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Condor Gold PLC (Company number: 05587987)
Report and Accounts Year ended 31 December 2013
CONDOR GOLD PLC
CONTENTS OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2013
TABLE OF CONTENTS
----------------------------------------------------------------------------
Highlights
Chairman's Statement
Strategic Report
Project Overview
Review of Operations
Report of the Directors
Report of the Independent Auditor
Consolidated Statement of Comprehensive Income
Consolidated Statement of Financial Position
Consolidated Statement of Changes in Equity
Company Statement of Financial Position
Company Statement of Changes in Equity
Consolidated Statement of Cash Flows
Company Statement of Cash Flows
Notes to the Financial Statements
CONDOR GOLD PLC
HIGHLIGHTS
FOR THE YEAR ENDED 31 DECEMBER 2013
Condor Gold PLC ("Condor", the "Company" or the "Group"), an AIM listed company
focused on delineating a large commercial reserve on its La India Project in
Nicaragua, announces its results for the year ended 31 December 2013.
Highlights
-- La India Project total mineral resource to NI 43-101 standards updated
in November 2013 of 18.4Mt at 3.9g/t for 2.33M oz gold and 2.68M oz
silver at 6.2g/t. Indicated resources +43% and Open Pit resources +20%.
-- GBP 7m private placement of new ordinary shares at GBP 1.60 per share
completed in February 2013.
-- Preliminary Economic Assessment ("PEA") to NI 43-101 standards completed
in March 2013. Details conceptual mine producing 152,000 oz gold per
annum for first 8 years of 13 year mine life.
-- PEA has robust economics: NPV US$325m, IRR 33%, pay back on capital
equipment of 3 years, low operating cash cost US$575 per oz gold net of
3% royalty and 30% corporation tax.
-- 139 drill holes for 20,137m drilling completed in period. Best drill
results 4.80m at 37.24g/t gold, 6.80m at 13.00g/t gold, 21.00m at
3.33g/t gold. Continuity of mineralisation and grade confirmed with
infill drilling in La India Open Pit.
-- 1,836m geotechnical drilling completed, aimed at steepening the pit wall
used in PEA.
-- Purchase of adjacent HEMCO-SRP-NS concession for US$250,000 in shares at
GBP 2.00 per share increased La India Project land area by 44% to 280sq
km.
-- Environmental and Social Impact Assessment ("ESIA") made excellent
progress.
-- Metallurgical test work to Pre-Feasibility Study ("PFS") level
completed, results show 93% to 96% recoverable gold.
-- Geophysics flown over entire 280sq km La India Project provides
additional exploration targets.
-- Drill result of 9.00m at 10.70g/t gold to the south of the current
resource on la India Open Pit demonstrates the gold mineralisation is
open along strike and to depth.
Post Period Highlights
Test work in support of the PFS has continued to advance in the first months of
2014:
-- A pump test has been completed with favourable results in support of a
dewatering program
-- Lycopodium has been selected as the design engineer for the plant,
components of the infrastructure capital expenditure estimate and an
operating cost estimate for processing.
-- Pit geotechnical work has been completed pending final pit selection.
-- Environmental baseline studies needed for the PFS are largely complete.
-- Preliminary waste rock geochemistry results suggest that acid drainage
will not be a problem.
-- Suitable tailings, waste dump and plant sites have been identified.
-- Rock chip sampling completed on 7 exploration targets within La India
Project
To view the PDF document, visit the following link:
http://media3.marketwire.com/docs/Report_and_Accounts_YearEnded2013.pdf
CONDOR GOLD PLC
CHAIRMAN'S STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2013
Dear Shareholder,
I am pleased to announce Condor Gold PLC's ("Condor" or "the Company" or "the
Group", www.condorgold.com) annual report for the 12 month financial year to
31st December 2013. During the year the Company made the transition from
exploration to resource development, focusing on the economic feasibility of
exploiting the flagship La India Project in Nicaragua. An updated NI 43-101
Mineral Resource Estimate was completed on 8th November 2013. Several studies
required for inclusion in a Pre-Feasibility Study ("PFS") were either commenced
or completed during the period, with both the geotechnical and metallurgical
studies completed to PFS level of competency. SRK Consulting (UK) Ltd ("SRK")
was awarded all studies to PFS level on La India Project.
Condor has completed 23,600m of drilling since the 2012 mineral resource
estimate, bringing the total drilled on La India Project to date to 62,000m. An
updated independent technical Mineral Resource Estimate for La India Project
using the National Instrument 43-101 standard of disclosure in accordance with
the Canadian Institute of Mining, Metallurgy and Petroleum (CIM) Standards, was
produced by SRK on 8th November 2013. The final report provides a significant
amount of detail about La India Project including but not limited to: the
project geology, exploration drilling and sampling, data quality and quantity,
data validation, the geological model and the classification and reporting
criteria. Shareholders and potential investors should take comfort from the
quality of work that has gone into producing an updated NI 43-101 technical
report for La India Project.
The current La India Project total mineral resource estimate is 18.4Mt at 3.9g/t
for 2.33M oz gold and 2.68M oz silver at 6.2g/t. Total gold equivalent is 2.37M
oz. The mineral resource in the higher indicated category of confidence
increased by 43% to 9.6Mt at 3.5g/t for 1.08M oz gold. The Inferred mineral
resource is 8.8Mt at 4.4g/t for 1.25M oz gold. The total open pit resource
increased 20% to 1.14M oz gold at 3.1g/t split between three deposits all within
a 2km radius. The bulk of the open pit resource is within the La India Open Pit
which accounts for 920,000 oz at 3.0g/t gold. The identification of two feeder
pits, the America Open Pit with 160,000 oz at 4.2g/t and the Central Breccia
Open Pit with 57,000 oz gold at 1.9g/t should help mine scheduling.
A geotechnical report to PFS level of confidence was completed in October 2013
following a 1836m geotechnical drilling programme. It was designed to test the
competency and strength of the host rock and determine the optimal pit angles
for the La India Open Pit resource.
Metallurgical studies to the PFS level of confidence were completed and show
good recovery rates, further de-risking the La India Project. La India Vein Set
gold recoveries range from 90% to 92% and the America Vein Set from 94% to 95%.
These recovery estimates include a 2% reduction from the reported extractions to
allow for plant inefficiencies. Most importantly, there are no unpleasant
surprises. SRK Consulting (U.S.) Inc has recommended that gold mineralised ore
can be processed by industry-standard whole-ore cyanidation with a standard
carbon-in-pulp (CIP) process flowsheet.
Condor completed a 3,351 line kilometer helicopter-borne geophysics survey
covering the entire 280 sq km La India Project, which has confirmed that there
remains considerable exploration upside for La India Project. The radiometric
survey provides a powerful regional mapping tool. The magnetics survey can be
used as an indirect tool for target delineation by the interpretation of zones
of magnetite destruction and are of sufficient detail to make a realistic
structural interpretation. Eight targets were identified as under-explored areas
within prospective geological settings. La India Project has large areas that
show surface expressions of gold mineralisation, which have yet to be drilled.
SRK completed an NI 43-101 compliant Preliminary Economic Assessment ("PEA"),
announced on the 5th March 2013 based on the 5th November 2012 NI 43-101 Mineral
Resource estimation. The PEA for La India Project details average annual gold
production of 152,000 oz gold for the first 8 years of an initial mine life of
13 years. Total production of 1,463,000 oz gold over the Life of Mine is at an
average operating cost of US$575 per oz gold; production is split evenly between
open pit and underground mining. The NPV of US$325m and IRR of 33% used a
US$1,400 gold price when gold was over US$1,600 per oz and are after a 3%
government royalty and 30% corporation tax. The payback period for the capital
equipment is 3 years.
CONDOR GOLD PLC
CHAIRMAN'S STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2013
Shortly after the release of the PEA the gold price fell approximately 25% to
US$1,200 per oz or US$400 per oz between mid March and early July 2013.
Fortunately, the Company raised GBP 7m at GBP 1.60 via a placement of new
ordinary shares in February 2013. The Board and senior management reacted to the
fall in the gold price by re-sizing La India Project ahead of a PFS using only
open pit resources. The decision was taken to focus on producing a smaller open
pit only operation and defer the underground mining potential identified in the
PEA until a later date to be funded out of future cash-flow or when market
conditions improved. Approximately 14,000m of in-fill drilling was completed in
La India Open Pit, 5,500m drilling on the America historic mine workings
targeting an open pit resource and 2,700m drilling on the Central Breccia
prospect, again targeting an open pit resource. A 3,000m trench programme was
completed on La Mestiza Vein Set, which host a resource of 334,000 oz gold at
7.0g/t to determine the likelihood of a feeder pit. The grades and widths of
gold mineralisation from previous drilling are significantly better than the
surface gold mineralisation. The Company concluded
that Mestiza is an underground rather than open pit target and the decision was
taken not to undertake a further drill programme on Mestiza to include in the
PFS. All drilling stopped in September 2013.
The PFS will be focused on a base case La India Open Pit only scenario. La India
Open Pit resource of 921,000 oz gold at 3.1g/t comprises 840,000 oz gold in the
Indicated category and 81,000 oz gold in the Inferred category. Under 43-101
standards, only Indicated ounces can be used in a PFS. There will be an annex to
the PFS showing the potential upside of including a further 300,000 oz gold open
pittable resources (81,000 oz gold in the Inferred category in La India Open
Pit, 160,000 oz gold on America Open Pit and 58,000 oz gold on the Central
Breccia Open Pit) in a Bankable Feasibility Study ("BFS"). The Company's
strategy is to produce the base case PFS on the 840,000 oz gold in the Indicated
category in La India Open Pit and proceed directly to a BFS with either the base
case only or with the base case plus the inclusion of additional 300,000 oz gold
open pittable resources. The later option will require between 8,000m to 10,000m
drilling to bring these additional ounces into the Indicated category for
inclusion in a BFS.
Irene Chow was hired as Chief Environmental Officer in April 2013, she has
accelerated several studies required in an Environmental Social Impact
Assessment ("ESIA"). Surface water flow monitoring weirs have been constructed
at five sites and ground water levels are being monitored at 24 locations on a
weekly basis. Several phases of water quality monitoring have already been
completed. Condor has completed several studies and collected enough data to
produce an ESIA to PFS level of confidence, including but not limited to:
hydrology and hydrogeology studies, fauna and flora studies, land use,
agriculture and soil characterization survey, meteorological studies, air
quality studies, geomorphology studies, environmental legacy, environmental and
social vulnerability and risks, a population census, artisanal miner survey and
stakeholder engagement plan.
Dave Crawford joined on 1st December 2013 as Chief Operating Officer. He has 37
years experience in the mining industry. He most recently completed 5 years at
Newmont Mining Company in Denver Colorado as its Study Director, Major Capital
Projects; which involved the valuation of properties for possible acquisition,
direction of evaluation teams, and development of strategies for identification
of prospective takeover targets. Dave Crawford spends over half his time at La
India Project and is tasked with taking the Project to PFS and BFS.
Condor also holds 100% ownership of three other concessions in Nicaragua; the
Estrella and Potrerillos concessions, which contain historic gold mine workings,
and the Rio Luna Concession, which contains a JORC Inferred Resource of 694,000
tonnes at 4.4g/t for 86,000 oz gold equivalent. In addition, the Company has a
20% interest in a fourth Concession, Cerro Quiroz, which contains established
gold mineralisation and is adjacent to B2Gold's operating gold mine at La
Libertad.
In El Salvador, Condor's JORC Resource of 747,000 oz gold and 22.38 million oz
silver or 1,120,000 oz gold equivalent at 2.6g/t remained unchanged during the
period due to the moratorium on all exploration and mining in El Salvador. In
2011, 10% of the Company's resource in El Salvador was gifted to a UK Charitable
Foundation whose beneficiaries are the most needy and poor in that country.
The moratorium on metallic mining in the Republic of El Salvador ("El Salvador")
has now been in place for just over 6 years. In November 2013, OceanaGold
Corporation completed the purchase of Pacific Rim Mining for circa US$12m or
US$7 per total resource ounce gold equivalent. Mick Wilkes, Managing Director
and CEO of OceanaGold is quoted in the announcement: "Our Company has a long and
successful track record of operating gold mines in partnership with local
communities in a safe and sustainable manner and we look forward to working with
our key stakeholders in El Salvador to unlock the significant opportunity that
exists at El Dorado for the people of El Salvador". OceanaGold produces 325,000
oz gold per annum in New Zealand and the Philippines. A new President of El
Salvador is due to be inaugurated in June 2014. It is unclear whether he is
pro-mining.
CONDOR GOLD PLC
CHAIRMAN'S STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2013
We continue to carefully monitor developments in El Salvador in relation to the
present moratorium. Although there is a clear risk that the El Salvador
exploration licences and related intangible assets may become impaired should
the outcome of the Government's consideration be a decision to pass a law
prohibiting metallic mining, the Board has concluded, particularly in light of
the US$315m damages being claimed by Pacific Rim, and the takeover of Pacific
Rim by OceanaGold that they are not currently impaired. However, in the
circumstances, the Board continues its policy of not capitalising further
expenditure in relation to the El Salvador projects. The El Salvador assets
carrying value included within this report total GBP 4.3m.
Turning to the financial results for the year 2013, the operating loss was GBP
2,917,034 (2012: GBP 3,258,653). Additionally, the Company raised GBP 7,284,660
(2012: GBP 6,788,268) through the exercise of options, and private placements.
The Company made foreign exchange losses of GBP 219,298 (2012: GBP 169,824). The
decrease of cash and cash equivalents was GBP 731,673 (2012: increase of GBP
1,283,822). The net cash balance at 31st December 2013 was GBP 2,268,470.
The strategy for 2014 is to produce a base case Pre-Feasibility Study on 840,000
oz gold in the Indicated category in La India Open Pit and demonstrate the
upside potential of La India Project by rock chip sampling and trenching on
several exploration targets outside the existing resource area. On completion of
a PFS the Company will proceed directly to a Bankable Feasibility Study with
either the base case or with the base case plus the inclusion of an additional
300,000 oz gold open pittable resources that are currently excluded from the
PFS. The later option will require between 8,000m to 10,000m drilling to bring
these additional ounces into the Indicated category for inclusion in a BFS. Only
Indicated ounces can be used in a PFS and BFS. There will be an annex to the PFS
showing the potential upside of including a further 300,000 oz gold open
pittable resources (81,000 oz gold in the Inferred category in La India Open
Pit, 160,000 oz gold on America Open Pit and 58,000 oz gold on the Central
Breccia) in a BFS. Condor is concluding a 3,000m trench programme on 5
exploration targets within La India Project identified by the airborne
geophysics survey.
CONDOR GOLD PLC
STRATEGIC REPORT
FOR THE YEAR ENDED 31 DECEMBER 2013
REVIEW OF DEVELOPMENTS AND FUTURE PROSPECTS
The Group's financial performance for the year was in line with Directors'
expectations. The Group loss after taxation for the year to 31 December 2013
amounted to GBP 2,908,667 (2012: GBP 3,256,013). No dividends were paid during
the year.
The Group, at the end of the financial period has interests in seven concessions
in the La India Mining District and a further four in four project areas in
Nicaragua, and four licences in two project areas in El Salvador. The Company
will continue to assess each individually with the intention of focusing on core
concessions with the highest probability of producing an economic resource, and
principally at La India. The Company is currently investing in the La India
concession which is discussed in greater detail in the 'Operations Report and
Projects Overview.' Operations in El Salvador are curtailed by the Government
moratorium on all exploration and mining in that country. The El Salvador
operation has been reduced to an administrative role until environmental and
drill permits are awarded, this situation is described in detail in 'Principal
Risks and Uncertainties' below.
KEY PERFORMANCE INDICATORS
The key indicator of performance for the Group is its success in identifying,
acquiring, developing and divesting investments in projects so as to create
shareholder value.
Control of bank and cash balances is a priority for the Group and these are
budgeted and monitored closely to ensure that it maintains adequate liquid
resources to meet financial commitments as they arise.
At this stage in its development, quantitative key performance indicators are
not an effective way to measure the Group's performance.
However, a qualitative summary of performance in the period in the Chairman's
Statement and the Operations Report and Project Overview is an effective way of
measuring the key performance of the Company.
PRINCIPAL RISKS AND UNCERTAINTIES
In common with other companies operating in natural resources exploration, the
Group's activities are speculative and involve a high degree of risk.
The Group's exploration work involves participation in geological work
programmes. Interpretations of the results of these programmes are dependent on
judgements and assessments that are speculative and these interpretations are
applied in designing further work programmes to which the Company can commit
significant resources.
Work programmes often involve drilling and other geological work that present
significant engineering challenges that are subject to unexpected operational
problems. Furthermore activities generally take place in remote locations that
can be subject to unexpected climate events, possible acts of terrorism,
criminal threats, piracy and potential environmental risks.
The Group operates in different countries where political, economic, legal,
regulatory and social uncertainties are potential risk factors. In this regard,
political uncertainties in El Salvador, in particular in relation to the ongoing
moratorium in processing applications for exploration and mining, have resulted
in operational delays in that country.
During the past few years to date considerable progress was made in El Salvador:
-- In March 2010, the Government of El Salvador ('GoES') placed a tender
for an independent 'Strategic Environment Study on the Metallic Mining
Sector in El Salvador' ('EAE') to inform the GoES how to conduct mining
in a safe, secure and environmentally friendly manner.
-- In September 2010 the Ministry of Economy ('MINEC') and the Ministry of
Foreign Affairs announced that Tau Consultora Ambiental of Spain (the
'Tau Group') (www.taugroup.com) had been awarded the contract for SES.
-- In December 2010, GoES finalised the appointment of a Supervisory
Committee to assist GoES on the interpretation of the Tau Group's EAE.
-- In September 2011, the Tau Group completed the EAE and submitted it to
GoES, a copy is available on the internet.
-- In May 2012, Condor's Chairman met with the Director of the Department
for Regulating Hydrocarbons and Mines at his office in the Ministry of
the Economy in San Salvador.
-- The Company has received assurances from a number of relevant Government
officials that it will maintain its concession areas following the
outcome of the moratorium process.
-- In March 2013 Pacific Rim announced an independent valuation of its 1.7m
oz reserves in El Salvador being worth over $300m. Pacific Rim is
currently engaged in legal proceedings with GoES over the ongoing
moratorium, and currently claiming $315m in damages.
-- In November 2013, OceanaGold Corporation completed the purchase of
Pacific Rim Mining for circa US$12m or US$7 per total resource ounce
gold equivalent.
It is the Company's view that although the situation remains uncertain and it is
unlikely that the necessary environmental and drilling approvals to enable
re-commencement exploration programmes on key projects will be forthcoming in
the near future, the indications are that the GoES will allow exploration and
mining following the EAE, Mining Policy Review and amendments to the current
Mining Law. The Company considers the damages being claimed by Pacific Rim, and
the purchase of Pacific Rim by OceanaGold to be encouraging for the El
Salvadorian assets. In the meantime operations in El Salvador remain on a care
and maintenance basis.
GOING CONCERN
The operations of the Group are currently financed from funds which the Company
has raised from shareholders. The Group has not yet earned revenues and is still
in the exploration phase of its business. In common with many exploration
companies, the Company raises finance for its exploration and appraisal
activities in discrete tranches to finance its activities for limited periods
only. Further funding will be required from time to time to finance the
Company's activities. The Directors prepare and monitor cash flow projections
based on different funding scenarios and make assumptions about the availability
of additional finance in the future.
The consolidated financial statements have been prepared on a going concern
basis. The Directors consider the going concern basis to be appropriate based on
cash flow forecasts and projections and current levels of commitments, cash and
cash equivalents.
FINANCIAL RISK MANAGEMENT
The Group's operations expose it to financial risks that include credit risk,
liquidity risk, and market risks. The Group does not have any debt and is not
therefore required to use derivative financial instruments to manage interest
rate costs nor is hedge accounting applied.
1. Credit risk
Credit risk is the risk of financial loss to the Group if a customer or
counterparty to a financial instrument fails to meet its contractual
obligations, and arises principally from the Group's receivables from customers
and investment securities.
The Group and the Company's financial assets comprise receivables and cash and
cash equivalents. The credit risk on cash and cash equivalents is limited
because the counterparties are banks with high credit-ratings assigned by
international credit rating agencies. The credit risk on trade and other
receivables is limited to the Group's receivable of GBP 978,715. The exposure of
the Group and the Company to credit risk arises from default of its
counterparty, with maximum exposure equal to the carrying amount of cash and
cash equivalents in the Group's Statement of Financial Position. The Group does
not have any significant credit risk exposure to any single counterparty or any
group of counterparties having similar characteristics. The Group defines
counterparties as having similar characteristics if they are connected entities.
The Group does not hold any collateral as security.
2. Liquidity risk
Liquidity risk is the risk that the Group will not be able to meet its financial
obligations as they fall due. The Group's approach to managing liquidity is to
ensure, as far as possible, that it will always have sufficient liquidity to
meet its liabilities when due, under both normal and stressed conditions,
without incurring unacceptable losses or risking damage to the Group's
reputation.
To ensure liquidity, the Group maintains sufficient cash and cash equivalents on
demand to meet its obligations as and when they fall due. The Group actively
manages its working finance to ensure that sufficient funds exist for operations
and planned expansion.
3. Market risks
Market risk is the risk that changes in market prices, such as foreign exchange
rates, interest rates and equity prices will affect the Group's income or the
value of its holdings of financial instrument. The objective of market risk
management is to manage and control market risk exposures within acceptable
parameters, while optimising return on risk.
i. Pricing and risks
The Directors consider there to be minimal price risk to the business. The
Group, however, does have an unlisted equity investment whose price is exposed
to market factors and realisation of which is dependent on the existence of
willing buyers and therefore beyond the Group's control.
ii. Interest rate cash flow risk
The Group does not have interest bearing liabilities. Interest bearing assets
are only cash balances that earn interest at a floating rate.
iii. Foreign exchange risk
The Group principally operates in US Dollars. The Directors believe that the
contracts for transfers of funds to Central America are so small that there
would be no benefit gained from hedging these contracts in the market. As such,
currency is bought at the spot rates prevailing on the days transfers are to
take place. This situation is monitored on a regular basis, and at present the
Group does not have any formal policy for hedging against exchange exposure. The
Group may, when necessary, enter into foreign currency forward contracts to
hedge against exposure from currency fluctuations, however, the Group has not
entered into any currency forward contracts to date.
4. Capital risk management
The Group manages its capital to ensure that entities within the Group will be
able to continue individually as going concerns, while maximising the return to
Shareholders through the optimisation of debt and equity balances. The Group
manages its capital structure and makes adjustments to it, in the light of
changes in economic conditions. To maintain or adjust its capital structure, the
Group may adjust or issue new shares or raise debt. No changes were made in the
objectives, policies or processes during the years ended 31 December 2013 and 31
December 2012. The capital structure of the Group consists of equity
attributable to equity holders of the parent, comprising issued capital,
reserves and retained losses as disclosed in the Consolidated Statement of
Changes in Equity.
ON BEHALF OF THE BOARD:
M L Child, Chairman
Date: 04 June 2014
CONDOR GOLD PLC
PROJECT OVERVIEW
FOR THE YEAR ENDED 31 DECEMBER 2013
CURRENT CONCESSION HOLDINGS
Nicaragua Projects
============================================================================
Project Concession Ownership Expiry Date Area (km2)
============================================================================
La India Project La India 100% Owned January 2027 68.50
--------------------------------------------------------
Espinito Mendoza 100% Owned November 2026 2.00
--------------------------------------------------------
Cacao 100% Owned January 2032 11.90
--------------------------------------------------------
Santa Barbara 100% Owned April 2034 16.20
--------------------------------------------------------
Real de la Cruz 100% Owned January 2035 7.66
--------------------------------------------------------
Rodeo 100% Owned January 2035 60.40
--------------------------------------------------------
La Mojarra 100% Owned June 2029 27.00
--------------------------------------------------------
HEMCO-SRP-NS (to be 100% Owned August 2035 86.39
renamed La Cuchilla)
--------------------------------------------------------
Subtotal 280.05
----------------------------------------------------------------------------
Boaco Rio Luna 100% Owned June 2035 43.00
----------------------------------------------------------------------------
RAAN Estrella 100% Owned April 2035 18.00
----------------------------------------------------------------------------
Nueva Segovia Potrerillos 100% Owned December 2031 12.00
----------------------------------------------------------------------------
La Libertad-Santo Cerro Quiroz 20% Owned April 2035 22.50
Domingo District
============================================================================
TOTAL 375.55
============================================================================
All concessions in Nicaragua are combined exploration and exploitation
concessions.
El Salvador Projects
============================================================================
Project Concession Ownership Expiry Date(i) Area (km2)
============================================================================
La Calera La Calera 100% Owned under moratorium 42.00
----------------------------------------------------------------------------
El Pescadito El Pescadito 100% Owned under moratorium 50.00
--------------------------------------------------------
Carolina 100% Owned under moratorium 40.50
--------------------------------------------------------
El Gigante 100% Owned under moratorium 42.50
============================================================================
TOTAL 175.00
============================================================================
(i)All exploration and mining licences in El Salvador are currently under El
Salvador's moratorium on mining and exploration activity. Condor owns 90%
interest in El Salvador (remaining 10% gifted to the Condor Resources El
Salvador Charitable Foundation).
CURRENT GLOBAL CIM/JORC CODE MINERAL RESOURCE
The following Mineral Resource estimations have been reported by independent
geologists in accordance with the terms and definitions of the CIM/JORC Code.
The Mineral Resource Estimations for Nicaragua were completed by SRK Consulting
(UK) Ltd. and for El Salvador by Geosure Exploration and Mining Solutions (La
Calera and part of Pescadito) and Ravensgate Resources (part of Pescadito).
--------------------------------------------------------------------
Tonnes Gold Silver
(kt) Grade Contained Grade Contained
(g/t) (koz) (g/t) (koz)
--------------------------------------------------------------------
Nicaragua Projects (100% Condor owned)
--------------------------------------------------------------------
La India 9,600 3.5 1,076 6 1,780
Project 8,800 4.4 1,252 7 900
--------------------------------------------------------------------
Total 18,400 3.9 2,328 6 2,680
--------------------------------------------------------------------
Rio Luna 694 3.5 80 56 500
====================================================================
Total 19,100 3.9 2,407 7 3,182
--------------------------------------------------------------------
El Salvador Projects (90% Condor owned)
--------------------------------------------------------------------
Pescadito 7,100 1.9 434 97 22,100
--------------------------------------------------------------------
La Calera 6,000 1.6 313 - -
====================================================================
Total 13,100 1.8 747 53 22,380
====================================================================
Grand Total 32,200 3.0 3,154 34 25,553
====================================================================
----------------------------------------------------------------------------
Tonnes Gold Equivalent CIM/JORC
(kt) Grade Contained Attributable Category
(g/t) (koz) Contained
(koz)
----------------------------------------------------------------------------
Nicaragua Projects (100% Condor owned)
----------------------------------------------------------------------------
La India 9,600 3.6 1,103 1,103 Indicated
Project 8,800 4.5 1,265 1,265 Inferred
----------------------------------------------------------------------------
Total 18,400 4.0 2,368 2,368 Ind + Inf
----------------------------------------------------------------------------
Rio Luna 694 4.4 86 86 Inferred
============================================================================
Total 19,100 4.0 2,454 2,454 Ind+Inf
----------------------------------------------------------------------------
El Salvador Projects (90% Condor owned)
----------------------------------------------------------------------------
Pescadito 7,100 3.4 764 688 Inferred
----------------------------------------------------------------------------
La Calera 6,000 1.6 317 285 Inferred
============================================================================
Total 13,100 2.6 1,081 964 Inferred
============================================================================
Grand Total 32,200 3.5 3,535 3,427 Inferred
============================================================================
Note that tonnage is rounded to nearest 10,000t, gold grade is rounded to
nearest 0.1g/t, silver and gold equivalent grade to nearest 1g/t, contained
gold and gold equivalent to nearest 1,000oz and contained silver to nearest
10,000oz. Gold equivalent is calculated using silver:gold ratio of 67:1.
Attributable gold is calculated as 90% interest in El Salvador licences
(remaining 10% gifted to the Condor Resources El Salvador Charitable
Foundation).
CURRENT LA INDIA PROJECT CIM CODE MINERAL RESOURCE
The following Mineral Resource estimations details SRK's CIM compliant Mineral
Resource Statement as at 8th November 2013 for the La India Project, as signed
off by Ben Parsons, a Competent Person as defined by the CIM Code.
----------------------------------------------------------------------------
SRK MINERAL RESOURCE STATEMENT SPLIT PER VEIN as of 7 November 2013
(4),(5),(6)
----------------------------------------------------------------------------
Category Area Name Vein Name Cut-Off gold
------------------------
Tonnes Au Au
(kt) Grade (Koz)
(g/t)
----------------------------------------------------------------------------
Indicated La India La India/ 0.5g/t 8,402 3.1 838
veinset California(1) (OP)
La India/ 2.0g/t 610 5.0 98
California(2) (UG)
-----------------------------------------------------------------
America America 0.5g/t 226 8.4 61
veinset Mine (OP)
America 2.0g/t 358 6.8 79
Mine (UG)
----------------------------------------------------------------------------
Inferred La India La India/ 0.5g/t 1,057 2.4 81
veinset California(1) (OP)
Teresa(3) 0.5g/t 6 6.9 1
(OP)
------------------------
La India/ 2.0g/t 1,095 5.2 183
California(2) (UG)
Teresa(2) 2.0g/t 80 11.1 28
(UG)
-------------------------------------
Arizona(3) 1.5g/t 430 4.2 58
Agua 1.5g/t 40 9.0 13
Caliente(3)
-----------------------------------------------------------------
America America 0.5g/t 957 3.2 99
veinset Mine (OP)
------------------------
America 2.0g/t 839 4.8 129
Mine (UG)
------------------------
Guapinol(3) 1.5g/t 751 4.8 116
-----------------------------------------------------------------
Mestiza Tatiana(3) 1.5g/t 1,080 6.7 230
veinset
Buenos 1.5g/t 210 8.0 53
Aires(3)
Espenito(3) 1.5g/t 200 7.7 50
-----------------------------------------------------------------
Central Central 0.5g/t 939 1.9 57
Breccia Breccia(1) (OP)
-----------------------------------------------------------------
San Lucas San 1.5g/t 330 5.6 59
Lucas(3)
-----------------------------------------------------------------
Cristalito- Cristalito- 1.5g/t 200 5.3 34
Tatescame Tatescame(3)
-----------------------------------------------------------------
El Cacao El Cacao(3) 1.5g/t 590 3.0 58
----------------------------------------------------------------------------
(1) The open pit mining and the Mineral Resource Estimates are constrained
within Whittle optimised pits, which SRK based on the following parameters:
A Gold price of USD1500 per ounce of gold with no adjustments. Prices are
based on experience gained from other SRK Projects. Metallurgical recovery
assumptions of 93% for gold, based on assumptions provided by the Company
Marginal costs of USD16.4/t for processing, USD3.8/t G&A and USD2.2/t for
mining, slope angles defined by the Company Geotechnical study which range
from angle 40 - 48 degrees.
(2) Underground mineral resources beneath the open pit are reported at a
cut-off grade of 2.0 g/t over a minimum width of 1.0m. Cut-off grades are
based on a price of USD1500 per ounce of gold and gold recoveries of 93
percent for resources, costs of USD16.4/t for processing, USD10.0/t G&A and
USD50.0/t for mining, without considering revenues from other metals.
(3) Mineral resources as previously quoted by SRK (22 December 2011) are
reported at a cut-off grade of 1.5 g/t, and have not been updated as part
of the current study due to no further detailed exploration.
(4) Mineral Resources are not Ore Reserves and do not have demonstrated
economic viability. All figures are rounded to reflect the relative
accuracy of the estimate and have been used to derive sub-totals, totals
and weighted averages. Such calculations inherently involve a degree of
rounding and consequently introduce a margin of error. Where these occur,
SRK does not consider them to be material. All composites have been capped
where appropriate. The Concession is wholly owned by and exploration is
operated by Condor Gold plc.
(5) The reporting standard adopted for the reporting of the MRE uses the
terminology, definitions and guidelines given in the Canadian Institute of
Mining, Metallurgy and Petroleum (CIM) Standards on Mineral Resources and
Mineral Reserves (December 2005) as required by NI 43-101.
(6) SRK Completed a site inspection to the deposit by Mr Benjamin Parsons,
MSc (MAusIMM(CP), Membership Number 222568, an appropriate "independent
qualified person" as this term is defined in National Instrument 43-101.
----------------------------------------------------------------------------
--------------------------------------------------------------------
SRK MINERAL RESOURCE STATEMENT SPLIT PER VEIN as of 7 November 2013
(4),(5),(6)
--------------------------------------------------------------------
Category Area Name Vein Name Cut-Off silver
----------------
Ag Ag
Grade (Koz)
(g/t)
--------------------------------------------------------------------
Indicated La India La India/ 0.5g/t 5.5 1,475
veinset California(1) (OP)
La India/ 2.0g/t 11.0 216
California(2) (UG)
---------------------------------------------------------
America America 0.5g/t 5.3 38
veinset Mine (OP)
America 2.0g/t 4.4 51
Mine (UG)
--------------------------------------------------------------------
Inferred La India La India/ 0.5g/t 4.1 139
veinset California(1) (OP)
Teresa(3) 0.5g/t
(OP)
----------------
La India/ 2.0g/t 11.4 403
California(2) (UG)
Teresa(2) 2.0g/t
(UG)
-----------------------------
Arizona(3) 1.5g/t
Agua 1.5g/t
Caliente(3)
---------------------------------------------------------
America America 0.5g/t 5.8 178
veinset Mine (OP)
----------------
America 2.0g/t 6.6 179
Mine (UG)
----------------
Guapinol(3) 1.5g/t
---------------------------------------------------------
Mestiza Tatiana(3) 1.5g/t
veinset
Buenos 1.5g/t
Aires(3)
Espenito(3) 1.5g/t
---------------------------------------------------------
Central Central 0.5g/t
Breccia Breccia(1) (OP)
---------------------------------------------------------
San Lucas San 1.5g/t
Lucas(3)
---------------------------------------------------------
Cristalito- Cristalito- 1.5g/t
Tatescame Tatescame(3)
---------------------------------------------------------
El Cacao El Cacao(3) 1.5g/t
--------------------------------------------------------------------
(1) The open pit mining and the Mineral Resource Estimates are
constrained within Whittle optimised pits, which SRK based on the
following parameters: A Gold price of USD1500 per ounce of gold
with no adjustments. Prices are based on experience gained from
other SRK Projects. Metallurgical recovery assumptions of 93% for
gold, based on assumptions provided by the Company Marginal costs
of USD16.4/t for processing, USD3.8/t G&A and USD2.2/t for mining,
slope angles defined by the Company Geotechnical study which range
from angle 40 - 48 degrees.
(2) Underground mineral resources beneath the open pit are reported
at a cut-off grade of 2.0 g/t over a minimum width of 1.0m. Cut-off
grades are based on a price of USD1500 per ounce of gold and gold
recoveries of 93 percent for resources, costs of USD16.4/t for
processing, USD10.0/t G&A and USD50.0/t for mining, without
considering revenues from other metals.
(3) Mineral resources as previously quoted by SRK (22 December 2011)
are reported at a cut-off grade of 1.5 g/t, and have not been
updated as part of the current study due to no further detailed
exploration.
(4) Mineral Resources are not Ore Reserves and do not have
demonstrated economic viability. All figures are rounded to reflect
the relative accuracy of the estimate and have been used to derive
sub-totals, totals and weighted averages. Such calculations
inherently involve a degree of rounding and consequently introduce
a margin of error. Where these occur, SRK does not consider them to
be material. All composites have been capped where appropriate. The
Concession is wholly owned by and exploration is operated by Condor
Gold plc.
(5) The reporting standard adopted for the reporting of the MRE uses
the terminology, definitions and guidelines given in the Canadian
Institute of Mining, Metallurgy and Petroleum (CIM) Standards on
Mineral Resources and Mineral Reserves (December 2005) as required
by NI 43-101.
(6) SRK Completed a site inspection to the deposit by Mr Benjamin
Parsons, MSc (MAusIMM(CP), Membership Number 222568, an appropriate
"independent qualified person" as this term is defined in National
Instrument 43-101.
--------------------------------------------------------------------
Summary of La India Project Mineral Resource Estimate per Vein Set.
----------------------------------------------------------------------
SRK MINERAL RESOURCE STATEMENT SPLIT PER VEINSET as of 7 November 2013
----------------------------------------------------------------------
Category Area Name Vein Name Cut-Off gold
------------------------
Tonnes Au Au
(kt) Grade (Koz)
(g/t)
----------------------------------------------------------------------
Indicated Subtotal La India 0.5g/t 8,402 3.10 838
Areas veinset (OP)
2.0 g/t 610 5.01 98
(UG)
------------------------------------------------
America 0.5g/t 226 8.41 61
veinset (OP)
2.0g/t 358 6.83 79
(UG)
----------------------------------------------------------------------
Inferred Subtotal La India 0.5g/t 1,063 2.41 82
Areas veinset (OP)
2.0 g/t 1,174 5.60 212
(UG)
1.5g/t 470 4.70 71
------------------------------------------------
America 0.5g/t 957 3.22 99
veinset (OP)
2.0g/t 839 4.79 129
(UG)
1.5g/t 751 4.80 116
------------------------------------------------
Mestiza 1.5g/t 1,490 7.00 333
veinset
------------------------------------------------
Central 0.5g/t 939 1.88 57
Breccia (OP)
------------------------------------------------
Other 1.5g/t 1,120 4.20 151
veins
----------------------------------------------------------------------
Summary of La India Project Mineral Resource Estimate per Vein Set.
----------------------------------------------------------------------------
SRK MINERAL RESOURCE STATEMENT SPLIT PER VEINSET as of 7 November 2013
----------------------------------------------------------------------------
Category Area Name Vein Name Cut-Off silver
------------------------------
Ag Ag
Grade (Koz)
(g/t)
----------------------------------------------------------------------------
Indicated Subtotal La India 0.5g/t 5.5 1,475
Areas veinset (OP)
2.0 g/t 11.0 216
(UG)
------------------------------------------------------
America 0.5g/t 5.3 38
veinset (OP)
2.0g/t 4.4 51
(UG)
----------------------------------------------------------------------------
Inferred Subtotal La India 0.5g/t 4.1 139
Areas veinset (OP)
2.0 g/t 11.4 403
(UG)
1.5g/t
------------------------------------------------------
America 0.5g/t 5.8 178
veinset (OP)
2.0g/t 6.6 179
(UG)
1.5g/t
------------------------------------------------------
Mestiza 1.5g/t
veinset
------------------------------------------------------
Central 0.5g/t
Breccia (OP)
------------------------------------------------------
Other 1.5g/t
veins
----------------------------------------------------------------------------
Summary of La India Project Mineral Resource Estimate by cut-off grade.
------------------------------------------------------------------------
SRK MINERAL RESOURCE STATEMENT as of 7 November 2013 (4),(5),(6)
------------------------------------------------------------------------
Category Area Name Vein Name Cut-Off gold
------------------------
Tonnes Au Au
(kt) (g/t) (Koz)
------------------------------------------------------------------------
Indicated Grand total All vein 0.5g/t 8,629 3.2 899
(OP)(1)
------------------------------------
2.0g/t 968 5.7 177
(UG)(2)
------------------------------------------------
Subtotal Indicated 9,597 3.5 1,076
------------------------------------------------------------------------
Inferred Grand total All veins 0.5g/t 2,959 2.5 238
(OP)(1)
------------------------
2.0g/t 2,014 5.3 341
(UG)(2)
------------------------
1.5g/t(3) 3,831 5.4 671
------------------------------------------------
Subtotal Inferred 8,803 4.4 1,250
------------------------------------------------------------------------
(1) The open pit mining and the Mineral Resource Estimates are
constrained within Whittle optimised pits, which SRK based on the
following parameters: A Gold price of USD1500 per ounce of gold with no
adjustments. Prices are based on experience gained from other SRK
Projects. Metallurgical recovery assumptions of 93% for gold, based on
assumptions provided by the Company Marginal costs of USD16.4/t for
processing, USD3.8/t G&A and USD2.2/t for mining, slope angles defined
by the Company Geotechnical study which range from angle 40 - 48
degrees.
(2) Underground mineral resources beneath the open pit are reported at a
cut-off grade of 2.0 g/t over a minimum width of 1.0m. Cut-off grades
are based on a price of USD1500 per ounce of gold and gold recoveries
of 93 percent for resources, costs of USD16.4/t for processing,
USD10.0/t G&A and USD50.0/t for mining, without considering revenues
from other metals.
(3) Mineral resources as previously quoted by SRK (22 December 2011) are
reported at a cut-off grade of 1.5 g/t, and have not been updated as
part of the current study due to no further detailed exploration.
(4) Mineral Resources are not Ore Reserves and do not have demonstrated
economic viability. All figures are rounded to reflect the relative
accuracy of the estimate and have been used to derive sub-totals,
totals and weighted averages. Such calculations inherently involve a
degree of rounding and consequently introduce a margin of error. Where
these occur, SRK does not consider them to be material. All composites
have been capped where appropriate. The Concession is wholly owned by
and exploration is operated by Condor Gold plc.
(5) The reporting standard adopted for the reporting of the MRE uses the
terminology, definitions and guidelines given in the Canadian Institute
of Mining, Metallurgy and Petroleum (CIM) Standards on Mineral
Resources and Mineral Reserves (December 2005) as required by NI 43-
101.
(6) SRK Completed a site inspection to the deposit by Mr Benjamin
Parsons, MSc, MAusIMM (CP), Membership Number 222568, an appropriate
"independent qualified person" as this term is defined in National
Instrument 43-101.
(7) Inferred Silver Mineral Resource Grades based on a sum total of
2,020 Kt for Indicated and 2,010 Kt for Inferred.
(8) The resource figures stated are both gross and net to the Company.
------------------------------------------------------------------------
Summary of La India Project Mineral Resource Estimate by cut-off grade.
----------------------------------------------------------------------------
SRK MINERAL RESOURCE STATEMENT as of 7 November 2013 (4),(5),(6)
----------------------------------------------------------------------------
Category Area Name Vein Name Cut-Off silver
----------------------------
Ag Ag
Grade (Koz)
(g/t)
----------------------------------------------------------------------------
Indicated Grand total All vein 0.5g/t 5.5 1513
(OP)(1)
----------------------------------------
2.0g/t 8.6 267
(UG)(2)
----------------------------------------------------
Subtotal Indicated 5.8 1781
----------------------------------------------------------------------------
Inferred Grand total All veins 0.5g/t 4.9 (7) 317(7)
(OP)(1)
----------------------------
2.0g/t 9.0 (7) 582(7)
(UG)(2)
----------------------------
1.5g/t(3)
----------------------------------------------------
Subtotal Inferred 6.9 (7) 899 (7)
----------------------------------------------------------------------------
(1) The open pit mining and the Mineral Resource Estimates are constrained
within Whittle optimised pits, which SRK based on the following parameters:
A Gold price of USD1500 per ounce of gold with no adjustments. Prices are
based on experience gained from other SRK Projects. Metallurgical recovery
assumptions of 93% for gold, based on assumptions provided by the Company
Marginal costs of USD16.4/t for processing, USD3.8/t G&A and USD2.2/t for
mining, slope angles defined by the Company Geotechnical study which range
from angle 40 - 48 degrees.
(2) Underground mineral resources beneath the open pit are reported at a
cut-off grade of 2.0 g/t over a minimum width of 1.0m. Cut-off grades are
based on a price of USD1500 per ounce of gold and gold recoveries of 93
percent for resources, costs of USD16.4/t for processing, USD10.0/t G&A and
USD50.0/t for mining, without considering revenues from other metals.
(3) Mineral resources as previously quoted by SRK (22 December 2011) are
reported at a cut-off grade of 1.5 g/t, and have not been updated as part
of the current study due to no further detailed exploration.
(4) Mineral Resources are not Ore Reserves and do not have demonstrated
economic viability. All figures are rounded to reflect the relative
accuracy of the estimate and have been used to derive sub-totals, totals
and weighted averages. Such calculations inherently involve a degree of
rounding and consequently introduce a margin of error. Where these occur,
SRK does not consider them to be material. All composites have been capped
where appropriate. The Concession is wholly owned by and exploration is
operated by Condor Gold plc.
(5) The reporting standard adopted for the reporting of the MRE uses the
terminology, definitions and guidelines given in the Canadian Institute of
Mining, Metallurgy and Petroleum (CIM) Standards on Mineral Resources and
Mineral Reserves (December 2005) as required by NI 43-101.
(6) SRK Completed a site inspection to the deposit by Mr Benjamin Parsons,
MSc, MAusIMM (CP), Membership Number 222568, an appropriate "independent
qualified person" as this term is defined in National Instrument 43-101.
(7) Inferred Silver Mineral Resource Grades based on a sum total of 2,020 Kt
for Indicated and 2,010 Kt for Inferred.
(8) The resource figures stated are both gross and net to the Company.
----------------------------------------------------------------------------
CONDOR GOLD PLC
REVIEW OF OPERATIONS
FOR THE YEAR ENDED 31 DECEMBER 2013
NICARAGUA - OPERATIONS REPORT
During 2013 Condor made the transition from exploration to resource development,
focusing on assessing the economic feasibility of exploiting the flagship La
India Project. In March a Preliminary Economic Assessment ("PEA") on the mining
potential was completed on the La India Project which showed that open pit and
underground mining on three fronts over a 13 year mine life could recover 1.4M
oz gold through an annual production of 150k oz per year over the first 8 years.
The study envisaged approximately half of the gold production coming from open
pit mining and half from underground mining over the Life of Mine, with the
majority of production from La India Vein Set.
Drilling and trenching completed in 2013 was designed to maximise open pit
mining resources. Resource definition drilling successfully converted an
inferred to an indicated resource on La India Open Pit in preparation for a
Pre-feasibility Study ("PFS") with a resource update announced in November. At
the same time PFS studies on the La India Open Pit were initiated, with
geotechnical and metallurgical studies completed.
Elsewhere, resource definition and exploratory drilling at America confirmed the
presence of remnant wall-rock gold mineralisation along a 1000m strike length of
the historic mine working. An updated mineral resource on the America Vein Set
identified an open pit resource of 160k oz gold at 4.2g/t and an overall
resource increase of 70k oz gold to 484k oz gold at 4.8g/t. Further drilling was
completed on the Central Breccia for which a maiden 57k oz gold at 1.9g/t open
pit resource was estimated. Both the America Vein Set and the Central Breccia
are located less than 2km from the La India open pit resource and are therefore
considered potential satellite pits.
The La India Project area was expanded by an additional 86km2 to 280km2 with the
acquisition of a new concession area in the northeast, further consolidating
Condor's position in the District. Regional exploration was advanced with an
aeromagnetic and radiometric survey and a high resolution satellite-derived
digital terrain model completed across the entire La India Gold Mining District.
This new data formed the basis for a regional targeting exercise for both open
pit and hidden gold exploration.
The focus going into 2014 is on producing a pre-feasibility study into open pit
mining on the La India Vein Set.
------------------------------------------------------------------------
Concession Prospect Rock Chip Trenches Trench Trench
Samples Completed (m) Samples
------------------------------------------------------------------------
La India 5 1 10 10
Vein Set
------------------------------------------------------------
America 14
Vein Set
------------------------------------------------------------
La India Central 0
Breccia
------------------------------------------------------------
Mestiza 0 7 573 467
Vein Set
------------------------------------------------------------
Other 242 7 401.8 400
------------------------------------------------------------------------
Espinito Mestiza 12 24 2,320.80 2212
Mendoza Vein Set
------------------------------------------------------------------------
El Rodeo 89
------------------------------------------------------------------------
Cacao 1
------------------------------------------------------------------------
Real de La 1
Cruz
------------------------------------------------------------------------
La Mojarra 22
========================================================================
Totals 386 39 3,305.60 3089
------------------------------------------------------------------------
------------------------------------------------------------------------
Concession Prospect Rock Chip Underground Underground Underground
Samples Channels (m) Samples
Completed
------------------------------------------------------------------------
La India 5 1 6 7
Vein Set
------------------------------------------------------------
America 14
Vein Set
------------------------------------------------------------
La India Central 0
Breccia
------------------------------------------------------------
Mestiza 0
Vein Set
------------------------------------------------------------
Other 242 3 7.6 11
------------------------------------------------------------------------
Espinito Mestiza 12
Mendoza Vein Set
------------------------------------------------------------------------
El Rodeo 89
------------------------------------------------------------------------
Cacao 1
------------------------------------------------------------------------
Real de La 1
Cruz
------------------------------------------------------------------------
La Mojarra 22
========================================================================
Totals 386 4 13.60 18
------------------------------------------------------------------------
Summary of rock chip sampling, trenching and underground channel sampling
completed in 2013.
--------------------------------------------------------------
Concession Prospect Diamond Diamond Core
Core Core Samples
Drill holes Drilling
(m)
--------------------------------------------------------------
La India 71 12,343.50 4,780
Vein Set
--------------------------------------------------
La India America 23 3,434.25 1,439
Vein Set
--------------------------------------------------
Central 16 2,319.61 1,170
Breccia
==============================================================
Totals 110 18,097.36 7,389
--------------------------------------------------------------
----------------------------------------------------------------------------
Concession Prospect RC Drill RC RC 1m Drill Total
holes Drilling Samples holes Drilling
(m) (m)
----------------------------------------------------------------------------
La India 3 143.5 137 74 12,487.00
Vein Set
----------------------------------------------------------------
La India America 26 1,896.0 1,807 49 5,330.25
Vein Set
----------------------------------------------------------------
Central 16 2,319.61
Breccia
============================================================================
Totals 29 2,039.5 1,944 139 20,136.86
----------------------------------------------------------------------------
Summary of drilling activity completed in 2013.
La India Project
La India, Espinito Mendoza, Cacao, Santa Barbara, Real de la Cruz, El Rodeo,
HEMCO-SRP-NS and La Mojarra Concessions
(Condor 100% ownership).
Condor has long recognised the potential of the La India Mining District for the
development of a modern gold mine, and has gradually built-up a concession
package of eight concessions covering an area of 280km2 through a combination of
public tender and private acquisition since first being granted the Cacao
Concession in 2006. The La India Mining District is an epithermal goldfield
hosted by a Tertiary aged volcanic complex and was a substantial gold producer
between 1938 and 1956 when the La India gold mine produced an estimated 576,000
oz gold with mine records showing a peak production of 41,861 oz gold at 11.8g/t
recovered grade and 39,282 oz silver at 11.0g/t in 1953. The Company currently
holds 100% interest in mining rights to 98% of the La India District gold
mineralisation including all the historical mine workings. In 2013 Condor
completed the first economic assessment of the Project's mining potential,
advanced the confidence of the mineral resource in the core mining zone and
initiated pre-feasibility level mining studies.
Preliminary Economic Assessment
A Preliminary Economic Assessment ('PEA') on the mining potential at La India
was completed in March 2013. The study was undertaken by SRK (UK) Limited and
was based on the data used in the September 2012 Resource Estimation, which
includes a considerable open pit resource on the La India Vein Set. The PEA
envisages mining simultaneously from the La India, America and La Mestiza vein
sets, feeding a centralised mill at 1.5Mtpa for 1,463,000 oz recovered gold at
an average grade of 3.8g/t over a 13 year Life of Mine ('LOM'). The PEA
envisages an average annual production of 152,000 oz gold over the first 8
years. The forecast mine production is split almost equally between underground
and open pit mining with all the open pit ore coming from the India-California
veins within La India Vein Set.
The Company recognised that maximising open pit mining is the key to the
projects economic success. Subsequent resource development drilling, technical
studies and exploration have all prioritised open pit mining with all technical
work completed to pre-feasibility study level on La India open pit.
Drilling and Trenching
In 2013 Condor completed 20,137m of drilling and 3,306m of trenching to finish a
23,600m drilling programme initiated in late 2012 to develop and test open pit
targets in four locations within the core 6km by 3km area of the La India
Project. The full drilling programme completed since the 2012 resource update
included:
1. 13,956m infill resource drilling on the proposed La India Open Pit to
estimate the open pit resource to indicated level of confidence
sufficient for inclusion in a PFS on open pit mining,
2. 5,486m exploration drilling through the wallrock of the historic America
Mine to test for additional open pit resource,
3. 2,680m follow-up exploration drilling on the Central Breccia Prospect to
define additional open pit resource, and
4. 31 trenches for 2,894m across the La Mestiza Vein Set to establish
whether this area has open pit or underground mining potential.
On the La India Vein Set a 13,956m resource infill drilling programme initiated
the previous year, and a 1,800m geotechnical drilling programme, was completed.
Infill drilling on the open pit resource was to 50m drill spacing in order to
convert inferred resource to the more confident indicated category required for
inclusion in a PFS. The geotechnical drilling was designed to measure the
geotechnical properties required to optimise open pit design to PFS level.
The geological and mineralisation information gained from the infill drilling
has allowed the Company geologists to develop a more robust and confident
geological model, and the exclusive use of larger diameter PQ core, first
trialled in 2012, considerably improved core recovery and drilling success
through cavities left behind by the historic mine workings. The infill drilling
confirmed and better delineated the high-grade gold mineralised zones with
highlights including:
-- A near surface intercept of 21m (20.3m true width) at 3.33g/t gold from
4m drill depth in drill hole LIRC240 in the Central Zone,
-- The first near surface bonanza grade intercept of 4.8m (4.4m true width)
at 37.24g/t gold from 14.40m drill depth returned from drill hole
LIDC239 in the South-Central Zone.
-- 19.20m (14.7m true width) at 3.60g/t gold from 194.90m in drill hole
LIDC308 on the Central North zone.
In addition to converting Inferred resources into the Indicated category,
drilling tested the strike continuation of hidden gold mineralisation along
strike to the south at depths of between 80m and 200m below surface. High-grade
gold mineralisation on the India-California structure was successfully extended
50m further south with an intercept of 9.00m (5.9m true width) at 10.70g/t gold
from 206.50m drill depth in drill hole LIDC319. The mineralisation still remains
open along strike to the South.
Eleven drill holes for 1,836m were designed to provide the geotechnical data
required to design an open pit on the La India Vein Set at PFS level of
confidence. This geotechnical drilling programme, which was designed and
supervised by geotechnical consultants from SRK Consulting (UK), incorporated
downhole imaging technology to measure fracture orientations and the
installation of five piezometers to measure groundwater levels and conduct
permeability test work. The geotechnical data from the drilling will be
integrated with hydrogeological data to establish the optimum pit wall angles to
be used in the PFS.
Over 5,000m of drilling, supplemented by 7 trenches for 402m, were completed on
the America Vein Set testing for remnant gold mineralisation in the wallrock of
the historic America-Constancia Mine. The widest zones of gold mineralisation
have been found in quartz breccia developments where a number of parallel
Constancia veins intercept the America-Escondido vein flexure. Drill intercepts
of up to 19m at 1.98g/t gold (including 3m at 7.82g/t gold) and 10m at 1.70g/t
gold separated by only 6m of waste (drill hole LIRC215) were returned from a
zone of wide moderate to high-grade gold mineralisation along a strike length of
between 100m and 150m and a down-dip extent of at least 300m. This
flexure-intercept zone was drill-tested at 50m spacing to up to 300m down dip
from surface, whereas the limbs of the flexure, where the wallrock of the old
mine workings have been shown to contain some remnant gold mineralisation were
drilled at 100m spacing to 180m down-dip.
In line with the Company's policy of targeting open-pittable resources a 2,321m
drilling programme was completed on the Central Breccia area. The drilling
programme had two objectives: Firstly, to follow-up on the excellent drilling
results returned from earlier drilling in order to provide sufficient drill data
for a maiden gold resource estimation on the Central Breccia. Secondly, to drill
beneath the soil anomalies identified near to the Central Breccia to test for
further hidden gold mineralised breccia systems. The Central Breccia gold
mineralisation is hosted by a hydrothermal breccia system with high-grade gold
mineralised zones associated with intense argillic alteration and sulphide
mineralisation within a low-grade background halo. The high-grade zones are
variable at a decimetre-scale which requires close spaced drilling to obtain
continuity between drill samples and confidently model the gold distribution.
Drilling to date has confirmed the lateral dimensions shown at surface with
high-grade mineralisation intercepted up to 100m below surface.
A 2,894m programme of 100m-spaced trenches, infilled to 50m in areas of
interest, were excavated across the entire La Mestiza Vein Set. Trenches were up
to 200m long and up to 3m deep in order to thoroughly test the sub-parallel
Tatiana, Jicaro and Buenos Aires veins package. La Mestiza Vein Set contains
334,000 oz gold at 7.0g/t, with significantly better grades and widths of gold
mineralisation returned from drilling at depth than from previous explorers
manual trench testing at surface. The programme was designed to categorically
test the width and grade of surface gold mineralisation in order to better
understand the geology of the deposit. Assay results confirmed previous
exploration data that the Jicaro and Buenos Aires veins are narrow with variable
grade at surface with a best intercept of 0.9m at 5.87g/t Au recorded in the
Buenos Aires 2 Vein (Trench LITR178). However the Tatiana Vein is wider in
places than was recognised in the shorter and shallower historic manual
trenches, with a wide quartz stock work and breccia zone revealed along at least
150m strike length with best results including:
-- 48m at 0.51g/t Au including 7.4m at 1.35g/t Au (Trench LITR173),
-- 11m at 1.90g/t Au (Trench LITR166b),
-- 6m at 2.25g/t Au (Trench LITR176b).
The wider zones of gold mineralisation at surface are hosted by fine breccia
zones interpreted as forming at higher levels under low confining pressure. The
identification of more confined structures hosting higher grade gold mineralised
at depth in both Condor and previous explorers drilling suggests that the
optimal gold mineralisation level is below surface and will require definition
through drilling rather than trenching. The Company concluded that La Mestiza is
an underground rather than open pit mining target and the decision was taken not
to undertake further drilling at La Mestiza for the current PFS study.
Resource Update
Condor announced an updated mineral resource estimate on the La India and
America vein sets and a maiden mineral resource on the Central Breccia Prospect
on the 8th November. The updated mineral resource incorporated an additional
23,598m of drilling that had been completed since the previous mineral resource
estimate in September 2012. La India Project currently contains a CIM compliant
indicated mineral resources of 9.6Mt at 3.5g/t Au for 1.08 million ounces of
gold and inferred mineral resources of 8.8Mt at 4.4g/t for 1.25 million ounces
of gold reported to NI 43-101 standard, for a combined indicated and inferred
mineral resource of 18.4Mt at 3.9g/t for 2.33M oz gold contained within a 9km
radius area.
The mineral resource has been calculated in three parts using different
parameters based on the potential economics and the confidence of the data
available. An open pit mineral resource of 1.14M oz gold at 3.1g/t which falls
within a US$1,500 per ounce gold optimised Whittle open pit has been estimated
using a 0.5g/t cut-off grade. The open pit resource comprises La India Open Pit
with 921,000 oz at 3.0g/t, America Open Pit with 160,000 oz at 4.2g/t and the
maiden Central Breccia Open Pit with 57,000 oz gold at 1.9g/t.
Zones that fall outside of the Whittle Pit shells have been estimated using an
underground cut-off grade 2.0g/t over 1m. A total underground mineral resource
of 518,000 oz gold at 5.4g/t lies beneath the La India and America open pit
shells: 310,000 oz at La India and 208,000 oz at America The remaining mineral
resource of 673,000 oz gold at 5.5g/t which has not been tested with a Whittle
open pit model and was not re-estimated in 2013 has been assigned a cut-off
grade of 1.5g/t. In addition, there is 2.68 million ounces of silver at a grade
of 6.2g/t estimated on the La India and California veins, and the historic
America Mine only where there is sufficient silver assay data.
The drilling on La India Vein Set was designed to convert inferred open pit
resource to the more confident indicated category whilst the drilling at America
and on the Central Breccia was designed to define additional open pit resources
at the inferred category. These goals were achieved with the overall open pit
resource at La India Project increased from 954,000 oz, located only in one
location, to 1.14 million oz at 3.1g/t gold in three close-spaced pits all
contained within a 6km by 3km area: the 921,000 oz La India Open Pit, the
160,000 oz America Open Pit and the 57,000 oz Central Breccia Open Pit
resources. The addition of the two smaller pits will add flexibility to a future
open pit mining operations. As well as adding additional open pit mineral
resource gold ounces, the drilling upgraded confidence in the mineral resource
with over 1.08 million ounces gold indicated mineral resource defined in the La
India and America Vein Sets, of which 899,000 oz is contained within the
open-pit shells, with the balance of 177,000 oz split evenly between the deeper
levels beneath the La India and America Mine Mineral resource Whittle open pit
shells.
Pre-Feasibility Study Preparation
A number of mine development studies have been completed aimed at moving quickly
towards a PFS. A 1,836m geotechnical drilling programme designed to more
accurately establish the optimum pit slope angles that can be supported by an
open pit mine on La India Vein Set was completed. A number of the geotechnical
and some exploration drill holes have been used to install piezometers for water
level monitoring as part of the hydrogeological study required for open pit and
underground mine design and water management planning, and also as a component
of the environmental baseline study. Metallurgical testwork was completed to PFS
level of confidence on the proposed La India and America vein sets and to a
Scoping Level of confidence on the Mestiza Vein Set and Central Breccia. The
testwork showed that America and La Mestiza ore can be processed using standard
CIP or CIL process without the need for gravity concentration with recoveries of
93-95% gold achievable. In addition, a comparison of standard cyanidation and
CIL tests indicated that preg robbing effects during processing would not be a
problem. Similarly acid-base accounting tests showed that the tailings will not
result in acid generation. Scoping level testwork on the Central Breccia ore
returned slightly lower recoveries at 89% from direct cyanidation, reflecting
the distinct metallurgical properties of this atypical deposit.
Studies to establish baseline conditions for the Environmental and Social Impact
Assessment ("ESIA") required for the PFS and for future mine permitting were
initiated:
-- Initial climatic and surface water flow studies were completed and
surface water flow monitoring initiated.
-- A meteorological station was purchased.
-- The first phase of an air quality studies completed.
-- The first phase of a flora and fauna study completed.
-- A population census and registration of artisanal mining activity within
the concession area was completed.
Regional Exploration
Preparatory work for exploration of the existing and newly acquired concession
areas outside of the core La India Project area has been initiated.
Re-processing of existing ground geophysical data collected by a previous
explorer in 2007 identified a number of targets for follow-up exploration and
demonstrated the potential benefits of an airborne geophysical survey over the
entire La India Project area. A helicopter aeromagnetic and radiometric survey
was flown over the entire 280km2 area at 100m line spacing for a total of 3,530
line-kilometres to collect a high-resolution dataset. Condor geologists have
used airborne magnetic and radiometric, and satellite derived topographic data,
combined with geological mapping and the existing exploration database to
develop a geological model of the La India Project's epithermal gold
mineralisation system. Eight targets were identified as under-explored areas
within prospective geological settings. Initial follow-up geological prospecting
and rock chip sampling provided sufficient information about the style of
mineralisation, and an indication of the gold grades to rank the targets and
develop exploration plans.
Two target styles were identified: near surface gold mineralisation with open
pit potential and deep-seated gold mineralisation that may have underground
mining potential.
New Concession Acquisition
The Company purchased an 86km2 concession located adjacent and to the North and
East of the La India Project area, increasing Condor's concession holding to
280km2. The newly acquired Concession, currently known as the HEMCO-SRP-NS
Concession, and to be re-named La Cuchilla Concession, covers a potential
additional 13km strike length of the America and La Mestiza Vein Set trends.
Gold mineralisation has been recorded in rockchip samples within 600m of the
southern boundary of the Concession. Reconnaissance exploration has revealed at
least four locations with quartz veining, an indication of past hydrothermal
activity in a geological setting known to have potential for the discovery of
economic gold mineralisation. The purchase agreement was signed in January with
HEMCO Nicaragua SA ("HEMCO") for a consideration of US$275,000 payable by way of
issuing new ordinary shares in Condor Gold Plc at GBP 2.00 per share.
Post-Period Activity
Since the year end Condor has continued to advance pre-feasibility studies.
Independent mining consultants SRK Consulting (UK) Ltd have been contracted to
produce a PFS on La India by testing two scenarios: a Base Case of 2,300tpd
production from La India Open Pit only, which hosts a resource of 920,000 oz
gold at 3.0g/t; or an alternative case of 2,800tpd if the two feeder pits of
America and Central Breccia, which contain a combined open pit resource of
220,000 oz gold at circa 4.0g/t, are included. A two week pumping test from the
historic mine workings at La India Open Pit to test the response of the La India
Mine workings to de-watering has been completed and the results are being
analysed at time of writing. The results of this test will be used to model the
hydrogeology of the La India Vein Set with respect to mine de-watering designs
and to refine the pit wall design. Hydrology studies are at an advanced stage
with surface flow measurements for a full wet season collected and recorded. The
locations of the Plant, Waste Dump and Tailings Storage Facility have been
chosen. Geochemical testwork has shown that the proposed waste dump will not be
prone to acid rock drainage. The contract for the PFS level process engineering
design for a processing plant and capital cost estimate has been awarded a
Lycopodium Minerals Canada Ltd. Baseline data continues to be collected to
international standards for the ESIA with a population census, artisanal miner
census completed and a Stakeholder Engagement Plan under development. Land use
mapping, flora and fauna surveys and air quality measurements have been
completed, an archeological study is underway and over one year's water quality
analysis data has been collected over the project area.
Regional exploration activity has continued to develop the eight targets
identified as under-explored. Over 400 rock chip samples have been collected
from the eight target areas, with 90 samples assaying above 1g/t gold, and 22
returning assay results above 10g/t gold, underlining the abundant and
widespread gold mineralisation in the project area. Trench testing is underway
on selected targets, and a regional geochemical study is being conducted to
identify the pathfinder elements associated with the gold mineralising
epithermal system at La India, that will be used in the soil survey using a
multi-element geochemistry database containing over two thousand rockchip
samples.
Other Project Areas
Rio Luna Concession
The Rio Luna Concession covers an area of 43 square kilometres in the Central
Highlands of Nicaragua, accessible from the Capital City, Managua by
approximately 90km of paved and graded roads. Rio Luna contains a JORC Inferred
Mineral Resource of 694kt at 3.5g/t for 80,000 oz gold and 280kt at 56g/t for
500,000 oz silver on five separate resource blocks, distributed between three
separate vein sets. In total this equates to 87,000 oz gold equivalent at 3.9g/t
gold equivalent (using a gold:silver ratio of 1:60). The Mineral Resource
estimate was calculated by Independent Geological Consultants SRK (UK) Ltd using
exploration data from Canadian explorer First Point Minerals Corporation who
completed an extensive programme of soil, auger, rock chip, trench and drill
sampling between 2004 and 2006. That exploration included 58 exploratory diamond
core drill holes for 6,262m that tested a number of selected target zones along
the three sub-parallel vein sets containing over 18km of gold-bearing epithermal
quartz veins identified by surface exploration on the concession area. The
current Mineral Resource is confined to five resource blocks where there is
sufficient density of trench and drilling data to demonstrate continuity of gold
mineralisation along strike and to depth. The resource blocks have a combined
strike length of only 1,750m to a depth of less than 150m below surface, except
on one cross section where drilling tested to a depth of 250m below surface.
This Mineral Resource Estimate demonstrates that where drilling has tested
segments of the epithermal veining currently recognised at Rio Luna the gold
mineralisation extends to depths of at least 250m below the surface, and gold
mineral concentrations are at sufficient grade to warrant further exploration.
Gold mineralisation on all five prospects included in the Mineral Resource
remains open along strike and to depth. Trenching has defined additional areas
of surface mineralisation along strike of the resource blocks remaining to be
drill tested and brought into the Mineral Resource.
Estrella Concession
The Estrella Concession covers an 18 square kilometre area in Nicaragua's
historic 'Mining Triangle(i)' in the northeast of the country. The concession is
centred on the historic Estrella Gold Mine. No mine plans or production data are
available for the Estrella Mine (also referred to as the Estrella de Venus Mine
in old reports), however it is believed that the mine exploited two or more
sub-parallel epithermal veins on two or three levels along a strike length of at
least a 250m.The mine was worked for only a few years before being destroyed in
1935 during civil unrest: abandoned steel mine trolleys and rail tracks are
testament to this period of mechanised mining. The old workings can be traced
for approximately 100m where the mineralised structure runs close to the bank of
a small river and then for an indeterminate distance beneath the crest of a
ridge. The drift that runs next to the river has been reopened by artisanal
miners. It is considered likely that the mining relied on gravity dewatering and
did not extend below the level of the drainage adit at river level, no deeper
than the 10-15m depth exploited by the artisanal miners. It is believed that the
mine operated a 20-50 tonne per day capacity mill during production.
Trench and underground channel sampling by previous explorers and confirmed by
Condor and has returned high grade gold intercepts over a 400m strike length
including the historic Estrella Gold Mine and extending along strike up the
ridge to the northeast. Two to three parallel epithermal veins separated by
short intervals of 5 to 10m of country rock are recognised in old mine workings
and trenches. A best trench intercept of 9.0m at 5.44g/t gold reflects the full
width of the mineralisation, whilst the channel sampling of the more selectively
mined underground workings, often only exploiting one of the two-three
structures returned an average intercept of 0.9m at 8.53g/t gold.
The challenge on this concession is to extend the size of the mineralised zone
beyond the 400m strike length defined to date. It is highly unlikely that the
mineralised fluids that deposited this ore body were restricted to an isolated
structure and future exploration activity will aim to discover extensions to the
known structure and/or other gold mineralised veins in the vicinity.
(i) The "Mining Triangle" of the Bonanza-Rosita-Siuna areas of northeast
Nicaragua is estimated to have historical production totalling more than 5
million ounces of gold, 4 million ounces of silver, 158,000 tons of copper, and
106,000 tons of zinc.
Potrerillos Concession
Condor maintains a strategic concession holding covering a 3.5km strike length
continuation of the gold mineralised system that hosts the historic San Albino
mine workings which contains a CIM mineral resource of 348 kt at 8.47g/t for
95,000 oz gold equivalent at the Indicated category and 3.371kt at 7.43g/t for
805,000 oz gold equivalent at the Inferred level of confidence (using a 1:60
Au:Ag ratio) as announced by concession holders TSX-listed Golden Reign
Resources on 7th January 2013. The San Albino Resource is located less than 500m
from the edge of the Potrerillos Concession. Channel sampling of trenches and
old mine adits carried out on the Potrerillos Concession between 2007 and 2009
returned intersections of up to 1m at 29.5g/t gold.
Cerro Quiroz Concession (Condor 20% ownership)
Condor holds a 20% interest in the 22.5km2 Cerro Quiroz Concession located
approximately 15km from the La Libertad Gold Mine and only 4km from the recently
opened Jabali satellite pit which is operated by TSX-listed Canadian mining
company B2Gold. B2Gold hold the majority 80% Interest in the Concession and
under the terms of the agreement manage and wholly fund exploration up until
completion of the first 2,000m of drilling has been completed, after which
Condor will be required to provide equity funding to maintain the Company's
interest. B2Gold have completed a programme of rockchip and soil sampling, and
excavated 10 trenches on the principal 1.5km long gold mineralised vein.
EL SALVADOR - OPERATIONS REPORT
Condor has continued to maintain a presence in El Salvador whilst the Government
continues the suspension of metallic mining and exploration activity that has
been in effect since 2007. The Company recognises that the resolution lies with
the Central Government, and Condor has played a leading role in lobbying the
Government in favour of a resumption of mining activity both as an individual
company and as a member of an umbrella group known as the Salvadoran Industrial
Association which represents the interests of a number of mining and exploration
companies. The Company's has maintained a continuous active dialogue with the
Government since 2007 in order to maintain the Company's claim over the
suspended licences and also to position the Company to benefit from other
prospective areas that are likely to become available should the Government
elect to support metallic mining in the future.
CONDOR GOLD PLC
REPORT OF THE DIRECTORS
FOR THE YEAR ENDED 31 DECEMBER 2013
DIRECTORS' REPORT
The Directors present their report with the financial statements of the Company
and the Group for the year ended 31 December 2013.
PRINCIPAL ACTIVITY
The principal activity of the Group in the year under review was that of
exploration of gold and silver concessions in El Salvador and Nicaragua. The
principal activity of the Company was that of a holding company.
DIRECTORS
The Directors shown below have held office during the year:
M L Child
J Mellon
R Davey
SUBSTANTIAL SHAREHOLDERS
On 31 December 2013 the Company was aware of the following interests in 3% or
more of the Company's issued share capital:
Number of Holding
Shareholders ordinary shares %
----------------------------------------------------------------------------
Regent Pacific Group 3,977,274 10.38
Mr M Child 3,887,500 10.14
Oracle Management Limited 2,748,675 7.17
Sentry Precious Metals Growth Fund 1,281,056 3.34
============================================================================
DIRECTORS' INTERESTS
The Directors in office during the year under review and their interests in
ordinary shares and unlisted options of the Company at 31 December 2013 were:
31 December 2013 31 December 2012
Number of Number of Number of Number of
Directors Holding shares options shares options
----------------------------------------------------------------------------
M L Child Direct 3,887,500 1,100,000 3,537,500 950,000
Indirect - - - -
R Davey Direct 32,500 350,000 32,500 200,000
Indirect - - - -
J Mellon Direct 38,820 - 38,820 -
Indirect 350,000 500,000 350,000 300,000
============================================================================
The interests of the Directors in options to subscribe for ordinary shares of
the Company were:
Forfeit/
lapsed/
Exercise Latest As at Granted exercised As at
price exercise 1 January during in the 31 December
(p) date 2013 the year year 2013
----------------------------------------------------------------------------
DIRECTORS
M L Child 20 23 December 2013 450,000 - 450,000 -
180 15 April 2016 250,000 - - 250,000
100 27 June 2017 250,000 - - 250,000
100 30 June 2018 - 600,000 600,000
R Davey 180 10 January 2017 100,000 - - 100,000
100 27 June 2017 100,000 - - 100,000
100 30 June 2018 - 150,000 - 150,000
J Mellon 180 15 April 2016 250,000 - - 250,000
100 27 June 2017 100,000 - - 100,000
100 30 June 2018 - 150,000 - 150,000
============================================================================
No Director had any interests in warrants to subscribe for ordinary shares of
the company during the year.
CORPORATE GOVERNANCE
Corporate policies
Condor takes its health, safety, environmental and community responsibilities
seriously, and has developed policies and systems to ensure that it explores in
a safe, low impact and consultative manner, maximising the sustainability of its
present and future operations for the benefit of all stakeholders.
Health and safety
Condor takes the health and safety of its employees and contractors seriously,
and strives to exceed statutory obligations and achieve best practice. To this
end, a new safety management system has been implemented for its exploration
operations.
Environment
Condor operates in strict adherence to local and Governmental standards with
regard to environmental impact on the local community. This procedure includes
pre-exploration checks and post-exploration remediation programs. Currently, no
unfulfilled commitments exist to remediate land upon which the Company has
conducted exploration work.
Community
Condor is committed to working consultatively and co-operatively within the
communities in which it operates, which includes local subsistence farmers and
pastoralists and firmly believes that future mining operations should be to the
benefit of all. To this end, Condor personnel participate in cultural awareness
programs and have forged close ties with landholders and maintain a constructive
dialogue with the Department of Environment and local community representatives.
Condor is also a sponsor of many community development and aid programs
currently in place including the provision of clean water through drilling water
wells, tree planting, the supply of school books and training of locals in both
technical and non technical skills to assist their personal development.
Compliance with the UK Corporate Governance Code
The Directors recognise the value of the UK Corporate Governance Code ("the
Code"), and whilst under AIM rules full compliance is not required, the
Directors believe that the Company applies the recommendations insofar as is
practicable and appropriate for a public Company of its size.
Board of directors
The board of directors at the year end included one executive chairman and two
non-executive directors who qualify as independent non-executive directors as
defined by the Code. The directors are of the opinion that the recommendations
of the Code have been implemented to an appropriate level. The board, through
the chairman and non executive directors, maintain regular contact with its
advisers and public relations consultants in order to ensure that the board
develops an understanding of the views of major shareholders about the company.
The board meets regularly throughout the year and met over 12 times during the
year to 31 December 2013. The board is responsible for formulating, reviewing
and approving the Group's strategy, financial activities and operating
performance. Day-to-day management is devolved to the country manager who is
charged with consulting with the board on all significant financial and
operational matters. Consequently, decisions are made promptly and following
consultation among directors concerned where necessary and appropriate.
All necessary information is supplied to the directors on a timely basis to
enable them to discharge their duties effectively, and all directors have access
to independent professional advice, at the Company's expense, as and when
required.
The participation of both private and institutional investors at the Annual
General Meeting is welcomed by the board.
Committees
Each of the following committees has its own terms of reference.
Audit committee
The Audit Committee comprises J Mellon (non-executive director) and R Davey
(non-executive director). The committee meets at least twice a year, in regard
to the audit work required and completed.
All directors received a copy of the respective audit committee reports prior to
these meetings and had an opportunity to comment. The meetings were attended by
the auditor.
The chief financial officer and a representative of the external auditor are
normally invited to attend meetings. Other directors or staff may be invited to
attend, as considered beneficial by the committee.
The Audit Committee's primary responsibilities are to review the effectiveness
of the Company's systems of internal control, to review with the external
auditor the nature and scope of their audit and the results of the audit, and to
evaluate and select external auditors.
Remuneration committee
The Remuneration Committee plans to meet at least twice in each year. Its
members are J Mellon (non-executive director) and R Davey (non-executive
director), both of whom were in attendance at the meetings since their
appointment date.
The Group's policy is to remunerate senior executives fairly in such a manner as
to facilitate the recruitment, retention and motivation of staff. The
Remuneration Committee agrees with the board a framework for the remuneration of
the chairman, the executive directors and the senior management of the Group.
The principal objective of the committee is to ensure that members of the
executive management of the company are provided incentives to encourage
enhanced performance and are, in a fair and responsible manner, rewarded for
their individual contributions to the success of the company. Non-executive fees
are considered and agreed by the board as a whole.
Service Contracts
The Company has service contracts with its non-executive directors.
The service contracts also provide that the directors and parties related to the
directors are entitled to participate in the share option arrangements operated
by the Company as well as consultancy payments.
Details of the contracts currently in place for directors and related parties
are as follows:
Annual Consultancy
salary payments Unexpired Notice
GBP '000 GBP '000 Date of Contract term period
----------------------------------------------------------------------------
M L Child 100 55 13 July 2011 - 6 months
J Mellon - 16 6 April 2011 - 2 months
R Davey 31 - 19 December 2011 - 2 months
Subject to the notice requirements described above, there is no provision in the
service agreements for compensation to be payable on early termination of the
contract.
Supplier payment policy
It is the Group's policy to pay suppliers in accordance with the terms of
business agreed with them. The number of days' purchases outstanding for the
group as at 31 December 2013 was 30 days (2012: 30 days).
Annual general meeting
Your attention is drawn to the Notice of Meeting enclosed with this report
convening the Annual General Meeting of the Company at 2p.m. on 26 June 2014 at
the offices of Speechly Bircham; 6 New Street Square, London, EC4A 3LX. The
Notice of Meeting sets out and explains the special and ordinary business to be
conducted at the meeting.
Directors Insurance
During the year the Company paid GBP 10,070 (2012: GBP 7,568) in respect of
Directors professional indemnity insurance.
STATEMENT OF DIRECTORS' RESPONSIBILITIES
The directors are responsible for preparing the Directors' Report and the
financial statements in accordance with applicable law and regulations.
Company law requires the directors to prepare financial statements for each
financial year. Under that law the directors have elected to prepare the
financial statements in accordance with International Financial Reporting
Standards (IFRSs') as adopted by the EU and applicable law.
Under company law the directors must not approve the financial statements unless
they are satisfied that they give a true and fair view of the state of affairs
of the Company and the Group and of the profit or loss of the group for that
period. In preparing these financial statements, the directors are required to:
-- select suitable accounting policies and then apply them consistently;
-- make judgments and accounting estimates that are reasonable and prudent;
-- state whether applicable accounting standards have been followed,
subject to any material departures disclosed and explained in the
financial statements;
-- prepare the financial statements on the going concern basis unless it is
inappropriate to presume that the Company will continue in business.
The directors are responsible for keeping adequate accounting records that are
sufficient to show and explain the company's transactions and disclose with
reasonable accuracy at any time the financial position of the company and enable
them to ensure that the financial statements comply with the Companies Act 2006.
They are also responsible for safeguarding the assets of the company and hence
for taking reasonable steps for the prevention and detection of fraud and other
irregularities.
They are further responsible for ensuring that the Report of the Directors and
other information included in the Annual Report and Financial Statements is
prepared in accordance with applicable law in the United Kingdom.
The maintenance and integrity of the Condor Gold Plc web site is the
responsibility of the directors; the work carried out by the auditor does not
involve the consideration of these matters and, accordingly, the auditor accepts
no responsibility for any changes that may have occurred in the accounts since
they were initially presented on the website.
Legislation in the United Kingdom governing the preparation and dissemination of
the accounts and the other information included in annual reports may differ
from legislation in other jurisdictions.
STATEMENT AS TO DISCLOSURE OF INFORMATION TO AUDITOR
So far as the directors are aware, there is no relevant audit information of
which the group's auditor is unaware, and each director has taken all steps that
he ought to have taken as a director in order to make himself aware of any
relevant audit information and to establish that the Group's auditor is aware of
that information.
AUDITOR
The auditor, Crowe Clark Whitehill LLP, will be proposed for re-appointment in
accordance with Section 485 of the Companies Act 2006.
ON BEHALF OF THE BOARD:
M L Child, Chairman
Date: 04 June 2014
REPORT OF THE INDEPENDENT AUDITOR TO THE MEMBERS OF CONDOR GOLD PLC
FOR THE YEAR ENDED 31 DECEMBER 2013
We have audited the financial statements of Condor Gold Plc for the year ended
31 December 2013 which comprise the Group and Parent Company Statements of
Financial Position, the Group Statement of Comprehensive Income, the Group and
Parent Company Cash Flow Statements, the Group and Parent Company Statements of
Changes in Equity and the related notes. The financial reporting framework that
has been applied in their preparation is applicable law and International
Financial Reporting Standards (IFRSs) as adopted by the European Union and, as
regards the parent company financial statements, as applied in accordance with
the provisions of the Companies Act 2006. The financial reporting framework that
has been applied in their preparation is applicable law and International
Financial Reporting Standards (IFRSs) as adopted by the European Union and, as
regards the parent company financial statements, as applied in accordance with
the provisions of the Companies Act 2006.
This report is made solely to the company's members, as a body, in accordance
with Chapter 3 of Part 16 of the Companies Act 2006. 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 directors and auditor
As explained more fully in the Directors' Responsibilities Statement set out on
page 26 and 27, the directors are responsible for the preparation of the
financial statements and for being satisfied that they give a true and fair
view. Our responsibility is to audit and express an opinion on the financial
statements in accordance with applicable law and International Standards on
Auditing (UK and Ireland). Those standards require us to comply with the
Auditing Practices Board's Ethical Standards for Auditors.
Scope of the audit of the financial statements
An audit involves obtaining evidence about the amounts and disclosures in the
financial statements sufficient to give reasonable assurance that the financial
statements are free from material misstatement, whether caused by fraud or
error. This includes an assessment of: whether the accounting policies are
appropriate to the company's circumstances and have been consistently applied
and adequately disclosed; the reasonableness of significant accounting estimates
made by the directors; and the overall presentation of the financial statements.
In addition, we read all the financial and non-financial information in the
annual report to identify material inconsistencies with the audited financial
statements and to identify any information that is apparently materially
incorrect based on, or materially inconsistent with, the knowledge acquired by
us in the course of performing the audit. If we become aware of any apparent
material misstatements or inconsistencies we consider the implications for our
report
Opinion on the financial statements
In our opinion:
-- the financial statements give a true and fair view of the state of the
group's and of the parent company's affairs as at 31 December 2013 and
of the group's loss for the year then ended;
-- the group financial statements have been properly prepared in accordance
with IFRSs as adopted by the European Union;
-- the parent company financial statements have been properly prepared in
accordance with IFRSs as adopted by the European Union and as applied in
accordance with the provisions of the Companies Act 2006; and
-- the financial statements have been prepared in accordance with the
requirements of the Companies Act 2006.
Emphasis of matter - El Salvador assets
In forming our opinion on the financial statements, which is not modified, we
have considered the adequacy of the disclosure made in notes 1, 11, 12 and 13 to
the financial statements concerning the uncertainty arising from the present
moratorium on processing of permits for mineral exploration and extraction in El
Salvador. As set out in note 1, if the necessary permit renewals are not granted
this would result in impairment of the Group's intangible assets and the
Company's investments in El Salvador in the future and such impairment would be
material.
Opinion on the other matters prescribed by the Companies Act 2006
In our opinion the information given in the Strategic Report and Directors'
Report for the financial year for which the financial statements are prepared is
consistent with the financial statements.
Matters on which we are required to report by exception
We have nothing to report in respect of the following matters where the
Companies Act 2006 requires us to report to you if, in our opinion:
-- adequate accounting records have not been kept by the parent company, or
returns adequate for our audit have not been received from branches not
visited by us; or
-- the parent company financial statements are not in agreement with the
accounting records and returns; or
-- certain disclosures of directors' remuneration specified by law are not
made; or
-- we have not received all the information and explanations we require for
our audit.
Stephen Bullock (Senior statutory auditor)
For and on behalf of Crowe Clark Whitehill LLP (Statutory auditor)
St Bride's House
10 Salisbury Square
London
EC4Y 8EH
Date: 04 June 2014
Note: The maintenance and integrity of the Condor Gold Plc website is the
responsibility of the directors. The work carried out by the auditor does not
involve consideration of these matters and accordingly the auditor accepts no
responsibility for any changes that may have occurred to the financial
statements since they were originally presented on the website. Legislation in
the United Kingdom governing the preparation and dissemination of financial
statements may differ from legislation in other jurisdictions.
CONDOR GOLD PLC
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2013
Year Ended Year Ended
Notes 31.12.13 31.12.12
GBP GBP
Revenue - -
Administrative expenses (2,917,034) (3,258,653)
----------- -----------
Operating loss 6 (2,917,034) (3,258,653)
----------- -----------
Finance income 5 8,367 2,640
----------- -----------
Loss before income tax (2,908,667) (3,256,013)
Income tax expense 7 - -
----------- -----------
Loss for the year (2,908,667) (3,256,013)
=========== ===========
Other comprehensive income:Other
comprehensive income to be reclassified to
profit or loss in subsequent periods:
Currency translation differences (219,298) (169,824)
----------- -----------
Other comprehensive (loss) / income for the
year (219,298) (169,824)
=========== ===========
Total comprehensive loss for the year (3,127,965) (3,425,837)
=========== ===========
Loss attributable to:
Non-controlling interest (3,755) (4,478)
Owners of the parent (2,904,912) (3,251,535)
----------- -----------
(2,908,667) (3,256,013)
=========== ===========
Total comprehensive loss attributable to:
Non-controlling interest (1,868) (1,898)
Owners of the parent (3,126,097) (3,243,939)
----------- -----------
(3,127,965) (3,425,837)
=========== ===========
Loss per share expressed in pence per share:
Basic and diluted (in pence) 9 7.79 10.65
=========== ===========
The notes form an integral part of these financial statements
CONDOR GOLD PLC
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2013
Notes 31.12.13 31.12.12
GBP GBP
ASSETS:
NON-CURRENT ASSETS
Property, plant and equipment 10 298,525 228,167
Intangible assets 11 14,721,128 10,250,474
------------ ------------
15,019,653 10,478,641
------------ ------------
CURRENT ASSETS
Trade and other receivables 13 978,715 520,551
Cash and cash equivalents 2,268,470 2,481,503
------------ ------------
3,247,185 3,002,054
------------ ------------
TOTAL ASSETS 18,266,838 13,480,695
============ ============
LIABILITIES:
CURRENT LIABILITIES
Trade and other payables 15 650,217 544,662
------------ ------------
NON-CURRENT LIABILITIES
Other payables 15 - 154,626
------------ ------------
TOTAL LIABILITIES 650,217 699,288
============ ============
NET CURRENT ASSETS 2,596,968 2,457,392
------------ ------------
NET ASSETS 17,616,621 12,781,407
============ ============
SHAREHOLDERS' EQUITY
Called up share capital 16 7,664,792 6,679,826
Share premium 22,228,265 15,928,571
Legal reserves 71 71
Exchange difference reserve 374,982 594,280
Share options reserve 2,551,670 1,873,151
Retained earnings (15,203,159) (12,294,492)
------------ ------------
17,216,621 12,781,407)
============ ============
TOTAL EQUITY ATTRIBUTABLE TO:
Non-controlling interest (68,877) (66,471)
Owners of the parent 17,685,498 12,847,878
------------ ------------
17,616,621 12,781,407
============ ============
The financial statement were approved and authorised for issue by the Board
of directors on 04 June 2014 and were signed on its behalf by:
M L Child - Chairman
Company No: 05587987
The notes form an integral part of these financial statements
CONDOR GOLD PLC
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
AS AT 31 DECEMBER 2013
Share Share Legal
Capital premium reserve
GBP GBP GBP
At 1 January 2012 5,583,451 10,000,846 71
Comprehensive income:
Loss for the year - - -
Other comprehensive income:
Currency translation differences - - -
-----------------------------------
Total comprehensive income 5,583,451 10,000,846 71
-----------------------------------
New shares issued 1,096,375 5,927,725 -
Share based payment - - -
-----------------------------------
At 31 December 2012 6,679,826 15,928,571 71
-----------------------------------
Comprehensive income:
Loss for the year - - -
Other comprehensive income:
Currency translation differences - - -
-----------------------------------
Total comprehensive income 6,679,826 15,928,571 71
-----------------------------------
New shares issued 984,966 6,299,694 -
Share based payment - - -
-----------------------------------
At 31 December 2013 7,664,792 22,228,265 71
-----------------------------------
CONDOR GOLD PLC
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
AS AT 31 DECEMBER 2013
Exchange Share
difference option Retained
reserve reserve earnings
GBP GBP GBP
At 1 January 2012 764,104 618,840 (8,973,906)
Comprehensive income:
Loss for the year - - (3,251,535)
Other comprehensive income:
Currency translation differences (172,404) - -
---------------------------------------
Total comprehensive income 591,700 618,840 (12,225,441)
---------------------------------------
New shares issued - - -
Share based payment - 1,254,311 -
---------------------------------------
At 31 December 2012 591,700 1,873,151 (12,225,441)
---------------------------------------
Comprehensive income:
Loss for the year - - (2,904,912)
Other comprehensive income:
Currency translation differences (220,647) - -
---------------------------------------
Total comprehensive income 371,053 1,873,151 (15,130,353)
---------------------------------------
New shares issued - - -
Share based payment - 678,519 -
---------------------------------------
At 31 December 2013 371,053 2,551,670 (15,130,353)
---------------------------------------
CONDOR GOLD PLC
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
AS AT 31 DECEMBER 2013
Non
Controlling Total
Total Interest Equity
GBP GBP GBP
At 1 January 2012 7,993,406 (64,573) 7,928,833
Comprehensive income:
Loss for the year (3,251,535) (4,478) (3,256,013)
Other comprehensive income:
Currency translation differences (172,404) 2,580 (169,824)
------------------------------------------
Total comprehensive income 4,569,467 (66,471) 4,502,996
------------------------------------------
New shares issued 7,024,100 - 7,024,100
Share based payment 1,254,311 - 1,254,311
------------------------------------------
At 31 December 2012 12,847,878 (66,471) 12,781,407
------------------------------------------
Comprehensive income:
Loss for the year (2,904,912) (3,755) (2,908,667)
Other comprehensive income:
Currency translation differences (220,647) 1,349 (219,298)
------------------------------------------
Total comprehensive income 9,722,319 (68,877) 9,653,442
------------------------------------------
New shares issued 7,284,660 - 7,284,660
Share based payment 678,519 - 678,519
------------------------------------------
At 31 December 2013 17,685,498 (68,877) 17,616,621
------------------------------------------
Share premium reserve represents the amounts subscribed for share capital in
excess of the nominal value of the shares issued, net of cost of issue.
Legal reserve represents the El Salvadorian statutory reserve calculated on
results declared.
The exchange difference reserve is a separate component of Shareholders'
equity in which the exchange differences, arising from translation of the
results and financial positions of foreign operations that are included in
the Company's Consolidated Financial Statements, are reported.
The share option reserve represents the amount recognised in previous years
and the current year relating to the share options granted under the Group's
share option scheme.
Retained earnings represent the cumulative net gains and losses recognised
in the consolidated income statement.
The notes form an integral part of these financial statements
CONDOR GOLD PLC
COMPANY STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2013
Notes 31.12.13 31.12.12
GBP GBP
ASSETS:
NON-CURRENT ASSETS
3,516
Property, plant and equipment 10 4,202
3,206,020
Investments 12 3,424,863
Trade and other receivables 13 14,463,589 8,763,659
------------ ------------
17,892,654 11,973,195
------------ ------------
CURRENT ASSETS
Trade and other receivables 13 173,393 37,309
Cash and cash equivalents 2,232,489 2,455,596
------------ ------------
2,405,882 2,492,905
------------ ------------
TOTAL ASSETS 20,298,536 14,466,100
============ ============
LIABILITIES:
CURRENT LIABILITIES
Trade and other payables 15 580,873 234,561
------------ ------------
NON-CURRENT LIABILITIES
Other payables 15 - 156,626
------------ ------------
TOTAL LIABILITIES 580,873 389,187
------------ ------------
NET CURRENT ASSETS 1,825,009 2,258,344
------------ ------------
NET ASSETS 19,717,663 14,076,913
============ ============
SHAREHOLDERS' EQUITY
7,664,792 6,679,826
Called up share capital 16
22,228,265 15,928,571
Share premium
2,551,670 1,873,151
Share options reserve
Retained earnings (12,727,064) (10,404,635)
------------ ------------
TOTAL EQUITY 19,717,663 14,076,913
============ ============
The financial statements were approved and authorised for issue by the Board
of directors on 04 June 2014 and were signed on its behalf by:
M L Child
Chairman
Company No: 05587987
The notes form an integral part of these financial statements
CONDOR GOLD PLC
COMPANY STATEMENT OF CHANGES IN EQUITY
AS AT 31 DECEMBER 2013
Share
Share Share option Retained
capital premium reserve earnings Total
GBP GBP GBP GBP GBP
At 1 January 2012 5,583,451 10,000,846 618,840 (7,762,565) 8,440,572
Comprehensive
income:
Loss for the period - - - (2,642,070) (2,642,070)
---------------------------------------------------------
Total comprehensive
income 5,583,451 10,000,846 618,840 (10,404,635) 5,798,502
---------------------------------------------------------
New shares issued 1,096,375 5,927,725 - - 7,024,100
Share based payment - - 1,254,311 - 1,254,311
---------------------------------------------------------
At 31 December 2012 6,679,826 15,928,571 1,873,151 (10,404,635) 14,076,913
---------------------------------------------------------
Comprehensive
income:
Loss for the period - - - (2,322,429) (2,322,429)
---------------------------------------------------------
Total comprehensive
income 6,679,826 15,928,571 1,873,151 (12,727,064) 11,754,484
---------------------------------------------------------
New shares issued 984,966 6,299,694 - - 7,284,660
Share based payment - - 678,519 - 678,519
---------------------------------------------------------
At 31 December 2013 7,664,792 22,228,265 2,551,670 (12,727,064) 19,717,663
---------------------------------------------------------
Share premium reserve represents the amounts subscribed for share capital in
excess of the nominal value of the shares issued, net of cost of issue.
The share option reserve represents the amount recognised in previous years
and the current year relating to the share options granted under the Group's
share option scheme.
Retained earnings represent the cumulative net gains and losses recognised
in the Company's income statement.
The notes form an integral part of these financial statements
CONDOR GOLD PLC
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2013
31.12.13 31.12.12
GBP GBP
Cash flows from operating activities
Loss before tax (2,908,667) (3,256,013)
Share based payment 678,519 1,254,311
Depreciation charges 53,988 28,592
Loss on sale of tangible fixed assets - 145
Impairment charge of intangible fixed assets 33,517 41,002
Reallocation of tangible fixed assets - -
Finance income (8,367) (2,640)
------------ ------------
(2,151,010) (1,934,603)
Decrease/(increase) in trade and other receivables (458,164) (170,583)
Increase/(decrease) in trade and other payables (49,071) 299,772
Income tax paid - -
------------ ------------
Net cash absorbed in operating activities (2,658,245) (1,805,414)
------------ ------------
Cash flows from investing activities
Purchase of tangible fixed assets (132,868) (203,079)
Purchase of intangible fixed assets (5,233,589) (3,734,425)
Interest received 8,367 2,640
------------ ------------
Net cash absorbed in investing activities (5,358,090) (3,934,864)
------------ ------------
Cash flows from financing activitiesProceeds from
share issue 7,284,660 7,024,100
------------ ------------
Net cash from financing activities 7,284,660 7,024,100
------------ ------------
(Decrease) / Increase in cash and cash equivalents (731,675) 1,283,822
------------ ------------
Cash and cash equivalents at beginning of year 2,481,503 854,146
Exchange gains cash and bank 518,642 343,535
------------ ------------
Cash and cash equivalents at end of year 2,268,470 2,481,503
============ ============
The notes form an integral part of these financial statements
CONDOR GOLD PLC
COMPANY STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2013
Year Ended Year Ended
31.12.13 31.12.12
GBP GBP
Cash flows from operating activities
Loss before tax (2.322,430) (2,642,070)
Share based payment 678,519 1,254,311
Share based payment to subsidiaries treated as
investment (218,843) (271,468)
Historic share based payment to subsidiaries
movement - 5,102
Depreciation charges 1,492 457
Loss on disposal of investments - -
Finance income (8,352) (2,623)
------------ ------------
(1,869,614) (1,656,291)
Increase in trade and other receivables (5,836,014) (3,938,952)
Decrease in trade and other payables 191,688 274,311
------------ ------------
Net cash absorbed in operating activities (7,513,940) (5,320,932)
------------ ------------
Cash flows from investing activities
Interest received 8,352 2,623
Purchase of tangible fixed assets (2,179) (3,972)
------------ ------------
Net cash from investing activities 6,173 (1,349)
------------ ------------
Cash flows from financing activitiesProceeds from
share issue 7,284,660 7,024,100
------------ ------------
Net cash from financing activities 7,284,660 7,024,100
------------ ------------
(Decrease) / Increase in cash and cash equivalents (223,107) 1,701,819
------------ ------------
Cash and cash equivalents at beginning of year 2,455,596 753,777
------------ ------------
Cash and cash equivalents at end of year 2,232,489 2,455,596
============ ============
The notes form an integral part of these financial statements
CONDOR GOLD PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2013
1. ACCOUNTING POLICIES
General information
These consolidated financial statements are for Condor Gold Plc and its
subsidiary undertakings. The Company is a public company registered in England
and Wales on 10 October 2005 and is listed on the AIM Market of the London Stock
Exchange. The address of its registered office is 6 New Street Square, London,
EC4A 3LX. The nature of the Group's operation is described in the Directors'
report.
Functional and presentation currency
Items included in the financial statements of each of the Group's entities are
measured using the currency of the primary economic environment in which the
entity operates (the "Functional currency"). The consolidated financial
statements are presented in British pounds ("GBP ") which is the Company's
presentation and functional currency.
Basis of preparation
These financial statements have been prepared in accordance with International
Financial Reporting Standards (IFRS and IFRIC interpretations), as adopted by
the European Union, and with those parts of the Companies Act 2006 applicable to
companies reporting under IFRS. The financial statements have been prepared
under the historical cost convention except for the revaluation of certain
financial instruments that are measured at fair value.
The operations of the Group are currently financed from funds which the Company
has raised from shareholders. The Group has not yet earned revenues and is still
in the exploration phase of its business. In common with many exploration
companies, the Company raises finance for its exploration and appraisal
activities in discrete tranches to finance its activities for limited periods
only and further funding will be required from time to time to finance those
activities. The directors prepare and monitor cash flow projections based on
different funding scenarios and make assumptions about the availability of
additional finance in the future. On the basis of those cash flow projections,
the directors consider that the Company will require additional financial
resources in the twelve month period from the date of approval of these
financial statements to enable the Company to undertake its planned programme of
exploration activity and to meet its commitments. The directors are confident
that they will be able to raise the required funds and/or manage the current
level of expenditure and therefore consider the going concern basis to be
appropriate.
The financial statements have been rounded to the nearest pound.
Interpretations and amendments to published standards effective in 2013
The following are the new IFRS and IFRIC interpretations and amendments to
published standards effective in 2013 that are relevant to the Group:
IAS 19 Amendment - Employee Benefits
IAS 12 Amendments - Deferred tax: Recovery of Underlying Assets
IFRS 7 and IAS 32 Offsetting financial assets and financial liabilities
IAS 27 Separate Financial Statements
IAS 28 Investments in Associates and Joint Ventures
IFRS 10 Consolidated Financial Statements
The adoption of the above IFRS and IFRIC Interpretations did not result in any
substantial changes to the Group's accounting policies nor any significant
impact on these financial statements except for presentation and disclosures in
the financial statements.
Standards, amendments and interpretations to published standards not yet effective
As at the date of approval of these financial statements, the following
standards and interpretations were in issue but not yet effective:
Issued but not yet EU adopted
IFRS 9 - Financial instruments
IFRIC 21 Levies
IFRS 14 Regulatory Deferral Accounts
Issued and EU adopted
IFRS 10, 11, 12, 13 and IAS 27 and 28 Amendments - Investment Entities
IAS 36 - Amendment - Impairment of assets
IAS 39- Amendment - Novation of derivatives
The directors do not anticipate that the adoption of these standards and
interpretations in future reporting periods will have a material impact on the
Group's results.
Basis of consolidation
The Group financial statements consolidate the accounts of its subsidiaries;
Minerales Morazan S.A. De C.V., Condor S.A., La India Gold S.A. and Cerro Quiroz
Gold S.A. under the acquisition method. The financial statements of subsidiaries
are included in the consolidated financial statements from the date that control
commences until the date control ceases. Cerro Quiroz Gold S.A. is currently
dormant, with no previous trading activity.
Entities that the group has significant influence but are not subsidiaries or
joint ventures are accounted for as associates. The results and assets and
liabilities of the associate were included in the consolidated accounts using
the equity method of accounting.
All the Group's companies have 31 December as their year end. Consolidated
financial statements are prepared using uniform accounting policies for like
transactions.
Intercompany transactions, balances and unrealised gains on transactions between
Group companies are eliminated.
Business combinations
On the acquisition of a subsidiary, fair values are attributed to the acquiree's
identifiable assets, liabilities and contingent liabilities that meet the
conditions necessary for recognition, on the basis of fair value at the
acquisition date. Those mineral reserves and resources that are able to be
reliably measured are recognised in the assessment of fair values on
acquisition.
Where the cost of acquisition exceeds the values attributable to such net
assets, the difference is treated as purchase goodwill. After initial
recognition, goodwill is measured at cost less any accumulated impairment
losses. Where the cost of acquisition is less than the value attributable to
such net assets, the difference is treated as negative goodwill and is
recognised immediately in the income statement.
Property, plant and equipment
Property, plant and equipment is stated at cost, or deemed cost less accumulated
depreciation, and any recognised impairment loss.
Depreciation is provided at the following annual rates in order to write off
each asset over its estimated useful life.
Plant and machinery - 20% on cost
Fixtures and fittings - 50% on cost
Motor vehicles - 25% on cost
Computer equipment - 50% on cost
Investments
Investments in subsidiaries are stated at cost less provision for any impairment
in value.
Financial instruments
(a) Financial assets
Financial assets are classified as financial assets at fair value through profit
and loss, loans and receivables, held-to-maturity financial assets, and
available-for-sale financial assets, as appropriate. The Group determines the
classification of its financial assets at recognition. Where financial assets
are recognised initially, they are measured at fair value, plus, in the case of
investments not at fair value through profit and loss, directly attributable
transaction costs.
Financial assets are derecognised only when the contractual rights to the cash
flows from the financial assets expire or the Group transfers substantially all
risks and rewards of ownership.
Financial assets recognised in the statement of financial position as trade and
other receivables are classified as loans and receivables. They are recognised
initially at fair value and subsequently measured at amortised cost less
impairment.
Cash and cash equivalents are also classified as loans and receivables. They are
subsequently measured at amortised cost. Cash and cash equivalents include
cash-in-hand and deposits held with banks.
Investments which are held for trading are accounted for at fair value through
profit and loss. Investments are treated as held for trading if they are:
(i) acquired or incurred principally for the purpose of selling or repurchasing
in the near term;
(ii) part of a portfolio of identified financial instruments that are managed
together and for which there is evidence of a
recent actual pattern of short-term profit-taking; or
(iii) a derivative (except for derivatives that are designated as effective
hedging instruments).
In addition, the Group classifies investments as financial assets at fair value
through profit and loss where the investment eliminates or significantly reduces
valuation or recognition inconsistencies that would otherwise arise from
measuring financial assets or financial liabilities, or recognising gains and
losses on them, on different bases.
The net gain or loss recognised in profit and loss incorporates any dividend or
interest earned on the financial asset.
(b) Financial liabilities
Liabilities within the scope of IAS 39 are classified as financial liabilities
at fair value through profit and loss or other liabilities, as appropriate.
A financial liability is derecognised when the obligation under the liability is
discharged or cancelled or expires.
Financial liabilities included in trade and other payables are recognised
initially at fair value and subsequently at amortised cost.
Taxation
Current taxes are based on the results shown in the financial statements and are
calculated according to local tax rules, using tax rates enacted or
substantially enacted by the balance sheet date.
Deferred income tax is provided using the balance sheet method on temporary
difference at the reporting date between the tax bases of assets and liabilities
and their carrying amounts for financial reporting purposes.
Deferred income tax liabilities are recognised for all temporary differences,
except:
-- Where the deferred income tax liability arises from the initial
recognition of goodwill or of an asset or liability in a transaction
that is not a business combination and, at the time of the transaction,
affects neither the accounting profit nor taxable profit; and
-- In respect of taxable temporary differences associated with investments
in subsidiaries, associates and interests in joint ventures, where the
timing of the reversal of the temporary differences can be controlled by
the parent, investor or venturer and it is probable that the temporary
differences will not reverse in the foreseeable future.
Deferred income tax assets are recognised for all deductible temporary
differences, carry forward of unused tax credits and unused tax losses, to the
extent that it is probable that taxable profit will be available against which
the deductable temporary differences, and the carry forward of unused tax
credits and unused tax losses can be utilised, except:
-- Where the deferred income tax asset relating to the deductable temporary
difference arise from the initial recognition of an asset or liability
in a transaction that is not a business combination and, at the time of
the transaction, affects neither the accounting profit nor taxable
profit or loss
-- In respect of deductable temporary differences associated with
investments in subsidiaries, associates and interests in joint ventures,
deferred income tax assets are recognised only to the extent that is
probable that the temporary differences will reverse in the foreseeable
future and taxable profit will be available against which the temporary
differences can be utilised.
Intangible assets - exploration costs, licences and minerals resources
Exploration expenditure comprises costs which are directly attributable to
researching and analysing data. Licences include the costs incurred in acquiring
mineral rights and, the entry premiums paid to gain access to areas of interest.
Mineral resources include amounts paid to third parties to acquire interests in
existing projects.
When it has been established that a mineral deposit has development potential,
all costs (direct and applicable overheads) incurred in connection with the
exploration and development of the mineral deposits are capitalised until either
production commences or the project is not considered economically viable.
In the event of production commencing, exploration costs, licences and mineral
resources are amortised through administrative expenses, over the expected life
of the mineral reserves on a unit production basis. Other pre-trading expenses
are written off as incurred. For the purposes of impairment testing, intangible
assets are allocated to specific projects with each licence reviewed annually.
Where a project is abandoned or is considered to be of no further interest, the
related costs are written off.
Foreign currencies
Assets and liabilities in foreign currencies are translated into sterling at the
rates of exchange ruling at the balance sheet date. Transactions in foreign
currencies are translated into sterling at the rate of exchange ruling at the
date of the transaction. Exchange differences are taken into account in arriving
at the operating result.
On consolidation of a foreign operation, assets and liabilities are translated
at the balance sheet rates, income and expenses are translated at rates ruling
at the transaction date. All resulting exchange differences shall be recognised
in other comprehensive income and accumulated in equity.
Share based payments
The fair value of equity instruments granted to directors, employees and
consultants is charged to the income statement with a corresponding increase in
equity. The fair value of share options is measured at grant date, using the
Black-Scholes model, and spread over the period during which the employee
becomes unconditionally entitled to the award. The charge is adjusted to reflect
the number of shares or options that vest, except where forfeiture is due to
criteria, as stated in the share option agreements.
Revenue recognition
Revenue is recognised to the extent that it is probable that the economic
benefits will flow to the Group and the revenue can be reliably measured.
Revenue is measured at the fair value of the consideration received, excluding
discounts, rebates, and sales taxes or duty. The Group assesses its revenue
arrangements against specific criteria in order to determine if it is acting as
principal or agent. The Group has concluded that it is acting as a principal in
all of its revenue arrangements.
Revenue from the sale of goods is recognised when the significant risks and
rewards of ownership have been transferred, which is considered to occur when
title passes to the customer. This generally occurs when product is physically
transferred onto a vessel, train, conveyor or other delivery mechanisms. Revenue
is measured at the fair value of the consideration received or receivable.
Interest revenue
Interest revenue is recognised as it accrues, using the effective interest rate
method (EIR).
Critical accounting estimates and judgements
The preparation of financial information in conformity with generally accepted
accounting standards requires management to make estimates and judgements that
affect the reported amounts of assets and liabilities as well as the disclosure
of contingent assets and liabilities at the balance sheet date and the reported
amounts of income and expenses during the reporting period.
In the process of applying the Group's accounting policies, which are described
in note 1, management has made the following assumptions that have the most
significant effect on the amounts recognised in the financial information:
a) Impairment of intangible assets and investment in subsidiaries
The Group tests annually for impairment or more frequently if there are
indications that the intangible assets and/or investments might be impaired.
Determining whether the intangible assets and/or investments are impaired
requires an estimation of the value in use of the cash generating units to which
the intangible assets belong to. The value in use calculation requires the Group
to estimate the future cash flows expected to arise from the cash-generating
unit and the suitable discount rate in order to calculate the present value.
In particular, the present moratorium on processing applications for mineral
exploration and extraction in El Salvador gives rise to a critical judgement in
preparing the financial statements. The factors considered by the Board in
arriving at its judgement in relation to El Salvador are set out in note 11, 12
and 13.
The situation in relation to the moratorium in El Salvador continues to be
closely monitored on an ongoing basis by the directors in the light of local
intelligence, and the board remain hopeful that the moratorium in El Salvador
will be lifted and that the Company's significant assets in El Salvador will
once again be able to be further utilised.
b) Share based payments
The Group has made awards of options on its un-issued share capital to certain
directors and employees as part of their remuneration package.
The valuation of these options involved making a number of critical estimates
relating to price volatility, future dividend yields, expected life of the
options and interest rates. These assumptions are described in more detail in
note 17.
2. REVENUE AND SEGMENTAL REPORTING
The Group's operating segments have been determined based on geographical areas.
The Group's operations are located in UK, El Salvador and Nicaragua. The Group
undertakes only one business activity as described in the Director's Report.
Revenue and results
All transactions between each reportable segment are accounted for using the
same accounting policies as the Group uses, as set out in note 1.
The segment results are the measures that are reported to the Groups' chairman
in order to assess the segments' performance during the period.
The Group has not generated revenue during the year.
The Group's results by reportable segment for the year ended 31 December 2013
are as follows:
UK El Salvador Nicaragua Consolidation
GBP GBP GBP GBP
RESULTS
Operating loss 2,330,782 37,565 548,687 2,917,034
Interest income 8,352 15 - 8,367
Income tax expense - - - -
Included in operating
loss
Impairment of
intangibles - 33,517 - 33,517
Depreciation 1,492 - 52,496 53,988
The Group's results by reportable segment for the year ended 31 December 2012
are as follows:
UK El Salvador Nicaragua Consolidation
GBP GBP GBP GBP
RESULTS
Operating
(profit)/loss 2,644,693 44,796 569,164 3,258,653
Interest income 2,623 17 - 2,640
Income tax expense - - - -
Assets - 2013
All transactions between each reportable segment are accounted for using the
same accounting policies as the Group uses, as set out in note 1.
UK El Salvador Nicaragua Consolidation
GBP GBP GBP GBP
ASSETS
Total assets 2,410,084 4,305,420 11,551,334 18,266,838
============= ============= ============= =============
LIABILITIES
Total liabilities 580,873 1,074 68,270 650,217
============= ============= ============= =============
The group had intercompany debt owed to the UK at 31 December 2013 split
segmentally as follows:
Due from El Salvador GBP 2,008,136
Due from Nicaragua GBP 12,455,453
Assets - 2012
All transactions between each reportable segment are accounted for using the
same accounting policies as the Group uses, as set out in note 1.
UK El Salvador Nicaragua Consolidation
GBP GBP GBP GBP
ASSETS
Total assets 2,496,421 4,319,372 6,664,902 13,480,695
============= ============= ============= =============
UK El Salvador Nicaragua Consolidation
GBP GBP GBP GBP
LIABILITIES
Total liabilities 389,187 545 309,556 699,288
============= ============= ============= =============
The Group had intercompany debt owed to the UK at 31 December 2012 split
segmentally as follows:
Due from El Salvador GBP 1,968,595
Due from Nicaragua GBP 6,795,064
4. STAFF COSTS
31.12.13 31.12.12
GBP GBP
Wages and salaries 1,450,170 431,403
Social security costs 76,545 20,169
------------- -------------
1,526,715 451,572
============= =============
Staff costs included within additions to exploration costs during the year were
GBP 1,285,889 (2012: GBP 273,926).
The average monthly number of Group and Company employees during the year were
as follows:
Group Company
2013 2012 2013 2012
--------------------- ---------------------
Directors 3 3 3 3
Employees 83 82 1 1
--------------------- ---------------------
86 85 4 4
--------------------- ---------------------
Directors remuneration, which form part of key management personnel is described
below. There are no other key management personnel in the opinion of the
directors.
Short Term Employee Salary Payments Related Party Total
Benefits: Payments (i)
2013 2012 2013 2012 2013 2012
GBP GBP GBP GBP GBP GBP
M L Child 100,000 100,000 55,000 50,000 155,000 150,000
J Mellon - - 16,000 12,000 16,000 12,000
R Davey 31,000 41,000 - - 31,000 41,100
------------------------------------------------------
Total 131,000 141,000 71,000 62,000 202,000 203,100
------------------------------------------------------
(i) Refer to note 18 for listing of related parties
The Company has adopted a discretionary bonus scheme by which bonuses are paid
to directors, employees and consultants and used by the recipients to subscribe
for new Ordinary Shares at market value. A total of up to 15 percent of the
total share capital in issue from time to time will be made available for this
purpose without the Board having first obtained the consent of the Shareholders.
The amount of any bonus payable under this scheme will be subject to approval by
the remuneration committee. At the year end no bonuses were paid.
During the year M Child exercised 450,000 share options.
The interests of the directors in options to subscribe for ordinary shares of
the Company were:
As at As at
Latest 1 Granted Exercised Lapsed 31
Exercise exercise January during in the in the December
price (p) date 2013 the year year year 2013
----------------------------------------------------------------------------
DIRECTORS
M L Child 20 23 Dec 2013 450,000 - 450,000 - -
180 15 Apr 2016 250,000 - - - 250,000
100 27 Jun 2017 250,000 - - - 250,000
100 30 June 2018 - 600,000 600,000
J Mellon 180 15 Apr 2016 250,000 - - - 250,000
100 27 Jun 2017 100,000 - - - 100,000
100 30 June 2018 - 150,000 150,000
R Davey 180 10 Jan 2012 100,000 - - - 100,000
100 27 Jun 2017 100,000 - - - 100,000
100 30 June 2018 - 150,000 - - 150,000
The options all have a life of five years from the date they were issued. The
exercise price varies dependent on the date of issue.
There are no vesting conditions attached to these options. However, if the
individual's engagement with the company is terminated, the options lapse within
30 days.
The market price of the shares at 31 December 2013 was 67.5p (2012: 156p).
The market price during the year ranged from 67.5p to 172.5p (2012: 48p to 196p).
No directors had any interests in warrants to subscribe for ordinary shares of
the company during the year.
5. FINANCE INCOME
31.12.13 31.12.12
GBP GBP
Deposit account interest 8,367 2,640
------------- -------------
6. LOSS BEFORE TAX
The loss before tax is stated after charging:
31.12.13 31.12.12
GBP GBP
Depreciation - owned assets 1,492 457
Fees payable to the company's auditor for the
audit of parent company and consolidated
financial statements 21,000 19,500
Foreign exchange differences 142,427 72,563
Impairment of intangible assets (See note 11) 33,517 41,002
Rent - operating leases 7,177 8,335
------------- -------------
7. TAXATION
Analysis of the tax charge 31.12.13 31.12.12
GBP GBP
Current tax:
Tax - -
------------- -------------
Total tax charge in income statement - -
============= =============
Reconciliation of the tax charge
31.12.13 31.12.12
GBP GBP
Loss before tax (2,908,667) (3,256,013)
------------- -------------
Loss before tax multiplied by standard rate
ofCorporation tax in the UK of 20% (2012: 20%) (581,733) (651,203)
Effects of:Non-taxation income/(non-deductible (10,350) (2,434)
expenses)Deferred tax not provided 592,083) 653,637)
Differences in overseas taxation rates - -)
------------- -------------
Total tax charge in income statement - -,
------------- -------------
A deferred tax asset has not been recognised in respect of deductible temporary
differences relating to certain losses carried forward at the year end, as there
is insufficient evidence that taxable profits will be available in the
foreseeable future against which the deductible temporary difference can be
utilised. The unrecognised deferred tax asset was GBP 2.9million (2012: GBP
2.3million).
8. LOSS OF PARENT COMPANY
As permitted by Section 408 of the Companies Act 2006, the profit and loss
account of the parent Company is not presented as part of these financial
statements. The parent Company's loss for the financial year was GBP 2,322,430
(2012: GBP 2,642,070).
9. LOSS PER SHARE
Basic earnings per share is calculated by dividing the earnings attributable to
ordinary shareholders by the weighted average number of ordinary shares
outstanding during the period.
A reconciliation is set out below:
31.12.13 31.12.12
Basic earnings per share GBP GBP (i)
Loss for the year 2,908,667 3,256,013
Weighted average number of shares 37,339,399 30,570,427
Loss per share (in pence) (7.79) (10.65)
============= =============
Diluted earnings per share
In accordance with IAS 33 and as the Group has reported a loss for the year, the
share options and warrants as detailed in note 17 are anti-dilutive.
Accordingly, diluted earnings per share is the same as basic earnings per share.
(i) Rebased in line with IAS 33 for the share consolidation on 25 June 2012.
10. PROPERTY, PLANT AND EQUIPMENT
Improvements
to rental Plant & Fixtures &
property machinery fittings
GBP GBP GBP
Group
Cost or valuation:
At 1 January 2012 200 15,998 27,100
Additions 115,839 52,573 5,655
Disposals - - -
Reclassification - - -
Exchange difference (16) (812) (1,622)
------------- ------------- -------------
At 31 December 2012 116,023 67,759 31,133
------------- ------------- -------------
Additions 57,449 36,897 1,189
Disposals - - -
Exchange difference (6,666) (3,267) (981)
------------- ------------- -------------
At 31 December 2013 166,806 101,389 31,341
------------- ------------- -------------
Accumulated depreciation and
impairment:
At 1 January 2012 - (13,551) (17,437)
Charge for period (11,602) (2,183) (2,170)
Disposals - - -
Reclassification - -
Exchange difference - 168 (643)
------------- ------------- -------------
At 31 December 2012 (11,602) (15,566) (20,250)
------------- ------------- -------------
Charge for period (14,321) (14,478) (2,681)
Disposals - - -
Exchange difference 5,054 268 480
------------- ------------- -------------
At 31 December 2013 (20,869) (29,776) (22,451)
------------- ------------- -------------
Net Book Value:
------------- ------------- -------------
At 31 December 2012 104,421 52,193 10,883
============= ============= =============
------------- ------------- -------------
At 31 December 2013 145,937 71,613 8,890
============= ============= =============
Computer
Motor equipment &
vehicles software Totals
GBP GBP GBP
Group
Cost or valuation:
At 1 January 2012 87,434 44,755 175,487
Additions 22,397 6,615 203,079
Disposals - (145) (145)
Reclassification - - -
Exchange difference (6,181) (1,782) (10,413)
------------- ------------- -------------
At 31 December 2012 103,650 49,443 368,008
------------- ------------- -------------
Additions 28,200 9,133 132,868
Disposals - - -
Exchange difference (5,252) (1,138) (17,304)
------------- ------------- -------------
At 31 December 2013 126,598 57,438 483,572
------------- ------------- -------------
Accumulated depreciation and
impairment:
At 1 January 2012 (45,413) (39,765) (116,166)
Charge for period (9,982) (2,654) (28,591)
Disposals - - -
Reclassification - - -
Exchange difference 6,625 (1,234) 4,916
------------- ------------- -------------
At 31 December 2012 (48,770) (43,653) (139,841)
------------- ------------- -------------
Charge for period (16,753) (5,755) (53,988)
Disposals - - -
Exchange difference 2,098 882 8,782
------------- ------------- -------------
At 31 December 2013 (63,425) (48,526) (185,047)
------------- ------------- -------------
Net Book Value:
------------- ------------- -------------
At 31 December 2012 54,880 5,790 228,167
============= ============= =============
------------- ------------- -------------
At 31 December 2013 63,173 8,912 298,525
============= ============= =============
The current year depreciation charge for the subsidiaries of GBP 52,496 (2012:
GBP 28,134) is included within the addition to exploration costs in the year.
Fixtures
& Computer
Company fittings Equipment Totals
GBP GBP GBP
Cost:
At 1 January 2013 2,338 12,820 15,158
Additions 263 1,916 2,179
----------- ----------- -----------
At 31 December 2013 2,601 14,736 17,337
----------- ----------- -----------
Depreciation:
----------- ----------- -----------
At 1 January 2012 - (11,186) (11,186)
(139) (318) (457)
Charge for the yearDisposals -) -) -)
----------- ----------- -----------
At 1 January 2013 (139) (11,504) (11,643)
Charge for the year (628) (864) (1,492)
Disposals - - -
----------- ----------- -----------
At 31 December 2013 (767) (12,368) (13,135)
----------- ----------- -----------
Net Book Value:
----------- ----------- -----------
At 31 December 2012 2,199 1,316 3,515
=========== =========== ===========
Net book Value:
----------- ----------- -----------
At 31 December 2013 1,834 2,368 4,202
=========== =========== ===========
11. INTANGIBLE ASSETS
Exploration Mineral
costs resources Licences Total
GBP GBP GBP GBP
Group
Cost or valuation:
At 1 January 2012 6,219,634 3,326,448 472,036 10,018,118
Additions 3,734,425 - - 3,734,425
Disposals - - - -
Exchange difference (507,863) - - (507,863)
----------- ----------- ----------- -----------
At 31 December 2012 9,446,196 3,326,448 472,036 13,244,680
Additions 5,253,947 - - 5,253,947
Disposals - - - -
Exchange difference (749,778) - - (749,778)
----------- ----------- ----------- -----------
At 31 December 2013 13,950,365 3,326,448 472,036 17,748,849
----------- ----------- ----------- -----------
Accumulated depreciation and
impairment:
At 1 January 2012 (1,817,658) (663,510) (472,036) (2,953,204)
Impairment for year (41,002) - - (41,002)
----------- ----------- ----------- -----------
At 31 December 2012 (1,858,660) (663,510) (472,036) (2,994,206)
----------- ----------- ----------- -----------
Impairment for year (33,515) - - (33,515)
----------- ----------- ----------- -----------
At 31 December 2013 (1,892,175) (663,510) (472,036) (3,027,721)
----------- ----------- ----------- -----------
Net Book Value:
----------- ----------- ----------- -----------
At 31 December 2012 7,587,536 2,662,938 - 10,250,474
=========== =========== =========== ===========
----------- ----------- ----------- -----------
At 31 December 2013 12,058,190 2,662,938 - 14,721,128
=========== =========== =========== ===========
In assessing whether an impairment is required for the carrying value of an
asset, its carrying value is compared with its recoverable amount. The
recoverable amount is the higher of the asset's fair value less costs to sell
and value in use. Given the nature of the Group's activities, information on the
fair value of an asset is usually difficult to obtain unless negotiations with
potential purchasers or similar transactions are taking place. Consequentially,
unless indicated otherwise, the recoverable amount used in assessing the
impairment charges described below is value in use. The Group generally
estimates value in use using a discounted cash flow model.
The calculation of value in use is most sensitive to the following assumptions:
-- Production volumes
-- Discount rates
-- Metal prices
-- Operating costs
In arriving at its assessment as to whether an impairment review is required in
relation to its El Salvador assets, which amounted to GBP 4,305,420 (2012 GBP
4,319,372) at the balance sheet date, the following were considered in the
context of the ongoing moratorium in that country;
-- Whilst the Company's exploration licences in El Salvador are currently
suspended as a result of the moratorium on mining activities they have
not been revoked, nor have they expired.
-- The Company has received assurances from a number of relevant government
officials that it will maintain its concession areas following the
outcome of the moratorium process.
-- Exploration for and evaluation of mineral resources in the El Salvador
project areas show excellent potential through additional drilling. The
gold resource of 747,000 oz has the potential to double to 1.5m oz and
the silver resource has the potential to increase from 22.4m oz to over
50m oz, which would be a large commercial reserve.
-- Gold and silver prices have increased significantly since the El
Salvador projects were last drilled.
-- Condor remains committed to continuing its exploration and evaluation
activities in the El Salvador project areas
-- Another company with 1.7m oz reserves in El Salvador recently announced
details of an independent valuation of its assets in excess of $300
million.
-- The directors consider the most likely outcome of the present moratorium
will be a resumption of mining activities in El Salvador
-- The purchase of Pacific Rim Mining (in El Salvador) for circa US $12m or
US $7 per total resource ounce gold equivalent.
In arriving at its assessment as to whether an impairment review is required in
relation to its Nicaragua assets, which amounted to GBP 11,551,334 (2012: GBP
6,664,902) at the balance sheet date, the following factors were considered:
The exploration assets are in good standing;
-- Substantive expenditure is planned on further exploration for and
evaluation of mineral resources in Nicaragua project areas;
-- Results from exploration for evaluation of mineral resources to date
lead the directors to believe that the projects can be development into
significant commercial reserves;
-- Sufficient data exists to indicate that the carrying amount of the
exploration and evaluation asset is likely to be recovered in full from
successful development or by sale.
-- Sensitivity analyses have been performed to the key assumptions listed
above which would not result in an impairment to these assets.
-- The La India Concession was added to Condor's portfolio in late 2010
through a concession swap with Canadian miner B2Gold, following a Letter
Agreement signed on 31 August 2010 between Condor and B2Gold. The
current 68.5 sq km La India Concession was originally part of a much
larger, 353.0 sq km El Limon -La India Concession, which in 1994 granted
a 3% Net Smelter Royalty ("NSR") to Repadre Capital Corporation. Due to
new mining laws, effective in August 2001, much of the El Limon-La India
Concession was relinquished to the Government and became available for
re-grant. Condor has received legal opinion from its lawyers in
Nicaragua that the 3% NSR is invalid under Nicaraguan law. B2Gold
provided Condor with a copy of a royalty agreement some 2 years after
the concession swap. The NSR is current the subject of a dispute between
B2Gold and Condor. More detail can be found in the Mineral Resource
Estimate for La India Project using the National Instrument 43-101
standard of disclosure in accordance with the Canadian Institute of
Mining, Metallurgy and Petroleum (CIM) standards produced by SRK on 8
November 2013.
In light of the above, the Board does not consider the Nicaragua exploration
licences and related intangible assets to require impairment reviews and has
continued to capitalise exploration expenditure in relation to those projects.
12. INVESTMENTS
Equity in
subsidiary Capital
Company undertakings contribution Total
GBP GBP GBP
Cost:
1 January 2012 3,332,026 271,138 3,603,164
Capital contribution relating to
share based payment - 271,468 271,468
Disposals - (5,102) (5,102)
------------------------------------------
3,332,026 537,504 3,869,530
31 December 2012
Capital contribution relating to
share based payment - 218,843 218,843
Disposals - - -
------------------------------------------
At 31 December 2013 3,332,026 756,347 4,088,373
------------------------------------------
Provision for impairment:
Charge at 1 January 2012 (663,510) - (663,510)
------------------------------------------
At 31 December 2012 and December
2013 (663,510) - (663,510)
------------------------------------------
Net Book Value:
At 31 December 2012 2,668,516 537,504 3,206,020
==========================================
At 31 December 2013 2,668,516 756,347 3,424,863
==========================================
In assessing whether an impairment is required for the carrying value of an
asset, reference has been made to the underlying intangible assets discussed in
note 11.
The capital contribution relating to share based payments relates to 496,000
share options granted by the Company to employees of a subsidiary undertaking in
the Group during the year, and a further 225,300 from the prior year. Refer to
note 17 for further details of share options.
The Company's investments at the balance sheet date in the share capital of
companies include the following:
Name Country of Interest Class of
incorporation % shares
----------------------------------------------------------------------------
Minerales Morazan S.A. de C.V. El Salvador 90 Ordinary
Condor S.A. Nicaragua 100 Ordinary
La India Gold S.A. Nicaragua 100 Ordinary
Cerro Qurioz Gold S.A. Nicaragua 20 Ordinary
Name Nature of Share Loss for
the business capital the year
and
reserves
----------------------------------------------------------------------------
GBP GBP
Minerales Morazan S.A. de C.V. Gold and silver (688,771) (37,550)
exploration
Condor S.A. Gold and silver (1,166,671) (178,057)
exploration
La India Gold S.A. Gold and silver (523,338) (370,630)
exploration
Cerro Qurioz Gold S.A. Gold and silver - -
exploration
During the prior year the Company donated 10% of its stake in Minerales Morazan
S.A. de C.V. to Condor Resources El Salvador Charitable Trust, a related
Charity, set up for the prevention and relief of poverty in the Republic of El
Salvador.
13. TRADE AND OTHER RECEIVABLES
Group Company
31.12.13 31.12.12 31.12.13 31.12.12
GBP GBP GBP GBP
Current:
Other receivables 951,033 482,698 146,054 1,800
Prepayments 27,682 37,853 27,339 35,509
---------- ---------- ----------- -----------
978,715 520,551 173,393 37,309
---------- ---------- ----------- -----------
Non-current: Amounts owed by - - 16,119,602 10,419,672
Group undertakingsProvision - - (1,656,013) (1,656,013)
---------- ---------- ----------- -----------
- - 14,463,589 8,763,659
---------- ---------- ----------- -----------
---------- ---------- ----------- -----------
978,715 520,551 14,636,982 8,800,968
========== ========== =========== ===========
In assessing whether an impairment is required for the carrying value of the
amounts owed by Group undertakings to the Company, reference has been made to
the underlying intangible assets discussed in note 11.
14. FINANCIAL INSTRUMENTS
The Group uses financial instruments such as trade receivables and payables and
other items that arise directly from its operations. The main purpose of these
financial instruments is to help finance the Group's operations.
A financial instrument is any contract that gives rise to both a financial asset
of one enterprise and a financial liability or equity instrument of another
enterprise.
The Group's financial instruments, which are recognised in the balance sheet,
comprise financial assets at fair value recognised through profit and loss, cash
and cash equivalents, receivables and payables. The information about the extent
and nature of these recognised financial instruments, including significant
terms and conditions that may affect the amount, timing and certainty of future
cash flows are disclosed in the respective notes below, where applicable.
The Group does not generally enter into derivative transactions (such as
interest rate swaps and forward foreign currency contracts) and it is, and has
been throughout the period under review, the Group's policy that no trading in
financial instruments shall be undertaken.
There were no financial instruments not recognised in the balance sheet of the
Company and the Group.
14.1 Financial instruments by category
Group Company
31.12.13 31.12.12 31.12.13 31.12.12
GBP GBP GBP GBP
Assets as per balance sheet
Loans and receivables:
Other receivables 978,715 520,551 173,393 37,309
Cash and cash equivalents 2,268,470 2,481,503 2,232,489 2,455,596
---------- ---------- ---------- ----------
Total 3,247,185 3,002,054 2,405,882 2,492,905
========== ========== ========== ==========
Group Company
31.12.13 31.12.12 31.12.13 31.12.12
GBP GBP GBP GBP
Liabilities as per balance sheet
Loans and receivables:
Trade and other payables 355,142 361,996 337,727 335,496
Accrued expenses 295,075 337,292 243,146 53,691
---------- ---------- ---------- ----------
Total 650,217 699,288 580,873 389,187
========== ========== ========== ==========
The Directors consider the carrying value of the financial assets and
liabilities to approximate their fair values.
14.2 Financial risk management objectives and policies
The Company's activities expose it to a variety of financial risks: currency
risk, credit risk, liquidity risk and cash flow interest-rate risk. These risks
are limited by the Group's financial management policies and practices described
below:
(a) Foreign currency exchange risks
The Group does not hedge its foreign currencies. The directors believe that the
contracts for transfers of funds to Central America are so small, there would be
no benefit gained from hedging these contracts on the market. The situation is
monitored on a regular basis. Transactions with vendors are mainly denominated
in a number of currencies. Therefore the directors consider that the currency
exposure arising from these transactions is not significant to the Group.
At present the Group does not have any formal policy for hedging against
exchange exposure. The Group may, when necessary, enter into foreign currency
forward contracts to hedge against exposure from currency fluctuations, however,
the Group has not entered into any currency forward contracts to date.
The following significant exchange rates were applied during the year:
Reporting date spot
Average rate rate
2013 2012 2013 2012
----------------------------------------------------------------------------
USD 1 0.6397 0.6311 0.6064 0.6191
NIO 1 0.0264 0.0273 0.0236 0.0257
----------------------------------------------------------------------------
A decrease of 1% in the relative strength of sterling (GBP) to US dollars (USD)
would result in an increased realised foreign exchange losses of GBP 6,718
(2012: GBP 3,543).
The Nicaraguan Cordoba (NIO) is set on a crawling peg to the US Dollar, with a
fixed 5% devaluation per annum. Therefore the Directors do not currently
consider any change in the relative strength of the Cordoba to be a risk to the
Company. Should NIO break away from its crawling peg to the USD, the Directors
will review this risk.
(b) Credit risk
As the Group had no turnover during the year; there is no significant
concentration of credit risk. The Group does not have written credit risk
management policies or guidelines. The Group's cash is held in reputable banks.
The carrying amount of these financial assets represent the maximum credit
exposure. No collateral was held as security and other credit enhancements
during the period. No financial assets are impaired or past due at the end of
the reporting period.
(c) Liquidity risks
To ensure liquidity, the Group maintains sufficient cash and cash equivalents to
meet its obligations as and when they fall due.
(d) Cash flow and fair value interest rate risks
The Group has no interest-bearing liabilities. Interest rates on bank deposits
are based on the relevant national inter bank offered rates. The Group has no
fixed interest rate assets.
The main financial risks for the Group are set out within the Strategic Report
on pages 6 - 8.
At 31 December 2013 the currency and interest rate profile of the financial
assets and liabilities of the Group was as follows:
31.12.13 31.12.12
GBP Weighted GBP Weighted
average average
interest interest
rate rate
Financial assets:
GBP - cash and cash 2,232,489 0.20% 2,556,146 0.20%
equivalents
USD - cash and cash 11,682 0.00% (90,262) 0.00%
equivalents
NIO - cash and cash 24,299 0.00% 15,619 0.00%
equivalents
------------ ------------
Total 2,268,470 2,481,503
============ ============
A decrease of 1% on the interest rates offered by the bank will result in a
decrease in interest receivable of GBP 8,367 (2012: GBP 2,640).
(e) The Group prepares budgets and forecasts to project its future spend, and
manages the capital available accordingly.
15. TRADE AND OTHER PAYABLES
Group Company
31.12.13 31.12.12 31.12.13 31.12.12
GBP GBP GBP GBP
Current:
Trade payables 24,388 35,460 22,241 19,247
Social security and other taxes 20,685 16,053 5,941 5,766
Other payables 310,069 155,857 309,545 155,857
Accrued expenses 295,075 337,292 243,146 53,691
---------- ---------- ---------- ----------
650,217 544,662 580,873 234,561
---------- ---------- ---------- ----------
Non-current:
Other payables - 154,626 - 154,626
---------- ---------- ---------- ----------
- 154,626 - 154,626
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
Total 650,217 699,288 580,873 389,187
========== ========== ========== ==========
The maturity analysis of non-current trade and other payables is as follows:
Group Company
31.12.13 31.12.12 31.12.13 31.12.12
GBP GBP GBP GBP
Due within 1-2 years - 154,626 - 154,626
---------- ---------- ---------- ----------
Total - 154,626 - 154,626
========== ========== ========== ==========
No interest is charged on the trade payables. The Company and the Group has
financial risk management policies in place to ensure that all payables are paid
within the credit time frame. The directors do not consider that is a material
risk to the Group.
16. CALLED UP SHARE CAPITAL AND SHARE PREMIUM
Number of Ordinary Share
shares shares premium Total
(thousands) GBP GBP GBP
At 31 December 2011 558,345 5,583,451 10,000,846 15,584,296
Consolidation of share
capital 27,917
-----------
Proceeds from shares issued 5,482 1,096,375 5,927,725 7,024,100
----------- ----------- ----------- -----------
At 31 December 2012 33,399 6,679,826 15,928,571 22,608,397
----------- ----------- ----------- -----------
Proceeds from shares issued 4,837 984,966 6,299,694 7,284,660
At 31 December 2013 38,233 7,664,792 22,228,265 29,893,057
=========== =========== =========== ===========
On 25 June 2012 the Company underwent a share consolidation, whereby all 1p
ordinary shares were consolidated into 20p ordinary shares.
The company has one class of ordinary shares which carry no right to fixed
income nor have any restrictions attached.
17. EQUITY-SETTLED SHARE OPTION SCHEME AND WARRANTS
a) Share Options
The Company has established a share option scheme for Directors, employees and
consultants to the Group.
The options all have a maximum life of five years from the date they were
issued. The exercise price is dependent on the date of issue.
There are no vesting conditions attached to these options, however, if the
individual's engagement with the Company is terminated, the options lapse within
30 days.
Details of the share options outstanding during 2012 were as follows:
1 January Forfeit
2012 Issued Exercised or lapsed
Date of Grant No. of shares in Year in year in year
----------------------------------------------------------------------------
23/12/2008 555,000 - (100,000) -
10/09/2009 100,000 - (47,500) -
31/12/2010 97,500 - (47,500) -
15/04/2011 895,000 - - (74,200)
15/08/2011 62,500 - - -
10/10/2011 20,000 - - -
20/12/2012 847,000 - -
--------------------------------------------------------
1,730,000 847,000 (195,000) (74,200)
Date from
which options
31 December are first
Date of Grant 2012 exercisable Lapse date
--------------------------------------------------------------
23/12/2008 455,000 24/12/2010 23/12/2013
10/09/2009 52,500 11/09/2010 10/09/2014
31/12/2010 50,000 01/11/2011 31/12/2015
15/04/2011 820,800 16/04/2012 15/04/2016
15/08/2011 62,500 16/07/2012 18/08/2016
10/10/2011 20,000 11/10/2012 10/10/2016
20/12/2012 847,000 21/12/2013 20/12/2017
--------------
2,307,800
Details of the share options outstanding during 2013 were as follows:
1 January
2013 Forfeit
No. of shares Issued Exercised or lapsed
Date of Grant (restated(i)) in Year in year in year
----------------------------------------------------------------------------
23/12/2008 455,000 - (455,000) -
10/09/2009 52,500 - (2,500) -
31/12/2010 50,000 - - -
1504/2011 820,800 28,600 - (132,000)
15/08//2011 62,500 - - (19,000)
10/10/2011 20,000 - - -
20/12/2012 847,000 - - -
01/07/2013 - 1,412,500 - -
--------------------------------------------------------
2,307,800 1,441,100 (457,500) (151,000)
Date from
which options
31 December are first
Date of Grant 2013 exercisable Lapse date
--------------------------------------------------------------
23/12/2008 - 24/12/2010 23/12/2013
10/09/2009 50,000 11/09/2010 10/09/2014
31/12/2010 50,000 - 01/11/2011 31/12/2015
1504/2011 714,400 16/04/2014 15/04/2016
15/08//2011 43,500 16/07/2012 18/08/2016
10/10/2011 20,000 16/07/2012 10/10/2016
20/12/2012 847,000 21/12/2013 20/12/2017
01/07/2013 1,412,500 01/07/2014 30/06/2018
--------------
3,140,400
(i) The number of shares shown here have been restated for the share
consolidation on 25 June 2012.
The weighted average exercise price per share is 96p (2012: 116p) and the
average contractual life is 5 years (2012: 5 years).
The estimated fair value of the options and warrants granted in 2013 was GBP
962,538 (2012: GBP 1,176,058) and has been fully recognised within
administration expenses, on a pro-rata basis over the vesting period. This fair
value has been calculated using the Black-Scholes option pricing model. The
inputs into the model were as follows:
2013 2012
Share price 67.5p 156p
Exercise price 100p 100p
Expected volatility 54.87% 140%
Expected life (yrs.) 5 3
Risk free rate 1.920% 2.461%
Expected dividend yield - -
A movement from the share option reserve of GBP 678,519 (2012: GBP 1,254,311)
was made during the year reflecting the movements on issued warrants and options
during the year.
Expected volatility was determined with reference to the historical volatility
of the Company's share price. The expected life used in the model has been
adjusted, based on management's best estimate, for the effects of
non-transferability, exercise restrictions and behavioural considerations.
The weighted average remaining contractual life of the share options outstanding
at the end of the period is 3 years (2012: 3 years).
b) Warrants
During the year the Company issued warrants to its consultants for services
provided totalling 1,458,333.
The warrants all have a maximum life of two and a half years from the date they
were issued.
No warrants were outstanding during 2012.
The estimated fair value of the warrants granted in 2013 was GBP 475,414 (2012:
GBP nil).
This fair value has been calculated using the Black-Scholes option pricing model
as detailed above.
18. RELATED PARTY TRANSACTIONS
During the year the Company received consultancy advice from the following
related parties:
Outstanding
31.12.13 31.12.12 at year end
Company Related party GBP GBP GBP
----------------------------------------------------------------------------
Burnbrae Limited J Mellon 16,000 12,000 -
Axial Associates Limited M L Child 55,000 50,000 -
All key management receives their remuneration from the subsidiary they work
for. The remuneration of key management in the subsidiaries is capitalised
within exploration costs.
At the balance sheet date the Company was owed GBP 134,715 (2012: GBP nil) by Mr
M Child in relation to payroll taxes arising on the exercise of share options
paid on Mr M Child's behalf shortly before the year end. This balance was repaid
by Mr M Child subsequent to the year end.
During the year the Company loaned funds to its subsidiaries details of which
are set out below:
31.12.13 31.12.12
Condor S.A. GBP GBP
Brought forward loan balance 1,844,770 751,293
Additional loans during the period 675,053 1,093,477
--------------------------
Closing balance 2,519,823 1,844,770
--------------------------
31.12.13 31.12.12
Minerales Morazan S.A. GBP GBP
Brought forward loan balance 1,968,595 1,921,087
Additional loans during the period 39,541 47,508
--------------------------
Closing balance 2,008,136 1,968,595
--------------------------
31.12.13 31.12.12
La India Gold S.A. GBP GBP
Brought forward loan balance 4,950,294 2,164,673
Additional loans during the period 4,985,336 2,785,621
--------------------------
Closing balance 9,935,630 4,950,294
--------------------------
19. OPERATING LEASES
The Group has an operating lease for rent. The total value of minimum lease
payments is GBP 25,005 (2012: 33,340), and the amount due within one year is GBP
8,335 (2012: GBP 8,335).
20. CONTROLLING PARTY
There is no ultimate controlling party.
21. CONTINGENT LIABILITY
The Company has a contingent liability to make further payment for La Mojarra
concession, upon the receipt of a drilling permit from the local authorities, at
the balance sheet date this had not been received. The amounts that will become
due upon receipt of the drilling permits for this concession would be $200,000
in cash and $250,000 in shares.
The Company has an additional contingent liability in relation to a claim from
an ex-consultant of the Company, the Company is vigorously defending this claim
and current internal expectations of costs are around in the region of GBP
300,000.
FOR FURTHER INFORMATION PLEASE CONTACT:
Condor Gold plc
Verity Orsborn
+44 (0) 789 984 6731
vorsborn@condorgold.com
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