North River Resources plc, the AIM quoted resource company focused on the Namib Lead-Zinc Project in Namibia has provided DirectorsTalk its unaudited interim results for the six months ended 30 June 2016.
Highlights:
— North River continued in its efforts to secure a mining licence for the Namib Project. A Notice of Preparedness to Grant the Mining Licence was received from the Namibian Ministry of Mines and Energy (“Ministry”) in January 2016, setting out a process and timeline for agreement on newly introduced licence conditions, and a formal proposal to address these conditions was submitted to the Ministry in late April 2016. The Ministry is yet to respond to this proposal.
— The 3,800 metre drill programme continued to progress in the first half of the year, with a number of drill holes showing significant mineralisation. Overall results, however, have been mixed, with drill holes not intersecting mineralization to the extent anticipated, indicating that achieving a significant increase in defined mineral resource will require further work to improve understanding of the structural complexity of the orebody at depth. Since 30 June 2016, the programmed drilling metres have been completed in early September, and next steps will be defined following completion and assessment of final assays.
— A loss before taxation reported for the 6 months to 30 June 2016 of GBP1,302,437 (30 June 2015: loss of GBP1,377,787).
Post period end:
— A successful share capital reorganisation and US$ 5.6 million financing, including an open offer and placing, were completed in July 2016, allowing the Company to redeem outstanding convertible loan notes to Greenstone Resources LP. The financing left the Company effectively debt free and with US$2.5 million in working capital to support project work programmes in the second half of the year.
— New appointments to the Board of Directors of wholly owned Namibian company, Namibia Lead Zinc and Mining (Pty) Ltd (“NLZM”), were announced on 26 August 2016. The appointments of Asser Kapere, Ratonda Kajivikua and Francois du Plessis will greatly strengthen the NLZM Board in its efforts to advance the mining licence application and take the Namib Project forward to a construction decision. Mr Kapere has been appointed as Chairman of the Board of Directors of NLZM.
— The Company now faces a critical period of assessment in determining the way forward for the Namib Project. In regards to this assessment we are cognisant of both the prolonged, ongoing uncertainty regarding timing and terms to be attached to the grant of a mining licence, and the results of the resource expansion drilling programme.
Chairman’s Statement
North River continued in the first half of 2016 to focus on advancing the Namib Lead Zinc Project in Namibia towards a construction decision. Against a backdrop of continued uncertainty surrounding the long outstanding mining licence application, the clear priorities in the period were to continue pushing for the grant of the licence, advancing the resource expansion drilling programme, and raising working capital to support these critical activities.
As shareholders are aware, a successful share capital reorganisation and US$ 5.6 million financing, including an open offer and placing, were completed in July 2016, allowing the Company to redeem outstanding convertible loan notes to Greenstone Resources LP and in so doing be left effectively debt free and with $2.5 million in working capital.
Regarding the Namib Project mining licence application, a Notice of Preparedness to Grant the Mining Licence was received from the Ministry in January 2016, setting out a process and timeline for agreement on newly introduced licence conditions. A formal proposal was submitted to the Ministry in late April 2016, addressing these conditions, by committing to: (i) providing an opportunity for local ownership of the Namib Project; (ii) participation by historically disadvantaged Namibians in the management of the Namib Project; and (iii) implementing a corporate social responsibility strategy.
As per the process set out in the Notice of Preparedness to Grant, the Ministry then had 30 days to review and respond to the Company on its proposal. The Ministry however informed NLZM on 2 June 2016, and then again on 3 August 2016, that it requires more time to review the submitted proposal. No revised date, or timeframe within which the Company can expect to receive a response, has been given by the Ministry. While the Company looks forward to continuing to work with the Ministry on agreeing the terms and conditions to the grant of the mining licence, the duration and outcome of these discussions remain uncertain and the final issue of the Mining Licence on commercially acceptable terms cannot be guaranteed.
The North River Board also continues to examine the implications of the Government of the Republic of Namibia’s proposed introduction of broad based empowerment legislation. As previously announced, a first draft of the NEEEF Bill was published in February 2016 for a period of public consultation and can be found on the website of the Office of the Prime Minister (www.opm.gov.na/web/opm/neee-bill). Following an extended period of public consultation, a second draft of the NEEEF Bill is now under further review and stakeholder consultation. The second draft of the NEEEF Bill clarifies that the legislation would apply to both existing and new business but otherwise remains largely unchanged from the first draft. Indications from the Namibian Government suggest that this proposed legislation will go ahead and be enacted into law but timing remains uncertain. If enacted, the NEEEF Bill will set out obligations for companies, irrespective of sector, in respect of, inter alia, ownership and management participation by previously disadvantaged Namibians. Certain obligations under the draft Bill are inconsistent with those laid down under the terms & conditions to the Notice of Preparedness to Grant. The extent to which the NEEEF Bill would place additional obligations on the Namib Project remains unclear. It is an area on which the Company and Namibian mining industry as a whole will seek and need further clarity in due course.
The Company recently announced new appointments to the Board of Directors of wholly owned Namibian company, Namibia Lead Zinc and Mining (Pty) Ltd (“NLZM”). The appointments of Asser Kuveri Kapere, Ratonda Engelhardine Kajivikua and Francois du Plessis are aimed at strengthening the Board to support the Group’s efforts to obtain the mining licence and take the Namib Project forward to a construction decision. Mr Kapere has been appointed as Chairman of NLZM.
North River is reporting a loss before taxation for the 6 months to 30 June 2016 of GBP1,302,437 (30 June 2015: loss of GBP1,377,787). The Company’s cash position at the end of the period was GBP162,026 (30 June 2015: GBP602,093), before the net US$2.5 million working capital financing was completed in July 2016.
I would like to thank our shareholders for their continued support during what has been a difficult period for North River. The Company now faces a critical period of assessment in determining the way forward for the Namib Project. In regards to this assessment we are cognisant of both the prolonged, ongoing uncertainty regarding timing and terms to be attached to the grant of a mining licence, and the results of the resource expansion drilling programme.
