RNS Number : 2850E
AIM Resources Limited
25 September 2008
AIM RESOURCES LIMITED
25 SEPTEMBER 2008
ANNUAL RESULTS
AIM Resources Limited ("the Company") (ASX:AIM ; AIM:AIMR) is pleased to announce its annual results for the year ended 30 June 2008.
The full Annual Report is available on the ASX website www.asx.com.au under the Company's trading code AIM and on the Company's website
www.aimresources.com.au .
Should you require further information please contact:
Scott Lowe
Managing Director
Ph: + 61 2 9357 9000
Fiona Owen
Grant Thornton UK LLP
Ph: +44 20 7383 5100
www.aimresources.com.au
MANAGING DIRECTOR'S REPORT AND OPERATIONS REVIEW
Dear Shareholders,
I am sure that everyone associated with AIM Resources would agree with the Chairman's assessment that 2007/2008 has been a year of
unprecedented challenge and difficulty. Adverse economic factors, most notably falling zinc prices and the downturn in global financial
markets, have presented an extremely difficult business environment for our company. At the same time, a number of internal and corporate
issues had to be addressed and resolved by management.
However, the problems and challenges have been dealt with in a responsible and professional manner, and the Company is now moving ahead
with a plan to recover value through our four key assets via a sound business strategy.
Health, Safety and Environment
Throughout the year in all AIM Resources' operations, the Company maintained its commitment to health, safety and the environment.
While safety standards and procedures were given utmost priority, tragically an employee of a drilling contractor at the Mumbwa project
in Zambia was fatally injured in an accident involving a trailer. The relevant authorities in Zambia were immediately notified, and the
incident has been fully investigated, with additional measures taken urgently to prevent a recurrence.
Malaria remains a significant concern to our workers and the Company. Appropriate programs aimed at preventing the disease and to treat
promptly those infected were set up and implemented.
There were no serious environmental incidents or prosecutions reported during the year.
Community
AIM Resources is committed to sustainable development through active engagement with the communities in which we operate and to working
on projects that benefit local people.
The Literacy Centre at the village of Perkoa, Burkina Faso, in its second year of operation, trained 69 people, including 39 women and
30 men. This program started in 2006 with two teachers in two main local languages. In 2006/2007, 72 people were trained. It should be noted
that this program is conducted in partnership with the Provincial Department of Basic Education and Teaching, which assures the quality of
training through supervision. The Company plans to build larger classrooms in the future to involve more people.
As part of its portable water supply program, the Company contributed to the establishment of a borehole equipped with a water tank and
operated with solar panels in the local village. An additional five boreholes will be drilled next year.
Local authorities have approved the construction of a primary school, while approval for a health clinic is still pending. Once all the
required authorisations are received, the Company will begin building these important infrastructure projects for the village.
Perkoa Zinc Mine Project - Burkina Faso
The most significant business challenges of the year were faced at the Perkoa Zinc Mine Project in Sanguie Province, Burkina Faso.
A number of positive outcomes were achieved on the project, including significant improvements to production, grade and operating cost
parameters in the business case, achievement of schedule targets, and successfully overcoming operational problems. However, these
improvements were not sufficient to off-set the more than 50 per cent reduction in the price of zinc.
.
Key achievements:
* 33% increase in process plant design capacity to 60kt / month ROM.
* 8% increase in life of mine production plan to 6.338 Mt ROM.
* Increase in ROM average life of mine grade from 13.2% to 13.8%.
* Reduction in downstream costs.
* Establishment of site facilities.
* Commencement of the main access decline.
* Manufacture of process plant components including ball mill.
Key Challenges and Actions Taken:
Box-cut damage
Early in the year the box-cut was damaged by extremely heavy and abnormal rainfall. Additional stabilisation and shotcreting work has
now been completed to allow the box-cut to withstand heavier rainfall in the future. Pumping facilities and drainage have also been
improved.
Competent Persons Report
In December 2007, serious errors in the financial modeling contained in a Competent Persons Report prepared by Minxcon (Pty) Ltd of
South Africa were discovered by AIM Resources' management.
SRK Consulting ("SRK") was subsequently commissioned to correct these errors and to provide an accurate and up-to-date report that was
completed in March 2008. This report confirmed previous technical aspects of the project and determined the Net Present Value (NPV) of the
project to be USD56M at a 10 per cent real discount rate using a zinc price of USD2,600.
A mine optimisation process completed later improved production and grade and lifted the NPV to USD105M based on the same zinc price.
This updated analysis, also validated by SRK, showed that the project currently needs an average zinc price of USD2,100 over the life of
mine to achieve a 10 per cent return.
Downturn in Zinc Prices and Financial Markets
Zinc prices plummeted more than 50 per cent during the year with a serious impact on the near-term viability of the project. Global
financial markets also weakened considerably. The combination of these two factors meant that additional capital required to complete
construction could not be raised on terms acceptable to the Company.
The changing market forces have had repercussions across the zinc industry, with numerous examples of companies either putting
businesses on care and maintenance or closing mines completely. During the year, AIM Resources' Management engaged UBS AG to assist the
Company to identify and evaluate all possible strategic alternatives for the project.
Looking ahead
Subsequent to year-end, the Perkoa Project has been put on hold until a suitable funding package can be found, a package that will not
only allow the project to start production when the zinc market strengthens, but also to provide an adequate level of price-risk
mitigation.
Burkina Faso Exploration
Key achievements:
* Three new gold prospecting tenements secured.
* Versatile Time-Domain Electro Magnetics (VTEM) survey completed.
* Independent geologists report gives positive opinion on potential.
During the year, the Company added the Naboue, Bonzan and Fafo exploration leases to its Burkina Faso portfolio. Together the three
leases cover approximately 539 square km, and lie on strike about 20 kilometres from the former Poura Gold Mine that produced in excess of
600,000 ounces of gold.
A VTEM survey was also completed over the Poa and Guido leases that cover 310 square kilometres and surround the Perkoa mining lease. An
interpretation of the data was conducted by Condor Consulting Inc. and, following year-end, its report was received that recommended nine
high priority targets for drilling and further exploration.
Looking ahead
Independent geological consultants reviewed the five Burkina Faso exploration properties. Their report, received after year-end,
concluded that "The Perkoa gold targets clearly merit a high-priority exploration effort".
The Company is optimistic about exploration in Burkina Faso and intends to increase efforts to assess the potential for economic
deposits of mineralisation through a detailed exploration program.
Mumbwa Iron Oxide Copper-Gold (IOCG) Project - Zambia
Key achievements:
* Phase 3 drilling program established and drilling targets met.
* Assays from initial holes confirm presence of copper (Cu) and gold (Au).
* Independent geologists give positive report of project potential.
* Negotiation of new JV agreement with partner BHP Billiton.
At Mumbwa, the Company contracted MSA Geoservices to conduct a cored drilling program over the anomalies identified by BHP Billiton's
Solid Earth* technology. This Phase 3 drilling program targeted around 10,200 metres. At year-end, 5,592 metres had been drilled, which was
to schedule.
Also during the year, the Joint Venture Partners renegotiated the terms and conditions of the JV Agreement. The original agreement
involved AIM Resources fully funding the first three phases of a five-phase exploration program, in order to earn a 70 per cent interest in
the project. BHP Billiton retained an option to fully fund the next two phases (Pre-feasibility and Feasibility Studies) to earn back an
additional 50 per cent equity, resulting in a JV in which BHP Billiton would hold 80 per cent and AIM Resources 20 per cent. Each party
would then share in future project costs and benefits on a pro-rata equity basis.
The new agreement inserts both an additional drilling phase and a Concept Study phase. It has been agreed that additional drilling is
warranted in order to adequately define the scale and scope of the Mumbwa project. A number of other commercial changes have been made,
including the opportunity for AIM Resources to have 150 per cent of its costs incurred for Phases 1-3 reimbursed.
Independent geological consultants reviewed the project and gave a very positive opinion about the project's potential. In its
conclusion, the report said that the authors believe "The project offers an exceptional opportunity to define and develop one of Africa's
first important IOCG deposits.".
Looking ahead
The laboratory-service provider conducting assays was changed to provide better turn-around time. However, operational delays in
preparation and laboratory work meant that results are only now beginning to be made available. Encouraging assay results for holes S36-007,
S36-009 and S36-010 were received and announced on 5 August 2008 and 22 September 2008.
AIM Resources remains enthusiastic and positive about the Mumbwa project. Having now signed a term-sheet, work is underway to finalise
and sign the new JV Agreement. We look forward to continuing our partnership with BHP Billiton on this exciting project.
Mokopane Project - South Africa
Key achievements:
* Application made to renew New Order Prospecting Rights
* Development of exploration program and budget
The Company's Mokopane Nickel-Platinum Project, in the Limpopo Province of South Africa, contains a mineralised Platreef zone on the
northern limb of the Bushveld Complex. The project area includes five known mineralised areas, of which one in the south-west, has a
JORC-compliant Inferred Resource estimated at 39.7 Mt at 0.146% nickel, 0.085% copper, 0.22 g/t platinum and 0.33 g/t palladium.
The New Order Prospecting Permit required renewal during the year, and an application was made to the relevant authority in March 2008.
Confirmation has been received from the Department of Minerals and Energy that the application is currently being processed. The renewal is
expected to be formalised in the near future.
Looking ahead
The Company has developed a draft budget for exploration that includes a drilling program to further define the resource status with the
view of establishing a JORC-compliant reserve.
The next phase of exploration will begin once the license renewal has been received. In parallel with this process, it has been agreed
with the Company's 26 per cent Black Economic Empowerment partner, Matimba Resources, that a review of strategic options for the Mokopane
asset will be undertaken.
Corporate
Management and Board
A number of Management and Board changes were made during the year.
Mr Chris Brown was appointed Chief Financial Officer and Company Secretary in August 2007. Chris' experience in corporate finance,
accounting, management and governance have been invaluable in establishing sound business practices within AIM Resources.
In November 2007, I was employed as Chief Operating Officer. I have over 25 years' experience in the mining industry in a variety of
senior management roles. Since joining the Company I have focused on instituting a range of operational, financial and general management
improvements. In June 2008, I was appointed to the Board as Chief Executive Officer and have since been appointed Managing Director of the
Company.
Mr Marc Flory resigned from the Company in April 2008.
Legal
Litigation brought by North Sound Legacy International Ltd, a substantial shareholder in the Company, against AIM Resources was resolved
satisfactorily in July 2008.
In July 2008, the Company initiated legal proceedings against former Managing Director Marc Flory, together with other parties, for
alleged breaches of his duties as a Director of the Company.
Company Outlook
AIM Resources has experienced a very difficult year, and while much work remains to be done in a market of continuing uncertainty, I
believe we can now look to the future with a sense of cautious optimism, based on a portfolio of attractive assets with growth potential.
Recent decisive action by Management regarding the Perkoa Project has preserved cash reserves that will allow the Company to conduct
business for a number of years. However, a primary objective now is to find a suitable funding package to bring Perkoa into operation and
provide an income stream. Perkoa's viability depends not only on an improvement in zinc prices, but also on suitable funding that includes
price-risk mitigation as a central component.
In addition to securing a future for Perkoa, our focus will be on the following priorities:
* Communicating the results of assays for the Mumbwa project and working with partner BHP Billiton on ongoing evaluation and
assessment of the project;
* Working on the five exploration leases in Burkina Faso, through a structured drilling and exploration program;
* Evaluating strategic options to maximise value for the Mokopane project, and
* Actively seeking opportunities to add to AIM Resources' portfolio of exploration projects and tenements.
While the coming year will no doubt also present challenges, I have full confidence that we have in place the right people and a
business strategy that makes the most of our assets, and which provides a sound approach to dealing with a dynamic global economy.
I look forward to managing this Company and being part of building a better future on behalf of our shareholders and other key
stakeholders.
Scott Lowe
Managing Director
INCOME STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2008
Note Consolidated Parent
2008 2007 2008 2007
$ $ $ $
Revenue 2 4,943,058 713,568 4,941,321 713,568
Other income 3 - 1,462,154 - 1,462,154
Employee benefits expense (2,194,686) (1,456,074) (2,194,686) (1,456,074)
Depreciation (70,930) (47,675) (70,930) (47,675)
Exploration expenditure (3,680,239) (2,254,186) (2,334,354) (2,254,186)
written off
Other expenses (3,764,657) (5,815,886) (3,819,631) (2,630,465)
Loss before income tax 4 (4,767,454) (7,398,099) (3,478,280) (4,212,678)
Income tax expense 5 - - - -
Loss attributable to members (4,767,454) (7,398,099) (3,478,280) (4,212,678)
of the parent entity
Basic earnings per share 23 (0.46) (1.07)
(cents per share)
Diluted earnings per share (0.36) (0.88)
(cents per share)
BALANCE SHEETS
AS AT 30 JUNE 2008
Note Consolidated Parent
2008 2007 2008 2007
$ $ $ $
CURRENT ASSETS
Cash and cash equivalents 6 57,718,103 12,007,750 57,272,817 11,819,049
Trade and other receivables 7 374,515 124,081 252,646 72,308
Inventories 8 33,292 60,282 - -
Other current assets 9 36,856 1,500 - -
TOTAL CURRENT ASSETS 58,162,766 12,193,613 57,525,463 11,891,357
NON-CURRENT ASSETS
Trade and other receivables 10 671,716 454,952 57,737,707 23,628,929
Financial assets 11 9,500 14,500 5,895,764 5,900,764
Property, plant and equipment 12 990,120 54,864 95,831 54,864
Deferred exploration costs 13 4,464,472 4,464,472 - -
Mine development assets 14 72,155,730 23,148,026 - -
Other non-current assets 15 5,689 2,729 - -
TOTAL NON-CURRENT ASSETS 78,297,227 28,139,543 63,729,302 29,584,557
TOTAL ASSETS 136,459,993 40,333,156 121,254,765 41,475,914
CURRENT LIABILITIES
Trade and other payables 16 18,516,744 6,868,267 1,504,309 3,707,069
Provisions 17 248,701 263 248,701 263
TOTAL CURRENT LIABILITIES 18,765,445 6,868,530 1,753,010 3,707,332
NON-CURRENT LIABILITIES
Rehabilitation provision 17 1,000,000 - - -
TOTAL NON-CURRENT LIABILITIES 1,000,000 - - -
TOTAL LIABILITIES 19,765,445 6,868,530 1,753,010 3,707,332
NET ASSETS 116,694,548 33,464,626 119,501,755 37,768,582
EQUITY
Issued capital 18 163,606,090 78,389,637 163,606,090 78,389,637
Reserves 2,715,851 (65,072) (4,533) 467
Accumulated losses (49,627,393) (44,859,939) (44,099,802) (40,621,522)
TOTAL EQUITY 116,694,548 33,464,626 119,501,755 37,768,582
Statement of Changes in Equity
for the year ended 30 JUNE 2008
Consolidated Issued Accumulated Financial Asset Foreign Currency Total
Capital Losses Reserve Translation Reserve Equity
$ $ $ $ $
Balance at 1 July 2007 51,431,750 (37,461,840) 970,750 - 14,940,660
Revaluation available-for-sale
assets - - 467 - 467
Transfer to income statement
- - (970,750) - (970,750)
Issue of share capital 25,429,815 - - - 25,429,815
Exercise of options 1,528,072 - - - 1,528,072
Adjustment for translation of
foreign controlled entities - - - (65,539) (65,539)
Loss attributable to members
of parent entity - (7,398,099) - - (7,398,099)
Loss attributable to minority
interests - - - - -
Balance at 30 June 2007 78,389,637 (44,859,939) 467 (65,539) 33,464,626
Revaluation available-for-sale
assets - - (5,000) - (5,000)
Transfer to income statement
- - - - -
Issue of share capital 85,038,757 - - - 85,038,757
Exercise of options 177,696 - - - 177,696
Adjustment for translation of
foreign controlled entities - - - 2,785,923 2,785,923
Loss attributable to members
of parent entity - (4,767,454) - - (4,767,454)
Loss attributable to minority
interests - - - - -
Balance at 30 June 2008 163,606,090 (49,627,393) (4,533) 2,720,384 116,694,548
Statement of Changes in Equity
for the year ended 30 JUNE 2008
Parent Issued Accumulated Financial Asset Total
Capital Losses Reserve Equity
$ $ $ $
Balance at 30 June 2006 51,431,750 (36,408,844) 970,750 15,993,656
Revaluation available-for- 467
sale assets - - 467
Transfer to income
statement - - (970,750) (970,750)
Issue of share capital 25,429,815 - - 25,429,815
Exercise of options 1,528,072 - - 1,528,072
Loss attributable to members
of parent entity - (4,212,678) - (4,212,678)
Balance at 30 June 2007 78,389,637 (40,621,522) 467 37,768,582
Revaluation available-for- (5,000)
sale assets - - (5,000)
Transfer to income -
statement - - -
Issue of share capital 85,038,757 - - 85,038,757
Exercise of options 177,696 - - 177,696
Loss attributable to members -
of parent entity - (3,478,280) (3,478,280)
Balance at 30 June 2008 163,606,090 (44,099,802) (4,533) 119,501,755
CASH FLOW STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2008
Note Consolidated Parent
2008 2007 2008 2007
$ $ $ $
Cash flows from operating
activities
Payments to suppliers and (5,500,880) (977,883) (5,411,785) (762,484)
employees
Interest received 4,796,197 676,470 4,794,461 676,470
Other Income 3,622 3,286 3,622 3,286
Net cash used in operating 28 (701,061) (298,127) (613,702) (82,728)
activities
Cash flows from investing
activities
Receipts/(payments) from - - (37,243,110) (22,076,076)
controlled entities
Payments for investments - (43,975) - (43,975)
Receipts from sale of - 1,516,693 - 1,516,693
investments
Payments for exploration,
evaluation and development (37,398,945) (23,826,452) (1,617,871) (2,254,186)
Payments for plant and (1,016,854) (15,240) (111,897) (15,240)
equipment
Payments for security deposits (214,035) (106,025) (900) -
Net cash used in investing (38,629,834) (22,474,999) (38,973,778) (22,872,784)
activities
Cash flows from financing
activities
Proceeds from share issues 90,197,047 28,602,111 90,197,047 28,602,111
Share issue costs (5,155,799) (1,919,224) (5,155,799) (1,919,224)
Net cash provided by financing 85,041,248 26,682,887 85,041,248 26,682,887
activities
Net increase in cash held 45,710,353 3,909,761 45,453,768 3,727,375
Cash and cash equivalents at 12,007,750 8,097,989 11,819,049 8,091,674
beginning of the year
Cash and cash equivalents at 6 57,718,103 12,007,750 57,272,817 11,819,049
end of the year
This information is provided by RNS
The company news service from the London Stock Exchange
END
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