TIDMALO
RNS Number : 2932A
Alecto Minerals PLC
06 June 2016
Alecto Minerals plc / EPIC: ALO / Market: AIM / Sector:
Mining
6 June 2016
Alecto Minerals plc ('Alecto' or the 'Company')
Final Results for the year ended 31 December 2015 and Notice of
AGM
Alecto Minerals plc (AIM: ALO), the Africa-focused gold and base
metal exploration and development company, is pleased to announce
its audited final results for the year ended 31 December 2015. In
addition, the Company announces that its Annual General Meeting
('AGM') will be held at the Washington Mayfair Hotel, 5 Curzon
Street, London, W1J 5HE on 30 June 2016 at 12.00 p.m. Copies of the
Company's Annual Report and Financial Statements, together with the
Notice of AGM, will be posted to shareholders today and will
shortly be available to view and download on the Company's website
at www.alectominerals.com.
Highlights
-- Transformation into a pre-production gold company with near
to mid-term cash flow potential following the successful
acquisition of the historical Matala and Dunrobin Gold Mines in
Zambia
-- Feasibility Study on Matala completed post period end,
demonstrating positive economics for a proposed 400,000 tonnes per
annum ('tpa') oxide and transitional open pit operation with a mine
life of approximately 4 years 8 months at US$1,200/oz Au with
exploration upside and underground mining potential:
o Estimated capital cost for plant and infrastructure of US$14.4
million
o Project NPV of US$28.6 million at an 10% discount rate
o Unlevered project IRR of 52%
-- Vendor financing progressing post period end with Yantai
Xinhai Machinery Co. Ltd with respect to the proposed construction
and financing of mining operations at Matala
-- Delivery of two joint venture agreements ('JV') for the
Group's Malian gold properties post period end enabling Alecto to
retain exposure to its promising exploration assets in Mali,
without further direct expense
o JV with Randgold Resources ('Randgold') for Kossanto West -
Randgold to fund all costs up to and including the completion of a
pre-feasibility study - Alecto to retain a 35% interest
o JV with Kola Gold ('Kola') via its subsidiary for the Karan
Gold Project - Kola will solely fund all exploration and
development costs up to and including the completion initially of a
scoping study and ultimately a Bankable Feasibility Study
-- Profit before taxation for the Group for the year ended 31
December 2015 of GBP3,343,615 (31 December 2014: restated loss of
GBP767,804) - due to a fair value adjustment to the exploration and
evaluation assets acquired by the Group in November 2015
-- Cash position of GBP530,003 (2014: GBP114,258) bolstered post
period end via GBP665,000 (before expenses) placing - solid
position to fund working capital requirements as Matala is
progressed towards future production
Alecto's CEO, Mark Jones, commented:
"We made great strides towards becoming an African gold producer
in 2015. The strong economics and low costs associated with
delivering production at the historical Matala Gold Mine in Zambia,
which was acquired alongside the Dunrobin Mine late last year, have
been demonstrated and with vendor financing progressing we are in a
solid position to execute on our production plans in the near term.
This exciting period was also marked by a significant amount of
work towards securing joint venture partners for the rest of our
African gold exploration portfolio, which were documented and
formalised post the period end. With production targeted in the
near to mid-term and exposure to a prospective exploration
portfolio in proven gold regions at no cost to Alecto, I am
confident that the coming months will prove to be both busy and
positive for the Company as we seek to build value in our business
for shareholders."
Chairman's Statement
Despite the extremely difficult market conditions faced by
junior mining and exploration companies over the last several
years, this has been a transformational period for Alecto with
significant corporate activity in pursuit of our stated strategy to
become a gold producer in Africa in the near to mid-term. We made
considerable headway in setting the parameters for the successful
negotiation of joint venture partnerships in respect of for our
attractive exploration portfolio in West Africa and ended the
reporting period as a very different Group from how we began in
2015.
As my first statement since being appointed as Chairman of the
Company, I am delighted to report on the successful transition of
Alecto from explorer to developer, with a JORC Code compliant total
estimated resource of over 1 million oz gold ('Au') (from 247,000
oz Au in the prior year) and approximately a further 0.24 million
oz Au of non-JORC resources and a 25-year renewable mining licence,
with a clear path to production being established in Zambia. This
is in addition to the successful delivery of two joint venture
agreements for our Malian properties through partnerships with both
FTSE-100 Randgold Resources Limited (LSE:RRS) ('Randgold
Resources') and Kola Gold Limited, via its subsidiary Cora Gold
Limited ('Cora Gold'), which enables us to retain exposure to our
promising exploration assets in Mali, without incurring any further
direct expense. Accordingly, I believe the Group is well positioned
for achieving future growth.
Our executive management and technical staff had been working
since 2014 on securing a project that would meet the stringent
criteria we had set to ensure that we would have the necessary
degree of confidence in financing, developing and managing a
resultant future mining operation. Their ability to effectively
identify and evaluate mining opportunities in Africa, culminating,
in November 2015, in the successful acquisition of the historic
Matala and Dunrobin gold mines in Zambia, confirmed that focused
determination and effort to acquire the right project clearly pays
off. This acquisition marked a turning point for the Company and is
expected to deliver substantial future value and economic returns
to stakeholders.
Key Project Developments
Zambia
In November 2015, Alecto acquired a 100% interest in the
historic Matala and Dunrobin gold mines in Zambia. With an existing
25-year renewable mining licence covering 32km2 of the Mwembeshi
Shear Zone, an environmental permit in place, feasibility study and
nearly US$20 million of historic investment, the acquisition
brought an additional 760,000 oz Au of estimated resources into the
group at an acquisition cost of less than US$3 per ounce, which is
substantially below the industry standard cost for a discovery
resource of this type.
Having worked closely with the vendor's team for several months
prior to completing the acquisition, Alecto developed a new
approach to mining the advanced deposits, culminating in the
production of an internal Scoping Study that indicated strong
economics at the prevailing gold price. Pursuant to this new
approach, Alecto was well placed to negotiate and sign an
engineering, procurement and construction ('EPC') contract with
South African mining consultants and EPC specialists, PenMin (Pty)
Ltd ('PenMin') in December 2015, less than a month after acquiring
the historic mines.
Post the end of the reporting period, Alecto's executive
management team completed an introductory visit to China with
PenMin in order to establish a relationship with Yantai Xinhai
Machinery Co. Ltd ('Xinhai'), a private Design, Build and Operate
('DBO') contractor, able to supply vendor financing. A key
component of these initial meetings was to understand Xinhai's
commercial requirements for financing a project such as Matala.
Accordingly, in February 2016, PenMin produced a feasibility study
for the Matala project which addressed all of Xinhai's
requirements, following which all parties signed a Letter of Intent
for the provision of up to US$14.4 million of financing for the
Design, Build and Operation of a proposed 400,000 tonne per annum
mine, expected to produce circa 33,000 oz Au per annum, with a net
present value for the project (at a 10% discount rate) of US$28.6
million and an estimated internal rate of return (IRR) of 52%.
Our development plan for Matala is designed to be rapid and
robust. Taking advantage of the measured and indicated portions of
the shallow oxide and transitional ores to reduce both mining and
process risk, a narrow slot cut along strike is planned to create
an elongated pit with a reduced stripping ratio. Ore at the
relatively high-grade of 2.8g/t Au will be delivered to the
run-of-mine ('ROM') pad and a simple crushing, gravity and direct
cyanidation process will be adopted. Additional oxide ores from
dump and process material from historical mining activity and fresh
ores from satellite deposits have been identified and will be mined
along with the oxide opportunity at the Dunrobin pit, providing for
an estimated 10 year life of mine ('LOM'). Once the oxide and
transitional ores have been exhausted a simple process upgrade will
allow for the processing of sulphide ores from all deposits and is
expected to increase the LOM substantially.
With a recent strengthening of the price of gold, excellent
project economics, and a financing route that minimises shareholder
dilution, Alecto has established a solid backbone for a profitable
and successful future mining operation that will define the Group
as a producer in the near to mid-term.
Mali
The Group commenced 2015 with an estimated resource of 247,000
oz Au at its Kossanto East gold project, having grown such resource
estimate by 131% during the course of 2014. With market conditions
unfavourable to secure funding for further exploration expenditure,
and having gauged the level of interest from major gold producers
in the Company's assets, the Board took the decision to leverage
the strong balance sheets of interested parties and seek joint
venture partnership arrangements for the continued development of
its exploration portfolio assets in West Africa. The objective of
this approach was to maintain exposure to what the Board views as
being highly attractive and promising early stage exploration
opportunities, without incurring additional expenditure on further
drilling and exploration activities.
Kossanto West - Randgold Resources Joint Venture
The process of partnering with a 'major', meant that certain
pre-conditions were required to be met including the consolidation
and renewal of certain of the Group's licences. To this end, the
licences of Kobokoto and Kobokoto East in Mali were consolidated
into a single block and, packaged together with Koussikoto, thereby
offering Randgold Resources exposure to the regional structure of
the Main Transcurrent Shear Zone (MTZ), the current focus for much
of their exploration activities in western Mali and eastern
Senegal.
A joint venture agreement was duly signed post the end of the
reporting period, in February 2016, and activities on the ground
are currently expected to commence in late Q2 2016.
Kossanto East
In March 2015, Alecto signed a co-operation agreement with TSX.V
quoted Desert Gold Ventures Inc. ('Desert Gold'), to enable
information sharing and collaboration, with a view to potentially
jointly developing Alecto's Kossanto East and Desert Gold's Barani
East deposits as one project. Throughout the reporting period a
number of tasks were achieved, including a new technical report on
Barani East, preliminary engineering work, and economic and base
case studies, which culminated in the production of a scoping
study. Initial scoping study level results demonstrated positive
economics based on a 400,000 tonnes per annum heap-leach project
with an NPV (at a 10% discount rate) of US$27.4 million and an IRR
of 107%.
The decision as to precisely how to proceed with potentially
developing the Kossanto East project remains to be taken. Whilst
the economics for the joint development of the project appear
positive, it was noted that Desert Gold are in the process of
renewing their permit's validity. In addition, guidance has been
sought from the government of Mali on their interpretation of what
exactly constitutes a Small Scale Mining licence, as this will
impact both the licence cost and the scope of the economic impact
assessment. As further detailed engineering and process design work
continues, so do discussions with other potentially interested
third parties, who have approached Alecto with regard to this
particular project.
Karan - Cora Gold Joint Venture
Kola Gold Limited, through its subsidiary Cora Gold, approached
Alecto during the reporting period to discuss the possibility of
working on, and ultimately partnering together for, the exploration
of our Karan exploration permit in southern Mali. In line with our
strategy to reduce exploration expenditure, Alecto worked closely
with Cora Gold to provide support on the ground, such that initial
exploration work could be completed and a view formed as to whether
gold anomalies identified at Cora Gold's exploration project, to
the south of Karan, continued to coincide with the geophysical
anomaly that can be seen running the entire length of the Karan
permit. Soil and termite mound sampling activities were used to map
a number of these anomalies.
Joint venture negotiations commenced in Q4 2015 culminating in
the signing of a formal agreement in May 2016. Further work has
been planned throughout 2016 and we look forward to updating
shareholders on the progress of Cora Gold's exploration programme
in due course.
Burkina Faso
Kerboulé
Alecto acquired its Kerboulé gold project in Burkina Faso in
late 2014 and quickly undertook a full re-work and compilation of
all the existing exploration data that had been generated by the
previous owners over a period of many years.
The political landscape in Burkina Faso was unusually
interrupted during 2014 due to a popular uprising that saw
long-time leader, Blaise Compaoré, removed from office, a
transitional government installed and a military coup d'état,
before finally returning to an elected democracy in November 2015.
Nevertheless, Alecto's dedicated team were not deterred and, in
April 2015, we were able to publish a maiden independent in situ
mineral resource estimate (non-JORC) for the project, completed by
Wardell Armstrong International ('WAI'), of 6.2Mt grading at
1.16g/t Au for 230,758 oz Au at a cut-off grade of 0.5 g/t Au.
Having proved the potential for a significant deposit to be
defined in the Kerboulé-Yalema Corridor ('KY Corridor') and that
further large-scale gold anomalies exist in the project area,
attention turned to renewing the exploration permits, in order that
the property could be given the opportunity to deliver on a
focussed exploration programme. The exceptional renewal of the
permits was completed in May 2016 which sets the conditions for
further joint venture discussions with a number of interested
parties. It is the Board's current intention to commence
exploration work at Kerboulé, within a joint venture partnership,
as soon as possible so that the true extent of the identified
exploration potential at Kerboulé can be defined.
Ethiopia
In February 2015, the Group was disappointed that Centamin plc
('Centamin') decided to terminate our joint venture on the Wayu
Boda and Aysid Metekel licences. In light of the licences large
size, their early stage of exploration, including a limited amount
of work performed by Centamin, and the high carrying costs of
exploration permits in Ethiopia, the Board decided that divestment
of the Group's Ethiopian assets was the most appropriate course of
action. In Q3 2015, we therefore announced that both permits had
been sold to a private Ethiopian mineral development company, Wame
Mineral Development ('Wame').
Wame acquired the assets on a deferred consideration basis, in
the form of a royalty of US$3 per JORC resource ounce of gold (or
gold equivalent), up to a maximum of US$1 million in respect of
each licence. Thus, the maximum potential aggregate deferred
consideration that Alecto may receive in the future from this
disposal is US$2 million. The disposal provides Alecto and its
shareholders with exposure to any mineral discoveries on these
expansive projects whilst reducing administrative costs by removing
the overheads associated with running the Ethiopian operation.
Mauritania
The Group continues to seek a joint venture partner for its
Mauritanian Wad Amour iron oxide copper gold asset.
Corporate Update
As mentioned above, this is my first Chairman's statement,
having joined the Board in November 2015, alongside the acquisition
of the historic Matala and Dunrobin gold mines. As a qualified
engineer, I have over 30 years' experience in the mining sector,
with specific skills in contract mining and infrastructure build,
which I hope will prove to be extremely valuable as we look to
advance Matala into production in the near to mid-term.
Financial Review
The profit before taxation for the Group for the year ended 31
December 2015 amounted to GBP3,343,615 (31 December 2014: restated
loss of GBP767,804). The profit this year is due to a fair value
adjustment to the exploration and evaluation assets acquired by the
Group in November 2015, net of the loss realised on the disposal of
the Group's Ethiopian assets. See Note 20. The Group's cash
position as at 31 December 2015 was GBP530,003 (2014:
GBP114,258).
In June 2015, Alecto successfully raised GBP300,000 (before
expenses) by way of a placing of 300 million new ordinary shares of
0.01 pence each in the capital of the Company ('Ordinary Shares')
at a price of 0.1 pence per share, with an existing institutional
investor. In November 2015, the Company successfully raised a
further GBP650,000 (before expenses) by way of a placing of
812,500,000 new Ordinary Shares at a price of 0.08 pence per share,
with certain new and existing shareholders. These placings were
augmented post-period end, in May 2016, with the raising of an
additional GBP665,000 (before expenses) by way of a placing of
831,250,000 new Ordinary Shares at a price of 0.08 pence per share,
with new and existing shareholders. The net proceeds of the
placings provided the Group and Company with additional working
capital as it continues to make rapid progress towards achieving
its goal of bringing the 400,000 tonnes per annum open-pit Matala
Gold Project in south-central Zambia into low-cost production in
the near to mid-term.
Outlook
Having finalised our landmark acquisition of the Matala Gold
Project, we have made swift progress in proving its commercial
viability. With an established resource in place with additional
upside potential, attractive value fundamentals, a clear route to
production and planned vendor financing progressing, our focus
going forward is very much on achieving gold production at this
project location at the earliest opportunity.
In support of our primary Matala objectives, I am delighted with
the success we have achieved in securing joint venture agreements
for two of our Malian gold projects. This serves to underpin our
strategy to maintain exposure to any significant discoveries made
across our West African gold exploration portfolio whilst
minimising the impact on our balance sheet.
We will endeavour to secure similar partnership agreements for
the rest of our portfolio in Mali, Burkina Faso and Mauritania
going forwards so that we can concentrate our efforts on bringing
Matala into commercial production. We will continue to operate at
low-cost and as rapidly as possible, and look forward to achieving
producer status at the earliest opportunity.
Finally, I would like to take this opportunity to thank
shareholders for their on-going support and our management team for
their dedication and hard work.
I look forward to the year ahead with much excitement and
optimism.
Gerald Chapman
Chairman
6 June 2016
STATEMENT OF FINANCIAL POSITION
As at 31 December 2015
Group Company
-------------------------------- ----------------- ----------------------------
Note 2015 2014 (restated) 2013 (restated) 2015 2014
GBP GBP GBP GBP GBP
------------------------- ------ ------------- ----------------- ----------------- ------------- -------------
Non-Current Assets
Property, plant and
equipment 6 112,905 198,547 223,616 - 174
Intangible assets 7 17,081,716 7,640,824 5,964,192 - -
Investment in
subsidiaries 8 - - - 8,871,224 8,362,083
Trade and other
receivables 10 21,307 21,601 20,192 - -
Available-for-sale
financial assets 9 7,650 14,400 21,000 7,650 14,400
17,223,578 7,875,372 6,229,000 8,878,874 8,376,657
------------------------- ------ ------------- ----------------- ----------------- ------------- -------------
Current Assets
Trade and other
receivables 10 286,461 329,176 124,273 271,523 313,739
Derivative financial - - 250,000 - -
instruments
Cash and cash
equivalents 11 530,003 114,258 624,155 510,285 103,194
------------------------- ------ ------------- ----------------- ----------------- ------------- -------------
816,464 443,434 998,428 781,808 416,933
------------------------- ------ ------------- ----------------- ----------------- ------------- -------------
Total Assets 18,040,042 8,318,806 7,227,428 9,660,682 8,793,590
------------------------- ------ ------------- ----------------- ----------------- ------------- -------------
Equity attributable
to the Owners of Parent
Company
Share capital 15 4,412,421 4,186,796 4,157,432 4,412,421 4,186,796
Share premium 15 13,446,703 11,147,543 7,509,266 13,446,703 11,147,543
Share option reserve 16 106,080 100,365 47,316 106,080 100,365
Available-for-sale
financial asset
reserve (42,350) (35,600) (29,000) (42,350) (35,600)
Translation reserve (449,292) (345,936) (31,232) - -
Retained losses (4,161,153) (7,464,486) (6,784,142) (9,316,815) (6,694,489)
------------------------- ------ ------------- ----------------- ----------------- ------------- -------------
Total Equity 13,312,409 7,588,682 4,869,640 8,606,039 8,704,615
------------------------- ------ ------------- ----------------- ----------------- ------------- -------------
Current Liabilities
Trade and other
payables 12 634,994 115,344 1,393,008 526,067 88,975
Borrowings 13 528,576 - 350,000 528,576 -
------------------------- ------ ------------- ----------------- ----------------- ------------- -------------
1,163,570 115,344 1,743,008 1,054,643 88,975
------------------------- ------ ------------- ----------------- ----------------- ------------- -------------
Non-current liabilities
Deferred income tax
liabilities 14 3,564,063 614,780 614,780 - -
------------------------- ------ ------------- ----------------- ----------------- ------------- -------------
3,564,063 614,780 614,780 - -
------------------------- ------ ------------- ----------------- ----------------- ------------- -------------
Total Liabilities 4,727,633 730,124 2,357,788 1,054,643 88,975
------------------------- ------ ------------- ----------------- ----------------- ------------- -------------
Total Equity and
Liabilities 18,040,042 8,318,806 7,227,428 9,660,682 8,793,590
------------------------- ------ ------------- ----------------- ----------------- ------------- -------------
CONSOLIDATED INCOME STATEMENT
For the year ended 31 December 2015
Group
------------------------------
Note 2015 2014 (restated)
GBP GBP
---------------------------------------------------- ------ ----------- -----------------
Revenue 14,291 -
Cost of sales - -
---------------------------------------------------- ------ ----------- -----------------
Gross profit 14,291 -
Administration expenses 17 (759,717) (788,621)
Other net gains/(losses) 20 4,075,622 (158,512)
Operating profit/(loss) 3,330,196 (947,133)
Finance income 21 45 397
Finance costs 22 - (18,526)
Profit/(loss) before income tax 3,330,241 (965,262)
Income tax expense 23 - -
---------------------------------------------------- ------ ----------- -----------------
Profit/(loss) for the year from continuing
operations 3,330,241 (965,262)
---------------------------------------------------- ------ ----------- -----------------
Discontinued operations
Profit for the year from discontinued operations
(attributable to equity holders of the
Parent) 27 13,374 197,458
---------------------------------------------------- ------ ----------- -----------------
Profit/(loss) attributable to owners of
the Parent 3,343,615 (767,804)
---------------------------------------------------- ------ ----------- -----------------
Earnings per share from continuing and
discontinued operations attributable to
owners of the Parent during the year 24
Basic earnings per share (pence)
From continuing operations 0.250 p (0.121) p
From discontinued operations 0.001 p 0.025 p
---------------------------------------------------- ------ ----------- -----------------
From profit/(loss) for the year 0.251 p (0.096) p
---------------------------------------------------- ------ ----------- -----------------
Diluted earnings per share (pence)
From continuing operations 0.242 p (0.121) p
From discontinued operations 0.001 p 0.025 p
---------------------------------------------------- ------ ----------- -----------------
From profit/(loss) for the year 24 0.243 p (0.096) p
---------------------------------------------------- ------ ----------- -----------------
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the year ended 31 December 2015
Continuing Discontinuing
Operations Operations Total Total
------------- --------------- ----------- -----------------
Note 2015 2015 2015 2014 (restated)
GBP GBP GBP GBP
---------------------------------------- ------ ------------- --------------- ----------- -----------------
Profit/(loss) for the year 3,330,241 13,374 3,343,615 (767,804)
Other Comprehensive Income:
Items that may be reclassified
subsequently to profit or loss
Currency translation differences (103,356) - (103,356) (239,913)
Change in value of available-for-sale
financial assets 9 (6,750) - (6,750) (6,600)
Total Comprehensive Income for
the Year Attributable to Owners
of the Parent, net of tax 3,220,135 13,374 3,233,509 (1,014,317)
---------------------------------------- ------ ------------- --------------- ----------- -----------------
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the year ended 31 December 2015
Attributable to owners of the parent
---------------------------------------------------------------------------------------------------------
Share Available-for-sale
Share Share option financial asset Translation Retained
capital premium reserve reserve reserve losses Total equity
GBP GBP GBP GBP GBP GBP GBP
------------------------ ----------- ------------ ---------- -------------------- ------------- ------------- --------------
As at 1 January 2014
(as previously
reported) 4,157,432 7,509,266 47,316 (29,000) 9,049 (6,824,423) 4,869,640
Prior period
adjustment (note 30) - - - - (40,281) 40,281 -
As at 1 January 2014
(as restated) 4,157,432 7,509,266 47,316 (29,000) (31,232) (6,784,142) 4,869,640
Loss for the year (as
restated) - - - - - (767,804) (767,804)
Other comprehensive income
Currency translation
differences - - - - (314,704) 74,791 (239,913)
Change in value of
available-for-sale
financial assets - - - (6,600) - - (6,600)
Total comprehensive
income for the year - - - (6,600) (314,704) (693,013) (1,014,317)
------------------------ ----------- ------------ ---------- -------------------- ------------- ------------- --------------
Proceeds from share
issue 10,000 1,490,000 - - - - 1,500,000
Issue costs - (98,380) 23,380 - - - (75,000)
Loan note conversion 3,204 365,321 - - - - 368,525
Share based payments 16,160 1,881,336 42,338 - - - 1,939,834
Expired options - - (12,669) - - 12,669 -
Transactions with
owners, recognised
directly in equity 29,364 3,638,277 53,049 - - 12,669 3,733,359
As at 31 December 2014 4,186,796 11,147,543 100,365 (35,600) (345,936) (7,464,486) 7,588,682
------------------------ ----------- ------------ ---------- -------------------- ------------- ------------- --------------
As at 1 January 2015 4,186,796 11,147,543 100,365 (35,600) (345,936) (7,464,486) 7,588,682
------------------------ ----------- ------------ ---------- -------------------- ------------- ------------- --------------
Profit for the year - - - - - 3,343,615 3,343,615
Other comprehensive income
Currency translation
differences - - - - (103,356) - (103,356)
Change in value of
available-for-sale
financial assets - - - (6,750) - - (6,750)
Total comprehensive
income for the year - - - (6,750) (103,356) 3,343,615 3,233,509
------------------------ ----------- ------------ ---------- -------------------- ------------- ------------- --------------
Proceeds from share
issue 131,250 1,418,750 - - - - 1,550,000
Issue costs - (157,715) - - - - (157,715)
Share based payments 94,375 1,038,125 5,715 - - - 1,138,215
Disposal of
subsidiaries - - - - - (40,282) (40,282)
Transactions with
owners, recognised
directly in equity 225,625 2,299,160 5,715 - - (40,282) 2,490,218
------------------------ ----------- ------------ ---------- -------------------- ------------- ------------- --------------
As at 31 December 2015 4,412,421 13,446,703 106,080 (42,350) (449,292) (4,161,153) 13,312,409
------------------------ ----------- ------------ ---------- -------------------- ------------- ------------- --------------
COMPANY STATEMENT OF CHANGES IN EQUITY
For the year ended 31 December 2015
Attributable to equity shareholders
Share Available-for-sale
Share Share option financial Retained
capital premium reserve asset reserve losses Total equity
GBP GBP GBP GBP GBP GBP
------------------------ ----------- ------------ ---------- -------------------- ------------- --------------
As at 1 January 2014 4,157,432 7,509,266 47,316 (29,000) (5,907,757) 5,777,257
------------------------ ----------- ------------ ---------- -------------------- ------------- --------------
Loss for the year - - - - (799,401) (799,401)
Other comprehensive
income
Change in value of
available-for-sale
financial assets - - - (6,600) - (6,600)
------------------------ ----------- ------------ ---------- -------------------- ------------- --------------
Total comprehensive
income for the year - - - (6,600) (799,401) (806,001)
------------------------ ----------- ------------ ---------- -------------------- ------------- --------------
Proceeds from share
issue 10,000 1,490,000 - - - 1,500,000
Issue costs - (98,380) 23,380 - - (75,000)
Loan note conversion 3,204 365,321 - - - 368,525
Share based payments 16,160 1,881,336 42,338 - - 1,939,834
Expired options - - (12,669) - 12,669 -
------------------------ ----------- ------------ ---------- -------------------- ------------- --------------
Transaction with
owners,
recognised directly
in equity 29,364 3,638,277 53,049 - 12,669 3,733,359
------------------------ ----------- ------------ ---------- -------------------- ------------- --------------
As at 31 December 2014 4,186,796 11,147,543 100,365 (35,600) (6,694,489) 8,704,615
As at 1 January 2015 4,186,796 11,147,543 100,365 (35,600) (6,694,489) 8,704,615
------------------------ ----------- ------------ ---------- -------------------- ------------- --------------
Loss for the year - - - - (2,622,326) (2,622,326)
Other comprehensive
income
Change in value of
available-for-sale
financial assets - - - (6,750) - (6,750)
------------------------ ----------- ------------ ---------- -------------------- ------------- --------------
Total comprehensive
income for the year - - - (6,750) (2,622,326) (2,629,076)
------------------------ ----------- ------------ ---------- -------------------- ------------- --------------
Proceeds from share
issue 131,250 1,418,750 - - - 1,550,000
Issue costs - (157,715) - - - (157,715)
Share based payments 94,375 1,038,125 5,715 - - 1,138,215
Transaction with
owners,
recognised directly
in equity 225,625 2,299,160 5,715 - - 2,530,500
------------------------ ----------- ------------ ---------- -------------------- ------------- --------------
As at 31 December 2015 4,412,421 13,446,703 106,080 (42,350) (9,316,815) 8,606,039
------------------------ ----------- ------------ ---------- -------------------- ------------- --------------
CONSOLIDATED STATEMENT OF CASH FLOWS
For the year ended 31 December 2015
Continuing Discontinuing
Operations Operations Total Total
------------- --------------- ------------- -----------------
2015 2015 2015 2014 (restated)
Note GBP GBP GBP GBP
---------------------------------------- ------ ------------- --------------- ------------- -----------------
Cash flows from operating activities
Profit/(loss) before taxation 3,330,241 13,374 3,343,615 (767,804)
Adjustments for:
Finance income (45) - (45) (397)
Finance costs - - - 18,526
Depreciation 6 64,631 6,679 71,310 69,945
Loss on settlement of derivative
financial instrument - - - 180,542
Profit on sale of property,
plant and equipment - - - (27,445)
Loss on disposal of subsidiaries 2,036,189 - 2,036,189 -
Gain on bargain purchase 26 (6,101,221) - (6,101,221) -
Share options expense - - - 42,337
Share based payments - - - 66,022
Decrease/(increase) in trade
and other receivables 47,568 - 47,568 (193,327)
Increase/(decrease) in trade
and other payables 108,279 (15,407) 92,872 (62,606)
(Gain)/loss on foreign exchange (45,871) 2,727 (43,144) (107,618)
Net cash (used in)/generated
from operating activities (560,229) 7,373 (552,856) (781,825)
---------------------------------------- ------ ------------- --------------- ------------- -----------------
Cash flows from investing activities
Interest received 45 - 45 399
Acquisition of subsidiaries
(net of cash acquired) (82,629) - (82,629) 1,027
Disposal of discontinued operation
(net of cash disposed of) 1 (4,171) (4,170) -
Loans granted to related party (64,123) - (64,123) -
Purchase of intangible assets 7 (277,503) (4,814) (282,317) (1,264,139)
Proceeds from sale of property,
plant and equipment - - - 41,593
Net cash used in investing activities (424,209) (8,985) (433,194) (1,221,120)
---------------------------------------- ------ ------------- --------------- ------------- -----------------
Cash flows from financing activities
Proceeds from issue of share
capital 1,550,000 - 1,550,000 1,569,458
Issue costs (152,000) - (152,000) (75,000)
Net cash generated from financing
activities 1,398,000 - 1,398,000 1,494,458
---------------------------------------- ------ ------------- --------------- ------------- -----------------
Net increase/(decrease) in cash
and cash equivalents 413,562 (1,612) 411,950 (508,487)
Cash and cash equivalents at
beginning of year 112,560 1,698 114,258 624,155
Exchange gains on cash and cash
equivalents 3,881 (86) 3,795 (1,410)
---------------------------------------- ------ ------------- --------------- ------------- -----------------
Cash and cash equivalents at
end of year 11 530,003 - 530,003 114,258
---------------------------------------- ------ ------------- --------------- ------------- -----------------
COMPANY STATEMENT OF CASH FLOWS
For the year ended 31 December 2015
Total Total
------------- -------------
2015 2014
Note GBP GBP
----------------------------------------------------- ------ ------------- -------------
Cash flows from operating activities
Loss before taxation (2,622,326) (799,401)
Adjustments for:
Finance income (34) (399)
Finance costs - 18,526
Depreciation 6 174 2,190
Loss on settlement of derivative financial
instrument - 180,542
Loss on disposal of subsidiaries 2,023,477 -
Management fee (218,505) (386,474)
Share options expense - 42,337
Share based payments - 66,022
Decrease/(increase) in trade and other receivables 36,390 (190,802)
Increase/(decrease) in trade and other payables 131,032 (57,062)
Net cash used in operating activities (649,792) (1,124,521)
----------------------------------------------------- ------ ------------- -------------
Cash flows from investing activities
Interest received 34 399
Acquisition of subsidiaries (100,000) -
Loans granted to subsidiary undertakings (241,151) (828,371)
Net cash used in investing activities (341,117) (827,972)
----------------------------------------------------- ------ ------------- -------------
Cash flows from financing activities
Proceeds from issue of share capital 1,550,000 1,569,458
Issue costs (152,000) (75,000)
Net cash generated from financing activities 1,398,000 1,494,458
----------------------------------------------------- ------ ------------- -------------
Net increase/(decrease) in cash and cash
equivalents 407,091 (458,035)
Cash and cash equivalents at beginning of
year 103,194 561,229
Cash and cash equivalents at end of year 11 510,285 103,194
----------------------------------------------------- ------ ------------- -------------
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 December 2015
1. General information
The principal activity of Alecto Minerals plc (the 'Company')
and its subsidiaries (together the 'Group') is to implement its
mineral exploration strategy to advance projects towards defining a
sufficient in-situ mineral resource to support a detailed
feasibility study towards mine development and production. The
Company's shares are quoted on the AIM market of the London Stock
Exchange plc. The Company is incorporated and domiciled in the UK.
The address of its registered office is 47 Charles Street, London,
W1J 5EL.
2. Summary of Significant Accounting Policies
The principal Accounting Policies applied in the preparation of
these Financial Statements are set out below. These Policies have
been consistently applied to all the periods presented, unless
otherwise stated.
2.1. Basis of Preparation of Financial Statements
The Consolidated Financial Statements of Alecto Minerals plc
have been prepared in accordance with International Financial
Reporting Standards (IFRS) and IFRIC Interpretations Committee
(IFRS IC) as adopted by the European Union and the Companies Act
2006 applicable to companies reporting under IFRS. The Consolidated
Financial Statements have also been prepared under the historical
cost convention, as modified by the fair value of
available-for-sale financial assets.
The Financial Statements are presented in UK Pounds Sterling
rounded to the nearest pound.
The preparation of financial statements in conformity with IFRSs
requires the use of certain critical accounting estimates. It also
requires management to exercise its judgement in the process of
applying the Group's Accounting Policies. The areas involving a
higher degree of judgement or complexity, or areas where
assumptions and estimates are significant to the Financial
Statements are disclosed in Note 4.
2.2. Basis of Consolidation
The Consolidated Financial Statements consolidate the Financial
Statements of the Company and the management accounts of all of its
subsidiary undertakings made up to 31 December 2015.
Subsidiaries are entities over which the Group has control. The
Group controls an entity when the Group is exposed to, or has
rights to, variable returns from its involvement with the entity
and has the ability to affect those returns through its power over
the entity. Subsidiaries are fully consolidated from the date on
which control is transferred to the Group. They are deconsolidated
from the date that control ceases.
The Group applies the acquisition method of accounting to
account for business combinations. The consideration transferred
for the acquisition of a subsidiary is the fair values of the
assets transferred, the liabilities incurred to the former owners
of the acquiree and the equity interests issued by the Group. The
consideration transferred includes the fair value of any asset or
liability resulting from a contingent consideration arrangement.
Identifiable assets acquired and liabilities and contingent
liabilities assumed in a business combination are measured
initially at their fair values at the acquisition date.
Acquisition-related costs are expensed as incurred unless they
result from the issuance of shares, in which case they are offset
against the premium on those shares within equity.
Any contingent consideration to be transferred by the Group is
recognised at fair value at the acquisition date. Subsequent
changes to the fair value of the contingent consideration that is
deemed to be an asset or liability is recognised in accordance with
IAS 39 either in profit or loss or as a change to other
comprehensive income. Contingent consideration that is classified
as equity is not re-measured, and its subsequent settlement is
accounted for within equity.
Investments in subsidiaries are accounted for at cost less
impairment.
Where necessary, adjustments are made to the financial
statements of subsidiaries to bring the accounting policies used
into line with those used by other members of the Group. All
intercompany transactions and balances between Group enterprises
are eliminated on consolidation.
Disposal of subsidiaries
When the Group ceases to have control any retained interest in
the entity is remeasured to its fair value at the date when control
is lost, with the change in carrying amount recognised in profit or
loss. The fair value is the initial carrying amount for the
purposes of subsequently accounting for the retained interest as an
associate, joint venture or financial asset. In addition, any
amounts previously recognised in other comprehensive income in
respect of that entity are accounted for as if the Group had
directly disposed of the related assets or liabilities. This may
mean that amounts previously recognised in other comprehensive
income are reclassified to profit or loss.
2.3. Going Concern
The Group's business activities, together with the factors
likely to affect its future development, performance and position,
are set out in the Chairman's Statement on pages 3 to 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 steady
revenue streams and an operating profit has been reported, an
operating loss is expected in the 12 months subsequent to the date
of these Financial Statements. The Directors believe, having
considered all available information, including cash flows prepared
by management, that the Group, having raised GBP665,000 (gross) in
May 2016, has sufficient funds to meet its expected committed and
contractual expenditure through to the end of 2016, and are
confident that they will be able to raise funding to provide
additional working capital to continue its current exploration
programme as well as additional works through to at least the end
of Q2 2017.
Based on the Board's assessment that the cash flow budgets can
be achieved and that the necessary funds will be raised, the
Directors have a reasonable expectation that the Group and the
Company have adequate resources to continue in operational
existence for the foreseeable future. Thus, they continue to adopt
the going concern basis of accounting in preparing the annual
financial statements for the year ended 31 December 2015.
The Financial Statements do not include any adjustments that may
be required should the Group be unable to continue as a going
concern. If the Group were unable to continue as a going concern,
then adjustments would be necessary to write assets down to their
recoverable amounts, non-current assets and liabilities would be
reclassified as current assets and liabilities and provisions would
be required for any costs associated with closure.
Going concern is referred to in the auditor's report starting on
pages 13 to 14 as an emphasis of matter.
2.4. New and Amended Standards
(a) New and amended standards mandatory for the first time for
the financial year beginning 1 January 2015
There were no IFRSs or IFRIC interpretations that were effective
for the first time for the financial year beginning 1 January 2015
that had a material impact on the Group or Company.
(b) New standards, amendments and Interpretations in issue but
not yet effective or not yet endorsed and not early adopted
The standards and interpretations that are relevant to the Group
or Company, issued, but not yet effective, up to the date of
issuance of the Financial Statements are listed below. The Company
and Group intend to adopt these standards, if applicable, when they
become effective.
Effective
Standard Impact on initial application date
IAS 1 (Amendments) Presentation of Financial Statements: Disclosure Initiative 1 January
2016
IAS 7 (Amendments) Disclosure Initiative *1 January
2017
IAS 12 (Amendments) Recognition of Deferred Tax *1 January
2017
IAS 16 (Amendments) Clarification of Acceptable Methods of Depreciation 1 January
2016
IAS 27 (Amendments) Equity method in Separate Financial Statements 1 January
2016
IAS 38 (Amendments) Clarification of Acceptable Methods of Amortisation 1 January
2016
IFRS 9 Financial Instruments *1 January
2018
IFRS 11 (Amendments) Joint Arrangements: Accounting for Acquisitions of 1 January
2016
Interests in Joint Operations
IFRS 12 (Amendments) Investment Entities: Applying the Consolidation Exception *1 January
2016
IFRS 14 Regulatory Deferral Accounts *1 January
2016
IFRS 15 Revenue from Contracts with Customers *1 January
2018
IFRS 16 Leases *1 January
2019
Annual Improvements 2010 - 2012 Cycle 1 February
2015
Annual Improvements 2012 - 2014 Cycle 1 January
2016
---------------------- ------------------------------------------------------------- ------------
(*) Subject to EU endorsement
The Group is evaluating the impact of the new or amended
standards above. The new or amended standards are not expected to
have a material impact on the Group's results or shareholders'
funds.
2.5. Segment Reporting
Operating segments are reported in a manner consistent with the
internal reporting provided to the chief operating decision-maker.
The chief operating decision-maker, who is responsible for
allocating resources and assessing performance of the operating
segments, has been identified as the Board of Directors that makes
strategic decisions.
2.6. Foreign Currencies
(a) Functional and presentation currency
Items included in the Financial Statements of the Group's
entities are measured using the currency of the primary economic
environment in which the entity operates (the 'functional
currency'). The functional currency of the UK parent entity is
Pounds Sterling and the functional currency of the BVI subsidiary
is US Dollars. The currency of Mauritania is the Mauritanian
Ouguiya; however all material contracts with the Mauritanian
subsidiary are denominated in Euros which is, therefore, its
functional currency. The currency of Mali is the Central African
Franc, which is therefore the functional currency of the Malian
subsidiary. The currency of Burkina Faso is the Central African
Franc, which is therefore the functional currency of the Burkina
Faso subsidiary. The Financial Statements are presented in Pounds
Sterling, rounded to the nearest pound, which is the Company's
functional and Group's presentation currency.
(b) Transactions and balances
Foreign currency transactions are translated into the functional
currency using the exchange rates prevailing at the dates of the
transactions or valuation where such items are re-measured. Foreign
exchange gains and losses resulting from the settlement of such
transactions and from the translation at year-end exchange rates of
monetary assets and liabilities denominated in foreign currencies
are recognised in the Income Statement. Foreign exchange gains and
losses that relate to borrowings and cash and cash equivalents are
presented in the income statement within 'finance income or costs'.
All other foreign exchange gains and losses are presented in the
income statement within 'Other (losses)/gains - net'.
Translation differences on non-monetary financial assets and
liabilities such as equities held at fair value through profit or
loss are recognised in profit or loss as part of the fair value
gain or loss. Translation differences on non-monetary financial
assets measured at fair value, such as equities classified as
available for sale, are included in other comprehensive income.
(c) Group companies
The results and financial position of all the Group entities
(none of which has the currency of a hyperinflationary economy)
that have a functional currency different from the presentation
currency are translated into the presentation currency as
follows:
-- assets and liabilities for each Statement of Financial
Position presented are translated at the closing rate at the date
of that Statement of Financial Position sheet;
-- income and expenses for each Income Statement are translated
at average exchange rates (unless this average is not a reasonable
approximation of the cumulative effect of the rates prevailing on
the transaction dates, in which case income and expenses are
translated at the dates of the transactions); and
-- all resulting exchange differences are recognised in other comprehensive income.
On consolidation, exchange differences arising from the
translation of the net investment in foreign entities, and of
monetary items receivable from foreign subsidiaries for which
settlement is neither planned nor likely to occur in the
foreseeable future are taken to other comprehensive income. When a
foreign operation is sold, such exchange differences are recognised
in the Statement of Comprehensive Income as part of the gain or
loss on sale.
2.7. Intangible assets
(a) Goodwill
Goodwill arises on the acquisition of subsidiaries and
represents the excess of the consideration transferred and the
acquisition date fair value of any previous equity interest in the
acquiree over the fair value of the net identifiable assets,
liabilities and contingent liabilities of the acquiree. If the
total of consideration transferred, non-controlling interest
recognised and previously held interest measured at fair value 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 the Income Statement.
For the purpose of impairment testing, goodwill acquired in a
business combination is allocated to each of the cash-generating
units, or groups of cash-generating units, that are expected to
benefit from the synergies of the combination. Each unit or group
of units to which the goodwill is allocated represents the lowest
level within the entity at which the goodwill is monitored for
internal management purposes. Goodwill is monitored at the
operating segment level.
Goodwill impairment reviews are undertaken annually, or more
frequently if events or changes in circumstances indicate a
potential impairment. The carrying value of goodwill is compared to
the recoverable amount, which is the higher of value in use and the
fair value less costs to sell. Any impairment is recognised
immediately as an expense and is not subsequently reversed.
(b) Exploration and evaluation
The Group recognises expenditure as exploration and evaluation
assets when it determines that those assets will be successful in
finding specific mineral resources. Expenditure included in the
initial measurement of exploration and evaluation assets and which
are classified as intangible assets, relate to the acquisition of
rights to explore, topographical, geological, geochemical and
geophysical studies, exploratory drilling, trenching, sampling and
activities to evaluate the technical feasibility and commercial
viability of extracting a mineral resource. Capitalisation of
pre-production expenditure ceases when the mining property is
capable of commercial production.
Exploration and evaluation assets are recorded and held at
cost.
Exploration and evaluation assets are assessed annually for
impairment. The assessment is carried out by allocating exploration
and evaluation assets to cash generating units, which are based on
specific projects or geographical areas.
Whenever the exploration for and evaluation of mineral resources
in cash generating units does not lead to the discovery of
commercially viable quantities of mineral resources and the Group
has decided to discontinue such activities of that unit, the
associated expenditures are written off to the Income
Statement.
2.8. Property, plant and equipment
Property, plant and equipment is stated at cost less accumulated
depreciation and any accumulated impairment losses. Subsequent
costs are included in the asset's carrying amount or recognised as
a separate asset, as appropriate, only when it is probable that
future economic benefits associated with the item will flow to the
Group and the cost of the item can be measured reliably. The
carrying amount of the replaced part is derecognised. All other
repairs and maintenance are charged to the Income Statement during
the financial period in which they are incurred.
Depreciation is provided on all property, plant and equipment to
write off the cost less estimated residual value of each asset over
its expected useful economic life on a straight line basis at the
following annual rates:
Field equipment - 20% straight line
Motor vehicles - 20% straight line
Computer equipment - 20-50% straight line
The assets' residual values and useful lives are reviewed, and
adjusted if appropriate, at the end of each reporting period.
An asset's carrying amount is written down immediately to its
recoverable amount if the asset's carrying amount is greater than
its estimated recoverable amount.
Gains and losses on disposal are determined by comparing the
proceeds with the carrying amount and are recognised within 'Other
(losses)/gains' in the Income Statement.
2.9. Impairment of non-financial assets
Intangible assets that have an indefinite useful life, for
example, goodwill, exploration and evaluation intangible assets not
ready to use, are not subject to amortisation and are tested
annually for impairment.
Property, plant and equipment is reviewed for impairment
whenever events or changes in circumstances indicate that the
carrying amount may not be recoverable. An impairment loss is
recognised for the amount by which the asset's carrying amount
exceeds its recoverable amount. The recoverable amount is the
higher of an asset's fair value less costs to sell and value in
use. For the purposes of assessing impairment, assets are grouped
at the lowest levels for which there are separately identifiable
cash flows (cash generating units). Non-financial assets that
suffered impairment are reviewed for possible reversal of the
impairment at each reporting date.
2.10. Financial Assets
Classification
The Group classifies its financial assets in the following
categories: loans and receivables; and available-for-sale. The
classification depends on the purpose for which the financial
assets were acquired. Management determines the classification of
its financial assets at initial recognition.
(i) Loans and receivables
Loans and receivables are non-derivative financial assets with
fixed or determinable payments that are not quoted in an active
market. They are included in current assets, except for maturities
greater than 12 months after the Statement of Financial Position
date. These are classified as non-current assets. The Group's loans
and receivables comprise trade and other receivables, restricted
assets and cash and cash equivalents in the Statement of Financial
Position.
(ii) Available-for-sale financial assets
Available-for-sale financial assets are non-derivatives that are
either designated in this category or not classified in any of the
other categories. They are included in non-current assets unless
the investment matures or management intends to dispose of the
investment within 12 months of the end of the reporting period.
Recognition and measurement
Regular purchases and sales of financial assets are recognised
on the trade date - the date on which the Group commits to
purchasing or selling the asset. Financial assets are derecognised
when the rights to receive cash flows from the assets have expired
or have been transferred, and the Group has transferred
substantially all of the risks and rewards of ownership.
Available-for-sale financial assets are subsequently carried at
fair value unless the Group is precluded from doing so as, in the
case of unlisted equity securities, the range of reasonable fair
value estimates is significant and the probabilities of the various
estimates cannot be reasonably assessed. In such circumstances
available-for-sale financial assets are held at cost and reviewed
annually for impairment.
Loans and receivables are subsequently carried at amortised cost
using the effective interest method.
Changes in the fair value of monetary and non-monetary
securities classified as available-for-sale are recognised in other
comprehensive income. When securities classified as
available-for-sale are sold or impaired, the accumulated fair value
adjustments recognised in equity are included in the Income
Statement as "gains and losses from investment securities."
Interest on available-for-sale securities calculated using the
effective interest method is recognised in the Income Statement as
part of other income. Dividends on available-for-sale equity
instruments are recognised in the Income Statement as part of other
income when the Group's right to receive payments is
established.
Impairment of financial assets
The Group assesses at the end of each reporting period whether
there is objective evidence that a financial asset, or a group of
financial assets, is impaired. A financial asset, or a group of
financial assets, is impaired, and impairment losses are incurred,
only if there is objective evidence of impairment as a result of
one or more events that occurred after the initial recognition of
the asset (a "loss event"), and that loss event (or events) has an
impact on the estimated future cash flows of the financial asset,
or group of financial assets, that can be reliably estimated.
2.11. Trade Receivables
Trade receivables are amounts due from third parties in the
ordinary course of business. If collection is expected in one year
or less they are classified as current assets. If not they are
presented as non-current assets.
Trade receivables are recognised initially at fair value, and
subsequently measured at amortised cost using the effective
interest method, less provision for impairment.
2.12. Cash and Cash Equivalents
Cash and cash equivalents comprise cash at bank and in hand, and
are subject to an insignificant risk of changes in value.
2.13. Share Capital
Ordinary shares are classified as equity. Incremental costs
directly attributable to the issue of new shares or options are
shown in equity as a deduction, net of tax, from the proceeds.
2.14. Share Based Payments
The Group operates a number of equity-settled, share-based
schemes, under which the entity receives services from employees or
third party suppliers as consideration for equity instruments
(options and warrants) of the Group. The fair value of the third
party suppliers' services received in exchange for the grant of the
options is recognised as an expense in the Statement of
Comprehensive Income or charged to equity depending on the nature
of the service provided. The value of the employee services
received is expensed in the Income Statement and its value is
determined by reference to the fair value of the options
granted:
-- including any market performance conditions;
-- excluding the impact of any service and non-market
performance vesting conditions (for example, profitability or sales
growth targets, or remaining an employee of the entity over a
specified time period); and
-- including the impact of any non-vesting conditions (for
example, the requirement for employees to save).
Non-market vesting conditions are included in assumptions about
the number of options that are expected to vest. The total expense
or charge is recognised over the vesting period, which is the
period over which all of the specified vesting conditions are to be
satisfied. At the end of each reporting period, the entity revises
its estimates of the number of options that are expected to vest
based on the non-market vesting conditions. It recognises the
impact of the revision to original estimates, if any, in the Income
Statement or equity as appropriate, with a corresponding adjustment
to a separate reserve in equity.
When the options are exercised, the Company issues new shares.
The proceeds received, net of any directly attributable transaction
costs, are credited to share capital (nominal value) and share
premium when the options are exercised.
2.15. Reserves
Share Premium Reserve - the share premium reserve includes any
premiums received on issue of share capital. Any transaction costs
associated with the issuing of shares are deducted from the share
premium.
Share Option Reserve - the share option reserve represents the
total fair value of all outstanding share based options and
warrants of the Group in issue at each period end.
Available-For-Sale Financial Asset Reserve - the
available-for-sale financial asset reserve represent the changes in
fair value of monetary and non-monetary securities classified as
available-for-sale financial assets.
Translation Reserve - the translation reserve represents the
cumulative differences arising due to foreign exchange on
consolidation of all the Company's subsidiaries.
Retained Losses - the retained losses reserve includes all
current and prior periods retained profit and losses.
2.16. Trade Payables
Trade payables are obligations to pay for goods or services that
have been acquired in the ordinary course of business from
suppliers. Accounts payable are classified as current liabilities
if payment is due within one year or less. If not, they are
presented as non-current liabilities.
Trade payables are recognised initially at fair value, and
subsequently measured at amortised cost using the effective
interest method.
2.17. Taxation
There has been no tax credit or expense for the period relating
to current or deferred tax. Tax is recognised in the Income
Statement, except to the extent that it relates to items recognised
in other comprehensive income or directly in equity. In this case,
the tax is also recognised in other comprehensive income or
directly in equity, respectively.
Deferred tax is accounted for using the balance sheet liability
method in respect of temporary differences arising from differences
between the carrying amount of assets and liabilities in the
financial statements and the corresponding tax bases used in the
computation of taxable profit. However, deferred tax liabilities
are not recognised if they arise from the initial recognition of
goodwill; deferred tax is not accounted for if it arises from
initial recognition of an asset or liability in a transaction other
than a business combination that at the time of the transaction
affects neither accounting nor taxable profit or loss.
In principle, deferred tax liabilities are recognised for all
taxable temporary differences and deferred tax assets are
recognised to the extent that it is probable that taxable profits
will be available against which deductible temporary differences
can be utilised.
Deferred tax liabilities are recognised for taxable temporary
differences arising on investments in subsidiaries, except where
the Group is able to control the reversal of the temporary
difference and it is probable that the temporary difference will
not reverse in the foreseeable future.
Deferred tax assets and liabilities are offset when there is a
legally enforceable right to offset current tax assets against
current tax liabilities and when the deferred tax assets and
liabilities relate to taxes levied by the same taxation authority
on either the same taxable entity or different taxable entities
where there is an intention to settle the balances on a net
basis.
Deferred tax is calculated at the tax rates that are expected to
apply to the period when the asset is realised or the liability is
settled. Deferred tax assets and liabilities are not
discounted.
2.18. Operating leases
Leases of assets under which a significant amount of the risks
and benefits of ownership are effectively retained by the lessor
are classified as operating leases. Operating lease payments are
charged to the income statement on a straight-line basis over the
period of the respective leases.
2.19. Revenue recognition
Revenue is measured at the fair value of the consideration
received or receivable, and represents amounts receivable for goods
or services supplied in course of ordinary business, stated net of
discounts, returns and value added taxes. The Group recognises
revenue when the amount of revenue can be reliably measured; when
it is probable that future economic benefits will flow to the
entity; and when specific criteria have been met for the Group's
activities described below.
Revenue is recognised in respect of amounts recharged to project
strategic partners in accordance to their contractual terms.
2.20. Finance income
Interest income is recognised using the effective interest
method.
2.21. Borrowings
Compound financial instruments
Compound financial instruments issued by the Group comprise
convertible notes that can be converted to share capital at the
option of the holder. The number of shares to be issued does not
vary with changes in their fair value.
The liability component of a compound financial instrument is
recognised initially at the fair value of a similar liability that
does not have an equity conversion option. The equity component is
recognised initially at the difference between the fair value of
the compound financial instrument as a whole and the fair value of
the liability component. Any directly attributable transaction
costs are allocated to the liability and equity components in
proportion to their initial carrying amounts.
Subsequent to their initial recognition, the liability component
of a compound financial instrument is measured at amortised cost
using the effective interest method. The equity component of a
compound financial instrument is not remeasured subsequent to
initial recognition, except on conversion or expiry.
3. Financial Risk Management
3.1. Financial Risk Factors
The Group's activities expose it to a variety of financial
risks: market risk (including foreign currency risk), credit risk
and liquidity risk. The Group's overall risk management programme
focuses on the unpredictability of financial markets and seeks to
minimise potential adverse effects on the Group's financial
performance.
Risk management is carried out by the London based management
team under policies approved by the Board of Directors.
Market Risk (including foreign currency risk)
The Group operates internationally and is exposed to foreign
exchange risk arising from various currency exposures, primarily
with respect to the Euro, Central African Franc, Mauritanian
Ouguiya and the Pound Sterling. Foreign exchange risk arises from
future commercial transactions, recognised assets and liabilities
and net investments in foreign operations. The Group negotiates all
material contracts for activities in relation to its subsidiaries
in either Pounds Sterling or Euros which in the Directors' opinion
are more stable than the respective local currencies. The Group
also holds minimal liquid assets in Central African Franc and
Mauritanian Ouguiya. The Group does not hedge against the risks of
fluctuations in exchange rates. The volume of transactions is not
deemed sufficient to enter into forward contracts. The Group has
not sensitised the figures for fluctuations in foreign exchange
rates as the Directors are of the opinion that these fluctuations
would not have a significant impact on the financial statements of
the Group at the present time. The Directors will continue to
assess the effect of movements in exchange rates on the Group's
financial operations and initiate suitable risk management measures
where necessary.
Credit Risk
Credit risk arises from cash and cash equivalents as well as
outstanding receivables. Management does not expect any losses from
non-performance of these receivables.
The amount of exposure to any individual counter party is
subject to a limit, which is assessed by the Board.
The Group considers the credit ratings of banks in which it
holds funds in order to reduce exposure to credit risk.
Liquidity Risk
In keeping with similar sized mineral exploration groups, the
Group's continued future operations depend on the ability to raise
sufficient working capital through the issue of equity share
capital. The Directors are confident that adequate funding will be
forthcoming with which to finance operations (see Note 2.3).
Controls over expenditure are carefully managed.
3.2. Capital Risk Management
The Group's objectives when managing capital are to safeguard
the Group's ability to continue as a going concern, in order to
enable the Group to continue its exploration and evaluation
activities, and to maintain an optimal capital structure to reduce
the cost of capital.
In order to maintain or adjust the capital structure, the Group
may adjust the issue of shares or sell assets to reduce debts.
At 31 December 2015 the Group had borrowings of GBP528,576
(2014: GBPnil) and defines capital based on the total equity of the
Company. The Group monitors its level of cash resources available
against future planned exploration and evaluation activities and
may issue new shares in order to raise further funds from time to
time.
4. Critical Accounting Estimates and Judgements
The preparation of the Financial Statements in conformity with
IFRSs requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amount of expenses during the
year. Actual results may vary from the estimates used to produce
these Financial Statements.
Estimates and judgements are continually evaluated and are based
on historical experience and other factors, including expectations
of future events that are believed to be reasonable under the
circumstances.
Significant items subject to such estimates and assumptions
include, but are not limited to:
Fair value of exploration and evaluation assets
In connection with the business combination detailed in Note 26
the Directors' determined that the consideration paid did not
reflect the fair value of the exploration assets acquired. The fair
value of the exploration assets of GBP11,880,210 was estimated by
applying a number of valuation metrics which include; geological
upside potential, mineralogy, market benchmarks, application of
local market factors and in particular consideration of internally
prepared feasibility study which indicated a net present valuation
of US$25 million, resulting in a US$16.25 million fair value
adjustment before consideration of tax implications.
Impairment of exploration and evaluation costs
Exploration and evaluation costs have a carrying value at 31
December 2015 of GBP16,677,503 (2014: GBP7,217,039). Such assets
have an indefinite useful life as the Group has a right to renew
exploration licences and the asset is only amortised once
extraction of the resource commences. Management tests annually
whether exploration projects have future economic value in
accordance with the accounting policy stated in Note 2.7 to the
Financial Statements. Each exploration project is subject to an
annual review by either a consultant or senior company geologist to
determine if the exploration results returned during the year
warrant further exploration expenditure and have the potential to
result in an economic discovery. This review takes into
consideration long term metal prices, anticipated resource volumes
and supply and demand outlook. In the event that a project does not
represent an economic exploration target and results indicate there
is no additional upside a decision will be made to discontinue
exploration. The Directors have reviewed the estimated value of
each project prepared by management and have concluded that no
impairment would be required and provided against the exploration
assets.
Estimated Impairment of Goodwill
Goodwill has a carrying value of GBP404,213 (2014: GBP423,785).
The Group tests annually whether goodwill has suffered any
impairment, in accordance with the accounting policy stated in Note
2.7 to the Financial Statements.
Management has concluded that no impairment charge is necessary
to the carrying value of goodwill. See Note 7 to the Financial
Statements.
Share based payment transactions
The Group has made awards of options and warrants over its
unissued share capital to certain Directors and employees as part
of their remuneration package. Certain warrants have also been
issued to shareholders as part of their subscription for shares and
suppliers for various services received.
The valuation of these options and warrants involves making a
number of critical estimates relating to price volatility, future
dividend yields, expected life of the options and forfeiture rates.
These assumptions have been described in more detail in Note 16 to
the Financial Statements.
Contingent consideration
As part of the acquisition of Gazelle Resources Inc, the Group
has entered into a contractual arrangement with Swala Resources Inc
('Swala'), in which, under certain milestones being reached, would
result in the Group paying further consideration of US$1.5m. For
full details on the arrangement, please see Note 28.
The Directors have reviewed the progress of the project and
consider reaching the milestones unlikely. Given this, the
Directors have assessed the fair value of the contingent
consideration to be nil; it is unlikely that the Company will have
any additional liability arising.
5. Segment Information
Management has determined the operating segments based on
reports reviewed by the Board of Directors that are used to make
strategic decisions. During the year the Group had interests in six
geographical segments; the United Kingdom, Mauritania, Ethiopia,
Burkina Faso, Mali and Zambia. Activities in the UK are mainly
administrative in nature whilst the activities in Ethiopia,
Mauritania, Burkina Faso, Mali and Zambia relate to exploration and
evaluation work. In September 2015 the Group disposed of its
interests in Ethiopia, see Note 27.
Burkina Intra-segment
Faso Ethiopia Mauritania Mali UK Zambia balances Total
2015 GBP GBP GBP GBP GBP GBP GBP GBP
----------------- ----------- ---------- ------------ ----------- ------------- ----------- --------------- ------------
Revenue - 42,687 - - - 14,291 - 56,978
Administrative
expenses (53,561) (26,586) (2,695) (71,089) (631,281) (1,707) - (786,919)
Loss on foreign
exchange - (2,727) 616 - - - - (2,111)
Other net
gains/(losses) - - - 1,185 (2,014,100) 6,088,537 - 4,075,622
Profit/(loss)
from
operations
per reportable
segment (53,561) 13,374 (2,079) (69,904) (2,645,381) 6,101,121 - 3,343,570
Capital
expenditure 94,353 4,814 27,498 110,045 - 45,607 - 282,317
Reportable
segment assets 5,456,624 - 1,160,749 5,749,242 9,660,682 9,384,727 (13,371,982) 18,040,042
Reportable
segment
liabilities 4,864,823 - 1,709,187 3,538,771 1,054,643 9,517,038 (15,956,830) 4,727,633
----------------- ----------- ---------- ------------ ----------- ------------- ----------- --------------- ------------
Burkina Intra-segment
Faso Ethiopia Mauritania Mali UK balances Total
2014 (restated) GBP GBP GBP GBP GBP GBP GBP
----------------------- ----------- ---------- ------------ ----------- ----------- --------------- -----------
Revenue - 243,961 - - - - 243,961
Administrative
expenses (20,014) (46,503) (4,662) (125,168) (638,777) - (835,124)
Other gains/(losses) - - - 27,445 (185,957) - (158,512)
Profit/(loss)
from operations
per reportable
segment (20,014) 197,458 (4,662) (97,723) (824,734) - (749,675)
Capital expenditure 13,955 53,290 72,441 1,124,453 - - 1,264,139
Reportable segment
assets 5,394,155 845,525 1,147,089 5,879,446 8,793,590 (13,740,999) 8,318,806
Reportable segment
liabilities 5,014,300 651,114 1,677,620 3,495,232 88,975 (10,197,117) 730,124
----------------------- ----------- ---------- ------------ ----------- ----------- --------------- -----------
A reconciliation of adjusted loss from operations per reportable
segment to profit/(loss) before tax is provided as follows:
2015 2014
GBP (restated)
GBP
----------------------------------------------- ----------- -------------
Profit/(loss) from operations per reportable
segment 3,343,570 (749,675)
Finance income 45 397
Finance costs - (18,526)
Profit/(loss) for the year before taxation 3,343,615 (767,804)
----------------------------------------------- ----------- -------------
6. Property, Plant and Equipment
Group Company
------------
Field Computer Computer
equipment Vehicles equipment Total equipment
GBP GBP GBP GBP GBP
------------------------------- ------------ ---------- ------------ ---------- ------------
Cost
As at 1 January 2014 190,910 117,345 18,541 326,796 10,941
Acquired through acquisition
of subsidiary 111,716 113,940 14,926 240,582 -
Disposals - (39,073) - (39,073) -
Foreign exchange differences (13,299) (9,892) (9,982) (33,173) -
------------------------------- ------------ ---------- ------------ ---------- ------------
As at 31 December 2014 289,327 182,320 23,485 495,132 10,941
------------------------------- ------------ ---------- ------------ ---------- ------------
Acquired through acquisition
of subsidiary 15,503 51,098 23,025 89,626 -
Disposals (18,849) (27,508) - (46,357) -
Foreign exchange differences (19,477) (21,410) (6,927) (47,814) -
------------------------------- ------------ ---------- ------------ ---------- ------------
As at 31 December 2015 266,504 184,500 39,583 490,587 10,941
------------------------------- ------------ ---------- ------------ ---------- ------------
Depreciation
As at 1 January 2014 50,245 38,675 14,260 103,180 8,577
Acquired through acquisition
of subsidiary 56,281 101,388 9,828 167,497 -
Charge for the year 43,238 23,606 3,101 69,945 2,190
Disposals - (25,618) - (25,618) -
Foreign exchange differences (2,176) (6,405) (9,838) (18,419) -
------------------------------- ------------ ---------- ------------ ---------- ------------
As at 31 December 2014 147,588 131,646 17,351 296,585 10,767
------------------------------- ------------ ---------- ------------ ---------- ------------
Acquired through acquisition
of subsidiary 10,703 50,240 14,100 75,043 -
Charge for the year 50,700 19,172 1,438 71,310 174
Disposals (15,265) (16,957) - (32,222) -
Foreign exchange differences (10,898) (19,071) (3,065) (33,034) -
As at 31 December 2015 182,828 165,030 29,824 377,682 10,941
------------------------------- ------------ ---------- ------------ ---------- ------------
Net book value
As at 31 December 2014 141,739 50,674 6,134 198,547 174
------------------------------- ------------ ---------- ------------ ---------- ------------
As at 31 December 2015 83,676 19,470 9,759 112,905 -
------------------------------- ------------ ---------- ------------ ---------- ------------
Depreciation expense of GBP71,310 (2014: GBP69,945) has been
charged in administration expenses (Note 17).
7. Intangible Assets
Exploration and evaluation assets are all internally
generated.
Group
--------------------------
Exploration & Evaluation Assets - Cost and 2015 2014
Net Book Value GBP GBP
--------------------------------------------- ------------- -----------
At 1 January 7,217,039 5,581,135
Additions 282,317 1,264,139
Acquired through acquisition of subsidiary
(at fair value) (Note 26) 11,880,210 490,000
Disposals (2,464,063) -
Foreign exchange differences (238,000) (118,235)
At 31 December 16,677,503 7,217,039
--------------------------------------------- ------------- -----------
Group
---------------------
2015 2014
Goodwill - Cost and Net Book Value GBP GBP
--------------------------------------------- ---------- ---------
At 1 January 423,785 383,057
Acquired through acquisition of subsidiary
(at fair value) - 40,728
Disposals (19,572) -
--------------------------------------------- ---------- ---------
At 31 December 404,213 423,785
--------------------------------------------- ---------- ---------
Exploration projects acquired during the year in Zambia at 31
December 2015 had a gold JORC compliant resource estimate of
760,000 ounces in the measured, indicated and inferred categories
at an average grade of 2.3 grams per ton. In determining the fair
value on acquisition the Directors' applied a number of valuation
metrics including geological upside potential, mineralogy, market
benchmarks, local market factors and internally generated
feasibility studies. For more information see Note 26.
Exploration projects in Burkina Faso, Mali and Mauritania are at
an early stage of development and, with the exception of the JORC
Code compliant inferred resource estimate of 247,000 oz Au for the
Kossanto Project in Mali as at 31 December 2015, no JORC or
non-JORC compliant resource estimates were available to enable
value in use calculations to be prepared. The Directors therefore
undertook an assessment of the following areas and circumstances
that could indicate the existence of impairment:
-- The Group's right to explore in an area has expired, or will
expire in the near future without renewal;
-- No further exploration or evaluation is planned or budgeted for;
-- A decision has been taken by the Board to discontinue
exploration and evaluation in an area due to the absence of a
commercial level of reserves; and
-- Sufficient data exists to indicate that the book value will
not be fully recovered from future development and production.
An impairment review of exploration and evaluation assets is
carried on out an annual basis in order to ensure that it is valued
at the lower of cost and recoverable amount. Following their
assessment, the Directors concluded that no impairment charge was
necessary at the year end. This included the Group's two gold
exploration licences in Mauritania for which no significant
exploration activity has been conducted over the past two
years.
8. Investments in Subsidiary Undertakings
Company
--------------------------
2015 2014
GBP GBP
---------------------------------------- ------------- -----------
Shares in Group Undertakings
At 1 January 4,440,001 3,840,001
Additions (Note 26) 2,068,576 600,000
Disposals (Note 27) (1,340,000) -
---------------------------------------- ------------- -----------
At 31 December 5,168,577 4,440,001
---------------------------------------- ------------- -----------
Loans to Group undertakings (Note 31) 3,702,647 3,922,082
---------------------------------------- ------------- -----------
At 31 December 8,871,224 8,362,083
---------------------------------------- ------------- -----------
Investments in Group undertakings are stated at cost, which is
the fair value of the consideration paid, less any impairment
provision.
Details of Subsidiary Undertakings
Country of Proportion
incorporation of share
and place of Registered capital Nature
Name of subsidiary business Parent company capital held of business
-------------------- ---------------- ------------------- -------------------- ------------ --------------
Alecto Holdings British Virgin Alecto Minerals Ordinary 100% Dormant
International Islands plc shares US$1
Limited
-------------------- ---------------- ------------------- -------------------- ------------ --------------
Alecto Guinea British Virgin Alecto Minerals Ordinary 100% Dormant
Holdings Limited Islands plc shares US$1
-------------------- ---------------- ------------------- -------------------- ------------ --------------
Alecto Mauritania Mauritania Alecto Holdings Ordinary 100% Exploration
Limited International shares MOU
Limited 1,000,000
-------------------- ---------------- ------------------- -------------------- ------------ --------------
AME West Africa United Kingdom Alecto Minerals Ordinary 100% Dormant
Limited plc shares GBP100
-------------------- ---------------- ------------------- -------------------- ------------ --------------
Caracal Gold Mali AME West Ordinary 100% Exploration
Mali SARL Africa Limited shares XOF
1,526,649,300
-------------------- ---------------- ------------------- -------------------- ------------ --------------
NewMines Holdings Nevis Alecto Minerals Ordinary 100% Dormant
Limited plc shares EUR923,373
-------------------- ---------------- ------------------- -------------------- ------------ --------------
Tobon Tondo Mali NewMines Ordinary 100% Exploration
SARL Holdings shares XOF
Limited 1,000,000
-------------------- ---------------- ------------------- -------------------- ------------ --------------
Gazelle Resources British Virgin Alecto Minerals Ordinary 100% Dormant
Inc Islands plc shares US$1
-------------------- ---------------- ------------------- -------------------- ------------ --------------
Societe Miniere Burkina Faso Gazelle Resources Ordinary 100% Exploration
de Kerboulé Inc shares XOF
SARL 1,000,000
-------------------- ---------------- ------------------- -------------------- ------------ --------------
Luiri Limited Mauritius Alecto Minerals Ordinary 100% Dormant
plc shares US$6,000
-------------------- ---------------- ------------------- -------------------- ------------ --------------
LG Holdings Mauritius Luiri Limited Ordinary 100% Dormant
Limited shares US$500
-------------------- ---------------- ------------------- -------------------- ------------ --------------
ZIO Holdings Mauritius Luiri Limited Ordinary 100% Dormant
Limited shares CAD$1
-------------------- ---------------- ------------------- -------------------- ------------ --------------
Luiri Gold Zambia LG Holdings Ordinary 100% Exploration
Mines Limited Limited / shares ZMW
ZIO Holdings 50,000
Limited
-------------------- ---------------- ------------------- -------------------- ------------ --------------
9. Available-for-Sale Financial Assets
Group Company
--------------------- ---------------------
2015 2014 2015 2014
GBP GBP GBP GBP
----------------------------------- --------- ---------- --------- ----------
At 1 January 14,400 21,000 14,400 21,000
Net losses transferred to equity (6,750) (6,600) (6,750) (6,600)
----------------------------------- --------- ---------- --------- ----------
At 31 December 7,650 14,400 7,650 14,400
----------------------------------- --------- ---------- --------- ----------
Less: non-current portion (7,650) (14,400) 7,650 (14,400)
----------------------------------- --------- ---------- --------- ----------
Current portion - - - -
----------------------------------- --------- ---------- --------- ----------
All available-for-sale financial assets are UK listed equity
securities denominated in Pounds Sterling.
Losses of GBP7,650 (2014: GBP6,600) were due to a change in fair
value.
10. Trade and Other Receivables
Group Company
---------------------- --------------------
2015 2014 2015 2014
GBP GBP GBP GBP
---------------------------- ---------- ---------- --------- ---------
Trade receivables - 116,728 - 116,728
Prepayments 27,528 20,446 25,850 18,818
Restricted assets 21,307 21,601 - -
VAT receivable 255,543 177,958 245,439 177,958
Security deposits - 1,253 - -
Other receivables 3,390 12,791 234 235
At 31 December 307,768 350,777 271,523 313,739
---------------------------- ---------- ---------- --------- ---------
Less: non-current portion (21,307) (21,601) - -
---------------------------- ---------- ---------- --------- ---------
Current portion 286,461 329,176 271,523 313,739
---------------------------- ---------- ---------- --------- ---------
Trade and other receivables are all due within one year. The
fair value of all receivables is the same as their carrying values
stated above.
The Group has provided bank guarantees as security for the
minimum spend requirements on the Mauritanian exploration licences.
The guarantees are not released until the end of the licence
period. The balance held via bank guarantee at 31 December 2015 is
GBP21,307 (31 December 2014: GBP21,601) and is included within
restricted assets.
The carrying amounts of the Group and Company's trade and other
receivables are denominated in the following currencies:
Group Company
-------------------- ----------------------
2015 2014 2015 2014
GBP GBP GBP GBP
------------------------ --------- --------- --------- ---------
UK Pounds 271,523 313,739 271,523 313,739
Central African Franc 10,562 15,437 - -
Zambian Kwacha 4,376 - - -
------------------------ --------- --------- --------- ---------
286,461 329,176 271,523 313,739
------------------------ --------- --------- --------- ---------
The maximum exposure to credit risk at the reporting date is the
carrying value of each class of receivable mentioned above. The
Group does not hold any collateral as security. At 31 December 2015
all trade and other receivables were fully performing.
11. Cash and Cash Equivalents
Group Company
-------------------- --------------------
2015 2014 2015 2014
GBP GBP GBP GBP
--------------------------- --------- --------- --------- ---------
Cash at bank and in hand 530,003 114,258 510,285 103,194
--------------------------- --------- --------- --------- ---------
All of the Company's cash at bank is held with institutions with
an AA credit rating.
12. Trade and Other Payables
Group Company
-------------------- -------------------
2015 2014 2015 2014
GBP GBP GBP GBP
--------------------------------- --------- --------- --------- --------
Trade payables 23,066 50,738 14,149 37,014
Other payables 48,229 1,716 1 1,065
Accrued expenses 256,199 62,890 204,417 50,896
Deferred consideration payable
(Note 26) 307,500 - 307,500 -
634,994 115,344 526,067 88,975
--------------------------------- --------- --------- --------- --------
Trade payables include amounts due of GBP8,554 (2014: GBP5,019)
in relation to exploration and evaluation activities.
13. Borrowings
Group Company
----------------- -----------------
2015 2014 2015 2014
GBP GBP GBP GBP
---------------------------------- --------- ------ --------- ------
Convertible loan note (Note 26) 528,576 - 528,576 -
---------------------------------- --------- ------ --------- ------
528,576 - 528,576 -
---------------------------------- --------- ------ --------- ------
On 23 November 2015, the Company issued 800,000 interest fee
convertible loan notes at a par value of US$1 per loan note. The
loan notes are convertible at the higher of 80% of the Company's
mid-market closing share price at the time of exercise and 0.08
pence.
14. Deferred tax
An analysis of deferred tax liabilities is set out below.
Group Company
---------------------- --------------
2015 2014 2015 2014
GBP GBP GBP GBP
--------------------------------- ----------- --------- ------ ------
Deferred tax liabilities
- Deferred tax liability after
more than 12 months 3,564,063 614,780 - -
Deferred tax liabilities 3,564,063 614,780 - -
--------------------------------- ----------- --------- ------ ------
The movement in the deferred tax account is as follows:
Group Company
---------------------- --------------
2015 2014 2015 2014
GBP GBP GBP GBP
----------------------------------- ----------- --------- ------ ------
At 1 January 614,780 614,780 - -
Acquisition of subsidiary (Note
26) 3,564,063 - - -
Disposal of subsidiary (Note 27) (614,780) - - -
As at 31 December 3,564,063 614,780 - -
----------------------------------- ----------- --------- ------ ------
The Group has additional capital losses of approximately
GBP440,000 (2014: GBP440,000) and other losses of approximately
GBP4,498,000 (2014: GBP5,126,000) available to carry forward
against future taxable profits. No deferred tax asset has been
recognised in respect of these tax losses because of uncertainty
over the timing of future taxable profits against which the losses
may be offset.
15. Share Capital and Share Premium
Group and Company
Share
Number of capital Share premium Total
shares GBP GBP GBP
------------------------------------ --------------- ----------- --------------- ------------
Issued and fully paid
As at 1 January 2014 593,918,775 4,157,432 7,509,266 11,666,698
------------------------------------ --------------- ----------- --------------- ------------
Issue of new shares - 17 January
2014 (1) 100,000,000 10,000 1,391,620 1,401,620
------------------------------------ --------------- ----------- --------------- ------------
Issue of new shares - 30 January
2014 79,113,924 7,911 1,242,089 1,250,000
------------------------------------ --------------- ----------- --------------- ------------
Issue of new shares - 28 March
2014 20,000,000 2,000 248,000 250,000
------------------------------------ --------------- ----------- --------------- ------------
Issue of new shares - 23 July
2014 32,045,742 3,204 365,321 368,525
------------------------------------ --------------- ----------- --------------- ------------
Issue of new shares - 16 November
2014 59,710,873 5,971 374,029 380,000
------------------------------------ --------------- ----------- --------------- ------------
Issue of new shares - 9 December
2014 2,777,143 278 17,218 17,496
------------------------------------ --------------- ----------- --------------- ------------
As at 31 December 2014 887,566,457 4,186,796 11,147,543 15,334,339
------------------------------------ --------------- ----------- --------------- ------------
Issue of new shares - 14 January
2015 (2) 200,000,000 20,000 515,000 535,000
------------------------------------ --------------- ----------- --------------- ------------
Issue of new shares - 22 June
2015 (3) 300,000,000 30,000 245,000 275,000
------------------------------------ --------------- ----------- --------------- ------------
Issue of new shares - 23 November
2015 (4) 1,756,250,000 175,625 1,539,160 1,714,785
------------------------------------ --------------- ----------- --------------- ------------
As at 31 December 2015 3,143,816,457 4,412,421 13,446,703 17,859,124
------------------------------------ --------------- ----------- --------------- ------------
(1) Includes issue costs of GBP98,380
(2) Includes issue costs of GBP65,000
(3) Includes issue costs of GBP25,000
(4) Includes issue costs of GBP67,715
On 14 January 2015 the Company raised GBP600,000 (gross) through
the issue of 200,000,000 new Ordinary Shares at a price of 0.3
pence per share.
On 22 June 2015 the Company raised GBP300,000 (gross) through
the issue of 300,000,000 new Ordinary Shares at a price of 0.1
pence per share.
On 23 November 2015, the Company issued 943,750,000 new Ordinary
Shares at a price of 0.12 pence per share as consideration for
business acquisitions. On the same date the Company raised
GBP650,000 (gross) through the issue of 812,500,000 new Ordinary
shares at a price of 0.08 pence per share.
16. Share Based Payments
Share options and warrants outstanding and exercisable at the
end of the year have the following expiry dates and exercise
prices:
Shares
Exercise price
Vesting date Expiry date in GBP per share 2015 2014
------------------- ------------------- ------------------- ------------ ------------
1 January 2012 31 December 2016 0.04300 7,550,000 7,550,000
1 January 2013 31 December 2016 0.04800 4,500,000 4,500,000
1 January 2014 31 December 2016 0.06300 2,250,000 2,250,000
6 November 2013 5 November 2016 0.01000 3,000,000 3,000,000
23 January 2014 23 January 2017 0.01580 7,000,000 7,000,000
24 February 2014 5 November 2016 0.01000 3,000,000 3,000,000
23 January 2014 22 January 2017 0.01500 5,000,000 5,000,000
24 February 2014 23 February 2019 0.01925 7,730,327 7,730,327
27 November 2015 27 November 2020 0.00080 45,000,000 -
85,030,327 40,030,327
--------------------------------------- ------------------- ------------ ------------
The Company and Group have no legal or constructive obligation
to settle or repurchase the options in cash.
The fair value of the share options and warrants was determined
using the Black Scholes valuation model. The parameters used are
detailed below:
2015 Warrants 2014 Warrants 2014 Warrants 2014 Warrants 2014 Warrants
--------------- --------------- --------------- --------------- ---------------
Granted on: 23/11/2015 23/1/2014 24/02/2014 24/02/2014 24/02/2014
Life (years) 5 3 years 2 years 3 years 5 years
Share price (pence per
share) 0.08p 1.85p 1.45p 1.45p 1.45p
Risk free rate 2.25% 2.25% 2.25% 2.25% 2.25%
Expected volatility 17% 26% 24% 26% 24%
Expected dividend yield - - - - -
Marketability discount 20% 20% 20% 20% 20%
Total fair value (GBP000) 6 29 12 11 14
The expected volatility is based on historical volatility for
the six months prior to the date of granting. The risk free rate of
return is based on zero yield government bonds for a term
consistent with the option life.
A reconciliation of options and warrants granted is shown
below:
2015 2014
---------------------------- ------------------------------
Weighted Weighted
average average
exercise exercise
Number price (GBP) Number price (GBP)
-------------------------------- ------------ -------------- -------------- --------------
Outstanding as at 1 January 40,030,327 0.0270 70,603,226 0.0320
Expired - - (53,303,226) 0.0290
Granted 45,000,000 0.0008 22,730,327 0.0160
-------------------------------- ------------ -------------- -------------- --------------
Outstanding as at 31 December 85,030,327 0.0131 40,030,327 0.0270
-------------------------------- ------------ -------------- -------------- --------------
Exercisable at 31 December 85,030,327 0.0131 40,030,327 0.0270
-------------------------------- ------------ -------------- -------------- --------------
2015 2014
---------------------------------------------------- ----------------------------------------------------
Weighted Weighted Weighted Weighted
Range Weighted average average Weighted average average
of average remaining remaining average remaining remaining
exercise exercise life life exercise life life
prices price Number expected contracted price Number expected contracted
(GBP) (GBP) of shares (years) (years) (GBP) of shares (years) (years)
---------- ----------- ------------ ----------- ------------ ----------- ------------ ----------- ------------
0 - 0.01 0.0008 45,000,000 4.9 4.9 - - - -
0.01 -
0.05 0.0250 37,780,327 2.44 2.44 0.0250 37,780,327 2.44 2.44
0.05 -
0.10 0.0630 2,250,000 2.00 2.00 0.0630 2,250,000 2.00 2.00
---------- ----------- ------------ ----------- ------------ ----------- ------------ ----------- ------------
No options or warrants were exercised during the period. The
total fair value has resulted in a charge to the Income Statement
for the year ended 31 December 2015 of GBPnil (2014: GBP42,337) and
a charge to Share Premium of GBP5,715 (2014 GBP23,380).
17. Expenses by Nature
Group - Continuing operations 2015 2014
GBP GBP
------------------------------------ --------- ---------
Directors' remuneration (Note 18) 98,432 117,422
Employee salaries (Note 19) 20,181 25,210
Social security costs (Note 19) 15,881 16,844
Other employment expenses 140,000 -
Audit & accountancy 51,094 40,607
Consultancy and professional fees 176,792 174,616
Operating lease charges 8,300 24,426
Other establishment expenses 59,563 55,235
AIM related fees 91,097 137,813
Depreciation 64,631 61,239
Travel & subsistence 34,362 51,470
Share option expenses - 42,337
Loss/(gain) on foreign exchange (616) -
Other expenses - 41,402
------------------------------------ --------- ---------
Total administrative expenses 759,717 788,621
------------------------------------ --------- ---------
Other employment expenses relate to a provision for
discretionary bonuses that are likely be paid to senior management
as shares in lieu of cash fees.
During the year the Group (including its overseas subsidiaries)
obtained the following services from the Company's auditors and its
associates:
Group
------------------
2015 2014
GBP GBP
-------------------------------------------------- -------- --------
Fees payable to the Company's auditor and its
associates for the audit of the Parent Company
and Consolidated Financial Statements 35,000 35,000
Fees payable to the Company's auditor and its
associates for tax services 1,000 1,000
-------------------------------------------------- -------- --------
18. Directors' Remuneration
Total emoluments Options Issued
-------------------- ------------------
2015 2014 2015 2014
GBP GBP GBP GBP
-------------------------- --------- --------- ------- ---------
Executive Directors
Mark Jones 22,000 29,750 - -
Michael Ware (1) - 32,315 - -
Dominic Doherty 91,004 44,487 - -
Non-executive Directors
Gerald Chapman (2) 4,222 - - -
Toby Howell 27,867 37,683 - -
Michael Johnson (3) - 15,000 - 28,835
Mark Wellesley-Wood (4) 15,333 9,667 - -
160,426 168,902 - 28,835
-------------------------- --------- --------- ------- ---------
(1) Resigned 8 July 2014
(2) Appointed 20 November 2015
(3) Resigned 30 September 2014
(4) Resigned 1 July 2015
The Directors of the Company are considered to be key management
personnel.
No pension benefits are provided for any Director.
Of the above Directors' remuneration costs, GBP61,994 (2014:
GBP51,480) has been capitalised in accordance with IFRS 6 as
exploratory related costs and are shown as an intangible addition
in the year.
There was no Directors' Remuneration relating to termination
benefits (2014: GBPnil).
19. Employees
Group
--------------------
2015 2014
Staff costs (excluding Directors) GBP GBP
------------------------------------ --------- ---------
Salaries and wages 104,374 240,743
Social security costs 1,307 57,291
Pension costs - -
------------------------------------ --------- ---------
105,681 298,034
------------------------------------ --------- ---------
The average monthly number of employees during the year was 10
(2014: 21).
Of the above staff costs, GBP85,500 (2014: GBP255,978) has been
capitalised in accordance with IFRS 6 as exploratory related costs
and are shown as an intangible addition in the year.
20. Other Net Gains/(Losses)
Group
--------------------------
2015 2014
GBP GBP
-------------------------------------------------------- ------------- -----------
Loss on settlement of equity swap agreement - (180,542)
Gain on disposal of property, plant and equipment - 27,445
Bargain purchase arising on acquisition of subsidiary 6,101,221 -
(Note 26)
Loss on disposal of subsidiaries (Note 27) (2,036,189) -
Other gains/(losses) 10,590 (5,415)
4,075,622 (158,512)
-------------------------------------------------------- ------------- -----------
21. Finance Income
Group
--------------
2015 2014
GBP GBP
------------------------------ ------ ------
Interest received from Bank 45 397
------------------------------ ------ ------
45 397
------------------------------ ------ ------
22. Finance Costs
Group
-----------------
2015 2014
GBP GBP
--------------------------------- ------- --------
Convertible loan note interest - 18,526
--------------------------------- ------- --------
- 18,526
----------------------------------------- --------
23. Income Tax
No income tax charge to the Income Statement arises due to the
losses incurred. No deferred tax asset has been recognised on
accumulated tax losses, as the recoverability of any assets is not
likely in the foreseeable future.
Group
--------------
Income tax expense 2015 2014
GBP GBP
-------------------------- ------ ------
Tax on loss for the year - -
-------------------------- ------ ------
The tax on the Group's profit before tax differs from the
theoretical amount that would arise using the weighted average tax
rate applicable to the profits of the consolidated entities as
follows:
Group
--------------------------
2015 2014
GBP GBP
---------------------------------------------------- ------------- -----------
Profit/(loss) before tax 3,330,241 (965,262)
---------------------------------------------------- ------------- -----------
Tax at the applicable rate of 27.42% (2014:
22.56%) 913,152 (217,763)
Effects of:
Expenditure not deductible for tax 572,547 36,932
Depreciation in excess of capital allowance 17,770 13,700
Non-taxable income (1,672,955) (59,202)
Net tax effect of losses carried forward 287,540 284,861
Utilisation of previously unrecognised tax losses (118,054) (58,528)
-------------
Tax charge - -
---------------------------------------------------- ------------- -----------
The tax charge relating to components of other comprehensive
income is as follows:
2015 2014
---------------------------------
Before After Before After
tax Tax charge tax tax Tax charge tax
GBP GBP GBP GBP GBP GBP
-------------------------- -------- ------------ --------- -------- ------------ ---------
Available-for-sale
financial assets (Note
9) 7,650 - 7,650 14,400 - 14,400
-------------------------- -------- ------------ --------- -------- ------------ ---------
Other comprehensive
income 7,650 - 7,650 14,400 - 14,400
-------------------------- -------- ------------ --------- -------- ------------ ---------
Current tax - -
Deferred tax (Note - -
14)
-------------------------- -------- ------------ --------- -------- ------------ ---------
No deferred tax asset was recognised on the fair value loss
attributable to the available-for-sale financial asset as this was
deemed immaterial.
24. Earnings per Share
The calculation of basic earnings per share of 0.251 pence (2014
restated: loss per share of (0.096) pence) is calculated by
dividing the profit attributable to shareholders of GBP3,343,615
(2014 restated loss: GBP767,804) by the weighted average number of
Ordinary Shares of 1,331,458,774 (2014: 801,201,925) in issue
during the period.
The calculation of diluted earnings per share of 0.243 pence is
calculated by dividing the profit attributable to shareholders of
GBP3,343,615 by the weighted average number of Ordinary Shares
together with the weighted average number of outstanding warrants
and options of 1,376,174,033 in issue during the period.
Details of share options that could potentially dilute earnings
per share in future periods are set out in Note 16.
The Company is committed to the issuance of ordinary shares to a
consultant should certain conditions be met in future periods. The
issuance of these Ordinary Shares could potentially dilute earnings
per share. Further details of this arrangement are set out in Note
29.
25. Financial Instruments by Category
Group - 31 December 2015
Assets per Statement of Financial Loans and Available-
Position receivables for-sale Total
------------------------------------------ -------------- -------------- ---------
Available-for-sale financial assets - 7,650 7,650
Trade and other receivables (excluding
prepayments) 258,933 - 258,933
Cash and cash equivalents 530,003 - 530,003
------------------------------------------- -------------- -------------- ---------
Total 788,936 7,650 796,586
------------------------------------------- -------------- -------------- ---------
Group - 31 December 2015
Liabilities per Statement of Financial At amortised
Position cost Total
------------------------------------------ -------------- -------------- ---------
Trade and other payables (excluding
non-financial liabilities) 115,344 115,344
Borrowings 528,576 528,576
------------------------------------------- -------------- -------------- ---------
Total 643,920 643,920
------------------------------------------- -------------- -------------- ---------
Group - 31 December 2014
Assets per Statement of Financial Loans and Available-
Position receivables for-sale Total
------------------------------------------ -------------- -------------- ---------
Available-for-sale financial assets - 14,400 14,400
Trade and other receivables (excluding
prepayments) 308,730 - 308,730
Cash and cash equivalents 114,258 - 114,258
Total 422,988 14,400 437,388
------------------------------------------- -------------- -------------- ---------
Group - 31 December 2015
Liabilities per Statement of Financial At amortised
Position cost Total
------------------------------------------ -------------- -------------- ---------
Trade and other payables (excluding
non-financial liabilities) 115,344 115,344
Total 115,344 115,344
------------------------------------------- -------------- -------------- ---------
Company - 31 December 2015
Assets per Statement of Financial Loans and Available-
Position receivables for-sale Total
----------------------------------------- -------------- ------------ -----------
Available-for-sale financial assets - 7,650 7,650
Trade and other receivables (excluding
prepayments) 510,285 - 510,285
Cash and cash equivalents 755,958 - 755,958
Total 1,266,243 7,650 1,273,893
------------------------------------------ -------------- ------------ -----------
Company - 31 December 2015
Liabilities per Statement of Financial At amortised
Position cost Total
------------------------------------------ -------------- ---------
Trade and other payables (excluding
non-financial liabilities) 218,565 218,565
Borrowings 528,576 528,576
Total 747,141 747,141
--------------------------------------------- -------------- ---------
Company - 31 December 2014
Assets per Statement of Financial Loans and Available-
Position receivables for-sale Total
----------------------------------------- -------------- ------------ ---------
Available-for-sale financial assets - 14,400 14,400
Trade and other receivables (excluding
prepayments) 294,921 - 294,921
Cash and cash equivalents 103,194 - 103,194
Total 398,115 14,400 412,515
------------------------------------------ -------------- ------------ ---------
Company - 31 December 2014
Liabilities per Statement of Financial At amortised
Position cost Total
------------------------------------------ -------------- --------
Trade and other payables (excluding
non-financial liabilities) 88,975 88,975
Total 88,975 88,975
--------------------------------------------- -------------- --------
26. Business Combinations
Luiri Limited
On 23 November 2015, the Group acquired 100% of the share
capital of Luiri Limited ('Luiri') for GBP2,068,576. Luiri is
registered in Mauritius and via its wholly owned subsidiary Luiri
Gold Mines Limited, holds a 32 sq. km. gold exploration and mining
group of licences in Zambia. As a result of this acquisition the
Group is expected to increase its presence in this market and
commodity.
The bargain purchase arising from the acquisition of
GBP6,101,221 has been recognised in the Income Statement under
'Other net gains/(losses)'; refer Note 20. The bargain purchase is
attributable to the consideration paid for Luiri, not reflecting
the fair value of the exploration assets acquired, in the opinion
of the Directors.
The following table summarises the consideration paid for Luiri
and the values of the assets acquired and liabilities assumed at
the acquisition date.
Consideration at 23 November 2015 GBP
------------------------------------------------------------ -----------
Cash 100,000
Equity instruments (943,750,000 ordinary shares at 0.12
pence per share) 1,132,500
Convertible loan note (US$800,000) 528,576
Deferred share consideration (256,250,000 ordinary shares
at 0.12 pence per share) 307,500
Total consideration (Note 8) 2,068,576
------------------------------------------------------------ -----------
Recognised amounts of identifiable assets acquired and
liabilities assumed GBP
--------------------------------------------------------- -------------
Cash and cash equivalents 17,371
Trade and other receivables 4,853
Property, plant & equipment 14,583
Exploration assets (included within Intangible Assets)
(Note 7) 11,880,210
Trade and other payables (183,157)
Deferred tax liabilities (Note 14) (3,564,063)
--------------------------------------------------------- -------------
Total identifiable net assets 8,169,797
--------------------------------------------------------- -------------
Bargain purchase (Note 20) (6,101,221)
--------------------------------------------------------- -------------
Total consideration 2,068,576
--------------------------------------------------------- -------------
The fair value of the 943,750,000 Ordinary Shares issued as
consideration for Luiri was based on the agreed price of 0.12 pence
per Ordinary Share.
The convertible loan notes are convertible at the higher of 80%
of the Company's mid-market closing share price at the time of
exercise and 0.08 pence. On 5 April 2016 the Company issued
433,501,250 new Ordinary Shares in relation to the conversion of
US$495,365 of the convertible loan notes.
The deferred consideration arrangement requires the Group to
issue the former owners of Luiri with 256,250,000 new Ordinary
Shares at a price of 0.12 pence per Ordinary Share on or before 20
November 2018.
The fair value of the exploration assets of GBP11,880,210 was
estimated by applying a number of valuation metrics which include;
geological upside potential, mineralogy, market benchmarks,
application of local market factors and in particular consideration
of an internally prepared feasibility study which indicated a net
present valuation of US$25 million for the Matala deposit. In the
Directors' opinion, the value of the consideration paid to effect
the acquisition does not accurately reflect the value of the
exploration licences. Therefore, the fair value of the exploration
assets acquired, after consideration of tax implications and the
removal of the fair value of other identifiable assets acquired,
has been estimated by the Directors as if the transaction was an
orderly sale by the vendors on an open market. This resulted in a
US$16.25 million fair value adjustment before consideration of the
tax implications.
A deferred tax liability of GBP3,564,063 has been recognised on
acquisition on the estimated tax effect of the temporary difference
between the fair value of the exploration asset and its tax
base.
The deferred tax liability has been estimated at a rate of 30%
of the temporary difference, representing the tax rates that are
expected to apply to the period when the temporary differences
reverse. The deferred tax liability recognised has not been
discounted.
Had Luiri been consolidated from 1 January 2015, the revenue
shown in the Consolidated Income Statement would have been
GBP97,005 and an additional loss for the period of GBP449,986 would
have been recorded.
27. Discontinued Operations
On 30 September 2015 the Group disposed of its Ethiopian
subsidiaries, Nubian Gold Exploration Limited and Rift Valley
Resources Limited. The subsidiaries are reported in the current
period as discontinued operations. Financial information relating
to the discontinued operations for the period to the date of
disposal is set out below.
The financial performance and cash flow information are for the
period ended 30 September 2015 and the year ended 31 December
2014.
Financial performance and cash flow information
2015 2014
GBP GBP
--------------------------------------------------- ---------- ----------
Revenue 42,687 243,961
Expenses (26,586) (46,503)
Other losses (2,727) -
--------------------------------------------------- ---------- ----------
Profit before income tax 13,374 197,458
---------------------------------------------------- ---------- ----------
Income tax - -
Profit for the year from discontinued operations 13,374 197,458
---------------------------------------------------- ---------- ----------
Net cash used in operating activities (12,041) (24,290)
---------------------------------------------------- ---------- ----------
Net cash used in investing activities (4,814) (84,385)
---------------------------------------------------- ---------- ----------
Net cash generated from financing activities 19,414 109,116
---------------------------------------------------- ---------- ----------
Net increase in cash and cash equivalents 2,559 441
---------------------------------------------------- ---------- ----------
Details of the sale of the subsidiaries
2015
GBP
--------------------------------------------------- -------------
Consideration received or receivable:
Cash 1
Fair value on contingent consideration -
--------------------------------------------------- -------------
Total disposal consideration 1
------------------------------------------------------ -------------
Carrying amount of net assets sold (see below) (2,059,955)
Reclassification of foreign currency translation
reserve 23,765
Loss on disposal of subsidiaries (Note 20) (2,036,189)
------------------------------------------------------ -------------
The carrying amounts of assets and liabilities as at the date of
sale (30 September 2015) were:
2015
GBP
------------------------------------- -----------
Property, plant and equipment 14,134
Cash 4,170
Intangibles 2,637,106
Goodwill 19,571
---------------------------------------- -----------
Total assets 2,674,981
---------------------------------------- -----------
Trade payables (246)
Deferred tax liabilities (Note 14) (614,780)
---------------------------------------- -----------
Total liabilities (615,026)
---------------------------------------- -----------
Net Assets disposed 2,059,955
---------------------------------------- -----------
28. Contingencies
Electrum Limited
The Group has entered into a contractual arrangement with
Electrum Limited ('Electrum') in relation to the acquisition of
Caracal Gold Mali SARL. Upon the Group establishing a proven and
probable JORC compliant reserve greater than 500,000 ounces of gold
in respect of the acquired gold exploration licences in south-west
Mali, which includes Kossanto East and Kossanto West, the Group is
obligated to pay Electrum GBP1.25 million to be satisfied by the
allotment of new Ordinary Shares in the Company.
Swala Resources Inc
The Group has entered into a contractual arrangement with Swala
Resources Inc ('Swala') in relation to the acquisition of Gazelle
Resources Inc., which includes Kerboulé. Upon the Group
establishing any of the following:
a) 250,000 ounce gold JORC proven reserve or equivalent resource
estimate at a minimum cut-off of 0.5 grams per tonne of gold;
b) 1 million ounce gold JORC inferred resource or equivalent
resource estimate at a minimum cut-off of 0.5 grams per tonne of
gold; or
c) commercial production of 75,000 ounces of gold.
The Group will be obligated to pay Swala US$1.5 million to be
satisfied, solely at the discretion of the Company, either in cash
or by the allotment of new ordinary shares in the Company.
VAT Registration
The Company is in discussions with HM Revenue & Customs
('HMRC') in connection with the status of its VAT registration.
HMRC is investigating whether the Company was entitled to have
reclaimed input VAT and in March 2014 issued a notice of assessment
to the Company. At 31 December 2015, VAT receivable amounted to
GBP245,439 (2014: GBP177,958). The Directors' are confident they
will be able to satisfactorily respond to all matters raised by
HMRC on the basis that they believe the registration in place to be
fully justified. In the opinion of the Directors, the outcome of
the discussions is unlikely to result in the Company having to
refund any VAT previously reclaimed.
29. Commitments
(a) Licence agreements
On 23 November 2010, the Group acquired three gold exploration
licences and, on 13 December 2010, two uranium exploration licences
in Mauritania. These licences were for a period of three years from
the date of grant and included commitments to pay annual land
royalty fees in the second and third year and adhere to minimum
spend requirements. The two uranium exploration licences were not
renewed during the prior year and one gold exploration licence was
not renewed in 2014, hence these licences have been fully impaired.
On 11 August 2014 the remaining two gold exploration licences were
renewed for a further three year period.
At the end of the licence period, the Group has the right to
renew the licence or, if a defined resource has been established,
apply for a mining licence for the target area. Upon grant of any
mining licence the Mauritanian Government will receive a 10%
shareholding of the rights and benefits of the licence area. The
Mauritanian Government also has the option to purchase an
additional 10% of the rights and benefits at the market rate upon
granting of the mining licence.
On 4 October 2013, the Group acquired AME West Africa Limited
which, via its wholly owned subsidiary, Caracal Gold Mali SARL,
owns gold and related minerals exploration licences in Mali. With
the exception of one licence area which is in the process of being
renewed, these licences have been recently renewed and include
commitments to pay annual land royalty fees.
On 28 March 2014, the Group acquired NewMines Holdings Limited
which, via its wholly owned subsidiary, Tobon Tondo SARL, owns a
gold and related mineral exploration licence in Mali. This licence
includes commitments to pay annual land royalty fees.
On 27 November 2014, the Group acquired Gazelle Resources Inc
which, via its wholly owned subsidiary, Societe Miniere de Kerboulé
SARL, owns gold and related mineral exploration licences in Burkina
Faso. These licences include commitments to pay annual land royalty
fees.
On 23 November 2015, the Group acquired Luiri Limited which, via
its wholly owned subsidiary, Luiri Gold Mines Limited, owns gold
mining licences in Zambia. These licences include commitments to
pay annual land royalty fees.
At 31 December 2015 the future aggregate minimum royalty fee
payments and minimum spend requirements are as follows:
2015 2014
---------------------------------------- ----------------------------------------
Group Land Minimum Land Minimum
royalty spend royalty spend
fees requirement Total fees requirement Total
GBP GBP GBP GBP GBP GBP
----------------- ---------- ----------------- --------- ---------- ----------------- ---------
Not later than
one year 46,022 - 46,022 46,155 - 46,155
Later than one
year and no
later
than five years 62,045 - 62,045 124,639 - 124,639
------------------ ---------- ----------------- --------- ---------- ----------------- ---------
Total 108,067 - 108,067 170,794 - 170,794
------------------ ---------- ----------------- --------- ---------- ----------------- ---------
(b) Bank guarantees
The Group has provided bank guarantees as security for the
minimum spend requirements on the Mauritanian exploration licences.
The guarantees are not released until the end of the licence
period. The balance held via bank guarantee at 31 December 2015 is
GBP21,307 (31 December 2014: GBP21,601) and is included within
restricted assets (Note 10).
(c) Capital commitments
Capital expenditure contracted for at the end of the reporting
period but not yet incurred is as follows:
Group 2015 2014
GBP GBP
-------------------- --------- ---------
Intangible assets 260,000 260,000
--------------------- --------- ---------
The Group has entered into a contractual arrangement with
O'Connor International Limited ('OCI') for consultancy work in the
normal course of trade in respect of the Mauritanian licence areas
acquired during the prior years. An amount of GBP130,000 for each
gold licence, GBP260,000 in aggregate, remains committed under this
contract. The payment of this fee is contingent on the issuance of
a feasibility study by the Company indicating the economic
feasibility for the relevant licence area. These amounts are to be
paid via the issuance of new Ordinary Shares in the Company and
will become payable on the date the relevant conditions are met
unless the agreement is terminated prior to the conditions being
met.
(d) Royalty agreements
As part of the contractual arrangement with OCI noted above, the
Group has agreed to pay OCI a royalty on revenue for each gold
licence acquired based on the total ounces of gold sold equal to
US$1 for every US$250 of the sale price per ounce. These royalties
will become payable when the licence areas move into production and
resources are sold from any of these areas.
As part of the acquisition of Caracal Gold Mali SARL
('Caracal'), the Group has assumed contractual commitments to
provide a 1% net revenue royalty on the first 300,000 ounces of
gold generated from its gold exploration licences in Mali held by
Caracal.
As part of the acquisition of Gazelle Resources Inc in 2014 the
Group has assumed contractual commitments to provide a 3% net
smelter return ('NSR') royalty on its gold exploration licences in
Burkina Faso. Half of the NSR, which equates to 1.5% may be bought
back at any time at the discretion of the Group in increments of
0.5% for the sum of US$500,000 per increment.
(e) Operating lease commitments
The Company leased office premises under a non-cancellable
operating lease agreement. The lease was on a fixed term expiring
in May 2015 and was not renewed. The lease expenditure charged to
the Income Statement during the year is disclosed in Note 17.
30. Prior Year Adjustment
In 2015 the Group changed the way foreign exchange is classified
on consolidation (see Note 2.6). Previously the foreign exchange
movements remained on the Income Statement (after elimination of
intercompany transactions), but is now classified within the
foreign currency translation reserve in equity. The Financial
Statements of 2012, 2013 and 2014 have been restated to reflect
this reclassification. The effect of the restatement on those
Financial Statements is summarised below. There is no effect on the
Company and no effect on the Group in 2015.
Group Effect Effect Effect Effect
on 2012 on 2013 on 2014 Total
GBP GBP GBP GBP
------------------------------------------- ---------- ----------- ----------- -----------
Decrease in foreign exchange 1,412 (116,482) (194,346) (309,416)
Decrease in loss 1,412 (116,482) (194,346) (309,416)
------------------------------------------- ---------- ----------- ----------- -----------
Increase in foreign currency translation
reserve (1,412) 116,482 194,346 309,416
------------------------------------------- ---------- ----------- ----------- -----------
Movement in equity - - - -
------------------------------------------- ---------- ----------- ----------- -----------
Earnings per share in 2014 has been restated from (0.120) pence
based on the reported loss in 2014 of GBP962,148 to (0.096) pence
based on the restated loss of GBP787,804.
31. Related Party Transactions
Loans to Group undertakings
Amounts receivable as a result of loans granted to subsidiary
undertakings are as follows:
2015 2014
GBP GBP
---------------------------------------- ----------- -----------
Alecto Holdings International Limited 2,430 1,630
Alecto Mauritania Limited 1,706,758 1,676,826
Nubian Gold Exploration Limited - 312,340
Rift Valley Resources Limited - 338,771
Caracal Gold Mali SARL 1,712,937 1,562,369
NewMines Holdings Limited 1,161 677
Tobon Tondo SARL 15,223 7,874
Gazelle Resources Limited 649 -
Societe Miniere de Kerboulé SARL 164,572 21,595
Luiri Gold Mines Limited 98,917 -
3,702,647 3,922,082
---------------------------------------- ----------- -----------
Transactions with subsidiary undertakings during the year
comprised the following:
Disposals Cash advances Beneficial Consulting Total
GBP GBP payments services GBP
GBP GBP
----------------------------------- ----------- --------------- ------------ ------------ -----------
Alecto Holdings International
Limited - - 800 - 800
Alecto Mauritania Limited - - 9,800 20,132 29,932
Nubian Gold Exploration
Limited (312,340) - - - (312,340)
Rift Valley Resources
Limited (338,771) - - - (338,771)
Caracal Gold Mali SARL - 72,600 3,326 74,642 150,568
NewMines Holdings Limited - - 484 - 484
Tobon Tondo SARL - - - 7,349 7,349
Gazelle Resources Limited - - 649 - 649
Societe Miniere de Kerboulé
SARL - 79,047 - 63,930 142,977
Luiri Gold Mines Limited - 49,830 21,278 27,809 98,917
(651,111) 201,477 36,337 193,862 (219,435)
----------------------------------- ----------- --------------- ------------ ------------ -----------
These amounts are interest free and repayable in Sterling when
sufficient cash resources are available in the subsidiaries.
All intra Group transactions are eliminated on
consolidation.
Other transactions
J Cubed Ventures Limited, a company of which Mark Jones is a
director and beneficial owner, was paid a fee of GBP97,000 (2014:
GBP97,500) for consulting services provided to the Company. No
balance was outstanding at the year-end (2014: GBP2,000).
As disclosed in Note 29, the Company leased office premises
under a non-cancellable operating lease agreement which expired in
May 2015 and was not renewed. This lease agreement was between the
Company and Savannah Resources plc ('Savannah'), a significant
shareholder of the Company as at 31 December 2015. Savannah was
paid GBP8,300 (2014: GBP16,600) by the Company in connection with
the expired operating lease agreement.
32. Ultimate Controlling Party
The Directors believe there to be no ultimate controlling
party.
33. Events after the Reporting Date
On 9 February 2016 the Company granted 167,815,680 share options
exercisable at 0.08p to certain directors, senior management and
consultants of the Company.
On 5 April 2016 the Company issued 433,501,250 new Ordinary
Shares in relation to the conversion of US$495,365 convertible loan
notes.
On 17 May 2016 the Company raised GBP665,000 (gross) through the
issue of 831,250,000 new Ordinary Shares at a price of 0.08 pence
per share.
**ENDS**
For further information please visit www.alectominerals.com,
follow us on Twitter @AlectoMinerals, or contact:
Alecto Minerals plc Tel: +44 (0)20 7499 5881
Mark Jones
Strand Hanson Limited Tel: +44 (0)20 7409 3494
Andrew Emmott
Matthew Chandler
James Dance
Beaufort Securities Limited Tel: +44 (0)20 7382 8300
Jon Belliss
St Brides Partners Limited Tel: +44 (0)20 7236 1177
Elisabeth Cowell
Charlotte Heap
Notes to editors:
Alecto Minerals plc is an African focused, gold and base metal
exploration and development company quoted on AIM with gold
exploration projects in Zambia, Mali, Burkina Faso and
Mauritania.
In Zambia, the historical Matala and Dunrobin gold mines have,
in aggregate, a 760,000 oz Au JORC Code compliant resource estimate
in the Measured, Indicated and Inferred categories at an average
grade of 2.3g/t Au. The Company is focused on bringing Matala into
low-cost production in the near to mid-term.
In Mali, the Kossanto East project has an inferred JORC Code
compliant resource estimate of 6.72Mt grading at 1.14g/t Au for an
aggregate of 247,000 oz Au with a cut-off grade of 0.5g/t Au. This
is under a co-operation agreement with ASX listed Desert Gold Inc.
to evaluate the potential to jointly develop each company's
neighbouring projects into production. The Kossanto West Project is
under a joint venture with Randgold Resources Limited. In addition,
the Company owns the 250 sq. km. Karan gold project in southern
Mali which is under joint venture with Cora Gold Limited.
Alecto also owns the Kerboulé Project, located in the highly
prospective Birrimian-age Djibo gold belt in northern Burkina Faso,
as well as the wholly owned Wad Amour IOCG Project in Mauritania
which is at an exploration stage.
Accordingly, the Company has a strong, diversified project
portfolio with exciting exploration upside potential.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR FFMPTMBJMMLF
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June 06, 2016 05:00 ET (09:00 GMT)
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