30 September 2016
China Nonferrous Gold Limited 中国有色黄金有限公司
(‘CNG’ or the ‘Company’)
Interim Results for the Six-Month Period Ended 30 June 2016
China Nonferrous Gold Limited (AIM:CNG), the mineral exploration and development company currently developing the Pakrut Gold Project (‘the Pakrut Project’) in the Republic of Tajikistan, today announces its interim results for the six-month period ended 30 June 2016.
The results below are available on the Company's website at www.cnfgold.com.
- 2,183 metres of tunneling and cuttings at various levels completed by the end of August;
- 11,500 metre of drilling as part of face preparation and 4,497 metres of in-fill drilling completed;
- More than 122,000 tonnes of ore has been extracted during the first half of 2016 from above levels and has been stockpiled;
- Technical enhancements to the plant completed following trial production;
- Processing capacity currently at 1700 tonnes per day;
- 1,777 tonnes of gold concentrate produced and 150,000 tonnes of ore stockpiled by the end of August
- Pakrut operating board strengthened
- Debt re-financing of US$120 million with CNMC International Capitals Company Limited and post period end up to US$100 million with China Construction Bank Corporation Macau Branch, both at lower cost
For further information please visit the Company’s website (www.cnfgold.com) or contact:
China Nonferrous Gold Limited
David Tang, Managing Director
Tel: +86 10 8442 6681
Investec Bank Plc Jeremy Ellis,
Tel: +44 (0)20 7597 5970
Tim Blythe, Camilla Horsfall
Tel: +44 (0)20 7138 3204
The Pakrut gold project, of which CNG has 100 per cent ownership, is situated in Tajikistan approximately 120km northeast of the capital city Dushanbe. Pakrut is located within the Tien Shan gold belt, which
extends from Uzbekistan into Tajikistan, Kyrgyzstan and Western China, and which hosts a number of multi-million ounce gold deposits.
CNG is transitioning from construction with mining contractors on site developing the underground mine and surface infrastructure to production phase.
Tajikistan is a secular republic located in Central Asia. The country is a member of the Commonwealth of Independent States and the Shanghai Cooperation Organisation. Tajikistan hosts numerous operating precious metal mines as well as the largest aluminium smelter in Central Asia. CNG's management team has extensive experience in the mining industry in Tajikistan.
CHINA NONFERROUS GOLD LIMITED Chairman’s Statement
Construction and Production
During the first half year of 2016, the Company has made considerable progress on reaching the designed capacity of Pakrut Gold Project.
The tunneling and cuttings at 2110, 2170, 2230 and 2292 levels have reached 2,183 metres by the end of August. 11,500 metres of drilling for face preparation and 4,497 metres of in-fill drilling has been completed across the sub-levels. More than 122,000 tonnes of ore has also been extracted from above levels since the start of 2016.
Throughout the winter after trial production late last year, the Company continued to make effective and successful progress on equipment maintenance and technical modification work for the processing plant and smelting plant in order to complete commissioning work during trial production and reach the design capacity of 2,000 tonnes per day. The processing plant has been continuously running and is currently processing 1,700 tonnes of ore per day. Meanwhile the smelting plant has satisfied the conditions for continuous operation after equipment maintenance and technical modification. By the end of August 2016, the Company had produced 2,175tonnes of concentrate. The smelting of the gold from the concentrate is expected to start in October 2016.
On June 4th, the President of Republic of Tajikistan visited the smelting and processing plant and attended the opening ceremony of the processing plant.
In order to manage the production in a more efficient way, senior operational engineers have been recruited to assist in the transformation of Pakrut from the construction stage to production.
The amount incurred by the Company on development and construction work during the first six months of 2016 was US$39,587,000 (30 June 2015: US$29,673,000). Administration expenditure was US$2,820,560 (30 June 2015: US$1,277,000). The overall loss incurred by the Company was US$3,400,000(30 June 2015: US$1,203,000). Total cash equivalents at the end of the period amounted to US$109,020,000 (30 June 2015: US$13,218,000).
In the first half of 2016, new debt financing totaling US$220 million was secured from the China Nonferrous Mining Group and the Construction Bank of China. The new loans were used settle the ICBC loan balance and part of the previous shareholder loan balance in order to maximise the Company’s cash position and reduce financing costs. As at 30 June 2016 the Company’s outstanding debt balance consisted of US$311 million with $211 million owed to China Nonferrous Metals Int’l Mining Co., Ltd(“CNMIM”) and CNMC International Capitals Company Limited. Post period end the Company paid down $55 million of the CNMIM loan.
The Company remains focused on the transformation of the Pakrut Gold Project from construction to production and is on course to reach design capacity of 2,000 tonnes per day for processing within the second half of 2016. The recruitment of more senior operational engineers will be conducted in due course while Pakrut is transforming from construction stage to operation.
The permanent camp at site is expected to be completed before winter and construction of the new tailings dam is expected to begin shortly.
I would like to take this opportunity to thank all of our employees, management and advisors for their continued effort in 2016 and thank our shareholders for their continued support. I very much look forward to updating our shareholders on the mine production and gold pour.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE SIXMONTHS ENDED 30 JUNE 2016
CHINA NONFERROUS GOLD LIMITED
|Six months ended 30 June 2016||Six months ended 30 June 2015||
Year ended 31 December
|Administrative and other expenses||(2,821)||(1,277)||(3,166)|
|Foreign exchange (losses)/ gains||(550)||80||(2,988)|
|Loss before Tax||(3,400)||(1,203)||(6,150)|
|Loss after Tax||(3,400)||(1,203)||(6,150)|
|Total comprehensive income||-||-||-|
|-Total comprehensive income for the period attributable to owners of the Company||(3,400)||(1,203)||(6,150)|
|Earnings per Share|
|-Basic and diluted (US cents)||(0.89)||(0.31)||(0.0161)|
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2016
CHINA NONFERROUS GOLD LIMITED
|30 June 2016 US$’000||30 June 2015 US$’000||
31 December 2015
|Mine under construction||284,077||157,005||244,529|
|Prepayments for property, plant and equipment||565||2,689||-|
|Property, plant and equipment||10,573||11,340||11,624|
|Total Non-Current Assets||295,215||171,034||256,153|
|Trade and other receivables||2,571||173||1,010|
|Cash and cash equivalents||109,020||13,218||2,213|
|Total Current Assets||151,755||48,167||42,613|
|Payables for property, plant and equipment||(73,534)||-||-|
|Provision for other liabilities and charges||-||(593)||(646)|
|Trade and other payables||-||-||-|
|Total Non-Current Liabilities||(348,534)||(135,470)||(57,083)|
|Trade and Other payables||(46,940)||(5,628)||(74,204)|
|Total Current Liabilities||(66,940)||(26,315)||(206,787)|
|Net Current Assets(Liabilities)||84,815||21,852||(164,174)|
|Total Assets Less Current Liabilities||380,030||192,886||91,979|
|Capital And Reserves|
|Total Equity and Liabilities||446,970||219,201||298,766|
CONSOLIDATED CASH FLOW STATEMENT
FOR THE SIX MONTHS ENDED 30 JUNE 2016
CHINA NONFERROUS GOLD LIMITED
|Six months ended 30 June 2015||Six months ended 30 June 2014||Year ended 31 December 2015|
|Cash Flows from Operating Activities|
|Loss before tax||(3,400)||(1,203)||(6,150)|
|Share based payments|
|Operating cash flows before movements||(2,492)||(1,191)||(5,612)|
|in working capital|
|Advance to suppliers||243||(1,973)||-|
|Trade and other receivables (increase) / decrease||(46)||160||39|
|Other payables (decrease) / increase||43,688||(8,574)||49,615|
|Decrease(increase) in Inventory|
|Cash used in operations||41,393||(11,577)||49,615|
|Income tax paid||-||-|
|Net Cash used in Operating Activities||41,393||(11,577)||44,042|
|Cash flows from Investing Activities|
|Payments for intangible assets||-|
|Payments for property, plant and equipment||(61)||(2,153)||(2,282)|
|Payments for construction in progress and mining rights||(38,752)||(17,476)||(111,999)|
|Increase in Inventories||(774)||(10,044)||(14,658)|
|Net cash used in Investing Activities||(39,587)||(29,673)||(128,935)|
|Cash flows from Financing Activities|
|Proceeds from issue of shares||-||190||190|
|Proceeds from borrowings||240,000||46,235||110,909|
|Repayment of borrowings||(135,000)||(10,229)||(31,375)|
|Net Cash from/(used in) Financing Activities||105,000||36,196||68,834|
|Net Decrease in Cash and Cash Equivalents||106,806||(5,054)||(16,059)|
|Cash and cash equivalents at beginning of the period||2,213||18,272||18,272|
|Cash and cash equivalents at end of the period||109,019||13,218||2,213|
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE SIX MONTHS ENDED 30 JUNE 2016
CHINA NONFERROUS GOLD LIMITED
|Balance at 1 January 2015||38||65,711||10,175||(17,495)||58,429|
|Loss and total comprehensive||-||-||-||(1,203)||-1,203|
|income for the period|
|Issue of shares in respect of exercise of share options||-||190||-||-||190|
|Balance at 30 June 2015||38||65,901||10,175||(18,698)||57,416|
|Balance at 1 January 2016||38||65,901||10,175||(41,218)||34,896|
|Loss and total comprehensive incomefor the period||-||-||-||(3,400)||-3,400|
|Loss and total comprehensive incomefor the period|
|Balance at 30 June 2015||38||65,901||10,175||(44,618)||31,496|
NOTES TO THE INTERIM FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2016
1. Accounting Policies
These unaudited condensed interim financial statements were approved for issue by the China Nonferrous Gold Limited Board of Directors on 28 September 2016.
These condensed interim financial statements have been prepared in accordance with the recognition and measurement criteria of International Financial Reporting Standards (IFRS). The financial information has been prepared under the historical cost convention.
These condensed interim financial statements do not constitute statutory accounts.
As permitted, the Group has chosen not to adopt IAS 34 ‘Interim Financial Statements’ in preparing these condensed interim financial statements.
The Group has applied consistent accounting policies in preparing the condensed interim financial statements for the six months ended 30 June 2016 and the comparative information for the six months ended 30 June 2015 and the financial statements for the year ended 31 December 2015 and the financial statements for the year ended 31 December 2015.
Risks and uncertainties
The Board continuously assesses and monitors the key risks of the business. The key risks that could affect the Group’s medium term performance and the factors that mitigate those risks have not substantially changed from those set out in the Group’s 2015 Annual Report and Financial Statements, a copy of which is available on the Group’s website: www.cnfgold.com.
Critical accounting estimates and judgements
The preparation of consolidated interim financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the end of the reporting period. Significant items subject to such estimates are set out in the Group’s 2015 Annual Report and Financial Statements. The nature and amounts of such estimates have not changed during the interim period.
The functional currency of the Group is US dollars and accordingly the amounts in the interim results are denominated in that currency.
Basis of Consolidation
The consolidated Financial Statements incorporate the Financial Statements of the Company and all Group undertakings. These are adjusted, where appropriate, to conform to Group accounting policies. Subsidiaries are all entities over which the Group has control which is where the Group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. All significant intercompany transactions and balances between group undertakings are eliminated on consolidation.
Subsidiaries are consolidated from the date on which control is transferred to the Group, and continue to be consolidated until the date when such control ceases.
Mines under construction
Expenditure is transferred from “Exploration and evaluation” assets to mining rights within “Mines under construction” once the work completed to date supports the future development of the property and such development receives the requisite approvals. All subsequent expenditure on technically and commercially feasible sites is capitalised within mining rights.
All expenditure on the construction, installation or completion of infrastructure facilities is capitalised as construction in progress within “Mines under construction”. Once production starts, all assets included in “Mines under construction” will be transferred into “Property, Plant and Equipment” or “Producing mines”. It is at this point that depreciation / amortization commences over its useful economic life.
Mines under construction are stated at cost. The initial cost comprises transferred exploration and evaluation assets, construction costs, infrastructure facilities, any costs directly attributable to bringing the asset into operation, the initial estimate of the rehabilitation obligation, and, for qualifying assets, borrowing costs. Costs are capitalized and categorized between mining rights and construction in progress respectively according to whether they are intangible or tangible in nature.
Property, plant and equipment
Property, plant and equipment (other than construction in progress) is stated at cost, less subsequent accumulated depreciation and subsequent accumulated impairment losses, if any.
Depreciation of property, plant and equipment (other than construction in progress) is calculated using the straight-line method to allocate their costs to their residual values over their estimated useful lives using the following rates per annum:
Plant and machinery - 20%, Motor vehicles - 20%, Office furniture and equipment - 20%.
The estimated useful lives, residual values and depreciation method are reviewed at the end of each reporting period, with the effect of any changes in estimate accounted for a prospective basis.
Impairment losses on tangible and intangible assets
Exploration and evaluation assets and mines under construction are assessed for impairment annually or where there is an indication that an asset or cash generating unit (“CGU”) may be impaired. If an indication exists, or when annual impairment testing for an asset is required, the Group estimates the asset’s or CGU’s recoverable amount. The recoverable amount is the higher of an asset’s or CGU’s fair value less costs to sell and its value in use. Where the carrying amount of an asset or CGU exceeds its recoverable amount, the asset/CGU is considered impaired and is written down to its recoverable amount. The Group bases its impairment calculation on detailed budgets and forecasts based on the life-of-mine plans.
The assessment is carried out by allocating exploration and evaluation and mines under construction assets to CGUs which are based on specific projects and geographical areas. Where exploration for and evaluation of mineral resources in CGUs does not lead to the discovery of commercially viable quantities of mineral resources and the Group has decided to discontinue such activities at the unit, the associated expenditure will be written off to profit or loss. Exploration and evaluation assets are impaired when the Group’s right to explore in an area has expired.
2. Earnings per Share
Basic earnings per share are based on the weighted average number of ordinary shares issued during the half year of 2016: 382,392,292 (2015: 381,407,570). There is no difference between basic and diluted earnings per share as the Company is loss making.
3. Going Concern
The Group’s business activities, together with the factors likely to affect its future development, performance and position are set out in Annual report for the year ended 31 December 2015 which can be found on the Company’s website. The accounting policies include the Group’s objectives, policies and processes for managing its capital; its financial risk management objectives; details of its financial instruments; and its exposure to liquidity risk. During the period the following refinancing steps have been undertaken by the Company:
On 6th May 2016 the Group obtained a loan with CNMC International Capitals Company Limited (“CNMC”), an associate of CNMIM of US$120 million (“CNMC Loan”). This loan has been used to refinance the loan facility with ICBC. The CNMC Loan is repayable on 31 December 2018 and includes an annual fixed interest rate of 4% on the amount drawn down, payable in arrears. On 27th June 2016 the Group drew down a further loan of US$19,114,809 from CNMIM for working capital purposes.
On 1st July the Group announced an agreement with the China Construction Bank Corporation Macau Branch for a loan facility of up to USD$ 100 million (“CCBC loan”). This loan has been used to refinance the Company’s 2012 loan with CNMIM and also for working capital purposes. The CCBC loan is for a maximum of 5 years and is repayable 60 months from the date of first drawdown. The annual interest rate is 2.1% plus 3 month LIBOR.
As at the date of approval of these interim statements, and based upon the budgeted levels of expenditure, the refinancing undertaken, Board approved cash flow forecasts and expected production dates, the Directors are satisfied that the Group has sufficient cash and loan facilities to finance the Group’s operating expenses and any further development and construction of the Pakrut Gold Project that is required.
The Directors have a reasonable expectation that the Group has adequate resources to continue in operational existence and thus they continue to adopt the going concern basis of accounting in preparing the interim results.