Interim Report

RNS Number : 6920N

Eurasia Mining PLC

26 September 2019

 

Eurasia Mining PLC (AIM:EUA)

('Eurasia' or 'the Company')

Interim report

for the six months ended

30 June 2019

Eurasia Mining plc, the platinum and gold production company, announces its interim results for the six months ended 30 June 2019.

Chairman's Statement

Dear Shareholder,

 The first six months of 2019 saw the Company embark on its second season of production at material levels at our West Kytlim alluvial platinum, PGM and gold mine. Production has been ongoing at site since May of this year concurrent with the project's most aggressive drilling programme in recent years. Earlier in September the Company moved forward in its plan to operate its own mines and purchased the necessary processing plant and other equipment. The West Kytlim mine is now operating on an owner basis, with 100% of metal revenues payable to Eurasia as opposed to 30-35% prior to September this year. Our experience on-site over the past number of years ensures our people have the necessary skills and expertise to successfully run the project from resource definition right through to concentrate upgrade and shipment of saleable product.

Our plans for sustainable phased production increases at the project incorporate resource and reserve upgrade programmes with further capitalisation of the asset from the mine's cashflow - this at a time of more buoyant metal prices and a generally bullish outlook in the PGM sector, especially for palladium, platinum, iridium and rhodium as well as gold that are all in the basket of metals of our sellable product.

Meanwhile, the Monchetundra Project was progressed considerably with important technical statutory reporting finalised and submitted to the relevant authorities by mid-September 2019. The flanks application surrounding the approved reserves and resources at both the Loipishnune and West Nittis deposits was also finalised and submitted for approval in late-September. Work is now ongoing to tie up the remaining work required to commence the Sinosteel EPC and see the 2Moz Monchetundra project through to production.

Progress has therefore been steady at both of our main projects through 2019. We thank our shareholders and supporters of the Company and look to further build on our recent successes to all our benefit. We also welcome Alexei Churakov to the Company in a role as a strategic advisor. As announced recently Mr Churakov has already made very significant contributions to both the West Kytlim and Monchetundra Projects. It is our intention to continue to broaden the experience base on our board in the coming months as we continue to transition from an exploration focused Company to an established PGM mining Company.

Christian Schaffalitzky

Executive Chairman

Enquiries:

Eurasia Mining PLC Christian Schaffalitzky / Keith Byrne	Tel: [phone]
WH Ireland Limited (Nominated Adviser & Broker) Katy Mitchell / James Sinclair-Ford	Tel: [phone]
First Equity Limited (Joint Broker)	Tel: [phone]
Jason Robertson
Optiva Securities (Joint Broker) Christian Dennis	Tel: [phone]

Operations Update

West Kytlim Platinum and Gold mine, Ural Mountains, Russia.

West Kytlim performance

Production volumes at the Kluchiki work area at West Kytlim were maintained at high levels from May 2019, with new additions to the processing circuit including a conveyance system to load material to the sluice and an additional circuit to target additional metal recovery working well.

Total production from mid- May to 14th^th September 2019 stood at 55kg (1,770 ounces) total raw platinum, with further metal at various stages in the production cycle. Metal prices have run substantially higher through the course of this year's mining season when compared to 2018. Platinum prices, as at 20^th September have advanced 20% on this time last year (20 Sept 2018 spot $826/ oz compared to $941/ oz at 20th Sept 2019). Rhodium prices are 119% up over the same period and Palladium 64% (source: Kitco.com).

In early September this year a decision was made to purchase the enrichment plant and to continue mining on an owner/operator basis. The main element of the washplant is a scrubber (a large rotating cylindrical screen through which platinum bearing gravels pass under gravity and are disintegrated and washed) which was purchased from mine cashflow with peripheral machinery including pumps, piping, generators, crew shelters and other sundry items. At the time of publication of this interim report mining was ongoing at site, and it is the Company's intention to continue mining to the end of the 2019 season and to commence immediately in 2020 on a 100% of revenue basis as opposed to 30-35% up until late September.

Reserves Drilling program progress update

A reserve upgrade drilling programme focused on the Bolshaya Sosnovka, Ust Tylai and Ust Tylai Pravy areas was outlined, funded and then commenced in early 2019. This program is one of the most aggressive programmes undertaken at West Kytlim in recent years and is designed to ensure available mineable reserves for planned capacity expansion from 2020 and subsequent years. The reserves definition work proceeds in parallel with mining and the Company expects it will lead to a revised reserves calculation to be prepared and submitted for approval.  A total of 1325 metres are now complete (to 16th September 2019), and a total of 835 exploration samples have been processed at the on-site laboratory. The program is to focus on the relatively higher grade Bolshaya Sosnovka area for the remainder of 2019, with 400m of regular diameter core drilling and 180m of verification drilling scheduled to be finished at Bolshaya Sosnovka by year end.

The Bolshaya Sosnovka, Ust Tylai and Ust Tylai Pravy areas are considerably larger than both the Malaya Sosnovka and Kluchiki Areas targeted by mining operations during this and last year.

Environmental and HSE

Eurasia and its contractor are committed to the highest Corporate Social Responsibility and environmental management standards at its mines. No incidents were reported for the period being reported. Areas mined during 2019 have been remediated as per our agreement with our Contractor, and in accordance with mining regulations as per our mining, forestry and environmental permits.

MONCHETUNDRA

Monchetundra is ca. 2 million-ounce PGM (Reserve + Resource) project near the town of Monchegorsk on the Kola Peninsula. A mining license was awarded in November 2018 and a financed Engineering Procurement Construction and Financing contract is in place with the Chinese semi-state group Sinosteel. In January 2019 a contract was agreed with Eurasia's long-standing exploration programme director the Central Kola Expedition, to write and submit a detailed project design report to authorities. This report sets out a minimum schedule of work to be undertaken on a prescribed schedule and was designed to integrate with the already arranged EPCF contract. The report was submitted on schedule on 13^th September 2019.

Monchetundra flanks application

As per Russian subsoil licensing legislation, the holder of a mining right is granted an automatic and exclusive right to apply for exploration tenements directly adjacent to their approved resource. Eurasia have previously utilised this right in application for exploration ground adjacent to the West Kytlim project. After desktop studies and analysis of available literature a final perimeter was agreed for the Monchetundra flanks application in August 2019, and an application submitted to the relevant authorities on 23rd September 2019.

The Monchetundra deposit is comprised of two separate deposits namely the Loipishnune and West Nittis deposits - both of which demonstrate clear on-strike continuation of mineralisation beyond the limit of the current approved reserves.

The applied for area contains a significant portion of an area to the north and west of the West Nittis deposit known as the Nittis Kamuzhaya Travanya (NKT ) Massif, an area previously mined for high grade nickel and copper and with resources in PGM provided to the Company by the Apatity branch of the Territorial fund of geological information. At NKT a Russian category P resource (similar to an Inferred Resource under the JORC classification) was calculated by the state funded research group Rosgeologia in 2017  and comprises  Ni - 298,000 t; Cu - 229,000 t; Co- 11,300 t; Pt - 18.5 tonnes/594,000 oz; Pd - 55 tonnes/1.7moz; Au - 7.6 tonnes/0.24moz; Ag - 185 tonnes/6moz. This resource has not been verified by the Company and accordingly cannot be relied upon, but is provided as an indication of potential. The Directors believe further potential resources exist in the on-strike continuation of the mineralisation at the Loipishnune deposit as it extends into the area between Loipishnune and West Nittis, in fact several early 'discovery holes' drilled by Eurasia in 2006 occur in this area beyond the current extent of the proposed Loipishnune pit and contain significant intervals including 8.4 g/t (Pt+Pd) over 3.6m occurring in Drillhole UM-3(see RNS dated 5th November 2006). These areas may be followed up in due course and, if so, the Company will provide updates as applicable.

The Monchegorsk Complex and Monchetundra Massif, which host the West Nittis and Loipishnune deposits are known to contain type examples of the majority of the layered intrusion and contact hosted PGM deposit types recognised globally. With the submission of this Flanks application, and the already state approved reserves in the Loipishnune and West Nittis deposits, the directors believe that Eurasia is established as a dominant player in the region.

Engineering Procurement Construction and Financing (EPCF) Contract

An EPCF contract to develop the mine at Monchetundra is already in place with Sinosteel, a state owned Chinese engineering group focused on mining, which was signed in October of 2016. The contract provides for Sinosteel to undertake the mine and processing plant construction and commissioning on a turnkey, commercial arms-length basis. 85 per cent (or US$149,600,000) of the contract value has been arranged as debt-based by Sinosteel - this element of plant construction costs will remain on the Sinosteel balance sheet until such time as the plant is operating at full capacity and to designed specification.

The EPCF also includes a sub-contract to be awarded to Eurasia's subsidiary Terskaya Mining Kompany, to cover initial development work at the Loipishnune open pit. This sub-contract, in the amount of US$50m may be drawn down on award of the mining permit.

Condensed consolidated statement of comprehensive income

for the six months ended 30 June 2019

	Note	6 months to	12 months to	6 months to
		30 June	31 December	30 June
		2019	2018	2018
		(unaudited)	(audited)	(unaudited)
		£	£	£
Revenue	4	13,316	2,573,329	447,545
Cost of sales		(16,309)	(2,280,559)	(409,374)
Gross (loss)/profit		(2,993)	292,770	38,171
Administrative costs		(572,236)	(1,609,068)	(399,737)
Investment income	5	1,211	5,821	3,168
Finance costs		-	(623,779)	(438,506)
Other gains	5	643,872	107,083	246,826
Other losses	5	-	(1,414,768)	(422,165)
Profit/(loss) before tax		69,854	(3,241,941)	(972,243)
Income tax expense		(45,373)	-	-
Profit/(loss) for the period		24,481	(3,241,941)	(972,243)
Other comprehensive (loss)/income:
Items that will not be reclassified subsequently to profit and loss:
NCI share of foreign exchange differences on translation of foreign operations		(17,633)	69,894	59,230
Items that will be reclassified subsequently to profit and loss:
Parents share of foreign exchange differences on translation of foreign operations		(185,002)	258,351	75,098
Other comprehensive (loss)/income for the period, net of tax		(202,635)	328,245	134,328
Total comprehensive loss for the period		(178,154)	(2,913,696)	(837,915)
Profit/(loss) for the period attributable to:
Equity holders of the parent		(105,775)	(2,573,231)	(820,852)
Non-controlling interest		130,256	(668,710)	(151,391)
		24,481	(3,241,941)	(972,243)
Total comprehensive loss for the period attributable to:
Equity holders of the parent		(290,777)	(2,314,878)	(745,754)
Non-controlling interest		112,623	(598,816)	(92,161)
		(178,154)	(2,913,694)	(837,915)
Basic and diluted loss (pence per share)		(0.004)	(0.12)	(0.02)

Condensed consolidated statement of financial position

as at 30 June 2019

	Note	At 30 June	At 31 December	At 30 June
		2019	2018	2018
		(unaudited)	(audited)	(unaudited)
		£	£	£
ASSETS
Non-current assets
Property, plant and equipment	6	3,984,544	3,660,614	4,074,458
Assets in the course of construction		36,805	33,193	35,688
Intangible assets	7	885,518	802,661	801,026
Other financial assets	8	-	-	456,061
Total non-current assets		4,906,867	4,496,468	5,367,233
Current assets
Inventories		43,053	1,495	122,380
Trade and other receivables		54,708	49,046	81,326
Cash and bank balances		317,796	452,676	165,825
Total current assets		415,557	503,217	369,531
Total assets		5,322,424	4,999,685	5,736,764
EQUITY
Capital and reserves
Issued capital	9	29,397,189	28,803,321	27,145,879
Reserves	10	3,803,544	3,941,115	3,463,934
Accumulated losses		(26,738,291)	(26,632,516)	(25,231,286)
Equity attributable to equity holders of the parent		6,462,442	6,111,920	5,378,527
Non-controlling interest		(1,306,416)	(1,419,039)	(800,748)
Total equity		5,156,026	4,692,881	4,577,779
LIABILITIES
Current liabilities
Borrowings	11	48,330	43,586	558,094
Trade and other payables		105,385	263,218	330,891
Other financial liabilities		-	-	270,000
Current tax liabilities		12,683	-	-
Total current liabilities		166,398	306,804	1,158,985
Total liabilities		166,398	306,804	1,158,985
Total equity and liabilities		5,322,424	4,999,685	5,736,764

Condensed statement of changes in equity

for the six months ended 30 June 2018

		Attributable to owners of the parent
	Note	Share capital	Share premium	Deferred shares	Other reserves	Foreign currency translation reserve	Accumulated losses	Total attributable to owners of parent	Non-controlling interest	Total equity
		£	£	£	£	£	£	£	£	£
Balance at 1 January 2018		1,847,847	17,749,704	7,025,483	3,744,216	(340,848)	(24,484,719)	5,541,683	(708,634)	4,833,049
Issue of ordinary share capital for cash		172,217	344,433	-	-	-	-	516,650	-	516,650
Shares issued under terms of financing arrangements		10,522	25,253	-	-	-	-	35,775	-	35,775
Share issue cost		-	(29,580)	-	-	-	-	(29,580)	-	(29,580)
Recognition of equity element of convertible loan notes		-	-	-	59,753	-	-	59,753	-	59,753
Non-controlling interests arising on sale of interest in subsidiary		-	-	-	-	-	-	-	47	47
Transaction with owners		182,739	340,106	-	(14,533)	-	74,286	582,598	47	582,645
Loss for the period		-	-	-	-	-	(820,852)	(820,852)	(151,391)	(972,243)
Other comprehensive loss
Exchange differences on translation of foreign operations		-	-	-	-	75,098	-	75,098	59,230	134,328
Total comprehensive income		-	-	-	-	75,098	(820,852)	(745,754)	(92,161)	(837,915)
Balance at 30 June 2018		2,030,586	18,089,810	7,025,483	3,729,683	(265,750)	(25,231,285)	5,378,527	(800,748)	4,577,779

 

Condensed statement of changes in equity

for the six months ended 30 June 2019

		Attributable to owners of the parent
	Note	Share capital	Share premium	Deferred shares	Other reserves	Foreign currency translation reserve	Accumulated losses	Total attributable to owners of parent	Non-controlling interest	Total equity
		£	£	£	£	£	£	£	£	£
Balance at 1 January 2019		2,371,569	19,406,269	7,025,483	4,023,610	(82,495)	(26,632,516)	6,111,920	(1,419,039)	4,692,881
Issue of ordinary share capital for cash		116,183	510,185	-	-	-	-	626,368	-	626,368
Share issue cost		-	(32,500)	-	-	-	-	(32,500)	-	(32,500)
Recognition of options under employee share option plan					47,431
Transaction with owners		116,183	477,685	-	47,431	-	-	593,868	-	593,868
Loss for the period		-	-	-	-	-	(105,775)	(105,775)	130,256	24,481
Other comprehensive loss
Exchange differences on translation of foreign operations		-	-	-	-	(185,002)	-	(185,002)	(17,633)	(202,635)
Total comprehensive income		-	-	-	-	(185,002)	(105,775)	(290,777)	112,623	(178,154)
Balance at 30 June 2019		2,487,752	19,883,954	7,025,483	4,071,041	(267,497)	(26,738,291)	6,462,442	(1,306,416)	5,156,026

Condensed consolidated statement of cash flows

for the six months ended 30 June 2018

		6 months to	12 months to	6 months to
		30 June	31 December	30 June
		2019	2018	2018
		(unaudited)	(audited)	(unaudited)
		£	£	£
Cash flows from operating activities
Profit/(loss) for the period		24,481	(3,241,941)	(972,243)
Adjustments for:
Depreciation and amortisation of non-current assets:
- Fixed assets		48,326	367,173	160,113
Finance costs recognised in profit or loss		-	623,779	438,506
Investment revenue recognised in profit or loss		(1,211)	(5,821)	(3,168)
Loss on impairment of financial assets			450,936
(Gain)/loss on disposal of investments		-		(246,826)
Income tax expense recognised in profit or loss		45,373	-	-
Gain on valuation of derivative financial instrument		-	(107,083)	45,000
Loss on loan settlement		-	60,405	-
Net foreign exchange (profit)/loss		(643,872)	903,427	377,165
Expense recognised in respect of warrants issued for professional services		-	14,307	-
Expense recognised in respect of options under employee share option plan		47,431	455,028
		(479,472)	(479,790)	(201,453)
Movements in working capital
(Increase)/decrease in inventories		(41,395)	3,425	8,464
(Increase)/decrease in trade and other receivables		(19,031)	36,522	(117,090)
(Decrease)/increase in trade and other payables		(175,771)	37,324	99,253
Cash used in operations		(715,669)	(402,519)	(210,826)
Income taxes paid		(16,130)
Net cash used in operating activities		(731,799)	(402,519)	(210,826)
Cash flows from investing activities
Interest received		1,211	5,821	3,168
Proceeds from sale of investment securities		-	-	246,873
Payments for property, plant and equipment		(11,775)	(113,198)	(75,612)
Payments for other intangible assets		(415)	(49,164)	(977)
Net cash (used in)/generated by investing activities		(10,979)	(156,541)	173,452
Cash flows from financing activities
Proceeds from sale of non-controlling interest			236,772
Proceeds from issues of equity shares		593,868	1,149,022	487,070
Repayment of borrowings		-	(447,440)	(370,902)
Net cash generated by financing activities		593,868	938,354	116,168
Net (decrease)/increase in cash and cash equivalents		(148,910)	379,294	78,794
Effects of exchange rate changes on the balance of cash held in foreign currencies		14,030	(16,437)	(2,788)
Cash and cash equivalents at the beginning of period		452,676	89,819	89,819
Cash and cash equivalents at the end of the period		317,796	452,676	165,825

 

Selected notes to the condensed consolidated financial statements

for the six months ended 30 June 2019

1.   General information

Eurasia Mining plc (the "Company") is a public limited company incorporated and domiciled in Great Britain with its registered office at International House, 42 Cromwell Road, London SW7 4EF, United Kingdom and principal place of business at Clubhouse Bank, 1 Angel Court, EC2R 7HJ. The Company's shares are listed on AIM, a market of the London Stock Exchange. The principal activities of the Company and its subsidiaries (the "Group") are related to the exploration for and development of platinum group metals, gold and other minerals in Russia.

The financial information set out in these condensed interim consolidated financial statements (the "Interim Financial Statements") do not constitute statutory accounts as defined in Section 435 of the Companies Act 2006. The Group's statutory financial statements for the year ended 31 December 2017, prepared under International Financial Reporting Standards (the "IFRS"), have been filed with the Registrar of Companies. The auditor's report on those financial statements was unqualified. The report did not contain a statement under Section 498(2) of the Companies Act 2006.

2. Basis of preparation

The Group prepares consolidated financial statements in accordance with International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB) ,as endorsed by the European Union (EU). These condensed consolidated interim financial statements for the period ended 30 June 2019 have been prepared by applying the recognition and measurement provisions of IFRS and the accounting policies adopted in the audited accounts for the year ended 31 December 2018.

These Interim Financial Statements have been prepared under the historical cost convention.

The accounting policies have been applied consistently throughout the Group for the purposes of preparation of these condensed consolidated interim financial statements.

The Interim Financial Statements are presented in Pounds Sterling (£), which is also the functional currency of the parent company.

3. Accounting policies

The Interim Financial Statements have been prepared in accordance with the accounting policies adopted in the Group's last annual financial statements for the year ended 31 December 2018.

4. Revenue

		6 months to	12 months to	6 months to
		30 June	31 December	30 June
		2019	2018	2018
		£	£	£
Sale of platinum and other metals		13,316	2,573,329	447,545
		13,316	2,573,329	447,545

The 2019 mining season commenced later than 2018 season, due to weather restrictions and additions made to the processing circuit aimed at achieving better recoveries and more consistent throughput, which held up the start of production by several weeks. The modifications were implemented successfully, however, as a result, the majority of 2019 revenues fall in the second half of 2019.

5. Other gains and losses

		6 months to	12 months to	6 months to
		30 June	31 December	30 June
		2019	2018	2018
		£	£	£
Gains
Change in fair value of derivative instrument		-	107,083	-
Net foreign exchange gain		643,872	-	-
		643,872	107,083	-
Losses
Impairment of investments		-	(450,936)	-
Loss on debt settlement		-	(60,405)	-
Net foreign exchange loss		-	(903,427)	(84,252)
		-	(1,414,768)	(84,252)
		643,872	(1,307,685)	(84,252)

6. Property, plant and equipment

		30 June	31 December	30 June
		2019	2018	2018
		£	£	£
Net book value at the beginning of period		3,660,614	4,370,475	4,370,475
Additions		11,775	113,198	75,612
Depreciation		(48,326)	(367,173)	(160,113)
Exchange differences		360,481	(455,886)	(211,516)
Net book value at the end of period		3,984,544	3,660,614	4,074,458

7. Intangible assets

		30 June	31 December	30 June
		2019	2018	2018
		£	£	£
Net book value at the beginning of period		802,661	840,793	840,793
Additions		415	49,164	977
Exchange differences		82,442	(87,296)	(40,744)
Net book value at the end of period		885,518	802,661	801,026

Intangible assets represent capitalised costs associated with Group's exploration, evaluation and development of mineral resources.

8. Other financial assets

		30 June	31 December	30 June
		2019	2018	2018
Advances to acquire interest in uranium project		-	-	456,061
		0	0	456,061

Advances to acquire interest in uranium project represent payment of $602,000 made in 2011 towards acquisition of 55% interest in the Kamushanovsky uranium project in Kyrgyzstan translated using the prevailing rate of exchange at the end of reporting period.

 

9. Share capital

		30 June	31 December	30 June
		2019	2018	2018
Issued ordinary shares with a nominal value of 0.1p:
Number		2,030,585,874	2,371,569,430	2,030,585,874
Nominal value (£)		2,030,586	2,371,569	2,030,586
Fully paid ordinary shares carry one vote per share and carry the right to dividends.
Issued deferred shares with a nominal value of 4.9 p:
Number		143,377,203	143,377,203	143,377,203
Nominal value (£)		7,025,483	7,025,483	7,025,483

Deferred shares have the following rights and restrictions attached to them:
- they do not entitle the holders to receive any dividends and distributions;
- they do not entitle the holders to receive notice or to attend or vote at General Meetings of the Company;
- on return of capital on a winding up the holders of the deferred shares are only entitled to receive the amount paid up on such shares after the holders of the ordinary shares have received the sum of 0.1p for each ordinary share held by them and do not have any other right to participate in the assets of the Company.

The increase in the Company's issued share capital during the reporting period occurred as follows:

Ordinary shares		Number of shares	Share capital	Share premium
			£	£
Balance at 1 January 2019		2,371,569,430	2,371,569	19,406,269
Share placing for cash		116,182,491	116,183	510,185
Cost of issue of shares		-		(32,500)
Balance at 30 June 2019		2,487,751,921	2,487,752	19,883,954
Deferred shares		Number of deferred shares	Deferred share capital
			£
Balance at 1 January and 30 June 2019		143,377,203	7,025,483

10. Reserves

		30 June	31 December	30 June
		2019	2018	2018
		£	£	£
Capital redemption reserve		3,539,906	3,539,906	3,539,906
Foreign currency translation reserve		(267,497)	(82,495)	(265,750)
Equity-based payment reserve		531,135	483,704	130,025
		3,803,544	3,941,115	3,463,934

The capital redemption reserve was created as a result of a share capital restructuring in earlier years. There is no policy of regular transactions affecting the capital redemption reserve.

The foreign currency translation reserve represents exchange differences relating to the translation from the functional currencies of the Group's foreign subsidiaries into GBP.

The equity-based payments reserve represents a reserve arisen on (i) the grant of share options to employees under the employee share option plan and (ii) on issue of warrants under terms of professional service agreements.

11. Borrowings

		30 June	31 December	30 June
		2019	2018	2018
		£	£	£
Non-current
Convertible loan notes		-	-	-
		-	-	-
Current
Unsecured loan		48,330	43,586	46,862
Convertible loan notes		-	-	511,232
		48,330	43,586	558,094
		48,330	43,586	558,094

On 3 February 2017 the Group entered into unsecured loan facility to borrow up to 57 million Russian Rubbles (RR) at 14% per annum, from Region Metal, the then subcontractor and West Kytlim mine operator. The Group had drawn RR 4.18 million and repaid RR0.3 million in 2017. As the subcontractor's arrangements had been discontinued the Group has no intention to utilise any more funds from this facility.
The loan maturity date is 31 December 2019.

 

END

 

 

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