In the same category

Managem

Published : May 14th, 2014

Serabi Gold plc : Financial Results for the First Quarter 2014 and Management's Discussion and Analy

( 0 vote, 0/5 ) Print article
  Article Comments Comment this article Rating Follow Company  
0
Send
0
comment
   

Published: 08:00 CEST 14-05-2014 /GlobeNewswire /Source: Serabi Gold plc /XLON: SRB /ISIN: GB00B4T0YL77

Serabi Gold plc : Financial Results for the First Quarter 2014 and Management's Discussion and Analysis

For immediate release

14 May 2014

 

Serabi Gold plc

("Serabi" or the "Company")

Financial Results for the First Quarter 2014 and Management's Discussion and Analysis

 

Serabi Gold (AIM:SRB, TSX:SBI), the Brazilian focused gold mining and development company, today releases its unaudited financial results for the three month period ending 31 March 2014 and at the same time has published the Management's Discussion and Analysis for the same period.

 

First Quarter 2014 - Operational Highlights

  • Successful plant commissioning and production ramp-up during the first quarter at Palito.
  • Gold production of 2,300 ounces() for the quarter.
  • End of quarter ore stockpile of 22,000 tonnes at an average grade of over 8.0 g/t.
  • Palito mine development has continued as planned with production of ore from stopes underway.
  • Remediation of the Carbon in Pulp (CIP) leaching circuit commenced.
  • Second ball mill purchased and preparations underway for it to be operational by end of second quarter.
    1. Gold production figures are subject to amendment pending final agreed assays of the gold content of the copper/gold concentrate that is being sold to a refinery.

 

First Quarter 2014 - Financial and Corporate Highlights

  • Cash balance at end of quarter of US$11.6 million.
  • Inventories of US$5.9 million including US$1.9 million of copper/gold concentrate awaiting sale.
  • Net Assets at end of quarter US$77.2 million.
  • Commercial Production expected to be declared during second quarter. Revenue and Operation Costs capitalized until Commercial Production achieved.
  • On 3 March 2014 the Company completed the placement of 200 million new ordinary shares and 100 million share purchase warrants raising gross proceeds of GB�10.0 million to finance the next stage of the evaluation and development of the Sao Chico gold project, to provide working capital for the on-going start-up of the Palito gold mine and for general working capital.

 

Mike Hodgson, CEO of Serabi said,

"With a successful first quarter start up at Palito now behind us, we can look forward to the second quarter, where we will see operational throughput achieve long term monthly rates.  In the plant, the early acquisition of a second ball, ultimately designed for the Sao Chico plant feed will allow us to accelerate the processing of the Palito ore stockpile, before switching to milling of Sao Chico ore early next year.  This, along with the ongoing remediation of the Carbon in Pulp ("CIP") plant means we can look forward to an exciting second half of the year.

Development at Sao Chico is continuing well, and we remain on target to commence underground mine development there before the end of the second quarter.  With the mine under development and work on an updated mineral resource expected to be underway by year end, we hope to start demonstrating the enhanced value this acquisition has brought to the Company.

Finally I would like to thank Fratelli Investments Limited and their continued financial support which initially enabled the Company to take Palito into production and is now allowing the Company to develop the Sao Chico project.  With the capital developments at Palito and Sao Chico, the Board remain confident of achieving our modest yet profitable production target of approximately 24,000 ounces for 2014, rising in 2015 as Sao Chico enters production.

 

Production statistics for first quarter 2014

Mining

 

Quarter ended 31 March 2014

Horizontal Development

metres

1,484

Ore Mined

tonnes

11,387

Average Grade Mined

g/t

7.09

 

Plant

 

Quarter ended 31 March 2014

Tonnes Milled

tonnes

13,766

Average Grade processed

g/t

7.43

Recovery

 

75.74%

Gold produced

ounces

2,300(1)

(1)         Gold production figures are subject to amendment pending final agreed assays of the gold content of the copper/gold concentrate that is being sold to a refinery.

 

Summary financials for first quarter 2014

 

Quarter ended 31 March 2014

Quarter ended 31 March 2013

 

US$

US$

Revenues

-

-

Loss before taxation

(1,257,621)

(1,359,226)

Net loss per share (basic and diluted)

(0.24c) 

(0.43c) 

 

 

 

 

As at 31 March 2014

As at 31 December 2013

 

US$

US$

Cash

11,616,470

3,789,263

Inventories

5,858,849

3,890,880

Debtors

2,479,575

1,340,631

Total current assets

19,954,894

9,020,774

Deferred exploration costs

25,607,411

24,659,003

Property plant and equipment

38,549,235

36,008,318

Total assets

84,111,540

69,688,095

 

 

 

Total liabilities

6,936,353

9,653,388

 

 

 

Equity shareholders' funds

77,175,187

60,034,707

 

 

Outlook and Strategy

The first quarter of 2014 represented a planned commissioning and testing phase for the process plant at Palito.  The current gold recovery circuit comprises milling, flotation (producing a high grade copper/gold concentrate) and gravity separation (producing a high grade gold concentrate) of the flotation tailings.  The Carbon in Pulp ("CIP") cyanide leaching tanks that are already at Palito are currently being remediated and expected to be operational during the third quarter of 2104. From that time the tailings from the gravity separation plant will be subject to cyanidation.  It is anticipated that this final stage of processing will result in overall gold recovery of approximately 92%.   The tailings currently being produced from the gravity separation circuit are being stockpiled and once the CIP plant is operational this stockpiled material will also be retreated with the intention that all material processed during 2014 will have been treated through all the recovery stages available.

The Company currently anticipates that the operational criteria determined by the Board prior to a declaration of Commercial Production will be achieved during the second quarter.  A second ball mill has been acquired and is being remediated and installed.  Whilst primarily acquired to permit a second processing line to be established for ore from Sao Chico, in the short term it will permit the Company to increase processing rates for Palito ore in excess of the planned 7,500 tonnes per month, in order that the Company can achieve its planned production of approximately 24,000 ounces from Palito for 2014.

Development work at Sao Chico is continuing well and the Company plans to establish the portal during the second quarter of 2014 with hard rock mining anticipated to begin in June.  A Decline Ramp will then be driven at a 12% gradient, from which two development levels, L1 and L2, will be established, at the 30 and 60 vertical metre intervals from surface respectively.  The development levels will follow the principal structure, known as the Main Vein, to its East and West strike limits, which is expected to represent approximately 500 development metres per level.  This work will allow the Company to better evaluate the continuity and payability of the mineralisation. The Company will also undertake underground drilling from within these development drives to identify parallel structures and will supplement this with additional surface drilling. The Company plans to complete this next evaluation stage by the end of 2014, at which time it expects to generate an updated mineral resource, from which a robust mine plan can be developed.  It is planned that any ore derived from development mining during 2014 will be transported to the Palito plant for processing.

In the longer term it is the strategy of the Company is to establish additional satellite high-grade gold mines in relatively close proximity to Palito which will be a centralised processing facility.  In this way the company expects to be able to grow its production base at low capital cost, avoid the need for major infrastructure improvements to be in place for new operations to be commercially viable and have low environmental impact. 

 

 

The unaudited financial results for the quarter ended 31 March 2014 and the Management Discussion and Analysis for the same period, together with this announcement, will be available from the Company's website - www.serabigold.com and will be posted on SEDAR at www.sedar.com.

 

 

Enquiries:

 

Serabi Gold plc

 

Michael Hodgson

Tel: +44 (0)20 7246 6830

Chief Executive

Mobile: +44 (0)7799 473621

 

 

Clive Line

Tel: +44 (0)20 7246 6830

Finance Director

Mobile: +44 (0)7710 151692

 

 

Email: contact@serabigold.com

 

Website:  www.serabigold.com

 

 

 

Beaumont Cornish Limited

Nominated Adviser and Financial Adviser

 

Roland Cornish

Tel: +44 (0)20 7628 3396

Michael Cornish

Tel: +44 (0)20 7628 3396

 

 

Peel Hunt LLP

UK Broker

 

Matthew Armitt

Tel: +44 (0)20 7418 9000

Ross Allister

Tel: +44 (0)20 7418 9000

 

 

Blytheweigh

Public Relations

 

Tim Blythe

Tel: +44 (0)20 7138 3204

Mobile: +44 7816 924626

Halimah Hussain

Tel: +44 (0)20 7138 3203

Mobile: +44 7725 978141

 

 

Neither the Toronto Stock Exchange, nor any other securities regulatory authority, has approved or disapproved of the contents of this announcement.

 

FINANCE REVIEW

 

Results of Operations

Three month period ended 31 March 2014 compared to the three month period ended 31 March 2013

 

During the first quarter of 2014 the mining operations were in a commissioning and ramp-up phase and did not represent Commercial Production as that concept is generally recognised within the mining industry.  The Company has not yet declared that Commercial Production has been achieved at Palito and in accordance with normal practice until the time that the Company does declare Commercial Production any revenues generated from and all operational costs related to, Palito as well as ongoing plant and other capital development costs are capitalised and reflected in the Balance Sheet of the Company.

 

The loss from operations increased by US$3,283 from US$1,064,266 for the 3 months ended 31 March 2013 to US$1,067,549 for the 3 month period ended 31 March 2014. There has been an increase of US$18,316 in depreciation charges of plant and equipment, which is offset by a decrease of US$18,259 in the charge for the period related to share based payments in comparison to the same period in the previous year.

 

Administration costs have shown an overall increase from US$908,753 for the 3 month period ended 31 March 2013 to US$911,979 for the 3 month period to 31 March 2014. Included in the administration expenses for the 3 month to 31 March 2013 was a provision of US$300,000 relating to bonuses payable to senior management.  A similar charge has not been incurred in the 3 month period ended 31 March 2014. After making adjustment for this item the increase in other costs reported as administrative expenses is US$303,226. The significant variances are:

 

  1. Professional and legal fees of US$103,000 in connection with the issue of a secured loan facility from Fratelli, the completion of a "whitewash" approval from the UK Takeover Panel and other ancillary costs related to the share placement completed in March 2014  to raise further capital of �10 million.
  2. An increase cost amounting to US$150,000 reflecting an increase in administrative staffing relating to the commencement of production operations at Palito.  These personnel are involved primarily in the accounting, information technology and personnel departments.

 

The increase in depreciation charges of US$18,316 between the two periods reflects the purchase of new plant and equipment during the year as the Palito Mine was put into production. New underground mining fleet delivered during the third quarter of 2013 is being depreciated in accordance with normal practice. The depreciation charges for this particular equipment which amounted to approximately US$114,000 for the three months to 31 March 2014 are being capitalised as a pre-production cost prior to Commercial Production being declared.  All other deprecation charges are being expensed.

 

Share based payments decreased from US$47,846 for the three month period ended 31 March 2013 to US$29,587 for the three month period ended 31 March 2014. The deemed value assigned to these share options is amortised over the expected option life and is calculated using the Black Scholes model. The charge for the three months to 31 March 2014 is in respect of options granted between January 2011 and 31 March 2014.

 

There was a tax charge of US$35,949 (including fines & penalties) during the first quarter of 2014 in respect of ICMS (a sales related tax) relating to the period 2004-2010. There was no similar charge during the same period of 2013. The company was only made aware during 2013 that in preceding calendar years it had incorrectly set-off certain taxes that were repayable to the Company against other taxes that it owed and therefore no corresponding charge was incurred during the same period in 2012. The Company will settle this liability over the period to June 2018.

 

The Company recorded a foreign exchange loss of US$9,918 in the 3 month period to 31 March 2014 which compares with a foreign exchange loss of US$255,218 recorded for the 3 months ended 31 March 2013.  These foreign exchange losses relate primarily to cash holdings of the Company maintained in currencies other than US Dollars as at the period end and do not necessarily reflect actual realised profits or losses.  The Company holds funds in certain currencies in anticipation of future expenditures that are anticipated to be settled in those currencies.  The exchange loss recorded during the first quarter of 2013 was a book loss incurred primarily on cash balances held at that time in UK pounds and Euros.  During the first quarter of 2014 the Company has held most of its funds in US dollars.  This has reduced the Company's exposure to losses on currency holdings.

 

Net interest charges for the 3 month period to 31 March 2014 were US$180,154 compared with US$39,742 for the first quarter of 2013.  An analysis of the composition of these charges is set out in the table below:

 

 

Quarter ended 31 March 2014

Quarter ended 31 March 2013

 

US$

US$

Interest on short term loan

104,877

26,630

Interest expense on convertible loan stock

20,247

15,639

Interest on finance leases

30,030

-

Finance arrangement fees

25,000

-

Other interest and finance expenses

-

230

Total finance expense

180,154

42,499

Interest income

-

(2,757)

Net finance costs

180,154

39,742

 

 

 

Summary of quarterly results

 

 

Quarter ended

Quarter ended

Quarter ended

Quarter ended

 

 

31 March

 2014

31 December

 2013

30 September

 2013

30 June

 2013

 

 

US$

US$

US$

US$

Revenues

 

-

-

-

-

Operating expenses

 

-

-

-

-

Gross loss

 

-

-

-

-

Administration expenses

 

(911,979)

(872,677)

(816,887)

(655,607)

Provision for indirect taxes

 

-

(213,220)

(263,250)

(150,026)

Option costs

 

(29,587)

(161,226)

(47,846)

(47,846)

Write-off of past exploration  expenditures

 

-

(1,007,233)

-

-

Gain on asset disposals

 

-

-

-

-

Depreciation of plant and equipment

 

(125,983)

(186,000)

(127,850)

(112,974)

Operating loss

 

(1,067,549)

(2,440,356)

(1,255,833)

(966,453)

Exchange

 

(9,918)

(36,618)

98,078

23,400

Net finance costs

 

(180,154)

(268,589)

(44,174)

(14,462)

Loss before taxation

 

(1,257,621)

(2,745,563)

(1,201,929)

(957,515)

Loss per ordinary share (basic and diluted)

 

(0.24) cents

(0.60) cents

(0.27) cents

(0.27) cents

 

 

 

 

 

 

Deferred exploration costs

 

25,607,411

24,659,003

25,950,041

16,375,076

Property, plant and equipment

 

38,549,235

36,008,318

36,603,692

30,228,704

Total current assets

 

19,954,894

9,020,774

10,134,384

17,758,039

Total assets

 

84,111,540

69,688,095

72,688,117

64,361,819

 

 

 

 

 

 

Total liabilities

 

6,936,353

9,653,388

7,504,716

5,432,817

Shareholders' equity

 

77,175,187

60,034,707

65,183,401

58,929,002

 

 

 

 

Quarter ended

Quarter ended

Quarter ended

Quarter ended

 

 

31 March

 2013

31 December

 2012

30 September

 2012

30 June

 2012

 

 

US$

US$

US$

US$

Revenues

 

-

-

-

-

Operating expenses

 

-

(296,017)

-

(64,250)

Gross loss

 

-

(296,017)

-

(64,250)

Administration expenses

 

(908,753)

(679,272)

(450,047)

(573,167)

Provision for indirect taxes

 

-

-

-

-

Option costs

 

(47,846)

(33,244)

(33,244)

(33,244)

Write-off of past exploration  expenditures

 

-

(267,703)

-

-

Gain on asset disposals

 

-

9,857

-

8,599

Depreciation of plant and equipment

 

(107,667)

(83,110)

(223,150)

(158,204)

Operating loss

 

(1,064,266)

(1,349,489)

(706,441)

(820,266)

Exchange

 

(255,218)

(4,380)

9,434

(19,103)

Net finance costs

 

(39,742)

(498,343)

(18,541)

(14,731)

Loss before taxation

 

(1,359,226)

(1,852,212)

(715,548)

(854,100)

Loss per ordinary share (basic and diluted)

 

(0.43) cents

(2.03) cents

(0.78) cents

(0.94) cents

 

 

 

 

 

 

Deferred exploration costs

 

17,696,480

17,360,805

18,249,489

17,405,081

Property, plant and equipment

 

29,187,365

26,848,991

25,514,742

25,845,466

Total current assets

 

21,881,077

3,993,428

2,054,299

3,305,872

Total assets

 

68,764,922

48,203,224

45,818,530

46,556,419

 

 

 

 

 

 

Total liabilities

 

4,857,524

8,942,223

4,358,930

4,219,578

Shareholders' equity

 

63,907,398

39,261,001

41,459,600

42,336,841

 

 

 

Liquidity and Capital Resources

 

On 3 March 2014, the Company completed a placing of 200 million units at a price of UK�0.05 per unit raising gross proceeds of UK�10 million.  The share placement was pursuant to a conditional subscription agreement entered into on 20 December 2013 between the Company and Fratelli Investments Limited ("Fratelli") to subscribe for a minimum of 125 million units and a maximum of 162.5 million units to finance initial development and underground drilling at the Sao Chico project and to provide further working capital to the business during the start-up phase of gold production at Palito. The final form of the investment by Fratelli comprised of (a) a subscription for 125 million units at the Subscription Price of 5 pence per unit; and (b) a further subscription for 27.5 million units at a subscription price of 5 pence per unit. The company procured third party investment not deemed to be acting in concert with Fratelli for 47.5 million units. 

 

Each unit comprises one new ordinary share and one half of a warrant. Each whole warrant entitles the holder to subscribe for one new ordinary share at a price of 6p for a period of two years from the date of issue.

 

Following completion of the share placement the Company repaid a short-term loan facility of US$7.5 million plus accrued interest that had been provided to the Company by Fratelli. At the time of repayment a total of US$5.5 million had been advanced under the loan facility.  Interest due under the facility was US$104,877 as at the date of the repayment of the loan facility.

 

On 20 December 2013, the Company entered into a secured loan agreement for a total facility of US$7.5 million with Fratelli Investments Limited ("Fratelli") and at the same time entered into a conditional subscription agreement with Fratelli for the placement of up to 162.5 million units as part of a placement of up to 200 million units to raise up to UK�10 million. Under the Loan Agreement Fratelli agreed to provide up to US$7.5 million to be drawn down in three instalments commencing from the date of the agreement to provide working capital to the Company and the Group during the start-up phase of gold production at Palito and to finance the initial development at the Sao Chico gold project.  The loan was to be repaid by the earlier of 30 April 2014 and the date falling seven days after the funds due from Fratelli under the conditional subscription were received and carried interest at a rate of 12% per annum and an arrangement fee of 3% of the facility amount.  The loan was secured against (i) the entire share capital of Serabi Mining Limited, a subsidiary of Serabi Gold plc, and the 99.99% shareholder of Serabi Minera�ao SA, which is the licence holder for the Palito Mine and (ii) the entire share capital of Kenai Resource Ltd a subsidiary of Serabi Gold plc and the 100 per cent shareholder of Gold Aura do Brasil Minera�ao Ltda, which is the licence holder for the Sao Chico project.  In addition the Company also made a charge in favour of Fratelli over all current and future sums owed by Serabi Minera�ao SA to Serabi Gold plc.  Following completion of the share placing on 3 March 2014, all amounts borrowed by the Company under the loan facility plus accrued interest were repaid to Fratelli and all security released. The Company drew down the first instalment of S$2.75 million on the date of the agreement and this money is included in the US$3.8 million cash holdings at the year end.

 

On 31 March 2014 the Company's net assets amounted to US$77.2 million which compares to US$60.0 million as reported at 31 December 2013, an increase of US$17.1 million. This increase primarily reflects the completion of the placing of new shares that was completed during the first quarter of 2014 raising US$16.65 million.

 

Non-current assets totalling US$64.2 million at 31 March 2014 (31 December 2013: US$60.7 million), are comprised of property, plant and equipment, which as at 31 March 2014 totalled US$38.5 million (31 December 2013: US$36 million), and includes US$23.3 million (US$20.7 million as of 31 December 2013) attributable to the Palito Mine Property and US$11.2 million (US$10.8 million as of 31 December 2013) representing the current expenditure on Projects in Construction incurred on the rehabilitation programme.   Deferred exploration costs as at 31 March 2014 totalled US$25.6 million (31 December 2013: US$24.7 million) of which US$15.3 million (31 December 2013: US$14.9 million) relates to past exploration expenditures around the Palito Mine and the wider Jardim Do Ouro project area and US$10.3 million (31 December 2013: US$9.8 million) relates to the past exploration costs relating to the Sao Chico gold project.

 

The Company has, during the three month period ended 31 March 2014, incurred costs of US$0.4 million for exploration expenditures on its mineral properties all of which has been spent on the Sao Chico property.

 

A total net expenditure of US$1.6 million has been recorded relating to on-going capital expenditure as well as start-up operating expenditures at the Palito Mine. Until Commercial Production is declared, any revenues generated from and all operational costs related to, Palito as well as ongoing plant and other capital development costs are capitalised and reflected in the Balance Sheet of the Company. Capital additions representing new plant and equipment or construction or capital of facilities totalled US$0.66 million for the 3 month period to 31 March 2014.  Site operating costs of US$1.64 million for the three month period were capitalised and set off against provisional revenue of US$0.65 million generated from 80 wet metric tonnes of copper/gold concentrate that departed from Brazil during the quarter. In total some 226 wet metric tonnes of copper/gold concentrate were produced at Palito during the quarter.  However the company is currently only recognising revenue for material that has departed from Brazil this being the date on which it considers that title passes to the refinery.

 

The Company had a working capital position of US$15,657,923 at 31 March 2014 compared to US$2,091,941 at 31 December 2013 as per the table below:

 

Note

March

2014

December 2013

Variance

 

 

US$

US$

US$

Current assets

 

 

 

 

Cash at bank and in hand

 

11,616,470

3,789,263

7,827,207

Inventories

i

5,858,849

3,890,880

       1,967,969

Prepayments

ii

1,745,676

1,264,654

481,022

Trade and other receivables

iii

733,899

75,977

657,922

Total current assets

 

19,954,894

9,020,774

10,934,120

 

 

 

 

 

Total current liabilities

 

 

 

 

Trade and other payables

iv

3,013,277

2,871,546

141,731

Interest bearing liabilities

v

1,016,770

3,790,363

(2,773,593)

Accruals

 

266,924

266,924

-

Total current liabilities

 

4,296,971

6,928,833

(2,631,862)

 

 

 

 

 

Working capital

 

15,657,923

2,091,941

13,565,982

 

 

 

 

 

Non-current liabilities

 

 

 

 

Interest bearing liabilities

v

681,854

833,560

(151,706)

Provisions

vi

1,532,760

1,480,665

52,095

Trade and other payables

 

424,768

410,330

14,438

Total non-current liabilities

 

2,639,382

2,724,555

(85,173)

 

 

 

 

 

 

The increase in the cash balances of US$7,827,207 results from the placing of new shares which was completed on 3 March 2014 raising gross proceeds of UK�10 million. Part of these funds have been applied to the repayment of a short term shareholder loan of US$5.5 million (excluding interest) of which US$2.75 million is included in working capital at 31 December 2013.

 

This increase in the Company's cash at bank position is the principal reason for the improvement in the working capital position of the company. Some of the other items which have had an impact on the Companies working capital position include the following.

 

  1. The levels of inventories have increased by US$2.0 million compared with 31 December 2013. Inventories of consumables (fuel, spare parts, chemicals, explosives etc.) at 31 March 2014 being US$0.93 million are similar in value to the holdings at 31 December 2013 which had a value of US$0.89 million.

Inventories of work in progress comprising mined ore, material in the course of processing or product stocks awaiting sale, have increased by US$1.93 million between 31 December 2013   and 31 March 2014.  At 31 December 2013, the Company valued the stockpile of ore that had been established on surface in preparation for processing at US$3.0 million.  Whilst this stockpile has been slightly depleted during the last quarter, at the end of the period the Company had established an inventory of approximately 166 wet metric tonnes of copper/gold concentrate either at Palito or en-route to the port of Belem from where this material is shipped to a refinery in Europe...  The valuation of US$1.9 million ascribed to this finished goods inventory accounts for most of the increase in inventory value at 31 March 2014.

 

  1. The level of prepayments has increased by US$0.49 million from US$1.26 million at 31 December 2013 to US$1.75 million at 31 March 2014. The prepayments represent:
     
    1. Prepaid taxes in Brazil amounting to US$1.23 million, (31 December 2013: US$1.10 million), of which the majority is federal and state sales taxes which the Company expects to recover either through off-set against other federal tax liabilities or through recovery directly.  The amount recoverable has increased by approximately US$136,000 in comparison to the prior year due to an increase in the level of social taxes the Company has prepaid at 31 March 2014.
    2. Supplier down-payments reflecting the timing and level of development and construction activity currently being undertaken for the opening of the Palito Mine. The Company has made advances to suppliers in respect of goods purchased (including down payment on new machinery) or items being fabricated of US$440,264 (31 December 2013 : US$228,000).
       
  2. Receivables of US$0.73 million as at 31 March 2014 have increased by US$0.65 million compared to the balance of US$76,000 at 31 December 2013.  This is attributable to net revenue due on shipments of copper/gold concentrate that have departed from Brazil during the first quarter of 2014.
     
  3. Trade Creditors amounting to US$3,103,277 at 31 March 2014 are consistent with the level of US$2,871,546 at 31 December 2013, with an increase of US$141,731. The items making up this total balance are:
     
    1. Trade Creditors have increased by US$229,384 in comparison to 31 December 2013 which is partly due to the increase in activity and operating equipment being utilised for mine development and also timing differences on when we make payments to trade creditors;
    2. Sales tax liabilities decreased by US$18,540 from US$459,796 to US$441,256 year on year;
    3. The standard wage accrual and social welfare accrual have decreased by US$69,133 from 31 December 2013 to 31 March 2014. This decrease results from the settlement during the quarter of a liability for the thirteenth salary which Brazilian employees are entitled to receive. The cost is accrued during the year and final settlement and taxes are paid in December and January;
       
  4. Interest bearing liabilities due within one year decreased by US$2,925,299. This is primarily because at 31 December 2013 the Company owed US$2.75 million on a short term shareholder loan, which was repaid during March 2014.

The Company has also acquired certain assets during 2013 under finance leases. At 31 March 2014 the Company had liabilities under these financial leases of US$553.004 due within one year (31 December 2013: US$600,280), and a further US$681,854 due after that date. The leases are for a term three years and carry interest at a rate of 6.45% per annum.

Also included is US$463,766 including accrued interest (December 2013: US$440,083) attributable to �300,000 of convertible loan stock which has a repayment date of 31 October 2014 subject to the right of the holder at any time, on one or more occasions, on or before the repayment date, to convert any of the outstanding amounts owed by the Company to Ordinary Shares at a price of 15 pence per Ordinary Share. 

 

  1. Non-current liabilities include the amount of US$1,532,760 (December 2013: US$1,480,665) in respect of provisions including US$1,181,145 (December 2013: US$1,141,000) for the cost of remediation of the current Palito Mine site at the conclusion of operational activity. The increase in the liability of US$52,095 is due to a movement in the exchange rate.. The Company undertook a review of the underlying cost assumptions during 2013.

 

 

The Company does not have any asset backed commercial paper investments.  As the Company has during 2014 generated only limited revenue and has in recent years primarily supported its activities by the issue of further equity, the working capital position at any time reflects the timing of the most recent share placement completed by the Company. 

 

On 3 March 2014, the Company completed a further placing of shares and share purchase warrants that raised gross proceeds of UK�10.0 million. These funds are to be used to provide working capital to the business during the start-up phase of the Palito operations and the next stage of development of the Sao Chico project. Commissioning of the process plant at Palito started on 13 December 2013 and the production rates have been increasing since that date. The final major stage of the remediation process will be the rehabilitation of the Carbon-In-Pulp circuit which is planned for completion by July 2014.

 

From the time that production operations commence at planned rates, management anticipates that the Company will have sufficient cash flow to be able to meet all its obligations as and when they fall due and to, at least in part, finance the exploration and development activities that it would like to undertake on its other exploration projects.

 

There are, however, risks associated with the commencement of any new mining and processing operation whereby unforeseen technical and logistical events result in additional time being required for commissioning or additional costs needing to be incurred, giving rise to the possibility that additional working capital may be required to fund these delays or additional capital requirements.  Should additional working capital be required the Directors consider that further sources of finance could be secured within the required timescale.

 

 


Condensed Consolidated Statement of Comprehensive Income

For the three months ended 31 March 2014

 

 

 

 

 

 

 

 

 

 

For the three months ended

 31 March

 

 

 

 

 

 

2014

2013

(expressed in US$)

Notes

 

 

(unaudited)

(unaudited)

CONTINUING OPERATIONS

 

 

 

 

 

Revenue

 

 

 

-

-

Operating expenses

 

 

 

-

-

Gross loss

 

 

 

-

-

Administration expenses

 

 

 

(911,979)

(908,753)

Share based payments

 

 

 

(29,587)

(47,846)

Depreciation of plant and equipment

 

 

 

(125,983)

(107,667)

Operating loss

 

 

 

(1,067,549)

(1,064,266)

Foreign exchange loss

 

 

 

(9,918)

(255,218)

Finance expense

 

 

 

(180,154)

(42,499)

Finance income

 

 

 

-

2,757

Loss before taxation

 

 

 

(1,257,621)

(1,359,226)

Income tax expense

 

 

 

-

-

Loss for the period from continuing operations (1)

 

 

 

(1,257,621)

(1,359,226)

  

 

 

 

 

 

Other comprehensive income (net of tax)

 

 

 

 

 

Exchange differences on translating foreign operations

 

 

 

1,920,750

609,475

Total comprehensive profit/(loss) for the period

 

 

 

663,129

(749,751)

 

 

 

 

 

 

Loss per ordinary share (basic and diluted) (1)

2

 

 

(0.24c)

(0.43c)

 

(1)           The Group has no non-controlling interests and all losses are attributable to the equity holders of the Parent Company

 

 

 


Condensed Consolidated Balance Sheet

As at 31 March 2014

 

 

 

 

31 March

31 March

31 December

 

 

 

2014

2013

2013

(expressed in US$)

Notes

 

(unaudited)

(unaudited)

(audited)

Non-current assets

 

 

 

 

 

Deferred exploration costs

3

 

25,607,411

 

17,696,480

 

24,659,003

 

Property, plant and equipment

4

 

38,549,235

29,187,365

36,008,318

Total non-current assets

 

 

64,156,646

46,883,845

60,667,321

Current assets

 

 

 

 

 

Inventories

5

 

5,858,849

795,485

3,890,880

Trade and other receivables

 

 

733,899

182,018

75,977

Prepayments and accrued income

 

 

1,745,676

681,188

1,264,654

Cash and cash equivalents

 

 

11,616,470

20,222,386

3,789,263

Total current assets

 

 

19,954,894

21,881,077

9,020,774

Current liabilities

 

 

 

 

 

Trade and other payables

 

 

3,003,401

2,295,152

2,871,546

Interest bearing liabilities

 

 

1,016,770

-

3,790,363

Accruals

 

 

276,800

408,540

266,924

Total current liabilities

 

 

4,296,971

2,703,692

6,928,833

Net current assets

 

 

15,657,923

19,177,385

2,091,941

Total assets less current liabilities

 

 

79,814,569

66,061,230

62,759,262

Non-current liabilities

 

 

 

 

 

Trade and other payables

 

 

424,768

131,230

410,330

Provisions

 

 

1,532,760

1,635,873

1,480,665

Interest bearing liabilities

 

 

681,854

386,729

833,560

Total non-current liabilities

 

 

2,639,382

2,153,832

2,724,555

Net assets

 

 

77,175,187

63,907,398

60,034,707

 

 

 

 

 

 

Equity

 

 

 

 

 

Share capital

 

 

61,668,212

52,773,993

60,003,212

Share premium reserve

 

 

69,041,915

54,083,565

54,479,151

Option reserve