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BEACONSFIELD GOLD NL
(ACN 057 793 834)
APPENDIX 4E
PRELIMINARY FINAL REPORT
FINANCIAL YEAR ENDED 30 JUNE 2004
(NB These accounts are in the process of being audited.)
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RESULTS FOR ANNOUNCEMENT TO THE MARKET
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|
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$'000
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Revenues from ordinary activities
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Up 41%
|
40,511
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Profit from ordinary activities after tax attributable to members
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Up >1000%
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11,726
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Net profit for the period attributable to members
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Up >1000%
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11,726
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Dividends
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Amount
per security
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Franked amount
per security
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Final dividend - no final dividend is proposed
|
n/a
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n/a
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Interim dividend
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n/a
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n/a
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Record date for determining entitlements to the dividend
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n/a
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Improved revenue and net profit reflects a 39% increase in gold production from the Beaconsfield Mine Joint Venture. Net profit was further boosted by a $4.0 million reversal of interest expense resulting from a realignment of the Company's banking facilities which coincided with the Company emerging from receivership.
CONSOLIDATED STATEMENT OF FINANCIAL PERFORMANCE
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Notes
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2004
$'000
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2003
$'000
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Revenues from ordinary activities
|
1
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40,511
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28,745
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Costs of production
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2(a)
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18,903
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16,385
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Borrowing costs expense
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2(b)
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3,834
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3,538
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Interest expense reversed (refer Note below)
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(4,000)
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-
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Depreciation and amortization expenses
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2(c)
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6,329
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5,689
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Other expenses from ordinary activities
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2(d)
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3,718
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2,304
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Profit/(loss) from ordinary activities before income tax expense
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11,727
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829
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Income tax expense relating to ordinary activities
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3
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-
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-
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Net profit/(loss) attributable to members of Beaconsfield Gold NL
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11,727
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829
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Total changes in equity other than those resulting from transactions with owners as owners attributable to members of Beaconsfield Gold NL
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11,727
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829
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Basic earnings/(loss) per share (cents per share)
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12.35
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1.06
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The $4.0 million reversal of interest expense is in accordance with the second supplemental deed to the Company's banking facility agreement with Bank of Western Australia Limited.
The deed provides that $4.0 million of interest previously accrued will be payable only from the Company's share of proceeds of the Beaconsfield Mine Joint Venture (BMJV) Manager's claims in respect of losses suffered by the BMJV participants associated with the design, procurement, construction and commissioning of the treatment plant at Beaconsfield by Bateman Brown & Root (BBR).
Accordingly, the financial accounts will record a contingent liability of $4.0 million, which will partly offset the contingent asset relating to the BBR claims.
CONSOLIDATED CONDENSED STATEMENT OF FINANCIAL POSITION
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Notes
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2004
$'000
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2003
$'000
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CURRENT ASSETS
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Cash assets
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5,416
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2,967
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Receivables
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3,877
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459
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Inventories
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1,815
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1,666
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Other
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327
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-
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TOTAL CURRENT ASSETS
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11,435
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5,092
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NON-CURRENT ASSETS
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Other financial assets
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4
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-
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-
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Property, plant & equipment
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5
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14783
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11,539
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Exploration, evaluation & development
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6
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6,838
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12,693
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Other
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17
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285
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TOTAL NON-CURRENT ASSETS
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21,638
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24,517
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TOTAL ASSETS
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33,073
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29,609
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CURRENT LIABILITIES
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Payables
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6,090
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6,265
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Interest-bearing liabilities
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7
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3,267
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31,533
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Provisions
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853
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505
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TOTAL CURRENT LIABILITIES
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10,210
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38,303
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NON-CURRENT LIABILITIES
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Interest-bearing liabilities
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8
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2,564
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539
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Provisions
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862
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303
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TOTAL NON-CURRENT LIABILITIES
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3,426
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842
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TOTAL LIABILITIES
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13,636
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39,145
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NET ASSETS/(LIABILITIES)
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19,437
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(9,536)
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EQUITY
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Contributed equity
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9
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77,781
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60,536
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Accumulated losses
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10
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(58,346)
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(70,072)
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TOTAL EQUITY
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19,437
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(9,536)
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CONSOLIDATED CONDENSED STATEMENT OF CASH FLOWS
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Notes
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2004
$'000
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2003
$'000
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CASH FLOWS FROM OPERATING ACTIVITIES
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Interest received
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64
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55
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Cash payments to suppliers and employees
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(25,616)
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(17,406)
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Cash receipts from gold and silver sales
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39,745
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28,356
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Borrowing costs
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(966)
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-
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NET CASH FLOWS FROM OPERATING ACTIVITIES
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11
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13,227
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11,005
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CASH FLOWS FROM INVESTING ACTIVITIES
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Mine development expenditure
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(3,027)
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(2,450)
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Purchase of property, plant & equipment
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(690)
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(232)
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NET CASH FLOWS USED IN INVESTING ACTIVITIES
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(3,717)
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(2,682)
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CASH FLOWS FROM FINANCING ACTIVITIES
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Repayments of borrowings
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(26,258)
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(8,000)
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Repayment of lease principal
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(203)
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(445)
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Proceeds from issue of ordinary shares
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10,401
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-
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Proceeds from issue of convertible notes
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9,000
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-
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NET CASH FLOWS FROM/(USED IN) FINANCING ACTIVITIES
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(7,060)
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(8,445)
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NET INCREASE/(DECREASE) IN CASH HELD
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2,449
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(122)
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Add opening cash brought forward
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2,967
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3,089
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CLOSING CASH CARRIED FORWARD
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11
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5,416
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2,967
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NOTES TO THE FINANCIAL STATEMENTS
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2004
$'000
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2003
$'000
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1 REVENUE FROM ORDINARY ACTIVITIES
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Revenues from operating activities
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Gold & silver sales
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39,589
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28,690
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Interest - other persons/corporations
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111
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55
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Other revenue
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811
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-
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Total revenues from operating activities
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40,511
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28,745
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2. EXPENSES AND LOSSES
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(a) Costs of production
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18,903
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16,385
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(b) Borrowing costs expensed
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Interest expense
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2,346
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3,470
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Amortisation of establishment fees
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122
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68
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Borrowing expenses
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1,366
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-
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Total borrowing costs expensed
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3,834
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3,538
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(c) Depreciation and amortization expenses
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Amortisation of non-current assets
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Exploration, evaluation and development costs
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2,819
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3,499
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Total amortization of non-current assets
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2,819
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3,499
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Depreciation of non-current assets
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Buildings
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48
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4
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Mining plant and equipment
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3,317
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2,075
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Plant and equipment under lease
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145
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111
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Total depreciation of non-current assets
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3,510
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2,190
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Total depreciation and amortization expenses
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6,329
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5,689
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(d) Other expenses
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Royalties
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1,704
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422
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Management and administration
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2,014
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1,882
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3,718
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2,304
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NOTES TO THE FINANCIAL STATEMENTS
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2004
$'000
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2003
$'000
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3 INCOME TAX
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The prima facie tax, using tax rates applicable in the country of operation, on operating profit differs from the income tax provided in the financial statements as follows:
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Prima facie tax on profit from ordinary activities
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3,518
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249
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Tax effect on permanent differences
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-
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-
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Deferred tax assets recognised
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(3,518)
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(249)
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Income tax expense attributable to operating profit
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-
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-
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2004
$'000
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2003
$'000
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4 OTHER FINANCIAL ASSETS (Non-current)
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Shares listed on a Stock Exchange
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19,956
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19,956
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Provision for diminution in value
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(19,956)
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(19,956)
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-
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-
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The investment above is the company's 25.62% (2003 25.62%) interest in Allstate Explorations NL ("Allstate") on a fully diluted basis. The market value of this investment at 30 June 2004 is nil (2003 $Nil) following the appointment of an administrator to the company and the suspension of trading in the shares on 10 June 2001. The principal activity of Allstate is also the development of the Beaconsfield Gold Project through its participation in the Beaconsfield Gold Joint Venture operation. The company has determined that it does not have the capacity to either control or significantly influence the operations of Allstate.
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NOTES TO THE FINANCIAL STATEMENTS
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2004
$'000
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2003
$'000
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5 PROPERTY, PLANT & EQUIPMENT
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Land and Buildings
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Land & buildings - at cost
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328
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245
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Accumulated depreciation
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(119)
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(72)
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209
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173
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Plant and Equipment
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Mining plant & equipment - at cost
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27,427
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20,386
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Accumulated depreciation
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(13,168)
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(9,626)
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14,259
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10,760
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Plant and equipment under lease - at cost
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426
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797
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Accumulated depreciation
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(111)
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(191)
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315
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606
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Total property, plant and equipment
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14,783
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11,539
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6 EXPLORATION, EVALUATION & DEVELOPMENT COSTS
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Exploration, evaluation and development costs carried forward in respect of mining areas of interest in production phase
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17,731
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20,766
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Accumulated amortization
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(10,893)
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(8,073)
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6,838
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12,693
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7 INTEREST-BEARING LIABILITIES (Current)
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Convertible note (secured)
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-
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4,500
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Bank loan (secured)
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3,152
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26,830
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Lease liability
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115
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203
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3,267
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31,533
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The Bank West loan facility is secured by a fixed and floating charge over all the company's assets including its percentage interest in the Beaconsfield Joint Venture operation.
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NOTES TO THE FINANCIAL STATEMENTS
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2004
$'000
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2003
$'000
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8 INTEREST-BEARING LIABILITIES (Non-Current)
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Government loan
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329
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329
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Lease liability
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95
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210
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Convertible Notes (Secured)
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2,140
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-
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2,564
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539
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Convertible notes are secured by a second ranking charge (behind Bank West) over the fixed and floating assets.
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9 CONTRIBUTED EQUITY
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(a) Issued and paid up capital
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Ordinary shares fully paid - Listed
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77,758
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60,536
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Partly paid shares - Unlisted
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23
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-
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77,781
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60,536
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(b) Movements in shares on issue
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(i) Ordinary shares fully paid:
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2004
|
2003
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Number of
shares
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$'000
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Number of
shares
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$'000
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Beginning of the financial year
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75,677,102
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60,536
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75,677,102
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60,536
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Issued during the year
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68,220,207
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17,955
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-
|
-
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Less transaction costs
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-
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(733)
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-
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-
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End of the financial year
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143,897,309
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77,758
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75,677,102
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60,536
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(ii) Partly paid shares:
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|
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2004
|
2003
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Number of
shares
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$'000
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Number of
shares
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$'000
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Issued during the year
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3,850,000
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38
|
-
|
-
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Less transaction costs
|
-
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(15)
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-
|
-
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End of the financial year
|
3,850,000
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23
|
-
|
-
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Fully paid ordinary shares issued during the year include the conversion of 22,866,667 convertible notes and the issue of a like number of fully paid ordinary shares.
NOTES TO THE FINANCIAL STATEMENTS
|
2004
$'000
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2003
$'000
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10 ACCUMULATED LOSSES
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|
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Accumulated losses
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(58,104)
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(70,072)
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Balance at beginning of year
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(70,072)
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(70,901)
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Net profit attributable to members of Beaconsfield Gold NL
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11,726
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829
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Balance at end of year
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(58,346)
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(70,072)
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11 STATEMENT OF CASH FLOWS
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|
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(a) Reconciliation of cash
|
|
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Cash balances comprise:
|
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Cash on hand
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5,416
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2,967
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Closing cash balance
|
5,416
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2,967
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(b) Reconciliation of the Operating Profit/(loss) after Tax to Net Cash Flows from Operations:
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Operating profit after tax
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11,968
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829
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Non-Cash Items
|
|
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Amortisation of non-current assets
|
2,941
|
3,567
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Depreciation of non-current assets
|
3,292
|
2,190
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Provision for rehabilitation
|
559
|
63
|
|
|
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Changes in assets and liabilities
|
|
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Receivables
|
(3,600)
|
176
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Inventories
|
(149)
|
(387)
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Trade & other creditors & borrowings
|
(2,114)
|
4,372
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Employee entitlements
|
329
|
195
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Net cash flows from operating activities
|
13,227
|
11,005
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12 EARNINGS PER SECURITY (EPS)
|
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Basic EPS (cents)
|
12.35
|
1.06
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Diluted EPS (cents)
|
12.33
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1.06
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|
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13 NET TANGIBLE ASSET BACKING
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Net tangible asset backing per ordinary security
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$0.135
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($0.126)
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REVIEW OF OPERATIONS
1. INTRODUCTION
The Beaconsfield Gold group has a 48.49% direct interest in the unincorporated Beaconsfield Mine Joint Venture (BMJV) which operates the Beaconsfield Mine at Beaconsfield in north-east Tasmania. The other participant is the Allstate group with a 51.51% interest. Allstate, with the higher interest, is Manager of the BMJV and the BMJV Mine Manager and all the personnel reporting to him are employed by Allstate. Beaconsfield Gold in turn owns 30% of the fully paid shares in Allstate.
Beaconsfield Gold and Allstate separately sell their pro-rata share of gold production each week and contribute pro-rata to fortnightly cash calls which cover operating and capital expenditure at the Beaconsfield Mine.
Joint Administrators (Michael Ryan and Tony Woodings of chartered accounting firm, Taylor Woodings, based in Perth, Western Australia) were appointed to Allstate on 8 June 2001 and became Joint Deed Administrators when Allstate creditors approved a Deed of Company Arrangement in late 2001. A Receiver and Manager was appointed to Beaconsfield Gold on 25 June 2001 and retired on 12 March 2004.
2. BEACONSFIELD MINE PERFORMANCE
Ore production at the end of the 2004 year was available from over 10 levels throughout the mine, down to the 940 metre level, allowing significant flexibility in mine scheduling. The improved decline / waste development layout and the modified ½ Upper / Avoca mining method provided operating benefits and efficiencies during the year. The face of the decline was 975 metres below surface at 30 June 2004.
Production Summary
(1) Mill reconciled head grade.
(2) Gold recovery excluding changes in gold in circuit.
234,440 tonnes of ore were milled for the year, a 3% improvement on 2003. Average mill reconciled head grade for the year, 20.8 g/t gold, was a significant 30% improvement on 2003. Gold recovery in the ore treatment plant, excluding changes in gold in circuit, averaged 93.9% for the 2004 year, a 4% improvement on 2003. The percentage of gold production recovered by gravity processes during the 2004 year was 58% (2003 year 53%).
Total BMJV gold production for the 2004 year of 147,152 ounces was a 39% improvement on the 2003 result of 105,736 ounces, 44% greater than the feasibility target for average annual production, and 15% greater than BMJV budget production for the 2004 year.
3. BMJV EXPENDITURE PER OUNCE
Operating, Capital and Total Cash Expenditure
1. Including underground diamond drilling costs.
2. Direct operating expenditure (including management fee to Allstate) plus capital expenditure.
BMJV direct operating expenditure for the 2004 year was $38.024 million (2003 year $35.815 million) or $258 per ounce of production (2003 year $339 per ounce).
BMJV capital expenditure for the 2004 year was $7.349 million (2003 year $5.531 million) or $50 per ounce of production (2003 year $52 per ounce). The main abnormal capital expenditure activity was the extensive ore resources diamond drilling program.
BMJV direct operating plus capital expenditure for the 2004 year was $45.373 million (2003 year $41.346 million) or $308 per ounce of production (2003 year $391 per ounce).
Beaconsfield Gold's 48.49% share of direct operating plus capital expenditure for the 2004 year was $22.001 million (2003 year $20.049 million).
4. BEACONSFIELD GOLD REVENUE
Beaconsfield Gold's total revenue from gold and by-product silver sales for the 2004 year was $39.589 million, a 38% improvement on the 2003 year figure of $28.690 million.
5. BMJV ORE RESERVES / RESOURCES AS AT 30 JUNE 2004
The BMJV commenced an extensive ore resources underground diamond drilling program mid way through the 2004 year. The program is planned to be completed in June 2005 so that the program was approximately one-third complete at the end of the 2004 year.
The reserves and resources for the Tasmania Reef as at 30 June 2004 have been calculated by Allstate as Manager of the BMJV. Allstate released a detailed report to the ASX, as did Beaconsfield Gold, in July 2004.
The updated BMJV reserves and resources are as follows:
After allowances had been made for mine design parameters and cut-off grade (6 g/t gold), the in-situ ore grade was reduced from 24.2 g/t gold to the diluted reserve grade of 16.1 g/t gold (a reduction of 8.1 g/t or 33%).
5.1 Reconciliation between 30 June 2003 and 30 June 2004 Ore Reserves
Total gold milled by the BMJV in the 2004 year was estimated to be 156,671 ounces. Subtracting this total from the ore reserves at 30 June 2003 (369,000 ounces) gives 212,329 ounces.
As the ore reserves at 30 June 2004 were 381,000 ounces, there was a net increase in ore reserves over the year, allowing for the mining depletion, of approximately 168,671 ounces or 46%.
Tonnes milled for the 2004 year were 234,440 tonnes. Total tonnes of reserves as at 30 June 2004 were 736,000 tonnes, indicating a reserve life, based on mill throughput for the 2004 year, of approximately 3.1 years.
5.2 Inferred Resources
At 30 June 2003, inferred resources for the Tasmania Reef were 216,000 tonnes at 11.4 g/t gold, containing 79,000 ounces of gold. At 30 June 2004, they had increased significantly to 586,000 tonnes at 19.0 g/t gold, containing 358,000 ounces. The increase over the 2004 year was 171%, 67% and 353% respectively for tonnes, grade and contained ounces.
6. GOLD HEDGING FOR BEACONSFIELD GOLD
The company initially sold forward 240,000 ounces of gold in October 1998 in a hedging arrangement with BankWest. The remaining hedge book at 30 June 2004 was 42,181 ounces at an average forward price, with deliveries out to May 2005, of A$552 per ounce based on a gold lease rate of 1.5% per annum.
The marked-to-market value of the hedge book at 30 June 2004, when the spot price of gold was A$570.37 per ounce, was negative $1.3 million.
6.1 Gold Hedging as a Percentage of Ore Reserves
The BMJV ore reserves as at 30 June 2004 were 381,000 ounces so that Beaconsfield Gold's 48.49% direct interest was approximately 184,700 ounces. As a percentage of those ore reserves therefore, Beaconsfield Gold at 30 June 2004 was approximately 23% hedged.
7. RETIREMENT OF THE RECEIVER AND MANAGER
The Receiver and Manager for Beaconsfield Gold, Mr Garry Trevor of Ferrier Hodgson, who was appointed on 25 June 2001, retired on 12 March 2004 following the completion of fund raisings totalling $14.5 million and the restructuring of the debt facilities with BankWest.
7.1 Fund Raisings
On 12 March 2004, the Company completed $5.5 million of equity funding provided by "sophisticated investor" clients of Tolhurst Noall Limited. The first $0.431 million of funding had been provided to pay for all the corporate costs necessarily incurred by the Beaconsfield Gold board up until the retirement of the Receiver and Manager and this high-risk funding was converted into Beaconsfield Gold fully-paid ordinary shares at $0.10 per share. A total of approximately 4.312 million shares were issued to cover this initial funding.
The balance of the agreed funding, $5.069 million, was subscribed at $0.23 per Beaconsfield Gold fully-paid ordinary share to facilitate the necessary restructuring of the company's finances with BankWest. A total of approximately 22.038 million shares were issued to cover this secondary funding. For the total agreed equity funding of $5.5 million, approximately 26.350 million shares were issued.
On 12 March 2004, the Company also raised $9 million through the issue of 30 million unlisted convertible notes to Gold Investors Pty Ltd, each note convertible into a fully paid Beaconsfield Gold share for $0.30 by 30 June 2006.
Principal terms of the convertible notes include the following:
- Interest of 9.0% per annum, interest payable each six months in arrears until conversion or redemption;
- Notes secured by a second ranking charge (behind BankWest) over the fixed and floating assets of Beaconsfield Gold;
- Beaconsfield Gold must redeem the notes in full at 30 June 2006 unless the notes have been converted; and
- Notes can be converted at any time during their life.
On 29 March 2004, the Company received conversion notices for 22,866,667 of the convertible notes on issue with a total face value of $6,860,000. The resultant 22,866,667 fully-paid ordinary shares in Beaconsfield Gold were issued on 30 March 2004. The remaining Beaconsfield Gold convertible note debt therefore is currently $2,140,000 (7,133,333 notes at $0.30 each).
In addition to the above fund raisings totaling $14.5 million, the Company announced a renounceable Rights Issue on 31 March 2004. This is discussed further in section 8.
7.2 Restructuring of Debt Facilities with BankWest
Net secured debt for Beaconsfield Gold (being BankWest secured debt plus accrued interest less cash held by the Receiver and Manager) had been reduced to $22.7 million at 31 December 2003, having been $32.8 million on 25 June 2001, when the Receiver and Manager was appointed, and having peaked at around $35.0 million in October 2002. $4.5 million of the secured debt was in the form of a convertible note which could be converted into a maximum of 9.0 million fully paid Beaconsfield Gold shares at $0.50 per share by 31 December 2004.
Under the restructuring undertaken in March 2004, the $4.5 million convertible note with BankWest was cancelled and Beaconsfield Gold issued 6.5 million unlisted options to BankWest with an exercise price of $0.30 each on or before 30 June 2006. If BankWest exercises all of the options in the future, the additional funds raised by Beaconsfield Gold would be $1.95 million.
Following the fund raisings totaling $14.5 million and the restructure of the BankWest facililities in March 2004, Beaconsfield Gold's secured debt with BankWest was dramatically reduced to approximately $8.3 million and the total of Beaconsfield Gold's cash accounts with BankWest was approximately $3.9 million.
With significant cash flow from Beaconsfield Gold's 48.49% interest in the BMJV and the successful completion of a Rights Issue (refer section 8), Beaconsfield Gold repaid a further $5.1 million, plus interest, to BankWest during the June 2004 quarter, reducing the outstanding debt to approximately $3.2 million at 30 June 2004.
7.3 BMJV Arrangements
At the time the Receiver and Manager for Beaconsfield Gold retired, Beaconsfield Gold entered into a Transitional Arrangements Deed (TAD) with Allstate and the Allstate Deed Administrators.
Under the TAD, the Receiver and Manager for Beaconsfield Gold paid to Allstate, as the BMJV Manager, the Beaconsfield Gold group's 48.49% share of outstanding accrued Beaconsfield Mine employee entitlements and all invoiced liabilities for Beaconsfield Mine goods and services delivered or received at that time. At the same time, the Allstate group paid its 51.51% pro rata share to Allstate as Manager.
Under the TAD, the BMJV participants agreed to pay fortnightly cash calls (previously monthly) to Allstate, as the BMJV Manager, to cover operating and capital expenditure at the mine.
Under the TAD, Beaconsfield Gold also agreed to fully repay its 48.49% share of the outstanding debt owed to the trade creditors of the Beaconsfield Mine who had their invoices frozen when Administrators were appointed to Allstate, the BMJV Manager, on 8 June 2001. Beaconsfield Gold owed a remaining total of $2.621M and agreed to make equal payments of $0.328M on 12 March 2004, 1 July 2004 and at six-monthly intervals thereafter. At 30 June 2004, the total outstanding was $2.293M.
Also as required by the TAD, Beaconsfield Gold provided a $3 million bank guarantee (via BankWest) to Allstate as the BMJV Manager (the Allstate BMJV participants similarly provided a $3 million bank guarantee to the BMJV Manager). Beaconsfield Gold is required by BankWest to keep a minimum of $2 million in a cash collateral account with BankWest in support of the $3 million guarantee. Under the TAD, the $3 million BankWest guarantee is to guarantee any obligations of Beaconsfield Gold in connection with or arising out of the TAD and other BMJV agreements.
8. RIGHTS ISSUE
On 31 March 2004, the Company announced a renounceable Rights Issue. The Rights Issue entitled security holders to acquire, at a price of $0.30 per new share:
- 1 new fully paid ordinary share in Beaconsfield Gold for every 7 fully paid ordinary shares; and
- 1 new fully paid ordinary share in Beaconsfield Gold for every 7 convertible notes; and
- 1 new fully paid ordinary share in Beaconsfield Gold for every 245 partly paid shares,
held by them. The issue was not underwritten.
On 20 May 2004, the Company announced that the issue had been very successful with a take-up of approximately 92% and that 17,481,565 new shares had been allotted. The total raised, before costs of the issue, was approximately $5.24 million.
9. ARBITRATION AWARD
Arbitration proceedings were brought by the BMJV participants in relation to a dispute with ACN 005 585 795 Pty Ltd (formerly Brown & Root Engineering & Construction Pty Ltd (BREC)) and Batepro Australia Pty Ltd ACN 009 006 777 (BA). The dispute arose in connection with a contract under which BREC and BA undertook to design, supply, construct and commission a gold treatment plant and backfill plant at the Beaconsfield Mine. The BMJV participants alleged amongst other things, delay, unsatisfactory design and construction, major defects and omissions in the works and failure to satisfy performance tests.
In January 2004, the arbitrator, Mr. J Tyrill, found that BREC and BA are jointly and severally liable to the BMJV participants for $60,366,785 together with interest after 17 January 2004 at the rate of $29,292 per week. The Arbitrator also found that the cross claims by BREC and BA against the BMJV participants fail.
In April 2004, Administrators were appointed to BREC and, in June 2004, liquidators were appointed to BA. The Deed Administrators of the Allstate group, together with the Beaconsfield Gold group, are dealing with the relevant appointees in regard to the arbitration award.
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