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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Bellzone | LSE:BZM | London | Ordinary Share | JE00B3N0SJ29 | ORD NPV |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 0.25 | 0.00 | 00:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
From Jan 2020 to Jan 2025
TIDMBZM
RNS Number : 3916C
Bellzone Mining PLC
28 September 2018
Bellzone Mining Plc
("Bellzone" or "the Company")
Unaudited interim results for the six months ended 30 June 2018
Bellzone Mining plc (AIM: BZM) announces its unaudited interim results for the six months ended 30 June 2018.
Bellzone's principal assets are the iron ore and nickel laterite JORC-compliant resources and reserves at Kalia in The Republic of Guinea, West Africa. Total iron ore resources are 6.16bt and nickel ore resources 79.3mt.
Business Update
-- In November 2017, Bellzone announced the signature of an agreement with the Guinean Government, the Addendum to the Kalia Mining Convention (L'Avenant ndeg1 à la Convention de Base) ("Addendum"), to update the 2010 Mining Convention for Kalia. In July 2018, after the end of the period under review, the Addendum was ratified by the National Assembly and subsequently by the Constitutional Court of The Republic of Guinea in August 2018 and finally promulgated into law by Presidential Decree on 31 August 2018, which is the Effective Date ("Date d'Entreé en Vigeur") of the Addendum according to its terms.
-- The Effective Date is the reference date for the Company's Addendum undertakings, and the indicative timetable announced on 9 November 2017, which was based on the expectation of ratification by end-2017, must now be in accordance with the confirmed Effective Date.
-- As announced on 1 May 2018, feasibility study work on the Kalia Ferronickel Project has been on-going. Extraction of up to a 250-tonne bulk sample for test smelting by Envirosteel at Mintek in South Africa was expected to be completed by end-May. Unfortunately some rainy season delay, coupled with additional XRF equipment re-calibration and lab-testing, as well as difficulty in obtaining sufficient numbers of suitable steel drums for transportation has meant that shipping may commence by end-October instead. Co-temporally, the Mintek prototype smelter has experienced initial test campaign issues which have resulted in some uncertainty as to when it will be available for Bellzone's sample. The current expectation is that the bulk sample will be shipped by end-October and the smelter campaign should be completed by the end of January 2019, which is well in line with the Company's Addendum undertakings.
-- The active discussions with respect to the Company's major assets announced on 11 June 2018 have remained positive, with strong interest in particular regard to Konta port. It is envisaged that any concrete agreement will require more time to reach and while there is a possibility to do so by end-2018, there is no certainty that any transaction will eventually be agreed.
-- Finally, Bellzone continues to monitor developments in the iron ore market and will seek to update the 2013 BFS if market conditions strengthen further, such that financing can be obtained to commence iron ore production.
Sector Highlights
-- Iron ore prices were volatile in 1Q18, rising from $74/t to $79/t (62% Fe CFR North China) before dropping back to $63/t but have since been relatively stable, moving in a range of $63-69/t and showing signs of stability with a positive trend. This is meaningfully above the 2013 BFS-assessed FOB Conakry all-in production cost of $34.39/t for 58% iron fines.
-- Updating oil price assumptions in the 2013 BFS model results in a current expected all-in production cost of $31.65/t for Bellzone's Kalia KP1 project (7mtpa of 58% Fe fines over a life of mine of 10 years, capable of extension by further JORC Reserve drilling).
-- Main iron ore price drivers include:
o Global steel production grew by 7.5% year-on-year in July 2018 (World Steel Association). Global seaborne iron ore demand increased by 59mt from 1,485mt in 2016 to 1,544mt in 2017, an increase of 4.0%. These indicators of demand and supply demonstrate the ongoing strong compound annual growth in the world iron ore and steel market and whilst scrap recycling continues to develop in importance as a secondary source of iron units, the firm growth trend will mean strong demand for primary iron units, resulting in the need to develop new mines cost-competitive to deliver to North China ports in particular.
o The drive to reduce Chinese airborne pollution has resulted in continuance of the trend for a high price premium for 65% iron ore over 62% iron ore and ores of lower grade. This trend is expected to continue, eventually resulting in much greater demand for the +65% pellets and sinter feed capable of being delivered by magnetite mines, as high grade oxide (DSO) mines are exhausted over time. Kalia holds 4.72bt of high quality magnetite as well as 913mt of oxide iron ore. Kalia's magnetite is known to be of mid- to low- Bond Work Index (the energy required to grind the magnetite to powder to prepare a suitable product) and to be capable of upgrade to 67-68% Fe in a 19mtpa 35-year life-of-mine scenario assessed in feasibility study work.
o New iron ore mines, in particular in Western Australia, are being developed to replace existing capacity that is at or near closure. Large new mines are not adding outright new capacity to global production.
o Of the largest current iron ore mines currently in development or ramp-up globally, Hancock Prospecting's 55mtpa Roy Hill mine reached its name-plate production rate of 55mtpa in May 2018; and, in 1Q18, Vale's 90mtpa S11D Carajas extension was half-way through its ramp-up, scheduled to reach capacity in 2019 or 2020 (although Vale's overall production was down 4.9% year-on-year).
o BHP Billiton's new 80mtpa South Flank mine is in the earliest stages of development, expecting to be in operation in 2021 - but will only replace the closing Yandi Mine production capacity (also 80mtpa), not increase BHP Billiton's production. Other smaller-scale mine developments include the Eliwana Mine (30mtpa, operational from late 2020) approved by Fortescue Metals Group and Rio Tinto is expected to approve the Koodaideri Mine (70mtpa, operational from 2021 but ramping up to 35mtpa in the first decade of life) in the near future. Both of these mines will replace existing exhausted capacity.
-- Market prospects for steel and steel alloy materials such as nickel have continued to strengthen, which has positive pricing effects on Bellzone's potential ferronickel project, although there has been a short-term pull back in the LME nickel price as a result of trade war uncertainty brought about by US administration commentary on potential trade tariffs in the last quarter. There is, however, evidence that strong trade enquiries for future nickel production are continuing:
o World nickel production (contained metal, all forms) rose from 980,000t in 1H17 to 1,066,000t in 1H18, a rise of 8.8%.
o The stainless steel market, which uses approximately 73% of nickel production, is growing rapidly with wider usage in developing markets, particularly China, causing demand side strength in nickel. Global stainless steel production grew by 5.0% in 2017 vs 2016 and at an increased rate of 9.5% year-on-year in 1Q18; and
o Automotive manufacturers have reportedly moved to secure nickel production for EV batteries, in addition to seeking to secure cobalt supply and fund research to reduce the cobalt content of EV batteries, in doing so increasing the nickel content of the batteries. The global EV battery industry is currently moving from Lithium-ion NMC 1:1:1 batteries to next generation NMC 5:3:2 and NMC 6:2:2 with the eventual goal of achieving NMC 8:1:1 batteries where the importance of nickel in ratio to manganese and cobalt increases from 1 to 8. The nickel in the battery provides the high energy density and cannot easily be substituted.
-- The results of the feasibility study work on the Kalia Ferronickel project undertaken to date, announced in August 2016, showed a conservative base case break-even nickel price of $10,617/t vs the current nickel price of $12,509/t (as at 27 September 2018) which is approximately 19% higher than the reference price quoted in the 2017 half-year financial results announcement.
Financing activities
Bellzone previously announced a US$4.0m loan facility with Hudson Global Group ("Hudson") in December 2016. Bellzone drew down US$0.8m on this loan in June 2017 and as Bellzone has continued to maintain strict cost discipline in the year since then, running below budgeted costs as well as deriving rental income from assets not currently being utilised in Bellzone's operations in Guinea, no further loan drawdowns have been necessary. The total amount of principal and interest due under the three loans from CS International (S) Pte Limited ("CS International") and Hudson as at 30 June 2018 was US$20.6m.
To remove any potential short-term financing overhang, Bellzone agreed with CS International and Hudson, in March 2018, to extend loan maturity dates of all three outstanding loans to 31 December 2019.
On 25 May 2018, the Company stated in its final results announcement for the year ended 31 December 2017 that the Group cash flow forecasts indicated that additional funds would be required to meet its working capital requirements for the remainder of 2018 and that, if alternative forms of financing were not available, it would continue to be reliant on further funding from its majority shareholder, Hudson Global Group Limited ("Hudson") primarily on the undrawn amount under the aforementioned loan facility.
On 12 July 2018, after the end of the period under review, Bellzone announced a placing of new shares with new investors of GBP1.0m (GBP0.935m net). The proceeds are being applied to 2018 budgeted expenditures, including costs related to the ferronickel feasibility study.
At the Annual General Meeting on 31 July 2018, the ordinary resolution to authorise the directors of the Company to allot relevant securities in respect of 1,500,000,000 ordinary shares was not passed. As such, the Company is currently entirely reliant on Hudson's loan facility to continue normal operations beyond mid-November 2018.
The Company, ahead of publication of these interim results, had sought reassurance of Hudson's financial support. However no assurance has been received at this time. Consequently the Company has determined it cannot rely on Hudson advancing further funds and is reviewing alternative financing options available to the board, including potential new equity investment (which would require Hudson consent to approve a resolution to issue further shares which is being sought) and the monetisation of its port asset.
Whilst the Company's existing cash resources are forecast to last until December 2018, it will be necessary in the boards' view to raise further funds by mid-November 2018 at the latest to maintain the Company's status as a going concern. There can be no assurance that the Company will be successful in its efforts to raise such funds in which case it may be necessary to invoke an insolvency procedure. The Board will continue to monitor the position closely and the Company will provide an update in due course.
Income and Costs
During the period, the Company began to realise modest income of US$178,000 from the rental of operating assets held in Guinea but not being utilised in Bellzone's current operations (net book value of assets rented out was de minimis), as well as the disposal of one non-essential asset. This had not been viable before the upturn in Guinea's macro-economic wellbeing, in particular in the non-ferrous mining sector.
The Company's overall operating costs decreased by 4% compared to 1H2017, largely resulting from continued operational efficiency in Guinea. In totality, the loss for the period was US$2.42m, which is slightly lower than 1H2017 (US$2.50m), due to operating cost savings and new asset rental income offsetting incremental accrued loan interest costs.
Enquiries:
Bellzone Mining plc +44 (0) 7767 492 712 Simon Edwards simon.edwards@bellzone.com WH Ireland Limited +44 (0) 20 7220 1666 Nominated Advisor & Joint Broker James Joyce / Jessica Cave SVS Securities Plc +44 (0) 20 3700 0100 Joint Broker Tom Curran / Ben Tadd / Nick Aitchison
Condensed Consolidated Statement of Financial Position
At 30 June 2018
Hot Features
Premium
Unaudited Unaudited Audited
30 June 30 June 31 December
2018 2017 2017
Note $'000 $'000 $'000
------------------------------- ----- ----------------- ----------------- -----------------
ASSETS
Non-current assets
Property, plant and equipment 941 1,324 1,005
Other intangible assets 29 91 57
Mineral properties in the
exploration and evaluation
phase 3 16,066 16,066 16,066
Total non-current assets 17,036 17,481 17,128
------------------------------- ----- ----------------- ----------------- -----------------
Current assets
Cash and cash equivalents 1,019 2,468 2,682
Trade and other receivables 234 62 53
Inventories 420 640 420
Total current assets 1,673 3,170 3,155
------------------------------- ----- ----------------- ----------------- -----------------
Total assets 18,709 20,651 20,283
------------------------------- ----- ----------------- ----------------- -----------------
EQUITY
Stated capital 4 335,456 333,349 335,355
Reserves 5 (2,365) 5,101 (3,237)
Retained losses (340,987) (342,785) (337,695)
Total equity (7,896) (4,335) (5,577)
------------------------------- ----- ----------------- ----------------- -----------------
LIABILITIES
Current liabilities
Trade and other payables 6,339 5,973 5,566
Provisions 244 111 272
Secured loans 20,022 18,902 20,022
Total current liabilities 26,605 24,986 25,860
------------------------------- ----- ----------------- ----------------- -----------------
Total equity and liabilities 18,709 20,651 20,283
------------------------------- ----- ----------------- ----------------- -----------------
The above consolidated statement of financial position should be read in conjunction with the accompanying notes.
Condensed Consolidated Statement of Comprehensive Income
For the six months ended 30 June 2018
Unaudited Unaudited
6 months ended 6 months ended
30-Jun-18 30-Jun-17
Note $'000 $'000
----------------------------------- ----- ----------------------------- -----------------------------
Income
Other income 178 -
Total income 6 178 -
----------------------------------- ----- ----------------------------- -----------------------------
Continuing operations:
Employee benefits expense (1,228) (1,070)
Depreciation and amortisation
expenses (92) (337)
Administration expenses (129) (370)
Consulting expenses (109) (51)
Exploration expenses (325) (137)
Gain/(loss) on disposal of 75 -
PPE
Legal expenses (16) (22)
Occupancy expenses (50) (54)
Travel and accommodation
expenses (38) (32)
----------------------------------- ----- ----------------------------- -----------------------------
Results from operating activities (1,912) (2,073)
Finance income - 7
Finance expense (686) (434)
----------------------------------- ----- ----------------------------- -----------------------------
Loss before income tax from
continuing operations (2,420) (2,500)
Income tax expense - -
Loss for the period from
continuing operations (2,420) (2,500)
----------------------------------- ----- ----------------------------- -----------------------------
Total comprehensive loss
for the period, net of tax:
Attributable to equity holders
of the parent entity (2,420) (2,500)
----------------------------------- ----- ----------------------------- -----------------------------
Cents Cents
----------------------------------- ----- ----------------------------- -----------------------------
Loss per share attributable
to the ordinary equity holders
of the parent entity:
Basic and diluted loss per
share (0.213) (0.249)
----------------------------------- ----- ----------------------------- -----------------------------
The above consolidated statement of comprehensive income should be read in conjunction with the accompanying notes.
Condensed Consolidated Statement of Changes in Equity
For the six months ended 30 June 2018
Stated Treasury Translation Share based Retained Total
capital share reserve payment reserve losses equity
$'000 $'000 $'000 $'000 $'000 $'000
---------------- --------------- ---------------- ---------------------- ----------------------- ---------------- -------------
Balance at 1
January 2018
(audited) 335,355 (3,300) 63 - (337,695) (5,577)
Loss for the
period - - - - (2,420) (2,285)
Share awards
vested on
23.01.2018 101 873 - - (873) 101
Total
comprehensive
loss for
the period - - - - (3,293) (7,862)
---------------- --------------- ---------------- ---------------------- ----------------------- ---------------- -------------
Balance at 30
June 2018
(unaudited) 335,456 (2,427) 63 - (340,988) (7,896)
---------------- --------------- ---------------- ---------------------- ----------------------- ---------------- -------------
Balance at 1
January 2017
(audited) 333,349 (3,300) 63 8,338 (340,285) (1,835)
Loss for the
period - - - - (2,500) (2,500)
Total
comprehensive
loss for
the period 333,349 (3,300) 63 8,338 (342,785) (4,335)
---------------- --------------- ---------------- ---------------------- ----------------------- ---------------- -------------
Balance at 30
June 2017
(unaudited) 333,349 (3,300) 63 8,338 (342,785) (4,335)
---------------- --------------- ---------------- ---------------------- ----------------------- ---------------- -------------
Balance at 1
January 2017
(audited) 333,349 (3,300) 63 8,338 (340,285) (1,835)
Loss for the
period - - - - (5,748) (5,748)
Total
comprehensive
loss for
the year - - - - (5,748) (5,748)
---------------- --------------- ---------------- ---------------------- ----------------------- ---------------- -------------
Transfer of
share based
payment
reserve - - - (8,338) 8,338 -
Share issued,
net of cash
of $335K 2,006 - - - - 2,006
Balance at 31
December
(audited) 335,355 (3,300) 63 - (337,695) (5,577)
---------------- --------------- ---------------- ---------------------- ----------------------- ---------------- -------------
The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes.
Condensed Consolidated Cash Flow Statement
For the six months ended 30 June 2018
Note Unaudited Unaudited
6 months 6 months
ended ended
30 Jun 2018 30 Jun
$'000 2017 $'000
-------------------------------------------- ----- ------------- ------------
Net cash outflow from operating activities 8 (1,674) (1,475)
-------------------------------------------- ----- ------------- ------------
Cash flows from investing activities
Payments for property, plant and equipment 11 -
Net cash inflow from investing activities 11 -
-------------------------------------------- ----- ------------- ------------
Cash flows from financing activities
Net proceeds from secured loans - 800
Net cash inflow from financing activities - 800
-------------------------------------------- ----- ------------- ------------
Net increase/(decrease) in cash and
cash equivalents (1,663) (675)
Cash and cash equivalents at the beginning
of the period 2,682 3,138
Exchange differences - 5
Cash and cash equivalents at end of
period 1,019 2,468
-------------------------------------------- ----- ------------- ------------
The above consolidated cash flow statement should be read in conjunction with the accompanying notes.
Notes to the Unaudited Interim Condensed Consolidated Financial Statements for the six months ended 30 June 2018
1. Reporting Entity
The consolidated financial statements of Bellzone Mining plc ("the Company") for the period ended 30 June 2018 were authorised for issue in accordance with a resolution of the board of directors on 28 September 2018.
Bellzone Mining plc is a public company listed on the AIM Market of the London Stock Exchange and incorporated and registered in Jersey, Channel Islands. The Company's registered office is located at Standard Bank House, 47-49 La Motte Street, St Helier, Jersey, JE2 4SZ. The consolidated financial statements of the Company as at and for the period ended 30 June 2018 comprise the Company and its subsidiaries (together referred to as the "Group").
The nature of the principal activities of the Group is described in the Directors' Report. The principal accounting policies adopted in the preparation of these financial statements are set out below. These policies have been consistently applied unless otherwise stated.
2. Basis of preparation a. Statement of compliance
The financial statements have been prepared in accordance with International Financial Reporting Standards as adopted for use in the European Union ("IFRS") and in accordance with the Companies (Jersey) Law 1991.
b. Adoption of new standards
The Group has adopted new and revised standards and interpretations issued by the International Accounting Standards Board (IASB) and the International Financial Reporting Interpretations Committee (IFRIC) of the IASB and adopted by the European Union that are relevant to its operations and effective for accounting periods beginning on or after 1 January 2018. Although these new standards and amendments apply for the first time in 2018, they do not have a material impact on the consolidated financial statements of the Group, apart from some additional disclosure requirements.
Standard Description Effective
Date
IFRS 9 Financial Instruments 1 January
2018
------------------------------------------- ----------
IFRS 15 Revenue from Contracts with Customers 1 January
2018
------------------------------------------- ----------
IFRS 2 Amendment - Classification and measurement 1 January
of share based 2018
payment transactions
------------------------------------------- ----------
IFRSs* Annual Improvements to IFRSs 2012-2014 1 January
Cycle 2018
------------------------------------------- ----------
IFRIC 22 Amendment - Foreign Currency Transactions 1 January
and Advance Consideration 2018
------------------------------------------- ----------
IFRS 15 is intended to introduce a single framework for revenue recognition and clarify principles of revenue recognition. The Group is not revenue generating thus there is no impact of IFRS 15 as there are no revenue contracts in place at this time.
IFRS 9 "Financial instruments" addresses the classification and measurement of financial assets and financial liabilities. The complete version of IFRS 9 was issued in July 2014. It replaces the guidance in IAS 39 that relates to the classification and measurement of financial instruments. IFRS 9 retains but simplifies the mixed measurement model and establishes three primary measurement categories for financial assets: amortised cost, fair value through other comprehensive income (OCI) and fair value through profit or loss. The basis of classification depends on the entity's business model and the contractual cash flow characteristics of the financial asset. Investments in equity instruments are required to be measured at fair value through profit or loss with the irrevocable option at inception to present changes in fair value in OCI. There is now a new expected credit loss model that replaces the incurred loss impairment model used in IAS 39. As the Group has no material financial assets other than cash, there will be no changes to classification and measurement and while the Group will apply the new expected credit loss impairment model, there was no material impact on initial adoption however Management will continue to assess the standard's impact.
There were also a number of new and revised IFRSs that have been issued but are not yet effective and have therefore not been applied by the Group for the year. The Group has not early-adopted any other standard, interpretation or amendment that has been issued but is not yet effective.
Standard Description Effective
Date
IFRS 16 Leases 1 January
2019
------------ ----------
IFRS 16 introduces a single lease accounting model, in which leases are capitalised as assets with an associated lease liability with the exception of certain low value leases and leases with a term under 12 months. Management are currently assessing the impact of this standard as whilst there are no current material operating leases in the Group it is likely to be relevant to future operations under certain mining service contracts and similar arrangements that fall within the scope of the standard once mining commences. In addition, the Group also acted as a lessor post year end by leasing certain of the Group's assets to generate income for the Group. IFRS 16 is substantially unchanged in most respects from IAS 17 for lessor accounting. The leases are expected to continue to be held and accounted for as operating leases.
The adoption of the other standards, as noted in the table above, is not expected to have an impact on the Group's financial statements.
c. Basis of measurement
The financial statements have been prepared on the historical cost basis except where indicated otherwise in the notes to the financial statements.
d. Functional and presentation currency
The functional currency of the Company and all of its subsidiaries is the United States Dollar ("US Dollar"). All amounts are expressed in US Dollars and all values are rounded to the nearest thousand ($000) unless otherwise stated.
e. Critical accounting estimates and judgements
The preparation of the consolidated financial statements in conformity with IFRS as adopted for use in the European Union requires management to make judgements, estimates and form assumptions that affect the reported amounts of assets, liabilities, expenses and the disclosure of contingent liabilities at the date of the financial statements. Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.
The Group makes estimates and assumptions concerning the future and the resulting accounting estimates will, by definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the financial results or the financial position reported in future periods are disclosed below.
Mineral properties in the exploration and evaluation phase and exploration expenditure:
Judgement is applied by management in determining when a project has reached a stage at which economically recoverable reserves exist and that development may be sanctioned. The Company has determined that the most appropriate accounting policy for the Kalia asset is to expense all exploration activity (other than the initial licence acquisition costs, which are capitalised as detailed in note 3) as incurred. The signing of the Addendum to the Mining Convention in November 2017 allowed the Company to normalise its operations and begin work to complete the ferronickel project feasibility study (the first phase of which was completed in August 2016).
Management is also are required to make certain judgements and assumptions as to events and circumstances that may occur in the future, in particular the ongoing validity of the mining licence, whether extraction operations are economically viable where reserves have been discovered and whether indications of impairment under IFRS 6 exist. Any such judgements and estimates may change over time as new information becomes available. As at the year end the Directors were of the opinion that there were no indicators of impairment under IFRS 6.
f. Provisions for legal claims:
The Group reviews outstanding legal cases following developments in the legal proceedings and at each reporting date, in order to assess the need for provisions and disclosures in its financial statements. Among the factors considered in making decisions on provisions are the nature of litigation, claim or assessment, the legal process and potential level of damages in the jurisdiction in which the litigation, claim or assessment has been brought, the progress of the case (including the progress after the date of the interim results but before the interim results are issued), the opinions or views of legal advisers, experience on similar cases and any decision of the Group's management as to how it will respond to the litigation, claim or assessment."
g. Going concern
The nature of the Group's current activities does not provide the Group with meaningful production or trading revenues, although some supplementary income may be realised as a result of ongoing asset management.
The signing of the Addendum to the Mining Convention in November 2017 allowed the Company to properly recommence its operations and begin work to complete the ferronickel project feasibility study (the first phase of which was completed in August 2016).
Funds of GBP1.6m raised through an equity placing in November 2017, together with existing cash and a further equity placing of GBP0.9m (net) in July 2018, are expected to be sufficient to meet the Company's budgeted working capital requirements until December 2018. Management has continued a programme to sell or lease non-critical assets in order to generate short-term cash flows. During 1H2018, this initiative has resulted in positive cash inflows to the Group of $178,000. Management is confident that such cash flows will continue in the next 12-month period but notes that substantial additional funds will be required to meet 2019 working capital requirements, as well as to make up any shortfall, which may arise as a result of actual expenditures arising from the feasibility study work exceeding existing budget expectations.
At the Annual General Meeting on 31 July 2018, the ordinary resolution to authorize the directors of the Company to allot relevant securities in respect of 1,500,000,000 ordinary shares was not passed. As such, the Company is currently entirely reliant on Hudson's loan facility of US$4.0 million announced in December 2016, of which US$3.2 million currently remains un-drawn, to continue normal operations beyond mid-November 2018.
Bellzone and Hudson agreed on 23 March 2018 to extend the draw-down availability period of the second Hudson loan from 31 December 2018 to 31 December 2019. Additionally, China Sonangol, which has also provided funding to the Group and Hudson also agreed to further extend the repayment date of all three loan agreements for principal and accrued interest from 31 December 2018 to 31 December 2019.
The Company, ahead of publication of these interim results, had sought reassurance of Hudson's financial support. However no satisfactory assurance has been received at this time. Consequently the Company has determined it cannot rely on Hudson advancing further funds.
Therefore, the Group is evaluating its ability to secure funding that would enable it both to continue operations for the short term and in the long term to develop the Kalia licence area. The directors' view is that additional funding may be sourced from one or more of the following:
-- the monetization of the Company's assets, in particular its port asset; and/or
-- funding in exchange for an interest in the Group's projects or future production from the projects.
Whilst the above funding sources are considered available to the Group and discussions are on-going with respect to asset monetization, there can be no guarantee that any transaction(s) will materialize within the timeframe necessary for the Company to continue its normal operations.
Assuming that financing is obtained to enable the Company to operate normally beyond mid-November 2018 into 2019, management notes that additional funding will be required in the longer term in order to advance the ferronickel project to a bankable feasibility stage. Furthermore, to commence development, significant funding would be required from external parties which is not committed at the date of this interim financial result announcement.
Whilst the Company's existing cash resources are forecast to last until December 2018, it will be necessary in the directors' view to raise further funds by mid-November 2018 (at the latest) to maintain the Company's status as a going concern.
Taking the above factors into account, the Directors' view is there can be no assurance that the Company will be successful in its efforts to raise such funds to enable the Company to continue as a going concern beyond mid-November 2018, in which case it may be necessary to invoke an insolvency procedure. The Company will provide an update in due course.
3. Mineral properties in the exploration and evaluation phase
Unaudited Unaudited
30 June 2018 30 June 2017
$'000 $'000
---------------------------------- ------------- -------------
Reconciliation of carrying amount
Opening net book amount 16,066 16,066
Closing net book amount 16,066 16,066
---------------------------------- ------------- -------------
At Balance sheet date
Cost 16,066 16,066
Net book amount 16,066 16,066
================================== ============= =============
The above asset values relate to the mineral properties in the exploration and evaluation phase and are based on the cost of acquiring 100% of Bellzone Holdings SA which previously held the Kalia and Faranah exploration permits and now holds the Kalia Mining Licence.
In addition to the costs of acquiring the exploration permits through the acquisition of the subsidiaries, the statutory fees paid on the issue of the Mining Concessions (Permits) for the Kalia areas were included.
4. STATED capital
a. Issued capital
Unaudited Unaudited
30 June 30 June
2018 2017
Shares $'000 Shares $'000
------------------------ -------------- ---------- -------------- ----------
Ordinary shares with
no par value 1,597,858,383 335,355 1,597,858,383 354,447
Cumulative share
issue costs - - - (19,092)
Share awards exercised - 101 - -
on 23.01.2018
1,597,858,383 335,456 1,597,858,383 335,355
------------------------ -------------- ---------- -------------- ----------
b. Movements in ordinary shares
-----------------------------------------------------------------------------------------------------
Number of Stated capital Number Stated
of capital
Date Details Shares $'000 Shares $'000
30 June 30 June 30 June 30 June
2018 2018 2017 2017
------------------- -------------------- -------------- --------------- -------------- ---------
1 January Opening
2018 balance 1,597,858,383 335,355 1,469,858,383 352,291
Placement
to clients
23 November of SVS Securities
2017 PLC - - 128,000,000 2,156
23 April Share awards - 101 - -
2018 exercised
on 23.01.2018
30 June Closing
2018 (unaudited) balance 1,597,858,383 335,456 1,597,858,383 354,447
------------------- -------------------- -------------- --------------- -------------- ---------
On 23 January 2018, Bellzone granted share awards to certain employees over 17,289,600 existing Ordinary Shares held in Treasury by the company, the awards being assessed by the Remuneration Committee at a nominal price of 1.25p per share and zero cost to the recipients.
These awards have been accepted by the employees and were therefore subject only to the recipients remaining employed by the Company. The awards vested in two equal tranches on 23 April 2018 and 23 July 2018.
The 17,289,600 Ordinary Shares being awarded from Treasury represented 1.08 per cent. of the total issued share capital of the Company which was unchanged by the vesting of the share awards.
On 23 April 2018, the first tranche of share awards, amounting to 8,644,800 fully paid Ordinary Shares of no par value vested.
The Company is a no par value company. No share issued by the Company shall have a par value.
There is no limit on the number of shares which may be issued by the Company and if the share capital structure of the Company is at any time divided into separate classes of share there is no limit on the number of shares of any class which may be issued by the Company, subject to shareholder approval.
Subject to the provisions of Jersey Companies Law and the Articles of the Company and without prejudice to any rights attached to any existing shares or class of shares, any share may be issued with such rights or restrictions as the Company may by ordinary resolution determine or, subject to and in default of such determination, as the Board shall determine.
The Company may, pursuant to Jersey Companies Law, issue fractions of shares and any such fractional shares shall rank pari passu in all respects with other shares of the same class issued by the Company.
The Company shall maintain a stated capital account in accordance with the Companies Law for each class of issued share. A stated capital account may be expressed in any currency determined by the Board from time to time.
Ordinary shares have no par value, carry one vote per share and carry the right to dividends. All shares have been fully paid. Refer to note 5 for details of treasury shares.
The Group is in project feasibility stage and did not declare or pay any dividends during the year (2017: nil).
c. Reconciliation of net cash inflow from financing activities
Unaudited Unaudited
30 June 2018 30 June 2017
$'000 $'000
------------------------------------ --------------- --------------
Increase in ordinary share capital - 2,015
Shares issue costs - (18)
Net proceeds from issue of shares - 1,997
------------------------------------ --------------- --------------
d. Capital management
The Group monitors capital which comprises all components of equity (i.e. share capital, reserves and retained loss).
The Group's objectives when managing capital are to safeguard its ability to continue as a going concern so that it can continue to provide returns for shareholders and benefits for other stakeholders, and to maintain an optimal capital structure to reduce the cost of capital.
In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends payable to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt.
5. RESERVES
Unaudited Unaudited
30 Jun 2018 30 June 2017
$'000 $'000
------------- ---------------- ---------------------
a. Reserves (2,365) 5,101
------------- ---------------- ---------------------
Cumulative Share-based
translation Treasury payment
adjustment shares reserve Total
$'000 $'000 $'000 $'000
Balance at 1 January 2018
(audited) 63 (3,300) - (3,237)
Share awards exercised
on 23.04.2018 - 873 - 873
Balance at 30 June 2018
(unaudited) 63 (2,427) - (2,364)
Balance at 1 January 2017
(audited) 63 (3,300) 8,338 5,101
Balance at 30 June 2017
(unaudited) 63 (3,300) 8,338 5,101
--------------------------- -------------- ---------- ------------- --------
6. OTHER INCOME
Other operating income arises mainly from the lease of equipment. The total rentals receivable under the lease are charged to the consolidated statement of comprehensive income on a straight-line basis over the lease term. Since this is not considered to be part of the main revenue generating activities, the Group presents this income separately from revenue.
7. Events occurring after the reporting period
(a) On 9 July 2018, the Company announced that on 5 July 2018 the National Assembly of The Republic of Guinea has duly and unanimously ratified the Addendum to the Kalia Mining Convention (L'Avenant ndeg1 à la Convention de Base) ("Addendum") which was signed on 9 November 2017. The Addendum updates the Mining Convention (Convention de Base) ("Convention") for its Kalia Mine and associated infrastructure, which was originally signed on 26 July 2010 and promulgated by Presidential Decree on 2 September 2010. On 3 September 2018, the Company announced that on 31 August 2018, the President of The Republic of Guinea had published the Presidential Decree promulgating into law the Addendum.
(b) On 31 July 2018, Julian Cheong resigned from the board of directors of the Company with immediate effect in order to focus on executive responsibilities in a non-board capacity. Mr Cheong continues to serve by mutual agreement as an executive manager with executive responsibilities unchanged.
(c) On 13 August 2018, the Company announced that Michael Farrow had stepped down as Chairman but would remain on the Board in the role of Non-Executive Director of the Company. Antony Gardner-Hillman, an Independent Non-Executive Director of the Company, was appointed as Non-Executive Chairman of the Board. The Board also agreed that Simon Brickles, an Independent Non-Executive Director of the Company, was appointed to the role of Senior Independent Director in addition to his existing responsibilities.
(d) On 23 July 2018, the second of two tranches of share awards, amounting to 8,644,800 fully paid Ordinary Shares of no par value ("Ordinary Shares"), vested. The shares were awarded from existing issued shares held by the Company in Treasury."
8. Reconciliation of loss after income tax to net cash OUTflow from operating activities
Unaudited Unaudited
6 months ended 6 months ended
30 Jun 2018 30 Jun 2017
$'000 $'000
----------------------------------------- ---------------- ----------------
Loss for the period after tax (2,420) (2,500)
Depreciation and amortisation expense 92 337
Non cash interest accrued on loan 1,195 499
Unrealised foreign exchange loss/(gain) 14 (4)
Change in working capital (555) 193
Decrease/(increase) in receivables (181) (4)
Decrease in stock - -
(Decrease)/increase in payables (346) 148
(Decrease)/increase in provisions (28) 49
---------------- ----------------
Net cash outflow from operating
activities (1,674) (1,475)
----------------------------------------- ---------------- ----------------
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.
END
IR LLFISASITFIT
(END) Dow Jones Newswires
September 28, 2018 10:09 ET (14:09 GMT)
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