TIDMALO
RNS Number : 8377M
Alecto Minerals PLC
12 May 2015
Alecto Minerals plc / EPIC: ALO / Market: AIM / Sector:
Exploration & Development
12 May 2015
Alecto Minerals plc ('Alecto' or the 'Company')
Final Results for the year ended 31 December 2014
and Notice of AGM
Alecto Minerals plc (AIM: ALO), the AIM quoted mineral
exploration company focussed on West and East Africa, is pleased to
announce its audited final results for the year ended 31 December
2014. In addition, the Company's Annual General Meeting ('AGM')
will be held at the Washington Mayfair Hotel, 5 Curzon Street,
London W1J 5HE, on Wednesday, 3 June 2015 at 11.00 a.m. The
Company's Annual Report and Financial Statements and Notice of AGM
will be posted to shareholders today and will shortly be available
to view and download on the Company's website at
www.alectominerals.com.
Highlights:
-- Demonstrated ability to create value via strategic
acquisitions followed by low cost exploration
-- Over-arching strategy to become a gold producer in Africa
with relevant project and partnership opportunities continually
being identified and evaluated
-- Completion of a successful field season across the Kossanto
East Gold Project ('Kossanto East') and the Kossanto West Gold
Project ('Kossanto West') in Mali
-- 131% increase to the pre-existing independent JORC inferred
resource estimate for Kossanto East
-- Discovery of multiple high grade gold targets at Kossanto West
-- Low cost all share acquisition of the Kerboulé Gold Project
('Kerboulé') in Burkina Faso
-- Independent assessment of in situ mineralisation (non-JORC)
completed post acquisition: 6.2Mt grading at 1.16g/t Au for 230,758
oz Au, at a cut-off grade of 0.5g/t Au
-- Subject to completion in due course of a JORC Mineral
Resource estimate for Kerboulé, the Company has the potential to
approximately double its existing independent JORC inferred
resource estimate when combining it with the inferred JORC resource
estimate for Kossanto East of 247,000 oz Au at an average grade of
1.14g/t Au
Alecto's CEO, Mark Jones, commented:
"The progress made during 2014 was pleasing having significantly
increased our resource base across our portfolio at a low cost,
both through exploration and acquisition initiatives. We have a
vision to establish Alecto as a gold producer and continue to
identify and evaluate appropriate additional projects in this vein
whilst seeking joint venture partners to advance our current
portfolio. We have decided to minimise expenditure on additional
drilling across our portfolio until this objective is achieved and
whilst recent developments in relation to Centamin at our Ethiopian
acreage were unfortunate, our focus remains on seeking to advance
our projects through establishing joint venture opportunities or
early monetisation as appropriate. I am pleased that our financial
position was strengthened via the fundraise successful completed in
January 2015 and I look positively to the year ahead."
For further information, please visit www.alectominerals.com or
contact:
Alecto Minerals plc Tel: +44 (0)20 3137 8862
Mark Jones
Strand Hanson Limited Tel: +44 (0)20 7409 3494
Richard Tulloch
Matthew Chandler
James Dance
Beaufort Securities Limited Tel: +44 (0)20 7382 8300
Elliott Hance
St Brides Partners Ltd Tel: +44 (0)20 7236 1177
Elisabeth Cowell
Felicity Winkles
Chairman's Statement
As a gold and base metal exploration and development company
focussed on West and East Africa, Alecto has demonstrated its
ability to create value via a combination of strategic acquisitions
and low cost exploration.
Our strategy remains focussed on establishing joint venture
opportunities for the advancement of our projects or early
monetisation of opportunities, as we believe our current portfolio
consists of a number of attractive assets and accordingly, we have
decided to minimise drilling expenditure as we evaluate such
opportunities. This renewed focus will allow us to seek to create
value across our current portfolio without incurring further
non-essential expenditure. In addition, our over-arching strategy
continues to be that of becoming a gold producer in Africa in the
near term and we continue to identify and evaluate a number of
appropriate projects.
Key Project Developments
In 2014, our exploration efforts were focused on seeking to
expand our knowledge of and to increase our resource base across
Alecto's portfolio.
At our 100% owned Kossanto East, following completion of the
2013/2014 field season, we were particularly pleased to have been
able to increase the pre-existing independent JORC inferred
resource estimate for the project by 131% at an average direct cost
of approximately US$4.70 per ounce. Accordingly, the JORC inferred
resource for Kossanto East is now 6.72Mt at an average grade of
1.14g/t Au, representing 247,000 oz Au at a 0.5g/t Au cut-off. In
line with our strategy, post the period end we signed a
co-operation agreement with Desert Gold Ventures Inc., a TSX.V
quoted mineral exploration company and titleholder of the
Farabantourou Gold Permit which is situated adjacent to Kossanto
East, with a view to jointly developing both deposits to bring them
into potential future production.
Following the acquisition of Kerboulé in Burkina Faso in
November 2014, for an initial consideration of GBP350,000 settled
through the issue of new ordinary shares, we proceeded to undertake
an analysis of the historic drilling results for the project. Post
the period end, we announced that Wardell Armstrong International
('WAI') had compiled an independent assessment of the in situ
mineralisation (non-JORC) of 6.2Mt grading at 1.16g/t Au for
230,758 oz Au, at a cut-off grade of 0.5g/t Au. This (non-JORC)
resource estimate was based on the results obtained from modelling
historical drilling work conducted by the previous owners of the
project and implies an initial acquisition cost to Alecto for
Kerboulé, prior to any deferred consideration, of approximately
US$2.25 per resource ounce of gold.
Accordingly, subject to completion of a JORC Mineral Resource
estimate for Kerboulé in due course, the Company has the potential
to approximately double its existing independent JORC inferred
resource estimate when combining it with the inferred JORC resource
estimate of 247,000 oz Au at an average grade of 1.14g/t Au for
Kossanto East.
During 2014, we also discovered multiple high grade gold targets
at our wholly owned Kossanto West. Significant high-grade
intercepts were encountered from 761 metres of scout RAB drilling,
completed across 38 holes, on the Toukwatou prospect within the
Massakama target. Intercepts from the drill programme included 6
metres @ 4.23 g/t Au from 9 metres depth on hole TRABL01/1, 12
metres @ 3.34 g/t Au from 6 metres depth on hole TRABL05/3 and 6
metres @7.835 g/t Au from 24 metres depth on hole TRABL06/8. The
mineralisation encountered is associated with an intensely quartz
veined felsic intrusive. Encouragingly, we have attracted interest
from a number of possible joint venture partners for this
asset.
In February 2015, it was disappointing to report that Centamin
plc ('Centamin') had served formal notice to terminate its earn-in
joint venture agreement in respect of our promising Ethiopian
properties; the Wayu Boda and Aysid Metekel licences. Centamin's
investment was insufficient to trigger any equity rights, Alecto
therefore continue to hold 100% ownership. We continue to believe
in the prospectivity of the blocks and are actively seeking a new
partner to continue the planned exploration programmes.
The Company continues to seek a joint venture partner for its
Wad Amour iron, oxide, copper, gold project in Mauritania following
the renewal of its permits in August 2014.
Financial Review
The loss before taxation for the Group for the year ended 31
December 2014 amounted to GBP962,148 (31 December 2013:
GBP1,242,540). The Group's cash position as at 31 December 2014 was
GBP114,258 (2013: GBP624,155).
During the period, we announced that the equity swap agreement
between ourselves and YA Global Master SPV Ltd ('Yorkville') had
been terminated by mutual consent. No further payments are due
between Yorkville and the Company and Yorkville remains interested
in 33,875,003 ordinary shares.
In January 2015, we successfully raised a further GBP600,000
(before expenses) by way of placing, via the Company's broker, of
200 million new ordinary shares at 0.3 pence per share. The net
proceeds augmented our working capital and are enabling us to
progress discussions with potential joint venture partners for the
advancement or early monetisation of opportunities across our gold
portfolio.
Outlook
In response to the depressed gold market, management has taken
steps to reduce the Group's monthly burn rate and thus preserve the
optionality of our current portfolio. Whist it has been a
challenging year in respect of the gold price performance and
operating constraints in the countries in which we do business,
your Board is confident that the current 'exploration drought' will
come to an end and the potential value of our assets will once
again be reflected in the Company's share price.
The Board also continues to seek to identify and evaluate
potential attractive opportunities to expand the Company's asset
base and thereby exploit the currently depressed sector valuations,
including working towards securing a more advanced stage project
that can potentially be funded through to near term production.
I would like to take this opportunity to thank shareholders for
their support in these difficult times and our management team for
their hard work on shareholders' behalf.
Mark Wellesley-Wood
Chairman
11 May 2015
STATEMENT OF FINANCIAL POSITION
As at 31 December 2014
Group Company
---------------------------- ----------------------------
Note 2014 2013 2014 2013
GBP GBP GBP GBP
------------------------------- ------ ------------- ------------- ------------- -------------
Non-Current Assets
Property, plant and
equipment 6 198,547 223,616 174 2,364
Intangible assets 7 7,640,824 5,964,192 - -
Investment in subsidiaries 8 - - 8,362,083 6,547,238
Trade and other receivables 10 21,601 20,192 - -
Available-for-sale
financial assets 9 14,400 21,000 14,400 21,000
7,875,372 6,229,000 8,376,657 6,570,602
------------------------------- ------ ------------- ------------- ------------- -------------
Current Assets
Trade and other receivables 10 329,176 124,273 313,739 122,937
Derivative financial
instruments 11 - 250,000 - 250,000
Cash and cash equivalents 12 114,258 624,155 103,194 561,229
------------------------------- ------ ------------- ------------- ------------- -------------
443,434 998,428 416,933 934,166
------------------------------- ------ ------------- ------------- ------------- -------------
Total Assets 8,318,806 7,227,428 8,793,590 7,504,768
------------------------------- ------ ------------- ------------- ------------- -------------
Equity attributable
to the Owners of Parent
Company
Share capital 16 4,186,796 4,157,432 4,186,796 4,157,432
Share premium 16 11,147,543 7,509,266 11,147,543 7,509,266
Share option reserve 17 100,365 47,316 100,365 47,316
Available-for-sale
financial asset reserve (35,600) (29,000) (35,600) (29,000)
Translation reserve (36,520) 9,049 - -
Retained losses (7,773,902) (6,824,423) (6,694,489) (5,907,757)
------------------------------- ------ ------------- ------------- ------------- -------------
Total Equity 7,588,682 4,869,640 8,704,615 5,777,257
------------------------------- ------ ------------- ------------- ------------- -------------
Current Liabilities
Trade and other payables 13 115,344 1,393,008 88,975 1,377,511
Borrowings 14 - 350,000 - 350,000
------------------------------- ------ ------------- ------------- ------------- -------------
115,344 1,743,008 88,975 1,727,511
------------------------------- ------ ------------- ------------- ------------- -------------
Non-current liabilities
Deferred income tax
liabilities 15 614,780 614,780 - -
------------------------------- ------ ------------- ------------- ------------- -------------
614,780 614,780 - -
------------------------------- ------ ------------- ------------- ------------- -------------
Total Liabilities 730,124 2,357,788 88,975 1,727,511
------------------------------- ------ ------------- ------------- ------------- -------------
Total Equity and Liabilities 8,318,806 7,227,428 8,793,590 7,504,768
------------------------------- ------ ------------- ------------- ------------- -------------
The Financial Statements were approved and authorised for issue
by the Board on 11 May 2015 and were signed on its behalf by:
Mark Jones
Chief Executive Officer
CONSOLIDATED INCOME STATEMENT
For the year ended 31 December 2014
Note 2014 2013
Continued operations GBP GBP
--------------------------------------- ------ ----------- -------------
Revenue 243,961 -
Cost of sales - -
--------------------------------------- ------ ----------- -------------
Gross profit 243,961 -
Administration expenses 18 (835,124) (789,213)
Impairment of intangible assets 7 - (337,398)
Loss on foreign exchange (194,346) (116,482)
Other net losses 21 (158,512) -
Operating Loss (944,021) (1,243,093)
Finance income 22 399 553
Finance costs 14 (18,526) -
Loss Before Income Tax (962,148) (1,242,540)
Income tax expense 23 - -
--------------------------------------- ------ ----------- -------------
Loss for the Year (962,148) (1,242,540)
--------------------------------------- ------ ----------- -------------
Attributable to Owners of the Parent (962,148) (1,242,540)
--------------------------------------- ------ ----------- -------------
Earnings Per Share Attributable
to Owners of the Parent During
the Year
Basic and Diluted Earnings Per (0.120) (0.306)
Share (pence) 24 p p
--------------------------------------- ------ ----------- -------------
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the year ended 31 December 2014
Note 2014 2013
GBP GBP
----------------------------------------------- ------ ------------- -------------
Loss for the year (962,148) (1,242,540)
Other Comprehensive Income:
Items that may be reclassified subsequently
to profit or loss
Currency translation differences (45,569) 130,313
Change in value of available-for-sale
financial assets 9 (6,600) (29,000)
Total Comprehensive Income for the
Year Attributable to Owners of the
Parent, net of tax from Continuing
Activities (1,014,317) (1,141,227)
----------------------------------------------- ------ ------------- -------------
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the year ended December 2014
Attributable to owners of the parent
-------------------------------------------------------------------------------------------------------
Share Available-for-sale
Share Share option financial asset Translation Retained
capital premium reserve reserve reserve losses Total equity
GBP GBP GBP GBP GBP GBP GBP
--------------------- ----------- ----------- --------- -------------------- ------------- ------------- --------------
As at 1 January
2013 2,509,388 6,717,310 40,322 - (121,264) (5,582,036) 3,563,720
Loss for the year - - - - - (1,242,540) (1,242,540)
Other comprehensive
income
Currency
translation
differences - - - - 130,313 - 130,313
Change in value of
available-for-sale
financial assets - - - (29,000) - - (29,000)
Total comprehensive
income for the
year - - - (29,000) 130,313 (1,242,540) (1,141,227)
--------------------- ----------- ----------- --------- -------------------- ------------- ------------- --------------
Proceeds from share
issue 791,304 358,696 - - - - 1,150,000
Issue costs - (110,000) - - - - (110,000)
Loan note
conversion 60,870 39,130 - - - - 100,000
Share based
payments 795,870 504,130 7,147 - - - 1,307,147
Expired options - - (153) - - 153 -
Transactions with
owners, recognised
directly in equity 1,648,044 791,956 6,994 - - 153 2,447,147
As at 31 December
2013 4,157,432 7,509,266 47,316 (29,000) 9,049 (6,824,423) 4,869,640
--------------------- ----------- ----------- --------- -------------------- ------------- ------------- --------------
As at 1 January 2014 4,157,432 7,509,266 47,316 (29,000) 9,049 (6,824,423) 4,869,640
------------------------- ----------- ------------ ---------- ---------- ---------- ------------- -------------
Loss for the year - - - - - (962,148) (962,148)
Other comprehensive
income
Currency translation
differences - - - - (45,569) - (45,569)
Change in value of
available-for-sale
financial assets - - - (6,600) - - (6,600)
Total comprehensive
income for the year - - - (6,600) (45,569) (962,148) (1,014,317)
------------------------- ----------- ------------ ---------- ---------- ---------- ------------- -------------
Proceeds from share
issue 10,000 1,490,000 - - - - 1,500,000
Issue costs - (98,380) 23,380 - - - (75,000)
Loan note conversion 3,204 365,321 - - - - 368,525
Share based payments 16,160 1,881,336 42,338 - - - 1,939,834
Expired options - - (12,669) - - 12,669 -
Transactions with
owners, recognised
directly in equity 29,364 3,638,277 53,049 - - 12,669 3,733,359
------------------------- ----------- ------------ ---------- ---------- ---------- ------------- -------------
As at 31 December 2014 4,186,796 11,147,543 100,365 (35,600) (36,520) (7,773,902) 7,588,682
------------------------- ----------- ------------ ---------- ---------- ---------- ------------- -------------
COMPANY STATEMENT OF CHANGES IN EQUITY
For the year ended 31 December 2014
Attributable to equity shareholders
Share Available-for-sale
Share Share option financial asset Retained
capital premium reserve reserve losses Total equity
GBP GBP GBP GBP GBP GBP
--------------------- ----------- ------------ ----------- -------------------- ------------- --------------
As at 1 January
2013 2,509,388 6,717,310 40,322 - (5,121,522) 4,145,498
--------------------- ----------- ------------ ----------- -------------------- ------------- --------------
Loss for the year - - - - (786,388) (786,388)
Other comprehensive
income
Change in value of
available-for-sale
financial assets - - - (29,000) - (29,000)
--------------------- ----------- ------------ ----------- -------------------- ------------- --------------
Total comprehensive
income for the
year - - - (29,000) (786,388) (815,388)
--------------------- ----------- ------------ ----------- -------------------- ------------- --------------
Proceeds from share
issue 791,304 358,696 - - - 1,150,000
Issue costs - (110,000) - - - (110,000)
Loan note
conversion 60,870 39,130 - - - 100,000
Share based
payments 795,870 504,130 7,147 - - 1,307,147
Expired options - - (153) - 153 -
--------------------- ----------- ------------ ----------- -------------------- ------------- --------------
Transaction with
owners, recognised
directly in equity 1,648,044 791,956 6,994 - 153 2,447,147
--------------------- ----------- ------------ ----------- -------------------- ------------- --------------
As at 31 December
2013 4,157,432 7,509,266 47,316 (29,000) (5,907,757) 5,777,257
As at 1 January 2014 4,157,432 7,509,266 47,316 (29,000) (5,907,757) 5,777,257
--------------------------------------- ----------- ------------ ---------- ---------- ------------- -----------
Loss for the year - - - - (799,401) (799,401)
Other comprehensive income
Change in value of available-for-sale
financial assets - - - (6,600) - (6,600)
--------------------------------------- ----------- ------------ ---------- ---------- ------------- -----------
Total comprehensive income for the
year - - - (6,600) (799,401) (806,001)
--------------------------------------- ----------- ------------ ---------- ---------- ------------- -----------
Proceeds from share issue 10,000 1,490,000 - - - 1,500,000
Issue costs - (98,380) 23,380 - - (75,000)
Loan note conversion 3,204 365,321 - - - 368,525
Share based payments 16,160 1,881,336 42,338 - - 1,939,834
Expired options - - (12,669) - 12,669 -
Transaction with owners, recognised
directly in equity 29,364 3,638,277 53,049 - 12,669 3,733,359
--------------------------------------- ----------- ------------ ---------- ---------- ------------- -----------
As at 31 December 2014 4,186,796 11,147,543 100,365 (35,600) (6,694,489) 8,704,615
--------------------------------------- ----------- ------------ ---------- ---------- ------------- -----------
CASH FLOW STATEMENTS
For the year ended 31 December 2014
Group Company
---------------------------- --------------------------
2014 2013 2014 2013
Note GBP GBP GBP GBP
------------------------------ ------ ------------- ------------- ------------- -----------
Cash flows from operating
activities
Loss before taxation (962,148) (1,242,540) (799,401) (786,388)
Adjustments for:
Finance income (399) (553) (399) (553)
Finance costs 18,526 - 18,526 -
Depreciation 6 69,945 27,403 2,190 4,645
Loss on settlement
of derivative financial
instrument 180,542 - 180,542 -
Profit on sale of
property, plant and
equipment (27,445) - - -
Impairment of exploration
assets 7 - 337,398 - -
Share options expense 42,337 7,147 42,337 7,148
Share based payments 66,022 50,000 66,022 50,000
Increase in trade
and other receivables (193,327) (70,748) (190,802) (79,913)
(Decrease)/Increase
in trade and other
payables (62,606) 43,759 (57,062) 28,530
Loss on foreign exchange 86,728 287,485 - -
Net cash used in operations (781,825) (560,649) (738,047) (776,531)
------------------------------ ------ ------------- ------------- ------------- -----------
Cash flows from investing
activities
Interest received 399 553 399 553
Acquisition of subsidiaries
(net of cash acquired) 1,027 22,887 - -
Loans granted to subsidiary
undertakings - - (1,214,845) (732,739)
Purchase of intangible
assets 7 (1,264,139) (885,886) - -
Proceeds from sale
of property, plant
and equipment 41,593 - - -
Purchase of property,
plant and equipment 6 - (34,117) - (1,687)
------------------------------ ------ ------------- ------------- ------------- -----------
Net cash used in investing
activities (1,221,120) (896,563) (1,214,446) (733,873)
------------------------------ ------ ------------- ------------- ------------- -----------
Cash flows from financing
activities
Proceeds from issue
of share capital 1,569,458 1,000,000 1,569,458 1,000,000
Transaction costs
of share issues (75,000) (110,000) (75,000) (110,000)
Proceeds from borrowings - 350,000 - 350,000
Net cash generated
from financing activities 1,494,458 1,240,000 1,494,458 1,240,000
------------------------------ ------ ------------- ------------- ------------- -----------
Net decrease in cash
and cash equivalents (508,487) (217,212) (458,035) (270,404)
Cash and cash equivalents
at beginning of year 624,155 848,059 561,229 831,633
Exchange gains on
cash and cash equivalents (1,410) (6,692) - -
------------------------------ ------ ------------- ------------- ------------- -----------
Cash and cash equivalents
at end of year 12 114,258 624,155 103,194 561,229
------------------------------ ------ ------------- ------------- ------------- -----------
Major non-cash transactions
On 23 January 2014, the Company issued 7,000,000 options valid
for three years from, and exercisable six months after, the date of
grant at an exercise price of 1.58 pence.
On 30 January 2014, the Company issued 79,113,924 new ordinary
shares of 0.01 pence each fully paid ("Ordinary Shares") at a price
of 1.58 pence per share as deferred consideration for a business
acquisition made in a prior period.
On 24 February 2014, the Company issued the following warrants
to advisers as consideration for services provided to the
Company:
-- 3,000,000 warrants exercisable for 2.7 years from the date of
grant at an exercise price of 1 pence each;
-- 5,000,000 warrants exercisable for 3 years from the date of
grant at an exercise price of 1.5 pence each; and
-- 7,730,327 warrants exercisable for 5 years from the date of
grant at an exercise price of 1.925 pence each.
On 28 March 2014, the Company issued 20,000,000 new Ordinary
Shares at a price of 1.25 pence per share as consideration for
business acquisitions. See Note 26.
On 23 July 2014, the Company issued 32,045,742 new Ordinary
Shares on conversion of a convertible loan note and associated
interest.
On 16 November 2014 the Company issued 54,996,857 new Ordinary
Shares at 0.6364 pence per share as consideration for a business
acquisition. See Note 26.
On 24 November 2014 the Company issued a further 4,714,016
Ordinary Shares at 0.6364 pence per share as payments to a
consultant in lieu of cash fees.
On 16 December 2014 the Company issued 2,777,143 new Ordinary
Shares at 0.63 pence per share as payment to a consultant of the
Company in lieu of cash fees.
1. General information
The principal activity of Alecto Minerals plc ("the Company")
and its subsidiaries (together "the Group") is the exploration and
development of precious and base metals. The Company's shares are
quoted on the AIM market of the London Stock Exchange plc. The
Company is incorporated and domiciled in the UK.
The address of its registered office is 47 Charles Street,
London, W1J 5EL.
2. Summary of Significant Accounting Policies
The principal Accounting Policies applied in the preparation of
these Financial Statements are set out below. These Policies have
been consistently applied to all the periods presented, unless
otherwise stated.
2.1. Basis of Preparation of Financial Statements
The Consolidated Financial Statements have been prepared in
accordance with International Financial Reporting Standards (IFRS)
and IFRS Interpretations Committee (IFRS IC) interpretations as
adopted by the European Union and the Companies Act 2006 applicable
to companies reporting under IFRS. The Consolidated Financial
Statements have also been prepared under the historical cost
convention, as modified by the revaluation of available-for-sale
financial assets and financial assets at fair value through profit
or loss.
The Financial Statements are presented in UK Pounds Sterling
rounded to the nearest pound.
The preparation of financial statements in conformity with IFRSs
requires the use of certain critical accounting estimates. It also
requires management to exercise its judgement in the process of
applying the Group's Accounting Policies. The areas involving a
higher degree of judgement or complexity, or areas where
assumptions and estimates are significant to the Financial
Statements are disclosed in Note 4.
2.2. Basis of Consolidation
The Consolidated Financial Statements consolidate the Financial
Statements of the Company and the audited management accounts of
all of its subsidiary undertakings made up to 31 December 2014.
Subsidiaries are entities over which the Group has control. The
Group controls an entity when the Group is exposed to, or has
rights to, variable returns from its involvement with the entity
and has the ability to affect those returns through its power over
the entity. Subsidiaries are fully consolidated from the date on
which control is transferred to the Group. They are deconsolidated
from the date that control ceases.
The Group applies the acquisition method of accounting to
account for business combinations. The consideration transferred
for the acquisition of a subsidiary is the fair values of the
assets transferred, the liabilities incurred to the former owners
of the acquiree and the equity interests issued by the Group. The
consideration transferred includes the fair value of any asset or
liability resulting from a contingent consideration arrangement.
Identifiable assets acquired and liabilities and contingent
liabilities assumed in a business combination are measured
initially at their fair values at the acquisition date.
Acquisition-related costs are expensed as incurred unless they
result from the issuance of shares, in which case they are offset
against the premium on those shares within equity.
Any contingent consideration to be transferred by the group is
recognised at fair value at the acquisition date. Subsequent
changes to the fair value of the contingent consideration that is
deemed to be an asset or liability is recognised in accordance with
IAS 39 either in profit or loss or as a change to other
comprehensive income. Contingent consideration that is classified
as equity is not re-measured, and its subsequent settlement is
accounted for within equity.
Goodwill is initially measured as the excess of the aggregate of
the consideration transferred and the fair value of non-controlling
interest over the identifiable net assets acquired and liabilities
assumed. If this consideration is lower than the fair value of the
net assets of the subsidiary acquired, the difference is recognised
in profit or loss in the Income Statement.
Investments in subsidiaries are accounted for at cost less
impairment.
Where necessary, adjustments are made to the financial
statements of subsidiaries to bring the accounting policies used
into line with those used by other members of the Group. All
intercompany transactions and balances between Group enterprises
are eliminated on consolidation.
2.3. Going Concern
The Group's business activities together with the factors likely
to affect its future development, performance and position are set
out in the Chairman's Statement on pages 3 to 4. In addition, Note
3 to the Financial Statements include the Group's objectives,
policies and processes for managing its capital, its financial risk
management objectives, details of its financial instruments and its
exposure to credit and liquidity risk.
The Financial Statements have been prepared on a going concern
basis. Although the Group's assets are not generating steady
revenue streams, an operating loss has been reported and an
operating loss is expected in the 12 months subsequent to the date
of these financial statements, the Directors believe, having
considered all available information including cash flows prepared
by management, that the Group, having raised GBP600,000 (gross) in
January 2015, has sufficient funds to meet its expected committed
and contractual expenditure through to the end of 2015, and are
confident that they will be able to raise additional funding to
provide additional working capital to continue its current
exploration programme as well as additional works.
Based on the Board's assessment that the cash flow budgets can
be achieved and that the necessary funds will be raised, the
Directors have a reasonable expectation that the Group and the
Company have adequate resources to continue in operational
existence for the foreseeable future. Thus, they continue to adopt
the going concern basis of accounting in preparing the annual
financial statements for the year ended 31 December 2014.
Should the Group be unable to continue trading, adjustments
would have to be made to reduce the value of the assets to their
recoverable amounts, to provide for further liabilities which might
arise and to classify fixed assets as current.
The Financial Statements do not include any adjustments that may
be required should the Group be unable to continue as a going
concern. If the Group were unable to continue as a going concern,
then adjustments would be necessary to write assets down to their
recoverable amounts, non-current assets and liabilities would be
reclassified as current assets and liabilities and provisions would
be required for any costs associated with closure.
Going concern is referred to in the auditor's report starting on
page 12 as an emphasis of matter.
2.4. New and Amended Standards
(a) New and amended standards and interpretations issued
A number of new standards and amendments to standards and
interpretations are effective for the financial year beginning on
or after 1 January 2014 and have been applied in preparing these
Financial Statements.
IFRS 10, 'Consolidated financial statements', builds on existing
principles by identifying the concept of control as the determining
factor in whether an entity should be included within the
consolidated financial statements of the parent company. The
standard provides additional guidance to assist in the
determination of control where this is difficult to assess.
IAS 27, 'Separate Financial Statements', replaces the current
version of IAS 27, 'Consolidated and Separate Financial Statements'
as a result of the issue of IFRS 10. The revised standard includes
the requirements relating to separate financial statements.
Amendments to IAS 36, 'Impairment of Assets', require additional
information about the fair value measurement when the recoverable
amount of impaired assets is based on fair value less costs of
disposal. The amendments also incorporate the requirement to
disclose the discount rate used in determining impairment (or
reversals) where recoverable amount (based on fair value less costs
of disposal) is determined using a present value technique.
All other new standards and amendments to standards and
interpretations effective for the financial year beginning on or
after 1 January 2014 are not material to the Group and Company and
therefore not applied in preparing these financial statements.
(b) New and amended standards and interpretations issued but not
yet effective for the financial year beginning on or after 1
January 2014 and not early adopted
The standards and interpretations that are issued, but not yet
effective, up to the date of issuance of the Financial Statements
are listed below. The Company and Group intend to adopt these
standards, if applicable, when they become effective. Unless stated
below, there are no IFRSs or IFRIC interpretations that are not yet
effective that would be expected to have a material impact on the
Group.
Effective
Standard Impact on initial application date
Presentation of Financial *1 January
IAS 1 (Amendments) Statements: Disclosure Initiative 2016
Clarification of Acceptable *1 January
IAS 16 (Amendments) Methods of Depreciation 2016
Property, plant and equipment: *1 January
IAS 16 (Amendments) Bearer Plants 2016
Defined Benefit Plans: Employee *1 July
IAS 19 (Amendments) Contributions 2014
*1 January
IAS 27 (Amendments) Separate Financial Statements 2016
Investments in Associates *1 January
IAS 28 (Amendments) and Joint Ventures 2016
Investment Entities: Applying *1 January
IAS 28 (Amendments) the Consolidation Exception 2016
Clarification of Acceptable *1 January
IAS 38 (Amendments) Methods of Amortisation 2016
*1 January
IAS 41 (Amendments) Agriculture: Bearer Plants 2016
*1 January
IFRS 9 (Amendments) Financial Instruments 2018
*1 January
IFRS 10 (Amendments) Consolidated Financial Statements 2016
Investment Entities: Applying *1 January
IFRS 10 (Amendments) the Consolidation Exception 2016
Joint Arrangements: Accounting
for Acquisitions of Interests *1 January
IFRS 11 in Joint Operations 2016
Investment Entities: Applying *1 January
IFRS 12 (Amendments) the Consolidation Exception 2016
*1 January
IFRS 14 Regulatory Deferral Accounts 2016
Revenue from Contracts with *1 January
IFRS 15 Customers 2017
*1 July
Annual Improvements 2010 - 2012 Cycle 2014
*1 July
Annual Improvements 2011 - 2013 Cycle 2014
*1 July
Annual Improvements 2012 - 2014 Cycle 2016
(*) Subject to EU endorsement
The Group is evaluating the impact of the new or amended
standards above. The new or amended standards are not expected to
have a material impact on the Group's results or shareholders'
funds.
2.5. Segment Reporting
Operating segments are reported in a manner consistent with the
internal reporting provided to the chief operating decision-maker.
The chief operating decision-maker, who is responsible for
allocating resources and assessing performance of the operating
segments, has been identified as the Board of Directors that makes
strategic decisions.
2.6. Foreign Currencies
(a) Functional and presentation currency
Items included in the Financial Statements of the Group's
entities are measured using the currency of the primary economic
environment in which the entity operates (the 'functional
currency'). The functional currency of the UK parent entity is
Pounds Sterling and the functional currency of the BVI subsidiary
is US Dollars. The currency of Mauritania is the Mauritanian
Ouguiya; however all material contracts with the Mauritanian
subsidiary are denominated in Euros which is, therefore, its
functional currency. The currency of Ethiopia is the Ethiopian
Birr, which is therefore the functional currency of the Ethiopian
subsidiaries. The currency of Mali is the Central African Franc,
which is therefore the functional currency of the Malian
subsidiary. The currency of Burkina Faso is the Central African
Franc, which is therefore the functional currency of the Burkina
Faso subsidiary. The Financial Statements are presented in Pounds
Sterling, rounded to the nearest pound, which is the Company's
functional and Group's presentation currency.
(b) Transactions and balances
Foreign currency transactions are translated into the functional
currency using the exchange rates prevailing at the dates of the
transactions or valuation where such items are re-measured. Foreign
exchange gains and losses resulting from the settlement of such
transactions and from the translation at year-end exchange rates of
monetary assets and liabilities denominated in foreign currencies
are recognised in the Income Statement. Foreign exchange gains and
losses that relate to borrowings and cash and cash equivalents are
presented in the income statement within 'finance income or costs'.
All other foreign exchange gains and losses are presented in the
income statement within 'Other (losses)/gains - net'.
Translation differences on non-monetary financial assets and
liabilities such as equities held at fair value through profit or
loss are recognised in profit or loss as part of the fair value
gain or loss. Translation differences on non-monetary financial
assets measured at fair value, such as equities classified as
available for sale, are included in other comprehensive income.
(c) Group companies
The results and financial position of all the Group entities
(none of which has the currency of a hyperinflationary economy)
that have a functional currency different from the presentation
currency are translated into the presentation currency as
follows:
-- assets and liabilities for each Statement of Financial
Position presented are translated at the closing rate at the date
of that Statement of Financial Position sheet;
-- income and expenses for each Income Statement are translated
at average exchange rates (unless this average is not a reasonable
approximation of the cumulative effect of the rates prevailing on
the transaction dates, in which case income and expenses are
translated at the dates of the transactions); and
-- all resulting exchange differences are recognised in other comprehensive income.
On consolidation, exchange differences arising from the
translation of the net investment in foreign entities, and of
monetary items receivable from foreign subsidiaries for which
settlement is neither planned nor likely to occur in the
foreseeable future are taken to other comprehensive income. When a
foreign operation is sold, such exchange differences are recognised
in the Statement of Comprehensive Income as part of the gain or
loss on sale.
2.7. Intangible assets
(a) Goodwill
Goodwill arises on the acquisition of subsidiaries and
represents the excess of the consideration transferred over the
Group's interest in the fair value of the net identifiable assets,
liabilities and contingent liabilities of the acquiree.
For the purpose of impairment testing, goodwill acquired in a
business combination is allocated to each of the cash-generating
units, or groups of cash-generating units, that are expected to
benefit from the synergies of the combination. Each unit or group
of units to which the goodwill is allocated represents the lowest
level within the entity at which the goodwill is monitored for
internal management purposes. Goodwill is monitored at the
operating segment level.
Goodwill impairment reviews are undertaken annually, or more
frequently if events or changes in circumstances indicate a
potential impairment. The carrying value of goodwill is compared to
the recoverable amount, which is the higher of value in use and the
fair value less costs to sell. Any impairment is recognised
immediately as an expense and is not subsequently reversed.
(b) Exploration and evaluation
The Group recognises expenditure as exploration and evaluation
assets when it determines that those assets will be successful in
finding specific mineral resources. Expenditure included in the
initial measurement of exploration and evaluation assets and which
are classified as intangible assets relate to the acquisition of
rights to explore, topographical, geological, geochemical and
geophysical studies, exploratory drilling, trenching, sampling and
activities to evaluate the technical feasibility and commercial
viability of extracting a mineral resource. Capitalisation of
pre-production expenditure ceases when the mining property is
capable of commercial production.
Exploration and evaluation assets are recorded and held at
cost.
Exploration and evaluation assets are assessed annually for
impairment. The assessment is carried out by allocating exploration
and evaluation assets to cash generating units, which are based on
specific projects or geographical areas.
Whenever the exploration for and evaluation of mineral resources
in cash generating units does not lead to the discovery of
commercially viable quantities of mineral resources and the Group
has decided to discontinue such activities of that unit, the
associated expenditures are written off to the Income
Statement.
2.8. Property, Plant and Equipment
Property, plant and equipment is stated at cost less accumulated
depreciation and any accumulated impairment losses. Subsequent
costs are included in the asset's carrying amount or recognised as
a separate asset, as appropriate, only when it is probable that
future economic benefits associated with the item will flow to the
Group and the cost of the item can be measured reliably. The
carrying amount of the replaced part is derecognised. All other
repairs and maintenance are charged to the Income Statement during
the financial period in which they are incurred.
Depreciation is provided on all property, plant and equipment to
write off the cost less estimated residual value of each asset over
its expected useful economic life on a straight line basis at the
following annual rates:
Field equipment - 20% straight line
Motor vehicles - 20% straight line
Computer equipment - 20-50% straight line
The assets' residual values and useful lives are reviewed, and
adjusted if appropriate, at the end of each reporting period.
An asset's carrying amount is written down immediately to its
recoverable amount if the asset's carrying amount is greater than
its estimated recoverable amount.
Gains and losses on disposal are determined by comparing the
proceeds with the carrying amount and are recognised within 'Other
(losses)/gains' in the Income Statement.
2.9. Impairment of non-financial assets
Intangible assets that have an indefinite useful life, for
example, exploration and evaluation intangible assets not ready to
use, are not subject to amortisation and are tested annually for
impairment.
Property, plant and equipment are reviewed for impairment
whenever events or changes in circumstances indicate that the
carrying amount may not be recoverable. An impairment loss is
recognised for the amount by which the asset's carrying amount
exceeds its recoverable amount. The recoverable amount is the
higher of an asset's fair value less costs to sell and value in
use. For the purposes of assessing impairment, assets are grouped
at the lowest levels for which there are separately identifiable
cash flows (cash generating units). Non-financial assets that
suffered impairment are reviewed for possible reversal of the
impairment at each reporting date.
2.10. Financial Assets
Classification
The Group classifies its financial assets in the following
categories: at fair value through profit or loss; loans and
receivables; and available-for-sale. The classification depends on
the purpose for which the financial assets were acquired.
Management determines the classification of its financial assets at
initial recognition.
(i) Financial assets at fair value through profit or loss
Financial assets at fair value or loss are financial assets held
for trading. A financial asset is classified in this category if
acquired principally for the purpose of selling in the short term.
Derivatives are also categorised as held for trading unless they
are designated as hedges.
Assets in this category are classified as current assets if
expected to be settled within 12 months, otherwise, they are
classified as non-current.
(ii) Loans and receivables
Loans and receivables are non-derivative financial assets with
fixed or determinable payments that are not quoted in an active
market. They are included in current assets, except for maturities
greater than 12 months after the Statement of Financial Position
date. These are classified as non-current assets. The Group's loans
and receivables comprise trade and other receivables, restricted
assets and cash and cash equivalents in the Statement of Financial
Position.
(iii) Available-for-sale financial assets
Available-for-sale financial assets are non-derivatives that are
either designated in this category or not classified in any of the
other categories. They are included in non-current assets unless
the investment matures or management intends to dispose of the
investment within 12 months of the end of the reporting period.
Recognition and measurement
Regular purchases and sales of financial assets are recognised
on the trade date - the date on which the Group commits to
purchasing or selling the asset. Financial assets carried at fair
value through profit or loss is initially recognised at fair value,
and transaction costs are expensed in the Income Statement.
Financial assets are derecognised when the rights to receive cash
flows from the assets have expired or have been transferred, and
the Group has transferred substantially all of the risks and
rewards of ownership.
Available-for-sale financial assets are subsequently carried at
fair value unless the Group is precluded from doing so as, in the
case of unlisted equity securities, the range of reasonable fair
value estimates is significant and the probabilities of the various
estimates cannot be reasonably assessed. In such circumstances
available-for-sale financial assets are held at cost and reviewed
annually for impairment.
Loans and receivables are subsequently carried at amortised cost
using the effective interest method.
Gains or losses arising from changes in the fair value of
financial assets at fair value through profit or loss are presented
in the Income Statement within 'Other (Losses)/Gains - Net' in the
period in which they arise.
Changes in the fair value of monetary and non-monetary
securities classified as available-for-sale are recognised in other
comprehensive income. When securities classified as
available-for-sale are sold or impaired, the accumulated fair value
adjustments recognised in equity are included in the Income
Statement as "gains and losses from investment securities."
Interest on available-for-sale securities calculated using the
effective interest method is recognised in the Statement of
Comprehensive Income as part of other income. Dividends on
available-for-sale equity instruments are recognised in the Income
Statement as part of other income when the Group's right to receive
payments is established.
Impairment of financial assets
The Group assesses at the end of each reporting period whether
there is objective evidence that a financial asset, or a group of
financial assets, is impaired. A financial asset, or a group of
financial assets, is impaired, and impairment losses are incurred,
only if there is objective evidence of impairment as a result of
one or more events that occurred after the initial recognition of
the asset (a "loss event"), and that loss event (or events) has an
impact on the estimated future cash flows of the financial asset,
or group of financial assets, that can be reliably estimated.
The criteria that the Group uses to determine that there is
objective evidence of an impairment loss include:
-- significant financial difficulty of the issuer or obligor;
-- a breach of contract, such as a default or delinquency in interest or principal repayments;
-- the disappearance of an active market for that financial
asset because of financial difficulties;
-- observable data indicating that there is a measurable
decrease in the estimated future cash flows from a portfolio of
financial assets since the initial recognition of those assets,
although the decrease cannot yet be identified with the individual
financial assets in the portfolio; or
-- for assets classified as available-for-sale, a significant or
prolonged decline in the fair value of the security below its
cost.
(i) Assets carried at amortised cost
The amount of impairment is measured as the difference between
the asset's carrying amount and the present value of estimated
future cash flows (excluding future credit losses that have not
been incurred), discounted at the financial asset's original
effective interest rate. The asset's carrying amount is reduced,
and the loss is recognised in the Income Statement. As a practical
expedient, the Group may measure impairment on the basis of an
instrument's fair value using an observable market price.
If, in a subsequent period, the amount of the impairment loss
decreases and the decrease can be related objectively to an event
occurring after the impairment was recognised (such as an
improvement in the debtor's credit rating), the reversal of the
previously recognised impairment loss is recognised in the Income
Statement.
(ii) Assets classified as available-for-sale
The Group assesses at the end of each reporting period whether
there is objective evidence that a financial asset or a group of
financial assets is impaired.
The cumulative impairment loss - measured as the difference
between the acquisition cost and the current fair value, less any
impairment loss on that financial asset previously recognised in
the Income Statement - is removed from equity and recognised in the
Income Statement.
For equity investments, a significant or prolonged decline in
the fair value of the security below its cost is also evidence that
the assets are impaired. If any such evidence exists the cumulative
loss - measured as the difference between the acquisition cost and
the current fair value, less any impairment loss on that financial
asset previously recognised in profit or loss - is removed from
equity and recognised in profit or loss. Impairment losses
recognised in the consolidated income statement on equity
instruments are not reversed through the consolidated income
statement.
2.11. Trade and Other Receivables
Trade and other receivables are amounts due from third parties
in the ordinary course of business. If collection is expected in
one year or less they are classified as current assets. If not they
are presented as non-current assets.
Trade and other receivables are recognised initially at fair
value, and subsequently measured at amortised cost using the
effective interest method, less provision for impairment.
2.12. Derivative financial instruments
Derivatives are initially recognised at fair value on the date a
derivative contract is entered into and are subsequently
re-measured at their fair value.
2.13. Cash and Cash Equivalents
Cash and cash equivalents comprise cash at bank and in hand, and
are subject to an insignificant risk of changes in value.
2.14. Share Capital
Ordinary shares are classified as equity. Incremental costs
directly attributable to the issue of new shares or options are
shown in equity as a deduction, net of tax, from the proceeds.
2.15. Share Based Payments
The Group operates a number of equity-settled, share-based
schemes, under which the entity receives services from employees or
third party suppliers as consideration for equity instruments
(options and warrants) of the Group. The fair value of the third
party suppliers' services received in exchange for the grant of the
options is recognised as an expense in the Statement of
Comprehensive Income or charged to equity depending on the nature
of the service provided. The value of the employee services
received is expensed in the Income Statement and its value is
determined by reference to the fair value of the options
granted:
-- including any market performance conditions;
-- excluding the impact of any service and non-market
performance vesting conditions (for example, profitability or sales
growth targets, or remaining an employee of the entity over a
specified time period); and
-- including the impact of any non-vesting conditions (for
example, the requirement for employees to save).
Non-market vesting conditions are included in assumptions about
the number of options that are expected to vest. The total expense
or charge is recognised over the vesting period, which is the
period over which all of the specified vesting conditions are to be
satisfied. At the end of each reporting period, the entity revises
its estimates of the number of options that are expected to vest
based on the non-market vesting conditions. It recognises the
impact of the revision to original estimates, if any, in the Income
Statement or equity as appropriate, with a corresponding adjustment
to a separate reserve in equity.
When the options are exercised, the Company issues new shares.
The proceeds received, net of any directly attributable transaction
costs, are credited to share capital (nominal value) and share
premium when the options are exercised.
2.16. Trade Payables
Trade payables are obligations to pay for goods or services that
have been acquired in the ordinary course of business from
suppliers. Accounts payable are classified as current liabilities
if payment is due within one year or less. If not, they are
presented as non-current liabilities.
Trade payables are recognised initially at fair value, and
subsequently measured at amortised cost using the effective
interest method.
2.17. Taxation
There has been no tax credit or expense for the period relating
to current or deferred tax. Tax is recognised in the Income
Statement, except to the extent that it relates to items recognised
in other comprehensive income or directly in equity. In this case,
the tax is also recognised in other comprehensive income or
directly in equity, respectively.
Deferred tax is accounted for using the balance sheet liability
method in respect of temporary differences arising from differences
between the carrying amount of assets and liabilities in the
financial statements and the corresponding tax bases used in the
computation of taxable profit. However, deferred tax liabilities
are not recognised if they arise from the initial recognition of
goodwill; deferred tax is not accounted for if it arises from
initial recognition of an asset or liability in a transaction other
than a business combination that at the time of the transaction
affects neither accounting nor taxable profit or loss.
In principle, deferred tax liabilities are recognised for all
taxable temporary differences and deferred tax assets are
recognised to the extent that it is probable that taxable profits
will be available against which deductible temporary differences
can be utilised.
Deferred tax liabilities are recognised for taxable temporary
differences arising on investments in subsidiaries and associates,
and interests in joint ventures, except where the Group is able to
control the reversal of the temporary difference and it is probable
that the temporary difference will not reverse in the foreseeable
future.
Deferred tax assets and liabilities are offset when there is a
legally enforceable right to offset current tax assets against
current tax liabilities and when the deferred tax assets and
liabilities relate to taxes levied by the same taxation authority
on either the same taxable entity or different taxable entities
where there is an intention to settle the balances on a net
basis.
Deferred tax is calculated at the tax rates that are expected to
apply to the period when the asset is realised or the liability is
settled. Deferred tax assets and liabilities are not
discounted.
2.18. Operating leases
Leases of assets under which a significant amount of the risks
and benefits of ownership are effectively retained by the lessor
are classified as operating leases. Operating lease payments are
charged to the income statement on a straight-line basis over the
period of the respective leases.
2.19. Revenue recognition
Revenue is measured at the fair value of the consideration
received or receivable, and represents amounts receivable for goods
or services supplied in course of ordinary business, stated net of
discounts, returns and value added taxes. The Group recognises
revenue when the amount of revenue can be reliably measured; when
it is probable that future economic benefits will flow to the
entity; and when specific criteria have been met for the Group's
activities described below.
Revenue is recognised in respect of amounts recharged to project
strategic partners in accordance to their contractual terms.
2.20. Finance income
Interest income is recognised using the effective interest
method.
2.21. Borrowings
Compound Financial Instruments
Compound financial instruments issued by the Group comprise
convertible notes that can be converted to share capital at the
option of the holder. The number of shares to be issued does not
vary with changes in their fair value.
The liability component of a compound financial instrument is
recognised initially at the fair value of a similar liability that
does not have an equity conversion option. The equity component is
recognised initially at the difference between the fair value of
the compound financial instrument as a whole and the fair value of
the liability component. Any directly attributable transaction
costs are allocated to the liability and equity components in
proportion to their initial carrying amounts.
Subsequent to their initial recognition, the liability component
of a compound financial instrument is measured at amortised cost
using the effective interest method. The equity component of a
compound financial instrument is not remeasured subsequent to
initial recognition, except on conversion or expiry.
3. Financial Risk Management
3.1. Financial Risk Factors
The Group's activities expose it to a variety of financial
risks: market risk (including foreign currency risk and price
risk), credit risk and liquidity risk. The Group's overall risk
management programme focuses on the unpredictability of financial
markets and seeks to minimise potential adverse effects on the
Group's financial performance.
Risk management is carried out by the London based management
team under policies approved by the Board of Directors.
Market Risk
(a) Foreign currency risk
The Group operates internationally and is exposed to foreign
exchange risk arising from various currency exposures, primarily
with respect to the Euro, Central African Franc, Ethiopian Birr,
Mauritanian Ouguiya and the Pound Sterling. Foreign exchange risk
arises from future commercial transactions, recognised assets and
liabilities and net investments in foreign operations. The Group
negotiates all material contracts for activities in relation to its
subsidiaries in either Pounds Sterling or Euros which in the
Directors' opinion are more stable than the respective local
currencies. The Group also holds minimal liquid assets in Central
African Franc, Mauritanian Ouguiya and Ethiopian Birr. The Group
does not hedge against the risks of fluctuations in exchange rates.
The volume of transactions is not deemed sufficient to enter into
forward contracts. The Group has not sensitised the figures for
fluctuations in foreign exchange rates as the Directors are of the
opinion that these fluctuations would not have a significant impact
on the financial statements of the Group at the present time. The
Directors will continue to assess the effect of movements in
exchange rates on the Group's financial operations and initiate
suitable risk management measures where necessary.
(b) Price risk
The Group is exposed to equity securities price risk because of
investments held by the Group as available-for-sale and fair value
through the profit or loss.
The Group's investments in equity of other entities that are
publicly traded are quoted on AIM. There is a limited volume of
shares traded in the Group's investee and if the Group was to
dispose of a significant percentage of its shares this could have a
substantial impact on the realisable value of these shares.
The Group does not have a substantial portfolio of shares and
manages its price risk by undertaking specific company research
prior to investing. The Group's quoted equity investment is held
for long term growth which the Directors believe mitigates the risk
of crystallising short term speculative reductions in value.
The table below summarises the impact of increases/decreases in
the AIM index on the Group's other comprehensive income for the
year. The analysis is based on the assumption that the AIM index
had increased/decreased by 10% with all other variables held
constant and all the Group's quoted equity investments moved
according to the historical correlation with the index.
2014 2013
----------------------------- -------------------------------
Index Impact Impact Impact
on post on other Impact on other
tax comprehensive on post comprehensive
losses income tax losses income
GBP GBP GBP GBP
--------- ----------- ---------------- ------------- ----------------
AIM - 1,440 - 2,100
--------- ----------- ---------------- ------------- ----------------
Other comprehensive income would increase/decrease as a result
of gains/losses on listed equity securities classified as
available-for-sale. Post tax losses would increase/decrease as a
result of the utilisation of tax losses arising from the movement
in fair value of listed equity securities classified as
available-for-sale.
(c) Interest rate risk
As the Group has no borrowings other than compound financial
instruments, it is not exposed to interest rate risk on financial
liabilities. The Group's interest rate risk arises from its cash
held on short-term deposit, which is not significant.
Credit Risk
Credit risk arises from cash and cash equivalents as well as
outstanding receivables. Management does not expect any losses from
non-performance of these receivables.
The amount of exposure to any individual counter party is
subject to a limit, which is assessed by the Board.
The Group considers the credit ratings of banks in which it
holds funds in order to reduce exposure to credit risk.
Liquidity Risk
In keeping with similar sized mineral exploration groups, the
Group's continued future operations depend on the ability to raise
sufficient working capital through the issue of equity share
capital. The Directors are confident that adequate funding will be
forthcoming with which to finance operations (see Note 2.3).
Controls over expenditure are carefully managed.
3.2. Capital Risk Management
The Group's objectives when managing capital are to safeguard
the Group's ability to continue as a going concern, in order to
enable the Group to continue its exploration and evaluation
activities, and to maintain an optimal capital structure to reduce
the cost of capital.
In order to maintain or adjust the capital structure, the Group
may adjust the issue of shares or sell assets to reduce debts.
At 31 December 2014 the Group had borrowings of GBPnil (2013:
GBP350,000) and defines capital based on the total equity of the
Company. The Group monitors its level of cash resources available
against future planned exploration and evaluation activities and
may issue new shares in order to raise further funds from time to
time.
3.3. Fair value estimation
The table below analyses financial instruments carried at fair
value, by valuation method. The different levels have been defined
as follows:
-- Quoted prices (unadjusted) in active markets for identical assets or liabilities (Level 1);
-- Inputs other than quoted prices included within Level 1 that
are observable for the asset or liability, either directly (that
is, as prices) or indirectly (that is, derived from prices) (Level
2); and
-- Inputs for the asset or liability that are not based on
observable market data (that is, unobservable inputs) (Level
3).
The following table presents the Group's assets that are
measured at fair value. The Group does not have any liabilities
measured at fair value.
2014 2013
--------------------------- ------------------------------
Assets Level Level Total Level Level Total
1 2 GBP 1 2 GBP
GBP GBP GBP GBP
----------------------------------------- -------- ------- -------- -------- --------- ---------
Available-for-sale
financial assets 14,400 - 14,400 21,000 - 21,000
Financial assets
at fair value through
profit or loss
* Derivative financial instruments - - - - 250,000 250,000
----------------------------------------- -------- ------- -------- -------- --------- ---------
Total assets 14,400 - 14,400 21,000 250,000 271,000
----------------------------------------- -------- ------- -------- -------- --------- ---------
(i) Financial instruments in Level 1
The fair value of financial instruments traded in an active
market is based on quoted market prices at the Statement of
Financial Position date. A market is regarded as active if quoted
prices are readily and regularly available from an exchange,
dealer, broker, industry group, pricing service, or regulatory
agency, and those prices represent actual and regularly occurring
market transactions on an arm's length basis. The quoted market
price used for financial assets held by the Group is the current
bid price. These instruments are included in Level 1. Instruments
included in Level 1 comprise AIM quoted equity investments
classified as available-for-for sale financial assets.
(ii) Financial instruments in Level 2
The fair value of financial instruments that are not traded in
an active market (for example, over-the-counter derivatives) is
determined by using valuation techniques. These valuation
techniques maximise the use of observable market data where it is
available, and rely as little possible on entity-specific
estimates. If all significant inputs required to fair value an
instrument are observable, the instrument is included in Level
2.
If one or more of the significant inputs is not based on
observable market data, the instrument is included in Level 3.
Specific valuation techniques used to value financial
instruments include:
-- quoted market prices or dealer quotes for similar instruments; and
-- the fair value of derivative financial instrument is
calculated based on the Company's quoted market price and a
prescribed formula in accordance with the respective equity swap
agreement.
4. Critical Accounting Estimates and Judgements
The preparation of the Financial Statements in conformity with
IFRSs requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amount of expenses during the
year. Actual results may vary from the estimates used to produce
these Financial Statements.
Estimates and judgements are continually evaluated and are based
on historical experience and other factors, including expectations
of future events that are believed to be reasonable under the
circumstances.
Significant items subject to such estimates and assumptions
include, but are not limited to:
Estimated Impairment of Goodwill
Goodwill has a carrying value of GBP423,785 (2013: GBP383,057).
The Group tests annually whether goodwill has suffered any
impairment, in accordance with the accounting policy stated in Note
2.7 to the Financial Statements.
Management has concluded that no impairment charge is necessary
to the carrying value of goodwill. See Note 7 to the Financial
Statements.
Impairment of exploration and evaluation costs
Exploration and evaluation costs have a carrying value at 31
December 2014 of GBP7,217,039 (2013: GBP5,581,135). Such assets
have an indefinite useful life as the Group has a right to renew
exploration licences and the asset is only amortised once
extraction of the resource commences. Management tests annually
whether exploration projects have future economic value in
accordance with the accounting policy stated in Note 2.7 to the
Financial Statements. Each exploration project is subject to an
annual review by either a consultant or senior company geologist to
determine if the exploration results returned during the year
warrant further exploration expenditure and have the potential to
result in an economic discovery. This review takes into
consideration long term metal prices, anticipated resource volumes
and supply and demand outlook. In the event that a project does not
represent an economic exploration target and results indicate there
is no additional upside a decision will be made to discontinue
exploration. The Directors have reviewed the estimated value of
each project prepared by management and have concluded that no
impairment would be required and provided against the exploration
assets.
Share based payment transactions
The Group has made awards of options and warrants over its
unissued share capital to certain Directors and employees as part
of their remuneration package. Certain warrants have also been
issued to shareholders as part of their subscription for shares and
suppliers for various services received.
The valuation of these options and warrants involves making a
number of critical estimates relating to price volatility, future
dividend yields, expected life of the options and forfeiture rates.
These assumptions have been described in more detail in Note 17 to
the Financial Statements.
Fair value of derivative financial instruments
The fair value of financial instruments that are not traded in
an active market is determined by using valuation techniques. The
fair value of the equity swaps is calculated using the prescribed
formula in the equity swap agreement and the Company's prevailing
market price at the year end.
The Equity swaps have been fully satisfied during the year. They
have no carrying value at the year end (2013: GBP250,000). The
other income amount, representing the gain on re-measuring to fair
value was deemed immaterial and therefore not recognised in the
Income Statement.
Available-for-sale financial assets
Available-for-sale financial assets have a carrying value at 31
December 2014 of GBP14,400 (2013: GBP21,000). The Group holds
listed equity securities as available-for-sale financial
assets.
The Group follows the guidance of IAS 39 to determine when an
available-for-sale equity investment is impaired. This
determination requires significant judgement. In making this
judgement, the Group evaluates, among other factors, the duration
and extent to which the fair value of an investment is less than
its cost; and the financial health of the short-term business
outlook for the investee, including factors such as industry and
sector performance and operational and financing cash flow.
Management has concluded that there is no impairment charge
necessary to the carrying value of available-for-sale financial
assets.
Compound financial instruments
In order to calculate the split for convertible loans between
the financial liability and equity components, management is
required to discount the contractual stream of future cash flows
under the convertible loan note instrument at an estimated rate of
interest applicable to instruments which do not have any associated
conversion option.
The values of the liability and equity conversion component were
determined at the date the loan notes were issued. The fair value
of the liability component was calculated using a market interest
rate for an equivalent non-convertible loan. The residual amount,
representing the value of the equity conversion option was deemed
immaterial and therefore not included in shareholders' equity.
Contingent consideration
As part of the acquisition of Gazelle Resources Inc, the Group
has entered into a contractual arrangement with Swala Resources Inc
('Swala'), in which, under certain milestones being reached, would
result in the Group paying further consideration of $1.5m. For full
details on the arrangement, please see Note 27.
The Directors have reviewed the progress of the project and
consider reaching the milestones unlikely. Given this, the
Directors have assessed the fair value of the contingent
consideration to be nil; it is unlikely that the Company will have
any additional liability arising.
5. Segment Information
Management has determined the operating segments based on
reports reviewed by the Board of Directors that are used to make
strategic decisions. During the year the Group had interests in
five geographical segments; the United Kingdom, Mauritania,
Ethiopia, Burkina Faso and Mali. Activities in the UK are mainly
administrative in nature whilst the activities in Ethiopia,
Mauritania, Burkina Faso and Mali relate to exploration and
evaluation work.
Burkina Intra-segment
Faso Ethiopia Mauritania Mali UK balances Total
2014 GBP GBP GBP GBP GBP GBP GBP
----------------------- ----------- ---------- ------------ ----------- ----------- --------------- -----------
Revenue - 243,961 - - - - 243,961
Administrative
expenses (20,014) (46,503) (4,662) (125,168) (638,777) - (835,124)
Gain/(loss)
on foreign
exchange (81,112) 1,765 111,011 (226,010) - - (194,346)
Other gains/(losses) - - - 27,445 (185,957) - (158,512)
Profit/(loss)
from operations
per reportable
segment (101,126) 199,223 106,349 (323,733) (824,734) - (944,021)
Capital expenditure 13,955 53,290 72,441 1,124,453 - - 1,264,139
Reportable
segment assets 5,394,155 845,525 1,147,089 5,879,446 8,793,590 (13,740,999) 8,318,806
Reportable
segment liabilities 5,014,300 651,114 1,677,620 3,495,232 88,975 (10,197,117) 730,124
----------------------- ----------- ---------- ------------ ----------- ----------- --------------- -----------
Intra-segment
Ethiopia Mauritania Mali UK balances Total
2013 GBP GBP GBP GBP GBP GBP
----------------------- ---------- ------------ ----------- ----------- --------------- -------------
Revenue - - - - - -
Administrative
expenses (29,863) (18,530) 94,993 (835,813) - (789,213)
Impairment
of intangible
assets - (332,046) (5,352) - - (337,398)
Loss on foreign
exchange (2,405) (109,434) (4,643) - - (116,482)
Loss from operations
per reportable
segment (32,268) (460,010) 84,998 (835,813) - (1,243,093)
Capital expenditure 250,281 70,929 597,106 1,687 - 920,003
Reportable
segment assets 799,427 999,362 2,729,431 7,504,768 (4,805,560) 7,227,428
Reportable
segment liabilities 722,385 1,602,063 397,714 1,727,511 (2,091,885) 2,357,788
----------------------- ---------- ------------ ----------- ----------- --------------- -------------
A reconciliation of adjusted loss from operations per reportable
segment to loss before tax is provided as follows:
2014 2013
GBP GBP
-------------------------------------- ----------- -------------
Loss from operations per reportable
segment (944,021) (1,243,093)
Finance income 399 553
Finance costs (18,526) -
Loss for the year before taxation (962,148) (1,242,540)
-------------------------------------- ----------- -------------
6. Property, Plant and Equipment
Group Company
------------
Field Computer Computer
equipment Vehicles equipment Total equipment
GBP GBP GBP GBP GBP
------------------------------- ------------ ---------- ------------ ---------- ------------
Cost
As at 1 January 2013 17,470 32,124 9,254 58,848 9,254
Acquired through acquisition
of subsidiary 172,120 55,191 7,631 234,942 -
Additions 2,010 30,420 1,687 34,117 1,687
Foreign exchange differences (690) (390) (31) (1,111) -
------------------------------- ------------ ---------- ------------ ---------- ------------
As at 31 December 2013 190,910 117,345 18,541 326,796 10,941
------------------------------- ------------ ---------- ------------ ---------- ------------
Acquired through acquisition
of subsidiary 111,716 113,940 14,926 240,582 -
Additions - - - - -
Disposals - (39,073) - (39,073) -
Foreign exchange differences (13,299) (9,892) (9,982) (33,173) -
------------------------------- ------------ ---------- ------------ ---------- ------------
As at 31 December 2014 289,327 182,320 23,485 495,132 10,941
------------------------------- ------------ ---------- ------------ ---------- ------------
Depreciation
As at 1 January 2013 4,892 2,165 3,932 10,989 3,932
Acquired through acquisition
of subsidiary 32,998 26,544 5,507 65,049 -
Charge for the year 12,488 10,073 4,842 27,403 4,645
Foreign exchange differences (133) (107) (21) (261) -
------------------------------- ------------ ---------- ------------ ---------- ------------
As at 31 December 2013 50,245 38,675 14,260 103,180 8,577
------------------------------- ------------ ---------- ------------ ---------- ------------
Acquired through acquisition
of subsidiary 56,281 101,388 9,828 167,497 -
Charge for the year 43,238 23,606 3,101 69,945 2,190
Disposals - (25,618) - (25,618) -
Foreign exchange differences (2,176) (6,405) (9,838) (18,419) -
------------------------------- ------------ ---------- ------------ ---------- ------------
As at 31 December 2014 147,588 131,646 17,351 296,585 10,767
------------------------------- ------------ ---------- ------------ ---------- ------------
Net book value
As at 31 December 2013 140,665 78,670 4,281 223,616 2,364
------------------------------- ------------ ---------- ------------ ---------- ------------
As at 31 December 2014 141,739 50,674 6,134 198,547 174
------------------------------- ------------ ---------- ------------ ---------- ------------
Depreciation expense of GBP69,945 (2013: GBP27,403) has been
charged in administration expenses (Note 18).
7. Intangible Assets
Exploration and evaluation assets are all internally
generated.
Group
------------------------
Exploration & Evaluation Assets 2014 2013
- Cost and Net Book Value GBP GBP
------------------------------------ ----------- -----------
At 1 January 5,581,135 3,222,346
Additions 1,264,139 885,886
Acquired through acquisition of
subsidiary (at fair value) (Note
26) 490,000 1,942,398
Impairment - (337,398)
Foreign exchange differences (118,235) (132,097)
At 31 December 7,217,039 5,581,135
------------------------------------ ----------- -----------
Group
--------------------
2014 2013
Goodwill - Cost and Net Book Value GBP GBP
--------------------------------------- --------- ---------
At 1 January 383,057 19,571
Acquired through acquisition of
subsidiary (on consolidation) (Note
26) - 239,759
Acquired through acquisition of
subsidiary (at fair value) (Note
26) 40,728 123,727
--------------------------------------- --------- ---------
At 31 December 423,785 383,057
--------------------------------------- --------- ---------
Exploration projects in Burkina Faso, Mali, Ethiopia and
Mauritania are at an early stage of development and, with the
exception of the JORC Code compliant inferred resource estimate of
247,000 oz Au for the Kossanto Project in Mali as at 31 December
2014, no JORC or non-JORC compliant resource estimates were
available to enable value in use calculations to be prepared. The
Directors therefore undertook an assessment of the following areas
and circumstances that could indicate the existence of
impairment:
-- The Group's right to explore in an area has expired, or will
expire in the near future without renewal;
-- No further exploration or evaluation is planned or budgeted for;
-- A decision has been taken by the Board to discontinue
exploration and evaluation in an area due to the absence of a
commercial level of reserves; and
-- Sufficient data exists to indicate that the book value will
not be fully recovered from future development and production.
An impairment review of exploration and evaluation assets is
carried on out an annual basis in order to ensure that it is valued
at the lower of cost and recoverable amount. Following their
assessment, the Directors concluded that no impairment charge was
necessary at the year end. This included the Group's two gold
exploration licences in Mauritania for which no significant
exploration activity has been conducted over the past two
years.
8. Investments in Subsidiary Undertakings
Company
------------------------
2014 2013
GBP GBP
------------------------------- ----------- -----------
Shares in Group Undertakings
At 1 January 3,840,001 1,340,001
Additions (Note 26) 600,000 2,500,000
------------------------------- ----------- -----------
At 31 December 4,440,001 3,840,001
------------------------------- ----------- -----------
Loans to Group undertakings 3,922,082 2,707,237
------------------------------- ----------- -----------
At 31 December 8,362,083 6,547,238
------------------------------- ----------- -----------
Investments in Group undertakings are stated at cost, which is
the fair value of the consideration paid, less any impairment
provision.
Details of Subsidiary Undertakings
Country Proportion
of incorporation of share
Name of and place Parent Registered capital Nature
subsidiary of business company capital held of business
------------------- ------------------- ---------------- -------------------- ------------ --------------
Alecto Holdings British Alecto Ordinary 100% Dormant
International Virgin Islands Minerals shares
Limited plc US$1
------------------- ------------------- ---------------- -------------------- ------------ --------------
Alecto Guinea British Alecto Ordinary 100% Dormant
Holdings Virgin Islands Minerals shares
Limited plc US$1
------------------- ------------------- ---------------- -------------------- ------------ --------------
Alecto Mauritania Mauritania Alecto Ordinary 100% Exploration
Limited Holdings shares
International MOU 1,000,000
Limited
------------------- ------------------- ---------------- -------------------- ------------ --------------
AME West United Kingdom Alecto Ordinary 100% Dormant
Africa Limited Minerals shares
plc GBP100
------------------- ------------------- ---------------- -------------------- ------------ --------------
Caracal Mali AME West Ordinary 100% Exploration
Gold Mali Africa shares
SARL Limited XOF 1,526,649,300
------------------- ------------------- ---------------- -------------------- ------------ --------------
Nubian Gold United Kingdom Alecto Ordinary 100% Exploration
Exploration Minerals shares
Limited plc GBP100,000
------------------- ------------------- ---------------- -------------------- ------------ --------------
Rift Valley United Kingdom Alecto Ordinary 100% Exploration
Resources Minerals shares
Limited plc GBP100,000
------------------- ------------------- ---------------- -------------------- ------------ --------------
NewMines Nevis Alecto Ordinary 100% Dormant
Holdings Minerals shares
Limited plc EUR923,373
------------------- ------------------- ---------------- -------------------- ------------ --------------
Tobon Tondo Mali NewMines Ordinary 100% Exploration
SARL Holdings shares
Limited XOF 1,000,000
------------------- ------------------- ---------------- -------------------- ------------ --------------
Gazelle British Alecto Ordinary 100% Dormant
Resources Virgin Islands Minerals shares
Inc plc US$1
------------------- ------------------- ---------------- -------------------- ------------ --------------
Societe Burkina Gazelle Ordinary 100% Exploration
Miniere Faso Resources shares
de Kerboulé Inc XOF 1,000,000
SARL
------------------- ------------------- ---------------- -------------------- ------------ --------------
9. Available-for-Sale Financial Assets
Group Company
---------------------- ----------------------
2014 2013 2014 2013
GBP GBP GBP GBP
---------------------------- ---------- ---------- ---------- ----------
At 1 January 21,000 50,000 21,000 50,000
Net losses transferred
to equity (6,600) (29,000) (6,600) (29,000)
---------------------------- ---------- ---------- ---------- ----------
At 31 December 14,400 21,000 14,400 21,000
---------------------------- ---------- ---------- ---------- ----------
Less: non-current portion (14,400) (21,000) (14,400) (21,000)
---------------------------- ---------- ---------- ---------- ----------
Current portion - - - -
---------------------------- ---------- ---------- ---------- ----------
All available-for-sale financial assets are UK listed equity
securities denominated in Pounds Sterling.
Losses of GBP6,600 (2013: GBP29,000) were due to a change in
fair value.
10. Trade and Other Receivables
Group Company
---------------------- --------------------
2014 2013 2014 2013
GBP GBP GBP GBP
---------------------------- ---------- ---------- --------- ---------
Trade receivables 116,728 - 116,728 -
Prepayments 20,446 33,595 18,818 33,595
Restricted assets 21,601 20,192 - -
VAT receivable 177,958 81,907 177,958 81,907
Security deposits 1,253 8,536 - 7,200
Other receivables 12,791 235 235 235
At 31 December 350,777 144,465 313,739 122,937
---------------------------- ---------- ---------- --------- ---------
Less: non-current portion (21,601) (20,192) - -
---------------------------- ---------- ---------- --------- ---------
Current portion 329,176 124,273 313,739 122,937
---------------------------- ---------- ---------- --------- ---------
Trade and other receivables are all due within one year. The
fair value of all receivables is the same as their carrying values
stated above.
The Group has provided bank guarantees as security for the
minimum spend requirements on the Mauritanian exploration licences.
The guarantees are not released until the end of the licence
period. The balance held via bank guarantee at 31 December 2014 is
GBP21,601 (31 December 2013: GBP20,192) and is included within
restricted assets.
The carrying amounts of the Group and Company's trade and other
receivables are denominated in the following currencies:
Group Company
-------------------- ----------------------
2014 2013 2014 2013
GBP GBP GBP GBP
------------------------ --------- --------- --------- ---------
UK Pounds 313,739 123,020 313,739 122,937
Central African Franc 15,437 1,253 - -
------------------------ --------- --------- --------- ---------
329,176 124,273 313,739 122,937
------------------------ --------- --------- --------- ---------
The maximum exposure to credit risk at the reporting date is the
carrying value of each class of receivable mentioned above. The
Group does not hold any collateral as security. At 31 December 2014
all trade and other receivables were fully performing.
11. Derivative Financial Instruments
Group Company
------------------ -----------------
2014 2013 2014 2013
GBP GBP GBP GBP
--------------- ------- --------- ------ ---------
Equity swaps - 250,000 - 250,000
--------------- ------- --------- ------ ---------
Derivative financial instruments of GBP250,000 in 2013 related
to amounts receivable pursuant to an equity swap agreement. On 16
December 2014 the equity swap agreement was terminated and settled,
resulting in a net loss to the Company for the period of
GBP180,542.
12. Cash and Cash Equivalents
Group Company
-------------------- --------------------
2014 2013 2014 2013
GBP GBP GBP GBP
--------------------------- --------- --------- --------- ---------
Cash at bank and in hand 114,258 624,155 103,194 561,229
--------------------------- --------- --------- --------- ---------
All of the Company's cash at bank is held with institutions with
an AA credit rating.
13. Trade and Other Payables
Group Company
---------------------- ---------------------
2014 2013 2014 2013
GBP GBP GBP GBP
------------------- --------- ----------- -------- -----------
Trade payables 50,738 63,470 37,014 63,470
Other payables 1,716 1,250,001 1,065 1,250,001
Accrued expenses 62,890 79,537 50,896 64,040
115,344 1,393,008 88,975 1,377,511
------------------- --------- ----------- -------- -----------
Trade payables include amounts due of GBP5,019 (2013: GBP13,771)
in relation to exploration and evaluation activities.
14. Borrowings
Group Company
------------------ -----------------
2014 2013 2014 2013
GBP GBP GBP GBP
---------------------------- ------- --------- ------ ---------
7% convertible loan notes - 350,000 - 350,000
---------------------------- ------- --------- ------ ---------
- 350,000 - 350,000
------------------------------------ --------- ------ ---------
On 4 October 2013, the Company issued 350,000 convertible loan
notes at a par value of GBP1 per loan note accruing interest daily
at a rate of 7% per annum. On 23 July 2014, the loan notes and
accrued interest of GBP18,526 were converted into 32,045,742 new
Ordinary Shares in the Company.
15. Deferred tax
An analysis of deferred tax liabilities is set out below.
Group Company
-------------------- --------------
2014 2013 2014 2013
GBP GBP GBP GBP
----------------------------- --------- --------- ------ ------
Deferred tax liabilities
- Deferred tax liability
after more than 12 months 614,780 614,780 - -
Deferred tax liabilities 614,780 614,780 - -
----------------------------- --------- --------- ------ ------
The gross movement on the deferred tax account is as
follows:
Group Company
-------------------- --------------
2014 2013 2014 2013
GBP GBP GBP GBP
---------------------------- --------- --------- ------ ------
At 1 January 614,780 614,780 - -
Acquisition of subsidiary - - - -
As at 31 December 614,780 614,780 - -
---------------------------- --------- --------- ------ ------
The movement in the deferred tax liability during the year is as
follows:
Group Company
------------ ------------
Deferred income tax liabilities Fair value Fair value
gains gains
GBP GBP
As at 1 January 2013 614,780 -
Acquisition of subsidiary - -
As at 31 December 2013 614,780 -
---------------------------------- ------------ ------------
As at 31 December 2014 614,780 -
---------------------------------- ------------ ------------
The Group has additional capital losses of approximately
GBP440,000 (2013: GBP440,000) and other losses of approximately
GBP5,126,000 (2013: GBP4,293,000) available to carry forward
against future taxable profits. No deferred tax asset has been
recognised in respect of these tax losses because of uncertainty
over the timing of future taxable profits against which the losses
may be offset.
16. Share Capital
Group and Company
Ordinary Share
Number shares premium Total
of shares GBP GBP GBP
------------------------- ------------- ----------- ------------ ------------
Issued and fully paid
As at 1 January 2013 358,483,993 2,509,388 6,717,310 9,226,698
------------------------- ------------- ----------- ------------ ------------
Issue of new shares
- 4 October 2013 13,043,478 91,304 58,696 150,000
------------------------- ------------- ----------- ------------ ------------
Issue of new shares
- 4 October 2013 108,695,652 760,870 489,130 1,250,000
------------------------- ------------- ----------- ------------ ------------
Issue of new shares
- 4 October 2013 8,695,652 60,870 39,130 100,000
------------------------- ------------- ----------- ------------ ------------
Issue of new shares
- 6 November 2013 (1) 100,000,000 700,000 190,000 890,000
------------------------- ------------- ----------- ------------ ------------
Issue of new shares
- 22 November 2013(2) 5,000,000 35,000 15,000 50,000
------------------------- ------------- ----------- ------------ ------------
As at 31 December 2013 593,918,775 4,157,432 7,509,266 11,666,698
------------------------- ------------- ----------- ------------ ------------
Issue of new shares
- 17 January 2014(3) 100,000,000 10,000 1,391,620 1,401,620
------------------------- ------------- ----------- ------------ ------------
Issue of new shares
- 30 January 2014 79,113,924 7,911 1,242,089 1,250,000
------------------------- ------------- ----------- ------------ ------------
Issue of new shares
- 28 March 2014 20,000,000 2,000 248,000 250,000
------------------------- ------------- ----------- ------------ ------------
Issue of new shares
- 23 July 2014 32,045,742 3,204 365,321 368,525
------------------------- ------------- ----------- ------------ ------------
Issue of new shares
- 16 November 2014 59,710,873 5,971 374,029 380,000
------------------------- ------------- ----------- ------------ ------------
Issue of new shares
- 9 December 2014 2,777,143 278 17,218 17,496
------------------------- ------------- ----------- ------------ ------------
As at 31 December 2014 887,566,457 4,186,796 11,147,543 15,334,339
------------------------- ------------- ----------- ------------ ------------
(1) Includes issue costs of GBP60,000
(2) Includes an implementation fee of GBP50,000
(3) Includes issue costs of GBP98,380
On 8 January 2014 at a General Meeting of the Company
shareholders approved a share capital reorganisation to sub-divide
and re-designate each of the issued ordinary shares of 0.7 pence in
the capital of the Company into sixty-nine deferred shares of 0.01
pence each and one Ordinary Share of 0.01 pence each.
On 17 January 2014 the Company raised GBP1,500,000 (gross)
through the issue of 100,000,000 new Ordinary Shares of 0.01 pence
each fully paid ('Ordinary Shares') at a price of 1.5 pence per
share.
On 30 January 2014, the Company issued 79,113,924 new Ordinary
Shares at a price of 1.58 pence per share as deferred consideration
for a business acquisition made in a prior period.
On 28 March 2014, the Company issued 20,000,000 new Ordinary
Shares at a price of 1.25 pence per share as consideration for
business acquisitions.
On 23 July 2014, the Company issued 32,045,742 new Ordinary
Shares on conversion of the convertible loan note and associated
interest.
On 16 November 2014 the Company issued 54,996,857 new Ordinary
Shares at 0.6364 pence per share as consideration for business
acquisitions. See Note 26.
On 24 November 2014 the Company issued a further 4,714,016
Ordinary Shares at 0.6364 pence per share as payments to a
consultant in lieu of cash fees.
On 16 December 2014 the Company issued 2,777,143 new Ordinary
Shares at 0.63 pence per share as payment to a consultant of the
Company in lieu of cash fees.
17. Share Based Payments
Share options and warrants outstanding and exercisable at the
end of the year have the following expiry dates and exercise
prices:
Shares
Exercise price
in GBP per
Vesting date Expiry date share 2014 2013
--------------- --------------- ---------------- ------------ ------------
1 January 31 December
2012 2016 0.04300 7,550,000 7,550,000
1 January 31 December
2013 2016 0.04800 4,500,000 4,500,000
1 January 31 December
2014 2016 0.06300 2,250,000 2,250,000
21 May 2012 20 May 2014 0.03100 - 38,000,000
25 June 2012 24 June 2014 0.03100 - 9,380,645
8 October 7 October
2012 2014 0.01550 - 5,922,581
6 November 5 November
2013 2016 0.01000 3,000,000 3,000,000
23 January 23 January
2014 2017 0.01580 7,000,000 -
24 February 5 November
2014 2016 0.01000 3,000,000 -
23 January 22 January
2014 2017 0.01500 5,000,000 -
24 February 23 February
2014 2019 0.01925 7,730,327 -
40,030,327 70,603,226
------------------------------- ---------------- ------------ ------------
The Company and Group have no legal or constructive obligation
to settle or repurchase the options in cash.
The fair value of the share options and warrants was determined
using the Black Scholes valuation model. The parameters used are
detailed below:
2014 Warrants 2014 Warrants 2014 Warrants 2014 Warrants 2013 Warrants
--------------- --------------- --------------- --------------- ---------------
Granted on: 23/1/2014 24/02/2014 24/02/2014 24/02/2014 6/11/2013
Life (years) 3 years 2 years 3 years 5 years 3 years
Share price
(pence per share) 1.85p 1.45p 1.45p 1.45p 1p
Risk free rate 2.25% 2.25% 2.25% 2.25% 2.25%
Expected volatility 26% 24% 26% 24% 17%
Expected dividend - - - - -
yield
Marketability
discount 20% 20% 20% 20% 20%
Total fair value
(GBP000) 29 12 11 14 7
The expected volatility is based on historical volatility for
the six months prior to the date of granting. The risk free rate of
return is based on zero yield government bonds for a term
consistent with the option life.
A reconciliation of options and warrants granted is shown
below:
2014 2013
--------------------------- --------------------------
Weighted Weighted
average average
exercise exercise
price price
Number (GBP) Number (GBP)
-------------------- -------------- ----------- ------------- -----------
Outstanding as at
1 January 70,603,226 0.032 69,554,593 0.033
Expired (53,303,226) 0.029 (1,951,367) 0.040
Granted 22,730,327 0.016 3,000,000 0.010
-------------------- -------------- ----------- ------------- -----------
Outstanding as at
31 December 40,030,327 0.027 70,603,226 0.032
-------------------- -------------- ----------- ------------- -----------
Exercisable at 31
December 40,030,327 0.027 70,603,226 0.032
-------------------- -------------- ----------- ------------- -----------
2014 2013
--------------------------------------------------- ----------------------------------------------------
Weighted Weighted Weighted Weighted
Weighted average average Weighted average average
Range of average remaining remaining average remaining remaining
exercise exercise life life exercise life life
prices price Number of expected contracted price Number of expected contracted
(GBP) (GBP) shares (years) (years) (GBP) shares (years) (years)
----------- ---------- ------------ ----------- ------------ ----------- ------------ ----------- ------------
0 - 0.05 0.025 37,780,327 2.44 2.44 0.031 68,353,226 1.05 1.05
0.05 -
0.10 0.063 2,250,000 2.00 2.00 0.063 2,250,000 3.00 3.00
----------- ---------- ------------ ----------- ------------ ----------- ------------ ----------- ------------
No options or warrants were exercised during the period. The
total fair value has resulted in a charge to the Income Statement
for the year ended 31 December 2014 of GBP42,337 (2013: GBP7,148)
and a charge to Share Premium of GBP23,380 (2013: GBPnil).
18. Expenses by Nature
Group 2014 2013
GBP GBP
------------------------------------ --------- ---------
Directors' fees (Note 19) 117,422 175,025
Employee salaries (Note 20) 25,210 31,648
Social security costs (Note 20) 16,844 16,754
Audit & accountancy 56,415 37,320
Consultancy and professional fees 174,616 233,452
Operating lease charges 24,426 24,322
Other establishment expenses 55,235 35,074
AIM related fees 137,813 137,636
Depreciation 69,945 27,403
Travel & subsistence 51,470 35,339
Share option expenses 42,337 7,148
Other expenses 63,391 28,092
------------------------------------ --------- ---------
Total administrative expenses 835,124 789,213
------------------------------------ --------- ---------
During the year the Group (including its overseas subsidiaries)
obtained the following services from the Company's auditors and its
associates:
Group
------------------
2014 2013
GBP GBP
------------------------------------------ -------- --------
Fees payable to the Company's auditor
and its associates for the audit
of the Parent Company and Consolidated
Financial Statements 35,000 30,000
Fees payable to the Company's auditor
and its associates for tax services 1,000 1,000
------------------------------------------ -------- --------
19. Directors' Remuneration
Directors' Fees Options Issued
------------------------------ ------------------
2014 2013 2014 2013
GBP GBP GBP GBP
-------------------------- --------- ------------------- ---------- ------
Executive Directors
Damian Conboy(1) - 70,525 - -
Mark Jones(2) 29,750 7,500 - -
Michael Ware (5) 32,315 60,000 - -
Dominic Doherty (6) 44,487 - - -
Non-executive Directors
Toby Howell 37,683 49,000 - -
Malcolm James(3) - 9,000 - -
Michael Johnson(4) 15,000 22,500 28,835 -
Mark Wellesley-Wood 9,667 - - -
(7)
168,902 218,525 28,835 -
-------------------------- --------- ------------------- ---------- ------
(1) Resigned 20 June 2013.
(2) Appointed 2 October 2013.
(3) Resigned 4 April 2013.
(4) Appointed 4 April 2013. Resigned 30 September 2014.
(5) Resigned 8 July 2014.
(6) Appointed 8 July 2014.
(7) Appointed 30 September 2014.
The Directors of the Company are considered to be key management
personnel.
No pension benefits are provided for any Director.
Of the above Directors' remuneration costs, GBP51,480 (2013:
GBP43,500) has been capitalised in accordance with IFRS 6 as
exploratory related costs and are shown as an intangible addition
in the year.
Included in Directors' Remuneration is GBPnil (2013: GBP25,525)
relating to termination benefits.
20. Employees
Group
--------------------
2014 2013
Staff costs (excluding Directors) GBP GBP
------------------------------------ --------- ---------
Salaries and wages 240,743 165,977
Social security costs 57,291 25,687
Pension costs - -
------------------------------------ --------- ---------
298,033 191,664
------------------------------------ --------- ---------
The average monthly number of employees during the year was 21
(2013: 5).
Of the above staff costs, GBP255,978 (2013: GBP143,262) has been
capitalised in accordance with IFRS 6 as exploratory related costs
and are shown as an intangible addition in the year.
21. Other Net Losses
Group
------------------
2014 2013
GBP GBP
--------------------------------------------- ---------- ------
Loss on settlement of equity swap agreement 180,542 -
Gain on disposal of property, plant (27,445) -
and equipment
Other losses 5,415 -
158,512 -
--------------------------------------------- ---------- ------
22. Finance Income
Group
--------------
2014 2013
GBP GBP
------------------------------ ------ ------
Interest received from Bank 399 553
------------------------------ ------ ------
399 553
------------------------------ ------ ------
23. Income Tax
No income tax charge to the Income Statement arises due to the
losses incurred. No deferred tax asset has been recognised on
accumulated tax losses, as the recoverability of any assets is not
likely in the foreseeable future.
Group
--------------
Income tax expense 2014 2013
GBP GBP
-------------------------- ------ ------
Tax on loss for the year - -
-------------------------- ------ ------
The tax on the Group's profit before tax differs from the
theoretical amount that would arise using the weighted average tax
rate applicable to the profits of the consolidated entities as
follows:
Group
--------------------------
2014 2013
GBP GBP
----------------------------------------- ----------- -------------
Loss before tax (962,148) (1,242,540)
----------------------------------------- ----------- -------------
Tax at the applicable rate of 22.56%
(2013: 23.25%) (217,061) (288,891)
Effects of:
Expenditure not deductible for tax 35,856 28,741
Depreciation in excess of capital
allowance/
(capital allowances in excess of
depreciation) 15,193 2,058
Net tax effect of losses carried
forward 257,271 301,486
Utilisation of previously unrecognised
tax losses (91,259) (43,394)
Tax charge - -
----------------------------------------- ----------- -------------
The tax charge relating to components of other comprehensive
income is as follows:
2014 2013
-----------------------------
Before Tax After Before Tax After
tax charge tax tax charge tax
GBP GBP GBP GBP GBP GBP
---------------------- -------- --------- -------- -------- --------- --------
Available-for-sale
financial assets
(Note 9) 14,400 - 14,400 29,000 - 29,000
---------------------- -------- --------- -------- -------- --------- --------
Other comprehensive
income 14,400 - 14,400 29,000 - 29,000
---------------------- -------- --------- -------- -------- --------- --------
Current tax - -
Deferred tax - -
(Note 15)
---------------------- -------- --------- -------- -------- --------- --------
No deferred tax asset was recognised on the fair value loss
attributable to the available-for-sale financial asset as this was
deemed immaterial.
24. Earnings per Share
The calculation of earnings per share of (0.120) pence (2013:
(0.306) pence) is calculated by dividing the loss attributable to
shareholders of GBP962,148 (2013: GBP1,242,540) by the weighted
average number of Ordinary Shares of 801,201,925 (2013:
406,179,049) in issue during the period.
In accordance with IAS 33, basic and diluted earnings per share
are identical as the effect of the exercise of share options would
be to decrease the earnings per share. Details of share options
that could potentially dilute earnings per share in future periods
are set out in Note 17.
The Company is committed to the issuance of ordinary shares to a
consultant should certain conditions be met in future periods. The
issuance of these Ordinary Shares could potentially dilute earnings
per share. Further details of this arrangement are set out in Note
28.
25. Financial Instruments by Category
Assets
at fair
Group - 31 December value
2014 through
Assets per Statement Loans the profit Available-
of Financial Position and receivables or loss for-sale Total
------------------------------ ------------------ ------------- -------------- ---------
Available-for-sale
financial assets - - 14,400 14,400
Trade and other receivables
(excluding prepayments) 308,731 - - 308,731
Cash and cash equivalents 114,258 - - 114,258
------------------------------- ------------------ ------------- -------------- ---------
Total 422,989 - 14,400 437,389
------------------------------- ------------------ ------------- -------------- ---------
Group - 31 December
2014
Liabilities per Statement At amortised
of Financial Position cost Total
------------------------------ ------------------ ------------- -------------- ---------
Trade and other payables
(excluding non-financial
liabilities) 115,344 115,344
------------------------------- ------------------ ------------- -------------- ---------
Total 115,344 115,344
------------------------------- ------------------ ------------- -------------- ---------
Assets
at fair
Group - 31 December value
2013 through
Assets per Statement Loans the profit Available-
of Financial Position and receivables or loss for-sale Total
------------------------------ ------------------ ------------- -------------- -----------
Available-for-sale
financial assets - - 21,000 21,000
Derivative financial
instruments - 250,000 - 250,000
Trade and other receivables
(excluding prepayments) 110,870 - - 110,870
Cash and cash equivalents 624,155 - - 624,155
Total 735,025 250,000 21,000 1,006,025
------------------------------- ------------------ ------------- -------------- -----------
Group - 31 December
2013
Liabilities per Statement At amortised
of Financial Position cost Total
------------------------------ ------------------ ------------- -------------- -----------
Borrowings 350,000 350,000
Trade and other payables
(excluding non-financial
liabilities) 1,393,008 1,393,008
Total 1,743,008 1,743,008
------------------------------- ------------------ ------------- -------------- -----------
Assets
at fair
Company - 31 December value
2014 through
Assets per Statement Loans the profit Available-
of Financial Position and receivables or loss for-sale Total
------------------------------ ------------------ ------------- ------------ ---------
Available-for-sale
financial assets - - 14,400 14,400
Derivative financial - - - -
instruments
Trade and other receivables
(excluding prepayments) 294,921 - - 294,921
Cash and cash equivalents 103,194 - - 103,194
Total 398,115 - 14,400 412,515
------------------------------- ------------------ ------------- ------------ ---------
Company - 31 December
2014
Liabilities per Statement At amortised
of Financial Position cost Total
----------------------------- -------------- --------
Trade and other payables
(excluding non-financial
liabilities) 88,975 88,975
Total 88,975 88,975
-------------------------------- -------------- --------
Assets
at fair
Company - 31 December value
2013 through
Assets per Statement Loans the profit Available-
of Financial Position and receivables or loss for-sale Total
------------------------------ ------------------ ------------- ------------ ---------
Available-for-sale
financial assets - - 21,000 21,000
Derivative financial
instruments - 250,000 - 250,000
Trade and other receivables
(excluding prepayments) 89,342 - - 89,342
Cash and cash equivalents 561,229 - - 561,229
Total 650,571 250,000 21,000 921,571
------------------------------- ------------------ ------------- ------------ ---------
Company - 31 December
2013
Liabilities per Statement At amortised
of Financial Position cost Total
----------------------------- -------------- -----------
Borrowings 350,000 350,000
Trade and other payables
(excluding non-financial
liabilities) 1,377,511 1,377,511
Total 1,725,511 1,725,511
-------------------------------- -------------- -----------
26. Business Combinations
NewMines Holdings Limited
On 28 March 2014, the Group acquired 100% of the share capital
of NewMines Holdings Limited ('NewMines') for GBP250,000. NewMines
is registered in Nevis and via its wholly owned subsidiary Tobon
Tondo S.U.A.R.L. holds 250 sq. km. of gold exploration licences in
western Mali. As a result of this acquisition the Group is expected
to increase its presence in this market and commodity.
The goodwill of GBP9,182 arising from the acquisition is
attributable to the expected upside potential of developing the
licence areas through further exploration. None of the goodwill is
expected to be deductible for tax purposes.
The following table summarises the consideration paid for
NewMines and the amounts of the assets acquired and liabilities
assumed recognised at the acquisition date.
Consideration at 27 March 2014 GBP
------------------------------------------ ---------
Cash -
Equity instruments (20,000,000 ordinary
shares at 1.25 pence per share) 250,000
Total consideration (Note 8) 250,000
------------------------------------------ ---------
Recognised amounts of identifiable assets
acquired and liabilities assumed GBP
------------------------------------------------- ---------
Cash and cash equivalents -
Trade and other receivables 818
Exploration assets (included within Intangible
Assets) (Note 7) 240,000
------------------------------------------------- ---------
Total identifiable net assets 240,818
------------------------------------------------- ---------
Goodwill (Note 7) 9,182
------------------------------------------------- ---------
Total consideration 250,000
------------------------------------------------- ---------
The fair value of the 20,000,000 Ordinary Shares issued as
consideration for NewMines was based on the agreed price of 1.25
pence per Ordinary Share.
The fair value of the exploration assets of GBP240,000 was
estimated by applying a number of valuation metrics which include;
geological upside potential, mineralogy, market benchmarks and the
application of local market factors. In the Directors' opinion, the
value of the consideration paid to effect the acquisition related
primarily to the value of the exploration licences and upside
potential representing a price agreed between willing and
knowledgeable parties on an arm's length basis. Therefore, the fair
value of the consideration transferred, after consideration of tax
implications and the removal of the fair value of other
identifiable assets acquired, has been used as a basis for valuing
the exploration assets acquired.
Had NewMines been consolidated from 1 January 2014, the revenue
shown in the consolidated income statement would have remained the
same and an additional loss for the period of GBP85,459 would have
been recorded.
Gazelle Resources Inc
On 27 November 2014, the Group acquired 100% of the share
capital of Gazelle Resources Inc ("Gazelle") for GBP350,000.
Gazelle is registered in the British Virgin Islands and, via its
wholly owned subsidiary Societe Miniere de Kerboulé SARL ("SMK")
holds 399.5 sq. km. of gold exploration licences in Burkina Faso,
which includes Kerboulé. As a result of this acquisition the Group
is expected to increase its presence in this market and
commodity.
The goodwill of GBP31,545 arising from the acquisition is
attributable to the expected upside potential of developing the
licence areas through further exploration. None of the goodwill is
expected to be deductible for tax purposes.
The following table summarises the consideration paid for
Gazelle and the amounts of the assets acquired and liabilities
assumed recognised at the acquisition date.
Consideration at 27 November 2014 GBP
------------------------------------------ ---------
Cash -
Contingent consideration (Note 27) -
Equity instruments (54,996,857 ordinary
shares at 0.6364 pence per share) 350,000
Total consideration (Note 8) 350,000
------------------------------------------ ---------
Recognised amounts of identifiable assets
acquired and liabilities assumed GBP
------------------------------------------------- -----------
Cash and cash equivalents 1,027
Trade and other receivables 110,760
Property, plant & equipment (Note 6) 73,085
Payables (116,417)
Exploration assets (included within Intangible
Assets) (Note 7) 250,000
------------------------------------------------- -----------
Total identifiable net assets 318,455
------------------------------------------------- -----------
Goodwill (Note 7) 31,545
------------------------------------------------- -----------
Total consideration 350,000
------------------------------------------------- -----------
The fair value of the 54,996,857 Ordinary Shares issued as
consideration for Gazelle was based on the agreed price of 0.6364
pence per Ordinary Share.
The fair value of the exploration assets of GBP250,000 was
estimated by applying a number of valuation metrics which include;
geological upside potential, mineralogy, market benchmarks and the
application of local market factors. In the Directors' opinion, the
value of the consideration paid to effect the acquisition related
primarily to the value of the exploration licences and upside
potential representing a price agreed between willing and
knowledgeable parties on an arm's length basis. Therefore, the fair
value of the consideration transferred, after consideration of tax
implications and the removal of the fair value of other
identifiable assets acquired, has been used as a basis for valuing
the exploration assets acquired.
Had Gazelle been consolidated from 1 January 2014, revenue shown
in the consolidated income statement would have remained the same
and an additional loss for the period of GBP1,700,910 would have
been recorded.
27. Contingencies
Electrum Limited
The Group has entered into a contractual arrangement with
Electrum Limited ("Electrum") in relation to the acquisition of
Caracal Gold Mali SARL. Upon the Group establishing a proven and
probable JORC compliant reserve greater than 500,000 ounces of gold
in respect of the acquired gold exploration licences in south-west
Mali, which includes Kossanto East and Kossanto West the Group is
obligated to pay Electrum GBP1.25 million to be satisfied by the
allotment of new Ordinary Shares in the Company.
Swala Resources Inc
The Group has entered into a contractual arrangement with Swala
Resources Inc ("Swala") in relation to the acquisition of Gazelle
Resources Inc., which includes Kerboulé. Upon the Group
establishing any of the following:
a) 250,000 ounce gold JORC proven reserve or equivalent resource
estimate at a minimum cut-off of 0.5 grams per tonne of gold;
b) 1 million ounce gold JORC inferred resource or equivalent
resource estimate at a minimum cut-off of 0.5 grams per tonne of
gold; or
c) commercial production of 75,000 ounces of gold;
the Group is obligated to pay Swala US$1.5 million to be
satisfied, solely at the discretion of the Company, either in cash
or by the allotment of new ordinary shares in the Company.
VAT Registration
The Company is in discussions with HM Revenue & Customs
("HMRC") in connection with the status of its VAT registration.
HMRC is investigating whether the company was entitled to have
reclaimed input VAT and in March 2014 issued a notice of assessment
to the Company. At 31 December 2014, VAT receivable amounted to
GBP177,958 (2013: GBP81,907). The Directors are confident they will
be able to satisfactorily respond to all matters raised by HMRC on
the basis that they believe the registration in place to be fully
justified. In the opinion of the Directors the outcome of the
discussions is unlikely to result in the Company having to refund
any VAT previously reclaimed.
28. Commitments
(a) Licence agreements
On 23 November 2010, the Group acquired three gold exploration
licences and, on 13 December 2010, two uranium exploration licences
in Mauritania. These licences were for a period of three years from
the date of grant and included commitments to pay annual land
royalty fees in the second and third year and adhere to minimum
spend requirements. The two uranium exploration licences were not
renewed during the prior year and one gold exploration licence was
not renewed in 2014, hence these licences have been fully impaired.
On 11 August 2014 the remaining two gold exploration licences were
renewed for a further three year period.
At the end of the licence period, the Group has the right to
renew the licence or, if a defined resource has been established,
apply for a mining licence for the target area. Upon grant of any
mining licence the Mauritanian Government will receive a 10%
shareholding of the rights and benefits of the licence area. The
Mauritanian Government also has the option to purchase an
additional 10% of the rights and benefits at the market rate upon
granting of the mining licence.
On 20 May 2011, the Group acquired Nubian Gold Exploration
Limited, which owns a gold and related minerals exploration licence
in Ethiopia that was issued on 29 April 2011. This licence was
renewed for a further three years from 29 April 2014 and includes
commitments to pay annual land royalty fees and adhere to minimum
spend requirements.
On 22 November 2011, the Group acquired Rift Valley Resources
Limited, which owns a gold and related minerals exploration licence
in Ethiopia that was issued on 10 August 2011. This licence was for
a period of three years from the date of grant. The licence was
renewed for a further three years from 28 October 2014 and includes
commitments to pay annual land royalty fees and adhere to minimum
spend requirements.
On 4 October 2013, the Group acquired AME West Africa Limited
which, via its wholly owned subsidiary, Caracal Gold Mali SARL,
owns gold and related minerals exploration licences in Mali. With
the exception of one licence area which is in the process of being
renewed, these licences have been recently renewed and include
commitments to pay annual land royalty fees.
On 28 March 2014, the Group acquired NewMines Holdings Limited
which, via its wholly owned subsidiary, Tobon Tondo SARL, owns a
gold and related mineral exploration licence in Mali. This licence
includes commitments to pay annual land royalty fees.
On 27 November 2014, the Group acquired Gazelle Resources Inc
which, via its wholly owned subsidiary, Societe Miniere de Kerboulé
SARL, owns gold and related mineral exploration licences in Burkina
Faso. These licences include commitments to pay annual land royalty
fees.
At 31 December 2014 the future aggregate minimum royalty fee
payments and minimum spend requirements are as follows:
Group Land royalty Minimum Total
fees spend requirement GBP
GBP GBP
---------------------------- -------------- -------------------- ---------
Not later than one year 46,155 - 46,155
Later than one year and
no later than five years 124,639 - 124,639
----------------------------- -------------- -------------------- ---------
Total 170,794 - 170,794
----------------------------- -------------- -------------------- ---------
(b) Bank guarantees
The Group has provided bank guarantees as security for the
minimum spend requirements on the Mauritanian exploration licences.
The guarantees are not released until the end of the licence
period. The balance held via bank guarantee at 31 December 2014 is
GBP21,601 (31 December 2013: GBP20,192) and is included within
restricted assets (Note 10).
(c) Capital commitments
Capital expenditure contracted for at the end of the reporting
period but not yet incurred is as follows:
Group 2014 2013
GBP GBP
-------------------- --------- ---------
Intangible assets 260,000 260,000
--------------------- --------- ---------
The Group has entered into a contractual arrangement with
O'Connor International Limited ("OCI") for consultancy work in the
normal course of trade in respect of the Mauritanian licence areas
acquired during the prior years. An amount of GBP130,000 for each
gold licence, GBP260,000 in aggregate, remains committed under this
contract. The payment of this fee is contingent on the issuance of
a feasibility study by the Company indicating the economic
feasibility for the relevant licence area. These amounts are to be
paid via the issuance of new Ordinary Shares in the Company and
will become payable on the date the relevant conditions are met
unless the agreement is terminated prior to the conditions being
met.
(d) Royalty agreements
As part of the contractual arrangement with OCI noted above, the
Group has agreed to pay OCI a royalty on revenue for each gold
licence acquired based on the total ounces of gold sold equal to
US$1 for every US$250 of the sale price per ounce. These royalties
will become payable when the licence areas move into production and
resources are sold from any of these areas.
As part of the acquisition of Caracal Gold Mali SARL
("Caracal"), the Group has assumed contractual commitments to
provide a 1% net revenue royalty on the first 300,000 ounces of
gold generated from its gold exploration licences in Mali held by
Caracal.
As part of the acquisition of Gazelle Resources Inc detailed in
Note 26, the Group has assumed contractual commitments to provide a
3% net smelter return ("NSR") royalty on its gold exploration
licences in Burkina Faso. Half of the NSR, which equates to 1.5%
may be bought back at any time at the discretion of the Group in
increments of 0.5% for the sum of US$500,000 per increment.
(d) Operating lease commitments
The Company leases office premises under a non-cancellable
operating lease agreement. The lease is on a fixed term expiring in
May 2015. The lease expenditure charged to the Income Statement
during the year is disclosed in Note 18.
The future aggregate minimum lease payments under
non-cancellable operating leases are as follows:
Group 2014 2013
GBP GBP
------------------------------------ ------- --------
Not later than one year 6,250 5,252
Later than one year but not later
than five years - 8,608
Total lease commitment 6,250 13,860
------------------------------------- ------- --------
29. Related Party Transactions
Savannah Resources plc
As disclosed in Note 28, the Company leases office premises
under a non-cancellable operating lease agreement. This lease
agreement is between the Company and Savannah Resources plc
('Savannah'), a significant shareholder of the Company as at 31
December 2014. Savannah was paid GBP16,600 (2013: GBP3,750) by the
Company in connection with the operating lease agreement.
Yorkville
In the prior year the Company entered into an equity swap
agreement with Yorkville, a significant shareholder of the Company
as at 31 December 2014, whereby the Company would receive a base
amount of GBP250,000 to be settled across 12 monthly payments based
on a formula related to the difference between the prevailing
market price of the Company's ordinary shares in any month and a
benchmark share price of 1.10 pence. For more information refer to
Note 11.
Loans to Group undertakings
Amounts receivable as a result of loans granted to subsidiary
undertakings are as follows:
2014 2013
GBP GBP
---------------------------------------- ----------- -----------
Alecto Holdings International Limited 1,630 1,400
Alecto Mauritania Limited 1,676,826 1,600,662
Nubian Gold Exploration Limited 312,340 355,133
Rift Valley Resources Limited 338,771 364,890
Caracal Gold Mali SARL 1,562,369 385,152
NewMines Holdings Limited 677 -
Tobon Tondo SARL 7,874 -
Societe Miniere de Kerboulé 21,595 -
SARL
3,922,082 2,707,237
---------------------------------------- ----------- -----------
Loans granted to subsidiary undertakings during the year
comprised the following types of transactions:
Repayments Cash Beneficial Consulting Total
GBP advances payments services GBP
GBP GBP GBP
-------------------------- ------------ ----------- ------------ ------------ -----------
Alecto Holdings
International Limited - - 230 - 230
Alecto Mauritania
Limited - 38,619 9,392 28,153 76,164
Nubian Gold Exploration
Limited (118,480) 17,022 23,126 35,539 (42,793)
Rift Valley Resources
Limited (124,596) 32,629 31,514 34,334 (26,119)
Caracal Gold Mali
SARL - 418,866 487,391 270,960 1,177,217
NewMines Holdings
Limited - - 677 - 677
Tobon Tondo SARL - - - 7,874 7,874
Societe Miniere
de Kerboulé
SARL - 6,643 - 14,952 21,595
(243,076) 513,779 552,330 391,812 1,214,845
-------------------------- ------------ ----------- ------------ ------------ -----------
These amounts are interest free and repayable in Sterling when
sufficient cash resources are available in the subsidiaries.
All intra Group transactions are eliminated on
consolidation.
Other transactions
J Cubed Ventures Limited, a company of which Mark Jones is a
director and beneficial owner, was paid a fee of GBP97,500 (2013:
GBP52,500) for consulting services provided to the Company. A
balance of GBP2,000 was outstanding at the year-end (2013:
GBP9,000).
30. Ultimate Controlling Party
The Directors believe there to be no ultimate controlling
party.
31. Events after the Reporting Date
On 15 January 2015 the Company raised GBP600,000 (gross) through
the issue of 200,000,000 new Ordinary Shares at a price of 0.3
pence per share.
On 12 February 2015 the Company was given notice by Centamin plc
of its intention to terminate the joint venture agreement with
regard to the development of the Company's licences in the Ethiopia
and accordingly on 13 May 2015 the agreement will be formally
terminated.
On 27 April 2015 the Company issued 12,497,143 new Ordinary
Shares to a consultant to the Company, in lieu of fees amounting to
GBP17,496.
**ENDS**
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR ABMFTMBIBBTA
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