27 Sep 2017 07:00
Kemin Resources plc
(“Kemin” or the “Company”)
Interim report – 6 months to 30 June 2017
Kemin Resources Plc (AIM: KEM), the exploration and development company with substantial interests in Kazakhstan, announces its unaudited interim results for the six months ended 30 June 2017.
Highlights:
Supplement to the licence extension in relation to the Smirnovskoye (licence 1605) deposit agreeing the work programmes has been approved allowing exploration and production until July 2019; The initial licence extension in relation to (licence 1606) deposit has been approved, for a three year period, final approval is subject to agreements in relation to the environmental and work programmes. Final licence approval expected in Q4 2017; In accordance with the mine development plan, company representatives arranged visits in April and June 2017 to several institutes in China and Russia, which deal with the design of molybdenum, tungsten, and lithium ore treatment and processing plants. Core drilling in Drozhilovskoye and Smirnovskoye to be carried out in H1 2018 to enable the shipment of samples to China and/or Russia in order to conduct technological testing. Continued support for the Company from its major shareholder; and Attributable loss reduced to £206k (2016: £232k), due to continuing savings in administrative overheads;Commenting on the results, Sanzhar Assaubayev, CEO of Kemin Resources said:
“The Company is very close to approval of the work programmes with the Kazakh authorities in relation to Drozhilovskoye, and is expecting to commence the exploration works in H1 2018 on both sites. The next stage is the construction of a trial plant for the development and testing of the processing technology, which will allow the future deposits’ development on a full scale basis”.
For further information, please visit http://www.keminresources.com or contact:
Kemin Resources PlcRajinder Basra (CFO)+44(0)207 932 2456
Strand Hanson Limited (Nomad, Financial Adviser and Broker)James Spinney/Ritchie Balmer+44(0)207 409 3494
Information on the Company
Kemin Resources plc (AIM: KEM) was formed into its present structure in April 2013 by the reverse take-over of GMA Resources plc by the ‘Joint Venture Kazakh-Russian Mining Company LLP’ (KRMC).
The Company is focused on developing its mineral resources including molybdenum, tungsten and lithium deposits Drozhilovskoye and Smirnovskoye. Each of the deposits is assessed to have significant value.
Kemin’s 90% owned Kazakh entity, KRMC, is the developer and future operator of the two subsoil licences that allow exploration and mining at each deposit.
Both deposits are located in northern Kazakhstan.
Kemin Resources Plc
Chief Executive Officer’s Review
The Company has now agreed the work programmes in relation to Smirnovskoye, but will commence the work as agreed with the Kazakh authorities on this site once the final Drozhilovskoye work programmes have been signed off. This is expected to be in Q4 2017, and the exploration work is therefore expected to commence in H1 2018. The licence is valid after the supplemental agreements for the Smirnovskoye area until July 2019.
In relation to Drozhilovskoye, the Company is agreeing the final form and content of the work programmes with the Kazakh authorities. Within the revisions to the work programme it has been agreed that the area is to be split into a north and south area and a commitment has been given that after one year of exploration works the northern area will be transferred to the production stage. These documents were delivered to the Kazakh authorities in September 2017, for final sign off, and are no further amendments are expected.
In accordance with the mine development plan, company representatives arranged visits in April and June 2017, to several institutes in China and Russia, which dealt with design of molybdenum, tungsten, and lithium recovery processing plants with facilities in China covering ore treatment.
In April 2017, several negotiations were held with IISC SB RAS (Institute of Solid State Chemistry and Mechanochemistry of the Siberian Branch of Russian Academy of Sciences) regarding the technological testing of molybdenum, tungsten and lithium recovery into concentrate. Commercial quotes were received which are being considered, these will allow the company to arrange the technological research and testing. IISC SB RAS has designed a Chemicometallurgical Plant in Krasnoyark, Russia, which processes lithium ores into metal and crystallised lithium as a final product.
In June 2017 company representatives also arranged visits to several institutes in China (Beijing, Urumqi, Yantai), which dealt with the recovery technologies of molybdenum, tungsten and lithium. In addition, at this time a number of working processing plants were visited in order to plan for the future production of ore.
The core drilling in Drozhilovskoye and Smirnovskoye is expected to commence in H1 2018 with samples of the cores extracted to be sent to China and/or Russia for technological testing the results of the pilot tests are expected in the same period or shortly thereafter.
We would like to thank the shareholders for their patience during this time but see a positive future for the Company going forward and for developments in 2018.
The major shareholder Bergfolk Corporation which is owned by the Assaubayev family, is fully committed to continuing to advance the project. Under the facility agreement in place with Amrita Investments Limited the Company has access to circa £4.5m of financing. Further details in relation to this facility are set out later in this letter.
Sanzhar Assaubayev
CEO Kemin Resources Plc
| Kemin Resources Plc Consolidated income statement | ||||||||||||||
| Six months ended 30 June 2017 | ||||||||||||||
| Six months to | Six months to | Year ended | ||||||||||||
| 30 June 2017 | 30 June 2016 | 31 December 2016 | ||||||||||||
| (unaudited) | (unaudited) | (audited) | ||||||||||||
| £000 | £000 | £000 | ||||||||||||
| Continuing operations | ||||||||||||||
| Administrative expenses | (93) | (104) | (158) | |||||||||||
| Operating Loss | (93) | (104) | (158) | |||||||||||
| Finance Expense | (115) | (134) | (287) | |||||||||||
| Loss before taxation | (208) | (238) | (445) | |||||||||||
| Income tax expense | - | - | - | |||||||||||
| Loss for the period | (208) | (238) | (445) | |||||||||||
| Loss for the period attributable to: | ||||||||||||||
| Equity shareholders of the parent | (206) | (232) | (432) | |||||||||||
| Non-controlling interest | (2) | (6) | (13) | |||||||||||
| (208) | (238) | (445) | ||||||||||||
| Loss per ordinary share | ||||||||||||||
| Basic & Diluted | (0.12p) | (0.14p) | (0.25p) | |||||||||||
| Consolidated statement of comprehensive income | ||||||||||||||
| Six months ended 30 June 2016 | ||||||||||||||
| Six months to | Six months to | Year ended | ||||||||||||
| 30 June 2017 | 30 June 2016 | 31 December 2016 | ||||||||||||
| (unaudited) | (unaudited) | (audited) | ||||||||||||
| £000 | £000 | £000 | ||||||||||||
| Loss for the period | (208) | (238) | (445) | |||||||||||
| Currency translation differences arising on translations of foreign operations* | 10 | (76) | (58) | |||||||||||
| Total comprehensive loss | (198) | (314) | (503) | |||||||||||
| * items which may be re-classified to statement or profit or loss. | ||||||||||||||
| Loss for the period attributable to: | ||||||||||||||
| Equity shareholders of the parent | (200) | (291) | (481) | |||||||||||
| Non-controlling interest | 2 | (23) | (22) | |||||||||||
| (198) | (314) | (503) | ||||||||||||
|
Kemin Resources Plc Consolidated Statement of financial position | ||||||||||||||
| Six months ended 30 June 2017 | ||||||||||||||
|
| ||||||||||||||
| 30 June 2017 | 30 June 2016 | 31 December 2016 | ||||||||||||
| (unaudited) | (unaudited) | (audited) | ||||||||||||
| £000 | £000 | £000 | ||||||||||||
| Non-current assets | ||||||||||||||
| Intangible assets | 2,502 | 2,221 | 2,539 | |||||||||||
| Property, plant and equipment | 14 | 14 | 15 | |||||||||||
| Other non-current assets | 167 | 162 | 169 | |||||||||||
| Restricted cash | 4 | 4 | 5 | |||||||||||
| 2,687 | 2,401 | 2,728 | ||||||||||||
| Current assets | ||||||||||||||
| Other receivables | 24 | 25 | 10 | |||||||||||
| Cash and cash equivalents | 8 | 119 | 59 | |||||||||||
| 32 | 144 | 69 | ||||||||||||
| Total assets | 2,719 | 2,545 | 2,797 | |||||||||||
| Current liabilities | ||||||||||||||
| Trade and other payables | 1,617 | 1,439 | 1,590 | |||||||||||
| Loans and borrowings | 669 | 441 | 690 | |||||||||||
| Other liabilities | - | - | - | |||||||||||
| 2,286 | 1,880 | 2,280 | ||||||||||||
| Non-current liabilities | ||||||||||||||
| Loans and borrowings | 3,104 | 2,936 | 2,990 | |||||||||||
| 3,104 | 2,936 | 2,990 | ||||||||||||
| Total liabilities | 5,390 | 4,816 | 5,270 | |||||||||||
| Net liabilities | (2,671) | (2,271) | (2,473) | |||||||||||
| Equity | ||||||||||||||
| Ordinary share capital | 1,748 | 1,748 | 1,748 | |||||||||||
| Deferred share capital | 6,168 | 6,168 | 6,168 | |||||||||||
| Share premium | 37,414 | 37,414 | 37,414 | |||||||||||
| Merger reserve | (41,682) | (41,682) | (41,682) | |||||||||||
| Share based payment reserve | 1,105 | 1,105 | 1,105 | |||||||||||
| Other reserve | 1,188 | 1,172 | 1,188 | |||||||||||
| Currency translation reserve | 9 | (7) | 3 | |||||||||||
| Retained earnings | (8,430) | (8,024) | (8,224) | |||||||||||
| (2,480) | (2,106) | (2,280) | ||||||||||||
| Non-controlling interest | (191) | (165) | (193) | |||||||||||
| Total equity | (2,671) | (2,271) | (2,473) | |||||||||||
| Kemin Resources Plc Consolidated Statement of changes in equity | |||||||||||||||||||||||
| Six months ended 30 June 2017 | |||||||||||||||||||||||
| Ordinary | Deferred | Share based | Currency | Attributed to | Non- | ||||||||||||||||||
| share | share | Share | Merger | payment | Other | translation | Retained | owners of the | controlling | ||||||||||||||
| capital | capital | premium | reserve | reserve | reserve | reserve | earnings | parent | interest | Total | |||||||||||||
| £000 | £000 | £000 | £000 | £000 | £000 | £000 | £000 | £000 | £000 | £000 | |||||||||||||
| 1 January 2017 | 1,748 | 6,168 | 37,414 | (41,682) | 1,105 | 1,188 | 3 | (8,224) | (2,280) | (193) | (2,473) | ||||||||||||
| Loss for the period | - | - | - | - | - | - | - | (206) | (206) | (2) | (208) | ||||||||||||
| Currency translation differences arising on translation of foreign operations | - | - | - | - | - | - | 6 | - | 6 | 4 | 10 | ||||||||||||
| Total comprehensive loss | - | - | - | - | - | - | 6 | (206) | (200) | 2 | (198) | ||||||||||||
| At 30 June 2017 | 1,748 | 6,168 | 37,414 | (41,682) | 1,105 | 1.188 | 9 | (8,430) | (2,480) | (191) | (2,671) | ||||||||||||
| At 1 January 2016 | 1,748 | 6,168 | 37,414 | (41,682) | 1,105 | 912 | 52 | (7,792) | (2,075) | (171) | (2,246) | ||||||||||||
| Loss for the period | - | - | - | - | - | - | - | (232) | (232) | (6) | (238) | ||||||||||||
| Currency translation differences arising on translation of foreign operations | - | - | - | - | - | - | (59) | - | (59) | (17) | (76) | ||||||||||||
| Total comprehensive loss | - | - | - | - | - | - | (59) | (232) | (291) | (23) | (314) | ||||||||||||
| Modification of loans received | - | - | - | - | - | 260 | - | - | 260 | 29 | 289 | ||||||||||||
| At 30 June 2016 | 1,748 | 6,168 | 37,414 | (41,682) | 1,105 | 1.172 | (7) | (8,024) | (2,106) | (122) | (2,271) | ||||||||||||
| At 1 January 2016 | 1,748 | 6,168 | 37,414 | (41,682) | 1,105 | 912 | 52 | (7,792) | (2,075) | (171) | (2,246) | ||||||||||||
| Loss for the year | - | - | - | - | - | - | - | (432) | (432) | (13) | (445) | ||||||||||||
| Currency translation differences arising on translation of foreign operations | - | - | - | - | - | - | (49) | - | (49) | (9) | (58) | ||||||||||||
| Total comprehensive profit - 31 December 2015 | - | - | - | - | - | - | (49) | (432) | (481) | (22) | (503) | ||||||||||||
| Contribution from related party | - | - | - | - | - | 276 | - | - | 276 | - | 276 | ||||||||||||
| At 31 December 2016 | 1,748 | 6,168 | 37,414 | (41,682) | 1,105 | 1,188 | 3 | (8,224) | (2,280) | (193) | (2,473) |
| Kemin Resources Plc Consolidated cash flow statement | |||||||||||
| Six months ended 30 June 2017 | |||||||||||
| Six months to | Six months to | Year ended | |||||||||
| 30 June 2017 | 30 June 2016 | 31 December 2016 | |||||||||
| (unaudited) | (unaudited) | (audited) | |||||||||
| £000 | £000 | £000 | |||||||||
| Net cash outflow from operating activities | (51) | (188) | (247) | ||||||||
| Financing activities | |||||||||||
| Loans repaid | - | - | (1) | ||||||||
| Net cash outflow from financing activities | - | - | (1) | ||||||||
| Decrease in cash and cash equivalents | (51) | (188) | (248) | ||||||||
| Cash and cash equivalents at the beginning of the period | 59 | 307 | 307 | ||||||||
| Cash and cash equivalents at the end of the period | 8 | 119 | 59 | ||||||||
Kemin Resources Plc
Notes to the consolidated financial information
Six months ended 30 June 2017
1 Basis of preparation
The consolidated interim financial information has been prepared using policies based on International Financial Reporting Standards (IFRS and IFRIC interpretations) issued by the International Accounting Standards Board ("IASB") as adopted for use in the EU.
The consolidated interim financial information have been prepared using the accounting policies which will be applied in the Group's financial statements for the year ended 31 December 2016. The consolidated interim financial information for the period 1 January 2017 to 30 June 2017 is unaudited and incorporates unaudited comparative figures for the interim period 1 January 2016 to 30 June 2016 and the audited financial information for the year to 31 December 2016. It does not include all disclosures that would otherwise be required within a complete set of financial statements.
In addition, the IASB has issued a number of IFRS and IFRIC amendments or interpretations since the last annual report was published. It is not expected that any of these have a material impact on the Group.
Going Concern
As at 30 June 2017, the Group had cash in hand of £8,000 (December 2016:£59,000).
Under a loan agreement dated 10 April 2013, Amrita Investment Limited (a company incorporated in the British Virgin Islands and ultimately controlled by the Assaubayev family) made available a facility of £7,000,000 on an unsecured basis. This was to be applied towards the Group's working capital requirements and the settlement of debts due of the Joint Venture Kazakhstan-Russian Mining Company LLP (KMRC). There is currently approximately £4.5m available under this facility.
The loan bears interest at LIBOR+5%. The loan is repayable on the earliest of the fifth anniversary of the agreement or of the fundraising completion date in respect of any equity fundraising which raises at least £5,000,000 (before expenses). At this point the Lender may choose to convert the loan into the ordinary shares of the Company at the conversion rates stipulated within the contract.
The Directors are confident that the Group has sufficient resources available to meet its liabilities as they fall due and its working capital requirements going forward and have therefore prepared these financial statements on a going concern basis.
2 Loss per ordinary share
The calculation of basic and diluted earnings per share from continuing operations is based upon the retained loss for the financial period, six months to 30 June 2017 is £206,000, (30 June 2016: loss £232,000 , 31 December 2016 loss £432,000).
The weighted average number of ordinary shares for calculating the basic loss per share and diluted loss per share for the six months to 30 June 2017 is 174,833,041 (30 June 2016 174,833,041, 31 December 2016 174,833,041).
3 Functional and presentational currency
The Group has prepared its financial statements in British Pounds. The functional currency of Joint Venture Kazakhstan-Russian Mining Company LLP (KRMC) trading company in Kazakhstan is the Kazakhstan Tenge ("KZT"). The functional currency of Kemin Resources is Pound Sterling. The rates used to convert Kazakhstan Tenge into British Pounds in these financial statements are as follows:
| 30 June 2017 | 30 June 2016 | 31 December 2016 | ||||||||||||||||
| Closing | Average | Closing | Average | Closing | Average | |||||||||||||
| KZT= £ | 414.00 | 402.00 | 449.35 | 493.52 | 406.65 | 467.79 | ||||||||||||
The currency translation movement on the Group's net investment in its subsidiaries in Kazakhstan is taken to reserves.
The financial statements of all Group companies are translated into British Pounds whereby their income statements are translated at the average rate of exchange for the year and their statement of financial position at the closing rate of exchange at the reporting date. Currency translation adjustments arising on the restatement of opening net assets, together with adjustments arising from the retranslation of intergroup and long term foreign currency loans to subsidiaries, are taken direct to reserves.
Transactions denominated in currencies other than the functional currency of a Company are recorded at the rate of exchange prevailing at the date of the transaction. Monetary assets and liabilities are translated into the relevant functional currency at the closing rates of exchange at the reporting date. Exchange differences arising from the restatement of monetary assets and liabilities at the closing rate of exchange at the reporting date or from the settlement of monetary transactions at a rate different from that at which the asset or liability was recorded are dealt with through the income statement.
4 Events after the balance sheet date
There were no significant transactions after the reporting date.
5 Approval of interim group financial statements
The interim group financial statements for the six months to 30 June 2017 were approved by the directors on 26 September 2017.
6 Ultimate Controlling Party
The controlling party of Kemin Resources plc is Bergfolk Corporation, by virtue of the fact that it owns 76,14% of the voting rights in the company. The ultimate controlling party is the Assaubayev family.
Kemin Resources Plc
Company Details
| Directors | Sanzhar Assaubayev, Chief Executive | |||
| Kanat Assaubayev, Chairman | ||||
| Ashar Qureshi, Non-Executive Director (Vice-Chairman) | ||||
| Aidar Assaubayev, Non-Executive Director | ||||
| Neil Herbert, Non-Executive Director | ||||
| Secretary | Rajinder Basra FCA | |||
| Registered office | 28 Eccleston Square | |||
| London | ||||
| SW1V 1NZ | ||||
| Nominated and Financial Adviser | Strand Hanson Limited | |||
| and Broker | 26 Mount Row | |||
| Mayfair | ||||
| London | ||||
| W1K 3SQ | ||||
| Telephone: +44 (0) 20 7409 3494 | ||||
| Auditors to the Group | BDO LLP | |||
| 55 Baker Street | ||||
| London | ||||
| W1U 7EU | ||||
| Registrars | Neville Registrars | |||
| 18 Laurel Lane | ||||
| Halesowen | ||||
| West Midlands | ||||
| B63 3DA | ||||
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