Final Results

RNS Number : 7739I
Kodal Minerals PLC
04 June 2014
 



Kodal Minerals plc

("Kodal Minerals" or the "Company" or the "Group"")

 

Final results for the year ended 31 March 2014

 

This year has been a transformational period for Kodal Minerals plc as it continues to develop a titanomagnetite and phosphate deposit in Norway, referred to as the "Kodal Project":

Operational Highlights

·      In July 2013, the Group assisted in the successful application to the Norwegian Directorate of Mining to upgrade the exploration licences over the Kodal Project area to extraction licences;

·      As part of its IPO process, the Group was able to declare a JORC compliant total indicated resource of 14.6Mt at 2.26% P (5.18% P2O5) and 24.12% Fe with an inferred resource of 34.3Mt at 2% P (4.59% P2O5) and 20.38% Fe

·      Consultants have been engaged and work has commenced on the baseline environmental and social studies for the Kodal Project;

·      Subsequent to the year end, the Group has submitted an application to the Larvik and Andebu municipalities (the two Norwegian municipalities in which the Kodal Project lies) for a change of land use permission to allow mining activities; and

·      In March 2014 the Group was granted 7 new exploration licences by the Norwegian Directorate of Mining covering an area of nearly 20 square kilometres around the Kodal Project, including an area in which a geophysical anomaly has historically been reported.

 

Financial Highlights

·      During the summer of 2013, the Group raised £0.3 million from private investors, to finance the analysis of the 918 metre test drilling undertaken in 2012 and undertake other preparatory work for the IPO;

·      In December 2013, Kodal Minerals completed its IPO and admission to AIM ("Admission") and exercised its option to acquire the licences for the Kodal Project;

·      The Company raised £1.0 million from a placing of ordinary shares at the time of Admission and in January 2014 raised a further £1.25 million from a further placing;

·      The consolidated results of the Group for the year to 31 March 2014 show a loss of £232,000 (2013: loss of £25,000); and

·      As at 31 March 2014, the Group had cash balances of £1,501,000 compared with £20,000 at 31 March 2013.

 

 

Commenting on the Group's activities, Chairman David Jones said:

"This has been a challenging and yet also highly successful period for the Group. The completion of the IPO on AIM and the associated exercise of our option to acquire the extraction licences for the Kodal Project in Norway was fundamental to the Group's future and has also allowed us to raise funding from the public markets. The majority of the work for the rest of this year is expected to involve the continued collection of environmental and social baseline data and the progression of the permitting and planning processes with the local municipalities in Norway.

We are encouraged by the preliminary metallurgical test work, including the very high phosphate concentrates we have produced, and will continue to investigate methods for improving the composition of our iron ore concentrate.

We are very grateful for the continued hard work and commitment of all involved and to the support shown by our shareholders."

The Company's Annual Report and Accounts will be posted to shareholders shortly and will be available to view and download on the Company's website at www.kodalminerals.com in accordance with AIM Rule 20.

 

For further information, please contact:

 

Kodal Minerals plc

Luke Bryan, CEO

 

Tel: 020 3463 2260

 

Allenby Capital Limited, Nominated Adviser

Jeremy Porter/Nick Harriss

 

 

Tel: 020 3328 5656

SP Angel Corporate Finance LLP, Financial Adviser & Broker

John Mackay/Laura Littley

 

 

Tel: 020 3463 2260

Yellow Jersey PR Ltd, Financial PR

Dominic Barretto/Kelsey Traynor

 

Tel: 07768 537 739

 

 

Chief Executive Officer's statement

 

I am very pleased to present my report for the year ended 31 March 2014, which is our first set of results as a public company traded on AIM.

 

IPO and acquisition of the Kodal Project

 

The most significant event in the year was the successful completion of the Initial Public Offering ("IPO") of Kodal Minerals and its admission to AIM in December 2013. The completion of the IPO also satisfied the last condition to allow the Group to exercise its option to acquire the Kodal Project licences from Tetra Minerals Oy ("Tetra"). The acquisition was completed by the issue of 250 million ordinary shares ("Shares") in the Company to Tetra and a cash payment of €100,000.

 

Under the terms of the acquisition, Tetra will also receive a royalty of 1.5 per cent of revenue generated from mineral sales in connection with the Kodal Project licences. In addition Tetra has also been granted options over additional Shares which become exercisable only if the JORC indicated resource of phosphate minerals exceeds certain relatively high threshold levels, the likelihood of which the directors of the Company ("Directors") presently consider to be remote.

 

Description of the Kodal Project

 

The Kodal Project is located in the Vestfold county of Norway and the boundary between the Andebu and Larvik municipalities crosses the project area. It is a phosphorus (P) and iron (Fe) project and is situated in the Lågen valley, 20 km north of Larvik. The Kodal Project forms part of the Vestfold-Ringerike Graben geological structure and is located approximately 85 km south-west of Oslo.

 

The Kodal Project area is covered by three contiguous extraction licences issued by the Norwegian Directorate of Mining which expire in July 2023. The location of the Kodal Project extraction licences is shown below.

 

 

Location map of the project concessions

 

The Kodal Project's mineralised zone has been subject to two phases of historic exploration and geological modelling since the 1960s. All historic exploration was undertaken by Norsk Hydro ASA ("Norsk Hydro"), a part state owned Norwegian energy and resources group.

 

The first phase was completed between 1960 and 1963 with 40 shallow (less than 50 metres) diamond drill holes over 20 profiles with subsequent follow-up drilling between 1974 and 1975 when an additional 20 diamond drill holes were drilled. These additional holes are deeper, with depths ranging from 110 to 550 metres.

 

More recently, Kodal Minerals drilled seven diamond drill holes in 2012, comprising 918 metres of drilling designed to verify historical drill data. A summary of drilling undertaken on the Kodal Project is set out in Table 1 below.

 


Years

Metres

Hole IDs

Diameter

A

1961

2062.90 m

BH01 - BH39, LH01-LH02B

EX

18.6 mm

B

1974

4198.20 m

BH41 - BH58

BQ

36.5 mm

C

2012

918.40 m

BH60-BH68

BQTK

40.5 mm


Total

7179.5 m




 

Table 1. Drilling undertaken on the Kodal Project.

 

Subsequent to drilling, Kodal Minerals undertook re-logging of all available historic core in 2013 and captured geological, mineralogical, alteration and geotechnical characteristics including core preservation, sampling and core recovery.

 

Historic data has been validated in three ways:

 

·      CSA Global (UK) Ltd ("CSA") has validated hard-copy grade data versus the digital data supplied by Kodal Minerals.

·      Kodal Minerals has undertaken a twin drilling programme, the results of which have been assessed by CSA.

·      Kodal Minerals has undertaken re-sampling and analysis of a portion of the available historic core, by current methods. This data has been assessed by CSA.

 

Historical mineral processing and metallurgical test work has been completed on samples obtained from the Kodal Project and reported as part of historical feasibility study work completed by Norsk Hydro in the 1970s. In addition,  preliminary test work was completed by Kodal Minerals in 2013 on a bulk composite sample (23kg) of drill core.

 

The Kodal Project has a JORC compliant total Indicated Resource of 14.6 million tonnes (Mt) at 2.26% P (5.18% P2O5) and 24.12% Fe with an Inferred Resource of 34.31 Mt at 2% P (4.59% P2O5) and 20.38% Fe. Table 2 below, sets out a summary of the Kodal Project resource by status.

 

Category

Gross

Net attributable

Operator


Tonnes
(millions)

Grade

Contained Metal

Tonnes
(millions)

Grade

Contained Metal




 

P2O5

(%)

 

Fe
(%)

 

P2O5

(Mt)

 

Fe

(Mt)


 

P2O5

(%)

 

Fe
(%)

 

P2O5

(Mt)

 

Fe

(Mt)


Ore/Mineral reserves per asset

 -

-

 -

-

-

 -

-

-

 -


Proved

 -

-

-

-

-

-

 -


Probable

 -

-

 -

-

-

 -

-

-

 -


Sub-total

 -

-

-

-

-

-


Mineral resources per asset












Measured

-

 -

-

-

-

-

 -

 -


Indicated

14.6

5.18

24.1

0.76

3.52

14.6

5.18

24.1

0.76

3.52

Kodal Minerals  

Inferred

34.3

4.59

20.0

1.58

6.99

34.3

4.59

20.0

1.58

6.99

Kodal Minerals  

Sub-total

48.9

4.77

21.49

2.34

10.51

48.9

4.77

21.49

2.34

10.51

Kodal Minerals   

Total

48.9

4.77

21.49

2.34

10.51

48.9

4.77

21.49

2.34

10.51

Kodal Minerals   

               

Table 2: Summary resources by status

 

Metallurgical test work

 

In March 2014, the Company reported the results of additional metallurgical test work. The sample material for these tests was drawn from drill core but cannot be considered to be representative of the deposit. The intention of the tests was to provide samples of both phosphate and iron concentrates for further analysis and to provide a sample of tailings material for preliminary analysis. The processing route was developed in the initial test work undertaken in 2013, and utilises froth flotation and magnetic separation.

 

The concentrate grades from these further tests were broadly in line with expectations based on the results obtained in 2013, with the phosphate concentrate grade dropping slightly while the iron ore grade improved slightly.

 


Phosphate concentrate

Iron concentrate

2013 Results

P2O5 41.8%

Fe 62%, Ti 8.7%

2014 Results

P2O5 40.5%

Fe 63.7%, Ti 5.2%

 

These tests indicate that the Kodal Project will produce a high-grade phosphate concentrate with both test programmes yielding a concentrate of over 40% P2O5. The increase in the iron concentrate grade is also very positive, especially in combination with the reduction in titanium.

 

Granting of additional permits

 

Subsequent to the IPO, the Group applied for and was granted seven new exploration licences by the Norwegian Directorate of Mining. These new licences cover a total land area of 19.795 km2 and surround the three extraction licences already held by the Group for the Kodal Project.

 

The new licences include a reported positive magnetic and gravity anomaly identified by ground geophysics. The Company has three reports detailing geophysics in the project area dated 1973, 1976 and 1983 by various authors including the Norwegian Geological Survey ("NGU").

 

Kodal Minerals is currently completing geological mapping of the entire new area as well as investigating known mineralised occurrences in the region. Limited ground geophysics is planned as a follow up to the mapping.

 

Site development

 

At the Kodal Project site, basic infrastructure has been put in place to support the field work planned to be undertaken over the summer.

 

Environmental monitoring has also started with the installation of two automatic weather stations, one at either end of the project area. These stations will collect local weather data, which will be used to support the Environmental and Social Impact Assessment ("ESIA") studies. The monitoring of stream flows in the Kodal Project area has also been under way since the spring thaw.

 

The format of the ESIA document has been completed following meetings with national, regional and municipal level authorities in Norway. The expected format and content of an ESIA in Norway is somewhat specific to Norway and the Company has spent some time ensuring the planned format meets the Norwegian requirements while still adhering to the Equator Principles risk management framework.

 

Environmental baseline studies are in progress as are studies on the potential social impact of the project.

 

The Company has completed a concept level site layout including approximate waste rock and tailings disposal options. The concept appears to offer a very compact zone of impact and if supported by future studies it seems that the Kodal Project may be able to be operated and decommissioned leaving a very moderate physical impact on the immediate environment.

 

Kodal Minerals has also engaged the services of various consultants to help with the project.

 

Change of land use application

 

Since the year end, the Group has submitted applications to the Larvik and Andebu municipalities (the two local municipalities in which the Kodal Project is located) for change of land use permission to allow mining operations to be undertaken. The two municipal planning processes operate according to different timetables and do not have defined completion dates. The Group expects that the initial decisions on area land use may be determined during the next 12 months.

 

Financing

 

During the summer of 2013, the Company raised £300,000 from the issue of Shares to private investors. These funds were used to continue the assay and metallurgical work and other preparatory work for the IPO.

 

At the time of the IPO, the Company completed a placing to institutional and professional investors to raise £1.0 million and in January 2014 completed a follow on placing raising a further £1.25 million. These funds have been used to meet the costs of the IPO and finance the ongoing development work at the Kodal Project, as well as meeting the Group's working capital requirements. As at 31 March 2014, the Group had cash balances of £1,501,000.

 

Outlook

 

During the year, the Group has made significant progress towards its objective of bringing the Kodal Project into production.

 

For the rest of the current financial year, the focus will be on progressing the change of land use applications with the municipalities and completing the environmental base line studies.

 

We will also undertake limited exploration studies on the new exploration licences around the existing Kodal Project.

 

 

 

Luke Bryan

CEO

3 June 2014

 

 

 



 

Consolidated Statement of Comprehensive Income

 

 


Note


Year ended 31 March

2014


Year ended 31 March

2013




£


£

Continuing operations






Revenue



-


-







Administrative expenses

2


(195,151)


(18,596)

Share based payments

5


(33,056)


-







OPERATING LOSS

2


(228,207)


(18,596)







Finance costs



(4,500)


(69)

Finance income



2


-







 LOSS BEFORE TAX



(232,705)


(18,665)







Taxation

6


-


-







LOSS FOR THE YEAR FROM CONTINUING OPERATIONS



 

(232,705)


 

(18,665)







Discontinued operations












Profit/(loss) after tax for the year from discontinued operations

16


1,238


(6,075)







LOSS FOR THE YEAR



(231,467)


(24,740)







OTHER COMPREHENSIVE INCOME












Items that may be subsequently reclassified to profit and loss












Currency translation loss



(245)


-







TOTAL COMPREHENSIVE INCOME FOR THE YEAR



 

(231,712)


 

(24,740)







Loss per share






Basic and diluted - earnings per share on continued operations - pence per share

4


(0.0688)


(0.0112)

Basic and diluted - earnings per share on total earnings- pence per share

4


(0.0684)


(0.0112)

 

 

The loss for the current and prior years and the total comprehensive income for the current and the prior years are wholly attributable to equity holders of the parent company.



 

 

Consolidated and Parent Company Statements of Financial Position

 

 





Group

31 March 2014


Group

31 March 2013


Company

31 March 2014


Company

31 March 2013


Note



£


£


£


£

NON CURRENT ASSETS











Intangible assets

7



2,944,069


355,014


-


355,014

Property, plant and equipment

8



77,157


-


-


-

Amounts due from

subsidiary undertakings




 

-


 

-


 

2,554,211


 

-

Investments in subsidiary

undertakings

9



 

-


 

-


 

900,010


 

-



























3,021,226


355,014


3,454,221


355,014

CURRENT ASSETS









Other receivables

10



82,994


5,476


73,330


5,476

Cash and cash equivalents

11



1,501,343


19,605


1,332,834


19,605














1,584,337


25,081


1,406,164


25,081










TOTAL ASSETS




4,605,563


380,095


4,860,385


380,095





















CURRENT LIABILITIES











Trade and other payables

12



(97,930)


(136,955)


(85,120)


(136,955)












TOTAL LIABILITIES




(97,930)


(136,955)


(85,120)


(136,955)























NET ASSETS




 

4,507,633


 

243,140


 

4,775,265


 

243,140












EQUITY











Attributable to owners of the Parent:











Share capital

13



240,700


54,804


240,700


54,804

Share premium account

13



4,527,078


249,825


4,527,078


249,825

Share based payment reserve




33,056


-


33,056


-

Translation reserve




(245)


-


-


-

Retained deficit




(292,956)


(61,489)


(25,569)


(61,489)












TOTAL EQUITY




4,507,633


243,140


4,775,265


243,140

                   



 

 

Consolidated Statement of Changes in Equity

 


Note

Share capital


Share premium account


Retained deficit


Share based payments reserve


 

Translation reserve


Total equity

Group


£


£


£


£


£


£

At 31 March 2012


48


49,995


(36,749)


-


-


13,294

 

Comprehensive income













Loss for the year


-


-


(24,740)


-


-


(24,740)














Total comprehensive income for the year


-


-


(24,740)


 

-


 

-


(24,740)














Transactions with owners













Proceeds from shares issued

13

7,813


242,188


-


-


-


250,001

Bonus issue of shares

13

46,800


(46,800)


-


-


-


-

Shares in settlement of services

 

13

143


4,442


-


 

-


 

-


4,585

At 31 March 2013


54,804


249,825


(61,489)


-


-


243,140














Comprehensive income













Loss for the year


-


-


(231,467)


-


-


(231,467)

Other comprehensive income













Currency translation loss


-


-


-


-


(245)


(245)














Total comprehensive income for the year


-


-


(231,467)


 

-


 

(245)


(231,712)














Transactions with owners













Proceeds from shares issued

13

81,722


2,474,212


-


-


-


2,555,934

Share issue expenses

13

-


(416,933)


-


-


-


(416,933)

Shares issued to purchase Kodal Phosphate AS

 

13

78,125


1,671,875


-


 

-


 

-


1,750,000

Shares in settlement of services

 

13

26,049


548,099


-


 

-


 

-


574,148

Share based payment


-


-


-


33,056


-


33,056

At 31 March 2014


240,700


4,527,078


(292,956)


33,056


(245)


4,507,633

 



 

 

Parent Company Statement of Changes in Equity

 


Note

Share capital


Share premium account


Retained deficit


Share based payments reserve


Total equity

Company


£


£


£


£


£

At 31 March 2012


48


49,995


(36,749)


-


13,294

 

Comprehensive income











Loss for the year


-


-


(24,740)


-


(24,740)

Other comprehensive income


-


-


-


-


-












Total comprehensive income for the year


-


-


(24,740)


 

-


(24,740)












Transactions with owners











Proceeds from shares issued

13

7,813


242,188


-


-


250,001

Bonus issue of shares

13

46,800


(46,800)


-


-


-

Shares in settlement of services


143


4,442


-


-


4,585

At 31 March 2013


54,804


249,825


(61,489)




243,140












Comprehensive income











Profit for the year


-


-


35,920


-


35,920

Other comprehensive income


-


-


-


-


-












Total comprehensive profit for the year


-


-


35,920


 

-


35,920












Transactions with owners











Proceeds from shares issued

13

81,722


2,474,212






2,555,934

Share issue expenses

13

-


(416,933)


-


-


(416,933)

Shares issued to purchase Kodal Phosphate AS

 

13

78,125


1,671,875


-


 

-


1,750,000

Shares in settlement of services

13

26,049


548,099


-


-


574,148

Share based payment


-


-


-


33,056


33,056

At 31 March 2014


 

240,700


4,527,078


(25,569)


 

33,056


4,775,265

 



 

 

Consolidated and Parent Company Statements of Cash Flows

 

 

 



Group

Year ended


Group

Year ended


Company

Year ended


Company

Year ended




31 March 2014


31 March 2013


31 March 2014


31 March 2013


Note


£


£


£


£

Cash flows from operating activities










(Loss) / profit before tax

2


(232,705)


(18,665)


35,920


(18,665)

Adjustments for non-cash items:










Share based payments



33,056


-


33,056


-











Operating cash flow before movements in working capital



(199,649)


(18,665)


 

68,976


(18,665)











Movement in working capital










(Increase) / decrease in receivables



(77,518)


9,524


(67,854)


9,524

(Decrease) / increase in payables



(39,025)


118,806


(51,835)


118,806

Net movements in working capital



(116,543)


128,330


(119,689)


128,330











Net cash outflow from operating activities



(316,192)


109,665


(50,713)


109,665











Cash flows from investing activities










Sale of intangible assets



-


-


900,000


-

Purchase of property, plant and equipment



(80,614)


-


-


-

Purchase of intangible assets



(441,950)


(343,728)


(153,848)


(343,728)

Disposal cost for discontinued operation



(3,762)


-


-


-

Investment in subsidiary undertakings



-


-


(900,000)


-

Loans to subsidiary undertakings



-


-


(804,211)


-

 

Net cash outflow from investing activities



(526,326)


(343,728)


 

(958,059)


(343,728)





















Cash flow from financing activities










Loan received



900,000


-


900,000


-

Loan repaid



(900,000)


-


(900,000)


-

Interest received



2


-


-


-

Interest paid



(4,500)


(69)


(4,500)


(69)

Net proceeds from share issues

13


2,326,501


250,001


2,326,501


250,001











Net cash inflow from financing activities



2,322,003


249,932


2,322,001


249,932











Increase in cash and cash equivalents



1,479,485


15,869


1,313,229


15,869

Cash and cash equivalents at beginning of the year

 

 


19,605


3,736


 

19,605


3,736

Exchange gain on cash



2,253


-


-


-











Cash and cash equivalents at end of the year

 

11


1,501,343


19,605


 

1,332,834


19,605











 

Cash and cash equivalents comprise cash on hand and bank balances.

 

 

NOTES TO THE FINANCIAL STATEMENTS

 

            BASIS OF PREPARATION

 

The financial information set out in this announcement is abridged and does not constitute the Company's statutory financial statements for the year ended 31 March 2014. The financial information has been extracted from the financial statements for the year ended 31 March 2014, which have been prepared in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board and as adopted by the European Union, and were approved by the Board on 3 June 2014 and on which the auditors' have reported without qualification and which did not contain an emphasis of matter paragraph nor a statement under section 498(2) or (3) of the Companies Act 2006.

 

 

The consolidated financial statements of Kodal Minerals Plc are prepared in accordance with the historical cost convention and in accordance with International Financial Reporting Standards ("IFRSs"), as adopted by the European Union ("EU") and in accordance with the provisions of the Companies Act 2006.  The Company's ordinary shares are quoted on AIM, a market operated by the London Stock Exchange.

 

Going concern

 

The Group has not earned revenue during the year to 31 March 2014 as it is still in the exploration and development phases of its business. The operations of the Group are currently being financed from funds which the Company has raised from the issue of new Shares.

 

As at 31 March 2014, the Group held cash balances of £1.5 million.

 

The Directors have prepared cash flow forecasts for the period ending 30 September 2015. The forecasts include the unavoidable running costs of the Group and limited discretionary exploration and development expenditure.  The forecasts demonstrate that the Group has sufficient cash resources available to allow it to continue in business for a period of at least twelve months from the date of approval of these financial statements without the need for a further fund raising.  However, further fund raising will be required at an appropriate time in order to complete the project plan.  Accordingly, the financial statements have been prepared on a going concern basis.

 

Basis of consolidation

 

The Group financial statements consolidate those of the Company and all of its subsidiary undertakings drawn up to the statement of financial position date. Subsidiary undertakings are entities over which the Group has the power to control the financial and operating policies so as to obtain benefits from their activities. The Group obtains and exercises control through voting rights.

 

Unrealised gains on transactions between the Company and its subsidiaries are eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Amounts reported in the financial statements of subsidiaries have been adjusted where necessary to ensure consistency with the accounting policies adopted by the Group.

 

Discontinued operations

 

The Group reports the results of discontinued operations in the period in which they occur separately within the consolidated statement of income as "discontinued operations". All prior period consolidated statements of income are adjusted to report the results of the component within discontinued operations. In the consolidated statement of cash flows the cash flows resulting from discontinued operations are presented separately from cash flows resulting from continuing operations; prior year presentation has been adjusted accordingly.

 

Foreign currency translation

 

Items included in the Group's consolidated financial statements are measured using the currency of the primary economic environment in which the Group operates ("the functional currency"). The financial statements are presented in pounds sterling ("£"), which is the functional and presentational currency of the Parent Company and the presentational currency of the Group.  End of year balances in the Group's Norwegian subsidiary undertakings were converted using and end of year rate of NOK 1 : £0.099980 (2013: there were no balances to convert).

 

Transactions in foreign currencies are recorded using the rate of exchange ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are translated using the rate of exchange ruling at the reporting date and the gains or losses on translation are included in profit and loss.  Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates as at the dates of the original transactions.  Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value was determined.

 

Deferred taxation

 

Deferred tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements. Deferred tax is determined using tax rates (and laws) that have been enacted or substantively enacted by the reporting date and are expected to apply when the related deferred tax is realised or the deferred liability is settled.

 

Deferred tax assets are recognised to the extent that it is probable that the future taxable profit will be available against which the temporary differences can be utilised.

 

Cash and cash equivalents

 

Cash and cash equivalents in the Statement of Financial Position comprise cash at bank and in hand.

 

Other receivables

 

Other receivables are carried at original amount less provision made for impairment of these receivables. A provision for impairment of receivables is established when there is objective evidence that the Group will not be able to collect all amounts due according to the original terms of the receivables. The amount of the provision is the difference between the assets' carrying amount and the recoverable amount. Provisions for impairment of receivables are included in the profit and loss.

 

Trade and other payables

 

Trade payables and other payables represent liabilities for goods and services provided to the Group prior to the end of the financial year that are unpaid and arise when the Group becomes obliged to make future payments in respect of the purchase of these goods and services. The amounts are unsecured and are usually paid within 30 days of recognition. 
 

Provisions

 

A provision is recognised when a present obligation (legal or constructive) has arisen as a result of a past event and it is probable that a future outflow of resources will be required to settle the obligation, provided that a reliable estimate can be made of the amount of the obligation.

 

When the effect of discounting is material, the amount recognised for a provision is the present value at the end of the reporting period of the future expenditures expected to be required to settle the obligation. The increase in the discounted present value amount arising from the passage of time is included in profit or loss.

 

Property, plant and equipment

 

Property, plant and equipment are stated at cost less accumulated depreciation and any recognised impairment loss. Depreciation is charged so as to write off the costs of assets, over their estimated useful lives, using the straight line method, on the following basis:

 

Plant and machinery                            4 years

Motor vehicles                                     4 years

Fixtures, fittings and equipment        4 years

 

Where property, plant and equipment are used in exploration and evaluation activities, the depreciation of the assets is capitalised as part of the cost of exploration and evaluation assets.  The assets' residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each reporting period.

 

Exploration and evaluation expenditure

 

In accordance with IFRS 6, exploration and evaluation costs incurred before the Group obtains legal rights to explore in a specific area (a "project area") are taken to profit or loss.

 

Upon obtaining legal rights to explore in a project area, the fair value of the consideration paid for acquiring those rights and subsequent exploration and evaluation costs are capitalised as exploration and evaluation assets. The costs of exploring for and evaluating mineral resources are accumulated with reference to appropriate cost centres being project areas or groups of project areas.

 

Upon the technical feasibility and commercial viability of extracting the relevant mineral resources becoming demonstrable, the Group ceases further capitalisation of costs under IFRS 6.

 

Exploration and evaluation assets are not amortised prior to the conclusion of appraisal activities, but are carried at cost less impairment, where the impairment tests are detailed below.

 

Exploration and evaluation assets are carried forward until the existence (or otherwise) of commercial reserves is determined:

·      where commercial reserves have been discovered, the carrying value of the exploration and evaluation assets are reclassified as development and production assets and amortised on an expected unit production basis; or

·      where a project area is abandoned or a decision is made to perform no further work, the exploration and evaluation assets are written off in full to profit or loss.

 

Exploration and evaluation - impairment

 

Project areas, or groups of project areas, are determined to be cash generating units for the purposes of assessment of impairment.

 

With reference to a project area or group of project areas, the exploration and evaluation assets (along with associated production and development assets) are assessed for impairment when such facts and circumstances suggest that the carrying amount of the assets may exceed the recoverable amount.

 

Such indicators include, but are not limited to, those situations outlined in paragraph 20 of IFRS 6 and include the point at which a determination is made as to whether or not commercial reserves exist.

 

The aggregate carrying value is compared against the expected recoverable amount, generally by reference to the present value of the future net cash flows expected to be derived from production of the commercial reserves.

 

Intangible assets and impairment

 

Externally acquired intangible assets are initially recognised at cost and subsequently amortised over their useful economic lives.  Amortisation is charged so as to write off the costs of intangible assets, over their estimated useful lives, using the straight line method, on the following basis:

 

Software                                                 3 years

 

Share capital

 

Ordinary shares are classified as equity. Incremental costs directly attributable to the increase of new shares or options are shown in equity as a deduction from the proceeds.

 

Equity settled transactions

 

The Group has issued shares as consideration for services received. Equity settled share based payments are measured at fair value at the date of issue.

 

The Group has granted equity settled options. The cost of equity settled transactions is measured by reference to the fair value at the date on which they were granted and is recognised as an expense over the vesting period, which ends on the date the employee becomes fully entitled to the award. Fair value is determined by using the Black-Scholes option pricing model.

 

In valuing equity settled transactions, no account is taken of any service and performance (vesting conditions), other than performance conditions linked to the price of the shares of the Parent Company (market conditions). Any other conditions which are required to be met in order for the Director and an external consultant to become fully entitled to an award are considered to be non-vesting conditions. Market performance conditions, non-vesting conditions are taken into account in determining the grant value.

 

No expense is recognised for awards that do not ultimately vest, except for awards where vesting is conditional upon a market or non-vesting condition, which are vesting irrespective of whether or not the market or non-vesting condition is satisfied, provided that all other performance or service conditions are satisfied.

 

At each reporting date before vesting, the cumulative expense is calculated; representing the extent to which the vesting period has expired and management's best estimate of the number of equity instruments that will ultimately vest. The movement in the cumulative expense since the previous reporting date is recognised in the profit and loss, with a corresponding entry in equity.

 

Where the terms of the equity-settled award are modified or a new award is designated as replacing a cancelled or settled award, the cost based on the original award terms continues to be recognised over the original vesting period. In addition, an expense is recognised over the remainder of the new vesting period for the incremental fair value of any modification, based on the difference between the fair value of the original award and the fair value of the modified award, both as measured on the date of the modification. No reduction is recognised if the difference is negative.

 

Where an equity based award is cancelled (including when a non-vesting condition within the control of the entity or employee is not met), it is treated as if it had vested on the date of the cancellation, and the cost not yet recognised in  profit and loss for the award is expensed immediately. Any compensation paid up to the fair value of the award at the cancellation or settlement date is deducted from equity, with any excess over fair value being treated as an expense.

 

Segmental reporting

 

Operating segments are reported in a manner consistent with the internal reporting provided to the Board of Directors, which has been identified as the Chief Operating Decision Maker. The Board of Directors is responsible for allocating resources and assessing performance of the operating segments in line with the strategic direction of the company.

 

Financial instruments

 

IFRS 7 requires information to be disclosed about the impact of financial instruments on the Group's risk profile, how the risks arising from financial instruments might affect the entity's performance, and how these risks are being managed. 

 

Financial assets and financial liabilities are recognised on the Statement of Financial Position when the Group becomes a party to the contractual provisions of the instrument.

 

The Group's policies include that no trading in derivative financial instruments shall be undertaken.

 

The required disclosures have been made in Note 15 to the accounts.

 

Critical accounting judgements and estimates

 

The preparation of these consolidated financial statements in accordance with International Financial Reporting Standards requires the use of accounting estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the consolidated financial statements and the reported amounts of income and expenses during the reporting period. Although these estimates are based on management's best knowledge of current events and actions, actual results ultimately may differ from those estimates. IFRSs also require management to exercise its judgement in the process of applying the Group's accounting policies.

 

The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of the assets and liabilities within the next financial year are addressed below.

 

Exploration and evaluation expenditure

 

The Group has capitalised all expenditure incurred in relation to exploration and evaluation of the Kodal Project, a phosphate and titanomagnetite deposit in southern Norway which the Group is treating as a project area, in each period presented in the consolidated financial statements. The Company signed binding heads of terms in January 2012 to acquire the legal and beneficial ownership to licences which granted the right to explore and evaluate mineral resources in the Kodal Project area. Legal completion for this option agreement occurred in October 2012 and on 30 December 2013 the Company exercised its option to complete the licence acquisition. The Directors consider it appropriate to capitalise costs directly attributable to exploration and evaluation activities on the Kodal Project and has been doing so from January 2012 in accordance with the accounting policy for these costs.  The carrying value of exploration and evaluation assets at 31 March 2014 was £2,944,069 (2013: £355,014) and the directors do not consider these assets to require impairment.

 

Share based payments

 

The Group has recorded charges for share based payments of £33,056 (2013: £nil).

 

For option based share based payments, management estimate certain factors used in the option pricing model, including volatility, exercise date of options and number of options likely to be exercised. If these estimates vary from actual occurrence, this will impact on the value of the equity carried in the reserves.

 

Further detailed analysis of the critical judgements and estimates relating to share based payments is addressed in Note 5.

 

Going concern

 

The Group has not earned revenue during the year to 31 March 2014 as it is still in the exploration and development phases of its business. The operations of the Group are currently being financed from funds which the Company has raised from the issue of new Shares.

 

As at 31 March 2014, the Group held cash balances of £1.5 million.

 

The Directors have prepared cash flow forecasts for the period ending 30 September 2015. The forecasts include the unavoidable running costs of the Group and limited discretionary exploration and development expenditure.  The forecasts demonstrate that the Group has sufficient cash resources available to allow it to continue in business for a period of at least twelve months from the date of approval of these financial statements without the need for a further fund raising.  However, further fund raising will be required at an appropriate time in order to complete the project plan.  Accordingly, the financial statements have been prepared on a going concern basis.

 

Tetra option agreement (see note 5)

 

An agreement between the Group and Tetra Minerals Oy ("Tetra"), granted to Tetra an option to subscribe for Shares in the Company. The maximum number of Shares that are subject to the option is 714,285,714, corresponding to the number of Shares that would be issued for a total amount of £5 million at 0.7 pence per Share. The options vest and become exercisable only once the JORC indicated resource for phosphate minerals at the Kodal Project meets certain thresholds.  Once vested, the options may be exercised by Tetra at a subscription price of 10p per Share for a period of three years after the date on which each tranche vests.  If Kodal Phosphate AS relinquishes or does not renew the Kodal Project extraction licences before any of the options vest then those options will lapse.

 

The Board has reviewed the Tetra option arrangements and determined that the fair value of the Tetra options is nil on the grounds that the option distribution is dependent on thresholds associated with the JORC phosphate mineral resources, the first of which, 90m tonnes, is well beyond the size of the current targeted ore body, which has a JORC mineral resource of 48.9m tonnes.  Unless and until further exploration of the Kodal Project identifies a further potential ore body the likelihood of the thresholds being met is considered to be remote.

 

New standards and interpretations not applied

 

At the date of authorisation of these consolidated financial statements, certain new standards, amendments and interpretations to existing standards have been published but are not yet effective, and have not been adopted early by the Group.

 

The Board anticipates that all of the pronouncements will be adopted in the Group's accounting policy for the first period beginning after the effective date of the pronouncement. The new standards and interpretations are not expected to have a material impact on the Group's consolidated financial statements.

 

 

 

Standard

Details of amendment

Annual periods beginning on or after

IFRS 9

Financial Instruments

 

New standard that forms the first part of a three-part project to replace IAS 39 Financial Instruments: Recognition and Measurement.

1 January 2015

IFRIC 21

 Levies

Clarifies that the obligating event that gives rise to a liability is the activity (as described in the relevant legislation) that triggers the payment of the levy.

 

1 January 2014

IFRS 2

Share-based payment

Amends the definition of "market condition" to include equity instruments of another entity in the same group.  Separates the definitions of "performance condition" and "service condition" from the definition of "vesting condition".

The definition of "performance condition"; (i) confirms performance conditions can be market or non-market conditions, (ii) aligns the performance period with the service period, (iii) clarifies that the service requirement can be implicit or explicit, and (iv) defines "performance target" to include targets based on equity instruments of another entity in the same group and that relate to performance of the whole, or part of, an entity, or group. 

The definition of "service condition" confirms that the failure to provide service for any reason (including termination of employment) is a failure to satisfy the service condition.

 

1 July 2014

IFRS 3

Business Combinations

Amended so all non-equity contingent consideration is measured at fair value at each reporting date with fair value changes recognised in profit or loss.  Includes consequential amendments to exclude contingent consideration in a business combination from other measurement bases in IFRS 9, IAS 39 and IAS 37

 

1 July 2014

IFRS 8   

Operating segments

Requires disclosure of the judgements made in aggregating operating segments including a description of the aggregated operating segments and economic indicators assessed.

Clarifies that the reconciliation of total reportable segments' assets to the entity's assets is only required when segment assets are regularly provided to the chief operating decision maker.

 

1 July 2014




IAS 16

Property, plant and equipment

Permits the gross carrying amount of items measured under the revaluation model to be adjusted in a manner consistent with the revaluation of the carrying amount (e.g. by reference to market data or proportionately) with accumulated depreciation being the difference to the carrying amount after impairment losses

 

1 July 2014




 

There are other standards in issue but not yet effective, which are not likely to be relevant to the Group which have therefore not been listed.

 

 

1.         SEGMENTAL REPORTING

 

It is the opinion of the Directors that the operations of the Group and Company represent one segment, and are treated as such when evaluating its performance.

 

The Group's accounting policy is to capitalise exploration and evaluation expenditure on the Kodal Project in Norway.  Consequently, the administrative expenses in the statement of comprehensive income reflect the administration costs necessary to run the Group and maintain its listing on the AIM market in the UK.

 

2.         OPERATING LOSS

 

 The operating loss before tax is stated after charging:

 



Group

Year ended

31 March 2014


Group

Year ended

31 March 2013



£


£

Audit services (Note 1)


20,000


-

Legal fees


29,351


1,003

Consultants


7,140


-

Other professional fees


55,030


874

Share based payment


33,056


-

Directors fees (Note 3)


35,767


-

Website costs


13,115


-

Stock exchange fees


8,550


-

Share register costs


5,184


-

Sundry


25,512


16,719



 

232,705


 

18,596

 

Note 1: Amounts payable to Baker Tilly UK Audit LLP and its associates in respect of both audit and non-audit services are as follows;

 



Group

Year ended

31 March 2014


Group

Year ended

31 March 2013



£


£

Audit services





- statutory audit of parent and consolidated accounts


18,000


-

- statutory audit of subsidiaries


2,000


-

Taxation advisory services


3,600


-

Services relating to corporate finance transactions entered into or proposed to be entered into by or on behalf of the company or any of its associates (Note 2)


42,500


-



66,100


-

 

Note 2: These expenses were incurred as part of the admission of the Company's shares to trading on AIM in December 2013.

 

Note 3: £7,500 of Director's fees were paid in shares during April 2014.

 

3.         EMPLOYEES' AND DIRECTORS' REMUNERATION

 

Apart from the Directors who are considered to be the Group's key management personnel, there were no employees in the years to 31 March 2014 and 2013 respectively. 

 


Group

Year ended

31 March 2014


Group

Year ended

31 March 2013


£


£

Directors' remuneration

51,739


-

Directors' social security costs

2,996


-

 

Total

 

54,735


 

-

 

 



 

Directors' salary and fees year ended

31 March 2014


Share based payments year ended

 31 March 2014


 

Total

year ended

31 March 2014



£


£


£

Luke Bryan (Note 1)


12,500


15,972


28,472

Guy Eastaugh


5,000


-


5,000

Markus Ekberg


767


-


767

Emin Eyi (Note 2)


5,000


-


5,000

David Jones


7,500


-


7,500

Robert Wooldridge (Note 3)


5,000


-


5,000



 

35,767


 

15,972


 

51,739

 

No remuneration was paid to the Directors in the year to 31 March 2013.

 

Note 1

Novoco Mine Engineering Limited, a company owned by Luke Bryan, provided consultancy services to the Group during the year and received fees of £100,000 in cash plus 48,500,000 in Shares in the year ended 31 March 2014 (2013:£nil). Of these fees, £50,000 in cash and 43,500,000 in Shares were success payments that were conditional on the completion of the Company's admission to AIM.

 

Note 2

The £5,000 fee paid to Emin Eyi will be settled by the issuance of 672,949 Shares at a price of 0.743 pence per Share.  These Shares were not issued at the year end.

 

Note 3

£2,500 of the £5,000 fee paid to Robert Wooldridge will be settled by the issuance of 336,472 Shares at a price of 0.743 pence per Share.  These Shares were not issued at the year end.

 

4.         EARNINGS PER SHARE

 

Basic loss per share is calculated by dividing the loss for the year attributable to ordinary equity holders of the parent by the weighted average number of ordinary shares outstanding during the year.

 

The following reflects the income and share data used in the basic EPS computations:

 

 


Earnings per Share on continued  operations


Earnings per Share on total  earnings

 

 

Weighted average number of Shares


 

Basic earnings per Share (pence)


£






Year ended 31 March 2014

(232,705)


-

338,258,503


0.0688

Year ended 31 March 2014

-


(231,467)

338,258,503


0.0684

Year ended 31 March 2013

-


(18,665)

166,542,947


0.0112

 

Diluted loss per Share is calculated by dividing the loss attributable to ordinary equity holders of the parent by the weighted average number of ordinary Shares outstanding during the year plus the weighted average number of ordinary Shares that would be issued on conversion of all the dilutive potential ordinary shares into ordinary Shares.  Options in issue are not considered diluting to the earnings per Share as the Group is currently loss making.   Diluted loss per Share is therefore the same as the basic loss per Share.

 

5.         SHARE BASED PAYMENTS

 

Share-based payments

 

The share-based payment reserve is used to recognise the value of equity-settled share-based payments provided to employees, including key management personnel, as part of their remuneration.

 



Year ended

31 March
2014


Year ended

31 March 2013

Share options outstanding


£


£

Opening balance


-


-

Issued in the period


40,000,000


-

 

Closing balance


 

40,000,000


 

-

 

Options issued in the period

 

Under an option agreement between the Group and Novoco Mine Engineering Limited ("Novoco"), a company wholly owned by Luke Bryan, the Group granted to Novoco options over 25,000,000 Shares ("Option Shares") at an exercise price of 0.7 pence per Share. The options becomes exercisable in respect of one third of the total number of Option Shares on each of the first, second and third anniversaries of 30 December 2013. The options are exercisable for a period of ten years from the date on which they vest and become exercisable.

 

Under an option agreement between the Group and David Hakes, a consultant to the company, the Group granted to David Hakes options over 15,000,000 Shares ("Option Shares") at an exercise price of 0.7 pence per Share. The options becomes exercisable in respect of one third of the total number of Option Shares on each of the first, second and third anniversaries of 30 December 2013. The options are exercisable for a period of ten years from the date on which they vest and become exercisable.

 

Details of share options outstanding at 31 March 2014:

 

Date of grant                         Number of options               Option price         Exercisable between

30 December 2013                  13,333,333                              0.7 pence               30 Dec 2014 - 30 Dec 2024

30 December 2013                  13,333,333                              0.7 pence               30 Dec 2015 - 30 Dec 2025

30 December 2013                  13,333,333                              0.7 pence               30 Dec 2016 - 30 Dec 2026

 

Included within administration expenses is a charge for issuing share options and making share based payments of £33,056 (2013: nil) which was recognised in accordance with the Group's accounting policies.

 

Additional disclosure information:

 

Weighted average exercise price of share options:

 

·      outstanding at the beginning of the period                                     N/A

·      granted during the period                                                                   0.7 pence

·      outstanding at the end of the period                                                 0.7 pence

·      exercisable at the end of the period                                                   N/A

 

Weighted average remaining contractual life of

share options outstanding at the end of the period                                       12.01 years

 

The share options granted during the period were valued at £169,333 at date of grant with reference to the Black-Scholes option pricing model taking into account the input assumptions as outlined below:

 

Dates issued                                            30 December 2013

Share price                                               0.7 pence

Exercise price                                           0.7 pence

Expected volatility                                   the options were granted on the day the Company's Shares were admitted to trading on AIM.       
 There is therefore no historical volatility for the Shares on the date of issue of the options.  A  
 volatility of 50% has been chosen as an approximation of the volatility for the shares of a junior
 mining company trading on AIM.

Vesting period ranging from                     30 December 2014 to 30 December 2016

Expected dividends                                  Nil

Risk free interest rate ranging from          2.897% to 3.062

 

A share based payment charge of £33,056 (2013: £nil) has been recognised in the profit and loss in the year in relation to these options.

 

Tetra Option Agreement

 

The Group has granted to Tetra Minerals Oy ("Tetra") an option to subscribe for new Shares. The maximum number of Shares that are subject to the option is 714,285,714, corresponding to the number of Shares that would be issued for a total amount of £5 million at the 0.7 pence per Share. The options vest and become exercisable only once the JORC indicated resource for phosphate minerals at the Kodal Project meet certain thresholds. These are as follows:

 


JORC Indicated Mineral Resource threshold reached of

Proportion of maximum number Option Shares that will vest


Tonnes of phosphate minerals

(%)


90,000,000

20


110,000,000

20


130,000,000

20


150,000,000

20


170,000,000

20

 

Once vested, the option may be exercised by Tetra at a subscription price of 10p per Share for a period of three years after the date on which each tranche vests.  If Kodal Phosphate AS relinquishes or does not renew the Kodal Project extraction licences before any of the options vest then those options will lapse.

 

The Board has reviewed the Tetra option arrangements and determined that the fair value of the Tetra options is nil on the grounds that the option distribution is dependent on thresholds associated with the JORC phosphate mineral resources, the first of which, 90m tonnes, is well beyond the size of the current targeted ore body, which has a JORC mineral resource of 48.9m tonnes.  Unless and until further exploration of the Kodal Project identifies a further potential ore body the likelihood of the thresholds being met is considered to be remote.

 

6.         TAXATION

 



Group

Year ended

31 March 14


Group

Year ended

31 March 13



£


£

Taxation charge for the year


-


-






Factors affecting the tax charge for the year





Loss from continuing operations before income tax


(232,705)


(18,665)






Tax at 20% (2013: 20% )


(46,541)


(3,733)






Expenses not deductible


53,949


2,617

Overseas rate differences


(105)


-

Gain not taxable


(53,216)



Losses carried forward not deductible


40,801


1,116

Temporary differences not recognised for deferred tax


5,112


-

 

Income tax expense


 

-


 

-

 

The Group has tax losses and other deferred tax assets totalling £51,000 (2013: £16,000) which will be able to be offset against future income. No deferred tax asset has been recognised in respect of these losses as the timing of their utilisation is uncertain at this stage.

 

7.         INTANGIBLE ASSETS

 




Exploration and evaluation


Software


Total

GROUP



£


£


£

COST








At 1 April 2013



355,014


-


355,014

Additions in the year



2,566,060


27,295


2,593,355

Effects of foreign exchange



63



63 









At 31 March 2014



2,921,137


27,295


2,948,432









AMORTISATION








At 31 March 2013



-


-


-

Amortisation charge



-


4,363


4,363









At 31 March 2014



-


4,363


4,363

 

NET BOOK VALUES








At 31 March 2014



2,921,137



2,944,069









At 31 March 2013



355,014



355,014

 




Exploration and evaluation


Software


Total

GROUP



£


£


£

COST








At 1 April 2012



12,707


-


12,707

Additions in the year



342,307


-


342,307









At 31 March 2013



355,014


-


355,014









AMORTISATION








At 31 March 2012 and 31 March 2013



-


-


-

 

NET BOOK VALUES








At 31 March 2013



355,014



355,014









At 31 March 2012



-



-

 

The additions to Exploration and Evaluation category represent the costs incurred by the Group in relation to the Kodal Project including the cost of the exploration licences of £1,833,295 acquired through the purchase of Kodal Phosphate AS.

 




Exploration and evaluation


Software


Total

COMPANY



£


£


£

COST








At 1 April 2013



355,014


-


355,014

Additions in the year



1,833,295


-


1,833,295

Disposals in the year



(2,188,309)


-


(2,188,309)









At 31 March 2014



-


-


-









AMORTISATION








At 31 March 2013 and 31 March 2014



-


-


-

 

NET BOOK VALUES








At 31 March 2014



-



-









At 31 March 2013



355,014



355,014

 




Exploration and evaluation


Software


Total

COMPANY



£


£


£

COST








At 1 April 2012



12,707


-


12,707

Additions in the year



342,307


-


342,307









At 31 March 2013



355,014


-


355,014









AMORTISATION








At 31 March 2012 and 31 March 2013



-


-


-

 

NET BOOK VALUES








At 31 March 2013



355,014



355,014









At 31 March 2012



12,707



12,707

 

The disposal represents the sale by the Company of the Kodal Project asset to a subsidiary undertaking .

 

8.      PROPERTY, PLANT AND EQUIPMENT

 



Fixtures, fittings and equipment


Plant and machinery


Motor vehicles


Total

GROUP


£


£


£


£

COST









At 1 April 2012 and 2013


-


-


-


-

Additions in the year


41,874


15,579


23,161


80,614

Effects of foreign exchange


143


27


417


587










At 31 March 2014


42,017


15,606


23,578


81,201










DEPRECIATION









At 1 April 2012 and 2013


-


-


-


-

Depreciation charge


2,837


136


1,056


4,029

Effects of foreign exchange


4


2


9


15










At 31 March 2014


2,841


138


1,065


4,044










NET BOOK VALUES









At 31 March 2014


39,176


15,468



77,157










At 31 March 2012 and 31 March 2013


-


-



-

 

 

The Company did not have any Property, Plant and Equipment as at 31 March 2012, 2013 and 2014.

 

 

9.      SUBSIDIARY ENTITIES

 

The consolidated financial statements include the following subsidiary companies:

 

 

Company

 

Subsidiary of

Country of

incorporation

Equity holding

Nature of

Business

Kodal Norway (UK) Ltd

Kodal Minerals Plc

United Kingdom

100%

Operating company

Kodal Mining AS

Kodal Norway (UK) Ltd

Norway

100%

Mining exploration

Kodal Phosphate AS

Kodal Norway (UK) Ltd

Norway

100%

Mining exploration

 

 

 

Carrying value of investment in subsidiaries

Year ended

31 March 2014


Year ended

31 March 2013

Opening balance

-


-

Additions

900,010


-

 

Closing balance

 

900,010


 

-

 

 

10.    OTHER RECEIVABLES

 



Group

31 March 2014


Group

31 March 2013


Company

31 March 2014


Company

31 March 2013



£


£


£


£

Other receivables


82,994


5,476


73,330


5,476



 

82,994


 

5,476


 

73,330


 

5,476










 

All receivables at each reporting date are current. No receivables are past due.  The Directors consider that the carrying amount of the other receivables approximates their fair value.

 

11.    CASH AND CASH EQUIVALENTS



Group

31 March 2014


Group

31 March 2013


Company

31 March 2014


Company

31 March 2013



£


£


£


£

Cash and cash equivalents


1,501,343


19,605


1,332,834


19,605



 

1,501,343


 

19,605


 

1,332,834


 

19,605










 

12.    TRADE AND OTHER PAYABLES



Group

31 March 2014


Group

31 March 2013


Company

31 March 2014


Company

31 March 2013



£


£


£


£

Trade payables


70,445


52,073


57,636


52,073

Other payables


27,485


84,882


27,484


84,882



 

97,930


 

136,955


 

85,120


 

136,955










 

 

All trade and other payables at each reporting date are current.  The Directors consider that the carrying amount of the trade and other payables approximates their fair value.

 

13.    ORDINARY SHARES

 

Allotted, issued and fully paid:


Nominal Value

Number of Ordinary Shares

Share Capital

£

Share Premium

£

At 31 March 2012

£0.01

4,800

48

49,995

Bonus issue (Note 1)


4,680,000

46,800

(46,800)



4,684,800

46,848

3,195

Share split (Note 2)

£0.0003125

149,913,600

46,848

3,195

Issue (Note 3)

£0.0003125

25,000,000

7,813

242,188

Issue (Note 4)

£0.0003125

458,542

143

4,442






At 31 March 2013

£0.0003125

175,372,142

54,804

249,825






Issue (Note 5)

£0.0003125

7,500,000

2,344

72,656

Issue (Note 6)

£0.0003125

18,654,500

5,828

300,105

Issue (Note 7)

£0.0003125

2,750,000

859

41,041

Issue (Note 8)

£0.0003125

2,821,150

882

18,866

Issue (Note 9)

£0.0003125

43,500,000

13,594

236,406

Issue (Note 10)

£0.0003125

26,785,715

8,371

179,129

Issue (Note 11)

£0.0003125

250,000,000

78,125

1,671,875

Issue (Note 12)

£0.0003125

142,857,240

44,643

955,358

Issue (Note 13)

£0.0003125

100,000,000

31,250

1,218,750

Share issue costs


-

-

(416,933)

 

At 31 March 2014


 

770,240,747

 

240,700

 

4,527,078






 

Share issue costs have been allocated against the Share Premium reserve.

 

Note 1:    On 31 July 2012, there was a bonus issue of 975 ordinary shares of £0.01 each for each ordinary share in issue on 24 July 2012.  The bonus issue was funded from the share premium account.

 

Note 2:    On 31 July 2012, each ordinary share of the Company of £0.01 was split into 32 new ordinary Shares of £0.0003125 each.

 

Note 3: On 16 October 2012, 25,000,000 Shares were issued at 1.0 pence per share.

 

Note 4: On 28 March 2013, 458,542 Shares were issued to a supplier of the Company in settlement of services provided to the Company by that supplier. These shares were issued at 1.0 pence each.

 

Note 5: On 8 April 2013 7,500,000 Shares were issued to two separate suppliers of the Company in settlement of their services provided to the Company by the suppliers. These shares were issued at 1.0 pence each.

 

Note 6: Between April and July 2013 a further 18,654,500 Shares were issued at a price of 1.64 pence, raising £305,933.80 in additional capital.

 

Note 7: On 18 July 2013 2,750,000 Shares were issued to a supplier of the Company in settlement of services provided to the Company by that supplier.  500,000 Shares were issued at 1.0 pence and 2,250,000 Shares at 1.64 pence.

 

Note 8: On 25 November 2013, a total of 2,821,150 Shares were issued to two separate suppliers of the Company in settlement of their services provided to the Company at an issue price of 0.7 pence per Share.

 

Note 9: Under a consultancy agreement dated 8 November 2013 between Novoco Mine Engineering Limited and the Company, 43,500,000 Shares were issued on 30 December 2013 at 0.5747 pence per Share for services provided to the Company.

 

Note 10: Under arrangements entered into by the Company with Thomas Eggar LLP, Allenby Capital limited and SP Angel Corporate Finance LLP, a total of 26,785,715 Shares were issued on 30 December 2013 at 0.7 pence per Share for services provided in relation to the admission of the Company to trading on AIM.

 

Note 11: Under the share acquisition agreement dated 12 October 2012 between Tetra Minerals Oy and the Company, the Company acquired all of the issued and to be issued share capital of Kodal Phosphate AS on completion of the Company's admission to AIM for a consideration consisting of:

(a) the sum of €100,000 payable in cash;

(b) the sum of £1,750,000 satisfied by the issue of 250,000,000 Shares at 0.7 pence per Share.

 

Note 12: On the 30 December 2013, 142,857,240 Shares were issued and allotted at 0.7 pence per Share in a placing at the time of the admission of the Company's Shares to trading on AIM.

 

Note 13: On 10 January 2014, 100,000,000 Shares were issued at 1.25 pence per Share in a placing.

  

14.    RESERVES

 

Reserve

Description and purpose

Share capital

Amount of the contributions made by shareholders in return for the issue of shares.

Share premium

Amount subscribed for share capital in excess of nominal value.

Share based payment reserve

Comprises the fair value of options and share rights recognised as an expense. Upon exercise of options or share rights, any proceeds received are credited to share capital. The share-based payment reserve remains as a separate component of equity.

Foreign exchange reserve

Gains/losses arising on re-translating the net assets of overseas operations into sterling.

Retained earnings

Cumulative net gains and losses recognised in the consolidated statement of financial position.

 

15.    FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT

 

The Group's principal financial instruments comprise cash and cash equivalents, other receivables and trade and other payables.

 

The main purpose of cash and cash equivalents is to finance the Group's operations.  The Group's other financial assets and liabilities such as other receivables and trade and other payables, arise directly from its operations.

 

It has been the Group's policy, throughout the periods presented in the consolidated financial statements, that no trading in financial instruments was to be undertaken, and no such instruments were entered in to.

 

The main risk arising from the Group's financial instruments is market risk. The Directors consider other risks to be more minor, and there are summarised below. The Board reviews and agrees policies for managing each of these risks.

 

Market risk

Market risk is the risk that changes in market prices, and market factors such as foreign exchange rates and interest rates will affect the Group's income or the value of its assets and liabilities.

 

The objective of market risk management is to manage and control market risk exposures within acceptable parameters while optimising the return.

 

Interest rate risk

The Group's exposure to the risks of changes in market interest rates relates primarily to the Group's cash and cash equivalents with a floating interest rate. These financial assets with variable rates expose the Group to interest rate risk. All other financial assets and liabilities in the form of receivables and payables are non-interest bearing.

 

In regard to its interest rate risk, the Group periodically analyses its exposure. Within this analysis consideration is given to alternative investments and the mix of fixed and variable interest rates. The Group does not engage in any hedging or derivative transactions to manage interest rate risk.

 

The Group in the year to 31 March 2014 earned only £2 in interest.  The very low interest rates available in the market of between 0.10% and 0.6% on a cash balance of circa £1m would earn the Group between £1,000 and £6,000 in a single year.  The Group is therefore insensitive to any interest rate risk.

 

The consolidated financial statements of Kodal Minerals Plc are prepared in accordance with the historical cost convention and in accordance with International Financial Reporting Standards ("IFRSs"), as adopted by the European Union ("EU") and in accordance with the provisions of the Companies Act 2006.  The Company's ordinary shares are quoted on AIM, a market operated by the London Stock Exchange.

 

Interest rate risk is measured as the value of assets and liabilities at fixed rate compared to those at variable rate.

 

Financial instruments by category



 

 

Loans and receivables


Other financial liabilities at amortised cost


 

 

Total

31 March 2014


£


£


£








Assets







Other receivables


82,994


-


82,994

Cash and cash equivalents


1,501,343


-


1,501,343

 

Total


 

1,584,337


 

-


 

1,584,337








Liabilities







Trade and other payables


-


97,930


97,930

 

Total


 

-


 

97,930


 

97,930








31 March 2013














Assets







Trade and other receivables


5,476


-


5,476

Cash and cash equivalents


19,605


-


19,605

 

Total


 

25,081


 

-


 

25,081








Liabilities







Trade and other payables


-


136,955


136,955

 

Total


 

-


 

136,955


 

136,955








 

Foreign exchange risk

Throughout the periods presented in the consolidated financial statements, the functional currency for the Group's Norwegian subsidiaries has been the Norwegian Kronor.

 

The Group incurs certain exploration costs in Norwegian Kronor on the Kodal Project, and has exposure to foreign exchange rates prevailing at the dates when Sterling funds are transferred into Norwegian Kronor. The Group has not hedged against this foreign exchange risk as the Directors do not consider that the level of exposure poses a significant risk.

 

The Group continues to keep the matter under review as further exploration and evaluation work is performed on the Kodal Project, and will developed currency risk mitigation procedures if the significance of this risk materially increases.

 

The Group's consolidated financial statements are largely insensitive to a change in the Sterling to Norwegian Kroner exchange rate due to low value of assets and liabilities (principally cash balances) maintained in Norwegian Kroner.  Furthermore for the next 12 months the Group is expected to incur mainly Sterling denominated expenditure.  Once the Kodal Project moves into the development phase a greater proportion of expenditure is expected to be Kroner denominated which may increase the foreign exchange risk.

 

Financial instruments by currency



GBP denominated


NOK

denominated


 

Total

31 March 2014


£


£


£

Assets







Other receivables


73,330


9,664


82,994

Cash and cash equivalents


1,332,834


168,509


1,501,343








Total


1,406,164


178,173


1,584,337








Liabilities







Trade and other payables


85,121


12,809


97,930








31 March 2013







Assets







Trade and other receivables


5,476


-


5,476

Cash and cash equivalents


19,605


-


19,605








Total


25,081




25,081








Liabilities







Trade and other payables


136,955


-


136,955








 

 

Liquidity risk

Liquidity risk is the risk that the entity will not be able to meet its financial obligations as they fall due.

 

The objective of managing liquidity risk is to ensure as far as possible, that the Group will always have sufficient liquidity to meet its liabilities when they fall due, under both normal and stressed conditions.

 

The Group has established policies and processes to manage liquidity risk. These include:

·      Monitoring the maturity profiles of financial assets and liabilities in order to match inflows and outflows;

·      Monitoring liquidity ratios (working capital); and

·      Capital management procedures, as defined below.

 

Capital management

The Group's objective when managing capital is to ensure that adequate funding and resources are obtained to enable it to develop its projects through to profitable production, whilst in the meantime safeguarding the Group's ability to continue as a going concern. This is to enable the Group, once projects become commercially and technically viable, to provide appropriate returns for shareholders and benefits for other stakeholders.

 

The Group has historically relied on equity to finance its growth and exploration activity, raised through the issue of Shares. After admission to the AIM market of the London Stock Exchange the Board will utilise financing sources, be that debt or equity, that best suits the Group's working capital requirements and taking into account the prevailing market conditions.

 

Fair value

The fair value of the financial assets and financial liabilities of the Group, at each reporting date, approximates to their carrying amount as disclosed in the Statement of Financial Position and in the related notes.

 

The fair values of the financial assets and liabilities are included at the amounts at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale.

 

The cash and cash equivalents, other receivables, trade payables and other current liabilities approximate their carrying value amounts largely due to the short-term maturities of these instruments.

 

16.    DISCONTINUED OPERATIONS

 

During the year to 31 March 2013, the Group held a 74% shareholding in a South African subsidiary, Clear Phosphate Minerals (Pty) Limited ("CPM"). CPM was established to explore for phosphate in South Africa and all of its funding was provided by the Group. CPM incurred costs as a result of legal and consultancy work to secure an exploration licence, which was not subsequently granted. In early 2013 the Directors decided to close CPM. All balances due from CPM to the Group were written off as incurred and as at 31 March 2013 a £5,000 provision was made by the Group for closure costs of CPM.  Finalisation of CPM's  tax position and the company closure process took longer than expected with CPM formally being removed from the Registrar of Companies in South Africa in December 2013.  At 31 March 2013 CPM had assets of £177 comprising cash at bank.  This balance was used to part settle the costs of closure. 

 

During the year to 31 March 2013 there was a charge to the accounts of Kodal Minerals Plc of £6,075 reflecting the costs of operations and closure of CPM.  During the year to 31 March 2014 an amount of £1,238 was written back to profit and loss, representing the unused accrual from the original £5,000 provision to close CPM.  These amounts have been shown on the consolidated statement of comprehensive income as discontinued operations in line with the Group's accounting policy.

 

17.    RELATED PARTY TRANSACTIONS

 

During the year to 31 March 2014, the Company issued 5,000,000 Shares at 0.01 pence per Share and 43,500,000 Shares at a price of 0.5747 pence per Share to Novoco Mine Engineering Limited as payment for services valued at £50,000 and £250,000 respectively.  Novoco Mine Engineering Limited is a company wholly owned by Luke Bryan.

 

During the year to 31 March 2014, Robert Wooldridge, a Director, subscribed for 28,571,430 Shares in the IPO at a price of 0.7 pence per Share.

 

During the year ended 31 March 2014, GEE Consulting Limited, a company wholly owned by Guy Eastaugh, subscribed for 2,857,150 Shares at a price of 0.7 pence per Share.

 

Transactions with subsidiary companies

 

Kodal Mining AS

Kodal Mining AS was incorporated on 13 June 2013 in Norway as a wholly owned subsidiary of the Company.  On 13 February 2014 it was sold to Kodal Norway (UK) Limited, another wholly owned subsidiary of the Company.  During the year ended 31 March 2014, £223,420 (2013: Nil) was advanced as a loan to Kodal Mining AS by the Company to support ongoing activity.

 

Kodal Norway (UK) Limited

Kodal Norway (UK) Limited is a wholly owned subsidiary of the Company incorporated in England.  On 13 February 2014 Kodal Norway (UK) Limited acquired from the Company its two Norwegian subsidiaries, Kodal Phosphate AS and Kodal Mining AS for consideration of £1,835,369 and £5,000 respectively. The Directors consider that the consideration paid for each company was equal to the fair value of the assets and liabilities acquired. The Company recognised a profit of £nil on the sale of each company.

 

During the year ended 31 March 2014,  the Company purchased assets  for a cost £47,603 (2013: £nil) on behalf of Kodal Norway (UK) Limited which it subsequently sold to Kodal Norway (UK) Limited  at cost.

 

Sale of exploration assets to Kodal Norway (UK) Limited

In December 2013 Kodal Minerals Plc sold all the tangible and intangible assets relating to the Kodal Project to Kodal Norway (UK) Limited for a sum of £900,000.  These assets and knowhow were the result of exploration and evaluation work undertake by Kodal Minerals Plc on the Kodal Project.  Kodal Minerals Plc recorded a profit on this sale of £266,079.  Kodal Norway (UK) Limited is the operating company for the Kodal Project.

 

Kodal Phosphate AS

During the year ended 31 March 2014 Kodal Mining AS incurred expenses on behalf of Kodal Phosphate AS of £895.  Following the closure of Kodal Phosphate's bank account, the balance of the bank account £2,098 was transferred to Kodal Mining AS.

 

Kodal Minerals Plc also paid annual licence costs on behalf of Kodal Phosphate AS of £1,434 during the year ended 31 March 2014 (2013: £nil).

 

Transactions with related parties

 

Robert Wooldridge, a Director, is a member of SP Angel Corporate Finance LLP ("SP Angel") which acts as Financial Adviser and Broker to the Company. During the year ended 31 March 2014 the Company issued 17,857,143 ordinary shares to SP Angel at 0.7 pence per Share as payment for advisory services and placing commission in relation to the placing and admission of the Company's Shares to trading on AIM. In addition, during the year ended 31 March 2014, the Company has paid fees to SP Angel of £62,500 (2013: £nil) as commission for placing Shares and has paid it £6,250 (2013: £nil) for its services as broker since the admission to AIM.

 

SP Angel was reimbursed by the Group for travel expenses in the year to 31 March 2013 of £2,493.

 

In October 2012, SP Angel subscribed for 1,500,000 Shares at a price of 1.0 pence per Share.

 

Furthermore in the years to 31 March 2014 and 31 March 2013 SP Angel was reimbursed by the Group £19,117 and £69,845 respectively for expenses paid by it on behalf of the Group.

 

Novoco Mine Engineering Limited, a company wholly owned by Luke Bryan, provided consultancy services to the Group during the year and received fees of £100,000 in cash plus 48,500,000 in Shares in the year ended 31 March 2014 (2013:£nil). Of these fees, £50,000 in cash and 43,500,000 in Shares were success payments that were conditional on completion of the Company's admission to AIM.  During the year to 31 March 2014 Novoco was reimbursed £32,783 for expenses (2013: £Nil).  At 31 March 2014 £14,500 was owed by the group to Novoco which was paid in April 2014.

 

 

18.    CONTROL

 

                                 No one party is identified as controlling the Group.

 

19.    POST BALANCE SHEET EVENTS

 

On 17 April 2014 the Group issued 2,358,681 Shares at a price of 0.743 pence per Share to Emin Eyi, a Director of the Group (672,949 Shares), Robert Wooldridge, a Director of the Group (336,472 Shares) both in lieu of director's fees and a consultant to the Group (1,349,260 Shares) as part payment of services to the Company.

 


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