TIDMKGLD
RNS Number : 5820D
Kolar Gold Limited
31 March 2014
31 March 2014
Kolar Gold Ltd
Half year results for six months ended 31 December 2013
Kolar Gold Limited ("Kolar Gold" or the "Company"), the Indian
focussed gold exploration and mine development company, announces
its unaudited results for the six months ended 31 December
2013.
The Company recorded a loss after tax for the period of
GBP1,578,434, (2012: GBP1,223,997) including a loss on the dilution
of investment in an associate of GBP909,622 (2012: nil). The
Company had GBP4.0m in cash and term deposits as at 31 December
2013 (2012: GBP6.5m).
The Company at the balance sheet date had the following
interests:
-- an effective interest of 26% in Geomysore Services India Private Limited ('GMSI') GMSI;
-- a right of first refusal, in association with the Cooperative
Societies of Bharat Gold Mines Limited ("BGML") ex-employees, to
acquire the "BGML" mining assets through a tender process to be
held by the owner, the Government of India; and
-- held cash balances of around GBP4.0m.
In addition, Kolar Gold has a management team with long standing
experience and knowledge of GMSI's activities and BGML.
GMSI
On 16 August 2013 the Company announced that it had entered into
a binding Heads of Agreement ("HoA") with GMSI to:
1. Dissolve the 2011 agreements between the Company and GMSI
through which Kolar Gold had certain rights over 14 Kolar Gold
projects;
2. Transfer the Kolar Gold exploration assets to GMSI;
3. Cancel GBP300,000 of advances previously made by Kolar Gold
to GMSI during the previous reporting period; and
4. Invest GBP700,000 into that company to fund its working
capital and to develop a number of advanced stage gold projects in
India. This includes the recently granted Jonnagiri Gold Mining
Lease, which already has a total JORC compliant Resource of 710k
oz.
In exchange for the above consideration Kolar Gold acquired a
30% interest in GMSI, and Kolar Gold's chief executive, Nick
Spencer, has joined the Board of GMSI.
In November 2013 GMSI awarded shares to Thriveni Earthmovers
Private Limited ('Thriveni') in consideration for the provision of
exploration and mining services to develop the Jonnagiri mining
lease project. As a result Kolar Gold now has an effective interest
in GMSI of 26%.
Subsequent to the Company's investment in GMSI, Deccan Gold
Mines (DGM), an Indian focussed gold exploration company listed on
the Bombay Stock Exchange (BSE), announced its in principle
agreement for an amalgamation with GMSI with a view to creating a
unique BSE listed large portfolio of India gold exploration and
development interests. The amalgamation is subject to valuations
and share swap ratios being agreed between the parties and the
shareholders of GMSI receiving a detailed and binding proposal from
DGM.
The Board of Kolar Gold has not received any definitive proposal
in connection with its interests in GMSI to consider at this point.
Should it do so it will consider the merits of the proposal and
whether its implementation would be in the best interest of Kolar
Gold's shareholders. The Board will report to shareholders if and
when it is appropriate to do so.
In the meantime, GMSI is proceeding with exploration and
drilling activities. Two core drill rigs have commenced operating
at Jonnagiri in recent weeks to upgrade and expand the defined gold
resource.
As at 31(st) December 2013 the Company valued its investment in
GMSI at GBP5.851million.
BGML Tender
Kolar Gold is jointly pursuing, with the Cooperative Societies
of BGML ex-employees, the acquisition and revival of the historic
Kolar Gold Fields which has produced 25 million ounces of gold at
15.9 grams per tonne over 120 years until closure in 2001.
In July 2013, the Supreme Court of India instructed the
Government of India to proceed with the tender sale and mine
revival of the historic BGML gold mines at Kolar Gold Fields.
In December 2013, Mecon Limited was appointed by the Government
to manage the tender process on its behalf. A final tender document
is expected to be issued to interested and qualifying parties in
2014.
The BGML ex-employees Society and Kolar Gold, as their Technical
and Financial collaborator has a right of first refusal to acquire
the BGML mine assets and fully revive the historic gold mine and
community.
Cash Balances and Working Capital
The strategic changes initiated by the Company in 2013 have
resulted in a reduction in ongoing overheads incurred during the
half-year (GBP605,000) and the investment in GMSI has removed any
further obligations (in respect of tenement rights) to the company.
Kolar Gold is no longer required to directly carry out exploration
activities on tenements as the Company now has exposure to GMSI's
increased and considerable gold licence area portfolio.
As at 31 December 2013 the Company's cash balances were GBP4m
and at the date of this report are around GBP3.7m.
Harvinder Hungin, Chairman of Kolar Gold Limited, commented:
"Kolar Gold is pursuing two strategies to develop a substantial
gold exploration and development business in India. First, through
its investment in GMSI, which may amalgamate with DGM to create
India's largest gold company listed on the Bombay Stock Exchange.
Secondly, after many years of work we are approaching the launch of
the tender process for the privatisation of BGML, the acquisition
of which, on acceptable terms, has been a long standing goal of
Kolar Gold. We have also minimised the cash burn to preserve
resources to enable Kolar Gold to participate at the level afforded
by our current resources or further, through Kolar Gold potentially
raising further capital . Major progress on both fronts is
anticipated this year, although India remains a challenging and
unpredictable environment in which to be certain as to timing"
Nick Spencer, Chief Executive Officer of Kolar Gold Limited,
commented:
"Through our investment in GMSI and the forthcoming BGML tender
we are positioning ourselves to have access to later stage gold
projects to pursue and develop. In GMSI, the two core rigs are now
operational full-time in order to potentially upgrade and expand
this gold resource at the Jonnagiri Mining License to over 1Moz of
gold. The necessary preparatory work to prepare for GMSI's possible
amalgamation with DGM is proceeding well, which will enable an
assessment to be made of the merits of the amalgamation and its
benefits to Kolar Gold shareholders. In anticipation of the BGML
tender, we are preparing our resources with the Employee Societies
to put ourselves in the position of being able to secure this
important gold asset."
_____________________
The Board
For further information please contact:
Kolar Gold Limited
Nick Spencer / Chris Clowes +61414874491 / +61417197288
N + 1 Singer (Nomad and Joint Broker)
James Maxwell / Jen Boorer +44 20 7496 3000
Pareto Securities (Joint Broker)
Will Slack +44 20 7786 4371
Tavistock Communications
Ed Portman / Nuala Gallagher +44 20 7920 3150
About Kolar Gold Limited:
Kolar Gold is an Indian gold exploration and development
company, listed on the AIM market (Ticker: KGLD) and an experienced
international board and strong local partners.
Kolar Gold is an investor in GMSI, an Indian exploration and
development company with a large portfolio of gold assets in the
Kolar Gold Belt and the rest of India. The Kolar Gold Belt is one
of the most prospective underdeveloped Archaean Greenstone Belts in
the world and is regarded by Mr Andrew J Vigar of Mining Associates
Limited, the Competent Person, as comparable to the Archaean
Greenstone Belts of South Africa, Canada and Western Australia
which have similar geology, structure and style of mineralisation.
This project area includes 32 known mineralised prospects and
covers 568 square kilometres in the southern states of Andhra
Pradesh, Karnataka and Tamil Nadu. GMSI has also recently been
awarded the Jonnagiri Gold Mining License for development.
Kolar Gold is also jointly pursuing, with the BGML mine employee
unions, the acquisition and revival of the neighbouring historic
Kolar Gold Fields which has produced 25 million ounces of gold at
15.9 grams per tonne over 120 years until closure in 2001.
Condensed consolidated statement of comprehensive income (unaudited)
for the six months ended 31 December
Six months Six months Year ended
ended ended
31 December 31 December 30 June
2013
2013 2012 (audited)
(unaudited) (unaudited)
GBP GBP
Note GBP
SUN Mining warrants issued
for services - (52,287) (77,542)
Options issued to directors (21,723) (20,421) (21,649)
Administrative expenses (605,413) (682,695) (1,438,250)
Advisory and due diligence
- GMSI and other prospective
gold assets (19,260) (526,626) (741,671)
Dilution of investment in associate (909,622) - -
Foreign exchange gains 8,752 - -
Loss from operating activities (1,547,266) (1,282,029) (2,278,845)
------------- -------------- ------------
Finance income 6 30,798 58,520 99,188
Finance costs (497) (488) (14,271)
------------- -------------- ------------
Net finance costs 30,301 58,032 84,917
------------- -------------- ------------
Share of loss of associate (61,469) - -
------------- -------------- ------------
Loss before tax (1,578,434) (1,223,997) (2,193,928)
------------- -------------- ------------
Income tax expense - - -
------------- -------------- ------------
Loss for the period (1,578,434) (1,223,997) (2,193,928)
Other comprehensive income
Foreign exchange translation
losses (35,417) (5,775) (5,510)
------------- -------------- ------------
Total comprehensive income
for the period (1,613,851) (1,229,772) (2,199,438)
============= ============== ============
Basic and diluted loss per
share (p) 1.5 1.2 2.1
The condensed notes are an integral part of the condensed
consolidated interim financial statements.
Condensed consolidated statement of financial position (unaudited)
as at 31 December 2013
31 December 31 December 30 June
2013 2012 2013
GBP GBP GBP
Note (unaudited) (unaudited) (audited)
Non-current assets
Plant and equipment 18,807 22,556 19,674
Investment in associate 6 5,851,077 - -
Exploration and evaluation
assets 6 - 5,807,365 6,122,168
Total non-current assets 5,869,884 5,829,921 6,141,842
------------- ------------- --------------
Current assets
Prepayments and other current
assets 33,209 58,628 27,506
Trade and other receivables 5,597 260,422 29,544
Term deposits 2,350,207 - 4,671,734
Cash and cash equivalents 1,633,685 6,452,196 698,817
Total current assets 4,022,698 6,771,246 5,427,601
------------- ------------- --------------
Total assets 9,892,582 12,601,167 11,569,443
------------- ------------- --------------
Current liabilities
Trade and other payables 256,744 369,534 321,450
Employee benefits 116,416 175,972 134,760
Total current liabilities 373,160 545,506 456,210
------------- ------------- --------------
Non-current liabilities
Employee benefits 2,923 3,850 4,606
------------- ------------- --------------
Total non-current liabilities 2,923 3,850 4,606
------------- ------------- --------------
Total liabilities 376,083 549,356 460,816
------------- ------------- --------------
Net assets 9,516,499 12,051,811 11,108,627
============= ============= ==============
Equity
Share capital 7 7,440,546 7,236,388 7,440,546
Share premium reserve 15,690,724 15,803,741 15,690,724
Reserves 3,811,216 3,889,304 3,824,910
Accumulated losses (17,425,987) (14,877,622) (15,847,553)
------------- ------------- --------------
Total equity 9,516,499 12,051,811 11,108,627
============= ============= ==============
These financial statements were approved by the Board of Directors
on 31 March 2014 and were signed on its behalf by:
________________________
Stephen Coe
Director
The condensed notes are an integral part of the condensed
consolidated interim financial statements.
Condensed consolidated statement of changes in equity (unaudited)
for the six months ended 31 December
Share Share premium Options Foreign Accumulated Total equity
capital reserve reserves currency losses
translation
reserve
(Unaudited) GBP GBP GBP GBP GBP GBP
Balance at 1 July
2013 7,440,546 15,690,724 3,816,304 8,606 (15,847,553) 11,108,627
Total comprehensive
income for the period
Loss for the period - - - - (1,578,434) (1,578,434)
Other comprehensive
income - foreign exchange
translation variances - - - (35,417) - (35,417)
---------- -------------- ---------- ------------- ------------- -------------
Total comprehensive
income for the period: - - - (35,417) (1,578,434) (1,613,851)
---------- -------------- ---------- ------------- ------------- -------------
Contributions by and
distributions to owners:
Issue of ordinary
shares - - - - - -
Equity-settled transactions
for the period - - 21,723 - - 21,723
---------- -------------- ---------- ------------- ------------- -------------
Total contributions
by and distributions
to owners: - - 21,723 - - 21,723
---------- -------------- ---------- ------------- ------------- -------------
Balance at 31 December
2013 7,440,546 15,690,724 3,838,027 (26,811) (17,425,987) 9,516,499
========== ============== ========== ============= ============= =============
(Audited)
Balance at 1 July
2012 7,010,625 15,700,535 4,081,682 14,116 (13,653,625) 13,153,333
Total comprehensive
loss for the year
Loss for the year - - - - (2,193,928) (2,193,928)
Other comprehensive
income - foreign exchange
translation variances - - - (5,510) - (5,510)
---------- -------------- ---------- ------------- ------------- -------------
Total comprehensive
loss for the period: - - - (5,510) (2,193,928) (2,199,438)
---------- -------------- ---------- ------------- ------------- -------------
Contributions by and
distributions to owners:
Exercise of SUN warrants 408,318 (43,749) (364,569) - - -
Other issues of ordinary
shares 21,603 33,938 - - - 55,541
Equity-settled transactions
for the period - - 99,191 - - 99,191
---------- -------------- ---------- ------------- ------------- -------------
Total contributions
by and distributions
to owners: 429,921 (9,811) (265,378) - - 154,732
---------- -------------- ---------- ------------- ------------- -------------
Balance at 30 June
2013 7,440,546 15,690,724 3,816,304 8,606 (15,847,553) 11,108,627
========== ============== ========== ============= ============= =============
The condensed notes are an integral part of the condensed
consolidated interim financial statements.
Condensed consolidated Statement of Cash Flows (unaudited)
for the six months ended 31 December
Six months Six months Year ended
ended ended
31 December 31 December 30 June 2013
2013 2012 (audited)
(unaudited) (unaudited)
GBP GBP GBP
Cash flows from operating activities
Loss for the period (1,578,434) (1,223,997) (2,193,928)
Adjustments for:
Depreciation 2,181 3,332 6,410
Share of loss of associate 61,469 - -
Dilution of investment in associate 909,622 - -
Net finance costs/(income) (30,301) (58,032) (84,917)
Unrealised foreign exchange (gains)/losses (49,584) (1,483) 14,716
Equity-settled share-based payment
transactions 21,723 80,000 99,191
------------- -------------- --------------
Operating loss before changes in
working capital and provisions (663,324) (1,200,180) (2,158,528)
Change in trade and other receivables 8,220 (206,719) 21,021
Change in other current assets (5,703) (7,942) 23,181
Change in trade and other payables (64,706) 14,916 (51,755)
Change in employee benefits (20,027) (2,126) (42,582)
------------- -------------- --------------
Cash used in operating activities (745,540) (1,402,051) (2,208,663)
Interest and finance costs paid (497) (488) (14,271)
------------- -------------- --------------
Net cash used in operating activities (746,037) (1,402,539) (2,222,934)
------------- -------------- --------------
Cash flows from investing activities
Interest received 46,525 59,641 103,447
Funds (placed on)/taken off term
deposit 2,321,527 - (4,671,734)
Payments for investment in associate (700,000) - -
Payments for exploration and evaluation
assets - (331,857) (676,323)
Payments for plant and equipment (1,314) (650) (846)
------------- -------------- --------------
Net cash used in investing activities 1,666,738 (272,866) (5,245,456)
------------- -------------- --------------
Cash flows from financing activities
Proceeds from issues of equity securities - - 55,541
Net cash from financing activities - - 55,541
------------- -------------- --------------
Net increase/(decrease) in cash
and cash equivalents 920,701 (1,675,405) (7,412,849)
Foreign exchange gain/(loss) on
closing cash balances 14,167 (4,291) (20,226)
Cash and cash equivalents at 1 July 698,817 8,131,892 8,131,892
------------- -------------- --------------
Cash and cash equivalents at 31
December 1,633,685 6,452,196 698,817
============= ============== ==============
The condensed notes on are an integral part of the condensed
consolidated interim financial statements.
Kolar Gold Limited
Notes to the condensed consolidated interim financial statements
for the six months ended 31 December 2013
1 Reporting entity
Kolar Gold Limited (the 'Company') is a company incorporated and
registered in Guernsey and its shares are traded on AIM in London.
The condensed consolidated interim financial statements of the
Company as at and for the six months ended 31 December 2013 comprises
the Company and its subsidiaries (together referred to as the
"Group"). The Group primarily is involved in the exploration and
development of mining assets in the Kolar Belt with GMSI, its
Indian partner, and the potential acquisition of the mining assets
of BGML from the GoI.
The consolidated annual financial report of the Group as at and
for the year ended 30 June 2013 is available upon request from
the Company's registered office at Frances House, Sir William
Place, St. Peter Port, Guernsey GY1 4HQ.
2 Statement of compliance
These condensed consolidated interim financial statements have
been prepared in accordance with IAS 34 Interim Financial Reporting.
They do not include all of the information required for full annual
financial statements and should be read in conjunction with the
consolidated financial statements of the Group as at and for the
year ended 30 June 2013.
These condensed interim consolidated financial statements were
approved by the Board of Directors on 31 March 2014.
3 Significant accounting policies
The accounting policies applied by the Group in these condensed
consolidated interim financial statements are the same as those
applied by the Group in its consolidated financial statements
as at and for the year ended 30 June 2013.
4 Going concern
These condensed consolidated interim financial statements have
been prepared on the basis of accounting principles applicable
to Kolar Gold being a "going concern" which assumes the Group
will continue in operation for at least 12 months from the date
of these interim financial statements and will be able to realise
its assets and discharge its liabilities in the normal course
of operations.
As an investor in an exploration company, the Group currently
has no source of operating cash inflows, other than interest income,
and has incurred net operating cash outflows for the six months
ended 31 December 2013 of GBP745,540 (2012: GBP1,402,051). During
this period, the Company received no net financing inflows (2012:
nil) and applied GBPnil (2012: GBP331,857) to mineral exploration
at the South Kolar PL area. During the six months ended 31 December
2013, GBP700,000 (2012: GBPnil) was paid for the acquisition of
a shareholding in GMSI, as detailed in full in Note 6.
At 31 December 2013 the Group had cash balances, including term
deposits, of GBP3,983,892 (30 June 2013: GBP5,370,551) and a surplus
in net working capital (current assets less current liabilities)
of GBP3,649,538 (June 2013: GBP4,971,391).
The Directors have prepared forecasts to continue its operations,
including the pursuit of the BGML assets, well beyond March 2015.
The Company will have to raise funds in the event that the Company's
tender offer for the BGML assets is successful, and/or the Company
substantially increases its Indian investments.
The directors consider that the Group has adequate resources to continue
its operations for at least 12 months from the date of these interim
financial statements. Notwithstanding the above, there can be no certainty
in this matter and the financial statements do not include any adjustments
that would be necessary should the going concern basis not be appropriate.
5 Estimates
The preparation of interim financial statements requires management
to make judgements, estimates and assumptions that affect the application
of accounting policies and the reported amounts of assets, liabilities,
income and expense. Actual results may differ from these estimates.
In preparing these condensed consolidated interim financial statements,
the significant judgements made by management in applying the Group's
accounting policies and the key sources of estimation uncertainty
were the same as those that applied to the consolidated financial
statements as at and for the year ended 30 June 2013.
6 Investment in associates
In 2010 the Group entered into a contract to acquire the rights to
gold assets in the North Kolar, South Kolar and East Kolar permit
areas of India. The mining assets comprise mineral exploration rights
in these permit areas. The Group was committed, but not obligated,
to acquire the rights when, and only when, they have been approved
by the Government of India. At 30 June 2013, a commitment existed
in relation to this acquisition of GBP4,716,981.
In August 2013 the Group entered into a Heads of Agreement with GMSI
to dissolve the above contract and return all rights in the Kolar
Gold Projects to GMSI. In consideration for the return of all tenement
rights to GMSI, the cancellation of a GBP300,000 loan made by KGL
to GMSI last year, and a cash consideration of GBP700,000, the Group
acquired a 30% equity interest in GMSI.
GMSI will be accounted for as an associate because, while the Group
has significant influence over GMSI, it does not have control, and
it will be accounted for on an equity accounting basis. The fair value
of the investment in GMSI at the time of the acquisition was equivalent
to the cost and fair value of the assets surrendered of GBP6,822,168,
and this amount has been determined to be the acquisition cost of
the investment in an associate.
In November 2013 GMSI granted shares to a third party amounting to
20% of GMSI's issued capital, in exchange for the provision of services.
As a result of this transaction and the purchase arrangements, the
Group's equity holding of GMSI fell to an effective interest of 26%.
Based on the above, between the date of acquisition and 31 December
2013, the Group suffered a loss on dilution in its investment totalling
GBP909,622.
The carrying value of the investment in an associate is determined
as follows:
Investment in an associate GBP
Acquisition cost 6,822,168
Dilution of investment (909,622)
Share of loss of associate (61,469)
------------
Total 5,851,077
============
7 Share capital
Issuance of ordinary shares
Ordinary shares
(Nominal value 7p per share)
Six months Year ended 30 June
ended 2013
31 December (audited)
2013
(unaudited) '000
'000
Opening balance 106,294 100,152
Issued upon the exercise
of warrants - 5,833
Issued as settlement of
debt - 309
Closing balance 106,294 106,294
============= =======================
No shares were issued during the period.
All shares issued by the Company are 'ordinary' shares and rank equally
in all respects, including for dividends, shareholder attendance and
voter rights at meetings, on a return of capital and in a winding-up.
Dividends
No dividends were declared nor paid during the six months ended 31
December 2013 (2012: nil).
8 Share-based payments
a) Options
The Company has issued options to directors, employees and long-term
consultants to compensate them for services rendered and incentivise
them to add value to the Group's longer term share value. They
comprise Reward Options in exchange for the provision of services
and Bonus Options, which are only receivable upon the Company's
shares being admitted to trading on a stock exchange.
On 27 November 2013, in line with their letters of appointment,
400,000 options were issued to non-executive directors with an
exercise price of 6.38p and a term of 5 years.
The following unexpired options existed as at 31 December 2013.
Name Date of Ordinary Shares Expiry Date Exercise
Grant under option Price GBP
Norman Coldham-Fussell 17.6.11 675,000 17.06.14 0.40
Nicholas Taylor Spencer 17.6.11 1,350,000 17.06.14 0.40
Richard Johnson 17.6.11 675,000 17.06.14 0.40
Harvinder Hungin 10.6.11 450,000 10.06.16 0.40
Stephen Coe 10.6.11 350,000 10.06.16 0.40
Stephen Oke 10.6.11 350,000 10.06.16 0.40
Harvinder Hungin 31.12.12 150,000 31.12.17 0.0838
Stephen Coe 31.12.12 125,000 31.12.17 0.0838
Stephen Oke 31.12.12 125,000 31.12.17 0.0838
Harvinder Hungin 27.11.13 150,000 27.11.18 0.0638
Stephen Coe 27.11.13 125,000 27.11.18 0.0638
Stephen Oke 27.11.13 125,000 27.11.18 0.0638
-------------------------
4,650,000
=========================
b) Warrants
No warrants were issued during the period.
The following unexercised warrants existed as at 31 December 2013:
Name Date Ordinary Expiry Exercise Price
of Grant Shares under Date GBP
option
Broker warrants Series 1 5.5.11 1,300,000 17.6.14 0.40
Broker warrants Series 2 17.6.11 1,500,000 17.6.14 0.60
2,800,000
=================
Each warrant entitles the holder to subscribe for one ordinary
share in the Company. The holder must exercise the warrants no
later than 30 days after the expiry date. Warrants do not confer
any voting rights on the holder.
9 Operating segments
The Group currently has one operating segment, being the exploration
for gold in India.
10 Subsequent events
There have been no significant events subsequent to the balance
sheet date to report that would alter the financial statements
as at 31 December 2013 or require disclosure.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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