Citigold answers ASX queries on finances and project status

The ASX compliance arm has questioned the financial standing of Charters Towers gold venture Citigold and whether it should remain a listed entity. In a letter to Citigold last month, ASX Compliance sought a detailed explanation of why Citigold's directors believed the company would continue to operate as a going concern for the foreseeable future and would be able to pay its debts when due. Citigold was also asked if it considered that its level of operations was sufficient to warrant continued quotation of its securities on ASX. The company argues that it has been a very successful explorer over a long period of time and continues to fulfil its requirements as an explorer under the ASX listing rules. Its reply to the ASX also noted its asset base, ongoing talks with potential investors to support a mine restart, and proven ability to raise funds - including $695,000 raised in January. Citigold's Charters Towers tenements boast an inferred mineral resource of 32 million tonnes at 14g/t gold. The company previously produced 100,000oz of gold before putting local mining operations on care and maintenance in 2016 as it sought to raise further capital. In his chairman's AGM address in November, Mark Lynch said; "Citigold has a strong gold asset foundation. We believe that once the major funding is finalised, the realisation of becoming a large ultra-low-cost gold producer is realistic and reachable." Questions follow half-year report The 'please explain' letter from the ASX followed the release of Citigold's half-year report on March 13. ASX Compliance noted that Citigold incurred a net loss amounting to $1,287,462 for the half-year ending December 31 2023. It had net current liabilities amounting to $1,840,336 as at that date and recorded net operating cash outflows of $625,513 for the half-year. The consolidated statement of cash flow disclosed: 'Proceeds from pre-sales of $185,000'. An independent auditor’s review report accompanying the Citigold half-year report included the following commentary: "The group have external borrowings of $3.8mil noting that the borrowings have not been sourced from regulated financial institutions. To that end, the continued capacity of the lenders to provide funding to the group as and when required is not guaranteed. "In addition to the above borrowing facility, the group has indicated in its cash flow forecast reliance on future share placements and loan drawdown to provide cash flow to enable the group to pay its debts as and when they fall due. All future gold sales are based on the group’s ability to raise sufficient capital to extract and process gold." Citigold's reply - signed by company secretary Niall Nand - pointed to its long history (operating since 1993), its substantial mineral resources and ore reserves, and the fact it held assets to the value of $97 million at December 31. 'It is customary, and/or not unusual, for an exploration entity to have negative 'operating' cash flows,' the Citigold reply stated. 'Therefore, it's reasonable, given the nature and stage of the company's operations, to expect this. 'The company has a long and proven track record of raising funds to meet the requirements of its business activities as required.' Mr Nand wrote that Citigold's directors considered that the company would be in a position to secure investments from a funding partner in order to undertake significant mining activities. 'There is interest by entities to join Citigold in the development of the gold mine. Citigold is continuing to work with parties who are at various stages of discussions regarding funding opportunities,' the reply states. The company has invested around $300 million in its Charters Towers project. The ASX sought more information about the company's exploration activities and mining preparation in a subsequent letter, which was answered by Citigold at length.

Citigold answers ASX queries on finances and project status

Industry Queensland

Related News

Austral Resources falls into receivership

Aeon tenement review yields new exploration targets

Quick fire – industry news briefs

Get access to breaking mining news, now.