TIDMCNG
China Nonferrous Gold Limited
('CNG' or the 'Company')
Interim Results for the Six-Month Period Ended 30 June 2021
China Nonferrous Gold Limited (AIM:CNG), the gold producer with
the operational Pakrut Gold Project ('the Pakrut Project') in the
Republic of Tajikistan, today announces its interim results for the
six-month period ended 30 June 2021.
The results below are available on the Company's website at
www.cnfgold.com.
Highlights
-- From January to June 2021, a total of 343,403 tons of ore was extracted
from the Pakrut gold mine; 363,030 tons of ore was processed at a grade
of 1.95 g/t; and 19,337 oz. gold ingots were poured.
-- From January to June 2021, the Group sold 17,288 oz. of gold ingots,
achieving sales revenue of US$30.87 million.
-- Since the outbreak of COVID-19 in Tajikistan on April 30 2020, the
Company has taken appropriate steps and effective measures to ensure that
staff at protected at site. It is worth noting that Tajikistan officials
announced that since August 29 2021, no new COVID-19 infection cases have
been found in Dushanbe, the capital of Tajikistan. To date operations at
the mine site at Pakrut continue as normal, and there are no confirmed or
suspected cases in the Company in Tajikistan or China.
For further information please visit the Company's website
(www.cnfgold.com) or contact:
China Nonferrous Gold Limited
Zhang Hui, Managing Director
Tel: +86 10 8442 6662
WH Ireland Limited (NOMAD & Broker)
Katy Mitchell, Andrew de Andrade
Tel: +44 (0)207 220 1666
Blytheweigh (PR)
Tim Blythe
Tel: +44 (0)20 7138 3224
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 entered steady state production from January 2019.
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 Organization. Tajikistan hosts numerous
operating precious metal mines as well as the largest aluminum
smelter in Central Asia. CNG's management team has extensive
experience in the mining industry in Tajikistan.
CEO's Statement
As CEO of the board, it gives me great pleasure to present the
CEO's statement of the Interim Results for the Six-Month Period
Ended 30 June 2021. Despite the global pandemic, Pakrut took
pandemic prevention and protection measures, and continued
producing during the first half of the year, making the group an
important gold producer in Tajikistan.
From January to June 2021, a total of 343,403 tons of ore was
extracted from the Pakrut gold mine. During that same six month
period:
-- 363,030 tons of ore was processed;
-- the average grade of the raw ore was 1.95 g/t;
-- the recovery rate of processing was 93.63%;
-- 10,003.47 tons of concentrate was produced from the processing plant; and
-- 9,346 tons of concentrate was treated in the smelter (the comprehensive
recovery rate of smelting was 92.46%) and 19,337 oz. gold ingots were
poured.
From 2020, the gold price began to rise, especially after March
2020, which has benefited the Group. From January to June 2021, the
Group sold 17,288 oz. of gold ingots, achieving sales revenue of
US$30.87million (unaudited), with an average sales price of
US$1,785.62 / oz.
Financial Results
The Company continued its production and operation work during
the first six months of 2021. Administration expenditure was
US$9,055,372 (30 June 2020: US$8,063,474). The largest increases
are insurance expenses and travel expenses being mainly due to the
increase of annual insurance premium for the fixed assets of Pakrut
and the increase of air ticket and repatriation isolation fee. The
non-operating costs were increased largely because as part of the
terms of the historic Investment Agreement with the Government of
the republic of Tajikistan, pursuant to which the Company , was
obliged to donate $2.21m for certain social projects in Tajikistan
Government. The operating profit was US$4,848,000 (30 June 2020:
US$1,503,000). Total cash equivalents at the end of the period
amounted to US$2,140,259 (30 June 2020: US$19,548,292). As at 30
June 2021, the Group had net liabilities of $21,518,316 (30 June
2020: net liabilities $20,712,868).
Given the limited production and cash balances the Group has
been reliant on support from its major shareholder, CNMC, and its
associates. US$20m of the CITIC Loan has been drawn down in January
2021(short-term liability) to replace the China Construction Bank
(CCB) Macau loan of US$20m (long-term liability) which became due
in January 2021. The second draw down of the CITIC loan of
US$14.55m in March 2021 was used to repay the CCB Asia loan of
US$14.55m which was due for repayment in March 2021.
The total amount of US$65m being a loan facility from the
Shanghai (Hong Kong) Limited (BOS) has been drawn down on 28 June
2021 in order to repay the CCBC Macau loan, of which US $65m
remains outstanding. As announced in February 2021, the Company has
repaid US$20m of its outstanding loan with CNMC International
Capitals Company Limited (CNMC International) in accordance with
its terms. And in June 2021, the Company repaid US$9.25m to CNMC
International which resulted in the decline of finance cost. Total
debt now equals $359.396m (including interest).
The Group commenced full production in January 2019, enabling it
to generate ongoing working capital. As mentioned earlier, in order
to ensure the repayment of existing loans, a broader refinancing is
required. Discussions are ongoing and further updates will be
provided in due course.
Outlook
The Company remains confident in its ability to achieve the
internal production target of 680,000 tons of ore set at the
beginning of this year. This is considered an achievable
target.
The Company continues to seek to improve its production capacity
through technological innovation. Whilst improving production, the
Company is also focusing on perfecting and improving the smelting
process by reducing production costs, increasing recovery rates and
improving competitiveness.
While we have taken big strides in the production and operation
of the Pakrut gold mine and achieved much, there are still
challenges to overcome and targets to meet, such as: further high
ore grade, improvement of internal controls and improved warehouse
management, all of which we will look to address in the coming
months.
Uncertainty created by the COVID-19 pandemic with regards to
future production and operations still exists in Tajikistan, and
the long term effects are difficult to predict and estimate but
there does appear to be indications that the global community is
bringing the situation under control. The Company will continue to
monitor the situation and make every effort to meet pandemic
prevention and control requirements, as well as stabilizing the
production and operation of Pakrut gold mine.
I would like to take this opportunity to thank all our
employees, management and advisers for their continued hard work in
2021. I would also like to extend my thanks to all our stakeholders
for their continued backing over the years. I very much look
forward to updating our shareholders further on the mine
developments, production levels, new strategy and direction.
Zhang Hui
CEO
29 September 2021
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE SIX MONTHSED 30 JUNE 2021
Unaudited Unaudited Audited
Six months Six months ended Year ended
ended 30 June 30 June 31 December
2021 2020 2020
Note US$'000 US$'000 US$'000
Revenue 30,865 24,329 64,516
Cost of sales (14,595) (14,134) (35,297)
Gross profit 16,270 10,195 29,219
Other Operating
income - - 1
Administrative
and other
expenses (9,055) (8,063) (17,827)
Loss on foreign
exchange (143) (629) (1,076)
Other operating
expenses (2,224) - (46)
Operating profit 4,848 1,503 10,271
Interest income 6 50 196
Finance costs (5,498) (8,465) (15,999)
Loss before Tax (644) (6,927) (5,532)
Income tax (731) - (824)
Loss for the
period
attributable to
owners (1,375) (6,927) (6,356)
of the Company
Other
comprehensive
income - - -
Total
comprehensive
income for the
period
attributable to
owners of the
Company (1,375) (6,927) (6,356)
Earnings per
Share
Basic and
diluted
(cents) 3 (0.35) (1.81) (1.66)
All of the activities of the Group are classified as
continuing.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2021
Unaudited Unaudited Audited
30 June 2021 30 June 2020 31 December 2020
US$'000 US$'000 US$'000
Non-Current Assets
Property, plant and
equipment 5368,036 400,701 373,201
Total Non-Current
Assets 368,036 400,701 373,201
Current Assets
Inventories 18,238 17,035 15,911
Trade and other
receivables 13,682 6,373 5,649
Cash and cash
equivalents 2,140 19,548 27,196
Total Current Assets 34,060 42,956 48,756
Non-Current
Liabilities
Borrowings 4(324,846) (18,586) (19,822)
Provisions for other
liabilities and
charges (995) (913) (995)
Total Non-Current
Liabilities (325,841) (19,499) (20,817)
Current Liabilities
Borrowings 4(34,550) (362,077) (368,919)
Trade and other
payables (63,224) (82,792) (52,363)
Total Current
Liabilities (97,774) (444,870) (421,282)
Total Liabilities (423,615) (464,369) (372,526)
Net Liabilities (21,518) (20,712) (20,143)
Capital And Reserves
Share Capital 38 38 38
Share premium 65,901 65,901 65,901
Other reserves 10,175 10,175 10,175
Retained earnings (97,632) (96,826) (96,257)
Total Equity (21,518) (20,712) (20,143)
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE SIX MONTHSED 30 JUNE 2021
Unaudited Unaudited Audited
Six months ended Six months ended Year ended
30 June 2021 30 June 2020 31 Dec 2020
US$'000 US$'000 US$'000
Cash flows from
Operating
Activities
Loss before income
tax (646) (6,927) (5,451)
Adjustments for:
Finance income 4 (50) (196)
Finance cost 5,498 8,465 15,999
Depreciation 5,617 3,741 11,072
Foreign exchange - - 1,076
Impairment - - -
Change in working
capital:
Inventory 2,327 178 945
Trade and other
receivables 1,431 1,620 (1,004)
Trade and other
payables (7,055) (4,461) (5,405)
Other current assets (12) (13) 121
Other current
liabilities - 353 (19)
Tax paid -
Net cash flows from
Operating
Activities 7,164 2,906 17,137
Cash flows from
Investing
Activities
Purchase of property,
plant and equipment (421) (1,892) (1,942)
Payments for mining
rights and
construction in
progress - - -
Disposal of PPE - - -
Interest received 4 50 196
Net cash used in
Investing
Activities (417) (1,842) (1,746)
Cash flows from
Financing
Activities
Proceeds from
borrowings 99,550 14,550 14,550
Repayment of
borrowings (130,095) (5,000) (10,000)
Interest paid (1,258) (2,186) (3,866)
Net Cash (used
in)/from Financing
Activities (31,803) 7,364 684
Net
(Decrease)/Increase
in Cash and Cash (25,056) 8,428 16,075
Equivalents
Cash and cash
equivalents at
beginning of the
period 27,196 11,120 11,120
Cash and cash
equivalents at end
of the period 2,140 19,548 27,196
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE SIX MONTHSED 30 JUNE 2021
Share Share Other Retained Total
capital premium reserve earnings equity
US$'000 US$'000 US$'000 US$'000 US$'000
Balance at 1 January
2020 38 65,901 10,175 (89,899) (13,785)
Loss and total
comprehensive income
for the period - - - (6,927) (6,927)
Balance at 30 June
2020 38 65,901 10,175 (96,826) (20,712)
Loss and total
comprehensive income
for - - - 571 571
the period
Balance at 31
December 2020
(audited) 38 65,901 10,175 (96,257) (20,143)
Balance at 1 January
2021 38 65,901 10,175 (96,257) (20,143)
Loss and total
comprehensive income
for the period - - - (1,375) (1,375)
Balance at 30 June
2021 (unaudited) 38 65,901 10,175 (97,632) (21,518)
NOTES TO THE INTERIM FINANCIAL STATEMENTS
FOR THE SIX MONTHSED 30 JUNE 2021
1. Accounting Policies
i) Basis of preparation
China Nonferrous Gold Limited (the "Company") is a company
registered in the Cayman Islands. The condensed consolidated
interim financial statements of the Company for the six months
ended 30 June 2021 comprise the result of the Company and its
subsidiaries (together referred to as the "Group") and have been
prepared in accordance with the AIM Rules for Companies. As
permitted, the Company has chosen not to adopt IAS 34 "Interim
Financial Statement" in preparing these interim financial
statements.
The consolidated interim financial information for the period 1
January 2021 to 30 June 2021 is unaudited and has not been reviewed
in accordance with International Standard on Review Engagements
2410 issued by the Auditing Practices Board. In the opinion of the
Directors the condensed interim financial information for the
period presents fairly the financial position, and results from
operations and cash flows for the period in conformity with the
generally accepted accounting principles consistently applied.
The condensed interim financial information incorporates
unaudited comparative figures for the interim period 1 January 2020
to 30 June 2020 and extracts from the audited financial statements
for the year to 31 December 2020. A copy of the accounts for that
year has been delivered to members. The auditor's report on those
financial statements was unqualified. The financial information
contained in this interim report does not constitute statutory
accounts.
The interim report has not been audited or reviewed by the
Company's auditor. The key risks and uncertainties and critical
accountancy estimates remain unchanged from 31 December 2020 and
the accounting policies adopted are consistent with those used in
the preparation of its financial statements for the year ended 31
December 2020.
ii) Cyclicality
The interim results for the six months ended 30 June 2021 are
not necessarily indicative of the results to be expected for the
financial year 2021. The operations of China Nonferrous Gold
Limited may be subject to seasonal variations depending on the
severity of snowfall levels at the mine site. Severe levels may
impact the ability to continue operations and result in damage to
the mine site.
NOTES TO THE INTERIM FINANCIAL
FOR THE SIX MONTHSED 30 JUNE 2021
2. Going Concern
The Interim Financial Statements have been prepared assuming the
Company will continue as a going concern. Under the going concern
assumption, an entity is ordinarily viewed as continuing in
business for the foreseeable future with neither the intention nor
the necessity of liquidation, ceasing trading or seeking protection
from creditors pursuant to laws and regulations.
In assessing whether the going concern assumption is
appropriate, the Directors take into account all available
information for the foreseeable future, in particular for the
twelve months from the date of approval of the Interim Financial
Statements. This information includes:
-- Management prepared cash flow projections;
-- Estimations as to when full production will commence and first revenues
will be generated and associated cash flows will occur;
-- The ability to complete the mine site work within the stated time frame
and budget;
-- Sources of funding from external sources;
-- Settle financial obligations as they fall due;
-- The continued financial support of the considered controlling party; and
-- The ability of management to renegotiate current financing arrangements
as was achieved in June 2021 in respect of the loan with China Nonferrous
Metals International Mining Co. Ltd.
-- The ultimate parent will continue to support the Group and therefore the
directors believe that funding and financial support will be forthcoming
if required although this is not guaranteed.
As at the date of approval of these interim statements, and
based upon consideration of the above, 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.
NOTES TO THE INTERIM FINANCIAL STATEMENTS
FOR THE SIX MONTHSED 30 JUNE 2021
3. Earnings per Share
June 2021 June 2020 December 2020
Basic and diluted earnings per (0.36)
share(cents) (1.81)
(1.66)
The basic earnings per share is calculated by dividing the loss
attributable to equity holders after tax of US$1,375,921 (30 June
2020: US$6,927,214) by the weighted average number of shares in
issue and carrying the right to receive dividend. For all the
periods disclosed up to 2021, the total number of shares remains
unchanged being 382,392,292 shares.
NOTES TO THE INTERIM FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2021
4. Borrowings
June 2021 June 2020 December 2020
US$000 US$000 US$000
Bank borrowings 99,550 104,550 99,550
Other loans 259,846 276,113 289,191
Less: unamortised borrowing costs - - -
Total 359,396 380,663 388,741
Non-current portion 324,846 18,586 19,822
Current portion 34,550 362,077 368,919
The fair value of borrowings equals their carrying amounts, as
the impact of discounting is not significant.
In January 2021, the Company drew down US$20 million to be used
for the replacement of CCB Macau loan of US $20m. A second draw
down of US$14.55m in March 2021 was used to repay the CCB Asia loan
of US$14.55m which was due for repayment in March 2021. These are
all short-term borrowings which come from external borrowings of
$34.55m from China CITIC Bank Corporation Limited (Zhuhai Branch)
("CITIC).
The total amount of US$65m of the Shanghai (Hong Kong) Limited
(BOS) Loan has been drawn down on 28 June 2021 in order to repay
the CCBC Macau loan.US $65m of the BOS Loan remains outstanding. As
announced in February 2021, the Company repaid US$20m of its
outstanding loan with CNMC International Capitals Company Limited
(CNMC International) in accordance with its terms. In June 2021,
the Company repaid a further US$9.25m to CNMC International.
Of the total borrowings $324.85m (including finance costs) of
long-term borrowings are provided by related parties.
CNMC trade: A loan of US$126.5m which was due to be repaid on 20
December 2020 was extended by agreement to 20 December 2022. A loan
of US$20m which was due to be repaid on 26 November 2020 has been
extended to 26 November 2022.
CNMC International: A loan of US$70m which was due to be repaid
on 8 December 2020 has been extended to 8 December 2022.
Shanghai (Hong Kong) Limited (BOS) :The Company has executed an
agreement with Bank of Shanghai (Hong Kong) Limited ("BOS") for a
loan facility of up to US $65 million which is for a maximum of 24
months . This is due to expire on 23 June 2023.
NOTES TO THE INTERIM FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2021
5. Property, Plant and Equipment
Office
furniture
and Motor Plant and Producing Assets under
Land equipment vehicles machinery Mines construction Total
US$000 US$000 US$000 US$000 US$000 US$000 US$000
Cost
At 1 January
2020 32 587 8,698 17,119 398,639 4,322 429,397
Additions - 106 - 1,836 - - 1,942
Transfer - - - 4,322 - (4,322) -
Disposals - - - - - - -
Settlement of
historical
liabilities - - - (20,214) (20,214)
At 31 December
2020 32 693 8,698 23,277 378,425 - 411,125
Additions - 10 254 189 - - 453
Transfers - - - - - - -
Disposals - - - - - - -
At 30 June
2021 32 703 8,952 23,466 378,425 - 411,578
Accumulated
Depreciation
At 1 January
2020 - 322 6,227 11,476 8,823 - 26,848
Charge for the
period - 32 414 2,580 8,050 - 11,076
Disposals - - - - - - -
At 31 December
2020 - 354 6,641 14,056 16,873 - 37,924
Charge for the
period 18 (2,090) 3,537 4,153 5,618
Disposals - - - - - -
At 30 June
2021 - 372 4,551 17,593 21,026 43,542
Net Book
Value
At 30 June
2021 32 331 4,401 5,873 357,399 - 368,036
At 31 December
2020 32 339 2,057 9,221 361,552 - 373,201
Depreciation for the producing mines is calculated based on the
unit of production method resulting to $4,153,000 of depreciation
charge for the 6 months period.
NOTES TO THE INTERIM FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2021
6. Subsequent events
In order to streamline the administration of the Group of CNG,
reduce the expenditures and ease the financial position, the Board
approved the dissolution of two subsidiary companies and one
representative office within the Group. Kryso Resources Limited
(UK) and International Mining Supplies & Services Limited will
be struck off and dissolved in October 2021. Kryso Resources
Limited (BVI) Beijing Representative Office was dissolved in August
2021. All the assets and liabilities of these three companies have
been transferred to Kryso Resources Limited (BVI), another
subsidiary company within the Group.
In future, the Group will continue to concentrate on the
development of Pakrut mine, and look forward to expanding their
interest in mineral resources in the surrounding areas of Central
Asia.
View source version on businesswire.com:
https://www.businesswire.com/news/home/20210929005494/en/
CONTACT:
China Nonferrous Gold Limited
SOURCE: China Nonferrous Gold Limited
Copyright Business Wire 2021
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