REG-AltynGold Plc Final Results
27/06/2022 07:00
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Final Results
AltynGold plc
("Altyn” or the "Company")
Results for the year ended 31 December 2021
AltynGold Plc (LSE:ALTN) an exploration and development company, is pleased to
announce its results for the year ended 31 December 2021.
Highlights
Financial highlights
• Turnover increased in the year to US$50m (2020: US$30m) an increase of
67%.
• 27,747oz of gold sold (2020: 16,535oz), an increase of 68%.
• Average gold price achieved (including silver), US$1,803oz, (2020:
US$1,816oz).
• The Company made a profit before tax of US$18.3m (2020: US$3.3m).
• Adjusted EBITDA (Earnings before interest, tax, depreciation and
amortisation) of US$26.4m (2020: US$13.5m).
• The Group repaid borrowings of US$7.9m (2020: US$3.4m).
• Capital expenditure in the year amounted to US$8.1m (2020: US$8.6m).
Operational highlights
• Ore processed 571,000t (2020 506,000t).
• Gold poured 28,450oz, (2020: 17,028oz) a 67% increase year-on-year.
• Mined gold grade 1.97g/t, (2020: 1.57g/t).
• Operating cash cost US$649/oz, (2020: US$800/oz).
• Gold recovery rate 83.05% (2020: 80.44%).
Underground development & exploration
• Transport decline No.1 was developed and is now at 117masl on ore bodies
3-8, transport decline 2 is now at 134masl, opening up significant reserves at
ore body 11.
• Development of the shaft and tunnelling amounted to 6,209 linear metres.
• Blast hole drilling at Sekisovskoye amounted to 119,340 linear metres.
• Extensive maintenance and improvement works were carried out to maintain
production safely and efficiently.
• Exploration work at Teren-Sai continued with the drilling of 22,580m
linear metres of exploratory drilling.
Further Information:
For further information please contact:
AltynGold Plc
Rajinder Basra
+44 (0) 203 432 3198
The information contained within this announcement is deemed by the Company to
constitute inside information as stipulated under the Market Abuse Regulations
(EU) No. 596/2014.
Information on the Company
AltynGold Plc (LSE:ALTN) is an exploration and development company, which is
listed on the main market segment of the London Stock Exchange.
To read more about AltynGold Plc please visit our website www.altyngold.uk
(http://www.altyngold.uk)
CHAIRMAN’S STATEMENT
Given the backdrop of the COVID-19 pandemic, 2021 was pencilled in by many
Companies to potentially be a difficult trading year. Indeed for some sectors
this has been the case, in relation to AltynGold, due to the careful
management of its resources and deployment of its fundraising into new
equipment and infrastructure improvements, the Company has been able to
generate a significant uplift in its revenue and profits. The primary driver
to the increase in revenues in the current year has been the increase in
production and grades achieved.
The Company is particularly pleased with the principal key performance
indicators in the majority of cases exceeding the budgets that were set for
the year. The Company generated an EBITDA in excess of US$26m (2020: US$13.5m)
on a turnover of US$50m (2020: US$30m).
During the year the Company reviewed the staffing structure which led to a
number of changes at head office in terms of grade and departmental
structures. At Board level, after a review, two new Non-Executive directors
were appointed to complement the skills and expertise of the existing Board.
This resulted in the employment of the Company’s first female Director
Maryam Buribayeva who, together with Vladimir Shkolnik, will monitor and
assess the Company’s environmental obligations. The Board sees its climate
change and environmental obligations has increasing importance in the future
and will monitor this closely, especially in light of the new environmental
laws introduced by the Kazakhstan government in July 2021.
The Company is changing and evolving and moving towards its medium term plan
for the extraction of 850ktpa. The budget for 2023 is set at 650ktpa, with the
move to 850ktpa being planned thereafter. With a stable cost base and a gold
price consensus of US$1,700 in the medium term the business model is evolving.
Further plant upgrades are scheduled for 2023 that will move the capacity up
to 1mtpa for Sekisovskoye in the longer term.
In terms of funding, there is sufficient cash generation to fund the expanded
operations at Sekisovskoye and service the debt for existing operations.
In relation to Teren-Sai, from the exploration work and test production
results, we believe the asset will add significantly to the profitability of
the Company. The development of Teren-Sai will require additional funding
initially. This can be met by the Company’s own resources, however it will
require further external funding to bring it fully on stream. With the Company
gearing set to go down with the repayment of the bond listed on AIX and the
scheduled repayment of the bank borrowings, the Company are looking at a
number of possibilities to raise further funds.
The Company is set to move forward having established a strong platform for
growth, from a review and strengthening of its management and human resources,
keeping tight controls over its operational structure and ensuring that the
right level of financing is in place. The growth and prosperity of the Company
are always balanced by the Company’s obligations to all stakeholders and
wider environmental issues which are growing in importance.
Kanat Assaubayev
Chairman
CHIEF EXECUTIVE OFFICER’S REVIEW
Overview
The Company achieved its principal goals in relation to its current operations
at Sekisovskoye being that of processing ore of 571ktpa (budget 570kpta), and
producing gold of 34,258oz (target 33,634oz). The step up in ore extraction
and the subsequent processing of the ore has led to a marked change in the
profitability of the Company. The Company profits have climbed to US$18.3m
(2020: US$3.3m) and EBITDA has moved to US$26.4m from last year’s level of
US$13.5m.
In relation to Teren-Sai the exploration program has proved fruitful, and the
extension of the licence and move to a commercial discovery in Area no2 is
being processed. Initially the areas will be stripped, as the initial step to
make it ready for ore extraction. Further plans will be put in place once the
licence is acquired for Area No. 2. In relation to the other areas of
interest, further exploration drilling is to be continued.
During the year a comprehensive review was undertaken to assess the human
resources requirements of the Company. The review ranged from the assessment
of the Board, head office function and the production workforce. This resulted
in changes to the Board, with the employment of the Company’s first female
Director. In relation to head office, staff were employed to deal with the
financial and regulatory requirements of the Company. Fewer staff were
required, but the pay grades did increase to attract the calibre of staff
required. The increase at the production site was a result of the greater
volume of processing.
The Company drew down the balance of its facilities with Bank Center Credit at
the start of the year, and took on a short term working capital loan at the
start of the year repayable in September 2022. The EBITDA is generating funds
to repay the loans during the year, finance its capital commitments and repay
the AIX bond in December 2022. In the current period factors that will have a
positive effect on the Company’s profitability in the forthcoming year are
the devaluation of the Kazakh Tenge against the US Dollar and the increase in
the gold price, currently trading at a higher rate than the average achieved
in 2021 of US$1,803oz.
Economic outlook
In relation to COVID-19 the restrictions have largely eased and there was
little impact on the productivity of the Company. A mention should also be
made of the unrest which occurred at the start of 2022 in Kazakhstan, which
was largely contained to Almaty. The Company was largely insulated from the
effects of any lockdowns and restrictions imposed. The Company is aware of its
wider social duties and obligations and is a responsible employer in this
regard, maintaining good relationships with its workforce.
With regard to the possible impact on the Company’s operations that may
arise out of the conflict that has arisen in Ukraine and sanctions imposed in
Russia. On a macro scale Kazakhstan as a country has close ties with Russia,
and thus the devaluation of the Russian Rouble has had an effect on devaluing
the Kazakh Tenge against the US Dollar, and there has been an upward push on
the price of an ounce of gold, which is currently trading in the range of
US$1,950oz. At a Company level, the trading with Russia has been reviewed and
alternative sources put in place for the small value of consumables purchased
from Russia. There is no reliance on Russian companies in terms of the supply
of capital equipment, parts or financing. All sales will continue under the
current off take agreement with all sales made in Kazakhstan in US Dollars.
Mine development
The input of significant capital equipment additions in 2020 and H1 2021 has
enabled the Company to progress mining operations in all areas of mining
operations. A significant acquisition in this regard was the purchase of the
self-propelled tunnelling equipment.
The principal development milestones achieved in the period were:
• Tunnelling and shaft sinking of 6,209 linear metres.
• Blast hole drilling of 119,340 linear metres.
• Exploration drilling was carried out and amounted to 18,943 linear metres.
• Backfilling of voids was carried out in the period amounting to a volume
of 64,404m.
During this period the Company has been concentrating on developing ore bodies
3-8 at horizons 117masl-178masl and ore body 11 at horizons 134masl-174masl.
The transport decline No.2 was extended by 343 linear metres allowing the
access of 640,000 tons of ore. Similarly transport decline No. 1 was extended
by 391 linear metres opening up accessible reserves of 163,000 tons.
In order to continue to mine efficiently and safely the following
capital/maintenance was carried out:
• A forced air facility was commissioned and built at elevation 355masl,
this necessitated the installation of 17km of overhead 6Kv lines. The Korfmann
ventilation equipment will allow safe and stable operations for a period up to
2029 in accordance with the mine operational plans.
• Various works were carried out to enable the efficient and safe working of
the stoping, this included introducing a new system of stoping and obtaining
an Ulba-150 charging unit to improve the quality of ore crushing.
• The mine operational procedures are constantly being updated to conform to
current safe working practices, during the period an electronic accounting and
explosive digitised log was introduced.
The key production figures are shown below:
Mining results ore extraction
2021 2020
Ore mined T 571,035 506,050
Gold grade g/t 1.94 1.57
Silver grade g/t 1.81 1.08
Contained gold oz 35,580 25,555
Contained silver oz 33,296 17,525
Mining results processing
2021 2020
Crushing T 534,426 421,040
Milling T 541,576 420,256
Gold grade g/t 1.97 1.58
Silver grade g/t 1.63 1.13
Gold recovery % 83.05 80.44
Silver recovery % 73.54 72.81
Contained gold oz 34,258 21,355
Contained silver oz 28,408 15,253
Gold Poured oz 28,450 17,028
Silver poured oz 20,891 11,180
Projected capital expenditure
Total 2022 2023
US$m
US$m
US$m
Prospect drilling 2.3 1.4 0.9
Underground development 7.2 5.3 1.9
Infrastructure 5.2 0.4 4.8
Ore handling facilities 14.0 – 14.0
Process plant incremental expansion 9.0 2.4 6.6
Teren-Sai exploration program 0.4 0.4 –
Total 38.1 9.9 28.2
Exploration – Teren-Sai
During the year the Company conducted exploration drilling and core drilling
at three areas within the exploration site. In total 22,500m of pneumatic
drilling and 7,500m of core drilling was planned, the actual results were
22,580m and 7,560m respectively.
The Company finalised its core drilling in Area no.2 in January and February
drilling 1,520m of core samples, and conducted further core drilling in Area
no. 5 amounting to 1,140m. Area No.5 core samples are being analysed with a
view to also moving this to the commercial discovery phase, however due to
time constraints in finalising and analysing the drilling results during
winter and the need to complete all necessary paperwork to extend the licences
which have expired in May 2022, the Company has concentrated on finalising the
development of Area No2, and will progress the development of Area no.5 in the
future.
The principal focus of the work program in the current year was to look at the
prospective site at No. 6 where extensive exploration drilling was carried out
amounting to 22,580m, this was followed up by 3,700m of core drilling towards
the end of the year. Sampled grades obtained from the core samples extracted
ranged from 1.4g/t to 2.4g/t.
The exploration licence at Teren-Sai expired in May 2022, under the contract
the Company has the right to renew the licence. The Company has submitted an
application to extend the licence in order to conduct further site works in
Teren Sai and to further define the areas of interest to the Company. In
relation to Area No.2 the Company is considering moving to the production
phase after further testing, and to the remaining sites of interest an
extension to the exploration licence. As noted in the prior year, the results
from the test production for Area No. 2 indicated an average grade of 1.8g/t,
with the initial production being obtained from open pit workings.
The move to a production licence will require additional capital expenditure
in order to build a new processing plant, a tailings dam and other
infrastructure requirements in order to process the ore efficiently. The test
production that was processed at Sekisovskoye has shown that the ore can be
processed using the same technology as that currently being employed at
Sekisovskoye. It is the intention of the Company to make initial preparations
for site development, however moving to the full production phase will require
further fund raising to achieve its full potential. The Company is in the
process of looking at lines of funding to move the project forward.
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 a capacity of 1mtpa for Sekisovskoye in 2023, at which point there will
also be further investment in the mining equipment needed to process the
increase in ore output.
In relation to the development of its prospective resource at Teren-Sai, the
current capex budget allows for the continuation of exploration at the site.
Further development of the site at Teren-Sai is dependent on raising further
funding, in addition to that which will be provided from cash flow from
existing operations.
Longer term plan
The Company has a had a successful year, with the capex investment increasing
ore extraction from the Sekisovskoye site which increased to 570ktpa. The aim
remains to move this up to 1mtpa, and budgets have been drawn up and funds
allocated to expand the existing capacity of the processing plant to 1mtpa
within two years. The longer term aim is to increase the ore extraction
towards the 2mtpa within a time frame of 6 years.
The capex required as outlined above amounts to US$38m, and will be largely
met from funds raised from operations. In addition to this an amount of US$75m
will be required to bring the Teren-Sai project on stream, as it will require
new processing facilities and infrastructure to be developed at the Teren-Sai
site. In the initial period the site will be stripped and made ready for open
pit production in order to move to production efficiently once the necessary
funding is in place. The brokers who are providing sponsored research and
opening up opportunities for investor funding will play a key role in moving
the projects forward.
The Board are constantly looking to diversify and invest in new and
complementary operations in Kazakhstan and internationally, however the
primary driver at present is to bring the Kazakhstan gold sites, as outlined
above, to their full potential.
FINANCIAL PERFORMANCE
Key performance indicators (KPIs)
Annual gold sales (oz)
27,747
2021 27,747
2020 16,535
2019 10,500
Annual gold poured (oz)
28,450
2021 28,450
2020 17,027
2019 10,537
Revenue (US$m)
US$50
2021 50.0
2020 30.0
2019 14.9
Operating cash cost of production (US$/oz)
US$649
2021 649
2020 800
2019 854
EBITDA (US$m)
US$26.4
2021 26.4
2020 13.5
2019 3.3
Net assets (US$m)
US$55.2
2021 55.2
2020 35.3
2019 33.3
The significant investment into plant upgrades and new capital and
infrastructure development during the year has resulted in the Company meeting
its targeted production levels and in a number of areas exceeding them. The
upgrades and new equipment allowed for more targeted mining of the ore bodies
resulting in higher grades and recoveries being achieved in the year.
The ore mined was 571,000t against the budget of 570,000t, the resulting ore
processed of 534,000t was a significant improvement on the prior year of
506,000t. The current run rate is indicating a higher level of ore to be mined
in the year to 31 December 2022. This is a key deliverable for the Company and
the management are pleased with the performance in the year and are keen on
driving this forward to higher levels.
Gold processed has increased by 60% from the prior year to 34,258oz (2020:
21,355oz), the Company had budgeted 33.635oz. A significant increase, the
increase in output was accompanied by a higher level of recovery of 83.05%
increasing from 80.44% in the prior year and the budgeted recovery rate of
82.13%. The upgrades of the plant and capital investment have paid a key role
in increasing the levels being achieved.
During 2021, the Company sold 27,747oz of gold (2020: 16,535oz). The average
price achieved per oz was similar to that of last year at US$1,803
(2020:US$1,816). The increase in profitability in the Company has been
achieved through a volume increase in production, since the year end the
average price of gold has increased and is currently trading in the region of
US$1,950 to US$2,000. It is difficult to predict how the price of gold will
move in the future but the current sentiment is positive.
There were again no changes to the sales off-take agreement currently in place
with the Kazakh national refinery, which continues to take all of the
Company’s output. As in the prior year, sales are translated at the spot US$
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$834/oz, (2020: S$970oz).
The operating cash cost excluding administrative costs amounted to US$649/oz
(2020: US$800/oz). The Kazakh Tenge in recent years has been weakening against
the US Dollar in 2020 it averaged 413Kzt to one US Dollar weakening to an
average of 426Kzt in 2021, it is currently in the region of 440Kzt. As the
Company’s revenues are earned in US Dollars and a significant cost base is
in Kazakh Tenge, it will have the benefit of reducing the cost base of the
Company.
The administrative costs have increased in the year by US$2.3m as a result of
four principal factors. First, during the year the Company as part of its
wider responsibilities to the community the Company agreed to assist in the
building of a wing of a new school/university building with an overall cost of
US$550,000. Second, there was an increase in wages and salaries by US$860,000
principally as a result of the increase in the number of staff as well as the
recruitment of experienced and skilled employees at a higher salary rate. The
third factor relates to various professional fees of US$480,000 relating to
sponsored research in order to increase the Company profile and attract new
investors and the development of further funding opportunities. The final
factor was travel cost returning to a normal level as the Company emerged from
restrictions imposed by COVID, translating into an increase of US$540,000.
The Company has reported a net profit of US$18.3m before tax (2020: US3.38m)
with a gross profit of US$27.8m (2020: US$12.4m). As noted above the principal
drivers to the better results was the increased production, grades and
recoverability achieved from the investment of the capex.
The adjusted EBITDA increased to US$26.4m, (2020: US$13.5m) details of the
calculation are shown in note 13 of the financial statements.
In relation to cash at the year end this was US$3.6m (2020: US$7.2m). Cash
generation as indicated by EBITDA was much higher in the current year. The
utilisation of funds by the Company was a result of a net repayment of loans
and capital expenditure in the year and a substantial prepayment in relation
to production facilitation for the forthcoming period. These have resulted in
a drop in the cash balance at the year end, the balance is expected to
increase as the prepayment is unwound and as a result of higher revenues from
the increase in gold prices.
The bonds as listed on AIX of US$10m are due for repayment in December 2022.
During the year net borrowings were repaid of US$1.6m. The interest incurred
on the debt in 2021 amounted to US$2.5m (2020: US$4.1m) the reduction was due
to repayment of the bonds to Amrita Investments Limited and African Resources
Limited, the balance of loans being repaid in H1 2021.
The Company managed to perform to its plan as set out and increase revenues
and profitability, dealing with any issues as posed by the government
restrictions involving COVID-19 and at the same time looking after the welfare
of the staff. The net assets of the Company increased by US$19.9m.
CONSOLIDATED INCOME STATEMENT
for the year ended 31 December 2021
2021 2020
Note $000 $000
Revenue 3 50,290 30,032
Cost of sales (22,496) (17,610)
Gross profit 27,794 12,422
Administrative expenses (5,138) (2,826)
Share based payment – (2,400)
Impairments (734) (34)
Operating profit 21,922 7,162
Foreign exchange (366) (1,508)
Finance expense (3,289) (2,324)
Total finance cost (3,655) (3,832)
Profit before tax 18,267 3,330
Taxation receipt/(expense) 56 (392)
Profit for the year attributable to the equity holders of the parent 18,323 2,938
Profit per ordinary share
Basic 67.04c 11.27c
Diluted 67.04c 10.97c
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the year ended 31 December 2021
2021 2020
Note $000 $000
Profit for the year 18,323 2,938
Items that may be reclassified subsequently to the income statement
Currency translation differences arising on translations of foreign operations (1,491) (3,846)
Currency translation differences on translation of foreign operations relating 3,038 (1,011)
to tax
1,547 (4,857)
Total comprehensive profit/(loss) for the year 19,870 (1,919)
Total comprehensive profit/(loss) attributable to:
Equity holders of the parent 19,870 (1,919)
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
as at 31 December 2021
2021 2020
(Registration number: 05048549) Note $000 $000
Assets
Non-current assets
Intangible assets 5 13,346 12,849
Property, plant and equipment 6 35,350 32,092
Deferred tax assets 8,189 5,311
Trade and other receivables 3,925 6,700
Restricted cash 70 13
60,880 56,965
Current assets
Inventories 9,121 5,468
Trade and other receivables 21,530 7,182
Cash and cash equivalents 3,593 7,154
34,244 19,804
Total assets 95,124 76,769
Equity and liabilities
Current liabilities
Trade and other payables (5,684) (6,705)
Provisions (232) (151)
Loans and borrowings (15,087) (5,833)
(21,003) (12,689)
Non-current liabilities
Vat payable (242) (230)
Other payables (1,000) (492)
Provisions (5,453) (4,763)
Loans and borrowings (12,221) (23,260)
(18,916) (28,745)
Total liabilities (39,919) (41,434)
Equity
Share capital (4,267) (4,267)
Share premium (152,839) (152,839)
Merger reserve 282 282
Other reserves – (333)
Foreign currency translation reserve 51,412 52,959
Accumulated losses 50,207 68,863
Equity attributable to owners of the company (55,205) (35,335)
Total equity and liabilities (95,124) (76,769)
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the year ended 31 December 2021
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 2020 4,055 151,476 (282) (48,102) – 333 (74,201) 33,279
Profit for the year – – – – – – 2,938 2,938
Other comprehensive loss – – – (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
At 1 January 2021 4,267 152,839 (282) (52,959) – 333 (68,863) 35,335
Profit for the year – – – – – – 18,323 18,323
Other comprehensive income – – – 1,547 – – – 1,547
Total comprehensive income – – – 1,547 – – 18,323 19,870
Transfer to reserves – – – – – (333) 333 –
At 31 December 2021 4,267 152,839 (282) (51,412) – – (50,207) 55,205
CONSOLIDATED STATEMENT OF CASH FLOWS
for the year ended 31 December 2021
2020 2019
Note $000 $000
Cash flows from operating activities
Net cash flow from operating activities 6,797 4,245
Cash flows from investing activities
Acquisitions of property plant and equipment (5,502) (8,559)
Acquisition of intangible assets (830) (1,271)
Proceeds from test production – 165
Net cash flows from investing activities (6,332) (9,665)
Cash flows from financing activities
Interest paid (2,411) (3,740)
Loans received 6,356 16,903
Loans repaid (7,985) (3,431)
Proceeds of share issue – 1,500
Commission paid – (588)
Net cash flows from financing activities (4,040) 10,644
Net (decrease)/increase in cash and cash equivalents (3,575) 5,224
Cash and cash equivalents at 1 January 7,154 1,934
Effect of exchange rate fluctuations on cash held 14 (4)
Cash and cash equivalents at 31 December 3,593 7,154
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 December 2021
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 2021 and 31 December 2020 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 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 IFRS. A copy of the
statutory accounts for 2020 has been delivered to the Registrar of Companies
and those for 2021 will be layed before the shareholders at the Annual General
Meeting. The full audited financial statements for the years end 31 December
2021 and 31 December 2020 do comply with IFRS.
2 Going concern
The Group had a successful year increasing revenues by 67% from the prior year
to US$50m, resulting in an increase of adjusted EBITDA to an amount in excess
of US$26m. The Group did enter into some further short term financing at the
start of the year from the Bank Center Credit in order to smooth the working
capital of the Group. The majority of this is repayable by September 2022.
This provided positive funding to the Group in the year, the adjusted EBITDA
is expected to continue at increasing levels in the future as production
grows, coupled with a strong gold price and the devaluation of the Kazakh
Tenge.
At the year-end the Group had cash resources of US$3.6m (2020: US$7.2m)
available. The decrease in funds from the prior year is principally due to
prepayments made to secure the services of subcontractors in relation to
future mine development and ore extraction, as well as the repayment of loans
in the year.
The Board have reviewed the Group’s forecast cash flows for the period to
September 2023, which include the capital and interest repayments to be made
in relation to the Group’s borrowings. The principal loan that is due for
repayment is the bond raised on the Kazakhstan Stock exchange of US$10m which
is repayable in December 2022. Capital and operating costs are based on
approved budgets and latest forecasts in the case of 2022 and current
development plans in the case of 2023. There are significant judgements
inherent in the cash forecast model, the significant assumptions are the
anticipated level of production to be achieved and the gold price. In the case
of planned production profiles these are based on a planned increase from
current levels being achieved and in the latter the consensus view of the
anticipated gold price in the short/medium term.
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 cash requirements including the
repayment of loans which are due for repayment in the period.
The Group’s adapted well to the impact of COVID-19, and there was little
impact on the operations of the Group from COVID-19, the Ukraine conflict or
the civil unrest that occurred in Kazakhstan in the early part of the year.
However 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 that
may lower the production at the mine and possible impact on the price of gold
if this was to fall. From the analysis undertaken the Board have concluded
that the 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 to US$1,561oz, 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:
2021 2020
$000 $000
Sale of gold and silver 50,031 29,790
Other sales 259 242
50,290 30,032
Included in revenues from sale of gold and silver are revenues of
US$50,031,000 (2020: US$29,790,000) which arose from sales of precious metals
to one customer based in Kazakhstan. Other sales amounted to US$259,000 (2020:
US$242,000) and related to lease and rental income.
4 Profit 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$18.3m (2020: US$2.9m).
The weighted average number of ordinary shares for calculating the basic
earnings per share in 2021 and 2020 is shown below.
The diluted earnings per share in 2020 arose as the convertible loan notes had
conversion rights, which would have resulted in an additional 702,650 shares
being issued, the convertible loan notes were all redeemed in the year. There
are currently no share options in issue that would result in diluted earnings
per share.
2021 2020
No. No.
Basic 27,332,933 26,070,079
Diluted 27,332,933 26,772,729
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 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
At 1 January 2021 9,026 8,650 17,676
Additions – 830 830
Amortisation capitalised – 585 585
Currency translation (225) (240) (465)
At 31 December 2021 8,801 9,825 18,626
Amortisation
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
At 1 January 2021 4,662 165 4,827
Amortisation charge 585 – 585
Currency translation (125) (7) (132)
At 31 December 2021 5,122 158 5,280
Carrying amount
At 31 December 2021 3,679 9,667 13,346
At 31 December 2020 4,364 8,485 12,849
At 1 January 2020 5,455 7,488 12,943
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 mining operations of Sekisovskoye. The Company obtained a contract
for exploration and evaluation on the site in May 2016 from the Kazakh
authorities, the licence expired in May 2022. The Company has the right to
extend the licence and has submitted the necessary paperwork to extend the
exploration phase in the areas of interest within the Teren-Sai ore field with
a view to moving area No. 2 to the production phase.
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 on one of the fifteen target zones area 2, which
includes 3 potential targets, and further exploration works in the other
areas. 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
(optional) extended licence period May 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 Total
properties
Land and
fixtures and
under
buildings
fittings machinery
construction US$000
US$000
and
US$000 US$000
buildings US$000
US$000
Cost or valuation
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
At 1 January 2021 13,264 24,050 11,780 9,322 1,973 60,389
Additions 3,356 197 2,147 653 2,187 8,540
Disposals – – (655) (4) – (659)
Transfers – 1,441 – – (1,441) –
Transfer from inventories – – – – 170 170
Currency translation (611) (654) (203) (261) (67) (1,796)
At 31 December 2021 16,009 25,034 13,069 9,710 2,822 66,644
Depreciation
At 1 January 2020 2,441 10,563 9,204 4,724 – 26,932
Charge for 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
At 1 January 2021 2,869 11,371 9,182 4,875 – 28,297
Charge for the year 699 2,188 817 782 – 4,486
Eliminated on disposal – (2) (655) (4) – (661)
Currency translation (218) (238) (239) (133) – (828)
Transfers – – – – – –
At 31 December 2021 3,350 13,319 9,105 5,520 – 31,294
Carrying amount
At 31 December 2021 12,659 11,715 3,964 4,190 2,822 35,350
At 31 December 2020 10,395 12,679 2,598 4,447 1,973 32,092
At 1 January 2020 11,508 14,223 741 2,777 1,067 30,316
Included within the additions to mining properties is an amount of US$430,000
relating to an increase in the abandonment and restoration provision, see note
21.
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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