TIDMCNG
China Nonferrous Gold Limited
('CNG' or the 'Company'
And with its subsidiaries the "Group")
Interim Results for the Six-Month Period Ended 30 June 2023
China Nonferrous Gold Limited (AIM: CNG), the mineral
exploration and mining company currently mining 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 2023.
The results below are available on the Company's website at
www.cnfgold.com.
Highlights
-- From January to June 2023, a total of 238,917 tons (30 June 2022:
302,590 tons) of ore was extracted from the Pakrut gold mine; 268,034
tons of ore was processed at a grade of 2.32 g/t; and 15,192 oz. gold
ingots were poured.
-- From January to June 2023, the Group sold 15,192 oz. (30 June 2022:
16,484 oz.) of gold ingots, achieving sales revenue of US$30.17 million.
For further information please visit the Company's website
(www.cnfgold.com) or contact:
China Nonferrous Gold Limited
Feng Zhishuo, Managing Director
Tel: +86 10 8442 6627
WH Ireland Limited (NOMAD & Broker)
Katy Mitchell, Andrew de Andrade
Tel: +44 (0)207 220 1666
BlytheRay (PR)
Tim Blythe, Megan Ray
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 in 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, I present the CEO's statement of the
Interim Results for the Six-Month Period Ended 30 June 2023. Pakrut
continued producing during the first half of the year, making the
Group an important gold producer in Tajikistan.
From January to June 2023, a total of 238,917 tons (30 June
2022: 302,590 tons) of ore was extracted from the Pakrut gold mine.
In January 2023, an avalanche occurred locally in Tajikistan,
damaging the electric power transmission tower that supplied the
mine and resulting in a power outage. The power shortage resulted
in underground mining and processing plants, and therefore
operations at the mine site, being suspended for approximately two
months. In March 2023, the road leading to the mining site was been
repaired and the site resumed normal operation.
During that same six month period:
-- 268,034 tons of ore was processed;
-- the average grade of the raw ore was 2.32 g/t;
-- the recovery rate of processing was 90.27%;
-- 7,977.17 tons of concentrate was produced from the processing plant;
and
-- 7,467.17 tons of concentrate was treated in the smelter (the
comprehensive recovery rate of smelting was 90.76%) and 15,192 oz. gold
ingots were poured.
From January to June 2023, the Group sold 15,192 oz. (30 June
2022: 16,484 oz.) of gold ingots, achieving sales revenue of
US$30.17million (unaudited) (30 June 2022: $30.71million), with an
average sales price of US$1,986.04 / oz. (30 June 2022: $1,863.02 /
oz.).
Financial Results
The Company continued its production and operation work during
the first six months of 2023. Administration expenditure was
US$10,227,386 (30 June 2022: US$10,032,340). The largest increase
in expenditure is staff salaries. The operating profit for the
period under review was US$3,882,000 (30 June 2022: US$4,910,000)
and the loss before tax from the period was US$17,166,096 (30 June
2022: US$946,000). The increase in loss before tax is mainly due to
increased finance costs with changes in market interest rates. Cash
and cash equivalents at the end of the period amounted to
US$3,626,620 (30 June 2022: US$11,791,206). As at 30 June 2023, the
Group had net liabilities of $32,606,400 (30 June 2022: net
liabilities $31,304,559).
In January 2023, the Group executed a loan agreement with CNMC
Trade Company Limited ("CNMC Trade") for a loan of up to USD $19.50
million (the "CNMC Loan") including an annual interest rate at 0.5%
plus 3 month LIBOR which was repayable within 3 months from the
date of drawdown. In July 2023, an extension contract was signed
with CNMC Trade, and this loan has been extended to 19 April 2024.
The CNMC Loan was used to repay the existing China CITIC Bank
Corporation Limited ("CITIC") bank facilities of USD $20m.
In June 2023, the Company also executed a loan agreement with
CNMC Trade for a loan of up to USD $65 million (the "Further CNMC
Loan") including an annual interest rate at 0.5% plus 3 month
LIBOR, which was due for repayment on 6 September 2023. The Further
CNMC Loan was used to repay the existing Bank of Shanghai (Hong
Kong) Limited ("BOS") loan facility of USD $65m, which was due for
repayment on 9 June 2023.
During the first quarter of 2023, the Group repaid US$1.9m of an
earlier CNMC Trade loan.
After the end of the period under review, on 12 July 2023, an
extension contract was signed with CNMC Trade, pursuant to which
the repayment date for the loan of US$123.6m was extended to 20
December 2023, the repayment date for the loan of US$20m was
extended to 26 November 2023, the repayment date for the loan of
US$14.55m was extended to 31 December 2023, and the repayment date
for the loan of US$19.50m was extended to 19 April 2024. An
extension contract was signed with CNMC International Capitals
Company Limited (CNNICC ) to extend the repayment date for the loan
of US$60.74m to 8 December 2023. The annual interest rate of the
above loans has been changed to SOFR plus 0.936% (it was previously
3.25% over 3 month LIBOR), and this new interest rate has been
applied retrospectively from 16 March 2023. CNMIM has also agreed
to extend an expired loan of US$12.68m with CNG to 31 May 2024.
As at the date of this announcement, the Company had total debt
facilities of c.US$316 million, excluding the interest accrued.
Outlook
The Directors believe the Pakrut project remains on track to
achieve the production target of 700,000 tons of ore per annum set
at the beginning of this year. 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.
Whilst the Directors consider that the Company has taken big
strides in the production and operation at the Pakrut gold mine and
has achieved much, there are still challenges to overcome. It was
very disappointing to receive the updated SRK Report (see
announcement dated 24 April 2023) which updated the JORC Compliant
Resource and reduced the resource at the Company's Pakrut project
and the estimated life of mine. This resulted in an impairment
charge of $265,952,925 being recorded in the 2022 financial
year.
Furthermore, after the end of the period under review, the
Company received notice that the loan of US$65m with CNMC Trade
would not be extended. CNMC Trade has requested that the Company
prepare a repayment plan for approval. At today's date CNG has a
cash balance of $1,099,307. Therefore, the Company's ability to
continue as a going concern is now reliant on the continued
forbearance of CNMC Trade. Should the Company and CNMC Trade be
unable to agree an acceptably phased repayment schedule and/or the
Company be unable to refinance the loan then it is likely that the
Company may need to be wound up.
The Directors of the Company are working with CNMC Trade to
consider their options and further updates will be provided in due
course.
I would like to take this opportunity to thank all our
employees, management and advisers for their continued hard work in
2023. I would also like to extend my thanks to all our stakeholders
for their continued backing over the years. I very much look
forward to updating our shareholders further on the mine
developments, production levels, new strategy and direction.
Feng Zhishuo
CEO
22 September 2023
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE SIX MONTHSED 30 JUNE 2023
Unaudited Unaudited Audited
Six months
Six months ended ended 30 June Year ended 31
30 June 2023 2022 December2022
Note US$'000 US$'000 US$'000
Revenue 30,172 30,710 68,525
Cost of sales (16,081) (15,469) (40,085)
Gross profit 14,091 15,241 28,440
Impairment of
Property, plant
and equipment - - (265,953)
Other Operating
income - 8 -
Administrative
and other
expenses (10,227) (10,032) (25,109)
Gain/(Loss) on
foreign
exchange 21 (280) 1,075
Other operating
expenses (2) (27) (213)
Operating
profit/(loss) 3,882 4,910 (261,760)
Interest income 1 - 2
Finance costs (11,984) (5,856) (15,242)
Loss before Tax (8,101) (946) (277,000)
Income tax (4,532) (3,971) (10,043)
Loss for the
period
attributable to
owners (12,633) (4,917) (287,043)
of the Company
Other
comprehensive
income - - -
Total
comprehensive
income for the
period
attributable to
owners of the
Company (12,633) (4,917) (287,043)
Earnings per
Share
Basic and diluted
(cents) 3 (33.04) (1.29) (750.65)
All of the activities of the Group are classified as
continuing.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2023
Unaudited Unaudited Audited
30 June 30 June 2022 31 December 2022
2023US$'000 US$'000 US$'000
Non-Current Assets
Property, plant
and equipment 461,528 359,111 65,074
Total Non-Current
Assets 61,528 359,111 65,074
Current Assets
Inventories 16,562 18,991 16,709
Trade and other
receivables 5,173 1,484 2,514
Cash and cash
equivalents 3,627 11,791 4,544
Total Current
Assets 25,362 32,266 23,767
Non-Current
Liabilities
Other payables - - (1,235)
Borrowings 5- (65,000) -
Provisions for
other liabilities
and charges (2,658) (1,084) (2,658)
Total Non-Current
Liabilities (2,658) (66,084) (3,893)
Current
Liabilities
Borrowings 5(386,959) (307,739) (379,368)
Trade and other
payables (23,337) (48,859) (19,011)
Total Current
Liabilities (410,296) (356,598) (398,379)
Total Liabilities (412,954) (422,682) (374,612)
Net Liabilities (326,064) (31,305) (313,431)
Capital And
Reserves
Share Capital 38 38 38
Share premium 65,901 65,901 65,901
Other reserves 10,175 10,175 10,175
Retained earnings (402,178) (107,419) (389,545)
Total Equity (326,064) (31,305) (313,431)
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE SIX MONTHSED 30 JUNE 2023
Unaudited Unaudited Audited
Year ended 31
Six months Dec 2022
Six months ended 30 ended 30 June 2022
June 2023 US$'000 US$'000 US$'000
Cash flows from
Operating
Activities
Loss before income
tax (8,101) (946) (277,000)
Adjustments for:
Impairment charge - - 265,953
Finance income (1) - (2)
Finance cost 11,984 5,856 15,242
Depreciation 3,582 6,215 11,028
Foreign exchange (21) 280 (1,075)
Change in working
capital:
Inventory 147 (1,657) 625
Trade and other
receivables (2,659) 592 1,689
Trade and other
payables 3,034 1,898 2,448
Income tax paid (4,533) (3,971) (10,043)
Net cash flows from
Operating
Activities 3,432 8,267 8,865
Cash flows from
Investing
Activities
Purchase of
property, plant and
equipment (29) (1,336) (7,625)
Interest received - - 2
Net cash used in
Investing
Activities (29) (1,336) (7,623)
Cash flows from
Financing
Activities
Proceeds from
borrowings 84,500 54,550 54,550
Repayment of
borrowings (86,884) (56,538) (55,550)
Interest paid (1,936) (624) (3,170)
Net Cash (used
in)/from Financing
Activities (4,320) (2,612) (4,170)
Net
(Decrease)/Increase
in Cash and Cash (917) 4,319 (2,928)
Equivalents
Cash and cash
equivalents at
beginning of the
period 4,544 7,472 7,472
Cash and cash
equivalents at end
of the period 3,627 11,791 4,544
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE SIX MONTHSED 30 JUNE 2023
Share Share Other Retained Total
capital premium reserve earnings equity
US$'000 US$'000 US$'000 US$'000 US$'000
Balance at 1 January 2022 38 65,901 10,175 (102,502) (26,388)
Loss and total comprehensive
income for the period - - - (4,917) (4,917)
Balance at 30 June 2022
(unaudited) 38 65,901 10,175 (107,419) (31,305)
Loss and total comprehensive
income for - - - (282,126) (282,126)
the period
Balance at 31 December 2022
(audited) 38 65,901 10,175 (389,545) (313,431)
Balance at 1 January 2023 38 65,901 10,175 (389,545) (313,431)
Loss and total comprehensive
income for the period - - - (12,633) (12,633)
Balance at 30 June
2023(unaudited) 38 65,901 10,175 (402,178) (326,064)
NOTES TO THE INTERIM FINANCIAL STATEMENTS
FOR THE SIX MONTHSED 30 JUNE 2023
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 2023 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 2023 to 30 June 2023 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 2022
to 30 June 2022 and extracts from the audited financial statements
for the year to 31 December 2022. 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 2022 and
the accounting policies adopted are consistent with those used in
the preparation of its financial statements for the year ended 31
December 2022.
ii) Cyclicality
The interim results for the six months ended 30 June 2023 are
not necessarily indicative of the results to be expected for the
financial year 2023. The operations of China Nonferrous Gold
Limited may be subject to seasonal variations depending on the
severity of snowfall levels at the mine site. The superposition of
external unstable factors will affect the increasing operating
pressure in the second half of the year. All units and departments
of the company must have a clear understanding, take effective
measures, make efforts from the aspects of safety and environmental
protection, production organization, cost reduction and efficiency
improvement, and strive to improve the basic management level to
ensure the smooth operation of the safety and environmental
protection situation and the smooth completion of the annual
production and operation tasks.
NOTES TO THE INTERIM FINANCIAL STATEMENTS
FOR THE SIX MONTHSED 30 JUNE 2023
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. But the loan of
US$65m that CNMC Trade provided CNG on 6 June 2023 will not be
extended. The Company's is reliant on the continued forbearance of
CNMC Trade. If the Company and CNMC Trade are unable to agree an
acceptably phased repayment schedule and/or the Company are unable
to refinance the loan then it is likely that the Company may need
to be wound up.
In assessing whether the going concern assumption is
appropriate, the Directors take into account all available
information for the foreseeable future. In making their assessment,
the Directors also have considered the level of production and
operations at the mine site, in conjunction with the updated
resource and reserve estimates as per the revised Independent
Technical Report produced by SRK Consulting (see the announcement
on the website of CNG), and how the Group will be able to use the
cash inflows from these operations to support its working capital
position and repay loans when they fall due. As the shareholder
loan extensions are provided on an annual basis for a one-year
period, the company applies to its creditors CNMC Trade Company Ltd
CNMICC and CNMIM), each year in advance of the loan repayment date
falling due, following the application process that has been in
place for a number of years. As at the current date, the company
has the following loans payable:
Amount Amount (interest
(principal) at accrued) at the
the date of date of this Repayment
Lender this report report Total date
CNMC Trade
Company
Ltd 123,600,000.00 39,707,401.87 282,357,401.87 20/12/2023
CNMC Trade
Company Ltd 20,000,000.00 26/11/2023
CNMC Trade
Company Ltd 14,550,000.00 31/12/2023
CNMC Trade
Company Ltd 19,500,000.00 19/04/2024
CNMC Trade
Company Ltd 65,000,000.00 06/09/2023
CNMICC 60,744,168.83 21,260,359.47 82,004,528.30 08/12/2023
CNMIM 12,683,598.78 10,075,085.73 22,758,684.51 31/05/2024
Total
shareholder
loans
repayable
in year to
30 June
2024 316,077,767.61 71,042,847.07 387,120,614.67
CNMC Trade Company Limited ("CNMC Trade") have confirmed on the
maturity date on 6 September 2023 that the loan of US$65m provided
to CNG on 6 June 2023 ("First Loan"), which is now overdue, will
not be extended. The Company's ability to continue as a going
concern is reliant on the continued forbearance of CNMC Trade.
Should the Company and CNMC Trade be unable to agree an acceptably
phased repayment schedule and/or the Company be unable to refinance
the loan then it is likely that the Company may need to be wound
up.
NOTES TO THE INTERIM FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2023
3. Earnings per Share
June 2023 June 2022 December 2022
Basic and diluted earnings per share (33.04)
(cents) (1.29)
(757.60)
The basic earnings per share is calculated by dividing the loss
attributable to equity holders after tax of US$12,633,443 (30 June
2022: US$4,917,101) by the weighted average number of shares in
issue and carrying the right to receive dividend. For all the
periods disclosed up to 2023, 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 2023
4. 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
2022 33 602 5,423 21,443 382,732 - 410,233
Additions - 36 92 1,475 - 6,022 7,625
Transfer from
Assets under
Construction - - - - 812 (812) -
Settlement of
historical
liabilities - - - (29,904) - (29,904)
Impairment - - - - (265,953) - (265,953)
At 31
December
2022 32 638 5,515 22,918 87,687 5,210 122,000
Additions - 8 - 1 - 27 36
At 30 June
2023 32 646 5,515 22,919 87,687 5,237 122,036
Accumulated Depreciation
At 1 January 2022 - 264 4,847 14,888 25,899 - 45,898
Charge for the period - 35 157 2,341 8,496 - 11,028
At 31 December 2022 - 299 5,005 17,228 34,395 - 59,926
Charge for the period 17 74 1,051 2,440 - 3,582
At 30 June 2023 - 316 5,079 18,279 36,835 - 60,508
Net Book Value
At 30 June 2023 32 330 436 4,641 50,852 5,237 61,528
At 31 December 2022 32 339 510 5,690 53,292 5,210 65,074
Depreciation for producing mines is calculated based on the unit
of production method amounting to $3,582,000 of depreciation charge
for the 6 month period.
NOTES TO THE INTERIM FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2023
5. Borrowings
June 2023 June 2022 December 2022
US$000 US$000 US$000
Bank borrowings - 85,000 85,000
Other loans 386,959 287,740 294,368
Total 386,959 372,740 379,368
Non-current portion - 65,000 -
Current portion 386,959 307,740 379,368
The fair value of borrowings equals their carrying amounts, as
the impact of discounting is not significant.
In January 2023, the Group executed a loan agreement with CNMC
Trade Company Limited ("CNMC Trade") for a loan of up to USD $19.50
million (the "CNMC Loan") including an annual interest rate at 0.5%
plus 3 month LIBOR and no extra fees payable to CNMC Trade for this
arrangement, which is repayable within 3 months from the date of
drawdown. In July 2023, an extension contract was signed with CNMC
Trade, and this loan has been extended to 19 April 2024. This CNMC
Loan has been used to repay the existing China CITIC Bank
Corporation Limited ("CITIC") bank facilities of USD $20m.
In June 2023, the Company also executed a loan agreement with
CNMC Trade for a loan of up to USD $65 million (the "Further CNMC
Loan") including an annual interest rate at 0.5% plus 3 month
LIBOR, which was due for repayment on 6 September 2023. The Further
CNMC Loan was used to repay the existing Bank of Shanghai (Hong
Kong) Limited ("BOS") loan facility of USD $65m, which was due for
repayment on 9 June 2023. As announced on September 7th, the $65m
loan will not be extended. CNMC Trade has requested that CNG
prepare a repayment plan for approval. CNMC Trade have also given
notice that it is reserving all rights to pursue legal action to
recover the sums due under the First Loan, although it advises that
it will give at least 7 days 'notice of any intention to do so.
During the first quarter of 2023, the Group repaid US$1.9m of an
earlier CNMC Trade loan.
After the end of the period under review, on 12 July 2023, an
extension contract was signed with CNMC Trade, pursuant to which
the repayment date for the loan of US$123.6m was extended to 20
December 2023, the repayment date for the loan of US$20m was
extended to 26 November 2023, the repayment date for the loan of
US$14.55m was extended to 31 December 2023, and the repayment date
for the loan of US$19.50m was extended to 19 April 2024. An
extension contract was signed with CNMC International Capitals
Company Limited (CNNICC ) to extend the repayment date for the loan
of US$60.74m to 8 December 2023. The annual interest rate of the
above loans has been changed to SOFR plus 0.936% (it was previously
3.25% over 3 month LIBOR), and this new interest rate has been
applied retrospectively from 16 March 2023. CNMIM has also agreed
to extend an expired loan of US$12.68m with CNG to 31 May 2024.
All loans are provided by related parties. The loans were
renewed in July (Please refer to the financial results).
View source version on businesswire.com:
https://www.businesswire.com/news/home/20230922568536/en/
CONTACT:
China Nonferrous Gold Limited
SOURCE: China Nonferrous Gold Limited
Copyright Business Wire 2023
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September 22, 2023 07:18 ET (11:18 GMT)
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