TIDMBMR
RNS Number : 8976S
BMR Group PLC
29 December 2016
BMR Group PLC
("BMR" or the "Company")
2016 Final Results and AGM Notice
The Company releases its full year results for the year ended 30
June 2016 ("Results"). The Results are being posted to shareholders
today and will be available on the Company's website,
www.bmrplc.com, shortly.
BMR also announces that notice of its annual general meeting
("AGM") will today be posted to shareholders and will also shortly
be available to view on the Company's website.
The AGM will be held at 11 a.m. on Tuesday 24 January 2017 at
the offices of WH Ireland, 24 Martin Lane, London, EC4R 0DR.
For further information:
BMR Group PLC 020 7734 7282
Alex Borrelli, CEO and Chairman
WH Ireland Limited 020 7220 1666
NOMAD and Joint Broker
Chris Fielding, Head of Corporate Finance
Nick Prowting, Manager
Peterhouse Corporate Finance 020 7469 0930
Joint Broker
Lucy Williams/ Duncan Vasey/ Heena Karani
This announcement contains inside information for the purposes
of Article 7 of Regulation 596/2014.
Note: This announcement has been reviewed by Geoff Casson, B.Sc.
(Hons), PhD, R Eng (Zambia), Member Engineering Institute of Zambia
(Metallurgy), General Manager of the Company's Zambian subsidiary,
Enviro Processing Ltd, who is a Qualified Person in accordance with
the guidance note for Mining, Oil & Gas Companies issued by the
London Stock Exchange in respect of AIM Companies.
CHAIRMAN'S STATEMENT
I am pleased to present below the financial statements of the
Company for the year ended 30 June 2016.
I am delighted to report to our shareholders on a significant
year of delivery of key milestones in the continued successful
development of the Company.
Plant at Kabwe costings and metal prices
Following our assessment of the most appropriate methodology for
processing the tailings at Kabwe, in December 2015, we submitted
the final report to the Zambia Environmental Management Agency
("ZEMA") in respect of the definitive Environmental Social Impact
Assessment ("ESIA") which included the construction of the
processing plant ("Plant"). Importantly, we gained approval from
ZEMA for the ESIA in May 2016 which enabled us to commence the
implementation of the construction of the Plant.
Provisional target date for commissioning of the Plant is Q3
2017 when we will initially process wash plant tailings ("WPT")
feed.
To configure the Plant for producing the requisite planned
quantities of product, we estimate the capital expenditure to be
approximately $2.68 million. The Directors are satisfied that this
cost can be satisfied from the current cash resources and from the
African Compass International ("ACI") Facility. The aggregate cost
of $2.68 million comprises 52% of confirmed quotations, 18% of
factored costs and 30% of internally estimated costs in respect of
$1.8 million for mechanicals, $0.4 million for instrumentation and
electrical items and $0.48 million for labour, pipework and other
ancillaries.
We commissioned a peer review of the costings which concluded
that the capital expenditure of $2.68 million can be categorised as
adequate for a scoping estimate with an industry-standard deviation
of -30% and +50%.
Operating Expenditure (OPEX) is currently estimated at
$120/tonne of tailings treated, with sulphuric acid comprising
approximately 50% of the costs. Sulphuric acid is readily available
from the local copperbelt smelters where prices are close to
historic lows. With the exception of specialist reagents, all other
significant Plant consumables, such as lime and limestone, can be
sourced locally.
The Company's operations are categorized as 'open pit' and will
incur a 5% mineral royalty payment to the Zambian Government. Our
local subsidiary will be subject to corporation tax which is
currently 30%.
In the past 12 months the London Metal Exchange zinc ("Zn") and
lead ("Pb") prices have risen substantially from circa $1,600 per
tonne and $1,700 per tonne to circa $2,700 and $2,400 per tonne,
respectively. These price rises have significantly increased the
in-situ Zn, Pb and metal values of the Company's combined JORC and
non JORC tailings assets due to be processed at the Plant to
approximately US$1.2 billion and US$0.46 billion, respectively.
Provisional estimates of the Vanadium ("V") present in all three
tailings products (non-JORC) have the potential of increasing the
total value to approximately US$2 billion. The Zn price rise has
also impacted favourably on the value of the Star Zinc acquisition
referred to below which is expected to be completed in the near
future.
Plant off-take agreement
As a measure of our success in planning the treatment of the
tailings into saleable products, in August 2016, we entered into an
off-take agreement with ACI, a private South African group engaged
in mining, energy and agri-business. This agreement provides for
the off-take by ACI over a minimum five-year period, commencing
within six months of commissioning of the Plant, of a minimum of
500 tpm of agricultural grade zinc sulphate heptahydrate ("ZSH"),
300 tpm of lead sponge and later, 300 tpm of LME grade 'A'
electrolytic zinc cathodes, each to a specified quality. All
products will be supplied on a 'free on board' Kabwe Plant gate
basis at a price linked to the related LME spot price. It is
estimated that sales of the minimum quantities of these three
products from the Plant, as it is proposed to be configured, would
generate gross revenue of at least US$750,000 per month.
Trade finance facility
In September 2016, we entered into a project construction and
trade finance facility (the "Facility") for up to US$5.2 million
with ACI. The Facility provides that ACI will make available, upon
achievement of various milestones, through to commissioning of the
Plant and proof of saleable product (the "Final Milestone"), up to
US$4.2 million for use in connection with the plant, and materials
processed, at Kabwe.
In addition, the Facility provides for the drawdown of US$1.0
million to satisfy the consideration payable to exercise the option
agreement with Bushbuck Resources Limited for the acquisition of
its Star Zinc Large Scale Prospecting Licence 19653-HQ-LPL in
Zambia, noted below. Drawdowns under the Facility, which is
interest free but involves an arrangement fee of US$100,000, are to
be re-paid within 12 months of the Final Milestone, by set-off
against product revenues due from ACI, or, at our election, in
cash. We expect to receive the first draw down under the Facility
imminently and, thereafter, firstly, to complete the ordering of
items of capital equipment requiring long-lead times and, second,
to complete the Star Zinc acquisition.
Plant construction update
a) Civil Works: marking-out and excavation of the thickener,
leach and precipitation tank foundations, steel fixing, shuttering
has been completed and concreting started. Two crews have been
working in tandem to complete as much of this work as possible
before the Christmas holiday.
b) Mechanical: tanks, thickeners, filter presses and all stainless steel tanks for the leach/precipitation/zinc re-leach have been ordered and are ready for shipment in early 2017. Inspection and testing of the mild steel precipitation and lead leach tanks manufactured in Kabwe has been completed. The lime and limestone mixing tanks for the precipitation stage are currently under construction. Agitator mechanisms for the tanks have been delivered on site. A contract for supply and delivery to Kabwe has been negotiated with Roytec South Africa for all thickeners, filter presses and the automated flocculant dosing units. By our negotiation of the contract covering all these items, important savings have resulted to the Company. Roytec South Africa is able to offer commissioning services and technical backup in Zambia.
c) Horizontal Belt Filter (HBF): a redundant, unused HBF has
been located and purchased from a copperbelt mining company in
Zambia at a significant saving for the Company and arrangements are
being made to move the unit to Kabwe in early 2017.
d) Electrical: an additional 500 kVa capacity transformer has
been installed and commissioned at the plant site as part of the
programme to meet the anticipated demand. Further capacity will be
added in the next year to meet the anticipated demand.
Plant Production Ramp-up Target Dates
Following commissioning of the Plant and after approximately 12
months of operations, we envisage ramping-up production in two
stages.
First stage
We plan to start the first stage ramp up by late 2018 to double
the Plant feed tonnage by combining WPT with ore from the Star Zinc
project. By adopting this strategy, we expect the Zn plant head
grade to increase along with Zn metal production from 3,100 tonnes
(ZSH equivalent, 15,000 tonnes) to approximately 8,000 tonnes per
annum. At this stage, ZSH and lead sponge production is expected to
remain constant, with the additional Zn metal production in the
form of cathode. The intention is to upgrade the Star Zinc ore by
sorting it at the mine site before transportation to Kabwe.
Second stage
We plan to coincide the second stage ramp up with the processing
of leach plant residue ("LPR") and imperial smelting furnace slag
("ISFS"). The tonnage throughput is likely to be made up of 2:1
ratio of LPR and ISFS combined with Star Zinc ore to meet the
planned zinc metal output. A limited amount of additional
metallurgical investigation work will be required to assess the
extent of the modifications for the acid brine leach section of the
plant. This metallurgical test work will now be extended to
investigate the impact of introducing the Star Zinc ore to the
feed. The provisional target date for commissioning this second
stage is 2020 and will involve the likely construction of a new
plant to handle the higher tonnage which should result in an
increased Zn metal production to approximately 25,000 tonnes per
annum.
Recovery of Vanadium, Germanium and Silver by-products
Test work undertaken by the Company's metallurgical partner,
Kupfermelt Metal Processing CC, successfully recovered Zn, Pb and V
into a pregnant liquor solution ("PLS") from a 2:1 blend of LPR/ISF
Slag. Work continues on the selective recovery of V from the PLS to
produce vanadium pentoxide which, when completed, will be taken
into account for valuing the Company's assets. The in-situ ISFS
vanadium potential (non-JORC) amounted to 9,000 tonnes, which is
equivalent to a grade of 0.6%, which was the assayed figure of the
random sample used for the test work.
In the New Year, we will start mineralogical analysis and
metallurgical test work on bulk samples of the different Star Zinc
ore types to investigate the deportment and process routes to
recover germanium and silver.
We have previously stated the Company will commission a
full-JORC compliant survey of the ISF Slag. Part of the survey
requires that the in-situ metals can be economically recovered for
which we have now submitted a scope of works to Alfred Knight
Laboratories and await their fee estimates.
Waelz Kiln Slag ("WKS")
In May 2016, we filed with ZEMA an Environmental Project Brief
("EPB") for the proposed sale from Kabwe of the WKS. The WKS
comprises approximately 1.1 million tonnes, as surveyed on a
JORC-compliant basis by Mineral Corporation Consultancy (Pty), as a
construction aggregate, for incorporation in block and concrete
making. The Company had previously manufactured and tested a batch
of concrete blocks, using an 80:20 ratio of WKS to building sand,
for which there was no evidence of leaching of lead or zinc.
In September 2016, we announced that ZEMA had requested that the
EPB be upgraded to an environmental impact assessment ("EIA") which
would delay the start of sales. As part of its on-going discussions
with ZEMA, the Company has submitted a letter of appeal against
their decision not to allow the sale of WKS for block construction
under the EPB. Discussions are currently ongoing between ZEMA and
our Consultant.
Imperial Smelting Furnace Slag ("ISF Slag")
In June 2016, we announced that, in co-operation with
Kupfermelt, a recovery of 77.2% Zn had been achieved from the ISF
Slag albeit at a cost of high sulphuric acid consumption.
Recognising that this stockpile potentially contains 120,000 tonnes
of Zn metal, we announced that test work would continue to
investigate ways of mitigating the high acid consumption by inter
alia modifying the process route and blending it with either Leach
Plant Residues (LPR) or Wash Plant Tailings (WPT).
In October 2016, we announced the successful completion of
laboratory scale testwork, using a sulphating acid brine leach. The
testwork was completed on randomly selected LPR/ISF Slag samples
composited in the ratio of 2:1, which approximates to the
individual tonnages of the two assets. The laboratory scale test
work, whose assay results were verified by an independent
accredited laboratory, generated recoveries from the composite of
up to circa 85% Zn and 91% Pb at a leach temperature of 80(o) C,
and 75% Zn and 80% Pb at ambient temperatures. Importantly, the
sulphuric acid consumption was more than halved, when compared to
the September 2015 tests, to approximately 500kgs/tonne.
The Company also announced that the sulphating acid brine leach
process also recovered approximately 90% of the contained vanadium
from the ISF Slag/LPR composite. The ISF Slag potentially contains
9,000 tonnes of Vanadium (V) (non-JORC) which is expected to be
recovered in the form of vanadium pentoxide, which has a current
aggregate market price in excess of US$15,000 per tonne.
Star Zinc, Zambia
In August 2016, we entered into a 60 day exclusive option
agreement ("Exclusivity Agreement"), with Bushbuck Resources
Limited of Zambia ("Bushbuck"), to acquire its Large Scale
Prospecting Licence 19653-HQ-LPL ("Star Zinc") in an area to the
immediate north of Lusaka, Zambia, for a total cash consideration
of US$1 million plus taxes, conditional upon, inter alia,
satisfactory completion of due diligence and the granting of
Ministerial approval to the transfer of the licence. The area
comprises 83 kms(2) and the deposit was mined briefly in the 1950s
by open pit mine with the ore treated at the Kabwe mine. Under the
terms of the Exclusivity Agreement, we paid Bushbuck a
non-refundable deposit of US$30,000 plus 16% VAT to undertake and
complete the requisite due diligence over the title to Star
Zinc.
Following the successful conclusion of due diligence, in
November 2016, we entered into a sale and purchase agreement ("the
Agreement") with Bushbuck to acquire Star Zinc and paid Bushbuck a
refundable deposit of US$100,000. The Agreement will become
unconditional upon satisfaction of the consideration of US$1.0
million, less the aforementioned sums, plus 16% VAT and property
transfer tax (PTT) of approximately 10%. The PTT has had to be
satisfied prior to the Agreement becoming unconditional.
We believe that the acquisition of Star Zinc will represent an
important strategic step for BMR as the in situ ore contains high
grade zinc ("Zn"). The ore is planned to be either blended with the
tailings from the Leach Plant Residues, to improve metal
recoveries, or used to raise the plant head grade to increase Zn
production at the Company's proposed processing plant at Kabwe.
This is expected to enhance the quality of the product, subject to
test work to confirm its compatibility. This, in turn, the Company
expects, will underpin the long-term future of the Kabwe operation.
The Company's first priority will be to undertake a drilling
programme on the karst fill/saprolitic material in the area of the
present open pit to determine the extent of the, as yet, untested
surface mineralisation and to establish a mineable resource. BMR
plans initially to spend up to US$200,000 on this drilling
programme over the next 18 months.
Ester Project, Portugal
In November 2016, we announced an option to acquire an 80%
interest in a project in North Portugal with an exploration
concession for tungsten, tin and potentially other minerals
including gold and silver, (the "Ester Project") with previous
historic workings. The option was granted by MineraliaMinas,
Geotecnia E Construcoes, LDA, ("Mineralia") a private Portuguese
geological and engineering company which holds a number of
exploration concessions granted by the Government of Portugal.
The decision to enter into this joint venture (JV) agreement has
enabled BMR to secure a unique opportunity in a strategically
important sector of the mining industry and simultaneously meet the
Company's strategy to grow, in a carefully targeted way, through
both joint ventures and acquisitions.
The option, which has a term of 12 months, is exercisable upon
the Company's expenditure of EUR140,000 which will be used
primarily to fulfil the next 12 months' exploration costs required
under the exploration concession. Upon exercising the option, the
Ester Project will be transferred into a joint venture company to
be owned 80% by BMR, which will appoint a majority of its board of
directors. Mineralia will act as project operator in cooperation
with BMR.
BMR has agreed, subject to exercise of the option, to pay
deferred consideration to Mineralia of EUR100,000 upon the grant of
a preliminary exploitation licence and EUR1,000,000 upon the grant
of a definitive exploitation licence.
The Ester Project comprises 327 km(2) and hosts the historic Rio
de Frades (Frades) and Regoufe wolfram tungsten mines, last
operated during the Second World War. The Ester Licence is located
in the Portuguese tungsten belt, approximately 70 km north of the
Pansquiera mine which is currently the only operating tungsten mine
in the region. As part of its due diligence, BMR commenced
preliminary fieldwork in late November and is working closely with
Mineralia, analysing historic archived data, and the results of an
aerial drone photographic survey designed to assist in the
geological interpretation of the first target area.
In 2015, tungsten was one of the raw materials identified by the
British Geological Survey, the US Department of Defence and the
European Commission as a 'critical' raw material due to its
economic importance and supply risk. Its main application is in the
machine tool industry and as an alloy in the production of
specialist high strength steels for use in the aerospace industry.
Whilst northern Portugal has a long history of mining tungsten,
currently China remains the world's largest supplier.
Directors, Consultants and Management
I am very grateful to Jeremy Hawke and Antony Gardner-Hillman in
their respective capacities as Mining and Operations Director and
Non-executive Director for their strong support and wise counsel as
we steer through the channels in the successful development of the
Company for our shareholders. I am also particularly grateful to
Dennis Bailey as Senior Consultant and Company Secretary, a close
colleague who is retiring from the Company at the end of the year.
In addition, we recognise the sterling efforts of our personnel at
Kabwe led by Geoff Casson in their dedicated commitment to the
construction of the Plant for the critical conversion of our
tailings into revenues.
We were pleased to announce the appointment of various senior
personnel to complement our small but experienced team at BMR.
Plant Construction Manager: Mr Jeff Livesey has been contracted
to manage the construction of the Company's Plant at Kabwe. Jeff is
a professional plant construction manager who has recently
completed a series of projects for different divisions of Anglo
American in South Africa. He will be resident in Kabwe during
construction until the Plant is commissioned.
Project Development Consultant: Mr Peter Kilroy has been
contracted to manage the Ester Project. Peter is a Mining Engineer
having graduated from the University of the Witwatersrand, South
Africa, later obtaining an MSc from the Royal School of Mines,
Imperial College London. During his career he has worked for Anglo
American, BHP Billiton and later as a mining consultant on a wide
range of projects in Africa, Europe and South America. Peter is a
Portuguese speaker and is able to bring a wide range of managerial
and organisational skills to this assignment.
Group Geologist: Ms Steph Wilk has an MSc in Earth Sciences from
the Royal School of Mines, Imperial College, London. She has six
years' field experience, three of which were spent working as an
exploration geologist in Australia. She also brings a range of data
analysis and computer processing skills that will strengthen the
Company's ability to investigate and evaluate any acquisition
opportunities.
Plant Metallurgist: Mr Luther Banda has a BSc in Metallurgy and
Mineral Processing from the University of Zambia, School of Mines,
Lusaka. Luther recently worked for Mopani Copper Mines (Glencore)
in the Nkana Leach Plant as Senior Assistant Metallurgical
Engineer. His responsibilities are to manage the metallurgical
performance and production of the Plant once in operation. In the
meantime he is supervising BMR's ongoing test work programme which
is designed to optimise and improve all phases of the metallurgical
process and de-risk the plant commissioning phase.
Fund raisings and share capital
We have successfully raised equity funds for the Company during
the year, the net proceeds of which are being applied principally
in the construction of the Plant at Kabwe.
In October 2015, we announced the successful raising of
GBP750,000, before expenses, by way of a placing of 18,750,000 new
ordinary shares at 4p per share. For each new share subscribed, a
warrant was issued entitling the holder, on exercise, to subscribe
for a further new ordinary share at 7.0p per share in the 42 days
following the publication of these results (the "7p Warrants").
Following this placing, we committed to make a similar amount of
new shares available to shareholders and, in January 2016, we
announced an open offer to shareholders of one new share for every
six shares held at 3p per share, in addition to a matching 7p
Warrant. I was pleased to announce that the Company successfully
raised approximately GBP414,524 by the issue of 13,817,453 new
ordinary shares at 3.0p per share, through the open offer. I
subscribed GBP20,000 in the open offer for 666,666 new ordinary
shares.
In April 2016, we raised GBP395,200 before expenses, by way of a
placing of 9,298,823 new ordinary shares at 4.25p per share. Each
placee also received for each share subscribed a 7p Warrant.
Subsequent to the year end, in October 2016, we raised
GBP620,000 before expenses, by way of a placing of 9,253,731 new
ordinary shares each in the capital of the Company at 6.7p per
share. Each placee also received for each share subscribed a 7p
Warrant. The net proceeds of this placing are expected to be
invested mainly in the Star Zinc project following the
exercise.
In total, there are now 51,120,007 warrants capable of exercise
for subscription into 51,120,007 new ordinary shares at 7p per
share in the 42 days following the publication of these results.
Therefore, if all the warrants are exercised, on or before 10
February 2017, the Company would raise in total GBP3,578,400 which
would be used for the Plant construction at Kabwe and general
working capital purposes.
Some shareholders holding warrants have already subscribed in
advance for new ordinary shares and I will exercise my 666,666
Warrants at 7p each and subscribe in full for new ordinary
shares.
The Company also has in issue options over 17,383,172 new
ordinary shares issued to Directors and management to subscribe at
6p per share. 25% of these options have vested while the balance
vests on the achievement of certain milestones: 25% on the first
announcement of interim or year-end results following successful
testing of the Plant; 25% on first announcement of interim or
year-end results following first revenue from a commercial sale of
product from the Plant; and 25% on the announcement of the next
interim or year-end results thereafter, demonstrating a continuing
commercial revenue stream.
Other Developments
While our principal focus is on the Kabwe Plant, we continue to
address legacy issues in the Company. In respect of the
investigation we conducted into financial irregularities at the
Company prior to my appointment in October 2014, resulting in the
write-downs and provisions of GBP10.3 million in respect of prior
years and announced with the results for the year ended 30 June
2014, the Company submitted particulars of claim against certain
entities, not being party to the settlement agreement entered into
in February 2015 where the Directors are confident of success. This
action is being undertaken on the basis of a fee aligned to
success.
We continue to have discussions with HMRC, following HMRC's
decision to de-register BMR for VAT with effect from 1 August 2015
with an assessment for previous VAT and interest thereon amounting
to GBP374,350 at 30 June 2016. We have reviewed recent case law on
VAT recoveries and the Directors are confident, following advice
that the Company has received, that our case has certain merits
justifying our position for seeking an appeal.
On 25 November 2016, the independent Directors announced that
BMR had made an indicative offer for Metal Tiger Plc, an investing
company on AIM in the natural resources sector, of which I was also
CEO from 17 October 2016. However, the terms, following this
announcement, were then rejected by the independent directors of
Metal Tiger Plc as fundamentally undervaluing that company. As a
result, on 29 November 2016, the independent BMR Directors
announced the formal withdrawal from the indicative offer with
minimal costs accruing to the Company.
Results for the year
The Company reported a loss before taxation for the year of
GBP1.13 million (2015: GBP1.59 million, after adjusting for other
income of GBP960,000 from the settlement agreement in February
2015). Administrative expenses amounted to GBP1.1 million (2015:
GBP2.41 million). Exchange translation differences on foreign
operations were GBP1.76 million (2015: GBP0.7 million). Adjustments
for share-based payments were GBP0.03 million (2015: GBP0.05
million). Loss per ordinary share was 0.75p (2015: 1.19p).
Consolidated net assets at 30 June 2016 amounted to GBP10.35
million (2015: GBP8.2 million) including cash and cash equivalents
of GBP1.01 million (2015: GBP0.78 million).
AGM and Resolutions
The resolutions for the forthcoming Annual General Meeting are
contained in a separate Notice which will be made available to
shareholders and on the website www.bmrplc.com. The Directors
recommend shareholders to vote in favour of all the resolutions and
a form of proxy is being despatched to all shareholders for this
purpose. The AGM will be held at 11.00 a.m. on Tuesday 24 January
2017 at the offices of WH Ireland Limited, 24 Martin Lane, London
EC4R 0DR.
Outlook
I believe we have successfully delivered on a number of key
fronts for our shareholders during the year under review.
We have refined our processing methodology for the treatment of
the tailings held at Kabwe, received the requisite approvals from
ZEMA, raised significant trade finance as well as equity finance
for the Plant and commenced its construction. We have also achieved
visibility of revenues with the signing of the off-take agreement
from the commercial operation of the Plant which we expect to be
commissioned in Q3 2017.
Furthermore, we have expanded the asset base of the Company with
the expected acquisition of Star Zinc which will extend the life of
the Plant and the Company has the opportunity for further expansion
in Portugal with the option for a majority stake in the Ester
Project.
We will continue to consider opportunities to expand the
business for increasing shareholder value while our principal focus
through the current year will be on the commissioning of the
Plant.
We are pleased to have expanded our team with experienced
personnel. We welcome our new shareholders and are grateful to our
long standing shareholders who remain very supportive of our
developments.
I believe we are now well-placed to deliver significant value
for our shareholders.
Alex Borrelli
Executive Chairman
28 December 2016
INDEPENT AUDITOR'S REPORT TO THE MEMBERS OF
BMR GROUP PLC
We have audited the financial statements of BMR Group PLC for
the year ended 30 June 2016 which comprise the Consolidated and
Parent Company Statements of Financial Position, the Consolidated
Statements of Comprehensive Income, the Consolidated and Parent
Company Cash Flow Statements, the Consolidated and Parent Company
Statement of Changes in Equity and the related notes numbered 1 to
24.
The financial reporting framework that has been applied in their
preparation is applicable law and International Financial Reporting
Standards (IFRSs) as adopted by the European Union and, as regards
the Parent Company financial statements, as applied in accordance
with the provisions of the Companies Act 2006.
This report is made solely to the company's members, as a body,
in accordance with Chapter 3 of Part 16 of the Companies Act 2006.
Our audit work has been undertaken so that we might state to the
company's members those matters we are required to state to them in
an auditor's report and for no other purpose. To the fullest extent
permitted by law, we do not accept or assume responsibility to
anyone other than the company and the company's members as a body,
for our audit work, for this report, or for the opinions we have
formed.
Respective responsibilities of directors and auditors
As explained more fully in the Statement of Directors'
Responsibilities, the directors are responsible for the preparation
of the financial statements and for being satisfied that they give
a true and fair view. Our responsibility is to audit and express an
opinion on the financial statements in accordance with applicable
law and International Standards on Auditing (UK and Ireland). Those
standards require us to comply with the Auditing Practices Board's
Ethical Standards for Auditors.
Scope of the audit of the financial statements
An audit involves obtaining evidence about the amounts and
disclosures in the financial statements sufficient to give
reasonable assurance that the financial statements are free from
material misstatement, whether caused by fraud or error. This
includes an assessment of: whether the accounting policies are
appropriate to the company's circumstances and have been
consistently applied and adequately disclosed; the reasonableness
of significant accounting estimates made by the directors; and the
overall presentation of the financial statements.
In addition, we read all the financial and non-financial
information in the Annual Report to identify material
inconsistencies with the audited financial statements and to
identify any information that is apparently materially incorrect
based on, or materially inconsistent with, the knowledge acquired
by us in the course of performing the audit. If we become aware of
any apparent material misstatements or inconsistencies we consider
the implications for our report.
Opinion on financial statements
In our opinion:
-- the financial statements give a true and fair view of the
state of the group's and of the parent company's affairs as at 30
June 2016 and of the group's loss for the year then ended;
-- the group financial statements have been properly prepared in
accordance with IFRSs as adopted by the European Union;
-- the parent company financial statements have been properly
prepared in accordance with IFRSs as adopted by the European Union
as applied in accordance with the provisions of the Companies Act
2006; and
-- the financial statements have been prepared in accordance
with the requirements of the Companies Act 2006.
Emphasis of matter - going concern
In forming our opinion on the financial statements, which is not
modified, we have considered the adequacy of the disclosure made in
note 3 to the financial statements concerning the company's ability
to continue as a going concern. The financial statements have been
prepared on the going concern basis, which depends on the receipt
of current financing arrangements and the ability to raise further
financing. These conditions, along with the other matters explained
in note 3 to the financial statements, indicate the existence of a
material uncertainty which may cast significant doubt about the
company's ability to continue as a going concern. The financial
statements do not include the adjustments that would result if the
company was unable to continue as a going concern.
Opinion on other matters prescribed by the Companies Act
2006
In our opinion the information given in the Strategic Report and
the Directors' Report for the financial year for which the
financial statements are prepared is consistent with the financial
statements.
Matters on which we are required to report by exception
We have nothing to report in respect of the following matters
where the Companies Act 2006 requires us to report to you if, in
our opinion:
-- adequate accounting records have not been kept by the Parent
Company, or returns adequate for our audit have not been received
from branches not visited by us; or
-- the financial statements are not in agreement with the accounting records and returns; or
-- certain disclosures of directors' remuneration specified by law are not made; or
-- we have not received all the information and explanations we require for our audit.
Leo Malkin
Senior Statutory Auditor
For and on behalf of
Crowe Clark Whitehill LLP
Statutory Auditor
St Bride's House
10 Salisbury Square
London EC4Y 8EH
28 December 2016
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Year ended 30 June 2016
2016 2015
Notes GBP GBP
Administrative expenses 6 (1,096,658) (2,414,281)
Impairment provision charge 6 - (83,272)
Share based payment 19 (31,714) (52,786)
Total administrative expenses (1,128,372) (2,550,339)
Other income 6 - 960,000
Finance expense 6 (2,078) (1,937)
Finance income 6 2,759 1,614
Loss before tax (1,127,691) (1,590,662)
Taxation 9 - -
Loss for the year (1,127,691) (1,590,662)
Other comprehensive loss
Items that may be reclassified
subsequently to profit and
loss:
Exchange translation differences
on foreign operations 1,762,673 705,218
Total comprehensive Income/(loss)
for the year attributable
to equity holders of the
parent company 634,982 (885,444)
Loss per ordinary share
Basic and diluted (pence) 10 (0.75)p (1.19)p
The notes on pages 37 to 66 form part of these of financial
statements
All amounts are derived from continuing operations.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 30 June 2016
Company No. 02401127
2016 2015
Notes GBP GBP
Assets
Non-current assets
Intangible exploration and
evaluation assets 11 11,957,768 9,811,527
Property, plant and equipment 12 91,242 65,924
12,049,010 9,877,451
Current assets
Trade and other receivables 14 52,569 199,911
Cash and cash equivalents 15 1,014,354 785,881
1,066,923 985,792
Total assets 13,115,933 10,863,243
Liabilities
Current liabilities
Trade and other payables 17 537,819 752,136
Total current liabilities 537,819 752,136
Non current liabilities
Deferred tax 16 2,226,035 1,906,525
Total non current liabilities 2,226,035 1,906,525
Total liabilities 2,763,854 2,658,661
Net assets 10,352,079 8,204,582
Equity
Share capital 18 21,310,951 20,892,288
Share premium 18 21,759,953 20,697,815
Share based payment reserve 19 84,500 52,786
Merger reserve 1,824,000 1,824,000
Translation reserve 1,499,187 (263,486)
Retained earnings (36,126,512) (34,998,821)
Total equity 10,352,079 8,204,582
The financial statements were approved by the Board of Directors
and authorised for issue on 28 December 2016 and were signed on its
behalf by
M A Borrelli
Executive Chairman
CONSOLIDATED STATEMENT OF CASH FLOW
Year ended 30 June 2016
2016 2015
GBP GBP
Cash flows from operating
activities
Loss before tax (1,127,691) (1,590,662)
Adjustments to reconcile
net losses to cash utilised
:
Amortisation of exploration
and evaluation assets 98,870 73,707
Depreciation of property,
plant and equipment 39,604 40,409
Loss on disposal of fixed
asset - 34,995
Loss on disposal of intangible
asset - 80,313
Finance income (2,759) (1,614)
Share based payments 31,714 52,786
Operating cash outflows before
movements in working capital (960,262) (1,310,066)
Changes in:
Trade and other receivables 401,401 (83,345)
Trade and other payables (211,032) (337,894)
Net cash outflow from operating
activities (769,893) (1,731,305)
Investing activities
Interest received 2,759 1,614
Purchases of property, plant
and equipment (67,605) (9,311)
Disposals of property, plant
and equipment 18,095 44,538
Purchases of intangible exploration
and evaluation assets (411,054) (159,530)
Net cash outflow from investing
activities: (457,805) (122,689)
Cash flows from financing
activities
Proceeds from settlement
agreement - 960,000
Proceeds from issue of shares
and warrants 1,559,724 1,000,000
Share issues costs (78,923) (50,000)
Net cash inflow from financing
activities 1,480,801 1,910,000
Net increase in cash and
cash equivalents 253,103 56,006
Effect of foreign exchange
rate changes (24,630) (20,820)
Cash and cash equivalents
at beginning of year 785,881 750,695
Cash and cash equivalents
at end of year 1,014,354 785,881
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Year ended 30 June 2016
Share Share Share Merger Translation Retained Total
capital premium based reserve reserve earnings equity
payment
reserve
GBP GBP GBP GBP GBP GBP GBP
As at 1 July
2014 20,178,002 20,462,101 - 1,824,000 (968,704) (33,408,159) 8,087,240
Total comprehensive
loss for the
year - - - - 705,218 (1,590,662) (885,444)
Issue of shares 714,286 285,714 - - - - 1,000,000
Share issue
costs - (50,000) - - - - (50,000)
Share based
payment - - 52,786 - - - 52,786
As at 30 June
2015 20,892,288 20,697,815 52,786 1,824,000 (263,486) (34,998,821) 8,204,582
Total comprehensive
loss for the
year - - - - 1,762,673 (1,127,691) 634,982
Issue of shares 418,663 1,141,061 - - - - 1,559,724
Share issue
costs - (78,923) - - - - (78,923)
Share based
payment - - 31,714 - - - 31,714
As at 30 June
2016 21,310,951 21,759,953 84,500 1,824,000 1,499,187 (36,126,512) 10,352,079
Reserves Description and purpose
Share capital - amount subscribed for share capital at nominal
value
Share premium - amounts subscribed for share capital in excess
of nominal value
Share based payment reserve - amount arising on the issue of
warrants and share options during the year
Merger reserve - amount arising from the issue of shares for
non-cash consideration
Translation reserve - amounts arising on re-translating the net
assets of overseas operations into the presentational currency
Retained earnings - cumulative net gains and losses recognised
in the consolidated income statement
COMPANY STATEMENT OF FINANCIAL POSITION
As at 30 June 2016
Company No. 02401127
2016 2015
Notes GBP GBP
Assets
Non-current assets
Property, plant and equipment 12 7,601 20,865
Investment in subsidiaries 13 10,031,706 7,969,380
10,039,307 7,990,245
Current assets
Trade and other receivables 14 30,850 182,022
Cash and cash equivalents 15 954,260 714,281
985,110 896,303
Total assets 11,024,417 8,886,548
Liabilities
Current liabilities
Trade and other payables 17 517,325 733,230
Total liabilities 517,325 733,230
Net assets 10,507,092 8,153,318
Equity
Share capital 18 21,310,951 20,892,288
Share premium 18 21,759,953 20,697,815
Share based payment reserve 19 84,500 52,786
Merger reserve 1,824,000 1,824,000
Retained earnings (34,472,312) (35,313,571)
Total equity 10,507,092 8,153,318
The financial statements were approved by the Board of Directors
and authorised for issue on 28 December 2016 and were signed on its
behalf by
M A Borrelli
Executive Chairman
COMPANY STATEMENT OF CASH FLOW
for the year ended 30 June 2016
2016 2015
GBP GBP
Cash flows from operating
activities
Profit/(loss) before tax 841,259 (70,682)
Adjustments to reconcile
net losses to cash utilised
:
Foreign exchange gains on
foreign subsidiary loans (1,615,588) (714,411)
Depreciation of property,
plant and equipment 3,724 16,465
Impairment of investment
in subsidiaries - 1,000,000
Finance income (2,759) (1,614)
Share based payments 31,714 52,786
Other impairment write down
and provision - 105,859
Operating cash outflows before
movements in working capital 741,650 388,403
Changes in:
Trade and other receivables 151,172 (81,915)
Trade and other payables (215,905) (1,210,026)
Net cash outflow from operating
activities (806,383) (903,538)
Investing activities
Interest received 2,759 1,614
Loans to subsidiaries (446,738) (1,013,608)
Purchases of property, plant
and equipment (8,555) -
Disposals of property, plant
and equipment 18,095 34,018
Net cash outflow from investing
activities: (434,439) (977,976)
Cash flows from financing
activities
Proceeds from settlement
agreement - 960,000
Proceeds from issue of shares
and warrants 1,559,724 1,000,000
Share issue costs (78,923) (50,000)
Net cash inflow from financing
activities 1,480,801 1,910,000
Net increase in cash and
cash equivalents 239,979 28,486
Cash and cash equivalents
at beginning of year 714,281 685,795
Cash and cash equivalents
at end of year 954,260 714,281
COMPANY STATEMENT OF CHANGES IN EQUITY
Year ended 30 June 2016
Share Share premium Share based Merger Retained Total
capital payment reserve earnings equity
reserve
GBP GBP GBP GBP GBP GBP
As at 1 July
2014 20,178,002 20,462,101 - 1,824,000 (34,528,478) 7,935,625
Total comprehensive
loss for the
year - - - - (785,093) (785,093)
Issue of shares 714,286 285,714 - - - 1,000,000
Share issue
costs - (50,000) - - - (50,000)
Adjustment
of reserve
on warrants
exercised
and lapsed - - 52,786 - - 52,786
As at 30 June
2015 20,892,288 20,697,815 52,786 1,824,000 (35,313,571) 8,153,318
Total comprehensive
profit for
the year - - - - 841,259 841,259
Issue of shares 418,663 1,141,061 - - - 1,559,724
Share issue
costs - (78,923) - - - (78,923)
Share based
payment - - 31,714 - - 31,714
As at 30 June
2016 21,310,951 21,759,953 84,500 1,824,000 (34,472,312) 10,507,092
Reserves Description and purpose
Share capital - amount subscribed for share capital at nominal
value
Share premium - amounts subscribed for share capital in excess
of nominal value
Share based payment reserve - amount arising on the issue of
warrants and share options during the year
Merger reserve - amount arising from the issue of shares for
non-cash consideration
Translation reserve - amounts arising on re-translating the net
assets of overseas operations into the presentational currency
Retained earnings - cumulative net gains and losses recognised
in the consolidated income statement
NOTES TO THE ACCOUNTS
Year ended 30 June 2016
1. GENERAL INFORMATION
BMR Group PLC (the 'Company') is incorporated and domiciled in
the United Kingdom. The address of the registered office is 35
Piccadilly, London W1J 0DW.
The Company was formerly named BMR Mining PLC and, on 10
February 2016, the Company was renamed BMR Group PLC.
The nature of the Group's operations and its principal activity
is that of the acquisition, evaluation and development of mineral
stockpiles, in particular tailings. The Group's projects are
located in Zambia and Portugal.
2. ADOPTION OF NEW AND REVISED STANDARDS
The directors have considered those Standards and
Interpretations, which have not been applied in the financial
information but are relevant to the Group's operations, that are in
issue but not yet effective and do not consider that any will have
a material impact on the future results of the Group.
3. SIGNIFICANT ACCOUNTING POLICIES
Basis of preparation
The financial statements have been prepared in accordance with
International Financial Reporting Standards ('IFRS') as issued by
the International Accounting Standards Board ('IASB') and as
adopted by the European Union ('EU') and those parts of the
Companies Act 2006 applicable to companies reporting under
IFRS.
The principal accounting policies adopted are set out below.
The Group financial information is presented in Pounds Sterling
("GBP"). For reference the year end exchange rate from Pounds
Sterling to US Dollar was 1.339 (2015: 1.5717). The Zambian
subsidiaries are now accounted for in US$ so the Pounds Sterling to
Zambian Kwacha exchange rate was not used (2015: 11.5449).
As permitted by Section 408 of the Companies Act 2006, the
Company has elected not to present its Income Statement for the
year. The Company reported a profit for the financial year ended 30
June 2016 of GBP841,259 (2015: loss of GBP785,094).
Basis of consolidation
The consolidated financial statements incorporate the financial
statements of the Company and entities controlled by the Company
(its subsidiaries) made up to 30 June each year. Control is
achieved when the Group is exposed, or has rights, to variable
returns from its involvement with the investee and has the ability
to affect those returns through its power over the investee.
The results of subsidiaries acquired or disposed of during the
year are included in the consolidated income statement from the
effective date of acquisition or up to the effective date of
disposal, as appropriate. Where necessary, adjustments are made to
the financial statements of subsidiaries to bring accounting
policies used into line with those used by the Group. All
intra-group transactions, balances, income and expenses are
eliminated on consolidation.
Segmental 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 has been identified as the Board
of Directors.
Going concern
After making enquiries, the Directors have a reasonable
expectation that the Group has adequate resources with a
combination of its cash balances and facility entered into with
Africa Compass International ("ACI") to continue in operational
existence for the foreseeable future. The facility with ACI
provides the Group upon achievement of various milestones, through
to commissioning of the plant and proof of saleable product, up to
US$4.2million for use in connection with the plant and materials
processed in Zambia. The Group has post year end submitted the
first drawdown request but has not yet received it. For these
reasons, they continue to adopt the going concern basis in
preparing the financial statements.
The operational requirements of the Company comprise maintaining
a Head Office in the UK with a Board comprising two executive
directors and one non-executive Director with two consultants for,
amongst other things, determining and implementing strategy and
managing operations. In addition, the Group has a team in Kabwe,
Zambia for establishing facilities for the processing of its
tailings into zinc and lead concentrates and a geologist and
consultants for the project in Portugal, all under the over-sight
of the Board.
The Directors have considered the current level of cash
balances, the facility with ACI and the operational requirements of
the Group in the UK, Zambia and Portugal over the next 12 months
and the commencement of the establishment, and commissioning, of a
plant in Zambia in Q3 2017. The Directors believe that the process
methodology for the plant in Zambia being developed by the Group
working with technical partners is capable of being patented. The
Directors expect the plant to be capable of processing at the rate
of five tonnes per hour and operating on a 24/7 basis once fully
operational.
In addition, the Directors expect the Group to generate revenues
from the sale locally of its Waelz kiln slag for building blocks in
the construction sector, subject to the approval of the Zambia
Environmental Management Agency ("ZEMA"). At present, the Company
has lodged an appeal with ZEMA after its application for such sale
with an Environmental Project Brief was rejected.
The Directors therefore believe that the current cash resources
are sufficient for the Group's current operations and for
establishing the enhanced plant and commencing preparations for the
planned main plant over the forthcoming 12 months
Foreign currencies
The individual financial statements of each Group company are
presented in the currency of the primary economic environment in
which it operates (its functional currency).For the purpose of the
consolidated financial statements, the results and financial
position of each Group company are expressed in GBP, which is the
functional currency of the Company, and the presentation currency
for the consolidated financial statements.
In preparing the financial statements of the individual
companies, transactions in currencies other than the functional
currency of each Group company ('foreign currencies') are recorded
in the functional currency at the rates of exchange prevailing on
the dates of the transactions. At each balance sheet date, monetary
assets and liabilities that are denominated in foreign currencies
are retranslated into the functional currency at the rates
prevailing on the balance sheet date. Non-monetary assets and
liabilities carried at fair value that are denominated in foreign
currencies are translated at the rates prevailing at the date when
the fair value was determined. Non-monetary items that are measured
in terms of historical cost in a foreign currency are not
retranslated.
Exchange differences are recognised in the income statement in
the period in which they arise except for exchange differences on
monetary items receivable from or payable to a foreign operation
for which settlement is neither planned nor likely to occur, which
form part of the net investment in a foreign operation, and which
are recognised in the foreign currency translation reserve and
recognised in the income statement on disposal of the net
investment.
Foreign currencies (continued)
For the purpose of presenting consolidated financial statements,
the assets and liabilities of the Group's foreign operations are
translated at exchange rates prevailing on the balance sheet date.
Income and expense items are translated at the average exchange
rates for the period, unless exchange rates fluctuate significantly
during that period, in which case the exchange rates at the date of
transactions are used. Exchange differences arising, if any, are
classified as equity and transferred to the Group's translation
reserve. Such translation differences are recognised as income or
as expenses in the period in which the operation is disposed
of.
Taxation
The tax expense represents the sum of the tax currently payable
and deferred tax.
The tax currently payable is based on taxable profit for the
year. Taxable profit differs from net profit as reported in the
income statement because it excludes items of income or expense
that are taxable or deductible in other years and it further
excludes items that are never taxable or deductible. The Group's
liability for current tax is calculated using tax rates that have
been enacted or substantively enacted by the balance sheet
date.
Deferred tax is the tax expected to be payable or recoverable on
differences between the carrying amounts of assets and liabilities
in the financial statements and the corresponding tax bases used in
the computation of taxable profit, and is accounted for using the
balance sheet liability method. Deferred tax liabilities are
generally 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. Such assets and
liabilities are not recognised if the temporary difference arises
from the initial recognition of goodwill or from the initial
recognition (other than in a business combination) of other assets
and liabilities in a transaction that affects neither the tax
profit nor the accounting profit.
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.
The carrying amount of deferred tax assets is reviewed at each
balance sheet date and reduced to the extent that it is no longer
probable that sufficient taxable profits will be available to allow
all or part of the asset to be recovered.
Deferred tax is calculated at the tax rates that are expected to
apply in the period when the liability is settled or the asset is
realised. Deferred tax is charged or credited in the income
statement, except when it relates to items charged or credited
directly to equity, in which case the deferred tax is also dealt
with in equity.
Deferred tax assets and liabilities are offset when there is a
legally enforceable right to set off current tax assets against
current tax liabilities and when they relate to income taxes levied
by the same taxation authority and the Group intends to settle its
current tax assets and liabilities on a net basis.
Property, plant and equipment
Property, plant and equipment are carried at cost less
accumulated depreciation and any recognised impairment loss.
Depreciation and amortisation is charged so as to write off the
cost or valuation of assets, other than land, over their estimated
useful lives, using the straight-line method, on the following
bases:
Motor vehicles 25%
Other 25%
The gain or loss arising on disposal or retirement of an asset
is determined as the difference between the sales proceeds and the
carrying amount of the asset and is recognised in income.
Impairment of property, plant and equipment
At each balance sheet date, the Group reviews the carrying
amounts of its property, plant and equipment to determine whether
there is any indication that those assets have suffered an
impairment loss. If any such indication exists, the recoverable
amount of the asset is estimated in order to determine the extent
of the impairment loss (if any). Where the asset does not generate
cash flows that are independent from other assets, the Group
estimates the recoverable amount of the cash-generating unit to
which the asset belongs.
Recoverable amount is the higher of the fair value less costs to
sell and value in use. In assessing value in use, the estimated
future cash flows are discounted to their present value using a
pre-tax discount rate that reflects current market assessments of
the time value for money and the risks specific to the asset for
which the estimates of future cash flows have not been
adjusted.
If the recoverable amount of an asset (or cash-generating unit)
is estimated to be less than its carrying amount, the carrying
amount of the asset (cash-generating unit) is reduced to its
recoverable amount. An impairment loss is recognised as an expense
immediately, unless the relevant asset is carried at a revalued
amount, in which case the impairment loss is treated as a
revaluation decrease.
Where an impairment loss subsequently reverses, the carrying
amount of the asset (cash-generating unit) is increased to the
revised estimate of its recoverable amount, but so that the
increased carrying amount does not exceed the carrying amount that
would have been determined had no impairment loss been recognised
for the asset (cash-generating unit) in prior years. A reversal of
an impairment loss is recognised as income immediately, unless the
relevant asset is carried at a revalued amount, in which case the
reversal of the impairment loss is treated as a revaluation
increase.
Intangible exploration and evaluation assets
Intangible exploration and evaluation assets comprise land use
rights, mining licences and Exploration and Evaluation ("E&E")
costs.
The land use rights and mining licences are stated at cost less
accumulated amortisation and impairment losses. They are amortised
using the straight line basis over the unexpired period of the
rights.
The Group applies the full cost method of accounting for E&E
costs, having regard to the requirements of IFRS 6 Exploration for
and Evaluation of Mineral Resources. Under the full cost method of
accounting, costs of exploring for and evaluating mineral resources
are accumulated by reference to appropriate cost centres being the
appropriate licence area, but are tested for impairment on a cost
pool basis as described below.
E&E assets comprise costs of (i) E&E activities that are
ongoing at the balance sheet date, pending determination of whether
or not commercial reserves exist and (ii) costs of E&E
activities associated with adding to the commercial reserves of an
established cost pool, did not result in the discovery of
commercial reserves.
Costs incurred prior to having obtained the legal rights to
explore an area are expensed directly to the income statement as
they are incurred.
Exploration and evaluation costs
All costs of E&E are initially capitalised as E&E
assets. Payments to acquire the legal right to explore, costs of
technical services and studies, seismic acquisition, exploratory
drilling and testing are capitalised as intangible E&E
assets.
Such costs include directly attributable overheads, including
the depreciation of property, plant and equipment utilised in
E&E activities, together with the cost of other materials
consumed during the exploration and evaluation phases.
Treatment of E&E assets at conclusion of appraisal
activities
Intangible E&E assets related to each exploration
licence/prospect are carried forward, until the existence (or
otherwise) of commercial reserves has been determined. If
commercial reserves have been discovered, the related E&E
assets are assessed for impairment on a cost pool basis as set out
below, and any impairment loss of the relevant E&E assets is
then reclassified as development and production assets.
Impairment of E&E assets
E&E assets are assessed for impairment when facts and
circumstances suggest that the carrying amount may exceed its
recoverable amount. Such indicators include, but are not limited
to, those situations outlined in paragraph 20 of IFRS 6 Exploration
for and Evaluation of Mineral Resources and include the point at
which a determination is made as to whether or not commercial
reserves exist.
Where there are indications of impairment, the E&E assets
concerned are tested for impairment. Where the E&E assets
concerned fall within the scope of an established full cost pool,
the E&E assets are tested for impairment together with all
development and production assets associated with that cost pool,
as a single cash generating unit.
The aggregate carrying value is compared against the expected
recoverable amount of the pool, generally by reference to the
present value of the future net cash f lows expected to be derived
from production of commercial reserves. Where the E&E assets to
be tested fall outside the scope of any established cost pool,
there will generally be no commercial reserves and the E&E
assets concerned will generally be written off in full.
Any impairment loss is recognised in the income statement as
additional depreciation and amortisation, and separately
disclosed.
The Group considers the whole of Zambia to be one cost pool and
therefore aggregates all Zambian assets for the purpose of
determining whether an impairment of E&E assets has
occurred.
Investment in subsidiaries
In the Company's financial statements, investment in
subsidiaries are stated at cost and reviewed for impairment if
there are any indications that the carrying value may not be
recoverable.
Related party transactions
IAS 24, 'Related Party Disclosures', requires the disclosure of
the details of transactions between the reporting entity and
related parties which are disclosed in Note 22. In the consolidated
financial statements, all transactions between Group companies are
eliminated.
Financial instruments
Recognition of financial assets and financial liabilities
Financial assets and financial liabilities are recognised on the
Group's balance sheet when the Group becomes a party to the
contractual provisions of the instrument.
De-recognition of financial assets and financial liabilities
The Group derecognises a financial asset only when the
contractual rights to cash flows from the asset expire; or it
transfers the financial asset and substantially all the risks and
rewards of ownership of the asset to another entity. If the Group
neither transfers nor retains substantially all the risks and
rewards of ownership and continues to control the transferred
asset, the Group recognises its retained interest in the asset and
an associated liability for the amount it June have to pay. If the
Group retains substantially all the risks and rewards of ownership
of a transferred financial asset, the Group continues to recognise
the financial asset and also recognises a collateralised borrowing
for the proceeds received. The Group derecognises financial
liabilities when the Group's obligations are discharged, cancelled
or expired.
Trade and other receivables
Trade and other receivables are measured at initial recognition
at fair value, and are subsequently measured at amortised cost less
any provision for impairment.
Cash and cash equivalents
Cash and cash equivalents comprise cash on hand and demand
deposits, and other short-term highly liquid investments that are
readily convertible to a known amount of cash with three months or
less remaining to maturity and are subject to an insignificant risk
of changes in value.
Impairment of financial assets
The Group assesses at each reporting date whether there is
objective evidence that a financial asset or a group of financial
assets is impaired. In the case of a financial asset classified as
available for sale, a significant or prolonged decline in the fair
value of the financial asset below its cost is considered as an
indicator that the financial asset is impaired. If any such
evidence exists for available-for-sale financial assets, 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 the income
statement. Impairment losses recognised in the income statement on
financial assets are not reversed through the income statement.
Trade and other payables
Trade and other payables are initially measured at fair value,
and are subsequently measured at amortised cost, using the
effective interest rate method.
Assets under hire purchase
Assets acquired under hire purchase are capitalised in the
financial statements and are depreciated in accordance with the
policy set out as above. Each hire purchase payment is allocated
between the liability and finance charges so as to achieve a
constant rate on the finance balance outstanding. Finance charges
are recognised in profit or loss over the period of the respective
hire purchase agreements.
Hire purchases are classified as finance leases as the terms of
the lease transfer substantially all of the risk and rewards of
ownership to the lessee
Provisions
Provisions are recognised when the Group has a legal or
constructive obligation, as a result of past events, for which it
is probable that an outflow of economic resource will result and
that outflow can be reliably measured.
Rehabilitation
Provisions are made for the estimated rehabilitation costs
relating to areas disturbed during exploration activities up to
reporting date but not yet rehabilitated. Changes in estimate are
dealt with on a prospective basis as they arise.
Share-based payments
The Group has applied IFRS 2 Share-based Payment for all grants
of equity instruments.
The Group issues equity-settled share-based payments to its
employees. Equity-settled share-based payments are measured at fair
value at the date of grant. The fair value determined at the grant
date of the equity-settled share-based payments is expensed on a
straight-line basis over the vesting period, based on the Group's
estimate of the shares that will eventually vest.
Fair value is measured using the Black Scholes model. The
expected life used in the model has been adjusted, based on
management's best estimate, for the effects of non-transferability,
exercise restrictions and behavioural considerations. The inputs to
the model include: the share price at the date of grant, exercise
price expected volatility, risk free rate of interest.
Share capital
Financial instruments issued by the Group are treated as equity
only to the extent that they do not meet the definition of a
financial liability. The Group's ordinary shares are classified as
equity instruments.
For the purposes of the disclosures given in note 18, the Group
considers its capital to be total equity. There have been no
changes in what the Group considers to be capital since the
previous period.
The Group is not subject to any externally imposed capital
requirements.
4. CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY
In the application of the Group's accounting policies, which are
described in note 3, the Directors are required to make judgements,
estimates and assumptions about the carrying amounts of the assets
and liabilities that are not readily apparent from other sources.
The estimates and associated assumptions are based on historical
experience and other factors that are considered to be relevant.
Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an
ongoing basis. Revisions to accounting estimates are recognised in
the period in which the estimate is revised if the revision affects
only that period or in the period of the revision and future
periods if the revision affects both the current and future
periods.
The following are the critical judgements and estimations that
the Directors have made in the process of applying the Group's
accounting policies and that have the most significant effect on
the amounts recognised in the financial statements:
i) Recoverability of exploration and evaluation assets
Determining whether an exploration and evaluation asset is
impaired requires an assessment of whether there are any indicators
of impairment, including by reference to specific impairment
indicators prescribed in IFRS 6 Exploration for and Evaluation of
Mineral Resources. If there is any indication of potential
impairment, an impairment test is required based on value in use of
the asset. The value in use calculation requires the entity to
estimate the future cash ows expected to arise from the
cash-generating unit and a suitable discount rate in order to
calculate present value. The carrying amount of the Group's
exploration and evaluation assets at the balance sheet date was
GBP11,957,768 (2015: GBP9,613,911). No impairments were made during
the year.
The methods and key assumptions in relation to the calculation
of the estimates are detailed in note 11.
ii) Going concern
As disclosed in note 3 the Directors have a reasonable
expectation that the Company has adequate resources through its
cash balances to continue in operational existence for the
foreseeable future. For this reason, the Company continues to adopt
the going concern basis in preparing the financial statements.
iii) Provisions for liabilities
As a result of exploration activities the Group is required to
make provision for rehabilitation. Signi cant uncertainty exists as
to the amount of rehabilitation obligations which may be incurred
due to the impact of possible changes in environmental legislation.
Due to the early stage of exploration activity no signi cant damage
has been caused and, therefore, no provision has been recognised at
30 June 2016 (2015: GBPnil) in the Group and the Company balance
sheets.
iv) Share based compensation
In order to calculate the charge for share-based compensation as
required by IFRS 2, the Group makes estimates principally relating
to the assumptions used in its option-pricing model as set out in
note 19.
5. SEGMENTAL 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 and making strategic decision, has been identified as the
Board of Directors. The Board of Directors considers there to be
only one operating segment, the exploitation and development of
mineral resources and only two geographical segments being Zambia
and the UK.
The geographical split of loss and assets and liabilities is as
follows:
UK Zambia Total
GBP GBP GBP
2015
Profit/(loss) before
tax 214,906 (1,805,568) (1,590,662)
Non-current assets
Intangible exploration
and evaluation assets - 9,811,527 9,811,527
Property, plant and equipment 20,865 45,059 65,924
20,865 9,856,586 9,877,451
Current assets
Trade and other receivables 182,022 17,889 199,911
Cash and cash equivalents 714,281 71,600 785,881
896,303 89,489 985,792
Total assets 917,168 9,946,075 10,863,243
Current liabilities 733,232 18,904 752,136
Non-current liabilities - 1,906,525 1,906,525
Net assets 183,936 8,020,646 8,204,582
UK Zambia Total
GBP GBP GBP
2016
Loss before tax (781,818) (345,871) (1,127,689)
Non-current assets
Intangible exploration
and evaluation assets - 11,957,768 11,957,768
Property, plant and
equipment 7,601 83,641 91,242
7,601 12,041,409 12,049,010
Current assets
Trade and other receivables 30,850 21,719 52,569
Cash and cash equivalents 954,260 60,094 1,014,354
985,110 81,813 1,066,923
Total assets 992,711 12,123,222 13,115,933
Current liabilities 517,325 20,494 537,819
Non-current liabilities - 2,226,035 2,226,035
Net assets 475,386 9,876,693 10,352,079
6. LOSS FOR THE YEAR
The loss for the year has been arrived at after charging /
(crediting):
2016 2015
GBP GBP
Depreciation of property, plant
and equipment (note12) 39,604 40,409
Loss on disposal of property,
plant and equipment - 34,995
Gain on disposal of property,
plant and equipment - 44,538
Loss on disposal of intangibles - 80,313
Amortisation of intangibles 98,870 73,707
Impairment provision charge
** - 83,272
Settlement monies received as
compensation - (960,000)
Operating lease costs (Office
rental costs) 72,184 166,709
Staff costs (note 8) 229,304 272,534
Share based payment charge 31,714 52,786
Finance income (2,759) (1,614)
------------------------ ------------------------
**Impairment provision (write
back)/ charge arising from:-
* Other payable write back - (22,587)
* Increase in VAT provision - 105,859
------------------------ ------------------------
- 83,272
------------------------ ------------------------
7. AUDITORS' REMUNERATION
The remuneration of the auditors can be analysed as follows:
2016 2015
GBP GBP
Fees payable to the company's
auditor for the audit of the
company and group's financial
statements 22,500 22,000
Fees payable to the company's
auditor for other services:
Other services relating to forensic
investigation work - 62,603
Other services relating to taxation
work 2,750 -
------------------------ ------------------------
25,250 84,603
------------------------ ------------------------
8. STAFF COSTS
2016 2015
Number Number
Directors 3 4
Consultant 2 2
Support staff (including Zambia
employees) 31 33
------- -------
The average monthly number of
employees 36 39
------- -------
Their aggregate remuneration
comprised:- GBP GBP
Fees 139,504 132,080
Wages and salaries 89,800 162,807
Share based option charges 23,961 35,895
Pension - 8,100
Social security costs - 4,547
-------- --------
253,265 343,429
-------- --------
Included within staff costs GBP139,504 (2015: GBP159,662)
relates to amounts in respect of Directors.
The highest paid Director's emoluments was GBP64,500 (2015:
GBP93,917)
9. TAXATION
2016 2015
GBP GBP
Current tax
UK corporation tax - -
Overseas taxation - -
----- -----
- -
----- -----
Deferred tax
UK corporation tax - -
Overseas taxation - -
----- -----
- -
----- -----
The taxation credit for each year can be reconciled to the loss
per the consolidated income statement as follows:
2016 2015
GBP GBP
Loss before tax (1,082,612) (1,590,662)
------------ ------------
Tax credit at the standard rate
of tax in the UK 216,522 318,132
Tax effect of non-deductible
expenses (27,671) (15,058)
Deferred tax asset not recognized (188,851) (303,074)
------------ ------------
Tax for the year - -
------------ ------------
The standard rate of corporation tax in the UK applied during
the year was 20% (2015: 20%).
9. TAXATION (continued)
At 30 June 2016, the Company and Group are carrying forward
estimated tax losses of GBP13.5m (2015: GBP12.5m) in respect of
various activities over the years. No deferred tax asset was
recognized in respect to these accumulated tax losses as there is
insufficient evidence that the amount will be recovered in future
years.
The Group has incurred indefinitely available tax losses of
GBP3.99m (2015: GBP3.72m) to carry forward against future taxable
income of the subsidiaries in which the losses arose and they
cannot be used to offset taxable profits elsewhere in the
Group.
10. LOSS PER SHARE
Basic loss per ordinary share is calculated by dividing the
consolidated net loss for the year attributable to ordinary equity
holders of the parent company by the weighted average number of
ordinary shares outstanding during the year. The calculation of the
basic and diluted loss per share is based on the following
data:
2016 2015
GBP GBP
Loss before tax
Loss for the purpose of basic
loss per share being consolidation
net loss attributable to equity
holders of the Company 1,127,689 1,590.662
------------ ------------
2016 2015
Number Number
Number of shares
Weighted average number of ordinary
shares for the purpose of basic
loss per shares 150,964,537 133,631,260
------------ ------------
Loss per ordinary share
Basic and diluted 0.75p 1.19p
------------ ------------
At the balance sheet date there were 20,339,403 (2015:
20,339,403) potentially dilutive Ordinary Shares. Potentially
dilutive ordinary shares relate to warrants and share options
issued to directors, consultants and third parties. In 2016 and
2015, the potential Ordinary shares are anti-dilutive and therefore
the diluted loss per share has not been calculated.
11. INTANGIBLE EXPLORATION AND EVALUATION ASSETS
Land Small Large Exploration Total
use Rights scale scale and evaluation GBP
GBP licence licence assets
GBP GBP GBP
GROUP
Cost
At 30 June 2014 3,007,123 570,163 1,696,484 8,937,532 14,211,302
Additions - - - 159,530 159,530
Disposals (89,029) - - - (89,029)
Foreign exchange
difference (148,176) (70,322) - 195,053 (23,445)
At 30 June 2015 2,769,918 499,841 1,696,484 9,292,115 14,258,358
Additions - - - 411,054 411,054
Foreign exchange
difference 303,389 246,985 - 1,373,236 1,923,610
At 30 June 2016 3,073,307 746,826 1,696,484 11,076,405 16,593,022
Accumulated depreciation
At 30 June 2014 (1,936,899) (224,457) (1,696,484) (524,000) (4,381,840)
Charge for the year (25,696) (48,011) - - (73,707)
Disposals 8,716 - - - 8,716
At 30 June 2015 (1,953,879) (272,468) (1,696,484) (524,000) (4,446,831)
Charge for the year (31,466) (67,404) - - (98,870)
Foreign exchange
difference - (89,553) - - (89,553)
At 30 June 2016 (1,985,345) (429,425) (1,696,484) (524,000) (4,635,254)
Carrying amount
At 30 June 2016 1,087,962 317,401 - 10,552,406 11,957,769
At 30 June 2015 816,039 227,373 - 8,768,115 9,811,527
At 30 June 2014 1,070,224 345,706 - 8,413,532 9,829,462
Depreciation of the small scale licence is applied by reference
to the period of the licence granted and the large scale licence
has been fully impaired.
Incorporated in the Exploration and Evaluation assets is a fair
value adjustment of GBP6,885,175 as a result of the acquisition of
Enviro Mining Limited on 20 June 2011 and its two subsidiary
companies, Enviro Processing Limited and Enviro Props Limited
(together "Enviro Group"). The Enviro Group owns the leasehold
rights and title to Stand 5187 containing the stockpiles at Kabwe
and the contents of the washplant and leachplant tailings. No
impairment has been made on the fair value this year on the basis
that third party reports and internal evaluation of future income
streams allied with the associated production costs generate net
present values, to the extent of the funding requirement for the
development of the production plant, using conservative discount
rates, which are well in excess of the costs capitalised as
intangible assets in the balance sheet.
Net Book Fair Value Fair Value
Value Adjustment GBP
of Assets GBP
Acquired
GBP
Exploration and evaluation
assets 1,959,324 7,332,791 9,292,115
Other net assets acquired 411,054 - 411,054
Foreign exchange difference 144,350 1,228,887 1,373,237
----------- ------------ -----------
2,514,728 8,561,678 11,076,406
Impairment provision (274,000) (250,000) (524,000)
----------- ------------ -----------
2,240,728 8,311,678 10,552,406
Deferred tax (note 16) - (2,226,035) (2,226,035)
2,240,728 6,085,643 8,326,371
The value now included in the exploration and evaluation assets
amounts to GBP8,311,678. On the basis of third party reports
incorporating values derived from JORC classifications and internal
evaluation of future income streams allied with the associated
production costs, net present values, using conservative discount
rates, have been generated which are well in excess of this figure
and the overall costs capitalised as intangible assets in the
balance sheet. The impairment assessment carried out relates to the
exploitation and development of mineral resources, as the one cash
generating unit ("CGU") representing the only operating segment.
The recoverable amount is determined from value in use calculations
based on cash flow projections from revenue and expenditure
forecasts covering a 5 year period to 2020, the expiry date of the
small scale license. The growth rate is assumed to be zero and the
level of production is constant on the basis the main plant is
assumed to be at the most efficient capacity over the period of
extraction. The key assumptions used are as follows:
2016 2015
Discount rate 20% 20%
Prevailing Metal prices**
(per tonne)
* Zinc $2,377 $1,745
* Lead $2,105 $1,760
Metal recovery rate from
processing as follow:
* Zinc 80% 50/80%
* Lead 85% 85%
Estimated monthly tonnage
of Zinc and Lead (JORC
Compliant) 29,200 29,200
** Prevailing metal prices extracted from London Metal Exchange
as at 3 October 2016
The discount rate is based on the specific circumstances of the
Group and its operating segments and is derived from its WACC, with
appropriate adjustments made to reflect the risks specific to the
CGU and to determine the pre-tax rate. In considering the discount
rates applying to the CGUs, the Directors have considered the
relative sizes, risks and the inter-dependencies of its CGUs. No
reasonably possible change in a key assumption would produce a
significant movement in the carrying value of the CGUs and
therefore no sensitivity analysis is presented.
12. PROPERTY PLANT AND EQUIPMENT
Land and Motor
Buildings Vehicles Other Total
GBP GBP GBP GBP
GROUP
Cost
At 30 June 2014 26,101 110,425 166,882 303,408
Additions - 6,929 2,382 9,311
Disposals - (46,654) (103,753) (150,407)
Foreign exchange difference (2,394) (5,503) (1,778) (9,675)
At 30 June 2015 23,707 65,197 63,733 152,637
Additions - - 59,774 59,774
Disposals - - (36,190) (36,190)
Foreign exchange difference 13,355 41,830 11,597 66,782
At 30 June 2016 37,062 107,027 98,914 243,003
Accumulated depreciation
At 30 June 2014 - (45,669) (122,496) (168,165)
Charge for the year - (23,901) (16,508) (40,409)
Disposals - 12,636 102,776 115,412
Foreign exchange difference - 5,124 1,325 6,449
At 30 June 2015 - (51,810) (34,903) (86,713)
Charge for the year (2,613) (15,760) (21,231) (39,604)
Disposals - - 18,095 18,095
Foreign exchange difference - (34,862) (8,677) (43,539)
At 30 June 2016 (2,613) (102,432) (46,716) (151,761)
Carrying amount
At 30 June 2016 34,449 4,595 52,198 91,242
At 30 June 2015 23,707 13,387 28,830 65,924
At 30 June 2014 26,101 64,756 44,386 135,243
The carrying amount of motor vehicles held under finance lease
amounted to GBPnil (2015: GBPnil).
Motor
Vehicles Other Total
GBP GBP GBP
COMPANY
Cost
At 30 June 2014 46,654 42,532 89,186
Disposals (46,654) - (46,654)
At 30 June 2015 - 42,532 42,532
Additions - 8,555 8,555
Disposals - (36,190) (36,190)
At 30 June 2016 - 14,897 14,897
Accumulated depreciation
At 30 June 2014 (6,804) (11,034) (17,838)
Charge for the year (5,832) (10,633) (16,465)
Disposals 12,636 - 12,636
At 30 June 2015 - (21,667) (21,667)
Charge for the year - (3,724) (3,724)
Disposals - 18,095 18,095
At 30 June 2016 - (7,296) (7,296)
Carrying amount
At 30 June 2016 - 7,601 7,601
At 30 June 2015 - 20,865 20,865
At 30 June 2014 39,850 31,498 71,348
The carrying amount of motor vehicles held under finance lease
amounted to GBPnil (2015: GBPnil).
13. INVESTMENT IN SUBSIDIARIES
Cost of Long Term
Investment Loans Total
GBP GBP GBP
COMPANY
Cost at 30 June 2014 4,676,701 3,279,073 7,955,774
Advance to subsidiary
undertakings - 321,438 321,438
Effect of forex exchange
rate charges 692,168 692,168
Impairment - (1,000,000) (1,000,000)
At 30 June 2015 4,676,701 3,292,679 7,969,380
Advance to subsidiary
undertakings - 446,738 446,738
Effect of forex exchange
rate charges 1,615,588 1,615,588
At 30 June 2016 4,676,701 5,355,005 10,031,706
The Company had investment in the following subsidiary
undertakings at 30 June 2016 and 30 June 2015:
Country of Ordinary Ordinary
incorporation Shares shares
held held
Name Activity and operation Company Group
Enviro Mining Holding Company
Limited Mauritius 100% 100%
Enviro Processing Tailings processing
Limited Zambia - 100%
Enviro Props Property holding
Limited Zambia - 100%
The Group holding of 100% in the Zambian subsidiaries is held as
to 99% by Enviro Mining Limited and 1% by a nominee on behalf of
the Company.
The Group holding of 100% in the Mauritius subsidiary is held as
to 95% by the Company and 5% by a nominee on behalf of the
Company.
The following dormant subsidiaries were struck off the register
of Companies in Zambia on 25 February 2016.
Name Activity Country Ordinary
of incorporation shares
held by
Group
and Company
------------------------- --------------- ------------------- -------------
Mukuba Chemical
Enterprises Ltd Asset holding Zambia 74%
------------------------- --------------- ------------------- -------------
Ndola Mineral Resources Tailings
Ltd processing Zambia 100%
------------------------- --------------- ------------------- -------------
Sensele Mineral Tailings
Resources Ltd processing Zambia 80%
------------------------- --------------- ------------------- -------------
Tailings
Mfubu Mineral Ltd processing Zambia 80%
------------------------- --------------- ------------------- -------------
Butale Mineral Tailings
Resources Ltd processing Zambia 80%
------------------------- --------------- ------------------- -------------
14. TRADE AND OTHER RECEIVABLE
Group Company
2016 2015 2016 2015
GBP GBP GBP GBP
Group and Company
Prepayment 34,955 101,795 30,850 98,556
Other receivables 2,356 1,727 - -
Vat receivable 15,258 96,389 - 83,466
52,569 199,911 30,850 182,022
======== ========= ======== =========
As outlined in note 17, a provision has been made in respect of
a VAT assessment received from HM Revenue & Customs
("HMRC").
The fair value of trade and other receivables is not
significantly different from the carrying value and none of the
balances are past due.
15 CASH AND CASH EQUIVALENTS
The Group's cash and cash equivalents as at 30 June 2016 of
GBP1,014,354 (2015: GBP785,881) comprise cash at bank and in
hand.
The Company's cash and cash equivalents as at 30 June 2016 of
GBP954,260 (2015: GBP714,281) comprise cash at bank and in
hand.
The Directors consider that the carrying amount of these assets
approximates their fair value.
16. DEFERRED TAX
Differences between IFRS and statutory tax rules (in the United
Kingdom and elsewhere) give rise to temporary differences between
the carrying values of certain assets and liabilities for financial
reporting purposes and for income tax purposes.
GBP
Deferred tax liabilities
At 30 June 2015 and 1 July
2015 1,906,525
Foreign exchange difference
At 319,510
-----------
At 30 June 2016 2,226,035
-----------
The deferred tax liabilities arose on the acquisition of
exploration and evaluation assets in 2011. These will be released
to the income statement as the fair value of the related
exploration and evaluation assets is amortised.
17. TRADE AND OTHER PAYABLES
Group Company
2016 2015 2016 2015
GBP GBP GBP GBP
Trade payables 119,395 151,330 119,395 144,749
Other taxes and
social security - 3,424 - -
Other payables - 164 - -
Vat payable 374,350 374,350 374,350 374,350
Accruals 44,074 222,868 23,580 214,131
--------- --------- --------- ---------
537,819 752,136 517,325 733,230
========= ========= ========= =========
BMR was de-registered for VAT with effect from 1 August 2015 on
the basis there was no effective consideration for any services
provided as no invoices had been raised by BMR and issued to its
subsidiaries and that management services were not considered
supplies for VAT purposes. A provision has been made for GBP374,350
(2015 - GBP374,350) in relation to VAT previously claimed including
interest and this amount has been provided in full. The Company has
appealed and submitted its case for continued registration after
having sought professional advice.
18. SHARE CAPITAL AND SHARE PREMIUM
As permitted by the Companies Act 2006, the Company does not
have an authorised share capital (2015: nil)
2016 2015
Issued equity share
capital Number GBP Number GBP
Issued and fully
paid
Ordinary shares
of GBP0.001 each 173,831,727 1,738,317 131,965,451 1,319,654
Deferred shares
of GBP0.009 each 1,346,853,817 12,121,684 1,346,853,817 12,121,684
Deferred shares
of GBP0.01 each 19,579,925 195,799 19,579,925 195,799
Deferred shares
of GBP0.04 each 181,378,766 7,255,151 181,378,766 7,255,151
============ ============
21,310,951 20,892,288
============ ============
Conversion of settlement shares into deferred shares
Pursuant to the settlement agreement dated 18 February 2015,
Masoud Alikhani, Barbara Alikhani and Lakeshore Trading Limited,
formerly Swan Logistics Limited agreed, which was subsequently
approved by shareholders at the Annual General Meeting on 28 May
2015, to convert their interest in (before the consolidation)
24,479,376 of GBP0.01 ordinary shares of the Company into (before
the consolidation) 27,199,307 GBP0.009 deferred shares with no
economic value or voting rights.
Re-organisation of share capital
At the Annual General Meeting on 28 May 2015 a resolution was
passed and the Company completed a share re-organisation to reduce
the par value of the existing ordinary shares comprising a sub
division of 1,319,654,510 ordinary shares into 1,319,654,510 new
GBP0.01 ordinary shares and a further 1,319,654,510 GBP0.009
deferred shares with no economic value or voting rights and the
consolidation of those new ordinary shares into a new class of
ordinary shares (New Ordinary Shares of GBP0.001 each) such that
each existing holding of 10 ordinary shares will convert into 1 New
Ordinary Share.
The deferred 1p shares confer no rights to vote at a general
meeting of the Company or to a dividend. On a winding-up the
holders of the deferred shares are only entitled to the paid up
value of the shares after the repayment of the capital paid on the
ordinary shares and GBP5,000,000 on each ordinary share.
The deferred shares of 4p each have no rights to vote or to
participate in dividends and carry limited rights on return of
capital.
Deferred shares of GBP0.009 issued during the year:
Number of Nominal
shares value
GBP
At 30 June 2014 - -
Conversion of ordinary
shares into deferred
shares following the
settlement agreement
on 18 February 2015 27,199,307 244,794
Deferred shares issued
arising from
Consolidation and subdivision
of shares on 28 May 2015 1,319,654,510 11,876,890
At 30 June 2015 1,346,853,817 12,121,684
-------------- -----------
18. SHARE CAPITAL AND SHARE PREMIUM (continued)
Shares issued during the year
Number of Nominal value Share Premium
shares
GBP GBP
At 30 June
2014 1,272,705,316 12,727,053 20,462,101
Ordinary shares
issued during
the year 71,428,570 714,286 285,714
Share issue
costs - - (50,000)
Conversion
of ordinary
shares into
deferred shares
following the
settlement
agreement on
18 February
2015 (24,479,376) (244,794) -
-------------- -------------- --------------
At 28 May 2015 1,319,654,510 13,196,545 20,697,815
-------------- -------------- --------------
Consolidation
and subdivision
of shares on
28 May 2015
(see note above) 131,965,451 1,319,654 20,697,815
-------------- -------------- --------------
At 30 June
2015 131,965,451 1,319,654 20,697,815
Ordinary shares
issued during
the year 41,866,276 418,663 1,141,061
Share issue
costs - - (78,923)
At 30 June
2016 173,831,727 1,738,317 21,759,953
-------------- -------------- --------------
Shares Issued Number of Shares Nominal Value Share Premium
8 July 2014 at GBP0.01 each 35,714,285 357,143 142,857
19 August 2014 at GBP0.01 each 35,714,285 357,143 142,857
At 28 May 2015 71,428,570 714,286 285,714
28 October 2015 at GBP0.01 each 18,750,000 187,500 562,500
28 February 2016 at GBP0.01 each 13,817,453 138,175 276,349
22 April 2016 at GBP0.01 each 9,298,823 92,988 302,212
At 30 June 2016 41,866,276 418,663 1,141,061
19. SHARE BASED PAYMENTS
Equity settled share-based payments
The Company has a share option scheme for directors, employees
and consultants.
30 June 30 June
2015 or Cancelled Granted Exercised 2016 or
date of or during during date of
appointment Lapsed the year the year resignation
Name Price Note Number Number Number Number Number
----------------- ----- ---- ------------ --------- ----------- --------- ------------
SHARE OPTIONS
M A Borrelli 6p A 6,070,411 - 2,139,832 - 8,210,243
J N Hawke 6p A 2,903,240 - 1,023,397 - 3,926,637
Consultants 6p A 4,222,895 - 1,023,397 - 5,246,292
Total options 13,196,546 - 4,186,626 - 17,383,172
SHARE WARRANTS
Novum Securities 28p B 7,142,857 - - - 7,142,857
Others 7p C - - 41,866,276 - 41,866,276
------------ --------- ----------- --------- ------------
Total Share
Warrants 7,142,857 - 41,866,276 - 49,009,133
Total Share
Options and
Warrants 20,339,403 - 446,052,902 - 66,392,305
Note A - Exercisable at any time before 12 June 2020
Note B - Exercisable at any time before 7 July 2017
Note C - Exercisable in the 42 days following publication of
BMR's results for the year ending 30 June 2016.
Warrants
For each share issued during the year a warrant was issued to
subscribe for a further new ordinary share at 7p per share in the
42 days following publication of BMR's results for the year ending
30 June 2016.
Share Options
On the 31 May 2016, the Company granted 4,186,626 share options
of 1p to directors and senior executives at an exercise price of 6p
exercisable before 31 May 2021. 25% of the options vested
immediately and 3 further tranches of 25% will vest on the
achievement of various milestones in the future. As a result of
this the fair value of the share options was determined at the date
of the grant using the Black Scholes model, using the following
inputs:
Share price at the date of amendment 4.35p
Strike price 6p
Volatility 100%
Expected life 1,825 days
Risk free rate 0.5%
The resultant fair value of the share options was determined to
be GBP31,714 (2015: GBP52,786), which was recognised in the income
statement.
20. FINANCIAL INSTRUMENTS
Capital risk management
The Group manages its capital to ensure that entities in the
Group will be able to continue as a going concern, while maximising
the return to shareholders.
The capital resources of the Group comprises issued capital,
reserves and retained earnings as disclosed in the Consolidated
Statement of Changes in Equity. The Group's primary objective is to
provide a return to its equity shareholders through capital growth.
Going forward the Group will seek to maintain a yearly ratio that
balances risks and returns of an acceptable level and also to
maintain a sufficient funding base to the Group to meet its working
capital and strategic investment needs.
Categories of financial instruments
2016 2015
Group GBP GBP
Financial assets
Cash and cash equivalents 1,014,354 785,881
Other receivables classified
as loan
and receivables at amortised
cost 17,614 98,116
----------- ---------
1,031,968 883,997
=========== =========
Financial liabilities classified
as held at amortised cost
Trade and other payables 493,745 529,268
----------- ---------
493,745 529,268
=========== =========
Company
Financial assets
Cash and cash equivalents 954,260 714,281
Other receivables classified
as loan
and receivables at amortised
cost - 83,466
----------- ---------
954,260 797,747
=========== =========
Financial liabilities classified
as held at amortised cost
Trade and other payables 493,745 519,099
493,745 519,099
=========== =========
Fair value of financial assets and liabilities
Fair value is the amount at which a financial instrument could
be exchanged in an arm's length transaction between informed and
willing parties, other than a forced or liquidation sale and
excludes accrued interest. Where available, market values have been
used to determine fair values.
Fair value hierarchy
The Group uses the following hierarchy for determining and
disclosing the fair value of financial instruments which are
measured at fair value by valuation technique:
Level 1: Quoted (unadjusted) prices in active markets for
identical assets or liabilities
Level 2: Other techniques for which all inputs which have a
significant effect on the recorded fair value are observable,
either directly or indirectly;
Level 3: Techniques which use inputs that have a significant
effect on the recorded fair value that are not based on observable
market data
Management assessed that the fair values of cash and short-term
deposits, trade receivables, trade payables, bank overdrafts and
other current liabilities approximate their carrying amounts
largely due to the short-term maturities of these instruments.
The Directors' assessment of the E&E assets at fair value,
are disclosed in note 12.
Financial risk management objectives
Management provides services to the business, co-ordinates
access to domestic and international financial markets, monitors
and manages the financial risks relating to the operations of the
Group through internal risks reports which analyse exposures by
degree and magnitude of risks. These risks include foreign currency
risk, credit risk, liquidity risk and cash f low interest rate
risk. The Group does not enter into or trade financial instruments,
including derivative financial instruments, for speculative
purposes.
As the Group has no committed borrowings, the Group is not
exposed to any risks associated with fluctuations in interest rates
on loans. Fluctuation in interest rates applied to cash balances
held at the 2015 balance sheet date would have minimal impact on
the Group.
Foreign exchange risk and foreign currency risk management
Foreign currency exposures are monitored on a monthly basis.
Funds are transferred between the Sterling and US Dollar accounts
in order to minimise foreign exchange risk. The Group holds the
majority of its funds in Sterling.
The carrying amounts of the Group's and Company's foreign
currency denominated financial assets and monetary liabilities at
the reporting date are as follows:
Financial liabilities Financial assets
2016 2015 2016 2015
Group GBP GBP GBP GBP
Zambian Kwacha - 10,169 - 50,592
US Dollars - - 180,143 105,782
Company
Zambian Kwacha - - - -
US Dollars - - 102,434 105,782
Foreign currency sensitivity analysis
The Group is exposed primarily to movements in Sterling against
the US Dollar. Sensitivity analyses have been performed to indicate
how the profit or loss would have been affected by changes in the
exchange rate between the US Dollar and Sterling. The analysis is
based on a weakening and strengthening of Sterling by 10 per cent
against the US Dollar in which the Group has assets and liabilities
at the end of each respective period.
A movement of 10 per cent reflects a reasonably possible
sensitivity when compared to historical movements over a three to
five year timeframe. The sensitivity analysis includes only
outstanding foreign currency denominated monetary items and adjusts
their translation at the period end for a ten per cent change in
foreign currency rates.
A positive number below indicates an increase in profit where
the US Dollar strengthens ten per cent. against Sterling. For a ten
per cent. weakening of the US Dollar against Sterling, there would
be an equal and opposite impact on the profit, and the balance
below would be negative.
The following table details the Group's sensitivity to a ten per
cent. strengthening in the US Dollar and Zambian Kwacha against
Sterling
2016 2015
GBP GBP
(Decrease)/increase in income
statement and net assets (US $) (16,751) (9,117)
(Decrease)/increase in income
statement and net assets (Kwacha) - (3,635)
========== =========
Credit risk management
Credit risk refers to the risk that a counter party will default
on its contractual obligations resulting in financial loss to the
Group. The Group does not have any significant credit risk exposure
on trade receivables.
The Group makes allowances for impairment of receivables where
there is an identified event which, based on previous experience,
is evidence of a reduction in the recoverability of cash f
lows.
The credit risk on liquid funds (cash) is considered to be
limited because the counterparties are financial institutions with
high credit ratings assigned by international credit-rating
agencies.
The carrying amount of financial assets recorded in the
financial statements represents the Group's maximum exposure to
credit risk.
Liquidity risk management
Liquidity risk is the risk that the Group and Company will not
be able to meet its financial obligations as they fall due.
Management monitor forecasts of the Group's liquidity reserve,
comprising cash and cash equivalent, on the basis of expected cash
flow. At 30 June 2016, the Group held cash and cash equivalent of
GBP1,014,354 (2015: GBP785,881) and the directors assess the
liquidity risk as part of their going concern assessment (see note
3)
Liquidity risk management (continued)
The Group and Company aim to maintain appropriate cash balances
in order to meet its liabilities as they fall due.
Maturity analysis
Group Between Between Between
2016 On In 1 and 6 6 and 12 1 and
3
Total demand 1 month months months years
GBP GBP GBP GBP GBP GBP
Trade and
other payables 537,819 35,819 83,576 44,074 374,350 -
Company Between Between Between
2016 On In 1 and 6 6 and 12 1 and
3
Total demand 1 month months months years
GBP GBP GBP GBP GBP GBP
============= =============== ============= ============ ============ =============
Trade and
other payables 517,325 35,819 83,576 23,580 374,350 -
============= =============== ============= ============ ============ =============
Group
2015
Between Between Between
On In 1 and 6 6 and 12 1 and
Total demand 1 month months months 3
years
GBP GBP GBP GBP GBP GBP
Trade and
other payables 752,136 48,250 59,981 152,556 491,350 -
Company
2015 Between Between Between
On In 1 and 6 6 and 12 1 and
3
Total demand 1 month months months years
GBP GBP GBP GBP GBP GBP
Trade and
other payables 733,232 48,250 49,812 143,820 491,350 -
============= =============== ============= ============ ============ =============
21. OPERATING LEASE ARRANGEMENT
At the balance sheet date, the Group had outstanding commitments
for future minimum lease payments under non-cancellable operating
leases, which fall due as follows:
2016 2015
GBP GBP
Land and buildings
Within one year 5,250 64,500
Within 2-5 years - -
------ -------
Total 5,250 64,500
====== =======
Operating lease payments represent rentals payable by the
Company for its office properties.
22. RELATED PARTY TRANSACTIONS
Transactions between the Company and its subsidiaries, which are
related parties, have been eliminated on consolidation and are not
disclosed in this note.
Directors' transactions
Transactions with the Directors are shown in the Directors'
Report.
Remuneration of key management personnel
The key management personnel of the Group are considered to be
the Directors. Details of their remuneration are covered in note 8
and the Report of the Remuneration Committee within the Corporate
Governance section.
23. CONTINGENT LIABILITIES AND PROVISIONS
BMR is currently de-registered for VAT with effect from 1 August
2015 on the bases there was no effective consideration for any
services provided as no invoices had been raised by BMR and issued
to its subsidiaries and that management services were not
considered as supplies for VAT purposes. The Company has received
assessments and has provided for GBP374,500 (2015: GBP374,500) in
back VAT claimed including interest. . The Company has appealed and
submitted its case for continued registration after having sought
professional advice. The Directors do not expect any resulting
assessment to be materially different from this provision taking
into account consideration of any possible compliance penalty.
24. EVENTS AFTER THE REPORTING DATE
On 16 August 2016, the Company announced that it had entered
into a 60 day exclusive option agreement ("Exclusivity Agreement"),
with Bushbuck Resources Limited of Zambia ("Bushbuck"), to acquire
its Large Scale Prospecting Licence 19653-HQ-LPL ("Star Zinc") in
an area to the immediate north of Lusaka, Zambia, for a total cash
consideration of US$1 million plus taxes, conditional upon, inter
alia, satisfactory completion of due diligence and the granting of
Ministerial approval to the transfer of the licence. Agreement with
Bushbuck Under the terms of the Exclusivity Agreement, the Company
paid Bushbuck a non-refundable deposit of US$30,000 ("Deposit")
plus 16% VAT to undertake and complete the requisite due diligence
over the title to Star Zinc, which can be extended from 60 days to
120 days at Bushbuck's discretion, in order for the Ministerial
approval for the transfer of the Licence to be formalised. BMR is
required, within seven days of such approval, to make payment of
US$1 million, less the Deposit, plus 16% VAT and property transfer
tax of 10%. The consideration is expected to be satisfied from the
cash resources shortly to be made available under the terms of the
anticipated loan facility of in connection with the off-take
agreement announced on 8 August 2016.
On 23 September 2016, the Company announced that it had entered
into a project construction and trade finance facility for up to
US$5.2 million with African Compass International Limited ("ACI"),
a private South African group engaged in mining, energy and
agri-business. The Facility provides that ACI will make available
upon achievement of various milestones, through to commissioning of
the Kabwe plant and proof of saleable product (the "Final
Milestone"), up to US$4.2 million for use in connection with the
plant, and materials processed, at Kabwe. In addition, the Facility
provides for the drawdown of US$1.0 million to satisfy the
consideration payable to exercise the option agreement with
Bushbuck Resources Limited for the acquisition of its Star Zinc
Large Scale Prospecting Licence 19653-HQ-LPL in Zambia, as
announced on 16 August 2016. Drawdowns under the Facility, which is
interest free but involves an arrangement fee of US$0.1 million,
are to be re-paid within 12 months of the Final Milestone, by set
off against product revenues due from ACI, or, at EML's election,
in cash.
On 28 October 2016, the Company issued 9,253,731 ordinary shares
of 1p each at a price of 6.7p per share raising GBP620,000. In
addition for each share a warrant was issued to subscribe for a
further new ordinary share at 7p per share in the 42 days following
publication of BMR's results for the year ending 30 June 2016.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR BLBDDRSDBGLI
(END) Dow Jones Newswires
December 29, 2016 02:00 ET (07:00 GMT)
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