We could not find any results for:
Make sure your spelling is correct or try broadening your search.
Register for streaming realtime charts, analysis tools, and prices.
| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Georgian Mining Corporation | LSE:GEO | London | Ordinary Share | VGG9688A1003 | ORD NPV (DI) |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 1.40 | 1.30 | 1.50 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
From Apr 2019 to Apr 2024
TIDMGEO
RNS Number : 9813S
Georgian Mining Corporation
29 June 2018
Georgian Mining Corporation / EPIC: GEO / Sector: Natural Resources
29(th) June 2018
Georgian Mining Corporation ('GEO' or the 'Company')
Final Results and AGM
Georgian Mining Corporation ('GEO' or the 'Company') is pleased to announce its final results for the 12 months ended 31 December 2017. The Company also announces that its Annual General Meeting ('AGM') will be held at The Washington Mayfair Hotel, 5 Curzon Street, London, W1J 5HE, at 2:00 p.m. BST on 28 August 2018.
The annual report and accounts for the year ended 31 December 2017 along with the notice of AGM will be posted to shareholders today.
The annual report and accounts for the year ended 31 December 2017 and the notice of AGM are available for download on the Company's website, www.georgianmining.com.
To view this announcement with the attached images, please follow this link:
http://www.rns-pdf.londonstockexchange.com/rns/9813S_1-2018-6-28.pdf
Chairman's Report
Key Achievements
The last twelve months have seen important key achievements for the Company that have greatly strengthened our foundations and which are critical to our continuing success in Georgia. These include technical success in the field; vesting of our 50% joint venture interest in JSC Georgian Copper & Gold ("Joint Venture" or "GCG"); building a stronger Board and Management Team; and concluding key new or revised agreements with our joint venture partner, Caucasian Mining Group ("Joint Venture Partner").
A major achievement in 2017 was the discovery of significant copper-gold sulphides resources at our most advanced project in Georgia, Kvemo Bolnisi East ("KBE"), with an extensive supergene enrichment zone, beneath the surface cap of gold oxides. There is clear evidence for significant upside potential for the sulphides resources and it is likely the sulphides will represent the majority of the project value. A key aim of the 2018 work programme is to further define this potential, and the next resource update at KBE will follow the 2018 infill drilling programme. The Gold Zone 3 ("GZ3") discovery west of KBE also substantially increases the footprint of gold mineralisation, and includes additional zinc sulphide-gold mineralisation beneath the cover.
In 2017 the Company completed 139 drillholes for a total of 13.4km of drilling, principally at Kvemo Bolnisi; undertook metallurgical testwork on KBE oxides and sulphides; along with a large volume of regional geochemical sampling and geophysical surveys in the wider licence area. Our re-evaluation of historical data and regional programmes has identified 14 prospects which will now undergo target testing in the wider 860 sq km licence area.
After a productive drilling campaign at KBE, we completed our vesting of $6.0M into the Joint Venture in September 2017, with the result that all future expenditure is on a 50:50 basis between the partners. However, at that point our Joint Venture Partner requested certain revisions to the original Shareholders Agreement and there followed a lengthy and complex period of negotiations. These were successfully concluded in March 2018 with the announcement of three key achievements - a modified Shareholders Agreement; an agreed 2018 work programme; and a Memorandum of Understanding on Production (of gold oxides) from the leading asset, KBE.
The Joint Venture company holds a 30-year mining concession, whose tenure is valid until 13(th) October 2041. During this mining tenure there is a requirement to obtain "right-to-explore" permits through government approval of multi-year exploration work programmes and budgets. Following the agreement with our Joint Venture partner on revisions to the Shareholders Agreement and other milestones announced in March 2018 we re-engaged with our partner and the Georgian Mining Agency to conclude negotiations to extend the exploration permits for the various areas and, at the time of reporting, the final application has been agreed. The final stage, submission and approval of a Government Resolution, should now be finalised upon new Ministerial appointments following a Government re-organisation triggered by the resignation of the Prime Minister on 13(th) June 2018. Interim Cabinet appointments were made on 20(th) June and we remain confident that once the new Government has settled the Government Resolution will be approved and allow us to press ahead with our 2018 Work Programme. In alignment with our partner and the Mining Agency, we supported the decision of the Joint Venture company to curtail fieldwork whilst this approval process was ongoing, but we are actively looking at options to secure additional drilling capacity to recover any delays.
Management
Commencing in late 2017 the Company has also made a number of key management changes, in recognition of the future skillsets required to deliver the best value to shareholders. Mike Struthers was appointed as COO in late December 2017, and subsequently appointed CEO on 28(th) March 2018. At the same time I also accepted the role of Non-Executive Chairman. Our prior careers with Lundin Mining and other recognised mining companies in the fields of exploration, new business development, mining and engineering, project development and management have added real depth to the Board and Management Team. The appointment of Simon Cleghorn as Technical Services Manager in Georgia commencing in June 2018 further strengthened the team's delivery ability and, given his long association with the Madneuli operations, added yet more depth to the relationships with our Joint Venture Partner.
The additions of Mike and Simon as well as the other Board changes during the period have created a very delivery-capable and focussed team, and we will continue to strengthen the Georgian team in key areas during 2018 and beyond.
Financial Results
As an exploration and development group which has no revenue we are reporting a loss for the twelve months ended 31 December 2017 of GBP2,382,476 (2016: GBP5,645,734), which is in line with our budget.
The Group's cash position at the end of the period was GBP1.5 million.
Outlook
The Company has a three-pronged strategy for value creation, to grow the Company and deliver shareholder returns:
1. To press ahead with the continued development of the KBE Project through the execution of the detailed work programme.
2. In parallel, to progress further target testing and resource development work on the other priority prospects within the licence area. There are over a dozen known targets with significant resource potential, and we have an excellent opportunity for developing a pipeline of gold-copper projects all within reach of established processing facilities.
3. Acquiring New Assets: To expand the portfolio we will continue to examine other opportunities in Georgia and within the Tethyan Belt as and when they arise.
A logical work programme has been defined to advance the KBE project, including new considerations of how the design of the operation must account for the future sulphides operation (pit limits, access, locations of facilities etc). This will be further refined as the scale of the sulphides operation is better defined. A key deliverable remains the Mining and Production Agreement with our partner's sister production company, RMG Gold, and this will be finalised prior to the end of the Feasibility Study, dependent upon the results of the metallurgical testwork.
Another key element in this work programme will be the advancement of environmental studies for the project, concluding baseline studies and in concert with the Feasibility Study incorporating environmental considerations into the designs of facilities at the site, to engineer-out or minimise any potential impacts.
Our recognition of the reserves potential in the wider Kvemo Bolnisi area is fundamental to effective planning of this future operation, with the new GZ3 discovery and the potential at KB West to consider.
2018 will also see the Company advancing target testing and the early phases of resource development at the other key projects at Dambludi and Tsitel Sopeli. This will allow the Company to validate revised geological models, prepare new resource models, and do preliminary work to illustrate the potential for a logical pipeline of development projects.
Dambludi is a zone of high-grade "bonanza" epithermal quartz-sulphide-gold veining occupying an area of at least 1.3 x 0.5km in plan, and has the potential for rapid project development, being all close to surface.
We are particularly excited about the opportunity presented by Tsitel Sopeli. Data review and the very limited historical core available has delineated zones of high-grade epithermal gold mineralisation at depth, to the west of the small area of gold oxide mineralisation. The veining represents the gold-rich end-member of the same low-sulphidation epithermal model. Our work in 2018 will test this new target which has significant upside due to incorrect drill orientations used previously (vertical drilling of sub-vertical veins). A key implication of GCG's new epithermal interpretation is the recognition that, despite the large amount of historic drilling in this target area and the ineffective vertical orientation of the holes, this drilling was also too shallow to test for the highest grade "bonanza gold" zones that characterize this type of low-sulphidation epithermal gold system.
Plan View of Dambludi Project Area
Tsitel Sopeli - Examples of Low-Sulphidation
Epithermal Sub-Vertical Quartz-Gold-Sulphide Veins
The Company has also recently received a number of approaches from financial and strategic investors, and in parallel GEO is reviewing opportunities presented within the Tethyan Belt, focused on regions close to its existing licence portfolio. As a result, GEO appointed Hannam & Partners in June 2018 as its financial advisers with a focus on these strategic opportunities and M&A.
On a broader front, the Company continues to develop business relationships within Georgia, and we are putting more efforts into building Georgian Mining's presence in country in 2018. Our Executive staff are spending a significant proportion of their time in country, and relationships in Government and the wider business community continue to expand. We remain confident that Georgia is a great address for developing a vibrant mining industry, and we want Georgian Mining to be a significant player.
We are also putting additional structure and investment into our Corporate Social Responsibility goals and programmes in 2018. Our reputation as a good corporate citizen within the communities in which we operate is a fundamental value for us, and we are already working effectively with local councils and community groups to provide support and contribute in different ways. I look forward to reporting significant progress and success in this area in the future.
I would like to thank our Shareholders for their support as well as the Board and Advisors for all their hard work and commitment during what has been a transformational year. We are excited by the opportunity for Georgian Mining to play a key role in developing the highly prospective mineral potential of Georgia to the benefit of our Shareholders and the country.
I look forward to providing regular updates on our progress as we meet our objectives over the next 12 months.
Neil O'Brien
Non-Executive Chairman
28 June 2018
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 31 December 2017
Hot Features
Premium
Group
----------------------------
Note 2017 2016
GBP GBP
-------------------------------------- ----- ------------- -------------
Non-Current Assets
Property, plant and equipment 7 162,535 131,968
Intangible assets 8 10,472,718 8,612,883
10,635,253 8,744,851
-------------------------------------- ----- ------------- -------------
Current Assets
Trade and other receivables 9 381,555 416,206
Cash and cash equivalents 10 2,569,997 1,659,314
-------------------------------------- ----- ------------- -------------
2,951,552 2,075,520
-------------------------------------- ----- ------------- -------------
Total Assets 13,586,805 10,820,371
-------------------------------------- ----- ------------- -------------
Current Liabilities
Trade and other payables 11 413,080 306,118
-------------------------------------- ----- ------------- -------------
Total Liabilities 413,080 306,118
-------------------------------------- ----- ------------- -------------
Net Assets 13,173,725 10,514,253
-------------------------------------- ----- ------------- -------------
Equity attributable to owners of the
Parent
Share capital 12 - -
Share premium 12 38,880,612 33,653,273
Reverse acquisition reserve (18,845,147) (18,845,147)
Other reserves 13 384,099 838,470
Retained losses (11,033,204) (8,772,601)
-------------------------------------- ----- ------------- -------------
Total equity attributable to owners
of the Parent 9,386,360 6,873,995
-------------------------------------- ----- ------------- -------------
Non-controlling interest 3,787,365 3,640,258
-------------------------------------- ----- ------------- -------------
Total Equity 13,173,725 10,514,253
-------------------------------------- ----- ------------- -------------
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the year ended 31 December 2017
Group
----------------------------
Note Year ended Year ended
31 December 31 December
2017 2016
Continuing Operations GBP GBP
--------------------------------------------- ----- ------------- -------------
Revenue - 3,758
Cost of sales - -
--------------------------------------------- ----- ------------- -------------
Gross profit - 3,758
--------------------------------------------- ----- ------------- -------------
Administration expenses 6 (1,909,711) (1,716,301)
Other gains / (losses) 15 (472,870) 4,022
Operating Loss (2,382,581) (1,708,521)
--------------------------------------------- ----- ------------- -------------
Impairment of intangible assets 8 - (3,937,375)
Finance income 18 105 162
Loss before Taxation (2,382,476) (5,645,734)
--------------------------------------------- ----- ------------- -------------
Income tax 19 - -
--------------------------------------------- ----- ------------- -------------
Loss for the year (2,382,476) (5,645,734)
--------------------------------------------- ----- ------------- -------------
Loss attributable to:
* owners of the Parent (2,260,603) (5,498,126)
* non-controlling interests (121,873) (147,608)
--------------------------------------------- ----- ------------- -------------
Loss for the year (2,382,476) (5,645,734)
--------------------------------------------- ----- ------------- -------------
Other Comprehensive Income:
Items that may be subsequently reclassified
to profit or loss
Exchange differences on translating
foreign operations (345,659) 763,910
--------------------------------------------- ----- ------------- -------------
Total Comprehensive Income (2,728,135) (4,881,824)
--------------------------------------------- ----- ------------- -------------
Attributable to:
* owners of the Parent (2,875,242) (4,475,791)
* non-controlling interests 147,107 (406,033)
--------------------------------------------- ----- ------------- -------------
Total Comprehensive Income (2,728,135) (4,881,824)
--------------------------------------------- ----- ------------- -------------
Earnings per share (pence) from continuing
operations attributable to owners
of the Parent - Basic & Diluted 20 (2.232) (9.895)
--------------------------------------------- ----- ------------- -------------
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
For the year ended 31 December 2017
Attributable to Equity Shareholders
-------------------------------------------------------------------
Reverse
Share acquisition Other Retained Non-controlling Total
premium reserve reserves losses Total interest equity
GBP GBP GBP GBP GBP GBP GBP
--------------- ----------- ------------- ---------- ------------- ------------ ---------------- ------------
As at 1
January
2016 29,090,348 (18,845,147) (442,370) (3,274,475) 6,528,356 4,046,291 10,574,647
--------------- ----------- ------------- ---------- ------------- ------------ ---------------- ------------
Loss for the
year - - - (5,498,126) (5,498,126) (147,608) (5,645,734)
--------------- ----------- ------------- ---------- ------------- ------------ ---------------- ------------
Other
comprehensive
income
Exchange
differences
on
translating
foreign
operations - - 1,022,335 - 1,022,335 (258,425) 763,910
--------------- ----------- ------------- ---------- ------------- ------------ ---------------- ------------
Total
comprehensive
income for
the
year - - 1,022,335 (5,498,126) (4,475,791) (406,033) (4,881,824)
--------------- ----------- ------------- ---------- ------------- ------------ ---------------- ------------
Transactions
with
owners
Issue of
ordinary
shares 4,750,400 - - - 4,750,400 - 4,750,400
Issue costs (187,475) - - - (187,475) - (187,475) Share Option charge - - 258,505 - 258,505 - 258,505 Total transactions with owners 4,562,925 - 258,505 - 4,821,430 - 4,821,430 --------------- ----------- ------------- ---------- ------------- ------------ ---------------- ------------ As at 31 December 2016 33,653,273 (18,845,147) 838,470 (8,772,601) 6,873,995 3,640,258 10,514,253 --------------- ----------- ------------- ---------- ------------- ------------ ---------------- ------------ As at 1 January 2017 33,653,273 (18,845,147) 838,470 (8,772,601) 6,873,995 3,640,258 10,514,253 --------------- ----------- ------------- ---------- ------------- ------------ ---------------- ------------ Loss for the year - - - (2,260,603) (2,260,603) (121,873) (2,382,476) --------------- ----------- ------------- ---------- ------------- ------------ ---------------- ------------ Other comprehensive income Exchange differences on translating foreign operations - - (614,639) - (614,639) 268,980 (345,659) --------------- ----------- ------------- ---------- ------------- ------------ ---------------- ------------ Total comprehensive income for the year - - (614,639) (2,260,603) (2,875,242) 147,107 (2,728,135) --------------- ----------- ------------- ---------- ------------- ------------ ---------------- ------------ Transactions with owners Issue of ordinary shares 5,463,941 - - - 5,463,941 - 5,463,941 Issue costs (236,602) - - - (236,602) - (236,602) Share Option charge - - 160,268 - 160,268 - 160,268 Total transactions with owners 5,227,339 - 160,268 - 5,387,607 - 5,387,607 --------------- ----------- ------------- ---------- ------------- ------------ ---------------- ------------ As at 31 December 2017 38,880,612 (18,845,147) 384,099 (11,033,204) 9,386,360 3,787,365 13,173,725 --------------- ----------- ------------- ---------- ------------- ------------ ---------------- ------------
CONSOLIDATED CASH FLOW STATEMENT
For the year ended 31 December 2017
Group
--------------------------
Note 2017 2016
GBP GBP
------------------------------------------- ----- ------------ ------------
Cash flows from operating activities
Loss before taxation (2,382,476) (5,645,734)
Adjustments for:
Finance Income - (166)
Share option expenses 160,268 258,505
Share based payments 57,061 50,400
Depreciation 35,593 21,092
Impairment of intangible asset - 3,937,375
Decrease/ (increase) in trade and
other receivables 34,650 (361,710)
Increase in trade and other payables 106,960 138,176
Foreign exchange (12,176) 113,666
Net cash used in operating activities (2,000,120) (1,488,396)
------------------------------------------- ----- ------------ ------------
Cash flows from investing activities
Interest received - 166
Purchase of property, plant & equipment (70,400) (145,906)
Purchase of Intangible assets (2,189,076) (1,500,746)
------------------------------------------- ----- ------------ ------------
Net cash used in investing activities (2,259,476) (1,646,486)
------------------------------------------- ----- ------------ ------------
Cash flows from financing activities
Proceeds from issue of shares 5,406,881 4,700,000
Cost of share issue (236,602) (187,475)
Net cash generated from financing
activities 5,170,279 4,512,525
------------------------------------------- ----- ------------ ------------
Net increase in cash and cash equivalents 910,683 1,377,643
Cash and cash equivalents at beginning
of year 1,659,314 281,671
Cash and cash equivalents at end
of year 10 2,569,997 1,659,314
------------------------------------------- ----- ------------ ------------
Major non-cash transactions
On 23 May 2017 the Company issued and allotted 356,695 new ordinary pre-consolidation shares with no par value at a price of 0.16p each as consideration for consultants fees.
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 December 2017
ACCOUNTING POLICIES
1. General Information
The principal activity of Georgian Mining Corporation ("the Company") and its subsidiaries (together "the Group") is to implement its mineral exploration strategy to advance projects towards defining a sufficient in-situ mineral resource to support a detailed feasibility study towards mine development and production.
The Company's shares are traded on AIM, a market operated by the London Stock Exchange. The Company is incorporated in the British Virgin Islands and domiciled in the United Kingdom.
The address of its registered office is Craigmuir Chambers, PO Box 71, Road Town, Tortola, BVI.
2. Summary of Significant Accounting Policies
The principal accounting policies applied in the preparation of these Financial Statements are set out below. These policies have been consistently applied to all the periods presented, unless otherwise stated.
2.1 Basis of Preparation of Financial Statements
The Group Financial Statements have been prepared in accordance with International Financial Reporting Standards (IFRS) and IFRS Interpretations Committee (IFRS IC) interpretations as adopted by the European Union applicable to companies under IFRS. The Group Financial Statements have been prepared under the historical cost convention.
The Financial Statements are presented in UK Pounds Sterling rounded to the nearest pound.
The preparation of financial statements in conformity with IFRSs requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Group's Accounting Policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the Financial Statements, are disclosed in Note 4.
2.2 Changes in accounting policy and disclosures
i) New and amended standards adopted by the Group
The following standards were adopted by the Group during the year:
Standard Impact on initial application Effective date
--------- ---------------------------------- ---------------
IAS 7 Statement of Cash Flow amendments 1 January 2017
---------------------------------- ---------------
There has been no material impact on the financial statements as a result of new standards.
ii) New standards, amendments and interpretations in issue but not yet effective or not yet endorsed and not early adopted
Standards, amendments and interpretations that are not yet effective and have not been early adopted are as follows:
Standard Impact on initial application Effective date
--------------------- -------------------------------------- ---------------
IFRS 9 Financial Instruments 1 January 2018
-------------------------------------- ---------------
IFRS 15 Revenue from Contracts with 1 January 2018
Customers
-------------------------------------- ---------------
IFRS 16 Leases 1 January 2019
-------------------------------------- ---------------
IFRS 2 (Amendments) Share-based payments - classification 1 January 2018
and measurement
-------------------------------------- ---------------
Annual Improvements 2014-2016 Cycle 1 January 2018
-------------------------------------- ---------------
IFRIC Interpretation Foreign currency transactions 1 January 2018
22 and advanced
consideration
-------------------------------------- ---------------
IFRIC 23 Uncertainty over Income tax *1 January
treatments 2018
-------------------------------------- ---------------
IFRS 9 (Amendments) Prepayment features with negative *1 January
compensation 2019
-------------------------------------- ---------------
IAS 28 (Amendments) Long term interests in associates *1 January
and joint ventures 2019
-------------------------------------- ---------------
(*) Subject to EU endorsement
The Group is evaluating the impact of the new and amended standards above.
The operating leases currently held will be subject to IFRS 16 changes as all lease (subject to certain criteria) will be deemed finance leases. The impact of this will be monitored by management. All other standards are not expected to have a material impact on the Group's results or shareholders' funds.
2.3 Basis of Consolidation
The Group Financial Statements consolidate the Financial Statements of Georgian Mining Corporation and the financial statements of all of its subsidiary undertakings made up to 31 December 2017.
Subsidiaries are entities over which the Group has control. The Group controls an entity when the Group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. Where an entity does not have returns, the Group's power over the investee is assessed as to whether control is held. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are deconsolidated from the date that control ceases. Below is a summary of subsidiaries of the Group:
Place of Parent company Registered Share capital Principal
Name of subsidiary business capital held activities
------------------- ---------------- -------------------- ---------------------- -------------- ----------------
Kibe Investments British Georgian Ordinary 100% Dormant
No.2 Limited Virgin Islands Mining Corporation shares US$12
------------------- ---------------- -------------------- ---------------------- -------------- ----------------
Noricum Gold Austria Kibe Investments Ordinary 100% Exploration
AT GmbH No.2 Limited shares EUR35,000
------------------- ---------------- -------------------- ---------------------- -------------- ----------------
GMC Investments British Georgian Ordinary 100% Dormant
Limited Virgin Islands Mining Corporation shares US$1
------------------- ---------------- -------------------- ---------------------- -------------- ----------------
JSC Georgian Georgia GMC Investments Ordinary 50% Exploration
Copper & Gold Limited shares US$12,000,000
------------------- ---------------- -------------------- ---------------------- -------------- ----------------
European Mining United Kingdom Georgian Ordinary 100% Mining Services
Services Limited Mining Corporation shares
GBP1
------------------- ---------------- -------------------- ---------------------- -------------- ----------------
Inter-company transactions, balances, income and expenses on transactions between group companies are eliminated. Profits and losses resulting from intercompany transactions that are recognised in assets are also eliminated. Accounting
policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Group. JSC Georgian Copper and Gold is considered as being controlled by the Company because two of the three directors are appointed by the Company and GMC Investments Limited had operational and management control of the entity as at year end.
2.4 Going Concern
The Group's business activities, together with the factors likely to affect its future development, performance and position, are set out in the Chairman's Report from page 3. In addition, Note 3 to the Financial Statements includes the Group's objectives, policies and processes for managing its capital; its financial risk management objectives; and details of its exposure to credit and liquidity risk.
The Financial Statements have been prepared on a going concern basis. Although the Group's assets are not generating steady revenue streams, an operating loss has been reported and an operating loss is expected in the 12 months subsequent to 31 December 2017, the Directors believe that the Group has sufficient funds to meet its immediate working capital requirements and undertake its targeted operating activities over the next 12 months from the date of approval of these Financial Statements. No budgets and forecasts have been drawn up covering the period after this period as in accordance with the Work Programme approved by the JV partners on 15 March 2018, the next work programme will be determined after the completion of the current agreed 6 month work programme. Whilst the negotiations to extend the exploration licence are ongoing, the Group have ceased exploration work in Georgia and have reduced expenditure to preserve cash in the short term. The Directors remain confident that this licence extension will be granted in due course.
The Group has financial resources which, the Directors believe, will be sufficient to fund the Group's committed expenditure both operationally and on specific exploration projects, which will recommence when the licence extension is confirmed, for the next 12 months. However, in order to complete other exploration work, including additional exploration and development subsequent to the current approved 6-month work programme underway in Georgia as well as additional work over the life of existing projects and as additional projects are identified and also to meet minimum spend requirements for existing projects after 12 months from the date of approval of these Financial Statements, additional funding will be required. The amount of funding cannot be reliably estimated at the point of approval of these Financial Statements and the Group will be required to raise additional funds either via an issue of equity or through the issuance of debt. The Directors are confident that funds will be forthcoming if and when they are required. In addition, the Group will be able to significantly reduce its working capital requirements and will not authorise expenditure on exploration if funds are not sufficient.
The Directors have, in the light of all the above circumstances, a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future. Thus they continue to adopt the going concern basis of accounting in preparing the Group Financial Statements.
2.5 Segment Reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker. The chief operating decision-maker, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the Board of Directors that makes strategic decisions.
Segment results, include items directly attributable to a segment as well as those that can be allocated on a reasonable basis.
2.6 Foreign Currencies
(a) Functional and presentation currency
Items included in the Financial Statements of the Group's entities are measured using the currency of the primary economic environment in which the entity operates (the 'functional currency'). The functional currency of the Company is Sterling, the functional currency of the BVI subsidiaries is US Dollars, the functional currency of the Austrian subsidiary is Euros and the functional currency of the Georgian subsidiary is Lari. The Financial Statements are presented in Pounds Sterling, rounded to the nearest pound, which is the Company's functional and the Group's presentation currency.
(b) Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions or valuation where such items are re-measured. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the Income Statement.
(c) Group companies
The results and financial position of all the Group's entities (none of which has the currency of a hyperinflationary economy) that have a functional currency different from the presentation currency are translated into the presentation currency as follows:
-- assets and liabilities for each statement of financial position presented are translated at the closing rate at the date of that statement of financial position;
-- income and expenses for each statement of comprehensive income presented are translated at average exchange rates (unless this average is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated at the dates of the transactions); and
-- all resulting exchange differences are recognised in other comprehensive income where material.
On consolidation, exchange differences arising from the translation of the net investment in foreign entities, and of monetary items receivable from foreign subsidiaries for which settlement is neither planned nor likely to occur in the foreseeable future, are taken to other comprehensive income. When a foreign operation is sold, such exchange differences are recognised in the income statement as part of the gain or loss on sale.
2.7 Intangible Assets
Exploration and evaluation assets
The Group recognises expenditure as exploration and evaluation assets when it determines that those assets will be successful in finding specific mineral resources. Expenditure included in the initial measurement of exploration and evaluation assets and which are classified as intangible assets, relate to the acquisition of rights to explore, topographical, geological, geochemical and geophysical studies, exploratory drilling, trenching, sampling and activities to evaluate the technical feasibility and commercial viability of extracting a mineral resource. Capitalisation of pre-production expenditure ceases when the mining property is capable of commercial production.
Exploration and evaluation assets are recorded and held at cost.
Exploration and evaluation assets are assessed for impairment annually or when facts and circumstances suggest that the carrying amount of an asset may exceed its recoverable amount. The assessment is carried out by allocating exploration and evaluation assets to cash generating units, which are based on specific projects or geographical areas.
Whenever the exploration for and evaluation of mineral resources in cash generating units does not lead to the discovery of commercially viable quantities of mineral resources and the Group has decided to discontinue such activities of that unit, the associated expenditures are written off to the Income Statement.
2.8 Property, Plant and Equipment
Property, plant and equipment is stated at historical cost less accumulated depreciation and any accumulated impairment losses. Depreciation is provided on all property, plant and equipment to write off the cost less estimated residual value of each asset over its expected useful economic life on a straight-line basis at the following annual rates:
Computer equipment - 20 to 50% straight line
Field equipment - 20 to 50% straight line
Vehicles - 20% straight line
All assets are subject to annual impairment reviews. An asset's carrying amount is written down immediately to its recoverable amount if the asset's carrying amount is greater than its estimated recoverable amount.
Subsequent costs are included in the asset's carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. The carrying amount of the replacement part is derecognised. All other repairs and maintenance are charged to the Income Statement during the financial period in which they are incurred.
The asset's residual value and useful economic lives are reviewed, and adjusted if appropriate, at the end of each reporting period.
Gains and losses on disposal are determined by comparing the proceeds with the carrying amount and are recognised within 'Other net gains / (losses)' in the income statement.
2.9 Impairment of non-financial assets
Assets that have an indefinite useful life, for example, intangible assets not ready to use, are not subject to amortisation and are tested annually for impairment. An impairment loss is recognised for the amount by which the asset's carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset's fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash generating units).
Non-financial assets that suffered impairment (except goodwill) are reviewed for possible reversal of the impairment at each reporting date.
2.10 Financial Assets
Classification
The Group has classified all of its financial assets as loans and receivables including cash and cash equivalents. The classification depends on the purpose for which the financial assets were acquired. Management determines the classification of its financial assets at initial recognition.
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are included in current assets. The Group's loans and receivables comprise trade and other receivables and cash and cash equivalents in the Statement of Financial Position.
Recognition and measurement
Loans and receivables are initially recognised at fair value plus transaction costs and are subsequently carried at amortised cost using the effective interest method.
Impairment
The Group assesses at the end of each reporting period whether there is objective evidence that a financial asset, or a group of financial assets, is impaired. A financial asset, or a group of financial assets, is impaired, and impairment losses are incurred, only if there is objective evidence of impairment as a result of one or more events that occurred after the initial recognition of the asset (a "loss event"), and that loss event (or events) has an impact on the estimated future cash flows of the financial asset, or group of financial assets, that can be reliably estimated.
The criteria that the Group uses to determine whether there is objective evidence of an impairment loss include:
-- significant financial difficulty of the issuer or obligor; -- a breach of contract, such as a default or delinquency in interest or principal repayments.
The amount of the loss is measured as the difference between the asset's carrying amount and the present value of estimated future cash flows (excluding future credit losses that have not been incurred), discounted at the financial asset's original effective interest rate. The asset's carrying amount is reduced, and the loss is recognised in the Statement of Comprehensive Income.
If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised (such as an improvement in the debtor's credit rating), the reversal of the previously recognised impairment loss is recognised in the Statement of Comprehensive Income.
2.11 Cash and Cash Equivalents
Cash and cash equivalents comprise cash at bank and in hand.
2.12 Taxation
Tax is recognised in the Statement of Comprehensive Income, except to the extent that it relates to items recognised in other comprehensive income or directly in equity. In this case, the tax is also recognised in other comprehensive income or directly in equity, respectively.
There has been no tax credit or expense for the period relating to current or deferred tax.
2.13 Share Capital
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds.
2.14 Reverse acquisition reserve
The reverse acquisition reserve arose on the acquisition of Kibe Investments No. 2 Limited in 2010. There has been no movement in the reserve since that date.
2.15 Share Based Payments
The Group operates a number of equity-settled share-based schemes, under which the entity receives services from employees or third party suppliers as consideration for equity instruments (shares, options and warrants) of the Group. The Group may also issue warrants to share subscribers as part of a share placing. The fair value of the equity-settled share based payments is recognised as an expense in the income statement or charged to equity depending on the nature of the service provided or instrument issued. The total amount to be expensed or charged in the case of options is determined by reference to the fair value of the options or warrants granted:
-- including any market performance conditions;
-- excluding the impact of any service and non-market performance vesting conditions (for example, profitability or sales growth targets, or remaining an employee of the entity over a specified time period); and
-- including the impact of any non-vesting conditions (for example, the requirement for employees to save).
In the case of shares and warrants the amount charged to the share premium account is determined by reference to the fair value of the services received if available. If the fair value of the services received is not determinable the shares are valued by reference to the market price and the warrants are valued by reference to the fair value of the warrants granted as described previously.
Non-market vesting conditions are included in assumptions about the number of options or warrants that are expected to vest. The total expense or charge is recognised over the vesting period, which is the period over which all of the specified vesting conditions are to be satisfied. At the end of each reporting period, the entity revises its estimates of the number of options that are expected to vest based on the non-market vesting conditions. It recognises the impact of the revision to original estimates, if any, in the income statement or equity as appropriate, with a corresponding adjustment to an other reserve in equity.
When the warrants or options are exercised, the Company issues new shares. The proceeds received, net of any directly attributable transaction costs, are credited to share capital (nominal value) and share premium when the warrants or options are exercised.
2.16 Trade Payables
Trade payables are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Accounts payable are classified as current liabilities if payment is due within one year or less (or in the normal operating cycle of the business if longer). If not, they are presented as non-current liabilities. Trade payables are recognised initially at fair value, and subsequently measured at amortised cost using the effective interest method.
2.17 Operating Leases
Leases of assets under which a significant amount of the risks and benefits of ownership are effectively retained by the lessor are classified as operating leases. Operating lease payments are charged to the income statement on a straight-line basis over the period of the respective leases.
2.18 Revenue Recognition
Revenue is measured at the fair value of the consideration received or receivable, and represents amounts receivable for goods or services supplied in the course of ordinary business, stated net of discounts, returns and value added taxes. The Group recognises revenue when the amount of revenue can be reliably measured; when it is probable that future economic benefits will flow to the entity; and when specific criteria have been met for the Group's activities described below.
Revenue is recognised in respect of amounts recharged to project strategic partners in accordance with their contractual terms. Revenue is also generated from management and consulting services to third parties.
2.19 Finance Income
Finance income consists of bank interest on cash and cash equivalents which is recognised using the effective interest rate method.
2.20 Trade and Other Receivables
Trade and other receivables are amounts due from third parties in the ordinary course of business. If collection is expected in one year or less they are classified as current assets. If not they are presented as non-current assets.
3. Financial Risk Management
3.1 Financial Risk Factors
The Group's activities expose it to a variety of financial risks being market risk (including, interest rate risk, currency risk and price risk), credit risk and liquidity risk. The Group's overall risk management programme focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the Group's financial performance.
Market Risk
(a) Foreign currency risks
The Group operates internationally and is exposed to foreign exchange risk arising from various currency exposures, primarily with respect to the USD and Georgian Lari against the UK pound. Foreign exchange risk arises from future commercial transactions, recognised assets and liabilities and net investments in foreign operations. The Group negotiates all material contracts for activities in relation to its subsidiary in USD. The Directors will continue to assess the effect of movements in exchange rates on the Group's financial operations and initiate suitable risk management measures where necessary.
(b) Price risk
The Group is not exposed to commodity price risk as a result of its operations, which are still in the exploration phase. Other than insignificant consulting revenue, the only revenue relates to intra group revenue in respect of recharges which are eliminated on consolidation. The Directors will revisit the appropriateness of this policy should the Group's operations change in size or nature.
The Group has no exposure to equity securities price risk, as it has no listed equity investments.
(c) Interest rate risk
As the Group has no borrowings, it is not exposed to interest rate risk on financial liabilities. The Group's interest rate risk arises from its cash held on short-term deposit, which is not significant.
Credit Risk
Credit risk arises from cash and cash equivalents as well as outstanding receivables. Management does not expect any losses from non-performance of these receivables.
The amount of exposure to any individual counter party is subject to a limit, which is assessed by the Board. No credit limits were exceeded during the reporting period, and management does not expect any losses from non-performance by these counterparties.
The Group considers the credit ratings of banks in which it holds funds in order to reduce exposure to credit risk.
Liquidity Risk
In keeping with similar sized mineral exploration groups, the Group's continued future operations depend on the ability to raise sufficient working capital through the issue of equity share capital. The Directors are confident that adequate funding will be forthcoming with which to finance operations. Controls over expenditure are carefully managed.
3.2 Capital Risk Management
The Group's objectives when managing capital are to safeguard the Group's ability to continue as a going concern, in order to provide returns for shareholders and to enable the Group to continue its exploration and evaluation activities. The Group has no debt at 31 December 2017 and defines capital based on the total equity of the Company being GBP13,173,725. The Group monitors its level of cash resources available against future planned exploration and evaluation activities and may issue new shares in order to raise further funds from time to time.
4. Critical Accounting Estimates and Judgements
The preparation of the Group Financial Statements in conformity with IFRSs requires Management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of expenses during the year. Actual results may vary from the estimates used to produce these Financial Statements.
4. Critical Accounting Estimates and Judgements (continued)
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.
Significant items subject to such estimates and assumptions include, but are not limited to:
Impairment of exploration and evaluation costs
Exploration and evaluation costs have a carrying value at 31 December 2017 of GBP10,472,718 (2016: GBP8,612,883): refer to Note 8 for more information. The Group has a right to renew exploration licences and the asset is only depreciated once extraction of the resource commences. Management tests annually whether exploration projects have future economic value in accordance with the accounting policy stated in Note 2.7. Each exploration project is subject to an annual review by either a consultant or senior company geologist to determine if the exploration results returned during the year warrant further exploration expenditure and have the potential to result in an economic discovery. This review takes into consideration the expected costs of extraction, long term metal prices, anticipated resource volumes and supply and demand outlook. In the event that a project does not represent an economic exploration target and results indicate there is no additional upside, a decision will be made to discontinue exploration.
Refer to Note 8 and the Chairman's Statement for further disclosure related to the title and good standing of the exploration rights held by Georgian Copper & Gold.
The Directors have reviewed the estimated value of each project prepared by management and have concluded that no impairment is required and provided against the exploration assets.
Share based payment transactions
The Group has made awards of options and warrants over its unissued share capital to certain Directors and employees as part of their remuneration package. Certain warrants have also been issued to shareholders as part of their subscription for shares and to suppliers for various services received.
The valuation of these options and warrants involves making a number of critical estimates relating to price volatility, future dividend yields, expected life of the options and forfeiture rates. These assumptions have been described in more detail in Note 14.
Control of Georgian Copper and Gold
Judgement is required to determine whether the Group has control over its subsidiaries. Georgian Copper and Gold is 50% owned but management are of the opinion that they control of the entity and have consolidated this entity. As at 31 December 2017, the Company is considered to control Georgian Copper and Gold as a result of the fact that:
- 2 out of 3 board seats are held by Directors of Georgian Mining Corporation; and
- GMC Investments Limited has operational and management control of the entity and has ability to approve expenditure.
On 15 March 2018, the Company entered into a Deed of Variation with its joint venture partner in Georgian Copper & Gold ("GCG") in relation to the ongoing operations of the operating company, future work programmes and budgets. As a result, both shareholders now have equal representation on the board of GCG and therefore, it is anticipated that for the financial year ended 31 December 2018, this entity will no longer be deemed to be under the control of the Company and will no longer be consolidated.
5. Segmental Information
The Group operates in three geographical areas, the UK, Georgia and Austria. The Parent Company operates in one geographical area, the UK. Activities in the UK are mainly administrative in nature whilst activities in Austria and Georgia relate to exploration and evaluation work. The reports used by the chief operating decision maker are based on these geographical segments.
The Group generated revenue of GBPnil during the year ended 31 December 2017 (2015: GBP3,758).
2017 Georgia Austria UK Total
GBP GBP GBP GBP
-------------------------------- ----------- --------- ------------ ------------
Revenue - - - -
Administrative expenses (271,422) (45,101) (1,593,188) (1,909,711)
Other gains/(losses) (312,742) - (160,128) (472,870)
Loss from operations per
reportable segment (584,164) (45,101) (1,753,316) (2,382,581)
----------- --------- ------------ ------------
Additions to non-current
assets 2,023,197 - 236,386 2,259,476
Reportable segment assets 10,488,140 11,740 3,086,925 13,586,805
Reportable segment liabilities 35,792 9,225 368,063 413,080
-------------------------------- ----------- --------- ------------ ------------
Segment assets and liabilities are allocated based on geographical location.
2016 Georgia Austria UK Total
GBP GBP GBP GBP
-------------------------------- ---------- ------------ ------------ ------------
Revenue - 1,606 2,152 3,758
Administrative expenses (233,904) (40,338) (1,183,554) (1,457,796)
Foreign exchange 61,313 - (315,796) (254,483)
Loss from operations per
reportable segment (172,591) (38,732) (1,497,198) (1,708,521)
---------- ------------ ------------ ------------
Additions to non-current
assets 1,500,746 - - 1,500,746
Impairment to non-current
assets - (3,937,375) - (3,937,375)
Reportable segment assets 8,805,070 11,630 2,003,671 10,820,371
Reportable segment liabilities 156,576 10,787 138,755 306,118
-------------------------------- ---------- ------------ ------------ ------------
A reconciliation of adjusted loss from operations per reportable segment to loss before tax is provided as follows:
2017 2016
GBP GBP
------------------------------------ ------------ ------------
Loss from operation per reportable
segment (2,382,581) (1,708,521)
- Finance income 105 162
- Impairment - (3,937,375)
Loss for the year before taxation (2,382,476) (5,645,734)
------------------------------------ ------------ ------------
6. Expenses by Nature
2017 2016
GBP GBP
------------------------------------------------ ---------- ----------
Directors' fees 142,750 107,252
Employee salaries 139,135 158,000
Fees payable to the Company's auditors
for the audit of the Parent Company and
group financial statements 42,325 22,550
Fees payable to the Company's auditors
for tax and other services - 17,646
Professional, legal and consulting fees 531,744 337,388
Accounting related services 37,369 60,458
Insurance 31,734 41,139
Office and administrative expenses 82,027 163,405
Depreciation 35,593 21,092
Travel and subsistence 184,528 109,476
AIM related costs including investor relations 236,662 225,841
Share option expense 160,268 258,505
Operations related costs 213,096 95,950
Other expenses 72,480 97,600
------------------------------------------------ ---------- ----------
Total administrative expenses 1,909,711 1,716,301
------------------------------------------------ ---------- ----------
7. Property, Plant and Equipment
Motor Field Computer Total
Vehicles equipment equipment GBP
GBP GBP GBP
---------------------------------- ---------- ----------- ----------- --------
Cost
---------------------------------- ---------- ----------- ----------- --------
As at 1 January 2016 - 5,410 7,257 12,667
Additions 46,942 60,843 38,121 145,906
----------------------------------- ---------- ----------- ----------- --------
As at 31 December 2016 46,942 66,253 45,378 158,573
----------------------------------- ---------- ----------- ----------- --------
Additions 14,763 47,461 8,176 70,400
Exchange Differences (3,035) - (1,656) (4,691)
----------------------------------- ---------- ----------- ----------- --------
As at 31 December 2017 58,670 113,714 51,898 224,282
----------------------------------- ---------- ----------- ----------- --------
Depreciation
---------------------------------- ---------- ----------- ----------- --------
As at 1 January 2016 - - 5,513 5,513
Charge for the year 4,798 11,032 5,262 21,092
----------------------------------- ---------- ----------- ----------- --------
As at 31 December 2016 4,798 11,032 10,775 26,605
----------------------------------- ---------- ----------- ----------- --------
Charge for the year 9,086 17,913 8,594 35,593
Exchange Differences (310) - (141) (451)
----------------------------------- ---------- ----------- ----------- --------
As at 31 December 2017 13,574 28,945 19,228 61,747
----------------------------------- ---------- ----------- ----------- --------
Net book value as at 31 December
2016 42,144 55,221 34,603 131,968
----------------------------------- ---------- ----------- ----------- --------
Net book value as at 31 December
2017 45,096 84,769 32,670 162,535
----------------------------------- ---------- ----------- ----------- --------
8. Intangible Assets
Exploration & Evaluation Assets at Cost 2017 2016
and Net Book Value GBP GBP
----------------------------------------- ----------- ------------
Balance as at 1 January 8,612,883 10,399,265
Additions 2,189,076 1,500,746
Impairment - (3,937,375)
Foreign currency differences (329,241) 650,247
As at 31 December 10,472,718 8,612,883
----------------------------------------- ----------- ------------
As part of the acquisition of GMC Investments Limited, the Group entered into a Shareholder Agreement with Caucasian Mining Group Limited ("CMG"), the partner in JSC Georgian Copper and Gold. The details of the agreement were such that CMG would transfer the exploration and mining licenses for the Georgian sites into Georgian Copper and Gold, which were considered to have a fair value of US$6m, while the Group would commit to paying the expenditure requirements on the operations over a two year period from the date of the licence transfer date of December 2015, which is also US$6m. As a result, the Group has recognised the fair value of the licenses of US$6m, which translate to GBP4.2m, as an exploration and evaluation asset.
Exploration projects Georgia are at an early stage of development and as at 31 December 2017, although a JORC (Joint Ore Reserves Committee) compliant resource estimate is available at Kvemo Bolnisi East, much of the licence area is still subject to further early stage exploration. The Directors therefore undertook an assessment of the following areas and circumstances which could indicate the existence of impairment:
-- The Group's right to explore in an area has expired, or will expire in the near future without renewal.
-- No further exploration or evaluation is planned or budgeted for.
-- A decision has been taken by the Board to discontinue exploration and evaluation in an area due to the absence of a commercial level of reserves.
-- Sufficient data exists to indicate that the book value will not be fully recovered from future development and production.
The current 30-year mining licence for the extraction of minerals (expiring 13 October 2041) held by JSC Georgian Copper and Gold is valid and in good standing. However, within this overall licence exists a requirement for separate staged approvals for continued exploration at named deposits and within the wider licence area. These mechanisms exist to encourage licence holders to advance their exploration activities and ultimately to register Reserves with the State. After a body of exploration work has been completed a company can either apply to extend the exploration period, register Reserves with the State, or return the area in question to the State. Exploration periods are typically in the range of 2-4 years, depending in part on the scale of the prospects.
A number of the exploration periods within the Group's licence area have now expired and the Group, along with its JV partner Caucasian Mining Group, have concluded a process of negotiating extensions to these exploration periods with the Mining Agency, within the Ministry of Economics and Sustainable Development in Georgia.
The final stage is the submission and approval of a Government Resolution which formally approves the application. However, as agreed with the Mining Agency, the Group has temporarily suspended fieldwork until the Resolution is approved. Unfortunately, the recent unexpected resignation of the Prime Minister on 13th of June as well as the entire cabinet, has delayed this process. The Directors believe that these approved extensions will receive formal approval from the Government and as a result, no adjustment has been made to the carrying value of the carried forward exploration and evaluation costs. If these licences are not extended, the ability of the Group to continue exploration and as such the carrying value of the investment will be uncertain and likely an impairment required.
As a result, no impairment charge is required at 31 December 2017 in relation to the exploration activities in Georgia.
9. Trade and Other Receivables
2017 2016
GBP GBP
------------------- -------- --------
VAT receivable 180,376 54,196
Prepayments 57,287 16,575
Other receivables 143,892 345,435
------------------- -------- --------
381,555 416,206
------------------- -------- --------
Trade and other receivables are all due within one year. The fair value of all receivables is the same as their carrying values stated above. These assets, excluding prepayments, are the only form of financial asset within the Group, together with cash and cash equivalents.
Other receivables relate to amounts owing from the issue of shares.
The carrying amounts of the Group's trade and other receivables are denominated in the following currencies:
2017 2016
GBP GBP
--------------- -------- --------
UK Pounds 227,855 399,619
Euros 1,820 3,580
Georgian Lari 151,880 13,007
--------------- -------- --------
381,555 416,206
--------------- -------- --------
The maximum exposure to credit risk at the reporting date is the carrying value of each class of receivable mentioned above. The Group does not hold any collateral as security.
10. Cash and Cash Equivalents
2017 2016
GBP GBP
-------------------------- ---------- ----------
Cash at bank and in hand 2,569,997 1,659,314
-------------------------- ---------- ----------
All of the Group's cash at bank is held with institutions with an AA credit rating.
11. Trade and Other Payables
2017 2016
GBP GBP
------------------ -------- --------
Trade payables 278,457 253,006
Other payables 9,040 7,385
Accrued expenses 125,583 45,727
------------------ -------- --------
413,080 306,118
------------------ -------- --------
12. Share Capital and Share Premium
On 15 December 2010 the shareholders approved the removal of the Company's authorised share capital and so there is no limit on the number of shares the Company is authorised to issue. On that date the shareholders also approved the removal of the nominal value of the shares, as permitted under local company legislation. As such all amounts raised are considered to be share premium.
Issued share capital
Group Number of Ordinary Share Total
shares shares premium GBP
GBP GBP
----------------------------------- ---------------- --------- ----------- -----------
At 1 January 2016 2,693,771,064 - 29,090,348 29,090,348
----------------------------------- ---------------- --------- ----------- -----------
Issue of new shares - 21 January
2016 (1) 1,250,000,000 - 942,500 942,500
Issue of new shares - 21 January
2016 63,000,000 - 50,400 50,400
Issue of new shares - 1 July 2016
(2) 785,714,286 - 1,036,025 1,036,025
5 October 2016 - Consolidation of
shares, 100 shares consolidated
to 1 share (4,744,560,498) - - -
Issue of new shares - 16 December
2016 (3) 32,500,000 - 2,534,000 2,534,000
----------------------------------- ---------------- --------- ----------- -----------
At 31 December 2016 80,424,853 - 33,653,273 33,653,273
----------------------------------- ---------------- --------- ----------- -----------
Issue of new shares - 23 May 2017
(4) 34,149,638 - 5,227,339 5,227,339
At 31 December 2017 114,574,491 - 38,880,612 38,880,612
----------------------------------- ---------------- --------- ----------- -----------
(1) Includes issue costs of GBP57,500
(2) Includes issue costs of GBP63,975
(3) Includes issue costs of GBP66,000
(4) Includes issue costs of GBP236,602
On 23 May 2017 the Company raised gross proceeds of GBP5,463,942 via the issue and allotment of 34,149,638 new ordinary shares with no par value at a price of 0.16p each.
13. Other reserves
2017 2016
GBP GBP
-------------------------------------- --------- --------
Foreign currency translation reserve (34,673) 579,965
-------------------------------------- --------- --------
Share option Reserve 418,772 258,505
-------------------------------------- --------- --------
384,009 838,470
-------------------------------------- --------- --------
Foreign currency translation reserve - the foreign currency translation reserve represents the effect of changes in exchange rates arising from translating the financial statements of subsidiary undertakings into the Company's presentation currency.
Share option reserve - the share option reserve represents the fair value of share options and warrants in issue. The amounts included are recycled to share premium on exercise or recycled to retained earnings on expiry.
14. Share Based Payments
Warrants and options outstanding at 31 December 2017 have the following expiry dates and exercise prices:
Shares
-----------------------
Exercise
price
in GBP
Grant date Expiry date per share 2017 2016
------------------ ------------------ ----------- ----------- ----------
28 January 2016 21 January 2018 0.1300 182,500 182,500
------------------ ------------------ ----------- ----------- ----------
1 July 2016 1 July 2018 0.1800 55,866 55,866
------------------ ------------------ ----------- ----------- ----------
20 July 2016 20 July 2021 0.1400 5,000,000 5,000,000
------------------ ------------------ ----------- ----------- ----------
15 November 2016 16 November 2018 0.1000 170,000 170,000
------------------ ------------------ ----------- ----------- ----------
30 January 2017 3 March 2022 0.1200 1,900,000 -
------------------ ------------------ ----------- ----------- ----------
22 June 2017 21 July 2022 0.1825 3,300,000 -
------------------ ------------------ ----------- ----------- ----------
10,608,366 5,408,366
------------------------------------- ----------- ----------- ----------
The fair value of the warrants and options was determined using the Black Scholes valuation model. The parameters used are detailed below:
2016 Warrants 2016 Warrants 2016 Warrants
-------------- -------------- --------------
Granted on: 01/07/2016 20/07/2016 15/11/2016
Life (years) 2 years 5 years 2 years
Share price on grant date 16p 16p 8p
Risk free rate 0.09% 0.5% 0.09%
Expected volatility 25.21% 23.29% 21.53%
Expected dividend yield - - -
Exercise price 18p 14p 10p
Marketability discount 20% 20% 20%
Total fair value (GBP) 68,987 188,690 660
--------------------------- -------------- -------------- --------------
2016 Warrants 2017 Warrants 2017 Warrants
-------------- -------------- --------------
Granted on: 28/01/2016 30/01/2017 22/06/2017
Life (years) 2 years 5.2 years 5 years
Share price on grant date 9p 8.8p 17.7p
Risk free rate 0.09% 0.57% 0.57%
Expected volatility 16.75% 27.06% 34.43%
Expected dividend yield - - -
Exercise price 13p 12p 18.25p
Marketability discount 20% 20% 20%
Total fair value (GBP) 168 20,225 140,043
--------------------------- -------------- -------------- --------------
The risk free rate of return is based on zero yield government bonds for a term consistent with the warrant and option life.
The movement of options and warrants granted over the year to 31 December 2017 is shown below:
2017 2016
----------------------- ----------------------
Weighted Weighted
average average
exercise exercise
price price
Number (GBP) Number (GBP)
------------------------------- ----------- ---------- ---------- ----------
As at 1 January 5,408,366 0.14 800,000 0.4
Granted 5,200,000 0.16 5,408,366 0.14
Expired - - (800,000) 0.4
------------------------------- ----------- ---------- ---------- ----------
Outstanding as at 31 December 10,608,366 0.15 5,408,366 0.14
------------------------------- ----------- ---------- ---------- ----------
Exercisable at 31 December 10,608,366 0.15 5,408,366 0.14
------------------------------- ----------- ---------- ---------- ----------
2017 2016
--------------------------------------------------- --------------------------------------------------
Weighted Weighted Weighted Weighted
Weighted average average Weighted average average
Range average remaining remaining average remaining remaining
of exercise exercise life life exercise life life
prices price Number expected contracted price Number expected contracted
(GBP) (GBP) of shares (years) (years) (GBP) of shares (years) (years)
------------- ---------- ----------- ------------ ------------ ---------- ----------- ----------- ------------
0.1 -
0.2 0.15 10,608,366 3.923 3.923 0.14 5,408,366 4.395 4.395
------------- ---------- ----------- ------------ ------------ ---------- ----------- ----------- ------------
No options or warrants were exercised during the period. The total fair value charged to the statement of comprehensive income for the year ended 31 December 2017 and included in administrative expenses was GBP160,268 (2016: GBP 258,505).
15. Other (losses)/gains - Net
Group
--------------------
2017 2016
GBP GBP
--------------------------------------- ---------- ------
Net foreign exchange gains / (losses) (451,125) 4,213
Other gains/losses (21,745) (191)
--------------------------------------- ---------- ------
(472,870) 4,022
--------------------------------------- ---------- ------
16. Employees
Group
--------------------
2017 2016
Staff costs (excluding Directors) GBP GBP
----------------------------------- -------- --------
Salaries and wages 139,136 126,429
Social security costs 41,091 31,571
Pensions 924 -
181,151 158,000
----------------------------------- -------- --------
The average monthly number of employees during the year was 23 (2016: 10).
17. Directors' Remuneration
For the year ended 31 December 2017
-------------------------------------------
Short term Post Employment Share based Total
benefits benefits payment GBP
GBP GBP GBP
------------------------- ----------- ---------------- ------------ --------
Executive Directors
Gregory Kuenzel 70,000 314 63,656 133,970
Martyn Churchouse 125,000 386 - 125,386
Non-executive Directors
Michael Hutchinson 4,166 - - 4,166
Roderick McIllree 8,333 24 - 8,357
Neil O'Brien 21,250 - 21,219 42,469
Peter Damouni 20,000 141 42,437 62,578
Laurence Mutch 20,000 91 20,190 40,281
Tony Frizelle 9,000 - 10,645 19,645
277,749 956 158,147 436,852
------------------------- ----------- ---------------- ------------ --------
For the year ended 31 December 2016
-------------------------------------------
Short term Post Employment Share based Total
benefits benefits payment GBP
GBP GBP GBP
------------------------- ----------- ---------------- ------------ --------
Executive Directors
Gregory Kuenzel 30,000 - 37,738 67,738
Jeremy Whybrow 37,846 - - 37,846
Martyn Churchouse 100,000 - - 100,000
Non-executive Directors
Michael Hutchinson 25,000 - - 25,000
Marcus Edwards-Jones 12,000 - 7,548 19,548
Roderick McIllree 28,000 - - 28,000
Neil O'Brien 8,000 - 11,321 19,321
Peter Damouni 6,462 - 37,738 44,200
247,308 - 94,345 341,653
------------------------- ----------- ---------------- ------------ --------
Of the above director fees, GBP135,000 (2016: GBP140,056) has been capitalised in accordance with IAS 38 as exploration and evaluation related costs and are shown as an intangible addition in the year.
18. Finance Income
Group
--------------
2017 2016
GBP GBP
-----
Finance income - bank interest 105 162
-------------------------------- ----- -----
19. Taxation
The tax on the Group's loss differs from the theoretical amount that would arise using the weighted average tax rate applicable to the losses of the consolidated entities as follows:
Group
2017 2016
GBP GBP
Loss before tax (2,382,476) (5,645,734)
------------ ------------
Tax at the weighted average rate of 19.78%
(2016: 20%) (471,254) (1,157,375)
Expenditure not deductible for tax purposes 23,141 364,249
Net tax effect of losses carried forward
on which no deferred tax asset is recognised 448,112 793,126
------------ ------------
Income tax for the year - -
------------ ------------
No charge to taxation arises due to the losses incurred.
The weighted average applicable tax rate of 19.78% (2016: 20.50%) used is a combination of the 19% standard rate of corporation tax in the UK, 25% Austrian corporation tax, 0% Georgian corporation tax (15% charged on distributions but as no distributions made 0%) and 0% BVI corporation tax.
The Group has accumulated tax losses of approximately GBP3,404,112 (2016: GBP2,956,000) available to carry forward against future taxable profits. A deferred tax asset has not been recognised because of uncertainty over future taxable profits against which the losses may be utilised.
Changes to the UK corporation tax rates were substantively enacted as part of Finance Bill 2017 (on 6 September 2016). These include reductions to the standard rate to reduce the rate to 17% from 1 April 2020.
20. Earnings per Share
The calculation of the total basic loss per share of 2.232 pence (2016: loss 9.895 pence) is based on the loss attributable to equity owners of the group of GBP2,260,603 (2016: GBP5,498,126) and on the weighted average number of ordinary shares of 101,288,979 (2016: 55,565,501) in issue during the period.
In accordance with IAS 33, basic and diluted earnings per share are identical as the effect of the exercise of share options or warrants would be to decrease the loss per share.
21. Commitments
(a) Work programme commitment
On 15 March 2018 the Group agreed a 6-month work programme with its JV partner, Caucasian Mining Group, related to the ongoing exploration and development of the licence areas in Georgia. Georgian Mining Corporation has committed to contributing $1 million (being 50% of the 6-month budget) to fund this work programme
(b) Royalty agreements
As part of the contractual arrangement with Kibe No.1 Investments Limited the Group has agreed to pay a royalty on revenue from gold sales arising from gold mines developed by Noricum Gold AT GmbH and covered by licenses acquired by Kibe No.1 Investments Limited. Under the terms of the Royalty Agreement between Kibe No.1 Investments Limited and Noricum Gold AT GmbH, the Group shall pay royalties, based on total ounces of gold sold, equal to US$1 for every US$250 of the sale price per ounce.
(c) Operating lease commitments
The Group leased office premises under a non-cancellable operating lease agreement. The previous lease fixed term expired during the year. The lease was renewed in October 2017 for a fixed term of 1 year. The lease expenditure charged to the income statement during the year is included in Note 6.
The future aggregate minimum lease payments under non-cancellable operating leases are as follows:
Group 2017 2016
GBP GBP
---------------------------------------- ------- -------
Not later than one year 60,000 27,000
Later than one year but not later than 35,000 -
five years
---------------------------------------- ------- -------
Total lease commitment 95,000 27,000
----------------------------------------- ------- -------
22. Related Party Transactions
Recharges between Georgian Mining Corporation and European Mining Services Limited
During the year Georgian Mining Corporation recharged administrative costs with a total value of GBP161,654 (2016: GBP334,235) to European Mining Services Limited for services rendered to European Mining Services Limited.
Services provided by European Mining Services Limited to JSC Georgian Copper & Gold
During the year European Mining Services Limited provided geological, technical and other professional services with a total value of GBP1,040,963 (2016: GBP696,929) to JSC Georgian Copper & Gold.
Loan from Georgian Mining Corporation to Kibe No.2 Investments Limited
As at 31 December 2017 there were amounts receivable of GBP3,826 (2016: GBP2,557) from Kibe No.2 Investments Limited. No interest was charged on the loans.
Loan from Georgian Mining Corporation to GMC Investments Limited
As at 31 December 2017 there were amounts receivable of GBP4,697,066 (2016: GBP1,862,618) from GMC Investments Limited. No interest was charged on the loans.
Loan from Georgian Mining Corporation to European Mining Services Limited
As at 31 December 2017 there were amounts receivable of GBP323,152 (2016: GBP423,152) from European Mining Services Limited.
All intra-group transactions are eliminated on consolidation.
Other Transactions
Fairholme Consulting Services Ltd, a company in which Gregory Kuenzel is a Director and beneficial owner, was paid a fee of GBP46,667 (2016: GBP69,998) for management and corporate consulting services to the Group. No balance was outstanding at the year-end.
Silvergate Capital Partners, a company in which Peter Damouni is a Director and beneficial owner, was paid a fee of GBP33,333 (2016: GBP32,500) for management and corporate consulting services to the Group. A balance of GBP8,524 was outstanding at the year-end.
Laurie Mutch & Associates Ltd, a company in which Laurie Mutch is a Director and beneficial owner, was paid a fee of GBP20,500 (2016: nil) for management and corporate consulting services to the Group. GBP18,200 was outstanding at the year-end.
Greenland Gas and Oil Limited, a company in which Greg Kuenzel, Roderick McIllree and Michael Hutchinson are Directors and shareholders, was paid a fee GBP18,600 (2016: 18,600) for geological information systems consulting services to the Group. No balance was outstanding at the year-end.
McGill LLP, a partnership in which Revaz Beridze (General Director of JSC Georgian Copper & Gold) is a partner, was paid a fee GBP81,093 (2016: GBP76,913) for legal services provided to JSC Georgian Copper & Gold. GBP7,966 was outstanding at the year end.
Revaz Beridze (General Director of JSC Georgian Copper & Gold), was paid a fee of GBP77,649 (2016: nil) for corporate consulting services to the Group. No balance was outstanding at the year-end.
23. Ultimate Controlling Party
The Directors believe there to be no ultimate controlling party.
24. Events after the Reporting Date
On 15 March 2018, Georgian Mining Corporation entered into a Deed of Variation with its JV partner Caucasian Mining Group ("CMG") in relation to the Shareholders Agreement governing the operations of Georgian Copper & Gold ("GCG"). One of these changes was a revision to the structure of the Board of GCG with both shareholders now having he right to appoint two directors to the board. As a result, it is unlikely that the investment in GCG will meet the criteria for control from that date and will therefore no longer be consolidated as a subsidiary undertaking of the Group.
The JV partners also agreed a 2018 Work Programme and Budget. The focus will continue to be on the further development of KBE GZ2 gold oxides, initially with an in-fill drilling programme for resource definition and, in parallel, further testwork and environmental and feasibility studies to achieve the target of a starter mining operation at GZ2. The Work Programme also includes further testing and expansion of the JORC compliant copper-gold resources beneath the oxides at GZ2 and Copper Zone 1, which contribute significant value to the future operation.
GCG also entered into a Memorandum of Understanding ("MoU") with Rich Metals Group ("RMG"). The MoU sets forth the current understanding and a framework for the detailed terms and conditions to be agreed relating to a Mining and Processing Agreement ('MPA'). The MoU and the MPA relate to KBE and both the gold oxides and copper-sulphides. RMG is the owner and operator of the processing plants at the Madneuli and Sakdrisi mines.
On 27 June 2018 the Company announced to the market details related to the extension of exploration rights within the existing mining licence. Further information can be found in the Chairman's Statement as well as Note 8 to these Financial Statements.
Market Abuse Regulation (MAR) Disclosure
Certain information contained in this announcement would have been deemed inside information for the purposes of Article 7 of Regulation (EU) No 596/2014 until the release of this announcement.
**S**
For further information please visit www.georgianmining.com or contact:
Mike Struthers Georgian Mining Corporation Company Tel: 020 7907
9327
Ewan Leggat S. P. Angel Corporate Nomad & Broker Tel: 020 3470
Finance LLP 0470
Soltan Tagiev S. P. Angel Corporate Nomad & Broker Tel: 020 3470
Finance LLP 0470
Damon Heath Shard Capital Partners Joint Broker Tel: 020 7186
LLP 9950
Camilla Horsfall Blytheweigh PR Tel: 020 7138
3224
Simon Woods Blytheweigh PR Tel: 020 7138
3204
About Georgian Mining Corporation
Georgian Mining Corporation has 50% ownership and operational control of the Bolnisi Copper and Gold Project in Georgia, situated on the prolific Tethyan Belt, a well-known geological region and host to many high-grade copper-gold deposits and producing mines. The Bolnisi licence covers an area of over 860 sq km and has a 30-year mining licence with a variety of targets and projects ranging from greenfield exploration / target definition phase through intermediate target-testing phases to more advanced projects including Kvemo Bolnisi East which will advance to Feasibility Study in 2018. These projects are proximal to several advanced projects and existing mining operations owned by the Company's joint venture partner, and their sister production company. Georgia has an established mining code and is a jurisdiction open to direct foreign investment.
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
FR EANKPALPPEFF
(END) Dow Jones Newswires
June 29, 2018 02:00 ET (06:00 GMT)
1 Year Georgian Mining Chart |
1 Month Georgian Mining Chart |
It looks like you are not logged in. Click the button below to log in and keep track of your recent history.
Support: +44 (0) 203 8794 460 | support@advfn.com
By accessing the services available at ADVFN you are agreeing to be bound by ADVFN's Terms & Conditions
