TIDMTSG
RNS Number : 8752M
Trans-Siberian Gold PLC
19 September 2019
19 September 2019
Trans-Siberian Gold plc
("TSG" or the "Company")
Interim Results for the six months ended 30 June 2019
Trans-Siberian Gold plc (TSG.LN), a low cost, high grade gold
producer in Russia, announces its unaudited interim results for the
period ended 30 June 2019.
Financial Highlights
-- Record H1 revenue generation of $30 million, up 8.7% YoY (H1 2018: $27.6 million)
-- Profit before tax $8.5 million, up 169.7% YoY (H1 2018: $3.2 million)
-- EBITDA $14.4 million, up 62.2% YoY (H1 2018: $8.9 million)
-- $5.6 million special interim dividend of $0.051 per share
declared and paid during the period
-- Completed 20.8% share buyback, increasing free float to 24.3%
-- Interim dividend of $2.0 million resulting in payment of
$0.023 per share (H1 2018: $0.009 per share)
Operational Highlights
-- Gold dore production increased to 21,889 oz, up 26.1% YoY (H1 2018: 17,361 oz.)
-- Refined gold production increased to 23,155 oz, up 11.9% YoY (H1 2018: 20,698 oz.)
-- Average gold grades 38.7% higher YoY at 8.6g/t (H1 2018: 6.2g/t)
-- Average selling price for gold remains flat at $1,312/oz. (H1 2018: $1,324/oz.)
-- Reduced Total Cash Cost per oz. gold by 24.6% to $672/oz (H1 2018: $891/oz)
-- Reduced AISC per oz. gold by 38.0% to $850/oz (H1 2018: $1,370/oz.)
-- Enhanced asset base with acquisition of development and
exploration licence for Rodnikova deposit
-- Strengthened Senior Management with appointments of new Chief
Financial Officer and Mine Manager
-- On track to achieve annual production guidance of 40,000 - 44,000 oz.
Alexander Dorogov, CEO of TSG, commented:
"We are proud to once again report record revenues of $30
million for the first six months of the year, reflecting superior
operational performance.
We have seen some exciting accomplishments over the period,
including the addition of two highly experienced individuals to our
Senior Management team, the acquisition of the licence for the
high-calibre Rodnikova deposit, one of the largest gold fields in
South Kamchatka, and the completion of a $7.6 million share
buyback.
I would also like to highlight that we are now mining at
consistently higher grades (averaging 8.6g/t) and look to drive
further the initiatives for improvements in our operational
efficiency.
With the issuance of our seventh consecutive dividend, I am very
pleased to be confirming our commitment to continued shareholder
returns, and we look forward to the remainder of the year with
optimism."
S
Contacts:
TSG
Stewart Dickson +44 (0) 7799 694195
Arden Partners plc
Paul Shackleton (Corporate Finance)
Tim Dainton / Fraser Marshall (Equity Sales) +44 (0) 207 894 7000
Hudson Sandler (Financial PR)
Charlie Jack / Katerina Parker / Elfreda
Kent +44 (0) 207 796 4133
About TSG
TSG is focused on low cost, high grade mining operations and
stable gold production from its 100% owned Asacha Gold Mine in Far
East Russia. The Company also holds the licence for the development
and exploration of the Rodnikova deposit, one of the largest gold
fields in South Kamchatka.
Additional information is available from the Company's website:
www.trans-siberiangold.com
Market Abuse Regulations
The information contained within this announcement is deemed by
the Company to constitute inside information as stipulated under
the Market Abuse Regulations (EU) No. 596/2014 ('MAR'). Upon the
publication of this announcement via Regulatory Information Service
('RIS'), this inside information is now considered to be in the
public domain.
Abbreviations
AISC All-In Sustaining Costs
g/t grammes per tonne
oz ounce
m metre
Disclaimer
This announcement contains "forward-looking statements" - that
is, statements related to future, not past, events. In this
context, forward-looking statements often address our expected
future business and financial performance, and often contain words
such as "expects," "anticipates," "intends," "plans," "believes,"
"seeks," "should" or "will." Forward-looking statements by their
nature address matters that are, to different degrees, uncertain.
For us, uncertainties arise from the behaviour of financial and
metals markets, fluctuations in interest and/or exchange rates and
metal prices; and from numerous other matters of national, regional
and global scale, including those of a political, economic,
business, competitive or regulatory nature. These uncertainties may
cause our actual future results to be materially different that
those expressed in our forward-looking statements.
Chief Executive Officer's Review
Operational Review
In the six months to 30 June 2019, the Asacha Gold Mine produced
23,155 oz. (H1 2018: 20,698 oz.) of refined gold and 63,577 oz. (H1
2018: 46,152 oz.) of refined silver. Our total cash cost of
$672/oz. (H1 2018: $891/oz.), is competitive amongst our industry
peers globally.
The average realised gold price remained flat at $1,312/oz.,
compared to $1,324/oz. in H1 2018. Post-period, as the gold price
has appreciated significantly, realised gold prices have also moved
higher. Production of gold in dore increased by 26.1% to 21,889 oz.
(H1 2018: 17,361 oz.), silver in dore increased by 42% to 59,787
oz. (H1 2018: 42,118 oz.).
The average processed ore gold grade was 8.6 g/t, representing a
substantial 38.7% increase above the H1 2018 average of 6.2 g/t.
This is a significant improvement period-on-period. We remain
committed to consistently increasing the average gold grade to
realise the full potential of our very high-calibre orebody. In H1
2019, stoping ore accounted for 77% of the total ore volume
delivered to the plant (H1 2018: 54%).
During the period we performed 3 weeks planned maintenance of
the mill and other plant equipment which was done on schedule and
on budget. This period of planned downtime has now been completed
and was absorbed with very little impact. Different types of mill
liners and grinding media are being tested in 2019 in order to
reduce scheduled mill downtime.
In the first quarter of 2019 primary efforts were focused on
completion of construction of a permanent pumping station at level
100m. The construction works were completed in May 2019. In the
interim, mobile pumps and a temporary pumping station at level 150m
were used to reduce the impact of the water ingress.
The Asacha plant processed 81,804 tonnes and achieved 95.3%
average gold recovery (H1 2018: 94.4%). We continue to blend higher
grade stoping ore with lower grade stockpiled ore to ensure our
processing capacity is fully utilized.
The Company's total gold production guidance range of 40,000 -
44,000 oz. for 2019 remains unchanged (2018: 42,128 oz). The upper
end of the range represents a year-on-year increase of
approximately 4.5% in total gold production.
Mining and production data for H1 2019 at the Asacha Gold Mine
is shown in the following table:
H1 H1 Year on year
Metric 2019 2018 % Change
---------------------- ------ ------ --------------
Mine development, m 3,884 2,802 38.6%
------ ------ --------------
Ore extracted, tonnes 73,857 95,518 -22.7%
------ ------ --------------
Ore processed, tonnes 81,804 92,217 -11.3%
------ ------ --------------
Grade, gold, g/t 8.6 6.2 38.7%
------ ------ --------------
Grade, silver, g/t 27.1 19.0 42.6%
------ ------ --------------
Recovery, gold, % 95.3 94.4 1.0%
------ ------ --------------
Recovery, silver, % 82.3 76.4 7.7%
------ ------ --------------
Gold in dore (oz.) 21,889 17,361 26.1%
------ ------ --------------
Silver in dore (oz.) 59,787 42,118 42.0%
------ ------ --------------
Gold refined (oz.) 23,155 20,698 11.9%
------ ------ --------------
Silver refined (oz.) 63,557 46,152 37.7%
------ ------ --------------
Gold sold (oz.) 22,062 20,472 7.8%
------ ------ --------------
Silver sold (oz.) 69,266 30,790 125.0%
------ ------ --------------
Gold price, $/oz. 1,312 1,324 -0.9%
---------------------- ------ ------ --------------
Silver price, $/oz. 15.1 16.9 -10.7%
---------------------- ------ ------ --------------
Rodnikova deposit
On 23 April 2019, the Russian Federal Agency for Subsoil Use
("Rosnedra") issued a 20-year licence to TSG's subsidiary ZAO
Trevozhnoye Zarevo ("TZ") for the development and exploration of
the Rodnikova deposit for a consideration of $3 million. Rodnikova,
which is located just 50 km from the Group's flagship Asacha Gold
Mine, is estimated under GKZ classification to contain
approximately 1Moz. of gold with an average grade of 5.3g/t. An
updated JORC compliant mineral resource estimate is underway and is
expected to be published by the end of year. Concurrently, the
Group is devising its exploration field work programme to assess
the full potential of the Rodnikova deposit and options to
potentially initiate early stage production.
Taking into consideration the fact that the Asacha and Rodnikova
deposits are believed to have similar geology, mineralogy and
metallurgy, the Company will determine the suitability of utilising
the existing processing techniques and plant at Asacha for the ore
at Rodnikova.
Employees and Safety
The safety and wellbeing of all our employees remains first
priority for the Board, and we continue to take all possible steps
to ensure that the highest standards of safety remain in place at
our operations.
At 30 June 2019 TZ employed 687 staff in Kamchatka (31 December
2018: 702).
The Group holds an approach of continuous improvement to advance
health and safety standards at our operations.
During H1 2019 six minor lost-time incidents were reported. We
continue to target a zero-injury rate.
Environment and Sustainability
In August 2019, we took steps to improve our transparency by
publishing a report on our website, providing full disclosure on
the management of our tailings storage facilities ('TSF'). This
report was published in response to a request from the Church of
England Pensions Board and Swedish Council on Ethics for the AP
Funds, backed by the UN-supported Principles for Responsible
Investment (PRI) and on behalf of 96 investors in the mining
sector. To date, there have not been any tailings-related safety or
environmental incidents at the Asacha Gold Mine.
We remain fully committed to improving our transparency and
providing our stakeholders with full disclosure and support the
movement towards greater transparency within the metals and mining
sector.
Financial Performance
H1 2019 generated record revenue of approximately $30 million
(H1 2018: $27.6 million) and a profit before tax of $8.5 million
(H1 2018: $3.2 million). We will continue to seek further
efficiencies to reduce our key cost metrics and thereby improve our
overall financial performance wherever practicable.
Interim Dividend
In line with our commitment to make attractive and sustainable
dividend pay-outs to shareholders, the Company is pleased to report
that the Board has declared an interim 2019 dividend of 2.3 US
cents per share equal to approximately $2.0 million (H1 2018: $1.0
million).
Board & Senior Management
Eugene Antonov, who was appointed Chief Operating Officer of TSG
in a non-Board capacity on 1 August 2018, was promoted to the Board
on 31 May 2019, strengthening the depth of the Company's Board,
which now comprises two executive and five non-executive directors,
two of whom are considered independent.
On 17 June 2019, the Company appointed a new Mine Manager at the
Asacha Mine, Evgeny Volkov. Mr Volkov has over 20 years of
experience working in the mining industry, most recently as Mine
Director at Nordgold's Zun-Khloba mine in Republic of Buryatiya,
where he was responsible for developing and implementing the
underground mining strategy, geotechnical control and mine
production, people management and budget planning, amongst others.
Prior to that, Mr Volkov spent eighteen years working at the iron
ore subsidiary of Evraz, lately as Chief Engineer and Technical
Director.
On 12 July 2019, the Company was also pleased to announce, post
period, the appointment of Sergey Kryazhevskih as Chief Financial
Officer, a non-Board position. Mr Kryazhevskih has over fifteen
years of experience in the mining industry, most recently serving
as Chief Financial Officer of JSC Pavlik, a Russian top 10 gold
producer operating in Russia's Far East. During his tenure at
Pavlik, the company successfully restructured its financial
obligations in the amount of US$ 750 million. Sergey has also held
senior positions at Atomredmetzoloto and Evraz, where he was
responsible for leading budgeting, investment planning and
financial control.
TSG considers these leadership appointments to be key to driving
further operational efficiencies and improvements within the
Company.
Outlook and priorities
The Company's strategy is to become a premier mid-tier gold
producer and developer, a goal we aim to achieve through enhancing
our existing operations, utilising our stable platform for future
growth opportunities and pursuing selective accretive M&A
opportunities to support our strong investment case.
In the first half of 2019 we were pleased to strengthen our
asset portfolio through the acquisition of a development and
exploration licence for Rodnikova, a high-grade deposit and one of
the largest gold fields in South Kamchatka. The Company is
currently devising its exploration field work programme to assess
the full potential of the deposit and options to potentially
initiate early stage production.
We remain committed to acting in a responsible manner,
protecting the environment, safeguarding the welfare of our
employees and maintaining good relationships with the communities
in which we operate.
Financial Review
Results
H1 2019 generated revenues of approximately $30 million (H1
2018: $27.6 million).
Sales of 22,062 oz. of refined gold (H1 2018: 20,472 oz.) and
69,266 oz. of refined silver (H1 2018: 30,790 oz.) amounted to $29
million and $1 million respectively (H1 2018: $27.1 million and
$0.5 million).
Average realised prices were $1,312 per oz. gold and $15.1 per
oz. silver (H1 2018 $1,324 per oz. gold and $17 per oz.
silver).
Cost of sales reduced by 11.3% to $17.7 million (H1 2018: $19.9
million), reflecting improved cost control and favourable currency
exchange movement.
During the period, our Total Cash Cost reduced by 24.6% to
$672/oz. (H1 2018: $891/oz.). All-In Sustaining Cost per oz. gold
fell by 38.0% to $850/oz. (H1 2018: $1370/oz.). We continue to
target a very competitive cost profile amongst our industry peers
globally.
The Group recorded a 151.5% increase in operating profit from
$3.6 million in H1 2018 to $9.0 million in H1 2019. The increase is
largely driven by higher volumes of gold sold (H1 2019: 22,062 oz.
vs. H1 2018: 20,472 oz.)
Total administrative expenses decreased by 12.2% to $3.4 million
(H1 2018: $3.9 million).
Finance expense remained consistent period-on-period, amounting
to $0.5 million (H1 2018: $0.5 million).
Profit for the period increased by 138.8% to $6.1 million (H1
2018: $2.6 million).
Financial Position
Total equity decreased by $9.7 million to $77.5 million (31
December 2018: $87.2 million). The decrease is attributed mostly to
the share buyback described below.
Capital expenditure amounted to $3.9 million (H1 2018: $9.5
million) relating primarily to the active mine development,
construction of a new pumping station at level 100m and the
acquisition of certain mining equipment.
Cash generated from operations increased from $12.3 million in
H1 2018 to $13.3 million in H1 2019, reflecting the record level of
revenue generated in the period. The cash balance increased by
82.5% from $9.7 million at 31 December 2018 to $17.7 million.
Loans and borrowings increased from $17.1 million at 31 December
2018 to $27.3 million at 30 June 2019. The increase relates largely
to the RUB 800 million credit facility obtained from VTB bank as
part of the share buyback described below, off-set by $2.0 million
repayment in the period.
Net Debt increased by $2.2 million from $7.4 million at 31
December 2018 to $9.6 million at 30 June 2019. The Net Debt/ EBITDA
ratio increased from 0.31 at 31 December 2018 to 0.33 at 30 June
2019. This is very conservative when benchmarked against a peer
group of global gold producers.
Share Buyback
On 2 May 2019, the Company entered into conditional agreements
with two of its major shareholders (Destin Investment Management
Limited and UFG PE Fund I, L.P) to buy back 22,894,565 of its
existing ordinary shares representing approximately 20.8% of the
Company's issued share capital by means of an off-market share
buyback at a price of 33 pence per share for an aggregate purchase
price of GBP7.6 million.
As part of the transaction a further 11,478,410 of the Company's
existing ordinary shares, representing approximately 10.4% of the
Company's issued share capital, were sold by the same shareholders
to other members of the UFG Group, Directors and to new investors.
The buyback was paid out of the Company's existing distributable
profits and funded by a term loan of up to RUB 800 million
(approximately GBP9.4 million) facility with VTB Bank, obtained by
TZ. The share sales, together with the buyback, will reduce the
dominance by UFG of the share register and benefit shareholders as
a whole.
On 12 July 2019, the Company announced that the off-market
buyback (as described above) had been completed. The shares subject
to the buyback are currently held in treasury.
Events after the reporting date
On 12 July 2019 the Company completed the off-market purchase of
22,894,565 ordinary shares of GBP0.10 each in the capital of the
Company from UFG Private Equity Fund I, L.P and Destin Investment
Management Limited at a price of GBP0.33 per share.
On 12 July 2019 Sergey Kryazhevskih was appointed as Chief
Financial Officer.
Post period, 7,500m underground drilling on the Main Zone at
depth and 5,000m surface drilling on Vein 25 (East Zone) was
successfully completed. Following the completion of the drilling
programme, the Company has commenced updating its geological models
and interpretation. Preliminary internal estimates indicate the
published JORC compliant in-situ resource may be overestimated; as
a result, the Directors consider that the operational life of the
Asacha Gold Mine beyond 2024 will need to be reviewed.
As the Company does not have published JORC compliant Mineral
Reserves this estimate should not be construed as a formal Life of
Mine statement.
The Company has engaged Competent Persons to produce updated
Mineral Resource Estimations for both Asacha and Rodnikova and
expects to publish these during the fourth quarter of the year.
The Asacha licence area and the regional district more widely,
remains under-explored which the Directors believe presents an
opportunity to define additional mineral resources locally and
regionally. Therefore, the Company expects to significantly
increase the scope and scale of its exploration and resource
definition activities to enhance the operational life of the Asacha
Gold Mine.
There were no other significant events after the end of the
reporting period.
Alexander Dorogov
Chief Executive Officer
18 September 2019
Consolidated Statement of Comprehensive Income
for the period ended 30 June 2019
6 months 6 months 12 months
to to to
30 June 30 June 31 December
2019 2018 2018
Unaudited Unaudited Audited
Notes $'000 $'000 $'000
Revenue 4 29,999 27,605 59,769
----- ---------- ---------- ------------
Cost of sales (17,689) (19,953) (37,872)
----- ---------- ---------- ------------
Ore stock inventory impairment
(charge) / reversal - (445) 4,028
----- ---------- ---------- ------------
x
----- ---------- ---------- ------------
Gross profit 12,310 7,207 25,925
----- ---------- ---------- ------------
Administrative expenses (3,430) (3,905) (8,393)
----- ---------- ---------- ------------
Other operating income 276 30 279
----- ---------- ---------- ------------
Foreign exchange on operating
activities (180) 237 192
----- ---------- ---------- ------------
Operating profit 8,976 3,569 18,003
----- ---------- ---------- ------------
Finance income 45 15 25
----- ---------- ---------- ------------
Finance expense (504) (486) (1,077)
----- ---------- ---------- ------------
Foreign exchange on financing
activities - 59 12
----- ---------- ---------- ------------
Profit before taxation 8,517 3,157 16,963
----- ---------- ---------- ------------
Income tax on profit (2,410) (600) (4,529)
----- ---------- ---------- ------------
Profit for the period / year 6,107 2,557 12,434
----- ---------- ---------- ------------
Total comprehensive income
for the period / year 6,107 2,557 12,434
----- ---------- ---------- ------------
Total comprehensive income for the
period is attributable to:
---------- ---------- ------------
- Owners of the parent company 6,107 2,557 12,434
----- ---------- ---------- ------------
Profit per share attributable
to the owners of the parent
company (expressed in cents)
----- ---------- ---------- ------------
- Basic and diluted 5 5.57 2.32 11.30
----- ---------- ---------- ------------
Consolidated Statement of Financial Position
as at 30 June 2019
31 December
30 June 2019 30 June 2018 2018
Unaudited Unaudited Audited
Notes $'000 $'000 $'000
Non-current assets
----- ------------ -------------- -----------
Intangible assets 3,046 501 -
----- ------------ -------------- -----------
Property, plant and equipment 7 88,055 88,412 91,122
----- ------------ -------------- -----------
Inventories 8 3,028 709 2,651
----- ------------ -------------- -----------
94,129 89,622 93,773
----- ------------ -------------- -----------
Current assets
----- ------------ -------------- -----------
Inventories 8 13,058 9,882 11,924
----- ------------ -------------- -----------
Trade and other receivables 3,950 4,138 2,229
----- ------------ -------------- -----------
Cash and cash equivalents 17,704 5,704 9,725
----- ------------ -------------- -----------
34,712 19,724 23,878
----- ------------ -------------- -----------
Total assets 128,841 109,346 117,651
----- ------------ -------------- -----------
Current liabilities
----- ------------ -------------- -----------
Trade and other payables (16,164) (9,391) (5,167)
----- ------------ -------------- -----------
Current income tax liabilities (1,093) (180) (834)
----- ------------ -------------- -----------
Borrowings 9 (8,229) (1,181) (6,522)
----- ------------ -------------- -----------
(25,486) (10,752) (12,523)
----- ------------ -------------- -----------
Non-current liabilities
----- ------------ -------------- -----------
Borrowings 9 (19,058) (14,800) (10,571)
----- ------------ -------------- -----------
Provisions (1,008) (1,327) (1,008)
----- ------------ -------------- -----------
Deferred tax liability (5,835) (4,189) (6,362)
----- ------------ -------------- -----------
(25,901) (20,316) (17,941)
----- ------------ -------------- -----------
Total liabilities (51,387) (31,068) (30,464)
----- ------------ -------------- -----------
Net assets 77,454 78,278 87,187
----- ------------ -------------- -----------
Capital and reserves attributable
to owners of the Company
----- ------------ -------------- -----------
Share capital 10 18,988 18,988 18,988
----- ------------ -------------- -----------
Treasury shares (9,442) - -
----- ------------ -------------- -----------
Retained earnings 67,908 59,290 68,199
----- ------------ -------------- -----------
77,454 78,278 87,187
----- ------------ -------------- -----------
Consolidated Statement of Changes in Equity
for the period ended 30 June 2019
Treasury Retained
Share capital shares earnings Total equity
Notes $'000 $'000 $'000 $'000
At 1 January 2018
----- ------------- -------- --------- ------------
Audited 18,988 - 59,028 78,016
----- ------------- -------- --------- ------------
Profit and total comprehensive
income for the period - - 2,557 2,557
----- ------------- -------- --------- ------------
Dividends - - (2,295) (2,295)
----- ------------- -------- --------- ------------
At 30 June 2018
----- ------------- -------- --------- ------------
Unaudited 18,988 - 59,290 78,278
----- ------------- -------- --------- ------------
Profit and total comprehensive
income for the period - - 9,877 9,877
----- ------------- -------- --------- ------------
Dividends - - (968) (968)
----- ------------- -------- --------- ------------
At 31 December 2018
----- ------------- -------- --------- ------------
Audited 18,988 - 68,199 87,187
----- ------------- -------- --------- ------------
Profit and total comprehensive
income for the period - - 6,107 6,107
----- ------------- -------- --------- ------------
Share buyback 10 - (9,442) - (9,442)
----- ------------- -------- --------- ------------
Dividends 6 - - (6,398) (6,398)
----- ------------- -------- --------- ------------
At 30 June 2019
----- ------------- -------- --------- ------------
Unaudited 18,988 (9,442) 67,908 77,454
----- ------------- -------- --------- ------------
Consolidated Statement of Cash Flows
for the period ended 30 June 2019
6 months 6 months 12 months
to to to
30 June 30 June 31 December
2019 2018 2018
Unaudited Unaudited Audited
Notes $'000 $'000 $'000
Cash flows from operating
activities
----- ---------- ---------- ------------
Cash generated from operations 11 13,253 12,300 28,852
----- ---------- ---------- ------------
Interest paid (543) (590) (1,153)
----- ---------- ---------- ------------
Income taxes paid (2,380) - (1,255)
----- ---------- ---------- ------------
Net cash generated from operating
activities 10,330 11,710 26,444
----- ---------- ---------- ------------
Investing activities
----- ---------- ---------- ------------
Purchase of intangible assets (3,046) - -
----- ---------- ---------- ------------
Purchase of property, plant
and equipment (3,942) (9,507) (17,816)
----- ---------- ---------- ------------
Loans granted (6,072) - -
----- ---------- ---------- ------------
Loans repaid 6,069 - -
----- ---------- ---------- ------------
Interest received 45 15 25
----- ---------- ---------- ------------
Net cash used in investing
activities (6,946) (9,492) (17,791)
----- ---------- ---------- ------------
Financing activities
----- ---------- ---------- ------------
Proceeds from new bank borrowings 9 12,312 1,035 4,900
----- ---------- ---------- ------------
Repayment of bank borrowings 9 (2,118) (4,700) (7,330)
----- ---------- ---------- ------------
Repayment of finance leases - (150) (338)
----- ---------- ---------- ------------
Dividends paid (5,643) - (3,263)
----- ---------- ---------- ------------
Net cash generated from /
(used in) financing activities 4,551 (3,815) (6,031)
----- ---------- ---------- ------------
Net increase / (decrease)
in cash and cash equivalents 7,935 (1,597) 2,622
----- ---------- ---------- ------------
Cash and cash equivalents
at beginning of period / year 9,725 7,491 7,491
----- ---------- ---------- ------------
Exchange gains / (losses)
on cash and cash equivalents 44 (190) (388)
----- ---------- ---------- ------------
Cash and cash equivalents
at end of period / year 17,704 5,704 9,725
----- ---------- ---------- ------------
Notes to the consolidated interim financial information
for the period ended 30 June 2019
1. General information
Trans-Siberian Gold plc (the Company) is a UK-based resources
company, with the objective of acquiring and developing a portfolio
of quality gold-mining assets in Russia.
The Company is a public limited company, incorporated and
domiciled in the United Kingdom, and has subsidiaries based in the
Russian Federation. The Company's registered office is 39 Parkside
Cambridge CB1 1PN United Kingdom. The registered number of the
Company is 1067991. The Company's shares are traded on the AIM
Market of the London Stock Exchange.
2. Basis of preparation
The consolidated interim financial information has been prepared
using policies based on International Financial Reporting Standards
(IFRS and IFRIC interpretations) issued by the International
Accounting Standards Board ("IASB") as adopted for use in the EU.
It does not include all disclosures that would otherwise be
required in a complete set of financial statements and should be
read in conjunction with the 2018 Annual Report.
The consolidated interim financial information for the six
months ended 30 June 2019 and 30 June 2018 is unreviewed and
unaudited and does not constitute statutory accounts as defined in
Section 435 of the Companies Act 2006. The comparative financial
information for the year ended 31 December 2018 has been derived
from the statutory financial statements for that year. Statutory
financial statements for the year ended 31 December 2018 were
approved by the Board of Directors on 4 June 2019 and filed with
the Registrar of Companies. The Independent Auditors' Report on
those financial statements was unqualified.
2.1 Going concern
The Group's operations are cash generative and management
tightly control the level of committed expenditure to ensure that
the Group has sufficient resources available to meet its
liabilities as they fall due. Regular cash forecasts are reviewed
to assess the potential impact of factors such as changes in
commodity prices, production rates and the timing of capital
expenditure.
The Group has reported an operating profit for the period of
$9.0 million. The Directors have reviewed the Group's cash flow
forecast for the period to 31 December 2020 and they believe that,
taking account of reasonably possible changes in commodity prices,
trading performance and expenditure and scheduled repayment of bank
loan facilities, the Group has adequate resources to continue in
operational existence for the foreseeable future, wherefore the
Directors are confident that the Group will continue as a going
concern and have prepared the financial information on that
basis.
2.2 Critical accounting judgements and uncertainties
The preparation of interim financial information requires
management to make judgements, estimates and assumptions that
affect the application of accounting policies and the reported
amounts of assets and liabilities, income and expense. Actual
results may differ from these estimates.
In preparing this consolidated interim financial information,
the significant judgements made by management in applying the
Group's accounting policies and the key sources of estimation
uncertainty were the same as those that applied to the consolidated
financial statements for the year ended 31 December 2018.
2.3 Standards, interpretations and amendments effective in
2019
The accounting policies adopted in the preparation of the
consolidated interim financial information are consistent with
those followed in the preparation of the Group's annual
consolidated financial statements for the year ended 31 December
2018, except for the adoption of new standards effective as of 1
January 2019.
The Group did not have to change its accounting policies or make
retrospective adjustments as a result of adopting these new
standards, in particular IFRS 16 Leases, which requires lessees to
use a single on-balance sheet model and recognise all lease assets
and liabilities on the balance sheet. The adoption of IFRS 16 has
not had a significant impact on the Group's financial statements as
the operating leases held by the Group are of low value and the
majority of the existing contracts either relate to service
agreements or contain performance obligations based on variable
terms and thus do not result in right of use assets or lease
liabilities.
3. Segment information
The Group's operations are entirely focused on gold production
and exploration and development activities within the Russian
Federation, with its corporate head office in the UK. The operating
segment has been identified on the basis of internal reports about
the components of the Group provided to the chief operating
decision makers. The chief operating decision makers have been
identified as the Chief Executive Officer, Chief Financial Officer
and the non-executive board members.
The Group has one reportable segment, being operations in
Russia. The operating results of this segment are regularly
reviewed by the Group's chief operating decision makers in order to
make decisions about the allocation of resources and to assess
their performance. With the exception of $1.0 million corporate
costs (H1 2018: $1.1 million), the numbers in the primary
statements reflect the results of the sole operating segment.
4. Revenue
6 months 6 months 12 months
to 30 June to 30 June to 31 December
2019 2018 2018
$'000 $'000 $'000
Revenue analysed by product:
----------- ----------- ---------------
Gold 28,951 27,086 58,122
----------- ----------- ---------------
Silver 1,048 519 1,647
----------- ----------- ---------------
29,999 27,605 59,769
----------- ----------- ---------------
All of the Group's refined gold and silver are sold to Russian
bank VTB.
5. Earnings per share
The calculation of basic profit per 10p ordinary share is based
on the retained profit for the period of $6,107,000 (H1 2018:
$2,557,000) and on 109,671,497 (H1 2018: 110,053,073) ordinary
shares, being the weighted average number of ordinary shares in
issue (excluding treasury shares (note 10)) and ranking for
dividends during the period.
The Group had no dilutive potential ordinary shares in either
periods that would serve to reduce the profit per ordinary share.
There is therefore no difference between the basic and diluted
profit per share for either period / year.
6. Dividends paid and proposed
A special interim dividend of 5.2 US cents per ordinary share
amounting to $5.7 million was declared and paid on 22 January
2019.
A final dividend of 1.136 US cents per ordinary share for the
year ended 31 December 2018 was declared on 27 June 2019 and paid
on 12 July 2019. The final dividend amounted to $0.8 million.
Under the UK Companies Act, treasury shares are not eligible to
be paid a dividend.
An interim dividend of 2.3 US cents per ordinary share was
declared by the Board of directors on 18(th) September 2019. It is
payable on 30(th) October 2019 to shareholders who are on the
register at 27(th) September 2019. This interim dividend, amounting
to $2.0 million, has not been recognised as a liability in this
interim financial information. It will be recognised in
shareholders' equity in the year to 31 December 2019.
7. Property, plant and equipment
Plant Assets
Mining and Office Motor under
properties Buildings machinery equipment vehicles construction Total
$'000 $'000 $'000 $'000 $'000 $'000 $'000
Cost
----------- --------- ---------- ---------- --------- ------------- -------
At 1 January 2018 74,772 79,909 20,564 453 5,618 3,892 185,208
----------- --------- ---------- ---------- --------- ------------- -------
Additions 6,621 200 951 - 78 2,330 10,180
----------- --------- ---------- ---------- --------- ------------- -------
Disposals - - (443) (1) - - (444)
----------- --------- ---------- ---------- --------- ------------- -------
Transfers - 94 400 - - (494) -
----------- --------- ---------- ---------- --------- ------------- -------
At 30 June 2018 81,393 80,203 21,472 452 5,696 5,728 194,944
----------- --------- ---------- ---------- --------- ------------- -------
Additions 6,939 - 1,504 11 176 - 8,630
----------- --------- ---------- ---------- --------- ------------- -------
Disposals - (10) (768) (44) (181) (435) (1,438)
----------- --------- ---------- ---------- --------- ------------- -------
Transfers - 4,222 (302) - - (3,920) -
----------- --------- ---------- ---------- --------- ------------- -------
Transferred from intangible
assets 501 - - - - - 501
----------- --------- ---------- ---------- --------- ------------- -------
At 31 December 2018 88,833 84,415 21,906 419 5,691 1,373 202,637
----------- --------- ---------- ---------- --------- ------------- -------
Additions 1,532 - 722 2 18 2,238 4,512
----------- --------- ---------- ---------- --------- ------------- -------
Disposals - (97) - - - - (97)
----------- --------- ---------- ---------- --------- ------------- -------
At 30 June 2019 90,365 84,318 22,628 421 5,709 3,611 207,052
----------- --------- ---------- ---------- --------- ------------- -------
Depreciation
----------- --------- ---------- ---------- --------- ------------- -------
At 1 January 2018 37,796 48,774 11,616 434 2,280 183 101,083
----------- --------- ---------- ---------- --------- ------------- -------
Depreciation charge 1,986 2,719 642 3 427 - 5,777
----------- --------- ---------- ---------- --------- ------------- -------
Disposals - - (327) (1) - - (328)
----------- --------- ---------- ---------- --------- ------------- -------
At 30 June 2018 39,782 51,493 11,931 436 2,707 183 106,532
----------- --------- ---------- ---------- --------- ------------- -------
Depreciation charge 1,621 3,140 725 3 447 - 5,936
----------- --------- ---------- ---------- --------- ------------- -------
Disposals - - (736) (40) (177) - (953)
----------- --------- ---------- ---------- --------- ------------- -------
At 31 December 2018 41,403 54,633 11,920 399 2,977 183 111,515
----------- --------- ---------- ---------- --------- ------------- -------
Depreciation charge 3,297 2,710 1,112 6 454 - 7,579
----------- --------- ---------- ---------- --------- ------------- -------
Disposals - (97) - - - - (97)
----------- --------- ---------- ---------- --------- ------------- -------
At 30 June 2019 44,700 57,246 13,032 405 3,431 183 118,997
----------- --------- ---------- ---------- --------- ------------- -------
Carrying amount
----------- --------- ---------- ---------- --------- ------------- -------
At 1 January 2018 36,976 31,135 8,948 19 3,338 3,709 84,125
----------- --------- ---------- ---------- --------- ------------- -------
At 30 June 2018 41,611 28,710 9,541 16 2,989 5,545 88,412
----------- --------- ---------- ---------- --------- ------------- -------
At 31 December 2018 47,430 29,782 9,986 20 2,714 1,190 91,122
----------- --------- ---------- ---------- --------- ------------- -------
At 30 June 2019 45,665 27,072 9,596 16 2,278 3,428 88,055
----------- --------- ---------- ---------- --------- ------------- -------
Mining properties assets relate to the Asachinskoye (Asacha)
mining licence held by the Company's subsidiary ZAO Trevozhnoye
Zarevo (TZ).
Capitalisation of depreciation
-- $400,000 (H1 2018: $526,000) of the depreciation charge is
included in additions to mining properties
-- $32,000 (H1 2018: $23,000) of the depreciation charge is
included in additions to assets under construction
-- $1,806,000 (H1 2018 $243,000) of the depreciation and mining
properties depletion charge is charged to inventories
8. Inventories
30 June 2019 30 June 2018
31 December
$'000 $'000 2018 $'000
Non-current:
------------ ------------ -----------
Ore stocks 3,028 5,183 2,651
------------ ------------ -----------
Less accumulated provision - (4,474) -
------------ ------------ -----------
3,028 709 2,651
------------ ------------ -----------
Current:
------------ ------------ -----------
Finished gold - 58 -
------------ ------------ -----------
Finished silver - 55 24
------------ ------------ -----------
Gold in progress 1,767 1,890 1,395
------------ ------------ -----------
Silver in progress 29 315 47
------------ ------------ -----------
Ore stocks 4,765 781 2,596
------------ ------------ -----------
Raw materials and consumables 6,497 6,783 7,862
------------ ------------ -----------
13,058 9,882 11,924
------------ ------------ -----------
16,086 10,591 14,575
------------ ------------ -----------
Finished gold, finished silver, gold in progress, silver in
progress and ore stocks include depreciation and mining properties
depletion charge $1,806,000 (H1 2018: $243,000).
During 2018 the Group commenced significant blending of lower
grade ore with higher grades when feeding the processing plant.
Consequently, management reassessed their estimate of the maximum
values to be realised from the existing ore stockpiles reflecting
the planned blended feed of such stockpiles to the mill on the
basis that they are blended with future ore mined. The net
realisable value tests demonstrate significant headroom with no
reasonable sensitivity indicating impairment. As a result, a
reversal of the previously recognised impairment provision in the
amount of $4,028,000 was recognised in H2 2018. In previous years,
no significant blending of ore grades was practiced, and the net
realisable values of ore stockpiles were assessed separately on
non-blending basis giving rise to an accumulated impairment
provision of $4,474,000 at 30 June 2018.
9. Borrowings
30 June 2019 30 June 2018
31 December
$'000 $'000 2018 $'000
Current:
------------ ------------ -----------
Bank borrowings 8,229 1,053 6,522
------------ ------------ -----------
Finance lease obligations - 128 -
------------ ------------ -----------
8,229 1,181 6,522
------------ ------------ -----------
Non-current:
------------ ------------ -----------
Bank borrowings 19,058 14,800 10,571
------------ ------------ -----------
Finance lease obligations - - -
------------ ------------ -----------
19,058 14,800 10,571
------------ ------------ -----------
27,287 15,981 17,093
------------ ------------ -----------
Movement in borrowings is analysed as follows:
31 December
30 June 2019 30 June 2018 2018
$'000 $'000 $'000
At beginning of period 17,093 19,831 19,831
------------ ------------ -----------
Increase in borrowings 12,312 1,035 4,900
------------ ------------ -----------
Repayment of borrowings and accrued
interest (2,118) (4,706) (7,330)
------------ ------------ -----------
Net movement in finance leases - (179) (308)
------------ ------------ -----------
At end of period 27,287 15,981 17,093
------------ ------------ -----------
On 15 May 2019, the Company's wholly owned subsidiary TZ entered
into an agreement with VTB Bank for a RUB 800 million credit
facility agreement for a 4-year term, repayable in equal amounts
quarterly with the first repayment effective five calendar quarters
after the initial drawdown. The facility bears an annual interest
at 10.7% and is secured against certain fixed assets of TZ. The
Group is currently in the process of finalising the fixed assets
security documentation. The facility was used to repay the
inter-group indebtedness of TZ as well as to finance TZ's working
capital requirements and other gold exploration and evaluation
works.
On 19 June 2017, TZ entered into an agreement with VTB Bank for
a $15,000,000 loan facility for a 5-year term, repayable in equal
amounts quarterly with the first repayment effective seven calendar
quarters after initial drawdown.
On 21 June 2017, TZ entered into a further agreement with VTB
Bank for an additional $5,000,000 revolving credit facility for a
3-year term.
Both facilities entered in 2017 are used to provide additional
working capital, bear annual interest at 6.2% and are secured
against the equity and fixed assets of TZ only. The Group is
currently in the process of finalising the equity and fixed assets
security documentation.
10. Share capital
Share capital at 30 June 2019 amounted to $18.9 million (31
December 2018: $18.9 million).
On 2 May 2019, the Company entered into conditional agreements
with two of its major shareholders within UFG Asset Management
("UFG") to buy back 22,894,565 of its existing ordinary shares by
means of an off-market share buyback at a price of 33 pence per
share, representing a discount of 42% to the closing middle market
price of a TSG ordinary share on 1 May 2019, for an aggregate
purchase price of GBP7.56 million ($9.44 million) (the
"Buyback").
The Buyback conditions were satisfied and approved on 27 June
2019 at the Annual General Meeting. The Buyback completed on 12
July 2019. At the reporting date the Company recognised an
obligation of $9.44 million to buy back the 22,894,565 ordinary
shares with the corresponding increase in the treasury shares
reserve.
The Buyback was funded out of the Company's existing
distributable profits, facilitated by the repayment of intra-group
indebtedness by the Company's wholly owned subsidiary, TZ,
utilising a new term loan facility of RUB 800 million obtained by
TZ from VTB Bank (note 9).
TSG currently has 87,158,508 ordinary shares in issue and holds
22,89,565 ordinary shares in treasury.
11. Cash generated from operations
6 months 6 months 12 months
31 December
30 June 2019 30 June 2018 2018
$'000 $'000 $'000
Profit for the period after tax 6,107 2,557 12,434
------------- ------------- ------------
Adjustments for:
------------- ------------- ------------
Taxation charged 2,410 600 4,529
------------- ------------- ------------
Finance expense 504 486 1,077
------------- ------------- ------------
Finance income (45) (15) (25)
------------- ------------- ------------
Loss on disposal of property, plant
and equipment - 116 148
------------- ------------- ------------
Unrealised foreign exchange differences (50) 159 341
------------- ------------- ------------
Depreciation of property, plant and
equipment 4,870 4,985 9,968
------------- ------------- ------------
Impairment / (reversal of impairment)
of ore stocks - 445 (4,028)
------------- ------------- ------------
Movements in working capital:
------------- ------------- ------------
Decrease in inventories 668 3,254 4,716
------------- ------------- ------------
(Increase) / decrease in trade and
other receivables (2,012) (1,654) 255
------------- ------------- ------------
Increase / (decrease) in trade and
other payables 801 1,367 (563)
------------- ------------- ------------
Cash generated from operations 13,253 12,300 28,852
------------- ------------- ------------
12. Contingencies
The Company's wholly owned subsidiary TZ has received a claim
from the Federal Service for Supervision of Use of Natural
Resources, RosPrirodNadzor ("RPN") over the payments for disposal
of waste materials following a site inspection in 2016. Having
taken appropriate advice, the management believe that they have a
strong legal position and as such, dispute the claim made by RPN.
The claim could potentially amount to approximately $2.1
million.
13. Events after the reporting date
On 12 July 2019 the Company completed the off-market purchase of
22,894,565 ordinary shares of GBP0.10 each in the capital of the
Company from UFG Private Equity Fund l, L.P and Destin Investment
Management Limited at a price of GBP0.33 per share.
On 12 July 2019 Sergey Kryazhevskih was appointed as Chief
Financial Officer.
There were no other significant events after the end of the
reporting period.
14. Non-IFRS Measures
The Group uses certain measures in this report that are not
defined under IFRS. Non-IFRS financial measures are provided as
additional information to investors to assist them with their
assessment of the Group's financial position and its operating
results. These measures are not in accordance with, or a substitute
for, IFRS, and may be different from or inconsistent with non-IFRS
financial measures used by other companies. These measures are
explained further below:
Cash costs
Cash costs are calculated on consolidated basis and include all
costs absorbed into cost of sales, excluding mining tax,
depreciation, amortisation and depletion, net of by-product revenue
(silver). Cash costs per ounce of gold sold is calculated by
dividing the aggregate of these costs by total ounces sold.
6 months 6 months 12 months
30 June 31 December
30 June 2019 2018 2018
$'000 $'000 $'000
Cost of sales 17,689 19,953 37,872
Adjustments for:
By-product revenue (silver) (1,048) (519) (1,647)
Mining tax (2,179) (1,255) (2,381)
Depreciation / depletion of owned property,
plant and equipment (5,244) (4,985) (9,968)
Loss on disposal of property, plant
and equipment - (116) (148)
Cash cost 9,218 13,078 23,728
Gold sold (oz.) 22,062 20,472 45,956
-------------------------------------------- -------------- ----------------- -------------
Cash cost ($) per oz. gold 418 639 516
-------------------------------------------- -------------- ----------------- -------------
Total cash costs
Total cash costs are calculated on consolidated basis as cash
costs plus mining tax and administrative expenses. Total cash costs
per ounce of gold sold is calculated by dividing the aggregate of
these costs by total ounces sold.
6 months 6 months 12 months
30 June 31 December
30 June 2019 2018 2018
$'000 $'000 $'000
Cash costs 9,218 13,078 23,728
Adjustments for:
Mining tax 2,179 1,255 2,381
Administrative expenses 3,430 3,905 8,393
Total cash costs 14,827 18,238 34,502
Gold sold (oz.) 22,062 20,472 45,956
--------------------------------- -------------- ----------------- -------------
Total cash cost ($) per oz. gold 672 891 751
--------------------------------- -------------- ----------------- -------------
Earnings Before Interest, Tax Depreciation and Amortisation
("EBITDA")
EBITDA is calculated on consolidated basis as net profit/(loss)
for the period excluding income tax expense, finance expense,
finance income, foreign exchange movements, depreciation,
amortisation and depletion, and impairment charges.
6 months 6 months 12 months
30 June 31 December
30 June 2019 2018 2018
$'000 $'000 $'000
Revenue 29,999 27,605 59,769
Adjustments for:
Cost of sales (17,689) (19,953) (37,872)
Administrative expenses (3,430) (3,905) (8,393)
Other operating income 276 30 279
Depreciation/depletion of owned property,
plant and equipment 5,244 4,985 9,968
Loss on disposal of property, plant
and equipment - 116 148
------------------------------------------ ------------- -------- ------------
EBITDA 14,400 8,878 23,899
------------------------------------------ ------------- -------- ------------
All-In Sustaining Costs ("AISC")
AISC reflect the full costs of keeping the mine in business and
include adjusted operating expenditure, sustaining corporate and
administrative expenditure, and sustaining capital and exploration
expenditure. It excludes non-sustaining costs related to new
operations and costs that are not related to current operations, as
well as taxes, finance costs and working capital adjustments.
6 months 6 months 12 months
30 June 31 December
30 June 2019 2018 2018
$'000 $'000 $'000
Cash costs 9,379 13,078 23,728
Adjustments for:
Mining tax 2,179 1,255 2,381
Administrative expenses 3,430 3,905 8,393
Ore stock inventory impairment - 445 (4,028)
Purchase of property, plant and equipment 3,942 9,507 17,816
Non-sustaining exploration expenditure (26) (146) (210)
Accretion of restoration costs - - 131
AISC 18,743 28,044 48,211
Gold sold (oz.) 22,062 20,472 45,956
------------------------------------------ -------------- ----------------- -------------
AISC ($) per oz. gold 850 1,370 1,049
------------------------------------------ -------------- ----------------- -------------
Company Information
Directors
Charles Ryan
Non-Executive Chairman
Alexander Dorogov
Chief Executive Officer
Eugene Antonov
Chief Operating Officer
Robert Sasson
Non-Executive Director
Stewart Dickson
Non-Executive Director
Lou Naumovski
Non-Executive Director
Florian Fenner
Non-Executive Director
Secretary
Simon Olsen
Company number
01067991
Registered office
39 Parkside
Cambridge CB1 1PN
Business address
P.O. Box 278
St. Neots PE19 9EA
Independent Auditors
PricewaterhouseCoopers LLP
1 Embankment Place
London WC2N 6RH
Telephone: +44 (0)20 7583 5000
Nominated Adviser & Corporate Broker
Arden Partners plc
125 Old Broad Street
London EC2N 1AR
Telephone: +44 (0)20 7614 5924
Bankers
National Westminster Bank plc
City of London Office
PO Box 12258
1 Princes Street
London EC2R 8PA
Solicitors
Locke Lord
201 Bishopsgate
London EC2M 3AB
Telephone: +44 (0)20 7861 9000
Registrar
Link Asset Services
Northern House
Woodsome Park
Fenay Bridge
Huddersfield
West Yorkshire HD8 0GA
Telephone: 0871 664 0300
International: +44 208 639 3399
Trans-Siberian Gold plc
UK - Registered office
Trans-Siberian Gold plc
39 Parkside
Cambridge CB1 1PN
United Kingdom
UK - Head office
Trans-Siberian Gold plc
P.O. Box 278
St. Neots PE19 9EA
United Kingdom
Russia - Moscow office
Trans-Siberian Gold Management, LLC (TSGM)
Office 55
Leninskiy Prospect 15A 119071
Moscow
Russian Federation
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
IR LLFLDAAITLIA
(END) Dow Jones Newswires
September 19, 2019 02:00 ET (06:00 GMT)
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