TIDMALTN
AltynGold Plc
("Altyn" or the "Company")
Results for the year ended 31 December 2020
AltynGold Plc (LSE:ALTN) an exploration and development company,
is pleased to announce its results for the year ended 31 December
2020.
Highlights
Financial highlights
-- Turnover increased in the year to US$30m (2019:
US$14.9m).
-- 16,535oz of gold sold (2019: 10,500oz), an increase of
57%.
-- Average gold price achieved (including silver), US$1,816oz,
(2019: US$1,390oz).
-- The Company made a profit before tax of US$3.3m (2019: loss
US$1.04m).
-- Adjusted EBITDA (Earnings before interest, tax, depreciation
and amortisation) of US$13.5m (2019: US$3.3m).
-- The Company finalised the listing of the balance of the
US$10m 9% bonds on the Astana International Exchange (AIX).
-- The balance of the facility with JSC Bank Center Credit of
US$8m was drawn down during the year.
-- A share placing with JSC Freedom Finance raised US$1.5m in
the year.
-- New facility taken out in December 2020 with Bank Center
Credit of US$5.5m, (2.3bln Tenge), of this US$973,000 was drawn
down before the year end.
Operational highlights
-- Gold poured 17,028oz, (2019: 10,537oz) a 61% increase
year-on- year.
-- Mined gold grade 1.57g/t, (2019: 1.92g/t), decreased due to
ore dilution - new equipment is now increasing to the target
grade.
-- Operating cash cost US$800/oz, (2019: US$854/oz).
-- Gold recovery rate 80.44% (2019: 82.31%).
Underground development & exploration
-- Subsoil use contract at Sekisovskoye extended to July
2029.
-- Production of test ore at Teren-Sai, average grade 1.8g/t at
81% recovery.
-- Total 5,657 linear metres developed at Sekisovskoye.
-- Transport declines further developed, decline No.1 352 linear
metres, decline No. 2 353 linear metres.
-- 750,000t of ore made accessible from declines 1 and 2.
-- Areas No.1, 2 and new Area 5 developed in Teren-Sai - drill
holes and core samples extracted,
Annual General Meeting
The Annual General Meeting of the Company will be held at
Langham Court Hotel, 31-35 Langham Street, London W1W 6BU, United
Kingdom on Thursday 24 June 2021 at 11.00am. Due to the current
COVID-19 situation if the timing location or other details change
the Company will notify shareholders as appropriate.
The details of the resolutions are given in the Annual Report
which will be available on the website in due course.
For further information please contact:
AltynGold Plc
Rajinder Basra, CFO +44 (0) 207 932 2456
AltynGold Plc (LSE: ALTN) is an exploration and development
company, which listed on the main market segment of the London
Stock Exchange in December 2014. To read more about AltynGold Plc
please visit our website www.altyngold.uk
CHAIRMAN'S STATEMENT
This year has been very different for many reasons, the effects
of the COVID-19 pandemic have been felt around the world, causing
economic and social havoc. One year later the crisis is still
ongoing, with governments, companies and individuals still facing
uncertainty on how the pandemic will evolve and its aftermath.
From our perspective as a mining Company focused on mining
operations in Kazakhstan, we have been insulated to a large extent
from the fallout of the pandemic, as mining operations were a
protected industry and the Company has been able to continue to
operate throughout the pandemic. While cooperating with the
authorities, the Company has quickly adapted its new operational
working practices to ensure that the staff were able to continue
working in a safe environment at the mine site, organising special
shift patterns for production. Office workers at both the mine site
and head office were largely able to work remotely, as the lock
down has eased the staff were able to resume their duties at the
offices during March 2021. The country is still organising measures
to contain the transmission of COVID-19, and in April 2021 a
limited lockdown was introduced in the country. The imposition of
the most recent lockdown has not resulted in any issues in relation
to the current operations of the Company.
Supply chains and the important sale of dore to the refinery
were carefully monitored and potential issues resolved as soon as
they arose.
Against this background the Company managed to grow, attracting
funding from a range of sources and delivering on its capital
investment plan. The resultant increase in production combined with
the favorable gold price led to a substantially higher revenue
stream.
While the gold price has increased given its hedge
characteristic against the downturn in the global outlook for
economies, a higher gold price level should be sustained by the
expectation of increased inflation levels resulting from global
monetary policies that are increasing the money supply, and a
deteriorating fiscal outlook. With the production levels budgeted
to increase, the management is upbeat about the Company's future
growth outlook.
With its strong financial position and additional funding
raised, the Company has also continued its exploration program at
Teren-Sai. The test production run as reported in the RNS news
release in 2021 yielded good results in terms of grade, and the
expected low cash cost of production will have a positive impact on
the results of the Company in the future.
In summary against the backdrop of uncertainty caused by the
COVID-19 crisis the Company has managed to emerge in a much
stronger position at the end of the year. It has secured its
required level of funding, utilising it to good effect as
demonstrated by the increased production levels. The Board has also
been strengthened by the appointment of a new non-executive
director Thomas Gallagher who will bring important qualities and
experience to the team, and we welcome him to the Company.
I would like to conclude with a heartfelt thank you to all the
staff from the top management and to those who only work on a
part-time basis for their dedication to the Company and support in
minimising the effect of the pandemic on our business.
Kanat Assaubayev
Chairman
CHIEF EXECUTIVE OFFICER'S REVIEW
Overview
The Company has been able to implement its medium term plan,
following successful rounds of financing completed in late 2019 and
2020. As such, a significant amount of underground plant and
equipment (details below) has been purchased leading to a 98%
increase in ore extraction in the year to 505,000t. Timely
maintenance of the processing plant and the overhaul of other
equipment allowed a swift increase in processed ore which grew 82%
from 231,000t to 420,000t leading to a 61% increase in gold
produced from 10,537oz to 17,028oz. With the introduction of more
specialised drilling rigs in 2021, the Company is also targeting a
lower level of dilution of extracted ore which should result in a
noticeable improvement of grades in Q2 2021.
Due to careful planning and co-operation with the relevant
authorities there was little impact on the operations of the
Company from COVID-19. Indeed, the trend and momentum of production
at Sekisovskoye continue to be very encouraging. These positive
developments set the stage for the company to achieve its first
major target of 850,000t ore extraction per annum.
The Company has also invested additional funds to expand the
exploration program at Teren-Sai. The Teren-Sai area is large,
covering in excess of 198km which the Company has split this into a
number of areas. After initially concentrating on Area No.2 the
Company has now expanded its exploration programs into Areas No. 1
and 5.
Commentary on results
Sekisovskoye underground mine
Plant and equipment
There was a significant investment in plant and machinery during
2020 and to date in 2021, these are summarised below:
-- Front-end loader ZL 50G
-- Dump truck 25t Chaicman
-- Material handling trucks CAT R1300 - 3 units
-- Underground haulers CAT AD30 - 3 units
-- Face drilling rig Atlas Copco T1D
-- Ring drilling rig Atlas Copco T1D
-- Exploration drilling rig Atlas Copco Diamec U4
-- Boomer T1D drilling rig with a capacity of 400m/month
-- Boomer T1D long-hole production drill
-- Diamec U4 Smart exploration drill rig
-- JSB Crawler with a capacity of 1.8cu.m
-- Korfmann AL18-2500 ventilator with a capacity of 100m3/s
-- Lupamit LKV 250 compressors, each compressor with a capacity
of 45m3/min
-- 100 CFO flower heaters
The following was achieved with regards to the underground mine
in the year:
-- There was a substantial development of tunneling amounting to
5,657 linear metres, including 353 metres on transport decline No 2
allowing access to 640,000 tons of reserves at levels +161, +164
and +178; and 352 metres on transport decline No 1 allowing access
to 110,000 tons at levels +150 and +163.
-- With the purchase of heaters, compressors and a Korfman
AL18-2500 ventilator, the company was able to complete necessary
works on the main ventilation shaft required for the continuation
of operations until 2029 in line with the mine plan.
-- Thanks to additional equipment, ore stockpiles were increased
substantially at portal No 2, allowing for an increase in the daily
ore production to 1,800t/day.
-- In addition to 48,000m3 of back and cavity filling, works are
ongoing for the development of the general site including
renovation and expansion of the offices and other amenities.
-- Ore mined at Sekisovskoye during 2020 was 506,000t (2019:
255,000t), with the new equipment on site this is budgeted to
increase.
-- The average gold grade was 1.58g/t (2019: 1.76 g/t) in line
with the Company budget. The average grade for the year was
affected by lower grades during Q1 at 1.49g/t (1.43g/t budgeted)
due to high level of developmental ore. The introduction of
additional equipment in particular the Boomer T1D LHD drilling rigs
has led to a steady improvement in grades to its current level of
1.75g/t. Further improvement expected in the future as more ore
bodies become accessible.
Exploration -- Teren-Sai
The Teren-sai exploration program has been expanded and
accelerated during 2020. The Company views the site as a very
valuable asset that will add substantially to the production
capacity of the Company once it is fully functional.
In area No.2 the Company continued pneumatic drilling conducting
16 profiles for verification analysis against existing data.
Additional drilling was also carried out to fully delineate the
extent and boundaries of the ore body resulting in 14 completed
drill holes and 4,183m drilled meterage.
Mining results ore extraction
2020 2019
Ore mined T 506,050 255,134
Gold grade g/t 1.57 1.92
S ilver grade g/t 1.08 1.37
Contained gold oz 25,555 15,760
Contained silver oz 17,525 11,239
Mining results processing
2020 2019
Crushing T 421,040 239,046
Mining T 420,256 230,966
G old grade g/t 1.58 1.76
Silver grade g/t 1.13 1.37
Gold recovery % 80.44 82.31
S ilver recovery % 72.81 69.88
Contained gold oz 21,355 12,981
C ontained silver oz 15,253 9,819
Gold Poured oz 17,028 10,537
Silver poured oz 11,180 6,760
Projected capital expenditure - Sekisovskoye
Total 2021 2022
US$m US$m US$m
Prospect drilling 1.7 0.9 0.8
Underground development 6.8 4.5 2.3
Infrastructure 0.1 -- 0.1
Ore handling facilities 3.7 3.4 0.3
Process plant incremental expansion 3.4 2.6 0.8
Total 15.7 11.4 4.3
In order to build up a reliable profile of the site,
verification results are being constantly mapped against existing
data. During 2020 the Company successfully processed the first
batch of test ore amounting to 1,794t, resulting in an average
grade of 1.8g/t and a recovery rate of 81%. These were very
encouraging results and a significant step in moving forward with
the project. It is expected that the initial extraction of ore will
be via open pit workings, with the use of some of the existing open
pit equipment which has been mothballed at Sekisovskoye, and
further equipment being purchased as necessary. The ore extracted
is expected to be processed by a separate plant to be built at
Teren-Sai, thus avoiding transport costs to Sekisovskoye and
keeping the unit cost of production at a reasonable level.
In addition to Area No.2 exploration work was expanded to Area
No.1 and new zone identified as Area No.5. In Area No.1, 13
prospective drilling profiles were conducted, the analysis of the
results was encouraging and further core drilling is to be
undertaken in 2021. In relation to Area No. 5, the meterage drilled
was 3,886m with 17 drill holes which identified 11 ore
intersections. Sampled grades over four of the holes ranged from
1.4g/t to 2.4g/t and further work is planned in this area in
2021.
The Company also commenced topographic work over 50km2 to gain a
better understanding of the site and the potential to develop the
area, the work will be completed during 2021.
Capital requirements
The capex requirements for the next two years are detailed in
the table below. The budgeted plans foresee the Company expanding
ore extraction and production to 850,000t to per annum for
Sekisovskoye, and the development of its prospective resource at
Teren-Sai. The Company is constantly reviewing and refining its
plans to adapt to changing circumstances.
Longer term plan
The long term plan still consists in operating the Sekisovskoye
Mine at 850kt annual capacity for three years then ramping up
production to 2Mtpa over a six year period. The initial target is
an important milestone and with the purchase of the new equipment
this is now progressing as planned. The longer term plan involves
obtaining further funding and the Board is constantly looking at
the best way to finance the business going forward. In this regard,
the Company has recently appointed Renaissance Capital to operate
as a Corporate Broker as well as produce independent research on
the Company in order to increase its profile with potential
investors. In order to achieve the longer term goal outlined, the
Company has estimated that it will require an initial funding of
US$40m-US$50m to attain 1Mpta target. Further funding will be
required for the secondary 2Mpta target.
Mining operations at Teren- Sai are planned to run in parallel
to Sekisovskoye development and will initially include surface
mining at Area No.2 before moving underground at a later stage. It
is envisaged that at the initial costs of open pit operations can
be kept low by making use of the existing equipment as far as
possible. The significant expenditure relates to the planned
Teren-Sai processing plant which will be a conventional
carbon-in-leach ("CIL") gold recovery plant, similar to the
existing one at the neighbouring Sekisovskoye Mine.
FINANCIAL PERFORMANCE
Key performance indicators (KPIs)
Annual gold sales (oz)
16,535oz
2020 16,535
2019 10,500
2018 14,990
Annual gold poured (oz)
17,028oz
2020 17,028
2019 10,537
2018 15,282
Reveune (US$m)
US$30m
2020 30.0
2019 14.9
2018 19.4
Operating cash cost of production (US$oz)
US$800oz
2020 800
2019 854
2018 865
Adjusted EBITDA (US$m)
US$13.5m
2020 13.5
2019 3.3
2018 0.9
Net assets (US$m)
US$35.3m
2020 35.3
2019 33.3
2018 34.9
The Company raised significant funds in the year, mainly bank
borrowings and a bond placement on the Astana International
Exchange. The raised funds have mainly been used for the purchase
of new underground equipment, infrastructure and capital
development at Sekisovskoye, exploration drilling at Teren-Sai and
funding expanded working capital requirements.
In terms of output, the investment in the new equipment and the
refurbishment of plant and machinery has had a direct and immediate
effect on production levels in the year. Gold poured has increased
by 61.6% from the prior year to 17,028oz the highest it has been
for a number of years. Budgeted levels in the forthcoming periods
are set to increase further as the full effect of the investments
made flow through.
During 2020, the Company sold 16,535oz of gold (2019: 10,500oz).
The average price achieved per oz in 2020 was US$1,816 (2019:
US$1,390) a significant uplift from the prior year. While consensus
analysts' forecasts expect the gold price to remain in the region
of US$1,800 the Company conservatively uses a lower price of gold
in its forward modelling. Further, the outlook for the business is
expected to remain positive given the anticipation of dollar
strength against the local currency in which a significant level of
expenses are payable.
There were no changes to the sales off-take agreement currently
in place with the Kazakh national refinery, which continues to take
all of the Company's output. As in the prior year, sales are
translated at the spot US$ market rate at the point the gold is
sold.
The total cash cost of production, which includes administrative
costs but excludes depreciation and provisions, amounted to
US$970/oz, (2019: S$1,104oz). The operating cash cost excluding
administrative costs amounted to US$800/oz (2019: US$854/oz). The
cash cost of production is expected to fall in future periods with
expanded economies of scale and improved grades. The administrative
costs are being closely monitored and there has only been a small
increase from the prior year, which is expected to be maintained in
future periods.
The Group has reported a net profit of US$3.3m before tax (2019:
loss US$1.04m) with a gross profit of US$11.9m (2019: US$2.5m),
this was after a one off charge in the year relating to a share
based payment of US$2.4m in connection with share options issued.
While the increase in gold price of 30% had a positive effect, the
principal driving factor for the increase in profitability was the
57% increase in output. The adjusted EBITDA increased to US$13.5m
(2019: US$3.3m) after adjusting for depreciation of US$3.9m (2019:
US$3.4m), and the share based payment noted above. The operating
profit as a consequence rose to US$7.2m (2019: US$0.0 Statement by
the directors in performance of their statutory duties in
accordance with s172 (1) Companies Act 2006.25m). Net profit has
been reduced by the effect of the borrowing costs which increased
from US$1.2m to US$2.3m. The effect of foreign exchange losses in
the subsidiaries also had the effect of decreasing profits, in 2020
this is US$1.5m (2019:US$116,000 gain), principally as a result of
the revaluation of the borrowings.
Management are keenly aware that funding should be on the most
attractive terms and are exploring new avenues to achieve this.
Cash at year-end was US$7.2m (2019: US$1.9m), the increase was
driven by fund raising, including the issue of shares for a
consideration of US$1.5m in the year. Current resources are
sufficient to meet the current working capital requirements and
purchase of capital equipment in the current budget. In December
2020 the Company agreed additional bank facilities with Bank Center
Credit of US$5.5m, of this amount US$1.9m is available to fund
working capital and the balance will be used for investment into
new machinery. Of this facility US$1.0m was drawn down in December
2020.
The main financing commitments during the year were payment of
interest on the bonds and repayment of principal and interest on
the bank borrowings, in total these amounted to US$4.1m in 2020
(2019: US$1.4m).
The consolidated net assets of the Group are US$35.3m (2019:
US$33.3m).
During the year the Company operated successfully through the
restrictions and lock downs as stipulated by the Kazakh authorities
and is pleased to confirm it safely guarded the wellbeing of its
staff. The Government imposed a number of lockdowns beginning in
March 2020 ranging from a full national lockdown and containment of
the major cities to less stringent limited ones that are currently
operating. The Company experienced minimal operational disruption
from the COVID-19 pandemic that commenced in 2020 and expects
operations to continue uninterrupted.
CONSOLIDATED INCOME STATEMENT
for the year ended 31 December 2020
2020 2019
Note $000 $000
Revenue 3 30,032 14,908
Cost of sales (17,610) (12,390)
Gross profit 12,422 2,518
Administrative expenses (2,826) (2,600)
Share based payment (2,400) --
Impairments (34) 107
Operating profit 7,162 25
Foreign exchange (1,508) 116
Finance expense (2,324) (1,183)
Total finance cost (3,832) (1,067)
Profit/(loss) before tax 3,330 (1,042)
Taxation expense (392) (214)
Profit/(loss) for the year attributable to the
equity holders of the parent 2,938 (1,256)
Profit/(loss) per ordinary share
Basic 4 11.27c (5.00c)*
Diluted 4 10.97c --
*The earnings per share calculation for 2019 has been restated
to reflect the 100:1 consolidation of shares in 2020.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the year ended 31 December 2020
2020 2019
$000 $000
Profit/(loss) for the year 2,938 (1,256)
Items that may be reclassified subsequently to the income
statement
Currency translation differences arising on translations
of foreign operations (3,846) 129
Currency translation differences on translation of foreign
operations relating to tax (1,011) (461)
(4,857) (332)
Total comprehensive loss for the year (1,919) (1,588)
Total comprehensive loss attributable to:
Equity holders of the parent (1,919) (1,588)
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
as at 31 December 2020
2020 2019
Registration number: 05048549 Note $000 $000
Assets
Non-current assets
Intangible assets 5 12,849 12,943
Property, plant and equipment 6 32,092 30,316
Deferred tax assets 5,311 7,356
Trade and other receivables 6,700 6,048
Restricted cash 13 --
56,965 56,663
Current assets
Inventories 5,468 3,631
Trade and other receivables 7,182 3,615
Cash and cash equivalents 7,154 1,934
19,804 9,180
Total assets 76,769 65,843
Equity and liabilities
Current liabilities
Trade and other payables (6,705) (7,553)
Provisions (151) (130)
Loans and borrowings (5,833) (2,550)
(12,689) (10,233)
Non-current liabilities
Vat payable (230) (964)
Other payables (492) (1,333)
Provisions (4,763) (5,007)
Loans and borrowings (23,260) (15,027)
(28,745) (22,331)
Total liabilities (41,434) (32,564)
Equity
Share capital (4,267) (4,055)
Share premium (152,839) (151,476)
Merger reserve 282 282
Other reserves (333) (333)
Foreign currency translation reserve 52,959 48,102
Accumulated losses 68,863 74,201
Equity attributable to owners of the company (35,335) (33,279)
Total equity and liabilities (76,769) (65,843)
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the year ended 31 December 2020
Share
Currency based
Share Share Merger translation payment Other Accumulated Total
capital premium reserve reserve reserve reserves losses equity
$000 $000 $000 $000 $000 $000 $000 $000
At 1 January
2019 4,054 151,470 (282) (47,770) -- 333 (72,945) 34,860
Loss for the
year -- -- -- -- -- -- (1,256) (1,256)
Other
comprehensive
loss -- -- -- (332) -- -- -- (332)
Total
comprehensive
loss -- -- -- (332) -- -- (1,256) (1,588)
New share
capital
subscribed 1 6 -- -- -- -- -- 7
At 31 December
2019 4,055 151,476 (282) (48,102) -- 333 (74,201) 33,279
At 1 January
2020 4,055 151,476 (282) (48,102) -- 333 (74,201) 33,279
Profit for the
year -- -- -- -- -- -- 2,938 2,938
Other
comprehensive
income -- -- -- (4,857) -- -- -- (4,857)
Total
comprehensive
loss -- -- -- (4,857) -- -- 2,938 (1,919)
New share
capital
subscribed 13 62 -- -- -- -- -- 75
Share based
payment
charge -- -- -- -- 2,400 -- -- 2,400
Share options
exercised 199 1,301 -- -- (2,400) -- 2,400 1,500
At 31 December
2020 4,267 152,839 (282) (52,959) -- 333 (68,863) 35,335
CONSOLIDATED STATEMENT OF CASH FLOWS
for the year ended 31 December 2020
2020 2019
Note $000 $000
Cash flows from operating activities
Net cash flow from operating activities 4,245 (2,832)
Cash flows from investing activities
Acquisitions of property plant and equipment (8,559) (7,180)
Proceeds from sale of property plant and equipment -- 20
Acquisition of intangible assets (1,271) (552)
Proceeds from test production 165 --
Net cash flows from investing activities (9,665) (7,712)
Cash flows from financing activities
Loans received 16,903 14,089
Proceeds of share issue 1,500 --
Interest paid (3,740) (193)
Loans repaid (3,431) (1,523)
Commission charge (588) --
Net cash flows from financing activities 10,644 12,373
Net increase in cash and cash equivalents 5,224 1,829
Cash and cash equivalents at 1 January 1,934 105
Effect of exchange rate fluctuations on cash held (4) --
Cash and cash equivalents at 31 December 7,154 1,934
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 December 2020
1 General information
AltynGold Plc (the "Company") is a Company incorporated in
England and Wales under the Companies Act 2006. The financial
information set out above for the years ended 31 December 2020 and
31 December 2019 does not constitute statutory accounts as defined
in Section 434 of the Companies Act 2006, but is derived from those
accounts. Whilst the financial information included in this
announcement has been compiled in accordance with international
financial reporting standards (IFRS), adopted pursuant to
Regulation (EC) in conformity with the requirements of the
Companies Act 2006, this announcement itself does not contain
sufficient financial information to comply with International IFRS.
A copy of the statutory accounts for 2019 has been delivered to the
Registrar of Companies and those for 2020 will be submitted for
approval by shareholders at the Annual General Meeting. The full
audited financial statements for the years end 31 December 2020 and
31 December 2019 do comply with IFRS.
2 Going concern
During the year the Group obtained additional funding
principally from a mixture of placing bonds on the Astana
International Exchange, an additional US$7.4m and obtaining further
funds from the term loans from a Kazakhstan based bank that were
agreed in 2019 of US$8.3m. In total these increased the loans and
borrowings from US$17.6m in 2019 to the current level of US$29.1m.
The funds were utilised to purchase equipment and to provide
working capital to expand and develop the mining site at
Sekisovskoye. The Group increased sales from US$14.9m to US$30.0m
during 2020, resulting in an increase in adjusted EBITDA from
US$3.4m to US$13.5m. This provided positive funding to the Group in
the year, and is expected to continue at increasing levels in the
future.
At the year-end the Group had cash resources of US$7.2m (2019:
US$1.9m) available. In December 2020 the Company agreed additional
bank facilities with Bank Center Credit in the amount of US$5.5m,
of which US$1.9m is available to fund working capital and the
balance is required to be used for investment into new machinery.
Of this facility US$1.0m was drawn down in December 2020.
The Board have reviewed the Group's forecast cash flows for the
period to June 2022, which include the capital and interest
repayments to be made in relation to the Group's borrowings.
Capital and operating costs are based on approved budgets and
latest forecasts in the case of 2021 and current development plans
in the case of 2022. Based on the Group's cash flow forecasts, the
Directors believe that the combination of its current cash
balances, net cash flows from operations, and increased production
based on projections of future growth, are sufficient for the
Company to achieve its current plans and meet its cash flow
requirements.
The Group has operated in the most difficult time of the
COVID-19 pandemic, and experienced little impact on its ability to
trade and grow the business. However management are keenly aware
that the situation may change and have factored any potential
impacts into its future business plans. The initial impact of
COVID-19 was felt in March 2020 when Kazakhstan and the UK went
into lockdown. The Group was quick to adapt and allowed office
workers to use remote technology to perform their duties. In
relation to the mine, mining operations were designated by the
government to be a key industry. This ensured that production and
transport of dore to the refinery could continue as normal. The
Group adapted working conditions and patterns of working, to ensure
that production continued in a safe working environment. The Group
has also ensured that adequate stocks are being maintained of parts
and consumables in order to prevent any disruption to production.
COVID-19 is still an ongoing issue in Kazakhstan and indeed in many
countries, however the Management believe the procedures they have
in place, such as shift working at the mine, remote working,
advance ordering of supplies and consumables, together with the
support of the government will ensure that future production will
continue.
The Board have considered possible stress case scenarios that
they consider may be likely to impact on the Group's operations,
financial position and forecasts. Factors considered are
operational disruptions, such as illness amongst the workforce,
disruption to supply chain and possible impact on the price of gold
if this was to fall to pre COVID-19 levels. From the analysis
undertaken the Board have concluded that Group will be able to
continue to trade by the careful management of its existing
resources. The stress tests included the following scenarios
amongst others, a fall in the gold price by 18% from current
levels, a drop in budgeted production by 20% or a combination of
both factors together. In each case the Group would not experience
a cash shortfall in either scenario. If required the Group would
manage its resources, reducing investment and managing its payables
in order to maintain liquidity.
The Board therefore considers it is appropriate to adopt the
going concern basis of accounting in preparing these financial
statements.
3 Revenue
The analysis of the group's revenue for the year from continuing
operations is as follows:
2020 2019
$000 $000
Sale of gold and silver 29,790 14,623
Other sales 242 285
30,032 14,908
Included in revenues from sale of gold and silver are revenues
of US$29,790,000 (2019: US$14,623,000) which arose from sales of
precious metals to one customer based Kazakhstan. Other sales
amounted to US$242,000 (2019: US$285,000) and related to lease and
rental income.
4 Profit/(loss) per ordinary share
The calculation of basic and diluted earnings per share from
continuing operations is based upon the retained profit from
continuing operations for the financial year of US$2.9m (2019: loss
of US$1.3m).
The weighted average number of ordinary shares for calculating
the basic loss in 2020 and 2019 is shown below. The company
consolidated its shares on a 100:1 basis during the year, the
comparative figure of the number of shares has been adjusted
accordingly.
The diluted earnings per share in 2020 arises as the convertible
loan notes have conversion rights, which would result in an
additional 702,650 shares being issued.
As the Company was loss making in 2019, the impact of the
potential ordinary shares outstanding from the conversion of the
convertible loan notes would be anti-dilutive, and as such the
basic and diluted earnings per share are the same.
2020 2019
No. No.
Basic 26,070,079 25,677,720
Diluted 26,772,729 n/a
5 Intangible assets
Teren-Sai Exploration and
geological data evaluation costs Total
Group US$000 US$000 US$000
Cost or valuation
At 1 January 2019 9,889 5,919 15,808
Additions -- 552 552
Amortisation capitalised -- 992 992
Currency translation 42 25 67
At 31 December 2019 9,931 7,488 17,419
At 1 January 2020 9,931 7,488 17,419
Additions -- 1,271 1,271
Amortisation capitalised -- 608 608
Currency translation (905) (717) (1,622)
At 31 December 2020 9,026 8,650 17,676
Amortisation
At 1 January 2019 3,470 -- 3,470
Amortisation charge 992 -- 992
Currency translation 14 -- 14
At 31 December 2019 4,476 -- 4,476
At 1 January 2020 4,476 -- 4,476
Amortisation charge 608 -- 608
Currency translation (422) -- (422)
Revenue relating to test
production -- 165 165
At 31 December 2020 4,662 165 4,827
Carrying amount
At 31 December 2020 4,364 8,485 12,849
At 31 December 2019 5,455 7,488 12,943
At 1 January 2019 6,419 5,919 12,338
The intangible assets relate to the historic geological
information pertaining to the Teren-Sai ore fields. The ore fields
are located in close proximity to the current open pit and
underground mining operations of Sekisovskoye. The Company obtained
a contract for exploration and evaluation on the site in May 2016
from the Kazakh authorities. The contract is valid for a period of
6 years, with a right to extend over a further 5 years.
The value of the geological data purchased is in the opinion of
the Directors the value that would have been incurred if the
drilling had been undertaken by a third party (or internally). The
Company has continued to develop the site with a CPR completed in
2019, and confirmatory drilling and further exploration work
continuing on the site.. Full details are given in the mineral
resources statement included as part of the Annual Report.
The directors consider that no impairment is required taking
into account the CPR results, exploration and planned production in
the future. The write off of the geological data over the period of
the licence to the end of the extended licence period in 2027 is
appropriate. After that period the costs amortised are capitalised
in line with the Company's accounting policy within the subsidiary
TOO GMK Altyn MM LLP, there are no impairment indicators.
6 Property, plant and equipment
Equipment, Plant,
Freehold fixtures machinery
Mining Land and and and Assets under
properties buildings fittings buildings construction Total
Group US$000 US$000 US$000 US$000 US$000 US$000
Cost or
valuation
At 1 January
2019 11,730 24,481 9,701 5,047 978 51,937
Additions 2,140 71 239 2,469 301 5,220
Disposals -- (4) (34) (41) -- (79)
Transfers -- 134 -- -- (134) --
Currency
translation 79 104 39 26 (78) 170
At 31
December
2019 13,949 24,786 9,945 7,501 1,067 57,248
At 1 January
2020 13,949 24,786 9,945 7,501 1,067 57,248
Additions 1,622 166 2,838 2,717 1,246 8,589
Disposals -- -- (70) (180) -- (250)
Transfers (764) 1,383 (26) 18 (471) 140
Transfer from
inventories -- -- -- -- 241 241
Currency
translation (1,543) (2,285) (907) (734) (110) (5,579)
At 31
December
2020 13,264 24,050 11,780 9,322 1,973 60,389
Depreciation
At 1 January
2019 2,220 8,291 8,501 4,534 -- 23,546
Charge for
year 209 2,133 794 217 -- 3,353
Eliminated on
disposal -- (3) (30) (40) -- (73)
Currency
translation 12 35 40 19 -- 106
Transfers -- 107 (101) (6) -- --
At 31
December
2019 2,441 10,563 9,204 4,724 -- 26,932
At 1 January
2020 2,441 10,563 9,204 4,724 -- 26,932
Charge for
the year 520 1,885 773 772 -- 3,950
Eliminated on
disposal -- -- (70) (180) -- (250)
Currency
translation (232) (997) (805) (441) -- (2,475)
Transfers 140 (80) 80 -- -- 140
At 31
December
2020 2,869 11,371 9,182 4,875 -- 28,297
Carrying
amount
At 31
December
2020 10,395 12,679 2,598 4,447 1,973 32,092
At 31
December
2019 11,508 14,223 741 2,777 1,067 30,316
At 1 January
2019 9,510 16,190 1,200 513 978 28,391
Capitalised cost of mining property are amortised over the life
of the licence from commencement of production on a unit of
production basis. This basis uses the ratio of production in the
period compared to the mineral reserves at the end of the period.
Mineral reserves estimates are based on a number of underlying
assumptions, which are inherently uncertain. Mineral reserves
estimates take into consideration estimates by independent
geological consultants. However, the amount of mineral that will
ultimately be recovered cannot be known until the end of the life
of the mine.
Any changes in reserve estimates are, for amortisation purposes,
treated on a prospective basis. The recovery of the capitalised
cost of the Company's property, plant and equipment is dependent on
the development of the underground mine.
The Directors are required to consider whether the non-current
assets comprising, mineral properties, plant and equipment have
suffered any impairment. The recoverable amount is determined based
on value in use calculations. The use of this method requires the
estimation of future cash flows and the choice of a discount rate
in order to calculate the present value of the cash flows. The
directors considered entity specific factors such as available
finance, cost of production, grades achievable, and sales price.
The directors have concluded that no adjustment is required for
impairment.
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Altyn Plc
SOURCE: Altyn Plc
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