Hidefield Gold Plc
Final Results for the Year Ended 31 December 2008
Chairman's statement
As I am sure our shareholders will agree, 2008 represented a year of
unprecedented challenges for investors and companies everywhere and
in all sectors of the economy but unfortunately, companies in the
junior resource sector in particular, were especially hard hit. As a
consequence, the Group was forced to respond to these events by
making significant reductions and changes to our previously planned
exploration programmes resulting in a significant slowing in the rate
of progress with our Don Nicolas Gold Project in Argentina and
accelerated activity to divest or joint venture our projects in
Brazil and Alaska.
It is encouraging that at the time of writing to you, stability
appears to have returned or at least is returning to capital markets,
investors are beginning to show renewed interest in advanced
exploration projects, especially gold projects and the gold price is
again approaching US$1,000 per ounce.
The present macro economic world outlook suggests that gold will be
an increasingly sought after commodity in the immediate years ahead,
with some pundits even speculating that we may well see a US$2,000
per ounce gold price in the next few years as investors and central
banks increase their exposure to physical gold . This could come at a
time when the sector would be seeing very few new mine developments
that could contribute to an increase in the supply of available gold
to meet increased demand. Gold exploration has already fallen to
extremely low levels, almost certainly ensuring that it will be some
years to come before we see sustainable new discoveries in the
sector.
Against that background, I am therefore pleased to report that the
Company has nevertheless made quite significant progress in advancing
the Don Nicolas gold project in East Santa Cruz Province in southern
Argentina and in confirmation of this progress, subsequent to year
end, we were able to report on the receipt of a new mineral resources
statement confirming the further expansion of the gold resources
discovered on the project.
Notwithstanding this progress, we have obviously had a very difficult
and different year to the past several years. Therefore the audited
results of our activities and transactions completed during the year
ended 31 December 2008 reflect a reassessment of project values in
light of the difficult economic environment, a general reduction and
change in the emphasis of our exploration expenditures and the
results of our efforts in joint venturing and selling various
projects in order to raise capital to support our ongoing but reduced
level of activity. The results of these activities produced a loss
for the year of £2,715,011.
South America
Our exploration related activities at the Don Nicolas gold project
during the 2008 calendar year included the completion of our Phase
III drilling programme, the commencement of an extensive sampling and
trenching programme across the large licence area in southern
Patagonia that includes the Don Nicolas gold project, updating of the
mineral resources report for the Don Nicolas project and completion
of a modest expansion of the Company's facilities at our ranches in
support of the exploration teams out in the field and to facilitate
on-site logging and reporting on the progress of our exploration
efforts.
Resource definition activities during the year on the Don Nicolas
gold project focussed on the "La Paloma" and "Martinetas" sectors of
our extensive portfolio of licences and it was from these areas that
our Phase III drilling activity provided us with the basis for an
update on the independently assessed Resource Statement for the
project. This new report, which was summarised in a news release to
the market on 22 June 2009, confirmed an expanded total mineral
resource of 2,153,000 tonnes at an average grade of 5.2 grammes per
tonne ("gpt") gold for 359,100 ounces of gold estimated using a high
grade cut of 90 gpt gold (6.69gpt gold and 463,343 ounces gold if no
high grade cut was applied).
This mineral resource estimate was prepared by Runge Limited of
Perth, Australia, an independent consultant engaged for the purpose
of completing the report, and was prepared in compliance with the
Australasian Code for Reporting of Mineral Resources by the Joint Ore
Reserves Committee ("JORC") and National Instrument 43-101 of the
Standards of Disclosure for Mineral Projects by the Canadian
Securities Administrators.
At this point in time the Group is not planning to update the Scoping
Study prepared to assess the economic viability of the development of
a mine on the Sulfuro deposit which continues to represent the most
advanced of the gold deposits on our licence portfolio as our Phase
III drilling confirmed that the deposit remained open for further
expansion and we do not anticipate recommencing drilling activity on
the Sulfuro deposit until we can be more confident of our ability to
attract new equity investment to fund that expenditure.
Encouragingly, we are seeing the impact of recent economic turmoil
reflected in the significant deflation of cost estimates for
development and operating expenditures. This began to occur in the
second half of 2008 and that trend has continued into 2009,
suggesting we may see some reduction in the cost estimates used in
our Scoping Study when next the Scoping Study is updated.
While the conceptual design for the development of a mine on the Don
Nicolas project was based upon suboptimal parameters, the Scoping
Study nevertheless confirmed that it would be economically feasible
to develop a mine based on the cost estimates available at the time
the report was concluded. We might therefore anticipate that any
update of the Scoping Study which was based upon recently updated
cost assumptions, should confirm improved economics of such a mine
development.
While the Phase III drilling programme was focused on the Sulfuro and
Martinetas sectors of the Don Nicolas gold project our exploration
efforts during the second half of the year, was focussed on
evaluating other high priority exploration target areas across our
extensive land position which has now expanded to approximately
230,000 hectares in what has become an area of focus for an
increasing number of international gold exploration and mining
companies.
With our focus during 2008 and for the foreseeable future on our
activities in Argentina we have pursued discussions to either sell or
joint venture our Cata Preta and Sumidouro Dome projects in Brazil.
Similarly we are pursuing discussions likely to lead to the sale or
joint venture of our Golden Zone project in Alaska, where we hold a
60% interest.
I am pleased to confirm that in mid 2008 we were able to dispose of
our residual interest in a number of coal licences in British
Columbia and early in 2009, concluded negotiations for the sale of
our 60% interest in the South Estelle exploration project in Alaska,
resulting in a profit of approximately £300,000 on these investments.
Associate Companies
Columbus Gold Corporation (approximately 19% owned) continued its
history of success in both expanding and securing valuable joint
ventures on its portfolio of well located exploration projects in
Nevada, Arizona and Utah.
Despite difficult market conditions, Columbus Gold was also
successful in completing the initial public offering of its
subsidiary, Columbus Silver Corporation on TSX Venture Exchange in
Canada, raising Can$1.8 million in the process. Columbus Silver is as
the name implies a silver focussed exploration company which has
subsequently continued to expand its portfolio of properties with the
recent acquisition of the Mogollon project in New Mexico.
Technical management of both Columbus Gold and Columbus Silver
continues to be lead by Andy Wallace and his colleagues at Cordex
based in Reno, Nevada and both companies have benefited greatly from
the Cordex's long experience with gold exploration in continental
USA.
During 2008, Alto Ventures Limited, the Company's other significant
associate company investment (approximately 14% owned) focused its
activities on its Despinassy gold project in the Abitibi greenstone
belt, near Val d'Or, Quebec and the Mud Lake, Cote-Archie Lake, and
Coldstream projects and the Beadmore-Geraldton camp in Ontario,
Canada. Alto was also successful in securing joint ventures on a
number of its projects reflecting the quality of projects acquired by
Alto's experienced technical team lead by Mike Koziol.
Corporate
The Board is very pleased with the progress made in our direct
exploration activities and the business development of our associate
companies. This progress has created significant value in our own
projects, particularly in Argentina, and in the investments we hold
in associate companies.
While the recognition of this value appears to be ignored by the
general investment community as reflected in our market
capitalisation, it is nevertheless well recognised by our peers in
the industry, resulting in frequent approaches for joint venturing on
our projects.
In mid 2008, our long serving founder and Technical Director, John
Prochnau retired from the Board to concentrate on his first love of
prospecting for new gold projects. John's assistance in building the
company has been much appreciated and he leaves us with a portfolio
of projects that bear testament to his skills as a world class
exploration geologist. John's shoes have been very ably filled by
Danilo Silva who is based in Buenos Aires and we are fortunate to
have Danilo leading out talented team of geology professionals.
Finally, Sean McGrath, the Group's CFO, was appointed to the Board of
Directors. Sean's public company experience and professionalism are
a welcome addition.
On behalf of the Board I wish to thank my colleagues for their
continuing efforts and our shareholders for their support and while
the outlook for the junior resources sector remains difficult, we
continue to look forward with optimism to progressing all of our
activities during 2009.
Kenneth P Judge
Chairman
26 June 2009
Consolidated Income Statement
For the year ended 31 December 2008
2008 2007
£ £
Expenses
Administrative expenses (919,253) (1,249,745)
Provision for diminution in value of
mineral rights (1,122,888) (1,304,851)
Total administrative expenses (2,042,141) (2,554,596)
Other operating income 171,069 -
Loss from operations (1,871,072) (2,554,596)
Finance income 42,290 58,177
Finance expense (107,217) -
Gain on disposal and deemed disposal of
associates 66,613 507,640
Impairment of associate investments (706,690) -
Share of operating loss in associates (274,476) (267,415)
Loss for the year before taxation (2,850,552) (2,256,194)
Tax credit 135,541 -
Loss for the year attributable to equity
holders of the parent (2,715,011) (2,256,194)
Loss per ordinary share
- Basic & Diluted 1 (0.98p) (0.84p)
Consolidated Statement of Recognised Income and Expense
For the year ended 31 December 2008
2008 2007
£ £
Available-for-sale investments:
Valuation (losses)/gains recognised
directly in equity (12,405) 1,934
Exchange gains/(losses) on retranslation of
foreign operations 1,052,376 (234,192)
Net income/(expense) recognised directly in
equity 1,039,971 (232,258)
Loss for the year (2,715,011) (2,256,194)
Total recognised income and expense for the
year (1,675,040) (2,488,452)
Consolidated Balance Sheet
As at 31 December 2008
2008 2007
£ £
ASSETS
Non-current assets
Intangible Assets - Mineral rights 7,147,337 6,015,571
Property, plant and equipment 338,486 302,687
Investments in associates 767,680 1,835,666
Financial asset - available-for-sale
investment 1,601 14,006
8,255,104 8,167,930
Current assets
Other receivables 871,755 979,368
Cash and cash equivalents 162,145 1,170,822
1,033,900 2,150,190
Assets classified as held for sale 18,936 -
Total current assets 1,052,836 2,150,190
TOTAL ASSETS 9,307,940 10,318,120
LIABILITIES
Current liabilities
Trade and other payables 176,079 385,570
Loans 588,050 -
Convertible loans 229,529 -
Corporate tax payable 69,525 287,951
1,063,183 673,521
SHAREHOLDERS' EQUITY
Share capital 2,780,996 2,752,527
Share premium 12,417,546 12,351,711
Other reserves 3,757,386 3,576,492
Foreign currency translation reserve 65,209 (987,167)
Available-for-sale reserve (3,849) 8,556
Retained deficit (10,772,531) (8,057,520)
8,244,757 9,644,599
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY 9,307,940 10,318,120
Consolidated Cash Flow Statement
For the year ended 31 December 2008
2008 2007
£ £
Cash flow from operating activities
Loss for the year (2,715,011) (2,256,194)
Adjustments for:
Depreciation 6,179 3,584
Taxation (135,541) -
Interest expense 107,217 -
Interest receivable (42,290) (31,865)
Share of operating loss in associates 274,476 267,415
Gain on deemed disposal of associates (38,823) (195,535)
Gain on disposal of associate (27,790) (312,105)
Gain on disposal of mineral property
interest (171,069) -
Gain on revaluation of financial assets -
fair value through profit or loss - (26,312)
Provision for impairment 1,829,578 1,304,851
Share based payment costs 76,056 85,728
Directors remuneration paid by issue of
shares 19,305 7,140
Foreign exchange differences (17,476) (3,844)
Net cash outflow from operating activities
before changes in working capital
(835,189) (1,157,137)
(Decrease) Increase in payables (327,215) 402
Decrease in receivables 347,091 122,655
Income taxes paid 126,361 -
Net cash outflow from operating activities (941,674) (1,034,080)
Investing activities
Payments for property, plant and
equipment (6,017) (86,274)
Proceeds from the disposal of financial
assets - 208,823
Proceeds from the disposal of mineral
rights 171,069 -
Interest received 42,290 31,865
Proceeds from the disposal of associate
investments 60,421 665,364
Exploration costs capitalised (1,376,761) (915,116)
Acquisition of associate investment - (112,742)
Net cash flow used in investing activities (1,108,998) (208,080)
Financing activities
Interest Paid 65,007 -
Issue of ordinary shares, net of issue
costs - 2,044,537
Loans 896,855 -
Net cash flow from financing activities 961,862 2,044,537
Net (decrease) increase in cash and cash
equivalents in the year (1,088,810) 802,377
Cash and cash equivalents at the beginning
of the year 1,170,822 344,164
Effect of foreign exchange rate changes on
cash and cash equivalents 80,133 24,281
Cash and cash equivalents at the end of the
year 162,145 1,170,822
The financial information included within this announcement does not
constitute the company's statutory accounts for the years ended 31
December 2008 or 31 December 2007, but it is derived from those
accounts. Statutory accounts for 2008 will be delivered to the
Registrar of Companies following the company's annual general
meeting. The auditors have reported on those accounts: their reports
were unqualified and did not contain statements under section 237(2)
or (3) of the Companies Act 1985.
The financial information included within this announcement has been
prepared using the recognition and measurement principles of
International Accounting Standards, International Financial Reporting
Standards and Interpretations adopted for use in the European Union
(collectively EU IFRSs). The principle accounting policies used in
preparing the financial information are unchanged from those included
in the audited financial statements.
No dividend is proposed.
Notes
1. Loss per ordinary share
The basic loss per share of 0.98 pence (2007 - 0.84 pence) is
calculated, on the loss on ordinary activities after taxation of
£2,715,011 (2007 - £2,256,194) and on 276,526,567 (2007 -
269,851,015) ordinary shares, being the weighted average number of
ordinary shares in issue during the year ended 31 December 2008. Due
to the losses incurred during the year a diluted loss per share has
not been calculated as this would serve to reduce the basic loss per
share.
There are options and warrants outstanding at the end of the year
that could potentially dilute basic earnings per share in the future.
2. Post balance sheet events
Subsequent to the end of the year,
a) The Group issued 59,000,000 ordinary common shares at 1p per
share in settlement of £590,000 of outstanding loans and convertible
loans. Further, as approved at the Group's Extraordinary General
Meeting held on 20 May 2009, the Group has agreed to allot and issue
an additional 73,135,900 ordinary common shares at 1p per share in
settlement of the remaining £731,359 of loans and convertible loans.
b) The South Estelle property in Alaska was sold to Millrock
Resources Corp. for US$100,000 and 1,000,000 common shares of
Millrock Resources Corp.
3. Other information
Copies of the annual report and accounts will be posted to all
shareholders by 30 June 2009 and will be available from the Company's
website at www.hidefieldgold.com shortly. Further copies will be
available from the Company's registered offices at One America
Square, Crosswall, London, United Kingdom EC3N 2SG, from the date of
posting.
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