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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Marakand | LSE:MKD | London | Ordinary Share | GB0033883835 | ORD 1P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 5.10 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
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RNS Number:0832G
Marakand Minerals Limited
22 October 2007
News release
For immediate release: 22 October 2007
Marakand Minerals Limited
Final Results for the twelve months ended 30 June 2007
Highlights
* No indication from the Uzbek Government that Marakand will have any role
in the future development of the Khandiza polymetallic deposit and
exploration of the surrounding area
* Oxus Gold plc (Marakand's 84.04% controlling shareholder) decision to sell
Marakand's Turkish exploration assets to KazakhGold Group Limited.
Marakand received $950,000 from Oxus.
* Agreement for Oxus Gold Plc to acquire the remaining 15.96% of the
Company's ordinary shares
LONDON: 22 October 2007 - Marakand Minerals Limited ("Marakand", the "Company"
or "the Group") has today announced, in respect of the year ended 30 June 2007,
a loss of approximately $19.4 million after charging a provision for impairment
against the carrying value of its investment in the Khandiza project of
approximately $19.1 million. Net assets at 30 June 2007 amounted to
approximately $9.4 million.
This has been a disappointing year for the Group following difficulties in
engaging with the Uzbek authorities in respect of the development of the
Khandiza zinc-lead-copper-silver project in Uzbekistan.
(All references to $ are to United States dollars.)
Report on Activities
Financial Results
The Group reports an unaudited loss for the period of $19,421,000 (2006:
$2,027,000) after an exceptional charge of $19,051,000 against the Group's
investment in the Khandiza project. The loss per share is 19.04 cents (2006:
2.01 cents).
Principal activities and review of business developments
Marakand is a mining exploration and development company which has focused on
base metals and silver. Its principal asset is its interest in the Khandiza
polymetallic deposit in South East Uzbekistan, and the surrounding exploration
areas. Until recently, the Company had also been pursuing a strategy to acquire
exploration assets in Turkey.
Khandiza Deposit, Uzbekistan
The Khandiza deposit contains, above a 2 % zinc cut off, a JORC classified and
audited Measured and Indicated Resource containing 11.8Mt at an average grade of
7.66 % zinc, 3.65 % lead, 0.91 % copper, 129 g/t silver and 0.38 g/t gold, plus
an Inferred Resource containing 2.6Mt at an average grade of 5.36 % zinc, 2.81 %
lead, 0.65 % copper, 161 g/t silver and 0.38 g/t gold.
Marakand obtained its interest in Khandiza under the Primary Exploration
Agreement. The Primary Exploration Agreement was originally entered into on 14
December 1996 between Goscomgeology (the State Committee of Geology and Mineral
resources for the Republic of Uzbekistan) and Oxus Resources Corporation.
The Primary Exploration Agreement provides Marakand, with rights to conduct
geological prospecting, prepare a feasibility study and negotiate with
Goscomgeology regarding the obtaining of an exploration licence and the
development of mining operations on the Khandiza deposit.
During the period 1996 to 2002, Oxus Resources Corporation completed Stage I of
a Feasibility Study and considerable exploration and deposit evaluation work.
In July 2002, the Primary Exploration Agreement was assigned to Oxus Mining
Limited and further to Oxus Minerals Corporation, which was then re-named
Marakand Minerals Limited ("Marakand"). Oxus Resources Corporation assigned its
rights to Oxus Minerals Corporation at the same time, thus before the issuance
of Presidential Decree # 359 on 17th October 2002, wherein Oxus was given the
exclusive right to negotiate with the Uzbek Government the development of the
Khandiza Deposit on the basis of a concession or production sharing agreement.
Marakand (previously Oxus Minerals Corporation) was established in September
2003. In October 2003, a private placement financing through the Royal Bank of
Canada ("RBC") was completed for #4 million (approximately US$6.8 million) to
enable Marakand to complete the final stage of the Khandiza Feasibility Study.
Marakand was successfully listed on the AIM division of the London Stock
Exchange in November 2003.
The feasibility study was satisfactorily completed and submitted to the Uzbek
Government as scheduled in October 2004, fully in accordance with Decree 359.
In 2005, Marakand completed an environmental and social impact assessment on the
project, and negotiated framework contracts with selected smelters, including
the State-owned Almalyk Mining and Metallurgical Combinat ("Almalyk MMC")
smelter in Uzbekistan. Marakand was then asked to resubmit its project economics
on the basis of a 50:50 JV with no tax privileges. Subsequent progress on the
project was however limited, as Marakand failed to get the required resolution,
promised from the Uzbek Government, which would have allowed the company to
proceed with project financing, detailed engineering designs and then
construction and development
In August 2006, the Uzbek Government issued Presidential Decree 442,
transferring the rights to develop the Khandiza deposit and related assets from
Goscomgeology to the State-owned Almalyk MMC. Since then, Marakand has been
seeking to clarify the nature of its continued role in the project with the
Uzbek Government, but has had no response.
With the further passage of time, and difficulties in engaging with the Uzbek
Government, it appears increasingly unlikely that the Company will be involved
in the future development of the Khandiza deposits.
Turkish Exploration
Marakand announced on 1 August 2006, that the Company had entered into exclusive
option agreements to acquire majority interests in two separate copper / gold
exploration license areas in southern Turkey, namely a 25% interest in the Hatay
Madencilik JV relating to the Hatay exploration license; and an option on the
Karakilise exploration license. Both license areas are located in the
prospective southern Turkish 'ophiolite belt' related to the Cyprus Arc, and
host ' Cyprus-type' copper / gold mineralisation. Exploration works, including
surface drilling, had previously been undertaken on both license areas.
In February 2007, Marakand completed a further programme of stream sediment
sampling, geological mapping, surface channel sampling and a 10 hole surface
drilling programme on the Hatay license.
On the 12th March 2007, Marakand was then advised by Oxus, that Oxus had agreed
in principle and subject to final contract, to sell certain assets to KazakhGold
Group Limited, including exploration assets in Turkey, owned by Marakand.
Oxus Gold plc and Oxus Resources Corporation entered into a deed for the sale
and purchase of assets with KazakhGold on 26 April 2007 ("SPA"). Under the SPA
the interest held by Marakand in Hatay was to be novated to KazakhGold by letter
agreement. The Novation Agreement was eventually signed by Yurttaslar
Construction, the JV partner, on the 9th June, wherein it was agreed that
"Yurttaslar Shareholders hereby consent to the transfer of Marakand's interest
of 12,500 regular shares in the joint stock company Hatay Madencilik to
KazakhGold Group Limited". However Yurttaslar have so far failed to sign a Board
Resolution to transfer the shares, and discussions are currently ongoing between
Oxus, Marakand, KazakhGold and Yurtasslar.
The Karakilise Option Agreement was novated from Marakand to KazakhGold on 30
April 2007. The Novation Letter provides that Marakand transfers all of its
rights, obligations and liabilities under the Karakilise Agreement to
KazakhGold.
Based on a fair market valuation undertaken by independent mineral industry
consultants, Marakand Directors accepted Oxus' offer of US$950,000 in cash to
acquire the Company's 25% interest in the Hatay Madencilik joint stock company
and the rights to an Option Agreement on the Karakilise copper / gold
exploration licence. The proceeds of the offer were applied to reducing the
Company's loan account with Oxus.
Outlook
In the event that Marakand has no future role in the Khandiza project, and in
light of the disposal by Oxus of Marakand's exploration assets in Turkey,
announced on 26 April 2007, Marakand would become a dormant company with no
activities. However Marakand remains the owner of the rights to the feasibility
study and the environmental and social impact assessment undertaken in relation
to the Khandiza project, together with associated geological exploration data,
results of all technical and engineering studies and financial analyses carried
out subsequent to June 1996. As at 30 June 2007, the book value of these studies
was US$9,405,000.
The Board has concluded that there is therefore no remaining commercial value
for the Company in respect of the Khandiza project and have, accordingly,
written down the value of its investment to reflect this.
Oxus Gold Plc has agreed to acquire the 15.96% of the shares in the Company
which it does not own by means of a share-for-share exchange. A circular
together with further financial details in respect of Oxus Gold Plc has been
sent to all shareholders.
Presently the day-to-day expenditure of the Company is being funded by Oxus Gold
Plc through an inter-company loan account. The Company and its Uzbek subsidiary
no longer have any cash resources or any ability to pursue its interests in the
Khandiza project.
Directors
Following a board meeting of Marakand on 11 January 2007, the Company announced
its intention to reconstitute its board of directors with immediate effect. The
decision to restructure the board was taken to ensure an appropriate board
composition and cost structure in light of the ongoing process of seeking
clarity on the Company's future in the Khandiza project, the exploration focus
in Turkey and the increased ownership, financial support and involvement in
Marakand by Oxus.
Accordingly Alasdair Stuart and Richard Robinson offered their resignation as
Directors and employees with immediate effect. William Charter resigned as a
full-time employee, but agreed to remain on the board as executive director in a
part-time capacity, to be joined by Oliver Prior as a non-executive director. Mr
Prior is also serving as an independent non-executive director on the board of
Oxus Gold Plc, the Company's parent undertaking. The Company wishes to thank Mr.
Stuart and Mr. Robinson for their services to the Company.
Post-balance sheet events
Oxus Gold Plc has agreed to acquire the 15.96% of the shares in the Company
which it does not own by means of a share-for-share exchange. Further details of
this acquisition have been sent to all shareholders.
For further information contact:
MARAKAND MINERALS LIMITED
William J Charter - Executive Technical Director Tel: +90 (0) 539 711 2196
Richard Wilkins - Company Secretary Tel: +44 (0) 207 907 2000
CANACCORD ADAMS LIMITED
Mark Ashurst Tel: +44 (0) 20 7050 6500
Consolidated Income Statement
Year ended 30 Year ended 30
June June
2007 2006
Note US$000 US$000
Revenue 30 132
Direct expenses
Exploration and mining development property 3 (19,051) (1,224)
Gross loss (19,021) (1,092)
Administrative expenses (178) (720)
Share-based payments (39) (207)
Foreign exchange loss (1) (42)
Loss on sale of Turkish assets 4 (143) -
Operating loss (19,382) (2,061)
Financial income 5 5 35
Financial expense 6 (41) -
Net financial (expense)/income (36) 35
(Loss)/Profit before tax (19,418) (2,026)
Taxation (3) (1)
(Loss)/Profit for the year attributable to equity shareholders (19,421) (2,027)
Loss per share - US cents 7 (19.04) (2.01)
All amounts relate to discontinued operations.
Consolidated Balance Sheet Note 2007 2006
US$000 US$000
Non-current assets
Exploration and mining development properties 8 9,405 28,456
Current assets
Trade and other receivables 9 1 1
Cash and cash equivalents 10 8 131
9 132
Total assets 9,414 28,588
Equity and liabilities
Equity attributable to shareholders
Share capital 11 1,822 1,781
Share premium 5,713 5,521
Capital reserve 27,279 27,240
Retained earnings (25,707) (6,286)
Total equity 9,107 28,256
Current liabilities
Trade and other payables 12 307 330
Corporation taxes - 2
307 332
Total equity and liabilities 9,414 28,588
Consolidated Cash Flow Statement Note Year ended 30 Year ended 30
June June
2007 2006
US$000 US$000
Cash flows from operating activities
Loss before tax for the year (19,418) (2,026)
Adjustments for:
Interest paid 41 -
Loss arising from impairment of exploration and mining development property 19,051 -
Equity-settled share-based payment expenses 39 207
Cash flows from operating activities before changes in working capital and (287) (1,819)
provisions
(Decrease)/increase in trade and other payables (28) 235
Cash absorbed by operating activities (315) (1,584)
Cash flows from financing activities
Proceeds from the issue of share capital 233 -
Interest paid (41)
Net cash from financing activities 192 -
Net decrease in cash and cash equivalents (123) (1,584)
Cash and cash equivalents at 1 July 131 1,715
Cash and cash equivalents at 30 June 10 8 131
Statement of Changes in Equity for the Group
For the year ended 30 June 2007
Share Share Capital Retained Total
Capital Premium Reserve Earnings
US$000 US$000 US$000 US$000 US$000
Balance at 1 July 2005 1,781 5,521 27,033 (4,259) 30,076
Losses after tax for the year - - - (2,027) (2,027)
Total recognised in income and expense for the year - - - (2,027) (2,027)
Equity-settled share-based payments - - 207 - 207
Balance at 30 June 2006 1,781 5,521 27,240 (6,286) 28,256
Balance at 1 July 2006 1,781 5,521 27,240 (6,286) 28,256
Losses after tax for the year - - - (19,421) (19,421)
Total recognised in income and expense for the year - - - (19,421) (19,421)
Conversion of Directors' remuneration to shares 41 192 - - 233
Equity-settled share-based payments - - 39 - 39
Balance at 30 June 2007 1,822 5,713 27,279 (25,707) 9,107
Statement of Changes in Equity for the Group
For the year ended 30 June 2007 - continued
Share capital is the amount subscribed for shares at nominal value.
Share premium represents the excess of the amount subscribed for share capital
over the nominal value of these shares net of share issue expenses.
Capital reserve represents the credit to equity in respect of share-based
payments together with reserves arising from the acquisition of the Uzbekistan
assets.
Retained earnings represent the cumulative loss of the Group attributable to
equity shareholders.
Notes
1 Corporate information
Marakand Minerals Limited ("the Company") is a company incorporated in the Guernsey in the Channel Islands. The
primary focus of the Company was to develop precious and base metal opportunities is the Khandiza region of
Uzbekistan.
2 Basis of preparation and accounting policies
The group financial statements consolidate those of the Company and its subsidiary (together referred to as "the
Group"). The parent company financial statements present information about the Company as a separate entity and not
about its group.
These financial statements have been prepared in accordance with International Financial Reporting Standards (IFRSs
and IFRIC interpretations) as adopted by the European Union.
3 Impairment of investment in the Khandiza polymetallic deposit and surrounding exploration area, Uzbekistan
The amount of the Group's investment in the exploration and mining development property held at Khandiza,
Uzbekistan were stated in 2006 at the value of $28,456,000 being the valuation of the project based upon a report
by Wardell Armstrong International on 28 November 2003. On 10 August 2006 a decree was issued instructing the
Group's partner, Goscomgeology, to transfer local responsibility for Khandiza from Goscomgeology to Almalyk
Mining and Metallurgical Combinat, a state owned base metal mining and smelter company. The decree also cancelled
an earlier decree which had authorised the Group to proceed with the project on a concession basis or product
sharing agreement. The Group indicated its preparedness to develop the project jointly with Almalyk but no
clearly defined role or structure was forthcoming. The Group no longer has the resource available to pursue its
claims against the Uzbek Government. The Board has reached the conclusion that the value of the investment made
in the Khandiza polymetallic deposit and surrounding exploration area is no more than the amounts expended to
complete the feasibility study and the environmental and social impact assessment undertaken in relation to the
project, together with associated geological exploration data, results of all technical and engineering studies
and financial analyses carried out subsequent to June 1996, which amounts to $9,405,000. The investment has been
written down to this value in the year.
4 Loss on sale of Turkish assets
Upon the sale of Oxus Gold plc's non-Uzbek assets to KazakhGold plc, the Company agreed to dispose of its
interests in its Turkish Hatay exploration licence and its Karakalise exploration licences to Oxus Resources
Corporation. Both of these licences are for exploration in Turkey. Oxus Resources Corporation is a wholly owned
subsidiary of Oxus Gold Plc the Company's parent undertaking. The licences were sold at market value as
determined by independent mineral industry consultants.
5 Financial income Year ended 30 Year ended 30
June June
2007 2006
US$000 US$000
Interest receivable 5 35
6 Financial expenses Year ended 30 Year ended 30
June June
2007 2006
US$000 US$000
Interest payable to parent undertaking 41 -
7 Loss per share
The calculation of the basic loss per share is based upon the net loss after tax attributable to ordinary
shareholders of US$19,421,000 (2006: a loss of US$2,027,000) and a weighted average number of shares in issue
for the year of 102,005,249 (2006: 101,023,490).
Year ended 30 Year ended 30
June June
2007 2006
Group Group
Basic loss per share (cents) (19.04) 2.01
(Loss)/profit attributable to ordinary shareholders $19,421,000 $2,027,000
Number Number
Weighted average number of shares in issue 102,005,249 101,023,490
Diluted earnings per share
The diluted loss per share for 2006 and 2007 is the same as the basic loss per share as the loss for the year
has an anti-dilutive effect.
8 Exploration and mining development properties Uzbekistan
Khandiza
Group and
Company
US$000
Cost
At 1 July 2005 28,456
Additions -
Disposals -
At 30 June 2006 28,456
At 1 July 2006 28,456
Additions -
Disposals -
Impairment of carrying value (19,051)
At 30 June 2007 9,405
The Group's exploration and development properties are not amortised until production commences. The Group's
investments in exploration and mining development properties were reviewed for impairment in the year.
9 Trade and other receivables
2007 2006
Group Group
US$000 US$000
Amounts due from parent undertaking 1 -
Prepayments - 1
1 1
10 Cash and cash equivalents
2007 2006
Group Group
US$000 US$000
Cash at bank 8 131
Cash at bank and bank and other deposits consist of cash. There is no material foreign exchange movement in
respect of cash and cash equivalents.
11 Issued share capital
Number Number US$000 US$000
2007 2006 2007 2006
At 1 July 101,023,490 101,023,490 1,781 1,781
Shares issued in the year 2,095,567 - 41 -
At 30 June 103,119,057 101,023,490 1,822 1,781
During 2006 2,095,576 shares were issued at #0.058 to Directors in payment for outstanding salaries and fees.
At 1 July 2006 the Company had 20,000,000 warrants outstanding. These warrants were not exercised and expired
on 30 October 2006.
12 Trade and other payables
2007 2006
Group Group
US$000 US$000
Trade creditors 29 1
Amounts due to parent undertaking 271 304
Other creditors 4 13
Accruals 3 12
307 330
13 Post-balance sheet events
On 22 October 2007 the Company's parent undertaking, Oxus Group Plc, announced that is proposing to acquire the
15.96% of the ordinary share capital of MML that it does not currently own. Oxus Gold Plc is listed on the
Alternative Investment Market of the London Stock Exchange.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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