REG - Greatland Gold PLC - 2023 Half Year Financial Report
06/03/2023 07:00
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RNS Number : 9764R Greatland Gold PLC 06 March 2023
Greatland Gold plc (AIM: GGP)
E: info@greatlandgold.com
W: http://greatlandgold.com
: twitter.com/greatlandgold
6 March
2023
Half-Year Financial Report
for the six months ended 31 December 2022
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION AS STIPULATED UNDER THE UK
MARKET ABUSE REGULATIONS. ON PUBLICATION OF THIS ANNOUNCEMENT VIA A
REGULATORY INFORMATION SERVICE, THIS INFORMATION IS CONSIDERED TO BE IN THE
PUBLIC DOMAIN.
Directors' Report
for the half-year ended 31 December 2022
The Directors present their report together with the financial report of the
consolidated entity (referred to as the Group) consisting of the parent
entity, Greatland Gold plc (AIM:GGP; Greatland or Company) and the entities it
controlled, for the half-year ended 31 December 2022.
Directors
The Directors of the Company in office during the half-year and until the date
of this report are as follows:
Name Period of Directorship
Mr Mark Barnaba, Non-Executive Chair Appointed 7 December 2022
Ms Elizabeth Gaines, Deputy Chair Appointed 7 December 2022
Mr Shaun Day, Managing Director Appointed 15 December 2020 (reappointed on 14 December 2021)
Mr Alex Borrelli, Non-Executive Director Appointed 18 April 2016 (reappointed on 14 December 2021)
Mr Clive Latcham, Non-Executive Director Appointed 15 October 2018 (reappointed on 6 December 2022)
Mr Paul Hallam, Non-Executive Director Appointed 1 September 2021 (reappointed on 14 December 2021)
Mr James Wilson, Executive Director Appointed 12 September 2022 (reappointed on 6 December 2022)
Principal activities
The principal activities of the Group during the year consisted of the
development of the Havieron gold-copper project (Havieron) and the exploration
and evaluation of mineral tenements within Australia.
Review of half-year results
§ Closing cash position of £59.8 million
§ Havieron project costs capitalised of £12.2 million during the half-year
§ Closing debt balance of £43.5 million
§ Net assets of £62.8 million
§ Operating loss before share-based payments of £3.5 million; statutory loss
of £13.3 million
§ Exploration expense of £2.7 million, including Juri Joint Venture costs
which are currently fully funded by Newcrest Mining Limited (Newcrest; ASX:
NCM) of £1 million
HEALTH, SAFETY AND WELLBEING
Greatland's most important priority is safety, keeping our employees,
contractors and communities safe and well. Our first priorities are to operate
with zero fatalities, reduce workplace injuries and prevent catastrophic
events. Greatland achieved its goal of maintaining a safe workplace for all in
the first half of financial year 2023. There were no fatalities at the
Company's projects during the half year (2022: nil) and the Total Recordable
Injury Frequency Rate for the Company (fully owned or operated projects) was
nil (2022: nil).
OPERATIONAL AND FINANCIAL REVIEW
Havieron Joint Venture, Western Australia (Greatland: 30%)
Havieron is an exciting gold-copper development project and is the cornerstone
of Greatland's strategic position in the Paterson region of Western Australia,
one of the leading frontiers for the discovery of tier-one gold-copper
deposits.
Discovered by Greatland in 2018, Havieron is being progressed under a joint
venture with Australia's largest gold producer, Newcrest. Newcrest has earnt a
70% interest in Havieron.
Newcrest assumed management of Havieron in May 2019, undertaking the orebody
definition and technical studies required to support regulatory approvals and
investment decisions for a staged development plan. The decline development
commenced in May 2021.
In August 2022, Newcrest released an updated Mineral Resource for Havieron.
Newcrest's updated Mineral Resource for Havieron was 85Mt at 2.0g/t Au and
0.26% Cu for a total of 5.5Moz of Au and 222kt of Cu, based on a November 2021
drilling cut-off date. Prior to this, in March 2022, Greatland announced an
independently updated Mineral Resource (including Ore Reserve) based on a
December 2021 drilling cut-off date of 92Mt at 1.9g/t Au and 0.24% Cu for a
total of 5.5Moz Au and 218kt Cu. The close alignment to Newcrest's updated
Mineral Resource is a testament to the high standard of work performed by
Greatland's technical team.
During the half-year, Greatland capitalised £12.2 million of expenditure
related to Havieron. A further £0.4 million was expensed as exploration and
evaluation for drilling to test geophysical targets outside the known Havieron
system. A total of 283,084 metres from 342 holes have now been drilled to
date, with all the latest completed holes continuing to intersect
mineralisation, and 19 reporting significant mineralisation.
Key updates to the development and exploration of Havieron during the period
were as follows:
§ Growth drilling continued to confirm and expand the extensions to known
mineralisation in the Eastern Breccia and the Northern Breccia;
§ Exploration drilling continued to test regional geophysical targets outside
of the main Havieron system on the Havieron mining lease; and
§ Project record advance rates were achieved in the decline in December 2022
with over 1,500 metres of development completed.
Various workstreams to support the development of the Feasibility Study
continue to progress. This includes several potential value enhancing options
with the aim of maximising value and de-risking the project.
The last 12 months of growth drilling results support the opportunity to
deliver an expanded Mineral Resource.
Juri Joint Venture, Western Australia (Greatland: 49%)
The Juri Joint Venture consists of the Black Hills and Paterson Range East
exploration licences in the prospective Paterson region and is operated by
Greatland under a joint venture with Newcrest. Newcrest has the right to earn
up to 75% in the project by spending up to A$20 million in total as part of a
two-stage farm-in over five years.
The second phase of the Juri Joint Venture drilling programme was completed
during the half-year on the Paterson Range East and Black Hills tenements,
comprising 2,234 metres and testing three targets. A total of £1 million was
spent on the drilling campaign during the period, which was fully funded by
Newcrest. Key activities included:
§ Diamond drill holes testing key targets including A9, Tama and Black Hill
North;
§ Assay testing and regional soil sampling analysis;
§ Results at Black Hills North show strong pathfinder geochemistry and
anomalous gold and copper;
§ Results at other targets are currently being reviewed; and
§ A small ground Electro Magnetic (EM) program was carried out at Black Hills
during the period.
Other Exploration, Western Australia (Greatland: 100%)
Scallywag
Scallywag is adjacent to the Havieron mining lease and contains 20 kilometres
of strike of Yeneena Group metasediments directly north-west of Havieron.
Exploration work over the Scallywag licence consisted of the following
activities during the period:
§ Two ground EM surveys were completed at A32/Pearl and A35 targets, with a
conductor identified at Pearl;
§ Completion of eight Reverse Circulation (RC) pre-collars targeting A34, A35
Pearl and Swan anomalies for 1,238 metres in preparation for diamond tails to
be completed in 2023;
§ A further diamond hole was completed at the Pearl target testing the EM
conductor for 489 metres;
§ A small amount of native copper was noted in the mud rotary pre-collar at
Pearl; and
§ Follow up drilling is being planned during 2023.
Greater Paterson
The Greater Paterson includes the Rudall, Canning, Pascalle, Wanman and
Salvation Well exploration licences. The licences collectively cover more than
1,000 square kilometres of ground which is considered prospective for
intrusion-related gold-copper systems and Havieron and Telfer-style deposits.
During the half-year, a single diamond hole was drilled, testing a
Havieron-style deep magnetic anomaly on the Rudall tenement for a total depth
of 943 metres.
In addition, geotechnical work was progressed at the Pascalle tenement, which
was acquired in September 2021.
Ernest Giles
Ernest Giles is located in central Western Australia, covering an area of
approximately 1,950 square kilometres with approximately 180 kilometres of
gold prospective geology. The eastern Yilgarn Craton is one of the most highly
mineralised areas in Western Australia and is considered prospective for large
gold deposits.
In October 2022, Greatland was awarded a drilling grant for Ernest Giles under
the Western Australian Government's Exploration Incentive Scheme (EIS). The
Ernest Giles project covers a sequence of magnetic greenstone geology typical
of the Archean goldfields of Western Australia which host large gold camps
such as Kalgoorlie, Leonora, Laverton, Mt Magnet and Jundee. The gold
prospective greenstone sequence at Ernest Giles does not outcrop. The
thickness of the cover sequence ranges from approximately 120 metres to more
than 300 metres across the broader project area. Consequently, with no
outcrop, the project has not been subject to extensive historic exploration
activity.
Drill testing on the Calanchini licence, focusing on the Meadows prospect,
will be the first priority for Greatland. Ongoing work will include airborne
geophysics to better understand the geology of the entire Ernest Giles belt
prior to systematic drill testing of the resultant priority targets.
Panorama
Panorama consists of three adjoining exploration licences, covering 157 square
kilometres in the Pilbara region of Western Australia. The tenure is
considered to be highly prospective for gold and cobalt.
A programme of surface geology mapping and soil sampling covering nine
distinct geochemical / geophysical target areas is planned for 2023. A field
reconnaissance trip has been completed with access to all areas confirmed and
good working relationships developed with the traditional owners, the
Palyku-Jartayi Aboriginal Corporation.
Bromus
Bromus is located 25 kilometres South-West of Norseman in the southern Yilgarn
region of Western Australia. Bromus consists of two licences, covering 87
square kilometres of under-explored greenstone and intrusive granites of the
Archean Yilgarn Block at the southern end of the Kalgoorlie-Norseman belt.
During the period, Greatland identified an RC drill target based on soil
sampling which returned anomalous copper, zinc and silver coincident with an
airborne EM anomaly. A surface sampling programme is also planned to follow up
on anomalous gold in soils in the north of the Bromus tenement. Greatland also
advanced land access negotiations with the Ngadju Native Aboriginal
Corporation, to enable drilling access.
Firetower and Warrentinna, Tasmania (Greatland: 100%; subject to option
agreement for divestment)
Firetower is located in central north Tasmania, Australia and covers an area
of 62 square kilometres. Warrentinna is located 60 kilometres North-East of
Launceston in north-eastern Tasmania and covers an area of 37 square
kilometres with 15 kilometres of strike prospective for gold.
In November 2022, Greatland announced it has entered into an agreement with
ASX-listed Flynn Gold Limited (Flynn Gold) under which Flynn Gold was granted
an option to purchase Greatland's Tasmanian tenements for an option fee of
A$0.1 million (~£0.06 million). The option fee has been recognised as other
income in the statement of comprehensive income.
The option may be exercised during the option period which ends no later than
30 June 2023. If the option is exercised by Flynn Gold, the following
additional amounts are payable to Greatland:
§ An initial purchase price of A$0.2 million (~£0.1 million);
§ Deferred consideration of:
- A$0.5 million (~£0.3 million) if a JORC-compliant Mineral
Resource of at least 500,000oz of gold is announced to the market; plus
- A$0.5 million (~£0.3 million) if Flynn Gold obtains a permit
to mine, in respect of one or more of the tenements; and
§ A royalty equal to 1% on net smelter returns in respect of any production
from the tenements.
CORPORATE
Transformational appointments to the Board
Greatland strengthened its Board capability during the half-year, announcing
three transformational appointments of Australian corporate and mining
industry leaders to assist the Company in fulfilling its growth ambitions.
Jimmy Wilson, a former senior executive at BHP including President Iron Ore,
joined as Executive Director on 12 September 2022. Mark Barnaba, eminent
natural resources investment banker and Deputy Chair of A$70 billion
ASX-listed Fortescue Metals Group Limited (Fortescue) joined Greatland as
Non-Executive Chair on 7 December 2022. Elizabeth Gaines, former Fortescue
Chief Executive Officer joined Greatland as Non-Executive Director and Deputy
Chair on 7 December 2022. Alex Borrelli transitioned from Greatland's
Non-Executive Chair to Non-Executive Director.
Equity issued
Havieron contingent consideration
In July 2022 (prior to the outcome of the Havieron 5% option process),
Greatland successfully renegotiated the deferred consideration that was due to
be paid in respect of its 2016 acquisition of Havieron. The original terms of
the acquisition comprised an initial payment of A$25,000 in cash and
65,490,000 new ordinary shares. A further 145,530,000 new ordinary shares was
payable if Greatland's ownership interest in Havieron reduced to 25% or less
or upon a decision to mine at Havieron, whichever occurs earlier.
The 145,530,000 deferred share payment was renegotiated as follows:
a) 138,981,150 Greatland shares were issued to the vendor nominee, Five
Diggers Pty Ltd (Five Diggers), during the half-year. This represented a 4.5%
reduction in total shares issued relative to the ordinary agreed quantum
b) In respect of the 138,981,150 shares issued, Five Diggers are subject
to the following restrictions:
i) A lock up which prohibits any shares from being disposed of for
the first 12 months from grant, subject to carve outs (such as recommend
takeovers), and
ii) Orderly market arrangement, under which the shares may only be
traded through Greatland's broker (subject to customary carve outs)
The new ordinary shares were issued on 2 August 2022.
August 2022 equity raise
In August 2022, Greatland raised £29.8 million through the issuance of
362,880,180 shares at £0.082 per share. Proceeds of the raising were for the
continued development of Havieron, drilling to explore the wider Havieron
orebody, exploration at Greatland's 100% owned licenses to target new
Havieron-like discoveries and to fund working capital and general corporate
activities.
Strategic placement to Wyloo Metals in September 2022
On 12 September 2022, Greatland entered into an agreement for a strategic
equity investment with Wyloo Metals (Wyloo), a privately owned minerals
investment company. Wyloo subscribed for 430,024,390 shares for A$60 million
(£33.5 million), an equivalent at the date of the agreement of £0.082 per
share, being a small premium to the five-day VWAP of 9 September 2022. The
transaction was approved by Greatland shareholders on 7 October 2022,
resulting in Wyloo becoming Greatland's largest shareholder with approximately
8.6% of shares on issue. Settlement occurred on 14 October 2022 at a converted
share price of £0.078 per share.
As part of the equity subscription, a further £35 million may be raised from
Wyloo in the future through the conversion of warrants with a strike price of
£0.10 per share.
Debt facility
Greatland signed a debt commitment letter for A$220 million (£130 million) in
September 2022 with ANZ, HSBC and ING to support the future development of
Havieron. The facility comprises a A$200 million seven-year amortising Term
Debt Facility and a A$20 million five-year Revolving Credit Facility. Term
Debt Facility interest will be charged at benchmark (Australian BBSY) plus
margin of 3.50% p.a. reducing to 3.25% p.a. post project completion, while
interest on the Revolving Credit Facility will be charged at a margin of 4.50%
p.a. Financial close and drawdown is subject to customary project financing
conditions including completion of reporting requirements, Havieron
Feasibility Study criteria and agreeing final documentation.
Co-investment options and Long Term Incentive Plan
Greatland recognised a share-based payment expense during the period of £9.2
million as a result of the grant of investment options and performance rights.
The Company granted 235,000,000 co-investment options to subscribe for new
ordinary shares in the Company to four of its directors. The co-investment
option structure has been designed to create strong and immediate alignment
with shareholders to deliver substantial share price growth, with the options
being set at £0.119, representing a 45% premium to the equity placement in
August 2022 of £0.082.
In addition, the Group issued 22,000,000 performance rights under the
Company's Long Term Incentive Plan (LTIP) in July 2022. The LTIP is an
important aspect of Greatland's remuneration structure and it is designed to
align the interests of employees (including executive directors) and
shareholders through the creation of shareholder value over the longer term.
Under the LTIP, participants are granted performance rights which only vest if
certain performance standards are met.
Administrative expenses
Administrative expenses were £1.8 million for the half-year. This increase on
the prior corresponding period (H1 2022: £1.1 million) was a result of:
§ An increase in employee costs of £0.8 million (H1 2022: £0.6 million) as
a result of new hires to build out Greatland's organisational capability so
that the Company has the required skills and expertise across its team to
oversee the development of Havieron.
§ The remainder of the increase was associated with increased activity and
growth in the business, including the Company's evaluation of business
development opportunities and investor engagement including its proposed cross
listing on the Australian Securities Exchange.
Option for 5% Havieron Joint Venture interest
Greatland retained 30% ownership of the Company's flagship asset at the
conclusion of the 5% option process provided for in the Havieron Joint Venture
agreement. The option price of US$60 million was independently determined at
which Newcrest could acquire an additional 5% interest in the Havieron Joint
Venture from Greatland. On 19 August 2022, Newcrest elected not to exercise
its option and as a result, Greatland's interest in Havieron remained at 30%,
an outcome that delivers substantial value to Greatland.
Dividends
The Board of Directors have not declared a dividend for the half-year (2021:
Nil).
Significant events after the balance date
Exercise of Options and Director Dealings
On 10 January 2023, Clive Latcham, Non-Executive Director, exercised 8,750,000
existing options over ordinary shares at a price of £0.025 per share for a
total consideration of £218,750. Mr Latcham retained 3,150,000 of the
resulting shares and sold 5,600,000 of the resulting shares to fund the
associated exercise cost and tax liabilities. Mr Latcham's shareholding has
now increased to 3,150,000 ordinary shares representing 0.06% of the total
voting rights and he retains 2,750,000 share options in the Company at various
exercise prices. Alex Borrelli, Non-Executive Director, exercised 7,500,000
existing options over ordinary shares at a price of £0.007 per share and
25,000,000 existing options at £0.002 for a total consideration of £102,500.
Mr Borrelli retained 13,300,000 of the resulting shares and sold 19,200,000 of
the resulting shares to fund the associated exercise cost and tax liabilities.
Mr Borrelli's shareholding has now increased to 26,403,372 ordinary shares
representing 0.52% of the total voting rights and he retains 19,000,000 share
options in the Company at various exercise prices.
In addition, in February 2023, the Company issued 11,500,000 new ordinary
shares following the conversion of options held by former employees (Share
Issue). The Share Issue was completed under the Company's block listing
facility for total exercise consideration of £298,000.
Newmont non-binding indicative offer to acquire 100% of issued shares of
Newcrest
On 6 February 2023, Newcrest, the Joint Venture Manager of Havierion,
announced that it had received a conditional and non-binding indicative
proposal from Newmont Corporation to acquire 100% of the issued shares of
Newcrest by way of a scheme arrangement. For further updates refer to
www.newcrest.com.
Signed in accordance with a resolution of the Directors.
Mark Barnaba Shaun Day
Non-Executive Chairman Managing Director
6 March 2023
Consolidated Statement of Comprehensive Income
for the half-year ended 31 December 2022
Note Six months ended Six months ended
31 Dec 2022 31 Dec 2021
£'000
£'000
Revenue - -
Exploration and evaluation expenses (1,719) (1,793)
Administration expenses 4 (1,799) (1,078)
Share-based payment expense 5 (9,157) (39)
Operating loss (12,675) (2,910)
Foreign exchange gains / (losses) (750) (582)
Other income 149 -
Finance income 177 -
Finance costs (180) (97)
Loss before tax (13,279) (3,589)
Income tax expense - -
Loss for the period (13,279) (3,589)
Other comprehensive income:
Exchange differences on translation of foreign operations (973) 7
Total comprehensive income for the period attributable to equity holders of (14,252) (3,582)
parent
Earnings per share (EPS):
Basic loss attributable to ordinary equity holders of the parent (pence)((a)) (0.29) (0.09)
Diluted loss attributable to ordinary equity holders of the parent (0.29) (0.09)
(pence)((a))
The Consolidated Statement of Comprehensive Income should be read in
conjunction with the accompanying notes.
(a) For the purpose of calculating basic earnings per share, the weighted
average number of the Group shares outstanding during the period was
4,637,835,742 (31 December 2021: 3,978,408,767). Dilutive earnings per share
is not included on the basis inclusion of potential ordinary shares would
result in a decrease in loss per share, and is considered anti-dilutive.
Consolidated Statement of Financial Position
as at 31 December 2022
Note 31 Dec 2022 30 Jun 2022
£'000 £'000
ASSETS
Exploration and evaluation assets 85 94
Mine development 6 49,826 35,582
Right of use asset 161 272
Property, plant and equipment 96 95
Financial asset held at fair value through profit and loss 56 -
Total non-current assets 50,224 36,043
Cash and cash equivalents 59,824 10,387
Advanced joint venture cash contributions 1,900 8,415
Trade and other receivables 376 -
Other current assets 758 426
Total current assets 62,858 19,228
TOTAL ASSETS 113,082 55,271
LIABILITIES
Trade and other payables 3,745 3,269
Lease liabilities 155 208
Provisions 695 919
Total current liabilities 4,595 4,396
Borrowings 7 43,515 43,103
Lease liabilities 11 70
Provisions 2,138 1,976
Total non-current liabilities 45,664 45,149
TOTAL LIABILITIES 50,259 49,545
NET ASSETS 62,823 5,726
EQUITY
Share capital 8 5,016 4,071
Share premium 8 70,255 36,166
Merger reserve 8 27,522 225
Foreign currency translation reserve (326) 647
Share-based payment reserve 5 9,492 335
Retained earnings (49,136) (35,718)
TOTAL EQUITY 62,823 5,726
The above Consolidated Statement of Financial Position should be read in
conjunction with the accompanying notes.
Consolidated Statement of Changes in Equity
for the half-year ended 31 December 2022
Note Share capital Share premium Merger reserve Foreign currency translation reserve Share- based payment reserves Retained earnings Total equity
£'000 £'000
£'000 £'000
£'000 £'000 £'000
At 1 July 2022 4,071 36,166 225 647 335 (35,718) 5,726
Loss for the period - - - - - (13,279) (13,279)
Other comprehensive income - - - (973) - - (973)
Total comprehensive loss for the period - - - (973) - (13,279) (14,252)
Transactions with owners in their capacity as owners:
Share-based payments 5 - - - - 9,157 - 9,157
Share capital issued 8 945 34,119 29,393 - - (139) 64,318
Cost of share issue 8 - (30) (2,096) - - - (2,126)
Total contributions by and distributions to owners of the Company 945 34,089 27,297 - 9,157 (139) 71,349
Six months ended on 31 December 2022 5,016 70,255 27,522 (326) 9,492 (49,136) 62,823
Note Share capital Share premium Merger reserve Foreign currency translation reserve Share-based payment reserves Retained earnings Total equity
£'000 £'000
£'000 £'000
£'000 £'000 £'000
At 1 July 2021 3,947 24,064 225 130 178 (24,389) 4,155
Loss for the period - - - - - (3,589) (3,589)
Other comprehensive income - - - 7 - - 7
Total comprehensive loss for the period - - - 7 - (3,589) (3,582)
Transactions with owners in their capacity as owners:
Share-based payments 5 - - - - 39 - 39
Share capital issued 8 99 12,224 - - - - 12,323
Cost of share issue 8 - (695) (695)
Total contributions by and distributions to owners of the Company 99 11,529 - - 39 - 11,667
Six months ended on 31 December 2021 4,046 35,593 225 137 217 (27,978) 12,240
The above Consolidated Statement of Changes in Equity should be read in
conjunction with the accompanying notes.
Consolidated Statement of Cash Flows
for the half-year ended 31 December 2022
Note Six months ended Six months ended
31 Dec 2022 31 Dec 2021
£'000
£'000
Cash flows from operating activities
Loss for the period (13,279) (3,588)
Adjustments for:
Share-based payment expense 5 9,157 39
Depreciation and amortisation 123 51
Non-cash other income (57) -
Investing interest income (177) -
Unwind of discount on provisions 174 89
Unrealised foreign exchange loss 721 581
Lease liability interest expense 2 7
Movement in operating assets / liabilities:
(Decrease) / increase in other trade and other receivables (349) 78
Increase in other current assets (194) -
Decrease in payables and other liabilities (1,383) (1,284)
Increase in provisions 21 -
Net cash inflow from operating activities (5,241) (4,027)
Cash flows from investing activities
Interest received 177 -
Payments for exploration and evaluation assets - (27)
Payments in advance for joint venture contributions (1,900) -
Payments for mine development and fixed assets (2,407) (5,887)
Payments for interest on mine development (1,202) -
Net cash outflow from investing activities (5,332) (5,914)
Cash flows from financing activities
Proceeds from issue of shares 8 63,290 12,323
Transaction costs from issue of shares 8 (2,126) (695)
Proceeds of borrowings - 6,443
Repayment of lease obligations (114) (38)
Payments for prepaid borrowing costs for debt (166) -
Net cash outflow from financing activities 60,884 18,033
Net increase in cash and cash equivalents 50,311 8,092
Effects of exchange rate differences on cash and cash equivalents (873) (17)
Cash and cash equivalents at the beginning of the period 10,386 6,212
Cash and cash equivalents at the end of the period 59,824 14,287
The above Consolidated Statement of Cash Flows should be read in conjunction
with the accompanying notes.
Notes to the Consolidated Financial Statements
for the half-year ended 31 December 2022
1. Corporate information
The half-year consolidated financial statements of Greatland and its
subsidiaries (collectively, the Group) for the six months ended 31 December
2022 were authorised for issue in accordance with a resolution of the
Directors on 6 March 2023.
Greatland is a company incorporated in England and Wales whose shares are
publicly traded on the AIM (AIM: GGP). The nature of the operations and
principal activities of the Company are described in the Directors' Report.
2 Basis of preparation
The consolidated financial statements for the half-year ended 31 December 2022
are general purpose condensed financial statements prepared in accordance with
IAS 34 Interim Financial Reporting and prepared in accordance with UK-adopted
international accounting standards and are presented in sterling (£). The
financial information does not constitute statutory accounts within the
meaning of section 434 of the Companies Act 2006. The information relating to
the half-year periods to 31 December 2022 and 31 December 2021 are unaudited.
PKF Littlejohn LLP have issued an independent review report on the half year
periods 31 December 2022 and 31 December 2021. The review report for 31
December 2022 can be found on page 19.
The half-year consolidated financial statements do not include all the
information and disclosures required in the annual financial statements, and
should be read in conjunction with the Group's annual financial statements as
at 30 June 2022 and considered together with any public announcements made by
Greatland during the half-year ended 31 December 2022. The annual report of
the Group for the year ended 30 June 2022 is available at
http://greatlandgold.com. The report of auditors on those financial statements
was unqualified.
The accounting policies adopted are consistent with those applied by the Group
in the preparation of the annual consolidated financial statements for the
year ended 30 June 2022. The Group has not early adopted any standard,
interpretation or amendment that has been issued but is not yet effective.
The amounts contained in this financial report have been rounded to the
nearest £1,000 where noted (£000) under the option available to the Company
under the Companies Act 2006.
Going Concern
The consolidated entity has incurred a loss before tax of £13.3 million for
the six months ended 31 December 2022 and had a net cash outflow of £10.6
million from operating and investing activities. At that date, there were net
current assets of £58.2 million, with cash of £59.8 million. Included in the
loss for the period was £10.0 million of non-cash transactions as a result of
share-based payments and unrealised foreign exchange loss.
The Directors have a reasonable expectation that the Group has adequate
resources to continue for the foreseeable future. The Group has a positive
cash position and can significantly reduce expenditure on its own exploration
programs if it wishes to do so and believes it has the ability to raise
capital for expansion purposes, if required and has consistently done so in
the past.
The Group also has demonstrated its ability to debt fund its share of Havieron
development. On 12 September 2022, Greatland executed a debt commitment letter
of A$220 million (£130 million). The debt commitment letter, including term
sheet, was signed for a seven-year term, self-arranged debt syndicate with
three leading banks: ANZ, HSBC and ING. Financial close and drawdown is
subject to customary project financing conditions including completion of
reporting requirements, Feasibility Study criteria and agreeing final
documentation.
Should the directors not achieve the matters set out above, there is
significant uncertainty whether the Group will continue as a going concern and
therefore whether they will realise their assets and extinguish their
liabilities in the normal course of business and at the amounts stated in the
financial report.
The principal risks and uncertainties for the six month period up to 31
December 2022 remained consistent with trends reported in the 2022 Annual
Report.
3 Segmental information
An operating segment is a component of the Group that engages in business
activities from which it may earn revenue and incur expenditure and about
which separate financial information is available that is evaluated regularly
by the Group's Chief Operating Decision Maker, who is the Managing Director,
in deciding how to allocate resources and in assessing performance.
Segment name Description
UK The UK sector consists of the parent company which provides investor relations
and corporate functions as well as administrative and management services to
the subsidiary undertaking based in Australia.
Australia This segment consists of the development activities for Havieron and
exploration and evaluation activities throughout Australia.
Segment information is evaluated by the executive management team and is
prepared in conformity with the accounting policies adopted for preparing the
financial statements of the Group.
Segment results
Income Statement for the half-year ended 31 December 2022 UK Australia Group
£'000 £'000 £'000
Revenue - - -
Exploration and evaluation costs - (1,708) (1,708)
Administration and other costs (430) (1,257) (1,687)
Operating loss for the segment (430) (2,965) (3,395)
Depreciation and amortisation expenses (13) (110) (123)
Segment result (443) (3,075) (3,518)
Share-based payment expense (9,157)
Foreign exchange losses (750)
Other income 149
Finance income 177
Finance expense (180)
Loss before income tax (13,279)
Income tax expense -
Loss for the half-year (13,279)
Income Statement for the half-year ended 31 December 2021 UK Australia Group
£'000 £'000 £'000
Revenue - - -
Exploration and evaluation costs - (1,774) (1,774)
Administration and other costs (573) (512) (1,085)
Operating loss for the segment (573) (2,286) (2,859)
Depreciation and amortisation expenses (13) (38) (51)
Segment result (586) (2,324) (2,910)
Foreign exchange losses (581)
Finance expense (97)
Loss before income tax (3,588)
Income tax expense -
Loss for the half-year (3,588)
Adjustments and eliminations
Share-based payment expense, foreign exchange losses, other income, finance
income, finance costs, and taxes are not allocated to individual segments as
they are managed on a Group basis.
4 Administrative expenses
Six months ended Six months ended
31 Dec 2022 31 Dec 2021
£'000
£'000
Employee benefits expense 761 561
Depreciation and amortisation expense 112 32
Other administrative and corporate costs 926 485
Total administrative expenses 1,799 1,078
5 Share-based payments
The total expense arising from share-based payment transactions recognised
during the period was as follows:
Note Six months ended Six months ended
31 Dec 2022 31 Dec 2021
£'000
£'000
Employee long term incentive plan (a) 448 -
Directors' co-investment options (b) 8,611 -
Other schemes (c) 98 39
Total share-based payment expense 9,157 39
(a) Employee Long Term Incentive Plan (LTIP)
Greatland's Board approved LTIP became effective in February 2022. The LTIP is
designed to provide long-term incentives for employees (including executive
directors) to deliver long-term shareholder returns. Under the LTIP,
participants are granted performance rights or options which vest if certain
performance standards are met. Participation in the plan is at the Board's
discretion and no individual has a contractual right to participate in the
plan or to receive any guaranteed benefits.
The Group issued 22,000,000 performance rights on 27 July 2022 under the
Greatland LTIP which were in respect of the 2022 financial year. The amount of
performance rights will vest depending on a number of performance targets
during the performance period from 27 July 2022 to 7 February 2025. The
share-based payment expense to be recognised in future periods is £2.2
million.
The fair value at grant date is independently determined using an adjusted
form of the Black-Scholes Model which includes a Monte Carlo simulation model
for the TSR rights. The key assumptions were as follows:
Fair value of performance rights and assumptions 2022 LTIP
Grant date 27 July 2022
Weighted average fair value £0.1205
Share price at grant date £0.131
Exercise price £0.001
Expected volatility 60%
Vesting date 7 February 2025
Life of performance rights 2.5 years
Expected dividends 0.00%
Risk free interest rate 1.82%
Valuation methodology Monte Carlo &
Black Scholes
Set out below are the performance rights granted under the plan:
Date of grant Exercisable from Expiry date Exercise price Number at Number at
31 December 2022 31 December 2021
27-Jul-2022 7-Feb-2025 26-Jul-2032 £0.001 22,000,000 -
Weighted average remaining contractual life of rights outstanding at the end 2.1 years -
of the period
5 Share-based payments (continued)
(b) Directors' Co-investment Options
The Company granted co-investment options to subscribe for new ordinary shares
in the Company to four Directors, Mark Barnaba, Elizabeth Gaines, Paul Hallam
and Jimmy Wilson. The co-investment option structure has been designed to
create strong and immediate alignment with shareholders to deliver substantial
share price growth, with the options being set at £0.119, representing a 45%
premium to the equity placement in August 2022 of £0.082.
There are no future amounts associated with these options to be expensed in
future periods.
The Group issued 235,000,000 co-investment options on 12 September 2022. The
fair value at grant date was independently determined using a Binomial
simulation model. The key assumptions were as follows:
Fair value of performance rights and assumptions Directors' options
Grant date 12 September 2022
Life of options
Fair value £0.0366
Share price at grant date £0.0902
Exercise price £0.119
Expected volatility 60%
Vesting date 12 September 2022
Life of options 4 years
Expected dividends 0.00%
Risk free interest rate 2.92%
Valuation methodology Binominal
Set out below are the options granted under the plan:
Grant Date Exercisable from Expiry date Exercise price Number at Number at
31 December 2022 31 December 2021
12-Sep-2022 27-Sep-2022 31-Aug-2026 £0.119 235,000,000 -
Weighted average remaining contractual life of rights outstanding at the end 3.7 years -
of the period
(c) Other schemes
Share options for other schemes outstanding at the end of the year have the
following expiry dates and exercise prices:
Date of grant Exercisable from Expiry date Exercise price Number at 31 December 2022 Number at
31 December 2021
20-Apr-2016 20-Apr-2016 20-Apr-2023(1) £0.002 25,000,000(2) 25,000,000
18-Jan-2017 18-Jul-2017 18-Jul-2023(1) £0.0028 14,000,000 14,000,000
18-Aug-2017 18-Feb-2018 16-Feb-2023(1) £0.007 7,500,000(2) 7,500,000
7-Sep-2018 7-Sep-2019 6-Sep-2023(1) £0.014 2,500,000 5,500,000
7-Sep-2018 7-Sep-2019 6-Sep-2023(1) £0.02 2,500,000 5,500,000
22-Mar-2019 21-Mar-2020 22-Mar-2023 £0.025 13,750,000(2) 13,750,000
26-Sep-2019 26-Sep-2020 25-Sep-2023 £0.025 3,000,000(2) 12,000,000
26-Sep-2019 26-Sep-2020 25-Sep-2023 £0.03 5,750,000(2) 14,750,000
5-May-2021 5-May-2024 4-May-2026 £0.25 5,000,000 5,000,000
8-Jul-2021 30-Jun-2024 7-Jul-2031 £0.001 2,000,000 2,000,000
Total 81,000,000 105,000,000
Weighted average remaining contractual life of rights outstanding at the end 0.8 years 1.8 years
of the period
(1) Remaining options outstanding relate to Alex Borrelli and a one year
extension to the expiry dates was granted by the Board in 2022
(2) Refer to Note 10 for options exercised after 31 December 2022
The share-based payment expense to be recognised in future periods is £0.4
million.
5 Share-based payments (continued)
The movements in the number of options from other schemes are as follows:
Weighted average exercise price Number of options Weighted average exercise price Number of options
Dec-22 Dec-22 Dec-21 Dec-21
Outstanding at the beginning of the year £0.026 81,000,000 £0.025 103,250,000
Exercised during the year - - £0.003 (250,000)
Forfeited during the year - - - -
Granted during the year - - £0.001 2,000,000
Outstanding at the end of the period £0.026 81,000,000 £0.026 105,000,000
Exercisable at the end of the period £0.011 74,000,000 £0.014 98,000,000
6 Mine Development
Notes 31 Dec 2022 30 Jun 2022
£'000 £'000
Opening net carrying amount 35,582 12,888
Additions 12,175 21,171
Adjustment to rehabilitation asset - (2,230)
Capitalised borrowing costs 2,565 2,260
Adjustment of currency translation (496) 1,493
Closing net carrying amount 49,826 35,582
7 Borrowings
31 Dec 2022 30 Jun 2022
£'000 £'000
Opening balance 43,103 12,190
Debt drawdowns - 24,234
Facility fees - 186
Capitalised interest 45 2,074
Effect of foreign exchange revaluation 728 2,736
Adjustment of currency translation (361) 1,683
Closing balance 43,515 43,103
The borrowings presented above relate to a loan agreement with Newcrest
Operations Limited dated 29 November 2020 in respect of Havieron.
The loan has two parts being Facility A and Facility B with values of US$20
million and US$30 million respectively, in addition to capitalised interest.
The loan balance at 31 December 2022 was US$52.4m. Interest is calculated on
the LIBOR rate plus a margin of 8% pa and is calculated every 90 days. The
loan was fully drawn down with Newcrest during the period and as a result
interest of US$2.9 million (£2.4 million) was settled in cash rather than
accrued under the facility.
Unrealised foreign exchange loss of £0.7 million (2021: £0.5 million)
incurred on a US$52.4 million loan held by the Australian subsidiary of the
Group. The functional currency of the Australian subsidiary is Australian
dollars while the loan is denominated in US dollars. The exchange rate
decreased from 0.69 USD/AUD at 30 June 2022 to 0.68 USD/AUD at 31 December
2022.
8 Equity
Note No. of Shares Share Capital Share Premium Merger reserve Total
£'000 £'000 £'000
As at 1 July 2021 3,947,270,143 3,947 24,064 225 28,236
Issued at £0.03 - exercise of options on 29 Jul 2021 250,000 1 7 - 8
Issued at £0.025 - under block listing authority on 2 Aug 2021 6,216,216 6 149 - 155
Issued at £0.025 - under block listing authority on 1 Sep 2021 10,810,812 11 260 - 271
Issued at £0.145 - from fundraise on 19 Nov 2021 82,000,000 82 11,808 - 11,890
Issued at £0.014 - exercise of options on 18 Mar 2022 3,000,000 3 39 - 42
Issued at £0.02 - exercise of options on 18 Mar 2022 3,000,000 3 57 - 60
Issued at £0.03 - exercise of options on 17 May 2022 9,000,000 9 261 - 270
Issued at £0.025 - exercise of options on 17 May 2022 9,000,000 9 216 - 225
Less: transaction costs on share issue - - (695) - (695)
As at 30 June 2022 4,070,547,171 4,071 36,166 225 40,462
Issued at £0.001 - Havieron contingent consideration on 2 Aug 2022 (a) 138,981,150 139 - - 139
Issued at £0.082 - from equity raise on 25 Aug 2022 (b) 362,880,180 363 - 29,393 29,756
Issued at £0.078 - from Wyloo subscription on 7 Oct 2022 (c) 430,024,390 430 33,104 - 33,534
Issued at £0.0765 - Havieron 5% option fee to advisor on 11 Nov 2022 13,443,391 13 1,015 - 1,028
Less: transaction costs on share issue - - (30) (2,096) (2,126)
As at 31 December 2022 5,015,876,282 5,016 70,255 27,522 102,793
(a) Contingent deferred acquisition consideration
In July 2022 (prior to the outcome of the Havieron 5% option process),
Greatland successfully renegotiated the deferred consideration that was due to
be paid in respect of its 2016 acquisition of Havieron. The original terms of
the acquisition comprised an initial payment of A$25,000 in cash and
65,490,000 new ordinary shares. A further 145,530,000 new ordinary shares were
payable if Greatland's ownership interest in Havieron reduced to 25% or less
or upon a decision to mine at Havieron whichever occurs earlier.
The 145,530,000 deferred share payment was renegotiated as follows:
c) 138,981,150 Greatland shares were issued to the vendor nominee,
Five Diggers, during the half-year. This represented a 4.5% reduction in total
shares issued relative to the ordinary agreed quantum
d) In respect of the 138,981,150 shares issued, Five Diggers are subject
to the following restrictions:
iii) A lock up which prohibits any shares from being disposed of for the
first 12 months from grant, subject to carve outs (such as recommend
takeovers), and
iv) Orderly market arrangement, under which the shares may only be
traded through Greatland's broker (subject to customary carve outs)
The new ordinary shares were issued in Greatland on 2 August 2022. The fair
value of the contingent consideration formed part of the original acquisition
in 2016 and as such the equity instruments were issued to share capital for
£0.001 as required by the Companies Act 2006, with nil value attributable to
share premium in August 2022.
(b) August 2022 equity raise
On 25 August 2022, Greatland raised total gross proceeds of £29.8 million
through placing 362,880,180 new ordinary shares at an issue price of £0.082.
The raise was facilitated through an incorporated Jersey registered company,
Ferdinand (Jersey) Limited. The proceeds of the share issue were held in trust
by Greatland on behalf of Ferdinand (Jersey) Limited, which was then acquired
by way of share for share exchange in circumstances which qualified for merger
relief, therefore no amount was recognised as share premium on the share issue
as required under section 612 of the Companies Act. The amount recognised in
the merger reserve reflects the amount by which the fair value of the shares
issued exceeded their nominal value and is recorded within the merger reserve
on consolidation, rather than in a share premium account.
8 Equity (continued)
(c) Strategic placement to Wyloo Metals in September
On 12 September 2022, Greatland entered into an agreement for a strategic
equity investment with Wyloo, a privately owned minerals investment company.
Wyloo subscribed for 430,024,390 shares for A$60 million (£33.5 million), an
equivalent at the date of the agreement of £0.082 per share. This placement
occurred at the same price as the August 2022 raise which equated to a small
premium to the five-day VWAP of 9 September 2022. The transaction was approved
by shareholders on 7 October 2022, resulting in Wyloo becoming Greatland's
largest shareholder with approximately 8.6% of shares on issue. Settlement
occurred on 14 October 2022 at a converted share price of £0.078 per share.
As part of the equity subscription, a further £35 million may be raised from
Wyloo in the future through the conversion of 352,620,000 warrants with a
strike price of £0.10 per share and expiry date of 6 October 2025. On
settlement, the A$60 million (£33.5 million) consideration received from
Wyloo was allocated to share capital and share premium reflecting the fair
value of the ordinary shares at settlement date.
9 Capital Commitments
As at 31 December 2022, Greatland had contractual commitments to capital
expenditure of £1.7 million (30 June 2022: £5.4 million), including from its
share in the Havieron Joint Venture
10 Significant events after the reporting date
Exercise of Options and Director Dealings
On 10 January 2023, Clive Latcham, Non-Executive Director, exercised 8,750,000
existing options over ordinary shares at a price of £0.025 per share for a
total consideration of £218,750. Mr Latcham retained 3,150,000 of the
resulting shares and sold 5,600,000 of the resulting shares to fund the
associated exercise cost and tax liabilities. Mr Latcham's shareholding
increased to 3,150,000 ordinary shares representing 0.06% of the total voting
rights and he retains 2,750,000 share options in the Company at various
exercise prices. Alex Borrelli, Non-Executive Director, exercised 7,500,000
existing options over ordinary shares at a price of £0.007 per share and for
25,000,000 existing options at £0.002 for a total consideration of £102,500.
Mr Borrelli retained 13,300,000 of the resulting shares and sold 19,200,000 of
the resulting shares to fund the associated exercise cost and tax liabilities.
Mr Borrelli's shareholding increased to 26,403,372 ordinary shares
representing 0.52% of the total voting rights and retains 19,000,000 share
options in the Company at various exercise prices.
In addition, in February 2023, the Company issued 11,500,000 new ordinary
shares following the conversion of options held by former employees (Share
Issue). The Share Issue was completed under the Company's block listing
facility for total exercise consideration of £298,000.
Newmont non-binding indicative offer to acquire 100% of issued shares of
Newcrest
On 6 February 2023, Newcrest, the Joint Venture Manager of Havierion,
announced that it had received a conditional and non-binding indicative
proposal from Newmont Corporation to acquire 100% of the issued shares of
Newcrest by way of a scheme arrangement. For further updates refer to
www.newcrest.com.
PKF LITTLEJOHN LLP INDEPENDENT REVIEW REPORT TO GREATLAND GOLD PLC
Conclusion
We have been engaged by the group to review the condensed set of financial
statements in the half-yearly financial report for the six months ended 31
December 2022 which comprise the Consolidated Statement of Comprehensive
Income, the Consolidated Statement of Financial Position, the Consolidated
Statement of Changes in Equity, the Consolidated Statement of Cash Flow and
related notes. We have read the other information contained in the half-yearly
financial report and considered whether it contains any apparent misstatements
or material inconsistencies with the information in the condensed set of
financial statements.
Based on our review, nothing has come to our attention that causes us to
believe that the condensed set of financial statements in the half-yearly
financial report for the six months ended 31 December 2022 is not prepared, in
all material respects, in accordance with UK adopted International Accounting
Standard 34 and the AIM Rules for Companies.
Basis for conclusion
We conducted our review in accordance with International Standard on Review
Engagements (UK) 2410, "Review of Interim Financial Information Performed by
the Independent Auditor of the Entity", issued for use in the United Kingdom.
A review of interim financial information consists of making enquiries,
primarily of persons responsible for financial and accounting matters, and
applying analytical and other review procedures. A review is substantially
less in scope than an audit conducted in accordance with International
Standards on Auditing (UK) and consequently does not enable us to obtain
assurance that we would become aware of all significant matters that might be
identified in an audit. Accordingly, we do not express an audit opinion.
As disclosed in note 1.2, the annual financial statements of the group are
prepared in accordance with UK adopted IASs. The condensed set of financial
statements included in this half-yearly financial report has been prepared in
accordance with UK adopted International Accounting Standard 34, "Interim
Financial Reporting".
Conclusions relating to going concern
Based on our review procedures, which are less extensive than those performed
in an audit as described in the Basis for conclusion section of this report,
nothing has come to our attention to suggest that management have
inappropriately adopted the going concern basis of accounting or that
management have identified material uncertainties relating to going concern
that are not appropriately disclosed.
This conclusion is based on the review procedures performed in accordance with
ISRE (UK) 2410, however future events or conditions may cause the group to
cease to continue as a going concern.
Responsibilities of directors
The directors are responsible for preparing the half-yearly financial report
in accordance with the AIM Rules for Companies.
In preparing the half-yearly financial report, the directors are responsible
for assessing the group's ability to continue as a going concern, disclosing,
as applicable, matters related to going concern and using the going concern
basis of accounting unless the directors either intend to liquidate the group
or to cease operations, or have no realistic alternative but to do so.
Auditor's responsibilities for the review of financial information
In reviewing the half-yearly report, we are responsible for expressing to the
group a conclusion on the condensed set of financial statements in the
half-yearly financial report. Our conclusion, including our Conclusions
relating to going concern, are based on procedures that are less extensive
than audit procedures, as described in the Basis for conclusion paragraph of
this report.
Use of our report
This report is made solely to the company's directors, as a body, in
accordance with the terms of our engagement letter dated 1 February 2023.
Our review has been undertaken so that we might state to the company's
directors those matters we have agreed to state to them in a reviewer's report
and for no other purpose. To the fullest extent permitted by law, we do not
accept or assume responsibility to anyone, other than the company and the
company's directors as a body, for our work, for this report, or for the
conclusions we have formed.
PKF Littlejohn
LLP
15 Westferry Circus
Statutory
Auditor
Canary Wharf
London E14 4HD
6 March 2023
PKF Littlejohn LLP, Chartered Accountants. A list of members' names is
available at the above address. PKF Littlejohn LP is a limited liability
partnership registered in England and Wales No. OC342572. Registered office as
above. PKF Littlejohn LLP is a member firm of the PKF International Limited
family of legally independent firms and does not accept any responsibility or
liability for the actions or inactions of any individual member or
correspondent firm or firms.
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