Lionsgold Regulatory News (LION)

11 December 2017

Lionsgold Limited

("Lionsgold", "LION" or the "Company")

Final Results

Lionsgold (LON: LION), the AIM quoted company focused on the exploration, production and retail application of physical gold, including the development of the Goldbloc digital currency, is pleased to announce its audited final results for the financial year 01 July 2016 to 30 June 2017.

For further information, please visit www.lionsgold.com or contact:

Chief Executive Officer's Report

I am pleased to make my report on the financial year 01 July 2016 to 30 June 2017. This was a period of resetting the Company's operations and strategic direction from the original proposition that the Company's mid-2011 IPO was based upon. Two months into the period under review, on 28 July 2016 there was an injection of new management and funding in the Company (formerly named Kolar Gold Limited), being myself as CEO and Luke Cairns as Executive Director, and £900,000 in gross proceeds raised. The then Chairman and other non-executive director who had held those board positions since the listing of Kolar Gold Limited on AIM in June 2011, stepped down at the end of September 2016 and at the end of December 2016 respectively. Amidst those changes, M. Hanuma Prasad was appointed as a new Non-Executive Director on 23 November 2016.

Following the appointment of the new management and operational review, the Group set about establishing a new three-fold strategy:

· Strengthen the partnership with one of India's leading gold exploration companies, Geomysore Services India Pvt Ltd ("Geomysore");

· Provide a physical gold holding and trading Fintech platform for India and other markets; and

· Achieve jurisdictional diversification through gold exploration and mine development in Finland.

Under this new strategy and following the changes above, the Company was rebranded and on 27 February 2017 commenced trading under the new name Lionsgold Limited with the new TIDM of "LION".

Review of operations for the financial year ended 30 June 2017

The last financial year was one of transition which resulted in the departure of several directors and the contraction of costs and activity to reflect the resources available. From this reduced operational base Lionsgold then proceeded to implement the new strategy of the Group.

The three business divisions of the Company - India Gold, Fintech Gold and Finland Gold - were carried out through the Group's activities and interests in Geomysore Services India Pvt Ltd, the UK incorporated TRAC Technology Limited and Finnish JV company, Kalevala Gold Oy.

Geomysore

Lionsgold has a 21.15% per cent shareholding in Geomysore as at the date of this report.  As at 30 June 2017, the Company valued its investment in Geomysore at £2.93 million (30 June 2016: £3.01 million).

During the period under review, Geomysore continued to progress with further exploration drilling, resource modelling and appraisal work to assess the feasibility, scale and timing of constructing a producing gold mine at Jonnagiri, for which Geomysore has been granted a 30 year mining licence to mine 365,000 tonnes of gold ore per year.

Based on data available as at 30 June 2016, Golder Associates Pty Limited estimated a JORC compliant indicated and inferred gold resource of 351,000 ounces in aggregate at the East and West blocks (234,000 and 117,000 ounces respectively) which was a significant increase from the approximate 150,000 ounces previously identified at the East Block and as announced in our interims on 30 March 2016. Full details on this resource increase can be found in the announcement dated 21 October 2016.

The Feasibility Study ("FS") on Jonnagiri was completed post period end. The preliminary FS results were released to market on 15 August 2017 with the final results of the Feasibility Study released on 16 November 2017, demonstrating a robust project that could potentially be developed as India's first privately owned gold mine.

Geomysore holds exploration rights covering in excess of 900km2 in India including a granted 30-year mining lease at Jonnagiri covering 6km2. The Jonnagiri Gold Project is situated in the state of Andhra Pradesh. Concurrently with negotiations relating to land acquisition at Jonnagiri, post balance date it was announced on 16 November 2017 that Geomysore has embarked on an internal scoping study on its South Kolar Project ("South Kolar") situated in the Southern part of the Kolar Gold Field also located in the state of Andhra Pradesh. South Kolar is an area covered under two Mining Lease Applications, covering approximately 10km2 each, and Geomysore has signed a Memorandum of Understanding with the government of Andhra Pradesh to develop the areas into commercially viable mines.

On 31 May 2017, the Company released the findings of the independent valuation of Geomysore's assets. Golder Associates assessed Geomysore's gold exploration assets (excluding Jonnagiri) covering a total area in excess of 900km2. They comprise 36 Prospecting Licences, Prospecting Licence Applications and Mining Lease Applications that predominantly cover greenstone belt areas in southern and central parts of India, with the main groupings of the licences and applications found in the Kolar and Jagular regions in the states of Andhra Pradesh and Karnataka respectively. Golder determined the total value of the gold exploration assets, excluding Jonnagiri, as follows:

Jonnagiri Gold Mine Feasibility Study Summary

The Jonnagiri Feasibility Study results were released to market post balance date on the 16 November 2017. The findings are NI 43-101 compliant and the Feasibility Study used a domestic market gold price being the three year average of Indian Bullion Jewellers Association ("IBJA") Price, INR2,806 per gram (equivalent of USD$1,301/oz based on USD$1 = INR67.08). Gold recovery has been estimated at 92.4% through a Gravity - CIL (carbon in leach) processing circuit.

The base case production profile is based solely on the 151,020 ounces of Probable Reserve from the Indicated Resource ("Base Case"). In parallel to the Base Case, a total production model was developed where all available ore was processed, being the Probable Reserve, the debris (unclassified material), part of the Inferred Resource and some low grade material to be used in the event the plant was at times underutilised ("Total Production Case").

The Jonnagiri mine will use conventional open pit mining with gold recovered by standard gravity and Carbon In Leach processing to produce a dore on site. Inputs to the feasibility study are presented as per Table 1 below.

Table 1 -Base Case inputs in the Feasibility Study

The key outputs of the Project as reported in the FS Base Case, based on mining only the Probable Reserve of 151,020 ounces of gold, are as per Table 2 below (based on USD$1 = INR67.08).

Table 2- NPV calculation - Base Case

In parallel to the Base Case schedule which processed only the Probable Reserve (Indicated Resource), a Total Production Case model was developed where all the available ore was processed, subject to tailings dam capacity. The ore processed will be the Probable Reserve, the debris (unclassified material), part of the Inferred Resource and if the plant was underutilised, the low grade material to 'fill the plant'. The Total Case scenario adds value to the Base Case without spending additional capital for the project. The IRR for the Total Case indicated an even more robust project. The key outputs of the financial analysis for such assumptions are shown in Table 3 below (based on USD$1 = INR67.08).

Table 3- NPV calculation - Total Case Production

Geomysore is currently engaged in negotiations with relevant landowners to purchase approximately 350 acres of land required for the development of the East Block open pit mine and other associated infrastructure, for example: Processing Plant, Tailing Storage Facility, Waste Rock Dumps and Water Reservoir.

Subject to agreement for the relevant land acquisition, and subject to financing, the building of a mine at Jonnagiri could commence as early as Q2 2018. The build is planned to take 24 months and at full production the Jonnagiri mine is forecast to produce around 25,000 oz of gold annually, which would contribute more than a quarter of India's gold production based on current domestic output.

TRAC Technology Limited

On 1 November 2016, the Company announced that it had agreed terms for a joint venture with TRAC Technology Limited ("TRAC") to launch an online gold and silver trading and storage platform for the Indian market (the "JV").

During the financial year the Company's initial shareholding of 27.3% was grown to become 37.7% as announced on the 3 May 2017.

Post balance date Lionsgold's shareholding in TRAC has increased to 55% with the Group CEO, Cameron Parry, co-investing and buying 5% of TRAC directly and becoming Non-Executive Chairman of Lionsgold's fintech subsidiary.

The Group's increased equity position to majority shareholder was completed with the aim of rolling out a suite of alternative-banking gold-based products, including a direct debit card and mobile phone banking-style app, as well as developing a gold-backed currency planned for release during 2018.

Following collaboration between TRAC's CEO and TRAC's Chairman, and working with select digital marketing and technology providers, on 18 October 2017, the vision for the digital gold currency Goldbloc was announced. Goldbloc's aim is to provide the convenience and utility of a fiat currency bank account, but representing direct ownership of physical gold by the Goldbloc holder. Each Goldbloc unit will represent 1/1,000th of a gram of physical gold (approximately £0.03 based on the current gold spot price) and shall be divisible to two decimal places. Goldbloc evolved from TRAC's offering of an online physical gold holding and trading platform to become a physical gold digital currency, in a bank account.

The full commercial version of Goldbloc is currently scheduled to be available, with physical debit card(s) attached to the Goldbloc holder's account, from Q2 2018.

Kalevala Gold Oy

During the financial period, on 13 October 2016, the Company announced that it had entered into a Memorandum of Understanding ("MOU") to establish a Joint Venture ("JV") to develop high grade gold exploration and mining assets within licences in Finland covering an area of approximately 24km2.

The Finnish JV company was incorporated Kalevala Gold Oy, and the Group CEO joined the board with two representatives from the JV partner's company.

Whilst sampling and drilling was carried out during the financial year, part of the work required to progress development of the assets involves obtaining environmental permitting to carry out a bulk sampling programme at one of the JV projects, Kuikka. The environmental permitting application was submitted in May 2017, following confirmation that all relevant prospecting licences and applications had been transferred to Kalevala. Whilst the exact timeline for approval cannot be known, the Board believes it reasonable to expect that Kalevala may obtain environmental permitting approval in Q2 2018 and depending on timing, this may see gold production from bulk sampling in Q3 of 2018.

In the interim at Kuikka, the results of the confirmation grade drilling program further demonstrate a high grade gold deposit and further delineate the shape and size for the most effective bulk sample cut. With regard to processing the ore, our pilot plant and equipment is in place and awaiting completion of commissioning using a planned 200 tonnes sample.

Post period end, additional exploration targets were identified and new prospecting licence granted, and Kalevala now holds more than 300km2 under licence representing over 90% of what the board believes to be the highly prospective Suomussalmi Greenstone Belt.

Board changes

On 28 July 2016 Cameron Parry was appointed to the Board as the Chief Executive Officer (CEO), Luke Cairns was appointed to the Board as an executive director and Vaidyanathan Sivakumar resigned from the Board.

On 30 September 2016 Harvinder Hungin resigned as the Chairman and as a non-executive director.

On 23 November 2016 Dr. M. Hanuma Prasad was appointed to the Board as a non-executive director.

Stephen Oke, who was a non-executive director since the June 2011 IPO, resigned from the Board on 31 December 2016.

Post balance date, on 23 November 2017, Luke Cairns stepped down as Executive Director and David Price was appointed as Non-Executive Chairman.

Key financials

The loss after tax for the year was £862,256 compared to £930,778 for the year to June 2016.

As at 30 June 2017, the Group's cash balances were £565,128 (2016: £404,806). During the financial year, the Company undertook a placing of 81,818,182 new ordinary shares at a price of 1.1p per share raising £900,000 before fees and expenses and placing of 50,000,000 new ordinary shares raising £550,000 before fees. Post the financial year end the Company completed a placing of 93,750,000 new ordinary shares raising £750,000 before fees, part of which is subject to approval at AGM.

The Group is continuously monitoring the rate of cash usage to ensure a balance between investment, achieving major milestones and having sufficient working capital to remain a going concern.

Outlook

Lionsgold has, post balance date, grown in scope and size leading up to the end of the 2017 calendar year. Since October 2017, Lionsgold has released details regarding the development of its digital gold currency, Goldbloc, the granting of an E-Money licence by the FCA (Financial Conduct Authority), the engagement of former Rio Tinto Chief Executive of Energy & Minerals, Mr Alan Davies, as part-time Global Strategy Consultant, the appointment of Mr David Price to the board as Non-Executive Chairman, and announced a financing offered directly to specific high net worth individuals with strategic relevance to the Company, securing the necessary cash for LION to maximise opportunities anticipated in 2018. In addition, Lionsgold announced that its Finland JV company had received permission for its pilot plant testing (200 tonnes), and the final Feasibility Study results were released in regard to the Jonnagiri Project in India as well as releasing the location of the next gold mine targeted from its India partner's portfolio - the South Kolar Project.

It has been a busy time since the change in management at the end of July 2016 and the Lionsgold Board believes we are heading into a very exciting year for the Group.

On behalf of my fellow directors I would like to thank all shareholders and stakeholders for supporting Lionsgold during this period of transition and transformation whilst welcoming all new shareholders to the register. We look forward with confidence to growing the value of our various interests and the Company.

Cameron Parry

Chief Executive Officer

Lionsgold Limited and its controlled entities

Consolidated Statement of Comprehensive Income

for the year ended 30 June 2017

Lionsgold Limited and its controlled entities

Consolidated Statement of Financial Position 

as at 30 June 2017

Lionsgold Limited and its controlled entities

Consolidated Statement of Changes in Equity

for year ended 30 June 2017

Lionsgold Limited and its controlled entities

Consolidated Statement of Cash Flows

For the year ended 30 June 2017

Lionsgold Limited and its controlled entities

Notes to the financial statements 

1. Basis of preparation and status of financial information

The financial information set out in this statement has been prepared in accordance with the recognition and measurement principles of International Financial Reporting Standards as adopted by the EU ("adopted IFRSs"), IFRIC interpretations and the Companies Act 2006 applicable to companies reporting under IFRS. It does not include all the information required for full annual accounts.

The financial information does not constitute the Company's statutory accounts for the years ended 30 June 2017 or 30 June 2016 but is derived from those accounts. Statutory accounts for 2016 have been delivered to the registrar of companies, and those for 2017 will be delivered in due course. The auditor has reported on those accounts; his reports were (i) unqualified, (ii) did not include a reference to any matters to which the auditor drew attention by way of emphasis without qualifying his report and (iii) did not contain a statement under section 498 (2) or (3) of the Companies Act 2006.

2. Earnings per share

The calculation of basic loss per share at 30 June 2017 was based on the loss of £847,275 (2016: £930,778), and a weighted average number of ordinary shares outstanding of 195,685,990 (2016: 106,293,537), calculated as follows:

Diluted loss per share

Options and warrants granted to the Directors, staff and external consultants are considered to be potential ordinary shares and have not been included in the determination of diluted loss per share as the effect of exercise would be non-dilutive. The options have not been included in the determination of the basic loss per share.

3. Annual Report and Annual General Meeting

Copies of the 2017 Annual Report and Accounts will be posted to shareholders shortly and will be available on the Company's website at www.lionsgold.com. Further copies may be obtained by contacting the Company Secretary at Lionsgold, Ground Floor, Dorey Court, Admiral Park, Saint Peter Port, Guernsey GY1 2HT.

The annual general meeting is to be held at the registered office on Thursday 28 December 2017.