TIDMGEO
RNS Number : 8089I
Georgian Mining Corporation
22 June 2017
Georgian Mining Corporation
22 June 2017
Final results and Notice of AGM
Georgian Mining Corporation ('GEO' or the 'Company') is pleased
to announce its final results for the 12 months ended 31 December
2016. The Company also announces that its Annual General Meeting
('AGM') will be held at The Washington Mayfair Hotel, 5 Curzon
Street, London, W1J 5HE, at 2:30 p.m. BST on 21 July 2017.
Highlights:
-- Work conducted which has identified that the Kvemo Bolnisi
('KB') Copper and Gold Project has the potential to host large
scale epithermal gold-copper mineralisation
-- Exploration target of >50Mt of copper and gold identified
-- Established a first mover advantage as a Tethyan Belt play in Georgia
-- Implementing a three-phase strategy to deliver on exploration
target and build a major copper and gold producer
-- Phase 1 achieved and exceeded with initial JORC resource of
2.22 Mt @ 0.8% Cu and 0.1 g/t Au identified, positioning GEO to
achieve proof-of-concept production in 2017
-- Raised GBP5.5m via an oversubscribed, nil-discount placing
which has fully funded GEO to achieve 2017 Phase 2 target of
delivering a JORC Resource of 3-5Mt of combined copper-gold
sulphide and gold oxide mineralisation at KB and explore wider
tenure in Georgia
GEO Managing Director Greg Kuenzel said, "2016 was a year which
saw us achieve many major milestones. We have now developed a clear
three-phase strategy to reach our ultimate exploration target of a
50Mt copper-gold deposit and recent drill results from KB continue
to demonstrate the strong potential for this expansive project to
represent a large copper/gold epithermal deposit. Having already
achieved phase one of our strategy to deliver a minimum of 1-2 Mt,
our focus for 2017 is to report a 3-5 Mt copper and gold resource
and to commence low cost production to be processed at our JV
partner's neighbouring operations. Following a recently
oversubscribed placing we are fully funded to achieve our resource
target via additional drilling and we are looking forward to
updating shareholders on what we believe is going to be a really
exciting year during which we hope to establish ourselves as a
prominent Tethyan Belt play."
Chairman statement
In July 2015, we secured an option to earn into a 50% interest
in Georgian Copper & Gold ("GCG"), the holder of an 860 sq km
mining licence in Georgia. This gave us access to an under-explored
copper-gold region along the highly prospective Tethyan Belt with
the potential to host significant mineral deposits similar to our
Joint Venture partner's nearby Madneuli mine, which has to date
produced an estimated 80Mt of copper - gold ore at a reported
average grade of circa 1.0% Cu and 1g/t Au. Almost two years and
10,450 metres of drilling later, our initial assessment of the
potential of our project has been validated and we now believe that
the JV licence area has the potential to host large scale
epithermal gold-copper mineralisation with a number of exciting
identified targets. Our first priority is to realise the full
potential of our initial discovery Kvemo Bolnisi ("KB"), as a
combined gold oxide and copper-gold sulphide deposit and then the
remainder of the JV license area.
To date, $5 million has been contributed by the Company to the
equity of GCG, thereby financing exploration activities and the
Georgian based operations. We expect to meet our full $6 million
obligation in the coming weeks effectively earning our 50% interest
in the operations.
Large Scale, High Grade Epithermal Geological Model
As our geological model for KB and the Bolnisi District evolves,
our strategy must adapt to realise the project's full potential.
When we first commenced work at KB, we hoped to deliver small scale
production by the end of 2016. But our access to an extensive
database of historic work and drilling carried out in the Soviet
era, enabled us to identify several starter pits capable of
providing feedstock for processing at nearby plants owned by our JV
partner. As our exploration drilling got underway the drill results
at KB East exceeded our expectations by repeatedly intersecting
significant copper and gold mineralisation. Resource drilling has
exposed a suite of mineralisation styles typical of epithermal
systems, beginning at surface with outcropping heap leachable oxide
gold mineralisation overlying an enriched (supergene) high-grade
chalcocite copper blanket. This extends into copper-gold sulphide
mineralisation hosted in breccia pipes that are surrounded by lower
grade bulk tonnage potential copper-gold sulphides and high-grade
sheeted pyrite-gold epithermal vein-type mineralisation.
Breccia-type sulphide mineralisation with grades in excess of 20%
Cu now extend down to a drill-indicated 200m and remains open at
depth.
Our exploration activities increasingly demonstrate that KB has
the characteristics of a large epithermal copper-gold system with
high-grade areas, as well as lower grade bulk tonnage potential.
This enables us to build a geological model for KB which includes
an exploration target in excess of 50Mt of copper and gold ores
such as exists nearby at Madneuli. The size of this opportunity has
grown over the last eighteen months of exploration work. Other
analogues along the Tethyan Belt encourage our ambition.
We intend to prove up the model and build a new copper and gold
producer
We are developing a three-phase program to test our 50Mt
exploration target. In Phase 1, KB will deliver 'proof of concept'
copper and gold production using our JV Partner's existing
processing infrastructure. This has multiple benefits: it de-risks
the project as it enhances the processing route, provides
non-dilutive cash flow to fund additional exploration, and
strengthens our relationship with our partner. We set a Phase 1
objective to delineate a minimum of 1 to 2Mt of copper-gold ore
feedstock to provide for this initial production.
In April 2017 we announced an initial JORC resource of 2.22 Mt @
0.8% Cu and 0.1 g/t Au, which achieved our initial objective for
Phase 1 and we plan to commence the negotiation of a processing
agreement with our JV partner in the near future. An MoU has
previously been agreed with JSC RMG Gold and JSC RMG Copper
(together 'RMG'), our partner's production company, for mining and
processing arrangements for the future production of precious and
base metal ores mined from our licence area. Access to RMG's
processing facilities will significantly reduce capital expenditure
requirements, fast track production and provide known and agreed
contract mining and processing costs.
Phase 2 is now underway, and on track to be completed in 2017.
In Phase 2 our objective is to delineate 3 to 5Mt of combined
copper-gold sulphide and gold oxide mineralisation and at the same
time test the epithermal characteristics of the deposit. As part of
Phase 2, resource development drilling is ongoing across three
zones. At Gold Zone 1 a maiden resource of 52,000t @ 1.92g/t Au has
already been delineated, however only the top 10m of the zone has
to date been tested. Both the base of the oxide and the extent of
the gold mineralisation are yet to be established. Similarly, only
a small part of the large target that we have identified at Gold
Zone 2 has so far been defined. Current drilling at Gold Zone 2 is
focused on establishing a first resource of 1Mt @ >1g/t Au. An
updated resource including both gold zones is expected in the near
term but importantly gold and copper mineralisation remains open in
all directions. Our Phase 2 exploration program is fully
funded.
At Gold Zone 2, in addition to the gold mineralisation from
surface, recent drilling has intercepted continuous copper
mineralisation from the base of the gold oxide zone to a depth of
200 m. There is continuous gold oxide mineralisation from surface
to the base of the weathering at depths ranging from 20 to 80m,
included an intersection of 24m @1.58 g/t Au from 1m depth, and
further intersections of copper mineralisation. The high-grade
copper sulphide found at the base of the oxides returned 16m @
15.4% Cu from 47m, including 4.95m @ 40.50% Cu, 0.46g/t Au and 55.6
g/t Ag (Drill hole TGD-044). Resource development drilling is
underway principally to extend the gold oxide Resource which
remains open in all directions. This programme is also testing
extensions to copper-gold sulphide mineralisation both at depth
beneath the Gold Zone 2 oxides and the expected link between the
two copper-gold sulphide breccia bodies that have now been drill
defined. 65 drill holes have been completed to date with depths
varying from 20 metres to 120 metres at Gold Zone 2 and a follow up
programme of a further 30 holes for circa 3,250 metres is already
well advanced and generating positive results. As most holes
drilled in the first programme ended in mineralisation, this new
copper-gold zone remains open at depth. The Company's consultants
are preparing the initial JORC (2012) Resource for Gold Zone 2
which should be finalised in July 2017.
The third zone where work is ongoing is Copper Zone 1 which
includes a JORC (2012) optimised in-pit Resource of 1.2Mt @1.03% Cu
@ a 0.4% Cu cut-off within the unconfined estimate of 2.22Mt @ 0.8%
Cu and 0.1 g/t Au @ a 0.3% Cu cut-off. These initial resources
launched discussions with our JV partner for delivery of an initial
1Mt @ 1% Cu-Au sulphide ore for toll treatment at the float plant
at our partner's Madneuli mine. Although work to date has focused
on the three zones as separate areas, results now indicate that
they may either coalesce or blow out at depth to form a large
epithermal copper-gold system which provides the basis for our new
KB geological model and support for our Phase 3 exploration target
of a 50Mt copper-gold deposit.
The Phase 3 exploration will commence immediately upon
completion of Phase 2, and if successful is designed to allow for
the opportunity of the KB project to grow into a stand-alone mine
operation able to support its own plant and associated
infrastructure. This requires us to delineate a 50Mt+ Resource at
KB. While KB is of course our first priority to grow the company,
our large JV license area offers significant scope for additional
gold and copper discoveries. Work on several identified targets has
commenced as part of a wider exploration strategy and we anticipate
further positive news-flow as we explore our portfolio of exciting
projects in Georgia.
Management
We have assembled an experienced Management Team which will be
expanded as further skills and resources are required.
The appointment of Dr. Neil O'Brien and Mr. Peter Damouni as
Non-Executive Directors has significantly strengthened our Board.
They bring wide and deep experience in developing and financing
mining projects. Dr. O'Brien is also a leading authority on geology
of the Tethyan Belt.
In March 2017, I joined the Board as Non-Executive Chairman and
Mr. Laurence Mutch was appointed as a Non-Executive Director. At
this time, Non-Executive Director Roderick McIllree stepped down
from the board to pursue his other business interests and
Non-Executive Chairman Michael Hutchinson retired. We would like to
thank them both for their stalwart efforts over the years and wish
them the best for their future endeavors.
In addition to the above, the Company is able to access highly
experienced outside consultants specialised in geology, Resource
estimation, mining and metallurgy to further strengthen our
technical capabilities.
Financial Results
As an exploration and development group which has no revenue we
are reporting a loss for the twelve months ended 31 December 2016
of GBP5,645,734 (2015: GBP653,854), which is in line with our
budget. The loss includes a one-off charge related to the
impairment of the Company's Austrian projects of GBP3,937,375.
The Group's cash position at the end of the period was
GBP1,659,314. Post period end, the Company successfully raised
GBP5,463,942 million by way of a placing of 34,149,638 new ordinary
shares of no par value in the capital of the Company. The funds
raised will enable the Company to expand the resource development
at the Kvemo Bolnisi copper and gold project in Georgia.
Outlook
We have met several major milestones at both project and
corporate levels during the year under review. As our three-phase
plan has been developed and is now in place, GEO's exploration
momentum should build in the year ahead and beyond. We are on track
to complete the $6 million obligation for our 50% interest in GCG,
and to achieve our resource development objectives at KB. Drill
results consistently reaffirm and strengthen our confidence that we
have a large copper-gold epithermal deposit on our hands, which
should join the ranks of the many profitable copper-gold mine
operations along the Tethyan Belt.
Our twin objectives for 2017 are to report a 3 to 5 Mt copper
and gold resource and to commence low cost production to be
processed at our JV partner's neighbouring operations. We are on
course to meet both objectives and with GBP5.5m raised via the
recently oversubscribed private placement and expected revenues
from ore sales, we are well funded for additional drilling,
follow-up work and initial investigation of new targets.
This is proving an active and productive year as we work towards
our 50Mt+ target to transform Georgian into a major European copper
and gold Developer and Producer.
Finally, I would like to thank the Board and Advisors for all
their hard work and commitment during what has been a very
successful year. We are excited by the opportunity for Georgian to
play a key role in developing the highly prospective mineral
potential of Georgia to the benefit our Shareholders, the local
community and the country as a whole. I look forward to providing
regular updates on our progress as we evolve from early stage
Exploration to significant mineral Production.
Anthony Frizelle
Chairman
21 June 2017
STATEMENTS OF FINANCIAL POSITION
As at 31 December 2016
Group
----------------------------
Note 2016 2015
GBP GBP
------------------------------- ----- ------------- -------------
Non-Current Assets
Property, plant and equipment 7 131,968 7,154
Intangible assets 8 8,612,883 10,399,265
8,744,851 10,406,419
------------------------------- ----- ------------- -------------
Current Assets
Trade and other receivables 9 416,206 54,497
Cash and cash equivalents 10 1,659,314 281,671
------------------------------- ----- ------------- -------------
2,075,520 336,168
------------------------------- ----- ------------- -------------
Total Assets 10,820,371 10,742,587
------------------------------- ----- ------------- -------------
Current Liabilities
Trade and other payables 11 306,118 167,940
------------------------------- ----- ------------- -------------
Total Liabilities 306,118 167,940
------------------------------- ----- ------------- -------------
Net Assets 10,514,253 10,574,647
------------------------------- ----- ------------- -------------
Equity attributable to owners
of the Parent
Share capital 12 - -
Share premium 12 33,653,273 29,090,348
Reverse acquisition reserve (18,845,147) (18,845,147)
Other reserves 13 838,470 (442,370)
Retained losses (8,772,601) (3,274,475)
------------------------------- ----- ------------- -------------
Total equity attributable
to owners of the Parent 6,873,995 6,528,356
------------------------------- ----- ------------- -------------
Non-controlling interest 3,640,258 4,046,291
------------------------------- ----- ------------- -------------
Total Equity 10,514,253 10,574,647
------------------------------- ----- ------------- -------------
STATEMENTS OF COMPREHENSIVE INCOME
For the year ended 31 December 2016
Group
----------------------------
Note Year ended Year ended
31 December 31 December
2016 2015
Continuing Operations GBP GBP
--------------------------------------- ----- ------------- -------------
Revenue 3,758 339
Cost of sales - -
--------------------------------------- ----- ------------- -------------
Gross profit 3,758 339
--------------------------------------- ----- ------------- -------------
Administration expenses 6 (1,716,301) (654,277)
Other gains / (losses) - net 15 4,022 (232)
Operating Loss (1,708,521) (654,170)
--------------------------------------- ----- ------------- -------------
Impairment of intangible assets 8 (3,937,375) -
Finance income 18 162 316
Loss before Taxation (5,645,734) (653,854)
--------------------------------------- ----- ------------- -------------
Income tax 19 - -
--------------------------------------- ----- ------------- -------------
Loss for the year (5,645,734) (653,854)
--------------------------------------- ----- ------------- -------------
Loss attributable to:
* owners of the Parent (5,498,126) (646,789)
* non-controlling interests (147,608) (7,065)
--------------------------------------- ----- ------------- -------------
Loss for the year (5,645,734) (653,854)
--------------------------------------- ----- ------------- -------------
Other Comprehensive Income:
Items that may be subsequently
reclassified to profit or
loss
Exchange differences on translating
foreign operations 763,910 (107,269)
--------------------------------------- ----- ------------- -------------
Total Comprehensive Income (4,881,824) (761,123)
--------------------------------------- ----- ------------- -------------
Attributable to:
* owners of the Parent (4,475,791) (753,908)
* non-controlling interests (406,033) (7,215)
--------------------------------------- ----- ------------- -------------
Total Comprehensive Income (4,881,824) (761,123)
--------------------------------------- ----- ------------- -------------
Earnings per share (pence)
from continuing operations
attributable to owners of
the Parent - Basic & Diluted 20 (9.895) (3.343)
--------------------------------------- ----- ------------- -------------
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
For the year ended 31 December 2016
Attributable to Equity Shareholders
------------------------------------------------------------------
Reverse
Share acquisition Other Retained Non-controlling Total
premium reserve reserves losses Total interest equity
GBP GBP GBP GBP GBP GBP GBP
----------------- ----------- ------------- ---------- ------------ ------------ ---------------- ------------
As at 1 January
2015 25,664,551 (18,845,147) (335,251) (2,627,686) 3,856,467 - 3,856,467
----------------- ----------- ------------- ---------- ------------ ------------ ---------------- ------------
Loss for the
year - - - (646,789) (646,789) (7,065) (653,854)
----------------- ----------- ------------- ---------- ------------ ------------ ---------------- ------------
Other
comprehensive
income
Exchange
differences
on translating
foreign
operations - - (107,119) - (107,119) (150) (107,269)
----------------- ----------- ------------- ---------- ------------ ------------ ---------------- ------------
Total
comprehensive
income for
the year - - (107,119) (646,789) (753,908) (7,215) (761,123)
----------------- ----------- ------------- ---------- ------------ ------------ ---------------- ------------
Transactions
with owners
Issue of
ordinary
shares 3,100,000 - - - 3,100,000 - 3,100,000
Issue costs (24,203) - - - (24,203) - (24,203)
Share based
payments 350,000 - - - 350,000 - 350,000
Non-controlling
interest
arising
on business
combination - - - - - 4,053,506 4,053,506
----------------- ----------- ------------- ---------- ------------ ------------ ---------------- ------------
Total
transactions
with owners 3,425,797 - - - 3,425,797 4,053,506 7,479,303
----------------- ----------- ------------- ---------- ------------ ------------ ---------------- ------------
As at 31
December
2015 29,090,348 (18,845,147) (442,370) (3,274,475) 6,528,356 4,046,291 10,574,647
----------------- ----------- ------------- ---------- ------------ ------------ ---------------- ------------
As at 1 January
2016 29,090,348 (18,845,147) (442,370) (3,274,475) 6,528,356 4,046,291 10,574,647
----------------- ----------- ------------- ---------- ------------ ------------ ---------------- ------------
Loss for the
year - - - (5,498,126) (5,498,126) (147,608) (5,645,734)
----------------- ----------- ------------- ---------- ------------ ------------ ---------------- ------------
Other
comprehensive
income
Exchange
differences
on translating
foreign
operations - - 1,022,335 - 1,022,335 (258,425) 763,910
----------------- ----------- ------------- ---------- ------------ ------------ ---------------- ------------
Total
comprehensive
income for
the year - - 1,022,335 (5,498,126) (4,475,791) (406,033) (4,881,824)
----------------- ----------- ------------- ---------- ------------ ------------ ---------------- ------------
Transactions
with owners
Issue of
ordinary
shares 4,750,400 - - - 4,750,400 - 4,750,400
Issue costs (187,475) - - - (187,475) - (187,475)
Share Option
charge - - 258,505 - 258,505 - 258,505
Total
transactions
with owners 4,562,925 - 258,505 - 4,821,430 - 4,821,430
----------------- ----------- ------------- ---------- ------------ ------------ ---------------- ------------
As at 31
December
2016 33,653,273 (18,845,147) 838,470 (8,772,601) 6,873,995 3,640,258 10,514,253
----------------- ----------- ------------- ---------- ------------ ------------ ---------------- ------------
CASH FLOW STATEMENTS
For the year ended 31 December 2016
Group
------------------------
Note 2016 2015
GBP GBP
------------------------------- ----- ------------ ----------
Cash flows from operating
activities
Loss before taxation (5,645,734) (653,854)
Adjustments for:
Finance Income (166) (316)
Share option expenses 258,505 -
Share based payments 50,400 -
Depreciation 21,092 2,498
Impairment of intangible
asset 3,937,375
Increase in trade and other
receivables (361,710) (564)
Increase in trade and other
payables 138,176 59,366
Foreign exchange 113,666 (25,284)
Net cash used in operating
activities (1,488,396) (618,154)
------------------------------- ----- ------------ ----------
Cash flows from investing
activities
Interest received 166 316
Purchase of property, plant
& equipment (145,906) (5,992)
Purchase of Intangible
assets (1,500,746) (433,061)
------------------------------- ----- ------------ ----------
Net cash used in investing
activities (1,646,486) (438,737)
------------------------------- ----- ------------ ----------
Cash flows from financing
activities
Proceeds from issue of
shares 4,700,000 498,500
Cost of share issue (187,475) (24,204)
Net cash generated from
financing activities 4,512,525 474,296
------------------------------- ----- ------------ ----------
Net increase / (decrease)
in cash and cash equivalents 1,377,643 (582,595)
Cash and cash equivalents
at beginning of year 281,671 863,801
Exchange differences on
cash and cash equivalents - 465
------------------------------- ----- ------------ ----------
Cash and cash equivalents
at end of year 10 1,659,314 281,671
------------------------------- ----- ------------ ----------
Major non-cash transactions
On 21 January 2016, the Company issued and allotted 63,000,000
new ordinary pre-consolidation shares with no par value at a price
of 0.08p each as consideration for consultants fees.
NOTES TO THE FINANICAL STATEMENTS
For the year ended 31 December 2016
ACCOUNTING POLICIES
1. General Information
On 3 October 2016, Noricum Gold Limited was renamed Georgian
Mining Corporation.
The principal activity of Georgian Mining Corporation ("the
Company") and its subsidiaries (together "the Group") is to
implement its mineral exploration strategy to advance projects
towards defining a sufficient in-situ mineral resource to support a
detailed feasibility study towards mine development and
production.
The Company's shares are traded on AIM, a market operated by the
London Stock Exchange. The Company is incorporated in the British
Virgin Islands and domiciled in the United Kingdom.
The address of its registered office is Craigmuir Chambers, PO
Box 71, Road Town, Tortola, BVI.
2. Summary of Significant Accounting Policies
The principal accounting policies applied in the preparation of
these Financial Statements are set out below. These policies have
been consistently applied to all the periods presented, unless
otherwise stated.
2.1 Basis of Preparation of Financial Statements
The Group Financial Statements have been prepared in accordance
with International Financial Reporting Standards (IFRS) and IFRS
Interpretations Committee (IFRS IC) interpretations as adopted by
the European Union applicable to companies under IFRS. The Group
Financial Statements have been prepared under the historical cost
convention.
The Financial Statements are presented in UK Pounds Sterling
rounded to the nearest pound.
The preparation of financial statements in conformity with IFRSs
requires the use of certain critical accounting estimates. It also
requires management to exercise its judgement in the process of
applying the Group's Accounting Policies. The areas involving a
higher degree of judgement or complexity, or areas where
assumptions and estimates are significant to the Financial
Statements, are disclosed in Note 4.
2.2 Changes in accounting policy and disclosures
(a) New and amended standards mandatory for the first time for
the financial period beginning 1 January 2016
A number of new standards and amendments to standards and
interpretations are effective for the financial period beginning on
or after 1 January 2016 and have been applied in preparing these
Financial Statements.
Amendments to IAS 1 Disclosure Initiative.
Amendments to IAS 1 Presentation of Financial Statements to
address perceived impediments to preparers exercising their
judgement in presenting their financial reports by making the
following changes:
- clarification that information should not be obscured by
aggregating or by providing immaterial information, materiality
considerations apply to all parts of the Financial Statements, and
even when a standard requires a specific disclosure, materiality
considerations do apply;
- clarification that the list of line items to be presented in
these statements can be disaggregated and aggregated as relevant
and additional guidance on subtotals in these statements and
clarification that an entity's share of OCI of equity-accounted
associates and joint ventures should be presented in aggregate as
single line items based on whether or not it will subsequently be
reclassified to profit or loss; and
- additional examples of possible ways of ordering the notes to
clarify that understandability and comparability should be
considered when determining the order of the notes and to
demonstrate that the notes need not be presented in the order so
far listed in paragraph 114 of IAS 1.
Amendments to IAS 16 and IAS 38 Clarification of Acceptable
Methods of Depreciation and Amortisation.
Amendments to IAS 16 Property, Plant and Equipment and IAS 38
Intangible Assets to:
- clarify that a depreciation method that is based on revenue
that is generated by an activity that includes the use of an asset
is not appropriate for property, plant and equipment;
- introduce a rebuttable presumption that an amortisation method
that is based on the revenue generated by an activity that includes
the use of an intangible asset is inappropriate, which can only be
overcome in limited circumstances where the intangible asset is
expressed as a measure of revenue, or when it can be demonstrated
that revenue and the consumption of the economic benefits of the
intangible asset are highly correlated; and
- add guidance that expected future reductions in the selling
price of an item that was produced using an asset could indicate
the expectation of technological or commercial obsolescence of the
asset, which, in turn, might reflect a reduction of the future
economic benefits embodied in the asset.
Amendments to IAS 27 Equity Method in Separate Financial
Statements.
Amendments to IAS 27 Separate Financial Statements to permit
investments in subsidiaries, joint ventures and associates to be
optionally accounted for using the equity method in separate
financial statements.
Amendments to IFRS 11 Accounting for Acquisitions of Interest in
Joint Operations.
Amendments to IFRS 11 Joint Arrangements to require an acquirer
of an interest in a joint operation in which the activity
constitutes a business (as defined in IFRS 3 Business Combinations)
to:
- apply all of the business combinations accounting principles
in IFRS 3 and other IFRSs, except for those principles that
conflict with the guidance in IFRS 11; and
- disclose the information required by IFRS 3 and other IFRSs
for business combinations.
The amendments apply both to the initial acquisition of an
interest in a joint operation, and the acquisition of an additional
interest in a joint operation (in the latter case, previously held
interests are not re-measured).
Annual Improvements 2012-2014 Cycle.
Makes amendments to the following standards:
- IFRS 5 - Adds specific guidance in IFRS 5 for cases in which
an entity reclassifies an asset from held for sale to held for
distribution or vice versa and cases in which held-for-distribution
accounting is discontinued.
- IFRS 7 - Additional guidance to clarify whether a servicing
contract is continuing involvement in a transferred asset, and
clarification on offsetting disclosures in condensed interim
financial statements.
- IAS 9 - Clarify that the high quality corporate bonds used in
estimating the discount rate for post-employment benefits should be
denominated in the same currency as the benefits to be paid.
- IAS 34 - Clarify the meaning of 'elsewhere in the interim
report' and require a cross-reference.
None of the amended standards adopted have had a material impact
on the Financial Statements of the Group.
There are no other new standards and amendments to standards and
interpretations effective for the financial period beginning on or
after 1 January 2016 that are material to the Company and therefore
not applied in preparing these Financial Statements.
(b) New standards, amendments and interpretations in issue but
not yet effective or not yet endorsed and not early adopted
The standards and interpretations that are issued, but not yet
effective, up to the date of issuance of the Financial Statements
are listed below. The Group intends to adopt these standards, if
applicable, when they become effective.
Effective
Standard Impact on initial application date
-------------------- ------------------------------- -----------
IAS 7 (Amendments) Disclosure Initiative *1 January
2017
IAS 12 (Amendments) Recognition of Deferred *1 January
Tax 2017
IFRS 2 (Amendments) Classification and Measurement *1 January
of Share-based payments 2018
IFRS 9 Financial Instruments 1 January
2018
IFRS 15 Revenue from Contracts with 1 January
Customers 2018
IFRS 16 Leases *1 January
2019
(*) Subject to EU endorsement
The Group is evaluating the impact of the new and amended
standards above. The Directors believe that these new and amended
standards are not expected to have a material impact on the Group's
results or shareholders' funds.
The Group does not expect to be significantly affected by the
introduction of IFRS 15 as there is currently immaterial revenue
being generated in the Group. The Directors will continue to assess
this as revenue increases.
2.3 Basis of Consolidation
The Group Financial Statements consolidate the Financial
Statements of Georgian Mining Corporation and the financial
statements of all of its subsidiary undertakings made up to 31
December 2016.
Subsidiaries are entities over which the Group has control. The
Group controls an entity when the Group is exposed to, or has
rights to, variable returns from its involvement with the entity
and has the ability to affect those returns through its power over
the entity. Where an entity does not have returns, the Group's
power over the investee is assessed as to whether control is held.
Subsidiaries are fully consolidated from the date on which control
is transferred to the Group. They are deconsolidated from the date
that control ceases. Below is a summary of subsidiaries of the
Group:
Parent Share
Place company Registered capital Principal
Name of subsidiary of business capital held activities
------------------- ------------- ----------------- --------------- --------- ----------------
Kibe Investments British Georgian Ordinary 100% Dormant
No.2 Limited Virgin Mining shares
Islands Corporation US$12
------------------- ------------- ----------------- --------------- --------- ----------------
Noricum Gold Austria Kibe Investments Ordinary 100% Exploration
AT GmbH No.2 Limited shares
EUR35,000
------------------- ------------- ----------------- --------------- --------- ----------------
GMC Investments British Georgian Ordinary 100% Dormant
Limited Virgin Mining shares
Islands Corporation US$1
------------------- ------------- ----------------- --------------- --------- ----------------
JSC Georgian Georgia GMC Investments Ordinary 50% Exploration
Copper & Limited shares
Gold US$12,000,000
------------------- ------------- ----------------- --------------- --------- ----------------
European United Georgian Ordinary 100% Mining Services
Mining Services Kingdom Mining shares
Limited Corporation GBP1
------------------- ------------- ----------------- --------------- --------- ----------------
Inter-company transactions, balances, income and expenses on
transactions between group companies are eliminated. Profits and
losses resulting from intercompany transactions that are recognised
in assets are also eliminated. Accounting
policies of subsidiaries have been changed where necessary to
ensure consistency with the policies adopted by the Group. JSC
Georgian Copper and Gold is considered as being controlled by the
Company because two of the three directors are appointed by the
Company and GMC Investments Limited has operational and management
control of the entity.
2.4 Going Concern
The Group's business activities, together with the factors
likely to affect its future development, performance and position,
are set out in the Chairman's Report from page 3. In addition, Note
3 to the Financial Statements includes the Group's objectives,
policies and processes for managing its capital; its financial risk
management objectives; and details of its exposure to credit and
liquidity risk.
The Financial Statements have been prepared on a going concern
basis. Although the Group's assets are not generating steady
revenue streams, an operating loss has been reported and an
operating loss is expected in the year ended 31 December 2017, the
Directors believe that the Group has sufficient funds to meet its
immediate working capital requirements and undertake its targeted
operating activities over the next 12 months from the date of
approval of these Financial Statements. In May 2017, the Group
raised GBP5.5m as a result of an issue of ordinary shares in the
Company. As a result, the Group has financial resources which, the
Directors believe, will be sufficient to fund the Group's committed
expenditure both operationally and on various exploration projects
for this time period. However, in order to complete other
exploration work over the life of existing projects and as
additional projects are identified and also to meet minimum spend
requirements for existing projects after 12 months from the date of
approval of these Financial Statements, additional funding will be
required. The amount of funding cannot be reliability estimated at
the point of approval of these Financial Statements and the Group
will be required to raise additional funds either via an issue of
equity or through the issuance of debt. The Directors are confident
that funds will be forthcoming if and when they are required. In
addition, the Group will be able to significantly reduce its
working capital requirements and will not authorise expenditure on
exploration if funds are not sufficient.
The Directors have, in the light of all the above circumstances,
a reasonable expectation that the Group has adequate resources to
continue in operational existence for the foreseeable future. Thus
they continue to adopt the going concern basis of accounting in
preparing the Group Financial Statements.
2.5 Segment Reporting
Operating segments are reported in a manner consistent with the
internal reporting provided to the chief operating decision-maker.
The chief operating decision-maker, who is responsible for
allocating resources and assessing performance of the operating
segments, has been identified as the Board of Directors that makes
strategic decisions.
Segment results, include items directly attributable to a
segment as well as those that can be allocated on a reasonable
basis.
2.6 Foreign Currencies
(a) Functional and presentation currency
Items included in the Financial Statements of the Group's
entities are measured using the currency of the primary economic
environment in which the entity operates (the 'functional
currency'). The functional currency of the Company is Sterling, the
functional currency of the BVI subsidiaries is US Dollars, the
functional currency of the Austrian subsidiary is Euros and the
functional currency of the Georgian subsidiary is Lari. The
Financial Statements are presented in Pounds Sterling, rounded to
the nearest pound, which is the Company's functional and the
Group's presentation currency.
(b) Transactions and balances
Foreign currency transactions are translated into the functional
currency using the exchange rates prevailing at the dates of the
transactions or valuation where such items are re-measured. Foreign
exchange gains and losses resulting from the settlement of such
transactions and from the translation at year-end exchange rates of
monetary assets and liabilities denominated in foreign currencies
are recognised in the Income Statement.
(c) Group companies
The results and financial position of all the Group's entities
(none of which has the currency of a hyperinflationary economy)
that have a functional currency different from the presentation
currency are translated into the presentation currency as
follows:
-- assets and liabilities for each statement of financial
position presented are translated at the closing rate at the date
of that statement of financial position;
-- income and expenses for each statement of comprehensive
income presented are translated at average exchange rates (unless
this average is not a reasonable approximation of the cumulative
effect of the rates prevailing on the transaction dates, in which
case income and expenses are translated at the dates of the
transactions); and
-- all resulting exchange differences are recognised in other
comprehensive income where material.
On consolidation, exchange differences arising from the
translation of the net investment in foreign entities, and of
monetary items receivable from foreign subsidiaries for which
settlement is neither planned nor likely to occur in the
foreseeable future, are taken to other comprehensive income. When a
foreign operation is sold, such exchange differences are recognised
in the income statement as part of the gain or loss on sale.
2.7 Intangible Assets
Exploration and evaluation assets
The Group recognises expenditure as exploration and evaluation
assets when it determines that those assets will be successful in
finding specific mineral resources. Expenditure included in the
initial measurement of exploration and evaluation assets and which
are classified as intangible assets, relate to the acquisition of
rights to explore, topographical, geological, geochemical and
geophysical studies, exploratory drilling, trenching, sampling and
activities to evaluate the technical feasibility and commercial
viability of extracting a mineral resource. Capitalisation of
pre-production expenditure ceases when the mining property is
capable of commercial production.
Exploration and evaluation assets are recorded and held at
cost.
Exploration and evaluation assets are assessed for impairment
annually or when facts and circumstances suggest that the carrying
amount of an asset may exceed its recoverable amount. The
assessment is carried out by allocating exploration and evaluation
assets to cash generating units, which are based on specific
projects or geographical areas.
Whenever the exploration for and evaluation of mineral resources
in cash generating units does not lead to the discovery of
commercially viable quantities of mineral resources and the Group
has decided to discontinue such activities of that unit, the
associated expenditures are written off to the Income
Statement.
2.8 Property, Plant and Equipment
Property, plant and equipment is stated at historical cost less
accumulated depreciation and any accumulated impairment losses.
Depreciation is provided on all property, plant and equipment to
write off the cost less estimated residual value of each asset over
its expected useful economic life on a straight-line basis at the
following annual rates:
Computer equipment - 20 to 50% straight line
Field equipment - 20 to 50% straight line
Vehicles - 20% straight line
All assets are subject to annual impairment reviews. An asset's
carrying amount is written down immediately to its recoverable
amount if the asset's carrying amount is greater than its estimated
recoverable amount.
Subsequent costs are included in the asset's carrying amount or
recognised as a separate asset, as appropriate, only when it is
probable that future economic benefits associated with the item
will flow to the Group and the cost of the item can be measured
reliably. The carrying amount of the replacement part is
derecognised. All other repairs and maintenance are charged to the
Income Statement during the financial period in which they are
incurred.
The asset's residual value and useful economic lives are
reviewed, and adjusted if appropriate, at the end of each reporting
period.
Gains and losses on disposal are determined by comparing the
proceeds with the carrying amount and are recognised within 'Other
net gains / (losses)' in the income statement.
2.9 Impairment of non-financial assets
Assets that have an indefinite useful life, for example,
intangible assets not ready to use, are not subject to amortisation
and are tested annually for impairment. An impairment loss is
recognised for the amount by which the asset's carrying amount
exceeds its recoverable amount. The recoverable amount is the
higher of an asset's fair value less costs to sell and value in
use. For the purposes of assessing impairment, assets are grouped
at the lowest levels for which there are separately identifiable
cash flows (cash generating units).
Non-financial assets that suffered impairment (except goodwill)
are reviewed for possible reversal of the impairment at each
reporting date.
2.10 Financial Assets
Classification
The Group has classified all of its financial assets as loans
and receivables including cash and cash equivalents. The
classification depends on the purpose for which the financial
assets were acquired. Management determines the classification of
its financial assets at initial recognition.
Loans and receivables are non-derivative financial assets with
fixed or determinable payments that are not quoted in an active
market. They are included in current assets. The Group's loans and
receivables comprise trade and other receivables and cash and cash
equivalents in the Statement of Financial Position.
Recognition and measurement
Loans and receivables are initially recognised at fair value
plus transaction costs and are subsequently carried at amortised
cost using the effective interest method.
Impairment
The Group assesses at the end of each reporting period whether
there is objective evidence that a financial asset, or a group of
financial assets, is impaired. A financial asset, or a group of
financial assets, is impaired, and impairment losses are incurred,
only if there is objective evidence of impairment as a result of
one or more events that occurred after the initial recognition of
the asset (a "loss event"), and that loss event (or events) has an
impact on the estimated future cash flows of the financial asset,
or group of financial assets, that can be reliably estimated.
The criteria that the Group uses to determine whether there is
objective evidence of an impairment loss include:
-- significant financial difficulty of the issuer or obligor;
-- a breach of contract, such as a default or delinquency in interest or principal repayments.
The amount of the loss is measured as the difference between the
asset's carrying amount and the present value of estimated future
cash flows (excluding future credit losses that have not been
incurred), discounted at the financial asset's original effective
interest rate. The asset's carrying amount is reduced, and the loss
is recognised in the Statement of Comprehensive Income.
If, in a subsequent period, the amount of the impairment loss
decreases and the decrease can be related objectively to an event
occurring after the impairment was recognised (such as an
improvement in the debtor's credit rating), the reversal of the
previously recognised impairment loss is recognised in the
Statement of Comprehensive Income.
2.11 Cash and Cash Equivalents
Cash and cash equivalents comprise cash at bank and in hand.
2.12 Taxation
Tax is recognised in the Statement of Comprehensive Income,
except to the extent that it relates to items recognised in other
comprehensive income or directly in equity. In this case, the tax
is also recognised in other comprehensive income or directly in
equity, respectively.
There has been no tax credit or expense for the period relating
to current or deferred tax.
2.13 Share Capital
Ordinary shares are classified as equity. Incremental costs
directly attributable to the issue of new shares or options are
shown in equity as a deduction, net of tax, from the proceeds.
2.14 Reverse acquisition reserve
The reverse acquisition reserve arose on the acquisition of Kibe
Investments No. 2 Limited in 2010. There has been no movements in
the reserve since acquisition.
2.15 Share Based Payments
The Group operates a number of equity-settled, share-based
schemes, under which the entity receives services from employees or
third-party suppliers as consideration for equity instruments
(shares, options and warrants) of the Group. The Group may also
issue warrants to share subscribers as part of a share placing. The
fair value of the equity-settled share based payments is recognised
as an expense in the income statement or charged to equity
depending on the nature of the service provided or instrument
issued. The total amount to be expensed or charged in the case of
options is determined by reference to the fair value of the options
or warrants granted:
-- including any market performance conditions;
-- excluding the impact of any service and non-market
performance vesting conditions (for example, profitability or sales
growth targets, or remaining an employee of the entity over a
specified time period); and
-- including the impact of any non-vesting conditions (for
example, the requirement for employees to save).
In the case of shares and warrants the amount charged to the
share premium account is determined by reference to the fair value
of the services received if available. If the fair value of the
services received is not determinable the shares are valued by
reference to the market price and the warrants are valued by
reference to the fair value of the warrants granted as described
previously.
Non-market vesting conditions are included in assumptions about
the number of options or warrants that are expected to vest. The
total expense or charge is recognised over the vesting period,
which is the period over which all of the specified vesting
conditions are to be satisfied. At the end of each reporting
period, the entity revises its estimates of the number of options
that are expected to vest based on the non-market vesting
conditions. It recognises the impact of the revision to original
estimates, if any, in the income statement or equity as
appropriate, with a corresponding adjustment to an other reserve in
equity.
When the warrants or options are exercised, the Company issues
new shares. The proceeds received, net of any directly attributable
transaction costs, are credited to share capital (nominal value)
and share premium when the warrants or options are exercised.
2.16 Trade Payables
Trade payables are obligations to pay for goods or services that
have been acquired in the ordinary course of business from
suppliers. Accounts payable are classified as current liabilities
if payment is due within one year or less (or in the normal
operating cycle of the business if longer). If not, they are
presented as non-current liabilities. Trade payables are recognised
initially at fair value, and subsequently measured at amortised
cost using the effective interest method.
2.17 Operating Leases
Leases of assets under which a significant amount of the risks
and benefits of ownership are effectively retained by the lessor
are classified as operating leases. Operating lease payments are
charged to the income statement on a straight-line basis over the
period of the respective leases.
2.18 Revenue Recognition
Revenue is measured at the fair value of the consideration
received or receivable, and represents amounts receivable for goods
or services supplied in the course of ordinary business, stated net
of discounts, returns and value added taxes. The Group recognises
revenue when the amount of revenue can be reliably measured; when
it is probable that future economic benefits will flow to the
entity; and when specific criteria have been met for the Group's
activities described below.
Revenue is recognised in respect of amounts recharged to project
strategic partners in accordance with their contractual terms.
Revenue is also generated from management and consulting services
to third parties.
2.19 Finance Income
Finance income consists of bank interest on cash and cash
equivalents which is recognised using the effective interest rate
method.
2.20 Trade and Other Receivables
Trade and other receivables are amounts due from third parties
in the ordinary course of business. If collection is expected in
one year or less they are classified as current assets. If not they
are presented as non-current assets.
3. Financial Risk Management
3.1 Financial Risk Factors
The Group's activities expose it to a variety of financial risks
being market risk (including, interest rate risk, currency risk and
price risk), credit risk and liquidity risk. The Group's overall
risk management programme focuses on the unpredictability of
financial markets and seeks to minimise potential adverse effects
on the Group's financial performance.
Market Risk
(a) Foreign currency risks
The Group operates internationally and is exposed to foreign
exchange risk arising from various currency exposures, primarily
with respect to the USD and Georgian Lari against the UK pound.
Foreign exchange risk arises from future commercial transactions,
recognised assets and liabilities and net investments in foreign
operations. The Group negotiates all material contracts for
activities in relation to its subsidiary in USD. The Directors will
continue to assess the effect of movements in exchange rates on the
Group's financial operations and initiate suitable risk management
measures where necessary.
(b) Price risk
The Group is not exposed to commodity price risk as a result of
its operations, which are still in the exploration phase. Other
than insignificant consulting revenue, the only revenue relates to
intra group revenue in respect of recharges which are eliminated on
consolidation. The Directors will revisit the appropriateness of
this policy should the Group's operations change in size or
nature.
The Group has no exposure to equity securities price risk, as it
has no listed equity investments.
(c) Interest rate risk
As the Group has no borrowings, it is not exposed to interest
rate risk on financial liabilities. The Group's interest rate risk
arises from its cash held on short-term deposit, which is not
significant.
Credit Risk
Credit risk arises from cash and cash equivalents as well as
outstanding receivables. Management does not expect any losses from
non-performance of these receivables.
The amount of exposure to any individual counter party is
subject to a limit, which is assessed by the Board. No credit
limits were exceeded during the reporting period, and management
does not expect any losses from non-performance by these
counterparties.
The Group considers the credit ratings of banks in which it
holds funds in order to reduce exposure to credit risk.
Liquidity Risk
In keeping with similar sized mineral exploration groups, the
Group's continued future operations depend on the ability to raise
sufficient working capital through the issue of equity share
capital. The Directors are confident that adequate funding will be
forthcoming with which to finance operations. Controls over
expenditure are carefully managed.
3.2 Capital Risk Management
The Group's objectives when managing capital are to safeguard
the Group's ability to continue as a going concern, in order to
provide returns for shareholders and to enable the Group to
continue its exploration and evaluation activities. The Group has
no debt at 31 December 2016 and defines capital based on the total
equity of the Company being GBP6,431,708. The Group monitors its
level of cash resources available against future planned
exploration and evaluation activities and may issue new shares in
order to raise further funds from time to time.
4. Critical Accounting Estimates and Judgements
The preparation of the Group Financial Statements in conformity
with IFRSs requires Management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amount of expenses during the
year. Actual results may vary from the estimates used to produce
these Financial Statements.
Estimates and judgements are continually evaluated and are based
on historical experience and other factors, including expectations
of future events that are believed to be reasonable under the
circumstances.
Significant items subject to such estimates and assumptions
include, but are not limited to:
Impairment of exploration and evaluation costs
Exploration and evaluation costs have a carrying value at 31
December 2016 of GBP8,612,883 (2015: GBP10,399,265): refer to Note
8 for more information. The Group has a right to renew exploration
licences and the asset is only depreciated once extraction of the
resource commences. Management tests annually whether exploration
projects have future economic value in accordance with the
accounting policy stated in Note 2.7. Each exploration project is
subject to an annual review by either a consultant or senior
company geologist to determine if the exploration results returned
during the year warrant further exploration expenditure and have
the potential to result in an economic discovery. This review takes
into consideration the expected costs of extraction, long term
metal prices, anticipated resource volumes and supply and demand
outlook. In the event that a project does not represent an economic
exploration target and results indicate there is no additional
upside, a decision will be made to discontinue exploration. The
Directors have reviewed the estimated value of each project
prepared by management and have concluded that an impairment of
GBP3,937,375 is required and provided against the exploration
assets.
Share based payment transactions
The Group has made awards of options and warrants over its
unissued share capital to certain Directors and employees as part
of their remuneration package. Certain warrants have also been
issued to shareholders as part of their subscription for shares and
to suppliers for various services received.
The valuation of these options and warrants involves making a
number of critical estimates relating to price volatility, future
dividend yields, expected life of the options and forfeiture rates.
These assumptions have been described in more detail in Note
14.
Control of Georgian Copper and Gold
Judgement is required to determine whether the Group has control
over it's subsidiaries. Georgian Copper and Gold is 50% owned but
management are of the opinion that they control the entity and have
consolidated this entity. The Company is considered to control
Georgian Copper and Gold as a result of the fact that:
- 2 out of 3 board seats are held by Directors of Georgian
Mining Corporation; and
- GMC Investments Limited has operational and management control
of the entity and has ability to approve expenditure.
5. Segmental Information
The Group operates in three geographical areas, the UK, Georgia
and Austria. The Company operates in one geographical area, the UK.
Activities in the UK are mainly administrative in nature whilst
activities in Austria and Georgia relate to exploration and
evaluation work. The reports used by the chief operating decision
maker are based on these geographical segments.
The Group generated revenue of GBP3,758 during the year ended 31
December 2016 (2015: GBP339).
2016 Georgia Austria UK Total
GBP GBP GBP GBP
--------------------------- ---------- ------------ ------------ ------------
Revenue - 1,606 2,152 3,758
Administrative expenses (233,904) (40,338) (1,183,554) (1,457,796)
Foreign exchange 61,313 - (315,796) (254,483)
Loss from operations
per reportable segment (172,591) (38,732) (1,497,198) (1,708,521)
---------- ------------ ------------ ------------
Depreciation 7,112 - 13,980 21,092
Additions to non-current
assets 1,500,746 - - 1,500,746
Impairment to non-current
assets - (3,937,375) - (3,937,375)
Reportable segment
assets 8,805,070 11,630 2,003,671 10,820,371
Reportable segment
liabilities 156,576 10,787 138,755 306,118
--------------------------- ---------- ------------ ------------ ------------
Segment assets and liabilities are allocated based on
geographical location.
2015 Georgia Austria UK Total
GBP GBP GBP GBP
-------------------------- ---------- ---------- ---------- -----------
Revenue - 339 - 339
Administrative expenses (14,447) (30,542) (609,288) (654,277)
Other (losses)/gains
- net (458) 4 - (454)
Foreign exchange - - 222 222
---------- ---------- ---------- -----------
Loss from operations
per reportable segment (14,905) (30,199) (609,066) (654,170)
---------- ---------- ---------- -----------
Depreciation - - 2,498 2,498
Additions to non-current
assets 6,874,808 482,218 586 7,357,612
Reportable segment
assets 6,978,251 3,481,323 283,013 10,742,587
Reportable segment
liabilities 2,032 25,434 140,474 167,940
-------------------------- ---------- ---------- ---------- -----------
A reconciliation of adjusted loss from operations per reportable
segment to loss before tax is provided as follows:
2016 2015
GBP GBP
------------------------------------ ------------ ----------
Loss from operation per reportable
segment (1,708,521) (654,170)
- Finance Income 162 316
- Impairment (3,937,375) -
Loss for the year before taxation (5,645,734) (653,854)
------------------------------------ ------------ ----------
6. Expenses by Nature
2016 2015
GBP GBP
-------------------------------------- ---------- --------
Directors' fees 107,252 111,088
Employee salaries 158,000 12,569
Fees payable to the Company's
auditors for the audit of the
Parent Company and group financial
statements 22,550 19,250
Fees payable to the Company's
auditors for tax and other services 17,646 1,000
Professional, legal and consulting
fees 337,388 172,207
Accounting related services 60,458 -
Insurance 41,139 34,759
Office and administrative expenses 163,405 45,303
Depreciation 21,092 2,498
Travel and subsistence 109,476 46,028
AIM related costs including investor
relations 225,841 153,059
Share option expense 258,505 -
Operations related costs 95,950 -
Other expenses 97,600 56,516
-------------------------------------- ---------- --------
Total administrative expenses 1,716,301 654,277
-------------------------------------- ---------- --------
7. Property, Plant and Equipment
Motor Field Computer Total
Vehicles equipment equipment GBP
GBP GBP GBP
---------------------- ---------- ----------- ----------- --------
Cost
---------------------- ---------- ----------- ----------- --------
As at 1 January 2015 - - 16,939 16,939
Additions - 5,410 583 5,993
----------------------- ---------- ----------- ----------- --------
As at 31 December
2015 - 5,410 17,522 22,932
----------------------- ---------- ----------- ----------- --------
Additions 46,942 60,843 38,121 145,906
----------------------- ---------- ----------- ----------- --------
As at 31 December
2016 46,942 66,253 55,643 168,838
----------------------- ---------- ----------- ----------- --------
Depreciation
---------------------- ---------- ----------- ----------- --------
As at 1 January 2015 - - 13,280 13,280
Charge for the year - - 2,498 2,498
----------------------- ---------- ----------- ----------- --------
As at 31 December
2015 - - 15,778 15,778
----------------------- ---------- ----------- ----------- --------
Charge for the year 4,798 11,032 5,262 21,092
----------------------- ---------- ----------- ----------- --------
As at 31 December
2016 4,798 11,032 21,040 36,870
----------------------- ---------- ----------- ----------- --------
Net book value as
at 31 December 2015 - 5,410 1,744 7,154
----------------------- ---------- ----------- ----------- --------
Net book value as
at 31 December 2016 42,144 55,221 34,603 131,968
----------------------- ---------- ----------- ----------- --------
8. Intangible Assets
Exploration & Evaluation Assets 2016 2015
at Cost and Net Book Value GBP GBP
--------------------------------------- ------------ -----------
Balance as at 1 January 10,399,265 3,045,148
Additions 1,500,746 433,061
Acquired through issue of equity - 350,000
Acquired on acquisition of subsidiary - 2,600,000
Acquired as part of the Shareholder
Agreement (see below) - 4,161,143
Impairment (3,937,375) -
Foreign currency differences 650,247 (190,087)
As at 31 December 8,612,883 10,399,265
--------------------------------------- ------------ -----------
As part of the acquisition of GMC Investments Limited, the Group
entered into a Shareholder Agreement with Caucasian Mining Group
Limited ("CMG"), the partner in JSC Georgian Copper and Gold. The
details of the agreement were such that CMG would transfer the
exploration and mining licenses for the Georgian sites into
Georgian Copper and Gold, which were considered to have a fair
value of US$6m, while the Group would commit to paying the
expenditure requirements on the operations over a two year period
from the date of the licence transfer date of December 2015, which
is also US$6m. As a result, the Group has recognised the fair value
of the licenses of US$6m, which translate to GBP4.2m, as an
exploration and evaluation asset.
Exploration projects Georgia are at an early stage of
development and as at 31 December 2016, no JORC (Joint Ore Reserves
Committee) or non-JORC compliant resource estimates are available
to enable value in use calculations to be prepared. The Directors
therefore undertook an assessment of the following areas and
circumstances which could indicate the existence of impairment:
-- The Group's right to explore in an area has expired, or will
expire in the near future without renewal.
-- No further exploration or evaluation is planned or budgeted for.
-- A decision has been taken by the Board to discontinue
exploration and evaluation in an area due to the absence of a
commercial level of reserves.
-- Sufficient data exists to indicate that the book value will
not be fully recovered from future development and production.
After carrying out the above review and analysis, the board have
decided to fully impair the carried forward costs related to the
Austrian projects. Although the board believe that these assets
still hold value, no expenditure is expected in the near future
therefore the assets have been fully impaired, resulting in a
charge of GBP3,937,375 to profit or loss. The Group is in early
stage discussions with two groups in relation to an earn in, JV or
other type of structure that may see value being obtained however,
none of these discussions are currently at a stage where a value
could be attributable to the sale or development of the asset. As a
result, the asset's carrying value has been fully impaired as at 31
December 2016.
No impairment charge is required at 31 December 2016 in relation
to the exploration activities in Georgia.
9. Trade and Other Receivables
2016 2015
GBP GBP
------------------- -------- -------
VAT receivable 54,196 17,963
Prepayments 16,575 25,062
Other receivables 345,435 11,472
------------------- -------- -------
416,206 54,497
------------------- -------- -------
Trade and other receivables are all due within one year. The
fair value of all receivables is the same as their carrying values
stated above. These assets, excluding prepayments, are the only
form of financial asset within the Group. Together with cash and
cash equivalents.
Other receivables relates to amounts owing from the issue of
shares.
The carrying amounts of the Group's trade and other receivables
are denominated in the following currencies:
2016 2015
GBP GBP
--------------- -------- -------
UK Pounds 399,619 44,444
Euros 3,580 8,188
Georgian Lari 13,007 1,865
--------------- -------- -------
416,206 54,497
--------------- -------- -------
The maximum exposure to credit risk at the reporting date is the
carrying value of each class of receivable mentioned above. The
Group does not hold any collateral as security.
10. Cash and Cash Equivalents
2016 2015
GBP GBP
-------------------------- ---------- --------
Cash at bank and in hand 1,659,314 281,671
-------------------------- ---------- --------
All of the Group's cash at bank is held with institutions with
an AA credit rating.
11. Trade and Other Payables
2016 2015
GBP GBP
------------------ -------- --------
Trade payables 253,006 142,582
Other payables 7,385 -
Accrued expenses 45,727 25,358
306,118 167,940
------------------ -------- --------
12. Share Capital and Share Premium
On 15 December 2010 the shareholders approved the removal of the
Company's authorised share capital and so there is no limit on the
number of shares the Company is authorised to issue. On that date
the shareholders also approved the removal of the nominal value of
the shares, as permitted under local company legislation. As such
all amounts raised are considered to be share premium.
Issued share capital
Group Number Ordinary Share Total
of shares shares premium GBP
GBP GBP
------------------------------------- ---------------- --------- ----------- -----------
At 1 January 2015 969,039,377 - 25,664,551 25,664,551
Issue of new shares - 23
March 2015 239,000,000 - 453,797 453,797
Issue of new shares - 24
March 2015 10,731,707 - 22,000 22,000
Issue of new shares - 31
March 2015 175,000,000 - 350,000 350,000
Issue of new shares - 14
July 2015 1,299,999,980 - 2,600,000 2,600,000
At 31 December 2015 2,693,771,064 - 29,090,348 29,090,348
------------------------------------- ---------------- --------- ----------- -----------
Issue of new shares - 21
January 2016 (1) 1,250,000,000 - 942,500 942,500
Issue of new shares - 21
January 2016 63,000,000 - 50,400 50,400
Issue of new shares - 1
July 2016 (2) 785,714,286 - 1,036,025 1,036,025
5 October 2016 - Consolidation
of shares, 100 shares consolidated
to 1 share (4,744,560,497) - - -
Issue of new shares - 16
December 2016 (3) 32,500,000 - 2,534,000 2,534,000
At 31 December 2016 80,424,854 - 33,653,273 33,653,273
------------------------------------- ---------------- --------- ----------- -----------
(1) Includes issue costs of GBP57,500
(2) Includes issue costs of GBP63,975
(3) Includes issue costs of GBP66,000
On 21 January 2016 the Company raised GBP1,000,000 via the issue
and allotment of 1,250,000,000 new ordinary shares with no par
value at a price of 0.08p each. On the same date the Company issued
and allotted 63,000,000 new ordinary shares with no par value at a
price of 0.08p each as consideration for consultants fees.
On 1 July 2016 the Company raised GBP1,100,000 via the issue and
allotment of 785,714,286 new ordinary shares with no par value at a
price of 0.14p each.
On 16 December 2016 the Company raised GBP2.6 million via the
issue and allotment of 32,500,000 new ordinary shares with no par
value at a price of 8p each.
13. Other Reserves
2016 2015
GBP GBP
-------------------------------------- -------- ----------
Foreign currency translation reserve 579,965 (442,370)
-------------------------------------- -------- ----------
Share option Reserve 258,505 -
-------------------------------------- -------- ----------
838,470 (442,370)
-------------------------------------- -------- ----------
Foreign currency translation reserve - the foreign currency
translation reserve represents the effect of changes in exchange
rates arising from the translating the financial statements of
subsidiary undertakings into the Company's presentation
currency.
Share option Reserve - The share option reserve represents the
fair value of share options and warrants in issue. The amounts
included are recycled to retained earnings on exercise or expiry of
the options and warrants.
14. Share Based Payments
Warrants outstanding at 31 December 2016 have the following
expiry dates and exercise prices:
Shares
--------------------
Exercise
price
in GBP
per
Grant date Expiry date share 2016 2015
-------------- ------------------ --------- ---------- --------
20 July 2015 20 March 2016 0.40 - 800,000
-------------- ------------------ --------- ---------- --------
28 January
2016 21 January 2018 0.13 182,500 -
-------------- ------------------ --------- ---------- --------
1 July 2016 1 July 2018 0.18 55,866 -
-------------- ------------------ --------- ---------- --------
20 July 2016 20 July 2021 0.14 5,000,000 -
-------------- ------------------ --------- ---------- --------
15 November
2016 16 November 2018 0.10 170,000 -
-------------- ------------------ --------- ---------- --------
5,408,366 800,000
--------------------------------- --------- ---------- --------
The fair value of the warrants was determined using the Black
Scholes valuation model. The parameters used are detailed
below:
2016 2016 2016 2016
Warrants Warrants Warrants Warrants
----------- ----------- ----------- -----------
Granted on: 28/01/2016 01/07/2016 20/07/2016 15/11/2016
Life (years) 2 years 2 years 5 years 2 years
Risk free rate 0.09% 0.09% 0.5% 0.09%
Expected volatility 16.75% 25.21% 23.29% 21.53%
Expected dividend - - - -
yield
Marketability discount 20% 20% 20% 20%
Total fair value
(GBP) 168 68,987 188,690 660
------------------------ ----------- ----------- ----------- -----------
The risk free rate of return is based on zero yield government
bonds for a term consistent with the option life.
The movement of options and warrants granted over the year to 31
December 2016 is shown below:
2016 2015
---------------------- --------------------
Weighted Weighted
average average
exercise exercise
price price
Number (GBP) Number (GBP)
---------------------------- ---------- ---------- -------- ----------
As at 1 January 800,000 0.4 - -
Granted 5,408,366 0.14 800,000 0.4
Expired (800,000) 0.4 - -
---------------------------- ---------- ---------- -------- ----------
Outstanding as at 31
December 5,408,366 0.14 800,000 0.004
---------------------------- ---------- ---------- -------- ----------
Exercisable at 31 December 5,408,366 0.14 800,000 0.004
---------------------------- ---------- ---------- -------- ----------
2016 2015
-------------------------------------------------- --------------------------------------------------
Weighted Weighted Weighted Weighted
Weighted average average Weighted average average
Range average remaining remaining average remaining remaining
of exercise exercise life life exercise life life
prices price Number expected contracted price Number expected contracted
(GBP) (GBP) of shares (years) (years) (GBP) of shares (years) (years)
-------------- ---------- ----------- ----------- ------------ ---------- ----------- ----------- ------------
0.1
- 0.2 0.14 5,408,366 4.395 4.395 0.4 800,000 0.25 0.25
-------------- ---------- ----------- ----------- ------------ ---------- ----------- ----------- ------------
No options or warrants were exercised during the period. The
total fair value charged to the statement of comprehensive income
for the year ended 31 December 2016 and included in administrative
expenses was GBP258,505 (2015: GBP nil).
15. Other (losses)/gains - Net
Group
----------------
2016 2015
GBP GBP
------------------------------ ------ ------
Net foreign exchange gains /
(losses) 4,213 222
Other gains/losses (191) (454)
------------------------------ ------ ------
4,022 (232)
------------------------------ ------ ------
16. Employees
Group
-------------------
2016 2015
Staff costs (excluding Directors) GBP GBP
----------------------------------- -------- -------
Salaries and wages 126,429 12,569
Social security costs 31,571 -
158,000 12,569
----------------------------------- -------- -------
The average monthly number of employees during the year was 10
(2015: 1).
17. Directors' Remuneration
Directors' Share Options Total
Fees charge
------------------ ---------------- -------- --------
2016 2015 2016 2015 2016 2015
GBP GBP GBP GBP GBP GBP
---------------------- -------- -------- --------- ----- -------- --------
Executive Directors
Gregory Kuenzel 30,000 31,500 37,738 - 30,000 31,500
Jeremy Whybrow 37,846 100,000 - - 37,846 100,000
Martyn Churchouse 100,000 46,739 - - 100,000 46,739
Non-executive
Directors
Michael Hutchinson 25,000 25,000 - - 25,000 25,000
Marcus Edwards-Jones 12,000 24,000 7,548 - 12,000 24,000
Roderick McIllree 28,000 20,000 - - 28,000 20,000
Neil O'Brien 8,000 - 11,321 - 8,000 -
Peter Damouni 6,462 - 37,738 - 6,482 -
247,308 247,239 94,345 - 247,308 247,239
---------------------- -------- -------- --------- ----- -------- --------
No pension benefits are provided for any Director.
Of the above director fees, GBP140,056 (2015: GBP136,151) has
been capitalised in accordance with IAS 38 as exploration and
evaluation related costs and are shown as an intangible addition in
the year.
18. Finance Income
Group
--------------
2016 2015
GBP GBP
-----
Finance income - bank interest 162 316
-------------------------------- ----- -----
19. Taxation
The tax on the Group's loss differs from the theoretical amount
that would arise using the weighted average tax rate applicable to
the losses of the consolidated entities as follows:
Group
--------------------------
2016 2015
GBP GBP
---------------------------------- ------------ ----------
Loss before tax 5,645,734 653,854
---------------------------------- ------------ ----------
Tax at the weighted average
rate of 20.50% (2015: 20%) (1,157,375) (130,770)
Expenditure not deductible for
tax purposes 364,249 5,733
Net tax effect of losses carried
forward on which no deferred
tax asset is recognised 793,126 125,037
---------------------------------- ------------ ----------
Income tax for the year - -
---------------------------------- ------------ ----------
No charge to taxation arises due to the losses incurred.
The weighted average applicable tax rate of 20.50% (2015: 20%)
used is a combination of the 20% standard rate of corporation tax
in the UK, 25% Austrian corporation tax, 0% Georgian corporation
tax (15% charged on distributions but as no distributions made 0%)
and 0% BVI corporation tax.
The Group has accumulated tax losses of approximately
GBP2,956,000 (2015: GBP2,163,000) available to carry forward
against future taxable profits. A deferred tax asset has not been
recognised because of uncertainty over future taxable profits
against which the losses may be utilised.
20. Earnings per Share
The calculation of the total basic loss per share of 9.895 pence
(2015: loss 3.343 pence) is based on the loss attributable to
equity owners of the group of GBP5,498,126 (2015: GBP646,789) and
on the weighted average number of ordinary shares of 55,565,501
(2015: 1,904,691,623) in issue during the period. The 2015 figure
has been restated from 0.0034 as a result of the share
consolidation in the year.
In accordance with IAS 33, basic and diluted earnings per share
are identical as the effect of the exercise of share options or
warrants would be to decrease the loss per share.
21. Commitments
(a) Purchase agreement
On 14 July 2015, the Group acquired GMC Investments Limited
which owns 50% of Georgian Copper & Gold Limited ("GCG"). GCG
is the holder of gold, copper and silver licenses in the Republic
of Georgia. The license is for a period of 30 years from December
2015 and includes commitments to pay US$6,000,000 over 2 years on
exploration and development, after which the joint venture partner,
Caucasian Mining Group, is required to contribute or dilute. As at
31 December 2016, US$2,000,000 has been spent under the agreement
with a further US$4,000,000 budgeted in 2017.
(b) Royalty agreements
As part of the contractual arrangement with Kibe No.1
Investments Limited the Group has agreed to pay a royalty on
revenue from gold sales arising from gold mines developed by
Noricum Gold AT GmbH and covered by licenses acquired by Kibe No.1
Investments Limited. Under the terms of the Royalty Agreement
between Kibe No.1 Investments Limited and Noricum Gold AT GmbH, the
Group shall pay royalties, based on total ounces of gold sold,
equal to US$1 for every US$250 of the sale price per ounce.
As part of a contractual arrangement with Ord Resources GmbH,
the Group has agreed to pay a royalty on revenue from gold sales
arising from gold mines developed by Noricum Gold AT GmbH and
covered by the licenses acquired from Ord Resources GmbH. Under the
terms of the Royalty Agreement with Ord Resources GmbH, the Group
shall pay royalties based on the total ounces of gold sold, at a
rate equal to US$2 for each ounce sold.
(c) Operating lease commitments
The Group leased office premises under a non-cancellable
operating lease agreement. The previous lease fixed term expired
during the year. The lease was renewed in October 2016 for a fixed
term of 1 year. The lease expenditure charged to the income
statement during the year is included in Note 6.
The future aggregate minimum lease payments under
non-cancellable operating leases are as follows:
Group 2016 2015
GBP GBP
----------------------------------- ------- -------
Not later than one year 27,000 27,000
Later than one year but not later - -
than five years
----------------------------------- ------- -------
Total lease commitment 27,000 27,000
------------------------------------ ------- -------
22. Related Party Transactions
Recharges between Georgian Mining Corporation and European
Mining Services Limited
During the year Georgian Mining Corporation recharged
administrative costs with a total value of GBP334,235 (2015:
GBPnil) to European Mining Services Limited for services rendered
to European Mining Services Limited.
Services provided by European Mining Services Limited and JSC
Georgian Copper & Gold Limited
During the year European Mining Services Limited provided
geological, technical and other professional services with a total
value of GBP696,929 (2015: GBPnil) to JSC Georgian Copper &
Gold.
Loan from Georgian Mining Corporation to Noricum Gold AT
GmbH
As at 31 December 2016 there were amounts receivable of GBPnil
(2015: GBP3,865,928) from Noricum Gold AT GmbH and GBP2,557 (2015:
GBP1,963) from Kibe No.2 Investments Limited. No interest was
charged on the loans.
Loan from Georgian Mining Corporation to JSC Georgian Copper and
Gold and GMC Investments Limited
As at 31 December 2016 there were amounts receivable of GBPnil
(2015: 126,193) from JSC Georgian Copper and Gold and GBP1,862,618
(2015: 118,825) from GMC Investments Limited. No interest was
charged on the loans.
Loan from Georgian Mining Corporation to European Mining
Services Limited
As at 31 December 2016 there were amounts receivable of
GBP423,152 (2015: GBPnil) from European Mining Services
Limited.
All intra-group transactions are eliminated on
consolidation.
Other Transactions
Greenland Gas and Oil Limited, a company in which Gregory
Kuenzel, Roderick McIllree, Jeremy Whybrow and Michael Hutchinson
are Directors and shareholders, was paid a fee of GBP18,600 (2015:
GBP9,500) for geological information systems consulting services to
the Group. No balance was outstanding at the year-end.
Fairholme Consulting Services Ltd, a company in which Gregory
Kuenzel is a Director and beneficial owner, was paid a fee of
GBP69,998 (2015: GBP45,166) for management and corporate consulting
services to the Group. No balance was outstanding at the
year-end.
Silvergate Capital Partners, a company in which Peter Damouni is
a Director and beneficial owner, was paid a fee of GBP32,500 (2015:
GBPnil) for management and corporate consulting services to the
Group. No balance was outstanding at the year-end.
23. Ultimate Controlling Party
The Directors believe there to be no ultimate controlling
party.
24. Events after the Reporting Date
On 30 January 2017 1,900,000 options over Ordinary Shares were
granted to Anthony Frizelle and Laurence Mutch upon joining the
Board at an exercise price of 12 pence per share.
On 23 May 2017 GBP5,463,942 was raised through a placing of
34,149,638 Ordinary Shares at a price of 16 pence per share.
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.
**ENDS**
For further information please visit www.georgianmining.com or
contact:
Greg Kuenzel Georgian Mining Company Tel: 020 7907
Corporation 9327
Ewan Leggat S. P. Angel Corporate Nomad & Tel: 020 3470
Finance LLP Broker 0470
Damon Heath Shard Capital Partners Joint Broker Tel: 0207
LLP 186 9950
Frank Buhagiar St Brides Partners PR Tel: 020 7236
Ltd 1177
About Georgian Mining Corporation
Georgian Mining Corporation has 50% ownership and operational
control of the Bolnisi Copper and Gold Project in Georgia, situated
on the prolific Tethyan Belt, a well-known geological region and
host to many high-grade copper-gold deposits and producing mines.
The Bolnisi licence covers an area of over 860 sq km and has a 30
year mining licence with two advanced exploration projects; Kvemo
Bolnisi and Tsitsel Sopeli. These projects are proximal to existing
mining operations which are owned by the Company's supportive joint
venture partner. Georgia has an established mining code and is a
jurisdiction open to direct foreign investment.
The Company is developing the project in three phases:
-- Phase 1: H1 2017 target to delineate a minimum of 1-2 Mt to
support initial spare capacity (now achieved and exceeded)
-- Phase 2: 2017 target to delineate a 3-5 Mt resource of
combined copper-gold sulphide and gold oxide mineralisation (on
target)
-- Phase 3: Long term target - to delineate a resource of 50Mt+
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR UAVNRBRANUAR
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