Interim Results

    RNS Number : 3720E
  Van Dieman Mines plc
  26 September 2008
   

    
    26 September 2008
    VAN DIEMAN MINES PLC
    (AIM: VDM)

    Interim Results

    Van Dieman Mines plc (AIM: VDM), the AIM listed mining company which is developing its 100% owned tin - sapphire mines in Tasmania,
Australia, announces its Interim Results for the period ended 30 June 2008. 

    Highlights:

    *     Restructuring of Board and Company
    *     Company to adopt a Revised Mine Development Plan for Scotia and Endurance Projects
    *     Production at Scotia expected to commence in December  2008
    *     The Company has commenced initial 1000m of 5000m confirmation drilling programme
    *     Loan facility of up to £5M from Galena Special Situations Master Fund Limited ("Galena") 

    Post Period:

    *     Review of Scotia Project completed
    *     Tasmanian Government regulatory authorities have given approval to proceed with modified mining methods 
    *     Bridge Loan of £0.75M provided by Galena 
    *     Closure of the Company's Sydney office and relocation to Tasmania
    *     Bill Wise and Harry Stacpoole, nominees of Galena, joined the Board on 29 August 2008



    ENQUIRIES:

 VAN DIEMAN MINES plc        Tel: [phone]
 Ron Goodman, Managing       Email:
 Director                    ron.goodman@
                             vandiemanmines.com
 GRANT THORNTON UK LLP       Tel: [phone]
 Fiona Owen

 FOX-DAVIES CAPITAL LIMITED  Tel: [phone]
 Daniel Fox-Davies,
 Corporate Finance

 LOTHBURY FINANCIAL          Tel: [phone]
 Michael Padley / Libby
 Moss



    Chairman's Statement

    The six months to 30 June 2008 were particularly challenging for Van Dieman Mines, with a wholesale restructuring of the Board and
Management of the Company, the departure of two of the founding Executive Directors, and the realisation that there were significant flaws
in the mining and processing plan put in place by the previous operational management. In March 2008, the Board instituted a thorough review
of all aspects of the Scotia Project and related operations. The initial outcomes of that review were announced to the market on 16 May
2008, and plans have been put in place to commence production at Scotia in December 2008.

    Progress During the First Half of  2008
    There was significant progress in some site works early in 2008, with commencement of earthworks, dam construction and plant erection.
However, it became increasingly clear that there were significant flaws in the original mining and processing plan, and in some critical
aspects of the operational management. By March 2008, it had become apparent to the Board that the previously indicated end-Q1 production
start date would not be met, resulting in the Board instituting a comprehensive review of all aspects of the Scotia Project. 
    Prior to the commencement of the review, Clive Trist resigned as Chief Executive Officer and Managing Director of the Company, and was
replaced by Ken Frey, previously Executive Director Marketing. Soon after commencement of the review, Neil Kinnane, Executive Director,
Exploration and Operations, was removed from the Board of Van Dieman Mines and left the Company. Two of the site management team also left
the company. Ron Goodman, who had joined the Board as a Non-Executive Director in October 2007, was appointed Executive Director, Operations
to manage the review process and to report its findings and recommendations to the Board. Leading experts in the geology, mining and
processing of alluvial deposits were commissioned to work with, and report to, Ron Goodman and the Mining Manager, Jim Semmens, who was
appointed in January 2008. 
    The review, which was reported upon in a press announcement on 16 May 2008, confirmed the concerns the Board had about the original
Scotia Project design. The main findings of the operational review were that the proposed mining methods and significant components of the
original process plant design for Scotia (and also planned for Endurance) were inappropriate, given the water-saturated characteristics
encountered in initial pre-stripping of the overburden and pre-commissioning of the process plant.
    The Board carefully considered and accepted the initial findings and key recommendations of the review, which resulted in the adoption
of a Revised Mine Development Plan. The revised plan will result in significant changes to aspects of mining and processing at both the
Scotia and Endurance Projects. These will include examination and trialling of alternative and potentially simpler methods to deliver the
"wet" ore from the mine to the plant. It also involves ongoing investigations to further reduce risk and to optimise the total mining
operation, including drilling, dewatering, trial mining and bulk sampling. Some modifications will also be required to the Tin Shed
Concentrating Facility.
    The Company expects that there will be material benefits to the Scotia and Endurance Projects that will result from the implementation
of the Revised Mine Development Plan including reduced capital and operating costs. The current expectation is that overall capital costs
may be reduced by an estimated A$4M to A$6M at the Scotia and Endurance Projects on the basis of expected disposal proceeds and termination
of surplus equipment on order. Subject to the mining and ore transport methods finally adopted, operating costs are also expected to be
lower, although those savings cannot be quantified until more information is available from the drilling, dewatering, trial mining and
processing. 
    The Board also accepted the conclusion from the Project Review that the basis upon which the previous management team determined the
reserves and resources was not consistent with current best practice. This is largely because of the almost total reliance on drilling data
that is 70 to 100 years old. The Company has therefore embarked on a limited (~5,000 m) confirmatory drilling programme. The proposed
drilling programme will initially focus on the Scotia Project resource, and the Company has commenced an initial programme of ~1,000m
covering the area of the initial phase of operations.

    Subsequent Events
    On 30 June 2008, the Company announced a loan facility of up to £5M from Galena Special Situations Master Fund Limited ('Galena'). 
Following shareholders approval of the relevant issuance authorities at the general meeting of 29 August 2008, Galena is now entitled to
convert the  first £3M into shares in Van Dieman Mines Plc at 6p per share.  The balance of £2M is uncommitted. As previously announced, the
Company intends to undertake a placement of shares prior to 31 December 2008.  
    On 26 August 2008, the Company announced that a Bridge Loan of £0.75M had been made by Galena to provide additional working capital
through to completion of the share placement. It is currently intended that the Bridge Loan be repaid from the share placement proceeds.
    On 6 August 2008, the Tasmanian Government regulatory authorities gave approval to proceed with the modified mining method. They will
monitor progress via normal reporting and inspection procedures. The two principal government agencies involved have been very supportive,
and the Company will work closely with them as the mine plan progresses and is further refined. 
    As announced on 18 August 2008, the Board has appointed Ron Goodman, previously Executive Director, Operations, as CEO and Managing
Director. Ron replaces Ken Frey who will retain a role in the development of the Company's sapphire joint venture. The Board thanks Ken for
his commitment and energy during the challenging times over the last six months. The Board has taken this decision in recognition of the
imperative for the Company to focus on the technical and operational challenges in bringing its Scotia and Endurance projects into
production. Ken Frey decided not to stand for re-election at the Annual General Meeting ("AGM") of the Company and resigned from the Board
at that time.
    Additionally, the Board has decided to close the Company's Sydney office and to transfer the bulk of the administration and financial
control functions to Tasmania. The move, which will be completed over the coming months, will provide savings on overhead costs and allow
for a more cohesive corporate structure for the day to day running of the Company. The Board has also identified a new CFO and Company
Secretary, Ms Lisa Norden CPA, who will join the Company on 1 October 2008.
    On 29 August 2008, as previously announced, Bill Wise and Harry Stacpoole, as nominees of Galena, became Non-Executive Directors of Van
Dieman Mines Plc.

    Looking Forward
    On 26 August 2008, the Company provided an operational update on the Scotia and Endurance Projects. Progress has been encouraging with
the programme to progressively dewater and strip the overburden well underway, and planning to deliver ore to the primary process plants in
a slurry form well in hand. Modifications have also been made to the primary process plant as it was originally designed to receive dry
feed. Commissioning of one of the twin halves of the primary processing plant is expected to take place during October and November, with
modifications to the second half of the plant to commence in October and final commissioning of the full plant in November and December. 
Production at Scotia is expected to commence in December 2008.
    The process of completing the loan facility over recent months and the consequent delay in accessing the Company's preferred contractor
meant that drilling only commenced at Scotia in mid-September. This is highly specialised drilling and the Company, following a review of
all other options, was committed to using this contractor because of the equipment and experience that they could provide. Initially, the
Company will be limiting the planned drilling programme to about 1,000m, covering the area proposed for the initial phase of the operations.

    A processing, sampling and assay protocol for concentrate from these plants and samples from the proposed drilling programme has been
agreed by the Company's operational management and a nearby assay laboratory. It is expected that the Company will achieve 1 to 2 week
turnaround from drilling/bulk sampling to receiving the tin assay by undertaking much of the sample preparation on site.
    The Board is actively reviewing ways to significantly increase production rate and reduce production risk at Scotia following
commissioning. Increasing production is important because the financial performance of the project, and the Company, are highly leveraged to
increased production as revenues increase at a faster rate than do costs. The key components of the potential expanded production are access
to multiple mining sites, increasing plant efficiency and throughput, and increasing mining and plant operating hours. All three of these
are currently being addressed, and the Company is confident of a positive outcome.
    The Development Plan and Environmental Management Plan (DPEMP) for Endurance is under consideration by the Tasmanian government
regulatory authorities, who understand that the mining method there is likely to change due to wet mining conditions. The Company will be
reviewing mining options at Endurance as it learns from early mining and commissioning at Scotia.
    Your Board welcomes Galena as a strategic partner and is extremely grateful for their ongoing financial support. We are delighted to
welcome Galena's  nominees, Bill Wise and Harry Stacpoole, to the Board.  I would also like to express my personal appreciation to my other
two fellow directors, Ron Goodman  and Nigel Christie , who have invested more time, energy and expertise into the Company than either
considered they would when they joined the Board.

    Mike Etheridge
    Non-Executive Chairman










    VAN DIEMAN MINES PLC

    CONSOLIDATED INTERIM FINANCIAL STATEMENTS
    for the period ended 30 June 2008

    CONSOLIDATED INTERIM INCOME STATEMENT

                                       Six months to  Six months to           Year to
                                        30 June 2008   30 June 2007  31 December 2007
                          Note            un-audited     un-audited           Audited
                                                   £              £                 £


 Mining expenses                            (12,548)       (15,774)         (247,106)
 Depreciation expense                      (169,759)       (57,066)         (135,699)
 Impairment of 
     plant & equipment    2(i)             (564,061)              -                 -
 Administrative expenses           (1,285,036)            (489,514)       (1,611,369)

                                      (2,031,404)         (562,354)       (1,994,174)

 Interest received                            49,535         81,086            48,699
 Finance costs                             (138,069)              -          (23,646)

 Net financing income /                     (88,534)         81,086            25,053
     (expense)

 Loss for period from                    (2,119,938)      (481,268)       (1,969,121)
     continuing
 operations  
 Loss on non-current                       (117,154)              -                 -
     assets held for
 re-sale 

 Loss for the period                    (2,237,092)       (481,268)       (1,969,121)

 Basic and diluted 
 loss per share           3                 ( 1.45p)        (0.52p)           (1.82p)




    CONSOLIDATED INTERIM STATEMENT OF RECOGNISED 
    INCOME AND EXPENSE

                                  Six months to  Six months to           Year to
                                   30 June 2008   30 June 2007  31 December 2007
                                     un-audited     un-audited           audited
                                              £              £                 £
 Exchange difference on                 738,106        147,472           495,571
 translation of foreign subsidy
 Loss for the period                (2,237,092)      (481,268)       (1,969,121)
 Total recognised income and        (1,498,986)      (333,796)       (1,473,550)
 expense for the period  

      
    VAN DIEMAN MINES PLC

    CONSOLIDATED INTERIM FINANCIAL STATEMENTS
    for the period ended 30 June 2008

    CONSOLIDATED INTERIM BALANCE SHEET
                                   Six months to     Six months to           Year to
                                    30 June 2008      30 June 2007  31 December 2007
                                      un-audited        un-audited           audited
                                               £                 £                 £
 ASSETS 
 Non-current assets 
 Property, plant and equipment         8,086,387         2,847,578         6,224,896
 Deferred exploration costs            2,515,000         2,757,195         2,227,393
 Trade & other receivables               299,611            70,739           255,487
                                      10,900,998         5,675,512         8,707,776
 Current assets 
 Trade and other receivables             288,516            41,270           302,422
 Cash & cash equivalents                 477,232            55,874         3,896,070
                                         765,748            97,144         4,198,492

 Non-current assets held for           1,780,746                 -                 -
 re-sale
 Total assets                         13,447,492         5,772,656        12,906,268

 EQUITY
 Issued Capital                       1,541,921            916,921         1,541,921
 Share premium account                11,062,144         6,497,169        11,087,144
 Warrant reserve                         484,784                 -           484,784
 Translation reserve                   1,352,996           266,791           614,890
 Accumulated losses                  (6,386,503)       (2,661,558)       (4,149,411)

 Total equity                          8,055,342         5,019,323         9,579,328

 LIABILITIES
 Non-current liabilities 
 Interest-bearing loans and              425,359           305,352           639,150
 borrowings
 Current liabilities
 Interest-bearing loans and            2,259,808            95,450         1,959,193
 borrowings
 Trade and other payables              1,523,176           352,531           728,597
                                       3,782,984           447,981         2,687,790
 Owing on non-current assets           1,183,807                 -                 -
 held 
 for re-sale
 Total liabilities                     5,392,150           753,333         3,326,940

 Total equity & liabilities           13,447,492         5,772,656        12,906,268

      VAN DIEMAN MINES PLC

    CONSOLIDATED INTERIM FINANCIAL STATEMENTS
    for the period ended 30 June 2008

    CONSOLIDATED INTERIM STATEMENT OF CHANGES OF EQUITY

                             Share         Share premium  Warrant reserve  Translation  Accumulated losses               Equity
                           capital               account                       reserve                                    Total
                                 £                     £                £            £                   £                    £
 Balance at                916,921             6,497,169                       119,319         (2,180,290)            5,353,119
 1 January 2007                                                         -
 Exchange differences            -                     -                       147,472                   -              147,472
 on translation of
 foreign operations


                                                                        -
 Loss for the period             -                     -                -            -           (481,268)            (481,268)
 Balance as at             916,921             6,497,169                       266,791         (2,661,558)            5,019,323
 30 June 2007

                                                                        -

                                 £                     £                £            £                   £                    £
 Balance at              1,541,921            11,087,144                       614,890         (4,149,411)            9,579,328
 1 January 2008

                                                                  484,784
 Exchange differences            -                     -                -      738,106                   -              738,106
 on translation of
 foreign operations
 Transaction costs               -              (25,000)                -            -                   -             (25,000)
 Loss for the period             -                     -                -            -         (2,237,092)       (2,237,092)   
 Balance as at           1,541,921            11,062,144          484,784    1,352,996         (6,386,503)            8,055,342
 30 June 2008

      VAN DIEMAN MINES PLC

    CONSOLIDATED INTERIM FINANCIAL STATEMENTS
    for the period ended 30 June 2008

    CONSOLIDATED INTERIM CASH FLOW STATEMENT

                                    Six months to         Six months to               Year to
                                     30 June 2008          30 June 2007      31 December 2007
                                       un-audited            un-audited               audited
                                                £                     £                     £
 Cash flows from
 operating activities
 Loss after taxation                  (2,148,558)             (481,268)           (1,994,174)
 Adjustments for
 Depreciation                             169,759                57,066               135,699
 Interest Paid                          (138,069)                     -              (23,646)
 Decrease/(Increase) in trade            (30,218)              (37,139)             (256,395)
 and other receivables
 Increase/(Decrease) in trade             978,282                23,393               168,384
 payables
 Net cash used in                  (1,168,804)                                  (1,970,132)  
 operating activities                                    (437,948)     

 Cash flows from 
 investing activities
 Acquisition of property, plant       (2,578,791)             (862,487)           (2,699,318)
 and equipment and exploration
 costs 
 Interest received                      49,535                   81,086                48,699
 Net cash used in investing           (2,529,256)             (781,401)           (2,650,619)
 activities
 Cash flows from financing
 activities
 Proceeds from other loans                480,885                     -             1,634,913
 Proceeds from issue of share                   -                     -             6,324,000
 capital
 Transaction costs                       (25,000)                     -             (624,241)
 Payment of finance lease &             (304,460)              (58,576)             (228,344)
 hire purchase liabilities
 Net cash used provided from              151,425              (58,576)             7,106,328
 financing activities

 Net increase / (decrease) in         (3,546,635)           (1,277,925)             2,485,577
 cash and cash equivalents
 Foreign exchange movement                127,797              (41,799)                34,895
 Cash and cash equivalents              3,896,070             1,375,598             1,375,598
 at beginning of period
 Cash and cash equivalents                477,232                55,874             3,896,070
 at end of period


      

 VAN DIEMAN MINES PLC

                                             NOTES TO THE UNAUDITED INTERIM FINANCIAL STATEMETNS
                                                     FOR THE SIX MONTHS TO 30 JUNE 2008 

 General Information 
 Van Dieman Mines Plc ("the Company") is a company incorporated in England and Wales under the Companies act 1985. The Company's registered
 office is 27/28 Eastcastle Street, London, WIW 8DH. 

 The principal activity of the Company and its subsidiary ("the Group") is the exploration for tin and sapphires and to develop and operate
 mining activities in Northern Tasmania, Australia. 

 The Group's principal activity is carried out in Australian dollars. The interim results are presented in British Pounds as this is the
 currency of the country (the UK) from which the Group operates.

 1.                                                                          Application of the going concern basis

 The Group's ability to continue as a going concern and develop and operate its mining activities are primarily dependent upon its ability
to
 fund its development and exploration programmes and to manage and generate positive cash flows from operations in the future, which will
be
 significantly affected by tin and sapphire prices. 

 The Directors have carried out a review of the Scotia Project, and adopted a Revised Mine Development Plan. The Board concluded that
further
 finance was required to complete development of the Scotia and Endurance mines and provide adequate working capital until the Group
achieves
 positive operating cash flows.  

 On 30 June 2008 the Company made an announcement concerning a Loan Facility of up to £3 million from Galena Special Situations Master Fund
 Limited ("Galena") which may be extended at Galena's discretion by up to a further £2 million (see www.vandiemanmines.com). The
announcement
 included the following key information: 

                                 * Galena granted an immediate loan facility, subject to certain conditions set out below, of up to £3
                                 million, to be drawn down in part to fund the Company's immediate working capital requirements, at the
sole
                                 discretion of Galena (the "Loan Facility"). Under the terms of the facility agreement a further £2 million
                                 may be drawn down at the discretion of Galena to the extent that the Company is not able to raise that sum
                                 through an equity issue.
                                 * The Loan Facility was conditional upon the Australian Foreign Investment Review Board ("FIRB")
consenting
                                 to Galena taking registered security over the assets of the Company and Van Dieman Mines Pty Ltd. Consent
                                 was received from the FIRB on 9 July 2008.  The Loan Facility is also subject to the shareholders of the
                                 Company passing the resolutions at the general meeting of the company on 29 August 2008 ("General
Meeting").

                                 * At the General Meeting, resolutions increasing the authorised share capital of the Company and
increasing
                                 the Directors' authorities under sec
 The Directors have therefore concluded that it is appropriate to prepare accounts on the going concern basis. However, there can be no
 certainty that the fund raising will be sufficient and, as with many projects of this nature, there remain significant uncertainties as to
 the timing and amount of forecast cash flows. These financial statements do not reflect the adjustments to carrying values of assets and
 liabilities and the reported expenses and balance sheet classifications that would be necessary should the going concern assumption be
 inappropriate, and these adjustments could be material.

 2.                                                                          Significant accounting policies

 The consolidated financial statements of the Company for the 6 months ended 30 June 2008 comprise the Company and its subsidiary.

  (a)                                                  Basis of preparation

 The financial statements are presented in British Pounds, rounded to the nearest Pound.  

 The interim results have been prepared in accordance with International Accounting Standard 34 "Interim Financial Reporting".

 The annual financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS). 

 The interim financial statements have been prepared under the historical cost convention. The financial information is in conformity with
 generally accepted accounting principles and requires the use of estimates and assumptions that affect the reported amounts of revenues
and
 expenses during the reporting period. Although these estimates are based in management's best knowledge of the amount, event or actions,
 actual results ultimately may differ from those estimates. 
 The financial statements do not constitute statutory accounts within the meaning of Section 240 of the Companies Act 1985. They have been
 prepared on a going concern basis in accordance with the International Reporting Standards. The accounting policies applied in preparing
the
 financial statements consistent with those that were adopted in the Group's 2007 statutory accounts. The financial statements for the
 periods ended 30 June 2008 and 30 June 2007 have not been audited.

  The principal accounting policies adopted are set out below.

 (b)                                                   Basis of consolidation
 (i)                                                   Subsidiary

 A subsidiary is an entity controlled by the Company. Control exists when the Company has the power, directly or indirectly, to govern the
 financial and operating policies of an entity so as to obtain benefits from its activities. In assessing control, potential voting rights
 that presently are exercisable or convertible are taken into account. The financial statements of the subsidiary are included in the
 consolidated financial statements from the date that control commences until the date that control ceases. 

 (ii)                                                  Transactions eliminated on consolidation

 Intra-group balances and any unrealised gains and losses or income and expenses arising from intra-group transactions,
 are eliminated in preparing the consolidated financial statements. 

 (c)                                                   Foreign currency
 (i)                                                   Functional and presentation currency 
 Items included in the financial statements of each of the Group's entities are measured using the currency of the
 primary economic environment in which the entity operates ("the functional currency"). The consolidated financial
 statements are presented in British Pounds, which is the Group's presentation currency and the functional currency of
 the Company.
 Transactions in foreign currencies are translated into functional currency at the foreign exchange rate ruling at the
 date of the transaction. Monetary assets and liabilities denominated in foreign currencies at the balance sheet date
 are translated into the functional currency at the foreign exchange rate ruling at that date. Foreign exchange
 differences arising on translation are recognised in the income statement. Non-monetary assets and liabilities that
 are measured in terms of historical cost in a foreign currency are translated using the exchange rate at the date of
 the transaction.  

 (ii)                                                  Financial statements of foreign operations 

 The assets and liabilities of foreign operations are translated to British Pounds at foreign exchange rates ruling at
 the balance sheet date. The revenues and expenses of foreign operations are translated to British Pounds at rates
 approximating to the foreign exchange rates ruling at the dates of the transactions. 

 (iii)                                                 Net investment in foreign operations 

 Exchange differences arising from the translation of the net investment in foreign operations are taken to translation
 reserve. They are released into the income statement upon disposal. 

 (d)                                                   Property, plant and equipment 
 (i)                                                   Owned assets 

 Items of property, plant and equipment are stated at cost. The cost of self-constructed assets includes the cost of
 materials, direct labour, the initial estimate, where relevant, of the costs of dismantling and removing the items and
 restoring the site on which they are located.

 Where parts of an item of property, plant and equipment have different useful lives, they are accounted for as
 separate items of property, plant and equipment. 

 (ii)                                                  Leased assets

 Leases in terms of which the Group assumes substantially all the risks and rewards of ownership are classified as
 finance leases. 

 (iii)                                                 Subsequent costs 

 The Group recognises in the carrying amount of an item of property, plant and equipment the cost of replacing part of
 such an item when that cost is incurred if it is probable that the future economic benefits embodied with the item
 will flow to the Group and the cost of the item can be measured reliably. All other costs are recognised in the income
 statement as an expense as incurred.
 (iv)                                                  Depreciation

 Depreciation is charged to the income statement or capitalised as part of the exploration and evaluation costs where
 appropriate, on a straight-line basis over the estimated useful lives of each part of an item of property, plant and
 equipment. Land is not depreciated. The estimated useful lives are as follows: 

 * buildings                                                                                       40 years
 * mining plant and equipment                                                                      3 to 15 years 
 * motor vehicles                                                                                  7 years 
 * computer equipment                                                                              3 years
 * fixtures, fittings and equipment                                                                3 years

 Depreciation is not charged on mining plant and equipment until mining activities have commenced.

 (e)                                                   Non-current assets held for sale  
 The Group, in adopting a revised mine development plan, holds plant and equipment surplus to its needs. Buyers for
 this surplus plant and equipment are being actively sought. 
 A fair market value has been established by the Group.  
 Non-current assets held for sale, are valued at the lower of carrying amount and fair value, less costs to sell. 

 (f)                                                   Intangible assets 
 (i)                                                   Exploration and evaluation costs

 These comprise costs directly incurred in exploration and evaluation as well as the cost of mineral licences. Once
 local title to the project area is obtained, exploration and evaluation costs are capitalised as intangible assets
 pending determination of the feasibility of the project. When the existence of economically recoverable reserves is
 established the related intangible assets are reclassified as mine development costs.

 Capitalised exploration expenditures are reviewed for impairment losses. Impairment reviews for deferred exploration
 and evaluation costs are carried out on a project by project basis, with each project representing a potential single
 cash generating unit. An impairment review is undertaken when indicators of impairment arise but typically when one of
 the following circumstances apply:

 * unexpected geological occurrences that render the resource uneconomic;
 * title to the asset is compromised;
 * variations in metal prices that render the project uneconomic; and
 * variations in the currency of operation.

 Where a project is abandoned or is determined not to be economically viable, the related costs are written off. The
 recoverability of deferred exploration and evaluation costs is dependent upon a number of factors common to the
 natural resource sector. These include the extent to which the Group can establish economically recoverable reserves
 on its properties, the ability of the Group to obtain necessary financing to complete the development of such reserves
 and future profitable production or proceeds from the disposition thereof. 

 (ii)                                                  Subsequent expenditure

 Subsequent expenditure on capitalised intangible assets is capitalised only when it increases the future economic
 benefits embodied in the specific asset to which it relates. All other expenditure is expensed as incurred. 

 (g)                                                   Trade and other receivables

 Trade and other receivables are stated at amortised cost. 

 (h)                                                   Cash and cash equivalents

 Cash and cash equivalents comprise cash balances and call deposits. Bank overdrafts that are repayable on demand and
 form an integral part of the Group's cash management are included as a component of cash and cash equivalents for the
 purpose of the statement of cash flows. 

 (i)                                                   Impairment

 The carrying amounts of the Group's assets (except deferred tax assets - see accounting policy (m)), are reviewed at
 each balance sheet date to determine whether there is any indication of impairment. If any such indication exists, the
 asset's recoverable amount is estimated - see accounting policy (i)(i).

 An impairment loss is recognised whenever the carrying amount of an asset or its cash-generating unit exceeds its
 recoverable amount. Impairment losses are recognised in the income statement. 

 As a result of mine plant modifications in line with the current revision of the mine plan, costs incurred to date
 were reviewed and have resulted in an impairment loss of £564,061 being written off in the Income Statement for the
 period ended 30 June 2008. 

 Impairment losses recognised in respect of cash-generating units are allocated first to reduce the carrying amount of
 any goodwill allocated to cash-generating units (group of units) and then, to reduce the carrying amount of the other
 assets in the unit (group of units) on a pro rata basis. Deferred exploration and evaluation costs are reviewed for
 impairment in accordance with accounting policy (f)(i).

 (i)                                                   Calculation of recoverable amount 

 The recoverable amount of other assets is the greater of their net selling price and value in use. In assessing value
 in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that
 reflects current market assessments of the time value of money and the risks specific to the asset. For an asset that
 does not generate largely independent cash inflows, the recoverable amount is determined for the cash-generating unit
 to which the asset belongs. 

 (ii)                                                  Reversals of impairment

 In respect of other assets, an impairment loss is reversed if there has been a change in the estimates used to
 determine the recoverable amount. 

 An impairment loss is reversed only to the extent that the asset's carrying amount does not exceed the carrying amount
 that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised. 

 (j)                                                   Provisions

 A provision is recognised in the balance sheet when the Group has a present legal or constructive obligation as a
 result of a past event, and it is probable that an outflow of economic benefits will be required to settle the
 obligation. If the effect is material, provisions are determined by discounting the expected future cash flows at a
 pre-tax rate that reflects current market assessments of the time value of money and, where appropriate, the risks
 specific to the liability.

 (k)                                                   Trade and other payables

 Trade and other payables are stated at amortised cost.

 (l)                                                   Expenses

 (i)                                                   Operating lease payments
 Payments made under operating leases are recognised in the income statement on a straight-line basis over the term of
 the lease. Lease incentives received are recognised in the income statement as an integral part of the total lease
 expense.

 (ii)                                                  Finance lease payments

 Minimum lease payments are apportioned between the finance charge and the reduction of the outstanding liability. The
 finance charge is allocated to each period during the lease term so as to produce a constant periodic rate of interest
 on the remaining balance of the liability.

 (iii)                                                 Borrowing costs

 Borrowing costs are recognised in the income statement.

 (m)                                                   Income tax

 Income tax on the profit or loss for the year comprises current and deferred tax. Income tax is recognised in the
 income statement except to the extent that it relates to items recognised directly in equity, in which case it is
 recognised in equity. 
 Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted at the balance
 sheet date, and any adjustment to tax payable in respect of previous years. 

 Deferred tax is provided using the balance sheet liability method, providing for temporary differences between the
 carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation
 purposes. The following temporary differences are not provided for: the initial recognition of assets or liabilities
 that affect neither accounting nor taxable profit, and differences relating to investments in subsidiaries to the
 extent that they will probably not reverse in the foreseeable future. The amount of deferred tax provided is based on
 the expected manner of realisation or settlement of the carrying amount of assets and liabilities, using tax rates
 enacted or substantively enacted at the balance sheet date. 

 A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be
 available against which the asset can be utilised. Deferred tax assets are reduced to the extent that it is no longer
 probable that the related tax benefit will be realised. 

 Additional income taxes that arise from the distribution of dividends are recognised at the same time as the liability
 to pay the related dividend. 

 (n)                             Mine development costs 

 Exploration costs are capitalised as intangible fixed assets until a decision is made to proceed to development.
 Related costs are transferred to mine development costs. Before reclassification, exploration costs are assessed for
 impairment and any impairment loss recognised in the income statement. Subsequent development costs are capitalised
 under mining assets, together with any amounts transferred from intangible exploration assets. Mining assets are
 amortised over the estimated life of the commercial ore reserves on a unit of production basis. 

 (o)                             Share based payments

 The Group has applied the requirements of IFRS2 in respect of warrants issued in consideration of capital raising
 costs incurred during the year and which have been credited to the warrant reserve.

 The fair value of services received in return for warrants granted is measured by reference to the fair value of the
 warrants issued, at date of issue. This estimate is determined using an appropriate valuation model considering the
 effects of the exercise conditions, expected exercise period and the payment of dividends by the Company.

 3.                                                                          Earnings/(Loss)

        
                                        Six months to                       Six months to  
                                         30 June 2008                        30 June 2007  
                                                    £                                   £  
                                                                                           
 Basic loss per share                         (1.45p)                             (0.52p)  
                                                                                           
 The calculation of basic loss per share is based on a loss for the period of £2,237,092
 (2007:£481,268) and 154,192,107 ordinary shares (2007: 91,692,107 ordinary shares), being
 the weighted average number of ordinary shares in issue during the period.
    
4.    Capital commitments
    The Company has committed to purchase plant and equipment from a United States supplier with a total contract value of £896,424. At 30
June 2008, the Company had paid a total of £519,786 against this contract. Upon completion of plant construction in the United States to
contract specification, 95% of the total contract value is payable, the remaining 5% being retained until erection and final commissioning
of the plant in Tasmania.

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