LONDON–(BUSINESS WIRE)–
China Nonferrous Gold Limited 中国有色黄金有限公司
(‘CNG’ or the ‘Company’)
Interim Results for the Six-Month Period Ended 30 June 2022
China Nonferrous Gold Limited (AIM:CNG), the gold producer with the operational Pakrut Gold Project (‘the Pakrut Project’) in the Republic of Tajikistan, today announces its interim results for the six-month period ended 30 June 2022.
The results below are available on the Company’s website at www.cnfgold.com.
Highlights
For further information please visit the Company’s website (www.cnfgold.com) or contact:
China Nonferrous Gold Limited
Zhang Hui, Managing Director
Tel: +86 10 8442 6662
WH Ireland Limited (NOMAD & Broker)
Katy Mitchell, Andrew de Andrade
Tel: +44 (0)207 220 1666
BlytheRay (PR)
Tim Blythe, Megan Ray
Tel: +44 (0)20 7138 3224
Project Summary
The Pakrut Gold Project, of which CNG has 100 per cent ownership, is situated in Tajikistan approximately 120km northeast of the capital city Dushanbe. Pakrut is located within the Tien Shan gold belt, which extends from Uzbekistan into Tajikistan, Kyrgyzstan and Western China, and which hosts a number of multi-million ounce gold deposits.
CNG entered steady state production from January 2019.
About Tajikistan
Tajikistan is a secular republic located in Central Asia. The country is a member of the Commonwealth of Independent States and the Shanghai Cooperation Organization. Tajikistan hosts numerous operating precious metal mines as well as the largest aluminum smelter in Central Asia. CNG’s management team has extensive experience in the mining industry in Tajikistan.
CEO’s Statement
As CEO of the board, it gives me great pleasure to present the CEO’s statement of the Interim Results for the Six-Month Period Ended 30 June 2022. Despite the global pandemic, Pakrut took pandemic prevention and protection measures, and continued producing during the first half of the year, making the group an important gold producer in Tajikistan.
From January to June 2022, a total of 302,590 tons of ore was extracted from the Pakrut gold mine. During that same six month period:
From January to June 2022, the Group sold 16,484 oz. (30 June 2021:17,288 oz.) of gold ingots, achieving sales revenue of US$30.71million (unaudited) (30 June 2021:$30.87million), with an average sales price of US$1,863.02 / oz.(30 June 2021:$1,785.62 / oz.)
Financial Results
The Company continued its production and operation work during the first six months of 2022. Administration expenditure was US$10,032,340 (30 June 2021: US$9,055,372). The largest increases are bank fees and tax being mainly due to the increase of interest expense and the increase of the Tajikistan imposed Resource Tax due to the increase of ore grade from 91.01% to 92.08%. The operating profit for the period under review was US$4,910,000 (30 June 2021: US$4,848,000) and the loss before tax from the period was US$946,000 (30 June 2021: US$644,000). Cash and cash equivalents at the end of the period amounted to US$11,791,206 (30 June 2021: US$2,140,259). As at 30 June 2022, the Group had net liabilities of $31,304,559 (30 June 2021: net liabilities $21,518,316).
Given the limited production and cash balances the Group continues to be reliant on support from its major shareholder, CNMC, and its associates. In January 2022, the Group executed a loan agreement with CNMC Trade Company Limited (“CNMC Trade”) for a loan of up to USD $34.55 million (the“CNMC Loan”). As announced in January 2022, this CNMC Loan has been used to repay the existing China CITIC Bank Corporation Limited (“CITIC”) bank facilities of USD $34.55m (being USD20m advanced in January 2021 (“First Loan”) and USD14.55m advanced in March 2021 (“Second Loan”).
In addition, on 24 January 2022, the Group executed a foreign currency working capital loan agreement with China CITIC Bank Corporation Limited (Zhuhai Branch) (“CITIC”) for a loan facility of up to US$20 million (the “new CITIC Loan”), with an annual interest at 3.00% over 6 month LIBOR, which was used to repay US$20m of the CNMC Loan.
The Company currently has total debt facilities (including banking facilities), before interest, of c.US$319 million.
Additional Tajik Tax
During August 2022, the Tajik Revenue Authority conducted a routine tax inspection and concluded that the Tajik subsidiary (Pakrut LLC) had generated a taxable profit of USD $4 million for the financial year ended 31 December 2021 (this was higher than the taxable profit originally recognized by the Company for its subsidiary). Therefore, pursuant to Tajik tax regulations, an associated tax charge of approximately 12% of the total net profit was due. This was USD$500,000, which had not been previously provided for by the Company. This has been provided for in these interim financial statements.
Outlook
The Company remains confident in its ability to achieve the internal production target of 700,000 tons of ore set at the beginning of this year. This is considered an achievable target.
The Company continues to seek to improve its production capacity through technological innovation. Whilst improving production, the Company is also focusing on perfecting and improving the smelting process by reducing production costs, increasing recovery rates and improving competitiveness.
Whilst the Company has taken big strides in the production and operation of the Pakrut gold mine and achieved much, there are still challenges to overcome and targets to meet, such as: further high ore grade, improvement of internal controls and improved warehouse management. And due to the insufficient capacity of the flotation tailings pond, compared with the same period in 2021, the progress of production tasks lags behind to a certain extent. In the second half of the year, the production and engineering construction organization are under great pressure and the task is heavy, all of which we will look to address in the coming months.
Uncertainty created by the COVID-19 pandemic with regards to future production and operations still exists in Tajikistan, and the long term effects are difficult to predict and estimate but there does appear to be indications that the global community is bringing the situation under control, and the epidemic situation in Tajik is stabilizing. The Company will continue to monitor the situation, conduct regular nucleic acid inspection for all staff to ensure their health and make every effort to meet pandemic prevention and control requirements, as well as stabilizing the production and operation of Pakrut gold mine.
I would like to take this opportunity to thank all our employees, management and advisers for their continued hard work in 2022. I would also like to extend my thanks to all our stakeholders for their continued backing over the years. I very much look forward to updating our shareholders further on the mine developments, production levels, new strategy and direction.
Zhang Hui
CEO
29 September 2022
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE SIX MONTHS ENDED 30 JUNE 2022
Unaudited
Unaudited
Audited
Six months ended 30 June 2022
Six months
ended 30 June
2021
Year ended 31 December
2021
Note
US$’000
US$’000
US$’000
Revenue
30,710
30,865
71,992
Cost of sales
(15,469)
(14,595)
(37,256)
Gross profit
15,241
16,270
34,736
Other Operating income
8
–
–
Administrative and other expenses
(10,032)
(9,055)
(19,879)
Loss on foreign exchange
(280)
(143)
(1,855)
Other operating expenses
(27)
(2,224)
(2,416)
Operating profit
4,910
4,848
10,585
Interest income
–
6
6
Finance costs
(5,856)
(5,498)
(10,826)
Loss before Tax
(946)
(644)
(235)
Income tax
(3,971)
(731)
(6,012)
Loss for the period attributable to owners
(4,917)
(1,375)
(6,247)
of the Company
Other comprehensive income
–
–
–
Total comprehensive income for the period attributable to owners of the Company
(4,917)
(1,375)
(6,247)
Earnings per Share
Basic and diluted (cents)
3
(1.29)
(0.35)
(1.63)
All of the activities of the Group are classified as continuing.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2022
Unaudited
Unaudited
Audited
30 June 2022US$’000
30 June 2021 US$’000
31 December 2021US$’000
Non-Current Assets
Property, plant and equipment
4
359,111
368,036
364,337
Total Non-Current Assets
359,111
368,036
364,337
Current Assets
Inventories
18,991
18,238
17,334
Trade and other receivables
1,484
13,682
4,202
Cash and cash equivalents
11,791
2,140
7,472
Total Current Assets
32,266
34,060
29,008
Non-Current Liabilities
Borrowings
5
(65,000)
(324,846)
(65,000)
Provisions for other liabilities and charges
(1,084)
(995)
(1,084)
Total Non-Current Liabilities
(66,084)
(325,841)
(66,084)
Current Liabilities
Borrowings
5
(307,739)
(34,550)
(303,953)
Trade and other payables
(48,859)
(63,224)
(49,696)
Total Current Liabilities
(356,598)
(97,774)
(353,649)
Total Liabilities
(422,682)
(423,615)
(324,841)
Net Liabilities
(31,305)
(21,518)
(26,388)
Capital And Reserves
Share Capital
38
38
38
Share premium
65,901
65,901
65,901
Other reserves
10,175
10,175
10,175
Retained earnings
(107,419)
(97,632)
(102,502)
Total Equity
(31,305)
(21,518)
(26,388)
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE SIX MONTHS ENDED 30 JUNE 2022
Unaudited
Unaudited
Audited
Six months ended 30 June 2022
US$’000
Six months ended 30 June 2021
US$’000
Year ended31
Dec 2021
US$’000
Cash flows from Operating Activities
Loss before income tax
(946)
(646)
(235)
Adjustments for:
Finance income
–
4
(6)
Finance cost
5,856
5,498
10,826
Depreciation
6,215
5,617
7,972
Foreign exchange
280
–
1,853
Impairment
–
–
–
Change in working capital:
Inventory
(1,657)
2,327
(1,423)
Trade and other receivables
592
1,431
(1,869)
Trade and other payables
(6,738)
(7,055)
3,222
Other current assets
3,312
(12)
(549)
Other current liabilities
1,353
–
(5,890)
Tax paid
Net cash flows from Operating Activities
8,267
7,164
13,904
Cash flows from Investing Activities
Purchase of property, plant and equipment
(1,336)
(421)
(994)
Payments for mining rights and construction in progress
–
–
–
Disposal of PPE
Interest received
–
–
–
4
–
6
Net cash used in Investing Activities
(1,336)
(417)
(989)
Cash flows from Financing Activities
Proceeds from borrowings
54,550
99,550
99,550
Repayment of borrowings
(56,538)
(130,095)
(128,806)
Interest paid
(624)
(1,258)
(3,384)
Net Cash (used in)/from Financing Activities
(2,612)
(31,803)
(32,640)
Net (Decrease)/Increase in Cash and Cash
(4,319)
(25,056)
(19,724)
Equivalents
Cash and cash equivalents at beginning of the period
7,472
27,196
27,196
Cash and cash equivalents at end of the period
11,791
2,140
7,472
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE SIX MONTHS ENDED 30 JUNE 2022
Share
Share
Other
Retained
Total
capital
premium
reserve
earnings
equity
US$’000
US$’000
US$’000
US$’000
US$’000
Balance at 1 January 2021
38
65,901
10,175
(96,257)
(20,143)
Loss and total comprehensive income for the period
–
–
–
(1,375)
(1,375)
Balance at 30 June 2021
38
65,901
10,175
(97,632)
(21,518)
Loss and total comprehensive income for
–
–
–
(4,870)
(4,870)
the period
Balance at 31 December 2021 (audited)
38
65,901
10,175
(102,502)
(26,388)
Balance at 1 January 2022
38
65,901
10,175
(102,502)
(26,388)
Loss and total comprehensive income for the period
–
–
–
(4,917)
(4,917)
Balance at 30 June 2022 (unaudited)
38
65,901
10,175
(107,419)
(31,305)
NOTES TO THE INTERIM FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2022
1. Accounting Policies
i) Basis of preparation
China Nonferrous Gold Limited (the “Company”) is a company registered in the Cayman Islands. The condensed consolidated interim financial statements of the Company for the six months ended 30 June 2022 comprise the result of the Company and its subsidiaries (together referred to as the “Group”) and have been prepared in accordance with the AIM Rules for Companies. As permitted, the Company has chosen not to adopt IAS 34 “Interim Financial Statement” in preparing these interim financial statements.
The consolidated interim financial information for the period 1 January 2022 to 30 June 2022 is unaudited and has not been reviewed in accordance with International Standard on Review Engagements 2410 issued by the Auditing Practices Board. In the opinion of the Directors the condensed interim financial information for the period presents fairly the financial position, and results from operations and cash flows for the period in conformity with the generally accepted accounting principles consistently applied.
The condensed interim financial information incorporates unaudited comparative figures for the interim period 1 January 2021 to 30 June 2021 and extracts from the audited financial statements for the year to 31 December 2021. A copy of the accounts for that year has been delivered to members. The auditor’s report on those financial statements was unqualified. The financial information contained in this interim report does not constitute statutory accounts.
The interim report has not been audited or reviewed by the Company’s auditor. The key risks and uncertainties and critical accountancy estimates remain unchanged from 31 December 2021 and the accounting policies adopted are consistent with those used in the preparation of its financial statements for the year ended 31 December 2021.
ii) Cyclicality
The interim results for the six months ended 30 June 2022 are not necessarily indicative of the results to be expected for the financial year 2022. The operations of China Nonferrous Gold Limited may be subject to seasonal variations depending on the severity of snowfall levels at the mine site. The superposition of external unstable factors will affect the increasing operating pressure in the second half of the year. All units and departments of the company must have a clear understanding, take effective measures, make efforts from the aspects of safety and environmental protection, production organization, cost reduction and efficiency improvement, and strive to improve the basic management level to ensure the smooth operation of the safety and environmental protection situation and the smooth completion of the annual production and operation tasks.
2. Going Concern
The Interim Financial Statements have been prepared assuming the Company will continue as a going concern. Under the going concern assumption, an entity is ordinarily viewed as continuing in business for the foreseeable future with neither the intention nor the necessity of liquidation, ceasing trading or seeking protection from creditors pursuant to laws and regulations.
In assessing whether the going concern assumption is appropriate, the Directors take into account all available information for the foreseeable future, in particular for the twelve months from the date of approval of the Interim Financial Statements. This information includes:
As at the date of approval of these interim statements, and based upon consideration of the above, the Directors are satisfied that the Group has sufficient cash and loan facilities to finance the Group’s operating expenses and any further development and construction of the Pakrut Gold Project that is required. The Directors have a reasonable expectation that the Group has adequate resources to continue in operational existence and thus they continue to adopt the going concern basis of accounting in preparing the interim results.
3. Earnings per Share
June 2022
June 2021
December 2021
Basic and diluted earnings per share(cents)
(1.29)
(0.35)
(1.63)
The basic earnings per share is calculated by dividing the loss attributable to equity holders after tax of US$4,917,101 (30 June 2021: US$1,375,921) by the weighted average number of shares in issue and carrying the right to receive dividend. For all the periods disclosed up to 2022, the total number of shares remains unchanged being 382,392,292 shares.
4. Property, Plant and Equipment
Land
US$000
Office furniture and equipment
US$000
Motor
vehicles
US$000
Plant and
machinery
US$000
Producing
Mines
US$000
Assets under construction
US$000
Total
US$000
Cost
At 1 January 2021
33
693
8,698
23,277
378,425
–
411,125
Additions
–
–
190
805
–
–
994
Disposals
–
(90)
(3,465)
(2,639)
–
–
(6,193)
Settlement of historical liabilities
–
–
–
4,307
–
4,307
At 31 December 2021
33
602
5,423
21,443
382,732
–
410,233
Additions
–
13
–
486
–
492
991
Transfers
–
–
–
–
–
–
Disposals
–
–
–
–
–
–
–
–
At 30 June 2022
33
615
5,423
21,929
382,732
492
411,224
Accumulated Depreciation
At 1 January 2021
–
354
6,641
14,056
16,873
–
37,924
Charge for the period
–
–
319
2,521
9,026
–
11,866
Disposals
–
(90)
(2,112)
(1,690)
–
–
(3,892)
At 31 December 2021
–
264
4,847
14,888
25,899
–
45,898
Charge for the period
15
78
1,167
4,955
–
6,215
Disposals
–
–
–
–
–
–
–
At 30 June 2022
–
279
4,926
16,054
30,854
–
52,113
Net Book Value
At 30 June 2022
32
336
497
5,876
351,878
492
359,111
At 31 December 2021
32
341
575
6,555
356,833
–
364,377
Depreciation for producing mines is calculated based on the unit of production method amounting to $4,955,000 of depreciation charge for the 6 month period.
5. Borrowings
June 2022
June 2021
December 2021
US$000
US$000
US$000
Bank borrowings
85,000
99,550
99,550
Other loans
287,740
259,846
269,403
Less: unamortised borrowing costs
–
–
–
Total
372,740
359,396
368,953
Non-current portion
65,000
324,846
65,000
Current portion
307,740
34,550
303,953
The fair value of borrowings equals their carrying amounts, as the impact of discounting is not significant.
In January 2022 the Group executed a loan agreement with CNMC Trade Company Limited (“CNMC Trade”) for a loan of up to USD $34.55 million (the “CNMC Loan”). This CNMC Loan has been used to repay the existing China CITIC Bank Corporation Limited (“CITIC”) bank facilities of USD $34.55m (being USD20m advanced in January 2021 (“First Loan”) and USD14.55m advanced in March 2021 (“Second Loan”).
In January 2022, the Group executed a foreign currency working capital loan agreement with China CITIC Bank Corporation Limited (Zhuhai Branch) (“CITIC”) for a loan facility of up to US$20 million (the “new CITIC Loan”), which was used to repay US$20m of the CNMC Loan.
Of the total borrowings $372,740,000 (including finance costs), $85,000,000 were provided by banks (including $65,000,000 by Bank of Shanghai and $20,000,000 by China CITIC Bank), and the rest were provided by related parties.
China Nonferrous Gold Limited
China Nonferrous Gold Limited