Horizonte Minerals plc / Index: AIM and TSX / Epic: HZM /
Sector: Mining
LONDON, Aug. 14 2014 /CNW/ - Horizonte Minerals Plc,
(AIM: HZM, TSX: HZM) ('Horizonte' or 'the Company') the
exploration and development company focused in Brazil, announces its unaudited results for
the six months ended 30 June 2014 and
the Management Discussion and Analysis for the same period.
Both of the above have been posted on the Company's website at
www.horizonteminerals.com and are also available on SEDAR at
www.sedar.com.
Overview
- Significant progress has been made in advancing the 100% owned
Araguaia Nickel Project ('Araguaia') as the next major nickel
project in Brazil
- Strengthened balance sheet - raised £5.4 million in
July 2014
- Pre-Feasibility Study ('PFS') completed March 2014 proving robust economics of Araguaia
as a leading high grade nickel project based on excellent
infrastructure and a proven and low risk pyro-metallurgical process
using Rotary Kiln Electric Furnace technology ('RKEF')
- Post tax NPV₈ of US$519 million
and 20% IRR based on 900ktpa single line, 15,000tpa nickel ('Ni')
in ferronickel ('Fe-Ni') product over 25 year life of mine ('LOM')
(Base Case - preferred route)
- Post tax NPV₈ of US$1.2 billion
and 21% IRR based on 2.7Mtpa twin line plant, 40,000tpa Ni in Fe-Ni
product ('2nd Option')
- Low cost operation - C1 cash costs of US$4.16/lb (US$9,166/t) over LOM (first quartile of cost
curve)
- Significant free cash flow generation - projected generation of
US$1.8 billion post tax over the 25
year LOM
- High Grade - 1.76% Ni average feed grade for the first
10 years of production (Base Case)
- Substantial NI 43-101 resource base consisting of 71.98Mt
grading 1.33% Ni (Indicated) and 25.35Mt at 1.21% Ni (Inferred) at
a 0.95% Ni cut-off grade allows operational flexibility and
production ramp up
- Awarded the Seal of Priority from the local Pará State's
Department of Industry, Commerce and Mining (SEICOM) to help
fast-track the development of Araguaia
- Filed Social Environmental Impact Assessment ('SEIA') with Pará
State Environmental Agency in Brazil – targeting issue of the Preliminary
Licence by Q1 2015
- Positive nickel market; with the implementation of the
Indonesian nickel ore ban the nickel price has increased in 2014
from US$13,200/t in January to
current levels around US$19,000/t
Chairman's Statement
I am delighted to report on the exceptional
progress your Company has made during the first half of 2014 in
delivering on significant value accretive milestones as we continue
to advance Brazil's next major
nickel project, Araguaia. With a positive nickel market
outlook ahead and a strong team both at Board and management level
with proven track records in the South American mining and nickel
space, it is our objective over the next 24 months to successfully
fast-track Araguaia through to completed Feasibility Study.
To this end, we have had a highly active period
which has seen us complete a 43-101 Pre-Feasibility Study in
March 2014 on time and within budget
which demonstrated the robust economics of Araguaia over two
operational scenarios as a leading nickel development project
globally; update our resource base to 71.98Mt grading 1.33% Ni
(Indicated) and 25.35Mt at 1.21% Ni (Inferred) to provide
operational flexibility and production ramp up potential; Complete
and file our Social and Environmental Impact Study; and receive a
'Seal of Priority' from the local Pará State's Department of
Industry, Commerce and Mining, which highlighted Araguaia as a
project of strategic importance to the country and state and
enlisted as part of an incentive plan to help fast-track the
development of Araguaia.
In July 2014, post
period end, a £5.4 million placing was successfully completed which
has further strengthened both the balance sheet and, importantly,
Horizonte's supportive shareholder base which includes Teck
Resources, Henderson Global Investors and Anglo Pacific. This additional capital means we
are well positioned to deliver on Araguaia's next development
stages as we take it through to the Feasibility Study stage by
early 2015.
Araguaia
Araguaia is a wholly owned, advanced nickel
project located in Pará State, south of the Carajas Mining District
in northern Brazil. The project is ideally located in an
established mining district, offering good road and rail networks
with accessible transportation routes to port, access to low cost
hydroelectric power and support from regional
authorities.
Significant exploration and development work has
been undertaken by Horizonte since 2010 when we acquired the
project from Teck Resources. We have completed 35,200m of
resource drilling and metallurgical testwork which has demonstrated
that Araguaia ore can be processed using the proven Rotary Kiln
Electric Furnace ('RKEF') process in order to produce a saleable
ferronickel product that meets the requirements of international
stainless steel plants. A Preliminary Economic Assessment
completed in 2012 highlighted the exciting potential of Araguaia as
a world-class nickel deposit.
With the above in mind, Horizonte completed a PFS
at Araguaia in March 2014, which
further confirmed the excellent economics and mining potential of
the Company's flagship project. In line with the demands of
the market, the study focused on maximising returns while
minimising financial and technical risk and as such two operational
scenarios were evaluated which demonstrated that Araguaia offers
flexibility to be developed at multiple scales. Our selected
route to production is the smaller Base Case with an after tax NPV₈
of US$519 million and a IRR of 20%,
which utilises a single line Rotary Kiln Electric Furnace ('RKEF')
plant, a proven process route, running at 900,000tpa with 15,000t
targeted annual production of nickel in Fe-Ni product. The
large scale 2nd Option offers production upside with an
NPV₈ of US$1.2 billion and 21% IRR
based on 2.7Mtpa twin line 40,000 Fe-Ni product RKEF process
plant. Importantly the Base Case option brings the project to
a capital level which is within reach of a junior mining company
such as ours, whilst demonstrating the considerable upside that
future expansion could bring.
The strong project economics of Araguaia are also
supported by the high nickel grades demonstrated at Araguaia, with
an average feed grade for the first 10 years of 1.76% Ni, placing
the deposit in the upper quartile for grade globally. Add to
this the extremely low C1 cash costs of US$4.16/lb (US$9,166/t) and significant free cash flow
generation projected to be US$1.8
billion post tax over the 25 year LOM on the Base Case
Scenario, it is clear that Araguaia offers a compelling investment
case.
Having now completed our PFS our next major
development objective is to advance Araguaia through to the
Feasibility Study Stage during 2015. With this in mind we
successfully filed our Social and Environmental Impact Assessment
('SEIA') in June 2014. The
completion and filing marked a significant de-risking step for the
project, as we worked with local stakeholders, communities and
government agencies. The report is currently being reviewed by the
Pará State Environmental Agency, and post the public hearing, we
should receive full approval in Q4 2014/Q1 2015.
The work programmes that will be completed in
preparation for the Feasibility Study include infill drilling to
define a Measured Resource, the collection of a bulk sample for
feed into a large scale continuous pilot plant tests for further
de-risking the project and optimising the RKEF process flow sheet,
the incorporation into the bulk sampling of a trail mining
programme, advanced engineering, geotechnical and water management
studies.
Nickel
Having reached a two year high of almost
US$22,000 a tonne in May 2014 nickel is the best performing metal this
year to date. This increase from c.US$13,000/t at the beginning of the year follows
the ban on direct shipping nickel ore from Indonesia, as well as concerns regarding
Russian supply. If the ban in Indonesia continues to be fully implemented it
is expected to remove 18% to 20% of world nickel supply from the
market, resulting in bullish forecasts on nickel futures, with the
Bank of America Merrill Lynch forecasting prices easily reaching
US$25,000 per tonne in
2015.
With this in mind, Horizonte is in a strong
position to deliver its Feasibility Study during 2015 and deliver
significant value uplift over the next 24 months as it progresses
the project towards development at a time when our high-grade
Araguaia ore will be in demand in a favourable nickel
market.
Outlook
Araguaia is a leading nickel project globally in
terms of size and grade which offers strong economics, a proven
process route, and excellent infrastructure. Your company is
led by an experienced Board and management team with significant
experience in both South America
and the nickel resource space and has the ability to bring Araguaia
into production at a crucial time for the nickel market when demand
will outstrip supply.
I am delighted that Horizonte has a solid track
record of delivering milestones on time and on budget and having
already completed the PFS this year which demonstrated robust
economics, we are well funded following our recent placing to move
into the Full Feasibility stage. I would like to take this
opportunity to thank the dedicated Horizonte Board of Directors,
Management team and shareholders for your continued support and I
look forward to providing further updates as we continue to develop
Brazil's next major nickel
mine.
David J. Hall
Chairman
Horizonte Minerals plc
Condensed Consolidated Interim Financial Statements for the
six months ended 30 June 2014
Condensed consolidated statement of comprehensive
income
|
|
6 months
ended
30
June
|
3 months
ended
30
June
|
|
|
2014
|
2013
|
2014
|
2013
|
|
|
Unaudited
|
Unaudited
|
Unaudited
|
Unaudited
|
|
Notes
|
£
|
£
|
£
|
£
|
Continuing
operations
|
|
|
|
|
|
Revenue
|
|
-
|
-
|
-
|
-
|
Cost of
sales
|
|
-
|
-
|
-
|
-
|
|
|
|
|
|
|
Gross
profit
|
|
-
|
-
|
-
|
-
|
|
|
|
|
|
|
Administrative
expenses
|
|
(654,545)
|
(670,241)
|
(396,452)
|
(304,739)
|
Charge for Share
Options granted
|
|
(34,351)
|
(114,087)
|
(29,631)
|
(57,071)
|
Change in value of
contingent consideration
|
|
525,763
|
-
|
95,808
|
-
|
Project
impairment
|
|
(31,989)
|
|
-
|
-
|
Loss on foreign
exchange
|
|
(31,960)
|
(37,919)
|
(22,099)
|
(109,986)
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from
operations
|
|
(227,082)
|
(822,247)
|
(352,374)
|
(471,796)
|
|
|
|
|
|
|
Finance
income
|
|
9,980
|
23,049
|
3,758
|
9,268
|
Finance
costs
|
|
(86,952)
|
(94,593)
|
(43,476)
|
(47,296)
|
|
|
|
|
|
|
Loss before
taxation
|
|
(304,054)
|
(893,791)
|
(392,092)
|
(509,824)
|
|
|
|
|
|
|
Taxation
|
|
-
|
-
|
-
|
-
|
|
|
|
|
|
|
Loss for the year
from continuing operations
|
|
(304,054)
|
(893,791)
|
(392,092)
|
(509,824)
|
|
|
|
|
|
|
Other
comprehensive income
|
|
|
|
|
|
Items that may be
reclassified subsequently to profit or loss
Change in value of
available for sale financial assets
|
|
(768)
|
(147,717)
|
224
|
(27,477)
|
Currency translation
differences on translating foreign operations
|
|
863,047
|
(330,867)
|
(45,919)
|
(2,274,165)
|
Other
comprehensive income for the period, net of tax
|
|
862,279
|
(478,584)
|
(45,695)
|
(2,301,642)
|
Total
comprehensive income for the period
|
|
|
|
|
|
attributable to
equity holders of the Company
|
|
558,225
|
(1,372,375)
|
(437,787)
|
(2,811,466)
|
|
|
|
|
|
|
Earnings per share
from continuing operations attributable to
the equity holders
of the Company
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted
(pence per share)
|
8
|
(0.076)
|
(0.244)
|
(0.098)
|
(0.139)
|
|
|
|
|
|
|
|
|
|
|
|
|
Condensed consolidated statement of financial
position
|
|
30
June
2014
|
31
December
2013
|
|
|
Unaudited
|
Audited
|
|
Notes
|
£
|
£
|
Assets
|
|
|
|
Non-current
assets
|
|
|
|
Intangible
assets
|
6
|
21,872,008
|
20,041,937
|
Property, plant &
equipment
|
|
85,210
|
107,451
|
Deferred tax
assets
|
|
5,571,538
|
5,373,634
|
|
|
27,528,756
|
25,523,022
|
Current
assets
|
|
|
|
Trade and other
receivables
|
|
48,997
|
62,127
|
Other current
financial assets
|
|
21,961
|
22,729
|
Cash and cash
equivalents
|
|
1,373,176
|
3,091,880
|
|
|
1,444,134
|
3,176,736
|
Total
assets
|
|
28,972,890
|
28,699,758
|
Equity and
liabilities
|
|
|
|
Equity
attributable to owners of the parent
|
|
|
|
Issued
capital
|
7
|
4,011,395
|
4,011,395
|
Share
premium
|
7
|
26,997,998
|
26,997,998
|
Other
reserves
|
|
2,001,829
|
1,139,550
|
Accumulated
losses
|
|
(8,679,743)
|
(8,410,040)
|
Total
equity
|
|
24,331,479
|
23,738,903
|
Liabilities
|
|
|
|
Non-current
liabilities
|
|
|
|
Contingent
consideration
|
|
2,038,499
|
2,477,310
|
Deferred tax
liabilities
|
|
2,421,505
|
2,335,492
|
|
|
4,460,004
|
4,812,802
|
Current
liabilities
|
|
|
|
Trade and other
payables
|
|
181,407
|
148,053
|
|
|
|
|
Total
liabilities
|
|
4,641,411
|
4,960,855
|
Total equity and
liabilities
|
|
28,972,890
|
28,699,758
|
|
|
|
|
Condensed statement of changes in shareholders'
equity
|
Attributable to the
owners of the parent
|
|
Share
capital
£
|
Share
premium
£
|
Accumulated
losses
£
|
Other
reserves
£
|
Total
£
|
|
|
|
|
|
|
As at 1 January
2013
|
3,600,462
|
24,384,527
|
(5,868,096)
|
5,438,899
|
27,555,792
|
Comprehensive
income
|
|
|
|
|
|
Loss for the
period
|
-
|
-
|
(893,791)
|
-
|
(893,791)
|
Other
comprehensive income
|
|
|
|
|
|
Change in value of
available for sale financial assets
|
-
|
-
|
-
|
(147,717)
|
(147,717)
|
Currency translation
differences
|
-
|
-
|
-
|
(330,867)
|
(330,867)
|
Total
comprehensive income
|
-
|
-
|
(893,791)
|
(478,584)
|
(1,372,375)
|
Transactions with
owners
|
|
|
|
|
|
Issue of ordinary
shares
|
410,933
|
2,671,066
|
-
|
-
|
3,081,999
|
Issue
costs
|
-
|
(47,595)
|
-
|
-
|
(47,595)
|
Share based
payments
|
-
|
-
|
114,087
|
-
|
114,087
|
Total transactions
with owners
|
410,933
|
2,623,471
|
114,087
|
-
|
3,148,491
|
As at 30 June
2013
|
4,011,395
|
27,007,998
|
(6,647,800)
|
4,960,315
|
29,331,908
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As at 1 January
2014
|
4,011,395
|
26,997,998
|
(8,410,040)
|
1,139,550
|
23,738,903
|
Comprehensive
income
|
|
|
|
|
|
Loss for the
period
|
-
|
-
|
(304,054)
|
-
|
(304,054)
|
Other
comprehensive income
|
|
|
|
|
|
Change in value of
available for sale financial assets
|
-
|
-
|
-
|
(768)
|
(768)
|
Currency translation
differences
|
-
|
-
|
-
|
863,047
|
863,047
|
Total
comprehensive income
|
-
|
-
|
(304,054)
|
862,279
|
558,225
|
Transactions with
owners
|
|
|
|
|
|
Issue of ordinary
shares
|
-
|
-
|
-
|
-
|
-
|
Issue
costs
|
-
|
-
|
-
|
-
|
-
|
Share based
payments
|
-
|
-
|
34,351
|
-
|
34,351
|
Total transactions
with owners
|
-
|
-
|
34,351
|
-
|
34,351
|
As at 30 June
2014
|
4,011,395
|
26,997,998
|
(8,679,743)
|
2,001,829
|
24,331,479
|
|
|
|
|
|
|
Condensed Consolidated Statement of Cash Flows
|
|
6 months
ended
30
June
|
3 months
ended
30
June
|
|
|
2014
|
2013
|
2014
|
2013
|
|
|
Unaudited
|
Unaudited
|
Unaudited
|
Unaudited
|
|
|
£
|
£
|
£
|
£
|
Cash flows from
operating activities
|
|
|
|
|
|
Loss before
taxation
|
|
(304,054)
|
(893,791)
|
(392,092)
|
(509,824)
|
Interest
income
|
|
(9,980)
|
(23,049)
|
(3,758)
|
(9,269)
|
Finance
costs
|
|
86,952
|
94,593
|
43,476
|
47,296
|
Project
impairment
|
|
31,989
|
-
|
-
|
-
|
Exchange
differences
|
|
31,960
|
37,918
|
22,099
|
109,986
|
Employee share
options charge
|
|
34,351
|
114,087
|
29,631
|
57,071
|
Change in fair value
of contingent consideration
|
|
(525,763)
|
-
|
(95,808)
|
-
|
Depreciation
|
|
2,041
|
2,090
|
980
|
1,113
|
Operating loss
before changes in working capital
|
|
(652,504)
|
(668,152)
|
(395,472)
|
(303,627)
|
Decrease/(increase)
in trade and other receivables
|
|
13,130
|
17,338
|
(18,346)
|
(9,224)
|
Increase/(decrease)
in trade and other payables
|
|
48,551
|
(51,361)
|
77,110
|
14,747
|
Net cash outflow
from operating activities
|
|
(590,823)
|
(702,175)
|
(336,708)
|
(298,104)
|
Cash flows from
investing activities
|
|
|
|
|
|
Net purchase of
intangible assets
|
|
(1,105,901)
|
(2,519,718)
|
(606,238)
|
(1,300,773)
|
Purchase of property,
plant and equipment
|
|
-
|
(37,681)
|
-
|
(1,360)
|
Interest
received
|
|
9,980
|
23,049
|
3,758
|
9,269
|
Net cash used in
investing activities
|
|
(1,095,921)
|
(2,534,350)
|
(602,480)
|
(1,292,864)
|
Cash flows from
financing activities
|
|
|
|
|
|
Proceeds from issue
of ordinary shares
|
|
-
|
3,082,000
|
-
|
3,082,000
|
Share issue
costs
|
|
-
|
(47,595)
|
-
|
(47,595)
|
Net cash inflow
from financing activities
|
|
-
|
3,034,405
|
-
|
3,034,405
|
Net
(decrease)/increase in cash and cash equivalents
|
|
(1,686,744)
|
(202,120)
|
(939,188)
|
1,443,437
|
Cash and cash
equivalents at beginning of period
|
|
3,091,880
|
5,887,174
|
2,334,463
|
4,313,684
|
Exchange loss on cash
and cash equivalents
|
|
(31,960)
|
(61)
|
(22,099)
|
(72,128)
|
Cash and cash
equivalents at end of the period
|
|
1,373,176
|
5,684,993
|
1,373,176
|
5,684,993
|
Notes to the Financial Statements
1. General information
The principal activity of the Company and its
subsidiaries (together 'the Group') is the exploration and
development of precious and base metals. There is no seasonality or
cyclicality of the Group's operations.
The Company's shares are listed on the
Alternative Investment Market of the London Stock Exchange (AIM)
and on the Toronto Stock Exchange (TSX). The Company is
incorporated and domiciled in the United
Kingdom. The address of its registered office is 26 Dover
Street London W1S 4LY.
2. Basis of
preparation
The condensed interim financial statements have
been prepared using accounting policies consistent with
International Financial Reporting Standards and in accordance with
International Accounting Standard 34 Interim Financial
Reporting. The condensed interim financial statements should be
read in conjunction with the annual financial statements for the
year ended 31 December 2013, which
have been prepared in accordance with International Financial
Reporting Standards (IFRS).
The condensed interim financial statements set
out above do not constitute statutory accounts within the meaning
of the Companies Act 2006. They have been prepared on a going
concern basis in accordance with the recognition and measurement
criteria of International Financial Reporting Standards (IFRS).
Statutory financial statements for the year ended 31 December 2013 were approved by the Board of
Directors on 20 February 2014. The
report of the auditors on those financial statements was
unqualified.
The condensed interim financial statements of the
Company have not been audited by the Company's auditor, PKF
Littlejohn LLP.
Going concern
The Directors, having made appropriate enquiries,
consider that adequate resources exist for the Group to continue in
operational existence for the foreseeable future and that,
therefore, it is appropriate to adopt the going concern basis in
preparing the condensed interim financial statements for the period
ended 30 June 2014.
Risks and uncertainties
The Board continuously assesses and monitors the
key risks of the business. The key risks that could affect the
Group's medium term performance and the factors that mitigate those
risks have not substantially changed from those set out in the
Group's 2013 Annual Report and Financial Statements, a copy of
which is available on the Group's website:
www.horizonteminerals.com. The key financial risks are liquidity
risk, foreign exchange risk, credit risk, price risk and interest
rate risk.
Critical accounting estimates and
judgements
The preparation of condensed interim financial
statements 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. Significant items subject to such estimates are
set out in note 4 of the Group's 2013 Annual Report and Financial
Statements. The nature and amounts of such estimates have not
changed significantly during the interim period.
3. Significant accounting
policies
The condensed interim financial statements have
been prepared under the historical cost convention as modified by
the revaluation of certain of the subsidiaries' assets and
liabilities to fair value for consolidation purposes.
The same accounting policies, presentation and
methods of computation have been followed in these condensed
interim financial statements as were applied in the preparation of
the Group's Financial Statements for the year ended 31 December 2013, except for the impact of the
adoption of the Standards and interpretations described below.
3.1. Changes in accounting
policy and disclosures
New and amended standards adopted by the
Group
Amendment to IAS 36, 'Recoverable Amount
Disclosures for Non-Financial Assets', to reduce the circumstances
in which the recoverable amount of assets or cash-generating units
is required to be disclosed, clarify the disclosures required, and
to introduce an explicit requirement to disclose the discount rate
used in determining impairment (or reversals) where recoverable
amount (based on fair value less costs of disposal) is determined
using a present value technique.
IFRS 10, 'Consolidated financial statements',
builds on existing principles by identifying the concept of control
as the determining factor in whether an entity should be included
within the consolidated financial statements of the parent company.
The standard provides additional guidance to assist in the
determination of control where this is difficult to assess.
IFRS 11, 'Joint Arrangements' provides for a more
realistic reflection of joint arrangements by focusing on the
rights and obligations of the arrangement, rather than its legal
form. There are two types of joint arrangement; joint operations
and joint ventures. Joint operations arise where a joint
operator has rights to the assets and obligations relating to the
arrangement and therefore accounts for its share of assets,
liabilities, revenue and expenses. Joint ventures arise where the
joint venture has rights to the net assets of the arrangement and
therefore equity accounts for its interest. Proportional
consolidation of joint ventures is no longer allowed.
4 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.
|
2014
|
UK
|
Brazil
|
Other
|
Total
|
|
6 months
ended
30 June
2014
£
|
6 months
ended
30 June
2014
£
|
6 months
ended
30 June
2014
£
|
6 months
ended
30 June
2014
£
|
Revenue
|
-
|
-
|
-
|
-
|
Administrative
expenses
|
(382,878)
|
(269,104)
|
(2,563)
|
(654,545)
|
Project and fixed
asset impairment
|
-
|
(31,989)
|
-
|
(31,989)
|
Profit / (Loss) on
foreign exchange
|
(20,259)
|
(11,701)
|
-
|
(31,960)
|
Other operating
income
|
-
|
-
|
-
|
-
|
Loss from operations
per
|
(403,137)
|
(312,794)
|
(2,563)
|
(718,494)
|
reportable
segment
|
|
|
|
|
Inter segment
revenues
|
-
|
310,265
|
33,033
|
343,298
|
Depreciation
charges
|
(1,576)
|
(465)
|
-
|
(2,041)
|
Additions to
non-current assets
|
-
|
1,111,645
|
-
|
1,111,645
|
Reportable segment
assets
|
1,663,920
|
27,308,940
|
30
|
28,972,890
|
Reportable segment
liabilities
|
2,129,423
|
2,511,988
|
-
|
4,641,411
|
|
|
|
|
|
|
|
|
|
|
2013
|
UK
|
Brazil
|
Other
|
Total
|
|
6 months
ended
30 June
2013
£
|
6 months
ended
30 June
2013
£
|
6 months
ended
30 June
2013
£
|
6 months
ended
30 June
2013
£
|
|
|
|
|
|
Revenue
|
-
|
-
|
-
|
-
|
Administrative
expenses
|
(361,865)
|
(289,636)
|
(18,740)
|
(670,241)
|
Profit / (Loss) on
foreign exchange
|
9,059
|
(46,842)
|
(136)
|
(37,919)
|
Other operating
income
|
-
|
-
|
-
|
-
|
Loss from operations
per
|
|
|
|
|
reportable
segment
|
(352,806)
|
(336,478)
|
(18,876)
|
(708,160)
|
Inter segment
revenues
|
-
|
258,495
|
32,617
|
291,112
|
Depreciation
charges
|
(1,343)
|
(747)
|
-
|
(2,090)
|
Additions to
non-current assets
|
-
|
2,484,607
|
-
|
2,484,607
|
Reportable segment
assets
|
6,066,758
|
27,873,444
|
812,878
|
34,753,080
|
Reportable segment
liabilities
|
2,528,668
|
2,892,504
|
-
|
5,421,172
|
|
|
|
|
|
|
2014
|
UK
|
Brazil
|
Other
|
Total
|
|
3 months
ended
30 June
2014
|
3 months
ended
30 June
2014
|
3 months
ended
30 June
2014
|
3 months
ended
30 June
2014
|
|
£
|
£
|
£
|
£
|
Revenue
|
-
|
-
|
-
|
-
|
Administrative
expenses
|
(217,705)
|
(177,580)
|
(1,167)
|
(396,452)
|
|
|
|
|
|
Profit/(loss) on
foreign exchange
|
(10,837)
|
(11,262)
|
-
|
(22,099)
|
Other operating
Income
|
-
|
-
|
-
|
-
|
Loss from operations
per
|
(228,542)
|
(188,842)
|
(1,167)
|
(418,551)
|
reportable
segment
|
|
|
|
|
Inter segment
revenues
|
-
|
158,033
|
16,568
|
174,601
|
Depreciation
charges
|
(788)
|
(192)
|
-
|
980
|
Additions to
non-current assets
|
-
|
598,107
|
-
|
598,107
|
|
|
|
|
|
|
2013
|
UK
|
Brazil
|
Other
|
Total
|
|
3 months
ended
30 June
2013
|
3 months
ended
30 June
2013
|
3 months
ended
30 June
2013
|
3 months
ended
30 June
2013
|
|
£
|
£
|
£
|
£
|
Revenue
|
-
|
-
|
-
|
-
|
Administrative
expenses
|
(168,061)
|
(122,038)
|
(14,640)
|
(304,739)
|
Profit/(loss) on
foreign exchange
|
(42,612)
|
(67,238)
|
(136)
|
(109,986)
|
Other operating
Income
|
-
|
-
|
-
|
-
|
Loss from operations
per
|
|
|
|
|
reportable
segment
|
(210,673)
|
(189,276)
|
(14,776)
|
(414,725)
|
Inter segment
revenues
|
-
|
135,789
|
16,407
|
152,196
|
Depreciation
charges
|
(714)
|
(398)
|
-
|
(1,112)
|
Additions to
non-current assets
|
-
|
1,074,314
|
-
|
1,074,314
|
|
|
|
|
|
A reconciliation of
adjusted loss from operations per reportable segment to loss before
tax is provided as follows:
|
|
|
|
|
|
|
6 months
ended
30 June
2014
|
6 months
ended
30 June
2013
|
3 months
ended
30 June
2014
|
3 months
ended
30 June
2013
|
|
£
|
£
|
£
|
£
|
Loss from operations
per reportable segment
|
(718,494)
|
(708,160)
|
(418,551)
|
(414,725)
|
– Change in fair
value of contingent consideration
|
525,763
|
-
|
95,808
|
-
|
– Charge for share
options granted
|
(34,351)
|
(114,087)
|
(29,631)
|
(57,071)
|
– Finance
income
|
9,980
|
23,049
|
3,758
|
9,268
|
– Finance
costs
|
(86,952)
|
(94,593)
|
(43,476)
|
(47,296)
|
Loss for the period
from continuing operations
|
(304,054)
|
(893,791)
|
392,092
|
(509,824)
|
|
|
|
|
|
5 Change in Fair Value of Contingent
Consideration
Contingent consideration has a carrying value of
£2,038,499 at 30 June 2014
(31 December 2013: £2,477,310). The
contingent consideration arrangement 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, which was completed in August 2010. 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.
The fair value of this potential consideration
has been determined using the operating and financial assumptions
in the cashflow model derived from the Araguaia project
pre-feasibility study ("Pre-Feasibility Study") published by the
Company in March 2014 in order to
calculate the ability to utilise the acquired tax losses, together
with the timing of their utilisation. 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.
As at 30 June 2014,
Management has reassessed the fair value of the potential
contingent consideration in accordance with the Group's accounting
policies. The cash flow model used to estimate the contingent
consideration has been adjusted, taking into account changed
assumptions in the timing of cash flows as derived from the
Pre-Feasibility Study. The change in the fair value of contingent
consideration has generated a credit to profit or loss of £525,763
in the six months ended 30 June 2014
(2013: £nil) due to changes in the exchange rate of the functional
currency in which the liability is payable and in the timing of
cash flows.
6 Intangible assets
Intangible assets comprise exploration and
evaluation costs and goodwill. Exploration and evaluation costs
comprise internally generated and acquired assets.
Group
|
|
Exploration
and
|
|
|
Goodwill
|
evaluation
costs
|
Total
|
|
£
|
£
|
£
|
Cost
|
|
|
|
At 1 January
2014
|
287,378
|
19,754,559
|
20,041,937
|
Additions
|
-
|
1,111,645
|
1,111,645
|
Impairment
|
-
|
(31,989)
|
(31,989)
|
Exchange rate
movements
|
10,584
|
739,831
|
750,415
|
Net book amount at 30
June 2014
|
297,962
|
21,574,046
|
21,872,008
|
7 Share Capital and Share Premium
Issued and fully
paid
|
Number of
shares
|
Ordinary
shares
£
|
Share
premium
£
|
Total
£
|
At 1 January
2014
|
401,139,497
|
4,011,395
|
26,997,998
|
31,009,393
|
Issue of ordinary
shares
|
-
|
-
|
-
|
-
|
Issue
costs
|
-
|
-
|
-
|
-
|
At 30 June
2014
|
401,139,497
|
4,011,395
|
26,997,998
|
31,009,393
|
8 Dividends
No dividend has been declared or paid by the Company during the
six months ended 30 June 2014 (2013:
nil).
9 Earnings per share
The calculation of the basic loss per share of
0.076 pence for the 6 months ended
30 June 2014 (30 June 2013 loss per share: 0.244 pence) is based on the loss attributable to
the equity holders of the Company of £ 304,054 for the six month
period ended 30 June 2014
(30 June 2013: £893,791) divided by
the weighted average number of shares in issue during the period of
401,139,497 (weighted average number of shares for the 6 months
ended 30 June 2013: 365,927,463).
The calculation of the basic loss per share of
0.098 pence for the 3 months ended
30 June 2014 (30 June 2013 loss per share: 0.139 pence) is based on the loss attributable to
the equity holders of the Company of £ 392,092 for the three month
period ended 30 June 2014 (3 months
ended 30 June 2013: £ 509,824)
divided by the weighted average number of shares in issue during
the period of 401,139,497 (weighted average number of shares for
the 3 months ended 30 June 2013:
367,722,945).
The basic and diluted loss per share is the same,
as the effect of the exercise of share options would be to decrease
the loss per share.
Details of share options that could potentially
dilute earnings per share in future periods are disclosed in the
notes to the Group's Annual Report and Financial Statements for the
year ended 31 December 2013 and in
note 10 below.
10 Issue of Share Options
On 9 May 2014, the
Company awarded 14,450,000 share options to Directors and senior
management. All of the share options have an exercise price of
7.25 pence. One third of the options
are exercisable from 8 November 2014,
one third from 8 May 2015 and one
third from 8 November 2015.
11 Ultimate controlling party
The Directors believe there to be no ultimate
controlling party.
12 Related party transactions
The nature of related party transactions of the
Group has not changed from those described in the Group's Annual
Report and Financial Statements for the year ended 31 December 2013.
13 Events after the reporting
period
On 31 July 2014 the
Company announced that it had closed a public offering in
Canada and a concurrent private
placement offering in the United
Kingdom, both of ordinary shares in the Company. A total of
50,000,000 shares were issued through the Canadian public offering,
at a price of C$ 0.11 per share and a
total of 41,287,608 shares were issued through the private
placement, at a price of £ 0.06 per share.
Approval of interim financial statements
The Condensed interim financial statements were approved by the
Board of Directors on 14 August
2014.
About Horizonte Minerals:
Horizonte Minerals Plc is an AIM and TSX‐listed
nickel development company focused in Brazil, which wholly owns the advanced
Araguaia Project located to the south of the Carajas mineral
district of northern Brazil.
The Corporation is developing the Araguaia
Project as the next major nickel mine in Brazil, with targeted production by 2017.
The Araguaia Project, which has excellent
infrastructure in place including rail, road, water and power, has
a current Mineral Resource estimate of 71.98Mt grading 1.33% Ni
(Indicated) and 25.4Mt at 1.21% Ni (Inferred), prepared in
accordance with National Instrument 43-101 ("NI 43-101").
Included in the Mineral Resources is a Probable Mineral Reserve
base of 21.2Mt at 1.66% Ni at a 0.95% Ni cut‐off.
A Prefeasibility Study has been completed which
underpins the robust economics of developing a mine with a targeted
15,000tpa nickel in ferronickel output with a 20% Fe‐Ni product
over a 25 year mine life utilising the proven pyrometallurgical
process of Rotary Kiln Electric Furnace technology. At these
production rates, the Araguaia Project has a post‐tax NPV of
US$519 million at a discount rate of
8% and an IRR of 20%, with a capital cost of US$582 million.
Horizonte has a strong shareholder structure,
including Teck Resources Limited (38.3%), Henderson Global
Investors (14.0%) and Anglo Pacific Group (7.5%).
The scientific and technical information
contained in this news release has been reviewed and approved by
David Hall, BSc, MSc, Fellow SEG
PGeo, Chairman of Horizonte, a qualified person within the meaning
of NI 43-101.
For further details on the Araguaia Project,
please refer to the technical report entitled "NI 43-101 Technical
Report, Prefeasibility Study (PFS) for the Araguaia Nickel Project,
Pará State, Brazil", dated
March 25, 2014, which is available on
the Corporation's website at horizonteminerals.com and on SEDAR at
www.sedar.com.
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. Accordingly, readers should not
place undue reliance on forward-looking information. The Company
does not undertake to update any forward-looking information,
except in accordance with applicable securities laws.
SOURCE Horizonte Minerals plc