IRONVELD PLC — Earnings Release 2013

Mar 27, 2014

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RNS Number : 2943D

Ironveld PLC

27 March 2014

IRONVELD PLC

("Ironveld" or the "Group")

Interim results for the six months ended 31 December 2013

Ironveld plc, the Pig Iron Developer located on the Northern Limb of the Bushveld Complex in Limpopo Province South Africa, is pleased to announce its interim results for the six months ended 31 December 2013

Highlights

·      Completion of successful drilling campaign leading to an updated Mineral Resource Estimate

o  Total project mineral resource of 80.45 million tons at an average grade of 39.8 % Fe, equating to 32.05  million tons of  Iron in-situ at a cut-off grade of 20% Fe

o  1.58 million tons of Iron at 20% Fe cut off now in Measured Mineral Resource

·      Successful completion of pilot plant smelting campaign confirming viability of the ore to produce marketable Pig Iron

·      Good progress towards completion of Definitive Feasibility Study for initial smelter which is planned to be commissioned in 2015

·      Sale of non-core wholly-owned trading subsidiary, Mercury Recycling Limited ("MRL"), for a total consideration of £1.6 million

For further information, please contact:

Ironveld plc Peter Cox, Chief Executive	c/o FTI Consulting 020 3727 1535
Shore Capital and Corporate Limited	020 7408 4090
Stephane Auton /  Toby Gibbs (corporate finance)
Jerry Keen (corporate broking)
F T I Consulting	020 3727 1535
Oliver Winters / Sara Powell

Chairman's Statement

Since publication of the Pre-Feasibility Study ("PFS") which demonstrated the viability of the Ironveld Project (the "Project") delivering one million tons of pig iron and 9,670 tons of ferro vanadium ("FeV") per annum, the Company has focused on progressively de-risking the Project.

During the period the Company completed its drilling campaign on the farms La Pucella, Altona and Nonnenwerth (together the "Lapon properties") leading to an updated Mineral Resource Estimate and increase in the grade of the Company's Main Magnetite Layer ("MML") Mineral Resource to 48 percent Fe and 1.12 percent Vanadium Pentoxide (V2O5). Importantly the Mineral Resource estimate includes the first portion of Measured Mineral Resource of 1.58 million tons of Iron with an additional 27.26 million tons of Iron declared in the Indicated Category.

In Q4 2013 the Group received the results from the pilot plant smelter campaign which validated the work produced in the PFS and demonstrated the viability of smelting the Ironveld ore to produce pig iron.

During the campaign, over 60 tons of iron were produced from 140 tons of Ironveld's titanomagnetite ore grading close to 50% Fe and containing 1.2% V2O5. The majority of iron produced during the campaign contained over 95% and close to 97% Fe with between 2.5% and 3.5% carbon. Sufficient carbon-containing iron has therefore been produced to use as material to test market acceptance.

High recoveries of iron in excess of 90% were achieved as a result of iron oxide levels of less than 5% being obtained in the slag during the campaign. The distribution of the vanadium into the metal increased significantly ranging from 1.1 to 1.5% as the iron level in the slag decreased. The resulting vanadium recovery at the higher vanadium levels obtained in the iron was over 70%.

Following these positive results the Group commenced a thorough marketing campaign which has resulted in significant interest in our product. Discussions are continuing with a number of interested parties in relation to a potential offtake agreement for the Group's production from the first stage of the Project and we look forward to providing further information to shareholders in due course.

In addition a contract was awarded to Tenova/GLPS for the completion of the Definitive Engineering Study for the 12MW Smelter "the small smelter". This study is the key component of the company's Definitive Feasibility Study of the small smelter project.

The results of the work performed to year end reaffirm our confidence and belief in the Project's potential to be developed into a world class pig iron project with associated vanadium and titanium slag by product revenues. The increase in both the Iron and Vanadium grade within the MML together with the exceptional recoveries in the smelting campaign impact the Project's economics and margins favourably.

Sale of non-core subsidiary

During the period under review the Group announced that it had entered into an agreement to sell our non-core wholly-owned trading subsidiary, Mercury Recycling Limited ("MRL"), to Environmental Safeguard Limited for a total consideration of £1.575 million in cash, comprising a purchase price of £1.45 million and a working capital adjustment of £125,000. The sale was in line with the Board's strategy to focus the Group's resources on the progression of the Ironveld Project.

Financials

The company recorded a loss before tax of £0.4m during the period (2012 - £0.1m) and had cash balances at the end of the period of £1.4m (2012 - £1.9m).

Summary

The progress made during 2013 means the Company is well positioned as it moves into the second half of the financial year. We have significantly de-risked the Project from an operational and technical perspective and look forward to providing further clarity following the publication of the forthcoming DFS.

Giles Clarke

Chairman

March 2014

IRONVELD PLC

CONSOLIDATED INCOME STATEMENT

FOR THE PERIOD ENDED 31 DECEMBER 2013

		restated
	6 Months	6 Months	18 Months
	ended	ended	ended
	31.12.13	31.12.12	30.06.13
	£'000	£'000	£'000
Administrative expenses	(354)	(223)	(860)
Operating loss	(354)	(223)	(860)
Investment revenues	7	11	22
Gain on acquisition	-	97	-
Finance costs	(47)	(12)	(48)
Loss before taxation	(394)	(127)	(886)
Taxation	(257)	-	(438)
Loss from continuing operations	(651)	(127)	(1,324)
Discontinued operations	120	(4,276)	(4,196)
Loss for the period	(531)	(4,403)	(5,520)
Attributable to owners of the company	(531)	(4,403)	(5,447)
Non controlling interests	-	-	(73)
	(531)	(4,403)	(5,520)
Earnings/(loss) per share
Continuing - Basic (pence)	(0.23)	(0.06)	(0.69)
Discontinued - Basic (pence)	0.04	(1.93)	(2.32)
Continuing and discontinued- Basic (pence)	(0.19)	(1.99)	(3.01)
Discontinued   - Diluted (pence)	0.04	n/a	n/a

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

FOR THE PERIOD ENDED 31 DECEMBER 2013

	£'000	£'000	£'000
Loss for the period	(531)	(4,403)	(5,520)
Exchange differences on the translation of foreign operations	(1,719)	(819)	(2,028)
Total comprehensive income for the period	(2,250)	(5,222)	(7,548)

IRONVELD PLC

CONSOLIDATED BALANCE SHEET

AS AT 31 DECEMBER 2013

		As at	As at	As at
		31.12.13	31.12.12	30.06.13
		£'000	£'000	£'000
Non-current assets
Exploration and evaluation		22,310	26,081	24,749
Property, plant and equipment		24	1,165	4
		22,334	27,246	24,753
Current assets
Trade and other receivables		235	549	179
Cash and bank balances		1,372	1,913	569
Assets classified as held for sale		-	-	1,837
		1,607	2,462	2,585
Total assets		23,941	29,708	27,338
Current liabilities
Trade and other payables		(237)	(309)	(246)
Bank overdrafts and loans		-	(44)	-
Liabilities directly associated with assets
classified as held for sale		-	-	(505)
		(237)	(353)	(751)
Non-current liabilities
Trade and other payables		-	(17)	-
Borrowings		(1,383)	(945)	(840)
Deferred tax liabilities		(6,214)	(6,978)	(6,891)
		(7,597)	(7,940)	(7,731)
Total liabilities		(7,834)	(8,293)	(8,482)
Net assets		16,107	21,415	18,856
Equity
Share capital		6,087	6,080	6,080
Share premium		14,097	14,062	14,097
Other reserves		21	21	21
Retained earnings reserve		(7,791)	(3,491)	(5,600)
Equity attributable to owners of the company		12,414	16,672	14,598
Non-controlling interests		3,693	4,743	4,258
Total equity		16,107	21,415	18,856

IRONVELD PLC

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE PERIOD ENDED 31 DECEMBER 2013

	Share	Share	Other	Retained	Total
	Capital	Premium	Reserves	Earnings	Equity
	£'000	£'000	£'000	£'000	£'000
Balance at 1 July 2012	3,583	235	386	1,357	5,561
Comprehensive income for the period	-	-	-	(5,222)	(5,222)
Transfer	-	-	(365)	365	-
Equity share based payments	-	-	-	9	9
Issue of share capital (net)	2,497	13,827	-	-	16,324
Balance at 31 December 2012	6,080	14,062	21	(3,491)	16,672
Comprehensive income for the period	-	-	-	(2,182)	(2,182)
Issue of share capital (net)	-	35	-	-	35
Credit to equity for equity-settled
share based payments	-	-	-	73	73
Balance at 30 June 2013	6,080	14,097	21	(5,600)	14,598
Loss for the period	-	-	-	(531)	(531)
Exchange differences on the
translation of foreign operations	-	-	-	(1,719)	(1,719)
Equity share based payments	-	-	-	59	59
Issue of share capital (net)	7	-	-	-	7
Balance at 31 December 2013	6,087	14,097	21	(7,791)	12,414

IRONVELD PLC

CONSOLIDATED CASH FLOW STATEMENT

FOR THE PERIOD ENDED 31 DECEMBER 2013

	6 Months	6 Months	18 Months
	ended	ended	ended
	31.12.13	31.12.12	30.06.13
	£'000	£'000	£'000
Net cash from operating activities	(378)	(193)	(501)
Investing activities
Interest received	6	11	22
Purchase of exploration and evaluation assets	(916)	(702)	(1,566)
Purchases of property, plant and equipment	(23)	(29)	(131)
Proceeds from disposal of property, plant and equipment	16	4	9
Loan advanced	(22)	(72)	(137)
Net cash inflow on disposal of subsidiary	1,370	-	-
Net cash inflow on acquisition of subsidiary	-	4	4
Net cash used in investing activities	431	(784)	(1,799)
Financing activities
Repayment of borrowings	(79)	(31)	(87)
New loans received	663	149	118
Proceeds on issue of equity (net costs)	7	2,621	2,657
Net cash used in financing activities	591	2,739	2,688
Net increase in cash and cash equivalents	644	1,762	388
Cash and cash equivalents at the start of period	748	101	343
Effect of foreign exchange rates	(20)	45	17
Cash and cash equivalents at end of period	1,372	1,908	748
Note to the cash flow statement
Operating loss  - continuing	(354)	(223)	(860)
Operating profit (loss)  - discontinued	18	(4,292)	(4,241)
Depreciation on property, plant and equipment	43	97	282
Impairment of goodwill	-	4,122	4,122
Share based payment expense	59	9	82
Decrease in deferred income	-	(4)	(14)
Loss on disposal of plant and equipment	(2)	15	37
Operating cash flows before movements in working capital	(236)	(276)	(592)
Movement in receivables	(15)	177	(154)
Movement in payables	(127)	(93)	238
Cash used in operations	(378)	(192)	(508)
Interest paid	-	(1)	(9)
Tax paid	-	-	16
Net cash from operating activities	(378)	(193)	(501)

IRONVELD PLC

NOTES TO CONSOLIDATED ACCOUNTS

FOR THE PERIOD ENDED 31 DECEMBER 2013

1.     Basis of preparation and accounting policies

The results for the six months to 31 December 2013 have been prepared under International Financial Reporting Standards (IFRS) as adopted by the EU and International Accounting Standards Board.

The accounting policies applied are consistent with those of the annual financial statements for the period ended 30 June 2013, as described in those financial statements.

The financial information does not constitute statutory accounts as defined by section 435 of the Companies Act 2006. Full accounts of the company for the year ended 30 June 2013 on which the Auditors gave an unqualified report, have been delivered to the Registrar of Companies.

2.    Earnings/(loss) per share

The calculation of basic and diluted earnings/(loss) per share is based upon the loss for the period and the weighted average number of shares in issue during the period.

	6 months	6 months	18 months
	to 31.12.13	to 31.12.12	30.06.13
	'000	'000	'000
Weighted average number of shares	285,840	221,784	181,021
Options - dilution	14,279	-	-
	300,119	221,784	181,021
	Pence	pence	pence
Basic loss per share - continuing and discontinued	(0.19)	(1.99)	(3.01)
Basic loss per share - continuing	(0.23)	(0.06)	(0.69)
Basic profit (loss) per share - discontinued	0.04	(1.93)	(2.32)
Discontinued - Diluted earnings per share	0.04	N/a	N/a

Where the Group reports a loss for any period, then in accordance with IAS 33, the share options and warrants in issue are not considered dilutive.

3.    Disposal of subsidiary

In September 2013, the Group disposed of 100% of the issued share capital of Mercury Recycling Limited, a  company involved in the recycling of lamps and batteries. The decision to dispose of the company was made in the six months to 30 June 2013 and was therefore classified as held for sale as at 30 June 2013. The comparative figures for the period to 31 December 2012 have been restated to reflect the subsidiary as a discontinued activity.

4.     Register office and copies of the report

The registered office is Ironveld Plc, Lakeside Fountain Lane, St Mellons, Cardiff, CF3 0FB and copies of this report are available from the registered office.

INDEPENDENT REVIEW REPORT

UHY Hacker Young

St. James Building

79 Oxford Street

Manchester

M1 6HT

TO IRONVELD PLC

Introduction

We have reviewed the accompanying balance sheet of Ironveld Plc  as at 31 December 2013 and the related statements of income, changes in equity, cash flows for the six month period then ended and other explanatory notes.  Management is responsible for the preparation and fair presentation of this interim financial information in accordance with International Financial Reporting Standards. Our responsibility is to express a conclusion on this interim financial information based on our review.

Scope of Review

We conducted our review in accordance with International Standard on Review Engagements 2410, "Review of Interim Financial Information Performed by the Independent Auditor of the Entity". A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the accompanying interim financial information does not give a true and fair view of the financial position of the entity as at 31 December 2013, and of its financial performance and its cash flows for the six month period then ended in accordance with International Financial Reporting Standards as applicable in the United Kingdom.

UHY Hacker Young Manchester LLP

Chartered Accountants

Manchester

March 2014

IRONVELD PLC (FORMERLY MERCURY RECYCLING GROUP PLC)

ADVISORS AND OTHER INFORMATION

FOR THE PERIOD ENDED 31 DECEMBER 2013

Directors	Giles Clarke	(Chairman)
	Peter Cox	(Chief Executive)
	Terry McConnachie	(Non-Executive Director)
	Nicholas Harrison	(Non-Executive Director)
	Rupert Fraser	(Non-Executive Director)
Secretary	Kirsti Jane Pinnell
Company Number	04095614
Registered Office	Ironveld Plc Lakeside Fountain Lane St Mellons Cardiff, CF3 0FB
Nominated Advisor and Broker	Shore Capital Stockbrokers Limited Bond Street House 14 Clifford Street London W1S 4JU
Solicitors	Kuit Steinart Levy 3 St Marys Parsonage Manchester M3 2RD
Auditors	UHY Hacker Young Manchester LLP St James Building 79 Oxford Street Manchester M1 6HT
Bankers	HSBC 97 Bute Street Cardiff CF10 5NA
Registrars	Capita IRG Plc Northern House Woodsome Park Fenay Bridge Huddersfield HD8 0LA

This information is provided by RNS

The company news service from the London Stock Exchange

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