REG-China Nonferrous Gold Limited Interim Results for the Six-Month Period Ended 30 June 2020
30/09/2020 09:55
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Interim Results for the Six-Month Period Ended 30 June 2020
China Nonferrous Gold Limited 中国有色黄金有限公司
(‘CNG’ or the ‘Company’ and with its subsidiaries the “Group”)
Interim Results for the Six-Month Period Ended 30 June 2020
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 2020.
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=52297734&newsitemid=20200930005346&lan=en-US&anchor=www.cnfgold.com&index=1&md5=fe1e938d257fd9695a36e48a7e3172f1)
.
Highlights
* From January to June 2020, a total of 261,268 tons of ore was extracted from
the Pakrut gold mine; 344,652 tons of ore was processed at a grade of 2.28
g/t; and 17,411.21 oz gold ingots was poured.
* From January to June 2020, the Group sold 14,839.18 oz of gold ingots,
achieving sales revenue of US$24.33 million.
* Since the outbreak of COVID-19 in Tajikistan on April 30 2020, the Company has
taken appropriate steps and effective measures to ensure that staff at
protected at site. To date operations at the mine site at Pakrut continue as
normal, and there are no confirmed or suspected cases in the Company in
Tajikistan or China.
* After the outbreak of the Tajikistan epidemic, flights with China have not
been opened, the Company has organised a private chartered flight to transport
around 45 Chinese employees to Tajikistan from China, which has taken off on 8
August 2020. We therefore remain confident that the annual internal production
target can be achieved.
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=52297734&newsitemid=20200930005346&lan=en-US&anchor=www.cnfgold.com&index=2&md5=80ffcfd306b0f1dbd679e88944ec72e5)
) or contact:
China Nonferrous Gold Limited
Yu Lixian, Chairman
Tel: +86 10 8442 6681
WH Ireland Limited (NOMAD & Broker)
Katy Mitchell, James Sinclair-Ford
Tel: +44 (0)207 220 1666
Blytheweigh (PR)
Tim Blythe
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.
About Tajikistan
Tajikistan is a secular republic located in Central Asia. The country is a
member of the Commonwealth of Independent States and the Shanghai Cooperation
Organisation. Tajikistan hosts numerous operating precious metal mines as well
as the largest aluminum smelter in Central Asia. CNG's management team has
extensive experience in the mining industry in Tajikistan.
Chairman’s Statement
As Chairman of the board, it gives me great pleasure to present the
Chairman’s statement of the Interim Results for the Six-Month Period Ended
30 June 2020. Following the first year of successful complete production in
2019, the Pakrut gold mine entered steady state production and full operation
in 2020, making the Group a significant gold producer in Tajikistan.
From January to June 2020, a total of 261,268 tons of ore was extracted from
the Pakrut gold mine During that same six month period:
* 344,652 tons of ore was processed;
* the average grade of the raw ore was 2.28 g/t;
* the recovery rate of processing was 92.07%;
* 9,979 tons of concentrate was produced from the processing plant; and
* 8,924 tons of concentrate among them was treated in the smelter (the
comprehensive recovery rate of smelting was 85.96%) and 17,411.21 oz gold
ingots were poured.
From 2020, the gold price began to rise, especially after March 2020, which
has benefited the Group. From January to August 2020, the Group sold 21,314.66
oz of gold ingots, achieving sales revenue of US$36.51million (unaudited),
with an average sales price of US$1,712.96 / oz. However, there can be no
guarantee that these sales will be achieved for the rest of the year.
Financial Results
The Company continued its production and operation work during the first six
months of 2020. Administration expenditure was US$8,063,474 (30 June 2019:
US$6,306,764). The largest increase is the depreciation expense in relation to
PPE mainly because CIP was moved into PPE and its depreciation began in 2019.
The operating profit was US$1,503,000 (30 June 2019: US$278,000). Total cash
equivalents at the end of the period amounted to US$19,548,292 (30 June 2019:
US$16,147,939). As at 30 June 2020, the Group held net liabilities of
$20,712,868 (30 June 2019: net liabilities $1,363,000).
Given the limited production and cash balances the Group has been reliant on
support from its major shareholder, CNMC, and its associates. In April 2020,
the Company drew down US$14.50 million on a new US$30 million loan facility
with China Construction Bank (Asia) Corporation Limited, which is being used
for general working capital purposes to fund the Pakrut gold mine. On June 30,
2020, the principal amount of CCB Macau's due loan of USD 5 million has been
repaid.
The Group commenced full production in January 2019. As mentioned earlier, the
Company currently has borrowings of c.US$362m (of which c.US$353m is the
principal loan amount and the balance represents accrued interest), the
majority of which is due for repayment before June 2021 (and a significant
proportion of which is due for repayment before the end of December 2020). The
Directors believe that the Company’s major shareholder will continue to
support the Company but in order to ensure the repayment of existing loans, a
broader refinancing is required. Discussions are ongoing and are expected to
be completed in the near term. Further updates will be provided when a
refinancing package is entered into.
Outlook
With the normal production and operation of Pakrut gold mine, the Company is
confident in its ability to achieve the production target of 680,000 tons of
ore set at the beginning of this year. This is considered a prudent target in
light of the uncertainties presented by the COVID pandemic.
The Company is continuing to enhance its production capacity. 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.
While we have 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, all of which I am confident to accomplish in the coming
months.
Overall, however, the uncertainty created by the COVID-19 pandemic on
production and operations still exists in Tajikistan, and the long term
effects are difficult to predict and estimate.
I would like to take this opportunity to thank all our employees, management
and advisers for their continued hard work in 2020. 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.
Yu Lixian
Chairman
30 September 2020
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE SIX MONTHS ENDED 30 JUNE 2020
Unaudited Unaudited Audited
Six months ended 30 June 2020 Six months Year ended 31 December
ended 30 June 2019
2019
Note US$’000 US$’000 US$’000
Revenue 24,329 20,881 49,157
Cost of sales (14,134) (13,582) (32,842)
Gross profit 10,195 7,299 16,315
Other Operating income - - 116
Administrative and other expenses (8,063) (6,307) (16,337)
(Loss)/Gain on foreign exchange (629) (714) (905)
Other operating expenses - - (136)
Operating profit/(loss) 1,503 278 (947)
Interest income 50 218 270
Finance costs (8,465) (9,812) (20,796)
-
Loss before Tax (6,927) (9,316) (21,473)
Income tax - (243) (508)
Loss for the period attributable to owners (6,927) (9,559) (21,981)
of the Company
Other comprehensive income - - -
Total comprehensive income for the period attributable to owners of the (6,927) (9,559) (21,981)
Company
Earnings per Share
Basic and diluted (cents) 3 (1.81) (2.49) (5.75)
All of the activities of the Group are classified as continuing.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2020
Unaudited Unaudited Audited
30 June 2020US$’000 30 June 2019 US$’000 31 December 2019US$’000
Non-Current Assets
Property, plant and equipment 5 400,701 410,826 402,548
Total Non-Current Assets 400,701 410,826 402,548
Current Assets
Inventories 17,035 4,248 16,856
Trade and other receivables 6,373 6,912 4,766
Cash and cash equivalents 19,548 16,148 11,120
Total Current Assets 42,956 27,308 32,743
Non-Current Liabilities
Borrowings 4 (18,586) (78,650) (103,586)
4
Provisions for other liabilities and charges (913) (157,725) (913)
Total Non-Current Liabilities (19,499) (236,375) (104,499)
Current Liabilities
Borrowings 4 (267,527)
(362,077) (837)
Trade and other payables (82,792) (202,285) (77,050)
Total Current Liabilities (444,870) (203,122) (344,577)
Total Liabilities (464,369) (439,497) (311,843)
Net Liabilities (20,712) (1,363) (13,785)
Capital And Reserves
Share Capital 38 38 38
Share premium 65,901 65,901 65,901
Other reserves 10,175 10,175 10,175
Retained earnings (96,826) (77,477) (89,899)
Total Equity (20,712) (1,363) (13,785)
CONSOLIDATED STATEMENT OF CASH FLOWS
AS AT 30 JUNE 2020
Unaudited Unaudited Audited
Six months ended 30 June 2020 Six months ended 30 June2019 Year ended31
US$’000 US$’000 Dec 2019
US$’000
Cash flows from Operating Activities
Loss before income tax (6,927) (9,316) (21,473)
Adjustments for:
Finance income (50) (218) (270)
Finance cost 8,465 9,812 20,796
Depreciation 3,741 5,056 7,722
Foreign exchange - - 905
Impairment - - -
Change in working capital:
Inventory 178 13,095 487
Trade and other receivables (1,620) (2,217) (904)
Trade and other payables (11,054) (4,653) (7,039)
Other current assets (13) (988) (154)
Other current liabilities 353 1,109 3,554
Tax paid (244) -
Net cash flows from Operating Activities 2,906 11,436 3,624
Cash flows from Investing Activities
Purchase of property, plant and equipment (1,892) (6,198) (5,842)
Payments for mining rights and construction in progress - - -
Disposal of PPE - - -
Interest received 50 218 270
Net cash used in Investing Activities (1,840) (5,980) (5,572)
Cash flows from Financing Activities
Proceeds from borrowings 14,550 20,000 20,000
Repayment of borrowings (5,000) (5,000) (10,000)
Interest paid (2,186) (12,671) (5,295)
Net Cash (used in)/from Financing Activities 7,364 2,329 4,705
Net Increase/(Decrease) in Cash and Cash 8,428 7,785 2,757
Equivalents
Cash and cash equivalents at beginning of the period
11,120 8,363 8,363
Cash and cash equivalents at end of the period 19,548 16,148 11,120
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE SIX MONTHS ENDED 30 JUNE 2020
Share Share Other Retained Total
capital premium reserve earnings equity
US$’000 US$'000 US$'000 US$'000 US$'000
Balance at 1 January 2019 38 65,901 10,175 (67,918) 8,196
Loss and total comprehensive income for the period - - - (9,559) (9,559)
Balance at 30 June 2019 38 65,901 10,175 (77,477) (1,363)
Loss and total comprehensive income for - - - (12,442) (12,442)
the period
Balance at 31 December 2019 (audited) 38 65,901 10,175 (89,899) (13,785)
Balance at 1 January 2020 38 65,901 10,175 (89,899) （13,785)
Loss and total comprehensive income for the period - - - (6,927) (6,927)
Balance at 30 June 2020 (unaudited) 38 65,901 10,175 (96,826) (20,712)
NOTES TO THE INTERIM FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2020
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 2020 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 2020
to 30 June 2020 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 2019 to 30 June 2019 and extracts
from the audited financial statements for the year to 31 December 2019. The
financial information contained in this interim report does not constitute
statutory accounts.
The comparatives for the full year ended 31 December 2019 are not the
Company's full statutory accounts for that year. A copy of the accounts for
that year have been delivered to members. The auditor's report on those
financial statements was unqualified.
The interim report has not been audited or reviewed by the Company's auditor.
The key risks and uncertainties and critical accountancy estimates remain
unchanged from 31 December 2019 and the accounting policies adopted are
consistent with those used in the preparation of its financial statements for
the year ended 31 December 2019.
ii) Cyclicality
The interim results for the six months ended 30 June 2020 are not necessarily
indicative of the results to be expected for the financial year 2020. The
operations of China Nonferrous Gold Limited may be subject to seasonal
variations depending on the severity of snowfall levels at the mine site.
Severe levels may impact the ability to continue operations and result in
damage to the mine site.
2. Going Concern
The Interim Financial Statements have been prepared assuming the Company will
continue as a going concern. Under the going concern assumption, an entity is
ordinarily viewed as continuing in business for the foreseeable future with
neither the intention nor the necessity of liquidation, ceasing trading or
seeking protection from creditors pursuant to laws and regulations.
In assessing whether the going concern assumption is appropriate, the
Directors take into account all available information for the foreseeable
future, in particular for the twelve months from the date of approval of the
Interim Financial Statements. This information includes:
* Management prepared cash flow projections;
* Estimations as to when full production will commence and first revenues will
be generated and associated cash flows will occur;
* The ability to complete the mine site work within the stated timeframe and
budget;
* Sources of funding from external sources;
* Settle financial obligations as they fall due;
* The continued financial support of the considered controlling party; and
* The ability of management to renegotiate current financing arrangements as was
achieved in June 2020 in respect of the loan with China Nonferrous Metals
International Mining Co. Ltd.
* The ultimate parent will continue to support the Group and therefore the
directors believe that funding and financial support will be forthcoming if
required although this is not guaranteed.
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 2020 June 2019 December 2019
Basic and diluted earnings per share(cents) (1.81)
(2.49)
(5.75)
The basic earnings per share is calculated by dividing the loss attributable
to equity holders after tax of US$6,927,214 (30 June 2019: US$9,558,940) by
the weighted average number of shares in issue and carrying the right to
receive dividend. For all the periods disclosed up to 2020, the total number
of shares remain unchanged being 382,392,292 shares.
4. Borrowings
June 2020 June 2019 December 2019
US$000 US$000 US$000
Bank borrowings 104,550 100,000 95,000
Other loans 276,113 260,010 276,113
Less: unamortised borrowing costs - - -
Total 380,663 360,010 371,113
Non-current portion 18,586 202,285 103,586
Current portion 362,077 157,724 267,527
The fair value of borrowings equals their carrying amounts, as the impact of
discounting is not significant.
In April 2020, the Company drew down US$14.50 million on a new US$30 million
loan facility with China Construction Bank (Asia) Corporation Limited, which
is being used for general working capital purposes to fund the Pakrut gold
mine.
The Company extended the repayment period of loans in place with CNMC Trade
Company Limited (CNMC Trade), totalling US$146.50 million, to December 2020.
The Company currently has total debt facilities (including banking
facilities), before interest, of c.US$353.7 million (being the US$341m
announced in July 2020, plus the CNMIM loan of US$12.7m).
5. 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 2019 32 755 10,772 14,990 - - 26,549
Additions - 152 - 2,129 - 3,561 5,842
Transfer - - - - 398,639 761 399,400
Disposals - (320) (2,074) - - - (2,394)
At 31 December 2019 32 587 8,698 17,119 398,639 4,322 429,396
Additions - - - - 1,892 - -
Transfers - - - - 4,322 (4,322) -
Disposals - - - - - - -
At 30 June 2020 32 587 8,698 17,119 404,853 - 429,396
Accumulated Depreciation
At 1 January 2019 - 611 7,909 10,607 - - 19,127
Charge for the period - 31 392 869 8,823 - 10,116
Disposals - (320) (2,074) - - - (2,394)
At 31 December 2019 - 322 6,227 11,476 8,823 - 26,849
Charge for the period 18 1,262 1,360 1.101 3,741
Disposals - - - - - -
At 30 June 2020 - 340 7,489 12,836 9,924 30,589
Net Book Value
At 30 June 2020 32 247 1,209 4,283 394,929 - 400,701
At 31 December 2019 32 265 2,471 5,643 389,816 4,322 402,548
As the mine started full production from January 2019, all assets included in
‘Mines under construction’ are transferred to ‘Producing mines’ as
part of Property, Plant and Equipment. Therefore, as at 31 December 2019 and
30 June 2020, there is nil balance being carried forward for ‘Mines under
construction’. Total depreciation is $3,741,760 for the 6 months period.
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