TSX: ASO
AIM: ASO
TORONTO, Nov. 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 ended September 30, 2018 (the "Quarter" or "Q3") and
nine months ended September 30, 2018
("YTD").
Financial Highlights:
YTD
- Gold production of 175,496 ounces, in line with full year 2018
guidance of 220,000 – 240,000 ounces, and a 247% increase versus
the same period in the prior year ("YTD 2017");
- Revenues of US$225.1 million from
gold sales of 174,812 ounces at an average realised gold price of
US$1,288 per ounce;
- Operating cash costs US$719 per
ounce sold, an improvement of 27% versus YTD 2017;
- All in sustaining costs ("AISC") of US$995 per ounce sold, a 34% improvement on YTD
2017;
- Company EBITDA margin of 32%, with EBITDA of US$72.8 million;
- Cash flow from operations of US$62.4
million; and
- Cash of US$8.6 million and debt
of US$128.8 million at September 30, 2018.
Q3 2018
- Gold production of 47,177 ounces in the Quarter, a decrease of
22% on the previous quarter, due to a scheduled reduction in high
grade mill feed from Youga's Balogo satellite deposit;
- Revenues of US$59.2 million from
gold sales of 48,974 ounces in Q3 2018 at an average realised gold
price of US$1,210 per ounce;
- Operating cash costs of US$877
per ounce sold in Q3 2018 versus US$698 in the previous quarter attributable to
lower gold sales in the Quarter and an increase in unit mining
costs at New Liberty;
- AISC of US$1,155 per ounce sold
in Q3 2018 versus $985/oz in the
previous quarter;
- Company EBITDA margin of 14%, with EBITDA of US$8.2 million in the Quarter;
- Operating cash flows of US$14.5
million in the Quarter; and
- Debt reduced by US$5.7 million
during the Quarter.
Serhan Umurhan, Chief Executive Officer of Avesoro,
commented on the results and operations:
"I am pleased to report that Avesoro produced 47koz in
the Quarter taking year to date production to 175,496 ounces. We
continue to generate solid revenues with strong EBITDA margins and
remain on track to deliver our FY18 production guidance of 220-240
koz Au. Q3 2018 gold production was 22% lower than Q2 2018 in line
with a scheduled reduction in mined grade at Youga due to a
reduction in high-grade ore production from the Balogo pit and
temporary mining of low-grade oxide material at Gassoré, where
historical artisanal mining has depleted the near surface
(<25m) oxide zone. Mining at
Gassoré has now reached fresh rock and run of mine grade is
increasing towards the reserve grade of 3.99g/t as
anticipated.
Q3 total material moved of 9.78mt was in-line with that
achieved in Q2, reflecting our continued underlying improvements in
productivity despite rainfall in Burkina
Faso being three times the historic average.
At New Liberty, quarter on quarter ore production increased
by 21kt, run of mine grade remained stable and waste tonnes were
unchanged. The wet season did however reduce our ability to fully
utilise the larger New Liberty mining fleet during the Quarter
which, combined with an increase in drill and blast costs and fuel
prices resulted in higher unit mining costs than in the previous
quarters of 2018. In Q4 we expect both mining rates, unit costs and
grade to improve at New Liberty, and for this to continue through
2019.
During the Quarter, cash costs increased to $877/oz and the AISC to $1,155/oz due to lower production at Youga and a
temporary increase in unit mining costs at New Liberty which added
approximately US$100/oz to these
numbers. Importantly, for the full year we remain on track to
deliver guided production and all-in sustaining costs per ounce.
However, full year cash costs are now expected to be 10-20% higher
than the previous guidance primarily due to higher mining costs at
New Liberty due to mining fleet utilisation being lower than
planned.
Exploration continues across the portfolio where we target an
additional 1Moz to our current mineral reserves. The US$25m budget includes assaying, engineering
studies, resource modelling and the independent technical reports
and is a discretionary investment which we believe is already
adding significant shareholder value with updated NI 43-101 reports
for both New Liberty and Youga expected early next year."
Update on Exploration Activity
The Company made the strategic decision in Q1 2018 to target the
addition of 1Moz to its mineral reserves primarily through
lower-risk infill drilling of existing mineral resources. Thus far
in 2018, 176,000m of diamond
core drilling has been drilled across the portfolio. The Company
believes it remains on track to deliver on this target of 1Moz of
additional reserves.
An updated NI 43-101 for New Liberty is expected to be published
in late Q1 2019 which will include an underground prefeasibility
study at the main New Liberty deposit combined with the first
reserves from Ndablama, a satellite deposit 45km from the
processing plant. Following that of New Liberty, the Company
expects to publish an updated NI 43-101 for Youga which is
anticipated to include additional reserves from Gassoré and
Ouaré.
Table 1: Consolidated Financial Highlights
Metric
|
Q3
2018
|
Q2
2018
|
Q3
2018
vs
Q2
2018
|
YTD
2018
|
YTD
2017
|
YTD
2018
vs
YTD
2017
|
Gold production,
oz
|
47,177
|
60,231
|
-22%
|
175,496
|
50,615
|
247%
|
Gold sold,
oz
|
48,974
|
57,285
|
-15%
|
174,812
|
51,187
|
242%
|
Operating cash costs,
US$/oz sold
|
877
|
698
|
26%
|
719
|
979
|
-27%
|
All in Sustaining
Costs, US$/oz sold
|
1,155
|
985
|
17%
|
995
|
1505
|
-34%
|
Average Realised Gold
Price, US$/oz
|
1,210
|
1,302
|
-7%
|
1,288
|
1,259
|
2%
|
Revenues,
US$m
|
59.2
|
74.5
|
-21%
|
225.1
|
64.5
|
249%
|
EBITDA**,
US$m
|
8.2
|
24.4
|
-66%
|
72.8
|
6.4
|
1039%
|
EBITDA margin,
%
|
14
|
33
|
-58%
|
32
|
10
|
226%
|
Cash flow from
operations, US$m
|
14.5
|
8.5
|
71%
|
62.4
|
-3.3
|
2018%
|
Capital spend,
US$m
|
8.1
|
13.2
|
-39%
|
34.9
|
19.5
|
79%
|
Cash, US$m
|
8.6
|
12.7
|
-32%
|
8.6
|
2.0
|
331%
|
Debt, US$m
|
128.8
|
134.5
|
-4%
|
128.8
|
120.0
|
7%
|
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
|
Q3
2018
|
Q2
2018
|
Q3
2018
vs
Q2
2018
|
YTD
2018
|
YTD
2017
|
YTD
2018
vs
YTD
2017
|
New
Liberty
|
|
|
|
|
|
|
Gold production,
oz
|
27,456
|
29,808
|
-8%
|
85,134
|
50,615
|
68%
|
Mining cost,
US$/t
|
3.00
|
2.42
|
24%
|
2.67
|
2.55
|
5%
|
Processing cost,
US$/t
|
23.29
|
24.53
|
-5%
|
24.11
|
26.79
|
-10%
|
Operating cash costs,
US$/oz sold
|
849
|
781
|
9%
|
825
|
979
|
-16%
|
All in Sustaining
Costs, US$/oz sold
|
1,113
|
1,038
|
7%
|
1,082
|
1,505
|
-28%
|
Youga
|
|
|
|
|
|
|
Gold production,
oz
|
19,721
|
30,423
|
-35%
|
90,362
|
87,048
|
4%
|
Mining cost,
US$/t
|
1.93
|
1.90
|
2%
|
1.99
|
1.81
|
10%
|
Processing cost,
US$/t
|
20.71
|
18.64
|
11%
|
19.63
|
19.14
|
3%
|
Operating cash costs,
US$/oz sold
|
958
|
616
|
55%
|
630
|
492
|
28%
|
All in Sustaining
Costs, US$/oz sold
|
1,113
|
852
|
31%
|
848
|
720
|
18%
|
Outlook
During the final quarter of 2018, the Company expects to see
improved productivity following the end of the rainy season and
improved mill feed grades at both New Liberty and Youga.
The Company maintains its full year production guidance of
220,000 – 240,000 ounces of gold and all-in-sustaining cost of
between US$960 and US$1,000 per ounce sold. Full year operating cash
cost guidance has been revised to between US$726 and US$792
per ounce sold.
Analyst and Investor Call
The company will be hosting a conference call for investors and
analysts on November 13, 2018 at
08:00 EST / 13:00 GMT
There will be an accompanying presentation that can be
downloaded from
http://avesoro.com/wp-content/uploads/2018/11/Avesoro-Q3-2018-Results-Presentation.pdf
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
|
+1 844 747
9618
|
Canada,
Local
|
Local
|
+1 416 216
4189
|
Password: 98790530#
International dial in numbers URL:
http://events.arkadin.com/ev/docs/NE_W2_TF_Events_International_Access_List.pdf
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.
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$726
to US$792 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 Q1 2019; declaring first mineral reserves at
Ndablama; declaring reserves at Gassoré and Ouaré; and targeting
the addition of 1Moz of additional reserves.
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 Nine Months Ended September 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
September
30,
2018
|
Three months
ended
September
30,
2017
|
Nine months
ended
September
30,
2018
|
Nine months
ended
September
30,
2017
|
$'000
|
$'000
|
$'000
|
$'000
|
|
|
|
|
|
Gold sales (Note
2)
|
59,247
|
25,452
|
225,147
|
64,464
|
|
|
|
|
|
Cost of
sales
|
|
|
|
|
- Production costs
(Note 2)
|
(45,646)
|
(18,187)
|
(137,827)
|
(52,250)
|
- Depreciation (Note
2)
|
(21,930)
|
(6,924)
|
(58,931)
|
(21,103)
|
|
|
|
|
|
Gross
(loss)/profit
|
(8,329)
|
341
|
28,389
|
(8,889)
|
|
|
|
|
|
Expenses
|
|
|
|
|
Administrative and
other expenses (Note 3)
|
(2,988)
|
(1,796)
|
(6,999)
|
(4,776)
|
Exploration and
evaluation costs
|
(2,494)
|
(466)
|
(9,018)
|
(1,333)
|
Loss on lease
termination
|
-
|
-
|
(566)
|
-
|
|
|
|
|
|
(Loss)/Profit from
operations
|
(13,811)
|
(1,921)
|
11,806
|
(14,998)
|
|
|
|
|
|
Derivative liability
gain/(loss)
|
-
|
3
|
105
|
(173)
|
Foreign exchange
gain/(loss)
|
644
|
(16)
|
(1,267)
|
(179)
|
Finance
costs
|
(3,177)
|
(2,726)
|
(10,350)
|
(8,349)
|
Finance
income
|
6
|
9
|
181
|
15
|
|
|
|
|
|
(Loss)/Profit
before tax
|
(16,338)
|
(4,651)
|
475
|
(23,684)
|
|
|
|
|
|
Tax credit/(charge)
for the period (Note 4)
|
219
|
-
|
(9,636)
|
-
|
|
|
|
|
|
Net loss after
tax
|
(16,119)
|
(4,651)
|
(9,161)
|
(23,684)
|
Attributable
to:
|
|
|
|
|
- Owners of the
Company
|
(15,807)
|
(4,651)
|
(11,960)
|
(23,684)
|
- Non-controlling
interest
|
(312)
|
-
|
2,799
|
-
|
|
|
|
|
|
Other
comprehensive income
Items that may be
reclassified subsequently to profit or loss:
|
|
|
|
|
Fair value
gains/(losses) on investments
|
-
|
(24)
|
22
|
(28)
|
Currency translation
differences
|
(36)
|
109
|
(76)
|
(83)
|
|
|
|
|
|
Total
comprehensive loss
|
(16,155)
|
(4,566)
|
(9,215)
|
(23,795)
|
Attributable
to:
|
|
|
|
|
- Owners of the
Company
|
(15,843)
|
(4,566)
|
(12,014)
|
(23,795)
|
- Non-controlling
interest
|
(312)
|
-
|
2,799
|
-
|
|
|
|
|
|
Basic loss per share,
(US$) (Note 5)
|
(0.194)
|
(0.087)
|
(0.147)
|
(0.445)
|
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
|
September
30,
2018
$'000
|
December
31,
2017
$'000
|
Assets
|
|
|
Current
assets
|
|
|
Cash and cash
equivalents
|
8,596
|
17,787
|
Trade and other
receivables (Note 6)
|
28,400
|
25,286
|
Inventories (Note
7)
|
52,409
|
36,932
|
Other
assets
|
1,737
|
1,710
|
|
91,142
|
81,715
|
Non-current
assets
|
|
|
Property, plant and
equipment (Note 8)
|
231,302
|
249,552
|
Intangible assets -
Exploration and evaluation assets (Note 9)
|
3,755
|
-
|
Investments
|
-
|
21
|
Deferred tax
asset
|
2,643
|
4,554
|
Other
assets
|
1,103
|
1,196
|
|
238,803
|
255,323
|
Total
assets
|
329,945
|
337,038
|
|
|
|
Liabilities
|
|
|
Current
liabilities
|
|
|
Borrowings (Note
10)
|
23,211
|
37,964
|
Trade and other
payables
|
69,068
|
41,003
|
Income tax
payable
|
6,108
|
12,358
|
Finance lease
liability (Note 11)
|
248
|
1,913
|
Derivative
liability
|
-
|
105
|
Provisions
|
3,282
|
523
|
|
101,917
|
93,866
|
Non-current
liabilities
|
|
|
Borrowings (Note
10)
|
104,634
|
101,335
|
Trade and other
payables
|
-
|
463
|
Finance lease
liability (Note 11)
|
697
|
5,875
|
Provisions
|
10,320
|
10,439
|
|
115,651
|
118,112
|
Total
liabilities
|
217,568
|
211,978
|
|
|
|
Equity
|
|
|
Share capital (Note
12)
|
353,686
|
353,653
|
Capital
contribution
|
52,742
|
54,022
|
Share based payment
reserve
|
8,694
|
7,840
|
Acquisition
reserve
|
(33,060)
|
(33,060)
|
Fair value
reserve
|
-
|
(487)
|
Cumulative
translation reserve
|
(542)
|
(466)
|
Deficit
|
(272,581)
|
(260,156)
|
Equity attributable
to owners
|
108,939
|
121,346
|
Non-controlling
interest (Note 13)
|
3,438
|
3,714
|
Total
equity
|
112,377
|
125,060
|
Total liabilities
and equity
|
329,945
|
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
|
Nine months
ended
September
30,
2018
|
Nine months
ended
September
30,
2017
|
|
$'000
|
$'000
|
Operating
activities
|
|
|
Net loss after
tax
|
(9,161)
|
(23,684)
|
Tax for the
period
|
9,636
|
-
|
Profit/(Loss) before
tax
|
475
|
(23,684)
|
Items
not affecting cash:
|
|
|
Share-based payments (Note
3)
|
854
|
890
|
Depreciation (Note
8)
|
59,146
|
21,372
|
Unrealized foreign exchange
loss/(gain)
|
390
|
(127)
|
Derivative liability
(gain)/loss
|
(105)
|
173
|
Interest expense
|
10,350
|
8,229
|
Loss on lease
termination
|
566
|
-
|
Impairment of
inventories
|
-
|
3,319
|
Changes in non-cash
working capital
|
|
|
Increase in trade and other receivables
|
(3,114)
|
(9,889)
|
Increase/(decrease) in trade and other payables
|
22,909
|
(3,628)
|
(Increase)/decrease in inventories
|
(15,477)
|
92
|
Income taxes
paid
|
(13,597)
|
-
|
Cash flows
from/(used in) operating activities
|
62,397
|
(3,253)
|
|
|
|
Investing
activities
|
|
|
Payments to acquire
property, plant and equipment
|
(29,280)
|
(19,473)
|
Payments to acquire
intangible assets
|
(5,659)
|
-
|
Decrease/(increase)
in other assets
|
66
|
(545)
|
Proceeds from sale of
available for sale investment
|
44
|
-
|
Cash flows used in
investing activities
|
(34,829)
|
(20,018)
|
|
|
|
Financing
activities
|
|
|
Proceeds from
borrowings (Note 10b)
|
6,150
|
18,800
|
Repayments of
borrowings (Note 10)
|
(31,717)
|
-
|
Finance
charges
|
(8,149)
|
(6,996)
|
Dividend payment to
non-controlling interest
|
(1,480)
|
-
|
Payment of finance
leases
|
(1,317)
|
-
|
Proceeds from
exercise of stock options (Note 12)
|
33
|
-
|
Cash flows (used
in)/from financing activities
|
(36,480)
|
11,804
|
|
|
|
Impact of foreign
exchange on cash balance
|
(279)
|
35
|
Net decrease in
cash and cash equivalents
|
(9,191)
|
(11,432)
|
Cash and cash
equivalents at beginning of period
|
17,787
|
13,429
|
Cash and cash
equivalents at end of period
|
8,596
|
1,997
|
|
|
|
Significant non-cash transactions during the nine months ended
September 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
$'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
|
-
|
-
|
-
|
-
|
-
|
-
|
(23,684)
|
(23,684)
|
-
|
(23,684)
|
Other comprehensive
loss for period
|
-
|
-
|
-
|
-
|
(28)
|
(83)
|
-
|
(111)
|
-
|
(111)
|
Total comprehensive
loss for period
|
-
|
-
|
-
|
-
|
(28)
|
(83)
|
(23,684)
|
(23,795)
|
-
|
(23,795)
|
Related party loan
(Note 10)
|
-
|
4,524
|
-
|
-
|
-
|
-
|
-
|
4,524
|
-
|
4,524
|
Share-based
payments
|
-
|
-
|
890
|
-
|
-
|
-
|
-
|
890
|
-
|
890
|
Balance at September
30, 2017
|
283,506
|
52,759
|
7,660
|
-
|
(481)
|
(483)
|
(256,366)
|
86,595
|
-
|
86,595
|
|
|
|
|
|
|
|
|
|
|
|
Balance at January 1,
2018
|
353,653
|
54,022
|
7,840
|
(33,060)
|
(487)
|
(466)
|
(260,156)
|
121,346
|
3,714
|
125,060
|
(Loss)/Profit for the
period
|
-
|
-
|
-
|
-
|
-
|
-
|
(11,960)
|
(11,960)
|
2,799
|
(9,161)
|
Other comprehensive
income/(loss) for period
|
-
|
-
|
-
|
-
|
22
|
(76)
|
-
|
(54)
|
-
|
(54)
|
Total comprehensive
income/(loss) for period
|
-
|
-
|
-
|
-
|
22
|
(76)
|
(11,960)
|
(12,014)
|
2,799
|
(9,215)
|
Exercise of stock
options (Note 12)
|
33
|
-
|
-
|
-
|
-
|
-
|
-
|
33
|
-
|
33
|
Share-based payments
(Note 3)
|
-
|
-
|
854
|
-
|
-
|
-
|
-
|
854
|
-
|
854
|
Dividends paid to
non-controlling interest
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
(3,075)
|
(3,075)
|
Related party loans
(Note 10)
|
-
|
1,698
|
-
|
-
|
-
|
-
|
-
|
1,698
|
-
|
1,698
|
Payment of related
party loans (Note 10b)
|
-
|
(2,978)
|
-
|
-
|
-
|
-
|
-
|
(2,978)
|
-
|
(2,978)
|
Reserve transfer on
sale of investment
|
-
|
-
|
-
|
-
|
465
|
-
|
(465)
|
-
|
-
|
-
|
Balance at
September 30, 2018
|
353,686
|
52,742
|
8,694
|
(33,060)
|
-
|
(542)
|
(272,581)
|
108,939
|
3,438
|
112,377
|
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 nine months ended September 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 (see Note 12) 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 November 12,
2018.
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.
IFRS 16 Leases 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. The Company is in the process
of assessing the impact of IFRS 16 and do not believe there to be a
material impact to the consolidated financial statements.
Going concern
The condensed interim consolidated financial statements have
been prepared on a going concern basis. As at September 30, 2018, the Company has net current
liabilities of $10.8 million and has
approximately $24.3 million of debt
repayments due in the next twelve months.
The 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 mining operations at New
Liberty. Accordingly, the Company expects to meet its current
liabilities through its cash generation capacity. In
addition, the Company has an undrawn facility of $23.7 million with AJL as at September 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
September 30, 2018:
|
New
Liberty
operations
|
Burkina
operations
|
Exploration
|
Corporate
|
Total
|
|
|
|
|
|
|
|
$'000
|
$'000
|
$'000
|
$'000
|
$'000
|
Profit/(Loss) for the
period
|
(13,768)
|
3,047
|
(2,552)
|
(2,846)
|
(16,119)
|
Gold sales
|
33,925
|
25,322
|
-
|
-
|
59,247
|
Production
costs
|
|
|
|
|
|
- Mine operating
costs
|
(26,532)
|
(20,433)
|
-
|
904
|
(46,061)
|
- Change in
inventories
|
1,589
|
(1,174)
|
-
|
-
|
415
|
|
(24,943)
|
(21,607)
|
-
|
904
|
(45,646)
|
Depreciation
|
(19,942)
|
(1,907)
|
(110)
|
(17)
|
(21,976)
|
Segment
assets
|
230,441
|
84,630
|
7,803
|
7,071
|
329,945
|
Segment
liabilities
|
(163,997)
|
(41,017)
|
(5,679)
|
(6,875)
|
(217,568)
|
Capital
additions
|
|
|
|
|
|
- property, plant and
equipment
|
5,181
|
2,788
|
-
|
-
|
7,969
|
- intangible
assets
|
-
|
-
|
2,300
|
-
|
2,300
|
Following is an analysis of the Group's results, assets and
liabilities by reportable segment for the nine months ended
September 30, 2018:
|
New
Liberty
operations
|
Burkina
operations
|
Exploration
|
Corporate
|
Total
|
|
|
|
|
|
|
|
$'000
|
$'000
|
$'000
|
$'000
|
$'000
|
Profit/(Loss) for the
period
|
(27,505)
|
33,803
|
(8,903)
|
(6,556)
|
(9,161)
|
Gold sales
|
108,442
|
116,705
|
-
|
-
|
225,147
|
Production
costs
|
|
|
|
|
|
- Mine operating
costs
|
(73,228)
|
(62,342)
|
-
|
904
|
(134,666)
|
- Change in
inventories
|
(298)
|
(2,863)
|
-
|
-
|
(3,161)
|
|
(73,526)
|
(65,205)
|
-
|
904
|
(137,827)
|
Depreciation
|
(51,142)
|
(7,706)
|
(227)
|
(71)
|
(59,146)
|
Capital
additions
|
|
|
|
|
|
- property, plant and
equipment
|
28,902
|
15,522
|
40
|
-
|
44,464
|
- intangible
assets
|
-
|
-
|
5,659
|
-
|
5,659
|
Following is an analysis of the Group's results, assets and
liabilities by reportable segment for the three months ended
September 30, 2017:
|
New
Liberty
operations
|
Burkina
operations
|
Exploration
|
Corporate
|
Total
|
|
|
|
|
|
|
|
$'000
|
$'000
|
$'000
|
$'000
|
$'000
|
Loss for the
period
|
(2,536)
|
-
|
(553)
|
(1,562)
|
(4,651)
|
Gold sales
|
25,452
|
-
|
-
|
-
|
25,452
|
Production
costs
|
|
|
|
|
|
- Mine operating
costs
|
(15,292)
|
-
|
-
|
-
|
(15,292)
|
- Impairment of ore
stockpile
|
(3,319)
|
|
|
|
(3,319)
|
- Change in
inventories
|
424
|
-
|
-
|
-
|
424
|
|
(18,187)
|
-
|
-
|
-
|
(18,187)
|
Depreciation
|
(6,924)
|
-
|
(104)
|
(5)
|
(7,033)
|
|
|
|
|
|
|
Segment
assets
|
208,093
|
-
|
13,314
|
1,581
|
222,988
|
Segment
liabilities
|
(135,480)
|
-
|
(89)
|
(824)
|
(136,393)
|
Capital
additions
|
|
|
|
|
|
– property, plant and
equipment
|
8,975
|
-
|
-
|
-
|
8,975
|
Following is an analysis of the Group's results, assets and
liabilities by reportable segment for the nine months ended
September 30, 2017:
|
New
Liberty
operations
|
Burkina
operations
|
Exploration
|
Corporate
|
Total
|
|
|
|
|
|
|
|
$'000
|
$'000
|
$'000
|
$'000
|
$'000
|
Loss for the
period
|
(17,911)
|
-
|
(1,554)
|
(4,219)
|
(23,684)
|
Gold sales
|
64,464
|
-
|
-
|
-
|
64,464
|
Production
costs
|
|
|
|
|
|
- Mine operating
costs
|
(48,126)
|
-
|
-
|
-
|
(48,126)
|
- Impairment of ore
stockpile
|
(3,319)
|
-
|
-
|
-
|
(3,319)
|
- Change in
inventories
|
(805)
|
-
|
-
|
-
|
(805)
|
|
(52,250)
|
-
|
-
|
-
|
(52,250)
|
Depreciation
|
(21,104)
|
-
|
(253)
|
(15)
|
(21,372)
|
Capital
additions
|
|
|
|
|
|
– property, plant and
equipment
|
21,545
|
-
|
-
|
-
|
21,545
|
3 Administrative and other expenses
|
Three months
ended
|
Nine months
ended
|
|
September
30,
2018
|
September
30,
2017
|
September
30,
2018
|
September
30,
2017
|
|
$'000
|
$'000
|
$'000
|
$'000
|
Wages and
salaries
|
599
|
445
|
1,726
|
1,197
|
Legal and
professional
|
563
|
606
|
1,522
|
1,282
|
Depreciation
|
46
|
109
|
215
|
269
|
Share based
payments
|
288
|
301
|
854
|
890
|
Tax on subsidiary
dividends
|
957
|
-
|
1,758
|
-
|
Other
expenses
|
535
|
335
|
924
|
1,138
|
|
2,988
|
1,796
|
6,999
|
4,776
|
4 Income taxes
Tax for the period comprises of:
|
Three months
ended
|
Nine months
ended
|
|
September
30,
2018
|
September
30,
2017
|
September
30,
2018
|
September
30,
2017
|
|
$'000
|
$'000
|
$'000
|
$'000
|
Current
tax
|
219
|
-
|
(7,664)
|
-
|
Deferred
tax
|
-
|
-
|
(1,972)
|
-
|
|
219
|
-
|
(9,636)
|
-
|
5 Earnings per share ("EPS")
|
Three months
ended
|
Nine months
ended
|
|
September
30,
2018
|
September
30,
2017
|
September
30,
2018
|
September
30,
2017
|
|
$'000
|
$'000
|
$'000
|
$'000
|
Net loss after tax
attributable to
Owners of the Company
|
(15,807)
|
(4,651)
|
(11,960)
|
(23,684)
|
|
|
|
|
|
Weighted average
number of
outstanding shares for basic EPS
|
81,575,260
|
53,247,590
|
81,565,260
|
53,247,590
|
|
|
|
|
|
Basic EPS
(US$)
|
(0.194)
|
(0.087)
|
(0.147)
|
(0.445)
|
6 Trade and other receivables
|
September
30,
2018
|
December
31,
2017
|
|
$'000
|
$'000
|
Trade
receivable
|
156
|
416
|
Other
receivable
|
14,095
|
10,690
|
Due from related
parties (Note 14)
|
2,793
|
1,015
|
Pre-payments
|
11,356
|
13,165
|
|
28,400
|
25,286
|
Other receivables include a VAT receivable from the Burkina Faso
Government amounting to $10.8 million
as at September 30, 2018
(December 31, 2017: $8.9 million).
7 Inventories
|
September
30,
2018
|
December
31,
2017
|
|
$'000
|
$'000
|
Gold doré
|
2,577
|
3,986
|
Gold in
circuit
|
3,122
|
2,561
|
Ore
stockpiles
|
4,518
|
6,688
|
Consumables
|
42,192
|
23,697
|
|
52,409
|
36,932
|
Ore stockpiles as at September 30,
2018 are stated at their net realisable values after
cumulative write-down at New Liberty of $2.3
million (December 31, 2017:
US$2.9 million).
8 Property, plant and equipment
|
Mining
assets
$'000
|
Capitalised
stripping
costs
$'000
|
Mine closure
and
rehabilitation
$'000
|
Assets held
under finance
lease
$'000
|
Machinery and
equipment
$'000
|
Vehicles
$'000
|
Leasehold
improvement
$'000
|
Total
$'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
|
11,413
|
10,414
|
81
|
-
|
22,556
|
-
|
-
|
44,464
|
Transfer from
intangible assets (Note 9)
|
1,904
|
-
|
-
|
-
|
-
|
-
|
-
|
1,904
|
Termination of
finance leases
|
-
|
-
|
-
|
(7,000)
|
-
|
-
|
-
|
(7,000)
|
At September 30,
2018
|
221,824
|
26,643
|
6,293
|
4,758
|
97,349
|
3,092
|
86
|
360,045
|
|
|
|
|
|
|
|
|
|
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
|
31,468
|
15,611
|
908
|
1,786
|
8,934
|
439
|
-
|
59,146
|
Termination of
finance leases
|
-
|
-
|
-
|
(1,528)
|
-
|
-
|
-
|
(1,528)
|
At September 30,
2018
|
83,573
|
17,449
|
3,198
|
2,822
|
19,814
|
1,801
|
86
|
128,743
|
|
|
|
|
|
|
|
|
|
Net book
value
|
|
|
|
|
|
|
|
|
At December 31,
2017
|
156,402
|
14,391
|
3,922
|
9,194
|
63,913
|
1,730
|
-
|
249,552
|
At September 30,
2018
|
138,251
|
9,194
|
3,095
|
1,936
|
77,535
|
1,291
|
-
|
231,302
|
9 Intangible assets - Exploration and evaluation
assets
|
September 30,
2018
|
December
31,
2017
|
|
$'000
|
$'000
|
Ouaré
|
3,755
|
-
|
|
3,755
|
-
|
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 that this satellite deposit will add further mine life to the
Youga Gold Mine.
Intangible assets related to exploration and evaluation costs on
Gassore East prospect of $1.9 million
were transferred to mining assets under property, plant and
equipment following commencement of mining operations within the
prospect during the quarter ended September
30, 2018.
10 Borrowings
|
September
30,
2018
|
December
31,
2017
|
|
$'000
|
$'000
|
Current
|
|
|
Bank loan - Senior
Facility Tranche A
|
15,003
|
14,741
|
Bank loan - Senior
Facility Tranche B
|
-
|
9,737
|
Shareholder loan -
Other
|
-
|
8,106
|
Related party
loan
|
8,208
|
5,380
|
|
23,211
|
37,964
|
Non-current
|
|
|
Bank loan - Senior
Facility Tranche A
|
59,806
|
58,668
|
Bank loan -
Subordinated Facility
|
10,656
|
10,846
|
Shareholder loan -
Working Capital Facility
|
9,907
|
14,938
|
Shareholder loan -
Other
|
3,956
|
-
|
Related party
loan
|
20,309
|
16,883
|
|
104,634
|
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 nine months
ended September 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 nine months ended September 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 $13.7
million were made during the nine months ended September 30, 2018 of which $10.8 million was allocated as a reduction to the
loan payable and $2.9 million as a
reduction to capital contribution.
Interest expense on the non-current loan payable to AJL for the
nine months ended September 30, 2018
was $0.8 million (nine months ended
September 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 $4.1 million was repaid during
the nine months ended September 30,
2018.
(c) Related party loan
In 2017 the Company entered into equipment and finance facility
agreements with Mapa İnşaat ve Ticaret A.Ş. ("Mapa"), a company
controlled by Mehmet Nazif Gűnal, Non-Executive Chairman of the
Company, to facilitate the purchase of heavy mining
equipment. The loan principal of these agreements includes a
mark-up of 2.5% over the cost incurred by Mapa in procuring the
equipment. The equipment finance loans are unsecured, with interest
charged at 6.5% per annum on the US$ 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
fell due six months after utilisation of the loan.
During the nine months ended September
30, 2018, the Company entered into further equipment and
finance facility agreements with Mapa amounting to $10.3 million. The same as 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 nine
months ended September 30, 2018 was
$1.4 million (nine months ended
September 30, 2017: $nil).
Interest repayment was $1.0 million
during the nine months ended September 30,
2018 (nine months ended September 30,
2017: $nil).
11 Finance lease liability
The finance lease liability as at September 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.
|
September
30,
2018
|
December
31,
2017
|
|
$'000
|
$'000
|
Gross finance lease
liability
|
|
|
- Within one
year
|
354
|
2,820
|
- Between two and
five years
|
817
|
7,191
|
|
1,171
|
10,011
|
Future finance
cost
|
(226)
|
(2,223)
|
Present value of
lease liability
|
945
|
7,788
|
|
|
|
Current
portion
|
248
|
1,913
|
Non-current
portion
|
697
|
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
September 30, 2018
|
81,575,260
|
353,686
|
(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 $1.6 million.
(ii) During the period ended
September 30, 2018, the Company
issued 15,000 new common shares on exercise of 15,000 stock options
at a price of GBP£1.575 per stock option. In 2017, the
Company issued 3,750 new common shares on exercise of 3,750 stock
options at a price of GBP£1.575 per stock option.
(c) Stock options
Information relating to stock options outstanding at
September 30, 2018 is as follows:
|
|
Nine months
ended
September 30,
2018
|
|
Year ended
December
31,
2017
|
|
Number
of
options
|
Weighted
average
exercise price
per share
|
Number
of options
|
Weighted
average
exercise price
per share
|
|
|
Cdn$
|
|
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
|
(13,362)
|
70.32
|
(5,570)
|
105.00
|
Options
forfeited
|
(222,828)
|
3.61
|
(148,947)
|
17.86
|
Share consolidation
adjustment
|
(5)
|
-
|
-
|
-
|
End of the
period
|
2,639,233
|
4.75
|
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 hold the Youga gold mine and the Balogo
satellite deposit.
14 Related party transactions
a) Borrowings
New drawdowns and repayments of the shareholder loan to AJL, new
drawdowns and repayments of equipment finance loans with Mapa and
interest repayments to Mapa in relation to the equipment finance
loans during the nine months ended September
30, 2018 are disclosed in Note 10.
(b) Provision/(purchases) of goods and services
The Company also provided/(purchased) the following services
from related parties:
|
Three months
ended
|
Nine months
ended
|
|
September
30,
2018
|
September
30,
2017
|
September
30,
2018
|
September
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
|
-
|
137
|
-
|
351
|
|
|
|
|
|
Technical and
support staff services provided by the Company to:
MNG Gold Liberia
Inc., a subsidiary of
Company's parent company
|
170
|
-
|
316
|
-
|
|
|
|
|
|
Sale of
consumables by the Company to: MNG Gold Liberia Inc., a
subsidiary of Company's parent company
|
1,068
|
-
|
1,606
|
-
|
|
|
|
|
|
Sale of
consumables and catering services by the Company to:
Faso Drilling Inc., a
subsidiary of
Company's parent company
|
336
|
-
|
336
|
-
|
|
|
|
|
|
Drilling services
provided to the Company by:
Zwedru Mining Inc., a
subsidiary of
Company's parent company
|
(357)
|
-
|
(2,211)
|
(377)
|
|
|
|
|
|
Drilling services
provided to the Company by:
Faso Drilling Company
SA., a subsidiary of
Company's parent company
|
(1,761)
|
-
|
(5,608)
|
-
|
|
|
|
|
|
Charter plane
services provided to the Company by:
MNG Gold Liberia
Inc., a subsidiary of
Company's parent company
|
(90)
|
(55)
|
(270)
|
(55)
|
|
|
|
|
|
Travel services
provided to the Company by:
MNG Turizm ve Ticaret
A.S., an entity
controlled by the Company's Chairman
|
(14)
|
(19)
|
(20)
|
(34)
|
|
|
|
|
|
Management
services provided by the Company to:
Atmaca Services
Liberia Inc., a subsidiary of
Company's parent company
|
-
|
2,000
|
-
|
2,000
|
|
|
|
|
|
Technical and
procurement services provided to the Company by:
MNG Orko Madencilik
A.S., an entity controlled
by the Company's Chairman
|
-
|
(350)
|
-
|
(350)
|
|
|
|
|
|
Administration
services provided to the Company by:
Avesoro Services
(Jersey) Limited, a
subsidiary of Company's parent company
|
-
|
(45)
|
-
|
(90)
|
Included in trade and other receivables is a receivable from
related parties of $2.8 million as at
September 30, 2018 (December 31, 2017: $1.0
million). Included in trade and other payables is
$2.8 million payable to related
parties as at September 30, 2018
(December 31, 2017: $0.5 million).
(c) Acquisition of heavy mining equipment
In addition to the equipment financed by Mapa (Note 10c), the
Company also acquired during the nine months ended September 30, 2018 trucks from Mapa for
US$0.4 million to supplement the
hauling capacity at Balogo.
SOURCE Avesoro Resources Inc.