|
|
|||
From: Nigel
ArtDate: 29th September 2006
Section: (FILLYABOOTS NEWS RELEASES)
Remote Name: 87.74.115.61
Date: 10/10/06
Time: 22:52
29th September 2006
Caledon Resources - Interims Results
News Item - Conduit PR
Caledon Resources plc (“Caledon” or the “Company”) Interim Results for the six months ended 30 June 2006
Highlights
Proposed acquisition of Xstrata Coal’s Cook Mine in Queensland, Australia which has a resource of 126 million tones of coal Once the deal is finalised, Caledon will have made the transition from an explorer to a producer with exploration assets Option agreement signed to purchase the nearby Minyango coal deposit in Queensland, Australia which is estimated to hold an inferred resource totalling >500 million tonnes of coal Profit for the period of £832,000 following the sale of the Company’s remaining stake in Eldorado Gold (prior comparable period loss of £1,225,000) Earnings per share of 0.25 pence (prior comparable period loss per share of 0.36 pence) Commenting today George Salamis, Chief Executive Officer of Caledon said “Caledon has commenced the shift of focus from solely being an explorer to a producing coal mining company. The Company is ready to progress the projects once the deals have been finalised and looks forward to recommencing trading on AIM by December 2006.”
For further information contact:
Caledon Resources plc George Salamis / Donal Douglas gsalamis@caledonresources.com / ddouglas@caledonresources.com Telephone +44 (0) 20 7318 5780
Conduit PR Leesa Peters / Ed Portman Leesa@conduitpr.com / ed@conduitpr.com Telephone + 44 (0) 20 7429 6607
Chairman’s statement
It is with pleasure that I provide you with this report of the Company’s activities for the first six months of 2006.
This year to date has witnessed an enormous amount of activity following the decision to develop or seek a producing asset that would transform Caledon into a company with near term positive cash flow for the benefit of shareholders. After a prolonged search for such an asset an announcement was made concerning the Cook underground coal mine in Queensland Australia.
On 19 June 2006, the Company heralded its transition into resource production, by announcing its intention to acquire the Cook Colliery and related mining operations (“Cook Mine”) in Australia, from Xstrata Coal Pty Ltd (“Xstrata”). Following this announcement trading in the Company’s existing ordinary shares on AIM were suspended due to the size and nature of the acquisition,
In addition to the proposed acquisition of Cook Mine, Caledon’s directors have been simultaneously working to acquire an additional coal deposit adjacent to the Cook Mine. To coincide with the release of this interim statement Caledon this morning issued the following release to the Stock Exchange.
The Company is pleased to announce the signing, by its wholly owned subsidiary Caledon MC Jersey Limited (“Caledon Jersey”), of an option agreement with Red Flint International Limited (“Red Flint”) regarding the acquisition of the Minyango coal deposit (“Minyango”) situated in Queensland, Australia.
The Minyango project area is situated in a region of strategic importance within the Bowen Basin and is surrounded by some of Queensland’s premier coking and thermal coal mining operations.
This acquisition, Caledon’s second in the coking coal business announced since June this year, is part of the Company’s long term growth strategy in the coking coal industry. Caledon’s acquisition of the undeveloped Minyango Coal deposit, estimated to contain resources (inferred) totalling over 500 million tonnes of coal, is expected to provide a platform for Caledon Group’s future growth and performance, potentially adding significant production to that envisaged from the neighbouring Cook mine The Minyango deposit is located about 15 km from the Cook coal preparation plant, and shares a common boundary with the northern end of the Cook mine lease.
Caledon’s proposed move into the production of coking coal in Australia can be attributed to strategic thinking combined with an element of good fortune. In late 2005, the Company was approached by a third-party group with a proposal to acquire undeveloped coal assets in the world-renowned Bowen Basin in Queensland, Australia. At the same time Caledon became aware of the competitive tender issued by Xstrata Coal who were seeking to dispose of part of their Cook mine lease. Following research, it was established that coking coal was a commodity that was believed likely to remain in short supply and therefore at the higher end of historical pricing levels due to the increased demand for carbon steel, driven by the continued economic expansion in China and India. Furthermore, worldwide transportation and export constrictions, currently a factor of the coking coal marketplace, will also continue to ensure that coking coal will remain at the higher end of the historic pricing levels.
The move from being an exploration only business to one which will focus on both production and exploration underlines the Company’s stated mission “to maximise shareholder value through the acquisition and development of an advanced-stage resource assets”.
The Directors of the Company believe that this fundamental change of focus should help drive Caledon forward. This is an exciting time for the development of the Company as it becomes a participant in the global coking coal industry.
As usual at this time I should like to take this opportunity to thank my colleagues for the tremendous effort and dedication they have all shown in pursuing the Company’s near term strategic objectives. It would be a mistake to single out any individual for particular praise as this has truly been a group wide project entered into by all demonstrating the maximum effort.
Robert Alford Chairman Review of operations
Australia
I am pleased to announce that the due diligence work conducted to date, both in Australia and the United Kingdom on both the Cook Mine and Minyango acquisitions, has proceeded with only minor hitches. Completion of the two acquisitions remains subject to various regulatory filings, shareholder approvals and financings. The Company remains on schedule to complete both transactions during the fourth quarter of 2006.
The extensive due diligence work conducted to date in the areas of technical, legal and financial in support of the Cook and Minyango acquisitions, have been undertaken to:
1. qualify and quantify the technical, legal, financial and environmental risks associated with the acquisition and future coal production and exploration on the two assets; 2. secure debt and equity financing to acquire Cook and Minyango; 3. provide the necessary documentation to support the Company’s readmission to AIM.
Cook Acquisition
On 19 June 2006, the Company announced its intention to acquire the Cook Mine from Xstrata, in Australia. For over twenty years the Cook Mine, currently host to coking and thermal coal resources in excess of in-situ 126 million tonnes, has produced a well established and highly prized brand of coking coal used in the steel making industry.
The purchase of the Cook Mine includes all of the underlying (Measured and Indicated) coal resources, related infrastructure and mine equipment, access to a coal washing plant, to haulage roads, to rail access and water allocation rights.
As part of the acquisition of Cook Mine, it has been agreed that Xstrata will market the coal production from Cook Mine for a two year period ending on 31 December 2008. In addition, Xstrata will guarantee Caledon rail and port access over the same period.
Caledon’s management views these value added benefits as being of particular importance to the Company and its shareholders. The marketing and logistics’ arrangement provides the benefits of Xstrata’s marketing expertise in addition to providing transport access to market during a time of infrastructure constraint in Australia.
Technical due diligence is a key aspect to all facets of the Cook Mine transaction and, to this end, a vast amount of work has been conducted in Australia by Caledon’s, Brisbane based technical advisors. The task of resource estimation, mine planning, wash plant up-grading and cash flow estimation has been completed and will be included in a CPR report which is being drafted by SRK (Australasia) Pty Limited (“SRK”) for the purposes of readmission on AIM.
Minyango Acquisition
On 29 September 2006, Caledon’s wholly owned subsidiary Caledon Jersey, signed an option agreement with Red Flint to acquire Minyango situated in Queensland, Australia.
Minyango – Deal Summary
Under the terms of the option agreement signed with Red Flint, Caledon Jersey has the right to acquire the entire issued share capital of Hazelhurst Holdings Limited (“Hazelhurst”) which indirectly owns an 80% interest in the Minyango coal project and a right to acquire the remaining 20%, on a staged payment basis spread over a period of approximately 14 months from the date of the option agreement. A key benefit of the option arrangement is that it will allow Caledon to immediately gain full access to the project area for the purposes of initiating exploration. As part of the transaction, Caledon Jersey will acquire the benefits from and assume the obligations of Red Flint under its agreement with Watami Trading Limited (“Watami”), the company from which Red Flint originally acquired Hazelhurst.These include paying the full consideration for Hazelhurst.
The total staged purchase price payable to Watami is approximately AUD42 million, of which at least AUD9.6 million may be paid in Caledon stock, at Caledon’s election.
As part of the total consideration due, an option fee of USD1.5 million (approximately AUD2 million) (“Option Fee”) is payable to Red Flint in connection with acquiring the option. In accordance with common market practice in the Australian mining industry, the option fee is non refundable but would be credited against the total staged purchase price. A further AUD10 million is due to be paid no later than Dec 14, 2006, with the payment conditional upon satisfaction of certain specified conditions by Nov 30, 2006. Those conditions include re-admission of Caledon on to AIM, and final shareholder approval which will be sought at an EGM currently expected to be convened for some time in November 2006. It is anticipated that, following this payment, Caledon will conduct resource delineation and coal quality studies and drilling and seismic campaigns on the Minyango deposit. At the end of this stage, if Caledon elects not to proceed and accordingly fails to pay the AUD9.6 million, Watami has the right to acquire back from Caledon Jersey the entire issued share capital of Hazelhurst in consideration for the full refund of all monies paid by Caledon Jersey to that date (other than the Option Fee). Such refund is payable within a certain period thereafter.
Should Caledon elect to proceed with the project beyond this point, a further AUD9.6 million payable in cash or in Caledon shares, or a combination of cash and shares at Caledon’s election. That AUD9.6 million payment would be due in March 2007. Upon payment, Caledon would then intend to proceed with more advanced exploration studies on the project. At the end of this stage, if Caledon elects not to proceed further and accordingly fails to pay the next instalment, being AUD20.4 million, Watami has the right to acquire back from Caledon Jersey 51% of the entire issued share capital of Hazelhurst for a nominal sum.
Should Caledon wish to proceed further Caledon would make the final AUD20.4 million payment in November 2007. Timing of this payment is subject to a further 3 month extension, where Caledon is well progressed with feasibility work on the Minyango project development but not finished because of delays outside its control.
Caledon will focus on conducting advanced exploration studies on potentially underground mineable portions of the Minyango coal resource. QCoal Pty Limited (“QCoal”), an Australian mining company, has reserved rights to develop near-surface, potentially open-pitable portions of the Minyango deposit, but only within a limited defined area at one end of the Minyango tenement. QCoal also has the right to a 1.75% royalty on any future coal production stemming from the Minyango deposit. Further, QCoal has entered into a subscription agreement with Caledon, under which QCoal agrees to subscribe for the equivalent of USD1.5 million of ordinary shares in Caledon (subject to certain conditions, such as Caledon’s re-admission to AIM by Dec 31, 2006).
China
Over the past three years, Caledon has acquired and explored four separate gold projects in southern China. Of the four projects, Mojiang, situated in southwestern Yunnan province, has been the Group’s primary exploration focus for the last 12 months. Given the advanced nature of exploration at Mojiang, with over 7,000m of drilling completed as at June 2006, the Group’s focus has been on defining mineralisation continuity at Mojiang.
The last remaining results from an extensive drill program conducted at Mojiang were published in a press release on 13 September 2006. Highlights from the recent Mojiang drilling include:
MJDDH013 intersected 2.05 g/t gold over 14metres MJDDH018 intersected 8.31 g/t gold over 1.75 metres MJDDH020 intersected 1.32 g/t gold over 35.80 metres MJDDH 022 intersected 17.10 g/t gold over 2.30 metres MJDDH 023 intersected 34.70 g/t gold over 1.30 metres MJDDH 024 intersected 2.70 g/t gold over 18 metres MJDDH 025 intersected 2.03 g/t gold over 14 metres MJDDH 027 intersected 7.24 g/t gold over 10 metres MJDDH 028 intersected 46.9 g/t gold over 2 metres MJDDH 030 intersected 5.43 g/t gold over 6 metres MJDDH 031 intersected 17.9 g/t gold over 2.5 metres The results of the recently completed programme once again confirm the continuity of mineralisation and presence of thick (>30m) zones of mineralisation interspersed with narrow bonanza grade epithermal vein style mineralisation.
On 26 June 2006, Caledon announced that it had agreed heads of terms with Hodges Resources Limited (“Hodges”) (ASX: HDG) , providing that, subject to agreeing a formal agreement, in consideration for a complete transfer to Hodges of Caledon's ownership in the Chinese Operations, which the Directors hope to conclude shortly following admission to AIM, Caledon will be issued ordinary shares in Hodges. These shares will make Caledon the largest shareholder of Hodges, with an ownership interest of approximately 14.9 per cent. The heads of terms provide that Caledon will be given the right to appoint two directors to the Board of Directors of Hodges.
Pursuant to the heads of terms of the Chinese Disposal, it is proposed that Caledon will grant Hodges a 13-month option to acquire the Company's current interest in the Mojiang gold property in Yunnan province. The exercise of this option will be subject to the following:
A$6 million in cash or, at Caledon’s election, ordinary shares in Hodges to be issued to Caledon upon exercise of the option; a further A$6 million to be paid to Caledon within six months of commencement of commercial mining; and a net smelter return royalty of 2 per cent. payable to Caledon until the total royalty payments equal A$10 million, thereafter the rate of royalty payments will be at 0.5 per cent. until total royalty payments equal A$15 million, thereafter royalty payments will be at 0.25 per cent. Completion of the Chinese Disposal with Hodges and the Company’s acquisition of shares in Hodges, should it happen, will allow Caledon to maintain a direct interest in and management control of its, Chinese assets, whilst providing the Company with enhanced ability to focus its senior management and financial resources on completing its growth strategy in the coal industry following completion of the Cook and Minyango acquisitions.
Hodges’s due diligence on Caledon projects is now complete. Caledon and Hodges are on-track to conclude the deal shortly after its re-admission on AIM.
Caledon Executive Appointments and Office Arrangements
In keeping with its coal production strategy, Caledon has announced a series of executive appointments during the second half of this year, designed to further strengthen the company.
On 8 September 2006, Robert Alford became executive chairman from his previous role as non-executive Chairman to manage the Group's transition from China focused gold explorer to coking coal producer with proposed assets in Australia. Robert joined the Board of the Company in 2000 when the Company was admitted to AIM as Finelot plc.
In the 70's and 80's Robert held a variety of senior positions in the Nelson Hurst Group including responsibility for Mergers and Acquisitions. In 1989 he negotiated the sale of the Nelson Hurst Group to Citibank NA. In May 1991 the now much-enlarged financial services group was reacquired by management. The Company was floated on the London Stock Exchange in December 1993 with Robert as Joint Group Managing Director. He resigned in May 1995 and now resides in Guernsey. Robert is a member of Lloyds, registered as a Non-Executive Director with the FSA and is recognised by The Guernsey Financial Services Commission and The Bermuda Monetary Authority (as a director of regulated businesses).
On 19 June 2006, the company announced the appointment of Mr Peter Seear as Chief Operating Officer. Mr. Seear has been actively engaged in the coal mining industry since 1977. He commenced his career immediately upon graduation from Coventry University in 1977. He became a Chartered Engineer in 1983 and then he proceeded to work for several contract coal mining companies. Additionally, he spent time with underground coal mining equipment manufacturers as an engineer, including 10 years with Joy Mining Machinery of South Africa and Joy Mining Machinery North America.
Mr Seear also holds a PMD degree from the Harvard School of Business and brings a wealth of contacts in the contract coal mining, processing and marketing business.
On 8 September, 2006, Caledon announced the appointment of Mr. Mark Trevan as Managing Director of the Group’s Australian operations. Mr. Trevan joins Caledon Coal (pty) limited, Caledon's holding company in Australia, following 25 years of service with Rio Tinto where he started as an accountant and progressed to hold senior executive roles in the areas of marketing, general commercial, corporate strategy and project feasibility. Mark's experience covers a number of bulk commodities, however, of most relevance to Caledon, is the last nine years where he worked for Rio Tinto Coal Australia (RTCA) as General Manager Marketing until 2005, at which time he was appointed to lead a project team investigating the establishment of a major new thermal coal mine. During Mark's time as General Manager Marketing, RTCA opened two coking coal mines and is now a significant participant in the internationally traded metallurgical coal market in addition to its substantial presence in the thermal coal market. Mark brings extensive coal industry contacts both within Queensland and the international arena.
In addition to executive appointments, Caledon was also pleased to announce the appointment of Mr. Nick Clarke as a non-executive director of the company, who joined the Board on 8 September 2006.
Mr. Clarke is a graduate of the Camborne School of Mines and is a Chartered Engineer. He has been involved in the mining industry since 1974 in a number of production and service capacities.
Caledon has opened an office in Brisbane, Australia. The Company’s Australian coal business operations will be managed out of this office, under the management of Mark Trevan.
Results from operations The group generated a profit of £832,000 for the six month period ended 30 June 2006 compared with a loss of £1,225,000 in the same period in 2005. The earnings per share for the six months ended 30 June 2006 was 0.25 pence (2005: loss per share 0.36 pence)
George Salamis Chief Executive Officer
Edward Portman Conduit PR Ltd 76 Cannon St London EC4N 6AE Office: +44 (0) 20 7429 6666 Direct: +44 (0) 20 7429 6607 Fax: +44 (0) 20 7429 6699 Mob: +44 (0) 773 3363 501
www.conduitpr.com
|