Ann: 2017 Full Year Statutory Accounts and Appendix 4E, page-10

Going concern
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As at 31 December 2017 the Group was in breach of a loan covenant on its Santander-Itau facility. The Group has not obtained a waiver for this breach from Santander-Itaú and has not been notified of a default under the terms of the agreement at the date of this report.

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The directors consider the going concern basis of preparation to be appropriate based on forecast cash flows. The cash flow forecast also depends on successful sulphide and oxide mining operations, processing activities and the completion of capital projects in accordance with management’s schedule and cost, and achieving forecast gold price and foreign exchange assumptions. The forecasts include the timely and successful commissioning of the plant upgrade by July 2018 to allow for the processing of increased sulphide ore as planned. Critical to achieving forecast cash flows is the Group’s ability to achieve forecast gold production. The Group has a reasonable expectation that such production forecasts will be achieved through a combination of improved recoveries following the plant upgrade and accessing higher grade ore reserves.

On the basis the Sprott Credit facility is completed as expected, the cash flow forecast also depends on the successful rolling of unsecured bank facilities of $23.0 million and continued support from our mining services contractor regarding repayment of the unsecured $9.7 million loan payable and some or all of aged past invoices of $28.2 million, to enable cash flow forecasts to be achieved. The unsecured bank facilities have a successful history of being rolled and the Directors expect this to continue. Should operations not successfully achieve operating and capital forecasts, including the continued support from the unsecured lenders and the mining contractor in respect of past invoices, the Group will require additional funding in the form of debt or equity or a combination of the two. Negotiation for additional equity and debt funding will be progressed as required and the Directors have a reasonable expectation that such additional funding can be secured.