LONDON (Alliance News) - Kolar Gold Ltd Monday said its pretax loss narrowed in the first half of its financial year, but it warned that although it has sufficient cash to continue operating well into 2016, it will need to raise further funds if it wants to take up its option to increase its stake in GMSI, the owner of a gold mining lease in India.
The gold miner focused in India reported a pretax loss of GBP568,074 for the six-months ended December 31, from a GBP1.4 million loss a year earlier, as administrative expenses fell and the company made no impairments during the period compared with the GBP909,622 in impairments recorded in 2013.
The company, which does not generate any revenue, had a cash balance of GBP1.5 million at the end of December.
"The company is continuously monitoring the rate of cash usage to ensure a balance between investment and achieving major milestones and having sufficient working capital to remain a going concern. The company is also investigating ways of raising further capital to support our stated gold objectives in India," said Kolar.
Kolar is due to make two further investments in GMSI, the owner of a gold mining lease in India, in April and May 2015 for up to a combined total of GBP207,000. The further tranches are part of a shareholders agreement and a share subscription agreement Kolar signed with GMSI in November.
Kolar said it has sufficient funds to last until the third quarter of 2016, but said it will need to raise additional funds should it wish to exercise its option to further invest in GMSI.
"Allowing for the company's budgeted run rate there are sufficient funds to continue operations until the third quarter in the 2016 calendar year and to make the investments in GMSI in March and May 2015 identified above. However these cash flow projections would not enable the exercising of the GMSI option, which is at the discretion of the company. It will therefore be necessary to raise additional funds in order to exercise this option," it said in a statement.
The additional option that Kolar holds, is to invest a further GBP1.32 million in GMSI, which would increase its current stake of 26.26% to 30.2%. Kolar said it currently values its investment in GMSI at around GBP2.8 million.
Kolar shares were up 4% top 2.60 pence per share on Monday morning.
By Joshua Warner; joshuawarner@alliancenews.com; @JoshAlliance
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