TSX: ASO
AIM: ASO
TORONTO, May 10, 2018 /CNW/ - Avesoro Resources Inc.
("Avesoro" or the "Company"), the TSX and AIM listed West African
gold producer, is pleased to announce the release of its unaudited
financial results for the quarter ended March 31, 2018 (the "Quarter" or "Q1").
Q1 2018 Highlights
- Record quarterly gold production of 68,088 ounces, an increase
of 140% quarter on quarter ("QoQ");
- Total Company revenues increased 174% QoQ to US$91.4 million, with record quarterly gold sales
of 68,553 ounces at an average realised gold price of US$1,333 per ounce;
- Operating cash costs of US$624
per ounce sold, an improvement of 19% QoQ;
- All in sustaining cash costs ("AISC") of US$914 per ounce sold, an improvement of 24%
QoQ;
- Company EBITDA margin of 44%, a 33% improvement on the previous
quarter, with EBITDA more than trebling QoQ to US$40.2 million;
- Strong operating cash flow of US$39.4
million, an increase of over 177% on the previous quarter,
with available cash on hand at the end of the Quarter of
US$23.0 million; and
- Net debt decreased by US$17.5
million to US$106.6
million.
Commenting on the Company's strong quarterly performance,
Serhan Umurhan, Chief Executive Officer of Avesoro Resources,
said: "I am delighted to report that following record
quarterly gold production of 68,088 ounces, the Company delivered
record quarterly revenues of US$91.4
million. This is an increase of 174% on Q4 2017 and
represents more than 90% of the full year revenue achieved in 2017.
On the back of the significantly increased cash flow from our
assets, the Company has strengthened its balance sheet during the
Quarter, and reduced net debt by US$17.5
million including a US$10.7
million scheduled debt repayment against the New Liberty
project finance facility.
We remain on track to achieve our 2018 production and cost
guidance of 220,000 to 240,000 ounces of gold at an operating cash
cost of US$620 to US$660 per ounce and an AISC of US$960 to US$1,000
per ounce.
Additionally, we are progressing well with the New Liberty
infill, Ndablama, Youga and Balogo drilling campaigns. We look
forward to updating the market later in the current quarter on our
progress towards increasing the Company's Mineral Resources and
subsequently extending the mine lives at our existing operations
through conversion to Mineral Reserves".
Table 1: Consolidated Financial Highlights
Metric
|
Q1
2018
|
Q4
20171
|
Q1
2017
|
Q1 2018
vs Q4
2017
|
Q1 2018
vs Q1
2017
|
Gold production,
oz
|
68,088
|
28,408
|
14,906
|
140%
|
357%
|
Gold sold,
oz
|
68,553
|
26,209
|
16,008
|
162%
|
328%
|
Operating cash
costs2, US$/oz sold
|
624
|
770
|
1,051
|
-19%
|
-41%
|
All in sustaining
costs2, US$/oz sold
|
914
|
1,206
|
1,488
|
-24%
|
-39%
|
Average realised
gold price, US$/oz
|
1,333
|
1,271
|
1,231
|
5%
|
8%
|
Revenues,
US$m
|
91.4
|
33.3
|
19.7
|
174%
|
364%
|
EBITDA2, US$m
|
40.2
|
11.03
|
0.2
|
265%
|
18,326%
|
EBITDA
margin2
|
44%
|
33%
|
1%
|
33%
|
3,873%
|
Cash flow from
operations, US$m
|
39.4
|
14.2
|
1.8
|
177%
|
2,075%
|
Capital spend,
US$m
|
13.6
|
10.6
|
5.0
|
28%
|
172%
|
Cash,
US$m
|
23.0
|
17.8
|
6.7
|
29%
|
241%
|
Net debt,
US$m
|
106.6
|
124.1
|
97.9
|
-14%
|
9%
|
1
|
The Company
acquired Youga and Balogo Gold Mines on December 18, 2017. The
operations for the thirteen days ended December 31, 2017 are
included in the Company's Q4 2017 results
|
2
|
Operating cash
costs, AISC, EBITDA and cash, are non-GAAP measures and are defined
in the notes section of this announcement
|
3
|
EBITDA in previous
quarters has been restated to exclude foreign exchange loss/(gains)
in EBITDA and adjusted EBITDA, treating the revaluation of
financial assets and liabilities as financing items rather than
operational items. This has had the effect of reducing Q4
2017 EBITDA by US$0.1m and nil effect on Q1 2017.
|
Table 2: Key Operational Financial Highlights
Metric
|
Q1
2018
|
Q4
2017
|
Q1
2017
|
Q1 2018 vs
Q4 2017
|
Q1 2018 vs
Q1 2017
|
New Liberty Gold
Mine, Liberia
|
Gold production,
oz
|
27,870
|
25,563
|
14,906
|
9%
|
87%
|
Mining cost,
US$/t
|
2.51
|
3.83
|
2.19
|
-35%
|
15%
|
Processing cost,
US$/t
|
24.52
|
24.63
|
26.77
|
0%
|
-8%
|
Operating cash
costs, US$/oz sold
|
846
|
790
|
1,051
|
7%
|
-20%
|
All in Sustaining
Costs, US$/oz sold
|
1,095
|
1,262
|
1,488
|
-13%
|
-26%
|
Youga and Balogo
Gold Mines, Burkina Faso1
|
Gold production,
oz
|
40,218
|
28,845
|
16,900
|
39%
|
138%
|
Mining cost,
US$/t
|
2.40
|
3.26
|
1.57
|
-26%
|
53%
|
Processing cost,
US$/t
|
19.63
|
20.51
|
16.87
|
-4%
|
16%
|
Operating cash
costs, US$/oz sold
|
470
|
573
|
791
|
-18%
|
-41%
|
All in Sustaining
Costs, US$/oz sold
|
750
|
884
|
1,127
|
-15%
|
-33%
|
1
|
Q1 and Q4 2017 are
reported as full quarters of production from the Youga and Balogo
Gold Mines. The Company acquired Youga and Balogo Gold Mines on
December 18, 2017.
|
Analyst and Investor Call
The company will be hosting a conference call and webcast for
investors and analysts on May 10,
2018 at 08:00 EST /
13:00 BST
The access details for the conference call are as follows:
Location
|
Phone
Type
|
Phone
Number
|
United
Kingdom
|
Freephone
|
0800 358
9473
|
United Kingdom,
Local
|
Local
|
+44 333 300
0804
|
United
States
|
Freephone
|
+1 855 857
0686
|
United States,
Local
|
Local
|
+1 631 913
1422
|
Canada
|
Freephone
|
+1 416 216
4189
|
Canada,
Local
|
Local
|
+1 844 747
9618
|
Password: 61146140#
Webcast URL:
http://arkadinemea-events.adobeconnect.com/e2w8a53msk4o/event/registration.html
Financial Statements and MD&A
The Financial Statements are appended to this announcement,
whilst both the Financial Statements and the accompanying
Management Discussion and Analysis are available for review at the
Company's website, www.avesoro.com and on www.sedar.com.
Notes
Non-GAAP Financial Measures: The Company has included certain
non-GAAP financial measures in this press release, including
operating cash costs and all-in sustaining costs ("AISC") per ounce
of gold sold. These non-GAAP financial measures do not have any
standardised meaning. Accordingly, these financial measures are
intended to provide additional information and should not be
considered in isolation or as a substitute for measures of
performance prepared in accordance with International Financial
Reporting Standards ("IFRS").
Operating cash costs and AISC are a common financial performance
measure in the mining industry but have no standard definition
under IFRS. Operating cash costs are reflective of the cost of
production. AISC include operating cash costs, net-smelter royalty,
corporate costs, sustaining capital expenditure, sustaining
exploration expenditure and capitalised stripping costs. The
Company reports cash costs on an ounces of gold sold basis.
The Company calculates EBITDA as net profit or loss for the
period excluding finance costs, income tax expense and
depreciation. EBITDA does not have a standardised meaning
prescribed by IFRS and should not be considered in isolation or as
a substitute for measures of performance prepared in accordance
with IFRS. EBITDA excludes the impact of cash costs of financing
activities and taxes and the effects of changes in working capital
balances and therefore is not necessarily indicative of operating
profit or cash flow from operations as determined under IFRS.
Other companies may calculate these measures differently and
should not be considered in isolation or as a substitute for
measures of performance prepared in accordance with IFRS.
Market Abuse Regulation (MAR) Disclosure
Certain information contained in this announcement would have
been deemed inside information for the purposes of Article 7 of
Regulation (EU) No 596/2014 until the release of this
announcement.
About Avesoro Resources Inc.
Avesoro Resources is a
West Africa focused gold producer
and development company that operates three gold mines across
West Africa and is listed on the
Toronto Stock Exchange ("TSX") and the AIM market operated by the
London Stock Exchange ("AIM"). The Company's assets include the New
Liberty Gold Mine in Liberia (the
"New Liberty Gold Mine" or "New Liberty") and the Youga and Balogo
Gold mines in Burkina Faso
("Youga" and "Balogo").
New Liberty has an estimated proven and probable mineral reserve
of 7.4Mt with 717,000 ounces of gold grading 3.03g/t and an
estimated measured and indicated mineral resource of 9.6Mt with
985,000 ounces of gold grading 3.2g/t and an estimated inferred
mineral resource of 6.4Mt with 620,000 ounces of gold grading
3.0g/t. The foregoing Mineral Reserve and Mineral Resource
estimates and additional information in connection therewith is set
out in an NI 43-101 compliant Technical Report dated November 1, 2017 and entitled "New Liberty Gold
Mine, Bea Mountain Mining Licence Southern Block, Liberia, West
Africa" and is available on SEDAR at www.sedar.com.
Youga and Balogo have a combined estimated proven and probable
mineral reserve of 9.3Mt with 513,000 ounces of gold grading 1.7g/t
and a combined estimated indicated mineral resource of 16.05Mt with
801,600 ounces of gold grading 1.55g/t and a combined inferred
mineral resource of 13Mt with 655,000 ounces of gold grading
1.57g/t. The foregoing Mineral Reserve and Mineral Resource
estimates and additional information in connection therewith is set
out in two NI 43-101 compliant Technical Reports, dated
June 16, 2017 entitled "Mineral
Resource and Mineral Reserve Update for the Balogo Project" and
dated June 19, 2017 and entitled
"Mineral Resource and Mineral Reserve Update for the Youga and
Ouaré Projects" and are available on SEDAR at www.sedar.com.
For more information, please visit www.avesoro.com
Qualified Persons
The Company's Qualified Person is Mark
J. Pryor, who holds a BSc (Hons) in Geology & Mineralogy
from Aberdeen University, United Kingdom and is a Fellow of the
Geological Society of London, a
Fellow of the Society of Economic Geologists and a registered
Professional Natural Scientist (Pr.Sci.Nat) of the South African
Council for Natural Scientific Professions. Mark Pryor is an independent technical
consultant with over 25 years of global experience in exploration,
mining and mine development and is a "Qualified Person" as defined
in National Instrument 43 -101 "Standards of Disclosure for Mineral
Projects" of the Canadian Securities Administrators and has
reviewed and approved this press release. Mr. Pryor has verified
the underlying technical data disclosed in this press release.
Forward Looking Statements
Certain information contained in this press release constitutes
forward looking information or forward looking statements with the
meaning of applicable securities laws. This information or
statements may relate to future events, facts, or circumstances or
the Company's future financial or operating performance or other
future events or circumstances. All information other than
historical fact is forward looking information and involves known
and unknown risks, uncertainties and other factors which may cause
the actual results or performance to be materially different from
any future results, performance, events or circumstances expressed
or implied by such forward-looking statements or information. Such
statements can be identified by the use of words such as
"anticipate", "plan", "continue", "estimate", "expect", "may",
"will", "would", "project", "should", "believe", "target",
"predict" and "potential". No assurance can be given that
this information will prove to be correct and such forward looking
information included in this press release should not be unduly
relied upon. Forward looking information and statements
speaks only as of the date of this press release.
Forward looking statements or information in this press release
include, among other things, statements relating to reducing the
Company's operating costs, statements regarding the expected
operational and financial performance of each of the foregoing for
the Company's New Liberty, Youga and Balogo mines and statements
relating to the Company's exploration campaign and aims to increase
its Mineral Resource and Reserve inventory and mine lives.
In making the forward looking information or statements
contained in this press release, assumptions have been made
regarding, among other things: general business, economic and
mining industry conditions; interest rates and foreign exchange
rates; the continuing accuracy of Mineral Resource and Reserve
estimates; geological and metallurgical conditions (including with
respect to the size, grade and recoverability of Mineral Resources
and Reserves) and cost estimates on which the Mineral Resource and
Reserve estimates are based; the supply and demand for commodities
and precious and base metals and the level and volatility of the
prices of gold; market competition; the ability of the Company to
raise sufficient funds from capital markets and/or debt to meet its
future obligations and planned activities and that unforeseen
events do not impact the ability of the Company to use existing
funds to fund future plans and projects as currently contemplated;
the stability and predictability of the political environments and
legal and regulatory frameworks including with respect to, among
other things, the ability of the Company to obtain, maintain, renew
and/or extend required permits, licences, authorizations and/or
approvals from the appropriate regulatory authorities; that
contractual counterparties perform as agreed; and the ability of
the Company to continue to obtain qualified staff and equipment in
a timely and cost-efficient manner to meet its demand.
Actual results could differ materially from those anticipated in
the forward looking information or statements contained in this
press release as a result of risks and uncertainties (both foreseen
and unforeseen), and should not be read as guarantees of future
performance or results, and will not necessarily be accurate
indicators of whether or not such results will be achieved. These
risks and uncertainties include the risks normally incidental to
exploration and development of mineral projects and the conduct of
mining operations (including exploration failure, cost overruns or
increases, and operational difficulties resulting from plant or
equipment failure, among others); the inability of the Company to
obtain required financing when needed and/or on acceptable terms or
at all; risks related to operating in West Africa, including potentially more
limited infrastructure and/or less developed legal and regulatory
regimes; health risks associated with the mining workforce in
West Africa; risks related to the
Company's title to its mineral properties; the risk of adverse
changes in commodity prices; the risk that the Company's
exploration for and development of mineral deposits may not be
successful; the inability of the Company to obtain, maintain, renew
and/or extend required licences, permits, authorizations and/or
approvals from the appropriate regulatory authorities and other
risks relating to the legal and regulatory frameworks in
jurisdictions where the Company operates, including adverse or
arbitrary changes in applicable laws or regulations or in their
enforcement; competitive conditions in the mineral exploration and
mining industry; risks related to obtaining insurance or adequate
levels of insurance for the Company's operations; that Mineral
Resource and Reserve estimates are only estimates and actual metal
produced may be less than estimated in a Mineral Resource or
Reserve estimate; the risk that the Company will be unable to
delineate additional Mineral Resources; risks related to
environmental regulations and cost of compliance, as well as costs
associated with possible breaches of such regulations;
uncertainties in the interpretation of results from drilling; risks
related to the tax residency of the Company; the possibility that
future exploration, development or mining results will not be
consistent with expectations; the risk of delays in construction
resulting from, among others, the failure to obtain materials in a
timely manner or on a delayed schedule; inflation pressures which
may increase the cost of production or of consumables beyond what
is estimated in studies and forecasts; changes in exchange and
interest rates; risks related to the activities of artisanal
miners, whose activities could delay or hinder exploration or
mining operations; the risk that third parties to contracts may not
perform as contracted or may breach their agreements; the risk that
plant, equipment or labour may not be available at a reasonable
cost or at all, or cease to be available, or in the case of labour,
may undertake strike or other labour actions; the inability to
attract and retain key management and personnel; and the risk of
political uncertainty, terrorism, civil strife, or war in the
jurisdictions in which the Company operates, or in neighbouring
jurisdictions which could impact on the Company's exploration,
development and operating activities.
This press release also contains Mineral Resource and Mineral
Reserve estimates. Information relating to Mineral Resource and
Mineral Reserve contained in this press release is considered
forward looking information in nature, as such estimates are
estimates only, and that involve the implied assessment of the
amount of minerals that may be economically extracted in a given
area based on certain judgments and assumptions made by qualified
persons, including the future economic viability of the deposit
based on, among other things, future estimates of commodity
prices. Such estimates are expressions of judgment and
opinion based on the knowledge, mining experience, analysis of
drilling results and industry practices of the qualified persons
making the estimate. Valid estimates made at a given time may
significantly change when new information becomes available, and
may have to change as a result of numerous factors, including
changes in the prevailing price of gold. By their nature, Mineral
Resource and Mineral Reserve estimates are imprecise and depend, to
a certain extent, upon statistical inferences which may ultimately
prove unreliable. If such Mineral Resource and Mineral Reserve
estimates are inaccurate or are reduced in the future (including
through changes in grade or tonnage), this could have a material
adverse impact on the Company and its operating and financial
performance. Mineral resources that are not mineral reserves
do not have demonstrated economic viability. Due to the
uncertainty that may be attached to inferred mineral resources, it
cannot be assumed that all or any part of an inferred mineral
resource will be upgraded to an indicated or measured mineral
resource as a result of continued exploration.
Although the forward-looking statements contained in this press
release are based upon what management believes are reasonable
assumptions, the Company cannot provide assurance that actual
results or performance will be consistent with these
forward-looking statements. The forward looking information and
statements included in this press release are expressly qualified
by this cautionary statement and are made only as of the date of
this press release. The Company does not undertake any
obligation to publicly update or revise any forward looking
information except as required by applicable securities laws.
Condensed Interim Consolidated Financial Statements
(Unaudited)
Avesoro Resources Inc.
For the Three Months Ended March 31,
2018 and 2017
(stated in thousands of US dollars)
Registered
office:
|
199 Bay
Street
|
|
Suite 5300
|
|
Commerce West
Street
|
|
Toronto
|
|
Ontario M5L
1B9
|
|
Canada
|
|
|
Company registration
number:
|
776831-1
|
|
|
Company incorporated
on:
|
1 February
2011
|
|
Three months
ended
March
31, 2018
$'000
|
Three months
ended
March 31,
2017
$'000
|
|
|
|
Gold sales (Note
2)
|
91,370
|
19,699
|
|
|
|
Cost of
sales
|
|
|
- Production costs
(Note 2)
|
(48,986)
|
(17,495)
|
- Depreciation (Note
2)
|
(16,610)
|
(6,751)
|
|
|
|
Gross
profit/(loss)
|
25,774
|
(4,547)
|
|
|
|
Expenses
|
|
|
Administrative and
other expenses (Note 3)
|
(1,604)
|
(1,586)
|
Exploration and
evaluation costs
|
(2,011)
|
(496)
|
Loss on lease
termination
|
(566)
|
-
|
|
|
|
Profit/(Loss) from
operations
|
21,593
|
(6,629)
|
|
|
|
Derivative liability
gain/(loss)
|
104
|
(163)
|
Foreign exchange
(loss)/gain
|
(1,095)
|
4
|
Finance
costs
|
(4,341)
|
(2,770)
|
Finance
income
|
175
|
3
|
|
|
|
Profit/(Loss)
before tax
|
16,436
|
(9,555)
|
|
|
|
Tax for the period
(Note 4)
|
(6,589)
|
-
|
|
|
|
Net profit/(loss)
after tax
|
9,847
|
(9,555)
|
Attributable
to:
|
|
|
- Owners of the
Company
|
8,019
|
(9,555)
|
- Non-controlling
interest (Note 13)
|
1,828
|
-
|
|
9,847
|
(9,555)
|
Other
comprehensive income
Items that may be
reclassified subsequently to profit or loss
|
|
|
Available-for-sale
investments
|
31
|
(18)
|
Currency translation
differences
|
(37)
|
52
|
|
|
|
Total
comprehensive income/(loss) for the period
|
9,841
|
(9,521)
|
Attributable
to:
|
|
|
- Owners of the
Company
|
8,013
|
(9,521)
|
- Non-controlling
interest
|
1,828
|
-
|
|
|
|
Earnings/(Loss) per
share, basic and diluted (US$) (Note 5)
|
0.10
|
(0.18)
|
The accompanying notes are an integral part of these condensed
interim consolidated financial
statements.
|
March
31,
2018
$'000
|
December
31,
2017
$'000
|
Assets
|
|
|
Current
assets
|
|
|
Cash and cash
equivalents
|
23,012
|
17,787
|
Trade and other
receivables (Note 6)
|
31,321
|
25,286
|
Inventories (Note
7)
|
30,969
|
36,932
|
Other
assets
|
1,769
|
1,710
|
|
87,071
|
81,715
|
Non-current
assets
|
|
|
Intangible assets -
Exploration and evaluation assets (Note 8)
|
1,760
|
-
|
Property, plant and
equipment (Note 9)
|
252,815
|
249,552
|
Available-for-sale
investments
|
52
|
21
|
Deferred tax
asset
|
2,295
|
4,554
|
Other
assets
|
1,196
|
1,196
|
|
258,118
|
255,323
|
Total
assets
|
345,189
|
337,038
|
|
|
|
Liabilities
|
|
|
Current
liabilities
|
|
|
Borrowings (Note
10)
|
24,157
|
35,999
|
Trade and other
payables
|
43,449
|
41,003
|
Income tax
payable
|
16,750
|
12,358
|
Finance lease
liability (Note 11)
|
436
|
1,913
|
Derivative
liability
|
1
|
105
|
Provisions
|
1,590
|
523
|
|
86,383
|
91,901
|
Non-current
liabilities
|
|
|
Borrowings (Note
10)
|
103,018
|
98,092
|
Trade and other
payables
|
463
|
463
|
Finance lease
liability (Note 11)
|
2,022
|
5,875
|
Provisions
|
11,276
|
10,439
|
|
116,779
|
114,869
|
|
203,162
|
206,770
|
|
|
|
Equity
|
|
|
Share capital (Note
12)
|
353,653
|
353,653
|
Capital
contribution
|
60,852
|
59,230
|
Share based payment
reserve
|
8,136
|
7,840
|
Acquisition
reserve
|
(33,060)
|
(33,060)
|
Available-for-sale
investment reserve
|
(456)
|
(487)
|
Cumulative
translation reserve
|
(503)
|
(466)
|
Deficit
|
(252,137)
|
(260,156)
|
Equity attributable
to owners
|
136,485
|
126,554
|
Non-controlling
interest (Note 13)
|
5,542
|
3,714
|
Total
equity
|
142,027
|
130,268
|
Total liabilities
and equity
|
345,189
|
337,038
|
The accompanying notes are an integral part of these condensed
interim consolidated financial statements.
|
Three months
ended
March
31,
2018
$'000
|
Three months
ended
March 31,
2017
$'000
|
Operating
activities
|
|
|
Net profit/(loss)
after tax
|
9,847
|
(9,555)
|
Tax for the
period
|
6,589
|
-
|
Profit/(Loss) before
tax
|
16,436
|
(9,555)
|
|
Items not affecting
cash:
|
|
|
|
|
Share-based payments
(Note 3)
|
296
|
276
|
|
|
Depreciation (Note
6)
|
16,663
|
6,840
|
|
|
Unrealized foreign
exchange loss
|
648
|
21
|
|
|
Derivative liability
(gain)/loss
|
(104)
|
163
|
|
|
Interest
expense
|
4,341
|
2,770
|
|
|
Loss on lease
termination
|
567
|
-
|
Changes in non-cash
working capital
|
|
|
|
Increase in trade and
other receivables
|
(6,035)
|
(1,037)
|
|
Increase in trade and
other payables
|
597
|
1,216
|
|
Decrease in
inventories
|
5,963
|
1,116
|
Cash flows from
operating activities
|
39,372
|
1,810
|
|
|
|
Investing
activities
|
|
|
Payments to acquire
property, plant and equipment
|
(11,798)
|
(4,992)
|
Payments to acquire
intangible assets
|
(1,761)
|
-
|
Decrease in other
assets
|
(60)
|
(261)
|
Cash flows used in
investing activities
|
(13,619)
|
(5,253)
|
|
|
|
Financing
activities
|
|
|
Borrowings
repayments
|
(19,175)
|
-
|
Finance
charges
|
(1,353)
|
(3,277)
|
Cash flows used in
financing activities
|
(20,528)
|
(3,277)
|
|
|
|
Impact of foreign
exchange on cash balance
|
-
|
31
|
Net
increase/(decrease) in cash and cash equivalents
|
5,225
|
(6,689)
|
Cash and cash
equivalents at beginning of period
|
17,787
|
13,429
|
Cash and cash
equivalents at end of period
|
23,012
|
6,740
|
Significant non-cash transactions during the three months ended
March 31, 2018 includes the
acquisition of new heavy mining equipment for $10.3 million in exchange for new related party
loans (Note 10c).
The accompanying notes are an integral part of these condensed
interim consolidated financial statements
|
Total Equity
Attributable to Owners
|
|
|
|
Share
capital
|
Capital
contribution
|
Share-
based
payment
reserve
|
Acquisition
reserve
|
Available-for-
sale
investment
Reserve
|
Cumulative
translation
reserve
|
Deficit
|
Total
|
Non-
controlling
Interest
|
Total
Equity
|
|
$'000
|
$'000
|
$'000
|
$'000
|
$'000
|
$'000
|
$'000
|
$'000
|
$'000
|
$'000
|
Balance at January 1,
2017
|
283,506
|
48,235
|
6,770
|
-
|
(453)
|
(400)
|
(232,682)
|
104,976
|
-
|
104,976
|
Loss for the
period
|
-
|
-
|
-
|
-
|
-
|
-
|
(9,555)
|
(9,555)
|
-
|
(9,555)
|
Other comprehensive
loss for period
|
-
|
-
|
-
|
-
|
(18)
|
52
|
-
|
34
|
-
|
34
|
Total comprehensive
loss for period
|
-
|
-
|
-
|
-
|
(18)
|
52
|
(9,555)
|
(9,521)
|
-
|
(9,521)
|
Share-based
payments
|
-
|
-
|
276
|
-
|
-
|
-
|
-
|
276
|
-
|
276
|
Balance at March 31,
2017
|
283,506
|
48,235
|
7,046
|
-
|
(471)
|
(348)
|
(242,237)
|
95,731
|
-
|
95,731
|
|
|
|
|
|
|
|
|
|
|
|
Balance at January 1,
2018
|
353,653
|
59,230
|
7,840
|
(33,060)
|
(487)
|
(466)
|
(260,156)
|
126,554
|
3,714
|
130,268
|
Profit for the
period
|
-
|
-
|
-
|
-
|
-
|
-
|
8,019
|
8,019
|
1,828
|
9,847
|
Other comprehensive
income/(loss) for period
|
-
|
-
|
-
|
-
|
31
|
(37)
|
-
|
(6)
|
-
|
(6)
|
Total comprehensive
income/(loss) for period
|
-
|
-
|
-
|
-
|
31
|
(37)
|
8,019
|
8,013
|
1,828
|
9,841
|
Share-based
payments
|
-
|
-
|
296
|
-
|
-
|
-
|
-
|
296
|
-
|
296
|
Related party loans
(Note 10c)
|
-
|
2,850
|
-
|
-
|
-
|
-
|
-
|
2,850
|
-
|
2,850
|
Payment of related
party loans (Note 10b)
|
-
|
(1,228)
|
-
|
-
|
-
|
-
|
-
|
(1,228)
|
-
|
(1,228)
|
Balance at March
31, 2018
|
353,653
|
60,852
|
8,136
|
(33,060)
|
(456)
|
(503)
|
(252,137)
|
136,485
|
5,542
|
142,027
|
The accompanying notes are an integral part of these condensed
interim consolidated financial statements.
1 Nature of
operations and basis of preparation
Avesoro Resources Inc. ("Avesoro" or the "Company"), was
incorporated under the Canada Business Corporations Act on
February 1, 2011. The focus of
Avesoro's business is the exploration, development and operation of
gold assets in West Africa,
specifically the New Liberty Gold Mine in Liberia and the Youga and Balogo Gold Mines in
Burkina Faso.
These condensed interim consolidated financial statements
("interim financial statements") have been prepared in accordance
with International Accounting Standard ("IAS") 34, "Interim
Financial Reporting", they do not include all disclosures that
would otherwise be required in a complete set of financial
statements. They follow accounting policies and methods of
their application consistent with the audited consolidated
financial statements for the year ended December 31, 2017. Accordingly, they should
be read in conjunction with the Company's audited consolidated
financial statements for the year ended December 31, 2017.
These interim financial statements were authorised by the Board
of Directors on May 9, 2018.
Going concern
The condensed interim consolidated financial statements have
been prepared on a going concern basis. As at March 31, 2018, the Company has net current
assets of $0.7 million and has
approximately $24.2 million of debt
repayments due in the next twelve months.
The cash generation of the Company significantly improved
following the acquisition of the Youga and Balogo Gold Mines in
December 2017 and the continuing
improvement of operations at New Liberty. In addition, the
Company has an undrawn facility of $21.3
million with the Company's majority shareholder, Avesoro
Jersey Limited ("AJL") as at March 31,
2018 which it can call upon for general working capital
purposes.
The Company's forecasts and projections show that the Company
has adequate resources to continue in operational existence for the
foreseeable future. Thus, it continues to adopt the going
concern basis of accounting in preparing the consolidated financial
statements.
2 Segment
information
The Company is engaged in the exploration, development and
operation of gold projects in the West African countries of
Liberia, Burkina Faso and Cameroon. Information presented to the Chief
Executive Officer for the purposes of resource allocation and
assessment of segment performance is focused on the geographical
location of mining operations. The reportable segments under
IFRS 8 are as follows:
- New Liberty operations;
- Burkina operations which include the Youga and Balogo Gold
Mines;
- Exploration; and
- Corporate.
Following is an analysis of the Group's results, assets and
liabilities by reportable segment for the three months ended
March 31, 2018:
|
New
Liberty
operations
|
Burkina
operations
|
Exploration
|
Corporate
|
Total
|
|
$'000
|
$'000
|
$'000
|
$'000
|
$'000
|
Profit/(Loss) for the
period
|
(6,036)
|
18,280
|
(1,037)
|
(1,360)
|
9,847
|
Gold sales
|
37,323
|
54,047
|
-
|
-
|
91,370
|
Production
costs
|
|
|
|
|
|
- Mine operating
costs
|
(23,261)
|
(20,687)
|
-
|
-
|
(43,948)
|
- Change in
inventories
|
(1,752)
|
(3,286)
|
-
|
-
|
(5,038)
|
|
(25,013)
|
(23,973)
|
-
|
-
|
(48,986)
|
Depreciation
|
(12,546)
|
(4,064)
|
(52)
|
(1)
|
(16,663)
|
|
|
|
|
|
|
Segment
assets
|
237,445
|
99,346
|
4,000
|
4,398
|
345,189
|
Segment
liabilities
|
(148,448)
|
(49,467)
|
(4,049)
|
(1,198)
|
(203,162)
|
Capital
additions
|
|
|
|
|
|
- property, plant and
equipment
|
16,448
|
8,911
|
40
|
-
|
25,399
|
- intangible
assets
|
-
|
1,760
|
-
|
-
|
1,760
|
2 Segment information
(continued)
Following is an analysis of the Group's results, assets and
liabilities by reportable segment for the three months ended
March 31, 2017:
|
New
Liberty
operations
|
Liberia
exploration
|
Cameroon
exploration
|
Corporate
|
Total
|
|
$'000
|
$'000
|
$'000
|
$'000
|
$'000
|
Loss for the
period
|
(7,631)
|
(517)
|
(63)
|
(1,344)
|
(9,555)
|
Gold sales
|
19,699
|
-
|
-
|
-
|
19,699
|
Production
costs
|
|
|
|
|
|
- Mine operating
costs
|
(16,145)
|
-
|
-
|
-
|
(16,145)
|
- Change in
inventories
|
(1,350)
|
-
|
-
|
-
|
(1,350)
|
|
(17,495)
|
-
|
-
|
-
|
(17,495)
|
Depreciation
|
(6,751)
|
(80)
|
(3)
|
(6)
|
(6,840)
|
|
|
|
|
|
|
Segment
assets
|
215,629
|
246
|
70
|
5,147
|
221,092
|
Segment
liabilities
|
(125,043)
|
(95)
|
-
|
(223)
|
(125,361)
|
Capital
additions
|
|
|
|
|
|
– property, plant and
equipment
|
7,180
|
-
|
-
|
27
|
7,207
|
3 Administrative
expenses
|
Three months
ended March
31, 2018
|
Three months
ended March
31, 2017
|
|
$'000
|
$'000
|
Wages and
salaries
|
536
|
378
|
Legal and
professional
|
302
|
542
|
Depreciation
|
53
|
89
|
Share based
payments
|
296
|
276
|
Other
expenses
|
417
|
301
|
|
1,604
|
1,586
|
Foreign exchange gains and losses have been reclassified as
financing items rather than operational items. The above
table has been restated to exclude the foreign exchange gain of
US$4 thousand for the three months
ended March 31, 2017.
4 Income
taxes
Tax for period comprises of:
|
Three months
ended March 31,
2018
|
Three months
ended March 31,
2017
|
|
$'000
|
$'000
|
Current
tax
|
4,330
|
-
|
Deferred
tax
|
2,259
|
-
|
|
6,589
|
-
|
5 Earnings per
share ("EPS")
|
Three months
ended March 31,
2018
|
Three months
ended March 31,
2017
|
|
$'000
|
$'000
|
Net profit/(loss)
after tax attributable to Owners of the Company
|
8,019
|
(9,555)
|
|
|
|
Weighted average
number of outstanding shares for basic EPS
|
81,560,260
|
53,247,590
|
Dilutive share
options
|
402,715
|
-
|
Weighted average
number of outstanding shares for diluted EPS
|
81,962,975
|
53,247,590
|
|
|
|
Basic EPS
(US$)
|
0.10
|
(0.18)
|
Diluted EPS
(US$)
|
0.10
|
(0.18)
|
6 Trade and other
receivables
|
|
March 31,
2018
|
December
31, 2017
|
|
|
$'000
|
$'000
|
Trade
receivable
|
|
1,427
|
416
|
Other
receivables
|
|
13,020
|
10,690
|
Due from related
parties (Note 14)
|
|
2,225
|
1,015
|
Pre-payments
|
|
14,649
|
13,165
|
|
|
31,321
|
25,286
|
Other receivables include a VAT receivable from the Burkina Faso
Government amounting to $11.2 million
as at March 31, 2018 (December 31, 2017: $8.9
million).
7
Inventories
|
|
March 31,
2018
|
December
31, 2017
|
|
|
$'000
|
$'000
|
Gold doré
|
|
-
|
3,986
|
Gold in
circuit
|
|
3,442
|
2,561
|
Ore
stockpiles
|
|
4,756
|
6,688
|
Consumables
|
|
22,771
|
23,697
|
|
|
30,969
|
36,932
|
Ore stockpiles as at March 31,
2018 are stated at their net realisable values after
cumulative write-down of $1.8
million.
8 Intangible assets
- Exploration and evaluation assets
|
|
March 31,
2018
|
December
31, 2017
|
|
|
$'000
|
$'000
|
Gassore
East
|
|
1,327
|
-
|
Ouare
|
|
433
|
-
|
|
|
1,760
|
-
|
Gassore East is a new minable mineralisation located 2
kilometres from the Youga processing plant. Internal resource
modelling and pit design shows it will add further mine life to the
Youga Gold Mine beyond that reported in the National Instrument NI
43-101 - Standards of Disclosure of Mineral Projects ("NI 43-101")
Technical Report dated June 19,
2017.
Ouaré, located 36 kilometres north east of the Youga processing
plant, is the subject of an infill drilling campaign to upgrade the
confidence level and classification of the existing mineral
resources reported in the NI 43-101 Technical Report dated
June 19, 2017.
9.
Property, plant and equipment
|
Mining
assets
|
Stripping
asset
|
Mine closure
and
rehabilitation
|
Assets held
under finance
lease
|
Machinery and
equipment
|
Vehicles
|
Leasehold
improvement
|
Total
|
|
$'000
|
$'000
|
$'000
|
$'000
|
$'000
|
$'000
|
$'000
|
$'000
|
Cost
|
|
|
|
|
|
|
|
|
At January 1,
2017
|
175,290
|
-
|
2,223
|
13,629
|
16,392
|
1,884
|
83
|
209,501
|
Additions
|
8,322
|
16,229
|
544
|
2,025
|
27,752
|
996
|
-
|
55,868
|
Acquisitions
|
24,895
|
-
|
3,445
|
-
|
30,639
|
204
|
-
|
59,183
|
Impairment
|
-
|
-
|
-
|
(3,896)
|
-
|
-
|
-
|
(3,896)
|
Foreign
exchange
|
-
|
-
|
-
|
-
|
10
|
8
|
3
|
21
|
At December 31,
2017
|
208,507
|
16,229
|
6,212
|
11,758
|
74,793
|
3,092
|
86
|
320,677
|
Additions
|
2,448
|
3,739
|
-
|
-
|
19,212
|
-
|
-
|
25,399
|
Disposals
|
-
|
-
|
-
|
(7,000)
|
-
|
-
|
-
|
(7,000)
|
At March 31,
2018
|
210,955
|
19,968
|
6,212
|
4,758
|
94,005
|
3,092
|
86
|
339,076
|
|
|
|
|
|
|
|
|
|
Accumulated
depreciation
|
|
|
|
|
|
|
|
|
At January 1,
2017
|
14,909
|
-
|
116
|
651
|
1,622
|
1,020
|
66
|
18,384
|
Charge for the
period
|
23,754
|
1,838
|
296
|
2,933
|
3,622
|
303
|
19
|
32,765
|
Acquisitions
|
13,442
|
-
|
1,878
|
-
|
5,633
|
39
|
-
|
20,992
|
Impairment
|
-
|
-
|
-
|
(1,020)
|
-
|
-
|
-
|
(1,020)
|
Foreign
exchange
|
-
|
-
|
-
|
-
|
3
|
-
|
1
|
4
|
At December 31,
2017
|
52,105
|
1,838
|
2,290
|
2,564
|
10,880
|
1,362
|
86
|
71,125
|
Charge for the
period
|
10,622
|
1,839
|
449
|
293
|
3,305
|
155
|
-
|
16,663
|
Disposals
|
-
|
-
|
-
|
(1,527)
|
-
|
-
|
-
|
(1,527)
|
At March 31,
2018
|
62,727
|
3,677
|
2,739
|
1,330
|
14,185
|
1,517
|
86
|
86,261
|
|
|
|
|
|
|
|
|
|
Net book
value
|
|
|
|
|
|
|
|
|
At December 31,
2017
|
156,402
|
14,391
|
3,922
|
9,194
|
63,913
|
1,730
|
-
|
249,552
|
At March 31,
2018
|
148,228
|
16,291
|
3,473
|
3,428
|
79,820
|
1,575
|
-
|
252,815
|
10 Borrowings
|
March
31, 2018
|
December
31, 2017
|
|
$'000
|
$'000
|
Current
|
|
|
Bank loan - Senior
Facility Tranche A
|
15,040
|
14,741
|
Bank loan - Senior
Facility Tranche B
|
-
|
9,737
|
Shareholder
loan
|
4,046
|
8,106
|
Related party
loan
|
5,071
|
3,415
|
|
24,157
|
35,999
|
Non-current
|
|
|
Bank loan - Senior
Facility Tranche A
|
59,856
|
58,668
|
Bank loan –
Subordinated Facility
|
10,675
|
10,846
|
Shareholder
loan
|
11,354
|
14,938
|
Related party
loan
|
21,133
|
13,640
|
|
103,018
|
98,092
|
(a) Bank loans
On December 17, 2013 the Company
entered into an agreement for an $88
million project finance loan facility with Nedbank Limited
and FirstRand Bank Limited (collectively the "Lenders"), (the
"Senior Facility"), and also entered into a subordinated loan
facility agreement for $12 million
with RMB Resources (the "Subordinated Facility"). On
December 9, 2015 the Company entered
into an agreement for an additional $10
million Tranche B Senior Facility ("Tranche B Facility",
together with the Senior Facility and the Subordinated Facility the
"Loan Facilities") provided by the Lenders. These Loan
Facilities, which have been fully drawn, financed the development
of the Company's New Liberty Gold Mine. $22.4 million of the Senior Facility principal
has been repaid to date including $10
million during the three months ended March 31, 2018.
(b) Shareholder loan
Current
The current shareholder loan payable to AJL was assumed on
acquisition of the Youga and Balogo Gold Mines of which
$4.1 million was repaid during the
three months ended March 31,
2018.
Non-current
In 2017, the Group borrowed $18.8
million from AJL through a working capital facility to meet
liabilities arising on the termination of legacy procurement
contracts, make advanced payments to suppliers to secure lower unit
cost pricing and to accelerate the acquisition of capital items
that will increase process plant throughput at New
Liberty.
The loan payable to AJL was initially recognised at fair value
calculated as its present value at a market rate of interest and
subsequently measured at amortised cost. The difference
between fair value and loan amount of $4.5
million has been credited to equity as a capital
contribution as the loan is from its majority shareholder.
Principal repayments totalling $5.1
million were made during the three months ended March 31, 2018 of which $3.9 million was allocated as a reduction to the
loan payable and $1.2 million as a
reduction to capital contribution.
Interest expense on the non-current loan payable to AJL for the
three months ended March 31, 2018 was
US$0.3 million (three months ended
March 31, 2017: US$nil).
(c) Related party loan
In 2017 the Company entered into equipment and finance facility
agreements with Mapa İnşaat ve Ticaret A.Ş. ("Mapa"), a company
controlled by Mehmet Nazif Gűnal, Non-Executive Chairman of the
Company, to facilitate the purchase of heavy mining
equipment. The loan principal of these agreements includes a
mark-up of 2.5% over the cost incurred by Mapa in procuring the
equipment. The equipment finance loans are unsecured, with interest
charged at 6.5% per annum on the US$ denominated loan and 5.5% per
annum on the Euro denominated loan amount. The loans are repayable
in cash in eight equal semi-annual instalments, the first of which
will fall due six months after utilisation of the loan.
During the three months ended March 31,
2018, the Company entered into further equipment and finance
facility agreements with Mapa amounting to $10.3 million. Similar to the loans entered
into in 2017, these loans were initially recognised at fair value
calculated as its present value at a market rate of interest and
subsequently measured at amortised cost. The difference of
$2.8 million between the loan amount
of $10.3 million and fair value of
$7.5 million has been credited to
equity as a capital contribution from a related party.
Interest expense on the related party loan to Mapa for the three
months ended March 31, 2018 was
US$1.2 million (three months ended
March 31, 2017: US$nil).
Interest repayment was $0.1 million
during the three months ended March 31,
2018 (three months ended March 31,
2017: US$nil).
11 Finance lease liability
The remaining finance lease liability relates to the fuel
storage facility at New Liberty Gold Mine following termination of
the lease arrangement on the generators at nil consideration.
Such assets have been classified as finance leases as the rental
period amounts to a major portion of the estimated useful economic
life of the lease assets and the present value of the minimum lease
payments amounts to at least substantially all of the fair value of
the leased assets.
|
March
31, 2018
|
December
31, 2017
|
|
$'000
|
$'000
|
Gross finance lease
liability
|
|
|
-
|
Within one
year
|
707
|
2,820
|
-
|
Between
two and five years
|
2,541
|
7,191
|
|
3,248
|
10,011
|
Future finance
cost
|
(790)
|
(2,223)
|
Present value of
lease liability
|
2,458
|
7,788
|
|
|
|
Current
portion
|
436
|
1,913
|
Non-current
portion
|
2,022
|
5,875
|
12 Equity
(a) Authorised
Unlimited number of common shares without par value.
(b) Issued
|
Shares
|
$'000
|
Balance at January 1,
2017
|
53,247,590
|
283,506
|
Issued to AJL on
acquisition of Youga and Balogo Gold Mines (i)
|
20,334,928
|
51,459
|
Equity financing
(i)
|
7,974,490
|
20,248
|
Share issuance costs
(i)
|
-
|
(1,568)
|
Exercise of stock
options (ii)
|
3,750
|
8
|
Share consolidation
adjustment
|
(498)
|
-
|
Balance at
December 31, 2017 and March 31, 2018
|
81,560,260
|
353,653
|
The Company's number of outstanding and issued shares, stock
options and warrants are retrospectively presented to reflect a
100:1 share consolidation which became effective on January 16, 2018.
(i)
|
The company acquired
Youga and Balogo Gold Mines on December 18, 2017 for a total
consideration of US$70.2 million which comprises of the issuance of
20,334,928 new common shares in the Company at a price of GBP£1.90
per share and a cash component of US$18.7 million. The cash
component was funded through the issuance of 7,974,490 new common
shares at a price of GBP£1.90 per share through a private
placing. The directly attributable costs of issuance of these
new common shares amounted to $1.6 million.
|
|
|
(ii)
|
In 2017, the Company
issued 3,750 new common shares on exercise of 3,750 stock options
at a price of GBP£1.575 per stock option.
|
(c) Stock options
Information relating to stock options outstanding at
March 31, 2018 is as follows:
|
|
Three months
ended March 31,
2018
|
|
Year ended
December 31, 2017
|
|
Number
of options
|
Weighted average
exercise price
per share
|
Number of
options
|
Weighted
average exercise price
per share
|
|
|
Cdn$
|
|
Cdn$
|
Beginning of the
period
|
2,829,428
|
4.96
|
1,242,695
|
9.12
|
|
Options
granted
|
11,000
|
3.19
|
1,745,000
|
3.41
|
|
Options
exercised
|
-
|
-
|
(3,750)
|
2.66
|
|
Options
expired
|
(10,862)
|
72.00
|
(5,570)
|
105.00
|
|
Options
forfeited
|
(85,967)
|
3.61
|
(148,947)
|
17.86
|
|
Share consolidation
adjustment
|
(5)
|
-
|
-
|
-
|
End of the
period
|
2,743,594
|
4.73
|
2,829,428
|
4.96
|
13 Non-controlling interest
Non-controlling interest represents the Government of
Burkina Faso's 10% share of
Burkina Mining Company and Netiana Mining Company, the subsidiaries
which respectively holds the Youga Gold Mine and Balogo Gold
Mine.
14 Related party transactions
(a) Borrowings
Principal repayments of the shareholder loan to AJL, new
equipment finance loans with Mapa and interest repayments to Mapa
in relation to the equipment finance loans during the three months
ended March 31, 2018 are disclosed in
Note 10.
(b) Acquisition of heavy mining equipment
In addition to the heavy mining equipment financed by Mapa, the
Company also acquired five mining trucks from Mapa for US$0.4 million during the three months ended
March 31, 2018 to supplement the
hauling capacity at Balogo.
(c) Provision/(purchases) of goods and services
The Company also provided/(purchased) the following services
from related parties:
|
Three months
ended
March
31,
2018
$'000
|
Three months
ended
March 31,
2017
$'000
|
Technical and
managerial services provided to: Avesoro Services (Jersey) Limited, a subsidiary of
Company's parent company
|
-
|
105
|
Drilling services
provided to the Company by: Zwedru Mining Inc., a subsidiary of Company's parent
company
|
(887)
|
(143)
|
Drilling services
provided to the Company by: Faso Drilling Company SA., a subsidiary of Company's
parent company
|
(1,450)
|
-
|
Charter plane
services provided to the Company by: MNG Gold Liberia Inc., a subsidiary of Company's
parent company
|
(90)
|
-
|
Travel services
provided to the Company by: MNG Turizm ve Ticaret A.S., an entity controlled by
the Company's Chairman
|
-
|
(8)
|
Included in trade and other receivables is a receivable from
related parties of $2.2 million as at
March 31, 2018 (December 31, 2017: $1
million).
Included in trade and other payables is $2.1 million payable to related parties as at
March 31, 2018 (December 31, 2017: $0.5
million).
SOURCE Avesoro Resources Inc.