TIDMIMIC
RNS Number : 9177I
Intl Mining & Infrast Corp PLC
31 March 2015
31 March 2015
INTERNATIONAL MINING & INFRASTRUCTURE CORPORATION PLC
("IMIC" or the "Company")
Interim Results
For the six months ended 31 December 2014
International Mining & Infrastructure Corporation plc (AIM:
IMIC), the Company focused on unlocking the value of iron ore in
Africa, is pleased to announce its interim results for the six
months ended 31 December 2014.
Highlights
-- Significant progress in the development of iron ore assets in Cameroon
-- Pre-Feasibility Study for the 2.7 billion tonne ("Bt") Nkout
iron ore project underway with final report due in H2 2015
-- Appointment of highly experienced African natural resources
veteran, Ethelbert Cooper, as Non-Executive Chairman
-- Updated Mineral Resource Estimate ("MRE6") for the Nkout deposit
- Increase in overall Mineral Resource of 225 Mt to over 2.7 Bt
- 68% increase in total direct shipping ore ("DSO")/Saprolite
Indicated resource to 252 Mt at 43.2% Fe
-- Updated Mineral Resource Estimate ("MRE2") for the Ntem deposit
- Increase in overall Mineral Resource of 60.8 million tonnes ("Mt") to 176.3 Mt
- Substantial increase of 148% in total Indicated resource,
which now stands at 96.9 Mt at 34.92% iron ("Fe")
-- Successful placing of new ordinary shares raised proceeds of
US$1.5 million in December 2014 and further US$0.5 million in
January 2015
-- Short term loan raised further US$5.8 million of which US$3
million was converted into ordinary shares in IMIC in January
2015
-- Appointment of CITIC Securities Co., Ltd, a leading Chinese
investment bank, in connection with the proposal to raise finance
in China
-- Definitive Feasibility Study for the Nkout deposit anticipated to begin in 2015
-- Preliminary Feasibility Study for the Ntem deposit anticipated to begin in H2 2015
-- Convertible bond issued to a Cameroonian investor, Caisse
Capital Limited, an investment vehicle controlled by Mr. Colin
Mukete, raised US$5 million in March 2015
-- Appointment of Mr. Colin Mukete, a prominent Cameroonian
businessmen, to the Advisory Board of IMIC strengthens the
leadership of the Company
The definitions of Measured, Indicated and Inferred Mineral
Resources, as used throughout this announcement, are as defined in
the CIM Definition Standards on Mineral Resources and Mineral
Reserves adopted by the CIM Council.
Ethelbert Cooper, IMIC's Chairman, commented:"During the second
half of 2014 we made progress in efforts to monetise our iron ore
assets in Cameroon. Following the recently reported upgrade in the
resource base at Nkout, a world-class iron ore asset, we are
continuing work on the Nkout Preliminary Feasibility Study and
intend to further drive the development of this project towards
production. At the same time, we are progressing Ntem, our smaller
but strategically attractive project, which has the potential to
deliver early revenues for the Company.
"Whilst the funding environment for iron ore development
companies is challenging against the softening of iron ore prices,
we remain fully committed to moving forward with our strategy. We
are hopeful that we will be able to raise additional funds to
support further development of our projects, and ultimately achieve
our strategic objective of unlocking the value potential of this
new world-class African iron ore region."
For further information, please contact:
International Mining & Infrastructure Corporation www.imicplc.com
plc
Ethelbert Cooper, Chairman
Haresh Kanabar, Chief Financial Officer +44 (0) 20 7290 3340
Strand Hanson Limited - Financial & Nominated www.strandhanson.co.uk
Adviser +44 (0) 20 7409 3494
James Spinney / Ritchie Balmer / James
Bellman
Pareto Securities Limited - Sole Broker www.paretosec.com
Guy Wilkes / Will Slack +44 (0) 20 7786 4370
Buchanan - Financial PR www.buchanan.uk.com
Mark Court / Sophie Cowles +44 (0) 20 7466 5000
About IMIC
IMIC's strategy is, in conjunction with its partner AIOG,
working to develop fundable solutions to infrastructure provision
for iron ore resources in West and Central Africa. In support IMIC
will seek to acquire interests in iron ore projects that would
benefit from a specific infrastructure solution. IMIC made its
first investment with the Dec 2013 acquisition of Afferro Mining
Inc, taking ownership of four iron ore deposits in Cameroon, the
most advanced asset being Nkout. IMIC plans to continue to develop
its assets, including accelerating the feasibility studies of the
smaller Ntem deposit, which is located only 80km from Kribi deep
water port.
IMIC's focus will initially be on iron ore opportunities in West
and Central Africa. The demand for iron ore is currently being
driven by China which consumes approximately 70 per cent. of the
world's current annual production. As the urbanization of China
continues demand for iron ore is expected to remain at significant
levels through to 2030. The iron ore projects currently identified
in West and Central Africa have the potential to produce at least
400 million tonnes of iron ore each year. This would establish
Africa as a global player, alongside Australia and Brazil, in the
iron ore industry.
In order to help deliver its infrastructure solutions, IMIC and
AIOG have established strategic partnerships with various Chinese
state owned companies. These companies are involved in railway and
port construction, power, iron ore beneficiation and iron ore
marketing. These relationships are intended to give IMIC and AIOG
the ability to work with relevant governments and financial
institutions to deliver infrastructure solutions and to guarantee
the onward sale of iron ore in China and other emerging world
markets.
IMIC shares are traded on the London Stock Exchange's AIM market
under the ticker symbol IMIC.
Chairman's Statement
I am pleased to report the financial results of International
Mining & Infrastructure Corporation plc for the six months
ended 31 December 2014 and to deliver a summary of progress during
the current financial year. The primary focus during the period was
driving the development of the Company's overall strategy and
continuing the necessary technical work with the view to advance
the development of IMIC's assets in Cameroon.
IMIC has ownership of four iron ore licences - Nkout, Ntem,
Akonolinga (all 100 per cent. owned) and Ngoa (70 per cent. owned)
- located in Cameroon in a significant iron ore corridor and with a
supportive topographical environment. We have been focused
predominantly on two assets, Nkout and Ntem, and we have made
significant progress with the development of these exploration
projects since their acquisition in December 2013, which was a
transformational event for the Company.
In the year to date IMIC has continued to progress the
development of these assets, which includes advancing work at the
main deposit, Nkout, and fast-tracking plans for early production
of iron ore concentrate at Ntem. We continued to implement several
detailed studies including a Pre-Feasibility Study ("PFS") for the
larger deposit Nkout, which is expected to complete in H2 2015.
Additionally, we recently completed an Updated Scoping Study for
the smaller but exciting deposit at Ntem, which offers the
potential for early revenues. Ntem is located 80km from the newly
developed multi-purpose commercial deep water seaport at Kribi and
benefits from close proximity to the existing gas-fuelled Kribi
power station.
Infrastructure lies at the forefront of our strategy. Africa is
known to be rich in natural resources with the largest iron ore
bodies found in the West and Central African regions of the
Continent. These resources are untapped due to a lack of adequate
infrastructure to evacuate the ore. Provision of the necessary
infrastructure would potentially place the West and Central African
region on a par with the world's largest iron ore producers,
Australia and Brazil, and efforts to achieve this goal should
receive the highest priority.
The development of IMIC's assets in Cameroon is intended to be
reinforced by additional acquisitions of projects or companies with
assets located within other areas of the iron ore rich West and
Central African region as we seek to create an important
asset-ownership position in the African iron ore mining sector. We
believe that the envisaged asset consolidation creates a realistic
opportunity for the success of the region, as the planned economies
of scale should prove cost effective and substantially reduce
capital and operating costs for the projects when they are
combined. It is an attractive time for further acquisitions since
we have an opportunity to purchase assets at relatively low prices,
subject to available finance, as the market capitalisation of many
junior iron ore mining companies has suffered due to the softening
of iron ore prices.
In conformity with our regional infrastructure and
asset-consolidation strategies, the potential exists to develop an
infrastructure solution through the emerging iron ore corridor that
would establish collaborative synergies among the iron ore mines in
Cameroon, Gabon and Congo. These three countries represent one of
the main iron ore clusters in West and Central Africa. As part of a
longer term initiative to create a combined iron ore evacuation
network for all three countries, we have been considering how best
to initially provide the infrastructure for our Cameroon assets and
expect to make progress with this strategy during the months
ahead.
IMIC intends to develop infrastructure through close
collaboration with major Chinese companies that specialise in
engineering, rail and seaport construction, power and iron ore
offtake, as well as with African host countries and in close
partnership with our privately held strategic partner, African Iron
Ore Group Limited ("AIOG"). AIOG has assembled a strategic
consortium of Chinese partners with the aim of fulfilling a common
ambition of creating fundable solutions for multi-user and
multi-purpose mining-related infrastructure which can provide the
backbone of the countries' transport systems, playing a key role in
economic and social development.
The People's Republic of China is of great strategic importance
to IMIC as the anticipated customer of IMIC's iron ore production
and the largest consumer of iron ore worldwide. In order to gain
access to new sources of capital for IMIC in the Asian market, we
have appointed one of the largest full-service investment banks in
the People's Republic of China, CITIC Securities Co., Ltd
("CITICS") to spearhead this campaign. CITICS has been engaged to
raise financing in China by identifying additional strategic
partners and potential new investors for the Company. We look
forward to working with CITICS, and we have confidence that this
respected institution is best placed to raise IMIC's profile and
broaden understanding of our story among the investment community
in China, ultimately leading to a successful capital raising.
In December 2014 and January 2015, we successfully completed the
placing of ordinary shares, raising US$2 million of gross proceeds,
which reinforced the working capital of the Group. In addition, we
secured a short term loan of US$5.8 million from our strategic
partner, AIOG, which subsequently converted US$3 million of total
funds loaned into ordinary shares in the Company. In March, we
successfully raised US$5 million via the issue of a convertible
bond to a new Cameroonian investor, Caisse Capital Limited, an
investment vehicle controlled by Mr. Colin Mukete, which further
supported the general working capital and operational requirements
of the Company.
We are delighted that we were able to attract new investors
considering the challenging fundraising environment in the current
iron ore market, which reassures us of the particular strength and
attractiveness of our projects. The Company is also encouraged by
AIOG's continued support and confidence in our strategy.
As a developing company, we are committed to working on the
advancement of our assets which requires funding. Whilst we
successfully raised some capital in December 2014, January and
March 2015, we continue to seek further funding to support the
ongoing operations of the Company. We should note nonetheless that
the funding environment for junior iron ore development companies
remains difficult against the background of weak iron ore prices.
However, despite the challenges, IMIC is engaged in ongoing
discussions with potential investors in relation to raising
additional funds for the Company. In light of the current market
environment we have also taken steps to reduce the Company's
operating costs.
Cameroon
IMIC controls four high quality assets in Cameroon, Nkout, Ntem,
Akonolinga and Ngoa, which are situated along the
Cameroon-Gabon-Congo iron ore corridor. Since mid-2014, we have
made significant progress in the development of the Nkout and Ntem
deposits, including the release of an updated mineral resource
statement for both projects, advanced work on the PFS for Nkout and
we recently completed an Updated Scoping Study for Ntem.
Our world class deposit, Nkout, has 2.7 billion tonnes of
identified resources and lies 330km away from the site of a
proposed second deep-water port near Kribi. A Preliminary Economic
Assessment, conducted in May 2012, valued an operating Nkout at
US$4.6 billion. We commenced the PFS for Nkout in early 2014 and we
are on track to launch the Definitive Feasibility Study ("DFS")
later this year. Our goal is to work with our strategic partner
AIOG and a consortium of Chinese partners to install the rail and
port infrastructure necessary for the delivery of a targeted 35
million tonnes per annum ("mtpa") of high-grade iron concentrate to
China.
It is envisaged that the first stage of the regional iron ore
rail corridor will be the link between Nkout and the deep water
port, and our ambition is to aggressively promote regional
synergies with projects further inland, in order to improve volumes
and related cost effectiveness and to achieve global
competitiveness for all of the central African projects
affected.
The Nkout PFS, coordinated by the highly experienced engineering
consultancy, Hatch Goba (Pty) Ltd., evolved well in the second half
of 2014. We achieved further milestones with a new Mineral Resource
Estimate (MRE6), prepared by SRK Consulting, which substantially
boosted the tonnage of high-grade oxidised resource in the
Indicated category, improved geological understanding of the ore
body and further increased our confidence that we have a truly
world-class iron ore asset.
The other attractive deposit, Ntem, has 176 million tonnes of
total Indicated and Inferred resource and is strategically located
80km from a recently-commissioned commercial port at Kribi, and
close to the existing gas-fuelled Kribi power station. Our
objective is to achieve early production at Ntem by transporting
high-grade iron concentrate to Kribi via a low-capex, slurry
pipeline solution and to supply the international market through
Panamex vessels loaded in Kribi's multi-purpose commercial
port.
The Ntem Scoping Study will provide input directly into the
feasibility studies, including a more granular investigation of the
initial completed study of critical elements at Ntem such as power,
port facilities and the slurry pipeline in a work program that was
conducted by engineering consultant, Mott MacDonald. Following
completion of the Ntem drilling programme, we have released an
updated Mineral Resource Estimate (MRE2), which significantly
increased the Indicated Resource category now standing at 96.9Mt of
34.9 per cent. Fe grade, further reinforcing our confidence in the
resource base. The new total Mineral Resource, which increased by
148 per cent. is expected to support the production of 4mtpa of
premium concentrate and potentially provides the basis for an
extended mine life. We were very encouraged with the new resource
which marked an important step in the development of Ntem, a
promising, fast-track, small scale operation.
Another important recent milestone at Ntem was completion of a
Scoping Study by AMEC, which follows the port and infrastructure
study implemented by Mott MacDonald in 2014. The Scoping Study
confirmed the improved prospective financial and economic strength
of the project as underpinned by the new resource estimate. We
intend to begin the Pre-Feasibility Study for Ntem during 2015 with
the objective of delivering Cameroon's first-ever commercial iron
ore exports, and achieving early revenues for the Company.
I would like to highlight the exceptional quality of the product
which is expected to be produced at both the Nkout and Ntem
projects. Metallurgical results indicate that a premium iron
concentrate of up to 69-70 per cent. Fe with low deleterious
materials can be achieved both from Nkout and Ntem. This, combined
with low costs of extraction and beneficiation, reinforces our
belief in strong economic potential for our assets, despite the
recent downturn observed in the international iron ore market. I
will return to this topic later on in this statement.
The two other licences in Cameroon, Ngoa and Akonolinga, are
attractive opportunities for future development, but we are
initially focusing our efforts on progressing the Nkout and Ntem
opportunities.
IMIC's approach is underpinned by our ongoing commitment to
cooperation with the Government of Cameroon so as to ensure rapid
development of our projects through to production, whilst at the
same time contributing to the general economic development of the
country. In February 2015 we were granted a licence renewal for the
Ntem project which is now valid until February 2017. I would like
to express our appreciation to the Government of Cameroon for their
support of our operations, for their positive encouragement as well
as active support of the mining industry in Cameroon, which has
been demonstrated through various initiatives including the
important development of the port infrastructure at Kribi.
People
A transformation of the Board of Directors of IMIC occurred
during the six months ended 31 December 2014. My arrival as
Chairman in November 2014 comes at an exciting time in the
Company's evolution and the development of our assets. I am
confident that my expertise and track record in the African natural
resources sector will prove beneficial in leading IMIC to the
achievement of important project milestones and iron ore
production.
In the period, we also expanded our executive, non-executive and
advisory teams, and further new Board appointments are also
expected to be made in the near future.
In July 2014, we were deeply saddened by the death of Dr Rilwanu
Lukman KBE, a Non-Executive Director of the Company since January
2012, and long-time close associate of mine. He is greatly
missed.
Ousmane Kane, who played an important role in the acquisition of
Afferro, stepped down from the role of CEO in July 2014, after he
had initiated the development strategy for the Cameroonian assets
and overseen the launch the Nkout feasibility study and the
infrastructure and scoping studies at Ntem.
Efforts are under way to recruit a new CEO and we intend to fill
this position in the near future. In the meantime, Haresh Kanabar
is serving as the acting CEO.
James Ward stepped down as Finance Director in August 2014, and
he continues as Company Secretary.
The former Chairman, Haresh Kanabar, assumed the role of Chief
Financial Officer following my appointment as Chairman. I would
like to acknowledge Haresh's major contribution to IMIC during his
time as Chairman and for his pivotal role in transforming IMIC into
a Company with world-class assets.
Dr Babacar Ndiaye departed from the Board after the end of the
period to focus more closely on business commitments in his home
country, Senegal. I would like to express my gratitude for his
valuable contribution to IMIC and wish him every success for the
future.
Also, in February 2015, we were pleased to welcome Mr Graeme
Hossie as a consultant to the Company, assisting with fundraising
initiatives and key elements of corporate strategy. Mr Hossie,
former CEO of London Mining, has extensive experience in the
African iron ore industry, which includes the development and
management of an iron ore project in Sierra Leone, which swiftly
evolved from the exploration phase through to commercial exports
under his leadership.
In March 2015, we were delighted to appoint Mr Colin Mukete, a
prominent Cameroonian businessman, to the Advisory Board of IMIC.
Mr Mukete, through his wealth of experience and a vast local
network of contacts will greatly strengthen our Advisory Board. In
addition, this appointment will significantly enhance the local
involvement and support for our projects in Cameroon.
I would like to thank my fellow directors as well as all of
IMIC's staff for their continued commitment and contribution to the
development of the Company in this six month period. We look
forward to the balance of 2015, as we proceed deliberately with
planning and implementation of our projects, and our continued
drive towards iron ore exports.
Iron ore market
The considerable drop in international iron ore prices in 2014
has been a noteworthy and challenging occurrence. As China
experienced accelerated economic growth over the past decade, its
consumption of the principal raw material used in steelmaking
increased substantially, climbing to 70 per cent. of
globally-traded iron ore, contributing to a significant rise in
iron ore prices.
However, the recent slowdown in demand for resources from China
due to stabilisation of economic growth, as well as increasing
global supply of the resource from the major producers, whose
high-volume, low-cost iron ore production strategy is aimed at
boosting market share and sustaining profit margins, have together
had a negative impact on ore prices. These prices have declined by
circa 50 per cent. since November 2013 putting adverse pressure on
smaller, marginal producers which have struggled to remain
profitable in the current market environment.
Despite the slowdown, China's steel production remains at high
levels as the country continues its urbanisation driven by rising
middle incomes. We believe that China's iron ore consumption is
likely to remain at sustained growth levels until at least 2030. It
is our view that the medium to long term prospects for iron ore
remain positive and that China continues to present a unique
opportunity for the African iron ore industry. From the Company's
planning perspective, the longer-term price profile of iron ore is
of greater importance than current short-term trends, as production
from our assets will not commence until a few years from now.
The sustainable long-term demand, and specifically the
increasing reliance by China on imported iron ore, gives Africa the
opportunity to become a major player in the global iron ore
industry alongside Australia and Brazil. We are encouraged that the
quality of our assets and the discipline of our approach to
regionally rationalised infrastructure seem destined to guarantee
success of the Company in its goal to become a highly efficient
low-cost producer.
Our belief that IMIC is well positioned to face the challenging
lower price environment is underpinned by the quality of our
assets, since we expect to produce high grade premium product
ensuring sustainable profit margins and steady returns from both
Ntem and Nkout. More importantly, we anticipate operating costs at
both the Ntem and Nkout projects to be low and globally competitive
with the costs of competing producers in Australia and Brazil.
While we expect the demand for seaborne iron ore to remain
strong and the international prices to revert to an upward
trajectory in the medium to long-term, we have taken appropriate
measures to ensure we efficiently manage our working capital
position allowing for continued progress in the continual
progressive development of our highly promising and globally
competitive assets.
Financials
For the six months ended 31 December 2014, the Company recorded
a loss attributable to shareholders of US$16.9 million compared
with a restated loss of US$6.6 million in the six months ended 31
December 2013. The loss per share for the six months ended 31
December 2014, which stands at US$0.10, compares with a restated
loss per share of US$0.10 in the corresponding period in the
previous year.
On 19 December 2013, the Company completed its acquisition of
Afferro Mining Inc. through its wholly owned subsidiary, Afferro
Holdings Limited. The fair values in the 31 December 2013 interim
results were at that time provisional due to the complexity of the
acquisition and due to the inherently uncertain nature of the
mining sector, in particular in valuing the exploration and
evaluation assets. A subsequent reassessment of the fair value of
the consideration paid was made in the 30 June 2014 year-end
financial statements; therefore the comparatives as at 31 December
2013 have been restated in these interim financial statements for
consistency with the figures disclosed in the 30 June 2014 year-end
financial statements. As a result of the reassessment of the fair
value of the consideration for the Afferro transaction, the Company
recorded a loss of US$6.6 million for the six months ended December
2013 whereas, prior to restatement, the Company had reported a
profit of US$4.1 million.
The main reasons behind the increased loss for the period, when
compared with the corresponding period in the prior year, are an
increase in administrative expenses, which included one off
non-recurring costs such as a US$650,000 charge in the period for
the settlement agreement of Ousmane Kane who stepped down as CEO in
July 2014. Administrative expenses have also increased due to the
Company incurring a full six months of depreciation charges on its
fixed assets which were acquired as part of the Afferro
acquisition, amounting to US$399,578, compared with less than one
month of depreciation charged incurred as at 31 December 2013
following the acquisition on 19 December 2013 amounting to
US$20,518.
In addition, the Company has reported a net foreign exchange
loss of US$4.6 million compared with a net gain of US$3.0 million
in the corresponding period in the prior year. The foreign exchange
losses mainly relate to the retranslation of losses on US Dollar
denominated borrowings. The variance between the change in fair
value of the embedded derivative of US$297,868, compared with a
change in fair value of US$4,571,932 in the comparative period, is
as a result of a change in the assumptions used to value the
embedded derivative which included a fall in the Company's share
price relative to the exercise price of the options.
The Company has funded its activities in the period through a
combination of debt and equity issue. This includes a short-term
loan of US$5.8 million with 5 per cent. interest from AIOG
repayable at 30 June 2015. The Group has also raised US$1.5m from
the issue of 9,554,140 ordinary shares in the period. Following the
end of the period, US$3.0 million of this loan has been converted
into shares with the balance of US$2.8 million outstanding. The
Company has incurred finance costs of US$8.9 million in the period
(2013: US$7.0 million), which comprised of US$4.3 million in
accrued interest charges on its various bonds and the IMIC
convertible loan note, US$2.4 million in amortised costs of issuing
the bonds and US$2.2 million in accrued costs for the convertible
loan note issued to Afferro shareholders.
The provision against loans receivable of US$2,725,584, which is
inclusive of the accrued interest, relates to amounts advanced to
AIOG in respect of expenses relating to the development of
projects. As there is additional uncertainty over the timing and
nature of the path to development, the directors have elected to
provide in full for the loan, consistent with the approach taken as
at 30 June 2014.
The value of exploration and the evaluation of assets, at
US$131.7 million (2013: GBP126.6 million), have increased by US$5.0
million in the period due to continuing work on the ground at the
Group's assets at Nkout and Ntem. Cash and cash equivalents as of
31 December 2014 were US$2.5 million (2013: US$8.5 million); no tax
charges were incurred in the period due to losses (2013: nil).
In March 2015 the Company successfully raised US5 million via a
convertible bond issued to a new Cameroonian investor, Caisse
Capital Limited, an investment vehicle controlled by Mr. Colin
Mukete, which further supports the general working capital and
operational requirements of the Company.
Outlook
The six months ended 31 December 2014 were focused on the
development of our world-class iron ore assets in Cameroon. Whilst
the funding environment for iron ore project developers is
challenging at a time of softening of iron ore prices, we remain
fully committed to moving forward with our strategy and progressing
our projects to the next phase of development.
During 2015, we will concentrate our efforts on the completion
of the PFS and commencement of the DFS for our 2.7bn tonne deposit
Nkout and commencement of the Feasibility Study for our smaller
asset, Ntem. We are on track and look forward to continuing to
achieve milestone objectives as we advance these major projects
towards production, while at the same time assessing further
acquisitions, effectively moving towards our strategic objective of
unlocking the value potential of the new world-class iron ore
region in this part of Africa.
We look forward with anticipation to our important work in
unlocking the potential of African iron ore in 2015 and have faith
in the plans we have adopted to achieve this goal.
Ethelbert Cooper
Chairman
31 March 2015
International Mining & Infrastructure Corporation Plc
Condensed CONSOLIDATED INCOME STATEMENT (UNAUDITED)
for the SIX months ENDED 31 DECEMBER 2014
Note 6 months As restated Year ended
ended 6 months 30 June
31 December ended 2014
2014 31 December US$
US$ 2013
US$
Administrative expenses (3,224,071) (2,177,139) (6,125,726)
Exceptional items - (8,209,449) (8,320,397)
Operating loss (3,224,071) (10,386,588) (14,446,123)
Finance income 5 2,416,140 1,804,203 3,968,708
Finance cost 5 (8,887,060) (7,075,937) (19,838,594)
Net foreign exchange gain/(loss) (4,663,027) 3,061,317 5,052,516
Gain on disposal of investment in
Afferro Mining Inc. - 2,807,597 2,807,597
Impairment of available for sale investment - (6,659) (11,681)
Change in fair value of investment - 556,329 553,202
Change in fair value of embedded derivative 12 297,868 4,571,932 3,559,344
Fair value of shares issued to AIOG
under anti-dilution agreement 13 (150,000) (1,918,573) (4,513,458)
Provision
non-current loans and receivables (2,725,584) - (20,507,996)
Loss before taxation (16,935,734) (6,586,379) (43,376,485)
Tax charge - - -
Loss for the period attributable to
shareholders of the Company (16,935,734) (6,586,379) (43,376,485)
Basic and diluted loss per share 6 (0.10) (0.10) (0.40)
======= ======= =======
International Mining & Infrastructure Corporation Plc
condensed CONSOLIDATED income sTATEMENT (UNAUDITED)
for the six months ended 31 DECEMBER 2014
Note 6 months As restated Year ended
ended 6 months 30 June
31 December ended 2014
2014 31 December US$
US$ 2013
US$
Loss for the period (16,935,734) (6,586,379) (43,376,485)
Available for sale investments
Losses arising during the period - 2,268,146 2,268,146
Less: reclassification adjustments
to gain on disposal included in profit
for the period - (2,807,597) (2,807,597)
Exchange differences on translation
of foreign
operations 8,674,984 1,862,363 (900,073)
Total other comprehensive income/(loss) 8,674,984 1,322,912 (1,439,524)
Total comprehensive income/(loss)
for the period attributable to shareholders
of the Company (8,260,750) (5,263,467) (44,816,009)
All results relate to continuing activities.
International Mining & Infrastructure Corporation Plc
condensed CONSOLIDATED STATEMENT OF FINANCIAL POSITION
(unaudited)
as at 31 DECEMBER 2014
Note 31 December As Restated 30 June
2014 31 December 2014
US$ 2013 US$
US$
Assets
Non-current assets
Exploration and evaluation assets 7 131,690,647 117,496,944 126,649,939
Goodwill 22,852,285 22,852,285 22,852,285
Property, plant and equipment 8 1,905,363 2,711,858 2,300,438
Investments - AIOG 165,766 175,969 181,728
Investments - Available for sale - 9,350 -
Investments - Fair value through - - -
profit and loss
Loans and receivables 9 - 17,487,460 -
Restricted cash 455,632 608,091 608,091
Total non-current assets 157,069,693 161,341,957 152,592,481
Current assets
Cash and cash equivalents 2,513,644 30,069,421 8,528,348
Other financial assets - - -
Other receivables 9 394,250 781,929 687,243
Inventories 144,964 700,301 219,584
Total current assets 3,052,858 31,551,651 9,435,175
Total assets 160,122,551 192,893,608 162,027,656
Liabilities
Current liabilities
Trade and other payables 1,880,582 8,697,045 2,759,853
Borrowings 10 16,633,643 10,344,525 10,773,039
Convertible loan notes 11 45,656,426 645,980 53,977
Total current liabilities 64,170,651 19,687,550 13,586,869
Non-current liabilities
Borrowings 10 68,814,125 65,149,486 66,871,112
Convertible loan notes 11 1,994,905 57,022,437 49,544,162
Embedded derivative 12 22,870 4,683,837 320,833
Deferred tax liability 22,852,285 22,852,285 22,852,285
Total non-current liabilities 93,684,185 149,708,045 139,588,392
Total liabilities 157,854,836 169,395,595 153,175,261
Net assets 2,267,715 23,448,013 8,852,395
Equity
Share capital 13 1,943,717 1,731,732 1,910,717
Share premium account 13 66,402,711 38,459,549 64,785,711
Share-based payment reserve 14 1,351,817 1,531,859 1,531,859
Available-for-sale reserve - - -
Warrant reserve 15 1,392,949 1,364,731 1,366,876
Translation reserve 7,601,396 1,688,848 (1,073,588)
Accumulated losses (76,290,889) (21,144,723) (59,535,197)
Total equity 2,401,701 23,631,996 8,986,378
Non-controlling interest (133,983) (133,983) (133,983)
Equity attributable to equity holders
of the parent 2,267,718 23,498,013 8,852,395
International Mining & Infrastructure Corporation Plc
condensed CONsOLIDATED STATEMENT OF CHANGES IN EQUITY
(unaudited)
FOR THE SIX MONTHS ENDED 31 DECEMBER 2014
Share
based Available- Equity Non-controlling
Share Share payment for-sale Warrant Translation Accumulated attributable interest Total
capital premium reserve reserve reserve reserve losses to owners equity
US$ US$ US$ US$ US$ US$ US$ US$ US$ US$
At 1 July 2013 1,575,154 18,537,201 30,416 539,451 208,819 (173,515) (14,558,344) 6,159,182 - 6,159,182
Loss for the period - - - - - - (9,393,976) (9,393,976) - (9,393,976)
Other comprehensive
loss for the period - - - 2,268,146 - 1,862,363 - 4,130,509 - 4,130,509
Transfer to
accumulated
losses on disposal - - - (2,807,597) - - 2,807,597 - - -
Share based payments - - 1,531,859 - - - - 1,531,859 - 1,531,859
Issue of shares 156,578 19,922,348 (30,416) - - - - 20,048,510 - 20,048,510
Issue of warrants - - - - 1,155,912 - - 1,155,912 - 1,155,912
Acquisition of
Afferro - - - - - - - - (133,983) (133,983)
At 31 December 2013
(as restated) 1,731,732 38,459,549 1,531,859 - 1,364,731 1,688,848 (21,144,723) 23,631,996 (133,983) 23,498,013
---------- ------------ ---------- ------------ ---------- ------------- ------------- -------------- ----------------- -------------
Conversion of
convertible
loan notes 149,409 21,993,005 - - - - (1,600,368) 20,542,046 - 20,542,046
Other issue of shares 29,576 5,390,901 - - - - - 5,420,477 - 5,420,477
Costs of issuing
shares - (1,057,744) - - - - - (1,057,744) - (1,057,744)
Issue of warrants - - - - 2,145 - - 2,145 - 2,145
Other comprehensive
income - - - - - (2,762,436) - (2,762,436) - (2,762,436)
Loss for the period - - - - - - (36,790,106) (36,790,106) - (36,790,106)
At 30 June 2014 1,910,717 64,785,711 1,531,859 - 1,366,876 (1,073,588) (59,535,197) 8,986,378 (133,983) 8,852,395
Issue of share
capital 33,000 1,617,000 - - - - - 1,650,000 - 1,650,000
Issue of warrants - - - - 26,073 - - 26,073 - 26,073
Loss for the period - - - - - - (16,935,734) (16,935,734) - (16,935,734)
Lapse of options - - (180,042) - - - 180,042 - - -
Other comprehensive
income - - - - - 8,674,984 - 8,674,984 - 8,674,984
At 31 December 2014 1,943,717 66,402,711 1,351,817 - 1,392,949 7,601,396 (76,290,889) 2,401,701 (133,983) 2,267,718
---------- ------------ ---------- ------------ ---------- ------------- ------------- -------------- ----------------- -------------
International Mining & Infrastructure Corporation Plc
condensed CONSOLIDATED statement OF CASH FLOWS (unaudited)
for the SIX months ENDED 31 DECEMBER 2014
6 months As restated Year ended
ended 6 months 30 June
31 December ended 2014
2014 31 December
2013
US$ US$ US$
Loss before tax (16,935,734) (6,586,379) (43,376,485)
Depreciation 399,578 20,518 493,481
Shares issued under anti-dilution agreement 150,000 1,918,573 4,513,458
Gain on disposal of investment in Afferro - (2,807,597) (2,807,597)
Warrants issued 26,072 1,531,859 1,501,443
Interest income (2,416,140) (1,804,203) (3,968,708)
Interest expense 8,887,060 7,075,937 19,838,594
Impairment and change in fair value
of investments - (545,682) (541,521)
Foreign exchange 4,663,027 (3,061,317) (5,052,516)
Change in fair value of embedded derivative (297,868) (4,571,932) (3,559,344)
Provision for loans and receivables 2,725,584 - 20,507,996
Cash flow from operating activities
before changes in working capital (2,798,421) (8,830,223) (12,451,199)
Increase/(decrease) in receivables 292,993 (75,227) 4,963,868
Increase/(decrease) in payables (879,271) (166,295) (8,814,183)
Net cash outflow from operating activities (3,384,699) (9,071,745) (16,301,514)
Investing activities
Interest received 459 43,378 47,033
Loan advanced to AIOG (419,336) (1,647,124) (1,884,948)
Purchase of property, plant and equipment (19,821) (7,399) (209,306)
Exploration and evaluation assets (5,040,708) (187,849) (8,860,127)
Investment in Afferro - (2,240,804) (2,240,804)
Acquisition of Afferro - (46,033,968) (46,033,968)
Net cash used in investing activities (5,479,406) (50,073,766) (59,182,120)
Financing activities
Proceeds from share issuance 1,500,000 19,185,682 20,953,342
Share issue costs - (1,057,984) (1,057,744)
Proceeds from issue of bond and warrants
and loans 5,800,000 90,000,000 100,000,000
Bond commission costs (197,352) (5,624,210) (5,624,210)
Interest paid (4,156,825) (3,775,001) (8,934,801)
Repayment of loans - (60,000,000) (71,568,700)
Net cash from financing activities 2,945,823 38,728,487 33,767,887
(Decrease)/Increase in net cash and
cash equivalents (5,918,282) (20,417,024) (41,715,747)
Reconciliation to net funds
Cash and cash equivalents at beginning
of period 8,528,348 45,642,920 45,642,920
Foreign exchange movement (96,422) 4,843,525 4,601,175
Cash and cash equivalents at end of
period 2,513,644 30,069,421 8,528,348
International Mining & Infrastructure Corporation Plc
NOTES TO THE condensed CONSOLIDATED FINANCIAL STATEMENTS
(unaudited) for the SIX months ENDED 31 december 2014
1 Basis of preparation
International Mining & Infrastructure Corporation Plc (the
"Company") or together with its subsidiaries the "Group") is a
public limited Company incorporated and domiciled in England and
Wales under the Companies Act 2006. Its registered office is 40 New
Bond Street, London, W1S 2RX.
These condensed unaudited consolidated financial statements for
the six months ended 31 December 2014 ("interim consolidated
financial statements") have been prepared under the historical cost
convention. These interim financial statements have been prepared
in accordance with IAS 34 Interim Financial Reporting. They do not
include all the information required for a complete set of IFRS
statements and should be read in conjunction with the 30 June 2014
annual report.
The preparation of the condensed consolidated financial
statements in compliance with IAS 34 requires management to make
judgements, estimates and assumptions that affect the application
of policies and reported amounts of assets and liabilities, income
and expenses. Actual results may differ from these estimates.
The financial information for the six months ended 31 December
2014 does not constitute statutory accounts as defined under
section 434 of the Companies Act 2006. The Company's statutory
financial statements for the year ended 30 June 2014 have been
audited by the Company's external auditor and lodged with the
United Kingdom Companies House. The auditor's report on those
accounts was unqualified and did not contain a statement under
Section 489(2) or (3) of the Companies Act 2006, but did include
references to matters to which the auditor drew attention by way of
emphasis.
Going concern
The Group has historically met its working capital requirements
by raising the required capital through the placing of shares and
the issue of bonds with investors.
Beyond current cash resources, the Group does have access to an
undrawn facility with Banque Atlantique Cameroon (BAC) for US$27m
which is available until November 2016, and is subject to providing
security against the Nkout asset.
The Group's objective is to raise additional equity funding, and
efforts are ongoing to secure such funding, that would enable it to
continue operations, complete the feasibility studies and meet
interest and debt payments due over the foreseeable future and
avoid draw down on the BAC facility. Further funds would then be
required to develop its Cameroon mine assets.
On the basis of the available debt facility, and progress with
securing additional funding, the Directors believe that it remains
appropriate to prepare the interim financial statements on a going
concern basis. However, while the Directors believe that the Group
will obtain additional equity funding sufficient to enable it to
continue in operational existence for the foreseeable future, they
have concluded that the lack of sufficient committed funds
represents a material uncertainty that may cast significant doubt
upon the Company's ability to continue as a going concern and
therefore the Group may be unable to realise its assets and
discharge its liabilities in the normal course of business. The
interim financial statements do not include the adjustments that
would result if the Company were unable to continue as a going
concern.
Restatement of 31 December 2013 comparatives
On 19 December 2013, the Company, through its wholly owned
subsidiary, Afferro Holdings Limited, completed its acquisition of
80.03% equity interest in Afferro. The fair values were provisional
at 31 December 2013 due to the complexity of the acquisition and
due to the inherently uncertain nature of the mining sector, in
particular, in valuing the exploration and evaluation assets. A
subsequent assessment of the fair value of the consideration paid
has been made and the comparatives at 31 December 2013 have been
restated in these interim financial statements for consistency with
the figures disclosed in the annual accounts for the year ended 30
June 2014. The impact of the restatement is that the Company has
recorded a loss of US$6.6 million for the six months ended December
2013 whereas prior to restatement the Company had reported a profit
of US$4.1 million.
International Mining & Infrastructure Corporation Plc
NOTES TO THE conDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited) AS AT 31 DECEMBER 2014
2 Accounting policies
The annual financial statements of the Company are prepared in
accordance with International Financial Reporting Standards as
adopted for use by the European Union. The condensed consolidated
financial statements included in this report have been prepared in
accordance with International Accounting Standard 34 'Interim
Financial Reporting', as adopted by the European Union.
The same accounting policies, presentation and methods of
computation are followed in these condensed consolidated financial
statements as applied in the Group's financial statements for the
year ended 30 June 2014. In addition, the Group has adopted the
following accounting policies.
3 Critical accounting judgements and key sources of estimation uncertainty
The preparation of the financial statements in conformity with
IFRS requires the use of estimates and assumptions that affect the
reported amounts of assets and liabilities at the date of the
financial statements and the reported amounts of revenue and
expenses during the reporting period. Although these estimates are
based on management's best knowledge of the amounts, events or
actions, actual results ultimately may differ from these
estimates.
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 include:
Business combinations
When the group acquires a business, it assesses the fair value
of the assets acquired and liabilities assumed by reference to the
contractual terms, economic circumstances and pertinent conditions
as at the acquisition date. The fair value assessment of the
consideration transferred, the assets acquired and the liabilities
assumed on the Afferro acquisition is difficult due its complexity
and the inherently uncertain nature of the mining sector, in
particular, in valuing exploration and evaluation assets.
Other assets and liabilities are valued by reference to
market-based observations or independent valuations where possible,
but where this is not feasible, a degree of judgment is required in
establishing fair values.
Exploration and evaluation expenditure
The application of the Group's accounting policy for exploration
and evaluation expenditure requires judgement to determine whether
future economic benefits are likely, from either future
exploration, development or asset sale, or whether activities have
not reached a stage which permits a reasonable assessment of the
existence of reserves.
Management is also required to assess impairment in respect of
exploration and evaluation assets. The exploration and evaluation
assets note discloses the carrying value of such assets. The
triggering events for impairment are defined in IFRS 6. In making
the assessment, management is required to make judgements on the
status of each project and assumptions about future events and
circumstances, in particular whether exploration permits are likely
to be renewed and whether an economically viable extraction
operation can be established. Any such estimates and assumptions
may change as new information becomes available.
The exploration permits for each of the Group's exploration
assets in Cameroon are required to be renewed every two years. In
particular, the Nkout permit was renewed from July 2013 and will be
required by the mining code to be renewed in June 2015, and the
Ntem permit renewal was submitted to the Ministry of Mines in April
2014 and the file is at the Presidency of the Republic of Cameroon
for approval. The Group believes, based on historic experience and
the strength of its relationship with the Cameroonian government,
that providing funding is available and IMIC continues to apply its
efforts with the vigour expended since the acquisition of Afferro,
and previously by Afferro, these licences will be renewed
Where an indicator of impairment exists, a formal estimate of
the recoverable amount is made. The assessment is based on
operational forecasts for advanced stage projects and requires the
use of estimates and assumptions such as the volume and quality of
mineral resources, long term iron ore prices, production levels
including grade and tonnes processed, production costs and capital
expenditure.
These estimates and assumptions are subject to risk and
uncertainty. Therefore, there is a possibility that changes in
circumstances will impact these projections, which may impact the
recoverable amount of assets and/or CGUs. Furthermore, the
Directors' determination that it remains appropriate to prepare the
financial statements on a going concern basis is based on the
availability of an undrawn debt facility with Banque Atlantique
Cameroon. This facility is subject to providing security against
the Nkout asset and is therefore similarly reliant on the Nkout
licence being renewed.
If, after expenditure is capitalised, information becomes
available suggesting that recovery of the expenditure is unlikely,
the relevant capitalised amount is written off in the Statement of
Comprehensive Income in the period when the new information becomes
available. At 31 December 2014 management has determined that there
are no indicators that the carrying value of the Group's
exploration and evaluation assets is impaired.
Carrying value of investments and loans
Determining whether investments are impaired requires an
estimation of the fair value of the asset at balance date. In the
case of equity investments classified as available for sale,
objective evidence of impairment would include a significant or
prolonged decline in the fair value of the investment below its
cost. The determination of what is 'significant' or 'prolonged'
requires judgement. In making this judgement, the Group evaluates,
among other factors, historical share price movements, political
and economic factors that might impact the development of projects
and the duration or extent to which the fair value of an investment
is less than its cost.
Valuation of embedded derivatives
The US$25 million convertible loan issued in June 2013 note has
two components, being the debt portion of the instrument and the
option to convert the debt into shares in the Company. IAS 32
requires that, as the number of shares to be converted is not
fixed, these be valued separately. IAS 39 requires the calculation
of the fair value of the option to be performed at each reporting
period. The embedded derivative (option to convert the loan note
into shares in the Company) has been fair valued using the Black
Scholes model which requires critical judgements in order to
ascertain the Group share price variability. As at 31 December 2014
the fair value of the embedded derivative was US$22,870 (30 June
2014: US$320,833; 31 December 2013: US$4,683,837). Further details
can be found in Note 12.
By their nature, these estimates are subject to measurement
uncertainty and the effect of changes in such estimates on the
consolidated financial statements of future periods could be
significant.
Valuation of share-based payments
Management is required to make assumptions and use their
judgement when determining the inputs used to value share-based
payment arrangements made during the year. Details of the inputs
adopted when valuing share-based payment arrangements can be found
in Note 14. Management bases these assumptions on observable market
data such as the Group's share price history and risk free interest
rates offered on Government bonds.
Recoverability of deferred tax assets
Judgement is required to determine whether deferred tax assets
are recognised in the Statement of Financial Position. Deferred tax
assets, including those arising from unutilised tax losses, require
management to assess the likelihood that the Group will generate
sufficient taxable profits in future periods, in order to utilise
recognised deferred tax assets. Assumptions about the generation of
future taxable profits depend on management's estimates of future
cash flows. These estimates are based on forecast cash flows from
operations and judgement about the application of existing tax laws
in each jurisdiction. To the extent that future cash flows and
taxable income differ significantly from estimates, the ability of
the Group to realise deferred tax assets could be impacted.
In addition, future changes in tax laws in the jurisdictions in
which the Group operates could limit the ability of the Group to
obtain tax deductions in future periods. The Group establishes tax
provisions, based on reasonable estimates, for possible
consequences of audits by the tax authorities of the respective
countries in which it operates. The amount of such provisions is
based on various factors, such as experience with previous tax
audits and differing interpretations of tax regulations by the
taxable entity and the responsible tax authority.
4 Segmental information
Following the acquisition of Afferro, the Company's business
segments have changed to exploration and development of iron ore
properties in Cameroon and corporate and other activities including
its investment in African Iron Ore Group Limited ("AIOG").
Corporate
Exploration and other
and development activities Total
US$ US$ US$
------------------------- -------------- --------------
As at 31 December 2014
Segment assets 134,375,651 25,746,900 160,122,551
Segment liabilities (786,235) (157,068,601) (157,854,836)
------------------------- -------------- --------------
For the 6 months ended 31
December 2014
Loss for the period (417,410) (16,518,324) (16,935,734)
========================= ============== ==============
As at 30 June 2014
Segment assets 130,570,591 31,457,065 162,027,656
Segment liabilities (1,585,343) (151,589,918) (153,175,261)
------------ -------------- --------------
For the year ended 30 June
2014
Loss for the period (456,869) (42,919,616) (43,376,485)
============ ============== ==============
As at 31 December 2013
Segment assets 146,831,006 46,062,602 192,893,608
Segment liabilities (1,190,340) (168,205,255) (169,395,595)
------------ -------------- --------------
For the 6 months ended 31
December 2013
Loss for the period - (6,586,379) (6,586,379)
============ ============== ==============
5 Finance income and costs
6 months 6 months
ended ended
31 December 31 December
2014 2013
US$ US$
----------------- -------------
Interest income on long-term loans 2,415,681 1,760,825
Interest income on short-term bank
deposits 459 43,378
----------------- -------------
Total finance income 2,416,140 1,804,203
================= =============
US$20 million Afferro Holdings June
8.875% bond (1,413,057) (1,324,303)
US$30 million Afferro Holdings November
9% bond (2,015,297) (501,927)
US$15 million IMIC April 8.75% bond (1,060,557) (856,015)
US$15 million IMIC May 8.75% bond (1,065,927) (856,405)
US$10 million IMIC October 8.125% bond (626,503) (645,026)
Bond Commission Costs (197,352) (47,552)
----------------- -------------
Effective interest on bonds (6,378,693) (4,231,228)
----------------- -------------
US$25 million IMIC convertible bond
note (299,740) (2,385,970)
Convertible loan notes issued to Afferro
share holders (2,208,627) (458,739)
----------------- -------------
Effective interest on convertible loan
notes (2,508,367) (2,844,709)
----------------- -------------
Total finance costs (8,887,060) (7,075,937)
================= =============
6 Basic and diluted earnings/(loss) per share
The calculation of the basic and diluted loss per share of
US$0.10 (31 December 2013: US$0.10; 30 June 2014: US$0.40) is based
on the loss for the six months to 31 December 2014 attributable to
equity holders of the Group of US$16,395,734 (31 December 2013:
US$6,586,379; 30 June 2014 US$43,376,485) and on the weighted
average number of shares in issue during the period of 163,168,355
(31 December 2013: 67,646,299; 30 June 2014 US$108,045,858).
7 Exploration and evaluation assets
US$
------------
At 1 July 2013 -
At 31 December 2013 117,496,944
At 1 July 2014 126,649,939
Additions during the period 5,040,708
At 31 December 2014 131,690,647
============
8 Property, plant and equipment
Office furniture & office equipment Machinery and equipment Vehicles Total
US$ US$ US$ US$
------------------------------------- -------------------------
Cost
At 1 July 2014 564,763 1,130,852 1,104,149 2,799,764
Additions 19,821 - - 19,821
Foreign exchange (16,095) - - (16,095)
------------------------------------- -------------------------
At 31 December 2014 568,489 1,130,852 1,104,149 2,803,490
------------------------------------- ------------------------- ---------- ---------
At 31 December 2013 551,212 1,143,279 1,078,942 2,773,432
------------------------------------- ------------------------- ---------- ---------
Depreciation
At 1 July 2014 137,277 175,001 187,048 499,326
Charge for the period 31,252 205,708 161,841 398,801
Foreign exchange - - - -
At 31 December 2014 168,529 380,709 348,889 898,126
------------------------- ---------- ---------
At 31 December 2013 61,575 - - 61,575
------------------------- ---------- ---------
Carrying value
At 1 July 2014 427,486 955,851 917,101 2,300,438
------------------------------------- ------------------------- ---------- ---------
At 31 December 2014 399,960 750,143 755,260 1,905,364
------------------------------------- ------------------------- ---------- ---------
At 31 December 2013 489,637 1,143,279 1,078,942 2,711,858
------------------------------------- ------------------------- ---------- ---------
9 Trade and other receivables and other financial assets
31 December 31 December 30 June
2014 2013 2014
US$ US$ US$
------------- ------------ -------------
Due within one year:
Other receivables 149,080 421,099 222,859
Prepayments 245,170 360,830 464,384
------------- ------------ -------------
394,250 781,929 687,243
============= ============ =============
Other financial assets - - -
============= ============ =============
Amounts falling due after one year:
Loan and other receivables 13,442,186 13,495,708 14,276,841
Accrued interest receivable 7,990,098 3,991,759 6,231,155
Provision against AIOG loans and receivables (21,432,284) - (20,507,996)
============= ============ =============
- 17,487,467 -
============= ============ =============
The loan to African Iron Ore Group Limited ("AIOG") is in
respect of expenses relating to the Simandou South infrastructure
project and other development projects. The loan has cost recovery
on the money lent at the rate of 25% per annum interest. The loan,
including accrued interest, is repayable at project vehicle
Financial Close.
On Financial Close of the project the outstanding loan balances
may be repaid in cash or converted into project vehicle equity upon
the agreement of both parties and at a price to be determined at
the point of conversion.
Interest accrued on the loan is disclosed as a non-current asset
as it is expected to be realised on Financial Close of the project
in conjunction with the principal of the loan. The Directors
consider that the carrying amount of the remaining trade and other
receivables approximates their fair value.
Following certain developments during the year ended 30 June
2014 regarding the ownership of rights to the Simandou project the
Director's consider that there exists additional uncertainty over
the timing and nature of the path to development of the Simandou
project and as such the Directors have elected to provide in full
for the loans receivables from AIOG of US$21,432,284 as at 31
December 2014. Refer to Note 16 for additional detail.
10 Borrowings
31 December 31 December 30 June
2014 2013 2014
US$ US$ US$
------------ ------------ -----------
Amounts falling due within one year:
Short-term loan (i) 5,800,000 - -
US$10 million IMIC October 8.125% bond
(ii) 9,743,813 9,298,692 9,697,206
Interest payable 1,089,831 1,045,833 1,075,833
------------ ------------ -----------
16,663,643 10,344,525 10,773,039
============ ============ ===========
Amounts falling due after one year:
US$15 million IMIC April 8.75% bond
(iii) 13,279,979 12,534,225 12,884,063
US$15 million IMIC May 8.75% bond (iv) 13,254,252 12,498,530 12,853,009
US$20 million Afferro Holdings June
8.875% bond (v) 17,714,370 16,724,926 17,188,814
US$30 million Afferro Holdings November
9% bond (vi) 24,565,523 23,391,805 23,945,226
------------ ------------ -----------
68,814,125 65,149,486 66,871,112
============ ============ ===========
(i) During the six months to 31 December 2014 the Group has
obtained a short-term loan of US$5.8 million with 5% interest from
AIOG repayable on or before 30 June 2015.
(ii) On 18 October 2012 IMIC issued a multi-tranche, unsecured
bond with a drawable value of US$50,000,000 of which US$10,000,000
was drawn down on 6 November 2012. The bond instrument carries
semi-annual interest coupon payments and an interest rate of 8.125%
per annum. On 9 August 2014, by way of a Supplemental Deed, the
final redemption date for the Bond was amended from 18 October 2014
to 18 October 2015.
(iii) On 16 April 2013 IMIC issued a multi-tranche, unsecured
bond with a drawable value of US$40,000,000 of which the first
tranche of US$15,000,000 was drawn down on 17 April 2013. The bond
instrument carries semi-annual interest coupon payments and an
interest rate of 8.75% per annum. The bond is repayable on 30
October 2016.
(iv) On 8 May 2013 the second tranche of US$15,000,000 was drawn
down of the IMIC multi-tranche, unsecured bond with a drawable
value of US$40,000,000. The bond instrument carries semi-annual
interest coupons and an interest rate of 8.75% per annum. The bond
is repayable on 30 October 2016.
(v) On 11 June 2013 Afferro Holdings Limited issued a
multi-tranche, unsecured bond with a drawable value of
US$60,000,000 of which US$20,000,000 was drawn down on 19 June
2013. The bond instrument carries semi-annual interest coupons and
an interest rate of 8.875% per annum. The bond is repayable on the
30 October 2016.
(vi) On 26 November 2013 Afferro Holdings Limited issued an
unsecured bond with a drawable value of US$100,000,000 of which
US$30,000,000 was drawn down. The bond instrument carries
semi-annual interest coupons and an interest rate of 9.0% per
annum. The bond is repayable on the 20 December 2017.
The bonds drawn down during the six months to 31 December 2014
had directly attributable transaction costs which were capitalised
as part of the bond and they have been included in the effective
interest calculation.
All interest rates are fixed and therefore the Group does not
suffer from interest risk variance. All borrowings are denominated
in US dollars.
In November 2013 the Company agreed a USD US$27 million facility
with Banque Atlantique Cameroun S.A. ("Banque Atlantique").
Drawdown of the facility was conditional upon completion of the
acquisition of Afferro Mining Inc ("Afferro") and on draw down
would be secured against the Nkout asset. The facility is available
until 12 November 2016 and bears a 12% interest rate. As at 31
December 2014 no amounts have yet been drawn against this
facility.
11 Convertible loan notes
31 December 31 December 30 June
2014 2013 2014
US$ US$ US$
------------ ------------ -----------
Amounts falling due within one year:
Interest payable 4,375,005 645,980 53,977
Convertible loan notes issued to Afferro 41,281,421 - -
shareholders (i)
------------ ------------ -----------
45,656,426 53,977
============ ============ ===========
Amounts falling due after one year:
US$25 million IMIC convertible bond
note (ii) 1,994,905 16,211,850 1,863,010
Convertible loan notes issued to Afferro
shareholders (i) - 40,810,587 47,681,152
------------ ------------ -----------
1,994,905 57,022,437 49,544,162
============ ============ ===========
(i) The convertible loan notes issued on completion of the
Company's acquisition of Afferro ("Afferro CLN") have a principal
amount of 40 pence (US$0.65) and are for a two year period. The
Afferro CLN are unsecured and rank pari passu with other unsecured
debt obligations of IMIC. The Afferro CLN accrue interest of 8% per
annum, which will be rolled up and paid at the end of its two year
term. Upon maturity, the CLN together with the accrued interest
will be paid either in cash or converted into shares in the Company
at the equivalent market value of such ordinary shares at the time
of conversion, at the Company's discretion. The Afferro CLN can be
redeemed early at the option of the Company, with accrued interest
to the date of redemption.
At 31 December 2014, there were 84,156,294 convertible loan
notes in issue. When the convertible loan notes were issued, the
prevailing market interest rate for similar loan notes without
conversion option was higher than the interest rate at which the
convertible loan notes were issued. The effective interest rate on
the convertible loan notes is 25.83%.
(ii) On 5 June 2013 the Company issued a multi-tranche,
convertible subordinated bond note with a drawable value of
US$25,000,000 of which the entire amount was drawn down on 11 June
2013. On 5 March 2014 the Company received notice for the
conversion of US$22,301,136 of the outstanding US$25,000,000
convertible loan note. As a result, the Company issued 45,000,000
new ordinary shares at a price of 29.64 pence each with
US$2,698,864 of the bonds remaining in use as at 31 December 2014.
The convertible bond carries semi-annual interest coupons and an
interest rate of 12% per annum. The bond is repayable on 30 October
2016. The bondholder may at any time during the life of the bond
serve 30 days' notice and convert the outstanding principal plus
accrued interest into ordinary shares in the Company at a price of
29.64 pence per ordinary share. This is considered to be a
convertible loan with an embedded derivative as the number of
shares to be issued as settlement is not fixed.
All interest rates are fixed and therefore the Group does not
suffer from interest risk variance. All borrowings are denominated
in US dollars.
12 Embedded derivative
31 December 31 December 30 June
2014 2013 2014
US$ US$ US$
------------ ------------ ------------
Balance at the beginning of the period 320,833 8,710,013 8,710,013
Initial value of embedded derivative - - -
Change in fair value (297,868) (4,571,932) (3,559,344)
Conversion of the convertible bond
note (Note 11) - - (5,694,554)
Foreign exchange (95) 545,756 864,718
------------ ------------ ------------
22,870 4,683,837 320,833
============ ============ ============
The change in fair value is a result of change in assumptions
used to value the embedded derivative:
December
2014 June 2014
--------- ---------
Risk free interest rate 0.50% 2.0%
Expected life 1.8 years 2.3 years
Expected volatility 32% 29%
Exchange rate 1.56 1.70
========= =========
13 Share capital and share premium
Number of Share Share
shares capital premium
US$ US$
------------ ---------- -----------
Balance at 1 July 2014 162,600,270 1,910,717 64,785,711
Private placing 9,554,140 30,000 1,470,000
Shares issued under anti-dilution
agreement 955,414 3,000 147,000
173,109,824 1,943,717 66,402,711
============ ========== ===========
The Company issued 9,554,140 ordinary shares at 10 pence each in
a private placing on 22 December 2014 raising proceeds of US$1.5
million.
The relationship agreement with AIOG contains a mutual
anti-dilution provision whereby in the event that either IMIC or
AIOG issue share capital they are required to issue 10% of the
share capital issued to the either party in order to maintain the
Group's mutual 10% holding in each other. As a result of the shares
issued on the private placing the Company granted 955,414 shares to
AIOG. The fair value of the shares issued to AIOG of US$150,000 was
recognised as an expense in the consolidated statement of
comprehensive income.
14 Share based payments
Following completion of the acquisition of Afferro, the Company
granted 4,776,000 share options to Directors, 1,750,000 share
options to certain employees and 1,000,000 share options to one of
the Company's strategic advisors. These share options vested
immediately and will be exercisable at 27 pence per share. During
the period to 31 December 2014 a total of 850,000 options lapsed;
as at 31 December 2014 the Company has 6,776,000 options in issue.
The share options have been determined to have a fair value of
US$1,351,817 using the Black-Scholes model with the following
assumptions:
Dividend yield 0%
Risk free interest rate 1.67%
Expected life 10 years
Expected volatility 32%
Weighted average exercise price 27 pence
--------
The following illustrates the number and weighted average
exercise prices ("WAEP") of, and movements in, share options during
the period.
Number of WAEP price
options
--------- ----------
At 1 July 2014 7,626,000 26.9
Options granted during the period - -
Option lapsed during the period (850,000) (26.2)
At 31 December 2014 6,776,000 27.0
========= ==========
15 Warrants
The Company issued 9,554,140 warrants to subscribe for ordinary
shares equivalent to one warrant for each share issued as part of
the private placing on 22 December 2014. The warrants are
exercisable at 10 pence per ordinary share and expire on 31
December 2017. The fair value of these warrants was US$951,646. The
warrants are exercisable at any point for two years from the first
anniversary of their date of issue and so the fair value of the
warrants have been apportioned over the one year period resulting
in a charge to the period ended 31 December 2014 of US$26,073.
The fair value of the warrants issued during the period other
than to equity holders of the Company was determined using the
Black-Scholes model with the following assumptions:
Dividend yield 0%
Risk free interest rate 0.86%
Expected life 3 years
Expected volatility 32%
Exercise price 10 pence
--------
The following illustrates the number and WAEP of, and movements
in, warrants during the period.
Number of WAEP
warrants pence
----------- ------
At 1 July 2014 130,116,964 33.3
Granted during the period 9,554,140 10.0
At 31 December 2014 139,671,104 31.7
=========== ======
The charge to the income statement for warrants issued in the
period ended 31 December 2014 was US$26,072 (31 December 2013:
US$2,145)
16 Related party transactions
During the period the Group entered into the following
transactions, in the ordinary course of business on an arm's length
basis, with related parties.
31 December
2014
US$
------------
Fees paid to Capita Asset Services
* Accounting services 1,923
* Director's fee 28,186
-
* Fair value of options granted
-
* Transaction bonus on completion of Afferro
acquisition
------------
Total Payments 30,109
------------
James Ward, director of Capita Asset Services, resigned as
director of IMIC on 14August 2014 therefore Capita Asset Services
is considered a related party only until that date.
Sub-lease charges by Gasol plc
* Office rent and service charges 68,233
* Telecommunications recharges 1,498
-------
Total Payments 69,731
-------
IMIC has a sub-lease agreement for the Company's offices with
Gasol plc, of which Mr Haresh Kanabar is a director.
On 7 November 2014, Mr Ethelbert Cooper was appointed as
Chairman of the Group. Mr Cooper is the chairman of AIOG and also
has an equity interest in AIOG.
IMIC has a relationship agreement with AIOG and under this
agreement the following transactions were entered during the six
months ended 31 December 2014:
1. IMIC advanced additional loans of US$419,336 to AIOG for the purpose of developing projects.
2. IMIC has accrued interest receivable of US$2,306,249 relating to the loans made to AIOG.
3. Due to uncertainty over the recoverability of the loans and
accrued interest to AIOG (US$21,432,284) a provision has been
recorded for the full amount of the receivable; the accrued
interest charges and additions in the period are charged to the
Statement of Comprehensive Income. Should the uncertainty change in
future, and should it become likely that a portion or the entire
loan to AIOG will become recoverable; the provision for bad debt
may be reversed in whole or in part.
31 December
2014
US$
Opening balance 20,507,995
Additions in the
period 419,336
Accrued interest
in the period 2,306,249
Foreign exchange (1,801,296)
------------
Closing balance 21,432,284
------------
4. IMIC has received a short term loan from AIOG of US$5,800,000
with 5% interest due for repayment on or before 30 June 2015 (note
10).
17 Financial Instruments
The Group is exposed to the risks that arise from its use of
financial instruments. This note describes the objectives, policies
and processes of the Group for managing those risks and the methods
used to measure them. Further quantitative information in respect
of these risks is presented throughout the financial
statements.
Capital risk management
The Group manages its capital with the directors carrying out a
review on a quarterly basis to ensure that it will be able to
continue as a going concern while maximising the return to
stakeholders. The Group ensures that its liquidity risk is
mitigated by placing financial assets on short term maturity, thus
all financial liabilities are met as they become due, and by
monitoring both the debt and equity markets for funding
opportunities. In addition, the Group maintains strong
relationships with its investors. Additional detail is provided
within the Strategic Report.
The capital structure of the Group consists of net debt, which
includes borrowings after deducting cash and cash equivalents, and
equity attributable to the owners of the parent, comprising issued
capital, reserves and retained earnings. In order to maintain or
adjust the capital structure, the Group may return capital to
shareholders, issue new shares or sell assets to reduce debt.
Net debt ratio
The net debt ratio as at 31 December 2014 is as follows:
31 December 31 December 30 June
2014 2013 2014
US$ US$ US$
Borrowings, convertible loan note and
embedded derivative (127,321,969) (137,846,265) (127,563,123)
Cash and cash equivalents 2,513,644 30,069,421 8,528,348
Loan (5,800,000) - -
------------- ------------- -------------
Net debt (130,608,325) (107,776,844) (119,034,775)
Equity 2,401,700 23,631,996 8,852,395
Net debt to equity ratio 5,438% 456% 1,345%
Fair value estimation
The table below analyses financial instruments carried at fair
value, by valuation method. The different levels have been defined
as follows:
-- Quoted prices (unadjusted) in active markets for identical assets or liabilities (Level 1)
-- Inputs other than quoted prices included within Level 1 that
are observable for the asset or liability, either directly or
indirectly (Level 2)
-- Inputs for the asset or liability that are not based on observable market data (Level 3)
31 December 2014
Level 1 Level 2 Level 3 Total
US$ US$ US$ US$
Financial assets
* Investment in AIOG - - 165,766 165,766
========= ========= ======== ========
Level 1 Level 2 Level 3 Total
US$ US$ US$ US$
Financial liabilities
at FVTPL
* Embedded derivatives - 22,870 - 22,870
========= ======== ======== =======
30 June 2014
Level 1 Level 2 Level 3 Total
US$ US$ US$ US$
Financial assets
* Investment in AIOG - - 181,728 181,728
========= ========= ======== ========
Level 1 Level 2 Level 3 Total
US$ US$ US$ US$
Financial liabilities
at FVTPL
* Embedded derivatives - 320,833 - 320,833
========= ======== ======== ========
Significant accounting policies
Details of the significant accounting policies and methods
adopted, including the criteria for recognition, the basis of
measurement and the basis on which income and expenses are
recognised, in respect of each class of financial asset, financial
liability and equity instrument are disclosed in the accounting
policies of this financial information.
The principal financial instruments used by the Group, from
which financial instrument risk arises are as follows:
- Financial assets
- Trade and other receivables
- Cash and cash equivalents
- Trade and other payables
- Borrowings
- Embedded derivative financial instruments
Financial assets
31 December 2014 30 December 30 June 2014
2013
Current Non-current Current Non-current Current Non-current
assets assets assets assets assets assets
Loans and receivables - - - 17,487,460 - -
Available for sale - - - 9,350 - -
assets
Fair value through - - - - - -
profit and loss
Cash and cash equivalents 2,513,644 - 30,069,421 - 8,528,348 -
Trade and other
receivables 394,250 - 781,929 - 687,243
Restricted cash - 455,632 - 608,091 - 608,091
Other receivables - - - - - -
and financial assets
---------- ------------ ----------- ------------ ---------- ------------
2,907,894 455,632 30,851,350 18,104,901 9,215,591 608,091
========== ============ =========== ============ ========== ============
Financial liabilities
31 December 31 December 2013 30 June
2014 2014
Current Non-current Current Non-current Current Non-current
liabilities liabilities liabilities liabilities liabilities liabilities
Trade creditors
and accruals 1,880,582 - 8,697,045 - 2,759,853 -
Borrowings 16,633,643 68,814,125 10,344,525 65,149,486 10,773,039 66,871,112
Convertible bond
note 45,656,426 1,994,905 645,980 57,022,437 53,977 49,544,162
Embedded derivatives - 22,870 - 4,683,837 - 320,833
----------- ------------- ------------- ------------- ------------- -------------
64,170,651 70,831,900 19,687,550 126,855,760 13,586,869 116,736,107
=========== ============= ============= ============= ============= =============
18 Subsequent events
On 8 January 2015 the Company announced that AIOG had elected to
convert US$3m of the US$5.8m short-term loan into ordinary shares
in the Company. The Company issued 19,736,842 new ordinary shares
of 0.2 pence each at the conversion price of 10 pence per ordinary
share. Under the terms of the Conversion, AIOG will receive one
warrant to subscribe for ordinary shares for every ordinary share
received pursuant to Conversion. The Warrants are exercisable at
any time up to two years following the first anniversary of their
issue at a price of 10 pence per Ordinary Share.
On 27 January 2015 the Company announced that funds of US$0.5m
had been received in respect of the further subscription for
3,184,713 ordinary shares of 0.2 pence each at a price of 10 pence
per ordinary share referred to in the announcement of 22 December
2014. Under the terms of the Further Subscription, the participant
would receive one warrant for every ordinary share subscribed. The
warrants are exercisable at any time up to 2 years following the
first anniversary of the issue at a price of 10 pence per Ordinary
Share.
On 11 February 2015 Dr Babacar Ndiaye, a Non-Executive Director
of the Company, stepped down from the Board with immediate
effect.
On 24 March 2015 the Company announced it had raised US$5m via a
Convertible Bond issue. The subscriber was a Cameroonian investor,
Caisse Capital Limited, an investment vehicle controlled by Mr.
Colin Mukete who was appointed to the Advisory Board of IMIC.
Copies of the interim statement will be available on the
Company's website at www.imicplc.com
This information is provided by RNS
The company news service from the London Stock Exchange
END
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