Audited Accounts for Financial Year Ended 31st December 2013

Thursday, June 5, 2014

              CONDOR GOLD PLC





Condor Gold PLC (“Condor”, the “Company” or the “Group”), an AIM listed company focused on delineating a large commercial reserve on its La India Project in Nicaragua, announces its results for the year ended 31 December 2013.


  • La India Project total mineral resource to NI 43-101 standards updated in November 2013 of 18.4Mt at 3.9g/t for 2.33M oz gold and 2.68M oz silver at 6.2g/t.  Indicated resources +43% and Open Pit resources +20%.
  • £7m private placement of new ordinary shares at £1.60 per share completed in February 2013.
  • Preliminary Economic Assessment (“PEA”) to NI 43-101 standards completed in March 2013. Details conceptual mine producing 152,000 oz gold per annum for first 8 years of 13 year mine life.
  •   PEA has robust economics: NPV US$325m, IRR 33%, pay back on capital equipment of 3 years, low operating cash cost US$575 per oz gold net of 3% royalty and 30% corporation tax.
  • 139 drill holes for 20,137m drilling completed in period. Best drill results 4.80m at 37.24g/t gold, 6.80m at 13.00g/t gold, 21.00m at 3.33g/t gold. Continuity of mineralisation and grade confirmed with infill drilling in La India Open Pit.
  • 1,836m geotechnical drilling completed, aimed at steepening the pit wall used in PEA.
  • Purchase of adjacent HEMCO-SRP-NS concession for US$250,000 in shares at £2.00 per share increased La India Project land area by 44% to 280sq km.
  • Environmental and Social Impact Assessment (“ESIA”) made excellent progress.
  •  Metallurgical test work to Pre-Feasibility Study (“PFS”) level completed, results show 93% to 96% recoverable gold.
  • Geophysics flown over entire 280sq km La India Project provides additional exploration targets.
  • Drill result of 9.00m at 10.70g/t gold to the south of the current resource on la India Open Pit demonstrates the gold mineralisation is open along strike and to depth.


Post Period Highlights

Test work in support of the PFS has continued to advance in the first months of 2014:

  • A pump test has been completed with favourable results in support of a dewatering program
  •  Lycopodium has been selected as the design engineer for the plant, components of the infrastructure capital expenditure estimate and an operating cost estimate for processing.
  •  Pit geotechnical work has been completed pending final pit selection.
  •  Environmental baseline studies needed for the PFS are largely completed. 
  • Preliminary waste rock geochemistry results suggest that acid drainage will not be a problem.
  •   Suitable tailings, waste dump and plant sites have been identified.
  •  Rock chip sampling completed on 7 exploration targets within La India Project





Dear Shareholder,

I am pleased to announce Condor Gold PLC’s (“Condor” or “the Company” or “the Group”, annual report for the 12 month financial year to 31st December 2013.  During the year the Company made the transition from exploration to resource development, focusing on the economic feasibility of exploiting the flagship La India Project in Nicaragua. An updated NI 43-101 Mineral Resource Estimate was completed on 8th November 2013. Several studies required for inclusion in a Pre-Feasibility Study (“PFS”) were either commenced or completed during the period, with both the geotechnical and metallurgical studies completed to PFS level of competency. SRK Consulting (UK) Ltd (“SRK”) was awarded all studies to PFS level on La India Project.


Condor has completed 23,600m of drilling since the 2012 mineral resource estimate, bringing the total drilled on La India Project to date to 62,000m. An updated independent technical Mineral Resource Estimate for La India Project using the National Instrument 43-101 standard of disclosure in accordance with the Canadian Institute of Mining, Metallurgy and Petroleum (CIM) Standards, was produced by SRK on 8th November 2013. The final report provides a significant amount of detail about La India Project including but not limited to: the project geology, exploration drilling and sampling, data quality and quantity, data validation, the geological model and the classification and reporting criteria. Shareholders and potential investors should take comfort from the quality of work that has gone into producing an updated NI 43-101 technical report for La India Project.


The current La India Project total mineral resource estimate is 18.4Mt at 3.9g/t for 2.33M oz gold and 2.68M oz silver at 6.2g/t. Total gold equivalent is 2.37M oz. The mineral resource in the higher indicated category of confidence increased by 43% to 9.6Mt at 3.5g/t for 1.08M oz gold. The Inferred mineral resource is 8.8Mt at 4.4g/t for 1.25M oz gold. The total open pit resource increased 20% to 1.14M oz gold at 3.1g/t split between three deposits all within a 2km radius. The bulk of the open pit resource is within the La India Open Pit which accounts for 920,000 oz at 3.0g/t gold. The identification of two feeder pits, the America Open Pit with 160,000 oz at 4.2g/t and the Central Breccia Open Pit with 57,000 oz gold at 1.9g/t should help mine scheduling.


A geotechnical report to PFS level of confidence was completed in October 2013 following a 1836m geotechnical drilling programme. It was designed to test the competency and strength of the host rock and determine the optimal pit angles for the La India Open Pit resource. 


Metallurgical studies to the PFS level of confidence were completed and show good recovery rates, further de-risking the La India Project. La India Vein Set gold recoveries range from 90% to 92% and the America Vein Set from 94% to 95%. These recovery estimates include a 2% reduction from the reported extractions to allow for plant inefficiencies. Most importantly, there are no unpleasant surprises. SRK Consulting (U.S.) Inc has recommended that gold mineralised ore can be processed by industry-standard whole-ore cyanidation with a standard carbon-in-pulp (CIP) process flowsheet.


Condor completed a 3,351 line kilometer helicopter-borne geophysics survey covering the entire 280 sq km La India Project, which has confirmed that there remains considerable exploration upside for La India Project. The radiometric survey provides a powerful regional mapping tool. The magnetics survey can be used as an indirect tool for target delineation by the interpretation of zones of magnetite destruction and are of sufficient detail to make a realistic structural interpretation. Eight targets were identified as under-explored areas within prospective geological settings. La India Project has large areas that show surface expressions of gold mineralisation, which have yet to be drilled.


SRK completed an NI 43-101 compliant Preliminary Economic Assessment (“PEA”), announced on the 5th March 2013 based on the 5th November 2012 NI 43-101 Mineral Resource estimation. The PEA for La India Project details average annual gold production of 152,000 oz gold for the first 8 years of an initial mine life of 13 years. Total production of 1,463,000 oz gold over the Life of Mine is at an average operating cost of US$575 per oz gold; production is split evenly between open pit and underground mining. The NPV of US$325m and IRR of 33% used a US$1,400 gold price when gold was over US$1,600 per oz and are after a 3% government royalty and 30% corporation tax. The payback period for the capital equipment is 3 years.







Shortly after the release of the PEA the gold price fell approximately 25% to US$1,200 per oz or US$400 per oz between mid March and early July 2013.  Fortunately, the Company raised £7m at £1.60 via a placement of new ordinary shares in February 2013. The Board and senior management reacted to the fall in the gold price by re-sizing La India Project ahead of a PFS using only open pit resources. The decision was taken to focus on producing a smaller open pit only operation and defer the underground mining potential identified in the PEA until a later date to be funded out of future cash-flow or when market conditions improved.  Approximately 14,000m of in-fill drilling was completed in La India Open Pit, 5,500m drilling on the America historic mine workings targeting an open pit resource and 2,700m drilling on the Central Breccia prospect, again targeting an open pit resource. A 3,000m trench programme was completed on La Mestiza Vein Set, which host a resource of 334,000 oz gold at 7.0g/t to determine the likelihood of a feeder pit. The grades and widths of gold mineralisation from previous drilling are significantly better than the surface gold mineralisation. The Company concluded

that Mestiza is an underground rather than open pit target and the decision was taken not to undertake a further drill programme on Mestiza to include in the PFS. All drilling stopped in September 2013.

The PFS will be focused on a base case La India Open Pit only scenario. La India Open Pit resource of 921,000 oz gold at 3.1g/t comprises 840,000 oz gold in the Indicated category and 81,000 oz gold in the Inferred category. Under 43-101 standards, only Indicated ounces can be used in a PFS. There will be an annex to the PFS showing the potential upside of including a further 300,000 oz gold open pittable resources (81,000 oz gold in the Inferred category in La India Open Pit, 160,000 oz gold on America Open Pit and 58,000 oz gold on the Central Breccia Open Pit) in a Bankable Feasibility Study (“BFS”).  The Company’s strategy is to produce the base case PFS on the 840,000 oz gold in the Indicated category in La India Open Pit and proceed directly to a BFS with either the base case only or with the base case plus the inclusion of additional 300,000 oz gold open pittable resources. The later option will require between 8,000m to 10,000m drilling to bring these additional ounces into the Indicated category for inclusion in a BFS.

Irene Chow was hired as Chief Environmental Officer in April 2013, she has accelerated several studies required in an Environmental Social Impact Assessment (“ESIA”). Surface water flow monitoring weirs have been constructed at five sites and ground water levels are being monitored at 24 locations on a weekly basis. Several phases of water quality monitoring have already been completed. Condor has completed several studies and collected enough data to produce an ESIA to PFS level of confidence, including but not limited to: hydrology and hydrogeology studies, fauna and flora studies, land use, agriculture and soil characterization survey, meteorological studies, air quality studies, geomorphology studies,   environmental legacy, environmental and social vulnerability and risks, a population census, artisanal miner survey and stakeholder engagement plan.

Dave Crawford joined on 1st December 2013 as Chief Operating Officer. He has 37 years experience in the mining industry. He most recently completed 5 years at Newmont Mining Company in Denver Colorado as its Study Director, Major Capital Projects; which involved the valuation of properties for possible acquisition, direction of evaluation teams, and development of strategies for identification of prospective takeover targets.  Dave Crawford spends over half his time at La India Project and is tasked with taking the Project to PFS and BFS.

Condor also holds 100% ownership of three other concessions in Nicaragua; the Estrella and Potrerillos concessions, which contain historic gold mine workings, and the Rio Luna Concession, which contains a JORC Inferred Resource of 694,000 tonnes at 4.4g/t for 86,000 oz gold equivalent. In addition, the Company has a 20% interest in a fourth Concession, Cerro Quiroz, which contains established gold mineralisation and is adjacent to B2Gold’s operating gold mine at La Libertad.

In El Salvador, Condor’s JORC Resource of 747,000 oz gold and 22.38 million oz silver or 1,120,000 oz gold equivalent at 2.6g/t remained unchanged during the period due to the moratorium on all exploration and mining in El Salvador. In 2011, 10% of the Company’s resource in El Salvador was gifted to a UK Charitable Foundation whose beneficiaries are the most needy and poor in that country.

The moratorium on metallic mining in the Republic of El Salvador (“El Salvador”) has now been in place for just over 6 years. In November 2013, OceanaGold Corporation completed the purchase of Pacific Rim Mining for circa US$12m or US$7 per total resource ounce gold equivalent. Mick Wilkes, Managing Director and CEO of OceanaGold is quoted in the announcement: “Our Company has a long and successful track record of operating gold mines in partnership with local communities in a safe and sustainable manner and we look forward to working with our key stakeholders in El Salvador to unlock the significant opportunity that exists at El Dorado for the people of El Salvador”.  OceanaGold produces 325,000 oz gold per annum in New Zealand and the Philippines. A new President of El Salvador is due to be inaugurated in June 2014. It is unclear whether he is pro-mining.






We continue to carefully monitor developments in El Salvador in relation to the present moratorium.  Although there is a clear risk that the El Salvador exploration licences and related intangible assets may become impaired should the outcome of the Government’s consideration be a decision to pass a law prohibiting metallic mining, the Board has concluded, particularly in light of the US$315m damages being claimed by Pacific Rim, and the takeover of Pacific Rim by OceanaGold that they are not currently impaired.  However, in the circumstances, the Board continues its policy of not capitalising further expenditure in relation to the El Salvador projects.  The El Salvador assets carrying value included within this report total £4.3m.

Turning to the financial results for the year 2013, the operating loss was £2,917,034 (2012: £3,258,653).  Additionally, the Company raised £7,284,660 (2012: £6,788,268) through the exercise of options, and private placements.  The Company made foreign exchange losses of £219,298 (2012: £169,824). The decrease of cash and cash equivalents was £731,673 (2012: increase of £1,283,822).  The net cash balance at 31st December 2013 was £2,268,470.

The strategy for 2014 is to produce a base case Pre-Feasibility Study on 840,000 oz gold in the Indicated category in La India Open Pit and demonstrate the upside potential of La India Project by rock chip sampling and trenching on several exploration targets outside the existing resource area. On completion of a PFS the Company will proceed directly to a Bankable Feasibility Study with either the base case or with the base case plus the inclusion of an additional 300,000 oz gold open pittable resources that are currently excluded from the PFS. The later option will require between 8,000m to 10,000m drilling to bring these additional ounces into the Indicated category for inclusion in a BFS. Only Indicated ounces can be used in a PFS and BFS. There will be an annex to the PFS showing the potential upside of including a further 300,000 oz gold open pittable resources (81,000 oz gold in the Inferred category in La India Open Pit, 160,000 oz gold on America Open Pit and 58,000 oz gold on the Central Breccia) in a BFS. Condor is concluding a 3,000m trench programme on 5 exploration targets within La India Project identified by the airborne geophysics survey.


           CONDOR GOLD PLC





The Group’s financial performance for the year was in line with Directors’ expectations. The Group loss after taxation for the year to 31 December 2013 amounted to £2,908,667 (2012: £3,256,013).  No dividends were paid during the year.

The Group, at the end of the financial period has interests in seven concessions in the La India Mining District and a further four in four project areas in Nicaragua, and four licences in two project areas in El Salvador. The Company will continue to assess each individually with the intention of focusing on core concessions with the highest probability of producing an economic resource, and principally at La India. The Company is currently investing in the La India concession which is discussed in greater detail in the ‘Operations Report and Projects Overview.’ Operations in El Salvador are curtailed by the Government moratorium on all exploration and mining in that country. The El Salvador operation has been reduced to an administrative role until environmental and drill permits are awarded, this situation is described in detail in ‘Principal Risks and Uncertainties’ below.



The key indicator of performance for the Group is its success in identifying, acquiring, developing and divesting investments in projects so as to create shareholder value.

Control of bank and cash balances is a priority for the Group and these are budgeted and monitored closely to ensure that it maintains adequate liquid resources to meet financial commitments as they arise. 

At this stage in its development, quantitative key performance indicators are not an effective way to measure the Group’s performance.

However, a qualitative summary of performance in the period in the Chairman’s Statement and the Operations Report and Project Overview is an effective way of measuring the key performance of the Company.



In common with other companies operating in natural resources exploration, the Group’s activities are speculative and involve a high degree of risk.

The Group’s exploration work involves participation in geological work programmes. Interpretations of the results of these programmes are dependent on judgements and assessments that are speculative and these interpretations are applied in designing further work programmes to which the Company can commit significant resources.

Work programmes often involve drilling and other geological work that present significant engineering challenges that are subject to unexpected operational problems. Furthermore activities generally take place in remote locations that can be subject to unexpected climate events, possible acts of terrorism, criminal threats, piracy and potential environmental risks.

The Group operates in different countries where political, economic, legal, regulatory and social uncertainties are potential risk factors. In this regard, political uncertainties in El Salvador, in particular in relation to the ongoing moratorium in processing applications for exploration and mining, have resulted in operational delays in that country. 








During the past few years to date considerable progress was made in El Salvador:

  • In March 2010, the Government of El Salvador (‘GoES’) placed a tender for an independent ‘Strategic Environment Study on the Metallic Mining Sector in El Salvador’ (‘EAE’) to inform the GoES how to conduct mining in a safe, secure and environmentally friendly manner.
  •  In September 2010 the Ministry of Economy (‘MINEC’) and the Ministry of Foreign Affairs announced that Tau Consultora Ambiental of Spain (the ‘Tau Group’) ( had been awarded the contract for SES.
  • In December 2010, GoES finalised the appointment of a Supervisory Committee to assist GoES on the interpretation of the Tau Group’s EAE.
  • In September 2011, the Tau Group completed the EAE and submitted it to GoES, a copy is available on the internet.
  • In May 2012, Condor’s Chairman met with the Director of the Department for Regulating Hydrocarbons and Mines at his office in the Ministry of the Economy in San Salvador.
  • The Company has received assurances from a number of relevant Government officials that it will maintain its concession areas following the outcome of the moratorium processed.
  • In March 2013 Pacific Rim announced an independent valuation of its 1.7m oz reserves in El Salvador being worth over $300m.  Pacific Rim is currently engaged in legal proceedings with GoES over the ongoing moratorium, and currently claiming $315m in damages.
  • In November 2013, OceanaGold Corporation completed the purchase of Pacific Rim Mining for circa US$12m or US$7 per total resource ounce gold equivalent.

It is the Company’s view that although the situation remains uncertain and it is unlikely that the necessary environmental and drilling approvals to enable re-commencement exploration programmes on key projects will be forthcoming in the near future, the indications are that the GoES will allow exploration and mining following the EAE, Mining Policy Review and amendments to the current Mining Law.  The Company considers the damages being claimed by Pacific Rim, and the purchase of Pacific Rim by OceanaGold to be encouraging for the El Salvadorian assets.  In the meantime operations in El Salvador remain on a care and maintenance basis.


The operations of the Group are currently financed from funds which the Company has raised from shareholders.  The Group has not yet earned revenues and is still in the exploration phase of its business.  In common with many exploration companies, the Company raises finance for its exploration and appraisal activities in discrete tranches to finance its activities for limited periods only. Further funding will be required from time to time to finance the Company’s activities.  The Directors prepare and monitor cash flow projections based on different funding scenarios and make assumptions about the availability of additional finance in the future.  

The consolidated financial statements have been prepared on a going concern basis. The Directors consider the going concern basis to be appropriate based on cash flow forecasts and projections and current levels of commitments, cash and cash equivalents.


The Group’s operations expose it to financial risks that include credit risk, liquidity risk, and market risks. The Group does not have any debt and is not therefore required to use derivative financial instruments to manage interest rate costs nor is hedge accounting applied.

  1. Credit risk

Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the Group’s receivables from customers and investment securities.

The Group and the Company’s financial assets comprise receivables and cash and cash equivalents. The credit risk on cash and cash equivalents is limited because the counterparties are banks with high credit-ratings assigned by international credit rating agencies. The credit risk on trade and other receivables is limited to the Group’s receivable of £978,715. The exposure of the Group and the Company to credit risk arises from default of its counterparty, with maximum exposure equal to the carrying amount of cash and cash equivalents in the Group’s Statement of Financial Position. The Group does not have any significant credit risk exposure to any single counterparty or any group of counterparties having similar characteristics. The Group defines counterparties as having similar characteristics if they are connected entities.

The Group does not hold any collateral as security.






   2.    Liquidity risk

Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due.  The Group’s approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Group’s reputation.

To ensure liquidity, the Group maintains sufficient cash and cash equivalents on demand to meet its obligations as and when they fall due.  The Group actively manages its working finance to ensure that sufficient funds exist for operations and planned expansion.

   3.    Market risks

Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and equity prices will affect the Group’s income or the value of its holdings of financial instrument.  The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimising return on risk.

(i)    Pricing and risks

The Directors consider there to be minimal price risk to the business. The Group, however, does have an unlisted equity investment whose price is exposed to market factors and realisation of which is dependent on the existence of willing buyers and therefore beyond the Group’s control.

(ii) Interest rate cash flow risk

The Group does not have interest bearing liabilities. Interest bearing assets are only cash balances that earn interest at a floating rate.

          (iii) Foreign exchange risk

The Group principally operates in US Dollars. The Directors believe that the contracts for transfers of funds to Central America are so small that there would be no benefit gained from hedging these contracts in the market. As such, currency is bought at the spot rates prevailing on the days transfers are to take place. This situation is monitored on a regular basis, and at present the Group does not have any formal policy for hedging against exchange exposure. The Group may, when necessary, enter into foreign currency forward contracts to hedge against exposure from currency fluctuations, however, the Group has not entered into any currency forward contracts to date.


   4.    Capital risk management

The Group manages its capital to ensure that entities within the Group will be able to continue individually as going concerns, while maximising the return to Shareholders through the optimisation of debt and equity balances. The Group manages its capital structure and makes adjustments to it, in the light of changes in economic conditions. To maintain or adjust its capital structure, the Group may adjust or issue new shares or raise debt. No changes were made in the objectives, policies or processes during the years ended 31 December 2013 and 31 December 2012. The capital structure of the Group consists of equity attributable to equity holders of the parent, comprising issued capital, reserves and retained losses as disclosed in the Consolidated Statement of Changes in Equity.



M L Child


          Date:  04 June 2014