REG - SolGold PLC - Half-Yearly Financial Report <Origin Href="QuoteRef">SOLG.L</Origin> - Part 2
15/02/2018 07:05
- Part 2: For the preceding part double click ID:nRSO8571Ea
revised and amended
standards, which are not yet mandatory in the EU. The list below includes only
standards and interpretations that could have an impact on the Consolidated
Financial Statements of the Group.
Effective period commencing on or after
IFRS 9 Financial instruments 1 Jan 2018
IFRS 15 Revenue from contracts with customers 1 Jan 2018
IFRS 161 Leases 1 Jan 2019
IAS 121 Amendment - Recognition of deferred tax assets for unrealised losses 1 Jan 2017
IAS 71 Amendment - Disclosure initiative 1 Jan 2017
IFRS 21 Amendment - Classification and measurement of share based payment transactions 1 Jan 2018
1 Not yet adopted by the European Union
IFRS 9 Financial instruments
The complete standard was issued in July 2014 including the requirements
previously issued and additional amendments. The new standard replaces IAS 39
and includes a new expected loss impairment model, changes to the
classification and measurement requirements of financial assets as well as to
hedge accounting. The new standard becomes effective for financial years
beginning on or after 1 January 2018. The Group has reviewed its existing
arrangements in place and has concluded that the adoption of this standard is
not expected to have a material impact in the future periods.
IFRS 15 Revenue from contracts with customers
The new standard was issued in May 2014. IFRS 15 is intended to introduce a
single framework for revenue recognition and clarify principles of revenue
recognition. This standard modifies the determination of when to recognise
revenue and how much revenue to recognise. The new standard becomes mandatory
for financial years beginning on or after 1 January 2018. The effect will be
assessed and disclosure will be made once the Group has assessed the impact of
applying IFRS 15. The adoption of this standard is not expected to have a
material impact in the future periods until the Group commences generating
revenues from its exploration projects.
IFRS 16 Leases
The new standard was issued in January 2016 replacing the previous leases
standard, IAS 17 Leases, and related Interpretations. IFRS 16 establishes the
principles for the recognition, measurement, presentation and disclosure of
leases for the customer ('lessee') and the supplier ('lessor'). IFRS 16
eliminates the classification of leases as either operating or finance as is
required by IAS 17 and, instead, introduces a single lessee accounting model
requiring a lessee to recognise assets and liabilities for all leases unless
the underlying asset has a low value or the lease term is twelve months or
less. This new standard applies to annual reporting periods beginning on or
after 1 January 2019 subject to EU endorsement. The Group has reviewed its
arrangements in place and has concluded that the adoption of this standard is
not expected to have a material impact in the future periods.
NOTES TO THE interim condensed CONSOLIDATED FINANCIAL STATEMENTS
FOR THE HALF-YEAR ENDED 31 DECEMBER 2017
NOTE 1 summary of significant accounting policies
Taxation
Deferred tax is provided using the balance sheet liability method, providing
for temporary differences between the carrying amounts of assets and
liabilities for financial reporting purposes and the amounts used for taxation
purposes. The amount of deferred tax provided is based on the expected manner
of realisation or settlement of the carrying amount of assets and liabilities,
using tax rates enacted or substantively enacted at the reporting date. A
deferred tax asset is recognised only to the extent that it is probable that
future taxable profits will be available against which the asset can be
utilised. Deferred tax assets are reduced to the extent that it is no longer
probable that the related tax benefit will be realised. The tax expense
(benefit) recognised at the reporting date is predominantly reflects the tax
effect on the mark to market of the available-for-sale financial assets.
NOTE 2 OPERATING SEGMENTS
The Group determines and separately reports operating segments based on
information that is internally provided to the Directors, who are the Group's
chief operating decision makers.
The Group has outlined below the separately reportable operating segments,
having regard to the quantitative threshold tests provided in IFRS 8 Operating
Segments, namely that the relative revenue, asset or profit / (loss) position
of the operating segment equates to 10% or more of the Group's respective
total. The Group reports information to the Board of Directors by project
areas. That is, the financial position of each project area is reported
discreetly, together with an aggregated corporate and administrative cost
centre.
31 December 2017(unaudited)
FinanceIncomeA$ IncomeA$ Loss for the periodA$ Share Based PaymentsA$ AssetsA$ LiabilitiesA$ Non-current asset additionsA$
Cascabel project* - - (380,175) - 74,560,293 6,103,831 22,932,224
Other Ecuadorian projects - - (12,718) - 8,704,043 310,257 5,095,785
Queensland projects - - (4,559) - 12,771,723 12,233 483
Solomon Islands projects - - (39,925) - 48,033 251 -
Corporate 66 - (11,274,650) 5,199,047 143,183,699 2,033,195 (5,164,233)
Total 66 - (11,712,027) 5,199,047 239,267,791 8,459,767 22,864,259
30 June 2017(audited)
FinanceIncomeA$ IncomeA$ Loss for the periodA$ Share Based PaymentsA$ AssetsA$ LiabilitiesA$ Non-current asset additionsA$
Cascabel project* - - (546,315) - 49,132,923 1,783,879 16,590,892
Other Ecuadorian projects - - (6,487) - 3,355,760 186,211 3,355,760
Queensland projects 30 30 (2,692) - 12,466,324 8,408 484
Solomon Islands projects 39 39 (31,942) - 29,406 - -
Corporate - - (3,912,536) 2,239,533 101,729,194 762,677 12,944,385
Total 69 69 (4,499,972) 2,239,533 166,713,607 2,741,175 32,891,521
NOTES TO THE interim condensed CONSOLIDATED FINANCIAL STATEMENTS
FOR THE HALF-YEAR ENDED 31 DECEMBER 2017
NOTE 2 OPERATING SEGMENTS (continued)
31 December 2016(unaudited)
FinanceIncomeA$ OtherIncomeA$ Loss for the periodA$ Share Based PaymentsA$ AssetsA$ LiabilitiesA$ Non-current asset additionsA$
Cascabel project* - - (247,074) - 31,938,967 1,365,466 5,250,745
Other Ecuadorian projects - - - - - - -
Queensland projects - - (1,115) - 9,271,537 30,644 64,750
Solomon Islands projects - - (537) - 321,754 9,946 249
Corporate 69 - (1,337,852) 3,845,520 69,393,803 746,606 5,797,918
Total 69 - (1,586,578) 3,845,520 110,926,061 2,152,662 11,113,662
* The Cascabel project is held by the subsidiary Exploraciones Novomining S.A.
which is 15% owned by a non-controlling interest.
Geographical information
Non-current assets 31 December 2017A$ 30 June 2017A$
UK - -
Australia 19,562,937 24,726,686
Solomon Islands - -
Ecuador 79,394,843 51,366,835
98,957,780 76,093,521
NOTES TO THE interim condensed CONSOLIDATED FINANCIAL STATEMENTS
FOR THE HALF-YEAR ENDED 31 DECEMBER 2017
NOTE 3 operating loss
Three months ended31 December 2017 Three months ended31 December 2016 Six months ended31 December 2017 Six months ended31 December 2016
A$ A$ A$ A$
The operating loss is stated after charging (crediting)
Interest revenue - external parties - 69 69 143
- 69 69 143
Administrative and consulting expenses 2,419,417 706,270 4,033,397 1,355,274
Employment expenses 270,997 170,937 562,098 330,014
Depreciation 11,897 10,846 23,924 12,891
Foreign exchange (gains) (1,734,534) (2,852,630) (61,724) (2,949,984)
Share based payments 2,951,473 3,845,520 5,199,047 3,845,520
3,919,251 1,880,943 9,756,742 2,593,715
Note 4 Loss per share
Six months ended31 December 2017 Six months ended31 December 2016
Calculation of basic and diluted loss per share is in accordance with IAS 33 Earnings per Share.
Loss per ordinary share
Basic loss per share (cents per share) (0.8) (0.1)
Diluted loss per share (cents per share) (0.8) (0.1)
Net loss used in calculating basic and diluted loss per share (A$) (11,712,027) (1,586,578)
Number Number
Weighted average number of ordinary share used in the calculation of basic loss per share 1,546,315,360 1,226,022,320
Weighted average number of dilutive options 6,763,730 7,210,611
Weighted average number of ordinary shares used in the calculation of diluted loss per share 1,553,079,090 1,233,232,931
NOTES TO THE interim condensed CONSOLIDATED FINANCIAL STATEMENTS
FOR THE HALF-YEAR ENDED 31 DECEMBER 2017
Note 5 intangible Assets
Deferred exploration costs
A$
Cost
Balance at 1 July 2016 92,810,120
Additions 18,660,501
Balance at 30 June 2017 111,470,621
Additions 26,647,854
Balance at 31 December 2017 138,118,475
Impairment losses
Balance at 1 July 2016 (51,730,206)
Impairment charge (17,310)
Balance at 30 June 2017 (51,747,516)
Impairment charge (1,877)
Balance at 31 December 2017 (51,749,393)
Carrying amounts
At 30 June 2016 41,079,914
At 30 June 2017 59,723,105
At 31 December 2017 86,369,082
Recoverability of the carrying amount of exploration assets is dependent on
the successful development and commercial exploitation of areas of interest,
and the sale of minerals or the sale of the respective areas of interest.
Note 6 investment in available for sale securities
(a) Investments accounted for as available-for-sale assets
31 December 2017 30 June 2017
A$ A$
Movements in available for sale assets
Opening balance at the beginning of the reporting period 14,366,304 1,622,711
Fair value adjustment through other comprehensive income (5,458,096) 12,743,593
Closing balance at the end of the reporting period 8,908,208 14,366,304
Available for sale financial assets comprise an investment in the ordinary
issued capital of Cornerstone Capital Resources Inc., listed on the Toronto
Venture Exchange ("TSXV") and an investment in the ordinary issued capital of
Aus Tin Mining Ltd, a company listed on the Australian Securities Exchange.
NOTES TO THE interim condensed CONSOLIDATED FINANCIAL STATEMENTS
FOR THE HALF-YEAR ENDED 31 DECEMBER 2017
Note 6 investment in available for sale securities (continued)
(b) Fair value
Fair value hierarchy
The following table details the consolidated entity's assets and liabilities,
measured or disclosed at fair value, using a three level hierarchy, based on
the lowest level of input that is significant to the entire fair value
measurement being:
Level 1: Quoted prices (unadjusted) in active markets for identical assets or
liabilities that the entity can access at the measurement date.
Level 2: Inputs other than quoted prices included within Level 1 that are
observable for the asset or liability, either directly or indirectly.
Level 3: Unobservable inputs for the asset or liability.
The fair values of financial assets and financial liabilities approximate
their carrying amounts principally due to their short-term nature or the fact
that they are measured and recognised at fair value.
The following table represents the Group's financial assets and liabilities
measured and recognised at fair value.
A$ A$ A$ A$
Level 1 Level 2 Level 3 Total
31 December 2017
Available for sale financial assets 8,908,208 - - 8,908,208
30 June 2017
Available for sale financial assets 14,366,304 - - 14,366,304
The available for sale financial assets are measured based on the quoted
market prices at 31 December 2017 and 30 June 2017.
NOTES TO THE interim condensed CONSOLIDATED FINANCIAL STATEMENTS
FOR THE HALF-YEAR ENDED 31 DECEMBER 2017
Note 7 SHARE CAPITAL
Half Year Ended 31 December2017 Full Year Ended 30 June
2017
A$ A$
a) Issued capital and share premium
Ordinary shares fully paid up 302,233,468 225,698,701
b) Movement in ordinary shares
At the beginning of the reporting period 225,698,701 104,503,526
Shares issued during the period 78,406,209 127,670,249
Transaction costs on share issue (1,871,442) (6,475,074)
At reporting date 302,233,468 225,698,701
Half Year Ended 31 December2017 Full Year Ended 30 June
2017
Number Number
c) Movement in number of ordinary shares on issue
Shares at the beginning of the reporting period 1,512,955,685 953,897,601
- Shares issued at £0.06 - Placement 28 August 2016 - 268,819,004
- Shares issued at £0.13 - Placement 17 October 2016 - 206,250,000
- Shares issued at £0.14 - Exercise of options 17 January 2017 - 900,000
- Shares issued at £0.30 - Newcrest share issue 31 January 2017 - 100,000
- Shares issued at £0.14 - Exercise of options 3 February 2017 - 1,200,000
- Shares issued at £0.14 - Exercise of options 21 February 2017 - 900,000
- Shares issued at £0.38 - Newcrest share issue 1 March 2017 - 240,000
- Shares issued at £0.41 - Placement 16 June 2017 - 78,889,080
- Shares issued at £0.14 - Exercise of options 26 June 2017 - 880,000
- Shares issued at £0.28 - Exercise of options 26 June 2017 - 880,000
- Shares issued at £0.14 - Exercise of options 7 July 2017 1,300,000 -
- Shares issued at £0.28 - Exercise of options 7 July 2017 1,300,000 -
- Shares issued at £0.38 - Newcrest share issue 11 August 2017 690,000 -
- Shares issued at £0.25 - Placement 30 November 2017 180,000,000 -
Shares at the reporting date 1,696,245,686 1,512,955,685
NOTES TO THE interim condensed CONSOLIDATED FINANCIAL STATEMENTS
FOR THE HALF-YEAR ENDED 31 DECEMBER 2017
NOTE 8 share options
At 31 December 2017 the Company had 88,353,768 options outstanding for the
issue of ordinary shares (31 December 2016: 48,051,768).
Options
Share options are granted to employees under the company's Employee Share
Option Plan ("ESOP"). The employee share option plan is designed to align
participants' interests with those of shareholders.
Unless otherwise documented by the Company, when a participant ceases
employment prior to the vesting of their share options, the share options are
forfeited after 90 days unless cessation of employment is due to termination
for cause, whereupon they are forfeited immediately. The Company prohibits key
management personnel from entering into arrangements to protect the value of
unvested ESOP awards.
The contractual life of each option granted is generally two to three years.
There are no cash settlement alternatives.
Each option can be exercised from vesting date to expiry date for one share
with the exercise price payable in cash.
Share options issued
There were 46,762,000 options granted during the period ended 31 December 2017
(31 December 2016: 41,591,768).
On 9 August 2017, the Company issued a combined total of 46,762,000 unlisted
share options over ordinary shares of the Company, including:
· 36,750,000 share options to Directors following approval granted by
shareholders at the Company's AGM on 28 July 2017;
· 10,000,000 share options to its two key geologists; and
· 12,000 share options to a third party as part of the capital raising
fees for the Company's last equity placement.
The options are exercisable at £0.60 and expire on 8 August 2020. The share
options for Directors and the geological executives have a vesting period of
18 months unless triggered by a change of control transaction.
The share options outstanding at 31 December 2017 are as follows:
Date of grant Exercisable from Exercisable to Exercise prices Number granted Number at 31 December2017
17 October 2016 The options vested immediately through to 17 October 2018 17 October 2018 £0.14£0.28 9,795,8849,795,884 9,795,8849,795,884
17 November 2016 The options vest on the earlier of:(a) the expiry of 75% of the Term, or (b) a Change of Control Transaction 28 October 2018 £0.28 22,000,000 22,000,000
9 August 2017 The options vest on the earlier of:(a) 18 months, or (b) a Change of Control Transaction 8 August 2020 £0.60 46,750,000 46,750,000
9 August 2017 The options vested immediately, through to 8 August 2020 8 August 2020 £0.60 12,000 12,000
88,353,768 88,353,768
NOTES TO THE interim condensed CONSOLIDATED FINANCIAL STATEMENTS
FOR THE HALF-YEAR ENDED 31 DECEMBER 2017
NOTE 8 share options (continued)
Share-based payments
The number and weighted average exercise price of share options are as
follows:
Weighted average exercise price31 December2017 Number of options31 December2017 Weighted average exercise price31 December 2016 Number of options31 December2016
Outstanding at the beginning of the period £0.25 44,191,768 £0.27 21,380,000
Exercised during the period £0.21 (2,600,000) - -
Lapsed during the period - - - -
Granted during the period £0.60 46,762,000 - -
Outstanding at the end of the period £0.44 88,353,768 £0.27 21,380,000
Exercisable at the end of the period £0.21 19,591,768 - -
The options outstanding at 31 December 2017 have exercise prices of £0.14,
£0.28 and £0.60 (31 December 2016: £0.14 - £0.28) and a weighted average
contractual life of 1.76 years (31 December 2016: 1.81 years).
Share options held by Directors are as follows:
Nicholas Mather 26,250,000 - 60p 07/02/19 - 08/08/20
- 750,000 14p 08/07/14 - 08/07/17
- 750,000 28p 08/07/14 - 08/07/17
Brian Moller 3,750,000 - 60p 07/02/19 - 08/08/20
- 550,000 14p 08/07/14 - 08/07/17
- 550,000 28p 08/07/14 - 08/07/17
Robert Weinberg 2,250,000 - 60p 07/02/19 - 08/08/20
- 440,000 14p 08/07/14 - 08/07/17
- 440,000 28p 08/07/14 - 08/07/17
John Bovard 2,250,000 - 60p 07/02/19 - 08/08/20
- 440,000 14p 08/07/14 - 08/07/17
- 440,000 28p 08/07/14 - 08/07/17
Craig Jones 2,250,000 - 60p 07/02/19 - 08/08/20
Craig Jones
2,250,000
-
60p
07/02/19 - 08/08/20
NOTES TO THE interim condensed CONSOLIDATED FINANCIAL STATEMENTS
FOR THE HALF-YEAR ENDED 31 DECEMBER 2017
NOTE 8 SHARE OPTIONS (continued)
Share-based payments (continued)
The fair value of services received in return for share options granted is
measured by reference to the fair value of share options granted. This
estimate is based on either a Black-Scholes model or Monte Carlo Simulation
considering the effects of the vesting conditions, expected exercise period
and the dividend policy of the Company.
Fair value of share options and assumptions £0.14 Options17 October 2016 £0.28 Options17 October 2016 £0.28 Options28 October 2016 £0.60 Options9 August 2017
Number of options 9,795,884 9,795,884 22,000,000 46,762,000
Fair value at issue date £0.12 £0.09 £0.14 £0.365-£0.375
Exercise price £0.14 £0.28 £0.28 £0.60
Expected volatility 99.744% 99.744% 99.744% 89.714%
Option life 2.00 years 2.00 years 2.00 years 3.00 years
Expected dividends 0.00% 0.00% 0.00% 0.00%
Risk-free interest rate (short-term) 0.53% 0.53% 0.66% 0.461%
Valuation methodology Black-Scholes Black-Scholes Black-Scholes Black-Scholes
A$ A$ A$ A$
Share based payments expense recognised in statement of comprehensive income - - 1,599,304 3,599,741
Share based payments expense recognised as share issue costs - - - 3,411
Share based payments expense to be recognised in future periods - - 1,066,202 9,311,176
The calculation of the volatility of the share price was based on the
Company's daily closing share price over the two-three year period prior to
the date the options were issued.
NOTES TO THE interim condensed CONSOLIDATED FINANCIAL STATEMENTS
FOR THE HALF-YEAR ENDED 31 DECEMBER 2017
NOTE 9 RELATED PARTIES
Transactions with Directors and Director-Related Entities
(i) The Company had a commercial agreement with Samuel Capital Ltd
("Samuel") for the engagement of Nicholas Mather as Chief Executive Officer
and Executive Director of the Company. For the half year ended 31 December
2017 A$200,000 was paid or payable to Samuel (2016: A$75,000). The total
amount outstanding at the end of the half year was A$ nil (31 December 2016:
A$ nil, 30 June 2017 A$26,725).
(ii) SolGold plc has a standing Administration and Services Agreement
with DGR Global Ltd, an entity associated with Nicholas Mather (a Director)
and Brian Moller (a Director) whereby DGR Global Ltd has agreed to provide
certain services including the provision by DGR Global Ltd of its premises
(for the purposes of conducting the Company's business operations), use of
existing office furniture, equipment and certain stationery, together with
general telephone, reception and other office facilities (''Services''). In
consideration for the provision of the Services, the Company shall reimburse
DGR Global Ltd for any expenses incurred by it in providing the Services. DGR
Global Ltd was paid A$180,000 (2016: A$180,000) for the provision of
administration, management and office facilities to the Company during the
half year. The total amount outstanding at half year end is A$30,000 (31
December 2016: A$ nil, 30 June 2017 A$22,011).
(iii) Mr Brian Moller (a Director), is a partner in the Australian firm
Hopgood Ganim Lawyers. Hopgood Ganim were paid A$181,330 (2016: A$172,631) for
the provision of legal services to the Company during the half year. These
services were based on normal commercial terms and conditions. The total
amount outstanding at half year end is A$33,263 (31 December 2016: A$26,253,
30 June 2017 A$92,350).
NOTE 10 COMMITMENTS AND CONTINGENT ASSET AND LIABILITIES
A 2% net smelter royalty is payable to Santa Barbara Resources Limited, who
were the previous owners of the Cascabel tenements. These royalties can be
bought out by paying a total of US$4 million. Fifty percent (50%) of the
royalty can be purchased for US$1 million 90 days following the completion of
a feasibility study and the remaining 50% of the royalty can be purchased for
US$3 million 90 days following a production decision.
In the event Cornerstone Capital Resources Inc.'s (Cornerstone) equity
interest in ENSA is diluted below 10%, Cornerstone's equity interest will be
converted to a half of one percent (0.5%) interest in a Net Smelter Return and
SolGold will have right to purchase the Net Smelter Return for US$3.5 million
at any time.
There are no other significant changes to commitments and contingencies
disclosed in the most recent annual financial report.
NOTE 11 SUBSEQUENT EVENTS
On 3 January 2018, SolGold announced a maiden Mineral Resource Estimate (MRE)
at Alpala, completed from 53,616m of drilling reported in accordance with the
Canadian Institute of Mining, Metallurgy and Petroleum (CIM) Definition
Standards for Mineral Resources and Mineral Reserves (May 2014). The Alpala
maiden mineral resource estimate totals a current 430 Mt @ 0.8% CuEq (at 0.3%
CuEq cut off) in the Indicated category, and 650 Mt @ 0.6% CuEq (at 0.3% CuEq
cut off) in the Inferred category; contained metal content of 2.3 Mt Cu in the
Indicated category and 2.9 Mt Cu in the Inferred category; and contained metal
content of 6.0 Mt Au in the Indicated category and 6.3 Moz Au in the Inferred
category.
The Directors are not aware of any other significant changes in the state of
affairs of the Group or events after balance date that would have a material
impact on the half year condensed consolidated financial statements.
DIRECTORS' RESPONSIBILITY STATEMENT AND REPORT ON PRINCIPAL RISKS AND
UNCERTAINTIES
Responsibility statement:
We confirm to the best of our knowledge:
a) The condensed set of financial statements have been prepared in
accordance with IAS 34 Interim Financial Reporting as adopted by the EU
b) The interim management report includes a fair review of the information
required by:
I. DTR 4.2.7R of the Disclosure and Transparency Rules, being an indication
of important events that have occurred during the first six months of the
financial year and their impact on the condensed set of financial statements:
and a description of the principal risks and uncertainties for the remaining
six months of the year; and
II. DTR 4.2.8R of the Disclosure and Transparency Rules, being related party
transactions that have taken place in the first six months of the current
financial year and that have materially affected the financial position or
performance of the entity during the period, and any changes in the related
party transactions described in the last annual report that could do so.
This report contains forward-looking statements. These statements are based on
current estimates and projections of management and currently available
information. Future statements are not guarantees of the future developments
and results outlined therein. Rather, future developments and results are
dependence on a number of factors; they involve various risks and
uncertainties and are based upon assumptions that may not prove to be
accurate. Risks and uncertainties identified by the Group are set out on page
x of the 2017 Annual Report and Accounts. We do not assume any obligation to
update the forward-looking statements contained in this report.
Signed in accordance with a resolution of Directors.
On behalf of the Directors
Nicholas Mather
Executive Director
Brisbane
15 February 2018
This information is provided by RNS
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- Part 2: For the preceding part double click ID:nRSO8571Ea
corporate and administrative cost
centre.
31 December 2017
(unaudited)
Finance Income Loss for the period Share Based Payments Assets Liabilities Non-current asset additions
Income A$ A$ A$ A$ A$ A$
A$
Cascabel project* - - (380,175) - 74,560,293 6,103,831 22,932,224
Other Ecuadorian projects - - (12,718) - 8,704,043 310,257 5,095,785
Queensland projects - - (4,559) - 12,771,723 12,233 483
Solomon Islands projects - - (39,925) - 48,033 251 -
Corporate 66 - (11,274,650) 5,199,047 143,183,699 2,033,195 (5,164,233)
Total 66 - (11,712,027) 5,199,047 239,267,791 8,459,767 22,864,259
30 June 2017
(audited)
Finance Income Loss for the period Share Based Payments Assets Liabilities Non-current asset additions
Income A$ A$ A$ A$ A$ A$
A$
Cascabel project* - - (546,315) - 49,132,923 1,783,879 16,590,892
Other Ecuadorian projects - - (6,487) - 3,355,760 186,211 3,355,760
Queensland projects 30 30 (2,692) - 12,466,324 8,408 484
Solomon Islands projects 39 39 (31,942) - 29,406 - -
Corporate - - (3,912,536) 2,239,533 101,729,194 762,677 12,944,385
Total 69 69 (4,499,972) 2,239,533 166,713,607 2,741,175 32,891,521
NOTES TO THE interim condensed CONSOLIDATED FINANCIAL STATEMENTS
FOR THE HALF-YEAR ENDED 31 DECEMBER 2017
NOTE 2 OPERATING SEGMENTS (continued)
31 December 2016
(unaudited)
Finance Other Loss for the period Share Based Payments Assets Liabilities Non-current asset additions
Income Income A$ A$ A$ A$ A$
A$ A$
Cascabel project* - - (247,074) - 31,938,967 1,365,466 5,250,745
Other Ecuadorian projects - - - - - - -
Queensland projects - - (1,115) - 9,271,537 30,644 64,750
Solomon Islands projects - - (537) - 321,754 9,946 249
Corporate 69 - (1,337,852) 3,845,520 69,393,803 746,606 5,797,918
Total 69 - (1,586,578) 3,845,520 110,926,061 2,152,662 11,113,662
* The Cascabel project is held by the subsidiary Exploraciones Novomining S.A.
which is 15% owned by a non-controlling interest.
Geographical information
Non-current assets 31 December 2017 30 June 2017
A$ A$
UK - -
Australia 19,562,937 24,726,686
Solomon Islands - -
Ecuador 79,394,843 51,366,835
98,957,780 76,093,521
NOTES TO THE interim condensed CONSOLIDATED FINANCIAL STATEMENTS
FOR THE HALF-YEAR ENDED 31 DECEMBER 2017
NOTE 3 operating loss
Three months ended Three months ended Six months ended Six months ended
31 December 2017 31 December 2016 31 December 2017 31 December 2016
A$ A$ A$ A$
The operating loss is stated after charging (crediting)
Interest revenue - external parties - 69 69 143
- 69 69 143
Administrative and consulting expenses 2,419,417 706,270 4,033,397 1,355,274
Employment expenses 270,997 170,937 562,098 330,014
Depreciation 11,897 10,846 23,924 12,891
Foreign exchange (gains) (1,734,534) (2,852,630) (61,724) (2,949,984)
Share based payments 2,951,473 3,845,520 5,199,047 3,845,520
3,919,251 1,880,943 9,756,742 2,593,715
Note 4 Loss per share
Six months ended Six months ended
31 December 2017 31 December 2016
Calculation of basic and diluted loss per share is in accordance with IAS 33
Earnings per Share.
Loss per ordinary share
Basic loss per share (cents per share) (0.8) (0.1)
Diluted loss per share (cents per share) (0.8) (0.1)
Net loss used in calculating basic and diluted loss per share (A$) (11,712,027) (1,586,578)
Number Number
Weighted average number of ordinary share used in the calculation of basic 1,546,315,360 1,226,022,320
loss per share
Weighted average number of dilutive options 6,763,730 7,210,611
Weighted average number of ordinary shares used in the calculation of diluted
loss per share
1,553,079,090 1,233,232,931
NOTES TO THE interim condensed CONSOLIDATED FINANCIAL STATEMENTS
FOR THE HALF-YEAR ENDED 31 DECEMBER 2017
Note 5 intangible Assets
Deferred exploration costs
A$
Cost
Balance at 1 July 2016 92,810,120
Additions 18,660,501
Balance at 30 June 2017 111,470,621
Additions 26,647,854
Balance at 31 December 2017 138,118,475
Impairment losses
Balance at 1 July 2016 (51,730,206)
Impairment charge (17,310)
Balance at 30 June 2017 (51,747,516)
Impairment charge (1,877)
Balance at 31 December 2017 (51,749,393)
Carrying amounts
At 30 June 2016 41,079,914
At 30 June 2017 59,723,105
At 31 December 2017 86,369,082
Recoverability of the carrying amount of exploration assets is dependent on
the successful development and commercial exploitation of areas of interest,
and the sale of minerals or the sale of the respective areas of interest.
Note 6 investment in available for sale securities
(a) Investments accounted for as available-for-sale assets
31 December 2017 30 June
2017
A$ A$
Movements in available for sale assets
Opening balance at the beginning of the reporting period 14,366,304 1,622,711
Fair value adjustment through other comprehensive income (5,458,096) 12,743,593
Closing balance at the end of the reporting period 8,908,208 14,366,304
Available for sale financial assets comprise an investment in the ordinary
issued capital of Cornerstone Capital Resources Inc., listed on the Toronto
Venture Exchange ("TSXV") and an investment in the ordinary issued capital
of Aus Tin Mining Ltd, a company listed on the Australian Securities Exchange.
NOTES TO THE interim condensed CONSOLIDATED FINANCIAL STATEMENTS
FOR THE HALF-YEAR ENDED 31 DECEMBER 2017
Note 6 investment in available for sale securities (continued)
(b) Fair value
Fair value hierarchy
The following table details the consolidated entity's assets and liabilities,
measured or disclosed at fair value, using a three level hierarchy, based on
the lowest level of input that is significant to the entire fair value
measurement being:
Level 1: Quoted prices (unadjusted) in active markets for identical assets or
liabilities that the entity can access at the measurement date.
Level 2: Inputs other than quoted prices included within Level 1 that are
observable for the asset or liability, either directly or indirectly.
Level 3: Unobservable inputs for the asset or liability.
The fair values of financial assets and financial liabilities approximate
their carrying amounts principally due to their short-term nature or the fact
that they are measured and recognised at fair value.
The following table represents the Group's financial assets and liabilities
measured and recognised at fair value.
A$ A$ A$ A$
Level 1 Level 2 Level 3 Total
31 December 2017
Available for sale financial assets
8,908,208 - - 8,908,208
30 June 2017
Available for sale financial assets
14,366,304 - - 14,366,304
The available for sale financial assets are measured based on the quoted
market prices at 31 December 2017 and 30 June 2017.
NOTES TO THE interim condensed CONSOLIDATED FINANCIAL STATEMENTS
FOR THE HALF-YEAR ENDED 31 DECEMBER 2017
Note 7 SHARE CAPITAL
Half Year Ended 31 December Full Year Ended 30 June 2017
2017
A$ A$
a) Issued capital and share premium
Ordinary shares fully paid up 302,233,468 225,698,701
b) Movement in ordinary shares
At the beginning of the reporting period 225,698,701 104,503,526
Shares issued during the period 78,406,209 127,670,249
Transaction costs on share issue (1,871,442) (6,475,074)
At reporting date 302,233,468 225,698,701
Half Year Ended 31 December Full Year Ended 30 June 2017
2017
Number Number
c) Movement in number of ordinary shares on issue
Shares at the beginning of the reporting period 1,512,955,685 953,897,601
- Shares issued at £0.06 - Placement 28 August 2016 - 268,819,004
- Shares issued at £0.13 - Placement 17 October 2016 - 206,250,000
- Shares issued at £0.14 - Exercise of options 17 January 2017 - 900,000
- Shares issued at £0.30 - Newcrest share issue 31 January 2017 - 100,000
- Shares issued at £0.14 - Exercise of options 3 February 2017 - 1,200,000
- Shares issued at £0.14 - Exercise of options 21 February 2017 - 900,000
- Shares issued at £0.38 - Newcrest share issue 1 March 2017 - 240,000
- Shares issued at £0.41 - Placement 16 June 2017 - 78,889,080
- Shares issued at £0.14 - Exercise of options 26 June 2017 - 880,000
- Shares issued at £0.28 - Exercise of options 26 June 2017 - 880,000
- Shares issued at £0.14 - Exercise of options 7 July 2017 1,300,000 -
- Shares issued at £0.28 - Exercise of options 7 July 2017 1,300,000 -
- Shares issued at £0.38 - Newcrest share issue 11 August 2017 690,000 -
- Shares issued at £0.25 - Placement 30 November 2017 180,000,000 -
Shares at the reporting date 1,696,245,686 1,512,955,685
NOTES TO THE interim condensed CONSOLIDATED FINANCIAL STATEMENTS
FOR THE HALF-YEAR ENDED 31 DECEMBER 2017
NOTE 8 share options
At 31 December 2017 the Company had 88,353,768 options outstanding for the
issue of ordinary shares (31 December 2016: 48,051,768).
Options
Share options are granted to employees under the company's Employee Share
Option Plan ("ESOP"). The employee share option plan is designed to align
participants' interests with those of shareholders.
Unless otherwise documented by the Company, when a participant ceases
employment prior to the vesting of their share options, the share options are
forfeited after 90 days unless cessation of employment is due to termination
for cause, whereupon they are forfeited immediately. The Company prohibits key
management personnel from entering into arrangements to protect the value of
unvested ESOP awards.
The contractual life of each option granted is generally two to three years.
There are no cash settlement alternatives.
Each option can be exercised from vesting date to expiry date for one share
with the exercise price payable in cash.
Share options issued
There were 46,762,000 options granted during the period ended 31 December 2017
(31 December 2016: 41,591,768).
On 9 August 2017, the Company issued a combined total of 46,762,000 unlisted
share options over ordinary shares of the Company, including:
· 36,750,000 share options to Directors following approval granted
by shareholders at the Company's AGM on 28 July 2017;
· 10,000,000 share options to its two key geologists; and
· 12,000 share options to a third party as part of the capital
raising fees for the Company's last equity placement.
The options are exercisable at £0.60 and expire on 8 August 2020. The share
options for Directors and the geological executives have a vesting period of
18 months unless triggered by a change of control transaction.
The share options outstanding at 31 December 2017 are as follows:
Date of grant Exercisable from Exercisable to Exercise prices Number granted Number at 31 December 2017
17 October 2016 The options vested immediately through to 17 October 2018 17 October 2018 £0.14 9,795,884 9,795,884
£0.28 9,795,884 9,795,884
17 November 2016 The options vest on the earlier of: 28 October 2018 £0.28 22,000,000 22,000,000
(a) the expiry of 75% of the Term, or (b) a Change of Control Transaction
9 August 2017 The options vest on the earlier of: 8 August 2020 £0.60 46,750,000 46,750,000
(a) 18 months, or (b) a Change of Control Transaction
9 August 2017 The options vested immediately, through to 8 August 2020 8 August 2020 £0.60 12,000 12,000
88,353,768 88,353,768
NOTES TO THE interim condensed CONSOLIDATED FINANCIAL STATEMENTS
FOR THE HALF-YEAR ENDED 31 DECEMBER 2017
NOTE 8 share options (continued)
Share-based payments
The number and weighted average exercise price of share options are as
follows:
Weighted average exercise price Number of options Weighted average exercise price Number of options
31 December 2017 31 December 2017 31 December 2016 31 December 2016
Outstanding at the beginning of the period £0.25 44,191,768 £0.27 21,380,000
Exercised during the period £0.21 (2,600,000) - -
Lapsed during the period - - - -
Granted during the period £0.60 46,762,000 - -
Outstanding at the end of the period £0.44 88,353,768 £0.27 21,380,000
Exercisable at the end of the period £0.21 19,591,768 - -
The options outstanding at 31 December 2017 have exercise prices of £0.14,
£0.28 and £0.60 (31 December 2016: £0.14 - £0.28) and a weighted average
contractual life of 1.76 years (31 December 2016: 1.81 years).
Share options held by Directors are as follows:
Share options held At 31 December 2017 At 31 December 2016 Option Price Exercise Period
Nicholas Mather 26,250,000 - 60p 07/02/19 - 08/08/20
- 750,000 14p 08/07/14 - 08/07/17
- 750,000 28p 08/07/14 - 08/07/17
Brian Moller 3,750,000 - 60p 07/02/19 - 08/08/20
- 550,000 14p 08/07/14 - 08/07/17
- 550,000 28p 08/07/14 - 08/07/17
Robert Weinberg 2,250,000 - 60p 07/02/19 - 08/08/20
- 440,000 14p 08/07/14 - 08/07/17
- 440,000 28p 08/07/14 - 08/07/17
John Bovard 2,250,000 - 60p 07/02/19 - 08/08/20
- 440,000 14p 08/07/14 - 08/07/17
- 440,000 28p 08/07/14 - 08/07/17
Craig Jones 2,250,000 - 60p 07/02/19 - 08/08/20
NOTES TO THE interim condensed CONSOLIDATED FINANCIAL STATEMENTS
FOR THE HALF-YEAR ENDED 31 DECEMBER 2017
NOTE 8 SHARE OPTIONS (continued)
Share-based payments (continued)
The fair value of services received in return for share options granted is
measured by reference to the fair value of share options granted. This
estimate is based on either a Black-Scholes model or Monte Carlo Simulation
considering the effects of the vesting conditions, expected exercise period
and the dividend policy of the Company.
Fair value of share options and assumptions £0.14 Options £0.28 Options £0.28 Options £0.60 Options
17 October 2016 17 October 2016 28 October 2016 9 August 2017
Number of options 9,795,884 9,795,884 22,000,000 46,762,000
Fair value at issue date £0.12 £0.09 £0.14 £0.365-£0.375
Exercise price £0.14 £0.28 £0.28 £0.60
Expected volatility 99.744% 99.744% 99.744% 89.714%
Option life 2.00 years 2.00 years 2.00 years 3.00 years
Expected dividends 0.00% 0.00% 0.00% 0.00%
Risk-free interest rate (short-term) 0.53% 0.53% 0.66% 0.461%
Valuation methodology Black-Scholes Black-Scholes Black-Scholes Black-Scholes
A$ A$ A$ A$
Share based payments expense recognised in statement of comprehensive income - - 1,599,304 3,599,741
Share based payments expense recognised as share issue costs - - - 3,411
Share based payments expense to be recognised in future periods - - 1,066,202 9,311,176
The calculation of the volatility of the share price was based on the
Company's daily closing share price over the two-three year period prior to
the date the options were issued.
NOTES TO THE interim condensed CONSOLIDATED FINANCIAL STATEMENTS
FOR THE HALF-YEAR ENDED 31 DECEMBER 2017
NOTE 9 RELATED PARTIES
Transactions with Directors and Director-Related Entities
(i) The Company had a commercial agreement with Samuel Capital
Ltd ("Samuel") for the engagement of Nicholas Mather as Chief Executive
Officer and Executive Director of the Company. For the half year ended 31
December 2017 A$200,000 was paid or payable to Samuel (2016: A$75,000). The
total amount outstanding at the end of the half year was A$ nil (31 December
2016: A$ nil, 30 June 2017 A$26,725).
(ii) SolGold plc has a standing Administration and Services
Agreement with DGR Global Ltd, an entity associated with Nicholas Mather (a
Director) and Brian Moller (a Director) whereby DGR Global Ltd has agreed to
provide certain services including the provision by DGR Global Ltd of its
premises (for the purposes of conducting the Company's business operations),
use of existing office furniture, equipment and certain stationery, together
with general telephone, reception and other office facilities
(''Services''). In consideration for the provision of the Services, the
Company shall reimburse DGR Global Ltd for any expenses incurred by it in
providing the Services. DGR Global Ltd was paid A$180,000 (2016: A$180,000)
for the provision of administration, management and office facilities to the
Company during the half year. The total amount outstanding at half year end
is A$30,000 (31 December 2016: A$ nil, 30 June 2017 A$22,011).
(iii) Mr Brian Moller (a Director), is a partner in the
Australian firm Hopgood Ganim Lawyers. Hopgood Ganim were paid A$181,330
(2016: A$172,631) for the provision of legal services to the Company during
the half year. These services were based on normal commercial terms and
conditions. The total amount outstanding at half year end is A$33,263 (31
December 2016: A$26,253, 30 June 2017 A$92,350).
NOTE 10 COMMITMENTS AND CONTINGENT ASSET AND LIABILITIES
A 2% net smelter royalty is payable to Santa Barbara Resources Limited, who
were the previous owners of the Cascabel tenements. These royalties can be
bought out by paying a total of US$4 million. Fifty percent (50%) of the
royalty can be purchased for US$1 million 90 days following the completion of
a feasibility study and the remaining 50% of the royalty can be purchased for
US$3 million 90 days following a production decision.
In the event Cornerstone Capital Resources Inc.'s (Cornerstone) equity
interest in ENSA is diluted below 10%, Cornerstone's equity interest will be
converted to a half of one percent (0.5%) interest in a Net Smelter Return and
SolGold will have right to purchase the Net Smelter Return for US$3.5 million
at any time.
There are no other significant changes to commitments and contingencies
disclosed in the most recent annual financial report.
NOTE 11 SUBSEQUENT EVENTS
On 3 January 2018, SolGold announced a maiden Mineral Resource Estimate (MRE)
at Alpala, completed from 53,616m of drilling reported in accordance with the
Canadian Institute of Mining, Metallurgy and Petroleum (CIM) Definition
Standards for Mineral Resources and Mineral Reserves (May 2014). The Alpala
maiden mineral resource estimate totals a current 430 Mt @ 0.8% CuEq (at 0.3%
CuEq cut off) in the Indicated category, and 650 Mt @ 0.6% CuEq (at 0.3% CuEq
cut off) in the Inferred category; contained metal content of 2.3 Mt Cu in the
Indicated category and 2.9 Mt Cu in the Inferred category; and contained metal
content of 6.0 Mt Au in the Indicated category and 6.3 Moz Au in the Inferred
category.
The Directors are not aware of any other significant changes in the state of
affairs of the Group or events after balance date that would have a material
impact on the half year condensed consolidated financial statements.
DIRECTORS' RESPONSIBILITY STATEMENT AND REPORT ON PRINCIPAL RISKS AND
UNCERTAINTIES
Responsibility statement:
We confirm to the best of our knowledge:
a) The condensed set of financial statements have been prepared in
accordance with IAS 34 Interim Financial Reporting as adopted by the EU
b) The interim management report includes a fair review of the information
required by:
I. DTR 4.2.7R of the Disclosure and Transparency Rules, being an
indication of important events that have occurred during the first six months
of the financial year and their impact on the condensed set of financial
statements: and a description of the principal risks and uncertainties for the
remaining six months of the year; and
II. DTR 4.2.8R of the Disclosure and Transparency Rules, being related
party transactions that have taken place in the first six months of the
current financial year and that have materially affected the financial
position or performance of the entity during the period, and any changes in
the related party transactions described in the last annual report that could
do so.
This report contains forward-looking statements. These statements are based on
current estimates and projections of management and currently available
information. Future statements are not guarantees of the future developments
and results outlined therein. Rather, future developments and results are
dependence on a number of factors; they involve various risks and
uncertainties and are based upon assumptions that may not prove to be
accurate. Risks and uncertainties identified by the Group are set out on page
x of the 2017 Annual Report and Accounts. We do not assume any obligation to
update the forward-looking statements contained in this report.
Signed in accordance with a resolution of Directors.
On behalf of the Directors
Nicholas Mather
Executive Director
Brisbane
15 February 2018
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