Final Results

RNS Number:9352R
Monterrico Metals PLC
09 April 2008

                             Monterrico Metals plc

                        ("Monterrico" or "the Company")

                                    AIM: MNA



       Preliminary Un-audited Results for the Year ended 31 December 2007



                               Highlights 2007/8



*  Zijin Consortium successfully concludes takeover of Monterrico in
   April 2007



*  The Consortium acquires 89.9% shareholding for 350p per share and
   maintains AIM listing



*  New Board of Directors appointed on 1 June 2007



*  Management in Peru strengthened; Board of Directors formally appointed
   at Monterrico's Peruvian subsidiary



*  New management commences review of Rio Blanco Detailed Feasibility
   Study. Work on the Environmental and Social Impact Assessment (ESIA) 
   continues



*  Stability Agreement obtained from Peruvian Government in August 2007.
   This


   o  provides formal registration of the Company's investments in Peru

   o  guarantees no change to tax and labour conditions for 10 year term

   o  permits free transferability of foreign currency and unrestricted trade
      of mineral products.



*  LS Nikko - the major Korean copper smelting company - buys 10% stake
   in Monterrico as the first part of a planned sell down by the Consortium; 
   thus reducing the Consortium's holding to 79.9%. Sale concluded in September 
   2007. LS Nikko pays 370p/share which is at a premium to the prevailing market 
   price and the offer price



*  Trust Funds of US$80 million offered in August 2007 to communities in
   area of influence of the Rio Blanco Project



*  Review of the Detailed Feasibility Study (DFS) has completed and a
   Trade-off study to evaluate the alternative technical options for the
   development of Rio Blanco will be conducted to maximise value from the total
   resource (1,257MT) defined to date at Rio Blanco, optimise the economics of 
   the Project, whilst improving environmental and social aspects



*  Company strengthens its Social programme and expands and improves
   communications with local and regional communities



*  PLC Head Office to be moved to Hong Kong



                              Chairman's Statement



Twelve months after the Zijin Consortium completed their acquisition of a
majority shareholding in Monterrico Metals plc, I can report that this has been
a period of intense, even if not very newsworthy, activity for the Company.



The three prime objectives on which we have been focusing are to:



  * build up the Company, transforming it from junior exploration company to a
    large mining company;
  * re-appraise the Company's assets in Peru, particularly the massive Rio
    Blanco copper/molybdenum project
  * secure the understanding and support of local communities around the Rio
    Blanco Project.



On the first, I am glad to report that the restructuring has made great strides.
A new and well-balanced Board is in place; an experienced new management team
has taken firm control; and a clear vision, ethos, and set of objectives have
been developed.  The Company is now in good shape to go forward.



On the second, the new management, with the benefit of its previous strong
experience of major mining projects, has been reviewing and re-evaluating the
technical design for the development of our largest single asset, the Rio Blanco
copper/molybdenum project. As we announced on March, a new Trade-off study is
being commissioned which will allow the most favourable option to be taken to
full feasibility. Inevitably this will cause some delay in the timeline, but the
end result should be a major increase in the exploitable resource, and therefore
a significant increase in value.  The Company will naturally do everything
possible to bring Rio Blanco on stream as quickly as possible.  Mr Xiaodong
Huang, our CEO, discusses this in more detail in his statement which follows.



On the third, we - in common with many other mining companies in Peru - have had
to contend with opposition from anti-mining campaigners.  This has caused some
difficult moments.  However, lessons have been learned; we are now in a position
to devote significantly greater effort and resource to our social and public
relations programme than before the take-over; and we enjoy the strong strategic
backing of the Peruvian government.  The latter are committed to free market
policies, set great store by Peru's economic and political relations with the
United States, EU and China, are pro-mining, and want to see the Rio Blanco
Project developed, as soon as possible.  The result of all these factors is that
we are beginning to see positive results on the ground.



It is worth reiterating here that the Company and its Peruvian subsidiary are
very firmly committed to observing the highest international standards of
environmental and social responsibility.  We particularly want to play our part
in alleviating poverty in an isolated and disadvantaged part of Peru.



Besides pressing forward with the Rio Blanco Project - our most important asset
- the company is also committed on expanding through the development of other
projects in Latin America, and by making further acquisitions.  This is an area
on which shareholders can expect to hear more during the coming year.



During the past year the Company has been able to rely on loans from its major
shareholder to cover our operating costs.  However, other options are under
consideration to finance further phases of the Rio Blanco Project, and the
expansion of the company.   Watch this space.



To conclude, although the past year has been largely one of internal
reorganisation and re-evaluation by the new management, resulting in a limited
news flow, this phase is nearly complete, and the Company poised to move
purposefully forward. As part of the re-organization, it has been decided to
relocate the plc head office to Hong Kong. I look to the future with optimism.
I believe that shareholders can do likewise.



Richard Ralph
Chairman
8 April, 2008



Enquiries:


Monterrico Metals plc                                     Tel: + 44 20 7776 2900
Richard Ralph (Non-Executive Chairman)
Susan Connolly (Investor Relations Manager)


Ambrian Partners Limited                                  Tel: + 44 20 7634 4705
Tim Goodman





                    Report from the Chief Executive Officer



It is now 10 months since I was appointed as CEO, and I am delighted to report
on Monterrico's operations since the last Annual Report.



Since the Zijin Consortium formally took over the management of Monterrico on 1
June 2007, Monterrico has been reorganised and restructured. In Peru we have
established a new Board of Directors for our wholly owned subsidiary Rio Blanco
Copper SA, (formerly Minera Majaz SA), which operates the Rio Blanco Project.
We have retained most key members of staff within this subsidiary and have
developed a new vision and operational philosophy which has now been adopted
throughout the Company. In so doing, I believe Monterrico is well on the way to
making a harmonious transition from a junior exploration company into a large
mining corporation through the successful development of Rio Blanco.  In keeping
with this transition, we are developing the Company's corporate governance and
corporate culture, based on the principles of corporate responsibility and
transparency.



I would like to take this opportunity to thank all directors and staff both of
Monterrico and Rio Blanco Copper SA for their contribution to the company.





REVIEW OF THE RIO BLANCO DETAILED FEASIBILITY STUDY (DFS)

The focus of our technical work since the acquisition has been to review the
Detailed Feasibility Study (DFS) for the Rio Blanco Project. As reported
previously, the DFS considers an operation treating 25Mt of ore per year over a
20 year period. This study was submitted in late 2006 and results were in part
released to the market in February 2007.



Over the past months this study has been reviewed both internally by the new
management and in conjunction with the principal consultants involved in its
preparation.



From this review we have concluded that aspects of the DFS have a number of
deficiencies and that the current design does not represent the optimum plan for
the long term development of this resource. One of the main reasons is that the
DFS considered the development of only 40% of the defined resource of 1,257 Mt
and our concern is that the DFS plan may constrain development of the full
resource and the upside potential of Rio Blanco in the future. Secondly the
rising cost of capital items over the past year, even without the inclusion of
the preferred pipeline option, makes it prudent to consider a wider range of
scales of operation, in order to optimise the economic return of the Project.
Thirdly, we feel that certain elements of the Project, notably of the design and
location of the Tailings Storage Facility (TSF), require further evaluation to
ensure the design is suitable for long term use and that all aspects meet
international environmental standards.



As a result, we have decided to commission a Trade-off study to evaluate the
alternative technical options for the development of Rio Blanco. The objective
of this study is to arrive at a design which will maximise value from the total
resource (1,257MT), optimise the economics of the Project, whilst improving
environmental and social aspects. The study will seek to build on the work to
date as much as possible. Additional drilling at Rio Blanco will also be
conducted to increase the global resource and define the upside potential for
planning purposes.



The decision to undertake this study has not been taken lightly.  We firmly
believe this study is necessary in order to be able to realise the full
potential of this important deposit.



IMPACT ON PROJECT TIME LINE

The decision to embark on a Trade-off study, with a very probable change in
Project design, will have a significant impact on the Project timetable. It is
anticipated that the trade off study will be completed in the second half of
2008, when a revised timetable for the Project will be announced.



However, in the meantime, this is broadly the time line we expect: Following
conclusion of the Trade-off study, we anticipate it will take approximately 12
months, to mid-late 2009, to take the new engineering designs to feasibility
level, with cost estimates of +/-10%. Whilst this work is being undertaken, the
environmental and social baseline work will be updated as necessary to complete
the ESIA in accordance with the new Project design.  Assuming that we have all
necessary community permits for land access, this would allow us to submit the
ESIA in mid to late 2009 with approvals following after 6 months and then
commence construction.



The Social situation remains the key factor in controlling this timetable and
the Company is working hard to consolidate relationships with local communities
and is working closely with central, regional and local governments.



SOCIAL ISSUES AND OUR SOCIAL PROGRAMME

In Peru, like the rest of South America community issues are common in the
mining industry, as they are in much of the world. Virtually all mining
companies face some community problems.  Rio Blanco is no exception.



In 2007 following the takeover by the new management, we have strengthened and
reorganised the Company's Social Programme. We have extended the network of
Community Relations offices in the area of influence of the Rio Blanco Project,
enlarged our teams of Community Relations personnel, and initiated a major new
Communications Programme, in keeping new management's commitment to
transparency.



COMMUNICATIONS

The Communications Programme is designed to promote understanding of the Rio
Blanco Project and dispel fears and misrepresentation promulgated by the
anti-mining movement. Under this Programme we have opened two new information
centres devoted to the Rio Blanco Project and mining in general. These are the
first of their kind in Peru.  In the first two months of operation, the first
centre in the regional capital of Piura received over 15,000 registered
visitors. A second centre has been opened recently and plans are underway to
open more centres in key towns throughout northern Peru. We have also expanded
the circulation of our information newsletters, and are making extensive use of
radio to reach the more remote areas. Our Spanish language website has been
redesigned to provide more information about the Project and our Social
programme in particular.



TRUST FUNDS FOR THE COMMUNITIES

To address the very common concern that local communities tend not to benefit
sufficiently from mining, in August 2007, we announced our offer to establish
voluntary Trust Funds totalling US$80 million for the two Communities closest to
the Rio Blanco site. These Funds are to be used by them for community
development projects of their choice. The Funds will be accumulated over the
mine life and will be in addition to the share of revenue  that these
communities will receive from taxes and royalties remitted to them by the State,
once Rio Blanco enters production.



STRENGTHENING RELATIONSHIPS WITH COMMUNITIES

Whilst the Trade-off study and additional engineering work are underway, we will
use our time productively on the Social Programme. Our aims are: strengthen
relationships with the communities; communicate details of the updates to the
project plans and endorse or renew land access agreements with the Communities.
We will also continue to prepare the Communities for the development of the
Project and the opportunities that it will offer, maximise participation of
local communities in company activities and integrate the Project into relevant
regional development plans.



STRATEGY GOING FORWARD

Going into 2008, I am confident that the Company will achieve greater social
support for the development of Rio Blanco.  Our Objectives and Strategies for
the next 12 months are:



* Philosophy: Continue to develop Monterrico into an international
  mining company, seeking to achieve harmonious co-development with our
  stakeholders, all while maintaining our total commitment to safeguarding 
  society and the environment.

* Technical: Revise the Project design to make best use of the potential
  of the Rio Blanco resource; to maximise economic returns and improve
  environmental and social aspects of the Project.  The technical team will
  concentrate on finalising the new trade off study, and depending on the 
  results, will extend the baseline studies for the ESIA and begin taking the 
  new Project design through to detailed feasibility level.

* Social:  Work to obtain social license. We will focus particularly on
  the local farming communities with the aim of obtaining their understanding 
  and acceptance for the development of Rio Blanco.

* Company growth: Mineral resources are the future of any mining
  company, and Monterrico will continue to pursue new project development
  opportunities and exploration in Latin America.



CONCLUSIONS

Rio Blanco is a magnificent project.  The delay in its construction is to
maximise the value of this important resource and to achieve the necessary
social support for harmonious long term operations.  I am confident that these
changes will strengthen the foundations of this very significant Project and
represent a better opportunity to create value for shareholders, local
communities and Peru as a whole.





Huang Xiaodong
Chief Executive Officer
8 April 2008





                       Chief Finance Officer's Review of

                              Financial Operations



After the acquisition by the Zijin Consortium, the new board was formed on the 1
June 2007 and one of the objectives was to reduce the administration expenses.
From January to May the Group incurred a total of US$5,93 million of costs, in
connection with the Zijin Consortium takeover. The Group, capitalised
development expenditure in the year of US$9,402,000, and at the year end, the
total capitalised expenditure for the Group was US$44,200,000.



An amount of US$30,669,038, representing the inter-company loan between
Monterrico and its Peruvian subsidiary Rio Blanco Copper S.A.  (formerly Minera
Majaz S.A.) was capitalised through two stability agreements with the Peruvian
government.



The total loss incurred for the Group in 2007 is US$10,636,000 (US$4,402,000 in
2006) including costs of    US$5,930,000 directly associated with the Zijin
Consortium takeover.



The Group has accumulated the total of US$2,969,000 receivables of IGV tax that
will be recovered after production has commenced.



The total loan and accumulated interest owed to the Zijin Consortium as at 31
December 2007 amounted to US$12,359,000.



As at 31 December 2007, the Group had cash reserves of US$5,044,000.



In February 2008 Monterrico signed a loan facility agreement of U$10,000,000
with the Zijin Consortium to cover the working capital requirements of the Group
for 2008.



Unaudited Consolidated income statement
For the year ended 31 December 2007


                                                          Note      31 December  31 December
                                                                           2007         2006
                                                                         US$000       US$000



Administrative expenses                                                 (3,940)      (4,154)
Non recurring administrative expenses                                   (5,930)            -
Other operating income                                                       19          201
Exploration costs written off                                             (495)            -
Operating loss                                                         (10,346)      (3,953)

Finance income                                                              464          931
Finance expense                                                           (754)      (1,380)

Loss from continuing operations before tax                             (10,636)      (4,402)

Taxation                                                                     -             -

Loss for the year                                                      (10,636)      (4,402)

Basic and diluted loss per ordinary share (US cents)        2            (40.4)       (17.3)





Unaudited Consolidated balance sheet
At 31 December 2007


                                                               31 December 31 December
                                                                      2007        2006
                                                                    US$000      US$000



Assets
     Property, plant and equipment                                     283         297
     Intangible assets - deferred exploration costs                 44,200      35,176
     Other receivables                                               2,969       2,088
Total non-current assets                                            47,452      37,561

     Other receivables and prepayments                                 350         497
     Cash and cash equivalents                                       5,044      12,576
Total current assets                                                 5,394      13,073

Total assets                                                        52,846      50,634

Equity
     Issued share capital                                            4,546       4,546
     Share premium                                                  50,178      50,178
     Share option reserve                                               38       1,092
     Foreign currency translation reserve                            3,213       2,391
     Retained losses                                              (18,265)     (9,136)
Total equity                                                        39,710      49,071

Liabilities
     Trade and other payables                                          777       1,563
     Loans                                                          12,359           -
Total current liabilities                                           13,136       1,563

Total equity and liabilities                                        52,846      50,634



Unaudited Consolidated statement of changes in shareholders' equity
For the year ended 31 December 2007


                                                                                  Foreign
                                                                       Share     currency
                                                   Share     Share    option  translation  Accumulated       Total
                                                 capital   premium   reserve      reserve         loss      equity
                                                  US$000    US$000    US$000       US$000       US$000      US$000

At 1 January 2006                                  3,861    32,998       350            -      (4,734)      32,475

Exchange realignment                                   -         -         -        2,391            -       2,391

Net income recognised directly in equity               -         -         -        2,391            -       2,391

Loss for the year                                      -         -         -            -      (4,402)     (4,402)
Total recognised loss for the year                     -         -         -        2,391      (4,402)     (2,011)

Issue of share capital                               685    17,792         -            -            -      18,477
Transaction cost on issue of shares                    -     (612)         -            -            -       (612)
Credit arising on share options                        -         -       742            -            -         742

At 31 December 2006                                4,546    50,178     1,092        2,391      (9,136)      49,071

At 1 January 2007                                  4,546    50,178     1,092        2,391      (9,136)      49,071

Exchange realignment                                   -         -         -          822            -         822

Net income recognised directly in equity               -         -         -          822            -         822

Loss for the year                                      -         -         -            -     (10,636)    (10,636)
Total recognised loss for the year                     -         -         -          822     (10,636)     (9,814)

Credit arising on share options                        -         -       453            -            -         453
Transfer to income statement on expired share          -         -   (1,507)            -        1,507           -
options

At 31 December 2007                                4,546    50,178        38        3,213     (18,265)      39,710



Unaudited Consolidated Cash Flow Statement
For the year ended 31 December 2007


                                                                   31 December  31 December
                                                                          2007         2006
                                                                        US$000       US$000
                                                        
Cash flows from operating activities                    
Loss before tax, finance income and finance charges                   (10,346)      (3,953)
Adjustment for:
    Depreciation                                                            97           64
    Share based payment expense                                            453          742
    Intangible assets written off                                          495            -
                                                                       (9,301)      (3,147)
Increase in other receivables and prepayments                            (698)        (568)
(Decrease)/Increase/ in trade and other payables                         (801)          469
Cash used in operations                                               (10,800)      (3,246)
Interest received                                                          332          845
Net cash outflow from operating activities                            (10,468)      (2,401)

Cash flows from investing activities
Purchase of property, plant and equipment                                 (77)        (129)
Purchase of intangible assets                                          (9,402)     (12,026)
Net cash outflow from investing activities                             (9,479)     (12,155)
                                                                                 

Cash flows from financing activities
Proceeds from the issue of ordinary share capital                            -       18,477
Payment of issue costs                                                       -        (612)
Proceeds from issue of loan                                             11,853            -
Net cash inflow from financing activities                               11,853       17,865

Net (decrease) / increase in cash and cash equivalents                 (8,094)        3,309
Cash and cash equivalents at beginning of year                          12,576        9,650
Exchange differences                                                       562        (383)
Cash and cash equivalents at end of period                               5,044       12,576





1. Accounting policies



Basis of preparation of financial statements

The consolidated financial statements are presented in US dollars and have been
prepared on the historical cost basis or the fair value basis where the fair
valuing of relevant assets and liabilities has been applied. The financial
statements have been prepared on the going concern basis on the grounds that the
Group continues to receive continuing financial support of the Zijin consortium,
the parent company of the Group.



2. Loss per share



The calculation of basic loss per ordinary share at 31 December 2007 is based on
losses of US$10,636,000 (twelve months to 31 December 2006: losses of
US$4,402,000) and a weighted average number of ordinary shares outstanding
during the period of 26,306,068 (25,445,625 for the twelve months to 31 December
2006).



3. Subsequent events



On the 4 February 2008 the Company entered into a loan facility agreement with
Xiamen Zijin Tongguan Investment Development Co., Ltd ("Zijin Consortium"), the
majority shareholder of the Company.



The Loan Facility is for an aggregate amount of up to US$10 million at an
interest rate of not greater than 1 per cent above LIBOR, as published by the
British Bankers Association (BBA). The loan is repayable on 4 February 2009.  At
the option of the Company the whole or part of the loan may be converted into
ordinary shares in the Company ("Ordinary Shares") at a conversion price of the
lower of (i) 350 pence per Ordinary Share and (ii) the average mid-market price
of an Ordinary Share over the three business days preceding the date of
conversion.



The proceeds from the Loan Facility will be used to meet the working capital
needs of the Group for 2008.



Rio Blanco Copper S.A, a Peruvian subsidiary acquired office premises on the 24
January 2008, which will be used to consolidate its operations in the Peruvian
capital Lima.  It cost US$330,000, of which US$210,000 was paid on acquisition,
and the balance is to be paid over 12 equal monthly instalments.



4. Statutory Accounts



The financial information set out above does not constitute the Company's
statutory accounts for the period ended 31 December 2007.  The 2007 figures are
based on unaudited accounts for the year ended 31 December 2007.  The financial
statements are produced in accordance with International Financial Reporting
Standards, as adopted by the European Union ("EU").



Statutory accounts for 2007 will be delivered to the Registrar of Companies
following the Company's Annual General Meeting.



Enquiries:

Monterrico Metals plc                                     Tel: + 44 20 7776 2900
Richard Ralph (Non-Executive Chairman)
Susan Connolly (Investor Relations Manager)

Ambrian Partners Limited                                  Tel: + 44 20 7634 4705
Tim Goodman




                      This information is provided by RNS
            The company news service from the London Stock Exchange
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