TIDMPML
RNS Number : 6857C
Papua Mining Plc
30 June 2016
Papua Mining plc
("Papua" or "the Company")
Financial Statements for the year ended 31 December 2015
Papua Mining plc, a UK company focused on the exploration of
gold and copper deposits in Papua New Guinea, is pleased to
announce its Annual Report and Accounts for the year ended 31
December 2015, which will be posted to shareholders today. The
Annual Report and Accounts are also available on the Company's
website.
For further information on the Company please visit
www.papuamining.com or contact:
Papua Mining plc
Hugh McCullough, Director +353 1 532 9535
Cenkos Securities plc -
Nominated Adviser and Broker
Derrick Lee/Beth McKiernan +44 131 220 6939
Chairman's Statement
I am pleased to present our report for Papua Mining plc ("Papua"
or "the Company") for the financial year ending 31 December 2015.
Notwithstanding the economic downturn, which has been particularly
pronounced in the mining sector, we have made significant progress
on the technical front in our exploration programme in Papua New
Guinea ("PNG").
Papua now holds six Exploration Licences granted by the Minister
for Mining in PNG all of which are located in the central part of
New Britain Island. The total area under licence is approximately
1,800 square kilometres.
Whilst exploration has been carried out over all of these
licences, the most intensive work during the past year has been
carried out in the Mt. Visi area covered by Exploration Licences
2051 and 2322.
The discovery, in May 2014, of high grade copper and gold values
in surface outcrop on EL2051 has been extended following the grant
in September 2015 of the adjoining licence EL2322. This has
culminated in a drilling programme on the Mt. Visi target which
commenced in December 2015 and was completed in March 2016. We are
excited by the evidence we have seen in the drilling of alteration
typical of the central parts of porphyry systems and, while the
initial assays from selected core samples do not show commercial
grades of copper, the visual identification of copper
mineralization through much of the rocks drilled is an important
indication of the presence nearby of a mineralized copper porphyry
system.
I reported in last year's report on the difficulties being
experienced in the resource sector in securing sufficient financial
resources to continue worthwhile exploration programmes. If
anything, the situation has deteriorated during the period under
review. Investment finance for exploration, even highly prospective
projects such as ours, virtually dried up and exploration budgets
both for major companies as well as for juniors have been severely
curtailed. Exploration by junior companies is currently virtually
non-existent. Despite the difficulties, we have managed to complete
our drilling programme at Mt Visi thereby advancing the Company's
prospects considerably. There are also appearing perhaps the first
signs of a tentative recovery in the market. It is clear that the
virtual total absence of serious exploration across the globe over
the last two years will have its inevitable consequences. When
markets do turn, as turn they will, there will be a chronic
shortage of advanced exploration targets to contribute the future
ore reserves which are inexorably required, year after year, even
in times of economic downturn, to maintain the businesses and
balance sheets of the major producers. Projects such as ours, at
Mt. Visi and Tripela, will be recognized and valued then for the
technical merit they clearly show now, but to a market whose
attention is focused elsewhere.
You will notice that the audit certificate for the 2015
financial statements includes a qualification with respect to the
issue of going concern. Financial resources are obviously in short
supply for the reasons outlined above. However, we will avail
ourselves of opportunities to raise additional funds as they arise
in order to preserve, and where possible, increase the value of the
shareholders' holdings in Papua Mining plc. We cannot, however,
give any guarantee that such financing will be available when
required nor that the Company will be able to continue to trade in
the absence of such financing.
I would like to thank my Board, our management team and all of
our people in Papua New Guinea for their loyalty and commitment to
the Company's future. All of them have made sacrifices to ensure
the progress of the Company's exploration in PNG. I am hopeful that
we will succeed in our resolve to realise the value of the very
exciting results obtained to date and that we will soon have the
opportunity to increase that value with additional exploration
drilling to intersect the orebody we believe to exist at Mt.
Visi.
Michael Gordon Jolliffe
29 June 2016
Directors' Biographies
Michael Gordon Jolliffe (aged 65) Non-Executive Chairman
Michael Jolliffe holds dual Greek/U.K. citizenship. He is
currently Chairman and the largest beneficial shareholder of
Wigham-Richardson Shipbrokers Ltd. ("WRS"), one of the oldest
established shipbrokers, which was established in 1894 in the U.K.
WRS is one of the oldest members and shareholders of the Baltic
Exchange. WRS also owns Harion Shipping Services, a shipbroker
based in Piraeus. Michael Jolliffe was one of the two founding
shareholders of Burren Energy plc (originally known as Sumo Oil
Ltd) and was its original President and CEO. Following the
involvement of outside private equity investors and its focus on
E&P, and the appointment of Finian O'Sullivan (former Chevron
executive) as the CEO of the company, Michael Jolliffe remained as
a director of Burren until its flotation on the London Stock
Exchange some eleven years later in 2003. The company was sold to
ENI the Italian State Oil Company in 2007.
Mr. Jolliffe also has significant experience with maritime
companies in accessing the public capital markets in the U.S. He
was the former Joint Managing Director and is currently Co-Founder
and Vice Chairman of Tsakos Energy Navigation which is currently
quoted on the New York Stock Exchange, and today controls 65
tankers with an average age of around 6.5 years.
Mr. Jolliffe is also Chairman of StealthGas Inc., a shipping
company which has 51 LPG ships under operation, and four product
tankers. This company was listed on the NASDAQ in October 2005.
Hugh Martin McCullough (aged 66), Chief Executive Officer
Hugh McCullough has over 40 years' experience in gold and base
metal exploration, principally in Ireland, Ghana and Mali. Having
previously worked as a project geologist, in 1982 he became chief
executive of Glencar Mining plc, a public company listed on the IEX
(of the Dublin Stock Exchange) and AIM. Mr. McCullough was
responsible for the management, financing and strategy of Glencar
for over 27 years until Glencar was taken over by Gold Fields
Limited in September 2009. During his time at Glencar, Mr.
McCullough was involved in a number of multi million ounce gold
discoveries and oversaw the development of certain gold deposits
from exploration to production.
Mr.McCullough is a Professional Geologist and holds an Honours
degree in Geology from University College Dublin and the degree of
Barrister-at-Law from the King's Inns, Dublin.
Kieran Harrington (aged 53), Technical Director
Kieran Harrington is a geologist with 30 years of experience and
expertise in gold exploration, mine development, project evaluation
and project management, with particular experience and past success
in exploration of gold deposits in West Africa and Europe. He
joined Glencar Mining plc in 1992 as a senior geologist where he
was involved in the discovery of a major commercial mine in Ghana
(Wassa) and the more recent discovery of the Komana Deposit in
Southern Mali. He left Glencar as Technical Director on its
acquisition by Gold Fields Limited in 2009. Prior to joining
Glencar, Mr. Harrington worked with Tara Prospecting Ltd and Burmin
Exploration and Development Ltd. Mr. Harrington is a Professional
Geologist holding an Honours degree in Geology from the National
University of Ireland, Galway.
Keith Geddes Lough (aged 57), Non-Executive Director
Keith Lough has over 30 years' experience in the natural
resources sector in both senior finance and general management
roles.
Keith held a number of senior finance and operational positions
at LASMO PLC before joining British Energy PLC as Finance Director,
a post he held from 2001 to 2004. During his tenure at British
Energy, Keith led the complex restructuring negotiations with the
Government and its creditors.
Keith went on to become a Founder Shareholder and Chief
Executive of Composite Energy Ltd from 2004 until 2011, when
Composite was divested to Dart Energy. Composite was a privately
owned business which successfully took coal-bed methane from
exploration to early production, acquiring coal-bed methane
licences and establishing drilling operations in both the UK and
Europe in a JV with BG Group.
Keith is currently a non-executive director and chairman of the
audit committee of Rockhopper Exploration PLC, and a non-executive
director of Cairn Energy PLC and Rock Solid Images PLC. He is also
a non-executive director and chairman of the audit committee of the
UK Gas and Electricity Markets Authority, which has supervisory
responsibility for Ofgem.
Keith has an Honours Degree in Economics from Edinburgh
University, an MSc in Finance from London Business School and is a
Fellow of the Chartered Association of Certified Accountants.
Gunnar Palm (aged 59), Non-Executive Director
Gunnar Palm is a partner at Richmond Park Partners LLP, an
independent merchant bank providing advisory, capital markets and
risk and asset management services. Prior to Richmond Park Partners
LLP, Mr. Palm was Co-head of HSBC Global Banking, Coverage and
Client Management for EMEA.
He has advised on a number of cross border mandates in the
Middle East, India, Europe and the US. Prior to HSBC, Mr. Palm was
a managing director at Barclays Capital and Credit Suisse First
Boston in New York and London. Between 2007 and 2010 Mr Palm was
also a Director of Bay Capital Partners (UK) Ltd, an independent
India focused investment management firm. Mr. Palm began his career
with The Boston Consulting Group in Munich. Mr. Palm received a BA
from the Stockholm School of Economics and a MBA from The Wharton
School of the University of Pennsylvania.
Review of Operations
During 2015, we continued our drilling programme at the Tripela
target in New Britain and also commenced a new drilling programme
at the Mt. Visi prospect in New Britain, which continued through
into March 2016. Exploration activity on our other licences in
Papua New Guinea ("PNG") was relatively modest in extent,
reflecting the current depressed state of the resource investment
market.
Papua Mining plc, ("PML") through its two PNG - incorporated
subsidiaries, holds six exploration licences ("ELs") with a total
area of 1,800 square kilometres in the central part of New Britain
island. Details of the ELs currently held are given on the project
pages of our Company website www.papuamining.com.
Mt Visi target
We first discovered the Mt. Visi Prospect in May 2014 during our
regional exploration work on our portfolio of ELs. We have a small,
highly effective exploration team who perform reconnaissance
exploration in new areas to determine targets deserving of follow -
up work. One of these targets was the Mt. Visi area of EL2051.
Initial field surveys there discovered significant copper and gold
mineralisation in surface outcrop. This was reported to
shareholders on 16th May 2014 and follow up work included grid -
based soil sampling on the target area including adjacent ground in
the adjoining EL2322, which was granted to the Company in September
2015. Geological and alteration mapping was then carried out to
delineate the deposit's surface expression. Petrological analyses
on selected samples from the centre of the mapped intense
alteration zone confirmed the presence at surface of a zone of high
temperature, potassic alteration typical of what is developed in
the central cores of mineralised porphyry deposits.
The results of all of this surface work confirmed that the
target warranted a shallow drilling programme to confirm the
porphyry deposit. However the Mt Visi area is a remote mountain-top
location and with no road/track access we had to source a
heli-portable rig which could be manually moved between drill pads.
Between December 22(nd) 2015 and March 2016, five holes were
drilled for a total metreage of 776 metres, with the deepest hole
being drilled to a downhole depth of 211 metres.
Details of the holes completed are given in Table 1 below.
HoleID Easting Northing Elevation Azimuth Dip Length
----------- -------- --------- ---------- -------- ---- -------
V22DDH001 260885 9363807 1165 35 -55 191 m
----------- -------- --------- ---------- -------- ---- -------
V22DDH002 260885 9363807 1165 215 -55 68 m
----------- -------- --------- ---------- -------- ---- -------
V22DDH003 260753 9363886 1187 115 -55 211 m
----------- -------- --------- ---------- -------- ---- -------
V22DDH004 260878 9363871 1165 120 -70 133 m
----------- -------- --------- ---------- -------- ---- -------
V22DDH005 260885 9363807 1165 22 -75 173 m
----------- -------- --------- ---------- -------- ---- -------
Table 1: Diamond drill hole parameters for the Mt. Visi Prospect
drilling programme
Results of the drilling were consistent with the earlier
assessment of rock chips by Corbett and Menzies in 2014 and the
subsequent spectroscopy, petrology and epidote chemistry studies
which had each inferred the presence of a proximal mineralised
porphyry.
The drilling has facilitated three dimensional mapping of
alteration and sulphide zonation, characteristic of that generated
by a mineralising porphyry. Inner zone bornite-K feldspar +/-
biotite alteration gives way to magnetite-chalcopyrite-silica
distally, while epidote occurs in the upper parts of the system
where it has some spatial and temporal association with sericite.
Chlorite overprints much of the pre-existing hydrothermal
alteration and is strongly associated with pyrite. The bulk of the
hydrothermal alteration is hosted within a plagioclase-hornblende
phyric diorite, that is intimately associated with significant
shear zones and hydrothermal breccias. The hydrothermal alteration
mineral assemblages appear to form in telescoping haloes suggesting
the intrusive system at Mt. Visi is concentrically zoned and
indicative of a nearby mineralising hydrothermal source.
The sulphide mineralisation which outcrops over a significant
part of the drilling area was encountered in all drill holes.
Bornite and chalcopyrite co-occur, almost invariably together with
quartz and/or magnetite, within the diorite. However their
occurrence in the drilling so far is patchy and the concentration
generally low overall but in areas where K-feldspar is present, the
tenor of mineralisation increases. Fine molybdenum is evident,
usually associated with quartz. In-house XRF analysis was completed
on all cores to delineate the mineralised zones. Holes 4 and 5 each
showed the most pervasive mineralisation. with a number of strongly
anomalous but still sub-ore grade copper and molybdenum
intersections over a number of downhole intercepts including the
following :
From To Width Cu
(metres) (metres) (metres) (ppm)
DDH004 49 67 18 387
DDH004 76 120 44 298
(DDH004) 49 120 71 294
DDH005 39 53 14 279
DDH005 60 68 8 649
DDH005 80 114 34 664
DDH005 122 139 17 533
DDH005 142 147 5 919
A limited number of anomalous samples were selected for
independent laboratory analysis to verify the XRF data and provide
assay data for gold which is not possible to determine accurately
with the XRF instrument Assay results for 20 samples selected from
VE22DDH001 yielded results of up to 0.219 g/t Au (81.7m), 0.14% Cu
(159.1m) and 77 ppm Mo (149.3m).
The interval in V22DDH004 from 49 metres to 120 metres downhole
was also assayed by the laboratory. While copper grades were mostly
anomalous and maximum value was 907 ppm or just under 0.1% copper,
the total intercept averaged just 382 ppm copper (30% higher than
the corresponding copper grade from the XRF data), and 0.04g/t gold
- still well short of an ore grade intersection.
The altered / mineralised diorite mapped at surface in the
'mineralised corridor' crops out over an area approximately 120
metres by 40 metres, with the associated hydrothermal alteration
approximately 150 metres by 80 metres. It is assumed this could
well represent a narrow finger stemming from a much larger, and
more intensely mineralised, porphyry apophysy. There are multiple
vectors towards higher grade mineralisation at the Mt. Visi
Prospect, with potassic alteration intensity, quartz vein density
and copper sulphide mineralisation concentration all increasing
with depth in holes VE22DDH003, VE22DDH004 and VE22DDH005. Spot
assays from several samples in VE22DDH001 suggest a notable
increase in molybdenum with depth. A corridor / structural
intersection is considered to be suitable plumbing for the diorite
emplacement, hydrothermal alteration, shearing and major
hydrothermal brecciation which has been encountered by the shallow
drilling. Thus, we interpret there to be a large target at depth
below these intercepts.
Tripela Target
Geological mapping and sampling in 2011 and 2012 discovered
significant copper and molybdenum soil anomalism at Tripela in
licence area EL1462 in the West New Britain Province . Float and
outcrop sampling and geological mapping delineated numerous
occurrences of in situ, high grade copper and molybdenum
mineralisation with grades up to 29% copper returned from outcrop
assays. Subsequent shallow diamond drilling confirmed the presence
of zoned argillic and phyllic alteration which we believed to be
marginal to a porphyry body. Follow up, deeper drilling intersected
high temperature, inner propylitic alteration, characteristic of
nearby porphyry development.
The various phases of drilling between January 2014 and February
2015 comprised a total of approximately 6,985 metres of drilling.
As described above the work to date has identified a significant
porphyry system with strong vectors supporting the potential for an
economic copper-gold porphyry orebody. The next phase of drilling
at Tripela will be designed to test for the projected porphyry
core. However, as announced in our interim statement last year that
drilling programme has been postponed until market conditions
improve.
Other Exploration Licences in PNG
We have carried out preliminary exploration on all our other
exploration licences in PNG and as these programmes advance,
further details will be announced when available.
Key Performance Indicators and Risk Management
Key performance indicators
The Board monitors KPIs which it considers appropriate for a
group at Papua Mining's stage of development.
As a mineral exploration business, an important factor is a
steadily improving market perception of the progress and value of
the business leading to an improving share price, continued support
from shareholders and therefore the ability to raise new equity
capital at increasing prices, thus minimising dilution for those
early investors who bore significant risk.
The KPIs for the Group are as follows:
Financial KPIs
Shareholder return - the performance of the share price.
The Company listed on AIM in March 2012 at a share price of
GBP0.44 ($0.68) and issued further shares in February 2013 at
GBP0.80 ($1.24), in June 2014 at GBP0.20 ($0.34), and in December
2015 at GBP0.01 ($0.001) per share. The share price at 1 June 2016
was GBP0.04187 ($0.06027). The fall in share price over the last
few years is unfortunate, but is consistent with the decline in
share prices of our peer companies in the resource sector over the
same period. The Directors are, however, hopeful that the nascent
current improvement in sentiment in the resource sector, if
sustained, will lead to an improved market value of the business in
2016 and 2017 given the technical success to date in the Group's
exploration operations.
Exploration expenditure - funding and development costs.
The availability of sufficient cash to facilitate continued
investment and funding of exploration programmes is essential. The
Group monitors the availability of sufficient cash to fund
exploration programmes. At 31 December 2015 the Group had cash of
$299,183 (2014: $2,513,874).
Non financial KPIs
Environment management - the Group has environmental policies in
place.
The Group is aware of the potential impact that its operations
may have on the environment. The Group ensures that, at a minimum,
its subsidiaries comply with the local regulatory requirements and
industry standard principles for environmental and social risk
management.
Performance against these environmental policies is continuously
monitored. The Directors consider that this has served to minimise
any negative impact of current exploration activities on the
environment.
Operational - the number of additional Exploration Licences and
exploration successes.
There has been extensive exploration activity in the year, and
the Directors are encouraged by the prospectivity of the Group's
Exploration Licences and by the exploration results obtained to
date. The Group currently has six Exploration Licences.
Except for the low share price during the year, the Directors
consider that performance against all other KPI's in 2015 was
acceptable.
Risk Management
The Directors consider that assessing and monitoring the
inherent risks in the exploration business, as well as other
financial risks, is crucial for the success of the Group. Risk
assessment is essential in the Group's planning processes. The
Board regularly reviews the performance of projects against plans
and forecasts. Further detail on management of financial risk is
set out in note 16.
Principal Risks and Uncertainties
The management of the business and the execution of the Board's
strategy are subject to a number of risks:
-- the success of mineral exploration projects is, by their
nature, inherently uncertain, and the availability of new
information can significantly change estimates of mineral
reserves;
-- the viability of exploration projects is largely driven by commodity prices;
-- commodity prices can be subject to volatile fluctuations.
The principal risks and the measures taken by the Group in order
to mitigate these risks are set out in more detail below.
Exploration and development risk
The Group's business operations are subject to risks and hazards
inherent in the exploration industry. The exploration for and the
development of mineral deposits involves significant risks which
even a combination of careful evaluation, experience and knowledge
may not eliminate. While the discovery of an ore body may result in
substantial rewards, it is impossible to ensure that the Group's
current exploration programmes will result in a profitable
commercial mining operation.
The Board aims to manage the development of the Group as a
successful exploration business by ensuring that additional
prospective licences are applied for and granted on a timely basis,
or otherwise acquired.
Exploration licences are held on the Papua New Guinea island of
New Britain. Six Exploration Licences are currently held.
Political Risk
There is a risk that assets will be lost through expropriation,
unrest or war. Papua Mining minimises political risk by operating
in a country with relatively stable political systems, established
fiscal and mining codes and a well established, successful mining
industry.
Papua Mining further minimizes risk by ensuring that the
majority of cash funds are securely held within financial
institutions of high standing outside of Papua New Guinea.
Commodity Risk
Commodities are subject to high levels of volatility in price
and demand. The price of commodities depends on a whole range of
factors, which are outside the control of the Group. There is the
risk the price for minerals will fall to a point where it becomes
uneconomic to extract them from the ground. This is an interest
risk of the mining industry, mitigation of which is currently
outside of the group's control whilst it is still in an
exploration, rather than extraction, phase.
Liquidity Risk
There is a risk of running out of working and investment
capital. The Group relies for funding on the issue of share
capital. Other than a Convertible Loan Note, the Group has no
borrowing and maintains tight financial and budgetary control to
keep its operations cost effective. Although there can be no
absolute assurance that adequate funding will be available when
required, the Directors are hopeful that they will secure
additional funding when required to do so, as demonstrated by the
fundraisings in June 2014 and December 2015.
Currency risk
Fluctuations in currency exchange risks can significantly impact
cash flows. The Group maintains currency in Sterling, Australian
Dollars and Papua New Guinea Kina to finance its overseas
operations. In 2016 the Group could have exposure amongst others to
Sterling, Euro, Australian Dollars and Papua New Guinea Kina. The
mix of currencies is such that the Directors believe the Group's
exposure is minimal. The Directors do however regularly monitor
currency exchange rates and make judgments as to whether to enter
into hedging contracts accordingly. Currently no such hedging
contracts are in place.
Interest rate risk
The only significant interest-bearing asset within the Group is
cash. The Directors constantly review the interest rate to ensure
optimum return on deposits for the Group.
Strategic report approved on behalf of the Board.
Hugh McCullough
Director
Date 29 June 2016
Directors' Report
Principal Activity
The principal activities of the Group are the exploration for
gold and copper resources in Papua New Guinea (PNG). The Group's
strategy is to explore for and, where the Directors believe that it
is commercially feasible, develop deposits of gold and/or copper
within the territory of PNG.
The Group currently holds six Exploration Licences granted by
the Minister for Mining in PNG. The licences are located in the
central part of New Britain.
Financial overview
The loss for the year is in line with the Directors'
expectations. With significant funding being raised in June 2014
and further funding completed in December 2015, the Directors are
hopeful that they will secure additional funding when required to
do so. The Directors are also of the view that the investment
sentiment in the resource sector will improve, to the extent that
the exploration success the Company has achieved to date will
enable it to raise sufficient additional exploration funding to
continue the exploration programmes in Papua New Guinea.
A detailed review of the Group's business, including its targets
and strategies is given in the Chairman's Statement and the Review
of Operations.
Results and Dividends
The results for the year are in line with Directors'
expectations. The Directors do not recommend a dividend.
Going Concern
As noted in the Chairman's statement, Papua Mining plc will
continue to seek additional equity funding as and when available in
order to continue its exploration programmes in the short term and
for general working capital purposes.
The Directors have prepared a cash flow forecast up to 30 June
2017 which supports the Directors' reasonable expectation that
Papua Mining plc has adequate resources to continue in operational
existence throughout this period. This cash flow forecast assumes
that the exploration programmes will only continue with additional
equity funding secured by the Group. Thus, they have adopted the
going concern basis of accounting in preparing the annual financial
statements.
Directors
The Directors in office during the year are listed below. The
interests of the Directors in the shares of the Company at the
relevant dates were as follows:
As at As at As at Number
22 June 31 December 31 December of options
2016 2015 2014 held at
31 December
Ordinary Ordinary Ordinary 2015
Shares Shares Shares
Michael Jolliffe 185,004 185,004 185,004 626,763
Hugh McCullough 504,571 504,571 354,571 1,997,886
Kieran Harrington 328,392 328,392 328,392 1,997,886
Gunnar Palm - - - -
Keith Lough - - - -
On December 21, 2015 Michael Jolliffe surrendered 250,000
options which he held at 31 December 2014, Hugh McCullough
surrendered 796,908 options which he held at 31 December 2014 and
Kieran Harrington surrendered 796,908 options which he held at 31
December 2014.
Substantial Shareholdings
As at 22 June 2016, being the latest practical date prior to
publication of this document, the Company was aware of the
following holdings of 3% or more of the issued share capital of the
Company:
Shares in % of the
the company Company's
issued share
capital
Michael Somerset-Leeke 24,191,102 28.54
South Pacific Mining
Holdings Limited 11,384,621 13.43
Salida Capital
(Europe) Limited 14,885,000 17.56
JP Morgan Asset Management
UK Ltd 3,649,238 4.31
Directors' remuneration
The remuneration of the Directors during the early part of 2015
was made on the recommendation of the Remuneration Committee,
taking into consideration remuneration packages of directors in
comparable businesses and in order to retain high quality
executives within a competitive market place.
Salaries and fees were paid to the Directors during the first
half of the year ended 31 December 2015 but were curtailed and
later suspended entirely during the second half of 2015. In
addition, certain directors also received benefits in kind,
principally private medical insurance, and fees were paid to
businesses with which some of the Directors are associated.
The Group made payments into the private pension schemes of two
of the Directors during the first half of 2015.
Share options were granted to three of the Directors during the
year as outlined above.
Full details of Directors' emoluments are set out in note 19 of
the financial statements.
Environmental Policy
The Group's projects are subject to the relevant PNG laws and
regulations relating to environmental matters.
The Group's strategy is to explore for and, where the Directors
believe that it is commercially feasible, develop deposits of gold
and/or copper within the territory of PNG. It is the Group's
intention to conduct its activities in a professional and
responsible manner, for the benefit of the Company's shareholders,
its employees and the national and local communities within which
it operates.
The Group aims to, at all times, conduct its operations in an
environmentally responsible manner and in accordance with relevant
legislation. The Group aims to adopt Best Practice policies as
recommended by the World Bank, the International Council on Mining
& Metals ("ICMM") and others where the Group deems that local
legislation to be inadequate in terms of environmental protection.
The Group has in place a detailed Field Operations Guidelines
Manual which covers in considerable detail the measures to be taken
by field personnel to minimize any negative environmental impact of
current exploration activities on the environment.
The Group also recognises the enormous potential of its
activities for positive impact on the communities in which it
operates and strives to optimise these positive impacts as far as
is possible.
The Papua Mining plc ("PM plc") Executive Directors have
extensive experience and expertise in environmental aspects of
mineral exploration and mining. The Group Country Manager, Chris
Muller, in addition to his significant geological qualifications
and experience, is a renowned lepidopterist who has participated in
many important environmental studies in PNG and is credited with
the discovery of a significant number of new butterfly species. All
Group personnel are encouraged to take an active interest in
environmental matters.
Directors' Indemnities
The Group has purchased insurance to cover its Directors and
officers against the costs of defending themselves in legal
proceedings taken against them in that capacity and in respect of
any damages resulting from those proceedings. The insurance does
not provide cover where a Director has acted fraudulently or
dishonestly.
Political contributions
No political donations have been made.
Corporate Governance
The Board of Directors is committed to maintaining high
standards of corporate governance and is accountable to the
Company's shareholders for the proper corporate governance of the
Group. The UK Corporate Governance Code does not apply to AIM
companies, and PM plc instead follows the principles of corporate
governance set out in the QCA Guidelines. PM plc operates within
the mining sector in an effective and efficient way, with integrity
and due regard for the interests of shareholders, and applies
principles of general governance applicable to the size and stage
of development of the Group.
- Audit Committee
The Audit Committee ensures the operation of good financial
practices throughout the Group, ensures that controls are in place
to protect the assets of the Group, reviews the integrity of
financial information, reviews the interim and annual financial
statements and reviews all aspects of the audit programme.
The Audit Committee is chaired by Mr. Keith Lough and also
comprises Mr. Michael Jolliffe and Mr. Gunnar Palm.
- Remuneration Committee
The Remuneration Committee is responsible for establishing a
formal and transparent procedure for developing policy on executive
remuneration and for setting the remuneration packages of
individual Executive Directors, and will meet at least twice per
annum.
The Remuneration of Non-Executive Directors will be a matter for
the executive members of the Board.
The Remuneration Committee is chaired by Mr. Michael Jolliffe
and also comprises Mr. Keith Lough and Mr. Gunnar Palm.
Auditor
The auditor, Grant Thornton UK LLP has resigned and been
replaced by Grant Thornton, Dublin. The latter has indicated its
willingness to continue in office and a resolution proposing that
they be re-appointed will be put to the Annual General Meeting.
Statement of Disclosure to Auditor
The Directors who held office at the date of approval of the
Directors' Report confirm that, so far as they are each aware,
there is no relevant audit information of which the Company's
auditor is unaware and each Director has taken all steps that he
ought to have taken as a Director in order to make himself aware of
any relevant audit information and to establish that the Company's
auditor is aware of that information.
Shareholders' consent will be sought at the Annual General
Meeting which will propose the reappointment of Grant Thornton
Dublin as independent auditor of the Company and to authorise the
Directors to determine the auditor's remuneration.
Statement of Directors' Responsibilities
The Directors are responsible for preparing the Strategic
Report, the Director's Report and the financial statements in
accordance with applicable law and regulations.
Company law requires the Directors to prepare financial
statements for each financial year. The Directors are required by
the AIM Rules of the London Stock Exchange to prepare group
financial statements in accordance with International Financial
Reporting Standards ("IFRS") as adopted by the European Union
("EU") and have elected to prepare the company financial statements
in accordance with IFRS as adopted by the EU.
The group financial statements are required by law and IFRS
adopted by the EU to present fairly the financial position of the
Group and the Company and the financial performance of the Group.
The Companies Act 2006 provides in relation to such financial
statements that references in the relevant part of that Act to
financial statements giving a true and fair view are references to
their achieving a fair presentation.
Under company law the Directors must not approve the financial
statements unless they are satisfied that they give a true and fair
view of the state of affairs of the Group and the Company and of
the profit or loss of the Group for that period.
In preparing the Group and Company financial statements, the
Directors are required to:
-- select suitable accounting policies and then apply them consistently;
-- make judgments and accounting estimates that are reasonable and prudent;
-- state whether they have been prepared in accordance with IFRSs adopted by the EU;
-- prepare the financial statements on the going concern basis
unless it is inappropriate to presume that the company will
continue in business.
The Directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the Group's and the
Company's transactions and disclose with reasonable accuracy at any
time the financial position of the Group and the Company and enable
them to ensure that the financial statements comply with the
Companies Act 2006. They are also responsible for safeguarding the
assets of the Group and the Company and hence for taking reasonable
steps for the prevention and detection of fraud and other
irregularities.
The Group's report and accounts will be published on the Group's
website and in this regard the Directors accept responsibility for
the maintenance and integrity of the PM plc website.
Annual General Meeting and Recommendation
The Board considers that the resolutions to be proposed at the
Annual General Meeting are in the best interests of the Company and
the Group as a whole and its unanimous recommendation is that
shareholders support these proposals as the Directors intend to do
in respect of their own holdings.
On behalf of the board
Hugh McCullough
Director
Date 29 June 2016
Independent auditor's report to the members of Papua Mining
plc
We have audited the financial statements of Papua Mining plc for
the year ended 31 December 2015 which comprise the consolidated and
parent company statements of financial position, the consolidated
statement of comprehensive income, the consolidated and parent
company statements of changes in equity, the consolidated and
parent company statements of cash flow, and the related notes. The
financial reporting framework that has been applied in their
preparation is applicable law and International Financial Reporting
Standards (IFRSs) as adopted by the European Union and, as regards
the parent company financial statements, as applied in accordance
with the provisions of the Companies Act 2006.
This report is made solely to the company's members, as a body,
in accordance with Chapter 3 of Part 16 of the Companies Act 2006.
Our audit work has been undertaken so that we might state to the
company's members those matters we are required to state to them in
an auditor's report and for no other purpose. To the fullest extent
permitted by law, we do not accept or assume responsibility to
anyone other than the company and the company's members as a body,
for our audit work, for this report, or for the opinions we have
formed.
Respective responsibilities of directors and auditor
As explained more fully in the Directors' Responsibilities
Statement set out on page 13, the directors are responsible for the
preparation of the financial statements and for being satisfied
that they give a true and fair view. Our responsibility is to audit
and express an opinion on the financial statements in accordance
with applicable law and International Standards on Auditing (UK and
Ireland). Those standards require us to comply with the Auditing
Practices Board's Ethical Standards for Auditors.
Scope of the audit of the financial statements
A description of the scope of an audit of financial statements
is provided on the Financial Reporting Council's website at
www.frc.org.uk/auditscopeukprivate.
Basis for qualified opinion on financial statements
In forming our opinion on the financial statements, we have
considered the evidence available in respect of the going concern
basis of preparation of the financial statements which was limited.
The Company and Group are reliant on further investment from third
parties in order continue in operational existence for a period of
at least 12 months from the date of signing these financial
statements. Whilst the directors have attempted to raise additional
finance, this has not been done to date and evidence of receiving
further investment is not available. Had this evidence been
available to us, we might have formed a different opinion on the
nancial statements and the validity of the going concern basis of
preparation. These matters and their possible effects are described
more fully on page 23.
Qualified opinion on financial statements
In our opinion, except for the possible effects of the matter
described in the Basis for quali ed opinion paragraph, the nancial
statements:
-- the financial statements give a true and fair view of the
state of the group's and of the parent company's affairs as at 31
December 2015 and of the group's loss for the year then ended;
-- the group financial statements have been properly prepared in
accordance with IFRSs as adopted by the European Union;
-- the parent company financial statements have been properly
prepared in accordance with IFRSs as adopted by the European Union
and as applied in accordance with the provisions of the Companies
Act 2006; and
-- the financial statements have been prepared in accordance
with the requirements of the Companies Act 2006.
Emphasis of matter - carrying value of intangible assets
In forming our opinion, we have considered the adequacy of
disclosures made in Note 9 to the financial statements, in relation
to the Directors' assessment of the carrying value of the Group's
exploration licenses and deferred exploration costs amounting to
$9.27million. The realisation of the intangible assets is dependent
on the successful development or disposal of precious metal and
other minerals in the Group's licence areas. Such successful
development is dependent on several variables including the
existence of commercial deposits of precious metal and other
minerals, availability of finance and the market price of precious
metal and other minerals.
The financial statements do not include the adjustments that
would result if the exploration and evaluation assets were not
recoverable. In view of the significance of these uncertainties we
consider that they should be drawn to your attention. Our opinion
is not qualified in these respects.
Opinions on other matter prescribed by the Companies Act
2006
In our opinion the information given in the Strategic Report and
Directors' Report for the financial year for which the financial
statements are prepared is consistent with the financial
statements.
Matters on which we are required to report by exception
We have nothing to report in respect of the following matters
where the Companies Act 2006 requires us to report to you if, in
our opinion:
-- adequate accounting records have not been kept by the parent
company, or returns adequate for our audit have not been received
from branches not visited by us; or
-- the parent company financial statements are not in agreement
with the accounting records and returns; or
-- certain disclosures of directors' remuneration specified by law are not made.
Except for the evidence of receiving further investment, as
referred to in the basis of qualified opinion paragraph, we have
received all of the information and explanations we require for our
audit.
Aidan Connuaghton
Senior Statutory Auditor
for and on behalf of Grant Thornton
Statutory Auditor
Chartered Accountants and Registered Auditors
Molyneux House
Bride Street
Dublin 8
Ireland
29 June 2016
Papua Mining plc
Consolidated statement of financial position at 31 December
2015
Note 2015 2014
US$ US$
Assets
Non-current assets
Intangible assets 9 9,270,355 17,021,091
9,270,355 17,021,091
------------- -------------------
Current Assets
Cash and cash equivalents 12 299,183 2,513,874
Other debtors 18,042 -
317,225 2,513,874
------------- -------------------
Total assets 9,587,580 19,534,965
============= ===================
Equity and liabilities
Equity attributable to shareholders of the parent
Share capital 13 8,230,864 8,194,453
Share premium 13 14,444,849 14,117,154
Other reserves 3,087,062 3,087,062
Share based payment reserve 1,368,830 1,351,176
Retained deficit (17,812,954) (7,639,577)
Total equity 9,318,651 19,110,268
------------- -------------------
Current liabilities
Trade and other payables 15 268,929 424,697
------------- -------------------
Total equity and liabilities 9,587,580 19,534,965
============= ===================
The financial statements on pages 15 to 37 were approved and
authorised for issue by the Board of Directors on 29 June 2016 and
signed on its behalf by:
Hugh McCullough
Director
Papua Mining plc
Company statement of financial position at 31 December 2015
Note 2015 2014
US$ US$
Assets
Non-current assets
Intangible assets 9 1,768,631 3,168,136
Investments 10 2,444,110 4,888,219
Trade and other receivables 11 4,852,222 10,507,675
9,064,963 18,564,030
---------------- -------------------
Current Assets
Cash and cash equivalents 12 286,897 2,321,692
Other Debtors 18,042 -
304,939 2,321,692
---------------- -------------------
Total assets 9,369,902 20,885,722
================ ===================
Equity and liabilities
Equity attributable to shareholders
Share capital 13 8,230,864 8,194,453
Share premium 13 14,444,849 14,117,154
Other reserves 2,425,281 2,425,281
Share based payment reserve 1,368,830 1,351,176
Retained deficit (17,372,373) (5,630,559)
Total equity 9,097,451 20,457,505
---------------- -------------------
Current liabilities
Trade and other payables 15 272,451 428,217
---------------- -------------------
Total equity and liabilities 9,369,902 20,885,722
================ ===================
The financial statements on pages 15 to 37 were approved and
authorised for issue by the Board of Directors on 29 June 2016 and
signed on its behalf by:
Hugh McCullough
Director
Papua Mining plc
Consolidated statement of comprehensive income for the year
ended 31 December 2015
Note 2015 2014
US$ US$
Administrative
expenses (10,176,680) (2,811,864)
Operating loss 6 (10,176,680) (2,811,864)
Finance income 5 3,303 18,951
Loss before taxation (10,173,377) (2,792,913)
Income tax expense 7 - -
Loss for the year attributable
to the
owners of the company (10,173,377) (2,792,913)
Other comprehensive income - -
Total comprehensive income
attributable to the owners
of the company (10,173,377) (2,792,013)
============= ============
Loss per share attributable
to shareholders
Basic 8 (0.20) (0.06)
Diluted 8 (0.20) (0.06)
============= ============
The Company has elected to take exemption under section 408 of
the Companies Act 2006 to not present the parent Company statement
of comprehensive income. The loss for the Company is shown in the
statement of changes in equity.
Papua Mining plc
Consolidated statement of changes in equity for the year ended
31 December 2015
Share
Based
Share Share Other Payment Retained Total
Capital Premium Reserve Reserve Deficit Equity
US$ US$ US$ US$ US$ US$
At 1 January
2014 5,489,648 11,458,500 3,087,062 1,073,442 (4,846,664) 16,261,988
Comprehensive
income
Loss for
the year
and total
comprehensive
income - - - - (2,792,913) (2,792,913)
Transactions
with owners
Issue of
share capital 2,704,805 2,658,654 - - - 5,363,459
Share based
payment - - - 277,734 - 277,734
Total transactions
with owners 2,704,805 2,658,654 - 277,734 - 5,641,193
At 31 December
2014 8,194,453 14,117,154 3,087,062 1,351,176 (7,639,577) 19,110,268
------------ ------------ ---------- ---------- ------------- -------------
Comprehensive
income
Loss for
the year
and total
comprehensive
income - - - - (10,173,377) (10,173,377)
Transactions
with owners
Issue of
share capital 36,411 327,695 - - 364,106
Share based
payment - - - 17,654 - 17,654
Total transactions
with owners 36,411 327,695 - 17,654 - 381,760
At 31 December
2015 8,230,864 14,444,849 3,087,062 1,368,830 (17,812,954) 9,318,651
============ ============ ========== ========== ============= =============
Share capital
Represents the par value of shares in issue.
Share premium
Represents amounts subscribed for share capital in excess of
nominal value, net of directly attributable issue costs.
Share based payment reserve
Represents the reserve account which is used for the
corresponding entry to the share based payment charge through
profit and loss (note 14).
Other reserves
Represents the reserve arising from a share for share exchange as part of a group reorganisation
in 2011
Papua Mining plc
Company statement of changes in equity for the year ended 31
December 2015
Share
Based
Share Share Other Payment Retained Total
Capital Premium Reserve Reserve Deficit Equity
US$ US$ US$ US$ US$ US$
Comprehensive
income
At 1 January
2014 5,489,648 11,458,500 2,425,281 1,073,442 (3,338,817) 17,108,054
Comprehensive
income
Loss for the
year and total
comprehensive
income - - - - (2,291,742) (2,291,742)
Transactions
with owners
Issue of share
capital 2,704,805 2,658,654 - - - 5,363,459
Share based
payment - - - 277,734 - 277,734
Total transactions
with owners 2,704,805 2,658,654 - 277,734 - 5,641,193
At 31 December
2014 8,194,453 14,117,154 2,425,281 1,351,176 (5,630,559) 20,457,505
------------ ------------ ---------- ---------- ------------- -------------
Comprehensive
income
Loss for the
year and total
comprehensive
income - - - - (11,741,814) (11,741,814)
Transactions
with owners
Issue of share
capital 36,411 327,695 - - - 364,106
Share based
payment - - - 17,654 - 17,654
Total transactions
with owners 36,411 327,695 - 17,654 - 381,760
At 31 December
2015 8,230,864 14,444,849 2,425,281 1,368,830 (17,372,373) 9,097,451
============ ============ ========== ========== ============= =============
Share capital
Represents the par value of shares in issue.
Share premium
Represents amounts subscribed for share capital in excess of
nominal value, net of directly attributable issue costs.
Share based payment reserve
Represents the reserve account which is used for the
corresponding entry to the share based payment charge through
profit and loss (note 14).
Other reserves
Represents the reserve arising from a share for share exchange
as part of a group reorganisation in 2011.
Papua Mining plc
Consolidated statement of cash flows for the year ended 31
December 2015
2015 2014
US$ US$
Cash flow from operating activities
Total comprehensive expense
for the year before tax (10,173,377) (2,792,913)
Adjustments to reconcile net loss before
income tax to cash flow from operating
activities:
Impairment of intangible assets 9,114,064 746,451
Share based payments 17,654 277,734
Currency adjustments 66,505 380,378
Movement in operating
assets/liabilities
- Other debtors (18,042) -
- Other liabilities (155,768) 174,188
Net cash flow from operating activities (1,148,964) (1,214,162)
----------------------- ---------------------
Cash flow from investing activities
Exploration expenditure (1,363,328) (4,885,679)
Net cash generated from investing activities (1,363,328) (4,885,679)
----------------------- ---------------------
Cash flow from financing activities
Proceeds from issuance of ordinary shares 364,106 5,363,459
Net cash generated from financing activities 364,106 5,363,459
----------------------- ---------------------
Net decrease in cash and cash equivalents (2,148,186) (736,382)
Cash and cash equivalents at the beginning of year 2,513,874 3,626,880
Effect of foreign exchange rates changes (66,505) (376,624)
----------------------- ---------------------
Cash and cash equivalents at the end of the year 299,183 2,513,874
======================= =====================
Papua Mining plc
Company statement of cash flows for the year ended 31 December
2015
2015 2014
US$ US$
Cash flow from operating activities
Total comprehensive expense for the year before tax (11,741,814) (2,291,742)
Adjustments to reconcile net loss before
income tax to cash flow from operating
activities:
Impairment of investments 2,444,109 -
Impairment of intangible assets 1,768,631 746,451
Share based payments 17,654 277,734
Currency adjustments 66,505 354,941
Net increase in operating assets
- Other receivables 5,637,412 (4,208,450)
Net (decrease)/ increase in operating liabilities
- Other liabilities (155,767) 174,188
Net cash flow from operating activities (1,963,270) (4,946,878)
------------- ------------
Cash flow from investing activities
Exploration expenditure (369,126) (1,242,259)
Net cash used in investing activities (369,126) (1,242,259)
------------- ------------
Cash flow from financing activities
Proceeds from issuance of ordinary shares 364,106 5,363,459
Net cash generated from financing activities 364,106 5,363,459
------------- ------------
Net decrease in cash and cash equivalents (1,968,290) (825,678)
Cash and cash equivalents at the beginning of year 2,321,692 3,498,557
Effect of foreign exchange rates changes (66,505) (351,187)
------------
Cash and cash equivalents at the end of the year 286,897 2,321,692
------------- ------------
Notes to the financial statements
1 Group and principal activities
For the purposes of these financial statements, the term "PM plc
Group" is defined as the companies Papua Mining plc (the
"Company"), Papua Mining Limited, Aries Mining Limited and
Sagittarius Mining Limited.
Papua Mining plc is a public limited company, quoted on AIM, and
is incorporated and domiciled in England and Wales.
The PM plc Group's main activity is the exploration for gold and
copper resources in Papua New Guinea, as set out in the Strategic
Report and the Directors' Report.
2 Adoption of new and revised standards
The statements, standards and interpretations, effective for
reporting periods beginning on or before 1 January 2014 have been
applied, being those standards that will be applied to PM plc
Group's financial statements for the year ending 31 December
2015.
Standards affecting presentation and disclosure
The following standards and interpretations became effective for
the 2015 financial statements but these were either not relevant to
or did not have a material impact on the Group's financial
statements:
- IAS 19 (amendment) - Defined benefit plans: Employee Contributions;
- Annual improvements to IFRSs 2010 - 2012 Cycle - various standards;
- Annual improvements to IFRSs 2011 - 2013 Cycle - various standards.
The Group has not applied the following standards and
interpretations which have been issued and become effective for
accounting periods beginning after the commencement of the Group's
next financial year but either have no impact or are not expected
to have a material impact on the Group's financial statements:
- IFRS 9 - Financial Instruments;
- IFRS 10, IFRS 12, IAS 28 (amendment) - Investment Entities:
Applying the Consolidation Exception;
- IFRS 10, IAS 28 (amendment) - Sale or Contribution of Assets
between an Investor and its Associate or Joint Venture;
- IFRS 11 (amendment) - Accounting for Acquisitions of Interests in Joint Operations;
- IFRS 14 - Regulatory Deferral Accounts;
- IFRS 15 - Revenue from contracts with customers;
- IAS 1 (amendment) - Disclosure Initiative;
- IAS 16 / 38 (amendment) - Property, Plant and Equipment /
Intangible Assets; Clarification of acceptable methods of
depreciation and amortisation;
- IAS 16 / 41 (amendment) - Agriculture: Bearer Plants;
- IAS 27 (amendment) - Equity Method in Separate Financial Statements;
The standards and interpretations addressed above will be
applied for the purposes of the Group financial statements with
effect from the date they become effective.
3 Basis of preparation and significant accounting policies
a) Basis of preparation
These consolidated financial statements have been prepared in
accordance with applicable International Financial Reporting
Standards (IFRSs), International Accounting Standards (IASs) and
International Financial Reporting Interpretations Committee (IFRIC)
interpretations (collectively IFRSs) as adopted for use in the
European Union.
The financial statements are prepared on the historical cost
basis. The principal accounting policies adopted are set out
below.
The preparation of financial statements in conformity with IFRS
requires the use of certain critical accounting estimates. It also
requires management to exercise its judgement in the process of
applying the Group's accounting policies
b) Basis of consolidation
The consolidated financial statements incorporate the financial
statements of the Company and subsidiaries controlled by the
Company as at 31 December 2015.
Subsidiaries are entities controlled by the Company. Control
exists when the Company has the power to govern the financial and
operating policies of an entity so as to obtain benefits from its
activities. In assessing control, potential voting rights that
presently are exercisable are taken into account. The financial
statements of subsidiaries are included in the consolidated
financial statements from the date that control commences until the
date that control ceases.
The acquisition method of accounting is used to account for the
acquisition of subsidiaries by the Group. The cost of an
acquisition is measured as the fair value of the assets given,
equity instruments issued, contingent consideration and liabilities
incurred or assumed at the date of exchange. Costs directly
attributable to the acquisition are expensed as incurred.
Identifiable assets acquired and liabilities and contingent
liabilities assumed in a business combination are initially
measured at fair value at the acquisition date.
When necessary, adjustments are made to the financial statements
of subsidiaries to bring the accounting policies used in line with
those of the Group.
All intra-group transactions, balances, income and expenses are
eliminated on consolidation.
c) Going concern
The group will seek to raise capital through the issuance of
equity to continue their exploration activities in the short term
and for general working capital purposes. The Directors have
prepared a cash flow forecast up to 30 June 2017 which supports the
Directors' reasonable expectation that Papua Mining plc has
adequate resources to continue in operational existence throughout
this period. This cash flow forecast assumes that the exploration
programmes will only continue with additional equity funding
secured by the Group. The financial statements have been prepared
assuming the Group will continue as a going concern. Under the
going concern assumption, an entity is ordinarily viewed as
continuing in business for the foreseeable future with neither the
intention nor the necessity of liquidation, ceasing trading or
seeking protection from creditors pursuant to laws or regulations.
In assessing whether the going concern assumption is appropriate,
management has considered the group's existing working capital
position and the necessity to seek future fund raising. Management
are of the opinion that subject to an additional fund raising the
group has adequate resources to continue as a going concern. If
alternative funding is not available then the group would be
unlikely to be able to continue as a going concern. These
circumstances indicate the existence of a material uncertainty
which may cast significant doubt about the group's ability to
continue as a going concern and, therefore, that it may be unable
to realise its assets and discharge its liabilities in the normal
course of business.
d) Intangible assets - exploration and evaluation costs
Exploration and evaluation expenditure costs comprise costs
associated with the acquisition of mineral rights and mineral
exploration and are capitalised as intangible assets pending the
feasibility of the project. They also include certain
administrative costs that are allocated to the extent that those
costs can be related directly to operational activities.
If an exploration project is deemed successful based on
feasibility studies, the related expenditures are transferred to
development and production assets and amortised over the estimated
useful life of the ore reserves on a unit of production basis.
Where a project is abandoned or considered to be no longer
economically viable, the related costs are written off to profit or
loss.
To date the PM plc Group has not progressed to the development
and production stage in any areas of operation.
e) Impairment of non financial assets
The PM plc Group assesses at each reporting date whether there
is an indication that an asset may be impaired. If any such
indication exists, or when annual impairment testing for an asset
is required, the PM plc Group estimates the asset's recoverable
amount. An asset's recoverable amount is the higher of an asset's
or cash-generating unit's fair value less costs to sell and its
value in use and is determined for an individual asset, unless the
asset does not generate cash inflows that are largely independent
of those from other assets or groups of assets. Where the carrying
amount of an asset exceeds its recoverable amount, the asset is
considered impaired and is written down to its recoverable amount.
In assessing value in use, the estimated future cash flows are
discounted to their present value using a pre-tax discount rate
that reflects current market assessments of the time value of money
and the risks specific to the asset. In determining fair value less
costs to sell, an appropriate valuation model is used.
Impairment losses of continuing operations are recognised in
profit or loss in those expense categories consistent with the
function of the impaired asset. For assets, an assessment is made
at each reporting date as to whether there is any indication that
previously recognised impairment losses may no longer exist or may
have decreased. If such indication exists, the PM plc Group makes
an estimate of recoverable amount. A previously recognised
impairment loss is reversed only if there has been a change in the
estimates used to determine the asset's recoverable amount since
the last impairment loss was recognised. If that is the case the
carrying amount of the asset is increased to its recoverable
amount. That increased amount cannot exceed the carrying amount
that would have been determined, net of depreciation, had no
impairment loss been recognised for the asset in prior years.
f) Financial instruments
Financial assets
The PM plc Group classifies its financial assets into one of the
categories discussed below, depending on the purpose for which the
asset was acquired.
Other receivables: These are non-derivative financial assets
with fixed or determinable payments that are not quoted in an
active market. They arise principally through the provision of
goods and services but also incorporate other types of contractual
monetary assets. They are initially recognised at fair value plus
transaction costs that are directly attributable to their
acquisition or issue, and are subsequently carried at amortised
cost using the effective interest rate method, less provision for
impairment.
Cash and cash equivalents: These include cash in hand, deposits
held at call with banks and bank overdrafts.
Investments in subsidiaries: These are included in these
financial statements at the cost of the ordinary share capital
acquired. Adjustments to this value are only made when, in the
opinion of the Directors, a permanent diminution in value has taken
place and where there is no prospect of an improvement in the
foreseeable future.
Financial liabilities
The PM plc Group classifies its financial liabilities as:
Trade and other payables: These are initially recognised at
fair-value and then carried at amortised cost. They arise
principally from the receipt of goods and services.
Equity instruments: These are recorded at fair value on initial
recognition net of transaction costs.
g) Provisions
A provision is recognised in the balance sheet when the PM plc
Group has a present legal or constructive obligation as a result of
a past event, and it is probable that an outflow of economic
benefits will be required to settle the obligation. If the effect
is material, provisions are determined by discounting the expected
future cash flows at a pre-tax rate that reflects the current
market assessment of the time value of money and, where
appropriate, the risks specific to the liability.
h) Current and deferred tax
The tax expense represents the sum of the current tax expense
and deferred tax expense.
Tax payable is based on taxable profit for the year. Taxable
profit differs from accounting profit as reported in the Statement
of Comprehensive Income because it excludes items of income or
expense that are taxable or deductible in other years and further
excludes items that are never taxable or deductible. The Group's
liability for current tax is measured using tax rates that have
been enacted or substantively enacted by the reporting date.
Deferred tax is the tax expected to be payable or recoverable on
differences between the carrying amounts of assets and liabilities
in the financial statements and the corresponding tax bases used in
the computation of taxable profit, and is accounted for using the
balance sheet liability method. Deferred tax liabilities are
generally recognised for all taxable temporary differences and
deferred tax assets are recognised to the extent that it is
probable that future taxable profits will be available, against
which deductible temporary differences can be utilised. Such assets
and liabilities are not recognised if the temporary difference
arises from goodwill or if from the initial liabilities in a
transaction that affect either the taxable profit or the accounting
profit.
The carrying amount of deferred tax assets is reviewed at each
reporting date and reduced to the extent that it is no longer
probable that sufficient future taxable profits will be available
to allow all or part of the asset to be recovered.
Deferred tax is calculated at the rates that are expected to
apply in the period when the liability is settled or the asset is
realised. Deferred tax is charged or credited in profit and loss,
except when it relates to items charged or credited directly to
equity, in which case the deferred tax is also dealt with in
equity.
I) Pensions
Pension costs charged in the financial statements represent the
contributions payable by the group during the year into defined
contribution pension schemes.
j) Foreign currency
Functional and presentation currency
The consolidated financial statements are presented in US
Dollars which is also the functional currency of the parent
company.
Foreign currency transactions and balances
Foreign currency transactions are translated into the functional
currency of the respective PM plc Group entity, using the exchange
rate prevailing on the date of the transaction. Foreign exchange
gains and losses resulting from the settlement of such transactions
and from the re-measurement of monetary items denominated in
foreign currency at year-end exchange rates are recognised in
profit or loss. Non-monetary items are not retranslated at year-end
and are measured at historical cost (translated using the exchange
rates at the transaction date), except for non-monetary items
measured at fair value which are translated using the exchange
rates at the date when fair value was determined.
Foreign operations
In the PM plc Group's financial statements, all assets,
liabilities and transactions of PM plc Group entities with a
functional currency other than the US Dollar are translated into US
Dollar upon consolidation. The functional currency of the entities
in the PM plc Group has remained unchanged during the reporting
period. On consolidation, assets and liabilities have been
translated into US Dollars at the closing rate at the reporting
date. Income and expenses have been translated into US Dollars at
the average rate over the reporting period. Exchange differences
are charged/credited to other comprehensive income and recognised
in the currency translation reserve in equity. On disposal of a
foreign operation, the related cumulative translation differences
recognised in equity are reclassified to profit or loss and are
recognised as part of the gain or loss on disposal.
The principal exchange rates used to the US Dollar in the
preparation of the 2014 financial statements are:
Annual average Year end
----------------------- -----------------
2015 2014 2015 2014
----------- ---------- -------- -------
Sterling 1.5254 1.6462 1.4763 1.5586
----------- ---------- -------- -------
PNG Kina 0.3596 0.3870 0.3326 0.3855
----------- ---------- -------- -------
Australian Dollar 0.7544 0.8985 0.8181 0.8181
----------- ---------- -------- -------
Euro 1.1031 1.3208 1.0866 1.2110
----------- ---------- -------- -------
k) Segmental Reporting
Operating segments are reported in a manner consistent with the
internal reporting provided to the Chief Executive & Technical
Director. They are the Directors of the PM plc Group that allocate
resources to and assess the performance of the segments. The
Directors consider there to be only one operating segment, being
the exploration licences in Papua New Guinea.
l) Investments (parent company)
Investments held as non-current assets comprise investments in
subsidiary undertakings and are stated at cost less any provision
for any impairment.
m) Equity and reserves
Equity and reserves comprises the following:
- "Share capital" is the nominal value of equity shares.
- "Share premium" represents amounts subscribed for share
capital in excess of nominal value, net of directly attributable
issue costs
- "Share based payment reserve" represents a reserve arising on
the grant of share options to certain Directors and key
employees.
- "Other reserve" represents a reserve arising from a group reorganisation in 2011.
- "Retained deficit" comprises cumulative profit and loss to date.
n) Share based payments
The Group issues equity-settled share-based payments to certain
directors and key employees. Equity-settled share-based payments
are measured at fair value at the date of grant by reference to the
fair value of the equity instruments granted. The fair value
determined at the grant date of equity-settled share-based payments
is expensed on a straight-line basis over the vesting period, based
on the Group's estimate of the number of instruments that will
eventually vest with a corresponding adjustment to equity. Fair
value is measured by use of a Black Scholes model. The expected
life used in the model has been adjusted, based on management's
best estimate, for the effect of non-transferability, exercise
restrictions, and behavoural considerations.
Non-vesting and market vesting conditions are taken into account
when estimating the fair value of the option at grant date. Service
and non-market vesting conditions are taken into account by
adjusting the number of options expected to vest at each reporting
date.
o) Critical accounting estimates and judgements
The PM plc Group makes estimates and assumptions concerning the
future. The resulting estimates will by definition, seldom equal
the actual results. 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. Certain amounts included in the
financial statements involve the use of judgement and/or
estimation. These judgements and estimates are based on
management's best knowledge of the relevant facts and
circumstances, but actual results may differ from the amounts
included in the financial statements. The Board has considered the
critical accounting estimates and assumptions used in the
historical financial information and concluded that the area of
judgement that has the most significant effect on the amounts
recognised in the financial statements concern.
Recoverability of deferred exploration costs
All costs associated with gold and copper exploration are
capitalised on a project basis, pending a decision on the economic
feasibility of the project. This capitalisation of such costs gives
rise to an intangible asset in the consolidated statement of
financial position. Exploration costs are capitalised where it is
considered likely that the amount will be recovered by future
exploitation, sale or alternatively where the activities have not
reached a stage which permits a reasonable assessment of the
existence of reserves. This requires management to make estimates
and assumptions as to the future events and circumstances,
especially in relation to whether an economically viable extraction
operation can be established. Such estimates are subject to change
and following initial capitalisation, should it become apparent
that recovery of the expenditure is unlikely, the relevant
capitalised amount will be impaired and written off to the
consolidated statement of comprehensive income on disposal of the
net investment.
Functional currency of the parent company
Management has concluded that the US dollar is the currency of
the primary economic environment in which the group operates and
therefore it's functional currency. The US dollar is the currency
in which business risks and exposures are measured and the
Company's assets and liabilities are largely denominated and
settled in US dollars.
p) Exceptional items
The PM plc Group has adopted an accounting policy and income
statement format that seeks to highlight significant items of
income and expense within PM plc Group results for the year. The
Directors believe that this presentation provides a more helpful
analysis as it highlights one-off items. Such items may include
significant restructuring costs, profits or losses on disposal or
termination of operations, litigation costs and settlements, profit
or loss on disposal of investments, significant impairment of
assets and unforeseen gains/losses arising on derivative
instruments. The Directors use their judgement in assessing the
particular items, which by virtue of their scale and nature are
disclosed in the income statement and related notes as exceptional
items.
4 Segmental reporting
During the year under review Management identified the PM plc
Group's only operating segment as the exploration of gold and
copper resources in Papua New Guinea. This one segment is monitored
and strategic decisions are made based upon it and other
non-financial data collated from the on-going exploration
activities. All of PM plc Group's exploration assets are based in
Papua New Guinea. The formats of financial reports that are
reported to the Chief Operating Decision Makers are consistent with
those presented in the annual financial statements.
5 Finance income 2015 2014
US$ US$
Bank interest received 3,303 18,951
6 Operating loss 2015 2014
US$ US$
Operating loss is stated
after charging:
Fees payable to the
PM plc Group's auditor
for the audit of PM
plc Group's financial
statements 38,000 46,255
Fees payable to the
PM plc Group's auditor
for taxation services 3,260 5,905
Share based payment
expense 17,654 277,734
Foreign exchange losses 66,505 380,378
Impairment of intangible
assets 9,114,063 746,451
7 Taxation
Group 2015 2014
US$ US$
Domestic current year
tax
U.K. corporation tax
- current year - -
Deferred tax
Origination and reversal
of temporary differences - -
Income tax expense - -
============= ============
Factors affecting tax
charge for the year
Loss on ordinary activities
before taxation (10,173,377) (2,792,913)
============= ============
Loss on ordinary activities
at the UK standard rate of
20.00% (2014: 21.49%) (2,034,675) (600,197)
============= ============
Effects of:
Carried forward losses
(UK) 121,840 104,641
Non-deductible expenses 1,912,835 511,674
Other tax adjustments - (16,118)
Current tax charge - -
============= ============
The Group has UK tax losses of approximately $3,061,769 (2014:
$2,452,569) available to carry forward against future trading
profits, subject to agreement by HMRC. No provision has been made
for a potential deferred tax asset of approximately $612,354 (2014:
$490,514 ) arising from UK tax losses. The Group has not recognised
a deferred tax asset on any losses carried forward due to the
uncertainty of future profits.
8 Loss per share
Group 2015 2014
US$ US$
Loss for the purpose
of basic
and diluted earnings
per share (10,173,377) (2,792,913)
============= ============
Numbers
Weighted average number
of ordinary shares for
the purpose of basic
and diluted earnings
per share 52,146,466 43,340,059
============= ============
US$ US$
Loss per share - basic (0.20) (0.06)
Loss per share - diluted (0.20) (0.06)
============= ============
Loss per share has been calculated by dividing loss for the year
by the weighted average number of ordinary shares in issue during
the year.
Diluted loss per share has been calculated by dividing the loss
for the year by the weighted average number of ordinary shares in
issue during the year adjusted to assume conversion of all dilutive
potential options/warrants. In accordance with the provisions of
IAS33, shares under option were not regarded as dilutive in
calculating diluted earnings per share.
9 Intangible assets
Group 2015 2014
US$ US$
Exploration costs
Cost
At beginning of year 17,767,542 12,881,863
Additions 1,363,328 4,885,679
At the end of year 19,130,870 17,767,542
============ ===========
Impairment
At beginning of year (746,451) -
Impairment charge (9,114,064) (746,451)
At the end of year (9,860,515) (746,451)
============ ===========
Net book value 9,270,355 17,021,091
============ ===========
9 Intangible assets (Continued)
Company 2015 2014
US$ US$
Exploration costs
Cost
At beginning of year 3,914,587 2,672,328
Additions 369,126 1,242,259
At the end of year 4,283,713 3,914,587
========== ==========
Impairment
At beginning of year (746,451) -
Impairment charge (1,768,631) (746,451)
At the end of year (2,515,082) (746,451)
============ ==========
Net book value 1,768,631 3,168,136
============ ==========
The Directors have reviewed all exploration costs for
indications of impairment. They have impaired exploration costs
where the exploration project is no longer considered economically
viable or where the carrying amount exceeds the recoverable amount.
An assets recoverable amount is the higher of the assets fair value
less costs to sell and its value in use. The impairment charge of
$9,114,063(2014:$746,451) in respect of the Group intangible assets
and $1,768,631 (2014:$746,451) in respect of the Company intangible
assets, is included within administration expenses in the
Consolidated Statement of Comprehensive Income.
In assessing the impairment charge, The Directors have
considered economic factors and the mining industry as a whole and
the effect of declining metal prices. Resource projects, some with
proven reserves, are available for purchase now at lower prices
than such projects would have received in a number of years ago.
The Directors have also considered recent transactions within the
industry where the acquisition price of similar companies has
declined over the last number of years.
10 Investments
Company 2015 2014
US$ US$
Investment in Papua
Mining Limited 2,444,110 4,888,219
========== ==========
An impairment charge of $2,444,109 (2014: $Nil) was recognized
by the Company in respect of the carrying value of investments
during the year.
The Group's principal subsidiary undertakings at 31 December
2015, all of which are included in the consolidation, were as
follows:
Proportion Class Nature
of of Country of
Name of Company held shareholding business incorporation
Subsidiary
undertakings
Papua Mining 100% Ordinary Exploration British Virgin
Limited Islands
Aries Mining 100% Ordinary Exploration Papua New Guinea
Limited
Sagittarius 100% Ordinary Exploration Papua New Guinea
Mining Limited
11 Trade and other receivables
Company 2015 2014
US$ US$
Amounts owed by Group
undertakings (non-current) 4,852,222 10,507,675
========== ===========
There are no fixed terms of repayment of amounts owed by Group
undertakings, which are technically repayable on demand. As it is
not intended for the amounts due to be repaid within one year these
receivables have been classified in the financial statements as
non-current assets. An impairment charge of $6,852,222 (2014:$Nil)
in respect of the amounts owed by group undertakings, is included
within administration expenses in the Company Statement of
Comprehensive Income. The Directors consider the carrying value of
trade and other receivables to equal their fair value.
12 Cash and cash equivalents
Group 2015 2014
US$ US$
Cash at bank 299,183 2,513,874
======== ==========
Company 2015 2014
US$ US$
Cash at bank 286,897 2,321,692
======== ==========
Cash and cash equivalents comprise cash.
The directors consider the carrying value of cash and cash
equivalents to equal fair value.
13 Share capital
Group and Company 2015 2014
Number Number
Issued share capital
Ordinary shares of GBP0.10
($0.16) each - 51,215,534
Ordinary shares of GBP0.001
($0.0016) each 82,105,534 -
Deferred shares of GBP0.099
($0.1584) each 51,215,534
2015 2014
US$ US$
Issued share capital
Fully paid 8,230,864 8,194,453
============ ===========
Fully paid ordinary shares carry one vote per share and carry
the right to dividends. There are no shares held by the entity or
its subsidiaries or associates.
26,200,000 ordinary shares of GBP0.001 ($0.0012) each were
issued at a price of GBP0.01 ($0.012) per share on 21 December 2015
and 2,590,000 ordinary shares of GBP0.001 ($0.012) each were issued
at a price of GBP0.01 ($0.012) per share on 21 December 2015. In
addition, 2,100,000 ordinary shares of GBP0.001 were issued to a
trade creditor in settlement of an invoice for GBP21,000.
On 21 December 2015 the Ordinary Share capital of GBP0.10p was
divided in Ordinary Share capital of GBP0.001 and Deferred Share
capital of GBP0.099p. The Deferred Share capital has no income or
voting rights and will be entitled to receive the amount paid up on
a winding-up once the ordinary share capital has received
GBP1,000,000 per ordinary share held.
On 21 December 2015 warrants were issued over 3,000,000 ordinary
shares of GBP0.001, exercisable over five years at a price of
GBP0.01 per share.
Share premium
The share premium account represents amounts subscribed for
share capital in excess of nominal value, net of directly
attributable issue costs.
Capital management
The Group's objectives when managing capital is to maintain its
ability to continue as a going concern in order to provide returns
for shareholders and benefits for other stakeholders and to ensure
sufficient resources are available to meet date to day operating
requirements. The Group defines capital as 'equity' and 'cash' as
shown in the consolidated statement of financial position. As at 31
December 2015 the Group held equity and cash balances of $9,318,651
and $299,183 (2014: $19,110,268 and $2,513,874) respectively.
The Board of Directors takes full responsibility for managing
the Group's capital and does so through board meetings, review of
financial information, and regular communication with officers and
senior management.
In order to maximise ongoing development efforts, the Company
does not pay dividends. The Group's investment policy is to invest
its cash in deposits with high credit worthy financial institutions
with short term maturity. The Group expects its current capital
resources will be sufficient to carry out its operating plans over
the foreseeable future.
14 Share based payments
Details of share options granted are as follows:
2015 2014
Weighted Weighted
average average
exercise exercise
Number price Number price
of options ($) of options ($)
Outstanding at
1 January 2015 2,860,724 2,840,724
Granted during
the year 6,620,421 20,000
Surrendered during (2,860,724) -
the year
------------ ---------- ------------- ----------
Outstanding at
31 December 2015 6,620,421 0.02 2,860,724 0.75
============ ========== ============= ==========
Exercisable at
31 December 2015 2,206,807 0.02 2,860,724 0.75
============ ========== ============= ==========
No shares options were exercised in this or the prior
period.
On 21 December 2015 share options were granted over 6,620,421
ordinary shares to certain employees. These share options are
exercisable at GBP0.02125 ($0.023) and the vesting periods are,
2,206,807 immediately on raising future fundraising, one year
(2,206,807 shares) and two years (2,206,807) from the grant date.
The options lapse on the tenth anniversary of the grant date.
On 26 September 2014 share options were granted over 20,000
ordinary shares to certain employees. These share options are
exercisable at GBP0.27 ($0.43) and the vesting periods are one year
(10,000 shares) and two years (10,000) from the grant date. The
options lapse on the fifth anniversary of the grant date.
On 16 May 2013 share options were granted over 120,000 ordinary
shares to certain employees. These share options are exercisable at
GBP0.77 ($1.25) and the vesting periods are one year (60,000
shares) and two years (60,000) from the grant date. The options
lapse on the fifth anniversary of the grant date.
On 18 September 2012 share options were granted over 80,000
ordinary shares to certain employees. These share options are
exercisable at GBP0.54 ($0.88) and the vesting periods are one year
(40,000 shares) and two years (40,000 shares) from the grant date.
The options lapse on the fifth anniversary of the grant date.
On 2 March 2012 share options were granted over 2,640,724
ordinary shares to certain Directors and key employees. These share
options are exercisable at GBP0.44 ($0.72) and the vesting periods
are one year (846,908 shares), two years (896,908) and three years
(896,908) from the grant date. The options lapse on the tenth
anniversary of the grant date.
The inputs into the Black
Scholes model are as follows: 2015 2014 2013
Share price 1.88p 27.25p 51.5-76.5p
Exercise price 2.12p 26.5p 51.5-76.5p
Expected volatility 32% 50-71% 78-119%
1-2years 1-2 years 1-2
Expected life years
Discount rate 1.87% 1.5% 1.5%
Expected volatility was determined by reference to the
historical volatility of the share price of the Company. The
expected life used in the model has been adjusted, based on
management's best estimate, for the effects of non-transferability,
exercise restrictions, and behavioural considerations.
The Group recognised total expenses of $17,654 (2014: $277,734)
relating to equity-settled share based payment transactions in the
year.
15 Trade and other payables
Group 2015 2014
US$ US$
Trade payables 77,254 207,760
Other payables 168,858 106,768
Accruals 22,817 110,169
268,929 424,697
======== ========
Company 2015 2014
US$ US$
Trade payables 77,254 207,760
Other payables 172,378 110,288
Accruals 22,819 110,169
-------- --------
272,451 428,217
======== ========
The Directors consider the carrying value of trade and other
payables to equal their fair value.
16 Financial instruments
In common with other businesses, the PM plc Group is exposed to
risks that arise from its use of financial instruments. This note
describes the PM plc Group's objectives, policies and processes for
managing those risks and the methods used to measure them. Further
quantitative information in respect of these risks is presented
throughout these financial statements.
The significant accounting policies regarding financial
instruments are disclosed in note 3.
The PM plc Group does not have any derivative products or any
long term borrowings. The PM plc Group is not exposed to
interest-bearing indebtedness. The exploration activities of the PM
plc Group were financed by proceeds of issue of shares.
Principal financial instruments
The principal financial instruments used by the PM plc Group,
from which financial instrument risk arises, are as follows:
2015 2014
US$ US$
Financial Assets
Cash and cash equivalents 299,183 2,513,874
======== ==========
Financial Liabilities
Trade payables 77,254 207,760
Other payables 168,858 106,768
-------- ----------
246,112 314,528
======== ==========
The Directors consider that the fair value of the above
financial instruments is equal to the carrying values.
General objectives, policies and processes
The Directors have overall responsibility for the determination
of the PM plc Group's risk management objectives and policies and,
while retaining ultimate responsibility for them, has delegated
authority for designing and operating processes that ensure the
effective implementation of the objectives and policies to the PM
plc Group's finance function. The Board receives regular reports
through which it reviews the effectiveness of the processes put in
place and the appropriateness of the objectives and policies it
sets.
The overall objective of the Directors is to set policies that
seek to reduce risk as far as possible without unduly affecting the
PM plc Group's competitiveness and flexibility. The Directors
consider that the risk components detailed below apply to the PM
plc Group and is managed at Group level.
Credit risk
Credit risk refers to the risk that the PM plc Group's financial
assets will be impaired by the default of a third party. The PM plc
Group is exposed to this risk primarily on its cash and cash
equivalents as set out in note 12.
Credit risk is managed by ensuring that surplus funds are
deposited only with well-established financial institutions of high
quality credit standing.
Foreign currency risk
Foreign currency risk refers to the risk that the value of a
financial commitment, recognised asset or liability will fluctuate
due to changes in foreign currency rates.
The PM plc Group operates primarily in Papua New Guinea.
Transactions are substantially denominated in PNG Kina, Australian
$, Sterling and US Dollars (its reporting currency). As such the PM
plc Group is exposed to transaction foreign exchange risk. The mix
of currencies and terms of trade with its suppliers are such that
the Directors believe that the PM plc Group's exposure is minimal
and consequently they have not, to date, specifically sought to
hedge that exposure. Most of the PM plc Group's funds are in
Sterling with only sufficient funds held overseas to meet local
costs. Funds are periodically transferred overseas to meet local
costs when required.
Commodity price risk
Commodity price risk is the risk that the PM plc Group's future
earnings will be adversely impacted by changes in the market prices
of commodities. The PM plc Group is exposed to commodity price risk
as its future revenues may be determined by reference to market
prices of copper and gold.
Liquidity risk
Liquidity risk relates to the ability of the PM plc Group to
meet future obligations and financial liabilities. To date the PM
plc Group has relied upon shareholder funding of its activities.
Future exploration and development activities may be dependent upon
the PM plc Group's ability to obtain further financing through
equity financing or other means. Although the PM plc Group has been
successful in the past in obtaining equity finance there can be no
assurance that the PM plc Group will be able to obtain adequate
financing in the future or that the terms of the financing will be
favorable.
The financial statements have been prepared on a going concern
basis and note 3(c) provides further information in this
regard.
Sensitivity analysis
Foreign currency sensitivity analysis
Currency risks are defined by IFRS 7 as the risk that the fair
value or future cash flows of a financial asset or liability will
fluctuate because of changes in foreign exchange rates.
The following table details the transactional impact of changes
in foreign exchange rates on financial assets and liabilities at
the Balance Sheet date, illustrating the (decrease)/increase in PM
plc Group operating result caused by a 10% strengthening of
Sterling, PNG Kina and the Euro compared to the year end spot rate.
The analysis assumes that all other variables, in particular other
foreign currency exchange rates, remain constant. The PM plc Group
operates in four different currencies, and those with a material
impact are noted here:
Year Year
ended ended
31 December 31 December
2015 2014
US$ US$
Sterling (35,740) (153,159)
PNG Kina (1,239) (19,218)
Euro - -
Australian Dollar (147) (86,442)
============= =============
17 Capital commitments
The PM plc Group's capital commitments relate to licence
expenditure and related exploration activities, the cost of which
will be met from future fundraising.
The PM plc Group currently holds six Exploration Licenses and
three further licenses are currently under application. If all of
the licence applications are granted, the Group's licences will
have total expenditure commitments of approximately US$0 million
over the coming 12 month period.
18 Staff costs
Number of employees
The average monthly number of employees (excluding Directors) of
the Group during the year was:
2015 2014
Administration 3 5
Technical 7 58
10 63
===== =====
Employment costs (including directors)
2015 2014
US$ US$
Wages and salaries 359,257 860,063
Social security
costs 15,725 36,222
Pension costs 43,716 60,181
Employee share based
payment charge 17,654 277,734
436,352 1,234,200
======== ==========
19 Directors emoluments
Aggregate emoluments, including benefits in kind, by director
are as follows:
Social
2015 Directors' Pension Sub Medical security
Directors fees Salary contributions total insurance costs Total
US$ US$ US$ US$ US$ US$ US$
H McCullough - 116,667 15,308 131,975 - 12,541 144,516
K Harrington - 187,500 15,308 202,808 - 16,125 218,933
M Jolliffe - 41,292 - 41,292 - - 41,292
G Palm - 30,969 - 30,969 - 3,716 34,685
K Lough - 30,969 30,969 - 3,716 34,685
------------ --------- --------------- -------- -----------
- 407,397 30,616 438,013 - 36,098 474,111
=========================== ========= =============== ======== =========== ========== ========
Social
2014 Directors' Pension Sub Medical security
Directors fees Salary contributions total insurance costs Total
US$ US$ US$ US$ US$ US$ US$
H McCullough - 200,000 25,576 225,576 12,957 21,500 260,033
K Harrington - 250,000 25,576 275,576 7,897 21,500 304,973
M Jolliffe 7,402 67,029 - 67,029 - - 74,431
G Palm - 56,304 - 56,304 - 5,657 61,961
K Lough - 56,304 - 56,304 - 5,657 61,961
----------- --------- --------------- -------- -----------
7,402 629,637 51,152 680,789 20,854 54,314 763,359
=========== ========= =============== ======== =========== ========== =========
Share options are held by the directors as follows:
2015 2014
Number Number
of options of options
Michael Jolliffe 626,763 250,000
Hugh McCullough 1,997,886 796,908
Kieran Harrington 1,997,886 796,908
============ ============
The key management personnel of the Group are considered to be
entirely represented by the Directors.
No Director has yet benefitted from any increase in value of
share capital since issuance of the options.
No Director exercised share options in the year.
20 Related party transactions
As well as remuneration of Directors (note 19), the following
transactions fall within the scope of IAS 24 Related Party
Disclosures.
(1) The Company was charged fees of $3,667 (2014: $3,713) during
the year by AA Corporate Management in respect of accounting and
company secretarial services. AA Corporate Management is controlled
by Antoine Awad, a director of Papua Mining Limited.
(2) Wighams Capital Partners Limited, a company connected to the
director Michael Jolliffe, charged fees of $0 (2014: $7,402) to the
company during the year. These fees are included within the
remuneration stated in note 19.
At 31 December 2015 there were $Nil (2014: $Nil) amounts payable
to the above related parties.
21 Post Balance Sheet Events
On May 16, 2016, the Company issued 2,000,000 ordinary shares of
GBP0.001 at a price of GBP0.03 per share. A further 666,667
ordinary shares of GBP0.001 were issued on the same day to a trade
creditor in settlement of an invoice for GBP20,000.
22 Control
The company is quoted on AIM and there is no individual
controlling party. The Directors' Report provides details of those
shareholders with an individual holding exceeding 3% of issued
share capital.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR EADKNASNKEFF
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