TIDMSOLG
RNS Number : 5505W
SolGold PLC
15 November 2017
Interim Condensed Consolidated Financial Statements
(Unaudited - Prepared by Management)
(Expressed in Australian Dollars)
Three Months Ended 30 September 2017 and 2016
NOTICE OF NO AUDITOR REVIEW OF INTERIM FINANCIAL STATEMENTS
Under National Instrument 51-102, Part 4, subsection 4.3(3)(a),
if an auditor has not performed a review of the interim financial
statements, the statements must be accompanied by a notice
indicating that the financial statements have not been reviewed by
an auditor.
The accompanying unaudited interim condensed consolidated
financial statements of the Company have been prepared by
management and are the responsibility of the Company's
management.
The Company's independent auditor has not performed a review of
these condensed interim financial statements.
/s/ Nicholas Mather /s/ Brian Moller
Nicholas Mather Brian Moller
Director Director
14 November 2017
INTERIM CONDENSED Consolidated Statement of Profit or loss and
other Comprehensive Income
for the QUARTER ended 30 September 2017
Three Three
months months
ended ended
30 September 30 September
2017 2016
Notes A$ A$
(Unaudited) (Unaudited)
Revenue - -
Administration and consulting
expenses (1,498,446) (457,669)
Borrowing costs and expenses (45) (70,868)
Depreciation and amortisation
expense (12,027) (2,045)
Employee benefit expenses (291,101) (159,091)
Legal expenses (115,423) (110,694)
Exploration written off (987) (21,289)
Unrealised foreign exchange
(gains) / losses (1,672,810) 97,420
Share based payments expense (2,247,574) (80,693)
Operating loss before income
tax (5,838,413) (804,929)
Income tax (expense) benefit - -
===================================== ======= ============== ==============
Loss for the period (5,838,413) (804,929)
============================================== ============== ==============
Other comprehensive income
/ (loss)
Items that may be reclassified
to profit and loss
Change in fair value of available
for sale financial assets (2,567,648) 2,415,087
Exchange differences on translation
of foreign operations (833,255) (1,558,949)
============================================== ============== ==============
Total comprehensive income
/ (loss) for the period (9,239,316) 51,209
============================================== ============== ==============
Loss for the quarter attributable
to:
Owners of the parent company (5,814,728) (785,536)
Non-controlling interest (23,685) (19,393)
---------------------------------------------- -------------- ------------------
(5,838,413) (804,929)
Total comprehensive income
/ (loss) for the quarter is
attributable to:
Owners of the parent company (8,729,411) 305,401
Non-controlling interest (509,905) (254,192)
---------------------------------------------- -------------- ------------------
(9,239,316) 51,209
--------------------------------------------- -------------- ------------------
Three Three
months months
ended ended
30 September 30 September
2017 2016
Notes Cents Cents
(Unaudited) (Unaudited)
Basic earnings per share 4 (0.4) (0.1)
Diluted earnings per share 4 (0.4) (0.1)
============================ ====== ============== ==============
The above interim condensed consolidated statement of profit or
loss and other comprehensive income should be read in conjunction
with the accompanying notes.
interim condensed Consolidated Statement of Financial
Position
at 30 september 2017
30 September 30 June
2017 2017
Notes A$ A$
(Unaudited) (Audited)
Assets
Current assets
Cash and cash equivalents 78,475,169 89,312,743
Other receivables and prepayments 1,715,662 1,307,344
Total current assets 80,190,831 90,620,087
==================================== ====== ============= =============
Non-current assets
Other financial assets 316,200 226,175
Investments in available-for-sale
securities 11,849,361 14,366,304
Property, plant and equipment 2,181,933 1,777,937
Exploration and Evaluation
Assets 5 69,355,011 59,723,105
==================================== ====== ============= =============
Total non-current assets 83,702,505 76,093,521
==================================== ====== ============= =============
Total assets 163,893,336 166,713,608
==================================== ====== ============= =============
Current liabilities
Trade and other payables 5,559,253 2,741,175
Borrowings - -
Total current liabilities 5,559,253 2,741,175
==================================== ====== ============= =============
Non-current liabilities
Interest bearing liabilities - -
------------------------------------ ------ ------------- -------------
Total non-current liabilities - -
------------------------------------ ------ ------------- -------------
Total liabilities 5,559,253 2,741,175
------------------------------------ ------ ------------- -------------
Net assets 158,334,084 163,972,433
------------------------------------ ------ ------------- -------------
Equity
Issued capital 6 227,052,094 225,698,701
Reserves 14,718,596 15,385,705
Accumulated losses (82,683,766) (76,869,038)
Non-controlling interest (752,840) (242,935)
==================================== ====== ============= =============
Total equity 158,334,084 163,972,433
==================================== ====== ============= =============
The above interim condensed consolidated statement of financial
position should be read in conjunction with the accompanying
notes.
interim condensed Consolidated Statement of Changes in
Equity
for the quarter ended 30 september 2017
Available Non-Controlling
for Sale Foreign interest
Financial Share currency reserve
Share Asset option translation Accumulated Non-controlling
capital Reserve reserve reserve losses interests Total
A$ A$ A$ A$ A$ A$ A$ A$
Notes (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited)
Balance 30 June 2016 104,503,526 (141,299) 1,104,337 1,948,864 (67,684) (72,489,364) 123,137 34,981,337
======================== ============= ============= ============= ============= ================= ============= ================ =============
Loss for the period - - - - - (785,536) (19,393) (804,929)
Other comprehensive
income
for the period - 2,415,087 - (1,324,150) - - (234,799) 856,138
======================== ============= ============= ============= ============= ================= ============= ================ =============
Total comprehensive
income
for the period - 2,415,087 - (1,324,150) - (785,536) (254,192) 51,209
New share capital
subscribed 27,929,248 - - - - - - 27,929,248
Share issue costs (1,249,029) - - - - - - (1,249,029)
======================== ============= ============= ============= ============= ================= ============= ================ =============
Balance 30 September
2016 131,183,745 2,273,788 1,104,337 624,714 (67,864) (73,274,900) (131,055) 61,712,765
======================== ============= ============= ============= ============= ================= ============= ================ =============
Loss for the period - - - - - (3,632,489) (62,554) (3,695,043)
Other comprehensive
income
for the period - 6,505,428 - (480,997) - - (49,326) 5,975,105
======================== ============= ============= ============= ============= ================= ============= ================ =============
Total comprehensive
income
for the period - 6,505,428 - (480,997) - (3,632,489) (111,880) 2,280,062
New share capital
subscribed 98,445,661 - - - - - - 98,445,661
Share issue costs (5,226,045) - - - - - - (5,226,045)
Options exercised 1,295,340 - - - - - - 1,295,340
Options expired - - (38,351) - - 38,351 - -
Value of share and
options
issued to Directors,
employees
and consultants - - 5,464,650 - - - - 5,464,650
======================== ============= ============= ============= ============= ================= ============= ================ =============
Balance 30 June 2017 225,698,701 8,779,216 6,530,636 143,717 (67,684) (76,869,038) (242,935) 163,972,433
======================== ============= ============= ============= ============= ================= ============= ================ =============
Loss for the period - - - - - (5,814,728) (23,685) (5,838,413)
Other comprehensive
income
for the period - (2,567,648) - (347,035) - - (486,220) (3,400,903)
======================== ============= ============= ============= ============= ================= ============= ================ =============
Total comprehensive
income
for the period - (2,567,648) - (347,035) - (5,814,728) (509,905) (9,239,316)
New share capital
subscribed 433,743 - - - - - - 433,743
Share issue costs (3,411) - - - - - - (3,411)
Options exercised 923,061 - - - - - - 923,061
Value of options issued
to Directors,
employees
and consultants - - 2,247,574 - - - - 2,247,574
======================== ============= ============= ============= ============= ================= ============= ================ =============
Balance 30 September
2017 227,052,094 6,211,568 8,778,210 (203,318) (67,864) (82,683,766) (752,840) 158,334,084
======================== ============= ============= ============= ============= ================= ============= ================ =============
The above interim condensed consolidated statement of changes in
equity should be read in conjunction with the accompanying
notes.
interim condensed Consolidated Statement of Cash Flows
for the quarter ended 30 September 2017
Three Three
months months
ended ended
30 September 30 September
2017 2016
Notes A$ A$
(Unaudited) (Unaudited)
Cash flows from operating
activities
Receipts from customers - -
Payments to suppliers and
employees (2,152,894) (1,466,540)
Interest received 66 69
Interest paid (45) -
Net cash outflow from operating
activities (2,152,873) (1,466,471)
============================================ ============== ==============
Cash flows from investing
activities
Proceeds from sale (Acquisition)
of property, plant and equipment (416,023) -
Refund of (payment for) security (90,025) -
deposits
Acquisition of exploration
and evaluation assets (7,859,236) (1,591,318)
Net cash (outflow)/inflow
from investing activities (8,365,284) (1,591,318)
============================================ ============== ==============
Cash flows from financing
activities
Proceeds from the issue of
ordinary share capital 1,353,393 20,401,794
Payment of issue costs - (27,415)
Proceeds from borrowings - 852,727
Net cash inflow from financing
activities 1,353,393 21,227,106
============================================ ============== ==============
Net (decrease)/increase in
cash and cash equivalents (9,164,764) 18,169,317
Cash and cash equivalents
at beginning of period 89,312,743 94,933
Effects of exchange rate
changes on cash and cash
equivalents (1,672,810) 97,354
Cash and cash equivalents
at end of period 78,475,169 18,361,604
============================================ ============== ==============
The above interim condensed consolidated statement of cash flows
should be read in conjunction with the accompanying notes.
NOTES TO THE interim condensed CONSOLIDATED FINANCIAL
STATEMENTS
FOR THE quarterED 30 september 2017
NOTE 1 summary of significant accounting policies
Basis of preparation
This general purpose interim condensed consolidated financial
report for the quarter ended 30 September 2017 has been prepared in
accordance with IAS 34 Interim Financial Reporting and
International Financial Reporting Standards ('IFRSs').
The interim condensed consolidated financial statements are
presented in Australian dollars ("A$") and have been prepared on
the historical cost basis.
The quarterly financial report does not include all notes of the
type normally included within the annual financial report and
therefore cannot be expected to provide as full an understanding of
the financial performance, financial position and financing
activities of the consolidated entity as the full financial
report.
It is recommended that the quarterly financial report be read in
conjunction with the annual report for the year ended 30 June 2017
and considered together with any public announcements made by
SolGold plc and its controlled entities during the quarter ended 30
September 2017.
The same accounting policies and methods of computation have
generally been followed in this quarterly financial report as the
most recent annual financial report.
Going concern
The financial statements have been prepared on a going concern
basis which contemplates the continuity of normal business
activities and the realisation of assets and discharge of
liabilities in the ordinary course of business. The Company has not
generated revenues from operations. In common with many exploration
companies, the Company raises finance for its exploration and
appraisal activities in discrete tranches. At the reporting date,
the Group had a net working capital surplus of $74,631,578 (30 June
2017: Net working capital surplus of $87,878,912).
It should be noted that the current working capital levels will
not be sufficient to bring the Group's projects into full
development and production and, in due course, further funding will
be required. In the event that the Company is unable to secure
further finance either through other finance arrangements or
capital raisings, it may not be able to fully develop its projects
and this may have a consequential impact on the carrying value of
the related exploration assets and the investment of the parent
company in its subsidiaries. In the absence of these matters being
successful, there exists a material uncertainty that may cast
significant doubt on the entity's ability to continue as a going
concern, and therefore, it may be unable to realise its assets and
discharge its liabilities in the ordinary course of business.
Comparatives
When required by Accounting Standards, comparatives have been
adjusted to conform to changes in presentation for the current
financial year.
Basis of consolidation
The quarterly interim condensed consolidated financial
statements comprise the financial statements of SolGold plc and its
controlled entities as at 30 September 2017.
NOTES TO THE interim condensed CONSOLIDATED FINANCIAL
STATEMENTS
FOR THE quarterED 30 september 2017
NOTE 2 OPERATING SEGMENTS
The Group determines and separately reports operating segments
based on information that is internally provided to the Directors,
who are the Group's chief operating decision makers.
The Group has outlined below the separately reportable operating
segments, having regard to the quantitative threshold tests
provided in IFRS 8 Operating Segments, namely that the relative
revenue, asset or profit / (loss) position of the operating segment
equates to 10% or more of the Group's respective total. The Group
reports information to the Board of Directors along company lines.
That is, the financial position of SolGold and each of its
subsidiary companies is reported discreetly, together with an
aggregated Group total. Accordingly, each company within the Group
that meets or exceeds the threshold tests outlined above is
separately disclosed below.
30 September 2017
(Unaudited)
----------------------------------------------------------------------------------------------------------------
Loss Non-
Finance Total for Share current
Income Income the Assets Liabilities based asset
$ $ Period $ $ payments additions
$ $ $
------------------ ---------- --------- ------------ ------------ -------------- ----------- ------------
Cascabel
project* - - (157,897) 57,898,513 3,248,269 - 7,746,909
------------------ ---------- --------- ------------ ------------ -------------- ----------- ------------
Other Ecuadorian
projects - - - 5,990,598 618,523 - 2,235,022
------------------ ---------- --------- ------------ ------------ -------------- ----------- ------------
Queensland
projects 66 66 (140) 12,647,451 20,746 - 12,040
------------------ ---------- --------- ------------ ------------ -------------- ----------- ------------
Solomon Islands
projects - - (251) 327,160 - - -
------------------ ---------- --------- ------------ ------------ -------------- ----------- ------------
Corporate - - (5,680,125) 87,029,614 1,671,715 2,247,574 (2,384,987)
------------------ ---------- --------- ------------ ------------ -------------- ----------- ------------
Total 66 66 (5,838,413) 163,893,336 5,559,253 2,247,574 7,608,984
------------------ ---------- --------- ------------ ------------ -------------- ----------- ------------
30 September 30 June 30 September 30 June
2016 2017 2016 2017
------------------ --------------------------------- ---------------------------- ------------- ------------
(Unaudited)
----------------------------------------------------------------------------------------------------------------
Non-current
Loss asset
for Share additions
Finance Total the based $
Income Income Period Assets Liabilities payments
$ $ $ $ $ $
------------------ ---------- --------- ---------- ------------ -------------- ------------- ------------
Cascabel
project* - - (129,279) 49,132,923 1,783,879 - 16,590,892
------------------ ---------- --------- ---------- ------------ -------------- ------------- ------------
Other Ecuadorian
projects - - - 3,355,760 186,211 - 3,355,760
------------------ ---------- --------- ---------- ------------ -------------- ------------- ------------
Queensland
projects 69 69 (923) 12,466,324 8,408 - 484
------------------ ---------- --------- ---------- ------------ -------------- ------------- ------------
Solomon Islands
projects - - (272) 29,406 - - -
------------------ ---------- --------- ---------- ------------ -------------- ------------- ------------
Corporate - - (674,455) 101,729,194 762,677 80,693 12,944,385
------------------ ---------- --------- ---------- ------------ -------------- ------------- ------------
Total 69 69 (804,929) 166,713,607 2,741,175 80,693 32,891,521
------------------ ---------- --------- ---------- ------------ -------------- ------------- ------------
* The Cascabel project is held by the subsidiary Exploraciones
Novomining S.A. which is 15% owned by a non-controlling
interest.
NOTES TO THE interim condensed CONSOLIDATED FINANCIAL
STATEMENTS
FOR THE quarterED 30 september 2017
NOTE 2 OPERATING SEGMENTS (continued)
Geographical information
30 September 30 June
2017 2017
A$ A$
(Unaudited) (Unaudited)
UK - -
Australia 22,353,740 24,726,686
Solomon Islands - -
Ecuador 61,348,765 51,366,835
----------------- ------------- -------------
83,702,505 76,093,521
----------------- ------------- -------------
Three months Three months
ended 30 ended 30
September September
2017 2016
A$ A$
(Unaudited) (Unaudited)
------------- -------------
NOTE 3 Revenues and Expenses
Included in the profit / (loss)
are the following revenues and
expenses:
Interest revenue - external
parties 66 69
Other income - -
======= =======
66 69
======= =======
Depreciation 12,027 2,045
Defined contribution superannuation
expense 14,526 12,083
Note 4 Loss per share
Calculation of basic and diluted loss per share is in accordance
with IAS 33 Earnings per Share.
Net loss used in calculating
basic and diluted loss per share (5,838,413) (804,929)
Number Number
============== ==============
Weighted average number of ordinary
share used in the calculation
of basic loss per share 1,515,763,377 1,057,289,526
Weighted average number of dilutive
options 10,922,301 424,590
Weighted average number of ordinary
share used in the calculation
of diluted loss per share 1,526,685,679 1,057,714,116
NOTES TO THE interim condensed CONSOLIDATED FINANCIAL
STATEMENTS
FOR THE quarterED 30 september 2017
Note 5 Exploration and Evaluation Assets
Quarter Full Year
Ended 30 Ended 30
September June
2017 2017
A$ A$
(Unaudited) (Audited)
Carrying amount at the beginning
of the period 59,723,105 41,079,914
Additions - expenditure 9,632,893 18,660,501
Exploration expenditure written
off (987) (17,310)
============= ===========
Carrying amount at the end of
the period 69,355,011 59,723,105
============= ===========
Recoverability of the carrying amount of exploration assets is
dependent on the successful development and commercial exploitation
of areas of interest, and the sale of minerals or the sale of the
respective areas of interest.
Note 6 issued capital
Quarter Full Year
Ended 30 Ended 30
September June
2017 2017
A$ A$
(Unaudited) (Audited)
a) Issued capital
Ordinary shares fully paid up 227,055,505 225,698,701
============== ==============
b) Movement in ordinary shares
At the beginning of the reporting
period 225,698,701 104,503,526
Shares issued during the period 1,356,804 127,670,249
Transaction costs on share issue - (6,475,074)
At reporting date 227,055,505 225,698,701
============== ==============
c) Movement in number of ordinary
shares on issue
Shares at the beginning of the
reporting period 1,512,955,685 953,897,601
* Shares issued at GBP0.06 - Placement 28 August 2016 - 268,819,004
* Shares issued at GBP0.13 - Placement 17 October 2016 - 206,250,000
* Shares issued at GBP0.14 - Exercise of options 17
January 2017 - 900,000
* Shares issued at GBP0.30 - Newcrest share issue 31
January 2017 - 100,000
* Shares issued at GBP0.14 - Exercise of options 3
February 2017 - 1,200,000
* Shares issued at GBP0.14 - Exercise of options 21
February 2017 - 900,000
* Shares issued at GBP0.38 - Newcrest share issue 1
March 2017 - 240,000
* Shares issued at GBP0.41 - Placement 16 June 2017 - 78,889,080
* Shares issued at GBP0.14 - Exercise of options 26
June 2017 - 880,000
* Shares issued at GBP0.28 - Exercise of options 26
June 2017 - 880,000
1,300,000 -
* Shares issued at GBP0.14 - Exercise of options 7 July
2017
1,300,000 -
* Shares issued at GBP0.28 - Exercise of options 7 July
2017
690,000 -
* Shares issued at GBP0.38 - Newcrest share issue 11
August 2017
Shares at the reporting date 1,516,245,685 1,512,955,685
============== ==============
NOTES TO THE interim condensed CONSOLIDATED FINANCIAL
STATEMENTS
FOR THE quarterED 30 september 2017
NOTE 7 share options
At 30 September 2017 the Company had 88,353,768 options
outstanding for the issue of ordinary shares (30 September 2016:
21,380,000).
Options
Share options are granted to employees under the company's
Employee Share Option Plan ("ESOP"). The employee share option plan
is designed to align participants' interests with those of
shareholders.
Unless otherwise documented with the Company, when a participant
ceases employment prior to the vesting of their share options, the
share options are forfeited after 90 days unless cessation of
employment is due to termination for cause, whereupon they are
forfeited immediately. The Company prohibits key management
personnel from entering into arrangements to protect the value of
unvested ESOP awards.
The contractual life of each option granted is generally two (2)
to three (3) years. There are no cash settlement alternatives.
Each option can be exercised from vesting date to expiry date
for one share with the exercise price payable in cash.
Share options issued
There were 46,762,000 options granted during the quarter ended
30 September 2017 (30 September 2016: nil).
On 9 August 2017, the Company issued a combined total of
46,762,000 unlisted share options over ordinary shares of the
Company, including:
-- 36,750,000 share options to Directors following approval
granted by shareholders at the Company's AGM on 28 July 2017;
-- 10,000,000 share options to its two key geologists; and
-- 12,000 share options to a third party as part of the capital
raising fees for the Company's last equity placement.
The options are exercisable at GBP0.60 and expire on 8 August
2020. The share options for Directors and the geological executives
have a vesting period of 18 months unless triggered by a change of
control transaction.
The share options outstanding at 30 September 2017 are as
follows:
Date of Exercisable Exercisable Exercise Number Number
grant from to prices granted at 30
September
2017
The options
vested immediately,
through to
17 October 17 October 17 October
2016 2018 2018 GBP0.14 9,795,884 9,795,884
GBP0.28 9,795,884 9,795,884
------------------------------------------------------------- ----------- -----------
The options
vest on the
earlier of:
(a) the expiry
of 75% of the
Term, or (b)
17 November a Change of 28 October
2016 Control Transaction 2018 GBP0.28 22,000,000 22,000,000
------------- ---------------------- ------------- ---------- ----------- -----------
The options
vest on the
earlier of:
(a) 18 months,
or (b) a Change
9 August of Control 8 August
2017 Transaction 2020 GBP0.60 46,750,000 46,750,000
------------- ---------------------- ------------- ---------- ----------- -----------
The options
vested immediately,
9 August through to 8 August
2017 8 August 2020 2020 GBP0.60 12,000 12,000
------------- ---------------------- ------------- ---------- ----------- -----------
88,353,768 88,353,768
------------------------------------------------------------- ----------- -----------
NOTES TO THE interim condensed CONSOLIDATED FINANCIAL
STATEMENTS
FOR THE quarterED 30 september 2017
NOTE 7 share options (continued)
Share-based payments
The number and weighted average exercise price of share options
are as follows:
Weighted Weighted
average average
exercise Number exercise Number
price of options price of options
30 September 30 September 30 September 30 September
2017 2017 2016 2016
Outstanding at the
beginning of the
period GBP0.25 44,191,768 GBP0.27 21,380,000
Exercised during GBP0.21 (2,600,000) - -
the period
Lapsed during the - - - -
period
Granted during the GBP0.60 46,762,000 - -
period
-------------------- --------------- -------------- -------------- --------------
Outstanding at the
end of the period GBP0.44 88,353,768 GBP0.27 21,380,000
-------------------- --------------- -------------- -------------- --------------
Exercisable at the GBP0.21 19,591,768 - -
end of the period
-------------------- --------------- -------------- -------------- --------------
The options outstanding at 30 September 2017 have exercise
prices of GBP0.14, GBP0.28 and GBP0.60 (30 September 2016: GBP0.14
- GBP0.50) and a weighted average contractual life of 2.01 years
(30 September 2016: 0.46 years).
Share options held by Directors are as follows:
Share options At 30 September At 30 September Option Exercise
held 2017 2016 Price Period
----------------- ---------------- ---------------- ------- ------------
07/02/19
Nicholas Mather 26,250,000 - 60p - 08/08/20
----------------- ---------------- ---------------- ------- ------------
08/07/14
- 750,000 14p - 08/07/17
----------------- ---------------- ---------------- ------- ------------
08/07/14
- 750,000 28p - 08/07/17
----------------- ---------------- ---------------- ------- ------------
07/02/19
Brian Moller 3,750,000 - 60p - 08/08/20
----------------- ---------------- ---------------- ------- ------------
08/07/14
- 550,000 14p - 08/07/17
----------------- ---------------- ---------------- ------- ------------
08/07/14
- 550,000 28p - 08/07/17
----------------- ---------------- ---------------- ------- ------------
07/02/19
Robert Weinberg 2,250,000 - 60p - 08/08/20
----------------- ---------------- ---------------- ------- ------------
08/07/14
- 440,000 14p - 08/07/17
----------------- ---------------- ---------------- ------- ------------
08/07/14
- 440,000 28p - 08/07/17
----------------- ---------------- ---------------- ------- ------------
07/02/19
John Bovard 2,250,000 - 60p - 08/08/20
----------------- ---------------- ---------------- ------- ------------
08/07/14
- 440,000 14p - 08/07/17
----------------- ---------------- ---------------- ------- ------------
08/07/14
- 440,000 28p - 08/07/17
----------------- ---------------- ---------------- ------- ------------
07/02/19
Craig Jones 2,250,000 - 60p - 08/08/20
----------------- ---------------- ---------------- ------- ------------
NOTES TO THE interim condensed CONSOLIDATED FINANCIAL
STATEMENTS
FOR THE quarterED 30 september 2017
NOTE 7 SHARE OPTIONS (continued)
Share-based payments (continued)
The fair value of services received in return for share options
granted is measured by reference to the fair value of share options
granted. This estimate is based on either a Black-Scholes model or
Monte Carlo Simulation considering the effects of the vesting
conditions, expected exercise period and the dividend policy of the
Company.
Fair value GBP0.14 GBP0.28 GBP0.28 GBP0.60
of share Options Options Options Options
options 17 October 17 October 28 October 9 August
and assumptions 2016 2016 2016 2017
Number of
options 9,795,884 9,795,884 22,000,000 46,762,000
Fair value GBP0.12 GBP0.09 GBP0.14 GBP0.365-GBP0.375
at issue
date
Exercise GBP0.14 GBP0.28 GBP0.28 GBP0.60
price
Expected
volatility 99.744% 99.744% 99.744% 89.714%
Option life 2.00 years 2.00 years 2.00 years 3.00 years
Expected
dividends 0.00% 0.00% 0.00% 0.00%
Risk-free
interest
rate (short-term) 0.53% 0.53% 0.66% 0.461%
Valuation Black-Scholes Black-Scholes Black-Scholes Black-Scholes
methodology
-------------------- -------------- -------------- -------------- ------------------
A$ A$ A$ A$
Share based
payments
expense
recognised
in statement
of comprehensive
income - - 2,958,492 1,447,921
Share based
payments
expense
recognised
as share
issue costs - - -
Share based
payments
expense
to be recognised
in future
periods - - 1,865,854 11,462,995
-------------------- -------------- -------------- -------------- ------------------
The calculation of the volatility of the share price was based
on the Company's daily closing share price over the two-three year
period prior to the date the options were issued.
NOTES TO THE interim condensed CONSOLIDATED FINANCIAL
STATEMENTS
FOR THE quarterED 30 september 2017
NOTE 8 RELATED PARTIES
Transactions with Directors and Director-Related Entities
(i) The Company had a commercial agreement with Samuel Capital
Ltd ("Samuel") for the engagement of Nicholas Mather as Chief
Executive Officer and Executive Director of the Company. For the
quarter ended 30 September 2017 A$100,000 was paid or payable to
Samuel (2016: A$50,000). The total amount outstanding at the end of
the quarter was A$nil (2016: A$9,435).
(ii) The Company has a long-standing commercial arrangement with
DGR Global, an entity associated with Nicholas Mather (Director)
and Brian Moller (Director), for the provision of various services,
whereby DGR Global provides resources and services including the
provision of its administration and exploration staff, its premises
(for the purposes of conducting the Company's business operations),
use of existing office furniture, equipment and certain stationery,
together with general telephone, reception and other office
facilities ("Services"). In consideration for the provision of the
Services, the Company shall reimburse DGR Global for any expenses
incurred by it in providing the Services. For the quarter ended 30
September 2017 A$90,000 was paid or payable to DGR Global (2016:
A$90,000) for the provision of administration, management and
office facilities to the Company during the quarter. The total
amount outstanding at quarter end was A$33,000 (2016: A$33,000).
The administration services agreement expires on 21 March 2019.
(iii) Mr Brian Moller (a Director), is a partner in the
Australian firm HopgoodGanim lawyers. For the quarter ended 30
September 2017, HopgoodGanim were paid A$95,787 (2016: A$102,836)
for the provision of legal services to the Company. The services
were based on normal commercial terms and conditions. The total
amount outstanding at the end of the quarter was A$18,558 (2016:
A$25,276).
(iv) On 20 November 2015, DGR Global Ltd agreed to provide short
term funding to SolGold plc to provide working capital. Interest on
the facility is charged at the rate of 9.5% per annum. The loan was
repayable by SolGold plc on the earlier of any capital raising
event, or 31 December 2016. DGR Global Ltd could, at its sole
election, convert all or part of the loan, including accrued
interest, into further equity as part of a SolGold plc capital
raising, and at the same price as third party participants, subject
to DGR Global Ltd and SolGold plc obtaining all necessary
regulatory approvals. A new loan agreement was signed on 30 June
2016 revising the limit on the facility to $7 million, all other
conditions remained the same. On 29 August 2016, DGR Global Ltd
converted $5,700,000 of the debt funding provided to SolGold into
SolGold shares in accordance with the terms of the loan
arrangements announced to the market on 1 July 2016.
NOTE 9 COMMITMENTS AND CONTINGENT ASSET AND LIABILITIES
There are no significant changes to commitments and
contingencies disclosed in the most recent annual financial
report.
NOTE 10 SUBSEQUENT EVENTS
On 8 November 2017 the Company entered into an agreement with a
syndicate of underwriters led by National Bank Financial Inc. and
Canaccord Genuity Corp.(collectively, the "Underwriters") pursuant
to which the Underwriters have agreed to purchase, on a bought deal
private placement basis, 180,000,000 ordinary shares (the "Ordinary
Shares") of SolGold at a price of 25 pence per Ordinary Share for
aggregate gross proceeds of GBP45,000,000 (the "Offering"). The
Offering is expected to close on or about November 30, 2017 and is
subject to certain closing conditions.
The Directors are not aware of any other significant changes in
the state of affairs of the Group or events after reporting date
that would have a material impact on the interim condensed
consolidated financial statements.
DIRECTORS' DECLARATION
In the Directors' opinion:
-- the attached interim condensed financial statements and notes
thereto comply with IAS 34 'Interim Financial Reporting' and other
mandatory professional reporting requirements;
-- the attached interim condensed financial statements and notes
thereto give a true and fair view of the consolidated entity's
financial position as at 30 September and of its performance for
the quarter ended on that date; and
-- there are reasonable grounds to believe that the company will
be able to pay its debts as and when they become due and
payable.
Signed in accordance with a resolution of Directors.
On behalf of the Directors
/s/ Nicholas Mather
Nicholas Mather
Executive Director
Brisbane
14 November 2017
This discussion and analysis (this "MD&A") is management's
assessment of the results and financial condition of SolGold plc
("SolGold" or the "Company") for the quarter ended 30 September
2017 and should be read in conjunction with the Company's unaudited
interim condensed consolidated financial statements for the quarter
ended 30 September 2017 and 2016 and the notes thereto. The interim
condensed consolidated financial statements have been prepared in
accordance with International Financial Reporting Standards
("IFRS") as issued by the International Accounting Standards Board
("IASB").
Management is responsible for the preparation of the financial
statements and this MD&A. Unless otherwise stated, all amounts
discussed in this MD&A are denominated in Australian
dollars.
Mr James Gilbertson (CP, BSc. Geology, MSc. Mining Geology) of
SRK Exploration Services is an independent "Qualified Person" (as
defined in National Instrument 43-101 - Standards of Disclosure for
Mineral Projects ("NI 43-101")), responsible for the technical
information reported herein, including verification of the data
disclosed.
Mr Nicholas Mather, BSc. Hons Geol, Chief Executive Officer of
the Company is a "Qualified Person" as defined in NI 43-101 and has
reviewed and approved the technical information in this MD&A
with respect to all of the Company's properties.
The information included in this MD&A is as of 14 November
2017 and all information is current as of such date. Readers are
encouraged to read the Company's Regulatory News Service ("RNS")
announcements filed on the London Stock Exchange and on the System
for Electronic Document Analysis and Retrieval ("SEDAR") under the
Company's issuer profile at www.sedar.com.
Description of Business
SolGold is a Brisbane, Australia based, dual LSE and TSX--listed
(SOLG on both exchanges) copper gold exploration and future
development company with assets in Ecuador, Solomon Islands and
Australia. SolGold's primary objective is to discover and define
world--class copper--gold deposits. Cascabel, SolGold's 85% owned
"World Class" (Refer to www.solgold.com.au/cautionary-notice/)
flagship copper--gold porphyry project, is located in northern
Ecuador on the under--explored northern section of the richly
endowed Andean Copper Belt. SolGold owns 85% of Exploraciones
Novomining S.A. ("ENSA") and approximately 5.34% of TSX--V--listed
Cornerstone Capital Resources Inc. ("Cornerstone"), which holds the
remaining 15% of ENSA, the Ecuadorian registered company which
holds 100% of the Cascabel concession.
SolGold's Board and Management Team have substantial vested
interests in the success of the Company as shareholders as well as
strong track records in the areas of exploration, mine appraisal
and development, investment, finance and law. SolGold's experience
is augmented by state of the art geophysical and modelling
techniques and the guidance of porphyry copper and gold expert Dr
Steve Garwin.
Results of Operations
The quarter ended 30 September 2017 compared with the quarter
ended 30 September 2016
Overall Performance
During the financial year ended 30 June 2017, SolGold announced
an update to its strategy to become a globally important copper
company by expanding the Company's copper-gold exploration
portfolio in Ecuador. Accordingly, a comprehensive, nation-wide
desktop study was undertaken by SolGold's independent experts
resulting in 59 new licences being granted, leaving the Company
with 7 exploration tenements in Australia, 60 exploration
concession in Ecuador and 1 exploration permit under application in
the Solomon Islands as at 30 September 2017.
Operating Results
The Company incurred a loss before tax of A$5,838,413 and loss
per share of 0.4 cents per share for the quarter ended 30 September
2017 compared to a loss before tax of A$804,929 and loss per share
of 0.1 cents per share for the quarter ended 30 September 2016.
Expenses incurred during the quarter ended 30 September 2017 were
A$5,838,413 compared to A$804,929 for the quarter ended 30
September 2016. The increase in expenses of A$5,033,484 over the
quarter ended 30 September 2016 was due to a number of factors, the
most notable of which are:
Administration and consulting expenses were A$1,498,446 for the
quarter ended 30 September 2017 compared to A$457,669 for the
quarter ended 30 September 2016. The increase in administrative
expenses of A$1,040,777 is largely due to the following:
- Increase in regulatory and compliance expenditure as a result
of the Toronto Stock Exchange listing fee of A$201,470 as well as
an increase in audit fees of A$105,122 resulting from an increase
in the audit scope due to the Company's increased market
capitalization;
- Increase in consultancy fees by A$200,000 due to the
appointment of a corporate advisory firm to review business
development opportunities;
- Increase in marketing, promotional and international travel
expenses by A$305,170 during the quarter ended 30 September 2017
due to increased profiling of the Company at industry conferences
and roadshows.
- Increase in Executive and Non-Executive Director fees by
A$101,434 during the quarter ended 30 September 2017 as a result of
the increase in annual Non-Executive Chairman fees and
Non-Executive Director fees from A$50,000 to A$110,000 and A$50,000
to A$70,000, respectively.
Borrowing costs and expenses were A$70,868 for the quarter ended
30 September 2016 compared to A$45 for the quarter ended 30
September 2017. The decrease in finance costs of A$70,823 is due to
the short term interest bearing liabilities and convertible notes
being converted into ordinary shares as part of the share placement
completed in August 2016. There was no short term interest bearing
liabilities or convertible notes outstanding at 30 September
2017.
Employee benefit expenses increased by A$132,010 to A$291,101
for the quarter ended 30 September 2017 from A$159,091 for the
quarter ended 30 September 2016, due to the increase in number of
administrative personnel in comparison to the prior quarter.
Unrealised foreign exchange (gains) losses increased by
A$1,770,230 to an unrealised foreign exchange gain of A$1,672,810
for the quarter ended 30 September 2017 compared to an unrealised
foreign exchange loss of $A97,420 for the quarter ended 30
September 2016, representing the weakening of the Australian dollar
against the United States dollar. The Company holds most of its
cash and cash equivalents in United States dollars.
Operating Results (continued)
Share based payments expense increased by A$2,166,881 to
A$2,247,574 for the quarter ended 30 September 2017 compared to
$A80,693 for the quarter ended 30 September 2016. The expense
recognised for the quarter ended 30 September 2017 represents the
fair value of the 46,762,000 unlisted options to directors, certain
employees and contractors over the vesting period.
The operating variances for the period are:
For the quarter 2017 2016 Variance
ended 30 September
A$ A$ A$
Revenue - - -
Cost of sales - - -
---------------------------------- ------------ ---------- ------------
Gross profit - - -
Other income - - -
Expenses
Administration and
consulting expenses (1,498,446) (457,669) (1,040,777)
Borrowing costs and
expenses (45) (70,868) 70,823
Depreciation and amortisation
expense (12,027) (2,045) (9,982)
Employee benefit expenses (291,101) (159,091) (132,010)
Legal expenses (115,423) (110,694) (4,729)
Exploration written
off (987) (21,289) 20,302
Unrealised foreign
exchange (gains) /
losses (1,672,810) 97,420 (1,770,230)
Share based payments
expense (2,247,574) (80,693) (2,166,881)
---------------------------------- ------------ ---------- ------------
Operating loss (5,838,413) (804,929) (5,033,484)
Loss before tax (5,838,413) (804,929) (5,033,484)
Tax expense (benefit) - - -
---------------------------------- ------------ ---------- ------------
Loss for the year (5,838,413) (804,929) (5,033,484)
---------------------------------- ------------ ---------- ------------
Other Comprehensive Income (Loss)
For the quarter ended 30 September 2017, the Company had a total
comprehensive loss of A$9,239,316 compared to a total comprehensive
profit of A$51,209 for the quarter ended 30 September 2016. The
increase in total comprehensive loss was due to the following:
Change in fair value of available for sale financial assets was
a loss of A$2,567,648 for the quarter ended 30 September 2017
compared to a gain of A$2,415,087 for the quarter ended 30
September 2016. The change year on year represents the mark to
market adjustments that the Company makes on its investment in
Cornerstone. The share price of Cornerstone at 30 September 2017
was C$0.37 per share compared to C$0.46 per share at 30 June 2017
and C$0.13 per share at 30 September 2016 compared to C$0.05 per
share at 30 June 2016.
Exchange differences on translation of foreign operations
representing the gain or loss recognised on translating the
Company's subsidiary Exploraciones Novomining S.A.'s ("ENSA")
financial statements was a loss of A$833,255 for the quarter ended
30 September 2017 compared to a loss of A$1,558,949 for the quarter
ended 30 September 2016. The average exchange rate used to
translate ENSA's financial statements for the quarter ended 30
September 2017 from United States dollars to Australian dollars was
1.25411 compared to 1.3207 for the quarter ended 30 September
2016.
Financial Position
Total assets at 30 September 2017 were A$163,893,336 compared to
A$166,713,608 at 30 June 2017 representing a decrease of
A$2,820,272 from the previous quarter as a result of increased cash
due to the exercise of share options and the issue of shares to
Newcrest Mining Ltd pursuant to top-up rights during the quarter,
offset by the continued exploration at the Company's flagship
Cascabel project and initial exploration of the newly granted
concessions in Ecuador and payments of corporate administrative and
overhead expenses.
Current assets decreased by A$10,837,574 primarily as a result
of funding the exploration programs at the Company's flagship
Cascabel project and the newly granted exploration concessions in
Ecuador.
Non-current assets increased by A$7,608,984 mainly due to
increases in intangible assets and property, plant and equipment
offset by the decrease in available for sale securities. Deferred
exploration assets increased by A$9,631,906 due predominantly to
the exploration expenditure incurred at the Cascabel project during
the quarter ended 30 September 2017. Investment in available for
sale securities decreased by A$2,516,943 representing the mark to
market adjustments that the Company makes on its investment in
Cornerstone.
Current and total liabilities at 30 September 2017 were
A$5,559,253 compared to A$2,741,175 at 30 June 2017 representing an
increase of A$2,818,078 from the previous quarter. The change is
due to the increased exploration activity in Ecuador resulting in
additional rigs and metres drilled compared to the previous
quarter.
Financings
During the quarter ended 30 September 2017, the Company issued
the following equities:
- On 7 July 2017, the Company issued an additional 1,300,000
shares at GBP0.14 to raise A$0.31 million (GBP0.18 million) in cash
as a result of the exercise of Director options.
- On 7 July 2017, the Company issued an additional 1,300,000
shares at GBP0.28 to raise A$0.62 million (GBP0.36 million) in cash
as a result of the exercise of Director options.
- On 9 August 2017, the Company issued a total of 46,762,000
unlisted options to Directors, certain employees and contractors.
The options have a strike price of GBP0.60 each and are exercisable
through to 8 August 2020.
- On 11 August 2017, the Company issued an additional 690,000
shares at GBP0.3816 to raise A$0.43 million (GBP0.26 million) in
cash to Newcrest International Pty Ltd ("Newcrest International"),
a wholly owned subsidiary of Newcrest Mining Ltd pursuant to
"top-up rights" held by Newcrest International pursuant to the
Newcrest Subscription Agreement (as varied). The allotment price
was based on the 10 day VWAP, in accordance with the terms of the
Newcrest Subscription Agreement.
Selected Financial Data
The following table provides selected annual financial
information derived from the most recently completed financial
statements and should be read in conjunction with the Company's
audited consolidated financial statements for the periods
below:
Year ended 30 June 2017 2016 2015
A$ A$ A$
Operations
Loss for the year after
tax (4,499,972) (5,723,122) (4,238,661)
Total comprehensive income
(loss) for the year 2,331,271 (4,483,698) (5,125,505)
Total comprehensive income
(loss) for the year attributable
to:
2,697,343 (4,383,728) (5,258,040)
* Owners of the parent company (366,071) (99,970) 132,535
* Non-controlling interest
2,331,271 (4,483,698) (5,125,505)
Basic and diluted loss per (0.3)/(0.3) (0.7)/(0.7) (0.6)/(0.6)
share (cents per share)
Balance Sheet
Working capital (deficit) 87,878,912 (8,220,663) (1,865,711)
Total assets 166,713,608 43,500,102 32,696,986
Total liabilities 2,741,175 8,518,765 2,338,446
Distributions or cash dividends Nil Nil Nil
declared per share
The Company prepares its consolidated annual financial
statements in accordance with IFRS as issued by the IASB.
SUMMARY OF QUARTERLY RESULTS
The following table sets forth a comparison of revenues and
earnings for the previous eight quarters ending with 30 September
2017. Financial information is prepared in accordance with IFRS as
issued by the IASB and is reported in Australian Dollars.
Quarter ended Sep 30, Jun 30, Mar 31, Dec 31,
2017 2017 2017 2016
A$ A$ A$ A$
Revenue - - - -
Loss for the quarter
before tax (5,838,413) (2,791,189) (4,575,517) (151,547)
Net loss per share
(cents per share) (0.4) (0.2) (0.3) (0.0)
Quarter ended Sep 30, Jun 30, Mar 31, Dec 31,
2016 2016 2016 2015
A$ A$ A$ A$
Revenue - - - -
Loss for the quarter
before tax (804,929) (2,412,779) (773,151) (2,031,645)
Net loss per share
(cents per share) (0.1) (0.3) (0.1) (0.3)
Exploration and Evaluation Assets
Total capitalised expenditures on exploration and evaluation
assets as at 30 September 2017 were A$69,355,011 compared to
A$59,723,105 at 30 June 2017. Exploration expenditure of
A$9,632,893 was incurred during the quarter ended 30 September 2017
compared to A$559,255 during the quarter ended 30 September 2016.
An impairment charge of A$987 (2016: A$21,289) was recognised for
exploration expenditure associated with tenements that were
surrendered or lapsed in the quarter ended 30 September 2017.
Cascabel Project (Ecuador)
At Cascabel, the benefits of corporate deals with Newcrest
Mining Ltd and Maxit Capital were realised with exploration fully
funded for the next 12 months as drilling continued to expand the
growing world class deposit at Alpala. A review of drilling results
has clarified world class intersections at updated metal prices,
and geology model is constantly improving drill targeting
capabilities.
Drilling to date has not yet constrained the rich Alpala
copper-gold deposit, and the deposit continues to grow with each
drill hole. Alpala alone is emerging as a Tier 1 copper project
with high average grades in both copper and gold. The project will
also enjoy the support of the surrounding 15 identified targets,
with drill testing at Aguinaga and other high priority targets
planned for the coming year.
The Company is currently directing drilling capability and
operations currently to the collection of drill data to be used in
the delivery of a Maiden Inferred Resource Estimate late December
2017. SolGold is also commencing planning for the collection of
necessary data to complete a preliminary economic assessment by end
2018.
Exploration activities during the quarter ended 30 September
2017 included:
-- Diamond drilling of holes 26 to 31 at Alpala, for a total of approximately 7500m
-- Geological modelling in preparation for upcoming Mineral Resource Estimate
-- Petrography and Mineragraphy.
-- Spectral alteration interpretation and analysis.
-- Ongoing environmental management with strict adherence to
guidelines provided by the Ministry of Environment.
-- Submission of annual technical and environmental management reports.
-- A hybrid "Spartan-Orion" 3D MV IP survey is currently underway
-- 3D geochemical modelling
-- Lidar topographic control survey planned for fourth quarter 2017.
-- Upgrade and expansion of the Alpala field camp and the
Rocafuerte field office and core handling and storage
facilities.
New Concessions for 100% SolGold Subsidiaries (Ecuador)
During the September quarter all four subsidiary companies have
had technical teams working on the ground. By the end of September
2017, seven project areas will have had initial evaluation
completed or nearing completion. Security and social teams have
been in the field ahead of the technical staff ensuring access to
all project areas and maintaining good relationships with local
landowners.
Of the 6 projects where evaluation work is being conducted, the
most promising projects identified are Machos - Florida Santa Cruz
- La Hueca Project (La Hueca Project), Sharug, Porvenir and Rio
Armarillo projects. These 4 projects all have Cu +- Au
mineralization identified with associated strong hydrothermal
alteration. Technical field teams during the quarter have been
conducting reconnaissance sampling, mapping and prospecting as
detailed in the table below.
New Concessions for 100% SolGold Subsidiaries (Ecuador)
COMPANY ROCK CHIPS STREAM PANNED MINERAL TOTAL
# SEDIMENTS CONCENTRATE
# #
---------------------- ----------- ----------- --------------- ------
Carnegie ridge
resources s.a. 126 83 0 209
---------------------- ----------- ----------- --------------- ------
Cruz del sol
cssa s.a. 271 180 180 631
---------------------- ----------- ----------- --------------- ------
Green rock resources
grr s.a. 275 549 14 838
---------------------- ----------- ----------- --------------- ------
Valle rico resources
vrr s.a. 19 32 22 73
---------------------- ----------- ----------- --------------- ------
Total 691 844 216
---------------------- ----------- ----------- --------------- ------
Table: Summary of regional sampling.
Queensland Projects (Australia)
In Australia, drill testing of porphyry style copper-gold
mineralisation at the Normanby Project, in northern Queensland
commenced in early July. A total of 518m of RC drilling from 7 RC
drill holes and 89.2m of diamond coring from 1 drill holes was
completed at the time of writing. A significant vertical
mineralised structure was intersected in holes MFT19, and MFT17,
and a separate shallow dipping zone of mineralisation was also
discovered in holes MFT24 and MFT014. Assay results remain
pending.
A reassessment of the range of other projects held in Queensland
resulted in definition of detailed work programs that will be put
in place as exploration funds become available.
Solomon Islands Projects
In the Solomon Islands, SolGold has streamlined its in-country
presence after significant drill testing reduced the prospectivity
of Fauro, Koloula and Malakuna tenements. The Kuma project in
Guadalcanal has never been drilled and is considered by SolGold to
be a significant porphyry copper-gold target upgraded by recent
geochemical and spectral work by SolGold subsidiary Guadalcanal
Exploration Pty Ltd (GEX).
Exploration Outlook
The focus of the Company during the financial year ending 30
June 2018 will be to continue exploration on its Cascabel project
in Ecuador and continue carrying out reconnaissance filed mapping
and rock chip sampling programs as well as evaluating several
mineralised outcropping targets over the 59 new tenements granted
to SolGold's four Ecuadorian subsidiaries.
Cascabel Project (Ecuador)
The Cascabel Project is a porphyry copper- gold deposit located
in the Imbabura province of northwest Ecuador. It lies just off the
main road, a 3-hour drive north of Ecuador's capital city, Quito.
The climate zone is tropical-savannah and vegetation is tropical
forest with a well-developed soil horizon. Topography rises from
elevations of 900 metres to 2,200 metres and the moderate to steep
landscape is incised by four large drainage complexes. A
first-order paved highway provides year-round access and crosses
the north-east corner of the concession.
Cascabel is SolGold's flagship project and shows significant
promise of hosting a tier 1 resource. SolGold has completed over
53,500m of drilling and expended over USD50M on the program, which
includes corporate costs and investments. This has been
accomplished with a workforce of up to 260 Ecuadorean workers and
geoscientists, and 6 expatriate Australian geoscientists.
SolGold's exploration program will focus on expanding the
mineralisation being defined along the greater Alpala trend. Over
23,000m of drilling is planned for the last calendar quarter of
2017, and over 106,000 metres of drilling is planned over the 2018
year. To date, SolGold has drill tested 4 of the 15 targets, being
Alpala Northwest, Alpala Central, Hematite Hill, and Alpala
Southeast. Currently drill testing of Alpala Northwest, Alpala
Central and Alpala Southeast targets is underway, with drill
testing of the Aguinaga target and other high priority targets to
commence in the coming year.
Cascabel Project (Ecuador) (continued)
Ecuador is undergoing a transformation with significant
improvements to infrastructure, including five key sea ports, over
10,000km of new highways, and 10 new hydroelectric projects. These
infrastructure improvements are sure to afford the project enormous
capital advantages as it moves toward feasibility over the coming
years. Completion of a new access road to Alpala Camp via the
village of Santa Cecilia in co-operation between the provincial
government and the local community is providing vital operational
advantages to the project.
Northern Ecuador lies within the under-explored northern section
of the richly endowed Andean Copper Belt, which extends from Chile
in the south to Colombia in the north and then north-west into
Panama. The tenement lies on the margin of the Eocene and Miocene
metallogenic belts which are renowned for hosting some of the
world's largest porphyry copper and gold deposits, like the giant
La Escondida Copper Mine in Chile, which is the world's largest
producer of copper and hosted within the same age host rocks as
Cascabel.
A number of globally significant deposits have been discovered
in the region, some of which are becoming mines. These include the
Junin copper project (982 million tonnes at 0.89% Cu), located some
60 km to the south-west of Cascabel, the La Colosa porphyry deposit
(905 million tonnes at 0.92 g/t Au) located to the north in
Colombia and the massive Cobre Panama deposit (3.3 billion tonne at
0.36% Cu) located to the north in Panama which contains over 26
million ounces of gold. The Fruta del Norte project in southern
Ecuador is among the largest and highest grade undeveloped gold
projects in the world (23.5 million tonnes at 9.59 g/t Au) and
highlights the pedigree of potential within the country.
The Cascabel project area is located above the subducted
extension of the Carnegie Ridge, where low angle subduction of
buoyant slabs generated zones of high magma flux and an environment
for outstanding porphyry copper and gold fertility.
The project is located within the Cordillera Occidental (or
Western Cordillera) of the Ecuadorian Andes. Basement rocks consist
of ocean floor basalts and sediments of Cretaceous age. High-level
Eocene (and possibly Late-Miocene) batholiths and associated
granite, granodiorite and diorite bodies intrude volcanic and
sedimentary rocks of Cretaceous to Tertiary age. The regional
controls that localise gold and copper mineralisation at Cascabel
are intimately related with the three-dimensional interaction of
deep seated NE-trending 1st order (arc-parallel) structures, with
NW-trending 2nd order (arc-normal) faults, and NNW-trending 3rd
order structures.
Within the Cascabel concession, volcanic and sedimentary rocks
are intruded by a number of Quartz diorite, diorite and hornblende
diorite stocks and dykes. The SolGold field teams completed 1:500
scale, "Anaconda" style geological mapping over the tenement area
and all high priority porphyry target centres have been elevated to
drill ready status.
Several types of mineralisation comprise the deposit, including
but not limited to:
-- disseminated mineralisation occurring within early quartz
diorite (QD10) source intrusions;
-- intense quartz-copper sulphide rich zones occurring at the
carapace and edges of QD10 intrusions;
-- multidirectional quartz-magnetite-chalcopyrite stock work
veins that extend several hundreds of metres beyond the QD10
intrusive margins;
-- moderate quartz-magnetite-chalcopyrite stock work veins and
lesser sheeted veins that characterize the more distal setting to
the source intrusions.
Cascabel Project (Ecuador) (continued)
Generally speaking, porphyry deposits are characteristically
continuous. At Alpala, on the basis of drill hole evidence and
geology, the mineralisation is robust and remains continuous over
the area drilled to date (from Hole 13 and 26 in the northwest to
Hole 21 and 28 in the southeast) at cut-off grades as high as 0.9%
copper equivalent. At lower cut-off grades (>0.5% copper
equivalent) the entire area drilled to data is continuous over
2200m length, and up to 700m width, over a total vertical column of
1800m.
Drilling indicates a true width of the mineralised envelope of
up to 700 metres, a length in excess of 1300 metres and over 1800m
vertical extent from surface. The highest-grade drill intervals
occur within and adjacent to a swarm of intrusions of early-stage,
quartz diorite porphyry bodies (QD10), which have been further
enriched with bornite mineralisation in a later stage phyllic
mineralisation event.
Mineralisation is controlled by a series of parent or source
quartz diorite ("QD10") intrusions, that have intruded the country
rock as a "swarm" of dykes and stocks, which have been enriched
with bornite mineralisation in a later stage phyllic mineralisation
event. The deposit that formed around the main mineralising QD10
source intrusions is up to 700 m thick in a SW-NE direction and
slowly tapers off towards surface, where the deposit outcrops in
Alpala Creek (where rock-saw channel sampling in trenches confirms
outcropping mineralisation over a combined zone of more than 87m
grading over 1% copper equivalent).
Each of the QD10 apophyses evident in the greater Alpala cluster
has mineralised a vertical extent of up to 1800 m of surrounding
host rock, forming tapering columns of multi-directional quartz
stock work veining that reach surface at locations like Alpala
Creek. To date, QD10 source intrusions have been intersected by
drilling over a strike length of more than 850 m from Hole 13 in
the northwest to Hole 25 in the southeast; drilling indicates a
vertical distribution of QD10 intrusions over more than 700 m from
950 m RL in Hole 25 to 250 m RL in Hole 12.
Grades that occur within the surrounding mineralised envelopes
in fact make up the bulk of the deposit at Alpala. The zones
contain classical porphyry style stock-work quartz - magnetite -
copper sulphide veining that is both extensive and intense and
includes sub-horizontal or low angle copper mineralised veins.
These zones are reasonably interpreted by management and SolGold
expert consultants to be continuous. This mineralisation forming
the bulk of the Alpala deposit extends for hundreds of metres
laterally and many hundreds of metres vertically (over 1000m in
parts) above the source intrusions.
At Cascabel, all drill holes have been assayed over their entire
length, including unmineralised rock, and the average of all drill
core at Alpala to date is 0.31% Cu and 0.26 g/t Au.
Initial 3D modelling based on existing drill data and grade
shell interpolants based on 3D Leapfrog(TM) modelling have outlined
an approximate Exploration Target at Alpala that ranges from 729Mt
at 1.06% copper equivalent, using a cut-off grade of 0.4% copper
equivalent, to 969Mt at 0.92% copper equivalent, using a cut-off
grade of 0.3% copper equivalent. These estimates compare favourably
in both grade and tonnage to existing block cave mineral resources,
and equate to an endowment of between 7.7-8.9Mt of contained copper
equivalents.
New Concessions for 100% SolGold Subsidiaries (Ecuador)
Outstanding results have been returned from first pass
prospecting subsequent to the end of the September as announced to
the market on 31 October 2017:
Ø Rock chip samples collected from SolGold's 100% owned La Hueca
Project have returned high grade copper and gold mineralisation
from extensive outcropping porphyry copper gold mineralisation over
a broad 5 km x 1 km zone. Best Results include;
o 13.82% Cu in sample R02000263
o 8.37% Cu in sample R02000310
o 4.08% Cu in sample R02000259
o 2.50% Cu in sample R02000307
o 1.80% Cu in sample R02000305
Ø 25 km long porphyry trend
Ø Jurassic in age similar to Fruta del Norte, Mirador and the
giant La Alumbrera mine in Argentina (Glencore).
Ø Samples were taken from an extensive zone of complex
multiphase copper sulphide and magnetite mineralised quartz veining
and hydrothermal alteration extending over an unclosed 5km long
zone
Ø Stream Sediment and panned concentrate sampling results have
highlighted additional areas of strongly anomalous copper and gold
mineralisation outside of the mineralised quartz vein zone, to be
followed up with detailed prospecting and field mapping.
In addition to the recent results returned from La Hueca, highly
anomalous Cu and Au results have been returned from stream sampling
programs at other project areas such as Porvenir and Sharug and Rio
Armarillo. These areas will require detailed follow up mapping and
rock chip sampling by SolGold's field teams to locate the source of
the stream sediment anomalism.
Queensland Projects (Australia)
The Company will commence a drill program to test porphyry style
gold mineralisation at the Normanby project. A reassessment of the
range of other projects held in Queensland resulted in the
definition of detailed work programs that will be put in place as
exploration funds become available. Joint venture opportunities are
being sought for these projects. The continued challenging equities
markets are making it difficult for companies to raise the
exploration funds to complete joint venture deals and commence
exploration.
Kuma Project (Solomon Islands)
The Kuma project is defined by a porphyry copper-gold target,
characterised by a widespread lithocap draping the steeply incised
terrain. Work to date has defined a number of porphyry style
geochemical anomalies centred on the upper portions of the Kuma
lithocap. Access agreements are being negotiated ahead of a field
program of Anaconda style geological mapping which is planned for
the coming year and reprocessing of existing airborne magnetic data
in 3D.
Kuma project exhibits silica ledges and dickite anomalies which
are controlled by high level structures which, along with the
identification and orientation of dikes (porphyritic felsic), veins
(quartz and epidote) and fractures (containing chalcopyrite or
magnetite) can provide vectors toward the centre of the Kuma
porphyry gold-copper system.
Drill Sites will be located following both magnetic
interpretation and correlation with geological mapping within and
peripheral to the target area. The project will be drill ready in
early 2019. Three steeply-inclined diamond core drill-holes, each
about 800 m deep, are envisaged for an initial test of the target
area.
Liquidity and Capital Resources
At 30 September 2017 the Company had cash and cash deposits of
A$78,475,169, a decrease of A$10,837,574 from A$89,312,743 as at 30
June 2017.
Cash expenditure (before financing activities) for the quarter
ended 30 September 2017 was A$10,518,157 million (2016:
A$3,057,789). During the quarter ended 30 September 2017, cash of
A$1,353,393 (2016: A$20,401,794) was received from the issue of
shares via "top-up" rights and the exercise of share options and
A$nil (2016: A$852,727) received as unsecured short term
borrowings. Accordingly, the net cash outflow of the Company for
the quarter ended 30 September 2017 was A$9,164,764 (2016: inflow
of A$18,169,317).
Cash of A$7,859,236 (2016: A$1,591,318) was invested by the
Company on exploration expenditure during the quarter ended 30
September 2017.
The Company has no history of revenues from its operating
activities and the Company has financed its activities by raising
capital through equity issuances or debt. Given the nature of the
Company's current activities, it will remain dependent on equity
and/or debt funding in the short to medium term until such time as
the Company becomes self-financing from the commercial production
of mineral resources.
Outstanding Share Data
The Company was authorised to issue 2,020,000,000 ordinary
shares at 30 September 2017 of which 1,516,245,686 were outstanding
at 30 June 2017 and at the date of the report, 14 November 2017. At
30 September 2017 and at the date of the report, the Company had
outstanding options to purchase an aggregate of 88,353,768 ordinary
shares with exercise prices ranging from GBP0.14 to GBP0.60 per
share and expiry dates ranging from 17 October 2018 and 8 August
2020.
Contingencies
A 2% net smelter royalty is payable to Santa Barbara Resources
Limited, which was the previous owner of the Cascabel tenements.
These royalties can be bought out by paying a total of US$4
million. Fifty percent (50%) of the royalty can be purchased for
US$1 million 90 days following the completion of a feasibility
study and the remaining 50% of the royalty can be purchased for
US$3 million 90 days following a production decision.
In the event Cornerstone's equity interest in ENSA is diluted
below 10%, Cornerstone's equity interest will be converted to a
half of one percent (0.5%) interest in a Net Smelter Return and
SolGold will have right to purchase the Net Smelter Return for
US$3.5 million at any time.
Transactions with Related Parties
Transactions with related parties are disclosed in Note 8 to the
30 September 2017 unaudited interim condensed consolidated
financial statements. Transactions between related parties are on
normal commercial terms and conditions no more favourable than
those available to other parties unless otherwise stated.
The figures noted below are for the quarter ended 30 September
2017 with comparative figures for the quarter ended 30 September
2016.
Transactions with Related Parties (continued)
The Company has a commercial agreement with Samuel Capital Ltd
("Samuel") for the engagement of Nicholas Mather as Chief Executive
Officer and Executive Director of the Company. For the quarter
ended 30 September 2017 A$100,000 was paid or payable to Samuel
(2016: A$50,000). The total amount outstanding at the end of the
quarter was A$nil (2016: A$9,435).
The Company has a long-standing commercial arrangement with DGR
Global, an entity associated with Nicholas Mather (Director) and
Brian Moller (Director), for the provision of various services,
whereby DGR Global provides resources and services including the
provision of its administration and exploration staff, its premises
(for the purposes of conducting the Company's business operations),
use of existing office furniture, equipment and certain stationery,
together with general telephone, reception and other office
facilities ("Services"). In consideration for the provision of the
Services, the Company shall reimburse DGR Global for any expenses
incurred by it in providing the Services. For the quarter ended 30
September 2017 A$90,000 was paid or payable to DGR Global (2016:
A$90,000) for the provision of administration, management and
office facilities to the Company during the quarter. The total
amount outstanding at quarter end was A$33,000 (2016: A$33,000).
The administration services agreement expires on 21 March 2019.
Mr Brian Moller (a Director), is a partner in the Australian
firm HopgoodGanim lawyers. For the quarter ended 30 September 2017,
HopgoodGanim were paid A$95,787 (2016: A$102,836) for the provision
of legal services to the Company. The services were based on normal
commercial terms and conditions. The total amount outstanding at
the end of the quarter was A$18,558 (2016: A$25,276).
On 20 November 2015, DGR Global agreed to provide short term
funding to SolGold to provide working capital. Interest on the
facility was charged at the rate of 9.5% per annum. The loan was
repayable by SolGold plc on the earlier of any capital raising
event, or 31 December 2016. DGR Global could, at its sole election,
convert all or part of the loan, including accrued interest, into
further equity as part of a SolGold capital raising, and at the
same price as third party participants, subject to DGR Global and
SolGold plc obtaining all necessary regulatory approvals. A new
loan agreement was signed on 30 June 2016 revising the limit on the
facility to A$7 million, all other conditions remained the same. On
29 August 2016, DGR Global converted A$5,700,000 of the debt
funding provided to SolGold into SolGold shares in accordance with
the terms of the loan arrangements announced to the market on 1
July 2016.
The key management personnel of the Company are the directors
and officers of the Company. Compensation awarded to key management
relating to consulting fees and share-based payments for the
quarters ended 30 September 2017 and 2016 are as follows:
Other Total
Salary Benefits(1) Pensions Remuneration
A$ A$ A$ A$
Three months ended
30 September 2017
----------------------- -------- ------------- --------- --------------
Directors
----------------------- -------- ------------- --------- --------------
Nicholas Mather 100,000 837,731 - 937,731
----------------------- -------- ------------- --------- --------------
Brian Moller 27,500 119,676 - 147,176
----------------------- -------- ------------- --------- --------------
Robert Weinberg 17,500 71,805 - 89,305
----------------------- -------- ------------- --------- --------------
John Bovard 17,500 71,805 - 89,305
----------------------- -------- ------------- --------- --------------
Craig Jones 17,500 71,805 - 89,305
----------------------- -------- ------------- --------- --------------
Other Key Management
Personnel(2) 262,022 783,968 15,062 1,061,051
----------------------- -------- ------------- --------- --------------
Total paid to Key
Management Personnel 442,022 1,956,791 15,062 2,413,874
----------------------- -------- ------------- --------- --------------
(1) Other Benefits represents the fair value of the share
options granted during the period based on either the Black-Scholes
model or Monte Carlo Simulation considering the effects of the
vesting conditions.
(2) Other Key Management Personnel consist of the aggregated
remuneration of Karl Schlobohm (Company Secretary), Priy Jayasuriya
(Chief Financial Officer), Jason Ward (Chief Geologist), Benn
Whistler (Technical Geologist) and Lazaro Roque-Albelo (Latin
Affairs Manager).
Transactions with Related Parties (continued)
Basic
Annual Other Total
Salary Benefits Pensions Remuneration
A$ A$ A$ A$
Three months ended
30 September 2016
----------------------- -------- ---------- --------- --------------
Directors
----------------------- -------- ---------- --------- --------------
Nicholas Mather 37,500 - - 37,500
----------------------- -------- ---------- --------- --------------
Brian Moller 12,500 - - 12,500
----------------------- -------- ---------- --------- --------------
Robert Weinberg 12,500 - - 12,500
----------------------- -------- ---------- --------- --------------
John Bovard 12,500 - - 12,500
----------------------- -------- ---------- --------- --------------
Scott Caldwell 3,056 - - 3,056
----------------------- -------- ---------- --------- --------------
Craig Jones - - - -
----------------------- -------- ---------- --------- --------------
Other Key Management
Personnel(1) 314,266 - 12,900 327,166
----------------------- -------- ---------- --------- --------------
Total paid to Key
Management Personnel 392,322 - 12,900 405,222
----------------------- -------- ---------- --------- --------------
(1) Other Key Management Personnel consist of the aggregated
remuneration of Karl Schlobohm (Company Secretary), Priy Jayasuriya
(Chief Financial Officer), Jason Ward (Chief Geologist), Benn
Whistler (Technical Geologist) and Lazaro Roque-Albelo (Latin
Affairs Manager).
During the quarter, A$15,062 employer's social security costs
(2016: A$12,900) were paid in respect of remuneration for key
management personnel.
Financial Instruments and Related Risks
The Company's financial assets and financial liabilities are
exposed to various risk factors that may affect the fair value
presentation or the amount ultimately received or paid on
settlement of its assets and liabilities. A summary of the major
financial instrument risks and the Company's approach to management
of these risks are highlighted below.
Credit Risk
The Company is exposed to credit risk primarily from the
financial institutions with which it holds cash and cash deposits.
The Company's cash and cash deposits are held with Australian,
Ecuadorian and Solomon Island financial institutions. Management
believes that the credit risk concentration with respect to
financial instruments included in other receivables and prepayments
is manageable.
Foreign Currency Risk
The Company transacts a significant portion of its business in
US dollars, which is the currency of Ecuador, and therefore is
subject to foreign exchange risk on US dollar receivables, trade
payables and cash balances. The Company attempts to mitigate these
risks by managing its US dollar inflows and outflows and
maintaining a significant portion of it cash and cash deposits in
US dollars. No hedging instruments have been used by the Company,
however, depending upon the nature and level of future foreign
exchange transactions, consideration may be given to the use of
hedging instruments. The Company believes that it adequately
manages its foreign exchange risk.
Liquidity Risk
The Company has no source of operating cash flow to funds its
exploration projects and is dependent on raising funds in capital
markets from a variety of eligible private, corporate and fund
investors, or from interested third parties (including other
exploration and mining companies) which may be interested in
earning an interest in the exploration project. The success or
otherwise of such capital raisings is dependent upon a variety of
factors including general equities and metals market sentiment,
macro-economic outlook, project prospectivity, operational risks
and other factors from time to time.
Financial Instruments and Related Risks (continued)
Other Price Risk
The Company is exposed to price risk with respect to commodity
and equity prices. Equity price risk is defined as the potential
adverse impact on the Company's earnings due to movements in
individual equity prices or general movements in the level of the
stock market. Commodity price risk is defined as the potential
adverse impact on earnings and economic value due to commodity
price movements and volatilities. The Company monitors commodity
prices of gold, copper and other metals, individual equity
movements, and the stock market to determine the appropriate course
of action to be taken by the Company. The Company believes that
both commodity and equity price movements can have a substantial
effect on the market value of the Company's investments.
Interest Rate Risks
The Company's policy is to retain its surplus funds on the most
advantageous term of deposit available up to twelve month's maximum
duration. The Company's cash and cash deposits may fluctuate in
value depending on the market interest rates and time to maturity
of the instruments.
Debt is initially recognised at fair value. Subsequent to
initial recognition these financial liabilities are held at
amortised cost using the effective interest rate method.
Subsequent Events
On 8 November 2017 the Company entered into an agreement with a
syndicate of underwriters led by National Bank Financial Inc. and
Canaccord Genuity Corp.(collectively, the "Underwriters") pursuant
to which the Underwriters have agreed to purchase, on a bought deal
private placement basis, 180,000,000 ordinary shares (the "Ordinary
Shares") of SolGold at a price of 25 pence per Ordinary Share for
aggregate gross proceeds of GBP45,000,000 (the "Offering"). The
Offering is expected to close on or about November 30, 2017 and is
subject to certain closing conditions.
Off-Balance Sheet Arrangements
At 30 September 2017, the Company had no off-balance sheet
arrangements such as guarantee contracts, contingent interest in
assets transferred to an entity, derivative instruments obligations
or any obligations that trigger financing, liquidity, market or
credit risk to the Company.
Critical Accounting Estimates
The preparation of financial statements in accordance with IFRS
requires management to make judgements, estimates and assumptions
about the carrying amounts of assets and liabilities, disclosure of
commitments and contingent liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during
the reporting period. The determination of estimates requires the
exercise of judgement based on various assumptions and other
factors such as historical experience, current and expected
economic conditions. Actual results could differ from these
estimates.
The significant judgements and estimates used in the preparation
of these interim condensed consolidated financial statements that
have a significant risk of causing a material adjustment to the
carrying amount of assets and liabilities and earnings within the
next financial reporting periods include:
Critical Accounting Estimates (continued)
Impairment and reversal of impairment of deferred exploration
assets
Deferred exploration assets are tested for impairment at the end
of each reporting period if in management's judgement there is an
indicator of impairment. If there are indicators, management
performs an impairment test on the major assets within this
balance.
Impairment reviews for deferred exploration costs are carried
out on a project-by-project basis, with each project representing a
potential single cash generating unit. An impairment review is
undertaken when indicators of impairment arise, typically when one
of the following circumstances apply:
-- The period for which the entity has the right to explore in
the specific area has expired during the period or will expire in
the near future, and is not expected to be renewed;
-- Substantive expenditure on further exploration for and
evaluation of mineral resources in the specific area is neither
budgeted nor planned;
-- Exploration for and evaluation of mineral resources in the
specific area have not led to the discovery of commercially viable
quantities of mineral resources and the entity has decided to
discontinue such activities in the specific area; and
-- Sufficient data exist to indicate that, although a
development in the specific area is likely to proceed, the carrying
amount of the exploration and evaluation asset is unlikely to be
recovered in full from successful development or by sale.
Fair value of share based payments
Determining the fair value of share-based payments involves
estimates of interest rates, expected life of options, share price
volatility and the application of the Black-Scholes option-pricing
model. The Black-Scholes option-pricing model requires the input of
highly subjective assumptions that can materially affect the fair
value estimate. Share options granted vest in accordance with the
ESOP. The valuation of share based compensation is subjective and
can impact profit and loss significantly. Several other variables
are used when determining the value of share options using the
Black-Scholes valuation model:
-- Dividend yield: The Company has not paid dividends in the
past because it is in the exploration stage and has not yet earned
any significant operating income. Also, the Company does not expect
to pay dividends in the foreseeable future. Therefore, a dividend
rate of 0% was used for the purposes of the valuation of the share
options.
-- Volatility: The Company uses historical information on the
market price to determine the degree of volatility at the date when
the share options are granted. Therefore, depending on when the
share options were granted and the period of historical information
examined, the degree of volatility can be different when
calculating the value of different stock options.
-- Risk-free interest rate: The Company used the interest rate
available for government securities of an equivalent expected term
as at the date of the grant of the share options. The risk-free
interest rate will vary depending on the date of the grant of the
share options and their expected term.
Changes in IFRS Accounting Policies and Future Accounting
Pronouncements
New standards and interpretations not yet adopted
The Company has elected not to early adopt the following revised
and amended standards, which are not yet endorsed in the EU. The
list below includes only standards and interpretations that could
have an impact on the consolidated financial statements of the
Company.
Changes in IFRS Accounting Policies and Future Accounting
Pronouncements (continued)
IFRS 9 Financial instruments
The complete standard has been issued in July 2014 including the
requirements previously issued and additional amendments. The new
standard replaces IAS 39 and includes a new expected loss
impairment model, changes to the classification and measurement
requirements of financial assets as well as to hedge accounting.
The new standard becomes effective for financial years beginning on
or after 1 January 2018. The Company will assess the impact on its
consolidated financial statements.
IFRS 15 Revenue from contracts with customers
The new standard was issued in May 2014 and establishes the
principles for the disclosure of useful information in the
financial statements in respect of contracts with customers. The
new standard becomes mandatory for financial years beginning on or
after 1 January 2018. The effect will be assessed and disclosure
will be made once the Company has assessed the impact of applying
IFRS 15. However as the Company currently does not generate revenue
there is no significant impact expected.
IFRS 16 Leases
The new standard was issued in January 2016 replacing the
previous leases standard, IAS 17 Leases, and related
Interpretations. IFRS 16 establishes the principles for the
recognition, measurement, presentation and disclosure of leases for
the customer ('lessee') and the supplier ('lessor'). IFRS 16
eliminates the classification of leases as either operating or
finance as is required by IAS 17 and, instead, introduces a single
lessee accounting model requiring a lessee to recognise assets and
liabilities for all leases unless the underlying asset has a low
value or the lease term is twelve months or less. This new standard
applies to annual reporting periods beginning on or after 1 January
2019 subject to EU endorsement. The Company will review its
arrangements in place in order to evaluate the potential impact of
the new standard.
Risks and Uncertainties
Resource exploration is a speculative business and involves a
high degree of risk. There is no certainty that the expenditures
made by the Company in the exploration of properties will result in
discoveries of commercial quantities of minerals. Exploration for
mineral deposits involves risks which even a combination of
professional evaluation and management experience may not
eliminate. Significant expenditures are required locate and
estimate ore reserves, and further the development of a property.
Capital expenditures to bring a property to a commercial production
stage are also significant. There is no assurance the Company has,
or will have, commercially viable ore bodies. There is no assurance
that the Company will be able to arrange sufficient financing to
bring ore bodies into production. The following are some of the
risks to the Company, recognising that it may be exposed to other
additional risks from time to time:
-- General geological risks
-- Title risk
-- Permitting risk in Ecuador
-- Dependence on key management personnel
-- Volatility of commodity prices
-- Project development risks
-- Currency fluctuations
-- Land access risks
-- Environmental risks
-- Geopolitical, regulatory and sovereign risk
The Company is diligent in minimising exposure to business risk,
but by the nature of its activities and size, will always have some
risk. These risks are not always quantifiable due to their
uncertain nature. Should one or more of these risks and
uncertainties materialise, or should underlying assumptions prove
incorrect, then actual results may vary materially from those
described on forward-looking statements.
Management's Responsibility for Financial Statements
The Board of Directors carries out its responsibility for the
interim condensed consolidated financial statements primarily
through the audit committee which is comprised of independent,
non-executive directors who meet periodically with management and
auditors to review financial reporting and internal control
matters.
Additional Information
Additional information relating to the Company is available on
the SEDAR under the Company's issuer profile at www.sedar.com and
can be found on the Company's website at www.solgold.com.au.
Forward-looking Statements
Certain statements contained in this MD&A may be deemed
"forward-looking statements" within the meaning of applicable
Canadian and U.S. securities laws. All statements in this MD&A,
other than statements of historical fact, that address future
events, developments or performance that SolGold expects to occur
including management's expectations regarding SolGold's growth,
results of operations, estimated future revenues, requirements for
additional capital, mineral reserve and mineral resource estimates,
production estimates, production costs and revenue estimates,
future demand for and prices of commodities, business prospects and
opportunities and outlook on gold and currency markets are
forward-looking statements. In addition, statements (including data
in tables) relating to reserves and resources and gold equivalent
ounces are forward-looking statements, as they involve implied
assessment, based on certain estimates and assumptions, and no
assurance can be given that the estimates will be realized.
Forward-looking statements are statements that are not historical
facts and are generally, but not always, identified by the words
"expects", "plans", "anticipates", "believes", "intends",
"estimates", "projects", "potential", "scheduled" and similar
expressions or variations (including negative variations), or that
events or conditions "will", "would", "may", "could" or "should"
occur including, without limitation, the performance of the assets
of SolGold, the realization of the anticipated benefits deriving
from SolGold's investments and transactions and the estimate of
gold equivalent ounces to be received in 2017. Although SolGold
believes the expectations expressed in such forward-looking
statements are based on reasonable assumptions, such statements
involve known and unknown risks, uncertainties and other factors,
most of which are beyond the control of SolGold, and are not
guarantees of future performance and actual results may accordingly
differ materially from those in forward-looking statements. Factors
that could cause the actual results to differ materially from those
in forward-looking statements include, without limitation:
fluctuations in the prices of the commodities; fluctuations in the
value of currency of Canada, Australia and the United Kingdom;
regulatory changes by national and local governments, including
permitting and licensing regimes and taxation policies; regulations
and political or economic developments in any of the countries
where properties in which SolGold holds interest are located; risks
related to the operators of the properties in which SolGold holds
interests; business opportunities that become available to, or are
pursued by SolGold; continued availability of capital and financing
and general economic, market or business conditions; litigation;
title, permit or license disputes related to interests on any of
the properties in which SolGold holds interest; development,
permitting, infrastructure, operating or technical difficulties on
any of the properties in which SolGold holds interest; risks and
hazards associated with the business of exploring, development and
mining on any of the properties in which SolGold holds interest,
including, but not limited to unusual or unexpected geological and
metallurgical conditions, slope failures or cave-ins, flooding and
other natural disasters or civil unrest or other uninsured risks.
The forward-looking statements contained in this MD&A are based
upon assumptions management believes to be reasonable, including,
without limitation: the ongoing operation of the properties in
which SolGold holds interest by the owners or operators of such
properties in a manner consistent with past practice; no material
adverse change in the market price of the commodities that underlie
the asset portfolio; no adverse development in respect of any
significant property in which SolGold holds interest; the accuracy
of publicly disclosed expectations for the development of
underlying properties that are not yet in production; and the
absence of any other factors that could cause actions, events or
results to differ from those anticipated, estimated or intended.
For additional information on risks, uncertainties and assumptions,
please refer to the AIF of SolGold filed on SEDAR at www.sedar.com
which also provides additional general assumptions in connection
with these statements. SolGold cautions that the foregoing list of
risk and uncertainties is not exhaustive. Investors and others
should carefully consider the above factors as well as the
uncertainties they represent and the risk they entail. SolGold
believes that the assumptions reflected in those forward-looking
statements are reasonable, but no assurance can be given that these
expectations will prove to be correct and such forward-looking
statements included in this MD&A should not be unduly relied
upon. These statements speak only as of the date of this MD&A.
SolGold undertakes no obligation to publicly update or revise any
forward-looking statements, whether as a result of new information,
future events or otherwise, other than as required by applicable
law.
This information is provided by RNS
The company news service from the London Stock Exchange
END
QRFOKPDPFBDKADD
(END) Dow Jones Newswires
November 15, 2017 05:31 ET (10:31 GMT)
Solgold (LSE:SOLG)
Historical Stock Chart
From Apr 2024 to May 2024
Solgold (LSE:SOLG)
Historical Stock Chart
From May 2023 to May 2024