Audited Results for the year ended 31 December 2020
For immediate release
27 September 2021
Serabi Gold plc
(“Serabi” or the “Company”)
Audited Results for the year ended 31
December 2020
Serabi (AIM:SRB, TSX:SBI), the Brazilian focused
gold mining and development company, today releases its audited
results for the year ended 31 December 2020.
Key Financial Information
SUMMARY FINANCIAL STATISTICS FOR THE THREE AND TWELVE
MONTHS ENDING 31 DECEMBER 2020 |
|
12 months to 31 Dec 2020
US$ |
3 months to 31 Dec 2020
US$ |
12 months to 31 Dec 2019 US$ |
3 months to 31 Dec 2019 US$ |
Revenue |
55,830,078 |
11,616,129 |
59,948,092 |
16,008,582 |
Cost of Sales |
(34,165,731) |
(9,237,743) |
(37,203,445) |
(9,541,572) |
Gross Operating Profit |
21,664,347 |
2,378,386 |
22,744,647 |
6,467,010 |
Administration and share based payments |
(6,144,281) |
(1,305,620) |
(5,357,680) |
(1,354,697) |
EBITDA |
15,520,066 |
1,072,766 |
17,386,967 |
5,112,313 |
Depreciation and amortisation charges |
(5,128,895) |
(412,086) |
(9,023,843) |
(2,520,390) |
Operating profit before finance and tax |
10,391,171 |
660,680 |
8,363,124 |
2,591,923 |
|
|
|
|
|
Profit/(loss) after tax |
7,031,025 |
411,758 |
3,832,984 |
983,643 |
Earnings per ordinary share (basic) |
11.92 cents |
(0.70 cents) |
6.51 cents |
1.67 cents |
|
|
|
|
|
Average gold price received |
US$1,727 |
US$1,841 |
US$1,376 |
US$1,475 |
|
|
|
|
|
|
|
|
As at 31 December
2020 |
As at 31 December 2019 |
Cash and cash equivalents |
|
|
6,603,620 |
14,234,612 |
Net assets |
|
|
57,747,524 |
65,598,516 |
|
|
|
|
|
Cash Cost and All-In Sustaining Cost (“AISC”) |
|
|
|
|
|
|
|
12 months to 31 December
2020 |
12 months to 31 December 2019 |
Gold production for cash cost and AISC
purposes |
|
|
31,212 ozs |
40,101 ozs |
|
|
|
|
|
Total Cash Cost of production (per ounce) |
|
|
US$1,075 |
US$832 |
Total AISC of production (per ounce) |
|
|
US$1,374 |
US$1,081 |
Financial Highlights
- Post tax profit of US$7.03 million an increase of 83 per cent
year on year.
- Earnings per share of 11.92 cents compared with 6.51 cents for
2019.
- EBITDA of US$15.52 million (2019: US$17.4 million) reflecting
the US$4.1 million reduction in revenue.
- Net cash generated from operations (after mine development
capital) of US$11.6 million (US$14.0 million).
- Average gold price of US$1,727 received on gold sales in 2020.
(2019: US$1,376)
- Revenue of US$55.8 million (2019: US$60.0 million) due to lower
production in the period, normal fluctuations in the timings of
sales and differentials in the provisional on-site assays and final
independently assessed assays, as further detailed below.
- Cash Cost for the year of US$1,075 per ounce.
- All-In Sustaining Cost for the year of US$1,374 per ounce
Post Year End Highlights
- Completed placing of new Ordinary Shares in March 2021 raising
gross proceeds of UK£12.5 million. Funds have been used to:
- Redeem US$2.0 million of convertible loan notes together with
accrued fees and interest.
- Settle balance of acquisition payment for the Coringa Gold
Project, which as at the date of the placing was US$3.5 million
including accrued interest.
- Part-fund the construction of the Coringa Gold Project which,
when in full production, is expected to increase current group
annual production by approximately 100 per cent. to approximately
80 kozpa. Initial development of the Coringa Mine portal commenced
in July 2021.
- Further regional exploration, including surface and underground
drilling on priority targets during 2021 as part of the Company's
longer term exploration objective of targeting a mineral resource
above 2 million ounces of contained gold in aggregate across all of
the Company's projects.
- Independent geotechnical studies requested by SEMAS as part of
the application for the Installation Licence (“LI”) have been
completed and the reports submitted for review. Management hopes
that the LI can be issued before the end of 2021, allowing plant
and site construction to commence during the early part of
2022.
Update on Investigation into
Unsubstantiated Payments
- On 1 April the Company advised that, during the course of audit
work in Brazil it had become aware of unexplained cash withdrawals
and was commencing further enquiries. Until the conclusion of these
enquiries it was not possible for the Company’s auditors to
conclude their audit procedures.
- The Company retained the services of Deloitte Touche Tohmatsu
Consultores Ltda in Brazil to undertake a forensic review working
alongside, the Company’s lawyers, FFA Legal (“FFA”) and the
Company’s auditors.
- As a result of this review the Company has identified that one
of its senior managers authorised the withdrawal of cash over a
period from January 2015 to March 2021 totalling approximately
US$349,000 at current exchange rates. Deloitte and FFA noted that
the Company’s wholly owned Brazilian subsidiary Serabi Mineração SA
(“SMSA”) did not receive the services documented to have been
provided in respect of these cash withdrawals. The enquiries
undertaken on behalf of the Company did not identify direct
evidence of improper payments occurring within the scope of
licencing and/or payments to obtain benefits in connection with
public agencies.
- Deloitte and FFA have also noted instances of irregularities
relating to expenses reimbursements of approximately US$904,000 and
travel advances of approximately US$510,000 paid to certain
Brazilian based staff.
- A summary of the findings and the conclusions is set out in
Note 3 (Basis of Preparation) of the financial statements that form
part of this news release.
- The review of electronic and physical records and interviews
with other members of staff in Brazil has not indicated any of the
transactions identified by the forensic review having been
undertaken with the knowledge or approval of any other member of
senior management in the UK.
- Management is satisfied that all of the payments identified by
the review process have been accounted for as expenses of the Group
in the year in which they were incurred. Accordingly, and
recognising the materiality of the value of the transactions
recorded in each period, no adjustment to the previously reported
results of the Group has been considered necessary.
- The Company has made a provision of approximately US$400,000 in
respect of additional profits tax that may be due if it is
determined that the identified expenditures were not deductible for
tax purposes.
- The Group has already made certain changes in personnel,
implemented changes in internal controls and is currently
establishing an internal audit function based in Brazil appointed
by and reportingly directly to the Audit Committee.
Clive Line, CFO of Serabi
commented,
The Company
produced a strong set of financial
results for 2020, notwithstanding
the many challenges that had to be
faced over the
year. With the successful completion of a
share placing earlier in March 2021, raising gross proceeds of
approximately UK£12.5
million and with continued good gold
production combined with better
than forecast gold prices and exchange rates, the
Company is now in a very strong
position and debt free.
Operating profit for 2020 (before finance and
tax) of US$10.4 million represents an improvement of 24 per cent
compared to 2019. EBITDA of US$15.52 million, whilst US$1.9 million
lower than 2019, is also pleasing given that revenues were US$4.1
million lower for the year. Considering that gold production for
the year was 22 per cent lower than in 2019, a consequence of the
necessary actions we took to safeguard the workforce during the
second and third quarters on 2020, I feel that this is an
exceptional result.
During the year approximately US$11.6 million of
cash flow was generated by the mining operations (after mine
development capital), which compares with US$14.0 million in the
preceding year. This broadly reflects the reduction in revenue of
approximately US$4.1 million resulting from the lower level of gold
sales in the year.
During the year, the balance sheet was improved
through the repayment of the secured loan with Sprott in the first
six months of 2020, totalling approximately US$7.0 million and
settling US$6.5 million of the final acquisition payment for
Coringa with Equinox Gold. In anticipation of the possibility that
cash flow could be impacted during the year and in particular in
light of the COVID-19 pandemic we did enter into a subscription
agreement for convertible loan notes of up to US$12 million with
Greenstone in April 2020. This was in part to ensure that the Group
was able to meet its obligation to Equinox for Coringa. That we
only needed to draw down US$2 million of the facility and were
otherwise able to meet the monthly payment instalments from cash
flow is very satisfying.
The proceeds of the March 2021 share placing
allowed us to redeem the convertible notes and to settle the final
balance due to Equinox.
Cash costs and All-In-Sustaining Costs have
increased but this is a direct result of the lower levels of
production. At the beginning of 2020 we had recruited additional
personnel in readiness to accelerate development mining rates,
which in turn would have resulted in increased gold production. Had
we been able to match the 40,000 ounces of gold production achieved
in 2019, I estimate that AISC would have been in the region of
US$1,075 per ounce. When looking at our costs on a unit cost per
tonne basis, we have seen a fairly flat profile over the last three
years with annual mining costs ranging between US$120 to US$130 per
tonne, process costs falling from US$39 per tonne in 2018 to US$29
per tonne in 2020 and other site costs declining slightly over the
last three years to approximately US$28 per tonne. The production
shortfall during 2020 was a direct consequence of labour reduction
we had to make at site in the midst of the pandemic. With the
reduced on-site workforce we had to reduce the number of mining
faces significantly and lost optionality within the mining
operation, which in turn negatively impacted grade and therefore
production.
The Company has previously highlighted that
revenue for the fourth quarter would be lower than in preceding
periods as a result of lower levels of gold being sold in the
period, a result of normal fluctuations in the timings of sales and
gold stocks on hand. Subsequent to the period end the Group has
finalised the pricing and the gold and metal content of four
shipments of copper/gold concentrate that were sold during the
third and fourth quarters of 2020. As advised in a news release
issued on 1 April, the final agreed gold assay of the copper/gold
concentrate these sales was lower than the provisional assay
undertaken by the Palito laboratory and as a result the Group
realised, during the first quarter of 2021, a revenue adjustment of
approximately US$970,000. A smaller adjustment of approximately
US$310,000 was realised in connection with the sales that were made
during the fourth quarter where final pricing and agreement on the
gold and metal content was made during the second quarter of 2021.
As these adjustments related to sales undertaken during 2020 this
adjustment has been reflected in the reported revenue for 2020.
Whilst it is normal for there to be variations
between assays generated by the Palito laboratory and other
laboratories these are normally within acceptable statistical
tolerances. The Group has examined the reason for these specific
variances which are of a level that had not been experienced in the
past 6 years of operations. The sampling process when material
arrives at the refinery is attended by a Group appointed
independent observer and the final samples also subject to
independent verification. The copper/gold concentrate is not a
homogenous material, with each consignment being produced over a
four to six week period. This gives rise to the potential for
variances as a result of sampling processes and procedures and the
Group has put in place additional procedures and controls to
minimise the potential for future sampling variations to arise.
Following internal reviews and having eliminated
the possibility of an error at the refinery and focussed on its own
procedures and processes, management has concluded that these
variances and in particular those arising on production and sales
completed during the third quarter of 2020 were the result of human
and equipment error during the early months of the pandemic and a
number of inaccurate high assay readings had elevated the average
grade of the material sold to the refinery Subsequently management
have noted that the deviation in assays between production batches
has reduced giving confidence that the potential for such material
errors to arise in the future has been significantly reduced.
When we look back at 2020, I think all things
considered it was a very satisfying year. The pandemic and
reduction in personnel at the operation did mean a lot of
non-essential activities had to be suspended, one of these was
exploration. In addition, mine development could not continue at
the rates we had budgeted. We simply had to ‘hunker down’ and keep
the rest of the operation running as well as possible. We therefore
consider producing over 75% of our budgeted ounces with what was a
skeleton workforce for over half of the year as a very commendable
result.
The pandemic did not adversely affect the plans
for our development asset, Coringa, and we did make good progress
in advancing the licensing process, with the award of the
all-important Licença Prévia LP in October.
The investigation into the financial
irregularities, whilst taking longer than I had originally hoped,
has been very thorough and has looked back at transactions over a
number of years. All businesses hope that their control processes
are robust enough to prevent such events occurring but as this
instance shows where there has been co-operation and collusion
these events can be difficult to identify. With the assistance of
Deloitte, we will have an Internal Audit function that will report
directly to the Audit Committee and which I expect to prevent any
recurrence of the situation that allowed these irregular
expenditures to occur.
Chairman’s Statement
During 2020 Serabi
was able to navigate successfully through
one of the most challenging periods for mining and many other
sectors of the economy. When we look back at 2020, in the years to
come, I am sure we will realise that overcoming these challenges
made us stronger and better prepared to achieve our future goals
and take advantage of the opportunities that lie in front of
us.
The mining sector has in general been quite
resilient and unlike many business sectors we can be grateful that
a market for our products has continued to be available and
certainly the gold market, as is often the case in times of
uncertainty, reacted strongly over the past year, posting a new
record high of US$2,061 per ounce in August 2020 and ending the
year at US$1,891 per ounce, a 24 per cent increase compared with 31
December 2019 (US$1,523 per ounce).
As we look forward, Serabi is now well
positioned and financed to deliver on its growth plans. Following a
successful placing of new shares completed in March 2021, raising
gross proceeds of approximately £12.5 million, the Company now has
a strong and debt free balance sheet. At the same time, we have
attracted a number of new institutional investors to the share
register, reflecting the Group’s ability to deliver its current
plans and its opportunities for further growth. The initial
development of the Coringa project is now underway in anticipation
of first gold being produced during 2023, whilst simultaneously,
the Company also now has the funding available to continue its
exploration programmes and develop some of the very exciting
resource growth opportunities that exist within its Palito Complex
land tenement.
As was reported during 2020, Serabi’s own
operations were quite significantly impacted by the pandemic and I
am grateful to the efforts of our staff and management who ensured
the Palito Complex continued to operate, uninterrupted throughout.
Rapid action to lockdown the mine site allowed the creation of a
working environment for our personnel who essentially lived and
worked in a safe bubble whilst longer term solutions were developed
and implemented. This approach was not without its hardships and my
thanks go out to all the staff who volunteered to remain at site,
continued working and did not return to their homes for many weeks.
Without their sacrifice and commitment, management would, in all
likelihood, have had to place the operation onto care and
maintenance with all the costs and logistical implications that
this might have entailed.
Having had such an excellent year in 2019,
Serabi’s management were rightly optimistic about the prospects for
2020. A planned public hearing for the Coringa project had been set
to take place in February 2020, potentially opening up the
opportunity to progress the licensing of that project, and the
ore-sorter had been installed and initial commissioning tests
completed putting the Company in a strong position to improve gold
production. Whilst a mill breakdown early in the first quarter was
a minor setback, March 2020 was a record month for production.
However, it was clear during the latter part of March that action
was needed to protect the operations and our staff from the
continued spread of COVID-19 across the globe. Now, more than ever,
was the time to prioritise the safety and preservation of the
welfare and lives of our employees. Personnel numbers at site were
reduced, and contractors released to maximise the ability to
establish social distancing in the workplace and minimise the
possibility of any infection entering the camp. At the same time
capital investment, exploration programmes and all other
non-essential expenditures were temporarily suspended to conserve
cash resources whilst management assessed the longer-term
options.
Whilst Brazil was, for a long time, a centre of
attention for COVID-19, it is now expected that all adults will
have received at least one vaccine dose very soon, and we have
noted only a very few cases of infection within our own staff.
Whilst there remains caution, we now seem to have a path forward
and we expect the lessons learned will help us become a stronger
and more efficient company in the future. The need to simplify the
mining operations in light of the reduced staffing and the lack of
contractors to undertake drilling required for mine planning for
over six months now necessitates a period of catch up with mine
development and opening up additional working faces. This should
re-establish the optionality that has been enjoyed over the past
years, which has been the backbone of our success, and which should
allow the deposits to continue to prosper for many years to come.
Both underground and surface drilling contractors returned to site
during the fourth quarter of 2020, and we now have two underground
rigs operating at each of Palito and São Chico with two surface
drilling rigs also involved in a drill programme for near mine
planning purposes. We also have taken on additional mine crews to
increase the rate of development mining and, in so doing, make up
for the activity lost during 2020.
Whilst the pandemic has limited the
opportunities to interact with the local communities we have
continued to try and provide support through this difficult time.
Our ability to continue to foster and build on our good relations
with the neighbouring communities is important to us and we have
continued to support projects to enhance the lives of the local
populations from drilling new wells for water, providing street
lighting and helping with new sports facilities for the school.
During this third quarter of 2021, we have also been working in
partnership with the City of Itaituba and the public health
department to organise and facilitate vaccination programmes for
the local communities and for our own personnel.
We had harboured high hopes of exploration
success during 2020 and building on the exciting work that had been
completed in the preceding 18 months. Organic growth from the
development of our very promising land holding in the Tapajos is a
key element of our growth aspirations. The Tapajos region remains
one of the great unexplored gold fields of the world and, having
been present in the region for many years, we have a significant
first mover advantage as the only hard-rock gold mining operation
in the area. While the exploration programme was curtailed in 2020,
activity re-started in the fourth quarter of 2020 and have already
reported some very encouraging results from the work completed so
far in 2021 and I hope that we will continue to deliver positive
news during the rest of the year.
The acquisition of the São Domingo tenements, in
the latter part of 2020, provides another excellent opportunity for
identifying further satellite deposits and initial exploration
drilling produced some extremely encouraging results and further
follow up work is planned during the remainder of 2021. Exploration
work has already been undertaken and will continue over several
other key prospects within the Palito Complex tenement and around
São Chico. During the remainder of the year programmes will cover
the Cinderella zone near São Chico, testing of the extensions of
the Palito deposit to the south west where an eight-kilometre trend
has been identified and parts of the large Mata Cobra anomaly that
bisects the Palito Complex tenement holdings and could host lower
grade but bulk mineable mineral opportunities We have set ourselves
a target of identifying a resource of at least two million ounces
in our tenement holdings over the coming years. With the level of
historic artisanal activity in the region, we remain confident that
there are significant undiscovered hard rock resources which
underlie the reported 20 to 30 million ounces of gold that have
been extracted by artisanal miners across the Tapajos region.
The Coringa project remains, in the near term,
the clear production growth opportunity for Serabi. The licencing
process was delayed by the pandemic and, following a supportive
public hearing in February 2020, it was not until the end of
September 2020 that the State Environmental Council of Para
(“COEMA”) was able to meet to consider and approve the award of the
Licença Previa (“Preliminary Licence” or “LP”). The LP represents
the first of a three-stage licencing process required for mining
projects in Brazil. The second stage is the award of an
Installation Licence (“LI”) which allows processing plant and other
infrastructure to be constructed and following completion of the
construction stage, the issue of the full Operating Licence (“LO”)
is the final stage in the licensing process. The LP is generally
considered the most critical stage as it involves input and
approval from a number of interested government agencies as well as
local stakeholders, communities and includes consideration of the
social, environmental and economic impacts and benefits of the
project. We are already well advanced with the submissions required
for the LI and in discussion with lenders and other financing
groups to secure the balance of the funding required to complete
the development of the project.
Coringa will, once in full production, double
the existing production and more importantly, as it is not expected
to add significantly to the fixed cost base, will provide a
reduction in the All-In Sustaining Cost (“AISC”) by spreading these
fixed costs over a larger production base. With Coringa in
production and the benefits of the ore-sorter being realised there
is a clear path to getting very close to annual production of
100,000 ounces of gold over the next couple of years.
The Board sees significant future value in
Serabi and a huge potential to grow its gold mining activities in
Brazil. Serabi has demonstrated a solid track record over the past
years of operating underground vein mines and built an experienced
and skilled operational team. Its unique skills and opportunities
have attracted a group of professional and sophisticated investors
that also understand the opportunity that the Group presents for
the future.
The publication of the Company’s Annual Report
and Accounts for the year ended 31 December 2020 (“2020 Annual
report”), was delayed as a result of the identification and
subsequent enquiries into the nature of unexplained cash
withdrawals made from the Group’s Brazilian subsidiary Serabi
Mineracão SA (“SMSA”). The Company initially engaged its legal
advisers in Brazil (“FFA”) to undertake enquiries into these
transactions and, following the presentation of their initial
findings, subsequently engaged the services of the Forensic
Investigations group of Deloitte Touche Tohmatsu Consultores Ltda
in Brazil (“Deloitte”) The enquiries made by FFA and Deloitte of
the accounting and banking records of SMSA, identified a total of
approximately US$349,000 of cash that had been withdrawn from SMSA
over a period between January 2015 and December 2020. Deloitte have
also completed a review of all other electronic and physical
records including electronic communications and have not identified
any further instances of irregular cash withdrawals. The Company
confirms that all the identified cash withdrawals were recorded
through the accounts of SMSA and expensed in the period in which
they were incurred. The enquiries undertaken on behalf of the
Company did not identify direct evidence of improper payments
occurring within the scope of licencing and/or payments to obtain
benefits in connection with public agencies. However,
notwithstanding that the Board consider that all reasonable and
practicable steps have been taken at this time, based on the
conclusions of the enquiries, the Board is unable to definitively
conclude on the precise nature of the payments made. The enquiries
also identified a number of other potential irregularities relating
to expense claims and travel and other expense advances made to
some Brazilian based members of staff during the same period. It
has been identified that these advances have been expensed through
the Group’s Income Statement in each of the relevant years.
However, analysis indicates that no claims for reimbursement of
expenses were ever submitted for these advances, and it would
appear therefore that, in the absence of documented expense claims,
these advances which over the period from January 2016 to March
2021 totalled approximately US$510,000 remain due to be repaid to
SMSA. In addition, the enquiries identified claims for
reimbursement of expenses submitted by certain members of staff in
Brazil that lacked appropriate and adequate supporting
documentation or were not necessarily of a nature that appeared
business related. The total value of such expenses over the period
1 January 2015 to 31 March 2021 was approximately US$904,000. All
these costs have been expensed through the Group’s Income Statement
in each of the relevant years. In respect of the advances that
remain due to be repaid and the claims for expenses, no direct
evidence has been identified of improper payments occurring within
the scope of licencing and/or payments to obtain benefits in
connection with public agencies. Management have made certain
changes to the Group’s control procedures for the processing of
bank payments, advances to staff and the reimbursement of
out-of-pocket expenses and is working with Deloitte to establish an
internal audit function reporting directly to the Audit Committee
to improve the overall internal control environment.
.
Serabi is committed to developing its Coringa
project and building new opportunities from its exploration ground.
Growth will broaden the Company’s appeal, widen its investor base
and in so doing address the valuation gap that we see compared with
small producers operating elsewhere in the world. However, whilst
we have hopes of identifying opportunities that might be suitable
for open-pit mining, we recognise that in the near-term new
discoveries will generally be high grade vein deposits similar to
Palito, São Chico and Coringa. Whilst Serabi has demonstrated its
credentials in developing underground mining, future production
growth should also present a diversification of technical risk to
broaden investor appeal. For this reason, we continue to see
carefully selected M&A as important for the future of the
Company. With its strong operating credentials and team, Serabi is
well placed to part of any consolidation of the best gold mining
opportunities in Brazil, a situation that the Board and management
of the Company considers would serve the interests of all
stakeholders, through risk diversification, broadening of the
capital base, economies of scale and opening up the financing
opportunities for new developments.
Nicolas Banãdos
Chairman
Serabi’s Directors Report and Financial
Statements for the year ended 31 December 2020 together the
Chairman’s Statement will be available from the Company’s website –
www.serabigold.com and will be posted on SEDAR at
www.sedar.com.
This announcement is inside information
for the purposes of Article 7 of Regulation 596/2014. The person
who arranged the release of this statement on behalf of the Company
was Clive Line, Director.
Enquiries:
Serabi
Gold plc |
|
Michael
Hodgson |
Tel: +44
(0)20 7246 6830 |
Chief
Executive |
Mobile:
+44 (0)7799 473621 |
|
|
Clive
Line |
Tel: +44
(0)20 7246 6830 |
Finance
Director |
Mobile:
+44 (0)7710 151692 |
|
|
Email:
contact@serabigold.com |
|
Website:
www.serabigold.com |
|
|
|
Beaumont
Cornish Limited Nominated Adviser and Financial Adviser |
|
Roland
Cornish / Michael Cornish |
Tel: +44
(0)20 7628 3396 |
|
|
Peel Hunt
LLP Joint UK Broker |
|
Ross
Allister / Alexander Allen |
Tel: +44
(0)20 7418 9000 |
|
|
Tamesis
Partners LLP Joint UK Broker |
|
Charlie
Bendon / Richard Greenfield |
Tel: +44
(0)20 3882 2868 |
|
|
Camarco Financial
PR |
|
Gordon
Poole / Nick Hennis |
Tel:
+44(0) 20 3757 4980 |
Copies of this announcement are available from
the Company's website at www.serabigold.com.
Neither the Toronto Stock Exchange, nor any
other securities regulatory authority, has approved or disapproved
of the contents of this announcement.
The following information, comprising, the
Income Statement, the Group Balance Sheet, Group Statement of
Changes in Shareholders’ Equity, and Group Cash Flow, is extracted
from these financial statements.
Annual Report
The Annual Report has been published by the
Company on its website at www.serabigold.com and printed copies are
expected to be available before 31 October 2021. Additional copies
will be available to the public, free of charge, from the Company's
offices at The Long Barn, Cobham Park Road, Downside, Surrey, KT11
3NE and will be available to download from the Company’s website at
www.serabigold.com.
The data included in the selected annual
information tables below is taken from the Company’s annual audited
financial statements for the year ended 31 December 2020, which
were prepared in accordance with international accounting standards
in conformity with the requirements of the Companies Act 2006. The
Parent Company financial statements have also been prepared in
accordance with those parts of the Companies Act 2006 applicable to
companies reporting under International Financial Reporting
Standards (“IFRS”)..
The audited financial statements for the year
ended 31 December 2020 will be presented to shareholders for
adoption at the next General Meeting of the Company’s shareholders
and filed with the Registrar of Companies.
Statement of Comprehensive
Income
For the year ended 31 December 2020
|
|
Group |
|
|
For the
year ended 31 December 2020 |
For the
year ended 31 December 2019 |
|
Notes |
US$ |
US$ |
|
|
|
|
Revenue |
|
55,830,078 |
59,948,092 |
Cost of
sales |
|
(33,127,648) |
(36,986,923) |
Release of
provision for impairment of inventory |
|
– |
500,000 |
Provision
for impairment of state taxes receivable |
|
(1,038,083) |
(716,522) |
Depreciation and amortisation charges |
|
(5,128,895) |
(9,023,843) |
Total cost of sales |
|
(39,294,626) |
(46,227,288) |
Gross profit |
|
16,535,452 |
13,720,804 |
Administration expenses |
|
(5,856,760) |
(5,262,380) |
Share-based
payments |
|
(533,264) |
(261,940) |
Gain on disposal of fixed assets |
|
245,743 |
166,640 |
Operating profit / (loss) |
|
10,391,171 |
8,363,124 |
Foreign
exchange (loss) / gain |
|
(214,845) |
210,988 |
Finance
expense |
4 |
(1,763,240) |
(2,558,433) |
Finance income |
4 |
74,403 |
175,237 |
Profit / (loss) before taxation |
|
8,487,4894 |
6,190,916 |
Income tax expense |
|
(1,456,464) |
(2,357,932) |
Profit / (loss) for the
period(1) |
|
7,031,025 |
3,832,984 |
|
|
|
|
Other comprehensive income (net of tax) |
|
|
|
Items that may be reclassified subsequently to profit or
loss |
|
|
|
Exchange differences on translating foreign operations |
|
(15,591,140) |
(3,682,836) |
Total comprehensive (loss) / profit for the
period(1) |
|
(8,560,115) |
150,148 |
Profit / (loss) per ordinary share (basic)
(1) |
5 |
11.92c |
6.51c |
Profit / (loss) per ordinary share (diluted)
(1) |
5 |
11.10c |
6.28c |
(1)
The Group has no
non-controlling interests and all profits are attributable to the
equity holders of the parent company.
Balance Sheet as at 31 December
2020
|
|
|
Group |
|
|
|
|
|
Restated |
|
|
|
|
31 December 2020 |
31 December 2019 |
|
|
|
|
US$ |
US$ |
Non-current assets |
|
|
|
|
|
Deferred
exploration costs |
|
|
|
27,778,354 |
29,656,716 |
Property,
plant and equipment |
|
|
|
26,235,551 |
34,492,164 |
Right of use
assets |
|
|
|
2,573,738 |
1,997,176 |
Taxes
receivable |
|
|
|
696,077 |
848,845 |
Deferred taxation |
|
|
|
1,879,158 |
1,321,782 |
Total non-current assets |
|
|
|
59,162,878 |
68,316,683 |
Current assets |
|
|
|
|
|
Inventories |
|
|
|
6,979,438 |
6,577,968 |
Trade and
other receivables |
|
|
|
1,936,044 |
802,275 |
Prepayments |
|
|
|
1,554,991 |
3,473,288 |
Cash and cash equivalents |
|
|
|
6,603,620 |
14,234,612 |
Total current assets |
|
|
|
17,074,093 |
25,088,143 |
Current liabilities |
|
|
|
|
|
Trade and
other payables |
|
|
|
6,846,202 |
6,113,789 |
Interest-bearing liabilities |
|
|
|
8,726,302 |
6,952,542 |
Acquisition
payment outstanding |
|
|
|
– |
12,000,000 |
Derivative
financial liabilities |
|
|
|
390,456 |
– |
Accruals |
|
|
|
292,089 |
319,670 |
Total current liabilities |
|
|
|
16,255,049 |
25,386,001 |
Net current assets |
|
|
|
819,044 |
(297,858) |
Total assets less current liabilities |
|
|
|
59,981,922 |
68,018,825 |
Non-current liabilities |
|
|
|
|
|
Trade and
other payables |
|
|
|
91,916 |
183,043 |
Provisions |
|
|
|
1,467,032 |
2,237,266 |
Deferred Tax
Liability |
|
|
|
324,519 |
– |
Interest-bearing liabilities |
|
|
|
350,931 |
– |
Total non-current liabilities |
|
|
|
2,234,398 |
2,420,309 |
Net assets |
|
|
|
57,747,524 |
65,598,516 |
|
|
|
|
|
|
|
|
|
|
|
|
Equity |
|
|
|
|
|
Share
capital |
|
|
|
8,905,116 |
8,882,803 |
Share
premium reserve |
|
|
|
21,905,976 |
21,752,430 |
Option
reserve |
|
|
|
1,173,044 |
1,019,589 |
Other
reserves |
|
|
|
10,254,048 |
7,149,274 |
Translation
reserve |
|
|
|
(64,004,958) |
(48,413,818) |
Retained surplus |
|
|
|
79,514,298 |
75,208,238 |
Equity shareholders’ funds attributable to owners of the
parent |
|
|
|
57,747,524 |
65,598,516 |
Statements of Changes in Shareholders’
Equity
For the year ended 31 December 2020
Group |
Share
capital |
Share
premium |
Share
option reserve |
Other
reserves |
Restated
Translation reserve |
Retained
surplus |
Total
equity |
|
US$ |
US$ |
US$ |
US$ |
US$ |
US$ |
US$ |
Equity shareholders’ funds at 31 December 2018 (as
previously presented) |
8,882,803 |
21,752,430 |
1,363,367 |
4,763,819 |
(40,807,123) |
73,154,991 |
69,110,287 |
Prior Year Restatement |
– |
– |
– |
– |
(3,923,859) |
– |
(3,923,859) |
Equity shareholders’ funds restated at 31 December
2018 |
8,882,803 |
21,752,430 |
1,363,367 |
4,763,819 |
(44,730,982) |
73,154,991 |
65,186,428 |
Foreign currency adjustments (restated) |
– |
– |
– |
– |
(3,682,836) |
– |
(3,682,836) |
Profit for year |
– |
– |
– |
– |
– |
3,832,984 |
3,832,984 |
Total comprehensive income for the year (restated) |
– |
– |
– |
– |
(3,682,836) |
3,832,984 |
150,148 |
Transfer to
taxation reserve |
– |
– |
– |
2,385,455 |
– |
(2,385,455) |
– |
Share
options lapsed in period |
– |
– |
(605,718) |
– |
– |
605,718 |
– |
Share option expense |
– |
– |
261,940 |
– |
– |
– |
261,940 |
Equity shareholders’ funds at 31 December 2019
(restated) |
8,882,803 |
21,752,430 |
1,019,589 |
7,149,274 |
(48,413,818) |
75,208,238 |
65,598,516 |
Foreign currency adjustments |
– |
– |
– |
– |
(15,591,140) |
– |
(15,591,140) |
Profit for year |
– |
– |
– |
– |
– |
7,031,025 |
7,031,025 |
Total comprehensive income for the year |
– |
– |
– |
– |
(15,591,140) |
7,031,025 |
(8,560,115) |
Shares
issued in period |
22,313 |
153,546 |
– |
– |
– |
– |
175,859 |
Transfer to
taxation reserve |
– |
– |
– |
3,104,774 |
– |
(3,104,774) |
– |
Share
options exercised in period |
– |
– |
(31,752) |
– |
– |
31,752 |
– |
Share
options lapsed in period |
– |
– |
(348,057) |
– |
– |
348,057 |
– |
Share option expense |
– |
– |
533,264 |
– |
– |
– |
533,264 |
Equity shareholders’ funds at 31 December
2020 |
8,905,116 |
21,905,976 |
1,173,044 |
10,254,048 |
(64,004,958) |
79,514,298 |
57,747,524 |
Other reserves comprise a merger reserve of
US$361,461 and a taxation reserve of US$9,892,587 (2019: merger
reserve of US$361,461 and taxation reserve of US$6,787,813)
Cash Flow Statement
For the year ended 31 December 2020
|
|
|
Group |
|
|
|
|
For the year ended 31 December 2020 |
For the year ended 31 December 2019 |
|
|
|
|
US$ |
US$ |
Cash outflows from operating activities |
|
|
|
|
|
Profit /
(loss) for the period |
|
|
|
7,031,025 |
3,832,984 |
Net
financial expense |
|
|
|
1,903,682 |
2,172,208 |
Depreciation
– plant, equipment and mining properties |
|
|
|
5,128,895 |
9,023,843 |
Inventory
impairment expense |
|
|
|
– |
(500,000) |
Taxation
expense |
|
|
|
1,456,464 |
2,357,932 |
Share-based
payments |
|
|
|
587,970 |
261,940 |
Taxation
Paid |
|
|
|
(466,604) |
– |
Interest
paid |
|
|
|
(285,567) |
(596,286) |
Foreign
exchange |
|
|
|
(116,210) |
(431,127) |
|
|
|
|
|
|
Changes in working capital |
|
|
|
|
|
(Increase) /
decrease in inventories |
|
|
|
(1,843,621) |
2,143,212 |
(Increase)
in receivables, prepayments and accrued income |
|
|
|
(770,571) |
(228,496) |
Increase /
(decrease) in payables, accruals and provisions |
|
|
|
1,930,609 |
470,787 |
Increase in short term intercompany payables |
|
|
|
– |
– |
Net cash inflow from operations |
|
|
|
14,556,072 |
18,506,997 |
|
|
|
|
|
|
Investing activities |
|
|
|
|
|
Acquisition
payment for subsidiary |
|
|
|
(6,500,000) |
– |
Acquisition
of other property rights |
|
|
|
(634,594) |
(1,541,457) |
Purchase of
property, plant, equipment, and projects in construction |
|
|
|
(2,545,575) |
(3,073,334) |
Mine
development expenditure |
|
|
|
(2,952,943) |
(4,478,420) |
Geological
exploration expenditure |
|
|
|
(2,425,440) |
(2,249,338) |
Pre-operational project costs |
|
|
|
(1,330,469) |
(1,634,647) |
Proceeds
from sale of assets |
|
|
|
627,447 |
240,524 |
Investment
in subsidiaries |
|
|
|
– |
– |
Loans to
subsidiaries |
|
|
|
– |
– |
Interest received and other finance income |
|
|
|
911 |
2,325 |
Net cash outflow on investing activities |
|
|
|
(15,760,663) |
(12,734,347) |
|
|
|
|
|
|
Financing activities |
|
|
|
|
|
Convertible
loan note receipts |
|
|
|
2,000,000 |
– |
Repayment of
short term secured loan |
|
|
|
(6,983,492) |
(285,135) |
Payment of
lease liabilities |
|
|
|
(397,490) |
(340,196) |
Net cash outflow from financing activities |
|
|
|
(5,380,982) |
(625,331) |
|
|
|
|
|
|
Net
(decrease) / increase in cash and cash equivalents |
|
|
|
(6,585,573) |
5,147,319 |
Cash
and cash equivalents at beginning of period |
|
|
|
14,234,612 |
9,216,048 |
Exchange difference on cash |
|
|
|
(1,045,419) |
(128,755) |
Cash and cash equivalents at end of period |
|
|
|
6,603,620 |
14,234,612 |
Notes
1. General
Information
The financial information set out above for the
years ended 31 December 2020 and 31 December 2019 does not
constitute statutory accounts as defined in Section 434 of the
Companies Act 2006 but is derived from those accounts. Whilst the
financial information included in this announcement has been
compiled in accordance with International Financial Reporting
Standards (“IFRS”) this announcement itself does not contain
sufficient financial information to comply with IFRS. A copy of the
statutory accounts for 2019 has been delivered to the Registrar of
Companies and those for 2020 will be delivered to the Registrar of
Companies following approval by shareholders at the Annual General
Meeting. The full audited financial statements for the years end 31
December 2020 and 31 December 2019 comply with IFRS.
As described in the Chairman’s statement, an
investigation into certain unsubstantiated cash withdrawals
totalling approximately US$340,000 and irregularities relating to
the payment of travel advances and expense claims totalling
approximately US$1,414,000 was commissioned by the Board and by the
Audit Committee and is now complete. Based on the findings of this
report, the Board has concluded that whilst there was a breakdown
in the group’s internal control in relation to the authorisation of
certain banking transactions and the payment and approval for
travel advances and reimbursement of expenses the Board and Audit
Committee have not been able to conclude on the nature of the
payments made, and the extent to which these were valid payments
for services provided or expenditures incurred on behalf of the
business.. The Board has introduced a number of measures to
strengthen the Company’s internal control systems and this work is
underway.
2. Auditor’s
Opinion
The auditor has issued an unqualified opinion in
respect of the financial statements for both 2020 and 2019 which do
not contain any statements under the Companies Act 2006, Section
498(2) or Section 498(3). The auditor’s opinion in respect of the
financial statements for 2020, does however contain an emphasis of
matter regarding unsubstantiated payments and other transaction
identified to have occurred between 2015 and March 2021 as detailed
in the note regarding the Basis of Preparation set out below.
It is however emphasised that the auditor’s
opinion is not qualified in respect of this emphasis of matter.
3. Basis of
Preparation
The financial statements have been prepared in
accordance with international accounting standards in conformity
with the requirements of the Companies Act 2006. The Parent Company
financial statements have also been prepared in accordance with
those parts of the Companies Act 2006 applicable to companies
reporting under International Financial Reporting Standards
(“IFRS”).
Accounting standards, amendments and
interpretations effective in 2020
The Group has not adopted any standards or
interpretations in advance of the required implementation
dates.
The following new standards, amendments or
interpretations applicable to periods beginning on or after 1
January 2020 were each effective as of 1 January 2020:
Amendments to References to the Conceptual
Framework in IFRS Standards
Definition of a Business (Amendments to IFRS
3)
Definition of Material (Amendments to IAS 1 and
IAS 8)
Interest Rate Benchmark Reform (Amendments to IFRS
9, IAS 39 and IFRS 7)
The adoption of these standards has had no effect
on the financial results of the Group.
There are a number of standards, amendments to
standards, and interpretations which have been issued that are
effective in future periods and which the Group has chosen not to
adopt early. None of these are expected to have a significant
effect on the Group, in particular
|
Effective
Date |
Covid
19-Related rent Concession (Amendment to IFRS 16) |
1 June
2020 |
Amendments
to IFRS 9, IAS 39,IFRS 7, IFRS 4 and IFRS 16 Interest Rate
benchmark Reform – Phase 2 |
1 January
2021 |
Property,
Plant and Equipment – Proceeds before Intended Use (amendments to
IAS 16) |
1 January
2022 |
Onerous
Contracts- Cost of Fulfilling a Contract (Amendments to IAS
37) |
1 January
2022 |
Annual
Improvements to IFRS Standards 2018-2020 |
1 January
2022 |
Reference to
Conceptual Framework (Amendments to IFRS 3) |
1 January
2022 |
IFRS 17
Insurance Contracts, including Amendments to IFRS 17 |
1 January
2023 |
Classification of Liabilities as Current or Non-current (Amendments
to IAS 1) and Classification of Liabilities as Current or
Non-current – Deferral of Effective Date |
1 January
2023 |
Investigation into Unsubstantiated
Payments
As described in the Chairman’s statement, an
investigation, into certain unsubstantiated cash withdrawals
totalling approximately US$349,000 and irregularities relating to
the payment of travel advances totalling US$510,000 and expense
claims totalling approximately US$904,000, was commissioned by the
Board and by the Audit Committee and is now complete. The Company
initially engaged its legal advisers in Brazil (“FFA”) to undertake
enquiries into these transactions and following the presentation of
their initial findings subsequently engaged the services of the
Forensic Investigations group of Deloitte Touche Tohmatsu
Consultores Ltda in Brazil (“Deloitte”). Deloitte were retained to
review, analyse and substantiate the initial findings of FFA and
also to conduct a more comprehensive investigation to identify any
other potential matters that may not have been identified in the
initial review by FFA. Based on the findings of these enquiries,
the Board has concluded that there was a breakdown in the group’s
internal control in relation to the authorisation of certain
banking transactions and the payment and approval for travel
advances and reimbursement of expenses. However, notwithstanding
that the Board consider that all reasonable and practicable steps
have been taken at this time, based on the conclusions of the
enquiries, the Board is unable to definitively conclude on the
precise nature of the payments made, and the extent to which these
were valid payments for services provided or expenditures incurred
on behalf of the business. The Board has introduced a number of
measures to strengthen the Company’s internal control systems and
this work is underway.
Cash withdrawals
All the identified cash withdrawals were
recorded through the accounts of SMSA and expensed in the period in
which they were incurred, and the enquiries concluded that no
direct evidence of improper payments occurring within the scope of
licencing and/or payments to obtain benefits in connection with
public agencies had been identified. However, notwithstanding that
the Board considers all reasonable and practicable steps have been
taken, at this time it has not been possible to definitively
conclude on the precise nature of the purpose to which the cash was
ultimately used and it remains possible that the ultimate
beneficiaries of these funds were not necessarily employees of
SMSA. Certain of the cash payments were supported by invoices for
services provided. It cannot be established with certainty that
those services were rendered, that if services were rendered the
service actually provided reflects the value of the consideration
made or that the ultimate recipient of the payment was the service
provider named on the invoice.
Irregularities regarding expense claims and
advances
The enquiries also identified a number of other
potential irregularities relating to expense claims and travel and
other expense advances made to some Brazilian based members of
staff during the same period. It has been identified that these
advances have been expensed through the Group’s Income Statement in
each of the relevant years. However, analysis indicates that no
claims for reimbursement of expenses were ever submitted for these
advances, and it would appear therefore that, in the absence of
documented expense claims, these advances which over the period
from January 2015 to March 2021 totalled approximately US$510,000,
remain due to be repaid to SMSA.
In addition, the enquiries identified claims for
reimbursement of expenses submitted by certain members of staff in
Brazil that lacked appropriate and adequate supporting
documentation or were not necessarily of a nature that appeared
business related. The total value of such expenses over the period
January 2015 to March 2021 was approximately US$904,000. All these
costs have been expensed through the Group’s Income Statement in
each of the relevant years.
In respect of the advances that remain due to be
repaid and the claims for expenses, no direct evidence has been
identified of improper payments occurring within the scope of
licencing and/or payments to obtain benefits in connection with
public agencies. However, in both situations, whilst the payments
were made by electronic bank transfer to the bank accounts of the
appropriate employee and notwithstanding that the Board considers
all reasonable and practicable steps have been taken, it has not
been possible to establish with certainty that the funds paid were
retained, in whole or in part, by these employees.
Other matters of relevance
The enquiries also identified certain isolated
transactions which are considered relevant in the context of the
work. These were
- a contract for BrR$104,000 (approximately US$20,000) with a
former public official to provide consulting services from January
2018 to December 2018. It has not been identified that the
individual held any public office during this period.
- payments totalling BrR$175,510 (approximately US$34,000) made
between November 2015 and December 2016 to an individual providing
consultancy services to SMSA that were not in accordance with the
contractual terms for this individual. The individual provided
services to the Company from 2008 until his contract was terminated
in July 2021.
- A payment of BrR$250,000 (approximately US$49,000) for the
supply of diesel fuel. The diesel fuel was never received, and the
funds were returned to SMSA. It was identified that the owner of
the Company who was supposed to supply the diesel fuel was related
to an employee of SMSA.
- A payment of BrR$151,500 (approximately US$29,000) under a
contract signed with SMSA in March, 2021 for environmental services
to be provided over a period to December 2021. The contract has
been terminated by SMSA for non-performance. A senior officer of
the service provider held positions of public office between 2011
and 2019.
In respect of these transactions no direct
evidence has been identified of improper payments occurring within
the scope of licencing and/or payments to obtain benefits in
connection with public agencies.
Summary of findings by year (1)
|
2015 USD |
2016 USD |
2017 USD |
2018 USD |
2019 USD |
2020 USD |
2021 USD |
Total USD |
Cash Withdrawals |
58,000 |
60,000 |
47,000 |
- |
97,000 |
87,000 |
- |
349,000 |
Travel advances and expense claims |
125,000 |
163,000 |
183,000 |
223,000 |
267,000 |
337,000 |
116,000 |
1,414,000 |
Other Matters |
- |
34,000 |
- |
20,000 |
- |
- |
29,000 |
83,000 |
(1) A fixed exchange rate of BRL5.15 to
US$1.00 has been used to calculate the approximate USD equivalent
values at an approximate current exchange rate.
The Company has explored and intends to pursue
appropriate legal remedies in respect of any funds that are
considered to have been misappropriated.
Going concern and availability of
finance
On 2 March 2021, the Group announced that it had
concluded a placing of new shares raising gross proceeds of £12.5
million. The shares were issued and admitted to trading on AIM and
listed on the TSX on 9 March 2021.
Following completion of the placing, the Group
settled the remaining deferred consideration due to Equinox for the
acquisition of Coringa amounting to US$2.5 million plus accrued
interest of US$1.09 million. The Group also redeemed US$2.0 million
of convertible loan stock held by Greenstone together with interest
and other agreed fees totalling US$533,560. Following the
settlement of these liabilities, the Group has no long-term
borrowings or debt, and all security interests held by Equinox and
Greenstone have been released.
The Group is using some of the proceeds from the
balance of the funds raised through the placing of new shares to
start the development of the mine at Coringa during 2021 and also
to fund the Group’s exploration programme for 2021.
The Group expects that it will use a combination
of debt finance and cash flow from its existing operations to meet
the further development costs of Coringa until that project reaches
a position of sustained positive cash-flow. The preliminary
economic assessment issued by the Group in October 2019, estimated
an initial capital requirement of US$24.7 million prior to
sustained positive cash-flow. Management estimates that first gold
production could occur 18 months after the commencement of initial
mine development.
The incidence of COVID-19 in Brazil remains
high, but management considers that, whilst this creates some
uncertainty, the actions and procedures that have been implemented
by the Group and its history over the past 12 months of dealing
with the effects of the pandemic, are minimising the potential for
any significant and extended effect on the business and its
operations. Management and the Board will continue to assess any
further actions that may be necessary, but at this time, based on
the information currently available and experiences to date,
consider that the measures currently in place will permit the Group
to maintain operations at forecast rates of production.
The Group did not claim or receive any COVID-19
related grants or other funding from any government or other
sources, during 2020 and has no expectation of receiving any such
financial support in the future.
The Directors have prepared an operational plan
and cash flow forecast covering a period of more than 12 months
from the date of the signing of these Financial Statements which
takes account of the current environment in Brazil. The Group’s
forecasts were prepared using a base gold price assumption of
US$1,700 per ounce and an exchange rate of BRL5:00 to US$1:00.
Based on this forecast which assumes levels of gold production and
exploration and development plans in accordance with market
guidance and taking into account the proceeds of the share placing
completed on 2 March 2021, the settlement of the remaining Deferred
Consideration, and the redemption of all of the Convertible Loan
Notes in issue, the Directors consider that the Group will have
sufficient cash flows to meet its financial obligations as they
fall due. Should it be required the Board could also reduce the
planned level of exploration expenditure or reduce the planned rate
of expenditure on the development of Coringa to reduce cash
outflows.
The Directors are confident as at the date of
this report of being able to raise the necessary debt funding for
the continued development of Coringa, as and when necessary. Whilst
the Group’s operations are performing at the levels that they
anticipate, the Directors acknowledge that the Group remains a
small-scale gold producer and any unplanned interruption or
reduction in gold production, unforeseen reduction of the gold
price or appreciation of the Brazilian Real could adversely affect
the level of free cash flow that the Group can generate on a
monthly basis. The Group maintains stocks of spare parts, and the
modular nature of the plant should permit gold production to
continue in the event of breakdowns. The Group constantly monitors
gold price and exchange rate and will use hedging facilities to
protect its cash flow where appropriate.
On this basis, the Directors have therefore
concluded that it is appropriate to prepare the financial
statements on a going concern basis.
4. Finance
expense and income
|
Group |
|
For the |
For the |
|
year ended |
year ended |
|
31 December 2020 |
31 December2019 |
|
US$ |
US$ |
Interest expense on secured loan |
(203,127) |
(646,516) |
Interest
expense on convertible loan |
(152,943) |
– |
Interest
expense on mineral property acquisition liability |
(1,035,904) |
– |
Unwinding of
discount on rehabilitation provision |
(141,466) |
– |
Amortisation
of arrangement fee for convertible loan |
(150,000) |
– |
Recognition
of variation in effective interest rate of secured loan |
(79,800) |
– |
Expense in
respect of non-substantial modification |
– |
(93,112) |
Unwinding of
discount on rehabilitation provision |
– |
(284,652) |
Loss upon
revaluation of derivative |
– |
(531,910) |
Unwinding of
discount on mineral property acquisition liability |
– |
(1,002,243) |
Interest payable |
(1,763,240) |
(2,558,433) |
Gain on revaluation of derivative |
33,023 |
– |
Gain in
respect of non-substantial modification |
40,469 |
172,912 |
Finance income on short term deposits |
911 |
2,325 |
Finance income |
74,403 |
175,237 |
Net finance expense |
(1,688,837) |
(2,383,196) |
5. Earnings
per Share
|
|
For the year ended 31 December 2020 |
For the year ended 31 December 2019 |
Profit / (loss) attributable to ordinary shareholders (US$) |
7,031,025 |
3,832,984 |
Weighted average ordinary shares in issue |
58,981,340 |
58,909,551 |
Basic profit / (loss) per share (US cents) |
11.92 |
6.51 |
Diluted ordinary shares in issue |
63,362,744(1) |
60,997,138(2) |
Diluted profit / (loss) per share (US cents) |
11.10 |
6.28 |
(1) Based on 2,345,088 options vested and
exercisable as at 31 December 2020 and 2,036,316 shares that could
be issued pursuant to any exercise of conversion rights attaching
to the Convertible Loan Notes as at 31 December 2020.
(2) Based on 2,087,587 options vested and
exercisable as at 31 December 2019
On 2 March 2020, the Group announced the
successful placing of 16.65 million new Ordinary Shares. These new
Ordinary Shares were issued and admitted to trading on AIM and
listed for trading on the TSX on 9 March 2020. Had these shares
been in issue prior to or on 31 December 2020 the basic and diluted
profit per share would have been affected accordingly.
6. Post
balance sheet events
On 2 March 2021, the Group announced that it had
concluded a placing of 16,650,000 new Ordinary Shares raising gross
proceeds of £12.5 million. The shares were issued and admitted to
trading on AIM and listed on the TSX on 9 March 2021. The shares
were placed with new and existing investors at a Placing Price of
£0.75 (C$1.32) per new Ordinary Share. Concurrently, the Group also
undertook a conditional placing of Warrants with investors
subscribing for a total of 4,003,527 Warrants at a price of £0.06
(C$0.11) per Warrant to raise gross proceeds of US$0.3 million
(£0.2 million / C$0.4 million), subject amongst other things to
shareholder approval which was received at a general meeting held
on 27 April 2021. The Warrants have an exercise price of £0.9375
(C$1.65) per new Ordinary Share and are exercisable for two years
from their date of issue. Greenstone Resources II LP
(“Greenstone”), a related party, subscribed for 4,195,424 new
Ordinary Shares and 2,097,711 Warrants.
On 19 March 2021, the Group redeemed all of the
Convertible Loan Notes in issue together with accrued interest and
other fees due. All the Loan Notes were held by Greenstone.
Except as set out above, there has been no item,
transaction or event of a material or unusual nature likely, in the
opinion of the Directors of the Company, to affect significantly
the continuing operation of the entity, the results of these
operations, or the state of affairs of the entity in future
financial periods.
Qualified Persons Statement
The scientific and technical information
contained within this announcement has been reviewed and approved
by Michael Hodgson, a Director of the Company. Mr Hodgson is an
Economic Geologist by training with over 30 years' experience in
the mining industry. He holds a BSc (Hons) Geology, University of
London, a MSc Mining Geology, University of Leicester and is a
Fellow of the Institute of Materials, Minerals and Mining and a
Chartered Engineer of the Engineering Council of UK, recognising
him as both a Qualified Person for the purposes of Canadian
National Instrument 43-101 and by the AIM Guidance Note on Mining
and Oil & Gas Companies dated June 2009.
Forward Looking Statements
Certain statements in this announcement are, or
may be deemed to be, forward looking statements. Forward looking
statements are identified by their use of terms and phrases such as
‘‘believe’’, ‘‘could’’, “should” ‘‘envisage’’, ‘‘estimate’’,
‘‘intend’’, ‘‘may’’, ‘‘plan’’, ‘‘will’’ or the negative of those,
variations or comparable expressions, including references to
assumptions. These forward looking statements are not based on
historical facts but rather on the Directors’ current expectations
and assumptions regarding the Company’s future growth, results of
operations, performance, future capital and other expenditures
(including the amount, nature and sources of funding thereof),
competitive advantages, business prospects and opportunities. Such
forward looking statements reflect the Directors’ current beliefs
and assumptions and are based on information currently available to
the Directors. A number of factors could cause actual results to
differ materially from the results discussed in the forward looking
statements including risks associated with vulnerability to general
economic and business conditions, competition, environmental and
other regulatory changes, actions by governmental authorities, the
availability of capital markets, reliance on key personnel,
uninsured and underinsured losses and other factors, many of which
are beyond the control of the Company. Although any forward looking
statements contained in this announcement are based upon what the
Directors believe to be reasonable assumptions, the Company cannot
assure investors that actual results will be consistent with such
forward looking statements.
ENDS
- Press Release - Annual Results 2020
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