Oriole Regulatory News (ORR)

Oriole Resources plc / Index: AIM / Epic: ORR / Sector: Mining

Oriole Resources PLC 

('Oriole Resources' or 'the Company' or 'the Group')

Final Results and Notice of AGM

Oriole Resources, the AIM-quoted exploration company operating in Africa and Europe, announces its final results for the year ended 31 December 2018.

Copies of the Company's Annual Report will be posted to shareholders on or before 23 April 2019. The Company's AGM will be held at 3.00pm on 16 May 2019 at the offices of Grant Thornton UK LLP, 30 Finsbury Square, London, EC2P 2YU.

The year saw several significant developments and importantly a renewed strategic focus on our high- impact, early-stage exploration assets, together with the identification of new targets. The Company was repositioned during the year, driven by a focused investment strategy and the appointment of a new highly experienced Board of Directors and a rebrand to Oriole Resources PLC.

Operational Highlights:

· Signing of an earn-in agreement with IAMGOLD Corporation to fast-track exploration at the Dalafin gold project in Senegal. This licence is currently 85%-owned by Oriole Resources. IAMGOLD can earn up to a 70% interest in the licence by spending US$8m over 6 years and has already completed initial AC, RC and DD drilling programmes during 2018 and early 2019. IAMGOLD is currently undertaking a c.13,000m Phase 2 AC and RC drilling programme on the southernmost Madina Bafé and Saroudia prospects as part of its year two earn-in;

· Signing of an earn-in agreement allowing the Company to earn up to a 90% interest in the Bibemi and Wapouzé licences in Cameroon. The earn-in agreement calls for spend of US$3.12m over 4 years. During 2018 our local partner established a sample preparation laboratory in Cameroon, and we have completed a rock-chip sampling programme at Bibemi that demonstrated 'bonanza' grades. A Phase 1 trenching programme was started on the licence in late 2018 and initial results announced this month have confirmed multiple zones of orogenic-style gold mineralisation, including 6m @ 3.02 g/t Au, with individual veins returning up to 13.70 g/t Au;

· Our Turkish partner, Lodos, at the Muratdere copper-gold porphyry project, has continued to invest into the project through the completion of an Environmental Impact Assessment ('EIA') and has informed us that we have been diluted below a 10% interest in the joint venture company. Lodos has advised us that they intend to exercise their option to convert our remaining shareholding into a 1.2% (post Turkish tax) net smelter return royalty and we are currently agreeing the necessary legal documents to do so;

· Post year end the Company announced the triggering of a US$0.5m success fee, receivable in instalments, from our Turkish partners on the Karaağaç gold project. This supports the Company's focus on developing projects in conjunction with carefully chosen partners which means that we can expose investors to significant exploration upside whilst also minimising the risk of dilution.

Financial Overview:

· Operating loss of £2.55m reported for the year to 31 December 2018 significantly reduced compared to a loss of £7.50m in the prior year, driven by increased cost discipline, a 26% reduction in administration costs and the successful resolution of a long-running VAT dispute with HMRC;

· Settlement of the VAT dispute to deliver an expected £0.52m cash in the second quarter of 2019. Advisor fees, relating to this dispute, of £170k incurred in 2018 will significantly reduce in 2019;

· Year-end cash balance of £1.29m with incoming funds expected from the resolution of the VAT dispute and the commencement of success-based payments from one of our Turkish partners.

Tim Livesey, CEO of Oriole, commented:

"The turnaround of the Company has been a major focus during the year, alongside the continued development of new targets and the acquisition of new assets.

I am pleased to say that we have been able to address all of the administrative items we highlighted back in March 2018 and have delivered these ahead of schedule, with the name change to Oriole Resources PLC in September 2018 as the final step in the corporate transformation.

We move forward with the programmes at the Dalafin licence and at our new JV in Cameroon, in addition to continuing the search for new opportunities and new partners to work with in the development of the Company. Through the initiatives taken by the Board and management over the last 12 months, Oriole is once again financially stable and is delivering excellent operational results with high-quality partners, clearly demonstrating the value across our portfolio of highly exciting early-stage assets."

Chairman's Statement

2018 has been a year of transformation for the Company. Within the space of 12 months the Company has changed its name, appointed a whole new Board of Directors and implemented a new strategy focused on early stage exploration, building on the core strengths of the Company's Directors and management team.

The Company's strategy is to develop a portfolio of exploration projects for gold and base metals, and identify potential partners to take them into the advanced exploration and mine development stages. To this end we regularly review potential new projects and maintain an active dialogue with mining companies.

New Management Team

Tim Livesey was appointed Chief Executive Officer on 1 March 2018, replacing Dr Bob Foster. Tim brings a wealth of experience in the sector having spent three decades working from generative exploration, through to operations and mine production. He has been involved in the exploration and advancement of several world class deposits, with roles including: Project Director and later CEO of Tethyan Copper Company (at the Reko Diq JV between Barrick and Antofagasta); Managing Director Saudi Arabia for Barrick Gold; Chief Operating Officer at Reservoir Minerals Inc; and Managing Director of Rakita Exploration (at the Nevsun 'Cukaru Peki' project). Tim has also successfully run his own consulting company and holds several Board and Advisory positions within the sector.

Following the retirement of Perry Ashwood, Bob Smeeton was appointed Chief Financial Officer on 4 June 2018 and three months later David Pelham and I completed the full refresh of the Board, with Peter Addison and Chris Worcester stepping down. We thank Peter, Perry and Chris for their service and are pleased to have retained the technical services of Dr Bob Foster on a consultancy basis.

The new Board brings many years of experience across the sector, and in global financial markets, and it is committed to delivering shareholder value. A key first step in that was to relaunch the Company under its new name, Oriole Resources PLC. This was accomplished in the General Meeting of the Company held on 4 September 2018.

Operations

Dalafin, Senegal

On 1 March 2018, the Company announced that it had successfully contracted with IAMGOLD Corporation for its Dalafin project in Senegal ("Dalafin"). Oriole currently holds 85% equity in the company that owns the Dalafin licence and the agreement with IAMGOLD allows them to earn a 70% interest in the licence over a 6-year period by spending US$8.0m. Initial drilling work has commenced and the first year spend commitment of US$0.5m has been reached and exceeded. Drilling results announced so far have confirmed mineralisation within multiple zones at the Madina Bafé target in the south of the licence area. This target is a priority for IAMGOLD as it falls within 10 kilometres of its 2.49Moz Boto gold project, where they have applied for a mining licence.

In February 2019, IAMGOLD outlined its year two work programme. The US$1m exploration programme will continue to focus on Madina Bafé and will include 5,000m regional AC drilling, to extend the previous 2018 campaign northwards, and 4,000m RC drilling to follow-up on best results from the 2018 AC, RC and DD programmes. They will also step north to test the Saroudia prospect, located c.2km NW of Madina Bafé. An initial 2,500m AC drilling programme will test the most prospective area as defined previously by Oriole. Subject to results of the AC drilling, a 1,600m RC programme is planned to follow-up on any trends identified.

Bibemi and Wapouzé, Cameroon

With the Dalafin project being operated by IAMGOLD from March, the Company's experienced exploration teams could focus on new projects and opportunities and on 12 June 2018, we were delighted to announce the completion of an earn-in agreement with Bureau d'Etudes et d'Investigations Géologico-minières, Géotechniques et Géophysiques SARL ('BEIG3'), a well-established Cameroonian company with strong in-country technical and logistic support, for its two early-stage gold exploration projects in north Cameroon, Bibemi and Wapouzé. Strong progress has been made in Cameroon, with an in-country preparation lab established by BEIG3 and a steady stream of work, including rock-chip sampling and an 8,742m Phase 1 trenching programme at Bibemi and a systematic soil sampling programme at Wapouzé.

At Bibemi, preliminary results have been encouraging, with bonanza grades reported on 27 November 2018 from the rock-chip sampling programme and initial results from the Phase 1 trenching confirming multiple zones of orogenic-style gold mineralisation, including 6m @ 3.02 g/t Au, and individual veins returning up to 13.70 g/t Au. The remaining results are anticipated in late Q1/early Q2 2019 and infill Phase 2 trenching is already underway on key zones for a planned 4,360m. At the Wapouzé project, results from the systematic soil sampling are expected later this month.

Investments and Royalty positions

The new Board has inherited a range of investment and potential royalty positions from the previous management team. We take an active interest in managing these positions, including taking Board positions where appropriate, with an ultimate goal of maximising shareholder value. These positions provide a potential source of funding for the Group which we aim to use to minimise future equity fund raisings, although timing and quantum of proceeds are not easily predictable. The most significant positions are set out below.

Thani Stratex Resources ('TSR')

Oriole maintains a monitoring role in the management of TSR and has non-Executive Board representation. In Egypt, TSR has 100% ownership of the Anbat project located within the Hodine licence. In December 2017, it announced a maiden JORC 2012-compliant Mineral Resource Estimate of 209,000 oz at 1.11 g/t Au within porphyry sills (Announcements dated 6 and 13 December 2017). No work was completed at Anbat during the year. The Hodine licence also includes the Hutite project which hosts a non-JORC compliant resource of 520,000oz Au.

TSR also has a 50% interest in two epithermal gold projects in Djibouti; Pandora and Assaleyta. In the first half of 2018 TSR completed phase 2 drilling for 3,036.5 m in 18 holes. Results have demonstrated broad zones of multi-gram gold mineralisation towards the NW-end of the main outcropping Pandora vein, with narrower zones of higher-grade mineralisation (Announcement dated 19 April 2018).

Progress in both Egypt and Djibouti has been limited during 2018 as TSR has been seeking funding for the drill programmes that are required to progress each of the projects. We understand management are continuing to pursue potential funding sources and we await developments in this regard.

Karaağaç

At the Company's former Karaaǧaç gold project in Turkey, the current owner, Anadolu Export Maden Sanayi ve Ticaret Limited Şirketi ("Anadolu"), has confirmed an Indicated resource significantly in excess of the 50,000 ounces of gold necessary to trigger the success-based payment due to Oriole upon reaching of that milestone. A payment agreement of US$25k per month over 20 months has been agreed and, with the payment for February 2019 having already been received, we expect to receive the majority of the US$500k due under the agreement during 2019.

Muratdere

At the Muratdere gold project in Turkey, our joint-venture partner, Lodos Maden Yatırım Sanayii ve Ticaret A.Ş. ("Lodos"), has committed to ongoing expenditure throughout 2019, with a focus on developing the Environmental Impact Assessment ("EIA") programme. Consequently, we have been diluted to an interest of less than 10%, which enables Lodos to exercise an option to convert our position to a 1.2% (post Turkish tax) royalty, and that process is currently under way. Lodos has made good progress on the project and has been working on the EIA with a view to moving towards construction and mining over the next two years.

Hasançelebi and Doğala

At two of the Company's gold projects in Turkey, Hasançelebi and Doğala, the Company has signed an exploration agreement with Turkish private company TET Madencilik Ltd Sti ("TET"). Progress to date has been slow, however we expect exploration work to increase during 2019. Oriole will manage the exploration programme and so its operational overheads in Turkey will be further reduced as costs will be recharged to TET.

Financial Review

Whilst we are reporting a loss for the year of £4.66m (2017: £5.40m), of that, £3.47m is related to our minority holding in TSR. Excluding TSR the Group reported reduced administrative costs of £1.81m, 26% down on the prior year and a £0.52m credit relating to our successful VAT appeal.

Looking forward, the conclusion of the VAT situation will reduce advisor costs by approximately £0.17m. Additionally, we recently announced the successful application for Research and Developments credits, relating to 2016, on our exploration activities which brought £0.04m cash back in February 2019 and should bring further income going forward.

We are confident we have achieved an efficient cost base model that allows us to focus our available funds on delivering shareholder value by maximising our exploration efforts.

Outlook

In 2019, we need to build on the foundations we have put in place during 2018. With a new Board and an excellent team of experienced geologists, there is a great opportunity for the Company to establish itself as a high-quality exploration company. Whilst funding has been difficult for the industry for many years, we have a good base of investment and royalty assets which we are gradually monetising, and exciting exploration projects in which to invest. We remain alert to other interesting projects that may become available and are encouraged by the recent rise in the gold price and potential opportunities arising from the merger of Barrick and Randgold, and the proposed acquisition of Goldcorp by Newmont.

On behalf of Oriole's Board of Directors, I would like to express our appreciation and thanks to all of our employees for their efforts and hard work during the past year.

John McGloin

Non-Executive Chairman

12 March 2019

Extracts from the Strategic Report

Principal Activities:

The principal activity of the Group is the exploration and development of gold and other high-value base metals projects.

Strategic approach:

The Board's strategy is to establish the Company as a leading value-adding project-generator in our chosen mineral specialisations and in our geographic areas of operation. We seek to acquire exposure to new frontier districts throughout Africa and Europe, and continually review new opportunities in order to add to our exploration portfolio. The Board is committed to developing a portfolio of projects that cover a range of mineral deposits across multiple jurisdictions, thus mitigating sovereign, technical and operational risks.

The Group finances its activities through the monetisation of more advanced projects and through periodic capital raisings.

Organisation overview:

Following the shareholder requsition in November 2017, the Company needed to put the events of 2017 behind it. Consequently, the Company has undergone significant managerial change, a strategy review and a rebrand. Managerial change started on 1 March with the appointment of Tim Livesey as Chief Executive Officer and the subsequent appointments of Bob Smeeton, John McGloin and David Pelham saw a full refresh of the Board of Directors during the year. The Board remains ably supported by a management team who, for many years, have delivered successful exploration projects across Turkey and Africa.

Business environment:

The price of gold fell 2% during the year, from an opening position of US$1,303 per ounce, to US$1,281 at 31 December 2018. During the year the price fell as low as US$1,177 per ounce in September but has rallied strongly since then and is above US$1,300 at the time of this report. With continued economic uncertainty, gold's reputation as a safe haven is leading to upward pressure on its price. The junior sector will benefit from this increasing gold price. Since 2012, exploration budgets and teams have been cut in the major gold producers, and resource pipelines have not been replenished. The need to replenish resources will drive the need for funding into early-stage exploration. The junior exploration sector will benefit from this and with a rising gold price, we expect to see increased appetite for investment into our sector.

Business performance:

2018 Operations:

The Group's main operations are split between active exploration projects and the management of our investment and royalty positions.

Active Exploration projects:

The Group entered 2018 with one active exploration project, namely the Dalafin gold project in eastern Senegal. Exploration work in earlier years had advanced this project to the point where significant further exploration expenditure had become justified. On 1 March 2018, the Company signed an agreement with Canadian-listed gold miner IAMGOLD Corporation ('IAMGOLD'), giving them the option to earn up to 70% of the licence in a two-stage process by spending up to US$8 million on exploration. The earn-in is progressing at an encouraging pace (announcements dated 31 May 2018, 25 October 2018, 6 February 2019 and 28 February 2019). The main exploration targets currently being pursued by IAMGOLD are in the south of the licence area, within 20 kilometres of their 2.49Moz Boto gold project, where they have recently applied for a mining licence (IAMGOLD Announcement 6 November 2018). IAMGOLD is in the second year of its earn-in, with a planned US$1m exploration programme currently underway on the Madina Bafé and Saroudia prospects.

In line with the strategic intent to expand and diversify the exploration portfolio, on 12 June the Company signed an earn in agreement with BEIG3 to gain an interest in the Bibemi and Wapouzé licences in northern Cameroon. Early-stage exploration work has commenced on both licences, with the rock-chip sampling programme at Bibemi delivering high-grade gold (announcement dated 19 November 2018). Final results from a Phase 1 trenching programme at Bibemi are pending and results are also expected shortly from a recently-completed soil sampling programme at Wapouzé.

Investment and royalty positions:

The Company invested a further £156k in Thani Stratex Resources Ltd ("TSR") during the year to maintain its c.30% shareholder interest. From June 2018 the Board decided not to continue funding TSR and accepted that its shareholding would be diluted down to 29.0% at the year end. Progress on the TSR licences has been limited in 2018 as the company has focused on securing alternative sources of finance to fund its exploration programmes in Egypt and Djibouti. We maintain a position on the TSR Board of Directors and actively engage with the management team to ensure we are fully aware of their plans and operations.

At the Company's former Karaaǧaç gold project in Turkey, Anadolu Export Maden Sanayi ve Ticaret Limited Şirketi ("Anadolu") has confirmed a JORC 2012-compliant Indicated Resource of 156,798oz, which is the trigger for a success based payment of US$500k to Oriole. We have agreed payment terms for this debt and expect the majority to be received in 2019. Oriole also retains a 1.5% net smelter return royalty on any future mineral production. The Oriole team in Turkey are assiting with the exploration.

In February 2016, the Board took the decision not to contribute its pro rata share of financing in the Muratdere Madencilik copper-gold project in Northern Turkey. Our joint-venture partner, Lodos Maden Yatırım Sanayii ve Ticaret A.Ş. ("Lodos") has continued to develop the project and we have consequenlty been diluted to below a 10% interest, which under the terms of the joint-venture agreement will trigger dillution to a royalty position, of 1.2% post-Turkish tax, once Lodos exercise their option to do so.

Financial Review:

The Group's loss after tax for the year was £4,661k (2017: loss of £5,402k). This figure includes a loss of £2,042k arising from our investment in Thani Stratex Resources Limited ('TSR'), following the relinquishment of TSR's licences in Ethiopia in May. In addition, the Board has recognised an impairment provision of £1,430k against the carrying value of TSR.

Administration expenses of £1,806k (2017: £2,442k) were 26% lower than the previous year, reflecting the Group's reduced cost base and its return to a focus on earlier-stage exploration.

A number of one-off costs impacted the 2017 results, with £5,060k of one-off items recognised, somewhat offset by the recognition of £2,883k profit on the sale of the interest in the Altintepe mine in Turkey. The 2017 one-off items included a provision for a VAT repayment of £557k which was the subject of a long-running dispute with the UK tax authorities. This dispute has now been successfully resolved and £516k of that accrual has been released to the Income Statement in 2018, with the cash expected to be received from HMRC early in Q2 of 2019.

The Group ended the year with a cash balance of £1,287k, a decrease in the year of £752k. Incoming funds included a net £1,061k from the share placing in June 2018 and £821k from the repayment of the loan made to Crusader Resources Limited in 2017. £229k was invested into our early stage exploration projects in Cameroon. A further £156k was invested in TSR to maintain our c.30% interest early in the year, although the Board decided not to contribute to further funding rounds from June onwards.

Tim Livesey

Chief Executive Officer

12 March 2019

Financial Statements

Statement of consolidated comprehensive income

Statement of consolidated financial position

Statement of consolidated changes in equity

Statement of consolidated cash flows

Notes to the consolidated financial statements

1. Basis of preparation

The financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union (EU), IFRIC interpretations and those parts of the Companies Act 2006 applicable to companies reporting under IFRS. The financial statements have been prepared under the historical cost convention as modified by the measurement of certain investments at fair value and have been prepared on a going concern basis.

The financial information set out in this announcement does not constitute the Group's statutory accounts for the year ended 31 December 2018 or the year ended 31 December 2017 under the meaning of Section 434 the Companies Act 2006 but is derived from those accounts. Statutory accounts for the years ended 31 December 2018 and 31 December 2017 have been reported on by the Independent Auditors. The Independent Auditors' Reports on the Annual Report and Financial Statements for each of 2018 and 2017 were unmodified, did not draw attention to any matters by way of emphasis and did not contain a statement under 498(2) or 498(3) of the Companies Act 2006.

The statutory accounts are available at www.orioleresources.com and will be delivered to the Registrar of Companies following the Company's Annual General Meeting. The statutory accounts for the year ended 31 December 2017 have been filed with the Registrar of Companies.

It is the prime responsibility of the Board to ensure the Company and the Group remains a going concern. At 31 December 2018 the Group had cash and cash equivalents of £1.3m, expected incoming funds from HMRC in respect of a £0.5m VAT refund and from a Turkish partner in respect of a success-based fee of US$0.5m, and no borrowings. The Company and the Group have minimal contractual expenditure commitments The Board therefore considers the present funds sufficient to maintain the working capital of the Company and Group for a period of at least 12 months from the date of signing the annual report and financial statements based on the forecasts of the Directors. For these reasons the Directors continue to adopt the going concern basis in the preparation of the financial statements.

2. Segment reporting

The Group's main exploration operations are located in Turkey, East Africa and West Africa. The Group's head office is located in the UK and provides corporate and support services to the Group and researches new areas of exploration opportunities. The management structure and the management reports received by the Directors and used to make strategic decisions reflect the split of operations.

b) The allocation of profits and losses for the year by segment is as follows:

3. Investment in equity-accounted associates

The balance at 31 December represents the Company's investment in Thani Stratex Resources Limited ("TSRL"). The shareholding interest reduced from 30.4% at 31 December 2017 to 29.0% at 31 December 2018.

4. Financial assets

Available for sale financial assets

The above investments have been reclassified to financial assets at fair value through comprehensive income.

Financial assets at fair value through other comprehensive income

Financial assets at fair value through other comprehensive income comprise:

· an 11% investment in Tembo Gold Corporation and:

· an 8% investment in Aforo Resources Limited.

The fair value of the investment in Tembo has been valued under level 1 of the fair value hierarchy and has been reduced to £187k following a prolonged reduction in the quoted value of its shares on the Toronto Stock Exchange. This has resulted in a loss of £167k being recognised in the consolidated statement of comprehensive income. The investment in Aforo has been valued under level 3 at £227k taking into account the early stage nature of the project.

5. Intangible assets

The Group's Intangible assets comprise entirely of exploration assets.

The capitalised cost of the principal projects and the additions during the year are as follows:

** ENDS **

The information contained within this announcement is deemed by the Company to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014. Following the publication of this announcement, this inside information is now considered to be in the public domain.

For further information please visit www.orioleresources.com, @OrioleResources on Twitter, or contact: 

Oriole Resources Plc Tel: +44 (0)20 7830 9650

Tim Livesey / Bob Smeeton / Claire Bay

Camarco (IR/PR Contact) Tel: +44 (0)20 3757 4980

Gordon Poole / Nick Hennis / Emily Hall

Grant Thornton UK LLP Tel: +44 (0)20 7383 5100

Samantha Harrison / Ben Roberts / Niall McDonald

Hannam & Partners Tel: +44 (0)20 7907 8500

Neil Passmore / Andrew Chubb

Notes to Editors:

Oriole Resources PLC is an AIM-listed exploration company, operating in Africa and Europe. It is focused on early-stage exploration in Cameroon and the more advanced Dalafin gold project in Senegal, where IAMGOLD has the option to spend US$8m to earn a 70% interest. The Company has a number of interests and royalties in companies operating throughout Africa and Turkey and is assessing new opportunities in both regions.