Annual Report & AGM Notice

Annual Report & AGM Notice

China Nonferrous Gold Limited

China Nonferrous Gold Limited 中国有色黄金有限公司

(“CNG” or the “Company”)

Final results for the year ended 31 December 2014

Notice of AGM

China Nonferrous Gold Limited 中国有色黄金有限公司 (AIM: CNG), the mineral exploration and development company currently developing the Pakrut gold project in the Republic of Tajikistan, today announces its final results for the year ended 31 December 2014.

The results below are extracted from the Company’s audited Annual Report and Financial Statements. Copies of the Annual Report will be posted to shareholders today and are available on the Company’s website (www.cnfgold.com) and from the Company’s office at Unit 2.24, The Plaza, 535 Kings Road, London SW10 0SZ.

Notice of AGM

The Company is also pleased to announce that its Annual General Meeting (“AGM”) will be held at the offices of Charles Russell Speechlys LLP at 09.30 a.m. on 27 July 2015 and the notice convening the AGM will be posted to shareholders today and is available on the Company’s website (www.cnfgold.com).

For further information please visit the Company’s website (www.cnfgold.com) or contact:

China Nonferrous Gold Limited

David Tang, Managing Director

Tel: +86 10 8442 6681

Investec Bank Plc

Jeremy Ellis, George Price

Tel: +44 (0)20 7597 5970

Project Summary

The Pakrut gold project, of which CNG has 100 per cent ownership, is situated in Tajikistan approximately 120km northeast of the capital city Dushanbe. Pakrut is located within the Tien Shan gold belt, which extends from Uzbekistan into Tajikistan, Kyrgyzstan and Western China, and which hosts a number of multi-million ounce gold deposits.

CNG is currently in a construction phase with mining contractors on site constructing the mine, plant and tailings dam.

About Tajikistan

Tajikistan is a secular republic located in Central Asia. The country is a member of the Commonwealth of Independent States and the Shanghai Cooperation Organisation. Tajikistan hosts numerous operating precious metal mines as well as the largest aluminium smelter in Central Asia. CNG's management team has extensive experience in the mining industry in Tajikistan.

Chairman’s Statement

It gives me great pleasure to present the Chairman’s Statement following the retirement of Luo Tao. As Managing Director it has been a very productive year with significant construction completed.

Construction and Production

The Group has made considerable progress over the course of the year and post period end with the speed of development of the Pakrut Gold Project increasing substantially.

The development of the main decline has been completed along with the west ventilation shaft and the Group has also completed the upgrade of the 55 kilometres of road from Romit to Pakrut. Furthermore, all foundations at the Pakrut processing plant, and the plant buildings have been constructed and the majority of the plant has been installed ready for testing. The 73 kilometre external power supply project, which includes the construction of two substations at both Pakrut and Hamza, is complete and power from the National Grid has now been supplied to site.

There are still a number of aspects of the project where progress is ongoing, including the tailings dam at Pakrut which is still to be constructed and the smelting and refining plant in Vahdat, which is in the process of being constructed. At Vahdat, all foundations have been laid, the majority of the buildings constructed and some of the equipment has been installed. The tailings dam at the smelting and refining plant in Vahdat has also been completed.

Trial production in Phase 1 of 2,000 tonnes per day (“tpd”) is expected to commence at the end of October 2015.

Financial Results

As progress on the Pakrut project accelerated, the amount incurred by the Group on development and construction work during the year increased from the previous year and stood at US$81,488,000 (2013: US$20,256,000). Administration expenditure was US$4,968,000 (2013: US$3,652,000). The overall loss incurred by the Group was US$15,680,000 (2013: US$6,393,000).

A total of US$43,557,000 and US$10,000,000 was drawn down from the RMB and US$ tranches of the CNMIM shareholder loan respectively. The balance outstanding under the CNMIM loan amounted to US$55,594,000 at the end of the period (2013: US$17,571,000). Loan repayments commenced during 2014 in accordance with the loan repayment schedule.

The Group has now also drawn down in May 2015 the final US$40,000,000 tranche of a bank term loan facility of US$120,000,000 from Industrial and Commercial Bank of China (Macau) Limited, which was secured by standby letters of credit. A total of US$65,970,000 was drawn down during 2014. Interest is charged at a rate of 2.9% above the 3 month LIBOR rate. Loan repayments commence in January 2016.

It is the opinion of the board of directors that the Group has sufficient funds to continue as a going concern, after taking into account revenue from projected gold sales with effect from November 2015.

Outlook

CNG is well advanced towards bringing the Pakrut project into production. Construction is expected to be completed in September 2015 and the Group remains confident that we will begin trial production at the end of October 2015.

I would like to take this opportunity to thank all of our employees, management and advisors for their continued effort in 2014 and thank our shareholders for their continued support of our Group. I very much look forward to updating our shareholders on the completion of mine construction and after initial production from Pakrut.

David (Weili) Tang

Acting Chairman

Managing Director

CHINA NONFERROUS GOLD LIMITED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

YEAR ENDED 31 DECEMBER 2014

  2014   2013
US$000 US$000
 
Revenue - -
Cost of sales -

___

-

___

Gross Profit - -
 
Administrative expenses (4,968) (3,652)
Listing and capital reorganisation expenses (1,043) (2,321)
Project impairment (9,475) -
(Loss)/gain on foreign exchange (151)

______

(386)

______

Operating Loss (15,637) (6,359)
Finance income 6 10
Finance costs (49)

______

(44)

______

Loss before Income Tax (15,680) (6,393)
Income tax -

______

-

______

Loss for the year attributable to owners of the parent (15,680) (6,393)
______ ______
Total comprehensive income attributable to owners of the parent
for the year
(15,680)

(6,393)

______ ______
Basic and Diluted Earnings per share attributable to owners of the parent
(expressed in dollars per share)

$(0.0411)

$(0.0168)

______ ______

All of the activities of the Group are classed as continuing.

CHINA NONFERROUS GOLD LIMITED CONSOLIDATED STATEMENT OF FINANCIAL POSITION

AS AT 31 DECEMBER 2014

  As at   As at
31 December 31 December
2014 2013
US$000 US$000
 
Non-Current Assets
Intangible assets - 9,475
Mines under construction 132,530 51,042
Property, plant and equipment 14,259 3,661
______ ______
Total Non-Current Assets 146,789

______

64,178

______

Current Assets

Inventories

24,732


6,610
Trade and other receivables 1,049 8,805
Cash and cash equivalents 18,272

______

8,602

______

Total Current Assets 44,053

______

24,017

______

Non-Current Liabilities
Trade and other payables (7,390) (1,124)
Borrowings (88,042) (1,547)
Provisions for other liabilities and charges (593)

_____

(544)

_____

Total Non-Current Liabilities (96,025)

_____

(3,215)

_____

Current Liabilities
Borrowings (30,916) (13,581)
Trade and other payables (23,045)

______

(15,091)

______

Total Current Liabilities (53,961)

______

(28,672)

______

Net Current Liabilities (9,907)

______

(4,655)

______

Net Assets 40,856

______

56,308

______

Equity attributable to the owners of the parent
Share capital 38 38
Share premium 65,711 65,616
Other reserve 10,175 10,175
Retained earnings (35,068)

______

(19,521)

______

Total Equity 40,856

______

56,308

______

These Financial Statements were approved and authorised for issue by the Directors on 30 June 2015 and are signed on their behalf by:

Consolidated Balance Sheet – As at 31 December 2011

Mr Weili Tang Mr Li Li

Managing Director Finance Director

CHINA NONFERROUS GOLD LIMITED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

YEAR ENDED 31 DECEMBER 2014

Attributable to owners of the parent

  Share
capital
US$000 		  Share
premium
US$000 		  Other reserve

US$000

  Retained
earnings
US$000 		  Total
US$000
Balance at 1 January 2013 6,270 69,475 - (13,904) 61,841
_____ ______ _____ ______ ______
 
Loss and Total comprehensive income for the year - -

-

(6,393) (6,393)
_____ ______ _____ _____ ______
Share based payments - options granted - -

-

776 776
Issue of ordinary shares 6 78 - - 84
Cancellation of existing shares under scheme of arrangement (6,276) (69,553)

75,829

- -
Issue of new shares under scheme of arrangement 38 65,616

(65,654)

- -
_____ ______ ______ _____ ______
Total contributions by and distributions to owners of the parent, recognised directly in equity (6,232) (3,859)

 

10,175

776 860
_____ ______ ______ _____ ______
 
Balance at 31 December 2013 38 65,616 10,175 (19,521) 56,308
_____ ______ ______ ______ ______
 
Balance at 1 January 2014 38 65,616 10,175 (19,521) 56,308
_____ ______ _____ ______ ______
 
Loss and Total comprehensive income for the year - -

-

(15,680) (15,680)
_____ ______ _____ _____ ______
Share based payments - options granted - - - 133 133
Issue of ordinary shares - 95 - - 95
_____ ______ ______ _____ ______
Total contributions by and distributions to owners of the parent, recognised directly in equity - 95

 

-

133 228
_____ ______ ______ _____ ______
 
Balance at 31 December 2014 38 65,711 10,175 (35,068) 40,856
_____ ______ ______ ______ ______

Other reserve comprises the capital reorganisation reserve under the scheme of arrangement.

CHINA NONFERROUS GOLD LIMITED CONSOLIDATED STATEMENT OF CASH FLOWS

YEAR ENDED 31 DECEMBER 2014

  31 December

2014

  31 December

2013

US$000 US$000
 
Cash flows generated from/(used in) Operating Activities 45,151

_____

1,627

_____

Net Cash generated from/(used in) Operating Activities 45,151

_____

1,627

_____

Cash flows from Investing Activities
Payments for intangible assets - (5,272)
Payments for mining rights and construction in progress (59,627) (11,218)
Purchase of property, plant and equipment (12,903) (631)
Movement in inventories (18,122) (1,253)
Interest received 6

______

10

______

Net Cash used in Investing Activities (90,646)

_______

(18,364)

_______

Cash flows from Financing Activities
Cash acquired from contractor - 4
Repayment of borrowings (15,681) -
Proceeds from issuance of equity share capital

Proceeds from borrowings

Interest paid

95

74,712

(3,962)

______

84

-

(834)

______

Net Cash generated from/(used in) Financing Activities 55,164

______

(746)

______

Net Increase/(Decrease) in Cash and cash equivalents 9,670 (17,483)
Cash and cash equivalents at beginning of the year 8,602

______

26,085

______

Cash and cash equivalents at end of the year 18,272

______

8,602

______

CHINA NONFERROUS GOLD LIMITED CONSOLIDATED STATEMENT OF CASH FLOWS

YEAR ENDED 31 DECEMBER 2014

Major non-cash transactions

Year ended 31 December 2014

During 2014 the Group made drawdowns from its loan facility with CNMIM under the RMB tranche of RMB274,409,000 (equivalent to US$43,577,000), which under the agency arrangement were paid directly to suppliers and contractors in order to settle the Group’s liabilities for mine construction, power line construction and the provision of processing plant equipment and materials.

Depreciation of US$2,236,508 has been capitalised as part of exploration and evaluation assets and mines under construction.

During 2014 the Group has accrued for work performed by contractors in that period, and paid advances and payments on account under the terms of those contracts. The cash and non-cash movements have been adjusted for within operating and investing activities accordingly.

Year ended 31 December 2013

During 2013 the Group made drawdowns from its loan facility with CNMIM under the RMB tranche of RMB72,022,000 (equivalent to US$11,432,000), which under the agency arrangement were paid directly to suppliers and contractors in order to settle the Group’s liabilities for mine construction, power line construction and the provision of processing plant equipment and materials.

Depreciation of US$1,100,303 has been capitalised as part of exploration and evaluation assets and mines under construction.

During 2013 the Group has accrued for work performed by contractors in that period, and paid advances and payments on account under the terms of those contracts. The cash and non-cash movements have been adjusted for within operating and investing activities accordingly.

Basis of Preparation

The Consolidated Financial Statements have been prepared in accordance with International Financial Reporting Standards (IFRS) and IFRS Interpretations Committee (IFRSIC) as adopted by the European Union. The Financial Statements have been prepared on a historical cost basis.

Basis of Consolidation

The consolidated Financial Statements comprise the financial statements of the Group as at 31 December 2014. Subsidiaries are all entities over which the Group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. These subsidiaries are adjusted, where appropriate, to conform to Group accounting policies. All intragroup assets and liabilities, equity, income, expenses and cash flows are eliminated on consolidation.

Subsidiaries are consolidated from the date on which control is transferred to the Group, and continue to be consolidated until the date when such control ceases.

Going Concern

The Group’s business activities, together with the factors likely to affect its future development, performance and position are set out in the Chairman’s Statement and the Business Review in the Report of the Directors. The accounting policies include the Group’s objectives, policies and processes for managing its capital; its financial risk management objectives; details of its financial instruments; and its exposure to liquidity risk.

In 2012, CNMIM provided a secured loan facility on commercial terms to the Company for US$10 million and RMB530 million (approximately US$83.5 million) that is being utilised to finance the development of the Pakrut Gold Project. US$71.08 million of that secured loan facility was utilised as at 30 November 2014, being the latest available drawdown date. The Group has made repayments since that date in accordance with the terms of the loan agreement. Whilst the Group is forecasting to meet the loan repayments to CNMIM when due, the Group has obtained a waiver from CNMIM to all financial and non-financial breaches, if applicable, during the year ended 31 December 2014 and up until 1 July 2016.

On 19 June 2014, the Group obtained a bank term loan facility of US$120,000,000 from Industrial and Commercial Bank of China (Macau) Limited, secured by standby letters of credit. The loans advanced under the facility cannot exceed 95% of the value of the standby letters of credit. Standby letters of credit were issued on 24 June 2014 and 18 June 2015 in order to enable the Group to drawdown US$80 million and US$40 million respectively under the facility. The principal loan repayments commence on 30 January 2016.

As at the date of approval of these Financial Statements, and based upon the budgeted levels of expenditure and Board approved cash flow forecasts, the Directors are satisfied that the Group has sufficient cash and loan facilities to finance the Group’s operating expenses and the development and construction of the Pakrut Gold Project.

It is anticipated that the trial production will begin at the end of October 2015 and approximately US$9,426,000 will be generated from gold sales in 2015. It is anticipated that the Group will have gold sales of approximately US$84,000,000 in 2016.

The Directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for at least 12 months from the date of signing these Financial Statements. Thus they continue to adopt the going concern basis of accounting in preparing the Financial Statements.

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