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Press Release: Avesoro Resources Inc. - Financial -10-

21 Mar 2018 11:00 am

17. Provision
 
                                            December 31,  December 31, 
                                             2017          2016 
                                            $'000         $'000 
Current 
Legal provisions                                     395             - 
Others                                               128             - 
                                                     523             - 
Non-current 
Mine closure and rehabilitation provision          8,529         2,304 
Provision for employee benefits                    1,910             - 
                                                  10,439         2,304 
 
 
                                   December 31,  December 31, 
                                    2017          2016 
                                   $'000         $'000 
Current 
Beginning of the year              -             - 
Assumed during the year (Note 4)            523             - 
End of the year                             523             - 
 
 
                                   December 31,  December 31, 
                                    2017          2016 
                                   $'000         $'000 
Non-current 
Beginning of the year                     2,304         1,369 
Additions during the year                   543           854 
Assumed during the year (Note 4)          7,477             - 
Unwinding of discount                       115            81 
End of the year                          10,439         2,304 
 

The estimated mine closure and rehabilitation costs are expected to be incurred at the end of the life of each mine, 2022 for New Liberty, 2024 for Youga and 2018 for Balogo. Mine closure and rehabilitation costs are estimated based on a formal closure plan and are subject to regular reviews. The principal factors that can cause expected cash flows to change include change in the LOM plan, changes in ore reserves and changes in law and regulation governing the protection of the environment.

18. Equity

(a) Authorised

Unlimited number of common shares without par value.

(b) Issued
 
                                                         Shares         $'000 
Balance at January 1, 2016                                536,168,262  177,877 
Issued to Sarama Investments Liberia Limited (i)            5,648,310      531 
Equity financing with AJL (ii)                            390,644,883   17,462 
Conversion of Promissory Note (ii)                        271,577,546   12,303 
Other equity financing (iii)                            4,110,000,000   75,132 
Share subscription (iv)                                     5,300,000      101 
Shares issued for services to the Company (iv)              5,420,000      100 
Balance at December 31, 2016                            5,324,759,001  283,506 
Issued to AJL on acquisition of Youga and Balogo Gold 
 Mines (v)                                              2,033,492,822   51,459 
Equity financing (v)                                      797,449,000   20,248 
Share issuance costs (v)                                            -  (1,568) 
Exercise of stock options (vi)                                375,000        8 
Balance at December 31, 2017                            8,156,075,823  353,653 
 
 
(i)    On January 6, 2016, the Company completed the acquisition 
        of Sarama Investments Liberia Limited which holds 
        the Cape Mount, Cape Mount East and Cape Mount West 
        licences, for a total consideration of 5,648,310 shares 
        at a price of 6.38p per share ($0.094). 
 
(ii)   On June 21, 2016 the Company issued 59,533,674 new 
        common shares at a price of $0.045302 per Share and 
        a promissory note for the aggregate principal amount 
        of US$12,303,006 to AJL ("the Promissory Note"), raising 
        gross proceeds of $15 million. 
 
       On July 15, 2016 the Company issued a further 331,111,209 
        new shares at a price of $0.045302 per share to AJL, 
        raising gross proceeds of $15 million. Further, the 
        Promissory Note issued by the Company to AJL also 
        converted into 271,577,546 Shares (also at a price 
        of $0.045302 per Share). 
 
       These transactions resulted in AJL becoming the majority 
        shareholder of the Company. 
 
(iii)  On December 6, 2016, the Company issued 4,110,000,000 
        shares at a price of 1.5 pence per share raising net 
        proceeds of $75 million, with AJL subscribing for 
        $60 million of new shares, via an equity fundraising 
        to finance the Company's transition to an owner-operator 
        mining model at New Liberty, repay amounts due to 
        the Lenders and to strengthen its balance sheet. 
 
(iv)   In addition, Serhan Umurhan, the Company's Chief Executive 
        Officer, subscribed for 5,300,000 shares at a price 
        of 1.5 pence per share. Serhan Umurhan and Geoff Eyre, 
        the Company's Chief Financial Officer, have been issued 
        2,710,000 shares each at a price of 1.5 pence per 
        share in consideration for an aggregate of $100,000 
        for services rendered to the Company. 
 
(v)    As discussed in Note 4, the company acquired Youga 
        and Balogo Gold Mines on December 18, 2017 for a total 
        consideration of US$70.2 million which comprises of 
        the issuance of 2,033,492,822 new common shares in 
        the Company at a price of 1.90p per share and a cash 
        component of US$18.7 million. The cash component was 
        funded through the issuance of 797,449,000 at a price 
        of 1.90p per share through a private placing. The 
        directly attributable costs of issuance of these new 
        shares amounted to $1.6 million. 
 
(vi)   During the year ended December 31, 2017 the Company 
        issued 375,000 shares on exercise of 375,000 stock 
        options at a price of 1.575 pence per stock option. 
 

(c) Stock options

Information relating to stock options outstanding at December 31, 2016 is as follows:
 
                                 December 31,                  December 31, 
                                  2017                          2016 
                   Number of     Weighted         Number of    Weighted 
                    options       average          options      average 
                                  exercise price                exercise price 
                                  per share                     per share 
                                  Cdn$                          Cdn$ 
Beginning of the 
 year               124,269,550             0.09   18,096,864             0.54 
Options granted     174,500,000             0.03  113,046,000             0.04 
Options exercised     (375,000)             0.03            -                - 
Options expired       (557,000)             1.05  (6,592,187)             0.39 
Options forfeited  (14,894,696)             0.18    (281,127)             0.35 
End of the year     282,942,854             0.05  124,269,550             0.09 
 

There were 51,202,500 stock options that have vested as at December 31, 2017 (2016: 24,952,550) with a weighted average exercise price of Cdn$0.04 (2016: Cdn$0.25).

The weighted average fair value of the 174,500,000 stock options granted in year ended December 31, 2017 (2016: 113,046,000 options) was estimated at US$0.01 per option (2016: US$0.02) at the grant date based on the Black-Scholes option-pricing model using the following assumptions:
 
                                                  Year ended     Year ended 
                                                   December 31,   December 31, 
                                                   2017           2016 
Share price at grant date                         GBP0.02-0.03   GBP0.02-0.06 
Exercise price                                    GBP0.02-0.03   GBP0.02-0.06 
Dividend yield                                               0%             0% 
Risk free interest rate                              0.40-0.72%     0.17-1.30% 
Expected life                                           5 years        5 years 
Expected volatility (based on historical 
 volatility)                                             34-90%        84-129% 
 

19. Loss per share
 
                                          Year ended         Year ended 
                                           December 31,2017   December 31,2016 
Loss for the year attributable to owners 
 of equity 
 ($'000)                                           (27,474)          (112,990) 
Weighted average number of common shares 
 for the purposes 
 of 
 basic and diluted loss per share                54,256,004         11,328,935 
Basic and diluted loss per share ($)                 (0.51)             (9.97) 
 

The weighted average number of common shares has been restated for the 100:1 share consolidation that became effective on January 16, 2018 (Note 25).

Where there is a loss, the impact of warrants and stock options is anti-dilutive, hence, basic and diluted earnings per share are the same.

20. Related party transactions

Following are the Company's related party transactions in addition to the acquisition of Youga and Balogo Gold Mines as discussed in Note 4.

(a) AJL loan facility

As discussed in Note 13(b), the Company borrowed US$18.8 million from its majority shareholder, AJL, during the year ended December 31, 2017. Interest charged on the loan for the year ended December 31, 2017 amounted to US$0.7 million.

(b) Loans payable to Mapa

As discussed in Note 13(c), the Company borrowed US$23.2 million from Mapa during the year ended December 31, 2017. Interest charged on the loans for the year ended December 31, 2017 amounted to US$0.4 million.

(c) Guarantee on the Loan Facilities

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March 21, 2018 07:00 ET (11:00 GMT)
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