30th Sep 2015 07:00
TENGRI RESOURCES
("TENGRI" or "THE COMPANY")
INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2015
Reporting Period Highlights
· 2014 Taldybulak drilling programme of 13 drilling holes for 2,029m results released. Leading to the decision to implement a phased development process of this project
· Commenced scoping study at Taldybulak aiming to fast-track development
· Completed US$5M fundraise in the form of a convertible note issued to Robust Resources, Argyle Street Management Limited and TIH Limited
· Board strengthened with the re-appointment of Gary Lewis to the board as Executive Chairman and appointment of Joshua Crumb as Non-Executive Director
· AU$150,000 investment in Slovakian precious metals exploration company Prospech Limited
· 2015 Taldybulak drilling programme completed for 11 diamond drill holes and 2,505m. This programme was aimed at optimizing Phase 1 of mine planning and expanding resource definition (results pending)
Director's Statement
I have the pleasure of presenting the Company's Half-Yearly Report for the six months ended 30 June 2015. 2015 has been a period of continued steady progress for the Company, we have seen excellent results from our 2014 drilling programme, which resulted in a new project focus for the Company, and are eagerly awaiting the final results from our 2015 programme. This period has also seen Tengri raise capital in difficult market conditions from existing shareholder Robust Resources Limited ("Robust Resources"), and welcomed some new names to our list of stakeholders.
The focus for Tengri remains on the development of low cost projects in Central Asia, we strongly believe that the work being undertaken, counter to the current economic cycle has the potential to generate significant returns for shareholders in time.
Taldybulak
We can confirm that the 2015 Taldybulak drilling programme has now been completed ahead of schedule. This programme has focused on improving the deposit definition by infilling areas of higher-grade mineralisation within the existing already defined resource envelope, suitable for inclusion in Phase 1 of the Taldybulak development. Data from this programme will also provide critical geotechnical information, which will be used in the scoping and feasibility studies going forward.
Our team in Bishkek are currently finalising a baseline hydrogeological programme on the Taldybulak pit area, which will generate additional data for the scoping study. We expect to be able to share the results of the first stages of the complete drilling programme in the coming months once they have been properly reviewed and interpreted.
Following a thorough tender process we have awarded the local scoping study to the Kazakh Mineral Company, a regionally respected organisation with expert knowledge of the region. We expect to receive the results of the scoping study before the end of 2015, the results of which will be utilised to determine the initial scope of work for the subsequent feasibility study in 2016.
Andash
Steady progress continues at Andash; our local teams are continuing to engage with local communities and relevant government bodies. We are committed to building strong and sustainable relationships with the local stakeholders in the hopes of developing Andash in a manner that is beneficial to all parties involved.
Although much of the development focus has been placed on Taldybulak since our listing, Andash remains an attractive project with potential for very low cost of production, we continue to evaluate options for Andash both as a stand alone project or alternatively as a satellite mine feeding a central plant at Taldybulak.
Social Responsbilities
Our commitment to engaging with local communities has enabled us to complete our second year of drilling at Taldybulak without interruption. Regional stakeholders in the Taldybulak project area have continued to support our work in the area whilst our team is making steady inroads with the communities surrounding the Andash project site.
Finance
Tengri successfully completed fundraising for US$5M in April this year via the issue of convertible notes at a premium of 54% to the share price at the time of issue. The Company has drawn down US$1,500,000 to date which reflects in the cash balance of $157,125 at the period end. The remaining US$3,500,000 may be drawn down at the Company's discretion and is sufficient to complete the 2015 work programme, constituting the foundation of the Taldybulak scoping study. Participating in this raise were existing shareholders Robust Resources who subscribed for US$4M in notes, with the remaining US$1M coming from Asia-based funds managed by Argyle Street Management Limited and TIH Limited.
Changes to the Board
In April Tengri welcomed Gary Lewis back to the Board as Executive Chairman along with highly experienced Canadian mining market and strategy specialist Joshua Crumb. At this time Peter Moss stepped down as Chairman to take a Non-Executive Director role and John Levings stepped down from Board but continued in his role as strategic technical consultant.
Future Developments
· Drill results from the 2015 programme to be released. This drilling aims to provide critical geotechnical information, to be used in the scoping and feasibility studies.
· Develop the 2016 drilling programmes aimed at further definition of the ore resource.
· Complete JORC resource evaluation.
· Define the optimal mining method for optimum ore extraction from Taldybulak and develop the associated conceptual mine plan and design.
· Complete Taldybulak's Phase 1 scoping and feasibility study.
· Develop the detailed mine plan and design for Taldybulak Phase 1.
· Produce scoping study on Phase 2 and evaluate the potential to incorporate our Andash deposit, 27 km away, as a satellite mine providing ore feed to a larger central plant at the Taldybulak project site.
· Conversion of Taldybulak exploration license to mining license.
Whilst external market forces are still unsteady, we remain confident that our counter-cyclical approach to development will ultimately yield returns for our shareholders. We look forward to keeping you updated as we progress in the coming weeks and months.
Kindest regards,
Peter Moss
Non-Executive Director
CONSOLIDATED STATEMENT OF PROFIT AND LOSS AND OTHER COMPREHENSIVE INCOME FOR THE SIX MONTHS ENDED 30 JUNE 2015
Notes | Consolidated six months ended 30 June 2015 US$ | Consolidated six months ended 30 June 2014 US$ | |
Revenue | 7,063 | 83,505 | |
Other income | 1,137 | 1,181 | |
Total income | 8,200 | 84,686 | |
Expense | |||
Depreciation expense | (26,921) | (24,553) | |
Employee benefits expense | (501,558) | (317,956) | |
Foreign exchange gain loss | (6,555) | (2,893,994) | |
Impairment expense | (39,224) | - | |
Insurance expense | (43,944) | (23,444) | |
Professional fees | (729,719) | (3,954) | |
Provision for doubtful debt | (53,510) | - | |
Public relations | (84,301) | (994) | |
Telecommunications expense | (25,236) | (6,768) | |
Rent expense | (134,301) | (124,437) | |
Travel expense | (109,276) | (12,017) | |
Other expense | (200,136) | (84,446) | |
Finance cost | (21,712) | (87,501) | |
Total expense | (1,976,393 | (3,580,064) | |
Loss before tax | (1,968,193) | (3,495,378) | |
Income tax benefit | - | - | |
Loss for the year | (1,968,193) | (3,495,378) | |
Other comprehensive income/(loss): exchange differences on translation of foreign operations |
(1,227,021) |
(1,448,330) | |
Total comprehensive loss for the year | (3,195,214) | (4,943,708) | |
Basic loss per share | (0.0297) | (0.0534) | |
Diluted loss per share | (0.0297) | (0.0534) | |
Weighted average number of shares | 107,618,497 | 92,639,920 |
No dividends were proposed or declared in respect of any of the periods presented above.
The accompanying notes form part of this historical financial information.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2015
Notes | As at 30 June 2015 US$ | As at 31 December 2014 US$ | |
Assets | |||
Cash and cash equivalent | 157,125 | 1,066,292 | |
Current trade and other receivables | 505,215 | 382,030 | |
Inventories | 257,384 | 268,682 | |
Total current assets | 919,724 | 1,717,004 | |
Non-current trade and other receivables | 422,351 | 443,204 | |
Financial assets | 124,974 | 39,379 | |
Exploration and evaluation expenditure | 19,559,380 | 19,884,176 | |
Property, plant and equipment | 344,086 | 370,899 | |
Total non-current assets | 20,450,791 | 20,737,657 | |
Total assets | 21,370,515 | 22,454,661 | |
Liabilities | |||
Trade and other payables | 388,790 | 161,493 | |
Other liabilities | 38,768 | 25,535 | |
Related party loan | 432,218 | - | |
Total current liabilities | 859,776 | 187,028 | |
Loans and borrowings (convertible notes) | 2 | 1,114,326 | - |
Financial derivative liability | 3 | 323,428 | - |
Total non-current liabilities | 1,437,754 | - | |
Total liabilities | 2,297,530 | 187,028 | |
Net assets | 19,072,985 | 22,267,633 | |
Shareholders' equity | |||
Share capital | 31,178,656 | 31,178,656 | |
Foreign currency translation reserve | (112,908) | 1,114,113 | |
Share based payments reserve | 8,654 | 8,654 | |
Accumulated losses | (12,001,983) | (10,033,790) | |
Investment revaluation reserve | 556 | - | |
Total shareholders' equity | 19,072,985 | 22,267,633 |
The accompanying notes form part of these financial statements.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE SIX MONTHS ENDED 30 JUNE 2015
Share capital US$ | Foreign currency translation reserve US$ | Share based payments reserve US$ |
Accumulated losses US$ |
Investment revaluation reserve US$ |
Total US$ | |
Balance at 31 December 2013 | 26,875,376 | 3,398,215 | (33,041,869) | - | (2,768,278) | |
Issue of shares on acquisition of Kyrgyz companies | 4,179,015 | - | - | - | 4,179,015 | |
Issue of shares | 124,265 | - | - | - | 124,265 | |
Share based payments | - | - | 8,654 | - | - | 8,654 |
Profit for the year | - | - | - | 23,008,079 | - | 23,008,079 |
Other comprehensive loss | - | (2,284,102) | - | - | - | (2,284,102) |
Total comprehensive income/ (loss) for the year | - | (2,284,102) | - | 23,008,079 | - | 20,723,977 |
Balance at 31 December 2014 | 31,178,656 | 1,114,113 | 8,654 | (10,033,790) | - | 22,267,633 |
Revalue of investments | 556 | 556 | ||||
Loss for the year | - | - | (1,968,193) | - | (1,968,193) | |
Other comprehensive loss | - | (1,227,021) | - | - | (1,227,021) | |
Total comprehensive income/loss for the year | - | (1,227,021) | (1,968,193) | - | (3,195,214) | |
Balance at 30 June 2015 | 31,178,656 | (112,908) | 8,654 | (12,001,983) | 556 | 19,072,985 |
CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE SIX MONTHS ENDED 30 JUNE 2015
Six months ended 30 June 2015 US$ | Six months ended 30 June 2014 US$ | ||
Cash flows from operating activities | |||
Loss before income tax | (1,968,193) | (3,495,378) | |
Adjustments for non-cash items: | |||
- Depreciation | 26,921 | 24,694 | |
- Impairment | 533 | - | |
- Finance cost | - | 87,501 | |
- Foreign exchange differences | (14,955) | (2,897,130) | |
- Amortisation of convertible notes | (53,288) | - | |
- Other non-cash items | - | 7,916 | |
Movement in working capital: | |||
Decrease/(increase) in inventories | 11,298 | (1,545) | |
Increase in trade and other receivables | (123,185) | (24,771) | |
Decrease in other assets | 20,853 | 28,980 | |
Increase/(decrease) in trade and other payables | 227,297 | (5,638) | |
Increase in other liabilities | 13,233 | 16,179 | |
Net cash outflow from operating activities | (1,859,486) | (6,259,192) | |
Cash flows from investing activities | |||
Purchase of property, plant and equipment | (20,130) | (28,092) | |
Payment for exploration expenditure | (842,481) | (119,434) | |
Payments for investments | (114,801) | - | |
Net cash outflow from investing activities | (977,412) | (147,526) | |
Cash flows from financing activities | |||
Proceeds from related party | 432,218 | - | |
Proceeds from borrowings | - | 6,372,972 | |
Proceeds from convertible notes | 1,500,000 | - | |
Net cash inflow from financing activities | 1,932,218 | 6,372,972 | |
Net decrease in cash and cash equivalents | (904,680) | (33,746) | |
Cash and cash equivalents at the beginning of the period | 1,066,290 | 115,743 | |
Effects of foreign exchange rate changes on the balance of cash held in foreign currencies | (4,485) | (6,265) | |
Cash and cash equivalents at the end of the year | 157,125 | 75,732 |
1. Basis of Accounting
The financial information has been prepared on an accruals basis and is based on historical costs modified by the revaluation of selected non-current assets, financial assets and financial liabilities for which the fair value basis of accounting has been applied. The financial information is drawn in accordance with the provisions of the International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board ("IASB") and adopted by the European Union. The financial information is presented in US dollars, rounded to the nearest dollar.
2. Loans and Borrowings
On 24 April 2015, the Company issued US$500,000 in convertible unsecured loan notes to Argyle Street Management Limited (ASML). The loan notes carry a coupon of 5% p.a. and are repayable on 31 March 2018. Unless previously redeemed, the notes are convertible at the option of ASML into the Company's common shares at a price of £0.05 per share, a premium of 60% to the share price at issue date.
On 27 April 2015, the Company issued US$500,000 in convertible unsecured loan notes to TIH Limited (TIH). The loan notes carry a coupon of 5% p.a. and are repayable on 31 March 2018. Unless previously redeemed, the notes are convertible at the option of TIH into the Company's common shares at a price of £0.05 per share, a premium of 60% to the share price at issue date.
On 30 June 2015, the Company issued US$500,000 in convertible unsecured loan notes to Robust Resources Limited (Robust Resources) as a partial draw down under the US$4M loan note. The loan notes carry a coupon of 5% p.a. and are repayable on 31 March 2018. Unless previously redeemed, the notes are convertible at the option of Robust Resources into the Company's common shares at a price of £0.05 per share, a premium of 54% to the share price at issue date.
The movement in number of convertible notes is given hereunder:
2015 | 2014 | |
$ | $ | |
Balance at the beginning of the period | - | - |
Placement of notes | 1,500,000 | - |
Embedded derivative at inception | (323,428) | - |
Unwinding of finance costs | 21,712 | - |
Other movement | (8,958) | - |
Conversion during the period | - | - |
Issue costs | (75,000) | - |
Balance at the end of the year | 1,114,326 | - |
Embedded Derivative Financial Instrument
The conversion options in the convertible notes have been from the host contract and accounted for as a derivative as the economic characteristics and risks of the embedded derivative are not closely related to the economic characteristics and risks of the host contract.
For more information on the value of the embedded derivative, please refer to Note 3.
3. Financial Derivative Liability
The Group's derivative financial instruments are measured at fair value and are summarised below:
2015 | 2014 | |
$ | $ | |
Financial derivative liability | ||
Opening balance | - | - |
Embedded derivative at inception | 323,428 | - |
Closing balance | 323,428 | - |
The convertibles notes issued by the Group contain an embedded option to convert the debt to ordinary shares. The embedded options have been separated from the host contract and accounted for as a derivative as the economic characteristics and risks of the embedded derivative are not closely related to the economic characteristics and risks of the host contract. The embedded derivatives are measured at fair value with changes in value being recorded in profit or loss.
Embedded options have been valued using the Black-Scholes method of options valuation.
Related Shares:
FOR.L