Cora Gold Limited / EPIC: CORA.L / Market: AIM / Sector: Mining

18 May 2020

Cora Gold Limited (“Cora Gold”, “Cora” or “the Company”)

2019 Final Results

Cora Gold Limited, the West African focused gold company, is pleased to announce its final audited results for the year ended 31 December 2019.

Highlights

·      Advancing strategy to discover, delineate and develop economic ore bodies through systematic exploration across permits totalling >1,100 sq km in known gold belts

·      Announced pit constrained Maiden Inferred Mineral Resource at the Sanankoro Gold Project of 5.0 million tonnes (Mt) at 1.6 g/t Au for 265,000 ounces of gold towards the end of 2019

o  Reconfirmation of the SRK derived Exploration Target of between 30 Mt and 50 Mt at a grade of between 1.0 and 1.3 g/t Au, for approximately 1-2 million ounces of gold

·      Scoping Study on the Sanankoro Gold Discovery announced post period end:

o  At US$1,400 gold price, a 1.5Mtpa Heap Leach Mine delivers 84% internal rate of return (‘IRR’) and US$30.9 million net present value (‘NPV’) (8% discount rate)

·      Good potential to increase Mineral Resources given under 25% of the total 40 linear km strike length of the potential mineralised zones identified has been drilled to date

·      Robust results from Q4 2019/Q1 2020 drilling campaign at Sanankoro, mainly testing the continuity of mineralisation at depth, in part below the limit of the existing resource pit shells, 

o  Highlights include 2.61g/t Au over 29m from 82m

·      Post period end, commenced drilling at the Madina Foulbé Permit in eastern Senegal with initial results showing good widths of gold mineralisation continuously intersected

·      Strong cash position having raised £2.89m post period end in April 2020

Bert Monro, CEO of Cora Gold, said, “2019 was another successful year exploring Sanankoro’s economic potential, which has laid the foundations for what we believe to be a pivotal time for Cora.  After taking over as CEO in January 2020, I was delighted to begin my role with the results of the Scoping Study.  This was a key milestone in the advancement of Sanankoro and demonstrated its potential to be a highly profitable oxide mine, delivering a short capex payback, with an annual average free cash flow of over US$19m and an 84% IRR at a US$1,400 gold price.

“With our experienced management team that has a proven track record in making multi-million ounce gold discoveries, we are in a strong position to move Sanankoro into development.  With this in mind, we are planning further metallurgical test work programmes to build on the Scoping Study as well as drilling programmes to both grow and increase confidence in the existing resources. Following our recent fundraise of £2.89m, strongly supported by existing shareholders, we are in a good financial position to drive ahead these ambitious plans.

“Naturally, across all our work, we remain cognisant of the evolving COVID-19 situation and will keep the safety of our team at the forefront of our plans while following government advice in the countries we operate in.”

Annual General Meeting

The Company hereby announces that its 2020 Annual General Meeting (the ‘AGM’) will be held at 12.00 p.m. on 23 June 2020.  Due to the ongoing impact of the COVID-19 pandemic the AGM will take place online. There are two ways in which attendees may join the AGM:

Option 1    By dial in:  Use the telephone number and Meeting ID set out below:

·      telephone number: +44 (0)20 3481 5240

·      Meeting ID: 830 0012 1806 #

Option 2    Online:  This requires the use of a device (computer, laptop, tablet or smartphone) connected to the internet. The device will need speakers and, if required, microphone capability in order to be able to speak. Use the hyperlink set out below:

·      hyperlink: https://us02web.zoom.us/j/83000121806

The Company’s Annual Report and Financial Statements for the year ended 31 December 2019, including the notice of AGM, will be posted to shareholders today and will be available thereafter on the Company’s website http://www.coragold.com 

**ENDS**

For further information, please visit http://www.coragold.com or contact:

Notes

Cora Gold is a gold company focused on two world class gold regions in Mali and Senegal in West Africa.  Historical exploration has resulted in the highly prospective Sanankoro Gold Discovery, in addition to multiple, high potential, drill ready gold targets within its broader portfolio.  Cora’s primary focus is on further developing Sanankoro in the Yanfolila Gold Belt (Southern Mali), which Cora believes has the potential for a standalone mine development.  Sanankoro has a positive Scoping Study published on it showing an 84% IRR and US$30.9m NPV at a US$1,400 gold price.  Cora’s highly experienced management team has a proven track record in making multi-million-ounce gold discoveries, which have been developed into operating mines.

Chairman’s Statement

I am pleased to present the Annual Report of Cora Gold Limited (‘Cora’ or the ‘Company’ and together with its subsidiaries the ‘Group’) for the year ended 31 December 2019.

Cora is a gold company focused on two world class gold regions in Mali and Senegal in West Africa, being the Yanfolila Gold Belt (south Mali) and the Kedougou-Kenieba Inlier gold belt (also known as the ‘Kenieba Window’) (west Mali / east Senegal).

The strategy of the Company is, through systematic exploration, to discover, delineate and develop economic ore bodies. Historical exploration has resulted in the highly prospective Sanankoro Gold Discovery (in the Yanfolila Gold Belt, southern Mali) (‘Sanankoro’), in addition to multiple, high potential, drill ready gold targets within its broader portfolio. Cora’s highly experienced and successful management team has a proven track record in making multi-million ounce gold discoveries which have been developed into operating mines.

Cora’s primary focus is on further developing Sanankoro, which the Company believes has the potential for a standalone mine development. In January 2020 we published an initial Scoping Study on the Sanankoro Gold Discovery which showed an 84% internal rate of return (‘IRR’) and US$30.9 million net present value (‘NPV’) (8% discount rate) at a gold price of US$1,400/oz. This study assists in de-risking the project by establishing a framework for understanding the economics of a future mine development and also provides guidance for the on-going exploration programmes to maximise the delineation of further economic mineralisation. Prior to this, in December 2019 the Company announced a maiden pit constrained Inferred Mineral Resource Estimate (‘MRE’) at Sanankoro of 5.0 million tonnes (Mt) at 1.6 g/t Au for 265,000 ounces of gold from independent consultants SRK Consulting (UK) Limited (‘SRK’). The MRE was prepared in accordance with the JORC 2012 Code. This is an initial step in determining the overall potential of Sanankoro and reconfirms the SRK derived Exploration Target of approximately 1-2 million ounces of gold within 100 metres of surface (as reported in October 2018). The MRE is based on under 25% of the total 40 linear kilometre strike length of the potential mineralised zones identified to date. The majority (88%) of the Inferred MRE is derived from oxide material. The small amount of sulphide material in the MRE confirms our belief that exploration expansion into the sulphide zones could provide significant future upside.

During Q1 2020 Cora announced that the results of the latest drill programme at Sanankoro have identified significant scope to extend resources at depth, along strike and in parallel structures. This drilling tested the continuity of mineralisation at depth, in part below the limit of the maiden MRE pit shells and included intercepts of 2.61 g/t Au over 29 metres. The maiden MRE has a range of pit depths from about 40-100 metres so there is significant scope to increase the open pit resources with further successful drilling. In addition, this drilling programme identified potential extensions to existing resources with results, including 5.16 g/t Au over 3 metres and 1.41 g/t Au over 13 metres. All of this continues to support our confidence in the Project. Having completed a GBP£2.89 million fundraise in April 2020 we have the capital available to continue to move Sanankoro forward with an initial focus on resource growth and then in time further study work.

Cora regards the health and safety of its employees and contractors as its highest priority. This is especially so during the current global COVID-19 outbreak. On 09 April 2020 we announced that in line with this, and following advice received from the Senegalese Government, Cora has suspended its current drill programme at the Madina Foulbé Permit in eastern Senegal. We look forward to recommencing and completing this drill programme as soon as it is appropriate and practical to do so.

Meanwhile field work continues across a number of permits in Mali, including some of those in the Sanankoro Project Area in the Yanfolila Gold Belt, southern Mali. Cora will continue to follow its strict protocols to reduce the risk of transmission of COVID-19 at the Company’s operating field camps.

Early in 2024 the Company announced the appointment of Robert (‘Bert’) Monro as its Chief Executive Officer (‘CEO’) and a Director, replacing Jonathan (‘Jon’) Forster who has stepped down from his post as CEO and a Director of the Company to reduce his workload after a 40 year career in the minerals industry. Dr. Forster remains Head of Exploration at Cora and will continue to manage the Company’s technical activities. On behalf of the Board and shareholders, I would like to thank Jon for his commitment and hard work during his tenure as CEO. With the recently announced Sanankoro MRE and Scoping Study, Jon has laid the foundations for what appears to be yet another successful economic gold discovery in his exemplary career; I am delighted that he continues to oversee the Company’s technical development as Head of Exploration. In his role as CEO, Bert brings a huge amount of enthusiasm, an in-depth understanding of the junior gold sector and a keen focus on adding shareholder value. He has played a key role in the Company’s development to date, initially as a Non-Executive Director and more recently in a business development capacity – he will now lead the Company through the next phase of its growth. Cora is well placed to continue to discover and define economic gold and add shareholder value.

We are very much looking forward to 2020, with a busy schedule of exploration programmes planned once again. We are confident that positive news flow will be generated throughout the coming months.

Edward Bowie

Independent Non-Executive Director and Chairman

15 May 2020

Consolidated Statement of Financial Position

as at 31 December 2019

All amounts stated in thousands of United States dollar

Consolidated Statement of Comprehensive Income

for the year ended 31 December 2019

All amounts stated in thousands of United States dollar (unless otherwise stated)

Consolidated Statement of Changes in Equity

for the year ended 31 December 2019

All amounts stated in thousands of United States dollar

Consolidated Statement of Cash Flows

for the year ended 31 December 2019

All amounts stated in thousands of United States dollar

Notes to the Consolidated Financial Statements

for the year ended 31 December 2019

All tabulated amounts stated in thousands of United States dollar (unless otherwise stated)

1.       General information

The principal activity of Cora Gold Limited (the ‘Company’) and its subsidiaries (together the ‘Group’) is the exploration and development of mineral projects, with a primary focus in West Africa. The Company is incorporated and domiciled in the British Virgin Islands. The address of its registered office is Rodus Building, Road Reef Marina, P.O. Box 3093, Road Town, Tortola, VG1110, British Virgin Islands.

2.       Accounting policies

The principal accounting policies applied in the preparation of financial statements are set out below (‘Accounting Policies’ or ‘Policies’). These Policies have been consistently applied to all the periods presented, unless otherwise stated.

2.1.    Basis of preparation

The consolidated financial statements of Cora Gold Limited have been prepared in accordance with International Financial Reporting Standards (‘IFRS’) and IFRS Interpretations Committee (‘IFRS IC’) as adopted by the European Union. The consolidated financial statements have been prepared under the historical cost convention.

The financial statements are presented in United States dollar (currency symbol: USD or US$), rounded to the nearest thousand, which is the Group’s functional and presentational currency.

The preparation of financial statements in conformity with IFRSs requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Group’s accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial statements are disclosed in Note 4.

(a)     New and amended standards mandatory for the first time for the financial period beginning 01 January 2019

The following new standards and amendments to standards and interpretations are effective for the financial period beginning on or after 01 January 2019 and have been applied in preparing these financial statements:

●   IFRS 16: Leases;

●   IFRS 9 (Amendments): Prepayment Features with Negative Compensation;

●   IAS 19 (Amendments): Plan Amendment, Curtailment or Settlement;

●   IFRIC 23: Uncertainty over Income Tax Treatments;

●   IAS 28 (Amendments): Long-term Interests in Associates and Joint Ventures; and

●   Annual improvements to IFRSs 2015-2017 Cycle.

The adoption of these standards and amendments did not have any material impact on the disclosures, or on the financial position or performance of the Group reported in these financial statements.

(b)     New standards, amendments and interpretations in issue but not yet effective or not yet endorsed and not early adopted

The standards and interpretations that are issued, but not yet effective, up to the date of issuance of the financial statements are listed below. The Group intends to adopt these standards, if applicable, when they become effective.

* Subject to EU endorsement

The Group is evaluating the impact of the new and amended standards above. The directors believe that these new and amended standards are not expected to have a material impact on the Group’s results or shareholders’ funds.

2.2.    Basis of consolidation

The consolidated financial statements incorporate those of the Company and its subsidiary undertakings for all periods presented.

Subsidiaries are entities over which the Group has control. The Group controls an entity when 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. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are deconsolidated from the date that control ceases.

The Group applies the acquisition method of accounting to account for business combinations. The consideration transferred for the acquisition of a subsidiary is the fair values of the assets transferred, the liabilities incurred to the former owners of the acquiree and the equity interests issued by the Group. The consideration transferred includes the fair value of any asset or liability resulting from a contingent consideration arrangement. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date.

Acquisition-related costs are expensed as incurred unless they result from the issuance of shares, in which case they are offset against the premium on those shares within equity.

Where necessary, adjustments are made to the financial information of subsidiaries to bring the accounting policies used into line with those used by other members of the Group. All intercompany transactions and balances between Group entities are eliminated on consolidation.

As at 31 December 2019 and 2018 the Company held:

●    a 100% shareholding in Cora Gold Mali SARL (registered in the Republic of Mali; the address of its registered office is Rue 224 Porte 1279, Hippodrome 1, BP 2788, Bamako, Republic of Mali);

●    a 100% shareholding in Cora Exploration Mali SARL (the address of its registered office is Rue 224 Porte 1279, Hippodrome 1, BP 2788, Bamako, Republic of Mali); and

●    a 95% shareholding in Sankarani Ressources SARL (the address of its registered office is Rue 841 Porte 202, Faladiè SEMA, BP 366, Bamako, Republic of Mali);

and Cora Resources Mali SARL (registered in the Republic of Mali; the address of its registered office is Rue 841 Porte 202, Faladiè SEMA, BP 366, Bamako, Republic of Mali) was a wholly owned subsidiary of Sankarani Ressources SARL.

The remaining 5% of Sankarani Ressources SARL can be purchased from a third party for US$1,000,000.

2.3.    Interest in jointly controlled entities

Joint venture arrangements that involve the establishment of a separate entity in which each venturer has joint control are referred to as jointly controlled entities. The results and assets and liabilities of jointly controlled entities are included in these financial statements for the period using the equity method of accounting.

2.4.    Going concern

Given the uncertainties created by the current global COVID-19 outbreak the directors will continue to monitor its impact on the Group’s activities and financial resources.

The financial statements have been prepared on a going concern basis. The directors have prepared cash flow forecasts for the period ending 30 June 2021. The forecasts include the costs of progressing the Group’s projects and the corporate and operational overheads of the Group. The forecasts demonstrate that the Group has sufficient cash resources available to allow it to continue as a going concern and meet its contracted and committed liabilities as they fall due. Additional funds will however be required in order to undertake all planned exploration and evaluation activities during the going concern period. The directors are confident in the ability of the Group to raise additional funding when required from the issue of equity or the sale of assets. Any delays in the timing and / or quantum of raising additional funds can be accommodated by deferring discretionary exploration and evaluation expenditure.

The directors have a reasonable expectation that the Group will have adequate resources to continue in operational existence for the foreseeable future. Thus they continue to adopt the going concern basis of accounting in preparing the financial statements.

2.5.    Segment reporting

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker. The chief operating decision-maker, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the board of directors that makes strategic decisions.

2.6.    Foreign currencies

(i)  Functional and presentational currency

Items included in the financial statements of the Group’s entities are measured using the currency of the primary economic environment in which the entity operates (the ‘functional currency’). The financial statements are presented in United States dollar, rounded to the nearest thousand, which is the Company’s and Group’s functional and presentational currency.

(ii) Transactions and balances

Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions or valuation where such items are re-measured. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in profit or loss.

2.7.    Investments

Investments in subsidiary companies are stated at cost less provision for impairment in value, which is recognised as an expense in the period in which the impairment is identified in the Company accounts. These investments are consolidated in the Group consolidated accounts.

2.8.    Intangible assets

The Group has adopted the provisions of IFRS 6 Exploration for and Evaluation of Mineral Resources.

The Group capitalises expenditure as project costs, categorised as intangible assets, when it determines that those costs will be successful in finding specific mineral resources. Expenditure included in the initial measurement of project costs and which are classified as intangible assets relate to the acquisition of rights to explore, topographical, geological, geochemical and geophysical studies, exploratory drilling, trenching, sampling and activities to evaluate the technical feasibility and commercial viability of extracting a mineral resource. Capitalisation of pre-production expenditure ceases when the mining property is capable of commercial production. Project costs are recorded and held at cost. An annual review is undertaken of each area of interest to determine the appropriateness of continuing to capitalise and carry forward project costs in relation to that area of interest. Accumulated capitalised project costs in relation to (i) an expired permit, (ii) an abandoned area of interest and / or (iii) a joint venture over an area of interest which is now ceased, will be written off in full as an impairment to profit or loss in the year in which (i) the permit expired, (ii) the area of interest was abandoned and / or (iii) the joint venture ceased.

Exploration and evaluation costs are assessed for impairment when facts and circumstances suggest that the carrying amount of an asset may exceed its recoverable amount.

2.9.    Financial assets

Classification

The Group’s financial assets consist of financial assets held at amortised cost. The classification depends on the purpose for which the financial assets were acquired. Management determines the classification of its financial assets at initial recognition.

Financial assets held at amortised cost

Assets that are held for collection of contractual cash flows, where those cash flows represent solely payments of principal and interest, are measured at amortised cost. Any gain or loss arising on derecognition is recognised directly in profit or loss and presented in other gains / (losses) together with foreign exchange gains and losses. Impairment losses are presented as a separate line item in the statement of profit or loss.

They are included in current assets, except for maturities greater than 12 months after the balance sheet date, which are classified as non-current assets. The Group’s financial assets at amortised cost comprise trade and other current assets and cash and cash equivalents at the year-end.

Recognition and measurement

Regular purchases and sales of financial assets are recognised on the trade date – the date on which the Group commits to purchasing or selling the asset. Financial assets are initially measured at fair value plus transaction costs. Financial assets are de-recognised when the rights to receive cash flows from the assets have expired or have been transferred, and the Group has transferred substantially all of the risks and rewards of ownership.

Financial assets are subsequently carried at amortised cost using the effective interest method.

Impairment of financial assets

The Group assesses, on a forward-looking basis, the expected credit losses associated with its financial assets carried at amortised cost. For trade and other receivables due within 12 months the Group applies the simplified approach permitted by IFRS 9. Therefore, the Group does not track changes in credit risk, but rather recognises a loss allowance based on the financial asset’s lifetime expected credit losses at each reporting date.

A financial asset is impaired if there is objective evidence of impairment as a result of one or more events that occurred after the initial recognition of the asset, and that loss event(s) had an impact on the estimated future cash flows of that asset that can be estimated reliably. The Group assesses at the end of each reporting period whether there is objective evidence that a financial asset, or a group of financial assets, is impaired.

The criteria that the Group uses to determine that there is objective evidence of an impairment loss include:

●   significant financial difficulty of the issuer or obligor;

●   a breach of contract, such as a default or delinquency in interest or principal repayments;

●   the Group, for economic or legal reasons relating to the borrower’s financial difficulty, granting to the borrower a concession that the lender would not otherwise consider;

●   it becomes probable that the borrower will enter bankruptcy or other financial reorganisation.

The Group first assesses whether objective evidence of impairment exists.

The amount of the loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows (excluding future credit losses that have not been incurred), discounted at the financial asset’s original effective interest rate. The asset’s carrying amount is reduced and the loss is recognised in profit or loss.

If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised (such as an improvement in the debtor’s credit rating), the reversal of the previously recognised impairment loss is recognised in profit or loss.

2.10. Cash and cash equivalents

Cash and cash equivalents comprise cash at bank and in hand, and are subject to an insignificant risk of changes in value.

2.11. Share capital

Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds.

2.12. Reserves

Retained earnings / (deficit) – the retained earnings / (deficit) reserve includes all current and prior periods retained profit and losses, and share based payments.

2.13. Financial liabilities at amortised cost

Trade payables are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Accounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities.

Trade payables are recognised initially at fair value, and subsequently measured at amortised cost using the effective interest method.

Other financial liabilities are initially measured at fair value. They are subsequently measured at amortised cost using the effective interest method.

Financial liabilities are de-recognised when the Group’s contractual obligations expire or are discharged or cancelled.

2.14. Provisions

The Group provides for the costs of restoring a site where a legal or constructive obligation exists. The estimated future costs for known restoration requirements are determined on a site-by-site basis and are calculated based on the present value of estimated future costs. All provisions are discounted to their present value.

2.15. Taxation

Tax is recognised in the Income Statement, except to the extent that it relates to items recognised in other comprehensive income or directly in equity. In this case, the tax is also recognised in other comprehensive income or directly in equity, respectively. Current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.

Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit, and is accounted for using the balance sheet liability method. Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised.

2.16. Share based payments

Equity-settled share based payments with employees and others providing services are measured at the fair value of the equity instruments at the grant date. Fair value is measured by use of an appropriate pricing model. The Company has adopted the Black-Scholes Model for this purpose.

Equity-settled share based payment transactions with other parties are measured at the fair value of the goods and services, except where the fair value cannot be estimated reliably in which case they are valued at the fair value of the equity instrument granted.

3.       Financial risk management

3.1.    Financial risk factors

The Group’s activities expose it to a variety of financial risks: market risk, credit risk and liquidity risk. The Group’s overall risk management programme focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the Group’s financial performance.

Risk management is carried out by the management team under policies approved by the board of directors.

(i)  Market risk

The Group is exposed to market risk, primarily relating to interest rate, foreign exchange and commodity prices. The Group does not hedge against market risks as the exposure is not deemed sufficient to enter into forward contracts. The Group has not sensitised the figures for fluctuations in interest rates, foreign exchange or commodity prices as the directors are of the opinion that these fluctuations would not have a significant impact on the financial statements of the Group at the present time. The directors will continue to assess the effect of movements in market risks on the Group’s financial operations and initiate suitable risk management measures where necessary.

(ii) Credit risk

Credit risk arises from cash and cash equivalents as well as outstanding receivables. To manage this risk, the Group periodically assesses the financial reliability of customers and counterparties.

The amount of exposure to any individual counterparty is subject to a limit, which is assessed by the board of directors.

The Group considers the credit ratings of banks in which it holds funds in order to reduce exposure to credit risk.

(iii)Liquidity risk

Cash flow and working capital forecasting is performed for all entities in the Group for regular reporting to the board of directors. The directors monitor these reports and forecasts to ensure the Group has sufficient cash to meet its operational needs.

3.2.    Capital risk management

The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern, in order to enable the Group to continue its exploration and evaluation activities, and to maintain an optimal capital structure to reduce the cost of capital.

The Group defines capital based on the total equity of the Company. The Group monitors its level of cash resources available against future planned operational activities and may issue new shares in order to raise further funds from time to time.

4.       Judgements and key sources of estimation uncertainty

The preparation of the financial statements in conformity with IFRSs requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of expenses during the year. Actual results may vary from the estimates used to produce these financial statements.

Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.

Significant items subject to such estimates and assumptions include, but are not limited to:

(i)  Intangible assets (see Note 9)

An annual review is undertaken of each area of interest to determine the appropriateness of continuing to capitalise and carry forward project costs in relation to that area of interest. Accumulated capitalised project costs in relation to (i) an expired permit, (ii) an abandoned area of interest and / or (iii) a joint venture over an area of interest which is now ceased, will be written off in full as an impairment to the statement of income in the year in which (i) the permit expired, (ii) the area of interest was abandoned and / or (iii) the joint venture ceased.

Each exploration project is subject to review by a senior Group geologist to determine if the exploration results returned to date warrant further exploration expenditure and have the potential to result in an economic discovery. This review takes into consideration long-term metal prices, anticipated resource volumes and grades, permitting and infrastructure. The directors have reviewed each project with reference to these criteria and have made adjustments for any impairment as necessary.

5.       Segmental analysis

The Group operates principally in the UK and West Africa, with operations managed on a project by project basis. Activities in the UK are administrative in nature whilst the activities in West Africa relate to exploration and evaluation.

An analysis of the Group’s overhead costs, and reportable segment assets and liabilities is as follows:

6.       Expenses by nature

Employees’ and directors’ remuneration

The average monthly number of employees and directors was as follows:

Employees’ and directors’ remuneration comprised:

Auditor’s remuneration

Expenditures relating to the Company’s auditor, PKF Littlejohn LLP, in respect of both audit and non-audit services were as follows:

7.       Income tax

No current or deferred tax arose in either year.

The tax on the Group’s loss before tax differs from the theoretical amount that would arise as follows:

8.       Earnings per share

The calculation of the basic and fully diluted earnings per share attributable to the equity shareholders is based on the following data:

As at 31 December 2019 and 2018 the Company’s issued and outstanding capital structure comprised a number of ordinary shares, warrants and share options (see Note 14).

On 22 April 2020 the Company closed a subscription for 60,838,603 ordinary shares at a price of 4.75 pence (British pound sterling) per share for total gross proceeds of GBP£2,889,833.64. Certain directors of the Company participated in this subscription. Immediately upon closing of this fundraise the total number of ordinary shares on issue was 190,515,170.

9.       Intangible assets

Intangible assets relate to exploration and evaluation project costs capitalised as at 31 December 2019 and 2018, less impairment.

Additions to project costs during the years ended 31 December 2019 and 2018 were in the following geographical areas:

Impairment of project costs during the years ended 31 December 2019 and 2018 relate to the following terminated projects:

Those projects which were terminated were considered by the directors to be no longer prospective.

Project costs capitalised as at 31 December 2019 and 2018 related to the following geographical areas:

10.    Trade and other receivables

11.    Cash and cash equivalents

Cash and cash equivalents held as at 31 December 2019 and 2018 were in the following currencies:

External ratings of cash at bank and short-term deposits as at 31 December 2019 and 2018 were as follows:

12.    Trade and other payables

13.    Financial instruments

14.    Share capital

The Company is authorised to issue an unlimited number of no par value shares of a single class.

As at 31 December 2017 the Company’s issued and outstanding capital structure comprised:

●     54,975,394 ordinary shares; and

●     warrants to subscribe for 320,575 ordinary shares at a price of 16.5 pence (British pound sterling) per ordinary share expiring 09 October 2020.

At the Company’s annual general meeting held on 12 June 2018:

●     it was approved by the shareholders that the Company issue 80,000 ordinary shares at a price of 16 pence (British pound sterling) per share to S3 Consortium Pty Ltd for a total gross value of GBP£12,800 as part of a service agreement dated 30 October 2017 with S3 Consortium Pty Ltd to assist with the Company’s digital marketing strategy; and

●     it was approved by the shareholders that on 18 December 2017 the board of directors adopted and approved a share option plan, and granted and approved share options over 2,550,000 ordinary shares in the capital of the Company exercisable at 16.5 pence (British pound sterling) per ordinary share expiring on 18 December 2022. 25% of such share options vested on each of 12 June 2018, 12 December 2018, 12 June 2019 and 12 December 2019.

In November 2018 share options over 325,000 ordinary shares in the capital of the Company exercisable at 16.5 pence (British pound sterling) per ordinary share and expiring on 18 December 2022 were cancelled following termination of a contract with a service provider.

On 06 December 2018 the Company closed a placing and subscription for 10,984,900 ordinary shares at a price of 5 pence (British pound sterling) per share for total gross proceeds of GBP£549,245. Certain directors of the Company participated in this subscription (see Note 18).

As at 31 December 2018 the Company’s issued and outstanding capital structure comprised:

●     66,040,294 ordinary shares;

●     warrants to subscribe for 320,575 ordinary shares at a price of 16.5 pence (British pound sterling) per ordinary share expiring on 09 October 2020; and

●     share options over 2,225,000 ordinary shares in the capital of the Company exercisable at 16.5 pence (British pound sterling) per ordinary share expiring on 18 December 2022.

On 30 April 2019 the Company closed a placing and subscription for 35,064,845 ordinary shares at a price of 3.85 pence (British pound sterling) per share for total gross proceeds of GBP£1,349,996.53. Certain directors of the Company participated in this subscription (see Note 18).

On 30 September 2019 the Company closed a placing and subscription for 28,571,428 ordinary shares at a price of 7 pence (British pound sterling) per share (the ‘Fundraising Shares’) for total gross proceeds of GBP£1,999,999.96. Each Fundraising Share has a warrant attached to subscribe for one new ordinary share at a price of 10 pence (British pound sterling) per share expiring on 30 September 2020. Certain directors of the Company participated in this subscription (see Note 18). In addition the Company issued warrants to a broker of the placing to subscribe for 2,142,857 ordinary shares at a price of 10 pence (British pound sterling) per share expiring on 30 September 2020.

On 09 October 2019 the board of directors granted and approved share options over 6,550,000 ordinary shares in the capital of the Company exercisable at 8.5 pence (British pound sterling) per ordinary share expiring on 09 October 2023. 2,500,000 of such share options were conditional upon Robert Monro taking on the role of Chief Executive Officer and a director of the Company. This condition was satisfied on 02 January 2020 when Robert Monro was appointed Chief Executive Officer and a director of the Company. Regarding the vesting of these share options:

●     1,012,500 vest on each of 09 October 2019, 09 April 2020, 09 October 2020 and 09 April 2021; and

●     625,000 vest on each of 02 January 2020, 02 July 2020, 02 January 2021 and 02 July 2021.

Following the resignation of Geoffrey McNamara as an independent non-executive director and chairman of the board on 12 November 2019 share options:

●     over 325,000 ordinary shares in the capital of the Company exercisable at 16.5 pence (British pound sterling) per ordinary share and expiring on 18 December 2022; and

●     over 350,000 ordinary shares in the capital of the Company exercisable at 8.5 pence (British pound sterling) per ordinary share and expiring on 09 October 2023;

were cancelled.

As at 31 December 2019 the Company’s issued and outstanding capital structure comprised:

●     129,676,567 ordinary shares;

●     warrants to subscribe for 30,714,285 ordinary shares at a price of 10 pence (British pound sterling) per ordinary share expiring on 30 September 2020;

●     warrants to subscribe for 320,575 ordinary shares at a price of 16.5 pence (British pound sterling) per ordinary share expiring on 09 October 2020;

●     share options over 1,900,000 ordinary shares in the capital of the Company exercisable at 16.5 pence (British pound sterling) per ordinary share expiring on 18 December 2022; and

●     share options over 6,200,000 ordinary shares in the capital of the Company exercisable at 8.5 pence (British pound sterling) per ordinary share and expiring on 09 October 2023.

Movements in capital during the years ended 31 December 2019 and 2018 were as follows:

The fair value of share options and warrants issued to broker of a placing has been calculated using the Black-Scholes Model, the inputs into which were as follows:

●     for share options granted on 18 December 2017:

●   strike price 16.5 pence (British pound sterling);

●   share price 12.25 pence (British pound sterling);

●   volatility 9.1%;

●   expiry date 18 December 2022;

●   risk free rate 1.5%; and

●   dividend yield 0%;

●     for warrants issued to broker of a placing on 30 September 2019:

●    strike price 10 pence (British pound sterling);

●    share price 7.63 pence (British pound sterling);

●    volatility 35.4%;

●    expiry date 30 September 2020;

●    risk free rate 0.6%; and

●    dividend yield 0%;

●     for share options granted on 09 October 2019:

●   strike price 8.5 pence (British pound sterling);

●   share price 7.47 pence (British pound sterling);

●   volatility 34.7%;

●   expiry date 09 October 2023;

●   risk free rate 0.6%; and

●   dividend yield 0%.

The cost of share based payments relating to share options has been recognised in the consolidated statement of comprehensive income and in retained earnings. The cost of warrants issued to broker of a placing has been recognised as a deduction from equity.

15.    Ultimate controlling party

The Company does not have an ultimate controlling party.

As at 31 December 2019 the Company’s largest shareholder was Hummingbird which held 23,340,127 ordinary shares (including shares held by Hummingbird’s subsidiary, Trochilidae Resources Ltd), being 18.00% of the total number of ordinary shares in issue and outstanding.

16.    Contingent liabilities

The Gold Exploration Permits section of the Strategic Report contains details of potential net smelter royalty obligations by project area, together with options to buy out the royalty. At the current stage of development, it is not considered that the outcome of these contingent liabilities can be considered probable or reasonably estimable and hence no provision has been recognised in the financial statements.

17.    Capital commitments

On 18 October 2019 the Group entered into a drilling contract with Energold Drilling (EMEA) Limited for a minimum of 600 metres of drilling at the Sanankoro Gold Discovery (Sanankoro Permit, Sanankoro Project Area in southern Mali) for a total contract value of approximately US$84,000 plus ancillary costs. As at 31 December 2019 under the terms of the contract the Group had incurred expenditure of approximately US$72,000 including ancillary costs for a total of approximately 302 metres of drilling. This drilling contract was fully satisfied in early 2020.

On 13 December 2018 the Group entered into a drilling contract with Target Drilling SARL for a total of 3,250 metres of drilling at the Sanankoro Gold Discovery (Sanankoro Permit, Sanankoro Project Area in southern Mali) for a total contract value of approximately EUR€100,000 plus ancillary costs. As at 31 December 2018 under the terms of the contract the Group had incurred expenditure of EUR€20,452 for a total of 203.2 metres of drilling. This drilling contract was fully satisfied in early 2019.

18.    Related party transactions

During the year ended 31 December 2019:

●   in relation to the services of Geoffrey McNamara, Independent Non-Executive Director and Chairman of the Company (resigned 12 November 2019), fees totalling GBP£24,000 were paid to Tanamera Resources Pte Ltd (‘Tanamera’), a company wholly owned by Geoffrey McNamara;

●   GBP£523 was paid to Amphi Capital Limited (‘Amphi’) for consulting services. Amphi ceased providing these services to the Company on 30 June 2019. Edward Bowie, Non-Executive Director (appointed 01 July 2019) and Chairman (appointed 12 November 2019) of the Company, is a director and shareholder of Amphi;

●   GBP£6,159 was paid to Hummingbird for the reimbursement of costs relating to travel, accommodation, subsistence and conferences;

●   in accordance with a Relationship Agreement dated 03 October 2017 fees totalling GBP£7,000 were paid to Hummingbird in relation to the services of Robert Monro as a Non-Executive Director of the Company (resigned 01 July 2019) to 30 June 2019;

●   GBP£34,000 was paid to Hathaway Consulting Ltd (‘Hathaway’) for business development consulting services. Hathaway ceased providing these services to the Company on 31 December 2019. The sole director of Hathaway is Robert Monro, Non-Executive Director of the Company (resigned 01 July 2019). Robert Monro was appointed Chief Executive Officer and a Director of the Company on 02 January 2020;

●   on 30 April 2019 the Company closed a placing and subscription for 35,064,845 ordinary shares at a price of 3.85 pence (British pound sterling) per share for total gross proceeds of GBP£1,349,996.53. The following directors of the Company participated in this subscription:

○    Key Ventures Holding Limited, which is wholly owned and controlled by First Island Trust Company Limited as Trustee of The Sunnega Trust being a discretionary trust of which Paul Quirk (Non-Executive Director) is a potential beneficiary, subscribed for 3,246,750 ordinary shares for total gross proceeds of GBP£124,999.88;

○    Robert Monro, Non-Executive Director (resigned 01 July 2019; appointed Chief Executive Officer and a Director on 02 January 2020), subscribed for 519,480 ordinary shares for total gross proceeds of GBP£19,999.98; and

○    Jonathan Forster, Chief Executive Officer and a Director (resigned 02 January 2020), subscribed for 129,870 ordinary shares for total gross proceeds of GBP£5,000; and

●   on 30 September 2019 the Company closed a placing and subscription for 28,571,428 ordinary shares at a price of 7 pence (British pound sterling) per share (the ‘Fundraising Shares’) for total gross proceeds of GBP£1,999,999.96. Each Fundraising Share has a warrant attached to subscribe for one new ordinary share at a price of 10 pence (British pound sterling) per share expiring on 30 September 2020. The following directors of the Company participated in this subscription:

○    Key Ventures Holding Limited, which is wholly owned and controlled by First Island Trust Company Limited as Trustee of The Sunnega Trust being a discretionary trust of which Paul Quirk (Non-Executive Director) is a potential beneficiary, subscribed for 357,142 ordinary shares for total gross proceeds of GBP£24,999.94;

○    Edward Bowie, Independent Non-Executive Director (appointed 01 July 2019) and Chairman (appointed 12 November 2019) of the Company, subscribed for 142,857 ordinary shares for total gross proceeds of GBP£9,999.99; and

○    Robert Monro, Non-Executive Director (resigned 01 July 2019; appointed Chief Executive Officer and a Director on 02 January 2020), subscribed for 142,857 ordinary shares for total gross proceeds of GBP£9,999.99.

During the year ended 31 December 2018:

●   in relation to the services of Geoffrey McNamara fees totalling GBP£24,000 were paid to Tanamera;

●   GBP£1,069 was paid to Amphi for consulting services;

●   in accordance with a Relationship Agreement dated 03 October 2017 fees totalling GBP£14,000 were paid to Hummingbird in relation to the services of Robert Monro as a Non-Executive Director of the Company; and

●   on 06 December 2018 the Company closed a placing and subscription for 10,984,900 ordinary shares at a price of 5 pence (British pound sterling) per share for total gross proceeds of GBP£549,245. The following directors of the Company participated in this subscription:

○    Key Ventures Holding Limited subscribed for 780,000 ordinary shares for total gross proceeds of GBP£39,000;

○    Tanamera subscribed for 780,000 ordinary shares for total gross proceeds of GBP£39,000; and

○    Jonathan Forster subscribed for 100,000 ordinary shares for total gross proceeds of GBP£5,000.

19.    Events after the balance sheet date

On 22 April 2020 the Company closed a subscription for 60,838,603 ordinary shares at a price of 4.75 pence (British pound sterling) per share for total gross proceeds of GBP£2,889,833.64. Certain directors of the Company participated in this subscription. Immediately upon closing of this fundraise the total number of ordinary shares on issue was 190,515,170 and the Company’s largest shareholder was Brookstone Business Inc which held 53,060,025 ordinary shares (being 27.85% of the total number of ordinary shares on issue and outstanding). Brookstone Business Inc is wholly owned and controlled by First Island Trust Company Limited as Trustee of the Nodo Trust, a discretionary trust with a broad class of potential beneficiaries. Patrick Quirk, father of Paul Quirk (Non-Executive Director), is a potential beneficiary of the Nodo Trust.

Brookstone Business Inc, Key Ventures Holding Limited and Paul Quirk (collectively the ‘Investors’; aggregated shareholdings being 34.07% of the total number of ordinary shares on issue and outstanding) have entered into a Relationship Agreement to regulate the relationship between the Investors and the Company on an arm’s length and normal commercial basis. In the event that Investors’ aggregated shareholdings becomes less than 30% then the Relationship Agreement shall terminate.

The current global COVID-19 outbreak led the Group to suspend its drill programme in April 2020 at the Madina Foulbé Permit in eastern Senegal. Meanwhile field work continues across a number of permits in Mali, including some of those in the Sanankoro Project Area in the Yanfolila Gold Belt, southern Mali. The Group will continue to follow its strict protocols to reduce the risk of transmission of COVID-19 at its operating field camps. Given the uncertainties created by COVID-19 the directors will continue to monitor its impact on the Group’s activities and financial resources.