TIDMVGM
RNS Number : 9034F
Vatukoula Gold Mines PLC
30 May 2013
30 May 2013
Vatukoula Gold Mines plc
("Vatukoula" or "the Company")
Interim Results to 28 February 2013
Vatukoula Gold Mines plc, the AIM listed (AIM: VGM) gold
producer focused on Fiji, is pleased to announce its Interim
Results for the half-year ended 28 February 2013.
-- Capital development investment opened up access to high grade Cayzer-Prince ore body
-- Phillip shaft produced 6.9 grams / tonne compared to the
previous six months which yielded 5.3 grams / tonne
Financial Highlights:
Half Year ended Half Year ended
28 February 2013 29 February 2012
------------------------------------------- ------------------ ------------------
Revenue (GBP'000) 20,822 30,383
EBITDA (GBP'000) 981 4,533
Cash generated from operating activities
(GBP'000) 343 4,375
Underlying operating (loss) / profit
(GBP'000) (2,274) 1,201
Cash cost per ounce sold 1,635 1,426
Average realised gold price (US$ / ounce) 1,681 1,676
Basic (loss) / earnings per share (pence) (2.26) 1.57
Capital investment (GBP'000) 7,304 6,865
------------------------------------------- ------------------ ------------------
Operational Highlights:
Half Year ended Half Year ended
28 February 2013 29 February 2012
----------------------------------------- ------------------ ------------------
Total underground tonnes mined (ore and
waste) 206,501 242,769
Strike drive development (metres) 882 2,632
Capital development (metres) 2,391 1,978
Ore processed (tonnes) 216,860 243,284
Average ore head grade (grams / tonne) 3.80 4.77
Total recovery (%) 73.24% 80.00%
Gold produced (ounces) 19,411 29,999
Gold shipped (ounces) 19,595 28,456
----------------------------------------- ------------------ ------------------
David Paxton, CEO of Vatukoula, commented:
"Our major focus for this period under review was to advance the
long term financing for the project. As the Company seeks the
development of new sections of existing ore bodies, it continues to
invest in capital development to open up access to higher grade ore
bodies. I am happy to say that the recent results at the Phillip
shaft are proof that our approach is heading in the right
direction.
As well, last year, a detailed review of our operations was
undertaken to identify a capital investment program. I am very
pleased with the external review, completed by independent
engineers, which provided a confirmation of our plans. Accessing
new sections of existing ore bodies is a key part of the capital
investment program, further supporting our current plans and
activities.
However, the lack of funding has resulted in our development
projects being either put on hold or severely reduced. With the
continued support of our strategic partners Zhongrun and now DRK
Energy we have been able to fund the working capital requirement at
the mine. We are actively working with DRK Energy to secure the
long term financing requirements of the mine."
Enquiries:
Vatukoula Gold Mines plc Daniel Stewart
+44 (0)20 7776
David Paxton + 44 (0)20 7440 0643 Colin Rowbury 6550
Kiran Morzaria
W.H. Ireland Limited Pelham, Bell Pottinger
+ 44 (0)20 7861
James Joyce + 44 (0)20 7220 1666 Charles Vivian 3232
James Bavister Daniel Thöle
Review of Operations
As highlighted as the beginning of this financial year the main
objectives for this period were to continue with our development
schedules to allow access to high grade mining sections. In the
first three months of this period we continued to invest heavily in
capital development which opened up access to the high grade
Cayzer-Prince ore body. This is reflected in an increase in grade
coming from the Phillip shaft of 6.9 grams / tonne compared to the
previous six months which yielded 5.3 grams / tonne.
Significant milestones have been achieved in our development
program, with both development at the Philip shaft on 20 level
("L") providing access to the Cayzer-Prince and Prince William ore
bodies and development in the Smith shaft on several levels
providing access to the Matanagata East ore body.
Capital constraints in the last three months have resulted in an
approximate 50% reduction in expenditure on capital development.
While we conclude the funding required for the expansion of
operations we will continue to limit capital expenditure which will
have the knock on effect to constraining production to current
rates.
Capital Development Progress
A detailed review of operations was undertaken last year and
identified a capital investment program to bring the mine to its
sustainable production target. The program identified four priority
mining areas that required additional underground development and
access: Cayzer Prince, Prince William, and two areas of the
Matanagata ore bodies. In addition to the review underground
drilling has indicated that the 1500 Split ore body which is
located in the hanging wall of the Prince William ore body at
Philip Shaft has good mining potential below the current areas
being mined.
Capital Development in the Philip Shaft area (Cayzer Prince,
Prince William and 1500 Split Ore bodies) has centred on the
development of two declines. The first decline has now been
completed down to 20L and has broken into the Philip Shaft on 20L.
The previous lowest mining horizon at Philip Shaft was 18L. The
shaft below the 18L is full of spillage and the holing of the
decline into the shaft on 20L is now allowing the shaft to be
cleaned out. Once this is completed the shaft will be re equipped
down to 20L allowing for easier personnel access to 20L and re
equipping of the 18L shaft ore passes for hoisting of ore and
waste.
This decline also provides access to the Prince William and 1500
Split ore bodies as well as access to the Western extremity of the
Cayzer Prince ore body. Level development has already commenced on
these access drives and development at the end of February was
within 100m of commencing ore development on the Prince William ore
body on 19L with the 1500 Split ore body being accessed only
another 40m further on from that point
The second decline allows central access to the Cayzer Prince
ore body below the existing 18L. This decline has already turned
out onto ore and limited stoping has commenced. This decline will
continue with main footwall drive development and further ore
access being only about 150m away
Further drilling results have allowed for development plans to
also be drawn up for additional access to the Prince William ore
body (and identified high grade footwall structures) on 18L, 17L,
16L and 14L and the Prince William and 1500 split ore bodies to the
north of the shaft on 16L, 15L and 13L
Capital development at Smith Shaft on the Matanagata ore body
has progressed well with the incline and associated footwall drives
having already opened up blocks for mining on the 15L.
All the above declines and inclines at Smith and Philip will
continue in order to access additional ore areas both deeper in the
mine (Philip) and up dip (Smith)
Dewatering of the Smith Shaft lower levels (which have been
flooded for many years) has continued. Dewatering commenced at the
19 L and is now dewatered to the 21L. The lowest areas of the Smith
Shaft are on 23L
Underground Production and Development
Gold production from underground mining was limited during the
undertaking and implementation of the capital investment program.
We continue to gradually implement footwall drive development
(below the ore body) as we believe that this approach will deliver
great benefits and allows for a reduced mining machinery fleet and
increased extraction ratio in the longer term (now already starting
to be realised at Smith Shaft). In the short-term however, it will
slow initial access to the ore and not produce any gold from
development. However we remain convinced that this program is
required for the long term sustainability at Vatukoula.
Operating Results Half Year Half Year % Variance
ended 28 February ended 29 February
2013 2012
-------------------------------------- ------------------- ------------------- -----------
Underground Mining
Total underground tonnes mined
(ore and waste) 206,501 242,769 (15%)
Operating development (metres) 6,779 8,628 (21%)
Strike drive development (metres) 882 2,632 (66%)
Capital development (metres) 2,391 1,978 21%
Total development (metres) 10,052 13,238 (24%)
Sulphide Plant
Sulphide ore delivered (tonnes) 126,063 165,339 (24%)
Sulphide head grade (grams / tonne) 4.86 5.68 (14%)
Oxide Plant
Ore delivered (tonnes) 91,547 78,994 16%
Oxide head grade (grams / tonne) 2.32 1.74 33%
Total (Sulphide + Oxide)
Ore processed (tonnes) 216,860 243,284 (11%)
Average ore head grade (grams /
tonne) 3.8 4.77 (20%)
Total recovery (%) 73.24% 80.00% (8%)
Gold produced (ounces) 19,411 29,999 (35%)
Gold shipped (ounces) 19,595 28,456 (31%)
-------------------------------------- ------------------- ------------------- -----------
Cash Costs
-------------------------------------- ------------------- ------------------- -----------
Cash cost per ounce sold (US$) 1,635 1,426 15%
Cash cost per tonne mined and milled
(US$ / tonne) 148 167 (11%)
Average realised gold price (US$
/ ounce) 1,681 1,676 0.3%
-------------------------------------- ------------------- ------------------- -----------
During the first half of the year we mined a total of 206,501
tonnes of ore and waste, a 15% decline on 242,769 tonnes mined in
the same period last year. The decline was driven by reduced
production from stoping areas while we were developing new
areas
Ore delivered from underground was 126,063 tonnes at a grade of
4.86 grams gold per tonne. This was lower than the previous half
years 165,339 tonnes at a grade of 5.68 grams per tonne, a decline
of 24% in tonnage and a 14.5% in the grade. The lower tonnage was a
reflection of lower strike drive development, reduced stoping
tonnes due to reduced face availability while developing to new
areas and improved stope mining widths.
The year on year variance in grade is a result of lower grade
being delivered from the Smith shaft. The lower grade from this
shaft is a result of local structural controls on an area of the
Matanagata deposit.
Total development decreased to 10,052 metres, a 24% reduction
compared to the same period last year. The variances in each
development type are detailed below.
-- Operating development includes all mining to access stopes
within an ore body (e.g. rises, cross-cuts and gullies). This type
of development is expensed as it is normally within the ore body
and once the mining has ceased the development has no further use.
Operating development decreased by 21% to 6,779 metres compared to
the same period last year. This reduction is a result of increased
resources being assigned to the capital development programme. Once
new development has exposed new mining areas, we expect an increase
in operating development.
-- Strike drive development is a unique category. Strike drives
are long-term (more than one year) horizontal access drives along
the strike of the ore body and provide access to the operating
development and stope mining. As these contain the mineralisation
within the drives, they are fully expensed. Strike drives are
dilutive and while we continue the current development programme
they will lower the overall sulphide head grade. The goal of the
development programme is to provide access to sufficient ore bodies
to allow the mine to produce at our planned rate. We were expecting
completion of this phase of development by end of 2013, however our
schedule has been delayed as a result of capital constraints. We
anticipate restarting the development program as a major part of
the capital investment program with the strike drive development
becoming a minor part of overall mining at Vatukoula and therefore
having only a minor impact on overall sulphide head grades. Strike
drive development decreased dramatically this half year to 882
metres (2,632 metres: HY 2012) as a result of our reduction in
non-essential development along with our cash preservation
programme.
-- Capital development metres are primarily comprised of
inclines, declines and footwall drives. This type of development is
carried out in waste and provides long term access to the ore
bodies, and is capitalised. Capital development increased by 21% to
2,391 metres compared to the same period last year. This is the
result of incline and decline access development (inclusive of the
18 level Philip Shaft decline development). Capital Development is
a major item of our new regime in underground mining at Vatukoula.
These capital development projects are being carried out by three
mechanised development machines ("Jumbos").
Surface Production
During the six months, production from the surface oxides
delivered 91,547 tonnes at an average grade of almost 2.32 grams
per tonne. A number of areas of surface material from historic
waste dumps at the mine have been uncovered by mine staff. The
surface oxide material is a supplemental source of gold production
and will be phased out once we have sufficient production from
underground sources.
Vatukoula Treatment Plant ("VTP")
Ore processed for the half year was 216,860 tonnes, an 11%
decrease compared to the half year ending 29 February 2012 (243,284
tonnes). The decrease was driven by the decreased underground
mining activities, which decreased ore delivered to the mill by 24%
from 165,339 tonnes in the half year ending February 2012 to
126,063 tonnes in the half year ending February 2013. This decrease
was off-set by a 16% increase in surface ore delivered to the mill,
from 78,994 tonnes in the half year ending February 2012 to 91,547
tonnes in the half year ending February 2013.
The average grade processed decreased from 4.77 grams of gold
per tonne in the half year ending February 2012, to 3.8 grams of
gold per tonne in the half year ending February 2013. This was
driven by lower grades delivered from underground mining operations
and an increase in lower grade surface tonnes delivered to the
mill.. Recoveries ran at 73% for the period compared to 80% in the
same period last year. Recoveries continue to be affected by the
sulphide waste material mined from the surface. In the long-run the
surface mining will be phased out and we expect that our recoveries
to return to between 81% and 85% dependent on the grade delivered
to the mill.
The mine shipped and sold 19,595 ounces of gold during for the
six months ended 28 February 2013 compared to 28,456 ounces in the
same period last year.
Capital Projects
As part of Vatukoula's strategy to expand, sustain and optimise
the mining operations in Fiji we have identified several projects
that exceed the sustaining capital investment normally required at
a mine of this nature. These projects form the majority of capital
investment program. Some projects were started in anticipation of a
debt financing, including essential; long term development. However
In December we severely curtailed the capital program to reduce
expenditure to 'necessary expenditure' only whilst awaiting the
necessary finance. This included the suspension of all surface
resource development drilling, and the underground development of
some areas of the mine. Although this has constrained production,
the mine personnel have managed to maintain operations until we can
secure the capital. The major capital projects that are either
under progress as essential items, or on hold pending finance, and
their progress and anticipated completion dates, are outlined
below.
Capital Projects Operational Drivers Measures / Progress Planned
Target Completion
Quarter
(Fiscal
Year)
18 Level Philip The planned decline is between Development Holed into This project
Decline Development the 18 level and 21 levels to shaft bottom 20 level is currently
of the Philip Shaft. This at 21 level Station in is on hold
decline will provide access Philip Shaft. until debt
to the bottom of the current funding
Philip Shaft, allowing for is secured
removal of spillage and
re-equipping of the lower
level loading pocket. The
decline will also provide
access to the lower levels
of the higher grade Prince
William and Cayzer Prince
ore bodies
Below 18 Level Development of declines Access Prince Decline holed On going
Philip Development below 18L, access Crosscuts William, Cayzer into shaft
and footwall drives to access Prince and on 20L and
both Prince William and 1500 Split access development
Cayzer Prince ore bodies ore bodies therefrom
below 18L is now on
footwall
drive 100m
from ore
Cayzer Prince
decline gained
access for
stoping.
Increased Further define the Mineral Metres Drilled This project This project
Mineral Resource Resource inventory and convert is currently is currently
Drilling these to Proven and Probable Full Year: suspended suspended
Mineral Reserves to replace 15,000 metres until debt until debt
the ounces mined. Better funding is funding
define the life of mine Mineral Reserve secured is secured
plan. Increase
Capital Development Develop Matanagata incline Access to Access to This project
Programme and footwall drives, Matanagata 15L Matanagata 15L Matanagata is currently
East footwall Drives, TTN stopes, stopes completed, is on hold
decline, 166N 16L footwall Access below 18L TTN decline until debt
drives and 166N HW2. current 18L and 166N funding
TTN, Access footwalls is secured
to 16L 166N put on hold
stopes in November
2012
Improved Haulage With the gradual introduction Secure additional Truck chutes This project
Fleet of footwall drives and the 8 trucks. operational is currently
associated benefits of higher Convert 6 in Matanagata is on hold
extraction of the ore body, loaders to and lower until debt
management have identified alternate 166N ore funding
that a change in the structure uses bodies Additional is secured
of the mining fleet will trucks mobilised
be required. Increased ore to site (rebuilds
and waste movement will in progress
require additional trucking - 2 out of
capacity. However reduced 4 operational)
loader capacity will be Additional
required through the use 4 trucks
of truck chutes to load to be sourced.
ore from stopes. A number 2 loaders
of the small 151 loaders converted
will be stood down or re-equipped to grader
for other uses such as materials and materials
supply. On-going sustaining handling
capital will then be required machines.
for change out of older/high
maintenance cost machines
as required.
Sautu Ventilation As part of the expansion % completed This project
Shaft improvement of operations, the mine is currently
will need to improve ventilation is on hold
to working faces, this is until debt
to be achieved, in part, funding
by reversing the air circulation is secured
in the Sautu Ventilation
Shaft from a down cast shaft
to a up cast shaft. This
is achieved by the purchase
and installation of large
industrial fans.
New Tailings The current tailings dams % completed Environmental This project
Dam Construction are estimated to reach full plans submitted. is currently
capacity by Q3 2014. To Construction is on hold
date we have identified to commence until debt
the site and carried out on receipt funding
the large majority of the of funds is secured
required technical works
for the new tailings dam.
--------------------- ----------------------------------- ------------------ -------------------- --------------
Financial Review
During the period the Company benefited from reduction in cost
of sales however the lower gold production and a relatively stable
gold price reduced the gross profit for the period to GBP0.9
million (HY 2012: GBP4.9 million). The lower gross profit affected
underlying operating loss resulting in a GBP2.3 million loss
compared to GBP1.2 million profit during the same period last year.
Net loss for the period was GBP2.5 million (HY 2012: Net profit
GBP1.2 million) this is attributed to the lower gross profits.
Revenue
Revenue for the half year was GBP20.8 million which is 31% lower
than the prior year period (GBP30.4 million). The Group's year on
year sales volume decreased by 8,862 ounces, thereby adversely
affected revenue. The average realised gold price was US$1,681 in
the half year ended February 2013 compared to US$1,676 per ounce in
the same period in 2012.
Cost of Sales and Operating Expenses
Cost of Sales and Operating Expenses decreased to GBP23.1
million in the half year ended February 2013 from GBP29.2 million
during the same period last year. An 11% decrease in ore mined and
delivered to the mill lowered costs by GBP3.1 million. Adjusting
for the decrease ore mined and delivered to the mill the remaining
GBP3 million reductions in costs are attributable like for like
to;
-- a decrease in mining and milling unit cost, of GBP2.6 million in additional costs;
-- a net GBP0.6 million increase in overhead and administrative
costs. This increase is as a result of a net increase in technical
and supervisory staff, and
-- a net decrease in other costs of GBP1 million inclusive of
gold duty and foreign exchange gains.
Cost of Sales and Operating Half Year ended 28 Half Year ended 29
Expenses February 2013 February 2012
-------------------------------
(GBP'000) (GBP'000)
------------------------------- ------------------- -------------------
Mining (11,620) (16,606)
Processing (4,561) (5,279)
Overheads (3,142) (2,725)
Gold Duty (583) (920)
Administrative expenses (1,236) (1,023)
Foreign exchange gains 1,532 901
Depreciation and amortisation (3,486) (3,530)
------------------------------- ------------------- -------------------
Total (23,096) (29,182)
------------------------------- ------------------- -------------------
Depreciation and amortisation was GBP3.5 million for the half
year ended 28 February 2013, similar to the same period last year
(GBP3.5 million).
Cash Costs
Cash costs for the half year ending 28 February 2013 were
US$1,634 per ounce sold (2012: US$1,426 per ounce). Improved cash
costs per tonne, as outlined above, reduced our cash cost per ounce
by US$211 per ounce. However these improvements in operating cost
were offset by a reduction in grade and a decrease in recovery rate
which elevated cash costs by US$323 per ounce and US$127 ounce
respectively. The remaining variance per ounce is attributable to
the effects of foreign exchange. The table below provides
reconciliation between cost of sales, operating expenses and cash
costs to calculate the cash cost per ounce sold.
Cash Costs Half Year ended Half Year ended
28 February 2013 29 February 2012
Mining (GBP'000) (11,620) (16,606)
Processing (GBP'000) (4,561) (5,279)
Overheads (GBP'000) (3,142) (2,725)
Gold duty (GBP'000) (583) (920)
Mine administrative costs (GBP'000) (209) (175)
Total cash costs of production (GBP'000) (20,115) (25,705)
GBGBP / US$ foreign exchange rate 0.65 0.64
Gold sold (Oz) 19,411 28,456
Tonnes mined and milled 216,860 243,284
Cash cost per ounce sold (US$ / Oz) 1,635 1,426
Cash cost per tonne mined and milled (US$
/ tonne) 148 167
------------------------------------------- ------------------ ------------------
Administrative Expenses
Administrative expenses totalled GBP1.2 million for the half
year ended 28 February 2013, which was a 21% increase in costs from
the same period in the prior year of GBP1.0 million. The
administrative expenses are those costs associated with maintaining
the London office and the administrative expenses in Fiji. Costs
include salaries, office rent, regulatory, audit, legal fees and
investor related expenses.
Exploration and Resource Definition Costs
As highlighted in the operations review we have curtailed our
capital expenditure and incurred GBP1.0 million exploration and
resource definition costs compared to the GBP1.6 million in the
same period last year. All the exploration and resource definition
costs were capitalised as an Intangible Asset in accordance with
the requirements of IFRS 6 Exploration for and Evaluation of
Mineral Assets.
Taxation and Other Expenses
During the period the Company had a tax credit of GBP0.2 million
(HY 2012: GBP0.3 million). This tax credit arises as a result of
the release of the deferred tax liability. Other expenses amounted
to GBP0.2 million in the half year ended 28 February 2013 (HY2012:
GBP0.2 million), in line with the same period last year
EBITDA
For the year half year ended 28 February 2013 EBITDA decreased
to GBP1.0 million from GBP4.5 million in the same period last year.
This decrease was driven by lower revenues and a lower gross profit
figure compared to the same period last year. Reconciliation
between net profit for the period and EBITDA is presented
below:
Half Year ended Half Year ended
28 February 2013 29 February 2012
(GBP'000) (GBP'000)
(Loss) / Profit for the period (2,458) 1,285
Less income tax credit 182 304
Plus depreciation and amortisation expense (3,486) (3,529)
Less finance income 2 36
Plus finance expense (137) (59)
-------------------------------------------- ---------------------------- ------------------
EBITDA 981 4,533
-------------------------------------------- ---------------------------- ------------------
Cash Flow
Net cash generated in operating activities was GBP0.3 million
for the half year ended 28 February 2013, a decrease of GBP4.0
million compared to the same period last year (cash generated of
GBP4.4 million). Prior to working capital movements the net
operating income was GBP0.03 million compared to GBP3.7 million in
the same period last year. The net operating income before changes
in working capital was increased by the changes in working capital
which generated GBP0.3 million (HY 2012: generated GBP0.7 million).
These changes in working capital were a result of an decrease in
inventories of GBP0.4 million a decrease in receivable of GBP1.8
million and a decrease in accounts payable of GBP1.9 million.
Cash flow used in investing activities equated to GBP7.3 million
for the year which represents a 6% increase from the same period
last year of GBP6.9 million. Of the GBP7.3 million used in
investing activities GBP1.1 million (HY 2012: GBP3.2 million) was
used in the purchase of plant and equipment and GBP6.2 million (HY
2012: GBP3.7 million) was used in underground development and
resource / exploration drilling. As of 28 February 2013 the Group
had cash and cash equivalents of GBP2.2 million (HY 2012: GBP4.5
million).
Post period events
On 8 April 2013 the Company announced that it had entered into a
subscription agreement with Zhongrun International Mining Co. Ltd.
("Zhongrun") whereby Zhongrun subscribed for 8,800,000 new ordinary
shares in the Company at a price of GBP0.15 per share (the
"Subscription Shares") to raise GBP1.32 million (the "Subscription
Agreement"). The Subscription Shares represent approximately 6.96%
of the enlarged issued share capital of the Company, increasing
Zhongrun's holding to 37,800,000 ordinary shares, representing
approximately 29.91% of the enlarged share capital of the
Company.
On 20 May 2013 the Company announced it has entered into a
subscription agreement with SCD Energy Inc., ("Subscriber"), which
is an indirectly wholly owned subsidiary of DRK Energy Co., Limited
("DRK") whereby the Subscriber has subscribed for 30,000,000 new
ordinary shares in the Company at a price of GBP0.15 per share (the
"Subscription Shares") to raise GBP4.5 million (the "Subscription
Agreement"). The Subscription Shares will represent approximately
19.2% of the enlarged issued share capital of the Company. The
first tranche was completed by the 28 May 2013 and the second will
be completed by the 17 June 2013.
In addition, under the Subscription Agreement, the Company and
DRK have agreed to work in conjunction to source the required debt
financing to fund the Company's planned expansion programme. Should
VGM enter into a debt financing package facilitated or introduced
by DRK of no less than US$40 million within 120 days of the
Subscription Agreement ("Debt Financing") DRK will have the option
to acquire an additional 24,000,000 new ordinary shares in the
Company (the "Option") at an exercise price of GBP0.15 per
share.
If, however the Company secures the Debt Financing within the
120 days from institutions that it is currently in discussions
with, the Option exercise price will be the lower of GBP0.25 or 90%
of the five day trading volume weighted average price ("VWAP")
following the announcement of the Debt Financing. These terms will
also apply if no debt financing is secured within the 120 days, in
which case the VWAP will be based on the 5 trading days after the
expiry of the 120 day period. The issue of shares under the option
would be subject to approval at a general meeting which will be
convened once the Company has more certainty on the nature and
timing of the Debt Financing.
If exercised, the Option would represent approximately 13.3% of
the enlarged issued share capital of the Company and in aggregate
with Subscription Shares DRK, the Subscriber would hold
approximately 29.9% of the enlarged issued share capital of the
Company.
In conjunction with the Subscription Agreement, the Company has
agreed that the Subscriber will be entitled to nominate 2 directors
for appointment to the board on completion of the first tranche of
the Subscription Agreement. Their appointment will be subject only
to approval by relevant regulatory authorities. Initially both of
these directors will hold non-executive positions on the board.
However, once a suitably qualified candidate has been identified,
one of the Subscriber's nominee non-executive directors will resign
and this candidate will be appointed as an executive director and
Chief Operating Officer.
On 22 May 2013 the Company announced that Colin Orr-Ewing has
tendered his resignation as Chairman and stepped down from the
Board of the Company with immediate effect. The company appointed
Yingbin Ian He, an existing director of the Company, as
Non-Executive Chairman, with immediate effect.
Outlook
The long term future of profitable mining operations at
Vatukoula requires access to new sections of existing ore bodies.
Accessing these ore bodies is the key part of our capital
investment program. However, the delay in securing debt funding has
delayed the development of mining in these new sections.
While we wait to complete our funding we have been undertaking
limited ore mining in existing open areas, and initiating mining in
new areas where possible resulting in reduced overall production.
Until additional funding is secured for the capital investment
program we expect production to be maintained at the current rate.
Therefore we do not expect any material variance from our current
production levels for the remainder of the financial year.
However, we are fully aware that a substantial capital
investment program is essential to place the mine onto a
sustainable production level. The capital investment consists of
essentially an underground development to access sufficient areas
for long term production, an extensive drilling program to better
define the ore bodies, an upgrade of our heavy vehicle engineering
team to provide and maintain a larger fleet of underground
equipment, and other ancillary projects.
We expect the capital investment program to cost in the region
of US$40 million. The program will start to deliver benefits within
3 months of the start, and we expect the entire program to be
complete within two years. Once complete we expect to be able to
maintain production at the historic levels.
Dave Paxton
30 May 2013
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE
INCOME Restated
6 months 6 months
Notes 28-Feb-13 29-Feb-12
(Unaudited) (Unaudited)
GBP'000 GBP'000
--------------------------------------- ------ ------------ ------------
Turnover 3 20,822 30,383
Cost of sales (19,906) (25,530)
Gross profit 916 4,853
--------------------------------------- ------ ------------ ------------
Operating expenses
Administrative expenses (1,236) (1,024)
Foreign exchange gains 1,532 901
Depreciation and amortisation expense (3,486) (3,529)
Underlying operating (loss) / profit (2,274) 1,201
--------------------------------------- ------ ------------ ------------
Inventory obsolescence write back 8 106
Gain on disposal of assets 29 -
Provision for mine rehabilitation - 46
Provision for doubtful debt expense (172) (4)
Share based payments expense (96) (345)
Operating (loss) / profit (2,505) 1,004
--------------------------------------- ------ ------------ ------------
Interest receivable and other income 2 36
Interest payable and similar charges (137) (59)
--------------------------------------- ------ ------------ ------------
Net (loss) / profit before taxation (2,640) 981
--------------------------------------- ------ ------------ ------------
Taxation 182 304
--------------------------------------- ------ ------------ ------------
(Loss) / profit for the period (2,458) 1,285
--------------------------------------- ------ ------------ ------------
Attributable to:
Owners of the Parent (2,458) 1,285
Non Controlling interest - -
--------------------------------------- ------ ------------ ------------
(2,458) 1,285
Other comprehensive expenses
Currency translation differences (509) (604)
--------------------------------------- ------ ------------ ------------
Total comprehensive (loss) / income
for the period (2,967) 681
--------------------------------------- ------ ------------ ------------
Attributable to:
Owners of the Parent (2,967) 681
Non Controlling interest - -
--------------------------------------- ------ ------------ ------------
(Loss) / earnings per share
--------------------------------------- ------ ------------ ------------
Pence Pence
Basic 5 (2.26) 1.57
Diluted 5 (2.26) 1.58
--------------------------------------- ------ ------------ ------------
All activities relate to continuing operations.
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL
POSITION
Notes 28-Feb-13 29-Feb-12 31-Aug-12
(Unaudited) (Unaudited) (Audited)
GBP'000 GBP'000 GBP'000
----------------------------------------------- ------ ------------ ------------ ----------
Assets
Non-current assets
Intangible assets 6 37,328 34,655 36,841
Property, plant and equipment 7 25,375 25,070 25,713
Mine properties and development 8 16,933 9,065 11,515
----------------------------------------------- ------ ------------ ------------ ----------
Total non-current assets 79,636 68,970 74,069
----------------------------------------------- ------ ------------ ------------ ----------
Current assets
Inventories 7,679 9,978 7,771
Trade and other receivables 4,497 7,165 6,383
Cash and cash equivalents 2,167 4,516 2,437
----------------------------------------------- ------ ------------ ------------ ----------
Total current assets 14,343 21,659 16,591
----------------------------------------------- ------ ------------ ------------ ----------
Total Assets 93,979 90,449 90,660
----------------------------------------------- ------ ------------ ------------ ----------
Current liabilities
Trade and other payables 8,443 5,710 10,053
Provisions 9 982 840 1,073
Borrowings 174 117 -
Vatukoula Social Assistance Trust Fund 1,230 1,202 1,189
Convertible loan 322 - -
----------------------------------------------- ------ ------------ ------------ ----------
Total current liabilities 11,151 7,869 12,315
----------------------------------------------- ------ ------------ ------------ ----------
Non-current Liabilities
Provisions 9 3,554 4,261 3,320
Convertible loan - 312 317
Vatukoula Social Assistance Trust Fund 16 13 15
Deferred tax liability 6,576 7,472 6,758
----------------------------------------------- ------ ------------ ------------ ----------
Total non-current liabilities 10,146 12,058 10,410
----------------------------------------------- ------ ------------ ------------ ----------
Shareholders' Equity
Share capital 10 5,828 4,378 4,828
Share premium account 87,259 76,709 81,659
Merger reserve 2,167 2,167 2,167
Foreign exchange reserve 1,531 1,186 1,022
Other reserves 2,978 2,703 2,882
Accumulated losses (27,081) (16,621) (24,623)
----------------------------------------------- ------ ------------ ------------ ----------
Total shareholders' equity 72,682 70,552 67,935
----------------------------------------------- ------ ------------ ------------ ----------
Total liabilities and shareholders' equity 93,979 90,449 90,660
----------------------------------------------- ------ ------------ ------------ ----------
Restated
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS 6 months 6 months
Notes 28-Feb-13 29-Feb-12
(Unaudited) (Unaudited)
GBP'000 GBP'000
--------------------------------------------------------- ------ ------------ ------------
Cash flows from operating activities
Operating (loss) / profit for the period: (2,505) 1,004
Adjustments for:
Share based payments 96 345
Depreciation and amortisation 3,486 3,529
Gain on disposal of assets (29) -
Inventory obsolescence write back (8) (106)
Foreign exchange gains (1,105) (810)
Provision for doubtful debt expense 172 4
Provision for mine rehabilitation - (46)
Movements in Employment Provisions (111) 161
--------------------------------------------------------- ------ ------------ ------------
Net operating (loss) / income before changes
in working capital (4) 4,081
--------------------------------------------------------- ------ ------------ ------------
Payment to Vatukoula Social Assistance Trust
Fund - (356)
Decrease / (increase) in inventories 368 (1,524)
Decrease in receivables 1,825 850
(Decrease) / increase in accounts payable (1,846) 1,324
--------------------------------------------------------- ------ ------------ ------------
Net cash generated in operating activities 343 4,375
--------------------------------------------------------- ------ ------------ ------------
Cash flows from investing activities
Payments for intangible assets 6 (997) (1,582)
Purchase of property plant and equipment 7 (1,096) (3,182)
Payments for mine properties and development 8 (5,242) (2,137)
Proceeds from disposals of property plant and 29 -
equipment
Interest received 2 36
--------------------------------------------------------- ------ ------------ ------------
Net cash used in investing activities (7,304) (6,865)
--------------------------------------------------------- ------ ------------ ------------
Cash flows before financing (6,961) (2,490)
--------------------------------------------------------- ------ ------------ ------------
Cash flows from financing activities
Proceeds from issuance of shares 10 6,600 -
Interest paid (126) (65)
Proceeds from borrowings 174 112
--------------------------------------------------------- ------ ------------ ------------
Net cash provided by financing activities 6,648 47
--------------------------------------------------------- ------ ------------ ------------
Net decrease in cash and cash equivalents (313) (2,443)
--------------------------------------------------------- ------ ------------ ------------
Cash and cash equivalents at beginning of the
period 2,437 6,892
Effect of foreign exchange on cash and cash equivalents 43 67
--------------------------------------------------------- ------ ------------ ------------
Cash and cash equivalents at end of the period 2,167 4,516
--------------------------------------------------------- ------ ------------ ------------
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
Equity
Share component
Ordinary Foreign based of
share Share Merger exchange payment convertible Accumulated
capital premium reserve reserve reserve loan note losses Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balance at 1
September
2012 4,828 81,659 2,167 1,022 2,837 45 (24,623) 67,935
Loss for the
period - - - - - - (2,458) (2,458)
Other
comprehensive
income
------------------ --------- --------- --------- --------- --------- ------------ ------------ ------------
- Currency
translation
differences - - - 509 - - - 509
Total
comprehensive
income - - - 509 - - (2,458) (1,949)
Issue of shares 1,000 5,600 - - - - - 6,600
Cost of share - - - - - - - -
issue
Share option - - - - - - - -
expired
Convertible loan - - - - - - - -
------------------ --------- --------- --------- --------- --------- ------------ ------------ ------------
Share based
payments - - - - 96 - - 96
Balance at 28
February
2013 5,828 87,259 2,167 1,531 2,933 45 (27,081) 72,682
Restated
Equity
Share component
Ordinary Foreign based of
share Share Merger exchange payment convertible Accumulated
capital premium reserve reserve reserve loan note losses Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balance at 1
September
2011 4,378 76,709 2,167 582 2,313 45 (17,656) 68,538
Profit for the
period - - - - - - 1,285 1,285
Other -
comprehensive
income
------------------ --------- --------- --------- --------- --------- ------------ ------------ ------------
- Currency
translation
differences - - - 604 - - - 604
Total
comprehensive
income - - - 604 - - 1,285 1,889
Issue of shares - - - - - - - -
Cost of share - - - - - - - -
issue
Share option - - - - - - - -
expired
Convertible loan - - - - - - - -
------------------ --------- --------- --------- --------- --------- ------------ ------------ ------------
Share based
payments - - - - 345 - - 345
Balance at 29
February
2012 4,378 76,709 2,167 1,186 2,658 45 (16,371) 70,772
------------------ --------- --------- --------- --------- --------- ------------ ------------ ------------
NOTES TO THE FINANCIAL INFORMATION
FOR THE SIX MONTHS ENDED 28 FEBRUARY 2013
1. General information
Vatukoula Gold Mines Plc. is registered in England and Wales
under number 5059077. The Company is governed by its articles of
association and the principal statute governing the Company is the
Companies Act 2006. The Company's registered office is at 2 More
London Riverside, London, SE1 2AP. The company is listed on the AIM
market of the London Stock Exchange. The principal activity of the
Group is the mining of gold ore and the refining of the ore into
gold Dore bars which are sold to be smelted into gold.
2. Basis of preparation
The interim condensed consolidated financial statements have
been prepared in accordance with International Accounting Standard
34, Interim Financial Reporting.
These interim condensed consolidated financial statements are
unaudited and does not constitute statutory financial statements.
The interim condensed consolidated financial statements incorporate
the results of the Group for the period from 1 September 2012 to 28
February 2013. The results for the year ended 31 August 2012 have
been extracted from the statutory financial statements for
Vatukoula Gold Mines plc. for the year ended 31 August 2012 which
are prepared under International Financial Reporting Standards
("IFRS") as adopted by the European Union. The interim financial
information should be read in conjunction with the annual financial
statements for the year ended 31 August 2012.
The same accounting policies, presentations and methods of
computation have been followed in these condensed financial
statements as were applied in the preparation of the Group's
financial statements for the year ended August 2012.
Certain prior year numbers have been restated, as detailed in
note 15.
3. Turnover and Segmental Analysis
All turnover in the Group in the current and prior period is
derived from the sales to one customer, which is included in the
Gold Mining Segment.
NOTES TO THE FINANCIAL INFORMATION
FOR THE SIX MONTHS ENDED 28 FEBRUARY 2013
3. Turnover and Segmental Analysis (continued)
Unattributed
28 Feb 2013 Head Office Gold Other
(Unaudited) Costs Mining Activity Total
GBP'000 GBP'000 GBP'000 GBP'000
------------------------------- ------------- --------- --------- ---------
Turnover - 20,822 - 20,822
------------------------------- ------------- --------- --------- ---------
Mining - (11,620) - (11,620)
Processing - (4,561) - (4,561)
Gold duty - (583) - (583)
Overheads - (3,142) - (3,142)
------------------------------- ------------- --------- --------- ---------
Cost of sales - (19,906) - (19,906)
------------------------------- ------------- --------- --------- ---------
Gross Profit - 916 - 916
------------------------------- ------------- --------- --------- ---------
Administrative expenses (943) (209) (84) (1,236)
Foreign exchange gains - 1,532 - 1,532
Depreciation and amortisation (793) (2,685) (8) (3,486)
------------------------------- ------------- --------- --------- ---------
Underlying operating loss (1,736) (446) (92) (2,274)
------------------------------- ------------- --------- --------- ---------
Inventory obsolescence - 8 - 8
Gain on disposal of assets - 29 29
Provision for doubtful
debt - (172) - (172)
Share based payments - (96) - (96)
------------------------------- ------------- --------- --------- ---------
Operating loss (1,736) (677) (92) (2,505)
------------------------------- ------------- --------- --------- ---------
Interest receivable and
other income 2 - - 2
Interest payable and similar
charges (23) (114) - (137)
------------------------------- ------------- --------- --------- ---------
Net loss before taxation (1,757) (791) (92) (2,640)
------------------------------- ------------- --------- --------- ---------
Taxation 182 - - 182
------------------------------- ------------- --------- --------- ---------
Loss for the period (1,575) (791) (92) (2,458)
------------------------------- ------------- --------- --------- ---------
Other Segment Items
Additions to intangible
assets - 997 - 997
Additions to property,
plant, and equipment - 1,096 - 1,096
Additions to mine properties
and development - 5,242 - 5,242
------------------------------- ------------- --------- --------- ---------
Current assets 684 13,486 173 14,343
Non currents assets 28,644 50,804 188 79,636
------------------------------- ------------- --------- --------- ---------
Current liabilities (807) (10,352) 8 (11,151)
Non current liabilities (6,575) (3,571) - (10,146)
------------------------------- ------------- --------- --------- ---------
NOTES TO THE FINANCIAL INFORMATION
FOR THE SIX MONTHS ENDED 28 FEBRUARY 2013
3. Turnover and Segmental Analysis (continued)
6 months Unattributed Restated
29-Feb-12 Head Office Gold Other
(Unaudited) Costs Mining Activity Total
GBP'000 GBP'000 GBP'000 GBP'000
------------------------------- ------------- --------- --------- ---------
Turnover - 30,383 - 30,383
------------------------------- ------------- --------- --------- ---------
Mining - (16,606) - (16,606)
Processing - (5,279) - (5,279)
Gold duty - (920) - (920)
Overheads - (2,725) - (2,725)
------------------------------- ------------- --------- --------- ---------
Cost of sales - (25,530) - (25,530)
------------------------------- ------------- --------- --------- ---------
Gross Profit - 4,853 - 4,853
------------------------------- ------------- --------- --------- ---------
Administrative expenses (758) (175) (90) (1,023)
Foreign exchange gains - 901 - 901
Depreciation and amortisation (1,218) (2,302) (10) (3,530)
------------------------------- ------------- --------- --------- ---------
Underlying operating (loss)
/ profit (1,976) 3,277 (100) 1,201
------------------------------- ------------- --------- --------- ---------
Inventory obsolescence - 106 - 106
Rehabilitation charge - 46 - 46
Provision for doubtful
debt - (4) - (4)
Share based payments (224) (121) - (345)
------------------------------- ------------- --------- --------- ---------
Operating (loss) / profit (2,200) 3,304 (100) 994
------------------------------- ------------- --------- --------- ---------
Interest receivable and
other income 27 9 - 36
Interest payable and similar
charges (28) (27) (4) (59)
------------------------------- ------------- --------- --------- ---------
Net (loss) / profit before
taxation (2,201) 3,286 (104) 981
------------------------------- ------------- --------- --------- ---------
Taxation 304 - - 304
------------------------------- ------------- --------- --------- ---------
(Loss) / Profit for the
period (1,897) 3,286 (104) 1,285
------------------------------- ------------- --------- --------- ---------
Other Segment Items
Additions to intangible
assets - 1,582 - 1,582
Additions to property,
plant, and equipment - 3,182 - 3,182
Additions to mine properties
and development - 2,137 - 2,137
------------------------------- ------------- --------- --------- ---------
Current assets 2,292 19,315 52 21,659
Non currents assets 29,633 38,928 229 68,790
------------------------------- ------------- --------- --------- ---------
Current liabilities (115) (7,746) (8) (7,869)
Non current liabilities (7,783) (4,275) - (12,058)
------------------------------- ------------- --------- --------- ---------
NOTES TO THE FINANCIAL INFORMATION
FOR THE SIX MONTHS ENDED 28 FEBRUARY 2013
4. Results for the period
The Interim results are not affected by seasonality or
cyclicity.
5. Earnings per share
(a) Basic
Basic (loss) / earnings per share is calculated by dividing the (loss)
/ profit for the year from continuing operations of the Group by the
weighted average number of ordinary shares in issue during the year
The calculation of consolidated (loss) / earnings per share is based
on the following (loss) / earnings and number of shares:
Restated
6 months 6 months
(Unaudited) (Unaudited)
28-Feb-13 29-Feb-12
GBP'000 GBP'000
--------------------------------------------- ------------ ---------------
(Loss) / profit after tax (2,458) 1,285
--------------------------------------------- ------------ ---------------
6 months 6 months
28-Feb-13 29-Feb-12
Number Number
--------------------------------------------- ------------ ---------------
Basic weighted average ordinary shares in
issue during the period 108,823,532 81,622,820
--------------------------------------------- ------------ ---------------
6 months 6 months
28-Feb-13 29-Feb-12
Pence Pence
--------------------------------------------- ------------ ---------------
Basic (loss) / earnings per share (2.26) 1.57
--------------------------------------------- ------------ ---------------
NOTES TO THE FINANCIAL INFORMATION
FOR THE SIX MONTHS ENDED 28 FEBRUARY 2013
5. Earnings per share (continued)
(b) Diluted
Diluted earnings per share is calculated by adjusting the weighted
average number of ordinary shares outstanding to assume the conversion
of dilutive potential ordinary shares. The Company has two categories
of dilutive potential ordinary shares: convertible loan notes and
share options / warrants. The convertible debt is assumed to have
been converted into ordinary shares, and the net profit is adjusted
to eliminate the interest expense less the tax effect. For the share
options, a calculation is performed to determine the number of shares
that could have been acquired at fair value (determined as the average
annual market share price of the company's shares) based on the monetary
value of the subscription rights attached to outstanding share options.
The number of shares calculated as above is compared with the number
of shares that would have been issued assuming the exercise of the
share options.
28-Feb-13 29-Feb-12
GBP'000 GBP'000
---------------------------------------------------- ------------ -----------
(Loss) / profit after tax (2,458) 1,285
Interest expense on convertible loan
note (net of tax) - 18
---------------------------------------------------- ------------ -----------
(Loss) / profit used to determine
diluted earnings per share (2,458) 1,303
---------------------------------------------------- ------------ -----------
28-Feb-13 29-Feb-12
Number Number
---------------------------------------------------- ------------ -----------
Basic weighted average ordinary shares
in issue during the period 108,823,532 81,622,820
Adjustments for:
Assumed conversion of convertible
loan note - 660,000
Share options / warrants - 329,715
---------------------------------------------------- ------------ -----------
Diluted weighted average ordinary shares in issue
during the period 108,823,532 82,612,535
---------------------------------------------------- ------------ -----------
28-Feb-13 29-Feb-12
Pence Pence
---------------------------------------------------- ------------ -----------
Diluted (loss) / earnings per share (2.26) 1.58
---------------------------------------------------- ------------ -----------
All potential shares were anti-dilutive for the period ended 28 February
2013 as the Group was in a loss making position. As a result diluted
loss per share for the period ended 28 February 2013 is disclosed
as the same value as basic loss per share.
NOTES TO THE FINANCIAL INFORMATION
FOR THE SIX MONTHS ENDED 28 FEBRUARY 2013
6. Intangible assets
Mining Computer Exploration
Rights Software expenditure Total
Group GBP'000 GBP'000 GBP'000 GBP'000
---------------------------------- -------- --------- ------------ --------
Cost
As at 1 September 2012 38,721 551 6,933 46,205
Additions - - 997 997
Disposals - - - -
Transferred from tangible assets - - - -
Exchange difference - 19 283 302
---------------------------------- -------- --------- ------------ --------
As at 28 February 2013 38,721 570 8,213 47,504
---------------------------------- -------- --------- ------------ --------
Amortisation
As at 1 September 2012 9,284 80 - 9,364
Current charge 794 15 - 809
Exchange difference - 3 - 3
---------------------------------- -------- --------- ------------ --------
As at 28 February 2013 10,078 98 - 10,176
---------------------------------- -------- --------- ------------ --------
Carrying value as at 28 February
2013 28,643 472 8,213 37,328
---------------------------------- -------- --------- ------------ --------
Mining Computer Exploration
Rights Software expenditure Total
Group GBP'000 GBP'000 GBP'000 GBP'000
---------------------------------- -------- --------- ------------ --------
Cost
As at 1 September 2011 38,414 243 2,769 41,426
Additions - - 4,164 4,164
Disposals - - (111) (111)
Transferred from tangible assets 307 299 - 606
Exchange difference - 9 111 120
---------------------------------- -------- --------- ------------ --------
As at 31 August 2012 38,721 551 6,933 46,205
---------------------------------- -------- --------- ------------ --------
Amortisation
As at 1 September 2011 7,313 56 - 7,369
Current charge 1,971 23 - 1,994
Exchange difference - 1 - 1
---------------------------------- -------- --------- ------------ --------
As at 31 August 2012 9,284 80 - 9,364
---------------------------------- -------- --------- ------------ --------
Carrying value as at 31 August
2011 29,437 471 6,933 36,841
---------------------------------- -------- --------- ------------ --------
NOTES TO THE FINANCIAL INFORMATION
FOR THE SIX MONTHS ENDED 28 FEBRUARY 2013
6. Intangible assets (continued)
Mining Computer Exploration
Rights Software expenditure Total
Group GBP'000 GBP'000 GBP'000 GBP'000
---------------------------------- -------- --------- ------------ --------
Cost
As at 1 September 2011 38,414 243 2,769 41,426
Additions - - 1,582 1,582
Disposals - 80 28 108
Exchange difference - 9 122 131
---------------------------------- -------- --------- ------------ --------
As at 29 February 2012 38,414 332 4,501 43,247
---------------------------------- -------- --------- ------------ --------
Amortisation
As at 1 September 2011 7,313 56 - 7,369
Current charge 1,217 5 - 1,222
Exchange difference - 1 - 1
---------------------------------- -------- --------- ------------ --------
As at 29 February 2012 8,530 62 - 8,592
---------------------------------- -------- --------- ------------ --------
Carrying value as at 29 February
2012 29,884 270 4,501 34,655
---------------------------------- -------- --------- ------------ --------
The Mining rights represent the mining rights acquired on the
acquisition of the Vatukoula Gold Mine in April 2008. The
amortisation of the Mining Rights is calculated on a unit of
production basis, based on forecast production and the total
Mineral Reserves. At the current production, reserves and gold
price, the useful economic life is expected to be 7 years. This
rate will vary from year to year and is dependent on the mineral
reserves which are reassessed every year. Amortisation is included
in depreciation and amortisation in the Statement of Comprehensive
Income.
For the year ended August 2012 the directors carried out an
impairment review. As in previous years, this was based on an
estimate of discounted future cash flows from the development and
operation of the Vatukoula Gold Mine. The directors have used past
experience and an assessment of future conditions, together with
external sources of information, to determine the assumptions which
were adopted in the preparation of a financial model to estimate
the cashflows.
The recoverable amount of the mine is determined by using a net
present value calculation based on the estimated
economically recoverable portion of the total Mineral Resource
and the life of mine plan. The life of mine plan is currently 7
years. This Mineral Resource is used rather than the Mineral
Reserve as the Mineral Reserve will not represent the total
recoverable amount from the mine. This is because it excludes ore
deposits that are above the economic cut off grade within the
Inferred Mineral Resource category.
The key assumptions therein are those regarding discount rates,
and expected changes to selling prices and direct costs during the
period. Management estimates discount rates using pre-tax rates
that reflect current market assessments of the time value of money
and the risks specific to the mine and the rate used was 10%.
The production is based on the directors' forecast of the mine's
maximum output and based on the mine achieving its operating
capacity. The directors believe this rate is justified based on the
current progress of the mine. A deferred tax liability of
GBP10,757,000 arose in 2008 in respect of the intangible assets
recognised on the acquisition in the prior periods. The deferred
tax liability is in respect of future taxable profits potentially
generated from the exploration of the mining rights.
The Exploration expenditure is an internally generated
intangible asset, and represents costs associated with the
exploration and evaluation of mineral deposits on our mining and
special prospecting licenses and are capitalised under IFRS 6. The
directors believe that there are no indicators of impairment.
The Computer Software expenditure represents the costs
associated with the purchase of specialised mining and inventory
software.
For the half year ended 28 February 2013, management reviewed
the estimates used in the calculation of the amortisation rates for
Intangible Assets. The details of the changes in estimates are
discussed in note 16.
NOTES TO THE FINANCIAL INFORMATION
FOR THE SIX MONTHS ENDED 28 FEBRUARY 2013
7. Property, plant and equipment
Freehold Fixtures
and leasehold Work Plant Motor Mine fittings
land in progress and machinery vehicles assets and equipment Total
Group GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------ --------------- ------------- --------------- ---------- --------- --------------- ---------
Cost
As at 1 September
2012 1,024 2,572 33,466 341 1,998 145 39,546
Additions - 1,096 - - - - 1,096
Transferred on
completion - (1,620) 1,620 - - - -
Disposals - - (151) - - - (151)
Exchange
difference 32 60 1,773 8 68 1 1,942
------------------ --------------- ------------- --------------- ---------- --------- --------------- ---------
As at 28 February
2013 1,056 2,108 36,708 349 2,066 146 42,433
------------------ --------------- ------------- --------------- ---------- --------- --------------- ---------
Accumulated
depreciation
As at 1 September
2012 13 - 13,021 238 463 98 13,833
Charge for the
period 6 - 2,195 1 31 1 2,234
Disposals - - (151) - - - (151)
Exchange
difference 1 - 1,119 4 17 1 1,142
------------------ --------------- ------------- --------------- ---------- --------- --------------- ---------
As at 28 February
2013 20 - 16,184 243 511 100 17,058
------------------ --------------- ------------- --------------- ---------- --------- --------------- ---------
Net book value
At 28 February
2013 1,036 2,108 20,524 106 1,555 46 25,375
------------------ --------------- ------------- --------------- ---------- --------- --------------- ---------
At 31 August 2012 1,011 2,572 20,445 103 1,535 47 25,713
------------------ --------------- ------------- --------------- ---------- --------- --------------- ---------
Freehold Fixtures
and leasehold Work Plant Motor Mine fittings
land in progress and machinery vehicles assets and equipment Total
Group GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------ --------------- ------------- --------------- ---------- --------- --------------- ---------
Cost
As at 1 September
2011 1,165 201 28,087 370 2,869 148 32,840
Additions - 7,245 - - - - 7,245
Transferred on
completion 90 (4,607) 4,517 - - - -
Disposals - - (122) - - - (122)
Changes in
estimates - - - - (932) - (932)
Transferred to
intangible (250) (299) - - - - (549)
Exchange
difference 19 32 984 (29) 61 (3) 1,064
------------------ --------------- ------------- --------------- ---------- --------- --------------- ---------
As at 31 August
2012 1,024 2,572 33,466 341 1,998 145 39,546
------------------ --------------- ------------- --------------- ---------- --------- --------------- ---------
Accumulated
depreciation
As at 1 September
2011 - - 8,643 251 315 98 9,307
Charge for the
period 13 - 3,835 2 139 2 3,991
Disposals - - (27) - - - (27)
Impairment - - - - - - -
Exchange
difference - - 570 (15) 9 (2) 562
------------------ --------------- ------------- --------------- ---------- --------- --------------- ---------
As at 31 August
2012 13 - 13,021 238 463 98 13,833
------------------ --------------- ------------- --------------- ---------- --------- --------------- ---------
Net book value
At 31 August 2012 1,011 2,572 20,445 103 1,535 47 25,713
------------------ --------------- ------------- --------------- ---------- --------- --------------- ---------
At 31 August 2011 1,165 201 19,444 119 2,554 50 23,533
------------------ --------------- ------------- --------------- ---------- --------- --------------- ---------
NOTES TO THE FINANCIAL INFORMATION
FOR THE SIX MONTHS ENDED 28 FEBRUARY 2013
7. Property, plant and equipment (continued)
Freehold Fixtures
and leasehold Work Plant Motor Mine fittings
land in progress and machinery vehicles assets and equipment Total
Group GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------ --------------- ------------- --------------- ---------- --------- --------------- ---------
Cost
As at 1 September
2011 1,165 201 28,087 370 2,869 148 32,840
Additions - 3,182 - - - - 3,182
Transferred on
completion 90 (1,988) 1,898 - - - -
Transferred to
intangible - (80) (28) - - - (108)
Exchange
difference 29 26 1,464 (6) 92 (1) 1,604
------------------ --------------- ------------- --------------- ---------- --------- --------------- ---------
As at 29 February
2012 1,284 1,341 31,421 364 2,961 147 37,518
------------------ --------------- ------------- --------------- ---------- --------- --------------- ---------
Accumulated
depreciation
As at 1 September
2011 - - 8,643 251 315 98 9,307
Charge for the
period 7 - 1,902 1 117 1 2,028
Transferred to
intangible - - - - - - -
Exchange
difference - - 853 (3) 13 - 863
------------------ --------------- ------------- --------------- ---------- --------- --------------- ---------
As at 29 February
2012 7 - 16,184 243 511 100 12,198
------------------ --------------- ------------- --------------- ---------- --------- --------------- ---------
Net book value
At 29 February
2012 777 1,341 20,023 15 2,516 48 24,720
------------------ --------------- ------------- --------------- ---------- --------- --------------- ---------
NOTES TO THE FINANCIAL INFORMATION
FOR THE SIX MONTHS ENDED 28 FEBRUARY 2013
8. Mine properties and development
28-Feb-13 29-Feb-12 31-Aug-12
(Unaudited) (Unaudited) (Audited)
GBP'000 GBP'000 GBP'000
------------------------------- ------------ ------------ ----------
Cost
Balance as at 1 September 13,865 8,695 8,695
Additions 5,242 2,137 4,952
Foreign exchange difference 722 313 218
------------------------------- ------------ ------------ ----------
Balance at end of period/year 19,829 11,145 13,865
------------------------------- ------------ ------------ ----------
Depreciation
Balance as at 1 September 2,350 1,740 1,740
Current charge 445 278 566
Foreign exchange difference 101 62 44
------------------------------- ------------ ------------ ----------
Balance at end of period/year 2,896 2,080 2,350
------------------------------- ------------ ------------ ----------
Carrying value
Balance at end of period/year 16,933 9,065 11,515
------------------------------- ------------ ------------ ----------
For the half year ended 28 February 2013, management reviewed
the estimates used in the calculation of the depreciation rates for
Mineral Properties and Development. The details of the changes in
estimates are discussed in note 16.
9. Provisions
Group
------------------------------------ ------------ -------------------- -------------------------
28-Feb-13 29-Feb-12 31-Aug-12
(Unaudited) (Unaudited) (Audited)
GBP'000 GBP'000 GBP'000
------------------------------------ ------------ -------------------- ------------- ----------
Current
Provision for annual leave 271 254 272
Provision for workers compensation 121 90 137
Other employee related provisions 590 496 664
------------------------------------ ------------ -------------------- ------------- ----------
982 840 1,073
------------------------------------ ------------ -------------------- ------------- ----------
Non current
Provision for mine rehabilitation 3,426 4,200 3,247
Provision for Long Service Leave 128 61 73
------------------------------------ ------------ -------------------- ------------- ----------
3,554 4,261 3,320
------------------------------------ ------------ -------------------- ------------- ----------
4,536 5,101 4,393
------------------------------------ ------------ -------------------- ------------- ----------
Employee
related Long Service
provisions Mine rehabilitation Leave Total
Group GBP'000 GBP'000 GBP'000 GBP'000
------------------------------------ ------------ -------------------- ------------- ----------
Balance at 1 September 2012 1,073 3,247 73 4,393
Additional provisions made during
the period 325 - 24 349
Reversed during the period (446) - (14) (460)
Unwinding of discount - 23 - 23
Changes in estimates - - - -
Exchange difference 30 156 45 231
------------------------------------ ------------ -------------------- ------------- ----------
Balance at 28 February 2013 982 3,426 128 4,536
------------------------------------ ------------ -------------------- ------------- ----------
NOTES TO THE FINANCIAL INFORMATION
FOR THE SIX MONTHS ENDED 28 FEBRUARY 2013
9. Provisions (continued)
Employee related provisions include a provision for unpaid
annual leave based on Fijian labour legislation, and a provision
for legally required workers compensation relating to work
injuries. Based on current estimates, these are expected to realise
in approximately 10 years.
The provision for mine rehabilitation represents the current
mine closure plan. The present value of the estimated cost is
capitalised as property, plant and equipment. Over time the
discounted liability will be increased for the change in the
present value based on the discount rates that reflect the current
market assessments and the risks specific to the liability. The
provision for Mine rehabilitation is expected to be expensed over
10 years. This is based on the current economic useful life of
seven years plus a further three years of rehabilitation. The
economic useful life is dependent on the economic viability of
extracting the contained Mineral Reserves and may vary on a year by
year basis dependant on the mining / processing costs and the price
of gold. In addition the quantum of the provision may vary on a
year by year basis dependant on the costs associated with executing
the Mine Rehabilitation Plan.
Long Service Leave is a contractual obligation for additional
leave days earned by employees with 10 years or more service. Based
on current estimates, these are expected to realise in
approximately 10 years.
10. Share capital
Group and Company
------------------------------------------ ------------ ------------------------
(a) Share Capital
28-Feb-13 29-Feb-12 31-Aug-12
(Unaudited) (Unaudited) (Audited)
GBP'000 GBP'000 GBP'000
------------------------------------------ ------------ ------------ ----------
Allotted, issued and fully paid
116,558,339 ordinary shares of 5p each
(31 Aug 2012: 96,558,339 ordinary shares
of 5p each) 5,828 4,378 4,828
------------------------------------------ ------------ ------------ ----------
(b) Share issues during the period
The following shares were issued during the period ended 28
February 2013:
Issue Par Value
value value Share of shares
per per premium Share Share issued
Share Share per Share Shares Capital premium for cash
Date GBP GBP GBP Number GBP GBP GBP
---------------- ------------ ------- ------- ----------- ----------- ---------- ---------- -----------
Shares issued
for cash
Issue for cash 09/11/2012 0.33 0.05 0.28 20,000,000 1,000,000 5,600,000 6,600,000
20,000,000 1,000,000 5,600,000 6,600,000
----------------------------- ------- ------- ----------- ----------- ---------- ---------- -----------
NOTES TO THE FINANCIAL INFORMATION
FOR THE SIX MONTHS ENDED 28 FEBRUARY 2013
10. Share capital (continued)
(c) Warrants and options
During the period ending 28 February 2013 the following
movements occurred on the warrants and options to purchase 5p
ordinary shares in Vatukoula Gold Mines Plc.
Average Number
exercise of
price Number Number Number Number Number Number warrants Number Number
per of of Number of of of of and of of
share options options of options options options options options options options options
Exercise
price GBP0.50 GBP0.70 GBP0.77 GBP0.88 GBP0.90 GBP0.95 GBP0.97 GBP1.00 GBP1.39 GBP1.75 Total
----------- ------------------ --------- --------- --------------- --------- --------- --------- --------- ----------- --------- --------- ------------
Balance at
1
September
2012 1.1 863,000 360,000 - 235,000 400,000 365,000 700,000 4,200,000 484,112 800,000 8,407,112
Granted
during
the period - - - - - - - - - - - -
Exercised
during
the period - - - - - - - - - - - -
Expired
during
the period - - - - - - - - - - - -
----------- ------------------ --------- --------- --------------- --------- --------- --------- --------- ----------- --------- --------- ------------
Balance at
28
February
2013 1.1 863,000 360,000 - 235,000 400,000 365,000 700,000 4,200,000 484,112 800,000 8,407,112
----------- ------------------ --------- --------- --------------- --------- --------- --------- --------- ----------- --------- --------- ------------
Average Number
exercise of
price Number Number Number Number Number Number warrants Number Number
per of of Number of of of of and of of
share options options of options options options options options options options options
Exercise
price GBP0.50 GBP0.70 GBP0.77 GBP0.88 GBP0.90 GBP0.95 GBP0.97 GBP1.00 GBP1.39 GBP1.75 Total
----------- ------------------ --------- --------- --------------- --------- --------- --------- --------- ----------- --------- --------- ------------
Balance at
1
September
2011 1.1 863,000 - - 235,000 400,000 365,000 700,000 4,200,000 484,112 - 7,247,112
Granted
during
the
period 1.1 - 360,000 9,000,000 - - - - - - 800,000 10,160,000
Exercised
during
the period - - - - - - - - - - - -
Expired
during
the
period 0.8 - - (9,000,000) - - - - - - - (9,000,000)
----------- ------------------ --------- --------- --------------- --------- --------- --------- --------- ----------- --------- --------- ------------
Balance at
31
August
2012 1.1 863,000 360,000 - 235,000 400,000 365,000 700,000 4,200,000 484,112 800,000 8,407,112
----------- ------------------ --------- --------- --------------- --------- --------- --------- --------- ----------- --------- --------- ------------
At the period end 6,347,112 options (31 August 2012: 6,347,112
options) are exercisable.
NOTES TO THE FINANCIAL INFORMATION
FOR THE SIX MONTHS ENDED 28 FEBRUARY 2013
10. Share capital (continued)
(c) Warrants and options (continued)
Average Number
exercise of
price Number Number Number Number Number Number warrants Number Number
per of of of of of of and of of
share options options options options options options options options options
Exercise
price GBP0.50 GBP0.70 GBP0.88 GBP0.90 GBP0.95 GBP0.97 GBP1.00 GBP1.39 GBP1.75 Total
----------- --------- -------- --------- -------- -------- -------- -------- ---------- -------- -------- ----------
Balance at
1
September
2011 1.1 863,000 - 235,000 400,000 365,000 700,000 4,200,000 484,112 - 7,247,112
Granted
during
the
period 1.4 - 360,000 - - - - - - 800,000 1,160,000
Exercised
during
the period - - - - - - - - - - -
Expired
during
the period - - - - - - - - - - -
----------- --------- -------- --------- -------- -------- -------- -------- ---------- -------- -------- ----------
Balance at
29
February
2012 1.1 863,000 360,000 235,000 400,000 365,000 700,000 4,200,000 484,112 800,000 8,407,112
----------- --------- -------- --------- -------- -------- -------- -------- ---------- -------- -------- ----------
NOTES TO THE FINANCIAL INFORMATION
FOR THE SIX MONTHS ENDED 28 FEBRUARY 2013
11. Post balance sheet events
On 8 April 2013 the Company announced that it had entered into a
subscription agreement with Zhongrun International Mining Co. Ltd.
("Zhongrun") whereby Zhongrun subscribed for 8,800,000 new ordinary
shares in the Company at a price of GBP0.15 per share (the
"Subscription Shares") to raise GBP1.32 million (the "Subscription
Agreement"). The Subscription Shares represent approximately 6.96%
of the enlarged issued share capital of the Company, increasing
Zhongrun's holding to 37,800,000 ordinary shares, representing
approximately 29.91% of the enlarged share capital of the
Company.
On 20 May 2013 the Company announced it has entered into a
subscription agreement with SCD Energy Inc., ("Subscriber"), which
is an indirectly wholly owned subsidiary of DRK Energy Co., Limited
("DRK") whereby the Subscriber has subscribed for 30,000,000 new
ordinary shares in the Company at a price of GBP0.15 per share (the
"Subscription Shares") to raise GBP4.5 million (the "Subscription
Agreement"). The Subscription Shares will represent approximately
19.2% of the enlarged issued share capital of the Company. The
first tranche was completed by the 28 May 2013 and the second will
be completed by the 17 June 2013.
In addition, under the Subscription Agreement, the Company and
DRK have agreed to work in conjunction to source the required debt
financing to fund the Company's planned expansion programme. Should
VGM enter into a debt financing package facilitated or introduced
by DRK of no less than US$40 million within 120 days of the
Subscription Agreement ("Debt Financing") DRK will have the option
to acquire an additional 24,000,000 new ordinary shares in the
Company (the "Option") at an exercise price of GBP0.15 per
share.
If, however the Company secures the Debt Financing within the
120 days from institutions that it is currently in discussions
with, the Option exercise price will be the lower of GBP0.25 or 90%
of the five day trading volume weighted average price ("VWAP")
following the announcement of the Debt Financing. These terms will
also apply if no debt financing is secured within the 120 days, in
which case the VWAP will be based on the 5 trading days after the
expiry of the 120 day period. The issue of shares under the option
would be subject to approval at a general meeting which will be
convened once the Company has more certainty on the nature and
timing of the Debt Financing.
If exercised, the Option would represent approximately 13.3% of
the enlarged issued share capital of the Company and in aggregate
with Subscription Shares DRK, the Subscriber would hold
approximately 29.9% of the enlarged issued share capital of the
Company.
In conjunction with the Subscription Agreement, the Company has
agreed that the Subscriber will be entitled to nominate 2 directors
for appointment to the board on completion of the first tranche of
the Subscription Agreement. Their appointment will be subject only
to approval by relevant regulatory authorities. Initially both of
these directors will hold non-executive positions on the board.
However, once a suitably qualified candidate has been identified,
one of the Subscriber's nominee non-executive directors will resign
and this candidate will be appointed as an executive director and
Chief Operating Officer.
On 22 May 2013 the Company announced that Colin Orr-Ewing has
tendered his resignation as Chairman and stepped down from the
Board of the Company with immediate effect. The company appointed
Yingbin Ian He, an existing director of the Company, as
Non-Executive Chairman, with immediate effect.
12. Capital Commitments
Capital commitments as at 28 February 2013 amounted to
GBP438,900 (31 August 2012; GBP495,728). These commitments are in
relation to projected expenditure on mine properties and
development.
13. Related party transactions
During the period, the Company paid consultancy fees of GBPnil
(31 August 2012: GBP59,500) to Promaco Ltd, a company related to J
I Stalker, director of Vatukoula Gold Mines Plc. There were no
amounts payable to Promaco Ltd at the period end.
14. Contingent liabilities
No significant changes in contingent liabilities occurred since
the end of last annual reporting period.
NOTES TO THE FINANCIAL INFORMATION
FOR THE SIX MONTHS ENDED 28 FEBRUARY 2013
15. Restatement of prior year numbers
Comparative numbers for the 6 months ended 29 February 2012 have
been restated to reflect the annual financial statements for the
year ended 31 August 2012 regarding the transfer of GBP250,000 from
Property, Plant and Equipment to acquisition costs. The amount was
originally impaired in the 6 months statements for 29 February
2012.
16. Changes to accounting estimates
The following changes to accounting estimates were made in the
2013 financial year in accordance with IAS 8.39:
-- The basis for the Unit of production calculation used to
determine the amortisation rate for intangible assets has been
changed to the total expected delivered ounces per the Life of Mine
plan. Previously, opening contained Reserves per the prior year
Reserves & Resources report was used a base for this
calculation. This resulted in a decrease in amortisation of
GBP320,274
-- The impact of the above change in estimate also reduced the Taxation credit GBP74,124
-- The basis for the Unit of production calculation used to
determine the depreciation rate for Mineral Properties and
Development has been changed to the total expected delivered ounces
per the Life of Mine plan. Previously, opening contained Indicated
Resources per the prior year Reserves & Resources report was
used a base for this calculation. This resulted in an increase in
depreciation of GBP79,179
-- The allocation of development related overheads between
operating expenditure and capitalised MPD was calculated on a per
tonne basis. Previously, this allocation was calculated on a per
metre basis. This reduced cost of sales by GBP2.8 million and
increased capitalised MPD by GBP2.8million.
17. Cautionary Statement
The interim results announcement contains forward looking
statements. These have been made by the Directors in good faith
based on the information available to them up to the time of their
approval of this report. The Directors can give no assurance that
these expectations will prove to have been correct. Due to the
inherent uncertainties, including both economic and business risk
factors underlying such forward looking information, actual results
may differ materially from those expressed or implied by these
forward looking statements. The Directors undertake no obligation
to update any forward looking statements whether as a result of new
information, future events or otherwise.
There are a number of potential risks and uncertainties which
could have a material impact on the Group's performance over the
remainder of the financial year and could cause actual results to
differ materially from expected and historical results. These
include but are not limited to, competitor activity and competition
risk, changes in foreign exchange and commodity price and the
political and economic risks of operating in Fiji.
18. Approval of interim financial statements
The interim financial statements for the six months ended 28
February 2013 were approved by the board of directors on 30 May
2013.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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