REG-China Nonferrous Gold Limited Interim Results for the Six-Month Period Ended 30 June 2023
22/09/2023 12:30
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Interim Results for the Six-Month Period Ended 30 June 2023
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 2023
China Nonferrous Gold Limited (AIM: CNG), the mineral exploration and mining
company currently mining the Pakrut Gold Project (‘the Pakrut Project’) in
the Republic of Tajikistan, today announces its interim results for the
six-month period ended 30 June 2023.
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=53559741&newsitemid=20230922568536&lan=en-US&anchor=www.cnfgold.com&index=1&md5=1ed33ca88aaef8d4e607756ed7e79d04)
.
Highlights
* From January to June 2023, a total of 238,917 tons (30 June 2022: 302,590
tons) of ore was extracted from the Pakrut gold mine; 268,034 tons of ore was
processed at a grade of 2.32 g/t; and 15,192 oz. gold ingots were poured.
* From January to June 2023, the Group sold 15,192 oz. (30 June 2022: 16,484
oz.) of gold ingots, achieving sales revenue of US$30.17 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=53559741&newsitemid=20230922568536&lan=en-US&anchor=www.cnfgold.com&index=2&md5=80537302651be0acd3121cdb1a3f14a0)
) or contact:
China Nonferrous Gold Limited
Feng Zhishuo, Managing Director
Tel: +86 10 8442 6627
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 in 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, I present the CEO’s statement of the Interim Results
for the Six-Month Period Ended 30 June 2023. Pakrut continued producing during
the first half of the year, making the Group an important gold producer in
Tajikistan.
From January to June 2023, a total of 238,917 tons (30 June 2022: 302,590
tons) of ore was extracted from the Pakrut gold mine. In January 2023, an
avalanche occurred locally in Tajikistan, damaging the electric power
transmission tower that supplied the mine and resulting in a power outage. The
power shortage resulted in underground mining and processing plants, and
therefore operations at the mine site, being suspended for approximately two
months. In March 2023, the road leading to the mining site was been repaired
and the site resumed normal operation.
During that same six month period:
* 268,034 tons of ore was processed;
* the average grade of the raw ore was 2.32 g/t;
* the recovery rate of processing was 90.27%;
* 7,977.17 tons of concentrate was produced from the processing plant; and
* 7,467.17 tons of concentrate was treated in the smelter (the comprehensive
recovery rate of smelting was 90.76%) and 15,192 oz. gold ingots were poured.
From January to June 2023, the Group sold 15,192 oz. (30 June 2022: 16,484
oz.) of gold ingots, achieving sales revenue of US$30.17million (unaudited)
(30 June 2022: $30.71million), with an average sales price of US$1,986.04 /
oz. (30 June 2022: $1,863.02 / oz.).
Financial Results
The Company continued its production and operation work during the first six
months of 2023. Administration expenditure was US$10,227,386 (30 June 2022:
US$10,032,340). The largest increase in expenditure is staff salaries. The
operating profit for the period under review was US$3,882,000 (30 June 2022:
US$4,910,000) and the loss before tax from the period was US$17,166,096 (30
June 2022: US$946,000). The increase in loss before tax is mainly due to
increased finance costs with changes in market interest rates. Cash and cash
equivalents at the end of the period amounted to US$3,626,620 (30 June 2022:
US$11,791,206). As at 30 June 2023, the Group had net liabilities of
$32,606,400 (30 June 2022: net liabilities $31,304,559).
In January 2023, the Group executed a loan agreement with CNMC Trade Company
Limited (“CNMC Trade”) for a loan of up to USD $19.50 million (the “CNMC
Loan”) including an annual interest rate at 0.5% plus 3 month LIBOR which
was repayable within 3 months from the date of drawdown. In July 2023, an
extension contract was signed with CNMC Trade, and this loan has been extended
to 19 April 2024. The CNMC Loan was used to repay the existing China CITIC
Bank Corporation Limited (“CITIC”) bank facilities of USD $20m.
In June 2023, the Company also executed a loan agreement with CNMC Trade for a
loan of up to USD $65 million (the “Further CNMC Loan”) including an
annual interest rate at 0.5% plus 3 month LIBOR, which was due for repayment
on 6 September 2023. The Further CNMC Loan was used to repay the existing Bank
of Shanghai (Hong Kong) Limited (“BOS”) loan facility of USD $65m, which
was due for repayment on 9 June 2023.
During the first quarter of 2023, the Group repaid US$1.9m of an earlier CNMC
Trade loan.
After the end of the period under review, on 12 July 2023, an extension
contract was signed with CNMC Trade, pursuant to which the repayment date for
the loan of US$123.6m was extended to 20 December 2023, the repayment date for
the loan of US$20m was extended to 26 November 2023, the repayment date for
the loan of US$14.55m was extended to 31 December 2023, and the repayment date
for the loan of US$19.50m was extended to 19 April 2024. An extension contract
was signed with CNMC International Capitals CompanyⅡLimited (CNNICCⅡ) to
extend the repayment date for the loan of US$60.74m to 8 December 2023. The
annual interest rate of the above loans has been changed to SOFR plus 0.936%
(it was previously 3.25% over 3 month LIBOR), and this new interest rate has
been applied retrospectively from 16 March 2023. CNMIM has also agreed to
extend an expired loan of US$12.68m with CNG to 31 May 2024.
As at the date of this announcement, the Company had total debt facilities of
c.US$316 million, excluding the interest accrued.
Outlook
The Directors believe the Pakrut project remains on track to achieve the
production target of 700,000 tons of ore per annum set at the beginning of
this year. 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 Directors consider that the Company has taken big strides in the
production and operation at the Pakrut gold mine and has achieved much, there
are still challenges to overcome. It was very disappointing to receive the
updated SRK Report (see announcement dated 24 April 2023) which updated the
JORC Compliant Resource and reduced the resource at the Company’s Pakrut
project and the estimated life of mine. This resulted in an impairment charge
of $265,952,925 being recorded in the 2022 financial year.
Furthermore, after the end of the period under review, the Company received
notice that the loan of US$65m with CNMC Trade would not be extended. CNMC
Trade has requested that the Company prepare a repayment plan for approval. At
today’s date CNG has a cash balance of $1,099,307. Therefore, the
Company’s ability to continue as a going concern is now reliant on the
continued forbearance of CNMC Trade. Should the Company and CNMC Trade be
unable to agree an acceptably phased repayment schedule and/or the Company be
unable to refinance the loan then it is likely that the Company may need to be
wound up.
The Directors of the Company are working with CNMC Trade to consider their
options and further updates will be provided in due course.
I would like to take this opportunity to thank all our employees, management
and advisers for their continued hard work in 2023. I would also like to
extend my thanks to all our stakeholders for their continued backing over the
years. I very much look forward to updating our shareholders further on the
mine developments, production levels, new strategy and direction.
Feng Zhishuo
CEO
22 September 2023
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE SIX MONTHS ENDED 30 JUNE 2023
Unaudited Unaudited Audited
Six months ended 30 June 2023 Six months Year ended 31 December2022
ended 30 June
2022
Note US$’000 US$’000 US$’000
Revenue 30,172 30,710 68,525
Cost of sales (16,081) (15,469) (40,085)
Gross profit 14,091 15,241 28,440
Impairment of Property, plant and equipment - - (265,953)
Other Operating income - 8 -
Administrative and other expenses (10,227) (10,032) (25,109)
Gain/(Loss) on foreign exchange 21 (280) 1,075
Other operating expenses (2) (27) (213)
Operating profit/(loss) 3,882 4,910 (261,760)
Interest income 1 - 2
Finance costs (11,984) (5,856) (15,242)
Loss before Tax (8,101) (946) (277,000)
Income tax (4,532) (3,971) (10,043)
Loss for the period attributable to owners (12,633) (4,917) (287,043)
of the Company
Other comprehensive income - - -
Total comprehensive income for the period attributable to owners of the (12,633) (4,917) (287,043)
Company
Earnings per Share
Basic and diluted (cents) 3 (33.04) (1.29) (750.65)
All of the activities of the Group are classified as continuing.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2023
Unaudited Unaudited Audited
30 June 2023US$’000 30 June 2022 US$’000 31 December 2022 US$’000
Non-Current Assets
Property, plant and equipment 4 61,528 359,111 65,074
Total Non-Current Assets 61,528 359,111 65,074
Current Assets
Inventories 16,562 18,991 16,709
Trade and other receivables 5,173 1,484 2,514
Cash and cash equivalents 3,627 11,791 4,544
Total Current Assets 25,362 32,266 23,767
Non-Current Liabilities
Other payables - - (1,235)
Borrowings 5 - (65,000) -
Provisions for other liabilities and charges (2,658) (1,084) (2,658)
Total Non-Current Liabilities (2,658) (66,084) (3,893)
Current Liabilities
Borrowings 5 (386,959) (307,739) (379,368)
Trade and other payables (23,337) (48,859) (19,011)
Total Current Liabilities (410,296) (356,598) (398,379)
Total Liabilities (412,954) (422,682) (374,612)
Net Liabilities (326,064) (31,305) (313,431)
Capital And Reserves
Share Capital 38 38 38
Share premium 65,901 65,901 65,901
Other reserves 10,175 10,175 10,175
Retained earnings (402,178) (107,419) (389,545)
Total Equity (326,064) (31,305) (313,431)
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE SIX MONTHS ENDED 30 JUNE 2023
Unaudited Unaudited Audited
Six months ended 30 June 2023 Six months Year ended 31
US$’000
ended 30 June 2022
Dec 2022
US$’000
US$’000
Cash flows from Operating Activities
Loss before income tax (8,101) (946) (277,000)
Adjustments for:
Impairment charge - - 265,953
Finance income (1) - (2)
Finance cost 11,984 5,856 15,242
Depreciation 3,582 6,215 11,028
Foreign exchange (21) 280 (1,075)
Change in working capital:
Inventory 147 (1,657) 625
Trade and other receivables (2,659) 592 1,689
Trade and other payables 3,034 1,898 2,448
Income tax paid (4,533) (3,971) (10,043)
Net cash flows from Operating Activities 3,432 8,267 8,865
Cash flows from Investing Activities
Purchase of property, plant and equipment (29) (1,336) (7,625)
Interest received - - 2
Net cash used in Investing Activities (29) (1,336) (7,623)
Cash flows from Financing Activities
Proceeds from borrowings 84,500 54,550 54,550
Repayment of borrowings (86,884) (56,538) (55,550)
Interest paid (1,936) (624) (3,170)
Net Cash (used in)/from Financing Activities (4,320) (2,612) (4,170)
Net (Decrease)/Increase in Cash and Cash (917) 4,319 (2,928)
Equivalents
Cash and cash equivalents at beginning of the period
4,544
7,472
7,472
Cash and cash equivalents at end of the period 3,627 11,791 4,544
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE SIX MONTHS ENDED 30 JUNE 2023
Share Share Other Retained Total
capital premium reserve earnings equity
US$’000 US$'000 US$'000 US$'000 US$'000
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)
Loss and total comprehensive income for - - - (282,126) (282,126)
the period
Balance at 31 December 2022 (audited) 38 65,901 10,175 (389,545) (313,431)
Balance at 1 January 2023 38 65,901 10,175 (389,545) (313,431)
Loss and total comprehensive income for the period - - - (12,633) (12,633)
Balance at 30 June 2023(unaudited) 38 65,901 10,175 (402,178) (326,064)
NOTES TO THE INTERIM FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2023
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 2023 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 2023
to 30 June 2023 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 2022 to 30 June 2022 and extracts
from the audited financial statements for the year to 31 December 2022. 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 2022 and the accounting policies adopted are
consistent with those used in the preparation of its financial statements for
the year ended 31 December 2022.
ii) Cyclicality
The interim results for the six months ended 30 June 2023 are not necessarily
indicative of the results to be expected for the financial year 2023. 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.
NOTES TO THE INTERIM FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2023
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. But the
loan of US$65m that CNMC Trade provided CNG on 6 June 2023 will not be
extended. The Company’s is reliant on the continued forbearance of CNMC
Trade. If the Company and CNMC Trade are unable to agree an acceptably phased
repayment schedule and/or the Company are unable to refinance the loan then it
is likely that the Company may need to be wound up.
In assessing whether the going concern assumption is appropriate, the
Directors take into account all available information for the foreseeable
future. In making their assessment, the Directors also have considered the
level of production and operations at the mine site, in conjunction with the
updated resource and reserve estimates as per the revised Independent
Technical Report produced by SRK Consulting (see the announcement on the
website of CNG), and how the Group will be able to use the cash inflows from
these operations to support its working capital position and repay loans when
they fall due. As the shareholder loan extensions are provided on an annual
basis for a one-year period, the company applies to its creditors（CNMC Trade
Company Ltd，CNMICC and CNMIM), each year in advance of the loan repayment
date falling due, following the application process that has been in place for
a number of years. As at the current date, the company has the following loans
payable:
Lender Amount (principal) at the date of this report Amount (interest accrued) at the date of this report Total Repayment date
CNMC Trade Company Ltd 123,600,000.00 39,707,401.87 282,357,401.87 20/12/2023
CNMC Trade Company Ltd 20,000,000.00 26/11/2023
CNMC Trade Company Ltd 14,550,000.00 31/12/2023
CNMC Trade Company Ltd 19,500,000.00 19/04/2024
CNMC Trade Company Ltd 65,000,000.00 06/09/2023
CNMICC 60,744,168.83 21,260,359.47 82,004,528.30 08/12/2023
CNMIM 12,683,598.78 10,075,085.73 22,758,684.51 31/05/2024
Total shareholder loans repayable in year to 30 June 2024 316,077,767.61 71,042,847.07 387,120,614.67
CNMC Trade Company Limited (“CNMC Trade”) have confirmed on the maturity
date on 6 September 2023 that the loan of US$65m provided to CNG on 6 June
2023 (“First Loan”), which is now overdue, will not be extended. The
Company’s ability to continue as a going concern is reliant on the continued
forbearance of CNMC Trade. Should the Company and CNMC Trade be unable to
agree an acceptably phased repayment schedule and/or the Company be unable to
refinance the loan then it is likely that the Company may need to be wound up.
NOTES TO THE INTERIM FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2023
3. Earnings per Share
June 2023 June 2022 December 2022
Basic and diluted earnings per share (cents) (33.04)
(1.29)
(757.60)
The basic earnings per share is calculated by dividing the loss attributable
to equity holders after tax of US$12,633,443 (30 June 2022: US$4,917,101) by
the weighted average number of shares in issue and carrying the right to
receive dividend. For all the periods disclosed up to 2023, 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 2023
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 2022 33 602 5,423 21,443 382,732 - 410,233
Additions - 36 92 1,475 - 6,022 7,625
Transfer from Assets under Construction - - - - 812 (812) -
Settlement of historical liabilities - - - (29,904) - (29,904)
Impairment - - - - (265,953) - (265,953)
At 31 December 2022 32 638 5,515 22,918 87,687 5,210 122,000
Additions - 8 - 1 - 27 36
At 30 June 2023 32 646 5,515 22,919 87,687 5,237 122,036
Accumulated Depreciation
At 1 January 2022 - 264 4,847 14,888 25,899 - 45,898
Charge for the period - 35 157 2,341 8,496 - 11,028
At 31 December 2022 - 299 5,005 17,228 34,395 - 59,926
Charge for the period 17 74 1,051 2,440 - 3,582
At 30 June 2023 - 316 5,079 18,279 36,835 - 60,508
Net Book Value
At 30 June 2023 32 330 436 4,641 50,852 5,237 61,528
At 31 December 2022 32 339 510 5,690 53,292 5,210 65,074
Depreciation for producing mines is calculated based on the unit of production
method amounting to $3,582,000 of depreciation charge for the 6 month period.
NOTES TO THE INTERIM FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2023
5. Borrowings
June 2023 June 2022 December 2022
US$000 US$000 US$000
Bank borrowings - 85,000 85,000
Other loans 386,959 287,740 294,368
Total 386,959 372,740 379,368
Non-current portion - 65,000 -
Current portion 386,959 307,740 379,368
The fair value of borrowings equals their carrying amounts, as the impact of
discounting is not significant.
In January 2023, the Group executed a loan agreement with CNMC Trade Company
Limited (“CNMC Trade”) for a loan of up to USD $19.50 million (the “CNMC
Loan”) including an annual interest rate at 0.5% plus 3 month LIBOR and no
extra fees payable to CNMC Trade for this arrangement, which is repayable
within 3 months from the date of drawdown. In July 2023, an extension contract
was signed with CNMC Trade, and this loan has been extended to 19 April 2024.
This CNMC Loan has been used to repay the existing China CITIC Bank
Corporation Limited (“CITIC”) bank facilities of USD $20m.
In June 2023, the Company also executed a loan agreement with CNMC Trade for a
loan of up to USD $65 million (the “Further CNMC Loan”) including an
annual interest rate at 0.5% plus 3 month LIBOR, which was due for repayment
on 6 September 2023. The Further CNMC Loan was used to repay the existing Bank
of Shanghai (Hong Kong) Limited (“BOS”) loan facility of USD $65m, which
was due for repayment on 9 June 2023. As announced on September 7th, the $65m
loan will not be extended. CNMC Trade has requested that CNG prepare a
repayment plan for approval. CNMC Trade have also given notice that it is
reserving all rights to pursue legal action to recover the sums due under the
First Loan, although it advises that it will give at least 7 days ‘notice of
any intention to do so.
During the first quarter of 2023, the Group repaid US$1.9m of an earlier CNMC
Trade loan.
After the end of the period under review, on 12 July 2023, an extension
contract was signed with CNMC Trade, pursuant to which the repayment date for
the loan of US$123.6m was extended to 20 December 2023, the repayment date for
the loan of US$20m was extended to 26 November 2023, the repayment date for
the loan of US$14.55m was extended to 31 December 2023, and the repayment date
for the loan of US$19.50m was extended to 19 April 2024. An extension contract
was signed with CNMC International Capitals CompanyⅡLimited (CNNICCⅡ) to
extend the repayment date for the loan of US$60.74m to 8 December 2023. The
annual interest rate of the above loans has been changed to SOFR plus 0.936%
(it was previously 3.25% over 3 month LIBOR), and this new interest rate has
been applied retrospectively from 16 March 2023. CNMIM has also agreed to
extend an expired loan of US$12.68m with CNG to 31 May 2024.
All loans are provided by related parties. The loans were renewed in July
(Please refer to the financial results).
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