REG-Serabi Gold plc : Audited Results for the year ended 31 December 2015 <Origin Href="QuoteRef">SRB.L</Origin>
30/03/2016 07:05
For immediate release
30 March 2016
Serabi Gold plc
("Serabi" or the "Company")
Audited Results for the year ended 31 December 2015
Serabi (AIM:SRB, TSX:SBI), the Brazilian focused gold mining and development
company, today releases its audited results for the year ended 31 December
2015.
Key Financial Information (1)
3 months to 31 Dec 2015 US$ 3 months to 31 Dec 2014 US$ 12 months to 31 Dec 2015 US$ 12 months to 31 Dec 2014 US$
Revenue (1) 8,042,431 7,374,461 35,086,113 12,627,784
Cost of Sales (1) (4,235,007) (6,319,134) (23,585,063) (9,697,665)
Depreciation and amortisation charges (2,236,959) (1,449,869) (5,840,769) (2,633,578)
Gross profit 1,570,465 (394,542) 5,660,281 296,541
Profit / (loss) before tax 285,221 3,157,386 476,294 (174,401)
Loss after tax (239,811) 3,157,386 (48,738) (174,401)
Loss per ordinary share (basic) (0.036c) 0.48c (0.01c) (0.03c)
Average gold price received 1,105 1,202 1,151 1,243
As at 31 December 2015 As at 31 December 2014
Cash and cash equivalents 2,191,759 9,813,602
Net assets 46,783,645 66,918,551
Cash Costs and All-In Sustaining Costs
3 months to 31 Dec 2015 3 months to 31 Dec 2014 12 months to 31 Dec 2015 6 months to 31 Dec 2014
Gold ounces produced 7,925 7,819 32,629 13,334
Gold production from Sao Chico (971) - (2,788) -
Gold production for cash cost and AISC purposes 6,954 7,819 29,841 13,334
Total Cash Cost of production (per ounce) US$610 US$712 US$677 US$793
Total All-In Sustaining Cost of production (per ounce) US$907 US$922 US$892 US$1,034
2 The Sao Chico Mine was only declared to be in Commercial Production with
effect from 1 January 2016 and therefore all costs and revenues relating to
this mine have been capitalised. The Income Statements therefore only
reflect the revenues and costs arising from the gold produced from the Palito
Mine and the Cash Costs and AISC therefore also only reflect the activities
from the Palito Mine.
Financial Highlights
* The Company has declared commercial production at Sao Chico effective from
1 January 2016.
* All-In Sustaining Costs ("AISC") of US$892 for the year to date with cash
costs of US$677.
* AISC of US$907 for the fourth quarter of 2015 with cash costs of US$610.
* Gross profit from operations of US$5.66 million compared with a profit of
US$0.3 million for 2014
* Operating profit before finance costs of US$0.88 million compared with a
loss ofUS$1.33 million for 2014.
* Cash holdings of US$2.2 million at 31 December 2015.
* Average gold price of US$1,105 received on gold sales in the fourth quarter
of 2015 and US$1,151for the year.
* Group has secured an additional US$5 million working capital facility.
* At 31 December 2015, the Brazilian Real to US Dollar exchange rate had
weakened by approximately 47% compared against 31 December 2014.
* Annual inflation in Brazil for January 2016 was 10.48% the highest rate
since November 2003. The local Central Bank overnight (SELIC) interest rate
was set at 14.25% in January 2016.
2016 Guidance
* Forecast gold production for 2016 of approximately 37,000 ounces with
All-In Sustaining Cost between US$840 to US$870 per ounce.
Post Year End Highlights
* Approximately 6.500 (1) ounces of gold produced during the first two months
of 2016.
* Testing of third ball mill underway.
* Other plant expansion programmes proceeding on schedule.
* Increased plant processing capacity expected to be operational from 1 May
2016.
Operational Highlights
· The final quarter of 2015 recorded 7,925 (1) ounces
of gold production, giving a year-end total of 32,629 (1) ounces.
· Combined mill throughput for the fourth quarter, for
both Palito and Sao Chico ore, totalled 34,848 tonnes, with 130,299 tonnes
being milled for the year.
· A total of 9,598 metres of horizontal development
across both mining operation was achieved for the year.
· At the end of the fourth quarter, surface stockpiles
at Palito and Sao Chico totalled approximately16,000 tonnes at a grade of 4.7
g/t of gold.
· November saw the commissioning of the Gekko intensive
leach reactor ("ILR"), which works in tandem with the Falcon gravity
centrifugal concentrator. This equipment is working exclusively on the Sao
Chico feed to recover gravity gold.
· Installation of the third ball mill is well underway
and this along with improvements in the flotation and CIP process circuits are
on schedule to be completed early in the second quarter of 2016. A carbon
regeneration kiln is also being acquired which will assist in enhancing gold
recoveries once the kiln is operational in the second half of the year.
(1) Gold production figures are subject to amendment pending
final agreed assays of the gold content of the copper/gold concentrate and
gold dore that is delivered to the refineries.
Palito development
* Annual mine development was 6,928 metres of which 1,960 metres was
completed in the fourth quarter of 2015.
* Annual mine production was 111,751 tonnes at 10.05 g/t of which 26,953
tonnes at 8.84 g/t grammes per tonne ("g/t") was produced in the fourth
quarter of 2015.
Sao Chico development
* Annual mine development was 2,997 metres of which 729 metres was completed
in the fourth quarter of 2015.
* Annual mine production was 22,096 tonnes at 8.45 g/t of which 7,006 tonnes
at 9.76 g/t was produced in the fourth quarter of 2015.
* Sao Chico is now being developed on the 186mRL and 156mRL levels, with
production on the 199mRL and 186mRL levels. The ramp is now being deepened to
the 126mRL, the next planned development level, and will continue this year to
the 96mRL to accommodate underground drilling of the Sao Chico deposit
extension at depth.
Mike Hodgson, CEO of Serabi commented,
"For what has been our first full year of gold production from Palito, 2015
has been a year that I can look back on with great satisfaction at what has
been achieved. The operational results have been excellent and the financial
results show that we have achieved these in a cost effective manner.
"Gold production in 2015 increased from 18,000 ounces in 2014 to almost
33,000 ounces in 2015 and we are forecasting further production growth for
2016 with Sao Chico now in commercial production. We have a current target
of 37,000 ounces of gold production for this year and with three consecutive
months of over 3,000 ounces of gold production per month and approximately
6,500 ounces produced during first two months of 2016 we are on target to
achieve our best quarter. What is even more satisfying is that these
production levels have been achieved before the plant capacity improvements
that we expect to complete for the beginning of May 2016.
"The financial results for 2015 speak for themselves; we have reduced cash
costs and all in sustaining costs per ounce, have achieved a gross profit
margin of 16% for 2015 and are aiming to have an all in sustaining costs of
between US$840 to US$870 for 2016.
"I am very optimistic for the next twelve months. We have had some welcome
respite in the recovery of the gold price during the first quarter and this
provides a boost to our cash generation. Whilst we remain focussed on
optimising the current operations, should the improvement in gold prices
continue and therefore provide additional cash flow, we will be looking later
in the year to evaluate some of our mine site discoveries that lie within the
existing tenements. The potential for resource growth at Palito and Sao
Chico is excellent with the advantage that this resource growth can quickly be
translated into low cost production growth.
"I would like to take this opportunity to thank the team for all their hard
work throughout the period. I believe that 2016 will be a good year for
Serabi and I look forward to updating shareholders of our continued progress
through the year."
The latest interview with Mike Hodgson, discussing the highlights of the
2015 financial year and progress at Palito and Sao Chico can be accessed using
the following links: http://brrmedia.co.uk/event/141647?popup=true
Chairman's Statement
Serabi has enjoyed another very successful year in 2015 and continues to make
strides towards its objective of becoming a gold producer with its All in
Sustaining Cost ("AISC") in the first quartile. The Palito Mine exceeded our
production expectations for 2015 and tonnage and grades have been in excess of
the estimates with in original 2012 Preliminary Economic Assessment. I fully
expect that this success will continue. Commercial production has also now
been declared for the Sao Chico Mine and as a consequence 2016 promises to be
another year of production growth.
The year was dominated for Serabi by a falling gold price but as with many
emerging market producers the effects were mitigated by the weakness of the
local currency. It has been a difficult balancing act in what is our first
full calendar year of operations to ensure continuity and consistency of
operations whilst at the same time seeking to make cost reductions to optimise
margins and safeguard the long term profitability of the business.
Management acknowledge the need to attain a cost base that gives the Group the
best chance of dealing with the possibility of an extended period of low gold
prices.
Whilst there has been a rally in the gold price in the early part of 2016, we
have in recent years seen similar trends in the first quarter with a
subsequent retrenchment over the rest of the year. We are therefore far from
complacent and will use this "windfall" as a buffer against the possibility of
potential weakening later in the year. The euphoria of the highs of 2011 and
2012 are well behind us and we should be grateful that gold's traditional
place as a safe haven has protected it against the quantum of the price
declines seen in many other commodities. The pain is however affecting us
all and I believe that 2016 will mark a turning point that will see
capitulation on the supply side. This follows a lack of any new significant
projects in the last two years, few on the horizon and a period where some
existing producers need to defer capital and resort to high-grading their
operations to maintain their short-term viability.
This supply shortfall should lead to an inevitable adjustment in prices. By
doing all we can to establish now a long term viable operation with the lowest
costs possible, I anticipate us being well positioned when this correction
takes place. Even if it takes longer to manifest itself the Group will be
well protected against any further down turn in the market.
Serabi enjoys the benefit of an experienced management team that has been
together for several years. The extensive collective operational experience
that they have has been a key factor in the ability to bring two mines into
production, on budget and within a short time frame. Serabi's management
sets it apart from many other junior mining companies and the proven record of
efficiently turning projects into cash flow is attracting support for the
Group as it seeks further growth opportunities. In recent years it has been
difficult for mining companies to justify undertaking exploration when it has
generally been a cheaper alternative to simply add additional ounces through a
corporate acquisition.
Management have been active in assessing a number of opportunities as it is
clearly an excellent time for Serabi to take advantage of the opportunities
created by the market weakness. However, it remains difficult to find the
blend of project and price that makes an acquisition compelling. Whilst we
consider that Serabi needs to grow and make a step change that will be
reflected in its valuation, the Board will not allow management to pursue
opportunities that will not bring strong long term returns to our existing
shareholders. Of course Serabi has the added advantage of being in a highly
prospective area and therefore has numerous organic growth opportunities.
Whilst it may be difficult to match the resource growth that an acquisition
can bring on a cost per ounce basis, success with our own exploration land
holdings has the benefit of seeing in-situ resources quickly transformed onto
cash flow. Pursing such organic growth creates the opportunity to build
around the Palito Mine a significant hub and spoke operation bringing into
play a number of small but highly profitable mines with low capital
requirements in light of the leverage available from the existing
operations. This ability to generate production quickly with a low capital
outlay is another factor which separates Serabi from many other junior
exploration and development peers.
Whist we are very pleased with the development of Serabi over the last three
years the Board is far from complacent. We have each experienced the
pitfalls associated with mining and the inherent risks that exist in the
sector and know that despite all the best planning we can never mitigate all
of these. Management is constantly challenged to ensure that its plans have
flexibility and that it is always seeking to mitigate risks, whether
geological, mechanical, social, economic or political. Only by doing this
can we ensure that we have a robust, profitable and sustainable business.
The next twelve months will bring their challenges but also their rewards.
I am optimistic on the outlook for gold and believe that we have now
positioned Serabi to benefit from and grow on the back of it. I am confident
that the Group will meet or even exceed its targets for the next twelve months
and in so doing build a strong financial foundation from which to realise the
growth potential that it has.
On behalf of the board of Directors I would like to extend my appreciation to
the employees and management of Serabi for a job well done during difficult
times in 2015. Their hard work and determination to succeed has your company
well positioned to reap the benefits of the higher gold price environment we
expect during 2016 and beyond. Finally, thank you to our shareholders, large
and small, for your patience during the last few years. I believe the future
is extremely bright for Serabi.
Sean Harvey - Chairman
Serabi's Directors Report and Financial Statements for the year ended 31
December 2015 together the Chairman's Statement and the Management Discussion
and Analysis, are available from the Company's website - www.serabigold.com
and will be posted on SEDAR at www.sedar.com .
Enquiries:
Serabi Gold plc
Michael Hodgson Tel: +44 (0)20 7246 6830
Chief Executive Mobile: +44 (0)7799 473621
Clive Line Tel: +44 (0)20 7246 6830
Finance Director Mobile: +44 (0)7710 151692
Email: contact@serabigold.com
Website: www.serabigold.com
Beaumont Cornish Limited Nominated Adviser and Financial Adviser
Roland Cornish Tel: +44 (0)20 7628 3396
Michael Cornish Tel: +44 (0)20 7628 3396
Peel Hunt LLP UK Broker
Matthew Armitt Tel: +44 (0)20 7418 9000
Ross Allister Tel: +44 (0)20 7418 9000
Blytheweigh Public Relations
Tim Blythe Tel: +44 (0)20 7138 3204
Camilla Horsfall Tel: +44 (0)20 7138 3224
Copies of this announcement are available from the Company's website at
www.serabigold.com .
Neither the Toronto Stock Exchange, nor any other securities regulatory
authority, has approved or disapproved of the contents of this announcement.
The following information, comprising, the Income Statement, the Group
Balance Sheet, Group Statement of Changes in Shareholders' Equity, and Group
Cash Flow, is extracted from these financial statements.
The Company will, in compliance with Canadian regulatory requirements, post
its Management Discussion and Analysis for the year ended 31 December 2015 and
its Annual Information Form on SEDAR at www.sedar.com . These documents will
also available from the Company's website - www.serabigold.com .
Annual Report
The Annual Report has been published by the Company on its website at
www.serabigold.com and printed copies are expected to be available by 15 May
2016. Additional copies will be available to the public, free of charge,
from the Company's offices at 2 nd floor, 30 - 32 Ludgate Hill, London, EC4M
7DR and will be available to download from the Company's website at
www.serabigold.com .
FINANCE REVIEW
The data included in the selected annual information table below is taken
from the Company's annual audited financial statements for the year ended 31
December 2015, which were prepared in accordance with International Financial
Reporting Standards in force at the reporting date and their interpretations
issued by the International Accounting Standards Board ("IASB") and adopted
for use within the European Union (IFRS) and with IFRS and their
interpretations issued by the IASB. There are no material differences on
application to the Group. The consolidated financial statements have also
been prepared in accordance with those parts of the Companies Act 2006
applicable to companies reporting under IFRS.
The audited financial statements for the year ended 31 December 2015 will be
presented to shareholders for adoption at the Company's next Annual General
Meeting and filed with the Registrar of Companies.
Statement of Comprehensive Income
For the year ended 31 December 2015
Group
For the year ended 31 December 2015 For the year ended 31 December 2014
Notes US$ US$
CONTINUING OPERATIONS
Revenue 35,086,113 12,627,784
Cost of sales (23,585,063) (9,697,665)
Depreciation and amortisation charges (5,840,769) (2,633,578)
Gross profit 5,660,281 296,541
Administration expenses (4,379,770) (4,257,540)
Write-back of provision for contingencies - 298,088
Share-based payments (404,075) (258,598)
Write back of impairment provision - 2,590,532
Operating profit / (loss) 876,436 (1,330,977)
Foreign exchange loss (71,280) (33,742)
Finance expense 4 (1,533,008) (687,282)
Income/(expense) on financial instruments 1,203,023 1,841,459
Finance income 1,123 36,141
Profit / (loss) before taxation 476,294 (174,401)
Income tax expense (525,032) -
Loss for the period from continuing operations (1) (48,738) (174,401)
Other comprehensive income (net of tax)
Items that may be reclassified subsequently to profit or loss
Exchange differences on translating foreign operations (20,490,243) (7,965,119)
Total comprehensive loss for the period (1) (20,538,981) (8,139,520)
Loss per ordinary share (basic and diluted) (0.01c) (0.03c)
(1) The Group has no non-controlling interests and all
losses are attributable to the equity holders of the Parent Company
Balance Sheet as at 31 December 2015
Group
2015 2014
US$ US$
Non-current assets
Development and deferred exploration costs 8,679,246 11,799,271
Property, plant and equipment 40,150,484 54,103,898
Total non-current assets 48,829,730 65,903,169
Current assets
Inventories 6,908,790 8,070,215
Trade and other receivables 6,133,284 6,772,046
Prepayments 2,429,506 2,503,877
Cash and cash equivalents 2,191,759 9,813,602
Total current assets 17,663,339 27,159,740
Current liabilities
Trade and other payables 4,212,803 4,601,337
Interest-bearing liabilities 11,385,155 16,228,220
Derivative financial liabilities - 528,503
Accruals 226,197 167,377
Total current liabilities 15,824,155 21,525,437
Net current assets/ (liabilities) 1,839,184 5,634,303
Total assets less current liabilities 50,668,914 71,537,472
Non-current liabilities
Trade and other payables 1,857,914 1,424,798
Provisions 1,898,714 2,829,468
Interest-bearing liabilities 128,641 364,655
Total non-current liabilities 3,885,269 4,618,921
Net assets 46,783,645 66,918,551
Equity
Share capital 5,263,182 61,668,212
Share premium reserve - 67,656,848
Option reserve 2,747,415 2,400,080
Other reserves 450,262 450,262
Translation reserve (39,226,535) (18,736,292)
Retained surplus / (accumulated losses) 77,549,321 (46,520,559)
Equity shareholders' funds attributable to owners of the parent 46,783,645 66,918,551
Statements of Changes in Shareholders' Equity
For the year ended 31 December 2015
Group Share capital Share premium Share option reserve Other reserves Translation reserve Retained Surplus Total equity
US$ US$ US$ US$ US$ US$ US$
Equity shareholders' funds at 31 December 2013 60,003,212 54,479,151 2,330,789 789,076 (10,771,173) (46,796,348) 60,034,707
Foreign currency adjustments - - - - (7,965,119) - (7,965,119)
Loss for year - - - - - (174,401) (174,401)
Total comprehensive income for the year - - - - (7,965,119) (174,401) (8,139,520)
Issue of new ordinary shares for cash 1,665,000 13,302,000 - - - 14,967,000
Costs associated with issue of new ordinary shares for cash (202,235) - - - - (202,235)
Convertible loan stock repaid - - - (260,882) - 260,882 -
Warrants lapsed in period - 77,932 - (77,932) - - -
Share options lapsed in period - - (189,308) - - 189,308 -
Share option expense - - 258,599 - - - 258,599
Equity shareholders' funds at 31 December 2014 61,668,212 67,656,848 2,400,080 450,262 (18,736,292) (46,520,559) 66,918,551
Foreign currency adjustments - - - - (20,490,243) - (20, 490,243)
Loss for year - - - - - (48,738) (48,738)
Total comprehensive income for the year - - - - (20,490,243) (48,738) (20,538,981)
Cancellation of share premium (67,656,848) - - - 67,656,848 -
Cancellation of deferred shares (56,405,030) - - - - 56,405,030 -
Share options lapsed in period - - (56,740) - - 56,740 -
Share option expense - - 404,075 - - - 404,075
Equity shareholders' funds at 31 December 2015 5,263,182 - 2,747,415 450,262 (39,226,535) 77,549,321 46,783,645
Other reserves comprise a merger reserve of US$361,461 (2014 : US$361,461)
and a warrant reserve of US88,801 (2014 : US$88,801).
Cash Flow Statements
For the year ended 31 December 2015
Group
For the year ended 31 December 2015 For the year ended 31 December 2014
US$ US$
Cash outflows from operating activities
Operating loss (48,738) (174,401)
Net financial (income) /expense 400,142 (1,156,576)
Depreciation - plant, equipment and mining properties 5,840,769 2,633,578
Write back of impairment provision - (2,590,532)
Taxation 525,032 -
Share-based payments 404,075 258,598
Write-back of provision for contingencies - (298,088)
Interest paid (1,006,508) (343,738)
Foreign exchange (1,482,239) 462,326
Finance charges (171,500) (228,510)
Changes in working capital
Increase in inventories (1,617,365) (4,157,262)
(Increase)/decrease in receivables, prepayments and accrued income (272,978) (8,218,764)
Increase in payables, accruals and provisions 1,831,710 1,153,538
Increase in short term intercompany payables - -
Net cash flow from operations 4,402,400 (12,659,831)
Investing activities
Sales revenues - capitalised 3,337,071 4,079,663
Capitalised pre-operating costs (5,422,606) (7,665,510)
Purchase of property, plant, equipment and projects in construction (2,985,139) (5,613,297)
Mine development expenditure (1,539,729) (301,723)
Capital and loan investments in subsidiaries - -
Interest received and other finance income 675,643 36,141
Net cash outflow on investing activities (5,934,760) (9,464,726)
Financing activities
Issue of ordinary share capital - 16,650,000
Receipts from short term secured loans - 10,750,000
Repayment of short term secured loan (4,000,000) (5,500,000)
Repayment of convertible loan stock - (477,780)
Payment of finance lease liabilities (757,596) (706,457)
Receipts for short term trade finance 21,787,907 16,205,212
Repayment of short term trade finance (22,899,024) (8,441,166)
Acquisition of subsidiary - cash acquired - -
Payment of share issue costs - (202,235)
Net cash inflow from financing activities (5,868,713) 28,277,574
Net (decrease) / increase in cash and cash equivalents (7,401,073) 6,153,017
Cash and cash equivalents at beginning of period 9,813,602 3,789,263
Exchange difference on cash (220,770) (128,678)
Cash and cash equivalents at end of period 2,191,759 9,813,602
Notes
1. General Information
The financial information set out above for the years ended 31 December 2015
and 31 December 2015 does not constitute statutory accounts as defined in
Section 434 of the Companies Act 2006, but is derived from those accounts.
Whilst the financial information included in this announcement has been
compiled in accordance with International Financial Reporting Standards
("IFRS") this announcement itself does not contain sufficient financial
information to comply with IFRS. A copy of the statutory accounts for 2014 has
been delivered to the Registrar of Companies and those for 2015 will be
submitted for approval by shareholders at the Annual General Meeting. The full
audited financial statements for the years end 31 December 2014 and 31
December 2014 do comply with IFRS.
2. Auditor's Opinion
The auditor has issued an unqualified opinion in respect of the financial
statements which does not contain any statements under the Companies Act 2006,
Section 498(2) or Section 498(3). The auditor has raised an Emphasis of
Matter in relation to going concern and the availability of project finance as
follows:
"In forming our opinion, which is not modified, we have considered the
adequacy of the disclosures made in Note 1(a) to the financial statements
concerning the group's ability to continue as a going concern. Whilst the
Group has access to further unsecured loan amounts in the near term, these
loans must be repaid by 31 January 2017. In order to meet its existing
commitments and liabilities as they fall due, the Group is dependent on its
ability to successfully achieve planned production levels for the year from
the Palito and Sao Chico mines, the latter of which achieved commercial
production on 1 January 2016. There are risks associated with the
commencement of a new mining operation and additional working capital may be
required to fund unforeseen technical and logistical events should they
occur. The Group is also susceptible to changes in gold price and currency
exchange rates which are outside of its control. These conditions, along
with the other matters explained in Note 1(a) to the financial statements
indicate the existence of a material uncertainty which may cast significant
doubt about the Group's ability to continue as a going concern. The financial
statements do not include the adjustments that would result if the Group and
the Company were unable to continue as a going concern."
NB: The reference to note 1(a) in the above is a reference to the Basis of
preparation note contained within the Financial Statements from which the
extract reproduced below referring to Going Concern is taken.
3. Basis of Preparation
The financial statements have been prepared in accordance with International
Financial Reporting Standards ("IFRS") in force at the reporting date and
their interpretations issued by the International Accounting Standards Board
("IASB") as adopted for use within the European Union and with IFRS and their
interpretations issued by the IASB. The consolidated financial statements have
also been prepared in accordance with those parts of the Companies Act 2006
applicable to companies reporting under IFRS.
It is not anticipated that the adoption in the future of the new or revised
standards or interpretations that have been issued by the International
Accounting Standards Board but are not yet effective will have a material
impact on the Group's earnings or shareholders' funds. The Company has not
adopted any new standards in advance of the effective dates.
Going concern and availability of project finance
Having commenced initial development activities for the Sao Chico Mine at the
end of 2014, this mine has been in development during 2015. On 1 February
2016, the Group announced that with effect from 1 January 2016 the Sao Chico
Mine had achieved Commercial Production. The Palito Mine has been in
Commercial Production since 1 July 2014.
On 30 December 2015 the Group entered into an agreement with Fratelli
Investments Ltd ("Fratelli"), its major shareholder whereby Fratelli agreed to
provide an unsecured short term working capital convertible loan facility of
US$5 million ("the Facility") to provide additional working capital
facilities. On 6 January 2016 the Group announced that it had made an
initial draw down of US$2 million against the Facility. The balance of the
Facility may be drawdown at any time up to 30 June 2016. The facility is to
be repaid by 31 January 2017.
The Group has a secured loan facility which is repayable by 31 December
2016. At 31 December 2015 the amount outstanding under this facility was
US$4.0 million.
The Directors anticipate the Group now has access to sufficient funding for
its immediate projected needs. The Group expects to have sufficient cash
flow from its forecast production to finance its on-going operational
requirements to repay its secured and unsecured loan facilities and to, at
least in part, fund exploration and development activity on its other gold
properties. However the forecasted cash flow projections for the next twelve
months include a significant increase in production from the Sao Chico Mine
compared with the preceding calendar year. Whilst the Group has declared
Commercial Production at the Sao Chico Mine, there are risks associated with
the commencement of any new mining operation whereby unforeseen technical
and logistical events result in additional costs needing to be incurred,
giving rise to the possibility that additional working capital may be
required. Additionally the Group is exposed to changes in gold price and
currency exchange rates. Should additional working capital be required the
Directors consider that further sources of finance could be secured within the
required timescale. On this basis the Directors have therefore concluded
that it is appropriate to prepare the financial statements on a going concern
basis. However there is no certainty that such additional funds either for
working capital or for future development will be forthcoming and these
conditions indicate the existence of a material uncertainty which may cast
significant doubt over the Group's ability to continue as a going concern and
therefore that it may be unable to realise its assets and discharge its
liabilities in the normal course of business. The financial statements do
not include the adjustments that would result if the Group was unable to
continue as a going concern.
4. Finance Income and expense
Group
For the For the
year ended year ended
31 December 31 December
2015 2014
US$ US$
Interest on trade financing loan (364,656) (228,510)
Finance cost on Sprott Loan (526,500) (120,000)
Interest on short-term loan (586,667) (101,782)
Interest payable on finance leases (32,388) (81,501)
Finance charge re convertible loan stock - (75,763)
Other finance-related expenses (22,797) (79,726)
Interest payable (1,533,008) (687,282)
Release of fair value for call options granted 196,330 123,670
Release of fair value for warrants issued (1) 332,173 1,350,827
Income from gold hedging activities 674,520 366,962
Gains on financial instruments 1,203,023 1,841,459
Finance income on short-term deposits 1,123 36,141
Net finance income/(cost) (328,862) 1,190,318
(1) The release of fair value for warrants issued relates to
100,000,000 warrants to subscribe for new ordinary shares issued by the
Company on 3 March 2014. The Company accounted for the issue of these
warrants in accordance with IAS32 and recorded a liability of US$1.68 million
at the date of issue. As at 31 December 2015 the fair value of these
warrants was assessed to be US$nil (2014 : US$332,173) and the reduction in
fair value has been recognised through the income statement. The warrants
expired on 2 March 2016 with none having been exercised.
5. Loss per Share
The calculation of the basic loss per share of 0.01 cents (2014: loss per
share: 0.03 cents) is based on the loss attributable to ordinary shareholders
of US$48,738 (2014: loss of US$174,401) and on the weighted average number of
ordinary shares of 656,389,204 (2014: 622,964,546) in issue during the period.
Diluted loss per share is the same as the basic loss per share because the
exercise of share options would be anti-dilutive.
6. Post balance sheet events
On 31 December 2015, the Group announced that it had entered into an
agreement with Fratelli Investments Ltd ("Fratelli"), its major shareholder
whereby Fratelli had agreed to provide a unsecured short term working capital
convertible loan facility of US$5 million ("the Facility") to provide
additional working capital facilities. On 6 January 2016 the Group announced
that it had made an initial draw down of US$2 million against the Facility.
On 1 February 2016 the Group announced that it had agreed an extended
repayment period for the remainder of the loan with Sprott Resource Lending
Partnership ("Sprott"), the outstanding balance of which amounted to US$4
million as at 31 December 2015. The balance of the loan had been due to be
repaid to Sprott by 31 March 2016. The Group has now agreed with Sprott that
the balance of the loan shall be repaid in nine equal monthly instalments
commencing 30 April 2016 and ending 31 December 2016. In the event that the
Group elects to make any early repayment a penalty fee can be applied which
depending on the time of repayment could be a maximum of 5% of the outstanding
loan balance at that time. The interest rate applied to the loan remains at
10% per annum. The Group has granted to Sprott a call option over 2,500
ounces of gold at a strike price of US$1,125 per ounce. Sprott has the right
to exercise its call option, subject to a minimum of 500 ounces, at any time
up to 30 June 2017. The call option if exercised will be settled in cash.
The Group has announced that effective from 1 January 2016 the Sao Chico Mine
had entered into commercial production.
Qualified Persons Statement
The scientific and technical information contained within this announcement
has been reviewed and approved by Michael Hodgson, a Director of the Company.
Mr Hodgson is an Economic Geologist by training with over 26 years' experience
in the mining industry. He holds a BSc (Hons) Geology, University of London, a
MSc Mining Geology, University of Leicester and is a Fellow of the Institute
of Materials, Minerals and Mining and a Chartered Engineer of the Engineering
Council of UK, recognising him as both a Qualified Person for the purposes of
Canadian National Instrument 43-101 and by the AIM Guidance Note on Mining and
Oil & Gas Companies dated June 2009.
Forward Looking Statements
Certain statements in this announcement are, or may be deemed to be, forward
looking statements. Forward looking statements are identifiied by their use of
terms and phrases such as ''believe'', ''could'', "should" ''envisage'',
''estimate'', ''intend'', ''may'', ''plan'', ''will'' or the negative of
those, variations or comparable expressions, including references to
assumptions. These forward looking statements are not based on historical
facts but rather on the Directors' current expectations and assumptions
regarding the Company's future growth, results of operations, performance,
future capital and other expenditures (including the amount, nature and
sources of funding thereof), competitive advantages, business prospects and
opportunities. Such forward looking statements reflect the Directors' current
beliefs and assumptions and are based on information currently available to
the Directors. A number of factors could cause actual results to differ
materially from the results discussed in the forward looking statements
including risks associated with vulnerability to general economic and business
conditions, competition, environmental and other regulatory changes, actions
by governmental authorities, the availability of capital markets, reliance on
key personnel, uninsured and underinsured losses and other factors, many of
which are beyond the control of the Company. Although any forward looking
statements contained in this announcement are based upon what the Directors
believe to be reasonable assumptions, the Company cannot assure investors that
actual results will be consistent with such forward looking statements.
ENDS
This announcement is distributed by NASDAQ OMX Corporate Solutions on behalf
of NASDAQ OMX Corporate Solutions clients.
The issuer of this announcement warrants that they are solely responsible for
the content, accuracy and originality of the information contained therein.
Source: Serabi Gold plc via Globenewswire
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