Source - RNS
RNS Number : 1386L
Tengri Resources
29 September 2016
 

 

 

 

 

 

HALF YEAR REPORT AND


FINANCIAL STATEMENTS

 

 

FOR THE SIX MONTHS ENDED 30 JUNE 2016

 



 

CHAIRMAN'S REPORT

 

REPORTING PERIOD HIGHLIGHTS

·      Completed sale of Talas Mining interests for cash consideration of US$6 million

·      Became "AIM Rule 15 cash shell" for the purpose of the AIM Rules

·      Redeemed US$3.25 million unsecured convertible loan notes from the proceeds of the sale of the Talas Mining Interests.  This consisted of a payment of US$2.25 million in part redemption of the US$4 million unsecured loan notes subscribed for by Robust Resources Limited and full payment of the $0.5 million unsecured loan notes subscribed for by funds managed by TIH investment Management Pte Limited and full payment of the $0.5 million unsecured loan notes subscribed for by funds managed by Argyle Street Management Limited.

.

 

 

CHAIRMAN'S STATEMENT

I have the pleasure of presenting your Company's Half-Year Report for the six months ended 30 June 2016.  The first half of 2016 has been a period of transition for the Company as it completed the disposal of its Talas Mining interests located in the Kyrgyz Republic and became a "cash shell" for the purposes of the AIM Rules and has until 1 December 2016 to make an acquisition or acquisitions which constitute a reverse takeover under Rule 14 of the AIM Rules or otherwise seek readmission as an "investing company" with the attendant requirement to raise at least £6.0 million on or immediately before such readmission.

The Company's ability to continue as a going concern is dependent upon the financial support received from its shareholders both in the form of additional funding and deferring the repayment of the outstanding loan balance. This is further set out in the Going Concern section of the notes to the financial statements

The focus for the board during the second half of 2016 is to make an acquisition that will constitute a reverse takeover and introduce a new business in the Company that has the possibility of ultimately yielding returns for its shareholders. The Board will update shareholders as there is progress on any possible reverse takeover targets.

 

Kindest regards,

 

 

 

PETER MOSS

Chairman

 



 

Statement of Profit and Loss and other Comprehensive Income

 

for the SIX MONTHS ENDED 30 JUNE 2016


Notes

Six Months Ended
30 June 2016

US $

Six Months Ended
30 June 2015

US $

Revenue




Other income


489

-

Total income


489

-





Expense




Depreciation expense


-

(10,227)

Employee benefits expense


(99,316)

(461,263)

Foreign exchange gain/(loss)


5,867

(16,918)

Impairment expense


-

(39,233)

Professional fees


(180,937)

(726,477)

Public relations


(82,625)

(82,438)

Telecommunications expense


3,369

(18,496)

Rent expense


-

(4,123)

Travel expense


(10,017)

(98,689)

Other expense


(55,922)

(129,486)

Fair value movement of convertible not derivative

5

647,503

-

Finance cost

4

(758,221)

(21,712)

Total expense


(530,299)

(1,609,062)





Loss before tax


(529,810)

(1,609,062)

Income tax benefit


-

-

Loss for the year


(529,810)

(1,609,062)





Other comprehensive income/(loss)


-

-

Total comprehensive loss for the year


(529,810)

(1,609,062)





Basic loss per share


(0.0049)

(0.0150)

Diluted loss per share


(0.0049)

(0.0150)

Weighted average number of shares


107,618,497

107,618,497

No dividends were proposed or declared in respect of any of the periods presented above.

The accompanying notes form part of this historical financial information.

 


Consolidated Statement of Financial Position

 

AS AT 30 JUNE 2016


Notes

As at
30 June 2016

US $

As at
31 December 2015

US $

Assets




Cash and cash equivalent


435,877

7,012

Total current assets


435,877

7,012





Available for sale financial assets

3

119,151

4,571,051

Total non-current assets


119,151

4,571,051





Total assets


555,028

4,578,063





Liabilities




Trade and other payables


324,415

666,747

Interest bearing liabilities

4

891,843

3,395,232

Financial derivative liability

5

-

647,504

Total current liabilities


1,216,258

4,709,483





Total liabilities


1,216,258

4,709,483





Net liabilities


(661,230)

(131,420)





Shareholders' equity




Share capital


97,059,609

97,059,609

Share-based payments reserve


121,654

121,654

Capital redemption reserve


92,740

92,740

Accumulated losses


(97,935,233)

(97,405,423)

Total shareholders' deficit


(661,230)

(131,420)

The accompanying notes form part of these financial statements.



 

Statement of Changes in Equity

 

for the SIX MONTHS ENDED 30 JUNE 2016


Share Capital

US$

Share-Based Payments Reserve

US$

Capital Redemption Reserve

US$

Accumulated Losses

US$

Total

US$







Balance at 31 December 2014

97,059,609

121,654

92,174

(71,897,625)

25,375,812







Other movement

-

-

566

-

566







Total comprehensive loss for the year

-

-

-

(25,507,798)

(25,507,798)

Balance at 31 December 2015

97,059,609

121,654

92,740

(97,405,423)

(131,420)







Total comprehensive loss for the period

-

-

-

(529,810)

(529,810)

Balance at 30 June 2016

97,059,609

121,654

92,740

(97,935,233)

(661,230)

The accompanying notes form part of these financial statements.

 

 



 

Statement of Cash Flows

 

for the SIX MONTHS ENDED 30 JUNE 2016



Six Months Ended 30 June 2016

US $

Six Months Ended 30 June 2015

US $

Cash flows from operating activities




Payments to employees and suppliers


(1,109,314)

(978,692)

Net cash flows used by operating activities


(1,109,314)

(978,692)





Cash flows from investing activities




Payment for exploration expenditure in equity investments


(552,981)

(939,667)

Purchase of property, plant and equipment


-

(14,904)

Net proceeds from divestment of subsidiaries


5,000,000

-

Net cash outflow from investing activities


4,447,019

(954,571)





Cash flows from financing activities




Proceeds from convertible notes


-

1,000,000

Proceeds from unsecured loan


351,600

251,763

Repayment of convertible notes


(3,250,000)

-

Net cash flows from financing activities


(2,898,400)

1,251,763





Net increase/(decrease) in cash and cash equivalents


439,305

(681,500)

Cash and cash equivalents at the beginning of the period


7,012

795,463

Effects of foreign exchange rate changes on the balance of cash held in foreign currencies


(10,440)

(42,219)

Cash and cash equivalents at the end of the year


435,877

71,702

The accompanying notes from part of these financial statements.

 


Notes to the Financial statements

 

1.   BASIS OF ACCOUNTING

The financial information has been prepared on an accruals basis and is based on historical costs modified by the revaluation of selected non-current assets, financial assets and financial liabilities for which the fair value basis of accounting has been applied.  The financial information is drawn in accordance with the provisions of the International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB) and adopted by the European Union.  The financial information is presented in US dollars, rounded to the nearest dollar.

 

2.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

A comprehensive summary of the significant accounting policies is provided for in the Tengri Resources (Tengri or the Company) 2015 Annual Report.  A number of the significant accounting policies in the 2015 Annual Report have been repeated below due to their importance on this Half Year Report.

Consolidation

As at 31 December 2015 management concluded that the Company had lost operational control of the Kyrgyz companies operating in the Kyrgyz Republic.

A subsidiary of the Company is an entity for which the Company is exposed, 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.  As the Company did not control the Kyrgyz companies at 31 December 2015 these are not considered to be subsidiaries of the Company at that date.

Due to the Kyrgyz companies ceasing to be treated as subsidiaries in the year ended 31 December 2015, the Company has prepared individual company interim financial statements for the period ended 30 June 2016.

As these are the separate financial statements of Tengri, the 31 December 2015 and 30 June 2015 comparatives provide information on the financial position and performance for Tengri only.

In these financial statements, the comparatives for the investments in the Kyrgyz Republic were treated as investments in subsidiaries until the point that control was lost, at which point these were held as available for sale investments.

Going Concern

During the period the Company divested its shareholdings in the Kyrgyz companies for total consideration of US$6.000 million (net consideration of US$4.447 million).

These funds have been utilised by the Company to finalise a settlement with Gold Fields Oregon Holdings BVI Limited (Goldfields) and to repay the TIH Limited (TIH) and Argyle Street Management Limited (ASML) loan notes.  The Company also partly repaid the Robust Resources Limited (Robust) loan note.

Further funds will be required to fund existing levels of corporate overheads and to repay the outstanding principal owing to Robust.

These factors indicate that the Company's ability to continue as a going concern is dependent upon the financial support received from its shareholders both in the form of additional funding and deferring the repayment of the outstanding loan balance. 

Notwithstanding the above, the Directors are satisfied that it is appropriate to prepare the financial statements on a going concern basis having regard to the following factors:

·      Tengri has significantly reduced expenses as a result of divesting the Kyrgyz companies;

·      Tengri has sufficient cash at the date of signing the financial statements to pay its trade creditors on normal commercial terms; and

·      Tengri and Robust intend to use their best efforts to negotiate and effect a solvent restructuring of the outstanding loan note balance.

Should the Company not be able to manage the inherent uncertainties referred to above, there would be significant uncertainty as to whether the Company would be able to meet its debts as and when they fall due and thus continue as a going concern. The Directors believe that there is a reasonable prospect of a solvent restructuring being agreed and implemented with Robust and therefore it is appropriate to prepare the financial statements on a going concern basis.

If the Company is unable to continue in operational existence for the foreseeable future, adjustments would have to be made to reduce the values of the assets to their recoverable amounts, provide for further liabilities that might arise and reclassify non-current assets as current assets.

 

3.   AVAILABLE FOR SALE FINANCIAL ASSETS



As at
30 June 2016

US$

As at
31 December 2015

US$





Investments at fair value brought forward


4,571,051

39,379

Investments acquired in the period


-

114,825

Investments in subsidiary companies reclassified


-

16,511,152

Disposal of investments


(4,451,900)

-

Impairment of investments


-

(12,094,305)





Financial assets at the end of the year


119,151

4,571,051





Level 1 investments at the end of the year


4,324

9,025

Level 3 investments at the end of the year


114,827

4,562,026

During the period the Company entered into a conditional agreement with Socagest to sell its Kyrgyz assets relating to the Taldybulak and Andash projects for US$6.000 million.  The sale provided that Tengri use US$0.553 million of the sales proceeds to repay trade creditor balances relating to its subsidiaries that formed part of the sale.  The sale was completed on 31 May 2016.  At the same time the Company and its majority shareholder Robust entered into an agreement with Goldfields to settle all ongoing and future obligations owed to Goldfields in respect of the Kyrgyz projects for a consideration of US$1.000 million.  This allowed the Company to complete a full and clean exit from its activities in the Kyrgyz Republic.

 

4.   INTEREST BEARING LIABILITIES



As at
30 June 2016

US$

As at
31 December 2015

US$





Convertible note liability (i)


750,000

3,241,778

Unsecured loan


141,843

153,454





Interest bearing liabilities


891,843

3,395,232

(i)      Convertible note liability

During the period the Company repaid in full the principal amounts outstanding (US$1.000 million) on the convertible unsecured loan notes to funds managed by ASML and TIH.  During the period the Company also partly repaid US$2.250 million of the outstanding principal owing to Robust.  There is still an outstanding principal balance of US$0.750 million to Robust.



 

Reconciliation of the convertible note liabilities movement during the period:


As at
30 June 2016

US$



Convertible note liability at 31 December 2015

3,241,778

Capitalise interest payable up to repayment

242,247

Unwinding interest on repayment of convertible note liabilities

515,975

Repayment of convertible note liability

(3,250,000)



Balance at 30 June 2016

750,000

 

5.   FINANCIAL DERIVATIVE LIABILITY



As at
30 June 2016

US$

As at
31 December 2015

US$





Financial derivative associated with convertible note liability


-

647,504





Financial derivative liability


-

647,504

The convertible note liabilities issued by the Company contain an embedded option to convert the debt to ordinary shares.  The embedded options have been separated from the host contract and accounted for as a derivative as the economic characteristics and risks of the embedded derivative are not closely related to the economic characteristics and risks of the host contract.  The embedded derivatives are measured at fair value with changes in value being recorded in profit or loss.

During the period the ASML and TIH convertible note liabilities were repaid in full.  As a result of the repayment the financial derivative recognised at inception for the ASML and TIH convertible notes has been fair valued at $nil with the movement taken to the profit and loss.

During the period the Company also partly repaid US$2.250 million of the outstanding principal owing to Robust.  The fair value of the embedded derivative related to the residual Robust convertible note (US$0.750 million) has been assessed at $nil.  The Company has determined the fair value to be $nil based on the following:

·      Tengri's closing share price was at reporting date was 1.825p.  This compares to the conversion price of 5.000p;

·      The Company has a shareholder deficit at reporting date of US$0.661 million; and

·      At reporting date the Company's ability to continue as a going concern is dependent upon the financial support received from its shareholders both in the form of additional funding and deferring the repayment of the outstanding loan balance.

 



 

Reconciliation of the financial derivative liability during the period is below:


As at
30 June 2016

US$



Financial derivative liability at 31 December 2015

647,504

Fair value movement of convertible note derivative

(647,504)



Balance at 30 June 2016

-

 

 


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