HIDEFIELD GOLD PLC
PRELIMINARY AUDITED RESULTS FOR THE YEAR ENDED 31 DECEMBER 2006
Chairman's statement
I am delighted to be reporting to you on the considerable progress that your
Company has made during the financial year which ended on 31 December 2006.
With the change in the Company's fiscal accounting period to 31 December in the
prior period, these audited accounts are the first time we are reporting in
respect of a full calendar financial year.
The past twelve months have seen the Group undertake significant exploration
and drilling programmes in Argentina and Alaska following the conclusion of
transactions completed during the first half of the year under review. The
assets acquired in these transactions are expected to provide the Company with
excellent exploration opportunities and in Argentina we already foresee the
potential of a near term mine development.
The audited results of our activities and transactions completed during the
year ended 31 December 2006 reflect a significant increase in our activities in
Argentina and Alaska and resulted in a loss on ordinary activities of �
2,038,108.
South America
Argentina is now the principal focus of the Group's direct exploration
activity. Following the completion of the acquisition of the East Santa Cruz
gold projects from Yamana Gold Inc., there was significant activity throughout
the year with field work and two substantial drill programmes which totalled
approximately 15,000 metres. This exploration work was designed to increase
gold resources and prepare for pre-development activities on the East Santa
Cruz projects. Assay results received to date, and for the most part now
published in recent stock exchange releases, have given us considerable
encouragement that this activity will allow us to add substantially to the
previously estimated resources on these properties.
The assay results of these drill programmes have already confirmed that this
has been an excellent acquisition for the Group and as a consequence we have
now moved to commence a pre-feasibility study for the development of our first
gold mine at this project. We expect that this pre-feasibility study should be
completed during the third quarter of 2007 at which time we should be in a
position to publish an updated resource estimate for these properties.
In light of the excellent progress made in Argentina and the focus this will
bring to our near term activity in South America, we have been evaluating how
best to manage and maximise the potential value of our Cata Preta and Sumidouro
Dome projects in Brazil. The acquisition of strategic licenses in and around
our original license holdings has already enabled us to complete a joint
venture on the Sumidouro Dome project and opened up a number of possible
alternatives for taking forward the Cata Preta project where we are
entertaining joint venture proposals as well.
North America
Following the May 2006 conclusion of the transaction with Piper Capital which
provided the Group with the right to earn up to a 100% interest in the Golden
Zone and South Estelle projects in Alaska, a significant exploration programme
was undertaken at both projects. Drilling conditions on the Golden Zone breccia
deposit were particularly challenging and much of our activity focused on
exploration programmes outside of the initial breccia deposit as we have been
encouraged by field reports of the discovery of several promising indications
of mineralisation on both of these properties. We continue to evaluate this
work and are planning follow up work in the coming northern summer.
Associate Companies
In May 2006, Columbus Gold Corporation (currently approximately 21% owned)
successfully completed its IPO on the TSX Venture Exchange in Canada following
an offering of new shares which raised approximately Cdn$5 million. This
funding provided Columbus with the resources to undertake exploration on its
promising portfolio which had expanded to 26 gold and silver projects by the
end of 2006. Drill results from Columbus's first drilling programme on its
Golden Mile property, completed during the first half of the year, were very
encouraging and were followed up with another substantial drilling programme
which was completed late in the third quarter.
Since completing its IPO, Columbus has negotiated and concluded a number of
joint ventures on gold projects it holds in Nevada, including on and around the
Utah Clipper project, where Agnico Eagle agreed to spend up to US$6.5 million
in exploration expenditures to earn a 51% interest in the Utah Clipper,
Crestview and Laura properties that will form the basis of an important new
joint venture. Located directly on the prolific northwest Battle Mountain Trend
which is host to a number of world-class gold deposits in the Cortez-Pipeline
area, these properties are located immediately adjacent to the Pipeline-Gold
Acres mine complex and Agnico Eagle recently announced it was commencing its
first drilling programme on the properties.
During 2006, most of the activity by Alto Ventures Limited, the Company's other
significant associate company investment (29% owned following a private placing
completed by Alto in January 2007) was focused on the Despinassy gold project
in the Abitibi greenstone belt, near Val d'Or, Quebec and the Coldstream
project in northern Ontario, Canada. Drilling on Despinassy and at Coldstream
during the first half of the year confirmed the continuity of mineralization on
both properties and indicates the excellent potential to significantly expand
the mineralisation already identified.
Corporate
The Board is very encouraged by the progress we have made in building
shareholder value through our acquisitions and recent exploration activities.
As can be imagined, all of this activity has required a significant effort by
my colleagues on the Board, our talented associates in North and South America
and none of this would have been possible without the continued support of our
shareholders who have provided us with the resources to undertake this
activity. This support included the approximately �4 million in new equity
which we raised from existing and new shareholders in the first quarter of
2006. This has recently been supplemented by a further capital raising of
approximately �2 million in the first quarter of 2007. We have also managed to
supplement the support of our shareholders through the timely and profitable
sale of our investment in Forum Uranium which resulted in the receipt of �
196,798 representing a profit of �123,671 on our modest initial investment.
In addition, the Board is pleased to welcome BDO Stoy Hayward LLP as our new
auditors. The choice of BDO was influenced by the extensive experience of their
natural resources team. I would also like to draw your attention to note 23 to
the accounts, which highlights changes that have been made to various
disclosures in the previous accounting period and in particular in relation to
the adoption of the provisions of FRS20 (share based payments).
On behalf of the Board I wish to thank all of our people and our shareholders
for their continued efforts and support and look forward with optimism to
continued good results to come from all of our activities during 2007.
Kenneth P Judge
Chairman
25 June 2007
For further information on this release, please contact:
Hidefield Gold Plc
Ken Judge, Chairman + 44 773 300 1002
Investor Relations
Paul Ensor + 44 20 7590 5503
Hanson Westhouse Limited (Nomad) + 44 113 246 2610
Tim Feather / Matthew Johnson
Teather & Greenwood: Landsbanki (Broker) + 44 20 7426 9000
Tom Hulme
Consolidated profit and loss account for the year ended 31 December 2006
Continuing operations
Continuing Acquisitions Total Total
Year to Year to Year to 15 months to
Note 31/12/06 31/12/06 31/12/06 31/12/05
(as restated)
� � � �
Provision for (955,602) - (955,602) (592,454)
diminution in value
of mineral rights
Exploration - (48,329) (48,329) (49,217)
expenditure written
off
Administrative (739,772) (244,018) (1,037,790) (437,626)
expenses
Other operating - - - 2,417
income
Operating loss (1,749,374) (292,347) (2,041,721) (1,076,880)
Share of operating (301,509) (294,130)
loss in Associates
Gain on deemed 73,436 -
disposal re.
Associates
Gain on deemed 49,913 -
disposal re.
investments
Profit on sale of - 769,567
investments
Other interest 48,453 33,851
receivable and
similar income
- Group
Loss on ordinary (2,038,108) (567,592)
activities before
taxation
Taxation - (244,226)
Loss for the period (2,038,108) (811,818)
Loss per ordinary 3 (0.97p) (0.53p)
share - basic and
diluted
Consolidated statement of total recognised gains and losses for the year ended
31 December 2006
Year to 15 months to
31/12/06 31/12/05
(as restated)
� �
Loss for the financial period
- group (1,736,599) (517,688)
- associated undertakings (301,509) (294,130)
(2,038,108) (811,818)
Revaluation reserve written back - 62,317
Currency translation differences on foreign (368,581) 16,473
currency net investments
Total recognised gains and losses relating to (2,406,689) (733,028)
that period
Prior year adjustments (52,153)
Total gains and losses recognised since last (2,458,842)
annual report
Consolidated balance sheet as at 31 December 2006
2006 2006 2005 2005
(as (as
restated) restated)
Note � � � �
Fixed assets
Tangible assets 268,805 -
Mineral rights 6,523,761 1,368,780
Investments in 2,235,035 2,055,720
associates
Other investments 63,698 353,108
Total fixed assets 9,100,299 3,777,608
Current assets
Debtors 1,077,485 250,014
Cash at bank 344,164 980,445
1,421,649 1,230,459
Creditors: amounts 657,188 378,154
falling due within
one year
Net current assets 764,461 852,305
Net assets 9,864,760 4,629,913
Capital and
reserves
Issued share 2,447,121 1,524,488
capital
Shares to be issued - 150,000
Share premium 10,675,940 7,175,147
account
Other reserves 3,420,263 52,153
Profit and loss (6,678,564) (4,271,875)
account
Shareholders' funds 9,864,760 4,629,913
Consolidated cash flow statement for the year ended 31 December 2006
Year to Year to 15 months to 15 months to
31/12/06 31/12/06 31/12/05 31/12/05
(as restated) (as restated)
� � � �
Cash flows from
operating activities
Operating loss (2,041,721) (1,076,880)
(Increase)/decrease in (672,763) 44,087
debtors
Increase/(decrease) in 183,586 54,499
creditors
Depreciation and 10,062 (149,513)
amortisation
Provision for 955,602 592,454
impairment
Share based payment 63,400 46,018
costs
Directors remuneration 2,813 5,450
paid by issue of shares
Exchange differences (61,830) (57,636)
Net cash outflow from (1,560,851) (541,521)
operating activities
Returns on investments
and servicing of
finance
Bank interest received 48,453 33,851
Capital expenditure and
financial investment
Payments to acquire (407,416) (236,325)
associates
Payments to acquire (13,499) (345,474)
other investments
Payments to acquire and (1,849,604) (907,013)
develop mineral rights
Payments to acquire (205,643) -
tangible fixed assets
Sale of investments 211,170 -
Sale of mineral rights - 199,597
Sale of tangible fixed 376 -
assets
(2,264,616) (1,289,215)
Acquisitions and
disposals
Payments for (581,879) -
subsidiaries (net of
cash acquired)
Financing
Capital raising costs (201,352) -
Issue of ordinary share 4,051,250 5,000
capital for cash
3,849,898 5,000
Net cash outflow (508,995) (1,791,885)
Effect of foreign (127,286) 60,519
exchange on cash
balances held
Decrease in cash in the (636,281) 1,731,366
period
Notes
* The financial information set out above does not constitute the Company's
statutory accounts for the period ended 31 December 2006 or 2005. The
statutory accounts for 2006 will be delivered to the Registrar of
Companies, following the Company's annual general meeting. The auditors
have reported on those accounts: their report was unqualified and did not
contain statements under section 237(2) or (3) of the Companies Act 1985.
* No dividend is proposed.
3 Loss per ordinary share
The basic loss per share of 0.97 pence (2005 - 0.53 pence) is calculated, on
the loss on ordinary activities after taxation of �2,038,108 (2005 - �811,818)
and on 210,637,270 (2005 - 152,310,720) ordinary shares, being the weighted
average number of ordinary shares in issue during the year ended 31 December
2006. Due to the losses incurred during the year a diluted loss per share has
not been calculated as this would serve to reduce the basic loss per share.
There are options and warrants outstanding at the end of the year that could
potentially dilute basic earnings per share in the future. These are detailed
in Note 14 to the accounts. In addition, in 2007, a further 30,428,571 shares
were issued in February and March 2007 which would further dilute the loss per
share in the future.
4 Reconciliation of movement in net funds
Year to 15 months to
31/12/06 31/12/05
(as restated)
Cash at the beginning of the period 980,445 2,711,811
Decrease in cash in the period per cash flow (636,281) (1,713,366)
statement
Cash at the end of the period 344,164 980,445
5 Post balance sheet events
On 23 February 2007, the Company issued 24,428,571 ordinary shares for cash at
7 pence per share to raise �1.71 million before expenses. On 27 March 2007, the
Company issued 6,000,000 ordinary shares for cash at 7 pence per share to raise
�0.42 million before expenses. Both of these issues were accompanied with an
issue of warrants on the basis of 1 warrant for each 2 shares issued. The
warrants are exercisable within 18 months of the admission to AIM of the
placing shares, at an exercise price of 8.5p.
6 Adjustments to the prior period
The following adjustments have been made to the figures previously reported for
the prior period:
Adjustments to the profit and loss account
a) The provision for diminution in the value of mining assets has now been
included in the operating loss, rather than after operating loss and before the
loss on ordinary activities as previously reported. This has had nil effect on
the loss reported for current and prior period.
b) The movement on the revaluation reserve has been included in the
Consolidated Statement of Total Recognised Gains and Losses.
c. An amount of �2,417 has been reclassified from interest income to other
operating income. This has had nil effect on the loss reported for current
and prior period.
d) Following the adoption of FRS 20 - share based payments, the Group loss for
the period ended 31 December 2005 has been amended (for the balance sheet
effect see 6g below).
Adjustments to the Group balance sheet
e) The interests of the Group in Minera Sud Argentina SA (�26,334) and Golden
Zone (�13,499) which were shown as investments in joint ventures in the
previous period have been reclassified and are now included in intangible
assets - mineral rights.
f) Two adjustments have been made to the unlisted investments balance reported
in the prior period of �69,229. Firstly, an amount of �63,778 shown as an
investment in the previous period was initial expenditure relating to the
acquisition of mineral properties in Argentina and has therefore been
reclassified and is now included in intangible assets - mineral rights.
Secondly, an investment at a cost of �5,451 has been reclassified from unlisted
to listed as it was incorrectly classified as unlisted in the prior period.
g) Following the adoption of FRS 20 - share based payments, the Group capital
and reserves at 30 September 2004 has been amended.
h) During 2005, an amount of �244,266, equivalent to Cdn$500,000 was withheld
by the purchaser of the Group's mineral properties at Groundhog and Trefi, in
relation to potential tax on the sale. This amount was written off as taxation
in the 2005 accounts. In addition, however, the balance sheet should have shown
a debtor for the amount due to be received and a creditor for the taxation
payable. The debtor and creditor have now been included in the restated prior
period.
The following tables show the effect of these adjustments on the prior period
Group balance sheet and Group profit and loss account:
Group:
Balance sheet As 6e 6f 6g 6h As restated
previously
reported
� � � � � �
Fixed assets
Mineral 1,265,169 39,833 63,778 - - 1,368,780
rights
Fixed asset 416,886 - (63,778) - - 353,108
investments
Investments 39,833 (39,833) - - -
in joint
ventures
Investments 2,055,720 - - - - 2,055,720
in associates
Total fixed 3,777,608 - - - - 3,777,608
assets
Current
assets
Debtors 5,788 - - - 244,226 250,014
Cash at bank 980,445 - - - - 980,445
986,445 244,226 1,230,459
Creditors: (133,928) - - - (244,226) 378,154
amounts
falling due
within one
year
Net current 852,305 - - - - 852,305
assets
Net assets 4,629,913 - - - - 4,629,913
Capital and
reserves
Issued share 1,524,488 1,524,488
capital
Shares to be 150,000 150,000
issued
Share premium 7,175,147 7,175,147
account
Other - 52,153 52,153
reserves
Profit and (4,219,722) (52,153) (4,271,875)
loss account
Shareholders' 4,629,913 4,629,913
funds
Profit and loss account As 6a 6c 6d As restated
previously
reported
� � � �
Operating loss (440,825) (592,454) 2,417 (46,018) (1,076,880)
Share of operating loss (294,130) - - -
of Associates
Provision for diminution (592,454) 592,454 - - -
in value of mineral
rights
Profit on sale mineral 769,567 - - - 769,567
rights
Other interest 36,268 - (2,417) - 33,851
receivable and similar
income
-
Loss on ordinary (521,574) - - (46,018) (567,592)
activities before
taxation
7 Copies of the annual report and accounts will be posted to all shareholders
by 29 June 2007. Further copies will be available from the Company's registered
offices at 30 Farringdon Street, London, EC4A 4HJ, from the date of posting.
END
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