Georgian Mining Corporation (LON:GEO) today announced its final results for the 12 months ended 31 December 2017. The Company also announces that its Annual General Meeting will be held at The Washington Mayfair Hotel, 5 Curzon Street, London, W1J 5HE, at 2:00 p.m. BST on 28 August 2018.
The annual report and accounts for the year ended 31 December 2017 along with the notice of AGM will be posted to shareholders today.
The annual report and accounts for the year ended 31 December 2017 and the notice of AGM are available for download on the Company’s website, www.georgianmining.com.
To view this announcement with the attached images, please follow this link:
http://www.rns-pdf.londonstockexchange.com/rns/9813S_1-2018-6-28.pdf
Chairman’s Report
Key Achievements
The last twelve months have seen important key achievements for the Company that have greatly strengthened our foundations and which are critical to our continuing success in Georgia. These include technical success in the field; vesting of our 50% joint venture interest in JSC Georgian Copper & Gold (“Joint Venture” or “GCG”); building a stronger Board and Management Team; and concluding key new or revised agreements with our joint venture partner, Caucasian Mining Group (“Joint Venture Partner”).
A major achievement in 2017 was the discovery of significant copper-gold sulphides resources at our most advanced project in Georgia, Kvemo Bolnisi East (“KBE”), with an extensive supergene enrichment zone, beneath the surface cap of gold oxides. There is clear evidence for significant upside potential for the sulphides resources and it is likely the sulphides will represent the majority of the project value. A key aim of the 2018 work programme is to further define this potential, and the next resource update at KBE will follow the 2018 infill drilling programme. The Gold Zone 3 (“GZ3”) discovery west of KBE also substantially increases the footprint of gold mineralisation, and includes additional zinc sulphide-gold mineralisation beneath the cover.
In 2017 the Company completed 139 drillholes for a total of 13.4km of drilling, principally at Kvemo Bolnisi; undertook metallurgical testwork on KBE oxides and sulphides; along with a large volume of regional geochemical sampling and geophysical surveys in the wider licence area. Our re-evaluation of historical data and regional programmes has identified 14 prospects which will now undergo target testing in the wider 860 sq km licence area.
After a productive drilling campaign at KBE, we completed our vesting of $6.0M into the Joint Venture in September 2017, with the result that all future expenditure is on a 50:50 basis between the partners. However, at that point our Joint Venture Partner requested certain revisions to the original Shareholders Agreement and there followed a lengthy and complex period of negotiations. These were successfully concluded in March 2018 with the announcement of three key achievements – a modified Shareholders Agreement; an agreed 2018 work programme; and a Memorandum of Understanding on Production (of gold oxides) from the leading asset, KBE.
The Joint Venture company holds a 30-year mining concession, whose tenure is valid until 13th October 2041. During this mining tenure there is a requirement to obtain “right-to-explore” permits through government approval of multi-year exploration work programmes and budgets. Following the agreement with our Joint Venture partner on revisions to the Shareholders Agreement and other milestones announced in March 2018 we re-engaged with our partner and the Georgian Mining Agency to conclude negotiations to extend the exploration permits for the various areas and, at the time of reporting, the final application has been agreed. The final stage, submission and approval of a Government Resolution, should now be finalised upon new Ministerial appointments following a Government re-organisation triggered by the resignation of the Prime Minister on 13th June 2018. Interim Cabinet appointments were made on 20th June and we remain confident that once the new Government has settled the Government Resolution will be approved and allow us to press ahead with our 2018 Work Programme. In alignment with our partner and the Mining Agency, we supported the decision of the Joint Venture company to curtail fieldwork whilst this approval process was ongoing, but we are actively looking at options to secure additional drilling capacity to recover any delays.
Management
Commencing in late 2017 the Company has also made a number of key management changes, in recognition of the future skillsets required to deliver the best value to shareholders. Mike Struthers was appointed as COO in late December 2017, and subsequently appointed CEO on 28th March 2018. At the same time I also accepted the role of Non-Executive Chairman. Our prior careers with Lundin Mining and other recognised mining companies in the fields of exploration, new business development, mining and engineering, project development and management have added real depth to the Board and Management Team. The appointment of Simon Cleghorn as Technical Services Manager in Georgia commencing in June 2018 further strengthened the team’s delivery ability and, given his long association with the Madneuli operations, added yet more depth to the relationships with our Joint Venture Partner.
The additions of Mike and Simon as well as the other Board changes during the period have created a very delivery-capable and focussed team, and we will continue to strengthen the Georgian team in key areas during 2018 and beyond.
Financial Results
As an exploration and development group which has no revenue we are reporting a loss for the twelve months ended 31 December 2017 of £2,382,476 (2016: £5,645,734), which is in line with our budget.
The Group’s cash position at the end of the period was £1.5 million.
Outlook
The Company has a three-pronged strategy for value creation, to grow the Company and deliver shareholder returns:
1. To press ahead with the continued development of the KBE Project through the execution of the detailed work programme.
2. In parallel, to progress further target testing and resource development work on the other priority prospects within the licence area. There are over a dozen known targets with significant resource potential, and we have an excellent opportunity for developing a pipeline of gold-copper projects all within reach of established processing facilities.
3. Acquiring New Assets: To expand the portfolio we will continue to examine other opportunities in Georgia and within the Tethyan Belt as and when they arise.
A logical work programme has been defined to advance the KBE project, including new considerations of how the design of the operation must account for the future sulphides operation (pit limits, access, locations of facilities etc). This will be further refined as the scale of the sulphides operation is better defined. A key deliverable remains the Mining and Production Agreement with our partner’s sister production company, RMG Gold, and this will be finalised prior to the end of the Feasibility Study, dependent upon the results of the metallurgical testwork.
Another key element in this work programme will be the advancement of environmental studies for the project, concluding baseline studies and in concert with the Feasibility Study incorporating environmental considerations into the designs of facilities at the site, to engineer-out or minimise any potential impacts.
Our recognition of the reserves potential in the wider Kvemo Bolnisi area is fundamental to effective planning of this future operation, with the new GZ3 discovery and the potential at KB West to consider.
2018 will also see the Company advancing target testing and the early phases of resource development at the other key projects at Dambludi and Tsitel Sopeli. This will allow the Company to validate revised geological models, prepare new resource models, and do preliminary work to illustrate the potential for a logical pipeline of development projects.
Dambludi is a zone of high-grade “bonanza” epithermal quartz-sulphide-gold veining occupying an area of at least 1.3 x 0.5km in plan, and has the potential for rapid project development, being all close to surface.
We are particularly excited about the opportunity presented by Tsitel Sopeli. Data review and the very limited historical core available has delineated zones of high-grade epithermal gold mineralisation at depth, to the west of the small area of gold oxide mineralisation. The veining represents the gold-rich end-member of the same low-sulphidation epithermal model. Our work in 2018 will test this new target which has significant upside due to incorrect drill orientations used previously (vertical drilling of sub-vertical veins). A key implication of GCG’s new epithermal interpretation is the recognition that, despite the large amount of historic drilling in this target area and the ineffective vertical orientation of the holes, this drilling was also too shallow to test for the highest grade “bonanza gold” zones that characterize this type of low-sulphidation epithermal gold system.
Plan View of Dambludi Project Area
Tsitel Sopeli – Examples of Low-Sulphidation
Epithermal Sub-Vertical Quartz-Gold-Sulphide Veins
The Company has also recently received a number of approaches from financial and strategic investors, and in parallel GEO is reviewing opportunities presented within the Tethyan Belt, focused on regions close to its existing licence portfolio. As a result, GEO appointed Hannam & Partners in June 2018 as its financial advisers with a focus on these strategic opportunities and M&A.
On a broader front, the Company continues to develop business relationships within Georgia, and we are putting more efforts into building Georgian Mining’s presence in country in 2018. Our Executive staff are spending a significant proportion of their time in country, and relationships in Government and the wider business community continue to expand. We remain confident that Georgia is a great address for developing a vibrant mining industry, and we want Georgian Mining to be a significant player.
We are also putting additional structure and investment into our Corporate Social Responsibility goals and programmes in 2018. Our reputation as a good corporate citizen within the communities in which we operate is a fundamental value for us, and we are already working effectively with local councils and community groups to provide support and contribute in different ways. I look forward to reporting significant progress and success in this area in the future.
I would like to thank our Shareholders for their support as well as the Board and Advisors for all their hard work and commitment during what has been a transformational year. We are excited by the opportunity for Georgian Mining to play a key role in developing the highly prospective mineral potential of Georgia to the benefit of our Shareholders and the country.
I look forward to providing regular updates on our progress as we meet our objectives over the next 12 months.
Neil O’Brien
Non-Executive Chairman
28 June 2018
About Georgian Mining Corporation
Georgian Mining Corporation has 50% ownership and operational control of the Bolnisi Copper and Gold Project in Georgia, situated on the prolific Tethyan Belt, a well-known geological region and host to many high-grade copper-gold deposits and producing mines. The Bolnisi licence covers an area of over 860 sq km and has a 30-year mining licence with a variety of targets and projects ranging from greenfield exploration / target definition phase through intermediate target-testing phases to more advanced projects including Kvemo Bolnisi East which will advance to Feasibility Study in 2018. These projects are proximal to several advanced projects and existing mining operations owned by the Company’s joint venture partner, and their sister production company. Georgia has an established mining code and is a jurisdiction open to direct foreign investment.
