TIDMRLD
RNS Number : 0386O
Richland Resources Ltd
30 September 2019
30 September 2019
Richland Resources Ltd
("Richland" or the "Company")
Interim Results for the half-year ended 30 June 2019
(unaudited)
Richland (AIM: RLD) announces its unaudited interim results for
the half year ended 30 June 2019.
Highlights:
-- Option agreement signed with TSX-V listed Fura Gems Inc.
("Fura") for it to acquire Richland's wholly owned subsidiary
Richland Corporate Ltd which owns 100 per cent. of Capricorn
Sapphire Pty Ltd (the "Option Agreement")
-- A further US$150,000 raised through the secured convertible
loan facility (the "Secured Convertible Loan Facility") obtained
from an existing significant shareholder in the Company
-- Directors, senior management, certain former directors and a
former consultant agreed to waive, in aggregate, US$452,559 of
accrued fees due to them
-- Loss of US$0.39 million for the 6 month period ended 30 June 2019 (H1 2018: US$0.78 million)
-- As at 30 June 2019:
o US$0.01 million of unrestricted cash and cash equivalents
(including the Disposal Group classified as held for sale)
o US$0.97 million of total assets
Post Period End:
-- On 4 July 2019, the Company raised, in aggregate,
approximately GBP100,000 (before expenses) through a placing of
158,730,159 new common shares of US$0.0003 each in the capital of
the Company
-- On 19 July 2019, the Option Agreement was amended to reduce
the option fee from CAD150,000 to CAD25,000 and increase the
consideration payable on Completion by CAD125,000 and an additional
CAD125,000 was borrowed under the Secured Convertible Loan
Facility
-- On 29 August 2019, certain of the Company's existing
Directors and senior management team converted an aggregate amount
of US$86,250 of fees accrued for periods up to 30 June 2019 into
108,246,025 new common shares at a price of 0.065 pence per
share
For further information, please contact:
Anthony Brooke Edward Nealon Mike Allardice
Chief Executive Officer Chairman Group Company Secretary
+66 81 854 1755 +61 409 969 955 +852 91 864 854
Nominated Adviser Broker
Strand Hanson Limited Peterhouse Capital Limited
James Harris Duncan Vasey / Lucy
Matthew Chandler Williams (Broking)
James Bellman Eran Zucker (Corporate
+44 (0) 20 7409 3494 Finance)
+44 (0) 20 7 469 0930
The information contained within this announcement is deemed by
the Company to constitute inside information as stipulated under
the Market Abuse Regulation (EU) No. 596/2014.
Note to Editors:
Further information is available on the Company's website:
www.richlandresourcesltd.com. Neither the contents of the Company's
website nor the contents of any website accessible from hyperlinks
on the Company's website (or any other website) is incorporated
into, or forms part of, this announcement.
CHAIRMAN'S STATEMENT
Dear Fellow Shareholder
On behalf of the Board, I am pleased to present the Group's
unaudited results for the six months to 30 June 2019. As announced
on 27 June 2019, the Company agreed and entered into an option
arrangement with Fura Gems Inc. ("Fura") for the sale of Richland's
wholly owned subsidiary Richland Corporate Ltd ("Richland
Corporate") (the "Option Agreement"), which wholly owns Capricorn
Sapphire Pty Ltd and in turn the Company's sole material asset, the
Capricorn Sapphire mine in Australia (the "Proposed Disposal"). We
are pleased to report that all of the significant contractual
conditions precedent to completion within the Option Agreement have
now been met and, subject to legal formalities and final TSX-V
approval, the Proposed Disposal is expected to complete shortly.
The main focus of this statement is therefore primarily to
summarise the terms of the Option Agreement, being the most
significant development within the period under review.
The Option Agreement
On 26 June 2019, Richland entered into the Option Agreement with
Fura, a gemstone mining company listed on the TSX Venture Exchange
("TSX-V"). Under the original terms of the Option Agreement, Fura
had an option until 31 July 2019 (the "Option") to conditionally
acquire from the Company: (i) all of the issued shares of its
wholly owned subsidiary Richland Corporate; and (ii) all of the
Company's loans to Richland Corporate. Richland Corporate owns 100
per cent. of Capricorn Sapphire Pty Ltd, which in turn holds the
group's Capricorn Sapphire project in Queensland, Australia.
Post the period end, on 19 July 2019, Fura and the Company
entered into a deed of amendment to restate and amend the Option
Agreement (the "Amended Option Agreement")in order to facilitate
the requisite TSX-V approval process for the transaction, expedite
exercise of the Option and thereby shorten the period to completion
of the Proposed Disposal ("Completion"). The principal amendments
effected by way of the Amended Option Agreement comprised: i) a
reduction in the Option Fee of CAD125,000 to CAD25,000 (the
"Reduced Option Fee"); ii) a corresponding increase in the cash
consideration payable by Fura on closing of CAD125,000; iii)
provision for the Company to borrow an additional CAD125,000 under
its pre-existing Secured Convertible Loan Facility (the "CAD125,000
Facility") from an existing shareholder (the "Lender"); iv)
provision for the Lender of the CAD125,000 Facility to be repaid at
Completion in the same manner as the other outstanding principal
amounts due under the facility; and v) provision for Fura to pay
the Lender's interest costs on the CAD125,000 Facility in an amount
of up to CAD3,000. The CAD125,000 Facility has been drawn down and
is intended to be utilised to cover the operating costs of
Capricorn Sapphire through to Completion.
Contemporaneously with the amendment to the Option Agreement,
the Company signed a seventh addendum to its pre-existing Secured
Convertible Loan Facility with the Lender to increase the principal
amount by the abovementioned CAD125,000 Facility and to re-confirm
the extension of the overall facility's maturity date to 31 October
2019, being the longstop date in the Amended Option Agreement. Save
for the fact that the additional CAD125,000 Facility has no
conversion rights, all other terms and conditions of the Secured
Convertible Loan Facilty remain unaltered. The Board are most
grateful to the Lender for the significant ongoing support he has
provided to the Company.
Exercise of the Option
On 19 July 2019, Fura issued an exercise notice under the terms
of the Amended Option Agreement which was duly acknowledged and
accepted by the Company. The parties also agreed that the
non-refundable Reduced Option Fee of CAD25,000 received previously
from Fura is deemed to include payment of the notional exercise
price of CAD100.
Completion and AIM Rule 15 Implications of the Proposed
Disposal
In accordance with AIM Rule 15, the Proposed Disposal
constitutes a fundamental change of business for the Company and
therefore required the approval of shareholders at a general
meeting. This approval was duly obtained at the Company's Annual
General Meeting held on 19 August 2019.
All of the significant contractual conditions precedent to
completion within the Amended Option Agreement have now been met
and, subject to legal formalities and final TSX-V approval, the
Proposed Disposal is expected to complete shortly.
Following Completion, Richland will become an AIM Rule 15 cash
shell and, as such, will be required to make an acquisition, or
acquisitions, which constitutes a reverse takeover under AIM Rule
14 (including seeking re-admission under the AIM Rules for
Companies) within six months from the Completion date.
Alternatively, within such time period, the Company could seek to
become an investing company pursuant to AIM Rule 8, which requires,
inter alia, the raising of at least GBP6 million and publication of
an admission document.
Waivers and conversion of fees
As announced on 28 June 2019, the Directors and senior
management team agreed to waive, in aggregate, US$452,559 of
accrued fees due to them up to 30 June 2019. On 29 August 2019, we
announced the conversion of an aggregate amount of US$86,250 of
unpaid fees accrued to 30 June 2019 into 108,246,025 new Common
Shares. Accordingly, all outstanding fees due to the Company's
directors and senior management up to 30 June 2019 were settled in
full.
Additional fundraising to cover the period to Completion
On 4 July 2019, the Company announced an equity fundraising of a
GBP100,000 (before expenses) to provide additional working capital
for the period through to completion of the Proposed Disposal,
which was arranged by Peterhouse Capital Limited who were
simultaneuously appointed as the Company's sole broker.
Outlook
As a significant shareholder I, like you, am most disappointed
that we were unable to achieve sustainable profitability at an
operational level for our Capricorn Sapphire operation leading to
its expected disposal at a loss, but, as the Company was unable to
raise funds to re-finance Capricorn Sapphire, the Board had to take
this difficult decision to sell Capricorn Sapphire.
We hope that the fee waivers and fee conversions in 2018 and
2019 serve to demonstrate our continued commitment to the Company
and we intend, following completion of the Proposed Disposal, to
seek to identify a suitable reverse takeover transaction in the
mining sector, with significant upside potential and a clear
alignment between the interests of directors, management and
shareholders.
Last but not least, on behalf of the Board I wish once again to
express our appreciation for the support and patience of the
Company's various stakeholders during this period of
transition.
Mr Edward Nealon
Non-Executive Chairman
Signed on 27 September 2019
OPERATIONAL AND FINANCIAL REVIEW
1. Financial Performance
Following a comprehensive review of the strategic options
available for its mining operations in Australia, on 28 September
2018 Richland announced that it was engaged in discussions with
potential strategic investors to procure sufficient funding to
enable the recommencement of production at the Capricorn Sapphire
mine or, alternatively, was seeking to conclude ongoing
negotiations with different parties in relation to the potential
sale of all or a part of Capricorn Sapphire. On 27 June 2019, the
Company announced the terms of the Option Agreement entered into
with Fura in relation to the proposed sale of the Capricorn
Sapphire project.
As a result of the Proposed Disposal pursuant to the Option
Agreement with Fura, Richland Corporate, which owns Capricorn
Sapphire Pty, along with the online gemstone business operated by
Richland Gemstones Ltd which Fura did not wish to purchase and
which is accordingly being discontinued, is disclosed as a disposal
group held for sale (the "Disposal Group held for sale").
Comparative information has been restated to ensure
comparability.
Operating profit for the period was US$93,000 compared to a loss
of US$128,000 in H1 2018. The profit primarily arose as a result of
the Directors and senior management personnel having agreed to
waive, in aggregate, US$452,559 of accrued fees due to them for
periods from 1 June 2018 up to and including 30 June 2019.
The Company had net unrestricted cash available of US$0.01
million at the period end (including the Disposal Group classified
as held for sale) compared to US$0.1 million as at the end of H1
2018.
Total assets were US$0.97 million at the period end, which
primarily reflects the Disposal Group held for sale.
2. Corporate Activity
As announced on 28 February 2019, the Company agreed and
executed a third addendum to its pre-existing Secured Convertible
Loan Facility (originally announced on 25 June 2018), to extend its
maturity date from 28 February 2019 to 31 March 2019.
As announced on 1 April 2019, the Company negotiated, agreed and
executed a fourth addendum to its pre-existing Secured Convertible
Loan Facility, in order to extend the maturity date from 31 March
2019 to 30 April 2019 for no additional consideration and increase
the amount available for drawdown under the facility by US$150,000
(the "Additional US$ Facility"). Save for the fact that the
Additional US$ Facility has no conversion rights and is therefore
not convertible into shares in the Company, all other terms and
conditions of the Secured Convertible Loan Facility, which remained
unaltered, apply to the Additional US$ Facility.
As announced on 1 May 2019, the Company agreed and executed a
fifth addendum to its pre-existing Secured Convertible Loan
Facility, to extend its maturity date from 30 April 2019 to 31 May
2019.
As announced on 3 June 2019, the Company agreed and executed a
sixth addendum to its pre-existing Secured Convertible Loan
Facility, to extend its maturity date from 31 May 2019 to 30 June
2019.
As announced on 27 June 2019, the Company agreed and entered
into an option arrangement with Fura Gems Inc. ("Fura") for the
sale of Richland's wholly owned subsidiary Richland Corporate Ltd
("Richland Corporate") (the "Option Agreement"), which wholly owns
Capricorn Sapphire Pty Ltd and in turn the Company's sole material
asset, the Capricorn Sapphire mine in Australia (the "Proposed
Disposal").
Current Status of the Proposed Disposal
As announced on 22 July 2019, Fura duly exercised the Option
alongside an amendment to the Option Agreement pursuant to which it
was, inter alia, agreed that the non-refundable Option Fee of
CAD25,000 received by the Company was deemed to include payment of
the notional exercise price of CAD100.
Further to the exercise of the Option, completion of the
Proposed Disposal ("Completion") is conditional upon: TSX-V and AIM
approval (as applicable); the approval of the Company's
shareholders at a duly convened general meeting; receipt of a
"no-objection" letter from the Bermuda Monetary Authority; the
renewal of two of the project's mining licences, ML 70419 and ML
70447; and other customary closing conditions for a transaction of
this nature (the "Conditions"). The Conditions are required to be
satisfied or waived by the longstop date of 31 October 2019 or such
later date as agreed by the parties (the "Longstop Date"). All of
the Conditions have now been satisfied save for legal formalities
and final TSX-V approval, and the Proposed Disposal is expected to
complete shortly.
Other key terms of the Proposed Disposal as restated by the Deed
of Amendment entered into on 19 July 2019 in respect of the
original Option Agreement
Option Fee: The total fee receivable by Richland for granting
the Option is CAD25,000 (the "Option Fee"), which has been paid by
Fura and is non-refundable.
Interim Funding of Capricorn Sapphire: The Company has made a
CAD125,000 interest free loan to Capricorn Sapphire (the "Capricorn
Sapphire Facility") to cover the anticipated costs of the project
through to Completion. The Capricorn Sapphire Facility will not be
repaid to the Company at Completion.
Purchase Price: The price payable by Fura at Completion is
US$185,000 and CAD125,000 (the "Cash Consideration") and the issue
of 4,859,825 new common shares in Fura (the "Consideration Shares")
(together, the "Purchase Price").
Additional Consideration: In addition to the Purchase Price,
further payments in respect of the Proposed Disposal will be due
from Fura as follows:
a) on Completion, Fura is to: (i) pay the Company US$90,000 by
way of a contribution towards the expenses incurred by the Company
in respect of Capricorn Sapphire during 2019 to date (the
"Additional Cash Payment On Completion"); and (ii) issue to
Richland such number of additional new Fura shares as is equivalent
to AUD150,000 by way of a partial refund of the financial assurance
deposits of AUD371,911 (the "Financial Assurance Deposits") lodged
by the Company on behalf of Capricorn Sapphire (the "Additional
Share Consideration On Completion"); and
b) 18 months after Completion, Fura is to pay the Company a
further AUD221,911 in cash (less any environmental liability claims
made against the Financial Assurance Deposits by the relevant
government authorities) being the refund of the balance of the
abovementioned Financial Assurance Deposits.
Proposed repayment of Convertible Loan from Purchase Price:
Conditional upon Completion, it has been agreed that the
outstanding principal amounts due under the Company's pre-existing
Secured Convertible Loan facility comprising GBP409,200 (which
includes the Lender's expenses of GBP9,200), USD150,000 and
CAD125,000 (approximately GBP605,796 in aggregate) will be repaid
from the Purchase Price. In the meantime, the Lender has agreed to
extend the maturity date of the Loan to the Longstop Date. The
amount of the Convertible Loan outstanding at Completion will be
repaid by the issue by Fura to the Lender of such number of the
Consideration Shares as is equivalent to the Convertible Loan
converted into Canadian Dollars using the CAD:GBP and CAD:USD
exchange rates on the day immediately prior to Completion divided
by the lower of: (i) the 30 day volume weighted average price per
Fura share; and (ii) the closing price of Fura shares on the day
prior to the issue of Fura shares to the Lender. In the event that
the Loan Amount at Completion is greater than the value of the
Consideration Shares, the shortfall shall be satisfied firstly from
the Cash Consideration and secondly from the Additional Cash
Payment On Completion. In the meantime, the Company remains liable
to pay interest on the Loan as it falls due on a quarterly basis in
arrears.
Regulatory Consequences of the Proposed Disposal: Following
successful Completion, Richland will have sold its sole project to
become an AIM Rule 15 cash shell and, as such, will be required to
make an acquisition, or acquisitions, which constitutes a reverse
takeover under AIM Rule 14 (including seeking re-admission under
the AIM Rules for Companies) within six months from the Completion
Date. Alternatively, within such time period, the Company could
seek to become an investing company pursuant to AIM Rule 8, which
requires, inter alia, the raising of at least GBP6 million and
publication of an admission document. The Company currently intends
to seek to identify a suitable reverse takeover transaction in the
mining sector.
Background on Fura: Fura is a gemstone mining and marketing
company listed on the TSX-V, which is engaged in the mining,
exploration and acquisition of gemstone licences. Fura has projects
in Colombia, where it owns a 76 per cent. interest in the Coscuez
emerald mine in Boyacá, and in Mozambique where it has an 80 per
cent. effective interest in four ruby licences. Further information
is available on its website: www.furagems.com.
Use of proceeds: the net proceeds of the Proposed Disposal will
be utilised to repay the pre-existing Secured Convertible Loan (as
set out above) and certain other outstanding creditors, with the
balance providing additional working capital for the group. In this
regard, subject to the terms of a 6 month lock-up and subsequent 6
month orderly market agreement, the Company will hold the Fura
Shares retained by it at Completion as investments held for
resale.
Interim funding of the Company pending Completion of the
Proposed Disposal: On 4 July 2019, the Company announced that i) it
had raised approximately GBP100,000 (before expenses) through a
placing of 158,730,159 new common shares at an issue price of 0.063
pence per placing share and ii) that the net proceeds from the
placing would be used to provide the Company with additional
working capital for the period through to Completion.
Interim funding of Capricorn Sapphire pending Completion:
Further to the Company's announcement of 22 July 2019: i) the
pre-existing secured Convertible Loan Facility was increased by
CAD125,000, ii) the CAD125,000 Facility has been used to provide
the Capricorn Sapphire Facility referred to above; and iii) Fura is
to pay the Lender's interest costs on the CAD125,000 Facility in an
amount of up to CAD3,000.
3. Going Concern
For the six months ended 30 June 2019, the Group recorded a loss
of US$394,000 and had net cash outflows from operating activities
of US$201,000. The ability of the entity to continue as a going
concern is dependent on the group generating positive operating
cash flows and/or securing additional funding through the raising
of debt or equity. Management has successfully raised money in the
past, but there is no guarantee that adequate funds will be
available when needed going forwards.
These conditions indicate a material uncertainty that may cast a
significant doubt about the entity's ability to continue as a going
concern and, therefore, that it may be unable to realise its assets
and discharge its liabilities in the normal course of business.
The interim financial statements have been prepared on the basis
that the entity is a going concern, which contemplates the
continuity of normal business activity, realisation of assets and
settlement of liabilities in the normal course of business for the
following reasons:
-- The Group has entered into an option agreement with Fura Gems
Inc. generating actual and expected further proceeds;
-- The Company is seeking to make an acquisition, or
acquisitions, which constitutes a reverse takeover under AIM Rule
14 (including seeking re-admission under the AIM Rules for
Companies) within six months from the Completion date of the
Proposed Disposal; and
-- Management has successfully raised money in the past.
Should the entity not be able to continue as a going concern, it
may be required to realise its assets and discharge its liabilities
other than in the ordinary course of business, and at amounts that
differ from those stated in the financial statements. The interim
financial report does not include any adjustments relating to the
recoverability and classification of recorded asset amounts or
liabilities that might be necessary should the entity not continue
as a going concern.
4. Future Plans
Following successful Completion of the Proposed Disposal,
Richland will have sold its sole project to become an AIM Rule 15
cash shell and, as such, will be required to make an acquisition,
or acquisitions, which constitutes a reverse takeover under AIM
Rule 14 (including seeking re-admission under the AIM Rules for
Companies) within six months from the Completion date.
Alternatively, within such time period, the Company could seek to
become an investing company pursuant to AIM Rule 8, which requires,
inter alia, the raising of at least GBP6 million and publication of
an admission document. The Company currently intends to seek to
identify a suitable reverse takeover transaction in the mining
sector.
Interim Financial Statements
Richland Resources Ltd
Condensed Consolidated Statement of Profit and Loss
For the Half Year ended 30 June 2019
(Unaudited)
Unaudited Unaudited Audited
Notes Six months Six months Year ended
ended 30 ended 30 31 December
June 2019 June 2018* 2018
$'000 $'000 $'000
=========== ============ =============
CONTINUING OPERATIONS
Other income - 22 74
Operating income/(expenses) 3 93 (150) (426)
=========== ============ =============
Operating income/(loss) 93 (128) (352)
Finance (cost)/income 4 (310) - 269
===========
Loss before income tax (217) (128) (83)
Income tax credit/(charge) - - -
=========== ============ =============
Loss after income tax from continuing
operations (217) (128) (83)
DISCONTINUED OPERATIONS
Loss for the period from discontinued
operations 6 (177) (650) (941)
=========== ============ =============
Loss for the period (394) (778) (1,024)
=========== ============ =============
(394) (778) (1,024)
=========== ============ =============
- Continuing operations (217) (128) (83)
- Discontinued operations (177) (650) (941)
=========== ============ =============
Basic and diluted EPS from continuing
operations (cents per share) 5 (0.04) (0.02) (0.02)
Basic and diluted EPS from discontinued
operations (cents per share) 5 (0.03) (0.13) (0.18)
Basic and diluted EPS from all
operations (cents per share) 5 (0.07) (0.15) (0.20)
* Comparative information has been restated to ensure
comparability (refer to note 6).
The accompanying notes form part of these financial
statements.
Richland Resources Ltd
Condensed Consolidated Statement of Other Comprehensive
Income
For the Half Year ended 30 June 2019
(Unaudited)
Unaudited Unaudited Audited
Six months Six months Year ended
ended 30 ended 30 31 December
June 2019 June 2018 2018
$'000 $'000 $'000
=========== =========== =============
Other comprehensive income
Loss for the period (394) (778) (1,024)
Items that may be reclassified
to profit or loss:
Foreign currency reserve movement (2) (53) (79)
=========== =========== =============
Total comprehensive loss for the
period (396) (831) (1,103)
=========== =========== =============
(396) (831) (1,103)
=========== =========== =============
- Continuing operations (217) (128) (83)
- Discontinued operations (179) (703) (1,020)
=========== =========== =============
The accompanying notes form part of these financial
statements.
Richland Resources Ltd
Consolidated Statement of Financial Position
As at 30 June 2019 (Unaudited)
Unaudited Unaudited Audited
Notes 30 June 30 June 31 December
2019 2018 2018
$'000 $'000 $'000
========== ========== ============
Non-current assets
Property, plant and equipment - 716 -
Intangible assets - 51 -
========== ========== ============
Total non-current assets - 767 -
========== ========== ============
Current assets
Inventories - 73 -
Trade and other receivables 14 63 30
Restricted cash - 281 -
Cash and cash equivalents 1 116 28
========== ========== ============
15 533 58
========== ========== ============
Non-current assets and Disposal
Group classified as held for sale 6 957 - 1,007
========== ========== ============
Total current assets 972 533 1,065
========== ========== ============
Total assets 972 1,300 1,065
========== ========== ============
Equity
Share capital 173 146 173
Share premium 54,644 54,409 54,644
Fees agreed to be converted to
equity 7 86 275 -
Share option reserve 50 161 47
Foreign currency translation reserve 52 80 54
Accumulated loss (55,210) (54,570) (54,816)
========== ========== ============
Total (deficiency in equity)/equity (205) 501 102
========== ========== ============
Non-current liabilities
Provision for environmental rehabilitation - 267 -
Total non-current liabilities - 267 -
========== ========== ============
Current liabilities
Trade and other payables 181 400 451
Convertible loan 8 685 132 249
866 532 700
========== ========== ============
Liabilities associated with Disposal
Group classified as held for sale 6 311 - 263
========== ========== ============
Total current liabilities 1,177 532 963
========== ========== ============
Total liabilities 1,177 799 963
========== ========== ============
Total equity and liabilities 972 1,300 1,065
========== ========== ============
The accompanying notes form part of these financial
statements.
Richland Resources Ltd
Consolidated Statement of Changes in Equity
For the Half Year Ended 30 June 2019
(Unaudited)
Total Fees Foreign
Common A class issued to be Share currency Accumu-
share share share Share converted option translation lated Total
capital capital capital premium to equity reserve reserve loss equity
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
========= ========= ========= ========= =========== ========= ============ ========= ========
Six months
ended 30 June
2019
(unaudited)
At start of
period 172 1 173 54,644 - 47 54 (54,816) 102
Total
comprehensive
loss for the
period - - - - - - (2) (394) (396)
========= ========= ========= ========= =========== ========= ============ ========= ========
Loss for the
period - - - - - - - (394) (394)
Foreign
exchange
gain on
translation - - - - - - (2) - (2)
========= ========= ========= ========= =========== ========= ============ ========= ========
Fees to be
converted - - - - 86 - - - 86
Share options - - - - - 3 - - 3
========= ========= ========= ========= =========== ========= ============ ========= ========
At end of
period 172 1 173 54,644 86 50 52 (55,210) (205)
========= ========= ========= ========= =========== ========= ============ ========= ========
Six months
ended 30 June
2018
(unaudited)
At start of
period 144 1 145 54,389 - 123 133 (53,792) 998
Total
comprehensive
loss for the
period - - - - - - (53) (778) (831)
========= ========= ========= ========= =========== ========= ============ ========= ========
Loss for the
period - - - - - - - (778) (778)
Foreign
exchange
gain on
translation - - - - - - (53) - (53)
========= ========= ========= ========= =========== ========= ============ ========= ========
Issue of share
capital 1 - 1 20 - - - - 21
Fees to be
converted - - - - 275 - - - 275
Share options - - - - - 38 - - 38
========= ========= ========= ========= =========== ========= ============ ========= ========
At end of
period 145 1 146 54,409 275 161 80 (54,570) 501
========= ========= ========= ========= =========== ========= ============ ========= ========
Year ended
31 December
2018 (audited)
At start of
year 144 1 145 54,389 - 123 133 (53,792) 998
Total
comprehensive
loss for the
year - - - - - - (79) (1,024) (1,103)
========= ========= ========= ========= =========== ========= ============ ========= ========
Loss for the
year - - - - - - - (1,024) (1,024)
Foreign
exchange
gain on
translation - - - - - - (79) - (79)
========= ========= ========= ========= =========== ========= ============ ========= ========
Issue of share
capital 28 - 28 255 - - - - 283
A Class share
buy back - -* -* - - - - - -*
Share options - - - - - (76) - - (76)
========= ========= ========= ========= =========== ========= ============ ========= ========
At end of
year 172 1 173 54,644 - 47 54 (54,816) 102
========= ========= ========= ========= =========== ========= ============ ========= ========
* Less than US$1,000
The accompanying notes form part of these financial
statements.
Richland Resources Ltd
Consolidated Statement of Cash Flows
For the Half Year Ended 30 June 2019
(Unaudited)
Unaudited Unaudited Audited
Notes Six months Six months Year ended
ended 30 ended 30 31 December
June 2019 June 2018 2018
$'000 $'000 $'000
=========== =========== =============
Cash flows used in operating activities
Cash absorbed by operations 9 (180) (396) (827)
Financing cost (paid)/received (21) 4 (4)
Net cash used in operating activities (201) (392) (831)
Cash flows used in investing activities
Purchase of property, plant and
equipment - (10) (10)
Purchase of intangible assets - (2) (11)
Net cash used in/by investing
activities - (12) (21)
Cash flows from financing activities
Proceeds from convertible loans 8 150 133 533
Net cash generated from financing
activities 150 133 533
Net decrease in cash and cash
equivalents (51) (271) (319)
=========== =========== =============
Movement in cash and cash equivalents
Exchange losses 1 1 (8)
At the beginning of the period 59 386 386
Decrease (51) (271) (319)
=========== =========== =============
At the end of the period 9 116 59
=========== =========== =============
Cash and cash equivalents - continuing
operations 1 37 28
=========== =========== =============
Cash and cash equivalents included
in asset from Disposal Group classified
as held for sale 8 79 31
=========== =========== =============
The accompanying notes form part of these financial
statements.
Richland Resources Ltd
Notes to the interim financial information
For the Half Year Ended 30 June 2019
(Unaudited)
1 Basis of preparation
The unaudited interim financial information set out above, which
incorporates the financial information of the Company and its
subsidiary undertakings (the "Group"), has been prepared using the
historical cost convention and in accordance with International
Financial Reporting Standards ("IFRS") and with those parts of the
Bermuda Companies Act, 1981 applicable to companies reporting under
IFRS.
These interim results for the six months ended 30 June 2019 are
unaudited and do not constitute statutory accounts as defined in
section 87A of the Bermuda Companies Act, 1981. The financial
statements for the year ended 31 December 2018 have been delivered
to the Registrar of Companies and the auditors' report on those
financial statements was unqualified and contained an emphasis of
matter pertaining to going concern.
Going concern basis of accounting
For the six months ended 30 June 2019, the Group recorded a loss
of US$394,000 and had net cash outflows from operating activities
of US$201,000. The ability of the entity to continue as a going
concern is dependent on the group generating positive operating
cash flows and/or securing additional funding through the raising
of debt or equity. Management has successfully raised money in the
past, but there is no guarantee that adequate funds will be
available when needed going forwards.
These conditions indicate a material uncertainty that may cast a
significant doubt about the entity's ability to continue as a going
concern and, therefore, that it may be unable to realise its assets
and discharge its liabilities in the normal course of business.
The interim financial statements have been prepared on the basis
that the entity is a going concern, which contemplates the
continuity of normal business activity, realisation of assets and
settlement of liabilities in the normal course of business for the
following reasons:
-- The Group entered into an option agreement with Fura Gems
Inc. generating actual and expected proceeds;
-- The Company is seeking to make an acquisition, or
acquisitions, which constitutes a reverse takeover under AIM Rule
14 (including seeking re-admission under the AIM Rules for
Companies) within six months from the Completion date; and
-- Management has successfully raised money in the past.
Should the entity not be able to continue as a going concern, it
may be required to realise its assets and discharge its liabilities
other than in the ordinary course of business, and at amounts that
differ from those stated in the financial statements. The interim
financial report does not include any adjustments relating to the
recoverability and classification of recorded asset amounts or
liabilities that might be necessary should the entity not continue
as a going concern.
2 Significant judgements in applying accounting policies and key
sources of estimation uncertainty
The preparation of financial statements in conformity with IFRS
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 consolidated
financial statements are summarised below.
Areas of judgement and key sources of estimation uncertainty
that have the most significant effect on the amounts recognised in
the consolidated financial statements include:
-- Estimates of the quantities of indicated and inferred gemstone resource;
-- The capitalisation of mine development costs;
-- The capitalisation of exploration and evaluation expenditures;
-- Review of tangible and intangible assets' carrying value, the
determination of whether these assets are impaired and the
measurement of impairment charges or reversals;
-- The estimated useful lives of tangible and long-lived assets
and the measurement of depreciation expense;
-- Recognition of a provision for environmental rehabilitation
and the estimation of the rehabilitation costs and timing of
expenditure;
-- Whether to recognise a liability for loss contingencies and
the amount of any such provision;
-- Recognition of deferred tax assets, amounts recorded for
uncertain tax positions, the measurement of income tax expense and
indirect taxes;
-- Determining fair value of non-current assets or disposal
groups held-for-sale and discontinued operations and
reclassification;
-- Determination of the net realisable value of inventory; and
-- Determination of fair value of stock options and financial instruments.
3 Operating income/(expenses)
Unaudited Unaudited Audited
Six months Six months Year ended
ended 30 ended 30 31 December
June 2019 June 2018 2018
$'000 $'000 $'000
=========== =========== =============
Auditors' remuneration (13) (29) (28)
Directors' emoluments and fees 89 (1) 33 (2) (82) (2)
Net foreign exchange gain/(loss) 1 8 12
Office expenses (14) (21) (29)
Professional and other services 32 (1) (103)(2) (369) (2)
Share option income/(expense) (2) (38) 76
Other expenses - - (6)
Total operating income/(expenses) 93 (150) (426)
=========== =========== =============
(1) In order to preserve cash reserves within the Company, the
Directors and senior management personnel agreed to waive, in
aggregate, US$452,559 of accrued fees due to them for periods from
1 June 2018 up to and including 30 June 2019.
(2) As a demonstration of support and commitment to the Company,
the Directors, senior management team, certain former directors and
a former consultant agreed to waive, in aggregate, GBP237,230 of
accrued fees due to them for periods ranging from December 2016 to
31 May 2018.
4 Finance income/(costs)
Unaudited Unaudited Audited
Six months Six months Year ended
ended 30 ended 30 31 December
June 2019 June 2018 2018
$'000 $'000 $'000
=========== =========== =============
Fair value adjustment on embedded
derivative element of convertible
loan (Note 8) (286) - 284
Interest paid (24) - (15)
=========== =========== =============
Total finance (cost)/income (310) - 269
=========== =========== =============
5 Basic and diluted earnings per share
The calculation of basic and diluted loss per share for the six
months ended 30 June 2019 was based on the loss attributable to
common shareholders from continuing operations of US$217,000 (six
months ended 30 June 2018: loss US$128,000; year ended 31 December
2018: loss US$83,000), discontinued operations loss of US$177,000
(six months ended 30 June 2018: US$650,000; year ended 31 December
2018: US$941,000) and a weighted average number of common shares
outstanding of 568,353,850 (six months ended 30 June 2018:
520,308,612; year ended 31 December 2018: 520,308,612).
The diluted loss per share and the basic loss per share are
recorded as the same amount, as conversion of share options
decreases the basic loss per share, thus being anti-dilutive.
6 Non-current assets and disposal groups classified as held for sale
Following a comprehensive review of the strategic options
available for its mining operations in Australia, on 28 September
2018 Richland announced that it was engaged in discussions with
potential strategic investors to procure sufficient funding to
enable the recommencement of production at the Capricorn Sapphire
mine or, alternatively, was seeking to conclude ongoing
negotiations with different parties in relation to the potential
sale of all or a part of Capricorn Sapphire. Further to such
announcement, the Board entered into an option agreement for the
sale of the entire Capricorn Sapphire project with Fura Gems Inc.
("Fura") on 26 June 2019.
As a result of the proposed transaction with Fura, this group of
assets along with the online gemstone business operated by Richland
Gemstones Ltd which Fura did not wish to purchase and which is
accordingly being discontinued is disclosed as a disposal group
held for sale (the "Disposal Group held for sale").
Unaudited Audited
30 June 31 December
2019 2018
$'000 $'000
========== ============
Assets of disposal group classified
as held for sale
Property, plant and equipment 548 550
Intangible assets 58 58
Inventories 59 61
Trade and other receivables 23 45
Restricted cash 261 262
Cash and cash equivalents 8 31
========== ============
Total assets 957 1,007
========== ============
Liabilities of disposal group
classified as held for sale
Trade and other payables 94 52
Provision for environmental rehabilitation 217 211
========== ============
Total liabilities 311 263
========== ============
Analysis of the results of discontinued
operations and the results recognised
on the measurement of assets of
the disposal group held for sale
is as follows:
Unaudited Unaudited Audited
Comparative information has been Six months Six months Year ended
restated to ensure comparability. ended 30 ended 30 31 December
June 2019 June 2018 2018
$'000 $'000 $'000
=========== =========== =============
Revenue 4 51 81
Cost of sales (154) (588) (874)
Other income 16 39 39
Operating expenses (40) (148) (173)
Finance cost (3) (4) (14)
=========== =========== =============
Loss before tax on discontinued
operations (177) (650) (941)
Tax (charge)/credit - - -
=========== =========== =============
Loss for the year from discontinued
operations (177) (650) (941)
=========== =========== =============
Cash flow information
Operating cash flows (174) (258) (757)
Investing cash flows - (16) (16)
Financing cash flows - - -
=========== =========== =============
Total cash flows (174) (274) (773)
=========== =========== =============
7 Fees agreed to be converted to equity
Unaudited Unaudited Audited
30 June 30 June 31 December
2019 2018 2018
$'000 $'000 $'000
========== ========== ============
Conversion of certain Directors'
and Management's Fees into new
Common Shares 86 (1) 275(2) -
86 275 -
========== ========== ============
(1) In order to further conserve the Company's cash reserves,
certain of the Directors and senior management personnel confirmed
their intention, to convert, in aggregate, US$86,250 of unpaid fees
due to them for periods from 1 June 2018 up to and including 30
June 2019 into new Common Shares.
(2) As announced on 6 July 2018, certain of the Company's
existing Directors and senior management team, certain former
directors and a former consultant agreed to the conversion of an
aggregate amount of US$275,215 of fees accrued for periods ranging
from December 2016 to 31 May 2018 into new Common Shares.
8 Convertible loan
Unaudited Unaudited Audited
30 June 30 June 31 December
2019 2018 2018
$'000 $'000 $'000
========== ========== ============
Loan at beginning of period 208 - -
Loan proceeds 150 132 533
Embedded derivative - (325)
========== ========== ============
Total loan 358 132 208
========== ========== ============
Embedded derivative beginning
of period 41 - -
Embedded derivative - - 325
Fair value adjustment on embedded
derivative (Note 4) 286 - (284)
========== ========== ============
Total embedded derivative 327 - 41
========== ==========
Carry amount of liability 685 132 249
========== ========== ============
As announced on 25 June 2018, the Company obtained a GBP300,000
Secured Convertible Loan facility from Astor Management AG (the
"Lender"), a private company whose majority shareholder is a
long-term significant shareholder in the Company. Subsequently, the
principal loan amount was increased from GBP300,000 to GBP400,000
in September 2018 and by a further US$150,000 in April 2019. See
subsequent events note 11 for extension of the Longstop Date. The
salient terms of the Secured Convertible Loan Facility are
summarised below:
(i) Term: A scheduled maturity date of 31 October 2019
(conditional on completion of the Proposed Disposal) when, unless
otherwise converted, the principal amount and any accrued interest
is repayable in full. The Company may pre-pay the whole or any part
of the loan on any day prior to the scheduled maturity date upon
giving not less than 15 business days' prior written notice to the
Lender and provided that any amount prepaid will still accrue
interest as though it were repaid on the maturity date.
(ii) Principal amount: GBP400,000 and US$150,000 (with the
Company to pay the Lender's legal costs in respect of preparing and
entering into the facility documentation).
(iii) Interest rate: 3 month GBP LIBOR + 7.5 per cent. per
annum, payable quarterly in arrears.
(iv) Security: Charge over all of the assets of Capricorn
Sapphire, the Company's wholly owned subsidiary that holds the
Company's mining tenements and operates the Capricorn Sapphire
mine, as well as the group's shares in Capricorn Sapphire.
(v) Conversion rights: Sterling principal amount and any accrued
interest convertible at the discretion of the Lender during the
Term at the lower of:
a) 0.25 pence per share;
b) the Company's volume weighted average share price for the
thirty trading days up to and including the trading day prior to
the conversion date specified in the conversion notice or such
other date as the parties may agree; and
c) any price at which the Company issues new shares for cash
from the commencement of the loan period to the date of
conversion.
(vi) Board representation: The Lender has the right to nominate
a non-executive director, subject to the prior approval of the
Company's Nominated Adviser, whilst the Lender and its associates
have (a) a shareholding representing more than 10 per cent. of the
Company's issued share capital from time to time; or (b) greater
than or equal to GBP75,000 principal amount is outstanding under
the Secured Convertible Loan Facility.
(vii) Events of default include customary solvency and
regulatory matters for a facility of this nature, including whether
the Company's financial statements are qualified by its auditor on
a going concern basis, if the Company's shares are cancelled from
admission to trading on AIM and if the Company is in breach of the
AIM Rules for Companies.
If an event of default is not remediated or has not been
remedied within 7 business days then the conversion price as
calculated in accordance with clause v) above is to be reduced by
50 per cent. with respect to any conversion notice issued after
such an event occurs.
9 Cash absorbed by operations
Unaudited Unaudited Audited
Six months
Six months ended Year ended
ended 30 30 June 31 December
June 2019 2018 2018
$'000 $'000 $'000
=========== =========== =============
Loss before income tax (394) (778) (1,024)
Adjusted for:
* Depreciation, amortisation and impairment of property,
plant and equipment - 204 303
* Shares issued at discount/(premium) - (22) (74)
* Finance cost 307 (4) (270)
* Unwinding of discount 7 8 16
* Write off of trade receivables provision - - (3)
* Share options expense 2 38 (76)
* Net foreign exchange difference (1) 3 1
Cash from operations before working
capital changes (79) (551) (1,127)
Working capital changes:
Inventories 3 66 78
Trade and other receivables 38 226 218
Trade and other payables (142) (137) 4
Cash utilised by operations before
interest and tax (180) (396) (827)
=========== =========== =============
10 Commitments
Unaudited Unaudited Audited
30 June 30 June 31 December
2019 2018 2018
$'000 $'000 $'000
========== ========== ============
Non-cancellable lease rentals
are payable as follows:
Less than one year 39 10 10
Between one and five years 116 - -
155 10 10
========== ========== ============
The lease relates to the leasing of the mining property and
business premises of Capricorn Sapphire Pty Ltd and is part of the
discontinued operations.
11 Subsequent events
Richland announced on 4 July 2019 that the Company has raised,
in aggregate, approximately GBP100,000 (before expenses) through a
placing of 158,730,159 new common shares of US$0.0003 each in the
capital of the Company ("Common Shares") (the "Placing Shares")
(the "Placing") with certain new investors at an issue price of
0.063 pence per Placing Share (the "Placing Price").
Details of the Placing
The Placing was arranged via Peterhouse Capital Limited
("Peterhouse") as agent of the Company.
Pursuant to the Placing, in aggregate, 158,730,159 Placing
Shares were issued at the Placing Price to certain new investors.
The Placing Price represented a discount of approximately 16 per
cent. to the closing middle market price of a Common Share of 0.075
pence on 3 July 2019, being the latest practicable date prior to
the announcement of the Placing. Peterhouse was due 5 per cent.
commission on the gross proceeds of the Placing which it was agreed
to be settled by the issue of 7,936,508 new Common Shares to
Peterhouse (the "Commission Shares").
Peterhouse were also appointed as the Company's sole broker on 4
July 2019 and agreed that their initial six month retainer fee
would be settled by the issue to them of a further 15,873,016 new
Common Shares at the Placing Price.
Amended Option Agreement
On 19 July 2019, Fura and the Company entered into a deed of
amendment to restate and amend the Option Agreement (the "Amended
Option Agreement") in order to facilitate the requisite TSX-V
approval process for the transaction, expedite exercise of the
Option and thereby shorten the period to Completion. The principal
amendments effected by way of the Amended Option Agreement
comprised: i) a reduction in the Option Fee of CAD125,000 to
CAD25,000 (the "Reduced Option Fee"); ii) a corresponding increase
in the Cash Consideration payable by Fura on Closing of CAD125,000;
iii) provision for the Company to borrow an additional CAD125,000
under its pre-existing Secured Convertible Loan Facility (the
"CAD125,000 Facility"); iv) provision for the Lender of the
CAD125,000 Facility to be repaid at Completion in the same manner
as the other outstanding principal amounts due under the facility;
and v) provision for Fura to pay the Lender's interest costs on the
CAD125,000 Facility in an amount of up to CAD3,000. The CAD125,000
Facility is being utilised to cover the operating costs of
Capricorn Sapphire through to Completion.
Upon Completion under the terms of the Amended Option Agreement
and repayment of the increased Secured Convertible Loan Facility,
the Company will receive the same net proceeds from the Proposed
Disposal as it would have received under the original Option
Agreement, prior to it being amended and restated.
Exercise of Option
On 19 July 2019, Fura issued an exercise notice under the terms
of the Amended Option Agreement which was duly acknowledged and
accepted by the Company. The parties also agreed that the
non-refundable Reduced Option Fee of CAD25,000 received previously
from Fura has deemed to include payment of the notional exercise
price of CAD100.
CAD125,000 increase in Secured Convertible Loan Facility
The Company also agreed and executed a seventh addendum to its
pre-existing Secured Convertible Loan Facility from the Lender
(full details of which were originally announced on 25 June 2018),
to increase the principal amount by the abovementioned CAD125,000
Facility and to re-confirm the extension of the overall facility's
maturity date to the Longstop Date of 31 October 2019. Save for the
fact that the additional CAD125,000 Facility has no conversion
rights, all other terms and conditions of the facility remain
unaltered.
As announced on 29 August 2019 and further to the Company's
final results announcement of 28 June 2019, a Director and senior
management converted in aggregate an amount of US$86,250 of unpaid
fees accrued for periods up to 30 June 2019 into new common shares
of US$0.0003 each in the capital of the Company. Pursuant to the
Fee Conversions, the Company issued, in aggregate, 108,246,025 new
Common Shares at an issue price of 0.065 pence per share, being the
Company's closing mid-market share price on 28 August 2019 and
representing a premium of approximately 3.17 per cent. to the
placing price of 0.063 pence per share for the Company's last
equity fundraising of 4 July 2019.
INDEPENT AUDITOR'S REVIEW REPORT
To the members of Richland Resources Limited
Report on the Half-Year Financial Report
Conclusion
We have reviewed the half-year financial report of Richland
Resources Limited (the Company) and its subsidiaries (the Group),
which comprises the consolidated statement of financial position as
at 30 June 2019, the condensed consolidated statement of profit or
loss and other comprehensive income, the consolidated statement of
changes in equity and the consolidated statement of cash flows for
the half-year then ended, notes comprising a statement of
accounting policies and other explanatory information, and the
directors' declaration.
Based on our review, which is not an audit, we have not become
aware of any matter that makes us believe that the half-year
financial report of the Group is not in accordance with the
International Accounting Standards and the Bermuda Companies Act
1981 including:
(i) Giving a true and fair view of the Group's financial
position as at 30 June 2019 and of its financial performance for
the half-year ended on that date; and
(ii) Complying with the International Accounting Standards and
the Bermuda Companies Act 1981.
Emphasis of matter - Material uncertainty relating to going
concern
We draw attention to Note 1 in the financial report which
describes the events and/or conditions which give rise to the
existence of a material uncertainty that may cast significant doubt
about the Group's ability to continue as a going concern and
therefore the Group may be unable to realise its assets and
discharge its liabilities in the normal course of business. Our
conclusion is not modified in respect of this matter.
Directors' responsibility for the Half-Year Financial Report
The directors of the company are responsible for the preparation
of the half-year financial report that gives a true and fair view
in accordance with International Accounting Standards and the
Bermuda Companies Act 1981 and for such internal control as the
directors determine is necessary to enable the preparation of the
half-year financial report that is free from material misstatement,
whether due to fraud or error.
Auditor's responsibility
Our responsibility is to express a conclusion on the half-year
financial report based on our review. We conducted our review in
accordance with Auditing Standard on Review Engagements ASRE 2410
Review of a Financial Report Performed by the Independent Auditor
of the Entity, in order to state whether, on the basis of the
procedures described, we have become aware of any matter that makes
us believe that the half-year financial report is not in accordance
with the Bermuda Companies Act 1981 including giving a true and
fair view of the Group's financial position as at 30 June 2019 and
its financial performance for the half-year ended on that date and
complying with International Accounting Standards and the Bermuda
Companies Act 1981. As the auditor of the Group, ASRE 2410 requires
that we comply with the ethical requirements relevant to the audit
of the annual financial report.
A review of a half-year financial report consists of making
enquiries, primarily of persons responsible for financial and
accounting matters, and applying analytical and other review
procedures. A review is substantially less in scope than an audit
conducted in accordance with Australian Auditing Standards and
consequently does not enable us to obtain assurance that we would
become aware of all significant matters that might be identified in
an audit. Accordingly, we do not express an audit opinion.
Independence
In conducting our review, we have complied with the independence
requirements of the International Accounting Standards and Bermuda
Companies Act 1981. We confirm that the independence declaration
required by the International Accounting Standards and Bermuda
Companies Act 1981, which has been given to the directors of the
Group, would be in the same terms if given to the directors as at
the time of this auditor's review report.
BDO Audit (WA) Pty Ltd
Jarrad Prue
Director
Perth, signed on 27 September 2019
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
IR BCGDCUGDBGCR
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