REG-China Nonferrous Gold Limited Interim Results for the Six-Month Period Ended 30 June 2021
29/09/2021 12:40
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Interim Results for the Six-Month Period Ended 30 June 2021
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 2021
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 2021.
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=52500445&newsitemid=20210929005494&lan=en-US&anchor=www.cnfgold.com&index=1&md5=19f184e967033ab5724f326dc1bff65c)
.
Highlights
* From January to June 2021, a total of 343,403 tons of ore was extracted from
the Pakrut gold mine; 363,030 tons of ore was processed at a grade of 1.95
g/t; and 19,337 oz. gold ingots were poured.
* From January to June 2021, the Group sold 17,288 oz. of gold ingots, achieving
sales revenue of US$30.87 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. It is worth noting that Tajikistan officials announced that
since August 29 2021, no new COVID-19 infection cases have been found in
Dushanbe, the capital of Tajikistan. 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.
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=52500445&newsitemid=20210929005494&lan=en-US&anchor=www.cnfgold.com&index=2&md5=236f49318c151b40974a258444e2fd76)
) 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
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.
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 2021.
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 2021, a total of 343,403 tons of ore was extracted from
the Pakrut gold mine. During that same six month period:
* 363,030 tons of ore was processed;
* the average grade of the raw ore was 1.95 g/t;
* the recovery rate of processing was 93.63%;
* 10,003.47 tons of concentrate was produced from the processing plant; and
* 9,346 tons of concentrate was treated in the smelter (the comprehensive
recovery rate of smelting was 92.46%) and 19,337 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 June 2021, the Group sold 17,288 oz.
of gold ingots, achieving sales revenue of US$30.87million (unaudited), with
an average sales price of US$1,785.62 / oz.
Financial Results
The Company continued its production and operation work during the first six
months of 2021. Administration expenditure was US$9,055,372 (30 June 2020:
US$8,063,474). The largest increases are insurance expenses and travel
expenses being mainly due to the increase of annual insurance premium for the
fixed assets of Pakrut and the increase of air ticket and repatriation
isolation fee. The non-operating costs were increased largely because as part
of the terms of the historic Investment Agreement with the Government of the
republic of Tajikistan, pursuant to which the Company , was obliged to donate
$2.21m for certain social projects in Tajikistan Government. The operating
profit was US$4,848,000 (30 June 2020: US$1,503,000). Total cash equivalents
at the end of the period amounted to US$2,140,259 (30 June 2020:
US$19,548,292). As at 30 June 2021, the Group had net liabilities of
$21,518,316 (30 June 2020: net liabilities $20,712,868).
Given the limited production and cash balances the Group has been reliant on
support from its major shareholder, CNMC, and its associates. US$20m of the
CITIC Loan has been drawn down in January 2021(short-term liability) to
replace the China Construction Bank (CCB) Macau loan of US$20m (long-term
liability) which became due in January 2021. The second draw down of the CITIC
loan of US$14.55m in March 2021 was used to repay the CCB Asia loan of
US$14.55m which was due for repayment in March 2021.
The total amount of US$65m being a loan facility from the Shanghai (Hong Kong)
Limited (BOS) has been drawn down on 28 June 2021 in order to repay the CCBC
Macau loan, of which US $65m remains outstanding. As announced in February
2021, the Company has repaid US$20m of its outstanding loan with CNMC
International Capitals Company Ⅱ Limited (CNMC International) in accordance
with its terms. And in June 2021, the Company repaid US$9.25m to CNMC
International which resulted in the decline of finance cost. Total debt now
equals $359.396m (including interest).
The Group commenced full production in January 2019, enabling it to generate
ongoing working capital. As mentioned earlier, in order to ensure the
repayment of existing loans, a broader refinancing is required. Discussions
are ongoing and further updates will be provided in due course.
Outlook
The Company remains confident in its ability to achieve the internal
production target of 680,000 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.
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, such as: further high ore grade, improvement of internal
controls and improved warehouse management, 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. The Company will
continue to monitor the situation 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 2021. 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 2021
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE SIX MONTHS ENDED 30 JUNE 2021
Unaudited Unaudited Audited
Six months ended Six months ended Year ended
30 June 2021 30 June 31 December
2020 2020
Note US$’000 US$’000 US$’000
Revenue 30,865 24,329 64,516
Cost of sales (14,595) (14,134) (35,297)
Gross profit 16,270 10,195 29,219
Other Operating income - - 1
Administrative and other expenses (9,055) (8,063) (17,827)
Loss on foreign exchange (143) (629) (1,076)
Other operating expenses (2,224) - (46)
Operating profit 4,848 1,503 10,271
Interest income 6 50 196
Finance costs (5,498) (8,465) (15,999)
Loss before Tax (644) (6,927) (5,532)
Income tax (731) - (824)
Loss for the period attributable to owners (1,375) (6,927) (6,356)
of the Company
Other comprehensive income - - -
Total comprehensive income for the period attributable to owners of the (1,375) (6,927) (6,356)
Company
Earnings per Share
Basic and diluted (cents) 3 (0.35) (1.81) (1.66)
All of the activities of the Group are classified as continuing.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2021
Unaudited Unaudited Audited
30 June 2021 30 June 2020 31 December 2020
US$’000 US$’000 US$’000
Non-Current Assets
Property, plant and equipment 5 368,036 400,701 373,201
Total Non-Current Assets 368,036 400,701 373,201
Current Assets
Inventories 18,238 17,035 15,911
Trade and other receivables 13,682 6,373 5,649
Cash and cash equivalents 2,140 19,548 27,196
Total Current Assets 34,060 42,956 48,756
Non-Current Liabilities
Borrowings 4 (324,846) (18,586) (19,822)
Provisions for other liabilities and charges (995) (913) (995)
Total Non-Current Liabilities (325,841) (19,499) (20,817)
Current Liabilities
Borrowings 4 (34,550) (362,077) (368,919)
Trade and other payables (63,224) (82,792) (52,363)
Total Current Liabilities (97,774) (444,870) (421,282)
Total Liabilities (423,615) (464,369) (372,526)
Net Liabilities (21,518) (20,712) (20,143)
Capital And Reserves
Share Capital 38 38 38
Share premium 65,901 65,901 65,901
Other reserves 10,175 10,175 10,175
Retained earnings (97,632) (96,826) (96,257)
Total Equity (21,518) (20,712) (20,143)
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE SIX MONTHS ENDED 30 JUNE 2021
Unaudited Unaudited Audited
Six months ended Six months ended Year ended
30 June 2021 30 June 2020 31 Dec 2020
US$’000 US$’000 US$’000
Cash flows from Operating Activities
Loss before income tax (646) (6,927) (5,451)
Adjustments for:
Finance income 4 (50) (196)
Finance cost 5,498 8,465 15,999
Depreciation 5,617 3,741 11,072
Foreign exchange - - 1,076
Impairment - - -
Change in working capital:
Inventory 2,327 178 945
Trade and other receivables 1,431 1,620 (1,004)
Trade and other payables (7,055) (4,461) (5,405)
Other current assets (12) (13) 121
Other current liabilities - 353 (19)
Tax paid -
Net cash flows from Operating Activities 7,164 2,906 17,137
Cash flows from Investing Activities
Purchase of property, plant and equipment (421) (1,892) (1,942)
Payments for mining rights and construction in progress - - -
Disposal of PPE - - -
Interest received 4 50 196
Net cash used in Investing Activities (417) (1,842) (1,746)
Cash flows from Financing Activities
Proceeds from borrowings 99,550 14,550 14,550
Repayment of borrowings (130,095) (5,000) (10,000)
Interest paid (1,258) (2,186) (3,866)
Net Cash (used in)/from Financing Activities (31,803) 7,364 684
Net (Decrease)/Increase in Cash and Cash (25,056) 8,428 16,075
Equivalents
Cash and cash equivalents at beginning of the period
27,196 11,120 11,120
Cash and cash equivalents at end of the period 2,140 19,548 27,196
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE SIX MONTHS ENDED 30 JUNE 2021
Share Share Other Retained Total
capital premium reserve earnings equity
US$’000 US$'000 US$'000 US$'000 US$'000
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 38 65,901 10,175 (96,826) (20,712)
Loss and total comprehensive income for - - - 571 571
the period
Balance at 31 December 2020 (audited) 38 65,901 10,175 (96,257) (20,143)
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 (unaudited) 38 65,901 10,175 (97,632) (21,518)
NOTES TO THE INTERIM FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2021
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 2021 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 2021
to 30 June 2021 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 2020 to 30 June 2020 and extracts
from the audited financial statements for the year to 31 December 2020. 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 2020 and the accounting policies adopted are
consistent with those used in the preparation of its financial statements for
the year ended 31 December 2020.
ii) Cyclicality
The interim results for the six months ended 30 June 2021 are not necessarily
indicative of the results to be expected for the financial year 2021. 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.
NOTES TO THE INTERIM FINANCIAL
FOR THE SIX MONTHS ENDED 30 JUNE 2021
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.
* 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.
NOTES TO THE INTERIM FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2021
3. Earnings per Share
June 2021 June 2020 December 2020
Basic and diluted earnings per share(cents) (0.36)
(1.81)
(1.66)
The basic earnings per share is calculated by dividing the loss attributable
to equity holders after tax of US$1,375,921 (30 June 2020: US$6,927,214) by
the weighted average number of shares in issue and carrying the right to
receive dividend. For all the periods disclosed up to 2021, the total number
of shares remains unchanged being 382,392,292 shares.
NOTES TO THE INTERIM FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2021
4. Borrowings
June 2021 June 2020 December 2020
US$000 US$000 US$000
Bank borrowings 99,550 104,550 99,550
Other loans 259,846 276,113 289,191
Less: unamortised borrowing costs - - -
Total 359,396 380,663 388,741
Non-current portion 324,846 18,586 19,822
Current portion 34,550 362,077 368,919
The fair value of borrowings equals their carrying amounts, as the impact of
discounting is not significant.
In January 2021, the Company drew down US$20 million to be used for the
replacement of CCB Macau loan of US $20m. A second draw down of US$14.55m in
March 2021 was used to repay the CCB Asia loan of US$14.55m which was due for
repayment in March 2021. These are all short-term borrowings which come from
external borrowings of $34.55m from China CITIC Bank Corporation Limited
(Zhuhai Branch) (“CITIC).
The total amount of US$65m of the Shanghai (Hong Kong) Limited (BOS) Loan has
been drawn down on 28 June 2021 in order to repay the CCBC Macau loan.US $65m
of the BOS Loan remains outstanding. As announced in February 2021, the
Company repaid US$20m of its outstanding loan with CNMC International Capitals
Company Ⅱ Limited (CNMC International) in accordance with its terms. In June
2021, the Company repaid a further US$9.25m to CNMC International.
Of the total borrowings $324.85m (including finance costs) of long-term
borrowings are provided by related parties.
CNMC trade: A loan of US$126.5m which was due to be repaid on 20 December 2020
was extended by agreement to 20 December 2022. A loan of US$20m which was due
to be repaid on 26 November 2020 has been extended to 26 November 2022.
CNMC International: A loan of US$70m which was due to be repaid on 8 December
2020 has been extended to 8 December 2022.
Shanghai (Hong Kong) Limited (BOS) :The Company has executed an agreement with
Bank of Shanghai (Hong Kong) Limited (“BOS”) for a loan facility of up to
US $65 million which is for a maximum of 24 months . This is due to expire on
23 June 2023.
NOTES TO THE INTERIM FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2021
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 2020 32 587 8,698 17,119 398,639 4,322 429,397
Additions - 106 - 1,836 - - 1,942
Transfer - - - 4,322 - (4,322) -
Disposals - - - - - - -
Settlement of historical liabilities - - - (20,214) (20,214)
At 31 December 2020 32 693 8,698 23,277 378,425 - 411,125
Additions - 10 254 189 - - 453
Transfers - - - - - - -
Disposals - - - - - - -
At 30 June 2021 32 703 8,952 23,466 378,425 - 411,578
Accumulated Depreciation
At 1 January 2020 - 322 6,227 11,476 8,823 - 26,848
Charge for the period - 32 414 2,580 8,050 - 11,076
Disposals - - - - - - -
At 31 December 2020 - 354 6,641 14,056 16,873 - 37,924
Charge for the period 18 (2,090) 3,537 4,153 5,618
Disposals - - - - - -
At 30 June 2021 - 372 4,551 17,593 21,026 43,542
Net Book Value
At 30 June 2021 32 331 4,401 5,873 357,399 - 368,036
At 31 December 2020 32 339 2,057 9,221 361,552 - 373,201
Depreciation for the producing mines is calculated based on the unit of
production method resulting to $4,153,000 of depreciation charge for the 6
months period.
NOTES TO THE INTERIM FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2021
6. Subsequent events
In order to streamline the administration of the Group of CNG, reduce the
expenditures and ease the financial position, the Board approved the
dissolution of two subsidiary companies and one representative office within
the Group. Kryso Resources Limited (UK) and International Mining Supplies
& Services Limited will be struck off and dissolved in October 2021. Kryso
Resources Limited (BVI) Beijing Representative Office was dissolved in August
2021. All the assets and liabilities of these three companies have been
transferred to Kryso Resources Limited (BVI), another subsidiary company
within the Group.
In future, the Group will continue to concentrate on the development of Pakrut
mine, and look forward to expanding their interest in mineral resources in the
surrounding areas of Central Asia.
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