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NQ Minerals PLC - Interim results for the six months to 30 June 2020

RNS Number : 5151A
NQ Minerals PLC
30 September 2020
 

30 September 2020

NQ Minerals Plc

(the "Company" or "NQ Minerals")

 

Interim results for the six months ended 30 June 2020

 

London, United Kingdom - September 30 2020 - NQ Minerals Plc (AQSE:NQMI, OTCQB:NQMLF, US ADR OTCQB:NQMIY) ("NQ" or the "Company" or the "Group") is pleased to announce its interim financial results for the six months ended 30 June 2020 ("H1 2020").


The Company wishes to highlight the H1 2020 financial results represent the state of the Company before the Hellyer Mine's processing capacity was increased significantly. The Company announced on 2 July 2020 that processing rates increased to 150 tonnes per hour ("tph"), or the equivalent of over 1.2 million tonnes per annum ("Mtpa").

 

The Hellyer operations continued undergoing processing circuit modifications during Q3 2020, and production rates have been increased further to 165 tonnes per hour at the end of September 2020. To highlight this, the Company was pleased to report that an average annualised production rate of 1.23 Mtpa for the months of July and August 2020 has been achieved. This is a very significant increase from Q1 2020 performance of 0.905 Mtpa and Q2 2020 rates of 1.01 Mtpa and compares to 2019 Hellyer's full year plant throughput totalling 0.84 million tonnes (an average of 103 tph and 92% plant availability).


Highlights:

 

-     During H1 2020, the Company produced 16,889 tonnes of lead concentrate and 8,850 tonnes of zinc concentrate, this represents a 66% and 19% increase in production respectively compared to H1 2019.  

-     During H1 2020, the Company generated £15.6 million in Revenue from concentrate sales and £5.3 million in Gross Profit which represents 10% and 58% increases respectively despite lead prices dropping from 2019 prices of approximately US$2,300 per tonne to below US$1,600 per tonne during H1 2020. Lead and Zinc prices have since recovered considerably in H2 2020 to date.

-     In April, the Company announced first quarter of lead concentrate production totalling 8,127 tonnes and zinc concentrate production of 4,609 tonnes.  Production rates were increased with further increases announced (see 28 September 2020 press release).

-     In June, the Company announced the closing of the acquisition of the historic Beaconsfield Gold Mine in Tasmania, Australia

-     In August, the Company announced it has signed a commitment letter issued by ING Bank N.V. ("ING") for a US$55 million loan in respect to the refinancing of the Company's existing project debt. 

-   In September, the Company announced that it had successfully increased production and processing rates up to 165 tph and plans are being finalised to increase production further to 180 tph, the equivalent of 1.5 Mtpa. 

 

 

 

Corporate

 

NQ has been active on several corporate initiatives which include enhancing the profile and visibility of the Company in the global capital markets space, diversifying our portfolio of assets, and moves to restructuring our diverse debt package that was initially put in place to fund the re-opening of the Hellyer operations.

 

The Company's shares are now traded in the USA through the OTC Markets. The Company now has an American Depository Receipt ("ADR") traded in the United States under the ticker NQMIY and the ordinary shares trade under the ticker NQMLF.

 

NQ believes that having an ADR traded in the United States will provide additional trading liquidity in the world's largest capital market. To further expand our global market presence, the Company has also engaged specialists DGWA in Germany to seek a listing on the Frankfurt Stock Exchange ("Börse Frankfurt").

 

In late February 2020, the Company signed a binding staged acquisition agreement totalling £1.05 million to purchase a 100% interest in the historic high-grade Beaconsfield Gold Mine in Tasmania and, after extensive due diligence, NQ took formal ownership of the mine in late June 2020. Beaconsfield is historically one of the richest gold mines in Tasmania, with past production totalling nearly 2 million ounces of gold from 1887 to 2012 at an average grade of nearly 15 grams per tonne gold. The Company plans to bring Beaconsfield back to gold production as soon as practicably possible.

 

In August 2020, the Company announced that ING Bank N.V. ("ING"), a leading global resources bank, committed to provide the Company with a US$55 million loan, subject to further conditions. This facility will allow the Company to repay Hellyer's early project debt and reduce the Company's interest expense by approximately US$2.5 million per annum. 

 

Production

 

Hellyer Gold Mine - Tasmania, Australia

 

During the half year, the Company announced several record-breaking month-over-month production performances at Hellyer. These results built on the January 2020 Company announcement about record Hellyer production for the month of December 2019 and for the fourth quarter of 2019.

 

Production statistics for 2019 -2020 quarter vs quarter and 2019-2020 half vs half were as follows:

 

Reconciled Production

2020 Q1

2020 Q2

2019 Q1

2019 Q2

H1 2020

H1 2019

Lead Concentrate tonnes

8,127

8,762

4,712

5,452

16,889

10,164

Zinc Concentrate tonnes

4,609

4,241

3,015

4,416

8,850

7,431

 

These results reflect strong improvements in metal recoveries in both our lead and zinc concentrate circuits during the 2019 and 2020 year-to-date financial years. 

 

In addition, continuous plant improvements and expansion plans saw plant throughput increase steadily throughout the year, and the mine managed to achieve production rates exceeding 1.2 million tonnes per year in the last days of June 2020, with further increases planned to 1.5 million tonnes per annum.

 

Production to date has focused primarily on getting the best out of the lead and zinc concentrate streams, with optimisation work continuing to show gradual and steady improvements.

 

With Hellyer's published JORC compliant Mineral Resource Estimated at 9.25 Mt (which is host to gold at 2.57 g/t for 764,300 oz, silver at 92 g/t Ag for 27,360,300 oz, lead at 2.99% for 276,600 tonnes and zinc at 2.57% for 217,400 tonnes), gold is the main in situ value metal. A number of opportunities to economically recover extra gold and silver from the Hellyer resource are being evaluated. Related studies are assessing process options, estimating capital and operating costs and establishing project execution approaches.

 

In the early part of 2020, to complement the Hellyer surface operations, NQ fortuitously managed to secure the rights to the exciting underground resources at Hellyer and exploration rights around Hellyer. In so doing NQ has significantly increased the lease area around Hellyer four- fold.

 

The acquisition of the underground mineral rights included 1.175 million tonnes of underground JORC Resources grading 8.6% zinc, 4.9% lead, 1.66 grams per tonne gold and 96 grams per tonne silver. These resources offer significant potential for increasing Hellyer's overall resources and add to the 10-year mine life of our current tailing's operations. The Company have identified several advanced exploration targets and plans to commence an exploration program to expand the known underground resources later in 2020.

 

New Mine Development

 

Beaconsfield Gold Mine - Tasmania, Australia 

 

In February 2020, NQ announced an option agreement to acquire of all the Beaconsfield Gold Mine ("Beaconsfield") in Tasmania for £1.05 million. The acquisition includes the Beaconsfield Mining Lease, infrastructure, permitted tailings dam and a 350,000 tonne per year gold processing plant. Historic gold production at the Beaconsfield Gold Mine was in two main phases before ceasing operations in 2012 due to low commodity prices:

 

• 1877-1914 - 1.04 million tonnes for 855,000 ounces of gold (avg grade 25.6 g/t gold)

• 1999-2012 - 2.72 million tonnes for 920,000 ounces of gold (avg grade 10.5 g/t gold)

 

In May 2020, the Company announced (as part of its due diligence on the assets) a new Mineral Resource Estimate for the lower section of the Beaconsfield Mine, resulting in an increase in contained gold resources underground to 1.454 million tonnes grading 10.3 grams per tonne gold for 483,000 ounces of gold.

 

 

 

 

Beaconsfield Mine
Mineral Resource Statement - 30th April 2020

Ordinary Kriging Grade Estimates

Subdivided by Resource Category Above a Lower Cut-off Grade of 3g/t Au.

 

Resource Category

Tonnes

kt

Gold Grade

Au g/t

Contained Metals

Au koz

Measured

485

11.4

177

Indicated

492

11.2

177

Inferred

477

8.4

129

Total

1,454

10.3

483

 

 

Importantly, this new Beaconsfield resource is only for the lower section of the mine from the 415m level down to the 1,500 vertical metres depth, and the ore body remains open at depth. The deepest hole returning 2.5m at 32.4 g/t gold. No resources have yet been calculated for the rich upper section of the mine, which was mined from 1877-1914.

 

NQ plans to re-open Beaconsfield by developing a new modern mine commencing with the development of a 3.6km decline access from surface to reconnect into the existing mine workings at the 430m level. The Company believes Beaconsfield offers a genuine opportunity to develop a high-quality gold asset in short order.

 

Exploration


Ukalunda Gold Project - Queensland, Australia

 

The 64.4km2 Ukalunda tenements, located 300km South from Townsville have excellent potential to host a gold deposit of size. There are multiple shows of mineralisation of similar characteristics to major deposits in the regions, such as the historic Wirralie Gold Mine, with its previously produced 1.1 million ounces of gold. The area is highly prospective for gold, silver and base metals. The Queensland Environmental Authority has now granted a mining lease for NQ's wholly owned Sunbeam Silver Mine ("Sunbeam"). The granting of the mining lease allows for a more active exploration effort at the historic Sunbeam Mine and further assessment of the multiple surface stockpiles which have been assessed to contain gold, silver, lead, zinc and antimony. The Company is currently working with its geological consultants to ascertain the true grade and tonnage available in the Sunbeam stockpiles with the view of monetising their value.

 

Square Post Gold Project - Queensland, Australia

 

The 168km2 Square Post licenses lie close to the main Flinders Highway only 50km south of the city of Townsville. The area is considered highly prospective for gold and is considered underexplored.

 

Safety & Environmental

 

The Company is determined and committed to making a positive impact in our communities. The Company continues to operate at the highest standards as it relates to Environmental, Community, Sustainability and Human Resource policies and procedures. The Company is committed to maintaining high performance standards and constantly strives to promote a culture of excellence that encourages our employees to exceed regulatory requirements for health, safety, community development and the environment. The Company reported no lost time due to accidents in H1 2020, which is a testament to all our teams.

 

Outlook

 

The Company has seen improvements on a month over month basis in production and mine site operating profits at the mine site level. The commencement of 2020 has continued on with operational success, with H1 2020 seeing production of lead concentrate totalling 16,889 tonnes and zinc concentrate production of 8,850 tonnes. This represents a dramatic improvement over H1 2019.  In addition, Hellyer produced 2,304 ounces of gold and 460,388 ounces of silver during H1 2020 as precious metal credits in the lead and zinc concentrate streams.

 

The Company is implementing programmes to further enhance plant throughput at Hellyer in 2020. The Company has successfully achieved a new record rate of production at 165 tph through the plant and the Company continues to review ways to increase this further to 180 tph over the coming months.

 

The Company's new Beaconsfield Gold Mine acquisition provides the possibility for significant near-term cash flow from gold production. The new JORC resource of 1.454 million tonnes grading 10.3 grams per tonne gold for 483,000 ounces is a significant resource and could provide a stable low-cost operation for many years to come. The Company is working with its engineering consultants to bring the Beaconsfield Gold Mine back into production as soon as possible.

 

The Company is still in the final stages of finalising the debt facility having announced it has signed a commitment letter issued by ING Bank N.V. ("ING") for a US$55m loan in respect of the refinancing of the existing project debt. The new debt facility will better align future debt maturities with the cash flows generated from Hellyer, while resulting in a favourable decrease in interest costs to the Company.   

 

NQ Minerals' Executive Chairman, Mr David Lenigas, said;

 

"In summary, the first half of 2020 saw dramatic improvements in our flagship Hellyer mining operations, and the second half should see even more improvements with respect to production, revenues and profits as we continue to move plant throughput higher. We have a lot to look forward in this second half of this year.  We are all working diligently to close the ING debt refinancing deal we announced a few months back, and a successful close on this transaction will add tremendously to the strength of the Company. The re-opening of the famous high-grade Beaconsfield Gold Mine is also a very exciting opportunity the Company is working towards, as this event will add significant revenues and profits to NQ over the coming years. And finally, I would like to state very clearly that NQ is totally committed to seeking a listing of its shares on a senior ranked global stock exchange and we are all working hard towards this goal. There is a great deal for shareholders to look forward to in the short, medium and long term and I thank all shareholder, staff, government agencies, contractors, consultants, supplier and off-takers for their valued support during these difficult COVID-19 times."

 

 

CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

FOR THE HALF-YEAR PERIOD ENDED 30 JUNE 2020

 

 

 

 

 

 

 

6 Months to

 

 

6 Months to

 

12 Months to

 

 

 

 

 

30 June 2020

 

 

30 June 2019

 

31 December 2019

 

 

 

 

 

£'000s

 

 

£'000s

 

£'000s

 

 

 

 

 

 

 

 

 

 

 

Revenue from contracts with customers

 

       15,615

 

 

    14,154

 

    27,226

Cost of sales

 

 

 

      (10,229)

 

 

   (10,747)

 

   (19,821)

Gross profit

 

 

 

         5,386

 

 

     3,407

 

      7,405

 

 

 

 

 

 

 

 

 

 

 

Other income

 

 

 

              -  

 

 

          -  

 

22

Selling and distribution expenses

 

        (3,566)

 

 

    (2,496)

 

     (4,720)

Administrative expenses

 

 

        (5,577)

 

 

   (10,484)

 

   (18,434)

Operating loss

 

 

 

        (3,757)

 

 

    (9,573)

 

   (15,727)

 

 

 

 

 

 

 

 

 

 

 

Finance costs

 

 

 

      (14,351)

 

 

    (8,311)

 

   (20,921)

Finance income

 

 

 

              23

 

 

         (41)

 

19

Loss on ordinary activities before taxation

 

      (18,085)

 

 

   (17,925)

 

   (20,902)

 

 

 

 

 

 

 

 

 

 

 

Taxation

 

 

 

 

            430

 

 

        332

 

689

 

 

 

 

 

 

 

 

 

 

 

Loss for the period

 

 

 

      (17,655)

 

 

   (17,593)

 

   (35,940)

 

 

 

 

 

 

 

 

 

 

 

Other comprehensive income

 

 

 

 

 

 

 

 

Foreign exchange (losses)/gains

 

           (549)

 

 

       (306)

 

13

 

 

 

 

 

 

 

 

 

 

 

Total comprehensive loss for the period attributable to the owners of the Parent

 

 

 

 

 

 

      (18,204)

 

 

(17,899)

 

   (35,927)

 

 

 

 

 

 

 

 

 

 

 

Loss per share (pence)

 

 

(5.25p)

 

 

(5.49p)

 

(10.94p)

 

 

 

CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION

AS AT 30 JUNE 2020

 

 

 

 

 

 

As At

 

As At

 

 

 

 

 

30 June 2020

 

31 December 2019

 

 

 

 

 

£'000s

 

£'000s

Assets

 

 

 

 

 

 

 

Non-current assets

 

 

 

 

 

 

Exploration and evaluation assets

 

     1,345

 

     1,238

Inventory

 

 

 

 

    15,672

 

    15,889

Property, plant and equipment

 

 

    21,292

 

    19,925

Financial assets

 

 

 

     1,074

 

     1,326

Deferred tax assets

 

 

 

        966

 

        880

Other assets

 

 

 

        450

 

            -

Total non-current assets

 

 

    40,799

 

    39,258

 

 

 

 

 

 

 

 

Current assets

 

 

 

 

 

 

Inventory

 

 

 

 

     4,808

 

     4,435

Trade and other receivables

 

 

     3,591

 

     3,387

Cash and cash equivalents

 

 

     2,287

 

     1,489

Total current assets

 

 

 

    10,686

 

     9,311

Total assets

 

 

 

    51,485

 

    48,569

 

 

 

 

 

 

 

 

Equity and liabilities

 

 

 

 

 

Equity attributable to owners of the Parent

 

 

 

Ordinary shares

 

 

 

        347

 

        330

Share premium

 

 

 

    16,894

 

    15,781

Unissued capital reserve

 

 

     3,879

 

     3,879

Share option reserve

 

 

 

     6,815

 

     7,124

Other reserve

 

 

 

        885

 

        267

Group reorganisation reserve

 

 

    (6,996)

 

    (6,996)

Translation reserve

 

 

 

       (487)

 

       (399)

Merger relief reserve

 

 

 

     7,171

 

     7,171

Accumulated losses

 

 

 

 (101,739)

 

   (83,535)

Total equity

 

 

 

   (73,231)

 

   (56,378)

 

 

 

 

 

 

 

 

Non-current liabilities

 

 

 

 

 

Financial liabilities

 

 

 

    90,282

 

    57,950

Provision for rehabilitation

 

 

     3,986

 

     4,043

Deferred tax liabilities

 

 

     5,891

 

     5,971

Total non-current liabilities

 

 

  100,159

 

    67,964

 

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

Trade and other payables

 

 

    16,493

 

    12,332

Financial liabilities

 

 

 

     5,275

 

    22,696

Convertible notes

 

 

 

     2,789

 

     1,955

Total current liabilities

 

 

    24,557

 

    36,983

Total liabilities

 

 

 

  124,716

 

  104,947

 

 

 

 

 

 

 

 

Total equity and liabilities

 

 

    51,485

 

    48,569

 

Post Balance Date Events

No matters or circumstances have arisen since the end of the financial year which significantly affected, or may significantly affect, the operations of the Company, the results of those operations, or the state of affairs of the company in future financial years.

 

Likely developments in the operations of the Company, and the expected results of those operations in future financial years, have not been included in this report as the inclusion of such information is likely to result in unreasonable prejudice to the Company.

 

·    NQ Minerals US$55 million Debt Restructuring with ING Bank

·    NQ Minerals Appoints European Investor Relations Advisor

·    Proposed Senior Stock Exchange Listing

On behalf of the board

 

Mr David Lenigas

Chairman

September 2020

 

The financial information for both the six months ended 30 June 2020 and the six months ended 30 June 2019 has not been audited. The financial information contained in the interim report does not constitute statutory accounts as defined in Section 434 of the Companies Act 2006.

 

The principal accounting policies of the Group are consistent with those detailed in the 31 December 2019 financial statements, which are prepared in accordance with International Financial Reporting Standards (IFRSs), as adopted by the European Union"

 

Competent Person's Statement

 

The information in this report that relates to the Hellyer project is based on information compiled by Mr. Roger Jackson, an Executive Director of the Company, who is a 25+ year Member of the Australasian Institute of Mining and Metallurgy (MAusIMM) and a Member of Australian Institute of Company Directors. Mr. Jackson has sufficient experience which is relevant to the style of mineralisation and type of deposits under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2012 Edition of the "Australasian Code for Reporting of  Exploration results, Mineral Resources and Ore Reserves". Mr. Jackson consents to the inclusion of the data contained in relevant resource reports used for this announcement as well as the matters, form and context in which the relevant data appears.

 

-END-

 

About NQ Minerals

 

NQ Minerals Plc is listed on London's Aquis Stock Exchange (AQSE) under the ticker NQMI and has it's 1:100 ADR traded on the US OTC QB under ticker NQMIY and its ordinary shares are dual traded on the US OTC QB under the ticker NQMLF.

 

NQ Minerals operations are in Australia. NQ commenced base metal and precious metal production in 2018 at its 100% owned flagship Hellyer Gold Mine in Tasmania. Hellyer has a published JORC compliant Mineral Resource estimated at 9.25 Mt which is host to Gold at 2.57 g/t Au for 764,300 oz Au, Silver at 92 g/t Ag for 27,360,300 oz Ag, Lead at 2.99% Pb for 276,600 tonnes and Zinc at 2.57% Zn for 217,400 tonnes. In addition to these resources, the Hellyer assets include a large mill facility and full supporting infrastructure, including a direct rail line to port. The Company is also planning to re-open the historic high-grade Beaconsfield Gold Mine in Tasmania, which has a JORC (2012) compliant Mineral Resource Estimate of 1.454 Mt at 10.3 g/t Au for 483,000 ounces of gold. Regular updates on the progress of the Hellyer Gold Mine and Beaconsfield can be viewed on NQ's website at www.nqminerals.com.

 

 

For more information, please contact:

 

NQ Minerals plc

David Lenigas, Chairman

[email protected]

Colin Sutherland, Chief Financial Officer
[email protected]

Tel: +1 416 452 2166 (North America)

 

Media Enquiries

IFC Advisory Limited

Graham Herring / Tim Metcalfe

[email protected]

Tel: +44 (0) 203 934 6630 (United Kingdom)

 

Corporate Adviser

First Sentinel Corporate Finance Limited

Brian Stockbridge / Gabrielle Cordeiro

Tel: +44 (0) 207 183 7407 (United Kingdom)

 

Corporate Broker

VSA Capital Limited

Andrew Monk/Maciek Szymanski

+ 44 (0) 203 005 5000 (United Kingdom)

 

The Following section relates to NQ Minerals Plc's news releases distributed in the United States:

 

Cautionary Note to US Investors 

 

The United States Securities and Exchange Commission ("SEC") permits US Mining companies, in their filings with the SEC, to disclose only those mineral deposits that a company can economically and legally extract or produce.  Any estimates of mineral resources shown in this press release or on NQ Minerals PLC's website have been prepared in accordance with definition standards of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves produced by the Australasian Joint Ore Reserves Committee, which may differ from definition standards of the United States Securities and Exchange Commission ("SEC") Industry Guide 7. The Company may use certain terms which the SEC guidelines strictly prohibit US registered companies from including in their filings with the SEC.   

 

Cautionary Note Regarding Forward-Looking Statements


This press release may contain "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Such statements include, but are not limited to, any statements based on current expectations, estimates, forecasts, and projections, including those related to our growth strategy, mineral estimates and any other statements that are not historical facts. Forward-looking statements are based on management's current expectations and are subject to risks and uncertainties that could negatively affect our business, operating results, financial condition and stock price. Factors that could cause actual results to differ materially from those currently anticipated are: risks related to our growth strategy; risks relating to exploration, development and/or extraction; our ability to obtain, perform under, and maintain financing and strategic agreements and relationships; our ability to attract, integrate, and retain key personnel; global demand for mineral resources; our need for substantial additional funds; government regulation; as well as other risks. The Company expressly disclaim any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in our expectations or any changes in events, conditions, or circumstances on which any such statement is based, except as required by law.

 

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