TIDMKEM
RNS Number : 0137A
Kemin Resources PLC
24 September 2015
24 September 2015
Kemin Resources plc
("Kemin" or the "Company")
Interim report - 6 months to 30 June 2015
Kemin Resources Plc (AIM:KEM), the molybdenum and tungsten
exploration and development company with substantial interests in
Kazakhstan, announces its unaudited interim results for the six
months ended 30 June 2015.
Highlights:
-- The value of the Drozhilovskoye and Smirnovskoye deposits to
be enhanced by a comprehensive exploration programme;
-- Completion of Competent Person's Reports to be postponed
until the completion of the additional exploration programme;
-- Continued support for the Company from Amrita Investments Limited;and
-- Attributable loss marginally reduced to GBP423k (2014: GBP427k);
Commenting on the results, Sanzhar Assaubayev, CEO of Kemin
Resources said:
"Our Drozhilovskoye and Smirnovskoye deposits are substantial
assets but, given the continued cyclical downturn in commodity
prices that we have seen during H1 2015, our Board is of the
opinion that it makes economic sense to preserve these projects for
a higher molybdenum and tungsten price environment. In making the
decision not to rush our CPRs, we can now concentrate on focused
exploration and appraisal work on the deposits and continuing to
add value for shareholders. Our major shareholder remains committed
to Kemin and to progressing both projects."
For further information, please visit
http://www.keminresources.com or contact:
Kemin Resources Plc
Louise Wrathall (Investor relations)
+44(0)207 932 2456
Strand Hanson Limited (Nomad, Financial Adviser and Broker)
Andrew Emmott / Ritchie Balmer
+44(0)207 409 3494
Information on the Company
Kemin Resources plc (AIM: KEM) was formed into its present
structure in April 2013 by the reverse take-over of GMA Resources
plc by the 'Joint Venture Kazakh-Russian Mining Company LLP'
(KRMC).
The Company is focussed on developing its two molybdenum and
tungsten deposits Drozhilovskoye and Smirnovskoye. Each of the
deposits is assessed to have significant value.
Kemin's 90% owned Kazakh entity, KRMC, is the developer and
future operator of the two subsoil licences that allow mining to
take place at each deposit.
Both deposits are located in northern Kazakhstan.
Kemin Resources Plc
Chief Executive Officer's Review
Since reporting the 2014 results, the Board continues to believe
that the price for molybdenum oxide and tungsten concentrates could
remain depressed for some time into the future and potentially
decrease further in light of the reducing demand for steel in
China. It is also noted that new molybdenum and tungsten mines are
expectedto commence production in the near future thereby providing
an additional hurdle for the recovery of price of both
commodities.
The Board is of the opinion that both Drozhilovskoye and
Smirnovskoye remain very attractive projects for Kemin Resources
and because of their relatively high grades, low strip ratios and
their proximity to the largest steel producer in the world, China,
they remain outstanding investment opportunities. However, the
Board believes that in light of the current market conditions and
molybdenum and tungsten commodity prices, it makes little economic
sense to accelerate these projects into production. Instead, the
Board believes the current environment gives the Company time to
further optimize the projects and continue to explore these highly
prospective areas within both sub soil licenses.
Kemin's management team has been working closely with Venmyn
Deloitte, the consultants on the Competent Person's Reports for
both Drozhilovskoye and Smirnovskoye. Together, a number of key
actions have been identified that, if completed, would materially
improve the understanding of both deposits. This has the potential
to significantly improve the economics of both deposits. In
addition, the work programme planned would also focus on 'right
sizing' the mine developments to ensure that mining and processing
capacity could be tailored to meet the future demand profile
expected for both commodities.
During this period, there will also be a more targeted approach
to potential Chinese groups with interests in molybdenum and
tungsten production, trading and end use. The aim would be to
explore the possibilities of development for the assets, whilst
ensuring reliable off take agreements for both commodities.
Therefore, the Board has taken the decision to delay the current
CPR's and complete additional new work on both Drozhilovskoye and
Smirnovskoye which will include;
1. Additional exploration targeting higher grade zones,
2. Updating the geological models to reflect new drilling,
higher cut off grades and exploration encompassing new areas within
both sub soil licences,
3. Additional metallurgical testing with the intention to better
optimise recoveries,
4. A new marketing study to encompass the recent impacts in the
Chinese steel market, and the current market for molybdenum and
tungsten, and
5. Approaching potential Chinese groups to determine financing
structures and opportunities available to work with these groups to
develop the Drozhilovskoye and Smirnovskoye deposits.
Kemin Resources Plc
Chief Executive Officer's Review (continued)
Upon completion of this additional work, both CPR's will
recommence and provide the Board and shareholders of Kemin
Resources with a clearer understanding of the economic
attractiveness of both projects, potential for off take agreements,
and a better understanding of financing structures that could be
used to develop both projects.
During the last six months, meetings have been held with a
number of interested parties, including Chinese groups, to discuss
opportunities for the development of Drozhilovskoye and
Smirnovskoye. At this stage, other than the exchanges of data,
Kemin Resources has not entered into any detailed or specific
discussions that are material to its business interests.
The major shareholder of Kemin Resources, has given comfort to
the Board of its continued commitment to the Company. If required,
they will provide financial support to Kemin in the future, this
may include assistance with the development of the projects. In
light of depressed commodity prices, the Board members have agreed
that the Company should take a cautious approach by strengthening
its understanding of the potential of the deposits, better
understanding the possible structures to develop the projects and
find reliable offtake opportunities for the concentrates from the
mines. While the Board accepts that its approach will have a
significant impact on the development time line of the projects, it
believes this to be prudent in the current economic climate.
Sanzhar Assaubayev
CEO Kemin Resources Plc
Kemin Resources Plc
Consolidated income statement
Six months ended 30 June
2015
Six months Six months
to to Year ended
30 June 30 June 31 December
2015 2014 2014
(unaudited) (unaudited) (audited)
GBP000 GBP000 GBP000
--------------------------------------------- ------------- ------------------ --------------
Continuing operations
Administrative expenses (225) (165) (340)
Share based payment - - -
Operating Loss (225) (165) (340)
Finance Income - - 1
Finance Expense (206) (305) (531)
Loss before taxation (431) (470) (870)
Income tax expense - - -
--------------------------------------------- ------------- ------------------ --------------
Loss for the period (431) (470) (870)
--------------------------------------------- ------------- ------------------ --------------
Loss for the period attributable
to:
Equity shareholders of the
parent (423) (427) (818)
Non-controlling interest (8) (43) (52)
(431) (470) (870)
--------------------------------------------- ------------- ------------------ --------------
Loss per ordinary share
Basic & Diluted (0.2p) (0.3p) (0.5p)
--------------------------------------------- ------------- ------------------ --------------
Consolidated statement of comprehensive
income
Six months ended 30 June
2015
Six months Six months
to to Year ended
30 June 30 June 31 December
2015 2014 2014
(unaudited) (unaudited) (audited)
GBP000 GBP000 GBP000
--------------------------------------------- ============= ================== ==============
(MORE TO FOLLOW) Dow Jones Newswires
September 24, 2015 02:00 ET (06:00 GMT)
Loss for the period (431) (470) (870)
Currency translation differences
arising on translations of
foreign operations* (13) 167 121
Total comprehensive loss (444) (303) (749)
--------------------------------------------- ------------- ------------------ --------------
* items which may be re-classified to statement
or profit or loss.
Loss for the period attributable
to:
Equity shareholders of the
parent (434) (277) (703)
Non-controlling interest (10) (26) (46)
(444) (303) (749)
--------------------------------------------- ------------- ------------------ --------------
Kemin Resources Plc
Consolidated Statement of financial
position
Six months ended 30 June
2015
30 June 31 December
30 June 2015 2014 2014
(unaudited) (unaudited) (audited)
GBP000 GBP000 GBP000
------------------------------------------- ------------- ------------------ ------------
Non-current assets
Intangible assets 2,719 1,738 2,801
Property, plant and equipment 24 19 26
Other non-current assets 146 23 152
Restricted cash 6 2 6
2.895 1,782 2,985
------------------------------------------- ------------- ------------------ ------------
Current assets
Other receivables 37 40 32
Cash and cash equivalents 473 1,963 704
--------------------------------------------- ------------- ------------------ ------------
510 2,003 736
------------------------------------------- ------------- ------------------ ------------
Total assets 3,405 3,785 3,721
Current liabilities
Trade and other payables 1,250 1,619 1,319
Loans and borrowings 635 524 592
Other liabilities 23 17 -
1,908 2,160 1,911
------------------------------------------- ------------- ------------------ ------------
Non-current liabilities
Loans and borrowings 2,903 2,323 2,773
Other liabilities 6 13 5
2,909 2,336 2,778
Total liabilities 4,817 4,496 4,689
Net liabilities (1,412) (711) (968)
============================================= ============= ================== ============
Equity
Ordinary share capital 1,748 1,748 1,748
Deferred share capital 6,168 6,168 6,168
Share premium 37,414 37,415 37,414
Merger reserve (41,682) (41,682) (41,682)
Share based payment reserve 1,105 1,105 1,105
Other reserve 921 731 921
Currency translation
reserve 150 196 161
Retained earnings (7,114) (6,300) (6,691)
--------------------------------------------- ------------- ------------------ ------------
(1,290) (619) (856)
Non-controlling interest (122) (92) (112)
--------------------------------------------- ------------- ------------------ ------------
Total equity (1,412) (711) (968)
============================================= ============= ================== ============
Kemin
Resources Plc
Consolidated
Statement of
changes in
equity
Six months
ended 30 June
2015
Share Attributed
Ordinary Deferred based Currency to Non-
owners of
share share Share Merger payment Other translation Retained the controlling
capital capital premium reserve reserve reserve reserve earnings parent interest Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
--------------- --------- --------- -------- --------- -------- -------- ------------ --------- ----------- ------------ --------
1 January 2015 1,748 6,168 37,414 (41,682) 1,105 921 161 (6,691) (856) (112) (968)
Loss for the
period - - - - - - - (423) (423) (8) (431)
Currency
translation
differences
arising on
translation
of foreign
operations - - - - - - (11) (11) (2) (13)
Total
comprehensive
loss - - - - - - (11) (423) (434) (10) (444)
--------------- --------- --------- -------- --------- -------- -------- ------------ --------- ----------- ------------ --------
At 30 June
2015 1,748 6,168 37,414 (41,682) 1,105 921 150 (7,114) (1,290) (122) (1,412)
--------------- --------- --------- -------- --------- -------- -------- ------------ --------- ----------- ------------ --------
At 1 January
2014 1,520 6,168 35,693 (41,682) 1,105 702 46 (5,873) (2,321) (66) (2,387)
Loss for the
period - - - - - - - (427) (427) (43) (470)
Currency
translation
differences
arising on
translation
of foreign
operations - - - - - - 150 - 150 17 167
Total
comprehensive
loss - - - - - - 150 (427) (277) (26) (303)
--------------- --------- --------- -------- --------- -------- -------- ------------ --------- ----------- ------------ --------
Shares issued 228 - 1,824 - - - - - 2,052 - 2,052
Share issue
cost - - (102) - - - - - (102) - (102)
Modification
of loans
received - - - - - 29 - - 29 - 29
At 30 June
2014 1,748 6,168 37,415 (41,682) 1,105 731 196 (6,300) (619) (92) (711)
--------------- --------- --------- -------- --------- -------- -------- ------------ --------- ----------- ------------ --------
At 1 January
2014 1,520 6,168 35,693 (41,682) 1,105 702 46 (5,873) (2,321) (66) (2,387)
Loss for the
year - - - - - - - (818) (818) (52) (870)
Currency
translation
differences
arising on
translation
of foreign
operations - - - - - - 115 - 115 6 121
Total
comprehensive
profit - 31
December 2014 - - - - - - 115 (818) (703) (46) (749)
--------------- --------- --------- -------- --------- -------- -------- ------------ --------- ----------- ------------ --------
Shares issued
in the year 228 - 1,824 - - - - - 2,052 - 2,052
Share issue
(MORE TO FOLLOW) Dow Jones Newswires
September 24, 2015 02:00 ET (06:00 GMT)
expenses - - (103) - - - - - (103) - (103)
Modification
of loans
received - - - - - 219 - - 219 - 219
At 31 December
2014 1,748 6,168 37,414 (41,682) 1,105 921 161 (6,691) (856) (112) (968)
--------------- --------- --------- -------- --------- -------- -------- ------------ --------- ----------- ------------ --------
Kemin Resources Plc
Consolidated cash flow
statement
Six months ended 30 June 2015
Six months Six months
to to Year ended
30 June 30 June 31 December
2015 2014 2014
(unaudited) (unaudited) (audited)
GBP000 GBP000 GBP000
-------------------------------- --------------------- ------------------ ------------
Net cash inflow/(outflow) from
operating
activities (231) (188) (740)
-------------------------------- --------------------- ------------------ ------------
Investing activities
Additions to intangible assets - (7) (947)
Restricted cash - 1 -
Additions to property, plant
and
equipment - - (4)
Net cash used in investing
activities - (6) (951)
Financing activities
Proceeds on issue of shares - 2,136 2,052
Issue costs - (186) (103)
Loans repaid - (238) (514)
Proceeds from borrowings - 434 949
Net cash flow from financing
activities - 2,146 2,384
-------------------------------- --------------------- ------------------ ------------
(Decrease)/increase in cash and
cash equivalents (231) 1,952 693
Cash and cash equivalents at
the
beginning of the year 704 11 11
Cash and cash equivalents at
the
end of the period 473 1,963 704
-------------------------------- --------------------- ------------------ ------------
Kemin Resources Plc
Notes to the consolidated financial information
Six months ended 30 June 2015
1 Basis of preparation
The consolidated interim financial information has been prepared
using policies based on International Financial Reporting Standards
(IFRS and IFRIC interpretations) issued by the International
Accounting Standards Board ("IASB") as adopted for use in the
EU.
The consolidated interim financial information have been
prepared using the accounting policies which will be applied in the
Group's financial statements for the year ended 31 December 2015.
The consolidated interim financial information for the period 1
January 2015 to 30 June 2015 is unaudited and incorporates
unaudited comparative figures for the interim 1 January 2014 to 30
June 2014 and the audited financial information for the year to 31
December 2014. It does not include all disclosures that would
otherwise be required within a complete set of financial
statements.
In addition, the IASB has issued a number of IFRS and IFRIC
amendments or interpretations since the last annual report was
published. It is not expected that any of these have a material
impact on the Group.
Going Concern
As at 30 June 2015, the Group had cash in hand of GBP0.47m
(2014:GBP1.9m).
Under a loan agreement dated 10 April 2013, Amrita Investment
Limited (a company incorporated in the British Virgin Islands and
ultimately controlled by the Assaubayev family) made available a
facility of GBP7,000,000 on an unsecured basis. This was to be
applied towards the Group's working capital requirements and the
settlement of debts due of the Joint Venture Kazakhstan-Russian
Mining Company LLP (KMRC).
The loan bears interest at LIBOR+5%. The loan is repayable on
the earliest of the fifth anniversary of the agreement or of the
fundraising completion date in respect of any equity fundraising
which raises at least GBP5,000,000, (before expenses). At this
point the Lender may choose to convert the loan in to the ordinary
shares of the Company at the conversion rates stipulated within the
contract.
The Directors are confident that the Group has sufficient
resources available to meet its liabilities as they fall due and
its working capital requirements going forward and have therefore
prepared these financial statements on a going concern basis.
Kemin Resources Plc
Notes to the consolidated financial information (continued)
Six months ended 30 June 2015
2 Loss per ordinary share
The calculation of basic and diluted earnings per share from
continuing operations is based upon the retained loss for the
financial period, six months to 30 June 2015 is GBP423,000, (30
June 2014 GBP427,000; 31 December 2014 GBP818,000).
The weighted average number of ordinary shares for calculating
the basic loss per share and diluted loss per share for the six
months to 30 June 2015 is 1,748,833,041, (30 June 2014 153,288,644;
31 December 2014 163,438,889).
3 Functional and presentational currency
The Group has prepared its financial statements in British
Pounds. The functional currency of Joint Venture Kazakhstan-Russian
Mining Company LLP (KRMC) trading company in Kazakhstan is the
Kazakhstan Tenge ("KZT"). The functional currency of Kemin
Resources is Pound Sterling. The rates used to convert Kazakhstan
Tenge into British Pounds in these financial statements are as
follows:
30 June 2015 30 June 2014 31 December
2014
------ ------------------ ------------------ ------------------
Closing Average Closing Average Closing Average
------ -------- -------- -------- -------- -------- --------
KZT=
GBP 291.04 278.74 312.52 290.87 280.07 291.83
------- -------- -------- -------- -------- -------- --------
The currency translation movement on the Group's net investment
in its subsidiaries in Kazakhstan is taken to reserves.
The financial statements of all Group companies are translated
into British Pounds whereby their income statements are translated
at the average rate of exchange for the year and their statement of
financial position at the closing rate of exchange at the reporting
date. Currency translation adjustments arising on the restatement
of opening net assets, together with adjustments arising from the
retranslation of intergroup and long term foreign currency loans to
subsidiaries, are taken direct to reserves.
Transactions denominated in currencies other than the functional
currency of a Company are recorded at the rate of exchange
prevailing at the date of the transaction. Monetary assets and
liabilities are translated into the relevant functional currency at
the closing rates of exchange at the reporting date. Exchange
differences arising from the restatement of monetary assets and
liabilities at the closing rate of exchange at the reporting date
or from the settlement of monetary transactions at a rate different
from that at which the asset or liability was recorded are dealt
with through the income statement.
4 Events after the balance sheet date
There were no significant transactions after the reporting
date.
5 Approval of interim group financial statements
The interim group financial statements for the six months to 30
June 2015 were approved by the directors on 24 September 2015.
6 Ultimate Controlling Party
The controlling party of Kemin Resources plc is Bergfolk
Corporation, by virtue of the fact that it owns 76% of the voting
rights in the company. The ultimate controlling party is the
Assaubayev family.
Kemin Resources Plc
Company Details
Directors Sanzhar Assaubayev, Chief executive
Kanat Assaubayev, Chairman
Ashar Qureshi, Non-Executive Director
(Vice-Chairman)
Aidar Assaubayev, Non-Executive Director
William Trew, Non-Executive Director
Ken Crichton, Non-Executive Director
Neil Herbert, Non-Executive Director
Secretary Rajinder Basra
Registered office 28 Eccleston Square
London
SW1V 1NZ
Nominated adviser and Strand Hanson Limited
broker 26 Mount Row
Mayfair
London
W1K 3SQ
Telephone: +44 (0) 20 7409 3494
Auditors to the group BDO LLP
55 Baker Street
London
W1U 7EU
Solicitors Gowlings (UK) LLP
15(th) Floor
125 Old Broad Street
London
EC2V 5EH
Registrars Neville Registrars
18 Laurel Lane
(MORE TO FOLLOW) Dow Jones Newswires
September 24, 2015 02:00 ET (06:00 GMT)
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