9 Dec 2016 07:00
9 December 2016
Kolar Gold Limited
("Kolar Gold", "Kolar" or the "Company")
Final results for the year ended 30 June 2016
Board changes
Kolar Gold Limited (LON: KGLD), the AIM-quoted gold exploration and mine development company, announces its audited final results for the year ended 30 June 2016.
For further information, please visit www.kolar-gold.com or contact:
Kolar Gold Limited Cameron Parry (Chief Executive Officer) Luke Cairns (Executive Director)
| Tel: +44 (0) 207 397 2880
|
WH Ireland Limited (Nominated Adviser) Tim Feather Ed Allsopp
| Tel: +44 (0) 113 394 6600
|
Vicarage Capital Limited (Broker) Rupert Williams / Jeremy Woodgate
| Tel: +44 (0) 203 651 2911
|
Tavistock (Financial PR) | Tel: +44 (0) 207 920 3150 |
Emily Fenton |
Chief Executive Officer's Report
Following the departure of Harvinder Hungin as Chairman post-period end, I am pleased to make my first report as CEO of Kolar Gold, notwithstanding the fact that neither I, nor my co-directors Luke Cairns and M. Hanuma Prasad, were on the Board for the period under review; Luke and I having both been appointed to the Board on 28 July 2016 and Hanuma appointed on 23 November 2016.
Following the appointment of the new management and an operational review, the Group set about establishing a new three-fold strategy:
· Strengthen the partnership with one of India's leading gold exploration companies, Geomysore Services India Private Limited ("Geomsyore");
· Provide physical gold holding and trading Fintech platform for the India market; and
· Jurisdictional diversification through gold exploration and mine development in Finland.
Review of operations for the financial year ended 30 June 2016
The last financial year was one of transition and reflection for the Group as it considered its options moving forward which resulted in the departure of several directors and the contraction of costs and activity to reflect the resources available. From this reduced operational base the Group was in a position to attract new capital and management after year-end to initiate and execute the new strategy of the Group.
Save for strategic reviews as previously announced the main activity of the Group was through its interest in Geomysore.
Geomysore
Kolar Gold has a 22.34 per cent shareholding in Geomysore as at the date of this report.
During the period under review, Geomysore continued to progress with further exploration drilling, resource modelling and appraisal work to assess the feasibility, scale and timing of constructing a producing gold mine at Jonnagiri, for which Geomsyore has been granted a 30 year mining licence to mine 365,000 tonnes of gold ore per year. The concerted drilling campaign undertaken at Jonnagiri, over the Mining lease block including the West Block (formerly Temple Deep) and the East Block, totalled 15,800 metres. The drilling campaign was undertaken in order both to increase the resource base and upgrade its definition, and was completed in December 2015. The Jonnagiri resource is divided into two parts: a prospective shallow open pit mine at the East Block and a potential open pit and underground mine at the West Block.
Based on data available as at 30 June 2016, Golder Associates Pty Limited estimated a JORC compliant indicated and inferred gold resource of 351,000 ounces in aggregate at the East and West blocks (234,000 and 117,000 ounces respectively) which was a significant increase from the approximate 150,000 ounces identified at the East Block and as announced in our interims on 30 March 2016. Full details on this resource increase can be found in the announcement dated 21 October 2016.
Whilst it was intended to complete the economic feasibility study ("EFS") during the year under review, the required funding was not forthcoming until post Kolar Gold's year end following the agreement with Thriveni Earth Movers Private Limited ("Thriveni") to invest US$2.4m into Geomysore at a valuation of US$18 million to fund additional drilling of up to 10,000 metres in relation to the East Block and to complete the EFS. This is expected to complete during Q1 2017. Once Thriveni has completed its investment, it will be the largest shareholder in Geomysore with 38% whilst Kolar's interest shall be diluted to 20.5%.
In November 2014 Kolar Gold was granted an option to invest a further US$2m (£1.34m) in Geomysore within 12 months at the same valuation as the most recent round of funding. As previously disclosed the option expired during November 2015 and has not been extended.
Geomysore also has a number of other gold licences and applications in India at different stages of development in some very prospective areas including North, East and South Kolar Belt, but all resources are currently focussed on the EFS at Jonnagiri.
As at 30 June 2016, the Company valued its investment in Geomysore at £3.01 million (30 June 2015: £3.05 million).
Bharat Gold Mines Limited ("BGML")
The new MMDR Act that was recently promulgated in India has opened up the possibility of reviving the BGML mine at State level, and in February JMJ Minerals Private Ltd, a company formed by KGL's partners, the United BGML ex-employees Union Society (Union), exchanged an Expression of Interest with the Government of Karnataka ("GoK") for a project to exploit the tailings at BGML with GoK's support. Direction from the Central Government and GoK is awaited, and it is not clear whether GoK can progress on the Expression of Interest exclusively with the Union as normal Indian government selection procedures, including for joint ventures, require a tender process.
Little further development has been made on this matter and since the year-end the Board has taken the decision to focus its resources on Geomysore and new opportunities as detailed below. The Directors remain hopeful that the Company can participate in any future tender process if and when one occurs but until such time as it does will not be investing any further material resources.
Strategic review and subsequent events
On 8 December 2015 the Board of Kolar Gold announced that it was reviewing its strategic options with the intention of considering all available opportunities for maximising value for shareholders.
Following that strategic review the then Board agreed to continue with its Indian interests and also pursue a path of diversification, the outcome of which has been realised since period end and is detailed below in Subsequent Events.
We have now diversified our jurisdictional risk through our joint venture in Finland and created a new complementary opportunity in financial technology ("Fintech") through the strategic 27.3% stake in TRAC Technology Limited and our 50/50 joint venture ("JV") with them to establish a gold trading and storage platform for the Indian market.
Key operational announcements to market since new management commenced:
· 15 September 2016 - Operational Review and Strategic Update
· 13 October 2016 - Finland Gold Joint Venture MOU Signed
· 21 October 2016 - Indian Resource Size Increase
· 01 November 2016 - Gold Trading Platform JV and Strategic Investment
Board changes
During the period under review Nick Spencer, the CEO of Kolar Gold, and the Company reached mutual agreement on the termination of his employment contract and he resigned from the Board of Kolar Gold on 8 December 2015 and served out his notice period to the end of May 2016.
Non-executive director Stephen Coe resigned on 31 December 2015. Stephen Oke replaced Stephen Coe as Chairman of the Audit Committee.
On 28 July 2016 Cameron John Parry was appointed to the Board as the Chief Executive Officer (CEO), Luke Sebastian Cairns was appointed to the Board as an executive director and Vaidyanathan Venkateswaran Sivakumar resigned from the Board.
On 30 September 2016 Harvinderpal Singh Hungin resigned as the Chairman and as a non-executive director.
On 23 November 2016 Dr. M. Hanuma Prasad was appointed to the Board as a non-executive director.
Stephen Oke, who has been a non-executive director since the June 2011 IPO, will be stepping down from the Board and leaving the Company at the end of December 2016. The Directors wish to thank Stephen for his efforts and contribution to the Company and wish him well.
Key financials
The loss after tax for the year was £930,778 compared to £1,254,716 for the year to June 2015.
As at 30 June 2016, the Group's cash balances were £404,806 (2015: £1,437,119). Since the year end the Company undertook a placing of 81,818,182 new ordinary shares at a price of 1.1p per share raising £900,000 before fees and expenses.
The Company is continuously monitoring the rate of cash usage to ensure a balance between investment, achieving major milestones and having sufficient working capital to remain a going concern.
Outlook
It has been a busy few months since joining the Board of Kolar Gold. The new Board has been greatly encouraged by its dealings with the team at Geomysore and we do not think we could have a better local partner in respect of mineral exploration in India where their experience and pipeline of licences is second to none. We look forward to the result of the EFS to enable all Geomysore stakeholders to assess the best way forward for Jonnagiri. India continues to represent a land of great opportunity and the prospect of launching our own gold trading platform to the second largest consumer market of gold in the world with proven technology with our partners at TRAC to compliment the potential of Geomysore moving into gold production is very exciting.
Added to this we have mitigated our jurisdictional risk through our JV in Finland, which we anticipate generating income through bulk sampling during the next calendar year as well as through our strategic 27.3% stake in TRAC encompassing all of its non-Indian business.
On behalf of my fellow directors I would like to thank all shareholders and stakeholders for supporting Kolar during this period of transition whilst welcoming new shareholders to the register from July and we look forward with confidence to growing the value of our various interests and the Company.
Cameron Parry
8 December 2016
Kolar Gold Limited and its controlled entities
Consolidated Statement of Comprehensive Income
for the year ended 30 June 2016
Group | ||||
Note | 2016£ | 2015£ | ||
Salaries and wages | (263,073) | (378,877) | ||
Other administrative expenses | (629,038) | (749,155) | ||
Accretion of investment in associate | 2,994 | 5,952 | ||
Loss from operating activities | (889,117) | (1,122,080) | ||
Finance income | 5,799 | 30,128 | ||
Finance costs | (3,477) | (74) | ||
Net financing income | 2,322 | 30,054 | ||
Share of loss of associate | (39,635) | (162,690) | ||
Loss on disposal of fixed assets | (4,348) | - | ||
Loss before tax | (930,778) | (1,254,716) | ||
Income tax | - | - | ||
Loss for the year | (930,778) | (1,254,716) | ||
Other comprehensive loss Items that are or may be reclassified subsequently to profit or loss Foreign exchange translation variances | (5,979) | (3,971) | ||
Total comprehensive loss for the year | (936,757) | (1,258,687) | ||
Basic and diluted loss per share (p) |
2 | (0.88) | (1.18) | |
All results are derived from continuing activities. | ||||
Kolar Gold Limited and its controlled entities
Consolidated Statement of Financial Position
as at 30 June 2016
Group | |||
2016 £ | 2015 £ | ||
Non-current assets | |||
Plant and equipment | - | 10,549 | |
Investment in associate | 3,013,662 | 3,050,303 | |
Total non-current assets | 3,013,662 | 3,060,852 | |
Current assets | |||
Trade and other receivables | 3,736 | 6,950 | |
Prepayments and other assets | 26,218 | 16,642 | |
Term deposits | 285,648 | 931,994 | |
Cash and cash equivalents | 119,158 | 505,725 | |
Total current assets | 434,760 | 1,461,311 | |
Total assets | 3,448,422 | 4,522,163 | |
Current liabilities | |||
Trade and other payables | 144,996 | 160,848 | |
Employee benefits | - | 117,146 | |
Total current liabilities | 144,996 | 277,994 | |
Non-current liabilities | |||
Employee benefits | - | 3,986 | |
Total non-current liabilities | - | 3,986 | |
Total liabilities | 144,996 | 281,980 | |
Total net assets | 3,303,426 | 4,240,183 | |
Equity | |||
Share capital | 7,440,546 | 7,440,546 | |
Share premium | 15,690,724 | 15,690,724 | |
Reserves | 17,672 | 3,832,720 | |
Accumulated losses | (19,845,516) | (22,723,807) | |
Total equity | 3,303,426 | 4,240,183 | |
Kolar Gold Limited and its controlled entities
Consolidated Statement of Changes in Equity
for year ended 30 June 2016
Share capital
| Share premium | Share based payment reserve | Foreign exchange translation reserve | Accumulated losses | Total equity | ||
£ | £ | £ | £ | £ | £ | ||
Balance at 30 June 2014 | 7,440,546 | 15,690,724 | 3,838,027 | (1,336) | (21,469,091) | 5,498,870 | |
Loss for the year | - | - | - | - | (1,254,716) | (1,254,716) | |
Other comprehensive loss - foreign exchange translation variances | - | - | - | (3,971) | - | (3,971) | |
Total comprehensive loss for the year | - | - | - | (3,971) | (1,254,716) | (1,258,687) | |
Balance at 30 June 2015 | 7,440,546 | 15,690,724 | 3,838,027 | (5,307) | (22,723,807) | 4,240,183 | |
Loss for the year | - | - | - | - | (930,778) | (930,778) | |
Other comprehensive loss - foreign exchange translation variances | - | - | - | (5,979) | - | (5,979) | |
Total comprehensive loss for the year | - | - | - | (5,979) | (930,778) | (936,757) | |
Transfer of expired options | - | - | (3,809,069) | - | 3,809,069 | - | |
Total contributions by and distributions to owners | - | - | (3,809,069) | - | 3,809,069 | - | |
Balance at 30 June 2016 | 7,440,546 | 15,690,724 | 29,958 | (11,286) | (19,845,516) | 3,303,426 | |
Kolar Gold Limited and its controlled entities
Consolidated Statement of Cash Flows
For the year ended 30 June 2016
2016 | 2015 | ||
£ | £ | ||
Cash flows from operating activities | |||
Loss for the year | (930,778) | (1,254,716) | |
Adjustments for: | |||
Depreciation | 2,050 | 2,854 | |
Accretion of investment in associate | (2,994) | (5,952) | |
Share of loss of associate | 39,635 | 162,690 | |
Net financing income | (2,338) | (30,054) | |
Foreign exchange variances | (6,140) | 15,431 | |
Operating loss before changes in working capital and provisions | (900,565) | (1,109,747) | |
Change in trade and other receivables | 3,213 | 2,285 | |
Change in other current assets | (9,576) | 8,065 | |
Change in trade and other payables | (15,852) | (175,192) | |
Change in employee benefit liability | (121,132) | (24,737) | |
Cash used in operating activities | (1,043,912) | (1,299,326) | |
Interest and finance costs paid | - | (74) | |
Net cash used in operating activities | (1,043,912) | (1,299,400) | |
| |||
Cash flows from investing activities | |||
Interest received | 5,138 | 16,074 | |
Funds withdrawn from term deposit | 646,346 | 1,128,242 | |
Payments for investments | - | (704,024) | |
Net cash from investing activities | 651,484 | 440,292 | |
| |||
Cash flows from financing activities | - | - | |
Net decrease in cash and cash equivalents | (392,428) | (859,108) | |
Foreign exchange gain/(loss) on cash balances | 5,861 | (5,348) | |
Cash and cash equivalents at 1 July | 505,725 | 1,370,181 | |
Cash and cash equivalents at 30 June (Excludes term deposits of £285,648 (2015: £931,944) | 119,158 | 505,725 |
Notes to the financial statements
1. Basis of preparation and status of financial information
The financial information set out in this statement has been prepared in accordance with the recognition and measurement principles of International Financial Reporting Standards as adopted by the EU ("adopted IFRSs"), IFRIC interpretations and the Companies Act 2006 applicable to companies reporting under IFRS. It does not include all the information required for full annual accounts.
The financial information does not constitute the Company's statutory accounts for the years ended 30 June 2016 or 30 June 2015 but is derived from those accounts. Statutory accounts for 2015 have been delivered to the registrar of companies, and those for 2016 will be delivered in due course. The auditor has reported on those accounts; his reports were (i) unqualified, (ii) did not include a reference to any matters to which the auditor drew attention by way of emphasis without qualifying his report and (iii) did not contain a statement under section 498 (2) or (3) of the Companies Act 2006.
2. Earnings per share
The calculation of basic loss per share at 30 June 2016 was based on the loss of £930,778 (2015: £1,254,716), and a weighted average number of ordinary shares outstanding of 106,293,537 (2015: 106,293,537), calculated as follows:
2016 | 2015 | |
£ | £ | |
Loss attributable to ordinary shareholders | 930,778 | 1,254,716 |
Weighted average number of ordinary shares | ||
'000 | '000 | |
Issued ordinary shares at 1 July | 106,294 | 106,294 |
Effect of shares issued during the year | - | - |
Weighted average number of shares at 30 June | 106,294 | 106,294 |
Diluted loss per share
Options and warrants granted to the Directors, staff and external consultants are considered to be potential ordinary shares and have not been included in the determination of diluted loss per share as the effect of exercise would be non-dilutive. The options have not been included in the determination of the basic loss per share.
| 2016 pence per share | 2015 pence per share |
Basic and diluted loss per share | 0.88 | 1.18 |
3. Annual Report and Annual General Meeting
Copies of the 2016 Annual Report and Accounts will be posted to shareholders shortly and will be available on the Company's website at www.kolar-gold.com. Further copies may be obtained by contacting the Company Secretary at Kolar Gold, Ground Floor, Dorey Court, Admiral Park, Saint Peter Port, Guernsey GY1 2HT.
The annual general meeting is to be held at the registered office on Wednesday 28 December 2016.