TIDMCNG
China Nonferrous Gold Limited ??????????
('CNG' or the 'Company')
Interim Results for the Six-Month Period Ended 30 June 2018
China Nonferrous Gold Limited (AIM: CNG), the mineral
exploration and development company currently developing the Pakrut
Gold Project ('the Pakrut Project') in the Republic of Tajikistan,
today announces its interim results for the six-month period ended
30 June 2018.
The results below are available on the Company's website at
www.cnfgold.com.
Highlights
-- A total of 21,270 cubic meters ("m") of excavation work completed to
2,350m/2,230m/2,110m;
-- The processing plant has completed its equipment overhaul and workshop
maintenance, and has re-commenced trial production;
-- The smelting plant has returned to trial production resulting in the
production of gold concentrate;
-- On 1st July 2018, the Pakrut gold mine entered into production and
gold ingots were poured; and
-- The construction of all infrastructure projects is expected to be
finalised and completed during the fourth quarter of 2018 and
full
production is expected to commence afterwards.
For further information please visit the Company's website
(www.cnfgold.com) or contact:
China Nonferrous Gold LimitedYu Lixian, Managing DirectorTel:
+86 10 8442 6681
Investec Bank plcJeremy Ellis, Alexander RuffmanTel: +44 (0)20
7597 5970
BlytheweighTim Blythe, Camilla HorsfallTel: +44 (0)20 7138
3204
Project Summary
The Pakrut Gold Project, of which CNG has 100 per cent
ownership, is situated in Tajikistan approximately 120km northeast
of the capital city Dushanbe. Pakrut is located within the Tien
Shan gold belt, which extends from Uzbekistan into Tajikistan,
Kyrgyzstan and Western China, and which hosts several
multi-million-ounce gold deposits.
CNG is transitioning from construction into the production
phase.
About Tajikistan
Tajikistan is a secular republic located in Central Asia. The
country is a member of the Commonwealth of Independent States and
the Shanghai Cooperation Organisation. Tajikistan hosts numerous
operating precious metal mines as well as the largest aluminium
smelter in Central Asia. CNG's management team has extensive
experience in the mining industry in Tajikistan.
Chairman's Statement
As the Chairman of the Board, it gives me great pleasure to
present the Chairman's Statement of the Interim Results for the
Six-Month Period Ended 30 June 2018. After the restoration of the
mine site following the severe snow disaster in 2017 the
infrastructure, construction and production operations of the
Pakrut gold mine have made significant progress during the
half-year. The company has completed the majority of the
construction for the flotation tailings pond, backfill station,
camp complex building and underground ventilation system projects,
to ensure that all infrastructure projects will be finished in the
fourth quarter of 2018 as previously stated. After conducting an
equipment overhaul and technical transformation, both the
processing plant and the smelting plant returned to trial
production in April 2018, and gold ingots were produced on July 1,
2018. Pakrut gold mine has ushered in a new chapter and entered a
new stage of its lifecycle after going through a difficult
post-disaster recovery and reconstruction period.
In relation to infrastructure construction, the flotation
tailings pond has completed its diversion culvert pouring project
at the length of 845m, 530,000 m³flood dam and tailings dam
construction, and the 12.5km of pipeline for the tailings
transportation has been laid. Once the geomembrane is laid, the
flotation tailings pond can be put into use. The steel structure
and concrete construction of the camp complex is currently being
built. The main structure is about to be completed whilst the
remaining works, the masonry and renovation projects, are expected
be finalised in the fourth quarter of 2018. Most of the workshop
construction for the backfill station and installation of the main
equipment such as thickener have been completed, and the trials of
these operations will be carried out in the fourth quarter of 2018.
The company has completed 12,957.7 m³of excavation and underground
construction work, and succeeded in finalising the ventilation
system and other engineering excavation works. Wind turbines and
other equipment will be installed shortly. The finalisation of all
infrastructure projects is expected to be completed during the
fourth quarter of 2018.
In terms of production and operation, the mining teams are on
site. The ore was mined to 2,230m in May 2018, and the mining
capacity reached 1,500 tons per day. The processing plant commenced
trial production in April 2018 after completing its equipment
overhaul and workshop maintenance. By September 2018, the
cumulative amount of minerals processed was 206,670 tons, and the
gold concentrate total was 6,186 tons. The smelting plant was
restored to trial production in June 2018, and the first batch of
gold ingots were poured on July 1st. It is expected that gold
production will total 5,835 tons of concentrate and 200 kg of gold
ingots by September 2018.
The insurance claims against the snowstorm disaster have been
completed, and a total of 24 million RMB
(approximately$$3,508,300USD) has been received, covering the
direct losses caused by the snowstorm. The company meanwhile has
again arranged the renewal of property insurance.
Financial Results
The Company continued its development and construction work
during the first six months of 2018 Administration expenditure was
US$2,179,000 (30 June 2017: US$1,987,000). The operating loss was
US$3,363,000 (30 June 2017: US$12,351,000). Total cash equivalents
at the end of the period amounted to US$61,896,000 (30 June 2017:
US$10,959,000).
Given the limited production and cash balances the Group has
been reliant on support from its major shareholder, CNMIM, and its
associates. As detailed in the announcement released on 5 March
2018, CNG signed a total loan facility of US$90 million from CNMC
International Capitals Company Limited ("CNMC International"). The
Company's total liabilities outstanding as at 30 June 2018 totals
approximately US$464 million and as at the date of this
announcement totals approximately US$424 million of which $244
million is repayable during 2018. The Company has now recommenced
production, which is expected to assist with raising further
working capital. As previously announced, the repayment of the
existing facilities will require a wider refinancing. Discussions
are ongoing and are expected to be concluded in advance of 31
December 2018 deadline.
Outlook
The impact of the snowstorm has now been largely resolvedwith
the infrastructure projects nearing completion. The pouring of gold
ingots indicates that the Pakrut gold mine has entered a new stage
and opened a new chapter.
After completing theinfrastructure projects, expected in the
fourth quarter of 2018, the Pakrut gold mine is expected
toenterfull production and capacity will gradually reach 2,000 tons
per day. In 2019, the Pakrut gold mine is expected to achieve an
annual production of 660,000 tons and produce 1.3 tons of gold per
annum. Subsequently, the company will fully increase its production
capacity, and strive to double its capacity by 2021. While
increasing the production, the company is as making every effort to
research and refine the selection and improvement process of the
Pakrut gold project by continuously reducing production costs,
increasing recovery rates and improving its overall
competitiveness.
The company has long been committed to becoming a significant
gold producer in Central Asia. It expects to benefit from the
support and advantages of its major shareholder, CNMIM, to
participate positively in China's"Belt and Road Initiative" in the
future, and meanwhile establish a good relationship with the
Tajikistan government and other Central Asian governments so as to
create greater benefits for shareholders by potentially developing
more gold resources and gold mines.
I would like to take this opportunity to thank all our
employees, management and advisors for their continued efforts in
first half of 2018 and thank our shareholders for their continued
support.The company will continue to share with all our
shareholders the latest developments in the construction, status of
production and company's new strategies and new financing and other
arrangements in due course.
Wu Xiang
Non-Executive Chairman
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE SIX MONTHSED 30 JUNE 2018
Unaudited Unaudited Audited
Six months ended Six months ended 30 June 2017 Year ended 31 December
30 June 2018 2017
Note US$'000 US$'000 US$'000
Revenue - 5,493 5,784
Cost of sales - (5,493) (5,784)
Gross profit - - -
Administrative and (2,179) (1,987) (5,017)
other expenses
(Loss)/Gain on foreign (1,183) (42) 750
exchange
Impairment of mines - (10,322) (10,703)
under construction
Operating loss (3,363) (12,351) (14,970)
Interest income 1 - 1
Finance costs - (47) -
Loss before Tax (3,362) (12,398) (14,969)
Income tax - - (68)
Loss for the period (3,362) (12,398) (15,037)
attributable
to owners of the Company
Other comprehensive income - - -
Total comprehensive income (3,362) (12,398) (15,037)
for the period
attributable to owners
of the Company
Earnings per Share
-Basic and diluted (cents) 3 (0.88) (3.24) (3.93)
All of the activities of the Group are classified as
continuing.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2018
Unaudited Unaudited Audited
Note
30 June 2018 US$'000 30 June 2017 US$'000 31 December 2017US$'000
Non-Current Assets
Mine 361,426 317,098 331,160
under construction
Property, plant 7,983 2,275 8,967
and equipment
Total Non-Current 369,409 319,373 340,127
Assets
Current Assets
Inventories 16,847 28,462 18,216
Trade and other 25,395 3,235 629
receivables
Cash and cash 61,896 1,398 12,067
equivalents
Total Current Assets 104,138 33,095 30,912
Current Liabilities
Trade and Other 4 (99,277) (82,892) (78,409)
payables
Borrowings (172,684) (30,000) (172,684)
Total Current (271,961) (112,892) (251,093)
Liabilities
Non-Current
Liabilities
Provision for other (768) (704) (767)
liabilities
and charges
Borrowings 4 (191,500) (222,684) (106,500)
Total Non-Current (192,268) (223,388) (107,267)
Liabilities
Total Liabilities (464,229) (336,280) (358,360)
Net Assets 9,318 16,188 12,679
Capital And Reserves
Capital 38 38 38
Share premium 65,901 65,901 65,901
Other reserves 10,175 10,175 10,175
Retained earnings (66,796) (59,926) (63,435)
Total Equity 9,318 16,188 12,679
CONSOLIDATED STATEMENT OF CASH FLOWS
AS AT 30 JUNE 2018
Unaudited Unaudited Audited
Six months ended Six months ended Year ended 31
30 June 2018 30 June 2017 December
US$'000 US$'000 2017
US$'000
Cash flows from
Operating
Activities
Loss before (3,361) (12,398) (15,037)
income tax
Adjustments for:
Finance income (1) - (1)
Depreciation 43 45 102
Foreign exchange 42
Impairment - 10,322 10,703
Change in working
capital:
Inventory 1,369 (296) 2,732
Trade and other (9,465) 859 90
receivables
Trade and other 6,128 682 (2,758)
payables
Net cash flows (5,287) (744) (4,169)
from Operating
Activities
Cash flows from
Investing
Activities
Purchase of - - (13)
property,
plant and equipment
Payments for mining (23,010) (8,548) (9,254)
rights and
construction
in progress
Disposal of PPE 382 - 42
Net cash used (22,628) (8,548) (9,225)
in Investing
Activities
Cash flows from
Financing
Activities
Proceeds from 90,000 - 26,500
borrowings
Repayment of (5,000) (1,667) (1,667)
borrowings
Interest paid (7,255) - (11,935)
Net Cash (used 77,745 (1,667) 12,898
in)/from
Financing Activities
Net 49,829 (10,959) (496)
Increase/(Decrease)
in
Cash and Cash
Equivalents
Cash and cash 12,067 12,357 12,563
equivalents
at
beginning of
the period
Cash and cash 61,896 1,398 12,067
equivalents
at end of the period
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE SIX MONTHSED 30 JUNE 2018
Share Share Other Retained Total
capital premium reserve earnings equity
US$'000 US$'000 US$'000 US$'000 US$'000
Balance at 1 January 2017 38 65,901 10,175 (48,298) 227,716
Loss and total comprehensive - - - (15,037) (15,037)
income for the period
Balance at 31 December 38 65,901 10,175 (63,435) 12,679
2017 (audited)
Balance at 1 January 2018 38 65,901 10,175 (63,435) 12,679
Loss and total comprehensive - - - (3,361) (3,361)
income for the period
Balance at 30 June 38 65,901 10,175 (66,796) 9,318
2018 (unaudited)
NOTES TO THE INTERIM FINANCIAL STATEMENTS
FOR THE SIX MONTHSED 30 JUNE 2018
1. Accounting Policies
i) Basis of preparation
China Nonferrous Gold Limited (the "Company") is a company
registered in the Cayman Islands. The condensed consolidated
interim financial statements of the Company for the six months
ended 30 June 2018 comprise the result of the Company and its
subsidiaries (together referred to as the "Group") and have been
prepared in accordance with the AIM Rules for Companies. As
permitted, the Company has chosen not to adopt IAS 34 "Interim
Financial Statement" in preparing these interim financial
statements.
The consolidated interim financial information for the period 1
January 2018 to 30 June 2018 is unaudited and has not been reviewed
in accordance with International Standard on Review Engagements
2410 issued by the Auditing Practices Board. In the opinion of the
Directors the condensed interim financial information for the
period presents fairly the financial position, and results from
operations and cash flows for the period in conformity with the
generally accepted accounting principles consistently applied.
The condensed interim financial information incorporates
unaudited comparative figures for the interim period 1 January 2017
to 30 June 2017 and extracts from the audited financial statements
for the year to 30 June 2017. The financial information contained
in this interim report does not constitute statutory accounts.
The comparatives for the full year ended 31 December 2017 are
not the Company's full statutory accounts for that year. A copy of
the accounts for that year have been delivered to members. The
auditor's report on those financial statements was unqualified.
The interim report has not been audited or reviewed by the
Company's auditor. The key risks and uncertainties and critical
accountancy estimates remain unchanged from 31 December 2017 and
the accounting policies adopted are consistent with those used in
the preparation of its financial statements for the year ended 31
December 2017.
ii) Cyclicality
The interim results for the six months ended 30 June 2018 are
not necessarily indicative of the results to be expected for the
financial year 2018. The operations of China Nonferrous Gold
Limited may be subject to seasonal variations depending on the
severity of snowfall levels at the mine site. Severe levels may
impact the ability to continue operations and result in damage to
the mine site.
NOTES TO THE INTERIM FINANCIAL STATEMENTS
FOR THE SIX MONTHSED 30 JUNE 2018
2. Going Concern
The Interim Financial Statements have been prepared assuming the
Company will continue as a going concern. Under the going concern
assumption, an entity is ordinarily viewed as continuing in
business for the foreseeable future with neither the intention nor
the necessity of liquidation, ceasing trading or seeking protection
from creditors pursuant to laws and regulations.
In assessing whether the going concern assumption is
appropriate, the Directors take into account all available
information for the foreseeable future, in particular for the
twelve months from the date of approval of the Interim Financial
Statements. This information includes:
-- Management prepared cash flow projections;
-- Estimations as to when full production will commence and first
revenues will be generated and associated cash flows will
occur;
-- The ability to complete the mine site work within the stated timeframe
and budget;
-- Sources of funding from external sources;
-- Settle financial obligations as they fall due;
-- The continued financial support of the considered controlling party;
and
-- The ability of management to renegotiate current financing
arrangements as was achieved in June 2018 in respect of the loan
with
China Nonferrous Metals International Mining Co. Ltd.
As at the date of approval of these interim statements, and
based upon consideration of the above, the Directors are satisfied
that the Group has sufficient cash and loan facilities to finance
the Group's operating expenses and any further development and
construction of the Pakrut Gold Project that is required. The
Directors have a reasonable expectation that the Group has adequate
resources to continue in operational existence and thus they
continue to adopt the going concern basis of accounting in
preparing the interim results.
NOTES TO THE INTERIM FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2018
3.Earnings per Share
June 2018 June 2017 December 2017
Basic and diluted earnings (0.88) (3.24)
per share(cents) (3.93)
The basic earnings per share is calculated by dividing the loss
attributable to equity holders after tax of US$ 3,361,841 (2017
June- loss US$12,398,000; December 2017 loss (US$ 15,037,000) by
the weighted average number of shares in issue and carrying the
right to receive dividend. For all of the periods disclosed2018
this was 382,392,292 shares.
NOTES TO THE INTERIM FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2018
4. Borrowings
June 2018 June 2017 December 2017
US$000 US$000 US$000
Bank borrowings 110,000 100,000 120,000
Other loans 254,184 153,145 159,184
Less: unamortised borrowing costs - (461) -
Total 364,184 252,684 279,184
Non-current portion 191,500 222,684 106,500
Current portion 172,684 30,000 172,684
The fair value of borrowings equals their carrying amounts, as
the impact of discounting is not significant.
A new loan agreement between CNMC International Capitals Company
Limited ("CNMC") and China Nonferrous Gold Limited was signed on
8th February 2018. Under this agreement, CNMC have provided a loan
facility of US$90,000,000 to China Nonferrous Gold Limited. This
loan has been provided with the purpose of improving daily business
operations of China Nonferrous Gold Limited. During July, 2018, the
obligatory right is transferred to CNMC International Trade from
CNMC International Capitals.
The loan contains annual fixed interest at 5.8%. Where the loan
is used for a purpose other than that stated in the contract (see
comment above), the proportion of the loan used will incur interest
at a fixed rate of 11.6% per annual. Payment of interest will be
made bi-annually.
The loan is repayable in full on 8th Dec 2020. For any
outstanding amounts owed after this date, interest will be charged
at a rate of 8.7% per annual until the outstanding amount is
paid.
NOTES TO THE INTERIM FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2018
5. Post balance sheet event
Contract for the First-Stage Mining Project of the Pakrut Gold
Mine
On 20th,June 2018the company's subsidiary, LLC Pakrut, signed a
contract for the first-stage mining project with Wenjian Limited
Liability Company ("LLC Wenjian").
LLC Wenjian is a private corporation registered in Tajikistan,
focused on construction, developing and contracting in Tajikistan,
and is not a related party of CNG. The total contract period agreed
is 12 months. The contract can be extended by mutual consent and
most of the mining operations are effectively undertaken by the
contractor with their own equipment.
The total estimated cost of the contract is 50 million RMB
(approximately USD$ 7.56 million) and is a tolling arrangement
which is payable in accordance with each stage of construction
accomplished by the contractor under the contract. The main scope
of the first-stage project includes developing, prospecting and
mining (except paste filling) of the Pakrut Gold Mine, as well as
all auxiliary work.
Consultancy Contract for the Construction of Tailing Ponds
On 15th, June 2018 the Company'ssubsidiary, Kryso Resources
Limited, entered into a new supplementary consultancy contract for
the construction of tailing ponds with China 15th Metallurgical
Construction Group Co., Ltd ("15MCC"), the former contractor of the
tailing-pond project, due to material changes to the planned
flotation tailing ponds in the construction site. China Nonferrous
Metals International Mining Co., Ltd ("CNMIM") will no longer act
as the agent for the Company regarding the contract.
Related Party Transaction
As 15MCC is an associate of CNMIM, a substantial shareholder in
the Company and pursuant to AIM Rule 13, the entry into the
supplementary consultancy contract is deemed to be a related party
transaction. The Company's board of directors (excluding Wu Xiang,
Yu Lixian and Zhang Hao, who are appointees of CNMIM) consider,
having consulted with CNG's Nominated Adviser, Investec Bank plc,
that the terms of the supplementary consultancy contract are fair
and reasonable insofar as the shareholders of CNG are
concerned.
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