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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Patagonia Gold Plc | LSE:PGD | London | Ordinary Share | GB00BF5B8R55 | ORD 1P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 31.00 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
From Apr 2019 to Apr 2024
TIDMPGD
RNS Number : 1428L
Patagonia Gold PLC
29 September 2016
29 September 2016
Patagonia Gold Plc
("Patagonia" or the "Company")
Half Yearly Financial Statements
Patagonia Gold Plc (AIM:PGD), the mining company with gold and silver projects in the southern Patagonia region of Argentina, Chile and Uruguay, is pleased to announce its unaudited interim results for the six months ended 30 June 2016. The Company will host a webcast and presentation today at 2.00 p.m. UK time on the interim results. See below for details.
Financial Highlights
Gross revenues of US$21.6 million for H12016 (1H2015: US$14.0 million), driven by improved production at Lomada and increased gold price
Net profit attributable to the Company of US$2.2 million (1H2015: net loss of US$5.8 million) as operating costs at Lomada significantly reduced
Operating Highlights
Mining operations at Lomada ceased at end of May, although leaching of gold continues and production will continue until the year end
- Production of 16,889 of Au to the end of June 2016 (1H2015: 9,944 oz / FY2015: 21,521 oz)
- Cash costs reduced significantly to US$591/oz (1H2015: US$1,165/oz)
Development of the initial open pit mine at Cap-Oeste completed on time and within budget
- First ore already loaded on to the pad and first gold sales expected during October 2016
- Initial 24 month life of mine with ability to increase project life with the development of the two underground projects at Cap-Oeste and COSE
- Continued evaluation of the Cap-Oeste and COSE underground projects, with a view to them being developed as one operation
At La Manchuria JV options are being evaluated to realise cash flow and advance exploration
Exploration work continues across the Company's property portfolio, with first exploration works commenced in Uruguay
Corporate Highlights
In February, Company entered into an Earn-in Agreement with Trilogy Mining Corporation to acquire a 100% interest in two gold exploration projects in Uruguay
US$10 million financing completed in May to fund the development of the Cap-Oeste open pit mine and heap leach pad and to provide ongoing working capital
Christopher van Tienhoven, CEO commented: "The improved political and economic environment in Argentina has had a very positive effect on our business and has enabled us to significantly reduce operating costs and improve efficiencies. We are delighted that the initial open pit mine at Cap-Oeste is coming into production on time and within budget and the outlook for the second half looks promising. Our pipeline of projects and exploration targets, coupled with the more favourable economic climate, stands us in good stead to continue to grow the Company and create value for our shareholders".
The unaudited interims report for the six months ended 30 June 2016 will also shortly be available on the Company's website at www.patagoniagold.com.
Webcast Details
The presentation will be made available on the Company's website (www.patagoniagold.com) immediately prior to the webcast.
DATE: Thursday, 29 September 2016
TIME: 14.00 BST
WEBCAST: http://webcasting.brrmedia.co.uk/broadcast/57e3bbf7c8dedf816611137b
A recording of the webcast will subsequently be made available on the Company's website - www.patagoniagold.com.
About Patagonia Gold
Patagonia Gold Plc is a mining company that seeks to grow shareholder value through exploration, development and production of gold and silver projects in the southern Patagonia region of Argentina. The Company is primarily focused on three projects: the flagship Cap-Oeste/COSE project, the La Manchuria project and the Lomada heap leach project. Patagonia Gold, indirectly through its subsidiaries or under option agreements, has mineral rights to over 220 properties in several provinces of Argentina and Chile, and is one of the largest landholders in the province of Santa Cruz.
For more information, please contact:
Christopher van Tienhoven, Chief Executive Officer
Patagonia Gold Plc
Tel: +54 911 5278 6950
Richard Tulloch / Ritchie Balmer
Strand Hanson Limited (Nominated Adviser and Broker)
Tel: +44 (0)20 7409 3494
This announcement contains inside information.
Chairman's introduction
I am pleased to present Patagonia Gold Plc's ("Patagonia" or the "Company") unaudited interim report for the six months ended 30 June 2016.
Patagonia Gold has had a good start to 2016 following the recent economic and political changes in Argentina. The removal of export royalties on doré and restriction on imports, a more competitive exchange rate and a higher than projected gold price have had a positive impact on the Company, with revenues of US$21.6 million (1H2015: US$14.0 million) and a net profit attributable to the Company of US$2.2 million (1H2015: Net loss of US$5.8 million) for the first six months of the year.
Having reached the end of its pit life, mining at Lomada de Leiva ("Lomada") was suspended, as planned, at the end of May 2016. However, leaching of gold continues and will continue at least until the end of the year. It is important to note that Lomada has exceeded production targets on a consistent basis since the start of the year.
In May, the Company successfully concluded a US$10.0 million financing to commence the development of the open pit mine at Cap-Oeste. The initial project consists of mining the oxide ore and treating it through a heap leach plant similar to that at Lomada. Total production from the initial project at Cap-Oeste, which has an expected life of mine of 24 months, is estimated to be 82,000 oz AuEq. Alternatives on how to mine and treat the sulphide ore at Cap-Oeste and COSE are currently being investigated and so far, encouraging results have been obtained.
The Company continues to seek to expand its resource base and exploration activities have commenced on its other properties in Santa Cruz Province namely El Bagual and Sarita.
In addition, as announced on 2 February 2016, the Company exercised its option to acquire, subject to certain milestones being achieved, up to 100% of Trilogy Mining Corporation's ("Trilogy") Carreta Quemada and Chamizo exploration gold projects in Uruguay ("Trilogy Option"). The Trilogy Option represents a good opportunity for the Company to acquire additional gold projects with good geological potential in a new jurisdiction, enabling the Company to diversify its regional operations and risks with initial exploration work having already commenced.
Details of the Company's other projects and activities in the year to date, are set out in more detail in the following Operations Report.
On 1 July 2016, the Company announced the resignation of Non-Executive Directors Ed Badida and Glenn Featherby. The Board has greatly appreciated the experience and support they have both contributed to the development of the Company.
These are exciting times for the Company with the changes being introduced in Argentina and the upturn in the gold sector. We are indebted to our shareholders for their continued support and our grateful thanks go also to our team for all their continued hard work and dedication. Our commitment to creating shareholder value through the development of our portfolio of properties remains our core focus going forward.
Carlos J Miguens
Non-Executive Chairman
28 September 2016
OPERATIONS REPORT
The following is a summary of the Company's operations, together with an update on exploration activities for the year to date.
Company's Properties
The Lomada de Leiva gold project (the "Lomada Project" or "Lomada") is located in the La Paloma property block approximately 120 kilometres to the north of the El Tranquilo property block. The Lomada pit mining operation ceased as of May 2016. Leaching of the heap leach stocks continues with production now forecast to carry on only until the end of the year as production has decreased faster than initially anticipated. However, as a result of the recent increases in the gold price and the removal of export royalties on doré, the Company is reassessing the viability of resources located in the southern end of the Lomada pit previously considered uneconomic.
The net profits obtained from production at Lomada are being utilised to meet a portion of the operating capital requirements for the construction of the open pit operations at Cap-Oeste and to fund ongoing exploration work across the Company's other projects. Patagonia's flagship project is the Cap-Oeste gold and silver project (the "Cap-Oeste Project") located in the El Tranquilo property block approximately 65 kilometres southwest of the town of Bajo Caracoles in Santa Cruz. Development of the Cap-Oeste open pit mine has now commenced with first gold sales from the project expected in October 2016.
Two kilometres along strike from the Cap-Oeste Project is the smaller but strategically vital Cap-Oeste South-East Project (the "COSE Project"). The Company plans to commence development and mining of the COSE Project in conjunction with the Cap-Oeste underground mine as one expanded project.
The La Manchuria property block is located approximately 50 kilometres to the southeast of the El Tranquilo property block and hosts the La Manchuria Project. JV options are currently being evaluated to realise cash flow and advance exploration on the block.
Exploration of the El Tranquilo block was halted in November 2015. First pass exploration of regional permits has been initiated together with first pass grass roots investigations at Las Lajas and Los Toldos. Follow-up work at La Manchuria and Sarita has also commenced.
Initial exploration work has also commenced across the Carreta Quemada and Chamizo projects in Uruguay. The first nine hole programme is now completed with assays pending and scheduled for October.
The JORC compliant resources delineated as at 31 December 2015 are listed in the table below:
Hot Features
Premium
INDICATED RESOURCES
------------------------------------------------------------------------------------------------------------
Area Indicated Grade (g/t) Metal (oz)
----------------------------------- ----------- --------------------- -----------------------------------
Name Tonnes Au Ag AuEq Au Ag AuEq**
----------------------------------- ----------- ------ ------ ----- ---------- ----------- ----------
La Manchuria 425,705 2.95 135 4.07 40,380 1,848,211 55,684
----------------------------------- ----------- ------ ------ ----- ---------- ----------- ----------
COSE 49,000 27.8 1,466 52.2 44,000 2,325,000 83,000
----------------------------------- ----------- ------ ------ ----- ---------- ----------- ----------
Cap-Oeste 14,585,000 1.82 56.32 2.76 855,000 26,407,000 1,295,000
----------------------------------- ----------- ------ ------ ----- ---------- ----------- ----------
Lomada* 4,000,465 0.48 NA NA 61,919 NA 61,919
----------------------------------- ----------- ------ ------ ----- ---------- ----------- ----------
TOTAL Indicated 1,001,299 30,580,211 1,495,603
----------------------------------- ----------- ------ ------ ----- ---------- ----------- ----------
INFERRED RESOURCES
------------------------------------------------------------------------------------------------------------
Area Inferred Grade (g/t) Metal (oz)
----------------------------------- ----------- --------------------- -----------------------------------
Name Tonnes Au Ag AuEq Au Ag AuEq**
----------------------------------- ----------- ------ ------ ----- ---------- ----------- ----------
La Manchuria 1,469,020 1.53 49.4 1.92 72,335 2,335,236 90,682
----------------------------------- ----------- ------ ------ ----- ---------- ----------- ----------
COSE 20,000 12.5 721 24.5 8,000 464,000 16,000
----------------------------------- ----------- ------ ------ ----- ---------- ----------- ----------
Cap-Oeste 8,392,000 1 25.79 1.43 269,000 696,000 385,000
----------------------------------- ----------- ------ ------ ----- ---------- ----------- ----------
Lomada 3,412,270 0.672 NA NA 73,726 NA 73,726
----------------------------------- ----------- ------ ------ ----- ---------- ----------- ----------
Total Inferred 423,061 3,495,236 565,408
----------------------------------- ----------- ------ ------ ----- ---------- ----------- ----------
INDICATED + INFERRED RESOURCES
------------------------------------------------------------------------------------------------------------
Au Ag AuEq**
----------------------------------- ----------- ------ ------ ----- ---------- ----------- ----------
Total indicated and inferred (oz) 1,424,360 34,075,447 2,061,011
----------------------------------- ----------- ------ ------ ----- ---------- ----------- ----------
*Lomada resource has not been depleted during 2016 to take account of production during the period, pending completion of third party estimation
** AuEq oz were calculated on the prevailing Au:Ag ratio at the date of publishing of the JORC/43-101 compliant resource reports for the individual projects
Argentina
Lomada de Leiva Project
2016 has seen a dramatic improvement in cash costs and production from the Lomada Project, with 16,889 ounces of gold produced to the end of June 2016 (1H2015: 9,944 ounces / FY2015: 21,521 ounces) at a cash cost of US$591/oz (1H2015: US$1,165/oz / FY2015: US$1,196/oz).
As a result of the improved production, increased gold price and reduced costs, in the first half of 2016 the Lomada Project achieved gross revenues of US$21.60 million (1H2015: US$14.05 million / FY2015: US$26.13 million) and a net profit of US$9.4 million (1H2015: Net loss of US$0.1 million / FY2015: Net loss of US$4.0 million).
The significant increase in production and reduction in costs experienced in the year to date, are predominantly a result of the dramatic improvement in machine availability. This is mainly due to import restrictions on spares having been lifted towards the end of 2015, which has enabled the Company to improve onsite maintenance and management of its plant, and thereby reduced the requirement to hire in equipment at significant additional cost.
As previously announced, operations at Lomada were suspended in May 2016 with the entire mining fleet relocated to the Cap-Oeste Project. The focus of the Company now is to reduce operating costs at Lomada.
As production from Lomada has decreased faster than originally expected, the heap leach pad will only continue to operate until the end of the year. Currently the main heap leach pad has received 85% of its design irrigation quota.
Exploration on the 40,000 hectare La Paloma block is ongoing and detailed ground magnetics together with a geochemical, trenching and drilling programme will be continuing throughout 2016. The objective is to replenish and expand the 30,000 ounces of production per annum and explore the previously under-explored La Paloma block. In addition, as stated above, following the recent increases in the gold price and the removal of export royalties, the Company is reassessing the viability of resources located in the Lomada pit previously considered uneconomic.
Cap-Oeste Project
The Cap-Oeste Project is the Company's flagship project and is located within a structural corridor extending six kilometres from the La Pampa prospect in the northwest to the Tango prospect in the southeast. To date, the Cap-Oeste deposit has an identified and delineated strike extent of 1.2 kilometres.
Following the updating of the Pre Feasibility Study (PFS) for Cap-Oeste funded by the US$10.0 financing completed in May 2016, the Company has now completed the construction of the initial low cost open pit mine at Cap-Oeste with a heap leach processing facility similar to that at Lomada. The optimised pit design, carried out on the existing JORC compliant Measured and Indicated Resources, contains a total of 5.6Mt of waste and 1.55Mt @ 2.3g/t Au and 85g/t Ag for a AuEq (69:1) of 3.53 g/t. The initial life of mine is expected to be 24 months, with forecast production estimated to be approximately 82,000 oz AuEq and an operating cost forecast to be within the range of US$800 to US$850 per oz, which includes the capital amortisation and working capital component of US$4.5 million.
Construction of the heap leach pad has now been completed and commissioned on time and within budget with the first ore now being irrigated and first gold sales expected during October 2016.
Underground mine development studies have been completed on the COSE and Cap-Oeste orebodies which contain deeper cyanide-leachable resources. Processing options remain either the possibility to agglomerate and heap leach the ore or assess third party treatment routes.
In respect of the underground mine at Cap-Oeste, metallurgical test work is continuing on the Arsenopyrite hosted mineralisation and recently completed flotation test work reported a 92.3% recovery of Au into a 62g/t cleaner concentrate with silver assays still pending. The concentrate will now be subjected to a series of leach tests with oxygen addition and fine grinding of the concentrate. Should the outcome of this test work show it to be economically viable, there is a potential to unlock high grade refractory ounces in the deeper section of the Cap-Oeste resource and thereby increase the project mine life to six years through the development of the two underground projects at Cap-Oeste and COSE.
COSE Project
Sourcing of used and new underground equipment for the development of the COSE and Cap-Oeste declines has commenced and a review of personnel available locally to develop an underground team for the mining of the projects is also under way. Full designs for both the COSE and Cap-Oeste projects have been completed and a renewal of the permit for the decline construction for COSE is in progress.
La Manchuria Project
PGSA is currently evaluating the possibility to JV the La Manchuria project with third parties in order to realise some cash flow from the deposit and to increase the exploration spend on existing targets within the Manchuria block. The block is highly prospective with over 145,000oz AuEq of JORC compliant Indicated and Inferred resources already delineated at La Manchuria.
To date no deal has been finalised and the market will be updated in due course.
Exploration Projects
Active greenfields and brownfields exploration has continued throughout the winter months on projects in Santa Cruz province, Argentina and in Uruguay in preparation for drill testing of priority targets before the end of the year.
Argentina
Regional geological mapping and surface sampling has been undertaken at the Los Toldos project in Santa Cruz, with particular attention to the El Bagual prospect that was inadequately drill tested by Barrick Gold Corporation during 2006 when drilling was curtailed prematurely due to budget constraints. A four hole diamond drilling programme is scheduled to test the prospect during November.
Mapping and surface sampling have been completed over the extensive Las Lajas project in central Santa Cruz.
Trenching and rotary air blast drilling at the Cerro Vasco prospect, located at the north of the La Paloma block, has confirmed the extension of the Brecha La Emilia fault zone to the south, beneath Quaternary gravels, as interpreted from ground magnetic and induced polarisation geophysical surveys completed at the prospect. A reverse circulation drilling programme is planned to test targets beneath the gravels before the end of the year.
At the El Tranquilo project, reverse circulation drilling is scheduled to commence at the beginning of October at the Monte Leon prospect, to delineate oxide gold mineralisation that may be scheduled into the Cap-Oeste heap-leach operation after the Cap-Oeste open pit reserves have been depleted.
Channel sampling of low sulphidation, silver bearing veins has been undertaken during the winter months at the Sarita project, located approximately 10 km north-west of Mina Martha silver mine. An induced polarisation geophysical survey is proposed to better define drill targets for a potential diamond drilling programme.
A thorough review of all the Company's projects in Chubut and Rio Negro provinces has been undertaken during 2016 to prioritise the tenure based on prospectivity and the possibility of improvements in the legislative situation for selected areas within these jurisdictions. New target areas have also been identified, with non-prospective areas likely to be relinquished as the Company seeks to rationalise its tenement portfolio in these provinces.
Uruguay
As a result of the Trilogy Option, the Company can acquire up to 100% of Carreta Quemada, which covers an area of 388km(2) , and Chamizo, which covers an area of 70km(2) , both located on the San José Greenstone Belt within the early Proterozoic Piedra Alta Terrane, approximately 100 kilometres from Montevideo, the capital of Uruguay.
Following the exercise of the option, exploration activity has escalated at the San José Gold Project in Uruguay. Geological mapping, soil and stream sediment geochemistry, ground magnetic and induced polarisation surveys have been, and continue to be conducted to define drill targets. Strong gold anomalism, reported from stream sediment and soil geochemical sampling has been reinforced by coincident anomalism in the geophysical surveys. Trenching and a nine-hole diamond drilling programme were completed at the Zona 13 prospect during August and September, with laboratory results anticipated in October. Subject to the results of the initial drilling and the requisite regulatory approvals being obtained, the Company will look to undertake further drilling in due course. Applications have been lodged for Prospecting Permits over two new project areas, Colla and Nueva Helvecia, located approximately 50km west of the Chamizo area. Sporadic exploration during the 1980s intersected ore-grade gold values in these very poorly exposed areas.
Social and economic responsibility
Patagonia maintains a strong awareness of its responsibilities towards the environment and existing social structures. Accordingly, attention is given to ensuring that all exploration and development work is carried out strictly within the guidelines of the relevant mining and environmental acts. Patagonia attempts, where possible, to hire local personnel and use local contractors and suppliers.
Matthew Boyes
Chief Operating Officer
28 September 2016
Condensed Consolidated Interim Statement of Comprehensive Income
Six months Six months
ended ended Year ended
30 June 30 June 31 December
2016 2015 2015
Note (unaudited) (unaudited) (audited)
--------------------------------- ----- ------------ ------------ ------------
$'000 $'000 $'000
Continuing operations
Revenue 21,601 14,047 26,128
Cost of sales (11,998) (13,960) (29,731)
------------ ------------ ------------
Gross profit / (loss) 9,603 87 (3,603)
--------------------------------- ----- ------------ ------------ ------------
Exploration costs (1,162) (3,562) (5,491)
--------------------------------- ----- ------------ ------------ ------------
Administration costs
Share-based payments
charge 23 (44) (32) (97)
Other administrative
costs 5 (4,186) (3,396) (11,304)
--------------------------------- ----- ------------ ------------ ------------
(4,230) (3,428) (11,401)
Finance income 16 875 2,832
Finance costs (617) (323) (782)
Profit / (Loss) before
taxes 3,610 (6,351) (18,445)
--------------------------------- ----- ------------ ------------ ------------
Income tax benefit/(charge) (1,142) 62 4,051
-----
Profit / (Loss) for the
period 2,468 (6,289) (14,394)
--------------------------------- ----- ------------ ------------ ------------
Attributable to non-controlling
interest 20 277 (503) (1,310)
Attributable to equity
share owners of the parent 2,191 (5,786) (13,084)
2,468 (6,289) (14,394)
Other comprehensive income
(loss)
Items that will not be
reclassified to profit
or loss:
Gain / (Loss) on revaluation
of available-for-sale
financial assets 17 3 (9)
Items that may be reclassified
subsequently to profit
or loss:
Exchange loss on translation
of foreign operations (1,614) (1,620) (5,521)
--------------------------------- ----- ------------ ------------ ------------
Other comprehensive loss
for the period (1,597) (1,617) (5,530)
--------------------------------- ----- ------------ ------------ ------------
Total comprehensive income
(loss) for the period 871 (7,906) (19,924)
--------------------------------- ----- ------------ ------------ ------------
Total comprehensive income
(loss) for the period
attributable to:
Non-controlling interest 277 (503) (1,310)
Owners of the parent 594 (7,403) (18,614)
--------------------------------- ----- ------------ ------------ ------------
871 (7,906) (19,924)
--------------------------------- ----- ------------ ------------ ------------
Net profit / (loss) per
share 7
Basic profit / (loss)
per share 0.002 (0.01) (0.01)
Diluted profit / (loss)
per share 0.002 (0.01) (0.01)
--------------------------------- ----- ------------ ------------ ------------
The accompanying notes are an integral part of these condensed consolidated interim financial statements.
Condensed Consolidated Interim Statement of Financial Position
As at As at As at
30 June 30 June 31 December
2016 2015 2015
Note (unaudited) (unaudited) (audited)
--------------------------- ----- ------------ ------------ ------------------------------
ASSETS $'000 $'000 $'000
Non-current assets
Property, plant
and equipment 9 10,884 9,730 6,327
Mineral properties 8 5,425 4,795 3,280
Mining rights 10 3,538 3,638 3,588
Available-for-sale
financial assets 13 22 20 7
Investments 13 325 - -
Other receivables 11 6,176 10,208 7,767
Deferred tax asset 3,691 2,810 4,790
30,061 31,201 25,759
--------------------------- ----- ------------ ------------ ------------------------------
Current assets
Inventory 14 2,593 1,737 2,253
Trade and other
receivables 12 5,574 1,703 455
Cash and cash equivalents 15 2,304 2,620 1,694
10,471 6,060 4,402
--------------------------- ----- ------------ ------------ ------------------------------
Total assets 40,532 37,261 30,161
--------------------------- ----- ------------ ------------ ------------------------------
LIABILITIES
Current liabilities
Short-term loans 17 11,482 7,207 13,346
Trade and other
payables 17 7,577 6,851 6,371
19,059 14,058 19,717
--------------------------- ----- ------------ ------------ ------------------------------
Non-current liabilities
Long-term loans 18 1,386 2,035 1,681
Provisions 18 525 1,059 607
1,911 3,094 2,288
--------------------------- ----- ------------ ------------ ------------------------------
Total liabilities 20,970 17,152 22,005
--------------------------- ----- ------------ ------------ ------------------------------
EQUTIY
Share capital 19 20,847 16,659 15,690
Share premium account 142,450 163,616 154,090
Currency translation
reserve 5,260 (19,403) (11,746)
Share-based payment
reserve 15,616 18,238 17,238
Accumulated losses (164,325) (159,245) (166,553)
--------------------------- ----- ------------ ------------ ------------------------------
Equity attributable
to shareholders
of the parent 19,848 19,865 8,719
--------------------------- ----- ------------ ------------ ------------------------------
Non-controlling
interest 20 (286) 244 (563)
Total equity 19,562 20,109 8,156
--------------------------- ----- ------------ ------------ ------------------------------
Total liabilities
and equity 40,532 37,261 30,161
--------------------------- ----- ------------ ------------ ------------------------------
The accompanying notes are an integral part of these condensed consolidated interim financial statements.
Condensed Consolidated Interim Statement of Changes in Equity
(Unaudited)
Equity attributable to shareholders
of the parent
--------------------------------------------------------------------------------------------------------------------
Share Currency Share-based Total Non-
Share premium translation payment Accumulated attributable controlling Total
capital account reserve reserve losses to owners interests equity
Note $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000
--------------- ----- -------- ----------------- -------------------- ------------------------ ------------------------ ------------- -------------------- -----------
At 1 January
2015 16,256 161,285 (15,453) 17,990 (153,461) 26,617 747 27,364
Changes in
equity for
first
six months
of 2015
Share-based
payment 23 - - - 33 - 33 - 33
Issue of
share capital
Issue in
lieu of
fees 19 210 409 - - - 619 - 619
Transactions
with owners 210 409 - 33 - 652 - 652
--------------- ----- -------- ----------------- -------------------- ------------------------ ------------------------ ------------- -------------------- -----------
Loss for
the period - - - - (5,786) (5,786) (503) (6,289)
Other
comprehensive
income
(loss):
Revaluation
of available-
for-sale
financial
assets - - - - 2 2 - 2
Exchange
differences
on
translation
to dollars 193 1,922 (3,950) 215 - (1,620) - (1,620)
Total
comprehensive
income
(loss) for
the period 193 1,922 (3,950) 215 (5,784) (7,404) (503) (7,907)
--------------- ----- -------- ----------------- -------------------- ------------------------ ------------------------ ------------- -------------------- -----------
At 30 June
2015 16,659 163,616 (19,403) 18,238 (159,245) 19,865 244 20,109
--------------- ----- -------- ----------------- -------------------- ------------------------ ------------------------ ------------- -------------------- -----------
At 1 January
2015 16,256 161,285 (15,453) 17,990 (153,461) 26,617 747 27,364
Changes in
equity for
year
ended 31
December
2015
Share-based
payment 23 - - - 97 - 97 - 97
Issue of
share capital
Issue by
placing 19 210 409 - - - 619 - 619
Transaction
costs of
placing - - - - - - - -
Exercise
of option - - - (1) 1 - - -
Transactions
with owners 210 409 - 96 1 716 - 716
--------------- ----- -------- ----------------- -------------------- ------------------------ ------------------------ ------------- -------------------- -----------
Loss for
the year - - - - (13,084) (13,084) (1,310) (14,394)
Other
comprehensive
income
(loss):
Revaluation
of available-
for-sale
financial
assets - - - - (9) (9) - (9)
Exchange
differences
on
translation
to dollars (776) (7,604) 3,707 (848) - (5,521) - (5,521)
Total
comprehensive
income
(loss) for
the period (776) (7,604) 3,707 (848) (13,093) (18,614) (1,310) (19,924)
--------------- ----- -------- ----------------- -------------------- ------------------------ ------------------------ ------------- -------------------- -----------
At 31 December
2015 15,690 154,090 (11,746) 17,238 (166,553) 8,719 (563) 8,156
--------------- ----- -------- ----------------- -------------------- ------------------------ ------------------------ ------------- -------------------- -----------
Changes in
equity for
first
six months
of 2016
Share-based
payment 23 - - - 44 - 44 - 44
Issue of
share capital 19 7,185 3,593 - - - 10,778 - 10,778
Issue by
placing
Transaction
costs of
placing - (287) - - - (287) - (287)
Lapse of
option - - - (20) 20 - - -
Transactions
with owners 7,185 3,306 - 24 20 10,535 - 10,535
--------------- ----- -------- ----------------- -------------------- ------------------------ ------------------------ ------------- -------------------- -----------
Profit for
the period - - - - 2,191 2,191 277 2,468
Other
comprehensive
income
(loss):
Revaluation
of available-
for-sale
financial
assets - - - - 17 17 - 17
Exchange
differences
on
translation
to dollars (2,028) (14,946) 17,006 (1,646) - (1,614) - (1,614)
Total
comprehensive
income
(loss) for
the period (2,028) (14,946) 17,006 (1,646) 2,208 594 277 871
--------------- ----- -------- ----------------- -------------------- ------------------------ ------------------------ ------------- -------------------- -----------
At 30 June
2016 20,847 142,450 5,260 15,616 (164,325) 19,848 (286) 19,562
--------------- ----- -------- ----------------- -------------------- ------------------------ ------------------------ ------------- -------------------- -----------
The accompanying notes are an integral part of these condensed consolidated interim financial statements.
Condensed Consolidated Interim Statement of Cash Flows
Six months Six months
ended ended Year ended
30 June 30 June 31 December
2016 2015 2015
(unaudited) (unaudited) (audited)
Note $'000 $'000 $'000
--------------------------------- ------- ------------ ------------ ------------
Operating activities
Net profit (loss) for
the period 2,468 (6,289) (14,394)
Adjustments for:
Finance income 13 (16) (875) (2,832)
Finance costs 617 323 782
Depreciation and amortization 8,9&10 1,262 1,343 2,728
Share issue in lieu
of payables - - 619
Decrease in available
for sale financial assets - 1,792 1,792
(Increase)/decrease
in inventory (340) 1,788 1,272
(Increase)/decrease
in trade and other receivables (3,528) 1,375 5,064
Decrease/(increase)
in deferred tax asset 1,099 (116) (2,096)
Decrease/(increase)
in trade and other payables 17 1,206 (1,390) (1,870)
Decrease in provisions 18 (82) (74) (526)
Share-based payments
charge 23 44 32 97
Net cash used in operating
activities 2,730 (2,091) (9,364)
--------------------------------- ------- ------------ ------------ ------------
Investing activities
Finance income 16 875 2,832
Purchase of property,
plant and equipment (6,373) (281) (454)
Additions to mineral
properties (2,746) (132) (93)
Increase in investments (325) - -
Proceeds from disposal 9 - 512 282
Net cash used in investing
activities (9,428) 974 2,567
--------------------------------- ------- ------------ ------------ ------------
Financing activities
Finance costs (617) (323) (782)
Increase in loans 17&18 15,925 5,710 18,516
Repayment of loans 17&18 (16,960) (6,957) (14,512)
Proceeds from issue
of share capital 19 10,778 619 -
Transaction costs of
placing 19 (287) - -
Net cash from financing
activities 8,839 (951) 3,222
--------------------------------- ------- ------------ ------------ ------------
Net decrease in cash
and cash equivalents 2,141 (2,068) (3,575)
Cash and cash equivalents
at beginning
of year 1,694 5,588 5,588
Effects of exchange
rate fluctuations on
cash and cash equivalents (1,531) (900) (319)
Cash and cash equivalents
at end of period 15 2,304 2,620 1,694
--------------------------------- ------- ------------ ------------ ------------
The accompanying notes are an integral part of these condensed consolidated interim financial statements.
The financial information represents the results of the parent company Patagonia Gold Plc ("Patagonia Gold" or the "Company") and its subsidiaries, collectively known as the "Group".
1. Basis of preparation
Patagonia Gold Plc is a company registered in England and Wales. The Company's ordinary shares are traded on the AIM market of the London Stock Exchange.
These unaudited condensed consolidated interim financial statements have been prepared in accordance with IAS 34 as adopted by the European Union and with the Companies Act 2006 applicable to companies reporting under IFRS. The Group's unaudited condensed consolidated interim financial statements have also been prepared in accordance with IFRS as issued by the International Accounting Standards Board ("IASB"). This condensed consolidated financial information does not comprise statutory financial statements within the meaning of Section 434 of the Companies Act 2006. Statutory financial statements for the year ended 31 December 2015 were approved by the Board of Directors on 14 April 2016. These financial statements which contained an unqualified audit report under Section 495 of the Companies Act 2006, with an emphasis of matter paragraph on the carrying value of investments in subsidiary companies, did not contain any statements under Section 498 (2) or (3) of the Companies Act 2006, and have been delivered to the Registrar of Companies in accordance with Section 441 of the Companies Act 2006.
The accounting policies applied in these condensed consolidated interim financial statements are consistent with those used in the annual consolidated financial statements for the year ended 31 December 2015. These condensed consolidated interim financial statements should be read in conjunction with the annual consolidated financial statements. The accounting policies have been applied consistently throughout the Group for the purposes of preparation of these condensed consolidated interim financial statements. There has been no change in critical accounting estimates from year-end.
2. Going concern
These condensed consolidated interim financial statements are prepared on a going concern basis, which the Directors believe to be appropriate.
Patagonia Gold has successfully transformed itself from a pure exploration company to fully fledged producer. Until Lomada de Leiva started commercial production in 2013 Patagonia Gold's focus was exploration work in its portfolio of properties in Chubut, Rio Negro and Santa Cruz. The Company started a small heap leach operation at Lomada de Leiva and to 30 June 2016 has produced a total of 81,647 ounces. Lomada had a relatively short life and in May 2016 the mining operation was suspended while exploration activity in the surrounding areas continues. Anticipating the end of the Lomada mine, the Company sought to advance the Cap-Oeste project through the construction of a heap leach operation similar to the one at Lomada. The capital cost of this project was estimated to be approximately $13.3 million, which has been funded from a successful fundraising of $10 million completed in May 2016 together with cash flow from Lomada and available credit lines. The development of the initial open pit mine at Cap-Oeste has been completed on time and within budget, with the first ore already having been loaded on to the pad and first gold sales expected during October 2016. The Directors
believe that the cash flow generated from this project is considered sufficient to lower the Company's debt position while at the same time enabling it to continue with its exploration activities. In addition, the Company is looking into the development of COSE and the Cap-Oeste sulphide resources which would be financed through internal cash flow, supplier credit and other project financing alternatives.
3. Recent accounting pronouncements
The following IFRS standards and amendments to existing standards have been published and are mandatory for the Company's accounting periods beginning on or after 1 January 2016 or later periods. The Company has not implemented early adoption:
-- IFRS 11 'Accounting for Joint Arrangements', effective for annual periods beginning on or after 1 January 2016. The amendments to IFRS 11 provide specific guidance on accounting for the acquisition of an interest in a joint operation ('JO') that is a business, to address diversity in practice;
-- IFRS 10, IFRS 12. IAS 28 "Investment Entities: Applying the Consolidation Exception', effective for annual periods beginning on or after 1 January 2016. The amendments address issues that have arisen in the context of applying the consolidation exception for investment entities;
-- IAS 27 'Separate financial statements', effective for annual periods beginning on or after 1 January 2016. The amendments reinstate the equity method as an accounting option for investments in subsidiaries, joint ventures and associates in an entity's separate financial statements; and
-- IAS 1 'Presentation of Financial Statements', effective for annual periods beginning on or after 1 January 2016. The amendments aim at clarifying IAS 1 to address perceived impediments to preparers exercising their judgement in presenting their financial reports.
The effect of the new standards and interpretations have been considered by management and are not expected to result in a material adjustment to the consolidated financial statements.
4. Segmental analysis
Management do not currently regard individual projects as separable segments for internal reporting purposes with the exception of the Lomada Project, which commenced commercial production in Q3 2013 and the Cap-Oeste Project where construction work has been completed. All revenue in the period is derived from sales of gold and silver.
The Group's net profit and its geographic allocation of total assets and total liabilities may be summarised as follows:
Net profit/(loss)
Six months Six months
ended ended Year ended
(Thousands of 30 June 30 June 31 December
$) 2016 2015 2015
-------------------- ----------- ----------- ------------
Argentina and
Chile (1) (6,542) (4,770) (9,710)
United Kingdom (385) (1,371) (569)
Canada - (21) (52)
Argentina - Lomada
Project 9,395 (127) (4,063)
2,468 (6,289) (14,394)
-------------------- ----------- ----------- ------------
(1) Segment represents other exploration projects.
Total assets
As at As at As at
(Thousands of 30 June 30 June 31 December
$) 2016 2015 2015
----------------------- -------- -------- ------------
Argentina and
Chile (1) 20,760 20,647 19,339
Argentina - Lomada
Project 9,374 13,606 9,371
United Kingdom 998 1,447 352
Argentina - COSE
Project 962 1,557 1,099
Argentina - Cap-Oeste
Project 8,438 - -
Canada - 4 -
40,532 37,261 30,161
----------------------- -------- -------- ------------
(1) Segment represents other exploration projects.
Total liabilities
As at As at As at
(Thousands of 30 June 30 June 31 December
$) 2016 2015 2015
----------------------- -------- -------- ------------
Argentina and
Chile (1) 13,972 10,316 12,706
Argentina - Lomada
Project 2,389 6,127 4,399
United Kingdom 950 705 4,900
Argentina - COSE - - -
Project
Argentina - Cap-Oeste 3,659 - -
Project
Canada - 4 -
20,970 17,152 22,005
----------------------- -------- -------- ------------
(1) Segment represents other exploration projects.
The Group's geographic allocation of exploration costs is as follows:
Six months Six months
ended ended Year ended
(Thousands of 30 June 30 June 31 December
$) 2016 2015 2015
Argentina (1) 1,162 3,562 5,491
--------------- ----------- ----------- ------------
(1) Segment represents exploration projects other than the Lomada Project, Cap-Oeste Project and the COSE Project.
From 1 September 2010 onwards, expenditures incurred at the Lomada Project are capitalised and disclosed as mineral properties - mining assets (See Note 8). From 1 April 2011 certain costs are included in inventory.
From 1 March 2011 onwards, expenditures incurred at the COSE Project are capitalised and disclosed as mineral properties - assets in the course of construction (See Note 8).
From 1 January 2016 onwards, expenditures incurred at the Cap-Oeste Project are capitalised and disclosed as mineral properties - assets in the course of construction (See Note 8).
Exploration costs incurred at all the other projects are written off to the statement of comprehensive income in the period they were incurred.
5. Other administrative costs
Six months Six months
ended ended Year ended
30 June 30 June 31 December
(Thousands of $) 2016 2015 2015
---------------------------- ----------- ----------- ------------
General and administrative 1,277 1,438 4,275
Argentine statutory
taxes 347 328 932
Professional fees 315 269 630
Payments under operating
leases 61 96 177
Foreign exchange 1,459 568 4,902
Parent and subsidiary
company Directors'
remuneration 310 378 722
Profit on sale of assets (71) (1,475) (1,465)
Depreciation charge 1,214 1,294 2,629
Amortisation of mining
rights 50 49 99
Depreciation allocated
to inventory (845) (932) (1,862)
Depreciation allocated
to mineral properties (83) - -
Impairment of inventory - 1,224 -
VAT expense/(income) 94 42 60
Consultancy fees 58 117 205
4,186 3,396 11,304
---------------------------- ----------- ----------- ------------
6. Remuneration of Directors and key management personnel
Parent company Directors' emoluments:
Six months Six months
ended ended Year ended
(Thousands 30 June 31 December
of $) 30 June 2016 2015 2015
------------ ------------- ----------- ------------
Directors
fees 193 241 433
Salaries 125 32 92
318 273 525
------------ ------------- ----------- ------------
In the six months ended 30 June 2016, the highest paid Director received $125 thousand (six months ended 30 June 2015: $57 thousand). This amount does not include any share-based payments charge.
Key management personnel emoluments:
Six months Six months
ended ended Year ended
(Thousands of 30 June 30 June 31 December
$) 2016 2015 2015
----------------------- ----------- ----------- ------------
Share-based payments
charge 44 32 97
Salaries 160 142 315
Other compensation,
including
short-term benefits 258 265 468
462 439 880
----------------------- ----------- ----------- ------------
7. Profit / (Loss) per share
The calculation of basic and diluted earnings per share is based on the following data:
Six months Six months
ended ended Year ended
30 June 30 June 31 December
2016 2015 2015
------------------------------------- -------------- --------------
Profit/(loss) after
tax (Thousands of
$) 2,191 (5,786) (13,084)
Weighted average
number of shares 1,556,918,389 1,047,855,280 1,053,955,080
Basic and diluted
profit/(loss) per
share ($) 0.002 (0.01) (0.01)
---------------------- -------------- -------------- --------------
There is no difference between the diluted loss per share and the basic loss per share presented. Due to the profit (loss) incurred in the period the effect of the share options in issue is anti-dilutive.
At 30 June 2016, there were 94,958,000 (30 June 2015: 95,258,000; 31 December 2015: 95,158,000) share options and 24,705,000 warrants (30 June 2015 and 31 December 2015: 24,705,000) in issue, which would have a potentially dilutive effect on the basic profit per share in the future.
8. Mineral properties
Assets
Surface in the
course
Mining rights of
(Thousands of
$) assets acquired construction Total
---------------------- ----------------- ---------------------- ------------------ ------------------
Cost
At 1 January 2015 3,211 1,850 1,664 6,725
Additions 130 - 2 132
Disposals - - - -
Exchange differences (192) (122) (109) (423)
----------------------
At 30 June 2015 3,149 1,728 1,557 6,434
---------------------- ----------------- ---------------------- ------------------ ------------------
Additions - - - -
Disposals - - - -
Exchange differences (847) (508) (458) (1,813)
---------------------- ----------------- ---------------------- ------------------ ------------------
At 31 December
2015 2,302 1,220 1,099 4,621
---------------------- ----------------- ---------------------- ------------------ ------------------
At 1 January 2016 2,302 1,220 1,099 4,621
Additions - - 2,746 2,746
Disposals - - - -
Exchange differences (269) (165) (149) (583)
At 30 June 2016 2,033 1,055 3,696 6,784
---------------------- ----------------- ---------------------- ------------------ ------------------
Amortization
At 1 January 2015 1,534 - - 1,534
Charge for the
period 213 - - 213
Exchange differences (108) - - (108)
---------------------- ----------------- ---------------------- ------------------ ------------------
At 30 June 2015 1,639 - - 1,639
---------------------- ----------------- ---------------------- ------------------ ------------------
Charge for the
period 248 - - 248
Exchange differences (546) - - (546)
---------------------- ----------------- ---------------------- ------------------ ------------------
At 31 December
2015 1,341 - - 1,341
---------------------- ----------------- ---------------------- ------------------ ------------------
At 1 January 2016 1,341 - - 1,341
Charge for the
period 208 - - 208
Exchange differences (190) - - (190)
At 30 June 2016 1,359 - - 1,359
---------------------- ----------------- ---------------------- ------------------ ------------------
Net book value
At 30 June 2015 1,510 1,728 1,557 4,795
---------------------- ----------------- ---------------------- ------------------ ------------------
At 31 December
2015 961 1,220 1,099 3,280
---------------------- ----------------- ---------------------- ------------------ ------------------
At 30 June 2016 674 1,055 3,696 5,425
---------------------- ----------------- ---------------------- ------------------ ------------------
Mining assets
The Lomada Project completed the trial heap leach phase and entered full commercial production in Q3 2013. From 1 September 2010 all development costs incurred in respect of the project have been capitalised as mineral properties - mining assets. The revenue received from the sale of gold and silver recovered from the Lomada trial heap phase was offset against the capitalised costs of Lomada Project development in compliance with IAS 16. Amortisation is charged based on the unit-of-production method.
Surface rights
The Company owns the surface rights to over 63,000 hectares of land encompassing the Estancia La Bajada, Estancia El Tranquilo and the Estancia El Rincon.
The Company has clear title and outright ownership over Estancia La Bajada and Estancia El Tranquilo. There is a back in right granted to the sellers under Estancia El Rincon's title deed whereby the Company irrevocably committed to resell the estancia to its former owner in the event that two consecutive years elapse without mining activities. Current activity on this estancia includes the Lomada de Leiva project.
Assets in the course of construction
From 1 March 2011, exploration costs on the COSE Project have been capitalised as mineral properties - assets in the course of construction, prior to the receipt of full permitting for extraction of the mineralisation.
From 1 January 2016, exploration costs on the Cap-Oeste Project have been capitalised as mineral properties - assets in the course of construction, prior to the receipt of full permitting for extraction of the mineralisation.
9. Property, plant and equipment
Office
equipment Machinery Improvements
and and and
(Thousands
of $) vehicles equipment Buildings Plant advances Total
-------------- ------------------- ----------------- ---------------- ------------------ ---------------- ----------------------
Cost
At 1 January
2015 606 8,707 777 8,810 69 18,969
Additions 106 105 - 70 - 281
Transfers 3 19 - - (22) -
Disposals (27) (904) - - - (931)
Exchange
differences (19) (572) (51) (579) (5) (1,226)
--------------
At 30 June
2015 669 7,355 726 8,301 42 17,093
-------------- ------------------- ----------------- ---------------- ------------------ ---------------- ----------------------
Additions 47 53 - 36 37 173
Transfers - 26 - 3 (29) -
Disposals (59) - - - - (59)
Exchange
differences (109) (2,125) (214) (2,418) (18) (4,884)
-------------- ------------------- At 31 December 2015 548 5,309 512 5,922 32 12,323 -------------- ------------------- ----------------- ---------------- ------------------ ---------------- ---------------------- At 1 January 2016 548 5,309 512 5,922 32 12,323 Additions 351 299 - 19 5,704 6,373 Transfers - 28 - - (28) - Disposals (52) - - - - (52) Exchange differences (31) (718) (70) (801) (5) (1,625) At 30 June 2016 816 4,918 442 5,140 5,703 17,019 -------------- ------------------- ----------------- ---------------- ------------------ ---------------- ---------------------- Depreciation At 1 January 2015 413 2,211 51 4,505 - 7,180 Disposals (27) (392) - - - (419) Charge for the period 50 415 7 609 - 1,081 Exchange differences (12) (146) (3) (318) - (479) -------------- At 30 June 2015 424 2,088 55 4,796 - 7,363 -------------- ------------------- ----------------- ---------------- ------------------ ---------------- ---------------------- Disposals (35) - - - - (35) Charge for the period 55 363 7 662 - 1,087 Exchange differences (113) (709) (19) (1,578) - (2,419) -------------- ------------------- At 31 December 2015 331 1,742 43 3,880 - 5,996 -------------- ------------------- ----------------- ---------------- ------------------ ---------------- ---------------------- At 1 January 2016 331 1,742 43 3,880 - 5,996 Disposals (52) - - - - (52) Charge for the period 54 270 5 675 - 1,004 Exchange differences (4) (247) (7) (555) - (813) At 30 June 2016 329 1,765 41 4,000 - 6,135 -------------- ------------------- ----------------- ---------------- ------------------ ---------------- ---------------------- Net book value At 30 June 2015 245 5,267 671 3,505 42 9,730 -------------- ------------------- ----------------- ---------------- ------------------ ---------------- ---------------------- At 31 December 2015 217 3,567 469 2,042 32 6,327 At 30 June 2016 487 3,153 401 1,140 5,703 10,884 -------------- ------------------- ----------------- ---------------- ------------------ ---------------- ----------------------
Improvements and advances at the year-end relate to the development and modification of software and plant, including advance payments.
10. Mining rights (Thousands of $) Amount ------------------------- ------------------- At 1 January 2015 $ 3,687 Additions - Amortisation charge for the period (49) Exchange differences - At 30 June 2015 $ 3,638 -------------------------- ------------------- At 1 January 2015 $ 3,687 Additions - Amortisation charge for the year (99) Exchange differences - At 31 December 2015 3,588 -------------------------- ------------------- At 1 January 2016 $ 3,588 Additions - Amortisation charge for the period (50) Exchange differences - At 30 June 2016 $ 3,538 -------------------------- -------------------
On 14 October 2011, Patagonia Gold, PGSA and Fomicruz entered into a definitive strategic partnership agreement in the form of a shareholders' agreement ("Fomicruz Agreement") to govern the affairs of PGSA and the relationship between the Company, PGSA and Fomicruz. Pursuant to the Fomicruz Agreement, Fomicruz contributed to PGSA the rights to explore and mine approximately 100,000 hectares of Fomicruz's mining properties in Santa Cruz Province in exchange for a 10% equity interest in PGSA. The Fomicruz Agreement establishes the terms and conditions of the strategic partnership for the future development of certain PGSA mining properties in the Province. The Company will fund 100% of all exploration expenditures on the PGSA properties to the pre-feasibility stage, with no dilution to Fomicruz. After feasibility stage is reached, Fomicruz is obliged to pay its 10% share of the funding incurred thereafter on the PGSA properties, plus annual interest at LIBOR +1% to the Company. Such debt and interest payments will be guaranteed by an assignment by Fomicruz of 50% of the future dividends otherwise payable to Fomicruz on its shares. Over a five-year period, the Company through PGSA is required to invest $5.0 million in exploration expenditures on the properties contributed by Fomicruz, whose rights to explore and mine were contributed to PGSA as part of the Fomicruz Agreement. The Company will manage the exploration and potential future development of the PGSA properties.
Fomicruz contributed to PGSA certain mining rights in exchange for a 10% equity interest in PGSA. Pursuant to IFRS 2 Share-based Payment, the mining rights acquired have been measured by reference to the estimated fair value of the equity interest given to Fomicruz. Management has estimated the fair value of the 10% interest in PGSA acquired by Fomicruz, on or about 14 October 2011 at $4.0 million. In determining this fair value estimate, management considered many factors including the net assets of PGSA and the illiquidity of the 10% interest. This amount has been recorded as an increase in the equity of PGSA and as a mining right asset. In the consolidated financial statements, the increase in equity in PGSA has been recorded as non-controlling interest. The initial share of net assets of PGSA ascribed to the non-controlling interest amounted to $4.0 million.
Management do not consider there to be any indications of impairment and no review of the carrying value has been undertaken.
The mining rights acquired by PGSA are for a forty-year period from the date of the agreement. As indicated above, these mining rights have been recorded as an intangible asset and are amortised on a straight-line basis over forty years commencing in 2012.
11. Other receivables
Non-current assets
As at As at As at
(Thousands of 30 June 31 December
$) 30 June 2016 2015 2015
------------------- ------------- -------- ------------
Recoverable VAT 5,878 9,889 7,549
Other receivables 298 319 218
6,176 10,208 7,767
------------------- ------------- -------- ------------
The Directors consider Recoverable VAT at 30 June 2016 to be recoverable in full based on post period-end approvals set by the Mining Secretary in Argentina.
The Directors have considered post year-end approvals set by the Mining Secretary in Argentina and consider the Recoverable VAT as at 30 June 2016 to be recoverable in full and no provision is considered necessary. The VAT balances receivable are normally due to the Group in less than one year, but these amounts have been classified as a non-current asset as management's on-going dialogue with the government indicate approval by the Mining Secretary and receipt of the funds may require a timeframe of more than one year.
12. Trade and other receivables
Current assets
As at As at As at
(Thousands of 30 June 30 June 31 December
$) 2016 2015 2015
--------------------- -------- -------- ------------
Other receivables 587 1,586 426
FOMICRUZ (1) 3,011 - -
Prepayments and
accrued income 21 92 24
UK Recoverable
VAT 7 12 5
ARG Recoverable
VAT 1,948 - -
Recharge of costs owed by
Landore
Resources Limited - 13 -
5,574 1,703 455
--------------------- -------- -------- ------------
(1) See Note 10.
All trade and other receivable amounts are short-term.
The carrying value of all trade and other receivables is considered a reasonable approximation of fair value.
There are no past due debtors.
13. Available-for-sale financial assets, finance income and Investments
Available-for-sale financial assets
The Company holds available-for-sale financial assets in listed equity securities that are publically traded on the AIM market. Fair values have been determined by reference to their quoted bid prices at the reporting date. The following unrealised losses are included in accumulated other comprehensive income.
As at As at As at
30 June 30 June 31 December
(Thousands of $) 2016 2015 2015
-------------------- -------- -------- ------------
Opening balance 7 18 18
Profit /(loss) for
the period 15 2 (11)
Closing balance 22 20 7
-------------------- -------- -------- ------------
The following table presents financial assets and liabilities measured at fair value in the statement of financial position in accordance with the fair value hierarchy. This hierarchy groups financial assets and liabilities into three levels based on the significance of inputs used in measuring the fair value of the financial assets and liabilities. The fair value hierarchy has the following levels:
-- Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities;
-- Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices); and
-- Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).
The level within which the financial asset or liability is classified is determined based on the lowest level of significant input to the fair value measurement.
The financial assets and liabilities measured at fair value in the statement of financial position are grouped into the fair value hierarchy as follows:
(Thousands Level Level Level
of $) 1 2 3 Total
------------------- ------ ------ ------ ------
As at 30 June
2016
Listed securities 22 - - 22
------------------- ------ ------ ------ ------
As at 30 June
2015
Listed securities 20 - - 20
------------------- ------ ------ ------ ------
As at 31 December
2015
Listed securities 7 - - 7
------------------- ------ ------ ------ ------
Finance Income
As at As at As at
30 June 30 June 31 December
(Thousands of $) 2016 2015 2015
------------------ -------- -------- ------------
Bank Interest 16 36 1
Income from sale
of bonds - 839 2,831
Finance income 16 875 2,832
------------------ -------- -------- ------------
Investments
In January 2016, Patagonia Gold entered into an option agreement with Trilogy Mining Corporation ("Trilogy") to acquire up to 100% of the San José Project in Uruguay. This joint venture business with Trilogy represents a great opportunity to acquire additional gold projects with good geological potential in a new jurisdiction, enabling the Company to diversify its regional operations and risks.
14. Inventory
Inventory comprises gold held on carbon and is valued by reference to the costs of extraction, which include mining and processing activities. Inventory and work in process is valued at the lower of the costs of extraction or net realisable value. Inventories sold are measured by reference to the weighted average cost.
15. Cash and cash equivalents
As at As at As at
(Thousands of 30 June 30 June 31 December
$) 2016 2015 2015
--------------------- -------- -------- ------------
Bank and cash
balances 2,242 2,320 1,617
Short-term deposits 62 300 77
2,304 2,620 1,694
--------------------- -------- -------- ------------
16. Finance lease obligations
As at As at As at
(Thousands of 30 June 30 June 31 December
$) 2016 2015 2015
----------------- -------- -------- ------------
Within one year 11,482 7,207 13,346
Within two to
three years 1,386 2,035 1,681
12,868 9,242 15,027
----------------- -------- -------- ------------
At 30 June 2016 PGSA had finance lease agreements for two Toyota vehicles and one Ford F-400 truck.
17. Trade and other payables
Current liabilities
As at As at As at
(Thousands of 30 June 30 June 31 December
$) 2016 2015 2015
------------------ -------- -------- ------------
Trade and other
payables 6,671 6,281 5,598
Short term loans 11,482 7,207 13,346
Other accruals 906 570 773
19,059 14,058 19,717
------------------ -------- -------- ------------
The carrying values of trade and other payables are considered to be a reasonable approximation of fair value.
The Group takes short term loans for the purpose of financing ongoing operational requirements. The Group's short term loans are denominated in USD and are at fixed rates of interest. Loans are provided from a range of banks.
18. Long term loans and provisions
As at As at As at
(Thousands of 30 June 30 June 31 December
$) 2016 2015 2015
----------------- -------- -------- ------------
Long term loans 1,386 2,035 1,681
Provisions 525 1,059 607
1,911 3,094 2,288
----------------- -------- -------- ------------
The Group takes long term loans for the purpose of financing ongoing operational requirements. The Group's long term loans granted to PGSA are denominated in $ and are at fixed rates of interest. Long term loans are provided by an Argentinian bank and backed by a Letter of Guarantee from the Company.
The carrying values of the provisions are considered to be a reasonable approximation of fair value. The timing of any resultant cash outflows are uncertain by their nature. The movement in the provisions are comprised of the following:
Reclamation
and
(Thousands remediation
of $) provision(i) Tax provision(ii) Other(iii) Total
---------------------- -------------- ------------------ ----------- ------
Balance at
1 January 2016 373 198 36 607
Net additions - - - -
Use of allowance - - - -
Exchange differences (50) (27) (5) (82)
Balance at
30 June 2016 323 171 31 525
---------------------- -------------- ------------------ ----------- ------
(i) Reclamation and remediation provision relates to the environmental impact of works undertaken at the balance sheet date.
(ii) Tax provision for withholding tax on foreign suppliers. (iii) Includes provision for road traffic accident. (Note 25.) 19. Share capital
Authorised
Issued and fully paid ordinary
shares of 1p each Number of
ordinary
($0.013) shares Amount
------------------------------------ ------------------------- ---------------------
At 1 January 2015 1,046,602,323 $ 16,256
Issue in lieu of professional
fees 1,111,111 17
Issue in lieu of Director's
fees 12,241,993 193
Exchange difference on translation
to $ - 193
At 30 June 2015 1,059,955,427 $ 16,659
------------------------------------ ------------------------- ---------------------
At 1 January 2015 1,046,602,323 $ 16,256
Issue in lieu of professional
fees 1,111,111 17 Issue in lieu of Director's fees 12,241,993 193 Exchange difference on translation to $ - (776) At 31 December 2015 1,059,955,427 $ 15,690 ------------------------------------ ------------------------- --------------------- At 1 January 2016 1,059,955,427 $ 15,690 Issue by placing 496,962,962 7,185 Exchange difference on translation to $ - (2,028) At 30 June 2016 1,556,918,389 $ 20,847 ------------------------------------ ------------------------- ---------------------
Issue by placing
On 11 May 2016, the Company issued 462,962,962 new ordinary shares of, each at a price of 1.50 pence per share raising $10.0 (GBP6.7 million) under the terms of the Subscription and Open Offer dated 22 April 2016. The cost of the placement totalled $286.6 thousand (GBP198.4 thousand) resulting in net proceeds of $9.7 million (GBP6.7 million). $6.7 million (GBP4.6 million) of the net proceeds are included in share capital and the balance of $3.0 million (GBP2.1 million) is included in share premium.
Due to additional demand from investors, on 25 May 2016 the Company issued a further 34,000,000 new ordinary shares under the same terms, raising $747 thousand (GBP510 thousand).
20. Non-controlling interest
GROUP
(Thousands of $) Amount -------------------------- ------ At 1 January 2016 (563) Share of operating profit - Lomada de Leiva 277 ---------------------------- ------ At 30 June 2016 (286) ---------------------------- ------
On 14 October 2011, Patagonia Gold, PGSA and Fomicruz entered into the Fomicruz Agreement (Note 10). Pursuant to the Fomicruz Agreement, Fomicruz contributed to PGSA the rights to explore and mine approximately 100,000 hectares of Fomicruz's mining properties in Santa Cruz Province in exchange for a 10% equity interest in PGSA.
The fair value of the rights to explore and mine approximately 100,000 hectares has been estimated by management at $4.0 million in accordance with IFRS 2 Share-based Payments. This amount has been recorded as an increase in the equity of PGSA and as mining rights. In the consolidated financial statements, the increase in equity of PGSA has been recorded as non-controlling interest.
The share of operating profit (losses) relates to Lomada de Leiva which commenced production in 2013.
21. Operating lease commitments
At the balance sheet date, the Group had outstanding annual commitments under non-cancellable operating leases. The totals of future minimum lease payments under non-cancellable operating leases for each of the following periods are:
As at As at As at
(Thousands of 30 June 30 June 31 December
$) 2016 2015 2015
------------------ -------- -------- ------------
Operating leases
which expire:
Within one year 76 212 141
Within two to
five years 11 134 25
After five years - - -
87 346 166
------------------ -------- -------- ------------
The Group has a number of operating lease agreements involving office and warehouse space with maximum terms of three years.
22. Related parties
During the period, the following transactions were entered into with related parties:
Six months Six months
ended ended Year ended
(Thousands of Notes 30 June 30 June 31 December
$) 2016 2015 2015
------------------- ------- ----------- ----------- ------------
Landore Resources
Limited (i) - 59 30
Cheyenne S.A. (ii) 12 6 6
Agropecuaria
Cantomi S.A. (iii) 58 66 126
------------------- ------- ----------- ----------- ------------
(i) In prior periods the Company recharged costs, consisting mainly of accommodation and travel expenses, to Landore Resources Limited ("Landore") and there was a balance owing to the Company from Landore at 30 June 2016 of $Nil (30 June 2015: $13 thousand; 31 December 2015: $Nil). Landore was a related party because William H. Humphries, who was a director of the Company until June 2015, is a director and shareholder of that company.
(ii) During the period the Group paid Cheyenne S.A. ("Cheyenne") for the provision of a private plane to facilitate occasional travel to outlying areas for Directors and senior employees. Cheyenne is a related party because Carlos J. Miguens, the Company's Chairman, is a director and shareholder of Cheyenne.
(iii) During the period the Group paid Agropecuaria Cantomi S.A. ("Agropecuaria") for the provision of an office in Buenos Aires. Agropecuaria is a related party because Carlos J. Miguens, the Company's Chairman, is a director and shareholder of Agropecuaria.
23. Share-based payments
The Group operates a share option plan under which certain employees and Directors have been granted options to subscribe for ordinary shares of the Company.
The number and weighted average exercise prices of share options are as follows:
30 June 2016 31 December 2015
----------------------------------------- ------------------------------------------
Weighted Weighted
average average
Number Number
exercise price of exercise price of
pence $ options pence $ options
------------------- ------------ -------------- ----------- ------------ -------------- ------------
Outstanding
at the beginning
of the period 13.97 $0.207 95,158,000 15.46 $0.242 85,383,000
Granted during
the period - - - 2.50 0.037 10,000,000
Exercised during - - - - -
the period -
Lapsed during
the period 14.50 0.194 (200,000) 7.72 0.114 (225,000)
------------------- ------------ -------------- ----------- ------------ -------------- ------------
Outstanding and
exercisable at
the end of the
period 13.97 $0.187 94,958,000 13.97 $0.207 95,158,000
------------------- ------------ -------------- ----------- ------------ -------------- ------------
Options outstanding at 30 June 2016 have an exercise price in the range of $0.033 (2.50p) per option to $0.830 (62.00p) per option and a weighted average contractual life of 5.5923 years.
The fair value of services received in return for share options granted is measured by reference to the fair value of share options granted. The estimate of the fair value of the services received is measured based on the Black-Scholes model. Details of contractual life and assumptions used in the model are disclosed in the table below.
Six months
ended Year ended
30 June 31 December
2016 2015
-------------------------------- --------------- ---------------
Weighted average share price 2.50p ($0.035) 2.50p ($0.037)
Exercise price 2.50p ($0.035) 2.50p ($0.037)
Expected volatility (expressed
as a percentage used in the
modelling under Black-Scholes
model) 52.00% 52.00%
Dividend yield nil nil
Option life (maximum) 10 years 10 years
Risk free interest rate (based
on national government bonds) 0.5% 0.5%
-------------------------------- --------------- ---------------
The expected volatility is wholly based on the historic volatility (calculated based on the weighted average remaining life of the share options).
All options are share settled and there are no performance conditions attached to the options.
Amounts expensed for the year from share-based payments are as follows:
Six months Six months
ended ended Year ended
30 June 30 June 31 December
(Thousands of $) 2016 2015 2015
--------------------------- ----------- ----------- ------------
New options granted
in the period - 32 97
Part vested options - -
granted in prior periods 44
----------- -----------
$44 $32 $97
--------------------------- ----------- ----------- ------------
The share-based payments charge is a non-cash item.
The total number of options over ordinary shares outstanding at 30 June 2015 was as follows:
Remaining
Exercise contractual
Date of No of price life
grant Employees entitled options (pence) (years)
-------------- ------------------------ ----------- --------- -------------
1 March
2007 Employees 75,000 6.875 0.67
23 May 2007 Senior management 200,000 8.0 0.89
5 June 2007 Director and employees 1,100,000 8.0 0.93
5 June 2007 Employee 25,000 10.5 0.93
3 June 2008 Director and employees 1,125,000 8.0 1.92
9 June 2009 Employees 1,175,000 12.0 2.94
23 June Directors and
2009 senior management 17,913,000 12.25 2.98
17 June Directors and
2010 employees 5,850,000 15.00 3.97
1 August
2010 Employee 300,000 15.00 4.09
10 February
2011 Directors 5,500,000 11.00 4.62
21 February
2011 Senior management 800,000 11.00 4.65
9 May 2011 Employees 500,000 43.50 4.86
Directors and
13 May 2011 senior management 4,400,000 11.00 4.87
24 May 2011 Senior management 1,000,000 39.00 4.90
10 June
2011 Employees 1,250,000 11.00 4.95
10 June
2011 Employees 925,000 40.00 4.95
15 August
2011 Employee 200,000 62.00 5.13
1 September
2011 Senior management 500,000 11.00 5.17
1 November
2011 Directors 750,000 11.00 5.34
1 November
2011 Directors 750,000 50.25 5.34
6 December
2011 Employee 20,000 54.00 5.44
31 January Directors and
2012 senior management 4,500,000 11.00 5.59
1 July 2012 Senior management 1,500,000 25.00 6.00
3 December Senior management
2012 and employees 3,000,000 22.75 6.43
9 January
2013 Directors 14,500,000 22.75 6.53
27 February
2013 Senior management 1,000,000 15.50 6.66
12 June
2013 Employee 150,000 10.50 6.95
12 September
2013 Directors 1,500,000 11.00 7.20
19 September Director and senior
2013 manager 6,000,000 11.75 7.22
10 October
2013 Employees 1,450,000 11.75 7.28
25 July Director and senior
2014 manager 7,000,000 7.875 8.07
31 March
2015 Senior management 10,000,000 2.50 8.75
-------------- ------------------------ ----------- --------- -------------
Total 94,958,000
---------------------------------------- ----------- --------- -------------
24. Financial commitments
Property, plant and equipment
During the period the Group entered into purchase commitments totalling $0.2 million (31 December 2015: $0.1 million) related to the purchase of two Toyota vehicles and one Ford F-400 truck, instalments are payable to the vendor over 37 instalments.
Fomicruz Agreement
On the Fomicruz properties, whose rights to explore and mine were contributed to PGSA as part of the Fomicruz Agreement signed on 14 October 2011, the Company will invest $5.0 million on exploration expenditures over five years.
Barrick Agreement
In March 2011, Patagonia Gold agreed with the Barrick Sellers to amend the original property acquisition agreement regarding the Cap-Oeste, COSE, Manchuria and Lomada gold and silver deposits, whereby the "Back in Right" was exchanged for a 2.5% NSR royalty, effective immediately. The NSR royalty does not apply to the Company's Santa Cruz properties acquired outside the Barrick Agreement, or to those acquired in the Fomicruz Agreement. A liability for potential future NSR payments has not been recognised since the Company is unable to reliably measure such a liability as the project has not yet commenced production and there is no certainty over the timing of potential future production.
A further cash payment of $1.5 million will become payable to Barrick upon the delineation of 200,000 ounces or greater of gold or gold equivalent NI 43-101 Indicated resource on the La Paloma Property Group.
25. Contingent liability
As shown in Note 18, provisions at 30 June 2016 include an amount provided in relation to one contingent liability.
Road Traffic Accident
In October 2011 and March 2012, following a fatal road traffic accident in Argentina, compensation claims were made outside of the life insurance policy held by PGSA. These are non-judicial claims against PGSA that have been partially settled through a mediation process among PGSA, the automobile insurance company, and the claimants. According to those settlement agreements, the automobile insurance company paid the agreed compensations to the claimants, while PGSA committed to afford some of the court expenses and settlement fees. On 7 October 2014, PGSA was notified of the judicial complaint for compensation for moral damages, loss of economic aid, and expenses, filed by the inheritors of one of the victims against PGSA, amounting to US$0.14 million (AR$2.1 million) plus interest. As at 30 June 2016, although the plaintiff claims compensation relating to loss of economic aid and expenses, those items have already been covered under an out-of-court previous settlement by the labor risk insurance company of PGSA. As at that date, the claim remains partially outstanding with respect to the moral damages item and a provision of US$31 thousand (AR$470 thousand) has been recorded.
26. Subsequent events
On 7 July 2016, 30,164,550 new ordinary shares of 1p each in the Company were issued in lieu of the outstanding fees owed to Directors for their services, accrued from periods ranging from 1 January 2012 to 30 June 2016 under each Director's terms of appointment. The shares were deemed to be allotted for cash at a market price of 1.954 pence each, being the volume weighted average share price for the Company for the 30 day period prior to the date of the announcement. The Company also allotted 666,666 new ordinary shares to certain of the Company's advisers in lieu of cash payments.
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR LPMLTMBMTBRF
(END) Dow Jones Newswires
September 29, 2016 02:00 ET (06:00 GMT)
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