“Solidcore Resources reports robust financial results, demonstrating growth in sales and positive free cash flow in the first half of the year, underpinned by reliable operating performance and inventory release against the backdrop of strong commodity prices. Despite limited available bank funding this strong financial footing allows the Company to finance substantial capital expenditures, which are expected to exceed US$ 285 million in 2024, above our initial estimates. In 2025-2029, the Company’s investment programme will top US$ 1 billion with a large part of it going towards our ambitious Ertis POX project”, said Vitaly Nesis, Group CEO of Solidcore Resources plc, commenting on the results.

FINANCIAL HIGHLIGHTS

The discussion below covers the results of continuing operations. The comparatives are restated in the same way. Cash flows include amounts of discontinued operations, as required by IFRS 5, unless otherwise stated.

• In 1H 2024, revenue increased by 79% year-on-year (y-o-y), totalling US$ 704 million (1H 2023: US$ 393 million). The average realised gold price increased by 17%, tracking market dynamics. Gold equivalent (“GE”) production was 252 Koz, an 18% increase y-o-y on the back of higher concentrate shipment volumes to China and production from toll-treated concentrate at Kyzyl. Gold equivalent sales increased by 56% y-o-y to 321 Koz due to substantial progress in unwinding of Kyzyl concentrate stockpiles, previously accumulated due to logistical challenges.
• Group Total Cash Costs (“TCC”)[1] for 1H 2024 were US$ 960/GE oz, within the Group’s full-year guidance of US$ 900-1,000/GE oz, while being up 10% y-o-y, owing to continuously high domestic inflation.
• All-in Sustaining Cash Costs (“AISC”)1 remained broadly unchanged at US$ 1,281/GE oz, and within the full-year guidance range of US$ 1,250-1,350/GE, while also reflecting the increase in sales volumes, driven by de-stockpiling and resulting in the spread of sustaining capital expenditure over a larger amount of ounces sold.
• Adjusted EBITDA1 was US$ 346 million, an increase of 73% y-o-y, driven by higher sales volumes and higher commodity prices. The Adjusted EBITDA margin decreased by 3 percentage points to 49% (1H 2023: 51%).
• Underlying net earnings[2]  increased by 72% to US$ 243 million (1H 2023: US$ 141 million). Net earnings[3] were US$ 238 million (1H 2023: US$ 272 million due to large forex gains).
• Capital expenditures on continuing operations were US$ 107 million[4], up 25% compared with US$ 85 million in 1H 2023. The increase is mainly related to the Ertis POX development project. Full-year capex is expected to be approximately US$ 60 million above the original guidance of US$ 225 million, due to prepayments for the green energy projects (solar and gas power plants at Varvara).
• The Company confirms its earlier announced plans for a massive investment programme exceeding US$ 1 billion in 2025-2029, which will be focused on the implementation of the Ertis POX project.
• Net operating cash inflow from continuing operations increased by 86% to US$ 344 million (1H 2023: US$ 184 million). The Group reported positive free cash flow1 of US$ 47 million on continuing and discontinued operations, a significant improvement over 1H 2023 negative FCF of US$ 341 million. Free cash flow from continuing operations excluding disposal of Russian business amounted to US$ 240 million (1H 2023: US$ 101 million).
• Given the cash proceeds from the disposal of the Russian business and strong cash inflow from the sale of inventory, the Company recorded a net cash position of US$ 357 million versus pro forma net debt of US$ 174 million at the end of 2023.
• The Company notes that financing from Western banks remains constrained with small or no credit limits offered to borrowers in Kazakhstan due to long onboarding duration and existing compliance hurdles. As a result, the Company estimates that its cost of debt is set to rise from its current levels and considers other available options for funding its investment programme.
• The Company reiterates its full-year guidance for production and costs: production of 475 GE Koz, TCC in the range of US$ 900-1,000/oz and AISC in the range of US$ 1,250-1,350. However, the management does not expect comparable half-on-half results in H2 2024, given the following detrimental factors: high base effect of de-stockpiling, which is not likely to be repeated in the near future, stronger than budgeted year-to-date KZT/USD rate, inflationary pressures, shortage of railcars and congestions of eastbound railroads.

Financial highlights [5]	1H 2024	1H 2023[6]	Change
Revenue, US$m	704	393	+79%
Total cash cost[7], US$ /GE oz	960	871	+10%
All-in sustaining cash cost3, US$ /GE oz	1,281	1,285[8]	0%
Adjusted EBITDA3, US$m	346	200	+73%
Average realised gold price[9], US$ /oz	2,267	1,934	+17%
Net earnings, US$m	238	272	-13%
Underlying net earnings3, US$m	243	141	+72%
Return on Assets3, %	14%	n/a	n/a
Return on Equity (underlying) 3, %	14%	n/a	n/a
Basic earnings/(loss) per share, US$	0.50	0.57	-12%
Underlying EPS3, US$	0.51	0.30	+70%
Net (cash)/debt3, US$m	(357)	174[10]	n/a
Net (cash) debt/Adjusted EBITDA	(0.61)	0.40[11]	n/a
Net operating cash flow from continuing operations, US$m	344	184	+86%
Capital expenditure on continuing operations, US$m	(107)	(85)	+25%
Free cash flow from continuing operations excluding disposal of Russian business, US$m	240	101	+240%
Net cash outflow on disposal of subsidiaries, US$m	(215)	-	n/a
Free cash flow3, total on continuing and discontinued operations, US$m	47	(341)	n/a

 

 

OPERATING HIGHLIGHTS

• No fatal accidents occurred among the Group’s workforce and contractors in H1 2024 as well as no lost time injuries were recorded (consistent with H1 2023).
• GE output for H1 was up by 18% y-o-y to 252 Koz.

	1H 2024	1H 2023	Change
PRODUCTION (Koz of GE[12])	252	213	+18%
Kyzyl	169	128	+32%
Varvara	83	86	-3%
SAFETY
LTIFR[13] (Employees)	0	0	n/a
Fatalities	0	0	n/a

 

CONFERENCE CALL AND WEBCAST

The Company will not hold a webcast in relation to 2024 half-year financial results.

The Company’s Investor Relations team will be available for all questions related to its financial results disclosure. Please see the contacts below.

 

Investor Relations	Media
Evgeny Monakhov Alikhan Bissengali +44 20 7887 1475 (UK)   Kirill Kuznetsov Alina Assanova +7 7172 47 66 55 (Kazakhstan) ir@solidcore-resources.com	Yerkin Uderbay +7 7172 47 66 55 (Kazakhstan) media@solidcore-resources.kz

 

FORWARD-LOOKING STATEMENTS

This release may include statements that are, or may be deemed to be, “forward-looking statements”. These forward-looking statements speak only as at the date of this release. These forward-looking statements can be identified by the use of forward-looking terminology, including the words “targets”, “believes”, “expects”, “aims”, “intends”, “will”, “may”, “anticipates”, “would”, “could” or “should” or similar expressions or, in each case their negative or other variations or by discussion of strategies, plans, objectives, goals, future events or intentions. These forward-looking statements all include matters that are not historical facts. By their nature, such forward-looking statements involve known and unknown risks, uncertainties and other important factors beyond the company’s control that could cause the actual results, performance or achievements of the company to be materially different from future results, performance or achievements expressed or implied by such forward-looking statements. Such forward-looking statements are based on numerous assumptions regarding the company’s present and future business strategies and the environment in which the company will operate in the future. Forward-looking statements are not guarantees of future performance. There are many factors that could cause the company’s actual results, performance or achievements to differ materially from those expressed in such forward-looking statements. The company expressly disclaims any obligation or undertaking to disseminate any updates or revisions to any forward-looking statements contained herein to reflect any change in the company’s expectations with regard thereto or any change in events, conditions or circumstances on which any such statements are based.

 

TABLE OF CONTENTS

Financial review

Principal risks and uncertainties

Going concern

Directors’ responsibility statement

Report on Review of Interim Condensed Consolidated Financial Statements

Condensed Consolidated Income Statement

Condensed Consolidated Statement of Comprehensive Income

Condensed Consolidated Statement of Financial Position

Condensed Consolidated Statement of Cash Flows

Condensed Consolidated Statement of Changes In Equity

Notes to the Interim Condensed Consolidated Financial Statements

Alternative Performance Measures

 

 

Financial review

market summary

Precious metals

In 1H 2024, the spot gold price continued its upward movement, reaching new records due to the continuous deterioration of the geopolitical environment (including uncertainty related to the upcoming US election) and persistent, although lower, inflation. The gold price bottomed in February, reaching US$ 1,985 after a better-than-expected U.S. inflation report, before reaching a record price of US$ 2,444  in May. The average LBMA gold price for the period was US$ 2,204/oz, up 14% y-o-y.

Demand for gold (excluding OTC) for 1H 2024 was mildly down, falling 5% y-o-y to 2,044 tonnes . The key factors of the decrease were a sharp decline in jewellery consumption and net outflows from exchange-traded funds (ETFs), partially offset by steady central bank accumulations.

Accounting for a little below 50% of the overall gold demand, jewellery consumption in 1H reached a two-year low volume of 870 tonnes, which is 10% lower y-o-y, as the gold price peaked in May; notably Chinese jewellery demand reached its lowest volume, even when compared to the period during the COVID pandemic. Bar and coin investment demand remained on par with the 1H 2023 at 574 tonnes, only dropping by 4 tonnes, as Western investors demonstrated selling interest, unlike consistent accumulation across Asia, despite record prices.

Central banks continued to accumulate gold throughout 1H 2024 and added 483 tonnes to reserves, a significant growth of 25% y-o-y. Gold demand in technology and electronics sectors rose by 11% y-o-y to 162 tonnes on the back of rapid growth in demand for AI and high-performance computing infrastructure.

Total 1H 2024 gold supply remained largely stable at 2,441 tonnes, compared to 2,414 in 1H 2023.

Foreign exchange

The Group’s revenues are denominated in US dollars, while the majority of the Group’s operating costs are denominated in local currency (Kazakhstani tenge). As a result, changes in exchange rates affected our financial results and performance. 

In 1H 2024, the Kazakhstani tenge stood at 449 KZT/USD on average, which is 1% lower y-o-y (1H 2023: 452 KZT/USD) and dropped by 4% y-o-y to 471 KZT/USD at the end of the period (1H 2023: 454 KZT/USD) due to the seasonal increase of demand for USD. The annualised inflation rate in the country remained stable, amounting to 8.5% by June 2024.  

Revenue

(US$m unless otherwise stated)		1H 2024	1H 2023	Сhange	Volume variance,  US$m	Price variance,  US$m
Gold		694	380	+83%	222	92
Average realised price[14]	US$ /oz	2,267	1,934	+17%
Average LBMA price	US$ /oz	2,203	1,933	+14%
Share of revenues	%	99%	97%
Other metals		10	13	-23%	(4)	1
Share of revenues	%	1%	3%
Total revenue		704	393	+79%	218	93

In 1H 2024, revenue grew by 79% y-o-y, primarily driven by the growth of gold sales on the back of substantial progress in unwinding of Kyzyl concentrate stockpile, previously accumulated due to logistical challenges.

The Group’s average realised price for gold was US$ 2,267/oz in 1H 2024, up 17% from US$ 1,934/oz in 1H 2023, and 3% above the average market price of US$ 2,203/oz.

 

	Revenue, US$m				Gold equivalent sold, Koz
OPERATION		1H 2024	1H 2023	Сhange		1H 2024	1H 2023	Сhange
Kyzyl		456	214	+113%		207	113	+84%
Varvara		189	179	+5%		85	93	-9%
Other[15]		59	-	n/a		29	-	n/a
Total revenue		704	393	+79%		321	206	+56%

The Company’s efforts to unwind the previously accumulated concentrate stockpiles had a positive impact on revenues at Kyzyl. Sales volumes at Varvara decreased as a result of planned grade decline at the leaching circuit, following production dynamics, which was more than offset by the increase in commodity prices during the period.

Cost of sales

(US$m)	1H 2024	1H 2023			Сhange
On-mine costs	81	83			-2%
Smelting costs	58	60			-3%
Purchase of ore and concentrates from third parties	59	35			+69%
Mining tax	43	38			+13%
Cash operating costs	241	216			+12%
Depreciation and depletion of operating assets	49	37			+32%
Costs of production	290	253			+15%
Сhange in metal inventories	67	(67)			n/a
Idle capacities and abnormal production costs	1	-			n/a
Total cost of sales	358	186			+92%

 

CASH OPERATING COST STRUCTURE	1Н 2024		1Н 2023
	US$m	Share	US$m	Share
Services	68	28%	54	25%
Consumables and spare parts	48	20%	70	32%
Labour	21	9%	16	7%
Mining tax	43	18%	38	18%
Purchase of ore from third parties	59	24%	35	16%
Other expenses	2	1%	3	1%
Total cash operating cost	241	100%	216	100%

The total cost of sales almost doubled in 1H 2024 to US$ 358 million, reflecting a combination of factors throughout the year:

• volume-based increase in production and sales (+56% in gold equivalent terms);
• domestic inflation in Kazakhstan (8% y-o-y);
• higher cost of services;
• increase in depreciation charges;
• price-driven increase in mining tax.

The cost of services was up 26% y-o-y, caused mostly by higher volume of transportation services at Kyzyl.

The cost of consumables and spare parts was down 31% compared to abnormally high level of insurance stocks in 1H 2023.

The cost of labour within cash operating costs was up 31% y-o-y, mainly stemming from annual salary increases (tracking domestic CPI inflation).

The increase in purchases of third-party ore by 69% is attributable to Varvara which was treating higher volumes of third-party purchased ore, which generated additional margin and allowed to partially offset decrease in Komar ore grade at the leaching circuit.

Mining tax increased by 13% y-o-y to US$ 43 million, mainly driven by an increase in production volume combined with an increase in average realised prices.

Depreciation and depletion was US$ 49 million, up 32% y-o-y attributable to expansion of mining.

In 1H 2024, a net metal inventory decrease of US$ 67 million (1H 2023: US$ 67 million increase) was recorded.

 

General, administrative and selling expenses

(US$m)	1H 2024	1H 2023	Change
Labour	22	15	+47%
Services	5	1	n/a
Share based compensation	2	9	-78%
Depreciation	1	1	-
Other	5	4	+25%
Total general, administrative and selling expenses	35	32	+9%

General, administrative and selling expenses (“SGA”) increased by 9% y-o-y from US$ 32 million in 1H 2023 to US$ 35 million in 1H 2024, mainly caused by the increased headcount of administrative personnel with the commencement of Ertis POX project development, as well as regular salary reviews and one-off transaction fees related to divestment of Russian operations and post-divestment restructurings.

 

Other operating expenses

(US$m)	1H 2024	1H 2023	Change
Social payments	10	2	n/a
Exploration expenses	2	1	+100%
Taxes, other than income tax	4	2	+100%
Other expenses	3	2	+50%
Total other operating expenses	19	7	+171%

Other operating expenses increased to US$ 19 million in 1H 2024 compared to US$ 7 million in 1H 2023 mainly due to a scheduled increase in social payments in accordance with existing partnership agreements.

TOTAL Cash costs

In 1H 2024, total cash costs per gold equivalent ounce sold (“TCC”) were US$ 960/GE oz, up 10% y-o-y and 3% higher compared to 2H 2023. Domestic inflation combined with KZT rate strengthening and mining tax increase had an overall negative impact on cost levels.

The table below summarises major factors that have affected the Group’s TCC and AISC dynamics y-o-y:

 

Total cash cost by segment/operation, US$/GE oz

 

OPERATION	1H 2024	1H 2023	Change	2H 2023	Change
Kyzyl	799	649	+23%	743	+8%
Varvara	1,353	1,138	+19%	1,239	+9%
Total Group TCC	960	871	+10%	928	+3%

• Kyzyl’s total cash costs were at US$ 799/GE oz, up 23% y-o-y and 8% half-on-half due to inflationary headwinds.

• At Varvara, TCC were up 19% y-o-y and up 9% half-on-half at US$ 1,353/GE oz on the back of a planned grade declines, combined with a 9% decrease in sales volumes and processing additional feed from higher cost third-party ore.

 

 

ALL-IN SUSTAINING AND all-in cash costs

All-in sustaining cash costs[17] remained broadly unchanged at US$ 1,281/GE oz, reflecting the temporary increase in sales volumes as inventory levels normalise, resulting in the spread of sustaining capital expenditure over a larger amount of ounces sold.

AISC by operations were as follows:

All-in sustaining cash cost by segment/operation, US$/GE oz

OPERATION	1H 2024	1H 2023	Change
Kyzyl	1,015	883	+15%
Varvara	1,745	1,629	+7%
Total Group AISC	1,281	1,285[18]	0%

 

	Total, US$m				US$ /GE oz
RECONCILIATION OF ALL-IN COSTS	1H 2024	1H 2023		Change	1H 2024	1H 2023		Change
Cost of sales, excluding depreciation, depletion and write-down of inventory to net realisable value (Note 2 of condensed financial statements)	246		160	+54%	840		776	+8%
adjusted for:
Idle capacities	(1)		-	n/a	(3)		-	n/a
Treatment charges deductions reclassification to cost of sales	18		5	+221%	60		26	+131%
SGA expenses, excluding depreciation, amortization and share based compensation (Note 2 of condensed financial statements)	18		14	+26%	62		70	-11%
Total cash costs	281		180	+57%	961		871	+10%
SGA expenses for Corporate and other segment and other operating expenses	33		19	+72%	112		91	+23%
Capital expenditure excluding development projects	36		48	-25%	123		232	-47%
Capitalised stripping	25		19	+36%	86		91	-5%
All-in sustaining cash costs	375		265	+41%	1,281		1,2852	-0%
Finance costs (net)	(1)		9	-111%	(4)		44	-109%
Capitalised interest	1		-	n/a	3		-	n/a
Income tax expense/(benefit)	49		51	-4%	167		248	-33%
After-tax all-in cash costs	423		325	+30%	1,446		1,577	-8%
Capital expenditure for development projects	46		-	n/a	159		-	n/a
SGA and other expenses for development assets	-		4	-90%	1		19	-95%
All-in costs	469		329	+43%	1,605		1,596	+1%

 

Adjusted EBITDA[19] and EBITDA margin

 (US$m)

	1H 2024	1H 2023	Change
Profit for the period	238	272	-13%
Finance cost (net)[20]	(1)	9	-111%
Income tax expense	49	51	-4%
Depreciation and depletion	52	27	+94%
EBITDA	338	359	-6%
Net foreign exchange loss/(gain)	6	(165)	-104%
Share based compensation	2	5	-60%
Change in fair value of contingent consideration liability	-	1	n/a
Adjusted EBITDA	346	200	+73%
Adjusted EBITDA margin	49%	51%	-2%
Adjusted EBITDA per gold equivalent oz	1,078	971	+11%

 

 

Adjusted EBITDA by segment/operation

(US$m)

 

OPERATION	1H 2024	1H 2023	Change
Kyzyl	294	143	+106%
Varvara	70	70	-1%
Attributable corporate and other costs	(18)	(13)	+41%
Total Group Adjusted EBITDA	346	200	+73%

In 1H 2024, Adjusted EBITDA was US$ 346 million, 73% higher y-o-y, with an Adjusted EBITDA margin of 49%, reflecting a 42% increase in gold equivalent sold as inventory levels normalise, combined with 17% increase in gold average realised price.

 

Other income statement items

Solidcore Resources recorded a net foreign exchange loss in 1H 2024 of US$ 6 million compared to an exchange gain of US$ 165 million in 1H 2023.

The Group does not use any hedging instruments for managing foreign exchange risk, other than a natural hedge arising from the fact that the majority of the Group’s revenue is denominated or calculated in US Dollars.

Income tax expense for 1H 2024 was US$ 49 million compared to US$ 51 million expense in 1H 2023, charged at an effective tax rate of 20% (1H 2023: 16%), The increase was mainly attributable to the increased profit before foreign exchange and tax. For details refer to Note 12 of the condensed consolidated financial statements.

 

Net earnings, earnings per share and dividends

The Group recorded net profit of US$ 238 million in 1H 2024 versus US$ 272 million in 1H 2023. The underlying net earnings attributable to the shareholders of the parent were US$ 243 million, compared to US$ 141 million in 1H 2023:

Reconciliation of underlying net earnings[21]

(US$m)

	1H 2024	1H 2023	Change
Profit for the financial period attributable to the shareholders of the Parent	238	272	-13%
Foreign exchange loss/(gain)	6	(165)	n/a
Change in fair value of contingent consideration liability	-	1	n/a
Tax effect	(1)	33	n/a
Underlying net earnings	243	141	+72%

Basic earnings per share was US$ 0.50 compared to US$ 0.57 earnings per share in 1H 2023. Underlying basic EPS[22] was US$ 0.51, compared to US$ 0.30 in 1H 2023.

Capital expenditurE[23]

(US$m)	Sustaining	Development	Capital stripping and underground development	Total 1H 2024	Total 1H 2023
Ertis POX	-	46	-	46	19
Kyzyl	16	-	17	33	25
Varvara	20	-	8	28	42
Total capital expenditure	36	46	25	107	85

Total capital expenditure increased by 25% y-o-y at US$ 107[24] million in 1H 2024. The increase is mainly related to Ertis POX development project. Capital expenditure excluding capitalised stripping costs was US$ 82 million in 1H 2024 (1H 2023: US$ 67 million).

The major capital expenditure items in 1H 2024 were as follows:

Development projects

• Capital expenditure of US$ 46 million was related to initial investments into the Ertis POX facility.

Stay-in-business capex at operating assets

• At Kyzyl, capital expenditure in 1H 2024 comprised US$ 16 million, mainly represented by scheduled technical upgrades, expansion of the concentrator capacity to 2.6 Mtpa and expansion of tailings storage facility.
• At Varvara, capital expenditure of US$ 20 million was mainly related to the construction of a tailings storage facility and upgrading the mining fleet.

 

Cash flows

Cash flows include amounts of discontinued operations as required by IFRS 5, unless otherwise stated.

(US$m)	1H 2024	1H 2023	Сhange
Operating cash flows before changes in working capital	350	382	-8%
Changes in working capital	167	(347)	-148%
Total operating cash flows	517	35	n/a
Continuing operations	344	184	+86%
Discontinued operations	173	(149)	n/a
Capital expenditure	(174)	(375)	-54%
Net cash outflow on disposal of subsidiaries	(215)	-	n/a
Loans advanced	(78)	(14)	n/a
Other	(3)	10	-130%
Investing cash flows	(470)	(379)	+24%
Continuing operations	(319)	(83)	+283%
Discontinued operations	(151)	(296)	-49%
Financing cash flows
Net changes in gross debt	(100)	127	-179%
Repayments of principal under lease liabilities	(1)	(12)	-92%
Total financing cash flows	(101)	115	-188%
Continuing operations	(96)	(39)	+144%
Discontinued operations	(5)	154	-104%
Net (decrease)/increase in cash and cash equivalents	(54)	(229)	-76%
Cash and cash equivalents at the beginning of the period	842	633	+33%
Effect of foreign exchange rate changes on cash and cash equivalents	(27)	(20)	+35%
Cash and cash equivalents at the end of the period	761	384	+98%

Total operating cash flows in 1H 2024 strengthened y-o-y on the back of a reduction in stockpiles of concentrate inventory. Operating cash flows increased significantly year-on-year to US$ 517 million, as a result of an increase in sales volumes and adjusted EBITDA. 

Total cash and cash equivalents almost doubled compared to 1H 2023 and comprised US$ 761 million, with the following items affecting the cash position of the Group:

• Operating cash flows of US$ 517 million;
• Net cash outflow on disposal of subsidiaries of US$ 215 million, see Note 3 of the condensed consolidated financial statements);
• Capital expenditure of US$ 174 million[25];
• Loans advanced of US$ 78 million[26]; and
• The gross borrowings decrease of US$ 101 million.

The Group reported positive free cash flow of US$ 47 million, a significant improvement over 1H 2023 negative FCF of US$ 341 million.

 

balance sheet, Liquidity and funding

NET DEBT	30-Jun-24	31-Dec-23	Change
Short-term debt and current portion of long-term debt	219	1,005	-78%
Long-term debt	185	2,220	-92%
Gross debt	404	3,225	-87%
Less: cash and cash equivalents	761	842	-10%
Net debt	(357)	2,383	-115%
Continuing operations	(357)	174	n/a
Discontinued operations		2,209	n/a
Adjusted EBITDA (continuing operations)	346	439	-21%
Net (cash)/debt / Adjusted EBITDA[27] (continuing operations)	(0.61x)	0.40x	n/a

Due to the cash proceeds from the disposal of the Russian business and strong cash inflow from sale of inventory, the Company recorded a net cash position of US$ 357 million versus pro forma net debt of US$ 174 million as at the end of 2023.

The proportion of long-term borrowings to total borrowings was 46% as at 30 June 2024 (69% as at 31 December 2023). As at 30 June 2024, the Group had US$ 100 million (31 December 2023: US$ 100 million) of available undrawn facilities.

The average cost of debt decreased to 4.5% in 1H 2024 (1H 2023: 5.2%) due to de-consolidation of the Russian business with higher interest rate levels. The Group is confident in its ability to repay its existing borrowings as they fall due.

INVENTORY

Inventory levels decreased by US$ 41 million to US$ 233 million for the 1H 2024.

(US$m)	30 June 2024	Change 1H 2024	31 Dec 2023	Change 2H 2023	30 June 2023
Сoncentrate	30	-36	66	+7	59
Ore stock piles	78	-8	86	0	86
Doré, work in-process, metal for refining and refined metals	64	+13	51	-3	54
Non-metal inventories	61	-10	71	+3	68
Total inventory	233	-41	274	+8	267

 

Payable metals in inventory accumulated at 30 June 2024 were as follows:

(GE Koz)	30 June 2024	31 December 2023
Concentrate	30	65
Doré	10	12
Total payable metals	40	78

2024 YEAR-END outlook
The Company reiterates its full-year guidance for production and costs: production of 475 GE Koz, TCC in the range of US$ 900-1,000/oz and AISC in the range of US$ 1,250-1,350. However, the management does not expect comparable half-on-half results in H2 2024 given the following detrimental factors: high base effect of de-stockpiling, which is not likely to be repeated in the near future, stronger than budgeted year-to-date KZT/USD rate, inflationary pressures, shortage of railcars and congestions of the eastbound railroads.

Principal risks and uncertainties

There are a number of potential risks and uncertainties which could have a material impact on the Group’s performance and could cause actual results to differ materially from expected and historical results.

The principal risks and uncertainties facing the Group are categorised as follows:

• Operational risks:
  • Production risk
  • Construction and development risk
  • Supply chain risk
  • Exploration risk
• Sustainability risks:
  • Health and safety risk
  • Environmental risk
  • Human capital risk
• Political and social risks:
  • Legal and compliance risk
  • Political risk
  • Taxation risk
• Financial risks:
  • Market risk
  • Currency risk
  • Liquidity risk

A detailed explanation of these risks and uncertainties can be found on pages 68 to 84 of the 2023 annual report which is available at www.solidcore-resources.com.

The directors consider that these principal risks and uncertainties have not changed materially since the publication of the annual report for the year ended 31 December 2023 and continue to apply to the Group for the remaining six months of the financial year.

Further updates will be presented in the full annual financial report for 2024.

 

 

Going concern

In assessing its going concern status, the Group has taken account of its principal risks and uncertainties, financial position, sources of cash generation, anticipated future trading performance, its borrowings and other available credit facilities, its forecast compliance with covenants on those borrowings, and its capital expenditure commitments and plans.

To assess the resilience of the Group’s going concern assessment in light of the macroeconomic volatility, management performed the stress downside scenario that is considered plausible over the next 12 months from the date of approval of the financial statements. As such, this does not represent the Group’s ‘best estimate’ forecast, but was considered in the Group’s assessment of going concern, reflecting the current evolving circumstances and the most significant and plausible changes in macro assumptions identified at the date of approving the press-release.

The Group has already taken precautionary measures to manage liquidity and provide flexibility for the future. Under the stress scenario, the Group’s income and profits are affected by simultaneous decrease of gold prices by 10% and local currency appreciation by 10%, as well as 10% overrun of development capital expenditure.

At the reporting date, the Group holds US$ 761 million of cash and US$ 100 million of undrawn credit facilities, which when combined with the forecast net cashflows under the stress scenario above, is considered to be adequate to meet the Group’s financial obligations as they fall due over the next 12 months. No borrowing covenant requirements are forecast to be breached in the stress scenario. The Group expects to settle obligations as they fall due but also has mitigating actions available such as reducing production volumes and variable mining costs where possible, reducing and deferring non-essential and non-committed capital expenditure.

The Board is therefore satisfied that the Group’s forecasts and projections, including the stress scenario above, show that the Group has adequate resources to continue in operational existence for at least the next 12 months from the date of this report and that it is appropriate to adopt the going concern basis in preparing the interim condensed consolidated financial statements for the period ended 30 June 2024. 

DIRECTORS’ RESPONSIBILITY STATEMENT

Directors are responsible for the preparation of the interim condensed consolidated financial statements of Solidcore Resources plc (the “Company”) and its subsidiaries (the “Group”), which comprise the condensed consolidated statement of financial position as at 30 June 2024, and the condensed consolidated statement of profit or loss and other comprehensive income, condensed consolidated statement of changes in equity and condensed consolidated statement of cash flows for the six months ended 30 June 2024, in accordance with International Accounting Standard (IAS) 34, Interim Financial Reporting.

 

In preparing the interim condensed consolidated financial statements, directors are responsible for:

• properly selecting and applying accounting policies;
• presenting information, including accounting policies, in a manner that provides relevant, reliable, comparable and understandable information;
• providing additional disclosures when compliance with the specific requirements in IFRSs are insufficient to enable users to understand the impact of particular transactions, other events and conditions on the Group’s consolidated financial position and financial performance; and
• making an assessment of the Group’s ability to continue as a going concern.

 

Directors also are responsible for:

• designing, implementing and maintaining an effective and sound system of internal controls throughout the Group;
• maintaining adequate accounting records that are sufficient to show and explain the Group’s transactions and disclose with reasonable accuracy at any time the consolidated financial position of the Group, and which enable them to ensure that the interim condensed consolidated financial statements of the Group comply with IAS 34;
• taking such steps as are reasonably available to them to safeguard the assets of the Group; and
• preventing and detecting fraud and other irregularities.

 

 

These interim condensed consolidated financial statements were approved and authorised for issue by the Board of Directors on 13 September 2024 and signed on its behalf by

Omar Bahram Chairman of the Board of Directors

Vitaly Nesis Group Chief Executive Officer

 

REPORT ON REVIEW OF INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

To: management and shareholders of Solidcore Resources plc

Introduction

We have reviewed the accompanying interim condensed consolidated financial statements of Solidcore Resources plc and its subsidiaries, which comprise the interim condensed consolidated statement of financial position as at 30 June 2024 and the related interim condensed consolidated statements of comprehensive income, changes in equity and cash flows for the six-month period then ended, and selected explanatory notes (interim financial information). Management is responsible for the preparation and presentation of this interim financial information in accordance with IAS 34, Interim Financial Reporting. Our responsibility is to express a conclusion on this interim financial information based on our review.

Scope of review

We conducted our review in accordance with International Standard on Review Engagements 2410, Review of Interim Financial Information Performed by the Independent Auditor of the Entity. A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

 

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the accompanying interim financial information of Solidcore Resources plc and its subsidiaries is not prepared, in all material respects, in accordance with IAS 34, Interim Financial Reporting.

License for carrying on ancillary services in accordance with the Acting Law of the Astana International Financial Center (AIFC), No. AFSA-A-LA-2020-0007 issued by AFSA on 28 February 2020.		State Audit License for audit activities on the territory of the Republic of Kazakhstan: series МФЮ–2, № 0000003, issued by the Ministry of Finance of the Republic of Kazakhstan on 15 July 2005

050660, Republic of Kazakhstan, Almaty

Al-Farabi ave., 77/7, Esentai Tower

 

        13 September 2024

CONDENSED CONSOLIDATED INCOME STATEMENT

 

		Period ended		Period ended
	Note	30 June 2024		30 June 2023
		US$m		US$m
Continuing operations
Revenue	4	704		393
Cost of sales	5	(358)		(186)
Gross profit		346		207
General, administrative and selling expenses	9	(35)		(32)
Other operating expenses, net	10	(19)		(7)
Operating profit		292		168
Foreign exchange (loss)/gain, net		(6)		165
Change in fair value of financial instruments	18	-		(1)
Finance costs	11	(9)		(16)
Finance income		10		7
Profit before income tax from continuing operations		287		323
Income tax	12	(49)		(51)
Profit for the period from continuing operations		238		272
Discontinued operations
Net loss from discontinued operations	3	(2,045)		(82)
Net (loss)/profit		(1,807)		190
(Loss)/profit for the period attributable to:
Equity shareholders of the Parent		(1,807)		190
		(1,807)		190
Earnings per share for continuing operations (US$)
Basic		0.50		0.57
Diluted		0.50		0.57
Earnings per share for discontinued operations (US$)
Basic		(4.32)		(0.17)
Diluted		(4.32)		(0.17)
Loss/(Earnings) per share for continuing and discontinued operations (US$)
Basic		(3.81)		0.40
Diluted		(3.81)		0.40

 

 

CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

 

 

 

CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION

 

 

	Note	30 June 2024		31 December 2023
Assets		US$m		US$m
Property, plant and equipment	14	832		2,998
Right-of-use assets		3		76
Goodwill		-		11
Investments in associates and joint ventures		6		129
Non-current accounts receivable		28		107
Other non-current financial assets		8		9
Deferred tax assets		5		192
Non-current inventories	15	39		115
Total non-current assets		921		3,637
Current inventories	15	194		1,178
Prepayments to suppliers		30		180
Income tax prepaid		17		46
VAT receivable		47		131
Trade and other receivables		37		261
Other financial assets at FVTPL		1		5
Cash and cash equivalents	20	761		842
Total current assets		1,087		2,643
Total assets		2,008		6,280
Liabilities and shareholders' equity
Accounts payable and accrued liabilities		(71)		(240)
Current borrowings	16	(219)		(1,005)
Income tax payable		(33)		(20)
Other taxes payable		(31)		(81)
Current portion of contingent consideration liability		(3)		(15)
Current lease liabilities		(1)		(18)
Total current liabilities		(358)		(1,379)
Non-current borrowings	16	(185)		(2,220)
Contingent and deferred consideration liabilities		(13)		(29)
Deferred tax liabilities		(54)		(252)
Environmental obligations		(15)		(69)
Non-current lease liabilities		(2)		(52)
Other non-current liabilities		(9)		(26)
Total non-current liabilities		(278)		(2,648)
Total liabilities		(636)		(4,027)
NET ASSETS		1,372		2,253
Share capital	13	14		14
Share premium	13	2,436		2,436
Share-based compensation reserve	13	4		33
Cash flow hedging reserve		7		8
Translation reserve		(1,138)		(2,063)
Retained earnings		49		1,825
Total equity		1,372		2,253
Total liabilities and shareholders’ equity		(2,008)		(6,280)

 

 

 

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

 

 

			Period ended[28]		Period ended
			30 June 2024		30 June 2023
	Note		US$m		US$m
Net cash generated by operating activities	20		517		35
Relating to:
Continuing operations			344		184
Discontinued operations	3		173		(149)
Cash flows from investing activities
Purchases of property, plant and equipment			(174)		(375)
Net cash outflow on asset acquisitions			(6)		-
Investments in associates			-		(3)
Net cash outflow on disposal of subsidiaries	3		(215)		-
Loans advanced			(78)		(14)
Repayment of loans provided			3		8
Contingent consideration received			-		5
Net cash used in investing activities			(470)		(379)
Relating to:
Continuing operations			(319)		(83)
Discontinued operations	3		(151)		(296)
Cash flows from financing activities
Borrowings obtained	20		359		582
Repayments of borrowings	20		(459)		(455)
Repayments of principal under lease liabilities	20		(1)		(12)
Net cash (used in)/ from financing activities			(101)		115
Relating to:
Continuing operations			(96)		(39)
Discontinued operations	3		(5)		154
Net decrease in cash and cash equivalents			(54)		(229)
Cash and cash equivalents at the beginning of the period	20		842		633
Effect of foreign exchange rate changes on cash and cash equivalents			(27)		(20)
Cash and cash equivalents at the end of the financial period	20		761		384

 

 

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

 

 

	Note	Stated capital account	Share capital	Share premium	Share-based compensation reserve	Cash flow hedging reserve	Translation reserve	Retained earnings	Total equity
		US$m	US$m	US$m	US$m	US$m	US$m	US$m	US$m
Balance at 1 January 2023 (audited)		2,450	-	-	35	16	(1,543)	1,284	2,242
Profit for the financial period		-	-	-	-	-	-	190	190
Other comprehensive loss, net of income tax		-	-	-	-	(4)	(495)	-	(499)
Total comprehensive income/(loss)		-	-	-	-	(4)	(495)	190	(309)
Share-based compensation		-	-	-	6	-	-	-	6
Transfer to retained earnings		-	-	-	(13)	-	-	13	-
Balance at 30 June 2023 (unaudited)		2,450	-	-	28	12	(2,038)	1,487	1,939
Balance at 1 January 2024 (audited)		-	14	2,436	33	8	(2,063)	1,825	2,253
Loss for the financial period		-	-	-	-	-	-	(1,807)	(1,807)
Other comprehensive loss, net of income tax		-	-	-	-	(1)	925	-	924
Total comprehensive income/(loss)		-	-	-	-	(1)	925	(1,807)	(883)
Share-based compensation		-	-	-	2	-	-	-	2
Transfer to retained earnings	13	-	-	-	(31)	-	-	31	-
Balance at 30 June 2024 (unaudited)		-	14	2,436	4	7	(1,138)	49	1,372

 

 

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1. GENERAL

Solidcore Resources (previously Polymetal International) is a leading gold producer based in Kazakhstan and listed on Astana International Exchange. During the six months ended 30 June 2024 the Group completed the divestment of its Russian business through sale of 100% share of JSC Polymetal (Polymetal Russia) (Note 3) and served an application to delist the Company’s shares from Moscow Stock Exchange.

Solidcore Resources plc (the “Company”) is the ultimate parent entity of Solidcore Resources.

The Company was incorporated on 29 July 2010 as a public limited company under Companies (Jersey) Law 1991 as Polymetal International plc. On 8 August 2023, the Group completed the re-domiciliation of the Company from Jersey to the Astana International Financial Centre ("AIFC") in Kazakhstan. The Company changed its name on 11 June 2024 following the sale of Polymetal Russia, which retained its former name.

Significant subsidiaries

As of 30 June 2024 the Company held the following significant mining and production subsidiaries:

 

				Effective interest held, %
Name of subsidiary	Deposits and production facilities	Segment	Country of incorporation	30 June 2024		31 December 2023
Varvarinskoye JSC	Varvara	Kazakhstan	Kazakhstan	100		100
Bakyrchik Mining Venture LLC	Kyzyl	Kazakhstan	Kazakhstan	100		100
Komarovskoye Mining Company LLC	Komar	Kazakhstan	Kazakhstan	100		100
Ertis Hydrometallurgical Plant LLC	Ertis POX	Kazakhstan	Kazakhstan	100		100

 

Basis of presentation

The unaudited interim condensed consolidated financial statements have been prepared in accordance with IAS 34 Interim Financial Reporting issued by the International Accounting Standards Board. They should be read in conjunction with the audited consolidated financial statements and the notes thereto included in the 2023 Annual Report of Polymetal International plc and its subsidiaries (“2023 Annual Report”) available at  https://www.solidcore-resources.com.

Accounting policies

These interim condensed consolidated financial statements have been prepared under the historical cost convention as modified by the revaluation of certain financial instruments measured at fair value.

The accounting policies and methods of computation applied are consistent with those adopted and disclosed in the Group’s consolidated financial statements for the year ended 31 December 2023, with the exception of new accounting pronouncements, which became effective on 1 January 2024 and have been adopted by the Group. The adoption of these new accounting pronouncements has not had a significant impact on the accounting policies, methods of

computation or presentation applied by the Group.

 

 

New standards and amendments applicable for the current period

• Classification of liabilities as current or non-current liabilities with covenants (Amendments to IAS 1 "Presentation of Financial Statements") specify the requirements for classifying liabilities as current or non-current. The amendments clarify that a right to defer settlement must exist at the end of the reporting period and that classification is unaffected by the likelihood that an entity will exercise its deferral right. In addition, a requirement has been introduced whereby an entity must disclose when a liability arising from a loan agreement is classified as non-current and the entity’s right to defer settlement is contingent on compliance with future covenants within twelve months. The amendments do not have a material impact on the Group
• Lease liability in a sale and leaseback (Amendments to IFRS 16 “Leases”) specify the requirements that a seller-lessee uses in measuring the lease liability arising in a sale and leaseback transaction. The amendments do not have an impact on the Group.
• Supplier finance arrangements (Amendments to IAS 7 “Statement of Cash Flows” and IFRS 7 “Financial Instruments: Disclosures”) clarify the characteristics of supplier finance arrangements and require additional disclosure of such arrangements. The amendments do not have a material impact on the Group.

New standards or amendments issued but not yet effective

The Group has not early adopted any amendment, standard or interpretation that has been issued but is not yet effective. It is expected that, where applicable, these standards and amendments will be adopted on each respective effective date.

 

Going concern

In assessing its going concern status, the Group has taken account of its financial position, anticipated future trading performance, its borrowings and other available credit facilities, its forecast compliance with covenants on those borrowings and capital expenditure commitments and plans.

The Board is satisfied that the Group’s forecasts and projections, having taken account of reasonably possible changes in trading performance, show that the Group has adequate resources to continue in operational existence for at least the next 12 months from the date of this report and that it is appropriate to adopt the going concern basis in preparing these interim condensed consolidated financial statements.

Exchange rates

Exchange rates used in the preparation of the interim condensed consolidated financial statements were as follows:

	Russian Rouble/US Dollar	Kazakh Tenge/US Dollar
As at 30 June 2024	Not applicable	471.46
As at 31 December 2023	89.69	454.56
Average 1H 2024	Not applicable	449.00

 

2. SEGMENT INFORMATION

The Group’s operating segments are aligned to those businesses that are evaluated regularly by the chief operating decision maker (the CODM) in deciding how to allocate resources and in assessing performance. Operating segments with similar economic characteristics are aggregated into reportable segments.

In March 2024, following the divestment of Russian business (Note 3), the Company re-assessed the presentation of financial information by segments. It was concluded that production hub-based reporting format is more meaningful from a management and forecasting perspective, as well as better aligned to the management structure, internal reporting and processes of the retained Group. Segment information for the period ended 30 June 2023 was restated accordingly.

Therefore the Group has identified two reportable segments:

• Varvara (Varvarinskoye JSC, Komarovskoye Mining Company LLC); and
• Kyzyl (Bakyrchik Mining Venture LLP).

 

Minor companies and activities (management, exploration, purchasing and other companies) which do not meet the reportable segment criteria are disclosed within the corporate and other segment.

 

The measure which management and the CODM use to evaluate the performance of the Group is a segment Adjusted EBITDA, which is an Alternative Performance Measure (APM). For more information on the APMs used by the Group, including definitions, please refer to page 40.

The accounting policies of the reportable segments are consistent with those of the Group’s accounting policies under IFRS. Revenue and cost of sales of the production entities are reported net of any intersegmental revenue and cost of sales, related to the intercompany sales of ore and concentrates.

Business segment current assets and liabilities, other than current inventory, are not reviewed by the CODM and therefore are not disclosed in these interim condensed consolidated financial statements. Additionally, net debt is included in performance measures, reviewed by CODM. The segment adjusted EBITDA reconciles to the profit before income tax from continuing operations as follows:

2. Segment information (continued)

	Period ended 30 June 2024											Period ended 30 June 2023
		Varvara		Kyzyl		Total reportable segments		Corporate and other		Total			Varvara		Kyzyl		Total reportable segments		Corporate and other		Total
Revenue from external customers		189		456		645		59		704			179		214		393		-		393
Cost of sales, excluding depreciation, depletion and write-down of inventory to net realisable value		105		141		246		61		307			99		61		160		-		160
Cost of sales		120		177		297		61		358			108		78		186		-		186
Depreciation included in cost of sales		(15)		(36)		(51)		-		(51)			(9)		(17)		(26)		-		(26)
General, administrative and selling expenses, excluding depreciation, amortisation and share-based compensation		9		9		18		14		32			6		8		14		12		26
General, administrative and selling expenses		9		10		19		16		35			7		8		15		17		32
Depreciation included in SGA		-		(1)		(1)		-		(1)			(1)		-		(1)		-		(1)
Share-based compensation		-		-		-		(2)		(2)			-		-		-		(5)		(5)
Other operating expenses excluding additional tax charges		5		12		17		2		19			4		2		6		1		7
Other operating expenses, net		5		12		17		2		19			4		2		6		1		7
Share of loss of associates and joint ventures		-		-		-		-		-			-		-		-		-		-
Adjusted EBITDA		70		294		364		(18)		346			70		143		213		(13)		200
Depreciation expense		15		37		52		-		52			10		17		27		-		27
Share-based compensation		-		-		-		2		2			-		-		-		5		5
Operating profit		55		257		312		(20)		292			60		126		186		(18)		168
Foreign exchange gain/(loss), net										(6)											165
Change in fair value of contingent consideration liability										-											(1)
Finance expenses										(9)											(16)
Finance income										10											7
Profit before tax										287											323
Income tax expense										(49)											(51)
Profit for the financial period from continuing operations										238											272
Current metal inventories		51		90		141		-		141			59		113		172		-		172
Current non-metal inventories		20		32		52		1		53			21		39		60		-		60
Non-current segment assets:
Property, plant and equipment, net		253		491		744		88		832			228		509		737		40		777
Non-current inventory		37		2		39		-		39			34		-		34		-		34
Investments in associates		-		-		-		6		6			-		-		-		11		11
Total segment assets		361		615		976		95		1 071			342		661		1 003		51		1 054
Additions to non-current assets:
Property, plant and equipment		32		37		69		46		115			43		27		70		18		88