TSX: ASO
AIM: ASO
TORONTO, Aug. 13, 2018 /CNW/ - Avesoro Resources Inc.,
("Avesoro" or the "Company"), the TSX and AIM listed West African
gold producer, is pleased to announce the release of its unaudited
financial results for the quarter (the "Quarter" or "Q2") and six
months ("H1") ended June 30,
2018.
Financial Highlights:
H1 2018
- Gold production of 128,319 ounces, in line with full year 2018
guidance of 220,000 – 240,000 ounces and a 318% increase versus H1
2017 ("HoH");
- Revenues of US$165.9 million from
gold sales of 125,838 ounces at an average realised gold price of
US$1,318 per ounce, versus revenues
of US$39 million and gold sales of
30,375 ounces in H1 2017;
- Operating cash costs US$658 per
ounce sold in H1 2018, an improvement of 37% HoH;
- All in sustaining cash costs ("AISC") of US$932 per ounce sold in H1 2018, a 40% HoH
improvement;
- Company EBITDA margin of 39%, with EBITDA of US$64.6 million versus EBITDA of US$1.1 million in H1 2017;
- Operating cash flows of US$47.9
million, compared to an outflow of US$7.4 million in H1 2017; and
- Cash of US$12.7 million and debt
of US$134.5 million at June 30, 2018.
Q2 2018
- Gold production of 60,231 ounces in the Quarter, a decrease of
12% on the previous quarter, as a result of planned lower grades at
the Youga mine;
- Revenues of US$74.5 million from
gold sales of 57,285 ounces in Q2 2018 at an average realised gold
price of US$1,302 per ounce;
- Operating cash costs of US$698
per ounce sold in Q2 2018;
- AISC of US$985 per ounce sold in
Q2 2018;
- Company EBITDA margin of 33%, with EBITDA of US$24.4 million in the Quarter; and
- Operating cash flows of US$8.5
million in the Quarter.
Serhan Umurhan, Chief Executive Officer of Avesoro,
commented: "We delivered a strong operational and
financial performance during the first half of 2018 producing over
128,000 ounces of gold across our two mines at an operating cash
cost of US$658 and all-in-sustaining
cost of US$932 per ounce sold. Both
New Liberty and Youga are performing in line with expectations
helping the Company to generate US$47.9
million in cash flow so far this year. Following a
particularly strong Q1 2018 performance, the Youga mine is now
performing at a normalised production rate. New Liberty's
performance continues to improve with a further seven percent
increase in gold production during the Quarter and unit cost
reductions in all key areas of operations.
We continue to make good progress with our substantial
exploration drilling programme across both Liberia and Burkina
Faso, with 89,900 metres of diamond drilling having been
completed across our portfolio so far this year, representing 52%
of the full year budget. We expect these activities to provide
further increases in shareholder value in addition to the 29%
increase in mineral reserves at Youga already announced earlier in
the Quarter.
We now look forward to delivering another strong performance
in the second half of 2018 and we maintain our full year production
guidance of 220,000 – 240,000 ounces of gold at an
all-in-sustaining cost of between US$960 and US$1,000
per ounce sold."
Table 1: Consolidated Financial Highlights
Metric
|
Q2
2018
|
Q1
2018
|
Q2
2018 vs
Q1 2018
|
H1
2018
|
H1
2017
|
H1
2018 vs H1 2017
|
Gold production,
oz
|
60,231
|
68,088
|
-12%
|
128,319
|
30,735
|
318%
|
Gold sold,
oz
|
57,285
|
68,553
|
-16%
|
125,838
|
31,390
|
301%
|
Operating cash
costs,
US$/oz sold
|
698
|
624
|
12%
|
658
|
1,043
|
-37%
|
All in Sustaining
Costs,
US$/oz sold
|
985
|
889
|
11%
|
932
|
1,543
|
-40%
|
Average Realised
Gold
Price, US$/oz
|
1,302
|
1,333
|
-2%
|
1,315
|
1,243
|
6%
|
Revenues,
US$m
|
74.5
|
91.4
|
-18%
|
165.9
|
39.0
|
325%
|
EBITDA**,
US$m
|
24.4
|
40.2
|
-39%
|
64.6
|
1.1
|
5,773%
|
EBITDA margin,
%
|
33
|
44
|
-26%
|
39
|
3
|
1,281%
|
Cash flow from
operations,
US$m
|
8.5
|
39.4
|
-78%
|
47.9
|
-7.4
|
747%
|
Capital spend,
US$m
|
13.2
|
13.6
|
-3%
|
26.8
|
12.0
|
123%
|
Cash,
US$m
|
12.7
|
23.0
|
-45%
|
12.7
|
2.8
|
354%
|
Debt,
US$m
|
134.5
|
137.3
|
-2%
|
134.5
|
119.6
|
12%
|
|
Operating cash
costs, AISC and EBITDA, are non-GAAP measures and are defined in
the notes section of this announcement.
|
Table 2: Key Operational Financial Highlights
Metric
|
Q2
2018
|
Q1
2018
|
Q2
2018 vs Q1
2018
|
H1
2018
|
H1
2017
|
H1
2018 vs H1
2017
|
New
Liberty
|
Gold production,
oz
|
29,808
|
27,870
|
7%
|
57,678
|
30,735
|
88%
|
Mining cost,
US$/t
|
2.42
|
2.51
|
-4%
|
2.47
|
2.38
|
4%
|
Processing cost,
US$/t
|
24.53
|
24.52
|
0%
|
24.53
|
27.34
|
-10%
|
Operating cash
costs,
US$/oz sold
|
781
|
846
|
-8%
|
813
|
1,043
|
-22%
|
All in Sustaining
Costs,
US$/oz sold
|
1,038
|
1,095
|
-5%
|
1,066
|
1,543
|
-31%
|
Youga
|
Gold production,
oz
|
30,423
|
40,218
|
-24%
|
70,641
|
48,922
|
44%
|
Mining cost,
US$/t
|
1.90
|
2.40
|
-21%
|
2.11
|
1.57
|
34%
|
Processing cost,
US$/t
|
18.64
|
19.63
|
-5%
|
19.14
|
18.76
|
2%
|
Operating cash
costs,
US$/oz sold
|
616
|
470
|
31%
|
530
|
537
|
-1%
|
All in Sustaining
Costs,
US$/oz sold
|
852
|
707
|
21%
|
767
|
821
|
-7%
|
Outlook
During the second half of 2018, the Company expects to see
further improvements in unit cost performance as mining volumes
increase following the commissioning of additional heavy mining
equipment at both New Liberty and Youga and also the increased
plant throughputs that have been enabled through process plant
optimisation activities undertaken during H1 2018.
The Company maintains its full year production guidance of
220,000 – 240,000 ounces of gold at an operating cash cost of
US$620 to US$660 per ounce sold and all-in-sustaining cost
of between US$960 and US$1,000 per ounce sold.
Following the Mineral Resource and Reserve upgrade for Youga
published during Q2 2018, the Company's extensive drilling
campaigns continue to progress at pace in both Liberia and Burkina
Faso with 89,900 metres of diamond drilling completed during
H1 2018. The Company now looks forward to further updating the
market on the results of its Mineral Resource upgrade work at New
Liberty during Q3 2018 and its infill drilling campaign at the
Ndablama deposit during Q4 2018.
Analyst and Investor Call
The company will be hosting a conference call and webcast for
investors and analysts on August 13,
2018 at 08:00 EST /
13:00 BST.
The access details for the conference call are as follows:
Location
|
Phone
Type
|
Phone
Number
|
United
Kingdom
|
Freephone
|
0800 358
9473
|
United Kingdom,
Local
|
Local
|
+44 333 300
0804
|
United
States
|
Freephone
|
+1 855 857
0686
|
United States,
Local
|
Local
|
+1 631 913
1422
|
Canada
|
Freephone
|
+1 416 216
4189
|
Canada,
Local
|
Local
|
+1 844 747
9618
|
Password: 33464313#
Webcast URL:
http://arkadinemea-events.adobeconnect.com/e2w8a53msk4o/event/registration.html
Financial Statements and MD&A
The Financial Statements are appended to this announcement. Both
the Financial Statements and the accompanying Management Discussion
and Analysis are available for review at the Company's website,
www.avesoro.com and on www.sedar.com.
In preparing the Company's interim financial statements for the
period ended June 30, 2018,
Management noted an error in the calculation of the fair valuation
of related party loans with Mapa Insaat ve Ticaret A.S. that
requires the restatement of the audited consolidated statement of
financial position as at December 31,
2017 and unaudited interim consolidated statement of
financial position as at March 31,
2018. The impact of the restatement of the audited
consolidated statement of financial position as at December 31, 2017 is to increase the current
portion of borrowings by US$2.0
million, increase the non-current portion of borrowings by
US$3.2 million and reduce the capital
contribution in equity by US$5.2
million. The impact of the restatement of the
unaudited interim consolidated statement of financial position as
at March 31, 2018 is to increase the
current portion of borrowings by US$2.8
million, increase the non-current portion of borrowings by
US$4.9 million and reduce the capital
contribution in equity by US$7.7
million. The adjustments have no impact on profit nor
cash flows for the year ended December 31,
2017 nor for the three months ended March 31, 2018. The repayment terms, rates
and amounts payable pursuant to the loan agreements are
unchanged.
The Company will re-file on SEDAR the restated audited consolidated
financial statements as of and for the year ended December 31, 2017 and the restated unaudited
interim consolidated financial statements as of and for the three
months ended March 31, 2018.
Notes
Non-GAAP Financial Measures: The Company has included certain
non-GAAP financial measures in this press release, including
operating cash costs and all-in sustaining costs ("AISC") per ounce
of gold sold and EBITDA. These non-GAAP financial measures do not
have any standardised meaning. Accordingly, these financial
measures are intended to provide additional information and should
not be considered in isolation or as a substitute for measures of
performance prepared in accordance with International Financial
Reporting Standards ("IFRS").
Operating cash costs and AISC are a common financial performance
measure in the mining industry but have no standard definition
under IFRS. Operating cash costs are reflective of the cost of
production. AISC include operating cash costs, net-smelter royalty,
corporate costs, sustaining capital expenditure, sustaining
exploration expenditure and capitalised stripping costs. The
Company reports cash costs on an ounces of gold sold basis.
The Company calculates EBITDA as net profit or loss for the
period excluding finance costs, income tax expense and
depreciation. EBITDA does not have a standardised meaning
prescribed by IFRS and should not be considered in isolation or as
a substitute for measures of performance prepared in accordance
with IFRS. EBITDA excludes the impact of cash costs of financing
activities and taxes and the effects of changes in working capital
balances and therefore is not necessarily indicative of operating
profit or cash flow from operations as determined under IFRS.
Other companies may calculate these measures differently and
should not be considered in isolation or as a substitute for
measures of performance prepared in accordance with IFRS.
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 two 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 ("New Liberty") and the
Youga Gold Mine in Burkina Faso
("Youga").
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,
prepared in accordance with CIM guidelines, 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 has an estimated Proven and Probable Mineral Reserve of
11.2Mt with 660,100 ounces of gold grading 1.84g/t and a combined
estimated Measured and Indicated Mineral Resource of 16.64Mt with
924,200 ounces of gold grading 1.73g/t and an Inferred Mineral
Resource of 13Mt with 685,000 ounces of gold grading 1.70g/t. The
foregoing Mineral Reserve and Mineral Resource estimates and
additional information in connection therewith, prepared in
accordance with CIM guidelines, is set out in an NI 43-101
compliant Technical Report dated July 31,
2018 and entitled "Mineral Resource and Mineral Reserve
Update for the Youga Gold Mine, Burkina
Faso" and is 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 within
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 speak
only as of the date of this press release.
Forward looking statements or information in this press release
include, among other things, statements regarding full year 2018
production guidance of 220,000 to 240,000 ounces of gold at an
operating cash cost of between US$620
to US$660 per ounce sold and an
all-in sustaining cost of between US$960 and US$1,000
per ounce sold, statements regarding improvements in its unit cost
base, increased mining rates, increased plant throughputs,
publishing of an updated Mineral Resource and Mineral Reserve for
New Liberty during Q3 2018 and the Ndablama deposit during Q4
2018.
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.
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.
Condensed Interim Consolidated Financial Statements
(Unaudited)
Avesoro Resources Inc.
For the Three and Six Months Ended June 30, 2018 and 2017
(stated in
thousands of US dollars)
Registered
office:
|
199 Bay
Street
|
|
Suite 5300
|
|
Commerce West
Street
|
|
Toronto
|
|
Ontario, M5L
1B9
|
|
Canada
|
|
|
Company registration
number:
|
776831-1
|
|
|
Company incorporated
on:
|
1 February
2011
|
Avesoro Resources Inc.
Interim Consolidated Statements of Income and Comprehensive
Income
(stated in thousands of US dollars)
Unaudited
|
Three months
ended
June
30,
2018
|
Three months
ended
June
30, 2017
|
Six months
ended
June
30, 2018
|
Six months
ended
June
30, 2017
|
$'000
|
$'000
|
$'000
|
$'000
|
|
|
|
|
|
Gold sales (Note
2)
|
74,530
|
19,313
|
165,900
|
39,012
|
|
|
|
|
|
Cost of
sales
|
|
|
|
|
- Production costs
(Note 2)
|
(43,195)
|
(16,567)
|
(92,181)
|
(34,062)
|
- Depreciation (Note
2)
|
(20,390)
|
(7,428)
|
(37,000)
|
(14,179)
|
|
|
|
|
|
Gross
profit/(loss)
|
10,945
|
(4,682)
|
36,719
|
(9,229)
|
|
|
|
|
|
Expenses
|
|
|
|
|
Administrative and
other expenses (Note 3)
|
(2,405)
|
(1,395)
|
(4,009)
|
(2,980)
|
Exploration and
evaluation costs
|
(4,513)
|
(371)
|
(6,524)
|
(867)
|
Loss on lease
termination
|
-
|
-
|
(566)
|
-
|
|
|
|
|
|
Profit/(Loss) from
operations
|
4,027
|
(6,448)
|
25,620
|
(13,076)
|
|
|
|
|
|
Derivative liability
(loss)/gain
|
-
|
(13)
|
105
|
(175)
|
Foreign exchange
loss
|
(817)
|
(167)
|
(1,912)
|
(164)
|
Finance
costs
|
(2,832)
|
(2,853)
|
(7,173)
|
(5,623)
|
Finance
income
|
-
|
3
|
174
|
6
|
|
|
|
|
|
Profit/(Loss)
before tax
|
378
|
(9,478)
|
16,814
|
(19,032)
|
|
|
|
|
|
Tax for the period
(Note 4)
|
(3,267)
|
-
|
(9,856)
|
-
|
|
|
|
|
|
Net profit/(loss)
after tax
|
(2,889)
|
(9,478)
|
6,958
|
(19,032)
|
Attributable
to:
|
|
|
|
|
- Owners of the
Company
|
(4,172)
|
(9,478)
|
3,847
|
(19,032)
|
- Non-controlling
interest (Note 13)
|
1,283
|
-
|
3,111
|
-
|
|
|
|
|
|
Other
comprehensive income/(loss)
Items that may be
reclassified subsequently
to profit or loss:
|
|
|
|
|
Fair value
gains/(losses) on investments
|
(9)
|
14
|
22
|
(4)
|
Currency translation
differences
|
(3)
|
(244)
|
(40)
|
(193)
|
|
|
|
|
|
Total
comprehensive income/(loss)
|
|
|
|
|
Attributable
to:
|
|
|
|
|
- Owners of the
Company
|
(4,184)
|
(9,708)
|
3,829
|
(19,229)
|
- Non-controlling
interest
|
1,283
|
-
|
3,111
|
-
|
|
(2,901)
|
(9,708)
|
6,940
|
(19,229)
|
Earnings/(Loss) per
share, basic and
diluted (US$) (Note 5)
|
(0.051)
|
(0.178)
|
0.047
|
(0.357)
|
The accompanying notes are an integral part of these condensed
interim consolidated financial statements.
Avesoro Resources Inc.
Interim Consolidated Statements of Financial Position
(stated in thousands of US dollars)
Unaudited
|
June
30,
2018
$'000
|
December
31,
2017
$'000
(as restated -
see Note 1)
|
Assets
|
|
|
Current
assets
|
|
|
Cash and cash
equivalents
|
12,686
|
17,787
|
Trade and other
receivables (Note 6)
|
32,532
|
25,286
|
Inventories (Note
7)
|
40,030
|
36,932
|
Other
assets
|
1,486
|
1,710
|
|
86,734
|
81,715
|
Non-current
assets
|
|
|
Property, plant and
equipment (Note 8)
|
243,403
|
249,552
|
Intangible assets -
Exploration and evaluation assets (Note 9)
|
3,359
|
-
|
Investments
|
-
|
21
|
Deferred tax
asset
|
2,602
|
4,554
|
Other
assets
|
1,301
|
1,196
|
|
250,665
|
255,323
|
Total
assets
|
337,399
|
337,038
|
|
|
|
Liabilities
|
|
|
Current
liabilities
|
|
|
Borrowings (Note
10)
|
25,750
|
37,964
|
Trade and other
payables
|
49,964
|
41,003
|
Income tax
payable
|
9,392
|
12,358
|
Finance lease
liability (Note 11)
|
254
|
1,913
|
Derivative
liability
|
-
|
105
|
Provisions
|
3,143
|
523
|
|
88,503
|
93,866
|
Non-current
liabilities
|
|
|
Borrowings (Note
10)
|
107,685
|
101,335
|
Trade and other
payables
|
-
|
463
|
Finance lease
liability (Note 11)
|
770
|
5,875
|
Provisions
|
9,738
|
10,439
|
|
118,193
|
118,112
|
Total
liabilities
|
206,696
|
211,978
|
|
|
|
Equity
|
|
|
Share capital (Note
12)
|
353,686
|
353,653
|
Capital
contribution
|
53,549
|
54,022
|
Share based payment
reserve
|
8,407
|
7,840
|
Acquisition
reserve
|
(33,060)
|
(33,060)
|
Fair value
reserve
|
-
|
(487)
|
Cumulative
translation reserve
|
(506)
|
(466)
|
Deficit
|
(256,774)
|
(260,156)
|
Equity attributable
to owners
|
125,302
|
121,346
|
Non-controlling
interest (Note 13)
|
5,401
|
3,714
|
Total
equity
|
130,703
|
125,060
|
Total liabilities
and equity
|
337,399
|
337,038
|
The accompanying notes are an integral part of these condensed
interim consolidated financial
statements.
Avesoro Resources Inc.
Interim Consolidated Statements of Cash Flows
(stated in thousands of US dollars)
Unaudited
|
Six months
ended
June
30,
2018
|
Six months
ended
June 30,
2017
|
|
$'000
|
$'000
|
Operating
activities
|
|
|
Net profit/(loss)
after tax
|
6,958
|
(19,032)
|
Tax for the
period
|
9,856
|
-
|
Profit/(Loss) before
tax
|
16,814
|
(19,032)
|
|
Items not affecting
cash:
|
|
|
|
|
Share-based payments
(Note 3)
|
567
|
590
|
|
|
Depreciation (Note
8)
|
37,171
|
14,339
|
|
|
Unrealized foreign
exchange loss/(gain)
|
1,125
|
(186)
|
|
|
Derivative liability
loss/(gain)
|
(105)
|
175
|
|
|
Interest
expense
|
7,173
|
5,623
|
|
|
Loss on lease
termination
|
566
|
-
|
Changes in non-cash
working capital
|
|
|
|
Increase in trade and
other receivables
|
(7,246)
|
(8,732)
|
|
Increase/(decrease)
in trade and other payables
|
6,008
|
(1,351)
|
|
(Increase)/decrease
in inventories
|
(3,098)
|
1,209
|
Income taxes
paid
|
(11,066)
|
-
|
Cash flows
from/(used in) operating activities
|
47,909
|
(7,365)
|
|
|
|
Investing
activities
|
|
|
Payments to acquire
property, plant and equipment
|
(23,447)
|
(12,002)
|
Payments to acquire
intangible assets
|
(3,359)
|
-
|
Decrease/(increase)
in other assets
|
119
|
(603)
|
Proceeds from sale of
available for sale investment
|
44
|
-
|
Cash flows used in
investing activities
|
(26,643)
|
(12,605)
|
|
|
|
Financing
activities
|
|
|
Proceeds from
borrowings (Note 10b)
|
6,150
|
15,600
|
Payments to
borrowings (Note 10)
|
(24,045)
|
-
|
Finance
charges
|
(5,540)
|
(6,269)
|
Dividend payment to
non-controlling interest
|
(1,424)
|
-
|
Payment of finance
leases
|
(1,254)
|
-
|
Proceeds from
exercise of stock options (Note 12)
|
33
|
-
|
Cash flows (used
in)/from financing activities
|
(26,080)
|
9,331
|
|
|
|
Impact of foreign
exchange on cash balance
|
(287)
|
21
|
Net decrease in
cash and cash equivalents
|
(5,101)
|
(10,618)
|
Cash and cash
equivalents at beginning of period
|
17,787
|
13,429
|
Cash and cash
equivalents at end of period
|
12,686
|
2,811
|
Significant non-cash transactions during the six months ended
June 30, 2018 includes the
acquisition of new heavy mining equipment for $10.3 million in exchange for new related party
loans (Note 10c) and the termination of the generators held as
finance leases (Note 8).
The accompanying notes are an integral part of these condensed
interim consolidated financial statements.
Avesoro Resources Inc.
Interim Consolidated Statements of Changes in Equity
(stated in thousands of US dollars)
Unaudited
|
Total Equity
Attributable to Owners
|
|
|
|
Share
capital
$'000
|
Capital
contribution
(as restated -
see Note 1)
$'000
|
Share-
based
payment
reserve
$'000
|
Acquisition
reserve
$'000
|
Fair
value
reserve
$'000
|
Cumulative
translation
reserve
$'000
|
Deficit
$'000
|
Total
$'000
|
Non-
controlling
Interest
$'000
|
Total
Equity
$'000
|
Balance at January 1,
2017
|
283,506
|
48,235
|
6,770
|
-
|
(453)
|
(400)
|
(232,682)
|
104,976
|
-
|
104,976
|
Loss for the
period
|
-
|
-
|
-
|
-
|
-
|
-
|
(19,032)
|
(19,032)
|
-
|
(19,032)
|
Other comprehensive
loss for period
|
-
|
-
|
-
|
-
|
(4)
|
(193)
|
-
|
(197)
|
-
|
(197)
|
Total comprehensive
loss for period
|
-
|
-
|
-
|
-
|
(4)
|
(193)
|
(19,032)
|
(19,229)
|
-
|
(19,229)
|
Share-based
payments
|
-
|
-
|
590
|
-
|
-
|
-
|
-
|
590
|
-
|
590
|
Balance at June 30,
2017
|
283,506
|
48,235
|
7,360
|
-
|
(457)
|
(593)
|
(251,714)
|
86,337
|
-
|
86,337
|
|
|
|
|
|
|
|
|
|
|
|
Balance at January 1,
2018
|
353,653
|
59,230
|
7,840
|
(33,060)
|
(487)
|
(466)
|
(260,156)
|
126,554
|
3,714
|
130,268
|
Restatement of
related party loans
|
-
|
(5,208)
|
-
|
-
|
-
|
-
|
-
|
(5,208)
|
-
|
(5,208)
|
Balance at January 1,
2018, as restated
|
353,653
|
54,022
|
7,840
|
(33,060)
|
(487)
|
(466)
|
(260,156)
|
121,346
|
3,714
|
125,060
|
Profit for the
period
|
-
|
-
|
-
|
-
|
-
|
-
|
3,847
|
3,847
|
3,111
|
6,958
|
Other comprehensive
income/(loss) for period
|
-
|
-
|
-
|
-
|
22
|
(40)
|
-
|
(18)
|
-
|
(18)
|
Total comprehensive
income/(loss) for period
|
-
|
-
|
-
|
-
|
22
|
(40)
|
3,847
|
3,829
|
3,111
|
6,940
|
Exercise of stock
options (Note 12)
|
33
|
-
|
-
|
-
|
-
|
-
|
-
|
33
|
-
|
33
|
Share-based
payments
|
-
|
-
|
567
|
-
|
-
|
-
|
-
|
567
|
-
|
567
|
Dividends paid to
non-controlling interest
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
(1,424)
|
(1,424)
|
Related party loans
(Note 10)
|
-
|
1,698
|
-
|
-
|
-
|
-
|
-
|
1,698
|
-
|
1,698
|
Payment of related
party loans (Note 10b)
|
-
|
(2,171)
|
-
|
-
|
-
|
-
|
-
|
(2,171)
|
-
|
(2,171)
|
Reserve transfer on
sale of investment
|
-
|
-
|
-
|
-
|
465
|
-
|
(465)
|
-
|
-
|
-
|
Balance at June
30, 2018
|
353,686
|
53,549
|
8,407
|
(33,060)
|
-
|
(506)
|
(256,774)
|
125,302
|
5,401
|
130,703
|
The accompanying notes are an integral part of these condensed
interim consolidated financial statements.
Avesoro Resources Inc.
Notes to Condensed Interim
Consolidated Financial Statements (Unaudited)
For the three and six months ended June 30,
2018 and 2017
(in thousands of US dollars unless otherwise stated)
1 Nature of operations and basis of
preparation
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 gold mine in Burkina
Faso.
On December 18, 2017 the Company
completed the acquisition of the Youga gold mine and the Balogo
satellite deposit in Burkina Faso
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 Avesoro Jersey Limited ("AJL"), the
Company's majority shareholder, for a total consideration of
US$70.2 million comprised of the
issuance of US$51.5 million of new
common shares in the Company and a cash component of US$18.7 million.
These condensed interim consolidated financial statements
("interim financial statements") have been prepared in accordance
with International Accounting Standard ("IAS") 34, "Interim
Financial Reporting". They do not include all disclosures that
would otherwise be required in a complete set of financial
statements. They follow accounting policies and methods of
their application consistent with the audited consolidated
financial statements for the year ended December 31, 2017. Accordingly, they should
be read in conjunction with the Company's audited consolidated
financial statements for the year ended December 31, 2017.
These interim financial statements were authorised by the Board
of Directors on August 10, 2018.
Restatement of Consolidated Statement of Financial
Position as at December 31,
2017
In preparing the Company's interim financial statements for the
period ended June 30, 2018,
Management identified an error in the calculation of the fair
valuation of related party loans with Mapa Insaat ve Ticaret
A.S. The error requires the restatement of the audited
consolidated statement of financial position as at December 31, 2017. The impact of the
restatement of the audited consolidated statement of financial
position is to increase the current portion of borrowings by
$2.0 million, increase the
non-current portion of borrowings by $3.2
million and reduce the capital contribution in equity by
$5.2 million. The adjustment
has no impact on profit nor cash flows for the year ended
December 31, 2017. The
repayment terms, rates and amounts payable pursuant to the loan
agreements are unchanged.
|
|
As previously
stated at
December 31,
2017
|
Increase/ (Decrease) Restatement
|
As restated at
December 31,
2017
|
|
|
$'000
|
$'000
|
$'000
|
Liabilities
|
|
|
|
|
Borrowings, current
portion
|
|
35,999
|
1,965
|
37,964
|
Borrowings,
non-current portion
|
|
98,092
|
3,243
|
101,335
|
|
|
|
|
|
Equity
|
|
|
|
|
Capital
contribution
|
|
59,230
|
(5,208)
|
54,022
|
New accounting policies
The Company adopted the following revised or new IFRS standards
that have been issued effective January
1, 2018. The impact of the standards on the Company's
accounting policies and financial statements is discussed
below:
IFRS 9, Financial Instruments introduces new requirements
for the classification and measurement of financial assets and
liabilities. IFRS 9 replaced the multiple classification and
measurement models for financial assets that exist under IAS 39
Financial Instruments, and the basis on which financial assets are
measured will determine their classification as either, at
amortized cost, fair value through profit and loss, or fair value
through other comprehensive income.
Although the investment in Stellar Diamonds plc remains measured
at fair value with fair value gains or losses recognised in other
comprehensive income, on disposal of the investment the cumulative
change in fair value remains in other comprehensive income and is
not recycled to the income statement. The adoption of IFRS has
no other material impact on the consolidated financial statements.
IFRS 15 Revenue from Contracts with Customers provides
that an entity should recognize revenue to depict the transfer of
goods to customers in an amount that reflects the consideration to
which the entity expects to be entitled in exchange for those
goods. The Company has assessed the impact of this change on the
amount of revenue recognised and determined it to be not
significant.
Going concern
The condensed interim consolidated financial statements have
been prepared on a going concern basis. As at June 30, 2018, the Company has net current
liabilities of $1.8 million and has
approximately $28.6 million of debt
repayments due in the next twelve months.
The free cash generation of the Company significantly improved
following the acquisition of the Youga gold mine and the Balogo
satellite deposit in December 2017
and the continuing improvement of operations at New Liberty.
Accordingly, the Company expects to meet its current liabilities
through its free cash generation capacity. In addition, the
Company has an undrawn facility of $20
million with AJL as at June 30,
2018 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. Thus, it continues to adopt the going
concern basis of accounting in preparing the consolidated financial
statements.
2 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 gold mine and the
Balogo satellite deposit;
- Exploration; and
- Corporate.
Following is an analysis of the Group's results, assets and
liabilities by reportable segment for the three months ended
June 30, 2018:
|
New
Liberty
operations
|
Burkina
operation
|
Exploration
|
Corporate
|
Total
|
|
$'000
|
$'000
|
$'000
|
$'000
|
$'000
|
Profit/(Loss) for the
period
|
(7,701)
|
12,476
|
(5,314)
|
(2,350)
|
(2,889)
|
Gold sales
|
37,194
|
37,336
|
-
|
-
|
74,530
|
Production
costs
|
|
|
|
|
|
- Mine operating
costs
|
(23,435)
|
(21,222)
|
-
|
-
|
(44,657)
|
- Change in
inventories
|
(135)
|
1,597
|
-
|
-
|
1,462
|
|
(23,570)
|
(19,625)
|
-
|
-
|
(43,195)
|
Depreciation
|
(18,653)
|
(1,736)
|
(65)
|
(53)
|
(20,507)
|
Segment
assets
|
232,806
|
94,472
|
4,356
|
5,765
|
337,399
|
Segment
liabilities
|
(144,557)
|
(55,125)
|
(4,310)
|
(2,706)
|
(206,698)
|
Capital
additions
|
|
|
|
|
|
- property, plant and
equipment
|
7,273
|
3,822
|
-
|
-
|
11,095
|
- intangible
assets
|
-
|
-
|
1,599
|
-
|
1,599
|
Following is an analysis of the Group's results, assets and
liabilities by reportable segment for the six months ended
June 30, 2018:
|
New
Liberty
operations
|
Burkina
operations
|
Exploration
|
Corporate
|
Total
|
|
$'000
|
$'000
|
$'000
|
$'000
|
$'000
|
Profit/(Loss) for the
period
|
(13,737)
|
30,756
|
(6,351)
|
(3,710)
|
6,958
|
Gold sales
|
74,517
|
91,383
|
-
|
-
|
165,900
|
Production
costs
|
|
|
|
|
|
- Mine operating
costs
|
(46,696)
|
(41,909)
|
-
|
-
|
(88,605)
|
- Change in
inventories
|
(1,887)
|
(1,689)
|
-
|
-
|
(3,576)
|
|
(48,583)
|
(43,598)
|
-
|
-
|
(92,181)
|
Depreciation
|
(31,200)
|
(5,800)
|
(117)
|
(54)
|
(37,171)
|
Capital
additions
|
|
|
|
|
|
- property, plant and
equipment
|
23,721
|
12,734
|
40
|
-
|
36,495
|
- intangible
assets
|
-
|
-
|
3,359
|
-
|
3,359
|
Following is an analysis of the Group's results, assets and
liabilities by reportable segment for the three months ended
June 30, 2017:
|
New
Liberty
operations
|
Burkina
operations
|
Exploration
|
Corporate
|
Total
|
|
$'000
|
$'000
|
$'000
|
$'000
|
$'000
|
Loss for the
period
|
(7,744)
|
-
|
(422)
|
(1,312)
|
(9,478)
|
Gold sales
|
19,313
|
-
|
-
|
-
|
19,313
|
Production
costs
|
|
|
|
|
|
- Mine operating
costs
|
(16,688)
|
-
|
-
|
-
|
(16,688)
|
- Change in
inventories
|
121
|
-
|
-
|
-
|
121
|
|
(16,567)
|
-
|
-
|
-
|
(16,567)
|
Depreciation
|
(7,428)
|
-
|
(66)
|
(5)
|
(7,499)
|
Segment
assets
|
219,718
|
-
|
255
|
2,985
|
222,958
|
Segment
liabilities
|
(135,802)
|
-
|
(111)
|
(708)
|
(136,621)
|
Capital
additions
|
|
|
|
|
|
- property,
plant and equipment
|
5,372
|
-
|
-
|
-
|
5,372
|
Following is an analysis of the Group's results, assets and
liabilities by reportable segment for the six months ended
June 30, 2017:
|
New
Liberty
operations
|
Burkina
operations
|
Exploration
|
Corporate
|
Total
|
|
$'000
|
$'000
|
$'000
|
$'000
|
$'000
|
Loss for the
period
|
(15,375)
|
-
|
(1,001)
|
(2,656)
|
(19,032)
|
Gold sales
|
39,012
|
-
|
-
|
-
|
39,012
|
Production
costs
|
|
|
|
|
|
- Mine operating
costs
|
(32,833)
|
-
|
-
|
-
|
(32,833)
|
- Change in
inventories
|
(1,229)
|
-
|
-
|
-
|
(1,229)
|
|
(34,062)
|
-
|
-
|
-
|
(34,062)
|
Depreciation
|
(14,180)
|
-
|
(150)
|
(10)
|
(14,340)
|
Capital
additions
|
|
|
|
|
|
- property,
plant and equipment
|
12,580
|
-
|
-
|
-
|
12,580
|
3 Administrative expenses
|
Three months
ended
|
Six months
ended
|
|
June
30, 2018
|
June
30, 2017
|
June
30, 2018
|
June
30, 2017
|
|
$'000
|
$'000
|
$'000
|
$'000
|
Wages and
salaries
|
591
|
375
|
1,127
|
752
|
Legal and
professional
|
657
|
134
|
959
|
676
|
Depreciation
|
117
|
72
|
171
|
161
|
Share based
payments
|
270
|
314
|
567
|
590
|
Other
expenses
|
770
|
500
|
1,185
|
801
|
|
2,405
|
1,395
|
4,009
|
2,980
|
Foreign exchange gains and losses have been reclassified as
financing items rather than operational items. The above
table has been restated to exclude the foreign exchange gain of
US$164 thousand for the six months
ended June 30, 2017.
4 Income taxes
Tax for the period comprises of:
|
Three months
ended
|
Six months
ended
|
|
June
30, 2018
|
June
30, 2017
|
June
30, 2018
|
June
30, 2017
|
|
$'000
|
$'000
|
$'000
|
$'000
|
Current
tax
|
(3,554)
|
-
|
(7,884)
|
-
|
Deferred
tax
|
287
|
-
|
(1,972)
|
-
|
|
(3,267)
|
-
|
(9,856)
|
-
|
5 Earnings per share ("EPS")
|
Three months
ended
|
Six months
ended
|
|
June
30,
2018
|
June
30,
2017
|
June
30,
2018
|
June
30,
2017
|
|
$'000
|
$'000
|
$'000
|
$'000
|
Net profit/(loss)
after tax
attributable to
Owners of the Company
|
(4,172)
|
(9,478)
|
3,847
|
(19,032)
|
|
|
|
|
|
Weighted average
number of
outstanding shares for basic EPS
|
81,575,260
|
53,247,590
|
81,567,802
|
53,247,590
|
Dilutive share
options
|
-
|
-
|
583,456
|
-
|
Weighted average
number of
outstanding shares for diluted EPS
|
81,575,260
|
53,247,590
|
82,151,258
|
53,247,590
|
|
|
|
|
|
Basic EPS
(US$)
|
(0.051)
|
(0.178)
|
0.047
|
(0.357)
|
Diluted EPS
(US$)
|
(0.051)
|
(0.178)
|
0.047
|
(0.357)
|
6 Trade and other receivables
|
June
30,
2018
|
December
31,
2017
|
|
$'000
|
$'000
|
Trade
receivable
|
316
|
416
|
Other
receivable
|
14,676
|
10,690
|
Due from related
parties (Note 14)
|
2,715
|
1,015
|
Pre-payments
|
14,825
|
13,165
|
|
32,532
|
25,286
|
Other receivables include a VAT receivable from the Burkina Faso
Government amounting to $12.8 million
as at June 30, 2018 (December 31, 2017: $8.9
million).
7 Inventories
|
June
30,
2018
|
December
31,
2017
|
|
$'000
|
$'000
|
Gold doré
|
1,253
|
3,986
|
Gold in
circuit
|
5,038
|
2,561
|
Ore
stockpiles
|
3,368
|
6,688
|
Consumables
|
30,371
|
23,697
|
|
40,030
|
36,932
|
Ore stockpiles as at June 30, 2018
are stated at their net realisable values after cumulative
write-down at New Liberty of $2.1
million (December 31, 2017:
US$2.9 million).
8 Property, plant and equipment
|
|
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
|
Cost
|
|
|
|
|
|
|
|
|
|
At January 1,
2017
|
|
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
|
|
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
|
Additions
|
|
7,286
|
7,510
|
-
|
-
|
21,699
|
-
|
-
|
36,495
|
Disposals
|
|
-
|
-
|
-
|
(7,000)
|
-
|
-
|
-
|
(7,000)
|
At June 30,
2018
|
|
215,793
|
23,739
|
6,212
|
4,758
|
96,492
|
3,092
|
86
|
350,172
|
|
|
|
|
|
|
|
|
|
|
Accumulated
depreciation
|
|
|
|
|
|
|
|
|
|
At January 1,
2017
|
|
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
|
|
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
|
Charge for the
period
|
|
21,292
|
6,305
|
691
|
1,130
|
7,522
|
231
|
-
|
37,171
|
Disposals
|
|
-
|
-
|
-
|
(1,527)
|
-
|
-
|
-
|
(1,527)
|
At June 30,
2018
|
|
73,397
|
8,143
|
2,981
|
2,167
|
18,402
|
1,593
|
86
|
106,769
|
|
|
|
|
|
|
|
|
|
|
Net book
value
|
|
|
|
|
|
|
|
|
|
At December 31,
2017
|
|
156,402
|
14,391
|
3,922
|
9,194
|
63,913
|
1,730
|
-
|
249,552
|
At June 30,
2018
|
|
142,396
|
15,596
|
3,231
|
2,591
|
78,090
|
1,499
|
-
|
243,403
|
9 Intangible assets - Exploration and evaluation
assets
|
June 30,
2018
|
December
31,
2017
|
|
$'000
|
$'000
|
Gassore
East
|
1,904
|
-
|
Ouaré
|
1,455
|
-
|
|
3,359
|
-
|
Gassore East is a new minable mineralisation located 2
kilometres from the Youga processing plant.
Ouaré, located 36 kilometres north east of the Youga processing
plant, is the subject of an infill drilling campaign to upgrade the
confidence level and classification of the existing mineral
resources.
Resource modelling and pit design from the National Instrument
43-101 – Standards of Disclosure of Mineral Projects published on
June 19, 2018 shows these two
satellite deposits will add further mine life to the Youga Gold
Mine.
10 Borrowings
|
June
30,
2018
|
December
31,
2017
|
|
$'000
|
$'000
(as restated -
see Note 1)
|
Current
|
|
|
Bank loan - Senior
Facility Tranche A
|
14,692
|
14,741
|
Bank loan - Senior
Facility Tranche B
|
-
|
9,737
|
Shareholder loan –
Other
|
-
|
8,106
|
Related party
loan
|
11,058
|
5,380
|
|
25,750
|
37,964
|
Non-current
|
|
|
Bank loan - Senior
Facility Tranche A
|
58,566
|
58,668
|
Bank loan -
Subordinated Facility
|
11,049
|
10,846
|
Shareholder loan -
Working Capital Facility
|
12,665
|
14,938
|
Shareholder loan -
Other
|
4,026
|
-
|
Related party
loan
|
21,379
|
16,883
|
|
107,685
|
101,335
|
(a) Bank loans
On December 17, 2013 the Company
entered into an agreement for an $88
million project finance loan facility with Nedbank Limited
and FirstRand Bank Limited (collectively the "Lenders"), (the
"Senior Facility"), 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. $22.4 million of the Senior Facility principal
has been repaid to date including $10
million during the six months ended June 30, 2018.
(b) Shareholder loan
Working Capital Facility
In 2017, the Group borrowed $18.8
million from AJL through a working capital facility 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 payable to AJL is 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 is credited to equity as a capital contribution as
the loan is from its majority shareholder.
New loans of $6.2 million during
the six months ended June 30, 2018
were allocated to an increase in loan payable of $4.9 million and additional capital contribution
of $1.2 million. Principal
repayments totalling $10 million were
made during the six months ended June 30,
2018 of which $7.8 million was
allocated as a reduction to the loan payable and $2.2 million as a reduction to capital
contribution.
Interest expense on the non-current loan payable to AJL for the
six months ended June 30, 2018 was
$0.6 million (six months ended
June 30, 2017: $nil).
Other
The other shareholder loan payable to AJL was assumed on
acquisition of the Youga gold mine and Balogo satellite deposit of
which $4.1 million was repaid during
the six months ended June 30,
2018.
(c) Related party loan
In 2017 the Company entered into equipment and finance facility
agreements with Mapa İnşaat ve Ticaret A.Ş. ("Mapa"), a company
controlled by Mehmet Nazif Gűnal, Non-Executive Chairman of the
Company, to facilitate the purchase of heavy mining
equipment. The loan principal of these agreements includes a
mark-up of 2.5% over the cost incurred by Mapa in procuring the
equipment. The equipment finance loans are unsecured, with interest
charged at 6.5% per annum on the US$ denominated loan and 5.5% per
annum on the Euro denominated loan amount. 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.
As discussed in Note 1, Management noted an error in the
calculation of the fair valuation of related party loans with Mapa
Insaat ve Ticaret A.S. The impact of the adjustment to restate the
consolidated statement of financial position as at December 31, 2017 is to increase the current
portion of borrowings by $2.0
million, increase the non-current portion of borrowings by
$3.2 million and reduce the capital
contribution in equity by $5.2
million.
During the six months ended June 30,
2018, the Company entered into further equipment and finance
facility agreements with Mapa amounting to $10.3 million. Similar to the loans entered
into in 2017, these loans were initially recognised at fair value
calculated as its present value at a market rate of interest and
subsequently measured at amortised cost. The difference of
$0.5 million between the loan amount
of $10.3 million and fair value of
$9.8 million has been credited to
equity as a capital contribution from a related party.
Interest expense on the related party loan to Mapa for the six
months ended June 30, 2018 was
$1.2 million (six months ended
June 30, 2017: $nil). Interest
repayment was $0.8 million during the
six months ended June 30, 2018 (six
months ended June 30, 2017:
$nil).
11 Finance lease liability
The finance lease liability as at June
30, 2018 relates to the fuel storage facility at New Liberty
Gold Mine following termination of the lease arrangement on the
generators at nil consideration. 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.
|
June
30,
2018
|
December
31,
2017
|
|
$'000
|
$'000
|
Gross finance lease
liability
|
|
|
- Within one
year
|
362
|
2,820
|
- Between two and
five years
|
903
|
7,191
|
|
1,265
|
10,011
|
Future finance
cost
|
(241)
|
(2,223)
|
Present value of
lease liability
|
1,024
|
7,788
|
|
|
|
Current
portion
|
254
|
1,913
|
Non-current
portion
|
770
|
5,875
|
12 Equity
(a) Authorised
Unlimited number of common shares without par
value.
(b) Issued
|
Shares
|
$'000
|
Balance at January 1,
2017
|
53,247,590
|
283,506
|
Issued to AJL on
acquisition of Youga gold mine (i)
|
20,334,928
|
51,459
|
Equity financing
(i)
|
7,974,490
|
20,248
|
Share issuance costs
(i)
|
-
|
(1,568)
|
Exercise of stock
options (ii)
|
3,750
|
8
|
Share consolidation
adjustment
|
(498)
|
-
|
Balance at December
31, 2017
|
81,560,260
|
353,653
|
Exercise of stock
options (ii)
|
15,000
|
33
|
Balance at June
30, 2018
|
81,575,260
|
353,686
|
The Company's number of outstanding and issued shares, stock
options and warrants are retrospectively presented to reflect a
100:1 share consolidation which became effective on January 16, 2018.
(i) The Company acquired the Youga
gold mine and the Balogo satellite deposit on December 18, 2017 for a total consideration of
US$70.2 million which comprises of
the issuance of 20,334,928 new common shares in the Company at a
price of GBP£1.90 per share and a cash component of US$18.7 million. The cash component was
funded through the issuance of 7,974,490 new common shares at a
price of GBP£1.90 per share through a private placement. The
directly attributable costs of issuance of these new common shares
amounted to $1.6 million.
(ii) During the three months ended
June 30, 2016, the Company issued
15,000 new common shares on exercise of 15,000 stock options at a
price of GBP£1.575 per stock option. In 2017, the Company issued
3,750 new common shares on exercise of 3,750 stock options at a
price of GBP£1.575 per stock option.
(c) Stock options
Information relating to stock options outstanding at
June 30, 2018 is as follows:
|
|
Six months
ended
June 30,
2018
|
|
Year ended
December
31,
2017
|
|
Number
of
options
|
Weighted
average
exercise price
per share
|
Number of
options
|
Weighted
average
exercise price
per share
|
|
|
Cdn$
|
|
Cdn$
|
Beginning of the
period
|
2,829,428
|
4.96
|
1,242,695
|
9.12
|
|
Options
granted
|
61,000
|
4.58
|
1,745,000
|
3.41
|
|
Options
exercised
|
(15,000)
|
2.66
|
(3,750)
|
2.66
|
|
Options
expired
|
(10,862)
|
72.00
|
(5,570)
|
105.00
|
|
Options
forfeited
|
(127,508)
|
3.66
|
(148,947)
|
17.86
|
|
Share consolidation
adjustment
|
(5)
|
-
|
-
|
-
|
End of the
period
|
2,737,045
|
4.76
|
2,829,428
|
4.96
|
13 Non-controlling interest
Non-controlling interest represents the Government of
Burkina Faso's 10% share of
Burkina Mining Company and Netiana Mining Company, the subsidiaries
which respectively holds the Youga gold mine and the Balogo
satellite deposit.
14 Related party transactions
(a) Borrowings
Principal repayments of the shareholder loan to AJL, new and
repayments of equipment finance loans with Mapa and interest
repayments to Mapa in relation to the equipment finance loans
during the six months ended June 30,
2018 are disclosed in Note 10.
(b) Acquisition of heavy mining equipment
In addition to the heavy mining equipment financed by Mapa, the
Company also acquired five mining trucks from Mapa for US$0.4 million during the six months ended
June 30, 2018 to supplement the
hauling capacity at Balogo.
(c) Provision/(purchases) of goods and services
The Company also provided/(purchased) the following services
from related parties:
|
Three months
ended
|
Six months
ended
|
|
June
30,
2018
|
June
30,
2017
|
June
30,
2018
|
June
30,
2017
|
|
$'000
|
$'000
|
$'000
|
$'000
|
Technical and
managerial services provided by the
Company to:
|
|
|
|
|
|
Avesoro Services
(Jersey) Limited, a
subsidiary of Company's parent company
|
-
|
109
|
-
|
214
|
|
|
|
|
|
Technical and
support staff services provided by
the Company to:
|
|
|
|
|
|
MNG Gold Liberia
Inc., a subsidiary of
Company's parent company
|
146
|
-
|
146
|
|
|
|
|
|
|
Sale of
consumables by the Company to:
|
|
|
|
|
|
MNG Gold Liberia
Inc., a subsidiary of
Company's parent company
|
538
|
-
|
538
|
|
|
|
|
|
|
Drilling services
provided to the Company by:
|
|
|
|
|
|
Zwedru Mining Inc., a
subsidiary of
Company's parent company
|
(967)
|
(234)
|
(1,854)
|
(377)
|
|
|
|
|
|
Drilling services
provided to the Company by:
|
|
|
|
|
|
Faso Drilling Company
SA., a subsidiary of
Company's parent company
|
(2,397)
|
-
|
(3,847)
|
-
|
|
|
|
|
|
Charter plane
services provided to the
Company by:
|
|
|
|
|
|
MNG Gold Liberia
Inc., a subsidiary of
Company's parent company
|
(90)
|
-
|
(180)
|
-
|
|
|
|
|
|
Travel services
provided to the Company by:
|
|
|
|
|
|
MNG Turizm ve Ticaret
A.S., an entity
controlled by the Company's Chairman
|
(6)
|
(7)
|
(6)
|
(15)
|
|
|
|
|
|
Management
services provided by the
Company to:
|
|
|
|
|
|
Atmaca Services
Liberia Inc., a subsidiary
of Company's parent company
|
-
|
2,000
|
-
|
2,000
|
Included in trade and other receivables is a receivable from
related parties of $2.7 million as at
June 30, 2018 (December 31, 2017: $1.0
million).
Included in trade and other payables is $2.8 million payable to related parties as at
June 30, 2018 (December 31, 2017: $0.5
million).
SOURCE Avesoro Resources Inc.