Final Results
Hidefield Gold plc
Final Results for the Year Ended 31 December 2007
Chairman's statement
I am delighted to be reporting to you on the considerable progress
that your Company made during the financial year ended 31 December
2007. The twelve months saw the Group undertake significant
exploration in Argentina and we believe we are already seeing the
potential for a future mine development.
The audited results of our activities and transactions completed
during the year ended 31 December 2007 reflect a significant increase
in our activities in Argentina which resulted in a loss for the year
of �2,256,194.
South America
2007 is likely to prove to have been the most important year in the
Group's history as we completed our first Resource Statement and a
Scoping Study for the possible future development of a gold mine on
our extensive licence position in East Santa Cruz Province,
Patagonia, Argentina.
During the second half of the year under review, we named our
flagship gold project in Patagonia, the "Don Nicolas" gold project in
respectful recognition of Senor Nicolas Urricelqui, the former owner
of the Company's La Paloma Estancia, one of three large ranches
totalling approximately 70,000 hectares that the Company now owns as
freehold land. Senor Urricelqui is a lifetime resident of the
region, a prominent and much respected local citizen and enthusiastic
supporter of the Company's activities.
The "Don Nicolas" gold project initially comprises the "La Paloma"
and "Martinetas" sectors of our extensive property and these areas
have been the focus of all of our drilling activity to date which
provided us with the basis for the completion of an independently
assessed initial Resource Statement for the project which confirmed a
mineral resource of 1,214,000 tonnes at 7.7 grammes per tonne ("gpt")
gold for 301,600 ounces of gold estimated using a high grade cut of
90 gpt gold (9.82 gpt gold and 383,400 ounces gold if no high grade
cut was applied). This mineral resource estimate was prepared by
Resource Evaluations Pty. Ltd. of Perth, Australia, an independent
consultant engaged for the purpose of completing the report, and was
prepared in compliance with the Australasian Code for Reporting of
Mineral Resources by the Joint Ore Reserves Committee ("JORC").
During the second half of the year and into the early part of 2008,
the Group continued an active field programme on the extensive vein
systems in both the La Paloma and Martinetas sectors of the Don
Nicolas project area including a Phase III drill programme which
commenced in October with encouraging initial drilling results being
published just prior to the year end.
The Phase III drill programme continued into the first half of 2008
and has now been completed with drill results published during the
first half of 2008 providing encouragement for the further expansion
of the initial resource estimate on the Don Nicolas gold project.
Just prior to the year end, the Group published the results of our
much anticipated Scoping Study designed to assess the economic
viability of the development of a mine on the Sulfuro deposit,
representing the most advanced of the gold deposits and currently
represents approximately 65% of the resource identified on the
Sulfuro and Martinetas sectors of the Don Nicolas gold project.
The Scoping Study confirmed that mining of the Sulfuro deposit,
whilst involving suboptimal operating parameters, would prove
modestly profitable for the development of an initial three year
mining operation producing 50,000 ounces of gold per year at an
estimated capital cost of approximately US$27.7 million for a mine
development using a 250,000 tonnes per annum processing plant.
The conceptual design for this mine development confirmed that
initial production would be from an open pit followed by underground
development and processing in a conventional leaching plant.
Metallurgical test work carried out as a part of the Scoping Study
indicates excellent gravity plus leach recoveries for oxidised ores
and acceptable leach recoveries for sulphide ores with reagent
consumption for all ore types confirmed as entirely satisfactory.
The Scoping Study confirmed the excellent progress made by the Group
in the period of less than two years since we acquired our project
areas in Patagonia, Argentina. These efforts have enabled us to
identify at least one gold deposit capable of supporting the
development of a profitable gold mine and provided the Group with the
encouragement to press ahead as quickly as possible to add additional
gold resources at both the Sulfuro and Martinetas sectors of the Don
Nicolas gold project.
While continuing to focus our exploration activities on these sectors
of the Don Nicolas gold project, during the year we increased our
licence position in the East Santa Cruz Province by more than 10% to
approximately 230,000 hectares. We have now begun evaluating other
high priority exploration target areas across our extensive land
position which now occupies a significant and central position in
what has become the focus of increasing exploration attention from a
large number of international gold exploration and mining companies.
While our focus during 2007 and early 2008 has been on our activities
in Argentina we have progressed discussions on a joint venture for
the Cata Preta project in Brazil and expect to be in a position to
announce the successful completion of those discussions in the third
quarter of 2008. The Group's Sumidouro Dome project just north of
the Cata Preta project remains under the management of our joint
venture partner who continues to evaluate the exploration potential
of that property.
North America
With the concentration of our exploration activities in Argentina,
the Group concluded a joint venture on the South Estelle project in
Alaska with International Tower Hill Mines Ltd, a Canadian listed
company, and our joint venture partners carried out a summer
exploration programme which provided considerable encouragement for
further exploration on this well located property.
The Group is actively pursuing discussions with regard to a joint
venture at the Golden Zone project in Alaska and we remain optimistic
that we can successfully conclude a joint venture to continue
exploration on the exploration targets we have identified on this
promising property.
Associate Companies
Columbus Gold Corporation (currently approximately 19.6% owned)
continued to expand its portfolio of well located exploration
projects in Nevada, Arizona and Utah, increasing the portfolio to 31
projects as of the date of this report.
In addition, during 2007 and continuing into 2008, Columbus Gold Corp
has continued its record of concluding significant joint ventures on
its exploration properties with a number of the worlds most important
gold mining companies. Joint ventures have also been concluded with
a number of other public companies and as of the date of this report,
Columbus Gold Corporation has established 14 joint ventures for
further significant exploration on its properties, a remarkable
effort in only the two years since the Company completed its Initial
Public Offering on the TSX Venture Exchange in Canada.
During 2007 most of the activity by Alto Ventures Limited, the
Company's other significant associate company investment (now 14.9%
owned following a Can$2.65 million capital raising and the sale of a
portion of the Group's shareholding), was focused on the now 100%
owned Despinassy gold project in the Abitibi greenstone belt, near
Val d'Or, Quebec and the Mud Lake, Cote-Archie Lake and Coldstream
projects in Ontario, Canada. Ongoing exploration on these projects
confirmed the excellent exploration potential within Alto Ventures'
extensive exploration portfolio including within the
Beardmore-Geradlton camp which attracted significant exploration and
joint venture interest during 2007 resulting in the establishment of
joint ventures on several of Alto's properties.
Corporate
The Board is very pleased with the progress made with our exploration
activities in Argentina and the business development of our associate
companies. This progress has created significant value in our own
projects, especially in Patagonia and in the investments we hold in
associate companies.
While this value appears not to be well recognised by the general
investment community as reflected in our market capitalisation, it is
nevertheless well recognised by our peers in the industry, resulting
in frequent approaches for joint venturing on our projects.
We have achieved this industry recognition and progress with our own
exploration efforts through the significant contribution of my
colleagues on the Board, our talented associates in North and South
America and of course the continued support of our shareholders who
have provided us with the resources to undertake this activity. This
support included the approximately �2 million in new equity which we
raised from existing and new shareholders in the first quarter of
2007. This was supplemented during the course of 2007 with the
receipts generated by our joint venturing of several properties and
the timely and profitable sale of a portion of our investment in Alto
Ventures Ltd which resulted in the receipt of �665,364 representing a
meaningful profit on our initial investment.
During 2007 our long serving Finance Director, Ken Bone finally took
retirement from the Board and his role has been admirably filled with
the appointment of Sean McGrath who was named as Chief Financial
Officer in July. We wish Ken the very best for his retirement and
appreciate his part time assistance while welcoming Sean to our
team. Sean deserves a special mention and thanks for his
professionalism and tireless efforts in completing the Group's
Financial Statements under the new IFRS regulations.
On behalf of the Board I wish to thank my colleagues for their
continuing efforts and our shareholders for their support and while
the outlook for the junior resources sector remains difficult, we
continue to look forward with optimism to progressing all of our
activities during 2008.
Kenneth P Judge
Chairman
25 June 2008
Hidefield Gold Plc
Ken Judge, Chairman + 44 773 300 1002
Investor Relations + 44 20 7976 2889
Paul Ensor
Hanson Westhouse Limited (Nomad) + 44 113 246 2610
Tim Feather / Matthew Johnson
Landsbanki Securities (UK) Ltd (Broker) + 44 20 7426 9000
Tom Hulme
Consolidated Income Statement
For the year ended 31 December 2007
2007 2006
Note � �
Expenses
Administrative expenses 1,249,745 1,086,119
Provision for diminution in value of
mineral rights 1,304,851 955,602
Total expenses (2,554,596) (2,041,721)
Loss from operations (2,554,596) (2,041,721)
Finance income 58,177 42,768
Gain on disposal and deemed disposal of
associates 507,640 73,436
Share of operating loss in associates (267,415) (301,509)
Loss for the year before taxation (2,256,194) (2,227,026)
Tax expense - -
Loss for the year attributable to equity
holders of the parent (2,256,194) (2,227,026)
Loss per ordinary share
- - Basic & Diluted 1 (0.84p) (1.06p)
Consolidated Statement of Recognised Income and Expense
For the year ended 31 December 2007
2007 2006
� �
Gain on deemed disposal of investments - 49,913
Exchange adjustments on foreign currency
net investments (234,191) (368,581)
Net income recognised directly in equity (234,191) (318,668)
Loss for the year attributable to equity
holders of the parent (2,256,194) (2,227,026)
Total recognised income and expense for the
year attributable to the equity holders of
the parent (2,490,385) (2,545,694)
All amounts relate to continuing activities.
Consolidated Balance Sheet
As at 31 December 2007
2007 2006
� �
ASSETS
Non-current assets
Mineral rights 6,015,571 6,532,761
Property, plant and equipment 302,687 268,805
Investments in associates 1,835,666 2,235,035
Financial asset - fair value through profit
or loss - 182,510
Financial asset - available-for-sale
investment 14,006 12,073
8,167,930 9,231,184
Current assets
Trade and other receivables 979,368 1,077,485
Cash and cash equivalents 1,170,822 344,164
2,150,190 1,421,649
TOTAL ASSETS 10,318,120 10,652,833
LIABILITIES
Current liabilities
Trade and other payables 385,570 375,219
Corporate tax payable 287,951 281,969
673,521 657,188
SHAREHOLDERS' EQUITY
Share capital 2,752,527 2,447,121
Share premium 12,351,711 10,675,940
Other reserves 3,576,492 3,420,263
Foreign currency translation reserve (987,167) (752,975)
Available-for-sale reserve 8,556 6,622
Retained deficit (8,057,520) (5,801,326)
9,644,599 9,995,645
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY 10,318,120 10,652,833
Consolidated Cash Flow Statement
For the year ended 31 December 2007
2007 2006
� �
Cash flow from operating activities
Loss for the year (2,256,194) (2,227,026)
Adjustments for:
Depreciation 3,584 10,062
Interest receivable (31,865) (48,453)
Share of operating loss in associates 267,415 301,509
Gain on deemed disposal of associates (195,535) (73,436)
Gain on disposal of associate (312,105) -
(Gain) / loss on revaluation of financial
assets - fair value through profit or loss (26,312) 5,685
Provision for impairment 1,304,851 955,602
Share based payment costs 85,728 63,400
Directors remuneration paid by issue of
shares 7,140 2,813
Foreign exchange differences (3,844) 128,981
Net cash flow from operating activities
before
changes in working capital (1,157,137) (880,863)
Increase in payables 402 183,586
Decrease/(increase) in receivables 122,655 (672,763)
Net cash flow from operating activities (1,034,080) (1,370,040)
Investing activities
Payments for property, plant and
equipment (86,274) (205,267)
Proceeds from the disposal of financial
assets 208,823 211,170
Interest receivable 31,865 48,453
Proceeds from the disposal of associate
investments 665,364 -
Exploration costs capitalised (915,116) (2,040,415)
Acquisition of subsidiary (net of cash
acquired) - (581,879)
Acquisition of associate investment (112,742) (407,416)
Acquisition of available-for-sale
investments - (13,499)
Net cash flow from investing activities (208,080) (2,988,853)
Financing activities
Issue of ordinary shares 2,130,000 4,051,250
Cost of share issue (85,463) (201,352)
Net cash flow from financing activities 2,044,537 3,849,898
Net decrease in cash and cash equivalents
in the year 802,377 (508,995)
Cash and cash equivalents at the beginning
of the year 344,164 980,445
Effect of foreign exchange rate changes on
cash
and cash equivalents 24,281 (127,286)
Cash and cash equivalents at the end of the
year 1,170,822 344,164
Notes to the Consolidated Financial Statements
For the year ended 31 December 2007
The financial information set out above does not constitute the
Company's statutory accounts for the period ended 31 December 2007 or
2006. The statutory accounts for 2007 will be delivered to the
Registrar of Companies, following the Company's annual general
meeting. The auditors have reported on those accounts: their report
was unqualified and did not contain statements under section 237(2)
or (3) of the Companies Act 1985.
No dividend is proposed.
1. Loss per ordinary share
The basic loss per share of 0.84 pence (2006 - 1.06 pence) is
calculated, on the loss on ordinary activities after taxation of
�2,256,194 (2006 - �2,227,026) and on 269,851,015 (2006 -
210,637,270) ordinary shares, being the weighted average number of
ordinary shares in issue during the year ended 31 December 2007. Due
to the losses incurred during the year a diluted loss per share has
not been calculated as this would serve to reduce the basic loss per
share.
There are options and warrants outstanding at the end of the year
that could potentially dilute basic earnings per share in the future.
2. Post balance sheet events
a) on 2 January 2008, the company issued and allotted 35,000
ordinary shares of 1p each ("Ordinary Shares") at a price of 5.38p
per share to each of Robert Ashley and Francis Johnstone, in lieu of
cash for directors' fees.
b) the Company granted incentive stock options to employees and
consultants to acquire 1,450,000 shares at a price of 4p per share on
28 February 2008. The options will vest over a two year period and
expire on February 28, 2016.
c) a total of 4,000,000 share warrants expired unexercised on 28
February 2008.
d) on 13 March 2008, Hamilton Capital Partners Limited acquired
2,000,000 ordinary shares of 1p each in the Company at a price of
4.75p per share from BSG Investments Inc. ("BSG"), a wholly owned
subsidiary of Brazilian Diamonds Limited.
e) the Company entered into a credit facility on 21 May 2008
with Hamilton Capital Partners Limited wherein the Company can borrow
up to US$500,000. The credit facility is unsecured, bears simple
interest at the LIBOR rate plus 3% and is repayable on or before 31
December 2008.
f) the Company sold its remaining 5% carried interest in the
Groundhog/Trefi coal licences located in British Columbia for gross
proceeds of CDN$250,000.
Other information
The Annual General Meeting of the Company will be held at the offices
of Sprecher Grier Halberstam LLP, 5th Floor, One America Square,
Crosswall, London EC3N 2SG at 2.00 p.m. on Friday 25 July 2008.
Copies of the annual report and accounts will be posted to all
shareholders by 30 June 2008 and will be available from the Company's
website at www.hidefieldgold.com shortly. Further copies will be
available from the Company's registered offices at One America
Square, Crosswall, London, United Kingdom EC3N 2SG, from the date of
posting.
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