Jul 1 2014
Wishbone Gold plc, the AIM listed exploration and acquisition company focused on identifying and developing precious metal assets, is pleased to announce its final results for the year ended 31 December 2013.
General Highlights (including post period end)
- Continuing successful exploration results
- The appointment of Tabarak Investment Bank, based in the Dubai International Financial Centre ("DIFC"), as an additional adviser to the company.
- Share exchange agreement with General Resources Investment Trust ("GRIT")
- Open Offer to Shareholders
- Beaufort Securities Ltd were appointed as broker on 10th May 2013 and Northland Capital Ltd were appointed as NOMAD on 14th October 2013.
Outlook
The board remains optimistic about the prospects for 2014 with very promising exploration results on tenements during the 2013 year, we are building on this in the current 2014 exploration season.
Chairman Richard Poulden said:
"Wishbone has made significant strides towards its objectives this year. We have successfully brought on board a substantial institutional investor, GRIT, who have confidence in our management team. With the fire power and back up of both GRIT and Tabarak Investment Bank we are well placed to bring on board both small and large opportunities.
In addition, we have an ever-growing pipeline of potential projects that we are constantly evaluating as well as continuing the exploration of our current portfolio. I am confident in a successful and strong future for Wishbone Gold's prospects."
Chairman's Statement
Dear Shareholders
It is with great pleasure that I write to you as fellow shareholders for the second time since our Company was admitted to trading on AIM. There is a lot of technical ground to be covered in this statement so in order to ensure that you read what I think is important I am going to start with those points even though some wash over into the current year.
Exciting things taken out of order
Additional Tenements & good exploration results
During the year under review we were notified that we had been granted the EPMs for Wishbone III and Wishbone IV, which we had applied for during 2012. These now surround the most prospective areas on Wishbone II and cover extensions to the North and East as well as being prospective in their own right.
We achieved very promising exploration results on Wishbone II and White Mountains during the year, which we are building on in the current exploration season.
Share Exchange with GRIT
Signing the share exchange agreement with General Resources Investment Trust ("GRIT") was important to us. This was conditional during 2013 and became unconditional on 7th March 2014. Under this agreement Wishbone issued 45,772,693 ordinary shares in exchange for 1,031,360 ordinary shares in GRIT.
Obviously this will provide funding to Wishbone through the sale of the GRIT shares but it also brings on board an institution with a huge amount of resources expertise and who believe, like us, that we are at the bottom of a cycle particularly in precious metals.
More important to me than the simple funding through the share exchange is the future support for other deals and the worldwide connections of the managers of the fund. GRIT's support for Wishbone was amply demonstrated by their subscription under the open offer to shareholders (see below).
Appointment of Tabarak Investment Bank
On 2nd April 2014 we announced the appointment of Tabarak Investment Bank, based in the Dubai International Financial Centre ("DIFC"), as an additional adviser to the company. Tabarak has particular expertise in the financing of commodity projects on both trading and mining. They are primarily providers of debt finance in excess of $50m.
Having Tabarak on board means that we are already working with a group who can assist immediately with any substantial project for which we may need finance.
Open Offer to Shareholders
On 4th April we announced an open offer to shareholders. Black Swan FZE, a company with which I am associated, underwrote this. The objective here was to do what amounted to a rights issue so as to raise money without disadvantaging small shareholders who are normally excluded from this kind of placing. 38% of the offer was taken up which, considering it is something of a first, I find encouraging.
Possible Acquisitions
During the year under review and the first part of 2014 we have reviewed potential acquisitions in Australia, Indonesia, Vietnam and North America. This program is continuing and as soon as there is some conclusive news in this regard it will be announced. As stated previously we continue to look for a project, which is either in production or close to production, and as can be seen from the foregoing we now have the backing to finance such a deal on the right terms.
Management Changes
On 10th September 2013, Clive Hyman was appointed CFO and Jonathan Harrison retired to the role of non-executive director. Clive had been working with Jonathan for some months prior to the formal appointment and subsequently has proved an excellent addition to the team. In recognition of his contribution thus far, on 7th March 2014 he was granted options over 5 million new ordinary shares in the company to vest as follows: 2,000,000 immediately, 2,000,000 on 7th March 2015, and 1,000,000 on 7th March 2016.
I am obviously very pleased that Jonathan has agreed to stay on as a non-exec. He has been a source of wise counsel over many years and I am sure will continue to be so. Check his twitter feed for his new found freedom to travel though!
Change of Advisors
Beaufort Securities Ltd were appointed as broker on 10th May 2013 and Northland Capital Ltd were appointed as NOMAD on 14th October 2013.
The Market for Gold
I have been outspoken in my belief in the long term upside potential inherent in the precious metals market, and by extension in gold and silver explorers and developers. I expressed this again this year on stage at the UK Investor show and even issued a Newsletter setting out what I think is happening in the gold market. This is available on the Black Swan Plc website and also on the Wishbone site.
In essence, if you had asked me five years ago if LIBOR was rigged I would have scoffed at how impossible that would be to achieve. Now, if you asked me that same question about any western financial market I would, at the very least, hesitate…
I have stated since the Quantitative Easing program began in 2008 that this activity would inevitably lead to inflation. It is impossible to inject that amount of money into the financial system, both in the US and Europe and NOT get inflation. All inflation is good for the value of precious metals. It is also good for scarce assets (such as classic cars and houses in certain areas).
At the same time as the massive QE programs have been injecting money into the system, Asia, and in particular China, have been buying gold and demanding physical delivery of every ounce they buy. China has not stated its actual gold reserves for many years but has merely left us to guess at the total by releasing snippets of data on gold shipped through Hong Kong and on domestic demand. Any minor analysis of this however shows that their gold holdings must now be substantially above the last admitted figure of 1,054mt.
Overall therefore we believe that gold remains a store of value for the future and that Wishbone is well positioned to exploit this to the benefit of our shareholders.
Details on the Exploration during the year
During the year under review, I am pleased to report highly encouraging sampling results at our two original concessions.
The number of gold exploration projects in Queensland has tripled over the past decade. Wishbone's own prospects, together with the recent discoveries in Mount Wright and Welcome are found on the southern borders of the Hodgkinson and Chillago area, which are renowned for their historic vein and alluvial gold deposits. All of these historical mineral occurrences were discovered at the surface and mined to limited depths of less than a hundred meters. The Group's main targets are focused on extensions of some of these shallow indications of mineralisation like those found in the immediate area below the town of Charters Towers (west of Wishbone II and IV), and at Ravenswood (south of Wishbone II) via a large, deep open pit have together produced tons of gold from the early 20th Century to the present from just such extensions of outcrop discoveries.
Wishbone's four properties in the Mingela region of Queensland, with all following the strategy of being close to old or existing gold or other mineral mines. Three of the tenements, Wishbone II, III and IV, are highly prospective and come with encouraging initial sampling and geomagnetics. Wishbone II's Oakey Mill and Hanging Valley have shown encouraging results, with the former close to the Mt Wright Gold mine operated by Resolute Resources and currently producing 100k oz/yr. White Mountain, on the other hand, is highly prospective and based on six historic operations, including an old mine that produced 17.4kg Au. High grade Au is indicated by sampling at Clements's Copper historical workings, with a positive CPR suggesting major targets.
In October 2013 we announced the results of exploration in the Wishbone II tenement:
Hanging Valley Prospect Area
- Latest results strengthen the Board's conclusion that the Hanging Valley represents a priority target that may contain multiple polymetallic veins located perpendicular to the major Alex Hill Shear Zone
- Latest work defined extensions to the previously identified polymetallic DAB vein system as well as a parallel vein with grades of 1.25% copper ('Cu'); 0.12g/t gold ('Au'); 476ppm molybdenum ('Mo'); 262ppm arsenic ('As')
- High grades (including one sample at 25.2 g/t Au) were also returned from rock chip samples on the previously discovered Haughton Bluff Creek West vein system
- Regional stream sediment sampling returned strongly anomalous results up to 27.7ppb Au in the area
Oaky Mill Prospect Area
- Significant areas of copper and gold mineralisation discovered by soil sampling
- Samples from 17 outcrops returned grades greater than 1% copper ('Cu') and a further 8 samples returned grades greater than 0.5% with one sample as high as 4.83% Cu and 0.23 g/t Au
- Stream sediment samples defined elevated gold levels up to 11.7ppb Au
- High grade rock chip samples of up to 7.32 g/t Au were taken from an area to the west of the prospect that was previously unexplored
Financial Overview
At the end of the period under review, Wishbone Gold held cash balances totalling US$ 135,074
(2012: US$589,116). Since then a net US$457,000 has been added to cash as a result of the Open Offer. Costs continue to be tightly controlled to enable as much of the funds available to the Company are spent in the ground for exploration purposes. The Directors are all paid minimal salaries and at the Company's option these can be paid in ordinary shares. During the period under review and during the current year all directors' salaries have been paid by shares in this way. Administrative costs during the year totalled US$ 625,872 (2012: US$281,727), an indication of the increased activities now being undertaken by Wishbone Gold.
There is a substantial adjustment in the accounts for the previous year whereby US$537,076 has been moved into the profit and loss account instead of being written off against share premium. Last year the then Baker Tilly audit team in Gibraltar, supported by Baker Tilly in London, told us that this was the correct treatment. That same team now works for Ernst & Young and this year they have decided, supported by Ernst & Young in London, that this treatment was incorrect and accordingly our accounts need to be restated. We will be seeking an adjustment in the audit fee to ensure we are not charged twice for these diametrically opposed pieces of advice.
The following events took place after the year end :
- The conditional agreement with GRIT became unconditional on 7th March 2014 and wishbone Gold Plc issued 45,772,693 ordinary shares in exchange for 1,031,360 ordinary shares in GRIT.
- Share options were issued to Clive Hyman, the CFO, on 7th March 2014 over 5 million new ordinary shares in the company to vest as follows: 2,000,000 immediately, 2,000,000 on 7th March 2015, and 1,000,000 on 7th March 2016
- The company appointed Tabarak Investment Bank as one of its advisors on 2 April 2014
- The company announced a conditional Placing and Open offer on 4th April, 2014. A total of 33,677,181 new ordinary shares were admitted to trading AIM on 28 April, 2014. The issue was under written by Black Swan FZE, a company in which Richard Poulden has an interest and 980,888 commission shares were paid accordingly representing 3% of the amount underwritten. The total issued and voting share capital after this event is 262,551,235 ordinary shares. The shares allotted and issued to Black Swan FZE are in the process of settlement. The Directors expect to receive the proceeds in the first week of July 2014.
Outlook
Wishbone has made significant strides towards its objectives this year. We have successfully brought on board a substantial institutional investor, GRIT, who have confidence in our management team. With the fire power and back up of both GRIT and Tabarak Investment Bank we are well placed to bring on board both small and large opportunities.
In addition, we have an ever-growing pipeline of potential projects that we are constantly evaluating as well as continuing the exploration of our current portfolio.
Finally, I would like to thank the Board, management team and all our advisers for their hard work during the year. Of particular note was the support from all our advisors for getting the open offer completed as this was a far larger and more complex task than it should be: it is this cost and complexity which unfairly dissuades companies from following this route for fundraising.
Lastly, I would thank you, our shareholders, for your support. I toyed with ending with some comment about "gold may be in the gutter but is headed…" but after due consideration I think we are better off with Thomas Cromwell: "Out of every ditch a path if only you can see it". Let me assure you that China does not think it is even close to the ditch, let alone in it.
RO'D Poulden
Chairman