Final Results

RNS Number : 0867H

Bezant Resources PLC

05 June 2017

 

5 June 2017

Bezant Resources Plc

("Bezant" or the "Company")

Final Results for the Six Months Ended 31 December 2016

Bezant (AIM: BZT), the AIM quoted mineral exploration and development company, announces its audited final results for the six months ended 31 December 2016.

Highlights:

Corporate:

·      Change of financial year end to 31 December

·      £1.2m loss after tax 6 month ended 31 December 2015 (unaudited): £0.3m; (12 months ended 30 June 2016: £9.1m)

·      Impairment charge of £0.2m (12 months ended 30 June 2016:  £8.3m) related to the Company's Mankayan Copper-Gold Project, Philippines)

·      Approximately £0.2m cash at bank at the period end (30 June 2016: £0.3m)

Platinum and Gold Mining Project, Choco District, Colombia:

·      Exploration agreement entered into with Exumax S.A.S ("Exumax") to secure its management services and expertise in respect of a planned 24-month exploration and development programme for the Company's near surface Colombian platinum and gold assets with objectives including;

o  Identifying priority alluvial areas containing platinum and gold

o  Analysis of historic recovery rates and assessing how the application of modern technology / processing can improve on historical recoveries

o  First production targeted for Q2/Q3 2017

·      Acquisition of 100 per cent. of Colombian Mining Data S.A. ("CMD") completed for consideration comprising the issue of 7,201,745 new ordinary shares.  CMD holds, inter alia, certain proprietary geological information and other data and intellectual property rights to be utilised by Exumax in performing its services under the Exploration Agreement

·      All relevant permits and permissions in place to begin trial recovery programme; strong community and regional government programme in place

·      Bulk sampling programme commenced recovering first gold-platinum metal with Exumax

·      Commissioned independent scoping study to assess project economics and production sensitivities

Mankayan Copper-Gold Project, Philippines (the "Mankayan Project" or "Mankayan"):

·      Notification received in February 2017 from the Philippines Department of Envirponment and Natural Resources with respect to the potential cancellation of the Mankayan Project's Mineral Production Sharing Agreement. Mankayan Project fully impaired last year due to the significant lingering uncertainty with respect to achieving any potential sale or joint venture ("JV") for the project in light of the current political and tax environment in the Philippines

Post Period End:

·      £1,189,000 raised before expenses, through a placement and subscription for 21,050,000 new ordinary shares by certain new and existing investors, both at a price of 2.0 pence per new ordinary share

·      Successful production confirmation results from Colombia gold-platinum licences

o   Production economics established for the FKJ-083 licence area, correlating historic mining data from previous operations with current exploration and processing results

o  INGEX scoping study successfully concluded with all in OPEX costs estimated at US$760/oz based on a 12 month pilot operation

·      Commenced pipeline of further exploration and evaluation work to establish prospective production zones by acquiring a fully-equipped, purpose built, modern alluvial processing plant, which is:

o   currently situated in Colombia and ready for mobilisation to site:

o   a mercury-free alluvial processing plant capable of processing up to 100m³ of material per hour (approximately 150 tonnes per hour)

o   the first modern plant of its kind to be utilised on the deposit

o   on track for plant commissioning in Q2 2017 followed by first production in early Q3 2017

·      To enable the expansion of future production, the Company also acquired engineering blue prints and all technical plans, schematics and data to enable Bezant to replicate and manufacture similar processing plants in Colombia

Commenting today, Ed Nealon, Chairman of the Company, said:

"This reporting period has been one of intense activity, as Bezant began to make operational assessments over the viability of gold and platinum production a for its Choco licences under option in Colombia. At a time when many platinum producers and miners are generally suffering from increasing costs to mine underground, our near surface operations, while not massive in scale, will target near-term production with good margins. The independent scoping study estimated total operational costs at US$768 per ounce of platinum and gold recoveries based on a 12 month pilot production project."

Commenting today Bernard Olivier, Chief Executive Officer, said:

"Following our gold-platinum recovery work and the results of the independent scoping study concluded post period end, we can now commence work towards first, full-scale gold-platinum recovery operations. Having now secured both an expert operating team and equipment, our objective is to begin first production of metals during Q2/Q3 2017."

For further information, please contact:

Bezant Resources plc Bernard Olivier Chief Executive Officer Laurence Read Executive Director / Communications Officer Strand Hanson Limited (Nomad) James Harris / Matthew Chandler / James Dance Beaufort Securities Limited (Broker) Elliot Hance or visit http://www.bezantresources.com

Tel: [phone] Tel: [phone] Tel: [phone] Tel: [phone]

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 ("MAR").

Chairman's Statement

I am pleased to present the Group's final results for the six months ended 31 December 2016, following the change to the Company's accounting reference date from 30 June to 31 December in order to bring our reporting calendar in line with the calendar year, and to report on the Company's on-going activities to the date of this statement. This change in our financial year end has been made with the approval of our auditors ahead of targeted future gold and platinum sales being initiated during 2017 at the Company's Choco Alluvial Gold-Platinum Project (the "Choco Project") located in Western Colombia.

For the six month period ended 31 December 2016, the Group reported a loss before and after tax of £1.18m.  The second half of 2016 was one of intense activity as Bezant began to make operational assessments over the viability of gold and platinum production from the licence areas under option in Choco, Colombia. At this point, I believe it is worthwhile recapping for shareholders what our objectives have been to date in progressing our Colombian operations and making them the core focus of the Company.

Historically, Bezant has returned cash to shareholders and built value from its Mankayan copper-gold asset in the Philippines which was the subject of a series of option payments from Gold Fields Netherlands Services BV, but where the full potential upside was ultimately unfulfilled due to changes in the Group's portfolio strategy and the persistent and on-going political risk in the Philippines. While the board of Bezant was, for some time, involved in detailed discussions with specific parties on an alternate project realisation event for Mankayan, the increased uncertainty surrounding title in the Philippines combined with the size of capital expenditure associated with such a large scale block caving operation, ultimately led us to the conclusion that near-term shareholder value for the company could best be driven from nearer term production assets with lower capital expenditure for project costs and more robust economic margins. Rather than await transactional value from pure exploration activities, we wished to seek to bring cash flow into the Company rapidly in order to build a profitable business and insulate shareholders from continuing dilution. While we have naturally had to raise funds to deliver on this objective, including the £1.19m gross fundraising conducted in September 2016, corporate overheads have been reduced to a bare minimum and we have been highly successful during, and post the period end, in hitting our key milestones and are now poised to begin first platinum and gold recovery at our Choco Project site.

Our capital allocation strategy over the period was staged, ensuring that funds were spent incrementally with decisions triggered by the completion of key working tasks. The primary focus in 2016 at the Choco Project was on licence area FKJ-083 that has previously been host to the largest modern mining operation in Colombia which afforded us access to many years of production data reporting via national tax reports. With such production reports providing valuable and verifiable evidence of the gold and platinum that had historically been profitably recovered from the licence area, Bezant's operations team looked to carry out a bulk sampling and production verification programme.

Progressing onto this advanced phase of pre-development work, Bezant also entered into an agreement with Exumax S.A.S. ("Exumax"), a highly experienced contracting group specialising in alluvial mining projects with 6 years' experience in-country. The agreement can be summarised as a 'costs only' payment arrangement with any substantive value for Exumax being realised from value growth in Bezant's equity. My own experience in dealing with contractors is that you have to select the right group and make sure all parties are firmly aligned with the targeted, profitable success of a project.

Following completion of the initial Exumax exploration agreement, we then began the verification programme in respect of historic mining activities over the FKJ-083 licence area with 22 test pits completed during the period to depths of 4 to 12 metres. A total of 95 individual samples between 0.25 and 1.0 loose cubic metres (LCM) were obtained. Post period end, I was pleased to report that the recovery results had confirmed the historic mining reports as being accurate.

The Bezant-Exumax team has significant experience in gold-platinum and alluvial recovery and while the final laboratory results were not completed until April 2017, the levels of visible gold and platinum observed during the test pitting programme led us to take the decision to commission an independent scoping study in order to assess the current economic sensitivities relating to potential production scenarios. Further to this decision, INGEX Grupo Minero SAS ("INGEX") was selected to undertake the requisite work with its findings being published in March 2017. The INGEX report confirmed the technical and economic feasibility of alluvial platinum (Pt) and gold (Au) production at the Choco Project based on historical data and drilling results.

At a time when many platinum producers and miners are generally suffering from increasing costs for underground operations, our near surface operations, while not massive in scale, target near-term production with good margins. The independent scoping study estimated total production costs at US$768 per ounce of platinum and gold recoveries, based on a 12 month pilot operation.

Another benefit, sometimes overlooked, of the Choco Project is that all precious metals recovered from the Choco alluvial platinum mining region are historically 'free', which does not necessitate the requirement for metallurgical separation processes to recover saleable material. This is yet another factor that commended the Choco Project to us, a region of Colombia that I first visited some 20 years ago, since penalties or smelter impurities are frequently a significant issue for mining operations. The product we intend to produce from Choco, in H2 2017, can be sold easily from a production methodology that is tried and tested with few complications, while simultaneously being an efficient and well run mining operation.

Following first production, our intent is not to prove up a JORC (2012) resource estimate, diversify into tailings at site, or simply build an expensive piece of equipment. Our aim instead is to generate sustainable cash flow by constructing small, inexpensive plants that can be readily moved around this sizeable platinum and gold district.  I would like to thank our shareholders for their continued support, as well as our team who have dedicated themselves to rapidly reaching the pre-production stage and who, in September 2016, converted their unpaid salary from 1 June 2016 to September 2016 into shares in the Company at a premium to the prevailing closing mid-market share price.

I look forward to providing further updates on the progress of our mining operations in Colombia in due course.

Mr Edward Nealon

Non-Executive Chairman

2 June 2017

Group Statement of Comprehensive Income

For the six months ended 31 December 2016

	Notes	Audited Six Months ended 31 December 2016 £'000		Unaudited Six months ended 31 December 2015 £'000		Audited 12 months ended 30 June 2016 £'000
Continuing operations
Group revenue		-		-		-
Cost of sales		-		-		-
Gross profit/(loss)		-		-		-
Operating expenses		(1,027)		(192)		(717)
Group operating loss		(1,027)		(192)		(717)
Other income		2		-		-
Interest receivable		-		1		1
Impairment	2	(155)		-		(8,278)
Share of Associates' loss		-		(74)		(136)
Loss before taxation		(1,180)		(265)		(9,130)
Taxation		-		-		-
Loss for the period		(1,180)		(265)		(9,130)
Attributable to: Owners of the Company		(1,172)		(265)		(9,114)
Non-controlling interest		(8)		-		(16)
		(1,180)		(265)		(9,130)
Other comprehensive income:
Foreign currency reserve movement		(66)		160		499
Total comprehensive loss for the period		(1,246)		(105)		(8,631)
Attributable to: Owners of the Company		(1,235)		(105)		(8,609)
Non-controlling interest		(11)		-		(22)
		(1,246)		(105)		(8,631)
Loss per share (pence)
Basic and diluted	3	(0.67)		(0.29p)		(8.42)

Consolidated Statement of Changes in Equity

For the six months ended 31 December 2016

	Share Capital £'000	Share Premium £'000	Other Reserves £'000	Retained Losses £'000	Non-Controll ing interest £'000	Total Equity £'000
Audited - six months ended 31 December 2016
Balance at 1 July 2016	274	32,048	1,054	(26,584)	(43)	6,749
Current period loss	-	-	-	(1,172)	(8)	(1,180)
Foreign currency reserve	-	-	(63)	-	(3)	(66)
Total comprehensive loss for the period	-	-	(63)	(1,172)	(11)	(1,246)
Proceeds from shares issued	122	1,031	-	-	-	1,153
Issue of ordinary shares related to business combination	14	148	-	-	-	162
Balance at 31 December 2016	410	33,227	991	(27,756)	(54)	6,818

Unaudited - six months ended 31 December 2015
Balance at 1 July 2015	166		31,053		549		(17,470)		-		14,298
Current period loss	-		-		-		(265)		-		(265)
Foreign currency reserve	-		-		160		-		-		160
Total comprehensive loss for the period	-		-		160		(265)		-		(105)
Proceeds from shares issued	33		368		-		-		-		401
Balance at 31 December 2015	199		31,421		709		(17,735)		-		14,594

Audited - 12 months ended 30 June 2016
Balance at 1 July 2015	166		31,053		549		(17,470)		-		14,298
Current period loss	-		-		-		(9,114)		(16)		(9,130)
Foreign currency reserve	-		-		505		-		(6)		499
Total comprehensive loss for the period	-		-		505		(9,114)		(22)		(8,631)
Proceeds from shares issued	33		368		-		-		-		401
Issue of ordinary shares related to business combination	75		627		-		-		-		702
Subsidiary acquired	-		-		-		-		(21)		(21)
Balance at 30 June 2016	274		32,048		1,054		(26,584)		(43)		6,749

Consolidated Balance Sheet

As at 31 December 2016

			Audited	Audited
			31 December 2016	30 June 2016
	Notes		£'000	£'000
ASSETS
Non-current assets
Plant and equipment			20	55
Intangible assets	4		1,834	1,620
Exploration and evaluation assets			4,790	4,790
Total non-current assets			6,644	6,465
Current assets
Trade and other receivables			73	115
Cash and cash equivalents			229	261
Total current assets			302	376
TOTAL ASSETS			6,946	6,841
LIABILITIES
Current liabilities
Trade and other payables			128	92
Total current liabilities			128	92
NET ASSETS			6,818	6,749
EQUITY
Share capital			410	274
Share premium			33,227	32,048
Share-based payment reserve			265	265
Foreign exchange reserve			726	789
Retained losses			(27,756)	(26,584)
EQUITY ATTRIBUTABLE TO OWNERS OF THE PARENT			6,872	6,792
NON-CONTROLLING INTEREST			(54)	(43)
TOTAL EQUITY			6,818	6,749

Consolidated Statement of Cash Flows

For the six months ended 31 December 2016

		Audited	Unaudited	Audited
		Six months ended 31 December 2016	Six  months ended 31 December 2015	12  months  ended 30 June 2016
	Notes	£'000	£'000	£'000
Net cash outflow from operating activities	5	(950)	(288)	(813)
Cash flows from investing activities
Interest received		-	1	1
Other income		24	7	22
Acquisition of plant and equipment		(3)	-	-
Deferred exploration expenditure		-		(2)
Option payments		(91)	(33)	-
Acquisition of subsidiary, net of cash acquired		-	-	(669)
Loans to associates and subsidiaries		(155)	(291)	(496)
		(225)	(316)	(1,144)
Cash flows from financing activities
Proceeds from issuance of ordinary shares		1,118	401	401
		1,118	401	401
Decrease in cash		(57)	(203)	(1,556)
Cash and cash equivalents at beginning of period		261	1,679	1,679
Foreign exchange movement		25	74	138
Cash and cash equivalents at end of period		229	1,550	261

Notes to the financial information

For the six months ended 31 December 2016

1.

Basis of Preparation The audited 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") including IFRS 6 'Exploration for and Evaluation of Mineral Resources', as adopted by the European Union ("EU") and with those parts of the Companies Act 2006 applicable to companies reporting under IFRS.   The audited financial information contained in this announcement does not constitute the Company's full financial statements for the six months ended 31 December 2016 or 12 months ended 30 June 2016, but is derived from those financial statements, approved by the board of directors. The auditors' report on the 31 December 2016 financial statements was unqualified and did not contain any statement under section 498(2) or (3) of the Companies Act 2006 but did contain, inter alia, an 'emphasis of matter' paragraph relating to going concern.  The full audited financial statements for the six months ended 31 December 2016 will be delivered to the Registrar of Companies and filed at Companies House following the Company's forthcoming annual general meeting. Going concern basis of accounting The Group made a loss from all operations for the six months ended 31 December 2016 after tax of £1.2 million (six months ended 31 December 2015 (unaudited):  £0.3 million;  12 months ended 30 June 2016: £9.1 million), had negative cash flows from operations and is currently not generating revenues. Cash and cash equivalents were £229,000 as at 31 December 2016.  The Group raised in aggregate, £1,000,000 before expenses, through a conditional placement subsequent to the period end. An operating loss is expected in the 12 months subsequent to the date of the accounts and as a result the Company will probably need to raise funding to provide additional working capital to finance its ongoing activities especially if it decides to exercise more of its options over certain platinum and gold licences in Colombia.  Management has successfully raised money in the past, but there is no guarantee that adequate funds will be available when needed in the future. There is a material uncertainty related to the conditions above that may cast significant doubt on the Group's ability to continue as a going concern and therefore the Group may be unable to realise its assets and discharge its liabilities in the normal course of business. Based on the Board's assessment that the Company will be able to raise additional funds, if required, to meet its working capital and capital expenditure requirements, the Board have concluded that they have a reasonable expectation that the Group can continue in operational existence for the foreseeable future. For these reasons the Group continues to adopt the going concern basis in preparing the report and financial statements.

2.	Impairment	Audited	Unaudited	Audited
		Six months ended 31 December 2016	Six months ended 31 December 2015	12 months ended 30 June 2016
		£'000	£'000	£'000
	Impairment loss on loan to associate	155	-	3,310
	Impairment loss on investment in associate	-	-	4,968
		155	-	8,278
	The Mankayan project has been fully impaired due to the significant lingering uncertainty concerning any potential sale or JV of the project given the current political and tax environment in the Philippines.

3.

Loss per share

The basic and diluted loss per share have been calculated using the loss attributable to equity holders of the Company for the six months ended 31 December 2016 of £1,172,000 (six months ended 31 December 2015 (unaudited):  £265,000; 12 months ended June 2016: £9,114,000).  The basic loss per share was calculated using a weighted average number of shares in issue of 175,167,279 (six months ended 31 December 2015: 92,437,573; 12 months ended June 2016: 108,279,905). The diluted loss per share has been calculated using a weighted average number of shares in issue and to be issued of 177,565,079 (six months ended 31 December 2015 (unaudited):  96,079,465; 12 months ended June 2016: 110,677,705). The diluted loss per share and the basic loss per share are recorded as the same amount, as conversion of share options decreases the basic loss per share, thus being anti-dilutive.

4.	Intangible assets
		Audited	Audited
		31 December 2016	30 June 2016
		£'000	£'000
4.1	Option to acquire exploration licence
	Balance at beginning of period	1,620	-
	Acquisitions through business combinations - Colombian projects' rights over platinum and gold licence areas	-	1,620
	Additions	91	-
	Exchange differences	(39)	-
	Carried forward at end of period	1,672	1,620
4.2	Intellectual property rights over proprietary geological data
	Balance at beginning of period	-	-
	Acquisitions through business combinations - Rights over geological information and other data	162	-
	Carried forward at end of period	162	-
	Total intangibles	1,834	1,620
	The options to acquire exploration licences represent an attractive opportunity to potentially generate long-term shareholder value via the creation of a low cost platinum and gold production operation outside of South Africa.  Whilst PGM prices are currently depressed, significant pressure on major platinum sources and depleting stock-piles should enable Bezant to realise potentially significant margins from the successful future development of such licence areas. The Board of Directors of Bezant has significant past experience of successfully developing world-class PGM group production sources with the Company's Non-Executive Chairman, Edward Nealon, having founded Aquarius Platinum Limited and Sylvania Resources Limited.  Post the balance sheet date, the options held over the FKJ-083 and HCA-082 licences were exercised.
	The intellectual property rights represent proprietary geological information and other data utilised in exploration activities.
	The directors have assessed the value of these intangible assets, and in their opinion, based on a review of the options over areas of interest, expected available funds and the opportunity to potentially create a low cost platinum and gold production operation, no impairment is necessary.

5.	Reconciliation of operating loss to net cash outflow from operating activities
		Audited	Unaudited	Audited
		Six months ended 31 December 2016	Six  months ended 31 December 2015	12  months  ended 30 June 2016
		£'000	£'000	£'000
	Operating loss	(1,027)	(192)	(717)
	Depreciation and amortisation	3	3	6
	VAT refunds received	(24)	(7)	(22)
	Foreign exchange gain	(14)	(84)	(146)
	Decrease in receivables	45	(23)	54
	Increase in payables	67	15	12
	Net cash outflow from operating activities	(950)	(288)	(813)

6.

Availability of Annual Report and Financial Statements

Copies of the Company's full Annual Report and Financial Statements are expected to be posted tomorrow to those shareholders who have elected to receive hardcopy shareholder communications from the Company and, once posted, will also be made available to download from the Company's website at www.bezantresources.com. The Annual Report and Financial Statements will also be made available for inspection at the Company's registered office during normal business hours on any weekday. Bezant Resources Plc is registered in England and Wales with registered number 02918391. The registered office is at Level 6, Quadrant House, 4 Thomas More Square, London E1W 1YW.

7.	Annual General Meeting
	The Company's next Annual General Meeting ("AGM") will be held at 10.00 a.m. on Friday, 30 June 2017 and a formal Notice of AGM and proxy form will also be posted tomorrow to those shareholders who have elected to receive hard copy shareholder communications from the Company and can also be downloaded from the Company's website at www.bezantresources.com.

 

END

 

 

FR SSFFWLFWSEDM