REG-China Nonferrous Gold Limited Half-year Report
30/09/2022 11:00
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Half-year Report
China Nonferrous Gold Limited 中国有色黄金有限公司
(‘CNG’ or the ‘Company’)
Interim Results for the Six-Month Period Ended 30 June 2022
China Nonferrous Gold Limited (AIM:CNG), the gold producer with the
operational Pakrut Gold Project (‘the Pakrut Project’) in the Republic of
Tajikistan, today announces its interim results for the six-month period ended
30 June 2022.
The results below are available on the Company's website at www.cnfgold.com
(https://cts.businesswire.com/ct/CT?id=smartlink&url=http%3A%2F%2Fwww.cnfgold.com&esheet=52931887&newsitemid=20220930005251&lan=en-US&anchor=www.cnfgold.com&index=1&md5=b447f9df0139cc0e061e70155aa3e7f7)
.
Highlights
* From January to June 2022, a total of 302,590 tons of ore was extracted from
the Pakrut gold mine; 274,453 tons of ore was processed at a grade of 2.58
g/t; and 16,330 oz. gold ingots were poured.
* From January to June 2022, the Group sold 16,484 oz. of gold ingots, achieving
sales revenue of US$30.71 million.
For further information please visit the Company’s website (www.cnfgold.com
(https://cts.businesswire.com/ct/CT?id=smartlink&url=http%3A%2F%2Fwww.cnfgold.com&esheet=52931887&newsitemid=20220930005251&lan=en-US&anchor=www.cnfgold.com&index=2&md5=09abd6821c43ff996a7e3ddb0b0d78c5)
) or contact:
China Nonferrous Gold Limited
Zhang Hui, Managing Director
Tel: +86 10 8442 6662
WH Ireland Limited (NOMAD & Broker)
Katy Mitchell, Andrew de Andrade
Tel: +44 (0)207 220 1666
BlytheRay (PR)
Tim Blythe, Megan Ray
Tel: +44 (0)20 7138 3224
Project Summary
The Pakrut Gold Project, of which CNG has 100 per cent ownership, is situated
in Tajikistan approximately 120km northeast of the capital city Dushanbe.
Pakrut is located within the Tien Shan gold belt, which extends from
Uzbekistan into Tajikistan, Kyrgyzstan and Western China, and which hosts a
number of multi-million ounce gold deposits.
CNG entered steady state production from January 2019.
About Tajikistan
Tajikistan is a secular republic located in Central Asia. The country is a
member of the Commonwealth of Independent States and the Shanghai Cooperation
Organization. Tajikistan hosts numerous operating precious metal mines as well
as the largest aluminum smelter in Central Asia. CNG's management team has
extensive experience in the mining industry in Tajikistan.
CEO’s Statement
As CEO of the board, it gives me great pleasure to present the CEO’s
statement of the Interim Results for the Six-Month Period Ended 30 June 2022.
Despite the global pandemic, Pakrut took pandemic prevention and protection
measures, and continued producing during the first half of the year, making
the group an important gold producer in Tajikistan.
From January to June 2022, a total of 302,590 tons of ore was extracted from
the Pakrut gold mine. During that same six month period:
* 274,453 tons of ore was processed;
* the average grade of the raw ore was 2.58 g/t;
* the recovery rate of processing was 92.08%;
* 9,288.31 tons of concentrate was produced from the processing plant; and
* 9,104.48 tons of concentrate was treated in the smelter (the comprehensive
recovery rate of smelting was 92.58%) and 16,330 oz. gold ingots were poured.
From January to June 2022, the Group sold 16,484 oz. (30 June 2021:17,288 oz.)
of gold ingots, achieving sales revenue of US$30.71million (unaudited) (30
June 2021:$30.87million), with an average sales price of US$1,863.02 / oz.(30
June 2021:$1,785.62 / oz.)
Financial Results
The Company continued its production and operation work during the first six
months of 2022. Administration expenditure was US$10,032,340 (30 June 2021:
US$9,055,372). The largest increases are bank fees and tax being mainly due to
the increase of interest expense and the increase of the Tajikistan imposed
Resource Tax due to the increase of ore grade from 91.01% to 92.08%. The
operating profit for the period under review was US$4,910,000 (30 June 2021:
US$4,848,000) and the loss before tax from the period was US$946,000 (30 June
2021: US$644,000). Cash and cash equivalents at the end of the period amounted
to US$11,791,206 (30 June 2021: US$2,140,259). As at 30 June 2022, the Group
had net liabilities of $31,304,559 (30 June 2021: net liabilities
$21,518,316).
Given the limited production and cash balances the Group continues to be
reliant on support from its major shareholder, CNMC, and its associates. In
January 2022, the Group executed a loan agreement with CNMC Trade Company
Limited (“CNMC Trade”) for a loan of up to USD $34.55 million (the“CNMC
Loan”). As announced in January 2022, this CNMC Loan has been used to repay
the existing China CITIC Bank Corporation Limited (“CITIC”) bank
facilities of USD $34.55m (being USD20m advanced in January 2021 (“First
Loan”) and USD14.55m advanced in March 2021 (“Second Loan”).
In addition, on 24 January 2022, the Group executed a foreign currency working
capital loan agreement with China CITIC Bank Corporation Limited (Zhuhai
Branch) (“CITIC”) for a loan facility of up to US$20 million (the “new
CITIC Loan”), with an annual interest at 3.00% over 6 month LIBOR, which was
used to repay US$20m of the CNMC Loan.
The Company currently has total debt facilities (including banking
facilities), before interest, of c.US$319 million.
Additional Tajik Tax
During August 2022, the Tajik Revenue Authority conducted a routine tax
inspection and concluded that the Tajik subsidiary (Pakrut LLC) had generated
a taxable profit of USD $4 million for the financial year ended 31 December
2021 (this was higher than the taxable profit originally recognized by the
Company for its subsidiary). Therefore, pursuant to Tajik tax regulations, an
associated tax charge of approximately 12% of the total net profit was due.
This was USD$500,000, which had not been previously provided for by the
Company. This has been provided for in these interim financial statements.
Outlook
The Company remains confident in its ability to achieve the internal
production target of 700,000 tons of ore set at the beginning of this year.
This is considered an achievable target.
The Company continues to seek to improve its production capacity through
technological innovation. Whilst improving production, the Company is also
focusing on perfecting and improving the smelting process by reducing
production costs, increasing recovery rates and improving competitiveness.
Whilst the Company has taken big strides in the production and operation of
the Pakrut gold mine and achieved much, there are still challenges to overcome
and targets to meet, such as: further high ore grade, improvement of internal
controls and improved warehouse management. And due to the insufficient
capacity of the flotation tailings pond, compared with the same period in
2021, the progress of production tasks lags behind to a certain extent. In the
second half of the year, the production and engineering construction
organization are under great pressure and the task is heavy, all of which we
will look to address in the coming months.
Uncertainty created by the COVID-19 pandemic with regards to future production
and operations still exists in Tajikistan, and the long term effects are
difficult to predict and estimate but there does appear to be indications that
the global community is bringing the situation under control, and the epidemic
situation in Tajik is stabilizing. The Company will continue to monitor the
situation, conduct regular nucleic acid inspection for all staff to ensure
their health and make every effort to meet pandemic prevention and control
requirements, as well as stabilizing the production and operation of Pakrut
gold mine.
I would like to take this opportunity to thank all our employees, management
and advisers for their continued hard work in 2022. I would also like to
extend my thanks to all our stakeholders for their continued backing over the
years. I very much look forward to updating our shareholders further on the
mine developments, production levels, new strategy and direction.
Zhang Hui
CEO
29 September 2022
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE SIX MONTHS ENDED 30 JUNE 2022
Unaudited Unaudited Audited
Six months ended 30 June 2022 Six months Year ended 31 December
ended 30 June 2021
2021
Note US$’000 US$’000 US$’000
Revenue 30,710 30,865 71,992
Cost of sales (15,469) (14,595) (37,256)
Gross profit 15,241 16,270 34,736
Other Operating income 8 - -
Administrative and other expenses (10,032) (9,055) (19,879)
Loss on foreign exchange (280) (143) (1,855)
Other operating expenses (27) (2,224) (2,416)
Operating profit 4,910 4,848 10,585
Interest income - 6 6
Finance costs (5,856) (5,498) (10,826)
Loss before Tax (946) (644) (235)
Income tax (3,971) (731) (6,012)
Loss for the period attributable to owners (4,917) (1,375) (6,247)
of the Company
Other comprehensive income - - -
Total comprehensive income for the period attributable to owners of the (4,917) (1,375) (6,247)
Company
Earnings per Share
Basic and diluted (cents) 3 (1.29) (0.35) (1.63)
All of the activities of the Group are classified as continuing.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2022
Unaudited Unaudited Audited
30 June 2022US$’000 30 June 2021 US$’000 31 December 2021US$’000
Non-Current Assets
Property, plant and equipment 4 359,111 368,036 364,337
Total Non-Current Assets 359,111 368,036 364,337
Current Assets
Inventories 18,991 18,238 17,334
Trade and other receivables 1,484 13,682 4,202
Cash and cash equivalents 11,791 2,140 7,472
Total Current Assets 32,266 34,060 29,008
Non-Current Liabilities
Borrowings 5 (65,000) (324,846) (65,000)
Provisions for other liabilities and charges (1,084) (995) (1,084)
Total Non-Current Liabilities (66,084) (325,841) (66,084)
Current Liabilities
Borrowings 5 (307,739) (34,550) (303,953)
Trade and other payables (48,859) (63,224) (49,696)
Total Current Liabilities (356,598) (97,774) (353,649)
Total Liabilities (422,682) (423,615) (324,841)
Net Liabilities (31,305) (21,518) (26,388)
Capital And Reserves
Share Capital 38 38 38
Share premium 65,901 65,901 65,901
Other reserves 10,175 10,175 10,175
Retained earnings (107,419) (97,632) (102,502)
Total Equity (31,305) (21,518) (26,388)
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE SIX MONTHS ENDED 30 JUNE 2022
Unaudited Unaudited Audited
Six months ended 30 June 2022 Six months ended 30 June 2021 Year ended31
US$’000 US$’000 Dec 2021
US$’000
Cash flows from Operating Activities
Loss before income tax (946) (646) (235)
Adjustments for:
Finance income - 4 (6)
Finance cost 5,856 5,498 10,826
Depreciation 6,215 5,617 7,972
Foreign exchange 280 - 1,853
Impairment - - -
Change in working capital:
Inventory (1,657) 2,327 (1,423)
Trade and other receivables 592 1,431 (1,869)
Trade and other payables (6,738) (7,055) 3,222
Other current assets 3,312 (12) (549)
Other current liabilities 1,353 - (5,890)
Tax paid
Net cash flows from Operating Activities 8,267 7,164 13,904
Cash flows from Investing Activities
Purchase of property, plant and equipment (1,336) (421) (994)
Payments for mining rights and construction in progress - - -
Disposal of PPE - - -
Interest received - 4 6
Net cash used in Investing Activities (1,336) (417) (989)
Cash flows from Financing Activities
Proceeds from borrowings 54,550 99,550 99,550
Repayment of borrowings (56,538) (130,095) (128,806)
Interest paid (624) (1,258) (3,384)
Net Cash (used in)/from Financing Activities (2,612) (31,803) (32,640)
Net (Decrease)/Increase in Cash and Cash (4,319) (25,056) (19,724)
Equivalents
Cash and cash equivalents at beginning of the period
7,472 27,196 27,196
Cash and cash equivalents at end of the period 11,791 2,140 7,472
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE SIX MONTHS ENDED 30 JUNE 2022
Share Share Other Retained Total
capital premium reserve earnings equity
US$’000 US$'000 US$'000 US$'000 US$'000
Balance at 1 January 2021 38 65,901 10,175 (96,257) (20,143)
Loss and total comprehensive income for the period - - - (1,375) (1,375)
Balance at 30 June 2021 38 65,901 10,175 (97,632) (21,518)
Loss and total comprehensive income for - - - (4,870) (4,870)
the period
Balance at 31 December 2021 (audited) 38 65,901 10,175 (102,502) (26,388)
Balance at 1 January 2022 38 65,901 10,175 (102,502) (26,388)
Loss and total comprehensive income for the period - - - (4,917) (4,917)
Balance at 30 June 2022 (unaudited) 38 65,901 10,175 (107,419) (31,305)
NOTES TO THE INTERIM FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2022
1. Accounting Policies
i) Basis of preparation
China Nonferrous Gold Limited (the "Company") is a company registered in the
Cayman Islands. The condensed consolidated interim financial statements of the
Company for the six months ended 30 June 2022 comprise the result of the
Company and its subsidiaries (together referred to as the "Group") and have
been prepared in accordance with the AIM Rules for Companies. As permitted,
the Company has chosen not to adopt IAS 34 "Interim Financial Statement" in
preparing these interim financial statements.
The consolidated interim financial information for the period 1 January 2022
to 30 June 2022 is unaudited and has not been reviewed in accordance with
International Standard on Review Engagements 2410 issued by the Auditing
Practices Board. In the opinion of the Directors the condensed interim
financial information for the period presents fairly the financial position,
and results from operations and cash flows for the period in conformity with
the generally accepted accounting principles consistently applied.
The condensed interim financial information incorporates unaudited comparative
figures for the interim period 1 January 2021 to 30 June 2021 and extracts
from the audited financial statements for the year to 31 December 2021. A copy
of the accounts for that year has been delivered to members. The auditor's
report on those financial statements was unqualified. The financial
information contained in this interim report does not constitute statutory
accounts.
The interim report has not been audited or reviewed by the Company's auditor.
The key risks and uncertainties and critical accountancy estimates remain
unchanged from 31 December 2021 and the accounting policies adopted are
consistent with those used in the preparation of its financial statements for
the year ended 31 December 2021.
ii) Cyclicality
The interim results for the six months ended 30 June 2022 are not necessarily
indicative of the results to be expected for the financial year 2022. The
operations of China Nonferrous Gold Limited may be subject to seasonal
variations depending on the severity of snowfall levels at the mine site. The
superposition of external unstable factors will affect the increasing
operating pressure in the second half of the year. All units and departments
of the company must have a clear understanding, take effective measures, make
efforts from the aspects of safety and environmental protection, production
organization, cost reduction and efficiency improvement, and strive to improve
the basic management level to ensure the smooth operation of the safety and
environmental protection situation and the smooth completion of the annual
production and operation tasks.
2. Going Concern
The Interim Financial Statements have been prepared assuming the Company will
continue as a going concern. Under the going concern assumption, an entity is
ordinarily viewed as continuing in business for the foreseeable future with
neither the intention nor the necessity of liquidation, ceasing trading or
seeking protection from creditors pursuant to laws and regulations.
In assessing whether the going concern assumption is appropriate, the
Directors take into account all available information for the foreseeable
future, in particular for the twelve months from the date of approval of the
Interim Financial Statements. This information includes:
* Management prepared cash flow projections;
* Estimations as to when full production will commence and first revenues will
be generated and associated cash flows will occur;
* The ability to complete the mine site work within the stated time frame and
budget;
* Sources of funding from external sources;
* Settle financial obligations as they fall due;
* The continued financial support of the considered controlling party; and
* The ability of management to renegotiate current financing arrangements as was
achieved in June 2021 in respect of the loan with China Nonferrous Metals
International Mining Co. Ltd.
As at the date of approval of these interim statements, and based upon
consideration of the above, the Directors are satisfied that the Group has
sufficient cash and loan facilities to finance the Group’s operating
expenses and any further development and construction of the Pakrut Gold
Project that is required. The Directors have a reasonable expectation that the
Group has adequate resources to continue in operational existence and thus
they continue to adopt the going concern basis of accounting in preparing the
interim results.
3. Earnings per Share
June 2022 June 2021 December 2021
Basic and diluted earnings per share(cents) (1.29)
(0.35) (1.63)
The basic earnings per share is calculated by dividing the loss attributable
to equity holders after tax of US$4,917,101 (30 June 2021: US$1,375,921) by
the weighted average number of shares in issue and carrying the right to
receive dividend. For all the periods disclosed up to 2022, the total number
of shares remains unchanged being 382,392,292 shares.
4. Property, Plant and Equipment
Land Office furniture and equipment Motor Plant and Assets under construction Total
US$000 US$000 vehicles machinery US$000 US$000
US$000 US$000 Producing
Mines
US$000
Cost
At 1 January 2021 33 693 8,698 23,277 378,425 - 411,125
Additions - - 190 805 - - 994
Disposals - (90) (3,465) (2,639) - - (6,193)
Settlement of historical liabilities - - - 4,307 - 4,307
At 31 December 2021 33 602 5,423 21,443 382,732 - 410,233
Additions - 13 - 486 - 492 991
Transfers - - - - - -
Disposals - - - - - - -
-
At 30 June 2022 33 615 5,423 21,929 382,732 492 411,224
Accumulated Depreciation
At 1 January 2021 - 354 6,641 14,056 16,873 - 37,924
Charge for the period - - 319 2,521 9,026 - 11,866
Disposals - (90) (2,112) (1,690) - - (3,892)
At 31 December 2021 - 264 4,847 14,888 25,899 - 45,898
Charge for the period 15 78 1,167 4,955 - 6,215
Disposals - - - - - - -
At 30 June 2022 - 279 4,926 16,054 30,854 - 52,113
Net Book Value
At 30 June 2022 32 336 497 5,876 351,878 492 359,111
At 31 December 2021 32 341 575 6,555 356,833 - 364,377
Depreciation for producing mines is calculated based on the unit of production
method amounting to $4,955,000 of depreciation charge for the 6 month period.
5. Borrowings
June 2022 June 2021 December 2021
US$000 US$000 US$000
Bank borrowings 85,000 99,550 99,550
Other loans 287,740 259,846 269,403
Less: unamortised borrowing costs - - -
Total 372,740 359,396 368,953
Non-current portion 65,000 324,846 65,000
Current portion 307,740 34,550 303,953
The fair value of borrowings equals their carrying amounts, as the impact of
discounting is not significant.
In January 2022 the Group executed a loan agreement with CNMC Trade Company
Limited (“CNMC Trade”) for a loan of up to USD $34.55 million (the “CNMC
Loan”). This CNMC Loan has been used to repay the existing China CITIC Bank
Corporation Limited (“CITIC”) bank facilities of USD $34.55m (being USD20m
advanced in January 2021 (“First Loan”) and USD14.55m advanced in March
2021 (“Second Loan”).
In January 2022, the Group executed a foreign currency working capital loan
agreement with China CITIC Bank Corporation Limited (Zhuhai Branch)
(“CITIC”) for a loan facility of up to US$20 million (the “new CITIC
Loan”), which was used to repay US$20m of the CNMC Loan.
Of the total borrowings $372,740,000 (including finance costs), $85,000,000
were provided by banks (including $65,000,000 by Bank of Shanghai and
$20,000,000 by China CITIC Bank), and the rest were provided by related
parties.
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