TIDMTSG
RNS Number : 6767A
Trans-Siberian Gold PLC
08 June 2016
Trans-Siberian Gold plc
Final results for the year ended 31 December 2015
Notice of Annual General Meeting
Highlights
-- Profit before tax $6.6 million (2014: $1.3 million)
-- Production 37,984 oz. gold, 49,398 oz. silver, increases of 5.3% and 10.7% respectively
-- Asacha plant processed average 13,437 tonnes per month, 3.0% increase
-- Cost of sales per oz. gold $742, 13.0% reduction
-- Cash cost per oz. gold sold $522, 11.8% reduction
Trans-Siberian Gold plc ("TSG" or "the Company") reports that
Asacha's fourth full year of operation produced 37,984 oz. (2014:
36,089 oz.) of refined gold and 49,398 oz. (2014: 44,610 oz.) of
refined silver. In 2015 the mine continued to implement the
recommendations of an earlier mine audit and to introduce
additional methods intended to lower dilution and increase ore
grades, including changes in stoping and blasting and improved
control of mining activities. Average dilution excluding rockfalls
improved significantly from 56.8% in 2014 to 40.4% in 2015, and
reduced further to 36.6% in the first quarter of 2016.
In June 2015 ore extraction was impacted by excessive water
inflow into the mine due to exceptionally heavy rains and
atypically quick snow melting. Increased water inflow at the levels
below 200 metres (m) had been anticipated in the mine's design,
however the actual inflow in June was substantially higher and
necessitated a temporary halt to extraction at the 182 m level and
below. By August the inflow had substantially decreased and
underground stoping activities resumed at the 182 m and lower
levels, however the mine suffered further flooding during November
as a result of the cyclone which hit Kamchatka at the end of
October.
These events also affected mine development and reduced the
amount of higher grade stoping ore available, requiring the
processing of lower grade material mined earlier and some tonnage
from poor grade ore stockpiles in order to maintain plant
throughput. This was the principal factor affecting the average
grade of the ore delivered to the plant (7.65 g/t in 2015 compared
with 7.68 g/t in 2014). The Company is cautiously optimistic that
the proportion of new, richer grade, stoping ore in ore processed
by the plant will increase during 2016 and expects that after the
100 m level is reached at the beginning of 2017, enabling the start
of cutting in vertical intervals of 50 m, the mine should be able
to cut 150 000 mt of stoping ore each year and deliver it to the
plant, with a consequent improvement in average ore grades.
Mining and production at Asacha in 2015:
Total Q1 2015 Q2 2015 Q3 2015 Q4 2015 Total
2014 2015
Mine development (metres) 3,576 1,152 686 1,231 868 3,937
Ore extracted (tonnes) 198,387 43,598 44,535 43,995 45,467 177,555
Ore processed (tonnes) 156,561 39,699 39,814 41,380 40,349 161,242
Average gold
grade (g/t) 7.68 7.43 8.17 7.64 7.39 7.65
Average silver
grade (g/t) 13.46 13.43 12.79 10.75 12.19 12.28
Gold recovery
rate (%) 95.06 95.19 95.97 95.19 95.20 95.40
Silver recovery
rate (%) 67.17 73.25 78.84 75.08 80.74 76.94
Gold in dore (oz.) 36,513 9,044 10,044 9,680 9,030 37,798
Silver in dore (oz.) 45,086 12,747 12,847 10,871 12,767 49,232
Gold refined (oz.) 36,089 9,508 8,238 9,548 10,690 37,984
Silver refined (oz.) 44,610 13,304 10,116 11,931 14,047 49,398
In September 2013 the Federal Agency on Subsoil Use extended the
Asacha licence until 1 September 2018, reflecting the seven year
mine life envisaged by the mine's original design documentation.
TSG's subsidiary ZAO Trevozhnoye Zarevo (TZ) intends to apply for a
further extension to the licence term, taking account of the
results of the significant exploration at Asacha in the period
since its resources were approved by the Russian State Geological
Commission for Reserves (GKZ) in 2002. As a first step, the process
to obtain GKZ's legal recognition of the increase in reserves
commenced in 2015. Following approval by GKZ the required design
changes to the project will be undertaken by an external design
institute, after which TZ will seek the necessary approvals and
agreements from various government bodies and agencies.
In the first quarter of 2016 mine development comprised
approximately 1,115 metres, while ore extraction (including ore
from stoping and mine development) amounted to 44,067 metric
tonnes. Plant throughput averaged 13,433 tonnes per month (7.5%
above planned 12,500 tonnes). There was a temporary slowdown of
mining activities as a result of a small fire at the Asacha adit
site after an earthquake. This caused minimal damage (estimated at
US$25,000) and normal production soon resumed. Ore delivered to the
plant included 17,398 mt of new stoping ore with an average grade
of 10.3 g/t, however, because of the factors discussed above, the
average first quarter gold grade was 7.38 g/t. As discussed above,
the Company is cautiously optimistic that the average grade of ore
processed by the plant will increase during 2016.
Group Mineral Resources
The Company's Asacha property contains approximately 760,000 oz.
of gold and about 1.8 million oz. of silver in total mineral
resources calculated to JORC standards. The resource estimate for
the Asacha deposit was updated by QG Pty Ltd (QG) to the end of
December 2015 to incorporate new data from mining development and
to account for mining depletion during 2015. A copy of QG's report
is available on TSG's website.
Asacha's Main zone hosts six defined veins. Three veins have
been defined in the separate East zone, with mineralisation
generally of lower tenor and width. Asacha's Resources estimates
were classified according to the guidelines of the JORC Code
(2012). Classification took account of data quality, confidence in
geological interpretation and confidence in block estimations. Some
of these aspects are necessarily subjective. Classifications were
applied by digitisation of polygon boundaries between classes in
long section view. Resources were only classified and reported
within constrained vein volumes.
Based on the presence of the operating mine and mill, existing
mine economics, the potential for incremental development access to
deeper and more distal parts of the orebody, and the potential for
further exploration success, QG opined that all of the vein
resources defined at Asacha have a reasonable prospect of eventual
economic extraction and that a comparison of reported mill
production to the undiluted resource model indicates that the
achieved tonnage is in line with expectation, after likely mining
dilution is taken into consideration.
JORC RESOURCE as at 31 December 2015
MINERAL RESOURCE - Asacha
Category Zone Tonnes Au Grade Ag Grade Contained
(000) g/t g/t Au oz. (000) Contained
Ag oz. (000)
Measured Main 98 16 27 50 84
Indicated Main 638 20 59 409 1,211
Indicated East 3 56 30 6 3
Total M &
I 739 20 55 465 1,298
Inferred Main 104 14 33 48 110
Inferred East 285 27 43 246 390
Total Inferred 390 24 40 295 500
Rounding in above table may mean that columns do not sum
exactly.
4 g/t cut-off
The information in this report relating to Asacha's mineral
resources is based on information compiled by Michael Stewart.
Michael Stewart is a Member of the Australasian Institute of Mining
and Metallurgy and the Australian Institute of Geoscientists. He
has no interest in, and is entirely independent of, TSG. Michael
Stewart has sufficient experience which is relevant to the style of
mineralisation and type of deposit under consideration and to the
activity which he is undertaking to qualify as a 'Competent Person'
as defined in the 2012 edition of the Australasian Code for
Reporting of Exploration Results, Mineral Resources and Ore
Reserves (JORC Code).
Mr Stewart is a Qualified Person under the AIM Rules and
consents to the inclusion in this report of the matters based on
his information in the form and context in which it appears.
Financial Review
The result for the year is a profit after tax of $4.5 million
(2014 loss: $127,000). The directors do not recommend payment of a
dividend (2014: nil).
Revenue from the sale of 37,801 oz. of refined gold (2014:
36,131 oz.) and 49,720 oz. of refined silver (2014: 44,395 oz.) was
$43.3 million and $737,000 respectively (2014: $45.4 million and
$801,000). Average realised prices were $1,146 per oz. gold and $15
per oz. silver (2014: $1,256 per oz. gold and $18 per oz. silver).
Cost of sales was $28.8 million (2014: $31.6 million), the 9.1%
reduction principally reflecting the full year impact of the
significant depreciation of the Russian rouble, partially offset by
the 4.6% increase in gold oz. sold. Cost of sales per oz. gold, net
of the credit from silver sales revenue, was $742 (2014: $853).
Cash cost per oz. gold including depletion, net of the silver
credit and excluding royalty, was $522 (2014: $592).
An additional impairment provision of $722,000 (2014: $4.1m) has
been recognised against the ore stockpile, reflecting the
difference between its expected net realisable value at a gold
price of $1,200/oz. and cost, including processing, refining and
royalties. At a gold price of $1,200/oz., the processing and
refining of the ore stockpile will be cash generative, wherefore it
is expected that the entire stockpile will be processed, with some
material likely to be blended with higher grade material.
The Group recorded an operating profit for the year of $8.8
million (2014: $4.4 million), after recognising the $722,000
increase in the inventory impairment provision discussed above,
$nil impairment charges against assets under construction and
exploration and evaluation expenditure at the Rodnikova property
(2014: $58,000) and an exchange loss of $316,000 (2014: $485,000),
principally reflecting the impact of the significant depreciation
of the Russian rouble on the Group's rouble denominated monetary
assets. Administrative expenses amounted to $5.6 million (2014:
$5.6 million). Russian administrative expenses amounted to $4.3
million (2014: $4.6 million). UK administrative expenses were $1.3
million (2014: $987,000).
Finance income was $301,000 (2014: $99,000). Finance costs were
$2.5 million (2014: $3.3 million).
Total non-current assets decreased from $91.0 million to $85.2
million. Mining properties of $27.0 million (2014: $27.0 million)
reflected $1.9 million additional mining and mine development,
offset by depletion of $1.9 million. Property, plant and equipment
decreased by $4.2 million to $50.3 million, primarily due to
depreciation charges, offset by additions to plant. Current assets
increased from $15.3 million to $20.1 million. Inventories at
Asacha at 31 December 2015 comprised $1.9 million gold and silver
in production (2014: $2.8 million), $5.4 million ore stocks (2014:
$4.6 million), of which $4.9 million (2014: $4.4 million) has been
recognised as a non-current asset and $3.4 million fuel and other
materials and supplies (2014: $2.9 million), in aggregate $10.7
million (2014: $10.3 million). As discussed above ore stocks are
stated net of impairment provisions totalling $10.3 million (2014
$9.6 million), comprising $9.3 million (2014: $9.1 million)
allocated against non-current assets and $1.0 million (2014:
$478,000) against current assets. Cash and cash equivalents
increased from $8.0 million to $12.6 million.
Loans and borrowings totalled $20.2 million (2014: $26.1
million), comprising $19.8 million (2014: $24.9 million)
outstanding under two five year facilities, totalling $43.0
million, provided by Sberbank for the development of the Asacha
project, $nil short term loan finance (2014: $1.1 million),
including accrued interest, provided by TSG's major shareholders
UFG Asset Management (UFG) and AngloGold Ashanti Limited (AGA) and
$461,000 finance lease obligations (2014: $138,000).
Asacha mine
At a gold price of $1,200/oz., Life of mine ("LOM") cash costs
on an all equity basis are forecast at $620/oz., before taking
account of a $25/oz. credit from silver production (assuming a
silver price of $14/oz. over the remaining mine life). Cash costs
including all royalties and taxes (in total $50.5 million, net of
VAT recoveries) on an all equity basis are forecast at $703/oz.
Total costs on the same basis, after depreciation of all capital
expenditure and including all pre-start up mining and other
operating expenditure, are forecast at $1,009/oz., giving a
$191/oz. margin at a gold price of $1,200/oz.
As previously reported, in light of the fall in the gold price
since 2013 and the ore dilution issue which had affected the mine's
operating performance the Board carried out an impairment review of
the mine's economic model as at 31 December 2014, assuming a gold
price of $1,200/oz., an expected economic life of 10 years and a
10.8% discount factor, to determine whether there had been any
impairment in the Group's mining properties and/or property, plant
and equipment or the Company's investment in TZ which holds the
licence for the mine. The Board then concluded that no impairment
had arisen in respect of the Group's mining properties or property,
plant and equipment but that an impairment provision of $34.4
million was required against the Company's investment in TZ. The
Board has undertaken a further impairment review of the mine's
economic model as at 31 December 2015, assuming a gold price of
$1,100/oz., an expected economic life of nine years and a 17.0%
pre-tax discount factor and has concluded that no impairment had
arisen in respect of the Group's mining properties or property,
plant and equipment and that no adjustment to the provision made in
2014 against the Company's investment in TZ is required.
Events after the reporting date
On 4 April 2016 the interest rates on TZ's two loan facilities
for the Asacha project were reduced from 11.5% (including a 1.0%
premium in lieu of a gold price hedging programme) to 9.3% (applied
to $9.65 million) and 9.7% (applied to $10.35 million).
Annual General Meeting
The 2015 Annual Report and Accounts have been sent to TSG's
shareholders, to be submitted for their approval at the Company's
AGM, which will be held in London on 30 June 2016 at 11:30 am at
the offices of BDO LLP, 55 Baker Street, London W1U 7EU.
Copies of the Annual Report and Accounts are available at the
Company's website at http://www.trans-siberiangold.com/.
Ends
Contacts:
TSG +44 (0) 1480 811871
Simon Olsen +44 (0) 7770 484965
Cantor Fitzgerald Europe +44 (0) 207 894 7000
Stewart Dickson/David Foreman (Corporate Finance)
Trans-Siberian Gold plc
Consolidated Statement of Financial Position
31 December 31 December
2015 2014
Note $000 $000
------------------------------------ ----- ------------------ ------------------
Assets
Non-current assets
Mining properties 2 27,048 26,969
Property, plant and equipment 3 50,288 54,527
Deferred exploration and evaluation
costs 4 1,643 1,643
Inventories 6 4,874 4,415
Deferred tax asset 5 1,341 3,476
Total non-current assets 85,194 91,030
------------------------------------ ----- ------------------ ------------------
Current assets
Inventories 6 5,782 5,899
Trade and other receivables 1,661 1,421
Cash and cash equivalents 12,643 7,951
------------------------------------ ----- ------------------ ------------------
Total current assets 20,086 15,271
------------------------------------ ----- ------------------ ------------------
Total assets 105,280 106,301
------------------------------------ ----- ------------------ ------------------
Liabilities
Non-current liabilities
Borrowings 7 16,596 22,875
Deferred tax liabilities 5 - -
Provisions 723 609
------------------------------------ ----- ------------------ ------------------
Total non-current liabilities 17,319 23,484
------------------------------------ ----- ------------------ ------------------
Current liabilities
Trade and other payables 3,405 3,107
Borrowings 7 3,637 3,262
Total current liabilities 7,042 6,369
------------------------------------ ----- ------------------ ------------------
Total liabilities 24,361 29,853
------------------------------------ ----- ------------------ ------------------
Total net assets 80,919 76,448
------------------------------------ ----- ------------------ ------------------
Capital and reserves attributable
to owners of the Company
Share capital 8 18,988 18,988
Share premium 8 89,520 89,520
Retained deficit (27,589) (32,060)
------------------------------------ ----- ------------------ ------------------
Total equity 80,919 76,448
------------------------------------ ----- ------------------ ------------------
Trans-Siberian Gold plc
Consolidated Statement of Comprehensive Income
Year ended Year ended
31 December 31 December
2015 2014
Note $000 $000
------------------------------------------ ----- ------------- -------------
Revenue 9 44,059 46,184
------------------------------------------ ----- ------------- -------------
Cost of sales 10 (28,777) (31,607)
Ore stock inventory impairment 6 (722) (4,134)
------------------------------------------ ----- ------------- -------------
Gross profit 14,560 10,443
Administrative expenses (5,562) (5,570)
Other income 86 109
Impairment provision 3,4 - (58)
Foreign exchange differences on operating
activities (316) (485)
------------------------------------------ ----- ------------- -------------
Profit from operations 8,768 4,439
Finance expense (2,461) (3,275)
Finance income 301 99
Foreign exchange differences on financing
activities 6 28
------------------------------------------ ----- ------------- -------------
Profit before tax 6,614 1,291
Income tax charge (2,143) (1,418)
------------------------------------------ ----- ------------- -------------
Profit (loss) for the year 4,471 (127)
------------------------------------------ ----- ------------- -------------
Total comprehensive income (expense)
for the year 4,471 (127)
------------------------------------------ ----- ------------- -------------
Profit (loss) for the year attributable
to:
Owners of the parent company 4,471 (127)
Profit (loss) for the year 4,471 (127)
------------------------------------------ ----- ------------- -------------
Total comprehensive income (expense)
for the year attributable to:
Owners of the parent company 4,471 (127)
Profit (loss) for the year 4,471 (127)
------------------------------------------ ----- ------------- -------------
Profit (loss) per share attributable
to the owners
of the parent company (expressed in
cents)
- basic and diluted 4.06 (0.12)
Trans-Siberian Gold plc
Consolidated Statement of Cash Flows
Year ended Year ended
31 December 31 December
2015 2014
$000 $000
---------------------------------------------- --- ------------- -------------
Cash flows from operating activities
Profit (loss) for the year 4,471 (127)
Adjustment for:
Mining properties depletion charged to
income statement 1,840 3,370
Depreciation of property, plant and equipment
charged to income statement 5,841 6,714
Finance expense - net 2,154 3,148
Impairment provision - Rodnikova - 58
Impairment of ore stocks 722 4,134
Corporation tax charge 2,143 1,418
Loss on sale of property, plant and equipment 24 48
--------------------------------------------------- ------------- -------------
Cash flows from operating activities before
changes in working capital and provisions 17,195 18,763
Increase in inventories (317) (2,687)
(Increase) decrease in trade and other
receivables (240) 436
Increase (decrease) in trade and other
payables 390 (2,184)
Cash generated from operations 17,028 14,328
Corporation tax paid (8) -
Interest paid on borrowings (2,636) (3,230)
Net cash flows generated from operating
activities 14,384 11,098
--------------------------------------------------- ------------- -------------
Investing activities
Mining properties (1,523) (2,426)
Purchase of property, plant and equipment
(PPE) (2,324) (1,036)
Proceeds from sale of PPE - 23
Purchase of exploration and evaluation
assets (106) (85)
Interest received 301 99
--------------------------------------------------- ------------- -------------
Net cash used in investing activities (3,652) (3,425)
--------------------------------------------------- ------------- -------------
Financing activities
Repayment of bank borrowings (5,143) (1,222)
Repayment of short term borrowings (891) (800)
Repayment of finance leases (12) (33)
--------------------------------------------------- ------------- -------------
Net cash used in financing activities (6,046) (2,055)
--------------------------------------------------- ------------- -------------
Net increase in cash and cash equivalents 4,686 5,618
Cash and cash equivalents at beginning
of the year 7,951 2,305
Exchange gains on cash and cash equivalents 6 28
Cash and cash equivalents at end of the
year 12,643 7,951
--------------------------------------------------- ------------- -------------
Notes
1. Going concern
The Group has reported an operating profit for the year of $8.8
million, which is stated after significant non-cash depreciation
and impairment charges. The Directors have reviewed the Group's
cash flow forecast for the period to 31 December 2017 and they
believe that, taking account of reasonably possible changes in
commodity prices, trading performance and expenditure and scheduled
repayment of bank loan facilities, the Group has adequate resources
to continue in operational existence for the foreseeable future,
wherefore the directors are confident that the Group will continue
as a going concern and have prepared the financial statements on
that basis.
2. Mining properties
Mining properties assets relate to the Asachinskoye (Asacha)
mining licence held by the Company's subsidiary ZAO Trevozhnoye
Zarevo (TZ).
Asacha
Group $000
--------------------- ---------
Cost
At 1 January 2014 54,194
Additions 3,123
--------------------- ---------
At 31 December 2014 57,317
--------------------- ---------
Depletion
At 1 January 2014 (27,068)
Charge for year (3,280)
--------------------- ---------
At 31 December 2014 (30,348)
--------------------- ---------
Net book value
At 1 January 2014 27,126
--------------------- ---------
At 31 December 2014 26,969
--------------------- ---------
Cost
At 1 January 2015 57,317
Additions 1,978
--------------------- ---------
At 31 December 2015 59,295
--------------------- ---------
Depletion
At 1 January 2015 (30,348)
Charge for year (1,899)
--------------------- ---------
At 31 December 2015 (32,247)
--------------------- ---------
Net book value
At 1 January 2015 26,969
--------------------- ---------
At 31 December 2015 27,048
--------------------- ---------
The licence includes the right to extract gold and silver and,
pursuant to the decision of the Federal Agency on Subsoil Use on 12
September 2013, its term has been extended for four years until 1
September 2018, reflecting the seven year mine life envisaged by
the mine's original design documentation. TZ intends to apply for a
further extension to the licence term, taking account of the
results of exploration at Asacha since its resources were approved
by the Russian State Geological Commission for Reserves (GKZ) in
2002.
In light of the fall in the gold price since 2013 and the
problem with ore dilution which affected the mine's operating
performance in 2014 the Board carried out an impairment review of
the mine's economic model as at 31 December 2014, assuming a gold
price of $1,200/oz., an expected economic life of 10 years and a
10.8% discount factor, to determine whether there had been any
impairment in respect of mining properties. The Board undertook a
further impairment review of the mine's economic model as at 31
December 2015, assuming a gold price of $1,100/oz., an expected
economic life of nine years and a 17.0% pre-tax discount factor and
are satisfied that no impairment has arisen in respect of mining
properties in either 2014 or 2015.
3. Property, plant and equipment
Office
Assets
Plant and Motor equipment under
construction
Buildings machinery vehicles and furniture (i) Total
Group $000 $000 $000 $000 $000 $000
---------------------- ---------- ----------- ---------- --------------- -------------- ---------
Cost
At 1 January
2014 76,228 17,454 2,293 481 2,043 98,499
Additions 635 59 - 2 151 847
Re-classifications 1,245 254 - - (1,499) -
Disposals - (240) - (8) - (248)
At 31 December
2014 78,108 17,527 2,293 475 695 99,098
---------------------- ---------- ----------- ---------- --------------- -------------- ---------
Depreciation
At 1 January
2014 (23,728) (8,568) (2,042) (401) (183) (34,922)
Charge for year
(ii) (8,340) (1,304) (151) (31) - (9,826)
Impairment provision - - - - - -
Disposals - 169 - 8 - 177
At 31 December
2014 (32,068) (9,703) (2,193) (424) (183) (44,571)
---------------------- ---------- ----------- ---------- --------------- -------------- ---------
Net book value
At 1 January
2014 52,500 8,886 251 80 1,860 63,577
---------------------- ---------- ----------- ---------- --------------- -------------- ---------
At 31 December
2014 46,040 7,824 100 51 512 54,527
---------------------- ---------- ----------- ---------- --------------- -------------- ---------
Cost
At 1 January
2015 78,108 17,527 2,293 475 695 99,098
Additions 228 2,055 - 2 420 2,705
Re-classifications - - - - - -
Disposals - (236) (46) (3) - (285)
At 31 December
2015 78,336 19,346 2,247 474 1,115 101,518
---------------------- ---------- ----------- ---------- --------------- -------------- ---------
Depreciation
At 1 January
2015 (32,068) (9,703) (2,193) (424) (183) (44,571)
Charge for year
(ii) (5,764) (1,045) (85) (25) - (6,919)
Impairment provision - - - - - -
Disposals - 211 46 3 - 260
---------- ----------- ---------- --------------- -------------- ---------
At 31 December
2015 (37,832) (10,537) (2,232) (446) (183) (51,230)
---------------------- ---------- ----------- ---------- --------------- -------------- ---------
Net book value
At 1 January
2015 46,040 7,824 100 51 512 54,527
---------------------- ---------- ----------- ---------- --------------- -------------- ---------
At 31 December
2015 40,504 8,809 15 28 932 50,288
---------------------- ---------- ----------- ---------- --------------- -------------- ---------
i. Assets under construction comprise $932,589 (2014: $512,576)
for building construction and infrastructure at Asacha.
ii. $340,383 of the depreciation charge is included in additions
to mining properties (2014: 1,004,623). $50,114 (2014: $157,357) of
the depreciation charge related to property, plant and equipment
used on exploration and evaluation projects or assets under
construction and was capitalised in exploration and evaluation
costs or property, plant and equipment in accordance with the
Group's accounting policy. $688,469 (2014 $1,949,178) of the
depreciation charge is included in inventories.
iii. The net carrying amount of property, plant and equipment
includes the following amounts in respect of assets held under
finance leases
2015 2014
$000 $000
Plant and machinery 703 335
Motor vehicles - -
Office equipment and furniture - -
-------------------------------- ------ ------
703 335
-------------------------------- ------ ------
As discussed in Note 2 the Board carried out an impairment
review of the mine's economic model and are satisfied that no
impairment has arisen in respect of property, plant and
equipment.
4. Deferred exploration and evaluation costs
Deferred exploration and evaluation expenditure relates to the
"Asacha East" zone, a separate orebody within the Asacha mineral
rights licence discussed in Note 2, and the Rodnikova mining
licence, also held by the Company's subsidiary ZAO Trevozhnoye
Zarevo (TZ) which was terminated in September 2014.
Asacha Rodnikova Total
$000 $000 $000
---------------------- ------- ---------- ------
At 1 January 2014 1,643 - 1,643
Additions (i) - 58 58
Impairment provision - (58) (58)
At 31 December 2014 1,643 - 1,643
---------------------- ------- ---------- ------
At 1 January 2015 1,643 - 1,643
Additions (i) - - -
Impairment provision - - -
At 31 December 2015 1,643 - 1,643
---------------------- ------- ---------- ------
i Additions include capitalised PPE depreciation (see Note 7(ii)
).
In 2012 the Federal Service for Supervision of Natural Resources
Management prescribed the implementation of two provisions of the
Rodnikova licence by April 2014, first the finalisation of the
design documentation, secondly the commencement of work at the
deposit, failing which the federal authorities would consider the
termination of the licence. Although TZ sought to comply with these
requirements, it was unclear in 2012 whether there was adequate
time or available funding to do so. Therefore a full impairment
provision was recognised in 2012 in respect of Rodnikova's deferred
exploration and evaluation costs. A design institute's
pre-feasibility study indicated that, at the lower gold prices
which have prevailed since the second half of 2013, exploitation of
the Rodnikova deposit would not be economically justified. TZ
applied to the federal authorities for an extension of the licence
term beyond its scheduled expiry on 1 September 2014 in order to
evaluate the cost effectiveness of various technical solutions to
improve the project's economics identified by the design institute,
however on 5 September 2014 the Company was informed that the
licence had been terminated.
5. Deferred tax
Deferred income tax at 31 December relates to the following:
1 January Charged/(Credited) 31 December
2015 to Income Statement 2015
$000 $000 $000
------------------------------------------------ ---------- --------------------- ------------
Tax effect of deductible temporary differences:
Property, plant and equipment - - -
Inventories - - -
Accounts receivable & other debtors (1) 1 -
Accounts payable etc. (279) 120 (159)
Recognised taxable losses (4,190) 2,546 (1,644)
Gross deferred tax asset (4,470) 2,667 (1,803)
------------------------------------------------ ---------- --------------------- ------------
Tax effect of taxable temporary differences:
Property, plant and equipment 994 (532) 462
Gross deferred tax liabilities 994 (532) 462
------------------------------------------------ ---------- --------------------- ------------
Total net deferred tax asset (3,476) 2,135 (1,341)
------------------------------------------------ ---------- --------------------- ------------
1 January Charged/(Credited) 31 December
2014 to Income Statement 2014
$000 $000 $000
------------------------------------------------ ---------- --------------------- ------------
Tax effect of deductible temporary differences:
Property, plant and equipment (444) 444 -
Inventories (3) 3 -
Accounts receivable & other debtors (1) - (1)
Accounts payable etc. (512) 233 (279)
Recognised taxable losses (3,926) (264) (4,190)
---------- --------------------- ------------
Gross deferred tax asset (4,886) 416 (4,470)
------------------------------------------------ ---------- --------------------- ------------
Tax effect of taxable temporary differences:
Property, plant and equipment - 994 994
Gross deferred tax liabilities - 994 994
------------------------------------------------ ---------- --------------------- ------------
Total net deferred tax asset (4,886) 1,410 (3,476)
------------------------------------------------ ---------- --------------------- ------------
6. Inventories
2015 2014
Group $000 $000
------------------------------ ------- -------
Non-current:
Ore stocks 4,874 4,415
------------------------------ ------- -------
4,874 4,415
------------------------------ ------- -------
Current:
Gold in progress 1,848 2,757
Silver in progress 32 31
Ore stocks 542 233
Fuel 1,004 1,143
Other materials and supplies 2,356 1,735
5,782 5,899
------------------------------ ------- -------
10,656 10,314
------------------------------ ------- -------
Gold in progress, silver in progress and ore stocks include
mining properties depletion $150,000 (2014: $90,000). Ore stocks,
part of which are classified as non-current inventories, are stated
net of an impairment provision of $10.3 million (2014: $9.6
million), which reflects the difference between the ore stockpile's
expected net realisable value at a gold price of $1,200/oz. and
cost, including processing, refining and royalties.
7. Borrowings
Group Company
-------------------------- --------------------------
31 December 31 December 31 December 31 December
2015 2014 2015 2014
Note $000 $000 $000 $000
-------------------------- ------ ------------ ------------ ------------ ------------
Non-current:
Bank Borrowings 16,209 22,862 - -
Finance lease obligations 387 13 - -
---------------------------------- ------------ ------------ ------------ ------------
16,596 22,875 - -
--------------------------------- ------------ ------------ ------------ ------------
Current:
Bank Borrowings 3,563 2,071 - -
Related party loans - 1,066 - 1,066
Other loans - - - -
Finance lease obligations 74 125 - -
---------------------------------- ------------ ------------ ------------ ------------
3,637 3,262 - 1,066
--------------------------------- ------------ ------------ ------------ ------------
20,233 26,137 - 1,066
--------------------------------- ------------ ------------ ------------ ------------
Movement in borrowings is analysed as follows:
Group Company
------------------ ----------------
2015 2014 2015 2014
Note $000 $000 $000 $000
-------------------------------- ------- -------- -------- -------- ------
At 1 January 26,137 28,471 1,066 1,822
Increase in borrowings - - - -
Interest on related party
and other loans 14 83 14 71
Repayment of loan and
accrued interest (6,298) (2,144) (1,080) (827)
IAS39 adjustment to net
present value of restructured
bank borrowings 57 79 - -
Finance leases 323 (352) - -
At 31 December 20,233 26,137 - 1,066
----------------------------------------- -------- -------- -------- ------
In 2009 and 2010 ZAO Trevozhnoye Zarevo (TZ) arranged two loan
facilities for the Asacha project, in total $43 million, with the
Russian bank Sberbank. Repayments under the initial five year $25
million facility and the second $18 million facility, each of which
initially bore an annual interest rate of 10.5%, commenced in
November 2011 and September 2012 respectively. The loans are
secured by pledges over certain moveable assets and the shares of
TZ and OOO Trans-Siberian Gold Management, TSG's other subsidiary.
In September 2013 the terms of the two loan facilities were
extended to December 2018. Repayment of the $26.5 million then
outstanding under the two facilities commenced in March 2014. On 20
March 2015, in addition to the $300,000 repayment due on that date,
TZ prepaid $2.2 million, which had been scheduled to be repaid in
2018. Also in March 2015 TZ made further prepayments of $800,000
and $900,000, respectively due in June 2015 and December 2015. On
12 August 2015, TZ made a further prepayment of $1.0 million which
had been due in 2016.
In accordance with IAS39, the fees and commissions paid to
Sberbank in respect of the loan restructuring are amortised over
the extended terms of the facilities, resulting in a net present
value adjustment of $297,000 (2014: $354,000). It was agreed that a
gold price hedge programme would be implemented for the revised
term of the facilities. It was subsequently agreed with the bank to
defer the start of the price protection programme in consideration
of an increase to the interest rate to 11.5% until such
commencement. On 4 April 2016, the interest rates on the two loan
facilities were reduced to 9.3% (applied to $9.65 million) and 9.7%
(applied to $10.35 million).
In 2012 UFG Asset Management (UFG) and AngloGold Ashanti Limited
(AGA), each a related party by virtue of their then respective
54.42% and 31.17% holdings in the shares of the Company, agreed to
provide short term loan facilities, in aggregate $781,000
(increased to $891,000 in January 2013), on commercial terms
including interest at 8%. In September 2012 the terms of the two
facilities were extended to 1 March 2013, the revised facility
agreements each including an option for the lender, subject to the
requisite approval of TSG's shareholders, to convert any part of
the outstanding loan into TSG shares at a price equivalent to the
volume weighted average price of TSG's shares for the period of 60
business days prior to notice of such conversion, exercisable prior
to scheduled repayment. The terms of the two facilities were
further extended, ultimately to 31 March 2015. Both facilities were
repaid in full on 12 March 2015.
8. Share capital and premium
Number of
Number of shares allotted Share
shares and fully capital Share premium Total
Group and Company authorised paid $000 $000 $000
----------------- --------- -------------- --------
At 1 January 2014 150,000,000 110,053,073 18,988 89,520 108,508
At 31 December
2014 150,000,000 110,053,073 18,988 89,520 108,508
------------------- ------------ ----------------- --------- -------------- --------
At 1 January 2015 150,000,000 110,053,073 18,988 89,520 108,508
At 31 December
2015 150,000,000 110,053,073 18,988 89,520 108,508
------------------- ------------ ----------------- --------- -------------- --------
All shares are ordinary shares with a par value of 10 pence.
9. Revenue
Year ended Year ended
31 December 31 December
2015 2014
Group $000 $000
-------- --- ------------- -------------
Gold 43,322 45,383
Silver 737 801
44,059 46,184
------------ ------------- -------------
10. Cost of sales
Year ended Year ended
31 December 31 December
2015 2014
Group $000 $000
---------------------- --- ------------- -------------
Wages and salaries 6,737 8,121
Energy and materials 10,536 9,657
Depreciation 5,702 6,709
Depletion 1,840 3,370
Other costs 3,962 3,750
--------------------------- ------------- -------------
28,777 31,607
-------------------------- ------------- -------------
11. Directors' remuneration and other interests
The aggregate remuneration of the directors of the Company was
as follows:
Year ended Year ended
31 December 31 December
2015 2014
$000 $000
--------------------------------------------- --- ------------- -------------
Basic salary 503 516
Fees 28 55
Bonus 276 -
Pension contributions 40 43
Benefits in kind 5 6
-------------------------------------------------- ------------- -------------
Directors' remuneration 852 620
Employer's National Insurance contributions 26 28
Key management compensation 878 648
-------------------------------------------------- ------------- -------------
Total number of directors during the
year 5 6
-------------------------------------------------- ------------- -------------
The following table shows the directors who served during the
year or in the previous year together with an analysis of their
remuneration:
Year ended Year ended
Basic Benefits 31 December 31 December
Pension
salary Fees Bonus Contributions in kind 2015 2014
$000 $000 $000 $000 $000 $000 $000
------------------------- -------- ------ ------- ---------------- --------- ------------- -------------
Executive directors
D Khilov 327 - 219 - - 546 326
SV Olsen 176 - 57 40 5 278 239
Non-executive directors
OE Bagirov (to 30
June 2014) - - - - - - 25
PCD Burnell - 28 - - - 28 30
CE Ryan - - - - - - -
R Sasson - - - - - - -
------------------------- -------- ------ ------- ---------------- --------- ------------- -------------
503 28 276 40 5 852 620
------------------------- -------- ------ ------- ---------------- --------- ------------- -------------
Mr Khilov's employment contract includes an entitlement to two
cash bonus payments, each in amount equivalent to eight months'
salary then payable, for which the performance criteria agreed by
the Remuneration Committee in 2014 comprise Asacha plant
production, average gold grades in ore delivered to the Asacha
plant and full cash cost targets, full cash cost being the total
cost of sales excluding depletion, depreciation and royalty less
revenue from sales of silver (net of royalty) divided by gold
ounces sold. In each case, all the required performance criteria
must be satisfied over a twelve month period. The performance
criteria for the first cash bonus payment to Mr Khilov were
satisfied in the twelve months ended 30 June 2015.
The following table shows the beneficial interests of the
directors who held office at the end of the year in the ordinary
shares of the Company (except for the beneficial interests of
Messrs Sasson and Ryan by virtue of their connection with the
Company's major shareholder UFG Asset Management):
Shares held Shares held
at at
1 January 31 December
Shares 2015 Additions Disposals 2015
------------- ------------ ---------- ---------- -------------
R Sasson 194,700 - - 194,700
------------- ------------ ---------- ---------- -------------
PCD Burnell 240,000 - - 240,000
------------- ------------ ---------- ---------- -------------
No directors have any interests in share options. The options
granted to three directors in respect of qualifying services under
an employee share option scheme approved by special resolution of
the Company on 18 August 2008 expired in 2014.
12. Events after the reporting date
On 4 April 2016, the interest rates on ZAO Trevozhnoye Zarevo's
two loan facilities for the Asacha project were reduced from 11.5%
to 9.3% (applied to $9.65 million) and 9.7% (applied to $10.35
million).
13. Basis of accounting and presentation of financial
information
The Group's financial statements have been prepared in
accordance with International Financial Reporting Standards (IFRS)
as adopted by the European Union. However this announcement does
not in itself contain sufficient information to comply with
IFRS.
The financial information does not constitute the Group's
statutory financial statements as defined in section 434 of the
Companies Act 2006 but is derived from those accounts. The
financial information for the year ended 31 December 2015 has been
extracted from the audited accounts of Trans-Siberian Gold plc
which will be delivered to the Registrar of Companies in due
course. The auditors reported on those accounts and their report
was unqualified and did not contain a statement under section 498
(2) or (3) of the Companies Act 2006. The financial information for
the year ended 31 December 2014 has been extracted from the audited
accounts of Trans-Siberian Gold plc which have been delivered to
the Registrar of Companies. The auditors reported on those accounts
and their report was unqualified and did not contain a statement
under section 498 (2) or (3) of the Companies Act 2006.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR AKFDBCBKDPAK
(END) Dow Jones Newswires
June 09, 2016 02:00 ET (06:00 GMT)
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