LONDON (Alliance News) - Kolar Gold Ltd said Wednesday it has concluded the review of its strategic options to keep the company alive beyond the middle of calendar 2017, finding that it may be able to raise capital through diversifying its interests by pursuing complementary acquisitions.
Kolar shares fell 27% to 1.63 pence on Wednesday, after the company posted an update on its strategic review, in which it said it does not consider it "will be able to raise capital with a strategy based solely on its Indian gold interests".
The capital is required for operations to continue at mine development company Geomysore Mining Services (India) Private Ltd, in which Kolar Gold has a 23.5% stake.
GMSI requires USD2.2 million in order to undertake the next phase of required drilling at Jonnagiri, prepare mining feasibility studies for the East Block and manage ongoing operations. GSMI is looking to build India's first operating mine by the end of 2017.
However, Kolar's cash and cash equivalents stood at GBP456,188 on December 31, down from GBP1.5 million a year earlier, and Kolar said there are outstanding liabilities in connection with changes to executive management of approximately GBP92,000.
The company said in order to raise the capital needed it will look for "complementary opportunities", initially focusing its search in India.
"If GMSI fails to raise such funds then the value of our investment in GMSI could be adversely affected," the company said.
Kolar posted its results for the six months to December 31, with pretax loss narrowing to GBP533,065 from GBP568,074. However, Kolar does not generate any substantial revenue, with the loss narrowing because of lower administrative expenses.
"The news from GMSI in connection with the possibility of building India's first operating mine by the end of 2017 is promising. Commencement of production, if it can be achieved and the required funding can be secured, would be a very significant step in the development of not only GMSI but also for the Indian gold sector," said Chairman Harvinder Hungin.
By Hannah Boland; hannahboland@alliancenews.com; @Hannaheboland
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