TIDMFML
RNS Number : 4124W
Frontier Mining Ltd
07 November 2014
FRONTIER MINING LTD
("Frontier" or "the Company")
Interim Results for the nine months ended 30 September 2014
Frontier Mining (AIM:FML), the AIM and KASE listed exploration,
development and production Company focused on Kazakhstan, is
pleased to announce its Interim Results for the nine months ended
30 September 2014, in accordance with the reporting requirements of
KASE.
Production highlights:
o 379,155 tonnes of ore mined (as of 30.06.2014: 181,326
tonnes)
o 356,694 tonnes of ore stacked (as of 30.06.2014: 165,947
tonnes)
o 1,130 tonnes of copper cathode sold (as of 30.06.2014: 511
tonnes)
Financial performance:
o Average sales price of US$6,842 per tonne (as of 30.06.2014:
US$6,784 per tonne)
o Average cash cost of production, excluding general and
administrative costs, of US$4,468 per tonne (as of 30.06.2014:
US$4,353 per tonne)
For further details please contact:
Frontier Mining Ltd Tel: +44 20 7898 9019
Yerlan Minavar
Cairn Financial Advisers LLP (Nomad) Tel: +44 20 7148 7900
Sandy Jamieson
RFC Ambrian (Broker) Tel: +44 20 3440 6800
John Harrison
Stefan Murphy
Walbrook PR and IR Tel: +44 20 7933 8780
Paul Cornelius
Guy McDougall
STATEMENT OF FINANCIAL POSITION
USD 30.09.2014 31.12.2013
--------------------------------------------- ---------------------- --------------------------------
Non-current assets
Exploration and evaluation assets 194,899,664 198,105,513
Mine development assets 422,517 499,316
Property, plant and equipment 47,536,853 53,898,801
Intangible assets 46,114 60,289
Advances paid for non-current assets 335,559 973,543
VAT recoverable, non-current portion 5,543,140 6,564,006
Restricted cash 420,573 437,413
Total non-current assets 249,204,420 260,538,881
--------------------------------------------- ---------------------- --------------------------------
Current assets
Inventories 15,723,751 14,084,584
Trade accounts receivable 425,334 365,022
Account Receivable from subsidiaries 17,548,820 -
VAT recoverable, current portion 2,052,392 945,882
Advances paid 1,020,718 632,533
Cash and cash equivalents 635,136 168,770
Other current assets 869,850 1,081,961
Total current assets 38,276,002 17,278,752
Assets of disposable groups held
for sale - 28,124,121
TOTAL ASSETS 287,480,422 305,941,754
--------------------------------------------- ---------------------- --------------------------------
EQUITY AND LIABILITIES
Equity
Share capital 18,767,573 18,609,140
Additional paid-in-capital 191,261,031 191,334,243
Option premium on convertible notes 120,993 120,993
Translation reserve 8,843,171 (39,884)
Accumulated losses (72,110,563) (46,388,864)
Total equity 146,882,206 163,635,628
--------------------------------------------- ---------------------- --------------------------------
Non-current liabilities
Interest bearing and interest free
loans and borrowings from third parties,
non-current portion 49,614,472 49,614,472
Interest bearing and interest free
loans and borrowings from related
parties, non-current portion 860,000 860,000
Provisions, non-current portion 3,473,626 4,023,410
Prepaid income 709,450 -
Other long-term liabilities - -
Deferred tax liability 36,403,725 36,685,854
Total non-current liabilities 91,061,273 91,183,736
--------------------------------------------- ---------------------- --------------------------------
Current liabilities
Interest bearing and interest free
loans and borrowings from third parties,
current portion 24,713,119 29,011,413
Interest bearing and interest free
loans and borrowings from related
parties, current portion 17,016,400 13,559,867
Trade accounts payable 3,827,626 2,192,470
Provisions, current portion - 207,154
Taxes payable 1,779,322 1,245,069
Other current liabilities 2,200,476 1,567,264
Total current liabilities 49,536,944 47,783,237
Total liabilities 140,598,217 138,966,973
Liabilities of disposable groups
held for sale - 3,339,153
TOTAL EQUITY AND LIABILITIES 287,480,422 305,941,754
--------------------------------------------- ---------------------- --------------------------------
STATEMENT OF COMPREHENSIVE INCOME
USD 30.09.2014 30.09.2013
--------------------------------------------- ---------------------- --------------------------------
Revenue 7,731,731 7 376 798
Cost of sales (6,783,072) (5 645 539)
Gross profit 948,659 1 731 259
--------------------------------------------- ---------------------- --------------------------------
Selling, general and administrative
expenses (2,433,217) (3 707 148)
Finance cost, net (3,170,905) (3 442 605)
Foreign exchange loss, net (16,787,257) (33 321)
Impairment - (858)
Income from sale of asset, net - 131 587
Other income / (loss), net (153,085) 368 659
Profit from operating activities before
income tax (21,595,805) (4 952 428)
---------------------- --------------------------------
Income tax (expense) / benefit, net - -
Profit/Loss for the period (21,595,805) (4 952 428)
--------------------------------------------- ---------------------- --------------------------------
Gain / (loss) from discontinued operations,
net of tax 8,843,171 -
Effect on currency translation (4,125,894) -
Total comprehensive income / (loss)
for the period (16,878,528) (4 952 428)
--------------------------------------------- ---------------------- --------------------------------
CASH FLOW STATEMENT
USD 30.09.2014 30.09.2013
---------------------- ----------------------
OPERATING ACTIVITIES
(Loss) / gain before income tax (21,595,805) (4,952,428)
Loss from discontinued operations (4,125,894) -
Adjustments for non-cash flow items:
Depreciation of property, plant and equipment
and mine development assets 1,748,700 4,165,644
Amortization of intangible assets 4,798 7,093
Finance costs 1,971,985 5,021,995
Loss from discontinued operations - (1,595,840)
Gain from released liability due to US
Trade and Development Agency - -
(Gain) / loss from financial liability
at fair value through profit or loss 51,407 -
Loss from disposal of property, plant
and equipment (197,906) -
Accrual of inventory provision - -
Recovery of impairment loss - -
Foreign exchange loss, net 22,584,259 (331,275)
Cash flows from operating activities
before changes in working capital 441,544 2,315,187
Change in value added tax receivable (1,266,061) (747,088)
Change in inventories (6,647,214) 1,026,595
Change in trade receivables (117,083) (1,353,729)
Change in advances and prepaid expenses (488,287) 2,244,015
Change in other receivables 56,283 113,302
Change in trade accounts payable 1,736,259 (7,167,111)
Change in other current liabilities 718,434 (34,932)
Change in taxes payable 493,951 -
Change in provision (207,154) -
Net cash flows from operating activities
before income tax and interest paid (5,279,328) (3,603,759)
Income tax paid - -
Interest paid - (4,377,193)
Net cash used in continuing operations (5,279,328) (7,980,952)
Net cash used in discontinued operations - -
Net cash used in operating activities (5,279,328) (7,980,952)
INVESTING ACTIVITIES
Increase in exploration and evaluation
assets and mining assets 458,381 (966,242)
Increase in mine development assets 854 (2,752,211)
Dummy (disposal group) - -
Purchase of property, plant and equipment (127,879) (7,511,088)
Purchase of intangible assets - 5,386
Account Receivable from sale of assets 12,150,000 -
Gain / (loss) from discontinued operations (4,125,894) -
Proceeds from sale of property, plant
and equipment - 1,726,569
Decrease in advances for non-current
assets 486,574 4,617,259
Increase in restricted cash deposit (51,189) (50,564)
Net cash used in investing activities 8,790,847 (4,930,891)
FINANCING ACTIVITIES
Proceeds from loans from related parties - -
Proceeds from loans from third parties - -
Proceeds from bank loans 709,450 12,616,937
Proceeds from issue of notes payable - 440,745
Repayment of loans from related parties (24,603) -
Repayment of bank loans - -
Repayment of notes payable (3,730,000) -
Net cash generated by financing activities (3,045,153) 13,057,682
-
Net increase in cash and cash equivalents 466,366 145,839
Cash and cash equivalents at the beginning
of the period 168,770 2,184,083
Included in disposal group - -
Cash and cash equivalents at the end
of the period 635,136 2,329,922
=============================================== ====================== ======================
STATEMENT OF CHANGES IN EQUITY
In US Dollars Share Additional Accumulated Translation Option Total
capital paid-in-capital loss reserve premium
to convertible
notes
--------------- -------------------- -------------------- ------------------ -------------------- -------------------------- --------------------
As at January
1,
2013 18,609,140 191,334,243 (60,042,983) - 120,993 150,021,393
--------------- -------------------- -------------------- ------------------ -------------------- -------------------------- --------------------
Loss for the
period - (4,952,428) (4,649,221)
Other
comprehensive
income - -
Total
comprehensive
loss for the
period - - (4,952,428) - - (4,952,428)
--------------- -------------------- -------------------- ------------------ -------------------- -------------------------- --------------------
Issue of
convertible
note - -
Income tax
effect 187,550 - 187,550
As at
September 30,
2013 18,609,140 191,334,243 (64,807,861) - 120,993 145,256,515
--------------- -------------------- -------------------- ------------------ -------------------- -------------------------- --------------------
Loss for the
period 18,418,997 18,418,997
Other
comprehensive
income (39,884) (39,884)
Total
comprehensive
loss for the
period - - 18,418,997 (39,884) - 18,379,113
--------------- -------------------- -------------------- ------------------ -------------------- -------------------------- --------------------
Issue of
convertible
note - -
Income tax
effect - -
As at December
31,
2013 18,609,140 191,334,243 (46,388,864) (39,884) 120,993 163,635,628
--------------- -------------------- -------------------- ------------------ -------------------- -------------------------- --------------------
Loss for the
period (25,721,699) 8,883,055 (16,838,644)
Other
comprehensive
income -
Total
comprehensive
loss for the
period - - (25,721,699) 8,883,055 - (16,838,644)
--------------- -------------------- -------------------- ------------------ -------------------- -------------------------- --------------------
Additional
issue
of shares 158,433 158,433
Share premium (73,212) (73,212)
Income tax
effect -
As at
September 30,
2014 18,767,573 191,261,031 (72,110,563) 8,843,171 120,993 146,882,205
--------------- -------------------- -------------------- ------------------ -------------------- -------------------------- --------------------
NOTES TO THE ACCOUNTS
1. BACKGROUND
FRONTIER MINING LTD. ("FRONTIER" or the "Company") was
incorporated under the laws of the state of Delaware on August 5,
1998 for the purpose of exploring, and if warranted, developing
gold and copper deposits in the Republic of Kazakhstan. Group's
principal activities are the exploration, mining and processing of
copper ores.
As of September 30, 2014 the Group owns the following
subsidiaries (thereafter together - the "Group"):
Effective ownership
Entity (location) Nature of business interest
----------------------------- ----------------------------- --------------------
U.S. Megatech, Inc.,
British Virgin Islands,
subsidiary of the Company Holding Company 100%
============================= ============================= ====================
Exploration and development
KazCopper LLP, The Republic of the Benkala license
of Kazakhstan, subsidiary and South Benkala
of U.S. Megatech Inc. area. 100%
============================= ============================= ====================
Kazakhstan Chemical Company
LLP, The Republic of
Kazakhstan, subsidiary Supply and transportation
of the Company of chemicals 100%
============================= ============================= ====================
Baltemir LLP, Republic
of Kazakhstan, subsidiary
of the Company Dormant 100%
============================= ============================= ====================
During the 9 months of 2014, FRONTIER has completed the process
of closing its inactive subsidiaries, including Frontier Mining
Finance BV, Frontier Mining Antilles NV and Frontier Mining
Co-operative (registered in the Netherlands. The number of
employees of the Group as of September 30, 2014 was 468 people
(2013: 449 employees).
Functional and presentation currencies
The presentation currency of the Group consolidated financial
statements is US Dollar. The functional currency for each entity in
the Group is determined as the currency of the primary economic
environment in which it operates. Transactions in currencies other
than the functional currency are initially recorded at the
functional currency rate at the date of the transaction. Monetary
assets and liabilities denominated in foreign currencies are
retranslated at the rate of exchange at the balance sheet date.
Exchange gains and losses on settlement of foreign currency
transactions translated at the rate prevailing at the date of the
transactions, or the translation of monetary assets and liabilities
at period end exchange rates, are taken to the income statement.
Non-monetary assets and liabilities denominated in foreign
currencies that are stated at historical cost are translated to the
functional currency at the foreign exchange rate at the date of the
transaction.
The functional currency of the Company is the US Dollar as the
majority of the operating activities are conducted in US
Dollars.
The functional currency of exploration and service entities
operating in Kazakhstan (KazCopper LLP and Kazakhstan Chemical
Company LLP) is the Kazakhstan Tenge (KZT).
All balance sheet items were recalculated according to the
exchange rate as on the reporting date, revenue/expenditure items
were recalculated at the average exchange rate.
At the reporting date, the exchange rate of the National Bank of
Kazakhstan was used:
Exchange rate 30.09.2014 31.12.2013
----------------------- ----------- -----------
At the reporting date 181.90 153.61
Average exchange rate 178.35 152.13
2. SHORT-TERM AND LONG-TERM ASSETS (US dollars)
ASSETS 30.09.2014 31.12.2013
----------------------------------- ------------ ------------
Non-current assets
Exploration and evaluation assets 194,899,664 198,105,513
Mine development assets 422,517 499,316
Property, plant and equipment 47,536,853 53,898,801
Intangible assets 46,114 60,289
Advances paid for non-current
assets 335,559 973,543
VAT recoverable, non-current
portion 5,543,140 6,564,006
Restricted cash 420,573 437,413
Total non-current assets 249,204,420 260,538,881
----------------------------------- ------------ ------------
Current assets
Inventories 15,723,751 14,084,584
Trade accounts receivable 425,334 365,022
Account Receivable 17,548,820 -
VAT recoverable, current portion 2,052,392 945,882
Advances paid 1,020,718 632,533
Cash and cash equivalents 635,136 168,770
Other current assets 869,850 1,081,961
------------
Total current assets 38,276,002 17,278,752
------------
Assets of disposable groups held
for sale - 28,124,121
TOTAL ASSETS 287,480,422 305,941,754
2.1 Exploration and evaluation assets
The exploration and evaluation expenses as of September 30, 2014
amounted to 194.9 million US dollars, these costs are associated
with the exploration of Benkala and South Benkala deposits.
According to IAS 23 <<Borrowing costs>> loans received
directly to finance qualified assets are allowed to capitalize.
During exploration of Benkala FRONTIER received loans from RedKite,
New Technologies LLP, Nursultan Nazarbayev Educational Fund SF,
Central Asian Educational Services S.A., Nikfar Holding Limited,
Casterwal Invest Ltd., Aliyev Y., and Riverhouse Consults Limited.
All interests related to above loans are capitalized and included
to the cost of the asset. Interests related to Sberbank JSC loans
are treated as operating expenses.
2.2 Property, plant and equipment
Property, plant and equipment are stated at cost less
accumulated depreciation and impairment losses.
The initial cost of other property, plant and equipment
comprises its purchase price, including import duties and
non-refundable purchase taxes and any directly attributable costs
of bringing the asset to its working condition and location for its
intended use.
Capital work in progress is carried at cost, less any recognised
impairment loss. Construction cost includes professional fees and,
for qualifying assets, borrowing costs capitalised in accordance
with the accounting policy. Such items of the property assets are
classified to the appropriate category of property, plant and
equipment at the time of completion and readiness for its intended
use.
Devaluation of Kazakhstan Tenge in February 2014 had a
significant impact on outstanding balance of assets, which caused a
revaluation of the assets by more than 6 million US dollars.
2.3 VAT recoverable
Outstanding balance of VAT had not changed since 31.12.2013.
Difference which is reflected in the balance is due to an increase
in the KZT/USD foreign exchange rate.
Title 30.09.2014 31.12.2013
------------------------------ ----------- -----------
VAT recoverable, non-current
portion 5,543,140 6,564,006
2.4 Inventories
Inventories are stated at the lower of cost and net realizable
value. Cost, including an appropriate portion of fixed and variable
overhead expenses, is assigned to inventories by the method most
applicable to the particular class of inventory. Net realizable
value represents the estimated selling price for inventories less
all estimated costs of completion and costs necessary to make the
sale.
Increased amount of inventories at reporting date is due to
increased amount of agglomerate and ore in reserves.
Inventories 30.09.2014 31.12.2013
-------------------------- ----------------------- -----------
Materials 4,299,086 5,668,882
Construction in progress 10,475,094 6,936,000
Finished products 896,233 1,302,630
Other materials 53,339 177,072
-------------------------- ----------------------- -----------
Total 15,723,751 14,084,584
2.5 Cash and cash equivalents
Cash includes cash on hand and cash on current accounts in
banks.
30.09.2014 31.12.2013
------------------------ ----------- -----------
Cash on current bank
accounts 628,286 46,448
Cash in transit in GBP - 95,170
Cash on hand 6,850 27,152
------------------------ ----------- -----------
Total 635,136 168,770
2.5.1 Restricted Cash
Cash deposits with banks are made pursuant to requirements of
the Group's subsoil use contracts. The Group accumulates such cash
deposits restoration provisions related to obligations to restore
and make the mines safe after use and the estimated costs of
cleaning up any chemical leakage.
3. EQUITY AND LIABILITIES (US dollars)
US Dollars Number of Nominal amount Additional paid Total
shares and in capital
outstanding
--------------- -------------- --------------- ---------------- ------------
September 30,
2013 1,860,913,973 18,609,140 191,334,243 209,943,383
December 31,
2013 1,860,913,973 18,609,140 191,334,243 209,943,383
September 30,
2014 1,876,757,268 18,767,573 191,261,031 210,028,604
In September 2014, the Company announced that it has issued
15,843,295 new ordinary shares of a nominal value of US$0.01 each
as incentive payments to senior management of FRONTIER.
3.1 Current and non-current liabilities
Borrowings
US Dollars 30.09.2014 31.12.2013
Non-current portion:
From third parties 49,614,472 49,614,472
From related parties 860,000 860,000
---------------------- ------------ -----------
50,474,472 50,474,472
Current portion:
From third parties 24,713,119 29,011,413
From related parties 17,016,400 13,559,867
---------------------- ------------ -----------
41,729,519 42,571,280
---------------------- ------------ -----------
Total 92,203,991 93,045,752
---------------------- ------------ -----------
3.2 Trade accounts payable
US dollars 30.09.2014 31.12.2013
--------------------------- ----------- -------------------
Trade account payable due
to third parties 3,827,626 2,192,470
--------------------------- ----------- -------------------
3,827,626 2,192,470
30.09.2014 31.12.2013
US dollars
--------------------------- ----------- -------------------
KZT 3,223,485 1,772,982
USD 237,298 271,748
EUR 210,957 75,666
GBP 98,217 68,389
RUB 57,669 3,685
Total 3,827,626 2,192,470
4. CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (US
dollars)
4.1 Revenue
30.09.2014 30.09.2013
--------- ----------- -----------
Revenue 7,731,731 7,376,798
4.2 Cost of sales
30.09.2014 30.09.2013
--------------- ------------- -------------
Cost of sales (6,783,072) (5,645,539)
4.3 Selling, general and administrative expenses
30.09.2014 30.09.2013
------------------------------------- ------------ ------------
Selling, general and administrative
expenses (2,433,217) (3,707,148)
4.4 Financial and other operating expenses
30.09.2014 30.09.2013
-------------------------------------- ---------------- -------------
Finance cost (3,170,905) (3,442,605)
Forex gain / (loss), net (16,787,257) (33,321)
Impairment - (858)
Income from sale of asset, net - 131,587
Other operating income / (expenses),
net (153,085) 368,659
-------------------------------------- ---------------- -------------
Profit from operating activities
before income tax (21,595,805) (4,952,428)
Income tax benefit / (expense),
net - -
-------------------------------------- ---------------- -------------
Profit / (loss) for the period (21,595,805) (4,952,428)
Effect on currency translation 8,843,171 -
Gain / (loss) from discontinued
operations (4,125,894) -
-------------------------------------- ---------------- -------------
Total comprehensive income (16,878,528) (4,952,428)
Devaluation of Kazakhstan Tenge in February 2014 had a
significant impact on foreign exchange loss during the 9 months of
2014.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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