TIDMGBGR
RNS Number : 7978J
GoldBridges Global Resources PLC
17 June 2014
17 June 2014
GoldBridges Global Resources plc
('GoldBridges', the 'Company' or the 'Group')
Preliminary results for the year ended 31 December 2013
GoldBridges Global Resources plc (LSE: GBGR), the gold mining
and development group, today announces its preliminary results for
the year ended 31 December 2013.
Highlights:
-- Gold poured during the year 30,669oz, (2012: 22,470oz) a
36.5% increase; gold grade 1.61g/t, (2012: 1.37g/t);
-- Gold recovery rate 84.3% (2012: 80.4%);
-- Operating cash cost per ounce down from last year US$903 (2012: US$1,046);
-- Positive contribution from underground mining which
recommenced production in June 2013 of 7,157oz (2012: 3,347oz) at
an average grade of 3.5g/t (2012: 2.75g/t);
-- Purchase of the geological data for the Karasuyskoye ore
fields estimated to contain resources of 9Moz of gold and 16Moz of
silver;
-- Positive contribution from underground mining which
recommenced production in June 2013 of 7,157oz (2012: 3,347oz) at
an average grade of 3.5g/t (2012: 2.75g/t);
-- Successful resolution against the additional fines and costs
imposed as a result of the tailings dam 3 incident in 2011,
resulting in a write back of provisions of US$9.3m;
-- The Company has successfully completed two placings post-year
end, raising gross proceeds of US$23m (GBP13.89m) to further
develop Group strategic plans and to provide additional
-- A strengthening of the Board of Directors coupled with a new
dynamic management team focused on growing Group turnover and
profitability working capital.
The accounts for the year ended 31 December 2013 will shortly be
available at the Company's website, http://www.goldbridgesplc.com/,
in accordance with AIM Rule 20.
Commenting, Aidar Assaubayev, Chief Executive, Goldbridges,
said:
"I am delighted to report that the operation at Sekisovskoye
continues to make positive progress, and that the Company has
delivered over and above the ambitious target that we set
ourselves.
"GoldBridges has been focused on growing production, improving
operational performance, as well researching additional growth
opportunities to enhance the current asset base to provide a solid
platform and deliver the best results for our shareholders.
"During the next quarter we will continue to develop the mine
and I look forward to updating the market with our progress."
For further information please visit www.goldbridgesplc.com or
contact:
GoldBridges Global Resources Plc +44 (0) 20 7932
Rajinder Basra (CFO) 2456
Strand Hanson Limited (Nomad, Financial Adviser
and Joint Broker) +44 (0) 20 7409
Andrew Emmott / James Spinney / Ritchie Balmer 3494
Peat & Co. (Joint Broker) +44 (0) 20 3540
John Beaumont, COO and Head of Research 1720
Blytheweigh (Financial PR) +44 (0) 20 7138
Tim Blythe / Camilla Horsfall / Halimah Hussain 3204
Chief Executive's Statement
I am delighted to present to you an update on the positive
progress during the year, and am also delighted to welcome on to
the board, Kanat Assauybayev, Ken Crichton and Alain Balian who
bring a wealth of experience and expertise to GoldBridges Global
Resources plc.
Over the last 12 months, the Company has been in the process of
implementing the recommendations that arose out of its strategic
review of the management and operations of the business. The
detailed review was principally conducted in 2012 and has been
implemented during the course of 2013. As a consequence there was a
commitment of time, energy and costs involved to see the process
through, and we are now confident that the Group is on the right
track to achieve profitability and growth. As part of this process
it was decided to change the name to GoldBridges Global Resources
plc, which was finalised in January 2014.
The operation at Sekisovskoye has performed well during the
year, with the additional input of ore from the underground
workings delivering an increase in gold production to a total of
30,669 oz in 2013 (22,471 oz in 2012). The original plan was to
phase out open pit production at Sekisovskoye in 2015, however this
winding down is currently being re-appraised with a view to extend
the open pit workings for a further two years. Plans as to the
timing and further development of the underground mining shafts to
accelerate the exploitation of the underground resource are
expected to be finalised soon.
In 2013, the opportunity arose to acquire the geological data in
relation to the Karasuyskoye Ore Fields, which appears to offer
significant potential, both in terms of resource base and location.
The resource, according to internal estimates, contains 9 million
ounces of gold and 16 million ounces of silver, and the location is
adjacent to the Group's current operations at Sekisovskoye. The
Group is currently in discussions with government authorities to
obtain the necessary licences and permits to exploit the site and
conduct further testing to validate the initial resource
estimates.
The funding to acquire the Karasuyskoye site was obtained from a
convertible loan note placed with African Resources Limited for
$27.5m, which was subsequently converted into shares in the Company
in December 2013. African Resources Limited also participated in
the placing in February 2014. In total the two placings post year
end raised GBP13.89m (equivalent to US$23m at year end exchange
rates). This funding will be used to provide a platform for growth
and additional working capital. We were grateful for the support of
our existing shareholders and to the new shareholders who
participated in the placings.
I am confident that 2014 will continue to be a positive year for
GoldBridges against the backdrop of changing economic and market
conditions. Indeed on a positive note the 20% devaluation of the
Kazakh Tenge announced in February 2014 is expected to have a
beneficial effect on the Group and the impact is currently being
assessed. The gold price has been volatile in the year given the
changing market conditions, with an opening price of US$1,650/oz at
the start of the year and a closing price of US$1,200/oz. The price
has since recovered and gold is currently trading in the
US$1,300/oz range. The consensus outlook is that gold will trade in
the range of US$1,100/oz to US$1,400/oz in the current year, based
on a stable economic (and political) climate with a gradual
increase in economic growth. The Group will continue its approach
of concentrating on the exploitation of higher grade underground in
order to keep operating costs as low as possible, as a buffer
against further downward gold price movements.
Finally, may I thank all our employees and management team for
their hard work and also thank our shareholders for their continued
support.
Aidar Assaubayev
Chief Executive Officer
Operational Review
The Group was focused during 2013 on growing production,
improving operational performance and researching new business
opportunities to complement and enhance the current asset base of
the Group. Open pit operations were complimented by increasing
production of ore from the underground higher grade resource. This
combined with the greater efficiencies achieved in recovery rates
has led in part to the increased group operating profit achieved in
the year. Following on from the review conducted in 2012, a number
of practical and pragmatic measures were put into place to achieve
efficiencies in the operations of the Group. During 2013, the Board
of Directors was strengthened by the appointment of a further three
Directors.
The Group had three main objectives in 2013, the first was to
accelerate the exploitation of the underground resource at
Sekisovskoye. Diamond drilling was accelerated in the underground
resource and these findings were used to access the resource level
indicated by the underground ore body. Internal reviews estimated
the gold resource at a total of 6moz of high grade ore. Venmyn
Deloitte a South African based consultancy, are currently working
on an independent Competent Persons Report (CPR) to verify these
estimates.
The second principal aim in the year was to implement the
operational review of the Group developed in 2012, and to deal with
and finalise the legacy issues inherited from the previous
management. These included the resolution of fines and
rehabilitation works incurred as a result of failure of the
tailings dam 3 in 2011, and recovery of monies due in relation to
the abortive acquisition of Akmola Gold LLP.
The third was to focus on new investment opportunities, in
particular, one that would utilise the current asset and skills
base of the Group in the most effective manner. The ideal fit was
found with the Karasuyskoye Ore Fields that sit adjacent to the
Group's current operating mine at Sekisovskoye. The initial
purchase of the geological data amounting to US$27.5m was funded by
the issue of a convertible bond by African Resources Limited (the
Group's principal Shareholder) which was subsequently converted
into shares in the Company in December 2013. Additional costs
incurred in relation to the negotiation and professional costs were
funded by the Group and amounted to US$2.6m.
Mineral Resources
The independent CPR is being prepared by Venmyn Deloitte and
work commenced in Q4 2013. Venmyn Deloitte ('Venmyn') is a wholly
owned subsidiary of Deloitte Touche Tohmatsu Limited, (part of the
Deloitte global services group), and is experienced in the
preparation of mineral resource reports. Based on the Group's
internal investigations the Directors' are confident that Venmyn's
report will provide positive confirmation of their internal
assessments. The management have been providing detailed
information as requested by Venmyn and are expecting the report to
be finalised in Q3 2014.
Sekisovskoye Operations and underground mine development
The key operational statistics of the mine operation are as
follows:
Mining - Open-cast mining
Actual 2013 Actual 2012
------------------ ----- ------------ ------------
Ore mined T 705,257 616,776
------------------ ----- ------------ ------------
Gold grade g/t 1.39 1.26
------------------ ----- ------------ ------------
Silver grade g/t 2.49 2.38
------------------ ----- ------------ ------------
Contained gold oz 31,621 24,915
------------------ ----- ------------ ------------
Contained silver oz 56,387 45,987
------------------ ----- ------------ ------------
Waste mined T 2,144,656 2,766,119
------------------ ----- ------------ ------------
Mining - Underground
Actual 2013 Actual 2012
------------------ ----- ------------ ------------
Ore mined T 63,572 37,867
------------------ ----- ------------ ------------
Gold grade g/t 3.50 2.75
------------------ ----- ------------ ------------
Silver grade g/t 5.27 3.62
------------------ ----- ------------ ------------
Contained gold oz 7,157 3,347
------------------ ----- ------------ ------------
Contained silver oz 11,139 4,397
------------------ ----- ------------ ------------
Waste mined T 128,006 109,570
------------------ ----- ------------ ------------
Mineral processing
Budget 2013 Actual 2013 Budget (% Actual 2012
2013)
------------------ ----- ------------ ------------ ---------- ------------
Crushing T 770,000 700,421 91.96 625,227
------------------ ----- ------------ ------------ ---------- ------------
Milling T 770,000 701,361 91.09 628,731
------------------ ----- ------------ ------------ ---------- ------------
Gold grade g/t 1.49 1.61 108.5 1.37
------------------ ----- ------------ ------------ ---------- ------------
Silver grade g/t 2.00 2.16 108.0 1.93
------------------ ----- ------------ ------------ ---------- ------------
Contained gold oz 30,295 36,388 120.1 27,803
------------------ ----- ------------ ------------ ---------- ------------
Contained silver oz 42,110 48,782 115.84 39,045
------------------ ----- ------------ ------------ ---------- ------------
Gold recovery % 82 84.3 102.8 80.4
------------------ ----- ------------ ------------ ---------- ------------
Silver recovery % 70 71.6 102.3 69.7
------------------ ----- ------------ ------------ ---------- ------------
Gold poured oz n/a 30,669 n/a 22,470
------------------ ----- ------------ ------------ ---------- ------------
Silver poured oz n/a 34,902 n/a 27,198
------------------ ----- ------------ ------------ ---------- ------------
Mining activity - open pit mine
A review was undertaken of the open pit mine to include the
mining methods, the infrastructure and the closure plan in relation
to winding down of mining activity.
Technical improvements were made to the explosive techniques
employed and improvements made to the road infrastructure to enable
a more efficient extraction and delivery of the ore to the
stockpile.
The Group also reconsidered the plan in relation to the
continued operation of the open pit operation, which was initially
considered for closure in Q2 2015. It was decided given the ore
reserves remaining that it would make economic sense to expand and
deepen the open pit operations. Based on the assessment made this
will increase the reserves that the open pit will produce by an
additional 64,000/oz, increasing the operational life of the open
pit to the end of 2017.
In addition to the usual mining works, the construction and
expansion of the tailings dams is continuing, these are on plan for
completion by 2015.
Mining activity - underground
Underground works were recommenced in April 2013, with mining
restarting in June, with a steady growth in production throughout
the year. During 2013, 63,500T of ore was excavated, the management
are expecting a significant improvement on this during 2014.
In 2013, in addition to resource extraction, a great deal of
preparatory work was carried out in order to gain further access to
ore bodies #3 and #11. This necessitated further exploratory
drilling that was conducted by both the Company's work force and
sub-contracted companies. As part of the plan developed in 2012
planned improvements to the infrastructure were also completed.
The principal works associated with underground mining in the
year were:
Mining and extraction of ore was from six mining levels in 2012,
ranging from +358mrl to +305mrl. In 2013 the work has continued to
develop further horizon extraction levels down to +250mrl. Once
this is fully completed there will be 170,000T of extractable ore
available. Of this amount 48,000T is ready for mining
extraction.
The diamond drilling programme to identify and enhance the
estimate of resources was deemed by management to be a key priority
in 2013. Resources were targeted at increasing the level of
drilling undertaken with subcontractors aiding the Company's own
staff to achieve impressive results in the year. By the end of the
year in excess of 53,800m of drilling had been achieved with
drilling conducted from the +250mrl level. The drilling is
continuing with a further 28,000m of drilling to be undertaken from
the 0mrl to -400mrl.
During 2013, in excess of 2,000 linear metres of tunnels were
developed for the transport decline, shafts and haulage entry
points, which necessitated the extraction of 45,200m(3) of waste in
the year. The works also included the necessary electrical works,
explosive magazines and ventilation works associated with the
tunnel development.
Underground - capex development
Based on detailed studies, two underground shafts are to be
constructed to a depth of 1000m which will be used to extract the
ore in the most commercially efficient manner. The estimated
capital expenditure for development of the shafts, equipment and
further working capital is expected to be in the region of US$130m.
This will be principally expended during the first three years of
the shafts construction. The amount required for the mine
development will be a combination of monies raised from external
capital sources with the balance of the funding coming from the
Group's internally generated cash flows.
Based on the current plans, the construction is expected to
commence in 2015, with construction of both shafts taking in the
region of 24 months. During this period the current transport
declines will be used to access the ore from underground.
The life of the mine of 22 years is based on the following
assumptions underlying the project economics of the model, gold
production of 100,000T of high grade ore per annum, this level of
production is to be achieved within 2 years of the shafts
completion. The model is based on a production cost in the region
of US$560/oz. The relatively low level is based on the switch to
higher grade underground ore from the current open pit source,
giving greater productivity from a smaller ore input into the
processing plant. Given these parameters and based on a price for
gold at 1,200/oz, the free cash flow over the project life is
expected to be in the region of US$1 billion.
Mineral processing
The performance against budget is shown in the table on page
above. The shortfall identified in ore processing was due to the
following:
-- Production problems in the ore crushing and sorting plant due
to plant failures. In Q4 these issues were resolved.
-- The supply of ore from underground was lower in Q4 due to
maintenance work, which resulted in a supply of ore being reduced
in that period.
The principal improvements highlighted in the year were as a
result of the following factors:
-- Production procedures have been enhanced resulting in the
mills being redesigned which has resulted in improving the quality
of ore being processed.
-- The quality of the underground ore is of better quality as it
can be ground to a finer paste, compared with the open pit ore. The
smaller granules have a positive effect on the sorption of
dissolved gold from the slurry. Thin sludges act as a sorbent and
lower gold recovery from activated carbon. In testing using solely
underground ore, the recovery rate achieved was an impressive 91.3%
for gold and 95.4% for silver.
-- The increase in the recovery rates of the ore being processed
is in part a direct consequence of the increase of underground ore
utilised.
-- The Group is in collaboration with independent research
companies in order to understand and obtain greater production
efficiencies, with particular emphasis on the quality of the ore
being extracted from underground resources. Preliminary studies
indicate potential increase in the recovery rates by an additional
1%.
Resolution of legacy issues
Tailings Dam
During 2012 the Irtysh Ecology department of the Ministry of the
Environment appealed through the courts and argued that a higher
level of fines and obligations as currently imposed should be
levied on the Company. This amounted to US$9.4M (being
1,429,000,000 Tenge) and was based on the agreement that the
environmental damage could not be directly measured and an indirect
measure of calculating the damage should be used. In March 2014
this argument was rejected on the basis that the damage was indeed
measurable reliably through the direct method and as such the court
action was dismissed. Indeed the court commented that the costs
already paid had exceeded the previous estimate agreed with the
department of 700,214,000 Tenge, and ordered the department to meet
the legal costs of the court amounting to 137,000 Tenge. Although
the department does have the right to appeal within 6 months of the
judgement given in March 2014 the Directors are of the opinion that
the possibility of this is remote. The provision in relation to the
finalisation of works to complete the outstanding rehabilitation
measures has been adjusted accordingly resulting in a write back of
the provision of US$9.3m.
The remainder of the rehabilitation works which amounts to
US$330,000 will be completed in 2014 to the satisfaction of the
Kazakh authorities.
Akmola Gold
In 2013, the Group successfully sued Akmola Gold for settlement
of US$2m which was due for payment in December 2013 as agreed
between the parties. The amount of US$2m related to the partial
repayment of amounts advanced to Akmola as part of the abortive
acquisition by GoldBridges in 2012.
Judgement was obtained in 2013, which was confirmed in 2013
which imposes a lien on the assets of Akmola Gold such that no
disposal of the assets of Akmola can take place without the consent
of Goldbridges. The Group are currently in negotiations with Akmola
in relation to crystallising the amount due. Due to the
uncertainties surrounding the issue a full provision has been
maintained against the amount due in relation to the recoverability
of this amount in the financial statements.
Acquisitions
Karasuyskoye Ore Fields
GoldBridges entered into an information transfer and sale
agreement with Hydrogeology LLP ("Hydrogeology") (the "Information
Transfer and Sale Agreement") to acquire certain historical
geological information pertaining to the Karasuyskoye Ore Fields
which are located adjacent to the Company's current operations in
Kazakhstan. The Directors are excited with the potential that the
site offers in relation to the potential revenues to be generated
and see it as a perfect fit for the current operations,
particularly in light of the expected termination of open pit
operations at Sekisovskoye.
The Karasuyskoye Ore Fields are an advanced exploration project
covering an area of approximately 198 km(2) . Exploration drilling
and testing by Hydrogeology and GoldBridges technical teams,
indicates estimated resources of approximately nine million ounces
of gold at 3g/t, and in excess of sixteen million ounces of
silver.
The Company expects initially to use the information acquired as
the basis for an application for the extension of its existing
mining licenses, to cover the Karasuyskoye Ore Fields, from the
Ministry of Industry and New Technologies (MINT). Assuming this
extension is granted, and following the completion of limited
additional verification work, the Company then expects to engage
Venmyn, to complete a JORC-compliant CPR on the Karasuyskoye Ore
Fields. The Group is currently awaiting notification from MINT and
expects to receive notification in the short term.
Following the completion of the CPR, the Company expects to
announce its strategy for bringing the Karasuyskoye Ore Fields into
production using the cash generated by its existing operations.
Initially, this is expected to involve the utilisation of the
Company's existing mining fleet and processing facilities, while
the Company completes its medium-term investment programme to
expand both fleet and plant.
The total consideration payable under the transaction was
US$27.5 million (approximately GBP17.25 million), which was
satisfied by the issue of a convertible bond to African Resources
Limited (a principal shareholder).
Financial performance review
Sekisovskoye poured 30,669 (2012: 22,470), ounces of gold in
2013. Due to timings in the shipping and selling of the gold poured
to the refiner, a total of 29,712 (2012: 24,800) ounces were sold
in 2013 at an average price of US$1,426 (2012: US$1,563) per ounce.
There were no other material items of revenue.
The total cash cost of production (which includes administrative
costs but excludes depreciation and provisions) amounts to
US$1,309/oz, (2012: US$1,428/oz). The operating cash cost amounts
to US$903/oz (2012: US$1,046/oz), this is based on the cost of
production excluding depreciation and administrative expenses.
Further cost savings measures are being put in place to further
reduce the costs.
Adjusted EBITDA for the year of negative US$0.5m (excluding the
movements in the tailings dam provision) showed a marked turnaround
reflecting improved operating cost control under the new management
resulting in improved gross profits and despite an increase in
administrative costs (explained in more detail below). In 2012,
EBITDA before the tailings dam provision movement and Akmola
impairment was a loss of US$2.3m. On the same basis, (excluding
depreciation adjustment) the Group reported an operating loss of
US$6.0m, compared with a loss of US$6.7m in 2012.
Administrative costs amount to US$16.5m (2012: US$9.5m),
(excluding provisions) the overall increase in the year amounts to
US$7m, the increase is due to a number of factors. The increase in
costs can be split into the following three principal areas:
firstly costs associated with the acquisition of the Karasuyskoye
Ore Fields; secondly costs associated with the termination and
closure of contracts not being continued with by the current
management; and finally costs related to the potential expansion
and development of the business.
Significant expenses were incurred in relation to negotiating
and securing the Karasuyskoye contract of approximately US$2.6m.
These costs did not meet capitalisation criteria and were exposed
as incurred.
Secondly the Group has incurred costs in relation to terminating
staff and other contracts in order to rationalise costs in the
future and provide more efficient or competitive services as
necessary. The Directors estimate the costs in relation to these
matters amounts to approximately US$1m. The effect of the
efficiency measures have not been fully reflected in the results of
the year, as additional costs were incurred as a result of
repositioning services and terminating/renewing contracts. The
Directors are confident that there will be marked reduction in
these costs in the forthcoming year.
The third factor resulting in the increase in administrative
cost is as result of the Company building a platform for future
growth, with the development of the underground mine and the
expansion of the asset base with the acquisition of the
Karasuyskoye Ore Fields. Staff numbers have increased by 59,
resulting in an increase in payroll cost of US$1.2m.
Finance expenses amount to US$1.5m of which US$407,000 relates
to interest that was accrued in relation to the convertible bond
issued during the year in order to finance the acquisition of the
geological data of the Karasuyskoye Ore Field. The balance of the
finance expense relates to the payment of interest to the European
Bank for Reconstruction (EBRD), see note 10.
The Group had cash balances at 31 December 2013 of US$12m (2012:
US$2.5m), The cash balances were significantly enhanced with the
monies raised in the two share placings post year end raising an
additional US$23m. The net assets of the Group are US$58.6m (2012:
US$29.3m), the significant increase in net assets arises
principally from the acquisition of the Karasuyskoye Ore Fields,
which was ultimately purchased by the issue of shares in the
Company on the conversion of the convertible bond issued to African
Resources Limited.
Operating cash flow was also considerably improved in 2013,
showing a net cash inflow from operating activities of US$7,304m
compared with an outflow of US$(9,981) in 2012, as a result of the
increased EBITDA and careful working capital management under the
new management. In addition, operating cash flows reflected cash
receipts in respect of pre-paid sales amounting to US$2.2m and
which will recognised in the income statement in 2014.
Going concern
The Group's operations are cash generative and the current cash
position is sufficient to cover ongoing operating and
administrative expenditure for the next 12 months.
As part of the strategic plan the Group are planning to build
two underground shafts in order to exploit the underground
resources in a more cost effective approach. The project is due to
commence in 2015, and at present the detailed planning is being
undertaken.
On 10 January 2014 and 28 February 2014 the Company completed
two successful share placings raising gross proceeds of US$23
million (GBP13.89 million). This provides additional working
capital to the Group and also provides the initial capital required
to progress the Group's capital enhancement plans.
The Directors anticipate that whilst the Group may seek to raise
further finance in the future, it now has access to sufficient
funding for its immediate needs. The Group expects to have
sufficient cash flow from its forecast production to finance its
ongoing operational requirements and to, at least in part, fund the
future capital requirements of the Group.
On this basis the Directors have therefore concluded that it is
appropriate to prepare the financial statements on a going concern
basis.
Audit opinion
The auditors have not qualified the audit report but have
referred to the importance of the valuation of the Karasuyskoye ore
fields, the emphasis of matter paragraph from the audit report is
reproduced below, see note 9.
In forming our opinion on the financial statements, which is not
modified, we have considered the adequacy of the disclosures in the
notes to the financial statements concerning the outcome of the
licence application at Karasuyskoye. During the year the Group
acquired the geological data at Karasuyskoye for US$27.5 million
and has applied for but not yet been granted a mining licence over
this area. In the event that the licence is granted to another
party, the Group would need to negotiate the sale of the data to
the successful applicant which may be at a lower value than the
carrying value. The ultimate outcome of this matter cannot
presently be determined.
Consolidated statement of profit or loss
year ended 31 December 2013
Reclassified
Notes 2013 US$000 2012 US$000
------------------------------------- ----- ---------------------- --------------------
Revenue 42,395 38,913
Cost of sales (32,076) (30,519)
Impairment of inventory 3 - (5,638)
------------------------------------- ----- ---------------------- --------------------
Gross profit 10,319 2,756
Administrative expenses (16,475) (9,464)
Impairment - Akmola investment - (3,553)
Tailings dam leak 9,252 (10,261)
Operating profit/(loss) 3,096 (20,522)
Finance income 1 244
Foreign exchange loss (413) (240)
Finance expense (1,515) (885)
------------------------------------- ----- ---------------------- --------------------
Profit/(loss) before taxation 1,169 (21,403)
Taxation credit/(charge) 5 358 (740)
Profit/(loss) attributable to equity
holders of the parent 1,527 (22,143)
------------------------------------- ----- ---------------------- --------------------
Profit/(loss) per ordinary share
------------------------------------- ----- ---------------------- --------------------
Basic & Diluted 0.15c (2.36)c
------------------------------------- ----- ---------------------- --------------------
Consolidated statement of profit or loss and other comprehensive
income
year ended 31 December 2013
2013 2012
US$000 US$000
--------------------------------------------------------- ------ --------
Profit/(loss) for the year 1,527 (22,143)
Currency translation differences arising on translations
of foreign operations items which will or may be
reclassified to profit or loss (763) (1,257)
--------------------------------------------------------- ------ --------
Total comprehensive income/(loss) attributable to
equity holders of the parent 764 (23,400)
--------------------------------------------------------- ------ --------
Consolidated statement of financial position
year ended 31 December 2013
Company number 5048549 Notes 2013 US$000 2012 US$000
Non-current assets
Intangible assets 27,157 -
Property, plant and equipment 8 44,357 40,814
Trade and other receivables 381 421
Deferred tax asset 1,145 556
Restricted cash 301 384
-------------------------------- ----- --------------------- ------------------
73,341 42,175
-------------------------------- ----- --------------------- ------------------
Current assets
Inventories 9,354 13,379
Trade and other receivables 5,446 4,288
Cash and cash equivalents 2,067 2,504
-------------------------------- ----- --------------------- ------------------
16,867 20,171
-------------------------------- ----- --------------------- ------------------
Total Assets 90,208 62,346
-------------------------------- ----- --------------------- ------------------
Current Liabilities
Trade and other payables (11,512) (3,762)
Other financial liabilities (239) (229)
Current tax payable (558) (332)
Provisions (647) (10,774)
Borrowings (894) (10,065)
-------------------------------- ----- --------------------- ------------------
(13,850) (25,162)
-------------------------------- ----- --------------------- ------------------
Net current assets/liabilities 3,017 (4,991)
-------------------------------- ----- --------------------- ------------------
Non-current liabilities
Other financial liabilities (1,287) (1,333)
Provisions (6,705) (6,549)
Borrowings (10,000) -
-------------------------------- ----- --------------------- ------------------
(17,992) (7,882)
-------------------------------- ----- --------------------- ------------------
Total liabilities (31,842) (33,044)
-------------------------------- ----- --------------------- ------------------
Net assets 58,366 29,302
-------------------------------- ----- --------------------- ------------------
Equity
Share capital 2,635 1,684
Share premium 115,594 88,245
Merger reserve (282) (282)
Currency translation reserve (8,841) (8,078)
Accumulated losses (50,740) (52,267)
-------------------------------- ----- --------------------- ------------------
Total equity 58,366 29,302
-------------------------------- ----- --------------------- ------------------
Consolidated statement of changes in equity
year ended 31 December 2013
Currency
Share Share Merger Other Translation Accumulated
Capital Premium Reserve Reserves Reserve Losses Total
US$000 US$000 US$000 US$000 US$000 US$000 US$000
---------------- ------------ --------------- -------- -------------- -------------- -------------- -----------
1 January 2012 1,310 76,914 (282) 535 (6,821) (30,659) 40,997
---------------- ------------ --------------- -------- -------------- -------------- -------------- -----------
Loss for the
year - - - - - (22,143) (22,143)
Other
comprehensive
loss - - - - (1,257) - (1,257)
---------------- ------------ --------------- -------- -------------- -------------- -------------- -----------
Total
comprehensive
loss - - - - (1,257) (22,143) (23,400)
---------------- ------------ --------------- -------- -------------- -------------- -------------- -----------
Lapsed share
options - - - (535) - 535 -
Shares issued
(note
26) 374 11,862 - - - - 12,236
Issue costs - (531) - - - - (531)
---------------- ------------ --------------- -------- -------------- -------------- -------------- -----------
31 December
2012 1,684 88,245 (282) - (8,078) (52,267) 29,302
---------------- ------------ --------------- -------- -------------- -------------- -------------- -----------
Profit for the
year - - - - - 1,527 1,527
Other
comprehensive
loss - - - - (763) - (763)
---------------- ------------ --------------- -------- -------------- -------------- -------------- -----------
Total
comprehensive
loss - - - - (763) 1,527 764
---------------- ------------ --------------- -------- -------------- -------------- -------------- -----------
Shares issued
on conversion
of loan notes
(note
26) 951 27,590 - - - - 28,541
Issue costs - (241) - - - - (241)
---------------- ------------ --------------- -------- -------------- -------------- -------------- -----------
31 December
2013 2,635 115,594 (282) - (8,841) (50,740) 58,366
---------------- ------------ --------------- -------- -------------- -------------- -------------- -----------
Consolidated statement of cashflows
year ended 31 December 2013 Notes 2013 US$000 2012 US$000
------------------------------------------- ------ ---------------------- ------------------
Net cash inflow/(outflow) from operating
activities 7,304 (9,941)
--------------------------------------------------- ---------------------- ------------------
Investing activities
Interest received 1 31
Proceeds on disposal of property, plant
and equipment - 416
Purchase of property, plant and equipment (7,471) (10,469)
Akmola Gold advances and prepayment
fees - (656)
Proceeds from Ognevka liquidation - 1,500
Restricted cash - (145)
--------------------------------------------------- ---------------------- ------------------
Net cash used in investing activities (7,470) (9,323)
--------------------------------------------------- ---------------------- ------------------
Financing activities
Proceeds on issue of shares - 12,236
Issue costs (241) (531)
Drawdown of bank loans - 10,065
Loan from related party 894 -
Interest paid (924) (765)
Repayment of bank loans - (1,000)
--------------------------------------------------- ---------------------- ------------------
Net cash inflow from financing activities (271) 20,005
--------------------------------------------------- ---------------------- ------------------
Increase in cash and cash equivalents (437) 741
--------------------------------------------------- ---------------------- ------------------
Cash and cash equivalents at beginning
of the year 2,504 1,763
--------------------------------------------------- ---------------------- ------------------
Cash and cash equivalents at end of
the year 2,067 2,504
--------------------------------------------------- ---------------------- ------------------
Notes
1. General information
GoldBridges Global Resources Plc (the "Company") is a Company
incorporated in England and Wales under the Companies Act 2006. In
January 2014 the Company changed its name from Hambledon Mining PLC
to Goldbridges Global Resources PLC. The address of its registered
office, and place of business of the Company and the subsidiaries
(the "Group") is set out within the Company information on page 49
of this annual report. The principal activities of the Group and
Company are set out on page 13 and, the strategic review within
this annual report.
2. Basis of preparation of financial information
The financial information set out above, which was approved by
the Board on 16 June 2014, has been compiled in accordance with
International Financial Reporting Standards ("IFRS"), but does not
contain sufficient information to comply with IFRS. The Company
expects to distribute its full financial statements that comply
with IFRS in June 2014.
The financial information set out above does not constitute the
Company's statutory accounts for the year ended 31 December 2013
but is extracted from those accounts. The Company's statutory
accounts for the year ended 31 December 2013 will be filed with the
Registrar of Companies following the Company's annual general
meeting. The independent auditors' report on those accounts was
unqualified, but did draw attention to a matter by way of emphasis
without qualifying those accounts, it did not contain any statement
under section 498(2) or (3) of the Companies Act 2006.
The financial statements have been prepared under the historical
cost convention. The accounting policies are consistent with those
adopted and disclosed in the Group's annual financial statements
for the year ended 31 December 2012.
The Directors have elected to present for the first time the
Company's financial statements in US Dollars in order to make them
comparable to the Group financial statements and the financial
statements of its peers. This is a change from prior years when the
financial statements were presented in Pound Sterling. The change
represents a change in accounting policy and has been applied
retrospectively.
The comparative figures between cost of sales and administrative
expenses have been re-analysed as the Directors are of the opinion
that this gives a fairer and more comparable presentation of the
results.
Copies of the Company's audited statutory accounts for the
period ended 31 December 2013 will be available at the company's
website at www.goldbridgesplc.com, promptly after the release of
this preliminary announcement and a printed version will be
dispatched to shareholders shortly. The Board approved this
announcement on 16 June 2014.
3. Revenue
Continuing operations 2013 2012
$000 $000
------------------------- ------- -------
Sale of gold and silver 42,395 38,913
------------------------- ------- -------
Included in revenues from sale of gold and silver are revenues
of US$42,395,000 (2012: US$38,769,000) which arose from sales to
the Group's largest customer.
4. Tailings dam leak
A Provision was set up in order to provide for the cost
associated with the Tailings Dam leak and an update is provided
below:
Provision Paid in Change in Currency Provision
b/f 2013 Translation c/Fwd
$000 $000 Provision
------------------------- --------- ------- ---------- ------------------- ---------------
Environmental and social
obligations 1,071 (771) 46 (16) 330
Fines and penalties 9,400 - (9,298) (102) -
------------------------- --------- ------- ---------- ------------------- ---------------
10,471 (771) (9,252) (118) 330
------------------------- --------- ------- ---------- ------------------- ---------------
Background
In 2011, tailings dam 3 utilised by a Group company in
Sekisovskoye for its mining operations suffered an industrial water
leak. This resulted in pollution of the environment principally to
the Sekisovka river and its surrounding environment. It was
estimated by an independent ecological company that the damage to
the environment amounted to the equivalent of US$3.8m, (being
700,214,000 Tenge). A direct action plan was presented to the
department responsible being, Irtysh Ecology department of the
Ministry of the Environment.
In addition the Group paid US$3.9 million in penalties in 2012
and completed substantially all the measures on environment
rehabilitation to make good the local environment.
The Group is committed to the development of improved waste
handling facilities to prevent a reoccurrence of the tailings dam
incident the costs of which were already included in its
infrastructure development plan.
As at January 2014, 13 out of 19 planned environmental recovery
activities were completed, their total cost was US$5.3m (being
815,747,000 Tenge). The total cost of unfinished actions is
US$330,000 (being 51,067,072 Tenge). This was confirmed by an
independent expert, who further concluded that no further remedial
action is required, subject to completion of the agreed plan.
In addition, during 2012 the Irtysh Ecology department of the
Ministry of the Environment appealed through the courts and argued
that a higher level of fines and obligations as currently imposed
should be levied on the Company. This amounted to US$9.4M (being
1,429,000,000 Tenge). This was based on the argument that the
environmental damage could not be directly measured and an indirect
measure of calculating the damage should be used. This argument was
rejected on appeal in March 2014 and as a consequence the fine was
cancelled. Further details are provided on page 5 of the Strategic
report.
As a result of the tailings dam leak, the Group has also
contracted with the Government of the Republic of Kazakhstan to
spend an additional US$4.1 million on the construction of a paste
plant which is not included in the provision but is set out in note
29 - "Commitments and contingencies". Of this amount a total of
US$266,937 has already been incurred prior to 31 December 2013. The
Company has until the end of 2015 to fulfil this obligation.
5. Taxation
2012 2012
--------------------------------------- ----- ----
$000 $000
--------------------------------------- ----- ----
Current taxation 250 332
Deferred taxation (608) 408
--------------------------------------- ----- ----
Total taxation charge/(benefit) (358) 740
--------------------------------------- ----- ----
The current taxation charge for the year ended 31 December 2013
arose in one of the Group's subsidiaries in Kazakhstan which
recognised taxable profits for the year and had utilised all its
brought forward tax losses from previous years.
6. Dividends
The Directors do not recommend a dividend for the year (2012:
nil) and the loss for the year has been added to accumulated
losses.
7. Loss per ordinary share
The calculation of basic and diluted earnings per share is based
on profit for the financial year of US$1,527,000 (2012: loss of
US$22,143,000).
The weighted average number of ordinary shares for calculating
the basic profit/(loss) in 2013 and 2012 is shown below. There were
no potential ordinary shares outstanding at the reporting date
(2012: Nil) and as such the basic and diluted earnings per share
are the same.
2013 2012
Basic and diluted 1,003,707,844 938,491,844
8. Post reporting date events
Equity raising
On 10 January 2014 the Company completed a placing raising
GBP1.93m (US$3.2m), through a placing of 97,972.000 new shares at a
price of 1.975 pence per share. In addition on 28 February 2014 the
Company raised gross proceeds of GBP11.96m (US$19.8m), through a
placing of 550,000,000 shares at a price of 2.175 pence per share.
The total number of shares following the placing of the shares is
2,211,342,130.
Tailings dam fine
During 2012 the Irtysh Ecology department of the Ministry of the
Environment appealed through the courts and argued that a higher
level of fines and obligations then currently imposed should be
levied on the Company. This amounted to US$9.4M (being
1,429,000,000 Tenge). This was based on the fact that the
environmental damage could not be directly measured and an indirect
measure of calculating the damage should be used. In March 2014
this argument was rejected by the courts on the basis that the
damage was indeed measurable reliably through the direct method and
as such the court action was dismissed. Indeed the court commented
that the costs already paid exceeded the previous estimate agreed
with the department of 700,214,000 Tenge, and ordered the
department to meet the legal costs of the court amounting to
137,000 Tenge. Although the department does have the right to
appeal within 6 months of the judgement the Directors are of the
opinion that the possibility of this is remote. The provision in
relation to the finalisation of works to complete the outstanding
rehabilitation measures has been adjusted accordingly resulting in
a write back of the provision of US$9.3m.
Akmola
In late 2013, subsequent to the termination of the proposed
Akmola Gold acquisition, the Company successfully sued Akmola Gold
for US$2,000,000, the amount it had previously advanced, and it
agreed to be repaid by 1 December 2013. In February 2014 The Appeal
Board of Astana upheld the decision made by the Specialised
Interregional Economic Court of Astana in favour of the Company.
The Company at present has a lien over the assets of Akmola Gold
LLP and will take all appropriate measures for enforcement of the
court decision.
Currency devaluation
On 11 February 2014 the Republic of Kazakhstan National Bank
declared a 20% devaluation of Tenge. The National Bank expects a
new exchange rate to be around 300 Tenge per British Pound. The
management are of the opinion this will have a positive impact on
the Group as all revenues are generated in US dollars. They are
currently quantifying the impact.
9 Intangible Assets
2013 US$ '000
------------------ --------------
Cost
------------------ --------------
1 January 2013 -
------------------ --------------
Additions 27,500
------------------ --------------
31 December 2013 27,500
------------------ --------------
Amortisation
------------------ --------------
1 January 2013 -
------------------ --------------
Charge 343
------------------ --------------
31 December 2013 343
------------------ --------------
31 December 2012 -
------------------ --------------
31 December 2013 27,157
------------------ --------------
The intangible assets relate to the historic geological
information pertaining to the Karasuyskoye ore fields. The ore
fields are located in close proximity to the current open pit and
underground mining operations of Sekisovskoye. The consideration
was satisfied by the issue of an unsecured convertible loan note of
GBP17,250,000 to African Resources Limited, which made the payment
to Hydrogeology LLP to acquire the asset on behalf of the Group.
The loan note was subsequently converted into ordinary shares in
the company.
The value of the geological data purchased is, in the opinion of
the Directors, the value that would have been incurred if the
drilling had been undertaken by a third party (or internally). The
Directors have determined that the value of this assets should be
amortised over 20 years.
The Group is in the process of obtaining the mining rights in
relation to the area covered by the data. However, the licensing
tender process has not yet commenced and there is no guarantee that
the licence will be granted. In the event the licence is not
granted to the Group, the Company would seek to negotiate a
disposal of the asset to the successful licence applicant.
In addition to the cost capitalised significant expenses
amounting to US$2.6m were incurred in 2013 in relation to
negotiating and securing the Karasuyskoye contract. These costs did
not meet capitalisation criteria and were expensed as incurred.
10. Notice of Annual General Meeting
The AGM will be held at the offices of BDO LLP, 55 Baker Street,
London W1U 7EU on Monday 30 June 2014 at 11.15am. The notice of
meeting and resolutions were issued on 6 June 2014 and are
available on the Company's website www.goldbridgesplc.com.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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