TIDMFAR
RNS Number : 4903A
Ferro-Alloy Resources Limited
30 September 2020
Dissemination of a Regulatory Announcement that contains inside
information according to REGULATION (EU) No 596/2014 (MAR).
Ferro-Alloy Resources Limited ('FAR' or 'the Company' or 'the
Group')
Interim Results for the six months ended 30 June 2020
Ferro-Alloy Resources Limited, the vanadium producer and
developer of the large Balasausqandiq vanadium deposit in Southern
Kazakhstan, announces its unaudited results for the six months
ended 30 June 2020 .
Highlights:
-- Record high production: 98 tonnes of vanadium pentoxide in
the first half compared with 71 tonnes production in the same
period last year in spite of COVID-19 and continuing power
interruptions
-- Record high shipments to customers: 109.2 tonnes of vanadium
pentoxide compared with 79.6 tonnes in the same period last
year
-- Supplies of high grade concentrates secured under long term contract
-- Hydrometallurgical line closed because of COVID-19 for the
three months from March until May but pyrometallurgical operations
continued throughout
-- Upgrade to local feasibility study at the Balasausqandiq Vanadium Project continuing
-- Prices of vanadium pentoxide have been relatively stable in
2020, having fallen throughout 2019 from the peak of around $30/lb
in late 2018. The current level of around US$5-6/lb is lower than
historic averages.
Post-Period:
-- Step-increase of around 100% in production after the period
end, with a total of 70 tonnes of vanadium pentoxide produced in
the first two months of the third quarter compared with an average
production of 16.3 tonnes per month in the first half of 2020
-- Technology developed for the production of electrolyte for vanadium flow batteries
-- Equity and Bond fundraisings completed totalling c. GBP1.23m
For further information, visit www.ferro-alloy.com or
contact:
Ferro-Alloy Resources Limited
Nick Bridgen, Chief Executive Officer info@ferro-alloy.com
Shore Capital (Broker)
Corporate Advisory: Toby Gibbs / Mark Percy / John More Tel: +44 (0)207 408 4090
Corporate Broking: Jerry Keen
VSA Capital (Financial Adviser) Tel: +44 (0)203 005 5000
Andrew Monk / Simon Barton
St Brides Partners Limited (Financial PR & IR Adviser)
Catherine Leftley / Megan Dennison Tel: +44 (0)207 236 1177
Operations Review
The existing vanadium concentrate processing operation
In spite of cut-backs to the investment programme caused
principally by the COVID-19 pandemic, major improvements to the
production facilities at the Company's existing operations have
been made. In particular, the new pyrometallurgical process line
has been completed with the installation of the second of two
roasting ovens and the expansion of the leaching circuit, as well
as two press-filters commissioned. This resulted in an increase in
production of 38% in the first half of 2020 and would have been
higher but for COVID-19 restrictions and continuing power outages.
Starting from July 2020, production has doubled compared with the
average monthly production last year and there is significant
capacity for higher production when the COVID-19 restrictions are
ended and power interruptions are resolved.
Period Production Growth Shipments Growth
(tonnes of vanadium vs (tonnes of vanadium vs
pentoxide contained last pentoxide contained last
in AMV * ) period in AMV (*) ) period
Q1 2020 4 9.1 +53% 61.0 +56%
--------------------- -------- --------------------- --------
Q2 2020 48.9 +25% 48.2 +19%
--------------------- -------- --------------------- --------
H1 2020 98.0 +38% 109.2 +37%
--------------------- -------- --------------------- --------
* AMV: ammonium metavanadate
The installation of new equipment and ongoing research work has
led to continuing improvements in operating regimes for processing
a wide variety of vanadium-containing concentratess in the
pyrometallurgical line. Commercially, we have signed long term
agreements to receive high grade raw-materials making up 100% of
current output.
Starting from July 2020, production of V2O5 contained in AMV
increased significantly even compared with the increased levels of
the first half year. Production in July and August totalled 70
tonnes, an increase of over 100% more than the average in each
month of the first half of 2020.
Outlook for the existing operation
Whilst record production has already been reported as a result
of recent improvement work, further increases are expected to come
in the remainder of the financial year and beyond.
The new operating regimes and supplies of concentrates which,
combined with the improvements already made, are expected to result
in up to 60 tonnes of vanadium pentoxide to be produced per month.
However, this increase can be impacted by the unreliability of the
current power supply, making completion of the connection to the
existing high voltage power line critical for further sustained
growth. Construction of the connection was frozen during the
COVID-19 state of emergency and quarantine restrictions but was
restarted in September with completion planned, COVID-19
permitting, around the end of Q1 2021.
A dissociation oven has already been procured which will enable
the Company to produce vanadium pentoxide powder and eliminate the
discount which applies to the current production of AMV. The main
equipment is already on site but installation was temporarily
halted during the state of emergency and quarantine lock-down.
Installation is now being resumed, with completion expected towards
the end of 2020.
Balasausqandiq
Development of the large Balasausqandiq vanadium deposit is
on-going in parallel with the Company's existing operations.
Balasausquandiq has a significant advantage when compared with
most other vanadium deposits and producers in that the ore is not
vanadiferous titano-magnetite ("VTM") and therefore does not
require the expensive concentrating and high temperature roasting
which VTM requires. This reduces both capital and operating costs
by about 60% and is likely to make the Group the lowest cost
primary producer. The proposed development is planned in two phases
to produce up to 22,400 tonnes per year of vanadium pentoxide
which, at a long-term price assumption of $7.50/lb of vanadium
pentoxide, will result in a Net Present Value (at 10% discount
rate) of over US$2 billion.
The Company has previously completed a feasibility study to
locally required standards, supplemented by a western-style JORC
reserve and resource estimate and the construction and operation of
a 15,000 tonnes per year pilot plant which demonstrated the
effectiveness of the proposed process. A completed gap analysis has
highlighted relatively small areas where further work is required
to meet the standards of a typical western banking feasibility
study which is ongoing.
Corporate
The Company listed on the new Astana International Stock
Exchange (AIX) on 6 January 2020 and consequently delisted from the
Kazakhstan Stock Exchange (KASE) on 21 February 2020. The Company's
primary listing remains the London Stock Exchange.
On 6 April 2020 the Company issued 500,000 shares to a provider
of financial services as payment for their services. On 14 May 2020
the Company issued 3,846,154 shares to raise GBP0.25m, on 3
September 2020 the Company issued 6,250,000 shares to raise GBP0.5m
and on 16 September 2020 the Company issued 6,250,000 shares to
raise a further GBP0.5m.
During the first half of 2020 the Company issued unsecured
corporate bonds totalling US$0.3m and since the end of the period,
in September, a further US$0.3m have been issued. The bonds were
issued under the terms and conditions set out in Terms and
Conditions of the Bonds in accordance with the rules of the Astana
International Financial Centre which stipulate an amount per bond
of US$2,000, a fixed maturity date of 17 March 2023 and interest
rate, based on the nominal amount, of 5.8% per year, paid
twice-yearly on 17 September and 17 March. The bonds are unsecured.
Investors have the right to require repayment after a minimum
period of one year by giving 30 days notice. To take account of the
different dates of actual issue and prevailing market terms for
interest, the actual amount subscribed for the bonds is adjusted to
a premium or discount from the nominal amount to secure the agreed
effective interest rate.
Issued during the half year to 30 June 2020:
Issue Date Number Amount advanced Earliest Effective
of bonds USD repayment interest
of $2,000 date rate
each
5 June 2020 50 100,000 05.07.2021 7.50%
----------- ---------------- ----------- ----------
11 June
2020 100 200,000 11.07.2021 7.50%
----------- ---------------- ----------- ----------
Issued since the end of the period:
Issue Date Number Amount advanced Earliest Effective
of bonds repayment interest
of $2,000 date rate
each
1 September
2020 5 10,624 01.10.2021 5.8%
----------- ---------------- ----------- ----------
9 September
2020 150 300,114 09.10.2021 7.00%
----------- ---------------- ----------- ----------
Vanadium prices in the period
Prices of vanadium pentoxide have been relatively stable in
2020, having fallen throughout 2019 from the peak of around
US$30/lb in late 2018. The current level of around US$5-6/lb is
lower than historic averages.
During 2019 the Group procured certain raw materials at prices
based on the much higher vanadium prices prevailing at the time. As
these materials can take several months for delivery and
processing, they were purchased at higher prices than those
prevailing when the end product was sold, which exaggerates the
negative effect on trading profits during periods of falling
prices. This had a significant impact on the financial results
during the first half of 2020 but does not occur during periods of
stable prices and the effect is reversed when prices rise.
Vanadium prices are currently impacted by COVID-19 but medium
and long term forecasts indicate the likelihood of a recovery as
world demand increases and new primary producers will be required
to meet demand. The Group is continuing to work under the long term
assumption for vanadium pentoxide of 6.75 USD/lb in 2021 and 7.5
USD/lb thereafter, both of which are less than published forecasts.
If prices follow these lower long term assumptions, there is likely
to be a significant improvement in profitability. The effect will
be magnified when the Group commissions the equipment to convert
AMV to vanadium pentoxide and the power supply issues are resolved
by the installation of the new connection to the adjacent high
voltage line.
COVID-19
The COVID-19 pandemic has been experienced in Kazakhstan in two
waves. On 16(th) March 2020 Kazakhstan declared a state of
emergency which ended on the 11(th) May 2020. Quarantine
restrictions were quickly imposed and started to be relaxed in June
but this resulted in a second wave during July and early August.
The Kazakhstan Government again responded rapidly and reimposed a
second national quarantine which ended on 17(th) August 2020.
Cumulatively, there have been around 110,000 cases and 1,700
deaths. The daily rate of confirmed infections has now been reduced
from nearly 2,000 per day in July to under 100 and international
flights have resumed with a number of countries. Given the
increasing cases being seen in various parts of the world, the
Company will continue to monitor the situation in Kazakhstan and
follow government guidance.
Operations during the first half of the year continued
throughout but were impacted in several ways. The Company's main
operation in Kazakhstan is manned by two teams of workers, each
working for half of the month while residing on site, followed by
half of the month on leave. During the lock-down it was not
possible to rotate staff as usual, or to bring some professional
managers to site from their homes which in many cases are long
distances from the operation. Bringing some subcontractors and
their equipment to site was also impossible. As a result, the
decision was made to close the hydrometallurgical line for three
months during March to May, resulting in lost production in the
region of 30-33 tonnes of vanadium pentoxide. Delays have been
experienced in the installation and commissioning of new equipment
and repairs of existing equipment, and continuing shortages of
technical staff have impacted the efficiency of operations. The
gradual easing of travel restrictions and the return of normal
activity in the wider economy are slowly diminishing these
operating problems.
The protection of the health and safety of our employees is our
paramount concern and the Company has implemented all the measures
recommended and required by the Kazakhstan authorities.
Earnings and cash flow
The Group generated total revenues of US$1.1m for the period
(2019: US$1.1m) reflecting the low market prices offsetting the
strong growth in production and shipments.
Gross revenue for the first six months of 2020 was US$1.2m
compared with US$2.0m in the first half of 2019. However, the
latter figure was reduced by $0.9m by other revenue, reflecting the
adjustment to price after delivery and fair value changes, whilst
there was little change in other income to the total for the first
half of 2020. Revenue, and the corresponding trade receivable, are
recognised at the time of transfer of control to the customer but,
as is common in the industry, the final pricing determination is
often based on assay and prices after arrival of the goods at the
port of destination. Therefore, revenues recognised at the time of
shipment are subject to adjustment to prices prevailing up to four
months later. Typically, the customer makes a provisional payment
based on volumes, quantities and spot prices at the date of
shipment and makes a final payment once the product has reached its
final destination. As a result, when prices are rising, the final
receipt can exceed the initial revenue recorded and vice versa.
Where prices decrease significantly, this can result in the Company
being in a net payable position if a downward adjustment to the
consideration exceeds the provisional payment received.
Cost of sales increased to US$1.9m (H1 2019: US$1.3m) reflecting
the increased volumes and processing of vanadium catalysts in the
pyrometallurgical line that were purchased at the high prices
prevailing at the end of 2018.
Strong control of overheads resulted in administrative expenses
of US$0.7m, 22% below last year (H1 2019: US$0.9m).
The Group made a net loss before and after tax of US$1. 7 m (H1 2019: loss of US$1.3m).
Net cash outflows from operating activities totalled US$0.7m,
reflecting the strong cash flow management initiated by the Group
during COVID-19 pandemic and low vanadium prices (H1 2019: cash
outflow US$2.3m). Investment activities and capital expenditure
were reduced, with net cash outflows from investing activities
totalling US$0.07m (H1 2019: US$0.5m). Net cash inflows from
financing activities totalled US$0.7m (H1 2019: US$6.6m) being the
proceeds, net of commissions, from equity and bond issues.
Balance sheet review
Non-current assets totalled to US$4.7m at 30 June 2020 (2019:
US$5.1m), reflecting low investment activities during the COVID-19
pandemic.
Current assets excluding cash balances totalled US$1.7m (2019:
US$1.8). Higher trade and other receivables and prepayments were
offset by lower inventory levels.
The Group had cash of US$0.4m at 30 June 2020 (2019: US$0.6m)
and borrowings in the form of bonds of US$300,000.
Description of principal risks, uncertainties and how they are
managed
The risks and uncertainties which the Group is facing are as set
out in the financial statements for the year ended 31 December 2019
in the CEO's Report on Operations as published on 27 June 2020. In
addition, there is a risk that further waves of the COVID-19
pandemic might cause the imposition of further lock-downs and might
impact production through its impact on the company's development
plans, availability of technical specialists and the performance of
sub-contractors, as well as on world demand for and prices of
vanadium. Furthermore, until the connection to the new power-line,
now planned for the end of the first quarter 2021, there may be
interruptions to production from planned and unplanned power
outages outside the control of the Company.
Responsibility statements
Directors' Responsibility Statement
We confirm that to the best of our knowledge:
a) the Condensed set of Interim Financial Statements has been
prepared in accordance with IAS 34 'Interim Financial
Reporting';
b) the interim management report includes a fair review of the
information required by DTR 4.2.7R (indication of important events
during the first six months and description of principal risks and
uncertainties for the remaining six months of the year);
c) the interim management report includes a fair review of the
information required by DTR 4.2.8R (disclosure of related parties'
transactions and changes therein); and
d) the condensed set of interim financial statements, which has
been prepared in accordance with the applicable set of accounting
standards, gives a true and fair view of the assets, liabilities,
financial position and profit or loss of the issuer, or the
undertakings included in the consolidation as a whole as required
by DTR 4.2.4R.
This Half Yearly Report has been approved by the Board and
signed on its behalf by:
Nicholas Bridgen
Director
30.09.2020
Condensed unaudited Consolidated Statement of Comprehensive
Income
Unaudited Unaudited
six-month six-month
period ended period ended
30 June 2020 30 June 2019
Note $000 $000
------------- ------------------------
Revenue from customers (pricing
at shipment) 2 1, 172 1,973
Other revenue (adjustments
to price after delivery and
fair value changes) (44) (865)
------------- ------------------------
Total revenue 1,128 1,108
Cost of sales 3 (1,90 3 ) (1,323)
------------- ------------------------
Gross loss (77 5 ) (215)
Administrative expenses 4 (766) (947)
Distribution expenses ( 55 ) ( 58 )
Other expenses (2) (1)
------------- ------------------------
Loss from operating activities (1,598) (1,221)
------------- ------------------------
Net finance costs 6 ( 1 1 1 ) (89)
------------- ------------------------
Loss before income tax (1,70 9 ) (1,310)
============= ========================
Income tax ( 1 ) -
Loss for the period (1, 710 ) (1,310)
Other comprehensive (loss)
income
Items that may be reclassified
to profit or loss
Exchange differences arising
on translation of foreign
operations (2 7 5) 9
------------- ------------------------
Total comprehensive (loss)
income for the period (1,98 5 ) (1,301)
============= ========================
Loss per share (basic and
diluted), US$ 14 (0.005) (0.004)
------------- ------------------------
Condensed unaudited Consolidated Statement of Financial
Position
Unaudited
31 December
30 June 2020 2019
Note $000 $000
-------------- ------------
ASSETS
Non-current assets
Property, plant and equipment 7 2,88 8 3,206
Exploration and evaluation
assets 8 56 59
Intangible assets 9 22 24
Long-term VAT receivable 11 61 6 652
Prepayments 12 1, 082 1,148
Total non-current assets 4,6 6 4 5,089
-------------- ------------
Current assets
Inventories 10 677 1,750
Trade and other receivables 11 463 35
Prepayments 12 5 4 7 38
Cash and cash equivalents 13 426 648
Total current assets 2, 113 2,471
-------------- ------------
Total assets 6 , 7 7 7 7,560
============== ============
EQUITY AND LIABILITIES
Equity
Share capital 14 34,375 33,965
Additional paid-in capital 397 397
Foreign currency translation
reserve (3,209) (2,934)
Accumulated losses (26,326) (24,617)
-------------- ------------
Total equity 5,23 6 6,811
-------------- ------------
Non-current liabilities
Provisions 60 64
Total non-current liabilities 60 64
-------------- ------------
Current liabilities
Loans and borrowings 15 300 -
Trade and other payables 16 1,12 5 626
Contract liability 1 7 56 59
-------------- ------------
Total current liabilities 1, 4 8 1 685
-------------- ------------
Total liabilities 1, 5 4 1 749
-------------- ------------
Total equity and liabilities 6 , 7 7 7 7,560
============== ============
Condensed unaudited Consolidated Statement of Changes in
Equity
Additional Foreign currency
Share Share paid in capital translation Accumulated
capital premium $000 reserve losses Total
$000 $000 $000 $000 $000
-------- -------- ---------------- ---------------- ------------------- -------
Balance at 1 January
2019 27,330 - 380 (2,965) (21,275) 3,470
Loss for the period - - - - (1,310) (1,310)
Other comprehensive
income
Exchange differences
arising on
translation
of foreign operations - - - 9 - 9
-------- -------- ---------------- ---------------- ------------------- -------
Total comprehensive
income (loss)
for the period - - - 9 (1,310) (1,301)
-------- -------- ---------------- ---------------- ------------------- -------
Transactions with
owners, recorded
directly in equity
Shares issued - 1 81 - - - 1 81
Other transactions
recognised directly
in equity - - 17 - - 17
Balance at 30 June
2019 33,978 - 397 (2,956) (22,585) 8,834
======== ======== ================ ================ =================== =======
Balance at 1 January
2020 33,965 - 397 (2,934) (24,617) 6,811
(1, 710
Loss for the period - - - - (1, 710 ) )
Other comprehensive
expense
Exchange differences
arising on
translation
of foreign operations - - - (2 7 5) - (2 7 5)
-------- -------- ---------------- ---------------- ------------------- -------
Total comprehensive
income (loss) (1,98 5
for the period - - - (2 7 5) (1, 710 ) )
-------- -------- ---------------- ---------------- ------------------- -------
Transactions with
owners, recorded
directly in equity
Shares issued (note
14) 410 - - - - 410
Balance at 30 June (26,32 7
2020 34,375 - 397 (3,209) ) 5,23 6
======== ======== ================ ================ =================== =======
Condensed unaudited Consolidated Statement
of Cash Flow
------------- -------------
Unaudited Unaudited
six-month six-month
period ended period ended
30 June 2020 30 June 2019
$000 $000
------------- -------------
Cash flows from operating activities
Loss for the period (1, 710 ) (1,310)
Adjustments for:
Depreciation and amortisation 244 257
Expenses on credit loss provisions and impairment
of prepayments - 21
Income tax 1 -
Net finance costs / (income) 1 1 1 89
Cash from operating activities before changes
in working capital (1,3 5 4) (943)
Change in inventories 1,073 (680 )
Change in trade and other receivables ( 4 30) ( 231 )
Change in prepayments (5 08 ) (595)
Change in trade and other payables 5 3 4 82
Change in contract liability (3) 92
------------- -------------
Net cash from operating activities (68 7 ) (2,275)
------------- -------------
Cash flows from investing activities
Acquisition of property, plant and equipment (74) (519)
Net cash used in investing activities (74) (519)
------------- -------------
Cash flows from financing activities
Proceeds from issue of share capital 442 6,880
Transaction costs on shares subscription (32) (232)
Proceeds from borrowings 300
Net cash from financing activities 710 6,648
------------- -------------
Net increase in cash and cash equivalents (5 1 ) 3, 854
Cash and cash equivalents at the beginning
of the period 648 892
Effect of movements in exchange rates on
cash and cash equivalents (17 1 ) (123)
------------- -------------
Cash and cash equivalents at the end of the
period 426 4,623
============= =============
Unaudited notes to the Financial Statements for the 6 months
period ended 30 June 2019
1 Basis of preparation
These Condensed Unaudited Financial Statements have been
prepared in accordance with IAS34 Interim Financial Reporting. The
same accounting policies and basis of preparation have been
followed as in the annual financial statements of the Group which
were published on 29 June 2020.
Going concern
The consolidated financial statements are prepared in accordance
with IFRS on a going concern basis. The directors have reviewed the
Group's cash flow forecasts for at least 12 months following the
reporting date, including sensitivities and mitigating actions.
After taking into account available cash, money raised subsequent
to the reporting date and forecast cash flow from operations, the
sirectors have a reasonable expectation that the Group has adequate
resources to continue its operational existence for the foreseeable
future. For this reason, they continue to adopt the going concern
basis in preparing the financial statements.
In reaching this conclusion, the directors have taken account of
the likely course of the COVID-19 pandemic and its likely effect on
operations. However, the possibility that the course of the
pandemic will be very different from the directors' expectations,
including its effect on the world demand for an pricing of
vanadium, gives rise to a material uncertainty which may cast
significant doubt about the Group's ability to continue as a going
concern and therefore it may be unable to realise its assets and
discharge its liabilities in the normal course of business. The
financial statements do not include the adjustments that would
result if the Group were unable to continue as a going concern.
Use of estimates and judgements
Preparing the financial statements requires management to make
judgements, estimates and assumptions that affect the application
of accounting policies and the reported amounts of assets and
liabilities, income and expenses. Actual results may differ from
these estimates.
Estimates and underlying assumptions are reviewed on an ongoing
basis. Revisions to accounting estimates are recognised in the
period in which the estimates are revised and in any future periods
affected.
Carrying value of processing operations
Given the decrease in vanadium pentoxide prices in the period,
the Directors have tested the processing operations PP&E for
impairment (note 7) at 30 June 2020. In doing so, net present value
cash flow forecasts were prepared using the fair value less cost to
develop method which required estimates including vanadium
pentoxide prices, production including the impact of ongoing and
planned development, together with costs and discount rate. Key
estimates included:
-- Production volumes of 12 tonnes per month of vanadium
pentoxide from hydrometallurgical line, 74 tons per month of
vanadium pentoxide from pyrometallurgical line and 68 tonnes per
month of vanadium pentoxide from electrometallurgical line.
-- Prices of US$5.1/lb in 2020, US$6.75/lb in 2021 and
thereafter, reflecting management estimates having consideration of
market commentary less a discount, and lower than the US$7.50/lb
used by the Company as a long-term assumption for other planning
purposes.
-- Further capital development costs of US$5m.
-- Discount rate of 10% post tax in real terms.
Fair value of trade receivables and payables classified at fair
value through profit and loss ("FVTPL") (note 11, 16 and 17)
The consideration receivable in respect of certain AMV sales for
which performance obligations have been satisfied at the end of the
period and for which the Group has received prepayment under the
terms of the sale agreements, remains subject to pricing
adjustments with reference to market prices in the month following
arrival at the port of final destination. Under the Group's
accounting policies, the fair value of the consideration is
determined and the remaining receivable is adjusted to reflect fair
value, or, if the final estimated consideration is lower than the
amounts received prior to the end of the period, a payable at FVTPL
is recorded. In the absence of forward market prices for the
commodity, management estimated the forward price based on: a) spot
market prices for vanadium pentoxide at 30 June 2020 less
applicable deductions for AMV; b) foreign exchange rates; c) risk
free rates and d) carry costs when material.
As at 30 June 2020 the Group recorded trade receivables at fair
value of US$0.395m (2019: US$0.030m). As at 30 June 2020 the Group
recognised a payable at FVTPL of US$0.056m (2019: US$0.059m).
These Condensed Unaudited Financial Statements have not been
audited or reviewed by the Group auditor.
IFRS 16, Leases, has been applied for the first time but its
impact is not material.
2 Revenue
Unaudited Unaudited
six-month six-month
period ended period ended
30 June 20 30 June 201
20 9
$000 $000
------------- -------------
Revenue from sales of vanadium
products 1,170 1,972
Sales of gravel and waste rock 2 1
Total revenue from customers 1,172 1,973
------------- -------------
Other revenues - change in fair
value of customer contract ( 44 ) (865)
============= =============
1,128 1,108
============= =============
Vanadium products
Under certain sales contracts the single performance obligation
is the delivery of AMV to the designated delivery point at which
point possession, title and risk on the product transfers to the
buyer. The buyer makes an initial provisional payment based on
volumes and quantities assessed by the Company and market spot
prices at the date of shipment. The final payment is received once
the product has reached its final destination with adjustments for
quality / quantity and pricing. The final pricing is based on the
historical average market prices during a quotation period based on
the date the product reaches the port of destination and an
adjusting payment or receipt will be made to the initially received
revenue. Where the final payment for a shipment made prior to the
end of an accounting period has not been determined before the end
of that period, the revenue is recognised based on the spot price
that prevails at the end of the accounting period, with adjustments
for the value of money and the carry costs where significant.
Other revenue related to the change in the fair value of amounts
receivable under the sales contracts between the date of initial
recognition and year end resulting from market prices are recorded
as other revenue. Refer to note 17 for details of contract
liabilities recorded at fair value.
3 Cost of sales
Unaudited Unaudited
six-month six-month
period ended period ended
30 June 20 30 June 201
20 9
$000 $000
------------- -------------
Materials 1,261 753
Wages, salaries and related taxes 340 257
Depreciation 2 31 244
Electricity 67 58
Other 4 11
------------- -------------
1, 903 1,323
============= =============
4 Administrative expenses
Unaudited
Unaudited six-month
six-month period ended
period ended 30 June 201
30 June 2020 9
$000 $000
------------- -------------
Wages, salaries and related taxes 437 422
Professional services 21 1 43
Materials 25 24
Depreciation and amortization 13 13
Business trip expenses 10 15
Security 7 8
Listing & reorganisation expenses 6 336
Communication and information services 4 3
Bank fees 5 2
Audit 3 61
Other 43 20
------------- -------------
766 94 7
============= =============
5 Personnel costs
Unaudited Unaudited
six-month six-month
period ended period ended
30 June 2020 30 June 2019
$000 $000
------------- -------------
Wages, salaries and related taxes 624 639
-------------
624 639
============= =============
6 Finance costs
Unaudited Unaudited
six-month six-month
period ended period ended
30 June 2020 30 June 2019
$000 $000
------------- -------------
Net foreign exchange costs 101 89
Interest on bonds 10 -
Net finance costs 1 1 1 89
============= =============
7 Property, plant and equipment
Land and Plant and Construction
buildings equipment Vehicles Computers Other in progress Total
$000 $000 $000 $000 $000 $000 $000
---------- ---------- -------- --------- ----- ------------ ---------
Cost
Balance at 1 January 2019 1,611 1,836 426 23 75 474 4,445
Additions 2 183 157 15 28 1,053 1,438
Transfers 62 28 - - - (90) -
Disposals - ( 48 ) - - - - (48)
Foreign currency translation
difference 12 15 4 1 1 8 41
---------- ---------- -------- --------- ----- ------------ ---------
Balance at 31 December 2019 1,687 2,014 587 39 104 1,445 5,876
========== ========== ======== ========= ===== ============ =========
Balance at 1 January 2020 1,687 2,014 587 39 104 1,445 5,876
Additions - 7 - - 1 66 74
Foreign currency translation
difference (94) (113) (33) (2) (6) (81) (3 29 )
---------- ---------- -------- --------- ----- ------------ ---------
Balance at 30 June 2020 1,593 1,908 55 4 3 7 99 1,430 5,621
========== ========== ======== ========= ===== ============ =========
Depreciation
Balance at 1 January 2019 581 1 , 335 282 12 32 - 2 , 2 4 2
Depreciation for the period 53 312 46 6 9 - 4 26
Disposals - (14) - (1) (2) - ( 17 )
Foreign currency translation
difference 5 1 2 2 - - - 19
---------- ---------- -------- --------- ----- ------------ ---------
Balance at 31 December 2019 639 1 , 645 330 17 39 - 2 , 670
========== ========== ======== ========= ===== ============ =========
Balance at 1 January 2020 639 1 , 645 330 17 39 - 2 , 670
Depreciation for the period 26 15 5 2 2 3 6 - 2 1 2
Foreign currency translation
difference (36) (92) (18) (1) ( 2 ) - (149)
---------- ---------- -------- --------- ----- ------------ ---------
Balance at 30 June 2020 629 1 , 706 334 19 43 - 2 , 73 3
========== ========== ======== ========= ===== ============ =========
Carrying amounts
At 1 January 2019 1,030 501 144 1 1 43 474 2,203
========== ========== ======== ========= ===== ============ =========
At 31 December 2019 1,048 369 257 22 65 1,445 3,206
========== ========== ======== ========= ===== ============ =========
At 30 June 2020 964 20 0 220 18 56 1,430 2,8 88
========== ========== ======== ========= ===== ============ =========
8 Exploration and evaluation assets
The Group's exploration and evaluation assets relate to
Balasausqandiq deposit. During the six months period ended 30 June
2020 the Group did not capitalise any exploration and evaluation
assets (in 2019: US$nil). As at 30 June 2020 the carrying value of
exploration and evaluation assets was US$0.056 m (2019:
US$0.059m).
9 Intangible assets
Mineral Computer
rights Patents software Total
$000 $000 $000 $000
-------- -------- ---------- ------
Cost
Balance at 1 January
2019 99 33 3 13 5
Additions - 1 - 1
Foreign currency translation
difference 1 - - 1
-------- -------- ---------- ------
Balance at 31 December
2019 100 34 3 1 3 7
======== ======== ========== ======
Balance at 1 January
2020 100 34 3 137
Foreign currency translation
difference (5) (1) - (6)
-------- -------- ---------- ------
Balance at 30 June 2019 95 33 3 1 3 1
======== ======== ========== ======
Amortisation
Balance at 1 January
2019 99 9 2 110
Amortisation for the
year - 2 - 2
Foreign currency translation
difference 1 (1) 1 1
-------- -------- ---------- ------
Balance at 31 December
2019 100 10 3 1 13
======== ======== ========== ======
Balance at 1 January
2020 100 10 3 113
Amortisation for the
period - 1 - 1
Foreign currency translation
difference (5) - - (5)
-------- -------- ---------- ------
Balance at 30 June 2020 95 11 3 1 09
======== ======== ========== ======
Carrying amounts
At 1 January 2019 - 24 1 25
======== ======== ========== ======
At 31 December 2019 - 24 - 24
======== ======== ========== ======
At 30 June 2020 - 22 - 22
======== ======== ========== ======
10 Inventories
Unaudited
31 December
30 June 2020 2019
$000 $000
-------------- -----------
Raw materials and consumables 525 1,575
Finished goods 97 172
Goods in transit - 3
Work in progress 55 -
677 1,750
============== ===========
11 Trade and other receivables
Unaudited 31 December
Non-current 30 June 2020 2019
$000 $000
------------- -----------
VAT receivable 95 5 1,012
Provision for VAT receivable (339) (360)
61 6 652
============= ===========
Unaudited 31 December
Current 30 June 2020 2019
$000 $000
------------- -----------
Trade receivables from third
parties 39 5 30
Due from employees 1 1 17
Other receivables 7 7 9
------------- -----------
483 56
Expected credit loss provision (20) (21)
-------------
463 35
============= ===========
The expected credit loss provision relates to credit impaired
receivables which are in default and the Group considers the
probability of collection to be remote given the age of the
receivable and default status.
12 Prepayments
Unaudited
31 December
30 June 2020 2019
$000 $000
-------------- -----------
Non-current
Prepayments for equipment 1,082 1,148
-------------- -----------
1,082 1,148
============== ===========
Current
Prepayments for goods and services 5 4 7 38
-------------- -----------
5 4 7 38
============== ===========
13 Cash and cash equivalents
Unaudited
31 December
30 June 2020 2019
$000 $000
-------------- -----------
Bank balances and other cash
deposits 426 647
Petty cash - 1
Cash and cash equivalents 426 648
============== ===========
14 Equity
(a) Share capital
Number of shares unless otherwise stated Ordinary shares
Unaudited 31 December
30 June 2020 2019
------------- -----------
- -
Outstanding at beginning of
year 312,978,848 305,471,087
Shares issued 5,110,204 7,507,761
-------------
Outstanding at end of the period 318,089,052 312,978,848
============= ===========
Details of shares issued:
Price per share,
Date of issue Number of shares $
-------------- ---------------- ----------------
Issued in lieu of fees 01 April 2020 500,000 0.1224
Subscription 20 May 2020 3,846,154 0.0796
Issued in lieu of fees 29 June 2020 764,050 0.0982
-------------- ---------------- ----------------
Total 5,110,204
================
Ordinary shares
All shares rank equally. The holders of ordinary shares are
entitled to receive dividends as declared from time to time and are
entitled to one vote per share at meetings of the Company.
Reserves
Share capital: Value of shares issued less costs of
issuance.
Additional paid in capital: Amounts due to shareholders which
were waived.
Foreign currency translation reserve: Foreign currency
differences on retranslation of results from functional to
presentational currency and foreign exchange movements on
intercompany balances considered to represent net investments which
are permanent as equity.
Accumulated losses: Cumulative net losses.
(b) Dividends
N o dividends were declared for the six-month period ended 30
June 2020.
(c) (Loss) / e arnings per share (basic and diluted)
The calculation of basic and diluted earnings / (loss) per share
has been based on the following (loss) / profit attributable to
ordinary shareholders and weighted-average number of ordinary
shares outstanding.
(i) (Loss) attributable to ordinary shareholders (basic and diluted)
Unaudited Unaudited
six-month six-month
period ended period ended
30 June 2020 30 June 2019
$000 $000
------------- -------------
Loss for the period, attributable
to owners of the Company (1, 710 ) (1,310)
------------- -------------
Loss attributable to ordinary shareholders (1, 710 ) (1,310)
============= =============
(ii) Weighted-average number of ordinary shares (basic and diluted)
Unaudited Unaudited
six-month six-month
period ended period ended
Shares 30 June 2020 30 June 2019
------------- -------------
Issued ordinary shares at 1 January 312,978,848 305,471,087
Effect of shares issued (weighted) 1,265,811 5,718,240
Weighted-average number of ordinary
shares at
30 June 314,244,659 311,189,327
============= =============
Loss per share of common stock
attributable to the Company (basic
and diluted) (0.005) (0.004)
------------- -------------
15 Loans and borrowings
There were no outstanding bank loans at 30 June 2020 (31
December 2019: US$ nil) and no bank loan repayments in the six
month period ended 30 June 2020 (in 2019: US$ nil).
During the period ended at 30 June 2020 the Company issued bonds
for the total amount of US$300,000:
Unaudited 31 December
30 June 2020 2019
------------- -----------
Bonds payable 300 -
-------------
Total 300 -
============= ===========
The bonds were issued under the terms and conditions set out in
Terms and Conditions of the Bonds in accordance with the rules of
the Anstana International Financial Center which stipulate an
amount per bond of US$2,000, a fixed maturity date of 17 March 2023
and interest rate, based on the nominal amount, of 5.8% per year,
paid twice-yearly on 17 September and 17 March. The bonds are
unsecured. Investors have the right to require repayment after a
minimum period of one year by giving 30 days notice. To take
account of the different dates of actual issue and prevailing
market terms for interetest, the actual amount subscribed for the
bonds is adjusted to a premium or discount from the nominal amount
to secure the agreed effective interest rate.
Effective Earliest
interest repayment
Issue date No of bonds rate Maturity date Amount subscribed
----------- --------- -------- ---------- -----------------
5 July
5 June 2020 50 7.5% 2023 21 100,000
11 July
11 June 2020 100 7.5% 2023 21 200,000
300,000
=================
16 Trade and other payables
Unaudited
31 December
30 June 2020 2019
$000 $000
-------------- -----------
Trade payables 62 3 256
Due to directors/key management 297 212
Due to employees 139 105
Other taxes 56 53
Interest payable 10 -
1,12 5 626
============== ===========
17 Contract liability (trade and other payables at FVTPL)
Unaudited
31 December
30 June 2020 2019
$000 $000
-------------- -----------
Contract liability (trade and other
payables at FVTPL) 56 59
56 59
============== ===========
18 Contingencies
(a) Insurance
The insurance industry in the Kazakhstan is in a developing
state and many forms of insurance protection common in other parts
of the world are not yet generally or economically available. The
Group does not have full coverage for its plant facilities,
business interruption, or third party liability in respect of
property or environmental damage arising from accidents on Group
property or relating to Group operations. There is a risk that the
loss or destruction of certain assets could have a material adverse
effect on the Group 's operations and financial position.
(b) Taxation contingencies
The taxation system in Kazakhstan is relatively new and is
characterised by frequent changes in legislation, official
pronouncements and court decisions which are often unclear,
contradictory and subject to varying interpretations by different
tax authorities. Taxes are subject to review and investigation by
various levels of authorities which have the authority to impose
severe fines, penalties and interest charges. A tax year generally
remains open for review by the tax authorities for five subsequent
calendar years but under certain circumstances a tax year may
remain open longer.
These circumstances may create tax risks in Kazakhstan that are
more significant than in other countries. Management believes that
it has provided adequately for tax liabilities based on its
interpretations of applicable tax legislation, official
pronouncements and court decisions. However, the interpretations of
the relevant authorities could differ and the effect on these
consolidated financial statements, if the authorities were
successful in enforcing their interpretations, could be
significant.
There are no tax claims or disputes at present.
19 Segment reporting
The Group's operations are split into three segments based on
the nature of operations: processing, subsoil operations (being
operations related to exploration and mining) and corporate segment
for the purposes of IFRS 8 Operating Segments. The Group's assets
are primarily concentrated in the Republic of Kazakhstan and the
Group's revenues are derived from operations in, and connected
with, the Republic of Kazakhstan.
Unaudited six-month
period ended 30 June
2020
Processing Subsoil Corporate Total
$000 $000 $000 $000
----------- ------- --------- -------
Revenue 1,128 - - 1,128
(1,90 3 (1,90 3
Cost of sales ) - - )
Administrative expenses (17 6 ) (49) (540) (76 5 )
Distribution & other
expenses (57) - - (57)
( 1 1 1
Finance costs ( 1 9 ) - (9 2 ) )
(63 2 (1,70
Loss before tax (1,027) (49) ) 9 )
=========== ======= ========= =======
Unaudited six-month
period ended 30 June
2019
Processing Subsoil Corporate Total
$000 $000 $000 $000
----------- ------- --------- -------
Revenue 1,108 - - 1,108
Cost of sales (1,323) - - (1,323)
Administrative expenses (278) (14) (656) (1,271)
Distribution & other
expenses (59) - - (59)
Finance costs 9 - (98) (89)
----------- ------- --------- -------
Loss before tax (543) (14) (753 ) (1,310)
=========== ======= ========= =======
20 Related party transactions
(a) Transactions with management and close family members
Management remuneration
Key management personnel received the following remuneration
during the period, which is included in personnel costs (see Note
5):
Unaudited Unaudited
six-month six-month
period ended period ended
30 June 2020 30 June 2019
$000 $000
------------- -------------
Wages, salaries and related
taxes 209 190
------------- -------------
(b) Transactions with other related parties
The re were no other related party transactions.
21 Subsequent events
On 3 September 2020 the Company issued 6,250,000 shares at a
price per share of 8 pence per share to raise GBP0.5m and on 16
September 2020 the Company issued 6,250,000 shares at 8 pence per
share to raise a further GBP0.5m.
On 1(st) September and 9 September 2020 the Company issued
unsecured corporate bonds. The bonds were issued under the terms
and conditions set out in Terms and Conditions of the Bonds in
accordance with the rules of the Astana International Financial
Centre which stipulate an amount per bond of US$2,000, a fixed
maturity date of 17 March 2023 and interest rate, based on the
nominal amount, of 5.8% per year, paid twice-yearly on 17 September
and 17 March. Investors have the right to require repayment after a
minimum period of one year from issue by giving 30 days notice. To
take account of the different dates of actual issue and prevailing
market terms for interest, the actual amount subscribed for the
bonds is adjusted to a premium or discount from the nominal amount
to secure the agreed effective interest rate.
Bonds issued since the end of the period:
Issue Date Number of Amount advanced Earliest Effective
bonds of repayment interest rate
$2,000 each date
1 September
2020 5 10,624 01.10.2021 5.8%
------------- ---------------- ----------- ---------------
9 September
2020 150 300,114 09.10.2021 7.00%
------------- ---------------- ----------- ---------------
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END
IR SESFIUESSEIU
(END) Dow Jones Newswires
September 30, 2020 02:00 ET (06:00 GMT)
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