News
Final Results for the year ended
30 September 2009
Lotus Resources Plc, ('Lotus' or 'the Company'), a company engaged in the development of mining and exploration projects in Mongolia, announces its results for the year ended 30 September 2009, a period of substantial progress for the Company.
Highlights:
- Two Exploration Licences acquired
- One Mining Licence acquired
- Trial mining carried out
- Initial revenue from sales and trading received
- Retained loss for the year £425,489 (2008: loss £323,634)
Post Period
- £700,000 Placing completed
- Additional mining project acquired at Tsagaan Chuluut
- Shareholding in both joint venture Exploration Licences increased
- Board appointment
Simon Longworth, Chief Executive, Lotus Resources Plc commented:
"The past year has seen continued good progress in the growth and development of Lotus Resources' project portfolio in Mongolia where we have identified the opportunity to build an integrated fluorspar exploration, mining, processing and trading operation.
"Development of the initial open pit mine at Amgalan is expected to start shortly. Initial mining by open pit at Dai Uul is expected to commence in mid 2010 subject to the grant of the mining licence and other necessary permissions. Mine planning for the underground mining operation at both Amgalan and Tsagaan Chuluut, which we acquired post period, is currently being undertaken by the Mongolian Mining Institute.
"Overall we have had a very successful year and it is the Board's intention to build upon the progress made and the strategy is to exploit our existing licences whilst continuing to acquire additional near production assets."
Enquiries:
Lotus Resources Plc
Simon Longworth
Chief Executive
Tel: +976 8800 8983
and +86 (0) 1350 107 0840
James Benson
Finance Director
Tel: +44 (0) 7768 242 660
Rivington Street Corporate Finance
Eran Zucker
Tel: +44 (0) 20 7562 3389
Lothbury Financial
Michael Padley
Tel: +44 (0) 20 7011 9411
Chief Executive's Statement
I am pleased to announce the results of the Company for the year ended 30 September 2009.
Overview
The past year has seen continued good progress in the growth and development of Lotus Resources' project portfolio in Mongolia where we have identified the opportunity to build an integrated fluorspar exploration, mining, processing and trading operation.
During the year the Company formed several business arrangements with local partners. Through these we acquired two exploration licences and one mining licence and undertook a small amount of trading in fluorspar. Since the year end we have acquired a further mining licence in our own right and have increased the holding in both of the exploration licences.
Financial results for the year ended 30th September 2009
The Group made a loss before tax of £425,489 (year ended 30 September 2008: Loss £323,634) with the expenditure primarily invested in investigating potential mining investments and acquiring exploration and mining licences.
During the year the Company successfully raised £133,285 from the issue of 4.4 million shares at an average of 3p per share and since the year end has raised a further £200,000 through the issue of 10 million shares at 1p per share and 4.69 million shares at 2.13p per share. In addition the Company has raised a £ 500,000 Cumulative Convertible Redeemable Secured Loan Note as shown in note 4.
This has provided the Company with working capital and asset finance to pursue its strategy.
As at 30 September 2009, the Company had cash of £43,701.
Operations
Lotus Resources Plc operates in Mongolia through its wholly owned subsidiary Lotus Minerals Mongolia LLC ("LMML") which holds the Group's investments in its mining and exploration companies.
Lotus Bayalag LLC was formed on 10 November 2008 and the Exploration Licence was transferred to Lotus Bayalag on 15 May 2009 when Mr Orgil Enkh-Onon, a local Mongolian businessman, took an interest of 35% in the company. LMML now owns 80% of the company, having acquired a further 15% on 25 December 2009 for $15,000. The exploration licence covers 1,066.7 hectares and is located approximately 225km east of Ulaanbaatar. Limited exploration work has been carried out on this licence so far, which involved trenching and test pitting on three outcropping fluorite veins. An exploration programme has been prepared to cover mapping and trenching and will commence during 2010.
Lotus Dai Uul LLC was formed on 16 February 2009 and the Exploration Licence was transferred to Lotus Dai Uul on 23 April 2009 when GXT LLC, a Mongolian company took an interest of 49% in the company. LMML now owns 100% of the company having acquired a further 49% on 12 January 2010 for $70,000. The licence covers 83 hectares approximately 300km southeast of Ulaanbaatar. It is located near the Bor-Ondor Mine (the biggest fluorspar mine in Mongolia) in the Bor-Ondor fluorspar district. In April 2009 the Company undertook a limited exploration programme in the area. The trench and drill data from that exploration work confirmed the validity of the results recorded by the Russians in the 1980s.
Trial mining was undertaken during the summer of 2009, and an application for the grant of a mining licence is being prepared. We expect to commence open pit mining in mid 2010 subject to the grant of the necessary permissions.
Lotus Amgalan LLC was formed on 10 June 2009 and the Mining Licence, which covers 35 hectares, was transferred to Lotus Amgalan on 30 June 2009 when Amguulan LLC, a Mongolian company took an interest of 49% in the company. The site is located approximately 410km southeast of Ulaanbaatar. It is expected that we will be able to commence mine development in Spring 2010.
Since the year end LMML has acquired the Tsagaan Chuluut Mining Licence. This was transferred to LMML on 30 December 2009 for a total consideration of $70,000. The property is located in the Dornogobi Province in central eastern Mongolia, approximately 400km southeast of the Mongolian capital of Ulaanbaatar, and 170km east-southeast of the town of Choir. The mining licence covers an area of 33 hectares. A Government approved resource of 167,000 tonnes of fluorspar ore has been defined to date. The resources are amenable to small scale open pit and underground mining.
Strategy
During 2010 the main focus will be to build an integrated fluorspar business that will encompass exploration, mining, processing and trading of both metallurgical and acid grade fluorspar. This will entail bringing three of the licences into production once all necessary permissions have been obtained, and conducting further exploration on all of the properties to define additional resources. The Company is actively looking for additional mining and exploration licences in order to add further resources and is also seeking opportunities to expand into fluorspar processing and trading either by making acquisitions or on its own account.
The Company is also keen to add exploration properties for gold and non-ferrous base metals. It is the Directors' intention to identify and acquire small scale, high grade deposits that can be quickly brought into production.
These opportunities, together with the additional commitments under the mining and exploration licences already acquired,and the need for additional working capital will require the Company to raise additional funding. The scale and timing of the fundraising will be dependent on the requirements of the individual projects.
Board
Ian Wang resigned as a director on 9 December 2009. I would like to thank him for his support since the Company was founded in 2006. In his place we welcome Dr Peter McNeill to the Board. Peter has considerable experience of Mongolia which will be valuable as we continue to develop the Company's activities.
I would like to end by thanking the co-founders, shareholders and staff who have been very supportive during these important initial stages in the Company's development and subject to my comments above I look forward to the future with great confidence.
Simon Longworth
Chief Executive
Consolidated Income Statement
For year ended 30 September 2009
| Notes | 2009 | 2008 | ||
| Continuing operations | £ | £ | ||
| Revenue | 23,949 | - | ||
| Administration expenses | (451,405) | (326,540) | ||
| Operating loss | (427,456) | (326,540) | ||
| Interest receivable | 1,974 | 2,939 | ||
| Finance costs | (7) | (33) | ||
| Loss before income tax | (425,489) | (323,634) | ||
| Income tax expense | - | - | ||
| Loss for the year | (425,489) | (323,634) | ||
| Attributable to: | ||||
| Equity holders of the company | (425,489) | (323,634) | ||
| Minority interests | - | - | ||
| Loss for the year | (425,489) | (323,634) | ||
| Loss per share | ||||
| Basic (pence per share) | 2 | (1.02) | (1.02) | |
| Diluted (pence per share) | 2 | (1.02) | (1.02) |
Consolidated Balance Sheet
As at 30 September 2009
| 2009 | 2008 | |||
| ASSETS | £ | £ | ||
| Non-current assets | ||||
| Intangible assets | 172,501 | - | ||
| Property, plant and equipment | 23,085 | 10,410 | ||
| 195,586 | 10,410 | |||
| Current assets | ||||
| Trade and other receivables | 26,756 | 10,359 | ||
| Cash and cash equivalents | 43,701 | 395,690 | ||
| 70,457 | 406,049 | |||
| Total assets | 266,043 | 416,459 | ||
| EQUITY AND LIABILITIES | ||||
| Equity attributable to equity holders of the company | ||||
| Issued capital | 454,269 | 409,841 | ||
| Share premium | 574,968 | 504,443 | ||
| Foreign currency translation reserve | 5,930 | - | ||
| Accumulated losses | (941,726) | (552,440) | ||
| 93,441 | 361,844 | |||
| Minority interests | 94,782 | - | ||
| Total Equity | 188,223 | 361,844 | ||
| Current liabilities | ||||
| Trade and other payables | 77,820 | 54,615 | ||
| Total equity and liabilities | 266,043 | 416,459 |
The financial statements were approved and authorised for issue by the Board and were signed on its behalf on 24 February 2010.
Consolidated Cash Flow Statement
For the year ended 30 September 2009
| Notes | 2009 | 2008 | ||
| £ | £ | |||
| Net cash from operating activities | (376,616) | (300,451) | ||
| Finance income | 1,974 | 2,939 | ||
| Finance costs | (7) | (33) | ||
| (374,649) | (297,545) | |||
| Cash flows from investing activities | ||||
| Purchases of property, plant and equipment | (14,574) | (10,764) | ||
| Purchases of intangible assets | (77,719) | - | ||
| Net cash used in investing activities | (92,293) | (10,764) | ||
| Cash flows from financing activities | ||||
| Net proceeds from the issue of shares | 114,953 | 693,092 | ||
| Net cash flow on financing activities | 114,953 | 693,092 | ||
| Net (decrease)/increase in cash and cash equivalents | (351,989) | 384,783 | ||
| Cash and cash equivalents at the beginning of the year | 395,690 | 10,907 | ||
| At the end of the year | 43,701 | 395,690 |
Notes
1. Basis of Preparation
Whilst the financial information included in this announcement has been prepared in accordance with International Financial Reporting Standards (IFRS), this announcement does not contain sufficient information to comply with IFRS. The Company will publish full financial statements that comply with IFRS in due course.
The financial information set out in the announcement does not constitute the Company's statutory accounts for the year ended 30 September 2009 or the year ended 30 September 2008. The financial information for the year ended 30 September 2009 and the year ended 30 September 2008 are extracted from the statutory accounts of Lotus Resources plc. The auditors have reported on those accounts; their report was unqualified, but did include references to matters to which the auditors drew attention by way of emphasis without qualifying their report as set out below:
Opinion on the financial statements
In our opinion:
- the financial statements give a true and fair view of the state of the Group's and of the
- Parent Company's affairs as at 30 September 2009 and of the group's loss for the year then ended;
- the Group financial statements have been properly prepared in accordance with IFRS as adopted by the European Union;
- the Parent Company financial statements have been properly prepared in accordance with IFRS as adopted by the European Union and as applied in accordance with the provisions of the Companies Act 2006; and
- the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.
Emphasis of matter - going concern
In forming our opinion, which is not qualified, we have considered the adequacy of the disclosures in note 2 concerning the company's ability to continue as a going concern. The financial statements and related notes have been prepared on the assumption that the Parent Company will be able to raise new finance to fund both the potential exploitation of any mineral reserves and to provide the Company and Group with working capital for a period of not less than 12 months from the date of this report. This condition indicates the existence of a material uncertainty which might cast doubt about the Group's ability to continue as a going concern. The financial statements do not include the adjustments that would result if the company was unable to continue as a going concern.
2. Going Concern
In determining the appropriate basis of preparation of the financial statements, the Directors are required to consider whether the Group can continue in operational existence for the foreseeable future.
In common with many early stage mining and exploration companies, the Company raises finance for its activities in discrete tranches. Further funding is raised as and when required. When any of the Group's projects move to the development stage, specific financing will be required. The ability to obtain additional funding will also be dependent on the likelihood of discovering economically recoverable mineral reserves.
The directors prepare annual budgets and cash flow projections that extend beyond 12 months from the date of this report. These projections include the proceeds of future fundraising and planned discretionary project expenditures necessary to maintain the Company and Group as a going concern. Although the Company has been successful in raising finance in the past, there is no assurance that it will obtain adequate finance in the future. However, the directors have a reasonable expectation that they will secure additional funding when required to continue meeting mining and, exploration costs and corporate overheads for the foreseeable future and therefore believe that the "going concern" basis is appropriate for the preparation of the financial statements
3. Basis of consolidation
The consolidated financial statements incorporate the financial statements of the Company and entities controlled by the Company (its subsidiaries). Control is achieved where the Company has the power to govern the financial and operating policies of an investee entity so as to obtain benefits from its activities.
Minority interests in the net assets of consolidated subsidiaries are identified separately from the Group's equity therein.
4. Post Balance Sheet Events
On 16 October 2009 10,000,000 ordinary 1p shares were issued at 1p and 800,000 ordinary 1p shares were issued at 2.5p.
On 8 December 2009 the company entered into an agreement with Habsburg & Partner Advisory AG to raise up to £150,000. Through the issue of 7,042,253 shares at 2.13p Habsburg & Partner Advisory AG has undertaken to make and settle payment of this amount within 30 days of the shares being received by the Subscriber. These funds which were due on 15th February have not been received.
On 8 December 2009 Lotus Resources Plc has placed 975,876 new ordinary shares at 2.13p per share, for a total of £20,786.
On 25 December 2009 Lotus Resources plc, through its wholly owned subsidiary Lotus Minerals Mongolia LLc acquired a further 15% of Lotus Bayalag LLC for consideration of £9,375 increasing its holding to 80%.
On 28 December 2009 the Company's investments in three dormant subsidiaries, Lotus Resources (Jin Yi) Limited, Lotus Resources (Jin Long) Limited and Lotus Resources (Jin Yuang), were transferred to Simon Longworth at book value.
On 30 December 2009 Lotus Resources plc, through its wholly owned subsidiary Lotus Minerals Mongolia LLC acquired a fluorspar mining licence at Tsagaan Chuluut for consideration of £43,750.
On 13th January 2010 Lotus Resources plc, through its wholly owned subsidiary Lotus Minerals Mongolia LLC acquired the additional 49% of the issued share capital of Lotus Dai Uul LLC not already owned for £62,500.
On 10 February 2010 Lotus Resources plc placed 4,694,835 ordinary shares at 2.13 pence per share for a total of £100,000 together with the issue of of warrants over 14,084,505 Ordinary Shares of 1p each exerciseable as follows:
- 4,694,835 warrants @2.13p for up to one year from issue
- 4,694,835 warrants @3.2p for up to two years from issue
- 4,694,835 warrants @4.26p for up to three years from issue
On 10 February 2010 Lotus Resources plc raised £500,000 via a convertible secured loan note based on asset acquisition. The principal terms are:
Conversion of all of the loan notes into ordinary shares of 1p at the Holders option until 31 December 2013 at an exercise price of 2.5p per share.
The Company may (subject to approval of the holders ) repay the first £200,000 of the £500,000 loan note plus any accrued interest, in part or in full, for cash, up to the date of repayment, at any time after the second anniversary of issue.
10% interest per annum payable quarterly in arrears, in cash or rolled up at the discretion of the holder;
Secured on plant and machinery of Lotus Minerals Mongolia LLC and its subsidiaries as assets are acquired.
The issue on 31 December 2013 of up to 20,000,000 warrants over Ordinary shares @4.26p exerciseable for up to two years from issue.
5. Loss per share
The basic earnings per share is based on the loss after taxation of £425,489 and on the weighted average number of shares in issue during the year of 41,724,553. Since the group was loss making in the current and prior year, the warrants in issue have no dilutive effect. Accordingly, the figures for the diluted earnings per share are the same as those for the basic earnings per share.
6. The directors do not recommend the payment of a dividend.
7. Announcement and Annual Report
The Annual Report for the year ended 30 September 2009, including the auditors' report, will be posted to shareholders and will be available from the same date to be downloaded from the Company's website at www.lotus-resources.com
The Directors of Lotus Resources Plc accept responsibility for this announcement.