LONDON, March 15, 2016 /CNW/ - Horizonte Minerals
Plc, (AIM: HZM, TSX: HZM) ('Horizonte' or 'the Company') the
nickel development company focused in Brazil, announces its results for the year
ended 31 December 2015.
Overview
- Acquired Glencore's Araguaia Project ('GAP'), adjacent to
Horizonte's 100% owned Araguaia Nickel Project in Brazil – the combination creates one of the
highest grade nickel saprolite projects in Brazil
- Completed Phase 4 infill resource drilling programme at
Araguaia on time and within budget - objective to convert the first
7 to 8 years of the modelled mine life to the Measured Resource
category
- Completed collection of 160 tonnes representative ore bulk
sample trial for pilot programme
- Successful metallurgical pilot plant campaign confirmed
production of high grade commercial ferronickel from representative
Araguaia ore by the proven RKEF process
- All technical data collected during 2015 to be combined into an
updated Pre-Feasibility Study including the integration of the GAP
project with Araguaia – expected delivery in 2016
Horizonte CEO Jeremy Martin
commented, "2015 was another productive year for the Company,
despite a backdrop of highly challenging commodities prices.
The successful pilot plant programme proves the suitability
of Araguaia to generate ferronickel product using the proven RKEF
process, while the agreement with Glencore to acquire the adjacent
nickel project is a game changing transaction for Horizonte, and as
a result we have been able to create one of the leading nickel
projects in Brazil.
"For the first half of 2016 work will focus on the integration
of the Glencore Project with the Araguaia Project - this includes
updating the combined Mineral Resource Estimate with the phase 4
drilling completed in 2015, an updated process flow sheet with the
data and results from the pilot programme and updated capital
costings which will all flow into an updated Pre-Feasibility
Study. We are well positioned for the recovery in the mining
sector over the next few years, with a low cost strategy to de-risk
Araguaia to ensure we can deliver maximum value for
shareholders."
Chairman's Statement
Though 2015 was an extremely difficult year for the resource /
commodities sector, it has been a pivotal and game changing one for
Horizonte. In parallel with further de-risking of our flagship
Araguaia nickel project we secured the acquisition of the adjacent
Glencore Araguaia Project ('GAP') to create a Tier 1 project in
Brazil. The combined projects
create one of the largest nickel saprolite resources in the world,
at the upper end of the grade curve, located in a proven mining
region.
The cost of this acquisition in immediate terms was US$2.0 million payable in shares, with additional
milestone payments in the future (total consideration US$8 million) thus at a minimal dilution to
current shareholders. GAP is an advanced project, with a
significant amount of high quality work completed initially by
Falconbridge and subsequently
Xstrata / Glencore, with some 1,302 diamond drill holes for 55,334
metres. Total historic spend on the project is in the order of
US$75 million, demonstrating the very
significant discount of our acquisition to the money previously
expended. And this is key - such an acquisition would never have
been done in the bull market from 2009 to 2014. It was only
possible due to the market rout that we have today, with majors
wishing to sell off non-core assets. This was not a spur of the
moment decision either - Horizonte had been wanting to acquire GAP
since it was taken over by Xstrata as part of Falconbridge.
The real driver behind this transaction is that by creating a Tier
1 asset, it has the potential to supply a high grade core for the
first 10 years of mine life, which has a significant positive
effect on the overall enlarged project economics.
Another key milestone in 2015 was the completion of the pilot
plant campaign, the results of which were announced in
November. The key objectives of the integrated pilot plant
campaign were to confirm the smelting behaviour of the Araguaia
ore, the mode of operation of the dryer/agglomerator-kiln-electric
furnace, as well as the production of ferronickel and slag at the
temperatures and quality under conditions similar to a commercial
operation. We were delighted with the success of the pilot
campaign which confirmed that Araguaia will support the production
of high grade ferronickel by the proven RKEF process. In
addition the campaign generated a wealth of technical data to be
incorporated into the Feasibility Study that will include the
acquired Glencore project.
Key milestones in 2016 and significant pieces of news flow to
look out for will be an updated resource estimate for the combined
projects along with an updated Pre-Feasibility Study. You may
ask is it worth doing this work given the state of the resource
sector. The answer is a firm yes as we are in a cyclical industry
and it is our intention to have Araguaia established as the next
generation nickel project in terms of advanced de-risked Tier 1
assets globally. Why? Because demand for nickel will
continue to grow.
As McKinsey reported in November
2015 ("Is there hidden treasure in the mining industry"), a
look at mining fundamentals offers a less gloomy view. Demand
for metals continues to grow worldwide, albeit at a slower pace, as
does production. For almost all commodities, production is at
record levels. The slower rate of demand growth in China has let growing supply overtake demand
in a number of commodities, and this overcapacity has pulled prices
down, for now. The McKinsey analysis suggests that the steadily
deteriorating quality of accessible resources, combined with the
current cuts in new mine investment, will likely squeeze supply in
the face of slow, steady demand growth, causing prices to
rebound. This is supported by number of reports for example,
Capital Economics stated, "…we think that the pieces are falling
into place for a significant rally in the price of nickel in 2016.
The expected rebound in demand, at a time of falling supply, will
send the market into deficit. Once the buffer of stocks has been
exhausted, we forecast that the tighter market will lift prices to
US$17,000 by end-year." Time
will tell, but Horizonte is positioned for the long term which will
see us benefit from the forecast rise in nickel prices.
Investing counter cyclically, whether in M&A or organic
growth, is an often-stated mantra that is rarely executed. I am
delighted to say that this is exactly what Horizonte has done with
its acquisition of GAP.
The consolidation of the Araguaia district is a major
achievement for Horizonte. The enlarged project is ideally
placed in the commodity cycle to be advanced with the aim of
commencing production within the next five years when the supply /
demand fundamentals for nickel will be more favourable.
I would sincerely like to thank our shareholders for your
continued support. I will leave you with this fact – Horizonte is
valued at C$0.01 per pound of nickel
in the ground. The last major nickel transaction was the
acquisition of Canico Resources by Vale in 2006 for a project of
similar scale and grade at C$0.23 per
pound nickel in the ground at the feasibility study stage.
I would like to extend my appreciation to our ever hard working
management team led by Jeremy Martin
and also my fellow Board members - Owen
Bavinton, Alex Christopher of
Teck, Bill Fisher and Allan Walker whose belief in the quality of the
Araguaia asset that Horizonte owns is as enduring as mine.
David J Hall
Chairman
15 March 2016
The Annual Report for the year ended 31
December 2015, together with the Management's Discussion and
Analysis prepared as at 31 December
2015 and Notice of Meeting and Management Information
Circular with respect to the Annual General Meeting of Shareholders
to be held on 21 April 2016 will be
posted to shareholders and are available on the Company's website
at www.horizonteminerals.com and on Sedar www.Sedar.com
The Annual General Meeting of the Company will be held at
2:30pm on 21
April 2016 at finnCap 60 New Broad Street London EC2M
1JJ.
CEO Jeremy Martin
will give a corporate presentation at the AGM.
Financial Statements
Independent Auditor's Report
to the Members of Horizonte Minerals Plc
We have audited the Financial Statements of Horizonte Minerals
Plc for the year ended 31 December
2015 which comprise the Consolidated Statement of
Comprehensive Income, the Consolidated and Parent Company
Statements of Financial Position, the Consolidated and Parent
Company Statements of Cash Flows, the Consolidated and Parent
Company Statements of Changes in Equity and the related
notes. 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
Auditor
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 Group and
the Parent Company's circumstances and have been consistently
applied and adequately disclosed; the reasonableness of significant
accounting estimates made by 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
31 December 2015 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
and 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.
Opinion on other matters prescribed by the Companies Act
2006
In our opinion the information given in the Strategic
Report and 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 Parent Company 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.
Alistair Roberts
(Senior statutory auditor)
|
|
|
|
1 Westferry
Circus
|
For and on behalf
of PKF Littlejohn LLP
|
|
|
|
Canary
Wharf
|
Statutory
auditor
|
|
|
|
London E14
4HD
|
15 March
2016
|
|
|
|
|
Consolidated
Statement of Comprehensive Income
|
|
|
|
For the year ended 31
December 2015
|
|
|
|
|
|
|
|
|
|
Year
ended
|
Year ended
|
|
|
31
December
|
31
December
|
|
|
2015
|
2014
|
|
Notes
|
£
|
£
|
Continuing
operations
|
|
|
|
Revenue
|
|
—
|
—
|
Cost of
sales
|
|
—
|
—
|
Gross
profit
|
|
—
|
—
|
Administrative
expenses
|
|
(864,892)
|
(1,311,688)
|
Charge for share
options granted
|
|
(100,248)
|
(125,107)
|
Changes in fair value
of contingent consideration
|
19
|
138,515
|
415,702
|
Project and
intangible fixed asset impairment
|
6
|
—
|
(31,989)
|
Loss on foreign
exchange
|
|
(251,409)
|
(46,364)
|
Other losses –
impairment of available-for-sale assets
|
13
|
(253,006)
|
—
|
Operating
loss
|
6
|
(1,331,040)
|
(1,099,446)
|
Finance
income
|
8
|
14,918
|
31,413
|
Finance
costs
|
8
|
(338,430)
|
(173,903)
|
Loss before
taxation
|
|
(1,654,552)
|
(1,241,936)
|
Income tax
|
9
|
—
|
—
|
Loss for the year
from continuing operations attributable to owners of the
parent
|
|
(1,654,552)
|
(1,241,936)
|
Other
comprehensive income
|
|
|
|
Items that may be
reclassified subsequently to profit or loss
|
|
|
|
Changes in value of
available-for-sale financial assets
|
13
|
253,006
|
(22,729)
|
Currency translation
differences on translating foreign operations
|
18
|
(7,267,732)
|
(1,438,422)
|
Other
comprehensive income for the year, net of tax
|
|
(7,014,726)
|
(1,461,151)
|
Total
comprehensive income for the year attributable to owners of the
parent
|
|
(8,669,278)
|
(2,703,087)
|
Earnings per share
from continuing operations attributable to owners of the
parent
|
|
|
|
Basic (pence per
share)
|
21
|
(0.311)
|
(0.283)
|
Diluted (pence per
share)
|
21
|
(0.311)
|
(0.283)
|
Consolidated
Statement of Financial Position
|
|
|
|
|
Company number:
05676866
|
|
|
|
|
As at 31 December
2015
|
|
|
|
|
|
|
|
|
|
|
|
|
31
December
|
31
December
|
|
|
|
2015
|
2014
|
|
|
Notes
|
£
|
£
|
Assets
|
|
|
|
|
Non-current
assets
|
|
|
|
|
Intangible
assets
|
|
10
|
20,046,102
|
20,770,312
|
Property, plant &
equipment
|
|
11
|
11,888
|
54,390
|
Deferred tax
assets
|
|
9
|
3,590,675
|
5,065,976
|
|
|
|
23,648,665
|
25,890,678
|
Current
assets
|
|
|
|
|
Trade and other
receivables
|
|
12
|
40,912
|
22,709
|
Available-for-sale
financial assets
|
|
13
|
—
|
—
|
Cash and cash
equivalents
|
|
14
|
2,738,905
|
5,030,968
|
|
|
|
2,779,817
|
5,053,677
|
Total
assets
|
|
|
26,428,482
|
30,944,355
|
Equity and
liabilities
|
|
|
|
|
Equity
attributable to owners of the parent
|
|
|
|
|
Share
capital
|
|
15
|
6,712,044
|
4,924,271
|
Share
premium
|
|
16
|
31,252,708
|
31,095,370
|
Other
reserves
|
|
18
|
(7,336,327)
|
(321,601)
|
Retained
losses
|
|
|
(11,081,173)
|
(9,526,869)
|
Total
equity
|
|
|
19,547,252
|
26,171,171
|
Liabilities
|
|
|
|
|
Non-current
liabilities
|
|
|
|
|
Contingent
consideration
|
|
19
|
5,171,629
|
2,235,512
|
Deferred tax
liabilities
|
|
9
|
1,560,581
|
2,201,778
|
|
|
|
6,732,210
|
4,437,290
|
Current
liabilities
|
|
|
|
|
Trade and other
payables
|
|
19
|
149,020
|
335,894
|
|
|
|
149,020
|
335,894
|
Total
liabilities
|
|
|
6,881,230
|
4,773,184
|
Total equity and
liabilities
|
|
|
26,428,482
|
30,944,355
|
The financial statements were authorised for issue by the Board
of Directors on 15 March 2016 and
were signed on its behalf.
David J Hall
Chairman
Jeremy J Martin
Chief Executive Officer
Company Statement
of Financial Position
|
|
|
|
|
|
Company number:
05676866
|
|
|
|
|
|
As at 31 December
2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Notes
|
31
December 2015
£
|
31 December 2014
£
|
Assets
|
|
|
|
|
|
Non-current
assets
|
|
|
|
|
|
Property, plant &
equipment
|
|
|
11
|
1,254
|
2,291
|
Investment in
subsidiaries
|
|
|
26
|
44,698,874
|
37,768,225
|
|
|
|
|
44,700,128
|
37,770,516
|
Current
assets
|
|
|
|
|
|
Trade and other
receivables
|
|
|
12
|
18,739
|
13,818
|
Cash and cash
equivalents
|
|
|
14
|
2,568,266
|
4,208,984
|
|
|
|
|
2,587,005
|
4,222,802
|
Total
assets
|
|
|
|
47,287,133
|
41,993,318
|
Equity and
liabilities
|
|
|
|
|
|
Equity
attributable to equity shareholders
|
|
|
|
|
|
Share
capital
|
|
|
15
|
6,712,044
|
4,924,271
|
Share
premium
|
|
|
16
|
31,252,708
|
31,095,370
|
Merger
reserve
|
|
|
18
|
10,888,760
|
10,888,760
|
Retained
losses
|
|
|
|
(7,240,881)
|
(7,652,755)
|
Total
equity
|
|
|
|
41,612,631
|
39,255,646
|
Liabilities
|
|
|
|
|
|
Non-current
liabilities
|
|
|
|
|
|
Contingent
consideration
|
|
|
19
|
5,171,629
|
2,235,512
|
|
|
|
|
5,171,629
|
2,235,512
|
Current
liabilities
|
|
|
|
|
|
Trade and other
payables
|
|
|
19
|
502,873
|
502,160
|
|
|
|
|
502,873
|
502,160
|
Total
liabilities
|
|
|
|
5,674,502
|
2,737,672
|
Total equity and
liabilities
|
|
|
|
47,287,133
|
41,993,318
|
The financial statements were authorised for issue by the Board
of Directors on 15 March 2016 and
were signed on its behalf.
David J Hall
Chairman
Jeremy J Martin
Chief Executive Officer
Statements of
Changes in Equity
|
|
|
|
For the year ended 31
December 2015
|
|
|
|
|
|
|
|
|
|
Attributable to
owners of the parent
|
|
|
Share
|
Share
|
Retained
|
Other
|
|
|
capital
|
premium
|
losses
|
reserves
|
Total
|
Consolidated
|
£
|
£
|
£
|
£
|
£
|
As at 1 January
2014
|
4,011,395
|
26,997,998
|
(8,410,040)
|
1,139,550
|
23,738,903
|
Loss for the
year
|
—
|
—
|
(1,241,936)
|
—
|
(1,241,936)
|
Other comprehensive
income:
|
|
|
|
|
|
Changes in value of
available-for-sale financial assets
|
—
|
—
|
—
|
(22,729)
|
(22,729)
|
Currency translation
differences on translating foreign operations
|
—
|
—
|
—
|
(1,438,422)
|
(1,438,422)
|
Total comprehensive
income for the year
|
—
|
—
|
(1,241,936)
|
(1,461,151)
|
(2,703,087)
|
Issue of ordinary
shares
|
912,876
|
4,564,389
|
—
|
—
|
5,477,265
|
Issue
costs
|
—
|
(467,017)
|
—
|
—
|
(467,017)
|
Share-based
payments
|
—
|
—
|
125,107
|
—
|
125,107
|
Total transactions
with owners, recognised directly in equity
|
912,876
|
4,097,372
|
125,107
|
—
|
5,135,355
|
As at 31 December
2014
|
4,924,271
|
31,095,370
|
(9,526,869)
|
(321,601)
|
26,171,171
|
Loss for the
year
|
—
|
—
|
(1,654,552)
|
—
|
(1,654,552)
|
Other comprehensive
income:
|
|
|
|
|
|
Changes in value of
available-for-sale financial assets
|
—
|
—
|
—
|
253,006
|
253,006
|
Currency translation
differences on translating foreign operations
|
—
|
—
|
—
|
(7,267,732)
|
(7,267,732)
|
Total comprehensive
income for the year
|
—
|
—
|
(1,654,552)
|
(7,014,726)
|
(8,669,278)
|
Issue of ordinary
shares
|
1,787,773
|
200,300
|
—
|
—
|
1,988,073
|
Issue
costs
|
—
|
(42,962)
|
—
|
—
|
(42,962)
|
Share-based
payments
|
—
|
—
|
100,248
|
—
|
100,248
|
Total transactions
with owners, recognised directly in equity
|
1,787,773
|
157,338
|
100,248
|
—
|
2,045,359
|
As at 31 December
2015
|
6,712,044
|
31,252,708
|
(11,081,173)
|
(7,336,327)
|
19,547,252
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Attributable to
equity shareholders
|
|
|
Share
|
Share
|
Retained
|
Merger
|
|
|
capital
|
premium
|
losses
|
reserves
|
Total
|
Company
|
£
|
£
|
£
|
£
|
£
|
As at 1 January
2014
|
4,011,395
|
26,997,998
|
(7,551,817)
|
10,888,760
|
34,346,336
|
Loss for the
year
|
—
|
—
|
(226,045)
|
—
|
(226,045)
|
Total comprehensive
income for the year
|
—
|
—
|
(226,045)
|
—
|
(226,045)
|
Issue of ordinary
shares
|
912,876
|
4,564,389
|
—
|
—
|
5,477,265
|
Issue
costs
|
—
|
(467,017)
|
—
|
—
|
(467,017)
|
Share-based
payments
|
—
|
—
|
125,107
|
—
|
125,107
|
Total transactions
with owners, recognised directly in equity
|
912,876
|
4,097,372
|
125,107
|
—
|
5,135,355
|
As at 31 December
2014
|
4,924,271
|
31,095,370
|
(7,652,755)
|
10,888,760
|
39,255,646
|
Profit for the
year
|
—
|
—
|
311,626
|
—
|
311,626
|
Total comprehensive
income for the year
|
—
|
—
|
311,626
|
—
|
311,626
|
Issue of ordinary
shares
|
1,787,773
|
200,300
|
—
|
—
|
1,988,073
|
Issue
costs
|
—
|
(42,962)
|
—
|
—
|
(42,962)
|
Share-based
payments
|
—
|
—
|
100,248
|
—
|
100,248
|
Total transactions
with owners, recognised directly in equity
|
1,787,773
|
157,338
|
100,248
|
—
|
1,945,111
|
As at 31 December
2015
|
6,712,044
|
31,252,708
|
(7,240,881)
|
10,888,760
|
41,612,631
|
Consolidated
Statement of Cash Flows
|
|
|
|
|
For the year ended 31
December 2015
|
|
|
|
|
|
|
|
|
|
|
|
|
31
December
|
31
December
|
|
|
|
2015
|
2014
|
|
|
Notes
|
£
|
£
|
Cash flows from
operating activities
|
|
|
|
|
Loss before
taxation
|
|
|
(1,654,552)
|
(1,241,936)
|
Finance
income
|
|
|
(14,918)
|
(31,413)
|
Finance
costs
|
|
|
338,430
|
173,903
|
Impairment of
Peruvian reserves
|
|
|
17,200
|
-
|
Impairment of
available-for-sale financial assets
|
|
|
253,006
|
-
|
Charge for share
options granted
|
|
|
100,248
|
125,107
|
Impairment of
intangible assets
|
|
|
-
|
31,989
|
Gain on sale of
property, plant and equipment
|
|
|
(24,453)
|
-
|
Exchange
differences
|
|
|
251,409
|
46,364
|
Change in fair value
of contingent consideration
|
|
|
(138,515)
|
(415,702)
|
Depreciation
|
|
|
1,419
|
3,666
|
Operating loss
before changes in working capital
|
|
|
(870,726)
|
(1,308,022)
|
(Increase)/decrease
in trade and other receivables
|
|
|
(19,635)
|
39,417
|
(Decrease)/increase
in trade and other payables
|
|
|
(37,154)
|
55,558
|
Net cash used in
operating activities
|
|
|
(927,515)
|
(1,213,047)
|
Cash flows from
investing activities
|
|
|
|
|
Purchase of
intangible assets
|
|
|
(2,663,260)
|
(1,843,161)
|
Proceeds from sale of
property, plant and equipment
|
|
|
26,734
|
—
|
Interest
received
|
|
|
14,918
|
31,413
|
Net cash used in
investing activities
|
|
|
(2,621,608)
|
(1,811,748)
|
Cash flows from
financing activities
|
|
|
|
|
Proceeds from issue
of ordinary shares
|
|
|
1,550,000
|
5,477,265
|
Issue
costs
|
|
|
(42,962)
|
(467,017)
|
Net cash generated
from financing activities
|
|
|
1,507,038
|
5,010,248
|
Net
(decrease)/increase in cash and cash equivalents
|
|
|
(2,042,085)
|
1,985,453
|
Cash and cash
equivalents at beginning of year
|
|
|
5,030,968
|
3,091,880
|
Exchange loss on cash
and cash equivalents
|
|
|
(249,978)
|
(46,365)
|
Cash and cash
equivalents at end of the year
|
|
14
|
2,738,905
|
5,030,968
|
Major non-cash transactions
During the year ended 31 December
2015 additions to intangible exploration assets included
£27,296 (2014: £46,261) in relation to depreciation charges on
property, plant and equipment used for exploration activities.
Company Statement
of Cash Flows
|
|
|
|
For year ended 31
December 2015
|
|
|
|
|
|
|
|
|
|
31
December
|
31
December
|
|
|
2015
|
2014
|
|
Notes
|
£
|
£
|
Cash flows from
operating activities
|
|
|
|
Profit/(loss) before
taxation
|
|
311,626
|
(226,045)
|
Finance
income
|
|
(6,952)
|
(14,006)
|
Charge for share
options granted
|
|
100,248
|
125,107
|
Exchange
differences
|
|
(375,747)
|
(91,966)
|
Depreciation
|
|
1,037
|
2,846
|
Operating
profit/(loss) before changes in working capital
|
|
30,212
|
(204,064)
|
(Increase) in trade
and other receivables
|
|
(4,921)
|
(1,783)
|
Increase in trade and
other payables
|
|
713
|
26,929
|
Net cash flows
generated from/(used in) operating activities
|
|
26,004
|
(178,918)
|
Cash flows from
investing activities
|
|
|
|
Loans to subsidiary
undertakings
|
|
(3,180,712)
|
(3,392,720)
|
Interest
received
|
|
6,952
|
14,006
|
Net cash used in
investing activities
|
|
(3,173,760)
|
(3,378,714)
|
Cash flows from
financing activities
|
|
|
|
Proceeds from issue
of ordinary shares
|
|
1,550,000
|
5,477,265
|
Issue
costs
|
|
(42,962)
|
(467,017)
|
Net cash generated
from financing activities
|
|
1,507,038
|
5,010,248
|
Net
(decrease)/increase in cash and cash equivalents
|
|
(1,640,718)
|
1,452,616
|
Cash and cash
equivalents at beginning of year
|
|
4,208,984
|
2,756,368
|
Cash and cash
equivalents at end of the year
|
14
|
2,568,266
|
4,208,984
|
Major non-cash transactions
On 25 November 2015 a total of
23,777,273 shares were issued at £0.0184 per share in consideration
for the purchase of the Vale dos Sonhos mineral concession from
Xstrata Brasil Mineração Ltda. No cash consideration were
exchanged.
Notes to the Financial Statements
1 General information
The principal activity of Horizonte Minerals Plc ('the Company')
and its subsidiaries (together 'the Group') is the exploration and
development of base metals. The Company's shares are listed on the
AIM market of the London Stock Exchange and on the Toronto Stock
Exchange. The Company is incorporated and domiciled in the UK. The
address of its registered office is 26 Dover Street, London W1S 4LY.
2 Summary of significant accounting policies
The principal accounting policies applied in the preparation of
these Financial Statements are set out below. These policies have
been consistently applied to all the years presented.
2.1 Basis of preparation
These Financial Statements have been prepared in accordance with
International Financial Reporting Standards (IFRSs) and IFRS
interpretations Committee (IFRS IC) interpretations as adopted by
the European Union (EU) and those parts of the Companies Act 2006
applicable to companies reporting under IFRS. The Financial
Statements have been prepared under the historical cost convention
as modified by the revaluation of available-for-sale financial
assets and certain subsidiaries' assets and liabilities to fair
value for consolidation purposes.
The preparation of financial statements in conformity with IFRS
requires the use of certain critical accounting estimates. It also
requires management to exercise its judgement in the process of
applying the Group's Accounting Policies. The areas involving a
higher degree of judgement or complexity, or areas where
assumptions and estimates are significant to the Financial
Statements, are disclosed in Note 4.
2.2 Changes in accounting policy and disclosures
a) New and amended standards adopted by the Group
There are no IFRSs or IFRIC interpretations that were effective
for the first time for the financial year beginning 1 January 2015 that have had a material impact on
the Group or Company.
b) New and amended standards, and interpretations issued but
not yet effective for the financial year beginning 1 January 2015 and not early adopted
The standards and interpretations that are issued, but not yet
effective, up to the date of issuance of the financial statements
are listed below. The Group intends to adopt these standards, if
applicable, when they become effective. Unless stated below,
there are no IFRSs or IFRIC interpretations that are not yet
effective that would be expected to have a material impact on the
Group.
Standard
|
|
Effective Date
|
IAS 1
(Amendments)
|
Presentation of
Financial Statements: Disclosure Initiative
|
1
January 2016
|
IAS 7
(Amendments)
|
Disclosure
Initiative
|
*1
January 2017
|
IAS 12
(Amendments)
|
Recognition of
Deferred
Tax
|
*1
January 2017
|
IAS 16
(Amendments)
|
Clarification of
Acceptable Methods of
Depreciation
|
1
January 2016
|
IAS 19
(Amendments)
|
Defined Benefit
Plans: Employee
Contributions
|
1 February
2015
|
IAS 27
(Amendments)
|
Separate Financial
Statements
|
1
January 2016
|
IAS 38
(Amendments)
|
Clarification of
Acceptable Methods of
Amortisation
|
1
January 2016
|
IFRS
9
|
Financial
Instruments
|
*1
January 2018
|
IFRS 11
(Amendments)
|
Joint Arrangements:
Accounting for Acquisitions
of
|
1 January 2016
|
|
Interests in Joint
Operations
|
|
IFRS
15
|
Revenue from
Contracts with
Customers
|
*1
January 2018
|
IFRS
16
|
Leases
|
*1 January 2019
|
Annual
Improvements
|
2010 – 2012
Cycle
|
1
February 2015
|
Annual
Improvements
|
2012 – 2014
Cycle
|
1 January
2016
|
*Subject to EU
endorsement
|
2.3 Basis of consolidation
Horizonte Minerals Plc was incorporated on 16 January 2006. On 23
March 2006 Horizonte Minerals Plc acquired the entire issued
share capital of Horizonte Exploration Limited (HEL) by way of a
share for share exchange. The transaction was treated as a group
reconstruction and was accounted for using the merger accounting
method as the entities were under common control before and after
the acquisition.
Subsidiaries are entities controlled by the Group. 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.
Specifically, the Group controls an investee if, and only if, the
Group has:
- Power over the investee (i.e. existing rights that give it the
current ability to direct the relevant activities of the
investee).
- Exposure, or rights, to variable returns from its involvement
with the investee.
- The ability to use its power over the investee to affect its
returns.
The Group considers all relevant facts and circumstances in
assessing whether it has power over an investee, including:
- The contractual arrangement with the other vote holders of the
investee.
- Rights arising from other contractual arrangements.
- The Group's voting rights and potential voting rights.
Consolidation of a subsidiary begins when the Group obtains
control over the subsidiary and ceases when the Group loses control
of the subsidiary. Assets, liabilities, income and expenses of a
subsidiary acquired or disposed of during the year are included in
the consolidated financial statements from the date the Group gains
control until the date the Group ceases to control the
subsidiary.
Other than for the acquisition of HEL as noted above, the Group
uses the acquisition method of accounting to account for business
combinations. The consideration transferred for the acquisition of
a subsidiary is the fair value of the assets transferred, the
liabilities incurred and the equity interests issued by the Group.
The consideration transferred includes the fair value of any asset
or liability resulting from a contingent consideration arrangement.
Identifiable assets acquired and liabilities and contingent
liabilities assumed in a business combination are measured
initially at their fair values at the acquisition date.
Acquisition-related costs are expensed as incurred unless they
result from the issuance of shares, in which case they are offset
against the premium on those shares within equity.
If an acquisition is achieved in stages, the acquisition date
carrying value of the acquirer's previously held equity interest in
the acquiree is remeasured to fair value at the acquisition date
through profit or loss.
Any contingent consideration to be transferred by the Group is
recognised at fair value at the acquisition date. Subsequent
changes to the fair value of the contingent consideration that is
deemed to be an asset or a liability is recognised in accordance
with IAS 39 either in profit or loss or as a change in other
comprehensive income. The unwinding of the discount on contingent
consideration liabilities is recognised as a finance charge within
profit or loss. Contingent consideration that is classified as
equity is not remeasured, and its subsequent settlement is
accounted for within equity.
The excess of the consideration transferred and the acquisition
date fair value of any previous equity interest in the acquiree
over the fair value of the Group's share of the identifiable net
assets acquired is recorded as goodwill. If this is less than the
fair value of the net assets of the subsidiary acquired in the case
of a bargain purchase, the difference is recognised directly in
profit or loss.
Inter-company transactions, balances and unrealised gains on
transactions between Group companies are eliminated. Accounting
policies of subsidiaries have been changed where necessary to
ensure consistency with policies adopted by the Group.
Investments in subsidiaries are accounted for at cost less
impairment.
The following 100% owned subsidiaries have been included within
the consolidated Financial Statements:
Subsidiary
undertaking
|
Parent
company
|
Country of
incorporation
|
|
Nature of
business
|
Horizonte Exploration
Ltd
|
Horizonte Minerals
Plc
|
England
|
|
Mineral
Exploration
|
Horizonte Minerals
(IOM) Ltd
|
Horizonte Exploration
Ltd
|
Isle of
Man
|
|
Holding
company
|
HM Brazil (IOM)
Ltd
|
Horizonte Minerals
(IOM) Ltd
|
Isle of
Man
|
|
Holding
company
|
Cluny (IOM)
Ltd
|
Horizonte Minerals
(IOM) Ltd
|
Isle of
Man
|
|
Holding
company
|
Champol (IOM)
ltd
|
Horizonte Minerals
(IOM) Ltd
|
Isle of
Man
|
|
Holding
company
|
Horizonte Nickel
(IOM) Ltd
|
Horizonte Minerals
(IOM) Ltd
|
Isle of
Man
|
|
Holding
company
|
HM do Brasil
Ltda
|
HM Brazil (IOM)
Ltd
|
Brazil
|
|
Mineral
Exploration
|
Araguaia Niquel
Mineração Ltda
|
Horizonte Nickel
(IOM) Ltd
|
Brazil
|
|
Mineral
Exploration
|
Lontra
Empreendimentos e
|
Araguaia Niquel
Mineração Ltda/
|
|
|
|
Participações
Ltda
|
Horizonte Nickel
(IOM) Ltd
|
Brazil
|
|
Mineral
Exploration
|
Typhon Brasil
Mineração Ltda
|
Cluny (IOM)
Ltd
|
Brazil
|
|
Mineral
Exploration
|
Trias Brasil
Mineração Ltda
|
Champol (IOM)
Ltd
|
Brazil
|
|
Mineral
Exploration
|
2.4 Going concern
The Group's business activities together with the factors likely
to affect its future development, performance and position are set
out in the Chairman's Statement on pages 4 and 5; in addition note
3 to the Financial Statements includes the Group's objectives,
policies and processes for managing its capital; its financial risk
management objectives; details of its financial instruments and its
exposure to credit and liquidity risk.
The Financial Statements have been prepared on a going concern
basis. Although the Group's assets are not generating revenues and
an operating loss has been reported, the Directors consider that
the Group has sufficient funds to undertake its operating
activities for a period of at least the next 12 months including
any additional payments required in relation to its current
exploration projects. The Group has cash reserves which are
considered sufficient by the Directors to fund the Group's
committed expenditure both operationally and on its exploration
projects for the foreseeable future. However, as additional
projects are identified and the Araguaia project moves towards
production, additional funding will be required.
As a result of considerations noted above, the Directors have a
reasonable expectation that the Group and Company have adequate
resources to continue in operational existence for the foreseeable
future. Thus they continue to adopt the going concern basis of
accounting in preparing these Financial Statements.
2.5 Intangible Assets
(a) Goodwill
Goodwill represents the excess of the cost of an acquisition
over the fair value of the Group's share of the net identifiable
assets, liabilities and contingent liabilities of the acquired
subsidiary at the date of acquisition. Goodwill arising on the
acquisition of subsidiaries is included in 'intangible assets'.
Goodwill is tested annually for impairment and carried at cost less
accumulated impairment losses. Impairment losses on goodwill are
not reversed. Gains and losses on the disposal of an entity include
the carrying amount of goodwill relating to the entity sold.
Goodwill is allocated to cash generating units for the purpose
of impairment testing. The allocation is made to those
cash-generating units or groups of cash-generating units that are
expected to benefit from the business combination in which the
goodwill arose, identified according to operating segment.
(b) Exploration and evaluation assets
The Group recognises expenditure as exploration licenses or
exploration and evaluation assets when it determines that those
assets will be successful in finding specific mineral resources.
Expenditure included in the initial measurement of exploration and
evaluation assets and which are classified as intangible assets
relate to the acquisition of rights to explore, topographical,
geological, geochemical and geophysical studies, exploratory
drilling, trenching, sampling and activities to evaluate the
technical feasibility and commercial viability of extracting a
mineral resource. Capitalisation of pre-production expenditure
ceases when the mining property is capable of commercial
production.
Exploration and evaluation assets arising on business
combinations are included at their acquisition-date fair value in
accordance with IFRS 3 (revised) 'Business combinations'. Other
exploration and evaluation assets and all subsequent expenditure on
assets acquired as part of a business combination are recorded and
held at cost.
Exploration and evaluation assets are assessed for impairment
when facts and circumstances suggest that the carrying amount of an
asset may exceed its recoverable amount. The assessment is carried
out by allocating exploration and evaluation assets to cash
generating units, which are based on specific projects or
geographical areas.
Whenever the exploration for and evaluation of mineral resources
in cash generating units does not lead to the discovery of
commercially viable quantities of mineral resources or the Group
has decided to discontinue such activities of that unit, the
associated expenditures are written off to profit or loss.
2.6 Property, plant and equipment
All property, plant and equipment is stated at historic cost
less accumulated depreciation. Historic cost includes expenditure
that is directly attributable to the acquisition of the items.
Subsequent costs are included in the asset's carrying amount or
recognised as a separate asset, as appropriate, only when it is
probable that future economic benefits associated with the item
will flow to the Group and the cost of the item can be measured
reliably. All repairs and maintenance costs are charged to profit
or loss during the financial period in which they are incurred.
Depreciation is charged on a straight-line basis so as to write
off the cost of assets, over their estimated useful lives, using
the straight-line method, on the following bases:
Office
equipment
|
|
25%
|
Vehicles and other
field equipment
|
|
25% – 33%
|
The asset's residual values and useful lives are reviewed, and
adjusted if appropriate, at the end of each reporting
period.
An asset's carrying amount is written down immediately to its
recoverable amount if the assets carrying amount is greater than
its estimated recoverable amount.
Gains and losses on disposal are determined by comparing the
proceeds with the carrying amount and are recognised within 'Other
(losses)/gains' in the Statement of Comprehensive Income.
2.7 Impairment of non-financial assets
Assets that have an indefinite useful life, such as goodwill or
intangible exploration assets not ready to use, are not subject to
amortisation and are tested annually for impairment. Intangible
assets that are subject to amortisation and property, plant and
equipment are reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount may not be
recoverable. An impairment loss is recognised for the amount by
which the asset's carrying amount exceeds its recoverable amount.
The recoverable amount is the higher of an asset's fair value less
costs to sell and value in use. For the purposes of assessing
impairment, assets are grouped at the lowest levels for which there
are separately identifiable cash flows (cash generating units).
Non-financial assets other than goodwill that suffered an
impairment are reviewed for possible reversal of the impairment at
each reporting date.
2.8 Foreign currency translation
(a) Functional and presentation currency
Items included in the Financial Statements of the Group's
entities are measured using the currency of the primary economic
environment in which the entity operates (the 'functional
currency'). The functional currency of the UK and Isle of Man entities is Sterling and the
functional currency of the Brazilian entities is Brazilian Real.
The Consolidated Financial Statements are presented in Pounds
Sterling, rounded to the nearest pound, which is the Company's
functional and Group's presentation currency.
(b) Transactions and balances
Foreign currency transactions are translated into the functional
currency using the exchange rates prevailing at the dates of the
transactions or valuation where such items are re-measured. Foreign
exchange gains and losses resulting from the settlement of such
transactions and from the translation at year-end exchange rates of
monetary assets and liabilities denominated in foreign currencies
are recognised in profit or loss.
(c) Group companies
The results and financial position of all the Group's entities
(none of which has the currency of a hyperinflationary economy)
that have a functional currency different from the presentation
currency are translated into the presentation currency as
follows:
- assets and liabilities for each statement of financial position
presented are translated at the closing rate at the date of that
statement of financial position;
- each component of profit or loss is translated at average
exchange rates during the accounting period (unless this average is
not a reasonable approximation of the cumulative effect of the
rates prevailing on the transaction dates, in which case income and
expenses are translated at the dates of the transactions); and
- all resulting exchange differences are recognised in other
comprehensive income.
On consolidation, exchange differences arising from the
translation of the net investment in foreign entities, and of
monetary items receivable from foreign subsidiaries for which
settlement is neither planned nor likely to occur in the
foreseeable future are taken to other comprehensive income. When a
foreign operation is sold, such exchange differences are recognised
in profit or loss as part of the gain or loss on sale.
Goodwill and fair value adjustments arising on the acquisition
of a foreign entity are treated as assets and liabilities of the
foreign entity and translated at the closing rate.
2.9 Financial assets
The Group classifies its financial assets in the following
categories: loans and receivables; and available-for-sale financial
assets, as appropriate. The Group determines the classification of
its financial assets at initial recognition, depending on the
purpose for which the financial assets were acquired.
(a) Available-for-sale financial assets
Available-for-sale financial assets consist of equity
investments that are neither classified as held for trading nor
designated at fair value through profit or loss. After initial
recognition, available-for-sale financial assets are subsequently
measured at fair value with unrealised gains or losses recognised
as other comprehensive income in the available-for-sale reserve
until the investment is derecognised, at which time the cumulative
gain or loss is recognised in other operating income, or the
investment is determined to be impaired, when the cumulative loss
is reclassified from the available-for-sale reserve to the Income
Statement in finance costs. The fair value of financial instruments
that are traded in active markets at each reporting date is
determined by reference to quoted market prices.
(b) Loans and receivables
Loans and receivables are non-derivative financial assets with
fixed or determinable payments that are not quoted in an active
market. After initial measurement, such financial assets are
subsequently measured at amortised cost using the effective
interest rate method, less impairment. The Group's loans and
receivables comprise 'trade and other receivables' and 'cash and
cash equivalents' in the Statement of Financial Position.
Derecognition
A financial asset is derecognised when the rights to receive
cash flows from the asset have expired.
2.10 Cash and cash equivalents
In the Statement of Financial Position and Statement of Cash
Flows, cash and cash equivalents comprise cash at bank and in hand
and demand deposits with banks and other financial institutions,
that are readily convertible into known amounts of cash and which
are subject to an insignificant risk of changes in value.
2.11 Impairment of financial assets
(a) Assets carried at amortised cost
The Group assesses at the end of each reporting period whether
there is objective evidence that a financial asset or group of
financial assets is impaired. A financial asset or a group of
financial assets is impaired and impairment losses are incurred
only if there is objective evidence of impairment as a result of
one or more events that occurred after the initial recognition of
the asset (a 'loss event') and that loss event (or events)
has an impact on the estimated future cash flows of the financial
asset or group of financial assets that can be reliably
estimated.
For loans and receivables category, the amount of the loss is
measured as the difference between the asset's carrying amount and
the present value of estimated future cash flows (excluding future
credit losses that have not been incurred) discounted at the
financial asset's original effective interest rate. The carrying
amount of the asset is reduced and the amount of the loss is
recognised in the Consolidated Income Statement.
If, in a subsequent period, the amount of the impairment loss
decreases and the decrease can be related objectively to an event
occurring after the impairment was recognised (such as an
improvement in the debtor's credit rating), the reversal of the
previously recognised impairment loss is recognised in the
Consolidated Income Statement.
(b) Assets classified as available-for-sale
The Group assesses at the end of each reporting period whether
there is objective evidence that a financial asset or a group of
financial assets is impaired.
For equity investments, a significant or prolonged decline in
the fair value of the security below its cost is also evidence that
the assets are impaired. If any such evidence exists the cumulative
loss – measured as the difference between the acquisition cost and
the current fair value, less any impairment loss on that financial
asset previously recognised in profit or loss – is removed from
equity and recognised in profit or loss. Impairment losses
recognised in the Consolidated Income Statement on equity
instruments are not reversed through the Consolidated Income
Statement.
2.12 Taxation
The tax credit or expense for the period comprises current and
deferred tax. Tax is recognised in the Income Statement, except to
the extent that it relates to items recognised in other
comprehensive income or directly in equity. In this case, the tax
is also recognised in other comprehensive income or directly in
equity, respectively.
The charge for current tax is calculated on the basis of the tax
laws enacted or substantively enacted by the end of the reporting
period in the countries where the company and its subsidiaries
operate and generate taxable income. Management periodically
evaluates positions taken in tax returns with respect to situations
in which applicable tax regulation is subject to interpretation. It
establishes provisions where appropriate on the basis of amounts
expected to be paid to the tax authorities.
Deferred tax is accounted for using the liability method in
respect of temporary differences arising from differences between
the carrying amount of assets and liabilities in the financial
statements and the corresponding tax bases used in the computation
of taxable profit. However, deferred tax liabilities are not
recognised if they arise from the initial recognition of goodwill;
deferred tax is not accounted for if it arises from initial
recognition of an asset or liability in a transaction other than a
business combination that at the time of the transaction affects
neither accounting nor taxable profit or loss.
In principle, deferred tax liabilities are recognised for all
taxable temporary differences and deferred tax assets are
recognised to the extent that it is probable that taxable profits
will be available against which deductible temporary differences
can be utilised. Deferred tax assets are recognised on tax losses
carried forward to the extent that the realisation of the related
tax benefit through future taxable profits is probable.
Deferred tax liabilities are recognised for taxable temporary
differences arising on investments in subsidiaries and associates,
and interests in joint ventures, except where the Company is able
to control the reversal of the temporary difference and it is
probable that the temporary difference will not reverse in the
foreseeable future.
Deferred tax assets and liabilities are offset when there is a
legally enforceable right to offset current tax assets against
current tax liabilities and when the deferred tax assets and
liabilities relate to taxes levied by the same taxation authority
on either the same taxable entity or different taxable entities
where there is an intention to settle the balances on a net
basis.
Deferred tax is calculated at the tax rates (and laws) that have
been enacted or substantively enacted by the Statement of Financial
Position date and are expected to apply to the period when the
asset is realised or the liability is settled.
Deferred tax assets and liabilities are not discounted.
2.13 Share capital
Ordinary shares are classified as equity. Incremental costs
directly attributable to the issue of new ordinary shares or
options are shown in equity as a deduction, net of tax, from the
proceeds.
2.14 Trade payables
Trade payables are obligations to pay for goods or services that
have been acquired in the ordinary course of business from
suppliers. Accounts payable are classified as current liabilities
if payment is due within one year or less. If not, they are
presented as non-current liabilities.
Trade payables are initially recognised at fair value and
subsequently measured at amortised cost using the effective
interest method.
2.15 Contingent consideration
Provisions are recognised when the Group has a present legal or
constructive obligation as a result of past events; it is probable
that an outflow of resources will be required to settle the
obligation; and the amount has been reliably estimated.
Provisions are measured at the present value of the expenditures
expected to be required to settle the obligation using a pre-tax
rate that reflects current market assessments of the time value of
money and the risks specific to the obligation. The increase in the
provision due to passage of time is recognised as finance cost.
2.16 Operating leases
Leases of assets under which a significant amount of the risks
and benefits of ownership are effectively retained by the lessor
are classified as operating leases. Operating lease payments are
charged to the Income Statement on a straight-line basis over the
period of the respective leases.
2.17 Share-based payments and incentives
The Group operates equity-settled, share-based compensation
plans, under which the entity receives services from employees as
consideration for equity instruments (options) of the Group. The
fair value of employee services received in exchange for the grant
of share options are recognised as an expense. The total expense to
be apportioned over the vesting period is determined by reference
to the fair value of the options granted:
- including any market performance conditions;
- excluding the impact of any service and non-market performance
vesting conditions; and
- including the impact of any non-vesting conditions.
Non-market performance and service conditions are included in
assumptions about the number of options that are expected to vest.
The total expense is recognised over the vesting period, which is
the period over which all of the specified vesting conditions are
to be satisfied. At the end of each reporting period the Group
revises its estimate of the number of options that are expected to
vest.
It recognises the impact of the revision of original estimates,
if any, in profit or loss, with a corresponding adjustment to
equity.
When options are exercised, the Company issues new shares. The
proceeds received net of any directly attributable transaction
costs are credited to share capital (nominal value) and share
premium.
The fair value of goods or services received in exchange for
shares is recognised as an expense.
2.18 Segment reporting
Operating segments are reported in a manner consistent with the
internal reporting provided to the Chief Executive Officer, the
Company's chief operating decision-maker ("CODM").
2.19 Finance income
Interest income is recognised using the effective interest
method, taking into account the principal amounts outstanding and
the interest rates applicable.
2.20 Contingent Liabilities
Contingent liabilities are potential obligations that arise from
past events and whose existence will only be confirmed by the
occurrence of one or more uncertain future events that, however,
are beyond the control of the Group. Furthermore, present
obligations may constitute contingent liabilities if it is not
probable that an outflow of resources will be required to settle
the obligation, or a sufficiently reliable estimate of the amount
of the obligation cannot be made.
3 Financial risk management
3.1 Financial risk factors
The main financial risks to which the Group's activities are
exposed are liquidity and fluctuations on foreign currency. The
Group's overall risk management programme focusses on the
unpredictability of financial markets and seeks to minimise
potential adverse effects on the Group's financial performance.
Risk management is carried out by the Board of Directors under
policies approved at the quarterly Board meetings. The Board
frequently discusses principles for overall risk management
including policies for specific areas such as foreign exchange.
(a) Liquidity risks
In keeping with similar sized mineral exploration groups, the
Group's continued future operations depend on the ability to raise
sufficient working capital through the issue of equity share
capital. The Group monitors its cash and future funding
requirements through the use of cash flow forecasts.
All cash, with the exception of that required for immediate
working capital requirements, is held on short-term deposit.
(b) Foreign currency risks
The Group operates internationally and is exposed to foreign
exchange risk arising from various currency exposures, primarily
with respect to the Brazilian Real, US Dollar and the UK pound.
Foreign exchange risk arises from future commercial
transactions, recognised assets and liabilities and net investments
in foreign operations that are denominated in a foreign currency.
The Group holds a proportion of its cash in US Dollars and
Brazilian Reals to hedge its exposure to foreign currency
fluctuations and recognises the profits and losses resulting from
currency fluctuations as and when they arise. The volume of
transactions is not deemed sufficient to enter into forward
contracts.
At 31 December 2015, if the US
Dollar had weakened/strengthened by 20% against Pound Sterling and
Brazilian Real with all other variables held constant, post tax
loss for the year would have been approximately £12,820/£19,230
lower/higher mainly as a result of foreign exchange losses/gains on
translation of US Dollar denominated bank balances.
(c) Interest rate risk
As the Group has no borrowings, it is not exposed to interest
rate risk on financial liabilities. The Group's interest rate risk
arises from its cash held on short-term deposit for which the
Directors use a mixture of fixed and variable rate deposits. As a
result, fluctuations in interest rates are not expected to have a
significant impact on profit or loss or equity.
(d) Price risk
The Group is exposed to commodity price risk as a result of its
operations. However, given the size and stage of the Group's
operations, the costs of managing exposure to commodity price risk
exceed any potential benefits. The Directors will revisit the
appropriateness of this policy should the Group's operations change
in size or nature. The Group's listed equity securities are
susceptible to price risk arising from uncertainties about future
values of the securities.
(e) Credit risk
Credit risk arises from cash and cash equivalents as well as
exposure to joint venture partners including outstanding
receivables. The Group maintains cash and short-term deposits with
a variety of credit worthy financial institutions and considers the
credit ratings of these institutions before investing in order to
mitigate against the associated credit risk. Management does not
expect any losses from non-performance by joint venture
partners.
No debt finance has been utilised and if required this is
subject to pre-approval by the Board of Directors. The amount of
exposure to any individual counter party is subject to a limit,
which is assessed by the Board.
3.2 Capital risk management
The Group's objectives when managing capital are to safeguard
the Group's ability to continue as a going concern, in order to
provide returns for shareholders and to enable the Group to
continue its exploration and evaluation activities. The Group has
no debt at 31 December 2015 and
defines capital based on the total equity of the Group. The Group
monitors its level of cash resources available against future
planned exploration and evaluation activities and may issue new
shares in order to raise further funds from time to time.
As indicated above, the Group holds cash reserves on deposit at
several banks and in different currencies until they are required
and in order to match where possible with the corresponding
liabilities in that currency.
3.3 Fair value estimation
The carrying values of trade receivables and payables are
assumed to be approximate to their fair values, due to their
short-term nature. The fair value of contingent consideration is
estimated by discounting the future contractual cash flows at the
Group's current cost of capital of 7% based on the interest rate
available to the Group for a similar financial instrument.
4 Critical accounting estimates and judgements
The preparation of the Financial Statements in conformity with
IFRSs requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the end of the
reporting period and the reported amount of expenses during the
year. Actual results may vary from the estimates used to produce
these Financial Statements.
Estimates and judgements are continually evaluated and are based
on historical experience and other factors, including expectations
of future events that are believed to be reasonable under the
circumstances.
Significant items subject to such estimates and assumptions
include, but are not limited to:
4.1 Impairment of exploration and evaluation costs
Exploration and evaluation costs have a carrying value at
31 December 2015 of £19,854,074
(2014: £20,499,389). Management tests annually whether exploration
projects have future economic value in accordance with the
accounting policy stated in note 2.7. Each exploration project is
subject to an annual review by either a consultant or senior
company geologist to determine if the exploration results returned
to date warrant further exploration expenditure and have the
potential to result in an economic discovery. This review takes
into consideration long-term metal prices, anticipated resource
volumes and grades, permitting and infrastructure. In the event
that a project does not represent an economic exploration target
and results indicate there is no additional upside, a decision will
be made to discontinue exploration. The Directors have reviewed the
estimated value of each project prepared by management and do not
consider any impairment is necessary.
4.2 Estimated impairment of goodwill
Goodwill has a carrying value at 31
December 2015 of £192,028 (2014: £270,923). The Group tests
annually whether goodwill has suffered any impairment, in
accordance with the accounting policy stated in note 2.7.
Management has concluded that there is no impairment charge
necessary to the carrying value of goodwill. See also note 10 to
the Financial Statements.
4.3 Contingent consideration
Contingent consideration has a carrying value of £5,171,629, at
31 December 2015 (2014: £2,235,512).
Following the purchase of the Vale dos Sonhos mineral concession
from Xstrata Brasil Brasil Mineração Ltda in November 2015 (refer note 19) there are two
contingent consideration arrangements in place as at 31 December 2015:
- A contingent consideration arrangement that requires the Group
to pay the former owners of Teck Cominco Brasil S.A (subsequently
renamed Araguaia Niquel Mineração Ltda) 50% of the tax effect on
utilisation of the tax losses existing in Teck Cominco Brasil S.A
at the date of acquisition. Under the terms of the acquisition
agreement, tax losses that existed at the date of acquisition and
which are subsequently utilised in a period greater than 10 years
from that date are not subject to the contingent consideration
arrangement.
- A contingent consideration arrangement that requires the Group
to pay Xstrata Brasil Mineração Ltda US$1,000,000 after the date of issuance of a
feasibility study comprising the Araguaia project and the Vale dos
Sonhos ('VdS') and Serra do Tapa ('SdT') project areas ('GAP')
(together the 'Enlarged Project'), to be satisfied in shares in the
Company (at the 5 day volume weighted average price taken on the
tenth business day after the date of such issuance) or cash, at the
election of the Company; and remaining consideration of
US$5,000,000 to be paid in cash, as
at the date of first commercial production from any of the resource
areas within the Enlarged Project area.
The fair value of these potential considerations have been
determined using the operating and financial assumptions in the
cash flow model derived from the Pre-Feasibility Study published by
the Group in March 2014 in order to
calculate the ability to utilise the acquired tax losses, together
with the timing of their utilisation. The Group has used discounted
cash flow analysis to determine when it is anticipated that the tax
losses will be utilised and any potential contingent consideration
paid. These cash flows could be affected by upward or downward
movements in several factors to include commodity prices, operating
costs, capital expenditure, production levels, grades, recoveries
and interest rates. Commercial production is assumed to commence in
2019.
If the estimated discount rate of 7% used in determining the
fair value of contingent consideration payable to Teck Cominco
Brasil S.A. and Xstrata Brasil Mineraçâo Ltda was 2% higher, then
Management's estimates of the amount payable would decrease by
£181,098 and £184,870, respectively. If the discount rate was
2% lower, the amount payable would increase by £200,176 and
£202,995.
The carrying value of contingent consideration would not be
affected were the operating cash flows to vary by as much as 50%
from management's estimates.
4.4 Current and deferred taxation
The Group is subject to income taxes in numerous jurisdictions.
Judgment is required in determining the worldwide provision for
such taxes. The Group recognises liabilities for anticipated tax
issues based on estimates of whether additional taxes will be due.
Where the final tax outcome of these matters is different from the
amounts that were initially recorded, such differences will affect
the current and deferred income tax assets and liabilities in the
period in which such determination is made.
Deferred tax liabilities have been recognised on the fair value
gains in exploration assets arising on the acquisitions of Araguaia
Niquel Mineração Ltda (formerly Teck Cominco Brasil S.A) and Lontra
Empreendimentos e Participações Ltda. A deferred tax asset has been
recognised on acquisition of Araguaia Niquel Mineração Ltda for the
utilisation of the available tax losses acquired. Should the actual
final outcome regarding the utilisation of these losses be
different from management's estimations, the Group may need to
revise the carrying value of this asset.
4.5 Other areas
Other estimates include but are not limited to future cash flows
associated with assets, useful lives for depreciation and fair
value of financial instruments.
5 Segmental reporting
The Group operates principally in the UK and Brazil, with operations managed on a project
by project basis within each geographical area. Activities in the
UK are mainly administrative in nature whilst the activities in
Brazil relate to exploration and
evaluation work. The reports used by the chief operating
decision-maker are based on these geographical segments.
2015
|
UK
2015
£
|
Brazil
2015
£
|
Other
2015
£
|
Total
2015
£
|
Administrative
expenses
|
(662,305)
|
(189,234)
|
(13,353)
|
(864,892)
|
Loss on foreign
exchange
|
(114,838)
|
(136,571)
|
—
|
(251,409)
|
Loss from operations
per reportable segment
|
(777,143)
|
(325,805)
|
(13,353)
|
(1,116,301)
|
Inter segment
revenues
|
—
|
872,643
|
—
|
872,643
|
Depreciation
charges
|
(1,037)
|
(382)
|
—
|
(1,419)
|
Additions to
non-current assets
|
—
|
(645,313)
|
—
|
(645,313)
|
Reportable segment
assets
|
2,687,317
|
23,741,165
|
—
|
26,428,482
|
Reportable segment
liabilities
|
5,260,018
|
1,621,212
|
—
|
6,881,230
|
|
|
|
|
|
|
|
|
|
|
2014
|
UK
2014
£
|
Brazil
2014
£
|
Other
2014
£
|
Total
2014
£
|
Administrative
expenses
|
(848,454)
|
(456,832)
|
(6,402)
|
(1,311,688)
|
Profit/(loss) on
foreign exchange
|
39,089
|
(85,453)
|
—
|
(46,364)
|
Project and
intangible fixed asset impairment
|
—
|
(31,989)
|
—
|
(31,989)
|
Loss from operations
per reportable segment
|
(809,365)
|
(574,274)
|
(6,402)
|
(1,390,041)
|
Inter segment
revenues
|
—
|
677,635
|
—
|
677,635
|
Depreciation
charges
|
(2,846)
|
(820)
|
—
|
(3,666)
|
Additions to
non-current assets
|
—
|
(2,018,658)
|
—
|
(2,018,658)
|
Reportable segment
assets
|
4,349,901
|
26,594,454
|
—
|
30,944,355
|
Reportable segment
liabilities
|
2,348,686
|
2,424,498
|
—
|
4,773,184
|
Inter segment revenues are calculated and recorded in accordance
with the underlying intra group service agreements.
A reconciliation of adjusted loss from operations per reportable
segment to loss before tax is provided as follows:
|
|
2015
|
2014
|
|
|
£
|
£
|
Loss from operations
per reportable segment
|
|
(1,116,301)
|
(1,390,041)
|
Changes in fair value
of contingent consideration (refer note 19)
|
|
138,515
|
415,702
|
Charge for share
options granted
|
|
(100,248)
|
(125,107)
|
Impairment of
available-for-sale asset
|
|
(253,006)
|
—
|
Finance
income
|
|
14,918
|
31,413
|
Finance
costs
|
|
(338,430)
|
(173,903)
|
Loss for the year
from continuing operations
|
|
(1,654,552)
|
(1,241,936)
|
6 Expenses by nature
|
|
|
|
2015
|
2014
|
Group
|
|
|
|
£
|
£
|
Staff
costs
|
|
|
|
456,255
|
680,080
|
Indemnity for loss of
office
|
|
|
|
55,019
|
29,227
|
Exploration related
costs expensed (excluding staff costs)
|
|
|
|
43,945
|
166,866
|
Charge for share
options granted
|
|
|
|
100,248
|
125,107
|
Depreciation (note
11)
|
|
|
|
1,419
|
3,666
|
Loss on foreign
exchange
|
|
|
|
251,409
|
46,364
|
Change in fair value
of contingent consideration
|
|
|
|
(138,515)
|
(415,702)
|
Impairments of
intangible fixed assets
|
|
|
|
—
|
31,989
|
Impairment of
available-for-sale financial asset
|
|
|
|
253,006
|
—
|
Operating lease
charges
|
|
|
|
95,182
|
64,153
|
Profit on disposal of
property, plant and equipment
|
|
|
|
(24,453)
|
—
|
Other
expenses
|
|
|
|
237,525
|
367,696
|
Total operating
expenses
|
|
|
|
1,331,040
|
1,099,446
|
Project and fixed asset impairment costs in 2014 of £31,989
consist of the impairment charge on intangible assets attributable
to the Rio Maria project.
7 Auditor remuneration
During the year the Group (including its overseas subsidiaries)
obtained the following services from the Company's auditor and its
associates:
|
|
|
|
2015
|
|
2014
|
Group
|
|
|
|
£
|
|
£
|
Fees payable to the
Company's auditor and its associates
for the audit of the parent company and consolidated
financial statements
|
|
|
|
37,500
|
|
30,000
|
Fees payable to the
Company's auditor and its associates
for other services:
|
|
|
|
|
|
|
– Audit related
assurance services
|
|
|
|
7,000
|
|
4,525
|
–Tax compliance
services
|
|
|
|
1,900
|
|
2,380
|
8 Finance income and costs
|
|
|
|
2015
|
2014
|
Group
|
|
|
|
£
|
£
|
Finance
income:
|
|
|
|
|
|
– Interest income on
cash and short-term bank deposits
|
|
|
|
14,918
|
31,413
|
Finance
costs:
|
|
|
|
|
|
– Contingent
consideration: unwinding of discount
|
|
|
|
(338,430)
|
(173,903)
|
Net finance
costs
|
|
|
|
(323,512)
|
(142,490)
|
9 Income Tax
|
|
|
|
|
|
2015
|
|
2014
|
Group
|
|
|
|
|
|
£
|
|
£
|
Tax
charge:
|
|
|
|
|
|
|
|
|
Current tax charge
for the year
|
|
|
|
|
|
—
|
|
—
|
Deferred tax charge
for the year
|
|
|
|
|
|
—
|
|
—
|
Tax on loss for
the year
|
|
|
|
|
|
—
|
|
—
|
Reconciliation of current tax
|
|
2015
|
2014
|
Group
|
|
£
|
£
|
Loss before income
tax
|
|
(1,654,552)
|
(1,241,936)
|
Current tax at 32.52%
(2014: 23.1%)
|
|
(538,060)
|
(330,757)
|
Effects
of:
|
|
|
|
Expenses not deducted
for tax purposes
|
|
82,043
|
62,451
|
Utilisation of tax
losses brought forward
|
|
(150,480)
|
—
|
Tax losses carried
forward for which no deferred income
tax asset was recognised – UK
|
|
—
|
131,940
|
Tax losses carried
forward for which no deferred income
tax asset was recognised – Brazil
|
|
606,497
|
136,366
|
Total tax
|
|
—
|
—
|
No tax charge or credit arises on the loss for the year.
The weighted average applicable tax rate of 32.52% used is a
combination of the 21.5% effective standard rate of corporation tax
in the UK, 34% Brazilian corporation tax and 30% Peruvian
corporation tax. The weighted average applicable tax rate has
increased from 23.1% to 32.52% as a greater proportion of loss
before income tax arose in Brazil.
Deferred income tax
An analysis of deferred tax assets and liabilities is set out
below.
|
|
2015
|
2014
|
Group
|
|
£
|
£
|
Deferred tax
assets
|
|
|
|
– Deferred tax asset
to be recovered after more than 12 months
|
|
3,590,675
|
5,065,976
|
|
|
3,590,675
|
5,065,976
|
Deferred tax
liabilities
|
|
|
|
– Deferred tax
liability to be settled after more than 12 months
|
|
(1,560,581)
|
(2,201,778)
|
|
|
(1,560,581)
|
(2,201,778)
|
Deferred tax asset
(net)
|
|
2,030,094
|
2,864,198
|
The gross movement on the deferred income tax account is as
follows:
|
|
|
|
|
|
2015
|
2014
|
Group
|
|
|
|
|
|
£
|
£
|
At 1
January
|
|
|
|
|
|
2,864,198
|
3,038,142
|
Exchange
differences
|
|
|
|
|
|
(834,104)
|
(173,944)
|
At 31
December
|
|
|
|
|
|
2,030,094
|
2,864,198
|
The movement in deferred income tax assets and liabilities
during the year, without taking into consideration the offsetting
of balances within the same tax jurisdiction, is as follows:
Group
|
|
|
|
Deferred tax
liabilities
Fair value gains
£
|
Deferred tax
assets
Tax Losses
£
|
Total
£
|
At 1 January
2014
|
|
|
|
(2,335,492)
|
5,373,634
|
3,038,142
|
Exchange
differences
|
|
|
|
133,714
|
(307,658)
|
(173,944)
|
At 31 December
2014
|
|
|
|
(2,201,778)
|
5,065,976
|
2,864,198
|
Exchange
differences
|
|
|
|
641,197
|
(1,475,301)
|
(834,104)
|
At 31 December
2015
|
|
|
|
(1,560,581)
|
3,590,675
|
2,030,094
|
Deferred tax assets are recognised on tax losses carried forward
to the extent that the realisation of the related tax benefit
through future taxable profits is probable.
The Group has tax losses of approximately £17,363,000 (2014:
£18,190,000) in Brazil and excess
management charges of approximately £1,690,000 (2014: £2,590,000)
in the UK available to carry forward against future taxable
profits. With the exception of the deferred tax asset arising on
acquisition of Araguaia Niquel Mineração Ltda (formerly Teck
Cominco Brasil S.A.) in 2011, no deferred tax asset has been
recognised in respect of tax losses because of uncertainty over the
timing of future taxable profits against which the losses may be
offset.
10 Intangible assets
Intangible assets comprise exploration licenses, exploration and
evaluation costs and goodwill. Exploration and evaluation costs
comprise acquired and internally generated assets.
Group
|
|
Goodwill
£
|
Exploration
Licenses
£
|
Exploration and
evaluation costs
£
|
Total
£
|
Cost
|
|
|
|
|
|
At 1 January
2014
|
|
287,378
|
—
|
19,754,559
|
20,041,937
|
Additions
|
|
—
|
—
|
2,018,658
|
2,018,658
|
Impairments
|
|
—
|
—
|
(31,989)
|
(31,989)
|
Exchange rate
movements
|
|
(16,453)
|
—
|
(1,241,841)
|
(1,258,294)
|
At 31 December
2014
|
|
270,925
|
—
|
20,499,387
|
20,770,312
|
Additions
|
|
—
|
3,174,275
|
2,540,833
|
5,715,108
|
Exchange rate
movements
|
|
(78,897)
|
—
|
(6,360,421)
|
(6,439,318)
|
Net book amount at
31 December 2015
|
|
192,028
|
3,174,275
|
16,679,799
|
20,046,102
|
Impairment charges in 2014 of £31,989 were included in profit or
loss as the intangible assets attributable to the Rio Maria project
were written off.
(a) Exploration and evaluation assets
Impairment reviews for exploration and evaluation assets are
carried out either on a project by project basis or by geographical
area. The Group's exploration and evaluation projects are at
various stages of exploration and development and are therefore
subject to a variety of valuation techniques.
An operating segment-level summary of exploration licenses,
exploration and evaluation assets is presented below:
|
|
|
|
2015
|
2014
|
Group
|
|
|
|
£
|
£
|
Brazil –
Araguaia/Lontra/Vila Oito and Floresta
|
|
|
|
16,679,799
|
20,499,387
|
Brazil – Vale dos
Sonhos (refer note 28)
|
|
|
|
3,174,275
|
—
|
|
|
|
|
19,854,074
|
20,499,387
|
The adjacent Araguaia/Lontra/Vila Oito and Floresta exploration
sites ('the Araguaia Project'), together with the Vale dos Sonhos
deposit acquired from Xstrata Brasil Mineração Ltda comprise a
resource of a sufficient size and scale to allow the Company to
create a significant single nickel project. For this reason, at the
current stage of development, these two projects are viewed and
assessed for impairment by management as a single cash generating
unit.
The mineral concession for the Vale dos Sonhos deposit was
acquired from Xstrata Brasil Mineração Ltda, a subsidiary of
Glencore Canada Corporation, in November
2015.
In March 2014 a Canadian NI 43-101
compliant Pre-Feasibility Study ('PFS') was published by the
Company regarding the Araguaia Project. The financial results and
conclusions of the PFS clearly indicate the economic viability of
the Araguaia Project. The Directors undertook an assessment of
impairment through evaluating the results of the PFS, which is
still relevant and applicable throughout 2015, and judged that no
impairment was required with regards to the Araguaia Project.
Sensitivity to changes in assumptions
For the base case NPV8 of the Araguaia Project of
US$519 million as per the PFS to be
reduced to the book value of the Araguaia Project as at
31 December 2015, the discount rate
applied to the cash flow model would need to be increased from 8%
to 20%.
Other early stage exploration projects in Brazil are at an early stage of development
and no JORC/Canadian NI 43-101 or non-JORC/ Canadian NI 43-101
compliant resource estimates are available to enable value in use
calculations to be prepared. The Directors therefore undertook an
assessment of the following areas and circumstances which could
indicate impairment:
- The Group's right to explore in an area has expired, or will
expire in the near future without renewal.
- No further exploration or evaluation is planned or budgeted
for, whether by the Company directly or through a joint venture
agreement.
- A decision has been taken by the Board to discontinue
exploration and evaluation in an area due to the absence of a
commercial level of reserves.
- Sufficient data exists to indicate that the book value will not
be fully recovered from future development and production.
(b) Goodwill
Goodwill arose on the acquisition of Lontra Empreendimentos e
Participações Ltda in 2010. The Directors have determined the
recoverable amount of goodwill based on the same assumptions used
for the assessment of the Lontra exploration project detailed
above. As a result of this assessment, the Directors have concluded
that no impairment charge is necessary against the carrying value
of goodwill.
11 Property, plant and equipment
Group
|
|
|
Vehicles and
other field
equipment
£
|
Office
equipment
£
|
Total
£
|
Cost
|
|
|
|
|
|
At 1 January
2014
|
|
|
161,070
|
15,175
|
176,245
|
Foreign exchange
movements
|
|
|
(8,981)
|
(445)
|
(9,426)
|
At 31 December
2014
|
|
|
152,089
|
14,730
|
166,819
|
Disposals
|
|
|
(40,089)
|
—
|
(40,089)
|
Foreign exchange
movements
|
|
|
(37,353)
|
(2,134)
|
(39,487)
|
At 31 December
2015
|
|
|
74,647
|
12,596
|
87,243
|
Accumulated
depreciation
|
|
|
|
|
|
At 1 January
2014
|
|
|
63,761
|
5,033
|
68,794
|
Charge for the
year
|
|
|
46,452
|
3,475
|
49,927
|
Foreign exchange
movements
|
|
|
(6,096)
|
(196)
|
(6,292)
|
At 31 December
2014
|
|
|
104,117
|
8,312
|
112,429
|
Charge for the
year
|
|
|
26,245
|
2,469
|
28,714
|
Disposals
|
|
|
(26,916)
|
—
|
(26,916)
|
Foreign exchange
movements
|
|
|
(37,807)
|
(1,065)
|
(38,872)
|
At 31 December
2015
|
|
|
65,639
|
9,716
|
75,355
|
Net book amount as
at 31 December 2015
|
|
|
9,008
|
2,880
|
11,888
|
Net book
amount as at 31 December 2014
|
|
|
47,972
|
6,418
|
54,390
|
Depreciation charges of £27,295 (2014: £46,261) have been
capitalised and included within intangible exploration and
evaluation asset additions for the year. The remaining depreciation
expense for the year ended 31 December
2015 of £1,419 (2014: £3,666) has been charged in
'administrative expenses' under 'Depreciation.'
Vehicles and other field equipment include the following amounts
used to perform exploration activities:
|
|
|
|
|
|
2015
|
2014
|
|
|
|
|
|
|
£
|
£
|
Cost
|
|
|
|
|
|
74,647
|
152,089
|
Accumulated
depreciation
|
|
|
|
|
|
(65,639)
|
(104,117)
|
Net book
amount
|
|
|
|
|
|
9,008
|
47,972
|
Company
|
|
Field
equipment
£
|
Office
equipment
£
|
|
Total
£
|
Cost
|
|
|
|
|
|
At 1 January
2014
|
|
4,208
|
7,403
|
|
11,611
|
Additions
|
|
—
|
—
|
|
—
|
At 31 December
2014 and 2015
|
|
4,208
|
7,403
|
|
11,611
|
Accumulated
depreciation
|
|
|
|
|
|
At 1 January
2014
|
|
2,894
|
3,580
|
|
6,474
|
Charge for the
year
|
|
1,314
|
1,532
|
|
2,846
|
At 31 December
2014
|
|
4,208
|
5,112
|
|
9,320
|
Charge for the
year
|
|
—
|
1,037
|
|
1,037
|
At 31 December
2015
|
|
4,208
|
6,149
|
|
10,357
|
Net book amount as
at 31 December 2015
|
|
—
|
1,254
|
|
1,254
|
Net book amount as at
31 December 2014
|
|
—
|
2,291
|
|
2,291
|
12 Trade and other receivables
|
|
|
|
Group
|
Company
|
|
|
|
|
2015
|
2014
|
2015
|
2014
|
|
|
|
|
£
|
£
|
£
|
£
|
Other
receivables
|
|
|
|
40,912
|
22,709
|
18,739
|
13,818
|
Current
portion
|
|
|
|
40,912
|
22,709
|
18,739
|
13,818
|
Trade and other receivables are all due within one year. The
fair value of all receivables is the same as their carrying values
stated above.
The carrying amounts of the Group and Company's trade and other
receivables are denominated in the following currencies:
|
|
|
|
|
Group
|
Company
|
|
|
|
|
|
2015
|
2014
|
2015
|
2014
|
|
|
|
|
|
£
|
£
|
£
|
£
|
Brazilian
Real
|
|
|
|
|
22,173
|
4,922
|
—
|
—
|
UK Pound
|
|
|
|
|
18,739
|
17,787
|
18,739
|
13,818
|
|
|
|
|
|
40,912
|
22,709
|
18,739
|
13,818
|
As of 31 December 2015 the Group's
and Company's other receivables of £40,912 (2014: £22,709) were
fully performing.
The maximum exposure to credit risk at the reporting date is the
carrying value of each class of receivable mentioned above. The
Group and Company do not hold any collateral as security.
13 Available-for-sale financial assets
The Group had investments in equity shares as at 31 December 2015. Following assessment by the
Directors of the Company, these shares have been fully impairment
to £nil. The fair value of the investments is £nil as at
31 December 2014 and 2015.
14 Cash and cash equivalents
|
|
|
Group
|
Company
|
|
|
|
2015
|
2014
|
2015
|
2014
|
|
|
|
£
|
£
|
£
|
£
|
Cash at bank and on
hand
|
|
|
2,676,160
|
4,982,219
|
2,519,018
|
4,160,235
|
Short-term
deposits
|
|
|
62,745
|
48,749
|
49,248
|
48,749
|
|
|
|
2,738,905
|
5,030,968
|
2,568,266
|
4,208,984
|
The Group's cash at bank and short-term deposits are held with
institutions with the following credit ratings (Fitch):
|
|
|
|
|
|
Group
|
Company
|
|
|
|
|
|
|
2015
|
2014
|
2015
|
2014
|
|
|
|
|
|
|
£
|
£
|
£
|
£
|
A
|
|
|
|
|
|
2,616,981
|
4,280,358
|
2,519,018
|
4,160,235
|
BBB-
|
|
|
|
|
|
121,924
|
750,610
|
49,248
|
48,749
|
|
|
|
|
|
|
2,738,905
|
5,030,968
|
2,568,266
|
4,208,984
|
15 Share capital
|
|
2015
|
2015
|
2014
|
2014
|
Group and
Company
|
|
Number
|
£
|
Number
|
£
|
Issued and fully
paid
|
|
|
|
|
|
Ordinary shares of 1p
each
|
|
|
|
|
|
At 1
January
|
|
492,427,105
|
4,924,271
|
401,139,497
|
4,011,395
|
Issue of ordinary
shares
|
|
178,777,273
|
1,787,773
|
91,287,608
|
912,876
|
At 31
December
|
|
671,204,378
|
6,712,044
|
492,427,105
|
4,924,271
|
On 2 October 2015 a total of
112,500,000 shares were issued through a private placement at a
price of £0.01 per share to raise £1,125,000 before expenses.
On 9 October 2015 a total of
42,500,000 shares were issued through a private placement at a
price of £0.01 per share to raise £425,000 before expenses.
On 25 November 2015 a total of
23,777,273 shares were issued at £0.0184 per share in consideration
for the purchase of the Vale dos Sonhos mineral concession from
Xstrata Brasil Mineração Ltda.
16 Share premium
|
|
|
2015
|
2014
|
Group and
Company
|
|
|
£
|
£
|
At 1
January
|
|
|
31,095,370
|
26,997,998
|
Premium arising on
issue of ordinary shares
|
|
|
200,300
|
4,564,389
|
Issue
costs
|
|
|
(42,962)
|
(467,017)
|
At 31
December
|
|
|
31,252,708
|
31,095,370
|
17 Share-based payments
The Directors have discretion to grant options to the Group
employees to subscribe for Ordinary shares up to a maximum of 10%
of the Company's issued share capital. One third of options are
exercisable at each six months anniversary from the date of grant,
such that all options are exercisable 18 months after the date of
grant and all lapse on the tenth anniversary of the date of grant
or the holder ceasing to be an employee of the Group. Neither the
Company nor the Group has any legal or constructive obligation to
settle or repurchase the options in cash.
Movements on number of share options and their related exercise
price are as follows:
|
|
|
Number of
options
2015
£
|
Weighted
average
exercise
price
2015
£
|
Number of
options
2014
£
|
Weighted
average
exercise
price
2014
£
|
Outstanding at 1
January
|
|
|
38,300,000
|
0.119
|
25,860,000
|
0.148
|
Forfeited
|
|
|
(2,790,000)
|
0.151
|
(2,010,000)
|
0.151
|
Granted
|
|
|
13,250,000
|
0.04
|
14,450,000
|
0.073
|
Outstanding at 31
December
|
|
|
48,760,000
|
0.096
|
38,300,000
|
0.119
|
Exercisable at 31
December
|
|
|
30,693,333
|
0.124
|
23,850,000
|
0.148
|
The options outstanding at 31 December
2015 had a weighted average remaining contractual life of
7.45 years (2014: 7.53 years).
The fair value of the share options was determined using the
Black-Scholes valuation model.
The parameters used are detailed below.
Group and
Company
|
|
|
|
2015
options
|
2014
options
|
Date of grant or
reissue
|
|
|
|
10/06/2015
|
09/05/2014
|
Weighted average
share price
|
|
|
|
2.63
pence
|
6.42 pence
|
Weighted average
exercise price
|
|
|
|
4.00
pence
|
7.25 pence
|
Expiry
date
|
|
|
|
09/06/2025
|
09/05/2024
|
Options
granted
|
|
|
|
13,250,000
|
14,450,000
|
Volatility
|
|
|
|
17.3%
|
17.3%
|
Dividend
yield
|
|
|
|
Nil
|
Nil
|
Option
life
|
|
|
|
10 years
|
10 years
|
Annual risk free
interest rate
|
|
|
|
2.83%
|
2.83%
|
Forfeiture
discount
|
|
|
|
—
|
—
|
Marketability
discount
|
|
|
|
5%
|
5%
|
Total fair value of
options granted
|
|
|
|
£54,700
|
£256,786
|
The expected volatility is based on historical volatility for
the six months prior to the date of grant. The risk free rate of
return is based on zero yield government bonds for a term
consistent with the option life.
The range of option exercise prices is as follows:
Range of exercise
prices (£)
|
|
2015
Weighted
average
exercise
price
(£)
|
2015
Number of
shares
|
2015
Weighted
average
remaining
life
expected
(years)
|
2015
Weighted
average
remaining
life
contracted
(years)
|
2014
Weighted
average
exercise
price
(£)
|
2014
Number of
shares
|
2014
Weighted
average
remaining
life
expected
(years)
|
2014
Weighted
average
remaining
life
contracted
(years)
|
0–0.1
|
|
0.060
|
30,300,000
|
8.62
|
8.62
|
0.076
|
17,200,000
|
8.65
|
8.65
|
0.1–0.2
|
|
0.154
|
18,460,000
|
5.53
|
5.53
|
0.154
|
21,100,000
|
6.63
|
6.63
|
18 Other reserves
|
Available-for-
|
|
|
|
|
|
sale
|
Merger
|
Translation
|
Other
|
|
|
reserve
|
reserve
|
reserve
|
reserve
|
Total
|
Group
|
£
|
£
|
£
|
£
|
£
|
At 1 January
2014
|
(230,276)
|
10,888,760
|
(8,470,834)
|
(1,048,100)
|
1,139,550
|
Other comprehensive
income
|
(22,730)
|
—
|
—
|
—
|
(22,730)
|
Currency translation
differences
|
—
|
—
|
(1,438,421)
|
—
|
(1,438,421)
|
At 31 December
2014
|
(253,006)
|
10,888,760
|
(9,909,255)
|
(1,048,100)
|
(321,601)
|
Other comprehensive
income
|
253,006
|
—
|
—
|
—
|
253,006
|
Currency translation
differences
|
—
|
—
|
(7,267,732)
|
—
|
(7,267,732)
|
At 31 December
2015
|
—
|
10,888,760
|
(17,176,987)
|
(1,048,100)
|
(7,336,327)
|
Company
|
|
|
|
Merger
reserve
£
|
Total
£
|
At 1 January 2014 and
31 December 2014
|
|
|
|
10,888,760
|
10,888,760
|
At 1 January 2015
and 31 December 2015
|
|
|
|
10,888,760
|
10,888,760
|
The merger and other reserve as at 31
December 2015 arose on consolidation as a result of merger
accounting for the acquisition of the entire issued share capital
of Horizonte Exploration Limited during 2006 and represents the
difference between the value of the share capital and premium
issued for the acquisition and that of the acquired share capital
and premium of Horizonte Exploration Limited.
Currency translation differences relate to the translation of
Group entities that have a functional currency different from the
presentation currency (refer note 2.8c). Movements in the
translation reserve are linked to the changes in the value of the
Brazilian Real against Sterling: the intangible assets of the Group
are located in Brazil, and their
functional currency is the Brazilian Real, which decreased in value
against Sterling in both 2014 and 2015.
19 Trade and other payables
|
|
Group
|
Company
|
|
|
2015
|
2014
|
2015
|
2014
|
|
|
£
|
£
|
£
|
£
|
Non-current
|
|
|
|
|
|
Contingent
consideration payable to former owners
of Teck Cominco Brasil S.A.
|
|
2,364,751
|
2,235,512
|
2,364,751
|
2,235,512
|
Contingent
consideration payable to Xstrata Brasil
Mineração Ltda (refer note 27)
|
|
2,806,878
|
—
|
2,806,878
|
—
|
Total contingent
consideration
|
|
5,171,629
|
2,235,512
|
5,171,629
|
2,235,512
|
Current
|
|
|
|
|
|
Trade and other
payables
|
|
16,038
|
28,380
|
10,377
|
3,239
|
Amounts due to
related parties (refer note 22)
|
|
—
|
—
|
413,930
|
413,930
|
Social security and
other taxes
|
|
21,519
|
27,303
|
15,533
|
15,040
|
Accrued
expenses
|
|
111,463
|
280,211
|
63,033
|
69,951
|
|
|
149,020
|
335,894
|
502,873
|
502,160
|
Total trade and other
payables
|
|
5,320,649
|
2,571,406
|
5,674,502
|
2,737,672
|
Trade and other payables include amounts due of £65,748 (2014:
£204,066) in relation to exploration and evaluation activities.
Contingent Consideration payable to the former owners of Teck
Cominco Brasil S.A.
The fair value of the potential contingent consideration
arrangement with the former owners of Teck Cominco Brasil S.A. was
estimated at the acquisition date according to when future taxable
profits against which the tax losses may be utilised were
anticipated to arise. The fair value estimates were based on the
current rates of tax on profits in Brazil of 34%. A discount factor of 7.0% was
applied to the future dates at which the tax losses will be
utilised and consideration paid.
As at 31 December 2015, there was
a finance expense of £323,925 (2014: £173,903) recognised in
finance costs within the Statement of Comprehensive Income in
respect of the contingent consideration arrangement, as the
discount applied to the contingent consideration at the date of
acquisition was unwound.
The cash flow model used to estimate the contingent
consideration was adjusted, to take into account changed
assumptions in the timing of cash flows as derived from the
Pre-Feasibility Study as published by the Group in March 2014. The key assumptions underlying the
cash flow model are unchanged as at 31
December 2014, other than during 2015 the assumed date for
commencement of commercial production was revised from 2017 to
2019. The change in the fair value of contingent consideration
payable to the former owners of Teck Cominco Brasil S.A. generated
a credit to profit or loss of £194,686 for the year ended
31 December 2015 (2014: £415,072) due
to exchange rate changes in Management's assumptions and in the
functional currency in which the liability is payable.
Contingent Consideration payable to Xstrata Brasil Mineração
Ltda
The contingent consideration payable to Xstrata Brasil Mineração
Ltda comprises two elements: USD$330,000 due after the date of issuance of a
joint feasibility study for the combined Enlarged Project areas,
together with US$5,000,000
consideration as at the date of first commercial production from
any of the resource areas within the Enlarged Project area. The key
assumptions underlying the treatment of the contingent
consideration the US$5,000,000 are as
per those applied to the contingent consideration payable to the
former owners of Teck Cominco Brasil S.A.
As at 31 December 2015, there was
a finance expense of £14,505 (2014: £nil) recognised in finance
costs within the Statement of Comprehensive Income in respect of
the contingent consideration arrangement, as the discount applied
to the contingent consideration at the date of acquisition was
unwound.
20 Dividends
No dividend has been declared or paid by the Company during the
year ended 31 December 2015 (2014:
nil).
21 Earnings per share
(a) Basic
The basic earnings per share of 0.311p loss per share (2014 loss
per share: 0.283p) is calculated by dividing the loss attributable
to owners of the parent by the weighted average number of ordinary
shares in issue during the year.
|
|
|
2015
|
2014
|
Group
|
|
|
£
|
£
|
Loss attributable to
owners of the parent
|
|
|
(1,654,552)
|
(1,241,936)
|
Weighted average
number of ordinary shares in issue
|
|
|
531,868,151
|
439,259,597
|
(b) Diluted
The basic and diluted earnings per share for the years ended
31 December 2015 and 31 December 2014 are the same as the effect of
the exercise of share options would be anti-dilutive.
Details of share options that could potentially dilute earnings
per share in future periods are set out in note 17.
22 Related party transactions
The following transactions took place with subsidiaries in the
year:
A fee totalling £232,829 (2014: £202,045) was charged to HM do
Brazil Ltda and £639,814 (2014: £475,589) to Araguaia Niquel
Mineração Ltda by Horizonte Minerals Plc in respect of consultancy
services provided and funding costs.
Amounts totalling £4,919,360 (2014: £2,076,925) were lent to HM
Brazil (IOM) Ltd, HM do Brasil Ltda, Araguaia Niquel Mineraçao Ltda
and Typhon Brasil Mineração Ltda to finance exploration work during
2015, by Horizonte Minerals Plc. Interest is charged at an annual
rate of 4% on balances outstanding during the year.
Balances with subsidiaries at the year end were:
|
|
|
2015
|
2015
|
2014
|
2014
|
|
|
|
Assets
|
Liabilities
|
Assets
|
Liabilities
|
Company
|
|
|
£
|
£
|
£
|
£
|
HM do Brasil
Ltda
|
|
|
845,808
|
—
|
274,678
|
—
|
Minera El Aguila
SAC
|
|
|
—
|
—
|
3,848
|
—
|
HM Brazil (IOM)
Ltd
|
|
|
4,725,314
|
—
|
4,493,680
|
—
|
Horizonte Nickel
(IOM) Ltd
|
|
|
28,747,037
|
—
|
26,916,381
|
—
|
Araguaia Niquel
Mineração Ltda
|
|
|
4,605,395
|
—
|
3,478,592
|
—
|
Horizonte Minerals
(IOM) Ltd
|
|
|
253,004
|
—
|
253,004
|
—
|
Horizonte Exploration
Ltd
|
|
|
—
|
413,930
|
—
|
413,930
|
Typhon Brasil
Mineração Ltda
|
|
|
3,174,275
|
—
|
—
|
—
|
Total
|
|
|
42,350,833
|
413,930
|
35,420,183
|
413,930
|
All Group transactions were eliminated on consolidation.
On 2 October 2015 a total of
112,500,000 shares were issued through the first tranche of a
private placement at a price of £0.01 per share, to raise
£1,125,000 before expenses. As part of this private placement,
Henderson Global Investors subscribed for 45,000,000 shares
representing 40 percent of the first tranche of the private
placement. By reason of its existing shareholdings in the Company,
the participation of Henderson Global Investors in the private
placement of 2 October 2015
constituted a related party transaction under AIM Rule 13 of the
AIM Rules for Companies.
On 9 October 2015 a total of
42,500,000 shares were issued through the second and final tranche
of a private placement at a price of £0.01 per share, to raise
£425,000 before expenses. Mr Richard
Griffiths subscribed for 45,500,000 shares representing 100
percent of the second tranche of the private placement. By reason
of his existing shareholdings in the Company, the participation of
Mr Griffiths in the second tranche of the private placement of
9 October 2015 constituted a related
party transaction under AIM Rule 13 of the AIM Rules for
Companies.
On 31 July 2014 a total of
50,000,000 shares were issued through a public offering in
Canada, at a price of CAD 0.11 per share and a private placement was
closed for a total of 41,287,608 shares, at a price of £0.06 per
share, to raise £5,447,265 before expenses. As part of this private
placement, Teck Resources Limited subscribed for 18,115,942 shares
representing 43.9 percent of the private placement and Henderson
Global Investors subscribed for 8,333,333 shares, representing 20.2
percent of the private placement. By reason of their existing
shareholdings in the Company, the participation of Teck Resources
Limited and Henderson Global Investors in the private placement
each constitute a related party transaction under AIM Rule 13 of
the AIM Rules for Companies.
On 27 June 2013 the Company signed
an agreement for an £8 million Equity Financing Facility ('EFF')
with Darwin Strategic Limited ('Darwin'), a majority owned
subsidiary of Henderson Global Investors' Volantis Capital. The EFF
agreement with Darwin provides Horizonte with an equity line
facility which, subject to certain conditions and restrictions, can
be drawn on any time over 36 months. The floor subscription price
in relation to each draw down is set at the discretion of the
Company. Horizonte is under no obligation to make a draw down and
there are no penalty fees if the Company does not use the
facility.
23 Ultimate controlling party
The Directors believe there to be no ultimate controlling
party.
24 Directors' remuneration (including key management)
|
|
|
|
|
|
|
|
|
|
Aggregate
|
Other
|
|
Pension
|
|
|
|
|
emoluments
|
emoluments
|
|
costs
|
|
Total
|
Group 2015
|
|
£
|
£
|
|
£
|
|
£
|
Non-Executive
Directors
|
|
|
|
|
|
|
|
Alexander
Christopher
|
|
—
|
—
|
|
—
|
|
—
|
David Hall
|
|
33,600
|
—
|
|
—
|
|
33,600
|
William
Fisher
|
|
24,000
|
—
|
|
—
|
|
24,000
|
Allan
Walker
|
|
24,000
|
—
|
|
—
|
|
24,000
|
Owen
Bavinton
|
|
25,608
|
—
|
|
—
|
|
25,608
|
Executive
Directors
|
|
|
|
|
|
|
|
Jeremy
Martin
|
|
149,000
|
1,950
|
|
39,104
|
|
190,054
|
Key
Management
|
|
|
|
|
|
|
|
Jeffrey
Karoly
|
|
99,000
|
—
|
|
48,656
|
|
147,656
|
|
|
355,208
|
1,950
|
|
87,760
|
|
444,918
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Aggregate
|
Other
|
|
Pension
|
|
|
|
|
emoluments
|
emoluments
|
|
costs
|
|
Total
|
Group 2014
|
|
£
|
£
|
|
£
|
|
£
|
Non-Executive
Directors
|
|
|
|
|
|
|
|
Alexander
Christopher
|
|
—
|
—
|
|
—
|
|
—
|
David Hall
|
|
44,008
|
—
|
|
—
|
|
44,008
|
William
Fisher
|
|
24,000
|
—
|
|
—
|
|
24,000
|
Allan
Walker
|
|
24,000
|
—
|
|
—
|
|
24,000
|
Owen
Bavinton
|
|
24,000
|
—
|
|
—
|
|
24,000
|
Executive
Directors
|
|
|
|
|
|
|
|
Jeremy
Martin
|
|
146,000
|
66,442
|
|
44,312
|
|
256,754
|
Key
Management
|
|
|
|
|
|
|
|
Jeffrey
Karoly
|
|
99,000
|
20,000
|
|
47,943
|
|
166,943
|
|
|
361,008
|
86,442
|
|
92,25
|
|
539,705
|
The Company does not operate a pension scheme. Pension costs
comprise contributions to Defined Contribution pension plans held
by the relevant Director or Key Management.
25 Employee benefit expense (including directors and key
management)
|
|
2015
|
2014
|
Group
|
|
£
|
£
|
Wages and
salaries
|
|
844,343
|
916,650
|
Social security
costs
|
|
198,064
|
266,136
|
Indemnity for loss of
office
|
|
55,216
|
29,227
|
Share options granted
to Directors and employees (note 17)
|
|
100,248
|
125,107
|
|
|
1,197,871
|
1,337,120
|
Management
|
|
6
|
6
|
Field
staff
|
|
26
|
25
|
Average number of
employees including Directors and key management
|
|
32
|
31
|
Employee benefit expenses includes £586,348 (2014: £502,706) of
costs capitalised and included within intangible non-current
assets.
Share options granted include costs of £81,883 (2014: £53,379)
relating to Directors.
26 Investment in subsidiaries
|
|
|
|
|
|
2015
|
2014
|
Company
|
|
|
|
|
|
£
|
£
|
Shares in Group
undertakings
|
|
|
|
|
|
2,348,042
|
2,348,042
|
Loans to Group
undertakings
|
|
|
|
|
|
42,350,832
|
35,420,183
|
|
|
|
|
|
|
44,698,874
|
37,768,225
|
Investments in Group undertakings are stated at cost.
On 23 March 2006 the Company
acquired the entire issued share capital of Horizonte Exploration
Limited by means of a share for share exchange; the consideration
for the acquisition was 21,841,000 ordinary shares of 1 penny each,
issued at a premium of 9 pence per
share. The difference between the total consideration and the
assets acquired has been credited to other reserves.
27 Commitments
Operating lease commitments
The Group leases office premises under cancellable and
non-cancellable operating lease agreements. The cancellable lease
terms are up to one year and are renewable at the end of the lease
period at market rate. The leases can be cancelled by payment of up
to one month's rental as a cancellation fee. The lease payments
charged to profit or loss during the year are disclosed in note
6.
The future aggregate minimum lease payments under
non-cancellable operating leases are as follows:
|
|
|
|
|
|
2015
|
|
2014
|
Group
|
|
|
|
|
|
£
|
|
£
|
Not later than one
year
|
|
|
|
|
|
46,596
|
|
22,201
|
Total
|
|
|
|
|
|
46,596
|
|
22,201
|
Capital Commitments
Capital expenditure contracted for at the end of the reporting
period but not yet incurred is as follows:
|
|
|
|
|
|
2015
|
|
2014
|
Group
|
|
|
|
|
|
£
|
|
£
|
Intangible
assets
|
|
|
|
|
|
42,100
|
|
7,004
|
Capital commitments relate to contractual commitments for
metallurgical, economic and environmental evaluations by third
parties. Once incurred these costs will be capitalised as
intangible exploration asset additions.
28 Contingent Liabilities
(a) Glencore Araguaia Project
On 28 September 2015 the Company
announced that it had reached agreement to indirectly acquire
through wholly owned subsidiaries in Brazil the advanced high-grade Glencore
Araguaia nickel project ('GAP') in north central
Brazil. GAP is located in the vicinity of the Company's
Araguaia Project.
Pursuant to a conditional asset purchase agreement ('Asset
Purchase Agreement') between, amongst others, the Company and
Xstrata Brasil Exploraçâo Mineral Ltda ('Xstrata'), a
wholly-owned subsidiary of Glencore Canada Corporation
('Glencore'), the Company has agreed to pay a total
consideration of US$8 million to
Xstrata, which holds the title to GAP. The consideration is
to be paid according the following schedule;
- US$2,000,000 in ordinary shares
in the capital of the Company (the "Initial Consideration
Shares"), split between the SdT and VdS deposit areas and
payable on the relevant closing date for such deposit area.
The closing date is linked to the date on which the Company or a
subsidiary of it is registered as holder of such deposit areas by
the National Department of Mineral Production of Brazil ('DNPM'), the deadline for which
can be extended after 6 months at the option of the Company for a
period of up to a year from the date of the signing of the Asset
Purchase Agreement. The transfer of the mineral concession
for the VdS deposit area from Xstrata was completed in November 2015 and following approval received at
a general meeting of its shareholders convened on 25 November 2015, Initial Consideration Shares to
the value of US$660,000 were issued
to Xstrata. As at 31st December
2015, the registration of the transfer of the mineral
concession for the SdT deposit area from Xstrata to a subsidiary of
the Company had not been completed by the DNPM. Should this take
place within the deadlines outlined above, at the time of closing
the Company will issue the Initial Consideration Shares to Xstrata
to the value of US$1,340,000 at a
price per Initial Consideration Share equal to the 5 day volume
weighted average share price on AIM taken on the business day prior
to the relevant closing. As such no provision has been made until
such time as registration of the transfer has been completed.
- US$1,000,000 after the date of
issuance of a joint feasibility study for the combined Araguaia
& GAP project areas, to be satisfied in HZM Shares (at the 5
day volume weighted average price taken on the tenth business day
after the date of such issuance) or cash, at the election of the
Company. Following transfer of the concession for the VdS deposit
area to a subsidiary of the Company, US$330,000 of this US$1,000,000 has been included in contingent
consideration payable; and
- The remaining US$5,000,000
consideration will be paid in cash, as at the date of first
commercial production from any of the resource areas within the
Enlarged Project area. Following transfer of the concession for the
VdS deposit area to a subsidiary of the Company, this has been
included in contingent consideration payable.
The SdT deposit area concessions are subject to on-going
litigation with a Brazilian third party. Glencore has
disputed these claims. The parties have agreed certain
protections including the receipt by HZM from Glencore of certain
indemnities in respect of such litigation.
The Asset Purchase Agreement contains customary warranties
regarding the GAP project and the parties' ability to enter into
the Proposed Transaction and is subject to customary termination
rights and confidentiality obligations.
(b) Other Contingencies
The Group has received a claim from various trade union
organisations in Brazil regarding
outstanding membership fees due in relation to various subsidiaries
within the Group. Some of these claims relate to periods prior to
the acquisition of the relevant subsidiary and would be covered by
warranties granted by the previous owners at the date of sale. The
Directors are confident that no amounts are due in relation to
these proposed membership fees and that the claims will be
unsuccessful. No subsequent actions, claims or communications from
the various trade union organisations have been received subsequent
to the requests for payment. As a result, no provision has been
made in the Financial Statements for the year ended 31 December 2015 for amounts claimed. Should the
claim be successful, the maximum amount payable in relation to fees
not subject to the warranty agreement would be approximately
£64,000.
In 2013 the Group received an infraction notice from the
Brazilian Environmental Agency's (IBAMA) district office in
Conceição do Araguaia in connection with carrying out drilling
activities in 2011 without the relevant permits. Drilling equipment
was furthermore impounded. The Group strongly believes that it
operated with all necessary permits and has initiated legal
proceedings to overturn the infraction notice. The Group has
secured cancelation of the injunction and has appealed the
associated fine of approximately £22,000.
In August 2014 the Group received
a claim from a former employee in Brazil with regard to amounts allegedly due
under the terms of his employment. The Group is defending the claim
and it is not currently practicable to estimate the extent of any
liability that may arise.
In December 2014 the Group
received a writ from the State Attorney in Conceiçao do Araguaia
regarding alleged environmental damages caused by drilling
activities in 2011. To ensure proper environmental stewardship, the
Group conducts certified baseline studies prior to all drill
programmes and ensures that areas explored are properly maintained
and conserved in accordance with local environmental legislation.
After drilling has occurred, drill sites and access routes are
rehabilitated to equal or better conditions and evidence is
retained to demonstrate that such rehabilitation work has been
completed. In January 2015 the Group
filed a robust defence against the writ. A court hearing was held
in May 2015 at which documents were
requested to confirm that valid environmental authorisations were
in place. These were subsequently submitted as requested. No
substantive financial claim continues to be made against the Group
under the terms of the writ. The Group continues to believe that
the writ is flawed and is working towards having it withdrawn in
due course. As a result no provision has been made in the
Financial Statements for the year ended 31
December 2015.
29 Parent Company Statement of Comprehensive Income
As permitted by section 408 of the Companies Act 2006, the
statement of comprehensive income of the Parent Company is not
presented as part of these Financial Statements. The Parent
Company's profit for the year was £311,625 (2014: £226,045
loss).
30 Events after the reporting date
No significant events have occurred since the reporting
date.
* * ENDS * *
About Horizonte Minerals:
Horizonte Minerals plc is an AIM and TSX-listed nickel
development company focused in Brazil, which wholly owns the advanced
Araguaia nickel laterite project located to the south of the
Carajas mineral district of northern Brazil. The Company is
developing Araguaia as the next major nickel mine in
Brazil.
The Project, which has excellent infrastructure in place
including rail, road, water and power has a current NI 43-101
compliant Mineral Resource of 71.98Mt grading 1.33% Ni (Indicated)
and 25.4Mt at 1.21% Ni (Inferred) at a 0.95% nickel cut-off;
included in Resources is a Probable Reserve base of 21.2Mt at
1.66%Ni.
Horizonte has a strong shareholder structure including Teck
Resources Limited (28.1%) and Henderson Global Investors
(17.0%).
CAUTIONARY STATEMENT REGARDING FORWARD
LOOKING INFORMATION
Except for statements of historical fact relating to the
Company, certain information contained in this press release
constitutes "forward-looking information" under Canadian securities
legislation. Forward-looking information includes, but is not
limited to, statements with respect to the potential of the
Company's current or future property mineral projects; the success
of exploration and mining activities; cost and timing of future
exploration, production and development; the estimation of mineral
resources and reserves and the ability of the Company to achieve
its goals in respect of growing its mineral resources; and the
realization of mineral resource and reserve estimates. Generally,
forward-looking information can be identified by the use of
forward-looking terminology such as "plans", "expects" or "does not
expect", "is expected", "budget", "scheduled", "estimates",
"forecasts", "intends", "anticipates" or "does not anticipate", or
"believes", or variations of such words and phrases or statements
that certain actions, events or results "may", "could", "would",
"might" or "will be taken", "occur" or "be achieved".
Forward-looking information is based on the reasonable assumptions,
estimates, analysis and opinions of management made in light of its
experience and its perception of trends, current conditions and
expected developments, as well as other factors that management
believes to be relevant and reasonable in the circumstances at the
date that such statements are made, and are inherently subject to
known and unknown risks, uncertainties and other factors that may
cause the actual results, level of activity, performance or
achievements of the Company to be materially different from those
expressed or implied by such forward-looking information, including
but not limited to risks related to: exploration and mining risks,
competition from competitors with greater capital; the Company's
lack of experience with respect to development-stage mining
operations; fluctuations in metal prices; uninsured risks;
environmental and other regulatory requirements; exploration,
mining and other licences; the Company's future payment
obligations; potential disputes with respect to the Company's title
to, and the area of, its mining concessions; the Company's
dependence on its ability to obtain sufficient financing in the
future; the Company's dependence on its relationships with third
parties; the Company's joint ventures; the potential of currency
fluctuations and political or economic instability in
countries in which the Company operates; currency exchange
fluctuations; the Company's ability to manage its growth
effectively; the trading market for the ordinary shares of the
Company; uncertainty with respect to the Company's plans to
continue to develop its operations and new projects; the Company's
dependence on key personnel; possible conflicts of interest of
directors and officers of the Company, and various risks associated
with the legal and regulatory framework within which the Company
operates.
Although management of the Company has attempted to identify
important factors that could cause actual results to differ
materially from those contained in forward-looking information,
there may be other factors that cause results not to be as
anticipated, estimated or intended. There can be no assurance that
such statements will prove to be accurate, as actual results and
future events could differ materially from those anticipated in
such statements.
SOURCE Horizonte Minerals plc