REG - Lexington Gold Ltd - Interim Results
04/09/2023 07:00
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RNS Number : 1959L Lexington Gold Limited 04 September 2023
4 September 2023
Lexington Gold Ltd
("Lexington Gold" or the "Company")
Interim Results for the half-year ended 30 June 2023
Lexington Gold (AIM: LEX), the gold exploration and development company with
projects in North and South Carolina, United States ("US") is pleased to
announce its unaudited interim results for the six-month period to 30 June
2023 ("H1 2023" or the "Period").
Highlights:
Corporate Summary
The first half of this year was particularly successful for the Company, with
promising exploration results at both our Jennings-Pioneer and Argo projects,
both located in the Carolinas, US, a region that has seen historic production
from multi-million-ounce mines. Whilst Lexington Gold remains focused on the
advancement of its US projects, the Company also spent the first half of 2023
assessing new gold exploration opportunities.
In March 2023, in order to satisfy the group's working capital requirements
and enable it to continue its existing exploration activities and assessment
of other projects/opportunities, Lexington Gold entered into a US$150,000
unsecured loan facility with the Company's Chairman, Edward Nealon. Shortly
thereafter, Lexington Gold announced the proposed acquisition of a 76%
interest in White Rivers Exploration Proprietary Limited ("WRE"), a holder of
significant gold prospects located in South Africa's Witwatersrand gold
fields. Shareholders overwhelmingly supported the proposed acquisition at a
Special General Meeting ("SGM") held on 26 June 2023, and the acquisition is
expected to complete in the near term.
Operational Highlights:
Jennings - Pioneer Project ("Jennings-Pioneer")
· Soil and surface sampling programme completed in February 2023
· Analysis of soil assays in April 2023 identified 13 gossans
within three separate mineralisation trends
· The sampling programme identified a 350m surface extent of the
Red Hill mineralisation
· The soil and surface sampling, as well as concurrent surface
mapping, sought to verify and supplement historic sampling conducted at the
deposit and the results served to reaffirm the project's high potential with
further exploration warranted in due course
Argo Project ("Argo")
· Completion of surface trenching and sampling campaign in February
2023, involving a total of 13 trench lines, with a total combined length of
approximately 844m
· A total of 439 samples were shipped to ALS in Nevada for assaying
· The trenching, sampling and mapping activity sought to better
define the grade distribution and structure of the mineralised zones in order
to facilitate the design of a potential Phase I drilling campaign for the
project in due course
Proposed Acquisition of WRE
· In May 2023, the Company announced the proposed acquisition of a 76%
interest in White Rivers Exploration Proprietary Limited ("WRE"), a major
tenement holder in the Witwatersrand gold fields of South Africa, with its
current tenement interests internally estimated to contain potential resources
of over 37 million ounces of gold
· Shareholder approval obtained in respect of the proposed WRE
acquisition at an SGM held on 26 June 2023
Post Period End
· In July 2023, the Company successfully raised approximately £2.5
million (gross) from certain new and existing investors to, inter alia,
support the proposed WRE acquisition and its initial workstreams
· The Company settled, in aggregate, £423,518 of outstanding loans and
accrued interest on the same terms as the fundraise by way of issuing new
shares
· In late July 2023, the Company also received the results of 440
multi-element assay samples returned from trench channel and rock sampling at
the Argo project
o Promising initial set of assay results for the project, showing high-grade
surface mineralisation at both the Northeast and Southern workings
Financial Summary
· Net loss for H1 2023 from continuing operations was US$0.4m (H1 2022:
US$0.37m)
· Total assets were US$5.2m as at the half-year end (31 December 2022:
US$5.10m)
· Cash position of US$0.28m as at the half-year end (31 December 2022:
US$0.42m)
· Total liabilities of US$0.68m as at the half-year end (31 December
2022: US$0.10m)
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.whirelandplc.com (http://www.whirelandplc.com)
Katy Mitchell 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)
Charles Goodwin / 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 by virtue of the Market
Abuse (Amendment) (EU Exit) Regulations 2019.
Note to Editors:
Lexington Gold (AIM: LEX) is currently 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, United States. 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
I am pleased to present Lexington Gold's unaudited interim results for the
six-month period ended 30 June 2023 and to report on the Company's ongoing
activities to the date of this statement.
We have continued to execute our successful exploration strategy in the
Carolinas, United States, with a soil and surface sampling programme being
completed at our Jennings-Pioneer project and assay results indicating
elevated gold values, as well as significant base metal assays, which included
barite and tellurium. The presence of these minerals adds further potential
value given their wide applications. The team looks forward to conducting
further exploration work at this project as the year progresses.
In March 2023, I advanced a US$150,000 loan facility to the Company to provide
additional working capital and financial flexibility, and enable it to
continue exploration on its existing projects whilst also assessing new gold
projects and opportunities.
The major development in the reporting period has been the recently announced
acquisition of a 76% interest in White Rivers Exploration Proprietary Limited.
The Board expects this proposed acquisition, which is now nearing completion,
to be game-changing for Lexington Gold given the internally estimated
potential resources of over 37 million ounces of gold for its projects within
the world-famous Witwatersrand gold fields in South Africa.
The Witwatersrand gold fields have been the source of almost a third of the
world's gold production since 1886 and with an estimated 1 billion ounces
still in the ground, the transaction represents a huge opportunity for
Lexington Gold. It is particularly exciting as Mark Creasy, who established
WRE back in 2002, will become a significant shareholder in the Company on
completion of the proposed acquisition, and as one of Australia's most
successful mining entrepreneurs, we look forward to learning and benefiting
from his expertise.
In July 2023, in order to, inter alia, support completion of the proposed
acquisition and its initial workstreams, we undertook an approximate £2.5
million (gross) equity fundraising and were most pleased to receive a high
level of interest and support from our existing shareholders who continue to
support the Company's planned further growth and development. Furthermore, we
were delighted to secure the additional funding at a premium to the Company's
then prevailing market share price.
We firmly believe that a multi-million oz JORC 2002/SAMREC compliant mineral
resource estimate ("MRE") can be established in respect of WRE's existing
asset portfolio and these new funds will help us progress this key objective,
unlock value from WRE's assets and also continue our work in the US,
especially at Jennings-Pioneer, where we have identified drill-ready targets.
In addition, certain outstanding indebtedness was settled via the issue of new
equity on the same commercial terms as the fundraise.
Post period end in July 2023, we received assay results in respect of our
previously completed surface exploration and trenching sampling programme at
our Argo project. These represented a promising first set of results, showing
high-grade surface mineralisation across both the Northeast and Southern
workings. We are now assessing the next exploration steps for this project.
With the WRE acquisition on track to complete in the near term, I look forward
to the rest of this year and thereafter with confidence as we refine and set
out our strategy for the WRE assets, whilst also remaining focused on our
existing exploration projects in the US.
I would like to thank our entire team for their tireless hard work and
commitment as we seek to build on our momentum throughout this rest of the
year and would also like to thank our shareholders for their unstinting and
much valued support.
Mr Edward Nealon
Non-Executive Chairman
4 September 2023
Chief Executive's Operational and Financial Review
1. Overview
Lexington Gold has had a very successful start to the year. The team continues
to deliver on key milestones, notably at our Jennings-Pioneer and Argo
projects. At Jennings-Pioneer, the Company completed a soil and surface
sampling programme and in April 2023 received promising results from the 505
soil samples and 17 rock grab samples taken earlier in the year. Whilst over
at the Argo project, February 2023 saw the completion of our trenching and
sampling campaign.
In March 2023, the Company entered into a US$150,000 unsecured loan facility
with its Chairman, Edward Nealon, in order to satisfy the group's ongoing
working capital requirements, exploration activities and the costs associated
with evaluating potential additional projects and opportunities.
The major achievement has been the acquisition of a 76% interest in White
Rivers Exploration Proprietary Limited ("WRE"), which holds interests in a
series of significant gold exploration tenements in South Africa's
Witwatersrand gold field, being historically the largest single gold producing
district in the world. The Company obtained shareholder approval for the
proposed acquisition at a Special General Meeting held in June 2023 and plans
to complete the transaction in the near term.
Post-period end, the Company announced that it had raised approximately £2.5
million (gross) from certain existing and new investors in order to, inter
alia, unlock value and facilitate the proposed acquisition of WRE. The Company
also announced that certain outstanding loans and accrued interest due to
Edward Nealon and Mark Creasy were being settled by way of the issue of new
equity on the same terms as the fundraising, in order to conserve the
Company's cash resources. Whilst the proposed acquisition is a key priority
for the Company, we remain focused on our existing projects in the Carolinas,
United States, and most recently, in July 2023, received assay results for our
Argo project, showing high-grade surface mineralisation.
2. Financial Performance
· Net loss for H1 2023 from continuing operations was US$0.4m (H1 2022:
US$0.37m)
· Total assets were US$5.2m as at the half-year end (31 December 2022:
US$5.1m)
· Cash position of US$0.28m as at the half-year end (31 December 2022:
US$0.42m)
· Total liabilities of US$0.68m as at the half-year end (31 December
2022: US$0.1m)
3. Dividend
The directors have not declared a dividend (2022: Nil).
4. Operational and Corporate Activities
During the first half of 2023, Lexington Gold conducted a series of key
exploration activities on its existing portfolio projects as follows:
Jennings-Pioneer Project
In February 2023, the Company announced the completion of a soil and surface
sampling programme at Jennings-Pioneer targeting gold, silver and base metals
through multi-element assaying to verify and supplement historical sampling
conducted on the deposit.
Subsequently, in April 2023, the Company received the associated results for
the 505 soil samples and 17 rock grab samples submitted for analysis.
Highlights included:
· The identification of 13 gossans (targets at surface) within three
separate mineralisation trends: the Barite Hill Trend, the Jennings Trend and
the Self Trend
· The Barite Hill Trend represents the Northeast extension of the
historic Barite Hill Mine, which continues 600m along strike onto Lexington
Gold's tenured property
· The sampling programme identified a 350m surface extent of the Red
Hill mineralisation extending from the historic Barite Hill pit
· United States critical mineral by-product potential including barite
and tellurium
Argo Project
February 2023 also saw further progress being made at our Argo project where a
surface trenching and sampling campaign was completed, involving 13 trench
lines with a total combined length of approximately 844m being dug by an
excavator and 409 composite channel samples of 2m each being collected. An
additional 30 rock samples were taken at surface and as point samples in
trenches such that a total of 439 samples were shipped to ALS in Nevada for
assaying.
Proposed acquisition of WRE
On 13 May 2023, the Company entered into, via a newly incorporated wholly
owned subsidiary, a conditional share subscription and loan agreements to
acquire 76% of White Rivers Exploration Proprietary Limited ("WRE"), an
exploration and development company with significant gold assets in South
Africa.
Highlights in respect of the proposed acquisition included:
· WRE is a major tenement holder in the Witwatersrand gold fields of
South Africa, with tenement interests covering approximately 89,499 hectares
· WRE's current tenement interests have been estimated by WRE's
management to contain potential resources of over 37 million ounces of gold
(non-JORC/non-SAMREC nor other international standard compliant estimate). WRE
has focussed its exploration efforts in particular on shallow (200 to 1,200m
depth) deposits close to well established infrastructure
· WRE's tenement interests comprise 10 prospecting rights (six granted
licences and four renewal applications) which are grouped into five projects
· WRE has an incorporated Joint Venture ("JV") arrangement with Avgold
Limited, a subsidiary of Harmony Gold Mining Company Limited (JSE:HMY)
("Harmony Gold"), the largest gold producer by volume in South Africa. Such JV
project, referred to as the Jelani Resources JV, has a non-code compliant
independently estimated resource of 6.02 million ounces of gold at an average
grade of 6.47 g/t
· The Witwatersrand gold fields area was historically the largest
single gold producing district in the world. Total historical gold
production over a century of mining activity was 2 billion ounces. It is
estimated that a further 1.2 billion ounces of gold resource remains in the
Witwatersrand
· WRE's Kroonstad project, has an independently estimated non-code
compliant gold exploration resource target of between 6.06 million ounces and
62.41 million ounces with a gold grade of between 4.96 g/t and 11.54 g/t and
potentially constitutes a new Witwatersrand goldfield
· WRE is believed to own the world's largest Witwatersrand drillhole
data base compiled over a ten-year period and consisting of some 2,500 mother
holes with their associated assays
· WRE was established by well-known Australian explorer, Mark Creasy,
in 2002, with whom the Company on 12 May 2023 entered into a one-year
unsecured loan arrangement for a principal amount of £0.3m. Mr Creasy will
become a significant shareholder of Lexington Gold on completion of the
proposed acquisition.
· The consideration comprised the provision of a £0.3m loan to WRE
from the Company and up to a further £6.4 million to be satisfied via the
issue of new common shares in the Company, dependent on certain pre-determined
milestones being met
On 26 June 2023, the Company held a Special General Meeting ("SGM") to, inter
alia, secure shareholder approval for the Company's proposed acquisition of
WRE.
Funding
In March 2023, Lexington Gold obtained an unsecured US$150,000 loan facility
from its Chairman, Edward Nealon, to provide additional working capital and
financial flexibility.
Post the period end, in July 2023, the Company successfully raised
approximately £2.5 million (gross) of new capital from both new and existing
investors in order to, inter alia, support the acquisition of the 76% interest
in WRE and its initial workstreams. Despite the difficult capital market
conditions, Lexington Gold received overwhelming support and interest from its
existing shareholders in such fundraising thereby enabling the Company to
conduct the fundraise at a premium to the Company's prevailing market share
price.
At the same time, the Company settled, in aggregate, £423,518 of outstanding
loans and accrued interest on the same commercial terms as the fundraising by
way of issuing new common shares and associated warrants to Edward Nealon and
Mark Creasy.
5. Post Period End
In July 2023, Lexington Gold received assay results in respect of the
abovementioned completed surface exploration and trenching sampling programme
at its Argo project. This promising first set of assays for Argo showed
high-grade surface mineralisation at both the Northeast and Southern workings.
6. Outlook
We are expecting to complete the acquisition of WRE in the near term.
Following the recent successful fundraise, the Company is well placed to,
inter alia, embark on the workstreams required to initiate the conversion of
WRE's current non-code compliant resources into a JORC compliant MRE and to
begin to unlock value from the Jelani Joint Venture.
Dr Bernard Olivier
Chief Executive Officer
4 September 2023
Interim Financial Statements
Lexington Gold Ltd
Condensed Consolidated Statement of Profit and Loss and Other Comprehensive
Income
For the Half-Year ended 30 June 2023
(Unaudited)
Unaudited Unaudited
Notes Six months ended 30 June 2023 Six months ended 30 June 2022
$'000 $'000
CONTINUING OPERATIONS
Operating expenses 3 (397) (363)
Fair value gain on derivative liability - 6
Finance cost (5) (10)
Loss before income tax (402) (367)
Income tax credit/(charge) - -
(402) (367)
Loss for the period
Other comprehensive income
Loss for the period (402) (367)
Items that may be reclassified to profit or loss:
Foreign currency reserve movement (6) -
(408) (367)
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) (0.14)
The accompanying notes form part of these financial statements.
Lexington Gold Ltd
Consolidated Statement of Financial Position
As at 30 June 2023 (Unaudited)
Unaudited Audited
Notes 30 31 December 2022
June
2023
$'000 $'000
Non-current assets
Exploration and evaluation assets 5 4,823 4,556
Total non-current assets 4,823 4,556
Current assets
Trade and other receivables 123 74
Cash and cash equivalents 284 424
Total current assets 407 498
5,230 5,054
Total assets
Equity
Share capital 851 851
Share premium 60,163 60,163
Share option reserve 651 651
Foreign currency translation reserve (8) (2)
Accumulated loss (58,076) (57,674)
Total equity attributable to equity owners of the parent 3,581 3,989
Non-controlling interest 970 970
Total equity 4,551 4,959
Current liabilities
Trade and other payables 143 95
Borrowings 6 536 -
Total current liabilities 679 95
5,230 5,054
Total equity and liabilities
The accompanying notes form part of these financial statements.
Lexington Gold Ltd Consolidated Statement of Changes in Equity
For the Half-Year Ended 30 June 2023
(Unaudited)
Issued share capital Share premium Share option reserve Foreign currency trans-lation reserve Accumu- Total equity attribu-table to share-holders Non-controlling interest Total equity
lated
loss
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
Six months ended 30 June 2023 (unaudited)
At start of period 851 60,163 651 (2) (57,674) 3,989 970 4,959
Total comprehensive loss for the period - - - (6) (402) (408) - (408)
Loss for the period - - - - (402) (402) - (402)
Foreign exchange gain on translation - - - (6) - (6) - (6)
851 60,163 651 (8) (58,076) 3,581 970 4,551
At end of period
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
The accompanying notes form part of these financial statements.
Lexington Gold Ltd
Consolidated Statement of Cash Flows
For the Half-Year Ended 30 June 2023
(Unaudited)
Unaudited Unaudited
Notes Six months ended 30 June 2023 Six months ended 30 June 2022
$'000 $'000
Cash flows used in operating activities
Cash absorbed by operations 7 (403) (365)
Interest received 1 -
Net cash used in operating activities (402) (365)
Cash flows used in investing activities
Payments for exploration (267) (612)
Net cash used in/by investing activities (267) (612)
Cash flows from financing activities
Proceeds from borrowings 525 416
Net cash generated from financing activities 525 416
Net decrease in cash and cash equivalents (144) (561)
Movement in cash and cash equivalents
Exchange gains/(losses) 4 (19)
At the beginning of the period 424 953
Decrease (144) (561)
284 373
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 2023
(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 2023 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
2022 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 2023, the Group recorded a loss of US$0.4m and
had net cash outflows from operating activities of US$0.4m. 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, in aggregate, gross proceeds of £2,516,300 (the
"Fundraising") at a price of 6 pence (the "Fundraising Price") per common
share of US$0.003 each in the capital of the Company ("Common Shares") from
the issue of, in aggregate, 41,938,334 new Common Shares (the "Fundraising
Shares") in early July 2023;
· Outstanding loans of US$150,000 due to the Company's Chairman, Edward
Nealon, and £300,000 due to Mark Creasy (together, in both instances, with
accrued interest thereon) have been settled in new equity on the same
commercial terms as the abovementioned fundraising; 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 2023 Six months ended 30 June 2022
$'000 $'000
Directors' emoluments and fees (98) (98)
Net foreign exchange gain/(loss) 3 (15)
Office expenses (23) (27)
Professional and other services (230) (164)
Share option expense - (48)
Other expenses (49) (11)
(397) (363)
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 2023 was based on the loss attributable to common shareholders from
continuing operations of US$402,000 (H1 2022: US$367,000) and a weighted
average number of common shares outstanding of 283,102,002 (H1 2022:
261,478,810).
5. Exploration and evaluation assets
Unaudited Audited
30 31 December 2022
June
2023
$'000 $'000
Balance at beginning of period 4,556 3,764
Additions 267 792
4,823 4,556
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, United States.
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 8.
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 2022
June
2023
$'000 $'000
Interest bearing borrowings
Balance at the beginning of the period - -
Loan from director 150 -
Loan from Mark Creasy 375 -
Convertible loan receipts - 416
Derivative liability allocation - (47)
Interest accrued 6 67
Foreign exchange 5 (28)
Loan converted to equity - (408)
536 -
As announced on 25 April 2022, the Company 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 was unsecured and repayable with accrued interest on 30 April
2023.
Interest accrued at 6 per cent. per annum to maturity and was payable in full
in new common shares ("Shares") if the Convertible Loan was converted. The
interest rate would have increased to 10 per cent. per annum in the event of
any unremedied default as set out in the underlying agreements.
The conversion price was the lower of: a) 3.2 pence per Share; or b) 0.9 times
the price at which the Company issued 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").
The Company subsequently raised, in aggregate, approximately £500,000 (before
expenses) through a placing, via Peterhouse Capital Limited ("Peterhouse") as
agent of the Company, of 10,526,317 new common shares of US$0.003 each in the
capital of the Company ("Common Shares") (the "Placing Shares") (the
"Placing") to certain new and existing shareholders at an issue price of 4.75
pence per Placing Share (the "Placing Price") on 17 October 2022. As the
Placing represented a Qualifying Financing in respect of the Convertible Loan,
conversion of the Convertible Loan was triggered, and the Company therefore
issued, in aggregate, 11,096,875 new Common Shares to the providers of the
Convertible Loan in respect of the automatic conversion of the principal
amount of the Convertible Loan (and accrued interest thereon of £20,100) at
the previously fixed price of 3.2 pence per Common Share (the "Loan Settlement
Shares").
In March 2023, the Company entered into a US$150,000 unsecured loan facility
with Lexington Gold's Chairman, Edward Nealon. The loan was unsecured, had a
12-month term from the date of drawdown, and incurred interest at a rate of 5
per cent. per annum, payable on maturity.
On 12 May 2023, the Company entered into a one-year unsecured loan agreement
for a principal amount of £0.3m with Mark Creasy at an interest rate of 7.5
per cent. per annum which was to accrue until its scheduled maturity date.
7. Cash (absorbed)/generated by operations
Unaudited Unaudited
Six months ended 30 June 2023 Six months ended 30 June 2022
$'000 $'000
Loss before income tax (402) (367)
Adjusted for:
§ Fair value gain on derivative liability - (6)
§ Finance cost 5 10
§ Share options expense - 48
§ Net foreign exchange difference (3) 10
Cash from operations before working capital changes (400) (305)
Working capital changes:
Trade and other receivables (49) 18
Trade and other payables 46 (78)
Cash (absorbed)/generated by operations before interest and tax (403) (365)
8. 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 GAR.
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 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 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.
No provision has been made for the payment of the deferred consideration as
the Tranche 1 Performance Milestone and Tranche 2 Performance Milestone events
have not occurred. The Group's projects are in the exploration phase and
therefore it is not certain that an economic assessment of mineral potential
or pre-feasibility study will be completed in the next few years, or at all.
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.
9. 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 2023
Directors' fees Executive fees ((1)) Share based payments Total
US$ US$ US$ US$
Edward Nealon 11,250 6,750 - 18,000
Bernard Olivier 11,250 39,000 - 50,250
Melissa Sturgess 11,250 - - 11,250
Rhoderick Grivas 11,250 6,750 - 18,000
45,000 52,500 - 97,500
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
((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.)
Borrowings and advances from directors and shareholders
Unaudited Audited
30 31 December 2022
June
2023
$'000 $'000
Ed Nealon 161 -
Bernard Olivier 25 -
Melissa Sturgess 6 -
Rhoderick Grivas 9 -
201 -
Current directors of the holding company and their close family members, as at
the date of these financial statements, control 5.30% (31 December 2022:
4.25%) of the voting shares of Lexington Gold.
10. Subsequent events
As announced on 10 July 2023, the Company raised, in aggregate, gross proceeds
of £2,516,300 (the "Fundraising") at a price of 6 pence (the "Fundraising
Price") per common share of US$0.003 each in the capital of the Company
("Common Shares") from the issue of, in aggregate, 41,938,334 new Common
Shares (the "Fundraising Shares). The Fundraising comprised a placing of
17,188,334 new Common Shares (the "Placing Shares") to raise £1,031,300 at
the Fundraising Price (the "Placing"), via the Company's joint brokers,
Peterhouse Capital Limited and WH Ireland Limited, and share subscriptions
for, in aggregate, 24,750,000 new Common Shares at the Fundraising Price to
raise £1,485,000 (the "Share subscriptions"). The Share Subscriptions
included a subscription of £100,000 by Edward Nealon, Lexington Gold's
Chairman, for 1,666,667 Fundraising Shares. In addition, outstanding loans of
US$150,000 due to the Company's Chairman, Edward Nealon, and £300,000 due to
Mark Creasy (together, in both instances, with accrued interest thereon) were
settled in new equity on the same commercial terms as the fundraising (the
"Loan Conversion Shares").
On 24 July 2023, Lexington Gold received assay results in respect of its
previously completed surface exploration and trenching sampling programme at
its Argo project. This promising first set of assays for Argo showed
high-grade surface mineralisation at both the Northeast and Southern workings.
Other than these abovementioned matters, no significant events have occurred
subsequent to the reporting date that would have a material impact on the
consolidated financial statements.
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