TIDMKRS
RNS Number : 4130S
Keras Resources PLC
20 December 2016
Keras Resources plc / Index: AIM / Epic: KRS / Sector:
Mining
20 December 2016
Keras Resources plc ('Keras' or 'the Company')
Final Results
Keras Resources plc, the Australian gold mining company, is
pleased to announce its final results for the year ended 30
September 2016.
HIGHLIGHTS:
-- Established portfolio of gold mining operations in areas with
proven resource potential in Western Australia:
o Low cost acquisition of 100% of Klondyke Gold Project in
Western Australia ('Klondyke')
o Agreement with Haoma Mining NL ('Haoma') for a Right to Mine
and Option to Purchase Agreement on tenements contiguous and near
to Klondyke
o Establishment of joint venture / tribute mining portfolio,
following initial acquisition of Chaffers Mining in November
2015
-- Primary focus on Klondyke, located in a prospective gold
region with 15km of strike, which has a scalable JORC compliant
resource of 5.6Mt @ 2.08g/t for 374,000 ounces with significant
further upside:
o Resource covers just 2km of the 7.5km main strike identified,
and is also open at depth
o Right to mine adjacent Haoma tenements, which have excellent
discovery potential, highlighted by high-grade drill results,
including 3m at 17.58g/t Au from 20m, 4m at 59.48g/t Au from 64m
and 11m at 7.23g/t Au from 30m on adjacent shear zones
-- Active growth strategy - Klondyke and Haoma transactions
provide Keras with control over the Warrawoona Greenstone Belt and
the Group continues to assess additional growth opportunities
within this prospective area
-- Additional upside available through established joint venture
/ tribute mining portfolio
CHAIRMAN'S STATEMENT
During the year under review the Company has changed its area of
operation to become an Australian focussed gold company. Having
identified the significant potential of the Australian gold market,
we have made substantial progress within a short space of time. We
established a portfolio of tribute mining operations, which have
served as a stepping stone to the transformational acquisition of
Klondyke.
With an established resource of 5.6Mt at 2.08g/t gold ('Au') for
374,000oz, and further upside opportunity already identified, we
believe Klondyke offers significant value uplift potential.
Furthermore, at the same time as we acquired Klondyke the Company
also reached an agreement with Haoma for a Right to Mine and Option
to Purchase Agreement on tenements contiguous and near to Klondyke
covering 650 hectares. We believe these tenements have excellent
potential due to the high grade drill results that have been
returned to date, including 3m @ 17.58g/t Au from 20m, 4m @ 59.48
g/t Au from 64m and 11m @ 7.23 g/t Au from 30m.
Crucially, as we will be the operator of Klondyke and the Haoma
tenements, with a 100% interest, we believe there are stronger
operating margins available for us here compared to our tribute
operations. It is therefore our intention that this will be our
primary development focus. With this in mind, our strategy going
forward is centred on advancing Klondyke towards production whilst
concurrently identifying, assessing and developing low risk,
high-margin mining operations, which are intended to provide cash
flow to support the development of Klondyke.
Despite not having been profitable in the year to 30 September
2016, our tribute mining operations have served to give us a
foothold in the gold mining sector in Australia. In order to ensure
that these operations are a profitable investment for the Company,
both in terms of capital investment and management time, Keras has
implemented rigorous internal screening protocols for assessing new
projects.
Aside from our operational activity in Australia, we have an 85%
interest in the Nayega Manganese Project in Togo, West Africa,
which we believe offers significant upside due to its low capex,
open pit, near-term production 250,000 tonne per annum manganese
export potential. Whilst we continue to await the award of a mining
licence, we remain optimistic about the future development
potential of this project, especially given the positive price
performance of manganese in 2016.
Corporate Update
To reflect our increasing operational presence in Australia, we
are currently working to finance the development of Klondyke
through a proposed listing on the Australian Stock Exchange
('ASX'). We will continue to keep shareholders updated with
developments relating to a potential listing of either the Company
or its subsidiary on the ASX.
With the change in focus of the Company to Australia, we have
commenced restructuring our Board. Mr. Roy Pitchford resigned from
his role as a non-executive director of the Company in September
2016, when we acquired the Klondyke and Haoma tenements. At the
same time, Mr. James Carter, the Finance Director, also resigned
from the Board, but he will continue to provide services to the
Company in the role of Chief Financial Officer. I would like to
take this opportunity to thank both Roy and James for the long-term
support and guidance they have given Keras and I look forward to
continuing to work with James.
Financial Review
In order to fund the acquisition of Klondyke, Keras entered into
an Acquisition Finance Facility Agreement ('Finance Agreement')
with a consortium of investors arranged by Riverfort Global Capital
Ltd (the 'Investors'). The Finance Agreement has been entered into
as a bridge funding facility to secure the acquisition of a
significant long-term asset for the Company.
The total drawdown available to the Company was US$2m (GBP1.5m)
('Principal Amount') and is repayable six months after the initial
drawdown at an interest rate of 10% per semi-annum, with a
Commitment Fee and an Implementation Fee of 5% each. Draw down of
the total facility took place on completion of the project
acquisition in October 2016 and the Company granted GBP389,350
worth of warrants to subscribe for new ordinary shares of 0.01p
each ("Ordinary Shares"). The warrants are exercisable at a strike
price of 0.8501GBP and are valid for two years from the date of
issue.
Outlook
This has been a transformational year for Keras, with the change
of focus from iron and manganese in Africa to gold in Australia. I
believe we now have the necessary foundations in place to build an
exciting mining business and increase shareholder value. The
acquisition of Klondyke and the Haoma tenements gives us the
opportunity to operate our own 100% owned gold mine, and our focus
is now on advancing Klondyke into production. The first step is to
gain a better understanding of the geology and to expand the
resource prior to completing development plans for the project. In
line with this, we commenced an initial 600m drill programme in
November 2016. We expect the results of this to confirm priority
targets for the resource drill programme planned for early 2017,
which we believe should extend the current JORC compliant mineral
resource estimate.
In addition to advancing Klondyke and the Haoma tenements, we
will continue to investigate profitable gold mining operations.
Finally, I would like to take this opportunity, in what could be
my final statement as Chairman, to thank the rest of the Board and
our management team for their hard work, and shareholders for their
support through a difficult period of transition. We look forward
to keeping shareholders updated with our progress over the coming
year, which is set to be an extremely active one.
Brian Moritz
Chairman
19 December 2016
OPERATING REVIEW
Australian Owner Operator Gold Projects
Klondyke Gold Project (100% owned)
In October 2016 Keras completed the acquisition of Arcadia
Minerals Pty Ltd ('Arcadia'), which at the time was the 100% owner
of the Klondyke Gold Project ('Klondyke') in the Pilbara region of
Western Australia. At the same time, the Company also acquired the
Haoma Mining NL ("Haoma") Right to Mine and Option to Purchase
Agreement, which gives Keras the right to mine a number of
tenements prospective for gold, covering 650 hectares contiguous
and near to Klondyke. These transactions are part of the Company's
strategy to become a significant gold producer in Western
Australia.
Klondyke is located in the prospective Warrawoona Goldfield in
the East Pilbara District of the Pilbara Goldfield of Western
Australia. The Project comprises four mining licences covering 490
hectares, which includes numerous historic gold mines with very
high gold grades, such as the Klondyke Block and the Kopcke's
Reward, which have historical mined grades of 574g/t and 90 g/t of
gold respectively. Klondyke itself has an established 2012 JORC
compliant Inferred Resource of 5.6Mt at 2.08g/t for 374,000oz Au.
Crucially, this resource is confined to two separate 1km portions
of a 7.5km of mineralised strike length identified, meaning there
is significant potential for a large increase in resource along the
untested strike length.
Initial optimisation work on the resource suggests, due to its
large tonnage, near surface nature, that the deposit could be best
exploited via open pit mining, with favourable operating metrics
projected. Aside from the open-pit resource, there is also the
potential for underground mining on high grade lodes, which would
further extend the resource potential of the deposit.
In addition to the upside potential identified within the
Klondyke licence area, Keras also has the right to mine the Haoma
tenements, which comprise seven tenements covering an area of 650
hectares. These are contiguous and near to the Klondyke deposit,
and include historic deposits such as the previously producing
Fieldings Gully mine, and the Coronation and Copenhagen
deposits.
The Fieldings Gully mine is located approximately 15km from the
centre of the Klondyke area and is an old operating mine. Fieldings
Gully has a historic non-compliant resource of 315,000t @ 1.8 g/t
Au for 18,266oz at a 0.5g/t Au cut-off and the resource remains
open at depth and along strike. Significant intersections returned
from the deposit include 14m @ 3.09g/t from 53m, 4m @ 5.29 g/t from
12m and 3m @ 17.58g/t from 20m.
Copenhagen is located 10km from Klondyke and is situated on an
old mine. No resource has been calculated, but significant
intercepts have been returned from the deposit, including 4m @
59.48 g/t Au from 64m, 6m @ 15.47g/t Au from 26m and 10m @ 6.82 g/t
Au from 18m. These intercepts are extremely positive, but I would
like to advise shareholders that a small open pit was developed in
the 1980s at Copenhagen and consequently some of these areas may
have been mined. We look forward assessing this deposit in more
detail.
Coronation is located 12.5km from Klondyke and is situated on an
old mine. Like Copenhagen, no resource has been calculated but
significant intercepts underpin the prospectivity of this asset,
including 8m @ 7.64g/t Au from 64m, 3m @ 16.67g/t Au from 16m and
2m @ 31.5g/t Au from 30m.
In line with our active growth strategy, work has already
commenced at Klondyke and the wider Haoma tenement area. Detailed
mapping of the greater Klondyke area commenced in early November
2016 and an initial 600m drill programme commenced in mid-November.
The intention of this first phase of drilling is to confirm
historical intercepts and finalise assay techniques for the main
12,000m drill programme which is targeted to upgrade the current
resource in the Klondyke main shear and to in-fill drill the
adjacent Haoma tenements located along strike of the resource.
Following this drill programme, we will look to follow-up
significant drill intercepts at Copenhagen and review data from the
Fieldings Gully and Coronation deposits in order to ascertain the
likelihood that further drilling could add to the current resource.
We also intend to complete further metallurgical testwork.
Phase three of our development programme will look to undertake
further extensional drilling in order to define the westerly strike
potential of the main Klondyke shear and as part of this we hope to
complete a scoping study. This would then potentially pave the way
for a pre-feasibility study, which covers phase four of our
development strategy.
In addition to advancing Klondyke and the Haoma tenements we
will continue to assess additional opportunities in the project
area that we believe offer prospective upside opportunity,
complement our current land holding and further consolidate our
presence within the region.
Australian Tribute Gold Projects
The Company continues to identify and assess low-risk, tribute
operations to enable continuing cash flows while the flagship, 100%
owned Klondyke Project is being advanced to a development decision.
To support this, Keras has implemented rigorous internal screening
protocols for assessing new projects to determine maximum cash
costs and profit per month to ensure the Company only invests in
low-risk projects that provide an adequate reward for the time
spent on the project.
The Company's tribute portfolio is focussed on the Western
Australian goldfields meaning that infrastructure can be shared
across the projects in order to maximise profitability.
Grants Patch Gold Project
Status: Anomaly 22 and Accord - Complete | Prince of Wales Mine
- Ongoing
On 17 November 2015 Keras secured its first tribute contract via
the acquisition of a 100% interest of Australian private company
Chaffers Mining ('Chaffers'). This gave Keras ownership of a five
year tribute mining agreement with Paddington Goldfields, a
subsidiary of Norton Goldfields ('Norton'), to mine certain defined
gold deposits located on the Norton Grants Patch lease area,
situated 30km north of Kalgoorlie in the heart of the Western
Australian goldfields ('Grants Patch'). The agreement covers
historic resources of 5,741,155t at 2 g/t of gold for 363,599
ounces, with multiple deposits comprised of remnant resources below
historic pits and previously unmined near-surface deposits. Ore
recovered is treated at Norton's Paddington processing plant
located 25km away ('Paddington Mill'). Keras is contracted to pay
mining and processing costs, plus 22% royalty on gold recovered to
Norton.
Following an initial investigation of the licence area, Keras
identified two shallow laterite and oxide gold deposits, Anomaly 22
and Accord, which were recognised as providing potential for rapid
targeting in order to generate revenue in the short term. The
Company also identified an opportunity for high grade underground
mining from the Price of Wales mine, which has a historic resource
of 154,000t @ 8g/t gold and an exploration target of 500Kt at 10g/t
for 160Koz.
Ore mining commenced at Anomaly 22 in March 2016 and the first
batch of ore, totalling 7,548t at a grade of 1.53 g/t containing
around 372 ounces of gold, was hauled in early April 2016 to be
processed at the Paddington Mill.
Following delivery, ore mining commenced at Accord and
operations continued to move between the Anomaly 22 and Accord
deposits, with a second batch of ore, estimated to total 17,000t of
ore at a grade of 1.93 g/t Au containing an estimated 1,055 ounces
of gold, delivered to the Paddington Mill in late April 2016.
In total, 63,346 tonnes of ore were mined from Anomaly 22 and
Accord, which was toll processed at a provisional grade of 1.36 g/t
Au for a total of 2,763 ounces Au. However, lower than expected
productivity in the small pits resulted in higher operating costs,
with a total operating cost per ounce excluding joint venture costs
of A$1,407/oz and total operating cost including payments to due
joint ventures partners of A$1,736/oz achieved, set against the
then average gold price of A$1,687/oz. This accordingly led us to
re-evaluate our joint venture mining protocols for the mining of
future deposits, including increasing excavator and trucking
capacity, optimising grade control drilling and re-negotiating
contracts in order to significantly reduce costs and increase
operating margins.
The underground Prince of Wales mine remains a prospective
target for Keras, where higher operating margins are modelled.
Keras has completed extensive design and costing work in order to
help finalise development plans for the mine and a Bulk Sample
permit to mine an initial 10,000t was received in July 2016, which
will allow the Company to target the shallow, higher-grade ore that
can be easily accessed from the existing decline. Further updates
relating to this will be provided in due course.
Wycheproof Gold Deposit
Status: Complete
Keras secured a 50:50 profit share agreement with Kalgoorlie
Mining Associates on 23 February 2016 to mine the Wycheproof
deposit, which is located 50km north-east of the city of Kalgoorlie
in the Western Australian goldfields. With an established resource
of 75,600t at 2.87 g/t Au for 6,974 ounces, Wycheproof is a
high-grade, shallow deposit, which Keras targeted due to its
ability to be brought into production in a short space of time.
To support the exploitation of this asset, Keras concluded a
toll milling agreement with Golden Mile Milling (Pty) Ltd ('Golden
Mile') on 31 August 2016 to treat ore from Wycheproof at Golden
Mile's Lakewood mill, which is located on the outskirts of
Kalgoorlie. Following this, in September 2016, the Company
commenced milling of the first 10,000t batch of gold ore from
Wycheproof and during the quarter ended 30 September 2016 mined
19,522 tonnes of ore at an estimated average grade of 1.80g/t Au.
The final batch is currently being processed with total recovered
gold estimated to be approximately 1,000 ounces Au.
Lindsay's Gold Project
Status: Ongoing
On 14 March 2016 Keras signed a binding profit share agreement
with KalNorth Gold Mines Limited ('KalNorth') over the Lindsay's
Project in the Western Australian goldfields. Under the terms of
the Agreement, Keras has been granted an exclusive and irrevocable
option to mine the Lindsay's Project in consideration for a share
of the net revenues derived from the Lindsay's Project.
The Lindsay's Project is located 65km NNE of Kalgoorlie and
about 60km NE of the Grants Patch Gold Tribute Project. It
incorporates total open pit and underground resources of 215,100
ounces Au at a grade of 1.7g/t Au of which 77% falls in the
Indicated Resource category. It also includes the high-grade Parrot
Feathers deposit, which comprises a resource of 401,000t at a grade
of 4.2g/t Au containing 54,000 ounces Au with further upside
potential. This deposit is likely to be targeted via an underground
operation. Keras is currently assessing development plans for this
project with a decision to proceed or not to be made in the near
future.
On 14 December 2016, the Group entered into a Dead of Release
with KalNorth Gold Mines Limited in relation to the binding profit
share agreement.
African Portfolio
Togo - Nayega Manganese Project (85% owned)
Keras holds an 85% interest in the Nayega manganese project,
which covers 92,390 hectares in northern Togo, held through Societe
Generale des Mines SARL. The project is 30km from a main road,
which has direct access to the regionally important deep-water port
of Lome 600km away that has >800,000t per annum back loading
capabilities.
Having defined a JORC Code compliant Indicated and Measured
Resource of 11.0Mt @ 13.1% manganese, the Company has completed the
majority of the Phase 1 Definitive Feasibility Study to develop an
initial open-pit, 250,000tpa manganese operation. To support this
proposed development, we have applied for a Mining Permit. The
Company continues to await the award of this, and consequently we
have not undertaken any significant activities during the year.
However, we would like to assure shareholders that we have all the
relevant documents, government assurances and local support in
place so that we are well positioned to deliver first production
within approximately nine months from a development decision,
subject to the availability of mining finance.
With the manganese price performing well this year we remain
unchanged in our view that Nayega offers significant value for
Keras and we are currently assessing the best ways in which to
realise this.
Gabon - Mebaga Iron Ore (78% owned)
The Mebaga licence has had an application for renewal lodged,
the Company is considering the best course of action for this
project.
South Africa - Leinster Manganese (74% owned)
The Company is considering disposal options with regards to this
project.
David Reeves
Managing Director
19 December 2016
For further information please visit www.kerasplc.com, follow us
on Twitter @kerasplc or contact the following:
Dave Reeves Keras Resources plc dave@kerasplc.com
Nominated Adviser
Gerry Beaney/David Hignell Northland Capital Partners Limited +44 (0) 20 3861 6625
Broker
Elliot Hance/Jonathon Belliss Beaufort Securities Limited +44 (0) 20 7382 8415
Financial PR
Susie Geliher/Charlotte Page St Brides Partners Limited +44 (0) 20 7236 1177
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEARED 30 SEPTEMBER 2016
2016 2015
GBP'000 GBP'000
Revenue 1,936 -
Cost of (2,242) -
sales
--------- ---------
Gross loss (306) -
Administrative and
exploration expenses (1,320) (1,180)
Loss from operating
activities (1,626) (1,180)
--------- ---------
Finance
costs (486) (78)
Net finance costs (486) (78)
--------- ---------
Results from operating activities
after finance costs (2,112) (1,258)
Impairment of assets (10) (4,458)
---------
Loss before tax (2,122) (5,716)
Tax (117) -
--------- ---------
Loss for the year (2,239) (5,716)
Other comprehensive income
Exchange translation on foreign
operations 95 19
--------- ---------
Total comprehensive loss
for the year (2,144) (5,697)
========= =========
Loss attributable to:
Owners of the Company (2,211) (5,450)
Non-controlling interests (28) (266)
-------- --------
Loss for the year (2,239) (5,716)
======== ========
Total comprehensive loss
attributable to:
Owners of the Company (2,075) (5,373)
Non-controlling interests (69) (324)
-------- --------
Total comprehensive loss
for the year (2,144) (5,697)
======== ========
Loss per share
Basic and diluted loss per share
(pence) (0.176) (0.528)
======== ========
All activities are classed as continuing
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 SEPTEMBER 2016
2016 2015
GBP'000 GBP'000
Assets
Property, plant and
equipment 51 35
Intangible assets 2,041 1,171
Trade and other receivables 29 -
Non-current assets 2,121 1,206
--------- ---------
Inventory 604 -
Trade and other receivables 200 52
Cash and cash equivalents 134 64
--------- ---------
Current assets 938 116
--------- ---------
Total assets 3,059 1,322
========= =========
Equity
Share capital 6,123 5,504
Share premium 7,666 6,371
Other reserves (339) 523
Retained deficit (12,387) (11,275)
--------- ---------
Equity attributable to
owners of the Company 1,063 1,123
Non-controlling interests (730) (661)
--------- ---------
Total equity 333 462
--------- ---------
Liabilities
Loans and borrowings 1,136 375
Trade and other payables 1,590 485
--------- ---------
Current liabilities 2,726 860
--------- ---------
Total liabilities 2,726 860
--------- ---------
Total equity and liabilities 3,059 1,322
========= =========
The financial statements were approved by the Board of Directors
and authorised for issue on 19 December 2016. They were signed on
its behalf by:
Brian Moritz,
Director
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEARED 30 SEPTEMBER 2016
Attributable to owners of the Company
Share Share Share Exchange Retained Total Non-controlling Total
capital premium option reserve deficit interests equity
/warrant
reserve GBP'000
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP GBP'000
'000
Balance at 1
October 2015 5,504 6,371 250 273 (11,275) 1,123 (661) 462
Loss for the
year - - - (839) (1,372) (2,211) (28) (2,239)
Other
comprehensive
income - - - 161 (25) 136 (41) 95
Total
comprehensive
loss for the
year - - - (678) (1,397) (2,075) (69) (2,144)
-------- -------- --------- --------- --------- -------- ---------------- ---------
Issue of
ordinary
shares 619 1,306 - - - 1,925 - 1,925
Costs of share
issue - (11) - - - (11) - (11)
Transfer reserve
on
cancellation of
options - - (250) - 250 - - -
Warrants issued
in
lieu of finance
costs - - 101 - - 101 - 101
Transfer in
respect
of warrants
exercised - - (35) - 35 - - -
--------
619 1,295 (184) - 285 2,015 - 2,015
-------- --------- --------- --------- -------- ---------------- ---------
Balance at 30
September
2016 6,123 7,666 66 (405) (12,387) 1,063 (730) 333
======== ======== ========= ========= ========= ======== ================ =========
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 SEPTEMBER 2016
2016 2015
GBP'000 GBP'000
Cash flows from operating
activities
Loss from operating
activities (1,626) (1,180)
Adjustments for:
Depreciation and amortisation 107 15
Profit on disposal of property,
plant and equipment - (1)
Foreign exchange differences (90) 139
Equity-settled share-based
payments - 21
(1,609) (1,006)
Changes in:
- inventories (604) -
- trade and other receivables (177) 12
- trade and other payables 942 177
Cash used in operating
activities (1,448) (817)
Finance costs (344) (15)
Net cash used in operating
activities (1,792) (832)
--------- ---------
Cash flows from investing
activities
Proceeds from sale of property,
plant and equipment - 13
Acquisition of property, (21) -
plant and equipment
Exploration and licence expenditure (286) (224)
Net cash used in investing
activities (307) (211)
--------- ---------
Cash flows from financing
activities
Net proceeds from issue of
share capital 1,434 655
Proceeds from short term
borrowings 735 345
Net cash flows from
financing activities 2,169 1,000
--------- ---------
Net increase/(decrease)
in cash and cash equivalents 70 (43)
Cash and cash equivalents
at beginning of year 64 107
Cash and cash equivalents
at 30 September 134 64
========= =========
NOTES
1. The financial information contained in this announcement does
not comprise full statutory accounts.
2. The financial statements have been prepared in accordance
with International Financial Reporting Standards as adopted by the
EU. The financial statements have been prepared on the historical
cost basis.
3. No dividend is proposed in respect of the period.
4. A formal notice of AGM along with the Annual Report and
Accounts will be sent to shareholders in the coming weeks and will
be uploaded to the Company's website in due course -
www.kerasplc.com.
This announcement contains inside information for the purposes
of Article 7 of Regulation (EU) 596/2014.
**ENDS**
This information is provided by RNS
The company news service from the London Stock Exchange
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