TSX: ASO
AIM: ASO
TORONTO, March 21, 2018 /CNW/ - Further to its
announcement dated March 5, 2018,
Avesoro Resources Inc. ("Avesoro" or the "Company"), the TSX and
AIM listed West African gold producer, is pleased to announce the
release and publication of its audited annual Financial Statements
("FS") and Management's Discussion and Analysis ("MD&A") for
the quarter and year ended December 31,
2017 ("FY 2017).
The FS are appended to this announcement. The FS and the
accompanying MD&A are available for review at the Company's
website, www.avesoro.com and on www.sedar.com.
Avesoro Resources Inc.
Consolidated Financial
Statements
Years ended December 31, 2017 and
2016
Registered
office:
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Suite 3800
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Royal Bank Plaza,
South Tower
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200 Bay
Street
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Toronto
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Ontario M5J
2Z4
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Canada
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Company registration
number:
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776831-1
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INDEPENDENT AUDITOR'S REPORT
To the Shareholders of Avesoro Resources Inc.
We have audited the accompanying consolidated financial
statements of Avesoro Resources Inc. for the year ended
December 31, 2017 and the year ended
December 31, 2016 which comprise the
consolidated statement of financial position, the consolidated
statements of income and comprehensive income, changes in equity
and cash flows for the years then ended, and a summary of
significant accounting policies and other explanatory
information. The financial reporting framework that has been
applied in their preparation is International Financial Reporting
Standards as issued by the
IASB.
Management's Responsibility for the Consolidated Financial
Statements
Management is responsible for the preparation and fair
presentation of these consolidated financial statements in
accordance with International Financial Reporting Standards, and
for such internal control as management determines is necessary to
enable the preparation of consolidated financial statements that
are free from material misstatement, whether due to fraud or
error.
Auditor's Responsibility
Our responsibility is to express an opinion on these
consolidated financial statements based on our audit. We conducted
our audit in accordance with Canadian generally accepted auditing
standards. Those standards require that we comply with ethical
requirements and plan and perform the audit to obtain reasonable
assurance about whether the consolidated financial statements are
free from material misstatement.
An audit involves performing procedures to obtain audit evidence
about the amounts and disclosures in the consolidated financial
statements. The procedures selected depend on the auditor's
judgment, including the assessment of the risks of material
misstatement of the consolidated financial statements, whether due
to fraud or error. In making those risk assessments, the auditor
considers internal control relevant to the entity's preparation and
fair presentation of the consolidated financial statements in order
to design audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on
the effectiveness of the entity's internal control. An audit also
includes evaluating the appropriateness of accounting policies used
and the reasonableness of accounting estimates made by management,
as well as evaluating the overall presentation of the consolidated
financial statements.
We believe that the audit evidence we have obtained is
sufficient and appropriate to provide a basis for our audit
opinion.
Opinion
In our opinion, the consolidated financial statements present
fairly, in all material respects, the financial position of Avesoro
Resources Inc. as at December 31,
2017 and December 31, 2016 and
its financial performance and its cash flows for the year then
ended in accordance with International Financial Reporting
Standards.
"BDO LLP" (signed)
London
March 20, 2018
Avesoro Resources
Inc.
|
Consolidated
Statement of Income and Comprehensive Income
|
For the years ended
December 31, 2017 and 2016
|
(stated in US
dollars)
|
|
|
|
|
Year ended
December 31,
2017
|
Year ended
December 31,
2016
|
|
$'000
|
$'000
|
Gold sales (Note
5)
|
97,786
|
63,612
|
|
|
|
Cost of
sales
|
|
|
- Production costs
(Note 5)
|
(73,494)
|
(87,017)
|
- Depreciation (Note
5)
|
(32,248)
|
(15,948)
|
- Other costs (Note
5)
|
-
|
(8,883)
|
|
|
|
Gross
loss
|
(7,956)
|
(48,236)
|
|
|
|
Expenses
|
|
|
Administrative and
other expenses (Note 6)
|
(5,666)
|
(12,049)
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Exploration and
evaluation costs
|
(2,958)
|
(2,715)
|
Impairment of
property, plant and equipment (Note 11)
|
(2,876)
|
(42,473)
|
Gain on lease
settlement (Note11)
|
3,988
|
-
|
|
|
|
Loss from
operations
|
(15,468)
|
(105,473)
|
|
|
|
Derivative liability
gain (Note 16)
|
-
|
1,054
|
Finance
costs
|
(11,812)
|
(8,576)
|
Finance
income
|
16
|
5
|
|
|
|
Loss before
tax
|
(27,264)
|
(112,990)
|
|
|
|
Tax for the
year (Note 7)
|
(143)
|
-
|
|
|
|
Net loss for the
year
|
(27,407)
|
(112,990)
|
Attributable
to:
|
|
|
- Owners of the
Company
|
(27,474)
|
(112,990)
|
- Non-controlling
interest
|
67
|
-
|
|
|
|
Other
comprehensive (loss)/income
|
|
|
Items that may be
reclassified subsequently to profit or loss
|
|
|
Available-for-sale
investments (Note 12)
|
(34)
|
(28)
|
Currency translation
differences
|
(66)
|
110
|
|
|
|
Total
comprehensive loss for the year
|
(27,507)
|
(112,908)
|
Attributable
to:
|
|
|
- Owners of the
Company
|
(27,574)
|
(112,908)
|
- Non-controlling
interest
|
67
|
-
|
|
|
|
Loss per share, basic
and diluted (US$) (Note 19)
|
(0.51)
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(9.97)
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|
|
|
The accompanying
notes are an integral part of these consolidated financial
statements.
|
Avesoro Resources
Inc.
|
Consolidated
Statement of Financial Position
|
As at December 31,
2017 and 2016
|
(stated in US
dollars)
|
|
|
|
|
December
31,
2017
|
December
31,
2016
|
|
$'000
|
$'000
|
Assets
|
|
|
Current
assets
|
|
|
Cash and cash
equivalents
|
17,787
|
13,429
|
Trade and other
receivables (Note 8)
|
25,286
|
5,775
|
Inventories (Note
9)
|
36,932
|
16,351
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Other assets (Note
10)
|
1,710
|
516
|
|
81,715
|
36,071
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Non-current
assets
|
|
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Property, plant and
equipment (Note 11)
|
249,552
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191,117
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Available-for-sale
investments (Note 12)
|
21
|
55
|
Deferred tax asset
(Note 7)
|
4,554
|
-
|
Other assets (Note
10)
|
1,196
|
-
|
|
255,323
|
191,172
|
Total
assets
|
337,038
|
227,243
|
|
|
|
Liabilities
|
|
|
Current
liabilities
|
|
|
Borrowings (Note
13)
|
35,999
|
20,312
|
Trade and other
payables (Note 14)
|
41,003
|
14,227
|
Income tax
payable
|
12,358
|
-
|
Finance lease
liability (Note 15)
|
1,913
|
2,370
|
Derivative liability
(Note 16)
|
105
|
105
|
Provision (Note
17)
|
523
|
-
|
|
91,901
|
37,014
|
Non-current
liabilities
|
|
|
Borrowings (Note
13)
|
98,092
|
73,159
|
Trade and other
payables (Note 14)
|
463
|
-
|
Finance lease
liability (Note 15)
|
5,875
|
9,790
|
Provision (Note
17)
|
10,439
|
2,304
|
|
114,869
|
85,253
|
|
206,770
|
122,267
|
|
|
|
Equity
|
|
|
Share capital (Note
18b)
|
353,653
|
283,506
|
Capital
contribution
|
59,230
|
48,235
|
Share based payment
reserve (Note 18c)
|
7,840
|
6,770
|
Acquisition reserve
(Note 4)
|
(33,060)
|
-
|
Available-for-sale
investment reserve (Note 12)
|
(487)
|
(453)
|
Cumulative
translation reserve
|
(466)
|
(400)
|
Deficit
|
(260,156)
|
(232,682)
|
Equity attributable
to owners
|
126,554
|
104,976
|
Non-controlling
interest
|
3,714
|
-
|
Total
equity
|
130,268
|
104,976
|
Total liabilities
and equity
|
337,038
|
227,243
|
|
|
|
The accompanying
notes are an integral part of these consolidated financial
statements.
|
Approved by the board of directors on March 20, 2018
"Geoffrey Eyre"
(signed)
Director
Avesoro Resources
Inc.
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|
|
Consolidated
Statement of Cash Flows
|
|
|
For the years ended
December 31, 2017 and 2016
|
|
|
(stated in US
dollars)
|
|
|
|
|
|
|
Year ended
December 31,
2017
|
Year ended
December 31,
2016
|
|
$'000
|
$'000
|
Operating
activities
|
|
|
Loss for the
year
|
(27,407)
|
(112,990)
|
Income tax
|
143
|
-
|
Loss before
tax
|
(27,264)
|
(112,990)
|
|
Items not affecting
cash:
|
|
|
|
|
Share-based payments
(Note 6)
|
1,070
|
768
|
|
|
Depreciation (Note
11)
|
32,765
|
16,359
|
|
|
Unrealized foreign
exchange loss/(gain)
|
(31)
|
240
|
|
|
Derivative liability
gain (Note 16)
|
-
|
(1,054)
|
|
|
Interest
expense
|
11,812
|
8,576
|
|
|
Write-down of
inventories (Note 9)
|
2,900
|
7,431
|
|
|
Gain on lease
settlement (Note 11)
|
(3,988)
|
-
|
|
|
Impairment of
property, plant and equipment (Note 11)
|
2,876
|
42,473
|
|
|
Impairment of
inventories (Note 9)
|
-
|
4,933
|
|
|
Exploration
acquisition costs settled through issuance of shares (Note
18b)
|
-
|
531
|
|
|
Services settled
through issuance of shares (Note 18b)
|
-
|
100
|
Changes in non-cash
working capital
|
|
|
|
Increase in trade and
other receivables
|
655
|
(4,970)
|
|
Increase in trade and
other payables
|
(2,036)
|
11,983
|
|
Increase in
inventories
|
(7,791)
|
(14,446)
|
Cash flows
from/(used in) operating activities
|
10,968
|
(40,066)
|
|
|
|
Investing
activities
|
|
|
Acquisition of Youga
and Balogo Gold Mines (Note 4)
|
(4,336)
|
-
|
Payments to acquire
property, plant and equipment
|
(30,061)
|
(54,126)
|
Decrease in other
assets
|
(546)
|
328
|
Proceeds from
pre-production gold sales
|
-
|
14,793
|
Finance
charges
|
-
|
(153)
|
Cash flows used in
investing activities
|
(34,943)
|
(39,158)
|
|
|
|
Financing
activities
|
|
|
Net proceeds from
issue of common shares (Note 18b)
|
18,680
|
92,695
|
Proceeds from
shareholder loan (Note 13b)
|
18,800
|
-
|
Exercise of stock
options
|
8
|
-
|
Net repayment of
borrowings
|
(168)
|
(12,430)
|
Finance
charges
|
(8,987)
|
(6,897)
|
Proceeds from issue
of promissory note (Note 18b)
|
-
|
12,303
|
Cash flows from
financing activities
|
28,333
|
85,671
|
|
|
|
Impact of foreign
exchange on cash balance
|
-
|
(146)
|
Net increase in
cash and cash equivalents
|
4,358
|
6,301
|
Cash and cash
equivalents at beginning of year
|
13,429
|
7,128
|
Cash and cash
equivalents at end of year
|
17,787
|
13,429
|
|
|
|
The significant
non-cash transactions during the year ended December 31, 2017 and
2016 are disclosed in Note 24.
|
|
The accompanying
notes are an integral part of these consolidated financial
statements.
|
Avesoro Resources
Inc.
|
Consolidated
Statement of Changes in Equity
|
As at December 31,
2017 and 2016
|
(stated in US
dollars)
|
|
|
|
|
|
Total Equity
Attributable to Owners
|
|
|
|
Share
capital
|
Capital
contribution
|
Share-based
payment reserve
|
Acquisition
reserve
|
Available-for-sale
investment
Reserve
|
Cumulative
translation reserve
|
Deficit
|
Total
|
Non-controlling
Interest
|
Total
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
$'000
|
$'000
|
$'000
|
$'000
|
$'000
|
$'000
|
$'000
|
$'000
|
$'000
|
$'000
|
Balance at January 1,
2016
|
177,877
|
48,235
|
6,002
|
-
|
(425)
|
(510)
|
(119,692)
|
111,487
|
-
|
111,487
|
Loss for the
year
|
-
|
-
|
-
|
-
|
-
|
-
|
(112,990)
|
(112,990)
|
-
|
(112,990)
|
Other comprehensive
loss for year
|
-
|
-
|
-
|
-
|
(28)
|
110
|
-
|
82
|
-
|
82
|
Total comprehensive
loss for year
|
-
|
-
|
-
|
-
|
(28)
|
110
|
(112,990)
|
(112,908)
|
-
|
(112,908)
|
Share-based payments
(Note 6)
|
-
|
-
|
768
|
-
|
-
|
-
|
-
|
768
|
-
|
768
|
Issue of common
shares (net of costs)
|
105,629
|
-
|
-
|
-
|
-
|
-
|
-
|
105,629
|
-
|
105,629
|
Balance at December
31, 2016
|
283,506
|
48,235
|
6,770
|
-
|
(453)
|
(400)
|
(232,682)
|
104,976
|
-
|
104,976
|
Loss for the
year
|
-
|
-
|
-
|
-
|
-
|
-
|
(27,474)
|
(27,474)
|
67
|
(27,407)
|
Other comprehensive
loss for year
|
-
|
-
|
-
|
-
|
(34)
|
(66)
|
-
|
(100)
|
-
|
(100)
|
Total comprehensive
loss for year
|
-
|
-
|
-
|
-
|
(34)
|
(66)
|
(27,474)
|
(27,574)
|
67
|
(27,507)
|
Share-based payments
(Note 6)
|
-
|
-
|
1,070
|
-
|
-
|
-
|
-
|
1,070
|
-
|
1,070
|
Acquisition of Youga
and Balogo (Note 4)
|
51,459
|
-
|
-
|
(33,060)
|
-
|
-
|
-
|
18,399
|
3,647
|
22,046
|
Other issue of common
shares
|
|
|
|
|
|
|
|
|
|
|
|
(net of
costs)
|
18,688
|
-
|
-
|
-
|
-
|
-
|
-
|
18,688
|
-
|
18,688
|
Related party loans
(Note 13b,c)
|
-
|
10,995
|
-
|
-
|
-
|
-
|
-
|
10,995
|
-
|
10,995
|
Balance at
December 31, 2017
|
353,653
|
59,230
|
7,840
|
(33,060)
|
(487)
|
(466)
|
(260,156)
|
126,554
|
3,714
|
130,268
|
|
|
|
|
|
|
|
|
|
|
|
The accompanying
notes are an integral part of these consolidated financial
statements.
|
Avesoro Resources Inc.
Notes to the Consolidated Financial Statements
For the years ended December 31, 2017
and 2016
(in US dollars unless otherwise stated)
1. Nature of operations
Avesoro Resources Inc. ("Avesoro" or the "Company"), was
incorporated under the Canada Business Corporations Act on
February 1, 2011. The focus of
Avesoro's business is the exploration, development and operation of
gold assets in West Africa,
specifically the New Liberty Gold Mine in Liberia and the Youga and Balogo Gold Mines in
Burkina Faso.
The Company's parent company is Avesoro Jersey Limited ("AJL"),
a company incorporated in Jersey and Mr. Murathan Doruk Gűnal is
the ultimate beneficial owner.
2. Going concern
As at December 31, 2017, the
Company had cash and cash equivalents of $17.8 million, net current liabilities of
$10.2 million and debt and interest
repayments of $39.5 million due
within the next 12 months.
The cash generation profile of the Company significantly
increased as a result of the acquisition of the Youga and Balogo
Gold Mines (Note 4) and the turnaround of operations at New
Liberty. In addition, the Company has an undrawn facility of
$16.2 million with AJL which it can
call upon for general working capital purposes.
The Company's forecasts and projections show that the Company
has adequate resources to continue in operational existence for the
foreseeable future. The Company continues to adopt the going
concern basis of accounting in preparing the consolidated financial
statements.
3. Summary of significant accounting
policies
The accounting policies set out below have been applied
consistently in these financial statements, unless otherwise
stated.
3.1 Basis of preparation
The accompanying consolidated financial statements have been
prepared in accordance with International Financial Reporting
Standards ("IFRS") issued by the International Accounting Standards
Board ("IASB"). The consolidated financial statements have
been prepared on a historical cost basis, as adjusted for certain
financial instruments carried at fair value.
3.2 New accounting standards
adopted
No new accounting standards or interpretations were adopted
during the year.
3.3 Standards in issue
but not yet effective
The following standards and interpretations which have been
recently issued or revised and are mandatory for the Group's
accounting periods beginning on or after January 1, 2018 or later periods have not been
adopted early:
Standard
|
Detail
|
Effective
date
|
IFRS 9
|
Financial
instruments
|
January 1,
2018
|
IFRS 15
|
Revenue with contracts
with customers
|
January 1,
2018
|
IFRS 16
|
Leases
|
January 1,
2019
|
IFRS 2
|
Amendment –
Classification and measurement of share based payment
transactions
|
January 1,
2018
|
IFRS 15 is intended to introduce a single framework for revenue
recognition and clarify principles of revenue recognition.
Management have assessed the point of revenue recognition and do
not expect there to be any material impact on the consolidated
financial statements.
IFRS 16 introduces a single lease accounting model, in which
leases are capitalised as assets with an associated lease liability
with the exception of certain low value leases and leases with a
term under 12 months. Management are currently assessing the impact
of this standard but there are no material operating leases in the
Group.
IFRS 9 introduces significant changes to the classification and
measurement requirements for financial instruments. Management are
currently assessing the impact of this standard.
3.4 Basis of
consolidation
3.4.1 Subsidiaries
Where the Company has control
over an investee, it is classified
as a subsidiary. The Company controls an investee
if all three of the following elements are present: power over the
investee, exposure to variable returns from the investee, and the
ability of the investor to use its power to affect those variable
returns. Control is reassessed whenever facts and circumstances
indicate that there may be a change in any of these elements of
control.
De-facto control exists in situations where the Company has the
practical ability to direct the relevant activities
of the investee without holding
the majority of the voting rights.
The consolidated financial statements present the results of the
Company and its subsidiaries ("the Group") as if they formed a
single entity. Intercompany transactions and balances between
group companies are therefore eliminated in full.
These financial statements include the accounts of Avesoro and
its subsidiaries. The significant subsidiaries at
December 31, 2017 are set out
below:
Company
|
Place of
incorporation
|
% of equity
ownership
|
Bea Mountain Mining
Corporation ("BMMC")
|
Liberia
|
100%
|
Burkina Mining Company
("BMC")
|
Burkina Faso
|
90%
|
Netiana Mining Company
("NMC")
|
Burkina Faso
|
90%
|
3.4.2 Transactions eliminated on
consolidation
Intra-group balances and any unrealized gains and losses or
income and expenses arising from intra-group transactions, are
eliminated in preparing the consolidated financial statements.
3.5 Foreign currency
translation
3.5.1 Functional and presentation currency
Items included in the financial statements of each of the
Company's entities are measured using the currency of the primary
economic environment in which the entity operates ("the functional
currency"). The consolidated financial statements are presented in
U.S. dollars ("$"), ("the presentation currency") which is the
functional currency of most of the subsidiary entities.
In the consolidated financial statements, all separate financial
statements of subsidiary entities, originally presented in a
currency different from the Company's presentation currency, have
been converted into US dollars. Assets and liabilities have been
translated into US dollars at the closing rate at the balance sheet
date. Income and expenses have been translated at the average rates
over the reporting period. Any differences arising from this
procedure have been charged/credited to the "Cumulative translation
reserve" in equity. Equity has been translated into US
dollars at historical rates.
3.5.2 Foreign currency
transactions
In preparing the financial statements of the group entities,
foreign currency transactions are translated into the functional
currency using the exchange rates prevailing at the dates of the
transactions. Foreign exchange gains and losses resulting from the
settlement of such transactions and from the translation at
period-end exchange rates of monetary assets and liabilities
denominated in foreign currencies are recognised in the loss from
operations.
3.6 Equity
The following describes the nature and purpose of each reserve
within equity.
Reserve
|
Description and
purpose
|
Share
capital
|
Amount subscribed for
share capital at share issue price less direct issue
costs
|
Capital
contribution
|
Includes the net assets
transferred to Avesoro on April 13, 2011 pursuant to the Plan of
Arrangement and the equity portion of the loans payable to AJL
(majority shareholder) and Mapa Insaat ve Ticaret A.S. (a related
party)
|
Share-based payment
reserve
|
Fair value of
share-based payments vested
|
Acquisition
reserve
|
The difference between
the consideration and the aggregate carrying value of the assets
and liabilities of the acquired entity as of the date of
acquisition where the business combination includes entities under
common control
|
Available-for-sale
investment reserve
|
Gains and losses
arising on available-for-sale investments
|
Cumulative translation
reserve
|
Exchange differences
arising on translation of non-US dollar functional currency
subsidiaries
|
Cumulative
deficit
|
Amount of cumulative
net gains and losses recognised on the consolidated statement of
income
|
Non-controlling
interest
|
Represents the share in
subsidiaries that is not owned by the Group
|
3.7 Property, plant
and equipment
All property, plant and equipment are stated at historical cost
less depreciation and applicable impairment charges. Historical
cost includes expenditures that are directly attributable to the
acquisition of the items. Subsequent costs are included in the
asset's carrying amount or recognized as a separate asset, as
appropriate, only when it is probable that future economic benefits
associated with the item will flow to the Company and the cost of
the item can be measured reliably. The carrying amounts of any
replaced parts are derecognized. All other repairs and maintenance
are charged to the consolidated statement of comprehensive
loss/income during the financial period in which they are
incurred.
Depreciation is provided to write off the cost using the
straight-line method over their estimated useful life of the assets
as follows:
Machinery and
equipment
|
3-4 years
|
Vehicles
|
5 years
|
Mining
equipment
|
5-10 years
|
Leasehold
improvements
|
Term of the
lease
|
An asset's carrying amount is written down immediately to its
recoverable amount if the asset's carrying amount is greater than
its estimated recoverable amount.
Mining and development costs include costs incurred after the
completion of a mining property's feasibility study. Mining
and development costs are not amortized during the development
phase but are reviewed for impairment when events or changes in
circumstances indicate that the carrying value may not be
recoverable, at least at each balance sheet date.
A mining and development property is considered to be capable of
operating in a manner intended by management when it commences
commercial production. Upon commencement of commercial
production a development property is transferred to a mining
property and is depreciated on a units-of-production method.
Only proven and probable reserves are used in the tonnes mined
units of production depreciation calculation.
3.8 Exploration costs
Exploration and evaluation costs are expensed as incurred until
a decision is taken that a mining property is economically
feasible, after which subsequent expenditures are capitalised as
intangible assets.
Exploration and evaluation costs include acquisition of rights
to explore, studies, exploration drilling, trenching, sampling and
associated activities.
3.9 Impairment
At each balance sheet date, the Company reviews the carrying
amounts of its non-current assets to determine whether there is any
indication that those assets have suffered an impairment loss. If
any such indication exists, the recoverable amount of the asset is
estimated in order to determine the extent of the impairment loss
(if any). Where the asset does not generate cash flows that are
independent from other assets, the Company estimates the
recoverable amount of the cash-generating unit to which the asset
belongs.
Recoverable amount is the higher of fair value less costs to
sell and value in use. In assessing value in use, the estimated
future cash flows are discounted to their present value using a
pre-tax discount rate that reflects current market assessments of
the time value of money and the risks specific to the asset for
which the estimates of future cash flows have not been
adjusted. If the recoverable amount of an asset (or
cash-generating unit) is estimated to be less than its carrying
amount, the carrying amount of the asset (cash-generating unit) is
reduced to its recoverable amount. An impairment loss is recognised
as an expense in the statement of comprehensive income.
In assessing whether there is any indication that an asset(s)
may be impaired, an entity shall consider, as a minimum, the
following indications:
External
- Significant changes with an adverse effect on the entity have
taken place during the period or will take place in the near
future, in the technological, market, economic or legal environment
in which the entity operates or in the market to which an asset is
dedicated;
- Market interest rates or other market rates of return on
investment have increased during the period, and those increases
are likely to affect the discount rate used in calculating an
assets value in use and decrease the assets recoverable amount;
and
- The carrying amount of the net assets of the entity is more
than its market capitalisation.
Internal
- Evidence of physical damage of an asset;
- Evidence from internal reporting that indicates the economic
performance of an asset
is or will be worse than expected; and
- Significant changes with an adverse effect on the entity have
taken place during the period or are expected to take place in the
near future to the extent and manner in which an asset is
used.
An impairment loss recognised in prior periods shall be reversed
if there has been a change in the estimates used to determine the
assets recoverable amount since the last impairment loss was
recognised.
Where an impairment loss subsequently reverses, the carrying
amount of the asset (cash-generating unit) is increased to the
revised estimate of its recoverable amount, but so that the
increased carrying amount does not exceed the carrying amount that
would have been determined had no impairment loss been recognised
for the asset (cash-generating unit) in prior periods. A reversal
of an impairment loss is recognised as income immediately.
3.10 Financial
instruments
Financial assets
All financial assets are recognised and derecognised on trade
date when the purchase or sale of a financial asset is under a
contract whose terms require delivery of the financial asset within
the timeframe established by the market concerned. Financial
assets are initially measured at fair value, plus transaction
costs, except for those financial assets classified as fair value
through profit or loss ("FVTPL"), which are initially measured at
fair value.
Available-for-sale financial assets
Available-for-sale financial assets include non-derivative
financial assets that are either designated as such or do not
qualify for inclusion in any of the other categories of financial
assets. All financial assets within this category are measured
subsequently at fair value, with changes in value recognised in
other comprehensive income. Gains and losses arising from
investments classified as available for sale are recognised in the
profit or loss when they are sold or when the investment is
impaired. In the case of impairment of available for sale assets,
any loss previously recognised in other comprehensive income is
transferred to the profit or loss. Impairments are assessed
when a decline in fair value is significant or prolonged based on
an analysis of indicators such as market price of the investment
and significant adverse changes in the environment in which the
investee operates. Impairment losses recognised in the profit or
loss on equity instruments are not reversed through the profit or
loss. Impairment losses recognised previously on debt securities
are reversed through the profit or loss when the increase can be
related objectively to an event occurring after the impairment loss
was recognised in the profit or loss.
Loans and receivables
Trade receivables, loans and other receivables that have fixed
or determinable payments that are not quoted in an active market
are classified as loans and receivables. Loans and
receivables are measured at amortised cost using the effective
interest method, less any impairment. Interest income is
recognised by applying the effective interest rate, except for
short-term receivables when the recognition of interest would be
immaterial.
Impairment of financial assets at amortised cost
Financial assets that are measured at amortised cost are
assessed for indicators of impairment at the end of each reporting
period. Financial assets are considered to be impaired when there
is objective evidence that, as a result of one or more events that
occurred after the initial recognition of the financial asset, the
estimated future cash flows of the financial asset have been
affected.
Cash and cash equivalents
Cash and cash equivalents comprise cash on hand and demand
deposits and other short-term highly liquid investments that are
readily convertible to a known amount of cash and are subject to an
insignificant risk of changes in value.
Derecognition of financial assets
The Company derecognises a financial asset only when the
contractual rights to the cash flows from the asset expire; or it
transfers the financial asset and substantially all the risks and
rewards of ownership of the asset to another entity. If the Company
neither transfers nor retains substantially all the risks and
rewards of ownership and continues to control the transferred
asset, the Company recognises its retained interest in the asset
and an associated liability for amounts it may have to pay. If the
Company retains substantially all the risks and rewards of
ownership of a transferred financial asset, the Company continues
to recognise the financial asset and also recognises a
collateralised borrowing for the proceeds received.
Financial liabilities and equity
Financial liabilities and equity instruments are classified
according to the substance of the contractual arrangements entered
into.
Equity instruments
An equity instrument is any contract that evidences a residual
interest in the assets of the Company after deducting all of its
liabilities. Equity instruments issued by the Company are recorded
at the proceeds received, net of direct issue costs. Warrants
issued alongside the raising of finance are recorded as a reduction
of capital stock based on the fair value of the warrants.
Other financial liabilities
Other financial liabilities, including borrowings, are initially
measured at fair value, net of transaction costs. Other financial
liabilities are subsequently measured at amortised cost using the
effective interest method, with interest expense recognised on an
effective yield basis. The effective interest method is a method of
calculating the amortised cost of a financial liability and of
allocating interest expense over the relevant period. The effective
interest rate is the rate that exactly discounts estimated future
cash payments through the expected life of the financial liability,
or, where appropriate, a shorter period.
Derecognition of financial liabilities
The Company derecognises financial liabilities when, and only
when, the Company's obligations are discharged, cancelled or they
expire.
Derivative financial instruments:
The Company has issued warrants that are exercisable in a
currency other than the functional currency of the entity
issuing. As such these warrants are treated as derivative
liabilities which are measured initially at fair value and gains
and losses on subsequent re-measurement are recorded in profit or
loss.
3.11 Income tax
The current income tax charge is calculated on the basis of the
tax laws enacted or substantively enacted at the balance sheet date
in the countries where the company's subsidiaries operate and
generate taxable income. Management periodically evaluates
positions taken in tax returns with respect to situations in which
applicable tax regulation is subject to interpretation and
establishes provisions where appropriate on the basis of amounts
expected to be paid to the tax authorities.
Deferred tax is provided in full, using the liability method, on
temporary differences arising between the tax bases of assets and
liabilities and their carrying amounts in the consolidated
financial statements. However, the deferred tax is not accounted
for if it arises from initial recognition of an asset or liability
in a transaction other than a business combination that at the time
of the transaction affects neither accounting nor taxable profit or
loss. Deferred tax is determined using tax rates (and laws) that
have been enacted or substantively enacted by the balance sheet
date and are expected to apply when the related deferred tax asset
is realised or the deferred tax liability is settled.
Deferred tax assets are recognised to the extent that it is
probable that future taxable profit will be available against which
the temporary differences can be utilised. Deferred tax is
provided on temporary differences arising on investments in
subsidiaries and associates, except where the timing of the
reversal of the temporary difference is controlled by the Company
and it is probable that the temporary difference will not reverse
in the foreseeable future.
3.12 Gold sales
Revenue from sales of gold is recognised when:
- the Company has passed the significant risks and rewards of
ownership of the product to the buyer, usually when gold doré
leaves the gold room, unless a return of physical metal is
requested in advance;
- it is probable that the economic benefits associated with the
sale will flow to the Company;
- the sales price can be measured reliably;
- the Company has no significant continuing involvement; and
- the costs incurred or to be incurred in respect of the sale can
be measured reliably.
Revenue earned while the mine is ramping up to commercial
production is accounted for as a credit to the capitalised mining
development asset. Revenue earned after commencement of
commercial production is recognised in the statement of
income. Commercial production at New Liberty was declared on
March 1, 2016.
3.13 Cost of sales
Cost of sales consists of production costs, depreciation of
mining assets and costs during temporary plant shutdown.
Production costs include mine operating expenses (such as hire
of mining equipment, staff costs, fuel, consumables, maintenance
and repair costs, general and administrative costs), third-party
smelting, refining and transport fees, royalty expense, changes in
inventories for the period including write-down to reduce
inventories to net realisable value and permanent impairment of
inventories. Cost of sales is based on average costing for
contained or recoverable ounces sold for the period.
Costs during temporary plant shutdown are mine operating
expenses that were incurred during the temporary suspension of
plant processing operations from May 7 to
June 30, 2016 as a consequence of operating problems with
the detoxification circuit in the process plant.
3.14 Stripping costs
Stripping costs incurred during the development phase of the
mine as part of initial pit stripping are capitalised as mining and
development costs as part of property, plant and equipment.
Stripping costs incurred during the production stage of the mine
are treated as either part of the cost of inventory or are
capitalised as a stripping activity asset if all of the following
are met:
- it is probable that the future economic benefit (improved
access to the ore body) associated with the stripping activity will
flow;
- the component of the ore body for which access has been
improved can be identified; and
- the costs relating to the stripping activity associated with
that component or components can be measured reliably.
Once determined that any portion of the stripping costs should
be capitalised, the average stripping ratio for the life of the
mine to which the stripping cost related is typically used to
determine the amount of the stripping costs that should be
capitalised.
Costs capitalised as stripping assets are depreciated on a units
of production basis, with reference to the estimated ounces of gold
reserves based on the life of mine plan in the components of the
ore body that have been made more accessible through the stripping
activity.
3.15 Inventories
Inventories are stated at the lower of cost or net realisable
value. The cost of ore stockpiles and gold in circuit is
determined principally by the weighted average cost method using
related production costs.
Costs of gold inventories include all costs incurred up until
production of an ounce of gold such as mining costs, processing
costs, directly attributable mine general and administration costs
and depreciation but exclude transport costs, refining costs and
royalties. Net realisable value is determined with reference
to estimated contained gold, market gold prices and an estimate of
the remaining costs of completion to bring inventories into its
saleable form. When the net realisable value is lower than
cost the difference is included in change in inventories under cost
of sales.
Impairment of inventories are recognised when stocks are
determined to be uneconomic to process. Reversals of impairments
are recognised when previously impaired inventories are determined
to be economic to process.
3.16 Leases
Determining whether an arrangement is, or contains, a lease is
based on the substance of the arrangement and requires an
assessment of whether fulfilment of the arrangement is dependent on
the use of a specific asset or assets and whether the arrangement
conveys a right to use the asset. Leases of plant and equipment
where the group assumes a significant portion of risks and rewards
of ownership are classified as a finance lease. Finance leases are
capitalised at the estimated present value of the underlying lease
payments. Each lease payment is allocated between the liability and
the finance charges to achieve a constant rate on the balance
outstanding. The interest portion of the finance payment is
capitalised as development costs until declaration of commercial
production at which time, interest will be charged to the statement
of comprehensive income over the lease period. The plant and
equipment acquired under the finance lease are depreciated over the
useful lives of the assets, or over the lease term if shorter.
Leases in which a significant portion of the risks and rewards of
ownership are retained by the lessor are classified as operating
leases. Payments made under operating leases are charged to the
statement of comprehensive income on a straight-line basis over the
period of the lease.
3.17 Provisions
Provisions are recognised when the Company has a present
obligation (legal or constructive) as a result of a past event, it
is probable that an outflow of resources will be required to settle
the obligation and a reliable estimate can be made of the amount of
the obligation. If the effect of the time value of money is
material, provisions are determined by discounting the expected
future cash flows at a pre-tax rate that reflects current market
assessments of the time value of money and, where appropriate, the
risks specific to the liability.
The net present value of estimated future rehabilitation costs
is provided for in the consolidated financial statements and
capitalised within property, plant and equipment on initial
recognition. Rehabilitation will generally occur on closure or
after closure of a mine and can include facility decommissioning
and dismantling, removal or treatment of waste materials, site and
land rehabilitation. Initial recognition is at the time of the
construction or disturbance occurring and thereafter as and when
additional construction or disturbances take place. The estimates
are reviewed annually to take into account the effects of inflation
and changes in estimated risk adjusted rehabilitation works cost
and are discounted using rates that reflect the time value of
money. Annual increases in the provision due to the unwinding of
the discount are recognised in the statement of comprehensive
income as a finance cost.
The present value of additional disturbances and changes in the
estimate of the rehabilitation liability are recorded to mining
assets against an increase/decrease in the rehabilitation
provision. Rehabilitation projects undertaken are charged to the
provision as incurred. Environmental liabilities, other than
rehabilitation costs, which relate to liabilities arising from
specific events, are expensed when they are known, probable and may
be reasonably estimated.
3.18 Borrowing costs
Borrowing costs are generally expensed as incurred except where
they relate to the financing of qualifying assets that require a
substantial period of time to get ready for their intended
use. Qualifying assets include mining and development
properties. Borrowing costs related to qualifying assets are
capitalised up to the date when the asset is ready for its intended
use.
3.19 Share-based payments
Equity-settled share-based payments to employees and others
providing similar services are measured at the fair value of the
equity instruments at the grant date. Fair value is measured by use
of a Black-Scholes model. The expected life used in the model has
been adjusted, based on management's best estimate, for the effects
of non-transferability, exercise restrictions and behavioural
considerations. When equity-settled stock options granted to
employees vest over a period of time and the charge is recognised
in the statement of comprehensive income over the corresponding
period.
Equity-settled share-based payment transactions with other
parties are measured at the fair value of the goods and services
received, except where the fair value cannot be estimated reliably,
in which case they are measured at the fair value of the equity
instruments granted, measured at the date the entity obtains the
goods or the counterparty renders the service.
3.20 Promissory
note
Promissory note is initially recognised at the fair value of the
proceeds, net of transaction costs incurred. These
transaction costs are subsequently amortised under the effective
interest rate method through the income statement. Promissory
note is classified as a current liability unless the Company has an
unconditional right to defer settlement of the liability for at
least one year after the balance sheet date.
3.21 Segments
Information presented to the Chief Executive Officer for the
purposes of resource allocation and assessment of segment
performance is focused on the geographical location.
3.22 Business
combinations
Acquisitions of businesses are accounted for using the
acquisition method. The consideration transferred in a
business combination is measured at fair value, which is calculated
as the sum of the acquisition-date fair values of the assets
transferred by the Group, liabilities incurred by the Group to the
former owners of the acquiree and the equity interests issued by
the Group in exchange for control of the acquiree.
Acquisition-related costs are recognised in profit or loss as
incurred.
Goodwill is measured as the excess of the sum of the
consideration transferred, the amount of any non-controlling
interests in the acquiree, and the fair value of the acquirer's
previously held equity interest in the acquiree (if any) over the
net of the acquisition date amounts of the identifiable assets
acquired and the liabilities assumed. If, after reassessment,
the net of the acquisition-date amounts of identifiable assets
acquired and the liabilities assumed exceeds the sum of the
consideration transferred, the amount of any non-controlling
interests in the acquiree and the fair value of the acquirer's
previously held interest in the acquiree (if any), the excess is
recognised immediately in profit or loss as a gain on a bargain
purchase.
Non-controlling interests that are present ownership interests
and entitle their holders to a proportionate share of the entity's
net assets in the event of liquidation are measured at the
proportionate share of net assets of the acquiree.
3.23 Common control business
combinations
Where business combinations include transactions among entities
under common control and outside the scope of IFRS 3 – Business
Combinations, the Company considered the guidance provided by IAS 8
- Accounting Policies, Changes in Accounting Estimates and Errors
and applied predecessor accounting.
Assets acquired or liabilities assumed are not restated to their
fair values. Instead, the acquirer incorporates the carrying
amounts of assets and liabilities of the acquired entity and no new
goodwill arises.
The difference between the consideration given and the aggregate
carrying value of the assets and liabilities of the acquired entity
as of the date of acquisition is included as acquisition reserve in
equity.
Management believes this policy gives a true and fair view as
all entities are under the same ultimate controlling party,
therefore under common control.
3.24 Critical accounting
judgements and sources of estimation uncertainty
In the application of the Company's accounting policies,
management is required to make judgements, estimates and
assumptions about the carrying amounts of assets and liabilities
that are not readily apparent from other sources. The estimates and
associated assumptions are based on historical experience and other
factors that are considered to be relevant. Actual results may
differ from these estimates.
The estimates and underlying assumptions are reviewed on an
ongoing basis. Revisions to accounting estimates are recognised in
the period in which the estimate is revised if the revision affects
only that period or in the period of the revision and future
periods if the revision affects both current and future
periods.
Key sources of estimation uncertainty and judgements made in
applying specific accounting policies are as follows:
Carrying value of New Liberty and Burkina Faso cash generating units
The ability of the Company to realise the carrying value of a
cash generating unit is contingent upon future profitable
production or proceeds from the gold mines and influenced by
operational, legal and political risks and future gold
prices.
Management makes the judgements necessary when considering
impairment at least annually with reference to indicators in IAS
36. If an indication exists, an assessment is made of the
recoverable amount. The recoverable amount is the higher of value
in use (being the net present value of expected future cash flows)
and fair value less costs to sell. Value in use is estimated based
on operational forecasts with key inputs that include gold
reserves, gold prices, production levels including grade and tonnes
processed, production costs and capital expenditure. Because of the
above-mentioned uncertainties, actual future cash flows could
materially differ from those estimated. Note 11 outlines the
significant inputs used when performing impairment test on the New
Liberty cash generating unit.
Reserve estimates
The Group estimates its ore reserves and
mineral resources in accordance with
the National Instrument 43-101 "Standards of Disclosure for
Mineral Projects" of the Canadian Securities
Administrators. Reserves determined in this way
are used in the calculation of depreciation of mining assets, as
well as the assessment of the carrying
value of the cash generating units and timing of mine
closure provision. Uncertainties
inherent in estimating ore reserves
and assumptions that are valid
at the time of estimation may
change significantly when new
information becomes available.
Changes in the forecast prices
of commodities, exchange rates,
production costs or recovery rates may change the
economic status of reserves and may, ultimately, result
in the reserves being restated. The
failure of the Company to achieve production estimates could have a
material and adverse effect on any or all of its future cash flows,
profitability, results of operations and/or financial
condition.
Declaration of commercial production
Management used its judgement to declare commercial production
at New Liberty effective March 1,
2016 following a 60-day period of process plant operations
in line with both design specifications and management expectations
in terms of throughput capacity and gold recovery.
Provisions for mine closure and rehabilitation costs
Management uses its judgement and experience to provide for and
amortise the estimated mine closure and site rehabilitation over
the life of the mine. Provisions are discounted at a risk-free rate
and cost base inflated at an appropriate rate. The ultimate closure
and site rehabilitation costs are uncertain and cost estimates can
vary in response to many factors including changes to relevant
legal requirements or the emergence of new restoration techniques.
The expected timing and extent of expenditure can also change, for
example in response to changes in ore reserves or processing
levels. As a result, there could be significant adjustments
to the provisions established which could affect future financial
results.
Capitalisation of exploration and evaluation costs
Exploration and evaluation costs are expensed as incurred until
a decision is taken that a mining property is economically
feasible, after which subsequent expenditures are capitalised as
intangible assets. Management estimates the economic
feasibility of a property using key inputs such as gold resources,
future gold prices, production levels, production costs and capital
expenditure.
Inventories
Valuations of ore stockpile and gold in circuit require
estimations of the amount of gold contained in, and recovery rates
from, the various work in progress. These estimations are based on
analysis of samples and prior experience. Judgement is also
required regarding the timing of utilisation of stockpiles and the
gold price to be applied in calculating net realisable value.
Share-based payments and warrants
The amounts used to estimate fair values of stock options and
warrants issued are based on estimates of future volatility of the
Company's share price, expected lives of the options, expected
dividends to be paid by the Company and other relevant
assumptions.
By their nature, these estimates are subject to measurement
uncertainty and the effect of changes in such estimates on the
consolidated financial statements of future periods could be
significant.
4. Acquisition of Youga and Balogo Gold
Mines
On December 18, 2017 the Company
completed the acquisition of the Youga Gold Mine and Balogo Gold
Mine in Burkina Faso (the "Youga
and Balogo Gold Mines") through the acquisition of the entire
issued share capital of MNG Gold Burkina SARL, Cayman Burkina Mines
Ltd., MNG Gold Exploration Ltd., AAA Exploration Burkina Ltd. and
Jersey Netiana Mining Ltd. and their subsidiaries from AJL for a
total consideration of $70.2 million
which comprises of the issuance of $51.5
million of new common shares in the Company and a cash
component of $18.7 million.
The Youga and Balogo Gold Mines provide the Company with
geographic diversity within West
Africa and are highly complementary to New Liberty Gold
Mine, significantly increasing Avesoro's gold production, in
addition to adding high quality exploration upside that will
provide for further future organic growth.
This transaction has been accounted for in accordance with Note
3.23 Common control business combinations as the Company and AJL
are both owned by Avesoro Holdings Limited. The following
table summarises the carrying value of the assets acquired and
liabilities assumed on the date of
acquisition.
|
$'000
|
Recognised amounts
of identifiable assets and liabilities assumed
|
|
Cash and cash
equivalents
|
14,394
|
Trade and other
receivables
|
20,166
|
Inventories
|
15,690
|
Property, plant and
equipment (Note 11)
|
38,191
|
Deferred tax asset
(Note 7)
|
4,554
|
Other
assets
|
1,844
|
Trade and other
payables
|
(25,742)
|
Loans payable to AJL
(Note 13(b))
|
(8,106)
|
Income tax
payable
|
(12,215)
|
Provisions (Note
17)
|
(8,000)
|
Total identifiable
net assets
|
40,776
|
Non-controlling
interest
|
(3,647)
|
Acquisition
reserve
|
33,060
|
|
70,189
|
Fair value of
consideration
|
|
Cash paid
|
18,730
|
Shares issued (Note
18b)
|
51,459
|
|
70,189
|
The net cash outflow from the acquisition amounted to
$4.3 million.
Acquisition-related costs of $0.7
million have been charged to administrative and other
expenses in the statement of comprehensive income for the year
ended December 31, 2017.
The results of Youga and Balogo Gold Mines are included within
the consolidated statement of income from the date of
acquisition. Youga and Balogo Gold Mines contributed revenues
of $2.5 million and a net income
after tax of of $0.5 million to the
Group's net loss for the period from December 18 to 31, 2017.
Had the acquisition completed on January
1, 2017, the Company would have reported revenues of
$236.6 million and a net income after
tax of $13.7 million for the year
ended December 31, 2017.
5. Segment information
The Company is engaged in the exploration, development and
operation of gold projects in the West African countries of
Liberia, Burkina Faso and Cameroon. Information presented to the Chief
Executive Officer for the purposes of resource allocation and
assessment of segment performance is focused on the geographical
location of mining operations. The reportable segments under
IFRS 8 are as follows:
- New Liberty operations;
- Burkina operations which include the Youga and Balogo Gold
Mines;
- Exploration; and
- Corporate.
Gold sales from New Liberty operations and Burkina operations
are each sold to a single but different customer, both located in
Switzerland.
Following is an analysis of the Company's results, assets and
liabilities by reportable segment for the year ended December 31, 2017:
|
New Liberty
operations
|
Burkina
operations
|
Exploration
|
Corporate
|
Total
|
|
$'000
|
$'000
|
$'000
|
$'000
|
$'000
|
Net income/(loss) for
the year
|
(20,770)
|
1,319
|
(2,458)
|
(5,498)
|
(27,407)
|
Gold sales
|
95,246
|
2,540
|
-
|
-
|
97,786
|
Production
costs
|
|
|
|
|
|
- Mine operating
costs
|
(70,433)
|
(3,187)
|
-
|
-
|
(73,620)
|
- Change in
inventories
|
(1,983)
|
2,109
|
-
|
-
|
126
|
|
(72,416)
|
(1,078)
|
-
|
-
|
(73,494)
|
Depreciation
|
(32,248)
|
-
|
(500)
|
(17)
|
(32,765)
|
|
|
|
|
|
|
Segment
assets
|
241,451
|
90,818
|
4,197
|
572
|
337,038
|
Segment
liabilities
|
(152,409)
|
(49,388)
|
(4,196)
|
(777)
|
(206,770)
|
Capital additions and
acquisitions – property, plant
and equipment
|
55,868
|
38,191
|
-
|
-
|
94,059
|
Following is an analysis of the Company's results, assets and
liabilities by reportable segment for the year ended December 31, 2016:
|
New Liberty
operations
|
Burkina
operations
|
Exploration
|
Corporate
|
Total
|
|
$'000
|
$'000
|
$'000
|
$'000
|
$'000
|
Loss for the
year
|
(103,015)
|
-
|
(3,105)
|
(6,870)
|
(112,990)
|
Gold sales
|
63,612
|
-
|
-
|
-
|
63,612
|
Production
costs
|
|
|
|
|
|
- Mine operating
costs
|
(80,209)
|
-
|
-
|
-
|
(80,209)
|
- Change in
inventories
|
(1,875)
|
-
|
-
|
-
|
(1,875)
|
- Impairment of
inventories
|
(4,933)
|
-
|
-
|
-
|
(4,933)
|
|
(87,017)
|
-
|
-
|
-
|
(87,017)
|
Depreciation
|
(15,948)
|
-
|
(389)
|
(22)
|
(16,359)
|
Other
costs
|
|
|
|
|
|
- Termination fee
(Note 20)
|
(4,500)
|
-
|
-
|
-
|
(4,500)
|
- Shutdown
costs
|
(4,383)
|
-
|
-
|
-
|
(4,383)
|
|
(8,883)
|
-
|
-
|
-
|
(8,883)
|
Segment
assets
|
216,567
|
-
|
575
|
10,101
|
227,243
|
Segment
liabilities
|
(121,483)
|
-
|
(69)
|
(715)
|
(122,267)
|
Capital
additions – property, plant
and equipment
|
27,714
|
-
|
30
|
-
|
27,744
|
6. Administrative
expenses
|
Year ended
December 31,
2017
|
Year ended
December 31,
2016
|
|
$'000
|
$'000
|
Wages, salaries and
contractual termination/change of control payments
|
1,693
|
4,046
|
Legal and
professional
|
1,548
|
5,412
|
Depreciation of
non-mining assets
|
17
|
411
|
Share based
payments
|
1,070
|
768
|
Foreign
exchange
|
78
|
250
|
Other
expenses
|
1,260
|
1,162
|
|
5,666
|
12,049
|
7. Income taxes
|
Year
ended
December
31,
2017
|
Year ended
December
31,
2016
|
|
$'000
|
$'000
|
Current
taxation
|
143
|
-
|
The analysis of the Company's taxation charge for the year based
on the company's statutory tax rate of 26.5% is as follows:
|
Year
ended
December
31,
2017
|
Year ended
December
31,
2016
|
|
$'000
|
$'000
|
Loss before
tax
|
(27,264)
|
(112,990)
|
|
|
|
Tax recovery at the
Canadian corporation tax rate of 26.5%
|
(7,225)
|
(29,942)
|
Effect of different
tax rates of subsidiaries operating in other jurisdictions
|
345
|
1,895
|
Non-deductible
expenses
|
1,048
|
10,822
|
Non-taxable
gains
|
(997)
|
(279)
|
Tax losses not
utilised and carried forward
|
7,219
|
17,957
|
Other
|
(247)
|
(453)
|
|
143
|
-
|
Deferred tax balances in Burkina
Faso for which there is a right of offset within the same
tax jurisdiction are presented net on the face of the balance sheet
as permitted by IAS 12. The closing deferred tax assets, after this
offsetting of balances, are shown below:
|
December
31,
2017
|
December
31,
2016
|
|
$'000
|
$'000
|
Deferred tax assets
arising from:
|
|
|
Capital
allowances
|
3,203
|
-
|
Other temporary
differences
|
1,351
|
-
|
|
4,554
|
-
|
Deferred tax balances in Liberia for which there is a right of offset
within the same tax jurisdiction are presented net as permitted by
IAS 12. A deferred tax asset of $4.8
million (2016: $2.9 million)
in respect of losses has been recognised and off set against a
deferred tax liability of $4.8
million (2016: $2.9 million)
with respect to accelerated tax depreciation in Liberia. The
Group has only recognised an asset up to the value of the deferred
tax liability.
The Group has further carried forward losses and capital
allowances in Liberia and
Canada in which it does not
recognise a deferred tax asset due to uncertainty over the
utilisation of these assets. The unrecognised deferred
taxation asset at December 31, 2017
is $107.9 million (2016: US$81.3 million) based on a carried forward tax
losses asset of $51.1 million (2016:
US$26.6 million) which expires
between 2031 and 2037 and capital allowances of $56.8 million (2016: US$54.7 million) which have no expiry date.
8. Trade and other
receivables
|
December
31,
2017
|
December
31,
2016
|
|
$'000
|
$'000
|
Trade
receivable
|
416
|
760
|
Other
receivables
|
10,690
|
1,940
|
Due from related
parties (Note 20(e))
|
1,015
|
122
|
Pre-payments
|
13,165
|
2,953
|
|
25,286
|
5,775
|
Other receivables include a VAT receivable from the Burkina Faso
Government amounting to $8.9 million
as at December 31, 2017 (2016:
$nil).
9. Inventories
|
December 31,
2017
|
December 31,
2016
|
|
$'000
|
$'000
|
Gold dore
|
3,986
|
1,720
|
Gold in
circuit
|
2,561
|
1,492
|
Ore
stockpiles
|
6,688
|
3,737
|
Consumables
|
23,697
|
9,402
|
|
36,932
|
16,351
|
Consumables at New Liberty as at December
31, 2016 include inventories acquired from a related party
(Note 20(d)).
Production costs for the year ended December 31, 2017 include a write-down of ore
stockpiles at New Liberty of $2.9
million to net realisable value. Production costs for
the year ended December 31,
2016 include an impairment of the low grade oxide stockpiles
which was not planned to be fed through the processing plant at New
Liberty as at December 31, 2016 of
$4.9 million.
10. Other assets
|
December
31,
2017
|
December
31,
2016
|
|
$'000
|
$'000
|
Current
|
|
|
Surety
deposit
|
400
|
400
|
Deposit to
supplier
|
662
|
-
|
Other
deposits
|
648
|
-
|
Amounts in escrow in
respect of an operating lease
|
-
|
116
|
|
1,710
|
516
|
Non-current
|
|
|
Asset retirement
obligation deposit
|
517
|
-
|
Other
deposits
|
679
|
-
|
|
1,196
|
-
|
11. Property, plant and
equipment
|
Development
assets
|
Mining
assets
|
Stripping
asset
|
Mine closure
and rehabilitation
|
Assets held under
finance lease
|
Machinery and
equipment
|
Vehicles
|
Leasehold
improvement
|
Total
|
|
$'000
|
$'000
|
$'000
|
$'000
|
$'000
|
$'000
|
$'000
|
$'000
|
$'000
|
Cost
|
|
|
|
|
|
|
|
|
|
At January 1,
2016
|
221,275
|
-
|
-
|
-
|
-
|
1,645
|
1,233
|
94
|
224,247
|
Transfers
|
(221,275)
|
210,746
|
-
|
1,369
|
9,160
|
-
|
-
|
-
|
-
|
Additions
|
-
|
7,017
|
-
|
854
|
4,469
|
30
|
-
|
-
|
12,370
|
Acquired from a
related party (Note 20)
|
-
|
-
|
-
|
-
|
-
|
14,717
|
657
|
-
|
15,374
|
Impairment
|
-
|
(42,473)
|
-
|
-
|
-
|
-
|
-
|
-
|
(42,473)
|
Foreign
exchange
|
-
|
-
|
-
|
-
|
-
|
-
|
(6)
|
(11)
|
(17)
|
At December 31,
2016
|
-
|
175,290
|
-
|
2,223
|
13,629
|
16,392
|
1,884
|
83
|
209,501
|
Additions
|
-
|
8,322
|
16,229
|
544
|
2,025
|
27,752
|
996
|
-
|
55,868
|
Acquisitions (Note
4)
|
-
|
24,895
|
-
|
3,445
|
-
|
30,639
|
204
|
-
|
59,183
|
Impairment
|
-
|
-
|
-
|
-
|
(3,896)
|
-
|
-
|
-
|
(3,896)
|
Foreign
exchange
|
-
|
-
|
-
|
-
|
-
|
10
|
8
|
3
|
21
|
At December 31,
2017
|
-
|
208,507
|
16,229
|
6,212
|
11,758
|
74,793
|
3,092
|
86
|
320,677
|
Accumulated
depreciation
|
|
|
|
|
|
|
|
|
|
At January 1,
2016
|
-
|
-
|
-
|
-
|
-
|
1,120
|
876
|
62
|
2,058
|
Charge for the
period
|
-
|
14,909
|
-
|
116
|
651
|
518
|
148
|
17
|
16,359
|
Foreign
exchange
|
-
|
-
|
-
|
-
|
-
|
(16)
|
(4)
|
(13)
|
(33)
|
At December 31,
2016
|
-
|
14,909
|
-
|
116
|
651
|
1,622
|
1,020
|
66
|
18,384
|
Charge for the
period
|
-
|
23,754
|
1,838
|
296
|
2,933
|
3,622
|
303
|
19
|
32,765
|
Acquisitions (Note
4)
|
-
|
13,442
|
-
|
1,878
|
-
|
5,633
|
39
|
-
|
20,992
|
Impairment
|
-
|
-
|
-
|
-
|
(1,020)
|
-
|
-
|
-
|
(1,020)
|
Foreign
exchange
|
-
|
-
|
-
|
-
|
-
|
3
|
-
|
1
|
4
|
At December 31,
2017
|
-
|
52,105
|
1,838
|
2,290
|
2,564
|
10,880
|
1,362
|
86
|
71,125
|
|
|
|
|
|
|
|
|
|
|
Net book
value
|
|
|
|
|
|
|
|
|
|
At December 31,
2016
|
-
|
160,381
|
-
|
2,107
|
12,978
|
14,770
|
864
|
17
|
191,117
|
At December 31,
2017
|
-
|
156,402
|
14,391
|
3,922
|
9,194
|
63,913
|
1,730
|
-
|
249,552
|
The additions to development assets for the year ended
December 31, 2017 include capitalized
borrowing costs of $nil (2016: $1.7
million). It also includes pre-production costs of
$nil for the year ended December 31,
2017 (2016: $2.1 million), net
of pre-production revenues of $nil (2016: $14.8 million).
Impairment of assets held under finance leases
During the year ended December 31,
2017, the Company agreed to cancel poor performing heavy
mining equipment held as finance leases and fully acquire those
with acceptable performance for a cash consideration of
$2.7 million. The derecognition
of the finance lease liabilities resulted in a gain of $4 million and an impairment of $2.9 million was recognised on those equipment
with low availabilities.
Impairment of New Liberty Gold Mine
In accordance with IAS 36, Impairment of Assets, the Company
assesses annually whether there are any indicators of impairment of
non-current assets. When circumstances or events indicate that
non-current assets may be impaired, these assets are reviewed in
detail to determine whether their carrying value is higher than
their recoverable value, and, where this is the result, an
impairment is recognised. Recoverable value is the higher of value
in use ("VIU") and fair value less costs to sell. VIU is estimated
by calculating the present value of the future cash flows expected
to be derived from the asset cash generating unit ("CGU"). Fair
value less costs to sell is based on the most reliable information
available, including market statistics and recent transactions. The
New Liberty Gold Mine has been identified as the CGU. This includes
the mining and development property and associated working
capital.
The mine operations falling below expectations during the year
represented an impairment trigger, and as a result, Management
performed impairment testing in order to ensure that the
recoverable value calculated exceeded the carrying value as
presented. The results of this test did not result in any
impairment for the year ended December 31,
2017 (2016: $42.5
million).
The recoverable amount of the CGU was determined by calculating
its VIU, which has been determined to be greater than its fair
value less cost to dispose. The key assumptions used in determining
the VIU for the CGU is life-of-mine ("LOM") plan, long-term gold
prices and discount rate. The estimates of future cash flows were
derived from the latest LOM plan as at December 31, 2017 which showed an estimated life
of 4 years (2016: seven years) and was based on management's
current best estimates of optimized mine and processing plans,
future operating costs and the assessment of capital expenditure of
the New Liberty Gold Mine. The Company also used the
following assumptions:
- estimated gold price of $1,300
per ounce (2016: a range from $1,200
to $1,300 (LOM average $1,300) per ounce) based on observable market
data including spot price and industry consensus; and
- a pre-tax discount rate of 8.5% (2016: 8.5%) was applied to
present value the net future cash flows based on the weighted
average cost of capital applicable to the CGU.
12. Available-for-sale
investments
|
December
31,
2017
|
December
31,
2016
|
|
$'000
|
$'000
|
Beginning of the
year
|
55
|
83
|
Loss recognised in
statement of comprehensive income
|
(34)
|
(28)
|
End of the
year
|
21
|
55
|
As at December 31, 2017 and 2016,
the Company holds 615,855 shares in Stellar Diamonds plc, a diamond
mining and exploration company listed on the AIM market operated by
the London Stock Exchange. The Company's available-for-sale
investments are classified as Level 1 where the fair value is
determined by reference to quoted prices (unadjusted) in active
markets.
13. Borrowings
|
December 31,
2017
|
December 31,
2016
|
|
$'000
|
$'000
|
Current
|
|
|
Bank loan - Senior
Facility Tranche A
|
14,741
|
11,222
|
Bank loan - Senior
Facility Tranche B
|
9,737
|
9,090
|
Shareholder
loan
|
8,106
|
-
|
Related party
loan
|
3,415
|
-
|
|
35,999
|
20,312
|
Non-current
|
|
|
Bank loan - Senior
Facility Tranche A
|
58,668
|
62,636
|
Bank loan -
Subordinated Facility
|
10,846
|
10,523
|
Shareholder
loan
|
14,938
|
-
|
Related party
loan
|
13,640
|
-
|
|
98,092
|
73,159
|
(a) Bank loans
On December 17, 2013 the Company
entered into an agreement for an $88
million project finance loan facility (the "Senior
Facility") with the Nedbank Limited and FirstRand Bank Limited
(collectively the "Lenders"), and also entered into a subordinated
loan facility agreement for $12
million with RMB Resources (the "Subordinated
Facility"). On December 9, 2015
the Company entered into an agreement for an additional
$10 million Tranche B Senior Facility
("Tranche B Facility", together with the Senior Facility and the
Subordinated Facility the "Loan Facilities") provided by the
Lenders. These Loan Facilities, which have been fully drawn,
financed the development of the Company's New Liberty Gold
Mine. $12.4 million of the
Senior Facility has been repaid to date.
On March 31, 2017, the Company
finalised an amendment to its Loan Facilities. The revisions
include improved conditions and rescheduled repayment terms of the
Loan Facilities in exchange for the provision of a personal
guarantee from Mehmet Nazif Gűnal, Non-Executive Chairman of the
Company, and corporate guarantees from the Avesoro Holdings Limited
group, the beneficial owner of 72.9% of the Company's issued
equity.
The rescheduled repayment structure provides no further capital
repayments until March 31, 2018 and
the Senior Facility loan tenor has been extended by two years until
January 31, 2022, and the tenor on
the Subordinated Facility has been extended to the earlier of 12
months following the repayment of the senior facility or
January 31, 2023. The Senior
Facility interest rate remains at LIBOR plus 1.8% until 2020,
following which it will increase to LIBOR plus 4.3% and the
Subordinated Facility interest rate remains the same at LIBOR plus
7.5%.
The Senior Facility is secured by charges over the assets of
BMMC and charges over the shares in BMMC.
(b) Shareholder loan
Current
The current shareholder loan payable to AJL of $8.1 million was assumed on acquisition of Youga
and Balogo Gold Mines (see Note 4).
Non-current
During the year ended December 31,
2017, BMMC borrowed $18.8
million from AJL to meet liabilities arising on the
termination of legacy procurement contracts, make advanced payments
to suppliers to secure lower unit cost pricing and to accelerate
the acquisition of capital items that will increase process plant
throughput at New Liberty.
The loan is unsecured and ranks subordinated to the Company's
bank loans. Interest is charged on the loan at a fixed rate
of 3.75% per annum. The amount undrawn from this loan
facility as at December 31, 2017 is
$16.2 million. BMMC may draw
down in multiple tranches at the Company's discretion before
December 31, 2020, with funds
available for general working capital purposes. The facility
is due to repaid in full no later than December 31, 2022 and has no early repayment
penalty.
The loan payable to AJL was initially recognised at fair value
calculated as its present value at a market rate of interest and
subsequently measured at amortised cost. The difference
between fair value and loan amount of $4.5
million has been credited to equity as a capital
contribution as the loan is from its majority shareholder.
(c) Related party loan
During the year ended December 31,
2017 the Company entered into equipment and finance facility
agreements with Mapa Ä°nÅŸaat ve Ticaret A.Åž. ("Mapa"), a company
controlled by Mehmet Nazif Gűnal, Non-Executive Chairman of the
Company, to facilitate the purchase of heavy mining equipment
totaling $23.2 million. The
loan principal of these agreements includes a mark-up of 2.5% over
the cost incurred by Mapa in procuring the equipment. The equipment
finance loans are unsecured, with interest charged at 6.5% per
annum on the US$ denominated loan amount of approximately
$11 million and 5.5% per annum on the
Euro denominated loan amount of approximately €10.3 million
(equivalent to approximately $12.2
million). The loans are repayable in cash in eight equal
semi-annual instalments, the first of which will fall due six
months after utilisation of the loan.
The loan payable to Mapa was initially recognised at fair value
calculated as its present value at a market rate of interest and
subsequently measured at amortised cost. The difference
between fair value and loan amount of $6.5
million has been credited to equity as a capital
contribution from a related party.
14. Trade and other
payables
|
December
31,
2017
|
December
31,
2016
|
|
$'000
|
$'000
|
Current
|
|
|
Trade
payables
|
27,649
|
7,368
|
Due to related
parties (Note 20(e))
|
464
|
1,342
|
Accruals and other
payables
|
12,890
|
5,517
|
|
41,003
|
14,227
|
Non-current
|
|
|
Trade
payables
|
463
|
-
|
15. Finance lease
liability
The finance lease liability relates to diesel-powered generators
and related equipment and the fuel storage facility, all at New
Liberty Gold Mine. Such assets have been classified as
finance leases as the rental period amounts to a major portion of
the estimated useful economic life of the lease assets and the
present value of the minimum lease payments amounts to at least
substantially all of the fair value of the leased assets.
|
December 31,
2017
|
December 31,
2016
|
|
$'000
|
$'000
|
Gross finance lease
liability
|
|
|
- Within one
year
|
2,820
|
3,902
|
- Between two and
five years
|
7,191
|
11,842
|
- After five
years
|
-
|
420
|
|
10,011
|
16,164
|
Future finance
cost
|
(2,223)
|
(4,004)
|
Present value of
lease liability
|
7,788
|
12,160
|
|
|
|
Current
portion
|
1,913
|
2,370
|
Non-current
portion
|
5,875
|
9,790
|
As discussed in Note 11, the Company cancelled certain finance
leases of heavy mining equipment. The derecognition of those
finance leases resulted in a gain of $4
million recognised in the consolidated statement of
comprehensive income.
16. Derivative liability
|
Year ended
December 31,
2017
|
Year ended
December 31,
2016
|
|
$'000
|
$'000
|
Beginning of the
year
|
105
|
1,159
|
Change in fair
value
|
-
|
(1,054)
|
End of the
year
|
105
|
105
|
On April 22, 2014 and July 29, 2014 the Company issued 16,687,499 and
12,260,148 warrants, respectively, with an exercise price of £0.378
(or the prevailing C$ equivalent thereof) and a term of three and a
half years.
On December 22, 2015 the Company
issued 20,400,000 Financier Options and re-issued 11,124,528
warrants with an exercise price of 7p and a term of 3.3 years.
The Company's derivative liability is classified as Level 3
where the fair value is based on inputs that are not observable and
significant to the overall fair value measurement. These are
treated as a derivative liability and were fair valued at inception
using the Black-Scholes option pricing model and the following
assumptions:
16. Derivative liability (continued)
|
December 22,
2015
|
July 29,
2014
|
April 22,
2014
|
Number of
warrants
|
31,524,528
|
12,260,148
|
16,687,499
|
Exercise
price
|
7 GBp
|
37.8 GBp
|
37.8 GBp
|
Dividend
yield
|
0%
|
0%
|
0%
|
Risk free interest
rate
|
1.29%
|
1.93%
|
1.99%
|
Expected
life
|
3.3 years
|
3.5 years
|
3.5 years
|
Expected volatility
(based on historical volatility)
|
60%
|
43%
|
46%
|
The changes in fair value at each reporting date are taken
directly to the statement of comprehensive income. The
following assumptions were used at each date.
|
December
31, 2017
|
December
31, 2016
|
Exercise
price
|
7
GBp
|
7-37.8 GBp
|
Dividend
yield
|
0%
|
0%
|
Risk free interest
rate
|
0.73%
|
0.55%
|
Expected
life
|
1.3
years
|
0.8-2.3
years
|
Expected volatility
(based on historical volatility)
|
103%
|
92-115%
|
The weighted average exercise price of the outstanding
31,524,528 warrants which are accounted for as derivative liability
as at December 31, 2017 is
7 GBp (2016: 22 GBp).
17. Provision
|
December 31,
2017
|
December 31,
2016
|
|
$'000
|
$'000
|
Current
|
|
|
Legal
provisions
|
395
|
-
|
Others
|
128
|
-
|
|
523
|
-
|
Non-current
|
|
|
Mine closure and
rehabilitation provision
|
8,529
|
2,304
|
Provision for
employee benefits
|
1,910
|
-
|
|
10,439
|
2,304
|
|
December 31,
2017
|
December 31,
2016
|
|
$'000
|
$'000
|
Current
|
|
|
Beginning of the
year
|
-
|
-
|
Assumed during the
year (Note 4)
|
523
|
-
|
End of the
year
|
523
|
-
|
|
December 31,
2017
|
December 31,
2016
|
|
$'000
|
$'000
|
Non-current
|
|
|
Beginning of the
year
|
2,304
|
1,369
|
Additions during the
year
|
543
|
854
|
Assumed during the
year (Note 4)
|
7,477
|
-
|
Unwinding of
discount
|
115
|
81
|
End of the
year
|
10,439
|
2,304
|
The estimated mine closure and rehabilitation costs are expected
to be incurred at the end of the life of each mine, 2022 for New
Liberty, 2024 for Youga and 2018 for Balogo. Mine closure and
rehabilitation costs are estimated based on a formal closure plan
and are subject to regular reviews. The principal factors
that can cause expected cash flows to change include change in the
LOM plan, changes in ore reserves and changes in law and regulation
governing the protection of the environment.
18. Equity
(a)
Authorised
Unlimited number of common shares without par value.
(b)
Issued
|
Shares
|
$'000
|
Balance at January 1,
2016
|
536,168,262
|
177,877
|
Issued to Sarama
Investments Liberia Limited (i)
|
5,648,310
|
531
|
Equity financing
with AJL (ii)
|
390,644,883
|
17,462
|
Conversion of
Promissory Note (ii)
|
271,577,546
|
12,303
|
Other equity
financing (iii)
|
4,110,000,000
|
75,132
|
Share subscription
(iv)
|
5,300,000
|
101
|
Shares issued for
services to the Company (iv)
|
5,420,000
|
100
|
Balance at December
31, 2016
|
5,324,759,001
|
283,506
|
Issued to AJL on
acquisition of Youga and Balogo Gold Mines (v)
|
2,033,492,822
|
51,459
|
Equity financing
(v)
|
797,449,000
|
20,248
|
Share issuance costs
(v)
|
-
|
(1,568)
|
Exercise of stock
options (vi)
|
375,000
|
8
|
Balance at
December 31, 2017
|
8,156,075,823
|
353,653
|
(i)
|
On January 6, 2016,
the Company completed the acquisition of Sarama Investments Liberia
Limited which holds the Cape Mount, Cape Mount East and Cape Mount
West licences, for a total consideration of 5,648,310 shares at a
price of 6.38p per share ($0.094).
|
|
|
(ii)
|
On June 21, 2016 the
Company issued 59,533,674 new common shares at a price of $0.045302
per Share and a promissory note for the aggregate principal amount
of US$12,303,006 to AJL ("the Promissory Note"), raising gross
proceeds of $15 million.
|
|
|
|
On July 15, 2016 the
Company issued a further 331,111,209 new shares at a price of
$0.045302 per share to AJL, raising gross proceeds of $15
million. Further, the Promissory Note issued by the Company
to AJL also converted into 271,577,546 Shares (also at a price of
$0.045302 per Share).
|
|
|
|
These transactions
resulted in AJL becoming the majority shareholder of the
Company.
|
|
|
(iii)
|
On December 6, 2016,
the Company issued 4,110,000,000 shares at a price of 1.5 pence per
share raising net proceeds of $75 million, with AJL subscribing for
$60 million of new shares, via an equity fundraising to finance the
Company's transition to an owner-operator mining model at New
Liberty, repay amounts due to the Lenders and to strengthen its
balance sheet.
|
|
|
(iv)
|
In addition, Serhan
Umurhan, the Company's Chief Executive Officer, subscribed for
5,300,000 shares at a price of 1.5 pence per share. Serhan
Umurhan and Geoff Eyre, the Company's Chief Financial Officer, have
been issued 2,710,000 shares each at a price of 1.5 pence per share
in consideration for an aggregate of $100,000 for services rendered
to the Company.
|
|
|
(v)
|
As discussed in Note
4, the company acquired Youga and Balogo Gold Mines on December 18,
2017 for a total consideration of US$70.2 million which comprises
of the issuance of 2,033,492,822 new common shares in the Company
at a price of 1.90p per share and a cash component of US$18.7
million. The cash component was funded through the issuance
of 797,449,000 at a price of 1.90p per share through a private
placing. The directly attributable costs of issuance of these
new shares amounted to $1.6 million.
|
|
|
(vi)
|
During the year ended
December 31, 2017 the Company issued 375,000 shares on exercise of
375,000 stock options at a price of 1.575 pence per stock
option.
|
(c)
Stock options
Information relating to stock options outstanding at
December 31, 2016 is as follows:
|
|
December
31, 2017
|
|
December
31, 2016
|
|
Number
of options
|
Weighted
average
exercise price
per share Cdn$
|
Number of
options
|
Weighted
average
exercise price
per share Cdn$
|
Beginning of the
year
|
124,269,550
|
0.09
|
18,096,864
|
0.54
|
Options
granted
|
174,500,000
|
0.03
|
113,046,000
|
0.04
|
Options
exercised
|
(375,000)
|
0.03
|
-
|
-
|
Options
expired
|
(557,000)
|
1.05
|
(6,592,187)
|
0.39
|
Options
forfeited
|
(14,894,696)
|
0.18
|
(281,127)
|
0.35
|
End of the
year
|
282,942,854
|
0.05
|
124,269,550
|
0.09
|
There were 51,202,500 stock options that have vested as at
December 31, 2017 (2016: 24,952,550)
with a weighted average exercise price of Cdn$0.04 (2016: Cdn$0.25).
The weighted average fair value of the 174,500,000 stock options
granted in year ended December 31,
2017 (2016: 113,046,000 options) was estimated at
US$0.01 per option (2016:
US$0.02) at the grant date based on
the Black-Scholes option-pricing model using the following
assumptions:
|
Year
ended December
31, 2017
|
Year ended
December 31, 2016
|
Share price at grant
date
|
GBP0.02-0.03
|
GBP0.02-0.06
|
Exercise
price
|
GBP0.02-0.03
|
GBP0.02-0.06
|
Dividend
yield
|
0%
|
0%
|
Risk free interest
rate
|
0.40-0.72%
|
0.17-1.30%
|
Expected
life
|
5
years
|
5 years
|
Expected volatility
(based on historical volatility)
|
34-90%
|
84-129%
|
19. Loss per share
|
Year
ended
December 31,
2017
|
Year ended
December 31,
2016
|
Loss for the year
attributable to owners of equity ($'000)
|
(27,474)
|
(112,990)
|
Weighted average
number of common shares for the purposes of
basic and diluted loss per share
|
54,256,004
|
11,328,935
|
Basic and diluted
loss per share ($)
|
(0.51)
|
(9.97)
|
The weighted average number of common shares has been restated
for the 100:1 share consolidation that became effective on
January 16, 2018 (Note 25).
Where there is a loss, the impact of warrants and stock options
is anti-dilutive, hence, basic and diluted earnings per share are
the same.
20. Related party
transactions
Following are the Company's related party transactions in
addition to the acquisition of Youga and Balogo Gold Mines as
discussed in Note 4.
(a) AJL loan facility
As discussed in Note 13(b), the Company borrowed US$18.8 million from its majority shareholder,
AJL, during the year ended December
31, 2017. Interest charged on the loan for the year
ended December 31, 2017 amounted to
US$0.7 million.
(b) Loans payable to Mapa
As discussed in Note 13(c), the Company borrowed US$23.2 million from Mapa during the year ended
December 31, 2017. Interest
charged on the loans for the year ended December 31, 2017 amounted to US$0.4 million.
(c) Guarantee on the Loan Facilities
In exchange for the revised and improved conditions and
rescheduled repayment terms of the Loan Facilities (see Note 13(a))
a personal guarantee was provided by Mehmet Nazif Gűnal,
Non-Executive Chairman of the Company and corporate guarantees were
provided by the Avesoro Holdings Limited group, the beneficial
owner of 72.9% of the Company's issued equity.
(d) Termination of mining services contract and acquisition of
mining assets
On September 6, 2016 the mining
services contract (the "Contract") between BMMC, the Company's
wholly owned subsidiary, and MonuRent (Liberia) Limited ("MonuRent") together with
all underlying supplier contracts was novated to Atmaca Services
(Liberia) Inc. ("ASLI"), a
Liberian company that is wholly owned by AJL. All terms of
the Contract remained the same.
As part of the novation agreement with MonuRent, ASLI paid to
MonuRent cash of $15.4 million to
acquire mining equipment leased to BMMC, $7.1 million cash for inventory, $9.7 million cash for invoiced receivables and
$4.5 million cash as a contract
novation fee.
On December 6, 2016 BMMC
terminated the mining services contract with ASLI and completed the
acquisition of mining equipment and inventory from ASLI in exchange
for a payment of $36.7 million, equal
to the amount paid by ASLI to MonuRent.
ASLI invoiced BMMC a total of $7.4
million for the lease and maintenance of mining equipment in
accordance with the Contract from September
6 to December 6, 2016 of which $6.1
million was paid in 2016 leaving an outstanding payable as
at December 31, 2016 of $1.3 million.
During the year ended December 31,
2017, BMMC charged $2 million
for management, procurement and operational assistance provided to
ASLI and an additional $0.3 million
for payments made on behalf of ASLI. The outstanding
receivable from ASLI as at December 31,
2017 is $1 million.
(e) Other provision/(purchases) of goods and services
The Company also provided/(purchased) the following services
from related parties:
|
Year
ended
December
31,
2017
|
Year ended
December
31,
2016
|
|
$'000
|
$'000
|
Technical and
managerial services provided to:
|
|
|
Avesoro Services
(Jersey) Limited, a subsidiary of Company's parent
company
|
486
|
122
|
|
|
|
Drilling services
provided to the Company by:
|
|
|
Zwedru Mining Inc., a
subsidiary of Company's parent company
|
(899)
|
(66)
|
|
|
|
Drilling services
provided to the Company by:
|
|
|
Faso Drilling Company
SA., a subsidiary of Company's parent company
|
(742)
|
-
|
|
|
|
Travel services
provided to the Company by:
|
|
|
MNG Turizm ve Ticaret
A.S., an entity controlled by the Company's Chairman
|
(38)
|
(20)
|
|
|
|
Administration
services provided to the Company by:
|
|
|
Avesoro Services
(Jersey) Limited, a subsidiary of Company's parent
company
|
(120)
|
-
|
|
|
|
Charter plane
services provided to the Company by:
|
|
|
MNG Gold Liberia
Inc., a subsidiary of Company's parent company
|
(180)
|
-
|
|
|
|
Technical and
procurement services provided to the Company by:
|
|
|
MNG Orko Madencilik
A.S., an entity controlled by the Company's Chairman
|
(350)
|
-
|
|
|
|
Environmental
services provided by:
|
|
|
Digby Wells
Environmental, an entity that shared a common director with the
Company
|
-
|
(70)
|
Included in trade and other receivables is a receivable from a
related party of $1 million as at
December 31, 2017 (2016: $0.1 million) which represents management,
procurement and operational assistance services.
Included in trade and other payables is $0.5 million payable to related parties as at
December 31, 2017 (2016: $1.3 million) which represents mainly drilling
and charter jet
services.
(f) Key management
compensation
The Company's directors and officers are considered the
Company's key management personnel. The compensation paid or
payable to key management for services is shown below.
|
Year
ended December
31, 2017
|
Year
ended December
31, 2016
|
|
$
|
$
|
Salaries and other
short-term employee benefits
|
1,263,198
|
1,099,122
|
Contractual
termination/change of control payments
|
-
|
1,243,797
|
Share-based payments
*
|
576,529
|
487,388
|
|
1,839,727
|
2,830,307
|
The remuneration earned by each director is as follows:
|
Year ended
December 31, 2017
|
|
Year ended December
31, 2016
|
|
|
|
|
|
Salaries
and other
short-term
benefits
|
Contractual
termination/
change of
control
|
Share-
based
payments
*
|
Total
|
|
Salaries
and other
short-term
benefits
|
Contractual
termination/
change of
control
|
Share-
based
payments
*
|
Total
|
|
$
|
$
|
$
|
$
|
|
$
|
$
|
$
|
$
|
Geoffrey
Eyre1
|
413,488
|
-
|
177,614
|
591,102
|
|
164,671
|
-
|
50,000
|
214,671
|
Karin
Ireton2
|
-
|
-
|
-
|
-
|
|
25,701
|
94,897
|
16,740
|
137,338
|
Jean-Guy
Martin
|
90,226
|
-
|
61,379
|
151,605
|
|
86,989
|
94,897
|
67,420
|
249,306
|
David
Netherway
|
90,226
|
-
|
61,379
|
151,605
|
|
98,004
|
135,567
|
95,320
|
328,891
|
Loudon
Owen
|
90,226
|
-
|
61,379
|
151,605
|
|
86,989
|
94,897
|
61,840
|
243,726
|
David
Reading2
|
-
|
-
|
-
|
-
|
|
263,147
|
350,000
|
38,138
|
651,285
|
Adrian
Reynolds2
|
-
|
-
|
-
|
-
|
|
25,701
|
94,897
|
22,320
|
142,918
|
Serhan
Umurhan1
|
579,032
|
-
|
214,778
|
793,810
|
|
239,814
|
-
|
50,000
|
289,814
|
|
1,263,198
|
-
|
576,529
|
1,839,727
|
|
991,016
|
865,155
|
401,778
|
2,257,949
|
|
* Share-based
payments for the year ended December 31, 2016 include fair value of
vested stock options and shares issued in exchange for
services to the Company.
|
1 Geoffrey
Eyre and Serhan Umurhan were appointed as directors on July 15,
2016.
|
2 Karin
Ireton, David Reading and Adrian Reynolds ceased to be directors of
the Company on July 15, 2016.
|
(g) Equity
financing
AJL's participation in the financing of the Company are
disclosed in Note 18b.
21. Financial instruments
by category
The Company's financial instruments consist of cash and cash
equivalents, trade and other receivables, available for sale
investments, borrowings, trade payables and accruals, finance lease
liability and derivative liability. Financial instruments are
initially recognized at fair value with subsequent measurement
depending on classification as described below. Classification of
financial instruments depends on the purpose for which the
financial instruments were acquired or issued, their
characteristics, and the Company's designation of such
instruments.
The Company has made the following classifications for its
financial instruments:
|
Available
for sale $'000
|
Cash
and Receivables
at amortised
cost $'000
|
Total $'000
|
December 31,
2017
|
|
|
|
Assets as per
statement of financial position
|
|
|
|
Cash and cash
equivalents
|
-
|
17,787
|
17,787
|
Trade and other
receivables
|
-
|
11,106
|
11,106
|
Due from related
parties
|
-
|
1,015
|
1,015
|
Available-for- sale
investments
|
21
|
-
|
21
|
Total
|
21
|
29,908
|
29,929
|
|
Available
for sale $'000
|
Cash
and Receivables
at amortised
cost $'000
|
Total $'000
|
December 31,
2016
|
|
|
|
Assets as per
statement of financial position
|
|
|
|
Cash and cash
equivalents
|
-
|
13,429
|
13,429
|
Trade and other
receivables
|
-
|
2,700
|
2,700
|
Due from related
parties
|
-
|
122
|
122
|
Available-for- sale
investments
|
55
|
-
|
55
|
Total
|
55
|
16,251
|
16,306
|
|
Liabilities at
fair value
through the
profit and
loss $'000
|
Other financial liabilities at amortised cost $'000
|
Total $'000
|
December 31,
2017
|
|
|
|
Liabilities as per
statement of financial position
|
|
|
|
Trade payables and
accruals
|
-
|
41,002
|
41,002
|
Due to related
parties
|
-
|
464
|
464
|
Derivative
liability
|
105
|
-
|
105
|
Finance lease
liability
|
-
|
7,788
|
7,788
|
Borrowings
|
-
|
134,091
|
134,091
|
Total
|
105
|
183,345
|
183,450
|
|
Liabilities at
fair value
through the
profit and
loss $'000
|
Other financial liabilities at amortised cost $'000
|
Total $'000
|
December 31,
2016
|
|
|
|
Liabilities as per
statement of financial position
|
|
|
|
Trade payables and
accruals
|
-
|
11,801
|
11,801
|
Due to related
parties
|
-
|
1,342
|
1,342
|
Derivative
liability
|
105
|
-
|
105
|
Finance lease
liability
|
-
|
12,160
|
12,160
|
Borrowings
|
-
|
93,471
|
93,471
|
Total
|
105
|
118,774
|
118,879
|
22. Financial and capital risk
management
(a) Financial risk management
The Company's activities expose it to a variety of financial
risks, which include interest rate and liquidity risk, foreign
exchange risk and credit risk.
Interest rate and liquidity risk
Fluctuations in interest rates impact on the value of short term
cash investments, finance lease liability and borrowings giving
rise to interest rate risk. The Company has in the past been
able to actively source financing through public offerings and debt
financing. This cash is managed to ensure surplus funds are
invested in a manner to achieve maximum returns while minimising
risks. In the ordinary course of business, the Company is
required to fund working capital and capital expenditure
requirements. The Company typically holds cash and cash
equivalents with a maturity of less than 30 days.
The Directors consider there to be minimal interest rate risk
from fluctuations in market interest rates since the interest on
the borrowings are largely fixed. If USD LIBOR, which is the
variable component of the interest increased by 100% during the
year ended December 31, 2017, finance
cost would have increased by $1
million.
The Company ensures that its liquidity risk is mitigated by a
combination of cash flow forecasts, budgeting, monitoring of
operational performance and placing financial assets on short term
maturity, thus all financial liabilities are met as they become
due.
The Company's liabilities, stated at their gross, contractual
and undiscounted amounts, fall due as indicated in the following
table:
At December 31,
2017
|
Within 30
days
$'000
|
30 days
to
6
months
$'000
|
6 to 12
months
$'000
|
Over
12
months
$'000
|
Trade and other
payables
|
28,673
|
12,322
|
8
|
463
|
Finance lease
liability
|
594
|
880
|
1,346
|
7,191
|
Borrowings and
finance costs
|
199
|
25,345
|
21,329
|
130,034
|
At December 31,
2016
|
|
|
|
|
Trade and other
payables
|
8,421
|
5,806
|
-
|
-
|
Finance lease
liability
|
325
|
1,626
|
1,951
|
12,262
|
Borrowings and
finance costs
|
9,082
|
1,832
|
17,135
|
84,609
|
Foreign exchange risk
Foreign exchange risk to the Group arises from transactions
denominated in currencies other than US dollars. In the
normal course of business the Company enters into transactions
denominated in foreign currencies, primarily Pounds Sterling,
Canadian Dollars, Euros, Australian Dollars and South African
Rand. As a result, the Company is subject to exposure from
fluctuations in foreign currency exchange rates. The Company
does not enter into derivatives to manage these risks.
Carrying value of
foreign currency balances
|
December 31,
2017
|
December
31,
2016
|
|
$'000
|
$'000
|
Cash and cash
equivalents, include balances denominated in:
|
|
|
|
Canadian Dollar
(CAD)
|
-
|
17
|
|
Pound Sterling
(GBP)
|
133
|
2,746
|
|
West African CFA
Franc (XOF)
|
13,999
|
-
|
|
Others
|
5
|
53
|
|
|
|
Investments, include
balances denominated in:
|
|
|
|
Pounds Sterling
(GBP)
|
21
|
55
|
|
|
|
Receivables and other
assets, include balances denominated in:
|
|
|
|
Canadian Dollar
(CAD)
|
259
|
225
|
|
Pounds Sterling
(GBP)
|
136
|
406
|
|
West African CFA
Franc (XOF)
|
20,334
|
-
|
|
Others
|
-
|
29
|
|
|
|
Trade and other
payables, include balances denominated in:
|
|
|
|
Canadian Dollar
(CAD)
|
175
|
198
|
|
Euro (EUR)
|
2,985
|
186
|
|
Pound Sterling
(GBP)
|
517
|
1,082
|
|
South African Rand
(ZAR)
|
972
|
1,146
|
|
West African CFA
Franc (XOF)
|
36,510
|
-
|
|
Others
|
36
|
65
|
|
|
|
The sensitivities below are based on financial assets and
liabilities held at December 31, 2017
and 2016 where balances were not denominated in the functional
currency of the Company. The sensitivities do not take into
account the Company's income and expenses and the results of the
sensitivities could change due to other factors such as changes in
the value of financial assets and liabilities as a result of
non-foreign exchange influenced
factors.
|
Effect on net
assets of USD
strengthening 10%
|
|
December
31, 2017 $'000
|
December
31, 2016
$'000
|
Canadian Dollar
(CAD)
|
(8)
|
(4)
|
Pound Sterling
(GBP)
|
23
|
(212)
|
South African Rand
(ZAR)
|
97
|
115
|
Euro (EUR)
|
299
|
19
|
West African CFA
Franc (XOF)
|
218
|
-
|
Credit risk
Financial instruments that potentially subject the Company to
credit risk consist of cash and cash equivalents. The Company has
an investment policy requiring that cash and cash equivalents only
are deposited in permitted investments with certain minimum credit
ratings.
|
December
31, 2017 $'000
|
December
31, 2016 $'000
|
Financial institutions
with Standards & Poor's A rating
|
2,784
|
13,457
|
Financial institutions
regulated by the Central Bank of the West African States
|
13,999
|
-
|
Financial institutions
un-rated
|
1,004
|
-
|
(b) Capital risk management
The Company's objectives when managing capital is to maintain
its ability to continue as a going concern in order to provide
returns for shareholders and benefits for other stakeholders and to
ensure sufficient resources are available to meet day to day
operating requirements. The Company defines capital as
'equity' as shown in the consolidated statement of financial
position.
The Company's board of directors takes responsibility for
managing the Company's capital and does so through board meetings,
review of financial information, and regular communication with
officers and senior management.
The Company does not currently pay out dividends.
The Company's investment policy is to invest its cash in
deposits with high credit worthy financial institutions with short
term maturity.
The Company is not subject to externally imposed capital
requirements and there has been no change in the overall capital
risk management as at December 31,
2017.
23. Commitments
Operating expenditure contracted for at December 31, 2017 but not yet incurred is as
follows:
|
Less than
one year
|
Between one
and five
years
|
Over five
years
|
|
$'000
|
$'000
|
$'000
|
Operating lease
expenditure
|
65
|
461
|
-
|
Other operating
expenditure
|
4,652
|
-
|
-
|
Capital
expenditure
|
1,698
|
-
|
-
|
Operating expenditure commitments comprises of operating leases
as at December 31, 2017.
Commitments in respect of finance leases are disclosed in Note
15.
24. Notes to the statement of cash flows
|
Borrowings
$'000
|
Finance
lease
liabilities
$'000
|
Share
capital
$'000
|
Capital
contribution
$'000
|
Total
$'000
|
As at January 1,
2017
|
93,471
|
12,160
|
283,506
|
48,235
|
437,372
|
Cash flows from/(used
in) financing activities
|
5,999
|
(877)
|
18,688
|
4,523
|
28,333
|
Cash flows used in
investing activities
|
-
|
(866)
|
-
|
-
|
(866)
|
Non-cash
flows
|
|
|
|
|
|
|
Finance
costs
|
9,689
|
1,695
|
-
|
-
|
11,384
|
|
Acquisition of Youga
and Balogo Gold Mines
|
8,106
|
-
|
51,459
|
-
|
59,565
|
|
Non-cash acquisition
of assets held under finance
leases
|
-
|
2,002
|
-
|
-
|
2,002
|
|
Related party
loans
|
16,772
|
-
|
-
|
6,472
|
23,244
|
|
Unrealised foreign
exchange
|
54
|
-
|
-
|
-
|
54
|
|
Gain on lease
settlement
|
-
|
(3,988)
|
-
|
-
|
(3,988)
|
|
Changes in non-cash
working capital
|
-
|
(2,338)
|
-
|
-
|
(2,338)
|
As at December 31,
2017
|
134,091
|
7,788
|
353,653
|
59,230
|
554,762
|
|
Borrowings
$'000
|
Finance
lease
liabilities
$'000
|
Share
capital
$'000
|
Promissory
note
$'000
|
Total
$'000
|
As at January 1,
2016
|
102,809
|
8,865
|
177,877
|
-
|
289,551
|
Cash flows from/(used
in) financing activities
|
(18,357)
|
(970)
|
92,695
|
12,303
|
85,671
|
Cash flows used in
investing activities
|
-
|
(1,061)
|
-
|
-
|
(1,061)
|
Non-cash
flows
|
|
|
|
|
|
|
Finance
costs
|
7,548
|
948
|
-
|
-
|
8,496
|
|
Capitalised
interest
|
1,471
|
-
|
-
|
-
|
1,471
|
|
Conversion of
promissory note into shares
|
-
|
-
|
12,303
|
(12,303)
|
-
|
|
Shares issued for
exploration licences
|
-
|
-
|
531
|
-
|
531
|
|
Shares issued in lieu
of services
|
-
|
-
|
100
|
-
|
100
|
|
Non-cash acquisition
of assets held under finance
leases
|
-
|
4,378
|
-
|
-
|
4,378
|
As at December 31,
2016
|
93,471
|
12,160
|
283,506
|
-
|
389,137
|
25. Subsequent events
On January 16, 2018 a 100:1 share
consolidation became effective and the Company's previously issued
share capital of 8,156,075,823 common shares of nil par value was
reduced to 81,560,260 new common shares of nil par value.
On February 21, 2018 the Company
entered into further equipment and finance facility agreements with
Mapa to facilitate the purchase of heavy mining equipment totaling
approximately $10.3 million.
The equipment finance loans are unsecured, with interest charged at
6.5% per annum and have similar terms as those entered into with
Mapa during the year ended December 31,
2017 as discussed in Note 18(c). The loan principal of
these agreements includes a mark-up of 2.5% over the cost incurred
by Mapa in procuring the equipment.
Market Abuse Regulation (MAR) Disclosure
Certain information contained in this announcement would have
been deemed inside information for the purposes of Article 7 of
Regulation (EU) No 596/2014 until the release of this
announcement.
About Avesoro Resources Inc.
Avesoro Resources is a West
Africa focused gold producer and development company that
operates three gold mines across West
Africa and is listed on the Toronto Stock Exchange ("TSX")
and the AIM market operated by the London Stock Exchange ("AIM").
The Company's assets include the New Liberty Gold Mine in
Liberia (the "New Liberty Gold
Mine" or "New Liberty") and the Youga and Balogo Gold mines in
Burkina Faso ("Youga" and
"Balogo").
New Liberty has an estimated proven and probable mineral reserve
of 7.4Mt with 717,000 ounces of gold grading 3.03g/t and an
estimated measured and indicated mineral resource of 9.6Mt with
985,000 ounces of gold grading 3.2g/t and an estimated inferred
mineral resource of 6.4Mt with 620,000 ounces of gold grading
3.0g/t. The foregoing Mineral Reserve and Mineral Resource
estimates and additional information in connection therewith is set
out in an NI 43-101 compliant Technical Report dated November 1, 2017 and entitled "New Liberty Gold
Mine, Bea Mountain Mining Licence Southern Block, Liberia, West
Africa" and is available on SEDAR at www.sedar.com.
Youga and Balogo have a combined estimated proven and probable
mineral reserve of 9.3Mt with 513,000 ounces of gold grading 1.7g/t
and a combined estimated indicated mineral resource of 16.05Mt with
801,600 ounces of gold grading 1.55g/t and a combined inferred
mineral resource of 13Mt with 655,000 ounces of gold grading
1.57g/t. The foregoing Mineral Reserve and Mineral Resource
estimates and additional information in connection therewith is set
out in two NI 43-101 compliant Technical Reports, dated
June 16, 2017 entitled "Mineral
Resource and Mineral Reserve Update for the Balogo Project" and
dated June 19, 2017 and entitled
"Mineral Resource and Mineral Reserve Update for the Youga and
Ouaré Projects" and are available on SEDAR at www.sedar.com.
For more information, please visit www.avesoro.com
Qualified Persons
The Company's Qualified Person is Mark
J. Pryor, who holds a BSc (Hons) in Geology & Mineralogy
from Aberdeen University, United Kingdom and is a Fellow of the
Geological Society of London, a
Fellow of the Society of Economic Geologists and a registered
Professional Natural Scientist (Pr.Sci.Nat) of the South African
Council for Natural Scientific Professions. Mark Pryor is an independent technical
consultant with over 25 years of global experience in exploration,
mining and mine development and is a "Qualified Person" as defined
in National Instrument 43 -101 "Standards of Disclosure for Mineral
Projects" of the Canadian Securities Administrators and has
reviewed and approved this press release. Mr. Pryor has verified
the underlying technical data disclosed in this press release.
Forward Looking Statements
Certain information contained in this press release constitutes
forward looking information or forward looking statements with the
meaning of applicable securities laws. This information or
statements may relate to future events, facts, or circumstances or
the Company's future financial or operating performance or other
future events or circumstances. All information other than
historical fact is forward looking information and involves known
and unknown risks, uncertainties and other factors which may cause
the actual results or performance to be materially different from
any future results, performance, events or circumstances expressed
or implied by such forward-looking statements or information. Such
statements can be identified by the use of words such as
"anticipate", "plan", "continue", "estimate", "expect", "may",
"will", "would", "project", "should", "believe", "target",
"predict" and "potential". No assurance can be given that
this information will prove to be correct and such forward looking
information included in this press release should not be unduly
relied upon. Forward looking information and statements
speaks only as of the date of this press release.
In making the forward looking information or statements
contained in this press release, assumptions have been made
regarding, among other things: general business, economic and
mining industry conditions; interest rates and foreign exchange
rates; the continuing accuracy of Mineral Resource and Reserve
estimates; geological and metallurgical conditions (including with
respect to the size, grade and recoverability of Mineral Resources
and Reserves) and cost estimates on which the Mineral Resource and
Reserve estimates are based; the supply and demand for commodities
and precious and base metals and the level and volatility of the
prices of gold; market competition; the ability of the Company to
raise sufficient funds from capital markets and/or debt to meet its
future obligations and planned activities and that unforeseen
events do not impact the ability of the Company to use existing
funds to fund future plans and projects as currently contemplated;
the stability and predictability of the political environments and
legal and regulatory frameworks including with respect to, among
other things, the ability of the Company to obtain, maintain, renew
and/or extend required permits, licences, authorizations and/or
approvals from the appropriate regulatory authorities; that
contractual counterparties perform as agreed; and the ability of
the Company to continue to obtain qualified staff and equipment in
a timely and cost-efficient manner to meet its demand.
Actual results could differ materially from those anticipated in
the forward looking information or statements contained in this
press release as a result of risks and uncertainties (both foreseen
and unforeseen), and should not be read as guarantees of future
performance or results, and will not necessarily be accurate
indicators of whether or not such results will be achieved. These
risks and uncertainties include the risks normally incidental to
exploration and development of mineral projects and the conduct of
mining operations (including exploration failure, cost overruns or
increases, and operational difficulties resulting from plant or
equipment failure, among others); the inability of the Company to
obtain required financing when needed and/or on acceptable terms or
at all; risks related to operating in West Africa, including potentially more
limited infrastructure and/or less developed legal and regulatory
regimes; health risks associated with the mining workforce in
West Africa; risks related to the
Company's title to its mineral properties; the risk of adverse
changes in commodity prices; the risk that the Company's
exploration for and development of mineral deposits may not be
successful; the inability of the Company to obtain, maintain, renew
and/or extend required licences, permits, authorizations and/or
approvals from the appropriate regulatory authorities and other
risks relating to the legal and regulatory frameworks in
jurisdictions where the Company operates, including adverse or
arbitrary changes in applicable laws or regulations or in their
enforcement; competitive conditions in the mineral exploration and
mining industry; risks related to obtaining insurance or adequate
levels of insurance for the Company's operations; that Mineral
Resource and Reserve estimates are only estimates and actual metal
produced may be less than estimated in a Mineral Resource or
Reserve estimate; the risk that the Company will be unable to
delineate additional Mineral Resources; risks related to
environmental regulations and cost of compliance, as well as costs
associated with possible breaches of such regulations;
uncertainties in the interpretation of results from drilling; risks
related to the tax residency of the Company; the possibility that
future exploration, development or mining results will not be
consistent with expectations; the risk of delays in construction
resulting from, among others, the failure to obtain materials in a
timely manner or on a delayed schedule; inflation pressures which
may increase the cost of production or of consumables beyond what
is estimated in studies and forecasts; changes in exchange and
interest rates; risks related to the activities of artisanal
miners, whose activities could delay or hinder exploration or
mining operations; the risk that third parties to contracts may not
perform as contracted or may breach their agreements; the risk that
plant, equipment or labour may not be available at a reasonable
cost or at all, or cease to be available, or in the case of labour,
may undertake strike or other labour actions; the inability to
attract and retain key management and personnel; and the risk of
political uncertainty, terrorism, civil strife, or war in the
jurisdictions in which the Company operates, or in neighbouring
jurisdictions which could impact on the Company's exploration,
development and operating activities.
This press release also contains Mineral Resource and Mineral
Reserve estimates. Information relating to Mineral Resource and
Mineral Reserve contained in this press release is considered
forward looking information in nature, as such estimates are
estimates only, and that involve the implied assessment of the
amount of minerals that may be economically extracted in a given
area based on certain judgments and assumptions made by qualified
persons, including the future economic viability of the deposit
based on, among other things, future estimates of commodity
prices. Such estimates are expressions of judgment and
opinion based on the knowledge, mining experience, analysis of
drilling results and industry practices of the qualified persons
making the estimate. Valid estimates made at a given time may
significantly change when new information becomes available, and
may have to change as a result of numerous factors, including
changes in the prevailing price of gold. By their nature, Mineral
Resource and Mineral Reserve estimates are imprecise and depend, to
a certain extent, upon statistical inferences which may ultimately
prove unreliable. If such Mineral Resource and Mineral Reserve
estimates are inaccurate or are reduced in the future (including
through changes in grade or tonnage), this could have a material
adverse impact on the Company and its operating and financial
performance. Mineral resources that are not mineral reserves
do not have demonstrated economic viability. Due to the
uncertainty that may be attached to inferred mineral resources, it
cannot be assumed that all or any part of an inferred mineral
resource will be upgraded to an indicated or measured mineral
resource as a result of continued exploration.
Although the forward-looking statements contained in this press
release are based upon what management believes are reasonable
assumptions, the Company cannot provide assurance that actual
results or performance will be consistent with these
forward-looking statements. The forward looking information and
statements included in this press release are expressly qualified
by this cautionary statement and are made only as of the date of
this press release. The Company does not undertake any
obligation to publicly update or revise any forward looking
information except as required by applicable securities laws.
SOURCE Avesoro Resources Inc.