TIDMLEX
RNS Number : 1959L
Lexington Gold Limited
04 September 2023
4 September 2023
Lexington Gold Ltd
("Lexington Gold" or the "Company")
Interim Results for the half-year ended 30 June 2023
Lexington Gold (AIM: LEX), the gold exploration and development
company with projects in North and South Carolina, United States
("US") is pleased to announce its unaudited interim results for the
six-month period to 30 June 2023 ("H1 2023" or the "Period").
Highlights :
Corporate Summary
The first half of this year was particularly successful for the
Company, with promising exploration results at both our
Jennings-Pioneer and Argo projects, both located in the Carolinas,
US, a region that has seen historic production from
multi-million-ounce mines. Whilst Lexington Gold remains focused on
the advancement of its US projects, the Company also spent the
first half of 2023 assessing new gold exploration
opportunities.
In March 2023, in order to satisfy the group's working capital
requirements and enable it to continue its existing exploration
activities and assessment of other projects/opportunities,
Lexington Gold entered into a US$150,000 unsecured loan facility
with the Company's Chairman, Edward Nealon. Shortly thereafter,
Lexington Gold announced the proposed acquisition of a 76% interest
in White Rivers Exploration Proprietary Limited ("WRE"), a holder
of significant gold prospects located in South Africa's
Witwatersrand gold fields. Shareholders overwhelmingly supported
the proposed acquisition at a Special General Meeting ("SGM") held
on 26 June 2023, and the acquisition is expected to complete in the
near term.
Operational Highlights :
Jennings - Pioneer Project ( "Jennings-Pioneer")
-- Soil and surface sampling programme completed in February 2023
-- Analysis of soil assays in April 2023 identified 13 gossans
within three separate mineralisation trends
-- The sampling programme identified a 350m surface extent of the Red Hill mineralisation
-- The soil and surface sampling, as well as concurrent surface
mapping, sought to verify and supplement historic sampling
conducted at the deposit and the results served to reaffirm the
project's high potential with further exploration warranted in due
course
Argo Project ( "Argo")
-- Completion of surface trenching and sampling campaign in
February 2023, involving a total of 13 trench lines, with a total
combined length of approximately 844m
-- A total of 439 samples were shipped to ALS in Nevada for assaying
-- The trenching, sampling and mapping activity sought to better
define the grade distribution and structure of the mineralised
zones in order to facilitate the design of a potential Phase I
drilling campaign for the project in due course
Proposed Acquisition of WRE
-- In May 2023, the Company announced the proposed acquisition
of a 76% interest in White Rivers Exploration Proprietary Limited
("WRE"), a major tenement holder in the Witwatersrand gold fields
of South Africa, with its current tenement interests internally
estimated to contain potential resources of over 37 million ounces
of gold
-- Shareholder approval obtained in respect of the proposed WRE
acquisition at an SGM held on 26 June 2023
Post Period End
-- In July 2023, the Company successfully raised approximately
GBP2.5 million (gross) from certain new and existing investors to,
inter alia, support the proposed WRE acquisition and its initial
workstreams
-- The Company settled, in aggregate, GBP423,518 of outstanding
loans and accrued interest on the same terms as the fundraise by
way of issuing new shares
-- In late July 2023, the Company also received the results of
440 multi-element assay samples returned from trench channel and
rock sampling at the Argo project
o Promising initial set of assay results for the project,
showing high-grade surface mineralisation at both the Northeast and
Southern workings
Financial Summary
-- Net loss for H1 2023 from continuing operations was US$0.4m (H1 2022: US$0.37m)
-- Total assets were US$5.2m as at the half-year end (31 December 2022: US$5.10m)
-- Cash position of US$0.28m as at the half-year end (31 December 2022: US$0.42m)
-- Total liabilities of US$0.68m as at the half-year end (31 December 2022: US$0.10m)
For further information, please contact :
Lexington Gold Ltd www.lexingtongold.co.uk
Bernard Olivier (Chief Executive Officer) via Yellow Jersey
Edward Nealon (Chairman)
Mike Allardice (Group Company Secretary)
Strand Hanson Limited (Nominated Adviser) www.strandhanson.co.uk
Matthew Chandler / James Bellman / Abigail T: +44 207 409 3494
Wennington
WH Ireland Limited (Joint Broker) www.whirelandplc.com
Katy Mitchell T: +44 207 220 1666
Peterhouse Capital Limited (Joint Broker) www.peterhousecap.com
Duncan Vasey / Lucy Williams (Broking) T: +44 207 469 0930
Eran Zucker (Corporate Finance)
Yellow Jersey PR Limited (Financial Public www.yellowjerseypr.com
Relations) T: +44 7948 758 681
Charles Goodwin / Annabelle Wills
The information contained within this announcement is deemed by
the Company to constitute inside information as stipulated under
the Market Abuse Regulation (EU) No. 596/2014 as it forms part of
United Kingdom domestic law by virtue of the European Union
(Withdrawal) Act 2018, as amended by virtue of the Market Abuse
(Amendment) (EU Exit) Regulations 2019.
Note to Editors :
Lexington Gold (AIM: LEX) is currently focused on the
exploration and development of its four diverse gold projects,
covering a combined area of approximately 1,675 acres in North and
South Carolina, United States. The projects are situated in the
highly prospective Carolina Super Terrane ("CST"), which has seen
significant historic gold production and is host to a number of
multi-million-ounce mines operated by majors. It was also the site
of the first US gold rush in the early 1800s, before gold was
discovered in California.
Further information is available on the Company's website:
www.lexingtongold.co.uk . Neither the contents of the Company's
website nor the contents of any website accessible from hyperlinks
on the Company's website (or any other website) is incorporated
into, or forms part of, this announcement.
Chairman's Statement
I am pleased to present Lexington Gold's unaudited interim
results for the six-month period ended 30 June 2023 and to report
on the Company's ongoing activities to the date of this
statement.
We have continued to execute our successful exploration strategy
in the Carolinas, United States, with a soil and surface sampling
programme being completed at our Jennings-Pioneer project and assay
results indicating elevated gold values, as well as significant
base metal assays, which included barite and tellurium. The
presence of these minerals adds further potential value given their
wide applications. The team looks forward to conducting further
exploration work at this project as the year progresses.
In March 2023, I advanced a US$150,000 loan facility to the
Company to provide additional working capital and financial
flexibility, and enable it to continue exploration on its existing
projects whilst also assessing new gold projects and
opportunities.
The major development in the reporting period has been the
recently announced acquisition of a 76% interest in White Rivers
Exploration Proprietary Limited. The Board expects this proposed
acquisition, which is now nearing completion, to be game-changing
for Lexington Gold given the internally estimated potential
resources of over 37 million ounces of gold for its projects within
the world-famous Witwatersrand gold fields in South Africa.
The Witwatersrand gold fields have been the source of almost a
third of the world's gold production since 1886 and with an
estimated 1 billion ounces still in the ground, the transaction
represents a huge opportunity for Lexington Gold. It is
particularly exciting as Mark Creasy, who established WRE back in
2002, will become a significant shareholder in the Company on
completion of the proposed acquisition, and as one of Australia's
most successful mining entrepreneurs, we look forward to learning
and benefiting from his expertise.
In July 2023, in order to, inter alia, support completion of the
proposed acquisition and its initial workstreams, we undertook an
approximate GBP2.5 million (gross) equity fundraising and were most
pleased to receive a high level of interest and support from our
existing shareholders who continue to support the Company's planned
further growth and development. Furthermore, we were delighted to
secure the additional funding at a premium to the Company's then
prevailing market share price.
We firmly believe that a multi-million oz JORC 2002/SAMREC
compliant mineral resource estimate ("MRE") can be established in
respect of WRE's existing asset portfolio and these new funds will
help us progress this key objective, unlock value from WRE's assets
and also continue our work in the US, especially at
Jennings-Pioneer, where we have identified drill-ready targets. In
addition, certain outstanding indebtedness was settled via the
issue of new equity on the same commercial terms as the
fundraise.
Post period end in July 2023, we received assay results in
respect of our previously completed surface exploration and
trenching sampling programme at our Argo project. These represented
a promising first set of results, showing high-grade surface
mineralisation across both the Northeast and Southern workings. We
are now assessing the next exploration steps for this project.
With the WRE acquisition on track to complete in the near term,
I look forward to the rest of this year and thereafter with
confidence as we refine and set out our strategy for the WRE
assets, whilst also remaining focused on our existing exploration
projects in the US.
I would like to thank our entire team for their tireless hard
work and commitment as we seek to build on our momentum throughout
this rest of the year and would also like to thank our shareholders
for their unstinting and much valued support.
Mr Edward Nealon
Non-Executive Chairman
4 September 2023
Chief Executive's Operational and Financial Review
1. Overview
Lexington Gold has had a very successful start to the year. The
team continues to deliver on key milestones, notably at our
Jennings-Pioneer and Argo projects. At Jennings-Pioneer, the
Company completed a soil and surface sampling programme and in
April 2023 received promising results from the 505 soil samples and
17 rock grab samples taken earlier in the year. Whilst over at the
Argo project, February 2023 saw the completion of our trenching and
sampling campaign.
In March 2023, the Company entered into a US$150,000 unsecured
loan facility with its Chairman, Edward Nealon, in order to satisfy
the group's ongoing working capital requirements, exploration
activities and the costs associated with evaluating potential
additional projects and opportunities.
The major achievement has been the acquisition of a 76% interest
in White Rivers Exploration Proprietary Limited ("WRE"), which
holds interests in a series of significant gold exploration
tenements in South Africa's Witwatersrand gold field, being
historically the largest single gold producing district in the
world. The Company obtained shareholder approval for the proposed
acquisition at a Special General Meeting held in June 2023 and
plans to complete the transaction in the near term.
Post-period end, the Company announced that it had raised
approximately GBP2.5 million (gross) from certain existing and new
investors in order to, inter alia, unlock value and facilitate the
proposed acquisition of WRE. The Company also announced that
certain outstanding loans and accrued interest due to Edward Nealon
and Mark Creasy were being settled by way of the issue of new
equity on the same terms as the fundraising, in order to conserve
the Company's cash resources. Whilst the proposed acquisition is a
key priority for the Company, we remain focused on our existing
projects in the Carolinas, United States, and most recently, in
July 2023, received assay results for our Argo project, showing
high-grade surface mineralisation.
2. Financial Performance
-- Net loss for H1 2023 from continuing operations was US$0.4m (H1 2022: US$0.37m)
-- Total assets were US$5.2m as at the half-year end (31 December 2022: US$5.1m)
-- Cash position of US$0.28m as at the half-year end (31 December 2022: US$0.42m)
-- Total liabilities of US$0.68m as at the half-year end (31 December 2022: US$0.1m)
3. Dividend
The directors have not declared a dividend (2022: Nil).
4. Operational and Corporate Activities
During the first half of 2023, Lexington Gold conducted a series
of key exploration activities on its existing portfolio projects as
follows:
Jennings-Pioneer Project
In February 2023, the Company announced the completion of a soil
and surface sampling programme at Jennings-Pioneer targeting gold,
silver and base metals through multi-element assaying to verify and
supplement historical sampling conducted on the deposit.
Subsequently, in April 2023, the Company received the associated
results for the 505 soil samples and 17 rock grab samples submitted
for analysis. Highlights included:
-- The identification of 13 gossans (targets at surface) within
three separate mineralisation trends: the Barite Hill Trend, the
Jennings Trend and the Self Trend
-- The Barite Hill Trend represents the Northeast extension of
the historic Barite Hill Mine, which continues 600m along strike
onto Lexington Gold's tenured property
-- The sampling programme identified a 350m surface extent of
the Red Hill mineralisation extending from the historic Barite Hill
pit
-- United States critical mineral by-product potential including barite and tellurium
Argo Project
February 2023 also saw further progress being made at our Argo
project where a surface trenching and sampling campaign was
completed, involving 13 trench lines with a total combined length
of approximately 844m being dug by an excavator and 409 composite
channel samples of 2m each being collected. An additional 30 rock
samples were taken at surface and as point samples in trenches such
that a total of 439 samples were shipped to ALS in Nevada for
assaying.
Proposed acquisition of WRE
On 13 May 2023, the Company entered into, via a newly
incorporated wholly owned subsidiary, a conditional share
subscription and loan agreements to acquire 76% of White Rivers
Exploration Proprietary Limited ("WRE"), an exploration and
development company with significant gold assets in South
Africa.
Highlights in respect of the proposed acquisition included:
-- WRE is a major tenement holder in the Witwatersrand gold
fields of South Africa, with tenement interests covering
approximately 89,499 hectares
-- WRE's current tenement interests have been estimated by WRE's
management to contain potential resources of over 37 million ounces
of gold (non-JORC/non-SAMREC nor other international standard
compliant estimate). WRE has focussed its exploration efforts in
particular on shallow (200 to 1,200m depth) deposits close to well
established infrastructure
-- WRE's tenement interests comprise 10 prospecting rights (six
granted licences and four renewal applications) which are grouped
into five projects
-- WRE has an incorporated Joint Venture ("JV") arrangement with
Avgold Limited, a subsidiary of Harmony Gold Mining Company Limited
(JSE:HMY) ("Harmony Gold"), the largest gold producer by volume in
South Africa. Such JV project, referred to as the Jelani Resources
JV, has a non-code compliant independently estimated resource of
6.02 million ounces of gold at an average grade of 6.47 g/t
-- The Witwatersrand gold fields area was historically the
largest single gold producing district in the world. Total
historical gold production over a century of mining activity was 2
billion ounces. It is estimated that a further 1.2 billion ounces
of gold resource remains in the Witwatersrand
-- WRE's Kroonstad project, has an independently estimated
non-code compliant gold exploration resource target of between 6.06
million ounces and 62.41 million ounces with a gold grade of
between 4.96 g/t and 11.54 g/t and potentially constitutes a new
Witwatersrand goldfield
-- WRE is believed to own the world's largest Witwatersrand
drillhole data base compiled over a ten-year period and consisting
of some 2,500 mother holes with their associated assays
-- WRE was established by well-known Australian explorer, Mark
Creasy, in 2002, with whom the Company on 12 May 2023 entered into
a one-year unsecured loan arrangement for a principal amount of
GBP0.3m. Mr Creasy will become a significant shareholder of
Lexington Gold on completion of the proposed acquisition.
-- The consideration comprised the provision of a GBP0.3m loan
to WRE from the Company and up to a further GBP6.4 million to be
satisfied via the issue of new common shares in the Company,
dependent on certain pre-determined milestones being met
On 26 June 2023, the Company held a Special General Meeting
("SGM") to, inter alia, secure shareholder approval for the
Company's proposed acquisition of WRE.
Funding
In March 2023, Lexington Gold obtained an unsecured US$150,000
loan facility from its Chairman, Edward Nealon, to provide
additional working capital and financial flexibility.
Post the period end, in July 2023, the Company successfully
raised approximately GBP2.5 million (gross) of new capital from
both new and existing investors in order to, inter alia, support
the acquisition of the 76% interest in WRE and its initial
workstreams. Despite the difficult capital market conditions,
Lexington Gold received overwhelming support and interest from its
existing shareholders in such fundraising thereby enabling the
Company to conduct the fundraise at a premium to the Company's
prevailing market share price.
At the same time, the Company settled, in aggregate, GBP423,518
of outstanding loans and accrued interest on the same commercial
terms as the fundraising by way of issuing new common shares and
associated warrants to Edward Nealon and Mark Creasy.
5. Post Period End
In July 2023, Lexington Gold received assay results in respect
of the abovementioned completed surface exploration and trenching
sampling programme at its Argo project. This promising first set of
assays for Argo showed high-grade surface mineralisation at both
the Northeast and Southern workings.
6. Outlook
We are expecting to complete the acquisition of WRE in the near
term. Following the recent successful fundraise, the Company is
well placed to, inter alia, embark on the workstreams required to
initiate the conversion of WRE's current non-code compliant
resources into a JORC compliant MRE and to begin to unlock value
from the Jelani Joint Venture.
Dr Bernard Olivier
Chief Executive Officer
4 September 2023
Interim Financial Statements
Lexington Gold Ltd
Condensed Consolidated Statement of Profit and Loss and Other
Comprehensive Income
For the Half-Year ended 30 June 2023
(Unaudited)
Unaudited Unaudited
Notes Six months Six months
ended 30 ended 30
June 2023 June 2022
$'000 $'000
----------- -----------
CONTINUING OPERATIONS
Operating expenses 3 (397) (363)
Fair value gain on derivative liability - 6
Finance cost (5) (10)
Loss before income tax (402) (367)
Income tax credit/(charge) - -
----------- -----------
Loss for the period (402) (367)
----------- -----------
Other comprehensive income
Loss for the period (402) (367)
Items that may be reclassified to profit
or loss:
Foreign currency reserve movement (6) -
----------- -----------
Total comprehensive loss for the period (408) (367)
----------- -----------
Loss per share attributable to the
owners of the parent
Basic and diluted loss per share from
continuing operations (cents per share) 4 (0.14) (0.14)
The accompanying notes form part of these financial
statements.
Lexington Gold Ltd
Consolidated Statement of Financial Position
As at 30 June 2023 (Unaudited)
Unaudited Audited
Notes 30
June 31 December
2023 2022
$'000 $'000
---------- ------------
Non-current assets
Exploration and evaluation assets 5 4,823 4,556
---------- ------------
Total non-current assets 4,823 4,556
---------- ------------
Current assets
Trade and other receivables 123 74
Cash and cash equivalents 284 424
---------- ------------
Total current assets 407 498
---------- ------------
Total assets 5,230 5,054
---------- ------------
Equity
Share capital 851 851
Share premium 60,163 60,163
Share option reserve 651 651
Foreign currency translation reserve (8) (2)
Accumulated loss (58,076) (57,674)
---------- ------------
Total equity attributable to equity
owners of the parent 3,581 3,989
Non-controlling interest 970 970
---------- ------------
Total equity 4,551 4,959
---------- ------------
Current liabilities
Trade and other payables 143 95
Borrowings 6 536 -
Total current liabilities 679 95
---------- ------------
Total equity and liabilities 5,230 5,054
---------- ------------
The accompanying notes form part of these financial
statements.
Lexington Gold Ltd Consolidated Statement of Changes in
Equity
For the Half-Year Ended 30 June 2023
(Unaudited)
Total
Foreign equity
Issued Share currency Accumu- attribu-table
share Share option trans-lation lated to Non-controlling Total
capital premium reserve reserve loss share-holders interest equity
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
--------- --------- --------- ------------- --------- -------------- ---------------- --------
Six months
ended
30 June 2023
(unaudited)
At start of
period 851 60,163 651 (2) (57,674) 3,989 970 4,959
Total
comprehensive
loss for the
period - - - (6) (402) (408) - (408)
--------- --------- --------- ------------- --------- -------------- ---------------- --------
Loss for the
period - - - - (402) (402) - (402)
Foreign
exchange gain
on
translation - - - (6) - (6) - (6)
--------- --------- --------- ------------- --------- -------------- ---------------- --------
At end of
period 851 60,163 651 (8) (58,076) 3,581 970 4,551
--------- --------- --------- ------------- --------- -------------- ---------------- --------
Six months
ended
30 June 2022
(unaudited)
At start of
period 787 59,096 555 (2) (56,750) 3,686 970 4,656
Total
comprehensive
loss for the
period - - - - (367) (367) - (367)
--------- --------- --------- ------------- --------- -------------- ---------------- --------
Loss for the
period - - - - (367) (367) - (367)
Foreign
exchange gain
on translation - - - - - - - -
--------- --------- --------- ------------- --------- -------------- ---------------- --------
Share options - - 48 - - 48 - 48
--------- --------- --------- ------------- --------- -------------- ---------------- --------
At end of
period 787 59,096 603 (2) (57,117) 3,367 970 4,337
--------- --------- --------- ------------- --------- -------------- ---------------- --------
The accompanying notes form part of these financial
statements.
Lexington Gold Ltd
Consolidated Statement of Cash Flows
For the Half-Year Ended 30 June 2023
(Unaudited)
Unaudited Unaudited
Notes Six months Six months
ended 30 ended 30
June 2023 June 2022
$'000 $'000
----------- -----------
Cash flows used in operating activities
Cash absorbed by operations 7 (403) (365)
Interest received 1 -
----------- -----------
Net cash used in operating activities (402) (365)
----------- -----------
Cash flows used in investing activities
Payments for exploration (267) (612)
Net cash used in/by investing activities (267) (612)
----------- -----------
Cash flows from financing activities
Proceeds from borrowings 525 416
Net cash generated from financing activities 525 416
----------- -----------
Net decrease in cash and cash equivalents (144) (561)
----------- -----------
Movement in cash and cash equivalents
Exchange gains/(losses) 4 (19)
At the beginning of the period 424 953
Decrease (144) (561)
----------- -----------
At the end of the period 284 373
----------- -----------
The accompanying notes form part of these financial
statements.
Lexington Gold Ltd
Notes to the interim financial information
For the Half-Year Ended 30 June 2023
(Unaudited)
1 . Basis of preparation
The unaudited interim financial information set out above, which
incorporates the financial information of the Company and its
subsidiary undertakings (the "Group"), has been prepared using the
historical cost convention and in accordance with International
Financial Reporting Standards ("IFRS") and with those parts of the
Bermuda Companies Act, 1981 applicable to companies reporting under
IFRS.
These interim results for the six months ended 30 June 2023 are
unaudited and do not constitute statutory accounts as defined in
section 87A of the Bermuda Companies Act, 1981.The financial
statements for the year ended 31 December 2022 have been delivered
to the Registrar of Companies and the auditors' report on those
financial statements was unqualified but contained an emphasis of
matter paragraph on going concern.
2 . Going concern
For the period ended 30 June 2023, the Group recorded a loss of
US$0.4m and had net cash outflows from operating activities of
US$0.4m. An operating loss is expected in the year subsequent to
the date of these financial statements. The ability of the entity
to continue as a going concern is dependent on the Group generating
positive operating cash flows and/or securing additional funding
through the raising of debt and/or equity to fund its projects.
These conditions indicate a material uncertainty that may cast a
significant doubt about the entity's ability to continue as a going
concern and, therefore, that it may be unable to realise its assets
and discharge its liabilities in the normal course of business.
The financial statements have been prepared on the basis that
the entity 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 for the following
reasons:
-- The Company raised, in aggregate, gross proceeds of
GBP2,516,300 (the "Fundraising") at a price of 6 pence (the
"Fundraising Price") per common share of US$0.003 each in the
capital of the Company ("Common Shares") from the issue of, in
aggregate, 41,938,334 new Common Shares (the "Fundraising Shares")
in early July 2023;
-- Outstanding loans of US$150,000 due to the Company's
Chairman, Edward Nealon, and GBP300,000 due to Mark Creasy
(together, in both instances, with accrued interest thereon) have
been settled in new equity on the same commercial terms as the
abovementioned fundraising; and
-- The Directors have the ability to reduce expenditure in order to preserve cash if required.
Should the 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 stated 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 entity not continue
as a going concern.
3 . Operating (expenses)/income
Unaudited Unaudited
Six months Six months
ended 30 ended 30
June 2023 June 2022
$'000 $'000
----------- -----------
Directors' emoluments and fees (98) (98)
Net foreign exchange gain/(loss) 3 (15)
Office expenses (23) (27)
Professional and other services (230) (164)
Share option expense - (48)
Other expenses (49) (11)
----------- -----------
Total operating expenses (397) (363)
----------- -----------
4 . Basic and diluted loss per share
The calculation of basic and diluted loss per share for the six
months ended 30 June 2023 was based on the loss attributable to
common shareholders from continuing operations of US$402,000 (H1
2022: US$367,000) and a weighted average number of common shares
outstanding of 283,102,002 (H1 2022: 261,478,810).
5 . Exploration and evaluation assets
Unaudited Audited
30
June 31 December
2023 2022
$'000 $'000
---------- ------------
Balance at beginning of period 4,556 3,764
Additions 267 792
4,823 4,556
---------- ------------
The amount above relates to exploration and development
activities in respect of the Group's 51% investment in four diverse
gold projects, covering a combined area of over 1,675 acres in
North and South Carolina, United States.
The projects are situated in the highly prospective Carolina
Super Terrane ("CST"), which has seen significant historic gold
production and is host to a number of multi-million-ounce mines
operated by majors. It was also the site of the first US gold rush
in the early 1800s, before gold was discovered in California.
In order for the Company to retain its 51% membership interests
in the four projects, it has to make certain Minimum Funding
Contributions in respect of each of the projects in each of the
four years and throughout the four-year period following its
re-admission to AIM in November 2020, in an aggregate amount of
AU$5 million (the "Minimum Funding Contributions"). The Minimum
Funding Contributions are further detailed in note 8.
In the event that the Minimum Funding Contributions are not
satisfied by the Company, Uwharrie Resources Inc., the Company's
joint venture partner, has the option to acquire the Company's 51%
interest in the relevant project for a nominal sum of AU$1.
The directors have assessed the value of the exploration and
evaluation asset having considered any indicators of impairment,
and in their opinion, based on a review of future expected
availability of funds to develop the projects and the intention to
continue exploration and evaluation, no impairment is
necessary.
6 . Borrowings
Unaudited Audited
30
June 31 December
2023 2022
$'000 $'000
---------- ------------
Interest bearing borrowings
Balance at the beginning of the period - -
Loan from director 150 -
Loan from Mark Creasy 375 -
Convertible loan receipts - 416
Derivative liability allocation - (47)
Interest accrued 6 67
Foreign exchange 5 (28)
Loan converted to equity - (408)
536 -
---------- ------------
As announced on 25 April 2022, the Company entered into
unsecured convertible loan agreements with respect to borrowing, in
aggregate, GBP335,000 principal amount (the "Convertible Loan"),
predominantly with certain long term significant shareholders and
Company Directors (together, the "Lenders"). The Convertible Loan
was unsecured and repayable with accrued interest on 30 April
2023.
Interest accrued at 6 per cent. per annum to maturity and was
payable in full in new common shares ("Shares") if the Convertible
Loan was converted. The interest rate would have increased to 10
per cent. per annum in the event of any unremedied default as set
out in the underlying agreements.
The conversion price was the lower of: a) 3.2 pence per Share;
or b) 0.9 times the price at which the Company issued any Shares
for cash prior to the conversion date (a "Qualifying Financing");
or c) 0.9 times the price offered by any person and their
affiliates (an "Offeror") to buy Shares with the objective of
seeking to acquire more than a 30% relevant interest in the
Company's issued Shares (a "General Offer").
The Company subsequently raised, in aggregate, approximately
GBP500,000 (before expenses) through a placing, via Peterhouse
Capital Limited ("Peterhouse") as agent of the Company, of
10,526,317 new common shares of US$0.003 each in the capital of the
Company ("Common Shares") (the "Placing Shares") (the "Placing") to
certain new and existing shareholders at an issue price of 4.75
pence per Placing Share (the "Placing Price") on 17 October 2022.
As the Placing represented a Qualifying Financing in respect of the
Convertible Loan, conversion of the Convertible Loan was triggered,
and the Company therefore issued, in aggregate, 11,096,875 new
Common Shares to the providers of the Convertible Loan in respect
of the automatic conversion of the principal amount of the
Convertible Loan (and accrued interest thereon of GBP20,100) at the
previously fixed price of 3.2 pence per Common Share (the "Loan
Settlement Shares").
In March 2023, the Company entered into a US$150,000 unsecured
loan facility with Lexington Gold's Chairman, Edward Nealon. The
loan was unsecured, had a 12-month term from the date of drawdown,
and incurred interest at a rate of 5 per cent. per annum, payable
on maturity.
On 12 May 2023, the Company entered into a one-year unsecured
loan agreement for a principal amount of GBP0.3m with Mark Creasy
at an interest rate of 7.5 per cent. per annum which was to accrue
until its scheduled maturity date .
7 . Cash (absorbed)/generated by operations
Unaudited Unaudited
Six months Six months
ended 30 ended 30
June 2023 June 2022
$'000 $'000
----------- -----------
Loss before income tax (402) (367)
Adjusted for:
* Fair value gain on derivative liability - (6)
* Finance cost 5 10
* Share options expense - 48
* Net foreign exchange difference (3) 10
Cash from operations before working
capital changes (400) (305)
Working capital changes:
Trade and other receivables (49) 18
Trade and other payables 46 (78)
----------- -----------
Cash (absorbed)/generated by operations
before interest and tax (403) (365)
----------- -----------
8 . Commitments and contingencies
Pursuant to the terms of its acquisition of Global Asset
Resources Limited ("GAR") in November 2020, Lexington Gold is
required to pay conditional deferred consideration, of, in
aggregate, AU$1.5m (being the Tranche 1 Deferred Consideration if
the Tranche 1 Performance Milestone detailed below is met) and the
sum of, in aggregate, AU$3.0m (being the Tranche 2 Deferred
Consideration if the Tranche 2 Performance Milestone detailed below
is met) to the Sellers and Uwharrie Resources Inc. ("URI"), in cash
or new Common Shares at the Company's sole discretion, subject to
the achievement by the Group of the Tranche 1 Performance Milestone
and Tranche 2 Performance Milestone or the occurrence of certain
Vesting Events within five years of completion of the Company's
acquisition of GAR.
The Tranche 1 Performance Milestone comprises confirmation by an
independent geologist and announcement by the Company of JORC 2012
compliant resources in respect of any one of the GAR Projects
(including any Additional Projects) that are not Excluded Projects
of at least:
a) 0.8 million ounces of gold at a grade of more than 1 g/t;
or
b) 0.6 million ounces of gold at a grade of more than 2.5 g/t;
or
c) 0.4 million ounces of gold at a grade of 5 g/t or more.
The Tranche 1 Deferred Consideration, payable within 21 business
days of the achievement of the Tranche 1 Performance Milestone or
occurrence of certain Vesting Events, comprises AU$1,299,000,
payable in cash or new Common Shares at the Relevant Price (in
whole or in part) at the Company's sole discretion, to the Sellers;
and AU$201,000, payable in cash or Common Shares at the Relevant
Price (in whole or in part) at the Company's sole discretion, to
URI.
The Tranche 2 Performance Milestone comprises the commissioning
from an independent geologist, completion and announcement by the
Company, in accordance with the AIM Rules, of a pre-feasibility
study in respect of any one of the GAR Projects (including any
Additional Projects) that are not Excluded Projects confirming a
pre-tax NPV of more than US$50m at a discount rate of at least 8
per cent.
The Tranche 2 Deferred Consideration, payable within 21 business
days of the achievement of the Tranche 2 Performance Milestone or
occurrence of certain Vesting Events, comprises AU$2,598,000,
payable in cash or new Common Shares at the Relevant Price (in
whole or in part) at the Company's sole discretion, to the Sellers;
and AU$402,000, payable in cash or Common Shares at the Relevant
Price (in whole or in part) at the Company's sole discretion, to
URI. If the Tranche 1 Deferred Consideration has not previously
been paid at the time of achievement of the Tranche 2 Performance
Milestone, the Tranche 1 Deferred Consideration will also become
payable in cash or new Common Shares (at the Company's sole
discretion) at such time.
No provision has been made for the payment of the deferred
consideration as the Tranche 1 Performance Milestone and Tranche 2
Performance Milestone events have not occurred. The Group's
projects are in the exploration phase and therefore it is not
certain that an economic assessment of mineral potential or
pre-feasibility study will be completed in the next few years, or
at all.
The Joint Venture Implementation Deed between GAR, URI and
Carolina Gold Resources also sets out certain Minimum Funding
Contributions in respect of each of the GAR Projects to be provided
by the Company in each of the four years and throughout the four
year period following Admission in order to retain its 51 per cent.
interest in the Projects which are summarised below. In the event
that the Minimum Funding Contributions are not satisfied by
Lexington Gold (on both an annual and overall basis), URI has the
option to acquire the Company's 51 per cent. membership interest
(via GAR Holdings) in the relevant Project SPV for a nominal sum of
AU$1. The Company similarly has the option to sell its 51 per cent.
membership interest in any of the GAR Projects to URI at any time
during the four-year period following Admission for AU$1 should the
Board determine that the Company no longer wishes to proceed with
one or more of the GAR Projects.
Minimum Funding Contributions for the Company to retain its 51
per cent . membership interests
AU$
Minimum Minimum Minimum Minimum Minimum
Project Total Year Year Year Year
1 2 3 4
JKL 1,500,000 250,000 150,000 150,000 150,000
Carolina Belle 1,500,000 250,000 100,000 100,000 100,000
Jennings-Pioneer 1,000,000 100,000 100,000 100,000 100,000
Argo 1,000,000 100,000 100,000 100,000 100,000
---------- -------- -------- -------- --------
5,000,000 700,000 450,000 450,000 450,000
---------- -------- -------- -------- --------
At the end of the initial four year period following Admission
and satisfaction of the Minimum Funding Contributions for a
Project, if URI elects not to fund its proportionate share of
future costs or fails to make an election then, in accordance with
the terms of the Joint Venture Implementation Deed, the Company
will potentially be able to increase its interest in each of the
Project SPVs to 80 per cent. by meeting certain further funding
commitments in years 5 and 6 (on both an annual and overall basis)
following Admission (the "Extended Period").
Extended Period funding contributions from the Company to
acquire an additional 29 per cent . membership interest and
increase its total interest to 80 per cent.
Minimum Minimum Minimum
Project Total Year Year
5 6
JKL 2,500,000 150,000 150,000
Carolina Belle 2,500,000 100,000 100,000
Jennings-Pioneer 1,500,000 100,000 100,000
Argo 1,500,000 100,000 100,000
---------- -------- --------
8,000,000 450,000 450,000
---------- -------- --------
If the Company does not meet the Extended Period funding
contributions in relation to a particular Project, it will retain
its 51 per cent. initial interest in such Project SPV.
In the event that the Company increases its interest in any of
the Project SPVs to 80 per cent. and URI elects not to fund its
proportionate share of future costs in respect of its then 20 per
cent. residual interest in the GAR Project concerned or fails to
make an election, the Company is able to increase its interest in
the relevant Project to 100 per cent. by agreeing to pay for the
relevant Project a Net Smelter Royalty to URI of 0.5 per cent. for
future production up to 50,000 oz gold equivalent, 2.0 per cent.
for future production from 50,000 to 400,000 oz gold equivalent and
1.0 per cent. for future production in excess of 400,000 oz gold
equivalent.
9 . Related parties
Identity of related parties
The Group has a related party relationship with its subsidiaries
and key management personnel.
Remuneration of key management personnel
Key management personnel are those persons having authority and
responsibility for planning, directing and controlling the
activities of the entity, directly or indirectly, including any
director (whether executive or otherwise) of the Group. Details of
the nature and amount of each element of the remuneration of each
director of the Group during the period are shown in the table
below:
Six months ended 30 June
2023
Share
Directors' Executive based
fees fees (1) payments Total
----------- ---------- ---------- -------
US$ US$ US$ US$
Edward Nealon 11,250 6,750 - 18,000
Bernard Olivier 11,250 39,000 - 50,250
Melissa Sturgess 11,250 - - 11,250
Rhoderick Grivas 11,250 6,750 - 18,000
----------- ---------- ---------- -------
45,000 52,500 - 97,500
----------- ---------- ---------- -------
Six months ended 30 June
2022
Share
based
Directors' Executive payments
fees fees (1) (2) Total
----------- ---------- ---------- --------
US$ US$ US$ US$
Edward Nealon 11,250 6,750 6,431 24,431
Bernard Olivier 11,250 39,000 10,182 60,432
Melissa Sturgess 11,250 - 6,431 17,681
Rhoderick Grivas 11,250 6,750 6,431 24,431
----------- ---------- ---------- --------
45,000 52,500 29,475 126,975
----------- ---------- ---------- --------
(1) For duties as executive director and consulting.
(2) In accordance with the requirements of IFRS 2 Share-based
payments, the estimated fair value for the share options granted
was calculated using a Black Scholes option pricing model. None of
the share options have been exercised.
Borrowings and advances from directors and shareholders
Unaudited Audited
30
June 31 December
2023 2022
$'000 $'000
---------- ------------
Ed Nealon 161 -
Bernard Olivier 25 -
Melissa Sturgess 6 -
Rhoderick Grivas 9 -
201 -
---------- ------------
Current directors of the holding company and their close family
members, as at the date of these financial statements, control
5.30% (31 December 2022: 4.25%) of the voting shares of Lexington
Gold.
10 . Subsequent events
As announced on 10 July 2023, the Company raised, in aggregate,
gross proceeds of GBP2,516,300 (the "Fundraising") at a price of 6
pence (the "Fundraising Price") per common share of US$0.003 each
in the capital of the Company ("Common Shares") from the issue of,
in aggregate, 41,938,334 new Common Shares (the "Fundraising
Shares). The Fundraising comprised a placing of 17,188,334 new
Common Shares (the "Placing Shares") to raise GBP1,031,300 at the
Fundraising Price (the "Placing"), via the Company's joint brokers,
Peterhouse Capital Limited and WH Ireland Limited, and share
subscriptions for, in aggregate, 24,750,000 new Common Shares at
the Fundraising Price to raise GBP1,485,000 (the "Share
subscriptions"). The Share Subscriptions included a subscription of
GBP100,000 by Edward Nealon, Lexington Gold's Chairman, for
1,666,667 Fundraising Shares. In addition, outstanding loans of
US$150,000 due to the Company's Chairman, Edward Nealon, and
GBP300,000 due to Mark Creasy (together, in both instances, with
accrued interest thereon) were settled in new equity on the same
commercial terms as the fundraising (the "Loan Conversion
Shares").
On 24 July 2023, Lexington Gold received assay results in
respect of its previously completed surface exploration and
trenching sampling programme at its Argo project. This promising
first set of assays for Argo showed high-grade surface
mineralisation at both the Northeast and Southern workings.
Other than these abovementioned matters, no significant events
have occurred subsequent to the reporting date that would have a
material impact on the consolidated financial statements.
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END
IR SSUFIEEDSEIU
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September 04, 2023 02:00 ET (06:00 GMT)
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