30 March 2012
Kolar Gold Ltd
Half year results for six months ended 31 December 2011
Kolar Gold Limited ("Kolar Gold" or the "Company" ), the Indian focussed gold exploration and mine development company, announces its unaudited results for the six months ended 31 December 2011.
· Cash deposits of £9.6m at period end.
o Majority has been earmarked to exercise the options over the remaining tenements.
· Loss after tax for the period was £1,205,337 (2010: £927,763).
· Core and RC drilling activities are well underway at South Kolar Licence area and results to date have been encouraging.
· The approval process for further licenses in North and East Kolar is progressing and in final stages with the Government.
· The corporate restructuring is complete and the Group's operating policies, procedures and systems are in place and operational.
Nick Spencer, Chief Executive Officer of Kolar Gold Limited, comments:
"I am pleased to announce that Kolar Gold has made solid progress during the last six months. The company has now established operations in India and undertook nearly 6000m of drilling in the prospective South Kolar Licence area during the half year.
The revival process of Bharat Gold Mines Limited (BGML) is continuing to move forward and we are now awaiting the Supreme Court to direct the sale tender process to begin. Kolar continues to work closely with our two Indian partners to build and expand our gold business in India."
For further information please contact:
Kolar Gold Limited
Nick Spencer / Chris Clowes
+617 3846 0211
Singer Capital Markets Ltd (Nomad and Joint Broker)
James Maxwell / Jenny Wyllie
+44 20 3205 7500
Ocean Equities Limited (Joint Broker)
+44 20 7786 4370
Ed Portman / Lydia Eades
+44 20 7920 3150
About Kolar Gold Limited:
Kolar Gold is an Indian gold exploration and development company, listed on the AIM market (Ticker: KGLD) that has an experienced international board and strong local partners.
KGL has rights to explore and develop one prospecting licence and 13 further licence applications in the Kolar Gold Belt, an 80 kilometre long Archaean Greenstone Belt, in Southern India. The Kolar Gold Belt is one of the most prospective underdeveloped Archaean Greenstone Belts in the world and is regarded by Mr Andrew J Vigar of Mining Associates Limited, the Competent Person, as comparable to the Archaean Greenstone Belts of South Africa, Canada and Western Australia which have similar geology, structure and style of mineralisation. This project area includes 32 known mineralised prospects and covers 568 square kilometres in the southern states of Andhra Pradesh, Karnataka and Tamil Nadu. KGL commenced exploration on the first Prospecting Licence in South Kolar in February 2011.
KGL is also jointly pursuing, with the mine employee unions, the acquisition and revival of the neighbouring historic Kolar Gold Fields which has produced 25 million ounces of gold at 15.9 grams per tonne over 120 years until closure in 2001.
Review of operations
Your Company has made good progress in the period establishing our operations in India and mobilising two rigs for drilling targets in the South Kolar block.
Steady progress is being made in the revival process of Bharat Gold Mines Limited (BGML). We are awaiting the Supreme Court to direct that the sale tender process should begin.
Kolar Gold continues to work closely with its two Indian partners, SUN Mining and Geomysore India (Private) Limited ('GMSI'), to establish Kolar Gold as a responsible leading player in the gold mining industry in India.
Your company has made an encouraging start on the ground in India this period.
Diamond drilling commenced in February 2011 in the South Kolar Licence area and by December nearly 6000m of drilling had been completed on several prospects. Drilling principally targeted known zones of mineralization and extensions of auriferous lodes previously mined at the Chigargunta mine in the south and the Bisanatham mine in the north.
Drilling at the Chigargunta NE deposit has validated historic drilling results and provided valuable fresh geological data on the host rocks and structural controls to mineralisation. Results included:
· KCN-02: 4.74m at 24.7g/t gold from 79.74m to 84.48m
· KCN-05: 0.50m at 160.2 g/t gold from 117.14m to 118.89m
· KCN-10: 1.00m at 12.1g/t gold from 45.65m to 46.65m
· KCN-14: 1.10m at 16.4g/t gold from 45.29m to 46.39m
· KCN-05: 3.65m at 4.6g/t gold from 20.54m to 24.19m (HW lode)
· KCN-05: 2.60m at 6.0g/t gold from 134.04m to 136.64m (FW lode)
The combined historic and current drilling results are being modeled in preparation for the next campaign of drilling.
Scout diamond drilling, with six holes, was carried out on the Chigargunta Eastern Lodes namely E2, E3 and E4 lodes. These holes have confirmed the extension of the lodes mined in the historic Chigargunta mines. Five of the six holes intersected encouraging gold values including:
· KCE 01 - 0.5m @ 4.90g/t from 41.55m & 1.0m @ 3.36g/t from 43.55m
· KCE 02 - 11.5m @ 1.21g/t from 82.84m incl. 1.5m @ 4.74g/t from 92.84m
· KCE 06 - 2.0m @ 3.04g/t from 14.3m and 3.0m @ 3.1g/t from 28.3m
Confirmation drilling has also been carried out at the Mallapakonda deposit which has a previous resource of 61,527 oz gold. This drilling has provided a good understanding of the controls to mineralisation at this priority target deposit. Modeling is been carried out to give a detailed interpretation of potential ore shoots and their continuity to depth. A resource update is also being computed.
Planning is underway to re-open one of the Mallapakonda adits to provide suitable underground drilling platforms. Difficult terrain hinders surface drilling at this deposit.
Drilling in this part of the South Kolar Licence area is in a forestry area, and ongoing foresty approval is required to drill additional surface holes in the area. An application for a 160 hole drill programme has been submitted to the State Forestry Department for approval.
To assist identification of priority targets at South Kolar, we undertook 40 line km of detailed Induced Polarisation ('IP') Surveys. The IP survey confirmed the continuity of auriferous structures previously mined at the Chigargunta and Old Bisanatham mines. A number of significant anomalies also exist along the north-south trend of the greenstone belt indicating a number of good target areas for drilling.
An RC drill rig was deployed in November to investigate the anomalies identified by the abovementioned IP surveys. This RC programme of 2,750m was completed in February with 30 shallow holes. Results are being interpreted to plan further follow up diamond and RC drilling going forward.
Over the last year, the company has generated a large database comprising ground magnetics, IP surveys, mapping, RC and diamond drilling. An exploration review is currently underway to combine and interpret all these data sets. A further programme of detailed mapping is also being undertaken with the valuable knowledge gained from the drilling and in particular the controls to mineralisation within the different rock units with an emphasis on structure and alteration characteristics. This review will allow better targeting of drill holes to identify zones most likely to host mineralisation.
Kolar Gold Projects
We continue to work closely with GMSI and SUN Mining to progress the North and East Kolar tenement approvals which are in the final stages with the Government. The Company has retained cash balances for the acquisition of these rights. These license approvals remain with the relevant mining department for approval and management are confident they will be granted in due course. The process of granting of licences has been slower than the Company planned.
The Company and advisors have made solid progress via dialogue with the Government of India and recent agreement in the Supreme Court to proceed with the sale and revival by tender process. We now await the court order and the issue of the sale tender documents which have been drafted by Ernst & Young.
The Company had £9.6m in cash deposits at period end. The bulk of these funds have been earmarked as consideration for the exercise of the options over the remaining tenements (£4.7m) and undertaking the Group's exploration activities (£3.2m) on these tenements during 2012.
The loss after tax for the period was £1,205,337, compared to £927,763 for the six months to 31 December 2010 and £3,256,290 for the year to June 2011.
Careful attention is being paid to the profile of expenditure at South Kolar. An increase in exploration expenditure is anticipated when the grant of the North and East Kolar tenements are approved by the Government.
The Group has operated within the cashflows it anticipated at the time of the IPO in June 2011 and accordingly will need to raise finance during 2012 if all options are exercised over the tenements and exploration is to take place as planned. These matters are described in detail in Note 4 to the financial statements. If such finance is not obtained then, the Group will have sufficient funds to exercise its options over the tenements but will need to slow down or defer its exploration activities in order to have sufficient cash to see it through the next 12 months. However, we remain well funded for our planned 2012 activities at this stage.
We have a number of activities and initiatives underway and we foresee 2012 will be a year of growth and expansion for the company.