TIDMSTEL
RNS Number : 6105G
Stellar Diamonds PLC
05 March 2018
NOT FOR DISTRIBUTION IN THE UNITED STATES OR FOR DISSEMINATION
TO US NEWS WIRE SERVICES.
5 March 2018
AIM: STEL
Stellar Diamonds plc
("Stellar" or the "Company")
Interim Results for the six months to 31 December 2017
Stellar Diamonds plc, the AIM listed (AIM: STEL) diamond
development company focused on West Africa, announces its unaudited
interim results for the six months to 31 December 2017.
Operational and Corporate Highlights:
o Successful disposal of Guinea assets for gross proceeds
US$1.25 million;
o Tribute Mining and Revenue Share Agreement with Octea Mining
over the Tongo-Tonguma project closed post period;
o Environmental Licence issued for Tongo paving way for issuing
of the large scale mining licence subject to licence fee payment
being made;
o Post-period announcement of a possible offer for the issued
and to be issued share capital of Stellar by ASX listed Newfield
Resources Limited ("Newfield Resources") with the intention to fund
the commercial development of the Tongo-Tonguma mine.
Financial Highlights
o Placing of GBP330,000 and an oversubscribed open offer raising
GBP200,000 completed;
o Receipt of final funds related to Guinea transaction, bringing
total gross consideration to US$1,250,000 (including exclusivity
payment of US$250,000 received pre-interim report period);
o Repayment of US$1.24m convertible loan note ("CLN") and issue
of a US$1,340,000 CLN during period;
o Amendments to US$1,650,000 and US$1,340,000 CLN's made with
repayment longstop dates extended to 30 April 2018 and 31 March
2018 respectively for the completion of the Tongo-Tonguma tribute
mining agreement and securing of the project funding as defined in
the CLN agreements;
o US$3 million unsecured loan received from Newfield Resources
post period, funds used towards commencement of the Front End
Engineering Design ("FEED"), mine plan drilling, payment of certain
licence fees, certain creditors and transaction fees.
Stellar Diamonds Chief Executive Karl Smithson commented, "The
interim reporting period has primarily been focussed on sourcing
the necessary funding to bring the Tongo-Tonguma project into
production. The capital markets in the UK have proven extremely
difficult to raise funds for junior mining companies in recent
years. Furthermore, the market capitalisation of Stellar during the
last six months hovered around the US$2 million level, which
provided additional challenges of raising capital to develop the
mine in Sierra Leone. However, we were pleased to report on 1st
February 2018 that a possible share offer to acquire Stellar by ASX
listed Newfield Resources, at a significant premium for Stellar
shareholders, was received which, if successful and alongside a
planned fundraise by Newfield Resources, would also bring the
required project development capital for Tongo-Tonguma. Alongside
any possible offer for the Company and subsequent to the period
ended 31 December 2017, Newfield Resources has advanced to Stellar
an unsecured US$3 million loan with which to primarily commence the
FEED programme, mine plan drilling and, as a result of the recent
completion of the tribute mining agreement, payment of Tonguma
mining licence fees of US$1.25 million (covering the period up to
July 2018). The loan will also be used to pay legal and corporate
financial advisor costs including those related to the possible
offer for the Company. Working capital will therefore remain
constrained as we continue discussions with Newfield Resources
regarding the possible offer.
"In addition, Stellar completed the disposal of its Guinea
assets and three Guinean subsidiary companies to BDG Capital in
return for an overall payment of US$1.25 million, meaning Stellar
can focus its resources on the Tongo-Tonguma project in Sierra
Leone."
Chairman's Statement
Stellar achieved two key milestones in the interim reporting
period and beyond. Firstly, we were able to successfully conclude
the disposal of our Guinean assets and subsidiary companies for a
total transaction price of US$1.25 million (with cash received of
US$0.87 million in total after payment of taxes, retrenchments,
certain creditors and other exit related costs), thus securing our
orderly exit from Guinea to focus on Sierra Leone. Secondly, our
innovative approach has led us to securing the potential funding
for the Tongo-Tonguma project via a proposed offer by Newfield
Resources to acquire the issued and to be issued share capital of
Stellar by means of a 'scheme of arrangement', which, if
successful, will bring in the required development capital for the
project in Q2-18.
Tongo-Tonguma Project, Sierra Leone
Just before the interim period commenced, Stellar signed a
conditional Tribute Mining and Revenue Share Agreements with Octea
Mining, which was formally completed on 28 February 2018. The
combined resource of Tongo-Tonguma is established at 4.5 million
carats, of which 4 million carats is estimated to be recovered
during the initial 21 year life-of-mine. The recoverable diamond
grades of the kimberlites in resource range from 100 carats per
hundred tonnes (cpht) to 260 cpht and modelled diamond values range
from US$209 per carat to US$310 per carat. A preliminary economic
assessment by Paradigm Project Management ("PPM") has established a
pre-tax NPV(10) of US$172million with an IRR of 49%. Stellar has
calculated the potential post-tax returns based on certain
assumptions and the fiscal terms of the Tonguma mine lease and
Sierra Leone Income Tax Act (2000) as amended, and estimates the
post-tax NPV(8) and IRR of US$113 million and 31% respectively to
Stellar.
Resource consultants Mineral Services Canada has also identified
an exploration target of a further 8 million carats not currently
in the mine plan, representing significant additional upside if
brought into future development plans.
During the reporting period Stellar secured an environmental
licence for its Tongo permit and now the mining licence, which was
earlier approved, can be issued subject to Stellar paying the
required annual licence fee. The fee, of approximately US$0.55
million, is expected to be paid when the Company has secured the
necessary project funding.
Before the interim period, Stellar and PPM signed a contract for
the Front End Engineering Design which is effectively the first
step in the mine development. Post the interim period ended 31
December 2017, this FEED programme commenced and a site visit was
undertaken by PPM. The FEED process is expected to take
approximately four months to complete after which a refined capital
and operating budget, mine plan and project execution plan will be
presented.
Guinea Assets Disposal
In order to focus our resources, the Board took the decision to
dispose of the Company's Guinea portfolio of three licences and
associated assets in the first half of 2017 to BDG Capital.
Following due diligence, the final price was agreed at US$1.25
million of which US$0.5m was received before the interim period
with the balance during the interim period, some of which was used
to settle employee and tax liabilities in Guinea.
Kumgbo Project, Liberia
No further work was conducted on the Kumgbo Project licences in
Liberia due to limited financial resources and a focus on disposing
of the Guinea assets and securing the funding for the Tongo-Tonguma
development. The Board remains positive about the prospectivity of
the Kumgbo licences and will either try to secure a joint venture
partner or allocate some funds towards exploration in 2018, if the
possible offer for the Company by Newfield Resources
progresses.
Diamond Market
Rough diamond demand and pricing has started on a positive
footing in 2018. This is driven somewhat by positive festive season
sales, increasing polished demand and a reduction of rough diamond
inventory over the past twelve months. Most producing companies are
reporting positive rough diamond sales in the first quarter of
2018.
Global rough diamond supply is estimated to decline by 2.4% to
147 million carat in 2018 as no new production is expected to come
on stream and Russian production is forecast to decrease. The long
term outlook for rough production remains one of decreasing carats
as the older mines approach the end of life. However, one new
discovery in Angola by Alrosa (Luaxe) has the potential to be a 10
million carat per year producer after 2020. Nevertheless, this is
unlikely to provide an oversupply of rough in the long term and
therefore the outlook remains one of positive sentiment for
diamonds.
Outlook
Stellar Diamonds is currently in discussions about a possible
share offer by Newfield Resources by means of a scheme of
arrangement at a significant premium to the Stellar Diamonds share
price before the possible offer was first announced on the 1
February 2018. If the scheme of arrangement is successful, Stellar
shareholders will exchange their Stellar shares for Newfield
Resources shares. The key to this proposed transaction is the
funding that Newfield Resources intends to commit to develop of the
Tongo-Tonguma mine. Further announcements will be made in due
course.
I would like to take this opportunity to thank all our
shareholders, management and employees for their support through
very challenging times.
Lord Daresbury
Non-Executive Chairman
**S **
This announcement contains inside information for the purposes
of Article 7 of EU Regulation 596/2014 and has been arranged for
release by Karl Smithson, Chief Executive Officer of the
Company.
For further information contact the following or visit the
Company's website at www.stellar-diamonds.com.
Karl Smithson, Stellar Diamonds Tel: +44 (0) 20
CEO plc 7010 7686
Emma Earl Cairn Financial Tel: +44 (0) 20
Sandy Jamieson Advisers (Nominated 7213 0880
Adviser)
Martin Lampshire Peterhouse Corporate Tel: +44 (0) 20
Finance (Broker) 7469 0930
Tim Blythe Blytheweigh Tel: +44 (0) 20
Nick Elwes (Financial PR) 7138 3204
Condensed consolidated statement of comprehensive loss
(unaudited)
for the six months ended 31 December 2017
(Stated in U.S. dollars)
Six months Six months Year
ended ended
31 December 31 December Ended
2017 2016 (unaudited)
(unaudited) 30 June
Notes 2017
(audited)
---------------------------------- ----------- ------------------- ------------------------ ----------------
Revenue - - -
Cost of sales - - -
Gross loss - - -
---------------------------------- ----------- ------------------- ------------------------ ----------------
Depreciation of plant
and equipment (352) (503) (1,007)
Administrative expenses (619,732) (545,810) (1,533,675)
Finance costs (318,039) (297,640) (730,085)
Remeasurement of derivatives - 5,808 12,504
Other income - 175,000 -
---------------------------------- ----------- ------------------- ------------------------ ----------------
(938,123) (663,145) (2,252,263)
Loss before tax (938,123) (663,145) (2,252,263)
Income tax expense - - -
---------------------------------- ----------- ------------------- ------------------------ ----------------
Loss from continuing
operations (938,123) (663,145) (2,252,263)
Loss on discontinued
operations 6 (46,805) - (6,928,025)
---------------------------------- ----------- ------------------- ------------------------ ----------------
Loss after tax attributable
to equity holders
of the parent (984,928) (663,145) (9,180,288)
---------------------------------- ----------- ------------------- ------------------------ ----------------
Total comprehensive
expense for the year
attributable to equity
holders of the parent (984,928) (663,145) (9,180,288)
---------------------------------- ----------- ------------------- ------------------------ ----------------
Basic and diluted
loss per share (0.019) (0.021) (0.260)
Basic and diluted
loss per share on
continuing operations (0.018) (0.021) (0.064)
---------------------------------- ----------- ------------------- ------------------------ ----------------
Condensed consolidated statement of financial position
(unaudited)
as at 31 December 2017
(Stated in U.S. dollars)
31 December 30 June
31 December 2017 2016 2017
Notes (unaudited) (unaudited) (audited)
----------------------------------------- ------------ ----------------------- ----------------- -----------------
Assets
Non-current assets
Intangible assets 3 8,561,522 13,757,565 7,583,915
Property, plant and equipment 4 55,831 1,221,224 63,810
Total non-current assets 8,617,353 14,978,789 7,647,725
----------------------------------------- ------------ ----------------------- ----------------- -----------------
Current assets
Trade and other receivables 31,304 380,271 41,062
Cash and cash equivalents 52,824 89,954 169,505
----------------------------------------- ------------ ----------------------- ----------------- -----------------
Assets in Disposal Groups classified
as held for sale 6 - - 920,911
----------------------------------------- ------------ ----------------------- ----------------- -----------------
Total current assets 84,128 470,225 1,131,478
----------------------------------------- ------------ ----------------------- ----------------- -----------------
Total assets 8,701,481 15,449,014 8,779,203
----------------------------------------- ------------ ----------------------- ----------------- -----------------
Equity and liabilities
Capital and reserves
Share capital 27,263,698 26,887,434 27,023,701
Share premium 31,542,593 30,449,207 31,042,176
Reverse acquisition reserve 17,073,279 17,073,279 17,073,279
Share option reserve 7 24,823 918,279 918,279
Accumulated loss (71,657,046) (63,073,254) (71,590,397)
Total equity 4,247,347 12,254,945 4,467,038
----------------------------------------- ------------ ----------------------- ----------------- -----------------
Non-current liabilities
Convertible loan 5 - 1,284,902 -
Provision - 104,369 -
Total non-current liabilities - 1,389,271 -
----------------------------------------- ------------ ----------------------- ----------------- -----------------
Current liabilities
Trade and other payables 1,124,240 540,054 1,367,072
Convertible loan 5 3,229,904 1,158,048 2,845,103
Loans 99,990 100,000 99,990
Derivative financial instruments - 6,696 -
Total current liabilities 4,454,134 1,804,798 4,312,165
----------------------------------------- ------------ ----------------------- ----------------- -----------------
Total liabilities 4,454,134 3,194,069 4,312,165
----------------------------------------- ------------ ----------------------- ----------------- -----------------
Total equity and liabilities 8,701,481 15,449,014 8,779,203
----------------------------------------- ------------ ----------------------- ----------------- -----------------
Company registration number: 5424214
Reverse
Share Share Share acquisition Accumulated Total
option
Capital premium reserve reserve loss equity
------------------- --------------- --------------- -------------- ---------------- ----------------- ----------------
Balance at 1
July 2016 26,887,434 30,449,207 918,279 17,073,279 (62,410,109) 12,918,090
Total
comprehensive
loss
for the year - - - - (9,180,288) (9,180,288)
Issue of
placing
shares 136,267 613,202 - - - 749,469
Share issue
costs - (20,233) - - - (20,233)
Balance as at
30 June 2017 27,023,701 31,042,176 918,279 17,073,279 (71,590,397) 4,467,038
Total
comprehensive
loss
for the
period - - - - (984,928) (984,928)
Issue of
placing
shares 239,997 539,994 - - - 779,991
Share issue
costs - (39,577) - - - (39,577)
Cancellation
of share
options - - (918,279) - 918,279 -
Issue of new
share options - - 24,823 - - 24,823
Balance at 31
December
2017 27,263,698 31,542,593 24,823 17,073,279 (71,657,046) 4,247,347
------------------- --------------- --------------- -------------- ---------------- ----------------- ----------------
Condensed consolidated statement of changes in equity
(unaudited)
as at 31 December 2017
(Stated in U.S. dollars)
Condensed consolidated statement of cash flows (unaudited)
For the six months ended 31 December 2017
(Stated in U.S. dollars)
Six months Six months
ended ended Year ended
31 December 31 December 30 June
2017 (unaudited) 2016 (unaudited) 2017 (audited)
------------------------------------- ---------------------- ---------------------- --------------------
Cash flows from operating
activities:
Net loss for the period (984,928) (663,145) (9,180,288)
Adjustments for:
Depreciation of property,
plant and equipment 352 503 1,007
Issue of share options 24,823 - -
Impairment on classification
as disposal group - - 6,905,703
Reversal of rehabilitation
provisions - - (104,369)
Shares issued to directors
in lieu of fees 65,308 - 90,332
Remeasurement of derivatives - (5,808) (12,504)
Net foreign exchange loss
/ (gain) 32,769 (96,571) (102,461)
Interest charge 318,040 297,640 730,085
Change in working capital
items:
Decrease / (Increase) in
receivables 9,757 (83,987) 255,222
Decrease in inventories - 26,934 26,934
Increase in trade and other
payables 61,875 126,222 703,240
------------------------------------- ---------------------- ---------------------- --------------------
Net cash used in operations (472,004) (398,212) (687,099)
------------------------------------- ---------------------- ---------------------- --------------------
Cash flows from investing
activities
Payments to acquire intangible
assets (969,979) (400,469) (896,552)
Disposal of Guinea assets 616,203 - 250,000
------------------------------------- ---------------------- ---------------------- --------------------
Net cash used in investing
activities (353,776) (400,469) (646,522)
------------------------------------- ---------------------- ---------------------- --------------------
Cash flows from financing
activities
Proceeds on Convertible
loan 100,000 639,310 600,000
Proceeds from issue of
share capital, net of costs 675,106 - 638,904
Interest paid (33,238) - (47,965)
------------------------------------- ---------------------- ---------------------- --------------------
Net cash generated by financing
activities 741,868 639,310 1,190,939
------------------------------------- ---------------------- ---------------------- --------------------
Net decrease in cash and
cash equivalents (83,912) (159,371) (142,682)
Cash and cash equivalents,
beginning of period 169,505 268,330 268,330
Effect of foreign exchange
rate changes (32,769) (19,006) 43,857
---------------------- ---------------------- --------------------
Cash and cash equivalents,
end of period 52,824 89,953 169,505
------------------------------------- ---------------------- ---------------------- --------------------
Notes to the consolidated financial statements (unaudited)
for the six months ended 31 December 2017
(Stated in U.S. dollars)
1. Basis of presentation
Stellar Diamonds plc (the "Company" or "Stellar" or on a
consolidated basis the "Group") is presenting unaudited financial
statements as of and for the six months ended 31 December 2017. The
comparative periods presented are the audited financial statements
as of and for the year ended 30 June 2017 and the unaudited
financial statements as of and for the six months ended 31 December
2016.
The information for the six months ended 31 December 2017 does
not constitute statutory accounts for Stellar Diamonds plc as
defined in section 434 of the Companies Act 2006. A copy of the
most recent statutory accounts for the year ended 30 June 2017 has
been delivered to the Registrar of Companies. The auditors reported
on those accounts: their report was unqualified but drew attention
to the Company's ability to continue as a going concern and the
valuation of intangible assets by way of emphasis and did not
contain a statement under section 498 (2) or (3) of the Companies
Act 2006.
The annual financial statements of the Group are prepared in
accordance with International Financial Reporting Standards as
adopted by the European Union ("IFRS"). The condensed set of
financial statements included in this interim financial report has
been prepared in accordance with International Accounting Standard
34 "Interim Financial Reporting", as adopted by the European
Union.
1.1 Going concern
The Company's business activities, together with the factors
likely to affect its future development, its key risks and
performance are set out in the Chairman's Statement.
The going concern of the Group is dependent on obtaining
additional finance in order to meet its working capital needs for a
period of not less than twelve months from the date of approval of
the financial statements and to continue to fund development of
exploration projects. This indicates the existence of material
uncertainties which may cast significant doubt on the ability of
the Company and the Group to continue as a going concern, and hence
may be unable to realise its assets and discharge its liabilities
in the normal course of business.
The Company announced on the 1 February 2018 a possible all
share offer by a scheme of arrangement for Stellar by Newfield
Resources, which, if successful, would result in Stellar shares
being exchanged for Newfield shares. As part of this transaction
Newfield is undertaking a series of placements and rights issue to
raise a cumulative A$40 million, most of which would be used to
develop the Tongo-Tonguma project in Sierra Leone. Subject to the
scheme of arrangement proceeding and completion of the fundraises
by Newfield, existing Stellar shareholders and holders of rights
over Stellar shares would hold a combined 16.4% of the enlarged
Newfield Resources.
However, should the scheme of arrangement not be successful, the
Directors believe that, since the tribute mining agreement with
Octea was closed on 28 February 2018, the Company will have the
ability to access sufficient levels of finance to fund the capital
expenditure requirements at Tongo-Tonguma, and to meet essential
administrative expenses for the foreseeable future. However there
is no guarantee that Stellar will be able to find either the short
term funding or longer term debt and equity funding necessary to
continue operating and to bring the Tongo-Tonguma Project into
production. The financial statements do not include any adjustment
to the carrying amount or classification of assets and liabilities
that would occur if the Company was unable to continue as a going
concern.
1.2 Changes in accounting policy
The same accounting policies, presentation and methods of
computation are followed in the condensed set of financial
statements as applied in Stellar Diamonds plc's latest audited
financial statements as of and for the year ended 30 June 2017.
2. Segments
During the period the Company engaged in the acquisition,
exploration, development and production of diamond properties in
the West African countries of Sierra Leone, Liberia (nil
expenditure) and Guinea. Information presented to the Chief
Executive Officer for the purposes of resource allocation and
assessment of segment performance is focused on the individual
projects in geographical locations. In the case of the Guinea based
projects, during the period the Guinea based assets were disposed
of and therefore the disposal group has been removed with a final
loss on discontinued operations recognised. The reportable segments
under IFRS 8 are therefore as follows:
-- Kono (Sierra Leone);
-- Tongo (Sierra Leone);
-- Guinea Disposal Group (Guinea);
-- Corporate and other exploration activities.
Following is an analysis of the Group's revenue, results, assets
and liabilities by reportable segment for the six months ended 31
December 2017:
Guinea
disposal Corporate Total
Group Kono Tongo and other
$ $ $ $ $
Revenue - sale
of diamonds - - - - -
--------------- ------------- -------------- ---------------- -----------------
Segment result - (11,148) (86,143) (522,792) (620,083)
--------------- ------------- -------------- ---------------- -----------------
Finance costs - - - - (318,040)
---------------- -----------------
Loss before tax - - - - (938,123)
Income tax expense - - - - -
--------------- ------------- -------------- ---------------- -----------------
Loss after tax - - - - (938,123)
Loss on discontinued
operations (46,805) - - - (46,805)
--------------- ------------- -------------- ---------------- -----------------
Loss after tax
and discontinued
operations (46,805) (11,148) (86,143) (522,792) (984,928)
--------------- ------------- -------------- ---------------- -----------------
Segment assets - 1,847 7,888,927 810,707 8,701,481
Segment liabilities - (5,726) (61,121) (4,387,287) (4,454,134)
Carrying value
of intangible
assets - - 7,792,664 768,858 8,561,522
Net book value
of property, plant
and equipment - 1,677 43,240 10,914 55,831
Capital additions
- intangible assets - - 254,309 723,298 977,607
Depreciation of
property, plant
and equipment - 296 7,627 56 7,979
Following is an analysis of the Group's revenue and results by
reportable segment for the year ended 30 June 2017:
Guinea
disposal Corporate
Group Kono Tongo and other Total
$ $ $ $ $
Revenue - sale
of diamonds - - - - -
---------------- ------------- -------------- ---------------- ----------------
Segment result - (38,943) 19,278* (1,515,018) (1,534,683)
---------------- ------------- -------------- ---------------- ----------------
Finance costs - - - - (730,085)
Remeasurement
of derivatives - - - - 12,504
---------------- ------------- -------------- ---------------- ----------------
Loss before tax - - - - (2,252,264)
Income tax expense - - - - -
---------------- ------------- -------------- ---------------- ----------------
Loss after tax - - - - (2,252,264)
Loss on discontinued
operations (6,928,024) - - - (6,928,024
---------------- ------------- -------------- ---------------- ----------------
Loss after tax
and discontinued
operations (6,928,024) (38,943) 19,278* (1,515,018) (9,108,288)
---------------- ------------- -------------- ---------------- ----------------
Segment assets 920,911 2,146 7,641,649 214,497 8,779,203
Segment liabilities - (5,726) (54,099) (4,252,340) (4,312,165)
Carrying value
of intangible
assets - - 7,538,355 45,560 7,583,915
Net book value
of property,
plant and equipment - 1,973 50,867 10,970 63,810
Assets in Disposal
Groups classified
as held for sale 920,911 - - - 920,911
Capital additions
- intangible
assets 926,161 - 409,597 - 1,335,758
Depreciation
of property,
plant and equipment 405,783 846 46 161 428,501
* The profit shown for Tongo relates entirely to foreign
currency gains recognised on transfers of US Dollars in Sierra
Leonean Leones in the year.
3. Intangible assets
Six months
ended 31 Year ended
December 30 June
2017 2017
$ $
Exploration and evaluation
expenditure
Cost
Opening balance 28,173,421 35,729,205
Additions 977,607 335,759
Transfers to disposal group - (8,891,543)
Closing balance 29,151,028 28,173,421
--------------- ----------------
Impairment
Opening balance 20,589,506 22,589,506
Transfer to disposal group - (2,000,000)
--------------- ----------------
Closing balance 20,598,506 20,589,506
--------------- ----------------
Carrying value 8,561,522 7,583,915
--------------- ----------------
4. Property, plant and equipment
Mining Machinery
assets and equipment Total
$ $ $
Cost
At 1 July 2016 11,079,305 9,593,335 20,692,640
Additions - - -
Disposal - (125,607) (125,607)
Transfer to disposal group (11,079,305) (8,965,065) (20,044,370)
At 30 June 2017 - 502,663 502,663
At 31 December 2017 - 502,663 502,663
Depreciation
At 1 July 2016 11,079,305 8,154,211 19,233,516
Charge for the year - 428,560 428,560
Depreciation on disposals - (113,923) (113,923)
Transfer to disposal group (11,079,305) (8,029,995) (19,109,300)
At 30 June 2017 - 438,853 438,853
Charge for the period - 7,979 7,979
At 31 December 2017 - 446,832 446,832
----------------- ------------------- -----------------
Net book value
At 31 December 2017 - 55,831 55,831
----------------- ------------------- -----------------
At 30 June 2017 - 63,810 63,810
----------------- ------------------- -----------------
5. Convertible loan
Deutsche
Balaton Other
convertible convertible
loan loan Total
Convertible loan: $ $ $
Balance brought forward at 1 July
2017 1,485,978 1,359,125 2,845,103
Interest expense - 154,017 154,017
Effective interest charged in
the period 164,022 - 164,022
Interest paid - (33,238) (33,238)
Repayment of convertible loan - (1,242,183) (1,242,183)
Issue of new convertible loan - 1,342,183 1,342,183
----------------- ------------------ ----------------
Presented as current loans and
borrowings at 31 December 2017 1,650,000 1,579,904 3,229,904
----------------- ------------------ ----------------
Deutsche Balaton convertible loan
On 12 December 2017 the Company and Deutsche Balaton agreed an
extension of the convertible loan note to 31 March 2018 and agreed
no interest would be recognised beyond this date. There was also an
amendment in the definition of "Transaction Default" to being upon
the occurrence of the earlier of the Transaction failing to
complete or upon the Company announcing the termination of the
Transaction on or before 31 March 2018. Additionally it was agreed
that the definition of "Placement Price" be amended to:
a) 5 pence; or
b) the VWAP of the next US$2 million in equity raised; or
c) the VWAP of the first US$10 million in equity raised after 1 February 2017; or
d) the VWAP of equity raisings from the date of this agreement
until at least US$35 million in debt financing has been raised for
the Tongo-Tonguma Project.
Should the transaction fail then the terms would revert to the
original terms of the agreement as disclosed in the financial
statements for the year ended 30 June 2017.
Other convertible loan
On 27 July 2017 the Company repaid in full the $1.24m
convertible loan note disclosed in note 19 and replaced it with a
$1.34m convertible loan note with the same parties, with Steven
Poulton and Creditforce each adding $50,000 to their original loan
amounts. The key terms of the $1.34m convertible loan mirrored the
$1.24m convertible loan with the following changes:
-- Change in the definition of the "Transaction" (or "Potential
Transaction") for the purposes of the $1.34 million CLN to the
completion of the Tribute Mining Agreement with Octea Mining
Limited over the Tonguma kimberlite project in Sierra Leone and the
raising of at least US$35,000,000 in debt or equity finance;
-- Change in the conversion period for the $1.34 million CLN to
the period commencing on the later of i) the earlier of the date on
which the Transaction completes (or the date on which the Company
makes an announcement that the Transaction will not proceed) and
ii) the date of obtaining the necessary shareholder authorisations
which are needed to enable the Company to issue new Ordinary Shares
pursuant to conversion of the CLN and ending on 5 June 2018 (the
Maturity Date);
-- Change in the definition of "Transaction Default" to being
upon the occurrence of the earlier of the Transaction failing to
complete or upon the Company announcing the termination of the
Transaction on or before 31 December 2017;
-- Change in the definition of "Subscription Price" of the CLN
Warrants (as such warrants are defined in the 6 October 2016
announcement) to the lower of: 5 pence or the Transaction Price (as
defined below).
-- The Transaction Price is defined as the lower of:
a) the VWAP of the next US$2 million in equity raised; or
b) the VWAP of the first US$10 million in equity raised after 1
February 2017; or
c) the VWAP of equity raisings from the date of this agreement
until at least US$35 million in debt financing has been raised for
the Tongo-Tonguma Project.
-- Change in the definition of the "Default Subscription Price"
(or "Alternative Subscription Price") (being the conversion price
and subscription price in respect of the $1.24 million CLN and CLN
Warrants respectively in the event of Transaction Default) to the
lower of 70% of: 5 pence or the 3 or 45 day VWAP prior to notice of
exercise of the warrants.
-- Amendment of Subscription Price of the Repayment Warrants (as
such warrants are defined in the announcement dated 6 October 2016)
to 70 percent of the Transaction Price or, in the event that a
Transaction Default has occurred the Default Subscription
Price.
On 12 December 2017 the Company and CLN noteholders of the $1.34
million CLN Noteholders agreed a change in the definition of
"Transaction Default" to being upon the occurrence of the earlier
of the Transaction failing to complete or upon the Company
announcing the termination of the Transaction on or before 30 April
2018.
6. Assets in Disposal Groups classified as held for sale
On the 8 December 2017 the Company completed the sale of its
Guinea assets with total gross proceeds of $1.25 million in order
to focus its efforts on the near term production of the
Tongo-Tonguma mine. In the financial statements for the year ended
30 June 2017 the Droujba, Mandala and Baoulé projects and assets
were classified as a Disposal Group and accounted for accordingly
and these were disposed of during the current period. For the
period ended 31 December 2017 further costs of $46,805 were
incurred in relation to the Guinea assets which are recognised as
discontinued operations.
7. Share options
The share option reserve represents the value of the share
options issued to the Group's Directors and employees under the
Group's share option scheme.
On the 20 December 2017 the Company cancelled all 1,013,000
existing share options over ordinary shares and granted 5,250,000
ordinary shares of GBP0.01 each in aggregate to certain Directors
and employees. The new options have an exercise price of 3.25 pence
per Ordinary Share. The New Options are exercisable for a period of
5 years from the date of grant. One third of the New Options will
vest immediately, one third in six months and one third in twelve
months. The exercise price represents a premium of 30% to the
closing share price of 2.50p per share on 19 December 2017. A share
based payment charge of $24,823 has been recognised during the
period.
The following is a summary of the share options outstanding and
exercisable as at 31 December 2017 and 30 June 2017 and changes
during the period.:
Number WAEP Number WAEP
of GBP of GBP
share GBP share GBP
options Pence options pence
period 2017 year ended 2016
ended 30 June
31 December 2017
2017
Outstanding at beginning
of the period 1,013,000 83.8 1,013,000 83.8
Granted during the
period 5,250,000 3.25 - -
Cancelled during
the period (1,013,000) 83.8 - -
------------------------------- ----------------- ----------- ---------------- -----------
Outstanding at end
of the period 5,250,000 3.25 1,013,000 83.8
Exercisable at end
of the period 1,750,000 3.25 1,013,000 83.8
------------------------------- ----------------- ----------- ---------------- -----------
The expiry date of all share options are 19 December 2022.
8. Post balance sheet events
On 1 February 2018, the Company confirmed it is in advanced
negotiations regarding a possible share offer for the entire issued
and to be issued share capital of the Company by Newfield Resources
Limited. Under the Possible Offer, Stellar shareholders and the
holders of rights over Stellar ordinary shares would receive in
aggregate approximately 95 million shares in Newfield Resources
("Consideration Shares"), expected to equate to approximately 16.4%
of the enlarged share capital of Newfield Resources assuming
completion of the Newfield Resources Financings (as defined below)
and the Possible Offer. Stellar shareholders would receive
approximately 0.76 of a Newfield Resources share for each Stellar
share held ("Possible Offer Ratio").
On 9 February 2018, the Company received an unsecured $3 million
loan from Newfield Resources. The loan will be used for
commencement of work on the Front End Engineering Design stage of
the mine plan for the Tongo-Tonguma project, mine plan drilling,
payment of certain licence fees as reported above and other
creditors and transaction related costs.
9. The Company's unaudited six month results to 31 December 2017
will be available to download from the Company's website at
www.stellar-diamonds.com.
This announcement contains inside information for the purposes
of Article 7 of EU Regulation 596/2014
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR FZLFBVXFLBBZ
(END) Dow Jones Newswires
March 05, 2018 02:00 ET (07:00 GMT)
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