TIDMUML
RNS Number : 6449G
Uranium Limited
03 February 2010
URANIUM LIMITED ("THE COMPANY")
INTERIM RESULTS FOR THE PERIOD ENDED 31 DECEMBER 2009
Uranium Limited today announces its interim results for the period from 1 July
2009 to 31 December 2009.
Highlights
Highlights for the period ended 31 December 2009:
· Income
US$1,300,054
· Loss for the period
(US$20,926,159)
· Shareholders' equity
US$127,555,787
· Total assets at market value
US$128,126,847
· Adjusted NAV per share
GBP1.91 (US$3.09)
· Decrease in GBP NAV since 1 July 2009 (GBP0.26)
(-12.0%)
· Decrease in US$ NAV since 1 July 2009 (US$0.51) (-14.2%)
Commenting on the results, Kelvin Williams, Chairman of Uranium Limited said:
"We are pleased to put before shareholders a transaction which the Board
believes will enable shareholders to access the NAV of their company, and, going
forward, to enjoy improved trading liquidity for their shares in a company with
comparable investment objectives and strategy in the uranium market to those of
Uranium Limited."
For further information, please contact:
+-------------------------------+-------------------------------+
| | |
| Uranium Limited | +27 82 788 0094 |
| Kelvin Williams (Chairman) | |
| | |
+-------------------------------+-------------------------------+
Chairman's statement
On 11th January 2010, the board of Uranium Limited ("UL") and the board of
Uranium Participation Corporation ("UPC") announced that they had reached
agreement on the terms of a recommended all-share offer to be made by UPC for
the entire issued share capital of UL, through a scheme of arrangement of our
company under Part VIII of the Companies Law (the "Scheme") (together the
"Transaction"). Shareholders will be asked to vote in favour of the Scheme at a
Court Meeting and at an Extraordinary General Meeting of the Company, each to be
held during March 2010.
The terms of the offer, and all related details pertaining to the offer will be
contained in a circular to be posted to all shareholders on 8th February 2010.
UL's shares have, since July 2008, been trading at a discount to the NAV per
share of the Company. The Board has considered alternatives to achieve a
reduction in the discount to this NAV per share, primarily by improving
liquidity and trading volumes. In an effort to improve liquidity and achieve
share price appreciation, UL on 30th December 2008 listed its shares on the TSX.
This listing has largely failed to improve the liquidity of UL's shares and
trading volumes have remained low throughout 2009.
The share price discount to NAV has prevented UL from raising funds by the issue
of further equity capital, as this is both commercially unattractive to its
existing shareholders, and UL's articles of incorporation do not permit UL to
issue share capital at a discount to its prevailing NAV.
The UL Board recognises that UPC shares have consistently exhibited better
liquidity and greater trading volume than UL shares. As a result, UPC's shares,
in contrast to UL shares, have historically not suffered from trading at a
persistent large discount to NAV. The Board believes that the Transaction will
enable UL shareholders to benefit from the better liquidity offered by UPC's
shares, as well as their greater valuation relative to NAV.
Based on UPC's history of successful financings that have broadened their
shareholder base and improved liquidity, the UL Board also believes that UPC
will be in a better position to raise finance through the issue of equity
capital, and therefore are better able to take advantage of future opportunities
in the uranium market.
The UL Board believes that the Transaction will enable UL shareholders to
benefit from improved trading liquidity, a better relation of the share price to
NAV, and long term capital appreciation as envisaged by current forecasts for
uranium prices. Under the Transaction, UL shareholders will receive shares in a
company with comparable investment objectives and strategy to UL, thereby
ensuring that they will retain a similar market exposure and risk profile to
that delivered by their current holding in UL.
Kelvin Williams
Chairman
3rd February 2010
Income statement
For the half year ended 31st December 2009
+-----------------------------------+------+--------------+----------+--------------+
| | | 1st July | | 1st July |
| | | 2009 | | 2008 |
| | | to | | to |
| |Note | 31st | | 31st |
| | | December | | December |
| | | 2009 | | 2008 |
| | | US$ | | US$ |
+-----------------------------------+------+--------------+----------+--------------+
| | | | | |
+-----------------------------------+------+--------------+----------+--------------+
| Income | | | | |
+-----------------------------------+------+--------------+----------+--------------+
| Bank interest | | - | | 79,739 |
+-----------------------------------+------+--------------+----------+--------------+
| Uranium loan fees | 2 | 1,300,054 | | 1,561,051 |
+-----------------------------------+------+--------------+----------+--------------+
| | | | | |
+-----------------------------------+------+--------------+----------+--------------+
| | | 1,300,054 | | 1,640,790 |
+-----------------------------------+------+--------------+----------+--------------+
| | | | | |
+-----------------------------------+------+--------------+----------+--------------+
| Expenses | 2 | | | |
+-----------------------------------+------+--------------+----------+--------------+
| Investment advisory fees | | - | | 894,148 |
+-----------------------------------+------+--------------+----------+--------------+
| Audit fees | | 62,621 | | 21,929 |
+-----------------------------------+------+--------------+----------+--------------+
| Directors' fees | | 128,031 | | 129,518 |
+-----------------------------------+------+--------------+----------+--------------+
| Listing expenses | | - | | 716,246 |
+-----------------------------------+------+--------------+----------+--------------+
| Other administrative expenses | | 1,514,561 | | 468,156 |
+-----------------------------------+------+--------------+----------+--------------+
| | | | | |
+-----------------------------------+------+--------------+----------+--------------+
| | | 1,705,213 | | 2,229,997 |
+-----------------------------------+------+--------------+----------+--------------+
| | | | | |
+-----------------------------------+------+--------------+----------+--------------+
| Loss on sale of uranium assets | | - | | (506,625) |
+-----------------------------------+------+--------------+----------+--------------+
| Decrease in fair value of uranium | 3 | (20,521,000) | | (23,292,365) |
| holdings | | | | |
+-----------------------------------+------+--------------+----------+--------------+
| | | | | |
+-----------------------------------+------+--------------+----------+--------------+
| | | | | |
+-----------------------------------+------+--------------+----------+--------------+
| Loss for the financial period | | | | |
| attributable to equity | | (20,926,159) | | (24,388,197) |
| shareholders | | | | |
+-----------------------------------+------+--------------+----------+--------------+
| | | | | |
+-----------------------------------+------+--------------+----------+--------------+
| | | | | |
+-----------------------------------+------+--------------+----------+--------------+
| | | | | |
+-----------------------------------+------+--------------+----------+--------------+
| Basic loss per share | 7 | US$(0.507) | | US$(0.591) |
+-----------------------------------+------+--------------+----------+--------------+
| | | | | |
+-----------------------------------+------+--------------+----------+--------------+
| Diluted loss per share | 7 | US$(0.507) | | US$(0.591) |
+-----------------------------------+------+--------------+----------+--------------+
| | | | | |
+-----------------------------------+------+--------------+----------+--------------+
The notes on pages 12 to 20 form part of these financial statements.
Balance sheet
At 31st December 2009
+-----------------------------------+------+--------------+----------+--------------+
| | | 31st | | 30th June |
| | Note | December | | 2009 |
| | | 2009 | | US$ |
| | | US$ | | |
+-----------------------------------+------+--------------+----------+--------------+
| | | | | |
+-----------------------------------+------+--------------+----------+--------------+
| ASSETS | | | | |
+-----------------------------------+------+--------------+----------+--------------+
| Non-current assets | | | | |
+-----------------------------------+------+--------------+----------+--------------+
| Other assets - Uranium holdings | 3 | 125,790,500 | | 146,311,500 |
+-----------------------------------+------+--------------+----------+--------------+
| | | | | |
+-----------------------------------+------+--------------+----------+--------------+
| | | 125,790,500 | | 146,311,500 |
+-----------------------------------+------+--------------+----------+--------------+
| | | | | |
+-----------------------------------+------+--------------+----------+--------------+
| Current assets | | | | |
+-----------------------------------+------+--------------+----------+--------------+
| Trade and other receivables | 4 | 699,635 | | 1,218,358 |
+-----------------------------------+------+--------------+----------+--------------+
| Cash and cash equivalents | | 1,636,712 | | 1,498,745 |
+-----------------------------------+------+--------------+----------+--------------+
| | | | | |
+-----------------------------------+------+--------------+----------+--------------+
| | | 2,336,347 | | 2,717,103 |
+-----------------------------------+------+--------------+----------+--------------+
| | | | | |
+-----------------------------------+------+--------------+----------+--------------+
| Total assets | | 128,126,847 | | 149,028,603 |
+-----------------------------------+------+--------------+----------+--------------+
| | | | | |
+-----------------------------------+------+--------------+----------+--------------+
| | | | | |
+-----------------------------------+------+--------------+----------+--------------+
| EQUITY | | | | |
+-----------------------------------+------+--------------+----------+--------------+
| Share capital | 5 | 412,500 | | 412,500 |
+-----------------------------------+------+--------------+----------+--------------+
| Share premium account | | - | | - |
+-----------------------------------+------+--------------+----------+--------------+
| Capital reserve | | (51,200,365) | | (30,679,365) |
+-----------------------------------+------+--------------+----------+--------------+
| Distributable reserve | 2 | 180,990,188 | | 180,990,188 |
+-----------------------------------+------+--------------+----------+--------------+
| Accumulated losses | | (2,646,536) | | (2,241,377) |
+-----------------------------------+------+--------------+----------+--------------+
| | | | | |
+-----------------------------------+------+--------------+----------+--------------+
| Total equity | | 127,555,787 | | 148,481,946 |
+-----------------------------------+------+--------------+----------+--------------+
| | | | | |
+-----------------------------------+------+--------------+----------+--------------+
| LIABILITIES | | | | |
+-----------------------------------+------+--------------+----------+--------------+
| Current liabilities | | | | |
+-----------------------------------+------+--------------+----------+--------------+
| Trade and other payables | 8 | 571,060 | | 546,657 |
+-----------------------------------+------+--------------+----------+--------------+
| | | | | |
+-----------------------------------+------+--------------+----------+--------------+
| Total liabilities | | 571,060 | | 546,657 |
+-----------------------------------+------+--------------+----------+--------------+
| | | | | |
+-----------------------------------+------+--------------+----------+--------------+
| Total EQUITY AND LIABILITIES | | 128,126,847 | | 149,028,603 |
+-----------------------------------+------+--------------+----------+--------------+
The notes on pages 12 to 20 form part of these financial statements.
The financial statements were authorised for issue by the board of directors on
3rd February 2010 and signed on its behalf by:
A C Pickford W
Scott
Director
Director
Cash flow statement
For the half year ended 31st December 2009
+-----------------------------------+------------+-----------------------------------+----------+--------------+
| | | 1st July | | 1st July |
| | | 2009 | | 2008 |
| | | to | | to |
| | | 31st | | 31st |
| | | December | | December |
| | | 2009 | | 2008 |
| | | US$ | | US$ |
+-----------------------------------+------------+-----------------------------------+----------+--------------+
| NET CASH FLOWS FROM OPERATING | | | | |
| ACTIVITIES | | | | |
+-----------------------------------+------------+-----------------------------------+----------+--------------+
| Loss from operations | | (20,926,159) | | (24,388,197) |
+-----------------------------------+------------+-----------------------------------+----------+--------------+
| | | | | |
+-----------------------------------+------------+-----------------------------------+----------+--------------+
| Decrease / (increase) in | | 518,723 | | (7,240) |
| receivables | | | | |
+-----------------------------------+------------+-----------------------------------+----------+--------------+
| | | | | |
+-----------------------------------+------------+-----------------------------------+----------+--------------+
| Increase / (decrease) in payables | | 24,403 | | (612,538) |
+-----------------------------------+------------+-----------------------------------+----------+--------------+
| | | | | |
+-----------------------------------+------------+-----------------------------------+----------+--------------+
| Loss on sale of uranium assets | | - | | 506,625 |
+-----------------------------------+------------+-----------------------------------+----------+--------------+
| | | | | |
+-----------------------------------+------------+-----------------------------------+----------+--------------+
| Decrease in fair value of uranium | | 20,521,000 | | 23,292,365 |
| holdings | | | | |
+-----------------------------------+------------+-----------------------------------+----------+--------------+
| | | | | |
+-----------------------------------+------------+-----------------------------------+----------+--------------+
| Purchase cost of uranium holdings | | - | | (38,883,990) |
+-----------------------------------+------------+-----------------------------------+----------+--------------+
| | | | | |
+-----------------------------------+------------+-----------------------------------+----------+--------------+
| Disposal proceeds of uranium | | - | | 34,012,500 |
| holdings | | | | |
+-----------------------------------+------------+-----------------------------------+----------+--------------+
| | | | | |
+-----------------------------------+------------+-----------------------------------+----------+--------------+
| NET CASH INFLOW / (OUTFLOW) FROM | | | | |
| OPERATING ACTIVITIES | | | | |
+ + +-----------------------------------+ +--------------+
| | | 137,967 | | (6,080,475) |
+-----------------------------------+------------+-----------------------------------+----------+--------------+
| | | | | |
+-----------------------------------+------------+-----------------------------------+----------+--------------+
| | | | | |
+-----------------------------------+------------+-----------------------------------+----------+--------------+
| NET INCREASE / (DECREASE) IN CASH | | | | |
| AND CASH EQUIVALENTS | | 137,967 | | (6,080,475) |
+-----------------------------------+------------+-----------------------------------+----------+--------------+
| | | | | |
+-----------------------------------+------------+-----------------------------------+----------+--------------+
| CASH AND CASH EQUIVALENTS | | | | |
| AT BEGINNING OF PERIOD | | 1,498,745 | | 8,182,291 |
+-----------------------------------+------------+-----------------------------------+----------+--------------+
| | | | | |
+-----------------------------------+------------+-----------------------------------+----------+--------------+
| CASH AND CASH EQUIVALENTS | | | | |
| AT END OF PERIOD | | 1,636,712 | | 2,101,816 |
+-----------------------------------+------------+-----------------------------------+----------+--------------+
| | | | | |
+-----------------------------------+------------+-----------------------------------+----------+--------------+
The notes on pages 12 to 20 form part of these financial statements.
Notes to the financial statements
For the half year ended 31st December 2009
1. GENERAL INFORMATION
Uranium Limited (the "Company") was incorporated in Guernsey on 28th June 2006
and is a closed ended investment company.
The Company was admitted to the Alternative Investment Market of the London
Stock Exchange ("AIM") on 21st July 2006 and on the Toronto Stock Exchange
("TSX") on 30th December 2008.
Activities
The Company's activities include holding and lending uranium oxide concentrates
("U3O8") and uranium hexafluoride ("UF6"), with the primary investment objective
of achieving capital appreciation in the value of its uranium holdings.
2. SIGNIFICANT ACCOUNTING POLICIES
Basis of preparation
The financial statements have been prepared in accordance with IAS 34 "Interim
Financial Reporting" and with Section 243 of The Companies (Guernsey) Law, 2008
applicable to companies reporting under IFRS. The interim financial information
should be read in conjunction with the annual financial statements for the year
ended 30th June 2009, which have been prepared in accordance with International
Financial Reporting Standards ("IFRS"). A summary of the more important
accounting policies is set out below.
Except as described below, the accounting policies applied are consistent with
those of the annual financial statements for the year ended 30th June 2009, as
described in those annual financial statements.
The preparation of financial statements in conformity with generally accepted
accounting principles requires the use of estimates and assumptions that affect
the reported amounts of assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Although these estimates are based on management's best
knowledge of the amount, event or actions, actual results ultimately may differ
from those estimates.
(a) Published standards and interpretations to existing standards effective in
2009 but not currently relevant
· IFRS 1 (Amendment), First time adoption of IFRS and IAS 27, Consolidated
and Separate Financial Statements - effective from 1st January 2009
· IFRS 3 (Revised), Business Combinations - effective from 1st January 2009
· IFRS 8, Operating Segments - effective from 1st January 2009
· IAS 23 (Amendment), Borrowing Costs - effective from 1st January 2009
· IAS 27 (Revised), Consolidated and Separate Financial Statements -
effective from 1st July 2009
· IFRIC 15, Agreements for Construction of Real Estates - effective from
1st January 2009
(b) Standards and interpretations to existing standards in issue, relevant for
the Company's operations but not yet effective
A number of new Standards, amendments to Standards and Interpretations in issue
are not yet effective for periods ended 31st December 2009 and have not been
applied in preparing these financial statements. Of these pronouncements, the
following will potentially have an impact on the operations of the Company and
it is planned to adopt these pronouncements when they become effective:
· IAS 1 (Amendment), Presentation of Financial Statements - effective 1st
January 2010
· IAS 32 (Amendment), Financial Instruments: Presentation - effective 1st
February 2010
· IFRS 9, Financial Instruments - effective 1st January 2013
Notes to the financial statements
For the half year ended 31st December 2009
SIGNIFICANT ACCOUNTING POLICIES (continued)
Foreign currency translation
(a) Functional and presentation currency
The functional currency of the Company is US Dollars. The Company's investors
are mainly from the United Kingdom and North America. The primary activity of
the Company is to invest in U3O8 and UF6 which are valued in US Dollars. The
performance of the Company is measured and reported to the investors in both
Sterling and US Dollars.
The Board of Directors considers the US Dollar as the currency that most
faithfully represents the economic effects of the underlying transactions,
events and conditions. The financial statements are presented in US Dollars
which is the Company's functional and presentation currency.
(b) Transactions and balances
Transactions in foreign currencies are translated into US Dollars at the rates
of exchange ruling at the dates of those transactions. Income statement items in
foreign currencies are translated into US Dollars at transaction date. Foreign
currency balances at period end are translated at the approximate rates of
exchange ruling at that date. Gains and losses arising on the settlement of
transactions and the translation at period end exchange rates of monetary assets
and liabilities balances denominated in foreign currencies are recognised in the
income statement.
Segmental reporting
The company has one business segment, the holding and lending of uranium with
the primary investment objective of achieving capital appreciation in the value
of its uranium holdings, and one main geographic segment, the global uranium
market.
A business segment is a group of assets and operations engaged in providing
products or services that are subject to risks and returns that are different
from those of other business segments. A geographical segment is engaged in
providing products or services within a particular economic environment that are
subject to risks and returns that are different from those of segments operating
on other economic environments.
Revenue recognition
Revenue is recognised only when it is probable that the economic benefits
associated with a transaction will flow to the company and the amount of revenue
can be measured reliably.
Revenue on the sale of U3O8 and UF6 is recognised at the time of delivery.
Uranium loan fees
Fees from loans of U3O8 and UF6 to third parties are recognised in the income
statement on an effective yield basis. The fees are generally based on a loan
rate and are calculated on the market value of the loaned uranium on a quarterly
basis. However, loan fee mechanisms can vary from loan to loan as some loan
contracts have also been based on fixed fees.
Formation and listing expenses recognised directly in equity
Formation and listing expenses which are directly attributable to the issue of
shares are charged against share premium as they are incurred.
Expenses
All operating expenses are recognised in the income statement on an accruals
basis.
Notes to the financial statements
For the half year ended 31st December 2009
SIGNIFICANT ACCOUNTING POLICIES (continued)
Holdings of U3O8 and UF6
Holdings of U3O8 and UF6 are designated at fair value through profit or loss.
All uranium holdings are initially measured at fair value. Gains and losses
arising on the change in fair value of uranium holdings are recognised in the
income statement when they arise.
U3O8 and UF6 on loan to counterparties remain on the balance sheet as the
Company retains substantially all of the risks and rewards of ownership.
Forward contracts
From time to time, the Company may enter into contracts for the future delivery
of U3O8 and UF6 at a fixed price. Such contracts are "executory contracts" in
that both parties are still to perform, to an equal degree, the actions required
of them by the contract until the day of final delivery under the contract.
Executory contracts are not recognised in the balance sheet of the Company, but
are noted as a future financial commitment.
Financial instruments
Financial assets and liabilities carried on the balance sheet include cash and
cash equivalents, trade and other accounts receivable and payable.
Financial instruments are classified as assets, liabilities or equity in
accordance with the substance of the contractual arrangement. Interest, gains
and losses relating to a financial instrument classified as an asset or
liability are reported as an expense or income. Financial instruments are
offset when the Company has a legally enforceable right to offset and intends to
settle either on a net basis or to realise the asset and settle the liability
simultaneously.
Trade receivables
Trade receivables are measured on initial recognition at fair value and
subsequently measured at amortised cost less provision for impairment.
Appropriate allowances for estimated irrecoverable amounts are recognised in the
income statement when there is objective evidence that the asset is impaired.
Any allowance recognised is measured as the difference between the asset's
carrying amount and the present value of estimated future cash flows discounted
at the effective interest rate computed on initial recognition of the asset.
Cash and cash equivalents
Cash and cash equivalents include cash in hand, demand deposits and deposits
with original maturities of three months or less.
Provisions and contingent liabilities
Provisions are recognised when the Company has a present legal or constructive
obligation as a result of past events, it is probable that an outflow of
resources will be required to settle the obligation, and a reliable estimate of
the amount can be made.
Provisions are measured at the directors' best estimate of the expenditure
required to settle the obligation at the balance sheet date, and are discounted
to present value where the effect is material.
The Company recognises a provision for onerous contracts when the expected
benefits to be derived from a contract are less than the unavoidable costs of
meeting the obligations under the contract.
Contingent liabilities are disclosed if the future obligation is probable or the
amount cannot be reasonably estimated.
Trade payables
Trade payables are initially measured at fair value, and are subsequently
measured at amortised cost, using the effective interest rate method. Trade
payables are carried at the fair value of the consideration to be paid in future
for services that have been received or supplied and invoiced or formally agreed
with the supplier.
Notes to the financial statements
For the half year ended 31st December 2009
SIGNIFICANT ACCOUNTING POLICIES (continued)
Taxation
The Company is incorporated in Guernsey and is taxed at a rate of zero percent
under the current tax system. The Company is liable to deduct tax at source from
any distribution or deemed distribution to Guernsey resident shareholders. A de
minimus has been enacted so that this will apply only to Guernsey residents
holding 1% or more of the issued share capital.
Share capital
Ordinary shares are classified as equity. Incremental costs directly
attributable to the issue of new shares are shown in equity as a deduction from
the proceeds, net of tax, and are disclosed in the statement of changes in
equity.
Distributable reserve
On 12th October 2007, the Company was granted approval for a capital reduction
by way of cancellation of the amount standing to the credit of its share premium
account on that date. The amount cancelled was transferred to distributable
reserves.
Capital reserve
Following the Company's change in accounting policy for the carrying value of
its uranium assets with effect from 1st July 2008, the unrealised gain or loss
on the change in fair value of its uranium assets is transferred from the income
statement to the capital reserve at each financial year end.
Share-based payments
The Company has applied the requirements of IFRS 2, Share-based Payments.
The Company has issued equity share options which represent equity-settled
share-based payments in connection with the admission of the Company to AIM.
Equity-settled share-based payments are measured at fair value at the date of
grant. The fair value determined at the grant date of the equity-settled share
based payment is deemed to be an incremental cost directly attributable to the
issue of the shares at admission and as such is deducted from equity.
Fair value is measured by use of the Black-Scholes pricing model. The expected
life used in the model is based on management's best estimate and is adjusted
for the effects of non-transferability, exercise restrictions and
behaviouralconsiderations.
See Note 6 for further description of the equity-settled share option granted.
Risk management
The Company attempts to mitigate risks that may affect its performance through a
process of identifying, assessing, reporting and managing material risks. The
principal risks to which the Company is exposed are uranium price risk,
counterparty credit risk, custodian credit risk and liquidity risk.
Uranium price risk
As an investor in uranium, the Company holds significant positions in uranium
that are exposed to changes in market price. In addition, the Company may enter
into fixed price forward purchase and sales contracts. The price of uranium is
volatile and is influenced by numerous factors beyond the Company's control,
such as demand and supply fundamentals and geopolitical events.
The objective of the Company is capital appreciation, which it intends to
achieve through a policy of acquiring uranium and a strategy of holding such
uranium for the long-term and not actively speculating or trading with regard to
short-term changes in the price of uranium. Accordingly, the Company does not
hedge or otherwise protect against movements in uranium price.
Notes to the financial statements
For the half year ended 31st December 2009
SIGNIFICANT ACCOUNTING POLICIES (continued)
The following table details the sensitivity of the Company's published net asset
value attributable to holders of ordinary shares (NAV) to a 10% increase and
decrease in the market price of uranium, with all other variables held constant.
+------------------------+-----------------+----------+--------------+--------+
| | 31st | 31st | 30th | 30th |
| | December |December | June | June |
| | 2009 | 2009 | 2009 | 2009 |
| | US$ | US | US$ | US$ |
+------------------------+-----------------+----------+--------------+--------+
| | | | | |
+------------------------+-----------------+----------+--------------+--------+
| | Change | Change | Change |Change |
| | in NAV | in NAV | in NAV |in NAV |
| | (US$) | (%) | (US$) | (%) |
+------------------------+-----------------+----------+--------------+--------+
| | | | | |
+------------------------+-----------------+----------+--------------+--------+
| 10% increase in | 12,579,050 | +9.9% | 14,631,150 | +9.9% |
| uranium market price | | | | |
+------------------------+-----------------+----------+--------------+--------+
| | | | | |
+------------------------+-----------------+----------+--------------+--------+
| 10% decrease in | (12,579,050) | -9.9% | (14,631,150) | -9.9% |
| uranium market price | | | | |
+------------------------+-----------------+----------+--------------+--------+
Counterparty credit risk
The Company's purchase, sale and lending of uranium expose the Company to the
risk of non-payment or non-performance. The directors review credit issues
associated with each and every transaction and consideration is given to credit
worthiness and credit concentration issues, the provision of appropriate
security, and other risk mitigation measures.
Custodian credit risk
The Company is exposed to the credit risk of the conversion and enrichment
facilities ("facilities"), the ultimate custodians of the Company's uranium. The
directors periodically review and manage the Company's exposure to the credit
risk of facilities that hold its material by diversifying its uranium holdings
across several facilities.
Physical uranium loss risk
The uranium owned by the Company could suffer damage or destruction by fire,
chemical accident, leakage or other incidents beyond the Company's control. This
may result in losses which are not compensated for by insurance proceeds. The
directors periodically review and manage the Company's risk of uranium loss by
diversifying its uranium holding across several conversion and enrichment
facilities, considering the availability of indemnities from the facilities
and/or the availability of external insurance cover.
Liquidity risk
The Company funds ongoing expenses from interest income, uranium loan fees, and
from cash held on demand and on deposit. The Company could be exposed to
significant liquidity risk if it were to fully invest its cash balances and if
income from uranium loan fees were to reduce, and other sources of funding were
to become unavailable. The directors review rolling forecasts of the Company's
cash requirements on an ongoing basis and the Company currently maintains a cash
balance adequate to meet expected cash requirements for the forward 12 month
period.
Notes to the financial statements
For the half year ended 31st December 2009
3. URANIUM HOLDINGS
+--------------------------------------+--------------+----------+-------------+
| | 31st | | 31st |
| | December | | December |
| | 2009 | | 2009 |
| | US$ | | US$ |
+--------------------------------------+--------------+----------+-------------+
| | | | |
+--------------------------------------+--------------+----------+-------------+
| | Cost | | Market |
| | | | value |
+--------------------------------------+--------------+----------+-------------+
| | | | |
+--------------------------------------+--------------+----------+-------------+
| 1,725,000 lbs of U3O8 | 81,274,300 | | 76,762,500 |
+--------------------------------------+--------------+----------+-------------+
| | | | |
+--------------------------------------+--------------+----------+-------------+
| 412,000 kgU of UF6 | 95,716,565 | | 49,028,000 |
+--------------------------------------+--------------+----------+-------------+
| | | | |
+--------------------------------------+--------------+----------+-------------+
| | 176,990,865 | | 125,790,500 |
+--------------------------------------+--------------+----------+-------------+
+--------------------------------------+--------------+----------+-------------+
| | 30th | | 30th |
| | June | | June |
| | 2009 | | 2009 |
| | US$ | | US$ |
+--------------------------------------+--------------+----------+-------------+
| | | | |
+--------------------------------------+--------------+----------+-------------+
| | Cost | | Market |
| | | | value |
+--------------------------------------+--------------+----------+-------------+
| | | | |
+--------------------------------------+--------------+----------+-------------+
| 1,725,000 lbs of U3O8 | 81,274,300 | | 88,837,500 |
+--------------------------------------+--------------+----------+-------------+
| | | | |
+--------------------------------------+--------------+----------+-------------+
| 412,000 kgU of UF6 | 95,716,565 | | 57,474,000 |
+--------------------------------------+--------------+----------+-------------+
| | | | |
+--------------------------------------+--------------+----------+-------------+
| | 176,990,865 | | 146,311,500 |
+--------------------------------------+--------------+----------+-------------+
The market value of U3O8 is taken as the average of (i) the month end UxC U3O8
spot price indicator (as published by Ux Consulting Company, LLC in its Ux
weekly publication) and (ii) the month end TradeTech U3O8 exchange value (as
published by TradeTech, LLC in the Nuclear Market Review), ("the Average U3O8
Published Price"), and that of UF6 is taken as the average of (i) the month end
UxC UF6 spot NA price and (ii) the month end TradeTech UF6 value, ("the Average
UF6 Published Price").
At 31st December 2009, 520,000 lbs of U3O8 with a cost of US$24,500,079 and a
market value of US$23,140,000 (30th June 2009: 1,317,440 lbs of U3O8 with a cost
of US$62,070,007 and a market value of US$67,846,100) as well as nil kgU of UF6
(30th June 2009: 200,000 kgU of UF6 with a cost of US$46,464,352 and a market
value of US$27,900,000) was on loan to third parties. The uranium on loan was
collateralised to its replacement value either by way of a guarantee issued to
the Company by the parent company of the borrower or by a standby letter of
credit issued by a major international bank.
4. TRADE AND OTHER RECEIVABLES
+--------------------------------------+----------+----------+-----------+
| | 31st | | 30th |
| |December | | June |
| | 2009 | | 2009 |
| | | | |
| | US$ | | US$ |
+--------------------------------------+----------+----------+-----------+
| | | | |
+--------------------------------------+----------+----------+-----------+
| Accrued loan fee | 627,747 | | 1,207,653 |
+--------------------------------------+----------+----------+-----------+
| Prepayments | 71,888 | | 10,705 |
+--------------------------------------+----------+----------+-----------+
| | | | |
+--------------------------------------+----------+----------+-----------+
| | | | |
| | 699,635 | | 1,218,358 |
+--------------------------------------+----------+----------+-----------+
Notes to the financial statements
For the half year ended 31st December 2009
5. SHARE CAPITAL
+------------------------------------+----------+----------+----------+---------+
| | | 31st | | 30th |
| | |December | | June |
| | | 2009 | | 2009 |
| | | US$ | | US$ |
+------------------------------------+----------+----------+----------+---------+
| Authorised | | | | |
+------------------------------------+----------+----------+----------+---------+
| 85,000,000 Ordinary Shares | | | | |
| of US$0.01 each | | 850,000 | | 850,000 |
+------------------------------------+----------+----------+----------+---------+
| | | | | |
+------------------------------------+----------+----------+----------+---------+
| Issued and fully paid | | | | |
+------------------------------------+----------+----------+----------+---------+
| 41,250,000 Ordinary Shares | | | | |
| of US$0.01 each | | 412,500 | | 412,500 |
+------------------------------------+----------+----------+----------+---------+
Rights of shareholders
The Ordinary Shares carry the right to vote, the right to receive all dividends
declared by the Company and on a winding up will have the right to share pro
rata in the surplus assets of the Company. The shares carry no right to fixed
income.
6. SHARE-BASED PAYMENTS
Equity-settled share option
The Company issued the former Custodian (Nufcor International Limited) an option
over shares representing 2,475,000 of the Company's issued ordinary share
capital at the time of admission to AIM. The option was granted to reward the
former Custodian for its services in relation to the Company issuing shares and
obtaining admission to AIM.
The grant of the option was conditional upon the Company's admission to AIM and
vested on the date of admission. The option may be exercised at any time (or
times) during the period commencing on 21st July 2008 and ending on 21st July
2011. The exercise price of the option is fixed at GBP2.05 per share.
+------------------------------------+----------+-----------+----------+----------+
| | | Options | | Weighted |
| | | | | average |
| | | | | exercise |
| | | | | price |
| | | | | US$ |
+------------------------------------+----------+-----------+----------+----------+
| Outstanding at the beginning of | | 2,475,000 | | 3.79 |
| the period | | | | |
+------------------------------------+----------+-----------+----------+----------+
| Granted during the period | | - | | - |
+------------------------------------+----------+-----------+----------+----------+
| Forfeited during the period | | - | | - |
+------------------------------------+----------+-----------+----------+----------+
| Exercised during the period | | - | | - |
+------------------------------------+----------+-----------+----------+----------+
| Expired during the period | | - | | - |
+------------------------------------+----------+-----------+----------+----------+
| Outstanding at the end of the | | 2,475,000 | | 3.79 |
| period | | | | |
+------------------------------------+----------+-----------+----------+----------+
| Exercisable at the end of the | | - | | - |
| period | | | | |
+------------------------------------+----------+-----------+----------+----------+
The inputs into the Black-Scholes model are as follows:
+------------------------------------+----------+--------+----------+---------+
| | | | | |
+------------------------------------+----------+--------+----------+---------+
| Weighted average share price | | | | US$3.79 |
+------------------------------------+----------+--------+----------+---------+
| Weighted average exercise price | | | | US$3.79 |
+------------------------------------+----------+--------+----------+---------+
| Expected volatility | | | | 11.56% |
+------------------------------------+----------+--------+----------+---------+
| Expected life | | | | 5 |
| | | | | years |
+------------------------------------+----------+--------+----------+---------+
| Risk free rate | | | | 4.84% |
+------------------------------------+----------+--------+----------+---------+
| Expected dividends | | | | nil |
+------------------------------------+----------+--------+----------+---------+
Expected volatility was determined by calculating the historical volatility of
U3O8, the underlying asset in which the Company is invested, over the past 3
years. The expected life used in the model was based on management's
expectation that the option will be exercised at the end of the life of the
option.
Notes to the financial statements
For the half year ended 31st December 2009
7. EARNINGS PER SHARE
+--------------------------------------+--------+----------+----------+----------+--------------+--+
| | 1st July 2009 to | | 1st July | |
| | 31st December 2009 | | 2008 to | |
| | US$ | | 31st | |
| | | | December | |
| | | | 2008 | |
| | | | | |
| | | | US$ | |
+--------------------------------------+------------------------------+----------+--------------+--+
| | | | | |
+--------------------------------------+------------------------------+----------+--------------+--+
| Earnings | | | |
+-----------------------------------------------+----------+----------+----------------------------+
| | | | | |
| Loss for the purposes of basic and | (20,926,159) | | (24,388,197) | |
| diluted earnings per share | | | | |
+--------------------------------------+------------------------------+----------+--------------+--+
| | | | | | | |
+--------------------------------------+--------+----------+----------+----------+--------------+--+
+--------------------------------------+---------+----------+--+----------+----------+----------+------------+-+--+
| | 1st July 2009 to | | 1st July | |
| | 31st December 2009 | | 2008 to | |
| | US$ | | 31st | |
| | | | December | |
| | | | 2008 | |
| | | | | |
| | | | US$ | |
+--------------------------------------+-----------------------+--------------------------------+------------+----+
| | | | | |
+--------------------------------------+-----------------------+--------------------------------+------------+----+
| Number of shares | | | | |
+--------------------------------------+----------------------------------+----------+-------------------------+--+
| Weighted average number of ordinary | | | | |
| shares for the purposes | | | | |
+--------------------------------------+----------------------------------+----------+-------------------------+--+
| of basic earnings per share | 41,250,000 | | 41,250,000 | |
+--------------------------------------+-----------------------+--------------------------------+------------+----+
| | | | |
+------------------------------------------------+----------+-------------+---------------------------------------+
| Effect of dilutive potential ordinary shares: | | | |
+------------------------------------------------+----------+-------------+---------------------------------------+
| share options | - | | - | |
+--------------------------------------+-----------------------+--------------------------------+------------+----+
| | | | | |
+--------------------------------------+-----------------------+--------------------------------+------------+----+
| Weighted average number of ordinary | | | | |
| shares for the purpose | 41,250,000 | | 41,250,00 | |
| of diluted earnings per share | | | | |
+--------------------------------------+-----------------------+--------------------------------+------------+----+
| | | | | | | | | | |
+--------------------------------------+---------+----------+--+----------+----------+----------+------------+-+--+
+--------------------------------------+------------+----------+------------+
| Basic loss per share | US$(0.507) | | US$(0.591) |
+--------------------------------------+------------+----------+------------+
+--------------------------------------+------------+----------+------------+
| Diluted loss per share | US$(0.507) | | US$(0.591) |
+--------------------------------------+------------+----------+------------+
8. TRADE AND OTHER PAYABLES
+--------------------------------------+----------+----------+---------+
| | 31st | | 30th |
| |December | | June |
| | 2009 | | 2009 |
| | | | US$ |
| | US$ | | |
+--------------------------------------+----------+----------+---------+
| | | | |
+--------------------------------------+----------+----------+---------+
| Advisory fee payable | - | | 97,541 |
+--------------------------------------+----------+----------+---------+
| Other accrued expenses | 571,060 | | 449,116 |
+--------------------------------------+----------+----------+---------+
| | | | |
+--------------------------------------+----------+----------+---------+
| | | | |
| | 571,060 | | 546,657 |
+--------------------------------------+----------+----------+---------+
Notes to the financial statements
For the half year ended 31st December 2009
9. RELATED PARTY TRANSACTIONS
The following are related parties to the Company:
A C Pickford - Director / Chief Executive Officer
K H Williams - Non-executive Director
W Scott - Non-executive Director
M S Travis - Non-executive Director
P K Bonney - Non-executive Director
D E Preston - Chief Financial Officer
QVT Financial LP - Significant Shareholder
Directors are entitled to fees totalling GBP142,500 (2008: GBP132,500) per annum
with effect from 1st January 2009. The highest paid Director receives a fee of
GBP50,000 per annum. In addition, the Chief Financial Officer is entitled to a
fee of GBP12,500 per annum. During the period fees totalling US$128,031 (2008:
US$129,518) were charged.
Mr A C Pickford, the Chief Executive Officer, holds 22,095 shares (0.05%) (2008:
22,095 shares (0.05%)) in the Company.
Mr D E Preston, the Chief Financial Officer, is also Managing Director of
Mercator Trust Company Limited ("Mercator"), the Company's administrator.
Mercator is entitled to an annual administration fee. During the period
administration fees totalling US$195,557 (2008: US$69,833) were charged and the
sum of US$ nil was outstanding as at 31st December 2009 (30th June 2009:
US$55,513). Included within the administration fees in the period are additional
fees of US$42,792 (2008: nil) charged by Mercator in connection with the
Transaction as defined in note 10.
At 31st December 2009, QVT Financial LP, of which Mr P K Bonney is a partner and
portfolio manager, held 11,837,535 shares (29% of issued shares) (30th June
2009: 11,837,535 shares (29% of issued shares)) in the Company.
10. POST BALANCE SHEET EVENTS
On 11th January 2010, the Company and Uranium Participation Corporation ("UPC")
announced that they had signed an Implementation Agreement pursuant to which UPC
will make an offer to acquire all of the issued ordinary share capital of the
Company (the "Transaction").
Under the terms of the Transaction, if accepted by Shareholders at an
Extraordinary General Meeting expected to be held in March 2010, holders of the
Company's shares will receive 0.50 of one common share of UPC for each Company
share held on the closing date of the Transaction which is expected to be in
March 2010.
The Transaction provides the Company's Shareholders with a significant premium
to the pre-offer price of the Company's shares and with ownership in a uranium
investment vehicle with better liquidity.
The Company will have a number of significant costs to settle which are
contingent on the completion of the Transaction, the largest of which is due to
the Company's Financial Adviser and Broker, Canaccord Adams who are due
GBP700,000 plus expenses. The Company will also need to pay legal costs,
insurance run off costs and termination costs to its Administrator and Directors
on finalisation of the deal.
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR TJMFTMBIMBFM
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