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RNS Number:5089D
Galahad Gold Plc
30 September 2004
INTERIM RESULTS
GALAHAD GOLD PLC ("Galahad" or the "Company")
CHAIRMAN'S STATEMENT
HIGHLIGHTS
*Significant progress at the Pebble xDeposit in Alaska with Inferred
Mineral Resource more than doubled
*Inferred Mineral Resource status confirmed at the Skaergaard project,
Greenland
*Acquisition of licence for one of the largest primary molybdenum projects
in the xworld at Malmbjerg, Greenland.
*Two successful share placings raising #8.8m
FINANCIAL RESULTS
The financial results for the six months ended 30 June 2004 relate to the new
activities of the group which began on 23 December 2003, when the Compxany
changed from being a financial investment company to a mining development
company. The results for the half year ended 30 June 2003 are therefore not
comparable.
Pre-tax losses for the six months to 30 June 2004 were #1,649,000 against a
profxit of #430,396 in the same period last year.
Northern Dynasty Minerals Limited
Galahad is the largest single shareholder in Northern Dynasty Minerals Limited
(NDM), a company quoted on the TSX Venture Exchange, Toronto. NDM is developing
the larxge-scale copper-gold-molybdenum-silver project at Pebble in Alaska, USA.
During the six months to 30 June 2004, Galahad increased its holding in NDM from
21.9% to 35.7%, (35.07% on a fully diluted basis). As a result, the group now
accounts for itsx investment in NDM as an associated undertaking. Galahad's
holding in NDM is currently 35.81% undiluted (34.65% on a fully diluted basis).
On 20 January 2004, NDM announced that it had increased the Pebble project's
Inferred Mineral Resource from 1x3m ounces of gold to 26.5m ounces and from 6.8bn
lbs of copper to 16.5bn lbs. According to Metals Economics Group (2003), this
makes the Pebble deposit the largest gold project in North America in terms of
contained gold and the second largest copperx project in North America in terms
of contained copper. At CDN$5.18 (the closing market price on 28 September
2004), NDM's share price is currently over treble the average price per share
paid by Galahad and in addition, Galahad currently has 1,057,0x55 warrants with
an exercise price of CDN$4.15; 137,500 warrants with an exercise price of
CDN$4.65 and 553,125 warrants with an exercise price of CDN$9.00.
At the closing market price on 28 September 2004, the value of Galahad's NDM
shareholding xwas CDN$83.4m against Galahad's overall cost of CDN$26m.
Galahad has great confidence in the Hunter Dickinson team developing the Pebble
project. Galahad's consultant, Brian Mountford, has been appointed as Pebble's
Project Director and Morris Beatxtie, a Galahad director, is now responsible for
the metallurgical work.
On 16 September 2004, NDM announced that its current US$24m development
programme has three main components:
* Systematic diamond drilling to convert the currently outlinxed mineral
resource to Measured and Indicated status;
* Comprehensive project engineering and site testing, directed towards
concluding a bankable feasibility study in the third quarter of 2005; and
* Thorough environmental andx socio-economic planning, data collecting and
completion of studies that fulfil the requirements for an Environmental
Impact Statement as well as State and Federal permits.
As many as 100 workers have been operating out of the field office xat Illiamna,
located about 19 miles south-east of the Pebble deposit. These crews are taking
baseline geotechnical and environmental measurements to assist in the selection
and design of project facilities. Six rigs have been deployed to complete
14x0,000 feet of drilling, designed to delineate more fully the Pebble project.
Skaergaard Minerals Corp.
Galahad holds 100% of Skaergaard Minerals Corp., the company developing the
gold-palladium-platinum deposit at Skaergaard in eastern Greenland.x On 8 June
2004, Galahad announced that the deposit had been confirmed by SRK Consulting
Limited as an Inferred Mineral Resource under Canadian National Instrument
43-101. The deposit contains 10.9m oz of gold, 35.1m oz of palladium and 3m oz
of plaxtinum, together with substantial accessory metals such as titanium and
vanadium. The important feature of Inferred Mineral Resource status is that, in
the opinion of an independent Qualified Person, the Skaergaard resource has a
reasonable prospect fxor economic extraction.
During the last few weeks, a further drilling programme has been completed at
Skaergaard and the analytical results are awaited. Since it acquired 100% of
Skaergaard Minerals Corp., Galahad has received excellent cooperationx from the
Greenlandic authorities in developing the project.
Finance
During the period, Galahad raised #7m in a share placing with institutional and
individual investors. As a measure of their confidence in the quality of
Galahad's projects, foxur of your directors added to their already substantial
shareholdings by investing a further #235,000 in the above placing.
In July 2004, Galahad successfully completed a further small placing, raising
#1.8m from institutions and individuals. Of thxe funds raised in this placing,
#1.55m was invested in NDM for 1,057,055 shares and 1,057,055 warrants.
Malmbjerg
On 16 August 2004, Galahad announced the acquisition of 100% of the Malmbjerg
molybdenum exploration licence in eastern Greenland.x This deposit has been
identified through previous exploration activities as one of the largest primary
molybdenum deposits in the world with an unclassified mineral resource estimate
of 150 m tonnes containing 0.23% Molybdenum Disulphide (at a 0.x16% cut off).
Within the next few months Galahad will be making further announcements
regarding proposals for the development of the Malmbjerg project.
There is a growing demand for molybdenum which is a metallic element most
frequently used axs an alloying element in alloy and stainless steels. It
enhances strength, hardenability, weldability, toughness, elevated temperature
strength and corrosion resistance. Although molybdenum is primarily used in
steels, its complex and unique propexrties have proved invaluable in an
expanding range of uses which include the production of industrial chemicals
and automotive lubricants.
Outlook
Galahad now has interests in three substantial natural resource projects in
varying stages of dxevelopment. We are encouraged by the significant progress
being made at Pebble, the recent confirmation of Inferred Mineral Resource
status at Skaergaard and the acquisition of the licence for the substantial new
molybdenum deposit at Malmbjerg.
Ixn addition, in the event that metal and minerals prices rise further due to
continued weakness in the US dollar and demand from China and other developing
countries such as India, Galahad is well-placed to benefit substantially. Your
Company has attrxibutable Inferred Mineral Resources of 20.12m ounces of gold, 3m
ounces of platinum, 35.1m ounces of palladium, 8.74bn lbs of copper and 313.2m
lbs of molybdenum together with the substantial accessory metals such as
titanium and vanadium at Skaergaaxrd plus the recent acquisition of the
significant molybdenum deposit at Malmbjerg.
In particular your Board takes great comfort from the fact that all of Galahad's
deposits are in two of the safest political areas in the world. We therefore
look fxorward to the future with confidence.
Yours sincerely
Ian Watson
Unaudited group profit and loss account
for the six month period ended 30 June 2004
Unaudited Audited - Year ended 31 December 2003
x Six months Continuing Discontinued Total
to operations operations
30 June 2003 2003 2003
2004
x #'000 #'000 #'000 #'000
Turnover - - 5,022 5,022
Cost of sales - - 2,085 2,085
x _________ _________ _______ ________
Gross profit - - 2,937 2,937
Administrative
expenses x689 16 499 515
Share of
Associated
company's
administrative
expenses 933 - - -
_________ ________ ________ __x______
Operating
profit (1,622) (16) 2,438 2,422
Interest
receivable 62 107
Interest
payable (89) x (4)
_________ ________
Profit on
ordinary
activities
before
taxation (1,649) 2,525
Taxation on
profitx on
ordinary
activities - (781)
________ ________
(Loss)/profit
on ordinary
activities
after taxation (1,649) x 1,744
Dividends - 2,919
________ ________
Retained loss
for the
period/year x (1,649) (1,175)
======= =======
Earnings per ordinary
shares
Basic and
diluted (0.3)p 2x.26p
Unaudited group balance sheet as at 30 June 2004
Unaudited Audited
30 June 2004 31 December 2003
x #'000 #'000
Fixed assets
Tangible assets 112 7
Intangible assets 53,534 52,636
x _________ _________
53,646 52,643
Listed investments 34,718 28,564
x _________ _________
88,364 81,207
Current assets
Debtors and prepayments 211 61
Cash at bank and in hand x 1,616 3,618
_________ _________
1,827 3,679
Creditors: amounts falling due x 1,118 1,018
within one period/year
_________ _________
Net current assets 709 2,661
x _________ _________
Total assets less current liabilities 89,073 83,868
Creditors: amounts falling due after more than one
year
Convertible loan stock 2,298 2,x650
_________ _________
86,775 81,218
_________ _________
Capital xand reserves
Called up share capital 5,626 4,979
Share premium account 6,555 -
Profit and loss account 421 2,066
x
Merger reserve 64,653 64,653
Warrant reserve 9,520 9,520
_________ _________
Shareholdersx' funds - equity 86,775 81,218
_________ _________
Unaudited group cash flow statement
for the six month period ended 30 June 2004
x Unaudited Unaudited Audited Audited
6 months 6 months to Year Year
to 30 June 2004 ended ended
x 30 June 31 December 31 December
2004 2003 2003
#'000 #'000 #'000 #'000
Net cash
(outflow)/infl
ow from
operatxing
activities (721) 4,822
_________ _________
Returns on investments and
servicing of finance
Interest
received x 62 107
Interest
payable (89) (4)
_________ _________
Net cash
(outflow)/infl
ow from
returns on
investments
and xservicing
of finance (27) 103
Acquisitions and disposals
Acquisition
expenses - (500)
Cash acquired - x 480
_________ _________
Net cash
outflow from
acquisitions
and disposals - (20)
Taxation
UK corporation
tax paid x - (24)
Capital expenditure and
financial investment
Net additions
to tangible
fixed assets 119 -
Net additions
to intangible
fixed assets x 898 -
Payments to
acquire
payable fixed
assets
investment 7,087 -
_________ _________
x (8,104) -
Equity
dividends paid - (2,919)
_________ _________
Cash
(outflow)/infl
ow xbefore use
of liquid
resources and
financing (8,852) 1,962
Management of liquid
resources
Cash placed on
deposit - (1,550)
Net decrease
ixn amounts
held at
brokers - 474
_________ _________
Net cash
outflow from
management of
liquid
resources x - (1,076)
Financing
Share capital
subscribed 7,027 -
Costs of share
issue (177) (79)
_________ x _________
Net cash
inflow/(outflo
w) from
financing 6,850 (79)
_________ _________
(Decrease)/inc
rease in casxh (2,002) 807
_________ _________
Unaudited reconciliation of shareholders funds and movement on reserves
for the six month period endedx 30 June 2004
Total Share Share Profit and Merger Warrant
Capital premium loss reserve reserve
account
x #'000 #'000 #'000 #'000 #'000 #'000
At 1 January
2004 81,218 4,979 - 2,066 64,653 9,520
Shares issued
on funding 6,850 589 6,261* - - x -
Shares issued
on conversion
of 352 58 294 - - -
options and
loan stock
Foreign
exchange
movements 4 - - 4 - -
Loxss for the
period (1,649) - - (1,649) - -
_________ ________ _______ __________ _______ ________
At 30 June
2004 86,755 5,626 6,555 421 64x,653 9,520
======== ======= ====== ========== ====== =======
* This figure is net of costs associated with funding.
Notes to the financial information for the six month period ended 30 June 2004
1. Accountingx policies
The financial statements have been prepared under the historical cost convention
and are in accordance with applicable accounting standards. The unaudited
financial statements for the six months ended 30 June 2004 have been prepared in
axccordance with accounting principles applied by the group in the prior
accounting period. The financial information shown in this publication is
unaudited and does not constitute statutory accounts as defined in Section 240
of the Companies Act 1985.x
2. Earnings per share
The calculation of (loss)/profit per ordinary shares for the six months ended 30
June 2004 is based on the weighted average number of ordinary shares.
3. Interim reports
Copies of this interim report for the six monthxs ended 30 June 2004 will be sent
to shareholders. Further copies will be available from the offices of Galahad
Gold plc, 44 Davies Street, London W1K 5JA.
This information is provided by RNS
The company newxs service from the London Stock Exchange
END
IR UKOKRSARKUAR
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