Mining Investments Resources PLC Final Results (1239U)

TIDMMIR

RNS Number : 1239U

Mining Investments Resources PLC

28 November 2013

Mining Investments Resources plc

("MIR" or "the Company")

Audited Results for the year ended 30 June 2013

Proposed share capital reorganisation

Notice of Annual General Meeting

and

Posting of Annual Report and Accounts

Chairman's review

The twelve month period to 30 June 2013 was one of implementation of the Company's strategy to make investments in mining companies in Russia. Mining Investments Resources plc (MIR) business development effort in Russia has been led by Dr Pavel Kepezhinskas, a senior member of the Russian mining community who has a successful track record of founding junior mining companies in Russia, two of which (Silver Bears Resources and Amur Minerals Corporation) have been taken public on the Canadian and UK stock exchanges respectively. In November 2013, Dr Kepezhniskas formally joined the Board of MIR as Director of Business Development and is a shareholder in the Company holding 15 million shares (11.69 per cent.).

This strategy resulted in an announcement on 5 November 2012 of MIR entering into a Strategic Alliance Agreement with Artel Vostok, a company which is one of the main gold alluvial mining companies in the northern region of Khabarovsk and the announcement of MIR undertaking a potential investment in a silver mine in the Primorsky region of Russia.

The period towards the end of the 2012/13 financial year was very difficult for MIR as well as many other junior mining companies. The transactions which MIR has focused on are investments in projects to mine precious metals and unfortunately the gold price has fallen dramatically by 24 per cent. to October 2013. The silver price has also been volatile and 2 year silver prices have fallen from around $32/oz to a low of $18.61/oz in 2013, but have recovered slightly to around the $22/oz level. The gold price had been steadily increasing for 12 years prior to the unexpected 2013 gold price crash and this created uncertainty in the financial markets. Accordingly, MIR has been obliged to conduct its negotiations slowly in order to ensure it is entering into investment opportunities which have a good chance of being able to raise the additional funding which will be required to support them. Also, in order to maintain its investment company status MIR was obliged to keep funds invested in junior mining companies and some of these investments have fallen in value along with the junior mining sector.

At the current time the gold and silver prices have stabilised at levels which are historically still high and offer attractive investment opportunities to develop the sort of projects which MIR is focused on, all of which have high grade deposits. We are optimistic that Artel Vostok will prevail in the licencing process and that the Primorsky silver project will be secured on attractive terms. MIR is also actively holding discussions relating to a number of other projects in the Far East of Russia and we are very hopeful that we will be able to widen the portfolio during the forthcoming year.

Artel Vostok Strategic Alliance Agreement

During the year, MIR entered into a Strategic Alliance Agreement with Artel Vostok (www.artelvostok.ru), an influential company in the Khabarovsk region of Russia, which operates alluvial mines and undertakes mining exploration activities as a contractor for other mining companies. Artel Vostok operates in the North of Khabarovsk, based in the Kiran camp. The Artel Vostok Strategic Alliance agreement results from a relationship which Dr Kepezhinskas has had for 18 years with Artel Vostok in which he assisted Artel Vostok in identifying and successfully exploring the source of gold for another of Artel Vostok's alluvial rivers, at Avleyakan. The Avleyakan mine was successfully explored in joint venture with a company which Dr Kepezhinskas assisted in founding, Silver Bears Resources which is quoted on the Toronto stock exchange (Ticker SBR).

The Agreement envisages that Artel Vostok will seek to acquire exploration licences over several areas which have been identified as having geological exploration potential and thereafter MIR intends to acquire an interest in the licences. It also encompasses co-operation on other projects within the area of operations of Artel Vostok which is an area in the Khabarovsk region which contains many other identified mineral exploration opportunities.

As a first step, Artel Vostok has applied for the first exploration licence. Exploration licence applications in Russia are subject to approval at the local level for submission to Moscow, an approval process in Moscow and then are published for formal application. The formal application process is held by a National Licence round. MIR's management have been informed that this exploration area has been approved in the region and in Moscow and will be included in the next round of licencing of the Russian Federation. Once a licencing decision has been made MIR will be in a position to make an investment on terms to be agreed.

Primorsky Silver Project

MIR is also undertaking negotiations to invest in a company which controls a silver mine in the Primorsky region of Russia, and signed a letter of intent for an investment which is conditional upon due diligence and technical appraisal. The programme defined in the letter of intent was to restart.

The Primorsky region of Russia contains a significant number of unexplored discoveries of high grade silver resources. Dr Kepezhinskas has been studying the geology of this region since 1992. The Primorsky silver mine was the only producing silver mine in the region during the Soviet Union and MIR believes provides a strategic acquisition to implement a wider strategy of exploration and production in one of the last unexplored silver provinces in the world.

During the due diligence and technical appraisal stage, MIR's management identified the possibility of upgrading the current processing facilities to increase recovery and replace the necessity to smelt a concentrate. In addition, the Company believes that it should be possible to reprocess tailings from the existing tailings dam. The feasibility of undertaking a plant upgrade and accurately estimating the recovery factors for the ore and tailings is therefore subject to the metallurgical testing of the ore and tailings from the existing mine.

The letter of intent was entered into at a time of higher silver prices and with the considerable turbulence in silver prices and the financial markets for precious metals companies, the Board has had to consider whether it is prudent to proceed with the transaction and negotiations have been proceeding slowly as a result. However, given the recent current stability in silver prices, increased confidence in the financial markets for silver investments combined with the economic advantages of the plant revamp, which should compensate for the lower silver price, MIR is now in the process of renegotiating terms for potential investment.

As the plant upgrade possibilities and tailings recovery require confirmation with sampling and testing, MIR has amended its letter of intent so that the first stage involves a programme, estimated to cost around US$100,000, to survey the volume and grade of the tailings and to undertake metallurgical test work on the ore and tailings. At current silver price levels, the Directors believe that the Primorsky silver investment offers attractive economics if approached in a prudent manner. The Primorsky silver mine is an unusual opportunity because it contains some high grade silver veins (C1 resources are grading over 600g/t) and substantial exploration areas which also offer the possibility of identifying additional high grade resources.

Financial results Year ended 30 June 2013

The financial results for year-end resulted in a loss of GBP368k. During the year the Company made realised gains on short term quoted investments of GBP117k and received GBP12k in dividends. At the year-end, short term quoted investments still held showed an unrealised loss of GBP100k which was in line with the general fall in junior mining company stocks. Included within the loss for the year is GBP141k in respect of the costs of undertaking the legal and technical due diligence in Russia on the projects in which MIR is engaged. The remaining GBP356k was incurred in the general and administrative costs of running the Company.

The Company generated a net cash outflow from operating activities of GBP429k which included GBP163k in respect of payments to settle debts arising prior to the restructuring of MIR, when the Company traded as Lagan Capital Plc. In addition, the company had a net cash outflow of GBP118k resulting from its investing activities. This was offset by net cash inflows of GBP930k from the issue of new shares. As a result, the Company has generated a net increase in cash and cash equivalents of GBP383k.

Proposed share capital reorganisation

The Company's Annual Report and Accounts (the "Annual Report") for the year ended 30 June 2013 has today been sent to shareholders together with notice of the Annual General Meeting (the "AGM") to be held at the offices of Kerman & Co LLP, 200 Strand WC2R 1 DJ at 10.30 am on Friday 20 December 2013 to consider various resolutions (the "Resolutions"). The Annual Report and notice of AGM are available on the Company's website: www.mirplc.com.

Included within the Resolutions is a special resolution proposing a reorganisation of the Company's share capital (the "Capital Reorganisation"). As detailed in the Annual Report and other recent announcements the Company is considering a number of investment opportunities all of which are likely to require the Company to raise capital. As the Company's current share price is significantly below the Company's current nominal value of each ordinary share of 1p each, it would be unable to issue shares at or around the current share price as the law prohibits the Company issuing shares at a discount to its nominal value. As a result, it is proposed that the Company performs the Capital Reorganisation in order to reduce the nominal value of its shares on the following basis: the existing issued ordinary shares of 1p each in the capital of the Company ("Existing Ordinary Shares") as at the Record Date, being 6.00 pm on 19 December 2013, will be subdivided into as one new ordinary share of 0.01p each in the capital of the Company ("New Ordinary Shares") and one A deferred share of 0.99p each in the capital of the Company ("A Deferred Shares"). Subject to the passing of the Resolutions, the New Ordinary Shares will for all material purposes have the same rights as the Existing Ordinary Shares and the A Deferred Shares will have the rights and restrictions ascribed to them in the Company's articles of association as amended.

Following the Capital Reorganisation there will be 128,281,120 ordinary shares of 0.01p in issue and each shareholder will continue to hold the same number of shares as before the Capital Reorganisation.

In addition the directors are seeking authority to issue and allot new ordinary shares up to an aggregate nominal amount of GBP500,000 and dis-apply statutory pre-emption rights up to the same amount. The directors believe these authorities together with the Capital reorganisation will provide them with the greatest flexibility when seeking to negotiate and conclude investments and would recommend shareholders vote in favour of the resolutions.

Michael Nosworthy

Executive Chairman

27 November 2013

Enquiries

 
                        Mining Investments Resources 
Michael Nosworthy        plc                           [phone] 
 
                        Mining Investments Resources 
Steve Roberts            plc                           07812043436 
 
 
                        Northland Capital Partners 
Luke Cairns / Matthew    Limited 
 Johnson                 (Nomad and Joint Broker)      020 7796 8800 
 
                        Peterhouse Corporate Finance 
Jon Levinson / Lucy      Limited 
 Williams                (Joint Broker)                020 7469 0936 
 

Consolidated statement of comprehensive income

for the year ended 30 June 2013

 
 
                                                               30 June    30 June 
                                                                  2013       2012 
                                                                GBP000     GBP000 
-----------------------------------------------------      -----------  --------- 
 Revenue                                                            12          - 
-----------------------------------------------------      -----------  --------- 
 Other income                                                      117          - 
 Total income                                                      129          - 
-----------------------------------------------------      -----------  --------- 
 Direct project costs                                            (141) 
 Administrative expenses                                         (356)      (634) 
-----------------------------------------------------      -----------  --------- 
 Total expenditure                                               (497)      (634) 
-----------------------------------------------------      -----------  --------- 
 Operating loss                                                  (368)      (634) 
 Finance costs                                                       -          - 
-----------------------------------------------------      -----------  --------- 
 Pre-tax loss for the year                                       (368)      (634) 
 Tax expense                                                         -          - 
-----------------------------------------------------      -----------  --------- 
 Total loss for the year                                         (368)      (634) 
 
 Other Comprehensive Income 
-----------------------------------------------------      -----------  --------- 
 Items which will be subsequently reclassified 
  to profit and loss 
-----------------------------------------------------      -----------  --------- 
 Unrealised loss on investments                                  (100)          - 
-----------------------------------------------------      -----------  --------- 
 Total comprehensive income for the year                         (468)      (634) 
-----------------------------------------------------      -----------  --------- 
 Loss per share 
  - basic                                                     (00.60p)   (11.48p) 
  - diluted                                                   (00.60p)   (11.48p) 
-----------------------------------------------------      -----------  --------- 
 
 

Consolidated balance sheet

as at 30 June 2013

 
                                       30 June    30 June 
                                          2013       2012 
                                        GBP000     GBP000 
-----------------------------------  ---------  --------- 
 Assets 
 Non-current assets                        285 
 Investments                                 -          - 
 Loans and receivables                       -          - 
-----------------------------------  ---------  --------- 
 Total non-current assets                  285          - 
-----------------------------------  ---------  --------- 
 Current assets 
 Trade and other receivables                13          - 
 Cash and cash equivalents                 403         20 
-----------------------------------  ---------  --------- 
                                           416         20 
-----------------------------------  ---------  --------- 
 Total assets                              701         20 
-----------------------------------  ---------  --------- 
 
 Equity 
 Capital and reserves attributable 
  to the Company's equity holders 
 Share capital                           3,767      2,539 
 Share premium account                   7,633      7,633 
 Retained earnings                    (10,914)   (10,335) 
-----------------------------------  ---------  --------- 
 Total equity                              486      (163) 
-----------------------------------  ---------  --------- 
 
 Liabilities 
 Current liabilities 
 Trade and other payables                  215        183 
 Non-current liabilities 
 Trade and other payables                    -          - 
-----------------------------------  ---------  --------- 
 Total liabilities                         215        183 
-----------------------------------  ---------  --------- 
 Total equity and liabilities              701         20 
-----------------------------------  ---------  --------- 
 

Consolidated cash flow statement

for the year ended 30 June 2013

 
                                                            Year ended            Year ended 
                                                               30 June               30 June 
                                                                  2013                  2012 
                                                                GBP000                GBP000 
-------------------------------------------------------  -------------  -------------------- 
 Operating activities 
 Loss for the year before tax                                    (368)                 (634) 
 Gain on disposal of investments                                 (117) 
 Impairment on financial assets                                      -                   454 
 Change in trade and other receivables                            (13)                   331 
 Change in trade and other payables                                 32                    14 
 Liabilities settled through issue 
  of shares                                                         37                     - 
-------------------------------------------------------  -------------  -------------------- 
 Net cash (outflow)/inflow from operating 
  activities                                                     (429)                   165 
-------------------------------------------------------  -------------  -------------------- 
 Investing activities 
 Purchase of listed investments                                  (709)                     - 
 Proceeds from sale of listed investments                          591                 (173) 
-------------------------------------------------------  -------------  -------------------- 
 Net cash inflow from investing activities                       (118)                 (173) 
-------------------------------------------------------  -------------  -------------------- 
 Financing activities 
 Proceeds from issue of share capital                            1,041                     - 
-------------------------------------------------------  -------------  -------------------- 
 Costs directly attributable to issue 
  of share capital                                               (111)                     - 
-------------------------------------------------------  -------------  -------------------- 
 Net cash inflow from financing activities                         930                     - 
-------------------------------------------------------  -------------  -------------------- 
 Cash and cash equivalents, beginning 
  of year                                                           20                    28 
 Net increase/(decrease) in cash 
  and cash equivalents                                             383                   (8) 
-------------------------------------------------------  -------------  -------------------- 
 Cash and cash equivalents, end of 
  year                                                             403                    20 
-------------------------------------------------------  -------------  -------------------- 
 
 
   Consolidated statement of changes 
   in equity 
 for the year ended 30 June 
  2013 
                                                                 Share       Profit         Total 
                                          Share capital        premium       & loss        equity 
                                                 GBP000         GBP000       GBP000        GBP000 
-------------------------------------  ----------------  -------------  -----------  ------------ 
 Balance as at 30 June 2011                       2,539          7,633      (9,701)           471 
-------------------------------------  ----------------  -------------  -----------  ------------ 
 Shares issued                                        -              -            -             - 
-------------------------------------  ----------------  -------------  -----------  ------------ 
 Transactions with owners                             -              -            -             - 
-------------------------------------  ----------------  -------------  -----------  ------------ 
 Loss for the year                                    -              -        (634)         (634) 
-------------------------------------  ----------------  -------------  -----------  ------------ 
 Total comprehensive income 
  for the year                                        -              -        (634)         (634) 
-------------------------------------  ----------------  -------------  -----------  ------------ 
 Balance as at 30 June 2012                       2,539          7,633     (10,335)         (163) 
 Shares issued                                    1,228              -        (111)         1,117 
-------------------------------------  ----------------  -------------  -----------  ------------ 
 Loss for the year                                    -              -        (368)         (368) 
-------------------------------------  ----------------  -------------  -----------  ------------ 
 Other comprehensive income                           -              -        (100)         (100) 
-------------------------------------  ----------------  -------------  -----------  ------------ 
 Total comprehensive income 
  for the year                                        -              -        (468)         (468) 
-------------------------------------  ----------------  -------------  -----------  ------------ 
 Balance as at 30 June 2013                       3,767          7,633     (10,914)           486 
-------------------------------------  ----------------  -------------  -----------  ------------ 
 
 

Notes

1. Financial statements

The financial information set out in this announcement does not constitute statutory accounts within the meaning of Section 434 of the Companies Act 2006 for the year ended 30 June 2013 or for the year ended 30 June 2012, but is derived from those accounts. The financial statements for 2013 will be delivered to the Registrar of Companies following the Company's Annual General Meeting. The auditors have issued an unqualified report on these accounts. The auditor has issued an unqualified opinion in respect of the financial statements which does not contain any statements under the Companies Act 2006, Section 498(2) or Section 498(3).

2. Summary of significant accounting policies

Basis of preparation

The financial statements of the Group have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union. The financial statements have been presented in accordance with IAS 1 Presentation of Financial Statements (Revised 2007). The Group has elected to present a "statement of comprehensive income" as one statement.

The Directors have prepared these accounts on a going concern basis, since they believe that the Group will be able to pay its liabilities as they fall due. The accounts are prepared according to the historic cost convention with the exception of investments designated as available for sale which are held at fair value.

Going Concern

The Group's business activities, together with the factors likely to affect its future development, performance and position are set out in the business review and the financial position of the Group. In addition, the directors' report includes the Group's objectives, policies and processes for managing its capital and its financial risk management objectives. Further details of the Company's financial instruments and hedging activities and its exposure to credit risk and liquidity risk are detailed below.

A portion of the Group's working capital is currently invested in a portfolio of listed companies. These assets will be liquidated as and when required in order to meet the Group's liabilities and expenses. The Directors recognise that stock market volatility could have either a positive or negative effect on the value of the shareholdings and hence on this source of working capital. Prior to the liquidation of shareholdings as soon as is considered opportune, the diversification of holdings over a number of different shares reduces the volatility and risk of the portfolio to levels closer to that of the market in general.

In considering going concern, the Directors have prepared cash flow forecasts to the end of December 2014 and these show adequate current working capital to meet the Groups' obligations until that date. Even in the event of negative market movements reducing the share portfolio's value prior to its liquidation, the Directors remain confident that these current resources alone will be adequate to meet the Groups' obligations for the next 12 months. The forecasts are based on the assumption that the Group will not generate any significant cash inflows during this period in respect of its investments and that working capital requirements will be maintained at currently planned levels.

In common with many mining and mining exploration companies, the Company needs to raise finance for its activities in discrete tranches to finance its activities for limited periods. The Directors are confident that the Company currently has a range of project or development activities against which it has a reasonable expectation of being able to raise further funds for both project expenditure and corporate expenses. Such activities would be supplementary to the forecast activities included in the current working capital forecast.

Based on this assessment, the Directors have a reasonable expectation that the Group has adequate resources to continue as a viable entity for the foreseeable future and the Directors therefore continue to adopt the going concern basis of accounting in preparing the annual financial statements.

3. Dividends

The directors do not recommend the payment of a dividend (2012: nil)

Annual Report

The Annual Report will be posted to all shareholders on 28 November 2013 and will be available on the Company's website at www.mirplc.com. Additional copies will be made available to the public, free of charge, from the Company's registered office at Bridge House, London Bridge, London, SE1 9QR.

Annual General Meeting

The Company's Annual General Meeting will be held on Friday 20 December 2013 at 10.30 a.m. at the offices of Kerman & Co. LLP, 200 Strand, London WC2R 1DJ. The Notice of the AGM and the associated explanatory notes relating to the proposed resolutions at that meeting are included in the Company's annual report.

This information is provided by RNS

The company news service from the London Stock Exchange

END

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