REG - Lexington Gold Ltd - Interim Results
28/09/2022 07:01
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RNS Number : 8972A Lexington Gold Limited 28 September 2022
28 September 2022
Lexington Gold Ltd
("Lexington Gold" or the "Company")
Interim Results for the half-year ended 30 June 2022
Lexington Gold (AIM: LEX), the gold exploration and development company with
projects in North and South Carolina, USA, is pleased to announce its
unaudited interim results for the six-month period to 30 June 2022 ("H1 2022"
or the "Period").
Highlights:
Corporate Summary
The first half of 2022 has been a productive period for the Company, with
encouraging exploration results announced for two of the Company's gold
projects in North and South Carolina, United States, a region which has seen
historical production and multi-million-ounce mines. Lexington Gold remains
focused on highly prospective exploration and development work with the
objective of proving up a significant resources base.
The Company has increased its investment in exploration activities whilst
keeping overhead costs low. Exploration results for the reporting period have
been encouraging, with estimated resources at one of the Company's four
projects, Jones-Keystone-Loflin, increasing by 27% since the period end to
approximately 83,000oz of contained gold.
Global macroeconomic uncertainty, especially in light of the ongoing war in
Ukraine and rising inflation, creates a climate that has in the past often
supported gold prices. Such an environment also serves to highlight the
benefits of operating in a stable political and regulatory region, such as the
USA.
Operational Highlights
Jones-Keystone-Loflin ("JKL") Project:
· Drilling programme successfully completed on both the Loflin and
Jones-Keystone sides of the project thereby concluding the Company's latest
5,000m reverse circulation ("RC") drill programme
· Assay results confirmed a significant new discovery which has been
named Loflin South
· Exceptional assay results obtained for the six RC drill holes at
Jones-Keystone
Carolina Belle Project:
· Very encouraging drill results received, predominantly from two
targets, McMaster and Martha Washington South, both showing good intersections
close to surface of approximately 1 g/t Au or more
· Results included 3m @ 3.68 g/t Au from 64m and 4m @ 1.8 g/t Au from
28m
· Results of maiden drilling campaign being interpreted and
incorporated into a 3D model in order to facilitate the design of a Phase II
drilling programme to further target, define and expand on intersected gold
mineralisation at all three current targets
Post Period End:
· Updated independent JORC Mineral Resource Estimate for the Loflin
side of the JKL Project of 82,700oz of contained gold as announced on 8 August
2022. This is up 27% from the initial estimate of September 2021 and includes
over 9,000 gold ounces from the newly discovered Loflin South
· Potential for a significant further increase in the estimated
resources for Loflin and Loflin South via additional drilling, subject to
funding
· Loflin project's 1m sample re-splits verified and further defined
high-grade shallow intercepts of up to approximately 10 g/t Au
· Jones-Keystone project's 1m sample re-splits verified and further
defined high-grade shallow intercepts of up to approximately 7.5 g/t Au
· Maiden JORC Mineral Resource Estimate for the Jones-Keystone side of
the JKL Project is currently being prepared following the recent receipt of
the 1m assay results for the Jones-Keystone project
· Appointment of WH Ireland Limited as Joint Broker
Financial Summary:
· Net loss for H1 2022 from continuing operations was US$0.37m (H1
2021: US$0.47m)
· Increased investment in exploration for H1 2022 of US$0.61m (H1 2021:
US$0.43m)
· Reduced operating expenses of US$0.36m (H1 2021: US$0.47m)
· Total assets were US$4.78m as at the half-year end (31 December 2021:
US$4.76m)
· Cash position of US$0.37m as at the half-year end (31 December 2021:
US$0.95m)
· Total liabilities of US$0.44m as at the half-year end (31 December
2021: US$0.11m) of which US$0.41m relates to the unsecured convertible loan of
£335,000 principal amount which is repayable by 30 April 2023 if not
previously converted
For further information, please contact:
Lexington Gold Ltd www.lexingtongold.co.uk (http://www.lexingtongold.co.uk)
Bernard Olivier (Chief Executive Officer) via Yellow Jersey
Edward Nealon (Chairman)
Mike Allardice (Group Company Secretary)
Strand Hanson Limited (Nominated Adviser) www.strandhanson.co.uk (http://www.strandhanson.co.uk)
Matthew Chandler / James Bellman / Abigail Wennington T: +44 207 409 3494
WH Ireland Limited (Joint Broker) www.w (http://www.whirelandplc.com) hirelandplc.com
(http://www.whirelandplc.com)
Katy Mitchell / Ben Good / Enzo Aliaj T: +44 207 220 1666
Peterhouse Capital Limited (Joint Broker) www.peterhousecap.com (https://peterhousecap.com/)
Duncan Vasey / Lucy Williams (Broking) T: +44 207 469 0930
Eran Zucker (Corporate Finance)
Yellow Jersey PR Limited (Financial Public Relations) www.yellowjerseypr.com (http://www.yellowjerseypr.com)
Tom Randell / Annabelle Wills T: +44 7948 758 681
The information contained within this announcement is deemed by the Company to
constitute inside information as stipulated under the Market Abuse Regulation
(EU) No. 596/2014 as it forms part of United Kingdom domestic law by virtue of
the European Union (Withdrawal) Act 2018, as amended.
Note to Editors:
Lexington Gold (AIM: LEX) is focused on the exploration and development of its
four diverse gold projects, covering a combined area of approximately 1,675
acres in North and South Carolina, USA. The projects are situated in the
highly prospective Carolina Super Terrane ("CST"), which has seen significant
historic gold production and is host to a number of multi-million-ounce mines
operated by majors. It was also the site of the first US gold rush in the
early 1800s, before gold was discovered in California.
Further information is available on the Company's website:
www.lexingtongold.co.uk (http://www.lexingtongold.co.uk) . Neither the
contents of the Company's website nor the contents of any website accessible
from hyperlinks on the Company's website (or any other website) is
incorporated into, or forms part of, this announcement.
Chairman's Statement
Dear Fellow Shareholder,
I am pleased to present Lexington Gold's unaudited interim results for the
six-month period ended 30 June 2022 and to report on the Company's ongoing
activities to the date of this statement.
It has been a period of substantial progress with the publication of an
updated and increased JORC resource estimate for the Loflin deposit and the
completion of our latest reverse circulation ("RC") drilling campaign across
both the Carolina Belle and JKL projects. Lexington Gold remains focused on
progressing highly prospective exploration activities and the development and
proving up of significant gold resources. Exploration results received in this
reporting period serve to justify the Company's acquisition of majority
interests in its four gold exploration projects in North and South Carolina in
2020, and the subsequent investment in additional leased acreage last year,
taking its total project acreage in the Carolinas to approximately 1,675
acres.
Our exploration drilling during the period has led to the identification of
Loflin South as a separate resource, initially estimated to contain over 9,000
gold ounces. The scope of the drill programme has only enabled limited
definition so far and the deposit remains open in all directions. It is
currently modelled as two separate satellite deposits.
At Jones-Keystone-Loflin, we also commissioned and announced on 8 August 2022
an updated independent JORC (2012) Mineral Resource Estimate for the Loflin
deposit (including the 9,000 gold ounces from Loflin South) comprising a total
Inferred Resource of 2,596,000t @ 0.99 g/t Au for 82,700oz of contained gold,
as at 31 July 2022. This represented a 27% increase in contained gold achieved
for the Loflin deposit when compared to the 65,000oz estimated in September
2021.
There is potential for the mineralisation at Loflin to remain open down-dip,
to the north-east and along the plunge of the syncline. There is also
potential for significant further increases in the resources for Loflin and
Loflin South through additional drilling. 3D Geological modelling and drilling
to date has delineated a NE-SW shallow plunging synclinal fold structure with
shallow gold mineralisation in the core of the structure.
A maiden JORC Mineral Resource Estimate for the Jones-Keystone side of the JKL
Project is currently being prepared by Pivot Mining Consultants Pty Ltd
following the recent receipt of the 1m assay results for the Jones-Keystone
project.
At Carolina Belle, during the reporting period, we received the final assay
results from our maiden drilling campaign, exceeding our expectations for this
reconnaissance programme. The results were predominantly from two targets,
McMaster and Martha Washington South. Both targets returned excellent initial
results with multiple good intersections of 1 g/t Au or more found close to
surface, including 3m @ 3.68 g/t Au from 64m and 4m @ 1.8 g/t Au from 28m. The
drilling data and assay results now incorporated into our database and models
for Carolina Belle, are facilitating the design of a Phase II drill campaign
to further target, define and expand the intersected gold mineralisation from
the various targets identified to date at the project.
Our investment in exploration activities during the period increased by
approximately 41% to US$612,000, while overhead costs were reduced by
approximately 22% to US$363,000 since the comparable period in 2021.
In late April 2022, the Company obtained an unsecured £335,000 convertible
loan which has ensured the uninterrupted implementation of our exploration
plans. The conversion price was set at 3.2p per share being approximately a
thirty per cent. premium to the then prevailing market share price. The
current market share price is now in excess of the conversion price.
The current uncertain global macroeconomic environment, impacted by the
ongoing war in Ukraine and rising inflation, is one that in the past has often
supported gold prices and serves to highlight the benefits of operating in a
stable political and regulatory region, such as the USA.
In August 2022, we were pleased to appoint WH Ireland Limited, a leading
broker to AIM quoted mining companies, as our joint broker.
We look forward to obtaining a maiden resource estimate for the Jones-Keystone
deposit in the near term and thereafter to continuing with our planned further
exploration and development work across our project portfolio.
Once again, I would like to thank our entire team for their consistent
delivery of results as we continue to execute our exploration plans and
develop our understanding of our exciting assets in the Carolinas alongside
our highly experienced local joint venture partner, Uwharrie Resources Inc.
Mr Edward Nealon
Non-Executive Chairman
28 September 2022
Chief Executive's Operational and Financial Review
1. Overview
H1 2022 has seen substantial progress, with the release of an updated and
increased JORC resource estimate for the Loflin deposit and completion of our
latest reverse circulation drilling campaign across both the Carolina Belle
and JKL projects.
We have learnt a substantial amount about the potential at our four projects
and been able to utilise our findings to refine our plans. This ensures that
we continue to make progress as quickly and cost effectively as possible. We
expect to be able to update our total resources via a maiden resource estimate
for Jones-Keystone in the near term and to be able to commission further
updates as we implement additional exploration work.
During the period, we conducted the following principal exploration activities
on our portfolio projects:
At Carolina Belle, drilling identified and confirmed the down-dip extension of
the main historical ore-zone mined during the historical third-party Iola and
Uwarra gold mining operations with a confirmed down-dip extension intersection
of 4m @ 2.1 g/t Au from 64m to 68m in hole CRBC-24. Significant gold
mineralisation was intersected in the Footwall and Hangingwall of the main
ore-zone of the historical Iola and Uwarra gold mining operations with 11m @
1.01 g/t Au from 68m to 79m (combined Hangingwall, Footwall and mined-out
historical main ore-zone) in hole CRBC-22 including: (i) a footwall
intersection of 4m @ 1.62 g/t Au from 72m to 76m; (ii) a Hangingwall
intersection of 4m @ 0.7 g/t Au from 68m to 72m; and (iii) a main historical
ore-zone intersected between 72.2m and 73.2m. There was also a potential
second gold mineralised zone intersected approximately 25m above the main
historical Iola and Uwarra ore-zone with 4m @1.53 g/t Au from 48m to 52m in
hole CRBC-22 and four drill holes intersected the historical mine workings of
Iola and Uwarra. The McMaster target intersected significant gold
mineralisation including 3m @ 3.68 g/t Au from 64m to 67m in hole CRBC-14; 4m
@ 1.8g/t Au from 28m to 32m in hole CRBC-15 as well as 4m @ 1.06 g/t Au from
20m to 24m in hole CRBC-16. The newly discovered Martha Washington South
target intersected several intersections close to surface above 1g/t Au
including 8m @1.07 g/t Au from surface to 8m in hole CRBC-02 as well as 4m @
1.1g/t Au from 8m to 12m in hole CRBC-04.
At Loflin, a total of 18 drill holes for an aggregate of 1,695m were drilled.
Due to the significant sulphide mineralisation intersected on the southern
side and outside of the current known Loflin resource ("Loflin South"), two
additional RC drill holes were drilled in the newly identified area. Detailed
logging and sampling of the 18 holes drilled on the combined Loflin South and
main Loflin deposit were completed with multiple intersections of sulphide
mineralisation and alteration zones of over 25m identified. An additional 278
samples comprising 4 metre sample composites as well as standards, blanks and
duplicates, were dispatched to American Assay Labs ("AAL") in Nevada for gold
assaying as well as whole-rock geochemistry analyses.
At Jones-Keystone, a total of 6 drill holes for an aggregate of 675m were
drilled thereby concluding the latest 5,000m RC drilling campaign. Initial
logging identified multiple intersections of alteration zones and sulphides
mineralisation and the largest combined intersection identified was over 50m.
The primary aim of the drilling on the Jones-Keystone side of JKL was to
enable the estimation of a maiden JORC compliant resource estimate. An
additional 190 samples comprising 4 metre sample composites as well as
standards, blanks and duplicates, were dispatched to AAL in Nevada for gold
assaying as well as whole-rock geochemistry analyses.
Assay results also confirmed a significant new discovery at our JKL Project,
which has been named Loflin South, containing an initial 9,000 ounce gold
resource.
Selected assay result highlights include:
· Hole LFRC-006: 36m @ 1.67 g/t Au and 1.89 g/t Ag from 20m to 56m
including: 12m @ 3.27 g/t Au and 2.9 g/t Ag from 28m to 40m and 4m @ 5.63 g/t
Au and 3.5 g/t Ag from 32m to 36m;
· Hole LFRC-002: 20m @ 1.52 g/t Au and 1.67 g/t Ag from 16m to 36m
including: 4m @ 3.01 g/t Au and 2.45 g/t Ag from 32m to 36m; and
· Hole LFRC-003: 8m @ 1.32 g/t Au from 80m to 88m including: 4m @ 1.45
g/t Au from 80m to 84m
Loflin South is located less than 250m south and south-east of our maiden
Loflin JORC resource estimate and there is potential for significant expansion
or enhancement of the current resource.
Successful drilling has extended the north-eastern boundary of the known
Loflin JORC resource with further selected assays including:
· Hole LFRC-008: 12m @ 1.26 g/t Au from 16m to 28m including: 4m @ 1.78
g/t Au from 20m to 24m; and
· Silver (Ag) values of up to 3.5 g/t associated with gold
mineralisation and zones of high sulphide alteration.
Final assay results from the drill programme at Loflin included shallow level
infill drilling and testing of the North-Eastern, South-Western and Southern
boundaries and extensions, with the following selected results:
· Hole LFRC-018: 24m @ 1.07 g/t Au and 2.76 g/t Ag from 4m to 28m
including: 4m @ 2.34 g/t Au and 6.41 g/t Ag from 24m to 28m;
· Hole LFRC-009: 16m @ 1.27 g/t Au and 3.79 g/t Ag from 16m to 32m
including: 8m @ 1.76 g/t Au and 6.48 g/t Ag from 20m to 28m; and 4m @ 1.93 g/t
Au and 6.11 g/t Ag from 24m to 28m;
· Hole LFRC-010: 4m @ 0.58 g/t Au from 48m to 52m;
· Hole LFRC-016: 4m @ 0.73 g/t Au from 4m to 8m;
· Hole LFRC-011 intersected a cavity created by historic underground
workings between 10m and 20m below surface. A 2m intersection immediately
above the cavity returned grades of 0.42 g/t Au from 8m to 10m;
· Drilling has extended the known north-eastern deposit boundary and
confirmed that the deposit remains open to the north-east towards the
direction of Jones-Keystone;
· The Loflin deposit appears to pinch off in a South-Westerly
direction, but the drilling results also indicated that the deposit opens
towards the south and south-east and potentially links in with the Loflin
South deposit, with intersections including 36m @1.67 g/t Au between 20m to
56m; and
· Assay results returned values of up to 6.9 g/t Ag associated with
gold mineralisation and zones of high sulphide alteration.
At Jones-Keystone, exceptional assay results received for the six RC drill
holes included:
· Hole JKRC-002: 52m @ 0.99 g/t Au from 72m to 124m including: 24m
@ 1.37 g/t Au from 80m to 104m; 16m @ 1.7 g/t Au from 84m to 100m; and 4m @
2.75 g/t Au from 92m to 96m;
· Hole JKRC-004: 40m @ 1.27 g/t Au from 20m to 60m including: 28m @
1.69 g/t Au from 28m to 56m; 16m @ 2.5 g/t Au from 28m to 44m; and 4m @ 4.56
g/t Au from 36m to 40m; and
· Hole JKRC-003: 28m @ 1.37 g/t Au from 64m to 92m including: 8m @
3.1 g/t Au from 64m to 72m and 4m @ 4.96 g/t Au from 64m to 68m.
The Jones-Keystone deposit remains open along strike and down dip and the
above results should support and facilitate the commissioning of a Maiden JORC
Resource Estimate for Jones-Keystone in the near term.
2. Financial Performance
· Net loss for H1 2022 from continuing operations was US$0.37m (H1
2021: US$0.47m)
· Total assets were US$4.8m as at the half-year end (31 December 2021:
US$4.8m)
· Cash position of US$0.37m as at the half-year end (31 December 2021:
US$0.95m)
· Total liabilities of US$0.44m as at the half-year end (31 December
2021: US$0.11m) of which US$0.41m relates to the unsecured convertible loan of
£335,000 principal amount which is repayable by 30 April 2023 if not
previously converted
3. Dividend
The directors have not declared a dividend (2021: Nil).
4. Corporate Activities
Funding
In late April 2022, an unsecured £335,000 convertible loan was obtained from,
inter alia, two significant shareholders and three directors, including the
Company's Chairman. This facility provides additional working capital and
financial flexibility as the Company focuses on establishing a maiden JORC
Resource estimate for Jones-Keystone and the potential upgrading of the
existing JORC Resource estimate at Loflin. The conversion right for the
lenders concerned was set at 3.2p per share being approximately 30 per cent.
above the then prevailing market share price of 2.45p per share.
5. Post Period End
Post the reporting period end, at the combined Loflin and Loflin South Project
significant intercepts were recorded from 1m sample re-splits including:
· Hole LFRC-006: 34m @ 1.75 g/t Au from 21m to 55m including: 17m @ 2.9
g/t Au from 21m to 38m and 2m @ 10.09 g/t Au from 31m to 33m
· Hole LFRC-009: 12m @ 1.95 g/t Au from 18m to 30m including: 6m @ 3.24
g/t Au from 22m to 28m and 2m @ 5.05 g/t Au from 22m to 24m
· Hole LFRC-002: 23m @ 1.35 g/t Au from 16m to 39m including: 5m @ 3.09
g/t Au from 31m to 36m and 1m @ 6.13 g/t Au from 32m to 33m
· Hole LFRC-018: 26m @ 1.04 g/t Au from 4m to 30m including: 3m @ 2.45
g/t Au from 25m to 28m
· Hole LFRC-003: 6m @ 1.6 g/t Au from 82m to 88m including: 2m @ 2.93
g/t Au from 82m to 84m
· Hole LFRC-008: 14m @ 1.2 g/t Au from 14m to 28m including: 4m @ 1.87
g/t Au from 19m to 23m
The 1m re-sampling of the 4m composites confirmed shallow, high-grade
intercepts of up to approximately 10g/t Au.
The updated independent JORC (2012) Mineral Resource Estimate for the Loflin
deposit (including 9,000oz at Loflin South), reported as at 31 July 2022, was
for a total Inferred Resource of 2,596,000t @ 0.99 g/t Au for 82,700oz of
contained gold. This represented a 27% increase in contained gold achieved for
the Loflin deposit versus the previous 65,000oz estimated in September 2021.
There is potential for mineralisation at Loflin to remain open down-dip, to
the north-east, along the plunge of the syncline. The newly discovered Loflin
South has had limited drilling and definition and remains open in all
directions and is currently modelled as two separate satellite deposits.
Accordingly, there is potential for a significant further increase in
resources for Loflin and Loflin South through additional future drilling. 3D
Geological modelling and drilling has delineated a NE-SW shallow plunging
synclinal fold structure with shallow gold mineralisation in the core of the
structure.
Post the reporting period end, significant intercepts were recorded from the
Jones-Keystone 1m sample re-splits including:
· Hole JKRC-002: 50m @ 1.09 g/t Au from 72m to 122m including:
o 27m @ 1.52 g/t Au from 72m to 99m
o 9m @ 2.71 g/t Au from 90m to 99m
o 1m @ 5.77 g/t Au from 93m to 94m
· Hole JKRC-003: 28m @ 1.15 g/t Au from 66m to 94m including:
o 6m @ 2.67 g/t Au from 66m to 72m
o 1m @ 5.17 g/t Au from 67m to 68m
· Hole JKRC-004: 31m @ 1.38 g/t Au from 28m to 59m including:
o 16m @ 2.15 g/t Au from 28m to 44m
o 1m @ 7.52 g/t Au from 32m to 33m
The 1m re-sampling of the 4m composites has confirmed shallow, high-grade
intercepts of up to approximately 7.5g/t Au.
A Maiden JORC Mineral Resource Estimate for the Jones-Keystone side of the JKL
Project is currently being prepared following the recent receipt of the 1m
assay results for the Jones-Keystone deposit.
6. Outlook
As a gold exploration and development company, the Directors continue to
believe that the group's gold projects in North and South Carolina in the
United States represent an excellent opportunity to create long-term
shareholder value through the identification and exploration of gold deposits
within the well-mineralised but under explored Carolina Super Terrane.
Dr Bernard Olivier
Chief Executive Officer
28 September 2022
Interim Financial Statements
Lexington Gold Ltd
Condensed Consolidated Statement of Profit and Loss and Other Comprehensive
Income
For the Half-Year ended 30 June 2022
(Unaudited)
Unaudited Unaudited
Notes Six months ended 30 June 2022 Six months ended 30 June 2021
$'000 $'000
CONTINUING OPERATIONS
Operating expenses 3 (363) (467)
Fair value gain on derivative liability 6 -
Finance cost (10) -
Loss before income tax (367) (467)
Income tax credit/(charge) - -
(367) (467)
Loss for the period
Other comprehensive income
Loss for the period (367) (467)
Items that may be reclassified to profit or loss:
Foreign currency reserve movement - -
(367) (467)
Total comprehensive loss for the period
Loss per share attributable to the owners of the parent
Basic and diluted loss per share from continuing operations (cents per share) 4 (0.14) (0.18)
The accompanying notes form part of these financial statements.
Lexington Gold Ltd
Consolidated Statement of Financial Position
As at 30 June 2022 (Unaudited)
Unaudited Audited
Notes 30 31 December 2021
June
2022
$'000 $'000
Non-current assets
Exploration and evaluation assets 5 4,376 3,764
Total non-current assets 4,376 3,764
Current assets
Trade and other receivables 27 45
Cash and cash equivalents 373 953
Total current assets 400 998
4,776 4,762
Total assets
Equity
Share capital 787 787
Share premium 59,096 59,096
Share option reserve 603 555
Foreign currency translation reserve (2) (2)
Accumulated loss (57,117) (56,750)
Total equity attributable to equity owners of the parent 3,367 3,686
Non-controlling interest 970 970
Total equity 4,337 4,656
Current liabilities
Trade and other payables 26 106
Borrowings 6 372 -
Derivative liability 7 41 -
Total current liabilities 439 106
4,776 4,762
Total equity and liabilities
The accompanying notes form part of these financial statements.
Lexington Gold Ltd
Consolidated Statement of Changes in Equity
For the Half-Year Ended 30 June 2022
(Unaudited)
Issued share capital Share premium Share option reserve Foreign currency trans-lation reserve Accumu- Total equity attribu-table to share-holders Non-controlling interest Total equity
lated
loss
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
Six months ended 30 June 2022 (unaudited)
At start of period 787 59,096 555 (2) (56,750) 3,686 970 4,656
Total comprehensive loss for the period - - - - (367) (367) - (367)
Loss for the period - - - - (367) (367) - (367)
Foreign exchange gain on translation - - - - - - - -
Share options - - 48 - - 48 - 48
787 59,096 603 (2) (57,117) 3,367 970 4,337
At end of period
Six months ended 30 June 2021 (unaudited)
At start of period 787 59,096 234 (3) (55,729) 4,385 971 5,356
Total comprehensive loss for the period - - - - (467) (467) - (467)
Loss for the period - - - - (467) (467) - (467)
Foreign exchange gain on translation - - - - - - - -
Share issue cost - - 108 - - 108 - 108
787 59,096 342 (3) (56,196) 4,026 971 4,997
At end of period
The accompanying notes form part of these financial statements.
Lexington Gold Ltd
Consolidated Statement of Cash Flows
For the Half-Year Ended 30 June 2022
(Unaudited)
Unaudited Unaudited
Notes Six months ended 30 June 2022 Six months ended 30 June 2021
$'000 $'000
Cash flows used in operating activities
Cash absorbed by operations 8 (365) (399)
Net cash used in operating activities (365) (399)
Cash flows used in investing activities
Payments for exploration (612) (434)
Net cash used in/by investing activities (612) (434)
Cash flows from financing activities
Proceeds from borrowings 416 -
Net cash generated from financing activities 416 -
Net decrease in cash and cash equivalents (561) (833)
Movement in cash and cash equivalents
Exchange (losses)/gains (19) 3
At the beginning of the period 953 2,895
Decrease (561) (833)
373 2,065
At the end of the period
The accompanying notes form part of these financial statements.
Lexington Gold Ltd
Notes to the interim financial information
For the Half-Year Ended 30 June 2022
(Unaudited)
1. Basis of preparation
The unaudited interim financial information set out above, which incorporates
the financial information of the Company and its subsidiary undertakings (the
"Group"), has been prepared using the historical cost convention and in
accordance with International Financial Reporting Standards ("IFRS") and with
those parts of the Bermuda Companies Act, 1981 applicable to companies
reporting under IFRS.
These interim results for the six months ended 30 June 2022 are unaudited and
do not constitute statutory accounts as defined in section 87A of the Bermuda
Companies Act, 1981.The financial statements for the year ended 31 December
2021 have been delivered to the Registrar of Companies and the auditors'
report on those financial statements was unqualified but contained an emphasis
of matter paragraph on going concern.
2. Going concern
For the period ended 30 June 2022, the Group recorded a loss of US$0.37m and
had net cash outflows from operating activities of US$0.37m. An operating loss
is expected in the year subsequent to the date of these financial statements.
The ability of the entity to continue as a going concern is dependent on the
Group generating positive operating cash flows and/or securing additional
funding through the raising of debt and/or equity to fund its projects.
These conditions indicate a material uncertainty that may cast a significant
doubt about the entity's ability to continue as a going concern and,
therefore, that it may be unable to realise its assets and discharge its
liabilities in the normal course of business.
The financial statements have been prepared on the basis that the entity is a
going concern, which contemplates the continuity of normal business activity,
realisation of assets and settlement of liabilities in the normal course of
business for the following reasons:
· The Company raised additional funding by way of a convertible loan of
£335,000 in late April 2022;
· The Directors are confident that they will be able to raise
additional funds to satisfy its immediate cash requirements and have
successfully raised financing in the past; and
· The Directors have the ability to reduce expenditure in order to
preserve cash if required.
Should the entity not be able to continue as a going concern, it may be
required to realise its assets and discharge its liabilities other than in the
ordinary course of business, and at amounts that differ from those stated in
the financial statements. The financial statements do not include any
adjustments relating to the recoverability and classification of recorded
asset amounts or liabilities that might be necessary should the entity not
continue as a going concern.
3. Operating (expenses)/income
Unaudited Unaudited
Six months ended 30 June 2022 Six months ended 30 June 2021
$'000 $'000
Directors' emoluments and fees (98) (98)
Net foreign exchange (loss)/gain (15) 3
Office expenses (27) (18)
Professional and other services (164) (246)
Share option expense (48) (108)
Other expenses (11) -
(363) (467)
Total operating expenses
4. Basic and diluted loss per share
The calculation of basic and diluted loss per share for the six months ended
30 June 2022 was based on the loss attributable to common shareholders from
continuing operations of US$367,000 (H1 2021: US$467,000) and a weighted
average number of common shares outstanding of 261,478,810 (H1 2021:
261,478,810).
5. Exploration and evaluation assets
Unaudited Audited
30 31 December 2021
June
2022
$'000 $'000
Balance at beginning of period 3,764 2,499
Additions 612 1,265
4,376 3,764
The amount above relates to exploration and development activities in respect
of the Group's 51% investment in four diverse gold projects, covering a
combined area of over 1,675 acres in North and South Carolina, USA.
The projects are situated in the highly prospective Carolina Super Terrane
("CST"), which has seen significant historic gold production and is host to a
number of multi-million-ounce mines operated by majors. It was also the site
of the first US gold rush in the early 1800s, before gold was discovered in
California.
In order for the Company to retain its 51% membership interests in the four
projects, it has to make certain Minimum Funding Contributions in respect of
each of the projects in each of the four years and throughout the four-year
period following its re-admission to AIM in November 2020, in an aggregate
amount of AU$5 million (the "Minimum Funding Contributions"). The Minimum
Funding Contributions are further detailed in note 9.
In the event that the Minimum Funding Contributions are not satisfied by the
Company, Uwharrie Resources Inc., the Company's joint venture partner, has the
option to acquire the Company's 51% interest in the relevant project for a
nominal sum of AU$1.
The directors have assessed the value of the exploration and evaluation asset
having considered any indicators of impairment, and in their opinion, based on
a review of future expected availability of funds to develop the projects and
the intention to continue exploration and evaluation, no impairment is
necessary.
6. Borrowings
Unaudited Audited
30 31 December 2021
June
2022
$'000 $'000
Interest bearing borrowings 372 -
372 -
As announced on 25 April 2022, the Company has entered into unsecured
convertible loan agreements with respect to borrowing, in aggregate, £335,000
principal amount (the "Convertible Loan"), predominantly with certain long
term significant shareholders and Company Directors (together, the "Lenders").
The Convertible Loan is unsecured and repayable with accrued interest on 30
April 2023.
Interest accrues at 6 per cent. per annum to maturity and is payable in full
in new common shares ("Shares") if the Convertible Loan is converted. The
interest rate increases to 10 per cent. per annum in the event of any
unremedied default as set out in the underlying agreements.
The conversion price is the lower of: a) 3.2 pence per Share; or b) 0.9 times
the price at which the Company issues any Shares for cash prior to the
conversion date (a "Qualifying Financing"); or c) 0.9 times the price offered
by any person and their affiliates (an "Offeror") to buy Shares with the
objective of seeking to acquire more than a 30% relevant interest in the
Company's issued Shares (a "General Offer").Automatic conversion occurs in the
event of a Qualifying Financing. In the event of a General Offer, a Lender can
elect to convert their Convertible Loan and accrued interest into Shares at
the Conversion Price.
7. Derivative liability
Unaudited Audited
30 31 December 2021
June
2022
$'000 $'000
Derivative liability from option to redeem borrowings for shares 41 -
41 -
It was determined that the redemption option (refer to Note 6) upon the
occurrence of a redemption event (e.g. a Qualifying Financing, etc.) should be
bifurcated and accounted for separately.
The embedded derivative liability represents the combined fair value of the
right of borrowers to receive Shares upon conversion. The embedded derivative
liability is adjusted to reflect fair value at each period end with changes in
fair value recorded in profit and loss.
8. Cash (absorbed)/generated by operations
Unaudited Unaudited
Six months ended 30 June 2022 Six months ended 30 June 2021
$'000 $'000
Loss before income tax (367) (467)
Adjusted for:
§ Fair value gain on derivative liability (6) -
§ Finance cost 10 -
§ Share options expense 48 108
§ Net foreign exchange difference 10 (3)
Cash from operations before working capital changes (305) (362)
Working capital changes:
Trade and other receivables 18 30
Trade and other payables (78) (67)
Cash (absorbed)/generated by operations before interest and tax (365) (399)
9. Commitments and contingencies
Pursuant to the terms of its acquisition of Global Asset Resources Limited
("GAR") in November 2020, Lexington Gold is required to pay conditional
deferred consideration, of, in aggregate, AU$1.5m (being the Tranche 1
Deferred Consideration if the Tranche 1 Performance Milestone detailed below
is met) and the sum of, in aggregate, AU$3.0m (being the Tranche 2 Deferred
Consideration if the Tranche 2 Performance Milestone detailed below is met)
to the Sellers and Uwharrie Resources Inc. ("URI"), in cash or New Common
Shares at the Company's sole discretion, subject to the achievement by the
Group of the Tranche 1 Performance Milestone and Tranche 2 Performance
Milestone or the occurrence of certain Vesting Events within five years of
completion of the Company's acquisition of Global Asset Resources Ltd
("GAR"). No provision has been made for the payment of the deferred
consideration as the Tranche 1 Performance Milestone, Tranche 2 Performance
Milestone and Vesting Events have not occurred.
The Tranche 1 Performance Milestone comprises confirmation by an independent
geologist and announcement by the Company of JORC 2012 compliant resources in
respect of any one of the GAR Projects (including any Additional Projects)
that are not Excluded Projects of at least:
a) 0.8 million ounces of gold at a grade of more than 1 g/t; or
b) 0.6 million ounces of gold at a grade of more than 2.5 g/t; or
c) 0.4 million ounces of gold at a grade of 5 g/t or more.
The Tranche 1 Deferred Consideration, payable within 21 business days of the
achievement of the Tranche 1 Performance Milestone or occurrence of certain
Vesting Events, comprises AU$1,299,000, payable in cash or New Common Shares
at the Relevant Price (in whole or in part) at the Company's sole discretion,
to the Sellers; and AU$201,000, payable in cash or New Common Shares at the
Relevant Price (in whole or in part) at the Company's sole discretion, to URI.
The Tranche 2 Performance Milestone comprises the commissioning from an
independent geologist, completion and announcement by the Company, in
accordance with the AIM Rules, of a pre-feasibility study in respect of any
one of the GAR Projects (including any Additional Projects) that are not
Excluded Projects confirming a pre-tax NPV of more than US$50m at a discount
rate of at least 8 per cent.
The Tranche 2 Deferred Consideration, payable within 21 business days of the
achievement of the Tranche 2 Performance Milestone or occurrence of certain
Vesting Events, comprises AU$2,598,000, payable in cash or New Common Shares
at the Relevant Price (in whole or in part) at the Company's sole discretion,
to the Sellers; and AU$402,000, payable in cash or New Common Shares at the
Relevant Price (in whole or in part) at the Company's sole discretion, to URI.
If the Tranche 1 Deferred Consideration has not previously been paid at the
time of achievement of the Tranche 2 Performance Milestone, the Tranche 1
Deferred Consideration will also become payable in cash or New Common Shares
(at the Company's sole discretion) at such time.
The Joint Venture Implementation Deed between GAR, URI and Carolina Gold
Resources also sets out certain Minimum Funding Contributions in respect of
each of the GAR Projects to be provided by the Company in each of the four
years and throughout the four-year period following Admission in order to
retain its 51 per cent. interest in the Projects which are summarised below.
In the event that the Minimum Funding Contributions are not satisfied by
Lexington Gold (on both an annual and overall basis), URI has the option to
acquire the Company's 51 per cent. membership interest (via GAR Holdings) in
the relevant Project SPV for a nominal sum of AU$1. The Company similarly has
the option to sell its 51 per cent. membership interest in any of the GAR
Projects to URI at any time during the four-year period following Admission
for AU$1 should the Board determine that the Company no longer wishes to
proceed with one or more of the GAR Projects.
Minimum Funding Contributions for the Company to retain its 51 per cent.
membership interests
AU$
Minimum Minimum Minimum Minimum Minimum
Project Total Year 1 Year 2 Year 3 Year 4
JKL 1,500,000 250,000 150,000 150,000 150,000
Carolina Belle 1,500,000 250,000 100,000 100,000 100,000
Jennings-Pioneer 1,000,000 100,000 100,000 100,000 100,000
Argo 1,000,000 100,000 100,000 100,000 100,000
5,000,000 700,000 450,000 450,000 450,000
At the end of the initial four-year period following Admission and
satisfaction of the Minimum Funding Contributions for a Project, if URI elects
not to fund its proportionate share of future costs or fails to make an
election then, in accordance with the terms of the Joint Venture
Implementation Deed, the Company will potentially be able to increase its
interest in each of the Project SPVs to 80 per cent. by meeting certain
further funding commitments in years 5 and 6 (on both an annual and overall
basis) following Admission (the "Extended Period").
Extended Period funding contributions from the Company to acquire an
additional 29 per cent. membership interest and increase its total interest to
80 per cent.
Minimum Minimum Minimum
Project Total Year 5 Year 6
JKL 2,500,000 150,000 150,000
Carolina Belle 2,500,000 100,000 100,000
Jennings-Pioneer 1,500,000 100,000 100,000
Argo 1,500,000 100,000 100,000
8,000,000 450,000 450,000
If the Company does not meet the Extended Period funding contributions in
relation to a particular Project, it will retain its 51 per cent. initial
interest in such Project SPV.
In the event that the Company increases its interest in any of the Project
SPVs to 80 per cent. and URI elects not to fund its proportionate share of
future costs in respect of its then 20 per cent. residual interest in the GAR
Project concerned or fails to make an election, the Company is able to
increase its interest in the relevant Project to 100 per cent. by agreeing to
pay for the relevant Project, a Net Smelter Royalty to URI of 0.5 per cent.
for future production up to 50,000 oz gold equivalent, 2.0 per cent. for
future production from 50,000 to 400,000 oz gold equivalent and 1.0 per cent.
for future production in excess of 400,000 oz gold equivalent.
10. Related parties
Identity of related parties
The Group has a related party relationship with its subsidiaries and key
management personnel.
Remuneration of key management personnel
Key management personnel are those persons having authority and responsibility
for planning, directing and controlling the activities of the entity, directly
or indirectly, including any director (whether executive or otherwise) of the
Group. Details of the nature and amount of each element of the remuneration
of each director of the Group during the period are shown in the table below:
Six months ended 30 June 2022
Directors' fees Executive fees ((1)) Share based payments ((2)) Total
US$ US$ US$ US$
Edward Nealon 11,250 6,750 6,431 24,431
Bernard Olivier 11,250 39,000 10,182 60,432
Melissa Sturgess 11,250 - 6,431 17,681
Rhoderick Grivas 11,250 6,750 6,431 24,431
45,000 52,500 29,475 126,975
Six months ended 30 June 2021
Directors' fees Executive fees ((1)) Share based payments ((2)) Total
US$ US$ US$ US$
Edward Nealon 11,250 6,750 14,415 32,415
Bernard Olivier 11,250 39,000 22,823 73,073
Melissa Sturgess 11,250 - 14,415 25,665
Rhoderick Grivas 11,250 6,750 14,415 32,415
45,000 52,500 66,068 163,568
((1) For duties as executive director and consulting.)
((2) In accordance with the requirements of IFRS 2 Share-based
payments, the estimated fair value for the share options granted was
calculated using a Black Scholes option pricing model. None of the share
options have been exercised as they are out of the money.)
Borrowings and advances from directors and shareholders
Unaudited Audited
30 31 December 2021
June
2022
$'000 $'000
Ed Nealon 63 -
Bernard Olivier 4 -
Melissa Sturgess 13 -
Rhoderick Grivas 32 -
Astor Management AG 61 -
Aero Services (IOM) Limited 123 -
Pure Ice Ltd 123 -
419 -
Current directors of the holding company and their close family members, as at
the date of these financial statements, control 4.25% (31 December 2021:
4.25%) of the voting shares of Lexington Gold.
11. Fair value
Carrying amount versus fair value
The following table compares the carrying amounts and fair values of the
Group's financial assets and financial liabilities as at 30 June 2022.
The Group considers that the carrying amount of the following financial assets
and financial liabilities are a reasonable approximation of their fair value:
• Trade and other receivables
• Trade and other payables
• Cash and cash equivalents
As at 30 June 2022 As at 31 December 2021
Carrying amount Fair value Carrying amount Fair value
$'000 $'000 $'000 $'000
Financial liabilities
Borrowings 372 372 - -
Derivative liability 41 41 - -
413 413 - -
Total
Fair value hierarchy
The level in the fair value hierarchy within which the financial asset or
financial liability is categorised is based on the lowest level input that is
significant to the fair value measurement.
Financial assets and financial liabilities are classified in their entirety
into only one of the three levels. The fair value hierarchy has the following
levels:
• Level 1 - quoted prices (unadjusted) in active markets for
identical assets or liabilities
• Level 2 - inputs other than quoted prices included within Level
1 that are observable for the asset or liability, either directly (i.e. as
prices) or indirectly (i.e. derived from prices)
• Level 3 - inputs for the asset or liability that are not based
on observable market data (unobservable inputs).
(in $'000) As at Level 1 Level 2 Level 3
30 June
2022
Financial liabilities
Derivative liability 41 - - 41
As at Level 1 Level 2 Level 3
31 December
2021
Financial liabilities
Derivative liability - - - -
Reconciliation: Level 3 recurring fair value measurements
Unaudited Audited
30 31 December 2021
June
2022
$'000 $'000
Derivative liability
Opening balance - -
On initial recognition of borrowings 47 -
Fair value adjustment recognised during the period (6) -
41 -
Transfers during the period
During the 6-month period to 30 June 2022:
• There were no transfers between Level 1 and Level 2 fair value
measurements
• There were no transfers into or out of Level 3 fair value
measurements
Valuation techniques
Derivative liabilities
A Monte-Carlo simulation option pricing model was used to estimate the fair
value of the conversion options embedded in borrowings. The model requires the
development and use of assumptions. These assumptions include estimated
volatility of the value of common shares and an appropriate risk-free interest
rate.
12. Subsequent events
On 11 July 2022, the Company announced the receipt of the results for 1m
re-splits taken from the RC drill hole 4m composite samples across its
combined Loflin and Loflin South Project. All of the holes concerned were
originally sampled as 4m composites. All composites which returned a gold
grade of more than 200ppb Au were subsequently re-sampled in the field and
assayed on a 1m basis. The 1m re-sampling confirmed shallow, high-grade
intercepts of up to approximately 10g/t Au and the results were incorporated
into the Company's geological model.
On 8 August 2022, the Company announced an updated independent JORC (2012)
Mineral Resource Estimate for the Loflin side of the JKL Project prepared by
Pivot Mining Consultants Pty Ltd of 2,596,000t @ 0.99 g/t Au for 82,700oz of
contained gold. This represented a 27% increase in contained gold versus the
previous estimate in September 2021.
On 15 August 2022, the Company announced the appointment of WH Ireland Limited
as its Joint Broker.
On 26 September 2022, the Company announced the receipt of the results for 1m
re-splits taken from the RC drill hole 4m composite samples at its
Jones-Keystone deposit that forms part of the JKL Project. The 1m re-sampling
confirmed shallow, high-grade intercepts of up to approximately 7.5g/t Au and
the results are currently being incorporated into the Company's geological
model.
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