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Annual Report 2004
Tertiary Minerals plc
Tertiary is a mineral exploration company with a diversified portfolio of mineral projects, mainly in
Scandinavia. Our small team of dedicated professionals is committed to exploration and management
excellence. Our aim is to add value to our projects and create wealth for our stakeholders through the
cost-effective discovery and development of mineral resources.
Tertiary Minerals plc
Tertiary has a strong and diverse exploration portfolio includingGold, Diamonds, Copper and Tantalum. Tantalum has shownstrong demand and price growth over the past ten years due toits predominant use in various electronic and other "high-tech"applications and the Company believes that this market willcontinue to grow strongly in future.Tertiary holds an exclusive license to develop the Ghurayyah Tantalum deposit in Saudi Arabia
– the world’s largest deposit of Tantalum metal.
T e r t i a r y M i n e r a l s p l c
Asset Base
1
Year in Brief
A n n u a l R e p o r t 2 0 0 4
Contents
Year in Brief 1Chairman’s Statement 2Operating & Financial Review 4Directors’ Report 13Auditors’ Report to the Shareholders 17Consolidated Profit and Loss Account 18Consolidated Statement of Total Recognised Gains and Losses 19
Balance Sheets 20Consolidated Cash Flow Statement 21Notes to the Financial Statements 22Notice of Annual General Meeting 30Form of Proxy 31Company Information IBC
New, potentially diamondiferous, kimberlite cluster discovered in Finlandwith over 50 targets now under control.
Initial drilling on Kaaresselkä gold project returned high grades. Follow updrilling in progress.
Exploration for giant copper-gold deposits continues at Ahmavuoma inSweden and on several projects in Finland.
Ghurayyah and Rosendal tantalum projects enhanced by recovery intantalum market with 7-8% demand growth forecast.
Commodity prices risen on strong demand. Gold price driven by weak USDollar to over $400 per ounce.
Drilling planned for winter 2004/5 on several exciting diamond, nickel and copper-gold projects.
During 2004 your Company achieved solid progress and
reported exciting exploration results for gold, copper and
diamonds, whilst the potential of Ghurayyah as a new
world-class source of tantalum was enhanced by the
recovery in the tantalum market.
GoldThree separate zones of gold
mineralisation within a one square
kilometre area have been confirmed
by initial drilling at the Kaaresselkä project
in northern Finland, acquired late last year.
The results included a number of high-grade and
near-surface intersections, and a follow up drilling
programme is now in progress. This is focused on
high-grade mineralisation in the Vanha zone, and results
are eagerly awaited.
More recently, your Company’s gold portfolio was boosted
by the acquisition of the Pitkäjärvi gold project in
west-central Finland where high-grade mineralisation
is present in surface boulders containing visible gold.
We have moved quickly to carry out a programme of
geophysics to trace the source of these boulders and
expect to drill-test bedrock targets shortly.
CopperDrilling of a large iron oxide-related copper-cobalt-gold
mineralised system at Ahmavuoma in northern Sweden
returned positive results, including an extension of
mineralisation in the Discovery Zone. The programme was
curtailed by an early Spring thaw, which meant we were
unable to drill other larger targets on the property. These
targets will be investigated when drilling resumes this
Winter, once the swampy ground has frozen and access
is re-established.
DiamondsPerhaps the most exciting development this year has been
the success of our diamond exploration initiative near
Kuusamo in the Karelian craton of northern Finland. In
Spring, a speculative drill hole to test a possible kimberlite
resulted in the discovery of two separate kimberlites on
the Kalettomanpuro prospect. Subsequent testing of a
magnetic anomaly at Kattaisenvaara, 20km away, resulted
in the discovery of a third kimberlite.
Analysis of small samples of the kimberlites did not yield
any diamonds, but independent geological investigations
on these new discoveries have confirmed that the
geological conditions at Kuusamo are ideal for the
occurrence of diamondiferous kimberlites. We are also
encouraged by the possibility that there may be a
geological link between our discoveries and the
Arkhangelsk kimberlites in the Russian half of the
Karelian craton that includes the Lomonosov diamond
project run by Alrosa and the highly diamondiferous
Grib pipe.
In order to capitalise on these discoveries, we have carried
out further targeting work and acquired additional
ground. We have now identified over fifty targets for
further investigation, and existing data strongly suggests
that more, potentially diamondiferous, kimberlites will be
discovered on this ground.
TantalumLast year, I highlighted the potential for a significant
recovery in the tantalum market and it is pleasing to
note that those ‘green-shoots’ have since flourished.
Inventories have been depleted, the spot price has
recovered and the market is growing once again, led by
the resurgence in consumer electronics spending. Current
annual demand growth is estimated at 7-8% and may be
further enhanced by the delivery of 3G mobile phone
technology.
Work planned for Ghurayyah this year was delayed by
the last-minute breakdown of negotiations with a
potential joint venture partner that otherwise would have
provided funding for preliminary and bankable feasibility
studies. Renewed efforts are currently being made to
secure alternative funding, and we are hopeful of a
positive outcome.
The tantalum industry was thrown into sharp focus in
October 2004 by the move into Voluntary Administration
by the world’s largest producer, Australia’s Sons of Gwalia
T e r t i a r y M i n e r a l s p l c2
Chairman’s Statement
group, following its failure to re-negotiate the terms of
its gold division hedge commitments. The possibility that
there may be a change in control of the majority of world
tantalum production has turned the spotlight on to
alternative sources of supply, including our Company’s
world-class Ghurayyah project.
Annual ResultsInevitably, for an exploration company, we remain
loss-making, reporting a loss of £861,081 for the year
(2003 £397,037). This comprises interest receipts of
£20,663, administration expenses of £245,030 and
£636,714 of written-off expenditure on projects where
the Board has decided that further exploration is not a
priority. Further details are provided in the Operating &
Financial Review on pages 4 to 12.
In Conclusion2004 has been a year of mixed fortunes for mineral
exploration companies. Whilst commodity prices have
gone from strength to strength to the benefit of some
producers, market sentiment towards explorers has been
generally less positive.
Your Company has an exciting portfolio of exploration
assets, diversified by commodity and country although our
exploration successes have, in my opinion, yet to be
reflected in the Company’s share price. I hope to improve
this important measure of performance during 2005 by
building on the value inherent in the Company.
Patrick L. Cheetham
Executive Chairman
8 December 2004
a Chairman Patrick Cheetham atKalettomapuro, Kuusamo Diamond Project
b Board of Directors – from left to right:
David Whitehead, Patrick Cheetham &
Donald McAlister.
a
b
During the past year, work has focused on exploration for gold,
copper and, most recently, diamonds together with progressing
the start of feasibility work on the Company’s advanced
tantalum-niobium projects in Finland and Saudi Arabia.
GOLD PROJECTSKaaresselkä Gold Project
Finland – Tertiary Minerals 100%
Originally discovered by the Geological
Survey of Finland (GTK), Kaaresselkä includes
gold mineralisation in three separate zones –
Vanha, Tienvarsi and Lampi – within an area of
1.1km x 0.6km.
These zones are defined by over 10,000m of diamond drilling
but GTK was unable to make resource estimates due to the
unreliability of their exploration data resulting from their use
of small diameter diamond drill core, small assay samples and
unreliable assay techniques.
Following the acquisition of the project last year geological
consultants ACA Howe completed a review of past GTK
exploration on behalf of Tertiary and made recommendations
for further drilling.
In order to check and validate previous results 10 diamond
drill holes were completed earlier this year for a total of
800m. Significant results from this drilling are shown in
the accompanying plan.
The results include some of the more important results from
Kaaresselkä to date including ;
● Hole 04KD005, located in the SE extension of
the Tienvarsi zone - intersected 2.75m grading
13.5 grammes/tonne (g/t) gold from 15.45m
depth demonstrating that mineralisation is open in
this direction.
● Hole 04KD007B, located towards the western end of the
Vanha zone - intersected 4.90m thickness grading
11.0 g/t gold from 74.80m down-hole and was drilled
to test at depth the gold mineralisation intersected by
GTK drill holes RC5 (3m grading 7.2g/t gold) and R436
(1.4m grading 22 g/t gold) towards the western end of
the Vanha zone. This result is important as it suggests
the potential for a high-grade depth extension to the
near surface mineralisation at Vanha.
● Hole 04KD010, located within the Lampi zone -
intersected 10.3m grading 3.48 g/t gold from bedrock
surface at a depth of 3.9m beneath the glacial till.
In some cases, however, drilling did not replicate previous good
results. This variability and often poor repeatability is common
in structurally controlled, coarse grained gold deposits where
a large number of holes are required to evaluate the grade
and tonnage.
The results from the Company’s first drilling programme at
Kaaresselkä are considered to be highly encouraging as they
confirm that gold mineralisation is spread over a wide area,
with a number of high-grade intersections having been
returned both from surface in the weathered zone and in the
fresh rock. The results also significantly upgraded the Lampi
zone as a target for further drilling.
Consequently, in November 2004 the Company started a
second drilling programme at Kaaresselkä. This programme is
concentrating on the Vanha zone, to test for extensions to
high-grade mineralisation encountered in hole 04KD007B, and
will also test for south-east extensions to Tienvarsi along strike
from Tertiary’s drill-hole 04KD005.
In addition, trenching (and possibly follow-up drilling)
is evaluating the Lampi zone (10.3m grading 3.88g/t gold
near surface) where the geometry of the mineralisation
requires further investigation. Results are expected in
February 2005.
Whilst detailed exploration at Kaaresselkä has been confined
to a 1km by 0.6km area so far, the prospect sits adjacent to a
large regional shear-zone that has good exploration potential
outside of the current area of focus. This potential is defined
in part by GTK geophysical and geochemical anomalies within
the current claim holdings. Some of these anomalies were
tested earlier this year with a programme of shallow bedrock
percussion drilling. Gold anomalies have been defined requiring
follow-up. In addition, a further claim application has been
made for an area some 20km west of Kaaresselkä where
previous drilling by Outokumpu on the Kiekerömaa project
reportedly intersected gold values up to 13 g/t (over an
unreported width).
T e r t i a r y M i n e r a l s p l c4
Operating and Financial Review
Pitkäjärvi Gold Project
Finland – Tertiary Minerals 100% (subject to third party
NSR royalty).
Pitkäjärvi is a target for high-grade gold mineralisation.
It was acquired in August 2004 from an independent prospector
who, in May this year, discovered a train of boulders on the
surface containing visible native gold. The boulders occur in an
area roughly 150m long by 70m wide although the full extent
of the boulder train is thought to be hidden beneath
surrounding marshland.
Field visits by Tertiary have confirmed significant gold grades
in surface boulders of probable local origin. Visible free gold in
hand-specimen was seen to be associated with quartz veining,
silicification and weak sulphide mineralisation in a moderately
altered granodiorite. Nine samples from different mineralised
boulders, up to 1m across, assayed up to 16.6 g/t gold and
averaged 8.5 g/t gold.
In addition a second, previously documented, boulder train
some 2km NW of Pitkäjärvi, at Tiaskuru, was relocated where a
number of boulders with visible gold and copper mineralisation
have assayed up to 5.7% copper and 0.3% cobalt.
An interpretation of available airborne geophysical data
covering the Pitkäjärvi and Tiaskuru areas has identified a
number of possible source areas for the mineralised boulders.
A follow-up ground geophysical survey has been completed
and drill targets defined.
b Gold bearing Boulder, Pitkäjärvi
c Unloading base-of-till drill rig,
Kaaresselkä
b
c
a 2004 drill hole locations, Kaaresselkä
COPPER PROJECTSAhmavuoma Copper-Gold-Cobalt Project
Sweden – Tertiary Minerals 100% (subject to third party
NSR royalty)
This is an advanced copper-gold-cobalt exploration
project covering a 3km long zone of iron-oxide
mineralisation and alteration and associated
copper mineralisation with multiple targets
defined by coincident geophysical and
geochemical anomalies.
Ahmavuoma has characteristics of IOCG (iron-
oxide-copper-gold) type deposits that include a number
of world-class deposits such as Olympic Dam in Australia and
Kiruna in Sweden.
In January 2004 a programme of deep penetrating ground
geophysics was conducted over the 3km long Ahmavuoma
magnetic anomaly to better define electrical targets having
potential for copper-gold and cobalt bearing sulphide
mineralisation. The results of this survey confirm strong
electrical conductors in the Northwest Zone (2km long)
and the Central Zone (1 km long) and a weak conductor
in the Discovery Zone where previous exploration drilling
intersected economically interesting levels of copper-cobalt
and gold.
The Winter drilling programme was originally designed to
include 7-10 diamond drill holes to test electrical conductors
and for mineralisation in the Discovery, Central and Northwest
Zones. However, due to the slow drill penetration rates,
necessary for good core recovery, only 5 holes could be
completed before the spring thaw as access depends on a
thick layer of snow and ice for drill rig movement across
marshy ground.
Discovery Zone
Three holes were completed at 50m intervals along the strike
of the Discovery Zone. Two holes (04AD001 and 002) were
drilled within the known mineralisation in order to check for
copper-gold and cobalt grade and grade distribution whilst
a third hole (04AD003) stepped out 50m to the north of
previous drilling.
The results include 5m, grading 1.37% copper and 0.3g/t
gold in hole 04AH003 and 18.05m grading 0.4% cobalt
and 0.15% copper in hole 04AH001. Both of these
intersections occur in a broader zone of lower grade copper
mineralisation with a width between 33-68m and grading
between 0.25-0.40% copper. All significant assay results are
shown in the accompanying table.
So far drilling in the Discovery Zone indicates that:
● the intensity of copper mineralisation is not directly
related to the electromagnetic anomaly and is more
widespread;
● the weak electromagnetic anomaly defines a zone of
massive iron-sulphide mineralisation of limited strike
length containing high levels of cobalt; and
● copper mineralisation remains open in all directions.
In all three holes the sulphide mineralisation is associated with
albite alteration, magnetite veining and brecciation and late
stage brittle fractures typical of IOCG style mineralisation.
Hole 04AD003 demonstrates that mineralisation is continuing
further to the north in the Discovery Zone despite the
associated geophysical anomalies being generally weak in this
area and tailing off towards hole 04AD003. This raises the
prospect that mineralisation may be more widespread in this
zone than previous work has suggested. In IOCG deposits it is
commonly the case that the highest copper grades are not
always directly associated with the highest concentrations of
geophysically conductive sulphide minerals.
Central Zone
The Central Zone is a 1km long coincident magnetic and
electromagnetic anomaly and was tested by hole 04AH004 at
its southern end, where base-of-till samples were anomalous
in copper.
This 192m long drill hole intersected altered and pervasively
fractured volcanic rocks with abundant magnetite (an iron-oxide
mineral) veining and magnetite breccias throughout. Massive
magnetite occurs in two intervals: a 2m wide section between
46 – 48m and a second, 7m wide section between 106 – 113m.
Magnetite can be electrically conductive in certain circumstances
and it is considered that the target electrical conductor is
explained by the massive magnetite intersections. Only limited
sulphide mineralisation is present in this hole and no significant
assays were returned.
Weather constraints did not permit the drilling of the second
planned hole in the Central Zone to test a possible
demagnetised zone further to the north along the axis of the
electrical conductor where magnetite may have been replaced
by more prospective sulphide mineralisation.
T e r t i a r y M i n e r a l s p l c6
Operating and Financial Reviewcontinued
Northwest Zone
The Northwest Zone comprises a 2 km long electrical
conductor with a weak magnetic signature.
Hole 04AH005 was drilled to test the conductor at its southern
end in a zone of possible enhanced dilation prospective for
sulphide mineralisation. The hole intersected a broad zone of
IOCG style rock alteration but nothing that would explain the
electrical conductor. A follow up down-hole electromagnetic
survey suggests that the target conductor was not tested by
hole 04KD005 and lies below the drill string and could be
tested by a new hole wedged off the existing drill hole.
A second hole, which planned to test the Northwest Zone
further to the north, at its point of maximum conductance,
was not drilled due to the weather constraints and will now
be included in a further programme of drilling to be carried
out this Winter.
Vehkavarra Copper-Gold Project
Sweden – Tertiary Minerals 100%
Vehkavaara, also a target for IOCG copper-gold mineralisation,
is situated in the Norbotten mining district some 70km south
of Ahmavuoma.
Fifty base-of till/bedrock percussion drill holes were completed
during the quarter, on two traverses, to follow up surface
copper-geochemical anomalies. Three zones of bedrock
anomalism were outlined and a programme of follow-up
trenching was carried out in November 2004. Only weak
bedrock mineralisation was exposed.
Other IOCG Projects
Finland – Tertiary Minerals 100%
During the year no significant work was carried out on
the Vahajoki, Kolari or Rauttavaara IOCG projects
although work is planned for 2005.
b Geophysical anomalies andwinter drill targets, Ahmavuoma
c Drilling hole 04AD001at Ahmavuoma
a Project Location Map, Scandinavia
KUUSAMO DIAMOND PROJECTFinland -Tertiary Minerals 100%
The earth’s crust beneath a large part of Finland and the
adjoining Karelian region of northwest Russia is old and has
been geologically stable over a long period of time. Such
parts of the crust are called cratons and are the main
source of the world’s diamonds. In particular,
diamonds are generally to be found in those
parts of the craton where there is a
thick lithospheric keel and low heat flow.
In the Karelian Craton, which underlies much
of Finland, the diamond prospective part is over
300,000 sq km in area and is nearly the same size as the
Slave Craton in Canada where in recent years a number of
important diamond mines have been developed.
Earlier this year the Company drilled a speculative drill hole at
Kalettomanpuro, near Kuusamo in northern Finland, to test
for a possible kimberlite occurrence. That hole was successful
in the discovery of two separate kimberlites. It subsequently
led to the discovery of the Kattaisenvaara kimberlite and the
evolution of an exciting new diamond exploration project for
the Company.
Kalettomanpuro
The objective of speculative drilling was to test a magnetic
anomaly that, based on previous exploration reports, was
believed to reflect a small kimberlite pipe or dyke. The hole
confirmed the presence of massive hypabyssal kimberlite
(Group I type) from 71.55m to 98.43m down hole. Unexpectedly,
the hole also intersected a second kimberlite (Group II type)
between 51.35m to 59.85m down-hole.
The second kimberlite differs from the first in that it is
micaceous, contains visible kimberlite indicator minerals,
is only slightly more magnetic than its host rocks and may be
significantly older than the massive kimberlite. This kimberlite
was not known from previous exploration.
Kattaisenvaara
Kattaisenvaara is located 20km away from Kalettomapuro and
was identified as a target with similar magnetic characteristics
to Kalettomanpuro.
The first drill hole at Kattaisenvaara collared directly into
kimberlite of Group 1 type. Three further holes were attempted
at Kattaisenvaara but only one of these successfully tested
the kimberlite, the other two holes being abandoned in deep
overburden. The successful hole collared in kimberlite at the
same location as the first reported hole but was drilled in the
opposite direction proving the total width of the kimberlite in
the plane of drilling to be 48m. The kimberlite appears to have
faulted contacts at both its northern and southern margins
and a well-developed breccia at the southern margin. The strike
length of the kimberlite is not yet known.
Small samples from each of the kimberlites at Kuusamo
have been tested for microdiamonds with negative results.
Kimberlites usually occur in clusters and any given cluster
usually comprises a spectrum of kimberlites from those
containing no microdiamonds to those with varying diamond
contents and may include some which are commercially
exploitable. Similarly, individual kimberlite intrusions can be
multi-phase, with some phases containing diamonds and
others none.
The potential of a cluster to host diamonds can be evaluated
by detailed mineralogical studies of the kimberlites in that
cluster. The Company, therefore, commissioned GTK to
undertake independent mineralogical studies on the
Kalletomanpuro and Kattaisenvaara kimberlites.
The report was prepared by an international kimberlite
specialist at the Geological Survey of Finland (GTK). The data in
the report is based on relatively limited sampling of the three
kimberlites discovered so far but supports the following
important conclusions:
● the geological conditions considered necessary for the
occurrence of diamondiferous kimberlites occur in the
Kuusamo area.
● the newly discovered kimberlites have tapped the
diamond stability field of the earth’s mantle.
● the mantle tapped by the kimberlites contain both types
of potential diamond-hosting mantle materials -
harzburgite and eclogite and has not been affected by
diamond destroying processes.
The GTK report concludes that the lack of micro-diamonds
in the kimberlite samples tested to date does not necessarily
limit the prospectivity of any future kimberlite discoveries in
the area.
The report also concludes that the results are ….”exciting in
that it is likely that an entirely new cluster of kimberlites
(the Kuusamo cluster) has been discovered” and that typically
there are 10-50 kimberlites in a cluster.
T e r t i a r y M i n e r a l s p l c8
Operating and Financial Reviewcontinued
The report speculates that the Group I Kuusamo kimberlites
may have a geological link to kimberlites found near
Arkhangelsk in Russia, also in the Karelian Craton that includes
the Lomonosov diamond project run by Alrosa and the highly
diamondiferous Grib pipe. This speculation is based principally
on the position of the Kuusamo cluster on the southern margin
of the same Devonian kimberlite and alkaline province that
stretches for over a 1,000 km from Northern Finland through
the diamond bearing regions of Kandalaksha, Terskii Bereg,
Arkhangeslsk and Central Timan in north-west Russia.
Tertiary considers that the results of the GTK study
considerably enhance the potential of the untested targets in
the Kuusamo area. The Company has recently expanded its
holding of claims and claim reservations to cover another
forty-nine kimberlite targets in addition to Kalettomanpuro
and Kattaisenvaara. Existing data strongly suggest that more
kimberlites will be discovered in these areas.
How diamonds get to the surface . . .
It is accepted wisdom that many diamonds (a form of carbon)
grew as crystals in the primeval earth as all harzburgitic
diamonds are over 3 billion years old. Over time diamonds
are only preserved where diamond is stable in preference to
graphite (at high pressure and relatively low temperature) and
this is usually beneath the old stable parts of the earth’s crust
(“cratons”) where there is a thick, cool and stable lithospheric
mantle keel – the so-called “diamond stability window”. In such
windows, diamonds are found in mantle containing the rock
types harzburgite or eclogite. For diamonds to be found at the
surface, kimberlitic magma must have risen to the surface
through the diamond stability field of the mantle, on the way
collecting pieces of the diamond host-rocks, harzburgite and
eclogite. As the kimberlite magma ascends, these pieces are
disrupted, liberating the diamonds. The kimberlite magma must
ascend rapidly enough so that the diamonds are preserved in
otherwise unstable conditions in the crust. Thus there are two
main pre-requisites for the occurrence of diamonds at or near
the earth’s surface:
● Favourable mantle conditions for diamond preservation
through geological time (a source of diamonds).
● A transport medium (kimberlite magma) that taps the
diamond stability field and both collects and preserves
the diamonds.
As kimberlites are the main transport medium, a study of the
mineralogy and mineral chemistry of kimberlites in any given
cluster will provide information on whether that cluster has
diamond potential.
9A n n u a l R e p o r t 2 0 0 4
a Illustrative drill cross-section, Kattaisenvaara Kimberlite, Kussamo diamond project.
b G10 & G9 pyrope garnets, Kalettomanpuro kimberlite
Kuusamo Diamond Project ◆
TANTALUM PROJECTSTantalum Market
Recent reports suggest that the tantalum market has
rebounded from its recent low with prices having recovered
after the collapse of the “high-tech” bubble to levels of near
US$40 per lb from a low of less than $20 per lb in 2002.
It is also reported that demand for tantalum has
recovered to within 5% of the 2000 peak
levels and is now 85% above the 2002
lows.
Interest in tantalum production has recently been
thrown into sharper focus by the move into Voluntary
Administration of the world’s largest tantalum producer, Sons
of Gwalia, following its failure to re-negotiate the terms of its
gold division hedge commitments. The possibility that there
may be a change in control of such a large part of the world’s
tantalum production has thrown the spotlight onto alternative
sources of supply for tantalum, including the Company’s
world-class Ghurayyah tantalum project.
Ghurayyah Project
Saudi Arabia – Tertiary Minerals 100%
Ghurayyah is a world-class deposit of tantalum, niobium
and zircon with an Inferred Mineral Resource of
nearly 400 million tonnes.
Earlier this year negotiations were in
progress for external funding of further
evaluation of the Ghurayyah project. A prospective
partner successfully completed extensive due diligence
on the project. Terms were agreed in principle, but before
documentation could be completed the prospective partner
withdrew for reasons not associated with the Ghurayyah
project. This has delayed further work on the project during the
year, but alternative sources of finance are being investigated
and the Company is hopeful of a successful outcome.
In anticipation of the funding being available, the Company
has commissioned St. Barbara Consulting to prepare a proposal
and obtain quotes for the metallurgical testwork component of
the Preliminary Feasibility Study.
The long-awaited revision of the Mining Law in Saudi Arabia
has now passed through the Legislative Council and received
Royal Assent. The purpose of the new law is to update the
Mining Code & Regulations in Saudi Arabia in line with
international best-practice and thereby make exploration in
Saudi Arabia more attractive to foreign investors. The changes
will simplify the retention of the Ghurayyah project and reduce
the Company’s holding costs in Saudi Arabia.
Rosendal Project
Finland – Tertiary Minerals 100%
The Rosendal pegmatite contains an Inferred Mineral Resource of
1.05 million tonnes at a grade of 255ppm Ta2O5.
Initial work on a preliminary feasibility study suggested that
the resources were insufficient to justify development and
whilst the tantalum price has been low, further work has been
on hold. However, there is still the opportunity to add to
resources at Rosendal through further exploration and now
that the tantalum market is recovering a re-evaluation of the
project is warranted.
BASE METAL PROJECTSDjuragruvan Zinc-Silver Project
Sweden –Tertiary Minerals 100%
The Company recently completed a drilling programme to test
for zinc-silver mineralisation at its Djuragruvan project in the
Bergslagen district of south-central Sweden.
Three holes were drilled to target down-dip and along the strike
extensions to zinc-lead-silver mineralisation at the Gruvberget
open-pit where, in 1989, a small, privately-managed mining
campaign produced 40,000t of custom-milling ore grading
7% zinc-lead and 90g/t silver from a 30m deep open-pit.
No significant mineralisation was intersected.
T e r t i a r y M i n e r a l s p l c10
Operating and Financial Reviewcontinued
a Outcrop ofGhurayyahtantalum-bearinggranite.
Ghurayyah Process Options
A programme of trenching was also completed to test an area
to the south of Gruvberget where Tertiary discovered a field of
zinc and silver-rich boulders in an earlier exploration campaign
but the source remains elusive.
Notträsk Nickel Project
Sweden – Tertiary Minerals 100%
Following on from the discovery of low tenor nickel
mineralisation last year the Company has carried out
mineralogical investigations into the mineralisation history of
the Notträsk intrusion in order to determine if further work in
the central part of the intrusion was justified.
A positive conclusion was reached and a programme of
geophysics is planned this coming Spring and will cover
the entire central part of the Notträsk intrusion in the
search for Voisey Bay style massive nickel sulphides in magma
feeder structures.
Other Base Metal Projects
During the year work was carried out on a number of
projects which as a result were assigned lower priority
and subsequently the costs associated with these projects
were written-off the Balance Sheet and into the Profit and
Loss account. Further details are provided in the Financial
Review on page 12.
These projects include the Boliden East Project where a
number of base-of till/bedrock percussion drill holes were
completed along strike from the Boliden gold mine but did not
generate targets worthy of follow-up.
Following further reviews it was decided that further exploration
at the Finnmark platinum group metal project and the
Vindfall zinc-silver project was a low priority.
The Finnmark claims will be relinquished but the
Vindfall project will continue to be held for
the time being whilst seeking a joint
venture partner to fund future
exploration costs.
c Nickel bearing massive suphides inroad-cut, Notträsk
d Sulphide rich boulders, Notträsk
c
d
Ghurayyah (Ta-Nb-Y)
b Project Location Ghurayyah
Financial ReviewThe reported loss for the year set out in the Financial
Statements is £861,081. This comprises treasury interest of
£20,663, administration costs of £245,030 and exploration
expenditure written-off totalling £636,714.
Compared to the 12 month period ended 30 September 2003,
administration costs and interest income are up 9% and 258%
respectively. The large increase in the loss this year is due to
the increased amount of write-offs on projects where
exploration has been abandoned or is now low priority. The
written-off historical expenditures on the Vindfall zinc project
and the Finnmark PGM project together account for 80% of
the total.
During the year the Company made two share placements
pursuant to authorities granted to it by shareholders at the last
two Annual General Meetings. In December 2003 the Company
raised £438,750 (before expenses) by placing 4,875,000 shares
at a price of 9 pence per share and then in January 2004 a
further £600,000 was raised by placing 4,000,000 shares at
15 pence per share.
The funds raised have been applied by the Company
to exploration and administration costs. Project and
reconnaissance expenditure during the year totalled £415,518
and was applied principally for gold at Kaaresselkä, copper-
gold-cobalt at Ahmavuoma and in developing the Kuusamo
diamond project in Finland. Lesser amounts were spent on
other exploration programmes described earlier in this report.
The breakdown of exploration spend by commodity is shown
in the pie-chart below.
T e r t i a r y M i n e r a l s p l c12
Operating and Financial Reviewcontinued
Exploration Spend by Commodity
Copper 37%
Gold 34%
Other 12%
Diamonds 12%
Tantalum 5%
Copper
Gold
OtherDiamonds
Tantalum
The Directors are pleased to submit their annual report and audited accounts for the year ended 30 September 2004.
Principal ActivitiesThe principal activities of the Group continue to be the identification, acquisition, exploration and development of mineral projects.
The principal areas of activity are Finland, Sweden and Saudi Arabia.
The Group’s exploration activity in Sweden is undertaken through a Swedish registered branch, Svensk filial till Tertiary Gold
Limited, United Kingdom.
Business ReviewA full review of activity is given in the Chairman’s Statement and the Operating and Financial Review.
The results for the Group are set out in detail on page 18. The loss for the year was £861,081, (2003: £397,037).
Proposed DividendThe Directors are unable to recommend the payment of any ordinary dividend.
Fixed AssetsDetails of fixed assets are set out in notes 8, 9 and 10 in the accounts.
Directors and Directors’ InterestsThe Directors holding office in the period and their beneficial interests in the share capital of the Company are:
Tertiary Minerals plc At 30 September 2004 At 30 September 2003Shares Share warrants Shares Share warrants
P L Cheetham 5,687,250 – 5,687,250 –
D A R McAlister – – – –
D Whitehead – 300,000 – 300,000
The Directors have no beneficial interests in the shares of the Company’s subsidiary undertakings as at 30 September 2004.
ShareholdersAs at the date of this report the following interests of 3% or more in the issued share capital of the Company appeared in the
register maintained under the provisions of Section 211 of the Companies Act 1985:
Number % ofof share
shares capital
Mrs Carole Rowan 2,954,499 7.3
Mr Patrick Lyn Cheetham 2,843,625 7.0
Mrs Karen Elizabeth Cheetham 2,843,625 7.0
Morstan Nominees Limited SEG Acct 2,740,000 6.8
Vidacos Nominees Ltd HHCLT ACCT 1,700,000 4.2
Pershing Keen Nominees Limited HHCLT Account 1,635,692 4.0
City of London PR Group plc 1,488,252 3.7
Tiger Resource Finance plc 1,330,000 3.3
Corporate GovernanceCompanies whose shares trade on AIM are not required to make an annual statement to shareholders regarding compliance with
the Principles of Good Governance and Code of Best Practice (‘the Combined Code’). However, the Board seeks to comply with the
principles of the Combined Code in so far as they are appropriate to a company of the size of Tertiary Minerals plc at its stage of
development.
13
Directors’ Report
A n n u a l R e p o r t 2 0 0 4
DirectorsThe Board comprises three directors, two of whom are non-executive:
Patrick Cheetham, aged 44 Executive ChairmanMr Cheetham, the founder of the Company, is a mining geologist, has 23 years experience in mineral exploration in Australia,
Europe and North America and 17 years experience in public company management.
Donald McAlister, aged 45 Non-executive DirectorMr McAlister is an accountant. He is a founding Director of the Group and is also Finance Director of Ridge Mining plc and was
formerly Finance Director of Reunion Mining plc.
David Whitehead, aged 62 Non-executive DirectorMr Whitehead is a mining geologist. He joined the Board in 2002 on retiring as Vice President Integration, Exploration and
Innovation at BHP Billiton Group Plc, having been Chief Executive, Exploration and Development of Billiton Plc from 1997.
The role of the Board is to agree the Group’s long term direction and strategy and monitor achievement of its business objectives.
The Board meets four times a year for these purposes and holds additional meetings when necessary to transact other business.
The Board receives reports for consideration on all significant strategic and operational matters.
The Non-Executive Directors are considered by the Board to be independent of management and free from any business or other
relationship, which could materially interfere with the exercise of their independent judgement. Directors have the facility to take
external independent advice in furtherance of their duties at the Group’s expense and have access to the services of the Company
Secretary.
The Board delegates certain of its responsibilities to the Audit, Remuneration and Share Allotment Committees of the Board.
These Committees operate within clearly defined terms of reference.
Accountability and Audit1. Directors’ Responsibilities
The Directors are required by UK company law to prepare financial statements, which give a true and fair view of the state
of the Company and the Group as at the end of the year and of the Group loss for the year. The Directors have responsibility
for ensuring that proper accounting records are kept which disclose with reasonable accuracy the financial position of the
Group and to enable them to ensure the accounts comply with the Companies Act 1985. They have a general responsibility
for taking such steps as are reasonably open to them to safeguard the assets of the Group and to prevent and detect fraud
and other irregularities.
Appropriate accounting policies, which follow generally accepted accounting practice and are explained in the notes to the
accounts, have been applied consistently and applicable accounting standards have been followed. In addition, reasonable and
prudent judgements and estimates have been used in the preparation of the financial statements.
The Directors are responsible for ensuring the Directors’ Report and other information included in the annual report is
prepared in accordance with Company Law in the United Kingdom.
The maintenance and integrity of the Tertiary Minerals plc website is the responsibility of the directors; the work carried out
by the auditors does not involve consideration of these matters and, accordingly, the auditors accept no responsibility for
any changes that may have occurred to the financial statements since they were initially presented on the website.
Legislation in the United Kingdom governing the preparation and dissemination of the financial statements and other
information included in annual reports may differ from legislation in other jurisdictions.
2. Going ConcernThe Directors are satisfied that the Group has adequate resources to continue to operate for the foreseeable future. For this
reason, they continue to adopt the “going concern” basis for preparing the accounts.
T e r t i a r y M i n e r a l s p l c14
Directors’ Reportcontinued
3. Audit Committee and AuditorsThe Audit Committee, composed entirely of Non-Executive Directors, assists the Board in meeting its responsibilities in
respect of external financial reporting and internal controls. The Audit Committee also keeps under review the scope and
results of the audit. It also considers the cost effectiveness, independence and objectivity of the auditors taking account of
any non-audit services provided by them.
4. Remuneration CommitteeThe Remuneration Committee comprises the Non-Executive Directors. The main purpose of the Committee is to determine
the appropriate remuneration for the Company’s Executive Chairman, ensuring that this reflects his performance and that of
the Group, and to demonstrate to shareholders that executive remuneration is set by Board members who have no personal
interest in the outcome of their decisions.
5. Internal ControlsThe Directors are responsible for the Group’s system of internal financial control. Although no system of internal financial
control can provide absolute assurance against material misstatement or loss, the Group’s system is designed to provide
reasonable assurance that problems are identified on a timely basis and dealt with appropriately.
In carrying out their responsibility, the Directors have put in place a framework of controls to ensure as far as possible that
ongoing financial performance is monitored in a timely manner, that corrective action is taken and that risk is identified as
early as practically possible, and have reviewed the effectiveness of internal financial control.
The Board, subject to delegated authority, reviews capital investment, property sales and purchases, additional borrowing
facilities, guarantees and insurance arrangements.
Corporate Social ResponsibilityThe Board takes regular account of the significance of social, environmental and ethical matters affecting the business of the
Company. At this stage in the Group’s development the Board has not adopted a specific policy on Corporate Social Responsibility
as it has a limited pool of stakeholders other than its shareholders. Rather, the Board seeks to protect the interests of the Group’s
stakeholders through individual policies and through ethical and transparent actions.
1. ShareholdersAs set out above, the Board seeks to protect shareholders’ interests by following, where appropriate, the guidelines in the
Combined Code and the Directors are always prepared where practicable, to enter into a dialogue with shareholders to
promote a mutual understanding of objectives. The AGM provides the Board with an opportunity to informally meet and
communicate directly with investors.
2. EnvironmentThe Board recognises that its principal activity, mineral exploration, has potential to impact on the local environment and
consequently has adopted an Environmental Policy to ensure that the Group’s activities have minimal environmental impact.
Where appropriate the Group’s contracts with suppliers and contractors legally bind those suppliers and contractors to do
the same.
3. EmployeesThe Company engages its employees to understand all aspects of the Company’s business and seeks to remunerate its
employees fairly, being flexible where practicable. The Group gives full and fair consideration to applications for employment
received from disabled persons, having regard to their particular aptitudes and abilities. The Board takes account of
employees’ interests when making decisions and suggestions from employees aimed at improving the Group’s performance
are welcomed.
4. Suppliers and ContractorsThe Group recognises that the goodwill of its contractors, consultants and suppliers is important to its business success and
seeks to build and maintain this goodwill through fair dealings. The Company has a prompt payment policy and seeks to settle all
agreed liabilities within the terms agreed with suppliers. The amount shown in the balance sheet in respect of trade creditors at
the end of the financial year represents 10 days of average daily purchases.
15A n n u a l R e p o r t 2 0 0 4
Charitable and Political DonationsDuring the year, the Group made no charitable or political donations.
Annual ReportCopies of the Tertiary Minerals plc Group financial statements are available from Companies House, Crown Way, Cardiff, CF14 3UZ
and also on the Company’s website: www.tertiaryminerals.com
Annual General MeetingNotice of the Company’s fifth Annual General Meeting convened for 26 January 2005 at 12:00 noon is set out on page 30 of
this report.
One item of special business will be conducted at the meeting. In proposing Resolution No.4 (Authority to Disapply Pre-emption Rights)
your Directors are seeking authority from shareholders to allot shares or grant rights over shares of the Company where they propose
to do so for cash and otherwise than to existing shareholders pro-rata to their holdings – for example through a placement of shares
and/or in connection with the operation of the Employee Share Scheme. The authority granted at last year’s Annual General Meeting is
due to expire at this year’s Annual General Meeting. Accordingly, Resolution 4 will be proposed as a special resolution to grant a
renewed authority. Apart from rights issues, the authority will be limited to the issue of new shares up to an aggregate nominal value of
£150,000 (being 15,000,000 ordinary shares of 1p each and 37% of the issued ordinary share capital of the Company as at the date of
this report). If given, this authority will expire on 26 January 2006 or at the conclusion of the Annual General Meeting for 2006,
whichever is the earlier.
On behalf of the Board
Patrick CheethamChairman
Approved by the Board of Directors on 8 December 2004
T e r t i a r y M i n e r a l s p l c16
Directors’ Reportcontinued
We have audited the financial statements of Tertiary Minerals plc for the year ended 30 September 2004, which comprise the
Consolidated Profit and Loss Account, the Balance Sheets, the Consolidated Statement of Total Recognised Gains and Losses, the
Consolidated Cash Flow Statement and related notes. These financial statements have been prepared under the accounting policies
set out therein.
This report is made solely to the company’s members, as a body, in accordance with Section 235 of the Companies Act 1985. Our
audit work has been undertaken so that we might state to the company’s members those matters we are required to state to them
in an auditor’s report, and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility
to anyone other than the company and the company’s members, as a body, for our audit work, for this report, or for the opinions
we have formed.
Respective responsibilities of the directors and auditorsThe directors’ responsibilities for preparing the Annual Report and the financial statements in accordance with applicable law and
United Kingdom Accounting Standards are set out in the Statement of Directors’ Responsibilities.
Our responsibility is to audit the financial statements in accordance with relevant legal and regulatory requirements and United
Kingdom Auditing Standards.
We report to you our opinion as to whether the financial statements give a true and fair view and are properly prepared in
accordance with the Companies Act 1985. We also report to you if, in our opinion, the Directors’ Report is not consistent with
the financial statements, if the company had not kept proper accounting records, if we have not received all the information and
explanations we require for our audit, or if information specified by law regarding directors’ remuneration and transactions with
the company and other members of the group is not disclosed.
We read other information contained in the Annual Report and consider whether it is consistent with the audited financial
statements. This other information comprises only the Directors’ Report, the Chairman’s Statement and the Operating & Financial
Review. We consider the implications for our report if we become aware of any apparent misstatements or material inconsistencies
with the financial statements. Our responsibilities do not extend to any other information.
Basis of opinionWe conducted our audit in accordance with United Kingdom Auditing Standards issued by the Auditing Practice 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.
OpinionIn our opinion the financial statements give a true and fair view of the state of the affairs of the Group and the Company as at
30 September 2004 and of the Group loss for the year then ended and have been properly prepared in accordance with the
Companies Act 1985.
PKFRegistered AuditorsManchester, UK
8 December 2004
17
Auditors’ Report to the Shareholdersfor the year ended 30 September 2004
A n n u a l R e p o r t 2 0 0 4
Notes 2004 2003£ £
Exploration costs written off 636,714 179,452
Administrative expenses 245,030 225,577
Operating loss (881,744) (405,029)
Interest receivable 20,663 7,992
Loss on ordinary activities before taxation 3 (861,081) (397,037)
Tax on profit on ordinary activities – –
Loss for the financial year 15 (861,081) (397,037)
Loss per share – basic (pence) 6 (2.3) (1.3)
All amounts relate to continuing activities.
T e r t i a r y M i n e r a l s p l c18
Consolidated Profit and Loss Accountfor the year ended 30 September 2004
Notes 2004 2003£ £
Loss for the financial year 15 (861,081) (397,037)
Foreign exchange translation differences on foreign currency net investments in subsidiaries (7,830) 48,483
Total recognised losses since last accounts (868,911) (348,554)
19
Consolidated Statement of Total RecognisedGains and Lossesfor the year ended 30 September 2004
A n n u a l R e p o r t 2 0 0 4
Group CompanyNotes 2004 2003 2004 2003
£ £ £ £
Fixed assets
Intangible assets 8 959,260 1,180,396 – –
Tangible assets 9 5,036 3,879 – 101
Investments 10 – – 224,889 224,889
964,296 1,184,275 224,889 224,990
Current assets
Debtors 11 70,583 28,392 2,051,199 1,552,762
Cash at bank and in hand 557,666 227,505 554,239 220,863
628,249 255,897 2,605,438 1,773,625
Creditors: amounts falling due within one year 12 62,448 37,851 26,584 21,137
Net current assets 565,801 218,046 2,578,854 1,752,488
Total assets less current liabilities 1,530,097 1,402,321 2,803,743 1,977,478
Capital and reserves
Called up share capital 13 404,210 315,460 404,210 315,460
Share premium account 15 2,961,665 2,053,728 2,961,665 2,053,728
Merger reserve 15 131,096 131,096 131,096 131,096
Profit and loss account 15 (1,966,874) (1,097,963) (693,228) (522,806)
Shareholders funds 16 1,530,097 1,402,321 2,803,743 1,977,478
These financial statements were approved by the Board of Directors on 8 December 2004
P L Cheetham D A R McAlisterExecutive Chairman Director
T e r t i a r y M i n e r a l s p l c20
Balance Sheetsas at 30 September 2004
21
Consolidated Cash Flow Statementfor the year ended 30 September 2004
Notes 2004 2003£ £
Net cash outflow from operating activities 18 (289,450) (272,464)
Returns on investment and servicing of finance
Interest received 20,663 7,994
Net cash outflow from operating activities after returns oninvestments and servicing of finance (268,787) (264,470)
Capital expenditure and financial investment
Purchase of intangible fixed assets (397,630) (230,933)
Purchase of tangible fixed assets (5,021) (139)
Sale of tangible fixed assets – –
Net cash outflow from capital expenditure and financial investment (402,651) (231,072)
Financing
Issue of share capital (net of expenses) 996,687 325,700
Exchange differences 4,912 3,587
Net cash inflow from financing 1,001,599 329,287
Increase/(Decrease) in cash 19 330,161 (166,255)
A n n u a l R e p o r t 2 0 0 4
1. Accounting policiesThe following accounting policies have been applied consistently in dealing with items which are considered material inrelation to the Group’s financial statements.
Basis of preparationThe financial statements have been prepared in accordance with applicable accounting standards and under the historicalcost accounting rules.
Basis of consolidationThe Group financial statements consolidate the financial statements of Tertiary Minerals plc and its subsidiary undertakingsusing the acquisition method.
In accordance with section 230 (4) of the Companies Act 1985, Tertiary Minerals plc is exempt from the requirement topresent its own profit and loss account. The amount of the loss for the financial year recorded within the financial statementsof Tertiary Minerals plc is £170,357 (2003: £150,571) as shown in note 15.
DepreciationDepreciation is provided by the Group on all tangible fixed assets, at rates calculated to write off the cost, less estimatedresidual value, of each asset evenly over its expected useful life, as follows:
Fixtures and fittings 25% to 33% per annum.
Intangible assets - exploration and developmentAccumulated costs incurred in relation to separate areas of interest (which may comprise more than one exploration licenceor exploration licence applications) are capitalised and carried forward where:
(a) such costs are expected to be recouped through successful exploration and development of the area, or alternatively byits sale; or
(b) exploration and/or evaluation activities in the area have not yet reached a stage which permits a reasonableassessment of the existence or otherwise of economically recoverable reserves, and active and significant operations in,or in relation to the areas are continuing.
An annual review is carried out by the Directors to consider whether any exploration and development costs have sufferedimpairment in value and if necessary provisions are made accordingly.
Accumulated costs in respect of areas of interest, which have been abandoned, are written off to the profit and loss accountin the year in which the area is abandoned.
Costs in respect of reconnaissance exploration (where the Group has no licences or licence applications) are written off to theprofit and loss account in the year in which the reconnaissance exploration took place.
Exploration and development costs are carried at the lower of cost and expected net realisable value.
The costs capitalised on specific areas of interest will be amortised over the useful economic life of the projects, once theybecome income generating, and the costs can be recouped.
Deferred taxationDeferred taxation, if applicable, is provided in full in respect of taxation deferred by timing differences between the treatmentof certain items for taxation and accounting purposes.
Deferred tax assets are recognised to the extent that they are regarded as recoverable. No deferred tax asset is recognised inthe financial statements.
T e r t i a r y M i n e r a l s p l c22
Notes to the Financial Statementsfor the year ended 30 September 2004
1. Accounting policies (continued)Foreign currenciesFor consolidation purposes, the assets and liabilities and the profit and loss accounts of overseas subsidiary undertakings andassociated undertakings are translated at the closing exchange rates. Exchange differences arising on these translations aretaken to reserves, net of exchange differences arising on related foreign currency borrowings.
Leasing and hire purchase commitmentsRentals applicable to operating leases where substantially all the benefits and risks of ownership remain with the lessor arecharged to the profit and loss account on a straight-line basis.
2. Segmental analysisOperating Net Operating Net
loss assets loss assets2004 2004 2003 2003
£ £ £ £
United Kingdom 163,958 2,578,854 150,571 1,752,589Overseas 697,123 (1,048,757) 246,466 (350,268)
–––––––––– –––––––––– –––––––––– ––––––––––861,081 1,530,097 397,037 1,402,321
–––––––––– –––––––––– –––––––––– ––––––––––
In the opinion of the directors, the Group’s activities represent one class of business.
A split of overseas segmental information is not considered to be meaningful by the directors.
3. Loss on ordinary activities before taxation2004 2003
£ £The operating loss is stated after chargingOperating lease rentals – land and buildings 16,250 18,400Auditors remuneration – audit 8,286 8,874Auditors remuneration – other services – –Depreciation – owned assets 3,864 5,802
–––––––––– ––––––––––
4. Directors emoluments2004 2003
£ £Remuneration in respect of directors was as follows:P L Cheetham (salary and bonus) 80,000 68,250D A R McAlister (salary) 7,500 7,500D Whitehead (directors’ fees) 7,500 7,500
–––––––––– ––––––––––95,000 83,250
–––––––––– ––––––––––
23A n n u a l R e p o r t 2 0 0 4
5. Staff costs2004 2003
£ £Staff costs (including directors) were as follows:Wages and salaries 142,567 127,801Social security costs 14,892 12,442
–––––––––– ––––––––––157,459 140,243
–––––––––– ––––––––––
The average monthly number of employees, including directors, employed by the Group during the year was as follows:
2004 2003Number Number
Technical employees 2 2Administration employees (including non-executive directors) 3 3
–––––––––– ––––––––––5 5
–––––––––– ––––––––––
6. Loss per shareLoss per share has been calculated on the loss and the weighted average number of shares in issue during the period.
2004 2003£ £
Loss (£) (861,081) (397,037)Weighted average shares in issue (No.) 38,043,359 29,639,565Basic loss per share (pence) (2.3) (1.3)
–––––––––– ––––––––––
The loss attributable to ordinary shareholders and weighted average number of ordinary shares for the purpose of calculatingthe diluted earnings per ordinary share are identical to those used for the basic earnings per ordinary share. This is because the exercise of share warrants would have the effect of reducing the loss per ordinary share and is therefore not dilutive under the terms of FRS 14.
7. Taxation on ordinary activitiesNo liability to corporation tax arises for the year due to tax losses.
The group has not recognised a deferred tax asset of £687,033 (Company £207,491). These amounts would be recoverable if sufficient taxable profits were made in the future.
T e r t i a r y M i n e r a l s p l c24
Notes to the Financial Statementscontinued
8. Intangible fixed assets
Deferredexplorationexpenditure
Group £CostAt 1 October 2003 1,180,396Additions during the year 397,630Project costs written off (606,024)Exchange differences (12,742)
––––––––––At 30 September 2004 959,260
––––––––––
9. Tangible fixed assetsGroup Company
fixtures fixturesand fittings and fittings
£ £CostAt 1 October 2003 22,551 5,778Additions 5,021 –Disposal – –
–––––––––– ––––––––––At 30 September 2004 27,572 5,778
–––––––––– ––––––––––
DepreciationAt 1 October 2003 (18,672) (5,677)Charge for the year (3,864) (101)Released on disposal – –
–––––––––– ––––––––––At 30 September 2004 (22,536) –
–––––––––– ––––––––––Net Book ValueAt 30 September 2004 5,036 –
–––––––––– ––––––––––At 1 October 2003 3,879 101
–––––––––– ––––––––––
25A n n u a l R e p o r t 2 0 0 4
10. Fixed assets investments
Shares in Groupundertakings
Company £Cost at 1 October 2003 224,889Additions –
––––––––––30 September 2004 224,889
––––––––––
The companies in which the Group’s interest at 30 September 2004 is more than 10% are as follows:
Country of incorporation/ Type and percentageCompany registration of shares held Principal activity
Tertiary Gold Limited England & Wales 100% of ordinary shares Mineral explorationTertiary (Middle East) Limited England & Wales 100% of ordinary shares Mineral exploration
11. DebtorsGroup Company
2004 2003 2004 2003£ £ £ £
Amounts owed by Group undertakings due after more than one year – – 2,038,979 1,543,081Other debtors 53,398 10,700 – –Prepayments and accrued income 17,185 17,692 12,220 9,681
–––––––––– –––––––––– –––––––––– ––––––––––70,583 28,392 2,051,199 1,552,762
–––––––––– –––––––––– –––––––––– ––––––––––
12. Creditors: amounts falling due within one yearGroup Company
2004 2003 2004 2003£ £ £ £
Trade creditors 13,515 6,643 6,013 1,322Other taxes and social security costs 5,544 6,675 5,546 6,675Accruals and deferred income 43,389 24,533 15,025 13,140
–––––––––– –––––––––– –––––––––– ––––––––––62,448 37,851 26,584 21,137
–––––––––– –––––––––– –––––––––– ––––––––––
T e r t i a r y M i n e r a l s p l c26
Notes to the Financial Statementscontinued
13. Share capital2004 2004 2003 2003
No. £ No. £AuthorisedOrdinary shares of 1p each 150,000,000 1,500,000 150,000,000 1,500,000
–––––––––– –––––––––– –––––––––– ––––––––––150,000,000 1,500,000 150,000,000 1,500,000–––––––––– –––––––––– –––––––––– ––––––––––
Allotted, called up and fully paidOrdinary shares of 1p each 40,421,093 404,210 31,546,093 315,460
–––––––––– –––––––––– –––––––––– ––––––––––40,421,093 404,210 31,546,093 315,460
–––––––––– –––––––––– –––––––––– ––––––––––
During the year the following share issues took place.
A placement of 4,875,000 1 penny ordinary shares for a total consideration of £438,750.
A placement of 4,000,000 1 penny ordinary shares for a total consideration of £600,000.
Warrants are issued for nil consideration and are exercisable as disclosed in note 14. Warrants are exchangeable on a one forone basis for each ordinary share of 1 penny at the exercise price on the date of conversion.
14. Warrants granted
Unexercised warrants Issue dates Exercise price Number Expiry dates
21/05/02 20p 300,000 20/05/05
15. Movement in reservesShare Profit
premium Merger and lossaccount reserve account
Group £ £ £
At 1 October 2003 2,053,728 131,096 (1,097,963)Loss for the financial year – – (861,081)Exchange differences – – (7,830)Premium on allotment, less expenses 907,937 – –
–––––––––– –––––––––– ––––––––––At 30 September 2004 2,961,665 131,096 (1,966,874)
–––––––––– –––––––––– ––––––––––
27A n n u a l R e p o r t 2 0 0 4
15. Movement in reserves (continued)Share Profit
premium Merger and lossaccount reserve account
Company £ £ £
At 1 October 2003 2,053,728 131,096 (522,806)Loss for the financial year – – (170,357)Exchange differences – – (65)Premium on allotment, less expenses 907,937 – –
–––––––––– –––––––––– ––––––––––At 30 September 2004 2,961,665 131,096 (693,228)
–––––––––– –––––––––– ––––––––––
16. Reconciliation of movements in shareholders’ fundsGroup Company
2004 2003 2004 2003£ £ £ £
Loss for the financial year (861,081) (397,037) (170,357) (150,571)Exchange differences (7,830) 48,483 (65) –Shares issued during the year net of issue costs 996,687 325,700 996,687 325,700
–––––––––– –––––––––– –––––––––– ––––––––––(Decrease)/Increase in shareholders’ funds 127,776 (22,854) 826,265 175,129
–––––––––– –––––––––– –––––––––– ––––––––––Opening shareholders’ funds 1,402,321 1,425,175 1,977,478 1,802,349
–––––––––– –––––––––– –––––––––– ––––––––––Closing shareholders’ funds 1,530,097 1,402,321 2,803,743 1,977,478
–––––––––– –––––––––– –––––––––– ––––––––––
17. Operating lease commitments
Financial commitments under non-cancellable operating leases will result in the following payments falling due in the nextfinancial year:
2004 2003Land and Land andbuildings buildings
£ £Expiring:Within one year 1,450 1,300Within two to five years – –After five years – –
–––––––––– ––––––––––1,450 1,300
–––––––––– ––––––––––
T e r t i a r y M i n e r a l s p l c28
Notes to the Financial Statementscontinued
18. Reconciliation of operating loss to net cash outflow from operating activities2004 2003
£ £Operating loss (881,744) (405,029)Depreciation and loss on disposal of fixed assets 3,864 5,802Intangible fixed assets written off 606,024 161,157(Increase)/Decrease in debtors (42,191) 39,378Increase/(Decrease) in creditors 24,597 (73,772)
–––––––––– ––––––––––Net cash outflow from operating activities (289,450) (272,464)
–––––––––– ––––––––––
19. Reconciliation of cash flow to movement in net fundsCash at bankand in hand Total
£ £At 30 September 2004 557,666 557,666At 1 October 2003 227,505 227,505
–––––––––– ––––––––––Increase in cash in the year 330,161 330,161
Cash outflow from decrease in funds and lease financing –Cash inflow from decrease in liquid resources –
––––––––––Change in net funds resulting from cash flows 330,161New finance leases –
––––––––––Movement in net funds in the year 330,161Net funds at 1 October 2003 227,505
––––––––––Net funds at 30 September 2004 557,666
––––––––––
20. Derivatives and other financial instruments
Interest rates and currency profile of financial liabilitiesAt 30 September 2004, the Group had no short term creditors denominated in any foreign currency (2003: £nil).
Interest rates and currency profile of financial assetsAt 30 September 2004, the Group had no financial assets other than short-term debtors and cash at bank. Bank balanceswere held in sterling with the exception of bank balances of £40 denominated in Swedish Krona. (2003: £196 denominatedin Swedish Krona).
Currency riskThe Group does not use foreign exchange contracts to manage its currency exposure as in the opinion of the directors, therisk from adverse currency fluctuations is minimal, and the cost of adopting such practice of hedging against fluctuationswould be greater than the related benefit from doing so.
The Group does not have any monetary assets or liabilities denominated in currencies other than the operating (or‘functional’) currency of the operating subsidiaries.
Maturity of financial liabilities and Group borrowing facilitiesThe Group has no outstanding financial liabilities as at 30 September 2004 and does not have any agreed borrowingfacilities as at this date.
Fair valuesThere is no material difference between the carrying and fair values of the Group’s financial assets and liabilities.
29A n n u a l R e p o r t 2 0 0 4
Notice is hereby given that the Annual General Meeting of the Company will be held in the City Room at the City of London Club,19 Old Broad Street, London EC2N 1DS, on Wednesday 26 January 2005 at 12:00 noon for the following purposes:
Ordinary Business1. To receive the annual report and financial accounts for the year ended 30 September 2004.
2. To re-elect Mr. D. Whitehead who is retiring by rotation under the Articles of Association as a Director of the Company.
3. To re-appoint PKF as Auditors of the Company and authorise the Directors to fix their remuneration
Special BusinessSpecial Resolution4. That the Directors be empowered, pursuant to Section 95 of the Companies Act 1985 (“the Act”), to allot equity securities
(as defined in Section 94 (2) of the Act) for cash pursuant to the authority and for the purposes of Section 80 of the Act inaccordance with an ordinary resolution passed on the twenty-ninth day of January 2004 as if sub-Section 89 (1) of the Actdid not apply to any such allotment, such power being limited to:
(i) the allotment of equity securities where such securities have been offered (whether by way of rights issue, open offeror otherwise) to holders of ordinary shares made in proportion (as nearly as may be) to their existing shareholdings of ordinary shares, but subject to such exclusions and arrangements as the Directors may consider necessary orexpedient to deal with fractional entitlements or any legal or practical problems under the laws of any overseasterritory, the requirements of any regulatory authority or any stock exchange, or otherwise; and
(ii) the allotment (otherwise than pursuant to sub-paragraph (i) above) of equity securities up to an aggregate nominalamount of £15,000 consisting of up to 15,000,000 ordinary shares of 1p each in the Company;
such power to expire (unless previously revoked, varied or renewed) at the conclusion of the Annual General Meeting to beheld in 2006 but so that the Company may, before such expiry, make an offer or agreement which would or might requireequity securities to be allotted after such expiry, such power to be substitution for and to revoke all pre-existing such powers.
By order of the Board Registered office:Sunrise House
C.W. Hulley Hulley RoadSecretary Macclesfield8 December 2004 Cheshire
SK10 2LP
Notes:1. Any member of the Company entitled to attend and vote at this meeting is entitled to appoint a proxy to attend and, on
a poll, to vote instead of him. A proxy need not be a member of the Company. A proxy need not preclude a member of theCompany from attending and voting at the above meeting if he so desires. To be valid, any appointments of proxies must be deposited at Capita IRG Plc, Proxy Department, The Registry, 34 Beckenham Road, Beckenham, Kent, BR3 4TU no laterthan 48 hours before the time at which the meeting is scheduled to commence.
2. The following information, which is available for inspection during normal business hours at the registered office of theCompany, from the date of this notice until the date of the Annual General Meeting, will also be available for inspection at theplace of the Annual General Meeting for a period of 15 minutes prior to the meeting and until the conclusion of the meeting:
a. Register of interests of Directors in the share capital of the Company;
b. Copies of services contracts of Directors of the Company.
3. Pursuant to Regulation 41 of the Uncertificated Securities Regulations 2001 the Company specifies that only thoseshareholders registered at 12:00 noon on 24 January 2005 shall be entitled to attend or vote at the meeting in respect ofthe number of shares registered in their name at that time. Changes to the Register of Members after 12:00 noon on the 24 January 2005 will be disregarded in determining the rights of any person to attend or vote at the meeting.
T e r t i a r y M i n e r a l s p l c30
Notice of Annual General Meeting
31
Form of Proxy✂
II/We (Block capitals please).......................................................................................................................................................................................................................
of............................................................................................................................................................................................................................................................................being a member/members of Tertiary Minerals plc hereby appoint the Chairman of the Meeting (see note 2)
or............................................................................................................................................................................................................................................................................as my/our proxy to vote for me/us on my/our behalf at the Annual General Meeting of the Company to be held on 26 January2005 in the City Room at City of London Club, 19 Old Broad Street, London EC2N 1DS at 12:00 noon and at any adjournmentthereof.
I wish this proxy to be used in connection with those of the Resolutions to be proposed at the Annual General Meeting which arelisted below, in the manner set out below, and in connection with any other ordinary business transacted at the meeting.
Dated ……………………………..... Signed or sealed (see notes 6 & 7) ..........................................................................................................................................
Please indicate with an “X” in the spaces below how you wish the proxy to vote. Unless otherwise instructed the proxy will at hisdiscretion vote as he thinks fit or abstain from voting in relation to all business of the meeting.
For Against
1. Ordinary Resolution to receive the annual report and financial accounts forthe year ended 30 September 2004.
2. Ordinary Resolution to re-elect Mr. D. Whitehead who is retiring by rotationunder the Articles of Association as a Director of the Company.
3. Ordinary Resolution to re-appoint PKF as Auditors of the Company and authorisethe Directors to fix their remuneration.
4. Special Resolution to empower the Directors to disapply the pre-emptionrights for certain allotments of shares.
Notes:1. This Form of Proxy is for the use of shareholders only and will be used only for the purpose of demanding or voting on a
poll.2. A member entitled to attend and vote at the meeting is entitled to appoint one or more proxies to attend and, on a poll, to
vote on the member’s behalf. If it is wished to appoint as proxy someone other than the Chairman of the meeting, deletethe words ‘the Chairman of the Meeting’ and insert in block capitals the full name of the person(s) to be appointed as proxy,initialling the alteration. A proxy need not be a member of the Company.
3. Completion and return of this Form of Proxy will not preclude a member of the Company from attending and voting inperson at the meeting or at any adjournment thereof, if they so choose.
4. Any alteration to this Form of Proxy must be initialled.5. To be effective this Form of Proxy must be lodged at the address overleaf 48 hours before the meeting.6. In the case of a corporation, this Form of Proxy must be executed either under its common seal or under the hand of an
officer or attorney duly authorised in writing.7. In the case of joint holders, the signature of any one of them will suffice but the names of all joint holders should be
shown.
A n n u a l R e p o r t 2 0 0 4
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THIRD FOLD
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LDCapita IRG PlcProxy DepartmentThe Registry34 Beckenham RoadBeckenhamKent BR3 4TU
PLEASE AFFIX
POSTAGESTAMP
A n n u a l R e p o r t 2 0 0 4
Head and Registered OfficeSunrise HouseHulley RoadMacclesfieldCheshireSK10 2LPUnited KingdomTel: +44 (0) 1625 626203Fax: +44 (0) 1625 626204
Company websitewww.tertiaryminerals.com
Nominated AdvisorSeymour Pierce LimitedBucklersbury House3 Queen Victoria StreetLondonEC4N 8ELUnited Kingdom
RegistrarsCapita IRG PlcThe Registry 34 Beckenham RoadBeckenhamKentBR3 4TUUnited Kingdom
BankersNational Westminster Bank plc2 Spring GardensBuxton, DerbyshireSK17 6DGUnited Kingdom
AuditorsPKFSovereign HouseQueen StreetManchesterM2 5HRUnited Kingdom
BrokerW H Ireland11 St James’s SquareManchesterM2 6WHUnited Kingdom
SolicitorsCobbettsShip Canal HouseKing StreetManchesterM2 4WBUnited Kingdom
Patrick CheethamExecutive Chairman
Donald McAlisterNon-Executive Director
David WhiteheadNon-Executive Director
Christine HulleyFCMA, MCMICompany Secretary
Directors & Professional Advisers
Tertiary Minerals plcSunrise House,Hulley Road,Macclesfield,Cheshire. SK10 2LPUnited Kingdom
Tel: +44 (0) 1625 626203 Fax: +44 (0) 1625 626204
Email: [email protected] Web: www.tertiaryminerals.com
