Horizonte Minerals plc / Index: AIM and TSX / Epic: HZM /
Sector: Mining
LONDON,
Feb. 25, 2015 /CNW/ - Horizonte
Minerals Plc, (AIM: HZM, TSX: HZM) ('Horizonte' or 'the
Company') the exploration and development company focused in
Brazil, announces its results for
the year ended 31 December 2014.
Overview
- Completion of NI 43-101 compliant Pre-Feasibility Study ('PFS')
on the 100% owned Araguaia Nickel Project in Brazil ('Araguaia'), demonstrating robust
project economics for a 15,000 tpa nickel in Fe-Ni product with
post-tax Net Present Value at 8% discount rate (NPV8) of
USD 519 million and IRR of 20% for
total initial capex of USD 582
million
- PFS confirmed that Araguaia ore is amenable for utilisation of
the proven Rotary Kiln Electric Furnace processing route, a 60 year
old technology which is used by circa 20 operations worldwide
today
- Current NI 43-101 compliant Mineral Resource, comprising of
71.98 Mt grading 1.33% Ni (Indicated) and 25.35 Mt at 1.21%
Ni (Inferred)
- Araguaia received 'Seal of Priority' from SEICOM, the State of
Parà's Department of Industry, Commerce and Mining, to assist fast
track the development of Araguaia demonstrating support for the
project by the Brazilian authorities
- Social Environmental Impact Assessment ('SEIA') for Araguaia
filed Q3 2014, a key milestone towards receiving the Preliminary
Licence, anticipated for 2015
- Araguaia SEIA received positive support from local community
and government authorities at the Public Hearing in January 2015 for the Aragauia Environmental
Impact Assessment; the final step in the award of the Preliminary
Licence ('LP')
- Commenced Phase 4 Resource infill drilling campaign utilising 8
diamond drill rigs as part of preparatory work for the Feasibility
Study planned for 2015; initial results over the bulk sample sites
have returned high nickel grades
- Successful placing resulting in strong year-end cash position
of £5 million, providing a solid
platform for commencement of the Feasibility Study at Araguaia
Chairman's Statement
Despite the challenging market conditions
for the resource sector in 2014 and continuing into 2015, exemplary
progress has been made by Horizonte throughout the year at its
wholly owned Araguaia nickel project in Parà State, north central
Brazil ('Araguaia'), as it moves
to develop the next major nickel project in Brazil.
Your Company announced the completed
Pre-Feasibility Study ('PFS') in March
2014, on time, within a tightly constrained budget and
importantly demonstrated the robust economics of Araguaia as a
leading nickel development project globally. In line with the
wider macroeconomic environment, the PFS 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 take to the Feasibility
Stage is a smaller 'Base Case' scenario utilising a single line
Rotary Kiln Electric Furnace ('RKEF') plant, running at 900,000 tpa
ore throughput, with 15,000 t targeted annual production of nickel
in Fe-Ni product that offers an after tax NPV₈ of USD 519 million and a IRR of 20%. The large
scale 'Option', which would also utilise the proven process of
RKEF, offers production upside with an NPV₈ of USD 1.2 billion and 21% IRR based on 2.7Mtpa twin
line 40,000 tpa nickel in Fe-Ni product. However, the Base
Case option importantly 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 USD4.16/lb (USD
9,166/t) together with significant free cash flow generated
over life of mine of approximately of USD1.8
billion post tax on the Base Case Scenario, and it is clear
that Araguaia offers a compelling investment case.
With the PFS completed, and despite poor market
sentiment overall during 2014, Horizonte successfully closed a
£5.5 million placing before costs in
July 2014, which further strengthened
the balance sheet. Importantly Horizonte has a supportive
shareholder base led by Teck Resources, and Henderson Global
Investors. With this and a solid cash position, we are well
positioned to deliver on Araguaia's next development milestones as
we take it through to the Feasibility Study ('FS') stage during
2015.
The FS is the next major milestone on the
journey to further de-risk the project, leading into the financing
to the construction and production stage.
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 Araguaia, 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 the Preliminary
Licence later in 2015.
The FS will also aim to deliver a Proven Reserve
to cover the earlier part of the mine life, as well as defining the
balance of the mine life in the Probable Reserve category for the
Base Case option of the PFS. To this extent drilling has been
underway since Q4 2014.
The current market sentiment towards resource
companies is focussed on the perception of falling demand for many
metals, with associated price falls. What needs to be made clear is
that even with moderate growth, the supply pipeline is lean.
It will be a lack of supply that will be responsible for increasing
prices and a resurgence of the resource sector. Not that
demand is that bad really - Wood Mackenzie predicts a 3.4% annual
increase in nickel consumption through to 2018. They see a nickel
shortage after the overhang is consumed by 2018 with some 778,000t
of new nickel needed by 2030 and 300,000t by 2018.
The Indonesian ban on raw material exports is
influential in this future picture. The potential building of
nickel pig iron smelters within Indonesia could supply new nickel currently
off market but the high costs of construction, plus problems with
permitting etc. may restrict this new supply. While new nickel pig
iron may come from the
Philippines, due to lower overall nickel grades in
the Philippines as compared to
Indonesia, this will be
insufficient to fill that large and increasing supply gap.
As a result there are bullish views on the
future nickel price; the Bank of America Merrill Lynch forecast
prices potentially reaching -USD
25,000/t in 2015 and Wood MacKenzie support this view with a
long term price of USD 25,350 to USD
26,460/t.
The PFS was modelled on a USD 19,000/t nickel price and we believe the
timing of the mine start up fits well with these pricing
forecasts.
With the above in mind, Araguaia is developing
into a leading nickel project globally in terms of size and grade
which offers strong economics, a proven process route, and good
infrastructure. Your Company is led by an experienced Board and
expanding management team with significant experience in both
South America and the nickel
resource space, and has positioned Araguaia for development at a
crucial time for the nickel market when demand will outstrip supply
and nickel prices will ensure massive value creation from the
project.
I am delighted that Horizonte has a solid track
record of delivering milestones on time and on budget; for this
much credit must go to Jeremy
Martin, C.E.O., and having already completed the PFS this
year which demonstrated robust economics, we are well funded
following our recent placing to move into the 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 project.
David J Hall
Chairman
25 February 2015
The Annual Report for the year ended 31
December 2014, together with the Management's Discussion and
Analysis prepared as at 31 December
2014 and Notice of Meeting and Management Information
Circular with Respect to the Annual General Meeting of Shareholders
to be held on 31 March 2015 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 31
March 2015 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
2014 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 2014 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) |
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1 Westferry Circus |
For and on behalf of PKF Littlejohn
LLP |
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Canary Wharf |
Statutory auditor |
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London E14 4HD |
25 February 2015
Consolidated Statement of Comprehensive Income |
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For the year ended 31 December 2014 |
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Year ended |
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Year ended |
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31
December |
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31 December |
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2014 |
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2013 |
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Notes |
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£ |
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£ |
Continuing operations |
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Revenue |
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— |
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— |
Cost of sales |
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— |
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— |
Gross profit |
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— |
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— |
Administrative expenses |
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(1,311,688) |
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(1,288,758) |
Charge for share options granted |
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(125,107) |
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(171,277) |
Changes in fair value of contingent
consideration |
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18 |
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415,702 |
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46,940 |
Project and intangible fixed asset impairment |
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6 |
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(31,989) |
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(1,033,240) |
Loss on foreign exchange |
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(46,364) |
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(149,199) |
Operating loss |
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6 |
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(1,099,446) |
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(2,595,534) |
Finance income |
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7 |
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31,413 |
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47,451 |
Finance costs |
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7 |
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(173,903) |
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(165,138) |
Loss before taxation |
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(1,241,936) |
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(2,713,221) |
Taxation |
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8 |
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— |
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— |
Loss for the year from
continuing operations attributable to
owners of the parent |
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(1,241,936) |
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(2,713,221) |
Other comprehensive income |
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Items that may be reclassified
subsequently to profit or loss |
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Changes in value of available for sale financial
assets |
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12 |
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(22,729) |
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(174,985) |
Currency translation differences on translating
foreign operations |
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17 |
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(1,438,422) |
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(4,124,364) |
Other comprehensive income for the year, net of
tax |
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(1,461,151) |
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(4,299,349) |
Total comprehensive income for the year
attributable to
owners of the parent |
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(2,703,087) |
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(7,012,570) |
Earnings per share from continuing operations
attributable
to owners of the parent |
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Basic (pence per share) |
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20 |
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(0.283) |
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(0.709) |
Diluted (pence per share) |
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20 |
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(0.283) |
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(0.709) |
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Consolidated Statement of Financial
Position |
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Company number: 05676866 |
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As at 31 December 2014 |
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31 December |
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31 December |
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2014 |
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2013 |
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Notes |
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£ |
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£ |
Assets |
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Non-current assets |
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Intangible assets |
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9 |
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20,770,312 |
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20,041,937 |
Property, plant & equipment |
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10 |
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54,390 |
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107,451 |
Deferred tax assets |
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8 |
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5,065,976 |
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5,373,634 |
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25,890,678 |
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25,523,022 |
Current assets |
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Trade and other receivables |
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11 |
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22,709 |
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62,127 |
Available for sale financial assets |
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12 |
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— |
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22,729 |
Cash and cash equivalents |
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13 |
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5,030,968 |
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3,091,880 |
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5,053,677 |
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3,176,736 |
Total assets |
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30,944,355 |
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28,699,758 |
Equity and liabilities |
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Equity attributable to owners of the
parent |
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Share capital |
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14 |
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4,924,271 |
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4,011,395 |
Share premium |
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15 |
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31,095,370 |
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26,997,998 |
Other reserves |
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17 |
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(321,601) |
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1,139,550 |
Retained losses |
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(9,526,869) |
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(8,410,040) |
Total equity |
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26,171,171 |
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23,738,903 |
Liabilities |
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Non-current liabilities |
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Contingent consideration |
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18 |
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2,235,512 |
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2,477,310 |
Deferred tax liabilities |
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8 |
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2,201,778 |
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2,335,492 |
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4,437,290 |
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4,812,802 |
Current liabilities |
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Trade and other payables |
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18 |
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335,894 |
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148,053 |
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335,894 |
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148,053 |
Total liabilities |
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4,773,184 |
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4,960,855 |
Total equity and liabilities |
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30,944,355 |
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28,699,758 |
The financial statements were authorised for issue by the Board
of Directors on 25 February 2015 and
were signed on its behalf.
David J Hall
Chairman
Jeremy J Martin
Chief Executive Officer
Company Statement of Financial Position |
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Company number: 05676866 |
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As at 31 December 2014 |
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31 December |
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31 December |
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2014 |
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2013 |
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Notes |
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£ |
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£ |
Assets |
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Non-current assets |
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Property, plant & equipment |
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10 |
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2,291 |
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5,137 |
Investment in subsidiaries |
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26 |
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37,768,225 |
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34,525,339 |
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37,770,516 |
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|
35,530,476 |
Current assets |
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Trade and other receivables |
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|
|
|
|
|
11 |
|
|
|
13,818 |
|
|
|
12,035 |
Cash and cash equivalents |
|
|
|
|
|
|
13 |
|
|
|
4,208,984 |
|
|
|
2,756,368 |
|
|
|
|
|
|
|
|
|
|
|
4,222,802 |
|
|
|
2,768,403 |
Total assets |
|
|
|
|
|
|
|
|
|
|
41,993,318 |
|
|
|
37,298,879 |
Equity and liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity attributable to owners
of the parent |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Share capital |
|
|
|
|
|
|
14 |
|
|
|
4,924,271 |
|
|
|
4,011,395 |
Share premium |
|
|
|
|
|
|
15 |
|
|
|
31,095,370 |
|
|
|
26,997,998 |
Merger reserve |
|
|
|
|
|
|
17 |
|
|
|
10,888,760 |
|
|
|
10,888,760 |
Retained losses |
|
|
|
|
|
|
|
|
|
|
(7,652,755) |
|
|
|
(7,551,817) |
Total equity |
|
|
|
|
|
|
|
|
|
|
39,255,646 |
|
|
|
34,346,336 |
Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-current liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Contingent consideration |
|
|
|
|
|
|
18 |
|
|
|
2,235,512 |
|
|
|
2,477,310 |
Current liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trade and other payables |
|
|
|
|
|
|
18 |
|
|
|
502,160 |
|
|
|
475,233 |
Total liabilities |
|
|
|
|
|
|
|
|
|
|
2,737,672 |
|
|
|
2,952,543 |
Total equity and liabilities |
|
|
|
|
|
|
|
|
|
|
41,993,318 |
|
|
|
37,298,879 |
The financial statements were authorised for issue by the Board
of Directors on 25 February 2015 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 2014 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Attributable to owners of the parent |
|
|
|
|
Share |
|
|
Share |
|
|
Retained |
|
|
Other |
|
|
|
|
|
|
|
capital |
|
|
premium |
|
|
losses |
|
|
reserves |
|
|
Total |
|
|
|
|
£ |
|
|
£ |
|
|
£ |
|
|
£ |
|
|
£ |
Consolidated |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As at 1 January 2013 |
|
|
|
3,600,462 |
|
|
24,384,527 |
|
|
(5,868,096) |
|
|
5,438,899 |
|
|
27,555,792 |
Loss for the year |
|
|
|
— |
|
|
— |
|
|
(2,713,221) |
|
|
— |
|
|
(2,713,221) |
Other comprehensive income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Changes in value of available for
sale financial
assets |
|
|
|
— |
|
|
— |
|
|
— |
|
|
(174,985) |
|
|
(174,985) |
Currency translation differences
on translating
foreign operations |
|
|
|
— |
|
|
— |
|
|
— |
|
|
(4,124,364) |
|
|
(4,124,364) |
Total comprehensive income for the year |
|
|
|
— |
|
|
— |
|
|
(2,713,221) |
|
|
(4,299,349) |
|
|
(7,012,570) |
Issue of ordinary shares |
|
|
|
410,933 |
|
|
2,671,066 |
|
|
— |
|
|
— |
|
|
3,081,999 |
Issue costs |
|
|
|
— |
|
|
(57,595) |
|
|
— |
|
|
— |
|
|
(57,595) |
Share-based payments |
|
|
|
— |
|
|
— |
|
|
171,277 |
|
|
— |
|
|
171,277 |
Total transactions with owners recognised
directly in equity |
|
|
|
410,933 |
|
|
2,613,471 |
|
|
171,277 |
|
|
— |
|
|
3,195,681 |
As at 31 December 2013 |
|
|
|
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 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Attributable to equity shareholders |
|
|
|
|
Share |
|
|
Share |
|
|
Retained |
|
|
Merger |
|
|
|
|
|
|
|
capital |
|
|
premium |
|
|
losses |
|
|
reserves |
|
|
Total |
|
|
|
|
£ |
|
|
£ |
|
|
£ |
|
|
£ |
|
|
£ |
Company |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As at 31 January 2013 |
|
|
|
3,600,462 |
|
|
24,384,527 |
|
|
(3,344,872) |
|
|
10,888,760 |
|
|
35,528,877 |
Loss for the year |
|
|
|
— |
|
|
— |
|
|
(4,378,222) |
|
|
— |
|
|
(4,378,222) |
Total comprehensive income for the year |
|
|
|
— |
|
|
— |
|
|
(4,378,222) |
|
|
— |
|
|
(4,378,222) |
Issue of ordinary shares |
|
|
|
410,933 |
|
|
2,671,066 |
|
|
— |
|
|
— |
|
|
3,081,999 |
Issue costs |
|
|
|
— |
|
|
(57,595) |
|
|
— |
|
|
— |
|
|
(57,595) |
Share-based payments |
|
|
|
— |
|
|
— |
|
|
171,277 |
|
|
— |
|
|
171,277 |
Total transactions with owners, recognised
directly in equity |
|
|
|
410,933 |
|
|
2,613,471 |
|
|
171,277 |
|
|
— |
|
|
3,195,681 |
As at 31 December 2013 |
|
|
|
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 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated Statement of Cash Flows |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the year ended 31 December 2014 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
31 December |
|
|
|
31 December |
|
|
|
|
|
|
|
|
|
|
2014 |
|
|
|
2013 |
|
|
|
|
|
|
Notes |
|
|
|
£ |
|
|
|
£ |
Cash flows from operating activities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss before taxation |
|
|
|
|
|
|
|
|
|
(1,241,936) |
|
|
|
(2,713,221) |
Finance income |
|
|
|
|
|
|
|
|
|
(31,413) |
|
|
|
(47,451) |
Finance costs |
|
|
|
|
|
|
|
|
|
173,903 |
|
|
|
165,138 |
Charge for share options granted |
|
|
|
|
|
|
|
|
|
125,107 |
|
|
|
171,277 |
Impairment of intangible assets |
|
|
|
|
|
|
|
|
|
31,989 |
|
|
|
1,048,282 |
Exchange differences |
|
|
|
|
|
|
|
|
|
46,364 |
|
|
|
(27,424) |
Change in fair value of contingent
consideration |
|
|
|
|
|
|
|
|
|
(415,702) |
|
|
|
(46,940) |
Depreciation |
|
|
|
|
|
|
|
|
|
3,666 |
|
|
|
4,370 |
Operating loss before changes in working
capital |
|
|
|
|
|
|
|
|
|
(1,308,022) |
|
|
|
(1,445,969) |
Decrease/(increase) in trade and other
receivables |
|
|
|
|
|
|
|
|
|
39,417 |
|
|
|
(17,285) |
Increase/(decrease) in trade and other
payables |
|
|
|
|
|
|
|
|
|
55,558 |
|
|
|
(177,040) |
Net cash used in operating activities |
|
|
|
|
|
|
|
|
|
(1,213,047) |
|
|
|
(1,640,294) |
Cash flows from investing activities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Purchase of intangible assets |
|
|
|
|
|
|
|
|
|
(1,843,161) |
|
|
|
(4,199,863) |
Purchase of property, plant and equipment |
|
|
|
|
|
|
|
|
|
— |
|
|
|
(100,037) |
Proceeds from sale of property, plant and
equipment |
|
|
|
|
|
|
|
|
|
— |
|
|
|
91,247 |
Interest received |
|
|
|
|
|
|
|
|
|
31,413 |
|
|
|
47,451 |
Net cash used in investing activities |
|
|
|
|
|
|
|
|
|
(1,811,748) |
|
|
|
(4,161,202) |
Cash flows from financing activities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds from issue of ordinary shares |
|
|
|
|
|
|
|
|
|
5,477,265 |
|
|
|
3,081,999 |
Issue costs |
|
|
|
|
|
|
|
|
|
(467,017) |
|
|
|
(57,595) |
Net cash generated from financing
activities |
|
|
|
|
|
|
|
|
|
5,010,248 |
|
|
|
3,024,404 |
Net increase/(decrease) in cash
and cash equivalents |
|
|
|
|
|
|
|
|
|
1,985,453 |
|
|
|
(2,777,092) |
Cash and cash equivalents at beginning of
year |
|
|
|
|
|
|
|
|
|
3,091,880 |
|
|
|
5,887,174 |
Exchange loss on cash and cash equivalents |
|
|
|
|
|
|
|
|
|
(46,365) |
|
|
|
(18,202) |
Cash and cash equivalents at end of the
year |
|
|
|
|
|
13 |
|
|
|
5,030,968 |
|
|
|
3,091,880 |
Major non-cash transactions
During the year ended 31 December
2014 additions to intangible exploration assets included
£46,261 (2013: £80,109) in relation to depreciation charges on
property, plant and equipment used for exploration activities.
Company Statement of Cash Flows |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For year ended 31 December 2014 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
31 December |
|
|
|
31 December |
|
|
|
|
|
|
|
|
|
|
2014 |
|
|
|
2013 |
|
|
|
|
|
|
Notes |
|
|
|
£ |
|
|
|
£ |
Cash flows from operating activities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss before taxation |
|
|
|
|
|
|
|
|
|
(226,045) |
|
|
|
(4,378,222) |
Finance income |
|
|
|
|
|
|
|
|
|
(14,006) |
|
|
|
(45,075) |
Charge for share options granted |
|
|
|
|
|
|
|
|
|
125,107 |
|
|
|
171,277 |
Impairment of investment in subsidiaries |
|
|
|
|
|
|
|
|
|
— |
|
|
|
4,264,167 |
Depreciation |
|
|
|
|
|
|
|
|
|
2,846 |
|
|
|
2,868 |
Operating (loss)/profit before
changes in working capital |
|
|
|
|
|
|
|
|
|
(112,098) |
|
|
|
15,015 |
(Increase)/decrease in trade and other
receivables |
|
|
|
|
|
|
|
|
|
(1,783) |
|
|
|
13,707 |
Increase/(decrease) in trade and other
payables |
|
|
|
|
|
|
|
|
|
26,929 |
|
|
|
(179,324) |
Net cash flows used in operating
activities |
|
|
|
|
|
|
|
|
|
(86,952) |
|
|
|
(150,602) |
Cash flows from investing activities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans to subsidiary undertakings |
|
|
|
|
|
|
|
|
|
(3,484,684) |
|
|
|
(5,314,945) |
Purchase of property, plant and equipment |
|
|
|
|
|
|
|
|
|
— |
|
|
|
(2,550) |
Interest received |
|
|
|
|
|
|
|
|
|
14,006 |
|
|
|
45,075 |
Net cash used in investing activities |
|
|
|
|
|
|
|
|
|
(3,470,678) |
|
|
|
(5,272,420) |
Cash flows from financing activities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds from issue of ordinary shares |
|
|
|
|
|
|
|
|
|
5,477,265 |
|
|
|
3,081,999 |
Issue costs |
|
|
|
|
|
|
|
|
|
(467,017) |
|
|
|
(57,595) |
Net cash generated from financing
activities |
|
|
|
|
|
|
|
|
|
5,010,248 |
|
|
|
3,024,404 |
Net increase/(decrease) in cash and cash
equivalents |
|
|
|
|
|
|
|
|
|
1,452,616 |
|
|
|
(2,398,618) |
Cash and cash equivalents at beginning of
year |
|
|
|
|
|
|
|
|
|
2,756,368 |
|
|
|
5,154,986 |
Cash and cash equivalents at end of the
year |
|
|
|
|
|
13 |
|
|
|
4,208,984 |
|
|
|
2,756,368 |
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 precious and base metals. The Company's shares are
listed on the Alternative Investment 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 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
A number of new standards and amendments to
standards and interpretations are effective for the annual period
beginning after 1 January 2014 and
have been applied in preparing these financial statements.
IFRS 10, 'Consolidated financial statements',
builds on existing principles by identifying the concept of control
as the determining factor in whether an entity should be included
within the consolidated financial statements of the parent company.
The standard provides additional guidance to assist in the
determination of control where this is difficult to assess.
IFRS 12, 'Disclosures of interests in other
entities', includes the disclosure requirements for all forms of
interests in entities, including joint arrangements, associates,
special purpose vehicles and other off Statement of Financial
Position vehicles.
IAS 27, 'Separate Financial Statements',
replaces the current version of IAS 27, 'Consolidated and Separate
Financial Statements' as a result of the issue of IFRS 10. The
revised standard includes the requirements relating to separate
financial statements.
IAS 28, 'Investments in Associates and Joint
Ventures', replaces the current version of IAS 28, 'Investments in
Associates', as a result of the issue of IFRS 11. The revised
standard includes the requirements for associates and joint
ventures that have to be equity accounted following the issue of
IFRS 11.
b) New and amended standards, and interpretations mandatory
for the first time for the financial year beginning 1 January 2014, but not currently relevant
to the Group
A number of new standards and amendments to
standards and interpretations are effective for annual periods
beginning after 1 January 2014, and
have not been applied in preparing these financial statements. None
of these is expected to have a significant effect on the financial
statements of the Company or Group.
Amendment to IAS 32, 'Financial Instruments:
Presentation', add application guidance to address inconsistencies
identified in applying some of the criteria when offsetting
financial assets and financial liabilities. This includes
clarifying the meaning of "currently has a legally enforceable
right of set-off" and that some gross settlement systems may be
considered equivalent to net settlement.
Amendment to IAS 36, 'Impairment of Assets',
require additional information about the fair value measurement
when the recoverable amount of impaired assets is based on fair
value less costs of disposal. The amendments also incorporate the
requirement to disclose the discount rate used in determining
impairment (or reversals) where recoverable amount (based on fair
value less costs of disposal) is determined using a present value
technique.
Amendment to IAS 39, 'Financial Instruments:
Novation of Derivatives and Continuation of Hedge Accounting', make
it clear that there is no need to discontinue hedge accounting if a
hedging derivative is novated, provided certain criteria are
met. This relief has been introduced in response to
legislative change across many jurisdictions that would lead to the
widespread novation of over-the-counter derivatives.
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.
Amendments to IFRS 10, 'Consolidated Financial
Statements', IFRS 11 'Joint Arrangements' and IFRS 12, 'Disclosure
of Interests in Other Entities' clarify the IASB's intention when
first issuing the transition guidance in IFRS 10, provide similar
relief in IFRS 11 and IFRS 12 from the presentation or adjustment
of comparative information for periods prior to the immediately
preceding period, and provide additional transition relief by
eliminating the requirement to present comparatives for the
disclosures relating to unconsolidated structured entities for any
period before the first annual period for which IFRS 12 is
applied.
Amendments to IFRS 10, 'Consolidated Financial Statements', IFRS
12, 'Disclosure of Interests in Other Entities' and IAS 27,
'Separate Financial Statements', define an investment entity and
introduce an exception to consolidating particular subsidiaries for
investment entities. These amendments require an investment entity
to measure those subsidiaries at fair value through profit or loss
in accordance with IFRS 9 'Financial Instruments', in its
consolidated and separate financial statements. The amendments also
introduce new disclosure requirements for investment entities in
IFRS 12 and IAS 27. IFRIC 21, 'Levies', addresses the accounting
for a liability to pay a levy if that liability is within the scope
of IAS 37. The interpretation also addresses the accounting for a
liability to pay a levy whose timing and amount is certain.
c) New and amended standards and
interpretations issued but not yet effective for the financial year
beginning 1 January 2014 and not
early adopted
The standards and interpretations that are
issued, but not yet effective, up to the date of issuance of the
financial statements are disclosed below. The Company and Group
intend to adopt these standards, if applicable, when they become
effective.
Amendments to IAS 1 "Presentation of Financial Statements":
Disclosure Initiative. The amendments to IAS 1 address perceived
impediments to preparers exercising their judgment in presenting
their financial reports by making the following changes:
- clarification that information should not be obscured by
aggregating or by providing immaterial information, materiality
considerations apply to all parts of the financial statements, and
even when a standard requires a specific disclosure, materiality
considerations do apply;
- clarification that the list of line items to be presented in
these statements can be disaggregated and aggregated as relevant
and additional guidance on subtotals in these statements and
clarification that an entity's share of OCI of equity-accounted
associates and joint ventures should be presented in aggregate as
single line items based on whether or not it will subsequently be
reclassified to profit or loss;
- additional examples of possible ways of ordering the notes to
clarify that understandability and comparability should be
considered when determining the order of the notes and to
demonstrate that the notes need not be presented in the order so
far listed in paragraph 114 of IAS 1.
The Group intends to adopt the amended standard
no later than the annual period beginning on or after 1 January 2016, subject to EU endorsement.
Amendments to IAS 16 'Property, Plant and
Equipment' and IAS 38 'Intangible Assets': Clarification of
Acceptable Methods of Depreciation and Amortisation. The amendments
clarify that a depreciation method which is based on revenue that
is generated by an activity which includes the use of an asset is
not appropriate for property, plant and equipment. The amendments
also introduce a rebuttable presumption that an amortisation method
that is based on the revenue generated by an activity that includes
the use of an intangible asset is inappropriate, which can only be
overcome in limited circumstances. The Group intends to adopt the
amended standard no later than the annual period beginning on or
after 1 January 2016, subject to EU
endorsement.
Amendments to IAS 16 "Property, Plant and
Equipment" and IAS 41 "Agriculture": Bearer Plants. The amendments
include 'bearer plants' within the scope of IAS 16 instead of IAS
41, allowing such assets to be accounted for as property, plant and
equipment and measured after initial recognition on a cost or
revaluation basis in accordance with IAS 16. The amendments also
introduce a definition of 'bearer plants' as a living plant that is
used in the production or supply of agricultural produce, is
expected to bear produce for more than one period and has a remote
likelihood of being sold as agricultural produce, except for
incidental scrap sales. The amendments also clarify that produce
growing on bearer plants remains within the scope of IAS 41. The
Group has yet to assess the amendments' full impact but intends to
adopt no later than accounting periods beginning on or after
1 January 2016, subject to EU
endorsement.
Amendment to IAS 19, 'Defined Benefit Plans:
Employee Contributions', provides guidance added to IAS 19 Employee
Benefits on accounting for contributions from employees or third
parties set out in the formal terms of a defined benefit
plan. The Directors do not believe that this will have an
impact on the Group, however will be adopted no later than
accounting period beginning on or after 1
July 2014, subject to endorsement by the EU.
Amendments to IAS 27 "Separate Financial
Statements": Equity Method in Separate Financial Statements. The
amendments to IAS 27 permit investments in subsidiaries, joint
ventures and associates to be optionally accounted for using the
equity method in the separate financial statements. The Group
intends to adopt the amended standard no later than the annual
period beginning on or after 1 January
2016, subject to EU endorsement.
IFRS 9 (2014) 'Financial Instruments' supersedes
IFRS 9 (2009), IFRS 9 (2010) and IFRS 9 (2013). The finalised
version of IFRS 9 contains accounting requirements for financial
instruments, replacing IAS 39 'Financial Instruments: Recognition
and Measurement'. The content of IFRS 9 (2014) includes:
- Classification and measurement - financial assets are
classified by reference to the business model within which they are
held and their contractual cash flow characteristics. The standard
introduces a fair value through other comprehensive income category
for certain debt instruments. Financial liabilities are classified
in a similar manner to that under IAS 39 however there are
differences in the requirements applying to the measurement of an
entity's own risk.
- Impairment - The standard introduces an expected credit loss
model for the measurement of the impairment of financial assets, so
it is no longer necessary for a credit event to have occurred
before a credit loss is recognised.
- Hedge accounting - The standard introduces a new hedge
accounting model that is designed to be more closely aligned with
how entities undertake risk management activities when hedging
financial and non-financial risk exposures.
- Derecognition - the requirements for the derecognition of
financial assets and liabilities are carried forward from IAS
39.
The Group intends to adopt the amended standards
no later than the annual period beginning on or after 1 January 2018, subject to EU endorsement.
Amendments to IFRS 10 'Consolidated Financial
Statements' and IAS 28 'Investments in Associates and Joint
Ventures' (2011) in order to clarify the treatment of the sale or
contribution of assets from an investor to its associate or joint
venture, as follows:
- require full recognition in the investor's financial statements
of gains and losses arising on the sale or contribution of assets
that constitute a business (as defined in IFRS 3 Business
Combinations.)
- require the partial recognition of gains and losses where the
assets do not constitute a business, i.e. a gain or loss is
recognised only to the extent of the unrelated investors' interests
in that associate or joint venture.
These requirements apply regardless of the legal
form of the transaction, e.g. whether the sale or contribution of
assets occurs by an investor transferring shares in a subsidiary
that holds the assets (resulting in loss of control of the
subsidiary), or by the direct sale of the assets themselves. The
Group intends to adopt the amended standard no later than the
annual period beginning on or after 1
January 2016, subject to EU endorsement.
Amendments to IFRS 10, IFRS 12 and IAS 28:
Investment Entities: Applying the Consolidation Exception. Amends
IFRS 10 Consolidated Financial Statements, IFRS 12
Disclosure of Interests in Other Entities and IAS 28
Investments in Associates and Joint Ventures (2011) to address
issues that have arisen in the context of applying the
consolidation exception for investment entities by clarifying
the following points:
- The exemption from preparing consolidated financial statements
for an intermediate parent entity is available to a parent entity
that is a subsidiary of an investment entity, even if the
investment entity measures all of its subsidiaries at fair
value.
- A subsidiary that provides services related to the parent's
investment activities should not be consolidated if the subsidiary
itself is an investment entity.
- When applying the equity method to an associate or a joint
venture, a non-investment entity investor in an investment entity
may retain the fair value measurement applied by the associate or
joint venture to its interests in subsidiaries.
- An investment entity measuring all of its subsidiaries at fair
value provides the disclosures relating to investment entities
required by IFRS 12.
The Group intends to adopt the amended standard
no later than the annual period beginning on or after 1 January 2016, subject to EU endorsement.
Amendments to IFRS 11 "Joint Arrangements:
Accounting for Acquisitions of Interests in Joint Operations"
require an acquirer of an interest in a joint operation in which
the activity constitutes a business as defined in IFRS 3. The
amendments apply both to the initial acquisition of an interest in
a joint operation, and the acquisition of an additional interest in
a joint operation. The Group has yet to assess the full impact of
this amendment and intends to adopt no later than accounting period
beginning on or after 1 January 2016,
subject to EU endorsement.
IFRS 14 "Regulatory Deferral Accounts" permits
an entity which is a first time adopter of International Financial
Reporting Standards to continue to account, with some limited
changes for 'regulatory deferral account balances' in accordance
with its previous GAAP, both on initial adoption of IFRS and in
subsequent financial statements. The Group is yet to assess the
full impact of this amendment and intends to adopt no later than
the accounting period beginning on or after 1 January 2016, subject to EU endorsement.
IFRS 15 "Revenue from Contracts with Customers"
provides a single, principles based five-step model to be applied
to all contracts with customers. The standard includes guidance on
the point in which revenue is recognised, accounting for variable
consideration, costs of fulfilling and obtaining a contract and
various related matters. IFRS 15 also introduces new disclosures
about revenue. The Group is yet to assess the full impact of this
amendment and intends to adopt no later than the accounting period
beginning on or after 1 January 2017,
subject to EU endorsement.
'Annual Improvements 2010 - 2012 Cycle' sets out
amendments to various IFRSs and provides a vehicle for making
non-urgent but necessary amendments to IFRSs:
- IFRS 2 'Share-based Payment': amendment to the definition of a
vesting condition.
- IFRS 3 'Business Combinations': amendments to the accounting
for contingent consideration in a business combination.
- IFRS 8 'Operating Segments': amends to the aggregation of
operating segments and the reconciliation of the total of the
reportable segments' assets to the entity's assets.
- IFRS 13 'Fair Value Measurement': amendments to short-term
receivables and payables.
- IAS 16 'Property, Plant and Equipment': amendments to the
revaluation method in relation to the proportionate restatement of
accumulated depreciation.
- IAS 24 'Related Party Disclosures': amendments regarding key
management personnel.
- IAS 38 'Intangible Assets': amendments to the revaluation
method in relation to the proportionate restatement of accumulated
depreciation.
The Group intends to adopt the amended standards
no later than the annual period beginning on or after 1 July 2014, subject to EU endorsement.
'Annual Improvements 2011 - 2013 Cycle' sets out
amendments to various IFRSs and provides a vehicle for making
non-urgent but necessary amendments to IFRSs:
- IFRS 1 'First-time Adoption of International Financial
Reporting Standards': amendment to the meaning of 'effective
IFRSs'.
- IFRS 3 'Business Combinations': amendments to the scope
exceptions for joint ventures.
- IFRS 13 'Fair Value Measurement': amendments to the scope of
paragraph 52 (portfolio exception).
- IAS 40 'Investment Property': amendments clarifying the
interrelationship between IFRS 3 and IAS 40 when classifying
property as investment property or owner-occupied property.
The Group intends to adopt the amended standards
no later than the annual period beginning on or after 1 July 2014, subject to EU endorsement.
'Annual Improvements 2012 - 2014 Cycle' sets out
additional amendments to the following IFRSs:
- IFRS 5 — Adds specific guidance in IFRS 5 for cases in which an
entity reclassifies an asset from held for sale to held for
distribution or vice versa and cases in which held-for-distribution
accounting is discontinued
- IFRS 7 — Additional guidance to clarify whether a servicing
contract is continuing involvement in a transferred asset, and
clarification on offsetting disclosures in condensed interim
financial statements
- IAS 9 — Clarify that the high quality corporate bonds used in
estimating the discount rate for post-employment benefits should be
denominated in the same currency as the benefits to be paid
- IAS 34 — Clarify the meaning of 'elsewhere in the interim
report' and require a cross-reference
The Group intends to adopt the amended standards no later than
the annual periods beginning on or after 1
July 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 |
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Parent company |
Country of incorporation |
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Nature of business |
Horizonte Exploration Ltd |
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Horizonte Minerals Plc |
England |
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Mineral Exploration |
Horizonte Minerals (IOM) Ltd |
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Horizonte Exploration Ltd |
Isle of Man |
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Holding company |
HM Brazil (IOM) Ltd |
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Horizonte Minerals (IOM) Ltd |
Isle of Man |
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Holding company |
HM Peru (IOM) Ltd |
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Horizonte Minerals (IOM) Ltd |
Isle of Man |
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Holding company |
Horizonte Nickel (IOM) Ltd |
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Horizonte Minerals (IOM) Ltd |
Isle of Man |
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Holding company |
HM do Brasil Ltda |
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HM Brazil (IOM) Ltd |
Brazil |
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Mineral Exploration |
Araguaia Niquel Mineração
Ltda |
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Horizonte Nickel (IOM) Ltd |
Brazil |
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Mineral Exploration |
Lontra Empreendimentos e |
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Araguaia Niquel
Mineração Ltda/ |
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Participações Ltda |
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Horizonte Nickel (IOM) Ltd |
Brazil |
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Mineral Exploration |
Mineira El Aguila SAC |
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HM Peru (IOM) Ltd |
Peru |
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Mineral Exploration |
Mineira Cotahusi SAC |
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Mineira El Aguila SAC |
Peru |
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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 considerable financial
resources which will be sufficient 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. The amount of additional
funding is estimated without any certainty at the point of approval
of these Financial Statements and the Group will be required to
raise additional funds either via an issue of equity or through the
issuance of debt. The Directors are confident that funds will be
forthcoming if and when they are required.
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 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 Company
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 |
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25% |
Vehicles and other field equipment |
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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 and Peruvian entities is
Brazilian Real and Peruvian Nuevo Sol respectively. 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:
(1) |
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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; |
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(2) |
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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 |
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(3) |
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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 foregoing
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' 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 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 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 balance sheet 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.
2.12 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.
2.13 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.
2.14 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.
2.15 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.
2.16 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.
2.17 Finance income
Interest income is recognised using the effective interest
method, taking into account the principal amounts outstanding and
the interest rates applicable.
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 focuses on the
unpredictability of financial markets and seeks to minimise
potential adverse effects on the Group's financial performance.
Risk management is carried out by the 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 2014, if the US
Dollar had weakened/strengthened by 5% against Pound Sterling and
Brazilian Real with all other variables held constant, post tax
loss for the year would have been approximately £15,641/£17,287
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 2014 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. As this
is an observable input all fair value estimates fall within level
2.
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 2014 of £20,499,389 (2013: £19,754,559). Management tests annually whether
exploration projects have future economic value in accordance with
the accounting policy stated in note 2.5. 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 consider
a full impairment charge necessary for the Rio Maria licence, for
which the impairment charge was £31,989. In 2013 the El Aguila Project was fully
impaired, with a charge of £738,103
together with the Falcao Project, for which the impairment charge
was £310,179.
4.2 Estimated impairment of goodwill
Goodwill has a carrying value at 31
December 2014 of £270,923
(2013: £287,378). 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 9 to the
Financial Statements.
4.3 Contingent consideration
Contingent consideration has a carrying value of £2,235,512 at 31 December
2014 (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. 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
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.
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 Share-based payment transactions
The Group has made awards of options and warrants over its
unissued share capital to certain Directors and employees as part
of their remuneration package.
The valuation of these options and warrants involves making a
number of critical estimates relating to price volatility, future
dividend yields, expected life of the options and forfeiture rates.
These assumptions have been described in more detail in note
16.
Were the actual number of options that vest to differ by 10%
from management's estimates, the overall option charge would
increase/ decrease by £11,156.
4.6 Other areas
Other estimates include but are not limited to employee benefit
liabilities, 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.
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 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2013 |
|
|
|
|
|
UK
2013
£ |
|
|
Brazil
2013
£ |
|
|
Other
2013
£ |
|
|
Total
2013
£ |
Administrative expenses |
|
|
|
|
|
(768,244) |
|
|
(498,874) |
|
|
(21,640) |
|
|
(1,288,758) |
Loss on foreign exchange |
|
|
|
|
|
(59,916) |
|
|
(89,283) |
|
|
— |
|
|
(149,199) |
Project and intangible fixed asset impairment |
|
|
|
|
|
— |
|
|
(295,137) |
|
|
(738,103) |
|
|
(1,033,240) |
Loss from operations per
reportable segment |
|
|
|
|
|
(828,160) |
|
|
(883,294) |
|
|
(759,743) |
|
|
(2,471,197) |
Inter segment revenues |
|
|
|
|
|
— |
|
|
511,766 |
|
|
65,740 |
|
|
577,506 |
Depreciation charges |
|
|
|
|
|
(2,869) |
|
|
(1,501) |
|
|
— |
|
|
(4,370) |
Additions to non-current assets |
|
|
|
|
|
— |
|
|
(4,241,762) |
|
|
— |
|
|
(4,241,762) |
Reportable segment assets |
|
|
|
|
|
3,342,399 |
|
|
25,354,609 |
|
|
2,750 |
|
|
28,699,758 |
Reportable segment liabilities |
|
|
|
|
|
2,544,042 |
|
|
2,416,813 |
|
|
— |
|
|
4,960,855 |
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:
|
|
|
|
|
|
2014
£ |
|
|
2013
£ |
Loss from operations per reportable segment |
|
|
|
|
|
(1,390,041) |
|
|
(2,471,197) |
Changes in fair value of contingent consideration
(refer note 18) |
|
|
|
|
|
415,702 |
|
|
46,940 |
Charge for share options granted |
|
|
|
|
|
(125,107) |
|
|
(171,277) |
Finance income |
|
|
|
|
|
31,413 |
|
|
47,451 |
Finance costs |
|
|
|
|
|
(173,903) |
|
|
(165,138) |
Loss for the year from continuing operations |
|
|
|
|
|
(1,241,936) |
|
|
(2,713,221) |
6. Operating loss
Loss from operations is stated after charging the following:
Group |
|
|
|
|
|
2014
£ |
|
|
2013
£ |
Depreciation |
|
|
|
|
|
3,666 |
|
|
4,370 |
Project and fixed asset impairment |
|
|
|
|
|
31,989 |
|
|
1,033,240 |
Auditors' remuneration |
|
|
|
|
|
|
|
|
|
- Fees payable for the audit of
Parent and consolidated financial statements |
|
|
|
|
|
30,000 |
|
|
30,000 |
- Fees payable for audit related assurance
services |
|
|
|
|
|
4,525 |
|
|
7,500 |
- Fees payable for tax compliance |
|
|
|
|
|
2,380 |
|
|
2,400 |
Operating lease charges |
|
|
|
|
|
64,153 |
|
|
92,773 |
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. Project
and fixed asset impairment costs in 2013 of £1,033,240 consist of the impairment charge on
intangible assets attributable to the El Aguila and Falcao projects
(refer note 9) of £738,103 and
£310,179 respectively. A receipt of
£15,042 (USD25,000) in connection with the signing of a
purchase and sale agreement for the Falcao project in December 2013 was netted off against the
impairment of that project so that the net impact on profit or loss
of the impairment of Falcao amounted to £295,037 (see note 9 Intangible Assets).
7. Finance income and costs
Group |
|
|
|
|
|
2014
£ |
|
|
2013
£ |
Finance income: |
|
|
|
|
|
|
|
|
|
- Interest income on cash and
short-term bank deposits |
|
|
|
|
|
31,413 |
|
|
47,451 |
Finance costs: |
|
|
|
|
|
|
|
|
|
- Contingent consideration: unwinding of
discount |
|
|
|
|
|
(173,903) |
|
|
(165,138) |
Net finance costs |
|
|
|
|
|
(142,490) |
|
|
(117,687) |
8. Taxation
Income tax expense
Group |
|
|
|
|
|
|
|
|
|
|
2014
£ |
|
|
|
|
2013
£ |
Analysis of tax charge |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current tax charge |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- UK Corporation tax charge for
the year |
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
|
— |
- Foreign tax |
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
|
— |
Current tax charge for the year |
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
|
— |
Deferred tax charge for the year |
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
|
— |
Tax on profit/(loss) for the year |
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
|
— |
Reconciliation of current tax
Group |
|
|
|
|
|
2014
£ |
|
|
2013
£ |
Loss before income tax |
|
|
|
|
|
(1,241,936) |
|
|
(2,713,221) |
Current tax at 26.6% (2013: 23.1%) |
|
|
|
|
|
(330,757) |
|
|
(626,754) |
Effects of: |
|
|
|
|
|
|
|
|
|
Expenses not deducted for tax purposes |
|
|
|
|
|
62,451 |
|
|
370,226 |
Tax losses carried forward for
which no deferred income tax asset
was recognised - UK |
|
|
|
|
|
131,940 |
|
|
207,143 |
Tax losses carried forward for
which no deferred income tax asset
was recognised - Brazil and Peru |
|
|
|
|
|
136,366 |
|
|
49,385 |
Total tax |
|
|
|
|
|
— |
|
|
— |
No tax charge or credit arises on the loss for the year.
The weighted average applicable tax rate of 26.6% 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. During 2013 the Brazil registered subsidiaries elected to
adopt the Actual Profit system to determine income tax. As a
result the losses incurred are eligible for tax purposes.
Deferred income tax
An analysis of deferred tax assets and liabilities is set out
below.
Group |
|
|
|
|
2014
£ |
|
|
2013
£ |
Deferred tax assets |
|
|
|
|
|
|
|
|
- Deferred tax asset to be recovered after more
than 12 months |
|
|
|
|
5,065,976 |
|
|
5,373,634 |
|
|
|
|
|
5,065,976 |
|
|
5,373,634 |
Deferred tax liabilities |
|
|
|
|
|
|
|
|
- Deferred tax liability to be settled after more
than 12 months |
|
|
|
|
(2,201,778) |
|
|
(2,335,492) |
|
|
|
|
|
(2,201,778) |
|
|
(2,335,492) |
Deferred tax asset (net) |
|
|
|
|
2,864,198 |
|
|
3,038,142 |
The gross movement on the deferred income tax account is as
follows:
Group |
|
|
|
|
|
|
|
|
|
|
2014
£ |
|
|
2013
£ |
At 1 January |
|
|
|
|
|
|
|
|
|
|
3,038,142 |
|
|
3,566,966 |
Exchange differences |
|
|
|
|
|
|
|
|
|
|
(173,944) |
|
|
(528,824) |
At 31 December |
|
|
|
|
|
|
|
|
|
|
2,864,198 |
|
|
3,038,142 |
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 2013 |
|
|
|
|
|
|
|
|
(2,742,012) |
|
|
|
6,308,978 |
|
|
|
3,566,966 |
Exchange differences |
|
|
|
|
|
|
|
|
406,520 |
|
|
|
(935,344) |
|
|
|
(528,824) |
At 31 December 2013 |
|
|
|
|
|
|
|
|
(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 |
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 £18,190,000 (2013: £17,751,000) in Brazil and excess management charges of
approximately £2,590,000 (2013:
£2,387,000) 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.
9. Intangible assets
Intangible assets comprise exploration and evaluation costs and
goodwill. Exploration and evaluation costs comprise acquired and
internally generated assets.
Group |
|
|
|
|
|
Goodwill
£ |
|
|
Exploration
and
evaluation costs
£ |
|
|
Total
£ |
Cost |
|
|
|
|
|
|
|
|
|
|
|
|
At 1 January 2013 |
|
|
|
|
|
342,765 |
|
|
20,074,974 |
|
|
20,417,739 |
Additions - internally generated |
|
|
|
|
|
— |
|
|
4,241,762 |
|
|
4,241,762 |
Impairments |
|
|
|
|
|
— |
|
|
(1,048,282) |
|
|
(1,048,282) |
Exchange rate movements |
|
|
|
|
|
(55,387) |
|
|
(3,513,895) |
|
|
(3,569,282) |
At 31 December 2013 |
|
|
|
|
|
287,378 |
|
|
19,754,559 |
|
|
20,041,937 |
Additions - internally generated |
|
|
|
|
|
— |
|
|
2,018,658 |
|
|
2,018,658 |
Impairments |
|
|
|
|
|
— |
|
|
(31,989) |
|
|
(31,989) |
Exchange rate movements |
|
|
|
|
|
(16,453) |
|
|
(1,241,841) |
|
|
(1,258,294) |
Net book amount at 31 December
2014 |
|
|
|
|
|
270,925 |
|
|
20,499,387 |
|
|
20,770,312 |
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. Impairment charges in 2013 of £1,048,282 were included in profit or loss as the
intangible assets attributable to El Aguila and Falcao were written
off following suspension of exploration activities at El Aguila and
termination of the Falcao joint venture with AngloGold Ashanti plc.
In December 2013 the Company signed a
sale and purchase agreement with Falcao Mineradora Ltda, a
Brazilian company. USD 25,000
(£15,042) was paid upon signature and
offset against the £310,179
impairment charge in the year for Falcao. Further consideration of
USD 140,000 shall be paid to the
Company in the event that the Final Exploration Report for the
Falcao project is accepted by the Brazilian Department of Mines
('DNPM').
(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 and evaluation
assets is presented below.
Group |
|
|
|
|
|
2014
£ |
|
|
2013
£ |
Brazil - Araguaia/Lontra/Vila Oito and
Floresta |
|
|
|
|
|
20,499,387 |
|
|
19,697,507 |
Brazil - Other |
|
|
|
|
|
— |
|
|
57,052 |
|
|
|
|
|
|
20,499,387 |
|
|
19,754,559 |
The adjacent Araguaia/Lontra/Vila Oito and Floresta exploration
sites ('the Araguaia Project') 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.
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 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
USD 519 million as per the PFS to be
reduced to the book value of the Araguaia Project as at
31 December 2014, the discount rate
applied to the cash flow model would need to be increased from 8%
to 20%, or the assumed long-term real nickel price of USD 19,000 per tonne would need to be reduced to
approximately USD13,975 per
tonne.
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.
10. Property, plant and equipment
Group |
|
|
|
|
|
Vehicles and
other field
equipment
£ |
|
|
Office
equipment
£ |
|
|
Total
£ |
Cost |
|
|
|
|
|
|
|
|
|
|
|
|
At 1 January 2013 |
|
|
|
|
|
271,882 |
|
|
10,633 |
|
|
282,515 |
Additions |
|
|
|
|
|
94,574 |
|
|
5,643 |
|
|
100,037 |
Disposals |
|
|
|
|
|
(165,590) |
|
|
— |
|
|
(165,590) |
Foreign exchange movements |
|
|
|
|
|
(39,796) |
|
|
(921) |
|
|
(40,717) |
At 31 December 2013 |
|
|
|
|
|
161,070 |
|
|
15,175 |
|
|
176,245 |
Foreign exchange movements |
|
|
|
|
|
(8,981) |
|
|
(445) |
|
|
(9,426) |
At 31 December 2014 |
|
|
|
|
|
152,089 |
|
|
14,730 |
|
|
166,819 |
Accumulated depreciation |
|
|
|
|
|
|
|
|
|
|
|
|
At 1 January 2013 |
|
|
|
|
|
134,730 |
|
|
2,221 |
|
|
136,951 |
Charge for the year |
|
|
|
|
|
81,489 |
|
|
2,990 |
|
|
84,479 |
Disposals |
|
|
|
|
|
(132,555) |
|
|
— |
|
|
(132,555) |
Foreign exchange movements |
|
|
|
|
|
(19,903) |
|
|
(178) |
|
|
(20,081) |
At 31 December 2013 |
|
|
|
|
|
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 |
Net book amount as at 31
December 2014 |
|
|
|
|
|
47,972 |
|
|
6,418 |
|
|
54,390 |
Net book amount as at 31 December 2013 |
|
|
|
|
|
97,309 |
|
|
10,142 |
|
|
107,451 |
Depreciation charges of £46,261
(2013: £80,109) 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 2014 of
£3,666 (2013: £4,370) has been charged in 'administrative
expenses' under 'Depreciation.'
Vehicles and other field equipment include the following amounts
used to perform exploration activities:
|
|
|
|
|
|
|
|
|
|
|
2014
£ |
|
|
|
2013
£ |
Cost |
|
|
|
|
|
|
|
|
|
|
152,089 |
|
|
|
161,070 |
Accumulated depreciation |
|
|
|
|
|
|
|
|
|
|
(104,117) |
|
|
|
(63,761) |
Net book amount |
|
|
|
|
|
|
|
|
|
|
47,972 |
|
|
|
97,309 |
Company |
|
|
|
|
|
Field
equipment
£ |
|
|
Office
equipment
£ |
|
|
|
Total
£ |
Cost |
|
|
|
|
|
|
|
|
|
|
|
|
|
At 1 January 2013 |
|
|
|
|
|
4,208 |
|
|
4,853 |
|
|
|
9,061 |
Additions |
|
|
|
|
|
— |
|
|
2,550 |
|
|
|
2,550 |
At 31 December 2013 and 2014 |
|
|
|
|
|
4,208 |
|
|
7,403 |
|
|
|
11,611 |
Accumulated depreciation |
|
|
|
|
|
|
|
|
|
|
|
|
|
At 1 January 2013 |
|
|
|
|
|
1,505 |
|
|
2,101 |
|
|
|
3,606 |
Charge for the year |
|
|
|
|
|
1,389 |
|
|
1,479 |
|
|
|
2,868 |
At 31 December 2013 |
|
|
|
|
|
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 |
Net book amount as at 31
December 2014 |
|
|
|
|
|
— |
|
|
2,291 |
|
|
|
2,291 |
Net book amount as at 31 December 2013 |
|
|
|
|
|
1,314 |
|
|
3,823 |
|
|
|
5,137 |
11. Trade and other receivables
|
|
|
|
|
|
|
|
|
|
|
Group |
|
|
Company |
|
|
|
|
|
|
|
|
|
|
|
2014
£ |
|
|
2013
£ |
|
|
2014
£ |
|
|
2013
£ |
Other receivables |
|
|
|
|
|
|
|
|
|
|
22,709 |
|
|
62,127 |
|
|
13,818 |
|
|
12,035 |
Current portion |
|
|
|
|
|
|
|
|
|
|
22,709 |
|
|
62,127 |
|
|
13,818 |
|
|
12,035 |
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 |
|
|
|
|
|
|
|
|
|
|
|
2014
£ |
|
|
2013
£ |
|
|
2014
£ |
|
|
2013
£ |
Brazilian Real |
|
|
|
|
|
|
|
|
|
|
4,922 |
|
|
12,898 |
|
|
— |
|
|
— |
UK Pound |
|
|
|
|
|
|
|
|
|
|
17,787 |
|
|
49,229 |
|
|
13,818 |
|
|
12,035 |
|
|
|
|
|
|
|
|
|
|
|
22,709 |
|
|
62,127 |
|
|
13,818 |
|
|
12,035 |
As of 31 December 2014 the Group's
and Company's other receivables of £22,709 (2013: £62,127) 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.
12. Available for sale financial assets
|
|
|
|
|
|
|
|
|
Group |
|
|
|
Company |
|
|
|
|
|
|
|
|
|
2014
£ |
|
|
2013
£ |
|
|
|
2014
£ |
|
|
|
2013
£ |
Quoted equity shares |
|
|
|
|
|
|
|
|
— |
|
|
22,729 |
|
|
|
— |
|
|
|
— |
Total Current |
|
|
|
|
|
|
|
|
— |
|
|
22,729 |
|
|
|
— |
|
|
|
— |
The Group had investments in listed equity shares as at
31 December 2013. The fair value of
these equity shares was determined by reference to published price
quotations in an active market. As at 31
December 2013 all other financial assets carried at fair
value in the Statement of Financial Position were categorised under
Level 1 and denominated in Canadian Dollars. The investments
delisted in the year and have been reclassified as Level 3. The
fair value of the investments is £nil as at 31 December 2014.
The following table presents the changes in
Level 3 instruments for the year ended 31
December 2014:
|
|
|
|
|
|
Assets held as
available for
sale |
|
|
|
|
|
|
2014
£ |
Opening balance |
|
|
|
|
|
— |
Transfers into Level 3 |
|
|
|
|
|
22,729 |
Change in value recognised in
other comprehensive income |
|
|
|
|
|
(22,729) |
|
|
|
|
|
|
— |
Fair value hierarchy
The Group uses the following hierarchy for determining and
disclosing the fair value of financial instruments by valuation
technique:
Level 1: |
|
quoted (unadjusted) prices in active
markets for identical assets. |
|
|
|
Level 2: |
|
other techniques for which all inputs
that have a significant effect on the recorded fair value are
observable, either directly or indirectly. |
|
|
|
Level 3: |
|
techniques that use inputs that have
a significant effect on the recorded fair value that are not based
on observable market data. |
13. Cash and cash equivalents
|
|
|
|
|
|
Group |
|
|
Company |
|
|
|
|
|
|
2014
£ |
|
|
2013
£ |
|
|
2014
£ |
|
|
2013
£ |
Cash at bank and on hand |
|
|
|
|
|
4,982,219 |
|
|
1,602,206 |
|
|
4,160,235 |
|
|
1,266,694 |
Short-term deposits |
|
|
|
|
|
48,749 |
|
|
1,489,674 |
|
|
48,749 |
|
|
1,489,674 |
|
|
|
|
|
|
5,030,968 |
|
|
3,091,880 |
|
|
4,208,984 |
|
|
2,756,368 |
The Group's cash at bank and short-term deposits are held with
institutions with the following credit ratings (Fitch):
|
|
|
|
|
|
|
|
|
|
|
Group |
|
|
Company |
|
|
|
|
|
|
|
|
|
|
|
2014
£ |
|
|
2013
£ |
|
|
2014
£ |
|
|
2013
£ |
A |
|
|
|
|
|
|
|
|
|
|
4,279,358 |
|
|
1,490,199 |
|
|
4,160,235 |
|
|
1,266,694 |
BBB- |
|
|
|
|
|
|
|
|
|
|
750,610 |
|
|
1,601,681 |
|
|
48,749 |
|
|
1,489,674 |
|
|
|
|
|
|
|
|
|
|
|
5,030,968 |
|
|
3,091,880 |
|
|
4,208,984 |
|
|
2,756,368 |
14. Share capital
Group and Company |
|
|
|
|
|
2014
Number |
|
|
2014
£ |
|
|
2013
Number |
|
|
2013
£ |
Issued and fully paid |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ordinary shares of 1p each |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At 1 January |
|
|
|
|
|
401,139,497 |
|
|
4,011,395 |
|
|
360,046,170 |
|
|
3,600,462 |
Issue of ordinary shares |
|
|
|
|
|
91,287,608 |
|
|
912,876 |
|
|
41,093,327 |
|
|
410,933 |
At 31 December |
|
|
|
|
|
492,427,105 |
|
|
4,924,271 |
|
|
401,139,497 |
|
|
4,011,395 |
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. On 11 June 2013, 41,093,327 ordinary shares of 1p
each were issued fully paid for cash consideration at 7.5 pence per share to raise £3.1 million before expenses.
15. Share premium
Group and Company |
|
|
|
|
|
2014
£ |
|
|
2013
£ |
At 1 January |
|
|
|
|
|
26,997,998 |
|
|
24,384,527 |
Premium arising on issue of
ordinary shares |
|
|
|
|
|
4,564,389 |
|
|
2,671,066 |
Issue costs |
|
|
|
|
|
(467,017) |
|
|
(57,595) |
At 31 December |
|
|
|
|
|
31,095,370 |
|
|
26,997,998 |
16. 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. The options are exercisable
two years from the date of grant and 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
2014
£ |
|
|
Weighted
average
exercise
price
2014
£ |
|
|
Number of
options
2013
£ |
|
|
Weighted
average
exercise
price
2013
£ |
Outstanding at 1 January |
|
|
|
|
|
25,860,000 |
|
|
0.148 |
|
|
26,730,000 |
|
|
0.138 |
Forfeited |
|
|
|
|
|
(2,010,000) |
|
|
0.151 |
|
|
(870,000) |
|
|
0.154 |
Granted |
|
|
|
|
|
14,450,000 |
|
|
0.073 |
|
|
— |
|
|
— |
Outstanding at 31 December |
|
|
|
|
|
38,300,000 |
|
|
0.119 |
|
|
25,860,000 |
|
|
0.148 |
Exercisable at 31 December |
|
|
|
|
|
23,850,000 |
|
|
0.148 |
|
|
22,360,000 |
|
|
0.147 |
The options outstanding at 31 December
2014 had a weighted average remaining contractual life of
7.53 years (2013: 7.55 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 |
|
|
|
2014
options |
|
|
2012
options |
|
|
2011
options |
|
|
2010
options |
|
|
2009
options |
Date of grant or reissue |
|
|
|
09/05/2014 |
|
|
24/09/2012 |
|
|
21/09/2011 |
|
|
17/11/2010 |
|
|
25/09/2009 |
Weighted average share price |
|
|
|
6.42 pence |
|
|
9.43 pence |
|
|
13.94 pence |
|
|
14.0 pence |
|
|
8.00 pence |
Weighted average exercise price |
|
|
|
7.25 pence |
|
|
15.40 pence |
|
|
15.40 pence |
|
|
15.50 pence |
|
|
9.5 pence |
Expiry date |
|
|
|
09/05/2024 |
|
|
24/09/2022 |
|
|
21/09/2021 |
|
|
17/11/2020 |
|
|
01/09/2019 |
Options granted |
|
|
|
14,450,000 |
|
|
3,500,000 |
|
|
14,380,000 |
|
|
10,100,000 |
|
|
4,050,000 |
Volatility |
|
|
|
17.3% |
|
|
14.2% |
|
|
17% |
|
|
17% |
|
|
50% |
Dividend yield |
|
|
|
Nil |
|
|
Nil |
|
|
Nil |
|
|
Nil |
|
|
Nil |
Option life |
|
|
|
10 years |
|
|
10 years |
|
|
10 years |
|
|
10 years |
|
|
10 years |
Annual risk free interest rate |
|
|
|
2.83% |
|
|
2.50% |
|
|
2.50% |
|
|
2.50% |
|
|
3.3% |
Forfeiture discount |
|
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
Marketability discount |
|
|
|
5% |
|
|
5% |
|
|
5% |
|
|
5% |
|
|
5% |
Total fair value of options
granted |
|
|
|
£256,786 |
|
|
£29,315 |
|
|
£404,832 |
|
|
£313,228 |
|
|
£107,932 |
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
(£) |
|
|
2014
Weighted
average
exercise
price
(£) |
|
|
2014
Number of
shares |
|
|
2014
Weighted
average
remaining
life
expected
(years) |
|
|
2014
Weighted
average
remaining
life
contracted
(years) |
|
|
2013
Weighted
average
exercise
price
(£) |
|
|
2013
Number of
shares |
|
|
2013
Weighted
average
remaining
life
expected
(years) |
|
|
2013
Weighted
average
remaining
life
contracted
(years) |
0-0.1 |
|
|
0.076 |
|
|
17,200,000 |
|
|
8.65 |
|
|
8.65 |
|
|
0.095 |
|
|
2,850,000 |
|
|
4.0 |
|
|
6.0 |
0.1-0.2 |
|
|
0.154 |
|
|
21,100,000 |
|
|
6.63 |
|
|
6.63 |
|
|
0.133 |
|
|
23,010,000 |
|
|
6.6 |
|
|
7.6 |
17. Other reserves
Group |
|
|
|
|
|
Available for
sale
reserve
£ |
|
|
Merger
reserve
£ |
|
|
Translation
reserve
£ |
|
|
Other
reserve
£ |
|
|
Total
£ |
At 1 January 2013 |
|
|
|
|
|
(55,291) |
|
|
10,888,760 |
|
|
(4,346,470) |
|
|
(1,048,100) |
|
|
5,438,899 |
Other comprehensive income |
|
|
|
|
|
(174,985) |
|
|
— |
|
|
— |
|
|
— |
|
|
(174,985) |
Currency translation
differences |
|
|
|
|
|
— |
|
|
— |
|
|
(4,124,364) |
|
|
— |
|
|
(4,124,364) |
At 31 December 2013 |
|
|
|
|
|
(230,276) |
|
|
10,888,760 |
|
|
(8,470,834) |
|
|
(1,048,100) |
|
|
1,139,550 |
Other comprehensive income |
|
|
|
|
|
(22,729) |
|
|
— |
|
|
— |
|
|
— |
|
|
(22,729) |
Currency translation differences |
|
|
|
|
|
— |
|
|
— |
|
|
(1,438,422) |
|
|
— |
|
|
(1,438,422) |
At 31 December 2014 |
|
|
|
|
|
(253,005) |
|
|
10,888,760 |
|
|
(9,909,256) |
|
|
(1,048,100) |
|
|
(321,601) |
Company |
|
|
|
|
|
|
|
|
Merger
reserve
£ |
|
|
Total
£ |
At 1 January 2013 and 31 December 2013 |
|
|
|
|
|
|
|
|
10,888,760 |
|
|
10,888,760 |
At 1 January 2014 and 31
December 2014 |
|
|
|
|
|
|
|
|
10,888,760 |
|
|
10,888,760 |
The other reserve as at 31 December
2014 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).
18. Trade and other payables
|
|
|
|
|
|
Group |
|
|
Company |
|
|
|
|
|
|
2014
£ |
|
|
2013
£ |
|
|
2014
£ |
|
|
2013
£ |
Non-current |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Contingent consideration |
|
|
|
|
|
2,235,512 |
|
|
2,477,310 |
|
|
2,235,512 |
|
|
2,477,310 |
|
|
|
|
|
|
2,235,512 |
|
|
2,477,310 |
|
|
2,235,512 |
|
|
2,477,310 |
Current |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trade and other payables |
|
|
|
|
|
28,380 |
|
|
11,632 |
|
|
3,239 |
|
|
6,203 |
Amounts due to related parties (refer note
21) |
|
|
|
|
|
— |
|
|
— |
|
|
413,930 |
|
|
413,930 |
Social security and other taxes |
|
|
|
|
|
27,303 |
|
|
28,322 |
|
|
15,040 |
|
|
13,000 |
Accrued expenses |
|
|
|
|
|
280,211 |
|
|
108,099 |
|
|
69,951 |
|
|
42,100 |
|
|
|
|
|
|
335,894 |
|
|
148,053 |
|
|
502,160 |
|
|
475,233 |
Total trade and other payables |
|
|
|
|
|
2,571,406 |
|
|
2,625,363 |
|
|
2,737,672 |
|
|
2,952,543 |
Trade and other payables include amounts due of £204,066 (2013: £72,694) in relation to exploration and
evaluation activities.
Contingent consideration
The fair value of the potential contingent consideration
arrangement 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 2014, there was
a finance expense of £173,903 (2013:
£165,138) 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.
At 31 March 2014, Management
reassessed the fair value of the potential contingent consideration
in accordance with the Group accounting policy. 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. The change in the fair value of
contingent consideration has generated a credit to profit or loss
of £415,702 for the year ended
31 December 2014 due to exchange rate
changes in Management's assumptions and in the functional currency
in which the liability is payable. During 2013, the change in fair
value of £46,940 was due to exchange
rate changes.
19. Dividends
No dividend has been declared or paid by the Company during the
year ended 31 December 2014 (2013:
nil).
20. Earnings per share
(a) Basic
The basic loss per share of 0.283p (2013 loss per share: 0.709p)
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.
Group |
|
|
|
|
|
2014
£ |
|
|
2013
£ |
Loss attributable to owners of the parent |
|
|
|
|
|
(1,241,936) |
|
|
(2,713,221) |
Weighted average number of ordinary shares in
issue |
|
|
|
|
|
439,259,597 |
|
|
382,737,815 |
(b) Diluted
The basic and diluted earnings per share for the years ended
31 December 2014 and 31 December 2013 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 16.
21. Related party transactions
The following transactions took place with subsidiaries in the
year:
A fee totalling £202,045 (2013:
£183,241) was charged to HM do
Brazil Ltda, £nil (2013:
£64,740) to Minera El Aguila SAC and
£475,589 (2013: £368,344) to Araguaia Niquel Mineração Ltda by
Horizonte Minerals Plc in respect of consultancy services provided
and funding costs. In 2013 the balance due from HM do Brasil Ltda
of £554,372, from Minera El Aguila
SAC of £1,283,978, from HM Brazil
(IOM) Ltd of £2,000,000, to PMA
Geoquimica Ltda of £111,016 and from
Brazil Mineral Holdings Ltd of £536,867 were impaired through profit or
loss.
Amounts totalling £2,076,925
(2013: £3,828,388) were lent to HM
Brazil (IOM) Ltd, HM do Brasil Ltda, Araguaia Niquel Mineraçao
Ltda, PMA Geoquimica Ltda, Minera El Aguila SAC and Minera El
Cotahuasi SAC to finance exploration work during 2014, 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:
Company |
|
|
|
|
|
2014
Assets
£ |
|
|
|
2014
Liabilities
£ |
|
|
2013
Assets
£ |
|
|
|
2013
Liabilities
£ |
HM do Brasil Ltda |
|
|
|
|
|
274,678 |
|
|
|
— |
|
|
— |
|
|
|
— |
Minera El Aguila SAC |
|
|
|
|
|
3,848 |
|
|
|
— |
|
|
— |
|
|
|
— |
HM Brazil (IOM) Ltd |
|
|
|
|
|
4,493,680 |
|
|
|
— |
|
|
4,078,148 |
|
|
|
— |
Horizonte Nickel (IOM) Ltd |
|
|
|
|
|
26,916,381 |
|
|
|
— |
|
|
25,158,763 |
|
|
|
— |
Araguaia Niquel Mineração
Ltda |
|
|
|
|
|
3,478,592 |
|
|
|
— |
|
|
2,687,382 |
|
|
|
— |
Horizonte Minerals (IOM) Ltd |
|
|
|
|
|
253,004 |
|
|
|
— |
|
|
253,004 |
|
|
|
— |
Horizonte Exploration Ltd |
|
|
|
|
|
— |
|
|
|
413,930 |
|
|
— |
|
|
|
413,930 |
Total |
|
|
|
|
|
35,420,183 |
|
|
|
413,930 |
|
|
32,177,297 |
|
|
|
413,930 |
All Group transactions were eliminated on consolidation.
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 11 June 2013, 41,093,327
ordinary shares of 1p each were issued fully paid for cash
consideration at 7.5 pence per share
to raise £3.1 million before
expenses. As part of this private placement, Teck Resources Limited
subscribed for 20,000,000 shares representing 48.7 percent of the
placing and Henderson Global Investors subscribed for 12,133,329
shares, representing 29.5 percent of the placing. 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.
22. Ultimate controlling party
The Directors believe there to be no ultimate controlling
party.
23. Expenses by nature
Group |
|
|
|
|
|
2014
£ |
|
|
2013
£ |
Staff costs |
|
|
|
|
|
680,080 |
|
|
228,505 |
Indemnity for loss of office |
|
|
|
|
|
29,227 |
|
|
77,847 |
Exploration related costs expensed
(excluding staff costs) |
|
|
|
|
|
166,866 |
|
|
188,438 |
Charge for share options granted |
|
|
|
|
|
125,107 |
|
|
171,277 |
Depreciation (note 10) |
|
|
|
|
|
3,666 |
|
|
4,370 |
Loss on foreign exchange |
|
|
|
|
|
46,364 |
|
|
149,199 |
Change in fair value of contingent
consideration |
|
|
|
|
|
(415,702) |
|
|
(46,940) |
Impairments of intangible fixed assets |
|
|
|
|
|
31,989 |
|
|
1,033,240 |
Other expenses |
|
|
|
|
|
431,849 |
|
|
789,598 |
Total operating expenses |
|
|
|
|
|
1,099,446 |
|
|
2,595,534 |
24. Directors' remuneration
Group 2014 |
|
|
|
|
|
Basic salary
and fees
£ |
|
|
|
Other
benefits
£ |
|
|
Discretionary
performance
related bonus
£ |
|
|
|
Total
£ |
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 |
|
|
|
45,754 |
|
|
65,000 |
|
|
|
256,754 |
|
|
|
|
|
|
364,000 |
|
|
|
45,754 |
|
|
65,000 |
|
|
|
372,762 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Group 2013 |
|
|
|
|
|
Basic salary
and fees
£ |
|
|
|
Other
benefits
£ |
|
|
Discretionary
performance
related bonus
£ |
|
|
|
Total
£ |
Non-Executive
Directors |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Alexander Christopher |
|
|
|
|
|
— |
|
|
|
— |
|
|
— |
|
|
|
— |
David Hall |
|
|
|
|
|
47,870 |
|
|
|
— |
|
|
— |
|
|
|
47,870 |
William Fisher |
|
|
|
|
|
24,000 |
|
|
|
— |
|
|
— |
|
|
|
24,000 |
Allan Walker |
|
|
|
|
|
24,000 |
|
|
|
— |
|
|
— |
|
|
|
24,000 |
Owen Bavinton |
|
|
|
|
|
24,000 |
|
|
|
— |
|
|
— |
|
|
|
24,000 |
Executive Directors |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jeremy Martin |
|
|
|
|
|
146,000 |
|
|
|
45,754 |
|
|
— |
|
|
|
191,754 |
|
|
|
|
|
|
265,870 |
|
|
|
45,754 |
|
|
— |
|
|
|
311,624 |
The Company does not operate a pension scheme. Included in other
benefits for the year of £45,754
(2013: £45,754) are contributions to
a Defined Contribution pension plan held by Mr Jeremy Martin of £44,313 (2013: £44,313). The bonus paid to Mr Martin in 2014 of
£65,000 (2013: £nil) was in respect
of delivery of the Pre-Feasibility Study.
25. Employee benefit expense (including directors)
Group |
|
|
|
|
|
2014
£ |
|
|
2013
£ |
Wages and salaries |
|
|
|
|
|
916,650 |
|
|
999,956 |
Social security costs |
|
|
|
|
|
266,136 |
|
|
286,990 |
Indemnity for loss of office |
|
|
|
|
|
29,227 |
|
|
77,847 |
Share options granted to Directors
and employees (note 16) |
|
|
|
|
|
125,107 |
|
|
171,277 |
|
|
|
|
|
|
1,337,120 |
|
|
1,536,070 |
Average number of employees including
Directors |
|
|
|
|
|
31 |
|
|
43 |
Employee benefit expenses includes £502,706 (2013: £1,058,441) of costs capitalised and included
within intangible non-current assets. In 2014 no employee benefit
expenses have been reimbursed by joint venture partners (2013:
£nil).
Share options granted include costs of £53,379 (2013: £101,918) relating to Directors.
26. Investments
Company |
|
|
|
|
|
|
|
|
|
|
2014
£ |
|
|
2013
£ |
Shares in Group undertakings |
|
|
|
|
|
|
|
|
|
|
2,348,042 |
|
|
2,348,042 |
Loans to Group undertakings |
|
|
|
|
|
|
|
|
|
|
35,420,183 |
|
|
32,177,297 |
|
|
|
|
|
|
|
|
|
|
|
37,768,225 |
|
|
34,525,339 |
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 two years and are renewable at the end of the lease
period at market rate. The leases can be cancelled by payment of up
to three months 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:
Group |
|
|
|
|
|
2014
£ |
|
|
|
2013
£ |
Not later than one year |
|
|
|
|
|
22,201 |
|
|
|
9,849 |
Later than one year and no later than five
years |
|
|
|
|
|
— |
|
|
|
— |
Total |
|
|
|
|
|
22,201 |
|
|
|
9,849 |
Capital Commitments
Capital expenditure contracted for at the end of the reporting
period but not yet incurred is as follows:
Group |
|
|
|
|
|
|
|
|
|
|
2014
£ |
|
|
|
2013
£ |
Intangible assets |
|
|
|
|
|
|
|
|
|
|
7,004 |
|
|
|
421,051 |
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.
Other Commitments
On 12 January 2012 the Company
signed an option agreement with Anglo Pacific Group plc ('Anglo
Pacific') for a future Net Smelter Royalty ('NSR'). The option was
exercisable by Anglo Pacific upon
completion of a Pre-Feasibility Study on the site where they would
pay Horizonte USD 12.5 million and
receive a NSR. The NSR would be at a rate of 1.5% of nickel revenue
produced up to 30,000 tonnes per annum, reduced by 0.02% for every
1,000 tonnes per annum above this rate. The rate was fixed at a
minimum rate of 1.1% for production of 50,000 tonnes per annum and
above. The Pre-Feasibility Study was completed in March 2014 and Anglo
Pacific elected not to exercise its option in regard of a
future NSR. The option agreement with Anglo
Pacific thus lapsed during 2014.
28. 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 2014 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
£90,000.
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 on the Group's property. The Group
strongly believes that it operated with all necessary permits and
has initiated legal proceedings to overturn the impounding of the
drilling equipment.The Group is also concurrently in discussions
with the authorities aimed at cancelling the injunction and its
associated fine of approximately £33,000.
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. The Group has filed a robust defence in January 2015 and no substantive financial claim
has currently been made against the Group under the terms of the
writ. The Group is working towards having the writ withdrawn in due
course and as a result no provision has been made in the Financial
Statements for the year ended 31 December
2014.
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 loss for the year was £226,045 (2013: £4,378,222 loss).
30. Events after the reporting date
No significant events have occurred since the reporting
date.
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, with
targeted production by late 2017 early 2018.
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.
A Pre-Feasibility Study has been completed which
underpins the robust economics of developing a mine with a targeted
15,000tpa nickel in ferro-nickel 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 project has a post-tax NPV of US$519m at a discount rate of 8% and an IRR of
20%, with a capital cost of US$582m
which puts this project in the lowest quartile of the cost
curve.
Horizonte has a strong shareholder structure
including Teck Resources Limited 38.5%, Henderson Global Investors
14%, Anglo Pacific Group 7%.
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