REG-Altyn Plc Final Results
30/04/2021 18:25
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Final Results
AltynGold Plc
("Altyn” or the "Company")
Results for the year ended 31 December 2020
AltynGold Plc (LSE:ALTN) an exploration and development company, is pleased to
announce its results for the year ended 31 December 2020.
Highlights
Financial highlights
• Turnover increased in the year to US$30m (2019: US$14.9m).
• 16,535oz of gold sold (2019: 10,500oz), an increase of 57%.
• Average gold price achieved (including silver), US$1,816oz, (2019:
US$1,390oz).
• The Company made a profit before tax of US$3.3m (2019: loss US$1.04m).
• Adjusted EBITDA (Earnings before interest, tax, depreciation and
amortisation) of US$13.5m (2019: US$3.3m).
• The Company finalised the listing of the balance of the US$10m 9% bonds on
the Astana International Exchange (AIX).
• The balance of the facility with JSC Bank Center Credit of US$8m was drawn
down during the year.
• A share placing with JSC Freedom Finance raised US$1.5m in the year.
• New facility taken out in December 2020 with Bank Center Credit of
US$5.5m, (2.3bln Tenge), of this US$973,000 was drawn down before the year
end.
Operational highlights
• Gold poured 17,028oz, (2019: 10,537oz) a 61% increase year-on- year.
• Mined gold grade 1.57g/t, (2019: 1.92g/t), decreased due to ore dilution -
new equipment is now increasing to the target grade.
• Operating cash cost US$800/oz, (2019: US$854/oz).
• Gold recovery rate 80.44% (2019: 82.31%).
Underground development & exploration
• Subsoil use contract at Sekisovskoye extended to July 2029.
• Production of test ore at Teren-Sai, average grade 1.8g/t at 81% recovery.
• Total 5,657 linear metres developed at Sekisovskoye.
• Transport declines further developed, decline No.1 352 linear metres,
decline No. 2 353 linear metres.
• 750,000t of ore made accessible from declines 1 and 2.
• Areas No.1, 2 and new Area 5 developed in Teren-Sai - drill holes and core
samples extracted,
Annual General Meeting
The Annual General Meeting of the Company will be held at Langham Court Hotel,
31-35 Langham Street, London W1W 6BU, United Kingdom on Thursday 24 June 2021
at 11.00am. Due to the current COVID-19 situation if the timing location or
other details change the Company will notify shareholders as appropriate.
The details of the resolutions are given in the Annual Report which will be
available on the website in due course.
For further information please contact:
AltynGold Plc
Rajinder Basra, CFO +44 (0) 207 932 2456
AltynGold Plc (LSE: ALTN) is an exploration and development company, which
listed on the main market segment of the London Stock Exchange in December
2014. To read more about AltynGold Plc please visit our website
www.altyngold.uk
(https://cts.businesswire.com/ct/CT?id=smartlink&url=http%3A%2F%2Fwww.altyngold.uk%2F&esheet=52421561&newsitemid=20210430005508&lan=en-US&anchor=www.altyngold.uk&index=1&md5=feef74b70da9cf8f215babec6484b4bc)
CHAIRMAN’S STATEMENT
This year has been very different for many reasons, the effects of the
COVID-19 pandemic have been felt around the world, causing economic and social
havoc. One year later the crisis is still ongoing, with governments, companies
and individuals still facing uncertainty on how the pandemic will evolve and
its aftermath.
From our perspective as a mining Company focused on mining operations in
Kazakhstan, we have been insulated to a large extent from the fallout of the
pandemic, as mining operations were a protected industry and the Company has
been able to continue to operate throughout the pandemic. While cooperating
with the authorities, the Company has quickly adapted its new operational
working practices to ensure that the staff were able to continue working in a
safe environment at the mine site, organising special shift patterns for
production. Office workers at both the mine site and head office were largely
able to work remotely, as the lock down has eased the staff were able to
resume their duties at the offices during March 2021. The country is still
organising measures to contain the transmission of COVID-19, and in April 2021
a limited lockdown was introduced in the country. The imposition of the most
recent lockdown has not resulted in any issues in relation to the current
operations of the Company.
Supply chains and the important sale of dore to the refinery were carefully
monitored and potential issues resolved as soon as they arose.
Against this background the Company managed to grow, attracting funding from a
range of sources and delivering on its capital investment plan. The resultant
increase in production combined with the favorable gold price led to a
substantially higher revenue stream.
While the gold price has increased given its hedge characteristic against the
downturn in the global outlook for economies, a higher gold price level should
be sustained by the expectation of increased inflation levels resulting from
global monetary policies that are increasing the money supply, and a
deteriorating fiscal outlook. With the production levels budgeted to increase,
the management is upbeat about the Company’s future growth outlook.
With its strong financial position and additional funding raised, the Company
has also continued its exploration program at Teren-Sai. The test production
run as reported in the RNS news release in 2021 yielded good results in terms
of grade, and the expected low cash cost of production will have a positive
impact on the results of the Company in the future.
In summary against the backdrop of uncertainty caused by the COVID-19 crisis
the Company has managed to emerge in a much stronger position at the end of
the year. It has secured its required level of funding, utilising it to good
effect as demonstrated by the increased production levels. The Board has also
been strengthened by the appointment of a new non-executive director Thomas
Gallagher who will bring important qualities and experience to the team, and
we welcome him to the Company.
I would like to conclude with a heartfelt thank you to all the staff from the
top management and to those who only work on a part-time basis for their
dedication to the Company and support in minimising the effect of the pandemic
on our business.
Kanat Assaubayev
Chairman
CHIEF EXECUTIVE OFFICER’S REVIEW
Overview
The Company has been able to implement its medium term plan, following
successful rounds of financing completed in late 2019 and 2020. As such, a
significant amount of underground plant and equipment (details below) has been
purchased leading to a 98% increase in ore extraction in the year to 505,000t.
Timely maintenance of the processing plant and the overhaul of other equipment
allowed a swift increase in processed ore which grew 82% from 231,000t to
420,000t leading to a 61% increase in gold produced from 10,537oz to 17,028oz.
With the introduction of more specialised drilling rigs in 2021, the Company
is also targeting a lower level of dilution of extracted ore which should
result in a noticeable improvement of grades in Q2 2021.
Due to careful planning and co-operation with the relevant authorities there
was little impact on the operations of the Company from COVID-19. Indeed, the
trend and momentum of production at Sekisovskoye continue to be very
encouraging. These positive developments set the stage for the company to
achieve its first major target of 850,000t ore extraction per annum.
The Company has also invested additional funds to expand the exploration
program at Teren-Sai. The Teren-Sai area is large, covering in excess of 198km
which the Company has split this into a number of areas. After initially
concentrating on Area No.2 the Company has now expanded its exploration
programs into Areas No. 1 and 5.
Commentary on results
Sekisovskoye underground mine
Plant and equipment
There was a significant investment in plant and machinery during 2020 and to
date in 2021, these are summarised below:
• Front-end loader ZL 50G
• Dump truck 25t Chaicman
• Material handling trucks CAT R1300 - 3 units
• Underground haulers CAT AD30 - 3 units
• Face drilling rig Atlas Copco T1D
• Ring drilling rig Atlas Copco T1D
• Exploration drilling rig Atlas Copco Diamec U4
• Boomer T1D drilling rig with a capacity of 400m/month
• Boomer T1D long-hole production drill
• Diamec U4 Smart exploration drill rig
• JSB Crawler with a capacity of 1.8cu.m
• Korfmann AL18-2500 ventilator with a capacity of 100m3/s
• Lupamit LKV 250 compressors, each compressor with a capacity of 45m3/min
• 100 CFO flower heaters
The following was achieved with regards to the underground mine in the year:
• There was a substantial development of tunneling amounting to 5,657 linear
metres, including 353 metres on transport decline No 2 allowing access to
640,000 tons of reserves at levels +161, +164 and +178; and 352 metres on
transport decline No 1 allowing access to 110,000 tons at levels +150 and
+163.
• With the purchase of heaters, compressors and a Korfman AL18-2500
ventilator, the company was able to complete necessary works on the main
ventilation shaft required for the continuation of operations until 2029 in
line with the mine plan.
• Thanks to additional equipment, ore stockpiles were increased
substantially at portal No 2, allowing for an increase in the daily ore
production to 1,800t/day.
• In addition to 48,000m3 of back and cavity filling, works are ongoing for
the development of the general site including renovation and expansion of the
offices and other amenities.
• Ore mined at Sekisovskoye during 2020 was 506,000t (2019: 255,000t), with
the new equipment on site this is budgeted to increase.
• The average gold grade was 1.58g/t (2019: 1.76 g/t) in line with the
Company budget. The average grade for the year was affected by lower grades
during Q1 at 1.49g/t (1.43g/t budgeted) due to high level of developmental
ore. The introduction of additional equipment in particular the Boomer T1D LHD
drilling rigs has led to a steady improvement in grades to its current level
of 1.75g/t. Further improvement expected in the future as more ore bodies
become accessible.
Exploration – Teren-Sai
The Teren-sai exploration program has been expanded and accelerated during
2020. The Company views the site as a very valuable asset that will add
substantially to the production capacity of the Company once it is fully
functional.
In area No.2 the Company continued pneumatic drilling conducting 16 profiles
for verification analysis against existing data. Additional drilling was also
carried out to fully delineate the extent and boundaries of the ore body
resulting in 14 completed drill holes and 4,183m drilled meterage.
Mining results ore extraction
2020 2019
Ore mined T 506,050 255,134
Gold grade g/t 1.57 1.92
S ilver grade g/t 1.08 1.37
Contained gold oz 25,555 15,760
Contained silver oz 17,525 11,239
Mining results processing
2020 2019
Crushing T 421,040 239,046
Mining T 420,256 230,966
G old grade g/t 1.58 1.76
Silver grade g/t 1.13 1.37
Gold recovery % 80.44 82.31
S ilver recovery % 72.81 69.88
Contained gold oz 21,355 12,981
C ontained silver oz 15,253 9,819
Gold Poured oz 17,028 10,537
Silver poured oz 11,180 6,760
Projected capital expenditure - Sekisovskoye
Total 2021 2022
US$m
US$m
US$m
Prospect drilling 1.7 0.9 0.8
Underground development 6.8 4.5 2.3
Infrastructure 0.1 – 0.1
Ore handling facilities 3.7 3.4 0.3
Process plant incremental expansion 3.4 2.6 0.8
Total 15.7 11.4 4.3
In order to build up a reliable profile of the site, verification results are
being constantly mapped against existing data. During 2020 the Company
successfully processed the first batch of test ore amounting to 1,794t,
resulting in an average grade of 1.8g/t and a recovery rate of 81%. These were
very encouraging results and a significant step in moving forward with the
project. It is expected that the initial extraction of ore will be via open
pit workings, with the use of some of the existing open pit equipment which
has been mothballed at Sekisovskoye, and further equipment being purchased as
necessary. The ore extracted is expected to be processed by a separate plant
to be built at Teren-Sai, thus avoiding transport costs to Sekisovskoye and
keeping the unit cost of production at a reasonable level.
In addition to Area No.2 exploration work was expanded to Area No.1 and new
zone identified as Area No.5. In Area No.1, 13 prospective drilling profiles
were conducted, the analysis of the results was encouraging and further core
drilling is to be undertaken in 2021. In relation to Area No. 5, the meterage
drilled was 3,886m with 17 drill holes which identified 11 ore intersections.
Sampled grades over four of the holes ranged from 1.4g/t to 2.4g/t and further
work is planned in this area in 2021.
The Company also commenced topographic work over 50km2 to gain a better
understanding of the site and the potential to develop the area, the work will
be completed during 2021.
Capital requirements
The capex requirements for the next two years are detailed in the table below.
The budgeted plans foresee the Company expanding ore extraction and production
to 850,000t to per annum for Sekisovskoye, and the development of its
prospective resource at Teren-Sai. The Company is constantly reviewing and
refining its plans to adapt to changing circumstances.
Longer term plan
The long term plan still consists in operating the Sekisovskoye Mine at 850kt
annual capacity for three years then ramping up production to 2Mtpa over a six
year period. The initial target is an important milestone and with the
purchase of the new equipment this is now progressing as planned. The longer
term plan involves obtaining further funding and the Board is constantly
looking at the best way to finance the business going forward. In this regard,
the Company has recently appointed Renaissance Capital to operate as a
Corporate Broker as well as produce independent research on the Company in
order to increase its profile with potential investors. In order to achieve
the longer term goal outlined, the Company has estimated that it will require
an initial funding of US$40m-US$50m to attain 1Mpta target. Further funding
will be required for the secondary 2Mpta target.
Mining operations at Teren- Sai are planned to run in parallel to Sekisovskoye
development and will initially include surface mining at Area No.2 before
moving underground at a later stage. It is envisaged that at the initial costs
of open pit operations can be kept low by making use of the existing equipment
as far as possible. The significant expenditure relates to the planned
Teren-Sai processing plant which will be a conventional carbon-in-leach
(“CIL”) gold recovery plant, similar to the existing one at the
neighbouring Sekisovskoye Mine.
FINANCIAL PERFORMANCE
Key performance indicators (KPIs)
Annual gold sales (oz)
16,535oz
2020 16,535
2019 10,500
2018 14,990
Annual gold poured (oz)
17,028oz
2020 17,028
2019 10,537
2018 15,282
Reveune (US$m)
US$30m
2020 30.0
2019 14.9
2018 19.4
Operating cash cost of production (US$oz)
US$800oz
2020 800
2019 854
2018 865
Adjusted EBITDA (US$m)
US$13.5m
2020 13.5
2019 3.3
2018 0.9
Net assets (US$m)
US$35.3m
2020 35.3
2019 33.3
2018 34.9
The Company raised significant funds in the year, mainly bank borrowings and a
bond placement on the Astana International Exchange. The raised funds have
mainly been used for the purchase of new underground equipment, infrastructure
and capital development at Sekisovskoye, exploration drilling at Teren-Sai and
funding expanded working capital requirements.
In terms of output, the investment in the new equipment and the refurbishment
of plant and machinery has had a direct and immediate effect on production
levels in the year. Gold poured has increased by 61.6% from the prior year to
17,028oz the highest it has been for a number of years. Budgeted levels in the
forthcoming periods are set to increase further as the full effect of the
investments made flow through.
During 2020, the Company sold 16,535oz of gold (2019: 10,500oz). The average
price achieved per oz in 2020 was US$1,816 (2019: US$1,390) a significant
uplift from the prior year. While consensus analysts’ forecasts expect the
gold price to remain in the region of US$1,800 the Company conservatively uses
a lower price of gold in its forward modelling. Further, the outlook for the
business is expected to remain positive given the anticipation of dollar
strength against the local currency in which a significant level of expenses
are payable.
There were no changes to the sales off-take agreement currently in place with
the Kazakh national refinery, which continues to take all of the Company's
output. As in the prior year, sales are translated at the spot US$ market rate
at the point the gold is sold.
The total cash cost of production, which includes administrative costs but
excludes depreciation and provisions, amounted to US$970/oz, (2019:
S$1,104oz). The operating cash cost excluding administrative costs amounted to
US$800/oz (2019: US$854/oz). The cash cost of production is expected to fall
in future periods with expanded economies of scale and improved grades. The
administrative costs are being closely monitored and there has only been a
small increase from the prior year, which is expected to be maintained in
future periods.
The Group has reported a net profit of US$3.3m before tax (2019: loss
US$1.04m) with a gross profit of US$11.9m (2019: US$2.5m), this was after a
one off charge in the year relating to a share based payment of US$2.4m in
connection with share options issued. While the increase in gold price of 30%
had a positive effect, the principal driving factor for the increase in
profitability was the 57% increase in output. The adjusted EBITDA increased to
US$13.5m (2019: US$3.3m) after adjusting for depreciation of US$3.9m (2019:
US$3.4m), and the share based payment noted above. The operating profit as a
consequence rose to US$7.2m (2019: US$0.0 Statement by the directors in
performance of their statutory duties in accordance with s172 (1) Companies
Act 2006.25m). Net profit has been reduced by the effect of the borrowing
costs which increased from US$1.2m to US$2.3m. The effect of foreign exchange
losses in the subsidiaries also had the effect of decreasing profits, in 2020
this is US$1.5m (2019:US$116,000 gain), principally as a result of the
revaluation of the borrowings.
Management are keenly aware that funding should be on the most attractive
terms and are exploring new avenues to achieve this.
Cash at year-end was US$7.2m (2019: US$1.9m), the increase was driven by fund
raising, including the issue of shares for a consideration of US$1.5m in the
year. Current resources are sufficient to meet the current working capital
requirements and purchase of capital equipment in the current budget. In
December 2020 the Company agreed additional bank facilities with Bank Center
Credit of US$5.5m, of this amount US$1.9m is available to fund working capital
and the balance will be used for investment into new machinery. Of this
facility US$1.0m was drawn down in December 2020.
The main financing commitments during the year were payment of interest on the
bonds and repayment of principal and interest on the bank borrowings, in total
these amounted to US$4.1m in 2020 (2019: US$1.4m).
The consolidated net assets of the Group are US$35.3m (2019: US$33.3m).
During the year the Company operated successfully through the restrictions and
lock downs as stipulated by the Kazakh authorities and is pleased to confirm
it safely guarded the wellbeing of its staff. The Government imposed a number
of lockdowns beginning in March 2020 ranging from a full national lockdown and
containment of the major cities to less stringent limited ones that are
currently operating. The Company experienced minimal operational disruption
from the COVID-19 pandemic that commenced in 2020 and expects operations to
continue uninterrupted.
CONSOLIDATED INCOME STATEMENT
for the year ended 31 December 2020
2020 2019
Note $000 $000
Revenue 3 30,032 14,908
Cost of sales (17,610) (12,390)
Gross profit 12,422 2,518
Administrative expenses (2,826) (2,600)
Share based payment (2,400) –
Impairments (34) 107
Operating profit 7,162 25
Foreign exchange (1,508) 116
Finance expense (2,324) (1,183)
Total finance cost (3,832) (1,067)
Profit/(loss) before tax 3,330 (1,042)
Taxation expense (392) (214)
Profit/(loss) for the year attributable to the equity holders of the parent 2,938 (1,256)
Profit/(loss) per ordinary share
Basic 4 11.27c (5.00c)*
Diluted 4 10.97c –
*The earnings per share calculation for 2019 has been restated to reflect the
100:1 consolidation of shares in 2020.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the year ended 31 December 2020
2020 2019
$000 $000
Profit/(loss) for the year 2,938 (1,256)
Items that may be reclassified subsequently to the income statement
Currency translation differences arising on translations of foreign operations (3,846) 129
Currency translation differences on translation of foreign operations relating (1,011) (461)
to tax
(4,857) (332)
Total comprehensive loss for the year (1,919) (1,588)
Total comprehensive loss attributable to:
Equity holders of the parent (1,919) (1,588)
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
as at 31 December 2020
2020 2019
Registration number: 05048549 Note $000 $000
Assets
Non-current assets
Intangible assets 5 12,849 12,943
Property, plant and equipment 6 32,092 30,316
Deferred tax assets 5,311 7,356
Trade and other receivables 6,700 6,048
Restricted cash 13 –
56,965 56,663
Current assets
Inventories 5,468 3,631
Trade and other receivables 7,182 3,615
Cash and cash equivalents 7,154 1,934
19,804 9,180
Total assets 76,769 65,843
Equity and liabilities
Current liabilities
Trade and other payables (6,705) (7,553)
Provisions (151) (130)
Loans and borrowings (5,833) (2,550)
(12,689) (10,233)
Non-current liabilities
Vat payable (230) (964)
Other payables (492) (1,333)
Provisions (4,763) (5,007)
Loans and borrowings (23,260) (15,027)
(28,745) (22,331)
Total liabilities (41,434) (32,564)
Equity
Share capital (4,267) (4,055)
Share premium (152,839) (151,476)
Merger reserve 282 282
Other reserves (333) (333)
Foreign currency translation reserve 52,959 48,102
Accumulated losses 68,863 74,201
Equity attributable to owners of the company (35,335) (33,279)
Total equity and liabilities (76,769) (65,843)
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the year ended 31 December 2020
Currency Share based
Share Share Merger translation payment Other Accumulated Total
capital premium reserve reserve reserve reserves losses equity
$000 $000 $000 $000 $000 $000 $000 $000
At 1 January 2019 4,054 151,470 (282) (47,770) – 333 (72,945) 34,860
Loss for the year – – – – – – (1,256) (1,256)
Other comprehensive loss – – – (332) – – – (332)
Total comprehensive loss – – – (332) – – (1,256) (1,588)
New share capital subscribed 1 6 – – – – – 7
At 31 December 2019 4,055 151,476 (282) (48,102) – 333 (74,201) 33,279
At 1 January 2020 4,055 151,476 (282) (48,102) – 333 (74,201) 33,279
Profit for the year – – – – – – 2,938 2,938
Other comprehensive income – – – (4,857) – – – (4,857)
Total comprehensive loss – – – (4,857) – – 2,938 (1,919)
New share capital subscribed 13 62 – – – – – 75
Share based payment charge – – – – 2,400 – – 2,400
Share options exercised 199 1,301 – – (2,400) – 2,400 1,500
At 31 December 2020 4,267 152,839 (282) (52,959) – 333 (68,863) 35,335
CONSOLIDATED STATEMENT OF CASH FLOWS
for the year ended 31 December 2020
2020 2019
Note $000 $000
Cash flows from operating activities
Net cash flow from operating activities 4,245 (2,832)
Cash flows from investing activities
Acquisitions of property plant and equipment (8,559) (7,180)
Proceeds from sale of property plant and equipment – 20
Acquisition of intangible assets (1,271) (552)
Proceeds from test production 165 –
Net cash flows from investing activities (9,665) (7,712)
Cash flows from financing activities
Loans received 16,903 14,089
Proceeds of share issue 1,500 –
Interest paid (3,740) (193)
Loans repaid (3,431) (1,523)
Commission charge (588) –
Net cash flows from financing activities 10,644 12,373
Net increase in cash and cash equivalents 5,224 1,829
Cash and cash equivalents at 1 January 1,934 105
Effect of exchange rate fluctuations on cash held (4) –
Cash and cash equivalents at 31 December 7,154 1,934
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 December 2020
1 General information
AltynGold Plc (the "Company") is a Company incorporated in England and Wales
under the Companies Act 2006. The financial information set out above for the
years ended 31 December 2020 and 31 December 2019 does not constitute
statutory accounts as defined in Section 434 of the Companies Act 2006, but is
derived from those accounts. Whilst the financial information included in this
announcement has been compiled in accordance with international financial
reporting standards (IFRS), adopted pursuant to Regulation (EC) in conformity
with the requirements of the Companies Act 2006, this announcement itself does
not contain sufficient financial information to comply with International
IFRS. A copy of the statutory accounts for 2019 has been delivered to the
Registrar of Companies and those for 2020 will be submitted for approval by
shareholders at the Annual General Meeting. The full audited financial
statements for the years end 31 December 2020 and 31 December 2019 do comply
with IFRS.
2 Going concern
During the year the Group obtained additional funding principally from a
mixture of placing bonds on the Astana International Exchange, an additional
US$7.4m and obtaining further funds from the term loans from a Kazakhstan
based bank that were agreed in 2019 of US$8.3m. In total these increased the
loans and borrowings from US$17.6m in 2019 to the current level of US$29.1m.
The funds were utilised to purchase equipment and to provide working capital
to expand and develop the mining site at Sekisovskoye. The Group increased
sales from US$14.9m to US$30.0m during 2020, resulting in an increase in
adjusted EBITDA from US$3.4m to US$13.5m. This provided positive funding to
the Group in the year, and is expected to continue at increasing levels in the
future.
At the year-end the Group had cash resources of US$7.2m (2019: US$1.9m)
available. In December 2020 the Company agreed additional bank facilities with
Bank Center Credit in the amount of US$5.5m, of which US$1.9m is available to
fund working capital and the balance is required to be used for investment
into new machinery. Of this facility US$1.0m was drawn down in December 2020.
The Board have reviewed the Group’s forecast cash flows for the period to
June 2022, which include the capital and interest repayments to be made in
relation to the Group’s borrowings. Capital and operating costs are based on
approved budgets and latest forecasts in the case of 2021 and current
development plans in the case of 2022. Based on the Group’s cash flow
forecasts, the Directors believe that the combination of its current cash
balances, net cash flows from operations, and increased production based on
projections of future growth, are sufficient for the Company to achieve its
current plans and meet its cash flow requirements.
The Group has operated in the most difficult time of the COVID-19 pandemic,
and experienced little impact on its ability to trade and grow the business.
However management are keenly aware that the situation may change and have
factored any potential impacts into its future business plans. The initial
impact of COVID-19 was felt in March 2020 when Kazakhstan and the UK went into
lockdown. The Group was quick to adapt and allowed office workers to use
remote technology to perform their duties. In relation to the mine, mining
operations were designated by the government to be a key industry. This
ensured that production and transport of dore to the refinery could continue
as normal. The Group adapted working conditions and patterns of working, to
ensure that production continued in a safe working environment. The Group has
also ensured that adequate stocks are being maintained of parts and
consumables in order to prevent any disruption to production. COVID-19 is
still an ongoing issue in Kazakhstan and indeed in many countries, however the
Management believe the procedures they have in place, such as shift working at
the mine, remote working, advance ordering of supplies and consumables,
together with the support of the government will ensure that future production
will continue.
The Board have considered possible stress case scenarios that they consider
may be likely to impact on the Group’s operations, financial position and
forecasts. Factors considered are operational disruptions, such as illness
amongst the workforce, disruption to supply chain and possible impact on the
price of gold if this was to fall to pre COVID-19 levels. From the analysis
undertaken the Board have concluded that Group will be able to continue to
trade by the careful management of its existing resources. The stress tests
included the following scenarios amongst others, a fall in the gold price by
18% from current levels, a drop in budgeted production by 20% or a combination
of both factors together. In each case the Group would not experience a cash
shortfall in either scenario. If required the Group would manage its
resources, reducing investment and managing its payables in order to maintain
liquidity.
The Board therefore considers it is appropriate to adopt the going concern
basis of accounting in preparing these financial statements.
3 Revenue
The analysis of the group’s revenue for the year from continuing operations
is as follows:
2020 2019
$000 $000
Sale of gold and silver 29,790 14,623
Other sales 242 285
30,032 14,908
Included in revenues from sale of gold and silver are revenues of
US$29,790,000 (2019: US$14,623,000) which arose from sales of precious metals
to one customer based Kazakhstan. Other sales amounted to US$242,000 (2019:
US$285,000) and related to lease and rental income.
4 Profit/(loss) per ordinary share
The calculation of basic and diluted earnings per share from continuing
operations is based upon the retained profit from continuing operations for
the financial year of US$2.9m (2019: loss of US$1.3m).
The weighted average number of ordinary shares for calculating the basic loss
in 2020 and 2019 is shown below. The company consolidated its shares on a
100:1 basis during the year, the comparative figure of the number of shares
has been adjusted accordingly.
The diluted earnings per share in 2020 arises as the convertible loan notes
have conversion rights, which would result in an additional 702,650 shares
being issued.
As the Company was loss making in 2019, the impact of the potential ordinary
shares outstanding from the conversion of the convertible loan notes would be
anti-dilutive, and as such the basic and diluted earnings per share are the
same.
2020 2019
No. No.
Basic 26,070,079 25,677,720
Diluted 26,772,729 n/a
5 Intangible assets
Group Teren-Sai Exploration and Total
geological data evaluation costs US$000
US$000 US$000
Cost or valuation
At 1 January 2019 9,889 5,919 15,808
Additions – 552 552
Amortisation capitalised – 992 992
Currency translation 42 25 67
At 31 December 2019 9,931 7,488 17,419
At 1 January 2020 9,931 7,488 17,419
Additions – 1,271 1,271
Amortisation capitalised – 608 608
Currency translation (905) (717) (1,622)
At 31 December 2020 9,026 8,650 17,676
Amortisation
At 1 January 2019 3,470 – 3,470
Amortisation charge 992 – 992
Currency translation 14 – 14
At 31 December 2019 4,476 – 4,476
At 1 January 2020 4,476 – 4,476
Amortisation charge 608 – 608
Currency translation (422) – (422)
Revenue relating to test production – 165 165
At 31 December 2020 4,662 165 4,827
Carrying amount
At 31 December 2020 4,364 8,485 12,849
At 31 December 2019 5,455 7,488 12,943
At 1 January 2019 6,419 5,919 12,338
The intangible assets relate to the historic geological information pertaining
to the Teren-Sai ore fields. The ore fields are located in close proximity to
the current open pit and underground mining operations of Sekisovskoye. The
Company obtained a contract for exploration and evaluation on the site in May
2016 from the Kazakh authorities. The contract is valid for a period of 6
years, with a right to extend over a further 5 years.
The value of the geological data purchased is in the opinion of the Directors
the value that would have been incurred if the drilling had been undertaken by
a third party (or internally). The Company has continued to develop the site
with a CPR completed in 2019, and confirmatory drilling and further
exploration work continuing on the site.. Full details are given in the
mineral resources statement included as part of the Annual Report.
The directors consider that no impairment is required taking into account the
CPR results, exploration and planned production in the future. The write off
of the geological data over the period of the licence to the end of the
extended licence period in 2027 is appropriate. After that period the costs
amortised are capitalised in line with the Company’s accounting policy
within the subsidiary TOO GMK Altyn MM LLP, there are no impairment
indicators.
6 Property, plant and equipment
Group Mining Freehold Equipment, Plant, Assets under Total
properties Land and fixtures and machinery and construction US$000
US$000 buildings fittings buildings US$000
US$000 US$000 US$000
Cost or valuation
At 1 January 2019 11,730 24,481 9,701 5,047 978 51,937
Additions 2,140 71 239 2,469 301 5,220
Disposals – (4) (34) (41) – (79)
Transfers – 134 – – (134) –
Currency translation 79 104 39 26 (78) 170
At 31 December 2019 13,949 24,786 9,945 7,501 1,067 57,248
At 1 January 2020 13,949 24,786 9,945 7,501 1,067 57,248
Additions 1,622 166 2,838 2,717 1,246 8,589
Disposals – – (70) (180) – (250)
Transfers (764) 1,383 (26) 18 (471) 140
Transfer from inventories – – – – 241 241
Currency translation (1,543) (2,285) (907) (734) (110) (5,579)
At 31 December 2020 13,264 24,050 11,780 9,322 1,973 60,389
Depreciation
At 1 January 2019 2,220 8,291 8,501 4,534 – 23,546
Charge for year 209 2,133 794 217 – 3,353
Eliminated on disposal – (3) (30) (40) – (73)
Currency translation 12 35 40 19 – 106
Transfers – 107 (101) (6) – –
At 31 December 2019 2,441 10,563 9,204 4,724 – 26,932
At 1 January 2020 2,441 10,563 9,204 4,724 – 26,932
Charge for the year 520 1,885 773 772 – 3,950
Eliminated on disposal – – (70) (180) – (250)
Currency translation (232) (997) (805) (441) – (2,475)
Transfers 140 (80) 80 – – 140
At 31 December 2020 2,869 11,371 9,182 4,875 – 28,297
Carrying amount
At 31 December 2020 10,395 12,679 2,598 4,447 1,973 32,092
At 31 December 2019 11,508 14,223 741 2,777 1,067 30,316
At 1 January 2019 9,510 16,190 1,200 513 978 28,391
Capitalised cost of mining property are amortised over the life of the licence
from commencement of production on a unit of production basis. This basis uses
the ratio of production in the period compared to the mineral reserves at the
end of the period. Mineral reserves estimates are based on a number of
underlying assumptions, which are inherently uncertain. Mineral reserves
estimates take into consideration estimates by independent geological
consultants. However, the amount of mineral that will ultimately be recovered
cannot be known until the end of the life of the mine.
Any changes in reserve estimates are, for amortisation purposes, treated on a
prospective basis. The recovery of the capitalised cost of the Company’s
property, plant and equipment is dependent on the development of the
underground mine.
The Directors are required to consider whether the non-current assets
comprising, mineral properties, plant and equipment have suffered any
impairment. The recoverable amount is determined based on value in use
calculations. The use of this method requires the estimation of future cash
flows and the choice of a discount rate in order to calculate the present
value of the cash flows. The directors considered entity specific factors such
as available finance, cost of production, grades achievable, and sales price.
The directors have concluded that no adjustment is required for impairment.
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