Interim Results

RNS Number : 3754N
Ovoca Gold PLC
28 September 2012
 

Ovoca Gold PLC

28September 2012

 

Ovoca Gold plc ("Ovoca" or the "Company")

2012 Interim Results

 

Ovoca Gold is pleased to announce its interim financial statements and report covering the six month period from 1 January 2012 to 30 June 2012.

 

Highlights:

 

·      Cash and cash equivalents and available for sale financial assets of US$36.6 million as at 30 June 2012

·      Exploitation license for the Olcha deposit received from the Russian State regulatory bodies

·      Successful mobilization during the 2012 summer field season for exploration and development at the two core projects at Stakhanovskiy and Rassoshinskaya

·      Appointment of Kirill Golovanov as CEO

·      Stakhanovskiy Project surface trench assay results from Berezitoviy and Burovaya ore bodies of:

v 2.5 metres at 281.40 g/t gold

v 4.0 metres at 41.28g/t gold

v 1.5 metres at 45.76 g/t gold

·      Processing of approximately 5,000 tonnes of primary rock by gravity concentration plant from Berezitoviy and Zabolocheniy ore bodies

·      Rassoshinskaya Project HQ-sized core drilling at the Zet Prospect produced two significant intersections:

v 0.4 metres at 74.40 g/t gold and 342.0 g/t silver

v 2.0 metres at 4.53 g/t gold and 38.9 g/t silver

 

 

Post period:

 

·      Continuation of bulk sample gravity processing at Stakhanovskiy with increased average daily throughput

·      Processing of 16,586 tonnes (for the 2012 calendar year to end of August) of primary rock from the Berezitoviy and Zabolocheniy ore bodies by gravity concentration, averaging 204 tonnes per day

·      Diamond core drilling started at Berezitoviy with 288 metres drilled in August from a planned 4,020 metres

·      Appointment of Wardell Armstrong International to estimate resources at the Stakhanovskiy Project

·      Thin high-grade gold drill intersections discovered at Podgorniy. High grade gold drill intercepts were found to persist at considerable depth to 356 metres vertical below surface

·      The three best HQ diamond core drill holes intercepted at Podgorniy were:

v 1.2 metres at 10.40 g/t gold and 101.00g/t silver from 26.0 metres depth

v 2.9 metres at 7.94 g/t gold and 18.70 g/t silver from 34.4 metres depth

v 0.9 metres at 10.00 g/t gold and 11.50 g/t silver from 356.0 metres depth

·      Bazaar Prospect: New high sulphidation type pyrite mineralization discovered within a 600 metre trench and from 1,050 metres of core drilling. If gold is associated with this pyrite a new target type has potentially been identified

·      Agromniy Prospect: 1,000 metres of surface trenching exposed a visible lead-silver (and potential gold) quartz vein at least 250 metres in length. Trenching is being undertaken perpendicular to the vein

 

 

CEO's letter

 

Dear shareholders,

 

It is my pleasure to report to you our financials and the results of our work for the first half of 2012. This year we identified a number of tasks which we sought to advance, building upon progress achieved in 2011. On Stakhanovskiy we planned to commence operations with our pilot bulk sampling plant which was built in 2011 and to complete a bulk sampling and drilling program which would allow us to calculate updated JORC resources for this project. On Rassoshinskaya we planned to continue further exploration works on last year's sites, Podgorniy and Zet, and also commenced drilling on a new target, Bazaar. On the corporate level we received a full exploitation license for the Olcha deposit.

 

 

Exploration:

 

Stakhanovskiy Project

 

The hard rock gravitation bulk sampling plant was commissioned and was operating to capacity. Following on from work undertaken in 2011, in the first half of 2012 further samples were taken from trenches and large bulk samples excavations. The bulk sampling plant throughput averaged 189 tonnes per 24 hour period and 5,000 tonnes of ore from the Berezitoviy and Zabolocheniy ore bodies were processed in the first half of 2012. The gravity concentrates and samples from the mill were collected. Samples were transported to Magadan for shaking table processing, with products fire assayed by Alex Stewart Laboratories in Moscow.

 

Diamond core drilling commenced at the end of August. An updated resource estimate by consultants Wardell Armstrong International on the current JORC Inferred category resource is planned to be completed by the end of 2012, once all bulk sampling, trenching and drilling is completed and the results have been received.

 

A total of 284 linear metres of trenches were completed at Zabolocheniy and three 50 metre x 20 metre rectangular areas were cleared and excavated on the Zabolocheniy orebody beneath shallow colluvium. These areas were blasted to 1.5 metres depth and mined and stockpiled on the plant ore pad adjacent to the crusher ready for processing in the bulk sampling plant.

 

Gold assays were received for a total of 286 samples taken from trenches completed in 2011 with an extra 5 grab samples. The average linear sample length was 1.5 metres and the total weight of all samples was 4,648 kg. The trench samples were processed on a shaking table with products assayed. The average gold grade of all samples was 2.63g/t and there are 15 significant trench intervals, >1.0g/t gold, shown in Table 1. Samples were taken from near surface semi-oxidized highly altered diorite dykes that contain extensive quartz veining. The assays were higher in gold grade than expected which illustrates the potential of the resource to be upgraded and to progress the project to feasibility.

 

Table 1: Stakhanovskiy Trench Sample, Fire Assay 50g, >1g/t gold

Trench Name

From (m)

To (m)

Interval (m)

Gold Grade g/t

KBR1

4.5

10.5

6.0

1.67

KBR1

13.5

15.0

1.5

1.72

KBR2

31.5

33.0

1.5

1.21

KBR4

3.0

4.5

1.5

8.06

KBR4

10.5

12.0

1.5

2.31

KBR4

18.5

22.5

4.0

3.81

KBR4

32.5

35.5

3.0

1.98

KBR5

5.5

7.0

1.5

2.02

TBR1-3

24.0

25.5

1.5

1.22

TBR1-5

26.0

27.5

1.5

1.24

TBR2-7

9.0

11.5

2.5

281.40

TBU1-2

10.5

13.5

3.0

2.79

TBU1-4

1.5

3.0

1.5

45.76

TBU1-4

7.5

8.5

1.0

1.03

TBU1-6

4.0

8.0

4.0

41.28

 

Rassoshinskaya Project

 

Podgorniy Prospect

A total of 8 diamond drill core holes for 1,580 metres were completed. Drilling tested various depths less than 350 metres vertical from surface and locations across a 1,000 metre long by 350 metre wide gold-silver mineralized zone.

 

 

 

Zet Prospect

A total of 15 diamond drill core holes for 2,229 meters were completed. Drilling was undertaken over a 2km strike length with maximum depths down to 200m vertical from surface. Gold fire assay results were received for 325 samples. A table of significant gold assay results is shown in Table 1. Alteration and mineralisation zones composed of typical banded epithermal quartz-adularia veining were found to continue at depth and along the strike length from Ovoca Gold's trenching and drilling completed in 2011.

 

Table 2: Zet Prospect HQ diamond core drill intersections, Fire Assay 50g, >1g/t gold

Drill Hole Name

Down hole depth (m)

Depth from Surface (m)

Interval (m)

True thickness (m)

Gold Grade g/t

Silver Grade g/t

CZ-30

108.4

93.9

0.5

0.4

74.40

342.0

CZ-31

144.0

124.7

2.4

2.0

4.53

38.9

 

Bazaar Prospect

A total of 600 linear meters of trenches were completed to identify potential targets for drilling. A 20 metre wide primary stockwork type quartz-carbonate vein system was discovered in the trenches near two historical surface float rock chip samples that have assay values of 24g/t and 60g/t gold, centred on an east-west striking creek so is covered with alluvial rocks.

 

Northwest Bazaar Project

Reconnaissance geological mapping identified a new prospect with extensive epithermal quartz veins on the surface. Historical surface float rock chip assays have gold values up to 5.0g/t. A 50m trenching program tested the area.

 

 

Corporate:

 

Olcha exploitation license

On April 3, 2012 Ovoca was granted an exploitation license for the Olcha deposit by the Russian State regulatory bodies. The Company was granted a 25 year exploitation license regarding Olcha (license number MAG 04341 BE, valid to 3 April 2037).

 

The Olcha license has a total area of 2.5 square kilometers and allows the Company, through its Russian ZAO Bulun subsidiary, to mine gold and silver. The State-certified reserves equal 279,000 ounces of gold at a grade of 13.4 g/t and 655,000 ounces silver at a grade of 31.6 g/t in the Russian reserve category C1 + C2 (this is not JORC compliant and not reviewed by a Competent Person). The Company, as per the license terms, must begin construction of a mine no later than 3 October 2020.

 

Board and management appointment

On April 12, 2012 Kirill Golovanov joined the Board of directors and on May 3, 2012 he was appointed CEO. Mr. Golovanov joined Ovoca as a corporate advisor in 2007 and moved to be the manager of the Company's Russia representative office in 2009. During his time at Ovoca he played a major role in the development and subsequent sale of the Goltsovoye silver deposit. He has extensive experience in mining and corporate law, as well as working experience at leading Russian enterprises, such as Gazprombank and Vneshekonombank.

 

 

 

Sincerely,

Kirill Golovanov

CEO

 

 

Ovoca Gold plc

Interim results for the six months ended 30 June 2012












€'000


€'000


$'000


$'000

Gross loss


                  -  


(166)


                 -  


(233)

Operating (loss)/profit


(2,000)


7,549


(2,595)


10,591

(Loss)/profit for the period before tax


(2,158)


7,258


(2,802)


10,182

(Loss)/profit for the period from continuing operations

(2,158)


7,170


(2,802)


10,059

(Loss)/profit for the period


(2,158)


7,170


(2,802)


10,059



(2,158)


7,170


(2,802)


10,059

Basic (loss)/earnings per share from continuing operations


 (0.02) cents


 0.08 cents


(0.03) cents


 0.12 cents

Fully diluted (loss)/earnings per share from continuing operations


 (0.02) cents


 0.08 cents


(0.03) cents


 0.11 cents

(Loss)/profit for the period


(2,158)


7,170


(2,802)


10,059

Total comprehensive loss for the period


(2,187)


(4,214)


(5,700)


(1,859)

 

 

  

 

 

 

 


Share capital

Share premium

Share based payment reserve

Other reserves

Foreign Currency Translation Reserve

Retained earnings

Total (attributable to owners of the parent)

At 1 January 2012


11,057

        -  

1,294

6,107

2,609

29,086

50,153

Realised exchange movement on available for sale assets disposed of during the period


                 

    -  

               -  

                      -  

               -  

                      -  

                   -  

0

Total comprehensive income


             -  

        -  

             -  

(1,504)

1,475

(2,158)

(2,187)

Total transactions with owners


             -  

        -  

             -  

        -  

             -  

           -  

            -  

At 30 June 2012


11,057

0

1,294

4,603

4,084

26,928

47,966

At 1 January 2011


11,057

48,108

1,253

16,729

2,494

(22,893)

56,748

Realised exchange movement on available for sale assets disposed of during the period


                 

    -  

               -  

                      -  

               -  

(971)

                   -  

(971)

Total comprehensive income


             -  

        -  

             -  

(8,600)

(2,784)

7,170

(4,214)

Total transactions with owners


             -  

(48,108)

41

        -  

15

48,048

(4)

At 30 June 2011


11,057

        -  

1,294

8,129

(275)

32,325

52,530

 

 

  

 


21,790


27,187


27,404


35,200



37,888


36,095


51,682


50,051

Total assets


59,678


63,282


79,086


85,251



7,706


2,751


9,692


3,562

Total liabilities


11,712


13,129


14,730


17,209

Net assets


47,966


50,153


64,356


68,042



47,966


50,153


64,356


68,042

 

 

 

 

Net cash flow from continuing operations


5,348


3,310


6,036


4,188

Net cash flow from operating activities


5,348


3,310


6,036


4,188

Net cash flow from financing activities


(1,445)


(191)


(2,489)


(336)

Net cash flow from investing activities


(3,332)


8,313


(3,567)


10,697

Cash and cash equivalents at the end of period/year

20,397


19,826


25,652


25,672

 

 

 

1

Basis of Preparation




















The interim consolidated financial statements for the six months ended 30 June 2012 have been prepared in accordance with IAS 34 'Interim Financial Reporting' as issued by the International Accounting Standards Board.













The interim consolidated financial statements do not include all the information and disclosures required in the annual financial statements and should be read in conjunction with the Group's annual financial statements as at 31 December 2011.












2

Accounting Policies










The accounting policies adopted in the preparation of the interim consolidated financial statements are consistent with those followed in the preparation of the Group's annual financial statements for the year ended 31 December 2011.













The adoption of other new standards and interpretations (as set out in the 2011 Annual Report) that became effective for the Group's financial statements for the year ended 31 December 2012 did not have any significant impact on the interim financial statements.












3

Going concern










The interim financial statements consolidate the financial statements of Ovoca Gold Plc and its subsidiary undertakings for the six months ended 30 June 2012. The company uses the full cost method of accounting for exploration costs. Under this method all costs associated with exploration are capitalised. The recovery of exploration costs is dependent on the successful production of economic quantities of precious metals and other minerals.  If commercial production is achieved, the unit of production basis will be used to amortise all remaining balances in the proportion the current production in a period bears to total estimated recoverable reserves.  Provision for impairment is made where a project is abandoned or considered to be of no further interest to the group or its anticipated income potential is less than the carrying value of the project on the statement of financial position. The directors have reviewed the current state of the group's finances, taking into account resources currently available to the group. The directors are satisfied that sufficient funding will be available to the group to enable it to trade at its projected level of operations for the foreseeable future. On this basis the directors consider that it is appropriate to prepare the financial statements on the going concern basis. The directors consider that in preparing the financial statements they have taken into account all information that could reasonably be expected to be available. The financial statements do not include any adjustments that would result if the Director's plans were not successful.




 

 

4

Segmental reporting




















Segment information is presented in accordance with IFRS 8 - Operating Segments with effect from 1 January 2010. Comparative information is presented on a consistent basis.












At 30 June 2012, the Group had two business segments, Exploration activities and Investment. Exploration activities are primarily carried out by number of subsidiary companies based in Russia. Investing activities are carried out by another subsidiary company located in Bermuda. Unallocated costs represent group administration costs, primarily incurred in Ireland.






















Period ended 30 June 2012

Exploration Activities

Investment

Unallocated

Total

Exploration Activities

Investment

Unallocated

Total



€'000

€'000

€'000

€'000

US$'000

US$'000

US$'000

US$'000












Exploration costs written off

                            -  

                           -  

                       -  

 

0

                         -  

                      -  

                        -  

 

0












Administration expenses

(139)

(255)

(582)

(976)

(181)

(331)

(755)

(1,267)


Other gains and losses

                            -  

(1,008)

(15)

(1,023)

                         -  

(1,309)

(19)

(1,328)












Operating loss

(139)

(1,264)

(597)

(2,000)

(181)

(1,640)

(774)

(2,595)












Finance costs

(126)

(399)

(1)

(526)

(164)

(520)

(1)

(685)


Finance income

59

308

1

368

76

401

1

478


Loss before tax

(206)

(1,355)

(597)

(2,158)

(269)

(1,759)

(774)

(2,802)












Segment assets

14,483

45,083

112

59,678

22,247

56,699

141

79,086


Segment liabilities

(495)

(11,050)

(167)

(11,712)

(623)

(13,897)

(210)

(14,730)


Net assets

13,988

34,033

(55)

47,966

21,624

42,802

(69)

64,356






















Period ended 30 June 2011

Exploration Activities

Investment

Unallocated

Total

Exploration Activities

Investment

Unallocated

Total



€'000

€'000

€'000

€'000

US$'000

US$'000

US$'000

US$'000












Exploration costs written off

(98)

-

(68)

(166)

(137)

-

(95)

(232)












Administration expenses

267

2,146

(2,077)

336

375

3,010

(2,914)

471


Other gains and losses

121

7,259

(1)

7,379

170

10,185

(1)

10,354












Operating profit/(loss)

290

9,405

(2,146)

7,549

408

13,195

(3,010)

10,593












Finance costs

(94)

(598)

47

(645)

(132)

(839)

66

(905)


Finance income

161

192

1

354

226

269

1

496


Profit/loss before tax

357

8,999

(2,098)

7,258

502

12,625

(2,943)

10,184












Segment assets

16,148

49,004

135

65,287

23,236

70,514

195

93,946


Segment liabilities

(763)

(11,721)

(269)

(12,753)

(1,098)

(16,866)

(387)

(18,351)


Net assets

15,385

37,283

(134)

52,534

22,138

53,648

(192)

75,595













4

Segmental reporting (continued)



















Secondary reporting format - geographical segments


















The Group's business segments and its assets are located in the Russia, Bermuda, Ireland and the United Kingdom. The table above shows income and expenditure and assets and liabilities by primary geographical segments on the basis that exploration activities are carried out in Russia, investment activity is carried out in Bermuda and unallocated amounts relate to costs incurred in Ireland and the United Kingdom.

 

5

Financial assets available for sale



















Financial assets available for sale are held at their fair value and consist of quoted securities. There was a fall in the price of the securities during the period but their overall performance remains strong, the decrease of the total value of the financial assets being caused by that fall. During the period the company disposed of its investment in the asset managed fund and acquired an additional amount of quoted securities with the proceeds.



 

 

 

 

6

Contingent provisions




















The Change in the Provisions is due to the timing of the deferred consideration payable on the acquisition of the 3 Russian subsidiaries, with the bulk of the conditional payment now falling due within the next 18 months.













The movement on deferred consideration during the period/year is as follows:






















Unaudited

Audited

Unaudited

Audited







30/06/2012

31/12/2011

30/06/2012

31/12/2011







€'000

€'000

$'000

$'000












Deferred consideration at 1 January 2012



12,653

12,082

16,593

16,010


Effective interest for the period



396

806

304

1,123


Payments made during the period



(2,386)

                      -  

(3,000)

                    -  


Exchange rate movement for the period



387

182

                        -  

                    -  


Fair value adjustment on re-evaluation of payment dates of deferred consideration


                         -  

(417)

                        -  

(540)


Deferred consideration at 30 June 2012




11,050

12,653

13,897

16,593





















7

Events after the reporting period



















There have been no significant events affecting the Group since the interim period.











8

Approval of the financial statements



















The interim report was approved by the Board of Directors on 27th September 2012 and is included on the Company's website, www.ovocagold.com.

 

 

 

 

The resource information contained in this announcement has been compiled and verified by Mr. Darren Allingham for the purposes of the AIM Note for Mining and Oil & Gas Companies issued by the London Stock Exchange in June 2009. Mr. Allingham is a member of The Australasian Institute of Mining and Metallurgy and The Australian Institute of Geoscientists and is a JORC (2004) competent person for the type of minerals being reported on in this statement. Mr. Allingham is a Geologist with over 17 years of work experience in gold exploration, resource estimation and mining, in thirteen different countries and has Bachelors and Bachelors with honours degrees in geology from The Australian National University and The University of Queensland, Australia. Mr. Allingham consents to the inclusion in the announcement of the matters based on their information in the form and context in which it appears.

 

Ovoca Gold Plc

Kirill Golovanov +7 495 916 6029

 

 

Davy - NOMAD, ESM Adviser and Joint Broker

John Frain/Daragh O'Reilly +353 1 679 6363

 

 

Fairfax I.S. PLC - Joint Broker

Ewan Leggat/Laura Littley +44 207 598 5368

 

 

 

 

 

 


This information is provided by RNS
The company news service from the London Stock Exchange
 
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