SOUTH CHINA RESOURCES PLC
Interim Report
For the six months ended 31st December 2006
Chairman's Statement
South China Resources PLC (SCR) completed major exploratory work at the Danfeng Copper and Molybdenum Project in the six months to 31 December 2006. During this period, the Company also engaged an independent, international industry consultancy practice, SRK Exploration Services Ltd, to audit the drilling, handling and assaying of copper and molybdenum in diamond drill core and underground channel sampling at the Danfeng Project.
In addition, the Company in accordance with its mandate to explore and develop base-metal projects in the Peoples Republic of China, entered into a binding Exploration and Mining Right Cooperation and Sale Agreement to acquire a 53% interest in the Zhunuo Copper Project in Tibet, China.
Danfeng Project
On the 8th February 2007 the Company provided guidance to shareholders regarding future work at Danfeng including the following:
1) The Company believes that good copper grades, which correlate well with previous Chinese drilling may be of economic interest to the Company.
2) The Company believes that given the structural complexities there is very limited potential for the Project to sustain a bulk tonnage, high-grade molybdenum mine at the current level of geological understanding.
3) As such the Company wishes to model the copper mineralisation to obtain an understanding of the geometry of that mineralisation and to perform some studies to determine the economics of mining this as a single product. This process is expected to take several months and then the Board will be in a position to consider an investment in a mining operation.
4) The granted license ensures the Company can continue working with its Joint Venture Partner to investigate the potential to develop a modest, but scalable copper mining operation.
5) The company does not believe further drilling is needed at this time, however will recommence with a local contractor if findings warrant investigation.
On the 31st December 2006, the Company received notification from the National level of Ministry of Land & Resources that a two year extension of term had been granted for the Danfeng Project Exploration License.
Zhunuo Copper Project
The Zhunuo Copper Project in Tibet, China, is a porphyry copper project at an early stage of drill and adit exploration. Results of exploration to date indicate it is a moderate to high grade porphyry copper resource with the potential to become a significant deposit in the Gangdese metallogenic belt of Tibet. The Company expects this Project to have a significant impact on its business should all contractual matters be executed according to the current Binding Joint Venture arrangement.
Xi'an Institute of Geology and Mineral Resources
SCR continues to search for new opportunities with its strategic Cooperation Agreement with the Xi'an Institute of Geology and Mineral Resources. The Cooperation Agreement specifies a right to acquire a 85% interest in any joint venture established by the parties. Current activities include the joint evaluation of an area of interest in the highly prospective East Qinling Mountain Belt, covering an area of interest of approximately 206.73 km sq. Previous exploration has identified significant coincident copper and molybdenum geochemical anomalies in the area of interest, which is located 14km along strike from the word class Jinduicheng molybdenum mining complex. The company greatly values the alliance with a highly respected central government controlled geological and mineral research institute.
Results
During the six months to 31 December 2006, the Company made a loss before and after tax of lb903,140 (31 December 2005 : Loss of lb313,158). Exploration costs of lb5,777,542 to date have been capitalised
(31 December 2005 : lb3,292,622 ). They relate to the drilling program of the Danfeng Copper Project.
In Summary
All the major exploration activity for the Danfeng Project was independently audited and reported on by SRK Exploration Services Ltd, and as a result the Company has commenced modelling the copper mineralization. The Zhunuo Copper Project represents a potential world class prospect and a significant asset for the company. In depth due diligence is currently being performed and we have the right team in place to secure a successful outcome during 2007.
Alastair Clayton
Chairman
Please find the full set of results attached.
For further information, please contact:
South China Resources Parkgreen Communications
Alastair Clayton Cathy Malins/ Annabel Leather
+44 207 493 7671 +44 20 7851 7480
Nabarro Wells & Co. Limited
Hugh Oram
+44 207 710 7400
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Beth Harris
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Parkgreen Communications
Pegasus House, 37-43 Sackville Street
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