BLACK MOUNTAIN RESOURCES LIMITED
AND CONTROLLED ENTITIES
ABN 55 147 106 974
INTERIM FINANCIAL REPORT
FOR THE HALF-YEAR ENDED
31 DECEMBER 2013
Contents
Corporate Information
This financial report includes the consolidated financial statements of Black
Mountain Resources Limited and controlled entities (`Group'). The Group's
functional presentation currency is AUD ($).
A description of the Group's operations and of its principal activities is
included in the review of operations and activities in the Director's Report.
Directors Auditors
Mr Peter Landau - Executive Chairman RSM Bird Cameron Partners
Mr John Ryan - Executive Director 8 St Georges Terrace
Ms Shannon Robinson - Executive Director Perth WA 6000
Mr Jason Brewer - Non-Executive Director
Solicitors
Company Secretaries
Steinepreis Paganin
Ms Shannon Robinson Level 4, 16 Milligan Street
Ms Rebecca Sandford Perth WA 6000
Registered Office Stock Exchange
Ground Floor, 1 Havelock Street Australian Securities Exchange
West Perth WA 6005 Exchange Plaza
2 The Esplanade
Share Registry Perth WA 6000
Computershare Investor Services ASX Code: BMZ
Level 2/45 St Georges Tce
Perth WA 6000 London Stock Exchange plc (AIM)
10 Paternoster Square
Website London EC4M 7LS
www.blackmountainresources.com.au AIM Code: BMZ
Directors' Report
Your directors present their report on the consolidated entity of Black
Mountain Resources Limited and the entities it controlled at the end of, or
during, the half-year ended 31 December 2013.
Directors
The persons who were directors of Black Mountain Resources Limited during the
half -year and up to the date of this report are:
Mr Peter Landau (Executive Director)
Mr John Ryan (Executive Director)
Ms Shannon Robinson (Executive Director)
Mr Jason Brewer (Non-Executive Director)
Results
The consolidated statement of comprehensive income shows a consolidated net
loss for the half-year ended 31 December 2013 of $1,215,178 (2012: net loss of
$1,185,020).
Review of Operations for the Half-Year ended 31 December 2013
New Departure Silver Project, Montana
During the financial period, the Company continued development and extensive
sampling programme at its New Departure Silver Project located in Montana, US
Importantly the samples were taken from the newly opened up Blue Dot Level
which accesses both the Bonanza Zone and Main Zone historic ore blocks
and will form a key part of production moving forward.
The Blue Dot level was initially entered through the eastern area from beneath
the historic workings. The drive has been continued through the historic
Bonanza Zone, opening access to various levels of historic workings, including
the Blue Dot level. These high grade silver results further underpin the
project's credentials and are in line with the extensive historic data
available for the New Departure Silver Project.
Directors' Report (Cont.)
The Company has undertaken a comprehensive sampling programme, underground and
surface surveying, as well as geological mapping. These activities, in
conjunction with new drifts being developed, have opened access to various
levels of historic workings, enabling greater and more cost effective access to
known historic mineralization zones as well as new mineralisation areas. As a
result of significant progress made so far, the development drives now access
three historical mineralisation blocks, in addition to the decline currently
being developed towards the Main Zone.
In addition, the Company has completed the initial phase of metallurgical test
work from bulk samples collected from its underground mine development to
ensure that shareholder returns are maximised when production commences in the
near term. Work to date has improved results from the flotation test to around
85% silver recovery. This is based on material from the upper mine workings
where the ore zone is strongly oxidised and is composed of silver chlorides and
base metal carbonates.
The Company anticipates these results to improve further (to over 90%) as the
mining operations move into fresh sulphide zones where the bulk of the historic
ounces are contained as opposed to older oxidised areas where the bulk samples
were taken.
Importantly, the laboratory that conducted the flotation tests uses the same
style circuit of the mill that Black Mountain proposes to use to toll treat ore
from the New Departure mine. This provides the Company with significant
advantage in expediting the final toll treat arrangements for the New Departure
mine. Toll treat arrangements with nearby mills will be finalised when the
Company completes its advanced metallurgical testing.
The Company is in the process of finalising the 3–D mine model and will
complete the 200ft decline to access the Main Zone from which initial
production will predominantly be derived. Outstanding milestones ahead of
production consist of: completion of the 3-D model, results from advanced
metallurgical testwork, results from channel sampling and confirmation of the
toll treat agreement with a local mill.
Conjecture Silver Project, Idaho
The Company anticipates recommencing mine development at the Conjecture Silver
Project in Q2 2014 given the weather conditions and current short term focus on
the New Departure Project. Mine development will entail completion of the
decline ramp to access historic workings and drifting on exposed vein
structures. In the meantime the Company has focussed on the development of the
mine plan, permitting and exploration programme for the project, including a
detailed 3–D mine model, using Vulcan software and incorporating the data from
historic production and mapping at the project.
Tabor Silver and Gold Project
Black Mountain continues with the collation, digitisation, mapping and review
of historic data on the project. The Company will evaluate the development of
this project once production at both the New and Departure and Conjecture
projects is underway.
Directors' Report (Cont.)
Corporate
A key development during the financial period was the signing of an agreement
for A$3 million strategic financing provided by ASX listed silver producing
company, Alcyone Resources Limited. The secured funds will be utilised to
facilitate mining at the Company's near term production projects. Full details
of the facility are set out in the announcement made on 24 December 2013.
On 5 March 2014, Alcyone announced its intention to undertake a
non-renounceable rights issue in order to fund its near term development.
Importantly, the strategic financing of Black Mountain for A$3 million from
Alcyone remains in place, however, in light of the announcement by Alcyone, the
Board of Black Mountain has taken the prudent approach to commence discussions
with a range of additional parties should the need to source additional funds
in the shorter term arise.
Outlook
Commencement of first silver production at New Departure is the Company's
predominant near term goal and in the coming weeks the Company will be focussed
on implementing all the necessary corporate and operational requirements in
order to reach this transformational goal. With the Conjecture Project due for
development immediately following this, we are not far from having two
productive high grade silver mines within our stable US portfolio. At this
point we will be perfectly poised to undertake rigorous exploration programmes
to uncover the proven high grade mineralisation spanning the surrounding
patented and unpatented claims, which will be funded, at least in part, from
internal revenues.
Subsequent Events
There have been no significant events subsequent to the half-year up to the
date of this report.
Auditor's Independence Declaration
The Auditor's Independence Declaration included within these financial
statements forms part of the Director's Report for the half-year ended 31
December 2013.
This report is signed in accordance with a resolution of the Board of
Directors.
Peter Landau
Executive Director
Perth, Western Australia, 14 March 2014
Statement of Comprehensive Income
For the half-year ended 31 December 2013
Consolidated
Half-Year Half-Year
31 Dec 2013 31 Dec 2012
$ $
Interest revenue 2,185 23,600
General and administrative expenses (531,019) (194,473)
Compliance and regulatory expenses (104,091) (409,065)
Consultancy costs (25,247) (95,591)
Director fees (110,000) (98,833)
Investor relations and legal expenses (91,949) (83,127)
Travel expenses (21,592) (141,377)
Interest expense (146,653) -
Other expenses (186,812) (186,154)
Loss before income tax expense (1,215,178) (1,185,020)
Income tax expense - -
Loss for the half-year (1,215,178) (1,185,020)
Other comprehensive income, net of tax
Items that may be reclassified
subsequently to operating result
Foreign currency translation differences 117,645 -
-
Total comprehensive income for the (1,097,533) (1,185,020)
half-year
Loss attributable to:
Owners of the Company (1,119,242) (1,185,020)
Non-controlling Interests (95,936) -
(1,215,178) (1,185,020)
Total comprehensive loss attributable to:
Owners of the Company (961,328) (1,185,020)
Non-controlling Interests (136,205) -
(1,097,533) (1,185,020)
Basic and diluted loss per share (cents (1.30) (1.64)
per share)
The above statement of comprehensive income should be read in conjunction with
the accompanying notes.
Statement of Financial Position
As at 31 December 2013
Consolidated
Note 31 December 2013 30 June 2013
$ $
ASSETS
Current Assets
Cash and cash equivalents 89,679 329,346
Trade and other receivables 311,991 271,552
Other assets 19,013 29,104
Total Current Assets 420,683 630,002
Non-Current Assets
Plant and equipment 927,411 967,138
Exploration and evaluation 3 18,854,862 18,400,482
expenditure
Total Non-current Assets 19,782,273 19,367,620
TOTAL ASSETS 20,202,956 19,997,622
LIABILITIES
Current Liabilities
Trade and other payables 1,148,309 1,095,422
Interest bearing liabilities 3,329,960 335,000
Total Current Liabilities 4,478,269 1,430,422
Non-Current Liabilities
Interest bearing liabilities - 1,744,980
Total Non-Current Liabilities - 1,744,980
TOTAL LIABILITIES 4,478,269 3,175,402
NET ASSETS 15,724,687 16,822,220
EQUITY
Issued capital 4 20,328,656 20,328,656
Reserves 2,057,920 1,900,006
Accumulated losses (5,316,500) (4,197,258)
Parent interest 17,070,076 18,031,404
Non-controlling interest (1,345,389) (1,209,184)
TOTAL EQUITY 15,724,687 16,822,220
The above statement of financial position should be read in conjunction with
the accompanying notes.
Statement of Changes in Equity
For the half-year ended 31 December 2013
Consolidated Issued Accumulated Option Foreign Non- Total
Capital Losses Reserve currency controlling
translation interest
reserve
$ $ $ $ $ $
Balance at 1 15,596,011 (1,521,875) 1,108,688 - - 15,182,824
July 2012
Loss for the - (1,185,020) - - - (1,185,020)
half-year
Total - (1,185,020) - - - (1,185,020)
comprehensive
loss for the
half-year
Transactions
with owners,
recorded
directly in
equity:
Issue of 2,328,664 - - - - 2,328,664
shares
Share issue (107,299) - - - - (107,299)
costs
Issue of - - 52,556 - - 52,556
options
Total 2,221,365 - 52,556 - - 2,273,921
transactions
with owners
Balance at 31 17,817,376 (2,706,895) 1,161,244 - - 16,271,725
December 2012
Balance at 1 20,328,656 (4,197,258) 1,161,244 738,762 (1,209,184) 16,822,220
July 2013
Loss for the - (1,119,242) - - (95,936) (1,215,178)
half-year
Other - - - 157,914 (40,269) 117,645
comprehensive
income
Total - (1,119,242) - 157,914 (136,205) (1,097,533)
comprehensive
loss for the
half-year
Balance at 31 20,328,656 (5,316,500) 1,161,244 896,676 (1,345,389) 15,725,687
December 2013
The above statement of changes in equity should be read in conjunction with the
accompanying notes.
Statement of Cash Flows
For the half-year ended 31 December 2013
Consolidated
Half Year Half Year
31 Dec 2013 31 Dec 2012
$ $
CASH FLOWS FROM OPERATING ACTIVITIES
Payments to suppliers and employees (749,222) (1,336,309)
Finance and interest costs - (738)
Interest received 2,185 23,600
Net cash (used in) operating activities (747,037) (1,313,447)
CASH FLOWS FROM INVESTING ACTIVITIES
Payments for exploration and evaluation (716,670) (2,154,790)
Payment for Lakeview Mill - (531,023)
Purchase of plant and equipment (45,096) -
Proceeds from disposal of plant and equipment 19,156 -
Net cash (used in) investing activities (742,610) (2,685,813)
CASH FLOW FROM FINANCING ACTIVITIES
Proceeds from borrowings 1,249,980 -
Proceeds from issue of shares (net) - 2,144,795
Net cash provided by financing activities 1,249,980 2,144,795
Net (decrease) in cash held (239,667) (1,854,465)
Cash and cash equivalents at the beginning of 329,346 3,254,072
the half-year
Cash and cash equivalents at end of half-year 89,679 1,399,607
The above statement of cash flows should be read in conjunction with the
accompanying notes.
Notes to the Financial Statements
For the half-year ended 31 December 2013
Note 1 - Summary of Significant Accounting Policies
Basis of Preparation
These general purpose interim financial statements for the half-year reporting
period ended 31 December 2013 has been prepared in accordance with Australian
Accounting Standard AASB 134: Interim Financial Reporting and the Corporations
Act 2001. The consolidated entity is a for-profit entity for financial
reporting purposes under Australian Accounting Standards.
These half-year financial statements do not include all notes of the type
normally included within the annual financial statements and therefore cannot
be expected to provide as full an understanding of the financial performance,
financial position and financing and investing activities of the consolidated
entity as the full financial statements.
It is recommended that the half-year financial statements be read in
conjunction with the annual financial report for the year ended 30 June 2013
and any public announcements made by Black Mountain Resources Limited during
the half-year reporting period in accordance with the continuous disclosure
requirements of the Corporations Act 2001.
The accounting policies have been consistently applied with those of the
previous financial year and corresponding interim reporting period, except in
relation to the matters disclosed below.
New and Revised Accounting Standards
The consolidated entity has adopted all of the new and revised Accounting
Standards and Interpretations issued by the Australian Accounting Standards
Board that are mandatory for the current reporting period. The adoption of
these new and revised Accounting Standards and Interpretations has not resulted
in a significant or material change to the consolidated entity's accounting
policies.
Any new, revised or amending Accounting Standards or Interpretations that are
not yet mandatory have not been early adopted by the consolidated entity.
Notes to the Financial Statements
For the half-year ended 31 December 2013
Going concern
The financial statements have been prepared on a going concern basis, which
contemplates the continuity of normal business activity and the realisation of
assets and discharge of liabilities in the normal course of business.
As disclosed in the financial statements, the consolidated entity incurred a
loss of $1,215,178 and had net cash outflows from operating and investing
activities of $747,037 and $742,610 respectively for the half-year ended 31
December 2013. As at that date, the consolidated entity had net current
liabilities of $4,057,586.
The Directors believe that there are reasonable grounds to believe that the
consolidated entity will be able to continue as a going concern, after
consideration of the following factors:
* The company will seek to raise additional funding for working capital,
which has proven to be successful in the past;
* As disclosed in the statement of financial position, the consolidated
entity has interest bearing liabilities of $3,329,960, which are classified
as current as at 31 December 2013. The directors believe that the company
will be able to negotiate repayment terms of these loans in its favour,
when they become due and payable; and
* The ability to scale down its operations in order to curtail expenditure,
in the event insufficient cash is available to meet projected expenditure.
Accordingly, the Directors believe that the consolidated entity will be able to
continue as a going concern and that it is appropriate to adopt the going
concern basis in the preparation of the financial report.
If the consolidated entity is unable to raise further funding or successfully
extend the repayment terms of the interest bearing liabilities, there would be
material uncertainty as to whether the consolidated entity will continue as a
going concern and therefore whether it will realise its assets and extinguish
its liabilities in the normal course of business and at the amounts stated in
the financial report.
The financial report does not include any adjustments relating to the amounts
or classification of recorded assets or liabilities that might be necessary if
the consolidated entity does not continue as a going concern.
Notes to the Financial Statements
For the half-year ended 31 December 2013
Note 2 - Segment Information
Management has determined the operating segments based on the reports reviewed
by the board of directors that are used to make strategic decisions. The
Company does not have any customers, operates only in the mineral exploration
industry within the geographical segments of Australia and USA.
Australia USA Total
31 December 2013 $ $ $
Revenue
Other revenues from external customers - - -
Total segment revenue - - -
Result
Segment result (895,396) (319,782) (1,215,178)
Interest revenue 2,073 112 2,185
Depreciation expense - 106,822 106,822
Assets and Liabilities at 31 December 2013
Segment assets
- Exploration expenditure - 18,854,862 18,854,862
* Plant and equipment - 927,411 927,411
- Cash and cash equivalents 35,580 54,099 89,679
- Other assets 19,013 - 19,013
- Trade and other receivables 121,580 190,411 311,991
Total assets as per the statement of 176,173 20,026,783 20,202,956
financial position
Segment liabilities
- Trade and other payables 724,440 423,869 1,148,309
* Borrowings 3,329,960 - 3,329,960
Total liabilities as per the statement of 4,054,400 423,869 4,478,269
financial position
Notes to the Financial Statements
For the half-year ended 31 December 2013
Note 2 - Segment Information (cont'd)
Australia USA Total
31 December 2012 $ $ $
Revenue
Other revenues from external customers - - -
Total segment revenue - - -
Result
Segment result (1,185,020) - (1,185,020)
Interest revenue 23,600 - 23,600
Assets and Liabilities at 31 December 2012
Segment assets
- Exploration expenditure 176,800 13,898,517 14,075,317
- Cash and cash equivalents 1,399,607 - 1,399,607
- Other assets 839,320 - 839,320
- Trade and other receivables 84,608 - 84,608
Total assets as per the statement of 2,500,335 13,898,517 16,398,852
financial position
Segment liabilities
- Trade and other payables 127,127 - 127,127
Total liabilities as per the statement of 127,127 - 127,127
financial position
Note 3 - Deferred exploration expenditure
31 December 30 June
2013 2013
$ $
Costs carried forward in respect of areas of interest in the following phases:
Deferred exploration and evaluation 18,854,862 18,400,482
Movement:
Balance at beginning of half-year 18,400,482
Exploration and evaluation expenditure incurred 535,369
Exploration and evaluation expenditure written (186,532)
off
Effects of foreign currency translation 105,543
Balance at end of half-year 18,854,862
The carrying value of the consolidated entity's interest in exploration
expenditure is dependent upon the continuance of the consolidated entity's
right to tenure of the areas of interest, results of future exploration and the
recoupment of costs through successful development and exploitation of the
areas of interest, or alternatively, by their sale.
Notes to the Financial Statements
For the half-year ended 31 December 2013
31 December 30 June
2013 2013
$ $
Note 4 - Issued Capital
Issued Capital
Ordinary shares - fully paid 15,491,156 15,491,156
Performance shares - fully paid 4,837,500 4,837,500
20,328,656 20,328,656
a. Movements in Ordinary shares from 1 July 2013 to 31 December 2013 were as
follows:
No of Shares $
Opening Balance 86,324,266 15,491,156
Issue of shares - -
Closing Balance 86,324,266 15,491,156
b. Movements in performance shares from 1 July 2013 to 31 December 2013 were
as follows:
No of Options $
Opening Balance 25,000,000 4,837,500
Issue of options - -
Closing Balance 25,000,000 4,837,500
Note 5 - Dividends
No dividend has been declared or paid during the half-year ended 31 December
2013 (2012: Nil).
Note 6 - Events subsequent to Reporting Date
There have been no subsequent events since the half year reporting date.
Note 7 -Contingent Liabilities
There has been no change in contingent liabilities since the last annual
reporting date.
Directors' Declaration
The directors of the company declare that:
1. The financial statements and notes are in accordance with the Corporations
Act 2001, including:
a. complying with the Accounting Standard AASB 134: Interim Financial
Reporting; and
b. giving a true and fair view of the consolidated entity's financial position
as at 31 December 2013 and of its performance for the half-year then ended.
2. In the directors' opinion there are reasonable grounds to believe that the
company will be able to pay its debts as and when they become due and
payable.
This declaration is made in accordance with a resolution of the Board of
Directors.
Executive Chairman
Peter Landau
Dated this 14 March 2014
Auditor's Independent Review Report
Auditor's Independent Review Report (Cont)