TIDMGCM
RNS Number : 7651T
GCM Resources PLC
22 March 2023
22 March 2023
GCM Resources plc
("GCM" or the "Company")
Interim Results for the 6 months ended 31 December 2022
GCM Resources plc (LON: GCM), an AIM quoted mining and energy
company , is pleased to report its interim results for the six
months ended 31 December 2022. The Chairman's Statement and the
full unaudited interim report are presented below and will shortly
be available at the Company's website www.gcmplc.com .
Chairman's Statement
The environment under which we operated in the six months ending
31 December was dominated by growing negative economic impacts of
the Ukraine conflict and, in the latter part of the reporting
period, the emergence of a changing political landscape as the
Bangladesh Government and Opposition parties launched campaigns
ahead of the national election, stated for early 2024.
The Bangladesh Government demonstrates commitment to coal being
in its long-term energy mix with 11,755MW coal-fired power plants
commissioned or in the pipeline. It has also committed to implement
the latest HELE power plants (High Efficiency, Low Emissions),
based on Ultra-Supercritical boiler technology resulting in smaller
environmental footprints as less coal is consumed with reduced
carbon dioxide emissions to produce the same electricity as
conventional power plants. Progress has been substantial, with
Ultra-Supercritical Power Plants commissioned at Payra 1,320MW in
2019-20; Rampal first unit (660MW) in November 2022 and the second
660MW unit scheduled for first half 2023; Banshkhali 1,320MW
(2x660MW) scheduled for 2023; and Matarbari 1,200MW (2x600MW)
scheduled for 2024.
The Phulbari Coal and Power Project ("the Project") can support
some 6,600MW of Ultra-Supercritical power generation. The Project
Proposal is built around supplying some or all coal production to
existing (and planned) coal-fired plants and also provides for the
option of installing up to 4,000MW new capacity at the Phulbari
coal mine site (which ultimately would provide the lowest cost coal
based power for Bangladesh).
Our Development Partner, Power Construction Corporation of China
Ltd. ("PowerChina"), earlier reiterated their commitment to
developing mine-mouth new capacity (RNS Number: 5488E, 11 March
2022). In this reporting period, PowerChina further demonstrated
their overall Project support through the extension of an MOU
focussed on coal mine development (RNS Number: 2978J, 12 December
2022). The intention is to arrive at a partnership covering
finance, project development and on-going mine management.
The Project's Proposal has been refined through discussions and
presentations at senior level of Government and during this process
our Bangladesh team were supported by PowerChina. A significant
enhancement is the inclusion of a large-scale Solar Power Park
(over 2GW possible) within the confines of the Project area, to be
operated in parallel with the mining operations. The Solar Power
Park would be installed in stages and it's planned that the power
would be supplied to both the national grid and mining operation,
also enabling the mine to become a "Net Zero Carbon Green
Mine".
Beyond the reporting period, the Company entered into a Joint
Development Agreement ("JDA") with PowerChina and Dyani Corporation
for development of the proposed Solar Power Park (RNS Number:
0138M, 9 January 2023). The JDA is comprehensive covering
financing, construction and operation of the Solar Power Park.
Bangladesh is on a trajectory to move from being a Least
Developed Country ("LDC") to a Developing Country in 2026. Key to
such a transition is a vibrant, growing economy. The way forward
unfortunately has been made more difficult by the inflationary and
supply-chain pressures (principally for energy) brought on by the
protracted Ukraine conflict. Like many other net-energy-importing
countries, Bangladesh has found itself in a position of not only
facing persistent high inflation but also a 30% drop in both the
value of its Taka currency against the US Dollar and its foreign
currency reserves over the past year. This has impacted the ability
to maintain energy supplies, particularly coal and LNG.
There is growing awareness both within the Bangladesh Government
and Civil Society that an over-dependence on imported energy to
power places the Country's industrial and economic development in
an unnecessary high risk situation, and that the strategy should
involve a balance between domestic and imported energy supply. The
State Minister for the Ministry of Power, Energy, and Mineral
Resources spoke openly for domestic coal supply in November 2022
when he was responding to questions by one of the MP's covering the
Project area. The State Minister emphasised that open pit coal
extraction was only possible in the Phulbari Coal Basin. More
recently, Bangladesh's significant power companies and business
identities have called for the Government to move on developing its
domestic coal and gas potential to provide the Country with higher
energy security and more sustainable energy costs.
The Project's Proposal address the concerns of over dependency
on imported fuels and provides compelling list of benefits,
including government participation, consistency in coal price and
large-scale supply and billions of dollars foreign exchange
savings. The Company is working closely with its consultant
lobbyists to gain approval for moving Project forward and finally
realise the enormous benefits for the Government and peoples of
Bangladesh and our shareholders.
Financials
GCM incurred a lower loss after tax of GBP693,000 for the six
months ended 31 December 2022 (31 December 2021: loss after tax of
GBP763,000). The most significant expenditure during the period was
pre-development expenditure, while administrative expenses for the
six months ended 31 December 2022 were GBP368,000 (31 December
2021: GBP352,000) and capitalised project expenditure for the
period was GBP277,000 (31 December 2021: GBP273,000).
The Company has at the date of this report drawn down GBP3.2
million of the total short-term loan facility of GBP3.5 million
with Polo Resources Ltd, the terms of the facility are detailed in
Note 5 of the interim report.
The Company will need to raise further funds by early in Q3 of
this year. The Company aims to strengthen GCM's financial position
and provide future funding by raising further funds by end of June
2023, and although there can be no certainty provided the directors
remain confident that sufficient funding will be obtained as and
when required. As such, the financial statements have been prepared
on a going concern basis. Please refer to the accounting policy
note on going concern (Note 1 to the Financial Statements) for
further information.
Outlook
In its World Energy Outlook in October 2022, the International
Energy Agency ("IEA") said: "The world is in the midst of the first
truly global energy crisis". It went on to reference "concerns over
global energy security, fuelling the transition to clean energy for
the climate and the interconnection between the energy crisis and
food security". The fact remains for LDC's, such as Bangladesh, the
current range of renewable energy systems are not suitable for
baseload power which LDC's struggle to provide. For the foreseeable
future, fossil fuels (principally coal and gas) will dominate power
generation in LDC's as well as in Developing Countries such as
China and India.
While Bangladesh remains in a "net-energy-importing" situation,
it is highly likely its economy will be disadvantaged by ongoing
supply constraints and high prices. Extracting its own domestic
energy resources, including moving forward with the Project, will
go a long way to reducing the exposure to the long-term vagaries of
the international energy market.
The Company is grateful for the patience and continued support
from its shareholders and stakeholders and I assure you that we
working diligently to move the Project forward and deliver returns
on your investment.
Mohd Najib Bin Abdul Aziz
Non-Executive Chairman
Interim Consolidated Income Statement
6 months 6 months Year ended
ended 31 ended 31 30 June
December December 2022
2022 2021 audited
unaudited unaudited GBP000
GBP000 GBP000
Operating expenses
Pre-development
expenditure (90) (174) (414)
Exploration and
evaluation costs 7 5 (35)
Administrative expenses (368) (352) (750)
------------------------------- ----------- ----------- -----------
Operating loss (451) (521) (1,199)
Finance costs (242) (242) (480)
------------------------------- ----------- ----------- -----------
Loss before tax (693) (763) (1,679)
Taxation - - -
Loss and total comprehensive
income for the period (693) (763) (1,679)
------------------------------- ----------- ----------- -----------
Earnings per share
Basic loss per share (pence) (0.4p) (0.6p) (1.1p)
Diluted loss per share (pence) (0.4p) (0.6p) (1.1p)
Interim Consolidated Statement of Changes in Equity
Share Share Share Accumulated Total
capital premium based losses
account payments
not settled
GBP000 GBP000 GBP000 GBP000 GBP000
Balance at 1 July 2021 12,048 55,611 772 (30,953) 37,289
Total comprehensive
loss - - - (1,679) (1,679)
Share issuances 447 2,089 (372) - 2,161
Share issuance costs - (121) - - (121)
Shares to be issued - - 414 - 414
Share based payments - - 17 - 17
Balance at 30 June
2022 12,495 57,576 642 (32,632) 38,081
Total comprehensive
loss - - - (693) (693)
Share issuances - - - - -
Shares to be issued - - 90 - 90
Share based payments - - 1 - 1
Balance at 31 December
2022 (unaudited) 12,495 57,576 733 (33,325) 37,479
------------------------ --------- --------- ------------- ------------ --------
Balance at 1 July 2021 12,048 55,611 583 (30,953) 37,289
Total comprehensive
loss - - - (763) (763)
Share issuances - - - - -
Shares to be issued - - 174 - 174
Share based payments - - 15 - 15
Balance at 31 December
2021 (unaudited) 12,048 55,611 772 (31,716) 36,715
------------------------ ------- ------- ---- --------- -------
Interim Consolidated Balance Sheet
31 December 31 December 30 June
2022 2021 2022
Notes unaudited unaudited audited
GBP000 GBP000 GBP000
Current assets
Cash and cash equivalents 740 116 961
Receivables 43 48 436
--------------------------- -------- ------------- ------------ ---------
Total current assets 783 164 1,397
Non-current assets
Property, plant
and equipment 1 6 3
Right of use assets 5 37 19
Intangible assets 3 43,005 42,452 42,742
Receivables - - -
Total non-current
assets 43,011 42,495 42,764
Total assets 43,794 42,659 44,161
--------------------------- -------- ------------- ------------ ---------
Current liabilities
Payables 4 (1,375) (1,457) (1,369)
Lease liabilities (15) (31) (27)
Borrowings 5 - - -
--------------------------- -------- ------------- ------------ ---------
Total current liabilities (1,390) (1,488) (1,396)
Non-current liabilities
Lease liabilities - (11) (1)
Borrowings (4,925) (4,445) (4,683)
--------------------------- -------- ------------- ------------ ---------
Total non-current
liabilities (4,925) (4,456) (4,684)
--------------------------- -------- ------------- ------------ ---------
Total liabilities (6,315) (5,944) (6,080)
--------------------------- -------- ------------- ------------ ---------
Net assets 37,479 36,715 38,081
--------------------------- -------- ------------- ------------ ---------
Equity
Share capital 6 12,445 12,048 12,495
Share premium account 6 57,576 55,611 57,576
Other reserves 733 772 642
Accumulated losses (33,325) (31,716) (32,632)
----------------------- --------- --------- ---------
Total equity 37,479 36,715 38,081
----------------------- --------- --------- ---------
Interim Consolidated Statement of Cash Flows
6 months 6 months Year ended
ended 31 ended 31 30 June
December December 2022
2022 2021 audited
unaudited unaudited GBP000
GBP000 GBP000
----------------------------------------- -----------
Cash flows used in operating
activities
Loss before tax (693) (763) (1,679)
Adjusted for:
Non-cash pre-development expenditure 90 174 414
Non-cash finance costs 242 242 480
Other non-cash expenses - - 30
------------------------------------------ ----------- ----------- -----------
(361) (347) (755)
Movements in working
capital:
(Increase) in operating receivables (7) (34) (23)
Increase/(decrease) in operating
payables 25 35 (68)
------------------------------------------ ----------- ----------- -----------
Cash used in operations (343) (346) (846)
Net cash used in operating
activities (343) (346) (846)
Cash flows from investing activities
Payments for intangible
assets (278) (255) (520)
Payments for property, plant - - -
and equipment
------------------------------------------ ----------- ----------- -----------
Net cash generated from investing
activities (278) (255) (520)
Cash flows from financing activities
Issue of ordinary
share capital 400 - 1,731
Share issue costs - - (121)
Proceeds from borrowing - - -
Interest paid - - -
Net cash from financing activities 400 - 1,610
Total (decrease)/increase in
cash and cash equivalents (221) (601) 244
Cash and cash equivalents at
the start of the period 961 717 717
------------------------------------------ ----------- ----------- -----------
Cash and cash equivalents at
the end of the period 740 116 961
------------------------------------------ ----------- ----------- -----------
Notes to the Interim Condensed Consolidated Financial
Statements
1. Accounting policies
GCM Resources plc (GCM) is domiciled in England and Wales, was
incorporated as a Public Limited Company on 26 September 2003 and
admitted to the London Stock Exchange Alternative Investment Market
(AIM) on 19 April 2004.
This unaudited interim report was authorised for issue by the
Board of Directors on 21 March 2023.
Basis of preparation
The annual consolidated financial statements have been prepared
in accordance with International Financial Reporting Standards
(IFRSs) as they apply to the financial statements of the Group for
the year ended 30 June 2022 and applied in accordance with the
Companies Act 2006.
The interim condensed consolidated financial statements for the
six months ended 31 December 2022 have been prepared using the same
policies and methods of computation as applied in the financial
statements for the year ended 30 June 2022. The financial
information contained herein does not constitute statutory accounts
within the meaning of Section 435 of the Companies Act 2006 and is
unaudited. The figures for the year ended 30 June 2022 have been
extracted from the statutory accounts for that year. Those accounts
have been delivered to the Registrar of Companies and contained an
unqualified auditors' report which included an emphasis of matter
concerning significant doubt over the ability for the Group to
continue as a going concern and did not include a statement under
section 498(2)(a) or (b), or section 498(3) of the Companies Act
2006.
Political and economic risks - carrying value of intangible
asset
The principal asset is in Bangladesh and accordingly subject to
the political, judicial, fiscal, social and economic risks
associated with operating in that country.
The Group's principal project relates to thermal coal and
semi-soft coking coal, the markets for which are subject to
international and regional supply and demand factors, and
consequently future performance will be subject to variations in
the prices for these products.
GCM, through its subsidiaries, is party to a Contract with the
Government of Bangladesh which gives it the right to explore,
develop and mine in respect of the licence areas. The Group holds a
mining lease and exploration licences in the Phulbari area covering
the prospective mine site. The mining lease has a 30-year term from
2004 and may be renewed for further periods of 10 years each, at
GCM's option.
In accordance with the terms of the Contract, GCM submitted a
combined Feasibility Study and Scheme of Development report on 2
October 2005 to the Government of Bangladesh. Approval of the
Scheme of Development from the Government of Bangladesh is
necessary to proceed with development of the mine. GCM continues to
await approval.
The Group has received no notification from the Government of
Bangladesh (the "Government") of any changes to the terms of the
Contract. GCM has received legal opinion that the Contract is
enforceable under Bangladesh and International law, and will
consequently continue to endeavour to receive approval for
development.
Accordingly, the Directors believe that the Phulbari Coal and
Power Project (the "Project") will ultimately receive approval,
although the timing of approval remains in the hands of the
Government. To enhance the prospects of the Project, GCM has
engaged in a strategy to align the Project with the needs and
objectives of the Government. This includes the option to supply
coal to both the Government's commissioned and in the pipeline
power plants, which total 11,755MW. The Government is seeking to
grow its economy and deliver electricity at prices that will ensure
competitiveness of its industries. The Group's strategy of
developing the Phulbari coal deposit as a captive, large-scale,
open pit mining operation supporting some 6,600MW of highly
energy-efficient Ultra-Supercritical power generation will enable
cheaper coal-fired electricity than imported coal options. This
evolving strategy has been enhanced to include installation of a
large-scale Solar Power Park (up to 2,500MW) within the Project
area, to be installed within the first two years of gaining land
access; operating the Phulbari coal mine as a "Net Zero Carbon" or
"Green Mine"; and participation modalities for Government.
Until approval of the Scheme of Development from the Government
of Bangladesh is received there is continued uncertainty over the
recoverability of the intangible mining assets. The Directors
consider that it is appropriate to continue to record the
intangible mining assets at cost, however if for whatever reason
the Scheme of Development is not ultimately approved the Group
would impair all of its intangible mining assets, totalling
GBP43,005,000 as at 31 December 2022.
.
Going concern
As at 31 December 2022, the Group had GBP740,000 in cash and
GBP601,000 in net current liabilities. The directors and management
have prepared a cash flow forecast to March 2024, which showed that
the Group would require further funds to cover operating costs to
advance the Phulbari Coal and Power Project and meet its
liabilities as and when they fall due. Based on the current
forecast, additional funding would need to be either raised from
third parties or drawn down under the GBP3.5million loan facility
with Polo Resources Limited ("Polo Loan Facility"), which currently
has GBP300,000 available to, in order to meet current operating
cost projections. The Company intends to explore alternative
funding options over the second quarter of 2023, with the aim to
complete and secure the necessary third-party funding by the end of
June 2023.
In forming the conclusion that it is appropriate to prepare the
condensed consolidated financial statements on a going concern
basis the Directors have made the following assumptions that are
relevant to the next twelve months:
- In the event that the Polo Loan Facility becomes payable,
sufficient funding can be obtained; and
- In the event that operating expenditure increases
significantly as a result of successful progress with regards to
the Phulbari Coal and Power Project, sufficient funding can be
obtained.
Upon achieving approval of the Phulbari Coal and Power Project,
significant additional financial resources will be required to
proceed to development.
2. Segment analysis
The Group operates in one segment being the exploration and
evaluation of energy related projects. The only significant project
within this segment is the Phulbari Coal and Power Project in
Bangladesh.
3. Intangibles
During the period intangibles increased by GBP277,000. The
increase is due to capitalised mining exploration and evaluation
expenditure relating to the Phulbari Coal and Power Project in
Bangladesh.
4. Payables
31 December 31 December 30 June
2022 2021 2022
unaudited unaudited audited
GBP000 GBP000 GBP000
-----------------------
Trade payables 581 663 575
Related party accrued
payable 794 794 794
Transaction costs - - -
payable
1,375 1,457 1,369
----------------------- ------------- ------------ ---------
The related party accrued payable of GBP794,000 at 31 December
2022 relates to accrued fees owing to the management services
company of the Executive Chairman of the Company, Datuk Michael
Tang PJN.
5. Borrowings
31 December 31 December 30 June
2022 2021 2022
unaudited unaudited audited
GBP000 GBP000 GBP000
Short-term loan facility from
related party 4,925 4,445 4,683
4,925 4,445 4,683
------------------------------- ------------- ------------ ---------
GCM is party to a GBP3,500,000 short-term loan facility with its
largest shareholder, Polo Resources Limited ("Polo"). As at 31
December 2022, the Company owed GBP4,925,000, comprising
GBP3,200,000 loan balance and accrued finance costs on borrowings
of GBP1,725,000.
The Company on 1 March 2022, as part of the completed placing
and subscriptions, amended the terms of the loan facility, such
that the lender may request conversion by the issuance of new
ordinary shares in the Company at 5.14 pence per share (being the
Issue Price) subject to any necessary regulatory approvals. All
other terms of the agreement remained unchanged
The Company on 26 March 2021, as part of the completed placing,
extended and amended the terms of the loan facility provided by
Polo Resources Limited (the "Facility") of which, as was announced
on 7 January 2021, there is GBP300,000 of the initial GBP3.5
million facility remaining undrawn. The lender has agreed that it
will not serve a repayment request on the company for 5 years from
the date of the agreement replacing the previous provision that it
was payable on demand with 90 days' notice. The Company and Polo
Resources Limited have agreed an increase in the interest rate from
12% to 15% per annum rising by 1.5% on the third anniversary and by
a subsequent 1.5% on each anniversary thereafter. Furthermore, the
lender may request conversion by the issuance of new ordinary
shares in the Company at 7.5 pence per share (being the Issue
Price) subject to any necessary regulatory approvals. The Company
may elect to repay all or part of the outstanding loan at any time
giving 60 days' notice and with the agreement of Polo Resources
Limited. Any share issue to the Lender is conditional upon the
Lender's interest, together with the interest of any parties with
which it is in concert, remaining below 30% of the Company's issued
capital. All other principal terms of the loan facility remained
unchanged.
6. Share issues
There were no shares issued during the period.
7. Post-balance sheet events
On 9 January 2023, the Company announced that it had agreed a
Joint Development Agreement ("JDA") with PowerChina International
Group Limited ("POWERCHINA"), and Dyani Corporation Ltd ("DYANI")
in relation to a proposed new greenfield solar project called the
Dinajpur Solar Power Project ("SOLAR PROJECT") which would be an
adjunct project in conjunction with the Phulbari Coal and Power
Project ("the Project"). The JDA has a term of 12-months and does
not at this stage commit any of the parties to expend any specified
sums. It is the intention that it will be superseded, in due
course, by a more detailed working arrangement between the parties,
but may be terminated earlier under certain prescribed
conditions.
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES
OF ARTICLE 7 OF THE UK VERSION OF REGULATION (EU) NO 596/2014 WHICH
IS PART OF UK LAW BY VIRTUE OF THE EUROPEAN UNION (WITHDRAWAL) ACT
2018, AS AMED. UPON THE PUBLICATION OF THIS ANNOUNCEMENT VIA A
REGULATORY INFORMATION SERVICE, THIS INSIDE INFORMATION IS NOW
CONSIDERED TO BE IN THE PUBLIC DOMAIN.
For further information:
GCM Resources plc WH Ireland Ltd
Keith Fulton James Joyce
Finance Director Andrew De Andrade
+44 (0) 20 7290 1630 +44 (0) 20 7220 1666
GCM Resources plc
Tel: +44 (0) 20 7290 1630
info@gcmplc.com; www.gcmplc.com
About GCM Resources
GCM Resources plc (LON:GCM), the AIM listed mining and energy
company, has identified a high-quality coal resource of 572 million
tonnes (JORC 2004 compliant) at the Phulbari Coal and Power Project
(the "Project") in north-west Bangladesh.
Utilising the latest highly energy efficient power generating
technology the Phulbari coal mine can support some 6,600MW. GCM
requires approval from the Government of Bangladesh in order to
develop the Project. The Company has a strategy of linking the
Company's mine proposal to supplying coal to the Government of
Bangladesh's existing and in the pipeline coal-fired power plants
and / or power plants developed development partners. Together with
credible, internationally recognised strategic development
partners, GCM aims to deliver a practical power solution to provide
the cheapest coal-fired electricity in the country, in a manner
amenable to the Government of Bangladesh.
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END
IR FLFIDVVILFIV
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