RNS Number:5322E
Van Dieman Mines plc
19 June 2006
VAN DIEMAN MINES PLC
Results for the year ended 31 December, 2005
CHAIRMAN'S STATEMENT
The year under review saw substantial progress on a number of fronts towards the
goal of establishing successful mining and treatment operations on the Company's
tin and sapphire mining leases in north east Tasmania.
The three main thrusts of this activity have been the finalisation of the mine
plan; manufacture of the treatment plants; and the development of effective
product marketing arrangements.
During the year, mining leases were formally granted over the Company's Scotia
and Endurance resource areas, enabling the Company to finalise its detailed
approach to mining operations.
The Company has been obliged to introduce some modifications to the mine plan in
response to unprecedented constraints on equipment delivery schedules. The
upsurge in global mining activity, fuelled in large measure by demand growth in
China and other major developing countries, has created huge bottlenecks in the
supply of a variety of equipment and materials, including notably truck tyres.
To avoid the problem of extended equipment delivery delays, the Company has
therefore decided to revise the mine plan. Van Dieman will now apply a
combination of in-pit conveyors and articulated dump trucks, instead of
conventional rigid (tyred) dump trucks as originally anticipated. The net effect
of these changes is expected to be marginal in terms of overall costs and
development schedules.
The Company is fortunate in having established excellent relations with its
local and international equipment and service suppliers, and supply arrangements
for all other major component materials and utility services are being secured
on schedule.
One of the final component steps in the progress towards mine start-up is the
submission to the Tasmanian government of a Development Proposal and
Environmental Management Plan (DPEMP), a comprehensive plan covering the range
of development and environmental issues. The Company continues to work closely
with the respective government departments, and this plan is close to
completion.
Inevitably, the treatment plant programme has been affected by supply pressures,
but the US manufacturer has been able to keep to the intended manufacturing
schedule, and current indications are that the treatment plant should be
commissioned to begin processing ore from the Scotia operation from the fourth
quarter this year.
Ahead of this, the pilot plant was installed in November, 2005 with a view to
generating bulk samples of treated ore to produce sufficient sapphire and other
co-product material to be able to stimulate and evaluate potential US market
demand. Following certain modifications, this plant is operating very
effectively and is now in a position to commence generating useful revenue from
sales of tin concentrate as well as sapphire.
It had always been the Company's intention to fund the construction of the pilot
plant and the two treatment plants for the Scotia and Endurance mines and
ancillary facilities via debt funding arrangements. In the event, however,
after an extensive review of the range of possible funding alternatives, the
Directors considered that under the prevailing circumstances the raising of
equity funds was the best option for the Company. In December 2005, the Company
successfully raised #2.8m, by way of a private placement of ordinary capital.
At the end of March, 2006 the Company secured a funding facility for A$2.0
million from the ANZ Bank in Australia to assist with the acquisition of mine
plant and equipment.
Good progress has been made over the past year with arrangements for marketing
the planned output from Van Dieman Mines. A six-year contract was signed in July
2005 with tin smelter and refiner, Thaisarco, for the offtake of the Company's
entire tin concentrate output of 1,350-1,500 tonnes contained tin per year at
prevailing market prices.
During the year, the Company also signed a joint marketing agreement with a
major gem wholesaler in the US to develop sales of cut sapphire to leading US
jewellery outlets. Trial samples of sapphire obtained in the pilot plant
programme were shipped to the US for the initial marketing campaign in February,
2006. In parallel, discussions are continuing with buyers of gem quality rough
sapphire in both the US and China.
The past year witnessed further strong growth in most major commodity prices to
levels where many began to question the sustainability of these advances. In
the case of tin, which is a narrower market than that of most other base metals
and therefore potentially more volatile, the price has risen in 2006 to a peak
of US$9,600 per tonne. The current level of around US$8,000 per tonne is
significantly higher than Van Dieman's break-even price on the basis of tin
production alone. Tin market fundamentals remain extremely sound, with steady
demand growth supported by new applications for tin, and few new sources of
mined tin supply on the horizon.
Van Dieman sapphires are recognised by the market to be of extremely high gem
quality. The all-important US jewellery market remains very buoyant and
sapphires continue to be the top selling gemstone by value.
For Van Dieman, 2005 was a year in which a number of important milestones were
reached. The final design and funding arrangements for construction of the
treatment plant were successfully concluded; the revised mine design was
finalised following mine lease approvals; ground facilities at the mine site
have been established; and good progress made with marketing arrangements for
product offtake.
Against this background, it is clear that the Company's share price performance
has yet to reflect fully the positive impact of these developments. The
Company's senior executive management have demonstrated great resourcefulness in
the face of numerous operating challenges over the past year, and have brought
the Company to the point where the start of production can now be anticipated
with confidence in the latter part of 2006. This, together with solid market
expectations for the Company's major products, augurs well for the generation of
steady continued revenue once mining operations are under way.
I thank my fellow Directors for their dedicated hard work and our shareholders
for their continuing support.
Michael Spriggs
Chairman
June, 2006
VAN DIEMAN MINES PLC
CONSOLIDATED PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED 31 DECEMBER 2005
Period from
Year ended 24 May 2004 to
31 December 2005 31 December 2004
# #
TURNOVER - -
Mining expenses (16,978) -
Administrative expenses (709,325) (565,737)
OPERATING LOSS (726,303) (565,737)
Interest received 121,702 6,370
LOSS ON ORDINARY ACTIVITIES
BEFORE TAXATION (604,601) (559,367)
Tax on loss on ordinary - -
activities
LOSS ON ORDINARY ACTIVITIES
AFTER TAXATION AND
LOSS FOR THE YEAR (604,601) (559,367)
Basic loss per share (0.84p) (0.99p)
All amounts relate to continuing activities.
CONSOLIDATED STATEMENT OF TOTAL
RECOGNISED GAINS AND LOSSES
Loss for the financial year (604,601) (559,367)
Exchange gain on consolidation of foreign subsidiary 189,871 115,239
Total movements during the period (414,730) (444,128)
VAN DIEMAN MINES PLC
CONSOLIDATED BALANCE SHEET
31 DECEMBER 2005
Year ended Period ended
31 December 2005 31 December 2004
# #
FIXED ASSETS
Tangible assets 2,349,706 1,597,680
CURRENT ASSETS
Debtors falling due within one year 379,259 49,082
Debtors falling due after one year 70,258 20,460
Cash at bank and in hand 4,123,660 2,603,870
4,573,177 2,673,412
CREDITORS: amounts falling due
within one year 203,327 96,339
NET CURRENT ASSETS 4,369,850 2,577,073
TOTAL ASSETS LESS CURRENT 6,719,556 4,174,753
LIABILITIES
CREDITORS: amounts falling due
after more than one year 168,974 -
NET ASSETS 6,550,582 4,174,753
CAPITAL AND RESERVES
Called up share capital 916,577 716,577
Share premium account 6,492,863 3,902,304
Profit and loss account (858,858) (444,128)
TOTAL EQUITY SHAREHOLDERS' FUNDS 6,550,582 4,174,753
VAN DIEMAN MINES PLC
CONSOLIDATED CASH FLOW STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2005
Year ended Period ended
Note 31 December 2005 31 December 2004
NET CASH OUTFLOW FROM
OPERATING ACTIVITIES 7 (a) (646,625) (382,825)
RETURNS ON INVESTMENTS AND
SERVICING OF FINANCE
Interest received 121,702 6,370
CAPITAL EXPENDITURE AND
FINANCIAL INVESTMENT
Payments to acquire tangible fixed assets (486,619) (85,973)
ACQUISITIONS AND DISPOSALS
Fees on acquisition of investment - (6,885)
Net cash acquired with subsidiary undertaking - 167,138
- 160,253
NET CASH OUTFLOW
BEFORE FINANCING (1,011,542) (302,175)
FINANCING
Issue of ordinary share capital 2,450,559 2,843,032
Receipt of loan funds - 63,013
Finance lease & hire purchase commitments repaid (34,032) -
2,416,527 2,906,045
MANAGEMENT OF LIQUID RESOURCES
Increase in cash on short term deposits (1,712,670) (2,275,152)
(DECREASE)/INCREASE IN CASH (307,685) 328,718
RECONCILIATION OF NET CASH FLOW
TO MOVEMENT IN NET FUNDS
(Decrease)/ increase in cash in the period (307,685) 328,718
Increase in short term deposits 1,712,670 2,275,152
Cash movements from net decrease in debt 34,032 -
Movement in net funds due to cash 1,439,017 2,603,870
Inception of finance leases (177,838) -
Inception of bank loan (55,628) -
Translation differences 114,805 -
MOVEMENT IN NET FUNDS 1,320,356 -
Net funds at 1 January 2005 2,603,870 -
NET FUNDS AT 31 DECEMBER 2005 7 (b) 3,924,226 2,603,870
VAN DIEMAN MINES PLC
NOTES
1. Financial Information
The financial information set out above does not constitute the Company's
statutory financial statements for the year ended 31 December, 2005 but is
derived from those statements. Statutory financial statements for the year
ended 31 December 2005 will be delivered to the Registrar of Companies. The
auditors have reported on the financial statements to 31 December 2005. Their
report was unqualified and did not contain statements under Section 237(2) of
the Companies Act 1985, but includes an emphasis of matter in respect of going
concern.
2. Application of the going concern basis
The group's principal activity is the exploration for tin and sapphires and to
develop and operate mining activities in Northern Tasmania, Australia. In common
with many mining companies, the successful outcome of this project is dependent
upon the granting and maintenance of mining licenses, sourcing adequate finance,
controlling development costs and realising income from production in line with
its business plan.
The group has and continues to make good progress in the process of securing the
orderly development of its principal properties. Applications for the two
mining licenses have been granted and three new exploration licenses were also
granted. Following the #2.8 million equity fund raising in December 2005 the
directors have placed orders for the major plant and are progressing the
project. The directors have prepared profit and cash flow projections for the
period to 31 December 2007 which support the view that the group has adequate
financial resources to develop the existing properties to the point of
profitable production without any need for further fundraising. Although, as
with many projects of this nature there remain uncertainties as to the timing
and amount of forecast cash flows. The directors have concluded that it is
appropriate to prepare the accounts on a going concern basis.
3. Annual report and financial statements
The Annual Report is being posted to shareholders. The Annual General Meeting
will be held on 9th August, 2006. Copies of the Annual Report and of this
announcement will be available at the Company's registered office: 90
Gloucester Place, London W1U 6EH.
4. Dividends
No dividend has been paid or proposed.
5. Loss per share
The calculation of basic loss per share is based on a loss for the period of
#604,601 and on 71,693,807 ordinary shares, being the weighted average number of
ordinary shares in issue during the year.
6. Reconciliation of movements in shareholders' funds and statement of movements in reserves
Share Profit and
Share premium loss
capital reserve account Total
# # # #
Group
At 1 January 2005 716,577 3,902,304 (444,128) 4,174,753
Loss for the year - - (604,601) (604,601)
Exchange gain on consolidation - -
of foreign subsidiary 189,871 189,871
Shares issued 200,000 2,590,559 - 2,790,559
At 31 December 2005 916,577 6,492,863 (858,858) 6,550,582
7. Notes to the Statement of Cash Flows
(a) Reconciliation of operating loss to net cash flow
Year ended Period to
31 December 31 December
2005 2004
# #
Operating loss (726,303) (565,737)
Increase in debtors (39,975) (21,375)
Increase in creditors 76,528 195,185
Depreciation 43,125 9,102
Net cash outflow from operating activities (646,625) (382,825)
(b) Analysis of changes in net funds
At 31 December Cash Other non- cash Exchange At 31 December
2004 flows movements adjustment 2005
# # # # #
Cash 328,718 (307,685) - 11,962 32,995
Debt due after one year - - (55,628) - (55,628)
Finance leases - 34,032 (177,838) - (143,806)
Short term deposits 2,275,152 1,712,670 - 102,843 4,090,665
Total 2,603,870 1,439,017 (233,466) 114,805 3,924,226
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR EAXKDFDFKEFE_SN_RNS5322E_SU_RNSTEST_XX_070052.7387_RZ__RT_R.xRoute.001
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