The directors have pleasure in submitting their report and the accounts for the year
ended 31 March 2001.
Principal activities and business review
The principal activity during the year was the development of the Parys Mountain
property. The group suspended operations at the Dolaucothi gold property in south Wales
but continued with the evaluation of other mineral development opportunities.
The loss for the year before taxation was £3,118,051 (2000 - £164,184). The group
has no revenues from the operation of its properties. The loss comprises interest and
administrative expenses together with an impairment provision of £3,000,000 (see below)
and evaluation costs not related to Parys Mountain which, in accordance with the group's
accounting policy, are charged to the profit and loss account. Included in the loss was
£61,546 (2000 - £50,948) in respect of interest due. The increase in the level of
loan outstanding is the explanation for higher interest charges. £59,637 (2000 -
£115,929) was expended on corporate costs, administration expenses and the
investigation and evaluation of exploration and development opportunities. This
expenditure has fallen in comparison with last year because of reduced activity.
The impairment provision of £3,000,000 arises following a review by the directors of the
net value at which the accumulated development costs of Parys Mountain should be carried
in the accounts. The provision was determined following calculations of discounted
estimated future real cash flows on the basis of current estimates of proven and probable
reserves and capital and operating costs, together with directors' estimates of future
metal prices and foreign currency exchange rates and in accordance with the provisions of
FRS 11. Further details of the valuation of intangible assets are to be found in note 8.
During the year no fixed assets (2000 - nil) were acquired, £74,159 (2000 -
£109,373) was capitalised in respect of the development of the Parys Mountain
property and £1,250 (2000 - £8,907) was capitalised in respect of the Dolaucothi
property. The reduction in these development expenditures is due to reduced levels of
activities at the properties.
At a time when metal prices remain low, the group has cut back on many activities in order
to conserve its finances. Work is still being done to refine the planned programme of
diamond core drilling at Parys Mountain. The continuing geological work at Parys Mountain
identified potential for the discovery of new deposits west of the White Rock zone.
However more funding will be required In order to carry out further activities.
In July 2001 an additional working capital agreement with Juno Limited, was concluded in
order to provide funding for the company's routine expenses.
The group has no revenues and the directors do not recommend a dividend. Since the date of
the accounts the activities of the group have continued in accordance with the directors'
expectations. The directors remain attentive for opportunities to be involved in
appropriate new mineral ventures.
Directors
The names of directors with biographical details are shown here.
Since 1 April 2000, Lord Crickhowell, Malcolm Swallow and Malcolm Burne have retired (see
page 9). In accordance with the articles of association, John Kearney retires by rotation
and, being eligible, offers himself for re-election. David Lean and Howard Miller have
been invited by the directors to join the board and, with the recommendation of the board,
are standing for election at the forthcoming AGM. Their biographical details are here.
Directors' interests in material contracts
Juno Limited (“Juno”) which is registered in Bermuda is the ultimate parent
company. The company has a controlling shareholder agreement with Juno dated September
1996, a working capital agreement with Juno of the same date and further working capital
agreements of June 1998, December 1998, December 1999 and July 2001. Apart from working
capital advances and related interest charges there were no transactions between the group
and Juno or its group during the year. An independent committee reviews and approves all
transactions and potential transactions with Juno. Danesh Varma is a director and, through
his family interests, a significant shareholder of Juno. John Kearney is a director and
shareholder of Minco plc, in which Juno holds an interest of approximately 22%.
There are no other contracts of significance in which any director has or had during the
year a material interest.
Directors' shareholdings
The interests at 31 March 2001 of the directors and their families in the share
capital of the company, all of which are beneficial, are set out overleaf. These holdings
were unchanged in amount at 20 August 2001. The holdings are expressed as a percentage of
116,241,384 (2000 – 116,241,384) shares, this being the number of shares in
issue at 20 August 2001.
At 31 March 2001 At 31 March 2000
| Director | Number of options | Number of ordinary shares | % of issued ordinary shares | Number of options | Number of ordinary shares | % of issued ordinary shares |
| John Kearney | 1,960,000 | - | 1.7 | 1,960,000 | - | 1.7 |
| Malcolm Burne | 500,000 | 1,000,000 | 1.3 | 500,000 | 1,000,000 | 1.3 |
| Ian Cuthbertson | 600,000 | 500,000 | 1.0 | 600,000 | 500,000 | 1.0 |
| Malcolm Swallow | 600,000 | - | 0.5 | 600,000 | - | 0.5 |
| Danesh Varma | 300,000 | - | 0.3 | 300,000 | - | 0.3 |
Directors' responsibilities for the financial statements
The directors are required by company law to prepare accounts for each financial year
that give a true and fair view of the state of affairs of the company and the group as at
the end of the financial year and of the profit or loss for that period.
The directors confirm that suitable accounting policies have been used and applied
consistently, and that reasonable and prudent judgements and estimates have been made in
the preparation of these accounts. The directors also confirm that applicable accounting
standards have been followed and that the financial statements have been prepared on the
going concern basis.
The directors have responsibility for ensuring that the group keeps proper accounting
records which disclose with reasonable accuracy the financial position of the group and
which enable them to ensure that the financial statements comply with the Companies Act
1985. They are also responsible for the systems of internal financial controls and for
safeguarding the assets of the company and the group and hence for taking reasonable steps
for the prevention and detection of fraud and other irregularities.
Further definition of the distinction of responsibilities between directors and auditors
is to be found in the auditors' report.
Substantial shareholders
At 20 August 2001 the following shareholders had advised the company of an interest in
the ordinary share capital of the company. So far as the company is aware there are no
other interests of more than 3% in the ordinary share capital of the company.
| Name | Number of shares | Percentage of share capital |
| Juno Limited | 57,924,248 | 49.8 |
| Strategic Lines Asset Management Limited | 9,800,000 | 8.4 |
Alterations to share capital and authority to allot shares
In order to provide greater flexibility in the financing of the company it is proposed
to put a resolution to the forthcoming AGM to subdivide each existing ordinary share, the
nominal value of which is 5 pence, into a new ordinary share, with a nominal value of 1
pence, and a deferred share of 4 pence. Each resulting new ordinary share will have the
same rights, including rights of voting, to dividends and on a return of capital, as the
existing ordinary shares. Existing certificates for ordinary shares of 5 pence each will
remain valid for the same number of new ordinary shares of 1 pence each. No certificates
will be issued in respect of the new deferred shares. These shares will not be listed and
will be effectively valueless. This subdivision of the company's shares will have no
effect on the net assets of the company.
In the light of the company's limited financial resources and the requirement to raise
further funds, the directors wish to have a larger than usual number of shares available
for issue. Although the directors would usually wish to allot any new share capital on a
pre-emptive basis, they believe that it is appropriate to have a larger amount available
for issue at their discretion without pre-emption than is usually the case for other
listed companies. Accordingly a resolution will be put to the AGM to renew the directors'
authority to allot equity securities for cash without pre-emption. In the case of
allotments other than for rights issues, it is proposed that such authority will be for up
to £290,000 (or 29,000,000 ordinary shares), which, after making allowance for the
proposed changes to the share capital, is equivalent to 25% of the issued ordinary share
capital at 20 August 2001. Whilst such authority is significantly in excess of the 5% of
existing issued ordinary share capital which is normal for listed companies, it will
provide additional flexibility which the directors believe is in the best interests of the
company in its present circumstances.
Market value of land
In August 1997 the freehold of the western part of Parys Mountain was purchased by the
company. Obtaining a meaningful value for this land is difficult, especially given its
historical use and that the company's pre-existing interest in the mineral rights would
also have to be taken into account. The land is carried in the accounts at its cost to the
company of £120,000. The directors are able to state only that, in their opinion, the
market value of this land is unlikely to be significantly less than this figure.
Going concern basis
As in previous years the directors have given careful consideration to the
appropriateness of the going concern concept in the preparation of the financial
statements. The validity of the going concern concept is dependent on finance being
available for the continuing working capital requirements of the group and finance for the
development of the Parys Mountain property eventually becoming available. The directors
believe, based on ongoing support from the major shareholder in respect of continuing
working capital requirements, that, whilst there is uncertainty as to whether the
conditions above will be met, the going concern basis is appropriate for these financial
statements.
Creditor payment policy
The group conducts its business on the normal trade credit terms of each of its
suppliers and tries to ensure that suppliers are paid in accordance with those terms. The
group's average creditor payment period at 31 March 2001 was 249 days (2000 - 60 days).
Charitable and political contributions
The group made no contributions during the year (2000 - nil).
Employment
The group is an equal opportunity employer in all respects.
Auditors
Deloitte & Touche have indicated their willingness to continue in office and a
resolution to re-appoint them and to authorise the directors to fix their remuneration
will be proposed at the annual general meeting.
By order of the board
Ian Cuthbertson
Company Secretary
Amlwch, 24 August 2001