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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Serabi Gold Plc | LSE:SRB | London | Ordinary Share | GB00BG5NDX91 | ORD 10P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 3.00 | 4.92% | 64.00 | 63.00 | 65.00 | 64.00 | 61.00 | 61.00 | 125,148 | 10:00:25 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| Gold Ores | 58.71M | -983k | -0.0130 | -49.23 | 48.47M |
Hot Features
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TIDMSRB
For immediate release
15 May 2020
Serabi Gold plc
("Serabi" or the "Company")
Unaudited results for the three month period ended 31 March 2020
Serabi (AIM:SRB, TSX:SBI), the Brazilian focused gold mining and
development company, today releases its unaudited results for the three
month period ended 31 March 2020.
Financial Highlights
-- Cash Cost for the quarter of US$996 per ounce.
-- All-In Sustaining Cost for the quarter of US$1,257 per ounce.
-- EBITDA for the first quarter of 2020 of US$3.20 million (Q1 2019: US$4.33
million).
-- Post tax profit of US$0.77 million reflecting lower level of gold sales
realised during the period compared with 2019 offset by higher average
gold prices in 2020.
-- Earnings per share of 1.31 cents.
-- Average gold price of US$1,549 received on gold sales in 2020
-- Lower revenue, quarter on quarter, reflects sales of gold inventory
realised in Q1 2019 and lower production resulting from a mill stoppage
in February 2020 (see news release 26 March 2020).
-- Agreement, concluded in April 2020, with Greenstone Resources II LP
("Greenstone") to subscribe for US$12 million Convertible Loan Stock.
-- Agreement reached with Equinox Gold Corp. ("Equinox") allowing the
Company to pay, in monthly instalments, the remaining US$12 million
consideration for purchase of Coringa, until travel restrictions caused
by Coronavirus are lifted.
Key Financial Information
SUMMARY FINANCIAL STATISTICS FOR THE THREE MONTHSING 31 MARCH 2020
----------------------------------------------------------------------------------------------------------
3 months to 3 months to
31 March 31 March 12 months to 12 months to
2020 2019 31 December 2019 31 December 2018
US$ US$ US$ US$
(unaudited) (unaudited) (audited) (audited)
------------------------------ ------------ ---------------- ---------------------- -----------------
Revenue 13,097,687 17,126,040 59,948,092 43,261,743
Cost of Sales (8,233,056) (11,361,987) (37,203,445) (31,101,016)
------------
Gross Operating Profit 4,864,631 5,764,053 22,744,647 12,160,727
Administration and share based
payments (1,664,630) (1,424,504) (5,524,320) (5,867,918)
------------ ---------------- ---------------------- -----------------
EBITDA 3,200,001 4,339,549 17,220,327 6,292,809
Depreciation and amortisation
charges (1,704,361) (2,289,545)) (8,857,203) (9,004,411)
------------ ---------------- ---------------------- -----------------
Operating profit/(loss) before
finance and tax 1,495,640 2,050,004 8,363,124 (2,711,602)
------------ ---------------- ---------------------- -----------------
Profit/(loss) after tax 772,632 1,549,962 3,832,984 (5,754,541)
------------ ---------------- ---------------------- -----------------
Earnings per ordinary share
(basic) 1.31 cents 2.63 cents 6.51 cents (11.20 cents)
------------ ---------------- ---------------------- -----------------
Earnings per ordinary share
(diluted) 1.27 cents 2.49 cents 6.28 cents (11.20 cents)
------------
Average gold price received US$1,549 US$1,287 US$1,376 US$1,258
As at As at As at
31 March 31 December 31 December
2020 2019 2018
------------------------------ ------------ ---------------- ---------------------- -----------------
Cash and cash equivalents 9,149,274 14,234,612 9,216,048
Net assets 55,554,750 69,733,388 69,110,287
Cash Cost and All-In Sustaining
Cost ("AISC") (1)
-------------------------------
3 months to 3 months to 12 months to 12 months to
31 March 31 March 31 December 2019 31 December 2018
2020 2019
------------------------------ ------------ ---------------- ---------------------- -----------------
Gold production for cash cost 9,020 ozs 10,164 ozs 40,101 ozs 37,108 ozs
and AISC purposes
------------ ---------------- ---------------------- -----------------
Total Cash Cost of production US$996 US$796 US$832 US$821
(per ounce)
------------ ---------------- ---------------------- -----------------
Total AISC of production (per US$1,257 US$1,021 US$1,081 US$1,093
ounce)
------------ ---------------- ---------------------- -----------------
Operational Highlights
-- First quarter gold production of 9,020 ounces.
-- 3,674 ounces of gold produced in March 2020, the highest monthly level
since the operation opened.
-- Ore sorter in full scale operation in March following completion of
commissioning during the quarter.
-- 42,036 tonnes of ore mined during the quarter at 6.54 grams per tonne
("g/t") of gold.
-- 40,465 tonnes of run of mine ("ROM") ore processed through the plant from
the combined Palito and Sao Chico orebodies, with an average grade of
6.66 g/t of gold.
-- 2,878 metres of horizontal development completed during the quarter.
-- Public hearing for the Coringa project held on 6 February 2020 with
positive feedback. The Company is now awaiting submission of final
recommendation to, and approval of, the State Environmental Council
("COEMA") for the award of the Licencia Previa (the Preliminary
License).
SUMMARY PRODUCTION STATISTICS FOR 2020 AND FOR 2019
Qtr 1 YTD Qtr 1 Qtr 2 Qtr 3 Qtr 4 Total
------------ -------
2020 2020 2019 2019 2019 2019 2019
------------ ------- ------ ------ ------ ------ ------ ------ --------
Gold
production
(1) (2) Ounces 9,020 9,020 10,164 9,527 10,187 10,233 40,101
Mined ore --
Total Tonnes 42,036 42,036 42,609 44,784 44,757 44,092 176,243
Gold grade (g/t) 6.54 6.54 7.47 6.72 7.14 6.69 7.00
Milled ore Tonnes 40,465 40,465 43,451 43,711 45,378 44,794 177,335
Gold grade (g/t) 6.66 6.66 7.69 6.72 6.84 6.81 7.02
Horizontal
development
-- Total Metres 2,878 2,878 1,868 2,419 2,433 2,908 9,628
------------ ------- ------ ------ ------ ------ ------ ------ --------
(1) Gold production figures are subject to amendment
pending final agreed assays of the gold content of the copper/gold
concentrate and gold doré that is delivered to the refineries.
(2) Gold production totals for 2020 includes treatment
of 9,146 tonnes of flotation tails at a grade of 4.35 g/t (Q1 2019:
3,136 tonnes at a grade of 4.00g/t)
(3) The table may not sum due to rounding
Exploration and Development Highlights
-- Step out surface diamond drilling at Sao Chico has identified westerly
extension for 375 metres with mineable widths and grades and for over 200
metres to the east.
-- Underground drilling at Sao Chico has continued to test the depth
extension with an intersection reported of over 25g/t over 4.08 metres at
a depth of over 200 metres below the current mine workings.
-- Geochemical results from the Mata Cobra and Cinderella anomalies
identifying a number of exciting new prospects.
Key Objectives for 2020
-- Implement measures to minimise short term impacts of Coronavirus
("CV-19") on current operations and provide a safe and responsible work
environment for staff during the crisis.
-- Continue to make its best efforts to maintain production levels as close
as guidance as is practical being mindful of providing proper rest
schedules for those staff at the mine site
-- Complete the licencing process for Coringa and complete all desktop
planning activity.
-- Secure financing package for the Coringa project to fund plant erection
and other site developments.
-- Complete, as soon as practical, exploration programmes at Sao Chico to
expand the resource with a view to producing a new resource estimation.
-- Complete exploration drilling programme over geophysical anomalies around
Sao Chico.
-- Complete acquisition of Coringa gold project.
Clive Line, CFO of Serabi commented,
"With all the uncertainties that exist today, it is very pleasing that
we have been able to operate continuously throughout this time and, as
things stand, we remain confident that the operations at the Palito
Complex will continue, uninterrupted, for the foreseeable future.
"The overall results for the first quarter are comparable with the same
period in 2019, which itself was a record year for Serabi, and operating
profit before interest and tax charges are only lower because of a
one-off provision of US$500,000 that was released back to income in the
first quarter of 2019. Gold revenue in the first quarter of 2019 was
higher but included approximately 2,200 ounces resulting from the sales
of gold inventory carried over from the preceding year. The average
gold price realised in the quarter of US$1,549 compares with the price
achieved for the same period of 2019 of US$1,287 an improvement of 20%,
which has helped mitigate the lower production achieved for the quarter
and therefore sales that have been realised in the same period.
"The lower production has impacted unit costs for the period. In
addition to incurring the unexpected costs for the mill repairs, in the
first quarter we also brought in contractors to give a short term boost
to our underground drilling capacity used particularly for longer term
mine development and plannnig purposes. The average exchange rate for
the period was BrR$4.46 to US$1.00, so the effect of the more recent
declines in the exchange rate have not yet flowed through into the
costs.
"With debt repayment obligations and the ongoing planned expenditure on
the successful exploration programmes that were being undertaken during
the quarter, it was always expected that the Group's cash holdings would
reduce compared with the end of December 2019. The final cash balance
of US$9.15 million was in-line with our internal forecasts even
considering the lower than forecast level of production achieved during
the period, primarily the result of the previously reported failure of
the main ball mill during February.
"Cash flow generated from operations was approximately US$2.2 million
but does reflect an increase in inventory levels during the quarter of
approximately US$1.4 million reflecting in part the variation between
production for the quarter of 9,020 ounces compared with the realised
sales in the period of only 8,120 ounces. The variation results from
timing differences between production and the recognition of sales due
to the departure dates of vessels carrying the Groups copper/gold
concentrate leaving Brazil and the delivery of gold bullion for final
sale.
"Whilst supply chains have not yet been an issue, we have nonetheless
increased holdings of key consumables, where we can, to help insulate
the operation from any interruptions that may arise. At the same time,
we have temporarily suspended capital investment and exploration
programmes to conserve cash resources, though I anticipate that we will
pick these up again over the coming months as the outlook becomes
clearer.
"I am very pleased that in April we were able to conclude the
arrangements with Greenstone for their subscription for US$12 million of
Convertible Loan Stock, originally announced on 21 January 2020, and
also to agree revised terms with Equinox for the final instalment
payment for the Coringa project. We are grateful for the continued
financial support from Greenstone and the understanding of Equinox.
These transactions have removed significant uncertainty for investors
and provide Serabi with a neat solution that allows us to complete the
acquisition of Coringa, which remains a key element of the Group's
growth plans.
"The second quarter has already begun well, and the gold price and the
exchange rate should provide further support going forward. We have a
number of challenges ahead of us, but our workforce has already shown
remarkable flexibility and commitment, and this gives me good reason to
be cautiously optimistic for the coming months."
This announcement is inside information for the purposes of Article 7 of
Regulation 596/2014. The person who arranged the release of this
statement on behalf of the Company was Clive Line, Director.
Enquiries:
Serabi Gold plc
Michael Hodgson Tel: +44 (0)20 7246 6830
Chief Executive Mobile: +44 (0)7799 473621
Clive Line Tel: +44 (0)20 7246 6830
Finance Director Mobile: +44 (0)7710 151692
Email: contact@serabigold.com
-----------------------------
Website: www.serabigold.com
-----------------------------
Beaumont Cornish Limited
Nominated Adviser
Roland Cornish Tel: +44 (0)20 7628 3396
Michael Cornish Tel: +44 (0)20 7628 3396
Peel Hunt LLP
UK Broker
Ross Allister Tel: +44 (0)20 7418 8900
Copies of this announcement are available from the Company's website at
www.serabigold.com.
Neither the Toronto Stock Exchange, nor any other securities regulatory
authority, has approved or disapproved of the contents of this
announcement.
The following information, comprising, the Income Statement, the Group
Balance Sheet, Group Statement of Changes in Shareholders' Equity, and
Group Cash Flow, is extracted from these financial statements.
Statement of Comprehensive Income
For the three month period ended 31 March 2020
For the three months ended
31 March
2020 2019
(expressed in US$) Notes (unaudited) (unaudited)
------------------------------------------- ----------- ------------- -------------
CONTINUING OPERATIONS
Revenue 13,097,687 17,126,040
Cost of sales (8,233,056) (11,861,987)
Release of inventory impairment provision -- 500,000
Depreciation and amortisation charges (1,704,361) (2,289,545)
------------------------------------------- ----------- ------------- -------------
Total cost of sales (9,937,417) (13,651,532)
Gross profit 3,160,270 3,474,508
Administration expenses (1,740,964) (1,383,831)
Share-based payments (25,238) (65,485)
Gain on disposal of fixed assets 101,572 24,812
------------- -------------
Operating profit 1,495,640 2,050,004
Foreign exchange loss (8,858) (14,617)
Finance expense 2 (184,991) (411,105)
Finance income 2 -- 139,059
------------------------------------------- ----------- ------------- -------------
Profit before taxation 1,301,791 1,763,341
Income tax expense 3 (529,159) (213,379)
------------------------------------------- ----------- ------------- -------------
Profit for the period(1) 772,632 1,549,962
------------------------------------------- ----------- ------------- -------------
Other comprehensive income (net of tax)
Items that may be reclassified subsequently to profit
or loss
Exchange differences on translating foreign
operations (14,976,508) (562,093)
------------------------------------------- ----------- ------------- -------------
Total comprehensive profit /(loss) for the
period(1) (14,203,876) 987,869
------------------------------------------- ----------- ------------- -------------
Profit / (loss) per ordinary share (basic) 4 1.31 cents 2.63 cents
------------------------------------------- ----------- ------------- -------------
Profit / (loss) per ordinary share 4 1.27 cents 2.49 cents
(diluted)
------------------------------------------- ----------- ------------- -------------
(1) The Group has no non-controlling interests and all losses
are attributable to the equity holders of the parent company.
Balance Sheet as at 31 March 2020
As at As at As at
31 March 31 March 31 December
2020 2019 2019
(expressed in US$) (unaudited) (unaudited) (audited)
------------------------------ ------------ ------------ ------------
Non-current assets
Deferred exploration costs 26,169,961 28,581,674 30,686,652
Property, plant and equipment 30,256,311 38,520,503 37,597,100
Right of use assets 1,923,563 2,245,801 1,997,176
Taxes receivable 832,520 1,554,651 848,845
Deferred taxation 865,371 2,091,031 1,321,782
-------------------------------- ------------ ------------ ------------
Total non-current assets 60,047,726 72,993,660 72,451,555
-------------------------------- ------------ ------------ ------------
Current assets
Inventories 6,220,213 6,272,053 6,577,968
Trade and other receivables 1,174,968 1,196,042 802,275
Prepayments and accrued income 2,149,300 4,328,718 3,473,288
Cash and cash equivalents 9,149,274 12,133,713 14,234,612
-------------------------------- ------------ ------------ ------------
Total current assets 18,693,755 23,930,526 25,088,143
-------------------------------- ------------ ------------ ------------
Current liabilities
Trade and other payables 5,604,674 5,931,532 6,113,789
Interest bearing liabilities 3,464,077 4,048,054 6,952,542
Acquisition payment outstanding 12,000,000 11,259,277 12,000,000
Derivative financial
liabilities -- 254,134 --
Accruals 289,776 342,322 319,670
------------ ------------
Total current liabilities 21,358,527 21,835,319 25,386,001
-------------------------------- ------------ ------------ ------------
Net current assets (2,664,772) 2,095,207 (297,858)
-------------------------------- ------------ ------------ ------------
Total assets less current
liabilities 57,382,954 75,088,867 72,153,697
-------------------------------- ------------ ------------ ------------
Non-current liabilities
Trade and other payables 93,648 971,662 183,043
Provisions 1,734,556 1,529,318 2,237,266
Interest bearing liabilities -- 2,424,246 --
------------------------------ ------------ ------------ ------------
Total non-current liabilities 1,828,204 4,925,226 2,420,309
-------------------------------- ------------ ------------ ------------
Net assets 55,554,750 70,163,641 69,733,388
-------------------------------- ------------ ------------ ------------
Equity
Share capital 8,882,803 8,882,803 8,882,803
Share premium reserve 21,752,430 21,752,430 21,752,430
Option reserve 1,044,827 1,428,852 1,019,589
Other reserves 7,768,741 4,937,419 7,149,274
Translation reserve (59,255,454) (41,369,216) (44,278,946)
Retained surplus 75,361,403 74,531,353 75,208,238
-------------------------------- ------------ ------------ ------------
Equity shareholders' funds 55,554,750 70,163,641 69,733,388
-------------------------------- ------------ ------------ ------------
The interim financial information has not been audited and does not
constitute statutory accounts as defined in Section 434 of the Companies
Act 2006. Whilst the financial information included in this announcement
has been compiled in accordance with International Financial Reporting
Standards ("IFRS") this announcement itself does not contain sufficient
financial information to comply with IFRS. The Group statutory accounts
for the year ended 31 December 2019 prepared under IFRS as adopted in
the EU and with IFRS and their interpretations adopted by the
International Accounting Standards Board will be filed with the
Registrar of Companies following their adoption by shareholders at the
next Annual General Meeting. The auditor's report on these accounts was
unqualified. The auditor's report did not contain a statement under
Section 498 (2) or 498 (3) of the Companies Act 2006.
Statements of Changes in Shareholders' Equity
For the three month period ended 31 March 2020
(expressed in
US$)
Share Other
Share Share option reserves Translation Retained
(unaudited) capital premium reserve (1) reserve Earnings Total equity
-------------- --------- ---------- --------- --------- ------------ ----------- ------------
Equity
shareholders'
funds at 31
December
2018 8,882,803 21,752,430 1,363,367 4,763,819 (40,807,123) 73,154,991 69,110,287
-------------- --------- ---------- --------- --------- ------------ ----------- ------------
Foreign
currency
adjustments -- -- -- -- (562,093) -- (562,093)
Profit for the
period -- -- -- -- -- 1,549,962 1,549,962
-------------- --------- ---------- --------- --------- ------------ ----------- ------------
Total
comprehensive
income for
the period -- -- -- -- (562,093) 1,549,962 987,869
Transfer to
taxation
reserve -- -- -- 173,600 -- (173,600) --
Share option
expense -- -- 65,485 -- -- -- 65,485
-------------- --------- ---------- --------- --------- ------------ ----------- ------------
Equity
shareholders'
funds at 31
March 2019 8,882,803 21,752,430 1,428,852 4,937,419 (41,369,216) 74,531,353 70,163,641
-------------- --------- ---------- --------- --------- ------------ ----------- ------------
Foreign
currency
adjustments -- -- -- -- (2,909,730) -- (2,909,730)
Loss for the
period -- -- -- -- -- 2,283,022 2,283,022
-------------- --------- ---------- --------- --------- ------------ ----------- ------------
Total
comprehensive
income for
the period -- -- -- -- (2,909,730) 2,283,022 (626,708)
Transfer to
taxation
reserve -- -- -- 2,211,855 -- (2,211,855) --
Shares issued
in period (605,718) -- -- 605,718 --
Share option
expense -- -- 196,455 -- -- -- 196,455
-------------- --------- ---------- --------- --------- ------------ ----------- ------------
Equity
shareholders'
funds at 31
December
2019 8,882,803 21,752,430 1,019,589 7,149,274 (44,278,946) 75,208,238 69,733,388
-------------- --------- ---------- --------- --------- ------------ ----------- ------------
Foreign
currency
adjustments -- -- -- -- (14,976,508) -- (14,976,508)
Profit for the
period -- -- -- -- -- 772,632 772,632
-------------- --------- ---------- --------- --------- ------------ ----------- ------------
Total
comprehensive
income for
the period -- -- -- -- (14,976,508) 772,632 (14,203,876)
Transfer to
taxation
reserve -- -- -- 619,467 -- (619,467) --
Share option
expense -- -- 25,238 -- -- -- 25,238
-------------- --------- ---------- --------- --------- ------------ ----------- ------------
Equity
shareholders'
funds at 31
March 2020 8,882,803 21,752,430 1,044,827 7,768,741 (59,255,454) 75,361,403 55,554,750
-------------- --------- ---------- --------- --------- ------------ ----------- ------------
(1) Other reserves comprise a merger reserve of US$361,461 and a
taxation reserve of US$7,469,934 (31 December 2019: merger reserve of
US$361,461 and a taxation reserve of US$6,787,813).
Cash Flow Statement
For the three month period ended 31 March 2020
For the three months
ended
31 March
2020 2019
(expressed in US$) (unaudited) (unaudited)
------------------------------------------------------ ----------- -----------
Cash flows from operating activities
Profit for the period 772,632 1,549,962
Net financial expense 193,849 286,663
Depreciation -- plant, equipment and mining properties 1,704,361 2,289,545
Inventory impairment expense -- (500,000)
Taxation expense 529,159 213,379
Share based payments 25,238 65,485
Foreign exchange 77,939 21,851
Changes in working capital
(Increase) / decrease in inventories (1,358,052) 2,737,810
(Increase) / decrease in receivables, prepayments
and accrued income (478,552) (736,605)
Increase / (decrease) in payables, accruals and provisions 743,312 538,494
---------------------------------------------------------- ----------- -----------
Net cash inflow from operations 2,209,886 6,466,584
------------------------------------------------------ ----------- -----------
Investing activities
Purchase of property, plant and equipment and assets
in construction (1,008,310) (389,728)
Mine development expenditure (587,609) (838,310)
Geological exploration expenditure (836,361) (588,462)
Pre-operational project costs (215,296) (439,942)
Acquisition of other property rights (183,239) (1,035,087)
Proceeds from sale of assets 239,003 35,042
Interest received and other finance income -- 2,217
------------------------------------------------------ ----------- -----------
Net cash outflow on investing activities (2,591,812) (3,254,270)
------------------------------------------------------ ----------- -----------
Financing activities
Repayment of short term secured loan (3,491,746) --
Payment of lease liabilities (36,308) (185,605)
Interest paid (204,669) (152,796)
Net cash outflow from financing activities (3,732,723) (338,401)
------------------------------------------------------ ----------- -----------
Net (decrease) / increase in cash and cash equivalents (4,114,649) 2,873,913
Cash and cash equivalents at beginning of period 14,234,612 9,216,048
Exchange difference on cash (970,689) 43,751
------------------------------------------------------ ----------- -----------
Cash and cash equivalents at end of period 9,149,274 12,133,713
------------------------------------------------------ ----------- -----------
Notes
1. Basis of Preparation
These interim condensed consolidated financial statements are for the
three month period ended 31 March 2020. Comparative information has been
provided for the unaudited three month period ended 30 March 2019 and,
where applicable, the audited twelve month period from 1 January 2019 to
31 December 2019. These condensed consolidated financial statements do
not include all the disclosures that would otherwise be required in a
complete set of financial statements and should be read in conjunction
with the 2019 annual report.
The condensed consolidated financial statements for the periods have
been prepared in accordance with International Accounting Standard 34
"Interim Financial Reporting" and the accounting policies are consistent
with those of the annual financial statements for the year ended 31
December 2019 and those envisaged for the financial statements for the
year ending 31 December 2020.
Accounting standards, amendments and interpretations effective in 2020
The following Accounting standard has come into effect as of 1 January
2020 have been
IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors
(Amendment -- Definition of Material)
The adoption of this standard has had no effect on the financial results
of the Group.
There are a number of standards, amendments to standards, and
interpretations which have been issued that are effective in future
periods and which the Group has chosen not to adopt early. None of
these are expected to have a significant effect on the Group, in
particular
IAS 1 Presentation of Financial Statements
IFRS 3 Business Combinations (Amendment -- Definition of a Business)
These financial statements do not constitute statutory accounts as
defined in Section 434 of the Companies Act 2006
Going concern and availability of finance
As at 31 March 2020 the Group had cash in hand of US$9.15 million and
net assets of US$55.60 million.
The occurrence of the Coronavirus (COVID-19) pandemic has created
significant uncertainty for all business sectors including Serabi and in
particular the short-term effects and actions that may need to be
implemented either by the Group or that may be imposed on the Group by
new regulations or measures taken by government. Already there are
limitations imposed which restrict the ability of certain of the Group's
personnel and contractors to attend the Group's operations. The Group
has and is implementing measures that will permit the Group to maintain
operations albeit at potentially reduced levels of production than
previously envisaged.
The Group has renegotiated the terms relating to the settlement of a
final acquisition payment of US$12 million due to Equinox Gold Inc
("Equinox") in respect of the purchase of Chapleau Resources Limited and
its Coringa gold project (the "Coringa Deferred Consideration"). Under
the revised arrangement the Group will pay monthly instalments
commencing 1 May 2020 of US$500,000 per month, increasing to US$1
million per month from 1 August 2020 and payable thereafter ("the
"Deferral Period") until such time as certain conditions relating to
travel into and within Brazil are lifted (the "Travel Restriction
Conditions"). Within 6 weeks of the satisfaction of the Travel
Restriction Conditions the remaining portion of the Coringa Deferred
Consideration will become payable.
The Company announced on 22 January 2020 that it had entered into an
agreement with Greenstone Resources II LP ("Greenstone") for the issue
of and subscription by Greenstone of US$12 million of Convertible Loan
Notes the proceeds of which would be used to satisfy the Coringa
Deferred Consideration. However, due to the uncertainties created by
the impact of the Coronavirus, the Company and Greenstone agreed to
extend the period for the satisfaction of the conditions required for
completion of the subscription by Greenstone. On 24 April 2020 the
Company announced that it had agreed certain amendments to the original
agreement with Greenstone (the "Amended Subscription Deed").
Under the Amended Subscription Deed certain terms of the subscription
with Greenstone have been amended as follows:
1. the Company may, prior to the satisfaction of the Travel Restriction
Condition only submit a subscription request in respect of Convertible
Loan Notes in the amount of US$500,000 each month. Following the
satisfaction of the Travel Restriction Condition, the Company may then
issue further subscription request for amounts of not less than
US$100,000 and not exceeding an amount equal to US$12,000,000 less the
sum of the aggregate principal amount of all Notes outstanding at that
time.
2. until such time as the existing secured loan due to Sprott Resource
Lending Partnership (the "Sprott Loan") has been repaid, the Convertible
Loan Notes shall be unsecured and will be subordinated to the Sprott
Loan. The Sprott Loan was approximately US$3.45 million as at 31 March
2020 and is being repaid in three equal monthly instalments ending 30
June 2020.
3. Following settlement of the Sprott Loan, the security interests of Sprott
will be discharged and the Company will grant to Greenstone the security
package as originally envisaged save that a pledge of the shares of
Chapleau Resources Limited ("CRL") will continue to be held by Equinox
until such time as the Coringa Deferred Consideration is settled in full.
CRL holds 100% of the shares of Chapleau Exploração Mineral
Ltda which in turn holds the exploration licences for the Coringa gold
project
4. The period during which the Company may issue an Issue Notice to
Greenstone expires on 31 December 2020 unless otherwise agreed.
5. Subject to Greenstone not having exercised its option to convert the
amount outstanding into Conversion Shares, the Convertible Loan Notes are
due to be repaid 16 months after the first Issue Date which was 30 April
2020.
The Directors have prepared an operational plan and cash flow forecast
based on their best judgement of the likely impact of the Coronavirus on
the Group's activities. Based on this forecast, which anticipated, for a
period of up to three months, reduced levels of gold production,
compared to the Group's 2020 budget, of 50 per cent, and assuming that
the Group continues to be able, with the assistance of the proceeds of
the Loan Notes subscribed for by Greenstone in accordance with the
Amended Subscription Deed, to meet its obligations to Equinox, the
Directors consider that the Group will have sufficient cash flows to
settle, in full, the Coringa Deferred Consideration, all other trade and
other liabilities as they fall due and will also be able to settle its
existing secured loan with Sprott.
The Balance Sheet of the Group shows a net liability position of US$2.7
million at 31 December 2020 including a current liability of US$12
million in respect of Coringa Deferred Consideration. This liability is
being financed through the issue of US$12 million of Convertible Loan
Notes to Greenstone which will not be repayable until 31 August 2021.
Whilst the Directors consider that the assumptions they have used are
reasonable and based on the information currently available to them,
there remains significant uncertainty regarding further actions that
have not been anticipated but which may be required or imposed and may
impact on the ability of the Group to meet the operational plan and cash
flow forecast.
At the current time the Directors have assumed that mining operations
and gold production will continue at the Palito Complex. There is no
evidence, at this time, to suggest that the authorities in Brazil have
any intention to try and close down or suspend mining activities as a
result of the current Coronavirus pandemic. On 20 March 2020, it was
stipulated in Decree 10,282/20 that mineral activity was considered an
essential business sector and further actions have subsequently been
invoked to prevent any restrictive measures being applied to the
supplies required by the mining industry including transportation of
supplies, availability of materials required for processing, and the
sale and transportation of the mineral products.
Whilst recognising all the above uncertainties, the Directors have
prepared the financial statements on a going concern basis. In the
event that additional short term funding is required, the Directors
believe there is a reasonable prospect of the Group securing further
funds as and when required in order that the Group can meet all
liabilities including the Coringa Deferred Consideration and the secured
loan with Sprott as and when they fall due in the next 12 months. The
Directors have been successful in raising funding as and when required
in the past and consider that the Group continues to have strong support
from its major shareholders who been supportive of and provided
additional funding when required on previous occasions.
As at the date of this report both the medium and long term impact of
COVID-19 on the underlying operations, and the outcome of raising any
further funds that may be required, remains uncertain and this
represents a material uncertainty surrounding going concern. If the
Group fails to achieve the operational plan or to raise any additional
necessary funds, the Group may be unable to realise its assets and
discharge its liabilities in the normal course of business. The matters
explained indicate that a material uncertainty exists that may cast
significant doubt on the Group and Company's ability to continue as a
going concern. These financial statements do not show the adjustments to
the assets and liabilities of the Group or the Company if this was to
occur
2. Finance expense and income
3 months ended
31 March 2020 3 months ended
(unaudited) 31 March 2019 (unaudited)
US$ US$
Interest expense on secured loan (145,091) (149,584)
Expense in respect of
non-substantial modification (39,900) --
Unwinding of discount on
acquisition payment -- (261,521)
(184,991) (411,105)
Income arising upon revaluation of
derivatives -- 136,842
Interest income -- 2,217
-------------- --------------------------
Net finance expense (184,991) (272,046)
-------------- --------------------------
3. Taxation
The Group has recognised a deferred tax asset to the extent that the
Group has reasonable certainty as to the level and timing of future
profits that might be generated and against which the asset may be
recovered. The Group has released the amount of US$185,578 as a
deferred tax charge during the three month period to 31 March 2020.
The Group has also incurred a tax charge for the period in Brazil of
US$343,581.
4. Earnings per Share
3 months ended
31 March 2020 3 months ended
(unaudited) 31 March 2019 (unaudited)
Profit attributable to ordinary
shareholders (US$) 772,632 1,549,962
--------------------------------- -------------- --------------------------
Weighted average ordinary shares
in issue 58,909,551 58,909,551
Basic profit per share (US cents) 1.31 2.63
--------------------------------- -------------- --------------------------
Diluted ordinary shares in
issue(1) 60,912,145 62,346,301
Diluted profit per share (US
cents) 1.27 2.49
--------------------------------- -------------- --------------------------
(1) Based on 2,087,587 options vested and exercisable as at 31 March
2020 (31 March 2019: 3,436,750 options)
4. Post balance sheet events
On 21 January 2020, the Group entered into a subscription deed (the
"Subscription Deed") for the issue of US$12 million of Convertible Loan
Notes ("the Loan Notes") by Greenstone Resources II LP ("Greenstone")
the proceeds of which were to be applied inter-alia to settle a payment
of US$12 million due to Equinox Gold Corp ("Equinox") representing a
final payment for the acquisition of the Coringa gold project (the
"Coringa Deferred Consideration"). The subscription deed was subject to
shareholder approval and certain other conditions being fulfilled at the
time of initial drawdown. However, as a consequence of the
uncertainties caused by Coronavirus, the Group subsequently agreed with
Greenstone to extend the period for the satisfaction of all the
conditions necessary for the completion of the subscription for and
issue to Greenstone of the Loan Notes.
On 9 April 2020, the Group announced that it had reached an agreement
with Equinox whereby the date for the completion of the Coringa Deferred
Consideration was extended (the "Deferral Period") until such time as
there are no international travel restrictions imposed by the Brazilian
authorities and also no travel restrictions within or into the State of
Para, Brazil, (the "Travel Restriction Condition") where the Group's
Palito Complex gold production operations and the Coringa gold project
are located. Under the terms of the extension the Group will start to
make instalment payments in respect the Coringa Deferred Consideration
of US$500,000 per month payable on each of 1 May 2020, 1 June 2020 and 1
July 2020 which will increase to US$1 million per month thereafter until
such time as the Travel Restriction Condition is satisfied. The balance
outstanding of the Coringa Deferred Consideration is expected to be
settled within six weeks of the Travel Restriction Condition being
satisfied.
On 23 April 2020, The Company and Greenstone signed an amendment deed
which varies the original Subscription Deed (the "Amendment Deed").
Under the Amendment Deed certain terms of the subscription with
Greenstone have been amended as follows:
1. the Company may, prior to the satisfaction of the Travel Restriction
Condition only submit a subscription request in respect of Convertible
Loan Notes in the amount of US$500,000 each month. Following the
satisfaction of the Travel Restriction Condition, the Company may then
issue further subscription request for amounts of not less than
US$100,000 and not exceeding an amount equal to US$12,000,000 less the
sum of the aggregate principal amount of all Notes outstanding at that
time.
2. until such time as the existing secured loan due to Sprott Resource
Lending Partnership (the "Sprott Loan") has been repaid, the Convertible
Loan Notes shall be unsecured and will be subordinated to the Sprott
Loan. The Sprott Loan was approximately US$3.45 million as at 31 March
2020 and is being repaid in three equal monthly instalments ending 30
June 2020.
3. Following settlement of the Sprott Loan, the security interests of Sprott
will be discharged and the Company will grant to Greenstone the security
package as originally envisaged save that a pledge of the shares of
Chapleau Resources Limited ("CRL") will continue to be held by Equinox
until such time as the Coringa Deferred Consideration is settled in full.
CRL holds 100% of the shares of Chapleau Exploração Mineral
Ltda which in turn holds the exploration licences for the Coringa gold
project
4. The period during which the Company may issue an Issue Notice to
Greenstone expires on 31 December 2020 unless otherwise agreed.
5. Subject to Greenstone not having exercised its option to convert the
amount outstanding into Conversion Shares, the Convertible Loan Notes are
due to be repaid 16 months after the first Issue Date which was 30 April
2020.
Save as set out above there have been no other material changes to the
terms of the Subscription Deed. The underlying conversion price at which
Greenstone may, convert any outstanding amount into Ordinary Shares
("Conversion Shares") in the Company has not been varied and remains at
a price of GBP0.76 per Ordinary Share. Greenstone may convert any
outstanding Convertible Loan Notes at any time.
The occurrence of the Coronavirus (COVID-19) pandemic has created
significant uncertainty for all business sectors including the Group and
in particular the short-term effects and actions that may need to be
implemented either by the Group or that may be imposed on the Group by
new regulations or measures taken by government. Already there are
limitations imposed which restrict the ability of certain of the
Company's personnel and contractors to attend the Group's operations.
The Group has and is implementing measures that will permit it to
maintain operations albeit at potentially reduced levels of production
than previously envisaged. The Group has implemented measures to reduce
the numbers of personnel and camp and has ceased all exploration
activity to liberate on site accommodation for personnel dedicated to
mining and gold production. In the short term, current staff at site
have agreed to extend their rosters in order to minimise crew
changeovers in the immediate term, thereby minimising the potential for
the virus to be introduced to the mine site. The Group started to
introduce a testing regime during May 2020 which is allowing for limited
changeover of personnel to be re-introduced and keep the mine site
virus-free. It is expected that the additional testing capability can
be acquired during the second quarter.
Except as set out above, there has been no item, transaction or event of
a material or unusual nature likely, in the opinion of the Directors of
the Company, to affect significantly the continuing operation of the
entity, the results of these operations, or the state of affairs of the
entity in future financial periods.
Qualified Persons Statement
The scientific and technical information contained within this
announcement has been reviewed and approved by Michael Hodgson, a
Director of the Company. Mr Hodgson is an Economic Geologist by training
with over 26 years' experience in the mining industry. He holds a BSc
(Hons) Geology, University of London, a MSc Mining Geology, University
of Leicester and is a Fellow of the Institute of Materials, Minerals and
Mining and a Chartered Engineer of the Engineering Council of UK,
recognising him as both a Qualified Person for the purposes of Canadian
National Instrument 43-101 and by the AIM Guidance Note on Mining and
Oil & Gas Companies dated June 2009.
Forward Looking Statements
Certain statements in this announcement are, or may be deemed to be,
forward looking statements. Forward looking statements are identi ed by
their use of terms and phrases such as "believe", "could", "should"
"envisage", "estimate", "intend", "may", "plan", "will" or
the negative of those, variations or comparable expressions, including
references to assumptions. These forward looking statements are not
based on historical facts but rather on the Directors' current
expectations and assumptions regarding the Company's future growth,
results of operations, performance, future capital and other
expenditures (including the amount, nature and sources of funding
thereof), competitive advantages, business prospects and opportunities.
Such forward looking statements re ect the Directors' current beliefs
and assumptions and are based on information currently available to the
Directors. A number of factors could cause actual results to differ
materially from the results discussed in the forward looking statements
including risks associated with vulnerability to general economic and
business conditions, competition, environmental and other regulatory
changes, actions by governmental authorities, the availability of
capital markets, reliance on key personnel, uninsured and underinsured
losses and other factors, many of which are beyond the control of the
Company. Although any forward looking statements contained in this
announcement are based upon what the Directors believe to be reasonable
assumptions, the Company cannot assure investors that actual results
will be consistent with such forward looking statements.
ENDS
Attachment
-- Q1 2020 Financial Statements
https://ml-eu.globenewswire.com/Resource/Download/c541fe67-b383-4b43-927b-4328db8f4ac9
(END) Dow Jones Newswires
May 15, 2020 02:00 ET (06:00 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.
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