174796 Altyn Annual Report 2020 Pt1_173796 Project Altyn Annual Report 2020 Pt1 04/05/2021 14:29 Page a
AltynGold plc (formerly Altyn plc)
Annual Report and Consolidated Financial Statements
for the Year Ended 31 December 2020
174796 Altyn Annual Report 2020 Pt1_173796 Project Altyn Annual Report 2020 Pt1 04/05/2021 14:29 Page b
WELCOME TO ALTYNGOLD PLC (formerly ALTYN PLC)
AltynGold Plc (LSE: ALTN) is an exploration and
development company, which listed on the main
market segment of the London Stock Exchange
in December 2014. To read more about AltynGold
Plc please visit our website www.altyngold.uk
Key achievements in 2020
The key highlights are documented below:
Financial highlights
At a glance
AltynGold’s main asset is its 100% interest in the
Sekisovskoye gold mine and its exploration site at
Teren-Sai in North East Kazakhstan. In the most
recent CPR in 2019 (page 14 of the Annual
Report) the Sekisovskoye site has Proved reserves
of 3.47Moz and Probable reserves of 0.33Moz. At
Teren-Sai the Proved reserves amount to 0.8Moz
and Probable reserves of 0.65Moz based in one
area that contains 4 breccia bodies known as area
No2. The Teren- Sai Project is made up of
15 targets based on historical exploration. Of
these 15 targets, AltynGold has identified a
number of areas for exploration, consisting of
various identified targets. Altyn is currently
principally focussed on exploration and
development of one of these 15 targets.
The Company received new mining equipment
during the year and is progressing its plans to
significantly increase the planned production
from the underground mine at Sekisovskoye.
The mining licence for Sekisovskoye is valid until
17 July 2029.
The Company was awarded the subsoil
exploration contract for the Teren-Sai ore field for
a 6-year term in 2016 with the right to extend for
another 5 years if there is a commercial discovery
of resources. The site encompasses an area of
approximately 198km2, and geological data
purchased by the Company indicates that there
are fifteen mineralised target zones, each with
the potential to contain significant gold
resources. It is currently targeting its efforts on
one of the sites. The results of the CPR are as
noted above and in the mineral resources
statement contained within the Annual Report
on page 16.
▲ Turnover increased in the year to US$30m (2019: US$14.9m).
▲ 16,535oz of gold sold (2019: 10,500oz), an increase of 57%.
▲ Average gold price achieved (including silver), US$1,816oz,
(2019: US$1,390oz).
▲ The Company made a profit before tax of US$3.3m (2019: loss
US$1.04m).
▲ Adjusted EBITDA (Earnings before interest, tax, depreciation and
amortisation) of US$13.5m (2019: US$3.3m).
▲ The Company finalised the listing of the balance of the US$10m
9% bonds on the Astana International Exchange (AIX).
▲ The balance of the facility with JSC Bank Center Credit of US$8m
was drawn down during the year.
▲ A share placing with JSC Freedom Finance raised US$1.5m in
the year.
▲ New facility taken out in December 2020 with Bank Center
Credit of US$5.5m, (2.3bln Tenge), of this US$973,000 was drawn
down before the year end.
Operational highlights
▲ Gold poured 17,028oz, (2019: 10,537oz) a 61% increase year-on-
year.
▲ Mined gold grade 1.57g/t, (2019: 1.92g/t), decreased due to ore
dilution - new equipment is now increasing to the target grade.
▲ Operating cash cost US$800/oz, (2019: US$854/oz).
▲ Gold recovery rate 80.44% (2019: 82.31%).
Underground development & exploration
▲ Subsoil use contract at Sekisovskoye extended to July 2029.
▲ Production of test ore at Teren-Sai, average grade 1.8g/t at 81%
recovery.
▲ Total 5,657 linear metres developed at Sekisovskoye.
▲ Transport declines further developed, decline No.1 352 linear
metres, decline No. 2 353 linear metres.
▲ 750,000t of ore made accessible from declines 1 and 2.
▲ Areas No. 1, 2 and new Area 5 developed in Teren-Sai - drill
holes and core samples extracted,
To read more about Altyn plc
please visit our website www.altyn.uk
174796 Altyn Annual Report 2020 Pt1_173796 Project Altyn Annual Report 2020 Pt1 04/05/2021 15:14 Page 1
AltynGold plc (formerly Altyn plc)
Annual Report 2020
CONTENTS
Strategic report
Strategic Report ..................................................................1 to 18
At a glance ......................................................................................IFC
Areas of exploration ......................................................................1
Chairman’s statement ..................................................................2
Chief Executive Officer’s review..............................................3
Financial performance..................................................................5
Market review and share price performance................6
Our strategy and business model ........................................7
Principal risks and uncertainties ............................................8
Directors’ Section 172 statement ......................................10
Corporate social responsibility ............................................11
Mineral resources statement ................................................14
Governance
Corporate Governance................................................19 to 40
Corporate governance statement ....................................19
Board of Directors ......................................................................22
Directors Report ............................................................................24
Statement of Directors’ Responsibilities ........................27
Audit Committee Report ........................................................28
Remuneration Committee - Chairman’s
statement ..........................................................................................29
Annual remuneration report ................................................30
Remuneration policy report..................................................34
Independent Auditor’s Report ............................................35
Financial statements
Consolidated Income Statement ......................................41
Consolidated Statement of Comprehensive
Income ................................................................................................41
Consolidated Statement of Financial Position ..........42
Company Statement of Financial Position ..................43
Consolidated Statement of Changes in Equity ........44
Company Statement of Changes in Equity ................45
Consolidated Statement of Cash Flows ........................46
Company Statement of Cash Flows ................................47
Notes to the Financial Statements......................48 to 71
Notice of Annual General Meeting ....................72 to 73
Company Information ..............................................................78
Areas of exploration
Russia
Russia
1 2
KAZAKHSTAN
1
Sekisovskoye
2
Teren-Sai Ore Fields
The Sekisovskoye deposit is the Company’s flagship
asset and is located close to the village of
Sekisovka, approximately 40km from the North East
Kazakhstan regional capital, Ust Kamenogorsk. The
current licence expires in July 2029.
In May 2016, the Company was awarded the
subsoil exploration contract to conduct further
testing at the Teren-Sai ore field for the 6 year term
with the right to extend for another 5 years in case
of commercial discovery of resources.
The Teren-Sai Project is made up of 15 targets
based on historical exploration. Of these 15 targets,
Altyn has identified a number of areas for
exploration, consisting of various identified targets.
Altyn is currently focused on exploration and
development of one of these 15 targets, namely
Area No.2. Area No.2 consists of four breccia bodies,
however Altyn is only targeting one of these
breccias for development at this stage.
The geological data that the Company acquired
indicates that there are at least fifteen mineralised
zones at Teren-Sai and this leads the Company to
believe that this project has the potential to contain
significant gold resources, a CPR was conducted in
2019 in one of the areas see the report on page 14.
The Company is continuing to validate the
geological data by twinning previous drill holes and
undertaking additional metallurgical testing on the
other sites.
The mineral rights at Sekisovskoye are held by a
100% owned subsidiary of the Company, DTOO
GRP Baurgold, and the processing plant is owned
by the 100% owned subsidiary of the Company
TOO GMK Altyn MM.
The Sekisovskoye deposit was discovered in 1833
with surface mining taking place during the
periods 1833 to 1847, 1932 to 1935, and 1943 to
1946. From 1975 to 1986, a range of exploration
work was carried out. Between 1978 and 1982
“AltaiZoloto” of the Ministry of Non-Ferrous Industry,
KazSSR, mined the oxidised area of the ore body. In
2003, under Hambledon Mining’s ownership
(subsequently renamed to AltynGold Plc), further
exploration work was undertaken and gold
production from the mine and processing plant
commenced in 2008.
In 2019, the Company released the findings of the
mining consultant, Ernst and Young’s Competent
Persons Report on the mine, which demonstrated
substantial JORC reserves and resources, see
page 14 for further details. With new plant acquired
in 2020 the Company is ramping to significantly
increase production. This will significantly increase
the number of oz of gold produced, with the aim of
achieving 100,000oz annually, in the future, which
is to be achieved by increasing output and
accessing higher grade reserves through the
continued development of the underground mine.
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174796 Altyn Annual Report 2020 Pt1_173796 Project Altyn Annual Report 2020 Pt1 04/05/2021 15:14 Page 2
In summary against the backdrop of uncertainty
caused by the COVID-19 crisis the Company has
managed to emerge in a much stronger position at
the end of the year. It has secured its required level
of funding, utilising it to good effect as
demonstrated by the increased production levels.
The Board has also been strengthened by the
appointment of a new non-executive director
Thomas Gallagher who will bring important
qualities and experience to the team, and we
welcome him to the Company.
I would like to conclude with a heartfelt thank you
to all the staff from the top management and to
those who only work on a part-time basis for their
dedication to the Company and support in
minimising the effect of the pandemic on our
business.
Kanat Assaubayev
Chairman
30 April 2021
2
AltynGold plc (formerly Altyn plc)
Annual Report 2020
CHAIRMAN’S STATEMENT
“
Even against the backdrop of
COVID-19 the Company managed
to grow, attracting funding from a
range of sources and delivering
on its capital investment plan.”
This year has been very different for many reasons,
the effects of the COVID-19 pandemic have been
felt around the world, causing economic and social
havoc. One year later the crisis is still ongoing, with
governments, companies and individuals still facing
uncertainty on how the pandemic will evolve and
its aftermath.
From our perspective as a mining Company
focused on mining operations in Kazakhstan, we
have been insulated to a large extent from the
fallout of the pandemic, as mining operations were
a protected industry and the Company has been
able to continue to operate throughout the
pandemic. While cooperating with the authorities,
the Company has quickly adapted its new
operational working practices to ensure that the
staff were able to continue working in a safe
environment at the mine site, organising special
shift patterns for production. Office workers at both
the mine site and head office were largely able to
work remotely, as the lock down has eased the staff
were able to resume their duties at the offices
during March 2021. The country is still organising
measures to contain the transmission of COVID-19,
and in April 2021 a limited lockdown was
introduced in the country. The imposition of the
most recent lockdown has not resulted in any
issues in relation to the current operations of the
Company.
Supply chains and the important sale of dore to the
refinery were carefully monitored and potential
issues resolved as soon as they arose.
Against this background the Company managed to
grow, attracting funding from a range of sources
and delivering on its capital investment plan. The
resultant increase in production combined with the
favorable gold price led to a substantially higher
revenue stream.
While the gold price has increased given its hedge
characteristic against the downturn in the global
outlook for economies, a higher gold price level
should be sustained by the expectation of
increased inflation levels resulting from global
monetary policies that are increasing the money
supply, and a deteriorating fiscal outlook. With the
production levels budgeted to increase, the
management is upbeat about the Company’s
future growth outlook.
With its strong financial position and additional
funding raised, the Company has also continued its
exploration program at Teren-Sai. The test
production run as reported in the RNS news release
in 2021 yielded good results in terms of grade, and
the expected low cash cost of production will have
a positive impact on the results of the Company in
the future.
174796 Altyn Annual Report 2020 Pt1_173796 Project Altyn Annual Report 2020 Pt1 04/05/2021 15:14 Page 3
AltynGold plc (formerly Altyn plc)
Annual Report 2020
CHIEF EXECUTIVE OFFICER’S REVIEW
“
A significant amount of
underground plant and
equipment has been purchased
leading to a 98% increase in ore
extraction in the year.”
Underground development
Overview
The Company has been able to implement its
medium term plan, following successful rounds
of financing completed in late 2019 and 2020.
As such, a significant amount of underground
plant and equipment (details below) has been
purchased leading to a 98% increase in ore
extraction in the year to 505,000t. Timely
maintenance of the processing plant and the
overhaul of other equipment allowed a swift
increase in processed ore which grew 82% from
231,000t to 420,000t leading to a 61% increase
in gold produced from 10,537oz to 17,028oz.
With the introduction of more specialised
drilling rigs in 2021, the Company is also
targeting a lower level of dilution of extracted
ore which should result in a noticeable
improvement of grades in Q2 2021.
Due to careful planning and co-operation with
the relevant authorities there was little impact
on the operations of the Company from
COVID-19. Indeed, the trend and momentum of
production at Sekisovskoye continue to be very
encouraging. These positive developments set
the stage for the company to achieve its first
major target of 850,000t ore extraction per
annum.
The Company has also invested additional funds
to expand the exploration program at Teren-Sai.
The Teren-Sai area is large, covering in excess of
198km which the Company has split this into a
number of areas. After initially concentrating on
Area No. 2, the Company has now expanded its
exploration programs into Areas No. 1 and 5.
Sekisovskoye underground mine
Plant and equipment
There was a significant investment in plant and
machinery during 2020 and to date in 2021, these
are summarised below:
Front-end loader ZL 50G
Dump truck 25t Chaicman
Material handling trucks CAT R1300 - 3 units
Underground haulers CAT AD30 - 3 units
Face drilling rig Atlas Copco T1D
Ring drilling rig Atlas Copco T1D
Exploration drilling rig Atlas Copco Diamec U4
Boomer T1D drilling rig with a capacity of
400m/month
Boomer T1D long-hole production drill
Diamec U4 Smart exploration drill rig
JSB Crawler with a capacity of 1.8cu.m
Korfmann AL18-2500 ventilator with a capacity
of 100m3/s
Lupamit LKV 250 compressors, each compressor
with a capacity of 45m3/min
100 CFO flower heaters
The following was achieved with regards to the
underground mine in the year:
There was a substantial development of
tunneling amounting to 5,657 linear metres,
including 353 metres on transport decline No 2
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174796 Altyn Annual Report 2020 Pt1_173796 Project Altyn Annual Report 2020 Pt1 04/05/2021 15:14 Page 4
4
AltynGold plc (formerly Altyn plc)
Annual Report 2020
CHIEF EXECUTIVE OFFICER’S REVIEW continued
allowing access to 640,000 tons of reserves at
levels +161, +164 and +178; and 352 metres on
transport decline No 1 allowing access to
110,000 tons at levels +150 and +163.
With the purchase of heaters, compressors and a
Korfman AL18-2500 ventilator, the company was
able to complete necessary works on the main
ventilation shaft required for the continuation of
operations until 2029 in line with the mine plan.
Thanks to additional equipment, ore stockpiles
were increased substantially at portal No 2,
allowing for an increase in the daily ore
production to 1,800t/day.
In addition to 48,000m3 of back and cavity
filling, works are ongoing for the development
of the general site including renovation and
expansion of the offices and other amenities.
Ore mined at Sekisovskoye during 2020 was
506,000t (2019: 255,000t), with the new
equipment on site this is budgeted to increase.
The average gold grade was 1.58g/t (2019: 1.76 g/t)
in line with the Company budget. The average
grade for the year was affected by lower grades
during Q1 at 1.49g/t (1.43g/t budgeted) due to
high level of developmental ore. The introduction
of additional equipment in particular the Boomer
T1D LHD drilling rigs has led to a steady
improvement in grades to its current level of
1.75g/t. Further improvement expected in the
future as more ore bodies become accessible.
Exploration – Teren-Sai
The Teren-sai exploration program has been
expanded and accelerated during 2020. The
Company views the site as a very valuable asset
that will add substantially to the production
capacity of the Company once it is fully functional.
In area No.2 the Company continued pneumatic
drilling conducting 16 profiles for verification
analysis against existing data. Additional drilling
was also carried out to fully delineate the extent
and boundaries of the ore body resulting in 14
completed drill holes and 4,183m drilled meterage.
In order to build up a reliable profile of the site,
verification results are being constantly mapped
against existing data. During 2020 the Company
successfully processed the first batch of test ore
amounting to 1,794t, resulting in an average grade
of 1.8g/t and a recovery rate of 81%. These were
very encouraging results and a significant step in
moving forward with the project. It is expected that
the initial extraction of ore will be via open pit
workings, with the use of some of the existing
open pit equipment which has been mothballed at
Sekisovskoye, and further equipment being
purchased as necessary. The ore extracted is
expected to be processed by a separate plant to be
built at Teren-Sai, thus avoiding transport costs to
Sekisovskoye and keeping the unit cost of
production at a reasonable level.
In addition to Area No.2 exploration work was
expanded to Area No.1 and new zone identified as
Area No.5. In Area No.1, 13 prospective drilling profiles
were conducted, the analysis of the results was
encouraging and further core drilling is to be
undertaken in 2021. In relation to Area No. 5, the
meterage drilled was 3,886m with 17 drill holes
Mining results ore extraction
Ore mined
Gold grade
Silver grade
Contained gold
Contained silver
Mining results processing
Crushing
Mining
Gold grade
Silver grade
Gold recovery
Silver recovery
Contained gold
Contained silver
Gold Poured
Silver poured
Projected capital expenditure
Prospect drilling
Underground development
Infrastructure
Ore handling facilities
Process plant incremental expansion
Total
2020
506,050
1.57
1.08
25,555
17,525
2020
421,040
420,256
1.58
1.13
80.44
72.81
21,355
15,253
17,028
11,180
T
g/t
g/t
oz
oz
T
T
g/t
g/t
%
%
oz
oz
oz
oz
2019
255,134
1.92
1.37
15,760
11,239
2019
239,046
230,966
1.76
1.37
82.31
69.88
12,981
9,819
10,537
6,760
Total
US$m
2021
US$m
2022
US$m
1.7
6.8
0.1
3.7
3.4
0.9
4.5
–
3.4
2.6
15.7
11.4
0.8
2.3
0.1
0.3
0.8
4.3
which identified 11 ore intersections. Sampled grades
over four of the holes ranged from 1.4g/t to 2.4g/t
and further work is planned in this area in 2021.
The Company also commenced topographic work
over 50km2 to gain a better understanding of the
site and the potential to develop the area, the work
will be completed during 2021.
Capital requirements
The capex requirements for the next two years are
detailed in the table below. The budgeted plans
foresee the Company expanding ore extraction and
production to 850,000t to per annum for
Sekisovskoye, and the development of its
prospective resource at Teren-Sai. The Company is
constantly reviewing and refining its plans to adapt
to changing circumstances.
Longer term plan
The long term plan still consists in operating the
Sekisovskoye Mine at 850kt annual capacity for three
years then ramping up production to 2Mtpa over a six
year period. The initial target is an important milestone
and with the purchase of the new equipment this is
now progressing as planned. The longer term plan
involves obtaining further funding and the Board is
constantly looking at the best way to finance the
business going forward. In this regard, the Company
has recently appointed Renaissance Capital to operate
as a Corporate Broker as well as produce independent
research on the Company in order to increase its profile
with potential investors. In order to achieve the longer
term goal outlined, the Company has estimated that it
will require an initial funding of US$40m-US$50m to
attain 1Mpta target. Further funding will be required for
the secondary 2Mpta target.
Mining operations at Teren- Sai are planned to run in
parallel to Sekisovskoye development and will
initially include surface mining at Area No.2 before
moving underground at a later stage. It is envisaged
that at the initial costs of open pit operations can be
kept low by making use of the existing equipment
as far as possible. The significant expenditure relates
to the planned Teren-Sai processing plant which will
be a conventional carbon-in-leach (“CIL”) gold
recovery plant, similar to the existing one at the
neighbouring Sekisovskoye Mine.
174796 Altyn Annual Report 2020 Pt1_173796 Project Altyn Annual Report 2020 Pt1 04/05/2021 15:14 Page 5
AltynGold plc (formerly Altyn plc)
Annual Report 2020
FINANCIAL PERFORMANCE
from US$1.2m to US$2.3m. The effect of foreign
exchange losses in the subsidiaries also had the
effect of decreasing profits, in 2020 this is US$1.5m
(2019:US$116,000 gain), principally as a result of the
revaluation of the borrowings.
Management are keenly aware that funding should
be on the most attractive terms and are exploring
new avenues to achieve this.
Cash at year-end was US$7.2m (2019: US$1.9m), the
increase was driven by fund raising, including the
issue of shares for a consideration of US$1.5m in
the year. Current resources are sufficient to meet
the current working capital requirements and
purchase of capital equipment in the current
budget. In December 2020 the Company agreed
additional bank facilities with Bank Center Credit of
US$5.5m, of this amount US$1.9m is available to
fund working capital and the balance will be used
for investment into new machinery. Of this facility
US$1.0m was drawn down in December 2020.
The main financing commitments during the year
were payment of interest on the bonds and
repayment of principal and interest on the bank
borrowings, in total these amounted to US$4.1m in
2020 (2019: US$1.4m).
The consolidated net assets of the Group are
US$35.3m (2019: US$33.3m).
During the year the Company operated successfully
through the restrictions and lock downs as
stipulated by the Kazakh authorities and is pleased
to confirm it safely guarded the wellbeing of its
staff. The Government imposed a number of
lockdowns beginning in March 2020 ranging from
a full national lockdown and containment of the
major cities to less stringent limited ones that are
currently operating. The Company experienced
minimal operational disruption from the COVID-19
pandemic that commenced in 2020 and expects
operations to continue uninterrupted.
Annual gold sales (oz)
16,535oz
16,535
10,500
14,990
Annual gold poured (oz)
17,028oz
17,028
10,537
15,282
Revenue (US$m)
US$30m
30.0
14.9
19.4
Operating cash cost of production (US$oz)
US$800oz
800
854
865
2020
2019
2018
2020
2019
2018
2020
2019
2018
2020
2019
2018
Adjusted EBITDA (US$m)
US$13.5m
2020
2019
2018
3.3
0.9
13.5
Net assets (US$m)
US$35.3m
2020
2019
2018
35.3
33.3
34.9
The Company raised significant funds in the year,
mainly bank borrowings and a bond placement on
the Astana International Exchange. The raised funds
have mainly been used for the purchase of new
underground equipment, infrastructure and capital
development at Sekisovskoye, exploration drilling
at Teren-Sai and funding expanded working capital
requirements.
In terms of output, the investment in the new
equipment and the refurbishment of plant and
machinery has had a direct and immediate effect
on production levels in the year. Gold poured has
increased by 61.6% from the prior year to 17,028oz
the highest it has been for a number of years.
Budgeted levels in the forthcoming periods are set
to increase further as the full effect of the
investments made flow through.
During 2020, the Company sold 16,535oz of gold
(2019: 10,500oz). The average price achieved per oz
in 2020 was US$1,816 (2019: US$1,390) a significant
uplift from the prior year. While consensus analysts’
forecasts expect the gold price to remain in the
region of US$1,800 the Company conservatively
uses a lower price of gold in its forward modelling.
Further, the outlook for the business is expected to
remain positive given the anticipation of dollar
strength against the local currency in which a
significant level of expenses are payable.
There were no changes to the sales off-take
agreement currently in place with the Kazakh
national refinery, which continues to take all of the
Company’s output. As in the prior year, sales are
translated at the spot US$ market rate at the point
the gold is sold.
The total cash cost of production, which includes
administrative costs but excludes depreciation and
provisions, amounted to US$970/oz, (2019:
S$1,104oz). The operating cash cost excluding
administrative costs amounted to US$800/oz (2019:
US$854/oz). The cash cost of production is
expected to fall in future periods with expanded
economies of scale and improved grades. The
administrative costs are being closely monitored
and there has only been a small increase from the
prior year, which is expected to be maintained in
future periods.
The Group has reported a net profit of US$3.3m
before tax (2019: loss US$1.04m) with a gross profit
of US$11.9m (2019: US$2.5m), this was after a one
off charge in the year relating to a share based
payment of US$2.4m in connection with share
options issued. While the increase in gold price of
30% had a positive effect, the principal driving
factor for the increase in profitability was the 57%
increase in output. The Adjusted EBITDA increased
to US$13.5m (2019: US$3.3m) after adjusting for
depreciation of US$3.9m (2019: US$3.4m), and the
share based payment noted above. A reconciliation
of Adjusted EBITDA to the net profit is shown in
note 13 of the financial statements. The operating
profit as a consequence rose to US$7.2m
(2019: US$0.025m). Net profit has been reduced by
the effect of the borrowing costs which increased
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174796 Altyn Annual Report 2020 Pt1_173796 Project Altyn Annual Report 2020 Pt1 04/05/2021 15:14 Page 6
6
AltynGold plc (formerly Altyn plc)
Annual Report 2020
MARKET REVIEW AND SHARE PRICE PERFORMANCE
FTSE 350 Mining Index
ALTN p per share
24,000
22,000
20,000
18,000
16,000
14,000
12,000
350.2
300.2
250.2
200.2
150.2
100.2
50.2
10,000
Jan-20
Feb-20
M ar-20
Apr-20
M ay-20
Jun-20
Jul-20
Aug-20
Sep-20
Oct-20
N ov-20
Dec-20
0.2
Jan-20
Feb-20
M ar-20
Apr-20
M ay-20
Jun-20
Jul-20
Aug-20
Sep-20
Oct-20
N ov-20
Dec-20
Gold price US$/oz
KZT/USD
2,200
2,100
2,000
1,900
1,800
1,700
1,600
1,500
1,400
1,300
1,200
Jan-20
Feb-20
M ar-20
Apr-20
M ay-20
Jun-20
Jul-20
Aug-20
Sep-20
Oct-20
N ov-20
Dec-20
460
450
440
430
420
410
400
390
380
370
Jan-20
Feb-20
M ar-20
Apr-20
M ay-20
Jun-20
Jul-20
Aug-20
Sep-20
Oct-20
N ov-20
Dec-20
Finally, the Directors believe that the company is on
track to deliver on the business plan outlined on
page 7 and are actively planning the next stage of
development in order to move the Company
towards its longer terms objectives. Given a low
balance sheet gearing, the Company has been
funded predominantly with debt in 2020. Further,
the Directors are looking to optimise the funding
mix with the aim of growing the business,
achieving good return for shareholders while
managing risk.
Commentary
From the base level of the prior year, the share price
of the Company has gathered significant
momentum all be it with some volatility. Indeed
the Company’s share price more than doubled over
the year, increasing from around £0.60 at the
beginning of the year to £1.30 towards the end of
the year after reaching a high of £2.80 in August
2020. In addition to increasing gold price, the share
price reacted positively to a successful debt raising,
which accelerated the investment program and
significantly increased production.
Given solid fundamentals, the Directors expect
further rerating of the share price. At the company
level, continued production growth and improving
grades should support revenues while tighter costs
should expand profitability. At the macro level,
consensus forecasts show gold price stabilising at
US$1,700-1,800oz range in the foreseeable future.
The KazakhTenge exchange rate is forecast to
depreciate putting a cap on the cost base.
174796 Altyn Annual Report 2020 Pt1_173796 Project Altyn Annual Report 2020 Pt1 04/05/2021 15:14 Page 7
AltynGold plc (formerly Altyn plc)
Annual Report 2020
OUR STRATEGY AND BUSINESS MODEL
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Our strategy is to continue to grow
and develop our underground
mine at Sekisovskoye and the
exploration target at Teren-Sai,
targeting initially an annual ore
extraction of 850,000t and
eventually rising to 2mt in the
future, the funding and capital
improvements in 2020 are moving
the Company towards this target.
In parallel, the highly prospective Teren-Sai Ore
Fields, adjacent to the Sekisovskoye mine, has the
potential to significantly expand the business
beyond our core asset.
Additionally since our progression to the Main
Board of the London Stock Exchange in
December 2014 we maintain our commitment to
shareholder value creation and best governance
practice..
Develop
Continue to develop our high
grade underground mine
at Sekisovskoye
Grow
Production and asset
base growth via the highly
prospective Karasuyskoye
Ore Fields
Progress
Continue to grow
Our business model is two-pronged consisting in continued
development of the flagship high grade underground Sekisovskoye
mine, while seeking further growth opportunities at the adjacent
Teren-Sai Ore Fields. Out of 15 targets in this area, the Company is
focusing initially on 3 in Area No2. In combination our strategy aims
a longer term target of 100,000oz annual gold production. In
addition the Company is selectively looking to complement existing
operations with selective acquisitions.
The business strategy rests on four pillars:
Growth and
Evaluation
Mining
Exploration
Development
Mining – The Company has a proven track record with its development of the mine at Sekisovskoye,
we intend to continue development of the underground Sekisovskoye mine in the most cost effective
and efficient manner as well as developing operations at Teren-Sai.
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Development – we are in the process of further developing the underground Sekisovskoye mine in
order to access significant ore reserves at increased depth. Additional reserves should extend the life of
mine, which in addition to the development of open pit operations and subsequent underground
operations at Teren-Sai should allow an increase in production towards 100,000oz annual gold
production target.
Exploration – The Company has been conducting extensive exploration at the Teren-Sai site. With the
recently completed CPR and extraction of test production yielding good results the Company is
moving towards the development stage.
Growth – We are committed to adding value to our shareholders by setting solid foundations for
future production growth. As such we frequently evaluate investment opportunities in Kazakhstan and
Central Asia in case of potentially synergetic additions to our core assets.
174796 Altyn Annual Report 2020 Pt1_173796 Project Altyn Annual Report 2020 Pt1 04/05/2021 15:14 Page 8
8
8
AltynGold plc (formerly Altyn plc)
Annual Report 2020
PRINCIPAL RISKS AND UNCERTAINTIES
The Company has reviewed the principal risks associated with the development of the Company, there has been no material changes in the level or likelihood of
the risks. The Company has considered the current situation in relation to COVID-19 and the effect of environmental factors, details of which are noted below:
Risk
Mitigation
Technical difficulties developing the underground
mine at Sekisovskoye and exploration site at Teren-Sai
Failure to achieve production estimates
Fiscal changes in Kazakhstan
No access to capital
Encountering technical difficulties in further developing the underground mine at
Sekisovskoye and developing the site at Teren-Sai to bring the prospective exploration site
into production, would be negative for the future of the Company. To mitigate this, the
Company has sought external consultants to provide an update on the technical work which
has been undertaken to date. The Company is in discussions with international consultants
to ensure that the most appropriate development methods are utilised. The current test
production at Teren-Sai indicates that the production of dore from the site is technically
feasible.
Failure to achieve production estimates could arise due to various circumstances, not the
least mining issues, processing plant issues and breakdowns, and political and other
disruptions, and in the current situation COVID-19 uncertainties see details elaborated on
separately. Given that Company revenues are dependent on producing gold and silver from
the Sekisovskoye mine, failure to achieve production targets would adversely affect the
Company’s profitability and ability to generate cash. The Company mitigates this risk by
careful operational planning and detailed technical appraisal work, as well as regular
maintenance work
The Company’s management has analysed the risks and uncertainties and has in place
control systems that monitor daily the performance of the business via key performance
indicators. Certain factors are beyond the control of the Company such as the fluctuations in
the price of gold and possible political upheaval. However, the Company is aware of these
factors and tries to mitigate these as far as possible. In relation to the gold price the
Company is pushing to achieve a lower cost base in order to minimise possible downward
pressure of gold prices on profitability. In addition it maintains close relationships with the
Kazakhstan authorities, in order to minimise bureaucratic delays and problems.
Given that AltynGold operates solely in Kazakhstan, the Company is naturally at risk of
adverse changes to the fiscal regime in the country. Kazakhstan is a relatively young country
and there have been fiscal changes in recent years, in some cases related to the mining
industry. However, the country is outward looking and committed to attracting direct
foreign investment. Kazakhstan has hosted international exhibitions and sporting events,
and is positively encouraging investment, including relaxing visa requirements. We therefore
believe that the Kazakh government is aligned with potential foreign investors and would be
very cautious in implementing any fiscal changes which could deter investment. Recent tax
audits of the subsidiary companies have not revealed any material discrepancies, the
Company has consulted with the tax authorities and provided all necessary information as
and when required, and will seek expert tax advice as and when necessary.
Funding Sekisovskoye – in order to continue with the underground development at
Sekisovskoye, the Company must incur additional capital expenditure. It currently has
sufficient funds available to complete the capital work program until 2022. The Company is
therefore dependent on cash from external sources to develop the mine after this point and
therefore its future is at risk if funds from these external sources are unavailable. While the
required level of funding has not been secured, the Assaubayev family, which owns 65.5% of
the Altyn shares through its vehicle, African Resources, has invested in and provided loans to
the Company in the past and is keen to see the Company succeed. However, without further
external funding to complete the underground mine, production would proceed at a much
slower pace. The Company has recently engaged corporate brokers and other consultants in
order to raise further funding as necessary.
174796 Altyn Annual Report 2020 Pt1_173796 Project Altyn Annual Report 2020 Pt1 04/05/2021 15:14 Page 9
AltynGold plc (formerly Altyn plc)
Annual Report 2020
Risk
Commodity price risk
Currency risk
Reliance on operating in one country
Altyn’s reliance on one operation
COVID-19 uncertainties
Health. safety and environmental issues
Mitigation
The Company generates its revenue from the sale of gold and silver that it has produced.
While the Company has no control over commodity prices, it is in a fortunate position to
have a very robust mine and development project in Sekisovskoye that can withstand
prolonged weak precious metals prices. The Company is significantly increasing production,
once further equipment is obtained. The lower resulting cash cost of production will provide
a significant buffer from falling commodity prices.
The US Dollar has been appreciating against the Kazakh Tenge moving from last year’s
closing level of KZT382 to this year’s closing level of KZT 421. The appreciation is a result of
the coronavirus pandemic and the fundamentals underlying each currency. The Kazakh
Tenge is expected to remain in this range in the foreseeable future. As the revenue is
generated in US Dollars any strengthening of the US Dollar against the Kazakh Tenge will
favour the Company, in addition as the Company has a relatively low cost of production,
local price inflation is not expected to have a significant impact.
Currently all of the Company’s mining assets are in Kazakhstan. The Company believes that
Kazakhstan has significant future mineral potential, hence the choice of jurisdiction. The
Company makes it its business to be well informed of any in-country changes which may
adversely affect the business. While the Company knows and understands Kazakhstan well
and hence has a strong position in-country, it has stated that it would look at other
opportunities in the future within the Central Asia region and this may mitigate risk.
Currently, the Company only generates revenue from one mine – Sekisovskoye. The Group is
actively exploring its adjacent property, Teren-Sai, with a view to developing this asset to
achieve production in the future, and in this respect recently completed a CPR on one area
known as area No.2 within the exploration site containing 4 breccias, and also recently
obtained the results of the test production which were positive.
The COVID-19 crisis is still ongoing one year after its initial outbreak, the situation remains
dynamic as governments around the globe continue to take unprecedented measures to
slow the spread and mitigate the human tragedy. The Company having assessed the
situation has taken and continues to take the steps as necessary in order to mitigate as far as
reasonably possible the impact on the Company. At the date of these financial statements
there has been little impact on the ability of the Company to operate as planned. The
Company operates in a protected industry and the government has ensured that it is able to
continue to trade throughout any lockdowns or restrictions imposed nationally. The
Company has adapted and changed allowing office workers to work remotely as necessary
with minimal disruption, and changing working patterns at the mine to maintain production
as well as keeping the employees safe. External supplies and requirements are closely
monitored and the Company has been advance ordering in order to avoid any delays arising
from supply chain disruptions.
The Company will keep the situation under review.
The Company is aware of its obligations to all stakeholders in relation to maintaining a safe
work environment. It liaises on a regular basis with the authorities and monitors and reports
on a regular basis key environmental indicators such as air and water quality. There were no
reporting incidences of accidents in the year at the mine.
The Company is also aware of its longer term obligations in relation to reducing its carbon
footprint and aims to ensure that this is considered in its decision making processes and the
impact and costs to the wider environment.
9
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174796 Altyn Annual Report 2020 Pt1_173796 Project Altyn Annual Report 2020 Pt1 04/05/2021 15:14 Page 10
10
AltynGold plc (formerly Altyn plc)
Annual Report 2020
DIRECTORS’ SECTION 172 STATEMENT
Statement by the directors in performance of
their statutory duties in accordance with
s172 (1) Companies Act 2006.
enabling production to be maintained at the
mine with office workers performing their
duties remotely.
The Board of Directors of AltynGold Plc both
individually and collectively act in the way they
consider in good faith would be most likely to
promote the success of the Company for the benefit of
its members as a whole (having regard to the
stakeholders and considerations set out in s172 (1) (a-f)
of the Act). In decisions taken to the year ended
31 December 2020, we would reference our approach
to our business plan, social and corporate responsibility
and the supporting control environment which deliver
good outcomes for the company and wider
stakeholders. In achieving this, the following areas are
highlighted:
In light of the COVID-19 pandemic the plans and
operational procedures of the Company have been
adapted in order to comply with revised working
requirements to ensure the safety of employees and
other stakeholders, whilst maintaining the continuity
of the business.
a) Our Company’s plans were designed to have
a long-term beneficial impact on the company
and to contribute to the success in delivering the
business of exploration and developing and
operating a mine to produce gold and other
precious metals as outlined in our strategy and
business model on page 7, and in relation to our
longer term plan in the Chief Executive Officer’s
review on page 3. We continue to operate our
business within a structured control environment
and comply with all necessary regulated
requirements necessary to maintain the operating
licences.
The Board made the following key decisions:
In making their decisions the Board carefully
assessed the future long term aim of growing the
Company to achieve its target level of production
of moving initially up to 100,000oz per annum. It
has made its decisions balanced against the need
to maintain safe working practices for its
employees, achieving the increase in production
capacity at a reasonable cost of capital to obtain a
good return to shareholders. The Board has
maintained regular contact with its principal
customer and suppliers, as well as cooperating
with the national and regional authorities to
ensure all regulatory and legal requirements were
met. The recent COVID-19 pandemic has limited
the ability to meet regularly in person. But regular
contact has been maintained with bankers and
suppliers and its refiner via online portals and
regular calls, meetings have been held monthly
when possible with employees. Shareholders have
been communicated with through the online
messaging services and the Company is intending
to hold an AGM where shareholders should be
able to physically attend this year.
Working practices were reorganised in order to
ensure the operations of the Company
continued in a safe working environment,
In order to raise the necessary funding to invest
in the Company’s operations, the management
authorised the draw down of further funding
from the bank and the placing of bonds on the
Astana International Exchange (AIX).
Key equipment purchases were authorised.
The Board was strengthened by the
appointment of another Independent Non-
Executive Director.
It was agreed by the Board in March 2021 that a
Corporate broker and analyst would be
appointed to market and promote the
Company.
b) Our employees are fundamental to the delivery of
our business. AltynGold wants to build teams that
are loyal and committed to the long term success
of the Company and create a pleasant work
environment where all employees can thrive. We
have put steps in place for workforce engagement,
training and development, employee networks,
and regular communication updates with senior
management. During the year the company has
worked closely with its employees and local
authorities at both head office and the mine site to
ensure that the staff were able to engage in the
Company’s activities in safe working environment.
The company will be reviewing the work practices
in the future to ensure where the changes were
beneficial to the Company/employees these are
retained.
c) At AltynGold, we think about the implications of
our decisions on everyone in our Group, our
industry and our community, because we are
committed to building a sustainable business with
a legacy we can all be proud of. Our success
depends on our relationships with employees, a
network of experts, customers and suppliers
beyond our business. The majority of the
workforce live and work in Sekisovska village
located next to the mine, the Company is aware of
the need to foster good relationships with the local
community and try to engage them, keeping
them informed of the business activities. All of our
activities are informed by appropriate engagement
with stakeholders to gain an understanding of our
operating environment and the market in which
we operate. At present, the Company has a single
customer for its gold output as regulated by the
Kazakh authorities and it complies with all
requirements for timings and deliveries as
appropriate. We value our suppliers and maintain
regular communication with them.
The Board has regular meetings with key
equipment suppliers, principal consumable
suppliers and its sub-contractors to agree contract
terms and to discuss any issues that may have
arisen. It has also established a good line of
communication with its principal finance providers
at the bank and AIX, to ensure that operations run
smoothly and they are kept abreast of Company
developments. During the period of the COVID-19
restrictions, it has been necessary for meetings to
be arranged on a remote contact basis using
internet contact platforms such as teams and
zoom.
d) Our plans take into account the impact of the
company’s operations on the community, the
environment and wider societal responsibilities,
some of which are mandated by government
legislation and others are taken up by the
Company voluntarily. The plans and procedures
were adapted as necessary for the COVID-19
pandemic. The Company was able to grow
employee numbers, aiding and supporting the
local community in which the mine is the key
employer. Further details on this and the
Company’s impact on the environment are as
detailed in the Corporate Social Responsibility
report on page 11. AltynGold aims to ensure that it
plays a responsible part in society as a whole. We
also evolve and adapt as regulation changes and
public interest in emerging issues grow. The plans
the Company has developed helps it to stay
focused and make an impact, it is keenly aware of
the mines environmental impact and the dangers
of not staying focused given the previous history
with the Company, in relation to the failure of the
tailings dam a number of years ago that had a
material impact on the Company and the
environment. It ensures we are pragmatic and
consistent, and using local resources and people as
necessary. There are regular checks made on the
environmental parameters by independent third
parties and government departments. No issues
were highlighted in the year. See further details in
the Corporate Social Responsibility Report on
page 11.
e) The Board of Directors’ intention is to behave
responsibly and ensure that the business operates
in a responsible manner within the high standards
of business conduct and good governance. Our
Company ensures that we meet standards
expected by our Regulators in order to ensure that
our license to operate is maintained. The Company
has regular contact with the environmental
authorities to ensure the Company complies in all
aspects with the government standards required
for the operation of the mine in Kazakhstan.
There is a policy in place for whistle blowing and
this ensures that employees feel empowered to
raise concerns in confidence and without fear of
unfair treatment. The Audit Committee as a whole
ensures that the processes in place are adequate.
f) We aim to act fairly between members and act for
all shareholders. The Company does have a
controlling shareholder; however their conduct is
controlled by a relationship agreement which aims
to ensure that they act in a fair, transparent and
responsible manner. All shareholders are welcome
at the Annual General Meeting to express their
views. The Company website has a facility to
obtain regular feedback from all shareholders.
174796 Altyn Annual Report 2020 Pt1_173796 Project Altyn Annual Report 2020 Pt1 04/05/2021 15:14 Page 11
AltynGold plc (formerly Altyn plc)
Annual Report 2020
CORPORATE SOCIAL RESPONSIBILITY
Human resources
The Company has expanded its workforce as a
result of the increased investment at the
Sekisovskoye mine site, with the total number of
employees now at 389 (2019: 297), an increase of
92, the majority relating to the employment of staff
in production. The company is well aware of its
social responsibilities employing 80% of the
population of the Glubokov district in East
Kazakhstan region in which the Sekisovskoye and
the Teren-Sai deposits are located. The Company is
expecting to expand its workforce in the future, and
will be taking advantage of incentives as provided
by the government by obtaining support from the
Ministry of Industry and Development.
The increased investment and resultant increased
production necessitated an increase in labour,
which is being recruited and managed in a
responsible way. Outsourced labour is still being
utilised, but their role is now being limited to
specific operations related to the development of
the mine. The Company operates in a protected
industry in Kazakhstan which the government see
as essential in maintaining the economic stability of
the country, and has been insulated to a large
extent from the effects of the COVID-19 pandemic,
but which has necessitated a change in work
patterns and more home working.
Human rights
Whilst the Company does not have a specific
human rights policy, it does have policies such as
Equal Opportunities and an Anti-bribery policy that
adhere to internationally proclaimed human rights
principles.
Employment policies and diversity
The Company has an equality and diversity policy
and communicated it to its employees in a formal
manner after consultation with the local authorities.
It is fully supported by senior management and
employee representatives. The policy is monitored
and reviewed annually to ensure that equality and
diversity is continually promoted in the workplace.
Free provision of canteen facilities.
Bonuses/awards to staff as merited.
The Company is opposed to all forms of unlawful
and unfair discrimination. All employees, no matter
whether they are part-time, full-time, or temporary,
will be treated fairly and with respect. The
Company will enforce current work practice and
work within the spirit of the law. When selecting
candidates for employment, promotion, training, or
any other benefit, it will be on the basis of their
aptitude and ability.
The policy has the following aims:
To create an environment in which individual
differences and the contributions of all team
members are recognised and valued.
To create a working environment that promotes
dignity and respect for every employee.
To not tolerate any form of intimidation,
bullying, or harassment, and to discipline those
that breach this policy.
To make training, development, and progression
opportunities available to all staff.
To promote equality in the workplace.
To encourage anyone who feels they have been
subject to discrimination to raise their concerns
so we can apply corrective measures.
To encourage employees to treat everyone with
dignity and respect.
To regularly review all our employment practices
and procedures so that fairness is maintained at
all times.
Employee involvement
Members of the management team regularly visit
subsidiaries and discuss matters of current interest
and concern with members of staff.
Gender diversity
Male
Female
Total
292
207
97
90
389
297
The Company is conscious there are no female
Directors in the very top position and are keeping
this under review.
2020
2019
The aim is to ensure that all employees and job
applicants are given equal opportunity and that our
organisation is representative of all sections of
society. Each employee will be respected and
valued and able to give their best as a result. This
policy reinforces our commitment to providing
equality and fairness to all in our employment and
not provide less favorable facilities or treatment on
the grounds of age, disability, gender, marriage and
civil partnership, pregnancy and maternity, race,
ethnic origin, colour, nationality, national origin,
religion or belief, and sexual orientation.
The Company provides the following to staff:
A medical station available to all employees.
The table above shows the staff employment by
gender. The Company places a great deal of
emphasis on gender equality and diversity. At
present there are 16 women in senior management
positions (2019: 12), male senior managers in 2020
were 44 including Directors (2019: 23, including
Directors).
Environmental considerations
During 2020 as in the prior year each of the
Company’s facilities as required by the government
authorities was environmentally monitored on a
quarterly basis by accredited outsourced
companies. This included the following checks
which were all within environmental standards set:
11
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174796 Altyn Annual Report 2020 Pt1_173796 Project Altyn Annual Report 2020 Pt1 04/05/2021 15:14 Page 12
12
AltynGold plc (formerly Altyn plc)
Annual Report 2020
CORPORATE SOCIAL RESPONSIBILITY continued
Checks were made on the water at surface and
sub-surface levels to ensure that it was within safe
limits, within both the production site and the
tailings dump site – no incidences were noted
during the year and as at the date of this report.
ways of dealing with this waste in the most efficient
and environmentally manner remain a key objective
of the Company. This is an ongoing process and the
Company is well aware of the impact on the
environment of carbon dioxide emissions.
Checks were regularly made on the air quality at
the production site, to include testing of the air
extraction systems at the crushing and grinding
plant, laboratory and transfer conveyors.
Appropriate repairs were carried out in the year
if there was any deviation from the accepted
norms – no incidences noted.
Soil samples were analysed at the tailings dumps
to ensure that there was no adverse effects on the
environment – no incidences noted.
Of primary importance to the Company is to
ensure that the tailings dam and water discharges
are within environmentally safe limits. The facility
has a system in place that provides treatment and
discharge of mine water into the surface reservoir –
quarterly testing is done to ensure all required
standards are met. This is reported to the
authorities on a quarterly basis, again no incidences
to report.
The Company has systems to control the
processing of waste in a controlled and
environmentally complaint manner. All household
waste produced is disposed of at specialised landfill
sites. Tyres are temporarily stored prior to removal
to a specialised site. Hazardous waste such as
Mercury is carefully sent for recycling as are plastic
waste from plastic packaging and other plastic
waste from pipes cuttings and geomembrane to
reduce the amount being sent to the landfill sites.
Metal scraps and exhausted oils are recycled as far
as possible on the production site.
It is in the Company’s plans to further refine and
develop its environmental management systems.
Further development of the tailings dump and future
Health and safety
Altyn is pleased to report that during 2020 as in
2019, there were no accidents at the Sekisovskoye
mine. The Company maintains its first aid rooms to
the highest standards and ensures that rescue
contracts are in place for employees in the event of
an emergency.
Our community
The support of the local community is key to the
success of the Company, and the various initiatives
and projects have been undertaken to ensure that
the success of the mine is of a benefit to all parties.
This is regarded as an ongoing commitment by the
Company to the local community and has been
formalised in a memorandum of co-operation by
the Company with the authorities of the rural
district. The company regularly contributes to local
projects and participates in local events. Some of
the activities that the Company participated in the
year are as noted below:
The Sekisovskoya region in winter has very large
snow drifts, the Company regularly clears the
road and access paths at Sekisovska village.
Assisting in the regeneration of the local area
and redevelopment of green spaces.
Assisting in anti- flood measures and clean up
operations.
Participating and providing gifts for children of
the local community and two orphanages in the
local area.
Assisting and providing food for the elderly and
pensioners in the local community.
174796 Altyn Annual Report 2020 Pt1_173796 Project Altyn Annual Report 2020 Pt1 04/05/2021 15:15 Page 13
AltynGold plc (formerly Altyn plc)
Annual Report 2020
The Company’s emissions by scope
The Company’s emissions by scope
Scope
Scope 1
Scope 2
Scope 3
Total
Intensity 1
Intensity 2
Source
Plant
Electricity
Other equipment
Tonnes CO2
2020
Tonnes CO2
2019
3,131
1,666
8
4,805
777
1,694
–
2,471
Tonnes per CO2
Per US$ of revenue
0.00016001
0.0001657
Tonnes Per CO2
Per oz of gold produced
0.2906
0.2345
Our approach to the environment
The Company’s policies outline our commitment to
environmental responsibility. Safeguarding the
environment and training our employees to
minimise the environmental impact of our activities
are important aspects of our business. We remain
committed to achieving the highest environmental
standards. The calculations are prepared by an
external consultancy and are approved by the
Minister of Environmental Protection in Kazakhstan,
which has strict guidelines and statutory
requirements in relation to the measurement of
emissions.
The emissions as recorded below relate entirely to
the Company’s activities in Kazakhstan, the head
office function in the UK has a very small carbon
foot print.
Climate change
Climate change is high on the agenda for
governments, regulators and investors, the UN
climate change conference is taking place in the
Glasgow in November 2021, and is being seen as
key decision making conference. It is clear that
many companies will be affected either directly or
indirectly by climate-related risks or government or
stakeholder actions aimed at addressing their
causes in the transition to a low-carbon economy.
The UK Government announced in July 2019 that it
expects listed companies to provide disclosures in
line with the recommendation of the taskforce on
climate related Financial Disclosures which is
headed lead by Mark Carney. In line with this the
Financial Conduct Authority has proposed changes
to listing rules to effect the changes by 2022. The
company takes it responsibilities seriously and is
reviewing the actions it needs to take in this regard.
Greenhouse gas reporting
Greenhouse gas emissions (GHG), are classified as
either direct or indirect and which are divided
further into Scope 1, Scope 2 and Scope 3
emissions. Direct GHG emissions are emissions from
sources that are owned or controlled by the
Company. Direct GHG emissions are emissions that
are a consequence of the activities of the Company
but that occur at sources owned or controlled by
other entities.
Scope 1 emissions
Direct emissions controlled by the Company arising
from plant.
Scope 2 emissions
Indirect emissions attributable to the Company due
to its consumption of purchased electricity.
Scope 3 emissions
Other indirect emissions associated with activities
that support or supply towards the Company’s
operations.
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14
AltynGold plc (formerly Altyn plc)
Annual Report 2020
MINERAL RESOURCES STATEMENT
Geological Setting
The sites are located in a complex geological
setting that has been subject to much alteration
and metamorphism. The projects are exploiting
gold that is hosted in a number of pipe-like breccia
bodies that have intruded into the Rudny Altai
poly-metallic belt, which is part of the larger Central
Asian Orogenic Belt.
Ten breccias have been mapped in and around the
Sekisovskoye Mine. Of these, seven breccias fall
within the Sekisovskoye Mine licence boundary.
Mineralisation is hosted in the breccia bodies and
includes free gold and gold sulphides. Gold is
embedded in the cement of the explosive
hydrothermal breccias and is smeared across the
lithology. The breccias are cut by barren igneous
dykes that are typically planar and dip steeply to
the northeast.
The Teren- Sai Project is made up of 15 targets
based on historical exploration. Of these 15 targets,
AltynGold has identified 4 areas for exploration,
namely Areas No.1 to No.4, consisting of various
identified targets. AltynGold is currently focused on
exploration and development of one of these 15
targets, namely Area No.2. Area No.2 consists of four
breccia bodies.
Overview
Ernst and Young Advisory Services (Pty) Ltd (“EY”)
were commissioned by the directors of AltynGold
Plc (“Altyn”) in 2019 to prepare Independent
Competent Persons’ Reports (“CPR”) on the
Sekisovskoye Gold Mine (“the Sekisovskoye Mine”)
and Teren- Sai gold project (“the Teren- Sai Project”).
Both the Sekisovskoye Mine which is an operating
mine targeting gold and silver, and Teren-Sai which
is an exploration licence area are located in eastern
Kazakhstan, adjacent to the Sekisovka village.
EY has compiled the reports in accordance with the
Australasian Code for Reporting of Exploration
Results, Mineral Resources and Ore Reserves, 2012
edition (“the JORC Code”). In the case of the
Sekisovskoye mine it is an update of the CPR
completed in 2014, entitled “Independent
Competent Persons’ Report on the Sekisovskoye
Gold Project prepared for Goldbridges Global
Resources Plc, (subsequently renamed AltynGold
Plc)” as at 31 May 2014 by Venmyn Deloitte (Pty) Ltd
(“Venmyn Deloitte”) referred to as “the 2014 CPR”. In
the case of Teren-Sai this will be a maiden Mineral
Resource and Ore Reserve estimate for the Project
based on exploration completed by AltynGold
since granting of the subsoil use contract in 2016.
The report describes reviews and documents the
technical and economic parameters of the
Sekisovskoye mine and Teren- Sai Project, in order
to identify all factors of a technical and economic
nature that would influence the future viability of
the project.
174796 Altyn Annual Report 2020 Pt1_173796 Project Altyn Annual Report 2020 Pt1 04/05/2021 15:15 Page 15
AltynGold plc (formerly Altyn plc)
Annual Report 2020
Exploration
Sekisovskoye
Recent exploration refers to all exploration carried
out since the project was acquired by AltynGold
(then known as Hambledon). The Sekisovskoye
Mine has undergone numerous exploration
programmes including geophysics, trenching and
diamond drilling. Recent exploration has consisted
of several drilling campaigns and a total of 1,490
drillholes have been completed. These drillholes
include both surface and underground drilling but
exclude all drilling prior to acquisition of the
Sekisovskoye Mine by Hambledon. Of these
drillholes, a total of 982 holes have been drilled
between 2011 and 2019 and these form the basis
of the orebody modelling and underground
resource estimation used in the CPR. Exploration
and orebody modelling has focused increasingly on
delineation of the orebody at depth and on infill
drilling to improve geological confidence in the
underground Mineral Resources since closure of
the open pit. More recent exploration campaigns
have consisted of almost exclusively underground
drilling.
These historical holes were drilled in 1993. The 53
drillholes drilled in Area No.2 form the basis of the
geological modelling and resource estimation used
in this CPR. Drilling has been completed to a depth
of approximately 465m below surface.
Mineral Resource Estimates
Mineral Resource classification is based on the level
of geoscientific confidence and primarily, drilling
density. Due to the nature of the deposit, which is
generally narrow and extending in a pipe-like
deposit at depth, drilling and the resultant number
of samples is denser near surface and becomes less
dense with depth.
Sekisovskoye
Measured and Indicated Resources are estimated
from the current working depth of -185masl to a
depth of -400masl. Inferred Mineral Resources have
been estimated from -400masl to -800masl. An
Exploration Result has been estimated
from -800masl to -1,500masl.
Teren-Sai
Teren-Sai
Recent exploration refers to all exploration carried
out since the project was acquired by Altyn in 2016.
Recent exploration carried out by AltynGold
includes pitting, trenching and diamond drilling.
Exploration has focused on the two breccias within
Area No.2 and includes a total of 41 drillholes
completed by AltynGold. A further 12 historical
drillholes are included in the geological database.
Measured Resources from surface (approximately
+490masl) to a depth of +260masl and Indicated
Resources from +260masl to a depth of +25masl.
No Inferred Mineral Resources have been
estimated. An Exploration Result has been
estimated from +25masl to -375masl. The open pit
to underground boundary is at +350masl.
Mineral asset valuation
The assumption of no selective mining was
informed by both the mining method and by
guidance included in the Kazakhstan mining
legislation, which does not allow for the selective
mining of blocks above the cut-off grade approved
by the Committee of Geology of Kazakhstan.
Therefore, no pay limit was used for mining
selectivity and the definition of Ore Reserves.
The key modifying factors used are as follows:
long term prices for gold and silver of
USD1,280/oz and USD17/oz, respectively; the
current prices are above US$1,600/oz and the in
the short-term the Company is using US$1,400
in modelling;
a processing recovery of 83% for gold and 73%
for silver, this is in line with the current
production:
an average underground mining cost of
USD425/oz, this is based on a longer term
projection based on an increased level of ore
mined the current cash cost is in the range of
US$850/oz.
EY estimated the preferred value of Sekisovskoye
Mine as the average value between the Income-
based approach and the Market-based approach.
Therefore, the preferred value for Sekisovskoye
Mine is estimated between US$383m to US$415m
and that of Teren-Sai as estimated as between
US$92m and US$104m.
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AltynGold plc (formerly Altyn plc)
Annual Report 2020
MINERAL RESOURCES STATEMENT continued
The following tables show the total mineral resources:
Sekisovskoye
31 May 2019
Resource Classification
Level
Masl
Tonnage
(Mt)
Cut-off
Grade
(g/t)
Average
gold grade
(g/t)
Contained
Gold
(Moz)
Measured
Indicated
Sub-total
Inferred
+250 to -400
+250 to -400
-400 to -800
Total mineral resources
29.03
3.48
32.51
37.15
69.66
1.50
1.50
1.50
1.50
1.50
3.76
3.03
3.68
2.37
2.98
3.51
0.34
3.85
2.83
6.68
Average
Silver
Grade
(g/t)
Contained
Silver
(Moz)
6.20
5.08
6.08
3.99
4.97
5.79
0.57
6.35
4.77
11.12
The previous mineral resource estimate in 2014 by Venmyn Deloitte estimated Mineral Resources for the
underground operations at the Sekisovskoye Mine. The estimation was based on the C1, C2 and P2 of the
GKZ classification system, which were then re-classified in accordance with the JORC Code. The 2014 Ore
Reserves were also estimated to a depth of -800masl. The Sekisovskoye 2014 Mineral Resources estimated
by Venmyn Deloitte are shown in the table below.
As of 31 December 2020 the measured resources at Sekisovskoye were 28.4Mt.
Sekisovskoye
31 May 2014
Resource Classification
Level
Masl
Tonnage
(Mt)
Indicated
Inferred
Inferred
0 to -400
0 to -400
–400 to -800
Sub-total – inferred
Total mineral resources
15.7
3.5
14.7
18.2
33.9
Cut-off
Grade
(g/t)
3.0
2
2
2
2.46
Average
gold grade
(g/t)
Contained
Gold
(Moz)
Average
Silver
Grade
(g/t)
Contained
Silver
(Moz)
5.32
4.21
4.21
4.21
4.72
2.67
6.99
3.52
0.48 No Estimate
1.99 No Estimate
2.46 No Estimate
5.14
6.99
3.52
The difference between the 2014 and the 2019 Mineral Resource estimates is primarily due to the lowering
of the cut-off grades used. The increased tonnage is also based on additional drilling completed since 2014,
which also resulted in the upgrading of a portion of the Indicated Mineral Resources into the Measured
Resources category.
The change in cut-off grade led to an increase in Mineral Resource tonnages of 35.75 million tonnes (“Mt”)
and a lowering of the average gold grade from 4.72g/t to 2.97g/t. Increasing geoscientific confidence
based on the results of additional drilling that was completed to a maximum depth of -400masl has
allowed for Indicated Resources to be converted to Measured Resources. There has been no change to
Mineral Resources below -400masl, which have remained Inferred Resources as no additional drilling or
exploration has been completed below -400masl.
Teren-Sai
31 May 2019
Resource Classification
Level
Masl
Tonnage
(Mt)
Measured – open pit +490 to +350
Measured
– Underground
Sub-total
Indicated
– underground
+350 to +25
+350 to +25
Total mineral resources
5.99
3.80
9.79
6.06
15.84
Cut-off
Grade
(g/t)
0.50
1.50
1.50
Average
gold grade
(g/t)
Contained
Gold
(Moz)
Average
Silver
Grade
(g/t)
Contained
Silver
(Moz)
1.89
3.75
2.61
3.38
2.91
0.36
0.46
0.82
0.66
1.48
3.25
6.13
4.37
5.52
4.81
0.63
0.75
1.37
1.07
2.45
The Teren-Sai CPR has measured Resources from surface (approximately +490masl) to a depth of +260masl
and Indicated Resources from +260masl to a depth of +25masl. No Inferred Mineral Resources have been
estimated. An Exploration Result has been estimated from +25masl to -375masl. The open pit to
underground boundary is at +350masl.
174796 Altyn Annual Report 2020 Pt1_173796 Project Altyn Annual Report 2020 Pt1 04/05/2021 15:15 Page 17
AltynGold plc (formerly Altyn plc)
Annual Report 2020
Exploration Target Estimate
Sekisovskoye
31 May 2019
Resource Classification
Level
Masl
Tonnage
(Mt)
Exploration
-800 to -1,500
22.79
Sekisovskoye
31 May 2014
Resource Classification
Level
Masl
Tonnage
(Mt)
Exploration
-800 to -1,500
24.4
Cut-off
Grade
(g/t)
1.5
Cut-off
Grade
(g/t)
2.0
Average
gold grade
(g/t)
Contained
Gold
(Moz)
Average
Silver
Grade
(g/t)
Contained
Silver
(Moz)
2.37
1.74 no estimate no estimate
Average
gold grade
(g/t)
Contained
Gold
(Moz)
Average
Silver
Grade
(g/t)
Contained
Silver
(Moz)
4.21
3.30 no estimate no estimate
The Exploration Target for the Sekisovskoye Mine has been updated from 2014 to reflect a cut-off grade of
1.5g/t and an average grade of 2.37g/t based on the Inferred Mineral Resources. No further exploration has
been completed or planned for this estimate and the cut-off grade has also remained unchanged.
Teren-Sai
31 May 2019
Resource Classification
Level
Masl
Tonnage
(Mt)
Exploration
+25 to -375
9.28
Ore Reserve Estimate
Sekisovskoye
Cut-off
Grade
(g/t)
1.50
Average
gold grade
(g/t)
Contained
Gold
(Moz)
Average
Silver
Grade
(g/t)
Contained
Silver
(Moz)
3.46
1.03 no estimate no estimate
The Ore Reserves have been estimated from surface (approximately +430masl) to a depth of -400masl. All
the Mineral Resource blocks that are above the Mineral Resource cut-off grade were included in the Ore
Reserve, as no selective mining has been assumed for the Ore Reserve estimation. The Ore Reserve
calculation includes a 5% dilution factor, 2% mining loss and 100% extraction factor. Based on the
estimated Ore Reserves.
Sekisovskoye
31 May 2019
Resource Classification
Proved
Probable
Total
Tonnage
(Mt)
29.87
3.58
33.45
Average
gold grade
(g/t)
Contained
Gold
(g/t)
3.61
2.91
3.53
3.47
0.33
3.80
Average
Silver
Grade
(Moz)
5.88
4.81
5.77
Contained
Silver
(g/t)
5.65
0.55
6.20
As of 31 December 2020 the proved reserves at Sekisovskoye were 29.21Mt.
Sekisovskoye
31 May 2014
Resource Classification
Probable
Tonnage
(Mt)
17.25
Average
gold grade
(g/t)
Contained
Gold
(g/t)
2.60
4.09
Average
Silver
Grade
(Moz)
5.37
Contained
Silver
(g/t)
2.98
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174796 Altyn Annual Report 2020 Pt1_173796 Project Altyn Annual Report 2020 Pt1 04/05/2021 15:15 Page 18
18
AltynGold plc (formerly Altyn plc)
Annual Report 2020
MINERAL RESOURCES STATEMENT continued
Teren-Sai
31 May 2019
Resource Classification
Proved – open pit
Proved – underground
Sub-total
Probable
Total
Average
gold grade
(g/t)
Contained
Gold
(g/t)
Average
Silver
Grade
(Moz)
Contained
Silver
(g/t)
1.71
3.60
2.43
3.25
2.74
0.35
0.45
0.80
0.65
1.45
2.94
5.87
4.06
5.33
4.54
0.59
0.74
1.33
1.07
2.40
Tonnage
(Mt)
6.29
3.91
10.20
6.23
16.43
For Teren-Sai the ore reserve calculation includes a dilution factor, mining loss and extraction factor. The
average estimated losses and dilution are mining losses of 5% for the open pit and 2% for the underground
and mining dilution of 10% for the open pit and 5% for the underground. An average mining extraction
factor of 90% has been utilised for the Ore Reserve estimation.
Summary
JORC gold mineral resources total 6.68Moz (2014 CPR – 5.14Moz). In addition, a further 1.74Moz (2014
CPR – 3.30Moz) have been identified as an Exploration Result below the -800masl. While these will require
further exploration drilling to be potentially upgraded to Mineral Resources, this result does highlight the
potential for a larger Mineral Resource than is currently estimated. Assuming that this potential were to be
realised, the current projects as developed would contain approximately 8.42Moz (2014 CPR – 8.4Moz) of
gold.
In addition the JORC gold resources at Teren-Sai total 1.48Moz with a further 1.03Moz as an exploration
target.
Strategic report approved by the Board on 30 April 2021 and signed on its behalf by:
Mr Aidar Assaubayev
(Chief Executive Officer)
Director
174796 Altyn Annual Report 2020 Pt2_174796 Project Altyn Annual Report 2020 Pt2 04/05/2021 14:30 Page 19
AltynGold plc (formerly Altyn plc)
Annual Report 2020
19
CORPORATE GOVERNANCE STATEMENT
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I am pleased to introduce our Corporate Governance Statement, which explains how AltynGold’s governance framework supports the principles of integrity,
strong ethical values and professionalism integral to our business. The Board recognises that we are accountable to shareholders for good corporate governance,
and this report, together with the Reports of the Audit and Remuneration Committees, seeks to demonstrate our commitment to high standards of governance
that are recognised and understood by all.
The Company is keenly aware of its obligations under the London Stock Exchange disclosure and transparency rules and is reviewing its corporate structure, given
the size of the Company it has not adopted the 2018 UK Corporate Governance Code, however the Company believes that the policies in place ensures that there
are high standards of accountability and corporate governance.
During the year the Company appointed an Independent Non- Executive Director on 9 December, his skills and background as a lawyer and dealing with financial
institutions will provide valuable expertise to the Company.
Full details in relation to the composition of the Board are given on pages 22 - 23. There are now in total three Non-Executive Directors on the Board, and
two Executive Directors together with a Chairperson. The Company will continue to keep under review the composition of the Board and its committees to
ensure that we have the right balance of skills, independence, experience and diversity.
In the opinion of the Directors these Annual Financial Statements present a fair, balanced and understandable assessment of the Group’s position and prospects
and provide the information necessary for shareholders to assess the Group’s position and performance, business model and strategy. This is presented in more
detail in the Chief Executive Officer’s review and review of financial performance on pages 3 - 4.
The respective responsibilities of the Directors and the Auditor in connection with the Financial Statements are explained in the Statement of Directors’
Responsibilities and the Auditor’s Report.
The Board delegates specific responsibilities to the Audit and Remuneration Committees, full details of their responsibilities are detailed below. The Company
currently does not have a Nomination Committee, and given its stage of development does not believe it is appropriate. Full details of the responsibilities of the
committees are detailed below.
Day-to-day management and the implementation of strategies agreed by the Board are delegated to the Executive Directors. The Group’s reporting structure
below Board level is designed so that decisions are made by the most appropriate people in a timely manner. Management teams report to members of the
Executive Committee. The Executive Directors and other managers give regular briefings to the Board in relation to business issues and developments. Clear and
measurable KPIs are in place to enable the Board to monitor progress. These policies and procedures enable the Board to make informed decisions on key issues
including strategy and risk management.
The Chairperson leads the Board and is responsible for its overall effectiveness, ensuring adequate time is available for discussion of all agenda items, in particular
strategic issues, promoting openness and debate, ensuring all Directors, particularly the Non-Executive Directors, are able to contribute, and facilitating a
constructive relationship between the Executive and Non-Executive Directors. The current Chairperson is not independent as he together with the two Executive
Directors are the controlling shareholders of the Company. Their conduct is controlled by a relationship agreement that will ensure that they act in a way for the
benefit of shareholders as a whole. The Non-Executive Directors will also ensure that the principals of the agreement are adhered to.
The Chief Executive Officer has responsibility for all operational matters which include the implementation of strategy and policies approved by the Board. The
senior Independent Non-Executive Director provides a sounding board for the Chairperson and also acts as an intermediary for other Directors and shareholders.
In terms of culture and engagement the Executive Directors liaise on a regular basis with the workforce and key suppliers and customer and reports back to the
Board. The human resources department has been strengthened and has developed a framework to improve the way in which employee views are
communicated to the Board, how employees engage with values and culture, and how we align strategy with our workforce development and reward policies.
Details in relation to the Company’s corporate social responsibility are given on pages 11 to 13, and engagement with other stakeholders in the Directors S172
Statement on page 10.
The Board has adopted procedures for the identification, authorisation (where appropriate) and monitoring of situations which may give rise to a conflict of
interest. There is a relationship agreement with the major shareholder which defines their responsibility if a situation arises. The Board has reviewed the procedures
and is satisfied that they are operating effectively.
The Company’s Articles of Association contain powers of removal, appointment, election and re-election of Directors and provide that at least one-third of the
Board must retire at each Annual General Meeting and each Director must retire by rotation every 3 years.
There is a no formal induction programme for new Directors, however they are given a full briefing and familiarised with all aspects of the Company’s operations.
The Company maintains directors’ and officers’ liability insurance to cover legal proceedings against Directors and Officers acting in that capacity.
The Group has a comprehensive financial review process, including detailed annual budgets, business plans and regular forecasting. There are a range of
performance indicators which are tracked by management on a daily, weekly and monthly basis, and addressed through a programme of operational meetings
and action plans. All Directors receive regular and timely information to enable them to perform their duties, including information on the Group’s operational and
financial performance, customer service, health and safety performance and forward trends. At each regular Board meeting the financial results are reviewed,
taking account of performance indicators and the detailed annual business plan and budget. The Board also considers forward trends and performance against
other key indicators, including areas where performance departs from forecasts, and contingency plans. The Board reviews medium and long-term strategy on a
regular basis. In this way, the Board assesses the prospects of the Group using all the information at its disposal, and considering historical performance, forecast
174796 Altyn Annual Report 2020 Pt2_174796 Project Altyn Annual Report 2020 Pt2 04/05/2021 14:30 Page 20
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AltynGold plc (formerly Altyn plc)
Annual Report 2020
CORPORATE GOVERNANCE STATEMENT continued
performance for the current year and longer-term forecasts over the 3-year business planning cycle as appropriate. Details of the Company’s strategy and business
model are given on page 7 of the Annual Report.
The Board has responsibility for determining the nature and extent of the principal risks the Company is willing to take to achieve its strategic objectives, and for
the Group’s internal control framework. The Board has a well-established procedure to identify, monitor and manage risk, and has carried out reviews of the
Group’s risk management and internal control systems and the effectiveness of all material controls, including financial, operational and compliance controls. The
principal risks facing the Group are detailed on pages 8 - 9.
The Board places great emphasis on communication and engagement with the Company’s shareholders. It is an area of focus that the Board wishes to strengthen
in the future. The principal forum at present to engage with the shareholders given the stage of development of the Company is at the Annual General Meeting
details of which are on page 72.
In relation to engaging with our stakeholders the Board recognises the importance of our wider stakeholders in delivering our strategy and business sustainability
and are conscientious on the responsibilities and duties to the stakeholders under section 172 of the Companies Act 2006.
We believe that effective corporate governance is critical to delivering our strategy and creating long-term value for our shareholders.
Board structure
The Board is comprised of the Executive Chairman, the Chief Executive Officer, an Executive Director and three Non-Executive Directors, one of which is non-
independent as he holds shares in the Company. Their details appear on pages 22 to 23, which lists their experience and expertise. Although none of the Directors
have had any formal training in finance they have all had a great deal of experience operating at the top level of management in a number of companies dealing
with all aspects of operating a business and will call in experts as and when required. Thomas Gallagher, an Independent Non-Executive Director, was appointed
during the year, whose expertise in dealing with financial institutions and fund raising will be invaluable
The Board is responsible to shareholders for the proper management of the Company. The statement of Directors’ responsibilities in respect of the accounts is set
out on page 27.
The Non-Executive Directors have a particular responsibility to ensure that the strategies proposed by the Executive Directors are fully considered. To enable the
Board to discharge its duties, all Directors have full and timely access to all relevant information and there is a procedure for all Directors, in furtherance of their
duties, to take independent professional advice, if necessary, at the expense of the Company. The Board has a formal schedule of matters reserved to it, and meets
on a regular basis.
The Board is responsible for overall Group strategy, approval of major capital expenditure projects and consideration of significant financing matters.
Audit Committee
The Audit Committee is currently comprised of Ashar Qureshi and Vladimir Shkolnik. The Board reviews the composition of the Audit Committee on a regular basis,
and will make changes as appropriate.
Audit Committee’s prime tasks are to review the scope of the external audit, to receive regular reports from the Company’s auditor and to review the half-yearly
and annual accounts before they are presented to the Board, focusing in particular on accounting policies and areas of management judgement and estimation.
The Committee is responsible for monitoring the controls which are in force to ensure the integrity of the information reported to the shareholders. The
Committee acts as a forum for discussion of internal control issues and contributes to the Board’s review of the effectiveness of the Company’s internal control and
risk management systems and processes.
The Audit Committee also undertakes a formal assessment of the auditors’ independence each year which includes:
p a review of non-audit services provided to the Company and related fees;
p discussion with the auditors of a written report detailing all relationships with the Company and any other parties that could affect independence or the
perception of independence;
p a review of the auditors’ own procedures for ensuring the independence of the audit firm and partners and staff involved in the audit, including the regular
rotation of the audit partner; and
p obtaining written confirmation from the auditors that, in their professional judgement, they are independent.
An analysis of the fees payable to the external audit firm in respect of both audit and non-audit services during the year is set out in Note 10 on page 55 of the
financial statements.
Remuneration Committee
The Remuneration Committee currently comprises of two Directors - Ashar Qureshi and Vladimir Shkolnik, which meets as required, it is responsible for
determining the contract terms, remuneration and other benefits of the Executive Directors. The remuneration of the Non-Executive Directors is determined by the
Board within the limits set out in the articles of association. None of the Committee members has any personal financial interest in the matters to be decided
(other than as shareholders), potential conflicts of interest arising from cross-Directorships, or any day-to-day involvement in running the business. The Committee
has access to professional advice from inside and outside the Company at the Company’s expense. There were no Remuneration Committee meetings held during
the year, there were no changes in the remuneration of the Executive Directors from the prior year.
174796 Altyn Annual Report 2020 Pt2_174796 Project Altyn Annual Report 2020 Pt2 04/05/2021 14:30 Page 21
AltynGold plc (formerly Altyn plc)
Annual Report 2020
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Company Secretary
The Company Secretary is responsible for the scheduling and administration of Company meetings, updating of the statutory information, filing requirements at
Companies House, and liaising with the relevant authorities at the FCA and London Stock Exchange as directed by the Board.
Board and Board committee meetings
The number of meetings during 2020 and attendance at regular Board meetings and Board committees was as follows:
Meeting Number held Number attended
Kanat Assaubayev
Aidar Assaubayev
Sanzhar Assaubayev
Ashar Qureshi
Vladimir Shkolnik
Thomas Gallagher*
*Thomas Gallagher was appointed to the Board on 9 December 2020.
Kanat Assaubayev
Chairman
30 April 2021
Board 9 9
Board 9 9
Board 9 9
Board 9 7
Audit Committee 2 2
Board 9 7
Audit Committee 2 1
Board – –
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AltynGold plc (formerly Altyn plc)
Annual Report 2020
BOARD OF DIRECTORS
Non-independent Chairman
Non-Independent Executive
Director
Non-Independent Executive
Director
Kanat Assaubayev
Aidar Assaubayev
Sanzhar Assaubayev
Appointment
Kanat Assaubayev was appointed to
the Board as Chairman on 23 October
2013.
Appointment
Aidar Assaubayev was appointed to
the Board as Chief Executive Officer
on 25 February 2013.
Appointment
Sanzhar Assaubayev was appointed
to the Board as Executive Director on
29 February 2016.
Experience
Kanat Assaubayev is one of
Kazakhstan’s leading entrepreneurs in
the natural resources sector.
Mr Assaubayev was the first Kazakh to
get a doctorate in metallurgy. His
early career was in academia where
he was the Chairman of the
Metallurgy and Mining Department
of Kazakh National Polytechnic
University. He subsequently began his
business career in the 1990s and has
led a number of natural resources
enterprises to national and
international success.
Experience
Aidar Assaubayev was formerly
Executive Vice Chairman of
KazakhGold Limited, the gold mining
corporation, and he was also formerly
Vice-President and a director of JSC
MMC Kazakhaltyn. Mr. Assaubayev
graduated from the Kazakh National
Technical University in Almaty and he
also holds a degree in Economics
from the Institute of Systemic Analysis
in Moscow.
Experience
Sanzhar Assaubayev was formerly
Director of International Affairs of JSC
MMC Kazakhaltyn and an Executive
Director of KazakhGold Group
Limited, the gold mining corporation.
He was educated at the Leysin
American School in Switzerland,
where he specialised in management,
and the American University in the
United Kingdom. Sanzhar Assaubayev
is the son of Kanat Assaubayev.
174796 Altyn Annual Report 2020 Pt2_174796 Project Altyn Annual Report 2020 Pt2 04/05/2021 14:30 Page 23
AltynGold plc (formerly Altyn plc)
Annual Report 2020
Non-Independent
Non-Executive Director
Independent Non-Executive
Director
Independent Non-Executive
Director
Ashar Qureshi
Vladimir Shkolnik
Thomas Gallagher
Appointment
Ashar Qureshi was appointed to the
Board as Non-Executive Director on
7 December 2012.
Appointment
Vladimir Shkolnik was appointed to
the Board as Non-Executive Director
on 21 November 2017.
Appointment
Thomas Gallagher was appointed to
the Board as Non-Executive Director
on 9 December 2020.
Experience
Ashar Qureshi is a London based US-
qualified lawyer. He was formerly the
Vice Chairman of Renaissance Group,
where his position was a senior
investment-banking role, and prior to
that he worked with international
firm Cleary Gottlieb Steen & Hamilton
LLP. He is currently a partner at Fried,
Frank, Harris. Shriver & Jacobson LLP.
Mr. Qureshi holds a Juris Doctorate
and is a graduate of Harvard Law
School and Harvard College.
Experience
Vladimir Shkolnik has held a number
of high profile positions in the
Kazakhstan government, and is
currently advising the Kazakhstan
government on industrial and energy
matters. His previous positions
included the office of Minister of
Energy, Minister of Trade and Industry,
and also Deputy Head of Presidential
administration, reporting directly to
the President. He is an academic with
a doctorate in physics and has written
a number of papers and books in the
field of energy, natural resources and
other scientific fields. He has been
influential in setting up academic
institutions, in the areas of mineral
processing and also nuclear power in
Kazakhstan, working with a number
of leading Companies from Japan,
France and Russia in setting up joint
enterprises.
Experience
Mr. Gallagher brings a wealth of
knowledge experience to the
Company, and a brief resume of his
experience is given below.
He received an LLM from the Law
School of Yale University, and also is a
graduate of Villanova University, and
of Loyola University School of Law
(New Orleans). In addition, he is a
member of the Bar Associations of
Washington D.C., New York, New
Jersey & Pennsylvania. Working
extensively in the legal and finance
sector for a number of years,
including as Legislation Attorney for
the Joint Committee on Taxation of
the Congress of the United States, he
has built up an extensive knowledge
in the sector and a has large number
of contacts.
He is currently a Member of the
Board of Trident Acquisition
Corporation, quoted on the NASDAQ,
a position he has held since 2016.
During the past five years he has
served on the Boards of Exchequer
Capital based in Switzerland, and the
Exchequer Trust Company Limited
based in New Zealand. He has
worked with banks and other
financial institutions organising all
aspects of fundraising, and has an
extensive knowledge of banking
products.
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24
AltynGold plc (formerly Altyn plc)
Annual Report 2020
DIRECTORS’ REPORT
for the Year Ended 31 December 2020
The directors present their report and the consolidated financial statements for the year ended 31 December 2020.
Change of name
The Company changed its name on 9 December 2020, in order to highlight to the market and potential shareholders the trade of the Company.
Principal activity and business review
The principal activity of the Company is that of a holding company and a provider of support and management services to its operating subsidiaries. Together
with its subsidiaries, it is involved in the production of gold and other precious metals from its mine sites in Kazakhstan, together with the development of further
suitable investment opportunities.
A review of the activities of the business throughout the year and up to April 2021 is set out in the Strategic report on pages 1 to 18 which includes information on
the Company’s risks, uncertainties and performance indicators. The Company accounts are prepared on a going concern basis.
Results and dividends
The Group’s profit for the year after taxation amounts to US$2.9m (2019 loss: US$1.3m). The results of the year are set out on page 41 in the consolidated income
statement.
The Directors do not recommend the payment of a dividend for the year (2019: nil).
Financial instruments
Details in relation to the Company’s borrowings are as disclosed in note 22. The principal loan held by the Company is a credit line with JSC Bank Center Credit for
US$17m, at rates ranging initially at 6% and subsequently rising to 7%. The Company has also issued US$10m 9% bonds on the Astana International Exchange in
Kazakhstan repayable in December 2022. The other principal borrowing relates to US$2m 10% convertible bonds raised in 2016 which are due for repayment in
May 2021. In December 2020 the Company agreed additional bank facilities with Bank Center Credit in the amount of US$5.5m, of which US$1.9m is available to
fund working capital and the balance is required to be used for investment into new machinery. Of this facility US$1.0m was drawn down in December 2020.
The total Company borrowings as at 31 December 2020, including accrued interest is US$29.1m (2019: US$17.6m).
The main risks arising from the Company’s financial instruments are liquidity risk, credit risk, foreign exchange risk and interest rate risk. Further details are provided
in note 25 on pages 67 - 71 of the Company’s financial statements.
Share capital details of the Company’s issued share capital, are set out in note 25 on page 65.
The Company has one class of ordinary share and they carry no right to fixed income. Each ordinary share carries the right to one vote at the general meetings of
the Company. All issued ordinary shares are fully paid. There are no specific restrictions on the size of the holding or on the transfer of the ordinary shares, which
are both governed by the general provisions of the articles of association and prevailing legislation. The Directors are not aware of any agreements between
holders of the Company’s ordinary shares that may result in restrictions on the transfer of securities or on voting rights. Certain Directors have an interest in the
ordinary shares in the Company and these are disclosed below.
Qualifying indemnity provision
The Company has entered into an insurance policy to indemnify the Directors of the Company against any liability when acting for the Company.
Charitable donations
The Company has made no charitable or political donations during the year (2019: Nil).
Annual General Meeting
The Annual General Meeting of the Company will be held at Langham Court Hotel, 31-35 Langham Street, London W1W 6BU, United Kingdom on Thursday
24 June 2021 at 11.00am. Due to the current Covid-19 situation if the timing location or other details change the Company will notify shareholders as appropriate.
The details of the resolutions are given on pages 72 - 77. The Directors consider that all of the resolutions to be put to the meeting are in the best interests of the
Company and its shareholders as a whole. The Board recommends that shareholders vote in favour of all resolutions.
Takeover directive
The Company has one class of share capital, which are ordinary shares. Each ordinary share carries one vote. All the ordinary shares rank pari passu. There are no
securities issued in the Company which carry special rights with regard to control of the Company. The identity of all substantial direct or indirect holders of
securities in the Company and the size and nature of their holdings is shown under the “Substantial interests” section of this report above.
174796 Altyn Annual Report 2020 Pt2_174796 Project Altyn Annual Report 2020 Pt2 04/05/2021 14:30 Page 25
AltynGold plc (formerly Altyn plc)
Annual Report 2020
A relationship agreement (the “Relationship Agreement”) that controls the conduct and voting restrictions was entered into between the Company and African
Resources Limited in regard to the arrangements between them whilst African Resources Limited is a controlling shareholder of the Company.
There are no restrictions on voting rights or on the transfer of ordinary shares in the Company. The rules governing the appointment and replacement of Directors.
Alteration of the articles of association of the Company and the powers of the Company’s Directors accord with usual English company law provisions. The
Directors are re-elected on a rotational basis each year. The Company is not party to any significant agreements that take effect, alter or terminate upon a change
of control of the Company following a takeover bid. The Company is not aware of any agreements between holders of its ordinary shares that may result in
restrictions on the transfer of its ordinary shares or on voting rights.
There are no agreements between the Company and its Directors or employees providing for compensation for loss of office or employment that occurs because
of a takeover bid.
Directors’ Section 172 statement’
Information on the Directors’ Section 172 statement is given on page 10.
Environmental matters
Information on greenhouse emissions is shown on page 13. The Company has minimal emissions during the period in the UK and thus no Streamlined Energy and
Carbon Reporting (SECR) disclosures are included.
Social and community issues
The Corporate Social Responsibility performance of the Company is detailed on pages 11 to 13.
Future developments and post balance sheet events
The Company’s future plans are detailed in the Chief Executive Officer’s review on pages 3 to 4.
Details of events after the end of the financial year are set out in note 27 on page 71 of the financial statements.
Communication with shareholders
Communications with shareholders are considered important by the Directors. The Directors regularly speak to investors and analysts during the year. Press
releases have been issued throughout the year; the Company’s website www.altyngold.uk is regularly updated and contains a wide range of information about the
Company. Enquiries from individuals on matters relating to their shareholdings and the business of the Company are dealt with informatively and promptly.
The Directors are responsible for ensuring the annual report and the financial statements are made available on a website. Financial statements are published on
the Company’s website in accordance with legislation in the United Kingdom governing the preparation and dissemination of financial statements, which may
vary from legislation in other jurisdictions. The maintenance and integrity of the Company’s website is the responsibility of the Directors. The Directors’
responsibility also extends to the ongoing integrity of the financial statements contained therein.
25
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Internal control
The Directors are responsible for the Group’s system of internal control and review of its effectiveness annually. The Board has designed the Group’s system of
internal control in order to provide the Directors with reasonable assurance that its assets are safeguarded, that transactions are authorised and properly recorded
and that material errors and irregularities are either prevented or would be detected within a timely period.
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The key elements of the control system in operation are:
p The Board meets regularly with a formal schedule of matters reserved to it for decision and has put in place an organisational structure with clearly defined lines
of responsibility and with appropriate delegation of authority;
p There are established procedures for planning, approval and monitoring of capital expenditure and information systems for monitoring the Group’s financial
performance against approved budgets and forecasts;
p UK Financial reporting is closely monitored by members of the Board to enable them to assess risk and address the adequacy of measures in place for its
monitoring and control. The Kazakh operations are closely supervised by the Board reviewing monthly, half yearly and annual financial reports from the
Directors and senior officers in Kazakhstan. This is normally supplemented by regular visits of the UK based finance officer to Kazakh operations which include
checking the integrity of financial information supplied to the UK. During the current year this process was performed remotely by teleconference calls with the
accounts teams based in Kazakhstan. The financial officer is ultimately responsible for the preparation of the consolidated financial statements that are then
reviewed by the Directors.
During the period, the Audit Committee has reviewed the effectiveness of internal controls as described above.
There are no significant issues disclosed in the Annual Report for the year ended 31 December 2020 (and up to the date of approval of the report) concerning material
internal control issues. The Directors confirm that the Board has reviewed the effectiveness of the system of internal control as described during the period.
Going concern
During the year the Group obtained additional funding principally from a mixture of placing bonds on the Astana International Exchange, an additional US$7.4m
and obtaining further funds from the term loans from a Kazakhstan based bank that were agreed in 2019 of US$8.3m. In total these increased the loans and
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AltynGold plc (formerly Altyn plc)
Annual Report 2020
DIRECTORS’ REPORT continued
borrowings from US$17.6m in 2019 to the current level of US$29.1m. The funds were utilised to purchase equipment and to provide working capital to expand
and develop the mining site at Sekisovskoye. The Group increased sales from US$14.9m to US$30.0m during 2020, with a result in increase in adjusted EBITDA from
US$3.4m to US$13.5m. This provided positive funding to the Group in the year, and is expected to continue at increasing levels in the future.
At the year-end the Group had cash resources of US$7.2m (2019: US$1.9m) available. In December 2020 the Company agreed additional bank facilities with Bank
Center Credit in the amount of US$5.5m, of which US$1.9m is available to fund working capital and the balance is required to be used for investment into new
machinery. Of this facility US$1.0m was drawn down in December 2020.
The Board have reviewed the Group’s forecast cash flows for the period to June 2022, which include the capital and interest repayments to be made in relation to
the Group’s borrowings. Capital and operating costs are based on approved budgets and latest forecasts in the case of 2021 and current development plans in the
case of 2022. Based on the Group’s cash flow forecasts, the Directors believe that the combination of its current cash balances, net cash flows from operations, and
increased production based on projections of future growth, are sufficient for the Company to achieve its current plans and meet its cash flow requirements.
The Company has operated in the most difficult time of the COVID-19 pandemic, and experienced little impact on its ability to trade and grow the business.
However the management are keenly aware that the situation may change and have factored any potential impacts into its future business plans. The initial
impact of COVID-19 was felt in March 2020 when Kazakhstan and the UK went into lockdown, the Group was quick to adapt and allowed office workers to use
remote technology to perform their duties. In relation to the mine, mining operations were designated by the government to be a key industry, this ensured that
production and transport of dore to the refinery could continue as normal. The Group adapted working conditions and patterns of working, to ensure that
production continued in a safe working environment. The Group has also ensured that adequate stocks are being maintained of parts and consumables in order to
prevent any disruption to production. COVID-19 is still an ongoing issue in Kazakhstan and indeed many countries, however the Management believe the
procedures they have in place, such as shift working at the mine, remote working, advance ordering of supplies and consumables, together with the support of
the government will ensure that future production will continue.
The Board have considered possible stress case scenarios that they consider may be likely to impact on the Group’s operations, financial position and forecasts.
Factors considered are operational disruptions, such as illness amongst the workforce, disruption to supply chain and possible impact on the price of gold if this
was to fall to pre COVID-19 levels. From the analysis undertaken the Board have concluded that Group will be able to continue to trade by the careful
management of its existing resources. The stress tests included the following scenarios amongst others, a fall in the gold price by 18% from current levels, a drop in
budgeted production by 20% or a combination of both factors together. In each case the Group would not experience a cash shortfall in either scenario if required
the Group would manage its resources, reducing investment and managing its payables in order to maintain liquidity.
Based on the Group’s cash flow forecasts, the Board believe that the combination of its current cash balances, net cash flows from operations, and an increased
production based on projected future growth, will be sufficient for the Group to achieve its current plans and meet its liabilities and commitments as they fall due
across the forecast period.
The Board therefore considers it is appropriate to adopt the going concern basis of accounting in preparing these financial statements.
Directors interest in shares and substantial shareholdings
The following information in relation to shareholdings has been audited.
The interests of the Directors in the shares of the Company are shown below:
Number % owned
Ashar Qureshi 78,800 0.30
Neither Vladimir Shkolnik nor Thomas Gallagher hold any interests in the shares of the Company.
The following have advised that they have an interest in 3% or more of the issued share capital of the Company as at 29 April 2021.
Number % owned
African Resources Limited 17,917,545 65.6
JSC Freedom Finance 1,578,422 5.8
Kanat, Aidar and Sanzhar Assaubayev are Directors and shareholders of African Resources Limited.
Reappointment of auditors
All Directors that are in office at the date of this report being approved have confirmed that they are aware that there is no relevant audit information of which the
auditor is unaware. Each of the Directors has confirmed they have taken all reasonable steps they ought to have taken as Directors to make themselves aware of
any relevant audit information and to establish that it has been communicated to the auditor. BDO LLP have expressed their willingness to continue in office as
auditors and a resolution to reappoint them will be proposed in the forthcoming Annual General Meeting.
Approved by the Board on 30 April 2021 and signed on its behalf by:
Mr Aidar Assaubayev
(Chief Executive Officer)
Director
174796 Altyn Annual Report 2020 Pt2_174796 Project Altyn Annual Report 2020 Pt2 04/05/2021 14:30 Page 27
AltynGold plc (formerly Altyn plc)
Annual Report 2020
STATEMENT OF DIRECTORS’ RESPONSIBILITIES
The directors are responsible for preparing the annual report and the financial statements in accordance with applicable law and regulations.
Company law requires the directors to prepare financial statements for each financial year. Under that law the directors are required to prepare the group financial
statements and have elected to prepare the Company financial statements in accordance with International Financial Reporting Standards (IFRSs). Under company
law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the group and
company and of the profit or loss for the group for that period.
In preparing these financial statements, the directors are required to:
p select suitable accounting policies and then apply them consistently;
p make judgements and accounting estimates that are reasonable and prudent;
p state whether they have been prepared in accordance with IFRSs, subject to any material departures disclosed and explained in the financial statements;
p prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business;
p prepare a director’s report, a strategic report and director’s remuneration report which comply with the requirements of the Companies Act 2006.
The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company’s transactions and disclose with
reasonable accuracy at any time the financial position of the company and enable them to ensure that the financial statements comply with the Companies
Act 2006 and, as regards the group financial statements, Article 4 of the IAS Regulation. They are also responsible for safeguarding the assets of the company and
hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. The Directors are responsible for ensuring that the annual
report and accounts, taken as a whole, are fair, balanced, and understandable and provides the information necessary for shareholders to assess the group’s
performance, business model and strategy.
Website publication
The directors are responsible for ensuring the annual report and the financial statements are made available on a website. Financial statements are published on
the company’s website in accordance with legislation in the United Kingdom governing the preparation and dissemination of financial statements, which may
vary from legislation in other jurisdictions. The maintenance and integrity of the company’s website is the responsibility of the directors. The directors’ responsibility
also extends to the ongoing integrity of the financial statements contained therein.
Directors’ responsibilities pursuant to DTR4
The directors confirm to the best of their knowledge:
p The group financial statements have been prepared in accordance with international financial reporting standards adopted pursuant to Regulation (EC) in
conformity with the requirements of the Companies Act 2006 and Article 4 of the IAS Regulation and give a true and fair view of the assets, liabilities, financial
position and profit and loss of the group.
p The annual report includes a fair review of the development and performance of the business and the financial position of the group and the parent company,
together with a description of the principal risks and uncertainties that they face.
p The directors are responsible for preparing the Annual Report and the financial statements in accordance with applicable law and regulations.
p Company law requires the directors to prepare financial statements for each financial year.
Under that law, the directors have elected to prepare the financial statements in accordance with international accounting standards in conformity with the
requirements of the Companies Act 2006. Under company law, the directors must not approve the financial statements unless they are satisfied that they give a
true and fair view of the state of affairs of the company and of the profit or loss of the company for that period. In preparing these financial statements, the
directors are required to:
p select suitable accounting policies and apply them consistently;
p make judgements and accounting estimates that are reasonable and prudent;
p state whether applicable International Financial Reporting Standards (IFRSs) are in accordance with international accounting standards in conformity with the
requirements of the Companies Act 2006, subject to any material departures disclosed and explained in the financial statements; and
p prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business.
The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the group’s and the company’s transactions and
disclose with reasonable accuracy at any time the financial position of the group and the company and enable them to ensure that the financial statements
comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the group and the company and hence for taking reasonable steps
for the prevention and detection of fraud and other irregularities.
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AltynGold plc (formerly Altyn plc)
Annual Report 2020
AUDIT COMMITTEE REPORT
The Committee’s terms of reference have been approved by the Board and follow published guidelines, which are available from the Company Secretary. The Audit
Committee comprises the Non-Executive Directors, Ashar Qureshi and Vladimir Shkolnik.
The Audit Committee’s prime tasks are to:
p review the scope of external audit, to receive regular reports from the auditor and to review the half-yearly and annual accounts before they are presented to
the Board, focusing in particular on accounting policies and areas of management judgement and estimation;
p review key areas of the financial statements which are assessed as being the carrying values of the intangible and tangible assets;
p monitor the controls which are in force to ensure the integrity of the information reported to the shareholders;
p assess key risks and to act as a forum for discussion of risk issues and contribute to the Board’s review of the effectiveness of the Group’s risk management
control and processes;
p act as a forum for discussion of internal control issues and contribute to the Board’s review of the effectiveness of the Group’s internal control and risk
management systems and processes;
p consider each year the need for an internal audit function;
p advise the Board on the appointment of external auditors and rotation of the audit partner every five years, and on their remuneration for both audit and non-
audit work, and discuss the nature and scope of their audit work;
p participate in the selection of a new external audit partner and agree the appointment when required;
p undertake a formal assessment of the auditors’ independence each year which includes:
– a review of non-audit services provided to the Group and related fees;
– discussion with the auditors of a written report detailing all relationships with the Company and any other parties that could affect independence or the
perception of independence;
– a review of the auditors’ own procedures for ensuring the independence of the audit firm and partners and staff involved in the audit, including the regular
rotation of the audit partner; and
– obtaining written confirmation from the auditors that, in their professional judgement, they are independent.
Meetings
The Committee meets prior to the annual audit with the external auditors to discuss the audit plan and again prior to the publication of the annual results. These
meetings are attended by the external audit partner and Company Secretary. Prior to bi-monthly Board meetings the members of the Committee meet on an
informal basis to discuss any relevant matters which may have arisen. Additional formal meetings are held as necessary.
During the past year the Committee:
p met with the external auditors, and discussed their report to the Audit Committee;
p approved the publication of annual and half-year financial results;
p considered and approved the annual review of internal controls;
p decided that due to the size and nature of operation there was not a current need for an internal audit function;
p agreed the independence of the auditors and approved their fees for both audit and non-audit services as set out in note 10 on page 55 of the financial
statements.
External auditors
BDO LLP held office throughout the year, and are assisted by a local office in Kazakhstan.
Ashar Qureshi
Chairman – Audit Committee
30 April 2021
174796 Altyn Annual Report 2020 Pt2_174796 Project Altyn Annual Report 2020 Pt2 04/05/2021 14:30 Page 29
AltynGold plc (formerly Altyn plc)
Annual Report 2020
REMUNERATION COMMITTEE –
CHAIRMAN’S STATEMENT
The Remuneration Committee presents its report for the year ended 31 December 2020 which is presented in two parts.
The first part is the annual remuneration report which details remuneration awarded to Directors and Non-Executive Directors during the year. The shareholders
will be asked to approve the annual remuneration report as an ordinary resolution (as in previous years) at the Annual General Meeting. Details in relation to voting
at last year’s AGM in relation to approval of the remuneration report and also the remuneration policy of the Company, (which is voted on tri-annually – to be
voted on in 2021) are detailed on pages 30 to 33.
The second part is the remuneration policy report which details the remuneration policy for Directors.
The policy is very much in line with the previous policy. The Remuneration Committee reviewed the existing policy and deemed no changes necessary to the
current arrangements.
Both of the above reports have been prepared in accordance with The Large and Medium-sized Companies and Groups (Accounts and Reports) (Amendment)
Regulations 2018.
The Company’s auditors, BDO LLP are required by law to audit certain disclosures and where disclosures have been audited, they are indicated as such.
Ashar Qureshi
Chairman – Remuneration Committee
30 April 2021
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30
AltynGold plc (formerly Altyn plc)
Annual Report 2020
ANNUAL REMUNERATION REPORT
Remuneration Committee
The Remuneration Committee currently comprises of two Directors - Ashar Qureshi and Vladimir Shkolnik. The Committee, which meets as required, is responsible
for determining the contract terms, remuneration and other benefits of the Executive Directors. The remuneration of the Non-Executive Directors is determined by
the Board within the limits set out in the articles of association. None of the Committee members has any personal financial interest in the matters to be decided
(other than as shareholders), potential conflicts of interest arising from cross-Directorships, or any day-to-day involvement in running the business. The Committee
has access to professional advice from inside and outside the Company at the Company’s expense. The remuneration committee considered and recommended
the appointment of Thomas Gallagher in the year.
Details of the remuneration paid in the year are shown below.
Approach to recruitment remuneration
All appointments to the Board are made on merit. The components of a new Director’s remuneration package (who is recruited within the life of the approved
remuneration policy) would comprise at present a base salary. The Company will pay such levels of remuneration to new Directors that would enable the
Company to attract appropriately skilled and experienced individuals that is not in the opinion of the Remuneration Committee excessive
Service contracts
All Executive Directors have full-time contracts of employment with the Company. Non-Executive Directors have contracts of service. No Director has a contract of
employment or contract of service with the Company, its joint venture or associated companies with a fixed term which exceeds three years. Directors’ notice
periods are set in line with market practice and of a length considered sufficient to ensure an effective handover of duties should a Director leave the Company.
All Directors’ contracts as amended from time to time, have run from the date of appointment. Service contracts are kept at the registered office.
Summary of Directors’ terms
unexpired Notice period
Date of contract term months
Executive Directors
Kanat Assaubayev
Aidar Assaubayev
Sanzhar Assaubayev
Non-Executive Directors
Ashar Qureshi
Vladimir Shkolnik
Thomas Gallagher
23 October 2017 Continuing 3
20 February 2013 Continuing 3
29 February 2017 Continuing 3
7 December 2015 Continuing 3
21 November 2018 Continuing 3
9 December 2020 Continuing 3
Policy on payment for loss of office
There are no contractual provisions agreed that could impact on a termination payment. Termination payments will be calculated in accordance with the existing
contract of employment or service contract. It is the policy of the Remuneration Committee to issue employment contracts to Executive Directors with normal
commercial terms and without extended terms of notice which could give rise to extraordinary termination payments.
Consideration of employment conditions elsewhere in the Group
In setting this policy for Directors’ remuneration the Remuneration Committee has been mindful of the Company’s objective to reward all employees fairly
according to their role, performance and market forces. In setting the policy for Directors’ remuneration the Remuneration Committee has considered the pay and
employment conditions of the other employees within the Group. No formal consultation has been undertaken with employees in drawing up the policy. The
Remuneration Committee has not used formal comparison measures.
Consideration of shareholder views
Shareholder views have been taken into account when formulating this policy, and was approved at the Annual General Meeting in 2018.
174796 Altyn Annual Report 2020 Pt2_174796 Project Altyn Annual Report 2020 Pt2 04/05/2021 14:31 Page 31
AltynGold plc (formerly Altyn plc)
Annual Report 2020
Remuneration
The total Directors fees and salaries of US$111,406 (2019 US$122,360) shown in the table below has been audited.
Directors salaries and fees 2020 2019
US$ US$
Executive Directors
Kanat Assaubayev – –
Aidar Assaubayev 38,400 38,400
Sanzhar Assaubayev – –
Non-Executive Directors
Ashar Qureshi 34,560 34,560
Vladimir Shkolnik 34,560 35,000
Neil Herbert* – 14,400
Thomas Gallagher (appointed 9 December 2020) 3,886 –
Total 111,406 122,360
*Neil Herbert resigned on 9 July 2019. During the year Neil Herbert was allotted shares totalling 10,429,930 at a value of US$75,000 in order to settle the balance of his outstanding remuneration.
The total amount remaining unpaid with respect to Directors’ remuneration amounted to US$52,000 (2019: US$149,000). The total directors’ remuneration for 2020
and 2019 includes only salaries and fees.
The remuneration levels will be in the range of US$140,000 in the forthcoming year.
Statement of implementation of remuneration policy in the following year
The policy was approved at the Annual General Meeting in June 2018, the policy is reviewed tri-annually.
The vote on the remuneration policy is binding in nature. The Company may not then make a remuneration payment or payment for loss of office to a person
who is, is to be, or has been a Director of the Company unless that payment is consistent with the approved remuneration policy, or has otherwise been approved
by a resolution of members.
Consideration by the Directors of matters relating to Directors’ remuneration
The Remuneration Committee considered the Executive Directors’ remuneration and the Board considered the Non-Executive Directors’ remuneration in the year
ended 31 December 2020. No increases were awarded and no external advice was taken in reaching this decision.
Shareholder voting
At the Annual General Meeting (AGM), in June 2021, there will be a vote on the resolution to approve the remuneration report, the Directors remuneration policy
is considered on a tri-annual basis with the next vote to be conducted in the year 2021. Details of the Directors remuneration policy can be found on the
Company’s website www.AltynGold.uk. The results of shareholder voting at the AGM’s on the 26 June 2020 and 27 June 2019 are shown below:
Votes in favour Votes against Votes in favour Votes against
No 000’s No 000’s No 000’s No 000’s No 000’s No 000’s
2020 2020 Maximum votes 2019 2019 Maximum votes
Voting to approve the Directors’ remuneration 1,794,081 278 2,579,264 1,953,033 732 2,567,675
Voting to approve the Directors’ remuneration policy n/a n/a n/a n/a n/a n/a
Members of the Remuneration Committee
The following Directors are members of the Remuneration Committee:
Ashar Qureshi and Vladimir Shkolnik.
Pension schemes and incentives
The Company does not operate a pension scheme.
Share option schemes
There are no share option schemes currently in the company.
Payments to past Directors
No payments were made to past Directors, except for the settlement of outstanding remuneration that was satisfied by the issue of shares as noted in the
remuneration table above.
Payments for loss of office
No payments for loss of office were made in the year ended 31 December 2020.
Statement of Directors’ shareholding and share interest
The interests of the Directors in the shares of the Company, including family and trustee holdings are disclosed on page 26 of the Annual Report.
Performance targets
There are no performance measure targets associated with the Directors Remuneration.
31
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32
AltynGold plc (formerly Altyn plc)
Annual Report 2020
ANNUAL REMUNERATION REPORT continued
Performance graph
The following information is unaudited.
Shown below is Altyn’s performance against the FTSE 350 mining index, which the Directors believe is the most appropriate market measure to judge the
performance of the Company against.
%
300
250
200
150
100
50
0
31/12/2008
31/12/2009
31/12/2010
31/12/2011
31/12/2012
31/12/2013
31/12/2014
31/12/2015
31/12/2016
31/12/2017
31/12/2018
31/12/2019
31/12/2020
FTSE 350 Mining Index
Altyn plc
Directors interest in shares and substantial shareholdings
The information which has been audited is disclosed on page 26 of the Directors’ Report.
Remuneration of the Chief Executive Officer over the last ten years
Aidar Assaubayev was appointed on 20 February 2013, replacing Timothy Daffern who was appointed on 5 November 2009. Included in the remuneration of
Timothy Daffern for the year 2013 is an amount of US$307,432 relating to a payment in respect of a change of control of the Company.
The table below demonstrates the remuneration of the Chief Executive Officer for the last ten years.
Total remuneration
Year Chief Executive Office US$000
2020 Aidar Assaubayev 38
2019 Aidar Assaubayev 38
2018 Aidar Assaubayev 83
2017 Aidar Assaubayev 201
2016 Aidar Assaubayev 215
2015 Aidar Assaubayev 175
2014 Aidar Assaubayev 82
2013 Timothy Daffern 626
2012 Timothy Daffern 282
2011 Timothy Daffern 271
2010 Timothy Daffern 535
174796 Altyn Annual Report 2020 Pt2_174796 Project Altyn Annual Report 2020 Pt2 04/05/2021 14:31 Page 33
AltynGold plc (formerly Altyn plc)
Annual Report 2020
Annual change in compensation for members of the Board and the remuneration of average employees over the last five years
In order to show a fair comparable of changes over the five year period the remuneration is presented in Pound Sterling.
2016 2017 2018 2019 2020
£ £ £ £ £
Remuneration fees Aidar Assaubayev
– appointed 25 February 2013
– Year-on-year difference – GBP£
– Year-on-year difference – %
Remuneration fees Neil Herbert
– appointed 29 February 2016, resigned 9 July 2019
– Year-on-year difference – GBP£
– Year-on-year difference – %
Remuneration of average employees
– Year-on-year difference – GBP£
– Year-on-year difference – %
156,000
156,000
61,500 30,000 30,000
–
–
27,000
–
–
91,278
–
–
–
–
(94,500) (31,500) –
(61) (51) –
77,983
50,983
189
36,486
(54,792)
(60)
22,500 11,250 –
(55,483) (11,250) –
(71) (50) –
48,344 – –
11,858 – –
33 – –
The following directors received remuneration of £27,000 per annum (pro-rata) from the date of their appointment to resignation if applicable:
p Ashar Qureshi (appointed 7 December 2012)
p Vladimir Shkolnik (appointed 22 November 2017)
p Alain Balian (appointed 23 October 2013, resigned 29 December 2017)
p Ken Crichton (appointed 23 October 2013, resigned 29 February 2016)
p William Trew (appointed 20 February 2013 resigned 14 July 2016)
Kanat Assaubayev and Sanzhar Assaubayev received no remuneration over the five year period.
Relative importance of spend on pay
The total expenditure of the Company on remuneration to all employees in shown in note 7 to the financial statements and in the table below.
2020 2019
Remuneration US$ US$
Directors emoluments 111 122
Employee salaries 1,909 1,829
Employer social tax and national insurance 528 217
Total 2,548 2,168
As the Company is currently not making distributions the relative importance of pay has been measured against debt repayments included in the consolidated
cash flow in the year. In 2020 the salaries represented 0.74 times the amount paid back in loan repayments in the year (2019:1.4 times).
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AltynGold plc (formerly Altyn plc)
Annual Report 2020
REMUNERATION POLICY REPORT
The remuneration policy of the Company was approved by a binding vote at the Annual General Meeting held on 29 June 2018, see details on page 31. As the
policy is determined tri-annually the next vote to determine the remuneration policy of Company will be in 2021.
At present the only remuneration payable to the Directors is that of a base salary, in setting the policy the Remuneration Committee has taken the following into
account:
p the need to attract, retain and motivate individuals of a calibre who will ensure successful leadership and management of the Company;
p the Company’s general aim of seeking to reward all employees fairly according to the nature of their role and their performance;
p remuneration packages offered by similar companies in the same sector;
p the need to align the interests of the shareholders with the long term growth and interests of the Company;
p the need to be flexible and adjust with operational changes throughout the term of the policy.
The remuneration of the Non-Executive Directors is determined by the Board, and takes into account additional remuneration for services outside the scope of the
ordinary duties of the Non-Executive Directors.
The details in relation to the Directors remuneration policy are available on the website www.altyngold.uk.
174796 Altyn Annual Report 2020 Pt2_174796 Project Altyn Annual Report 2020 Pt2 04/05/2021 14:31 Page 35
AltynGold plc (formerly Altyn plc)
Annual Report 2020
INDEPENDENT AUDITOR’S REPORT
to the members of AltynGold Plc
Opinion on the financial statements
In our opinion:
p the financial statements give a true and fair view of the state of the Group’s and of the Parent Company’s affairs as at 31 December 2020 and of the Group’s
profit for the year then ended;
p the Group financial statements have been properly prepared in accordance with international accounting standards in conformity with the requirements of
the Companies Act 2006;
p the Group financial statements have been properly prepared in accordance with international financial reporting standards adopted pursuant to Regulation
(EC) No 1606/2002 as it applies in the European Union;
p the Parent Company financial statements have been properly prepared in accordance with international accounting standards in conformity with the
requirements of the Companies Act 2006 and as applied in accordance with the provisions of the Companies Act 2006; and
p the financial statements have been prepared in accordance with the requirements of the Companies Act 2006; and, as regards the Group financial
statements, Article 4 of the IAS Regulation.
We have audited the financial statements of AltynGold Plc (the ‘Parent Company’) and its subsidiaries (the ‘Group’) for the year ended 31 December 2020 which
comprise the consolidated income statement, the consolidated statement of comprehensive income, the consolidated statement of financial position, the
parent company statement of financial position, the consolidated statement of changes in equity, the parent company statement of changes in equity, the
consolidated statement of cash flows, the parent company statement of cash flows and notes to the financial statements, including a summary of significant
accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and international accounting standards in
conformity with the requirements of the Companies Act 2006 and international financial reporting standards adopted pursuant to Regulation (EC) No 1606/2002
as it applies in the European Union, and as regards the Parent Company financial statements, as applied in accordance with the provisions of the Companies Act
2006.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards
are further described in the Auditor’s responsibilities for the audit of the financial statements section of our report. We believe that the audit evidence we have
obtained is sufficient and appropriate to provide a basis for our opinion. Our audit opinion is consistent with the additional report to the audit committee.
Independence
Following the recommendation of the audit committee, we were appointed by the Board of Directors on 26 March 2013 to audit the financial statements for the
year ending 31 December 2012 and subsequent financial periods. The period of total uninterrupted engagement including retenders and reappointments is 9
years, covering the years ending 31 December 2012 to 31 December 2020. We remain independent of the Group and the Parent Company in accordance with
the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard as applied to listed public
interest entities, and we have fulfilled our other ethical responsibilities in accordance with these requirements. The non-audit services prohibited by that standard
were not provided to the Group or the Parent Company.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the Directors’ use of the going concern basis of accounting in the preparation of the financial
statements is appropriate. Our evaluation of the Directors’ assessment of the Group’s and the Parent Company’s ability to continue to adopt the going concern
basis of accounting included:
p Reviewing cash flow forecasts for the period to June 2022 and challenging management on the key operating assumptions based on 2020 and 2021 actual
results and external data, where possible.
p Testing the integrity of the forecast model checking the accuracy and completeness of the model, including challenging the appropriateness of estimates
and assumptions with reference to empirical data and external evidence with specific focus on the following assumptions: gold price, production, costs, gold
grade, recoveries and foreign exchange rates and assessed their consistency with approved budgets and the mine development plan, as applicable.
p Comparing budgets to actual figures achieved to assess the reliability of management’s forecasts.
p Discussing the potential impact of COVID-19 with management and the Audit Committee including their assessment of risks and uncertainties. We formed
our own assessment of risks and uncertainties based on our understanding of the business and mining sector.
p Evaluating management’s sensitivity analysis and performing our own sensitivity analysis in respect of the key assumptions underpinning the forecasts. We
assessed the validity of any mitigating actions identified by Management.
p Confirming the terms of all borrowing facilities in place and reviewing the repayments to check these are accurately reflected in the cash flow forecast.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may
cast significant doubt on the Group’s and the Parent Company’s ability to continue as a going concern for a period of at least twelve months from when the
financial statements are authorised for issue.
Our responsibilities and the responsibilities of the Directors with respect to going concern are described in the relevant sections of this report.
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AltynGold plc (formerly Altyn plc)
Annual Report 2020
INDEPENDENT AUDITOR’S REPORT continued
to the members of AltynGold Plc
Overview
Coverage
100% (2019: 100%) of Group profit before tax
100% (2019: 100%) of Group revenue
99% (2019: 99%) of Group total assets
Key audit matters
2020 2019
Carrying value of intangible assets
Carrying value of property, plant & equipment
Going concern –
Materiality
Group financial statements as a whole
$1.07m (2019: $0.92m) based on 1.4% (2019: 1.4%) of total assets
An overview of the scope of our audit
Our Group audit was scoped by obtaining an understanding of the Group and its environment, including the Group’s system of internal control, and assessing the
risks of material misstatement in the financial statements. We also addressed the risk of management override of internal controls, including assessing whether
there was evidence of bias by the Directors that may have represented a risk of material misstatement.
Our group audit scope focused on DTOO Gornorudnoe Predpriatie Baurgold, which holds Sekisovskoye mine and TOO GMK Altyn MM, which holds the Teren-Sai
exploration project and contracts the sale of the Group’s gold, which were subject to a full scope audit with the audit work performed by overseas component
auditors under our direction and supervision. Together with the Parent company, which was also subject to a full scope audit, these represent the significant
components of the Group. The remaining component of the Group, Hambledon Mining Company Limited, was considered non-significant and we completed
analytical procedures for this intermediate holding company on an entity only basis to confirm there are no significant risks of material misstatements within this
entity.
All of the audits were conducted by BDO LLP and the BDO member firm in Kazakhstan. The BDO member firm performed the full scope audit of the significant
components in Kazakhstan, under the direction and supervision of the Group auditor.
Our involvement with component auditors
For the work performed by component auditors, we determined the level of involvement needed in order to be able to conclude whether sufficient appropriate
audit evidence has been obtained as a basis for our opinion on the Group financial statements as a whole. Our involvement with component auditors included the
following:
p Detailed group reporting instructions were sent to the component auditor, which included the significant areas to be covered by the audit (including areas
that were considered to be key audit matters as detailed above), and set out the information required to be reported to the group audit team.
p The Group audit team was actively involved in the direction of the audits performed by the component auditor for Group reporting purposes along with the
consideration of findings and determination of conclusions drawn. The Group audit team performed additional procedures in respect of certain of the
significant risk areas that represented Key Audit Matters in addition to the procedures performed by the component auditor.
p As part of our audit strategy, the senior manager of the Group audit team visited each of the principal operating locations in the year and met with
management in Kazakhstan.
p The Group audit team reviewed the component auditor’s work papers remotely, including review of group reporting documents, attended clearance meetings
virtually for the significant component and engaged with the component auditor regularly during their fieldwork and completion phases.
174796 Altyn Annual Report 2020 Pt2_174796 Project Altyn Annual Report 2020 Pt2 04/05/2021 14:31 Page 37
AltynGold plc (formerly Altyn plc)
Annual Report 2020
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial statements of the current period and
include the most significant assessed risks of material misstatement (whether or not due to fraud) that we identified, including those which had the greatest effect
on: the overall audit strategy, the allocation of resources in the audit, and directing the efforts of the engagement team. These matters were addressed in the
context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
Key audit matter
Carrying value of intangible assets
As detailed in note 4 and 14, the Group’s intangible assets represent historical geological data of $4.4m and exploration and
evaluation costs of $8.5m pertaining to the Teren-Sai ore fields, adjacent to the Group’s current mining licence area and
production facilities at Sekisovskoye, which are significant assets and total $12.9m at 31 December 2020.
Management was required to assess whether there was any indication that this asset may be impaired in accordance with
accounting standards. Management have carried out an assessment of impairment indicators during the year and
concluded that there are no indicators of impairment.
There are a number of estimates and judgements used by the management in assessing the indicators of impairment
including non-financial and financial data. Therefore, given the subjectivity involved in determining whether there is an
indication of impairment, the carrying value of the intangible assets is considered to be a key audit matter.
How the scope of our audit
addressed the key audit
matter
p We obtained and examined management’s assessment of impairment indicators in accordance with accounting
standards, including their use of an economic model and reference to an independent Competent Person’s Report, and
challenged the assumptions made by management in the economic model with reference to empirical data and
external evidence. We compared the assumptions to the independent Competent Person’s report and obtained the
rationale behind them.
p We read the correspondence, contracts and other documents regarding the subsoil exploration contract to confirm that
the Group has a contractual right for exploration in the Teren-Sai area. We considered the appropriateness of
management’s judgement that the subsoil exploration contract would be extended upon expiry in May 2022. We made
inquiries of management on the extension process and verified its consistency with the current subsoil use regulations.
p We considered other potential impairment triggers, such as the impact of COVID-19, noting that the exploration activities
continued through the period.
p We obtained and examined the exploration and evaluation results to date and ensured that drilling results indicated that
the area remains prospective and supports the geological data expectation.
p We reviewed management’s plans and budgets and ensured the Group is committed to the development of the project
and substantive expenditure on further exploration for and evaluation of mineral resources in the area is budgeted and
planned.
p We assessed the Group’s amortisation policy and useful life assessment.
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p We compared the reserves included in the models to the independent Competent Person’s report and performed
procedures to assess their independence and competence. We met with the Competent Person as part of this process
and ascertained there had been no limitations placed on them.
p We reviewed the economic model of the project and the forecast NPV of the Teren-Sai ore field project, which amounts
to $230m providing headroom over the carrying value of the asset. We undertook sensitivity analysis on the NPV model,
over gold grade, production volume, mining and processing costs, gold prices and discount rate and ensured that under
each scenario there is headroom above the carrying value.
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Key observations:
Our work did not indicate that management’s assessment that there are no indicators of impairment in respect of the
carrying value of intangible assets was unreasonable.
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AltynGold plc (formerly Altyn plc)
Annual Report 2020
INDEPENDENT AUDITOR’S REPORT continued
to the members of AltynGold Plc
Key audit matter
Carrying value of property, plant and equipment
As detailed in note 4 and 15, the Group’s property, plant and equipment represents its most significant assets and totals
$32.1m at 31 December 2020.
Management was required to assess whether there was any indication that the assets may be impaired in accordance with
accounting standards. Management have carried out an assessment of impairment indicators during the year and
concluded that there are no indicators of impairment.
Management’s assessment of the impairment indicators contained a number of key assumptions that required estimation
and judgements, including gold prices, gold reserves and production level, gold grade, exchange rates, cost assumptions
and discount rates. Given the subjectivity involved, the carrying value of property, plant and equipment is considered to
represent a key audit matter.
How the scope of our audit
addressed the key audit
matter
p We obtained and examined management’s assessment of impairment indicators in accordance with accounting
standards, including their use of an economic model and reference to an independent Competent Person’s Report, and
challenged the assumptions made by management in the economic model with reference to empirical data and
external evidence. We compared the assumptions to the independent Competent Person’s report and obtained the
rationale behind them.
p We compared the actual performance with the economic model and investigated material deviations and considered
whether these represented an indicator of impairment.
p We compared the actual performance during 2020 to budgets in order to assess the quality of management’s
forecasting.
p We visited the Sekisovskoye mine, observed and discussed the operations, operational results and mining processes with
the mine management and the chief geologist. We discussed the mine plan with the chief geologist who confirmed that
the reasons for the changes in production and gold grade in 2020 were in line with management’s assumptions
provided to us.
p Additionally, we compared the proven and probable reserves included in the models to the independent Competent
Person’s report and performed procedures to assess their independence, competence and scope. We met with the
Competent Person as part of this process and ascertained there had been no limitations placed on them.
p We reviewed the economic model of the project and the NPV of the Sekisovskoye mine, which amounts to $332m
providing headroom over the carrying value of the asset. We undertook sensitivity analysis on the NPV value over gold
grade, production volume, mining and processing costs, gold prices and discount rate and ensured that under each
scenario there is headroom above the carrying value.
p We assessed the reasonableness of the factors explained above and confirmed that in the ore bodies where there was
sufficient targeting and drilling equipment in place, the operational results met the expectations and supported the
model in place.
p We considered other potential impairment triggers, such as the impact of COVID-19, noting the mine continued to
operate during the period.
p We read the key licence agreements and confirmed that the Group holds valid licence. We assessed and obtained
evidence regarding the licence terms and minimum work programme requirements and considered the Group’s ability
to meet the requirements. We read correspondence with the authorities and discussed with management any instances
of non-compliance that could impact on legal title.
Key observations:
Our work did not indicate that management’s assessment that there are no indicators of impairment in respect of the
carrying value of property, plant and equipment was unreasonable.
Our application of materiality
We apply the concept of materiality both in planning and performing our audit, and in evaluating the effect of misstatements. We consider materiality to be the
magnitude by which misstatements, including omissions, could influence the economic decisions of reasonable users that are taken on the basis of the financial
statements.
In order to reduce to an appropriately low level the probability that any misstatements exceed materiality, we use a lower materiality level, performance materiality,
to determine the extent of testing needed. Importantly, misstatements below these levels will not necessarily be evaluated as immaterial as we also take account
of the nature of identified misstatements, and the particular circumstances of their occurrence, when evaluating their effect on the financial statements as a whole.
174796 Altyn Annual Report 2020 Pt2_174796 Project Altyn Annual Report 2020 Pt2 04/05/2021 14:31 Page 39
AltynGold plc (formerly Altyn plc)
Annual Report 2020
Based on our professional judgement, we determined materiality for the financial statements as a whole and performance materiality as follows:
Group financial statements
Parent company financial statements
2020
$m
1.07
2019
$m
0.92
2020
$m
0.80
2019
$m
0.69
1.4% of total assets
75% of group materiality
Materiality
Basis for determining
materiality
Rationale for the benchmark
applied
We have determined an assets based measure is appropriate as the Group is currently developing an underground mining
project that requires significant capital expenditure. It is consistent with our approach adopted in previous years.
Performance materiality
Basis for determining
performance materiality
60% of materiality considering the nature of activities and historic audit adjustments
0.64
0.55
0.48
0.41
Component materiality
We set materiality for each component of the Group based on a percentage of between 53% and 75% of Group materiality dependent on the size and our
assessment of the risk of material misstatement of that component. Component materiality ranged from $565,000 to $800,000. In the audit of each component,
we further applied performance materiality levels of 60% of the component materiality to our testing to ensure that the risk of errors exceeding component
materiality was appropriately mitigated.
Reporting threshold
We agreed with the Audit Committee that we would report to them all individual audit differences in excess of $21,000 (2019: $18,000). We also agreed to report
differences below this threshold that, in our view, warranted reporting on qualitative grounds.
Other information
The directors are responsible for the other information. The other information comprises the information included in the annual report other than the financial
statements and our auditor’s report thereon. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise
explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so,
consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise
appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this
gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material
misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
Other Companies Act 2006 reporting
Based on the responsibilities described below and our work performed during the course of the audit, we are required by the Companies Act 2006 and ISAs (UK)
to report on certain opinions and matters as described below.
Strategic report and
Directors’ report
In our opinion, based on the work undertaken in the course of the audit:
Directors’ remuneration
Matters on which we are
required to report by
exception
p the information given in the Strategic report and the Directors’ report for the financial year for which the financial
statements are prepared is consistent with the financial statements; and
p the Strategic report and the Directors’ report have been prepared in accordance with applicable legal requirements.
In the light of the knowledge and understanding of the Group and Parent Company and its environment obtained in the
course of the audit, we have not identified material misstatements in the strategic report or the Directors’ report.
In our opinion, the part of the Directors’ remuneration report to be audited has been properly prepared in accordance with
the Companies Act 2006.
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to
report to you if, in our opinion:
p adequate accounting records have not been kept by the Parent Company, or returns adequate for our audit have not
been received from branches not visited by us; or
p the Parent Company financial statements and the part of the Directors’ remuneration report to be audited are not in
agreement with the accounting records and returns; or
p certain disclosures of Directors’ remuneration specified by law are not made; or
p we have not received all the information and explanations we require for our audit.
39
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AltynGold plc (formerly Altyn plc)
Annual Report 2020
INDEPENDENT AUDITOR’S REPORT continued
to the members of AltynGold Plc
Responsibilities of Directors
As explained more fully in the statement of Directors’ responsibilities, the Directors are responsible for the preparation of the financial statements and for being
satisfied that they give a true and fair view, and for such internal control as the Directors determine is necessary to enable the preparation of financial statements
that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the Directors are responsible for assessing the Group’s and the Parent Company’s ability to continue as a going concern,
disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Directors either intend to liquidate the
Group or the Parent Company or to cease operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or
error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted
in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if,
individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
Extent to which the audit was capable of detecting irregularities, including fraud
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to
detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including
fraud is detailed below:
p We gained an understanding of the legal and regulatory framework applicable to the group and the industry in which it operates, and considered the risk of
acts by the group that were contrary to applicable laws and regulations, including fraud. These included, but were not limited to compliance with Companies
Act 2006 and international accounting standards.
p We held discussions with management and the audit committee to understand the laws and regulations relevant to the Group and company. These included
elements of the significant laws and regulations relating to the industry, financial reporting framework, listing rules, tax legislation and environmental
regulations in the UK and Kazakhstan;
p We held discussions with management and the audit committee to determine any known or suspected instances of non-compliance with laws and
regulations or fraud identified by them;
p Testing the appropriateness of journal entries made through the year by applying specific criteria to detect possible irregularities and fraud;
p Performing a detailed review of the Group’s year-end adjusting entries and investigating any that appear unusual as to nature or amount and agreeing to
supporting documentation;
p For significant and unusual transactions, particularly those occurring at or near year-end, obtaining evidence for the rationale of these transactions and the
sources of financial resources supporting the transactions;
p Assessing the judgements made by management when making key accounting estimates and judgements, and challenging management on the
appropriateness of these judgements (refer to key audit matters above);
p Extending inquiries to individuals outside of management and the accounting department to corroborate management’s ability and intent to carry out plans
that are relevant to developing the estimate set out in the key audit matters section above;
p Reviewing minutes from board meetings of those charges with governance to identify any instances of non-compliance with laws and regulations;
p Communicating relevant identified laws and regulations and potential fraud risks to all engagement team members and remained alert to any indications of
fraud or non-compliance with laws and regulations throughout the audit; and
p Directing the auditors of the significant components to ensure an assessment is performed on the extent of the components compliance with the relevant
local and regulatory framework.
Our audit procedures were designed to respond to risks of material misstatement in the financial statements, recognising that the risk of not detecting a material
misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment by, for example, forgery,
misrepresentations or through collusion. There are inherent limitations in the audit procedures performed and the further removed non-compliance with laws and
regulations is from the events and transactions reflected in the financial statements, the less likely we are to become aware of it.
A further description of our responsibilities is available on the Financial Reporting Council’s website at: www.frc.org.uk/auditorsresponsibilities. This description
forms part of our auditor’s report.
Use of our report
This report is made solely to the Parent Company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has
been undertaken so that we might state to the Parent Company’s members those matters we are required to state to them in an auditor’s report and for no other
purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Parent Company and the Parent Company’s
members as a body, for our audit work, for this report, or for the opinions we have formed.
Laura Pingree (Senior Statutory Auditor)
For and on behalf of BDO LLP, Statutory Auditor
London, UK
30 April 2021
BDO LLP is a limited liability partnership registered in England and Wales (with registered number OC305127).
174796 Altyn Annual Report 2020 Pt3_174796 Altyn Annual Report 2020 Pt3 04/05/2021 14:32 Page 41
AltynGold plc (formerly Altyn plc)
Annual Report 2020
41
CONSOLIDATED INCOME STATEMENT
for the year ended 31 December 2020
2020 2019
Note $000 $000
Revenue 5 30,032 14,908
Cost of sales (17,610) (12,390)
Gross profit 12,422 2,518
Administrative expenses (2,826) (2,600)
Share based payment 23 (2,400) –
Impairments 8 (34) 107
Operating profit 7,162 25
Foreign exchange (1,508) 116
Finance expense (2,324) (1,183)
Total finance cost 9 (3,832) (1,067)
Profit/(loss) before tax 10 3,330 (1,042)
Taxation expense 11 (392) (214)
Profit/(loss) for the year attributable to the equity holders of the parent 2,938 (1,256)
Profit/(loss) per ordinary share
Basic 11.27c (5.00c)*
Diluted 12 10.97c –
*The earnings per share calculation for 2019 has been restated to reflect the 100:1 consolidation of shares in 2020 see note 23 of the financial statements.
The notes on pages 48 to 71 form an integral part of these financial statements.
CONSOLIDATED STATEMENT OF COMPREHENSIVE
INCOME
for the year ended 31 December 2020
2020 2019
Note $000 $000
Profit/(loss) for the year 2,938 (1,256)
Items that may be reclassified subsequently to the income statement
Currency translation differences arising on translations of foreign operations (3,846) 129
Currency translation differences on translation of foreign operations relating to tax (1,011) (461)
(4,857) (332)
Total comprehensive loss for the year (1,919) (1,588)
Total comprehensive loss attributable to:
Equity holders of the parent (1,919) (1,588)
The notes on pages 48 to 71 form an integral part of these financial statements.
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42
AltynGold plc (formerly Altyn plc)
Annual Report 2020
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
as at 31 December 2020
2020 2019
Registration number: 05048549 Note $000 $000
Assets
Non-current assets
Intangible assets 14 12,849 12,943
Property, plant and equipment 15 32,092 30,316
Deferred tax assets 11 5,311 7,356
Trade and other receivables 18 6,700 6,048
Restricted cash 13 –
56,965 56,663
Current assets
Inventories 17 5,468 3,631
Trade and other receivables 18 7,182 3,615
Cash and cash equivalents 7,154 1,934
19,804 9,180
Total assets 76,769 65,843
Equity and liabilities
Current liabilities
Trade and other payables 19 (6,705) (7,553)
Provisions 21 (151) (130)
Loans and borrowings 22 (5,833) (2,550)
(12,689) (10,233)
Non-current liabilities
Vat payable 19 (230) (964)
Other payables 19 (492) (1,333)
Provisions 21 (4,763) (5,007)
Loans and borrowings 22 (23,260) (15,027)
(28,745) (22,331)
Total liabilities (41,434) (32,564)
Equity
Share capital 23 (4,267) (4,055)
Share premium (152,839) (151,476)
Merger reserve 282 282
Other reserves (333) (333)
Foreign currency translation reserve 52,959 48,102
Accumulated losses 68,863 74,201
Equity attributable to owners of the company (35,335) (33,279)
Total equity and liabilities (76,769) (65,843)
Approved by the Board on 30 April 2021 and signed on its behalf by:
Mr Aidar Assaubayev (Chief Executive Officer)
Director
Mr Sanzhar Assaubayev (Executive Director)
Director
The notes on pages 48 to 71 form an integral part of these financial statements.
174796 Altyn Annual Report 2020 Pt3_174796 Altyn Annual Report 2020 Pt3 04/05/2021 14:32 Page 43
AltynGold plc (formerly Altyn plc)
Annual Report 2020
43
COMPANY STATEMENT OF FINANCIAL POSITION
as at 31 December 2020
2020 2019
Registration number: 05048549 Note $000 $000
Assets
Non-current assets
Property, plant and equipment 15 – 67
Investments in subsidiaries 16 50,339 41,448
Loans due from subsidiaries 16 59,640 53,874
109,979 95,389
Current assets
Trade and other receivables 18 76 13
Cash and cash equivalents 6,316 1,787
6,392 1,800
Total assets 116,371 97,189
Equity and liabilities
Current liabilities
Trade and other payables 19 (297) (334)
Loans and borrowings 22 (2,917) (616)
(3,214) (950)
Non-current liabilities
Bonds 22 (9,317) (6,511)
Loans due to subsidiary (27,232) (16,975)
(36,549) (23,486)
Total liabilities (39,763) (24,436)
Equity
Share capital 23 (4,267) (4,055)
Share premium (152,839) (151,476)
Other reserves (333) (333)
Foreign currency translation reserve 16,338 16,338
Accumulated losses 64,493 66,773
Total equity (76,608) (72,753)
Total equity and liabilities (116,371) (97,189)
The parent Company is claiming the exemption under the Companies Act 2006 s408 not to present it’s individual income statement. The Company made a loss of
US$120,000 in the year (2019: profit of US$5.4m).
Approved by the Board on 30 April 2021 and signed on its behalf by:
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Mr Aidar Assaubayev (Chief Executive Officer)
Director
Mr Sanzhar Assaubayev (Executive Director)
Director
The notes on pages 48 to 71 form an integral part of these financial statements.
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44
AltynGold plc (formerly Altyn plc)
Annual Report 2020
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the year ended 31 December 2020
At 1 January 2019
Loss for the year
Other comprehensive loss
Total comprehensive loss
New share capital subscribed
At 31 December 2019
At 1 January 2020
Profit for the year
Other comprehensive income
Total comprehensive loss
New share capital subscribed
Share based payment charge
Share options exercised
Share
capital
$000
4,054
–
–
–
1
4,055
4,055
–
–
–
13
–
199
Currency Share based
Share Merger translation payment Other Accumulated Total
premium reserve reserve reserve reserves losses equity
$000 $000 $000 $000 $000 $000 $000
151,470 (282) (47,770) – 333 (72,945) 34,860
– – – – – (1,256) (1,256)
– – (332) – – – (332)
– – (332) – – (1,256) (1,588)
6 – – – – – 7
151,476 (282) (48,102) – 333 (74,201) 33,279
151,476 (282) (48,102) – 333 (74,201) 33,279
– – – – – 2,938 2,938
– – (4,857) – – – (4,857)
– – (4,857) – – 2,938 (1,919)
62 – – – – – 75
– – – 2,400 – – 2,400
1,301 – – (2,400) – 2,400 1,500
At 31 December 2020
4,267
152,839 (282) (52,959) – 333 (68,863) 35,335
Group Reserves
Share capital
Share premium
Merger reserve
Currency translation reserve
Other reserve
Share based payment reserve
Amount of the contributions made by shareholders in return for issue of shares at their nominal value.
Amount subscribed for share capital in excess of nominal value.
Reserve created on application of merger accounting under a previous GAAP.
Gains/losses arising on re-translating the net assets of overseas operations into US Dollars.
Amount of proceeds on issue of convertible debt relating to the equity component.
Amount relating to fair value on grant of share options.
The notes on pages 48 to 71 form an integral part of these financial statements.
174796 Altyn Annual Report 2020 Pt3_174796 Altyn Annual Report 2020 Pt3 04/05/2021 14:32 Page 45
AltynGold plc (formerly Altyn plc)
Annual Report 2020
45
COMPANY STATEMENT OF CHANGES IN EQUITY
for the year ended 31 December 2020
At 1 January 2019
Profit for the year
Total comprehensive income
New share capital subscribed
At 31 December 2019
At 1 January 2020
Loss for the year
Total comprehensive income
New share capital subscribed
Share based payment charge
Share options exercised
At 31 December 2020
Company Reserves
Share capital
Share premium
Currency translation reserve
Other reserve
Share based payment reserve
Currency Share based
Share Share translation payment Other Accumulated
capital premium reserve reserve reserves losses Total
$000 $000 $000 $000 $000 $000 $000
4,054 151,470 (16,338) – 333 (72,143) 67,376
– – – – – 5,370 5,370
– – – – – 5,370 5,370
1 6 – – – – 7
4,055 151,476 (16,338) – 333 (66,773) 72,753
4,055 151,476 (16,338) – 333 (66,773) 72,753
– – – – – (120) (120)
– – – – – (120) (120)
13 62 – – – – 75
– – – 2,400 – – 2,400
199 1,301 – (2,400) – 2,400 1,500
4,267 152,839 (16,338) – 333 (64,493) 76,608
Amount of the contributions made by shareholders in return for the issue of shares at their nominal value.
Amount subscribed for share capital in excess of nominal value.
Gains/losses arising on re-translating the net assets of overseas operations into US Dollars.
Amount of proceeds on issue of convertible debt relating to the equity component.
Amount relating to fair value on grant of share options.
The notes on pages 48 to 71 form an integral part of these financial statements.
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46
AltynGold plc (formerly Altyn plc)
Annual Report 2020
CONSOLIDATED STATEMENT OF CASH FLOWS
for the year ended 31 December 2020
2020 2019
Note $000 $000
Cash flows from operating activities
Net cash flow from operating activities 24 4,245 (2,832)
Cash flows from investing activities
Acquisitions of property plant and equipment (8,559) (7,180)
Proceeds from sale of property plant and equipment – 20
Acquisition of intangible assets 14 (1,271) (552)
Proceeds from test production 165 –
Net cash flows from investing activities (9,665) (7,712)
Cash flows from financing activities
Loans received 16,903 14,089
Proceeds of share issue 1,500 –
Interest paid 24 (3,740) (193)
Loans repaid (3,431) (1,523)
Commission charge (588) –
Net cash flows from financing activities 10,644 12,373
Net increase in cash and cash equivalents 5,224 1,829
Cash and cash equivalents at 1 January 1,934 105
Effect of exchange rate fluctuations on cash held (4) –
Cash and cash equivalents at 31 December 7,154 1,934
The notes on pages 48 to 71 form an integral part of these financial statements.
174796 Altyn Annual Report 2020 Pt3_174796 Altyn Annual Report 2020 Pt3 04/05/2021 14:33 Page 47
AltynGold plc (formerly Altyn plc)
Annual Report 2020
47
COMPANY STATEMENT OF CASH FLOWS
for the year ended 31 December 2020
2020 2019
Note $000 $000
Cash flows from operating activities
Net cash outflow from operating activities 24 (749) (860)
Net cash flow from operating activities (749) (860)
Cash flows from investing activities
Loans paid to subsidiaries (700) (398)
Loans repaid by subsidiaries 500 354
Net cash flows from investing activities (200) (44)
Cash flows from financing activities
Loans received 8,578 3,054
Proceeds from issue of ordinary shares, net of issue costs 1,500 –
Interest repaid (2,233) (160)
Loans repaid (1,779) (268)
Commission charge (588) –
Net cash flows from financing activities 5,478 2,626
Net increase in cash and cash equivalents 4,529 1,722
Cash and cash equivalents at 1 January 1,787 65
Cash and cash equivalents at 31 December 6,316 1,787
The notes on pages 48 to 71 form an integral part of these financial statements.
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AltynGold plc (formerly Altyn plc)
Annual Report 2020
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 December 2020
1 General information
AltynGold Plc (the “Company”) is a Company incorporated in England and Wales under the Companies Act 2006. The address of its registered office, and place of
business of the Company and its subsidiaries is set out within the Company information on page 78 of this annual report. The principal activities of the Company
and subsidiaries are set out on page 24 and the strategic review within this annual report.
2 Basis of preparation
The annual report is for the year ended 31 December 2020 and includes the consolidated and parent company’s financial statements prepared in accordance with
international financial reporting standards adopted pursuant to Regulation (EC) in conformity with the requirements of the Companies Act 2006. The financial
statements have been prepared using accounting policies set out in note 4 which are consistent with all applicable IFRSs and with those parts of the Companies
Act 2006 applicable to companies reporting under IFRSs. For these purposes, IFRSs comprises the standards issued by the International Accounting Standards
Board and interpretations issued by the International Financial Reporting Interpretations Committee. The financial statements have been prepared under the
historical cost convention, except for the adjustment in relation to the fair value of the derivative element included in the bond raised with African Resources
Limited see note 22 loans and borrowings, and on a going concern basis.
Going concern
During the year the Group obtained additional funding principally from a mixture of placing bonds on the Astana International Exchange, an additional US$7.4m
and obtaining further funds from the term loans from a Kazakhstan based bank that were agreed in 2019 of US$8.3m. In total these increased the loans and
borrowings from US$17.6m in 2019 to the current level of US$29.1m. The funds were utilised to purchase equipment and to provide working capital to expand
and develop the mining site at Sekisovskoye. The Group increased sales from US$14.9m to US$30.0m during 2020, resulting in an increase in adjusted EBITDA from
US$3.4m to US$13.5m. This provided positive funding to the Group in the year, and is expected to continue at increasing levels in the future.
At the year-end the Group had cash resources of US$7.2m (2019: US$1.9m) available. In December 2020 the Company agreed additional bank facilities with Bank
Center Credit in the amount of US$5.5m, of which US$1.9m is available to fund working capital and the balance is required to be used for investment into new
machinery. Of this facility US$1.0m was drawn down in December 2020.
The Board have reviewed the Group’s forecast cash flows for the period to June 2022, which include the capital and interest repayments to be made in relation to
the Group’s borrowings. Capital and operating costs are based on approved budgets and latest forecasts in the case of 2021 and current development plans in the
case of 2022. Based on the Group’s cash flow forecasts, the Directors believe that the combination of its current cash balances, net cash flows from operations, and
increased production based on projections of future growth, are sufficient for the Company to achieve its current plans and meet its cash flow requirements.
The Group has operated in the most difficult time of the COVID-19 pandemic, and experienced little impact on its ability to trade and grow the business. However
management are keenly aware that the situation may change and have factored any potential impacts into its future business plans. The initial impact of COVID-19
was felt in March 2020 when Kazakhstan and the UK went into lockdown. The Group was quick to adapt and allowed office workers to use remote technology to
perform their duties. In relation to the mine, mining operations were designated by the government to be a key industry. This ensured that production and
transport of dore to the refinery could continue as normal. The Group adapted working conditions and patterns of working, to ensure that production continued
in a safe working environment. The Group has also ensured that adequate stocks are being maintained of parts and consumables in order to prevent any
disruption to production. COVID-19 is still an ongoing issue in Kazakhstan and indeed in many countries, however the Management believe the procedures they
have in place, such as shift working at the mine, remote working, advance ordering of supplies and consumables, together with the support of the government
will ensure that future production will continue.
The Board have considered possible stress case scenarios that they consider may be likely to impact on the Group’s operations, financial position and forecasts.
Factors considered are operational disruptions, such as illness amongst the workforce, disruption to supply chain and possible impact on the price of gold if this
was to fall to pre COVID-19 levels. From the analysis undertaken the Board have concluded that Group will be able to continue to trade by the careful
management of its existing resources. The stress tests included the following scenarios amongst others, a fall in the gold price by 18% from current levels, a drop in
budgeted production by 20% or a combination of both factors together. In each case the Group would not experience a cash shortfall in either scenario. If
required the Group would manage its resources, reducing investment and managing its payables in order to maintain liquidity.
The Board therefore considers it is appropriate to adopt the going concern basis of accounting in preparing these financial statements.
3 Adoption of new and revised standards
A number of new standards, amendments to standards and interpretations, are effective for annual periods beginning on or after 1 January 2020. They have been
adopted and applied in preparing these financial statements.
The new standards include:
–
–
–
–
–
–
IAS 1 Presentation of Financial Statements and IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors (Amendment – Definition of Material)
IFRS 3 Business Combinations (Amendment – Definition of Business)
Revised Conceptual Framework for Financial Reporting
IAS 1 Presentation of Financial Statements to clarify how to classify debt and other liabilities as current or non-current.
Interest Rate Benchmark Reform – IBOR ‘phase 2’ (Amendments to IFRS 9, IAS 39 and IFRS 7); and
COVID-19-Related Rent Concessions (Amendments to IFRS 16).
174796 Altyn Annual Report 2020 Pt3_174796 Altyn Annual Report 2020 Pt3 04/05/2021 14:33 Page 49
AltynGold plc (formerly Altyn plc)
Annual Report 2020
49
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3 Adoption of new and revised standards continued
The adoption of the standards has not had an impact on the Company’s financial statements.
The following new standards, and amendments to standards, are effective for annual periods beginning after 1 January 2022 and have not been applied in
preparing these financial statements:
The following amendments are effective for the period beginning 1 January 2022:
p Onerous Contracts – Cost of Fulfilling a Contract (Amendments to IAS 37);
p Property, Plant and Equipment: Proceeds before Intended Use (Amendments to IAS 16);
p Annual Improvements to IFRS Standards 2018-2020 (Amendments to IFRS 1, IFRS 9, IFRS 16 and IAS 41); and
p References to Conceptual Framework (Amendments to IFRS 3).
The Company is reviewing the new standards, amendments to standards and interpretations as noted above which are effective from 1 January 2022 to assess the
potential impact on the financial statements. They have not been applied in preparing these financial statements.
4 Accounting policies
Basis of consolidation
Where a company has control over an investee, the investee is classified as a subsidiary. A company controls an investee if all three of the following elements are
present: power over the investee, exposure to variable returns from the investee, and the ability of the investor to use its power to affect those variable returns.
Control is reassessed whenever facts and circumstances indicate that there may be a change in any of these elements of control.
The consolidated financial statements present the results of the company and its subsidiaries (“the Group”) as if they formed a single entity. Intercompany
transactions and balances between group companies are therefore eliminated in full.
The consolidated financial statements incorporate the results of business combinations using the acquisition method. In the statement of financial position, the
acquiree’s identifiable assets, liabilities and contingent liabilities are initially recognised at their fair values at the acquisition date. The results of acquired operations
are included in the consolidated statement of comprehensive income from the date on which control is obtained. They are de-consolidated from the date on
which control ceases.
Revenue recognition
Revenue represents amounts received for goods provided in the normal course of business, net of VAT and any other sales related taxes.
The Company’s revenue is generated entirely from the sale of the gold and silver (“Precious Metal”) content of doré. The doré was delivered to a precious metal
refiner, based in Kazakhstan during 2020 and 2019, which also purchased all precious metal that was refined. Title of the precious metal passes upon acceptance of
the delivery from the Company to the refiner. Sales of precious metal are only recognised when the delivery has been accepted and title for the precious metal has
accordingly been passed to the refiner. The Company does not hedge or otherwise enter into any derivatives in respect of its sales of doré. Sales are recorded at
the actual selling price of the doré which is based on current market prices. The Company receives 90% less fees of the revenue on delivery of the dore to the
refiner based on the spot dollar and gold and silver prices on the day of delivery. The balance is paid once the dore is refined into gold or silver and is usually paid
within 14 days, based on the original gold price or silver price and spot price of the US dollar on the day of settlement.
Foreign currencies
The Company has prepared its financial statements in United States Dollars (US$). The functional currency of the companies in Kazakhstan is the Kazakhstan Tenge
(KZT). The functional currency of the Company and Hambledon Mining Company Limited is the United States Dollars (US$).
The rates used to convert Pound Sterling and Kazakhstan Tenge into United States Dollar in these financial statements are as follows:
US$ to Pound Sterling closing 1.37 ( 2019: 1.33) average 1.28 (2019: 1.28),
US$ to Kazakh Tenge closing 420.91 (2019: 382.59) average 412.95 (2019: 382.75).
The year end and average rates used for the Kazakh Tenge have been obtained from the National Bank of Kazakhstan.
Transactions denominated in currencies other than the functional currency of each respective entity are recorded at the rate of exchange prevailing at the date of
the transaction. Monetary assets and liabilities are translated into the relevant functional currency at the closing rates of exchange at the reporting date. Exchange
differences arising from the restatement of monetary assets and liabilities at the closing rate of exchange at the reporting date or from the settlement of monetary
transactions at a rate different from that at which the asset or liability was recorded are dealt with through the statement of profit or loss.
On consolidation, the results of overseas operations are translated into US dollars, the presentation currency, at rates approximating to those ruling when the
transactions took place. All assets and liabilities of overseas operations are translated at the rate ruling at the balance sheet date. Exchange differences arising on
translating the opening net assets at the opening rate and the results of overseas operations at the actual rate are recognised directly in the consolidated
statement of other comprehensive income. The intercompany loans form a part of the Company’s investment in a foreign operation. The exchange difference
arising on the intercompany loans on translation in the company income statement is being recognised in other comprehensive income which on consolidation is
recognised in a separate component of equity until disposal of the foreign operations.
In the individual parent company financial statements foreign exchange losses are recognised in the income statement.
174796 Altyn Annual Report 2020 Pt3_174796 Altyn Annual Report 2020 Pt3 04/05/2021 14:33 Page 50
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AltynGold plc (formerly Altyn plc)
Annual Report 2020
NOTES TO THE FINANCIAL STATEMENTS continued
for the year ended 31 December 2020
4 Accounting policies continued
Intangible assets
Externally acquired intangible assets are initially recognised at cost and subsequently amortised on a straight-line basis over their expected economic life. In the
Directors’ opinion of 10 years from May 2016, being the licenced period of the Teren-Sai exploration project. There is no effect on the income statement as
amortisation costs of the geological data are capitalised in line with the accounting policy on exploration and evaluation costs.
Exploration and evaluation costs
All costs incurred prior to obtaining the legal right to undertake exploration and evaluation activities on a project are written off as incurred. All costs associated
with mineral exploration and investments are capitalised on a project by project basis, pending determination of the feasibility of the project. Costs incurred
include appropriate technical and administrative expenses. If an exploration project is successful and the project is determined to be commercially viable, the
related costs will be transferred to mining assets and amortised over the estimated life of the mineral reserves on a unit of production basis. Where a project is
relinquished, abandoned, or is considered to be of no further commercial value to the Group, the related costs are written off. Impairment reviews performed
under IFRS 6 ‘Exploration for and evaluation of mineral resources’ are carried out on a project by project basis, with each project representing a potential single cash
generating unit. An impairment review is undertaken when indicators of impairment arise; typically when one of the following circumstances applies:
p sufficient data exists that render the resource uneconomic and unlikely to be developed
p title to the asset is compromised
p budgeted or planned expenditure is not expected in the foreseeable future
p insufficient discovery of commercially viable resources leading to the discontinuation of activities.
Property, plant and equipment
Mining properties comprise previously capitalised exploration, evaluation and development expenditure incurred during the exploration and development stages
of the Company’s mining projects.
Other items of property, plant and equipment are initially recognised at cost. As well as the purchase price, cost include directly attributable costs and estimated
present value of any future unavoidable costs of dismantling and removing items. The corresponding liability is recognised within provisions.
Assets under construction represent assets under development that are not at the stage that can be used commercially to generate revenues, no depreciation is
applied to these assets.
Depreciation
Depreciation of property, plant and equipment is calculated on a straight line or units of production basis, as appropriate. Assets are fully depreciated over their
economic lives, or over the remaining life of the mine if shorter.
Assets under construction and freehold land are not depreciated.
Asset class
Buildings
Equipment, fixtures and fittings
Plant, machinery and vehicles
Mining properties
Depreciation method and rate
8-10 per cent per annum
10-40 percent per annum
7-30 per cent. per annum
Unit of production based on the proven reserves
Impairment of non-current assets
Property, plant and equipment and intangible assets are assessed for impairment at each reporting date when events or a change in circumstances suggest that
the carrying amount of an asset may exceed the recoverable amount.
Where there has been an indication of a possible impairment, management assesses the recoverability of the carrying value of the asset by comparing it with the
estimated discounted future net cash flows generated by the asset based on management’s expectation of future production and selling prices. Any identified
impairment is charged to the statement of profit or loss.
Where an impairment loss subsequently reverses, the carrying amount of the asset is increased to the revised estimate of its recoverable amount but such that the
increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset in prior
years.
A reversal of impairment loss is recognised in the profit or loss immediately.
174796 Altyn Annual Report 2020 Pt3_174796 Altyn Annual Report 2020 Pt3 04/05/2021 14:33 Page 51
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4 Accounting policies continued
Inventories
Inventories are valued at the lower of cost or net realisable value. Net realisable value represents the estimated selling price less all estimated costs of completion
and costs to be incurred in marketing, selling and distribution.
Costs incurred in bringing each product to its present location and condition are accounted for as follows:
Spare parts and consumables
– Purchase costs on a first in, first out basis
Ore stockpiles, work in progress and finished gold
– Dependent on the current stage in the production cycle, the cost will reflect cost of direct materials, power,
labour and a proportion of overhead, to bring the product to its current state
Taxation
The tax expense represents the sum of the tax currently payable and deferred tax.
The tax currently payable is based on the taxable profit for the year. Taxable profit differs from net profit as reported in the statement of profit or loss because it
excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The
Company’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting date.
Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities in the financial statements and
the corresponding tax bases used in the computation of taxable profit and is accounted for by using the balance sheet liability method. Deferred tax liabilities are
generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be
available against which deductible temporary differences can be utilised. Such assets and liabilities are not recognised if the temporary difference arises from the
initial recognition of goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither
the taxable profit nor the accounting profit. Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries and
associates, and interests in joint ventures except where the Company is able to control the reversal of the temporary difference and it is probable that the
temporary difference will not reverse in the foreseeable future.
The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profits
will be available to allow all or part of the asset to be recovered. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability
is settled or the asset is realised. Deferred tax is charged or credited in the income statement, except when it relates to items charged to other comprehensive
income or credited directly to equity, in which case the deferred tax is also dealt within equity. Deferred tax assets and liabilities are offset when there is a legally
enforceable right to set off current tax assets against current tax liabilities and when they relate to income taxes levied by the same taxation authority and the
Group intends to settle its current tax assets and liabilities on a net basis.
Deferred income tax is recognised on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated
financial statements and on unused tax losses or tax credits in the group. Deferred income tax is determined using tax rates and laws that have been enacted or
substantively enacted by the reporting date.
Financial Instruments
Financial assets and financial liabilities are recognised in the consolidated statement of financial position when the Group becomes party to the contractual
provisions of the instrument.
Trade and other receivables
Trade and other receivables are recognised initially at their transaction price in accordance with IFRS 9 and are subsequently measured at amortised cost. The
Group applies the simplified approach to providing for expected credit losses (ECL) prescribed by IFRS 9, which permits the use of the lifetime expected loss
provision for all trade receivables measured on a collection basis. Expected credit losses are assessed on a forward looking basis, using information such as the
expected future currency, commodity and inflation rates. The loss allowance is measured at initial recognition and throughout its life at an amount equal to
lifetime ECL. Any impairment is recognised in the income statement.
Cash and cash equivalents
Cash and cash equivalents comprise cash in hand and demand deposits, and other short-term highly liquid investments with original maturities of less than three
months and which are readily convertible to a known amount of cash and are subject to an insignificant risk of change in value; for the purposes of statement of
cash flow.
Investments
Investment in subsidiaries are included at cost less impairment.
Loans and receivables from subsidiaries
Loans to subsidiary undertakings are subject to IFRS 9 expected credit loss model. The intercompany loans are repayable on a deferred basis, and a three year
notice of repayment can only be given after full repayment of the Bank Center Credit loan, which is repayable on October 2026. The earliest the loans can be
repaid is October 2029.
The intercompany loans at present are considered to be in stage 2, and have been assessed as indicated in the IFRS 9 ECL model, with extensions being made on
the repayment terms of the original loans that were given. As the loans are considered to be in stage 2 a lifetime ECL is determined using all relevant, reasonable
and supportable historical, current and forward-looking information that provides evidence about the risk that the subsidiaries will default on the loan and the
amount of losses that would arise as a result of that default.
174796 Altyn Annual Report 2020 Pt3_174796 Altyn Annual Report 2020 Pt3 04/05/2021 14:33 Page 52
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AltynGold plc (formerly Altyn plc)
Annual Report 2020
NOTES TO THE FINANCIAL STATEMENTS continued
for the year ended 31 December 2020
4 Accounting policies continued
Financial liabilities
The Group classifies its financial liabilities into one of two categories discussed below, depending on the purpose for which the liability was acquired.
Financial liabilities at fair value through profit or loss
Financial liabilities at fair value through profit or loss comprise only the conversion option related to $10m loan note classified as derivative financial liability. They
are carried in the consolidated statement of financial position at fair value with changes in fair value recognised in the consolidated income statement. Other than
these derivative financial instruments, the Group does not have any liabilities held for trading nor has it designated any other financial liabilities as being at fair
value through profit or loss.
Other financial liabilities
Other financial liabilities comprise borrowings, trade payables and other short-term monetary liabilities. These are initially measured at fair value and subsequently
recognised at amortised cost using effective interest rate method.
Derecognition of financial liabilities
Financial liabilities are derecognised when, and only when, the Group’s obligations are discharged, cancelled, or they expire.
Fair value measurement hierarchy
The Group classifies its financial assets and financial liabilities measured at fair value using a fair value hierarchy that reflects the significance of the inputs used in
making the fair value measurement. The fair value hierarchy has the following levels:
p quoted prices (unadjusted) in active markets for identical assets or liabilities (Level 1);
p inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from
prices) (level 2);
p inputs for the asset or liability that are not based on observable market data (unobservable inputs) (Level 3);
p the level in the fair value hierarchy within the financial asset or financial liability is determined on the basis of the lowest level input that is significant to the fair
value measurement.
Compound instruments
The component parts of compound instruments (convertible notes and loans with detachable warrants) issued by the Company are classified separately as
financial liabilities and equity in accordance with the substance of the contractual arrangements and the definitions of a financial liability and an equity instrument.
A conversion option that will be settled by the exchange of a fixed amount of cash for a fixed number of the Company’s own equity instruments is an equity
instrument.
At the date of issue, the fair value of the liability component is estimated using the prevailing market interest rate for similar non convertible instruments. This
amount is subsequently recorded as a liability on an amortised cost basis using the effective interest method until extinguished upon conversion or at the
instrument’s maturity date.
The conversion option or detachable warrant classified as equity is determined by deducting the amount of the liability component from the fair value of the
compound instrument as a whole. This is recognised and included in equity, net of income tax effects, and is not subsequently re-measured. Gains or losses are
recognised in profit or loss upon conversion or expiration of the conversion option.
Transaction costs that relate to the issue of the compound instruments are allocated to the liability and equity components in proportion to the fair value of the
debt and equity components. Transaction costs relating to the equity component are recognised directly in equity. Transaction costs relating to the liability
component are included in the carrying amount of the liability component and are amortised over the lives of the compound instruments using the effective
interest method.
Share capital
Financial instruments used by the Group are classified as equity only to the extent that they do not meet the definition of a financial liability or financial asset. The
Company’s ordinary shares are classified as equity instruments and are recorded at proceeds received, net of direct issue costs.
Provision for commitments and contingencies
Provisions are recognised when the Company has a present obligation at the reporting date, which occurred as a result of a past event, and it is probable that the
Company will be required to settle that obligation and the amount of the obligation can be reliably estimated.
Possible obligations that are less than probable, and commitments to make purchases and incur expenditure in future periods, are not recognised as provisions
but are disclosed as commitments and contingencies.
Provision for site rehabilitation and decommissioning costs and the associated asset is recorded at the present value of the expected expenditure required to settle
the Company’s future obligations. Actual outcomes may vary. Details regarding the provision for site rehabilitation and decommissioning costs are set out in note
21 to the financial statements.
174796 Altyn Annual Report 2020 Pt3_174796 Altyn Annual Report 2020 Pt3 04/05/2021 14:33 Page 53
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Annual Report 2020
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4 Accounting policies continued
Critical accounting judgements and key sources of estimation uncertainty
In the application of the Company’s accounting policies, the Directors have made judgements and estimates that may have a significant effect on the amount
recognised in the financial statements. These include:
p carrying value of property, plant and equipment, including estimates made in respect of reserves and resources, discount rate and future gold prices (note 15):
Costs capitalised as mining assets in property, plant and equipment are assessed for impairment when circumstances suggest that the carrying value may
exceed its recoverable value. As part of this assessment, management has not carried out an impairment test, as no indicators of impairment have been
identified. This test compares the carrying value of the assets at the reporting date with the expected discounted cash flows. For the discounted cash flows to
be calculated, management has used a production profile based on its best estimate of proven and probable reserves of the assets and a range of
assumptions, including an estimated price of gold and a discount rate which, taking into account other assumptions used in the calculation, management
considers to be reflective of the risks. This assessment involves judgement as to (i) the likely commerciality of the asset, (ii) proven, probable reserves which are
estimated, (iii) future revenues and estimated development costs pertaining to the asset, (iv) the discount rate to be applied for the purposes of deriving a
recoverable value, (v) the likelihood of the licence being revoked due to outstanding obligations under license commitments as detailed in note 21.
There were no impairment indicators identified, therefore a full impairment test was not carried out.
p recoverability of inventories (note 17):
The recoverability of inventories is dependent upon the future production of the Company, and future prices achievable, which will determine if any provision
is required against inventories. The directors have assessed the impairment indicators, and made judgements in reflection to future prices achievable and
production and make impairments as appropriate.
p carrying value of provisions (note 21):
Estimates of the cost of future decommissioning and restoration of production facilities are based on current legal and constructive requirements, technology
and price levels, while estimates of when decommissioning will occur depend on assumptions made regarding the economic life of fields which in turn
depend on such factors as gold prices, decommissioning costs, discount rates and inflation rates. The management reviewed the estimation process and the
basis for the principal assumptions underlying the cost estimates, noting in particular the reasons for any major changes in estimates as compared with the
previous year. The Company was satisfied that the approach applied was fair and reasonable. The Company was also satisfied that the discount and inflation
rates used to calculate the provision were appropriate.
p recognition of deferred taxation assets (note 11):
Deferred tax assets are recognised only to the extent it is considered probable that those assets will be recoverable. This involves an assessment of when those
deferred tax assets are likely to reverse, and a judgement as to whether or not there will be sufficient taxable profits available to offset the tax assets when they
do reverse. This requires assumptions regarding future profitability and is therefore inherently uncertain. To the extent assumptions regarding future profitability
change, there can be an increase or decrease in the level of deferred tax assets recognised that can result in a charge or credit in the period in which the
change occurs.
p carrying value of intangible assets (note 14):
The carrying value for intangible exploration and evaluation assets, represent the costs of active exploration projects the commerciality of which is unevaluated
until reserves can be appraised. Where properties are appraised to have no commercial value, the associated costs are treated as an impairment loss in the
period in which the determination is made. The recoverability of intangible exploration assets is assessed by comparing the carrying value to estimates of the
present value of projects where indicators of impairment have been identified on an asset. The present values of intangible exploration assets are inherently
judgmental. Exploration and evaluation costs will be written off to the income statement unless commercial reserves are established or the determination
process is not completed and there are no indications of impairment. The outcome of ongoing exploration, and therefore whether the carrying value of
exploration and evaluation assets will ultimately be recovered, is inherently uncertain.
There were no impairment indicators identified, therefore a full impairment test was not carried out.
p Provision for taxation (note 11 and 18)
Management make judgements in relation to the recognition of various taxes payable by the Group and VAT recoverability for which the recoverability and
timing of recovery is assessed. The Group operates in jurisdictions which necessarily require judgement to be applied when assessing the applicable tax
treatment for transactions and the Group obtains professional advice where appropriate to ensure compliance with applicable legislation.
p Estimation of credit losses (note 16)
The management make judgements in relation to the future recoverability of receivables, in relation to the parent Company there are substantial loans to the
subsidiaries. The management has used the guidance as noted in IFRS9 to make judgements in relation to the future risk of default, the ability of the Company
to achieve its production targets and achieve a sufficient level of profits to repay the loans, inherent in this model are a number of judgements. The
management has estimated that a provision was required of US$31.7m at the year end (2019: US$31.9m).
p Extension of Teren-Sai licence (note 14)
The management will make an application to extend the exploration licence at Teren-Sai, which is to be extended by 5 years to 2027, however the likelihood of
the licence ultimately being extended is dependent on the Company satisfying the conditions required for renewal. Inherent in this process for the application
for renewal and beyond are judgements of determining if the conditions can be satisfied.
174796 Altyn Annual Report 2020 Pt3_174796 Altyn Annual Report 2020 Pt3 04/05/2021 14:33 Page 54
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AltynGold plc (formerly Altyn plc)
Annual Report 2020
NOTES TO THE FINANCIAL STATEMENTS continued
for the year ended 31 December 2020
5 Revenue
The analysis of the group’s revenue for the year from continuing operations is as follows:
2020 2019
$000 $000
Sale of gold and silver 29,790 14,623
Other sales 242 285
30,032 14,908
Included in revenues from sale of gold and silver are revenues of US$29,790,000 (2019: US$14,623,000) which arose from sales of precious metals to one customer
based Kazakhstan. Other sales amounted to US$242,000 (2019: US$285,000) and related to lease and rental income.
6 Segmental information
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker. The chief operating decision
maker, who is responsible for allocating resources and assessing performance of the operating segments and making strategic decision, has been identified as the
Board of Directors.
The Board of Directors consider there to be two operating segments, the exploration and development of mineral resources at Sekisovsskoe and at Teren-Sai, both
based in one geographical segment, being Kazakhstan. All sales were made in Kazakhstan from the mine at Sekisovskoye. However in relation to Teren-Sai as there
is discrete financial information available and the assets account for greater than 10% of the combined total assets of all segments it is considered to be a separate
operating segment.
Teren-Sai is an exploration asset, details of the carrying value of the asset are shown in note 14.
7 Staff number and costs
Group
The aggregate remuneration comprised:
2020 2019
US$000 US$000
Directors’ emoluments 111 122
Employee wages and salaries 1,909 1,829
Employer social tax and national insurance 528 217
2,548 2,168
The average number of employees (including Directors) was
2020 2019
Production 301 239
Administration 88 58
389 297
Company
The average number of employees (including Directors) was:
2020 2019
Administration 6 6
The aggregate remuneration comprised:
2020 2019
US$000 US$000
Directors’ emoluments 111 122
Employee wages and salaries – 5
Employer social tax and national insurance 2 8
113 135
174796 Altyn Annual Report 2020 Pt3_174796 Altyn Annual Report 2020 Pt3 04/05/2021 14:33 Page 55
AltynGold plc (formerly Altyn plc)
Annual Report 2020
55
8 Impairments
2020 2019
US$000 US$000
Impairments (reversed) – ore and other inventory (32) (138)
Impairment provided – other 66 31
34 (107)
The reversal of impairment in 2019 relates to ore that is less than 1g/t, which was still being used in processing for operational reasons and was fully provided
against in prior years.
9 Finance income and costs
2020 2019
US$000 US$000
Finance costs
Foreign exchange (loss)/gain (1,508) 116
Unwinding of discount on provisions (390) (142)
Interest expense (1,657) (419)
Unwinding of discount other financial liabilities (277) (622)
Total finance costs (3,832) (1,067)
10 Loss before taxation
The loss on ordinary activities before taxation is stated after (crediting/charging):
2020 2019
US$000 US$000
Staff costs (note 7) 2,548 2,168
Depreciation of tangible assets 3,950 3,353
Share based payment 2,400 –
(Profit) on disposal on tangible assets – (15)
Cost of inventories recognised as an expense 2,449 1,382
Provision of impairment of receivables 66 31
Reversal of impairment of inventory (32) (138)
Irrecoverable VAT written off 128 233
Penalties and fines 318 247
Fees payable to the Company’s auditors for the audit of the Company financial statements 54 51
Fees payable to the Company’s auditors for the audit of the Group financial statements 125 120
Fees payable to the auditors of the Company’s Subsidiaries pursuant to legislation 29 33
11 Income tax
Tax charged in the income statement
2020 2019
US$000 US$000
Deferred taxation
Arising from origination and reversal of temporary differences 392 214
The tax on loss before tax for the year is higher than the standard rate of corporation tax in the UK (2019 - higher than the standard rate of corporation tax in the
UK) of 19% (2019 - 19%).
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AltynGold plc (formerly Altyn plc)
Annual Report 2020
NOTES TO THE FINANCIAL STATEMENTS continued
for the year ended 31 December 2020
11 Income tax continued
The differences are reconciled below:
2020 2019
US$000 US$000
Profit/(loss) before tax 3,330 (1,042)
Corporation tax at standard rate 633 (198)
Decrease from effect of different UK tax rates on some earnings (83) (30)
Increase from effect of expenses not deductible in determining taxable profit (tax loss) 1,202 463
Tax decrease from utilisation of tax losses – (480)
Current year tax losses and other temporary differences not recognised 914 459
Foreign exchange allowable losses in subsidiary (2,274) –
Total tax charge 392 214
Deferred tax
Group
Deferred tax assets and liabilities are offset were they arise within the subsidiaries in Kazakhstan. The Group has recognised the deferred tax asset only to the extent
that it is probable that the taxable profit will be available against which the deductible temporary difference can be utilised. The future tax profits are expected to
derive from the gold mining operations in Kazakhstan. The tax losses arising in the prior periods will reduce the Company’s and its subsidiaries’ future tax liabilities.
Deferred tax assets are recognised as the Directors believe that sufficient taxable profits will be made against which the carried forward losses can be utilised.
Unutilised taxation losses arising in Kazakhstan of US$61.5m (2019: US$68.1m) are available to carry forward for a maximum of 10 years. It is estimated that the tax
losses available to carry forward will be utilised by 2030. Unutilised tax losses arising in the UK amount to US$6.4m (2019: US$6m).
Expiry of tax losses in Kazakhstan
2021
US$000
2022
US$000
2023
US$000
2024
US$000
2025
US$000
2026
US$000
2027
US$000
2028
US$000
2029 2030 Total
US$000 US$000 US$000
Expiry
–
–
–
–
1,300
33,700
500
1,800
18,700 5,500 61,500
Unrecognised deferred taxation assets
2020 2019
US$000 US$000
Taxation losses 7,454 6,965
Included within the unrecognised taxable losses above is an amount of US$1.2m (2019: US$1.1m) in relation to the Company, and US$6.3m (2019: US$5.8m) in
relation to the Kazakh subsidiaries. This amount has been carried forward as the Directors are uncertain if there will be sufficient taxable profits in the foreseeable
future to offset the losses incurred.
Accelerated Other
Taxation taxation timing
losses depreciation differences Total
US$000 US$000 US$000 US$000
(315) 129 7,999
1 January 2019
(13) (201) (214)
Debit to income
Credit to other comprehensive income
– – (461)
Currency translation 34 (2) – 32
8,185
–
(461)
31 December 2019 and 1 January 2020 7,758 (330) (72) 7,356
(202) (190) (392)
Debit to income
Debit to other comprehensive income
– – (1,011)
Currency translation (686) 33 11 (642)
–
(1,011)
31 December 2020 6,061 (499) (251) 5,311
12 Profit/(loss) per ordinary share
The calculation of basic and diluted earnings per share from continuing operations is based upon the retained profit from continuing operations for the financial
year of US$2.9m (2019: loss of US$1.3m).
The weighted average number of ordinary shares for calculating the basic loss in 2020 and 2019 is shown below. As explained in the share capital note 23, the
company consolidated its shares on a 100:1 basis during the year, the comparative figure of the number of shares has been adjusted accordingly.
The diluted earnings per share in 2020 arises as the convertible loan notes have conversion rights, which would result in an additional 702,650 shares being issued.
174796 Altyn Annual Report 2020 Pt3_174796 Altyn Annual Report 2020 Pt3 04/05/2021 14:33 Page 57
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12 Profit/(loss) per ordinary share continued
As the Company was loss making in 2019, the impact of the potential ordinary shares outstanding from the conversion of the convertible loan notes would be
anti-dilutive, and as such the basic and diluted earnings per share are the same.
2020 2019
No. No.
Basic 26,070,079 25,677,720
Diluted 26,772,729 n/a
13 Adjusted EBITDA
The Directors of the Company have presented the performance measure adjusted EBITDA (earnings before interest, tax, depreciation and amortisation) as they
monitor this performance measure at a consolidated level, and the Directors believe it is relevant to measuring the Group’s performance. Adjusted EBITDA is
calculated by adjusting the net profit for interest, tax, depreciation, amortisation and exceptional items. In the current year, exceptional item relates to the share
based payment transaction (see note 23).
Adjusted EBITDA is not a defined performance measure in IFRS. The Group’s definition of adjusted EBITDA may not be comparable with similarly titled performance
measures as disclosed by other entities.
Reconciliation of adjusted EBITDA to profit after tax 2020 2019
US$000 US$000
Profit/(loss) after tax 2,938 (1,256)
Income tax expense 392 214
Finance expense 2,324 1,183
Foreign exchange 1,508 (116)
Depreciation and amortisation 3,950 3,353
Share based payment 2,400 –
Adjusted EBITDA 13,512 3,378
14 Intangible assets
Group
Teren-Sai Exploration and
geological data evaluation costs Total
US$000 US$000 US$000
Cost or valuation
At 1 January 2019 9,889 5,919 15,808
Additions – 552 552
Amortisation capitalised – 992 992
Currency translation 42 25 67
At 31 December 2019 9,931 7,488 17,419
At 1 January 2020 9,931 7,488 17,419
Additions – 1,271 1,271
Amortisation capitalised – 608 608
Currency translation (905) (717) (1,622)
At 31 December 2020 9,026 8,650 17,676
Amortisation
At 1 January 2019 3,470 – 3,470
Amortisation charge 992 – 992
Currency translation 14 – 14
At 31 December 2019 4,476 – 4,476
At 1 January 2020 4,476 – 4,476
Amortisation charge 608 – 608
Currency translation (422) – (422)
Revenue relating to test production – 165 165
At 31 December 2020 4,662 165 4,827
Carrying amount
At 31 December 2020 4,364 8,485 12,849
At 31 December 2019 5,455 7,488 12,943
At 1 January 2019 6,419 5,919 12,338
174796 Altyn Annual Report 2020 Pt3_174796 Altyn Annual Report 2020 Pt3 04/05/2021 14:33 Page 58
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AltynGold plc (formerly Altyn plc)
Annual Report 2020
NOTES TO THE FINANCIAL STATEMENTS continued
for the year ended 31 December 2020
The intangible assets relate to the historic geological information pertaining to the Teren-Sai ore fields. The ore fields are located in close proximity to the current
open pit and underground mining operations of Sekisovskoye. The Company obtained a contract for exploration and evaluation on the site in May 2016 from the
Kazakh authorities. The contract is valid for a period of 6 years, with a right to extend over a further 5 years.
The value of the geological data purchased is in the opinion of the Directors the value that would have been incurred if the drilling had been undertaken by a
third party (or internally). The Company has continued to develop the site with a CPR completed in 2019, and confirmatory drilling and further exploration work
continuing on the site. Full details are given in the mineral resources statement included as part of the Annual Report.
The directors consider that no impairment is required taking into account the CPR results, exploration and planned production in the future. The write off of the
geological data over the period of the licence to the end of the extended licence period in 2027 is appropriate. After that period the costs amortised are
capitalised in line with the Company’s accounting policy within the subsidiary TOO GMK Altyn MM LLP, there are no impairment indicators.
15 Property, plant and equipment
Group
Freehold Equipment, Plant,
Mining Land and fixtures and machinery and Assets under
properties buildings fittings buildings construction Total
US$000 US$000 US$000 US$000 US$000 US$000
Cost or valuation
At 1 January 2019 11,730 24,481 9,701 5,047 978 51,937
Additions 2,140 71 239 2,469 301 5,220
Disposals – (4) (34) (41) – (79)
Transfers – 134 – – (134) –
Currency translation 79 104 39 26 (78) 170
At 31 December 2019 13,949 24,786 9,945 7,501 1,067 57,248
At 1 January 2020 13,949 24,786 9,945 7,501 1,067 57,248
Additions 1,622 166 2,838 2,717 1,246 8,589
Disposals – – (70) (180) – (250)
Transfers (764) 1,383 (26) 18 (471) 140
Transfer from inventories – – – – 241 241
Currency translation (1,543) (2,285) (907) (734) (110) (5,579)
At 31 December 2020 13,264 24,050 11,780 9,322 1,973 60,389
Depreciation
At 1 January 2019 2,220 8,291 8,501 4,534 – 23,546
Charge for year 209 2,133 794 217 – 3,353
Eliminated on disposal – (3) (30) (40) – (73)
Currency translation 12 35 40 19 – 106
Transfers – 107 (101) (6) – –
At 31 December 2019 2,441 10,563 9,204 4,724 – 26,932
At 1 January 2020 2,441 10,563 9,204 4,724 – 26,932
Charge for the year 520 1,885 773 772 – 3,950
Eliminated on disposal – – (70) (180) – (250)
Currency translation (232) (997) (805) (441) – (2,475)
Transfers 140 (80) 80 – – 140
At 31 December 2020 2,869 11,371 9,182 4,875 – 28,297
Carrying amount
At 31 December 2020 10,395 12,679 2,598 4,447 1,973 32,092
At 31 December 2019 11,508 14,223 741 2,777 1,067 30,316
At 1 January 2019 9,510 16,190 1,200 513 978 28,391
Capitalised cost of mining property are amortised over the life of the licence from commencement of production on a unit of production basis. This basis uses the
ratio of production in the period compared to the mineral reserves at the end of the period. Mineral reserves estimates are based on a number of underlying
assumptions, which are inherently uncertain. Mineral reserves estimates take into consideration estimates by independent geological consultants. However, the
amount of mineral that will ultimately be recovered cannot be known until the end of the life of the mine.
Any changes in reserve estimates are, for amortisation purposes, treated on a prospective basis. The recovery of the capitalised cost of the Company’s property,
plant and equipment is dependent on the development of the underground mine.
The Directors are required to consider whether the non-current assets comprising, mineral properties, plant and equipment have suffered any impairment. The
recoverable amount is determined based on value in use calculations. The use of this method requires the estimation of future cash flows and the choice of a
discount rate in order to calculate the present value of the cash flows. The directors considered entity specific factors such as available finance, cost of production,
grades achievable, and sales price. The directors have concluded that no adjustment is required for impairment.
174796 Altyn Annual Report 2020 Pt3_174796 Altyn Annual Report 2020 Pt3 04/05/2021 14:33 Page 59
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59
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15 Property, plant and equipment continued
Company
Other property,
plant and equipment Total
US$000 US$000
Cost or valuation
At 1 January 2019 467 467
At 31 December 2019 467 467
At 1 January 2020 467 467
At 31 December 2020 467 467
Depreciation
At 1 January 2019 330 330
Charge for year 70 70
At 31 December 2019 400 400
At 1 January 2020 400 400
Charge for the year 67 67
At 31 December 2020 467 467
Carrying amount
At 31 December 2020 – –
At 31 December 2019 67 67
At 1 January 2019 137 137
16 Investments
Summary of the company investments
Country of
Percentage registration &
Name held operation
Directly held
Hambledon Mining Company Limited 100 British Virgin Islands
TOO GMK Altyn MM 100 Kazakhstan
Indirectly held
DTOO Gornorudnoe Predpriatie Baurgold 100 Kazakhstan
The principal activity of all companies relates to gold mining and production with the exception of Hambledon Mining Company Limited which is an investment
holding Company and is currently dormant, its registered address is Palm Grove House, P O Box 438,Road Town, Tortola, British Virgin Islands.
Both Companies trade from 10 Novostroyevsaya Street, Glubokovskoye district, Sekisovka village East Kazakhstan.
Contribution to
investment Subsidiaries
Shares adjustment loans Total
US$000 US$000 US$000 US$000
10,090 61,407 71,722
1 January 2019
– 44 44
Net cash movements
– 5,566 5,566
Management charges and interest
– 1,015 1,015
Impairment reversal – IFRS9
Transfer of loans from subsidiaries
– 16,975 16,975
Adjustment as a result of loan repayment terms – 31,133 (31,133) –
225
–
–
–
–
31 December 2019 225 41,223 53,874 95,322
– 200 200
Net cash movements
– 5,685 5,685
Management charges and interest
Impairment reversal - IFRS9
– 279 279
Adjustment as a result of loan repayment terms – 8,891 (398) 8,493
–
–
–
31 December 2020 225 50,114 59,640 109,979
174796 Altyn Annual Report 2020 Pt3_174796 Altyn Annual Report 2020 Pt3 04/05/2021 14:33 Page 60
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AltynGold plc (formerly Altyn plc)
Annual Report 2020
NOTES TO THE FINANCIAL STATEMENTS continued
for the year ended 31 December 2020
16 Investments continued
Total
US$000
Movement of expected credit loss
1 January 2019
32,970
Impairment reversal – IFRS9 (1,015)
31 December 2019
31,955
Impairment reversal – IFRS9 (279)
31 December 2020 31,676
The investments together with the loans which are denominated in US Dollars represent the investments into the subsidiaries and in the opinion of the directors
the aggregate value of the investments in the subsidiaries is not less than the amount shown in these financial statements. The directors review the intercompany
borrowings on a regular basis, together with the associated cash flows of each company, and assess under the expected credit loss (ECL) model as required by
IFRS 9.
The loans to subsidiaries are charged at interest rates ranging from interest free to a range of 5-7%. The intercompany loans are repayable at the earliest October
2029 as the parent Company needs to give a three year formal request for repayment after the Bank Center Credit loan has been repaid which is due for payment
in October 2026.
The Company has applied IFRS 9 in the current period and estimates that there is a reversal of an ECL calculated of US$279,000 (2019: US$1m) on the receivables
from the subsidiaries. The total ECL as at 31 December 2020 is US$31.7m (2019: US$31.9m).
The intercompany loans at present are considered to be in stage 2, and have been assessed as indicated in the IFRS 9 ECL model, with extensions being made on
the repayment terms of the original loans that were given. As the loans are considered to be in stage 2 a lifetime ECL is determined using all relevant, reasonable
and supportable historical, current and forward-looking information that provides evidence about the risk that the subsidiaries will default on the loan and the
amount of losses that would arise as a result of that default. The Company applied a spread of sensitivities ranging from full recovery of the loans estimated at 10%,
to a recovery of 80% of the loans at a 75% probability, based on a weighted average of the probabilities the Company estimated a total ECL to be provided of
US$31.7m. If the probability of recoverability worsened by 10% the ECL would increase by US$8.5m from the prior year.
The reversal of impairment for the year is recognised in the income statement within administrative expenses.
17 Inventories
Group
2020 2019
US$000 US$000
Ore 3,752 1,794
Raw materials and consumables 997 1,068
Work in progress 263 408
Finished goods and goods for resale 456 361
5,468 3,631
The value of inventories above is stated net of a provision for low grade ore made in prior periods of US$1.1m (2019: US$1.2m). A provision was made in the year
against spare parts and consumables that are assessed as being slow moving that may not be required for future repairs or production of US$327,000 (2019:
US$359,000), resulting in a write back in the year of US$32,000.
The movement in inventory recognised as an expense in the income statement is US$2.5m (2019: US$1.4m).
18 Trade and other receivables
Non-current
Other receivables
Prepayments – advances for equipment
Group
2020
US$000
1,705
4,995
6,700
Group Company Company
2019 2020 2019
US$000 US$000 US$000
1,856 – –
4,192 – –
6,048 – –
174796 Altyn Annual Report 2020 Pt3_174796 Altyn Annual Report 2020 Pt3 04/05/2021 14:33 Page 61
AltynGold plc (formerly Altyn plc)
Annual Report 2020
61
18 Trade and other receivables continued
Current
Vat recoverable
Prepayments
Other receivables – recoverable
Other receivables – provision
2020
US$000
3,549
2,826
823
(16)
7,182
Group Company
2019 2020 2019
US$000 US$000 US$000
2,061 71 10
659 5 3
895 – –
– – –
3,615 76 13
The trade receivables are stated at full carrying value and their ageing is less than 30 days old. The Directors consider that the carrying value of trade receivables
approximates to their fair value.
Prepayments have increased as a result of increased advance payments to suppliers for parts and consumables.
Other receivables included within non-current assets for 2020 and 2019 relate to an amount recoverable in relation to Value Added Tax, this is expected to be
recovered by offset against VAT payable in future periods.
19 Trade and other payables
Non-current
VAT payable
Other taxes payable
Current
Trade payables
Other taxes payable
Other creditors
VAT payable
Group
2020
US$000
230
492
722
2020
US$000
2,161
2,050
492
2,002
6,705
Group Company Company
2019 2020 2019
US$000 US$000 US$000
964 – –
1,333 – –
2,297 – –
Group Company
2019 2020 2019
US$000 US$000 US$000
4,652 100 2
342 1 –
1,371 196 332
1,188 – –
7,553 297 334
Trade creditors and accruals principally comprise amounts outstanding for trade purchases of goods and services. The majority of the trade creditors relate to the
Company’s trading subsidiaries in Kazakhstan. For most suppliers, interest is not charged on trade payables. The Company regularly reviews all outstanding
payables to ensure they are paid within the appropriate time frame.
VAT payable relates to amounts due and payable and scheduled for payment with the Kazakh tax authorities.
The Company has agreed a payment plan with the Kazakh authorities in relation to the payment of royalties which are due. The portion agreed to be paid within
one year is US$1,899,000 (2019:US$342,000), and an amount due of US$446,000 is payable in more than one year, (2019 US$1,333,000).
The Directors consider that the carrying amount of trade payables approximates to their fair value.
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AltynGold plc (formerly Altyn plc)
Annual Report 2020
NOTES TO THE FINANCIAL STATEMENTS continued
for the year ended 31 December 2020
20 Related party transactions
Remuneration of key management personnel
The remuneration of the Directors, who are the key management personnel of the Company, is set out below in aggregate for each of the categories specified in
IAS 24 – “Related Party Disclosures”. The total amount remaining unpaid with respect to remuneration of key management personnel amounted to US$52,000 in
the current year (2019: US$149,000). Further information about the remuneration of the individual directors is set out in the audited section of the report on
directors’ remuneration on page 31.
Short term employee benefits
Social security costs
Group
2020
US$000
111
2
113
Group Company Company
2019 2020 2019
US$000 US$000 US$000
122 111 122
7 2 7
129 113 129
Related party transactions
The transactions between the Company and the subsidiaries are disclosed in Note 16. These relate to management and interest charges on services/loans from the
parent to the subsidiaries in Kazakhstan.
During the year the following transactions were conducted with the Companies controlled by the Assaubayev family:
p Asia Mining Group (AMG), a company controlled by the Assaubayev family supplied equipment and spares to the Company in prior years. At the year end an
amount of US$85,982 (2019 US$165,000) is due to AMG and is included within other trade payables;
p Director fees in the amount of US$34,560 to Vladimir Shkolnik has been paid by Amrita Investments Limited on behalf of the Company and has remained in the
outstanding balance of the payable at year end.
p Amounts due by the Group to Amrita Investments Limited a company controlled by the Assaubayev family, total US$45,000 (US$1,047,000) this includes
interest repayable of US$nil (2019: US$421,000). No interest is being charged on the balance outstanding as at 31 December 2020 which is repayable on
demand. In addition in February 2020 Amrita Investments Limited a company controlled by the Assaubayev family made a payment to acquire the US$1.5m
convertible loan note from the previous institutional bondholders who went into liquidation, on the same terms and conditions of the original loan note. The
payments in the Consolidated and Company statements of cash flows were shown gross as the Company was facilitating the settlement of the convertible
loan note between the previous bondholder and Amrita Investments Limited. As of 31 December 2020, the outstanding balance with the accrued interest
amounted to $1,525,747. Further details on the movements and the closing balances in relation to Amrita Investments Limited are shown in note 24.
p An interest free loan was received from Chartmile of US$81,000, in 2019 this was repaid in the year;
p In 2016 the Company issued US$10m of convertible bonds to African Resources Limited which is an immediate controlling party (see note 25), a company
controlled by the Assaubayev family. The bonds carry a coupon of 10% per annum, payable semi-annually in arrears on 29 July and 28 February each year, see
note 22. The balance of the principal on the bond was repaid in March 2021.
p The Company received an interest free loan from Bolat Assaubayev, a relative of the Assaubayev family during 2019. Of the total received of US$1,045,000 an
amount of US$673,000 was outstanding at the end of December 2019 this was repaid during 2020, see note 24.
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21 Provisions
Abandonment &
restoration Holiday pay Total
US$000 US$000 US$000
Group
I January 2019
Change in estimate of provision
Unwinding of discount
Paid during the year
Currency translation reserve
31 December 2019 & 1 January 2020
Change in estimate of provision
Unwinding of discount
Paid during the year
Currency translation adjustment
31 December 2020
31 December 2020
Current
Non-current
31 December 2019
Current
Non-current
4,412 94 4,506
– 176 176
576 – 576
– (140) (140)
19 – 19
5,007 130 5,137
(171) 119 (52)
390 – 390
– (87) (87)
(463) (11) (474)
4,763 151 4,914
– 151 151
4,763 – 4,763
4,763 151 4,914
– 130 130
5,007 – 5,007
5,007 130 5,137
Abandonment and restoration costs
In accordance with the provisions of the subsoil use contract (the “Contract”), DTOO GRP Baurgold is liable for site restoration costs upon completion of production
activities. It is not possible to predict accurately the amount which might ultimately be payable for site restoration as it includes assumptions such as inflation in
Kazakhstan over the life of the Contract which are inherently uncertain. An estimate of the future cost of restoration has been discounted and a provision
recognised. The discounted amount for cost of restoration has been capitalised as a tangible fixed asset (note 15) and will be amortised using the unit of
production method over the life of the mine.
In accordance with the subsoil use agreement, DTOO GRP Baurgold has established a cash fund to pay for the cost of restoration. The cash fund is maintained in a
separate bank account in the name of DTOO GRP Baurgold. DTOO GRP Baurgold is required to contribute each year an amount equal to 1% of its operating
expenses (being the cost of sales of DTOO GRP Baurgold in extracting the ore) to this fund. Any transfers from the bank account require the authorisation of the
Government of Kazakhstan. This fund will be used to pay for the costs of restoration as and when they become due. If the funds in the account are insufficient to
pay for the costs, DTOO GRP Baurgold will be required to pay any deficit. If there are funds surplus to those required for restoration these will be returned to DTOO
GRP Baurgold.
At the year end the amount in the fund amounted to US$13,000 (2019: US$nil). The Company has an obligation to contribute to the restricted cash fund as
stipulated in its licence, and has been in communication with the relevant authorities to restore the fund to the required level in 2021. The failure to comply in the
year with certain administrative requirements of the licence including the maintenance of the cash fund may result in a penalty estimated to be less than
US$2,000.
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AltynGold plc (formerly Altyn plc)
Annual Report 2020
NOTES TO THE FINANCIAL STATEMENTS continued
for the year ended 31 December 2020
22 Loans and borrowings
Group Group Company Company
2020 2019 2020 2019
US$000 US$000 US$000 US$000
Current loans and borrowings
Bonds
Bank loans
Related party loans (see note 20)
Other borrowings
Due one – two years
Bonds
Bank loans
Due two – five years
Bonds
Bank loans
Due more than five years
Bank loans
Total non-current loans and borrowings
2,882
2,906
45
–
5,833
9,317
2,997
12,314
–
8,990
8,990
1,956
23,260
– 2,882 –
– – –
1,801 35 616
749 – –
2,550 2,917 616
4,171 9,317 4,171
1,470 – –
5,641 9,317 4,171
2,340 – 2,340
4,411 – –
6,751 – 2,340
2,635 – –
15,027 9,317 6,511
Convertible bonds
US$10m convertible bond
In 2016 the Company secured a total of US$10m proceeds from a convertible loan with the major shareholder, African Resources Limited. The loan bears a coupon
of 10% per annum, payable semi-annually. In January 2018 the bond holders elected to convert US$9.72m of the bond into ordinary shares of the Company at the
conversion price of 3p per share, resulting in the issue of 233,333,333 new ordinary shares being issued to African Resources Limited at that time.
As further discussed in the note 4 the total value of the conversion option was determined at fair value on inception to be US$1.9m, as at 31 December 2020 the
fair value of the conversion option is US$nil (2019: US$nil). The part relating to the conversion of the bond into shares has been recognised in equity. The residual
value was assigned to the debt host liability and accounted for at amortised cost using the effective interest rate of 17%, the total liability is US$652,000 (2019:
US$2.1m) and includes accrued interest US$375,000 and applicable taxes (2019: US$1.9m). The bond was repaid in March 2021.
US$2m convertible bond
In 2016 the Company entered into US$2m convertible loans with institutional investors. The loans bear a coupon rate of 10% per annum, payable semi-annually
and are due for repayment in May 2021. The Notes can be converted into Ordinary Shares of the Company at a price of 2.15p per share any time prior to maturity.
The exchange rate of US$1.466 for £1 shall be used to determine the number of conversion shares. The number of shares to be issued if the conversion option was
exercised is 634,538.
In February 2020 Amrita Investments Limited made a payment to assume US$1.5m of the convertible bonds from the previous institutional bondholders who
went into liquidation.
The conversion option meets the fixed-for-fixed criteria and therefore has been classified as equity instrument in the other reserves. On initial recognition
Management have assessed the value of the contractual cash flows discounted at the interest rate of 15% being the market interest rate for the similar instruments
without a conversion feature. The value of liability component is US$2.2m including interest and applicable taxes (2019 US$2.06m). The remaining balance initially
calculated of $0.3m is allocated to the residual equity component.
Other bonds
Bond Listed on Astana International Exchange
In December 2019 the Company issued bonds to the value of US$2,340,000, net of expenses amounting to US$263,000. In March and July 2020 the balance of the
bonds were issued raising US$6.8m after expenses US$588,000. The total number of bonds at the year end amounts to US$10m at a coupon rate of 9% repayable
in December 2022. At the year end the carrying value approximates to their fair value.
Other loans
Related party loans
The total comprises amounts that are payable to Amrita Investments Limited amounting to US$45,000 (2019: US$1.047m), together with the US$2m convertible
bond (note 20 above) of US$1.5m. Both amounts are due for repayment within one year.
In 2020 the loans payable to Chartmile Resources Inc. of US$81,000, and the balance due to a relative of the Assaubayev family of US$673,000 were repaid in the
year.
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22 Loans and borrowings continued
Bank loans
In September 2019 the Company agreed a facility with JSC Bank Center Credit (BCC) for an amount of US$17m. The amount was divided into US$7m relating to a
general working capital loan and US$10m to be used specifically for capital expenditure. The Company had a facility remaining of US$8.0m as at the end of 2019,
this was drawn down during 2020.
The bank loan is repayable in instalments over a term of 7 years and bears interest at 6%-7%, capital repayments commenced during the year in October 2020.
In December 2020 the Company agreed a new facility with BCC of US$5.5m (2.3bln Tenge), of this amount US$3.6m has to be utilised to purchase equipment and
the balance of US1.9m for working capital purposes. US$973,000 was drawn down in December 2020. The loan is denominated in Kazakh Tenge with interest at
15.5% repayable in instalments over 5 years with a 6 month capital repayment holiday.
The bank loans are secured over the assets of the Group.
The total borrowings of the Group disclosing the scheduled repayments of capital and interest are disclosed in note 25.
23 Share capital
Issued and fully paid
Number US$000
At 31 December 2020 – Ordinary shares of £0.10 each 27,332,933 4,267
At 31 December 2019 – Ordinary shares of £0.001 each 2,568,834,400 4,055
In June 2020 10,429,930 shares were issued for a total consideration of US$75,000 in order to settle outstanding remuneration due to a former Director of the
Company.
In October 2020 a further 154,028,981 shares were issued for a consideration of US$1.5m under an option agreement that was granted in June 20202 to the broker
that arranged the listing of the US$10m 9% bonds on the Astana Stock Exchange.
The fair values on the grant date was determined using the Black-Scholes option pricing model. The following key assumptions were used in determining the
share options’ fair value at the grant date, market stock price 2.2p, option strike price 0.75p, volatility 71.6%, risk free rate 0.82%.
In November 2020 the Company consolidated its shares on a 100:1 basis, this resulted in the nominal value of the shares being revalued from £0.001 to £0.10.
The rights attaching to the shares are detailed in the Directors report on page 24.
24 Notes to the cash flow statement
Group Group Company Company
2020 2019 2020 2019
US$000 US$000 US$000 US$000
Profit/(loss) before taxation
Adjusted for:
Finance income
Finance expenses
Unwinding of discount
Depreciation of tangible fixed assets
Impairments and provisions (reversal)/provided
Provision of impairment receivable
(Increase) in inventories
(Increase) in trade and other receivables
Share based payment transaction
(Decrease) in other financial liabilities
(Increase)/decrease in trade and other payables
Profit on disposal of property, plant and equipment
Foreign currency translation
Cash inflow/(outflow) from operations
Income taxes payable
Net cash inflow/(outflow) from operations
3,330
–
1,657
667
3,950
(52)
66
(2,409)
(4,901)
2,400
–
(1,971)
–
1,508
4,245
–
4,245
(1,042) (120) 5,370
– (2,775) (2,766)
419 1,665 387
764 (1,668) (2,707)
3,353 67 70
70 (279) (1,015)
– – –
(2,115) – –
(1,495) (156) (89)
– 2,400 –
(122) 82 –
(2,533) 35 (110)
(15) – –
(116) – –
(2,832) (749) (860)
– – –
(2,832) (749) (860)
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NOTES TO THE FINANCIAL STATEMENTS continued
for the year ended 31 December 2020
24 Notes to the cash flow statement continued
Group
Cashflow
––––––––––––––––––––––––––––––––––––––
Cash changes
–––––––––––
Non-Cash changes
––––––––––––––––––––––––––––––––
1 January
2020
B/fwd
US$000
New loans Commission
US$000
US$000
Loan element of US$10m convertible bond
Loan element of US$2m convertible bond*
Loan element of Kazakhstan listed bond
Other borrowings
Bolat Assaubayev
Chartmile Resources Inc
Amrita Investments Limited**
2,111
2,060
2,340
9,265
673
81
1,047
–
–
7,415
8,325
–
–
1,163
–
–
(588)
–
–
–
–
Loans
repaid
US$000
–
–
–
(938)
(673)
(81)
(1,739)
Interest
repaid
US$000
(1,504)
(122)
(607)
(1,045)
–
–
(461)
31 December
(Receivables)/ 2020
Foreign Payables
exchange net-off C/fwd
US$000 US$000 US$000
Interest
charges
US$000
44
235
815
860
–
–
–
– – 651
– – 2,173
– – 9,375
382 – 16,849
– – –
– – –
– 35 45
Net cash outflow from financing activities 17,577
16,903
(588)
(3,431)
(3,739)
1,954
382 35 29,093
Due within one year
Due after one year
2,550
15,027
17,577
5,833
23,260
29,093
*Of this US$1.5m is due to Amrita Investments Limited a company controlled by the Assaubayev family see note 20.
**Included within related party transactions are amounts received and paid from Amrita Investments Limited, these amounts are shown gross as the Company was facilitating the settlement of the
convertible loan note taken over by Amrita Investments Limited from Sturgeon.
Company
Cash changes
——————————–––––––––––––––––––– ——————
Cashflow
1 January
2020
B/fwd
US$000
New loans Commission
US$000
US$000
Loan element of US$10m convertible bond
Loan element of US$2m convertible bond*
Loan element of Kazakhstan listed bond
Chartmile Resources Inc
Amrita Investments Limited**
2,111
2,060
2,340
81
535
–
–
7,415
–
1,163
–
–
(588)
–
–
Loans
repaid
US$000
–
–
–
(81)
(1,698)
Interest
repaid
US$000
(1,504)
(122)
(607)
–
–
Non-Cash changes
––––––––––––––––––––––––––––––––
Interest
charges and
unwinding
of discount
US$000
31 December
(Receivables)/ 2020
Foreign Payables
exchange net-off C/fwd
US$000 US$000 US$000
44
235
815
–
–
– – 651
– – 2,173
– – 9,375
– – –
– 35 35
Net cash outflow from financing activities 7,127
8,578
(588)
(1,779)
(2,233)
1,094
– 35 12,234
Due within one year
Due after one year
616
6,511
7,127
2,917
9,317
12,234
*Of this US$1.5m is due to Amrita Investments Limited a company controlled by the Assaubayev family see note 20.
**Included within related party transactions are amounts received and paid from Amrita Investments Limited, these amounts are shown gross as the Company was facilitating the settlement of the
convertible loan note taken over by Amrita Investments Limited from Sturgeon.
Group
Cashflow
Cash changes
Non-Cash changes
—————————— ——————— ——————————————————
1 January
2019
B/fwd
US$000
New loans
US$000
Loans
repaid
US$000
Interest
repaid
US$000
Interest
charges
US$000
31 December
2019
Foreign Receivables
exchange net-off C/fwd
US$000 US$000 US$000
Loan element of US$10m convertible bond
Loan element of US$2m convertible bond
Loan element of Kazakhstan listed bond
Other borrowings
Bolat Assaubayev
Chartmile Resources Inc
Amrita Investments Limited
2,090
1,873
–
206
–
–
1,012
–
–
2,321
9,990
1,045
81
652
–
–
–
(884)
(372)
–
(267)
–
(160)
–
(33)
–
–
–
Net cash outflow from financing activities
5,181
14,089
(1,523)
(193)
Due within one year
Due after one year
1,218
3,963
5,181
–
–
–
–
–
–
–
–
–
21
347
19
48
–
–
22
457
–
–
–
– – 2,111
– – 2,060
– – 2,340
(62) – 9,265
– – 673
– – 81
– (372) 1,047
(62) (372) 17,577
– – 2,550
– – 15,027
– – 17,577
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24 Notes to the cash flow statement continued
Company
Cashflow
Cash changes
Non-Cash changes
—————————— ——————— ——————————————————
1 January
2019
B/fwd
US$000
New loans
US$000
Loans
repaid
US$000
Interest
repaid
US$000
Interest
charges and
unwinding
of discount
US$000
31 December
2019
Foreign Unwinding of
exchange discount C/fwd
US$000 US$000 US$000
Loan element of US$10m convertible bond
Loan element of US$2m convertible bond
Loan element of Kazakhstan listed bond
Chartmile Resources Inc
Amrita Investments Limited
Net cash outflow from financing activities
Due within one year
Due after one year
2,090
1,873
–
–
151
4,114
151
3,963
4,114
–
–
2,321
81
652
–
–
–
–
(268)
–
(160)
–
–
–
3,054
(268)
(160)
21
347
19
–
–
387
– – 2,111
– – 2,060
– – 2,340
– – 81
– – 535
– – 7,127
616
6,511
7,127
25 Financial instruments
Financial instruments by category
Company
Financial assets Group Group Company
2019
2020 2019 2020
US$000 US$000 US$000 US$000
Cash and cash equivalents 7,154 3,615 6,316
1,787
Other receivables and advance payments 779 4,869 5 3
7,933 8,484 6,321 1,790
Financial instruments by category
Company
Financial liabilities Group Group Company
2020 2019 2020
2019
US$000 US$000 US$000 US$000
Trade and other payables 2,653 6,023 297
334
Loans and borrowings 29,093 17,577 12,234 7,127
31,746 23,600 12,531 7,461
Financial assets and liabilities are measured at amortised cost.
Policy on financial risk management
The Company’s principal financial instruments comprise cash and cash equivalents, trade receivables, trade and other payables, other financial liabilities and
borrowings. The Company’s accounting policies and methods adopted, including the criteria for recognition, the basis on which income and expenses are
recognised in respect of each class of financial asset, financial liability and equity instrument are set out in note 4 - “accounting policies”. The Company does not use
financial instruments for speculative purposes. The carrying value of all financial assets and liabilities approximates to their fair value.
Capital risk management
The Company’s primary objective when managing risk is to ensure there is sufficient capital available to support the Company’s funding requirements, including
capital expenditure, in a way that optimises the cost of capital. Maximises shareholders’ returns and ensures the Company’s ability to continue as a going concern.
There were no changes to the Company’s capital management approach in the year.
The Company may make adjustments to the capital structure as opportunities arise, as and when borrowings mature or as and when funding is required. This may
take the form of raising equity, debt finance, equipment supplier credit or a combination thereof.
The Company monitors capital on the basis of the gearing ratio, which is defined as net debt divided by total capital. Net debt is calculated as total borrowings
(including current and non-current borrowings as shown in the consolidated statement of financial position) less cash and cash equivalents. Total capital is
calculated as equity as shown in the consolidated statement of financial position plus net debt. While the Company does not set absolute limits on the ratio, the
Company believes that a ratio of 30%-40% is acceptable as the Company continues the construction and development of the underground of the Sekisovskoye
mine, and that optimally this should reduce to and remain below 25% thereafter. The Company’s policy in respect of capital risk management is the same as that
of the Group.
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NOTES TO THE FINANCIAL STATEMENTS continued
for the year ended 31 December 2020
25 Financial instruments continued
2020 2019
US$000 US$000
Group
Total borrowings 29,093 17,577
Less: cash and cash equivalents (7,154) (1,934)
Net debt 21,939 15,643
Total equity 35,335 33,279
Total Capital 57,274 48,922
Gearing ratio 38.30% 31.98%
Company
Total borrowings 12,234 7,127
Less: cash and cash equivalents (6,316) (1,787)
Net debt 5,918 5,340
Total equity 76,608 72,753
Total Capital 82,526 78,093
Gearing ratio 7.20% 6.8%
Derivatives, financial instruments and risk management
The Company does not use derivative instruments or other financial instruments to manage its exposure to fluctuations in foreign currency exchange rates,
interest rates and commodity prices.
Foreign currency risk management
The Company and its subsidiaries have transactional currency exposures. Such exposures arise from sales or purchases by the Company’s two subsidiaries in
Kazakhstan, in currencies other than the Company’s functional currency. The functional currency of TOO GMK Altyn MM and DTOO Gornorudnoe Predpriatie
Baurgold is the Kazakh Tenge. The currency transactions giving rise to this foreign currency risk are primarily USD denominated revenues, USD denominated
borrowings and other financial liabilities and certain USD denominated trade payables. The Company and its subsidiaries do not enter into hedging positions in
respect of its exposure to foreign currency risk.
The carrying amounts of the Groups foreign currency denominated net monetary assets and monetary liabilities at 31 December, are as follows:
Group
2020 US$000
Functional currency
2019 US$000
Functional currency
Currency of monetary asset/liability US$ KZT Total US$ KZT Total
US Dollar (5,937) (15,994) (21,931) (5,355) (9,573) (14,928)
British Pound (274) – (274) (312) – (312)
Kazakhstan Tenge – (1,540) (1,540) – (4,258) (4,258)
Russian Rouble (71) (71) – –
Net Monetary position (23,816) (19,498)
Company
Currency of monetary asset/liability
US Dollar (5,898) (5,898) (5,355) (5,355)
British Pound (274) (274) (312) (312)
Net Monetary position (6,172) (5,667)
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25 Financial instruments continued
Sensitivity analysis
A 10% (2019: 20%) strengthening, or weakening, of any one of the above currencies against the US Dollar which the Directors consider to be a reasonable possible
change, based on future predictions of currency movements for the purpose of sensitivity analysis, is shown below:
2020 2019
Group US$000 US$000
10% (2019: 20%) weakening/strengthening of Kazakh Tenge against the US Dollar (1,760) (1,915)
Commodity price risk
The Company is exposed to the effect of fluctuations in the price of gold and silver which are quoted in US Dollars on the international markets. The Company
prepares annual budgets and periodic forecasts including sensitivity analyses in respect of various levels of prices of these metals.
The Company’s only significant sales during the years ended 31 December 2020 and 2019 were sales of gold doré containing gold and silver. The sales proceeds
for gold doré is fixed by reference to the gold and silver prices on the day of sale. The Company does not plan in the future to hedge its exposure to the risk of
fluctuations in the price of gold or silver and therefore it held no financial instruments that are sensitive to commodity price changes at either reporting date.
Credit risk
Credit risk refers to the risk that a counter-party will default on its contractual obligations resulting in a financial loss to the Company. The Group has adopted a
policy of only dealing with creditworthy counter-parties. The Group’s exposure and the credit ratings of its counter-parties are monitored by the Board of Directors
to ensure that the aggregate value of transactions is spread amongst approved counter-parties. In the current climate due the COVID-19 pandemic, the Company
is aware that there may be issues in relation to recoverability and safe guarding of its assets and has built this into their assessments of the creditworthiness of
counter-parties.
The Group’s principal financial assets are cash and cash equivalents, trade debtors and other accounts receivables. Cash equivalents include amounts held on
deposit with financial institutions.
The Group is mainly exposed to credit risk on its cash equivalents and trade and other receivables as per the balance sheet. The maximum exposure to credit risk is
represented by the carrying amount of each financial asset in the balance sheet which at the year end amounted to Cash and cash equivalents US$7.2m ( 2019:
US$1.9m) , and other receivables (excluding VAT and other taxes ) of US$779,000 (2019: US$5.7m).
Although the full scope tax audit which was completed in the prior year showed no material issues, there is always the possibility of fiscal change in the country.
Kazakhstan is a relatively young country and there have been a number of fiscal changes in recent years, which in some cases related to the mining industry.
The credit risk on liquid funds held in current accounts and available on demand is limited because the Group’s counter-parties are mainly banks with high credit
ratings assigned by international credit-rating agencies.
It is often impractical in Kazakhstan to carry out a check of creditworthiness of suppliers before making the contracted prepayments. There were no significant
balances at 31 December 2020 and 2019 in respect of which suppliers had defaulted on their obligations.
The Company’s maximum exposure to credit risk is limited to the carrying amount of loans recorded in the financial statements. The majority of the loans are on
fixed repayment terms in relation to intercompany borrowings the Company has applied IFRS 9 which resulted in a significant impairment in the prior periods. The
recoverability of the loans has been reassessed in the current year which resulted in a decrease in the provision by US$279,000 see note 16.
Liquidity risk
During the year ended 31 December 2020, the Company was financed by internally generated funds, and other borrowings principally from bank borrowings and
the bond raised on the Astana Stock Exchange. The Company manages its liquidity risk. The Directors monitor cash flow and cash flow forecasts on a regular basis
and ensure that the loan commitments and working capital commitments are adequately funded.
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NOTES TO THE FINANCIAL STATEMENTS continued
for the year ended 31 December 2020
25 Financial instruments continued
The following tables detail the Group and the Company’s remaining contractual maturity for its financial liabilities. The tables have been drawn up based on the
undiscounted cash flows of financial liabilities based on the earliest date on which the Company and its subsidiaries can be required to pay. The table includes
both interest and principal cash flows.
Trade
and other
Borrowings payables Total
Group US$000 US$000 US$000
31 December 2020
Due after more than five years
From two to five years
From one to two years
Due after more than one year
Due within one year
2,088 – 2,088
10,604 – 10,604
14,855 – 14,855
27,547 – 27,547
7,243 2,653 9,896
34,790 2,653 37,443
Trade
and other
Borrowings payables Total
Group US$000 US$000 US$000
31 December 2019
Due after more than five years
From two to five years
For one to two years
Due after more than one year
Due within one year
9,391 – 9,391
3,499 – 3,499
3,547 – 3,547
16,437 – 16,437
2,287 6,365 8,652
18,724 6,365 25,089
Trade
Intercompany and other
loan Borrowings payables Total
Company US$000 US$000 US$000 US$000
31 December 2020
Due after more than five years
For one to two years
Due after more than one year
Due within one year
47,995
–
47,995
–
47,995
– – 47,995
10,878 – 10,878
10,878 – 58,873
3,285 297 3,582
14,163 297 62,455
Trade
Intercompany and other
loan Borrowings payables Total
Company US$000 US$000 US$000 US$000
31 December 2019
Due after more than five years
From two to five years
From one to two years
Due after more than one year
Due within one year
33,100
–
–
33,100
–
33,100
– – 33,100
2,540 – 2,540
2,587 – 2,587
5,127 – 38,227
1,076 334 1,410
6,203 334 39,637
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25 Financial instruments continued
Borrowings and interest rate risk
There is no exposure to interest rate risk as the current principal borrowings in the Company and its subsidiaries are at fixed rates. The bonds at a fixed coupon rate
of 9 - 10%, and the other borrowings at an average interest rate of 6 - 7%, see note 22.
The significant commitments and contingencies in relation to the group are as noted below.
(a) Contractual liabilities
Subsoil use rights are not provided to the Company on an indefinite basis, and each renewal shall be approved before the current contract or license expires.
These rights can be cancelled by the Government of the Republic of Kazakhstan (hereinafter referred to as “the Government”) if the Company does not fulfil
contractual liabilities.
Deposit development costs
In accordance with the subsoil use contract, the Company has an approved working programme which may be reviewed and reconsidered depending on the
economic viability and operational conditions of the deposit. The management of the Company believes it has fulfilled the requirements of the Contract.
Training for Kazakhstani specialists
In accordance with the terms of the contract the Company is liable for the annual costs incurred in respect of the professional training of the Kazakhstani
personnel involved in the work. The costs are estimated to be at least 1% of the operational costs during the development and operational process.
Development of the social sphere of the region
According to the terms of the contract, the Company is liable for supporting the development and ensuring social support for the activity of the communities near
the area of operations of the Company. As at 31 December 2020, the Company has met all the conditions of the Contract.
Liabilities on the restoration of the mine
Within eighty calendar days upon the expiration of the contract the Company is liable for the development of the mine restoration programme and its inspection
by the competent authority of the Government of the Republic of Kazakhstan. The Company is liable for implementation of the programme upon its approval.
(b) Taxation risks
The tax system of Kazakhstan, being relatively new, is characterised by frequent changes to the legal norms, official interpretations and court decisions, which are
often not explicit and can be contradictory. This leads to differing interpretations by the tax authorities. The examination and investigations of the accounts to
ensure that the tax payable is accurate are carried out by several regulatory bodies. These bodies have the power to impose heavy fines and penalties. The
accuracy of the tax computation can be investigated five calendar years after the end of the accounting period. In certain circumstances this period can be
increased.
(c) Insurance
In accordance with the subsoil use contract the Company is liable for the development of the insurance programme and its submission for approval by the
competent authority. The Company has several contracts of obligatory insurance including insurance of the vehicle owners, the employer’s liability and insurance
of the subsoil users’ liability where the activity of such subsoil users is connected to the damage to third parties.
(d) Court proceedings
The claims on the Company are periodically set out in the courts along with the Company’s activities. As at the reporting date, there are no material claims against
the Company.
As part of the settlement in relation to the tailings dam restoration programme, the Company has a memorandum signed with the local authorities, whereby the
Company is liable for arranging the construction of the paste plant for US$1.4m (US$600m Tenge). It has been agreed that the Company will use its best endeavors
to have this completed once all necessary permits are obtained, the necessary permits have not been obtained at the date of this report. Other than the paste
plant as at the reporting date the Company has fulfilled all of its obligations in relation to the outstanding works which required in relation to the tailings dam
restoration program.
26. Parent and ultimate parent undertaking
The controlling party and parent entity of the Company is African Resources Limited, by virtue of the fact that at the date of this report it owns 65.5% (2019: 69.8%)
of the voting rights in the Company. There is no requirement to prepare consolidated accounts for African Resources Limited, which is registered in the British
Virgin Islands.
The ultimate controlling party are the Assaubayev family, by virtue of the fact that they are the controlling party of African Resources Limited.
27. Non adjusting events after the financial period
On 22 April 2021 a contract for the purchase of mining equipment was cancelled due to delays as a result of COVID-19. The full amount of prepayment for this
equipment of US$3.6m was repaid to the Group on 27 April 2021. An alternative supplier will be sought.
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AltynGold plc (formerly Altyn plc)
Annual Report 2020
NOTICE OF ANNUAL GENERAL MEETING
NOTICE IS HEREBY GIVEN THAT the Annual General Meeting of the AltynGold Plc (the “Company”) will be held at Langham Court Hotel, 31-35 Langham Street,
London W1W 6BU, United Kingdom on 24 June 2021 at 11.00am in order to consider and, if thought fit, pass resolutions 1 to 7 as ordinary resolutions and
resolution 8 as a special resolution:
ORDINARY RESOLUTIONS
1. To receive the audited accounts and the reports of the Directors and auditors for the year ended 31 December 2020.
2. To approve the Directors’ remuneration policy and report.
3. To re-elect Sanzhar Assaubayev as a Director of the Company.
4. To confirm the appointment of Thomas Gallagher as a Director (Non-Executive) of the Company.
5. To reappoint BDO LLP as the Company’s auditors to hold office until the conclusion of the next general meeting at which the annual accounts are to be laid
before the Company.
6. To authorise the Audit Committee of the Board to determine the auditors’ remuneration.
7. That, in accordance with section 551 of the Companies Act 2006 (as amended) (the “Act”) the directors be generally and unconditionally authorised to allot
Relevant Securities (as defined in the notes to this Notice):
a. comprising equity securities (as defined by section 560 of the Act) up to an aggregate nominal amount of £1,738,005 (such amount to be reduced by the
nominal amount of any Relevant Securities allotted under paragraph 7b. below) in connection with an offer by way of a rights issue:
i. to holders of ordinary shares in proportion (as nearly as may be practicable) to their respective holdings; and
ii. to holders of other equity securities as required by the rights of those securities or as the directors otherwise consider necessary, but subject to such
exclusions or other arrangements as the directors may deem necessary or expedient in relation to treasury shares, fractional entitlements, record dates,
legal or practical problems in or under the laws of any territory or the requirements of any regulatory body or stock exchange; and
b.
in any other case, up to an aggregate nominal amount of £869,003 (such amount to be reduced by the nominal amount of any equity securities allotted
under paragraph 7a. above in excess of £869,003), provided that this authority shall, unless renewed, varied or revoked by the Company, expire on the date
which is 18 months after the date on which this resolution is passed or, if earlier, the date of the next annual general meeting of the Company save that the
Company may, before such expiry, make offers or agreements which would or might require Relevant Securities to be allotted and the directors may allot
Relevant Securities in pursuance of such offer or agreement notwithstanding that the authority conferred by this resolution has expired.
This resolution revokes and replaces all unexercised authorities previously granted to the directors to allot Relevant Securities but without prejudice to any
allotment of shares or grant of rights already made, offered or agreed to be made pursuant to such authorities.
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73
SPECIAL RESOLUTION
8. That, conditional on the passing of Resolution 7, the directors be given the general power to allot equity securities (as defined by section 560 of the Companies
Act 2006 (as amended) (the “Act”) for cash, either pursuant to the authority conferred by resolution 7 or by way of a sale of treasury shares, as if section 561(1) of
the Act did not apply to any such allotment, provided that this power shall be limited to:
a. the allotment of equity securities in connection with an offer of equity securities (but, in the case of the authority granted under 7b., by way of a rights issue
only):
i. to the holders of ordinary shares in proportion (as nearly as may be practicable) to their respective holdings; and
ii. to holders of other equity securities as required by the rights of those securities or as the directors otherwise consider necessary, but subject to such
exclusions or other arrangements as the directors may deem necessary or expedient in relation to treasury shares, fractional entitlements, record dates,
legal or practical problems in or under the laws of any territory or the requirements of any regulatory body or stock exchange; and
b. the allotment (otherwise than pursuant to paragraph 8a. above) of equity securities up to an aggregate nominal amount of £260,700.
The power granted by this resolution will expire on the date which is 18 months after the date on which this resolution is passed or, if earlier, the conclusion of the
Company’s next annual general meeting (unless renewed, varied or revoked by the Company prior to or on such date) save that the Company may, before such
expiry make offers or agreements which would or might require equity securities to be allotted after such expiry and the directors may allot equity securities in
pursuance of any such offer or agreement notwithstanding that the power conferred by this resolution has expired.
This resolution revokes and replaces all unexercised powers previously granted to the directors to allot equity securities as if section 561(1) of the Act did not apply
but without prejudice to any allotment of equity securities already made or agreed to be made pursuant to such authorities
By order of the Board
Rajinder Basra
Company Secretary
Registered Office:
28 Eccleston Square
London
SW1V 1NZ
Dated 30 April 2021
Company Number: 05048549
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AltynGold plc (formerly Altyn plc)
Annual Report 2020
NOTES TO THE NOTICE OF
ANNUAL GENERAL MEETING
Relevant Securities means:
p Shares in the Company other than shares allotted pursuant to:
– an employee share scheme (as defined by section 1166 of the Act);
– a right to subscribe for shares in the Company where the grant of the right itself constituted a Relevant Security; or
– a right to convert securities into shares in the Company where the grant of the right itself constituted a Relevant Security.
p Any right to subscribe for or to convert any security into shares in the Company other than rights to subscribe for or convert any security into shares allotted
pursuant to an employee share scheme (as defined by section 1166 of the Act). References to the allotment of Relevant Securities in the resolution include
the grant of such rights.
Entitlement to attend and vote
1. Only those shareholders registered in the Company’s register of members at:
p 6.00 pm on Tuesday 22 June 2021; or,
p if this meeting is adjourned, at 6.00 pm on the day two days prior to the adjourned meeting, shall be entitled to attend and vote at the meeting. Changes to
the register of members after the relevant deadline shall be disregarded in determining the rights of any person to attend and vote at the meeting.
Appointment of proxies
2.
If you are a shareholder who is entitled to attend and vote at the meeting, you are entitled to appoint a proxy to exercise all or any of your rights to
attend,speak and vote at the meeting and you should have received a proxy form with this notice of meeting. You can only appoint a proxy using the
procedures set out in these notes and the notes to the proxy form.
3.
If you are not a member of the Company but you have been nominated by a member of the Company to enjoy information rights, you do not have a right to
appoint any proxies under the procedures set out in this “Appointment of proxies” section. Please read the section “Nominated persons” below.
4. A proxy does not need to be a shareholder of the Company but must attend the meeting to represent you. You may appoint more than one proxy provided
each proxy is appointed to exercise rights attached to different shares. You may not appoint more than one proxy to exercise rights attached to any one share.
To appoint more than one proxy, each proxy must be appointed on a separate proxy form. If you wish your proxy to speak on your behalf at the meeting you
will need to appoint your own choice of proxy (not the chairman) and give your instructions directly to them.
5. Shareholders can:
p appoint a proxy and give proxy instructions by returning the enclosed proxy form by post (see note 7);
p register their proxy appointment electronically (see note 8);
p if a CREST member, register their proxy appointment by utilising the CREST electronic proxy appointment service (see note 9).
Appointment of a proxy does not preclude you from attending the meeting and voting in person. If you have appointed a proxy and attend the meeting and
vote in person, your proxy appointment will automatically be terminated.
6. A vote withheld is not a vote in law, which means that the vote will not be counted in the calculation of votes for or against the resolution. If no voting
indication is given, your proxy will vote or abstain from voting at his or her discretion. Your proxy will vote (or abstain from voting) as he or she thinks fit in
relation to any other matter which is put before the meeting.
Appointment of proxy by post
7 The notes to the proxy form explain how to direct your proxy how to vote on each resolution or withhold their vote.
To appoint a proxy using the proxy form, the form must be:
p completed and signed;
p sent or delivered to Neville Registrars (the “Registrar”), at Neville House, Steelpark Road, Halesowen, West Midlands B62 8HD; and
p received by the Registrar no later than 11.00am on 22 June 2021.
In the case of a shareholder which is a company, the proxy form must be executed under its common seal or signed on its behalf by an officer of the company
or an attorney for the company. Any power of attorney or any other authority under which the proxy form is signed (or a duly certified copy of such power or
authority) must be included with the proxy form. If you have not received a proxy form and believe that you should have one, or if you require additional proxy
forms, please contact the Registrar on +44 (0) 121 585 1131.
Appointment of proxies electronically
8. As an alternative to completing the hard-copy proxy form, you can appoint a proxy electronically online at www.sharegateway.co.uk and completing the
authentication requirements as set out on the proxy form. For an electronic proxy appointment to be valid, your appointment must be received by the Registrar
no later than 11.00am on 22 June 2021.
Appointment of proxies through CREST
9. CREST members who wish to appoint a proxy or proxies by utilising the CREST electronic proxy appointment service may do so for the meeting and any
adjournment(s) of it by using the procedures described in the CREST Manual (available via www.euroclear.com). CREST Personal Members or other CREST
sponsored members, and those CREST members who have appointed a voting service provider(s), should refer to their CREST sponsor or voting service
provider(s), who will be able to take the appropriate action on their behalf.
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In order for a proxy appointment made using the CREST service to be valid, the appropriate CREST message (a CREST Proxy Instruction) must be properly
authenticated in accordance with Euroclear UK & Ireland Limited’s (EUI) specifications and must contain the information required for such instructions, as
described in the CREST Manual. The message, regardless of whether it constitutes the appointment of a proxy or is an amendment to the instruction given to a
previously appointed proxy, must, in order to be valid, be transmitted so as to be received by the Registrar ID 7RA11 no later than 11.00am on 22 June 2021, or,
in the event of an adjournment of the meeting, 48 hours before the adjourned meeting. For this purpose, the time of receipt will be taken to be the time (as
determined by the timestamp applied to the message by the CREST Applications Host) from which the issuer’s agent is able to retrieve the message by enquiry
to CREST in the manner prescribed by CREST. After this time, any change of instructions to proxies appointed through CREST should be communicated to the
appointee through other means.
CREST members and, where applicable, their CREST sponsors or voting service providers should note that EUI does not make available special procedures in
CREST for any particular message. Normal system timings and limitations will therefore apply in relation to the input of CREST Proxy Instructions. It is the
responsibility of the CREST member concerned to take (or, if the CREST member is a CREST personal member or sponsored member, or has appointed a voting
service provider(s), to procure that his/her CREST sponsor or voting service provider(s) take(s)) such action as shall be necessary to ensure that a message is
transmitted by means of the CREST system by any particular time. In this connection, CREST members and, where applicable, their CREST sponsors or voting
service providers are referred, in particular, to those sections of the CREST Manual concerning practical limitations of the CREST system and timings.
The Company may treat as invalid a CREST Proxy Instruction in the circumstances set out in Regulation 35(5)(a) of the Uncertificated Securities Regulations
2001..
Appointment of proxy by joint members
10. In the case of joint holders, where more than one of the joint holders completes a proxy appointment, only the appointment submitted by the most senior
holder will be accepted. Seniority is determined by the order in which the names of the joint holders appear in the Company’s register of members in respect
of the joint holding (the first-named being the most senior).
Changing proxy instructions
11. Shareholders may change proxy instructions by submitting a new proxy appointment using the methods set out above. Note that the cut-off time for receipt of
proxy appointments (see above) also apply in relation to amended instructions; any amended proxy appointment received after the relevant cut-off time will
be disregarded.
Where you have appointed a proxy using the hard-copy proxy form and would like to change the instructions using another hard-copy proxy form, please
contact the Registrar on +44 (0) 121 585 1131.
If you submit more than one valid proxy appointment, the appointment received last before the latest time for the receipt of proxies will take precedence.
Termination of proxy appointments
12. A shareholder may change a proxy instruction but to do so you will need to inform the Company in writing by:
p Sending a signed hard copy notice clearly stating your intention to revoke your proxy appointment to Neville Registrars, at Neville House, Steelpark Road,
Halesowen, West Midlands B62 8HD. In the case of a shareholder which is a company, the revocation notice must be executed under its common seal or
signed on its behalf by an officer of the company or an attorney for the company. Any power of attorney or any other authority under which the revocation
notice is signed (or a duly certified copy of such power or authority) must be included with the revocation notice.
The revocation notice must be received by the Registrar no later than 11.00am on 22 June 2021.
If you attempt to revoke your proxy appointment but the revocation is received after the time specified, your original proxy appointment will remain valid
unless you attend the meeting and vote in person.
Corporate representatives
13. A corporation which is a shareholder can appoint one or more corporate representatives who may exercise, on its behalf, all its powers as a member provided
that no more than one corporate representative exercises powers over the same share.
Issued shares and total voting rights
14. As on 6pm at 30 April 2021, the Company’s issued share capital comprised 27,332,934 ordinary shares of £ 0.10 each. Each ordinary share carries the right to one
vote at a general meeting of the Company and, therefore, the total number of voting rights in the Company is 27,332,934.
The Company’s website, www.altyngold.uk will include information on the number of shares and voting rights.
Notification of shareholdings
15. Any person holding 3% or more of the total voting rights of the Company who appoints a person other than the Chairman of the Annual General Meeting as
their proxy will need to ensure that both they, and their proxy, comply with their respective disclosure obligations under the Disclosure Rules and Transparency
Rules.
Questions at the meeting
16. Any member attending the meeting has the right to ask questions. The Company must answer any question you ask relating to the business being dealt with
at the meeting unless:
p answering the question would interfere unduly with the preparation for the meeting or involve the disclosure of confidential information; p the answer has
already been given on a website in the form of an answer to a question; or p it is undesirable in the interests of the Company or the good order of the
meeting that the question be answered.
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AltynGold plc (formerly Altyn plc)
Annual Report 2020
NOTES TO THE NOTICE OF
ANNUAL GENERAL MEETING continued
Nominated persons
17. If you are a person who has been nominated under section 146 of the Companies Act 2006 to enjoy information rights (Nominated Person):
p You may have a right under an agreement between you and the shareholder of the Company who has nominated you to have information rights (Relevant
Shareholder) to be appointed or to have someone else appointed as a proxy for the meeting.
p If you either do not have such a right or if you have such a right but do not wish to exercise it, you may have a right under an agreement between you and
the Relevant Shareholder to give instructions to the Relevant Shareholder as to the exercise of voting rights.
p Your main point of contact in terms of your investment in the Company remains the Relevant Shareholder (or, perhaps, your custodian or broker) and you
should continue to contact them (and not the Company) regarding any changes or queries relating to your personal details and your interest in the Company
(including any administrative matters). The only exception to this is where the Company expressly requests a response from you.
Documents on display
18. Copies of the service contracts of the executive directors and the non-executive directors’ contracts for services are available for inspection at the Company’s
registered office during normal business hours and at the place of the meeting from at least 15 minutes prior to the meeting until the end of the meeting.
Communication
19. Except as provided above, shareholders who have general queries about the meeting should use the following means of communication (no other methods
of communication will be accepted):
p Contact the Company by e-mail to info@altyngold.uk.
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Annual Report 2020
77
EXPLANATION OF RESOLUTIONS
An explanation of each of the resolutions is set out below.
ORDINARY BUSINESS
Resolutions 1 to 7 will be proposed as ordinary resolutions and will be passed if more than 50% of shareholders’ votes cast are in favour.
Resolution 1: To receive the 2020 Report and Accounts
The directors of the Company (the ‘Directors’) must present their Annual Report and Accounts of the Company for the year ended 31 December 2020 (the ‘Annual
Report’) to shareholders for formal adoption at the Annual General Meeting.
Resolution 2: Directors’ remuneration report
The Directors’ remuneration report is set out in the Annual Report. In accordance with the provisions of the Act the Directors’ remuneration report is the Annual
Report contains:
p a statement by the Chairman of the Remuneration Committee;
p the Directors’ remuneration policy in relation to future payments to the Directors and former Directors’; and p the Annual Report on remuneration, which sets
out payments made in the financial year ending 31 December 2020.
The statement by the Remuneration Committee Chairman and the Annual Report on remuneration will be put to an annual advisory shareholder vote by ordinary
resolution. Accordingly, Resolution 2 is the ordinary resolution to approve the Directors’ remuneration report. As it is an advisory vote it does not affect the actual
remuneration paid to any Director.
Resolutions 3 to 4: To re-elect the Directors
Under the Company’s articles of association, one third of the Directors or, if their number is not a multiple of three, then the number nearest to but not less than
one-third must retire from office and then stand for re-election.
Biographical details of directors to be re-elected are set out in the Annual Report and are also available for viewing on the Company’s website at www.altyngold.uk
Resolutions 5 to 6: To reappoint the auditors and authorise the Audit Committee of the Board to determine their remuneration
The Company is required to appoint auditors at each general meeting at which the annual accounts and report are to be laid before the Company, to hold office
until the conclusion of the next such meeting. The Audit Committee has reviewed the effectiveness, independence and objectivity of the external auditors, BDO
LLP, on behalf of the Board which now proposes their reappointment as auditors of the Company. Resolution 6 also authorises the Audit Committee of the Board,
in accordance with standard practice, to negotiate and agree the remuneration of the auditors.
SPECIAL BUSINESS
As well as the ordinary business of the meeting outlined above, a number of special matters will be dealt with at the Annual General Meeting. Resolution 7 will be
proposed as an ordinary resolution and will be passed if more than 50% of shareholders’ votes cast are in favour. Resolution 8 will be proposed as a special
resolution. For this resolution to be passed, at least 75% of shareholders’ votes cast must be in favour.
Resolution 7: Directors’ authority to allot shares
At the 2020 Annual General Meeting in June 2020 the Directors were given authority to allot shares in the Company, and Resolution 8 seeks to renew this authority
for a period until the date which is 18 months after the date on which this resolution is passed or, if earlier, the date of the next annual general meeting of the
Company.
This resolution would give the Directors authority to allot ordinary shares, and grant rights to subscribe for or convert any security into shares in the Company, up
to an aggregate nominal value of £855,891.82. This amount represents approximately one-third (33.33%) of the issued ordinary share capital of the Company, as at
24 April 2020, the last practicable date prior to the publication of this document. The Company does not currently hold any shares in treasury. The extent of the
authority follows the guidelines issued by institutional investors.
The Directors consider that it is appropriate for this authority and these powers to be granted to preserve maximum flexibility for the future.
Resolution 8: Disapplication of pre-emption rights
Section 561 of the Companies Act 2006 gives all shareholders the right to participate on a pro-rata basis in all issues of equity securities for cash, unless they agree
that this right should be disapplied. The effect of this resolution is to empower the Directors, until the date which is 18 months after the date on which this
resolution is passed or, if earlier, the date of the next annual general meeting of the Company, to allot equity securities for cash, without first offering them on a
pro-rata basis to existing shareholders, but only up to a maximum nominal amount of £233,434.21 representing approximately 10% of the Company’s issued
ordinary share capital on 26 April 2021 (being the latest practicable date before the date of this document). In addition, the resolution empowers the Directors to
deal with fractional entitlements and any practical problems arising in any overseas territory on any offer made on a pro-rata basis. The Directors consider that it is
appropriate for this authority and these powers to be granted to preserve maximum flexibility for the future.
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AltynGold plc (formerly Altyn plc)
Annual Report 2020
COMPANY INFORMATION
Directors
Mr Kanat Assaubayev
Mr Aidar Assaubayev
Mr Sanzhar Assaubayev
Mr Ashar Qureshi
Mr Vladimir Shkolnik
Mr Thomas Gallagher
Company secretary
Mr Rajinder Basra
(Chairman)
(Chief Executive Officer)
(Executive Director)
(Non-Executive Director)
(Non-Executive Director)
(Non-Executive Director, appointed 9 December
2020)
Auditors
BDO LLP
55 Baker Street
London
W1U 7EU
BDO Kazakhstan
6 Gabdullin St,
Almaty City, 050013
Kazakhstan
Registered office & Company number
28 Eccleston Square
London
SW1V 1NZ
Company number: 5048549
Kazakhstan office
10 Novostroyevskaya
Sekisovskoye Village
Kazakhstan
Solicitors
Wragge Lawrence Graham & co. LLP
54 More
London Riverside
London
SE1 2AU
Cleary Gottlieb Steen & Hamilton LLP
City Place House
London
EC2V 5EH
174796 Altyn Annual Report 2020 Pt4_174796 Project Altyn Annual Report 2020 Pt4 04/05/2021 14:46 Page 79
174796 Altyn Annual Report 2020 Pt4_174796 Project Altyn Annual Report 2020 Pt4 04/05/2021 14:46 Page 80
AltynGold plc
28 Eccleston Square
London
SW1V 1NZ
www.altyn.uk