Discovery Metals Limited: Half Year Financial Report

 
TIDMDME 
 
22 February 2012 
 
AIM ANNOUNCEMENT 
 
Discovery Metals Limited 
 
HALF YEAR FINANCIAL REPORT 
 
Highlights 
 
  * The Company's half year financial results reflect the continuing development 
    and progress of the Boseto copper project in north-west Botswana, including: 
 
      * Raising the debt component of the project finance; 
      * Placing the hedging protection for project revenue; 
      * Continued Boseto zone exploration success at Mango, Zeta North-East, 
        Selene and Plutus underground targets; 
      * Commencement of open pit mining at Boseto in September 2011. 
 
  * The Company reports in US Dollars to better reflect the Company's activities 
    and cost and revenue exposure. 
  * The Company held US$98.9 million in cash at 31 December 2011. 
  * The Boseto copper project remains on track for production in the second 
    quarter of 2012. 
 
Financial Results 
 
The Discovery Metals consolidated group reported a loss of US$6.966 million for 
the December 2011 half year, up from the US$4.908 million loss for the 
corresponding period in 2010.  This result is consistent with the ramp up in 
activity, manning and costs by the Company as it moves through project 
development at Boseto  and  prepares  for  copper-silver  concentrate 
production  in  the  second quarter of 2012.   These results exclude the US$51 
million unrealised mark-to- market gain (after tax) reported on the Boseto hedge 
book. 
 
Discovery Metals' Managing Director, Brad Sampson, commented, "The half year 
financial results of the Company reflect the continued progression of Discovery 
Metals towards becoming an operating copper and silver producer in the second 
quarter of 2012.   We also continue to invest in the development of the Boseto 
copper project and exploration to find our next project in Botswana." 
 
Detailed Commentary on Financial Results 
 
Items of note in the Half Year Financials and Directors Report are: 
 
Assets: 
 
  * The cash and cash equivalents balance at 31 December 2011 of US$98.9 million 
    results from funds remaining from the 2010 equity raising and drawings on 
    the Boseto project finance syndicated debt; 
  * Trade and other receivables reflect the usual 3 month processing time for 
    VAT refunds in Botswana; 
  * The  appearance  of  the  derivative  financial  assets  reflects  the 
    mark-to-market  positive valuation of  the  Boseto  hedging  protection 
    placed  in  July  2011.    The  current  portion  of US$13.2 million 
    reflects the positive value of the hedges to be closed out in the 2012 
    calendar year; 
  * Plant and equipment increased to US$220.5 million as a result of Boseto 
    construction activity; 
  * The appearance of Inventory of US$2.9 million reflects the purchase of 
    initial spares and supplies for the Boseto operations; 
  * The US$45.8 million exploration asset comprises continued investment in the 
    exploration and feasibility work at Boseto and other parts of the Kalahari 
    Copperbelt. 
 
Liabilities: 
 
  * The increase in trade and other payables to US$22.1 million is the accrued 
    construction charges for Sedgman and other contractors at Boseto for the 
    month of December 2011. 
 
Income: 
 
  * The non-cash gain of US$51.0 million in Other Comprehensive Income is the 
    result of the mark-to-market unrealised gain on the Boseto project hedging 
    protection placed in July 2011. 
 
Costs: 
 
  * Salaries increased to US$3.9 million with a ramp up in project, exploration 
    and corporate personnel to support the development and operation of the 
    Boseto copper project; 
  * A non-cash cost of US$0.7 million for unrealised foreign exchange loss on 
    funds held in other than US dollars to be applied largely to Australian 
    corporate costs in 2012 (the Australian Dollar devalued in relation to the 
    US Dollar in the last six months of 2011, but has since rebounded); 
  * A non-cash cost of US$1.4 million for employee benefits relates to the 
    expensing of share based payments. 
 
The Interim Financial Statements have been reviewed by the Company's auditor, 
Ernst and Young in Australia and Botswana. 
 
Competent Person Statement 
 
The information in this report that relates to Exploration Results is based on 
information compiled by Mr Wallace Mackay who is a Member of the Australian 
Institute of Geoscientists (AIG). Mr Mackay is a full-time employees of 
Discovery Metals Limited.  Mr Mackay has sufficient experience which is relevant 
to the style of mineralisation and type of deposit under consideration and to 
the activity which they are undertaking to qualify as a Competent Person as 
defined in the 2004 Edition of the "Australasian Code for Reporting of 
Exploration Results, Mineral Resources and Ore Reserves" (JORC Code).  Mr Mackay 
consents to the inclusion in this report of the matters based on information 
provided by him and in the form and context in which it appears. 
 
Forward Looking Statements 
 
This release includes certain statements that may be deemed "forward-looking 
statements".  All statements in this discussion, other than statements of 
historical facts, that address future activities and events or developments that 
Discovery Metals expects, are forward-looking statements.  Although Discovery 
Metals believes the expectations expressed in such forward-looking statements 
are based on reasonable assumptions, such statements are not guarantees of 
future performance and actual results or developments may differ materially from 
those in the forward-looking statements. Factors that could cause actual results 
to differ materially from those in forward-looking statements include market 
prices, continued availability of capital and financing, and general economic, 
market or business conditions.   Investors are cautioned that any such 
statements are not guarantees of future performance and that actual results or 
developments may differ materially from those projected in forward-looking 
statements. 
 
Discovery Metals Background 
 
Discovery  Metals  is  an  ASX/AIM/BSE  listed  copper  exploration  and 
development  company  focused  on  the  emerging  Kalahari Copperbelt in north- 
west Botswana.   The Company is a near-term copper producer currently developing 
its 100% owned Boseto Copper Project towards production in the first half of 
2012. The Company is in the process of de-listing from the AIM market. 
 
The Kalahari Copperbelt sediment-hosted mineralisation of the Boseto Copper 
Project is similar in style to the well-known and large deposits of the Central 
African Copperbelt of Zambia and the Democratic Republic of the Congo. 
 
Discovery Metals has prospecting licences covering 11,872 km2 along the Kalahari 
Copperbelt. 
 
Further information on the Company including Mineral Resources and Ore Reserves 
is available on our website:  www.discoverymetals.com 
 
For further information on this release and Discovery Metals Limited, please 
contact: Brad Sampson Managing Director Ph: [phone] 
[e-mail] 
 
AIM Nominated Advisor - Fairfax I.S. PLC, Contact Ewan Leggat/Laura Littley Ph: 
[phone] or 7460 4387 
 
UK PR - Tavistock PR, Contact Jos Simson/Emily Fenton Ph [phone] or 
[phone] 
 
 
 
 
Attachment: Half Year Financial Report: 
http://hugin.info/137928/R/1588416/498473.pdf 
 
 
 
 
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     originality of the information contained therein. 
 
Source: Discovery Metals Limited via Thomson Reuters ONE 
 
[HUG#1588416]