Golden Saint Resources Interim Results

The Board of Directors of Golden Saint Resources Ltd (LON:GSR) have today announced the Company’s unaudited results for the six months ended 30 June 2017.

Highlights within the six-month period to 30 June 2017

·     Tongo License bulk sampling results

o  750 tonnes of gravel processed;

o  56 diamonds recovered;

o  96.75cts diamonds recovered;

o  26g gold recovered;

o  12.9CPHT (carat per hundred tonnes);

o  1.73cts/stn (carats per stone);

o  0.035g/t (gram per tonne) gold;

o  Largest stone 4.10ct;

o  Reconnaissance kimberlite exploration commenced targeting the highest priority geophysical target, TD-1;

·     Baja License bulk sampling results

o  1 355 tonnes of gravel processed;

o  52 diamonds recovered;

o  84.73cts diamonds recovered;

o  1.8g gold recovered;

o  6.3CPHT;

o  1.63cts/stn;

o  0.0013g/t gold;

o  Largest stone 2.55ct;

·     Acceptable tracer test results at all bulk sampling plants;

·     Competent person’s note on exploration activities attached to this announcement http://www.rns-pdf.londonstockexchange.com/rns/2469S_1-2017-9-29.pdf
; and

·     For the six months to 30 June 2017, the Group recorded a total comprehensive loss of USD $891,000 (2016: USD $1,073,000) showing a further streamlining of exploration and other costs.

 

Highlights of operations post 30 June 2017

·     Bulk sampling of gravels continuing at Tongo Site #2 and Baja Site #4.  Expected to be completed by end of September 2017;

·     The geochemical soil sampling program with field mapping, focussing predominantly on gold distributions and occurrences, started on Moa; and

·     The Company announced the return of Hassan Abass Kargbo as Exploration Manager to the Sierra Leone team, effective 12 May 2017.  Hassan is an internationally experienced geologist with over 8 years of experience in Sierra Leone.  Sallau Deen moved into the role of Senior Geologist.

 

This announcement contains inside information for the purposes of Article 7 of EU Regulation 596/2014.

A copy of the interim results is available on the Company’s website www.goldensaintresources.com.

For further information, please contact:

Golden Saint Resources Ltd        Pierre Fourie                                                    +61 (0) 8 6145 4400

Beaumont Cornish Limited         Roland Cornish / Emily Staples                  +44 (0) 20 7628 3396

Cassiopeia Services Limited       Stefania Barbaglio                                           +44 (0) 79 4969 0338

SVS Securities Plc                            Tom Curran / Ben Tadd                                 +44 (0) 20 7710 9612

Chief Executive Officer’s Statement

Operations

The company’s strategy of extracting sufficient gravel to continue the bulk sample processing activities through the peak of the wet season proved successful.  During this next dry season, the company is planning field mapping at Baja to guide the positioning of future bulk samples.  At Tongo the plan is to excavate enough gravel to feed the processing plant at 4t/hr continuously (also through the wet season).  Equipment will be rented that will enable the company to extract gravel down to the bottom of the basal level for maximum diamond and gold recovery.  Follow-up geochemical soil sampling and mapping at Moa will focus predominantly on gold distributions and occurrences.

In the Tongo licence, 750 tonnes of the alluvial target on the left-bank of the Woa Valley (Tongo Site #2) were processed through a horizontal Dove jig plant to yield 96.75 carats (cts) of diamonds running at 12.9CPHT (carats per hundred tonnes) and an average stone size of 1.73cts/stn. The largest diamond recovered was a 4.10ct stone.  Free gold of 26 grams at 0.035g/t was also recovered.    In addition, reconnaissance kimberlite exploration commenced in the Tongo licence, targeting the highest priority geophysical target, TD-1.

At the alluvial target at Baja Site #4 in the Sewa Valley 1,355 tonnes were processed through the local washplant yielding 84.73cts of diamonds at a grade of 6.3CPHT and an average stone size of 1.63cts/stn.  The largest diamond recovered was a 2.55ct stone.  Free gold of 1.8 grams at a recovered grade of 0.0013g/t was also recovered.

In the Moa licence, further desktop studies were completed leading to a planned geochemical soil sampling programme targeting gold and other mineralisation on the western side of the Moa Valley.  Field mapping will further contribute to the understanding of the nature of gold occurrences on the license.

The encouraging provisional bulk sampling results give the company confidence to increase the rate of bulk sampling in parallel to other exploration activities.  The addition of a roll sieve to the scrubber at Tongo plus an additional jig plant will increase the maximum production capacity from 1t/hr to 5t/hr without sacrificing diamond or gold recovery efficiencies.

As at the date of this report, the current annual licence fees have been paid to the National Minerals Agency (NMA).

Corporate

The Board of Directors of the Company became more functional with the addition of Mr Pierre Fourie as Chief Executive Officer effective 1 September 2017 and Mr Yohannes Adimas Prawiro as Executive Director, Business Development effective 24 July 2017.  Adimas previously served as Project Manager for GSR.  Pierre has an extensive career of over 20 years as a mining engineer in the area of resource/reserve estimation, mineral economics, mine construction and operations.  In addition to his career experience, Pierre has a B. Com. and a B. Eng. and is also a member of the Australian Institute of Mining and Metallurgy and the Canadian Institute of Mining, Metallurgy and Petroleum.  Pierre is a competent professional to be appointed as CEO for the Board.  Keng H. Seah resigned from the board with effect 31 July 2017.

As at 30 June 2017, the Group’s cash and cash equivalents stood at USD 181,000.  It is encouraging that the company is still supported by the market as it raised an amount of £614,820 (before expenses) in September 2017 by way of a placing.  This enables the company to expand bulk sampling activities moving closer to a self-funding exploration program.  It also enables the company to look at new business opportunities led by Director Adimas Prawiro.

Going concern

This report has been prepared on the going concern basis, which contemplates the continuation of normal business activity and the realisation of assets and the settlement of liabilities in the normal course of business.

The Directors believe that, with due consideration to the Group’s future plans, there are sufficient funds to meet the Group’s working capital requirements.

The Group recorded a comprehensive loss of USD$891,000 for the six months ended 30 June 2017 and had net assets of USD$1,592,000 as at 30 June 2017 (2016: loss of USD$1,073,000 and net assets of USD$1,691,000).

This Going Concern statement is primarily dependent on an ongoing capital raising as well as on the continuing shipment and possible sale of diamonds and gold from bulk sampling activities. The Company intends to continue with its fundraising efforts and will inform shareholders of further raises as and when they occur.

Outlook                                                                                                                                                                                       

Moving towards proving up inferred resources on the three license areas in Sierra Leone, the company is planning on expanding bulk sampling rates in the alluvial diamond and gold areas in parallel to other exploration activities.

 

Pierre Fourie

Chief Executive Officer

 

 

Consolidated Interim Statement of Comprehensive Income for the period 1 January 2017 to 30 June 2017

	Notes	6 months ended 30 June 2017 USD$’000 (Unaudited)		6 months ended 30 June 2016 USD$’000 (Unaudited)
Net operating income
Sales		6		2
Foreign exchange gain / (loss)		(5)		(10)
Other Income		–		–
		1		(8)
Net operating expenses
Continuing operations	2	(904)		(1,018)
Operating loss		(904)		(1,018)
Net loss for the period		(903)		(1,026)
Other comprehensive income
Foreign currency loss		12		(47)
Total comprehensive loss for the period		(891)		(1,073)
Net Loss for the period attributable to:
Equity holders for the parent		(756)		(936)
Non-controlling interest		(147)		(90)
		(903)		(1,026)
Total comprehensive loss for the period attributable to:
Equity holders for the parent		(744)		(983)
Non-controlling interest	16	(147)		(90)
		(891)		(1,073)
Earnings per share attributable to members of the Parent
Basic loss per share -cents	5	(0.01)		(0.04)
Diluted loss per share-cents	5	(0.01)		(0.04)

 

 

Consolidated Interim Statement of Financial Position as at 30 June 2017

 

	Note	6 months ended 30 June 2017 USD$’000 (Unaudited)		Year ended 31 December 2016 USD$’000 (Audited)
ASSETS
Current assets
Cash and cash equivalents	7	181		376
Trade and other receivables	8	115		40
Inventories	9	300		306
Total current assets		596		722
Non-current assets
Property plant and equipment	10	1,027		1,077
Exploration and evaluation assets	11	66		132
Intangible assets	12	6		6
Total non-current assets		1,099		1,215
TOTAL ASSETS		1,695		1,937
EQUITY
Share capital	15	55,869		55,077
Reserves	15	(42,782)		(42,794)
Retained earnings		(11,495)		(10,592)
Total equity		1,592		1,691
Equity attributable to owners of the parent		2,573		2,525
Non-controlling equity interest	16	(981)		(834)
		1,592		1,691
LIABILITIES
Current liabilities
Trade and other payables	17	85		234
Financial Liabilities	19	18		12
TOTAL LIABILITIES		103		246
TOTAL EQUITY & LIABILITIES		1,695		1,937

 

Consolidated Interim Statement of Cash Flows for the period 1 January 2017 to 30 June 2017

 

	Note	6 months ended 30 June 2017 USD$’000 (Unaudited)		6 months ended 30 June 2016 USD$’000 (Unaudited)
Cash Flows from operating activities
Loss before taxation from operations		(903)		(1,026)
Adjustments to add/(deduct) non-cash items:
Depreciation of property, plant and equipment		72		69
Amortisation of exploration costs		66		–
Unrealised foreign exchange losses		5		(47)
Operating loss before working capital changes		(760)		(1,004)
Decrease in inventories		6		11
Decrease / (increase) in prepayments and other receivables		(75)		13
Decrease / (increase) in financial liabilities		6		–
Decrease / (Increase) in trade and other payables		(68)		(130)
Net cash flow from operating activities		(891)		(1,110)
Cash flows from investing activities
Payments to acquire property plant and equipment		(21)		(7)
Increase in deposits paid		–		–
Payment for intangible assets		–		–
Exploration assets		–		–
Net cash flow from investing activities		(21)		(7)
Cash flows from financing activities
Proceeds of ordinary share issue		717		1,826
Proceed from loans		–		–
Redemption of Convertible Note		–		–
Net cash flow from financing activities		717		1,826
Net increase/(decrease) in cash and cash equivalents		(195)		709
Cash and cash equivalents at beginning of period		376		13
Cash and cash equivalents at end of period		181		722

 

 

Consolidated Interim Statement of Changes in Equity for the period 1 January 2017 to 30 June 2017

 

	Attributable to equity holders of the parent
	Share Capital     (US $’000)		Foreign Currency Reserve   (US $’000)		Merger Reserve     (US $’000)		Retained Earnings     (US $’000)	Total Equity     (US $’000)		Total Attributable to Owners of the Parent (US $’000)		Non-Controlling Interest   (US $’000)	Total       (US $’000)
As at 1 January 2017	55,077		(147)		(42,647)		(10,592)	1,691		2,525		(834)	1,691
Comprehensive income / (loss) for the period	–		–		–		(903)	(903)		(756)		(147)	(903)
Foreign exchange gain / (loss) on translation	–		12		–		–	12		12		–	12
Total comprehensive income for the period	–		12		–		(903)	(891)		(744)		(147)	(891)
Transaction with owners in their capacity as owners
Shares issued during the period	812		–		–		–	812		812		–	812
Cost of capital	(20)		–		–		–	(20)		(20)		–	(20)
As at 30 June 2017	55,869		(135)		(42,647)		(11,495)	1,592		2,573		(981)	1,592

 

 

Notes to the Financial Statements

Accounting Policies

1.1          Corporate information

The consolidated financial statements of Golden Saint Resources Ltd for the financial period from 1 January 2017 and ended 30 June 2017 were authorised for issue in accordance with a resolution of the Directors on 26 September 2017.

The registered office of Golden Saint Resources Ltd, the ultimate parent of the Group, is 171 Main Street, Road Town Tortola VG 1110 British Virgin Islands.

The principal activity of the Group is early stage diamond and gold exploration with three Exploration Licenses in Sierra Leone.

1.2          Basis of preparation

The consolidated financial statements of Golden Saint Resources Limited and its controlled entities (“the Group”) have been prepared in accordance with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB) and adopted by the European Union (EU) as they apply to the financial statements of the Group for the period 1 January 2017 to 30 June 2017.

The consolidated financial statements have been prepared on a historical cost convention basis, except for certain financial instruments that have been measured at fair value. The consolidated financial statements are presented in US dollars and all values are rounded to the nearest thousand except when otherwise indicated.

1.3          Basis of consolidation

The consolidated financial statements comprise the financial statements of the Group as at 30 June 2017, and for the period then ended.

Subsidiaries are fully consolidated from the date of acquisition, being the date on which the Group obtains control, and continue to be consolidated until the date when such control ceases.

The financial statements of the subsidiaries are prepared for the same reporting period as the parent company, using consistent accounting.

All intra-group balances, transactions, unrealised gains and losses resulting from intra-group transactions and dividends are eliminated in full.

Total comprehensive income within a subsidiary is attributed to the non-controlling interest even if it results in a deficit balance. A change ownership interest of a subsidiary, without a loss of control, is accounted for as an equity transaction.

Pooling of Interests on Incorporation of Parent Entity

On incorporation of the entity, subsidiaries have been consolidated using the pooling of interests method on the basis that the entities being combined are ultimately controlled by the same parties, both before and after the combination.

Under this method the assets and liabilities of the acquiree are recorded at book value and intangible assets and contingent liabilities are only recognised if they were previously recognised by the acquiree. No goodwill is recorded and expenses of the combination are written off immediately in profit or loss.

The excess of consideration over the value of the acquiree’s net assets is recognised in the merger reserve, a negative reserve within equity.

Any non-controlling interest in the acquiree is recognised as the proportion of the assets and liabilities of the acquiree at the date of acquisition. From the date of acquisition forward, a proportionate share of profits, or losses, in the related subsidiary is then attributed to the non-controlling interest.

Subsequent Business Combinations

Business combinations occur where an acquirer obtains control over one or more businesses.  A business combination is accounted for by applying the acquisition method, unless it is a combination involving entities or businesses under common control. The business combination will be accounted for from the date that control is attained, whereby the fair value of the identifiable assets acquired and liabilities (including contingent liabilities) assumed is recognised (subject to certain limited exceptions).

When measuring the consideration transferred in the business combination, any asset or liability resulting from a contingent consideration arrangement is also included. Subsequent to initial recognition, contingent consideration classified as equity is not re-measured and its subsequent settlement is accounted for within equity. Contingent consideration classified as an asset or liability is re-measured in each reporting period to fair value, recognising any change to fair value in profit or loss, unless the change in value can be identified as existing at acquisition date.

All transaction costs incurred in relation to business combinations are expensed to the statement of comprehensive income. The acquisition of a business may result in the recognition of goodwill or a gain from a bargain purchase.

1.4          Significant accounting judgements, estimates and assumptions

The preparation of the Group’s consolidated financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent liabilities at the date of the consolidated financial statements, and the reported amounts of revenues and expenses during the reporting period. Estimates and assumptions are continuously evaluated and are based on management’s experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. However, actual outcomes would differ from these estimates if different assumptions were used and different conditions existed.

In particular, the Group has identified the following areas where significant judgements, estimates and assumptions are required, and where actual results were to differ, may materially affect the financial position or financial results reported in future periods. Further information on these and how they impact the various accounting policies is located in the relevant notes to the consolidated financial statements.

1.4.1 Key Judgements

In the process of applying the Group’s accounting policies, management has made the following judgements, which have the most significant effect on the amounts recognised in the consolidated financial statements.

 

Going concern

This report has been prepared on the going concern basis, which contemplates the continuation of normal business activity and the realisation of assets and the settlement of liabilities in the normal course of business.

At 30 June 2017, the Group held cash reserves of $181,000 (2016: $376,000). 

The Directors are confident the Group will generate revenue from alluvial diamond and gold sales in the second half of 2017 which will contribute to cash flow.  In addition the Company intends to raise additional equity finance during the course of the year to contribute towards its working capital requirements.

On this basis, the Directors believe that there are sufficient funds to meet the Group’s working capital requirements.

The Group recorded a loss of $903,000 for the six months ended 30 June 2017 and had net assets of $1,592,000 as at 30 June 2017 (2016: loss of $1,026,000 and net assets of $1,691,000).

Should the Group be unable to obtain sufficient funding as advised above, there is a material uncertainty which may cast doubt as to whether or not the Group will be able to continue as a going concern and whether it will realise its assets and extinguish its liabilities in the normal course of business and at the amounts stated in the financial statements.

The financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts nor to the amounts and classification of liabilities that might be necessary should the Group not continue as a going concern.

Accruals

Management have used judgement and prudence when estimating certain accruals for contractor claims. The accruals recognised are based on work performed but are before settlement.

Contingencies

By their nature, contingencies will only be resolved when one or more uncertain future events occur or fail to occur. The assessment of the existence, and potential quantum, of contingencies inherently involves the exercise of significant judgement and the use of estimates regarding the outcome of future events. Please refer to Note 19 for further details.

Impairment of assets

The Group assesses each asset or cash generating unit (CGU) every reporting period to determine whether any indication of impairment exists. Where an indicator of impairment exists, a formal estimate of the recoverable amount is made, which is considered to be the higher of the fair value less costs to sell, or the value in use.

These assessments require the use of estimates and assumptions such as long-term commodity prices (considering current and historical prices, price trends and related factors), discount rates, operating costs, future capital requirements, closure and rehabilitation costs, exploration potential, reserves and operating performance (which includes production and sales volumes). These estimates and assumptions are subject to risk and uncertainty. Therefore, there is a possibility that changes in circumstances will impact these projections, which may impact the recoverable amount of assets and/or CGUs.  Please refer to Note 10 for further details.

Goodwill and intangible assets that have an indefinite useful life are not subject to amortisation and are tested annually for impairment, or more frequently if events or changes in circumstances indicate that they might be impaired.  Other assets are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use.

 

1.4.2 Key estimates and assumptions

The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are described below. The Group based its assumptions and estimates on parameters available when the consolidated financial statements were prepared. Existing circumstances and assumptions about future developments, however, may change due to market changes or circumstances arising beyond the control of the Group. Such changes are reflected in the assumptions when they occur.

Exploration and evaluation expenditure

The application of the Group’s accounting policy for exploration and evaluation expenditure requires judgement in determining whether future economic benefits will arise either from future exploitation or sale or where activities have not reached a stage which permits a reasonable assessment of the existence of reserves. The determination of a Joint Ore Reserves Committee (JORC) resource is itself an estimation process that requires varying degrees of estimation depending on sub-classification and these estimates directly impact the point of deferral of exploration and evaluation expenditure. The deferral policy requires management to make certain estimates and assumptions about future events or circumstances, in particular whether an economically viable extraction operation can be established. Estimates and assumptions made may change if new information becomes available. If, after expenditure is capitalised, information becomes available suggesting that the recovery of expenditure is unlikely, the amount capitalised is written off in the consolidated statement of comprehensive income in the period when the new information becomes available. Exploration and evaluation assets are carried at historical cost less any impairment losses recognised. (Please refer to Note 11 for further details).

 

1.5          New standards and amendments and interpretations adopted by the Group

There are a number of new Accounting standards and interpretations issued by the AASB that are not yet mandatorily applicable to the Group and have not been applied in preparing these consolidated financial statements. The Group does not plan to adopt these standards early.

These standards are not expected to have a material impact on the Group in the current or future reporting periods.

1.6          Summary of significant accounting policies

Exploration and evaluation assets

It is the Group’s policy to capitalise the cost of acquiring rights to explore areas of interest. All other exploration and evaluation expenditure is expensed to the statement of profit or loss and other comprehensive income.

The costs of acquisition are carried forward as an asset provided the rights to the areas of interest are current and one of the following conditions are met:

·      Such costs are expected to be recouped through the successful development and exploitation of the area of interest, or alternatively, by its sale; or

·      Exploration activities in the area of interest have not yet reached a stage which permits a reasonable assessment of the existence of otherwise of recoverable reserves, and active and significant operations in relation to the area are continuing.

When the technical feasibility and commercial viability of extracting a mineral resource have been demonstrated then any capitalised exploration and evaluation expenditure is reclassified as capitalised mine development. Prior to reclassification, capitalised exploration and evaluation expenditure is assessed for impairment.

Impairment

An impairment exists when the carrying amount of an asset or cash-generating unit exceeds its estimated recoverable amount. Any impairment losses are recognised in the statement of profit or loss and other comprehensive income.

The carrying value of capitalised exploration and evaluation expenditure is assessed for impairment at the cash generating unit level whenever facts and circumstances (from an impairment review) suggest that the carrying amount of the asset may exceed its recoverable amount.

Impairment reviews for exploration and evaluation costs are carried out on a project-by-project basis, as each project has the potential to be an economically viable cash generating unit. An impairment review is undertaken when indicators of impairment arise but normally when one of the following conditions applies:

·     unexpected geological occurrences render a deposit uneconomic

·     title to an asset is compromised

·     variations in commodity prices render the project uneconomic

·     variations in the currency of operation

·     variations to the fiscal and tax legislation in the country of operation.

Property, plant and equipment

Plant and equipment are shown at cost less accumulated depreciation and impairment losses. The initial cost of an asset comprises its purchase price or construction cost, any costs directly attributable to bringing the asset into operation, any incidental cost of purchase, and associated borrowing costs. The purchase price or construction cost is the aggregate amount paid and the fair value of any other consideration given to acquire the asset. Directly attributable costs include employee benefits, professional fees and costs of testing whether the asset is functioning properly. Capitalised borrowing costs include those that are directly attributable to the construction of mining and infrastructure assets.

Property, plant and equipment relate to plant, machinery, fixtures and fittings and are shown at historical cost less accumulated depreciation and impairment losses.

The depreciation rates applied to each type of asset are as follows:

 

Plant and machinery      10%

Motor Vehicles                15%

Fixtures and fittings       10-20%

Lease Improvements     5 years

Subsequent expenditure is capitalised when it is probable that future economic benefits from the use of the asset will be increased. All other subsequent expenditure is recognised as an expense in the period in which it is incurred. Assets that are replaced and have no future economic benefit are derecognised and expensed through profit or loss. Repairs and maintenance which neither materially add to the value of assets nor appreciably prolong their useful lives are charged against income. Gains/ losses on the disposal of fixed assets are credited/charged to income. The gain or loss is the difference between the net disposal proceeds and the carrying amount of the asset.

The asset’s residual values, useful lives and methods of depreciation are reviewed at each reporting period, and adjusted prospectively if appropriate.

Inventories

Inventories are valued at the lower of cost and net realisable value.

 

Financial instruments: initial recognition and measurement

Trade and other receivables

Trade and other receivables are stated at amortised cost less provision for doubtful debts. Trade and other receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market.

Trade receivables are generally due for settlement between 30 and 90 days.  They are presented as current assets unless collection is not expected for more than 12 months after reporting date.  Collectability of trade receivables is reviewed on an ongoing basis.  Debts which are known to be uncollectible are written off by reducing the carrying amount directly.  A provision for impairment of trade receivables is used when there is objective evidence that the Group will not be able to collect all amounts due according to the original terms of the receivables.

Cash and cash equivalents

Cash and cash equivalents are measured at fair value, based on the relevant exchange rates at balance sheet date. Cash and cash equivalents comprise cash, cash at hand and short-term deposit amounts with original maturity of less than three months. For the purpose of the consolidated statement of cash flows, cash and cash equivalents consist of cash and cash equivalents as defined above, net of outstanding bank overdrafts.

Impairment

The Group assesses at each reporting date whether there is any objective evidence that a financial asset is impaired. A financial asset is deemed to be impaired if there is objective evidence of impairment as a result of one or more events that has occurred after the initial recognition of the asset (a loss event) and that loss event has an impact on the estimated future cash flows of the financial asset that can be reliably estimated.

Trade and other payables

Trade and other payables are non-derivative financial liabilities that are not quoted in an active market.  It represents liabilities for goods and services provided to the Group prior to the year end and which are unpaid.  These amounts are unsecured and have 7-30 day payment terms.  Trade and other payables are presented as current liabilities unless payment is not during within 12 months from the reporting date. They are recognised initially at their fair value and subsequently measured at amortised cost using the effective interest method.

Interest-bearing loans and borrowings

Interest-bearing loans and borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are subsequently carried at amortised cost using the effective interest (EIR) method. The fair value implies the rate of return on the debt component of the facility. This rate of return reflects the significant risks attaching to the facility from the lenders’ perspective.

Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included in finance income in profit or loss.

Borrowing costs directly attributable to the acquisition, construction or production of an asset that necessarily takes a substantial period of time to get ready for its intended use or sale are capitalised as part of the cost of the respective assets. All other borrowing costs are expensed in the period they occur. Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of funds e.g. arrangement fees.

The Group capitalises borrowing costs for all eligible assets. Where funds are borrowed specifically to finance the project, the amount capitalised represents the actual borrowing costs incurred. Early repayment of borrowings, specifically for reasons of refinancing do not qualify for capitalising as borrowing costs under IAS 23 and are recognised as a loss on de-recognition in the statement of comprehensive income.

Fair value of financial instruments

The following methods and assumptions are used to estimate the fair values:

·     Cash and short-term deposits, trade and other receivables, trade and other payables and other current liabilities approximate their carrying amounts largely due to the short-term maturities of these instruments.

·     Initial fair value of interest-bearing borrowings is normally the transaction price, i.e. the fair value of the consideration received. When part of the consideration is for something other than the loan, the fair value is estimated using an appropriate valuation technique.

·     For disclosure purpose only, the fair value of unquoted instruments, such as loans and other financial liabilities, is estimated by discounting future cash flows using rates currently available for debt on similar terms, credit risk and remaining maturities.

Provisions

Provisions are measured at the present value of management’s best estimate of the expenditure required to settle the present obligation at the end of the reporting period.  The discount rate used to determine the present value is a pre-tax amount that reflects current market assessments of the time value of money, and the risks specific to the liability.  The increase in the provision due to the passage of time is recognised as interest expense.

Finance income

Interest income is made up of interest received on cash and cash equivalents.

 

 

Deferred taxation

Deferred income tax is provided using the balance sheet method on temporary differences at the reporting date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes.

Deferred income tax liabilities are recognised for all taxable temporary differences.

Deferred income tax assets are recognised for all deductible temporary differences, carry forward of unused tax credits and unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry forward of unused tax credits and unused tax losses, can be utilised, except:

·     In respect of deductible temporary differences associated with investments in subsidiaries, deferred income tax assets are recognised only to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profit will be available against which the temporary differences can be utilised.

The carrying amount of deferred income tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be utilised. Unrecognised deferred income tax assets are reassessed at the end of each reporting period and are recognised to the extent that it has become probable that future taxable profit will be available to allow the deferred tax asset to be recovered.

Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period.

Deferred income tax assets and deferred income tax liabilities are offset if a legally enforceable right exists to set off current tax assets against current income tax liabilities and the deferred income taxes relate to the same taxable entity and the same taxation authority.

Foreign currencies

i)     Functional and presentation currency

The consolidated financial statements are presented in US dollars, which is the Group’s presentation currency.

 

ii)    Transaction and Balances

Transactions in foreign currencies are initially recorded in the functional currency at the respective functional currency rates prevailing at the date of the transaction.  Monetary assets and liabilities denominated in foreign currencies are retranslated at the spot rate of exchange ruling at the reporting date.  All differences are taken to the profit or loss, should specific criteria be met. 

Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rate as at the date of the initial transaction. Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value was determined.

 

iii)   Group Companies

The results and financial position of foreign operations (none of which has the currency of a hyperinflationary economy) that have a functional currency different from the presentation currency are translated into the presentation currency as follows:

 ·     Assets and liabilities for each statement of financial position presented as translated at the closing rate at the date of the statement of financial position.

·     Income and expenses for each income statement and statement of profit or loss and other comprehensive income are translated at average exchange rates (unless this is not a reasonable approximation of the cumulative effect of the rates prevailing on the transactions dates, in which case income and expenses are translated at the dates of the transactions), and

·     All resulting exchange differences are recognised in other comprehensive income

Revenue Recognition

Revenue is measured at the fair value of the consideration received or receivable.

The Group recognises when the amount of revenue can be reliably measured, it is probably that future economic benefits will flow to the entity and specific criteria have been met as described below.

i)     Interest Income

Interest income is recognised using the effective interest method.  When a receivable is impaired, the Group reduces the carrying amount to its recoverable amount, being the estimated future cash flow discounted at the original effective interest rate of the instrument, and continues unwinding the discount as interest income.

 

ii)   Sale of Goods

Revenue from sale of goods is recognised at the point of delivery as this corresponds to the transfer of significant risks and rewards of ownership of the goods and the cessation of all involvement in those goods.

 

2.                    Net Operating Expenses

	6 months ended 30 June 2017 USD$’000 (Unaudited)		6 months ended 30 June 2016 USD$’000 (Unaudited)
Continuing operations
Depreciation of property plant and equipment	72		69
Amortisation expenses	66		–
Cost of goods Sold	6		11
Occupancy costs	58		61
Employee costs	263		241
General expenses	61		160
Advertising and promotion expenses	6		37
Exploration expenses	301		146
Admin expenses	67		285
Lease expenses	1		1
Travel expenses	3		7
	904		1,018

 

 

 

 

3.                    Key Management Personnel

	6 months ended 30 June 2017 USD$’000 (Unaudited)		6 months ended 30 June 2016 USD$’000 (Unaudited)
Directors’ emoluments	80		155
Superannuation	7		10

 

 

 

4.                    Employee costs

	6 months ended 30 June 2017 USD$’000 (Unaudited)		6 months ended 30 June 2016 USD$’000 (Unaudited)
Wages and salaries	175		202
Superannuation	8		14
Other employee costs	9		25
Total	192		241

 

 

5.                    Earnings per share

	6 months ended 30 June 2017 USD$’000 (Unaudited)		6 months ended 30 June 2016 USD$’000 (Unaudited)
Loss for the period attributable to members of the parent	(756)		(936)
Basic loss per share is calculated by dividing the loss attributable to owners of the Parent by the weighted average number of ordinary share in issue during the period.
Basic weighted average number of ordinary shares in issue	6,330,172,603		2,219,420,481
Basic loss per share-cents	(0.01)		(0.04)
Diluted loss per share-cents	(0.01)		(0.04)

6.                    Segment Reporting

The consolidated entity’s operating segments have been determined with reference to the monthly management accounts used by the chief operating decision maker to make decisions regarding the consolidated entity’s operations and allocation of working capital.

Due to the size and nature of the consolidated entity, the Board as a whole has been determined as the chief operating decision maker.

The consolidated entity operates in one business segment and one geographical segment, namely mineral exploration industry in Sierra Leone.

The revenues and results of this segment are those of the consolidated entity as a whole and are set out in the statement of profit and loss and other comprehensive income. The segment assets and liabilities of this segment are those of the consolidated entity and are set out in the Statement of Financial Position.

 

7.                    Cash and Cash Equivalents

	6 months ended 30 June 2017 USD$’000 (Unaudited)		Year ended 31 December 2016 USD$’000 (Audited)
Current accounts	181		376

 

There are no restrictions on the cash currently held by the Group.

8.                    Trade and Other Receivables

	6 months ended 30 June 2017 USD$’000 (Unaudited)		Year ended 31 December 2016 USD$’000 (Audited)
Trade receivables	3		–
Prepayments	112		40
Total receivables	115		40

 

Prepayments for the period ended 30 June 2017 relate to payments made in advance for services from the AIM Nominated Adviser and Broker as well as legal retainer for Golden Saint Resources (Africa) Ltd.

 

9.                    Inventories

	6 months ended 30 June 2017 USD$’000 (Unaudited)		Year ended 31 December 2016 USD$’000 (Audited)
Opening stock	306		331
Cost of diamond sales	(6)		(25)
Total stock	300		306

 

Inventories consist of 97.15 carat of cut, gem quality diamonds and 70.74 of uncut industrial use grade diamonds that have since been exported from Sierra Leone.

10.                 Property, Plant and Equipment

	Plant and Machinery	Furniture and Fixtures	Lease Improvements	Motor Vehicles	Total
	US $’000	US $’000	US $’000	US $’000	US $’000
Period 1 January 2017 to 30 June 2017
Opening net book value	994	31	4	48	1,077
Additions	2	–	–	20	22
Disposals	–	–	–	–	–
Depreciation charge	(62)	(3)	(1)	(6)	(72)
Closing net book value at 30 June 2016	934	28	3	62	1,027
At 30 June 2017
Cost	1,221	56	8	95	1,380
Accumulated depreciation	(287)	(28)	(5)	(33)	(353)
Net book value at 30 June 2017	934	28	3	62	1,027

 

Additions to furniture and fixtures comprise of renovation of Sierra Leone office.

	Plant and Machinery	Furniture and Fixtures	Lease Improvements	Motor Vehicles	Total
	US $’000	US $’000	US $’000	US $’000	US $’000
Period 1 January 2016 to 31 December 2016
Opening net book value	1,107	31	6	33	1,177
Additions	8	7	–	24	39
Disposals	–	(1)	–	–	(1)
Depreciation charge	(121)	(6)	(2)	(9)	(138)
Closing net book value	994	31	4	48	1,077
At 31 December 2016
Cost	1,219	56	8	75	1,358
Accumulated depreciation	(225)	(25)	(4)	(27)	(281)
Net book value at 31 Dec 2016	994	31	4	48	1,077

 

 

11.                 Exploration and Evaluation Assets

	Mineral Exploration Licences		Total
Cost
As at 1 January 2017	132		132
Additions	–		–
As at 30 June 2017	132		132
Provision for Amortisation and Impairment
As at 1 January 2017	–		–
Amortisation charge for the period	66		–
As at 30 June 2017	66		–
Net book value
As at 30 June 2017	66		132

 

The board of directors regularly assesses the potential of each mineral licence.

 

	Mineral Exploration Licences		Total
Cost
As at 1 January 2016	98		98
Additions	34		34
As at 31 December 2016	132		132
Provision for Amortisation and Impairment
As at 1 January 2016	–		–
Amortisation charge for the period	–		–
As at 31 December 2016	–		–
Net book value
As at 31 December 2016	132		132

 

 

12.                 Intangible Assets

	Trade Mark		Total
Opening net book value as at 1 January 2017	6		6
Additions	–		–
Amortisation charge	–		–
Closing net book value as at 30 June 2017	6		6

 

There was no impairment during the period to 30 June 2017.

 

	Trade Mark		Total
Opening net book value as at 1 January 2016	6		6
Additions	–		–
Amortisation charge	–		–
Closing net book value as at 31 December 2016	6		6

 

13.                 Subsidiaries

Details of the Company’s subsidiaries at 30 June 2017 are as follows:

Name of Subsidiary	Place of Incorporation	Proportion of Ownership Interest	Proportion of Voting Power
Golden Saint Resources (Australia) Pty Ltd	Australia	100	100
Golden Saint Resources (Africa) Ltd	Sierra Leone	75	75
Golden Saint Diamonds Pte Ltd	Singapore	100	100
Golden Saint Diamonds (SL) Limited	Sierra Leone	75	75

 

14.                 Taxation

Unrecognised tax losses

Where the realisation of deferred tax assets is dependent on future taxable profits, losses carried forward are recognised only to the extent that business forecasts predict that such profits will be available to the companies in which losses arose.

The parent, Golden Saint Resources Ltd, is not liable to corporation tax in BVI, so it has no provision for deferred tax. However, Golden Saint Resources (Australia) Pty Ltd is liable to tax in Australia and Golden Saint Resources (Africa) Ltd is liable to tax in Sierra Leone, so potential deferred tax in respect of those companies is noted as follows:

For the six months ended 30 June 2017, GSR (Australia) Pty Ltd had losses of USD 138,805, while GSR Africa had losses of USD 585,079 upon which deferred tax assets are not recognised.  These losses are available indefinitely for offset against future taxable profits.

 

15.                 Share Capital and Reserves

The share capital of the Company is denominated in UK Pounds Sterling. Each allotment during the period was then translated into the Group’s functional currency, US Dollars at the spot rate on the date of issue.

	Number of Shares		USD $
Authorised
Ordinary shares	2,904,457,570
Issued and Fully Paid – Common Shares
At 31 December 2013	420,172,001		48,753,609
Issued during the period 1 January 2014 to 30 June 2014	–		–
At 30 June 2014	420,172,001		48,753,609
Issued during the period 1 July 2014 to 31 December 2014	60,124,397		1,326,007
At 31 December 2014	480,296,398		50,079,616
Issued during the period 1 January 2015 to 30 June 2015	639,946,772		2,119,902
At 30 June 2015	1,120,243,170		52,199,518
Issued during the period 1 July 2015 to 31 December 2015	1,006,785,674		660,195
At 31 December 2015	2,127,028,884		52,859,713
Issued during the period 1 January 2016 to 30 June 2016	2,374,694,364		1,825,971
At 30 June 2016	4,501,723,248		54,685,684
Issued during the period 1 July 2016 to 31 December 2016	1,333,333,333		497,632
At 31 December 2016	5,835,056,581		55,077,271
Issued during the period 1 January 2017 to 30 June 2017	2,987,200,001		812,370
At 30 June 2017	8,822,256,582		55,868,865
Reserves
Balances held in Foreign Currency Reserve relate to unrealised foreign exchange gain/loss that arises when converting the group entities at the balance sheet date of 30 June 2017. Balances held in Merger Reserve represent the excess of consideration paid for GSR Africa over the fair value of net assets acquired.
	6 months ended 30 June 2017 USD$’000 (Unaudited)		Year ended 31 December 2016 USD$’000 (Audited)
Foreign Currency Translation Reserve
At Start of Period	(147)		(100)
Movement during the period	12		(47)
At End of Period	(135)		(147)
Merger Reserve
At Start of Period	(42,647)		(42,647)
Movement during the period	–		–
At End of Period	(42,647)		(42,647)
TOTAL RESERVES
At Start of Period	(42,794)		(42,747)
Movement during the period	12		(47)
At End of Period	(42,782)		(42,794)

 

16.                 Non-Controlling Equity Interest

 

	6 months ended 30 June 2017 USD$’000 (Unaudited)		6 months ended 30 June 2016 USD$’000 (Unaudited)		Year ended 31 December 2016 USD$’000 (Audited)
Balance brought forward from prior period	(834)		(621)		(621)
Share of losses in period	(147)		(90)		(213)
	(981)		(711)		(834)

 

On 1 July 2013, the Group acquired a 75% interest in Golden Saint Resources (Africa) Ltd. At this date, the Group recognised a non-controlling interest of USD $21,646, which represented the non-controlling interest’s share of net assets in Golden Saint Resources (Africa) Ltd at that date.

As at 30 June 2017, the non-controlling interest’s share of losses in Golden Saint Resources (Africa) Ltd was USD 147,000.

 

 

17.                 Trade and Other Payables

	6 months ended 30 June 2017 USD$’000 (Unaudited)		Year ended 31 December 2016 USD$’000 (Audited)
Trade payables	5		124
Accruals	9		7
Other payables	71		103
Total accruals	85		234

 

Trade payables are non-interest bearing and are normally settled on 60 day terms.

Accruals relate to salaries & wages and exploration expenses.

Other payables relate to superannuation and tax withheld from salaries payable to the tax office.

 

18.                 Commitments and Contingencies

The Group is subject to the following commitments in the 2017 financial year on their exploration sites: Baja USD$350,000, Tongo USD$350,000, and Moa USD$250,000.

Aside from those mentioned above, the Group is subject to no commitments or contingent liabilities.

 

19.                 Financial Liabilities

	6 months ended 30 June 2017 USD$’000 (Unaudited)		Year ended 31 December 2016 USD$’000 (Audited)
Hire Purchase	7		12
Insurance Premiums	11		–
Total financial liabilities	18		12

 

 

20.                 Subsequent Events

 

·      Licence renewal applications for all three exploration licences were approved on 19 July 2016 by the National Minerals Authority (“NMA”).

·      Capital raising on of £614,820 (before expenses) in September 2017 by way of a placing.

 

21.                 Related Party Transactions

During the period 1 January 2017 to 30 June 2017, commission expenses totalling USD 70,831 (2016: GBP 34,900) were paid to Mr Cyril D Silva (via his wholly owned consultancy company Clayhill Capital Consultants Pty Ltd) in relation to services rendered on a placing.

22.                 Financial risk management objectives and policies

The Group’s activities expose it to a variety of financial risks. The Group’s Board provides certain specific guidance in managing such risks, particularly as relates to credit and liquidity risk. Any form of borrowings requires approval from the Board and the Group does not currently use any derivative financial instruments to manage its financial risks. The key financial risks and the Group’s major exposures are as follows:

 

 

Credit risk

The maximum exposure to credit risk is represented by the carrying amount of the financial assets. In relation to cash and cash equivalents, the Group limits its credit risk with regards to bank deposits by only dealing with reputable banks. In relation to sales receivables, the Group’s credit risk is managed by credit checks for credit customers and approval of letters of credit by the Group’s advising bank for offtake customers.

Foreign Currency Risk

Currency risk is the risk that the value of a financial instrument will fluctuate due to changes in foreign exchange rates. The table below indicates the currencies to which the Group had significant exposure at 30 June 2017 on its monetary assets and liabilities. The analysis calculates the effect of a reasonably possible movement of the currency rate against the US dollar, with all other variables held constant on the statement of comprehensive income (due to the fair value of currency sensitive non-trading monetary assets and liabilities). A positive amount in the table reflects a potential net increase in the consolidated statement of comprehensive income.

 

Currency Held	2017 USD$’000	Change in Currency rate in 10%	Effect on Statement of Comprehensive Income
British Pound Sterling	66	±10	6.6
Australian Dollar	14	±10	1.4
Singaporean Dollar	3	±10	0.3
Sierra Leonean Leone	0	±10	0

23.                 Liquidity risk

Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. Numbers in the table below represent the gross, contractual, undiscounted amount payable in relation to the financial liabilities.

The Group monitors its risk to a shortage of funds using a combination of cash flow forecasts, budgeting and monitoring of operational performance.

	On Demand USD$’000	Less than three months USD$’000	Three to twelve months USD$’000	One to five years USD$’000	TOTAL USD$’000
As at 30 June 2017:
Trade and other payables	84	5	12	1	102

 

24.                 Capital management

Capital includes equity attributable to the equity holders of the parent. Refer to the statement of changes in equity for quantitative information regarding equity.

The Group’s primary objectives when managing capital are to safeguard its ability to continue as a going concern in order to provide returns for shareholders. For details of the capital managed by the Group as at 30 June 2017, please see Note 15.

The Group is not subject to any externally imposed capital requirements.

25.                 Interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. A sensitivity analysis is not presented, as all borrowing costs have been capitalised as at 30 June 2017; therefore profit or loss and equity would have not been affected by changes in the interest rate.

 

 

 

26.                 Parent Company Information (Golden Saint Resources Ltd)

	6 months ended 30 June 2017 USD$’000 (Unaudited)	6 months ended 30 June 2016 USD$’000 (Unaudited)	Year ended 31 December 2016 USD$’000 (Audited)
Loss for the period	178	395	450
Balance Sheet	6 months ended 30 June 2017 USD$’000 (Unaudited)	6 months ended 30 June 2016 USD$’000 (Unaudited)	Year ended 31 December 2016 USD$’000 (Audited)
Current assets	8,231	7,280	7,656
Non-current assets	69,406	69,406	69,406
Equity	77,622	76,651	76,988
Current liabilities	15	35	71
Non-current liabilities	–	–	–