Conroy Gold and Natural Resources plc
Annual Report 2000

Plain-text annual report

CONROY DIAMONDS AND GOLD P.l.c. C o n r o y D i a m o n d s a n d G o l d P. l . c . A n n u a l R ep o r t a n d F i n a n c i a l S t a t e m e n t s 2 0 0 0 1 C o n r o y D i a m o n d s a n d G o l d P . l . c . A n n u a l R e p o r t a n d F i n a n c i a l S t a t e m e n t s 2 0 0 0 C o n r o y D i a m o n d s a n d G o l d P. l . c . A n n u a l R ep o r t a n d F i n a n c i a l S t a t e m e n t s 2 0 0 0 Contents 2 Chairman’s Statement 6 Review of Operations 9 Company Information 12 Directors’ Report 14 Auditors’ Report 15 Profit and Loss Account 16 Balance Sheet 17 Cash Flow Statement 18 Statement of Accounting Policies 19 Notes to the Financial Statements Chairman’s Statement Dear Shareholder I have great pleasure in presenting your Company’s Annual Report and Financial These excellent intersections represent substantial gold mineralisation which continues and increases at depth. Statements for 2000, a period during which Exploration within the Armagh-Monaghan the Company’s status has been much enhanced gold belt to the northeast and southwest of as a result of its admission to the Alternative Tullybuck/Lisglassan has also yielded excellent Investment Market (AIM) of the London results. The gold belt is made up of a series Stock Exchange. Ongoing fieldwork and conceptual studies have significantly improved your Company’s understanding of the structure and geological setting of its Tullybuck/Lisglassan gold deposit in County Monaghan, and recent drilling there has yielded further excellent results. of fault blocks, one of which contains the Tullybuck/Lisglassan gold deposit. Geochemical surveys undertaken over other blocks have identified significant gold and base-metal anomalies. One such anomalous area, in Co. Armagh, has been further tested by trenching and channel sampling. This revealed highly elevated bedrock gold and base-metal values The deposit is now believed to be one of a of potential economic significance. number of similar mineralised fault-blocks which together make up the much larger Armagh-Monaghan gold belt, shown to extend Any one or several of these fault blocks could host gold and/or base-metal deposits. for a distance of some 18 kilometres. Significant Elsewhere in your Company’s licence areas base-metal mineralisation has also been along the Orlock Bridge Fault, geological and discovered in these fault-blocks. geochemical exploration has resulted in the Exploration Success Success achieved in our ongoing delineation drilling on the Company’s gold deposit at Tullybuck/Lisglassan provides additional support for your Company’s belief that the discovery has the potential to become a gold mine. Nearly 800 metres of diamond drilling has been completed discovery of further gold and base-metal anomalies. In view of these excellent results on your Company’s licences in the Longford-Down Massif, application has been made for a further eleven licences straddling the Orlock Bridge Fault. by your Company on the deposit. AIM Vertical continuity of mineralisation within a Your Company’s shares have now been single gold bearing lode has been further tested admitted to trade on the Alternative Investment by two recent drill holes. The first intersected Market of the London Stock Exchange (“AIM”). the gold bearing lode at a depth of 25 metres Admission to AIM is an important milestone in where it graded 10.04 grammes of gold per your Company’s corporate development both in tonne over a width of 1.59 metres. The second, relation to the marketability of your Company’s our best drilling result so far, intersected the shares and its ability to raise capital. same gold bearing lode at a depth of 46 metres where it graded 14.40 grammes of gold over a width of 2.84 metres. This intersection contains a continuous interval grading 22.03 grammes of gold per tonne over a width of 1.77 metres. Ellis and Partners Limited acted as your Company’s Nominated Broker in connection with the admission of your Company’s shares to trading on AIM. Seymour Pierce Limited is the Company’s Nominated Adviser for the purposes of the AIM rules. These excellent intersections represent substantial gold mineralisation which continues and increases at depth. 3 C o n r o y D i a m o n d s a n d G o l d P . l . c . A n n u a l R e p o r t a n d F i n a n c i a l S t a t e m e n t s 2 0 0 0 4 . c . l . P d l o G d n a s d n o m a i D y o r n o C 0 0 0 2 s t n e m e t a t S l a i c n a n i F d n a t r o p e R l a u n n A Our work programme in the Armagh-Monaghan gold belt – stretching over some 18 kilometres – continues to raise our expectations. 5 C o n r o y D i a m o n d s a n d G o l d P . l . c . A n n u a l R e p o r t a n d F i n a n c i a l S t a t e m e n t s 2 0 0 0 Finance The Company raised IR£1,368,223 net of expenses through the issue of 4,500,000 new ordinary shares, the details of which are set out in Note 9 to the accounts. These funds have enabled the Company to finance its ongoing operations. Directors, Consultants and Staff Our work programme in the Armagh- Monaghan gold belt – stretching over some 18 kilometres – continues to raise our expectations. Recent identification of gold and base-metal mineralisation in bedrock is indicative of significant gold and base-metal mineralisation over a large area. To the west of the Armagh-Monaghan gold belt, geological and geochemical exploration near Slieve Glah indicates the presence of another I would like to express my appreciation of large anomalous gold and base-metals area. the support and dedication of the directors, This is the subject of an ongoing evaluation consultants, in particular our Senior Geological programme. and Mining Consultants, Dr. Michael Smith and Mr. Terry Beal, and staff which has made possible the progress and success that your Company has achieved. Future Outlook Your Company’s strategy is to identify and develop significant geological and prospecting opportunities which have major economic potential. This strategy has already achieved success through the identification of the mineral potential of the Longford-Down Massif. The planned activity programme makes the The success of the strategy being pursued by coming year the most exciting one yet for your Company is also one that has brought us to your Company. Within the area under your the attention of the international mining world. Company’s control we believe that we have several deposits that could very well be economic. Your Company looks to the future with confidence. We have a strong land position, good geological knowledge based on our Preliminary studies have been commissioned exploration, and a team with the expertise and towards development of a mine at Tullybuck/ track record to bring your Company forward in Lisglassan which include identification of the a positive direction. characteristics of the ore and trial extraction metallurgy, as well as engineering studies for mine design. Looking ahead, we will continue to seek other opportunities with major potential in gold, base-metals, diamonds and other mineral Drilling and trenching programmes have resources, both in Ireland and abroad. pinpointed sites for the next round of diamond drilling. In addition, subject to workload priorities, we will make progress on our plan to open and inspect the old underground mining shafts at Tullybuck/Lisglassan. Professor Richard Conroy Chairman 6 . c . l . P d l o G d n a s d n o m a i D y o r n o C 9 9 9 1 s t n e m e t a t S l a i c n a n i F d n a t r o p e R l a u n n A Review of Operations 1 Introduction The Company’s operations during the year achieved excellent results. Further gold intersections, including our best so far, were returned from drilling our Tullybuck/Lisglassan gold deposit. From our work elsewhere within the Longford-Down Massif it is evident that this deposit is part of a much larger gold-bearing feature – the Armagh-Monaghan gold belt – within which further gold deposits are likely to be found. This understanding will yield immense long-term benefits to the Company. 2 The Tullybuck/Lisglassan gold deposit The thickness and vertical development of mineralisation was tested by two boreholes drilled on the same section line. In the first hole a gold lode intersection grading 10.04g/t of gold over a width of 1.59m occurs at a downhole depth of approximately 25m. In the second hole an intersection of the same gold lode grading 14.40g/t of gold at a width of 2.84m occurs at a downhole depth of approximately 46m. Within this second intersection there is a continuous interval that measures 1.77m and grades 22.03g/t of gold. These results, excellent in themselves, also show that the gold mineralisation continues and increases at depth. Ongoing data consolidation and review of the structure of the Tullybuck/Lisglassan deposit in relation to its regional setting continues. Significant events in the nature of the development of the gold mineralisation at Tullybuck/Lisglassan would appear to encompass not only the presence of the Orlock Bridge Fault and Ordovician greywackes of andesitic composition but also hydraulic fracturing and igneous activity at depth. It also appears that at least two phases of gold mineralisation are present; an early high temperature, low-grade pervasive event and a subsequent concentration of gold mineralisation associated with and by a later low temperature base-metal event. Your Company now has a fundamental and unique understanding of gold deposition in the Longford-Down Massif. Preliminary studies have commenced towards development of a mine at Tullybuck/Lisglassan. These include mineralogical and metallurgical studies as well as engineering studies for mine design. The study of the mineralogical characteristics of the ore will include investigations using reflected light microscopy and electron microprobing. Trial tests will be made to determine gold extraction options from ore leading to the design of the optimum method of ore concentration. Results derived from the British Geological Survey/CRAFT project in which your Company participates have also been most helpful in understanding the development of gold mineralisation at Tullybuck/Lisglassan. Geochemical investigations suggest that quartz- feldspar and quartz-carbonate veins associated with the gold concentration event can be identified by means of their geochemical signature. This understanding of the gold mineralisation may be helpful in the final definition of the size of the gold deposit at Tullybuck/Lisglassan as well as detection of further deposits in the Armagh- Monaghan gold belt through refinement of our geochemical techniques. ...we now believe that the Clontibret Prospect has the potential to host the first major gold mine in the British Isles in recent times. 3 Armagh-Monaghan gold-belt 4 Further exploration elsewhere in Geological and geochemical prospecting on the Longford-Down Massif our licences in Co. Armagh has continued The Company holds two licences in Co. Cavan with highly encouraging results. Our latest some distance to the west of the Armagh- soil geochemistry programmes have revealed Monaghan gold belt, though still within the very extensive gold anomalies. Geology mapping Longford-Down Massif. This area represents a and structural interpretation is underway and different prospecting target. The Orlock Bridge over 400m of trenching has been completed Fault, here known as the Slieve Glah shear zone, on one anomaly. Channel samples from these is offset by a significant strike swing and appears trenches have shown elevated gold and base- to have formed a dilation zone of a type often metal values in the bedrock over intervals in associated with large-scale mineralisation. excess of 10m. Reconnaissance surveys identified several Exploration within the Armagh-Monaghan clusters of soil samples with highly anomalous gold-belt to the northeast and southwest gold values. These clusters are associated with of Tullybuck/Lisglassan has also continued the inferred dilation zone. Follow up infill to yield excellent results. On the licences geochemical programmes have confirmed west of and adjacent to Tullybuck/Lisglassan that these clusters are part of a very large in Co. Monaghan strong gold geochemical anomalous gold area. This is now being anomalies have been mapped and drill sites evaluated in detail. planned. To the south of Tullybuck/Lisglassan, prospecting has identified further significant gold and base-metal anomalies. The Armagh-Monaghan gold belt is known to extend for approximately 18 km along the Orlock Bridge Fault. The gold belt is divided into a series of fault blocks within one of which lies the Tullybuck/Lisglassan gold deposit. Geochemical surveys and bedrock sampling by the Company have identified significant gold anomalies in other blocks. These findings have major implications for the scale and extent of mineralisation in the Armagh-Monaghan gold belt, and future prospects for the Company. 5 Additional licences The successful results of the Company’s exploration activity has led to a re-assessment of the mineral prospectivity of the Longford- Down Massif taking into account the mineable gold grades and thicknesses which have been demonstrated in the Tullybuck/Lisglassan deposit, the identification of the Armagh- Monaghan gold belt and the positive results from exploration of the Slieve Glah dilation zone. The Company has therefore applied for 11 more licences straddling the Orlock Bridge Fault within the Longford-Down Massif. Left to right: Henry H. Rennison Dr. Pamela Conroy Louis J. Maguire Professor Richard Conroy Henry B. Knott Maureen T.A. Jones James P. Jones F.C.A. 9 C o n r o y D i a m o n d s a n d G o l d P . l . c . A n n u a l R e p o r t a n d F i n a n c i a l S t a t e m e n t s 2 0 0 0 Company Information Directors, Secretary and Advisers Auditors Professor Richard Conroy Executive Chairman* Maureen T.A. Jones Managing Director* James P. Jones F.C.A.† Finance Director* Louis J. Maguire† Non-Executive Director* Henry B. Knott†§ Non-Executive Director Dr. Pamela Conroy§ Non-Executive Director Henry H. Rennison†§ Non-Executive Director* * Members of Executive Committee † Members of Remuneration Committee § Members of Audit Committee Company Secretary and Registered Office James P. Jones 10 Upper Pembroke Street Dublin 2 Ireland Nominated Adviser Seymour Pierce Limited 29/30 Cornhill London EC3V 3NF Nominated Broker Ellis & Partners Limited Talisman House Jubilee Walk Three Bridges West Sussex RH10 1LQ Arthur Andersen Chartered Accountants Andersen House International Financial Services Centre Dublin 1 Financial Advisers Merrion Corporate Finance Ltd Block C The Sweepstakes Centre Ballsbridge Dublin 4 Legal Advisers William Fry Solicitors Fitzwilton House Wilton Place Dublin 2 Olswang 90 Long Acre London WC2E 9TT Rutherfords Solicitors 41 Fitzwilliam Square Dublin 2 Blake, Cassels & Graydon Box 25 Commerce Court West Toronto M5L 1A9 Canada Registrars Bastow Charleton Registrars Limited Marine House Clanwilliam Court Dublin 2 Financial Information Contents 12 Directors’ Report 14 Auditors’ Report 15 Profit and Loss Account 16 Balance Sheet 17 Cash Flow Statement 18 Statement of Accounting Policies 19 Notes to the Financial Statements 2 1 . c . l . P d l o G d n a s d n o m a i D y o r n o C 0 0 0 2 s t n e m e t a t S l a i c n a n i F d n a t r o p e R l a u n n A Directors’ Report for the Year Ended 31 May, 2000 The Directors present their annual report, together with the audited financial statements of Conroy Diamonds and Gold P.l.c. for the year ended 31 May, 2000. Principal Activities and Business Review The current focus of the Company’s activities is on a major geological structure in Ireland known as the Longford-Down Massif. The Company has acquired prospecting licences over an area of almost 1,000km2. On one small portion of this licence area, at Clontibret in County Monaghan, the Company has intersected high grades and mineable widths of gold mineralisation in the Tullybuck/Lisglassan deposit, which, the Directors believe, has the potential to become the first major gold mine in Britain or Ireland in recent times. Recent drilling of the Tullybuck/Lisglassan deposit has yielded further excellent results. Exploration within the Company’s licence area has demonstrated, in addition to the Tullybuck/Lisglassan gold deposit, an extensive gold belt which extends over a distance of up to 18km from County Armagh into County Monaghan. Geochemical surveys within this gold belt point to the existence of lookalike units to Tullybuck/Lisglassan, with the potential to host further similar mineral deposits. During the year, the Company’s status was much enhanced as a result of its admission to the Alternative Investment Market of the London Stock Exchange. The Company also raised IR£1,368,223, net of expenses, through the issue of 4,500,000 new Ordinary shares. Future Development of the Business It is the intention of the Directors to continue to develop the activities of the Company. Further strategic opportunities in mineral resources, both in Ireland and abroad, will be sought by the Company. Results for the Year and State of Affairs at 31 May, 2000 The profit and loss account for the year ended 31 May, 2000 and the balance sheet at that date are set out on pages 15 and 16 respectively. The Company recorded a loss for the financial year of IR£103,793 (1999 – IR£82,294). The shareholders’ funds increased to IR£2,050,750 at 31 May, 2000 from IR£786,320 at 31 May, 1999. No dividends or transfers to reserves are recommended by the Directors. Health and Safety at Work The well-being of the Company’s employees is safeguarded through adherence to health and safety standards in accordance with the requirements of the Safety, Health and Welfare at Work Act, 1989. Directors The Directors who served during the year are as follows: R.T.W.L. Conroy M.T.A. Jones P. Conroy H.B. Knott J.P. Jones H.H. Rennison L.J. Maguire In accordance with the Company’s articles of association, Dr. Pamela Conroy and Mr. Louis Maguire will retire by rotation and, being eligible, will offer themselves for re-election at the Annual General Meeting. Directors’ and Secretary’s Shareholdings and Other Interests The interests of the Directors and Secretary, all of which were beneficially held, in the ordinary share capital of the Company at 31 May, 1999 and 31 May, 2000 were as follows: R.T.W.L. Conroy J.P. Jones M.T.A. Jones H.H. Rennison P. Conroy L.J. Maguire H.B. Knott Ordinary Shares of 2.5p each 3,750,010 360,010 750,010 330,010 500,010 310,010 150,010 __________ __________ Options 500,000 150,000 200,000 50,000 25,000 50,000 25,000 __________ __________ 1 3 C o n r o y D i a m o n d s a n d G o l d P . l . c . A n n u a l R e p o r t a n d F i n a n c i a l S t a t e m e n t s 2 0 0 0 The options are currently exercisable at a price of IR68.5p, expiring on 26 May 2008. Additional options over 750,000 shares have been granted, subject to shareholder approval at the next general meeting of shareholders, to certain directors at an exercise price of IR66p. Except as disclosed above, neither the Directors nor their families had any beneficial interest in the share capital of the Company. There have been no contracts or arrangements entered into during the financial year in which a Director of the Company had a material interest and which were significant in relation to the Company’s business except as disclosed in Note 14 to the financial statements. Substantial Shareholdings So far as the Board is aware, no person or company, other than the Directors’ interests disclosed above and the two shareholders listed below, held 3% or more of the issued ordinary share capital of the Company at 25 September, 2000: Name Deirdre Conroy Vella IIU Nominees Limited Directors’ Responsibility Statement Number of Shares 500,000 460,500 % 3.52 3.25 Company law requires the Directors to prepare financial statements for each period which give a true and fair view of the state of affairs of the Company and of the profit or loss of the Company for that period. In preparing the financial statements, the Directors have: selected suitable accounting policies and then applied them consistently; (cid:2) made judgements and estimates that are reasonable and prudent. As explained in Note 1 to the financial statements, the Directors have reviewed cashflow projections and other relevant information and are satisfied that the Company will be able to continue in operation for the foreseeable future. Accordingly, the financial statements have been prepared on the going concern basis. The Directors are responsible for keeping proper accounting records which disclose with reasonable accuracy at any time the financial position of the Company and to enable them to ensure that the financial statements comply with the Companies Acts 1963 to 1999. They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. Auditors The auditors, Arthur Andersen, Chartered Accountants, will continue in office in accordance with Section 160 (2) of the Companies Act, 1963. On behalf of the Board R.T.W.L. Conroy Chairman J.P. Jones Director Approved by the Directors on 27 September, 2000 (cid:2) 4 1 . c . l . P d l o G d n a s d n o m a i D y o r n o C 0 0 0 2 s t n e m e t a t S l a i c n a n i F d n a t r o p e R l a u n n A Auditors’ Report TO THE MEMBERS OF CONROY DIAMONDS AND GOLD P.l.c.: We have audited the financial statements on pages 15 to 24 which have been prepared under the historical cost convention and in accordance with the accounting policies set out on page 18. Respective Responsibilities of Directors and Auditors As described on page 13, the Directors are responsible for the preparation of financial statements in accordance with Accounting Standards generally accepted in Ireland. Our responsibilities, as independent auditors, are established in Ireland by statute, the Auditing Practices Board, and our profession’s ethical guidelines. Basis of Opinion We conducted our audit in accordance with Auditing Standards issued by the Auditing Practices Board. An audit includes examination, on a test basis, of evidence relevant to the amounts and disclosures in the financial statements. It also includes an assessment of the significant estimates and judgements made by the Directors in the preparation of the financial statements, and of whether the accounting policies are appropriate to the Company’s circumstances, consistently applied and adequately disclosed. We planned and performed our audit so as to obtain all the information and explanations which we considered necessary in order to provide us with sufficient evidence to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or other irregularity or error. In forming our opinion we also evaluated the overall adequacy of the presentation of information in the financial statements. Opinion In our opinion, the financial statements give a true and fair view of the state of affairs of the Company at 31 May, 2000 and of its loss and cashflows for the year then ended and have been properly prepared in accordance with the Companies Acts, 1963 to 1999. We have obtained all the information and explanations we consider necessary for the purposes of our audit. In our opinion, proper books of account have been kept by the Company. The Company’s financial statements are in agreement with the books of account. In our opinion, the information given in the Directors’ report on pages 12 and 13 is consistent with the financial statements. The net assets of the Company, as stated in the balance sheet on page 16, are more than half of the amount of its called up share capital and, in our opinion on that basis there did not exist at 31 May, 2000, a financial situation which, under Section 40(1) of the Companies (Amendment) Act, 1983 would require the convening of an extraordinary general meeting of the Company. Arthur Andersen Chartered Accountants and Registered Auditor Dublin 27 September, 2000 1 5 C o n r o y D i a m o n d s a n d G o l d P . l . c . A n n u a l R e p o r t a n d F i n a n c i a l S t a t e m e n t s 2 0 0 0 Profit and Loss Account for the Year Ended 31 May, 2000 Operating Expenses Other Income Loss on Ordinary Activities before Taxation Tax on loss on ordinary activities Loss for the Year Profit and Loss Account, at 31 May, 1999 Profit and Loss Account, at 31 May, 2000 Notes 2 3 4 2000 IR£ 1999 IR£ (104,014) (86,526) 221 __________ 4,232 __________ (103,793) (82,294) – __________ – __________ (103,793) (82,294) (241,495) __________ (159,201) __________ (345,288) __________ __________ (241,495) __________ __________ There are no recognised gains or losses other than the loss for the year. The accompanying notes form an integral part of this profit and loss account. On behalf of the Board R.T.W.L. Conroy Chairman J.P. Jones Director Approved by the Directors on 27 September, 2000 6 1 . c . l . P d l o G d n a s d n o m a i D y o r n o C 0 0 0 2 s t n e m e t a t S l a i c n a n i F d n a t r o p e R l a u n n A Balance Sheet 31 May, 2000 Fixed Assets Mineral interests Tangible assets Current Assets Debtors Cash at bank and in hand Creditors: Amounts falling due within one year Net Current Assets/(Liabilities) Total Assets less Current Liabilities Creditors: Amounts falling due after more than one year Capital and Reserves Called up share capital Share premium account Profit and loss account Notes 5 10 6 7 8 9 9 Shareholders’ Funds – all equity 11 2000 IR£ 1999 IR£ 1,504,609 1,083,197 9,419 __________ 10,878 __________ 1,514,028 __________ 1,094,075 __________ 14,282 51,001 1,137,056 __________ 730 __________ 1,151,338 51,731 (614,616) __________ (353,486) __________ 536,722 __________ (301,755) __________ 2,050,750 792,320 – __________ (6,000) __________ 2,050,750 __________ __________ 786,320 __________ __________ 354,627 2,041,411 242,127 785,688 (345,288) __________ (241,495) __________ 2,050,750 __________ __________ 786,320 __________ __________ The accompanying notes form an integral part of this balance sheet. On behalf of the Board R.T.W.L. Conroy Chairman J.P. Jones Director Approved by the Directors on 27 September, 2000 1 7 C o n r o y D i a m o n d s a n d G o l d P . l . c . A n n u a l R e p o r t a n d F i n a n c i a l S t a t e m e n t s 2 0 0 0 Cash Flow Statement for the Year Ended 31 May, 2000 Net Cash Inflow/(Outflow) from Operating Activities Returns on Investments and Servicing of Finance Taxation Capital Expenditure and Financial Investments Net Cash Outflow before Financing Financing Increase/(Decrease) in Cash Notes 12A 12B 12B 12C 2000 IR£ 1999 IR£ 111,860 __________ (123,383) __________ – __________ – __________ – __________ – __________ (421,979) __________ (417,048) __________ (310,119) (540,431) 1,362,223 __________ (3,925) __________ 1,052,104 __________ __________ (544,356) __________ __________ The accompanying notes form an integral part of this cash flow statement. On behalf of the Board R.T.W.L. Conroy Chairman J.P. Jones Director Approved by the Directors on 27 September, 2000 8 1 . c . l . P d l o G d n a s d n o m a i D y o r n o C 0 0 0 2 s t n e m e t a t S l a i c n a n i F d n a t r o p e R l a u n n A Statement of Accounting Policies The financial statements have been prepared under the historical cost convention. The Company’s principal accounting policies are set out below. All of these policies have been applied consistently throughout the year. A Mineral Interests i Exploration, appraisal and development expenditure The Company accounts for mineral expenditure under the ‘full cost’ method of accounting. Exploration, appraisal and development expenditure is incurred on acquiring, exploring or testing exploration prospects. All lease, licence and property acquisition costs, geological and geophysical costs and other direct costs of exploration, appraisal and development are capitalised. The amount capitalised includes other operating expenses indirectly related to these activities. ii Cost Pools Costs are capitalised within geographic cost pools which initially comprise Ireland and the rest of the world. Costs relating to the exploration and appraisal of mineral interests which the Directors consider to be unevaluated are initially held outside the cost pool. Costs held outside the cost pool are reassessed at each year end. When a decision to develop these interests has been taken, or there is evidence of impairment, the related costs are transferred to the cost pool. Proceeds from the disposal of part or all of an interest which is outside the cost pool is credited to that interest with any excess being credited to the cost pool. iii Ceiling Test A ceiling test is carried out at each balance sheet date to assess whether the net book value of capitalised costs in the pool, together with the future costs of development of undeveloped reserves, is covered by the discounted future net revenues from the reserves within the pool, calculated at prices prevailing at the year end. Any deficiency arising is provided for to the extent that, in the opinion of the Directors, it is considered to represent a permanent diminution in the value of the related asset, and where arising, is dealt with in the profit and loss account as additional depreciation. iv Depreciation Expenditure within the cost pool is depreciated using the unit of production method based on commercial reserves. Costs used in the unit of production calculation comprise the net book value of capitalised costs plus the anticipated future costs of development of the undeveloped reserves at current year end unescalated prices. Changes in cost and reserve estimates are dealt with prospectively. B Issue Expenses and Share Premium Account Issue expenses arising on the issue of equity securities are written off, in the first instance, against the share premium account, with any issue expenses in excess of the balance on the share premium account being written off to the profit and loss account. C Tangible Fixed Assets Tangible fixed assets are stated at cost less accumulated depreciation. Depreciation is provided on a straight line basis to write off the cost less estimated residual value of the assets over their estimated useful lives as follows: Motor vehicles Office equipment 5 years 8 years 1 9 C o n r o y D i a m o n d s a n d G o l d P . l . c . A n n u a l R e p o r t a n d F i n a n c i a l S t a t e m e n t s 2 0 0 0 Notes to the Financial Statements 31 May, 2000 1 Operations and Going Concern The Company is an investment holding company and is currently involved in the development of mineral exploration opportunities, principally in the Longford-Down Massif. During the year IR£1,368,223 was raised by the issue of the share capital. The finance raised will be used to continue to develop the Company’s activities. On the basis of their review of projected cash flow information, and taking into account the above funding together with the very encouraging results obtained from the exploration programme, the Directors consider it appropriate to prepare the financial statements on the going concern basis. 2 Operating Expenses Management services and operating expenses (a) 416,055 351,575 2000 IR£ 1999 IR£ Transfer to Mineral Interests (Note 5) (312,041) __________ (264,849) __________ 104,014 __________ __________ 86,526 __________ __________ a The Company had one employee during the period (1999 – one) and availed of management services from a related company (Note 14). The remuneration paid during the period comprised salary of IR£16,446 and social welfare costs of IR£1,447 (1999 – IR£16,039 and IR£1,363 respectively). 3 Loss on Ordinary Activities before Taxation The loss on ordinary activities before taxation is arrived at after charging the following items, which are stated at amounts prior to the re-allocation to mineral interests: Auditors’ remuneration Directors’ emoluments fees other 2000 IR£ 12,500 1999 IR£ 12,500 62,500 62,500 – __________ __________ – __________ __________ All losses arose from continuing operations. 4 Tax on loss on Ordinary Activities No taxation charge arises in the financial year due to losses incurred. There was no unprovided deferred taxation at 31 May, 2000 (1999 – IR£Nil). (cid:2) (cid:2) 0 2 . c . l . P d l o G d n a s d n o m a i D y o r n o C 0 0 0 2 s t n e m e t a t S l a i c n a n i F d n a t r o p e R l a u n n A Notes to the Financial Statements continued 5 Mineral Interests Costs held outside cost pool: Ireland IR£ Namibia IR£ Total IR£ Cost At 31 May, 1999 1,083,137 Expenditure during the period licences and appraisal other operating costs (Note 2) 109,371 312,041 __________ 60 – – __________ 1,083,197 109,371 312,041 __________ At 31 May, 2000 1,504,549 __________ __________ 60 __________ __________ 1,504,609 __________ __________ The Directors have considered the proposed work programmes for these mineral interests, presently held outside the cost pools. They are satisfied that there are no indications of impairment, but recognise that future realisation of the mineral interests, held outside the cost pools, is dependent on further successful exploration and appraisal activities and the subsequent economic production of the mineral reserves. 6 Debtors Amounts falling due within one year VAT receivable Other 7 Creditors: Amounts falling due within one year Accruals Due to related undertaking (Note 14) Bank overdraft 2000 IR£ 1999 IR£ 10,432 5,070 3,850 __________ 45,931 __________ 14,282 __________ __________ 51,001 __________ __________ 2000 IR£ 481,456 8,960 1999 IR£ 254,898 58,610 124,200 __________ 39,978 __________ 614,616 __________ __________ 353,486 __________ __________ (cid:2) (cid:2) 2 1 C o n r o y D i a m o n d s a n d G o l d P . l . c . A n n u a l R e p o r t a n d F i n a n c i a l S t a t e m e n t s 2 0 0 0 8 Creditors: Amounts falling due after more than one year The Company received advances from its principal shareholder, who is also a Director, (Note 14). The movement on this shareholder’s loan during the year was as follows: At beginning of year Advances during the year Repayments during the year At end of year These amounts are unsecured and interest free. 9 Called up Share Capital and Share Premium Authorised: 400,000,000 ordinary shares of 2.5p each Issued and Fully Paid: 2000 IR£ 6,000 78,500 1999 IR£ 9,925 20,000 (84,500) __________ (23,925) __________ – __________ __________ 6,000 __________ __________ 2000 IR£ 1999 IR£ 10,000,000 __________ __________ 10,000,000 __________ __________ Start of year Share issue (a) Share issue (b) Share issue (c) Issue expenses End of year Share Capital Number Share Capital IR£ Share Premium IR£ 9,685,070 242,127 300,000 200,000 7,500 5,000 785,688 183,583 125,548 4,000,000 100,000 1,154,412 – __________ – __________ (207,820) __________ 14,185,070 __________ __________ 354,627 __________ __________ 2,041,411 __________ __________ a On 20 January, 2000, 300,000 ordinary shares of IR£0.025 were issued for a consideration of £0.50 sterling per share. This realised IR£0.637 per share resulting in a premium of IR£0.612 per share. b On 26 April, 2000, 200,000 ordinary shares of IR£0.025 were issued for a consideration of £0.50 sterling per share. This realised IR£0.653 per share resulting in a premium of IR£0.628 per share. c On 25 May, 2000, 4,000,000 ordinary shares of IR£0.025 were issued for a consideration of £0.25 sterling per share. This realised IR£0.314 per share resulting in a premium of IR£0.289 per share. 2 2 . c . l . P d l o G d n a s d n o m a i D y o r n o C 0 0 0 2 s t n e m e t a t S l a i c n a n i F d n a t r o p e R l a u n n A Notes to the Financial Statements continued 10 Tangible Fixed Assets Cost 31 May, 1999 Additions 31 May, 2000 Accumulated Depreciation 31 May, 1999 Depreciation charge 31 May, 2000 Net Book Value 31 May, 1999 31 May, 2000 Office Equipment IR£ Motor Vehicles IR£ Total IR£ 11,411 2,645 14,056 567 __________ – __________ 567 __________ 11,978 __________ __________ 2,645 __________ __________ 14,623 __________ __________ 2,120 1,058 3,178 1,497 __________ 529 __________ 2,026 __________ 3,617 __________ __________ 1,587 __________ __________ 5,204 __________ __________ 9,291 __________ __________ 1,587 __________ __________ 10,878 __________ __________ 8,361 __________ __________ 1,058 __________ __________ 9,419 __________ __________ 11 Reconciliation of Movement in Shareholders’ Funds At 31 May, 1999 Loss for the financial year Shares issued, net At 31 May, 2000 2000 IR£ 786,320 (103,793) 1999 IR£ 868,614 (82,294) 1,368,223 __________ – __________ 2,050,750 __________ __________ 786,320 __________ __________ 2 3 C o n r o y D i a m o n d s a n d G o l d P . l . c . A n n u a l R e p o r t a n d F i n a n c i a l S t a t e m e n t s 2 0 0 0 12 Notes to the Cash Flow Statement A Reconciliation of Loss to Net Cash Outflow from Operating Activities: Operating Loss Depreciation Increase/(Decrease) in Creditors Decrease/(Increase) in Debtors Net Cash Inflow/(Outflow) from Operating Activities B Analysis of Cash Flows: Capital Expenditure and Financial Investment 2000 IR£ (103,793) 2,026 176,908 1999 IR£ (82,294) 1,955 (7,169) 36,719 __________ (35,875) __________ 111,860 __________ __________ (123,383) __________ __________ 2000 IR£ 1999 IR£ Investment in mineral interests (421,412) (409,152) Purchase of tangible fixed assets (567) __________ (7,896) __________ (421,979) __________ __________ (417,048) __________ __________ Financing Issue of share capital, net 1,368,223 – Shareholders’ loan (repayments)/advances, net C Analysis and Reconciliation of Net Funds (6,000) __________ (3,925) __________ 1,362,223 __________ __________ (3,925) __________ __________ Cash at bank and in hand Bank overdrafts 31 May 1999 730 Cash Flow 31 May 2000 1,136,326 1,137,056 (39,978) __________ (84,222) __________ (124,200) __________ (39,248) __________ __________ 1,052,104 __________ __________ 1,012,856 __________ __________ 4 2 . c . l . P d l o G d n a s d n o m a i D y o r n o C 0 0 0 2 s t n e m e t a t S l a i c n a n i F d n a t r o p e R l a u n n A Notes to the Financial Statements continued 13 Commitments and Contingencies Obligations under Mineral Interests The Company has received prospecting licences under the Republic of Ireland Mineral Development Acts 1940 to 1995 for areas in Monaghan and Cavan. It has also received licences in Northern Ireland for areas in Armagh and Down in accordance with the Mineral Development Act (Northern Ireland) 1969. The Company has certain obligations in respect of these licences at year end. The commitments in relation to these licences are as follows: Expiration period: (cid:2) Within one year Between two and five years 2000 IR£ 1999 IR£ 90,000 35,796 118,000 __________ 178,935 __________ 208,000 __________ __________ 214,731 __________ __________ 14 Related Party Transactions The Company received cash advances amounting to IR£78,500 (1999 – £20,000) from its principal shareholder and the balance outstanding at 31 May, 2000 was IR£Nil (1999 – IR£6,000) (Notes 2 and 8). The Company shares accommodation and management services with Conroy P.l.c. which has certain common shareholders and Directors. The Company had previously agreed with Conroy P.l.c. to pay an amount of IR£8,000 per month in management charges to that company. This arrangement ceased at 31 May, 2000. IR£8,960 was outstanding at year end (1999 – IR£58,610) as a result of the transactions during the year (Note 7). (cid:2) 

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