Interim Results

RNS Number : 5258K
Ferro-Alloy Resources Limited
29 August 2019
 

Ferro-Alloy Resources Limited ("FAR" or "the Company" or "the Group")

 

Interim Results for the six months ended 30 June 2019

 

Ferro-Alloy Resources Limited, the vanadium producer and developer of the large Balasausqandiq vanadium deposit in Southern Kazakhstan, announces its unaudited results for the six months ended 30 June 2019.

 

Highlights:

 

  • Admitted to trading on the London Stock Exchange on 28 March 2019, raising $6.9m (£5.3m) before expenses
  • Continuous production maintained during major expansion and improvement work at the existing vanadium concentrate processing operation ("Existing Operation")
  • 55% year-on-year increase in production at the Existing Operation; production of vanadium pentoxide in H1 2019 totalled 71.5 tonnes
  • Incremental improvements to the Existing Operation already increasing production; record monthly production of vanadium pentoxide achieved in June 2019 of 17.6 tonnes
  • Completion of first batch of improvements to the Existing Operation targeted for the end of Q3 2019 resulting in an anticipated significant increase in production in Q4 2019
  • Development continuing at the large Balasausqandiq Vanadium Project (the "Project"); which has a NPV of $2 billion at a long-term forecast vanadium pentoxide price of $7.50/lb
  • Upgrade of the local feasibility study on the Project continuing

 

For further information, visit www.ferro-alloy.com or contact:

 

Ferro-Alloy Resources Limited

Nick Bridgen (CEO)

info@ferro-alloy.com

 

Shore Capital

(Corporate Broker)

Jerry Keen/Toby Gibbs

+44 207 408 4090

 

 

 

 

St Brides Partners Limited

(Financial PR & IR Adviser)

Catherine Leftley/Gaby Jenner

+44 207 236 1177

 

Operations Review

 

The Existing Operation

Production at the Existing Operation was maintained throughout H1 2019 with only minor interruptions in spite of significant levels of capital development work being undertaken at the plant.  Installation of new equipment and the renovation of the existing belt filter meant that plant availability averaged only 75% in the period but despite this, overall production reached 71.5 tonnes, representing a 55% increase to that achieved in the H1 2018. Incremental expansion and improvement work already completed has resulted in record production in June 2019 of 17.6 tonnes of vanadium pentoxide.

 

The main work carried out in H1 to expand and improve production at the Existing Operation included: 

  • construction of a 990m2 extension to the plant facility;
  • installation of electrometallurgical and recrystallisation equipment;
  • construction of a 15,000m2 evaporation pond;
  • detailed engineering for the construction of a connecting line and transformer station to the adjacent 110 kV power-line;
  • addition of substantial new equipment to increase capacity of existing production processes; and 
  • construction of supporting worker accommodation

 

Equipment delivered to site during H1 2019 included: 

  • a rotating pre-roasting furnace for the pre-roasting of concentrates;
  • a second main concentrate roasting oven;
  •  a furnace for the decomposition of ammonium metavanadate ("AMV") into vanadium pentoxide;
  • three new 16 cubic meters tanks with cooling systems for increasing the capacity for sedimentation of AMV;
  • two new 16 cubic metre tanks with steam heating for the leaching with sodium carbonate of vanadium concentrates;
  • a new 16 cubic metre tank for the preliminary leaching of roasted vanadium concentrates; and 
  • a new press-filter

 

Outlook for the Existing Operation

Whilst record production has already been reported as a result of recent improvement work, the most significant increases are expected to come in Q4 2019.

 

Completion of the process plant building expansion and installation and commissioning of the first phase of new equipment is targeted at the end of Q3 2019 resulting in an increase in name-plate capacity to over 50 tonnes of vanadium pentoxide per month, over four times higher than the average for H1 2019.  However, operations are likely to be impacted by unreliability of the current power supply until the connection is made to a new high voltage power line, expected around the end of Q1 2020.

 

The new equipment includes a dissociation oven which will enable the Company to produce vanadium pentoxide powder and eliminate the discount which applies to the current production of AMV. Work is progressing on the second part of the capital programme which is expected to further increase production later in 2020.

 

Balasausqandiq

Development of the large Balasausqandiq vanadium deposit is on-going in parallel with the Existing Operation.

 

Balasausquandiq has a significant advantage when compared to most other vanadium deposits and producers in that the ore is not vanadiferous titano-magnetite ("VTM") and therefore does not require the expensive concentrating and high temperature roasting which VTM requires. This reduces both capital and operating costs by about 60% and is likely to make the Group the lowest cost primary producer.  The proposed development is planned in two phases to produce up to 22,400 tonnes per year of vanadium pentoxide which, at a long-term price assumption of $7.50/lb of vanadium pentoxide, will result in a Net Present Value (at 10% discount rate) of over $2 billion.

 

The Company has previously completed a feasibility study to locally required standards, supplemented by a western-style JORC reserve and resource estimate and the construction and operation of a 15,000 tpy pilot plant which has also proved the feasibility of the proposed process.  A completed gap analysis has highlighted relatively small areas where further work is required to meet the standards of a typical western banking feasibility study.  This will be carried out simultaneously with the already-planned confirmatory work to test the potential of using simpler vertical autoclaves instead of the more complex and expensive horizontal autoclaves that the pilot plant operation has indicated are not required.

 

Corporate

On 28 March 2019 the Company was admitted to listing on the London Stock Exchange.

 

On 25th of July 2019 Ferro-Alloy Resources Limited appointed Shore Capital to act as Corporate Broker.

 

Vanadium prices in the period

Prices of vanadium pentoxide have been volatile in the reporting period, starting the year at around US$16/lb before falling to around US$7/lb by the end of the H1 reporting period.  The fall in vanadium prices from the high levels experienced in 2018 was expected by the industry, although the timing was more sudden than had been forecast.  As a result of industry trading practices and the application of the Company's accounting policies, the fall in price has resulted in certain charges to profit in the year that are not expected to recur.

 

During the period the Group procured certain raw materials at prices based on the prevailing spot vanadium prices and, as these materials can take several months for delivery and processing, these were purchased at higher prices than those prevailing when the end product was sold, having the effect of reducing trading profits during periods of falling prices.

 

Furthermore, as is the norm in the industry, revenue, and the corresponding trade receivable are recognised at the time of transfer of control of products to the customer, but the final pricing determination is based on assay and prices around the time of arrival of the goods at the port of destination which can be several months later. Therefore, receivables relating to shipments made in Q4 2018 which had been valued at fair value based on the price prevailing at the end of 2018, realised less than the carrying value. The loss, together with the fair value adjustments to further sales made in H1, is included in note 2 as Other Revenues. 

 

In accordance with the Company's accounting policy, shipments made in H1 2019, which had not yet been assayed and priced at destination by the end of the period, have been valued on the basis of the price prevailing as at 30 June 2019 of around $7/lb.

 

Vanadium prices are now very close to the level that the Company expects in the long-term, so the directors do not anticipate further significant falls or increases. However, there is uncertainty over the extent of future Chinese enforcement of new steel standards which might increase demand and price volatility.  Stable prices will lessen the accounting effects detailed above and as production rises in Q4 2019 and the Company starts to produce vanadium pentoxide instead of AMV, it is expected that profitability will be very much enhanced.

 

Earnings and cash flow

The Group generated revenues of US$1.1m for the period compared to US$1.7m for the first six months of 2018, reflecting the falling market prices and the negative Other Revenue detailed above and below. Cost of sales increased to US$1.3m from US$0.7m for the first six months of 2018 reflecting the increased volumes and the relatively high price at which raw materials were acquired.

 

Administrative expenses of US$0.9m (H1 2018: US$0.6m) included non-recurring listing costs of $0.3m, with the remainder principally comprising employee costs, audit and professional services, reflecting the higher costs associated with the Company being listed on the London Stock Exchange.

 

The Group made a net loss before and after tax of US$1.3m (H1 2018: profit of US$0.3m). 

 

Net cash outflows from operating activities totalled US$2.3m (H1 2018: US$0m) principally reflecting the decrease in selling prices. Net cash outflows from investing activities included US$0.5m (H1 2018: US$0.2m) of capital expenditure associated with expanding the processing operation. Net cash inflows from financing activities totalled US$6.6m (H1 2018: US$0.2m) being the proceeds, net of commissions, from the offer at the time of listing on the London Stock Exchange.

 

Balance sheet review

Non-current assets increased to US$3.3m at 30 June 2019 (2018: US$2.8m), reflecting the capital expenditure in existing operations.

 

Current assets excluding cash balances increased to US$2.4m from US$1.1m year before. The increase was driven by increases in production resulting in higher inventories (US$1.6m from US$0.9m) and an increase in prepayments (US$0.7m from US$0.1m)

 

The Group had cash of US$4.6m at 30 June 2019 (2018: US$0.9m).

 

Description of principal risks, uncertainties and how they are managed

Risks and uncertainties which the Group is facing are as set out in the financial statements for the year ended 31 December 2019 in the CEO's Report on Operations as published on 30 April 2019.  In addition, the timing and extent of the increase in production anticipated in the fourth quarter of 2019 is uncertain because it depends on the performance of sub-contractors and unforeseen commissioning delay.  Furthermore, until the connection to the new power-line, expected around the end of the first quarter of 2020, there may be interruptions to production outside the control of the Company.  Since the changes being made to the process plant are in the nature of expansions and improvements to the existing processes without any significant change in the style of equipment or technology, the directors are confident that any such outcomes can be relatively easily managed but recognises that some delay may be possible.

 

 

 

Responsibility statements

Directors Responsibility Statement

 

We confirm that to the best of our knowledge:

a) the Condensed set of Interim Financial Statements has been prepared in accordance with IAS 34 Interim Financial Reporting;

b) the interim management report includes a fair review of the information required by DTR 4.2.7R (indication of important events during the first six months and description of principal risks and uncertainties for the remaining six months of the year);

c) the interim management report includes a fair review of the information required by DTR 4.2.8R (disclosure of related partiestransactions and changes therein); and

d) the condensed set of interim financial statements, which has been prepared in accordance with the applicable set of accounting standards, gives a true and fair view of the assets, liabilities, financial position and profit or loss of the issuer, or the undertakings included in the consolidation as a whole as required by DTR 4.2.4R.

 

 

This Half Yearly Report has been approved by the Board and signed on its behalf by:

 

 

 

James Turian

Director

29.08.2019

 

 

Condensed unaudited Consolidated Statement of Comprehensive Income

 

 

Note

Unaudited
six-month
period ended
30 June 2019

$000

 

Unaudited
six-month
period ended
30 June 2018

$000

Revenue

2

1,108

 

1,661

Cost of sales

3

(1,323)

 

(658)

Gross (loss) profit

 

(215)

 

1,003

Administrative expenses

4

(947)

 

(604)

Distribution expenses

 

(58)

 

(42)

Other expenses

 

(1)

 

(1)

(Loss) profit from operating activities

 

(1,221)

 

356

Net finance income/(costs)

6

(89)

 

(25)

Profit (loss) before income tax

 

(1,310)

 

331

 

Income tax

 

-

 

(1)

(Loss) profit for the period

 

(1,310)

 

330

 

 

 

 

 

Other comprehensive (loss) income

Items that may be reclassified to profit or loss

 

 

 

 

Exchange differences arising on translation of foreign operations

 

9

 

11

Total comprehensive (loss) income for the period

 

(1,301)

 

341

(Loss)/earnings/per share (basic and diluted), US$

14

(0.004)

 

0.001

                                                           

 

 

 

 

Condensed unaudited Consolidated Statement of Financial Position

 

Note

 

Unaudited
30 June 2019

$000

 

31 December 2018
$000

ASSETS

 

 

 

 

 

Non-current assets

 

 

 

 

 

Property, plant and equipment

7

 

2,515

 

2,203

Exploration and evaluation assets

8

 

60

 

59

Intangible assets

9

 

25

 

25

Long-term VAT receivable

11

 

429

 

237

Prepayments

12

 

251

 

249

Total non-current assets

 

 

3,280

 

2,773

 

 

 

 

 

 

Current assets

 

 

 

 

 

Inventories

10

 

1,616

 

929

Trade and other receivables

11

 

56

 

38

Prepayments

12

 

686

 

91

Cash and cash equivalents

13

 

4,623

 

892

Total current assets

 

 

6,981

 

1,950

Total assets

 

 

10,261

 

4,723

 

 

 

 

 

 

EQUITY AND LIABILITIES

 

 

 

 

 

Equity

 

 

 

 

 

Share capital

14

 

33,978

 

27,330

Additional paid-in capital

 

 

397

 

380

Foreign currency translation reserve

 

 

(2,956)

 

(2,965)

Accumulated losses

 

 

(22,585)

 

(21,275)

Total equity

 

 

8,834

 

3,470

 

 

 

 

 

 

Non-current liabilities

 

 

 

 

 

Provisions

 

 

60

 

60

Total non-current liabilities

 

 

60

 

60

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

Trade and other payables

16

 

1,011

 

929

Contract liability

15

 

356

 

264

Total current liabilities

 

 

1,367

 

1,193

Total liabilities

 

 

1,427

 

1,253

Total equity and liabilities

 

 

10,261

 

4,723

 

            Condensed unaudited Consolidated Statement of Changes in Equity

 

Share
capital
$000

 

Share
 premium
$000

 

Additional paid in capital
$000

 

Foreign currency translation reserve
$000

 

Accumulated
losses
$000

 

Total
$000

Balance at 1 January 2018

15

 

26,904

 

380

 

(2,672)

 

(24,238)

 

389

Profit for the period

-

 

-

 

-

 

-

 

330

 

330

Other comprehensive income

 

 

 

 

 

 

 

 

 

 

 

Exchange differences arising on translation of foreign operations

-

 

-

 

-

 

11

 

-

 

11

Total comprehensive income (loss) for the period

-

 

-

 

-

 

11

 

330

 

341

Transactions with owners, recorded directly in equity

 

 

 

 

 

 

 

 

 

 

 

Shares issued

-

 

181

 

-

 

-

 

-

 

181

Balance at 30 June 2018

15

 

27,085

 

380

 

(2,661)

 

(23,908)

 

911

Balance at 1 January 2019

27,330

 

-

 

380

 

(2,965)

 

(21,275)

 

3,470

Loss for the period

-

 

-

 

-

 

-

 

(1,310)

 

(1,310)

Other comprehensive expense

 

 

 

 

 

 

 

 

 

 

 

Exchange differences arising on translation of foreign operations

-

 

-

 

-

 

9

 

-

 

9

Total comprehensive income (loss) for the period

-

 

-

 

-

 

9

 

(1,310)

 

(1,301)

Transactions with owners, recorded directly in equity

 

 

 

 

 

 

 

 

 

 

 

Shares issued (note 14)

6,648

 

-

 

-

 

-

 

-

 

6,648

Other transactions recognised directly in equity (note 14)

-

 

-

 

17

 

-

 

-

 

17

Balance at 30 June 2019

33,978

 

-

 

397

 

(2,956)

 

(22,585)

 

8,834

 

Condensed unaudited Consolidated Statement of Cash Flow

 

 

 

 

 

 

 

Unaudited
six-month
period ended
30 June 2019
$000

 

Unaudited
six-month
period ended
30 June 2018
$000

 

Cash flows from operating activities

 

 

 

 

 

 

(Loss) income for the period

 

 

 

(1,310)

 

331

Adjustments for:

 

 

 

 

 

 

Depreciation and amortisation

 

 

 

257

 

18

Loss on write-off of property, plant and equipment

 

 

 

-

 

15

Expenses on credit loss provisions and impairment of prepayments

 

 

 

21

 

-

Income tax  

 

 

 

-

 

(1)

Net finance costs / (income)

 

 

 

89

 

25

Cash from operating activities before changes in working capital

 

 

 

(943)

 

388

Change in inventories

 

 

 

(680)

 

(3)

Change in trade and other receivables

 

 

 

(231)

 

(416)

Change in prepayments

 

 

 

(595)

 

(31)

Change in trade and other payables

 

 

 

82

 

116

Change in contract liability

 

 

 

92

 

-

Net cash from operating activities

 

 

 

(2,275)

 

54

 

 

 

 

 

 

 

Cash flows from investing activities

 

 

 

 

 

 

Acquisition of property, plant and equipment

 

 

 

(519)

 

(169)

Net cash used in investing activities

 

 

 

(519)

 

(169)

 

 

 

 

 

 

 

Cash flows from financing activities

 

 

 

 

 

 

Proceeds from issue of share capital

 

 

 

6,880

 

181

Transaction costs on shares subscription

 

 

 

 

(232)

 

-

Net cash from financing activities

 

 

 

6,648

 

181

 

 

 

 

 

 

 

Net increase in cash and cash equivalents

 

 

 

3,854

 

66

Cash and cash equivalents at the beginning of the period

 

 

 

892

 

267

Effect of movements in exchange rates on cash and cash equivalents

 

 

 

 

(123)

 

(24)

Cash and cash equivalents at the end of the period

 

 

 

4,623

 

309

 

 

 

 

 

 

 

 

 

Unaudited notes to the Financial Statements for the 6 months period ended 30 June 2019

 

1          Basis of preparation

These Condensed Unaudited Financial Statements have been prepared in accordance with IAS34 Interim Financial Reporting. The same accounting policies and basis of preparation have been followed as in the annual financial statements of the Group which were published in 30 April 2019.

 

The consolidated financial statements are prepared in accordance with IFRS on a going concern basis. The Directors have reviewed the Group's cash flow forecasts for at least 12 months following the reporting date, including sensitivities and mitigating actions. After taking into account available cash and forecast cash flow from operations, the Directors consider that the Group has adequate resources to continue its operational existence for the foreseeable future. For this reason, they continue to adopt the going concern basis in preparing the financial statements.

 

These Condensed Unaudited Financial Statements have not been approved or reviewed by the Corporate Auditor.

 

IFRS 16, Leases, has been applied for the first time but its impact is not material.

 

2          Revenue

 

Unaudited
six-month
period ended
30 June 2019
$000

 

Unaudited
six-month
period ended
30 June 2018
$000

 

Revenue from sales of vanadium products

1,972

 

1,661

 

Sales of gravel and waste rock

1

 

-

 

Total revenue from customers

1,973

 

1,661

 

Other revenues Ð change in fair value of customer contract

(865)

 

-

 

 

1,108

 

1,661

 

             Vanadium products

Under certain sales contracts the single performance obligation is the delivery of AMV to the designated delivery point at which point possession, title and risk on the product transfers to the buyer. The buyer makes an initial provisional payment based on volumes and quantities assessed by the Company and market spot prices at the date of shipment. The final payment is received once the product has reached its final destination with adjustments for quality / quantity and pricing. The final pricing is based on the historical average market prices during a quotation period based on the date the product reaches the port of destination and an adjusting payment or receipt will be made to the initially received revenue. Where the final payment for a shipment made prior to the end of an accounting period has not been determined before the end of that period, the revenue is recognised based on the spot price that prevails at the end of the accounting period, with adjustments for the value of money and the carry costs where significant.

Other revenue related to the change in the fair value of amounts receivable under the sales contracts between the date of initial recognition and year end resulting from market prices are recorded as other revenue. Refer to note 17 for details of contract liabilities recorded at fair value.

 

3          Cost of sales

 

Unaudited
six-month
period ended
30 June 2019
$000

 

Unaudited
six-month
period ended
30 June 2018
$000

 

Materials

753

 

360

 

Wages, salaries and related taxes

257

 

219

 

Depreciation

244

 

22

 

Electricity

58

 

37

 

Other

11

 

20

 

 

1,323

 

658

 

4          Administrative expenses

 

Unaudited
six-month
period ended
30 June 2019
$000

 

Unaudited
six-month
period ended
30 June 2018
$000

 

Wages, salaries and related taxes

422

 

391

 

Listing & reorganisation expenses

336

 

105

 

Audit

61

 

-

 

Professional services

43

 

17

 

Materials

24

 

22

 

Business trip expenses

15

 

13

 

Depreciation and amortization

13

 

6

 

Security

8

 

9

 

Communication and information services

3

 

3

 

Bank fees

2

 

4

 

Other

20

 

34

 

 

947

 

604

 

5          Personnel costs

 

 

Unaudited
six-month
period ended
30 June 2019
$000

 

Unaudited
six-month
period ended
30 June 2018
$000

Wages, salaries and related taxes

 

639

 

584

 

 

639

 

584

6          Finance costs

 

 

Unaudited
six-month
period ended
30 June 2019

$000

 

Unaudited
six-month
period ended
30 June 2018

$000

Net foreign exchange costs

 

89

 

25

Net finance costs/(income)

 

89

 

25

 

7          Property, plant and equipment

 

Land and buildings
$000

 

Plant and equipment
$000

 

Vehicles
$000

 

Computers
$000

 

Other
$000

 

Construction in progress
$000

 

Total
$000

Cost

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at 1 January 2018

1,853

 

2,015

 

364

 

13

 

42

 

202

 

4,489

Additions

9

 

131

 

123

 

13

 

47

 

350

 

673

Disposals

-

 

(27)

 

-

 

-

 

(4)

 

(17)

 

(48)

Foreign currency translation difference

(251)

 

(283)

 

(61)

 

(3)

 

(10)

 

(61)

 

(669)

Balance at 31 December 2018

1,611

 

1,836

 

426

 

23

 

75

 

474

 

4,445

Balance at 1 January 2019

1,611

 

1,836

 

426

 

23

 

75

 

474

 

4,445

Additions

63

 

200

 

155

 

14

 

17

 

70

 

519

Transfers

-

 

181

 

-

 

-

 

-

 

(181)

 

-

Foreign currency translation difference

14

 

16

 

3

 

1

 

2

 

5

 

41

Balance at 30 June 2019

1,688

 

2,233

 

584

 

38

 

94

 

368

 

5,005

Depreciation

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at 1 January 2018

1,853

 

2,015

 

295

 

13

 

32

 

202

 

4,410

Depreciation for the period

-

 

10

 

29

 

1

 

5

 

-

 

45

Disposals

-

 

(27)

 

-

 

-

 

-

 

-

 

(27)

Reversal of impairment

(1,022)

 

(393)

 

-

 

-

 

-

 

(175)

 

(1,590)

Foreign currency translation difference

(250)

 

(270)

 

(42)

 

(2)

 

(5)

 

(27)

 

(596)

Balance at 31 December 2018

581

 

1,335

 

282

 

12

 

32

 

-

 

2,242

Balance at 1 January 2019

581

 

1,335

 

282

 

12

 

32

 

-

 

2,242

Depreciation for the period

28

 

171

 

22

 

2

 

4

 

-

 

227

Transfers

-

 

-

 

-

 

-

 

-

 

-

 

-

Foreign currency translation difference

5

 

13

 

3

 

1

 

(1)

 

-

 

21

Balance at 30 June 2019

614

 

1,519

 

307

 

15

 

35

 

-

 

2,490

Carrying amounts

 

 

 

 

 

 

 

 

 

 

 

 

 

At 1 January 2018

-

 

-

 

69

 

-

 

10

 

-

 

79

At 31 December 2018

1,030

 

501

 

144

 

11

 

43

 

474

 

2,203

At 30 June 2019

1,074

 

714

 

277

 

23

 

59

 

368

 

2,515

.

8          Exploration and evaluation assets

The Group's exploration and evaluation assets relate to Balasausqandiq deposit. During the six months period ended 30 June 2019 the Group did not capitalise any exploration and evaluation assets (in 2018: US$nil). As at 30 June 2019 the carrying value of exploration and evaluation assets was US$0.060m (2018: US$0.059m).

 

9          Intangible assets

 

Mineral rights
$000

 

Patents
$000

 

Computer software
$000

 

Total
$000

Cost

 

 

 

 

 

 

 

Balance at 1 January 2018

115

 

36

 

4

 

155

Additions

-

 

2

 

-

 

2

Foreign currency translation difference

(16)

 

(5)

 

(1)

 

(22)

Balance at 31 December 2018

99

 

33

 

3

 

135

 

 

 

 

 

 

 

 

Balance at 1 January 2019

99

 

33

 

3

 

135

Additions

-

 

-

 

-

 

-

Foreign currency translation difference

1

 

1

 

-

 

2

Balance at 30 June 2019

100

 

34

 

3

 

137

 

 

 

 

 

 

 

 

Amortisation

 

 

 

 

 

 

 

Balance at 1 January 2018

115

 

36

 

2

 

153

Amortisation for the year

-

 

-

 

1

 

1

Reversal of impairment

-

 

(23)

 

-

 

(23)

Foreign currency translation difference

(16)

 

(4)

 

(1)

 

(21)

Balance at 31 December 2018

99

 

9

 

2

 

110

 

 

 

 

 

 

 

 

Balance at 1 January 2019

99

 

9

 

2

 

110

Amortisation for the year

-

 

1

 

-

 

1

Foreign currency translation difference

1

 

(1)

 

1

 

1

Balance at 30 June 2019

100

 

9

 

3

 

112

 

 

 

 

 

 

 

 

Carrying amounts

 

 

 

 

 

 

 

At 1 January 2018

-

 

-

 

2

 

2

At 31 December 2018

-

 

25

 

-

 

25

At 30 June 2019

-

 

25

 

-

 

25

 

10        Inventories

 

 

Unaudited
30 June 2019
$000

 

31 December 2018
$000

 

Raw materials and consumables

 

1,162

 

527

 

Finished goods

 

448

 

184

 

Goods in transit

 

-

 

218

 

Work in progress

 

6

 

-

 

 

 

1,616

 

929

 

 

 

 

 

 

 

  

11        Trade and other receivables

Non-current

Unaudited
30 June 2019

 

31 December 2018

 

$000

 

$000

VAT receivable

789

 

594

Provision for VAT receivable

(360)

 

(357)

 

429

 

237

 

Current

Unaudited
30 June 2019

 

31 December 2018

 

$000

 

$000

Trade receivables from third parties

26

 

21

Due from employees

-

 

24

Other receivables

51

 

14

 

77

 

59

Expected credit loss provision

(21)

 

(21)

 

56

 

38

 

The expected credit loss provision relates to credit impaired receivables which are in default and the Group considers the probability of collection to be remote given the age of the receivable and default status.

 

12        Prepayments

 

Unaudited
30 June 2019
$000

 

31 December 2018
$000

Non-current

Prepayments for equipment

251

 

249

 

251

 

249

Current

 

 

 

Prepayments for goods and services

686

 

91

 

686

 

91

13        Cash and cash equivalents

 

Unaudited
30 June 2019
$000

 

31 December 2018
$000

Bank balances and other cash deposits

4,623

 

885

Petty cash

-

 

Cash and cash equivalents

4,623

 

892

 

14        Equity

(a)        Share capital

 

Number of shares unless otherwise stated                                                    Ordinary shares

 

Unaudited
30 June 2019

 

31 December 2018

Par value

-

 

-

Outstanding at beginning of year

305,471,087

 

1,523,732

Shares issued prior to share split

-

 

1,493

Share reorganisation (split)

-

 

305,045,000

Shares issued post share split

7,507,761

 

426,087

Outstanding at end of year

312,978,848

 

305,471,087

 

Ordinary shares

All shares rank equally. The holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one vote per share at meetings of the Company.

In July 2018 the Company's shareholders voted by ordinary resolution to subdivide each share into 200 new shares of no par value so that the listed shares will be of a value within the normal range for listing companies. As a result, the share premium was transferred to share capital in 2018.

Reserves

Share capital: Value of shares issued less costs of issuance.  Prior to the share restructuring share capital related to the nominal value of shares issued.

Additional paid in capital: Amounts due to shareholders which were waived.

Foreign currency translation reserve: Foreign currency differences on retranslation of results from functional to presentational currency and foreign exchange movements on intercompany balances considered to represent net investments which are permanent as equity.

Accumulated losses: Cumulative net losses.

(b)        Dividends

No dividends were declared for the six-month period ended 30 June 2019.

(c)        (Loss) earnings per share (basic and diluted)

The calculation of basic and diluted earnings / (loss) per share has been based on the following (loss) profit attributable to ordinary shareholders and weighted-average number of ordinary shares outstanding.

 

(i)         (Loss) profit attributable to ordinary shareholders (basic and diluted)

 

Unaudited
six-month
period ended
30 June 2019
$000

 

Unaudited
six-month
period ended
30 June 2018
$000

(Loss) profit for the year, attributable to owners of the Company

(1,310)

 

330

(Loss) profit attributable to ordinary shareholders

(1,310)

 

330

(ii)        Weighted-average number of ordinary shares (basic and diluted)

Shares

Unaudited
six-month
period ended
30 June 2019

 

Unaudited
six-month
period ended
30 June 2018
Restated

Issued ordinary shares at 1 January (after subdivision)

305,471,087

 

304,746,400

Effect of shares issued (weighted)

5,718,240

 

101,000

Weighted-average number of ordinary shares at
30 June

311,189,327

 

304,847,400

 

 

 

 

(Loss) earnings per share of common stock attributable to the Company (basic and diluted)

(0.004)

 

0.001

         

The 2018 comparative has been revised to reflect the share split as if it had occurred on 1 January 2018 for comparability purposes. There are no significant dilutive or potentially dilutive instruments.

 

15        Loans and borrowings

There were no outstanding loans at 30 June 2019 (31 December 2018: US$nil) and no borrowings or loan repayments in the six month period ended 30 June 2019 (in 2018: the borrowing was US$ nil).

 

16        Trade and other payables

 

Unaudited
30 June 2019
$000

 

31 December 2018
$000

Trade payables

594

 

302

Advances received

159

 

5

Due to directors/key management

146

 

547

Due to employees

57

 

44

Other taxes

55

 

31

 

1,011

 

929

 

17        Contract liability (trade and other payables at FVPL)

 

Unaudited
30 June 2019
$000

 

31 December 2018
$000

Contract liability (trade and other payables at FVPL)

356

 

264

 

356

 

264



 

18        Contingencies

 

(a)        Insurance

The insurance industry in the Kazakhstan is in a developing state and many forms of insurance protection common in other parts of the world are not yet generally or economically available. The Group does not have full coverage for its plant facilities, business interruption, or third party liability in respect of property or environmental damage arising from accidents on Group property or relating to Group operations. There is a risk that the loss or destruction of certain assets could have a material adverse effect on the GroupÕs operations and financial position.

(b)        Taxation contingencies

The taxation system in Kazakhstan is relatively new and is characterised by frequent changes in legislation, official pronouncements and court decisions which are often unclear, contradictory and subject to varying interpretations by different tax authorities. Taxes are subject to review and investigation by various levels of authorities which have the authority to impose severe fines, penalties and interest charges. A tax year generally remains open for review by the tax authorities for five subsequent calendar years but under certain circumstances a tax year may remain open longer.

These circumstances may create tax risks in Kazakhstan that are more significant than in other countries. Management believes that it has provided adequately for tax liabilities based on its interpretations of applicable tax legislation, official pronouncements and court decisions. However, the interpretations of the relevant authorities could differ and the effect on these consolidated financial statements, if the authorities were successful in enforcing their interpretations, could be significant.

There are no tax claims or disputes at present.

 

19        Segment reporting

The Group's operations are split into three segments based on the nature of operations: processing, subsoil operations (being operations related to exploration and mining) and corporate segment for the purposes of IFRS 8 Operating Segments. The GroupÕs assets are primarily concentrated in the Republic of Kazakhstan and the GroupÕs revenues are derived from operations in, and connected with, the Republic of Kazakhstan.

 

Unaudited six-month period ended 30 June 2019

 

 

 

 

 

 

 

 

 

 

Processing
$000

 

Subsoil
$000

 

Corporate
$000

 

Total
$000

Revenue

 

1,108

 

-

 

-

 

1,108

Cost of sales

 

(1,323)

 

-

 

-

 

(1,323)

Administrative expenses

 

(278)

 

(14)

 

(656)

 

(1,271)

Distribution & other expenses

 

(59)

 

-

 

-

 

(59)

Finance costs

 

9

 

-

 

(98)

 

(89)

(Loss)/Profit before tax

 

(543)

 

(14)

 

(753)

 

(1,310)

 

Unaudited six-month period ended 30 June 2018

 

 

 

 

 

 

 

 

 

 

Processing
$000

 

Subsoil
$000

 

Corporate
$000

 

Total
$000

Revenue

 

1,661

 

-

 

-

 

1,661

Cost of sales

 

(658)

 

-

 

-

 

(658)

Administrative expenses

 

(229)

 

(20)

 

(355)

 

(604)

Distribution & other expenses

 

(43)

 

-

 

-

 

(43)

Finance costs

 

1

 

-

 

(26)

 

(25)

Profit before tax

 

732

 

(20)

 

(381)

 

331

 

20        Related party transactions

(a)        Transactions with management and close family members

Management remuneration

Key management personnel received the following remuneration during the year, which is included in personnel costs (see Note 5):

 

 

Unaudited
six-month
period ended
30 June 2019

$000

 

Unaudited
six-month
period ended
30 June 2018

$000

Wages, salaries and related taxes

 

190

 

178

 

(b)        Transactions with other related parties

There were no other related party transactions.

 

 


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