TIDMSGZ
RNS Number : 6938U
Scotgold Resources Ltd
30 March 2023
30 March 2023
Scotgold Resources Limited ("Scotgold" or the "Company")
Interim Results
Scotgold Resources Limited (AIM: SGZ), Scotland's first
commercial gold producer, announces its Interim Results for the six
months ended 31 December 2022 ('H1 2023').
Operational Overview
-- Production for six months ended 31 December 2022, totalled 3,809 ounces of gold
-- H1 2023 gold concentrate sales totalled GBP5.4m (A$9.5m) from
550 tonnes of concentrate shipments to our off-take partner
-- First Scottish gold doré sales were made to Scottish
jewellery companies in December 2022 totalling GBP25,420
Financials
-- Total revenues of A$9.5m in H1 2023 (H1 2022: A$6.4m)
-- Loss before taxation in H1 2023 of A$9.5m (H1 2022: A$5.3m)
-- Cash at 31 December 2022 of A$67k (30 June 2022: A$168k)
-- Net debt of A$25.0m at 31 December 2022
Chairman Statement
The period under review, whilst challenging, has seen progress
and important milestones being achieved at our Cononish gold mine,
in Tyndrum, Scotland ('Cononish'), as we continue to develop
Scotland's first commercial gold mine towards full production,
producing both gold concentrate for off-take and Scottish gold doré
for the jewellery industry.
During H1 2023 (1 July to 31 December 2022) we implemented
initiatives for the underground mining operation and processing
plant to enable our operation to run more efficiently. Power and
ventilation upgrades in the underground mine and de-bottlenecking
of the process plant (floatation and tailings filtration) were
completed as well as mine development in the underground mine, to
allow three development drives, allowing the Company to drive to
the first stope mining area initially planned for calendar Q2 2023,
as well as inclining to the 445 level to open even further
development drives in late 2023. Additionally, limited resource
definition and grade control drilling commenced October 2022,
providing essential information for the correct design and shape of
stopes, with the aim of higher certainty in grade prediction for
the 2023 mine plan, when mining transitions from development
tunnelling to long hole stoping.
Production for the three months ended 31 September 2022,
totalled 2,004 ounces of gold, however this was lower than the
2,600 to 3,200 ounces targeted for the quarter, as a result of the
successful, but delayed power and ventilation upgrades in the
underground mine, which stalled mine development on the waste ramp
in September 2022.
During the three months to 31 December 2022, operational
difficulties continued in the underground mine. December 2022 was
impacted by changes in the short-term mine schedule to expedite
continuous long hole stoping in the western areas of the mine in
2023 , as reported on 21 December 2022, and harsher than expected
weather conditions. Production totalled 1,805 ounces (previously
forecasted 3,000-3,500 ounces of gold) and an additional 324 ounces
was mined in December but stored underground as weather conditions
didn't allow for the mining trucks to move the ore to the ROM pad
safely. This ore was then processed at the beginning of January
2023.
Gold concentrate sales for the period totalled GBP5.4m (A$9.5m)
from 550 tonnes of concentrate shipments to our off-take
partner.
Additionally, first Scottish gold doré sales were made to
Scottish jewellery companies in December 2022 totalling GBP25,420
and sales continue post-period end with Scottish gold jewellery
launches planned in 2023.
Post-period mine development
As reported on the 19 January 2023, in our 2023 mine plan and
strategy update, whilst the majority of capital project works
completed in H1 2023 focussed on increasing the mine production
rate, mine production would still be the limiting factor for gold
production, until long hole stoping commenced, forecasted at this
stage for calendar Q2 2023.
Post-period end, in January 2023, mine development focussed on
the 430 West ore drive, 415 East ore drive and the incline ramp
accessing the 445 level and achieved record development rates with
3,003 tonnes of ore mined, and 2,620 tonnes of ore fed to the
process plant. However, average grade of the ore processed was
lower than predicted (5.65g/t actual vs 7.35g/t planned of
gold).
In February 2023, development on the 430 West ore drive
continued. However, as the 430 West ore drive progressed in late
February and into early March 2023, gold grades began to decline
significantly, and the 430 West ore drive turned to waste,
contradicting the grade control model. Total ore production in
February was negatively impacted, with actual 977 tonnes mined and
1,441 tonnes processed .
As a result of the 430 West ore drive turning to waste and the
need to focus on ore production, the Company shifted development
priorities on 3 March 2023 to the 415 East ore drive. In parallel,
plans commenced to bring forward long hole stoping to early April
(instead of previously forecasted for calendar Q2 2023), to secure
the short to medium term production profile and enhance gold
production thereafter. Stope drilling continues to be undertaken
successfully and the transition to Long hole stope mining is on
track to commence in 5 days time.
Financial Position
Post-period end, on 9 February 2023, the Company undertook an
equity fundraise to provide funds to support the planned transition
from tunnel development mining to long hole stoping. 7,428,460 new
Ordinary Shares totalling gross proceeds of GBP3.0m (US$3.6m) at a
price of 40p per share were issued after a Placing, Subscription
and Retail Offer. Seven Directors of Scotgold and a significant
shareholder participated in the Subscription for a total of
1,435,000 Subscription Shares with a total value of GBP574,000
(US$700,280).
Further to the Capital Raising, Bridge Barn Limited, a company
owned and controlled by Mr Nathaniel le Roux and provider of debt
funding to the Company, has agreed the option to defer a total of
GBP2.5m capital repayments due by the Company in calendar year 2023
by up to 9 months from the due date.
As reported on 27 March 2023, the Company's mine plan
anticipated that 5,818 tonnes of mineralised ore would be mined in
February and March 2023 ahead of the transition to long-hole
stoping in Q2 2023. Actual tonnes mined are now expected to be
between 550 and 600 in March and about 3,000 tonnes of waste to
place into required areas for commencement of stope drilling.
The Company's management team continuously assess the cash
position of the Company. As a result of recent mining performance
being below plan, largely due to lower than expected grades in the
430 West ore drive resulting in the subsequent decision to bring
forward long hole stope mining, the Directors now believe that, in
the event that the planned commencement of long hole stoping in
April is delayed, or the anticipated tonnes of ore mined in April
and the following months is significantly below the current mine
plan, then a material uncertainty would exist that casts
significant doubt over the ability of the consolidated entity to
continue as a going concern in the very immediate term and
therefore its ability to realise its assets and discharge its
liabilities in the normal course of business.
In order to safeguard against this potential shortfall in
working capital over the next few months the Directors have
determined to take steps to strengthen the Company's cash position.
The Company is in advanced discussions with its gold offtake
partner, and is reviewing final documentation, to secure a
US$500,000 advance to assist with short-term working capital. The
Directors of the Company have also discussed, if the need arises,
the provision of additional working capital, in the form of equity
or a short-term convertible loan.
The ability of the consolidated entity to continue as a going
concern over the long term will remain dependent on the quantity
and grade of ore mined and processed being within a reasonable
tolerance of the forecast quantity and grade and adherence to the
planned product shipment schedule.
Our people and commitment to sustainability
We are supported and driven by our team. We currently have 96
employees and continually invest in our people. In this regard, we
were pleased to report that we have been working with Forth Valley
College in Falkirk on apprenticeship schemes where we currently
have placed students in mechanical engineering roles. In addition,
in July 2022, we launched a partnership with the University of St
Andrews for a five-year student bursary programme. Our team is
working closely with the University teaching staff and students on
the MSc Strategic Resources course involving work at both the
University and at our Cononish site.
We are committed to the principles of sustainable and
responsible mining in all aspects of our business. We are dedicated
to the safety of our workforce and local communities. To that end,
we are proud of our no cyanide status, as one of the only gold
producers globally that does not use it in our processing. We also
utilise dry stack tailings to ensure safety and a minimal
environmental footprint. The Company can also confirm that there
have been no serious health and safety incidents this year. We work
in accordance to the UK's HSC best practice and have a zero-harm
safety culture focused on continuous improvement to achieve an
injury free and healthy work environment.
We also support work of Loch Lomond and The Trossachs National
Park and contribute to the Strathfillan Development Trust, which is
a local charity representing the residents of Tyndrum, Crianlarich
and Inverarnan.
Finally, I would like to extend my appreciation to our
colleagues here in Scotland who have worked with dedication during
very challenging times. I would also like to extend my gratitude to
all our stakeholders for their continued support and as we continue
to develop the mine during this critical time, we will update on
developments and progress in this regard.
Chairman
Peter Hetherington
29 March 2023
The information contained within this announcement is deemed to
constitute inside information as stipulated under the retained EU
law version of the Market Abuse Regulation (EU No. 596/2014) (the
"UK MAR") which is part of UK law by virtue of the European Union
(Withdrawal) Act 2018. The information is disclosed in accordance
with the Company's obligations under Article 17 of the UK MAR. Upon
the publication of this announcement, this inside information is
now considered to be in the public domain.
For further information please visit www.scotgoldresources.com
or contact the following:
Scotgold Resources Shore Capital Celicourt Communications
Limited
Nomad and Broker Financial PR
Chief Executive Officer
Toby Gibbs / John More Felicity Winkles/Ariana
Phil Day Fanning
CFO
Sean Duffy
Via Celicourt Communications Tel +44 (0) 20 7408 4090 Tel +44 (0) 208 434
2643
Tel +44 (0) 774 8843
871
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE
INCOME
FOR THE HALF YEARED 31 DECEMBER 2022
Notes 31 December 31 December
2022 2021
$ $
Gold Concentrate Sales 2 9,488,508 6,431,437
Production Costs (11,896,042) (6,431,437)
Sale of scrap metal - 2,411
Net (loss) / profit from operations (2,407,534) 2,411
Interest income 7,930 1,816
Loss on settlement of loan 3 - (1,359,008)
Administration costs (1,107,011) (694,442)
Interest expense 4 (1,010,577) (808,668)
Depreciation and amortisation of plant
and equipment and Right of Use assets 6,7 (1,465,587) (1,403,670)
Depreciation of mining development asset 9 (1,734,676) -
Employee and consultant costs, excluding
share-based payments (1,104,391) (842,503)
Share-based payments 13 (111,269) (153,468)
Other expenses - (218,557)
Currency exchange expense (537,935) (96,883)
LOSS BEFORE INCOME TAX (9,471,050) (5,572,972)
Income tax benefit - -
LOSS FOR THE PERIOD (9,471,050) (5,572,972)
Other Comprehensive Income
Items that may be reclassified to Profit
or Loss
Exchange difference on translation of
foreign subsidiaries 50,630 281,768
Total comprehensive result for the period (9,420,420) (5,291,204)
============= ============
Basic and diluted (loss) per share (cents
per share) (14.89) (9.62)
CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER
2022
Notes 31 December 30 June
2022 2022
$ $
CURRENT ASSETS
Cash and cash equivalents 67,098 168,086
Trade and other receivables 5 1,026,445 4,686,404
Inventories 887,104 1,295,839
Other current assets 282,536 1,048,210
Total Current Assets 2,263,183 7,198,539
------------- -------------
NON-CURRENT ASSETS
Trade and other receivables 5 1,471,832 1,463,125
Plant and equipment 6 14,449,238 14,515,295
Right of use assets 7 2,750,647 3,025,490
Mineral exploration and evaluation 8 3,209,042 3,051,622
Mine development expenditure 9 22,428,489 23,996,356
------------- -------------
Total Non-Current Assets 44,309,248 46,051,888
TOTAL ASSETS 46,572,431 53,250,427
------------- -------------
CURRENT LIABILITIES
Trade and other payables 4,601,880 3,999,379
Other current liabilities 1,481,721 1,100,811
Borrowings 10 859,446 1,175,358
Total Current Liabilities 6,943,047 6,275,548
------------- -------------
NON-CURRENT LIABILITIES
Borrowings 10 24,204,192 22,266,513
Provisions 11 727,327 781,898
Total Non-Current Liabilities 24,931,519 23,048,411
TOTAL LIABILITIES 31,874,566 29,323,959
============= =============
NET ASSETS 14,697,865 23,926,468
============= =============
EQUITY
Issued capital 12 57,835,768 57,755,221
Reserves 1,592,517 1,430,619
Accumulated losses (44,730,421) (35,259,372)
TOTAL EQUITY 14,697,865 23,926,468
============= =============
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE HALF YEARED 31 DECEMBER 2022
Issued Accumulated Options Share-based Foreign Total
Capital Losses Reserve payment Currency Equity
reserve Translation
Reserve
$ $ $ $ $ $
HALF YEAR TO 31
DECEMBER
2021
Balances at 1
July
2021 52,640,345 (24,474,388) 134,769 900,806 (249,608) 28,951,924
Total
comprehensive
result for the
period - (5,572,972) - - 281,768 (5,291,204)
Transactions with owners in their capacity as owners:
Issue of shares 5,114,876 - - - - 5,114,876
Share-based
payments - - - 153,468 - 153,468
Balances at 31
December
2021 57,755,221 (30,047,360) 134,769 1,054,274 32,160 28,929,064
=================== ============= ========= ============ ============= ============
HALF YEAR TO 31
DECEMBER
2022
Balances at 1
July
2022 57,755,221 (35,259,372) 134,769 1,169,443 126,407 23,926,468
Total
comprehensive
result for the
period - (9,471,050) - 111,269 50,631 (9,309,150)
Issue of shares 80,547 - - - - 80,547
Balances at 31
December
2022 57,835,768 (44,730,422) 134,769 1,280,712 177,038 14,697,865
=================== ============= ========= ============ ============= ============
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE HALF YEARED 31 DECEMBER 2022
31 December 31 December
2022 2021
$ $
CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from customers 13,078,275 5,976,072
Payments to suppliers (13,283,761) (7,635,639)
Interest income received 7,930 1,816
Net Cash outflow from Operating Activities (197,556) (1,657,751)
-------------- --------------
CASH FLOWS FROM INVESTING ACTIVITIES
Payments for exploration expenditure - (92,229)
Purchase of plant and equipment (701,677) (382,544)
Net Cash Outflow from Investing Activities (701,677) (474,773)
-------------- --------------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issue of shares and options 82,569 -
Proceeds from short term unsecured loan 1,440,367 1,883,594
Repayment of lease liabilities (712,950) (1,422,739)
Net Cash Inflow from Financing Activities 809,986 460,855
-------------- --------------
Net (decrease) in cash held (89,247) (1,671,669)
Effect of exchange rate fluctuations on
cash and cash equivalents (11,741) 10,498
Cash and cash equivalents at the beginning
of the period 168,086 2,624,342
Cash and cash equivalents at the end
of the period 67,098 963,171
============== ==============
NOTE 1 - STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Preparation
These consolidated financial statements for the interim
half-year reporting period ended 31 December 2022 are general
purpose financial statements, which have been prepared in
accordance with the requirements of the Corporations Act 2001,
Accounting Standards and Interpretations, including AASB 134
'Interim Financial Reporting', and other applicable requirements of
the law. The condensed consolidated interim financial statements
have been prepared in accordance with the AIM rules. The six months
results for 31 December 2022 have not been audited nor reviewed
pursuant to statutory requirements in both the United Kingdom and
Australia.
These financial statements have been prepared on a historical
cost basis and are presented in Australian dollars. These
general-purpose financial statements do not include all the notes
of the type normally included in annual financial statements.
Accordingly, these financial statements are to be read in
conjunction with the annual report for the year ended 30 June 2022
and any public announcements made by the Company during the interim
reporting period.
The Company is a listed public company, incorporated in
Australia and operating in Scotland. The entity's principal
activity is mine development and mineral exploration. These
financial statements are for the consolidated entity consisting of
Scotgold Resources Limited and its controlled entities.
The accounting policies adopted are consistent with those of the
previous financial year and the corresponding interim period,
except for the policies stated below.
Revenue from sale of goods
Revenue from the sale of goods is recognised when control of the
goods has passed to the buyer based upon agreed delivery terms.
Sale of concentrates
Revenue from the sale of concentrates is recognised when control
has passed to the buyer based upon agreed delivery terms, generally
being when the product is loaded onto the ship and bill of lading
received, or delivered to the customer's premises. In cases where
control of the product is transferred to the customer before
shipping takes place, revenue is recognised when the customer has
formally acknowledged their legal ownership of the product, which
includes all inherent risks associated with control of the product.
In these cases, the product is clearly identified and immediately
available to the customer and this is when the performance
obligation is met.
The price to be received on sales of concentrate is
provisionally priced and recognised at the estimate of the
consideration receivable that is highly probable of not reversing
by reference to the relevant contractual price and the estimated
mineral specifications, net of treatment and refining charges where
applicable. Subsequently, provisionally priced sales are repriced
at each reporting period up until when final pricing and settlement
is confirmed, with revenue adjustments relating to the quality and
quantity of commodities sold being recognised in sales revenue.
Provisionally priced sales for which price finalisation is
referenced to the relevant metal price index have an embedded
commodity derivative. The embedded derivative is carried at fair
value through profit or loss as part of trade receivables.
The period between provisional pricing and final invoices is
generally 120 days.
Provisional pricing adjustments
The Group's sales contracts may provide for provisional pricing
of sales at the time the product is delivered to the vessel with
final pricing determined using the index on or after the vessel's
arrival to the port of discharge. This provisional pricing relates
to the quality and quantity of the commodity sold, which is
included in sales revenue, and an embedded derivative relating to
the pricing of the commodity sold. Provisional pricing adjustments
relating to the embedded derivative are separately identified as
movements in the financial instrument rather than being included
within Sales revenue. The final pricing adjustment mechanism, being
an embedded derivative, is separated from the host contract and
recognised at fair value through profit or loss. These amounts are
disclosed separately as Provisional pricing adjustments in Other
revenue, rather than being included within Sales revenue for the
Group.
Going Concern
For the period ended 31 December 2022 the Group recorded a loss
of $9.5m (2021: $5.6m) and had a working capital deficiency of
$4.8m (2021: $13.0m). The Group recorded net operating cash
outflows of $0.1m for the financial period (2022: $1.7m).
These conditions indicate a material uncertainty that may cast
significant doubt over the ability of the consolidated entity to
continue as a going concern and therefore its ability to realise
its assets and discharge its liabilities in the normal course of
business.
The ability of the consolidated entity to continue as a going
concern is dependent on the quantity and grade of ore mined and
processed matching the forecast quantity and grade and adherence to
the planned product shipment schedule.
The Group also recognises the inherent operational risks (such
as mining fleet availability, processing plant recovery and
environmental accidents and disputes) and macro-economic factors
(such as the gold price and foreign exchange movements) which could
further impact the Group's ability to continue as a going
concern.
The financial statements have been prepared on the basis that
the Company is a going concern, which contemplates the continuity
of normal business activity, realisation of assets and settlement
of liabilities in the normal course of business.
Directors believe that there will be sufficient funds available
to continue to meet the Group's working capital requirements as at
the date of this report and that sufficient funds will be available
to finance the operations of the Group for the following
reasons:
-- Since the period end, the Group has issued a further
7,428,460 new Ordinary Shares worth GBP3.0m.
-- Agreed the option to defer a total of GBP2.5 million capital
repayments due by the Company in calendar year 2023 to Bridge Barn
Limited by up to 9 months from the due date.
-- The Company is in advanced discussions with its gold offtake
partner, and is reviewing final documentation, to secure a
US$500,000 advance to assist with short-term working capital. The
Directors of the Company have also discussed, if the need arises,
the provision of additional working capital, in the form of equity
or a short-term convertible loan.
Accordingly, the Directors believe that the consolidated entity
has access to sufficient financing to be able to continue as a
going concern.
Should the consolidated entity not be able to continue as a
going concern it may be required to realise its assets and
discharge its liabilities other than in the ordinary course of
business, and at amounts that differ from those in the financial
statements. The financial statements do not include any adjustments
relating to the recoverability and classification of recorded asset
amounts or liabilities that might be necessary should the
consolidated entity be unable to continue as a going concern.
Statement of Compliance
The financial report was authorised for issue on 29 March
2023.
The financial report complies with Australian Accounting
Standards as issued by the Australian Accounting Standards Board
and International Financial Reporting Standards (IFRS) as issued by
the International Accounting Standards Board.
New or amended standards adopted by the entity
The consolidated entity has adopted all of the new or amended
Accounting Standards and Interpretations issued by the Australian
Accounting Standards Board ('AASB') that are mandatory for the
current reporting period.
Any new or amended Accounting Standards or Interpretations that
are not yet mandatory have not been early adopted.
Key estimates and judgements
Judgement is exercised in estimating variable consideration.
This is determined by past experience with respect to the final
selling price received on the assay results as taken at the goods
final destination.
Revenue will only be recognised to the extent that it is highly
probable that a significant reversal in the amount of cumulative
revenue recognised under the contract will not occur when the
uncertainty associated with the variable consideration is
subsequently resolved.
NOTE 2 - GOLD CONCENTRATE SALES
Six months to
31 December 31 December
2022 2021
$ $
From continuing operations
Sales revenue from contracts with customers
Production and sale of gold concentrate 9,488,508 6,431,437
Sales revenue 9,488,508 6,431,437
============ ============
NOTE 3 - LOSS ON SETTLEMENT OF LOAN
On 4 May 2021, four directors and one material shareholder who
is not a director (collectively "the Loan Providers"), made
available to SGZ Cononish Limited an unsecured, interest-free,
short-term loan facility of GBP 2,000,000, with the due date for
repayment thereof being 4 November 2021. The loan facility was
drawn down by SGZ Cononish Limited in two tranches of GBP 1,000,000
each on 12 May 2021 and 6 August 2021 respectively.
On 27 September 2021, the loan was settled by Scotgold Resources
Limited on behalf of SGZ Cononish Limited by the issuing by
Scotgold Resources Limited of 3,301,420 shares to the Loan
Providers (these shares being referred to hereinafter as "the
Settlement Shares") at a price of 60.58p. This was deemed a
non-cash financing activity.
NOTE 4 - INTEREST EXPENSE
Six months to
31 December 31 December
2022 2021
$ $
Interest expense is attributable to the following:
Secured loan (see Note 10) 844,688 648,450
Lease liabilities (see Note 10) 112,781 153,343
Unwinding of discount on provision for restoration
and decommissioning
(see Note 11) 53,108 6,875
------------ ------------
Total interest cost expensed 1,010,577 808,668
============ ============
NOTE 5 - TRADE AND OTHER RECEIVABLES
Current trade and other receivables comprise the following:
31 December 30 June
2022 2022
$ $
Trade debtors 414,973 4,008,959
GST/VAT receivable 329,178 436,108
Other receivables 282,294 241,337
------------ ----------
1,026,445 4,686,404
============ ==========
Non-current trade and other receivables comprise the
following:
31 December 30 June
2022 2022
$ $
Rehabilitation, restoration and land management
Bond deposits 1,471,832 1,463,125
1,471,832 1,463,125
============ ==========
NOTE 6 - PLANT AND EQUIPMENT
Plant and equipment 31 December 30 June
2022 2022
$ $
Cost 17,384,651 16,634,431
Accumulated depreciation (2,935,413) (2,119,136)
------------ ------------
14,449,238 14,515,295
============ ============
Movement for the six months ended 31 December
2022
Plant and Motor Furniture Total
equipment vehicles and office
Cost equipment
Opening balance 16,390,899 56,179 187,353 16,634,431
Additions 679,742 - - 679,742
Disposals - - - -
Foreign exchange movement 72,826 253 (2,601) 70,478
Closing balance 17,143,467 56,432 184,752 17,384,651
----------- ----------- ------------ -----------
Accumulated depreciation
Opening balance 2,015,532 37,112 66,492 2,119,136
Depreciation expensed 802,466 2,024 21,328 825,818
Foreign Exchange (4,115) 3,262 (8,688) (9,541)
Closing balance 2,813,883 42,398 79,132 2,935,413
----------- ----------- ------------ -----------
Movement for the year ended Plant and Motor Furniture Total
30 June 2022 equipment vehicles and office
equipment
Cost
Opening balance 16,686,237 58,522 80,846 16,825,605
Additions 385,540 - 114,042 499,582
Foreign exchange movement (680,878) (2,343) (7,535) (690,756)
----------- ----------- ------------ -----------
Closing balance 16,390,899 56,179 187,353 16,634,431
----------- ----------- ------------ -----------
Accumulated depreciation
Opening balance 489,900 33,117 21,658 544,675
Depreciation expensed 1,605,064 5,529 47,148 1,657,741
Foreign exchange movement (79,432) (1,534) (2,314) (83,280)
----------- ----------- ------------ -----------
Closing balance 2,015,532 37,112 66,492 2,119,136
----------- ----------- ------------ -----------
Net carrying value
----------- ----------- ------------ -----------
At 30 June 2022 14,375,367 19,067 120,861 14,515,295
----------- ----------- ------------ -----------
At 30 June 2021 16,196,337 25,405 59,188 16,280,930
----------- ----------- ------------ -----------
NOTE 7 - RIGHT-OF-USE ASSETS
31 December 30 June
2022 2022
$ $
Cost 6,060,186 6,859,368
Accumulated Depreciation (3,309,539) (3,833,878)
---------------- ------------
2,750,647 3,025,490
================ ============
The movements in Right-of-use assets are as follows:
Six months Year ended
to 31 December 30 June
2022 2022
$ $
Cost
Opening balance 6,859,368 4,601,501
Additions 355,385 1,566,768
Modifications of rights - 977,541
Foreign exchange movement (1,154,567) (286,442)
---------------- ------------
Closing balance 6,060,186 6,859,368
---------------- ------------
Accumulated Depreciation
Opening balance 3,833,878 1,823,539
Depreciation expensed 623,171 1,954,136
Foreign exchange movement (1,147,510) 56,203
---------------- ------------
Closing balance 3,309,539 3,833,878
---------------- ------------
NOTE 8 - MINERAL EXPLORATION AND EVALUATION
Six months Year to
to
31 December 30 June
2022 2022
$ $
Opening balance 3,051,622 2,990,000
Additional expenditure capitalised during the
period - 185,422
Foreign exchange movement 157,420 (123,800)
------------ ----------
Closing balance 3,209,042 3,051,622
============ ==========
The ultimate recoupment of exploration expenditure carried
forward is dependent upon successful development and commercial
exploitation, or sale of the respective areas.
As at 31 December 2022, management have not identified any
indicators of impairment in respect of this asset.
NOTE 9 - MINE DEVELOPMENT EXPITURE
Six months Year to
to
31 December 30 June
2022 2022
$ $
Opening balance 23,996,356 25,770,548
Additions - 935,058
Movement in Provision for restoration and
decommissioning
(see Note 11) - 121,030
Amortisation (1,734,676) -
Transfer to plant and equipment - (2,247,870)
Transfer to production costs - (582,410)
Foreign exchange movement 166,809 -
------------
Closing balance 22,428,489 23,996,356
============ ============
As at 31 December 2022, management have not identified any
indicators of impairment in respect of the mine development
asset.
NOTE 10 - BORROWINGS
31 December 30 June
2022 2022
Non-current $ $
Secured loan facility 16,716,174 16,146,988
Unsecured loan facility 6,167,111 4,548,865
Right-of-use lease liabilities 1,320,907 1,570,660
------------ -----------
24,204,192 22,266,513
============ ===========
31 December 30 June
2022 2022
Current $ $
Right-of-use lease liabilities 859,446 1,175,358
------------ -----------
859,446 1,175,358
============ ===========
Total borrowings 25,063,638 23,441,871
============ ===========
All of the borrowings are denominated in GBP (Pounds
sterling).
Loan from company controlled by shareholder
There have been no material changes or variations 'to the terms
of the secured loan facility other than those listed in the
subsequent events section in the Directors' report.
The secured loan is in good standing at the reporting date.
Movements on the secured facility loan for the six months ended
31 December 2022 :
Third Fourth Fifth Sixth Seventh Eight Tranche Total
Tranche Tranche Tranche Tranche Tranche
$ $ $ $ $ $ $
Balance at
beginning of
period 1,037,797 2,060,388 2,051,698 989,012 980,990 9,027,103 16,146,988
Interest at
effective
rate 42,269 84,539 84,539 39,032 39,032 394,391 683,802
Interest
Payment (13,409) (26,817) (26,817) (12,382) (12,383) (125,107) (216,915)
Foreign
exchange
movement 6,560 13,028 12,977 6,240 6,193 57,301 102,299
Balance at
end of
period 1,073,217 2,131,138 2,122,397 1,021,902 1,013,832 9,353,688 16,716,174
The effective interest rate on the secured loan facility is
8.38% (Year ended 30 June 2022 - 8.38%) per annum.
Lease liabilities
The movements in lease liabilities are as follows:
Six months Year to
to
31 December 30 June
2022 2022
$ $
Opening balance 2,746,017 2,660,513
Additional rights acquired 393,987 1,801,023
Modifications to rights - 883,049
Interest expense 112,781 295,033
Repayments (712,950) (2,775,775)
Foreign exchange movement (359,482) (117,826)
------------ ------------
Balance at end of period 2,180,353 2,746,017
============ ============
Non-current portion 1,320,907 1,570,659
Current portion 859,446 1,175,358
The effective interest rate on the lease liabilities is 7.44%
(year ended 30 June 2022 - 7.44%) per annum. Right-of-use assets
with an aggregate net carrying value of $2,750,647 (30 June 2022 -
$3,025,490) are financed by the lease liabilities.
NOTE 11 - PROVISIONS
31 December 30 June
2022 2022
$ $
Provision for restoration and decommissioning 727,327 781,898
============ ========
This provision represents the best estimate of the present value
of expenditures required to effect restoration of the Cononish mine
area at the end of mining operations at the mine as well as to
carry out aftercare and monitoring activities in terms of the
Decommissioning and Restoration Plan formulated in accordance with
the requirements set out in the Section 75 Agreement entered into
by SGZ Cononish Limited on 12 September 2018, based on the mine
development activities carried out up to and including 31 December
2022.
In arriving at the amount of the provision, an annual inflation
rate of 2.0% has been applied to estimated future costs stated at
current levels and the resultant cashflows have been discounted
back to 31 December 2022 using a discount rate of 0.98%.
The movements in the provision are as follows:
Six months Year to
to
31 December 30 June
2022 2022
$ $
Opening balance 781,898 908,915
Unwinding of discount (108,074) (1,470)
Adjustment for mine development progress and
change in rate 55,102 (119,560)
Foreign exchange movement (1,599) (5,987)
------------ ----------
Closing balance 727,327 781,898
============ ==========
NOTE 12 - ISSUED CAPITAL
31 December 30 June 31 December 30 June
2022 2022 2022 2022
No. of No. of $ $
shares shares
Ordinary shares - fully
paid 59,673,291 59,523,291 57,835,768 57,755,221
============ =========== ============ ===========
(a) Movements in ordinary share capital
During the six months ended 31 December 2022
Date Details Shares Value $
(cents)
Balance at the beginning
of the period 59,523,291 57,755,221
19/12/2022 Exercise of options 150,000 0.54 80,547
Balance at 31 December
2022 59,673,291 57,835,768
=========== ===========
During the year ended 30 June 2022
Date Details Shares Value $
(cents)
Balance at 30 June 2021 56,221,871 52,640,345
Conversion of Directors'
24/09/2021 Loan 3,301,420 1.549 5,114,876
Balance at 30 June 2022 59,523,291 57,755,221
=========== ===========
(b) Movements in options
On 19 December 2022, 150,000 options were exercised at an option
price of 30p. Otherwise, there have been no movements in options
since the prior reporting year ended 30 June 2022, other than the
share-based payment changes disclosed in Note 13.
The options outstanding at 31 December 2022, excluding options
issued to key management and senior managers as share-based
payment, are as follows:
Number Exercise Expiry Date Option Reserve
Price
$
31 March
30,000 $8.00 2022 134,769
Details of options issued to key management and senior managers
are set out in Note 12.
NOTE 13 - SHARE-BASED PAYMENTS
The rules of the Enterprise Management Incentive Scheme of the
Company provide that the Board may at its discretion grant
Enterprise Management Incentive Scheme options to employees of the
Company and its controlled entities to acquire ordinary shares in
the Company at such exercise price and in such numbers as it
considers appropriate and to attach such performance conditions to
the vesting of such options as it considers appropriate, subject to
compliance with the provisions of Schedule 5 of the United Kingdom
Income Tax (Earnings and Pensions) Act 2003 and other applicable
legislation.
No new options were granted or cancelled in the period.
Charges in respect of share-based payment have been recognised
as follows:
Charged Charged Increase
to profit to mine development in share-based
or loss payment reserve
$ $ $
Cumulative to 30 June 2021 631,873 268,933 900,806
During year ended 30 June 2022 268,637 - 268,637
-------------- ---------------------- -----------------
Cumulative to 30 June 2022 900,510 268,933 1,169,443
During period ended 31 December
2022 111,269 - 111,269
Cumulative to 31 December 2022 1,011,779 268,933 1,280,712
============== ====================== =================
NOTE 14 - RELATED PARTIES
Basic remuneration of GBP177,375 per annum is payable in terms
of the service agreement and Mr Phillip Day shall be eligible to
join the Group pension fund. The annual leave entitlement of Mr
Phillip Day amounts to 18.75 days plus a pro rata number of public
holidays in Scotland. The service agreement further provides that
Mr Phillip Day shall be reimbursed for the reasonable cost of
necessary travel incurred in connection with visits to the
operations of the Group in Scotland, including flights to and from
Switzerland and car hire in the United Kingdom, and that the Group
shall provide accommodation to Mr Phillip Day while he is visiting
the operations.
The agreement for the rendering of consultancy services with PAW
Consulting Services GmbH provides for a consultancy service fee of
GBP4,479 per month, excluding VAT, to be payable net of any amounts
in respect of income tax and national insurance contributions
required to be deducted by law. In addition, the Group shall
reimburse all reasonable expenses incurred by PAW Consulting
Services GmbH in rendering the consultancy services.
Sean Duffy is remunerated in terms of a contract of employment
which provides for a fixed salary of GBP155,000 per annum, as well
as an annual leave entitlement of 18.75 days plus a pro rata number
of public holidays in Scotland and eligibility to join the Group
pension fund.
Each of the Directors is a related party.
Mr Richard Barker provides the services of Company Secretary
through his service company Barston Corporation Pty Ltd. The
services as Company Secretary provided by Mr Barker are charged at
commercial, arm's length rates.
NOTE 15 - COMMITMENTS FOR EXPITURE
Amounts payable to Loch Lomond and the Trossachs Countryside
Trust
The following amounts are payable to the Loch Lomond and the
Trossachs Countryside Trust in terms of Clause 18 of the Section 75
Agreement entered into with the owner of the land on which the
Cononish mine is situated, the Loch Lomond and the Trossachs
National Park Authority and the Crown Estate Scotland in respect of
the development of the Cononish mine:
$
Not later than one year 88,810
Later than 1 year but not later
than 2 years 88,810
Later than 2 years but not later
than 5 years 266,430
Later than 5 years 88,810
--------
532,860
--------
Other than the commitments disclosed above, there have been no
material changes during the period to the commitments disclosed in
the annual report for the period ended 31 December 2022.
NOTE 16 - CONTINGENT LIABILITIES
There have been no material changes during the period to the
contingent liabilities disclosed in the annual report for the year
ended 30 June 2022.
NOTE 17 - SEGMENT INFORMATION
Operating segments are reported in a manner consistent with the
internal reporting provided to the chief operating decision maker.
The chief operating decision maker, who is responsible for
allocating resources and assessing performance of the operating
segments, has been identified as the Board of Directors of Scotgold
Resources Limited.
The comparative information disclosed is for the period ended 31
December 2021 in the case of segment loss, interest expense and
depreciation and for the year ended 30 June 2022 in the case of
balances of and movements in segment assets and liabilities .
Six months ended 31 December
2022
Scotland Scotland Australia Other Total
Mining Exploration
$ $ $ $ $
Segment income 9,484,289 - - - 9,484,289
Segment loss (7,470,977) - (1,888,804) - (9,359,781)
Segment assets 2,047,791 107,561 106,739 1,151 2,263,242
Segment non-current
assets 42,562,214 3,209,040 272,670 - 46,043,924
Segment liabilities (30,618,758) (226,091) (227,795) (9,746) (31,082,390)
Segment non-current
liabilities (792,176) - - - (792,176)
Included in segment
result:
Interest expense 1,010,577 - - - 1,010,577
Depreciation 3,200,264 - - - 3,200,264
Comparative figures
Scotland Scotland Australia Other Total
For the six months Mining Exploration
ended 31 December $ $ $ $ $
2021:
Segment other income 6,431,437 33 6,431,470
Segment loss 5,171,720 6,315 394,937 - 5,572,972
As at 30 June 2022:
Segment assets 6,999,511 91,226 106,739 1,063 7,198,539
Segment non-current
assets 42,727,597 3,051,622 272,669 - 46,051,888
Segment liabilities (5,855,231) 182,854 227,795 9,668 (6,275,548)
Segment non-current
liabilities (23,044,179) (4,232) - - (23,048,411)
Included in segment
result for the six
months ended 31 December
2021:
Interest expense 808,213 455 - - 808,668
Depreciation 1,399,608 4,062 - - 1,403,670
NOTE 18 - MATTERS SUBSEQUENT TO THE OF PERIOD
On 16 January, the Group issued 7,428,460 new Ordinary Shares
totalling gross proceeds of GBP3.0 million (US$3.6 million) at a
price of 40p per share, These shares were issued after the
successful equity Placing, Subscription and Retail Offer.
Seven Directors of Scotgold and a significant shareholder
participated in the Subscription for a total of 1,435,000
Subscription Shares with a total value of GBP574,000
(US$700,280).
Further to the Capital Raising, Bridge Barn Limited, a company
owned and controlled by Mr Nathaniel le Roux and provider of debt
funding to the Company, has agreed the option to defer a total of
GBP2.5 million capital repayments due by the Company in calendar
year 2023 by up to 9 months from the due date.
Apart from the above, no other matter or circumstance has arisen
since 31 December 2022 that has significantly affected, or may
significantly affect the consolidated entity's operations, the
results of those operations, or the consolidated entity's state of
affairs in future financial periods.
DIRECTORS OPINION
1. In the opinion of the Directors of Scotgold Resources Limited (the 'Company'):
a. the accompanying financial statements and notes are in
accordance with the Corporations Act 2001 including:
i. giving a true and fair view of the consolidated entity's
financial position as at 31 December 2022 and of its performance
for the half-year then ended; and
ii. complying with Australian Accounting Standards, the
Corporations Regulations 2001, professional reporting requirements
and other mandatory requirements,
b. there are reasonable grounds to believe that the Company will
be able to pay its debts as and when they become due and
payable,
c. the financial statements and notes thereto are in accordance
with International Financial Reporting Standards issued by the
International Accounting Standards Board,
This declaration is made in accordance with a resolution of the
Board of Directors made pursuant to Section 303(5) of the
Corporations Act 2001
,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,
PHILLIP DAY - Managing Director and CEO
Dated at Tyndrum, this 29th day of March, 2023
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END
IR SEDESUEDSESD
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