2009-06-24 09:47:11 -
London, June , 24, 2009
European Nickel PLC
Unaudited Interim Results for the period ended 31 March 2009
24 June 2009 - London: European Nickel PLC ("European Nickel" or the
"Company")(AIM, PLUS: ENK) is pleased to report its unaudited interim
results for the six months ended 31 March 2009.
Highlights:
* US$6 million placing successfully completed in April
* Negotiations with BHP Billiton regarding off-take agreement
progressing well
* Forestry permit fee paid
* Chinese due diligence on Çaldag successfully completed
* Acoje trial heap site and laboratory completed
Simon Purkiss, MD of the Company commented: "The next key step in
advancing the financing of the Çaldag project is completing the
agreement under which BHP Billiton releases its rights to the
off-take. Once this is done both the equity and the debt financing
from China will progress to the next stage, on track for completion
by the end of the year."
The Chairman's Statement and the interim financial statements are set
out below.
The report may be viewed on the Company's website
www.enickel.co.uk shortly.
Contacts:
Simon Purkiss/Andrew Lindsay, 020 7290 3130
European Nickel
Canaccord Adams Limited
Andrew Chubb 020 7050 6500
Alex Buck, BuckBias
07932 740 452
Chairman's Statement
Dear Shareholder,
In the short period since we published our 2008 Annual Report, I am
pleased to report that we continue to make good progress towards
finalising the conditions pre-requisite for completing the project
funding for our flagship Çaldag project in Turkey by the end of 2009.
The Çaldag Project
At the minesite, work continues on preparing the site for the
earthworks and development, which will commence upon completion of
the project funding. In early June 2009, the forestry permit fee was
paid and the Forestry Department has already built a road through the
area to be cleared in anticipation of the commencement of tree
clearance. A plan for additional geotechnical drilling, which is
required at the plant site following various improvements that were
made to the plant and heap layout last year, is being prepared for
implementation at the beginning of the construction programme.
Negotiations with BHP Billiton are progressing well. This has taken
slightly longer than we initially anticipated as we are now
negotiating for the termination of BHP Billiton's entire off-take
contract. Provided such negotiations are concluded as expected, it is
anticipated that Jiangxi Rare Earth and Rare Metals Tungsten Group
Company Limited ("JXTC") will then take 100% of Çaldag mixed
hydroxide product. Previously BHP Billiton had agreed to release
only 50% of the off-take but has now indicated it is willing to
release all of the off-take. The directors believe this will assist
with the project funding process.
The termination of the off-take agreement is an important step
towards securing the US$20 million purchase by JXTC of 20% of the
equity in the Çaldag project. The three conditions precedent for the
equity purchase are the issue of the forestry permit, the completion
of the JXTC off-take agreement and the approval of the Jiangxi
Provincial Government for JXTC to hold equity in an overseas entity.
The forestry permit has been approved and paid for and the approval
of the investment by the Jiangxi Provincial Government for which the
termination agreement is an essential step will be sought once the
termination agreement with BHP Billiton is signed. It is therefore
expected that the completion of this process will take several more
months. The termination agreement will also allow the debt financing
process to proceed in parallel to the equity purchase and discussions
with a Chinese bank will progress once the termination agreement with
BHP Billiton has been signed.
The Acoje Joint Venture
At our Acoje joint venture with Rusina Mining NL in the Philippines
test work continues to demonstrate that the ore gives high recoveries
and leaches rapidly, in comparison with many other deposits. The
construction of the heap leach trial site is progressing well. The
construction of a heap pad and ancillary facilities, including a
fully equipped laboratory, have been completed. The heap will be
stacked and irrigation will commence in some three months time. The
data from this testwork will be incorporated into the Definitive
Feasibility Study, which is still on course to be completed in 2010.
We expect to release some intermediate results from this trial to the
market later on in the year.
Chairman's Statement (continued)
Berong Nickel Corporation ("Berong")
Following the seasonal close-down of shipping operations over the
period from October to April Berong has made two shipments to BHP
Billiton's Yabulu refinery in Australia, with a further shipment
scheduled for July. With the downturn in the nickel price at the end
of last year Berong reduced its workforce at the mine and current
shipments are being made from the 300,000 tonne stockpile at the
barge loading area. With the recent rise in the nickel price to
around US$14,500/tonne (US$6.58/lb) the shipments will generate
useful cash flow. Berong is reviewing the possibility of
recommencing mining operations through selective mining at a lower
cost base than 2008.
Heap leach testwork on Berong ore has commenced with bottle roll
tests and column testwork is planned for later this year.
Financial Results
With the termination of direct ore shipments from Çaldag last year,
the US$2.0 million reduction in interest received and a US$3.2
million negative movement in net exchange loss the Company made a
loss after tax during the period of US$10.6 million compared with a
loss of US$6.4 million in the previous comparable period. Cash
balances plus refundable deposits totalled US$7.2 million at the end
of the period and this was subsequently augmented by US$6.0 million
of gross proceeds from the placing completed in April.
Outlook
The outlook, from a broader market perspective, seems more positive
for the remainder of the year than was anticipated at the time of our
Annual Report. The equity markets have rallied, China is seemingly
back in the commodities market and the nickel price has
strengthened. However, despite these encouraging signs, we are still
finding funding from Western banks is extremely tight and investors
are cautious. Whilst we are firm believers in the long term demand
for raw materials from China and the recovery of demand in the medium
term in the rest of the world, we continue to operate and manage
costs prudently while waiting for full confidence to return.
The good progress of the BHP Billiton off-take negotiations will
enable the project funding to enter into its next phase and we still
hope to announce the successful conclusion of project finance for
Çaldag by the end of 2009 which will allow us to then ramp up
construction. Our acquisitions in the Philippines have increased the
ore available to the Company for subsequent projects and the
development of a demonstration pilot plant at Acoje will increase the
knowledge and confidence for subsequent development of a project
similar in size to Çaldag.
David Whitehead
Chairman
24 June 2009
Consolidated income statement
for the period ended 31 March 2009
Year ended
6 month 6 month 30
period ended period ended September
31 March 31 March
Note 2009 2008 2008
Unaudited Unaudited Audited
US$000 US$000 US$000
Revenue - 4,238 5,606
Cost of sales - (3,499) (4,778)
_______ _______ _______
Gross profit - 739 828
Administrative expenses (3,694) (6,256) (16,253)
Other operating costs (2,747) (3,520) (7,497)
Other operating income 26 326 250
_______ _______ _______
Operating loss (6,415) (8,711) (22,672)
Other interest receivable 3 165 2,400 3,232
and similar income
Interest payable and 4 (3,112) (88) (469)
similar charges
Share of results of (1,281) - (3,427)
associates
_______ _______ _______
Loss before tax (10,643) (6,399) (23,336)
Tax (4) (22) (27)
_______ _______ _______
Loss for the period (10,647) (6,421) (23,363)
======= ======= =======
Loss per share (basic and 5 ($0.03) ($0.02) ($0.06)
diluted)
======= ======= =======
Consolidated balance sheet
for the period ended 31 March 2009
6 month 6 month Year
period ended period ended ended
31 March 31 March 30 September
2009 2008 2008
Unaudited Unaudited Audited
Note US$000 US$000 US$000
Non-current assets
Goodwill 1,096 1,098 1,096
Intangible assets 2,794 3,105 2,944
Property, plant and 6 75,628 78,110 75,545
equipment
Investments accounted 7 50,346 - 51,623
for using the equity
method
Advance payments for 2,278 - 1,598
investments
Available for sale 314 1,251 692
investments
_______ _______ _______
132,456 83,564 133,498
_______ _______ _______
Current assets
Inventories 102 356 101
Trade and other 8 14,038 18,026 17,034
receivables
Cash and cash 1,330 74,867 8,791
equivalents
_______ _______ _______
15,470 93,249 25,926
_______ _______ _______
Total assets 147,926 176,813 159,424
======= ======= =======
Current liabilities
Trade and other payables (1,538) (3,521) (2,452)
Current tax liabilities - (22) -
_______ _______ _______
(1,538) (3,543) (2,452)
_______ _______ _______
Net current assets 13,932 89,706 23,474
_______ _______ _______
Non-current liabilities
Provisions (2,400) (1,200) (2,400)
_______ _______ _______
Total liabilities (3,938) (4,743) (4,852)
======= ======= =======
Net assets 143,988 172,070 154,572
======= ======= =======
Equity
Called up share capital 7,216 7,216 7,216
Share premium account 202,851 202,851 202,851
Merger reserve 776 776 776
Translation reserve (546) (86) (552)
Fair value reserve (1,830) (784) (1,451)
Accumulated losses (64,479) (37,903) (54,268)
_______ _______ _______
Total equity 143,988 172,070 154,572
======= ======= =======
Consolidated statement of recognised income and expense
for the period ended 31 March 2009
6 month 6 month Year
period ended period ended ended
31 March 31 March 30 September
2009 2008 2008
As restated
Unaudited Unaudited Audited
US$000 US$000 US$000
Loss for the period (10,647) (6,421) (23,363)
Exchange differences 6 (22) (488)
arising on translation of
foreign operations
Loss on available for sale (378) (973) (1,640)
investments
_______ _______ _______
Total recognised gains and (11,019) (7,416) (25,491)
losses for the period
======= ======= =======
Consolidated cash flow statement
for the period ended 31 March 2009
6 month period 6 month period Year
ended ended ended
31 March 31 March 30 September
2009 2008 2008
Unaudited Unaudited Audited
US $000 US $000 US $000
Net cash used in (5,539) (11,526) (23,897)
operating activities
_______ _______ _______
Interest and similar 165 2,155 3,232
income received
Interest and similar (145) (263)
charges paid
Purchase of property, (387) (9,542) (5,940)
plant and equipment
Purchase of intangible (11) (301) (313)
fixed assets
Purchase of investments - - (55,050)
in associates
Advance payments for (680) - (1,598)
investments
Loans to associates (280) - -
Purchase of investments - - (510)
_______ _______ _______
Net cash used in (1,338) (7,688) (60,442)
investing activities
_______ _______ _______
Issue of ordinary share - 976 976
capital
_______ _______ _______
Net cash from financing - 976 976
activities
_______ _______ _______
Net decrease in cash (6,887) (18,238) (83,363)
and cash equivalents
Cash and cash 8,791 92,860 92,860
equivalents at
beginning of period
Effect of foreign (584) 245 (706)
currency rate changes
_______ _______ _______
Cash and cash 1,330 74,867 8,791
equivalents at the end
of the period
======= ======= =======
Notes
1. Basis of preparation
The interim financial statements have been prepared in accordance
with the recognition and measurement requirements of International
Financial Reporting Standards (IFRS) as adopted in the European Union
(EU) and on the basis of the accounting policies used in preparing
the Group's financial statements for the year ending 30 September
2008.
Going concern and availability of project finance
In common with many companies in the exploration and development
stages, the Company raises its finance for exploration and
development programmes in discrete tranches and further funding is
raised as and when required. On 9 April 2009 gross proceeds of
US$6.0 million were raised in an equity placing that is not accounted
for in the period (see note 10). The Board believes that the
available cash, refundable deposits and funds from the placing will
provide the Group with sufficient funds for going concern purposes
until 31 March 2010 but requiring further funding to continue to
progress projects.
In February 2009 the Company received approval for the issue of the
forestry permit for the Çaldag project and a framework financing
arrangement has been signed to source the debt funding for the
project from Chinese banks subject to some conditions precedent. The
Board anticipates completion of the financing during the second half
of 2009. However, if the financing is not completed in time there can
be no certainty that alternative sources of funding will be available
which would adversely affect the ability to progress the Çaldag
project such that it could lead to an impairment of the Group's
Çaldag related assets.
2. The directors do not propose an interim dividend.
3. Interest receivable and similar income:-
31 March 31 March 30 September
2009 2008 2008
Unaudited Unaudited Audited
US$000 US$000 US$000
Bank interest receivable 165 2,155 3,232
Net exchange gains - 245 -
_______ _______ _______
165 2,400 3,232
======= ======= =======
4. Interest payable and similar charges
31 March 31 March 30 September
2009 2008 2008
Unaudited Unaudited Audited
US$000 US$000 US$000
Bank interest payable 145 88 263
Net exchange losses 2,967 - 206
_______ _______ _______
3,112 88 469
======= ======= =======
5. The calculation of loss per share is based on a loss of
US$10,647,000 (six months to 31 March 2008 - loss US$6,421,000) (year
to 30 September 2008 - loss US$23,363,000) and on 384,727,857 (six
months to 31 March 2008 - 384,384,610) (year to 30 September 2008 -
384,556,704) ordinary shares, being the weighted average number of
shares in issue during the period. Outstanding options have no
dilutive effect in the period or for the six months to 31 March 2008
and the year to 30 September 2008.
Notes (continued)
6. Property, plant and equipment includes "Assets under construction"
amounting to US$72,982,000 (six months to 31 March 2008 -
US$74,995,000) (year to 30 September 2008 - US$72,652,000) which
relates to expenditure on the Çaldag project and which is not yet
being depreciated.
7. Investments in associates relate predominantly to the 19.3%
shareholding in Toledo Mining Corporation and the 18.7% shareholding
in Berong Nickel Corporation.
8. Trade and other receivables:-
31 March 31 March 30 September
2009 2008 2008
Unaudited Unaudited Audited
US$000 US$000 US$000
Trade receivables - 2,341 221
Other receivables 6,883 8,809 8,744
Refundable deposits 5,845 - 5,845
Prepayments and accrued income 1,309 6,876 2,224
_______ _______ _______
14,037 18,026 17,034
======= ======= =======
Other receivables includes an amount of US$6,199,000 (31 March 2008 -
US$7,650,000) (30 September 2008 - US$8,115,000) recoverable in over
one year. This represents input VAT incurred in Turkey which will in
due course be recovered against taxable sales in that country.
The refundable deposits are advance payments for equipment for the
Çaldag project that may be recalled under a bank guarantee.
9. The results for the six months ended 31 March 2009 and 31 March
2008 are unaudited and do not constitute statutory accounts within
the meaning of Section 435 of the Companies Act 2006. The statutory
accounts for the year ended 30 September 2008 have been delivered to
the Registrar of Companies. The audit report was unqualified and
included an emphasis of matter relating to the availability of
project finance and the assumptions adopted for the Berong impairment
review.
10. On 19 March 2009 the Company closed the placing for the issue of
86,000,000 ordinary shares of 1p each to raise gross proceeds of
US$6.0 million. The placing was approved by shareholders at a
General Meeting on 8 April 2009 and the proceeds were received on 9
April 2009. The placing has not been accounted for in the period
ending 31 March 2009. The total number of ordinary shares in issue
at 8 June 2009 is 470,727,857.
11. On 2 June 2009 US$3.8m was paid for the Forestry Permit fee and
associated stamp duty for the Çaldag project.
Company information
Directors
David Whitehead (Non-Executive Chairman)
Simon Purkiss (Managing Director)
Andrew Lindsay (Finance Director)
Sir David Logan (Non-Executive Director)
Paul Lush (Non-Executive Director)
Chris Pointon (Non-Executive Director)
Euan Worthington (Non-Executive Director)
Senior Management
Kemal Yildirim
Country Manager, Turkey
Stuart Sankey
General Manager - Engineering
Ken Stein
Country Manager, the Philippines
Mike Oxley
Business Development Manager
Company Secretary
Robert McLearon
Registered office
3rd Floor
49 Albemarle Street
London W1S 4JR
Tel: +44 20 7290 3130
Fax: +44 20 7290 3149
Company registration number
4013168
Web address
www.enickel.co.uk
Izmir office
Kemal Yildirim - Country Manager
Sardes Nikel Madencilik A.S.
Akdeniz Caddesi
No: 14 Birsel Is Merkezi
Kat: 5 D.502
35210 Konak
Izmir
Turkey
Tel: +90 232 455 0030
Fax: +90 232 489 8060
Manila office
Ken Stein - Country Manager
ENickel Services (Philippines)
10/F SSHG Law Center
105 Paseo de Roxas
Legaspi Village
Makati City
The Philippines
Tel: +63 2 667 6700
Fax: +63 2 667 6710
Auditors
PKF (UK) LLP
Farringdon Place
20 Farringdon Road
London EC1M 3AP
Nominated adviser and broker
Canaccord Adams Limited
Cardinal Place
7th Floor
80 Victoria Street
London SW1E 5JL
Solicitors
Mayer Brown International LLP
11 Pilgrim Street
London EC4V 6RW
Fasken Martineau LLP
17 Hanover Square
London W1S 1HU
Bankers
Barclays Bank PLC
54 Lombard Street
London EC3V 9EX
Registrars
Computershare Investor Services PLC
PO Box 82
The Pavilions
Bridgwater Road
Bristol BS99 7NH
Dedicated shareholder tel: 0870 889 4064
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