Persian Gold Announcements

RNS Number : 8069U Persian Gold PLC 20 May 2008  
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20th May 2008
Persian Gold PLC

Preliminary Results for Year Ended 31 December 2007

Highlights:
 
Ø      Persian Gold building on Early Mover Advantage in underexplored Iran
 
Ø      Chah-e-Zard gold prospect moves to pre-feasibility
 
Ø      Dalli copper-gold prospect moves to second phase drilling
 
Ø      Increasing emphasis on copper-gold projects in the Tethyan Belt
 

John Teeling, Chairman of Persian Gold, commented;

"We are building a diverse portfolio of assets in Iran. As we learn more about the geology and as we add to our team, our focus is changing to copper-gold projects in the Tethyan Belt. 

Whilst we believe that our existing projects have significant potential, we are now seeing a flow of considerably larger projects with very high growth potential. We are constantly evaluating new projects, but will only move under the correct conditions."
Persian Gold PLC
John Teeling, Chairman
+353 (0) 1 833 2833
College Hill
Paddy Blewer
+44 (0) 20 7457 2020

Nick Elwes
Blue Oar Securities Plc
John Wakefield
+44 (0) 117 933 0020

Simon Moynagh
  
Persian Gold PLC - Statement Accompanying the Preliminary Results

Persian Gold is building on its Early Mover Advantage in Iran. Our logic is simple. Rocks do not change, politics do.

During the period under review, we expanded our portfolio of projects, drilled two promising prospects and recently added a new top management team. We are now at the stage of a scoping study on one project, Chah-e-Zard, second phase drilling on another, Dalli, while we are in discussions with concession holders on a series of potential gold-copper projects ranging from grass roots to late stage development.

It is important to remember that Iran is not a Third World unexplored jungle. It is a vast country stretching over 2,000km containing over 70 million people. The culture is ancient and sophisticated, education levels are high and skills are available. In most parts of the country the infrastructure is good with roads and power available.

What must be remembered is that two thirds of Iran is desert, some of it, like the Lut desert, still traversed by camel. There are massive mountain ranges, on the West, the Zagros, and right down the east between Afghanistan and Pakistan. The climate varies dramatically from the temperate Caspian Sea to the torrid desert.

Iran is a developed country which has had a mining industry for centuries, however, there has been little modern exploration - giving us our opportunity. Within the country, there are large base metal and gold producers. The domestic market for metals is expanding at a fast rate as the economy grows.

So where is the opportunity for Persian Gold? Political tensions over the past 30 years have had two significant impacts. Exploration dollars are orphans, they go where they are wanted and best received. For many years, low commodity prices have combined with the political situation in Iran to keep out foreign exploration money. Higher metal prices have been accompanied by increased tension resulting in virtually no Western mining companies, except Persian Gold, having an active exploration presence in Iran.

The second important impact has been on the availability and implementation in Iran of modern exploration technology. Again, the political situation has made it difficult for local Iranian companies to acquire and utilise the latest advances. It is said that exploration begins at zero every twenty years as new technology opens new exploration doors. Persian Gold is capitalising on both the political and technical situations by bringing new, fresh ideas to the geographical opportunities in Iran. As an example, much of our early stage Iranian prospecting utilises the most modern satellite imagery techniques.

Another example is the search for gold in the clay-alunite-silica rocks of Takestan and now, in Dustbiglu, which is utilising the knowledge and skills of geologists experienced in the new gold discoveries in the Andes of South America.

As happens, once we are established in a country, we are finding new projects as people bring projects to us. The biggest change in Persian Gold strategy was a realisation of the potential for major gold-copper discoveries in the Tethyan Belt, which stretches from Turkey in the northwest, right through Iran into Pakistan. On the Turkish end of this belt, numerous large gold mines are being developed. On the Iran-Pakistan border, the largest undeveloped gold and copper deposit in the world, Reko Diq, is being developed jointly by Barrick and Antofagasta.

While we continue to work on our earlier projects, one of which is now at pre-feasibility stage, our focus is turning to gold-copper porphyries. We are working on one, Dalli, we have looked at another, Shadan and currently we are at an early stage in examining three additional prospects.

Turning to our current projects, we have four; Chah-e-Zard in central Iran, Dalli, south of Tehran and two earlier stage projects, Dustbiglu and Takestan both in the northwest.

The Chah-e-Zard gold/silver prospect is moving to decision stage. We have completed two drilling and trenching phases. We have identified and modelled a near surface gold/silver oxide deposit of 160,000 ounces of gold and 1 million ounces of silver. We are exercising our option to acquire 70 percent of the property and we are applying to the authorities for a Discovery Certificate, which would allow us to obtain an Exploitation Licence. We will undertake a scoping study once the Discovery Certificate is obtained. This project has the potential to be a small profitable gold/silver producer. Decision time will be the end of 2008.

Our second advanced project, Dalli, is moving into the next phase of drilling. The earlier drilling programme discovered commercial grades of copper/gold from surface to 200 metres in an area known as the South Hill. Drill results on the North Hill, some 1.7km away, produced good gold grades but lower copper grades from surface to 200 metres. Recent geophysical and trenching work between the two hills has failed to connect the systems.

The second phase of drilling at Dalli will focus on the depth and extent of mineralisation in the South Hill. One hole will go to 500 metres, while the others will test the extent of the mineralisation. Additional work on the North Hill now suggests a gold in silica system. This will be tested.

Our earlier stage projects, Takestan and Dustbiglu, are big targets. We are looking for gold spread over a wide area. Generally the grade will be low, a cut-off of 0.5 g/t, but the volume will be large and the processing simple. We are ready to trench and drill in the Twin Hills area of Takestan, but we have been unable to obtain permits due to an adjacent nature reserve.

Dustbiglu is an earlier stage project which has never been prospected for gold. Earlier work for copper identified a large zone, diameter 10km, of clay-alunite-silica. A reworking of the earlier data has identified gold traces. Once permits are issued, we will undertake significant sampling.

To take advantage of the opportunities on offer and to undertake competent professional exploration, we have recruited an in-country team of experienced geologists to work with our current managers and advisers. I am delighted to welcome Bahman Rashidi as General Manager, Iran and Farzin Talebi Rad as Operations Manager. Though with us only a few months, their impact is already obvious. Both are very experienced.

Future

Iran, and the surrounding areas, have significant unexploited potential in gold and base metals. The Persian Gold exploration model of gold in alunite is being pursued in Iran while new exciting opportunities, particularly in copper-gold in the Tethyan Belt have changed priorities. Not only are opportunities now offering themselves in Iran but similar prospects have been identified in adjacent areas to Iran.

We have the opportunities, we have the people and we have the presence on the ground in Iran. We believe that funding can be sourced for the right proposal. The future is bright.

John Teeling
Chairman

20th May 2008

  
CONSOLIDATED INCOME STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2007
2007

2006

£

£
REVENUE
-

-
Cost of sales
-

-
GROSS PROFIT
-

-
Administrative expenses
(394,950)

(310,321)
OPERATING LOSS - continuing operations
(394,950)

(310,321)
Finance income
16,868

25,057
Finance costs
(1,301)

(1,008)
LOSS BEFORE TAXATION
(379,383)

(286,272)
Income tax expense
-

-
LOSS AFTER TAXATION FOR THE 

FINANCIAL YEAR
(379,383)

(286,272)
LOSS PER SHARE - Basic and Diluted 
(0.66p)

(0.51p)

  
CONSOLIDATED BALANCE SHEET AS AT 31 DECEMBER 2007
2007

2006

£

£
ASSETS:

NON CURRENT ASSETS

Intangible assets
1,283,362

819,203
CURRENT ASSETS

Other receivables
20,085

3,529
Cash and cash equivalents
693,076

309,260

713,161

312,789
TOTAL ASSETS
1,996,523

1,131,992
LIABILITIES:

CURRENT LIABILITIES 

Trade and other payables
(271,977)

(199,855)
NET CURRENT ASSETS
441,184

112,934
NON-CURRENT LIABILITIES 

Provision
(10,000)

-
NET ASSETS
1,714,546

932,137
EQUITY

Called-up share capital
158,531

139,507
Share premium
2,314,113

1,246,034
Retained earnings - (deficit)
(888,075)

(508,692)
Share based remuneration reserve
129,977

55,288
TOTAL EQUITY 
1,714,546

932,137

  
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2007
Called up

Share

Share
Share
Based
Retained
Capital
Premium
Payment
Earnings
Total

Reserve

£
£
£
£
£
At 1 January 2006
139,482
1,244,359
-
(222,420)
1,161,421
Share based payments
-
-
55,288
-
55,288
Shares issued for cash
25
1,675
-
-
1,700
Share issue expenses
-
-
-
-
-
Loss for the year
-
-
-
(286,272)
(286,272)
At 31 December 2006
139,507
1,246,034
55,288
(508,692)
932,137
Share based payments
-
-
74,689
-
74,689
Shares issued for cash
19,024
1,122,386
-
-
1,141,410
Share issue expenses
-
(54,307)
-
-
(54,307)
Loss for the year
-
-
-
(379,383)
(379,383)
At 31 December 2007
158,531
2,314,113
129,977
(888,075)
1,714,546

The share capital reserve comprises of share capital issued for cash.
The share premium reserve comprises of a premium arising on the issue of shares.
The share based payment reserve comprises of share based payments made in 2006 and 2007.
Retained earnings comprises of losses incurred in 2007 and prior years.

  
CONSOLIDATED CASH FLOW STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2007
2007

2006

£

£
CASH FLOW FROM OPERATING ACTIVITIES

Loss for financial year
(379,383)

(286,272)
Finance costs recognised in loss
1,301

1,008
Finance revenue recognised in loss
(16,868)

(25,057)
Share based payment
59,413

-

(335,537)

(310,321)
MOVEMENTS IN WORKING CAPITAL

Increase in trade and other payables
72,122

174,510
Increase in trade and other receivables
(16,556)

(246)
CASH USED BY OPERATIONS
(279,971)

(136,057)
Finance cost
(1,301)

(1,008)
Finance income
16,868

25,057
NET CASH USED IN OPERATING ACTIVITIES
(264,404)

(112,008)
CASH FLOWS FROM INVESTING ACTIVITIES

Payments for intangible assets
(438,883)

(505,310)
NET CASH USED IN INVESTING ACTIVITIES
(438,883)

(505,310)
CASH FLOW FROM FINANCING ACTIVITIES

Proceeds from issue of equity shares
1,087,103

1,700
NET CASH GENERATED FROM FINANCING 

ACTIVITIES
1,087,103

1,700
NET INCREASE/(DECREASE) IN CASH AND 

CASH EQUIVALENTS
383,816

(615,618)
Cash and cash equivalents at beginning of the 

financial year
309,260

924,878
Cash and cash equivalents at end of the financial 

year
693,076

309,260

  
Notes:

1. Accounting Policies
The Group's transition date to IFRS is 1 January 2006 and the comparative financial information for the year ended 31 December 2006 has been restated on a consistent basis with those accounting policies applied by the Group in preparing its first full financial statements in accordance with IFRS as at 31 December 2007, except where otherwise required or permitted by IFRS 1 "First Time Adoption of International Accounting Standards".

2. Earnings per Share

LOSS PER SHARE
2007

2006

£

£
Basic Loss per share - Basic and Diluted
(0.66p)

(0.51p)

Basic loss per share

The losses and weighted average number of ordinary shares used in the calculation of basic loss per share are as follows:
2007

2006

£

£
Loss for the year attributable to equity holders of the

parent
(379,383)

(286,272)
Weighted average number of ordinary shares for 

the purpose of basic earnings per share
57,720,785

55,794,279

Diluted loss per share
Basic and diluted loss per share are the same, as the effect of the outstanding share options is anti-dilutive and is therefore excluded. As inclusion of the beneficial ordinary shares would result in a decrease in the loss per share, they are considered to be anti-dilutive and, as such are not included in the calculation.
  
3. Intangible Assets
2007

2006

2007

2006

Group

Group

Company

Company

£

£

£

£
Exploration and Evaluation

Assets:

Cost:

At 1 January  
819,203

258,606

819,203

258,606
Additions during the year
464,159

560,597

464,159

560,597
At 31 December 
1,283,362

819,203

1,283,362

819,203
Net Book Value:

At 31 December 
1,283,362

819,203

1,283,362

819,203

Exploration and evaluation assets relates to expenditure incurred during prospecting, exploring for gold and related expenditure in Iran.

No amortisation is charged prior to the commencement of production. When production commences within an area of interest previously capitalised in respect of exploration, evaluation and development, these costs are amortised over the commercial reserves of the mining property on a unit of production basis.

All intangible assets held by the group to date are at an early stage, but all present indications, including those from feasibility reports produced during 2007 are that it will have a value in excess of the accumulated costs to date. No impairment provision has been made in respect of these intangible assets.

The group's activities are subject to a number of significant potential risks including:

- Price fluctuations
- Uncertainties over development and operational costs
- Operational and environmental risks
- Political and legal risks, including arrangements with governments for licences, profit 
  sharing and taxation
- Availability of funding developments

The realisation of this intangible asset is dependent on the discovery and development of economic mineral reserves which is affected by these and other risks. Should this prove unsuccessful the value included in the balance sheet would be written off to the income statement.

The directors are aware that by its nature there is an inherent uncertainty in such development expenditure as to the value of the asset. Having reviewed the deferred exploration and evaluation development expenditure at 31 December 2007, the directors are satisfied that the value of the intangible asset is not less than carrying net book value.
  
4. General Information

The financial information set out above does not constitute the Company's financial statements for the year ended 31 December 2007. The financial information for 2006 is derived from the financial statements for 2006 which have been delivered to the Registrar of Companies. The auditors have reported on 2006 statements; their report was unqualified with an emphasis of matter in respect of considering the adequacy of the disclosures made in the financial statements concerning the valuation of intangible assets, and did not contain a statement under section 237(2) or (3) of the Companies Act 1985. The financial statements for 2007 will be delivered to the Registrar of Companies following the Company's Annual General Meeting. 

A copy of the Company's Annual Report and Accounts for 2007 will be mailed to all shareholders shortly and will also be available for collection from the Company's registered office, 20-22 Bedford Row, London WC1R 4JS.
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