TIDMRLD
RNS Number : 4045C
Richland Resources Ltd
28 September 2018
28 September 2018
Richland Resources Ltd
("Richland" or the "Company")
Interim Results for the half-year ended 30 June 2018
(unaudited)
and GBP100,000 extension of Convertible Loan Note Facility
Richland (AIM: RLD), the Australian sapphire producer and
gemstones developer, announces its unaudited interim results for
the half year ended 30 June 2018.
Highlights:
-- Anthony ("Tony") Brooke, a gemstone industry expert with
approximately 36 years' experience in the gemstone industry,
appointed as Chief Executive Officer
-- 3,581,237 new common shares of US$0.0003 each in the capital
of the Company ("Common Shares") issued to Tony Brooke at a price
of 0.84 pence per share in respect of sales commissions of
US$42,717 earned during the period from 1 December 2016 to 31
December 2017
-- GBP300,000 secured convertible loan facility (the "Secured
Convertible Loan Facility") obtained from an existing significant
shareholder in the Company, to provide short term working capital.
An initial GBP100,000 tranche of the facility was drawndown and
received in the period
-- Directors, senior management team, certain former directors
and a former consultant agreed to waive, in aggregate, GBP237,230
of accrued fees due to them
-- US$0.05 million (H1 2017: US$1.0 million) total income as
Capricorn Sapphire's mining operations remained suspended during
the reporting period
-- Operating loss of US$0.78 million (H1 2017: US$0.96 million
loss) including depreciation of US$0.20 million (H1 2017: US$0.21
million)
-- As at 30 June 2018:
o US$0.1 million of unrestricted cash and cash equivalents
o US$1.3 million of total assets
o US$0.5 million of total current assets
o US$0.8 million of total non-current assets
Post Period End:
As announced on 6 July 2018, in order to preserve the Company's
cash resources:
-- Certain of the Company's existing Directors and senior
management team, certain former directors and a former consultant
converted an aggregate amount of GBP207,537 (comprising US$275,215
at the USD:GBP exchange rate of 1.3261 on 22 June 2018) of fees
accrued for periods ranging from December 2016 to 31 May 2018 into
74,120,531 new Common Shares at a price of 0.28 pence per share;
and
-- The Company issued an additional 16,000,000 new Common Shares
at the same price in relation to certain professional fees due
through to 31 December 2018
-- The balancing GBP200,000 of the abovementioned GBP300,000
Secured Convertible Loan Facility was drawndown and received by the
Company
-- The Company has today signed an addendum to the Secured
Convertible Loan Facility to increase the facility by a further
GBP100,000 on the same commercial terms as the existing Secured
Convertible Loan Facility, to provide additional working capital
whilst the Company continues to seek to secure the requisite
funding to re-start production at Capricorn Sapphire or
alternatively seek to conclude ongoing negotiations with different
parties in relation to the sale of all or a part of the
project.
Commenting today, Chief Executive Officer, Anthony Brooke
said:
"During H1 2018, significant time has been spent preparing the
ground at site pending sufficient funding being secured to
recommence mining operations at Capricorn Sapphire, whilst at the
same time undertaking test drilling and general maintenance on a
low cost basis to facilitate a more focused open pit operation and
ultimately higher yield production once mining recommences.
"I would particularly like to draw shareholders attention to the
fact that our sightholder buyers and clients in Thailand are keen
for mining to re-start as their inventories of rough are running
low and few global Corporate Socially Responsible sources of
sapphires exist. Upon production recommencing our potential forward
sales of blue rough production are very positive and parti colours
and generally non-traditional sapphire cuts have been reportedly
highly sought after in the retail segment such that potential
forward sales of our parti and green rough are also likely to
improve.
"We continue to hold discussions with potential strategic
investors to secure the necessary funding to re-start production,
whilst simultaneously also seeking to identify potential acquirers
for the project in order to maximise value from our
investment."
For further information, please contact:
Anthony Brooke Edward Nealon Mike Allardice
Chief Executive Officer Chairman Group Company secretary
+66 81 854 1755 +61 409 969 955 +852 91 864 854
Nominated Adviser Broker
Strand Hanson Limited Shore Capital Stockbrokers
James Harris Ltd
Matthew Chandler Jerry Keen (corporate
James Dance broking)
+44 (0) 20 7409 3494 Toby Gibbs / Mark Percy
(corporate finance)
+44 (0) 20 7408 4090
The information contained within this announcement is deemed by
the Company to constitute inside information as stipulated under
the Market Abuse Regulation (EU) No. 596/2014.
Note to Editors:
Further information is available on the Company's website:
www.richlandresourcesltd.com. Neither the contents of the Company's
website nor the contents of any website accessible from hyperlinks
on the Company's website (or any other website) is incorporated
into, or forms part of, this announcement.
Chairman's Statement
On behalf of the Board, I am pleased to present the Group's
unaudited results for the six months to 30 June 2018.
During the period we conducted and concluded a strategic review
process, the main findings of which were announced on 25 June 2018
and are summarised as follows:
-- Following the suspension of mining operations in December
2017, the Company has conducted regular and ongoing maintenance
activities to ensure the good standing and preparedness of the
mine's infrastructure and equipment. Accordingly, subject to the
Company securing sufficient additional funding in due course, it is
envisaged that operations could be recommenced within a timeframe
of approximately one month from a re-start decision being made.
-- Internal exploration activities during the strategic review
period have focused on refining the Company's mining plan with two
initial target areas identified and delineated on Capricorn
Sapphire's licenced acreage for opening-up when production
recommences. Mining operations will remain suspended pending the
Company securing sufficient longer-term additional financing to
enable the recommencement of production later this year.
-- A further exploration programme has been planned, subject to
funding, to target potential resource expansion and improvement in
grade and recovery comprising a ground penetrating radar survey and
further drilling together with the potential appointment of a site
geologist in order to more tightly control mining and exploration
geology.
-- Potential to achieve higher sales prices by lengthening the
sales cycle; pre-sales negotiations held with targeted key
customers to seek to secure longer term supply arrangements and
relationships which are anticipated to result in improved pricing
once production recommences.
-- Intention to create mine stockpiles onsite concurrently with
production and additional pumps purchased, in order to better
manage production flow and mitigate the risk of future high
rainfalls such as those experienced in Q4 2017 and February
2018.
-- Global sapphire market conditions have generally improved.
The Company is now observing a reduction in sapphires available in
the market and a reduction in the level of the previously reported
illegal production from Madagascar (and in Nigeria), and the
commensurate downwards pricing pressure, due to their depleted
resources and more effective policing by the relevant
authorities.
With regard to the Company's corporate activity during the
period;
-- We obtained a financing facility of up to GBP300,000 for
working capital purposes obtained by way of a secured convertible
loan at an interest rate of 3 month GBP LIBOR plus 7.5 per cent.
per annum, with a scheduled maturity date of 31 December 2018, from
Astor Management AG, a private company controlled by a long-term
significant shareholder (the "Secured Convertible Loan Facility");
and
-- As a demonstration of support and commitment to the Company,
the Directors, senior management team, certain former directors and
a former consultant agreed to waive, in aggregate, GBP237,230 of
accrued fees due to them and to convert, in aggregate, a further
GBP207,537 of unpaid fees into new Common Shares. Accordingly, all
outstanding fees due to the Company's current and former Directors,
and existing senior management and a former consultant up to 31 May
2018 have been waived/settled in full.
On 22 June 2018, Mr Ami Mpungwe resigned from his position as a
non-executive director of the Company and I would like to take this
opportunity to thank him for his valuable support and wish him well
in his future endeavours.
The Company has today signed an addendum to the Secured
Convertible Loan Facility to increase the facility by a further
GBP100,000 on the same commercial terms as the existing Secured
Convertible Loan Facility, to provide additional working capital.
The Board is currently engaged in discussions with potential
strategic investors to procure sufficient longer-term funding to
enable the recommencement of production at Capricorn Sapphire later
this year. Simultaneously the Company is engaged in discussions
with alternative parties to conclude a transaction for a partial or
complete disposal of the Capricorn Sapphire project. In the
meantime, operations will remain suspended and further
announcements will be made as and when appropriate.
Lastly, the Board wishes to express its appreciation for the
continued support and patience of the Company's various
stakeholders during this period of transition and we look forward
to providing further updates in due course.
Mr Edward Nealon
Non-Executive Chairman
28 September 2018
1. Financial Performance
In mid-December 2017, the Company decided to temporarily halt
mining operations in light of, inter alia, adverse weather
conditions and a weak market environment, in order to conserve its
cash resources and in anticipation of a recovery in sapphire
pricing levels and market demand.
Revenue for the period was US$0.05 million compared to US$1.0
million in H1 2017 as a result of the suspension of operations
throughout the period.
Operating loss for the period decreased by approximately 20 per
cent., from US$0.96 million in H1 2017 to US$0.77 million primarily
as a result of the suspended operations. The operating loss
reflects costs incurred at the Capricorn Sapphire project in
relation to maintenance, rehabilitation, corporate costs and
includes depreciation of US$0.2 million.
The Company had net unrestricted cash available of US$0.1
million at the period end compared to US$0.3 million as at the end
of H1 2017.
Total non-current assets were US$0.8 million at the period end,
which primarily reflects the capital expenditure associated with
the Capricorn Sapphire project.
2. Corporate Activity
As announced on 5 February 2018, Anthony ("Tony") Brooke was
appointed to the Board as the Company's new Chief Executive
Officer. Mr Brooke has previously acted as Vice President of
Marketing and Sales for the Company's wholly owned subsidiary,
Capricorn Sapphire Pty Limited ("Capricorn Sapphire"), and been
assisting with its sales and marketing initiatives alongside his
team at Gem Dreams Co. Limited ("Gem Dreams"), as set out in the
Company's announcement of 23 November 2016.
Dr. Bernard Olivier simultaneously resigned as Chief Executive
Officer and as a director of the Company in order to pursue his
other interests. The Company would again like to thank Dr. Olivier
for his significant contributions to the Company's development,
initially in Tanzania and subsequently in relation to the
establishment and commissioning of the Company's Capricorn Sapphire
mine.
Pursuant to certain pre-existing contractual arrangements
between Capricorn Sapphire, Tony Brooke and Gem Dreams in
connection with the abovementioned sales and marketing assistance
and the Company's beneficiation strategy, the Company issued
3,581,237 new common shares of US$0.0003 each in the capital of the
Company ("Common Shares") to Tony Brooke in February 2018 in
respect of sales commissions of US$42,717 earned during the period
from 1 December 2016 to 31 December 2017 (the "Commission Shares").
The number of Commission Shares has been calculated on the basis of
the Company's volume weighted average share price of 0.84p pence
for the year ended 30 November 2017 and using a foreign exchange
rate of GBP1 = U$1.42.
Effective from 22 June 2018, Mr Ami Mpungwe tendered his
resignation as a non-executive director of the Company to enable
him to pursue his other business interests. The Board would like to
thank Ami for his valuable service to the Company since 2004 and
wish him well in his future endeavours.
3. Going Concern
For the six months ended 30 June 2018, the Group recorded a loss
of US$0.78 million and had net cash outflows from operating
activities of US$0.4 million. The ability of the entity to continue
as a going concern is dependent on the group generating positive
operating cash flows and/or securing additional funding through the
raising of debt or equity to fund its planned recommencement of
production and its operational and marketing activities. Management
has successfully raised money in the past, but there is no
guarantee that adequate funds will be available when needed going
forwards.
These conditions indicate a material uncertainty that may cast a
significant doubt about the entity's ability to continue as a going
concern and, therefore, that it may be unable to realise its assets
and discharge its liabilities in the normal course of business.
The interim financial statements have been prepared on the basis
that the entity is a going concern, which contemplates the
continuity of normal business activity, realisation of assets and
settlement of liabilities in the normal course of business for the
following reasons:
-- The Group received a further GBP0.2 million under the
Convertible Loan facility subsequent to the reporting period end
and is currently in advanced discussions to extend this facility by
a further GBP0.1m;
-- The Directors, senior management personnel, certain former
Directors and a former consultant agreed to waive, in aggregate,
GBP237,230 of accrued fees due to them for periods from December
2016 to 31 May 2017;
-- Certain of the Directors, senior management personnel, former
Directors and a former consultant converted, in aggregate,
GBP207,537 of unpaid fees due to them for periods from December
2016 up to and including 31 May 2018 into new Common Shares;
-- The Company is seeking to raise sufficient additional
longer-term financing to enable the recommencement of production at
the Capricorn Sapphire mine: Simultaneously, the Company is, also
seeking to transact with potential acquirers for the project with
whom negoations are ongoing; and
-- Management has successfully raised money in the past.
Should the entity not be able to continue as a going concern, it
may be required to realise its assets and discharge its liabilities
other than in the ordinary course of business, and at amounts that
differ from those stated in the financial statements. The interim
financial report does not include any adjustments relating to the
recoverability and classification of recorded asset amounts or
liabilities that might be necessary should the entity not continue
as a going concern.
4. Operational Update and Future Plans
Sales for the period were approximately US$51,000 comprising
approximately US$30,000 from the sale of approximately 530,000
carats of lower quality sapphires/corundum, US$17,000 from cut
stones/Jewellery and US$4,000 from non-sapphire sales. Sapphire
inventory levels at the period end comprised 673,467 carats of
rough, 43,788 carats of heated fancy color rough in various small
sizes and 7,486 carats of cut gemstones of which 5,055 carats are
good quality parti (bi-coloured) stones for the wholesale market
and 2,431 carats are lower quality included parti stones for the
wholesale market.
During Q3 2018, the Company has continued to undertake essential
ongoing on-site maintenance and been endeavouring to procure
sufficient additional longer-term financing to enable the
recommencement of production later this year but will also be
continuing ongoing negotiations regarding the sale of all or part
of Capricorn sapphire and otherwise seek to maximise value from its
investment in Capricorn Sapphire and in the meantime operations
will remain suspended.
5. Post Period End
As announced on 6 July 2018, certain of the Company's existing
Directors and senior management team, certain former directors and
a former consultant agreed to the conversion of an aggregate amount
of GBP207,537 (comprising US$275,215 at the USD:GBP exchange rate
of 1.3261 on 22 June 2018) of fees accrued for periods ranging from
December 2016 to 31 May 2018 into new Common Shares (the "Fee
Conversion"). The Fee Conversion amount is shown in the Statement
of Financial Position as Fees agreed to be converted to equity.
Pursuant to the Fee Conversion, the Company issued, in
aggregate, 74,120,531 new Common Shares at an issue price of 0.28
pence per share, representing a premium of approximately 27 per
cent. to the Company's closing mid-market share price of 0.22 pence
on 5 July 2018.
In addition, the Company issued a further 16,000,000 new Common
Shares at the same price in relation to the settlement of certain
professional fees due though to 31 December 2018.
The Company has today signed an addendum to the Secured
Convertible Loan Facility to increase the facility by a further
GBP100,000 ( the "Additional GBP100,000 Facility") on the same
commercial terms the existing Secured Convertible Loan Facility
which were summarised in the Company's announcement dated 25 June
2018, to provide additional working capital.
At the Company's Annual General Meeting on 25th July 2018
approval was given for the restriction in Bye-law 14.2 in respect
of any shareholder acquiring a Relevant Interest in Voting
Securities of the Company in excess of thirty percent (30%) to not
apply in relation to any common shares issued pursuant to the
Convertible Loan Agreement dated 22 June 2018 between the Company
and Astor Management AG (the "Lender"). If the Lender seeks to
convert the Additional GBP100,000 Facility then the Company will be
required at a duly convened general meeting, to put a resolution to
its shareholders in the form prescribed in Bye-law 14.6(e) of its
Bye-laws to seek to obtain approval for the Company to issue such
number of Common Shares to the Lender as would be required from
time to time to satisfy conversion of all or part of the amount due
under the Additional GBP100,000 Facility (notwithstanding the
restriction set out in Bye-law 14.2 that no shareholder may own
more than 30 per cent. of the Company's Common Shares). In the
event that shareholders do not approve such a resolution at a duly
convened general meeting, and the Lender wishes to convert all or
part of the Additional GBP100,000 Facility (the "Loan Conversion
Amount") into new Common Shares then the Company will be required
to convert that portion of the Loan Conversion Amount which is not
in breach of Bye-law 14.2 into new Common Shares and repay to the
Lender within three business days of the meeting the proportion of
the Loan Conversion Amount not so converted together with a 'non
conversion fee' in cash equivalent to twice the value of the
unconverted portion of the Loan
Conversion Amount.
Interim Financial Statements
Richland Resources Ltd
Condensed Consolidated Statement of Profit and Loss
For the Half Year ended 30 June 2018
(Unaudited)
H1 2018 H1 2017 FY 2017
$'000 $'000 $'000
======== ======== ========
CONTINUING OPERATIONS
Revenue 51 1,078 1,942
Cost of sales (589) (1,240) (2,654)
======== ======== ========
Gross loss (538) (162) (712)
Other income 61 98 249
Operating expenses (297) (900) (1,595)
======== ======== ========
Operating loss (774) (964) (2,058)
Financing costs paid (4) (2) (10)
Impairment - - (1,920)
======== ======== ========
Loss before income tax (778) (966) (3,988)
Income tax credit/(charge) - - -
======== ======== ========
Loss after income tax from continuing
operations (778) (966) (3,988)
DISCONTINUED OPERATIONS
Profit for the year from discontinued
operations - - 35
======== ======== ========
Loss for the year (778) (966) (3,953)
======== ======== ========
Basic and diluted EPS from continuing
operations (cents per share) (0.15) (0.23) (0.93)
Basic and diluted EPS from continuing
operations (cents per share) - - 0.01
Basic and diluted EPS from all
operations (cents per share) (0.15) (0.23) (0.92)
Richland Resources Ltd
Consolidated Statement of Financial Position
As at 30 June 2018 (Unaudited)
H1 2018 H1 2017 FY 2017
$'000 $'000 $'000
========= ========= =========
Non-current assets
Property, plant and equipment 716 3,080 964
Intangible assets 51 35 52
========= ========= =========
Total non-current assets 767 3,115 1,016
========= ========= =========
Current assets
Inventories 73 154 139
Trade and other receivables 63 288 289
Restricted cash 281 292 296
Cash and cash equivalents 116 299 386
========= ========= =========
533 1,033 1,110
========= ========= =========
Non-current assets and Disposed - 50 -
Group classified as held for sale
========= ========= =========
Total current assets 533 1,083 1,110
========= ========= =========
Total assets 1,300 4,198 2,126
========= ========= =========
Equity
Share capital 146 125 145
Share premium 54,409 53,836 54,389
Fees agreed to be converted to 275 - -
equity
Share option reserve 161 85 123
Foreign currency translation reserve 80 117 133
Accumulated loss (54,570) (50,805) (53,792)
========= ========= =========
Total equity 501 3,358 998
========= ========= =========
Non-current liabilities
Provision for environmental rehabilitation 267 261 273
Total non-current liabilities 267 261 273
========= ========= =========
Current liabilities
Trade and other payables 400 494 855
Interest-bearing borrowings 132 - -
532 494 855
========= ========= =========
Liabilities associated with Disposed - 85 -
Group classified as held for sale
========= ========= =========
Total current liabilities 532 579 855
========= ========= =========
Total liabilities 799 840 1,128
========= ========= =========
Total equity and liabilities 1,300 4,198 2,126
========= ========= =========
Richland Resources Ltd
Condensed Consolidated Statement of Cash Flows
For the Half Year Ended 30 June 2018
(Unaudited)
H1 2018 H1 2017 FY 2017
$'000 $'000 $'000
======== ======== ========
Cash flows from operating activities
Cash absorbed by operations (396) (771) (1,335)
Financing cost received/(paid) 4 (9) (9)
Net cash used in operating activities (392) (780) (1,344)
Cash flows from investing activities
Purchase of property, plant and
equipment (10) (258) (282)
Purchase of intangible assets (2) (2) (19)
Derecognise disposed group cash - - (33)
Net cash used in/by investing activities (12) (260) (334)
Cash flows from financing activities
Cash proceeds from issue of shares - 1,025 1,731
Proceeds from convertible loans 133 - -
Net cash generated from financing
activities 133 1,025 1,731
Net (decrease)/increase in cash
and cash equivalents (271) (15) 53
======== ======== ========
Movement in cash and cash equivalents
Exchange losses 1 (12) (26)
At the beginning of the period 386 359 359
Decrease (271) (15) 53
======== ======== ========
At the end of the period 116 332 386
======== ======== ========
Cash and cash equivalents - continuing
operations 116 299 386
======== ======== ========
Cash and cash equivalents net of - 33 -
borrowings included in asset from
Disposed Group classified as held
for sale
======== ======== ========
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END
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