TIDMCNG
30 September 2016
China Nonferrous Gold Limited ??????????
('CNG' or the 'Company')
Interim Results for the Six-Month Period Ended 30 June 2016
China Nonferrous Gold Limited (AIM:CNG), the mineral exploration
and development company currently developing the Pakrut Gold
Project ('the Pakrut Project') in the Republic of Tajikistan, today
announces its interim results for the six-month period ended 30
June 2016.
The results below are available on the Company's website at
www.cnfgold.com.
Highlights
-- 2,183 metres of tunneling and cuttings at various levels completed by
the end of August;
-- 11,500 metre of drilling as part of face preparation and 4,497 metres
of in-fill drilling completed;
-- More than 122,000 tonnes of ore has been extracted during the first
half of 2016 from above levels and has been stockpiled;
-- Technical enhancements to the plant completed following trial
production;
-- Processing capacity currently at 1700 tonnes per day;
-- 1,777 tonnes of gold concentrate produced and 150,000 tonnes of ore
stockpiled by the end of August
-- Pakrut operating board strengthened
-- Debt re-financing of US$120 million with CNMC International Capitals
Company Limited and post period end up to US$100 million with
China
Construction Bank Corporation Macau Branch, both at lower
cost
For further information please visit the Company's website
(www.cnfgold.com) or contact:
China Nonferrous Gold Limited
David Tang, Managing Director
Tel: +86 10 8442 6681
Investec Bank Plc Jeremy Ellis,
George Price
Tel: +44 (0)20 7597 5970
Blytheweigh
Tim Blythe, Camilla Horsfall
Tel: +44 (0)20 7138 3204
Project Summary
The Pakrut gold project, of which CNG has 100 per cent
ownership, is situated in Tajikistan approximately 120km northeast
of the capital city Dushanbe. Pakrut is located within the Tien
Shan gold belt, which
extends from Uzbekistan into Tajikistan, Kyrgyzstan and Western
China, and which hosts a number of multi-million ounce gold
deposits.
CNG is transitioning from construction with mining contractors
on site developing the underground mine and surface infrastructure
to production phase.
About Tajikistan
Tajikistan is a secular republic located in Central Asia. The
country is a member of the Commonwealth of Independent States and
the Shanghai Cooperation Organisation. Tajikistan hosts numerous
operating precious metal mines as well as the largest aluminium
smelter in Central Asia. CNG's management team has extensive
experience in the mining industry in Tajikistan.
CHINA NONFERROUS GOLD LIMITED Chairman's Statement
Construction and Production
During the first half year of 2016, the Company has made
considerable progress on reaching the designed capacity of Pakrut
Gold Project.
The tunneling and cuttings at 2110, 2170, 2230 and 2292 levels
have reached 2,183 metres by the end of August. 11,500 metres of
drilling for face preparation and 4,497 metres of in-fill drilling
has been completed across the sub-levels. More than 122,000 tonnes
of ore has also been extracted from above levels since the start of
2016.
Throughout the winter after trial production late last year, the
Company continued to make effective and successful progress on
equipment maintenance and technical modification work for the
processing plant and smelting plant in order to complete
commissioning work during trial production and reach the design
capacity of 2,000 tonnes per day. The processing plant has been
continuously running and is currently processing 1,700 tonnes of
ore per day. Meanwhile the smelting plant has satisfied the
conditions for continuous operation after equipment maintenance and
technical modification. By the end of August 2016, the Company had
produced 2,175tonnes of concentrate. The smelting of the gold from
the concentrate is expected to start in October 2016.
On June 4th, the President of Republic of Tajikistan visited the
smelting and processing plant and attended the opening ceremony of
the processing plant.
In order to manage the production in a more efficient way,
senior operational engineers have been recruited to assist in the
transformation of Pakrut from the construction stage to
production.
Financial Results
The amount incurred by the Company on development and
construction work during the first six months of 2016 was
US$39,587,000 (30 June 2015: US$29,673,000). Administration
expenditure was US$2,820,560 (30 June 2015: US$1,277,000). The
overall loss incurred by the Company was US$3,400,000(30 June 2015:
US$1,203,000). Total cash equivalents at the end of the period
amounted to US$109,020,000 (30 June 2015: US$13,218,000).
In the first half of 2016, new debt financing totaling US$220
million was secured from the China Nonferrous Mining Group and the
Construction Bank of China. The new loans were used settle the ICBC
loan balance and part of the previous shareholder loan balance in
order to maximise the Company's cash position and reduce financing
costs. As at 30 June 2016 the Company's outstanding debt balance
consisted of US$311 million with $211 million owed to China
Nonferrous Metals Int'l Mining Co., Ltd("CNMIM") and CNMC
International Capitals Company Limited. Post period end the Company
paid down $55 million of the CNMIM loan.
Outlook
The Company remains focused on the transformation of the Pakrut
Gold Project from construction to production and is on course to
reach design capacity of 2,000 tonnes per day for processing within
the second half of 2016. The recruitment of more senior operational
engineers will be conducted in due course while Pakrut is
transforming from construction stage to operation.
The permanent camp at site is expected to be completed before
winter and construction of the new tailings dam is expected to
begin shortly.
I would like to take this opportunity to thank all of our
employees, management and advisors for their continued effort in
2016 and thank our shareholders for their continued support. I very
much look forward to updating our shareholders on the mine
production and gold pour.
Wu Xiang
Non-Executive Chairman
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE SIXMONTHSED 30 JUNE 2016
CHINA NONFERROUS GOLD LIMITED
Unaudited Unaudited Audited
Six months ended Six months ended Year ended 31
30 June 2016 30 June 2015 December
2015
US$'000 US$'000 US$'000
Revenue
Interest income 3 1 4
Administrative (2,821) (1,277) (3,166)
and
other expenses
Foreign exchange (550) 80 (2,988)
(losses)/ gains
Finance costs (32) (7)
Loss before Tax (3,400) (1,203) (6,150)
Income tax - - -
Loss after Tax (3,400) (1,203) (6,150)
Total - - -
comprehensive
income
-Total (3,400) (1,203) (6,150)
comprehensive
income
for the period
attributable
to owners
of the Company
Earnings per
Share
-Basic and (0.89) (0.31) (0.0161)
diluted
(US cents)
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2016
CHINA NONFERROUS GOLD LIMITED
Unaudited Unaudited Audited
30 June 2016 30 June 2015 US$'000 31 December 2015
US$'000 US$'000
Non-current
Assets
Intangible assets - -
Mine 284,077 157,005 244,529
under
construction
Prepayments for 565 2,689 -
property,
plant
and equipment
Property, plant 10,573 11,340 11,624
and equipment
Total Non-Current 295,215 171,034 256,153
Assets
Current Assets
Inventories 40,164 34,776 39,390
Trade and other 2,571 173 1,010
receivables
Cash and cash 109,020 13,218 2,213
equivalents
Total Current 151,755 48,167 42,613
Assets
Non-Current
Liabilities
Payables for (73,534) - -
property,
plant
and equipment
Provision for - (593) (646)
other
liabilities
and charges
Trade and other - - -
payables
Borrowings (275,000) (134,877) (56,437)
Total Non-Current (348,534) (135,470) (57,083)
Liabilities
Current
Liabilities
Trade and Other (46,940) (5,628) (74,204)
payables
Borrowings (20,000) (20,687) (132,583)
Total Current (66,940) (26,315) (206,787)
Liabilities
Net 84,815 21,852 (164,174)
Current
Assets(Liabilities)
Net Assets 31,496 57,416 34,896
Total Assets 380,030 192,886 91,979
Less Current
Liabilities
Capital And
Reserves
Capital 38 38 38
Share premium 65,901 65,901 65,901
Other reserves 10,175 10,175 10,175
Retained earnings (44,618) (18,698) (41,218)
Total Equity 31,496 57,416 34,896
Total Equity and 446,970 219,201 298,766
Liabilities
CONSOLIDATED CASH FLOW STATEMENT
FOR THE SIX MONTHSED 30 JUNE 2016
CHINA NONFERROUS GOLD LIMITED
Unaudited Unaudited Audited
Six months ended 30 June 2015 Six months ended 30 June 2014 Year ended 31 December 2015
US$'000 US$'000 US$'000
Cash Flows
from
Operating
Activities
Loss before (3,400) (1,203) (6,150)
tax
Adjustments
for:
Interest - - (4)
income
Depreciation 908 5 542
Share based
payments
Finance costs - 7 -
Operating (2,492) (1,191) (5,612)
cash
flows
before
movements
in working
capital
Advance to 243 (1,973) -
suppliers
Trade and (46) 160 39
other
receivables
(increase)
/ decrease
Other 43,688 (8,574) 49,615
payables
(decrease)
/ increase
Decrease(increase)
in Inventory
Cash used in 41,393 (11,577) 49,615
operations
Income tax - -
paid
Net Cash used 41,393 (11,577) 44,042
in Operating
Activities
Cash flows
from
Investing
Activities
Payments for -
intangible
assets
Payments for (61) (2,153) (2,282)
property,
plant
and equipment
Payments for (38,752) (17,476) (111,999)
construction
in
progress and
mining
rights
Increase (774) (10,044) (14,658)
in
Inventories
Interest - - 4
received
Net cash used (39,587) (29,673) (128,935)
in Investing
Activities
Cash flows
from
Financing
Activities
Proceeds from - 190 190
issue
of shares
Proceeds from 240,000 46,235 110,909
borrowings
Repayment of (135,000) (10,229) (31,375)
borrowings
Interest paid (10,890)
Net 105,000 36,196 68,834
Cash
from/(used
in)
Financing
Activities
Net Decrease 106,806 (5,054) (16,059)
in Cash
and
Cash
Equivalents
Cash and cash 2,213 18,272 18,272
equivalents
at
beginning of
the period
Cash and cash 109,019 13,218 2,213
equivalents
at end of the
period
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE SIX MONTHSED 30 JUNE 2016
CHINA NONFERROUS GOLD LIMITED
Share Share Other Retained Total
capital premium reserve earnings equity
US$'000 US$'000 US$'000 US$'000 US$'000
Balance at 1 38 65,711 10,175 (17,495) 58,429
January 2015
Loss and total - - - (1,203) -1,203
comprehensive
income for the period
Issue of shares - 190 - - 190
in respect of
exercise of share
options
Balance at 30 June 2015 38 65,901 10,175 (18,698) 57,416
Balance at 1 38 65,901 10,175 (41,218) 34,896
January 2016
Loss and total - - - (3,400) -3,400
comprehensive
incomefor the period
Loss and total
comprehensive
incomefor the period
Balance at 30 June 2015 38 65,901 10,175 (44,618) 31,496
NOTES TO THE INTERIM FINANCIAL STATEMENTS
FOR THE SIX MONTHSED 30 JUNE 2016
1. Accounting Policies
These unaudited condensed interim financial statements were
approved for issue by the China Nonferrous Gold Limited Board of
Directors on 28 September 2016.
These condensed interim financial statements have been prepared
in accordance with the recognition and measurement criteria of
International Financial Reporting Standards (IFRS). The financial
information has been prepared under the historical cost
convention.
These condensed interim financial statements do not constitute
statutory accounts.
As permitted, the Group has chosen not to adopt IAS 34 'Interim
Financial Statements' in preparing these condensed interim
financial statements.
The Group has applied consistent accounting policies in
preparing the condensed interim financial statements for the six
months ended 30 June 2016 and the comparative information for the
six months ended 30 June 2015 and the financial statements for the
year ended 31 December 2015 and the financial statements for the
year ended 31 December 2015.
Risks and uncertainties
The Board continuously assesses and monitors the key risks of
the business. The key risks that could affect the Group's medium
term performance and the factors that mitigate those risks have not
substantially changed from those set out in the Group's 2015 Annual
Report and Financial Statements, a copy of which is available on
the Group's website: www.cnfgold.com.
Critical accounting estimates and judgements
The preparation of consolidated interim financial statements
requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the end of the reporting
period. Significant items subject to such estimates are set out in
the Group's 2015 Annual Report and Financial Statements. The nature
and amounts of such estimates have not changed during the interim
period.
The functional currency of the Group is US dollars and
accordingly the amounts in the interim results are denominated in
that currency.
Basis of Consolidation
The consolidated Financial Statements incorporate the Financial
Statements of the Company and all Group undertakings. These are
adjusted, where appropriate, to conform to Group accounting
policies. Subsidiaries are all entities over which the Group has
control which is where the Group is exposed to, or has rights to,
variable returns from its involvement with the entity and has the
ability to affect those returns through its power over the entity.
All significant intercompany transactions and balances between
group undertakings are eliminated on consolidation.
Subsidiaries are consolidated from the date on which control is
transferred to the Group, and continue to be consolidated until the
date when such control ceases.
Mines under construction
Expenditure is transferred from "Exploration and evaluation"
assets to mining rights within "Mines under construction" once the
work completed to date supports the future development of the
property and such development receives the requisite approvals. All
subsequent expenditure on technically and commercially feasible
sites is capitalised within mining rights.
All expenditure on the construction, installation or completion
of infrastructure facilities is capitalised as construction in
progress within "Mines under construction". Once production starts,
all assets included in "Mines under construction" will be
transferred into "Property, Plant and Equipment" or "Producing
mines". It is at this point that depreciation / amortization
commences over its useful economic life.
Mines under construction are stated at cost. The initial cost
comprises transferred exploration and evaluation assets,
construction costs, infrastructure facilities, any costs directly
attributable to bringing the asset into operation, the initial
estimate of the rehabilitation obligation, and, for qualifying
assets, borrowing costs. Costs are capitalized and categorized
between mining rights and construction in progress respectively
according to whether they are intangible or tangible in nature.
Property, plant and equipment
Property, plant and equipment (other than construction in
progress) is stated at cost, less subsequent accumulated
depreciation and subsequent accumulated impairment losses, if
any.
Depreciation of property, plant and equipment (other than
construction in progress) is calculated using the straight-line
method to allocate their costs to their residual values over their
estimated useful lives using the following rates per annum:
Plant and machinery - 20%, Motor vehicles - 20%, Office
furniture and equipment - 20%.
The estimated useful lives, residual values and depreciation
method are reviewed at the end of each reporting period, with the
effect of any changes in estimate accounted for a prospective
basis.
Impairment losses on tangible and intangible assets
Exploration and evaluation assets and mines under construction
are assessed for impairment annually or where there is an
indication that an asset or cash generating unit ("CGU") may be
impaired. If an indication exists, or when annual impairment
testing for an asset is required, the Group estimates the asset's
or CGU's recoverable amount. The recoverable amount is the higher
of an asset's or CGU's fair value less costs to sell and its value
in use. Where the carrying amount of an asset or CGU exceeds its
recoverable amount, the asset/CGU is considered impaired and is
written down to its recoverable amount. The Group bases its
impairment calculation on detailed budgets and forecasts based on
the life-of-mine plans.
The assessment is carried out by allocating exploration and
evaluation and mines under construction assets to CGUs which are
based on specific projects and geographical areas. Where
exploration for and evaluation of mineral resources in CGUs does
not lead to the discovery of commercially viable quantities of
mineral resources and the Group has decided to discontinue such
activities at the unit, the associated expenditure will be written
off to profit or loss. Exploration and evaluation assets are
impaired when the Group's right to explore in an area has
expired.
2. Earnings per Share
Basic earnings per share are based on the weighted average
number of ordinary shares issued during the half year of 2016:
382,392,292 (2015: 381,407,570). There is no difference between
basic and diluted earnings per share as the Company is loss
making.
3. Going Concern
The Group's business activities, together with the factors
likely to affect its future development, performance and position
are set out in Annual report for the year ended 31 December 2015
which can be found on the Company's website. The accounting
policies include the Group's objectives, policies and processes for
managing its capital; its financial risk management objectives;
details of its financial instruments; and its exposure to liquidity
risk. During the period the following refinancing steps have been
undertaken by the Company:
On 6th May 2016 the Group obtained a loan with CNMC
International Capitals Company Limited ("CNMC"), an associate of
CNMIM of US$120 million ("CNMC Loan"). This loan has been used to
refinance the loan facility with ICBC. The CNMC Loan is repayable
on 31 December 2018 and includes an annual fixed interest rate of
4% on the amount drawn down, payable in arrears. On 27th June 2016
the Group drew down a further loan of US$19,114,809 from CNMIM for
working capital purposes.
On 1st July the Group announced an agreement with the China
Construction Bank Corporation Macau Branch for a loan facility of
up to USD$ 100 million ("CCBC loan"). This loan has been used to
refinance the Company's 2012 loan with CNMIM and also for working
capital purposes. The CCBC loan is for a maximum of 5 years and is
repayable 60 months from the date of first drawdown. The annual
interest rate is 2.1% plus 3 month LIBOR.
As at the date of approval of these interim statements, and
based upon the budgeted levels of expenditure, the refinancing
undertaken, Board approved cash flow forecasts and expected
production dates, the Directors are satisfied that the Group has
sufficient cash and loan facilities to finance the Group's
operating expenses and any further development and construction of
the Pakrut Gold Project that is required.
The Directors have a reasonable expectation that the Group has
adequate resources to continue in operational existence and thus
they continue to adopt the going concern basis of accounting in
preparing the interim results.
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