TIDMGCM
RNS Number : 9817F
GCM Resources PLC
25 March 2022
25 March 2022
GCM Resources plc
("GCM" or the "Company")
Interim Results for the 6 months ended 31 December 2021
GCM Resources plc (LON: GCM), an AIM quoted mining and energy
company , is pleased to report its interim results for the six
months ended 31 December 2021. The Chairman's Statement and the
full unaudited interim report are presented below and will shortly
be available at the Company's website www.gcmplc.com .
Chairman's Statement
The Company's performance over the six months ending 31 December
2021 continued to be hindered by the effects of the Coronavirus
Pandemic. Bangladesh, unlike most of Europe, did not move from the
rolling lock-downs until late August and the return to "business as
usual" has been slow.
Our commitment to delivering a return to shareholders in
recognition of their continued support is unrelenting. We have been
continuously reappraising the best way to present the Phulbari Coal
and Power Project ("the Project") so to maximise alignment with the
energy and power needs of the Government and People of Bangladesh.
Prime considerations in this appraisal have included:
-- World energy crisis that commenced in 2020;
-- Chinese President Xi Jinping delivered a pre-recorded address
to the United Nations General Assembly on 22 September 2021 where
he stated China would step up efforts to assist Developing
Countries access "green" and "low carbon" energy, and that China
would not build new coal-fired power projects abroad. The actual
ramifications of these statements are yet to be realised, given
that China itself has stated coal power remains in its energy/power
mix and that the long-term strategy is energy efficiency (more
power for less coal) and a pursuit of "Net Zero Carbon Emissions"
also involves carbon off-setting.
-- World energy crisis now exacerbated by turmoil unfolding in
Eastern Europe and timeframe for energy and power markets to return
to normality appear to be extensively protracted;
-- Supply chains are under enormous pressure and international
shipping freight rates are skyrocketing;
-- In response to the above, countries are trending towards
developing internal natural energy resources to enhance energy
security and control costs;
-- Bangladesh's gas reserves have depleted and the country
appears to be exposed to the growing uncertainties and risks of
supply and costs in the highly competitive world energy market.
The Project's core asset is the Phulbari coal deposit which
consists of 527 million tonnes (JORC 2004) of high-energy thermal
and metallurgical coal, capable of supporting over 6,600MW power
generation for at least 30-years. The fundamental consideration has
always been ensuring the coal mining operation's economic
sustainability. We have explored options with our international
development partners and believe the entire Phulbari Geologic Basin
should be declared an "Energy Park" of national significance for
Bangladesh. It is rich in natural energy resources and power
generating potentials, capable of supporting over 4,500MW Solar
Power and over 6,600MW thermal power, and in parallel producing
enormous volumes of valuable industrial mineral co-products from
the overburden material removed to access the coal.
In the reporting period we have continued to grow our
relationship with development partner Power Construction
Corporation of China, Ltd ("PowerChina"). On 23 November 2021, GCM
and PowerChina agreed to extend to 6 December 2022 a memorandum of
understanding ("MoU") focused on the Phulbari coal mine
development. The aim is to allow PowerChina and GCM to determine
the modality for PowerChina to become a Mine Development Partner.
The areas covered under the MoU include finance of the coal mine
development.
GCM is still in discussion with China Nonferrous Metal
Industry's Foreign Engineering and Construction Co., Ltd. ("NFC")
to extend involvement in the Phulbari coal mine development
following expiry of the Frame Work Agreement on 12 October
2021.
Beyond the reporting period:
-- On 2 March 2022, the Company announced it raised gross
proceeds of GBP2.13 million through a placing of 25,291,828 shares
and a subscription for 16,171,777 shares at a price of 5.14 pence
per share representing a discount of approximately 36.9% to the
closing mid-market share price on 1 March 2022. These funds will be
principally be used for Project development capital and are
sufficient to cover operating expenses through to Q2 2023.
-- On 11 March 2022, the Company announced extension of the
joint venture agreements with PowerChina covering phased
development of some 4,000MW of power generation, for a further two
years to 15 March 2024. GCM and PowerChina have reinforced their
belief that the High-Efficiency, Low-Emissions Coal-Fired Power
Generation planned under these Joint Venture Agreements should
remain an attractive option available to the Bangladesh Government.
This translates to more power for less coal consumed (higher energy
efficiency with reduced emissions) and increasing energy and power
security for Bangladesh as it continues to develop its economy and
at the same time move towards "Net Zero Emission" targets over the
coming decades.
Financials
GCM incurred a lower loss after tax of GBP763,000 for the six
months ended 31 December 2021 (31 December 2020: loss after tax of
GBP1,091,000). The most significant expenditure during the period
was pre-development expenditure, while administrative expenses for
the six months ended 31 December 2021 were GBP352,000 (31 December
2020: GBP329,000) and capitalised project expenditure for the
period was GBP273,000 (31 December 2020: GBP234,000).
On 2 March 2022, the Company announced it had secured Gross
Funding proceeds of GBP2.13 million through a placing and
subscription of new ordinary shares (See Note 7 for details). This
funding provides the Company with sufficient funds to cover its
corporate and project operating expenses through to Q2 2023. The
Company has at the date of this report drawn down GBP3.2 million of
the total short-term loan facility of GBP3.5 million with Polo
Resources Ltd, the terms of the facility are detailed in Note 5 of
the interim report.
Over the next 12 months, the Company will seek to further
strengthen GCM's financial position and provide future funding, and
the directors remain confident that sufficient funding will be
obtained as and when required. As such, the financial statements
have been prepared on a going concern basis. Please refer to the
accounting policy note on going concern (Note 1 to the Financial
Statements) for further information.
Outlook
The World energy crisis is intensifying and given Bangladesh has
become largely reliant on imported fuels, its economy is growingly
exposed to the vagaries of energy supply competition and price
escalations. All nations are now turning inward to maximise
recovery of their own naturally occurring energy resources to
off-set this crisis and somehow insulate their economies. GCM and
its main development partner working to demonstrate the importance
of the Project and the development of the 'Energy Park' for the
Government and people of Bangladesh.
I would like to thank our shareholders and stakeholders for
their continued commitment and support for GCM and our commitment
to deliver returns on your investment.
Mohd Najib Bin Abdul Aziz
Non-Executive Chairman
Interim Consolidated Income Statement
6 months 6 months Year ended
ended 31 ended 31 30 June
December December 2021
2021 2020 audited
unaudited unaudited GBP000
GBP000 GBP000
Operating expenses
Pre-development
expenditure (174) (587) (809)
Exploration and
evaluation costs 5 (7) 35
Administrative expenses (352) (329) (717)
------------------------------- ----------- ----------- -----------
Operating loss (521) (923) (1,491)
Finance costs (242) (168) (383)
------------------------------- ----------- ----------- -----------
Loss before tax (763) (1,091) (1,874)
Taxation - - -
Loss and total comprehensive
income for the period (763) (1,091) (1,874)
------------------------------- ----------- ----------- -----------
Earnings per share
Basic loss per share (pence) (0.6p) (0.9p) (1.5p)
Diluted loss per share (pence) (0.6p) (0.9p) (1.5p)
Interim Consolidated Statement of Changes in Equity
Share Share Share Accumulated Total
capital premium based losses
account payments
not settled
GBP000 GBP000 GBP000 GBP000 GBP000
Balance at 1 July 2020 11,256 53,534 1,706 (29,079) 37,417
Total comprehensive
loss - - - (1,874) (1,874)
Share issuances 792 2,155 (1,938) - 1,009
Share issuance costs - (78) - - (78)
Shares to be issued - - 809 - 809
Share based payments - - 6 - 6
Balance at 30 June 2021 12,048 55,611 583 (30,953) 37,289
Total comprehensive
loss - - - (763) (763)
Share issuances - - - - -
Shares to be issued - - 174 - 174
Share based payments - - 15 - 15
Balance at 31 December
2021 (unaudited) 12,048 55,611 772 (31,716) 36,715
------------------------- --------- --------- ------------- ------------ --------
Balance at 1 July 2020 11,256 53,534 1,706 (29,079) 37,417
Total comprehensive
loss - - - (1,091) (1,091)
Share issuances 602 675 (1,277) - -
Shares to be issued - - 587 - 587
Share based payments - - 5 - 5
Balance at 31 December
2020 (unaudited) 11,858 54,209 1,021 (30,170) 36,918
------------------------ ------- ------- -------- --------- --------
Interim Consolidated Balance Sheet
31 December 31 December 30 June
2021 2020 2021
Notes unaudited unaudited audited
GBP000 GBP000 GBP000
Current assets
Cash and cash equivalents 116 48 717
Receivables 48 35 13
--------------------------- -------- ------------- ------------ ---------
Total current assets 164 83 730
Non-current assets
Property, plant
and equipment 6 10 8
Right of use assets 37 19 59
Intangible assets 3 42,452 41,861 42,179
Receivables - - -
Total non-current
assets 42,495 41,890 42,246
Total assets 42,659 41,973 42,976
--------------------------- -------- ------------- ------------ ---------
Current liabilities
Payables 4 (1,457) (1,284) (1,422)
Lease liabilities (31) (26) (40)
Borrowings 5 - (3,737) -
--------------------------- -------- ------------- ------------ ---------
Total current liabilities (1,488) (5,047) (1,462)
Non-current liabilities
Lease liabilities (11) (8) (22)
Borrowings (4,445) - (4,203)
--------------------------- -------- ------------- ------------ ---------
Total non-current
liabilities (4,456) (8) (4,225)
--------------------------- -------- ------------- ------------ ---------
Total liabilities (5,944) (5,055) (5,687)
--------------------------- -------- ------------- ------------ ---------
Net assets 36,715 36,918 37,289
--------------------------- -------- ------------- ------------ ---------
Equity
Share capital 6 12,048 11,858 12,048
Share premium account 6 55,611 54,209 55,611
Other reserves 772 1,021 583
Accumulated losses (31,716) (30,170) (30,953)
----------------------- --------- --------- ---------
Total equity 36,715 36,918 37,289
----------------------- --------- --------- ---------
Interim Consolidated Statement of Cash Flows
6 months 6 months Year ended
ended 31 ended 31 30 June
December December 2021
2021 2020 audited
unaudited unaudited GBP000
GBP000 GBP000
----------------------------------------- -----------
Cash flows used in operating
activities
Loss before tax (763) (1,091) (1,874)
Adjusted for:
Non-cash pre-development expenditure 174 587 809
Non-cash finance costs 242 168 383
Other non-cash expenses - - -
----------------------------------------- ----------- ----------- -----------
(347) (336) (682)
Movements in working
capital:
(Increase)/decrease in operating
receivables (34) (19) 2
Increase in operating payables 35 212 354
------------------------------------------ ----------- ----------- -----------
Cash used in operations (346) (143) (326)
Net cash used in operating activities (346) (143) (326)
Cash flows from investing activities
Payments for intangible
assets (255) (228) (557)
Payments for property, plant - - -
and equipment
------------------------------------------ ----------- ----------- -----------
Net cash generated from investing
activities (255) (228) (557)
Cash flows from financing activities
Issue of ordinary
share capital - - 1,009
Share issue costs - - (78)
Proceeds from borrowing - 350 600
Interest paid - - -
Net cash from financing activities - 350 1,531
Total (decrease)/increase in
cash and cash equivalents (601) (21) 648
Cash and cash equivalents at
the start of the period 717 69 69
------------------------------------------ ----------- ----------- -----------
Cash and cash equivalents at
the end of the period 116 48 717
------------------------------------------ ----------- ----------- -----------
Notes to the Interim Condensed Consolidated Financial
Statements
1. Accounting policies
GCM Resources plc (GCM) is domiciled in England and Wales, was
incorporated as a Public Limited Company on 26 September 2003 and
admitted to the London Stock Exchange Alternative Investment Market
(AIM) on 19 April 2004.
This unaudited interim report was authorised for issue by the
Board of Directors on 24 March 2022.
Basis of preparation
The annual consolidated financial statements have been prepared
in accordance with International Financial Reporting Standards
(IFRSs) as they apply to the financial statements of the Group for
the year ended 30 June 2021 and applied in accordance with the
Companies Act 2006.
The interim condensed consolidated financial statements for the
six months ended 31 December 2021 have been prepared using the same
policies and methods of computation as applied in the financial
statements for the year ended 30 June 2021. The financial
information contained herein does not constitute statutory accounts
within the meaning of Section 435 of the Companies Act 2006 and is
unaudited. The figures for the year ended 30 June 2021 have been
extracted from the statutory accounts for that year. Those accounts
have been delivered to the Registrar of Companies and contained an
unqualified auditors' report which included an emphasis of matter
concerning significant doubt over the ability for the Group to
continue as a going concern and did not include a statement under
section 498(2)(a) or (b), or section 498(3) of the Companies Act
2006.
Political and economic risks - carrying value of intangible
asset
The principal asset is in Bangladesh and accordingly subject to
the political, judicial, fiscal, social and economic risks
associated with operating in that country.
The Group's principal project relates to thermal coal and
semi-soft coking coal, the markets for which are subject to
international and regional supply and demand factors, and
consequently future performance will be subject to variations in
the prices for these products.
GCM, through its subsidiaries, is party to a Contract with the
Government of Bangladesh which gives it the right to explore,
develop and mine in respect of the licence areas. The Group holds a
mining lease and exploration licences in the Phulbari area covering
the prospective mine site. The mining lease has a 30-year term from
2004 and may be renewed for further periods of 10 years each, at
GCM's option.
In accordance with the terms of the Contract, GCM submitted a
combined Feasibility Study and Scheme of Development report on 2
October 2005 to the Government of Bangladesh. Approval of the
Scheme of Development from the Government of Bangladesh is
necessary to proceed with development of the mine. GCM continues to
await approval.
The Group has received no notification from the Government of
Bangladesh (Government) of any changes to the terms of the
Contract. GCM has received legal opinion that the Contract is
enforceable under Bangladesh and International law, and will
consequently continue to endeavour to receive approval for
development.
Accordingly, the Directors are confident that the Phulbari Coal
and Power Project (Project) will ultimately receive approval,
although the timing of approval remains in the hands of the
Government. To enhance the prospects of the Project, GCM has
engaged in a strategy to align the Project with the needs and
objectives of the Government. The Government seeks to rapidly
expand the country's power generation, including the increase in
coal fired power generation from the current 250MW to approximately
20,000MW. The Group's strategy is to work with the Government of
Bangladesh and its international development partners to develop
the planned coal mine together with power plants and supply chains
to utilise the full coal production which can support over 6,600MW
power generation.
Until approval of the Scheme of Development from the Government
of Bangladesh is received there is continued uncertainty over the
recoverability of the intangible mining assets. The Directors
consider that it is appropriate to continue to record the
intangible mining assets at cost, however if for whatever reason
the Scheme of Development is not ultimately approved the Group
would impair all of its intangible mining assets, totalling
GBP42,452,000 as at 31 December 2021.
Going concern
As at 31 December 2021, the Group had GBP116,000 in cash and
GBP1,324,000 in net current liabilities. The directors and
management have prepared a cash flow forecast to March 2023, which
showed that the Group would require further funds to cover
operating costs to advance the Phulbari Coal and Power Project and
meet its liabilities as and when they fall due. Based on the
current forecast, additional funding would need to be either raised
from third parties or drawn down under the GBP3.5million loan
facility with Polo Resources Limited ("Polo Loan Facility"), which
currently has GBP300,000 available to, in order to meet current
operating cost projections.
The Company on 2 March 2022, announced it had secured Gross
Funding proceeds of GBP2.13million through a placing and
subscription of new ordinary shares (See Note 7 for details). This
funding provides the Company with sufficient funds to cover its
corporate and project operating expenses through to Q2 2023.
In forming the conclusion that it is appropriate to prepare the
condensed consolidated financial statements on a going concern
basis the Directors have made the following assumptions that are
relevant to the next twelve months:
- In the event that the Polo Loan Facility becomes payable,
sufficient funding can be obtained; and
- In the event that operating expenditure increases
significantly as a result of successful progress with regards to
the Phulbari Coal and Power Project, sufficient funding can be
obtained.
Upon achieving approval of the Phulbari Coal and Power Project,
significant additional financial resources will be required to
proceed to development.
2. Segment analysis
The Group operates in one segment being the exploration and
evaluation of energy related projects. The only significant project
within this segment is the Phulbari Coal and Power Project in
Bangladesh.
3. Intangibles
During the period intangibles increased by GBP273,000. The
increase is due to capitalised mining exploration and evaluation
expenditure relating to the Phulbari Coal and Power Project in
Bangladesh.
4. Payables
31 December 31 December 30 June
2021 2020 2021
unaudited unaudited audited
GBP000 GBP000 GBP000
-----------------------
Trade payables 663 590 579
Related party accrued
payable 794 694 843
Transaction costs - - -
payable
1,457 1,284 1,422
----------------------- ------------- ------------ ---------
The related party accrued payable of GBP794,000 at 31 December
2021 relates to accrued fees owing to the management services
company of the Executive Chairman of the Company, Datuk Michael
Tang PJN.
5. Borrowings
31 December 31 December 30 June
2021 2020 2021
unaudited unaudited audited
GBP000 GBP000 GBP000
Short-term loan facility from
related party 4,445 3,737 4,203
4,445 3,737 4,203
------------------------------- ------------- ------------ ---------
GCM is party to a GBP3,500,000 short-term loan facility with its
largest shareholder, Polo Resources Limited ("Polo"). As at 31
December 2021, the Company owed GBP4,445,000, comprising
GBP3,200,000 loan balance and accrued finance costs on borrowings
of GBP1,245,000. The Company on 26 March 2021, as part of the
completed equity placing, extended and amended the terms of the
loan facility provided by Polo Resources Limited (the "Facility")
of which, as was announced on 7 January 2021, there is GBP300,000
of the initial GBP3.5 million facility remaining undrawn as at the
date of this report. The lender has agreed that it will not serve a
repayment request on the Company for 5 years from the date of the
agreement replacing the previous provision that it was payable on
demand with 90 days' notice. The Company and Polo Resources Limited
have agreed an increase in the interest rate from 12% to 15% per
annum rising by 1.5% on the third anniversary and by a subsequent
1.5% on each anniversary thereafter. Furthermore, the lender may
request conversion by the issuance of new ordinary shares in the
Company at 7.5 pence per share (being the Issue Price) subject to
any necessary regulatory approvals. The Company may elect to repay
all or part of the outstanding loan at any time giving 60 days'
notice and with the agreement of Polo Resources Limited. Any share
issue to the Lender is conditional upon the Lender's interest,
together with the interest of any parties with which it is in
concert, remaining below 30% of the Company's issued capital. All
other principal terms of the loan facility remain unchanged. As
noted below, on 2 March 2022, the Company agreed to amend the issue
price of the shares from 7.5p to 5.14p as part of Polo's
participation in the subscription and fund raising on that date,
all other terms as above remained unchanged.
6. Share issues
There were no shares issued during the period.
7. Post-balance sheet events
On 2 March 2022, the Company announced that the Company had
raised gross proceeds of GBP2.13million through a placing (the
"Placing") of 25,291,828 shares and a subscription for 16,171,777
shares (the "Subscription") of new ordinary 1p shares in the
Company ("Fundraising Shares") at a price of 5.14 pence per share
("the Placing Price"), representing a discount of approximately
36.9% to the closing mid-market share price on 1 March 2022 (being
the last business day prior to this announcement).
-- The Company raised gross proceeds of approximately
GBP1,300,000 by means of a placing (the "Placing") of 25,291,828
new Ordinary Shares (the "Placing Shares") at the Placing Price
through ETX Capital, which is the trading name of Monecor (London)
Limited. ETX Capital is acting as broker in connection with the
Placing.
-- The Company also announced that it had appointed ETX Capital
as joint broker, as part of the Placing.
-- An issue of 16,171,777 new ordinary shares of 1p each in the
capital of the Company (the "Subscription Shares") to certain
individuals including Polo Resources Ltd at the Issue Price to
raise GBP830,000 (the "Subscription") at an issue price of 5.14p
("the issue price").
-- The Company as part of the proposed subscription, agreed to
amend the terms of the loan facility provided by Polo Resources
Limited (the "Facility") of which, as announced on 26 March 2021,
there is GBP300,000 of the initial GBP3.5 million facility
remaining undrawn. The lender may request conversion by the
issuance of new ordinary shares in the Company at 5.14 pence per
share (being the Issue Price) subject to any necessary regulatory
approvals. All other terms of the agreement remained unchanged.
On 11 March 2022, the Company announced that further to the
announcement of 19 January 2021, it had completed the extension of
the joint venture agreements announced on 17 January 2019 and 13
January 2020 ("First JV Agreement") and 15 March 2019 ("Second JV
Agreement") with Power Construction Corporation of China
("PowerChina"). The joint venture agreements which were both due to
expire on 15 March 2021 have both been extend for a further two
years to 15 March 2024.
This announcement contains inside information for the purposes
of Article 7 of the UK version of Regulation (EU) No 596/2014 which
is part of UK law by virtue of the European Union (Withdrawal) Act
2018, as amended ("MAR"). Upon the publication of this announcement
via a Regulatory Information Service, this inside information is
now considered to be in the public domain.
For further information:
GCM Resources plc WH Ireland Ltd
Keith Fulton James Joyce
Finance Director Andrew de Andrade
+44 (0) 20 7290 1630 +44 (0) 20 7220 1666
GCM Resources plc
Tel: +44 (0) 20 7290 1630
info@gcmplc.com; www.gcmplc.com
About GCM Resources
GCM Resources plc (LON:GCM), the AIM listed mining and energy
company, has identified a high-quality coal resource of 572 million
tonnes (JORC 2004 compliant) at the Phulbari Coal and Power Project
(the "Project") in north-west Bangladesh.
Utilising the latest highly energy efficient power generating
technology, the Phulbari coal mine is capable of supporting over
6,000MW power generation. GCM is awaiting approval from the
Government of Bangladesh to develop the Project. The Company,
together with credible, internationally recognised strategic
partners, has a strategy of positioning its proposed coal to supply
power plants at the mine-mouth and other coal-fired power projects
in Bangladesh. GCM aims to deliver a practical power solution to
provide the cheapest electricity in the country, in a manner
amenable to the Government of Bangladesh.
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END
IR VZLFLLXLEBBV
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