CNG: China Nonferrous Gold Limited: Final Results

  CNG: China Nonferrous Gold Limited: Final Results

UK Regulatory Announcement

LONDON

30 June 2014

                        China Nonferrous Gold Limited

                           ('CNG' or the 'Company')

              Final Results for the year ended 31 December 2013

China Nonferrous Gold Limited (AIM:CNG), the mineral exploration and
development company currently developing the Pakrut Gold Project (‘the Pakrut
Project’) in the Republic of Tajikistan, today announces its final results for
the year ended 31 December 2013.

The results below are extracted from the Company's audited Annual Report and
Financial Statements. Copies of the Annual Report will be posted to
shareholders today and are available on the Company's website at
www.cnfgold.com and from the Company's registered offices at Unit 2.24, The
Plaza, 535 Kings Road, London, SW10 0SZ.

Highlights

  *Significant progress towards bringing the Pakrut project into production:

       *Main decline at the mine has reached a depth of more than 1,000
         metres;
       *West ventilation access decline has reached a depth of over 430
         metres;
       *Confident of commencing production before the end of 2014.

  *Construction of associated mine infrastructure progressing to plan:

       *Construction of the access road and bridge to the mine now complete;
       *External power supply network set to be completed by the end of
         September 2014;
       *Construction of the processing plants set to commence shortly.

  *Independent Technical Report produced by SRK Consulting China Limited,
    announced on 17 June 2013, confirmed the Pakrut project is being developed
    on a very strong and viable commercial basis;
  *Completed a corporate restructuring and re-naming in order to prepare the
    Company for a potential listing on the main board of the Hong Kong Stock
    Exchange.

Tao Luo, Chairman, China Nonferrous Gold Limited, commented:

“From both an operational and corporate perspective, 2013 was a critical year
in the ongoing development of China Nonferrous Gold Limited. The Company
continued to advance its flagship multi-million ounce Pakrut gold project
towards production, while also undertaking a corporate restructuring and
re-naming in order to prepare the Group for a potential listing on the main
board of the Hong Kong Stock Exchange.

“With production at Pakrut expected in the near-term and significant progress
made towards the Hong Kong listing, the future for our Group is very
exciting.”

For further information please visit the Company’s website (www.cnfgold.com)
or contact:


China Nonferrous Gold Limited
David Tang, Managing Director
Tel: +86 10 8442 6681

Investec Bank Plc
Jeremy Ellis, George Price
Tel: +44 (0)20 7597 5970

Hume Capital
Jon Belliss, Guy Peters
Tel: +44 (0)20 3693 1470

Blytheweigh
Paul Weigh, Halimah Hussain
Tel: +44 (0)20 7138 3204


Project Summary

The Pakrut gold project, of which CNG has 100 per cent ownership, is situated
in Tajikistan approximately 120km northeast of the capital city Dushanbe.
Pakrut is located within the Tien Shan gold belt, which extends from
Uzbekistan into Tajikistan, Kyrgyzstan and Western China, and which hosts a
number of multi-million ounce gold deposits.

CNG is currently in a construction phase with mining contractors on site
developing the underground mine and surface infrastructure.

About Tajikistan

Tajikistan is a secular republic located in Central Asia. The country is a
member of the Commonwealth of Independent States and the Shanghai Cooperation
Organisation. Tajikistan hosts numerous operating precious metal mines as well
as the largest aluminium smelter in Central Asia. CNG's management team has
extensive experience in the mining industry in Tajikistan.

Chairman’s Statement

From both an operational and corporate perspective, 2013 was a critical year
in the ongoing development of China Nonferrous Gold Limited (‘CNG’). The Group
continued to advance its flagship multi-million ounce Pakrut gold project
towards production, while also undertaking a corporate restructuring and
re-naming in order to prepare the Group for a potential listing on the main
board of the Hong Kong Stock Exchange (‘HKSE’).

A clear path towards production

Construction work has continued apace at Pakrut. As reported previously, much
progress has been achieved with the construction of the underground mine,
which remains on track to complete this year with initial small scale
production scheduled to commence immediately thereafter. The main decline at
the mine has reached a depth of more than 1,000 metres, while the west
ventilation access decline has reached a depth of over 430 metres. Full scale
production in Phase 1 of 2,000 tonnes per day (“tpd”) is expected to commence
in June 2015.

Work regarding associated infrastructure is also progressing to plan, with
construction of the access road and bridges to the mine now complete and work
on the external power supply network set to be completed by the end of
September 2014. The majority of equipment required for the processing plants
has been purchased and is currently being shipped to the mine site, with
construction of the processing plants set to commence shortly.

While I am pleased to report this progress, I am also conscious that the Group
is behind the initial timescale it set for bringing the Pakrut gold project
into production. However, much was achieved in 2013, and indeed has been
achieved so far in 2014, and there is a strong view shared by the Board that
the majority of construction challenges have been overcome.

The Independent Technical Report produced by SRK Consulting China Limited,
which was announced on 17 June 2013, highlights the Board’s belief that the
Pakrut project is being developed on a very strong and viable commercial
basis. Being so close to commercial production is highly exciting and we
remain committed to making this happen as soon as possible.

Completion of corporate restructuring in advance of potential Hong Kong
listing

Having completed our corporate restructuring, a significant amount of
management time and attention has gone into preparing the Group for listing on
the HKSE. As a reminder to all shareholders, the reason for seeking this
listing is that the Group’s Board of Directors unanimously view the HKSE as
representing a more appropriate and attractive exchange on which to list CNG,
and believe the successful completion of such a listing, and subsequent
de-listing from the AIM of the London Stock Exchange, would be in the
interests of all shareholders.

Looking beyond our Pakrut gold project, the Group has ambitions to become a
mid-tier gold producer in the medium-term, which could be achieved through a
combination of acquisitive growth and the further exploration and development
of our existing asset base. Achieving these objectives could potentially
require additional future capital. Given this, the Board felt that seeking a
listing in Hong Kong is not only more appropriate given the Group’s strong
Chinese ties, but would place the Group in a stronger position to achieve its
medium to long-term growth aspirations, given the more favourable disposition
of the Hong Kong investor base to companies of our size, focus and stage of
development.

Financial Results for the Year ended 31 December 2013

The amount incurred by the Group on development and construction work during
the year was US$20,256,000 (2012: US$25,523,000). Administration expenditure
was US$3,652,000 (2012: US$3,406,000). The overall loss incurred by the Group
was US$6,393,000 (2012: US$3,618,000). Total cash equity funding raised from
exercising options during the period was US$88,000 resulting in cash and cash
equivalents at the end of the period of US$8,602,000 (2012: US$26,085,000).

As always, I would like to take this opportunity to thank all of our
employees, management, advisors and the entire board, including former
Managing Director Craig Brown, for their efforts during 2013 and also thank
our shareholders for their continued support of our Group.

With small-scale production at Pakrut expected before the end of the year and
significant progress made towards a potential listing in Hong Kong, the future
for our Group is very exciting. I look forward to updating shareholders on
further progress as and when appropriate.

Events Post Period End

Post period end, the Group obtained a bank term loan facility of
US$120,000,000 from Industrial and Commercial Bank of China (Macau) Limited,
secured by standby letters of credit. The loans advanced under the facility
cannot exceed 95% of the value of the standby letters of credit. A standby
letter of credit was issued on 24 June 2014 for US$84,500,000. The loan
availability period runs from 9 July 2014 until 19 June 2015 and the Group
will draw down the remaining facility when required, subject to the provision
of the requisite letter of credit. Interest is charged at 2.9% above the 3
month LIBOR rate. The loan is conditional upon usual commercial terms
including the supply of associated documentation (which includes the
completion of associated security documentation). The principal loan
repayments commence on 30 January 2016 and the loan is repayable by 8 June
2019.


Tao Luo
Non-Executive Chairman
29 June 2014


                                                                
Consolidated Statement of Comprehensive Income - Year Ended 31 December 2013
                                                                     
                                                         2013        2012
                                                         US$000      US$000
                                                                     Restated
Revenue                                                  -           -
Cost of sales                                            -           -
Gross Profit                                             -           -
                                                                     
Administrative expenses                                  (3,652)     (3,406)
Listing and capital reorganisation expenses              (2,321)     (427)
Project impairment                                       -           (466)
(Loss)/gain on foreign exchange                          (386)       637
Operating Loss                                           (6,359)     (3,662)
Finance income                                           10          44
Finance costs                                            (44)        -
Loss before Income Tax                                   (6,393)     (3,618)
Income tax                                               -           -
Loss for the year attributable to owners of the          (6,393)     (3,618)
parent
                                                                    
Total comprehensive income attributable to owners
of the parent                                            (6,393)     (3,618)
for the year
                                                                    
Basic and Diluted Earnings per share attributable
to owners of the parent                                  $(0.0168)   $(0.0116)
(expressed in dollars per share)
                                                                    
                                                                     

All of the activities of the Group are classed as continuing.

The Group had no recognised gains or losses other than the loss for the
financial years above.

                                                               
Consolidated Statement of
Financial Position - Year Ended 31
December 2013
                                                                     
                                         As at         As at         As at
                                         31 December   31 December   1 January
                                         2013          2012          2012
                                         US$000        US$000        US$000
                                                       Restated      Restated
Non-Current Assets
Intangible assets                        9,475         3,103         18,325
Mines under construction                 51,042        40,279        -
Property, plant and equipment            3,661         1,971         1,335
                                                                   
Total Non-Current Assets                 64,178        45,353        19,660
Current Assets
                                         6,610         2,172         1,703
Inventories
Other receivables                        8,805         7,429         1,216
Cash and cash equivalents                8,602         26,085        11,050
Total Current Assets                     24,017        35,686        13,969
Non-Current Liabilities
Trade and other payables                 (1,124)       -             -
Borrowings                               (1,547)       (2,994)       -
Provisions for other liabilities         (544)         -             -
and charges
Total Non-Current Liabilities            (3,215)       (2,994)       -
Current Liabilities
Borrowings                               (13,581)      -             -
Trade and other payables                 (15,091)      (16,204)      (109)
Total Current Liabilities                (28,672)      (16,204)      (109)
Net Current Assets                       (4,655)       19,482        13,680
Net Assets                               56,308        61,841        33,520
Equity attributable to the owners
of the parent
Share capital                            38            6,270         4,640
Share premium                            65,616        69,475        37,995
Other reserve                            10,175        -             -
Retained earnings                        (19,521)      (13,904)      (9,115)
Total Equity                             56,308        61,841        33,520
                                                                     

                                                               
Consolidated Statement of Changes in Equity - Year Ended 31 December 2013
Attributable to owners of the parent
                                                                       
                            Share     Share      Other      Retained
                            capital   premium    reserve    earnings   Total
                            US$000    US$000                US$000     US$000
                                                 US$000
Balance at 1 January
2012 (as previously         4,640     37,995     -          (4,372)    38,263
reported)
                                                                       
Effect of prior             -         -          -          (4,743)    (4,743)
period adjustments
                                                                   
                                                                       
Balance at 1 January        4,640     37,995     -          (9,115)    33,520
2012 (restated)
                                                                   
Loss and Total
comprehensive income        -         -          -          (3,618)    (3,618)
for the year
                                                                   
Share based payments        -         -          -          144        144
- options granted
Share based payments
- exercise of               -         1,315      -          (1,315)    -
warrants
Issue of ordinary           1,630     30,165     -          -          31,795
shares
                                                                   
Total contributions
by and distributions                             
to owners of the            1,630     31,480                (1,171)    31,939
parent, recognised                               -
directly in equity
                                                                   
                                                                       
Balance at 31
December 2012               6,270     69,475     -          (13,904)   61,841
(restated)
                                                                   
                                                                       
Loss and Total
comprehensive income        -         -          -          (6,393)    (6,393)
for the year
                                                                   
Share based payments        -         -          -          776        776
- options granted
Issue of ordinary           6         78         -          -          84
shares
Cancellation of
existing shares under       (6,276)   (69,553)   75,829     -          -
scheme of arrangement
Issue of new shares
under scheme of             38        65,616     (65,654)   -          -
arrangement
                                                                   
Total contributions
by and distributions
to owners of the            (6,232)   (3,859)    10,175     776        860
parent, recognised
directly in equity
                                                                   
                                                                       
Balance at 31               38        65,616     10,175     (19,521)   56,308
December 2013
                                                                   
                                                                       

Other reserve comprises the capital reorganisation reserve under the scheme of
arrangement.

                                                              
Consolidated Statement of Cash Flows - Year Ended 31 December 2013
                                                                   
                                                     31 December   31 December

                                                     2013          2012
                                                     US$000        US$000
                                                                   Restated
Cash flows generated from/(used in) Operating        1,627         (850)
Activities (note 23)
Net Cash generated from/(used in) Operating          1,627         (850)
Activities
Cash flows from Investing Activities
Payments for exploration and evaluation              (5,272)       (400)
Payments for mining rights and mine under            (11,218)      (6,559)
construction
Purchase of property, plant and equipment            (631)         (1,593)
Movement in inventories – consumables                (1,253)       (469)
Interest received                                    10            44
Net Cash used in Investing Activities                (18,364)      (8,977)
Cash flows from Financing Activities
Cash acquired from contractor                        4             -
                                                     84            26,878
Proceeds from issuance of equity share capital       -             (1,871)
Payments for borrowing costs                         (834)         (145)
Interest paid                                                     
Net Cash generated from Financing Activities         (746)         24,862
Net (Decrease)/Increase in Cash and cash             (17,483)      15,035
equivalents
Cash and cash equivalents at beginning of the        26,085        11,050
year
Cash and cash equivalents at end of the year         8,602         26,085
                                                                   

Basis of Preparation

The principal accounting policies applied in the preparation of these
Consolidated Financial Statements are set out below. These policies have been
consistently applied to all the years presented, unless otherwise stated. The
Consolidated Financial Statements have been prepared in accordance with
International Financial Reporting Standards (IFRS) and IFRS Interpretations
Committee (IFRSIC) as adopted by the European Union. The Financial Statements
have been prepared on a historical cost basis. The preparation of Financial
Statements in conformity with IFRSs requires the use of certain critical
accounting estimates. It also requires management to exercise its judgement in
the process of applying the Group’s accounting policies. The areas involving a
higher degree of judgement or complexity, or areas where assumptions and
estimates are significant to the Consolidated Financial Statements are
disclosed on page 34.

The Consolidated Financial Statements provide comparative information in
respect of the previous period. In addition, the Group presents an additional
Statement of Financial Position at the beginning of the earliest period
presented when there is: a retrospective application of an accounting policy;
a retrospective restatement or prior period error; or a reclassification of
items in the Financial Statements that has a material impact on the Group. An
additional Statement of Financial Position is presented in these Consolidated
Financial Statements; refer below to Changes in Accounting Policies and
Disclosures and note 30.

The functional and presentational currency of the Group is US dollars and
accordingly the amounts in the Financial Statements are denominated in that
currency.

China Nonferrous Gold Limited was incorporated in the Cayman Islands on 24
April 2013 in order to effect a group reorganisation by means of a scheme of
arrangement (“the Scheme”). Under the Scheme dated 30 July 2013, the
shareholders of the existing ordinary shares in Kryso Resources
Limited(formerly Kryso Resources Plc) had their shares cancelled in
consideration for which they received ordinary shares in China Nonferrous Gold
Limited on a one-for-one basis. The ordinary shares of Kryso Resources Limited
were de-listed and the issued shares of China Nonferrous Gold Limited admitted
to trading on AIM.

The Group reorganisation does not result in a change of control and is
therefore excluded from the scope of IFRS 3 ‘Business combinations’. In the
Consolidated Financial Statements, China Nonferrous Gold Limited includes the
assets and liabilities of Kryso Resources Limited at their pre-combination
carrying amounts without any fair value uplift. The Group reorganisation only
causes a change in the structure of the Group and in substance does not impact
on the reporting of the Group.

Basis of Consolidation

The consolidated Financial Statements comprise the financial statements of the
Group as at 31 December 2013. Subsidiaries are all entities over which the
Group is exposed to, or has rights to, variable returns from its involvement
with the entity and has the ability to affect those returns through its power
over the entity. These subsidiaries are adjusted, where appropriate, to
conform to Group accounting policies. All intragroup assets and liabilities,
equity, income, expenses and cash flows are eliminated on consolidation.

Subsidiaries are consolidated from the date on which control is transferred to
the Group, and continue to be consolidated until the date when such control
ceases.

Going Concern

The Group’s business activities, together with the factors likely to affect
its future development, performance and position are set out in the Chairman’s
Statement and the Business Review in the Report of the Directors. The
accounting policies include the Group’s objectives, policies and processes for
managing its capital; its financial risk management objectives; details of its
financial instruments; and its exposure to liquidity risk.

In 2012, CNMIM provided a secured loan facility on commercial terms to the
Company for US$10 million and RMB530 million (approximately US$83.5 million)
that is being utilised to finance the development of the Pakrut Gold Project.
US$41.7 million of that secured loan facility has been utilised to date.

On 19 June 2014, the Group obtained a bank term loan facility of
US$120,000,000 from Industrial and Commercial Bank of China (Macau) Limited,
secured by standby letters of credit. The loans advanced under the facility
cannot exceed 95% of the value of the standby letters of credit. A standby
letter of credit was issued on 24 June 2014 for US$84,500,000 by Industrial
and Commercial Bank of China (Beijing) Limited. The loan draw down
availability period runs from 9 July 2014 until 19 June 2015 and the Group
will draw down the remaining facility when required, subject to the provision
of the requisite letter of credit. Interest is charged at 2.9% above the 3
month LIBOR rate. The loan is conditional upon usual commercial terms
including the completion of associated security documentation and is
separately guaranteed by China Nonferrous Metals Mining (Group) Co. Limited.
The principal loan repayments commence on 30 January 2016.

As at the date of approval of these Financial Statements, and based upon the
budgeted levels of expenditure and Board approved cash flow forecasts, the
Directors are satisfied that the Group has sufficient cash and loan facilities
to finance the Group’s operating expenses, the development and construction of
the Pakrut Gold Project and ongoing exploration and evaluation costs.

The Directors have a reasonable expectation that the Group has adequate
resources to continue in operational existence for at least 12 months from the
date of signing these Financial Statements. Thus they continue to adopt the
going concern basis of accounting in preparing the Financial Statements.

Contact:

China Nonferrous Gold Limited
 
Press spacebar to pause and continue. Press esc to stop.