TIDMLEX
RNS Number : 8972A
Lexington Gold Limited
28 September 2022
28 September 2022
Lexington Gold Ltd
("Lexington Gold" or the "Company")
Interim Results for the half-year ended 30 June 2022
Lexington Gold (AIM: LEX), the gold exploration and development
company with projects in North and South Carolina, USA, is pleased
to announce its unaudited interim results for the six-month period
to 30 June 2022 ("H1 2022" or the "Period").
Highlights :
Corporate Summary
The first half of 2022 has been a productive period for the
Company, with encouraging exploration results announced for two of
the Company's gold projects in North and South Carolina, United
States, a region which has seen historical production and
multi-million-ounce mines. Lexington Gold remains focused on highly
prospective exploration and development work with the objective of
proving up a significant resources base.
The Company has increased its investment in exploration
activities whilst keeping overhead costs low. Exploration results
for the reporting period have been encouraging, with estimated
resources at one of the Company's four projects,
Jones-Keystone-Loflin, increasing by 27% since the period end to
approximately 83,000oz of contained gold.
Global macroeconomic uncertainty, especially in light of the
ongoing war in Ukraine and rising inflation, creates a climate that
has in the past often supported gold prices. Such an environment
also serves to highlight the benefits of operating in a stable
political and regulatory region, such as the USA.
Operational Highlights
Jones-Keystone-Loflin ("JKL") Project :
-- Drilling programme successfully completed on both the Loflin
and Jones-Keystone sides of the project thereby concluding the
Company's latest 5,000m reverse circulation ("RC") drill
programme
-- Assay results confirmed a significant new discovery which has been named Loflin South
-- Exceptional assay results obtained for the six RC drill holes at Jones-Keystone
Carolina Belle Project :
-- Very encouraging drill results received , predominantly from
two targets, McMaster and Martha Washington South, both showing
good intersections close to surface of approximately 1 g/t Au or
more
-- Results included 3m @ 3.68 g/t Au from 64m and 4m @ 1.8 g/t Au from 28m
-- Results of maiden drilling campaign being interpreted and
incorporated into a 3D model in order to facilitate the design of a
Phase II drilling programme to further target, define and expand on
intersected gold mineralisation at all three current targets
Post Period End :
-- Updated independent JORC Mineral Resource Estimate for the
Loflin side of the JKL Project of 82,700oz of contained gold as
announced on 8 August 2022. This is up 27% from the initial
estimate of September 2021 and includes over 9,000 gold ounces from
the newly discovered Loflin South
-- Potential for a significant further increase in the estimated
resources for Loflin and Loflin South via additional drilling,
subject to funding
-- Loflin project's 1m sample re-splits verified and further
defined high-grade shallow intercepts of up to approximately 10 g/t
Au
-- Jones-Keystone project's 1m sample re-splits verified and
further defined high-grade shallow intercepts of up to
approximately 7.5 g/t Au
-- Maiden JORC Mineral Resource Estimate for the Jones-Keystone
side of the JKL Project is currently being prepared following the
recent receipt of the 1m assay results for the Jones-Keystone
project
-- Appointment of WH Ireland Limited as Joint Broker
Financial Summary :
-- Net loss for H1 2022 from continuing operations was US$0.37m (H1 2021: US$0.47m)
-- Increased investment in exploration for H1 2022 of US$0.61m (H1 2021: US$0.43m)
-- Reduced operating expenses of US$0.36m (H1 2021: US$0.47m)
-- Total assets were US$4.78m as at the half-year end (31 December 2021: US$4.76m)
-- Cash position of US$0.37m as at the half-year end (31 December 2021: US$0.95m)
-- Total liabilities of US$0.44m as at the half-year end (31
December 2021: US$0.11m) of which US$0.41m relates to the unsecured
convertible loan of GBP335,000 principal amount which is repayable
by 30 April 2023 if not previously converted
For further information, please contact :
Lexington Gold Ltd www.lexingtongold.co.uk
Bernard Olivier (Chief Executive Officer) via Yellow Jersey
Edward Nealon (Chairman)
Mike Allardice (Group Company Secretary)
Strand Hanson Limited (Nominated Adviser) www.strandhanson.co.uk
Matthew Chandler / James Bellman / Abigail T: +44 207 409 3494
Wennington
WH Ireland Limited (Joint Broker) www.w hirelandplc.com
Katy Mitchell / Ben Good / Enzo Aliaj T: +44 207 220 1666
Peterhouse Capital Limited (Joint Broker) www.peterhousecap.com
Duncan Vasey / Lucy Williams (Broking) T: +44 207 469 0930
Eran Zucker (Corporate Finance)
Yellow Jersey PR Limited (Financial Public www.yellowjerseypr.com
Relations) T: +44 7948 758 681
Tom Randell / Annabelle Wills
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 as it forms part of
United Kingdom domestic law by virtue of the European Union
(Withdrawal) Act 2018, as amended.
Note to Editors :
Lexington Gold (AIM: LEX) is focused on the exploration and
development of its four diverse gold projects, covering a combined
area of approximately 1,675 acres in North and South Carolina, USA.
The projects are situated in the highly prospective Carolina Super
Terrane ("CST"), which has seen significant historic gold
production and is host to a number of multi-million-ounce mines
operated by majors. It was also the site of the first US gold rush
in the early 1800s, before gold was discovered in California.
Further information is available on the Company's website:
www.lexingtongold.co.uk . 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
Dear Fellow Shareholder,
I am pleased to present Lexington Gold's unaudited interim
results for the six-month period ended 30 June 2022 and to report
on the Company's ongoing activities to the date of this
statement.
It has been a period of substantial progress with the
publication of an updated and increased JORC resource estimate for
the Loflin deposit and the completion of our latest reverse
circulation ("RC") drilling campaign across both the Carolina Belle
and JKL projects. Lexington Gold remains focused on progressing
highly prospective exploration activities and the development and
proving up of significant gold resources. Exploration results
received in this reporting period serve to justify the Company's
acquisition of majority interests in its four gold exploration
projects in North and South Carolina in 2020, and the subsequent
investment in additional leased acreage last year, taking its total
project acreage in the Carolinas to approximately 1,675 acres.
Our exploration drilling during the period has led to the
identification of Loflin South as a separate resource, initially
estimated to contain over 9,000 gold ounces. The scope of the drill
programme has only enabled limited definition so far and the
deposit remains open in all directions. It is currently modelled as
two separate satellite deposits.
At Jones-Keystone-Loflin, we also commissioned and announced on
8 August 2022 an updated independent JORC (2012) Mineral Resource
Estimate for the Loflin deposit (including the 9,000 gold ounces
from Loflin South) comprising a total Inferred Resource of
2,596,000t @ 0.99 g/t Au for 82,700oz of contained gold, as at 31
July 2022. This represented a 27% increase in contained gold
achieved for the Loflin deposit when compared to the 65,000oz
estimated in September 2021.
There is potential for the mineralisation at Loflin to remain
open down-dip, to the north-east and along the plunge of the
syncline. There is also potential for significant further increases
in the resources for Loflin and Loflin South through additional
drilling. 3D Geological modelling and drilling to date has
delineated a NE-SW shallow plunging synclinal fold structure with
shallow gold mineralisation in the core of the structure.
A maiden JORC Mineral Resource Estimate for the Jones-Keystone
side of the JKL Project is currently being prepared by Pivot Mining
Consultants Pty Ltd following the recent receipt of the 1m assay
results for the Jones-Keystone project.
At Carolina Belle, during the reporting period, we received the
final assay results from our maiden drilling campaign, exceeding
our expectations for this reconnaissance programme. The results
were predominantly from two targets, McMaster and Martha Washington
South. Both targets returned excellent initial results with
multiple good intersections of 1 g/t Au or more found close to
surface, including 3m @ 3.68 g/t Au from 64m and 4m @ 1.8 g/t Au
from 28m. The drilling data and assay results now incorporated into
our database and models for Carolina Belle, are facilitating the
design of a Phase II drill campaign to further target, define and
expand the intersected gold mineralisation from the various targets
identified to date at the project.
Our investment in exploration activities during the period
increased by approximately 41% to US$612,000, while overhead costs
were reduced by approximately 22% to US$363,000 since the
comparable period in 2021.
In late April 2022, the Company obtained an unsecured GBP335,000
convertible loan which has ensured the uninterrupted implementation
of our exploration plans. The conversion price was set at 3.2p per
share being approximately a thirty per cent. premium to the then
prevailing market share price. The current market share price is
now in excess of the conversion price.
The current uncertain global macroeconomic environment, impacted
by the ongoing war in Ukraine and rising inflation, is one that in
the past has often supported gold prices and serves to highlight
the benefits of operating in a stable political and regulatory
region, such as the USA.
In August 2022, we were pleased to appoint WH Ireland Limited, a
leading broker to AIM quoted mining companies, as our joint
broker.
We look forward to obtaining a maiden resource estimate for the
Jones-Keystone deposit in the near term and thereafter to
continuing with our planned further exploration and development
work across our project portfolio.
Once again, I would like to thank our entire team for their
consistent delivery of results as we continue to execute our
exploration plans and develop our understanding of our exciting
assets in the Carolinas alongside our highly experienced local
joint venture partner, Uwharrie Resources Inc.
Mr Edward Nealon
Non-Executive Chairman
28 September 2022
Chief Executive's Operational and Financial Review
1 . Overview
H1 2022 has seen substantial progress, with the release of an
updated and increased JORC resource estimate for the Loflin deposit
and completion of our latest reverse circulation drilling campaign
across both the Carolina Belle and JKL projects.
We have learnt a substantial amount about the potential at our
four projects and been able to utilise our findings to refine our
plans. This ensures that we continue to make progress as quickly
and cost effectively as possible. We expect to be able to update
our total resources via a maiden resource estimate for
Jones-Keystone in the near term and to be able to commission
further updates as we implement additional exploration work.
During the period, we conducted the following principal
exploration activities on our portfolio projects:
At Carolina Belle, drilling identified and confirmed the
down-dip extension of the main historical ore-zone mined during the
historical third-party Iola and Uwarra gold mining operations with
a confirmed down-dip extension intersection of 4m @ 2.1 g/t Au from
64m to 68m in hole CRBC-24. Significant gold mineralisation was
intersected in the Footwall and Hangingwall of the main ore-zone of
the historical Iola and Uwarra gold mining operations with 11m @
1.01 g/t Au from 68m to 79m (combined Hangingwall, Footwall and
mined-out historical main ore-zone) in hole CRBC-22 including: (i)
a footwall intersection of 4m @ 1.62 g/t Au from 72m to 76m; (ii) a
Hangingwall intersection of 4m @ 0.7 g/t Au from 68m to 72m; and
(iii) a main historical ore-zone intersected between 72.2m and
73.2m. There was also a potential second gold mineralised zone
intersected approximately 25m above the main historical Iola and
Uwarra ore-zone with 4m @1.53 g/t Au from 48m to 52m in hole
CRBC-22 and four drill holes intersected the historical mine
workings of Iola and Uwarra. The McMaster target intersected
significant gold mineralisation including 3m @ 3.68 g/t Au from 64m
to 67m in hole CRBC-14; 4m @ 1.8g/t Au from 28m to 32m in hole
CRBC-15 as well as 4m @ 1.06 g/t Au from 20m to 24m in hole
CRBC-16. The newly discovered Martha Washington South target
intersected several intersections close to surface above 1g/t Au
including 8m @1.07 g/t Au from surface to 8m in hole CRBC-02 as
well as 4m @ 1.1g/t Au from 8m to 12m in hole CRBC-04.
At Loflin, a total of 18 drill holes for an aggregate of 1,695m
were drilled. Due to the significant sulphide mineralisation
intersected on the southern side and outside of the current known
Loflin resource ("Loflin South"), two additional RC drill holes
were drilled in the newly identified area. Detailed logging and
sampling of the 18 holes drilled on the combined Loflin South and
main Loflin deposit were completed with multiple intersections of
sulphide mineralisation and alteration zones of over 25m
identified. An additional 278 samples comprising 4 metre sample
composites as well as standards, blanks and duplicates, were
dispatched to American Assay Labs ("AAL") in Nevada for gold
assaying as well as whole-rock geochemistry analyses.
At Jones-Keystone, a total of 6 drill holes for an aggregate of
675m were drilled thereby concluding the latest 5,000m RC drilling
campaign. Initial logging identified multiple intersections of
alteration zones and sulphides mineralisation and the largest
combined intersection identified was over 50m. The primary aim of
the drilling on the Jones-Keystone side of JKL was to enable the
estimation of a maiden JORC compliant resource estimate. An
additional 190 samples comprising 4 metre sample composites as well
as standards, blanks and duplicates, were dispatched to AAL in
Nevada for gold assaying as well as whole-rock geochemistry
analyses.
Assay results also confirmed a significant new discovery at our
JKL Project, which has been named Loflin South, containing an
initial 9,000 ounce gold resource.
Selected assay result highlights include:
-- Hole LFRC-006: 36m @ 1.67 g/t Au and 1.89 g/t Ag from 20m to
56m including: 12m @ 3.27 g/t Au and 2.9 g/t Ag from 28m to 40m and
4m @ 5.63 g/t Au and 3.5 g/t Ag from 32m to 36m;
-- Hole LFRC-002: 20m @ 1.52 g/t Au and 1.67 g/t Ag from 16m to
36m including: 4m @ 3.01 g/t Au and 2.45 g/t Ag from 32m to 36m;
and
-- Hole LFRC-003: 8m @ 1.32 g/t Au from 80m to 88m including: 4m @ 1.45 g/t Au from 80m to 84m
Loflin South is located less than 250m south and south-east of
our maiden Loflin JORC resource estimate and there is potential for
significant expansion or enhancement of the current resource.
Successful drilling has extended the north-eastern boundary of
the known Loflin JORC resource with further selected assays
including:
-- Hole LFRC-008: 12m @ 1.26 g/t Au from 16m to 28m including:
4m @ 1.78 g/t Au from 20m to 24m; and
-- Silver (Ag) values of up to 3.5 g/t associated with gold
mineralisation and zones of high sulphide alteration.
Final assay results from the drill programme at Loflin included
shallow level infill drilling and testing of the North-Eastern,
South-Western and Southern boundaries and extensions, with the
following selected results:
-- Hole LFRC-018: 24m @ 1.07 g/t Au and 2.76 g/t Ag from 4m to
28m including: 4m @ 2.34 g/t Au and 6.41 g/t Ag from 24m to
28m;
-- Hole LFRC-009: 16m @ 1.27 g/t Au and 3.79 g/t Ag from 16m to
32m including: 8m @ 1.76 g/t Au and 6.48 g/t Ag from 20m to 28m;
and 4m @ 1.93 g/t Au and 6.11 g/t Ag from 24m to 28m;
-- Hole LFRC-010: 4m @ 0.58 g/t Au from 48m to 52m;
-- Hole LFRC-016: 4m @ 0.73 g/t Au from 4m to 8m;
-- Hole LFRC-011 intersected a cavity created by historic
underground workings between 10m and 20m below surface. A 2m
intersection immediately above the cavity returned grades of 0.42
g/t Au from 8m to 10m;
-- Drilling has extended the known north-eastern deposit
boundary and confirmed that the deposit remains open to the
north-east towards the direction of Jones-Keystone;
-- The Loflin deposit appears to pinch off in a South-Westerly
direction, but the drilling results also indicated that the deposit
opens towards the south and south-east and potentially links in
with the Loflin South deposit, with intersections including 36m
@1.67 g/t Au between 20m to 56m; and
-- Assay results returned values of up to 6.9 g/t Ag associated
with gold mineralisation and zones of high sulphide alteration.
At Jones-Keystone, exceptional assay results received for the
six RC drill holes included:
-- Hole JKRC-002: 52m @ 0.99 g/t Au from 72m to 124m including:
24m @ 1.37 g/t Au from 80m to 104m; 16m @ 1.7 g/t Au from 84m to
100m; and 4m @ 2.75 g/t Au from 92m to 96m;
-- Hole JKRC-004: 40m @ 1.27 g/t Au from 20m to 60m including:
28m @ 1.69 g/t Au from 28m to 56m; 16m @ 2.5 g/t Au from 28m to
44m; and 4m @ 4.56 g/t Au from 36m to 40m; and
-- Hole JKRC-003: 28m @ 1.37 g/t Au from 64m to 92m including:
8m @ 3.1 g/t Au from 64m to 72m and 4m @ 4.96 g/t Au from 64m to
68m.
The Jones-Keystone deposit remains open along strike and down
dip and the above results should support and facilitate the
commissioning of a Maiden JORC Resource Estimate for Jones-Keystone
in the near term.
2 . Financial Performance
-- Net loss for H1 2022 from continuing operations was US$0.37m (H1 2021: US$0.47m)
-- Total assets were US$4.8m as at the half-year end (31 December 2021: US$4.8m)
-- Cash position of US$0.37m as at the half-year end (31 December 2021: US$0.95m)
-- Total liabilities of US$0.44m as at the half-year end (31
December 2021: US$0.11m) of which US$0.41m relates to the unsecured
convertible loan of GBP335,000 principal amount which is repayable
by 30 April 2023 if not previously converted
3 . Dividend
The directors have not declared a dividend (2021: Nil).
4 . Corporate Activities
Funding
In late April 2022, an unsecured GBP335,000 convertible loan was
obtained from, inter alia, two significant shareholders and three
directors, including the Company's Chairman. This facility provides
additional working capital and financial flexibility as the Company
focuses on establishing a maiden JORC Resource estimate for
Jones-Keystone and the potential upgrading of the existing JORC
Resource estimate at Loflin. The conversion right for the lenders
concerned was set at 3.2p per share being approximately 30 per
cent. above the then prevailing market share price of 2.45p per
share.
5 . Post Period End
Post the reporting period end, at the combined Loflin and Loflin
South Project significant intercepts were recorded from 1m sample
re-splits including:
-- Hole LFRC-006: 34m @ 1.75 g/t Au from 21m to 55m including:
17m @ 2.9 g/t Au from 21m to 38m and 2m @ 10.09 g/t Au from 31m to
33m
-- Hole LFRC-009: 12m @ 1.95 g/t Au from 18m to 30m including:
6m @ 3.24 g/t Au from 22m to 28m and 2m @ 5.05 g/t Au from 22m to
24m
-- Hole LFRC-002: 23m @ 1.35 g/t Au from 16m to 39m including:
5m @ 3.09 g/t Au from 31m to 36m and 1m @ 6.13 g/t Au from 32m to
33m
-- Hole LFRC-018: 26m @ 1.04 g/t Au from 4m to 30m including: 3m @ 2.45 g/t Au from 25m to 28m
-- Hole LFRC-003: 6m @ 1.6 g/t Au from 82m to 88m including: 2m @ 2.93 g/t Au from 82m to 84m
-- Hole LFRC-008: 14m @ 1.2 g/t Au from 14m to 28m including: 4m @ 1.87 g/t Au from 19m to 23m
The 1m re-sampling of the 4m composites confirmed shallow,
high-grade intercepts of up to approximately 10g/t Au.
The updated independent JORC (2012) Mineral Resource Estimate
for the Loflin deposit (including 9,000oz at Loflin South),
reported as at 31 July 2022, was for a total Inferred Resource of
2,596,000t @ 0.99 g/t Au for 82,700oz of contained gold. This
represented a 27% increase in contained gold achieved for the
Loflin deposit versus the previous 65,000oz estimated in September
2021.
There is potential for mineralisation at Loflin to remain open
down-dip, to the north-east, along the plunge of the syncline. The
newly discovered Loflin South has had limited drilling and
definition and remains open in all directions and is currently
modelled as two separate satellite deposits. Accordingly, there is
potential for a significant further increase in resources for
Loflin and Loflin South through additional future drilling. 3D
Geological modelling and drilling has delineated a NE-SW shallow
plunging synclinal fold structure with shallow gold mineralisation
in the core of the structure.
Post the reporting period end, significant intercepts were
recorded from the Jones-Keystone 1m sample re-splits including:
-- Hole JKRC-002: 50m @ 1.09 g/t Au from 72m to 122m including:
o 27m @ 1.52 g/t Au from 72m to 99m
o 9m @ 2.71 g/t Au from 90m to 99m
o 1m @ 5.77 g/t Au from 93m to 94m
-- Hole JKRC-003: 28m @ 1.15 g/t Au from 66m to 94m including:
o 6m @ 2.67 g/t Au from 66m to 72m
o 1m @ 5.17 g/t Au from 67m to 68m
-- Hole JKRC-004: 31m @ 1.38 g/t Au from 28m to 59m including:
o 16m @ 2.15 g/t Au from 28m to 44m
o 1m @ 7.52 g/t Au from 32m to 33m
The 1m re-sampling of the 4m composites has confirmed shallow,
high-grade intercepts of up to approximately 7.5g/t Au.
A Maiden JORC Mineral Resource Estimate for the Jones-Keystone
side of the JKL Project is currently being prepared following the
recent receipt of the 1m assay results for the Jones-Keystone
deposit.
6 . Outlook
As a gold exploration and development company, the Directors
continue to believe that the group's gold projects in North and
South Carolina in the United States represent an excellent
opportunity to create long-term shareholder value through the
identi cation and exploration of gold deposits within the
well-mineralised but under explored Carolina Super Terrane.
Dr Bernard Olivier
Chief Executive Officer
28 September 2022
Interim Financial Statements
Lexington Gold Ltd
Condensed Consolidated Statement of Profit and Loss and Other
Comprehensive Income
For the Half-Year ended 30 June 2022
(Unaudited)
Unaudited Unaudited
Notes Six months Six months
ended 30 ended 30
June 2022 June 2021
$'000 $'000
----------- -----------
CONTINUING OPERATIONS
Operating expenses 3 (363) (467)
Fair value gain on derivative liability 6 -
Finance cost (10) -
Loss before income tax (367) (467)
Income tax credit/(charge) - -
----------- -----------
Loss for the period (367) (467)
----------- -----------
Other comprehensive income
Loss for the period (367) (467)
Items that may be reclassified to profit
or loss:
Foreign currency reserve movement - -
----------- -----------
Total comprehensive loss for the period (367) (467)
----------- -----------
Loss per share attributable to the
owners of the parent
Basic and diluted loss per share from
continuing operations (cents per share) 4 (0.14) (0.18)
The accompanying notes form part of these financial
statements.
Lexington Gold Ltd
Consolidated Statement of Financial Position
As at 30 June 2022 (Unaudited)
Unaudited Audited
Notes 30
June 31 December
2022 2021
$'000 $'000
---------- ------------
Non-current assets
Exploration and evaluation assets 5 4,376 3,764
---------- ------------
Total non-current assets 4,376 3,764
---------- ------------
Current assets
Trade and other receivables 27 45
Cash and cash equivalents 373 953
---------- ------------
Total current assets 400 998
---------- ------------
Total assets 4,776 4,762
---------- ------------
Equity
Share capital 787 787
Share premium 59,096 59,096
Share option reserve 603 555
Foreign currency translation reserve (2) (2)
Accumulated loss (57,117) (56,750)
---------- ------------
Total equity attributable to equity
owners of the parent 3,367 3,686
Non-controlling interest 970 970
---------- ------------
Total equity 4,337 4,656
---------- ------------
Current liabilities
Trade and other payables 26 106
Borrowings 6 372 -
Derivative liability 7 41 -
---------- ------------
Total current liabilities 439 106
---------- ------------
Total equity and liabilities 4,776 4,762
---------- ------------
The accompanying notes form part of these financial
statements.
Lexington Gold Ltd
Consolidated Statement of Changes in Equity
For the Half-Year Ended 30 June 2022
(Unaudited)
Total
Foreign equity
Issued Share currency Accumu- attribu-table
share Share option trans-lation lated to Non-controlling Total
capital premium reserve reserve loss share-holders interest equity
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
--------- --------- --------- ------------- --------- -------------- ---------------- --------
Six months
ended
30 June 2022
(unaudited)
At start of
period 787 59,096 555 (2) (56,750) 3,686 970 4,656
Total
comprehensive
loss for the
period - - - - (367) (367) - (367)
--------- --------- --------- ------------- --------- -------------- ---------------- --------
Loss for the
period - - - - (367) (367) - (367)
Foreign
exchange gain
on translation - - - - - - - -
--------- --------- --------- ------------- --------- -------------- ---------------- --------
Share options - - 48 - - 48 - 48
At end of
period 787 59,096 603 (2) (57,117) 3,367 970 4,337
--------- --------- --------- ------------- --------- -------------- ---------------- --------
Six months
ended
30 June 2021
(unaudited)
At start of
period 787 59,096 234 (3) (55,729) 4,385 971 5,356
Total
comprehensive
loss for the
period - - - - (467) (467) - (467)
--------- --------- --------- ------------- --------- -------------- ---------------- --------
Loss for the
period - - - - (467) (467) - (467)
Foreign
exchange gain
on translation - - - - - - - -
--------- --------- --------- ------------- --------- -------------- ---------------- --------
Share issue
cost - - 108 - - 108 - 108
--------- --------- --------- ------------- --------- -------------- ---------------- --------
At end of
period 787 59,096 342 (3) (56,196) 4,026 971 4,997
--------- --------- --------- ------------- --------- -------------- ---------------- --------
The accompanying notes form part of these financial
statements.
Lexington Gold Ltd
Consolidated Statement of Cash Flows
For the Half-Year Ended 30 June 2022
(Unaudited)
Unaudited Unaudited
Notes Six months Six months
ended 30 ended 30
June 2022 June 2021
$'000 $'000
----------- -----------
Cash flows used in operating activities
Cash absorbed by operations 8 (365) (399)
Net cash used in operating activities (365) (399)
----------- -----------
Cash flows used in investing activities
Payments for exploration (612) (434)
Net cash used in/by investing activities (612) (434)
----------- -----------
Cash flows from financing activities
Proceeds from borrowings 416 -
Net cash generated from financing activities 416 -
----------- -----------
Net decrease in cash and cash equivalents (561) (833)
----------- -----------
Movement in cash and cash equivalents
Exchange (losses)/gains (19) 3
At the beginning of the period 953 2,895
Decrease (561) (833)
----------- -----------
At the end of the period 373 2,065
----------- -----------
The accompanying notes form part of these financial
statements.
Lexington Gold Ltd
Notes to the interim financial information
For the Half-Year Ended 30 June 2022
(Unaudited)
1 . Basis of preparation
The unaudited interim financial information set out above, which
incorporates the financial information of the Company and its
subsidiary undertakings (the "Group"), has been prepared using the
historical cost convention and in accordance with International
Financial Reporting Standards ("IFRS") and with those parts of the
Bermuda Companies Act, 1981 applicable to companies reporting under
IFRS.
These interim results for the six months ended 30 June 2022 are
unaudited and do not constitute statutory accounts as defined in
section 87A of the Bermuda Companies Act, 1981.The financial
statements for the year ended 31 December 2021 have been delivered
to the Registrar of Companies and the auditors' report on those
financial statements was unqualified but contained an emphasis of
matter paragraph on going concern.
2 . Going concern
For the period ended 30 June 2022, the Group recorded a loss of
US$0.37m and had net cash outflows from operating activities of
US$0.37m. An operating loss is expected in the year subsequent to
the date of these financial statements. 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 and/or equity to fund its projects.
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 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 Company raised additional funding by way of a convertible
loan of GBP335,000 in late April 2022;
-- The Directors are confident that they will be able to raise
additional funds to satisfy its immediate cash requirements and
have successfully raised financing in the past; and
-- The Directors have the ability to reduce expenditure in order to preserve cash if required.
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 financial
statements do 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.
3 . Operating (expenses)/income
Unaudited Unaudited
Six months Six months
ended 30 ended 30
June 2022 June 2021
$'000 $'000
----------- -----------
Directors' emoluments and fees (98) (98)
Net foreign exchange (loss)/gain (15) 3
Office expenses (27) (18)
Professional and other services (164) (246)
Share option expense (48) (108)
Other expenses (11) -
----------- -----------
Total operating expenses (363) (467)
----------- -----------
4 . Basic and diluted loss per share
The calculation of basic and diluted loss per share for the six
months ended 30 June 2022 was based on the loss attributable to
common shareholders from continuing operations of US$367,000 (H1
2021: US$467,000) and a weighted average number of common shares
outstanding of 261,478,810 (H1 2021: 261,478,810).
5 . Exploration and evaluation assets
Unaudited Audited
30
June 31 December
2022 2021
$'000 $'000
---------- ------------
Balance at beginning of period 3,764 2,499
Additions 612 1,265
4,376 3,764
---------- ------------
The amount above relates to exploration and development
activities in respect of the Group's 51% investment in four diverse
gold projects, covering a combined area of over 1,675 acres in
North and South Carolina, USA.
The projects are situated in the highly prospective Carolina
Super Terrane ("CST"), which has seen significant historic gold
production and is host to a number of multi-million-ounce mines
operated by majors. It was also the site of the first US gold rush
in the early 1800s, before gold was discovered in California.
In order for the Company to retain its 51% membership interests
in the four projects, it has to make certain Minimum Funding
Contributions in respect of each of the projects in each of the
four years and throughout the four-year period following its
re-admission to AIM in November 2020, in an aggregate amount of
AU$5 million (the "Minimum Funding Contributions"). The Minimum
Funding Contributions are further detailed in note 9.
In the event that the Minimum Funding Contributions are not
satisfied by the Company, Uwharrie Resources Inc., the Company's
joint venture partner, has the option to acquire the Company's 51%
interest in the relevant project for a nominal sum of AU$1.
The directors have assessed the value of the exploration and
evaluation asset having considered any indicators of impairment,
and in their opinion, based on a review of future expected
availability of funds to develop the projects and the intention to
continue exploration and evaluation, no impairment is
necessary.
6 . Borrowings
Unaudited Audited
30
June 31 December
2022 2021
$'000 $'000
---------- ------------
Interest bearing borrowings 372 -
372 -
---------- ------------
As announced on 25 April 2022, the Company has entered into
unsecured convertible loan agreements with respect to borrowing, in
aggregate, GBP335,000 principal amount (the "Convertible Loan"),
predominantly with certain long term significant shareholders and
Company Directors (together, the "Lenders"). The Convertible Loan
is unsecured and repayable with accrued interest on 30 April
2023.
Interest accrues at 6 per cent. per annum to maturity and is
payable in full in new common shares ("Shares") if the Convertible
Loan is converted. The interest rate increases to 10 per cent. per
annum in the event of any unremedied default as set out in the
underlying agreements.
The conversion price is the lower of: a) 3.2 pence per Share; or
b) 0.9 times the price at which the Company issues any Shares for
cash prior to the conversion date (a "Qualifying Financing"); or c)
0.9 times the price offered by any person and their affiliates (an
"Offeror") to buy Shares with the objective of seeking to acquire
more than a 30% relevant interest in the Company's issued Shares (a
"General Offer").Automatic conversion occurs in the event of a
Qualifying Financing. In the event of a General Offer, a Lender can
elect to convert their Convertible Loan and accrued interest into
Shares at the Conversion Price.
7 . Derivative liability
Unaudited Audited
30
June 31 December
2022 2021
$'000 $'000
---------- ------------
Derivative liability from option to
redeem borrowings for shares 41 -
---------- ------------
41 -
---------- ------------
It was determined that the redemption option (refer to Note 6)
upon the occurrence of a redemption event (e.g. a Qualifying
Financing, etc.) should be bifurcated and accounted for
separately.
The embedded derivative liability represents the combined fair
value of the right of borrowers to receive Shares upon conversion.
The embedded derivative liability is adjusted to reflect fair value
at each period end with changes in fair value recorded in profit
and loss.
8 . Cash (absorbed)/generated by operations
Unaudited Unaudited
Six months Six months
ended 30 ended 30
June 2022 June 2021
$'000 $'000
----------- -----------
Loss before income tax (367) (467)
Adjusted for:
* Fair value gain on derivative liability (6) -
* Finance cost 10 -
* Share options expense 48 108
* Net foreign exchange difference 10 (3)
Cash from operations before working
capital changes (305) (362)
Working capital changes:
Trade and other receivables 18 30
Trade and other payables (78) (67)
----------- -----------
Cash (absorbed)/generated by operations
before interest and tax (365) (399)
----------- -----------
9 . Commitments and contingencies
Pursuant to the terms of its acquisition of Global Asset
Resources Limited ("GAR") in November 2020, Lexington Gold is
required to pay conditional deferred consideration, of, in
aggregate, AU$1.5m (being the Tranche 1 Deferred Consideration if
the Tranche 1 Performance Milestone detailed below is met) and the
sum of, in aggregate, AU$3.0m (being the Tranche 2 Deferred
Consideration if the Tranche 2 Performance Milestone detailed below
is met) to the Sellers and Uwharrie Resources Inc. ("URI"), in cash
or New Common Shares at the Company's sole discretion, subject to
the achievement by the Group of the Tranche 1 Performance Milestone
and Tranche 2 Performance Milestone or the occurrence of certain
Vesting Events within five years of completion of the Company's
acquisition of Global Asset Resources Ltd ("GAR"). No provision has
been made for the payment of the deferred consideration as the
Tranche 1 Performance Milestone, Tranche 2 Performance Milestone
and Vesting Events have not occurred.
The Tranche 1 Performance Milestone comprises confirmation by an
independent geologist and announcement by the Company of JORC 2012
compliant resources in respect of any one of the GAR Projects
(including any Additional Projects) that are not Excluded Projects
of at least:
a) 0.8 million ounces of gold at a grade of more than 1 g/t; or
b) 0.6 million ounces of gold at a grade of more than 2.5 g/t; or
c) 0.4 million ounces of gold at a grade of 5 g/t or more.
The Tranche 1 Deferred Consideration, payable within 21 business
days of the achievement of the Tranche 1 Performance Milestone or
occurrence of certain Vesting Events, comprises AU$1,299,000,
payable in cash or New Common Shares at the Relevant Price (in
whole or in part) at the Company's sole discretion, to the Sellers;
and AU$201,000, payable in cash or New Common Shares at the
Relevant Price (in whole or in part) at the Company's sole
discretion, to URI.
The Tranche 2 Performance Milestone comprises the commissioning
from an independent geologist, completion and announcement by the
Company, in accordance with the AIM Rules, of a pre-feasibility
study in respect of any one of the GAR Projects (including any
Additional Projects) that are not Excluded Projects confirming a
pre-tax NPV of more than US$50m at a discount rate of at least 8
per cent.
The Tranche 2 Deferred Consideration, payable within 21 business
days of the achievement of the Tranche 2 Performance Milestone or
occurrence of certain Vesting Events, comprises AU$2,598,000,
payable in cash or New Common Shares at the Relevant Price (in
whole or in part) at the Company's sole discretion, to the Sellers;
and AU$402,000, payable in cash or New Common Shares at the
Relevant Price (in whole or in part) at the Company's sole
discretion, to URI. If the Tranche 1 Deferred Consideration has not
previously been paid at the time of achievement of the Tranche 2
Performance Milestone, the Tranche 1 Deferred Consideration will
also become payable in cash or New Common Shares (at the Company's
sole discretion) at such time.
The Joint Venture Implementation Deed between GAR, URI and
Carolina Gold Resources also sets out certain Minimum Funding
Contributions in respect of each of the GAR Projects to be provided
by the Company in each of the four years and throughout the
four-year period following Admission in order to retain its 51 per
cent. interest in the Projects which are summarised below. In the
event that the Minimum Funding Contributions are not satisfied by
Lexington Gold (on both an annual and overall basis), URI has the
option to acquire the Company's 51 per cent. membership interest
(via GAR Holdings) in the relevant Project SPV for a nominal sum of
AU$1. The Company similarly has the option to sell its 51 per cent.
membership interest in any of the GAR Projects to URI at any time
during the four-year period following Admission for AU$1 should the
Board determine that the Company no longer wishes to proceed with
one or more of the GAR Projects.
Minimum Funding Contributions for the Company to retain its 51
per cent . membership interests
AU$
Minimum Minimum Minimum Minimum Minimum
Project Total Year Year Year Year
1 2 3 4
JKL 1,500,000 250,000 150,000 150,000 150,000
Carolina Belle 1,500,000 250,000 100,000 100,000 100,000
Jennings-Pioneer 1,000,000 100,000 100,000 100,000 100,000
Argo 1,000,000 100,000 100,000 100,000 100,000
---------- -------- -------- -------- --------
5,000,000 700,000 450,000 450,000 450,000
---------- -------- -------- -------- --------
At the end of the initial four-year period following Admission
and satisfaction of the Minimum Funding Contributions for a
Project, if URI elects not to fund its proportionate share of
future costs or fails to make an election then, in accordance with
the terms of the Joint Venture Implementation Deed, the Company
will potentially be able to increase its interest in each of the
Project SPVs to 80 per cent. by meeting certain further funding
commitments in years 5 and 6 (on both an annual and overall basis)
following Admission (the "Extended Period").
Extended Period funding contributions from the Company to
acquire an additional 29 per cent . membership interest and
increase its total interest to 80 per cent.
Minimum Minimum Minimum
Project Total Year Year
5 6
JKL 2,500,000 150,000 150,000
Carolina Belle 2,500,000 100,000 100,000
Jennings-Pioneer 1,500,000 100,000 100,000
Argo 1,500,000 100,000 100,000
---------- -------- --------
8,000,000 450,000 450,000
---------- -------- --------
If the Company does not meet the Extended Period funding
contributions in relation to a particular Project, it will retain
its 51 per cent. initial interest in such Project SPV.
In the event that the Company increases its interest in any of
the Project SPVs to 80 per cent. and URI elects not to fund its
proportionate share of future costs in respect of its then 20 per
cent. residual interest in the GAR Project concerned or fails to
make an election, the Company is able to increase its interest in
the relevant Project to 100 per cent. by agreeing to pay for the
relevant Project, a Net Smelter Royalty to URI of 0.5 per cent. for
future production up to 50,000 oz gold equivalent, 2.0 per cent.
for future production from 50,000 to 400,000 oz gold equivalent and
1.0 per cent. for future production in excess of 400,000 oz gold
equivalent.
10 . Related parties
Identity of related parties
The Group has a related party relationship with its subsidiaries
and key management personnel.
Remuneration of key management personnel
Key management personnel are those persons having authority and
responsibility for planning, directing and controlling the
activities of the entity, directly or indirectly, including any
director (whether executive or otherwise) of the Group. Details of
the nature and amount of each element of the remuneration of each
director of the Group during the period are shown in the table
below:
Six months ended 30 June
2022
Share
based
Directors' Executive payments
fees fees (1) (2) Total
----------- ---------- ---------- --------
US$ US$ US$ US$
Edward Nealon 11,250 6,750 6,431 24,431
Bernard Olivier 11,250 39,000 10,182 60,432
Melissa Sturgess 11,250 - 6,431 17,681
Rhoderick Grivas 11,250 6,750 6,431 24,431
----------- ---------- ---------- --------
45,000 52,500 29,475 126,975
----------- ---------- ---------- --------
Six months ended 30 June
2021
Share
based
Directors' Executive payments
fees fees (1) (2) Total
----------- ---------- ---------- --------
US$ US$ US$ US$
Edward Nealon 11,250 6,750 14,415 32,415
Bernard Olivier 11,250 39,000 22,823 73,073
Melissa Sturgess 11,250 - 14,415 25,665
Rhoderick Grivas 11,250 6,750 14,415 32,415
----------- ---------- ---------- --------
45,000 52,500 66,068 163,568
----------- ---------- ---------- --------
(1) For duties as executive director and consulting.
(2) In accordance with the requirements of IFRS 2 Share-based
payments, the estimated fair value for the share options granted
was calculated using a Black Scholes option pricing model. None of
the share options have been exercised as they are out of the
money.
Borrowings and advances from directors and shareholders
Unaudited Audited
30
June 31 December
2022 2021
$'000 $'000
---------- ------------
Ed Nealon 63 -
Bernard Olivier 4 -
Melissa Sturgess 13 -
Rhoderick Grivas 32 -
Astor Management AG 61 -
Aero Services (IOM) Limited 123 -
Pure Ice Ltd 123 -
419 -
---------- ------------
Current directors of the holding company and their close family
members, as at the date of these financial statements, control
4.25% (31 December 2021: 4.25%) of the voting shares of Lexington
Gold.
11 . Fair value
Carrying amount versus fair value
The following table compares the carrying amounts and fair
values of the Group's financial assets and financial liabilities as
at 30 June 2022.
The Group considers that the carrying amount of the following
financial assets and financial liabilities are a reasonable
approximation of their fair value:
-- Trade and other receivables
-- Trade and other payables
-- Cash and cash equivalents
As at 30 June 2022 As at 31 December
2021
Carrying Fair value Carrying Fair value
amount amount
--------- ----------- --------- -----------
$'000 $'000 $'000 $'000
Financial liabilities
Borrowings 372 372 - -
Derivative liability 41 41 - -
--------- ----------- --------- -----------
Total 413 413 - -
--------- ----------- --------- -----------
Fair value hierarchy
The level in the fair value hierarchy within which the financial
asset or financial liability is categorised is based on the lowest
level input that is significant to the fair value measurement.
Financial assets and financial liabilities are classified in
their entirety into only one of the three levels. The fair value
hierarchy has the following levels:
-- Level 1 - quoted prices (unadjusted) in active markets for identical assets or liabilities
-- Level 2 - inputs other than quoted prices included within
Level 1 that are observable for the asset or liability, either
directly (i.e. as prices) or indirectly (i.e. derived from
prices)
-- Level 3 - inputs for the asset or liability that are not
based on observable market data (unobservable inputs).
(in $'000) As at Level 1 Level 2 Level 3
30 June
2022
Financial liabilities
Derivative liability 41 - - 41
------------ -------- -------- --------
As at Level 1 Level 2 Level 3
31 December
2021
Financial liabilities
Derivative liability - - - -
------------ -------- -------- --------
Reconciliation: Level 3 recurring fair value measurements
Unaudited Audited
30
June 31 December
2022 2021
$'000 $'000
---------- ------------
Derivative liability
Opening balance - -
On initial recognition of borrowings 47 -
Fair value adjustment recognised during (6) -
the period
41 -
---------- ------------
Transfers during the period
During the 6-month period to 30 June 2022:
-- There were no transfers between Level 1 and Level 2 fair value measurements
-- There were no transfers into or out of Level 3 fair value measurements
Valuation techniques
Derivative liabilities
A Monte-Carlo simulation option pricing model was used to
estimate the fair value of the conversion options embedded in
borrowings. The model requires the development and use of
assumptions. These assumptions include estimated volatility of the
value of common shares and an appropriate risk-free interest
rate.
12 . Subsequent events
On 11 July 2022, the Company announced the receipt of the
results for 1m re-splits taken from the RC drill hole 4m composite
samples across its combined Loflin and Loflin South Project. All of
the holes concerned were originally sampled as 4m composites. All
composites which returned a gold grade of more than 200ppb Au were
subsequently re-sampled in the field and assayed on a 1m basis. The
1m re-sampling confirmed shallow, high-grade intercepts of up to
approximately 10g/t Au and the results were incorporated into the
Company's geological model.
On 8 August 2022, the Company announced an updated independent
JORC (2012) Mineral Resource Estimate for the Loflin side of the
JKL Project prepared by Pivot Mining Consultants Pty Ltd of
2,596,000t @ 0.99 g/t Au for 82,700oz of contained gold. This
represented a 27% increase in contained gold versus the previous
estimate in September 2021.
On 15 August 2022, the Company announced the appointment of WH
Ireland Limited as its Joint Broker.
On 26 September 2022, the Company announced the receipt of the
results for 1m re-splits taken from the RC drill hole 4m composite
samples at its Jones-Keystone deposit that forms part of the JKL
Project. The 1m re-sampling confirmed shallow, high-grade
intercepts of up to approximately 7.5g/t Au and the results are
currently being incorporated into the Company's geological
model.
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END
IR FLFIRATIDFIF
(END) Dow Jones Newswires
September 28, 2022 02:00 ET (06:00 GMT)
Lexington Gold (LSE:LEX)
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