Georgian Mining Corporation (LON:GEO) has today provided its interim results for the six-month period ended 30 June 2018.
UPDATE ON PERMIT APPLICATION
Mike Struthers, Georgian Mining Corporation Chief Executive Officer said:
“Regarding the Company’s permit application. As noted in our news release of 25th September 2018, I had a positive meeting with the Minister of Economy and Sustainable Development Mr. Kobulia on Friday 21st September 2018 regarding the Company’s application to extend our exploration permits. Following the meeting the Minister provided the below comment which reinforced our belief that this issue will get resolved very soon.”
Mr. George Kobulia , Georgian Minister of Economy and Sustainable Development said:
“I appreciate the effort that Georgian Mining are putting into their projects in Georgia. The Government has ambitious plans to expand our mineral resource extraction activities in the country, and we welcome companies who are very focussed on results and delivery. I hope we can respond positively on the company’s application in the very near future.”
While the period under review has been frustrating for our shareholders, the directors and all stakeholders of Georgian Mining, as we continue to wait for final Ministerial approval of our permitting application, the new Government appointments have now been made and we are confident the Government Resolution on our permits will be approved, and we will be able to press ahead with our 2018 drilling programme.
After a productive drilling campaign at our most advanced project Kvemo Bolnisi East (“KBE”) in 2017, 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 which were successfully concluded in March 2018 with the announcement of three key achievements; (i) a modified Shareholders Agreement; (ii) an agreed 2018 work programme; and (iii) a Memorandum of Understanding on Production (of gold oxides) from KBE. As a result of these changes each shareholder now has equal board representation and therefore, as of 1 March 2018, the JV Company is no longer consolidated for group accounting purposes.
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 revisions to the Shareholders Agreement, we re-engaged with our partner and the Georgian Mining Agency to conclude negotiations to extend the exploration permits for the various areas and the final application was agreed to in June.
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. Although the previous Minister of Economy endorsed our application just before the former minister resigned, it is necessary for the new Minister to also endorse the application before the Government Resolution can be circulated and approved. New Cabinet appointments have been made and we remain confident that the Government Resolution will be approved.
While we wait for the approval I have been delighted with the technical work being carried out at KBE in preparation for resource infill and development drilling, infrastructure sterilisation drilling, and commencement of the feasibility study. The recent work has included pit optimisations at KBE and developing new concepts for layouts of surface facilities and haulage routes to the processing facilities at the neighbouring operations. These have all been done internally and are particularly interesting as we are now starting to see what the future KBE operation will actually look like.
During this period, and whilst the process to extend the exploration licence has been ongoing, we have reduced expenditure wherever possible to preserve cash.
The Company continues to strengthen its Board and Management team and on 28th March 2018, Mike Struthers, previously COO, has been appointed CEO. At the same time, I also accepted the role of Non-Executive Chairman.
The appointment of Simon Cleghorn as Technical Services Manager in Georgia commencing in June 2018 further strengthened the team’s delivery ability and these, as well as the other Board changes during the period, have created a very capable team.
In June 2018 the Company appointed Hannam & Partners as its financial advisors to focus on strategic opportunities and M&A, with a view to expanding the portfolio in Georgia and within the Tethyan Belt. The Board and Management continue to develop the business, placing great emphasis on enhancing the Company’s presence in Georgia in 2018.
I would like to thank our Shareholders for their continued support as well as the Board and Advisors for all their hard work. Over the next 6 months we are confident we will benefit from the significant opportunities that now lie before us.