Interim Report to Shareholders 1998

Since 1 April, the company’s exploration activities have continued with the completion of a fourth drill hole at Parys Mountain and the drilling of our first hole at the Dolaucothi gold property. Throughout the period detailed geological work has continued at Parys Mountain with separate studies on the age of the volcanic rocks, paleontological and graptolite dating and structural geology. A major report detailing the results of lithogeochemical analysis of the property is expected to be finalised before the end of the year.

The loss for the half year was £59,000, down from £85,000 in the previous year, largely because the 1997 figure included legal fees in connection with the purchase of the freehold of part of the Parys Mountain property. Expenditure on mineral exploration and development at Parys Mountain and Dolaucothi was £184,000 for the six months, compared to £61,000 in the equivalent period last year when no drilling was being carried out. In accordance with the company’s accounting policies these amounts are capitalised to intangible assets.

Loan finance has been secured from Juno Limited, the company’s major shareholder, to provide for the basic costs of maintaining the company and for a limited geological programme over the next year. At a time when nearly all smaller mineral companies are experiencing considerable difficulties with funding, this facility provides welcome support for the company and the other shareholders; however new funding will be required for the company’s planned drilling programme.

Drilling

Hole AMC 14 was drilled over the period from June to August and was located in the north central part of the Parys Mountain property and north of the open cast pits. The hole reached a depth of 593 metres and as previously reported, intersected three horizons of interest. The results provide ample evidence of the potential of Parys Mountain and are encouraging.

Scientific Studies

A report was completed by Dr. Randall Parrish of the British Geological Survey and the University of Leicester on the age of the volcanic rocks at Parys Mountain using high precision U-Pb isotope dating. This work, which involved sampling from the lower and upper volcanics in the immediate vicinity of the massive sulphide deposit, showed that the volcanism at Parys Mountain is early Silurian in age and not Ordovician. This finding independently confirms the volcanogenic massive sulphide (VMS) setting of the ores. The report concludes that the ore deposit was formed during a short period of time from heat derived from Silurian volcanism and that the primary heat source which drove the hydro-thermal alteration and which generated the orebody was the volcanism. This work has added further confirmation to the view that the setting of the Parys Mountain deposit has strong similarities with other major VMS deposits elsewhere in the world and strengthens the company’s optimism that additional reserves can be identified.

The major geological study of the stratigraphic and structural setting of the various mineralised zones using lithogeochemical analysis continued. Preliminary results of the lithogeochemical data are proving useful in outlining areas of increased hydro-thermal alteration where hotter and potentially mineralising fluids have modified the host rhyolites and shales. In general, it is clear that the extent of alteration increases with depth below the surface, becoming more significant at about 200 metres depth, which is beyond the limits of most of the historical drilling.

We have developed and laid out a plan to drill 10,000 metres in 10 to 15 holes. Much of this drilling is planned for the eastern and north-eastern parts of the property which have been largely unexplored to date. This will be one of the most comprehensive drilling programmes ever undertaken on the property. It would take at least one year to complete and is budgeted to cost about £500,000.

Dolaucothi Gold

At the Dolaucothi Gold property the first of a number of planned holes was located southwest of the main Roman workings on the Roman Lode. The hole was drilled to a depth of 100 metres to determine the nature of the mineralisation exploited by the Romans in the upper Roman Adit and to explore the updip structure hosting to Roman Lode. At a depth of 32 metres a sulphide rich vein with associated pyritized shale and small traces of gold was intersected over a length of 30 centimetres in a structure similar to that normally hosting the old Roman lode. A second quartz zone was intersected at the bottom of the hole at a depth of 96 metres associated with a zone of pyritization. The hole has given very useful geological information, in that the interpretation of geology of the old adits has become clearer. A deeper follow-up hole will be started by the University of Cardiff in December at the same location, with a final target depth of 170 metres.

Outlook for 1999

We have a range of further activities we want to carry out at Parys Mountain of which the most significant is the drilling programme referred to above. This will require further funding. This is not a good time to be looking to raise money for drilling programmes. Financing conditions in the mineral industry world wide over the past year have been the worst since the 1973 oil price induced slump. Despite the current market sentiment, we intend to stick to our plans, to make progress and to increase our geological understanding of the property so that we are in a position to advance quickly with the drilling programme as soon as funding and market conditions permit.

On behalf of the board of directors

John F Kearney

Chairman
21 December 1998

 

Unaudited Consolidated Profit and Loss Account

		Six months to 30 September 1998		Six months to 30 September 1997
		£		£
Turnover		-		-
Net operating expenses - continuing operations		50,962		88,519
Interest receivable		(861)		(3,080)
Interest payable		8,787		11
Loss on ordinary activities before and after taxation			58,888	85,450
	Loss per share - basic	0.1 pence		0.1 pence
	Loss per share - fully diluted	0.1 pence		0.1 pence

No dividend is proposed. There are no minority interests or extraordinary items.

 

Unaudited Consolidated Balance Sheet

		30 September 1998	30 September 1997
Fixed assets		£	£
	Intangible assets	11,989,437	11,489,617
	Tangible assets	186,905	186,228
	Total fixed assets	12,176,342	11,675,845
Current assets
	Debtors	103,431	108,927
	Cash	-	318,967
	Total current assets	103,431	427,894
Current liabilities
	Creditors - amounts due within one year	(420,251)	(245,528)
	Net current (liabilities)/assets	(316,820)	182,366
Net assets		11,859,522	11,858,211
Shareholders’ funds
	Share capital	6,593,371	6,518,371
	Share premium	5,738,146	5,740,846
	Profit & loss account - deficit	(471,995)	(401,006)
	Equity shareholders’ funds	10,998,344	10,997,033
	Non equity shareholders’ funds	861,178	861,178
Total shareholders’ funds		11,859,522	11,858,211

Notes : -

1 The half year figures are unaudited. The profit and loss account and the balance sheet have been prepared on a basis consistent with that of the accounts for the year ended 31 March 1998. The auditors' report on those accounts was not qualified and did not contain a statement under section 237 of the Companies Act 1985.

2 Current liabilities include £308,594 due to Juno Limited, the ultimate parent company.

3 The 1997 comparative consolidated figures have been restated.

4 No dividend is proposed.

5 This interim statement is being posted to all shareholders and copies will be available on request from the company's registered office.