Year End Report 2017
Financial information July - December and full year 2017
- The Company does not yet report any revenue
- Net income MSEK -5.6 (-1.7), full year -13.9 (5.0)
- Earnings per share before and after dilution SEK -0.07 (-0.02), full year -0.17 (-0.08)
- Total cash flow of MSEK 0.1 (1.6), full year -4.8 (9.3)
- Investments in exploration work and licenses MSEK 2.2 (1.8), full year 2.3 (1.9)
- Investments into joint ventures MSEK 8.5 (8.6), full year 8.5 (8.6)
- Cash and cash equivalents amounted to MSEK 5.9 (10.7) at period end
- The Board of Directors proposes that no dividend is paid
Significant events during July - December and full year 2017
In January 2017, the Krasny Joint venture was granted a new bedrock exploration license, called "Batiy"
- The license has a total area of 86 sq. km and borders the Krasny license on the northwest.
- The new license was granted without an auction and is deemed to have high exploration potential.
Results from a mineral processing test of Krasny ore confirm 85.5% total gold recovery for ore from the Upper structure.
- The total weight of the processed sample was 3,259 kg with an average gold grade of 1.92 g/t.
- The through gold recovery for the ore from the Upper structure is expected at 85,5 % which is higher than previous processing test results.
In September 2017, a JORC mineral resource update was announced for the Krasny project
- The report is developed by Micon International which made the JORC resource estimation for Krasny last year as well. The report is based on the exploration data acquired until the end of the 2016 exploration program.
- The report shows 45% increase of gold resources to 1,388 koz for the Krasny project since last year, reflecting the successful exploration activities during 2016.
- For the first time, the resource estimation includes both "Krasny" and "Vostochny" (previously "Krasny North"). For Krasny, the resource estimation shows 273 koz of Indicated mineral resources (mineral resources of 7,617,000 tons at an average grade of 1.11 g/t Au) and 1,052 koz of Inferred mineral resources (18,536,000 tons at an average grade of 1.76 g/t Au). Vostochny shows a total of 63 koz of Inferred mineral resources (1,114,000 tons at an average grade of 1.76 g/t Au). All resources are reported within economically minable open pits. The report also includes 240 koz of Probable gold reserves.
In December 2017, positive results from a new scoping study was announced for the Krasny deposit
- The scoping study was performed by TOMS engineering consultancy and included the exploration results until (but not including) the 2017 exploration program. It did not include the Vostochny mineralization.
- The study evaluated different gold production options; including development of, either, only the Upper mineralization, or, both the Upper and Lower mineralizations, as well as only open pit production, or a combination of open pit and underground mining. All production scenarios returned positive free cash flows.
- The best outcome is estimated when producing both the Upper and Lower mineralizations in an open pit with total undiscounted free cash flow of MUSD 373, at a fixed gold price of 1,250 USD/oz and production costs of 601 USD/oz.
The year 2017 exploration program on the Northern Territories was finalized
- The exploration program covered seven out of the 21 exploration targets that were identified during the 2016 stream sediment survey. These seven exploration targets cover an area of 122 sq. km and 12,896 soil samples were collected and analyzed for 32 chemical elements plus gold.
- A great exploration potential is confirmed, and in line with the targets, the exploration area could be further scaled down.
- Three anomalous geochemical areas were identified with a total area of 10.2 sq. km that are now ready for drilling and trench sampling.
Statutory approval for pilot mining operations on the Kopylovskoye license was received and bulk sampling was carried out during July - August 2017
- The approval allows mining of 150,000 tons of ore during the next two years.
- 32 tons of ore, representing different parts of the Kopylovskoye mineralization was processed at a neighboring plant to confirm gold grades and recovery.
In July 2017, a MSEK 15 loan was received
- The loan was granted by Scandinavian Credit Fund I AB with purpose to finance the 2017 exploration program on Krasny and Northern Territories.
- With the loan, Kopy Goldfields will be able to maintain the 49% ownership in Krasny through the 2017 exploration program.
- The loan is due for repayment after two years, on July 7, 2019, but may be repaid, partially or fully, after the first 12 months. The loan bears an arrangement fee of SEK 75,000 and an annual interest rate of 11.5 percent.
The nearby located Sukhoy Log deposit, formerly State owned, was sold in January 2017 at the auction price of MUSD 158
- The Sukhoy Log deposit is located 60 kilometers North from the Krasny license and is one of the biggest undeveloped gold deposits in the world.
- The deposit was acquired by a Joint venture between Polyus Gold, a Russian major gold producer, and Rostekh, a Russian state owned multi-industry company.
- Development of this deposit will provide a significant improvement of the local infrastructure which in turn expects to lead to a general reduction of the mining costs in the area.
Significant events after the reporting period
In February 2018, a MSEK 15 loan was granted from Scandinavian Credit Fund I AB
- The loan will be paid in two installments; MSEK 10 was paid on March 5, 2018 and MSEK 5 will be paid on May 3, 2018.
- The loan is due for repayment after two years, on March 3, 2020, but may be repaid, partially or fully, after the first 12 months. The loan bears an annual interest rate of 11.75 percent and no arrangement fee.
Comments from CEO
In 2017 we advanced on all three of our projects, Krasny, the Northern Territories and Kopylovsky, and we are happy to report positive developments for all of them.
As planned, the majority of our efforts and funds were focused on the Krasny project, which returned excellent results. An updated mineral resource report according to the JORC code issued by Micon International in September confirmed a 45% increase in gold resources to 1,388 koz of gold. This resource increase primarily relates to the new gold structures identified within Krasny and Vostochny during the 2016 exploration activities, which means that the results from the 2017 exploration program were not taken into account. In 2017, we drilled an additional 79 core holes for a total of 19,569 meters within the Krasny and Vostochny mineralizations, and based on the exploration results, we see significant potential for a further resource increase. We aim to update the JORC resource estimation shortly.
Following the 2017 exploration activities, both the Krasny and the Vostochny mineralizations were left open along the strike and down dip. On January 19, 2018, we resumed exploration drilling with the primary objective of prospecting in the Vostochny structure further along the strike and testing several other targets within our Krasny and Batiy license areas. We look forward to more exciting exploration results in 2018.
During the year, results from a scoping study were released, including several options for production on the Krasny project, and I am delighted to conclude that all scenarios returned positive free cash flows. The best outcome is estimated when producing both the upper and lower structures in an open pit, which would return a total undiscounted free cash flow of MUSD 373 at a fixed gold price of 1,250 USD/oz and production costs of 601 USD/oz. Just like the recent JORC report, this scoping study was also based on the 2016 resource data. With the new drill results from 2017, we aim to update the scoping study during 2018.
During the year we noted a worldwide return of interest in exploration projects. According to S&P Global, gold exploration budgets increased worldwide by 22% in 2017 y-o-y. The gold price increased moderately in 2017 by 13% and is forecasted to be stable in 2018. With these positive developments in the mining sector, we advanced our other two projects, the Northern Territories (NT) and Kopylovskoye. The 2017 exploration program on the NT covered seven of the 21 exploration targets that were identified during the 2016 stream sediment survey. A soil geochemical survey at 200*50 meters grid, together with geological mapping, was done of the total area of 122 sq km; 12,896 soil samples were collected and analyzed for 32 chemical elements plus gold. The results confirm our expectations of the Northern Territories being an area with high exploration potential. We identified three anomalous geochemical areas with a total area of 10.2 sq. km ready for drilling and trench sampling.
For the Kopylovskoye project, we received the environmental and safety permits required for a test mining program. This program was carried out in cooperation with a local partner in July-August 2017. A total of 32 tons of ore representing different parts of the Kopylovskoye mineralization were collected and processed at a neighboring mill. The 2018 plans for the Kopylovskoye project are either to sell the project for cash if the market allows or to develop pilot mining with a partner.
I am of course happy to look back on a year with an increasing share price. In 2017 the share price increased by 14%, following a 55% increase in 2016 and 71% in 2015. This obviously reflects the progress we have made on our Krasny project, but we believe that we have the major share price rally ahead of us, with Krasny heading towards production and the potential of the Northern Territories becoming increasingly clearer.
On behalf of Kopy Goldfields, I thank you for your interest and support of the company. I wish everyone an interesting and rewarding 2018 with our company, and we will do our best to make this happen.
With kind regards,
Stockholm, March 22, 2018
This information is information that Kopy Goldfields AB is obliged to make public pursuant to the EU Market Abuse Regulation and the Securities Markets Act. The information was submitted for publication, through the agency of the contact person set out above, at 8:45 CET on March 22, 2018.
About Kopy Goldfields AB
Kopy Goldfields AB (publ), listed at NASDAQ First North in Stockholm is a gold exploration and production company operating in one of the most gold rich areas in the world; Lena Goldfields, Bodaibo, Russia. The company holds 12 bedrock exploration- and production licenses and one alluvial license covering 2,049 sq. km, of which 49% of the Krasny licenses (two bedrock and one alluvial) are held by the company. Kopy Goldfields' objective is to become a near-term gold producer in cooperation with a producing partner under a JV agreement.
Kopy Goldfields AB applies International Financial Reporting Standards (IFRS), as approved by the European Union. Hagberg & Aneborn Fondkommission acts as Certified Adviser, contact number: +46-8-408 933 50.
Outstanding shares: 79,866,054
Kopy Goldfields AB
Marknadsplats: First North
2019-03-06 Presentation hos PDAC