North River Resources widens FY loss, eyes short-term fundraise

Shares in North River Resources were down about 10% as it booked an impairment-laden set of full-year results that saw pre-tax losses widen to £9.8m, from a loss of £3.3m.

The numbers included a £6.7m impairment of goodwill, from zero a year earlier. The company, which also flagged the need for a short-term working-capital fundraise, said it remained committed to bringing the Namib Project into production.

"Whilst the average prices for zinc and lead in 2015 were lower than for the prior period, recent market developments indicate that the supply and demand balance is tightening which augurs well for the price outlook," said chairman Rod Beddows.

Given the uncertain timeframe for securing the mining licence and gaining clarity on the implications of the proposed broad-based economic empowerment legislation, North River was focusing its immediate attentions on completing the resource expansion drilling campaign and progressing the mining licence application.

"Initial results from the resource drilling campaign have been encouraging and have confirmed mineralization 80 metres below the existing northern resource," Beddows said

Certain holes had achieved outstanding intersections, such as NLDD067 (57.1m, true width of 8.5 metres, at 28.6% zinc) and NLDD069 (35.7 metres, true width of 9 metres, at 33.8% zinc).

Beddows said these provided the company with increased confidence that an enlarged resource supporting a longer life of mine would be delineated in due course.

"Pending clarity on the timing for receiving the mining licence and taking the project forward, we are redoubling our efforts to conserve cash and identify further cost savings," he said in a statement.

"In light of this, the Project Director has left the Company, and a number of project work streams, including the Front End Engineering and Design work continue to be deferred."

North River would nonetheless need to undertake a working capital fundraising in the short term, in order to continue to fund the work programme over a longer period than envisaged at the time of the placing and open offer completed in October 2015.

"We are in the process of evaluating funding options and the structure under which funds may be raised," Beddows said.