Final results for the year ended 30 June 2016

RNS Number : 1443R
Ironveld PLC
07 December 2016
 

 

 

 

 

 

7 December 2016                                                                                                        

 

IRONVELD PLC

("Ironveld" or the "Company")

 

Final results for the year ended 30 June 2016

 

Ironveld plc, the owner of a High Purity Iron ("HPI"), Vanadium and Titanium project located on the Northern Limb of the Bushveld Complex in Limpopo Province, South Africa (the "Project") is pleased to announce its final results for the 12 months ended 30 June 2016 ("the Period"). The Period saw a number of important milestones achieved as the Company moves towards delivering the Project.

 

Operational Highlights

·     Offtake secured for 100 per cent of all three products for the first 5 years of LOM

·     Approval of Section 11 transfer transferring the Mineral Right to HW Iron (Pty) Ltd

·     Key mining right executed to mine magnetite on the Harriets Wish 393LR, Cracouw 391LR and Aurora 397LR Farms

·     Approval granted for the Environmental Management Program ("EMP") on the above mentioned farms

·      Full EIA for Pan Palladium (Pty) Ltd granted, with Mining Right expected to be granted and transferred in Q1 2017

·      Prospecting right on the farm Non Plus Ultra 683LR executed

·      Formal letter received from Eskom confirming power supply availability for the Project

·      Implementation of the critical infrastructure program with the design of the electrical infrastructure completed ahead of schedule and below budget

 

Project Financing

·    IDC debt and equity of R244.08 million (approx. US$17.9 million) funding package (including full BBBEE capital contribution) approved

·      Successful placing to raise £1.8 million, with proceeds to be used for working capital and advancing the development of the Project

 

Appointments

·      Appointment to the Board of Mr Vred von Ketelhodt as Chief Financial Officer

·      Appointment of Mr Thamaga Mphahlele as CEO designate to Ironveld Smelting (Pty) Ltd, a subsidiary of Ironveld plc

 

Post Period

·      Land lease agreements for the 15 MW smelter are being processed by the Department of Rural Development and Land Development and are expected shortly

·      Discussions for the remaining portion of debt and equity are in advanced stages

 

Outlook

·     Financial closure is expected during 2017

·     Construction of the 15MW smelter expected to commence immediately on financial closure

·     The 15MW smelter has a projected annual output of 42,000 tonnes of HPI, 381 tonnes of Vanadium and 8,269 tonnes of Titanium per annum.

 

 

Peter Cox, CEO said:

"The focus for the Period was on achieving key milestones that would enable Ironveld to move towards financial closure, we have made excellent progress in this respect, which is testament to the hard work of the Company. Events such as securing the mining right, EMP approval and receiving confirmation from Eskom for power supply represent tangible milestones towards bringing our world class HPI, vanadium and titanium project into production.

Offtake demand for all three products is strong with multiple offers being considered. This is being run in tandem with positive discussions around financial arrangements for the Project and near term finalisation is expected. We continue to see currency movements that benefit project economics and which are expected to result in a positive cash flow impact.

It is a tremendously exciting time for the Company and we look forward to progressing the Project through financing and into the construction stage later in 2017."

 

For further information, please contact:

Ironveld plc

Peter Cox, Chief Executive

c/o Camarco

020 3757 4980

Shore Capital and Corporate Limited

Stephane Auton / Toby Gibbs (corporate finance)

Jerry Keen (corporate broking)

020 7408 4090

Camarco

Gordon Poole / Billy Clegg / Kimberley Taylor

020 3757 4980

 

Notes to Editors:

Ironveld (IRON.LN) is the owner of a High Purity Iron, Vanadium and Titanium project located on the Northern Limb of the Bushveld Complex in Limpopo Province South Africa.  Ironveld expects to mine its own VTM ore as feedstock for a 15MW DC smelter which will produce speciality iron products including high purity iron powder as well as vanadium and titanium slag products.

The Definitive Feasibility Study published in April 2014 confirms the project's viability to deliver an exceptionally high grade iron product (99.5% Fe) called High Purity Iron which commands a premium in the market place. Vanadium and Titanium slag containing commercial grades of vanadium and titanium will also be produced and sold.

Ironveld's Board includes; Giles Clarke as Chairman, Peter Cox as CEO, Vred von Ketelhodt as CFO, Nick Harrison and Rupert Fraser as a Non-Executive Directors.

Ironveld is an AIM traded company. For further information on Ironveld please refer to www.ironveld.com.

 

 

Chairman's Statement:

 

Over the last twelve months we have made strong operational and financial progress across the business as we continue to transition the Company towards construction of our world class integrated High Purity Iron ("HPI"), Vanadium and Titanium project on the Northern Limb of the Bushveld complex in the Limpopo province of South Africa.  The focus for the Period remained firmly on de-risking the Project and executing offtake agreements for our high quality and globally important products. The Period culminated with executing offtake partnerships on all three products, importantly with international and highly reputable partners. 

 

As I mentioned in my interim Chairman's statement, the Project is a highly deliverable polymetallic operation that represents a strategically important project for the South African Government. Post Period we have seen further government endorsement for the Project with the International Development Corporation ("IDC"), a national development finance institution set up to promote growth and industrial development, providing Project debt and equity funding of R244.08 million (approx. US$17.9 million). This accompanies the Project's inclusion by the Government in the 12I tax allowance incentive scheme in September 2014, which is estimated to be worth R 54.6 million (approximately GBP 3.1 million).  Both the above are material stamps of approval from the Government, who we have a strong working relationship with.

 

There were a number of significant achievements during the Period. In December the Company was informed by Hacra Mining and Exploration (Pty) Ltd ("HACRA"), a wholly owned subsidiary of Sylvania Platinum Limited, that the mining right for magnetite on the Harriets Wish, Cracouw and Aurora farms had been executed and the associated Environmental Management Programme approved by the Department of Mineral Resources. The Company awaits the execution of the mining right on farms Nonnewerth, La Pucella and Altona for the mining of magnetite (the Pan Palladium Right). These farms make up the future Project farms that the Company anticipates mining. In terms of exploration, in December the Company successfully executed the prospecting right on the Non Plus Ultra farm that sits adjacent to Nonnewerth, La Pucella and Altona and represents a highly prospective target for future VTM feed to the smelter.

 

Final approvals were obtained and finalised in May for the Section 11 transfer, transferring the Mineral Right to HW Iron (Pty) Ltd and the Environmental Impact Assessment for Pan Palladium (Pty) Ltd, a wholly owned subsidiary of Sylvania Platinum Limited has been granted. The Pan Palladium right relating to the acquisition from Sylvania is expected to be granted and transferred to Ironveld in the first quarter of 2017.

 

Power is an important component to the Project and during the Period we received a written undertaking from Eskom confirming power supply availability. Eskom's power supply has stabilised significantly during the Period and their commitment to bring further capacity on line remains strong. As per the Project DFS, it is our intention to augment this power supply with backup power for critical operations.

 

Planning is at an advanced stage with draft construction contracts being negotiated and requests for quotes from mining contractors for mining operations having been circulated. Contracts are currently at the subject of due diligence by the senior debt providers and will be concluded upon completion of their due diligence.

 

The land lease agreement for the farm Altona, where the 15MW DC smelter is planned to be constructed, is currently being finalised by the Department of Rural Development and Land Development, who are the land owner.

 

By way of de-risking the Project and allowing for Project funding to be executed, in May and June we finalised agreements with two partners for the offtake of 100 per cent of all three products for the first 5 years of the LOM. Oreport, a South African based, majority black owned, global trading company will take 100 per cent of the HPI and titanium slag representing 42,000 tonnes and 8,269 tons per annum respectively (as projected in the Projects Definitive Feasibility Study). An established international company will take 100 per cent of the Vanadium slag product, again from first production and for a period of five years of LOM. These agreements were executed on attractive price terms for the Company, represent material endorsement for the quality of the products and are reflective of the strong international market demand across all three products. Importantly they provide financial security to the Company in the early years of the Project's long life.
 

 

By way of a reminder, the company will produce HPI in powder form. This product is widely used in powder metallurgy, magnetic materials and in a variety of specialist applications and is a growing market driven by the continuous introduction of new materials and technologies. Vanadium has extensive applications including the grid energy storage market, where vanadium redox flow batteries are under development, being heralded as the "missing-link" in volume storage for clean energy. Titanium, which is used in the pigment industry as well as in the steel and alloying industries, is a key part of a new battery technology.

 

The Company is in continual discussions with potential Project funders for the remaining part of the Project financing and has received specific proposals and ongoing due diligence is taking place. We continue to see currency movements that benefit project economics and which are expected to result in a positive cash flow impact.

 

We continue to work closely with the local communities in our project area and on our efforts to improve community engagement and standards of living. Our Keep a Girl in School Programme goes from strength to strength as we work closely with our partners, the Imbumba Foundation and the Nelson Mandela Foundation, to provide hygiene support to 605 female student at schools in the Project area. The Company has received supporting letters from both parents and girls as to the impact the programme has made to their lives. As a result of this success, the Company is in the process of starting a programme for male students encouraging academic and sporting achievement.  

 

Financial

The group recorded a loss before tax of £0.6m (2015: £0.6m) and cash balances of £0.1m (2015: £1.4m) at the end of the period.  The Company does not plan to pay a dividend for the year ended 30 June 2016.

 

Management

During the Period, we were delighted to strengthen the management team and welcome Mr Vred von Ketelhodt as CFO and Mr Thamaga Mphahlele as CEO designate to Ironveld Smelting (Pty) Ltd, a subsidiary of Ironveld plc, responsible for managing operations and the team during the development of the Project.

 

Mr von Ketelhodt has a 25 year career in the mining industry with significant management, financial and project management expertise and has been providing consultancy services to the Company since February 2013.  Thamaga is a registered professional electrical engineer, most recently at Eskom SOC in a variety of technical engineering roles.

 

Outlook

Management are working tirelessly to conclude financing for the Project and the Company is now in as strong a position as it has ever been with respect to executing this key milestone. In addition, we continue to make excellent headway on the ground as we look to begin construction during 2017.

 

The Board is confident of the fundamentals of the Project and its ability to generate significant cash flow supported by strong market demand for the end products. We would like to thank all of our shareholders for their continued support as we enter a transformational period for the Company. We look forward to updating shareholders in the near future.

 

 

 

 

Giles Clarke

Chairman

6 December 2016
 

 

CONSOLIDATED INCOME STATEMENT

                                                                                                                                                      As restated

                                                                                                               Year                                          Year

                                                                                                            ended                                       ended

                                                                                                               2016                                          2015

                                                                           Note                            £000                                           £000

 

 

Administrative expenses                                                                             (494)                                        (520) 

                                                                                                                                                                                              
Operating loss                                                       4                                 (494)                                         (520)

 

Investment revenues                                                 6                                      -                                                1

Finance costs                                                          7                                   (91)                                           (74)
                                                                                                                                                                                               
Loss before tax                                                                                         (585)                                         (593)

 

Tax                                                                         8                                      -                                             -
                                                                                                                                                                                                
Loss for the period                                                                                   (585)                                         (593)

                                                                                                                                                                                                                                  

 

Attributable to:

Owners of the company                                                                              (584)                                        (592)

Non-controlling interests                                                                                 (1)                                            (1)
                                                                                                                                                                                                 
                                                                                                                  (585)                                        (593)
                                                                                                                                                                                                  

Loss per share

 

                                           - Basic and diluted      9                              (0.18p)                                       (0.20p)

                                                                                                                                                                                                                                                                                                                                                                         

 

There is no difference between the results as disclosed above and the results on a historical cost basis.  The income statement has been prepared on the basis that all operations are continuing operations.
 

 

 

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

                                                                                                       

                                                                                                                                                                    

                                                                                                                                                   As restated

                                                                                                              Year                                       Year

                                                                                                          ended                                     ended

                                                                                                             2016                                        2015

                                                                                                             £000                                        £000

 

Loss for the period                                                                                 (585)                                        (593)

Exchange difference on translation of foreign operations                            (525)                                        (600)
                                                                                                                                                                                       

Total comprehensive income for the period                                    (1,110)                                     (1,193)

                                                                                                                                                                                                                                  
 

 

Attributable to:

Owners of the company                                                                         (954)                                     (1,025)

Non-controlling interests                                                                        (156)                                        (168)
                                                                                                                                                                            
                                                                                                (1,110)                                  (1,193)  

                                                                                                                                                                                                                           
 

 

 

 

CONSOLIDATED BALANCE SHEET

 

                                                                                                                                                                                                                                                                                        

                                                                                                                                      As restated

                                                                                                              2016                                          2015
 Note
                              £000                                          £000

Non-current assets

Other intangible assets                                            11                           21,509                                       21,743

Property, plant and equipment                                  12                                   9                                             14
                                                                                                                                                                                                

                                                                                                                                                21,518                                      21,757
Current assets

Trade and other receivables                                    14                                  234                                            77

Cash and cash equivalents                                                                           113                                       1,407

                                                                                                                                                                                                  

                                                                                                                  347                                      1,484
                                                                                                                                                                                         
Total assets                                                                                           21,865                                    23,241
                                                                                                                                                                                          
Current liabilities
Trade and other payables                                        15                                (186)                                      (185)

Borrowings                                                             16                                (992)                                   (1,149)
                                                                                                                                                                                          
                                                                                                              (1,178)                                   (1,334)
Non-current liabilities
Deferred tax liabilities                                              17                              (4,699)                                   (4,930)
                                                                                                                                                                                                                                                                                      

                                                                                                               (4,699)                                   (4,930)
                                                                                                                                                                                           

Total liabilities                                                                                        (5,877)                                   (6,264)
                                                                                                                                                                                            

Net assets                                                                                                15,988                                  16,977
                                                                                                                                                                                            
Equity
Share capital                                                           19                               6,500                                     6,474
Share premium                                                        20                             16,136                                   16,056
Other reserves                                                         20                                    21                                         21
Retained earnings                                                    20                            (10,006)                                  (8,902)
                                                                                                                                                                                          
Equity attributable to owners of the company                                        12,651                                    13,649

Non-controlling interests                                       23                                3,337                                       3,328
                                                                                                                                                                                                                                      
Total equity                                                                                             15,988                                    16,977
                                                                                                                                                                                           

 

 

These financial statements were approved by the Board and authorised for issue on 6 December 2016.

 

Signed on behalf of the Board

 

 

 

P Cox
Director                                                                                            Company Registration No: 04095614

 

 

 

 

PARENT COMPANY BALANCE SHEET

 

 

                                                                                                               2016                                        2015

                                                                           Note                             £000                                        £000

Non-current assets

Investments                                                           13                             18,954                                      17,776
                                                                                                       
Current assets
Trade and other receivables                                     14                                  78                                            86
Cash and cash equivalents                                                                           74                                        1,381
                                                                                                                                                                                                                                                                                      

                                                                                                                152                                        1,467
                                                                                                                                                                                       
Total assets                                                                                          19,106                                      19,243
                                                                                                                                                                                       

Current liabilities
Trade and other payables                                      15                                 (179)                                       (169)
                                                                                                                                                                                       
Total liabilities                                                                                        (179)                                       (169)
                                                                                                                                                                                        

Net assets                                                                                             18,927                                      19,074
                                                                                                                                                                                         

 

Equity

Share capital                                                         19                              6,500                                        6,474

Share premium                                                      20                            16,136                                      16,056

Other reserves                                                       20                                  21                                            21

Retained earnings                                                  20                            (3,730)                                     (3,477)
                                                                                                                                                                                        
Total equity                                                                                          18,927                                       19,074
(Attributable to owners of the Company)                                                                                                                               

 

 

These financial statements were approved by the Board and authorised for issue on 6 December 2016.

 

Signed on behalf of the Board

 

 

 

 

P Cox

Director                                                       Company Registration No: 04095614
 

 

 

 

 

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY          

 

 

                                                                   Share              Share         Warrant          Retained                         

Attributable to owners of the company          Capital         Premium         Reserve          Earnings                 Total  

 

                                                                     £000                 £000              £000                 £000                  £000

 

As at 1 July 2014                                          6,097              14,097                  21               (8,635)               11,580

Prior period adjusted                                            -                       -                     -                     739                   739

                                                                                                                                                                                                                                    
At 1 July 2014 (as restated)                        6,097               14,097                   21                (7,896)               12,319  

                                                                                                                                                                                                                                                

Other comprehensive income (as restated)           -                       -                    -                  (600)                   (600)

 

Issue of share capital                                     377                1,959                   -                       -                    2,336  

 

Credit for equity-settled
 share based payments                                      -                       -                    -                   221                     221

 

Adjustment arising from changes

 in non-controlling interests as (restated)             -                       -                    -                   (35)                     (35)
 

Loss for the year (as restated)                           -                       -                    -                  (592)                   (592) 

                                                                                                                                                                                                                                
At 30 June 2015 (as restated)                   6,474              16,056                 21               (8,902)                 13,649
                                                                                                                                                                                                                                


Other comprehensive income                            -                       -                    -                  (525)                   (525)

  

Issue of share capital                                       26                    80                    -                       -                     106

 

Credit for equity-settled

 share based payments                                     -                        -                    -                   171                     171

 

Adjustment arising from changes

  in non-controlling interests                              -                       -                     -                   (166)                   (166)

 

Loss for the year                                              -                       -                     -                   (584)                   (584)

                                                                                                                                                                                                              
Balance at 30 June 2016                           6,500             16,136                  21              (10,006)                12,651
                                                                                 
                                                                                                                                                 

 

 

 

 

 

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (continued)   

 

 

                                                                                                    Owners of    Non-controlling          Total

Total equity                                                                               the company                Interest          Equity

                                                                                                             £000                     £000             £000

 

As at 1 July 2014                                                                                11,580                    3,410         14,990  

 

Prior period adjustment                                                                            739                        157             896  

                                                                                                                                                                                                                                                                                                                                           

At 1 July 2014 (as restated)                                                               12,319                     3,567         15,886

                                                                                                                                                                                                

 

Other comprehensive income (as restated)                                              (600)                      (168)            (768)

 

Issue of share capital                                                                            2,336                           -            2,336

 

Credit for equity-settled share based payments                                          221                           -               221

 

Adjustment arising from changes in

 non-controlling interests (as restated)                                                      (35)                       (70)             (105)

 

Loss for the year (as restated)                                                                (592)                        (1)              (593) 

                                                                                                                                                                                                                                             __________

Balance at 30 June 2015 (as restated)                                              13,649                    3,328            16,977

                                                                                                                                                                                         

Other comprehensive income                                                                 (525)                    (156)               (681)

 

Issue of share capital                                                                              106                          -                  106  

 

Credit for equity-settled share based payments                                         171                           -                 171

 

Adjustment arising from changes in non-controlling interests                     (166)                      166                     -
 

Loss for the year                                                                                    (584)                      (1)                (585) 
                                                                                                                                                                                                                             
Balance at 30 June 2016                                                                    12,651                3,337                15,988
                                                                                                                                                                                                                              


 

 

COMPANY STATEMENT OF CHANGES IN EQUITY

 

Equity attributable to the equity holders of the Company:

 

 

                                                              Share              Share         Warrant          Retained                Total

                                                            Capital         Premium         Reserve          Earnings               Equity

                                                                £000                 £000              £000                 £000                 £000

 

Balance at 1 July 2014                         6,097              14,097                21                 (3,246)               16,969

 

Issue of share capital                                377                1,959                  -                         -                  2,336
 

Credit for equity-settled
share based payments                                  -                       -                   -                      221                  221

 

Loss for the year                                            -                       -                   -                    (452)              (452)
                                                                                                                                                                                                                           

 

Balance at 30 June 2015                      6,474              16,056                21                 (3,477)               19,074

 

Credit for equity-settled

share based payments                                   -                       -                   -                     171                     171
 

Issue of share capital                                   26                     80                  -                        -                       106


Loss for the year                                             -                       -                   -                   (424)                   (424)
                                                                                                                                                                                                                              
Balance at 30 June 2016                         6,500             16,136                 21                 (3,730)                18,927
                                                                                                                                                                                                                                                        

 

 

 

 

CONSOLIDATED CASH FLOW STATEMENT

                                                                             

                                                                                                            Year                                        Year

                                                                                                         ended                                     ended

                                                                                                            2016                                        2015

                                                                           Note                         £000                                        £000

 

Net cash used in operating activities                   21                          (470)                                        (286)
                                                                                                                                                                                            
Investing activities
Purchases of property, plant and equipment                                              (4)                                            (1)
Purchase of exploration and evaluation assets                                       (821)                                        (840)
Contribution to exploration and evaluation assets                                     187                                              -
Interest received                                                                                       -                                               1

                                                                                                                                                                                             
Net cash used in investing activities                                                   (638)                                        (840)
                                                                                                                                                                                              

Financing activities
Proceeds on issue of equity (net of costs)                                                     6                                        2,129
Repayment of borrowings                                                                        (187)                                        (333)
                                                                                                                                                                                               
Net cash (used)/generated by financing activities                              (181)                                       1,796
                                                                                                                                                                                               

Net (decrease)/increase in cash and cash equivalents                    (1,289)                                         670

Cash and cash equivalents at beginning
 of period
                                                                 21                       1,407                                         738

Effects of foreign exchange rates                                                                 (5)                                          (1)

                                                                                                                                                                                                
Cash and cash equivalents at end of period       21                                113                                      1,407

                                                                                                                                                                                                                               
 

 

 

COMPANY CASH FLOW STATEMENT

 

                                                                             

                                                                                                               Year                                        Year

                                                                                                            ended                                     ended

                                                                                                               2016                                        2015

                                                                           Note                            £000                                        £000

 

Net cash from operating activities                       21                              (231)                                        (237)
                                                                                                                                                                                            

Investing activities

Interest received                                                                                           -                                              1

Payments to acquire investments                                                        (1,082)                                       (1,230)
                                                                                                                                                                                             
Net cash used in investing activities                                               (1,082)                                        (1,229)
                                                                                                                                                                                             

Financing activities

Proceeds on issue of equity (net of costs)                                                    6                                       2,129
                                                                                                                                                                                              

Net cash generated from financing activities                                           6                                       2,129            

                                                                                                                                                                                                                               

 

Net (decrease)/increase in cash and cash equivalents                      (1,307)                                         663

 

Cash and cash equivalents at                                                         
beginning of period                                                21                         1,381                                         718
                                                                                                                                                                                                
Cash and cash equivalents at end of period          21                              74                                       1,381
                                                                                                                                                                                                

 

 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

 

1. General information

 

Ironveld Plc is a public company incorporated in the United Kingdom under the Companies Act 2006 whose shares are listed on the Alternative Investment Market of the London Stock Exchange. The address of the registered office is given on page 2. The nature of the Group's operations and its principal activities are set out in note 3 and in the Strategic Report on pages 3 to 4.

 

Adoption of new and revised Standards

 

There were no new or amended IFRS standards or IFRIC interpretations adopted for the first time in these financial statements that had a material impact on the financial statements.

 

At the date of authorisation of these financial statements, the following accounting standards, amendments to existing standards and interpretations are not yet effective and have not been adopted early by the Group.

 

IFRS 14                                                Regulatory Deferral Accounts

IFRS 15                                                Revenue from Contracts with Customers

IFRS 11 (amended)                               Accounting for Acquisitions of Interests in Joint Operations

IAS 16 & 38 (amended)                         Clarification of Acceptable Methods of Depreciation and Amortisation

IFRS 9 (2014)                                       IFRS 9 Financial Instruments (2014)

IAS 27 (amended)                                 Equity Method in Separate Financial Statements

IFRS 10, 12 & IAS 28 (amended)           Investment Entities:  Applying the Consolidation Exception

IAS 1 (amended)                                  Disclosure Initiative

IFRS 16                                               Leases

IAS 12 (amended)                                Recognition of Deferred Tax Assets for Unrealised Losses

IAS 7 (amended)                                  Disclosure Initiative

IFRS 15 (Clarification)                           Revenue from Contracts with Customers

IFRS 2 (amendments)                           Classification and Measurement of Share-based Payment Transactions

 

Annual Improvements to IFRSs 2012-2014 Cycle.

 

The adoption of these standards, amendments and interpretations is not expected to have a material impact on the group/company's result for the year or equity.

 

 

2.1  Significant accounting policies

 

The financial statements are based on the following policies which have been consistently applied:

 

Basis of preparation

 

The financial statements have been prepared in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union.

 

The financial statements have been prepared on the historical cost basis. The principal accounting policies are set out below:

 

Basis of consolidation

 

The consolidated financial statements incorporate the financial statements of the Company and all entities controlled by the Company (its subsidiaries) made up to the year end.  Control is achieved where the Company has power to govern the financial and operating policies of an investee entity so as to obtain benefits from its activities.

 

Subsidiaries are consolidated from the date of their acquisition, being the date on which the Company obtains control and ceases when the Company loses control of the subsidiary. Profit or loss and each component of other comprehensive income are attributed to the owners of the Company and to the non-controlling interests. Total comprehensive income of the subsidiaries is attributed to the owners of the Company and to the non-controlling interests even if this results in the non-controlling interests having a deficit balance.

 

 

 

Non-controlling interests in subsidiaries are identified separately from the Group's equity therein. Those interests of non-controlling shareholders are initially measured at their proportionate share of the fair value of the acquirees identifiable net assets. Subsequent to acquisition, the carrying value of the non-controlling interests is the amount of initial recognition plus the non-controlling interests' share of the subsequent changes in equity.

 

Changes in the Group's interests in subsidiaries that do not result in a loss of control are accounted for as equity transactions. The carrying amount of the Group's interests and the non-controlling interests are adjusted to reflect the changes in their relative interests in the subsidiaries. Any difference between the amount by which the non-controlling interests are adjusted and the fair value of the consideration paid or received is recognised directly in equity and attributed to the owners of the company.

 

Business combinations

 

Acquisitions of subsidiaries are accounted for using acquisition accounting. The consideration for each acquisition is measured at the fair value of assets given, liabilities incurred or assumed and equity instruments issued by the group in exchange for control in the acquiree. Acquisition-related costs are recognised in the income statement as incurred.

 

Exploration and evaluation

 

Costs incurred prior to acquiring the rights to explore are charged directly to the income statement.

 

Licence acquisition costs and all other costs incurred after the rights to explore an area have been obtained, such as the direct costs of exploration and appraisal (including geological, drilling, trenching, sampling, technical feasibility and commercial viability activities) are accumulated and capitalised as intangible exploration and evaluation (E & E) assets, pending determination. Amounts charged to project partners in respect of costs previously capitalised are deducted as contributions received in determining the accumulated cost of exploration and evaluation assets.

 

E & E assets are not amortised prior to the conclusion of the appraisal activities. At completion of appraisal activities, if financial and technical feasibility is demonstrated and commercial reserves are discovered then, following development sanctions, the carrying value of the relevant E & E asset will be reclassified as a development and production asset in intangible assets after the carrying value has been assessed for impairment and, where appropriate adjusted. If after completion of the appraisal of the area it is not possible to determine technical and commercial feasibility or if the legal rights have expired or if the Group decide to not continue activities in the area, then the cost of unsuccessful exploration and evaluation are written off to the income statement in the relevant period.

 

The Group's definition of commercial reserves for such purposes is proved and probable reserves on an entitlement basis. Proved and probable reserves are the estimated quantities of minerals which geological, geophysical and engineering data demonstrate with a specified degree of certainty to be recoverable in future years from the known reserves and which are considered to be commercially producible.

 

Such reserves are considered commercially producible if management has the intention of developing and producing them and such intention is based upon:

 

          -         a reasonable expectation that there is a market for substantially all of the expected production;

          -         a reasonable assessment of the future economics of such production;

          -         evidence that the necessary production, transmission and transportation facilities are available or can be made
                    available; and

          -         agreement of appropriate funding; and

          -         the making of the final investment decision.

 

 

Exploration and evaluation (continued)

 

On an annual basis a review for impairment indicators is performed. If an indicator of impairment exists an impairment review is performed. The recoverable amount is then considered to be the higher of the fair value less costs of sale or its value in use. Any identified impairment is written off to the income statement in the period identified.

 

Development and production assets

 

Development and production assets, classified within property, plant and equipment, are accumulated generally on a field basis and represents the cost of developing the commercial reserves discovered and bringing them into production, together with the E&E expenditure incurred in finding the commercial reserves transferred from intangible assets.

 

Depreciation of producing assets

 

The net book values of producing assets are depreciated generally on the field basis using the unit or production method by reference to the ratio of production in the period and the related commercial reserves of the field, taking into account the future development expenditure necessary to bring those reserves to production.

 

Research and development

 

Research expenditure is recognised as an expense in the period in which it is incurred.

 

An internally-generated asset arising from any development is recognised only if all of the following conditions are met:

          -         an asset is created that can be identified;

          -         it is probable that the asset created will generate future economic benefits; and

          -         the development cost of the asset can be measured reliably.

 

Revenue

 

Revenue is measured at the fair value of the consideration received or receivable for goods and services provided in the normal course of business, net of discounts and value added tax.

 

Taxation

 

The tax expense represents the sum of the tax payable and deferred tax.

 

Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amount of assets and liabilities in the financial statements and the corresponding tax base used in the calculation of the taxable profit and is accounted for using the balance sheet liability method. Deferred tax liabilities are generally recognised on all appropriate taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which the deductible timing differences can be utilised. The carrying amount of deferred tax assets is reviewed at each balance sheet date.

 

Deferred tax is calculated at the tax rates that are expected to be applicable in the period when the liability or asset is realised and is based on tax laws and rates substantially enacted at the balance sheet date. Deferred tax is charged in the income statement except where it relates to items charged/credited in other comprehensive income, in which case the tax is also dealt with in other comprehensive income.

 

 

Leases

 

Rentals payable under operating leases are charged to the income statement on a straight line basis over the lease term.

 

Property, plant and equipment

 

Tangible fixed assets are stated at cost less depreciation.  Depreciation is provided at rates calculated to write off the cost less the estimated residual value of each asset over its expected useful life, as follows:

 

Plant and machinery                             10% - 25% straight line basis or reducing balance basis

 

Foreign currencies

 

The individual financial statements of each group company are presented in the currency of the primary economic environment in which it operates (its functional currency). For the purposes of the consolidated financial statements, the results and financial position of each group company are expressed in pounds sterling, which is the functional currency of the Company, and the presentation currency for the consolidated financial statements.

 

In preparing the financial statements of the individual companies, transactions in currencies other than the entity's functional currency are recognised at the rates of exchange prevailing on the dates of the transactions. At each balance sheet date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing at that date. Non-monetary items carried at fair value that are denominated in foreign currencies are  translated at the rates prevailing at the date the fair value was determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated. Exchange differences are recognised in the income statement in the period in which they arise.

 

When presenting the consolidated financial statements, the assets and liabilities of the group's foreign operations are translated at the exchange rates prevailing at the balance sheet date. Income and expense items are translated at average exchange rates for the period, unless exchange rates have fluctuated significantly in which case the rates at the date of the transactions are used. Exchange differences arising are recognised in other comprehensive income and accumulated in equity (attributed to non-controlling interests where appropriate).

 

Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and translated using the closing rate.

 

Financial instruments

 

Financial assets and financial liabilities are recognised in the Group's balance sheet when the Group becomes a party to the contractual provisions of the instrument.

 

Other receivables

 

Other receivables are measured at initial recognition at fair value, and are subsequently measured at amortised cost using the effective interest rate method except for short-term receivables when recognition of interest would be immaterial. Appropriate allowances for the estimated irrecoverable amounts are recognised in the income statement when there is objective evidence that the asset is impaired.

 

Cash and cash equivalents

 

Cash and cash equivalents comprise cash on hand and demand deposits, and other short term highly liquid investments that are readily convertible to a known amount of cash and are subject to an insignificant risk of change in value.

  

 

Financial liability and equity

 

Interest bearing bank loans and overdrafts are recorded at the proceeds received, net of direct issue costs. Finance charges, including premiums payable on settlement or redemption and direct issue costs, are accounted for on an accrual basis in the income statement using the effective interest rate method and are added to the carrying amount of the instrument to the extent that they are not settled in the period in which they arise.

 

The group classifies financial instruments, or their component parts, on initial recognition as a financial asset, financial liability or an equity instrument in accordance with the substance of the contractual arrangement. Financial instruments are initially recognised at fair value and are subsequently amortised using the effective interest method. Fair value is estimated from available market data and reference to other instruments considered to be substantially the same.

 

Trade and other payables

 

Trade payables and other financial liabilities are initially measured at fair value, and are subsequently measured at amortised cost, using the effective interest rate method.

 

The Group's activities expose it primarily to the financial risks of changes in interest rates on long term borrowings.

 

Investments

 

Investments are stated at cost less any provision for the permanent diminution in value.

 

Share-based payments

 

The Group issues equity-settled share-based payments to certain employees and other parties.  Equity settled share-based payments are measured at fair value at the date of grant.  In respect of employee related share based payments, the fair value determined at the grant date is expensed on a straight-line basis over the vesting period, based on the Group's estimate of shares that will eventually vest. In respect of other share based payments, the fair value is determined at the date of grant and recognised when the associated goods or services are received.

 

Operating segments

 

The Group considers itself to have one operating segment in the year and further information is provided in note 3.

 

Going concern

 

The Directors have, at the time of approving the financial statements, a reasonable expectation that the Company and the Group have adequate resources to continue in operating existence for the foreseeable future. Thus they continue to adopt the going concern basis of accounting in preparing the financial statements. Further details are provided in the note 2.2 and in the Strategic Report on pages 3 to 4.

 

 

 

2.2  Critical accounting estimates and judgements

 

The Group makes estimates and assumptions regarding the future. Estimates and judgements are continually evaluated based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. In the future, actual experience may differ from these estimates and assumptions. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below.

 

Fair value of acquisition

 

On acquisition of a subsidiary, the company is required to estimate the fair value of the assets and liabilities acquired and the consideration paid. The estimate in respect of exploration and evaluation assets is affected by many factors including the future viability of commercial reserves which have been based on the judgement of directors supported by third party technical reports.

 

Going concern

 

The Group's present resources and existing facilities are only considered adequate to meet committed overhead expenditure for the period to 30 June 2017 by which time the Directors expect to have completed the full funding of the Project (the High Purity Iron, Vanadium and Titanium project located on the Northern Limb of the Bushveld Complex in Limpopo Province, South Africa owned by the Group). The Group announced on 6 October 2016 that they have received approval for a ZAR244m funding package for the Project and were in the process of executing formal funding agreements. The Group is also in advanced stages of negotiating the remaining debt agreements for the Project. Overall a ZAR 871m financing package is proposed.

 

The Directors are confident that sufficient funds can be raised for this additional planned activity and therefore have a reasonable expectation that the Group will have adequate resources to continue in operational existence for the foreseeable future, being twelve months from the date of the approval of the financial statements. The Group is committed to developing the Project and is actively engaged in raising finance to allow the development to proceed.  For this reason, the Board continues to adopt the going concern basis in the preparation of the financial statements.

 

Fair value of share based payments

 

Calculation of the fair value of the share based payments issued requires estimates to be used for the share price volatility, the risk free rate and the model with which to calculate the fair value.

 

Exploration and evaluation assets

 

The group has adopted a policy of capitalising the costs of exploration and evaluation and carrying the amount without impairment assessment until impairment indicators exist (as permitted by IFRS 6). The directors consider that the group remains in the exploration and evaluation phase and therefore, under IFRS 6, the directors have to make judgements as to whether any indicators of impairment exist and the future activities of the company. No such indicators of impairment were identified and therefore no impairment review has been carried out.

 

Deferred tax assets

 

The directors must judge whether the future profitability of the Group is likely in making the decision whether or not to recognise a deferred tax asset in respect of taxation losses. No deferred tax assets have been recognised in the year.

 

Useful lives of property, plant and equipment

 

Property, plant and equipment are amortised or depreciated over their useful lives. Useful lives are based on the management's estimates of the period that the assets will generate revenue, which are based on judgement and experience and periodically reviewed for continued appropriateness. Changes to estimates can result in significant variations in the carrying value and amounts charged to the consolidated income statement in specific periods.
 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

 

3.  Business and geographical segments

 

Information reported to the Group Directors for the purposes of resource allocation and assessment of segment performance is focused on the activity of each segment and its geographical location. The directors consider that there is only one business segment, which is the activity of prospecting, exploration and mining based in South Africa.

 

4.  Operating loss                                                                                                             Year                 Year

                                                                                                                                      Ended              ended

                                                                                                                                         2016                 2015

Operating loss for the period is shown after charging:                                                             £000                 £000

 

Net foreign exchange (losses)/gains                                                                                       (5)                       4

Depreciation on tangible assets                                                                                                8                      8

Operating leases - Land and buildings                                                                                     25                     25

                                                                                                                                                                                             

    

Auditors remuneration

 

Fees payable to the auditors for the audit of the company's accounts                                        24                    24

 

Fees payable to the company's auditors and its associates for other services:-

The audit of the company's subsidiaries                                                                           8                      8

Tax compliance services                                                                                                3                      3

Other assurance services                                                                                              9                       6    

                                                                                                                                                                                                                                                                                                                                                                                                                    

 

5.  Staff cost

                                                                                                                                       Year                 Year

                                                                                                                                    ended              ended

                                                                                                                                       2016                2015

                                                                                                                                       £000                £000

 

Wages and salaries                                                                                                          519                   652
Social security costs                                                                                                          17                    17
Share based payments                                                                                                     155                   221
                                                                                                                                                                                       
                                                                                                                                      691                   890
                                                                                                                                                                                                                               
Directors remuneration and fees                                                                                       309                   307
                                                                                                                                                                                                                                
The aggregate remuneration paid to the highest paid director was                                       118                   140
                                                                                                                                                                                                                               

 

 

The average monthly number of employees, including Directors, during                             2016                 2015

the period was as follows:                                                                                         Number            Number

 

Administration and management                                                                                        16                     14  

                                                                                                                                                                                                                                                                                                     

  

Further details of the Directors' remuneration are given in the Directors' Remuneration Report on pages 9 and 10.

 

 

 

 

6.  Investment revenues

                                                                                                                                       Year                 Year

                                                                                                                                    ended              ended

                                                                                                                                       2016                 2015

                                                                                                                                       £000                 £000

 

Interest on bank deposits                                                                                                      -                      1
                                                                                                                                                                                                                            

 

 

7.  Finance costs

                                                                                                                                       Year                 Year

                                                                                                                                    ended              ended

                                                                                                                                       2016                 2015

                                                                                                                                       £000                 £000

 

Loan interest and similar charges                                                                                          91                    74
                                                                                                                                                                                                                             
                                                                                                                                           91                    74
                                                                                                                                                                                                                               

 

8. Tax

                                                                                                                                                     As restated                                       

                                                                                                                                       Year                 Year

                                                                                                                                    ended              ended

                                                                                                                                       2016                 2015

a) Tax charge for the period                                                                                               £000                 £000

 

Corporation tax:

Current period                                                                                                                       -                       -
Deferred tax (note 17)                                                                                                            -                       -
                                                                                                                                                                                                                             
                                                                                                                                            -                       -
                                                                                                                                                                                                                            

 

b) Factors affecting the tax charge for the period

Loss on ordinary activities for the period before taxation                                                      (585)                 (593)
                                                                                                                                                                                                                              

Loss on ordinary activities for the period before taxation multiplied by
effective rate of corporation tax of 20% (2015 - 20.75%)                                                      (117)                 (123)

Effects of :
Non-deductible expenses                                                                                                      34                    46
Unused tax losses not recognised                                                                                         83                    77
                                                                                                                                                                                                                               
Tax expense for the period                                                                                                       -                       -
                                                                                                                                                                                                                                

 

c) Factors that may affect future tax charges  -  The Group has estimated unutilised tax losses amounting to £2,460,000 (2015 - £1,897,000) the values of which are not recognised in the balance sheet. The losses represent a potential deferred taxation asset of £490,000 (2015 - £400,000) which would be recoverable should the Group make sufficient suitable taxable profits in the future.

 

In addition, the group has pooled exploration costs incurred of £4,400,000 (2015 - £3,900,000) which are expected to be deductible against future trading profits of the group.

 

 

 

9. (Loss)/earnings per share                                                                                 

                                                                                                                                                         As restated                                

                                                                                                                                       2016                    2015

                                                                                                                                       £000                    £000

 

Loss attributable to the owners of the Company                                                                  (584)                   (592)  

                                                                                                                                                                                                                               

   

Effect of prior period adjustment                                                                                                                (236)

                                                                                                                                                                                                                    

                                                                                                                                                                  

As previously stated                                                                                                                                   (828)

                                                                                                                                                                                                                                 

 

 

Loss per share - Basic and diluted

  Continuing operations                                                                                                 (0.18p)                (0.20p)

                                                                                                                                                                                      

                                    

 

Effect of prior period adjustment                                                                                                              (0.08p)

                                                                                                                                                                                             

 

As previously stated                                                                                                                                 (0.28p)

                                                                                                                                                                                                

 

 

The prior period adjustment reduced the taxation charge for the year ended 30 June 2015 by £288,000 and the non-controlling interest of losses by £52,000, resulting in an overall reduction of losses attributable to owners of the company of £236,000.

 

The calculation of basic earnings per share is based on 326,938,397 (2015 - 296,115,053) ordinary shares, being the weighted average number of ordinary shares in issue during the period.

 

Where the Group reports a loss for the current period, then in accordance with IAS 33, the share options are not considered dilutive. Details of such instruments which could potentially dilute basic earnings per share in the future are included in note 19.

 

Under IAS 33, the share warrants in issue during the period were not considered to be diluting as the market based vesting conditions of the warrants had not been met at the year end. Further details are provided in note 19.

 

 

10.  Loss attributable to owners of the parent company

 

As permitted by Section 408 of the Companies Act 2006, the profit and loss account of the parent Company is not presented as part of these accounts. The parent Company's loss for the financial year amounted to £424,000 (2015 - £452,000).

 

 

 

 

11. Other intangible assets 

                                                                                                                                                       Exploration

                                                                                                                                                       and

                                                                                                                                            evaluation

                                                                                                                                                   assets                                                                                                                                                                                                  

                                                                                                                                                      £000                  

Group

Cost:

At 1 July 2014                                                                                                                                       21,787

Additions                                                                                                                                                   980

Exchange differences                                                                                                                              (1,024)      

                                                                                                                                                                                 
At 30 June 2015                                                                                                                                    21,743
                                                                                                                                                                                                                                                   
Additions                                                                                                                                                 927

Contributions received                                                                                                                            (187)

Exchange differences                                                                                                                              (974)

                                                                                                                                                                                       
At 30 June 2016                                                                                                                                     21,509     

                                                                                                                                                                                                                                    
Amortisation:

 

At 1 July 2014, 30 June 2015 and at 30 June 2016                                                                                            -  

                                                                                                                                                                                                                                   
 

Net book value at 30 June 2016                                                                                                               21,509  

                                                                                                                                                                                                                                  

 

Net book value at 30 June 2015                                                                                                               21,743        

 

                                                                                                                                                                                                                             

 

 

The Group's exploration and evaluation assets all relate to South Africa.

 

In respect of the exploration and evaluation assets which remain in the appraisal phase, the group has performed a review for impairment indicators and in the absence of such indicators no impairment review was carried out.
 

 

 

12. Property, plant and equipment

                                                                                                                                                         Plant and 

                                                                                                                                                       machinery

Group

                                                                                                                                                                £000

Cost:

At 1 July 2015                                                                                                                                            29

Additions                                                                                                                                                     4

Exchange differences                                                                                                                                  (1)

                                                                                                                                                                                   
At 30 June 2016                                                                                                                                         32    

                                                                                                                                                                                  


Depreciation:
At 1 July 2015                                                                                                                                             15
Charge for the period                                                                                                                                     8

Exchange differences                                                                                                                                    -

                                                                                                                                                                                   
At 30 June 2016                                                                                                                                          23  

                                                                                                                                                                                                                                     

Net book value at 30 June 2016                                                                                                                   9    

 

                                                                                                                                                                                    

 

Net book value at 30 June 2015                                                                                                                 14
                                                                                                                                                                                 

                                                                                                                                                                     
                                                                                                                                                                                                                                                                                                                                            

                                                                                                                                                            Plant and

                                                                                                                                                          machinery

                                                                                                                                                                   £000

Cost:

At 1 July 2014

                                                                                                                                                                    30

 

Additions                                                                                                                                                        1

Exchange differences                                                                                                                                    (2)    

                      
At 30 June 2015                                                                                                                                            29  

                                                                                                                                                                                                                              
Depreciation:
At 1 July 2014                                                                                                                                               8
Charge for the period                                                                                                                                     8  

Exchange differences                                                                                                                                  (1) 

                                                                                                                                                                            

 


At 30 June 2015                                                                                                                                          15
                                                                                                                                                                            

 

Net book value at 30 June 2015                                                                                                                    14     

                                                                                                                                                                                                                               

 

 

Net book value at 30 June 2014                                                                                                                   22

                                                                                                                                                                                           

 

All non-current assets in 2016 and 2015 were located in South Africa.
 

 

 

 

13. Investments

 

Company                                                                                                                                       

                                                                                                                                                        Subsidiary

                                                                                                                                                    undertakings

                                                                                                                                                                  £000

Cost:

At 1 July 2014                                                                                                                                        16,362

Additions                                                                                                                                                1,414
Disposals                                                                                                                                                      -
                                                                                                                                                                                   

At 30 June 2015                                                                                                                                     17,776
                                                                                                                                                                                   

Additions                                                                                                                                                1,178 

                                                                                                                                                                                    


At 30 June 2016                                                                                                                                     18,954
                                                                                                                                                                                   

Provisions for impairment

At 1 July 2014                                                                                                                                                -

On disposal                                                                                                                                                    -

                                                                                                                                                                                   
At 30 June 2015                                                                                                                                             -

                                                                                                                                                                                   

                                                                                                                                       

 

At 30 June 2016                                                                                                                                             -
                                                                                                                                                                                      
Net book value at 30 June 2016                                                                                                               18,954

                                                                                                                                                                                   

Net book value at 30 June 2015                                                                                                               17,776
                                                                                                                                                                                   


Additions in the year of £1,414,000 (2015 - £1,178,000) represent further shares issued, and fully paid, by Ironveld Mauritius Limited, the company's wholly owned subsidiary.

 

The Company has investments in the following principal subsidiaries. To avoid a statement of excessive length, details of the investments which are not significant have been omitted:

 

                                                                                         Proportion of                              Nature of

Name of company                                 Shares                 voting rights                               business  

                                                                                       and shares held

Subsidiary undertakings

Ironveld Mauritius Limited                        Ordinary                    100%+                                Holding Company

Ironveld Holdings (Proprietary) Limited     Ordinary                    100%                                  Holding Company

Ironveld Mining (Proprietary) Limited        Ordinary                    100%                           Mining and exploration

Ironveld Smelting (Proprietary) Limited    Ordinary                      74%                 Ore processing and smelting

HW Iron (Proprietary) Limited                 Ordinary                      68%                         Prospecting and mining

Lapon Mining (Proprietary) Limited          Ordinary                       74%                        Prospecting and mining

Luge Prospecting and
Mining (Proprietary) Limited                     Ordinary                       74%                        Prospecting and mining

 

 

 

All subsidiary undertakings are incorporated in South Africa, other than Ironveld Mauritius Limited, which is incorporated in Mauritius.

 

+ Held directly by Ironveld Plc

 

Envirolite Limited, Envirolite Midlands Limited, WEEE Recycling Limited and Battnet Limited were dormant companies which were dissolved during the period.

 

Further details of non-wholly owned subsidiaries of the Group are provided in note 23.

 

 

14. Trade and other receivables

                                                                                                  Group                                     Company

                                                                                       2016                 2015                2016                 2015

                                                                                       £000                 £000                £000                 £000

                                                                               

Amounts owed from Group undertakings                                 -                        -                    39                     24

Other debtors                                                                   209                     68                    33                     56
Prepayments and accrued income                                       25                       9                      6                       6
                                                                                                                                                                                                    
                                                                                       234                     77                    78                     86
                                                                                                                                                                                                    
Credit risk

 

The Group's principal financial assets are bank balances, cash balances, and other receivables. The Group's credit risk is primarily attributable to its other receivables of which £171,000 is due to a third party financial institution and further information is provided in note 18. The amounts presented in the balance sheet are net of allowances for doubtful receivables.

 

 

15. Trade and other payables                                                  Group                                   Company

                                                                                       2016                 2015                2016                 2015

                                                                                       £000                 £000                £000                 £000

 

Trade payables                                                                  14                      3                    14                       3  

Taxation and social security costs                                       25                    76                    24                     65  

Other payables                                                                    5                      5                      5                       5

Accruals and deferred income                                            142                  101                  136                     96
                                                                                                                                                                                             
                                                                                      186                   185                  179                   169
Due within 12 months                                                     (186)                 (185)                (179)                (169)
                                                                                                                                                                                              
Due after more than 12 months                                             -                       -                      -                       -
                                                                                                                                                                                              

 

  

 

 

16. Borrowings

                                                                                                  Group                                     Company

                                                                                       2016                 2015                 2016                 2015

                                                                                       £000                 £000                 £000                 £000

 

Other loans                                                                      992                 1,149                      -                      -
                                                                                                                                                                                                                            

 

The borrowings are repayable as follows:                                 Group                                    Company

                                                                                       2016                 2015                 2016                  2015

                                                                                       £000                 £000                 £000                  £000

 

On demand or within one year                                         992                 1,149                      -                       -

                                                                                                                                                                                                                             
                                                                                     992                 1,149                     -                       -
Due for settlement within 12 months                               (992)               (1,149)                     -                       -
                                                                                                                                                                                                                            
Due for settlement after more than 12 months                    -                       -                          -                        -
                                                                                                                                                                                                                             

 

Further details on loans are provided in note 18.

 

 

17. Deferred tax

                                                                                                                                                Group

                                                                                                                                                      As restated

                                                                                                                                       2016                 2015

                                                                                                                                       £000                 £000

 

Balance at 1 July - as previously stated                                                                             6,058                6,069

Prior period adjustment                                                                                                   (1,128)                 (896)

                                                                                                                                                                                                                               

                                                                                                                                                                                           

As restated                                                                                                                     4,930                5,173

 

Exchange differences                                                                                                        (231)                 (243)

Income statement - tax charge                                                                                             -                       -

                                                                                                                                                                                    

                                                          

                                                                                                                                                                                                                                                 
Balance at 30 June                                                                                                          4,699                4,930
                                                                                                                                                                                                                                   

 

The deferred tax liability is made up as follows:                                                                                                                                                                                                                                               

                                                                                                                                                 Group           

                                                                                                                                                    As restated             

                                                                                                                                        2016                 2015

                                                                                                                                        £000                 £000

 

Fair value adjustments                                                                                                   4,699                   4,930
                                                                                                                                                                                                                                

 

 

 

18. Financial instruments

 

The Group's policies as regards derivatives and financial instruments are set out in the accounting policies in note 2. The Group does not trade in financial instruments.

 

Capital risk management

 

The Group manages its capital to ensure that they will be able to continue as a going concern whilst maximising the return to stakeholders through the optimisation of the debt and equity balance. The Group's overall strategy remains unchanged from 2015.

 

The capital structure of the Group consists of debt, which includes the borrowings disclosed in note 16, cash and cash equivalents and equity attributable to equity holders of the parent company.

 

The Group is not subject to any externally imposed capital requirements.

 

Interest rate risk profile

 

The Group is exposed to interest rate risk because the Group borrows funds at both fixed and floating interest rates. The Group's exposures to interest rates on financial assets and financial liabilities are detailed in the liquidity risk management section of this note.

 

Credit risk management

 

Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the company. The Group has adopted a policy of only dealing with creditworthy counterparties as a means of mitigating the risk of financial loss from defaults. The Group's exposure and the credit ratings of its counterparties are continuously monitored and the aggregate value of the transactions concluded is spread where possible.

 

Liquidity Risk Management

 

Ultimate responsibility for liquidity risk management rests with the Board of Directors, which has established an appropriate liquidity risk management framework for the management of the Group's short, medium and long term funding and liquidity management requirements. The Group manages liquidity risk by maintaining adequate reserves and banking facilities by continuously monitoring forecast and actual cash flows, and by matching the maturity profiles of financial assets and liabilities. Details of additional undrawn facilities that the group has at its disposal to manage liquidity are set out below.

 

Financial facilities

 

The Group did not have any secured bank loan or overdraft facilities during the current or comparative period. The Group has a loan facility of South African Rand 15m that has been drawn in full at the year end.

 

Financial assets

 

The Group has no financial assets, other than short-term receivables and cash deposits of £113,000 (2015 - £1,407,000). The cash deposits attract variable rates of interest. At the year end the effective rate was 0.04% (2015 - 0.09%). The cash deposits held were as follows:-

                                                                                                                                       2016                 2015

                                                                                                                                       £000                 £000

Sterling - United Kingdom banks                                                                                           23                 1,378

USD - United Kingdom banks                                                                                               47                       -

South African Rand  - United Kingdom banks                                                                          3                       3

South African Rand  - South African banks                                                                            40                     26      

                                                                                                                                                                                                                                                                                           

                                                                                                                                         113                1,407

                                                                                                                                                                                                                                                                                 

 

 

Financial liabilities

 

The Group's financial liabilities consist of other loans. Interest rates charged on these are as follows:

 

 

                                                                        Weighted

                                                                          average

                                                                          effective

                                                                    interest rate                  Within 1

                                                                                   (%)                        year                                               

                                                                                                                £000                                              

30 June 2016

Variable interest rates - SA                                        5.14                        992                                              

                                                                                                                                            

 

 

30 June 2015

Variable interest rates - SA                                        5.66                     1,149   

                                                                                                                                                                                   

 

Other loans relate to a loan agreed on the acquisition of the Ironveld Group. The loan of £992,000 (2015 - £939,000) bears interest at the South African current prime rate, is repayable no later than 31 July 2017 and is secured against the assets of the group. The loan held at 30 June 2015 of £210,000 was settled during the period.

 

Currency exposures

 

The Group undertakes transactions denominated in foreign currencies and is consequently exposed to fluctuations in exchange rates.

 

The carrying amounts of the Group's foreign currency denominated monetary assets and monetary liabilities were as follows:-

 

As at 30 June 2016                                                                                                          Assets       Liabilities

                                                                                                                                          £000                 £000

 

British Pound Sterling (£)                                                                                                      56                   178

USD ($)                                                                                                                               47                       -  

South African Rand (ZAR)                                                                                                   218                1,000
                                                                                                                                                                                                            
                                                                                                                                        321                1,178
                                                                                                                                                                                              

 

As at 30 June 2015                                                                                                           Assets        Liabilities

                                                                                                                                           £000                 £000

 

British Pound Sterling (£)                                                                                                 1,430                   169  

South African Rand (ZAR)                                                                                                     44                1,165

                                                                                                                                                                                                                                                                                                                                         

                                                                                                                                      1,474                1,334        

                                                                                                                                                                                                                                                 

 

Financial commitments and guarantee

 

A rehabilitation guarantee of £599,000 (ZAR 11,993,000) (2015 - Nil) has been issued to the Department of Mineral Resources from two subsidiaries, HW Iron Proprietary Limited and Luge Prospecting and Mining Company Proprietary Limited, in order to comply with Section 41 of the Mineral and Petroleum Resources Development Act, 202 (Act 28 of 2002).  Under this agreement the group will pay deposits to a third party financial institution to be held pending discharge of any potential claim on this guarantee.  At 30 June 2016 £171,000 (ZAR 3,426,000) (2015 - Nil) had been deposited in respect of this agreement and is included in other receivables.  This represents a concentration of credit risk and the group is exposed to currency risks on these amounts.  As the project has not yet commenced then no liability is considered to exist at the reporting date and the amount remains repayable as a current asset.

 

 

19. Share capital

 

Group and Company

                                                                                                                                       2016                 2015

                                                                                                                                       £000                 £000

Allotted, called up and fully paid

327,544,176 (2015 - 324,919,252) ordinary shares of 1p each                                              3,276                3,250

322,447,158 (2015 - 322,447,158) deferred shares of 1p each                                              3,224                3,224

                                                                                                                                                                                       

                                                                

                                                                                                                                      6,500                6,474
                                                                                                                                                                                        

 

In July 2015, 576,667 ordinary shares of 1p each were issued on the exercise of share options.

 

On 15 July 2015 the company issued 841,547 shares to directors in lieu of salary at 5.38 pence per share.  On 7 August 2015 the company issued 315,620 shares to consultants in lieu of payment at 5.67 pence per share.  On 3 February 2016 the company issued 891,090 shares to directors in lieu of salary at 4.2 pence per share.

 

Following the year end, in November 2016, the company completed a placing of 40,000,003 shares raising £1,800,000 before expenses of the issue.

 

Unlike ordinary shares, the deferred shares have no voting rights, no dividend rights and on a return of capital or winding up are entitled to a return of amounts credited as paid. The deferred shares are not transferrable and beneficial interest in the deferred shares can be transferred to such persons as the Directors may determine as custodian for no consideration without sanction of the holder.

 

Share options

 

The Company has a share option scheme for certain employees and former employees of the Group. The share options in issue during the period were as follows:

 

                                                             As at                                                                                        As at
Date                      Exercise                 1 July               Granted          Exercised       Lapsed/          30 June

granted                   price                     2015                 in year             in year        Cancelled           2016

                                                             No.                     No.                   No.                No.                     No.

21 May 2010             10p                    1,600,000                      -                       -                      -          1,600,000

16 August 2012          1p                     6,235,137                      -                       -                      -          6,235,137

14 November 2012      1p                      6,663,505                      -                       -                      -          6,663,505

16 April 2013              1p                     1,066,667                      -              (33,333)                    -          1,033,334

7 November 2013        1p                     2,230,000                      -            (143,333)                    -          2,086,667

1 May 2014                 1p                        600,000                      -            (400,000)                    -            200,000
1 October 2015           1p                                  -         2,500,000                       -                       -          2,500,000

27 January 2016         1p                                  -            445,545                       -                       -            445,545

                                                                                                                                                                                                                                                                                                                                          

 

 

The exercise period of the options is as follows:


Date
granted                      Expiry date
                Exercise period

 

21 May 2010              21 May 2020                to 21 May 2020

 

16 August 2012          16 August 2022

14 November 2012     14 November 2022      The options are exercisable 1/3 on the first anniversary

16 April 2013              16 April 2023                of grant, 1/3 on the second anniversary of grant and the

7 November 2013       7 November 2023        final 1/3 on the first anniversary of grant

1 May 2014                 1 May 2024

1 October 2015           1 October 2025

27 January 2016         27 January 2026

 

Of the options granted on 1 October 2015, 1,000,000 are exercisable following first commercial production from the 15 MW smelter, which is expected in December 2017.

 

The group recognised a share based payment expense of £171,000 (2015 - £221,000) in the period.

 

The aggregate of the estimated fair value of the options granted in the year amounts to £123,000 (2015 - £Nil). The inputs into the Black Scholes Model are as follows:-

 

                                                                                                                                                     2016

Weighted average share price (pence)                                                                                                5.1

Weighted average exercise price (pence)                                                                                           1.0

Expected volatility                                                                                                                   62% to 64%

Weighted average vesting period                                                                                                  2 years

Risk free rate                                                                                                                                    0.47%

 

Expected volatility was determined by calculating the historical volatility of the group's share price over the 3 years prior to the grant date. The expected life used in the model is based on management's best estimate.

 

Share warrants

 

As at 1 July 2015 and at 30 June 2016 the warrants in issue were; 8,399,966 issued at a price of 0.25p each with an expiry date of 24 September 2016.

 

The share warrants were issued as part of the placing pursuant to the terms of a warrant instrument executed by the Company and dated 24 September 2010. Under the warrant Instrument, 8,399,966 warrants were created, with each warrant granting the holder the right to subscribe for one ordinary share at a price of 10p per share (subject to adjustment in limited circumstances such as a subdivision or consolidation of the Company's share capital) payable in cash on exercise.


The warrants were exercisable within six years of being issued subject to the average closing market price of the Company's shares having been at least 15p per ordinary share over a period of at least 30 consecutive days (unless the Board waives this condition). The Company shall procure that the ordinary shares issued pursuant to the exercise of warrants are admitted to trading on AIM. The warrants themselves will not be dealt with or admitted to trading on any market and are only transferable in limited circumstances by their holders.

 

Warrants represent subscription rights for ordinary shares in Ironveld Plc.

 

Warrants may be exercised in whole or in part (and from time to time) prior to the final expiry date. The warrants are non-transferable.

 

In addition to the above warrants, Sylvania Metals Pty Limited entered into a loan facility of 15,000,000 South African Rand, in consideration for which the Company has undertaken to grant Sylvania warrants with effect from 16 August 2012 as a guarantee. Sylvania are entitled, pursuant to these warrants, to subscribe for such number of 1 pence Ordinary Shares as results from dividing £1,500,000 by the volume weighted average price of the Company's shares on AIM for the 90 business days ending on the business day immediately prior to the date of exercise, with such warrants being exercisable during the period commencing on 1 July 2017 and ending on the earlier of repayment in full of the loan facility monies or the fifth anniversary of admission.

 

Such warrants are only exercisable to the extent that any amount is then outstanding under the loan facility. The Company shall procure that any shares issued pursuant to the exercise of the warrants are admitted to trading on AIM. The proceeds derived from the exercise of the warrants will be used only to repay the associated loan.

 

 

20. Reserves

                                                                                                                                     Share

Group                                                                                                  Warrant          premium          Retained

                                                                                                            reserve           account           earnings

                                                                                                               £000                £000                 £000

 

At 1 July 2015                                                                                              21              16,056               (9,750)

Prior period adjustment                                                                                    -                       -                   848  

                                                                                                                                                                                                
At 1 July 2015 - as restated                                                                          21              16,056               (8,902)

Loss for the period                                                                                           -                       -                  (584)

Exchange difference on translation of foreign operations                                      -                       -                  (525)

Issue of share capital                                                                                       -                     80                       -

Adjustment arising from change in non-controlling interests                                 -                       -                  (166)

Credit for equity settled share based payments                                                   -                       -                   171  

                                                                                                                                                                                                                                 
At 30 June 2016                                                                                             21              16,136              (10,006) 

                                                                                                                                                                                           

 

Retained earnings is made up of cumulative profits and losses to date, share based payments, adjustments arising from changes in non-controlling interests and exchange differences on translation of foreign operations.

 

Prior period adjustment

 

In the prior period certain subsidiary tax computations have included claims for tax deductions on costs of exploration incurred in those periods. Under IAS 12 deferred tax provisions were included in the financial statements for each prior period based on the resulting timing differences.

 

It has now been agreed with the South African Revenue Service that claims for tax deductions on the relevant costs of exploration should not be made until profits are generated. Therefore, no timing differences currently arise. The resulting reversal of the deferred tax provisions has been treated as a prior period adjustment and comparative figures have been restated, as, in the opinion of the directors, this produces better information to the shareholders.

 

The prior period adjustment resulted in a reduction in the loss after tax in 2015 of £288,000 and a reduction of the non-controlling interest share in that loss of £52,000.  The net assets at 1 July 2014 were increased by £896,000 and those at 30 June 2015 increased by £1,128,000.  The net assets attributable to owners of the company increased by £739,000 at 1 July 2014, and by £848,000 at 30 June 2015, with the difference being attributed to the non-controlling interest.  Further information is given in note 17, note 23 and the consolidated statement of changes in equity.

 

 

 

Company                                                                                                                      Share

                                                                                                            Warrant           premium       Retained

                                                                                                             reserve           account        earnings

                                                                                                                 £000                  £000               £000

 

At 1 July 2015                                                                                              21              16,056               (3,477)

Loss for the period                                                                                          -                       -                  (424)

Issue of share capital                                                                                      -                    80                       -

Credit for equity settled share based payments                                                 -                       -                   171
                                                                                                                                                                                          
At 30 June 2016                                                                                            21              16,136               (3,730)

                                                                                                                                                                                                                            

                                                                                                                                                                                                                 

 

The balance classified as share premium is the premium on the issue of the Group's equity share capital, comprising 1p ordinary shares and 1p deferred shares less any costs of issuing the shares.

 

The warrant reserve represents the estimated fair value of share warrants issued.

 

 

21. Cash generated from operations

 

Group                                                                                                                              2016                 2015

                                                                                                                                        £000                 £000

 

Operating loss                                                                                                                 (494)                 (520)

Depreciation on property, plant and equipment                                                                    8                       8

Share based payment expense                                                                                        171                   221

                                                                                                                                                                                      
Operating cash flows before movements in working capital                                                  (315)                 (291)

Movement in receivables                                                                                                  (109)                  (16)

Movement in payables                                                                                                        (46)                   24    

                                                                                                                                                                                                                

                                                                                                                                                                                                                                                      

Cash used in operations                                                                                                   (470)                 (283)
Interest paid                                                                                                                           -                      (3) 

                                                                                                                                                                                                           

      

                                                                                                                                                                                                                                                

Net cash used in operations                                                                                            (470)                 (286)                                                                                                                                                                                        

                                                                                                                                                                                                                    


 

Cash and cash equivalents                                                                                              2016                 2015              

                                                                                                                                         £000                 £000

 

Cash and bank balances                                                                                                      113                  1,407

                                                                                                                                                                                                           

 

 

Company                                                                                                                            2016                 2015

                                                                                                                                           £000                 £000

 

Operating loss                                                                                                                      (424)                 (452)

Share based payment expense                                                                                                76                   127

                                                                                                                                                                                                
Operating cash flows before movements in working capital                                                       (348)                 (325)

                                                                                                                               

Movement in receivables                                                                                                             8                   (25)
Movement in payables                                                                                                             109                   113
                                                                                                                                                                                                 

Net cash used in operations                                                                                               (231)                  (237)

                                                                                                                                                                                                           

 

Cash and cash equivalents                                                                                                   2016                  2015

                                                                                                                                            £000                  £000

 

Cash and bank balances                                                                                                           74                 1,381

                                                                                                                                                                                                            

                                                                                                                                                                 

  

 

22. Related party transactions

 

Group and Company

 

The key management personnel of the group are the directors. Directors remuneration is disclosed in Note 5.

 

During the year the Company paid £55,200 (2015 - £36,000) for accounting services to Westleigh Investments Holdings Limited, a company in which G Clarke and N Harrison are materially interested.

 

Other receivable include £2,800 (2015 - £nil) due to Kennedy Ventures Plc, a company in which G Clarke and N Harrison are materially interested. 

 

All transactions are considered to be on terms equivalent to those that prevail in arm's length transactions.


23. Non-controlling interest

                                                                                                                                                     As restated              

                                                                                                                                          2016              2015

                                                                                                                                          £000              £000

At 1 July - as previously stated                                                                                       (3,048)            (3,410)

 

Prior period adjustment                                                                                                     (280)               (157)
                                                                                                                                                                                          
At 1 July - as restated                                                                                                     (3,328)              (3,567)

 

Exchange adjustments                                                                                                       156                   168

Adjustment arising from change in non-controlling interest                                                   (166)                     70

Share of loss for the period                                                                                                     1                      1

                                                                                                                                                                                                                                                                                                                                                                                                                 

At 30 June                                                                                                                     (3,337)              (3,328) 

                                                                                                                                                                                                                                                                                                                                                                                                                                                                  

 

On 12 November 2015 the Group transferred part of its holding in HW Iron (Proprietary) Limited to certain project partners, resulting in a decrease in its interest from 73% to 68%, for £nil consideration.

 

 

 

The difference between the consideration paid/received and the change in non-controlling interest has been adjusted against retained earnings attributable to the owners of the Group in accordance with IFRS 10.

 

The table below shows details of non-wholly owned subsidiaries of the Group that have material non-controlling interests:

 

                                                                                               Profit/(loss)

                                                      Proportion of                     allocated to                         Accumulated

                                                    of voting rights                 non-controlling                     non-controlling

                                                   and shares held                     interests                                interests

                                                                                                        As restated                              As restated

                                                        2016        (2015)           2016                2015                2016                 2015

                                                                                            £000                £000                £000                 £000

 

HW Iron (Proprietary) Limited             32%         (27%)                -                       -                1,061                   939
Lapon Mining (Proprietary) Limited      26%         (26%)                -                       -                2,277                2,390
Other non-controlling interests                                                 (1)                    (1)                    (1)                    (1)

                                                                                                                                                                                                                               
                                                                                             (1)                    (1)               3,337                3,328         

                                                                                                                                                                                                                                
 

Summarised financial information in respect of each of the Group's subsidiaries that have material non-controlling interests is set out below. The summarised financial information below represents amounts before intragroup eliminations. The accounts of the subsidiaries have been translated from their presentational currency of South African Rand (Zar) using the Zar:GBP exchange rate prevailing at 30 June 2016 of 20.0272 (2015 - 19.089).

 

HW Iron (Proprietary) Limited                 

                                                                                                                                                   As restated                

                                                                                                                                       2016                 2015

                                                                                                                                       £000                 £000
Current assets                                                                                                                  171                      1
Non-current assets                                                                                                        5,817                 6,006
                                                                                                                                                                                  
Current liabilities                                                                                                           (1,480)            (1,480)
Non-current liabilities                                                                                                    (1,291)            (1,290)
                                                                                                                                                                                       
Equity attributable to owners of the Company                                                                   2,156              2,298
Non-controlling interest                                                                                                   1,061                 939

                                                                                                                                                                                                                                                                                   

 

Revenue                                                                                                                             -                     -
Expenses                                                                                                                           1                     -  

                                                                                                                                                                                                                                                                                                                                                                                                               


Profit/(loss) for the year                                                                                                        (1)                    - 

                                                                                                                                                                                                                              

Attributable to the owners of the Company                                                                           (1)                   -
Attributable to the non-controlling interests                                                                            -                     -

                                                                                                                                                                                                                                                                        

             

Dividends paid to non-controlling interests                                                                             -                     -
Net cash inflow from operating activities                                                                          (252)                152
Net cash outflow from investing activities                                                                               7              (200)
Net cash inflow from financing activities                                                                             245                  49
                                                                                                                                                                                   
Net cash inflow                                                                                                                   -                      1 

                                                                                                                                                                                                                                                                                                                                                      

 

 

Lapon Mining (Proprietary) Limited

 

                                                                                                                                                       As restated

                                                                                                                                       2016                  2015

                                                                                                                                       £000                  £000

Current assets                                                                                                                        -                       -
Non-current assets                                                                                                         13,222            13,843
                                                                                                                                                                                                     
Current liabilities                                                                                                             (1,056)            (1,077)

Non-current liabilities                                                                                                       (3,407)           (3,575)
                                                                                                                                                                                                    
Equity attributable to owners of the Company                                                                     6,482              6,801
Non-controlling interest                                                                                                     2,277              2,390

                                                                                                                                                                                                                                                                                                                   

 

Revenue                                                                                                                                 -                        -
Expenses                                                                                                                               1                        -
                                                                                                                                                                                                        
Profit/(loss) for the year                                                                                                         (1)                        -
                                                                                                                                                                                                         

 

Attributable to the owners of the Company                                                                            (1)                           -           
Attributable to the non-controlling interests                                                                              -                           -

                                                                                                                                                                                                                                                                                                                        

 

Dividends paid to non-controlling interests                                                                               -                       -
Net cash inflow from operating activities                                                                                (1)                      -
Net cash outflow from investing activities                                                                              (26)                (128)
Net cash inflow from financing activities                                                                                  27                  128
                                                                                                                                                                                                         
Net cash inflow                                                                                                                       -                         -

                                                                                                                                                                                                                                                                                                                

 

 

24. Control
 

The Directors consider that there is no overall controlling party.


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