Last checked at 30 Jun 2021 11:07
China Nonferrous Gold Limited
(“CNG” or the “Company”)
Final Results
for the twelve months ended 31 December 2020
China Nonferrous Gold Limited 中国有色黄金有限公司 (AIM: CNG), the mineral exploration and development company currently developing the Pakrut gold project in the Republic of Tajikistan, today announces its final results for the year ended 31 December 2020.
The results below are extracted from the Company’s audited Annual Report and Financial Statements. Copies of the Annual Report have been dispatched to shareholders today and are available on the Company’s website (www.cnfgold.com).
The Company also confirms that it will post a notice convening the annual general meeting of the Company in due course. A further announcement will be made when it is dispatched.
For further information please visit the Company’s website (www.cnfgold.com) or contact:
China Nonferrous Gold Limited
Zhang Hui, Managing Director
Tel: +86 10 8442 6662
WH Ireland Limited (NOMAD & Broker)
Katy Mitchell, James Sinclair-Ford
Tel: 0207 220 1666
Blytheweigh (PR)
Tim Blythe
Tel: +44 (0)20 7138 3224
Project Summary
The Pakrut gold project, of which CNG has 100 per cent ownership, is situated in Tajikistan approximately 120 km 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 progressing well in several important aspects, with the Pakrut gold mine entering normal production and achieving full operational capacity in 2020.
The Company made significant achievements in 2020 and became an important gold-production enterprise in Tajikistan. The Pakrut gold mine achieved its internal production targets for 2020, which brings steady cash flows to support the sustainable development of the company.
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.
The information contained within this announcement is deemed by the Company to constitute inside information under the Market Abuse Regulation (EU) No. 596/2014.
Chief Executive Officer’s Statement
As CEO of the board, it gives me great pleasure to present the CEO’s statement of the annual report for the year ended 31 December 2020. Following the first successful normal production work in 2019, the Company has progressed well in several important aspects, with the Pakrut gold mine entering formal production and achieving full operational capacity in 2020.
The Company made significant achievements in 2020 and became an important gold-production enterprise in Tajikistan. The Pakrut gold mine achieved its internal production targets for 2020, which brings steady cash flows to support the sustainable development of the Company.
Operation
From January to December 2020, a total of 640,036 tons of ore was extracted from the Pakrut gold mine (2019: 731,600 tons), and a total of 684,526 tons of ore were processed at a grade of 2.16 g/t, 19,874 tons of gold concentrate were produced at a grade of 68.52 g/t, 1,126 kg gold bullion were poured with a comprehensive recovery rate of 80.01% (2019:1,168 kg gold bullion).
COVID-19
With COVID-19 continuing to have a significant impact on the global economy, our priority is the safety and health of our people and ensuring the Company’s operations can continue in operation as normal. Since the outbreak of COVID-19 in Tajikistan on April 30 2020, the Company has taken appropriate steps and effective measures to ensure that staff at protected at site. To date operations at the mine site at Pakrut continue as normal, and there are no confirmed or suspected cases in the Company in Tajikistan or China.
Through preventative measures such as social distancing and self-isolation to reduce COVID-19 spreading and allowing healthcare systems to make critical adaptations for testing and triage capacity, the impact on working conditions has been reduced as much as is practical. Beijing has sought to reduce channels for the transmission of the virus and there have been no cases reported within the Company to date. The mine is still in normal operation. The amount of production personnel at the mine site remains sufficient to meet the required production level, so production is still progressing well at site in spite of COVID-19 and the target for the first half of 2021 is not affected by the suspended flights. In addition, the Company organized a private chartered flight to transport around 45 Chinese employees to Tajikistan from China on 8 August 2020. We therefore remain confident that the annual internal production target can be achieved.
Financial results
The development and construction work at the Pakrut Gold Project was finalised at the end of the 2018 financial year. The Group therefore generated revenue from full operational production from the beginning of the 2019 financial year.
Administration expenditure for the year under review was US$17,827,290 (2019: US$16,336,541). The main reason for the increase this year is due to property insurance premiums, epidemic isolation costs for employees and supplementary payment of utility bills from 2016 to 2020, which the authority of Electricity and Water left some outstanding fees to collect.
The overall loss incurred by the Group was US$6,357,743 (2019: US$21,981,000). Pakrut generated gold sales revenue of US$64,516,000 (2019: US$49,157,000), a significant increase as a result of entering full operational production.
During the course of the year, the Group did not enter into any new financing agreements with shareholders or their associates. Instead, the original repayment dates in December 2019 on the loan contracts previously signed with China Nonferrous Metals International Mining Co., Ltd. and China Nonferrous Metals Mining Group Co., Ltd. (“CNMC Loans”) were extended once more and are now repayable in December 2022.
In July 2018, CNMC and CNMC Trade Co., Ltd. signed an agreement transferring one of the loans of US$20 million to China Nonferrous Mining Group Co, Ltd. to CNMC Trade Co., Ltd which constituted a related party under the AIM Rules for Companies. In July 2019, the remaining $126.5 million was also transferred to the same party.
In 2020, the Group repaid US$10 million to China Construction Bank Corporation Macau Branch (“CCBC”) in respect of its existing loan agreement, of which US$85 million remains outstanding at the year end. During 2020, the Group signed a new financing agreement with CCBC for a loan of $14.55 million, repayable in March 2021.
The existing CCBC loan facilities total US$99.55 million and the CNMC and CNMIM loan facilities total US$289 million so that, including interest, US$389 million of loans were payable as at 31 December 2020 (approximately US$349m without interest). US$349m（without interest）is payable within one year of the financial statements, which includes US$99.55 million due to CCBC and the remaining balance due to shareholders. As the major shareholder and ultimate beneficial owner, CNMIM and CNMC will continue strongly supporting the Company, especially on the extension of the loans. The loan will be extended again even though it was expired. In addition, regarding the bank facilities, the Company is confident that it will use the bank’s new loans to repay/replace the debts. The CCBC loan is due for repayment in the first half of 2021.
The Group has continued production throughout 2021 despite the outbreak of COVID-19, enabling it to raise sufficient working capital. As announced on 15 July 2020, in order to ensure the repayment of existing loans a broader refinancing will be required. Discussions are ongoing and the remaining discussions are expected to be completed in the near term. The parent Company CNMC has committed to support the CNG group should this be required for a period of at least 12 months from the date of approval of these financial statements.
Events after the Reporting Period
In January 2021, the Company executed an agreement with China CITIC Bank Corporation Limited (Zhuhai Branch) (“CITIC”) for a loan facility of up to CNY 300million which is equivalent to US$46.37m. The CITIC Loan facility is for a maximum of 12 months and is repayable 12 months from first drawdown. The terms of the CITIC Loan include an annual interest rate at 2.7% plus 6 month LIBOR. US$20m of the CITIC Loan was drawn down in January 2021 to replace the China Construction Bank (CCB) Macau loan of US$20m which fell due in January 2021. A second drawdown of US$14.55m in March 2021 was used to repay the CCB Asia loan of US$14.55m which fell due for repayment in March 2021.
In March 2021, the Company also extended the repayment period of loans in place with CNMC Trade Company Limited (CNMC Trade), totaling US$146.50 million, to December 2022. The Company currently has total debt facilities (including banking facilities), before interest, of c.US$319.5 million. The CCBC loan which is payable in the first half of 2021 has been repaid with a new loan from Bank of Shanghai (Hong Kong).
Outlook
The Company is continuing to enhance its production capacity. Whilst improving production, the Company is also focusing on perfecting and improving the smelting process by reducing production costs, increasing recovery rates and improving competitiveness.
The Company has long been dedicated to becoming a significant gold producer in Central Asia. The Company has also established a strong relationship with the government of Tajikistan and other Central Asian countries, and it will consider other appropriate acquisitions at the right time, although there can be no guarantee that any acquisition will occur.
While we have taken big strides in the production and operation of the Pakrut gold mine and achieved much, there are still challenges to overcome and targets to meet, all of which I am confident to accomplish in the coming months.
Uncertainty created by the coronavirus pandemic on production and operations still exists in Tajikistan, and the long term effects are difficult to predict and estimate. The Company will make every effort to meet pandemic prevention and control requirements, as well as stabilizing and expanding the production and operation of Pakrut gold mine.
I would like to take this opportunity to thank all our employees, management and advisers for their continued hard work in 2020. I would also like to extend my thanks to all our stakeholders for their continued backing over the years. I very much look forward to updating our shareholders further on the mine developments, production levels, new strategy and direction.
Zhang Hui
Chief Executive Officer
30 June 2021
Auditors Opinion
We have audited the financial statements of China Nonferrous Gold Limited (the ‘group’) for the year ended 31 December 2020 which comprise the Consolidated Statement of Comprehensive Income, the Consolidated Statement of Financial Position, the Consolidated Statement of Changes in Equity, the Consolidated Statement of Cash Flows and notes to the financial statements, including significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union.
In our opinion, the group financial statements:
give a true and fair view of the state of the group’s affairs as at 31 December 2020 and of its loss for the year then ended; andhave been properly prepared in accordance with IFRSs as adopted by the European Union.Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the financial statements section of our report. We are independent of the company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard as applied to listed entities, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the director's use of the going concern basis of accounting in the preparation of the financial statements is appropriate. Our evaluation of the directors’ assessment of the group’s ability to continue to adopt the going concern basis of accounting included an analysis of qualitative and quantitative aspects within management’s forecast financial information up to the end of 2023, as well as obtaining a letter of support from the group’s related party lenders, and reviewing the latest financial information of this entity.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.
Our application of materiality
The scope of our audit was influenced by our application of materiality. We determined materiality for the financial statements as a whole to be US$4,478,000 (2019: US$3,500,000) for the group financial statements using 1% of gross assets as a basis.
We consider gross assets to be the most relevant determinant of the group’s financial position and performance used by shareholders, with the key financial statement balances being producing mines, other property, plant and equipment, inventory and cash. The going concern of the group is dependent on its ability to fund operations going forward, as well as on the valuation of its assets, which represent to the underlying value of the group. However, we consider that loss before tax will also be a key indicator of performance to financial statements users as the group is still in the early stages of its production cycle and continues to seek to maximise production and operating efficiencies at the mine.
Whilst materiality for the financial statements as a whole was set a US$4,478,000 each significant component of the group was audited to an overall materiality ranging between US$21,000 and US$2,310,000 with performance materiality set at 70%. We applied the concept of materiality both in planning and performing our audit, and in evaluating the effect of misstatement.
Our approach to the audit
In designing our audit we determined materiality, as above, and assessed the risk of material misstatement in the financial statements. In particular, we looked at areas requiring the directors to make subjective judgements, for example in respect of significant accounting estimates including impairment of producing mines, and considered future events that are inherently uncertain. We also addressed the risk of management override of internal controls, including evaluating whether there was evidence of bias by the directors that represents a risk of material misstatement due to fraud.
A full scope audit was performed on the complete financial information of the group’s operating components located in Tajikistan and United Kingdom, with the group’s key accounting function for all being based in China with a local function in Tajikistan.
The group’s Tajik operations are audited by a non PKF network firm. The audit team discussed significant events occurring during the year and post year-end period with the component auditor and performed a review of the component auditor’s working papers, including review of planning and completion stage group reporting. The group audit team are responsible for the scope and direction of the audit process. All other work was performed remotely by PKF Littlejohn LLP.
Key audit matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of the current period and include the most significant assessed risks of material misstatement (whether or not due to fraud) we identified, including those which had the greatest effect on: the overall audit strategy, the allocation of resources in the audit; and directing the efforts of the engagement team. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
Key Audit Matter | How our scope addressed this matter |
Valuation of Producing Mines – Pakrut LLC (Note 12) |
|
Producing mines within PPE is the most material balance within the financial statements and represents the key source from which the group generates income. The carrying value of Producing mines, as at 31 December 2020, is $379m (2019: $390m). There is the risk that the value of the mine is impaired. | Our work in this area included: A review of management’s impairment assessment, including consideration of any net present value calculations used, providing challenge as to the source of the inputs and obtaining support where possible;Ensuring valid mining licenses are held;Considering any potential impairment indicators through discussion with management and the component auditor, who has visited the mine site as part of their audit, as well as review of announcements to the market and Board minutes for evidence of impairment; andA review of management’s assessment of the impact of COVID-19 on operations at the mine site as well as external macroeconomic factors, and consideration of whether there is evidence to suggest the mine asset should be impaired.
We noted that the lifespan of the mine used in the depletion calculation is 18 years which is 8 years more than the licence currently held by CNG permits. Based on the information available to management there is currently no reason to expect the licence extension will not be granted however if it were not then there is the risk that the key inputs into this calculation would need to be amended. This could lead to a material impact on the related charge within the financial statements and therefore on the carrying value of Producing mines. |
Other information
The other information comprises the information included in the annual report, other than the financial statements and our auditor’s report thereon. The directors are responsible for the other information contained within the annual report. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
Responsibilities of directors
As explained more fully in the statement of directors’ responsibilities, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are responsible for assessing the company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the company or to cease operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below:
We obtained an understanding of the group and the sector in which it operates to identify laws and regulations that could reasonably be expected to have a direct effect on the financial statements. We obtained our understanding in this regard through discussions with management and the internal legal team in Pakrut. We also selected a specific audit team based on experience with auditing entities within this industry facing similar audit and business risks.We determined the principal laws and regulations relevant to the group and parent company in this regard to be those arising from:AIM RulesLocal industry regulations in TajikistanLocal tax and employment law in China and TajikistanWe designed our audit procedures to ensure the audit team considered whether there were any indications of non-compliance by the company with those laws and regulations. These procedures included, but were not limited to:enquiries of management;review of Board minutes;review of legal ledger accounts;A review of RNS announcements;A review of component auditor’s work surrounding local laws and regulations in Tajikistan.We also identified the risks of material misstatement of the financial statements due to fraud. Aside from the non-rebuttable presumption of a risk of fraud arising from management override of controls, we did not identify any significant fraud risks.As in all of our audits, we addressed the risk of fraud arising from management override of controls by performing audit procedures which included, but were not limited to: the testing of journals, reviewing accounting estimates for evidence of bias; and evaluating the business rationale of any significant transactions that are unusual or outside the normal course of business.Because of the inherent limitations of an audit, there is a risk that we will not detect all irregularities, including those leading to a material misstatement in the financial statements or non-compliance with regulation. This risk increases the more that compliance with a law or regulation is removed from the events and transactions reflected in the financial statements, as we will be less likely to become aware of instances of non-compliance. The risk is also greater regarding irregularities occurring due to fraud rather than error, as fraud involves intentional concealment, forgery, collusion, omission or misrepresentation.
A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council’s website at: www.frc.org.uk/auditors responsibilities. This description forms part of our auditor’s report.
Use of our report
This report is made solely to the company’s members, as a body, in accordance with our engagement letter dated 1 June 2020. Our audit work has been undertaken so that we might state to the company’s members those matters we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone, other than the company and the company's members as a body, for our audit work, for this report, or for the opinions we have formed.
Joseph Archer (Engagement Partner)
For and on behalf of PKF Littlejohn LLP
Statutory Auditor
15 Westferry Circus
Canary Wharf
London E14 4HD
Date:
Consolidated Statement of Comprehensive Income, Year Ended 31 December 2020
CHINA NONFERROUS GOLD LIMITED
Notes to the Financial Statements (continued)
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| 2020 | 2019 | ||
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| US$000 | US$000 | ||
Revenue | 3 | 64,516 | 49,157 | ||
Cost of sales |
| (35,297) | (32,842) | ||
Gross Profit |
| 29,219 | 16,315 | ||
Other operating income |
| 1 | 116 | ||
Administrative expenses | 6 | (17,827) | (16,337) | ||
Loss on foreign exchange |
| (1,076) | (905) | ||
Other operating expenses |
| (46) | (136) | ||
Operating Profit/(Loss) |
| 10,271 | (947) | ||
Finance income | 8 | 196 | 270 | ||
Finance costs | 8 | (15,999) | (20,796) | ||
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Loss before Income Tax |
| (5,532) | (21,473) | ||
Income tax | 7 | (824) | (508) | ||
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Loss for the year attributable to owners of the parent |
| (6,356) | (21,981) | ||
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Total comprehensive income attributable to owners of the parent for the year |
| (6,356) | (21,981) | ||
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Basic and Diluted Earnings per share attributable to owners of the parent (expressed in cents per share) | 9 | (1.66) | (5.75) | ||
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All of the activities of the Group are classed as continuing.
Consolidated Statement of Financial Position
| Note | As at 31 December 2020 US$000 | As at 31 December 2019 US$000 |
Non-Current Assets |
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Property, plant and equipment | 12 | 373,201 | 402,548 |
Total Non-Current Assets |
| 373,201 | 402,548 |
Current Assets |
|
|
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Inventories | 15 | 15,911 | 16,856 |
Trade and other receivables | 16 | 5,649 | 4,766 |
Cash and cash equivalents |
| 27,196 | 11,120 |
Total Current Assets |
| 48,756 | 32,743 |
Non-Current Liabilities |
|
|
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Borrowings | 17 | (19,822) | (103,586) |
Provisions for other liabilities and charges | 19 | (995) | (913) |
Total Non-Current Liabilities |
| (20,817) | (104,499) |
Current Liabilities |
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|
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Borrowings | 17 | (368,919) | (267,527) |
Trade and other payables | 18 | (52,363) | (77,050) |
Total Current Liabilities |
| (421,282) | (344,577) |
Net Current Liabilities |
| (372,526) | (311,843) |
Net Liabilities |
| (20,143) | (13,785) |
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Equity attributable to the owners of the parent |
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Share capital | 21 | 38 | 38 |
Share premium |
| 65,901 | 65,901 |
Other reserve |
| 10,175 | 10,175 |
Retained earnings |
| (96,257) | (89,899) |
Total Equity |
| (20,143) | (13,785) |
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Consolidated Statement of Cash Flow
| 31 December | 31 December | |
| 2020 | 2019 | |
| US$000 | US$000 | |
Cash flows from Operating Activities (Note 23) | 17,137 | 3,624 | |
Net cash generated from Operating Activities | 17,137 | 3,624 | |
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Cash flows from Investing Activities |
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Purchase of property, plant and equipment | (1,942) | (5,842) | |
Interest received | 196 | 270 | |
Net cash used in Investing Activities | (1,746) | (5,572) | |
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Cash flows from Financing Activities |
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Proceeds from borrowings (net of capitalised issue costs) | 14,550 | 20,000 | |
Repayment of borrowings | (10,000) | (10,000) | |
Interest paid | (3,866) | (5,295) | |
Net cash generated from Financing Activities | 684 | 4,705 | |
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Net increase/(decrease) in Cash and cash equivalents | 16,075 | 2,757 | |
Cash and cash equivalents at beginning of the year | 11,120 | 8,363 | |
Cash and cash equivalents at end of the year | 27,196 | 11,120 |
Consolidated Statement of Changes in Equity
Attributable to owners of the parent |
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| Share capital US$000 | Share premium US$000 | Other reserve US$000 | Retained earnings US$000 | Total US$000 | ||||
Balance at 1 January 2019 | 38 | 65,901 | 10,175 | (67,918) | 8,196 | ||||
Loss for the year | - | - | - | (21,981) | (21,981) | ||||
Total comprehensive loss for the year | 38 | 65,901 | 10,175 | (89,899) | (13,785) | ||||
Total transactions with owners of the parent, recognised directly in equity | - | - | - | - | - | ||||
Balance at 31 December 2019 | 38 | 65,901 | 10,175 | (89,899) | (13,785) | ||||
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Balance at 1 January 2020 | 38 | 65,901 | 10,175 | (89,899) | (13,785) | ||||
Loss for the year | - | - | - | (6,356) | (6,356) | ||||
Total comprehensive loss for the year |
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Total transactions with owners of the parent, recognised directly in equity | - | - | - | - | - | ||||
Balance at 31 December 2020 | 38 | 65,901 | 10,175 | (96,255) | (20,141) |
Notes to the Financial Statements
1. Financial Risk Management
The Group’s operations expose it to a number of financial risks; principally the availability of adequate funding, movements in interest rates and fluctuations in foreign currency exchange rates. Continuous monitoring of these risks ensures that the Group is protected against any adverse effects of such risks so far as it is possible and foreseeable.
Market Risk
a. Cash Flow and Interest Rate Risk
The continued operation of the Group is dependent on the ability to raise sufficient working capital until the mine produces sufficient quantities of gold to be self-sufficient. The Group currently finances itself through the issue of equity share capital and the secured loan facilities from CNMIM, CNMC and CCB. Management monitors its cash and future funding requirements through the use of cash flow forecasts. All cash not immediately required for working capital purposes is held on short term deposit. The Group’s exposure to interest rate fluctuations on cash balances is restricted to the rate earned on these short-term deposits. The potential impact of such fluctuations is not considered material to the financial statements.
The Group’s interest rate risk arises from long-term borrowings. The Group has both variable and fixed rate borrowings. Borrowings issued at variable rates expose the Group to cash flow interest rate risk which is partially offset by cash invested at variable rates. The annual fixed interest rate for the CNMIM loan is 9% for all USD and RMB denominated tranches. All payments of principal and interest in respect of the RMB denominated tranche are repayable at a fixed RMB: USD exchange rate. The interest rate on the CCB loan of US$65 million is 2.10% per annum over the quarterly LIBOR rate and the loan is repayable in US$. The interest rate on the new CCB loan of US$20 million is 1.20% per annum over the quarterly LIBOR rate and the loan is repayable in US$. The interest rate on the CNMC loan of US$90 million taken out in 2018 is fixed at 5.8% per annum, calculated and paid on a half yearly basis. The interest rate on CNMCTC loans totaling $146.5 million is 3.70% per annum over the six month LIBOR rate and the loan is repayable in US$.
At 31 December 2020, the potential impact of fluctuations in interest rates is not considered material to the financial statements.
b. Foreign Currency Risk
The Group operates internationally and is exposed to foreign exchange risk arising from currency exposures. Currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates. The Group has cash assets denominated in UK Sterling, United States Dollars, Tajik Somoni and PRC Renminbi and incurs liabilities for its working capital expenditure in all of these denominations. Payments are made in all of these denominations at the pre-agreed price and converted (if necessary) as soon as payment needs to occur. Currency conversions and provisions for expenditure are only made as soon as debts are due and payable. The Group is therefore exposed to currency risk in so far as its liabilities are incurred in UK Sterling, PRC Renminbi and Tajik Somoni, and fluctuations occur due to changes in the exchange rates against the functional and presentational currency of US Dollar. The table below details the split of the cash held as at 31 December 2020 between the various currencies.
Somoni | GBP Sterling | US Dollar | Renminbi | Total US$000 |
30,212 | 27 | 16,057 | 53,198 | 13,157 |
Due to the different nature of assets and liabilities, changes in asset value caused by exchange rate changes have different ways of affecting a Company's free cash flow. Therefore, it must be considered separately when evaluating the value of an enterprise. The first is the monetary items in the corporate balance sheet. Typical monetary items include monetary funds, loans, accounts receivable and accounts payable. When the exchange rate changes, the above-mentioned assets or liabilities of the enterprise accounted in foreign currencies will increase or depreciate accordingly. For example, in the context of the depreciation of the Renminbi, the foreign currency deposits (Somoni/USD) held by enterprises will appreciate, which in itself has a substantial impact on the present value of cash. The foreign currency-settled bonds or other debts issued by companies can be repaid at a lower RMB cost, which can save companies more funds that can be used for free distribution, thereby promoting the enhancement of corporate value.
During 2020, the Group’s principal revenue, costs, assets and liabilities, including intercompany loans were denominated in USD. The Group manages foreign currency risk by matching receipts and payments and monitoring movements in exchange rates. The Group does not currently hedge its exposure to foreign currencies and recognises the profits and losses resulting from currency fluctuations as and when they arise. At the year end the Group did not have material exposure to foreign exchange risk relating to its non-US$ denominated bank deposits and as such this not disclosed. The year-end exchange rates used in the preparation of the financial statements for 2020 and 2019 were as follows:
| Somoni to USD | GBP to USD | Renminbi to USD |
31 December 2020 | 11.30 | 1.3625 | 6.5250 |
31 December 2019 | 9.6872 | 1.31162 | 6.9762 |
1. Financial Risk Management (continued)
Liquidity Risk and Credit Risk
The continued operation of the Group is dependent on the ability to raise sufficient working capital. As noted above, the Group currently finances itself through the issue of equity and borrowings from CNMIM, CNMC and CCB. Management monitors its cash and future funding requirements through the use of cash flow forecasts. The Group enters into capital commitments to fund operations, and any surplus cash not immediately required for working capital purposes is held on short term deposit.
The table below summarises the maturity profile of the Group’s financial liabilities based on contractual undiscounted payments.
| Less than 1 Year US$000 | Between 1 and 2 Years US$000 | Between 2 and 5 Years US$000 | Over 5 Years US$000 | Total US$000 | Carrying amount US$000 | ||||||
|
|
|
|
|
|
| ||||||
Year ended 31 December 2020 |
|
|
|
|
|
| ||||||
Interest-bearing borrowings | 368,919 | 19,822 | - | - | 388,741 | 388,741 | ||||||
Trade and other payables | 52,363 | - | - | - | 52,363 | 52,363 | ||||||
Provisions for other liabilities | - | - | - | 2,481 | 2,481 | 995 | ||||||
| 421,453 | 19,822 | - | 2,481 | 443,585 | 442,099 | ||||||
|
|
|
|
|
|
|
Year ended 31 December 2019 |
|
|
|
|
|
| ||||||
Interest-bearing borrowings | 267,527 | 103,586 | - | - | 371,113 | 371,113 | ||||||
Trade and other payables | 77,050 | - | - | - | 77,050 | 77,050 | ||||||
Provisions for other liabilities | - | - | - | 2,481 | 2,481 | 913 | ||||||
| 344,577 | 103,586 | - | 2,481 | 450,644 | 449,076 | ||||||
|
|
|
|
|
|
|
The Group holds bank accounts with banks in the UK, PRC and Tajikistan with the following credit ratings:
Credit rating | 2020 US$000 | 2019 US$000 | ||
|
|
| ||
A | 21,212 | 5,314 | ||
No independent credit rating available | 5,984 | 5,806 | ||
| 27,196 | 11,120 |
If a bank has no credit rating, the Group assesses the credit quality through local knowledge and past experience in the particular jurisdiction.
Capital Risk Management
The Group consider equity to be their capital. The Group’s objective when managing their capital is to safeguard the Group’s ability to continue as a going concern in order to provide returns for shareholders and to enable the Group to continue its exploration, evaluation and mine construction. The Group holds debt in the form of both shareholder and external loans and defines capital based on the total equity of the Company. Except for the secured loan facilities from CNMIM, CNMC and CCB, the Group’s current policy for raising capital is through equity issues and debt financing. The Group is not currently required to monitor its gearing ratio and is not exposed to any externally imposed capital requirements.
2. Critical Accounting Estimates, Assumptions and Judgments
The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities are set out below. Estimates and assumptions are continually evaluated and are based on management’s experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. Uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of assets and liabilities affected in future periods.
The Group has identified the following areas where significant estimates, assumptions and judgments are required. The most significant judgment for the Group is the assumption that exploration and development at its sites will ultimately lead to a commercial mining operation. Failure to do so could lead to impairment of the mine.
Estimated impairment of Producing mines (Note 12)
The Group tests annually whether exploration, evaluation and licensing assets and producing mines have suffered any impairment. The recoverable amounts of the cash generating units (“CGUs”) have been determined based on value in use calculations which require the use of estimates and assumptions such as long-term commodity prices, gold recovery rates, discount rates, operating costs and therefore expected margins, future capital requirements and mineral resource estimates (see below). These estimates and assumptions are subject to risk and uncertainty and therefore there is a possibility that changes in circumstances will impact the recoverable amount. Management has assessed its CGUs as being individual exploration and mine sites, which is the lowest level for which cash inflows are independent of those of other assets or CGUs.
In assessing the carrying amounts of its exploration, evaluation and licensing assets and producing mines at Pakrut, the Directors have used an independently prepared and Director approved bankable feasibility study (http://www.cnfgold.com/projects/pakrut-gold-project). The period used in management’s assessment is the anticipated life of the mine to the expiration of the license in 2030 with revenues being generated from full production from January 2019.
The calculation assumes a mining capacity of 2,000 tonnes of ore daily increasing to 4,000 tonnes per day. Estimated production volumes are based on detailed life-of-mine plans and take into account development plans for the mines agreed by management as part of the long-term planning process. Production volumes are dependent on a number of variables, such as: the recoverable quantities; the production profile; the cost of the development of the infrastructure necessary to extract the reserves; the production costs; the contractual duration of mining rights; and the selling price of the commodities extracted. Gold revenues have been estimated over that period at a price of US$1,600 based on management’s estimates, which are derived from forward price curves and long-term views of global supply and demand, building on past experience of the industry and consistent with external sources.
The total cost per ounce is estimated to be around US$780 with a gross margin of circa 60%. Royalties have been calculated at 6% of sales revenues and corporate income tax at 13%, according to the relevant laws in Tajikistan. A discount rate of 10% has been utilised.
The calculations have been tested for sensitivity to changes in the key assumptions. The most sensitive inputs in the calculation of the value in use are operating and direct costs, the gold price, and the discount rate. An impairment to the mine value would occur if, compared to the base case scenario, the discount rate were to increase to 14%, gold prices fell by 9%, or direct costs were to increase by 27%.
2. Critical Accounting Estimates, Assumptions and Judgments (continued)
Approval of Pakrut reserves by Tajik Department of Geology
In November 2011, the Government of the Republic of Tajikistan issued the Pakrut Gold Project mining license to LLC Pakrut. According to the terms of the license, the amount of ore that can be mined is variable depending upon the mine plan. The plan submitted by the Group envisages an initial processing capacity of 760,000 tons of ore per annum, increasing to 800,000 tons per annum. The mining license is valid until 2 November 2030.
The mining license issued in November 2011 currently entitles the Group to mine JORC compliant resources (measured, indicated and inferred) of 904,000 ounces out of total JORC compliant resources of 4,383,000 ounces at Pakrut, excluding the Eastern Pakrut, Rufigar and Sulfidnoye ore zones. The JORC compliant resources include the results from the Group’s exploration and evaluation work subsequent to the mining license issue date.
LLC Pakrut has sought approval of the increased JORC compliant resources from the Tajik Department of Geology and the Scientific and Technical Counsel which includes the results of all exploration and evaluation activities undertaken by the Group between 2009 and 2013. The application is currently subject to that approval process and the Directors are not aware of any legal or other impediments which would prevent approval of their application and therefore permit the Group to mine the increased resources. However, the approval process currently remains incomplete.
The mine design and construction work undertaken to date, together with the assessment of the recoverable amount of ‘Producing mines’ (see below), is based upon the total quantity of JORC compliant resources of which part falls outside the area covered by the mining license and still subject to formal approval, as noted above. Failure to obtain this approval would lead to an impairment of ‘Mines under Construction’, together with inventories, and also impact the going concern basis of preparation of the Financial Statements. The Group has made the judgement that this approval will be forthcoming. No provision for impairment has been recognised in these Financial Statements relating to this uncertainty.
2. Critical Accounting Estimates, Assumptions and Judgments (continued)
Mineral resource and reserve estimates
Reserves are estimates of the amount of resources that can be economically and legally extracted from the Group’s mining properties. The Group estimates its mineral resources based on information compiled by appropriately qualified persons relating to the geological and technical data on the size, depth, shape and grade of the ore body and suitable production techniques and recovery rates. This analysis requires complex geological judgments to interpret the data. The estimation of the recoverable amount is based upon factors such as estimates of commodity prices, future capital expenditure and production costs along with geological assumptions made in estimating the size and grade of the resources. Details of the mineral resources and reserve estimates can be found on www.cnfgold.com.
The Group estimates and reports mineral resource estimates in line with the principles contained in the Australasian Code for Reporting Exploration Results, Mineral Resources and Ore Reserves (December 2004), which is prepared by the Joint Ore Reserves Committee (JORC) of the Australasian Institute of Mining and Metallurgy, Australian Institute of Geoscientists and Minerals Council of Australia, known as the “JORC Code”. The determination of a JORC resource is itself an estimation process that involves varying degrees of uncertainty depending on how the resources are classified (i.e. measured, indicated or inferred).
As additional geological information is produced during the operation of a mine and through additional exploration activity, mineral resource estimates may change. Such changes may impact on the Group’s reported financial position which includes the carrying value of property, plant and equipment and inventories.
Estimated economically recoverable reserves are used in determining the depreciation and/or amortisation of mine-specific assets. This results in a depreciation/amortisation charge proportional to the depletion of the anticipated remaining life-of-mine production. The life of each item, which is assessed at least annually, has regard to both its physical life limitations and present assessments of economically recoverable reserves of the mine property at which the asset is located. These calculations require the use of estimates and assumptions, including the amount of recoverable reserves and estimates of future capital expenditure. The calculation of the UOP rate of depreciation/amortisation could be impacted to the extent that actual production in the future is different from current forecast production based on economically recoverable reserves, or if future capital expenditure estimates change. Changes to economically recoverable reserves could arise due to changes in the factors or assumptions used in estimating reserves, including:
The effect on economically recoverable reserves of differences between actual commodity prices and commodity price assumptions;Unforeseen operational issues.2. Critical Accounting Estimates, Assumptions and Judgments (continued)
Depreciation/Amortisation (Note 12)
As the mine entered full production during the period, 2019 was the first period for which depreciation / amortisation was charged in respect of the producing mine assets. As mentioned in the judgement above judgement is required in the calculation of this amount with the key estimates considered to be surrounding the amount of economically recoverable resources and the lifespan of the asset. The economically recoverable reserves are considered to be those detailed out on the website (see above for link) and the lifespan of the mine is considered to be 18 years. As mentioned above the Group currently only has a mining license that is valid until November 2030 which is less than the 18 year period used within the depreciation/amortisation calculation. After considering the information available to them which includes discussions with Tajik officials and the required timing for extending the mining license, management have made the judgement that they will be able to secure the necessary extensions and therefore continue to the mine for a period of 18 years. If a 10 year license period were to be used then depreciation for 2020 would be approximately $14.49 million.
3. Segment Information
The following segments are based on the management reports received by the Executive Directors, who are the chief operating decision makers. The Group operates principally in three geographical areas, UK, PRC and Tajikistan, with operations managed on a project by project basis within Tajikistan. For segment reporting purposes, the operations of the Cayman Islands registered parent Company are included in the UK and PRC segment as these segments are jointly managed
2020 | UK and PRC US$000 | Tajikistan Pakrut US$000 | Total US$000 | |||
|
|
|
| |||
Revenue | - | 64,516 | 64,516 | |||
Cost of sales | - | (35,297) | (35,297) | |||
Administrative expenses (including foreign exchange) | (2,313) | (16,591) | (18,904) | |||
Other operating expenses | - | (46) | (46) | |||
Impairment | - | - | - | |||
Other operating income | - | 1 | 1 | |||
Operating profit/(loss) | (2,313) | 12,583 | 10,270 | |||
Finance costs | (15,999) | - | (15,999) | |||
Finance income | 151 | 45 | 196 | |||
Income tax | - | (824) | (824) | |||
Loss for the year | (18,115) | 11,804 | (6,357) | |||
|
|
|
| |||
Total assets | 24,472 | 397,567 | 422,039 | |||
Total liabilities | 418,203 | 23,898 | 442,099 | |||
Additions to property, plant and equipment | - | 1,942 | 1,942 |
The Group’s mining activities are located in Tajikistan, principally within the Pakrut Gold Project. Support and administration services are provided from the UK and PRC. Inter-segment revenue is eliminated on consolidation and is conducted on mutually agreed terms between Group companies.
All revenue generated in the period was from the government of Tajikistan.
2019 | UK and PRC US$000 | Tajikistan Pakrut US$000 | Total US$000 | |||||||
|
|
|
| |||||||
Revenue | - | 49,157 | 49,157 | |||||||
Cost of sales | - | (32,842) | (32,842) | |||||||
Administrative expenses (including foreign exchange) | (4,536) | (12,705) | (17,241) | |||||||
Other operating expenses |
| (136) | (136) | |||||||
Impairment | - | - | - | |||||||
Other operating income | - | 116 | 116 | |||||||
Operating profit/(loss) | (4,536) | 3,590 | (947) | |||||||
Finance costs | (20,796) | - | (20,796) | |||||||
Finance income | 270 | - | 270 | |||||||
Income tax | - | (508) | (508) | |||||||
Loss for the year | (25,062) | 3,082 | (21,981) | |||||||
|
|
|
| |||||||
Total assets | 8,787 | 426,504 | 435,291 | |||||||
Total liabilities | 414,609 | 34,467 | 449,076 | |||||||
Depreciation | 22 | 2,544 | 2,566 | |||||||
Additions to property, plant and equipment | - | 5,842 | 5,842 | |||||||
|
|
|
|
4. Particulars of Employees
The average number of staff employed by the Group during the financial year amounted to:
| 2020 No. | 2019 No. | ||
|
|
| ||
Administrative and management | 125 | 129 | ||
Operational staff | 607 | 574 | ||
| 732 | 703 | ||
The aggregate costs of the above were: |
|
| ||
| 2020 US$000 | 2019 US$000 | ||
|
|
| ||
Wages and salaries | 4,379 | 4,721 | ||
Basic pension cost | 885 | 861 | ||
| 5,265 | 5,582 |
No staff costs were capitalised since the Group entering into full producing from January 2019.
5. Directors’ Emoluments
The Directors’ emoluments in respect of qualifying services were:
| Salary and fees | Total | ||
2020 | US$ | US$ | ||
Mr Boyi Liang* | 76,797 | 76,797 | ||
Mr Yong Li | 23,088 | 23,088 | ||
Mr Lixian Yu | 197,131 | 197,131 | ||
Mr Delin Feng | 194,921 | 194,921 | ||
Mr Xiuzhi Shi | 22,233 | 22,233 | ||
Mr Hui Zhang** | 61,142 | 61,142 | ||
| 576,311 | 576,311 | ||
|
|
| ||
| Salary and fees | Total | ||
2019 | US$ | US$ | ||
Mr Boyi Liang | 49,360 | 49,360 | ||
Mr Xiang Wu | 17,953 | 17,953 | ||
Mr Yong Li | 22,853 | 22,853 | ||
Mr Lixian Yu | 227,754 | 227,754 | ||
Mr Delin Feng | 140,340 | 140,340 | ||
Mr Xiuzhi Shi | 22,989 | 22,989 | ||
| 481,249 | 481,249 | ||
|
|
| ||
Key management comprises Executive and Non-Executive Directors and all emoluments are short term in nature.
* Mr Boyi Liang was appointed on 30 July 2019 and resigned on 25 September 2020
** Mr Hui Zhang was appointed on 25 September 2020
6. Expenses by nature
| 2020 | 2019 | ||
| US$000 | US$000 | ||
|
|
| ||
Employee benefit expenses | 6,617 | 6,057 | ||
Operating lease expenses | 145 | 186 | ||
Depreciation | 3,200 | 2,566 | ||
Legal, professional and regulatory costs | 170 | 338 | ||
Travel and entertaining | 125 | 232 | ||
Social & other taxes | 6,287 | 5,721 | ||
Other Expenses | 258 | 159 | ||
Commission/bank fees | 1,025 | 1,077 | ||
Total administrative expenses | 17,827 | 16,337
|
6. Expenses by nature (continued)
| 2020 US$000 |
2019 US$000 | ||
Fees payable to the Company’s auditor for the audit of the consolidated financial statements | 114 | 104 | ||
Fees payable to the Company’s auditor for other services: Tax compliance services | 3 | 3 | ||
| 117 | 107 |
7. Income Tax
a. Analysis of Charge in the Year
| 2020 | 2019 | ||
| US$000 | US$000 | ||
Current tax: |
|
| ||
Current tax | 824 | 508 | ||
Deferred tax | - | - | ||
Total | 824 | 508 | ||
|
|
|
No provision for income taxes arose in the Cayman Islands, the UK, British Virgin Islands. A current income tax expense arose in Tajikistan during the year as LLC Pakrut sold gold in the amount of TJS 671,738,902 – equivalent to US$ 64,515,782 (2019: TJS 469,386,040 – equivalent to US$ 49,156,539). Thereby, the Company paid the amount of advance payments of income tax according to the Tax Code of the Republic of Tajikistan, being 1.00% of revenue.
7. Income Tax (continued)
Factors Affecting Current Tax Charge
The tax assessed on the loss for the year is higher than the weighted average standard rate of corporation tax of 20% (2019 – 20%).
| 2020 US$000 | 2019 US$000 | ||
Loss before income tax | (5,451) | (21,473) | ||
|
|
| ||
Loss on ordinary activities by weighted average rate of tax at 20% (2019 – 20%) | (1,090) | (4,295) | ||
Expenses not deductible for tax purposes | 640 | 513 | ||
Tax losses for which no deferred income tax asset was recognised | 1,274 | 4,289 | ||
Current tax payable | 824 | 508 |
The Group did not recognise deferred income tax assets of approximately US$1,274,000 (2019: US$4,289,000). Unused Tajik tax losses amounting to approx. US$16,772,000 at 31 December 2020 can be carried forward for three years from the year incurred and used against future taxable income at 15%.
8. Finance Income and Costs
| 2020 | 2019 |
| |||
| US$000 | US$000 |
| |||
Finance Income |
|
|
| |||
Interest income on short term bank deposits | 196 | 270 |
| |||
|
|
|
| |||
Finance Costs |
|
|
| |||
Interest expense on shareholder’s loans wholly repayable within five years | 13,111 | 16,304 |
| |||
Interest expense on bank borrowings wholly repayable within five years | 2,888 | 4,493 |
| |||
Less: Borrowing costs capitalised in qualifying assets |
| - |
| |||
Finance costs | 15,999 | 20,797 |
|
9. Earnings per Share
| 2020 | 2019 |
| |||
| US$ | US$ |
| |||
Basic and diluted earnings per share (cents) | (1.66) | (5.75) |
|
The basic earnings per share is calculated by dividing the loss attributable to equity holders after tax of US$ 6,357,000 (2019: 21,981,000) by the weighted average number of shares in issue and carrying the right to receive dividend. For the year ended 31 December 2020 this was 382,392,292 (2019– 382,392,292) shares.
As the Group has incurred a loss for the year, no option or warrant is potentially dilutive, and hence the basic and diluted earnings per share are the same. At the year end, there were nil (2019: nil) share options outstanding that are potentially dilutive in the future.
10. Intangible Assets
| Exploration and evaluation assets US$000 |
Cost |
|
At 1 January 2018, 31 December 2018, 31 December 2019 and 31 December 2020 | 9,941 |
|
|
Impairment |
|
At 1 January 2018, 31 December 2018, 31 December 2019 and 31 December 2020 | (9,941) |
|
|
Net Book Value |
|
At 31 December 2018, 31 December 2019 and 31 December 2020 | - |
|
|
The exploration and evaluation assets represent internally generated costs in connection with the Group’s exploration and evaluation activities. Expenditure is transferred from exploration and evaluation assets to mines under construction once the work completed to date supports the future development of the property and such development receives appropriate approvals.
The rights of LLC Pakrut to carry out exploration and evaluation activity at the Pakrut deposit expired on 1 April 2014. The renewal application by the Group to extend the exploration license is being considered by the Government of Tajikistan. Although the Directors are not aware of any legal or other impediments which would ultimately prevent approval of the license extension, the Directors fully impaired the carrying value of the exploration and evaluation assets during 2014 due to non-renewal of the Exploration License. Exploration and evaluation activities can continue at the Pakrut Gold Deposit in the area covered by the mining license. Currently, staff members of Pakrut are coordinating with the local government for exploration licenses.
11. Mines under Construction
Cost | Mining rights US$000 | Construction in progress US$000 | Total US$000 | |||
At 1 January 2019 | 35,022 | 364,378 | 399,400 | |||
Additions | - | - | - | |||
Transfer to PPE | (35,022) | (364,378) | (399,400) | |||
At 31 December 2019 and 1 January 2020 | - | - | - | |||
Additions | - | - | - | |||
Transfer to PPE | - | - | - | |||
At 31 December 2020 | - | - | - |
Mining rights comprised of exploration and evaluation assets up to the date the Pakrut Gold Project was determined to be technically feasible and commercially viable. All subsequent exploration and evaluation expenditure at this site was capitalised within mining rights. Mining rights also included the subsoil contract signature bonus and payments to obtain land use rights.
Construction in progress comprised the mine, smelting plant, tailings pond, power lines and road construction work carried out at the Pakrut Gold Project by contractors and directly by the Group. It also included the borrowing costs associated with the loan to finance the mine, construction from China Nonferrous Metals Intl Mining Co. Limited (“CNMIM”) and China Construction Bank (“CCB”), together with associated legal, professional and consultancy costs.
Mines under construction are not depreciated until construction is completed and the assets are available for their intended use and signified by the formal commissioning of the mine for production. Construction was completed at the end of the 2018 financial year with the mine being deemed to be fully operational at the start of the 2019 financial year and all accumulated capitalised costs were transferred into Property, Plant and Equipment at 1 January 2019.
12. Property, Plant and Equipment
| Land US$000 | Office furniture and equipment US$000 | Motor vehicles US$000 | Plant and machinery US$000 | Producing mines US$000 | Assets under construction US$000 | Total US$000 | |||||||
Cost |
|
|
|
|
|
|
| |||||||
|
|
|
|
|
|
|
| |||||||
At 1 January 2019 | 32 | 755 | 10,772 | 14,990 | - | - | 26,549 | |||||||
Additions | - | 152 | - | 2,129 | - | 3,561 | 5,842 | |||||||
Transfer from MUC | - | - | - | - | 398,639 | 761 | 399,400 | |||||||
Disposals | - | (320) | (2,074) | - | - | - | (2,394) | |||||||
At 31 December 2019 | 32 | 587 | 8,698 | 17,119 | 398,639 | 4,322 | 429,396 | |||||||
|
|
|
|
|
|
|
| |||||||
Additions | - | 106 | - | 1,836 | - | - | 1,942 | |||||||
Transfer from MUC | - | - | - | - | - | - | - | |||||||
Transfer from Assets under Construction | - |
- | - | 4,322 | - | (4,322) | - | |||||||
Settlement of historical liabilities | - | - | - | - | (20,214) | - | (20,214) | |||||||
Disposals | - | - | - | - | - | - | - | |||||||
|
|
|
|
|
|
|
| |||||||
At 31 December 2020 | 32 | 693 | 8,698 | 23,277 | 378,425 | - | 411,125 | |||||||
|
|
|
|
|
|
|
|
12. Property, Plant and Equipment (continued)
Accumulated Depreciation |
|
|
|
|
|
|
| |||||||
At 1 January 2019 | - | 611 | 7,909 | 10,607 | - | - | 19,127 | |||||||
Charge for the year | - | 31 | 392 | 869 | 8,823 | - | 10,115 | |||||||
Disposal | - | (320) | (2,074) | - | - | - | (2,394) | |||||||
At 31 December 2019 | - | 322 | 6,227 | 11,476 | 8,823 | - | 26,849 | |||||||
|
|
|
|
|
|
|
| |||||||
Charge for the year | - | 32 | 414 | 2,580 | 8,045 | - | 11,072 | |||||||
Disposal | - | - | - | - | - | - | - | |||||||
|
|
|
|
|
|
|
| |||||||
At 31 December 2020 | - | 354 | 6,641 | 14,056 | 16,868 | - | 37,920 | |||||||
|
|
|
|
|
|
|
| |||||||
Net Book Value |
|
|
|
|
|
|
| |||||||
At 31 December 2020 | 32 | 339 | 2,057 | 9,221 | 361,557 | - | 373,205 | |||||||
At 31 December 2019 | 32 | 265 | 2,471 | 5,643 | 389,816 | 4,322 | 402,548 |
In 2019 as the mine entered full production, mines under construction were transferred into Property, Plant & Equipment under the sub-category of Producing mines as presented above, and depreciation/depletion charged as per the accounting policies.
The carrying value of the PPE, most notably producing mines, and the depreciation / depletion methodology used, are both considered to be key accounting judgements. Detail of these are disclosed in Note 2 along with the related key estimates.
13. Subsidiary Undertakings
The Group had the following subsidiary undertakings as at 31 December 2020:
Name of Company | Holding | Country of Incorporation | Proportion of Voting Rights held | Nature of Business | Registered addresses | ||||||||||||||||||
|
|
|
|
|
|
|
| ||||||||||||||||
Directly held |
|
|
|
|
|
| |||||||||||||||||
Kryso Resources (BVI) Limited | Ordinary shares (CNG) | British Virgin Islands | 100% | Holding Company | 190 Elgin Avenue, Grand Cayman, KY1-9005, Cayman Islands | ||||||||||||||||||
|
|
|
|
|
|
| |||||||||||||||||
Kryso Resources Limited | Ordinary shares (CNG) | UK | 100% | Holding Company | Unit 2.24, the Plaza 535 Kings Road | ||||||||||||||||||
|
|
|
|
|
|
| |||||||||||||||||
Indirectly held |
|
|
|
|
| ||||||||||||||||||
International Mining Supplies and Services Limited (BVI holds 100% share) | Ordinary shares (BVI) | UK | 100% | Service Company | Unit 2.24, the Plaza 535 Kings Road | ||||||||||||||||||
|
|
|
|
|
| ||||||||||||||||||
LLC Pakrut (BVI holds 100% share) | Ordinary shares (BVI) | Tajikistan | 100% | Mineral exploitation, development and mining | Bahor district, Vahdat, Tajikistan | ||||||||||||||||||
|
|
|
|
| |||||||||||||||||||
14. Financial Instruments by category
| Financial assets at amortised cost | |
| US$000 | |
31 December 2020 Assets per Statement of Financial Position |
| |
Trade and other receivables, excluding prepayments | 3,016 | |
Cash and cash equivalents | 27,196 | |
Total | 30,212 | |
|
| |
| Financial liabilities at | |
| amortised | |
| cost | |
| US$000 | |
31 December 2020 Liabilities per Statement of Financial Position |
| |
Borrowings | 388,741 | |
Provisions for other liabilities and charges | 995 | |
Trade and other payables, excluding non-financial liabilities | 52,363 | |
Total | 442,099 |
14. Financial Instruments by category (continued)
| Financial assets at amortised cost | |
| US$000 | |
31 December 2019 Assets per Statement of Financial Position |
| |
Trade and other receivables, excluding prepayments | 3,137 | |
Cash and cash equivalents | 11,120 | |
Total | 14,258 | |
|
| |
| Financial liabilities at amortised cost | |
| US$000 | |
31 December 2019 Liabilities per Statement of Financial Position |
| |
Borrowings | 371,113 | |
Provisions for other liabilities and charges | 913 | |
Trade and other payables, excluding non-financial liabilities | 77,050 | |
Total | 449,076 |
15. Inventories
| 2020 | 2019 |
| |||
| US$000 | US$000 |
| |||
|
|
|
| |||
Gold | - | - |
| |||
Construction materials and processing equipment | 15,911 | 16,856 |
| |||
| 15,911 | 16,856 |
|
The inventory balance in 2020 relates to raw materials and semi-finished products used in gold production.
16. Trade and Other Receivables
| Group | Group | |
| 2020 | 2019 | |
| US$000 | US$000 | |
Other receivables | 3,016 | 3,137 | |
Prepayments and deposits | 2,633 | 1,629 | |
Total | 5,649 | 4,766 |
None of the receivables are past due. The fair values are equal to the carrying amounts.
Other receivables includes $2,758,418 due from related party CNMIM in relation to funds received from the insurance provider after the snowfall disaster, which were received on behalf of CNG.
17. Borrowings
| 2020 | 2019 |
| |
| US$000 | US$000 |
| |
|
|
|
| |
Bank borrowings | 99,550 | 95,000 |
| |
Other loans | 289,191 | 276,113 |
| |
Total | 388,741 | 371,113 |
| |
|
|
|
| |
Non-current portion | 19,822 | 103,586 |
| |
|
|
|
| |
Current portion | 368,919 | 267,527 |
|
The fair value of borrowings equals their carrying amounts, as the impact of discounting is not significant.
CNMIM loan
In accordance with the terms of the Subscription Agreement and Warrant Instrument dated 27 July 2010 between Kryso Resources Limited (formerly Kryso Resources Plc) and CNMIM, a subsidiary Company of significant shareholder China Nonferrous Metals Mining (Group) Co. Limited (“China Nonferrous”), CNMIM was required to use its best endeavors to secure mine funding for the construction and development of the Pakrut Gold Project.
The USD tranche of the loan has been settled in full and US$Nil was outstanding as at 31 December 2020 (2019: US$Nil). The amount outstanding on the RMB tranche of the loan as at 31 December 2020 was US$12,683,599 (2019: US$12,683,599).
CNMC loans
The loan agreement between CNMC International Capitals Company Limited and China Nonferrous Gold Limited was signed on 20 September 2017. Under this agreement, CNMC International Capitals Company Limited provided a loan facility of US$6,500,000 to CNG. This loan was used to improve the daily business operations of CNG.
The full amount of the loan was drawn down on the 20 September 2017. The loan contains annual fixed interest at 4%, however where the loan is used for a purpose other than that stated in the contract (see comments above), the proportion of the loan used will incur interest at a fixed rate of 8% per annum. Payment of interest is made quarterly.
During 2019, the loan was transferred from CNMC International Capitals Company Limited to another member of the group, CNMC Trade. On 15 July 2020, a loan extension agreement was signed extending the repayment date until 20 December 2020. The extension agreement incurs interest at a rate of 6 months LIBOR + 3.7%.
On 26 March 2021, a loan extension agreement was signed extending the repayment date until 20 December 2022. The extension agreement incurs interest at a rate of 3 months LIBOR + 3.25%.
A loan agreement between CNMC International Capitals Company Limited and China Nonferrous Gold Limited was signed on 27 April 2016. Under this agreement, CNMC International Capitals Company Limited provided a loan facility of US$120,000,000 to China Nonferrous Gold Limited. This loan was used to refinance the previous ICBC loan of the same amount, and the purpose of these funds was for development, operations and management of the Pakrut Gold Project, including operating and related expenses.
The full amount of the loan was drawn down on the 27 April 2016. The loan contains annual fixed interest at 4%, however where the loan is used for a purpose other than that stated in the contract (Pakrut Mine – see comments above), the proportion of the loan used will incur interest at a fixed rate of 8% per annum. Payment of interest will be made biannually in June and December.
During 2019, the loan was transferred from CNMC International Capitals Company Limited to another member of the group, CNMC Trade. On 15 July 2020, a loan extension agreement was signed extending the repayment date until 20 December 2020. The extension agreement incurs interest at a rate of 6 months LIBOR + 3.7%.
The Group has pledged its 100% equity interest in China Nonferrous Gold Limited to CNMC as security for repayment of the loan.
A loan agreement between CNMC International Capitals Company Limited and China Nonferrous Gold Limited was signed on 27 May 2016 for a total amount of US$20,000,000, which was drawn down in full on 27 June 2016. The loan period per the contract was 6 months, from 27 May 2016 to 26 November 2016.The loan contains a fixed interest rate of 4% per annum, which is calculated on a monthly basis from the 21st of the month to the 20 of the following month.
During 2018, the loan was transferred from CNMC International Capitals Company Limited to another member of the group, CNMC Trade. A further extension has been signed extending the repayment date until 26 November 2020. On 26 March 2021, a loan extension agreement was signed extending the repayment date until 20 December 2022. The extension agreement incurs interest at a rate of 3 months LIBOR + 3.25%.
A loan agreement between CNMC International Capitals Company II Limited (CNMC International) and China Nonferrous Gold Limited was signed on 8 February 2018 for a total amount of US$90,000,000, which was drawn down in full on 9 February 2018. The loan was provided for the purposes of the construction, operations and management of the Pakrut Gold Project, including operating and related expenses. This use is in line with the terms of the agreement. The loan period per the contract was from 9 February 2018 to 8 December 2020.
The loan contains a fixed interest rate of 5.8% per annum, which is calculated on a half yearly basis from the 21st of December to the 20th June, and from the 21st June to 20th December. Payment of interest will be made biannually in June and December of each year. Where the loan is used for a purpose other than that stated in the contract (see comments above), the proportion of the loan used will incur interest at a fixed rate of 11.6% per annum. At the repayment date, interest will be charged at 8.7% on any unpaid balance. On 8 February 2021 US$20,000,000 was repaid, and on 26 March 2021, a loan extension agreement was signed extending the repayment date of US$70,000,000 until 20 December 2022. The extension agreement incurs interest at a rate of 3 months LIBOR + 3.25%. The Company has repaid US$9.26m（¥60million）of its outstanding loan in June 2021.
CCB loans
The first loan agreement between China Construction Bank (“CCB”) and China Nonferrous Gold Limited was signed on 14 June 2016. Under this agreement CCB provided a loan facility of US$100,000,000 to China Nonferrous Gold Limited. This loan was used to refinance a previous loan from CNMC of US$55,000,000, with the remainder used for development, operations and management of the Pakrut Gold Project, including operating and related expenses. This use is in line with the terms of the agreement.
The loan is secured by Standby Letter(s) of Credit to be issued by China Construction Bank Corporation, Beijing Branch, and guaranteed by CNMC under the terms of the loan agreement, for an aggregate amount of not less than US$103,092,783.51, with validity of not less than 60 months in favor of CCB.
The full amount of the loan was drawn down on 30 June 2016. The loan incurs interest at a rate of 3 months LIBOR + 2.1% and is payable in arrears at the end of each applicable interest period.
The loan is repayable in 8 installments commencing 18 months from drawdown date and every 6 months thereafter as follows:
31/12/17 – US$5,000,000
30/06/18– US$5,000,000
31/12/18 – US$5,000,000
30/06/19 – US$5,000,000
31/12/19 – US$5,000,000
30/06/20 – US$5,000,000
31/12/20 – US$5,000,000
30/06/21 – Balance of loan
The second loan agreement between China Construction Bank (“CCB”) and China Nonferrous Gold Limited was signed on 29 January 2019. Under this agreement CCB provided a loan facility of US$20,000,000 to China Nonferrous Gold Limited. This loan was used for the purpose of working capital for Pakrut Gold Project. This use is in line with the terms of the agreement.
The loan is secured by Standby Letter(s) of Credit to be issued by China Construction Bank Corporation, Beijing Branch, and guaranteed by CNMC under the terms of the loan agreement, for an aggregate amount of not less than US$20,620,000, with validity of not less than 12 months in favor of CCB.
The full amount of the loan was drawn down on 29 January 2019. The loan incurs interest at a rate of 3 months LIBOR + 1.2% and is payable quarterly in arrears. It has been repaid on 29 January 2021.
The third loan agreement between China Construction Bank (“CCB”) and China Nonferrous Gold Limited was signed on 9 March 2020. Under this agreement CCB provided a loan facility of US$14,550,000 to China Nonferrous Gold Limited. This loan was used for the purpose of working capital for Pakrut Gold Project. This use is in line with the terms of the agreement.
The loan is secured by Standby Letter(s) of Credit to be issued by China Construction Bank Corporation, Beijing Branch, and guaranteed by CNMC under the terms of the loan agreement, for an aggregate amount of not less than US$30,000,000, with validity of not less than 12 months in favor of CCB.
The full amount of the loan was drawn down on 13 April 2020. The loan incurs interest at a rate of 3 months LIBOR + 1.15% and is payable quarterly in arrears. It has been repaid on 16 March 2021.
18. Trade and other payables
| 2020 | 2019 | ||
| US$000 | US$000 | ||
|
|
| ||
Trade and other payables | 52,363 | 77,050 | ||
|
|
| ||
| 52,363 | 77,050 |
Trade and other payables include amounts due of US$46,354,408 (2019: US$61,010,581) in relation to mine development.
19. Provisions for Other Liabilities and Charges
| Rehabilitation US$000 | Total US$000 | ||
|
|
| ||
At 1 January 2020 | 913 | 913 | ||
Unwinding of discount | 82 | 82 | ||
|
|
| ||
At 31 December 2020 | 995 | 995 |
All provisions are non-current.
The Group makes full provision for the future cost of rehabilitating the mine site and associated production facilities on a discounted basis at the time of constructing the mine and installing those facilities.
The rehabilitation provision represents the present value of rehabilitation costs relating to the Pakrut mine site, which are expected to be incurred up to 2030, which is the expiration date of the mining license. The provision has been created based upon the feasibility study. Assumptions based upon the current economic environment within Tajikistan have been made, which management believes are a reasonable basis upon which to estimate the future liability and will be reviewed regularly to take into account any material changes to the assumptions. The actual rehabilitation costs and works required will ultimately depend upon future market prices for the necessary rehabilitation works required, changes in future regulatory requirements and the timing on when the mine ceases to operate commercially.
The discount rate used in the calculation of the provision as at 31 December 2020 is 9% per annum. The value of the undiscounted provision is US$2,481,000 (2019: US$2,481,000).
20. Treasury Policy and Financial Instruments
The Group operates informal treasury policies which include ongoing assessments of interest rate management and borrowing policy. The Board approves all decisions on treasury policy.
Facilities are arranged, based on criteria determined by the Board, as required to finance the long-term requirements of the Group. The Group has financed its activities by the raising of funds through the placing of shares and through the issue and subsequent exercise of options and warrants.
There are no material differences between the book value and fair value of the financial assets at the year end. Except for the impact of discounting on the provisions for liabilities and other charges, there are no material differences between the book value and fair value of financial liabilities at the year end.
21. Share Capital
|
|
|
| |||||
| 2020 | 2020 |
| 2019 | 2019 |
| ||
| No. of | Share | No. of | Share | ||||
| ordinary | Capital | ordinary | Capital | ||||
| shares | US$000 | shares | US$000 | ||||
|
|
|
|
| ||||
At 1 January (Ordinary shares of $0.0001) each | 382,392,292 | 38 | 382,392,292 | 38 | ||||
Issued during the year | - | - | - | - | ||||
|
|
|
|
| ||||
At 31 December (Ordinary shares of US$0.0001 each) | 382,392,292 | 38 | 382,392,292 | 38 | ||||
|
|
|
|
All shares are authorised for issue and fully paid.
22. Share Based payments
Options can be granted to any employee of the Group in accordance with the rules of the Group in accordance with the rules of the Unapproved Share Option Scheme. The option price is not to be less than the initial Placing Price or the price on the day of issue. The options cannot be exercised for a period of at least one year from the date of grant. In the event of any employee to whom options have been granted ceasing to be an employee of the Group he or she will have a set period in which to exercise those options (depending on the reasons for leaving), falling which, the options will lapse.
There were no share options outstanding at the year end.
23. Cash flow information
|
| 31 December 2020 | 31 December 2019 | |
|
| US$000 | US$000 | |
Cash flows from Operating Activities |
|
|
| |
|
|
|
| |
Loss before income tax |
| (5,451) | (21,473) | |
Adjustments for: |
|
|
| |
Finance income |
| (196) | (270) | |
Finance costs |
| 15,999 | 20,796 | |
Depreciation |
| 11,072 | 7,722 | |
Foreign exchange loss |
| 1,076 | 905 | |
Change in working capital: |
|
|
| |
Inventory |
| 945 | 487 | |
Trade and other receivables |
| (1,004) | (904) | |
Trade and other payables |
| (5,405) | (7,039) | |
Other current assets |
| 121 | (154) | |
Other current liabilities |
| (19) | 3,554 | |
Net Cash generated from Operating Activities |
| 17,137 | 3,624 |
23. Cash flow information (continued)
Net debt reconciliation
| 31 December 2020 US$000 | 31 December 2019 US$000 | ||
Cash and cash equivalents | 27,196 | 11,120 | ||
Borrowings – repayable within one year | (368,919) | (267,527) | ||
Borrowing – repayable after one year | (19,822) | (103,586) | ||
Net debt | (361,545) | (359,993) |
| 31 December 2020 US$000 | 31 December 2019 US$000 | ||
Cash and cash equivalents | 21,196 | 11,120 | ||
Borrowings – fixed interest rates | (126,538) | (116,685) | ||
Borrowings – variable interest rates | (262,204) | (254,429) | ||
Net debt | (361,545) | (359,993) |
23. Cash flow information (continued)
|
Cash at bank US$000 | Borrowings due within 1 year US$000 | Borrowings due after 1 year US$000 |
Total US$000 | ||||
|
|
|
|
| ||||
Net debt as at 1 January 2019 | 8,363 | (162,724) | (182,285) | (336,645) | ||||
Cash flows | 2,757 | 10,000 | (14,705) | (1,948) | ||||
Interest accrued | - | - | (21,400) | (21,400) | ||||
Movement between current and non-current | - | (114,803) | 114,803 | - | ||||
Net debt as at 31 December 2019 | 11,120 | (267,527) | (103,586) | (359,993) | ||||
|
|
|
|
| ||||
Cash flows | 16,076 | (677) | - | 15,392 | ||||
Interest accrued | - | - | (16,950) | (16,950) | ||||
Movement between current and non-current | - | (100,715) | 100,715 | - | ||||
Net debt as at 31 December 2020 | 27,196 | (368,919) | (19,822) | (361,545) |
24. Controlling Party
The Directors consider China Nonferrous Metals Mining (Group) Co. Limited (“CNMC”) to be the ultimate controlling party, by virtue of their shareholding and representation on the Board of Directors.
25. Contingent Liabilities
During 2018, a contract was entered into between LLC Pakrut & LLC WenJian, a Company set up by a former employee of Pakrut (Dept. 2), to provide outsourced services including the extraction of ore, delivery of ore to smelting plant, cleaning of mine, mine development and construction works. LLC WenJian is not considered to be a related party.
Although LLC WenJian hold the relevant license for the construction works, the Company does not hold a license in accordance with the laws of Tajikistan “On subsoil” and “On licensing of certain types of activities” for implementing the other services they have been contracted to perform. This is a breach of Tajik laws and regulations which could result in penalties being imposed on both parties to the contract. The outcome of this situation is unclear and could result in fines imposed with the worst-case scenario being that Pakrut could have their own license rescinded by the Tajik government. There is no visibility surrounding the value or nature of any penalty at this time.
26. Related Party Transactions
The amount paid by the Company and Kryso Resources Limited to CNMIM for interest on the loan in 2020 amounted to US$Nil (2019:US$Nil). The amount due to CNMIM as at 31 December 2020 was US$19,821,708 (2019: US$18,586,242). CNMIM is a significant shareholder of China Nonferrous Gold Limited and Boyi Liang and Hui Zhang are CEO and President of CNMIM respectively. During 2020, CNG did not pay any interest to CNMC.
The amount payable by the Company to CNMC for interest on the loans in 2020 amounted to US$5,292,500 (2019: US$5,989,013). The amount due to CNMC as at 31 December 2020 was US$106,709,291 (2019: US$101,402,291). CNMC is the ultimate parent of China Nonferrous Gold Limited and Feng Delin is Chief Accountant of CNMC.
27. Related Party Transactions (continued)
During 2020, 15MCC (a related party to CNG through being a subsidiary of CNMC, the Company’s ultimate controlling party) provided equipment and materials, together with installation and construction work to the Group amounting to US$Nil (2019: $Nil) and the Group advanced payments to 15MCC amounting to US$1,524,503 (2019: $3,945,580). As at 31 December 2020, the total liability due to 15MCC was US$15,917,473 (2019: US$28,541,552).
In 2015 the Group entered into an additional consultancy contract with CNMC Hongtoushan Fushun Mining Co Ltd., through CNMIM as agent as follows:
Smelting and Processing Agreement
CNMC Hongtoushan Fushun Mining Co Ltd. (CNHFMG) is a copper mine and processing operation owned by CNMC. On 7th of September 2015, the Group entered into a smelting and processing agreement with CNHFMG.
Under the terms of the Agreement, CNG will pay to CNHFMG an amount of RMB 17.99 (approximately US$2.8) per gram of finished gold once the Project commences the 12-month production period. Prior to this period the Company will cover the labour and associated costs of CNFMG. Once in production, in the event the recovery of the plant is above the Beijing General Research Institute of Mining and Metallurgy forecast rate over the life of production of 82.99 percent, CNHFMG will share 40 percent of the profits from the upside directly due to the increased recovery. In the event recovery is below 75 percent, CNHFMG will bear 20 per cent of any loss incurred by the Company from the Project due to directly to recovery levels.
During 2020, CNHFMG provided equipment and materials, together with installation and construction work to the Group amounting to US$Nil (2019:US$Nil) and the Group advanced payments to CNHFMG amount to US$304,887(2019: US$166,962). As at 31 December 2020, the total liability due to CNHFMG was US$575,565.
During the year of 2020 CNMC provided a guarantee for standby letters of credit amounting to US$30,000,000 as security for the Group’s bank loan facility with China Construction Bank. During the year of 2019, CNMC provided a guarantee from standby letters of credit amounting to US$134,020,629 as security for the Group’s bank loan facility with China Construction Bank.
27. Related Party Transactions (continued)
During 2020, there is a total receivable amount of $2,739,702 (2019: US$2,739,702 ) owed by CNMIM for the insurance claim on the 2017 snowfall disaster which is held on the Group’s behalf. There is also a total amount of US$25,079 payable by the entities within the group owed to CNMIM as at 31 December 2020 (2019: US$25,079).
As at 31 December 2020, there is a total payable amount of $226,080 (2019: $226,080) owed to Daye Nonferrous Metal Group Holding Co., Ltd, a subsidiary of the ultimate controlling party, CNMC.
28. Events after the Reporting Period
In January 2021, the Company executed an agreement with China CITIC Bank Corporation Limited (Zhuhai Branch) (“CITIC”) for a loan facility of up to CNY 300million which is equivalent to US$46.37m. The CITIC Loan facility is for a maximum of 12 months and is repayable 12 months from first drawdown. The terms of the CITIC Loan includes an annual interest rate at 2.7% plus 6 month LIBOR. US$20m of the CITIC Loan has been drawn down in January 2021 to replace the China Construction Bank (CCB) Macau loan of US$20m which became due in January 2021. Second drawdown of US$14.55m in March 2021 was used to repay the CCB Asia loan of US$14.55m which was due for repayment in March 2021.
The Group has continued production throughout 2020 despite the outbreak of COVID-19, enabling it to raise sufficient working capital. As announced on 25 June 2021, The Company has executed an agreement with Bank of Shanghai (Hong Kong) Limited (“BOS”) for a loan facility of up to US $65 million (the “BOS Loan”). The Loan facility is for a maximum of 24 months and is repayable 24 months from the drawdown. The total amount of US$65m of the BOS Loan is expected to be drawn down before the end of the month in order to repay the CCBC Macau loan, of which US $65m remains outstanding.
As announced in February 2021, the Company repaid US$20m of its outstanding loan with CNMC International Capitals Company Ⅱ Limited (“CNMC International”) in accordance with its terms. The Company extended the repayment period of loans in place with CNMC Trade Company Limited (CNMC Trade) and CNMC International, totaling US$216.50 million, to December 2022. Then in June 2021，the Company repaid US$9.26m（¥60million） of its outstanding loan with CNMC International. The Company currently has total debt facilities (including banking facilities), before interest, of c.US$319.5 million.
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