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Company Angel Mining PLC
TIDM ANGM
Headline

Interim Results

Released 07:00 30-Nov-2012
Number 3816S07

RNS Number : 3816S
Angel Mining PLC
30 November 2012
 

30 November 2012

 

 Angel Mining plc

("Angel Mining" or the "Company")

 

Un-audited financial information

for the six months ended

31 August 2012

 

The Directors of Angel Mining, the Greenland-focused mining and exploration company, report the Company's unaudited interim results for the six months ended 31 August 2012.

 

Highlights 

 

The Company recorded a loss of $14,600,000 for the period, compared to $1,654,000 for the same period a year ago. 

 

Since the end of the period under review, the Company has also:

·      raised an additional $2,000,000 in the form of funding from Cyrus Capital Partners, which together with a loan of $1,750,000 drawn on 23 July 2012 is repayable on 15 February 2013.

·      Issued 25,000,000 shares at par value to Yorkville which has reduced the value of the loan outstanding at 29 November to $1,234,000.

 

FINANCIAL RESULTS

 

The loss for the period amounts to $14,600,000 (2011: $1,654,000), the Company's cash and bank balances amounted to $625,000 compared to $252,000 at 31 August 2011.  The loss includes a provision of $10,805,000 for the impairment of the value of assets at Nalunaq Gold Mine.  This is a conservative estimate of the total investment in Nalunaq which may not be recovered from future cash generation.  The result for the period has benefited by the impact of the accounting treatment of the Company's Joint Ownership Share Plan ("JSOP") equity incentive scheme.  As a result of the significant drop in the Company's share price and a change in the fair value of the associated JSOP liability, there was a positive impact of $419,000 (2011: $834,000) on the profit and loss statement.

 

The Directors have set a production target of 1,500 - 2,000 ounces of gold per month and now believe that this will be achieved consistently from Q1 2013.  Although the Company has been producing and selling gold on a regular basis since September 2011, it has not yet, for accounting purposes, reached 'commercial production'.  In keeping with IFRS guidance and normal practice for companies within the mining sector, the Company will commence commercial production when it can consistently achieve 70% of its monthly minimum production target (i.e. 1,050 ounces per month). 

 

Until this is achieved, the operating costs less revenue will be capitalised as development costs.  For this reason, no revenue from gold sales or costs of production has been recognised in the income statement during the six months ended 31 August 2012 or the comparable periods. 

 

The latest assessment of recoverable gold at Nalunaq and our best understanding of the associated income, based on an average gold price of $1,700 per ounce, and of the operating costs to extract the gold, suggests that the mine should generate at least $25,000,000 of free cash before we have to face the possibility of mine closure.  Consequently, we have taken an impairment charge of $10,805,000 against the assets at Nalunaq, reducing the value carried forward at 31 August 2012 to $25,000,000. It is highly likely that in future months the resource assessment will change. It is possible that we could find additional high grade ore to mine, particularly in the Mountain Block.  If this is the case, the life of mine may be extended and all or part of the impairment charge may be reversed.

 

The geologist who first discovered the Nalunaq deposit believes that there may be other gold bearing intrusions in the Nalunaq mountain and we are working with Nuna Minerals A/S to see if there is any geological evidence to justify a more extensive exploration programme.  In September this year, a team of geologists from Nuna Minerals traversed the mountain taking rock samples to see if they could find other outcrops of gold bearing quartz or other indicative evidence.  We expect to get their report before the end of 2012.

 

 

 

OPERATIONS

 

Nalunaq

The AGM was held on 31 August 2012 and, at that date, the Company made a production forecast for September, October and November, which assumed that the mine would be able to access higher grade ore from pillars during this period.  Unfortunately, the BMP took longer than expected to provide the mining permit and an essential piece of equipment was delivered late.  The situation was compounded in September by operational problems encountered by the Company's fuel supplier, Polaroil, such that they were unable to deliver oil as consistently as required.  In consequence, all solid material in the plant was pumped to tailings in case the tank agitators had to be switched off.  This would have resulted in material settling in the tanks and there would have been a very expensive and time consuming task to dig the material out.  This was avoided but the site went for a week with no mining or processing activity until the fuel arrived.  It then took two weeks to recharge the processing system before gold stripping could recommence.

 

Fortunately, these problems are now behind us and both mine and process plant are back in production.  Pillar mining is scheduled to commence in December 2012 and, provided no major problems are encountered with the first selected pillars, this will be one of the principle sources of high grade ore during 2013 together with material from Mountain Block.

 

The table below sets out the production and sales data for Nalunaq from the first gold pour up to the date of this announcement.

 

Doré produced (kilograms)

339.1

Doré shipped (kilograms)

339.1

Gold recovered (ounces)

9,877

Gold content of doré (%)

90.6%

Gold sold (ounces)

9,877

Average gold price achieved (per ounce)

1,665.51

Silver recovered (ounces)

856

Silver content of doré (%)

7.9%

Silver sold (ounces)

856

Average silver price achieved (per ounce)

30.89

 

There have been some important changes to the Nalunaq management team in recent months.  Steve Ainsworth left the Company in June and Alex Hamilton left in October.  In July, Nigel Handley joined as Deputy General Manager. He is a mining engineer with extensive experience of mine management and since he joined he has led the mining team and, in particular, has directed the preparations for pillar mining.  Since Alex left, Nigel has also taken full responsibility for the General Manager role.  In late October, Jonathan White joined us as plant manager.  He is a metallurgist with over 20 years experience of managing gold processing plants.

 

The Company has appointed Peter Connery as Chief Operating Officer and Peter will commence work in mid December. He had a distinguished military career and then took his team building expertise into the mining industry where he has been general manager for a number of large mines in Africa. He will immediately take full responsibility for the day to day running of Nalunaq and Nigel Handley will support him as Deputy General Manager.  Nigel will also start work in the New Year on permit applications and other project work for Black Angel.  In January Bob Austin joins as mine manager.  Bob is a mining engineer and has worked as a mine manager for many years with Anglo American Corporation, mainly on mines in Africa.    

 

Black Angel

 

The decline in commodity prices, with zinc now trading below $2,000 per tonne and lead just above $2,000 per tonne, has had a detrimental impact on the economic viability of the Black Angel project.  In order to address this issue the Company is looking increase the life/scale of the operations by expanding the JORC compliant resource base and also by reducing operating costs to below $1,000 per tonne. 

 

The resource issue may be solved by drilling some additional exploration holes in the Deep Ice Zone and work is proceeding to see if this could be achieved in 2013.  An initial internal assessment indicates that the geologists will probably need another 10 holes to be drilled.  A more detailed assessment is currently being undertaken.

 

A substantial component of the operating costs is the cost of fuel oil. Each year, at today's prices, the plan suggest that the annual cost for fuel will be in excess of $15 million and that this could be reduced to below $4 million, if the power could be supplied through an in-situ hydro-electric operation.  A study was undertaken by Cominco in the 1970s and this indicated that there is sufficient water in the South Lake to generate electricity for the project.  Niras Greenland A/S has been commission to produce a pre-feasibility study of the scheme based on existing data.  Their report will indicate what work needs to be done to complete a full design and feasibility study and will also estimate the cost of building a plant capable of generating approximately 6MHZ of electricity throughout the year.

 

The enlarged resource and the potential impact of hydro-electric power could then enable the Company to produce a new Bankable Feasibility Study which should then significantly improve the Company's ability to raise the funds necessary to take the project into production.   

 

FINANCE

The recent funding, provided by Cyrus, amounting to $3,750,000 has enabled the Company to overcome its recent setbacks and, it is now expected that Nalunaq will generate cash to meet all Group funding needs.

 

Discussions are ongoing with Cyrus Capital Partners with regard to the refinancing of Angel Mining plc, which will include the renegotiation of the short term debt repayment terms.  It had been hoped that a financial restructure plan could have been agreed by the end of November but this is now expected to be finalised in the New Year.  Cyrus is our largest stakeholder and a long-term investor in the business.  We anticipate that they will play a significant role in the future development of the Company.

 

Issue of new shares

 

On 3 April 2012, 71,428,565 new ordinary shares were issued at 1.4p as the result of a private placing, raising $1,616,454.

 

On 5 April 2012, 15,588,998 new ordinary shares were issued to YA Global Master SPV at 1.66p per share, being the first draw on the new SEDA facility, raising $415,424.

 

On 4 May 2012, 18,618,073 new ordinary shares were issued to YA Global Master SPV at 1.4p per share, being the second draw on the new SEDA facility, raising $420,848.

 

On 16 August 2012, 25,800,000 new ordinary shares were issued to YA Global Master SPV at 1.0p per share raising $404,579 which was used to repay a portion of the outstanding promissory note with Yorkville.

 

New borrowings

 

On 23 July 2012, FBC agreed to advance a further $1.75 million, which was treated as a further tranche of the short-term loan, increasing the total outstanding to $28.3 million plus accrued interest.  This new tranche was due to be repaid prior to 30 November 2012 with the balance of the loan repayable prior to 31 December 2012. 

 

POST BALANCE SHEET EVENTS

 

Issues of new shares

 

On 22 October 2012, 25,000,000 new ordinary shares were issued to YA Global Master SPV at 1.0p per share raising $400,000 which was used to repay $392,000 of the outstanding promissory note with Yorkville plus interest accrued.

 

New borrowings

 

On 2 October, Cyrus agreed to extend the short term loan facility by an additional $2.0 million and to extend the repayment date of the entire facility to 15 February 2013.  The aggregate amount now repayable by the Company to Cyrus on 15 February 2013 is $30.4 million plus accrued interest.

 

One of the conditions to Cyrus making the additional funds available to the Company was that the Company grant to Cyrus an option entitling Cyrus to acquire 75% of the issued share capital of Arctic Mining Limited in exchange for £1 and a write-down of a portion of the short term loan to be agreed at the time of exercise. Arctic Mining Limited is a wholly owned subsidiary of the Company that owns 100% of the share capital of Black Angel Mining A/S.  It does not include the Nalunaq license which is held separately in another wholly owned subsidiary of the Company. 

 

This option is exercisable by Cyrus on or after 15 February 2013 in the event that the Company has not, on or before such date, repaid at least $3.85 million of the short term loan and also complied with certain other conditions, including the raising of further equity. 

 

 

GOING CONCERN

 

·      having the continued support of its current debt provider, Cyrus, and its existing trade creditors;

·      being able to draw down fully on the SEDA facility;

·      having the ability to raise new finance; and 

·      being able to achieve target production at the Nalunaq gold mine in Q1 2013.  

 

New finance will also be required to implement the planned redevelopment of the Black Angel zinc/lead mine.

This is discussed further in Note 1 to the financial information.

 

OUTLOOK

2012 has been a year of setbacks and frustrations and the Company has been grateful for the support of Cyrus.  The Company is also grateful for the support of Yorkville and various trade creditors. 

 

I believe that despite the difficulties encountered in 2012, the strengthened management team will be able to take advantage of the higher grade ore at Nalunaq and hit the long established production target, which will generate the cash needed to meet all of our financial commitments.  We also have the prospect of finding more gold at Nalunaq than we had expected, if the results of mining Mountain Block and/or the exploration initiative with Nuna Minerals prove that there is further development potential.

 

Market conditions have forced the Company to revise our view on the financing of Black Angel but we expect it is possible, albeit with increased capital expenditure, to develop a more attractive project with a life expectancy of over 25 years that will use mainly renewable energy.  I also believe that the concept of building the process plant underground and putting tailings safely in the old workings of the mine will make Black Angel a model of operational and environmental efficiency.

 

There is a great deal of work to be done.  But we have the prospect of being cash generative in 2013, having a new bankable feasibility study for Black Angel by the end of that year and having a refinanced balance sheet to build a new future.

 

Working in Greenland presents some significant operational challenges.  We have a team who are learning all the time and I am confident that we will succeed.  

 

Frank Chapman

CHAIRMAN

 

Enquiries:

 

Angel Mining plc

Nicholas Hall, Chief Executive Officer

Kevin McNair, Chief Financial Officer

 

07931 709 053

07900 690 908

 

Fox-Davies Capital (Nominated Adviser and Broker)

Simon Leathers

Daniel Fox-Davies

 

 

0203 463 5000

 

Bishopsgate Communications Limited

Nick Rome

 

 

0207 562 3350

 

 



 

Consolidated information of comprehensive income

Six months ended 31 August 2012

 



6 months

ended

31 Aug. 2012

Unaudited

$000

6 months

 ended

31 Aug, 2011 Unaudited

$000

12 months

ended

29 Feb, 2012

Audited

$000

Continuing operations





Other operating costs


(12,134)

407

(2,804)

Operating loss


(12,134)

407

(2,804)






Finance costs


(2,672)

(2,144)

(3,074)

Finance income


206

83

344

Loss before tax


(14,600)

(1,654)

(5.534)

Taxation


-

-

-

Retained loss for the period


(14,600)

(1,654)

(5,534)






Other comprehensive income for the year





Exchange translation difference on foreign operations


1,385

30

188

Total comprehensive income for the year attributable

  to ordinary equity holders of the company


 

(13,215)

 

(1,624)

 

(5,346)

Earnings/(loss) per share (cents)





Basic


(1.48)

(0.24)

(0.75)

Diluted


(1.48)

(0.24)

(0.75)











 

 


Consolidated information of financial position

As at 31 August 2012

 

 



6 months

ended

31 Aug. 2012

Unaudited

$000

6 months

 ended

31 Aug, 2011 Unaudited

$000

12 months

ended

29 Feb, 2012

Audited

$000

Non-current assets





Property, plant and equipment


56,746

60,592

64,802

Note receivable


2,983

4,104

2,803

Rehabilitation asset


4,000

4,640

4,326



63,729

69,336

71,931

Current assets





Inventories


1,247

2,430

1.355

Trade and other receivables


32

328

44

Other financial asset


1,240

1,219

1,257

Cash and cash equivalents


625

252

667



3,144

4,229

3,323

Current liabilities





Trade and other payables


(12,475)

(10,903)

(10,163)

Current borrowings


(29,792)

(23,198)

(29,206)

Current provisions


(429)

(471)

(722)



(42,697)

(34,572)

(40,091)






Net current (liabilities)/assets


(39,552)

(30,343)

(36,768)

Total assets less current liabilities


24,177

38,993

35,163






Non-current liabilities





Non-current borrowings


(8,233)

(7,526)

(7,846)

Non-current provisions


(4,020)

(4,425)

(4,831)



(12,253)

(11,951)

(12,677)

Net assets


11,924

27,043

22,486






Capital and reserves





Share capital


17,004

13,277

14,915

Share premium


48,491

49,219

47,904

Own shares held by EBT


(2,568)

(2,568)

(2,568)

Convertible borrowings - equity component


7,371

7,371

7,371

Share option reserve


-

-

23

Translation reserve


356

(6)

(1,029)

Retained deficit


(58,730)

(40,250)

(44,130)

Total equity


11,924

27,043

22,486

















Consolidated information of changes in equity

Six months ended 31 August 2012

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Ordinary

share capital

$'000

 

 

 

 

 

 

 

Share premium

$'000

 

 

 

 

 

Own shares held by EBT

$000

 

 

 

 

 

Convertible borrowings - equity component

$000

 

 

 

 

 

 

Share option reserve $'000

 

 

 

 

 

 

 

Translation reserve

$'000

 

 

 

 

 

 

 

Retained deficit

$'000

 

 

 

 

Equity attributable to equity holders of the parent

$'000

 

 

 

 

 

 

 

Total equity

$'000

At 28 February 2011

8,052

39,455

(2,568)

7,371

-

(841)

(38,596)

12,873

12,873

Loss for the year

-

-

-

-

-

-

(5,534)

(5,534)

(5,534)

Shares issued

6,863

9,125

-

-

-

-

-

15,988

15,988

Cost of shares issued

-

(676)

-

-

-

-

-

(676)

(676)

Share option expense

-

-

-

-

23

-

-

23

23

Exchange translation difference on foreign operations

 

-

 

-

 

-

 

-

 

-

 

(188)

 

-


 

835

At 29 February 2012

14,915

47,904

(2,568)

7,371

23

(1,029)

(44,130)

22,486

22,486

Loss for the period

-

-

-

-

-

-

(14,600)

(14,600)

(14,600)

Shares issued

2,089

747

-

-

-



2,836

2,836

Cost of shares issued

-

(160)

-

-

-

-

-

(160)

(160)

Share option expense

-

-

-

-

(23)

-

-

(23)

(23)

Exchange translation difference on foreign operations

 

-

 

-

 

-

 

-

 

-

 

1,385


 

1,385

 

1,385

At 31 August 2012

17,004

48,491

(2,568)

7,371

-

356

(58,730)

11,924

11,924

 

  

 


Consolidated information of cashflow

Six months ended 31 August 2012

 

 



6 months

ended

31 Aug. 2012

Unaudited

$000

6 months

 ended

31 Aug, 2011 Unaudited

$000

12 months

ended

29 Feb, 2012

Audited

$000

Operating activities





(Loss)/profit before tax


(14,600)

(1,654)

(5,534)

Adjusted for:





Depreciation of property, plant and equipment


-

-

5

Finance income


(206)

(83)

(344)

Finance costs


2,672

2,144

3,074

(Increase)/decrease in inventories


108

(1,568)

(493)

(Decrease)/increase in trade and other receivables


12

(191)

128

Increase/(decrease) in trade and other payables


2,312

1,525

3,077

Share-based payments


(23)

(834)

(678)

Cashflows from operating activities


(9,726)

(661)

(765)

Investing activities





Purchase of property, plant and equipment


(3,951)

(12,295)

(14,063)

Impairment of property, plant and equipment


10,805

-

-

Interest received


-

83

17

Cashflows from investing activities


6,854

(12,212)

(14,046)

Financing activities





Equity share capital subscription, net


2,676

6,031

7,519

Draw down from Socius facility


-

-

5,000

New borrowings, net of costs


1,750

6,225

2,972

Repayments of borrowings


(1,623)

-

(358)

Cashflows from financing activities


2,803

12,256

15,133






Net increase/(decrease) in cash and cash equivalents


(69)

(617)

322

Cash and cash equivalents at start of year


667

441

441

Exchange movements


27

428

(96)

Cash and cash equivalents at end of year


625

252

667



















































 

 

 



 

Notes to the financial statements

Six months ended 31 August 2012

 

General information

Angel Mining plc ("Angel" or the "Company") is incorporated and domiciled in the United Kingdom and, together with its subsidiaries, forms "the Group".

 

The principal accounting policies applied in the preparation of the financial information are set out below.

 

1. Basis of preparation

The half-yearly financial information for the six months ended 31 August 2012 is unaudited and that for the equivalent period is also unaudited. The comparatives for the full year ended 29 February 2012 are not the Group's full statutory accounts for that year. The financial statements for the year ended 29 February 2012 contained an unqualified auditors' report in accordance with s235 of the Companies Act 1985. However, the auditor's report did contain a paragraph entitled "Emphasis of matter - Going concern" which made reference to the accounting policy regarding going concern and the existence of a material uncertainty.

 

The half-yearly financial information was approved by the board on 29 November 2012.

 

The annual financial statements of Angel Mining plc for the year ended 28 February 2013 will be prepared in accordance with International Financial Reporting Standards ("IFRS") as adopted by the European Union, and with those parts of the Companies Act 2006 applicable to companies reporting under IFRS. Accordingly the half-yearly financial information has been prepared using accounting policies consistent with those which will be adopted by the group in the financial statements.

 

Going concern

For the purpose of their going concern assessment, the Directors have assumed that the Company will:

·      have the continued support of its current debt provider, Cyrus and its affiliate, FBC;

·      be able to draw down on the Yorkville facilities;

·      have the ability to raise new finance; and 

·      be able to bring the Nalunaq gold mine up to target production by Q1 2013.

 

The Directors have concluded that the combination of these circumstances represents a material uncertainty that casts significant doubt upon the Company's and Group's ability to continue as a going concern and that, therefore, the Company and the Group may be unable to realise its assets and discharge its liabilities in the normal course of business.

 

Nevertheless, after making enquiries and considering the uncertainties described above, the Directors have a reasonable expectation that the Group and the Company have adequate resources to continue in operational existence for the foreseeable future and are supported by the following opinions and post balance sheet events:

·      the Group has completed a number of gold pours at Nalunaq and subsequent gold sales. Based on the current plan for exploiting the resource at Nalunaq, the Directors believe that the Group will quickly achieve and sustain commercial production and cash generation;

·      following the move into commercial production, the Group's ability to raise money via the equity markets should be significantly improved;

·      further draw downs on the Yorkville facilities are possible if needed once approved by the majority shareholder and this has occurred based on history of draw downs and approvals received; and

·      Cyrus and the Company have entered into discussions about extending the repayment terms of its loans and capitalised interest beyond February 2013.

 

For these reasons, they continue to adopt the going concern basis in preparing its interim financial information. The Directors believe that the Group now has sufficient resources for continuing operations and it will be able to attract additional finance for the development of the Black Angel and other projects in the foreseeable future.

 

2. Accounting policies

All accounting policies are the same as those reported in the annual financial statements for the year ended 29 February 2012. 

 

The Directors have set a production target of between 1,500 and 2,000 ounces of doré per month which they expect to achieve in Q1 2013.  Although the Company is now producing and selling gold on a regular basis, for accounting purposes it has not reached 'commercial production'.  In keeping with IFRS guidance and normal practice for companies within the mining sector, the Company will commence commercial production when it consistently achieves 70% of its monthly production target.  Until this milestone has been reached, the process plant at Nalunaq is still considered under construction.  Costs incurred up to the point of commercial production will continue to be capitalised.  Revenue realised during the period will be treated in the same fashion.  For this reason, no revenue from gold sales or costs of production have been recognised in the income statement during the six months ended 31 August 2012 or in the comparable periods.

 

 

3. Earnings/(loss) per share

The basic and diluted loss per share is calculated by dividing the loss attributable to equity holders of the parent by the weighted average number of ordinary shares in issue during the year.

 



6 months

ended

31 Aug. 2012

Unaudited

6 months

 ended

31 Aug, 2011 Unaudited

12 months

ended

29 Feb, 2012

Audited

Profit attributable to equity holders of the parent ($000)


(14,600)

(1,654)

(5,534)

Weighted average number of shares


983,251,285

681,069,135

736,873,684

Earnings/(loss) per share (cents)


(1.48)

(0.24)

(0.75)

 

In the periods where the Group has made a loss, share options were anti‑dilutive and have not been included in the loss per share calculation.

 

4. Borrowings

 



6 months

ended

31 Aug. 2012

Unaudited

$000

6 months

 ended

31 Aug, 2011 Unaudited

$000

12 months

ended

29 Feb, 2012

Audited

$000

Current borrowings


29,793

23,198

29,206

Non-current borrowings


8,233

7,526

7,846

 

On 23 July 2012, FBC agreed to advance a further $1.75 million, which was treated as a further tranche of the short-term loan, increasing the total outstanding to $28.3 million plus accrued interest.  This new tranche was due to be repaid on or before 30 November 2012 with the balance of the short term loan repayable prior to 31 December 2012.

 

5. Share capital

 

Ordinary shares


Shares

£

 

 

 

 

Authorised

6 months

ended

31 Aug. 2012

 (000)

6 months

 ended

31 Aug, 2011

(000)

12 months

ended

29 Feb, 2012

 (000)

6 months

ended

31 Aug. 2012

 (000)

6 months

 ended

31 Aug, 2011

(000)

12 months

ended

29 Feb, 2012

 (000)

At beginning of period

5,172

5,172

5,172

51,720

51,720

51,720

Increased in period

-

-

-

-

-

-

At end of period

5,172

5,172

5,172

51,720

51,720

51,720

 


Shares

 

 

 

 

Issued

6 months

ended

31 Aug. 2012

 (000)

6 months

 ended

31 Aug, 2011

(000)

12 months

ended

29 Feb, 2012

 (000)

At beginning of period

903,652

478,326

478,326

Issued in period

131,436

325,327

425,326

At end of period

1,035,088

803,653

903,652

 

The Company also has 1 'B share' of £1.00 which was issued on 21 August 2009 as a result of the conversion of the original Cyrus loan into a convertible loan note.  The B share has voting rights equivalent to 577,275,625 ordinary shares. 

 

Issue of new shares

 

On 3 April 2012, 71,428,565 new ordinary shares were issued at 1.4p as the result of a private placing, raising $1,616,454.

 

On 5 April 2012, 15,588,998 new ordinary shares were issued to YA Global Master SPV at 1.66p per share, being the first draw on the new SEDA facility, raising $415,424.

 

On 4 May 2012, 18,618,073 new ordinary shares were issued to YA Global Master SPV at 1.4p per share, being the second draw on the new SEDA facility, raising $420,848.

 

On 16 August 2012, 25,800,000 new ordinary shares were issued to YA Global Master SPV at 1.0p per share raising $404,579 which was used to repay a portion of the outstanding promissory note with Yorkville.

 

6. Post balance sheet events

 

Issues of new shares

 

On 22 October 2012, 25,000,000 new ordinary shares were issued to YA Global Master SPV at 1.0p per share raising $400,000 which was used to repay a portion of the outstanding promissory note with Yorkville.

 

New borrowings

 

On 2 October, Cyrus agreed to extend the short term loan facility by an additional $2.0 million and to extend the repayment date of the entire facility to 15 February 2013.  The aggregate amount now repayable by the Company to Cyrus on 15 February 2013 is $30.4 million plus accrued interest.

 

One of the conditions to Cyrus making the additional funds available to the Company was that the Company grant to Cyrus an option entitling Cyrus to acquire 75% of the issued share capital of Arctic Mining Limited in exchange for £1 and a write-down of a portion of the short term loan to be agreed at the time of exercise. Arctic Mining Limited is a wholly owned subsidiary of the Company that owns 100% of the share capital of Black Angel Mining A/S.  It does not include the Nalunaq license which is held separately in another wholly owned subsidiary of the Company. 

 

This option is exercisable by Cyrus on or after 15 February 2013 in the event that the Company has not, on or before such date, repaid at least $3.85 million of the short term loan and also complied with certain other conditions, including the raising of further equity. 

 



 


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