RNS Number:7716Z
AuIron Energy Ld
1 March 2001
AUIRON ENERGY
ACN 000 754 174
Half-Year Financial Report
31 December 2000
DIRECTORS' REPORT
The directors present their report together with the consolidated financial
report for the half-year ended 31 December 2000 and the review report thereon.
DIRECTORS
The directors of the company during or since the end of the half-year are:
Name Period of Directorship
Mr Alfred L Paton Director since 30/11/98
B Eng, FAIM, MIE, FAusIMM, FAICD Appointed Chairman 1998
Neill F Arthur Director since 30/10/87
Eur Ing. BE(Chem) Hons, C Eng, FIChE, Appointed Managing Director 1998
FAusIMM, FAICD
Louis A Clinton Director since 30/11/98
Appointed Deputy Chairman 1998
Dr Michael Andrews Director since 21/09/94
B.Sc. Ph.D., MAusIMM
Warwick J Higgs Director since 01/06/94
FCA, FIAA
Robin H Chambers Director since 16/12/99
BA LLB (Hons)(Melb) LLM (Duke)
REVIEW OF OPERATIONS
The principal continuing activities of the consolidated entity consisted of the
construction of a demonstration iron smelter in South Australia and exploration
for base metals and hydrocarbons in Australia and the United Kingdom.
SASE South Australia (90% AuIron)
Demonstration Plant Operations Commenced
The first operating phase of the Whyalla demonstration plant began in November
with first pig iron produced on 24 November 2000. The scheduled shutdown of
operations began shortly before Christmas to allow for employee leave and
planned plant modifications during January 2001. Operations recommenced on 4
February 2001.
Initial operations were very encouraging with high quality pig iron produced and
high post combustion achieved. Some difficulties were experienced mainly with
ancillary equipment, especially the coal delivery system. Appropriate
modifications have been implemented.
SASE Iron Ore Resources Upgraded Status
During the December Quarter geological consultants Hellman & Schofield Ltd
completed independent ore resource estimates for SASE's Kestrel and Buzzard iron
ore deposits, located in the Hawk's Nest area, 115 km southeast of Coober Pedy,
which confirmed there is sufficient resources for at least 20 years.
Ingomar Coal Trial Pit Tenders Called
The Company has called tenders for the construction of a trial exploration pit
on the Ingomar portion of the Phillipson coalfield. The purpose is to extract a
bulk sample of coal from the Rankin seam for testing in the SASE demonstration
plant. This seam is the likely source of coal for commercial operations.
Ballymoney, Northern Ireland (100% AuIron)
In Northern Ireland, the Company's Ballymoney 660 million tonnes coal resource
represents the largest single open cast coal resource in the UK. It has low cost
mining conditions which confer the advantage for competitive base load, on site
electric power generation. Northern Ireland has some of the UK's most expensive
electricity; Ballymoney based power is expected to generate some of the
cheapest.
Electricity Market Study
UK energy consultancy, Primark WEFA, was appointed to undertake an independent
study of the electricity market in Northern Ireland and the Republic of Ireland
in the context of an "all island" integrated market.
The study is examining forecast generating capacity requirements in the context
of competitive fuel prices, principally imported natural gas and imported
internationally traded steaming coal.
Independent Mining Study Update
Independent mining consultants were appointed to undertake a detailed review of
proposed mining strategies and capital and operating costs for the production of
fuel to supply three different power station capacities.
Power Station Partner
In December 2000 the Company and ABB Energy ventures amicably terminated the
long standing 50/50 power station joint venture, following ABB's decision to
sell its entire worldwide power business to Alstom of France.
The Company has been approached by five international power groups to join the
project. Upon completion of the WEFA and mining studies, negotiations to
introduce a new power station partner will begin, based on the latest
competitive market assessments.
Indonesia
On 4 December 2000, AuIron completed negotiations for its withdrawal from its
Indonesian gold and copper exploration projects through the sale of all shares
in its subsidiary MM Gold Pty Ltd, the holding company for all the Indonesian
projects, to mining contractor Icon Enterprises Ltd.
Group Results
The operating loss of the economic entity for the half year after income tax and
abnormal item was $ 4,960,261 (Half Year ending 31 December 1999 $11,637,718).
The economic entity operates in one industrial segment, being exploration for
base metals and hydrocarbons.
Signed at Sydney on in accordance with a resolution of the Directors.
W J Higgs
Director
DIRECTORS' DECLARATION
In the opinion of the directors of AuIron Energy Limited:
1 The financial statements and notes set out on pages 5 to 11:
(a) give a true and fair view of the financial position of the consolidated
entity as at 31 December 2000 and of its performance, as represented by
the results of its operations and cash flows for the half-year ended on
that date; and
(b) comply with Accounting Standard AASB 1029 "Half-Year Accounts and
Consolidated Accounts" and the Corporations Regulations; and
2. at the date of this declaration there are reasonable grounds to believe that
the company will be able to pay its debts as and when they become due and
payable.
Dated at Sydney this day of 2001
Signed in accordance with a resolution of the directors.
W J Higgs
Director
AUIRON ENERGY LIMITED AND ITS CONTROLLED ENTITIES ACN: 000 754 174
Balance Sheet
as at 31 December 2000
CONSOLIDATED
Note 31 Dec 30 June 31 Dec
2000 2000 1999
CURRENT ASSETS
Cash 3 16,292,246 12,747,759 12,815,734
Receivables 207,878 29,690 17,211
Other 5,665 19,265 -
TOTAL CURRENT ASSETS 16,505,789 12,796,714 12,832,945
NON-CURRENT ASSETS
Exploration expenditure 4 20,145,058 18,595,506 17,706,277
Leased Assets 252,574 269,171 -
Property, plant and equipment (net) 123,091 303,867 822,749
Demonstration Plant 16,097,589 8,943,331 -
Intangibles 5 5,561,778 5,708,141 5,850,734
TOTAL NON-CURRENT ASSETS 42,180,090 33,820,016 24,379,760
TOTAL ASSETS 58,685,879 46,616,730 37,212,705
CURRENT LIABILITIES
Creditors 1,439,249 5,251,641 124,577
Borrowings 30,096 30,465 -
Provisions 280,694 131,338 139,900
TOTAL CURRENT LIABILITIES 1,750,039 5,413,444 264,477
NON CURRENT LIABILITIES
Government Grant 6,205,713 5,830,842 -
Borrowings 224,732 239,149 -
TOTAL NON-CURRENT LIABILITIES 6,430,445 6,069,991 -
TOTAL LIABILITIES 8,180,484 11,483,435 264,477
NET ASSETS 50,505,395 35,133,295 36,948,228
SHAREHOLDERS' EQUITY
Share Capital 6 83,210,740 65,217,089 64,865,024
Reserves 5,694,842 3,098,988 3,254,096
Accumulated losses (39,280,648) (34,320,387)(32,389,525)
SHAREHOLDERS' EQUITY
ATTRIBUTABLE TO MEMBERS OF
AUIRON ENERGY LIMITED 49,624,934 33,995,690 35,729,595
OUTSIDE EQUITY INTERESTS IN
CONTROLLED ENTITIES 880,461 1,137,605 1,218,633
TOTAL SHAREHOLDERS' EQUITY 50,505,395 35,133,295 36,948,228
The accompanying notes form part of these financial statements.
AUIRON ENERGY LIMITED AND ITS CONTROLLED ENTITIES ACN: 000 754 174
Profit and Loss Account
for the half year ended 31 December 2000
CONSOLIDATED
Note Dec 2000 Dec 1999
$ $
Revenue
Interest received 442,517 27,078
Operating loss before abnormal items and
income tax 2 (2,164,372) (1,252,717)
Abnormal item before income tax 2 (2,795,889) (10,385,001)
Operating loss before income tax (4,960,261) (11,637,718)
Income tax attributable to operating loss - -
Operating loss after income tax (4,960,261) (11,637,718)
Outside equity interests in operating
loss after income tax - -
Operating loss after income tax attributable to (4,960,261) (11,637,718)
members of the Company
Accumulated losses at the
beginning of the half year (34,320,387) (20,751,807)
Accumulated losses at the end of
the half year (39,280,648) (32,389,525)
The accompanying notes form part of these financial statements.
AUIRON ENERGY LIMITED AND ITS CONTROLLED ENTITIES Note ACN: 000 754 174
Statement of Cash Flows
for the half year ended 31 December 2000
CONSOLIDATED
Note Dec 2000 Dec 1999
$ $
CASH FLOWS FROM OPERATING
ACTIVITIES
Payments for exploration expenditure
and to suppliers and employees (3,245,423) (1,951,939)
Interest received 442,517 27,078
Interest paid - (21,949)
Net cash used in operating activities (2,801,175) (1,946,810)
CASH FLOWS FROM INVESTING
ACTIVITIES
Net funds acquired on acquisition
of SASE P/L - 1,090,745
Payment for demonstration plant,
property, plant and equipment (10,990,497) (9,495)
Net cash provided by ( used in ) (10,990,497) 1,081,250
investing activities
CASH FLOWS FROM FINANCING
ACTIVITIES
Grant from Federal Government 412,358 -
Repayment of borrowings - (750,000)
Proceeds from issue of
securities 16,914,650 13,022,823
Net cash provided by financing activities 17,327,008 12,272,823
Net increase (decrease) in cash 3,535,336 11,407,263
Cash at the beginning of the financial period 12,747,759 1,407,059
Effect of exchange rate changes on the balances
of cash held in foreign currencies at the
beginning of the financial year 9,151 1,412
Cash at 31 December 3 16,292,246 12,815,734
The accompanying notes form part of these financial statements.
AUIRON ENERGY LIMITED AND ITS CONTROLLED ENTITIES ACN: 000 754 174
Notes to and forming part of the Financial Statements
for the half year ended 31 December 2000
1. BASIS OF PREPARATION OF HALF-YEAR FINANCIAL STATEMENTS
The half-year consolidated financial report is a general purpose financial
report which has been prepared in accordance with the requirements of the
Corporations Law, Accounting Standard 1029 "Half-Year Accounts and
Consolidated Accounts" and Urgent Issues Group consensus views. It is
recommended that this half-year financial report be read in conjunction with the
30 June 2000 Annual Financial Report and any public announcements by AuIron
Energy Limited and its Controlled Entities during the half-year in accordance
with continuous disclosure obligations arising under the Corporations Law.
It has been prepared on the basis of historical costs and except where stated,
does not take into account changing money values or current valuations of
non-current assets.
These accounting policies have been consistently applied by each entity in
the economic entity and, except where there is a change in accounting policy,
are consistent with those of the previous year.
The carrying amounts of non-current assets are reviewed to determine whether
they are in excess of their recoverable amount at the end of the half-year.
If the carrying amount of a non-current asset exceeds the recoverable amount,
the asset is written down to the lower amount. In assessing recoverable amounts
the relevant cash flows have not been discounted to their present value.
Exploration and evaluation expenditure
Exploration and evaluation expenditure incurred is accumulated in respect of
each separate identifiable area of interest. These costs are only carried
forward where right of tenure of the area of interest is current and to the
extent that they are expected to be recouped through successful development
and commercial exploitation, or alternatively, sale of the area or where
activities in the area have not yet reached a stage which permits reasonable
assessment of the existence of economically recoverable reserves.
Accumulated costs in relation to an abandoned area are written off in full
against profit in the period in which the decision to abandon the area is made.
Government Grants received relating to exploration activities are offset against
exploration and evaluation expenditure.
Goodwill
Goodwill represents the excess of the purchase consideration plus incidental
costs over the fair value of identifiable net assets acquired on the acquisition
of a controlled entity.
Goodwill associated with the purchase of equity in SASE Pty Ltd is amortised
on a straight line basis over 20 years. The policy regarding amortisation will
be reviewed on a regular basis as the project is in developmental phase.
Cash
For the purpose of the statements of cash flows, cash includes
i) cash on hand and at call deposits with banks or financial institutions,
net of bank overdrafts; and
ii) investments in money market instruments with less than 14 days to
maturity.
Demonstration Plant
Costs associated with the construction of the iron ore smelting demonstration
plant are capitalised until such time as an assessment of the commercial
viability of the plant is determined. If a decision is made to proceed to
commercial development of smelting operations, the accumulated costs will be
amortised against future revenue streams.
AUIRON ENERGY LIMITED AND ITS CONTROLLED ENTITIES ACN: 000 754 174
Notes to and forming part of the Financial Statements
for the half year ended 31 December 2000
CONSOLIDATED
Dec 2000 Dec 1999
$ $
2. OPERATING LOSS
a) The operating loss before income tax
has been determined
after:
(i) Charging as expenses
Interest paid to other persons - (21,949)
(ii) Crediting as income
Interest received or receivable:
- other corporations 442,517 27,708
b) Revenue
Other revenue
(i) interest received 442,517 27,708
c) Abnormal Items -
Write- Off Indonesian Investment (2,583,165) -
Write -Off Indonesian Exploration
Expenditure (212,724) (10,385,001)
(2,795,889) (10,381,001)
On 4 December 2000, Aulron completed negotiations for its withdrawal from
its Indonesian gold and copper exploration projects through the sale of all
shares in its subsidiary MM Gold Pty Ltd, the holding company for all the
Indonesian projects. The company's Indonesian office was closed in October
2000. Expenditures in the half year relate primarily to the closure of the
office and totalled $212,724.
Consideration for the sale is the cash payment of US$250,000 payable on the
earlier of either 4 September 2001 or commencement of construction of the
Way Linggo gold mine, and 2% net smelter royalties on MM Gold's share of any
future production from the Tapaktuan and Salawati exploration projects
located in Sumatra and Irian Jaya.
The consideration has not been recognised in the financial statements due to
the current political uncertainty in the region. The amount will be
recognised at the time of receipt.
In 1997 the Company concluded discussions with Teck Corporation (a joint
venture partner), whereby Teck would acquire 9% of the capital of MM Gold
Pty Ltd ("MMG") for CDN$3 million. However, in the event that Aulron Energy
decided not to float Pacific Goldfields Limited ("PGU') or MMG by 9 July
2000, Aulron Energy would purchase the Teck interest in MMG by the issue
of shares in Aulron Energy to the value of CDN$3 million.
Under the terms of the agreement with Teck Corporation set out above and by
reason of the fact that there was no float of MMG or PGL within the specified
timeframe, Aulron Energy was required to purchase the Teck interest in MMG
by the issue of shares in Aulron Energy.
As a result of the issue of Auiron Energy Ltd shares pursuant to the
agreement with Teck and the subsequent sale of all of the shares in MMG on
4 December 2000 the group recognised a loss of $2,583,165.
CONSOLIDATED
Dec June Dec
2000 2000 2000
3. CASH
Cash at bank and on hand 96,340 258,231 46,629
Short-term deposits 16,195,906 12,489,528 12,769,105
16,292,246 12,747,759 12,815,734
AUIRON ENERGY LIMITED AND ITS CONTROLLED ENTITIES ACN: 000 754 174
Notes to and forming part of the Financial Statements
for the half year ended 31 December 2000
4. EXPLORATION EXPENDITURE CONSOLIDATED
Dec June Dec
2000 2000 1999
$ $ $
Expenditure carried forward in
respect of areas of interest in the
exploration and evaluation phase:
Expenditure relating to projects
current 1 July 18,595,506 27,179,891 27,179,891
Add: Expenditure during the half
year 599,643 2,293,534 356,457
Exchange difference on opening
balances 949,909 416,811 554,930
Less: Write-off Indonesian Exploration
Expenditure - (10,544,730) (10,385,001)
South Australian Government Grant - (750,000) -
Expenditure carried forward
at 31 December 20,145,058 18,595,506 17,706,277
The above exploration and evaluation expenditure has been incurred largely in
respect of coal deposits in Australia and Northern Ireland. Specifically the
costs relate to drilling, the completion of reports dealing with geological,
hydrological, geotechnical and environmental studies, together with mine plans
and capital and operating cost studies.
The ultimate recoupment of this expenditure is dependent on the successful
development and commercial exploitation or, alternatively, sale of these areas
of interest.
CONSOLIDATED
Dec June Dec
2000 2000 1999
$ $ $
5. INTANGIBLES
Goodwill on the purchase of SASE Pty Ltd
(at cost) 5,854,504 5,854,504 5,850,734
Less : Accumulated amortisation 292,726 146,363 -
5,561,778 5,708,141 5,850,734
6. SHARE CAPITAL
a) Issued and paid up capital
253,431,386 ordinary shares 83,210,740 65,207,589 47,109,835
950,000 ordinary shares of 25 cents
each paid to 1 cent - 9,500 9,500
b) Share premium reserve - - 17,745,689
83,210,740 65,217,089 64,865,024
c) At 31 December 2000, the Company had on issue 950,000 options exercisable on
or before 30 June 2001 at 24 cents per share, 7,500,000 options exercisable
on or before 31 December 2004 at various prices per share, 500,000 options
exercisable on or before 30 November 2003 at 30 cents per share, and
1,060,000 options exercisable on or before 18 October 2005 at 30 cents per
share and 5,300,000 options exercisable on or before 8 September 2005.
CONSOLIDATED
Dec Dec
2000 1999
7.EARNINGS PER SHARE
Basic earnings loss per share (cents per share) (2.1) (8.0)
Weighted average number of ordinary shares on
issue used in the calculation of basic
earnings per share 238,290,548 144,890,299
The diluted earnings per share has not been reported above as it is not
materially different from the basic earnings per share.
AUIRON ENERGY LIMITED AND ITS CONTROLLED ENTITIES ACN 000 754 174
Notes to and forming part of the Financial Statements
for the half year ended 31 December 2000
8. COMPARATIVE INFORMATION
The information presented for the half year ended 31 December 1999 has been
reviewed. The balance sheet at 30 June 2000 has been audited
9. EVENTS SUBSEQUENT TO BALANCE DATE
On 12 February 2001 the company announced a 1 for 4 pro-rata Rights Issue
for a total subscription price of 90 cents to all shareholders to raise
sufficient funds for the next phase of development of its projects.
The subscription price of 90 cents comprises:
- 1 ordinary share in Aulron Energy Limited fully paid up ranking pari passu
with existing ordinary fully paid shares for a subscription price of 87.5
cents, and
- An entitlement to 1 ordinary share in the Ballymoney (Northern Ireland)
Project Company for 1 pence (2.5 cents).
The Ballymoney (Northern Ireland) project will be separately listed on AIM
and in Germany.
As a consequence of the Rights Issue approximately 20% of the Ballymoney
(Northern Ireland) Project Company will be owned directly by shareholders
participating in the Aulron Rights Issue.
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