Avesoro Resources Regulatory News (ASO)

14 November 2019

Avesoro Resources Inc.

TSX: ASO

AIM: ASO

FINANCIAL RESULTS AND OPERATIONAL UPDATE

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2019

Avesoro Resources Inc. ("Avesoro" or the "Company"), the TSX and AIM listed West African gold producer announces the release of its unaudited Financial Statements ("FS") and Management's Discussion and Analysis ("MD&A") for the quarter (the "Quarter" or "Q3") and nine months ("YTD") ended September 30, 2019.

Serhan Umurhan, Chief Executive Officer of Avesoro, commented: "Avesoro's financial performance in Q3 was affected by the operational issues and lower production levels as announced on October 10, 2019 in the Q3 Production Update. The Company's majority shareholder, Mr Murathan Gunal, has reconfirmed his commitment to continue to provide such financial support as the Company requires for its continued operation as the effects of the transition to contractor mining and other cost saving initiatives settle down.

Mining operations continue at both our New Liberty and Youga gold mines with operational performance having improved since the end of Q3. However, gold production remains lower than budgeted with provisional Group production in October of 5.5koz.

My revised expectations of full year gold production for the Group is between 140,000 - 145,000 oz split 70koz at New Liberty and 75koz Youga."

Financial & Operational Highlights:

YTD 2019

·; Gold production of 102,114 ounces from the New Liberty Gold Mine in Liberia ("New Liberty") and Youga Gold Mine in Burkina Faso ("Youga");

·; Company revenues of US$139.1 million from gold sales of 103,523 ounces at an average realised gold price of US$1,340 per ounce;

·; Consolidated operating cash costs1 of US$1,069 per ounce sold in 9 months to September;

·; Consolidated all in sustaining costs1 ("AISC") of US$1,431 per ounce in 9 months to September;

·; Company EBITDA margin of 5% with EBITDA1 of US$7.0 million;

·; Net operating cash flows of US$15.8 million; and

·; Cash of US$6.3 million and gross debt of US$144.8 million at September 30, 2019.

Q3 2019

·; Gold production of 22,678 ounces in the Quarter, a decrease of 34% on the previous quarter, as a result of production interruptions at both the New Liberty and Youga gold mines;

·; Company revenues of US$31.2 million from gold sales of 21,246 ounces at an average realised gold price of US$1,464 per ounce;

·; Consolidated operating cash costs1 of US$1,315 per ounce sold in Q3;

·; Consolidated AISC1 of US$1,971 per ounce sold in Q3;

·; Company EBITDA margin of -15%, with EBITDA1 of -US$4.7 million in the Quarter; and

·; Net operating cash flows of US$5.7 million in the Quarter.

Notes: 

1 See "Non-GAAP Financial Measures";

Table 1: Consolidated Financial Highlights

Table 2: Key Operations Financial Highlights

Outlook

At Youga, additional mining and auxiliary equipment brought by the mining contractor arrived in October and is expected to improve mining productivity during Q4 2019. However, gold production and unit cost performance will continue to be impacted by low grade ore from the Zergore pit.

In October 2019, New Liberty experienced a pit wall and ramp failure on the north side of the Kinjor-east pit. Mining operations continue at the Marvoe and Kinjor-south pits, but ore production will be reduced, and unit cost underperformance is expected in Q4 2019 as a result.

Higher waste stripping is expected in the short-term as access to the Kinjor pit remains restricted and to complete the final open pit pushback. The Company continues to work on the New Liberty underground Definitive Feasibility Study and the start of underground development remains targeted for H1 2020.

Take-over Bid

On October 17, 2019 the Company's major shareholder Avesoro Jersey Limited ("AJL") formally commenced an insider bid to acquire all of the issued and outstanding shares of the Company, other than shares owned by AJL, at a price of £1.00 per share. A take-over circular containing additional information about the Offer is available at www.sedar.com.

On October 21, 2019 the board of directors of the Company filed a directors' circular that recommends the minority shareholders accept the Offer and deposit their common shares in the Company to the Offer. A copy of the directors' circular is available at www.sedar.com and on the Company's website.

Financial Statements and MD&A

The financial statements are appended to this announcement. The financial statements and the accompanying MD&A are available to review at the Company's website, www.avesoro.com and on www.sedar.com.

Non-GAAP Financial Measures

The Company has included certain non-GAAP financial measures in this press release, including operating cash costs, all-in sustaining costs ("AISC") per ounce of gold sold and EBITDA. These non-GAAP financial measures do not have any standardised meaning. Accordingly, these financial measures are intended to provide additional information and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with International Financial Reporting Standards ("IFRS").

Operating cash costs and AISC are a common financial performance measure in the mining industry but have no standard definition under IFRS. Operating cash costs are reflective of the cost of production.

AISC include operating cash costs, net-smelter royalty, corporate costs, sustaining capital expenditure, sustaining exploration expenditure and capitalised stripping costs. The Company reports cash costs on an ounce of gold sold basis.

The Company calculates EBITDA as net profit or loss for the period excluding finance costs, income tax expense and depreciation. EBITDA does not have a standardised meaning prescribed by IFRS and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS. EBITDA excludes the impact of cash costs of financing activities and taxes and the effects of changes in working capital balances and therefore is not necessarily indicative of operating profit or cash flow from operations as determined under IFRS. Other companies may calculate EBITDA differently.

Other companies may calculate these measures differently and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS.

Market Abuse Regulation (MAR) Disclosure

Certain information contained in this announcement would have been deemed inside information for the purposes of Article 7 of Regulation (EU) No 596/2014 until the release of this announcement.

Contact Information

About Avesoro Resources Inc.

Avesoro Resources is a West Africa focused gold producer and development company that operates two gold mines across West Africa and is listed on the Toronto Stock Exchange ("TSX") and the AIM market operated by the London Stock Exchange ("AIM"). The Company's assets include the New Liberty Gold Mine in Liberia ("New Liberty") and the Youga Gold Mine in Burkina Faso ("Youga").

New Liberty has an estimated Proven and Probable Mineral Reserve of 17Mt with 1,365,000 ounces of gold grading 2.49g/t and an estimated Measured and Indicated Mineral Resource of 20.47Mt with 1,748,200 ounces of gold grading 2.66g/t and an estimated Inferred Mineral Resource of 3.0Mt with 271,000 ounces of gold grading 2.8g/t. A supporting Technical Report summarising the PFS, prepared in accordance with CIM guidelines, is set out in an NI 43-101 compliant Technical Report dated January 31, 2019 and entitled "NI 43-101 Pre-Feasibility Report, Mineral Resource and Mineral Reserve Update for the New Liberty Gold Mine, Liberia" and is available on SEDAR at www.sedar.com. 

Youga has an estimated Proven and Probable Mineral Reserve of 14.7Mt with 814,900 ounces of gold grading 1.72g/t and a combined estimated Measured and Indicated Mineral Resource of 22.16Mt with 1,189,100 ounces of gold grading 1.67g/t and an Inferred Mineral Resource of 7.6Mt with 377,000 ounces of gold grading 1.5g/t. A Technical Report dated 20 June 2019 prepared in accordance with the requirements of National Instrument 43-101 and entitled " NI 43-101 Technical Report Mineral Resource and Mineral Reserve Update for the Youga Gold Mine, Burkina Faso" is available on SEDAR at www.sedar.com and on the Company's corporate website www.avesoro.com. 

For more information, please visit www.avesoro.com

Qualified Persons

The Company's Qualified Person is Mark J. Pryor, who holds a BSc (Hons) in Geology & Mineralogy from Aberdeen University, United Kingdom and is a Fellow of the Geological Society of London, a Fellow of the Society of Economic Geologists and a registered Professional Natural Scientist (Pr. Sci.Nat) of the South African Council for Natural Scientific Professions. Mark Pryor is an independent technical consultant with over 25 years of global experience in exploration, mining and mine development and is a "Qualified Person" as defined in National Instrument 43 -101 "Standards of Disclosure for Mineral Projects" of the Canadian Securities Administrators and has reviewed and approved this press release. Mr. Pryor has verified the underlying technical data disclosed in this press release.

Forward Looking Statements

Certain information contained in this press release constitutes forward looking information or forward-looking statements within the meaning of applicable securities laws. This information or statements may relate to future events, facts, or circumstances or the Company's future financial or operating performance or other future events or circumstances. All information other than historical fact is forward looking information and involves known and unknown risks, uncertainties and other factors which may cause the actual results or performance to be materially different from any future results, performance, events or circumstances expressed or implied by such forward-looking statements or information. Such statements can be identified by the use of words such as "anticipate", "plan", "continue", "estimate", "expect", "may", "will", "would", "project", "should", "believe", "target", "predict" and "potential". No assurance can be given that this information will prove to be correct and such forward looking information included in this press release should not be unduly relied upon. Forward looking information and statements speak only as of the date of this press release.

Forward looking statements or information in this press release include the Company meeting its annual production guidance for 2019 of 140,000 - 145,000 ounces of gold, statements regarding the Company's expectation that mining productivity will improve at Youga during Q4 2019 and statements regarding underground development at the New Liberty Gold Mine expected to commence in H1 2020.

In making the forward looking information or statements contained in this press release, assumptions have been made regarding, among other things: general business, economic and mining industry conditions; interest rates and foreign exchange rates; the continuing accuracy of Mineral Resource and Reserve estimates; geological and metallurgical conditions (including with respect to the size, grade and recoverability of Mineral Resources and Reserves) and cost estimates on which the Mineral Resource and Reserve estimates are based; the supply and demand for commodities and precious and base metals and the level and volatility of the prices of gold; market competition; the ability of the Company to raise sufficient funds from capital markets and/or debt to meet its future obligations and planned activities and that unforeseen events do not impact the ability of the Company to use existing funds to fund future plans and projects as currently contemplated; the stability and predictability of the political environments and legal and regulatory frameworks including with respect to, among other things, the ability of the Company to obtain, maintain, renew and/or extend required permits, licences, authorizations and/or approvals from the appropriate regulatory authorities; that contractual counterparties perform as agreed; and the ability of the Company to continue to obtain and retain qualified staff (including employees and contractors) and equipment in a timely and cost-efficient manner to meet its demand.

Actual results could differ materially from those anticipated in the forward-looking information or statements contained in this press release as a result of risks and uncertainties (both foreseen and unforeseen) and should not be read as guarantees of future performance or results and will not necessarily be accurate indicators of whether or not such results will be achieved. These risks and uncertainties include the risks normally incidental to exploration and development of mineral projects and the conduct of mining operations (including exploration failure, cost overruns or increases, and operational difficulties resulting from plant or equipment failure, among others); the inability of the Company to obtain required financing when needed and/or on acceptable terms or at all; risks related to operating in West Africa, including potentially more limited infrastructure and/or less developed legal and regulatory regimes; health risks associated with the mining workforce in West Africa; risks related to the Company's title to its mineral properties; the risk of adverse changes in commodity prices; the risk that the Company's exploration for and development of mineral deposits may not be successful; the inability of the Company to obtain, maintain, renew and/or extend required licences, permits, authorizations and/or approvals from the appropriate regulatory authorities and other risks relating to the legal and regulatory frameworks in jurisdictions where the Company operates, including adverse or arbitrary changes in applicable laws or regulations or in their enforcement; competitive conditions in the mineral exploration and mining industry; risks related to obtaining insurance or adequate levels of insurance for the Company's operations; that Mineral Resource and Reserve estimates are only estimates and actual metal produced may be less than estimated in a Mineral Resource or Reserve estimate; the risk that the Company will be unable to delineate additional Mineral Resources; risks related to environmental regulations and cost of compliance, as well as costs associated with possible breaches of such regulations; uncertainties in the interpretation of results from drilling; risks related to the tax residency of the Company; the possibility that future exploration, development or mining results will not be consistent with expectations; the risk of delays in construction resulting from, among others, the failure to obtain materials in a timely manner or on a delayed schedule; inflation pressures which may increase the cost of production or of consumables beyond what is estimated in studies and forecasts; changes in exchange and interest rates; risks related to the activities of artisanal miners, whose activities could delay or hinder exploration or mining operations; the risk that third parties to contracts may not perform as contracted or may breach their agreements; the risk that plant, equipment or labour may not be available at a reasonable cost or at all, or cease to be available or resign, or in the case of labour, may undertake strike or other labour actions; the inability to attract and retain key management and personnel; and the risk of political uncertainty, terrorism, civil strife, or war in the jurisdictions in which the Company operates, or in neighbouring jurisdictions which could impact on the Company's exploration, development and operating activities.

Although the forward-looking statements contained in this press release are based upon what management believes are reasonable assumptions, the Company cannot provide assurance that actual results or performance will be consistent with these forward-looking statements. The forward-looking information and statements included in this press release are expressly qualified by this cautionary statement and are made only as of the date of this press release. The Company does not undertake any obligation to publicly update or revise any forward-looking information except as required by applicable securities laws.

Condensed Interim Consolidated Financial Statements (Unaudited)

Avesoro Resources Inc.

For the Three and Nine Months Ended September 30, 2019 and 2018

(stated in thousands of US dollars)

Registered office: 199 Bay Street

Suite 5300

Commerce West Street

Toronto

Ontario, M5L 1B9

Canada

Company registration number: 776831-1

Company incorporated on: 1 February 2011

The accompanying notes are an integral part of these condensed interim consolidated financial statements.

The accompanying notes are an integral part of these condensed interim consolidated financial statements.

The accompanying notes are an integral part of these condensed interim consolidated financial statements.

The accompanying notes are an integral part of these condensed interim consolidated financial statements.

1 Nature of operations and basis of preparation

Avesoro Resources Inc. ("Avesoro" or the "Company"), was incorporated under the Canada Business Corporations Act on February 1, 2011. The focus of Avesoro's business is the exploration, development and operation of gold assets in West Africa, specifically the New Liberty Gold Mine ("New Liberty") in Liberia and the Youga Gold Mine ("Youga") in Burkina Faso.

The Company's parent company is Avesoro Jersey Limited ("AJL"), a company incorporated in Jersey and Mr. Murathan Doruk Gűnal is the ultimate beneficial owner.

These condensed interim consolidated financial statements ("interim financial statements") have been prepared in accordance with International Accounting Standard ("IAS") 34, "Interim Financial Reporting". They do not include all disclosures that would otherwise be required in a complete set of financial statements. They follow accounting policies and methods of their application consistent with the audited consolidated financial statements for the year ended December 31, 2018 except for the adoption of new accounting policies as discussed below. Accordingly, they should be read in conjunction with the Company's audited consolidated financial statements for the year ended December 31, 2018.

These interim financial statements were authorised by the Board of Directors on November 13, 2019.

New accounting policies

The Company has initially adopted IFRS 16 from January 1, 2019. IFRS 16 introduced a single, on-balance sheet accounting model for lessees. As a result, the Company as a lessee, has recognised right-of-use assets representing its rights to use the underlying assets and lease liabilities representing its obligation to make lease payments. Lessor accounting remains the same. On transition to IFRS 16, the Company elected to apply the practical expedient to grandfather the assessment of which transactions are leases. It applied IFRS 16 only to contracts that were previously assessed as leases. Accordingly, the comparative information presented for 2018 has not been restated. Contracts that were not identified as lease under IAS 17 and IFRC 4 were not reassessed. Therefore, the definition of lease under IFRS 16 has been applied to contracts entered into or changed on or after January 1, 2019 and no new leases were identified.

The Company leases drill rigs and the fuel storage facility at New Liberty, which were previously classified as finance leases under IAS 17. For the finance leases, the carrying amount of the right-of-use asset and lease liability at January 1, 2019 were determined as the carrying amount of the lease asset and lease liability under IAS 17 immediately before date of IFRS 16 adoption.

In July 2019, the Company entered into an open pit mining contract with Orkun Group Sarl (the "Mining Contractor") at Youga. The mining programme under the contract is based on the excavation of between 800,000 to 900,000 bank cubic metres ("BCM") of material per month, including a minimum of 120,000 tonnes of ore delivered to the ROM pad, per month. Over the life of mine, the contract is based on the excavation of a minimum of 42 million BCM ("Minimum TMM") of material over the life of mine which can be increased, at the Company's option, to 60 million BCM on the same terms.

The contract price of excavation during the Minimum TMM period is US$4.26 per BCM reducing to US$3.75 per BCM thereafter for the remainder of the Contract. The Mining Contractor will pay an earn-in fee of US$0.51 per BCM to acquire the Company's existing heavy mining equipment fleet ("Existing Fleet") in Youga which will be off-set against the contract price during the Minimum TMM period. Legal title and control of the Existing Fleet passes at the end of the Minimum TMM period.

1 Nature of operations and basis of preparation (continued)

The Mining Contractor also committed to supplement the Existing Fleet with additional equipment ("Supplemental Fleet") at its own cost. This Supplemental Fleet has been determined as an identified asset under IFRS 16. Although the Company obtains substantially all the economic benefits of the identified asset, Management have determined that the right to direct the identified asset lies with the Mining Contractor based on the following critical factors:

·; the Mining Contractor makes the decisions on where and when to deploy the identified asset;

·; the Mining Contractor has the right to change how to mine the excavation output; and

·; the Mining Contractor manages the day-to-day mining operations and employs the personnel required to fulfil the mining contract.

Accordingly, whilst judgmental Management concluded that this mining contract does not contain a lease. Management is aware of a draft IFRS Interpretations Committee tentative agenda decision (included in the September 2019 IFRIC Update) assessing the judgement in determining who has the right to direct the assets in the context of a shipping contract. Based on the tentative agenda decision, principles in relation to the shipping contract may also be relevant in considering the Company's mining contract. Management will revisit the accounting treatment detailed above following finalisation of the Committee's agenda decision.

A number of other new standards are effective from January 1, 2019 but these do not have a material effect on the Company's financial statements.

Going concern

In July 2019, Avesoro Holdings Limited ("AHL") which is the Company's ultimate parent company and controlled by Mr. Murathan Doruk Günal, the eldest son of the Company's Chairman, reported that it had breached two undertakings contained in the parent company guarantee that AHL has provided to the Company's lenders Nedbank Limited and FirstRand Bank Limited (collectively the "Lenders") in respect of the Company's bank borrowings.

The technical breaches for the late submission of audited accounts of AHL to the Lenders and AHL's total equity financial covenant at December 31, 2018 being lower than the required level represent events of default by the Company under the cross-default provisions of the loan documents and allow the Lenders to accelerate repayment of the bank borrowings before their final maturity date.

In September 2019, the Lenders agreed to waive the events of default.

The operational transition to contractor mining at both mines earlier in the year, the security incident at Youga in August 2019 and heavy rainfall at New Liberty leading to the flooding of the Kinjor pit have resulted in disruption to mining activities and reduced gold production year to date.

AJL, the Company's major shareholder, has reiterated its commitment to continue to support the financial needs of the Company whilst the production guidance is under review and the offer to take the Company private as discussed in Note 15 remains open for acceptance by minority shareholders. AJL and Mapa, a company controlled by the Company's Chairman, have deferred all principal repayments and associated interest payments on the AJL Working Capital Facility and Mapa equipment loans that are overdue and would have fallen due for payment before October 31, 2020 to October 31, 2020. AJL provided $15 million of additional loans up to September 30, 2019 and a further $5 million loan was agreed in October 2019 of which $3.5 million has been drawn to date to satisfy the Company's near-term cash flow needs and working capital shortfall.

The Company has received confirmation that Mr. Murathan Doruk Günal intends to support the Group for at least one year from the date of these interim financial statements. On this basis, the Directors and Management continue to adopt the going concern basis of accounting in preparing the interim financial statements.

2 Segment information

The Company is engaged in the exploration, development and operation of gold projects in the West African countries of Liberia and Burkina Faso. Information presented to the Chief Executive Officer for the purposes of resource allocation and assessment of segment performance is focused on the geographical location of mining operations. The reportable segments under IFRS 8 are as follows:

·; New Liberty operations;

·; Burkina operations which include the Youga Gold Mine and the Balogo satellite deposit;

·; Exploration; and

·; Corporate.

Following is an analysis of the Group's results, assets and liabilities by reportable segment for the three months ended September 30, 2019:

Following is an analysis of the Group's results, assets and liabilities by reportable segment for the nine months ended September 30, 2019:

2 Segment information (continued)

Following is an analysis of the Group's results, assets and liabilities by reportable segment for the three months ended September 30, 2018:

Following is an analysis of the Group's results, assets and liabilities by reportable segment for the nine months ended September 30, 2018:

3 Administrative and other expenses

4 Income taxes

Tax for the period comprises of:

5 Earnings per share ("EPS")

6 Trade and other receivables

Other receivables as at September 30, 2019 include VAT receivable from the Burkina Faso Government of $6.8 million (December 31, 2018: $3.1 million) and a financial asset with respect to factored VAT receivable from the Burkina Faso Government of $nil (December 31, 2018: $6.4 million).

7 Inventories

Ore stockpiles as at September 30, 2019 are stated at their net realisable values after cumulative write-down at New Liberty of $0.8 million (December 31, 2018: $1.6 million) and a provision for obsolescence of consumables at Youga of $0.6 million (December 31, 2018: $0.7 million).

8 Intangible assets - Exploration and evaluation assets

Intangible assets as at September 30, 2019 are in respect of capitalised exploration and evaluation assets at Ndablama and Ouaré, located 44 kilometres east of the Youga processing plant. Ouare is the subject of an infill drilling campaign to upgrade the confidence level and classification of the existing mineral resources. Resource modelling and pit design shows that this satellite deposit will add further mine life to Youga.

8 Intangible assets - Exploration and evaluation assets (continued)

Exploration and evaluation costs charged to profit and loss arose from the following licence areas:

9 Property, plant and equipment

Mining equipment with carrying value of $3.9 million had been written off after being damaged beyond repair during a security breach at Youga in August 2019.

10 Borrowings

(a) Bank loans

On December 17, 2013 the Company entered into an agreement for an $88 million project finance loan facility with Nedbank Limited and FirstRand Bank Limited (collectively the "Lenders"), (the "Senior Facility"), and also entered into a subordinated loan facility agreement for $12 million with RMB Resources (the "Subordinated Facility"). On December 9, 2015 the Company entered into an agreement for an additional $10 million Tranche B Senior Facility (together with the Senior Facility and the Subordinated Facility the "Loan Facilities") provided by the Lenders. These Loan Facilities, which have been fully drawn, financed the development of the Company's New Liberty Gold Mine. $38.4 million of the Senior Facility principal has been repaid to date.

(b) Working Capital Facility with AJL

Gross proceeds of new tranches during the period ended September 30, 2019 was $15.3 million (year ended December 31, 2018: $21.9 million) of which $0.4 million (year ended December 31, 2018: $3.9 million) has been credited to capital contribution. Gross repayments during the period ended September 30, 2019 amounted to $nil (year ended December 31, 2018: $13.7 million) of which $nil (year ended December 31, 2018: $2.9 million) has been charged to capital contribution.

10 Borrowings (continued)

(b) Working Capital Facility with AJL (continued)

In August 2019, principal repayments and associated interest payments on the loans payable to AJL, which were overdue and would have fallen due for payment before October 31, 2020, have been deferred to October 31, 2020.

(c) Related party loans payable to Mapa İnşaat ve Ticaret A.Ş. ("Mapa")

Gross proceeds of new loans during the period ended September 30, 2019 was $nil (year ended December 31, 2018: $10.3 million) of which $nil (year ended December 31, 2018: $0.4 million) has been credited to capital contribution. Principal repayments during the period ended September 30, 2019 amounted to $nil (year ended December 31, 2018: $4.8 million) and interest repayments during the period ended September 30, 2019 amounted to $0.4 million (year ended December 31, 2018: $1.7 million).

In August 2019, principal repayments and associated interest on the equipment finance loans to Mapa, which were overdue and would have fallen due for payment before October 31, 2020, have been deferred to October 31, 2020.

11 Lease liabilities

Lease liabilities as at September 30, 2019 relate to drill rigs and the fuel storage facility at New Liberty. Lease liability is measured at the present value of the leased payments. Lease payments are apportioned between the finance charges and reduction of lease liability using the incremental borrowing rate implicit in the lease to achieve a constant rate of interest on the remaining balance of the liability.

12 Equity

(a) Authorised

Unlimited number of common shares without par value.

(b) Issued

12 Equity (continued)

(c) Stock options

Information relating to stock options outstanding at September 30, 2019 is as follows:

13 Non-controlling interest

The composition of the non-controlling interests held by the Government of Burkina Faso is as follows:

14 Related party transactions

(a) Borrowings

The Company's related party loans payable to Mapa, Working Capital Facility with AJL and loan payable to AJL are disclosed in Note 10.

(b) Royalty payable to AJL

Pursuant to the share purchase agreement between the Company and AJL on the acquisition of the Youga Gold Mine in December 2017, the Company accrued a royalty payable to AJL of $1.7 million for the nine months ended September 30, 2019 in respect of a net smelter return on the Youga Gold Mine.

(c) Provision/(purchases) of goods and services

The Company also provided/(purchased) the following services from related parties:

* Company's gross billings as agents in the procurement, shipping and handling of consumables

14 Related party transactions (continued)

Included in trade and other receivables is a receivable from related parties of $2.9 million as at September 30, 2019 (December 31, 2018: $3.4 million).

Included in trade and other payables is $4.5 million payable to related parties as at September 30, 2019 (December 31, 2018: $3.3 million).

15 Subsequent events

On October 1, 2019 a pit wall and ramp failure occurred in the north side of the Kinjor-east pit at New Liberty. There were no injuries or equipment damage, however, mining activities within the Kinjor-East pit have been suspended. Mining is continuing at the Marvoe and Kinjor-South pits at New Liberty.

On October 17, 2019 AJL formally commenced an insider bid to acquire all of the issued and outstanding shares of the Company, other than shares owned by AJL, at a price of £1.00 per share (the "Offer"). A take-over circular containing additional information about the Offer is available at www.sedar.com.

On October 21, 2019 the board of directors of the Company filed a directors' circular that recommends that minority shareholders of the Company accept the Offer and deposit their common shares in the Company to the Offer. A copy of the directors' circular is available at www.sedar.com and on the Company's website.

On October 21, 2019 the Company entered into a loan agreement in connection with an additional working capital facility of up to $5 million with AJL ("New Facility") to assist with satisfying the Company's near term cashflow needs. The Company has drawn a first tranche of $3.5 million with the second tranche of up to $1.5 million drawable until December 31, 2019, at the mutual agreement of both parties. This New Facility is unsecured and is subordinated to the Company's existing facilities. Interest is charged on the drawn amount at a fixed rate of 3.0 per cent per annum. The tranches of the New Facility are due to be repaid in full no later than 12 months following drawdown of the relevant tranche.