Cora Gold Regulatory News (CORA)

Notes to the Condensed Consolidated Financial Statements

For the six months ended 30 June 2023 and 2022, and the year ended 31 December 2022

All tabulated amounts stated in thousands of United States dollar (unless otherwise stated)

1. General information

The principal activity of Cora Gold Limited ('the Company') and its subsidiaries (together the 'Group') is the exploration and development of mineral projects, with a primary focus in West Africa. The Company is incorporated and domiciled in the British Virgin Islands. The address of its registered office is Rodus Building, Road Reef Marina, P.O. Box 3093, Road Town, Tortola VG1110, British Virgin Islands.

The condensed consolidated interim financial statements of the Group for the six months ended 30 June 2023 comprise the results of the Group and have been prepared in accordance with AIM Rules for Companies. As permitted, the Company has chosen not to adopt IAS 34 'Interim Financial Reporting' in preparing these interim financial statements.

The condensed consolidated interim financial statements for the period 01 January to 30 June 2023 are unaudited. In the opinion of the directors the condensed consolidated interim financial statements for the period present fairly the financial position, and results from operations and cash flows for the period in conformity with generally accepted accounting principles consistently applied. The condensed consolidated interim financial statements incorporate unaudited comparative figures for the interim period 01 January to 30 June 2022 and extracts from the audited consolidated financial statements for the year ended 31 December 2022.

The interim report has not been audited or reviewed by the Company's auditor.

With the exception of the accounting policy set out below regarding convertible loan notes and related accounting judgements, the key risks and uncertainties and critical accounting estimates remain unchanged from 31 December 2022 and the accounting policies adopted are consistent with those used in the preparation of its financial statements for the year ended 31 December 2022.

Accounting policy - convertible loan notes

The convertible loan notes, convertible into ordinary shares in the capital of the Company, issued during the six months ended 30 June 2023 are not for a fixed number of ordinary shares and in the event that they are not converted then repayment is in cash. In accordance with IAS 32 'Financial Instruments: Presentation' the Company's convertible loan notes are classified as financial liability instruments. Proceeds from the issue of convertible loan notes are recognised as debt until such time as they are converted either at the election of the holder or when certain preconditions are satisfied when they become recognised as equity. See Note 7 for further details regarding the convertible loan notes.

As at 30 June 2023 and 2022, and 31 December 2022 the Company held:

● a 100% shareholding in Cora Gold Mali SARL (registered in the Republic of Mali; the address of its registered office is Rue 224 Porte 1279, Hippodrome 1, BP 2788, Bamako, Republic of Mali);

● a 100% shareholding in Cora Exploration Mali SARL (the address of its registered office is Rue 224 Porte 1279, Hippodrome 1, BP 2788, Bamako, Republic of Mali);

● a 95% shareholding in Sankarani Ressources SARL (the address of its registered office is Rue 841 Porte 202, Faladie SEMA, BP 366, Bamako, Republic of Mali). The remaining 5% of Sankarani Ressources SARL can be purchased from a third party for US$1 million; and

● Cora Resources Mali SARL (registered in the Republic of Mali; the address of its registered office is Rue 841 Porte 202, Faladie SEMA, BP 366, Bamako, Republic of Mali) was a wholly owned subsidiary of Sankarani Ressources SARL.

2. Earnings per share

The calculation of the basic and fully diluted earnings per share attributable to the equity shareholders is based on the following data:

As at 30 June 2023, 2022 and 31 December 2022 the Company's issued and outstanding capital structure comprised a number of ordinary shares and share options (see Note 8).

3. Intangible assets

Intangible assets relate to exploration and evaluation project costs capitalised as at 30 June 2023 and 2022, and 31 December 2022, less impairment.

Additions to project costs during the six months ended 30 June 2023 and 2022, and the year ended 31 December 2022 were in the following geographical areas:

Impairment of project costs during the six months ended 30 June 2023 and 2022, and the year ended 31 December 2022 relate to the following terminated projects:

Cora's primary focus is on further developing the Sanankoro Gold Project in Mali and following a review of projects in 2023 the board of directors decided to terminate all projects in the Yanfolila Project Area (Mali), being the Farani, Farassaba III, Siékorolé and Tékélédougou permits. In previous periods, other projects which were terminated were considered by the directors to be no longer prospective.

Project costs capitalised as at 30 June 2023 and 2022, and 31 December 2022 related to the following geographical areas:

4. Trade and other receivables

5. Cash and cash equivalents

Cash and cash equivalents held as at 30 June 2023 and 2022, and 31 December 2022 were in the following currencies:

6. Trade and other payables

7. Convertible loan notes

On 13 March 2023 the Company closed a subscription for:

● 80,660,559 ordinary shares in the capital of the Company at a price of US$0.0487 per ordinary share for total gross proceeds of US$3,928,169.26 (see Note 8); and

● convertible loan notes ('CLN' or 'Convertible Loan Notes') convertible into ordinary shares in the capital of the Company in accordance with the Convertible Loan Note Instrument dated 28 February 2023 for a total of US$15,875,000

(together the 'Fundraising'). Certain directors of the Company participated in this Fundraising.

As at 30 June 2023 the Company had an unsecured obligation in relation to issued and outstanding Convertible Loan Notes for a total of US$15,875,000, being convertible into ordinary shares in accordance with the Convertible Loan Note Instrument dated 28 February 2023. These Convertible Loan Notes were issued on 13 March 2023 and have a maturity date of 09 September 2023. In the event that any Convertible Loan Notes are not converted on or prior to their maturity date then such Convertible Loan Notes are repayable at a 5% premium to the total amount outstanding under the CLN. As at 30 June 2023 finance costs of US$485,000 have been accrued in respect of the 5% premium.

The Convertible Loan Note Instrument dated 28 February 2023 sets out the terms of the CLN, which are principally as follows:

● Maturity Date: 09 September 2023.

● Coupon: 0%.

● Mandatory Conversion: In the event of conclusion of definitive binding agreements in respect of senior debt for the Sanankoro Gold Project and such agreements being unconditional:

● on or prior to 11 June 2023, at the lower of (a) US$0.0596 per ordinary share, (b) the market price per ordinary share as at the date of the Mandatory Conversion and (c) the price of any equity issuance by the Company in the prior 60 days (excluding shares issued pursuant to the Company's Share Option Scheme or pursuant to terms of any other agreement entered into prior to 13 March 2023);

● after 11 June 2023, at the lower of (a) US$0.0542 per ordinary share, (b) the market price per ordinary share as at the date of the Mandatory Conversion and (c) the price of any equity issuance by the Company in the prior 60 days (excluding shares issued pursuant to the Company's Share Option Scheme or pursuant to terms of any other agreement entered into prior to 13 March 2023).

● Voluntary Conversion: At the election of the holder at any time after 11 June 2023, at US$0.0569 per ordinary share.

● Repayment: Repayable on Maturity Date, if not converted, or earlier, at the option of the holder, in the case of a (i) a change of control of the Company (ii) the merger or sale of the Company (including the sale of substantially all of the assets), at a 5% premium to the total amount outstanding under the CLN.

● Other: CLN are issued fully paid in amount and are fully transferable.

In addition, holders of CLN issued on 13 March 2023 were granted proportionate participation in a Net Smelter Royalty ('NSR') of 1% in respect of all ores, minerals, metals and materials containing gold mined and sold or removed from the Sanankoro Gold Project, until 250,000 ozs of gold has been produced and sold from the Sanankoro Gold Project, provided that the Company may purchase and terminate the NSR, in full and not in part, at any time for a value of US$3 million.

Prior to the maturity date of 09 September 2023 for the Convertible Loan Notes issued on 13 March 2023 for a total of US$15,875,000, the holders of CLN approved amendments to the Convertible Loan Note Instrument dated 28 February 2023 (see Note 12).

8. Share capital

The Company is authorised to issue an unlimited number of no par value shares of a single class.

As at 31 December 2021 the Company's issued and outstanding capital structure comprised:

● 289,557,159 ordinary shares;

● share options over 1,225,000 ordinary shares in the capital of the Company exercisable at 16.5 pence (British pound sterling) per ordinary share expiring on 18 December 2022;

● share options over 4,950,000 ordinary shares in the capital of the Company exercisable at 8.5 pence (British pound sterling) per ordinary share expiring on 09 October 2023;

● share options over 4,600,000 ordinary shares in the capital of the Company exercisable at 10 pence (British pound sterling) per ordinary share expiring on 12 October 2025; and

● share options over 6,650,000 ordinary shares in the capital of the Company exercisable at 10.5 pence (British pound sterling) per ordinary share expiring on 08 December 2026.

During the six months ended 30 June 2022:

● on 14 May 2022 share options over 100,000 ordinary shares in the capital of the Company exercisable at 10.5 pence (British pound sterling) per ordinary share expiring on 08 December 2026 were cancelled.

As at 30 June 2022 the Company's issued and outstanding capital structure comprised:

● 289,557,159 ordinary shares;

● share options over 1,225,000 ordinary shares in the capital of the Company exercisable at 16.5 pence (British pound sterling) per ordinary share expiring on 18 December 2022;

● share options over 4,950,000 ordinary shares in the capital of the Company exercisable at 8.5 pence (British pound sterling) per ordinary share expiring on 09 October 2023;

● share options over 4,600,000 ordinary shares in the capital of the Company exercisable at 10 pence (British pound sterling) per ordinary share expiring on 12 October 2025; and

● share options over 6,550,000 ordinary shares in the capital of the Company exercisable at 10.5 pence (British pound sterling) per ordinary share expiring on 08 December 2026.

During the six months ended 31 December 2022:

● on 18 December 2022 share options over 1,225,000 ordinary shares in the capital of the Company exercisable at 16.5 pence (British pound sterling) per ordinary share expired.

As at 31 December 2022 the Company's issued and outstanding capital structure comprised:

● 289,557,159 ordinary shares;

● share options over 4,950,000 ordinary shares in the capital of the Company exercisable at 8.5 pence (British pound sterling) per ordinary share expiring on 09 October 2023;

● share options over 4,600,000 ordinary shares in the capital of the Company exercisable at 10 pence (British pound sterling) per ordinary share expiring on 12 October 2025; and

● share options over 6,550,000 ordinary shares in the capital of the Company exercisable at 10.5 pence (British pound sterling) per ordinary share expiring on 08 December 2026.

During the six months ended 30 June 2023:

● on 13 March 2023:

● the Company closed a subscription for:

● 80,660,559 ordinary shares in the capital of the Company at a price of US$0.0487 per ordinary share for total gross proceeds of US$3,928,169.26; and

● Convertible Loan Notes convertible into ordinary shares in the capital of the Company in accordance with the Convertible Loan Note Instrument dated 28 February 2023 for a total of US$15,875,000 (see Note 7)

(together the 'Fundraising'). Certain directors of the Company participated in this Fundraising.

● the board of directors granted and approved share options over 14,350,000 ordinary shares in the capital of the Company exercisable at 4 pence (British pound sterling) per ordinary share expiring on 13 March 2028.

As at 30 June 2023 the Company's issued and outstanding capital structure comprised:

● 370,217,718 ordinary shares;

● share options over 4,950,000 ordinary shares in the capital of the Company exercisable at 8.5 pence (British pound sterling) per ordinary share expiring on 09 October 2023;

● share options over 4,600,000 ordinary shares in the capital of the Company exercisable at 10 pence (British pound sterling) per ordinary share expiring on 12 October 2025;

● share options over 6,550,000 ordinary shares in the capital of the Company exercisable at 10.5 pence (British pound sterling) per ordinary share expiring on 08 December 2026; and

● share options over 14,350,000 ordinary shares in the capital of the Company exercisable at 4 pence (British pound sterling) per ordinary share expiring on 13 March 2028.

In addition, the Company had an unsecured obligation in relation to issued and outstanding Convertible Loan Notes for a total of US$15,875,000 (see Note 7).

Movements in capital during the six months ended 30 June 2023 and 2022, and the year ended 31 December 2022 were as follows:

9. Ultimate controlling party

The Company does not have an ultimate controlling party.

As at 30 June 2023 the Company's largest shareholder was Brookstone Business Inc ('Brookstone') which held 103,329,906 ordinary shares, being 27.91% of the total number of ordinary shares issued and outstanding. Brookstone is wholly owned and controlled by First Island Trust Company Ltd as Trustee of The Nodo Trust, being a discretionary trust with a broad class of potential beneficiaries. Patrick Quirk, father of Paul Quirk (Non-Executive Director of the Company), is a potential beneficiary of The Nodo Trust.

Brookstone, Key Ventures Holding Ltd and Paul Quirk (Non-Executive Director of the Company) (collectively the 'Investors'; as at 30 June 2023 their aggregated shareholdings being 31.60% of the total number of ordinary shares issued and outstanding) have entered into a Relationship Agreement on 18 March 2020 to regulate the relationship between the Investors and the Company on an arm's length and normal commercial basis. In the event that Investors' aggregated shareholdings becomes less than 30% then the Relationship Agreement shall terminate. Key Ventures Holding Ltd is wholly owned and controlled by First Island Trust Company Ltd as Trustee of The Sunnega Trust, being a discretionary trust of which Paul Quirk (Non-Executive Director of the Company) is a potential beneficiary.

10. Contingent liabilities

A number of the Company's project areas have potential net smelter return royalty obligations, together with options for the Company to buy out the royalty. At the current stage of development, it is not considered that the outcome of these contingent liabilities can be considered probable or reasonably estimable and hence no provision has been recognised in the financial statements.

11. Capital commitments

During 2020 and 2021 the Company entered into contracts with a number of contractors in respect of a Definitive Feasibility Study ('DFS') for the Sanankoro Gold Project. Total estimated costs in respect of the DFS contractors were approximately US$2,067,000. As at 30 June 2022, under the terms of the contracts, the Company had incurred costs of approximately US$1,990,000. The DFS was completed in 2022.

12. Events after the reporting date

Prior to the maturity date of 09 September 2023 for the Convertible Loan Notes issued on 13 March 2023 for a total of US$15,875,000, the holders of CLN approved amendments to the Convertible Loan Note Instrument dated 28 February 2023 (see Note 7). These amendments resulted in the following principal changes to the terms of the CLN:

● Maturity Date: 12 March 2024.

● Mandatory Conversion: In the event of conclusion of definitive binding agreements in respect of senior debt for the Sanankoro Gold Project and such agreements being unconditional:

● after 09 September 2023, at the lower of (a) US$0.0487 per ordinary share, (b) the market price per ordinary share as at the date of the Mandatory Conversion and (c) the price of any equity issuance by the Company in the prior 60 days (excluding shares issued pursuant to the Company's Share Option Scheme or pursuant to terms of any other agreement entered into prior to 13 March 2023).

● Voluntary Conversion: At the election of the holder at any time after 09 September 2023, at US$0.0487 per ordinary share.

● Early Repayment: prior to 09 September 2023, holders of CLN may elect to request the early repayment of outstanding CLN which shall be redeemed by the Company for par value of the principal amount of the CLN plus 5% of the principal amount of the CLN.

The other terms of the CLN, including Coupon and Repayment, remain unchanged.

Following the above amendments to the Convertible Loan Note Instrument dated 28 February 2023 certain holders of CLN requested the early repayment of outstanding CLN for a total principal amount of US$625,000 plus 5% premium. Accordingly, as at the date of these condensed consolidated interim financial statements, the Company had an unsecured obligation in relation to issued and outstanding CLN for a total of US$15,250,000, being convertible into ordinary shares in accordance with the Convertible Loan Note Instrument dated 28 February 2023 as amended. These CLN were issued on 13 March 2023 and have a maturity date of 12 March 2024.

13. Approval of condensed consolidated interim financial statements

The condensed consolidated interim financial statements were approved and authorised for issue by the board of directors of Cora Gold Limited on 22 September 2023.

**ENDS**