity funding was raised in October 2007, enabling finalisation of a debt
facility of A$15.4million (the "Debt Facility"). At the time, this was considered to be sufficient funding to put both the Scotia Project
and the Endurance Project into production.
The treatment plant, which had commenced construction earlier in the year in the USA, was delivered to the Scotia mine site in November
and erection of the plant commenced in early December 2007, with a view to commissioning and commencement of production during Q1 2008.
Subsequent Events
There was significant progress in some site works early in 2008, with commencement of earthworks, dam construction and plant erection.
However, it became increasingly clear that there were significant flaws in the original mining and processing plan, and in some critical
aspects of the operational management. By March 2008, it had become apparent to the Board that the previously indicated end of Q1 2008
production start date would not be met, resulting in the Board instituting a comprehensive review of all aspects of the Scotia Project.
Prior to the commencement of the review, Clive Trist resigned as Chief Executive Officer and Managing Director of the Company, and was
replaced by Ken Frey, previously Executive Director Marketing. Soon after commencement of the review, Neil Kinnane, Executive Director,
Exploration and Operations, was removed from the Board of Van Dieman and left the Company. Two of the site management team also left the
company. Ron Goodman, who had joined the Board as a Non-Executive Director in October 2007, was appointed Executive Director, Operations to
manage the review process and to report its findings and recommendations to the Board. Leading experts in the geology, mining and processing
of alluvial deposits were commissioned to work with, and report to, Ron Goodman and the recently appointed (late January 2008) Mining
Manager, Jim Semmens.
The review, which is now largely complete, and which was reported upon in an announcement on 16 May 2008, confirmed the concerns the
Board had about the original Scotia Project design. The main findings of the operational review were that the proposed mining methods and
significant components of the original process plant design for Scotia (and also planned for Endurance) were inappropriate, given the
water-saturated characteristics encountered in initial pre-stripping of the overburden and pre-commissioning of the process plant.
The Board carefully considered and accepted the initial findings and key recommendations of the review, which will result in the
adoption of a revised mine development plan (the "Revised Mine Development Plan"). The Revised Mine Development Plan will result in
significant changes to aspects of mining and processing at both the Scotia and Endurance projects. These will include examination and
trialing of alternative and potentially simpler methods to deliver the "wet" ore from the mine to the plant. It also involves ongoing
investigations to further reduce risk and to optimise the total mining operation, including drilling, dewatering, trial mining and bulk
sampling. Some modifications will also be required to the tin shed concentrating facility.
The Company expects that there will be material benefits to the Scotia and Endurance projects that will result from the implementation
of the Revised Mine Development Plan, including reduced capital and operating costs. The current expectation is that overall capital costs
may be reduced by an estimated A$4 million to A$6 million at the Scotia and Endurance projects on the basis of expected disposal proceeds
and termination of surplus equipment on order. Subject to the final mining and ore transport methods finally adopted, operating costs are
also expected to be lower, although those savings cannot be quantified until more information is available from the drilling, dewatering and
trial mining and processing.
The Board also accepted the conclusion from the project review that the basis upon which the previous management team determined the
JORC reserves and resources was not consistent with current best practice. This is largely because of the almost total reliance on drilling
data that is 70 to 100 years old in relation to the Scotia reserve. The Company has therefore embarked on a limited (~5,000 m) confirmatory
drilling programme to validate the previously determined JORC reserves. The drilling programme will also provide information to fine-tune
mining options, assist with dewatering, and enhance mine planning. The proposed drilling programme will initially focus on the Scotia
Project resource and will take about 4 to 6 months and A$0.5 million to complete.
Looking Forward
The proposed drilling, dewatering and trial mining programmes and plant modifications mean that commissioning at Scotia is now not
expected to commence until September, with a gradual ramp up to full production by the end of 2008. On the positive side, the Company and
its consultants are examining options for increasing mining rate and plant processing rate with a view to increasing long-term production
rate, and maximising near-term cash flow during ramp up.
While the Revised Mine Development Plan will result in significant capital savings and potentially lower operating costs, the delays in
commissioning and achieving full production have put pressure on working capital during the second half of 2008. The financial position of
the Company worsened in late May 2008 when the provider of its Debt Facility refused a drawdown request. This forced the Company to urgently
seek financing options to both replace the existing Debt Facility and to provide short-term working capital.
The Company canvassed a range of financing options and, on 30 June 2008, announced that one of its substantial shareholders, Galena
Special Situation Master Fund Limited ("Galena") had granted it an immediate loan facility of up to �5 million, �3 million of which is,
subject to the satisfaction of certain conditions, to be drawn down at the sole discretion of Galena (the "Loan Facility"). The Loan
Facility may be extended by up to a further �2 million in the event that a proposed equity raising is not fully subscribed. The Group is in
the process of seeking approval from the Australian Foreign Investment Review Board ("FIRB") for approval for Galena, as a non-Australian
entity, to take registered security over the Group's assets. It is expected that a response will be received from FIRB within four to six
weeks. The Board anticipates that FIRB approval will be obtained. Upon registration of the security over the Group's assets, the Group will
be entitled to immediately draw down on the remaining portion of the Loan Facility. The Loan Facility will be used, in the first instance, to fund the Group's immediate working capital requirements
including payment of the Group's creditors and to fund the working capital required to undertake the trial mining, dewatering, plant
modifications and initial confirmatory drilling (~1,000 metres) through to the end of August 2008. On receipt of the approval from FIRB the
Company's existing Debt Facility will be repaid out of the Loan Facility proceeds and Galena will be granted a fixed and floating charge
over the assets of the Group. The details of the Loan Facility and the further facility of up to �2 million were contained in the Company's
announcement of 30 June 2008, and aspects of it will require shareholder approval at the Company's general meeting to be convened for 29
August 2008.
Your Board has acted decisively in recent months to deal with the issues facing the Group. Following a thorough and professional
operational review by our new management team and external consultants, implementation of the Revised Mine Development Plan is underway. The
Board now believes the Company has the financial security to take the Scotia and Endurance projects into production.
2007 and the first half of 2008 has been a turbulent period for the Company, with yet further disappointments. However, I can assure
shareholders that we now have the management and staff in place to deliver the Revised Mine Development Plan, and to progress commissioning
of the Scotia Project within the next few months. Indeed, I particularly want to commend the remaining Van Dieman staff, whose commitment to
the Company and its projects has been outstanding, especially given the at times difficult working environment.
I am also particularly grateful for the professionalism and commitment of my fellow Directors throughout what has been a very demanding
few months. Their skill and dedication has been matched with a remarkable willingness to take the hard decisions and to commit time well
beyond normal expectations.
Finally, I extend the Board's appreciation to the Company's loyal and patient shareholders. You can be assured that we are doing
everything we can to finally bring the Company's projects into production, to optimise the business, and to capitalise on the historically
high tin prices.
Mike Etheridge
Non-Executive Chairman
30 June 2008
VAN DIEMAN MINES PLC
CONSOLIDATED INCOME STATEMENT
For the Year Ended 31 December 2007
2007 2006
� �
Mining Expenses (247,106) (220,321)
Administrative expenses (1,747,068) (928,380)
Operating loss (1,994,174) (1,148,701)
Bank interest receivable 48,699 132,381
Finance costs (23,646) -
Net financing income 25,053 132,381
Loss before tax (1,969,121) (1,016,320)
Income tax expense - -
Loss for the period (1,969,121) (1,016,320)
2007 2006
� �
Basic and diluted loss per share (p) (1.82p) (1.11p)
CONSOLIDATED STATEMENT OF RECOGNISED INCOME AND EXPENSE
For the Year Ended 31 December 2007
2007 2006
� �
Foreign exchange translation differences 495,571 (185,793)
Loss for the period (1,969,121) (1,016,320)
Total recognised income and expense for the period (1,473,550) (1,202,113)
COMPANY STATEMENT OF RECOGNISED INCOME AND EXPENSE
For the Year Ended 31 December 2007
2007 2006
� �
Loss for the period (713,232) (232,498)
Total recognised income and expense for the period (713,232) (232,498)
VAN DIEMAN MINES PLC
BALANCE SHEETS
As at 31 December 2007
Group Company Group Company
2007 2007 2006 2006
� � � �
Assets
Property, plant and 6,224,896 - 2,594,337 -
equipment
Deferred exploration 2,227,393 - 1,918,666 -
costs
Investments - 11,933,701 - 4,561,158
Trade and other 255,487 - 66,699 -
receivables
Total non-current assets 8,707,776 11,933,701 4,579,702 4,561,158
Trade and other 302,422 53,799 85,217 1,453,158
receivables
Cash and cash 3,896,070 4,718 1,375,598 1,006,024
equivalents
Total current assets 4,198,492 2,459,182
Total assets 12,906,268 11,992,218 6,040,517 7,020,340
Equity
Issued capital 1,541,921 1,541,921 916,921 916,921
Share premium 11,087,144 11,087,144 6,497,169 6,497,169
Warrant reserve 484,784 484,784 - -
Translation reserve 614,890 - 119,319 -
Accumulated losses (4,149,411) (1,143,727) (2,180,290) (430,495)
Total equity 9,579,328 11,970,122 5,353,119 6,983,595
Liabilities
Interest-bearing 639,150 - 290,021 -
loans and borrowings
Total non current liabilities 639,150 - 290,021 -
Interest-bearing 1,959,193 - 68,239 -
loans and borrowings
Trade and other 728,597 22,096 329,138 36,745
payables
Total current liabilities 2,687,790 22,096 36,745
Total liabilities 3,326,940 22,096 687,398 36,745
Total equity and liabilities 12,906,268 11,992,218 6,040,517 7,020,340
These financial statements were approved by the Board of Directors and authorised for issue on
30 June 2008 and were signed on their behalf by:
KENAN FREY
Chief Executive Officer and Managing Director
VAN DIEMAN MINES PLC
STATEMENTS OF CASH FLOWS
For the Year Ended 31 December 2007
Group Company Group Company
Year to Year to Year to Year to
2007 2007 2006 2006
� � � �
Cash flows from operating
activities
Operating loss (1,994,174) (722,324) (1,148,701) (309,216)
Depreciation 135,699 - 76,138 -
Increase in debtors (256,395) (45,967) (45,229) (7,834)
Increase/(Decrease) in 168,384 (14,649) 156,271 (34,341)
creditors
Cash used in operations (1,946,486) (782,940) (961,521) (351,391)
Interest paid (23,646) - - -
Net cash used in operating (1,970,132) (782,940) (961,521) (351,391)
activities
Cash flows from investing
activities
Interest received 48,699 9,094 132,381 76,718
Acquisition of property, plant (2,699,318) - (2,167,167) -
and equipment and exploration
costs
Investment in subsidiaries - (5,927,219) - (1,531,408)
Net cash used in investing (2,650,619) (5,918,125) (2,034,786) (1,454,690)
activities
Cash flows from financing
activities
Proceeds from other loans 1,634,913 - - -
Proceeds from the issue of 6,324,000 6,324,000 344,650 344,650
share capital
Transaction costs (624,241) (624,241) - -
Finance lease and hire (228,344) - (33,369) -
purchase payments
Net cash provided from 7,106,328 5,699,759 311,281 344,650
financing activities
Net increase/(decrease) in 2,485,577 (1,001,306) (2,685,026) (1,461,431)
cash and cash equivalents
Cash and cash equivalents at 1,375,598 1,006,024 4,123,660 2,467,455
beginning of year
Effect of exchange rate fluctuations on cash 34,895 - (63,036) -
held
Cash and cash equivalents at 3,896,070 4,718 1,375,598 1,006,024
end of year
This information is provided by RNS
The company news service from the London Stock Exchange
END
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