Report of the Directors and Audited Financial S...
FOR: RAMBLER METALS & MINING PLC
AIM SYMBOL: RMM
TSX VENTURE SYMBOL: RAB
October 29, 2013
Rambler Metals and Mining PLC: Report of the Directors and Audited Financial Statements for the Year Ended July
31, 2013
LONDON, UNITED KINGDOM and BAIE VERTE, NEWFOUNDLAND AND LABRADOR--(Marketwired - Oct. 29, 2013) - Rambler
Metals and Mining Plc (AIM:RMM)(TSX VENTURE:RAB) ("Rambler" or the "Company") -
Registered number: 05101822 (England and Wales)
RAMBLER METALS AND MINING PLC
CONTENTS OF THE FINANCIAL STATEMENTS
Page
Company Information 1
Chairman's Statement 2
Management's Discussion and Analysis 3
Report of the Directors 29
Directors' Responsibilities 32
Corporate Governance 33
Independent Auditor's Report 34
Consolidated Income Statement 36
Consolidated Statement of Comprehensive Income 37
Consolidated Statement of Financial Position 38
Consolidated Statement of Changes in Equity 39
Consolidated Statement of Cash Flows 40
Notes to the Consolidated Financial Statements 41
Company Statement of Comprehensive Income 71
Company Statement of Financial Position 72
Company Statement of Changes in Equity 73
Company Statement of Cash Flows 74
Notes to the Company Financial Statements 75
RAMBLER METALS AND MINING PLC
COMPANY INFORMATION
FOR THE YEAR ENDED JULY 31, 2013
Directors: T S Chan
E C Chen
D H W Dobson
L D Goodman
B Hinchcliffe
S Neamonitis
G Ogilvie
J S Thomson
Secretary: P Mercer
Registered office: Salatin House
19 Cedar Road
Sutton
Surrey
SM2 5DA
Registered number: 5101822 (England and Wales)
Auditor: BDO LLP
55 Baker Street
London
W1U 7EU
RAMBLER METALS AND MINING PLC
CHAIRMAN'S STATEMENT FOR THE YEAR ENDED JULY 31, 2013
We are pleased to report the results for the year ended July 31, 2013.
The principal activity of Rambler Metals and Mining plc ('the parent Company' or 'the Company') and its
subsidiaries (the 'Group', or 'Rambler') is the development, mining and exploration of the Ming Copper-Gold
Mine ("Ming Mine") in Newfoundland and Labrador and the exploration and development of other properties located
in Atlantic Canada.
The parent Company's Ordinary Shares trade on the London AIM market under the symbol "RMM" and on the TSX
Venture Exchange under the symbol "RAB".
The presentational currency of the Group's financial statements is Canadian dollars ($).
OPERATIONAL HIGHLIGHTS
The Group reached considerable milestones and other key achievements during the fiscal year. Highlights
include:
-- Declared commercial production on November 1, 2012 resulting in profits
before tax of $3.7 million for the last three quarters of the year.
-- Generated cash of $12.6 million from operations since declaring
commercial production.
-- Continued its exploration activity at the Ming Mine and acquired
exploration and development rights to other local copper/gold
properties.
FINANCIAL HIGHLIGHTS
The consolidated profit after taxation of the Group in respect of the year ended July 31, 2013 amounted to
$9,053,000 (earnings per share of $0.063) versus a loss of $3,367,000 for the year ended July 31, 2012 (a loss
per share of $0.026).
Following the declaration of commercial production on November 1, 2012 the Group generated revenue of $34.7
million mainly from the sale of copper concentrate. Prior to commercial production the Group generated revenue
from saleable material produced during commissioning of $9.5 million and offset this revenue against the
Mineral Property asset.
The gross assets of the Group amounted to $116.9 million as at the end of the year. This included Mineral
Properties of $49.3 million and Intangible assets of $17.4 million which consisted of accumulated deferred
exploration and evaluation expenditures on the Lower Footwall Zone at the Ming Mine.
Reaching commercial production is a significant milestone for any exploration or development project. My thanks
to our employees, officers and directors for the progress made during the year and I look forward to continued
success in fiscal 2014.
DHW Dobson
Chairman
October 28, 2013
RAMBLER METALS AND MINING PLC
MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED JULY 31, 2013
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This MD&A, including appendices, is intended to help the reader understand
Rambler Metals and Mining plc ('the parent company') and its subsidiaries
(the 'Group' or 'Rambler'), our operations and our present business
environment. It has been prepared as of October 28, 2013 and covers the
results of operations for the quarter and year ended July 31, 2013. This
discussion should be read in conjunction with the audited Financial
Statements for the year ended July 31, 2013 and notes thereto. These
consolidated financial statements have been prepared in accordance with
International Financial Reporting Standards ("IFRS") and their
interpretations adopted by the International Accounting Standards Board
("IASB"), as adopted by the European Union and with IFRS and their
interpretations adopted by the IASB. The presentation currency is Canadian
dollars. These statements together with the following MD&A are intended to
provide investors with a reasonable basis for assessing the potential future
performance. See Forward Looking Statement disclosure in Appendix 5.
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GROUP OVERVIEW
The strategic vision of the Group is to become Atlantic Canada's leading mine operator and resource developer.
Its principal activity is the development, mining and exploration of the Ming Copper-Gold Mine ('Ming Mine') in
Newfoundland and Labrador (see map referenced in Appendix 1) and the exploration and development of other
properties located in Atlantic Canada. The Company declared commercial production on November 1, 2012 and the
Group subsequently reported revenue of $34.7 million from the sale of 14,634 dry metric tonnes ('dmt') of
copper concentrate containing 3,947 tonnes of accountable copper metal, 2,664 and 10,895 ounces of accountable
gold and silver respectively and further revenue from the sale of gold dore bars containing 270 ounces of gold,
generating an overall profit before tax of $2,985,000.
The parent Company's Ordinary Shares trade on the London AIM market under the symbol "RMM" and the TSX Venture
Exchange under the symbol "RAB".
The Group has established the following four strategic goals:
1. Continue as a profitable copper and gold producer by continuing to
produce a high grade concentrate at the Nugget Pond concentrating
facility then improving revenue through the integration of the gold
hydromet plant into the production stream.
2. Increase available resources and reserves through further exploration
both within the Ming mine and current land holdings.
3. Continue to investigate, through various optimization studies,
development of the Lower Footwall Zone creating organic growth.
4. Selectively pursue growth opportunities within Atlantic Canada including
joint ventures, acquisitions, strategic alliances and equity positions.
The Group's directors and management believe that focussing on these priorities will instil a solid foundation
for Rambler and its shareholders, while providing the best opportunity to build a successful and long term
mining company.
RAMBLER METALS AND MINING PLC
MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED JULY 31, 2013
HIGHLIGHTS OF THE YEAR ENDED JULY 31, 2013
This was a significant year following the declaration of commercial production on November 1, 2012.
Highlights of the 2013 fiscal year included:
Production
-- For the first 9 months in commercial production the Group produced
13,802 tonnes of copper concentrate containing 3,953 tonnes of copper
metal, 3,137 ounces of gold and 23,958 ounces of silver. The average
feed grade during the period was 3.60% Cu, 1.31 g/t Au and 8.95 g/t Ag
followed by a mill recovery of 91%, 62% and 71% for copper, gold and
silver respectively.
-- During the fourth quarter produced a total of 5,244 dmt (Q3'13 - 4,575
dmt) of copper concentrate for a total of 18,299 dmt for fiscal year
ended July 31, 2013 and 20,524 dmt since the start of copper production
in May 2012. Concentrate produced during the fourth quarter averaged 30%
copper with 8 g/t gold and 59 g/t silver (Q3'13: 28% copper with 7 g/t
gold and 51 g/t silver) with milling recoveries for copper and gold
averaging 94% and 65% respectively (Q3'13: 91% and 62% respectively).
-- During the fourth quarter daily tonnage through the mill increased from
571 dmt during May, improved to 585 dmt in June and 610 dmt in July. The
continued increase in throughput was evident in the increased
concentrate produced during the fourth quarter, despite a 12 day
maintenance period in the copper concentrator between June and July
allowing the gold hydromet to be operated.
-- Delivered three shipments of concentrate during the year totalling
approximately 17,956 wet metric tonnes ('wmt') via the Group's port
facility at Goodyear's Cove, Newfoundland and Labrador.
Capital Development
-- Development into the high grade 1807 copper zone continued during the
year with ore being stockpiled as development progressed. With the
majority of tonnes for the 2013 fiscal year coming from this zone, ore
access on multiple levels was the main focus for underground development
crews.
-- A significant development milestone was reached during the year, being
the breakthrough of the independent 1807 ramp system. Ore from all
developed levels of this high copper grade zone can now be accessed with
larger 42 tonne haul trucks. Additional drill sites are also now
available for continued exploration and extension drilling of the known
mineralized areas.
Financing, Royalty and Investment
-- During the year repayments of US$1,454,129 (project to date
US$9,309,570) were made from the delivery of 949 ounces of gold thereby
satisfying requirements in the gold loan agreement to repay a minimum of
US$3.6 million in each of the first two 12 month periods of production
and partially meeting the requirements for the third 12 months.
-- Agreed terms for the extension of its $10 million secured credit
facility to March 31, 2014. Under the amendment agreement the Group paid
Sprott Resource Lending Partnership ('Sprott'), in shares, a 4%
extension fee. Interest will continue to accrue at 9.25% and any
drawdown on the facility will be subject to the 4% drawdown fee as per
the original agreement. Of the initial $10 million credit facility made
available, only $7.5 million was drawn with $500,000 repaid in November
2012. $3.0 million was made available under the amended credit facility
and was available until September 30, 2013. On April 30, 2013 and May
31, 2013 payments of $500,000 and $600,000 respectively reduced the
outstanding balance at year end to $5,900,000. As of the date of this
release the outstanding balance on the facility is $4,750,000.
-- Exercised an option for the acquisition of 588,230 shares of Maritime
Resources Corp (TSX VENTURE:MAE) ('Maritime') priced at $0.25 per share
for a total consideration of $147,000 bringing Rambler's equity stake to
18%. Maritime continues to advance the Green Bay portfolio of
properties, specifically the Hammerdown mine. Maritime filed a Technical
Report to accompany its NI43-101 compliant resource estimate released on
May 28, 2013 which showed 79,000 ounces in the measured category,
349,600 ounces in the indicated category (428,600 ounces of gold
combined) and 661,100 ounces in the Inferred category, at a 3g/t cut-off
grade. The reported grades for each of the measured, indicated and
inferred resource categories were 12.12 g/t, 8.27 g/t and 6.92 g/t gold
respectively.
-- Announced the purchase of a 1% net smelter royalty ('NSR') held over the
Ming Mine for a total consideration of $500,000. The mine was initially
encumbered by a combined 4.5% NSR held by four separate groups. Of the
four net smelter royalties, two included a buyout clause allowing the
Company to purchase 3% of the total NSR for a combined payment of
$1,100,000. This is the second royalty Rambler purchased since starting
commissioning leaving a combined net smelter royalty of 1.5% on the Ming
Mine.
Exploration and evaluation
-- Capital development continued with the 1807 zone ramp being driven down
gradient to the 481 and 485 levels. In the first half of fiscal 2014 the
Company intends to complete a program of in-fill drilling moving
inferred 1807 zone material into the measure and indicated categories
with the medium term intention of testing for new mineralization down
and up-plunge. All zones within the mine, including the 1807 Zone,
remain open both up and down plunge.
-- The Group finalized a purchase and sale agreement with a local
exploration company for the exclusive rights to explore and develop the
Krissy Buckle gold/copper property located within 40 kilometres of the
Group's Nugget Pond precious and base metal processing facility. The
Group has exclusive rights to explore and develop the property while
providing the vendors with a 2% net smelter royalty ('NSR') on any ore
extracted. 1% of the NSR can be bought out at any point in the future
for a fee of $1,000,000. In addition to the NSR, advance royalty
payments totalling $90,000 will be paid to the vendors over the first 4
years.
-- The Company received funding from the Research Development Corporation,
Newfoundland and Labrador ('RDC') to complete in depth research on two
separate projects associated with the advancement of Ming Mine. The
first is a gold liberation of historic tailings study for which RDC will
contribute $178,439, total project investment $239,169. The second
project involves an examination of various pre-concentration methods
with the goal of further improving the economic viability of the Lower
Footwall Zone. RDC is supporting this research by contributing $250,000
through its R&D Proof of Concept program to a total project cost of
$372,668.
Staffing
-- Announced the appointment of Mr. Robert McGuire, P.Eng., as the Group's
new General Manager at the Ming Copper-Gold Mine. Mr. McGuire has over
35 years' experience in underground mining with a diverse background in
supervisory and managerial positions. Mr. Tim Sanford, P.Eng., the
Group's previous General Manager was promoted to Vice President
Technical Services, a new executive position that will oversee the
preparation of Rambler's expansion plans of the Ming Mine and external
growth opportunities.
-- At the end of the year a total of 139 full time employees were employed
at the Ming Mine compared to 130 full time employees at July 31, 2012.
-- The Group continues to evaluate current employment levels and look for
opportunities to streamline its operations with the goal of improving
overall efficiency.
FINANCIAL RESULTS
-- Revenue
-- A total of 14,746 dmt of concentrate was provisionally invoiced
during the year at an average price of $3.38 per pound copper,
$1,530 per ounce gold and $27 per ounce silver, generating $35.6
million in combined revenue before final assay and weights were
agreed on the three delivered shipments. An additional $479,000 in
revenue was realized on the sale of 324 ounces of gold produced
mainly from the testing of floatation tails from the copper
concentrator being reprocessed through the Group's gold processing
facility.
-- Revenue associated with the sale of copper concentrate is recognised
when significant risks and rewards of ownership of the asset sold
are transferred to the Group's off-taker, which is when the group
receives provisional payment for each lot of concentrate invoiced.
Where a provisional invoice is not raised, risks and rewards of
ownership transfer when the concentrate passes over the rail of the
shipping vessel. Adjustments arising due to differences in assays,
from the time of provisional invoicing to the time of final
settlement, are adjusted to revenue. Adjustments arising due to
differences in commodity prices, from the time of provisional
invoicing to the time of final settlement, are adjusted to Gain or
Loss on Derivative Financial Instruments.
-- During the year the Group agreed final weights and assays on three
concentrate shipments with its off-take partner resulting in a
$941,776 reduction in revenue (112 dmt) bringing net revenue for the
period to $34.7 million. Throughout the year the Group fixed a
portion of its copper, gold and silver production with its off-take
partner to mitigate the risk of any significant commodity price
movements resulting in a net realized loss on derivative financial
assets of $73,703 being the difference in the commodity prices at
time of provisional invoicing, and actual commodity prices realized
on the fixed portion of the shipment. A further unrealized loss of
$250,755 resulted at year end being the difference in the commodity
prices at time of provisional invoicing and anticipated commodity
prices upon final settlement following the future shipment of
concentrates in the Group's warehouse at year end.
-- Revenue of $9.5 million realized in Q1/13 during the testing and
commissioning of the Ming Mine along with operating expenditures
were offset against the mineral property asset.
-- Profit
-- The net profit before tax for the year was $2,985,000 compared with
a loss of $3,367,000 for the year ended July 31, 2012. The net
profit for the quarter ended July 31, 2013 was $7,620,000
($1,579,000 before tax) or $0.053 per share which compares to
$193,000 for Q3/13 and a loss of $1,202,000 for Q4/12.
Rambler Metals and Mining Plc
-- Production costs
-- Average production costs (before depreciation and amortisation)
incurred since the declaration of commercial production were $145
per tonne of ore milled and $2.03 per equivalent pound of copper.
-- Cash flow and cash resources
-- Cash flows generated from operating activities were $11,468,000
compared with cash utilized of $1,209,000 in the previous fiscal
year. Cash flows generated from operating activities were $5,892,000
in Q4/13 compared to cash utilized of $380,000 in Q3/13 and cash
utilized of $1,211,000 in Q4/12. The increase in the cash generated
relates to the operating profit and changes in working capital.
-- Cash resources as at July 31, 2013 were $5.6 million and as of
October 28, 2013 had increased to $6.5 million.
OPERATIONAL SUMMARY
For the first 9 months in commercial production the Company produced 13,802 tonnes of copper concentrate
containing 3,953 tonnes of copper metal, 3,137 ounces of gold and 23,958 ounces of silver. The average feed
grade during the period was 3.60% Cu, 1.31 g/t Au and 8.95 g/t Ag followed by a mill recovery of 91%, 62% and
71% for copper, gold and silver respectively.
PRODUCTION
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Total Q4/13 Q3/13 Q2/13
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Dry Tonnes Milled 137,397 47,027(ii) 43,907(i) 46,463
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Copper Recovery 94% 91% 89%
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Gold Recovery 65% 62% 58%
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Silver Recovery 73% 71% 68%
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Copper Head Grade (%) 4.05 3.59 3.14
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Gold Head Grade (g/t) 1.52 1.29 1.13
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Silver Head Grade (g/t) 10.95 8.68 7.19
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CONCENTRATE (Produced and Stored in Warehouse)
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Total Q4/13 Q3/13 Q2/13
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Copper (%) 30.0 27.9 27.6
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Gold (g/t) 7.7 6.7 6.7
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Silver (g/t) 58.6 51.4 51.0
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Dry Tonnes produced 13,802 5,244 4,575 3,983
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Copper Metal (tonnes) 3,953 1,574 1,278 1,101
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Gold (ounces) 3,137 1,297 987 853
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Silver (ounces) 23,958 9,873 7,557 6,528
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Note: (1) Tables show first three quarters in commercial production
(2) (i) Continual freezing of the course ore bin in February
(3) (ii) 12 day period where gold hydromet was operated instead of
copper circuit allowing annual maintenance in the copper
concentrator. The hydromet milled 7,247 dry tonnes giving a combined
total tonnage for Q4 of 54,274
HEALTH AND SAFETY
-- The Group completed the year with no lost time accidents and 7 medical
aid injuries. The lost time accident frequency rate and medical aid
frequency rate for the period and fiscal year to date was 0 and 4.3
respectively.
-- The Health and Safety of the Group's employees continues to be a high
priority with prevention and hazard recognition being key components of
the Group's strategy.
OUTLOOK
Management continue to pursue the following objectives:
-- Continue to utilize cash flow from operations to pay down credit
facility debt by the end of March 2014 maximizing shareholder value by
reducing the Group's expensive finance costs
-- Continue mining and milling the exposed 1807 workplaces for the
generation of copper concentrate revenue from the Ming Mine. Place
additional development focus into preparing this high grade zone for
further exploration both up-dip and down-dip for inclusion in future
resource and reserve estimates.
-- Open up mining horizons in the Ming South up and down plunge ore bodies.
-- Optimize the mining and processing of ores from the Ming Mine that would
allow an expansion to 1,000 mtpd; which in turn could allow the gold
hydromet to be operated independently and/or simultaneously with the
copper concentrator.
-- Continuing to evaluate Optimization Opportunities for a possible future
expansion into the Lower Footwall Zone.
-- Become a strategic long term low-cost producer in Atlantic Canada, by
selectively pursuing growth opportunities with joint ventures and
acquisitions, including the Group's investment in "The Little Deer
Project" and Maritime Resources Corp.
-- Increase exposure and liquidity both on London's AIM and on Toronto's
Venture Exchange through marketing and investor relations campaigns.
See 'Forward Looking Information' in Appendix 5 for a description of the factors that may cause actual results
to differ from forecast.
CAPITAL PROJECTS REVIEW
During the year the Group incurred expenditures of $15,142,000 on Mineral Property which were offset by pre-
commercial production revenue of $9,478,000 from gold and copper concentrate sales, $2,620,000 on property,
plant and equipment and $190,000 on exploration and evaluation of the Ming Mine.
Prior to the mine being considered substantially complete and ready for its intended use, all direct operating
costs, including costs associated with stockpile ores, were capitalized within mineral property and offset by
revenues generated from on-going production.
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Total Q4/13 Q3/13 Q2/13 Q1/13
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$,000 $,000 $,000 $,000 $,000
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Mineral Property 5,664 1,267 1,766 2,147 484
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Property, plant and equipment 2,620 826 389 586 819
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Exploration and evaluation costs 190 131 1 - 58
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TOTAL CAPITAL 8,474 2,224 2,156 2,733 1,361
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Following the start of commercial production at the beginning of Q2/13 the majority of expenditure on the
mineral property relates to capital development in the 1807 zone including the independent 1807 ramp system
which will provide access to 1807 stoping and access to lower levels of the Ming Mine ore body.
Property, plant and equipment includes $1.9 million on underground mobile equipment and $0.6 million on storage
and office buildings during the year.
Exploration and evaluation costs relate to exploration drilling on the 1806 and 1807 ore zones and the on-going
Lower Footwall zone projects as outlined above in the Highlights of the Year Ended July 31, 2013 section.
FINANCIAL REVIEW
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Fiscal 2013 Commentary
($000's) Comparatives
Fiscal 2012
($000's) B/(W)(i)
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Revenue of $34.7 million was generated
through the sale of 14,634 dmt of copper
concentrate containing 3,947 tonnes of
accountable copper metal and 2,664
ounces of accountable gold. This
34,669 compared with revenue of $1.2 million in 1,219 2,744%
the prior year from gold sales from the
Group's Tilt Cove East Mine and the
further refining of slag materials from
the Nugget Pond Crown Pillar satellite
deposits.
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Production costs relate to the
processing and mining costs associated
with Group's Ming Mine and include
processing costs of $5.4 million, mining
costs $15.5 million and depreciation and
amortisation of $6.7 million. Operating
costs associated with mining and
27,644 processing of Ming Mine ores were 674 (4,001)%
capitalized to Mineral Property prior to
commercial production being achieved. In
2012, operating costs of $674,000 relate
to the processing, mining, royalty and
general administrative costs associated
with the completion of the Group's Tilt
Cove satellite deposit.
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General and administrative expenses were
higher than the previous year by
$535,000. Employment costs increased
$256,000 as a result of key management
promotions and compensation changes and
the recruitment of additional
administrative staff, legal and
professional costs increased $79,000
3,557 which includes the costs of a strategic 3,022 (18)%
review carried out during the year,
travel and investor relation costs
increased $113,000 and security and
general office expenses increased
$112,000 due to the addition of security
personnel at the mine site and the move
to the new office and dry facility.
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Loss on derivative financial
instruments. Throughout the year the
Group fixed a portion of its copper,
gold and silver production with its off-
take partner to mitigate the risk of any
significant commodity price movements
resulting in a net realized loss on
derivative financial assets of $73,703
being the difference in the commodity
prices at time of provisional invoicing,
(323) and actual commodity prices realized on - -
the fixed portion of the shipment. A
further unrealized loss of $250,755
resulted at year end being the
difference in the commodity prices at
time of provisional invoicing and
anticipated commodity prices upon final
settlement following the future shipment
of concentrates in the Group's warehouse
at year end.
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Foreign exchange losses arising on the
Gold Loan reduced in the year as a
(513) result of the strengthening of the (959) 47%
Canadian dollar against the US dollar
during the year.
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Income tax credit. Following the
declaration of commercial production
during the year it has been concluded
6,068 that the Group has sufficient evidence - -
of future taxable profits to justify the
recognition of a deferred tax credit of
$6.1 million.
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Mineral Properties The group incurred
costs of $15.1 million in the year
offset by revenue on gold production of
$9.5 million (see further below). The
costs include labour of $4.6 million,
contractor and material costs of $0.3
million, underground development costs
of $4.5 million, depreciation of $1
million and finance costs of $1.1
million. Finance costs include $0.6
million in effective interest charges
arising on the gold loan due to higher
than estimated gold prices and actual
gold ounces delivered during the year as
well as changes to future gold pricing
and volume estimates. Finance costs
5,664 include actual cash cost of $0.6 million 9,596 41%
relating to interest on the Group's
Credit Facility and equipment capital
leases.
Ming Mine Revenue of $9.5 million was
realized in Q1/13 on the sale of 14,918
ounces of gold and 1,271 tonnes of
copper concentrate. Processing and ore
transportation costs of $5.5 million and
concentrated transportation & other
allowances of $241,000 were incurred to
generate this revenue. Revenue realized
during testing and commissioning was
credited against Mineral Properties
prior the declaration of commercial
production.
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Capital spending on property, plant and
equipment decreased significantly during
the year following the move to
2,620 commercial production with $1.9 million 10,451 75%
spent on underground mobile equipment
and $0.4 million on a storage facility.
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Capital spending on exploration and
evaluation relate to exploration
190 drilling on the 1806 and 1807 ore zones 633 70%
and the on-going Optimization Studies on
the Group's Lower Footwall Zone ore
body.
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(i)B/(W) = Better / (Worse)
SUMMARY OF QUARTERLY RESULTS
The quarterly results for the Group for the last eight fiscal quarters are set out in the following table.
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Quarterly Results
(All amounts in 000s of Canadian
Dollars, except Loss per share 4th 3rd 2nd 1st
figures) Quarter Quarter Quarter Quarter
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Fiscal 2013
Revenue 13,175 10,087 11,407 -(i)
Net Income/ (loss) 7,620 193 1,958 (718)
Earnings/(loss) per Share (Basic &
Diluted) 0.053 0.001 0.014 (0.005)
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Fiscal 2012
Revenue -(i) -(i) -(i) 1,219
Net Income/ (loss) (1,202) (281) (1,039) (845)
Earnings/(loss) per Share (Basic &
Diluted) (0.009) (0.002) (0.008) (0.007)
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(i)gold and copper sales resulting from the testing and commissioning of the Ming Mine were credited to Mineral
Properties until commercial production was achieved
Losses increased in first quarter of 2012 and further increased in the second quarter of 2012 as a result of an
exchange loss of $0.7 million and $0.30 million respectively and reduced sales activity due to the processing
of the Group's satellite deposits completed in the first quarter of 2012. The fluctuation in losses in the
third and fourth quarters of 2012 and the first quarter of 2013 reflects exchange gains and losses on the
retranslation of the Gold Loan. The profit in the second quarter of 2013 reflects the successful move into
commercial production on November 1, 2012. The reduced profit in the third quarter of 2013 was due to a decline
in copper and gold prices and invoicing of less copper concentrate when compared to the second quarter of 2013
and the subsequent increase in profits in fourth quarter of 2013 was due to an increase in production and the
recognition of a deferred tax credit of $6,040,000.
LIQUIDITY, CAPITAL RESOURCES AND FINANCIAL POSITION
Since announcing commercial production, the Group has generated cash flows to finance its operational and
development requirements and repay loans. Prior to Q2/13 the Group relied on private placement financings of
equity securities, a Gold Loan facility, capital leases and a credit facility (see 'Commitments and Loans'
section) to finance its development requirements. The Group generated operating cash flows of $12.6 million
since declaring commercial production on November 1, 2012 with $5.9 million generated in Q4/13 and positive
cash flows are expected to continue. However, there is no guarantee that expenses will not exceed income again
during this mining phase. If this is the case, the liquidity risk could be material, even with current cash
resources.
The Group's holding of cash balances is kept under constant review. Given the current climate, the Group takes
a very risk averse approach to management of cash resources and Management and Directors monitor events and
associated risks on a continuous basis. Cash and short-term investment resources (cash, cash equivalents and
short-term investments) were as follows:
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July 31, 2013 July 31, 2012
Resource $'000 $'000
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Cash $CDN 2,212 7,394
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Cash US$ 3,293 -
----------------------------------------------------------------------------
Cash GBP 61 77
----------------------------------------------------------------------------
Short-term Investments GBP - 355
----------------------------------------------------------------------------
Total 5,566 7,826
----------------------------------------------------------------------------
Sales of copper concentrate are in US dollars and the majority of the Group's expenses are incurred in Canadian
dollars. The Group's principal exchange rate risk relates to movements between the Canadian and US dollar. The
Gold Loan is repayable in US dollars from future sales of gold mitigating the exchange risk. Management will
closely monitor exchange fluctuation and consider the use of forward exchange contracts as required.
Interest rates on the capital leases and short term borrowings are fixed, eliminating interest rate risk.
Cash flows utilised in investing activities amounted to $8.6 million for the year. Net cash of $6.7 million was
spent on the Group's Mineral Property ($9.5 million proceeds received from the sale of gold and copper
concentrate less $16.2 million in mine development). $1.6 million was spent on property, plant and equipment,
$0.2 million on Exploration and Evaluation of the Lower Footwall Zone and $0.1 million invested in Maritime
Resources Corp.
Cash flows utilized in financing activities during the year amounted to $5.1 million and included repayment of
$1.6 million of the Group's credit facility and repayments of the gold loan of $1.4 million and finance lease
repayments of $2.1 million.
The Group is required to hold Letters of Credit in favour of the Government of Newfoundland and Labrador in
respect of the reclamation and closure liability at the existing Nugget Pond Mill and Ming Mine. At year end
the Group holds bearer deposit notes totalling $3.26 million.
Since the commencement of commercial production the Group has generated operating cash flows of $12.6 million
and reduced the working capital deficit from $8.8 million at November 1, 2012 to $2.7 million at July 31, 2013.
The Group expects to remain cash flow positive based on current projections and production forecasts generating
a working capital surplus during the next 12 months including the repayment of the Sprott credit facility by
the due date of March 31, 2014. The current economic conditions do, however, create uncertainty particularly
over:
(a) the price of copper, gold and silver;
(b) the exchange rate between Canadian and US dollars and thus the
consequence for the cash generated from US dollar revenues;
(c) the production targets being met; and
(d) the terms of the Gold Loan being complied with.
The Group's forecasts and projections, taking account of reasonably possible changes in trading performance,
show that the Group should continue to be cash flow positive and meet its repayment obligations under both the
credit facility and Gold loan.
Based on the above management concludes the Group has adequate resources to continue in operational existence
for the foreseeable future. Thus they continue to adopt the going concern basis of accounting in preparing the
annual financial statements.
At October 28, 2013 the Group has $6.5 million in cash and cash equivalents.
Financial Instruments
The Group's financial instruments as at July 31, 2013 comprised of financial assets, comprising available for
sale investments, cash and cash equivalents and trade and other receivables and financial liabilities comprised
of trade payables, other payables, accrued expenses and interest bearing loans and borrowings.
All of the Group's financial liabilities are measured at amortised cost.
The Board of Directors determines, as required, the degree to which it is appropriate to use financial
instruments and hedging techniques to mitigate risks. The main risks for which such instruments may be
appropriate are foreign currency risk, liquidity risk, credit risk, interest rate risk and commodity price risk
each of which is discussed in note 23 of the financial statements for the year ended July 31, 2013.
COMMITMENTS AND LOANS
At July 31, 2013, there were no capital commitments made to third parties.
Gold Loan
In March 2010, the Group entered into an agreement ("Gold Loan") with Sandstorm to sell a portion of the life-
of-mine gold production from its Ming Mine. Under the terms of the agreement Sandstorm made staged upfront cash
payments for the gold to the Group totalling US$20 million.
For this, in each production year following the first year of production, until 175,000oz of payable gold has
been produced, the Group has agreed to sell a percentage equal to 25% x (85% divided by the actual percentage
of metallurgical recovery of gold realized in the immediately preceding production year) provided that, if the
payable gold production in any production year after the third production year is less than 15,000 ounces, then
in each such production year, Sandstorm payable gold shall not be less than 25% of the payable gold. In each
production year following the first year of production, after 175,000oz of payable gold has been produced, the
Group has agreed to sell a percentage equal to 12% x (85% divided by the actual percentage of metallurgical
recovery of gold realized in the immediately preceding production year) provided that, if the payable gold
production in any production year after the third production year is less than 15,000 ounces, then in each such
production year, Sandstorm payable gold shall not be less than 12% of the payable gold for the remainder of the
period ending 40 years after the date of the agreement. After the expiry of the 40 year term, the agreement is
renewable in 10 year terms at the option of Sandstorm.
The remaining circumstances in which the Gold Loan may be repaid earlier than by the delivery of payable gold
are as follows:
i. If within 24 months of the date that gold is first produced (28 November
2011), the Ming Mine has not produced and sold a minimum of 24,000oz
(6,000 ounces of Sandstorm payable gold) of payable gold (18,555 oz
produced to July 31, 2013; 5,723 ounces of Sandstorm payable gold) then
a portion of the US$20 million will be repayable based on the shortfall
of payable gold, and/or;
ii. Within the first 36 months of production of gold any shortfall in the
value of payable gold below the following amounts will be required to be
paid in cash:
-- within the first 12 months - US$3.6 million
-- within the second 12 months - US$3.6 million
-- within the third 12 months - US$3.1 million
Subsequent to the year end the Group has satisfied the requirement to deliver 6,000 ounces of Sandstorm payable
gold.
During the first twenty months of production, repayments of US$9,309,570 were made from the delivery of 5,723
ounces of gold thereby satisfying the requirement to repay a minimum of US$3.6 million cash during the first
and second 12 month periods and partially meeting the requirements for the third 12 months.
Credit Facility
On September 29, 2011 the Group agreed a Credit Facility of up to $10 million with Sprott Resource Lending
Partnership ('Sprott') for use as additional funding for the development of the Ming Mine. Subsequent to
amending the agreement in December 2011 the facility is available in three instalments; the first instalment of
$5 million was drawn on October 29, 2011, the second instalment of $2.5 million was drawn on January 30, 2012
and the final instalment for the balance up to $10 million was available until August 31, 2012. The Company did
not draw on this $2.5 million final available instalment. Interest will accrue at a fixed rate of 9.25% per
annum. In connection with the Credit Facility, a Structuring Fee of $100,000 and a 3% Commitment Fee of
$300,000 were paid to Sprott in cash. Pursuant to the terms of the Credit Facility, the Company issued $300,000
of ordinary shares of 1p each in the capital of the Company to Sprott in exchange for the repayment of the
previously paid cash Commitment Fee. In addition, a further 4% Drawdown Fee on all amounts drawn under the
Credit Facility was satisfied by the issuance of ordinary shares by the Company. On November 30, 2012 the Group
repaid $500,000. On March 26, 2013 this agreement was amended such that the principal is repayable by March 31,
2014 and secured by a fixed and floating charge over the assets of the Group. Upon amending the credit facility
an amendment fee of $400,000 was paid to Sprott in ordinary shares of 1p each. On April 30, 2013 and
subsequently on May 31, 2013 the Group made repayments of $500,000 and $600,000 respectively reducing the
outstanding balance to $5,900,000 at July 31, 2013.
Loan and lease balances
At July 31, 2013, interest bearing loans and borrowings comprised a Gold Loan of $18,791,000, finance lease
commitments of $7,040,000, a Credit Facility of $5,900,000 and a bank loan of $22,000. The Group entered into
finance lease commitments of $1,432,000 to finance the acquisition of a mine truck, scoop trams and a loader in
the year.
SUBSEQUENT EVENTS
On August 30, 2013 the Company announced an additional payment of $500,000 to Sprott reducing the outstanding
balance to $5.4 million.
On September 17, 2013 the Group announced that a conditional offer had been accepted by Cornerstone Capital
Resources Inc. for the Group to acquire their 50% interest in The Little Deer Copper Deposit and Whalesback
Mine in Newfoundland for $550,000 consisting of $200,000 in cash and $350,000 in shares. The 50% interest is
subject to a Joint Venture agreement with Thundermin Resources Inc. On October 15, 2013 the Group announced
that the conditions of the offer had been satisfied.
On September 30, 2013 the Company made an additional payment of $650,000 to Sprott reducing the outstanding
balance to $4.75 million.
APPENDIX 1 - LOCATION MAP: http://media3.marketwire.com/docs/Location%20Map.pdf
APPENDIX 2 - SELECTED FINANCIAL INFORMATION & REVIEW OF OVERALL PERFORMANCE
----------------------------------------------------------------------------
Financial Highlights
(All amounts in 000s of Canadian
Dollars, unless otherwise stated) Year ended July 31,
------------------------------------
2013 2012 2011
----------------------------------------------------------------------------
Gold sales - gold dore (Ounces) 324(1) 15,613(2) 1,399
Average price (per ounce) 1,491(1) 1,654(2) 1,492
Concentrate sales pre commercial
production (dmt) 14,634(1) 1,271(2) -
Concentrate sales post commercial
production (dmt) 4,331(2) - -
Average provisional price ($ per tonne
Cu, Ag & Au concentrate) 2,382(1) - -
----------------------------------------------------------------------------
Revenue 34,669 1,219 3,523
Production Expenses (27,644) (674) (1,754)
Exploration Expenditure (26) (24) (79)
Administrative expenses (3,557) (3,022) (2,750)
Net Income (loss) 9,053 (3,367) (53)
Cash Flow generated from (used in)
operating activities 11,468 (1,209) (1,352)
Cash Flow used in investing activities (8,595) (7,075) (25,092)
Cash Flow (used in) from financing
activities (5,154) 5,903 28,623
Net (decrease) increase in cash (2,281) (2,381) 2,179
Cash and cash equivalents at end of
period 5,566 7,826 10,170
----------------------------------------------------------------------------
Total Assets 116,859 110,718 96,473
Total Liabilities (39,167) (43,317) (34,495)
Working Capital (2,753) (7,625) 7,804
----------------------------------------------------------------------------
Weighted average number of shares
outstanding (000s) 142,690 128,477 102,282
Earnings (loss) per share ($) 0.063 (0.026) (0.001)
----------------------------------------------------------------------------
(1) represents post commercial production, November 1, 2012 to July 31,
2013.
(2) gold and copper concentrate sales relating to the testing and
commissioning of the Ming Mine are credited to Mineral Properties until
commercial production is achieved.
APPENDIX 3 - FINANCIAL REVIEW FOR THE QUARTER ENDED JULY 31, 2013
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Q4/13
Results Commentary
($000's) Comparatives
Q3/13 B/(W)(i) Q4/12 B/(W)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Revenue in Q4/13 was generated
through the sale of 5,573 dmt
of copper concentrate
containing 1,610 tonnes of
accountable copper metal and
1,130 ounces of accountable
gold compared with $10.1
million from the sale of 4,274
dmt of copper concentrate in
13,175 Q3/13. The increase in revenue 10,087 31% - N/A
can be attributed to increased
concentrate production offset
by declining commodity prices
during Q4/13. Revenue realized
in Q4/12 during the testing
and commissioning of the Ming
Mine was credited against the
Mineral Property asset.
----------------------------------------------------------------------------
Production costs relate to the
processing and mining costs
associated with Group's Ming
Mine production and include
processing and mining costs of
$1.8 million (Q3/13: $1.7
million) and $5.4 million
(Q3/13: $4.7 million)
7,173 respectively and in line with 6,435 (11)% - N/A
the increased production noted
above. Operating costs
associated with mining and
processing of Ming Mine ores
were capitalized to Mineral
Property prior to commercial
production being achieved.
----------------------------------------------------------------------------
General and administrative
expenses were lower than the
previous quarter by $155,000.
Promotional and travel costs
reduced by $79,000 and legal
and professional costs by
$59,000. In comparison to
Q4/12 administrative expenses
843 increased by $58,000. Staff 998 16% 785 (7)%
costs increased by $62,000,
security and general office
expenses by $30,000 offset by
a reduction of $25,000 in
promotional and travel costs
and $14,000 in legal and
professional costs.
----------------------------------------------------------------------------
Loss on derivative financial
instruments. During Q4/13 the
net unrealized fair value gain
adjustment recognized was
$145,000 being the difference
in the commodity prices at
time of provisional invoicing
and anticipated commodity
prices upon final settlement
offset by a realized loss of
$192,000 on the final
settlement of the Group's
third concentrate shipment. In
Q3/13 as commodity prices
began to fall the Group fixed
a portion of its copper, gold
and silver concentrate to
reduce further losses ahead of
(47) final settlement on its second (858) 95% - N/A
concentrate shipment. A loss
of $385,000 was realized being
the difference in commodity
prices at the time of
provisional invoicing and
actual commodity prices
realized on the fixed portion
of the shipment. A further
unrealized loss of $473,000
was booked during the third
quarter being the difference
in commodity prices at the
time of provisional invoicing
concentrates in shipment three
(shipment subsequently on 28
May 2013) and the anticipated
future commodity price at time
of final settlement.
----------------------------------------------------------------------------
Foreign exchange differences
arising on the Gold Loan
resulted in a loss in Q4/13 as
(295) a result of the weakening of (243) (21)% (447) 34%
the Canadian dollar against
the US dollar during the
quarter.
----------------------------------------------------------------------------
Mineral Properties The group
incurred costs of $1.3 million
in the quarter. The cost
includes labour costs of $0.7
million and underground
1,266 development costs of $0.6 1,768 28% 2,501 49%
million. Mineral properties
expenditure reduced in Q4/13
in line with the completion of
the 1807 independent ramp
breakthrough in Q3/13.
----------------------------------------------------------------------------
Capital spending on property,
plant and equipment increased
during the quarter compared to
Q3/13 reflecting the
acquisition of two additional
828 underground scooptrams The 389 (112)% 189 (338)%
increase from Q4/12 is due to
the reasons outlined above and
the overall movement from
capital development into
production.
----------------------------------------------------------------------------
Capital spending on
exploration and evaluation
costs in Q4/13 relates to
exploration drilling on the
131 Group's 1807 and 1806 ore - N/A 10 (1,210)%
bodies as well as on-going
Optimization Studies on the
Group's Lower Footwall Zone
ore body
----------------------------------------------------------------------------
(i)B/(W) = Better / (Worse)
APPENDIX 4 - CRITICAL ACCOUNTING POLICIES AND ESTIMATES
The details of the Group's accounting policies are presented in accordance with International Financial
Reporting Standards as set out in Note 2 to the financial statements. The preparation of financial statements
in conformity with IFRS requires management to make estimates and assumptions that affect the reported amounts
of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the year.
The following estimates are considered by management to be the most critical for investors to understand some
of the processes and reasoning that go into the preparation of the Group's financial statements, providing some
insight also to uncertainties that could impact the Group's financial results.
Going Concern
Since the commencement of commercial production the Group has generated operating cash flows of $12.6 million
and reduced the working capital deficit from $8.8 million at November 1, 2012 to $2.7 million at July 31, 2013.
The Group expects to remain cash flow positive based on current projections and production forecasts generating
a working capital surplus during the next 12 months including the repayment of the Sprott credit facility by
the due date of March 31, 2014. The current economic conditions do, however, create uncertainty particularly
over:
(a) the price of copper, gold and silver;
(b) the exchange rate between Canadian and US dollars and thus the
consequence for the cash generated from US dollar revenues;
(c) the production targets being met; and
(d) the terms of the Gold Loan being complied with.
The Group's forecasts and projections, taking account of reasonably possible changes in trading performance,
show that the Group should continue to be cash flow positive and meet its repayment obligations under both the
credit facility and Gold loan.
Based on the above management concludes the Group has adequate resources to continue in operational existence
for the foreseeable future. Thus they continue to adopt the going concern basis of accounting in preparing the
annual financial statements.
Share-based payments
The Group calculates the cost of share based payments using the Black-Scholes model. Inputs into the model in
respect of the expected option life and the volatility are subject to management estimate and any changes to
these estimates may have a significant effect on the cost. The assumptions used in calculating the cost of
share based payments are explained in note 5 of the financial statements for the year ended July 31, 2013.
Gold Loan
The Group calculates the effective interest rate on the Gold Loan based on estimates of future cash flows
arising from the sale of payable gold (see note 21 of the financial statements for the year ended July 31,
2013). The cash flows will be dependent on the production of gold and its selling price at the time of delivery
which have been estimated in line with the mine plan, future prices of gold and resource and reserve estimates.
Management's estimates of these factors are subject to risk and uncertainties affecting the amount of the
interest charge. Any changes to these estimates may result in a significantly different interest charge which
would affect the income statement and the corresponding Gold Loan liability.
Mineral Property and Exploration and Evaluation Costs
The directors have assessed whether there are any indicators of impairment in respect of mineral property and
exploration and evaluation costs. In making this assessment they have considered the Group's business plan
which includes resource estimates, future processing capacity, the forward market and longer term price outlook
for copper and gold. Resource estimates have been based on the most recently filed NI43-101 report and its
opportunities economic model which includes resource estimates and conversion of its inferred resources.
Management's estimates of these factors are subject to risk and uncertainties affecting the recoverability of
the Group's mineral property and exploration and evaluation costs. Any changes to these estimates may result in
the recognition of an impairment charge with a corresponding reduction in the carrying value of such assets.
After consideration of the above factors, the directors do not consider that there are any indicators that
mineral property and exploration and evaluation costs are impaired at the year end.
Closure Costs
The Group has an obligation to reclaim its properties after the minerals have been mined from the site, and has
estimated the costs necessary to comply with existing reclamation standards. These estimates are recorded as a
liability at their fair values in the periods in which they occur. If the estimate of reclamation costs proves
to be inaccurate, the Group could be required to increase the provision for site closure and reclamation costs,
which would increase the amount of future reclamation expense, resulting in a reduction in the Group's earnings
and net assets.
Revenue
Revenues are subject to variation after the date of sale due to assay, price and foreign exchange fluctuations.
Management monitors these changes closely and at the end of the period the directors will consider whether the
effect of these variations are material on the whole and determine whether an adjustment is therefore
appropriate.
Available for sale investment
Management consider that they do not have significant influence over the financial and policy decisions of
Maritime and therefore have included the investment as an available for sale investment.
Commercial production
The Group monitored the on-going testing and commissioning of its copper concentrate milling facility to assess
when commercial production had been achieved. Commercial Production is the assessment that the mill is capable
of operating in the manner intended and was defined by management at the onset of development to be 60 days of
continuous production from both the mill and mine, being 85% of target rates envisaged in the Group's
Feasibility Study. Prior to commercial production being declared, costs and revenues are offset to the Mineral
Properties asset and post commercial production will be charged to the Group's income statement. Commercial
production was achieved at November 1, 2012.
Deferred tax
The Group has incurred losses which will be available for offset against future taxable profits and one of the
subsidiaries has tax credits available to offset against future tax liabilities. Following the declaration of
commercial production during the year it has been concluded that the Group has sufficient evidence of future
taxable profits to justify the recognition of a deferred tax asset. If future taxable profits prove to be
insufficient the Group could be required to reduce the deferred tax asset which would result in a reduction in
the Group's earnings and net assets.
In the current year, new and revised standards which have been adopted have not affected the disclosures
presented in these financial statements with the exception of the disclosure of the breakdown of other
comprehensive income between items that may be reclassified into profit or loss or not in accordance with IAS 1
- Presentation of Financial Statements.
No standards issued but not yet effective have been adopted early.
International Financial Reporting Standards that have recently been issued or amended but are not yet effective
have not been adopted for the annual reporting period ended July 31, 2013:
Nature of
change to Application
IFRS accounting date of Application
/Amendment Title policy standard date for Group
----------------------------------------------------------------------------
Various Annual No change to Various August 1, 2013
Improvements accounting
to IFRSs policy,
therefore, no
impact
----------------------------------------------------------------------------
IFRS 9 Financial No change to January 1, August 1, 2015
instruments: accounting 2015
Classification policy,
and therefore, no
Measurement impact
----------------------------------------------------------------------------
IFRS 10 Consolidated No change to January 1, August 1, 2013
Financial accounting 2013
Statements policy,
therefore, no
impact
----------------------------------------------------------------------------
IFRS 11 Joint No change to January 1, August 1, 2013
Arrangements accounting 2013
policy,
therefore, no
impact
----------------------------------------------------------------------------
IFRS 12 Disclosure of No change to January 1, August 1, 2013
Interests in accounting 2013
Other Entities policy,
therefore, no
impact
----------------------------------------------------------------------------
IFRS 13 Fair Value No change to January 1, August 1, 2013
Measurement accounting 2013
policy,
therefore, no
impact
----------------------------------------------------------------------------
Management have reviewed the impact of the above standards and interpretations and have concluded that they
will not result in any material changes to reported results.
Details of the main accounting policies of the Group are included in note 2 of the financial statements for the
year ended July 31, 2013.
APPENDIX 5 - OTHER MATTERS
Outstanding Share & Option Data
As at the date of this MD&A the following securities are outstanding:
----------------------------------------------------------------------------
Weighted Average Exercise
Security Shares issued or Issuable Price
----------------------------------------------------------------------------
Common Shares 143,280,614 --
----------------------------------------------------------------------------
Options 4,087,334(i) $0.46
----------------------------------------------------------------------------
(i)if all options have fully vested
For further assistance Mr. Peter Mercer, Corporate Secretary can be reached directly at +1-709-800-1929 ext.500
or pmercer@ramblermines.com.
Forward Looking Information
This MD&A contains "forward-looking information" ("FLI") which may include, but is not limited to, statements
with respect to the Group's objectives and strategy, future financial or operating performance of the Group and
its projects, exploration expenditures, costs and timing of the development of new deposits, costs and timing
of future exploration, requirements for additional capital, government regulation of mining exploration and
development, environmental risks, title disputes or claims and limitations of insurance coverage. All
statements, other than statements of historical fact, are forward-looking statements. Often, but not always,
statements containing FLI can be identified by the use of words such as "plans", "expects", "is expected",
"budget", "scheduled", "estimates", "forecasts", "intends", "anticipates", or "believes" or variations
(including negative variations) of such words and phrases, or state that certain actions, events or results
"may", "could", "would", "might" or "will" be taken, occur be achieved or continue to be achieved. Statements
containing FLI are necessarily based on a number of estimates and assumptions that, while considered reasonably
by the Company, involve known and unknown risks, uncertainties and other factors which may cause the actual
results, performance or achievements of the Group to be materially different from any future results,
performance or achievements expressed or implied by the FLI. Such factors include, among others, general
business, economic, competitive, political and social uncertainties; the actual results of current exploration
activities; conclusions of economic evaluations; availability and cost of credit; fluctuations in Canadian
dollar interest rates; fluctuations in the relative value of United States dollars, Canadian dollars and
British Pounds; changes in planned parameters as plans continue to be refined; fluctuations in the market and
forward prices of copper, gold, silver or certain other commodities; possible variations of ore grade or
recovery rates; failure of equipment; accidents and other risks of the mining exploration industry; political
instability, insurrection or war; delays in obtaining governmental approvals or financing or in the completion
of development or construction activities, as well as those factors discussed in the section entitled "Risks
and Uncertainties" in the Report of Directors for the year ended July 31, 2013. Although the Group has
attempted to identify important factors that could cause actual actions, events or results to differ materially
from those described in the FLI contained in this MD&A, there may be other factors that cause actions, events
or results to differ from those anticipated, estimated or intended. Unless stated otherwise, statements
containing FLI herein are made as of the date of this MD&A.
Other than as required by applicable securities law, the Company disclaims any obligation to update any forward-
looking statements, whether as a result of new information, future events or results or otherwise. There can be
no assurance that forward-looking statements will prove to be accurate, as actual results and future events
could differ materially from those anticipated in such statements. All of the forward-looking statements made
in this MD&A are qualified by these cautionary statements. Accordingly, readers should not place undue reliance
on forward-looking statements. The following table outlines certain significant forward-looking statements
contained in this MD&A and provides the material assumptions used to develop such forward-looking statements
and material risk factors that could cause actual results to differ materially from the forward looking
statements.
----------------------------------------------------------------------------
FLI statements Assumptions Risk Factors
----------------------------------------------------------------------------
Continued positive Actual expenditures from Expenditures exceeding
cash flow operations will not revenues resulting from
exceed revenues. fluctuations in the
market and forward prices
of copper, gold, silver
or certain other
commodities, or increased
costs of production
----------------------------------------------------------------------------
Repayment of credit Generation of sufficient Significant reductions in
facility by March cash flow from the sale price of copper and/or
31, 2014 of concentrate gold. Production
shortfalls. Increased
costs of production
----------------------------------------------------------------------------
Continued mining and Achieving the planned Development delays
milling the exposed capital and operating reducing access to
1807 workplaces and development and production ore
further up-dip and production targets; and,
down-dip timely completion of
exploration of 1807 drill bays to allow
zone commencement of
exploration drilling
----------------------------------------------------------------------------
Optimisation of the Successful completion of Economic viability
mining and a detailed engineering
processing of ores review of existing
from the Ming Mine infrastructure and
to allow expansion availability of finance
to 1,000 mtpd from cash flow from
operations or external
----------------------------------------------------------------------------
Open up mining Achieving the planned Development delays
horizons in the capital and operating reducing access to
Ming South up and development and production ore
down plunge ore production targets
bodies.
----------------------------------------------------------------------------
Become a strategic Identification and Availability of suitable
long term low cost acquisition of suitable mineral properties at an
producer by mineral properties, appropriate price and
selective pursuit investment opportunities adequate available
of growth and suitable partners for finance. Availability of
opportunities joint ventures. suitable acquisition and
joint venture
opportunities on
acceptable terms
----------------------------------------------------------------------------
Increasing stock Market reacts positively Failure to reach market
market exposure and to Group's results and expectations.
liquidity promotional activity Deterioration in market
conditions generally or
in the mining sector
----------------------------------------------------------------------------
Further information
Additional information relating to the Group is on SEDAR at www.sedar.com and on the Group's web site at
www.ramblermines.com.
RAMBLER METALS AND MINING PLC
REPORT OF THE DIRECTORS FOR THE YEAR ENDED JULY 31, 2013
The Directors present their report with the audited financial statements of the Group for the year ended July
31, 2013.
PRINCIPAL ACTIVITY
The principal activity of the Group is the development, mining and exploration of the Ming Copper-Gold Mine
located in Newfoundland and Labrador and the exploration and development of other properties located in
Atlantic Canada. The principal activity of the parent company is that of a holding company.
REVIEW OF BUSINESS
A review of the Group's business and prospects is set out in the Management's Discussion and Analysis.
FUTURE DEVELOPMENTS
The Group is looking forward to:
1. Continuing as a profitable copper and gold producer by continued
optimization of concentrate production at the Nugget Pond concentrating
facility, improving revenue through the integration of the gold hydromet
plant into the production stream and focusing on the Group's operations
with the goal of reducing its overall operating costs.
2. Increasing available resources and reserves through further exploration
both within the Ming mine and current land holdings.
3. Continuing to investigate, through on-going optimization studies,
development of the Lower Footwall Zone creating organic growth.
4. Selectively pursuing growth opportunities within Atlantic Canada
including joint ventures, acquisitions, strategic alliances and equity
positions.
DIVIDENDS
No dividends will be distributed for the year ended July 31, 2013.
DIRECTORS
The Directors during the period under review were:
T S Chan
E C Chen (appointed September 24, 2012)
D H W Dobson
L D Goodman
B Hinchcliffe
S Neamonitis
G Ogilvie
J M Roberts (resigned February 20, 2013)
J S Thomson
POLICY ON PAYMENT OF CREDITORS
It is the Group's and Company's policy to settle all amounts due to creditors in accordance with agreed terms
of supply and market practice in the relevant country.
The Group's average creditor payment period at July 31, 2013 was 53 days (2012: 74 days). The Company's average
creditor payment period at July 31, 2013 was 51 days (2012: 62 days).
POLITICAL AND CHARITABLE CONTRIBUTIONS
During the year, the Group made charitable donations of $12,800 (2012: $2,950) to various charities in the Baie
Verte area, Newfoundland and Labrador.
SUBSTANTIAL SHARE INTERESTS
At October 28, 2013 the parent Company was aware of the following substantial share interests:
Number of
Ordinary % of Share
Shares Capital
Henderson Global Investors 24,427,575 17.05%
Tinma International Ltd. 22,736,992 15.87%
Legal and General Investment Management 17,575,000 12.27%
Majedie Asset Management 9,043,597 6.31%
Whitmill Trust (Zila Corporation) 8,838,000 6.17%
Hargreaves Lansdown 4,564,543 3.19%
FINANCIAL INSTRUMENTS
The Board of Directors determines, as required, the degree to which it is appropriate to use financial
instruments and hedging techniques to mitigate risks. The main risks for which such instruments may be
appropriate are foreign exchange risk, liquidity risk, credit risk, interest rate risk and commodity price
risk, each of which is discussed in note 23 to the financial statements.
SUBSEQUENT EVENTS
Details of subsequent events are set out in the Management's Discussion and Analysis.
RISKS AND UNCERTAINTIES
An investment in Rambler should be considered highly speculative due to the nature of its operations and
certain other factors. An investment in Rambler's securities should only be made by persons who can afford the
total loss of their investment. The risk factors which should be taken into account in assessing Rambler's
activities and an investment in securities of Rambler include, but are not limited to, those set out below.
Should any one or more of these risks occur, it could have a material adverse effect on the value of securities
of Rambler and the business, prospects, assets, financial position or operating results of Rambler, any one of
which may have a significant adverse effect on the price or value of any securities of Rambler.
The risks noted below do not necessarily comprise all those faced by Rambler and are not intended to be
presented in any assumed order of likelihood or magnitude of consequences.
Mining risks
Mining operations are inherently risky. These operations are subject to all hazards and risks encountered in
the exploration for, and development and production of underground ore, including formation pressures, seismic
activity, rock bursts, fires, power outages, cave-ins, flooding, explosions and other conditions involved in
the drilling and removal of material. Any of these events could result in serious damage to the mine and other
infrastructure, damage to life or property, environmental damage and possible legal liability.
The Company's profitability will depend, in part, on the economic returns and actual costs of developing its
mining projects, which may differ from the estimates made by the Company.
Copper and Gold Price Volatility
The Group's revenues are expected to be derived from the extraction and sale of copper and gold concentrate.
The prices of copper and gold have fluctuated widely, particularly in recent years, and are affected by
numerous factors beyond the Group's control including international, economic and political trends,
expectations of inflation, currency exchange fluctuations, interest rates, global or regional consumption
patterns, speculative activities and increased global production due to new extraction developments and
improved extraction and production methods. In recent years the price of copper has been affected by changes in
the worldwide balance of copper supply and demand, largely resulting from economic growth and political
conditions in China and other major developing economies. While this demand has resulted in higher prices for
copper in recent years, if Chinese economic growth slows, it could result in lower demand for copper. The
effect of these factors on the price of copper and gold cannot be accurately predicted. Any material decrease
in the prevailing price of copper in particular for any significant period of time would have an adverse and
material impact on the Group's economic evaluations and on the Group's results of operations and financial
condition.
Additional Requirement for Capital
The Group may need to raise additional capital in due course to fund anticipated future development and on-
going operations. Future development of the Ming Mine, future acquisitions, base metal prices, environmental
rehabilitation or restitution, revenues, taxes, capital expenditures and operating expenses and geological and
processing successes are all factors which will have an impact on the amount of additional capital required.
Any additional equity financing may be dilutive to shareholders and debt financing, if available, may involve
restrictions on financing and operating activities. There is no assurance that additional financing will be
available on terms acceptable to the Group. If the Group is unable to obtain additional financing as needed, it
may be required to reduce the scope of its operations or anticipated expansion, forfeit its interests in some
or all of its properties, incur financial penalties and reduce or terminate its operations.
Uncertainty in the estimation of mineral resources and mineral reserves
The calculation of mineral reserves and mineral resources and related grades mined has a degree of uncertainty.
Until such a time as the mineral reserves and mineral resources are actually mined and processed, the quantity
of grades must be considered as estimates only. The mineral reserves estimates of the Company have been
determined based on assumed metal prices, cut-off grades and costs that may prove to be inaccurate. Any
material change in these variables, along with differences in actual metal recoveries when compared to
laboratory test results, may affect the economic outcome of current and future projects.
STATEMENT AS TO DISCLOSURE OF INFORMATION TO AUDITOR
All of the current Directors have taken all the steps that they ought to have taken to make themselves aware of
any information needed by the Group's Auditor for the purposes of their audit and to establish that the Auditor
is aware of that information. The Directors are not aware of any relevant audit information of which the
Auditor is unaware.
AUDITOR
The auditor, BDO LLP, will be proposed for re-appointment in accordance with Section 489 of the Companies Act
2006.
On Behalf of The Board:
P Mercer
Company Secretary
October 28, 2013
RAMBLER METALS AND MINING PLC
DIRECTORS' RESPONSIBILITIES
The directors are responsible for preparing the report of the directors and the financial statements in
accordance with applicable law and regulations.
Company law requires the directors to prepare financial statements for each financial year. Under that law the
directors have elected to prepare the group and company financial statements in accordance with International
Financial Reporting Standards (IFRSs) as adopted by the European Union. Under company law the directors must
not approve the financial statements unless they are satisfied that they give a true and fair view of the state
of affairs of the group and company and of the profit or loss of the group for that period. The directors are
also required to prepare financial statements in accordance with the rules of the London Stock Exchange for
companies trading securities on the Alternative Investment Market.
In preparing these financial statements, the directors are required to:
-- select suitable accounting policies and then apply them consistently;
-- make judgements and accounting estimates that are reasonable and
prudent;
-- state whether they have been prepared in accordance with IFRSs as
adopted by the European Union, subject to any material departures
disclosed and explained in the financial statements;
-- prepare the financial statements on the going concern basis unless it is
inappropriate to presume that the company and the group will continue in
business.
The directors are responsible for keeping adequate accounting records that are sufficient to show and explain
the company's transactions and disclose with reasonable accuracy at any time the financial position of the
company and enable them to ensure that the financial statements comply with the requirements of the Companies
Act 2006. They are also responsible for safeguarding the assets of the company and hence for taking reasonable
steps for the prevention and detection of fraud and other irregularities.
Website publication
The directors are responsible for ensuring the annual report and the financial statements are made available on
a website. Financial statements are published on the company's website in accordance with legislation in the
United Kingdom governing the preparation and dissemination of financial statements, which may vary from
legislation in other jurisdictions. The maintenance and integrity of the company's website is the
responsibility of the directors. The directors' responsibility also extends to the on-going integrity of the
financial statements contained therein.
RAMBLER METALS AND MINING PLC
CORPORATE GOVERNANCE REPORT FOR THE YEAR ENDED JULY 31, 2013
In formulating the Group's corporate governance procedures the Board of Directors takes due regard of the
principles of good governance set out in the UK Corporate Governance Code issued by the Financial Reporting
Council in September 2012 (as appended to the Listing Rules of the Financial Services Authority) and the size
and development of the Group. The Group also has regard to the Quoted Companies Alliance (QCA) Guidelines on
Corporate Governance for AIM Companies.
The Board of Rambler Metals and Mining PLC is made up of one executive Director and seven non-executive
Directors. D H W Dobson is the senior non-executive director and G Ogilvie is the Group's President and Chief
Executive. It is the Board's policy to maintain independence by having at least half of the Board comprising
non-executive directors. The structure of the Board ensures that no one individual or group dominates the
decision making process.
The Board ordinarily meets no less than quarterly providing effective leadership and overall control of the
Group's affairs through the schedule of matters reserved for its decision. This includes the approval of
budgets and business plans, items of major capital expenditure, risk management policies and the approval of
the financial statements. Formal agendas, papers and reports are sent to the directors in a timely manner,
prior to Board meetings. The Board delegates certain of its responsibilities to Board committees which have
clearly defined terms of reference. Between the Board meetings, the executive Director, the Chief Financial
Officer and some of the non-executive directors meet on a regular basis to review and discuss progress.
All Directors have access to the advice and services of the company secretary, who is responsible for ensuring
that all Board procedures are followed. Any Director may take independent professional advice at the Group's
expense in the furtherance of his duties.
The Audit Committee, which meets not less than quarterly and considers the Group's financial reporting
(including accounting policies) and internal financial controls, is chaired by J S Thomson, the other members
being L Goodman and E C Chen. The committee receives reports from management and from the Group's auditor. The
Group has in place a series of procedures and controls designed to identify and prevent the risk of loss. These
procedures are formally documented and are reported on regularly. The Audit Committee has reviewed the systems
in place and considers these to be appropriate.
The Remuneration Committee, which meets at least once a year and is responsible for making decisions on
directors' remuneration packages, is chaired by L Goodman. T S Chan and J S Thomson are the other committee
members.
Remuneration of executive Directors is established by reference to the remuneration of executives of equivalent
status both in terms of time commitment, level of responsibility of the position and by reference to their job
qualifications and skills. The Remuneration Committee will also have regard to the terms which may be required
to attract an executive of equivalent experience to join the Board from another company. Such packages may
include performance related bonuses and the grant of share options.
The Board attaches importance to maintaining good relationships with all its shareholders and ensures that all
price sensitive information is released to all shareholders at the same time in accordance with AIM and Toronto
Stock Exchange-Venture market rules. The Group's principal communication is through the Annual General Meeting
and through the annual report and accounts, quarterly and interim statements.
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF RAMBLER METALS AND MINING PLC
We have audited the financial statements of Rambler Metals and Mining PLC for the year ended 31 July 2013 which
comprise the consolidated income statement, the consolidated and parent company statements of comprehensive
income, the consolidated and parent company statements of financial position, the consolidated and parent
company statements of changes in equity, the consolidated and parent company statements of cash flows and the
related notes. The financial reporting framework that has been applied in their preparation is applicable law
and International Financial Reporting Standards (IFRSs) as adopted by the European Union and, as regards the
parent company financial statements, as applied in accordance with the provisions of the Companies Act 2006.
This report is made solely to the company's members, as a body, in accordance with Chapter 3 of Part 16 of the
Companies Act 2006. Our audit work has been undertaken so that we might state to the company's members those
matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent
permitted by law, we do not accept or assume responsibility to anyone other than the company and the company's
members as a body, for our audit work, for this report, or for the opinions we have formed.
Respective responsibilities of directors and auditors
As explained more fully in the statement of directors' responsibilities, the directors are responsible for the
preparation of the financial statements and for being satisfied that they give a true and fair view. Our
responsibility is to audit and express an opinion on the financial statements in accordance with applicable law
and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the
Auditing Practices Board's Ethical Standards for Auditors.
Scope of the audit of the financial statements
A description of the scope of an audit of financial statements is provided on the Financial Reporting Council's
website at www.frc.org.uk/auditscopeukprivate.
Opinion on financial statements
In our opinion:
-- the financial statements give a true and fair view of the state of the
group's and the parent company's affairs as at 31 July 2013 and of the
group's profit for the year then ended;
-- the group financial statements have been properly prepared in accordance
with IFRSs as adopted by the European Union;
-- the parent company financial statements have been properly prepared in
accordance with IFRSs as adopted by the European Union and as applied in
accordance with the provisions of the Companies Act 2006; and
-- the financial statements have been prepared in accordance with the
requirements of the Companies Act 2006.
Separate opinion in relation to IFRSs as issued by the IASB
As explained in Note 2 to the group financial statements the group, in addition to applying IFRSs as adopted by
the European Union, has also applied IFRSs as issued by the International Accounting Standards Board (IASB).
In our opinion the group financial statements comply with IFRSs as issued by the IASB.
Opinion on other matters prescribed by the Companies Act 2006
In our opinion the information given in the directors' report for the financial year for which the financial
statements are prepared is consistent with the financial statements.
Matters on which we are required to report by exception
We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to
report to you if, in our opinion:
-- adequate accounting records have not been kept by the parent company, or
returns adequate for our audit have not been received from branches not
visited by us; or
-- the parent company financial statements are not in agreement with the
accounting records and returns; or
-- certain disclosures of directors' remuneration specified by law are not
made; or
-- we have not received all the information and explanations we require for
our audit.
Jason Homewood (senior statutory auditor)
For and on behalf of BDO LLP, statutory auditor
London
United Kingdom
October 28, 2013
BDO LLP is a limited liability partnership registered in England and Wales (with registered number OC305127).
RAMBLER METALS AND MINING PLC
CONSOLIDATED INCOME STATEMENT
For the Year Ended July 31, 2013
(EXPRESSED IN CANADIAN DOLLARS)
Note 2013 2012
$'000 $'000
Revenue 3 34,669 1,219
Production costs (20,936) (674)
Depreciation and amortisation (6,708) -
---------------------
Gross profit 7,025 545
Administrative expenses (3,557) (3,022)
Exploration expenses (26) (24)
---------------------
Operating profit/(loss) 4 3,442 (2,501)
---------------------
Exchange loss (513) (959)
Bank interest receivable 84 102
Loss on derivative financial instruments 6 (323) -
Finance costs 7 295 (9)
---------------------
Net financing income/(expense) (457) (866)
---------------------
Profit/(loss) before tax 2,985 (3,367)
Income tax credit 8 6,068 -
---------------------
Profit/(loss) for the year attributable to
owners of the parent 9,053 (3,367)
---------------------
---------------------
Earnings/(loss) per share
Note 2013 2012
$
Basic earnings/(loss) per share 19 0.063 (0.026)
---------------------
---------------------
Diluted earnings/(loss) per share 19 0.063 (0.026)
---------------------
---------------------
RAMBLER METALS AND MINING PLC
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the Year Ended July 31, 2013
(EXPRESSED IN CANADIAN DOLLARS)
2013 2012
$'000 $'000
Profit/(loss) for the year 9,053 (3,367)
----------------------
Other comprehensive income
Items that may be reclassified into profit or loss
Exchange differences on translation of foreign
operations (net of tax) (3) 8
Gain/(loss) on available for sale investment (net of
tax) 721 (422)
----------------------
Other comprehensive income/(loss) for the year 718 (414)
----------------------
Total comprehensive income/(loss) for the year and
attributable to the owners of the parent 9,771 (3,781)
----------------------
----------------------
Registered number: 05101822 (England and Wales)
RAMBLER METALS AND MINING PLC
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at July 31, 2013
(EXPRESSED IN CANADIAN DOLLARS)
Note
2013 2012
$'000 $'000
Assets
Intangible assets 9 17,450 17,260
Mineral properties 10 49,395 48,064
Property, plant and equipment 11 28,460 31,494
Available for sale investments 12 1,703 712
Deferred tax 8 5,916 -
-------------------
Total non-current assets 102,924 97,530
-------------------
Inventory 13 3,373 1,100
Trade and other receivables 14 1,096 718
Derivative financial asset 15 639 281
Cash and cash equivalents 16 5,566 7,826
Restricted cash 17 3,261 3,263
-------------------
Total current assets 13,935 13,188
-------------------
Total assets 116,859 110,718
-------------------
-------------------
Equity
Issued capital 18 2,613 2,599
Share premium 75,164 74,756
Merger reserve 214 214
Translation reserve 140 143
Fair value reserve 299 (422)
Accumulated losses (738) (9,888)
-------------------
Total equity 77,692 67,402
-------------------
Liabilities
Interest-bearing loans and borrowings 21 20,576 20,691
Provision 22 1,903 1,812
-------------------
Total non-current liabilities 22,479 22,503
-------------------
Interest-bearing loans and borrowings 21 10,898 14,827
Trade and other payables 20 5,790 5,986
-------------------
Total current liabilities 16,688 20,813
-------------------
Total liabilities 39,167 43,317
-------------------
Total equity and liabilities 116,859 110,718
-------------------
-------------------
ON BEHALF OF THE BOARD:
L D Goodman, Director
Approved and authorised for issue by the Board on October 28, 2013
RAMBLER METALS AND MINING PLC
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Share Share Merger Translation
capital Premium Reserve reserve
(EXPRESSED IN CANADIAN DOLLARS) $'000 $'000 $'000 $'000
Group
Balance at August 1, 2011 2,299 65,934 214 135
--------------------------------------------
Comprehensive income
Loss for the year - - - -
--------------------------------------------
Foreign exchange translation
differences - - - 8
Loss on available for sale
investments - - - -
--------------------------------------------
Total other comprehensive
income - - - 8
--------------------------------------------
Total comprehensive income for
the year - - - 8
--------------------------------------------
Transactions with owners
Issue of share capital 300 9,047 - -
Share issue expenses - (225) - -
Share-based payments - - - -
--------------------------------------------
Transactions with owners 300 8,822 - -
--------------------------------------------
Balance at July 31, 2012 2,599 74,756 214 143
--------------------------------------------
--------------------------------------------
Balance at August 1, 2012 2,599 74,756 214 143
--------------------------------------------
Comprehensive income
Profit for the year - - - -
--------------------------------------------
Foreign exchange translation
differences - - - (3)
Profit on available for sale
investments (net of tax) - - - -
--------------------------------------------
Total other comprehensive
income - - - (3)
--------------------------------------------
Total comprehensive income for
the year - - - (3)
--------------------------------------------
Transactions with owners
Issue of share capital 14 408 - -
Share-based payments - - - -
--------------------------------------------
Transactions with owners 14 408 - -
--------------------------------------------
Balance at July 31, 2013 2,613 75,164 214 140
--------------------------------------------
--------------------------------------------
Fair value Accumulated
reserve Losses Total
(EXPRESSED IN CANADIAN DOLLARS) $'000 $'000 $'000
Group
Balance at August 1, 2011 - (6,604) 61,978
---------------------------------------------
Comprehensive income
Loss for the year - (3,367) (3,367)
---------------------------------------------
Foreign exchange translation
differences - - 8
Loss on available for sale
investments (422) - (422)
---------------------------------------------
Total other comprehensive
income (422) - (414)
---------------------------------------------
Total comprehensive income for
the year (422) (3,367) (3,781)
---------------------------------------------
Transactions with owners
Issue of share capital - - 9,347
Share issue expenses - - (225)
Share-based payments - 83 83
---------------------------------------------
Transactions with owners - 83 9,205
---------------------------------------------
Balance at July 31, 2012 (422) (9,888) 67,402
---------------------------------------------
---------------------------------------------
Balance at August 1, 2012 (422) (9,888) 67,402
---------------------------------------------
Comprehensive income
Profit for the year - 9,053 9,053
---------------------------------------------
Foreign exchange translation
differences - - (3)
Profit on available for sale
investments (net of tax) 721 - 721
---------------------------------------------
Total other comprehensive
income 721 - 718
---------------------------------------------
Total comprehensive income for
the year 721 9,053 9,771
---------------------------------------------
Transactions with owners
Issue of share capital - - 422
Share-based payments - 97 97
---------------------------------------------
Transactions with owners - 97 519
---------------------------------------------
Balance at July 31, 2013 299 (738) 77,692
---------------------------------------------
---------------------------------------------
RAMBLER METALS AND MINING PLC
CONSOLIDATED STATEMENT OF CASH FLOWS
For the Year Ended July 31, 2013
(EXPRESSED IN CANADIAN DOLLARS)
2013 2012
$'000 $'000
Cash flows from operating activities
Operating profit/(loss) 3,442 (2,501)
Depreciation 6,813 131
Share based payments 97 80
Increase in inventory (145) (167)
(Increase)/decrease in debtors (379) 847
Increase in derivative financial instruments (962) -
Increase in creditors 3,431 410
----------------------
Cash generated from/(utilised in) operations 12,297 (1,200)
Interest paid (857) (9)
Tax received 28 -
----------------------
Net cash generated from/(utilised in) operating
activities 11,468 (1,209)
----------------------
Cash flows from investing activities
Interest received 84 102
Redemption of bearer deposit note 2 114
Acquisition of listed investment (148) (1,135)
Acquisition of evaluation and exploration assets (160) (658)
Acquisition of mineral properties - net (6,735) 4,508
Acquisition of property, plant and equipment (1,638) (10,006)
----------------------
Net cash utilised in investing activities (8,595) (7,075)
----------------------
Cash flows from financing activities
Proceeds from issue of share capital - 8,714
Payment of transaction costs - (225)
Proceeds from exercise of share options 22 38
Repayment of Gold Loan (note 21) (1,466) (7,888)
(Repayment)/proceeds of Credit Facility (1,625) 6,976
Capital element of finance lease payments (2,085) (1,712)
----------------------
Net cash (utilised)/from financing activities (5,154) 5,903
----------------------
Net decrease in cash and cash equivalents (2,281) (2,381)
Cash and cash equivalents at beginning of period 7,826 10,170
Effect of exchange rate fluctuations on cash held 21 37
----------------------
Cash and cash equivalents at end of period 5,566 7,826
----------------------
----------------------
RAMBLER METALS AND MINING PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1. Nature of operation and going concern
The principal activity of the Group is the development and exploration of the Ming Copper-Gold Mine ("Ming
Mine") located in Baie Verte, Newfoundland and Labrador, Canada.
The Group's business activities, together with the factors likely to affect its future development, performance
and position, its financial position, cash flows, liquidity position and borrowing facilities are set out in
the Management Discussion and Analysis on pages 3 to 28. In addition, note 23 to the financial statements
includes the Group's objectives, policies and processes for managing its capital; its financial risk management
objectives; details of its financial instruments and hedging activities; and its exposures to credit risk and
liquidity risk.
Since the commencement of commercial production the Group has generated operating cash flows of $12.6 million
and reduced the working capital deficit from $8.8 million at November 1, 2012 to $2.7 million at July 31, 2013.
The Group expects to remain cash flow positive based on current projections and production forecasts generating
a significant working capital surplus during the next 12 months including the repayment of the Sprott credit
facility by the due date of March 31, 2014. The current economic conditions do, however, create uncertainty
particularly over
(a) the price of copper, gold and silver;
(b) the exchange rate between Canadian and US dollars and thus the
consequence for the cash generated from US dollar revenues ;
(c) the production targets being met; and
(d) the terms of the Gold loan being complied with.
The Group's forecasts and projections, taking account of reasonably possible changes in trading performance,
show that the Group should continue to be cash flow positive and meet its repayment obligations under both the
credit facility and Gold loan.
Based on the above management concludes the Group has adequate resources to continue in operational existence
for the foreseeable future. Thus they continue to adopt the going concern basis of accounting in preparing the
annual financial statements.
2. Significant accounting policies
Rambler Metals and Mining Plc (the "Company") is a company registered in England and Wales. The consolidated
financial statements of the Company for the year ended July 31, 2013 comprise the Company and its subsidiaries
(together referred to as the "Group").
These financial statements are presented in Canadian dollars. Although the parent company has a functional
currency of GB pounds the majority of the Group's operations are carried out by its operating subsidiary which
has a functional currency of Canadian dollars. Foreign operations are included in accordance with the policies
set out in note 2(d). At July 31, 2013 the closing rate of exchange of Canadian dollars to 1 GB pound was 1.57
(July 31, 2012: 1.58) and the average rate of exchange of Canadian dollars to 1 GB pound for the year was 1.58
(2012: 1.60).
(a) Statement of compliance
The consolidated financial statements of Rambler Metals and Mining plc have been prepared in accordance with
International Financial Reporting Standards ("IFRS") and their interpretations issued by the International
Accounting Standards Board ("IASB"), as adopted by the European Union and with IFRS and their interpretations
adopted by the IASB. There are no material differences on application to the Group. The consolidated financial
statements have also been prepared in accordance with those parts of the Companies Act 2006 applicable to
companies reporting under IFRS.
New and revised standards which have been adopted during the year have not affected the disclosures presented
in these financial statements with the exception of the disclosure of the breakdown of other comprehensive
income between items that may be reclassified into profit or loss or not in accordance with IAS 1 -
Presentation of Financial Statements.
The Group has not adopted any standards or interpretations in advance of the required implementation dates. It
is not expected that adoption of standards or interpretations which have been issued by the International
Accounting Standards Board but have not been adopted will have a material impact on the financial statements.
(b) Basis of preparation
The financial statements are presented in Canadian dollars, rounded to the nearest thousand dollars.
The preparation of financial statements in conformity with IFRS requires management to make judgements,
estimates and assumptions that affect the application of policies and reported amounts of assets and
liabilities, income and expenses. The estimates and associated assumptions are based on historical experience
and various other factors that are believed to be reasonable under the circumstances, the results of which form
the basis of making the judgements about carrying values of assets and liabilities that are not readily
apparent from other sources. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an on-going basis. Revisions to accounting estimates
are recognised in the period in which the estimate is revised if the revision affects only that period or in
the period of the revision and future periods if the revision affects both current and future periods.
Judgements made by management in the application of IFRS that have a significant effect on the financial
statements and estimates with a significant risk of material adjustment in the next year are discussed in note
26.
The accounting policies set out below have been applied consistently to all periods presented in these
consolidated financial statements.
The accounting policies have been applied consistently by Group entities.
(c) Basis of consolidation
(i) Subsidiaries
Subsidiaries are entities controlled by the Company. Control exists when the Company has the power, directly or
indirectly, to govern the financial and operating policies of an entity so as to obtain benefits from its
activities. In assessing control, potential voting rights that presently are exercisable or convertible are
taken into account. The financial statements of subsidiaries are included in the consolidated financial
statements from the date that control commences until the date that control ceases.
(ii) Transactions eliminated on consolidation
Intragroup balances and any unrealised gains and losses or income and expenses arising from intragroup
transactions, are eliminated in preparing the consolidated financial statements.
(d) Foreign currency
(i) Foreign currency transactions
Transactions in foreign currencies are translated to the functional currency at the foreign exchange rate
ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies at the
balance sheet date are translated to the functional currency at the foreign exchange rate ruling at that date.
Foreign exchange differences arising on translation are recognised in the income statement. Non-monetary assets
and liabilities that are measured in terms of historical cost in a foreign currency are translated using the
exchange rate at the date of the transaction. Non-monetary assets and liabilities denominated in foreign
currencies that are stated at fair value are translated to the functional currency at foreign exchange rates
ruling at the dates the fair value was determined.
(ii) Translation into presentation currency
The assets and liabilities of the UK parent are translated to Canadian dollars at foreign exchange rates ruling
at the balance sheet date. The revenues and expenses of the parent company are translated to Canadian dollars
at rates approximating to the foreign exchange rates ruling at the dates of the transactions.
(iii) Net investment in foreign operations
Exchange differences arising from the translation of the net investment in foreign operations are taken to
translation reserve. They are released into the income statement upon disposal.
(e) Property, plant and equipment
(i) Owned assets
Items of property, plant and equipment are stated at cost. The cost of self-constructed assets includes the
cost of materials, direct labour and the initial estimate of the costs of dismantling and removing the items
and restoring the site on which they are located, where an obligation to incur such costs exists.
Where parts of an item of property, plant and equipment have different useful lives, they are accounted for as
separate items of property, plant and equipment.
(ii) Leased assets
Leases in terms of which the Group assumes substantially all the risks and rewards of ownership are classified
as finance leases. All other leases are classified as operating leases.
(iii) Subsequent costs
The Group recognises in the carrying amount of an item of property, plant and equipment the cost of replacing
part of such an item when that cost is incurred if it is probable that the future economic benefits embodied
with the item will flow to the Group and the cost of the item can be measured reliably. All other costs are
recognised in the income statement as an expense as incurred.
(iv) Depreciation
Depreciation is charged to the income statement or capitalised as part of the exploration and evaluation costs
or Mineral Properties where appropriate, on a straight-line basis over the estimated useful lives of each part
of an item of property, plant and equipment. Land is not depreciated. The estimated useful lives are as
follows:
= buildings 5 to 10 years
= plant and equipment 2 to 10 years
= motor vehicles 3 years
= computer equipment 3 years
= fixtures, fittings and equipment 3 years
The estimated useful lives and residual values of the assets are considered annually and restated as required.
(f) Mineral Properties
Upon transfer of 'Exploration and evaluation costs' into 'Mineral Properties', all subsequent expenditure on
the construction, installation or completion of infrastructure facilities is capitalised within 'Mineral
Properties'. Development expenditure is net of proceeds from all sale of gold and copper concentrate extracted
during the development phase and until commercial production is declared.
Mineral properties are amortised on a unit of production basis.
(g) Intangible assets
(i) Exploration and evaluation costs
These comprise costs directly incurred in exploration and evaluation. They are capitalised as intangible assets
pending determination of the feasibility of the project. When the existence of economically recoverable
reserves and the availability of finance is established, the related intangible assets are transferred to
Mineral Properties. Where a project is abandoned or is determined not to be economically viable, the related
costs are written off.
The recoverability of deferred exploration and evaluation costs is dependent upon a number of factors common to
the natural resource sector. These include the extent to which the Group can establish economically recoverable
reserves on its properties, the ability of the Group to obtain necessary financing to complete the development
of such reserves and future profitable production or proceeds from the disposition thereof.
(ii) Impairment of exploration and evaluation costs
Impairment reviews for exploration and evaluation costs are carried out on a project by project basis, with
each project representing a potential single cash generating unit. An impairment review is undertaken when
indicators of impairment arise but typically when one of the following circumstances apply:
-- unexpected geological occurrences that render the resource uneconomic;
-- title to the asset is compromised;
-- variations in metal prices that render the project uneconomic; and
-- variations in the exchange rate for the currency of operation.
(h) Available for sale investments
Available for sale investments are recognised at fair value with changes in value recorded in other
comprehensive income. Subsequent to initial recognition available-for-sale financial assets are stated at fair
value. Movements in fair values are recognised in other comprehensive income, with the exception of impairment
losses which are recognised in profit or loss. Fair values are based on prices quoted in an active market if
such a market is available. If an active market is not available, the group establishes the fair value of
financial instruments by using a valuation technique, usually discounted cash flow analysis. When an investment
is disposed, any cumulative gains and losses previously recognised in equity are recognised in profit or loss.
(i) Inventory
Stockpiled ore is recorded at the lower of production cost and net realisable value. Production costs include
all direct costs plus an allocation of fixed costs associated with the mine site.
Operating supplies are valued at the lower of cost and net realisable value. Cost is determined on an average
cost basis.
(j) Trade and other receivables
Trade and other receivables are generally stated at their cost less impairment losses. Receivables in respect
of the sale of copper concentrate which contain an embedded derivative linking them to future commodity prices
are measured at fair value through profit and loss and are treated as derivative financial assets or
liabilities. Receivables with a short duration are not discounted.
(k) Financial instruments measured at fair value through profit and loss
Financial instruments measured at fair value through profit and loss, which includes all derivative financial
instruments and receivables containing embedded derivatives arising from sales of concentrate, are measured at
fair value at each balance sheet date with changes in value reflected directly within the income statement.
(l) Cash and cash equivalents
Cash and cash equivalents comprise cash balances and call deposits. Bank overdrafts that are repayable on
demand and form an integral part of the Group's cash management are included as a component of cash and cash
equivalents for the purpose of the statement of cash flows.
(m) Impairment
The carrying amounts of the Group's assets (except deferred exploration and evaluation costs (see accounting
policy (g)(ii)) and deferred tax assets (see accounting policy 2(s)), are reviewed at each balance sheet date
to determine whether there is any indication of impairment. If any such indication exists, the asset's
recoverable amount is estimated (see accounting policy 2(m)(i)).
An impairment loss is recognised whenever the carrying amount of an asset or its cash-generating unit exceeds
its recoverable amount. Impairment losses are recognised in the income statement.
Impairment losses recognised in respect of cash-generating units are allocated first to reduce the carrying
amount of any goodwill allocated to cash-generating units (group of units) and then, to reduce the carrying
amount of the other assets in the unit (group of units) on a pro rata basis.
(i) Calculation of recoverable amount
The recoverable amount of other assets is the greater of their net selling price and value in use. In assessing
value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount
rate that reflects current market assessments of the time value of money and the risks specific to the asset.
For an asset that does not generate largely independent cash inflows, the recoverable amount is determined for
the cash-generating unit to which the asset belongs
(ii) Reversals of impairment
An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable
amount.
An impairment loss is reversed only to the extent that the asset's carrying amount does not exceed the carrying
amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been
recognised.
(n) Financial liabilities and equity
Financial liabilities and equity instruments are classified according to the substance of the contractual
arrangements entered into. An equity instrument is any contract that evidences a residual interest in the
assets of the Group after deducting all of its liabilities.
Financial liabilities include bank loans and the Gold Loan which are recognised initially at fair value less
attributable transaction costs. Subsequent to initial recognition, interest-bearing borrowings are stated at
amortised cost with any difference between cost and redemption value being recognised in the statement of
comprehensive income over the period of the borrowings on an effective interest basis except where the
difference between cost and redemption value qualify to be capitalised as part of the cost of a qualifying
asset.
(o) Trade and other payables
Trade and other payables are stated at amortised cost.
(p) Revenue recognition
Revenue comprises the fair value of the consideration received or receivable for the sale of goods and services
in the ordinary course of the Group's activities. Revenue is shown net of sales tax.
The group recognises revenue when the amount of the revenue can be reliably measured, it is probable that
future economic benefits will flow to the entity and when specific criteria have been met as described below.
Any revenues generated during commissioning are treated as a contribution towards previously incurred costs and
are therefore credited against mining and development assets accordingly.
Sale of gold
Revenue associated with the sale of gold dore bars is recognised in accordance with contract terms negotiated
with the refiner and when significant risks and rewards of ownership of the asset sold are transferred to the
refiner, which is when the minimum determinable or agreed amount of gold has been determined and title has
passed to the refiner.
Sale of concentrate
Revenue associated with the sale of copper concentrate is recognised when significant risks and rewards of
ownership of the asset sold are transferred to the Group's off-taker, which is when the group receives
provisional payment for each lot of concentrate invoiced. Where a provisional invoice is not raised, risks and
rewards of ownership transfer when the concentrate passes over the rail of the shipping vessel. Adjustments
arising due to differences in assays and weights, from the time of provisional invoicing to the time of final
settlement, are adjusted to revenue.
(q) Expenses
(i) Operating lease payments
Payments made under operating leases are recognised in the income statement on a straight-line basis over the
term of the lease. Lease incentives received are recognised in the income statement as an integral part of the
total lease expense.
(ii) Finance lease payments
Minimum lease payments are apportioned between the finance charge and the reduction of the outstanding
liability. The finance charge is allocated to each period during the lease term so as to produce a constant
periodic rate of interest on the remaining balance of the liability.
(iii) Borrowing costs
Borrowing costs are recognised in the income statement where they do not meet the criteria for capitalisation.
Borrowing costs directly attributable to the acquisition, construction or production of a qualifying asset are
capitalised.
(r) Equity settled share based payments
All share based payments are recognised in the financial statements.
All goods and services received in exchange for the grant of any share-based remuneration are measured at their
fair values. Fair values of employee services are determined indirectly by reference to the fair value of the
share options awarded. Their value is appraised at the grant dates and excludes the impact of non-market
vesting conditions.
All share-based remuneration is ultimately recognised as an expense in the income statement with a
corresponding credit to the accumulated losses in the balance sheet.
If vesting periods apply, the expense is allocated over the vesting period, based on the best available
estimate of the number of share options expected to vest. Estimates are subsequently revised if there is any
indication that the number of share options expected to vest differs from previous estimates. Any cumulative
adjustment prior to vesting is recognised in the current period. No adjustment is made to any expense
recognised in prior periods if the number of share options ultimately exercised is different to that estimated
on vesting. Upon exercise of share options the proceeds received net of attributable transaction costs are
credited to share capital.
(s) Income tax
Income tax on the profit or loss for the year comprises current and deferred tax. Income tax is recognised in
the income statement except to the extent that it relates to items recognised directly in equity, in which case
it is recognised in equity.
Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or
substantively enacted at the balance sheet date, and any adjustment to tax payable in respect of previous
years.
Deferred tax is provided using the balance sheet liability method, providing for temporary differences between
the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for
taxation purposes. The following temporary differences are not provided for: goodwill not deductible for tax
purposes, the initial recognition of assets or liabilities that affect neither accounting nor taxable profit,
and differences relating to investments in subsidiaries to the extent that they will probably not reverse in
the foreseeable future. The amount of deferred tax provided is based on the expected manner of realisation or
settlement of the carrying amount of assets and liabilities, using tax rates enacted or substantively enacted
at the balance sheet date. A deferred tax asset is recognised only to the extent that it is probable that
future taxable profits will be available against which the asset can be utilised. Deferred tax assets are
reduced to the extent that it is no longer probable that the related tax benefit will be realised.
3. Operating segments
The Group's operations relate to the exploration for and development of mineral deposits with support provided
from the UK and as such the Group has only one operating segment.
Information about geographical areas
2013 2012
UK Canada Consolidated UK Canada Consolidated
$'000 $'000 $'000 $'000 $'000 $'000
Segment revenue - 34,669 34,669 - 1,219 1,219
------------------------------------------------------
Segment non-current
assets 1,357 101,567 102,924 - 97,530 97,530
------------------------------------------------------
Information about major customers
Revenues from transactions with a single customer exceeding 10% of total revenues were as follows:
2013 2012
$'000 $'000
Customer A - 1,219
Customer B 34,190 -
Others 479 -
--------------------
34,669 1,219
--------------------
--------------------
4. Operating profit/(loss)
The operating profit/(loss) is after charging/(crediting):
2013 2012
$'000 $'000
Depreciation - owned assets 4,609 131
Amortisation 2,204 -
Directors' emoluments (see note 24) 413 338
Auditor's remuneration:
Audit of these financial statements 66 64
Fees payable to the auditor for other services:
Other assurance services 10 10
--------------------
--------------------
The Audit Committee reviews the nature and extent of non-audit services to ensure that independence is
maintained.
In addition to the depreciation charge shown above, depreciation of $1,045,000 (2012: $4,092,000) was
capitalised within mineral properties.
5. Personnel expenses
Salary costs
Group Group
2013 2012
$'000 $,000
Wages and salaries 11,343 9,543
Compulsory social security contributions 1,644 1,367
Share based payments 325 79
--------------------
13,312 10,989
--------------------
--------------------
Salary costs of $4,638,000 (2012: $8,449,000) were capitalised as mineral properties and $10,000 (2012:
$948,000) as assets under construction costs during the year.
Number of employees
The average number of employees during the year was as follows:
Group Group
2013 2012
Directors 8 7
Administration 13 10
Production and development 139 126
--------------------
160 143
--------------------
--------------------
During the year the Group granted share options to key personnel to purchase shares in the entity. The options
are exercisable at the market price of the shares at the date of grant.
Share-based payments
The number and weighted average exercise prices of share options are as follows:
Weighted Weighted
average average
exercise Number exercise Number
price of options price of options
2013 2013 2012 2012
$ '000 $ '000
Outstanding at the beginning
of the year 0.46 3,937 0.48 4,167
Granted during the year 0.47 622 0.50 646
Exercised during the year 0.24 (117) 0.18 (202)
Cancelled during the year 0.63 (329) 0.54 (674)
----------- -----------
Outstanding at the end of
the year 0.45 4,113 0.46 3,937
----------- -----------
----------- -----------
Exercisable at end of year 0.45 3,339 0.45 3,313
----------- -----------
----------- -----------
The options outstanding at July 31, 2013 have an exercise price in the range of $0.16 to $1.10 and a weighted
average remaining contractual life of 7 years (2012: 6 years).
The fair value of services received in return for share options granted are measured by reference to the fair
value of share options granted. The estimate of the fair value of the services received is measured based on
the Black-Scholes model.
In the current year, new and revised standards which have been adopted have not affected the disclosures
presented in these financial statements with the exception of the disclosure of the breakdown of other
comprehensive income between items that may be reclassified into profit or loss or not in accordance with IAS 1
- Presentation of Financial Statements.
No standards issued but not yet effective have been adopted early.
International Financial Reporting Standards that have recently been issued or amended but are not yet effective
have not been adopted for the annual reporting period ended July 31, 2013:
Nature of
change to Application
IFRS accounting date of Application
/Amendment Title policy standard date for Group
----------------------------------------------------------------------------
Various Annual No change to Various August 1, 2013
Improvements accounting
to IFRSs policy,
therefore, no
impact
----------------------------------------------------------------------------
IFRS 9 Financial No change to January 1, August 1, 2015
instruments: accounting 2015
Classification policy,
and therefore, no
Measurement impact
----------------------------------------------------------------------------
IFRS 10 Consolidated No change to January 1, August 1, 2013
Financial accounting 2013
Statements policy,
therefore, no
impact
----------------------------------------------------------------------------
IFRS 11 Joint No change to January 1, August 1, 2013
Arrangements accounting 2013
policy,
therefore, no
impact
----------------------------------------------------------------------------
IFRS 12 Disclosure of No change to January 1, August 1, 2013
Interests in accounting 2013
Other Entities policy,
therefore, no
impact
----------------------------------------------------------------------------
IFRS 13 Fair Value No change to January 1, August 1, 2013
Measurement accounting 2013
policy,
therefore, no
impact
----------------------------------------------------------------------------
Management have reviewed the impact of the above standards and interpretations and have concluded that they
will not result in any material changes to reported results.
Details of the main accounting policies of the Group are included in note 2 of the financial statements for the
year ended July 31, 2013.
APPENDIX 5 - OTHER MATTERS
Outstanding Share & Option Data
As at the date of this MD&A the following securities are outstanding:
----------------------------------------------------------------------------
Weighted Average Exercise
Security Shares issued or Issuable Price
----------------------------------------------------------------------------
Common Shares 143,280,614 --
----------------------------------------------------------------------------
Options 4,087,334(i) $0.46
----------------------------------------------------------------------------
(i)if all options have fully vested
For further assistance Mr. Peter Mercer, Corporate Secretary can be reached directly at +1-709-800-1929 ext.500
or pmercer@ramblermines.com.
Forward Looking Information
This MD&A contains "forward-looking information" ("FLI") which may include, but is not limited to, statements
with respect to the Group's objectives and strategy, future financial or operating performance of the Group and
its projects, exploration expenditures, costs and timing of the development of new deposits, costs and timing
of future exploration, requirements for additional capital, government regulation of mining exploration and
development, environmental risks, title disputes or claims and limitations of insurance coverage. All
statements, other than statements of historical fact, are forward-looking statements. Often, but not always,
statements containing FLI can be identified by the use of words such as "plans", "expects", "is expected",
"budget", "scheduled", "estimates", "forecasts", "intends", "anticipates", or "believes" or variations
(including negative variations) of such words and phrases, or state that certain actions, events or results
"may", "could", "would", "might" or "will" be taken, occur be achieved or continue to be achieved. Statements
containing FLI are necessarily based on a number of estimates and assumptions that, while considered reasonably
by the Company, involve known and unknown risks, uncertainties and other factors which may cause the actual
results, performance or achievements of the Group to be materially different from any future results,
performance or achievements expressed or implied by the FLI. Such factors include, among others, general
business, economic, competitive, political and social uncertainties; the actual results of current exploration
activities; conclusions of economic evaluations; availability and cost of credit; fluctuations in Canadian
dollar interest rates; fluctuations in the relative value of United States dollars, Canadian dollars and
British Pounds; changes in planned parameters as plans continue to be refined; fluctuations in the market and
forward prices of copper, gold, silver or certain other commodities; possible variations of ore grade or
recovery rates; failure of equipment; accidents and other risks of the mining exploration industry; political
instability, insurrection or war; delays in obtaining governmental approvals or financing or in the completion
of development or construction activities, as well as those factors discussed in the section entitled "Risks
and Uncertainties" in the Report of Directors for the year ended July 31, 2013. Although the Group has
attempted to identify important factors that could cause actual actions, events or results to differ materially
from those described in the FLI contained in this MD&A, there may be other factors that cause actions, events
or results to differ from those anticipated, estimated or intended. Unless stated otherwise, statements
containing FLI herein are made as of the date of this MD&A.
Other than as required by applicable securities law, the Company disclaims any obligation to update any forward-
looking statements, whether as a result of new information, future events or results or otherwise. There can be
no assurance that forward-looking statements will prove to be accurate, as actual results and future events
could differ materially from those anticipated in such statements. All of the forward-looking statements made
in this MD&A are qualified by these cautionary statements. Accordingly, readers should not place undue reliance
on forward-looking statements. The following table outlines certain significant forward-looking statements
contained in this MD&A and provides the material assumptions used to develop such forward-looking statements
and material risk factors that could cause actual results to differ materially from the forward looking
statements.
----------------------------------------------------------------------------
FLI statements Assumptions Risk Factors
----------------------------------------------------------------------------
Continued positive Actual expenditures from Expenditures exceeding
cash flow operations will not revenues resulting from
exceed revenues. fluctuations in the
market and forward prices
of copper, gold, silver
or certain other
commodities, or increased
costs of production
----------------------------------------------------------------------------
Repayment of credit Generation of sufficient Significant reductions in
facility by March cash flow from the sale price of copper and/or
31, 2014 of concentrate gold. Production
shortfalls. Increased
costs of production
----------------------------------------------------------------------------
Continued mining and Achieving the planned Development delays
milling the exposed capital and operating reducing access to
1807 workplaces and development and production ore
further up-dip and production targets; and,
down-dip timely completion of
exploration of 1807 drill bays to allow
zone commencement of
exploration drilling
----------------------------------------------------------------------------
Optimisation of the Successful completion of Economic viability
mining and a detailed engineering
processing of ores review of existing
from the Ming Mine infrastructure and
to allow expansion availability of finance
to 1,000 mtpd from cash flow from
operations or external
----------------------------------------------------------------------------
Open up mining Achieving the planned Development delays
horizons in the capital and operating reducing access to
Ming South up and development and production ore
down plunge ore production targets
bodies.
----------------------------------------------------------------------------
Become a strategic Identification and Availability of suitable
long term low cost acquisition of suitable mineral properties at an
producer by mineral properties, appropriate price and
selective pursuit investment opportunities adequate available
of growth and suitable partners for finance. Availability of
opportunities joint ventures. suitable acquisition and
joint venture
opportunities on
acceptable terms
----------------------------------------------------------------------------
Increasing stock Market reacts positively Failure to reach market
market exposure and to Group's results and expectations.
liquidity promotional activity Deterioration in market
conditions generally or
in the mining sector
----------------------------------------------------------------------------
Further information
Additional information relating to the Group is on SEDAR at www.sedar.com and on the Group's web site at
www.ramblermines.com.
RAMBLER METALS AND MINING PLC
REPORT OF THE DIRECTORS FOR THE YEAR ENDED JULY 31, 2013
The Directors present their report with the audited financial statements of the Group for the year ended July
31, 2013.
PRINCIPAL ACTIVITY
The principal activity of the Group is the development, mining and exploration of the Ming Copper-Gold Mine
located in Newfoundland and Labrador and the exploration and development of other properties located in
Atlantic Canada. The principal activity of the parent company is that of a holding company.
REVIEW OF BUSINESS
A review of the Group's business and prospects is set out in the Management's Discussion and Analysis.
FUTURE DEVELOPMENTS
The Group is looking forward to:
1. Continuing as a profitable copper and gold producer by continued
optimization of concentrate production at the Nugget Pond concentrating
facility, improving revenue through the integration of the gold hydromet
plant into the production stream and focusing on the Group's operations
with the goal of reducing its overall operating costs.
2. Increasing available resources and reserves through further exploration
both within the Ming mine and current land holdings.
3. Continuing to investigate, through on-going optimization studies,
development of the Lower Footwall Zone creating organic growth.
4. Selectively pursuing growth opportunities within Atlantic Canada
including joint ventures, acquisitions, strategic alliances and equity
positions.
DIVIDENDS
No dividends will be distributed for the year ended July 31, 2013.
DIRECTORS
The Directors during the period under review were:
T S Chan
E C Chen (appointed September 24, 2012)
D H W Dobson
L D Goodman
B Hinchcliffe
S Neamonitis
G Ogilvie
J M Roberts (resigned February 20, 2013)
J S Thomson
POLICY ON PAYMENT OF CREDITORS
It is the Group's and Company's policy to settle all amounts due to creditors in accordance with agreed terms
of supply and market practice in the relevant country.
The Group's average creditor payment period at July 31, 2013 was 53 days (2012: 74 days). The Company's average
creditor payment period at July 31, 2013 was 51 days (2012: 62 days).
POLITICAL AND CHARITABLE CONTRIBUTIONS
During the year, the Group made charitable donations of $12,800 (2012: $2,950) to various charities in the Baie
Verte area, Newfoundland and Labrador.
SUBSTANTIAL SHARE INTERESTS
At October 28, 2013 the parent Company was aware of the following substantial share interests:
Number of
Ordinary % of Share
Shares Capital
Henderson Global Investors 24,427,575 17.05%
Tinma International Ltd. 22,736,992 15.87%
Legal and General Investment Management 17,575,000 12.27%
Majedie Asset Management 9,043,597 6.31%
Whitmill Trust (Zila Corporation) 8,838,000 6.17%
Hargreaves Lansdown 4,564,543 3.19%
FINANCIAL INSTRUMENTS
The Board of Directors determines, as required, the degree to which it is appropriate to use financial
instruments and hedging techniques to mitigate risks. The main risks for which such instruments may be
appropriate are foreign exchange risk, liquidity risk, credit risk, interest rate risk and commodity price
risk, each of which is discussed in note 23 to the financial statements.
SUBSEQUENT EVENTS
Details of subsequent events are set out in the Management's Discussion and Analysis.
RISKS AND UNCERTAINTIES
An investment in Rambler should be considered highly speculative due to the nature of its operations and
certain other factors. An investment in Rambler's securities should only be made by persons who can afford the
total loss of their investment. The risk factors which should be taken into account in assessing Rambler's
activities and an investment in securities of Rambler include, but are not limited to, those set out below.
Should any one or more of these risks occur, it could have a material adverse effect on the value of securities
of Rambler and the business, prospects, assets, financial position or operating results of Rambler, any one of
which may have a significant adverse effect on the price or value of any securities of Rambler.
The risks noted below do not necessarily comprise all those faced by Rambler and are not intended to be
presented in any assumed order of likelihood or magnitude of consequences.
Mining risks
Mining operations are inherently risky. These operations are subject to all hazards and risks encountered in
the exploration for, and development and production of underground ore, including formation pressures, seismic
activity, rock bursts, fires, power outages, cave-ins, flooding, explosions and other conditions involved in
the drilling and removal of material. Any of these events could result in serious damage to the mine and other
infrastructure, damage to life or property, environmental damage and possible legal liability.
The Company's profitability will depend, in part, on the economic returns and actual costs of developing its
mining projects, which may differ from the estimates made by the Company.
Copper and Gold Price Volatility
The Group's revenues are expected to be derived from the extraction and sale of copper and gold concentrate.
The prices of copper and gold have fluctuated widely, particularly in recent years, and are affected by
numerous factors beyond the Group's control including international, economic and political trends,
expectations of inflation, currency exchange fluctuations, interest rates, global or regional consumption
patterns, speculative activities and increased global production due to new extraction developments and
improved extraction and production methods. In recent years the price of copper has been affected by changes in
the worldwide balance of copper supply and demand, largely resulting from economic growth and political
conditions in China and other major developing economies. While this demand has resulted in higher prices for
copper in recent years, if Chinese economic growth slows, it could result in lower demand for copper. The
effect of these factors on the price of copper and gold cannot be accurately predicted. Any material decrease
in the prevailing price of copper in particular for any significant period of time would have an adverse and
material impact on the Group's economic evaluations and on the Group's results of operations and financial
condition.
Additional Requirement for Capital
The Group may need to raise additional capital in due course to fund anticipated future development and on-
going operations. Future development of the Ming Mine, future acquisitions, base metal prices, environmental
rehabilitation or restitution, revenues, taxes, capital expenditures and operating expenses and geological and
processing successes are all factors which will have an impact on the amount of additional capital required.
Any additional equity financing may be dilutive to shareholders and debt financing, if available, may involve
restrictions on financing and operating activities. There is no assurance that additional financing will be
available on terms acceptable to the Group. If the Group is unable to obtain additional financing as needed, it
may be required to reduce the scope of its operations or anticipated expansion, forfeit its interests in some
or all of its properties, incur financial penalties and reduce or terminate its operations.
Uncertainty in the estimation of mineral resources and mineral reserves
The calculation of mineral reserves and mineral resources and related grades mined has a degree of uncertainty.
Until such a time as the mineral reserves and mineral resources are actually mined and processed, the quantity
of grades must be considered as estimates only. The mineral reserves estimates of the Company have been
determined based on assumed metal prices, cut-off grades and costs that may prove to be inaccurate. Any
material change in these variables, along with differences in actual metal recoveries when compared to
laboratory test results, may affect the economic outcome of current and future projects.
STATEMENT AS TO DISCLOSURE OF INFORMATION TO AUDITOR
All of the current Directors have taken all the steps that they ought to have taken to make themselves aware of
any information needed by the Group's Auditor for the purposes of their audit and to establish that the Auditor
is aware of that information. The Directors are not aware of any relevant audit information of which the
Auditor is unaware.
AUDITOR
The auditor, BDO LLP, will be proposed for re-appointment in accordance with Section 489 of the Companies Act
2006.
On Behalf of The Board:
P Mercer
Company Secretary
October 28, 2013
RAMBLER METALS AND MINING PLC
DIRECTORS' RESPONSIBILITIES
The directors are responsible for preparing the report of the directors and the financial statements in
accordance with applicable law and regulations.
Company law requires the directors to prepare financial statements for each financial year. Under that law the
directors have elected to prepare the group and company financial statements in accordance with International
Financial Reporting Standards (IFRSs) as adopted by the European Union. Under company law the directors must
not approve the financial statements unless they are satisfied that they give a true and fair view of the state
of affairs of the group and company and of the profit or loss of the group for that period. The directors are
also required to prepare financial statements in accordance with the rules of the London Stock Exchange for
companies trading securities on the Alternative Investment Market.
In preparing these financial statements, the directors are required to:
-- select suitable accounting policies and then apply them consistently;
-- make judgements and accounting estimates that are reasonable and
prudent;
-- state whether they have been prepared in accordance with IFRSs as
adopted by the European Union, subject to any material departures
disclosed and explained in the financial statements;
-- prepare the financial statements on the going concern basis unless it is
inappropriate to presume that the company and the group will continue in
business.
The directors are responsible for keeping adequate accounting records that are sufficient to show and explain
the company's transactions and disclose with reasonable accuracy at any time the financial position of the
company and enable them to ensure that the financial statements comply with the requirements of the Companies
Act 2006. They are also responsible for safeguarding the assets of the company and hence for taking reasonable
steps for the prevention and detection of fraud and other irregularities.
Website publication
The directors are responsible for ensuring the annual report and the financial statements are made available on
a website. Financial statements are published on the company's website in accordance with legislation in the
United Kingdom governing the preparation and dissemination of financial statements, which may vary from
legislation in other jurisdictions. The maintenance and integrity of the company's website is the
responsibility of the directors. The directors' responsibility also extends to the on-going integrity of the
financial statements contained therein.
RAMBLER METALS AND MINING PLC
CORPORATE GOVERNANCE REPORT FOR THE YEAR ENDED JULY 31, 2013
In formulating the Group's corporate governance procedures the Board of Directors takes due regard of the
principles of good governance set out in the UK Corporate Governance Code issued by the Financial Reporting
Council in September 2012 (as appended to the Listing Rules of the Financial Services Authority) and the size
and development of the Group. The Group also has regard to the Quoted Companies Alliance (QCA) Guidelines on
Corporate Governance for AIM Companies.
The Board of Rambler Metals and Mining PLC is made up of one executive Director and seven non-executive
Directors. D H W Dobson is the senior non-executive director and G Ogilvie is the Group's President and Chief
Executive. It is the Board's policy to maintain independence by having at least half of the Board comprising
non-executive directors. The structure of the Board ensures that no one individual or group dominates the
decision making process.
The Board ordinarily meets no less than quarterly providing effective leadership and overall control of the
Group's affairs through the schedule of matters reserved for its decision. This includes the approval of
budgets and business plans, items of major capital expenditure, risk management policies and the approval of
the financial statements. Formal agendas, papers and reports are sent to the directors in a timely manner,
prior to Board meetings. The Board delegates certain of its responsibilities to Board committees which have
clearly defined terms of reference. Between the Board meetings, the executive Director, the Chief Financial
Officer and some of the non-executive directors meet on a regular basis to review and discuss progress.
All Directors have access to the advice and services of the company secretary, who is responsible for ensuring
that all Board procedures are followed. Any Director may take independent professional advice at the Group's
expense in the furtherance of his duties.
The Audit Committee, which meets not less than quarterly and considers the Group's financial reporting
(including accounting policies) and internal financial controls, is chaired by J S Thomson, the other members
being L Goodman and E C Chen. The committee receives reports from management and from the Group's auditor. The
Group has in place a series of procedures and controls designed to identify and prevent the risk of loss. These
procedures are formally documented and are reported on regularly. The Audit Committee has reviewed the systems
in place and considers these to be appropriate.
The Remuneration Committee, which meets at least once a year and is responsible for making decisions on
directors' remuneration packages, is chaired by L Goodman. T S Chan and J S Thomson are the other committee
members.
Remuneration of executive Directors is established by reference to the remuneration of executives of equivalent
status both in terms of time commitment, level of responsibility of the position and by reference to their job
qualifications and skills. The Remuneration Committee will also have regard to the terms which may be required
to attract an executive of equivalent experience to join the Board from another company. Such packages may
include performance related bonuses and the grant of share options.
The Board attaches importance to maintaining good relationships with all its shareholders and ensures that all
price sensitive information is released to all shareholders at the same time in accordance with AIM and Toronto
Stock Exchange-Venture market rules. The Group's principal communication is through the Annual General Meeting
and through the annual report and accounts, quarterly and interim statements.
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF RAMBLER METALS AND MINING PLC
We have audited the financial statements of Rambler Metals and Mining PLC for the year ended 31 July 2013 which
comprise the consolidated income statement, the consolidated and parent company statements of comprehensive
income, the consolidated and parent company statements of financial position, the consolidated and parent
company statements of changes in equity, the consolidated and parent company statements of cash flows and the
related notes. The financial reporting framework that has been applied in their preparation is applicable law
and International Financial Reporting Standards (IFRSs) as adopted by the European Union and, as regards the
parent company financial statements, as applied in accordance with the provisions of the Companies Act 2006.
This report is made solely to the company's members, as a body, in accordance with Chapter 3 of Part 16 of the
Companies Act 2006. Our audit work has been undertaken so that we might state to the company's members those
matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent
permitted by law, we do not accept or assume responsibility to anyone other than the company and the company's
members as a body, for our audit work, for this report, or for the opinions we have formed.
Respective responsibilities of directors and auditors
As explained more fully in the statement of directors' responsibilities, the directors are responsible for the
preparation of the financial statements and for being satisfied that they give a true and fair view. Our
responsibility is to audit and express an opinion on the financial statements in accordance with applicable law
and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the
Auditing Practices Board's Ethical Standards for Auditors.
Scope of the audit of the financial statements
A description of the scope of an audit of financial statements is provided on the Financial Reporting Council's
website at www.frc.org.uk/auditscopeukprivate.
Opinion on financial statements
In our opinion:
-- the financial statements give a true and fair view of the state of the
group's and the parent company's affairs as at 31 July 2013 and of the
group's profit for the year then ended;
-- the group financial statements have been properly prepared in accordance
with IFRSs as adopted by the European Union;
-- the parent company financial statements have been properly prepared in
accordance with IFRSs as adopted by the European Union and as applied in
accordance with the provisions of the Companies Act 2006; and
-- the financial statements have been prepared in accordance with the
requirements of the Companies Act 2006.
Separate opinion in relation to IFRSs as issued by the IASB
As explained in Note 2 to the group financial statements the group, in addition to applying IFRSs as adopted by
the European Union, has also applied IFRSs as issued by the International Accounting Standards Board (IASB).
In our opinion the group financial statements comply with IFRSs as issued by the IASB.
Opinion on other matters prescribed by the Companies Act 2006
In our opinion the information given in the directors' report for the financial year for which the financial
statements are prepared is consistent with the financial statements.
Matters on which we are required to report by exception
We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to
report to you if, in our opinion:
-- adequate accounting records have not been kept by the parent company, or
returns adequate for our audit have not been received from branches not
visited by us; or
-- the parent company financial statements are not in agreement with the
accounting records and returns; or
-- certain disclosures of directors' remuneration specified by law are not
made; or
-- we have not received all the information and explanations we require for
our audit.
Jason Homewood (senior statutory auditor)
For and on behalf of BDO LLP, statutory auditor
London
United Kingdom
October 28, 2013
BDO LLP is a limited liability partnership registered in England and Wales (with registered number OC305127).
RAMBLER METALS AND MINING PLC
CONSOLIDATED INCOME STATEMENT
For the Year Ended July 31, 2013
(EXPRESSED IN CANADIAN DOLLARS)
Note 2013 2012
$'000 $'000
Revenue 3 34,669 1,219
Production costs (20,936) (674)
Depreciation and amortisation (6,708) -
---------------------
Gross profit 7,025 545
Administrative expenses (3,557) (3,022)
Exploration expenses (26) (24)
---------------------
Operating profit/(loss) 4 3,442 (2,501)
---------------------
Exchange loss (513) (959)
Bank interest receivable 84 102
Loss on derivative financial instruments 6 (323) -
Finance costs 7 295 (9)
---------------------
Net financing income/(expense) (457) (866)
---------------------
Profit/(loss) before tax 2,985 (3,367)
Income tax credit 8 6,068 -
---------------------
Profit/(loss) for the year attributable to
owners of the parent 9,053 (3,367)
---------------------
---------------------
Earnings/(loss) per share
Note 2013 2012
$ $
Basic earnings/(loss) per share 19 0.063 (0.026)
---------------------
---------------------
Diluted earnings/(loss) per share 19 0.063 (0.026)
---------------------
---------------------
RAMBLER METALS AND MINING PLC
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the Year Ended July 31, 2013
(EXPRESSED IN CANADIAN DOLLARS)
2013 2012
$'000 $'000
Profit/(loss) for the year 9,053 (3,367)
----------------------
Other comprehensive income
Items that may be reclassified into profit or loss
Exchange differences on translation of foreign
operations (net of tax) (3) 8
Gain/(loss) on available for sale investment (net of
tax) 721 (422)
----------------------
Other comprehensive income/(loss) for the year 718 (414)
----------------------
Total comprehensive income/(loss) for the year and
attributable to the owners of the parent 9,771 (3,781)
----------------------
----------------------
Registered number: 05101822 (England and Wales)
RAMBLER METALS AND MINING PLC
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at July 31, 2013
(EXPRESSED IN CANADIAN DOLLARS)
Note
2013 2012
$'000 $'000
Assets
Intangible assets 9 17,450 17,260
Mineral properties 10 49,395 48,064
Property, plant and equipment 11 28,460 31,494
Available for sale investments 12 1,703 712
Deferred tax 8 5,916 -
-------------------
Total non-current assets 102,924 97,530
-------------------
Inventory 13 3,373 1,100
Trade and other receivables 14 1,096 718
Derivative financial asset 15 639 281
Cash and cash equivalents 16 5,566 7,826
Restricted cash 17 3,261 3,263
-------------------
Total current assets 13,935 13,188
-------------------
Total assets 116,859 110,718
-------------------
-------------------
Equity
Issued capital 18 2,613 2,599
Share premium 75,164 74,756
Merger reserve 214 214
Translation reserve 140 143
Fair value reserve 299 (422)
Accumulated losses (738) (9,888)
-------------------
Total equity 77,692 67,402
-------------------
Liabilities
Interest-bearing loans and borrowings 21 20,576 20,691
Provision 22 1,903 1,812
-------------------
Total non-current liabilities 22,479 22,503
-------------------
Interest-bearing loans and borrowings 21 10,898 14,827
Trade and other payables 20 5,790 5,986
-------------------
Total current liabilities 16,688 20,813
-------------------
Total liabilities 39,167 43,317
-------------------
Total equity and liabilities 116,859 110,718
-------------------
-------------------
ON BEHALF OF THE BOARD:
L D Goodman, Director
Approved and authorised for issue by the Board on October 28, 2013
RAMBLER METALS AND MINING PLC
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Share Share Merger Translation
capital Premium Reserve reserve
(EXPRESSED IN CANADIAN DOLLARS) $'000 $'000 $'000 $'000
Group
Balance at August 1, 2011 2,299 65,934 214 135
--------------------------------------------
Comprehensive income
Loss for the year - - - -
--------------------------------------------
Foreign exchange translation
differences - - - 8
Loss on available for sale
investments - - - -
--------------------------------------------
Total other comprehensive
income - - - 8
--------------------------------------------
Total comprehensive income for
the year - - - 8
--------------------------------------------
Transactions with owners
Issue of share capital 300 9,047 - -
Share issue expenses - (225) - -
Share-based payments - - - -
--------------------------------------------
Transactions with owners 300 8,822 - -
--------------------------------------------
Balance at July 31, 2012 2,599 74,756 214 143
--------------------------------------------
--------------------------------------------
Balance at August 1, 2012 2,599 74,756 214 143
--------------------------------------------
Comprehensive income
Profit for the year - - - -
--------------------------------------------
Foreign exchange translation
differences - - - (3)
Profit on available for sale
investments (net of tax) - - - -
--------------------------------------------
Total other comprehensive
income - - - (3)
--------------------------------------------
Total comprehensive income for
the year - - - (3)
--------------------------------------------
Transactions with owners
Issue of share capital 14 408 - -
Share-based payments - - - -
--------------------------------------------
Transactions with owners 14 408 - -
--------------------------------------------
Balance at July 31, 2013 2,613 75,164 214 140
--------------------------------------------
--------------------------------------------
Fair value Accumulated
reserve Losses Total
(EXPRESSED IN CANADIAN DOLLARS) $'000 $'000 $'000
Group
Balance at August 1, 2011 - (6,604) 61,978
---------------------------------------------
Comprehensive income
Loss for the year - (3,367) (3,367)
---------------------------------------------
Foreign exchange translation
differences - - 8
Loss on available for sale
investments (422) - (422)
---------------------------------------------
Total other comprehensive
income (422) - (414)
---------------------------------------------
Total comprehensive income for
the year (422) (3,367) (3,781)
---------------------------------------------
Transactions with owners
Issue of share capital - - 9,347
Share issue expenses - - (225)
Share-based payments - 83 83
---------------------------------------------
Transactions with owners - 83 9,205
---------------------------------------------
Balance at July 31, 2012 (422) (9,888) 67,402
---------------------------------------------
---------------------------------------------
Balance at August 1, 2012 (422) (9,888) 67,402
---------------------------------------------
Comprehensive income
Profit for the year - 9,053 9,053
---------------------------------------------
Foreign exchange translation
differences - - (3)
Profit on available for sale
investments (net of tax) 721 - 721
---------------------------------------------
Total other comprehensive
income 721 - 718
---------------------------------------------
Total comprehensive income for
the year 721 9,053 9,771
---------------------------------------------
Transactions with owners
Issue of share capital - - 422
Share-based payments - 97 97
---------------------------------------------
Transactions with owners - 97 519
---------------------------------------------
Balance at July 31, 2013 299 (738) 77,692
---------------------------------------------
---------------------------------------------
RAMBLER METALS AND MINING PLC
CONSOLIDATED STATEMENT OF CASH FLOWS
For the Year Ended July 31, 2013
(EXPRESSED IN CANADIAN DOLLARS)
2013 2012
$'000 $'000
Cash flows from operating activities
Operating profit/(loss) 3,442 (2,501)
Depreciation 6,813 131
Share based payments 97 80
Increase in inventory (145) (167)
(Increase)/decrease in debtors (379) 847
Increase in derivative financial instruments (962) -
Increase in creditors 3,431 410
----------------------
Cash generated from/(utilised in) operations 12,297 (1,200)
Interest paid (857) (9)
Tax received 28 -
----------------------
Net cash generated from/(utilised in) operating
activities 11,468 (1,209)
----------------------
Cash flows from investing activities
Interest received 84 102
Redemption of bearer deposit note 2 114
Acquisition of listed investment (148) (1,135)
Acquisition of evaluation and exploration assets (160) (658)
Acquisition of mineral properties - net (6,735) 4,508
Acquisition of property, plant and equipment (1,638) (10,006)
----------------------
Net cash utilised in investing activities (8,595) (7,075)
----------------------
Cash flows from financing activities
Proceeds from issue of share capital - 8,714
Payment of transaction costs - (225)
Proceeds from exercise of share options 22 38
Repayment of Gold Loan (note 21) (1,466) (7,888)
(Repayment)/proceeds of Credit Facility (1,625) 6,976
Capital element of finance lease payments (2,085) (1,712)
----------------------
Net cash (utilised)/from financing activities (5,154) 5,903
----------------------
Net decrease in cash and cash equivalents (2,281) (2,381)
Cash and cash equivalents at beginning of period 7,826 10,170
Effect of exchange rate fluctuations on cash held 21 37
----------------------
Cash and cash equivalents at end of period 5,566 7,826
----------------------
----------------------
RAMBLER METALS AND MINING PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1. Nature of operation and going concern
The principal activity of the Group is the development and exploration of the Ming Copper-Gold Mine ("Ming
Mine") located in Baie Verte, Newfoundland and Labrador, Canada.
The Group's business activities, together with the factors likely to affect its future development, performance
and position, its financial position, cash flows, liquidity position and borrowing facilities are set out in
the Management Discussion and Analysis on pages 3 to 28. In addition, note 23 to the financial statements
includes the Group's objectives, policies and processes for managing its capital; its financial risk management
objectives; details of its financial instruments and hedging activities; and its exposures to credit risk and
liquidity risk.
Since the commencement of commercial production the Group has generated operating cash flows of $12.6 million
and reduced the working capital deficit from $8.8 million at November 1, 2012 to $2.7 million at July 31, 2013.
The Group expects to remain cash flow positive based on current projections and production forecasts generating
a significant working capital surplus during the next 12 months including the repayment of the Sprott credit
facility by the due date of March 31, 2014. The current economic conditions do, however, create uncertainty
particularly over
(a) the price of copper, gold and silver;
(b) the exchange rate between Canadian and US dollars and thus the
consequence for the cash generated from US dollar revenues ;
(c) the production targets being met; and
(d) the terms of the Gold loan being complied with.
The Group's forecasts and projections, taking account of reasonably possible changes in trading performance,
show that the Group should continue to be cash flow positive and meet its repayment obligations under both the
credit facility and Gold loan.
Based on the above management concludes the Group has adequate resources to continue in operational existence
for the foreseeable future. Thus they continue to adopt the going concern basis of accounting in preparing the
annual financial statements.
2. Significant accounting policies
Rambler Metals and Mining Plc (the "Company") is a company registered in England and Wales. The consolidated
financial statements of the Company for the year ended July 31, 2013 comprise the Company and its subsidiaries
(together referred to as the "Group").
These financial statements are presented in Canadian dollars. Although the parent company has a functional
currency of GB pounds the majority of the Group's operations are carried out by its operating subsidiary which
has a functional currency of Canadian dollars. Foreign operations are included in accordance with the policies
set out in note 2(d). At July 31, 2013 the closing rate of exchange of Canadian dollars to 1 GB pound was 1.57
(July 31, 2012: 1.58) and the average rate of exchange of Canadian dollars to 1 GB pound for the year was 1.58
(2012: 1.60).
(a) Statement of compliance
The consolidated financial statements of Rambler Metals and Mining plc have been prepared in accordance with
International Financial Reporting Standards ("IFRS") and their interpretations issued by the International
Accounting Standards Board ("IASB"), as adopted by the European Union and with IFRS and their interpretations
adopted by the IASB. There are no material differences on application to the Group. The consolidated financial
statements have also been prepared in accordance with those parts of the Companies Act 2006 applicable to
companies reporting under IFRS.
New and revised standards which have been adopted during the year have not affected the disclosures presented
in these financial statements with the exception of the disclosure of the breakdown of other comprehensive
income between items that may be reclassified into profit or loss or not in accordance with IAS 1 -
Presentation of Financial Statements.
The Group has not adopted any standards or interpretations in advance of the required implementation dates. It
is not expected that adoption of standards or interpretations which have been issued by the International
Accounting Standards Board but have not been adopted will have a material impact on the financial statements.
(b) Basis of preparation
The financial statements are presented in Canadian dollars, rounded to the nearest thousand dollars.
The preparation of financial statements in conformity with IFRS requires management to make judgements,
estimates and assumptions that affect the application of policies and reported amounts of assets and
liabilities, income and expenses. The estimates and associated assumptions are based on historical experience
and various other factors that are believed to be reasonable under the circumstances, the results of which form
the basis of making the judgements about carrying values of assets and liabilities that are not readily
apparent from other sources. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an on-going basis. Revisions to accounting estimates
are recognised in the period in which the estimate is revised if the revision affects only that period or in
the period of the revision and future periods if the revision affects both current and future periods.
Judgements made by management in the application of IFRS that have a significant effect on the financial
statements and estimates with a significant risk of material adjustment in the next year are discussed in note
26.
The accounting policies set out below have been applied consistently to all periods presented in these
consolidated financial statements.
The accounting policies have been applied consistently by Group entities.
(c) Basis of consolidation
(i) Subsidiaries
Subsidiaries are entities controlled by the Company. Control exists when the Company has the power, directly or
indirectly, to govern the financial and operating policies of an entity so as to obtain benefits from its
activities. In assessing control, potential voting rights that presently are exercisable or convertible are
taken into account. The financial statements of subsidiaries are included in the consolidated financial
statements from the date that control commences until the date that control ceases.
(ii) Transactions eliminated on consolidation
Intragroup balances and any unrealised gains and losses or income and expenses arising from intragroup
transactions, are eliminated in preparing the consolidated financial statements.
(d) Foreign currency
(i) Foreign currency transactions
Transactions in foreign currencies are translated to the functional currency at the foreign exchange rate
ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies at the
balance sheet date are translated to the functional currency at the foreign exchange rate ruling at that date.
Foreign exchange differences arising on translation are recognised in the income statement. Non-monetary assets
and liabilities that are measured in terms of historical cost in a foreign currency are translated using the
exchange rate at the date of the transaction. Non-monetary assets and liabilities denominated in foreign
currencies that are stated at fair value are translated to the functional currency at foreign exchange rates
ruling at the dates the fair value was determined.
(ii) Translation into presentation currency
The assets and liabilities of the UK parent are translated to Canadian dollars at foreign exchange rates ruling
at the balance sheet date. The revenues and expenses of the parent company are translated to Canadian dollars
at rates approximating to the foreign exchange rates ruling at the dates of the transactions.
(iii) Net investment in foreign operations
Exchange differences arising from the translation of the net investment in foreign operations are taken to
translation reserve. They are released into the income statement upon disposal.
(e) Property, plant and equipment
(i) Owned assets
Items of property, plant and equipment are stated at cost. The cost of self-constructed assets includes the
cost of materials, direct labour and the initial estimate of the costs of dismantling and removing the items
and restoring the site on which they are located, where an obligation to incur such costs exists.
Where parts of an item of property, plant and equipment have different useful lives, they are accounted for as
separate items of property, plant and equipment.
(ii) Leased assets
Leases in terms of which the Group assumes substantially all the risks and rewards of ownership are classified
as finance leases. All other leases are classified as operating leases.
(iii) Subsequent costs
The Group recognises in the carrying amount of an item of property, plant and equipment the cost of replacing
part of such an item when that cost is incurred if it is probable that the future economic benefits embodied
with the item will flow to the Group and the cost of the item can be measured reliably. All other costs are
recognised in the income statement as an expense as incurred.
(iv) Depreciation
Depreciation is charged to the income statement or capitalised as part of the exploration and evaluation costs
or Mineral Properties where appropriate, on a straight-line basis over the estimated useful lives of each part
of an item of property, plant and equipment. Land is not depreciated. The estimated useful lives are as
follows:
= buildings 5 to 10 years
= plant and equipment 2 to 10 years
= motor vehicles 3 years
= computer equipment 3 years
= fixtures, fittings and equipment 3 years
The estimated useful lives and residual values of the assets are considered annually and restated as required.
(f) Mineral Properties
Upon transfer of 'Exploration and evaluation costs' into 'Mineral Properties', all subsequent expenditure on
the construction, installation or completion of infrastructure facilities is capitalised within 'Mineral
Properties'. Development expenditure is net of proceeds from all sale of gold and copper concentrate extracted
during the development phase and until commercial production is declared.
Mineral properties are amortised on a unit of production basis.
(g) Intangible assets
(i) Exploration and evaluation costs
These comprise costs directly incurred in exploration and evaluation. They are capitalised as intangible assets
pending determination of the feasibility of the project. When the existence of economically recoverable
reserves and the availability of finance is established, the related intangible assets are transferred to
Mineral Properties. Where a project is abandoned or is determined not to be economically viable, the related
costs are written off.
The recoverability of deferred exploration and evaluation costs is dependent upon a number of factors common to
the natural resource sector. These include the extent to which the Group can establish economically recoverable
reserves on its properties, the ability of the Group to obtain necessary financing to complete the development
of such reserves and future profitable production or proceeds from the disposition thereof.
(ii) Impairment of exploration and evaluation costs
Impairment reviews for exploration and evaluation costs are carried out on a project by project basis, with
each project representing a potential single cash generating unit. An impairment review is undertaken when
indicators of impairment arise but typically when one of the following circumstances apply:
-- unexpected geological occurrences that render the resource uneconomic;
-- title to the asset is compromised;
-- variations in metal prices that render the project uneconomic; and
-- variations in the exchange rate for the currency of operation.
(h) Available for sale investments
Available for sale investments are recognised at fair value with changes in value recorded in other
comprehensive income. Subsequent to initial recognition available-for-sale financial assets are stated at fair
value. Movements in fair values are recognised in other comprehensive income, with the exception of impairment
losses which are recognised in profit or loss. Fair values are based on prices quoted in an active market if
such a market is available. If an active market is not available, the group establishes the fair value of
financial instruments by using a valuation technique, usually discounted cash flow analysis. When an investment
is disposed, any cumulative gains and losses previously recognised in equity are recognised in profit or loss.
(i) Inventory
Stockpiled ore is recorded at the lower of production cost and net realisable value. Production costs include
all direct costs plus an allocation of fixed costs associated with the mine site.
Operating supplies are valued at the lower of cost and net realisable value. Cost is determined on an average
cost basis.
(j) Trade and other receivables
Trade and other receivables are generally stated at their cost less impairment losses. Receivables in respect
of the sale of copper concentrate which contain an embedded derivative linking them to future commodity prices
are measured at fair value through profit and loss and are treated as derivative financial assets or
liabilities. Receivables with a short duration are not discounted.
(k) Financial instruments measured at fair value through profit and loss
Financial instruments measured at fair value through profit and loss, which includes all derivative financial
instruments and receivables containing embedded derivatives arising from sales of concentrate, are measured at
fair value at each balance sheet date with changes in value reflected directly within the income statement.
(l) Cash and cash equivalents
Cash and cash equivalents comprise cash balances and call deposits. Bank overdrafts that are repayable on
demand and form an integral part of the Group's cash management are included as a component of cash and cash
equivalents for the purpose of the statement of cash flows.
(m) Impairment
The carrying amounts of the Group's assets (except deferred exploration and evaluation costs (see accounting
policy (g)(ii)) and deferred tax assets (see accounting policy 2(s)), are reviewed at each balance sheet date
to determine whether there is any indication of impairment. If any such indication exists, the asset's
recoverable amount is estimated (see accounting policy 2(m)(i)).
An impairment loss is recognised whenever the carrying amount of an asset or its cash-generating unit exceeds
its recoverable amount. Impairment losses are recognised in the income statement.
Impairment losses recognised in respect of cash-generating units are allocated first to reduce the carrying
amount of any goodwill allocated to cash-generating units (group of units) and then, to reduce the carrying
amount of the other assets in the unit (group of units) on a pro rata basis.
(i) Calculation of recoverable amount
The recoverable amount of other assets is the greater of their net selling price and value in use. In assessing
value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount
rate that reflects current market assessments of the time value of money and the risks specific to the asset.
For an asset that does not generate largely independent cash inflows, the recoverable amount is determined for
the cash-generating unit to which the asset belongs.
(ii) Reversals of impairment
An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable
amount.
An impairment loss is reversed only to the extent that the asset's carrying amount does not exceed the carrying
amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been
recognised.
(n) Financial liabilities and equity
Financial liabilities and equity instruments are classified according to the substance of the contractual
arrangements entered into. An equity instrument is any contract that evidences a residual interest in the
assets of the Group after deducting all of its liabilities.
Financial liabilities include bank loans and the Gold Loan which are recognised initially at fair value less
attributable transaction costs. Subsequent to initial recognition, interest-bearing borrowings are stated at
amortised cost with any difference between cost and redemption value being recognised in the statement of
comprehensive income over the period of the borrowings on an effective interest basis except where the
difference between cost and redemption value qualify to be capitalised as part of the cost of a qualifying
asset.
(o) Trade and other payables
Trade and other payables are stated at amortised cost.
(p) Revenue recognition
Revenue comprises the fair value of the consideration received or receivable for the sale of goods and services
in the ordinary course of the Group's activities. Revenue is shown net of sales tax.
The group recognises revenue when the amount of the revenue can be reliably measured, it is probable that
future economic benefits will flow to the entity and when specific criteria have been met as described below.
Any revenues generated during commissioning are treated as a contribution towards previously incurred costs and
are therefore credited against mining and development assets accordingly.
Sale of gold
Revenue associated with the sale of gold dore bars is recognised in accordance with contract terms negotiated
with the refiner and when significant risks and rewards of ownership of the asset sold are transferred to the
refiner, which is when the minimum determinable or agreed amount of gold has been determined and title has
passed to the refiner.
Sale of concentrate
Revenue associated with the sale of copper concentrate is recognised when significant risks and rewards of
ownership of the asset sold are transferred to the Group's off-taker, which is when the group receives
provisional payment for each lot of concentrate invoiced. Where a provisional invoice is not raised, risks and
rewards of ownership transfer when the concentrate passes over the rail of the shipping vessel. Adjustments
arising due to differences in assays and weights, from the time of provisional invoicing to the time of final
settlement, are adjusted to revenue.
(q) Expenses
(i) Operating lease payments
Payments made under operating leases are recognised in the income statement on a straight-line basis over the
term of the lease. Lease incentives received are recognised in the income statement as an integral part of the
total lease expense.
(ii) Finance lease payments
Minimum lease payments are apportioned between the finance charge and the reduction of the outstanding
liability. The finance charge is allocated to each period during the lease term so as to produce a constant
periodic rate of interest on the remaining balance of the liability.
(iii) Borrowing costs
Borrowing costs are recognised in the income statement where they do not meet the criteria for capitalisation.
Borrowing costs directly attributable to the acquisition, construction or production of a qualifying asset are
capitalised.
(r) Equity settled share based payments
All share based payments are recognised in the financial statements.
All goods and services received in exchange for the grant of any share-based remuneration are measured at their
fair values. Fair values of employee services are determined indirectly by reference to the fair value of the
share options awarded. Their value is appraised at the grant dates and excludes the impact of non-market
vesting conditions.
All share-based remuneration is ultimately recognised as an expense in the income statement with a
corresponding credit to the accumulated losses in the balance sheet.
If vesting periods apply, the expense is allocated over the vesting period, based on the best available
estimate of the number of share options expected to vest. Estimates are subsequently revised if there is any
indication that the number of share options expected to vest differs from previous estimates. Any cumulative
adjustment prior to vesting is recognised in the current period. No adjustment is made to any expense
recognised in prior periods if the number of share options ultimately exercised is different to that estimated
on vesting. Upon exercise of share options the proceeds received net of attributable transaction costs are
credited to share capital.
(s) Income tax
Income tax on the profit or loss for the year comprises current and deferred tax. Income tax is recognised in
the income statement except to the extent that it relates to items recognised directly in equity, in which case
it is recognised in equity.
Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or
substantively enacted at the balance sheet date, and any adjustment to tax payable in respect of previous
years.
Deferred tax is provided using the balance sheet liability method, providing for temporary differences between
the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for
taxation purposes. The following temporary differences are not provided for: goodwill not deductible for tax
purposes, the initial recognition of assets or liabilities that affect neither accounting nor taxable profit,
and differences relating to investments in subsidiaries to the extent that they will probably not reverse in
the foreseeable future. The amount of deferred tax provided is based on the expected manner of realisation or
settlement of the carrying amount of assets and liabilities, using tax rates enacted or substantively enacted
at the balance sheet date. A deferred tax asset is recognised only to the extent that it is probable that
future taxable profits will be available against which the asset can be utilised. Deferred tax assets are
reduced to the extent that it is no longer probable that the related tax benefit will be realised.
3. Operating segments
The Group's operations relate to the exploration for and development of mineral deposits with support provided
from the UK and as such the Group has only one operating segment.
Information about geographical areas
2013 2012
UK Canada Consolidated UK Canada Consolidated
$'000 $'000 $'000 $'000 $'000 $'000
Segment revenue - 34,669 34,669 - 1,219 1,219
------------------------------------------------------
Segment non-current
assets 1,357 101,567 102,924 - 97,530 97,530
------------------------------------------------------
Information about major customers
Revenues from transactions with a single customer exceeding 10% of total revenues were as follows:
2013 2012
$'000 $'000
Customer A - 1,219
Customer B 34,190 -
Others 479 -
--------------------
34,669 1,219
--------------------
--------------------
4. Operating profit/(loss)
The operating profit/(loss) is after charging/(crediting):
2013 2012
$'000 $'000
Depreciation - owned assets 4,609 131
Amortisation 2,204 -
Directors' emoluments (see note 24) 413 338
Auditor's remuneration:
Audit of these financial statements 66 64
Fees payable to the auditor for other services:
Other assurance services 10 10
--------------------
--------------------
The Audit Committee reviews the nature and extent of non-audit services to ensure that independence is
maintained.
In addition to the depreciation charge shown above, depreciation of $1,045,000 (2012: $4,092,000) was
capitalised within mineral properties.
5. Personnel expenses
Salary costs
Group Group
2013 2012
$'000 $,000
Wages and salaries 11,343 9,543
Compulsory social security contributions 1,644 1,367
Share based payments 325 79
--------------------
13,312 10,989
--------------------
--------------------
Salary costs of $4,638,000 (2012: $8,449,000) were capitalised as mineral properties and $10,000 (2012:
$948,000) as assets under construction costs during the year.
Number of employees
The average number of employees during the year was as follows:
Group Group
2013 2012
Directors 8 7
Administration 13 10
Production and development 139 126
--------------------
160 143
--------------------
--------------------
During the year the Group granted share options to key personnel to purchase shares in the entity. The options
are exercisable at the market price of the shares at the date of grant.
Share-based payments
The number and weighted average exercise prices of share options are as follows:
Weighted Weighted
average average
exercise Number exercise Number
price of options price of options
2013 2013 2012 2012
$ '000 $ '000
Outstanding at the beginning
of the year 0.46 3,937 0.48 4,167
Granted during the year 0.47 622 0.50 646
Exercised during the year 0.24 (117) 0.18 (202)
Cancelled during the year 0.63 (329) 0.54 (674)
----------- -----------
Outstanding at the end of
the year 0.45 4,113 0.46 3,937
----------- -----------
----------- -----------
Exercisable at end of year 0.45 3,339 0.45 3,313
----------- -----------
----------- -----------
The options outstanding at July 31, 2013 have an exercise price in the range of $0.16 to $1.10 and a weighted
average remaining contractual life of 7 years (2012: 6 years).
The fair value of services received in return for share options granted are measured by reference to the fair
value of share options granted. The estimate of the fair value of the services received is measured based on
the Black-Scholes model.
Fair value of share options and assumptions
issued during the year 2013 2012
Fair value at measurement date $0.214 $0.288
------------------------
Share price (weighted average) $ 0.473 $ 0.503
Exercise price (weighted average) $ 0.473 $ 0.503
Expected volatility (expressed as weighted
average volatility used
in the modelling under Black-Scholes model) 50.8% 68.0%
Expected option life (years) 5 5
Expected dividends 0 0
Risk-free interest rate (based on national
government bonds) 1.55% 1.67%
------------------------
The expected volatility is based on the historical volatility (calculated based on the weighted average
remaining life of the share options), adjusted for any expected changes to future volatility due to publicly
available information.
There is no performance or market conditions associated with the share option grants.
The share-based payment expense relates to the following grants:
2013 2012
$'000 $'000
Share options granted in 2009 - 17
Share options granted in 2010 - 4
Share options granted in 2011 17 36
Share options granted in 2012 26 22
Share options granted in 2013 54 -
--------------------
Total expense recognised as employee costs 97 79
--------------------
--------------------
6. Loss on derivative financial instruments
2013 2012
$'000 $'000
Loss on concentrate receivables from off-taker 323 -
--------------------
--------------------
7. Finance costs
2013 2012
$'000 $'000
Finance lease interest 319 -
Gold loan interest (1,750) -
Credit facility interest and charges 975 -
Off-take provisional payment interest 88 -
Mortgage interest 5 9
Unwinding of discount on reclamation provision 68 -
---------------------
(295) 9
---------------------
---------------------
Finance costs incurred prior to the declaration of commercial production were generally capitalised in Mineral
Properties.
8. Income tax credit
Recognised in the income statement
2013 2012
$'000 $'000
Current tax expense
Current year - -
----------------------
- -
Deferred tax credit
In respect of previously unrecognised tax losses (6,040) -
Tax losses surrendered for tax credit (28) -
----------------------
Total income tax credit in income statement (6,068) -
----------------------
----------------------
Reconciliation of effective tax rate 2013 2012
$'000 $'000
Profit/(loss) before tax 2,985 (3,367)
----------------------
----------------------
Income tax using the UK corporation tax rate of
23.67% (2012: 25.33%) 706 (853)
Effect of tax rates in foreign jurisdictions (rates
increased) 228 (105)
Non-deductible expenses 30 25
Foreign exchange differences (2) -
Effect of tax losses previously not recognised (7,030) 933
----------------------
(6,068) -
----------------------
----------------------
Recognised in other comprehensive income
2013 2012
$,000 $,000
Current tax expense
Current year - -
----------------------
- -
Deferred tax expense
Fair value re-measurement of available for sale
investments 122 -
----------------------
Total income tax expense in statement of other
comprehensive income 122 -
----------------------
----------------------
Recognised deferred tax assets and liabilities
Deferred tax assets and liabilities are attributable to the following:
Assets Liabilities Net
Balance Balance Balance Balance Balance Balance
July July July July July July
31, 31, 31, 31, 31, 31,
2013 2012 2013 2012 2013 2012
$'000 $'000 $'000 $'000 $'000 $'000
Property, plant and
equipment - - (1,413) (21) (1,413) (21)
Mineral property - - (1,228) (3,104) (1,228) (3,104)
Intangible assets - - (1,352) (1,327) (1,352) (1,327)
Available for sale
investment - 61 (61) - (61) 61
Gold loan - - (533) - (533) -
Tax value of loss carry-
forwards and credits
recognised 10,503 4,391 - - 10,503 4,391
---------------------------------------------------
Net tax assets /
(liabilities) 10,503 4,452 (4,587) (4,452) 5,916 -
---------------------------------------------------
---------------------------------------------------
Unrecognised deferred tax assets
Deferred tax assets have not been recognised in respect of the following
items:
2013 2012
$'000 $'000
UK tax losses - 1,126
Canadian losses and tax credits - 5,442
--------------------
- 6,568
--------------------
--------------------
The Group has incurred losses which will be available for offset against future taxable profits and one of the
subsidiaries has tax credits available to offset against future tax liabilities. Following the declaration of
commercial production during the year it has been concluded that the Group has sufficient evidence of future
taxable profits to justify the recognition of a deferred tax asset of $5.9 million.
Movement in recognised deferred tax assets and liabilities
Recognised in
Balance other Balance
Aug 1, Recognised in comprehensive July 31,
2011 income income 2012
$'000 $'000 $'000 $'000
Property, plant and
equipment 97 (76) - 21
Mineral properties 1,556 1,548 - 3,104
Intangible assets 1,556 (229) - 1,327
Available for sale
investment - (61) - (61)
Tax value of loss
carry-forwards and
credits (3,209) (1,182) - (4,391)
------------------------------------------------------
- - - -
------------------------------------------------------
------------------------------------------------------
Recognised in
Balance other Balance
Aug 1, Recognised in comprehensive Jul 31,
2012 income income 2013
$'000 $'000 $'000 $'000
Property, plant and
equipment 21 1,392 - 1,413
Mineral properties 3,104 (1,876) - 1,228
Intangible assets 1,327 25 - 1,352
Available for sale
investment (61) - 122 61
Gold loan - 533 - 533
Tax value of loss
carry-forwards and
credits (4,391) (6,114) 2 (10,503)
------------------------------------------------------
- (6,040) 124 (5,916)
------------------------------------------------------
------------------------------------------------------
9. Intangible assets
Exploration and
evaluation
costs
$'000
Cost
Balance at 1 August 2011 16,627
Additions 633
-------------------------
Balance at 31 July 2012 17,260
-------------------------
-------------------------
Balance at 1 August 2012 17,260
Additions 190
-------------------------
Balance at July 31, 2013 17,450
-------------------------
-------------------------
Carrying amounts
At 1 August 2011 16,627
-------------------------
-------------------------
At 31 July 2012 17,260
-------------------------
-------------------------
At 1 August 2012 17,260
-------------------------
-------------------------
At July 31, 2013 17,450
-------------------------
-------------------------
Consideration of impairment for exploration and evaluation costs
The directors have assessed whether there are any indicators of impairment in respect of exploration and
evaluation costs. In making this assessment they have considered the Group's preliminary economic assessment
which includes resource estimates, future processing capacity, the forward market and longer term price outlook
for copper and gold. The directors do not consider that there are any indicators that exploration and
evaluation costs are impaired ay the year end.
10. Mineral properties
Mineral
property
$'000
Cost
Balance at August 1, 2011 38,468
Additions 9,596
---------------
Balance at July 31, 2012 48,064
---------------
---------------
Balance at August 1, 2012 48,064
Additions 5,664
Transfer to inventory on commercial production (2,129)
---------------
Balance at July 31, 2013 51,599
---------------
---------------
Amortisation
Balance at August 1, 2011 -
Amortisation charge -
---------------
Balance at July 31, 2012 -
---------------
---------------
Balance at August 1, 2012 -
Amortisation charge 2,204
---------------
Balance at July 31, 2013 2,204
---------------
---------------
Carrying amounts
At August 1, 2011 38,468
---------------
---------------
At July 31, 2012 48,064
---------------
---------------
At August 1, 2012 48,064
---------------
---------------
At July 31, 2013 49,395
---------------
---------------
The Group generated revenue from saleable material produced during commissioning of $9.5 million (2012: $28.2
million) and offset this revenue against the mineral property asset prior to commercial production being
declared during the year.
The Group capitalised borrowing costs of $1.1 million (2012: $4.6 million).
11. Property, plant and equipment
Assets
Land and under Motor Plant and
buildings construction vehicles equipment
$'000 $'000 $'000 $'000
Cost
Balance at August 1,
2011 2,941 15,310 153 14,165
Additions 733 6,189 59 3,378
Disposals - - - (189)
-----------------------------------------------------
Balance at July 31,
2012 3,674 21,499 212 17,354
-----------------------------------------------------
-----------------------------------------------------
Balance at August 1,
2012 3,674 21,499 212 17,354
Additions 30 131 47 2,349
Reclassification 613 (21,604) - 20,991
-----------------------------------------------------
Balance at July 31,
2013 4,317 26 259 40,694
-----------------------------------------------------
-----------------------------------------------------
Depreciation and impairment losses
Balance at August 1,
2011 926 - 71 6,452
Depreciation charge
for the year 333 - 58 3,755
Eliminated on
disposals - - - (189)
-----------------------------------------------------
Balance at July 31,
2012 1,259 - 129 10,018
-----------------------------------------------------
-----------------------------------------------------
Balance at August 1,
2012 1,259 - 129 10,018
Depreciation charge
for the year 399 - 54 5,087
-----------------------------------------------------
Balance at July 31,
2013 1,658 - 183 15,105
-----------------------------------------------------
-----------------------------------------------------
Carrying amounts
At August 1, 2011 2,015 15,310 82 7,713
-----------------------------------------------------
-----------------------------------------------------
At July 31, 2012 2,415 21,499 83 7,336
-----------------------------------------------------
-----------------------------------------------------
At August 1, 2012 2,415 21,499 83 7,336
-----------------------------------------------------
-----------------------------------------------------
At July 31, 2013 2,659 26 76 25,589
-----------------------------------------------------
-----------------------------------------------------
Fixtures,
fittings
and Computer
equipment equipment Total
$'000 $'000 $'000
Cost
Balance at August 1,
2011 90 670 33,329
Additions 3 89 10,451
Disposals - (6) (195)
------------------------------------------------------
Balance at July 31,
2012 93 753 43,585
------------------------------------------------------
------------------------------------------------------
Balance at August 1,
2012 93 753 43,585
Additions 17 46 2,620
Reclassification - - -
------------------------------------------------------
Balance at July 31,
2013 110 799 46,205
------------------------------------------------------
------------------------------------------------------
Depreciation and impairment losses
Balance at August 1,
2011 57 491 7,997
Depreciation charge
for the year 15 128 4,289
Eliminated on
disposals - (6) (195)
------------------------------------------------------
Balance at July 31,
2012 72 613 12,091
------------------------------------------------------
------------------------------------------------------
Balance at August 1,
2012 72 613 12,091
Depreciation charge
for the year 16 98 5,654
------------------------------------------------------
Balance at July 31,
2013 88 711 17,745
------------------------------------------------------
------------------------------------------------------
Carrying amounts
At August 1, 2011 33 179 25,332
------------------------------------------------------
------------------------------------------------------
At July 31, 2012 21 140 31,494
------------------------------------------------------
------------------------------------------------------
At August 1, 2012 21 140 31,494
------------------------------------------------------
------------------------------------------------------
At July 31, 2013 22 88 28,460
------------------------------------------------------
------------------------------------------------------
Leased plant and machinery
The Group leases surface and underground equipment under a number of finance lease agreements. At the end of
each lease the Group has the option to purchase the equipment at a beneficial price. At July 31, 2013, the net
carrying amount of leased plant and machinery was $4,090,000 (2012: $5,542,000). The leased plant and machinery
secures lease obligations (see note 21). During the year plant and equipment additions of $1,432,000 (2012:
$2,422,000) were acquired through finance lease arrangements.
12. Available for sale investments
Available for sale
investments
$'000
Cost or valuation
Balance at August 1, 2011 -
Acquisitions 1,134
Revaluation (433)
---------------------
Balance at July 31, 2012 712
---------------------
---------------------
Balance at August 1, 2012 712
Acquisitions 148
Revaluation 843
---------------------
Balance at July 31, 2013 1,703
---------------------
---------------------
Carrying amounts
At July 31, 2012 712
---------------------
---------------------
At July 31, 2013 1,703
---------------------
---------------------
Rambler holds an 18% equity stake in Maritime Resources Corp and a representative on the Board of Directors.
The market price at July 31, 2013 was $0.30 (2012: $0.14 per share). The cost of the available for sale
investments is $1,282,000 (2012: $1,134,000).
13. Inventory
2013 2012
$'000 $'000
Metals in process 1,977 -
Operating supplies 1,396 1,100
--------------------
3,373 1,100
--------------------
--------------------
14. Trade and other receivables
2013 2012
$'000 $'000
Other receivables 372 72
Sales taxes recoverable 288 478
Prepayments and accrued income 436 168
--------------------
1,096 718
--------------------
--------------------
15. Derivative financial asset
2013 2012
$'000 $'000
Concentrate receivables from off-taker 639 281
--------------------
--------------------
The cost of the concentrate receivables is $865,000 (2012: $281,000).
16. Cash and cash equivalents
2013 2012
$'000 $'000
Short term deposits - 355
Bank balances 5,566 7,471
--------------------
--------------------
Cash and cash equivalents in the statement of cash
flows 5,566 7,826
--------------------
--------------------
17. Restricted cash
2013 2012
$'000 $'000
Bearer deposit notes 3,261 3,263
--------------------
--------------------
The Group is required to hold Letters of Credit in favour of the Government of Newfoundland and Labrador in
respect of the reclamation and closure liability associated with the Ming Mine The bearer deposit notes mature
on differing dates throughout fiscal 2014 and have a nominal value of $3,300,000 (2012 - $3,302,000) giving an
effective yield of 1.2% (2012 - 1.1%).
18. Capital and reserves
Share capital and share premium - group and company
Number '000
In issue at 1 August 2011 123,315
Issued for cash 17,522
Issued in consideration for finance fees 1,321
Issued on exercise of options 202
---------------
In issue at 31 July 2012 142,360
---------------
---------------
In issue at 1 August 2012 142,360
Issued in consideration for finance fees 804
Issued on exercise of options 72
---------------
In issue at July 31, 2013 143,236
---------------
---------------
At July 31, 2013, the authorised share capital comprised 1,000,000,000 ordinary shares of 1p each.
The holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled
to one vote per share at meetings of the Company.
Details of shares issued during the year ended July 31, 2013 are as follows:
On October 24, 2012 the company received monies to subscribe for 39,000 shares for $0.38 each raising a total
of $14,820 following the exercise of options.
On November 23, 2012 the company issued 33,000 shares for $0.18 each raising a total of $5,940 following the
exercise of options.
On March 27, 2013 the company issued 803,374 shares for $0.4979 to satisfy $400,000 of finance expenses.
Merger reserve
The merger reserve arose from the acquisition of Rambler Mines Limited by Rambler Metals and Mining PLC. This
acquisition was accounted for in accordance with the merger accounting principles set out in UK Financial
Reporting Standard 6 and the Companies Act 1985, which continue under the Companies Act 2006, whereby the
consolidated financial statements were presented as if the business previously carried out through Rambler
Mines Limited had always been owned and controlled by the Company. The transition provisions of IFRS 1 allow
all business combinations prior to transition to IFRS to continue to be accounted for under the requirements of
UK GAAP at that time. Accordingly this acquisition has not been re-stated in accordance with that standard.
Translation reserve
The translation reserve comprises all foreign exchange differences arising from the translation of the
financial statements of the parent company which has a different functional currency from the presentation
currency. Exchange differences arising are classified as equity and transferred to the Group's translation
reserve. Such translation differences are recognised in the income statement in the period of disposal of the
operation.
Fair value reserve
The fair value reserve comprises cumulative adjustments made to the fair value of available for sale
investments.
Capital management
The Group's objectives when managing capital are to safeguard the entity's ability to continue as a going
concern so that it can continue to increase the value of the entity for the benefit of the shareholders. Given
the nature of the Group's current activities the entity will remain dependent on a mixture of debt and equity
funding until such a time as the Group becomes self-financing from the commercial production of mineral
resources.
The Group's capital was as follows:
2013 2012
$'000 $'000
Cash and cash equivalents 5,566 7,826
Finance leases (7,040) (7,689)
Bank loan (22) (26)
Gold loan (18,791) (20,889)
Credit facility (5,621) (6,914)
----------------------
Net debt (25,908) (27,692)
Equity (77,692) (67,402)
----------------------
Total capital (103,600) (95,094)
----------------------
----------------------
Details of employee share options outstanding are set out in note 5.
19. Earnings/(loss) per share
Basic earnings per share
The calculation of basic earnings per share at July 31, 2013 was based on the profit attributable to ordinary
shareholders of $9,053,000 and a weighted average number of ordinary shares outstanding during the period ended
July 31, 2013 of 142,690,000 calculated as follows:
Profit/(loss) attributable to ordinary shareholders
2013 2012
$'000 $'000
Profit/(loss) for the period 9,053 (3,367)
---------------------
Profit/(loss) attributable to ordinary shareholders 9,053 (3,367)
---------------------
---------------------
Weighted average number of ordinary shares
Number '000
At August 1, 2011 123,315
Effect of shares issued during the year 5,162
---------------
---------------
At July 31, 2012 128,477
---------------
---------------
In issue at August 1, 2012 142,360
Effect of shares issued during year 330
---------------
Weighted average number of ordinary shares at July 31,
2013 142,690
---------------
---------------
There is no material difference between the basic and diluted loss per share. At July 31, 2013 there were
4,113,000 (2012: 3,937,000) share options in issue of which 1,079,397 (2012: N/A) were considered to be
dilutive and may have a dilutive effect on the basic earnings or loss per share in the future.
20. Trade and other payables
2013 2012
$'000 $'000
Trade payables 4,177 4,918
Non trade payables 287 65
Accrued expenses 1,326 1,003
--------------------
5,790 5,986
--------------------
--------------------
21. Interest-bearing loans and borrowings
This note provides information about the contractual terms of the Group's interest-bearing loans and
borrowings. For more information about the Group's exposure to interest rate and foreign currency risk, see
note 23.
2013 2012
$'000 $'000
Non-current liabilities
Bank loan 19 23
Finance lease liabilities 4,613 5,727
Gold Loan 15,944 14,941
--------------------
20,576 20,691
--------------------
--------------------
Current liabilities
Current portion of bank loan 3 3
Current portion of finance lease liabilities 2,427 1,962
Current portion of Gold Loan 2,847 5,948
Credit Facility 5,621 6,914
--------------------
10,898 14,827
--------------------
--------------------
Finance lease liabilities
Finance lease liabilities are payable as follows:
Minimum Minimum
lease lease
Payments Interest Principal Payments Interest Principal
2013 2013 2013 2012 2012 2012
$'000 $'000 $'000 $'000 $'000 $'000
Less than one year 2,759 332 2,427 2,189 227 1,962
Between one and five
years 4,867 254 4,613 6,361 634 5,727
-------------------------------------------------------
7,626 586 7,040 8,550 861 7,689
-------------------------------------------------------
-------------------------------------------------------
Under the terms of the lease agreements, no contingent rents are payable. The finance lease liabilities are
secured on the underlying assets. Total interest of $101,000 (2012: $428,000) was charged to mineral properties
during the year.
Gold Loan
In March 2010, the Group entered into an agreement ("Gold Loan") with Sandstorm to sell a portion of the life-
of-mine gold production from its Ming Mine.
Under the terms of the agreement Sandstorm made staged upfront cash payments for the gold to the Group
totalling US$20 million.
For this, in each production year following the first year of production, until 175,000oz of payable gold has
been produced, the Group has agreed to sell a percentage equal to 25% x (85% divided by the actual percentage
of metallurgical recovery of gold realized in the immediately preceding production year) provided that, if the
payable gold production in any production year after the third production year is less than 15,000 ounces, then
in each such production year, Sandstorm payable gold shall not be less than 25% of the payable gold. In each
production year following the first year of production, after 175,000oz of payable gold has been produced, the
Group has agreed to sell a percentage equal to 12% x (85% divided by the actual percentage of metallurgical
recovery of gold realized in the immediately preceding production year) provided that, if the payable gold
production in any production year after the third production year is less than 15,000 ounces, then in each such
production year, Sandstorm payable gold shall not be less than 12% of the payable gold for the remainder of the
period ending 40 years after the date of the agreement. After the expiry of the 40 year term, the agreement is
renewable in 10 year terms at the option of Sandstorm.
A 4.5% cash commission was payable with each payment received under the agreement.
The remaining circumstances in which the Gold Loan may be repaid earlier than by the delivery of payable gold
are as follows:
i. If within 24 months of the date that gold is first produced (November
28, 2011), the Ming Mine has not produced and sold a minimum of 24,000oz
(6,000 ounces of Sandstorm payable gold) of payable gold (18,555 oz
produced to July 31, 2013; 5,723 oz of Sandstorm payable gold) then a
portion of the US$20 million will be repayable based on the shortfall of
payable gold, and/or;
ii. Within the first 36 months of production of gold any shortfall in the
value of payable gold below the following amounts will be required to be
paid in cash:
-- within the first 12 months - US$3.6 million
-- within the second 12 months - US$3.6 million
-- within the third 12 months - US$3.1 million
Subsequent to the year end the Group has satisfied the requirement to deliver 6,000 ounces of Sandstorm payable
gold.
During the first twenty months of commissioning, repayments of US$9,309,570 were made from the delivery of
5,723 ounces of gold thereby satisfying the requirement to repay a minimum of US$3.6 million cash during the
first and second 12 months and partially meeting the requirements for the third 12 months.
The Gold Loan is accounted for as a financial liability carried at amortised cost. In determining the effective
interest rate implicit in the cash flows arising from the loan the cash flows are forecast at each quarter end
based on management's best estimates of the time of delivery of payable gold, the total amount of gold expected
to be produced over the mine life and the timing of that production.
Total interest of $1,169,000 was accrued during the period of which $581,000 (2012: $4,340,000) was charged to
mineral properties.
The Gold Loan is secured by a fixed and floating charge over the assets of the Group.
Credit Facility
On September 29, 2011 the Group agreed a credit facility of up to $10 million with Sprott Resource Lending
Partnership ("Sprott") for use as additional funding for the development of the Ming Mine. Subsequent to
amending the agreement in December 2011 the facility was available in three instalments; the first instalment
of $5 million was drawn on January 29, 2012, the second instalment of $2.5 million was drawn on January 30,
2012 and the final instalment for the balance up to $10 million was available until August 31, 2012 but was not
drawn. Interest accrues at a fixed rate of 9.25% per annum. In connection with the credit facility, a
structuring fee of $100,000 and a 3% commitment fee of $300,000 were paid to Sprott in cash. Pursuant to the
terms of the credit facility, the Company issued $300,000 of ordinary shares of 1p each in the capital of the
Company to Sprott in exchange for the repayment of the previously paid cash commitment fee. In addition, a
further 4% drawdown fee on all amounts drawn under the credit facility was satisfied by the issuance of
ordinary shares by the Company. On November 30, 2012 the Group repaid $500,000. On March 26, 2013 this
agreement was amended such that the principal is repayable by March 31, 2014 and is secured by a fixed and
floating charge over the assets of the Group. Upon amending the credit facility an amendment fee of $400,000
was paid to Sprott in ordinary shares of 1p each. On April 30, 2013 and subsequently on May 31, 2013 the Group
made repayments of $500,000 and $600,000 respectively to Sprott thereby reducing the outstanding balance to
$5,900,000.
Total financing and interest charges of $392,000 (2012: $1,004,000) were charged to mineral properties during
the year.
22. Provision
2013 2012
$'000 $'000
Reclamation and closure provision
Opening balance 1,812 1,647
Provision utilised during the year - (121)
Unwinding of discount 91 286
---------------------
Ending balance 1,903 1,812
---------------------
---------------------
The reclamation and closure provision has been made in respect of costs of land restoration and rehabilitation
expected to be incurred at the end of the Ming Mine's useful life. The provision has been calculated based on
the present value of the expected future cash flows associated with reclamation and closure activities as
required by the Government of Newfoundland and Labrador. The provision relates to restoration of all three
sites associated with the Ming Mine project: mill, mine and port sites. The liability is secured by Letters of
Credit for $3,255,155.
23. Financial instruments
The Group's principal financial assets comprise: cash and cash equivalents, restricted cash, available for sale
investments, derivative financial instruments and other receivables. In addition the Company's financial assets
include amounts due from subsidiaries. The Group and Company's financial liabilities comprise: trade payables;
other payables; and accrued expenses. The Group's financial liabilities also include interest bearing loans and
borrowings.
All of the Group's and Company's financial liabilities are measured at amortised cost and their financial
assets are classified as loans and receivables and measured at amortised cost with the exception of available
for sale investments and derivative financial instruments as described in notes 12 and 15 respectively.
The Group held the following categories of financial instruments at July 31, 2013:
2013 2012
$'000 $'000
Financial assets
Assets at fair value through profit and loss:
Derivative financial instruments 639 281
--------------------
Available for sale investments:
Investment in quoted equity securities 1,703 712
--------------------
Loans and receivables:
Other receivables 372 72
Sales taxes recoverable 288 478
Prepayments and accrued income 436 168
Cash at bank 5,566 7,826
Restricted cash 3,261 3,263
--------------------
9,923 11,807
--------------------
Total financial assets 12,265 12,800
--------------------
--------------------
Liabilities at amortised cost or equivalent: 2013 2012
$'000 $'000
Trade payables (4,177) (4,918)
Non trade payables (287) (65)
Accrued expenses (1,326) (1,003)
Loans and borrowings (31,474) (35,518)
--------------------
Total financial liabilities (37,264) (41,504)
--------------------
--------------------
The board of directors determines, as required, the degree to which it is appropriate to use financial
instruments and hedging techniques to mitigate risks. The main risks for which such instruments may be
appropriate are foreign exchange risk, liquidity risk, credit risk, interest rate risk and commodity price risk
each of which is discussed below.
Foreign exchange risk
The Group's cash resources are held in Canadian dollars, GB pounds and US Dollars and certain receivables and
the Gold Loan are denominated in US dollars. The Group has a downside exposure to any strengthening of the GB
pound as this would increase expenses in Canadian dollar terms. This risk is mitigated by reviewing the holding
of cash balances in GB pounds. Any weakening of the GB pound would however result in the reduction of the
expenses in Canadian dollar terms and preserve the Group's cash resources. In addition, any such movements
would affect the Consolidated Balance Sheet when the net assets of the Parent Company are translated into
Canadian dollars. The Group has a downside exposure to any strengthening of the US dollar as this would
increase the amount repayable on the Gold Loan in Canadian dollar terms. This risk, however, is relevant only
should the Gold Loan be repaid in cash under terms set out in note 21. Repayment is envisaged in payable gold
which is denominated in US dollars. Exposure to this foreign currency risk has been mitigated since the
commencement of production. Any weakening of the US dollar would however result in a reduction in revenue and
receivables in Canadian dollar terms. The Group has not hedged its exposure to currency fluctuations.
The policy in relation to the translation of foreign currency assets and liabilities is set out in note 2(d),
'Accounting Policies Foreign Currencies' to the consolidated financial statements.
The Group does not hedge its exposure of foreign investments held in foreign currencies. There is no
significant impact on profit or loss from foreign currency movements associated with the Parent company's
assets and liabilities as the foreign currency gains or losses are recorded in the translation reserve.
Exchange rate fluctuations may adversely affect the Group's financial position and results. The following table
details the Group's sensitivity to a 10% strengthening and weakening in the GB pound against the Canadian/US
Dollar. 10% represents management's assessment of the reasonable possible exposure.
Equity
2013 2012
$'000 $'000
10% strengthening of GB pound (12) 24
10% weakening of GB pound 11 (22)
10% strengthening of US dollar (1,879) (1,734)
10% weakening of US dollar 1,708 1,576
----------------------
----------------------
Liquidity risk
With finite cash resources the liquidity risk is significant. This risk is managed by controls over expenditure
and concentrating on achieving the payment milestones under the financing arrangement. Success will depend
largely upon the outcome of on-going and future exploration and development programmes. Given the nature of the
Group's current activities the entity will remain dependent on a mixture of debt and equity funding in the
short to medium term until such time as the Group becomes self-financing from the commercial production of
mineral resources. The liabilities of the parent company are due within one year. The parent company has
adequate financial resources to meet the obligations existing at July 31, 2013.
The Group's and Company's trade payables, other payables and accrued expenses are generally due between one and
three months and the Group's other financial liabilities are due as follows:
Financial liabilities 2013 2012
$'000 $'000
Due within one year 11,621 16,174
Due within one to two years 5,865 5,667
Due within two to three years 4,732 4,795
Due within three to four years 3,764 4,778
Due within four to five years 3,404 3,168
Due after five years 16,576 16,240
--------------------
45,962 50,822
--------------------
--------------------
Fixed rate financial liabilities
At the year end the analysis of finance leases, hire purchase contracts and bank loans which were all due in
Canadian Dollars and are at fixed interest rates was as follows:
Fixed rate liabilities 2013 2012
$'000 $'000
Due within one year 8,663 8,879
Due within one to two years 2,640 2,021
Due within two to three years 1,916 2,015
Due within three to four years 306 1,461
Due within four to five years 23 243
Due after five years - 10
--------------------
13,548 14,629
--------------------
--------------------
The average fixed interest rate for the finance leases and hire purchase contracts outstanding at July 31, 2013
was 6.30%.
Credit risk
The Group generally holds the majority of its cash resources in Canadian dollars given that the majority of the
Group's outgoings are denominated in this currency. Given the current climate, the Group has taken a very risk
averse approach to management of cash resources and management and Directors monitor events and associated
risks on a continuous basis. There is little perceived credit risk in respect of trade and other receivables
(see note 14). The Group maximum exposure to credit risk at July 31, 2013 was represented by receivables and
cash resources.
Interest rate risk
The Group's policy is to retain its surplus funds on the most advantageous term of deposit available up to
twelve month's maximum duration. Details of the Group's borrowings are described in note 21.
If the interest rate on deposits were to fluctuate by 1% there would be no material effect on the Group's and
Company's reported results.
Commodity price risk
Commodity price risk is the risk that the Group's future earnings will be adversely impacted by changes in the
market prices of commodities. The Group is exposed to commodity price risk as its future revenues will be
derived based on contracts with customers at prices that will be determined by reference to market prices of
copper and gold at the delivery date.
As explained in note 26 the Group calculates the effective interest rate on the Gold Loan based on estimates of
future cash flows arising from the sale of payable gold. In estimating the cash flows the following table
details the Group's sensitivity to a 10% increase and a 25% decrease in the price of gold. These percentages
represent management's assessment of the reasonable possible exposure.
Gross assets
2013 2012
$'000 $'000
10% increase in the price of gold (1,843) (2,089)
25% decrease in the price of gold 4,609 5,222
----------------------
----------------------
Receivables in respect of the sale of copper concentrate which contain an embedded derivative linking them to
future commodity prices are measured at fair value through profit and loss and are treated as derivative
financial assets or liabilities. In estimating the value of the derivative the following table details the
Group's sensitivity to a 5% increase and a 5% decrease in the price of copper, gold and silver. These
percentages represent management's assessment of the reasonable possible exposure.
Gross assets
2013 2012
$'000 $'000
5% increase in the price of copper, gold and silver 441 157
5% decrease in the price of copper, gold and silver (441) (157)
----------------------
----------------------
Financial assets
The floating rate financial assets comprise interest earning bank deposits at rates set by reference to the
prevailing LIBOR or equivalent to the relevant country. Fixed rate financial assets are cash held on fixed term
deposit.
At the year end the cash and short term deposits were as follows:
Average
Average interest
Floating period for rates for
Fixed rate rate which rates fixed rate
At July 31, 2013 assets Assets Total are fixed assets
$'000 $'000 $'000 Months %
Sterling - 61 61 - -
US $ - 3,293 3,293 - -
Canadian $ - 2,212 2,212 - -
------------------------------------
- 5,566 5,566
------------------------------------
------------------------------------
At July 31, 2012
$'000 $'000 $'000 Months %
Sterling 355 77 432 1 0.25
Canadian $ - 7,394 7,394 - -
------------------------------------
355 7,471 7,826
------------------------------------
------------------------------------
Fair values
In the directors' opinion there is no material difference between the book value and fair value of any of the
group's financial instruments.
24. Related parties
Identity of related parties
The Group has a related party relationship with its subsidiaries and with its directors and executive officers.
Transactions with key management personnel
The directors' compensations were as follows:
2013 2012
$'000 $'000
Salary - executive
G Ogilvie 330 270
Fees - non-executive
D H W Dobson - -
S Neamonitis 13 13
J M Roberts 7 13
L D Goodman 13 13
B D Hinchcliffe 13 13
T S Chan 13 3
J Thomson 13 13
E C Chen 11 -
--------------------
413 338
--------------------
--------------------
D H W Dobson waived his entitlement to director's fees for the current and preceding periods. At July 31, 2013
fees of $12,000 (2012: $21,000) remained outstanding.
Share options held by directors were as
follows: At 31.07.13 At 31.07.12
No. No.
'000 '000
G Ogilvie(1) 1,100 1,100
J Thomson(2) 400 400
D H W Dobson(3) 45 45
S Neamonitis(4) 100 100
J M Roberts(3) 45 45
L D Goodman(3) 45 45
B D Hinchcliffe(3) 45 45
------------------------------
1,780 1,780
------------------------------
------------------------------
(1) 200,000 options at an exercise price of $0.93 expiring on 7 December
2016, 150,000 options at an exercise price of $1.10 expiring on 12 November
2017 and 750,000 options at an exercise price of $0.19 expiring on 10
November 2018.
(2) 100,000 options at an exercise price of $0.93 expiring on 7 December
2016 and 300,000 options at an exercise price of $0.19 expiring on 10
November 2018.
(3) options at an exercise price of $0.19 expiring on 10 November 2018.
(4) options at an exercise price of $0.53 expiring on 22 March 2022.
Total key management personnel compensations were as follows:
2013 2012
$'000 $'000
Short term employee benefits 784 659
Social security costs 39 33
Share based payments - 17
--------------------
823 709
--------------------
--------------------
25. Subsequent events
On August 30, 2013 the Company announced an additional payment of $500,000 to Sprott reducing the outstanding
balance to $5.4 million.
On September 17, 2013 the Group announced that a conditional offer had been accepted by Cornerstone Capital
Resources Inc. for the Group to acquire their 50% interest in The Little Deer Copper Deposit and Whalesback
Mine in Newfoundland for $550,000 consisting of $200,000 in cash and $350,000 in shares. The 50% interest is
subject to a Joint Venture agreement with Thundermin Resources Inc. On October 15, 2013 the Group announced
that the conditions of the offer had been satisfied.
On September 30, 2013 the Company made an additional payment of $650,000 to Sprott reducing the outstanding
balance to $4.75 million.
26. Critical accounting estimates and judgements
The details of the Group's accounting policies are presented in accordance with International Financial
Reporting Standards as set out in Note 2 to the financial statements. The preparation of financial statements
in conformity with IFRS requires management to make estimates and assumptions that affect the reported amounts
of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the year.
The following estimates are considered by management to be the most critical for investors to understand some
of the processes and reasoning that go into the preparation of the Company's financial statements, providing
some insight also to uncertainties that could impact the Company's financial results.
Going Concern
The risks associated with going concern are explained in note 1.
Mineral Property and Exploration and Evaluation Costs
The directors have assessed whether there are any indicators of impairment in respect of mineral property and
exploration and evaluation costs. In making this assessment they have considered the Group's business plan
which includes resource estimates, future processing capacity, the forward market and longer term price outlook
for copper and gold. Resource estimates have been based on the most recently filed NI43-101 report.
Management's estimates of these factors are subject to risk and uncertainties affecting the recoverability of
the Group's mineral property and exploration and evaluation costs. Any changes to these estimates may result in
the recognition of an impairment charge with a corresponding reduction in the carrying value of such assets.
After consideration of the above factors, the directors do not consider that there are any indicators that
mineral property and exploration and evaluation costs are impaired at the year end.
Closure costs
The Group has an obligation to restore its properties after the minerals have been mined from the site, and has
estimated the costs necessary to comply with existing reclamation standards. These estimates are recorded as a
liability at their fair values in the periods in which they occur. If the estimate of reclamation costs proves
to be inaccurate, the Group could be required to increase the provision for site closure and reclamation costs,
which would increase the amount of future reclamation expense, resulting in a reduction in the Group's earnings
and net assets.
Share-based payments
The Group calculates the cost of share based payments using the Black-Scholes model. Inputs into the model in
respect of the expected option life and the volatility are subject to management estimate and any changes to
these estimates may have a significant effect on the cost. The assumptions used in calculating the cost of
share based payments are explained in note 5.
Gold Loan
The Group calculates the effective interest rate on the Gold Loan based on estimates of future cash flows
arising from the sale of payable gold (see note 21).The cash flows will be dependent on the production of gold
and its selling price at the time of delivery which have been estimated in line with the mine plan, future
prices of gold and reserve estimates. Management's estimates of these factors are subject to risk and
uncertainties affecting the amount of the interest charge. Any changes to these estimates may result in a
significantly different interest charge which would affect the carrying value of the exploration and evaluation
costs and the corresponding Gold Loan liability.
Revenue
Revenues are subject to variation after the date of sale due to assay, price and foreign exchange fluctuations.
Management monitors these changes closely and at the end of the period the directors will consider whether the
effect of these variations are material on the whole and determine whether an adjustment is therefore
appropriate.
Available for sale investment
Management consider that they do not have significant influence over the financial and policy decisions of
Maritime and therefore have included the investment as an available for sale investment.
Commercial production
The Group monitors the on-going testing and commissioning of its copper concentrate milling facility to assess
when commercial production has been achieved. Commercial Production is the assessment that the mill is capable
of operating in the manner intended was defined by management at the onset of development to be 60 days of
continuous production from both the mill and mine, being 85% of target rates envisaged in the Group's
Feasibility Study. Prior to commercial production being declared, costs and revenues are offset to the Mineral
Properties asset and post commercial production will be charged to the Group's income statement. Commercial
production was achieved at November 1, 2012.
Deferred tax assets
The Group has incurred losses which will be available for offset against future taxable profits and one of the
subsidiaries has tax credits available to offset against future tax liabilities. Following the declaration of
commercial production during the year it has been concluded that the Group has sufficient evidence of future
taxable profits to justify the recognition of a deferred tax asset. If future taxable profits prove to be
insufficient the Group could be required to reduce the deferred tax asset which would result in a reduction in
the Group's earnings and net assets.
RAMBLER METALS AND MINING PLC
COMPANY STATEMENT OF COMPREHENSIVE INCOME
For the Year Ended July 31, 2013
2013 2012
$'000 $'000
Profit/(loss) for the year 211 (1,232)
Other comprehensive income
Items that may be reclassified into profit or loss
Exchange differences on translation into
presentation currency (154) 361
----------------------
Other comprehensive (loss)/income for the year (154) 361
----------------------
Total comprehensive income/(loss) for the year 57 (871)
----------------------
----------------------
Registered number: 05101822 (England and Wales)
RAMBLER METALS AND MINING PLC
COMPANY STATEMENT OF FINANCIAL POSITION
As at July 31, 2013
(EXPRESSED IN CANADIAN DOLLARS)
Note
2013 2012
$'000 $'000
Assets
Investments C3 68,323 68,848
Deferred tax C4 1,375 -
----------------------
Total non-current assets 69,698 68,848
----------------------
Trade and other receivables C5 53 50
Cash and cash equivalents C6 66 437
----------------------
Total current assets 119 487
----------------------
Total assets 69,817 69,335
----------------------
----------------------
Equity
Issued capital 18 2,613 2,599
Share premium 75,164 74,756
Translation reserve (10,221) (10,067)
Retained profit 2,104 1,893
----------------------
Total equity 69,660 69,181
----------------------
Liabilities
Trade and other payables C7 157 154
----------------------
Total current liabilities 157 154
----------------------
Total liabilities 157 154
----------------------
Total equity and liabilities 69,817 69,335
----------------------
----------------------
ON BEHALF OF THE BOARD:
L D Goodman, Director
Approved and authorised for issue by the Board on October 28, 2013
RAMBLER METALS AND MINING PLC
COMPANY STATEMENT OF CHANGES IN EQUITY
Share Share Translation Accumulated
capital premium reserve losses Total
(EXPRESSED IN
CANADIAN DOLLARS) $'000 $'000 $'000 $'000 $'000
Balance at August
1, 2011 2,299 65,934 (10,428) 3,115 60,920
--------------------------------------------------------
Comprehensive
income
Loss for the year - - - (1,232) (1,232)
--------------------------------------------------------
Foreign exchange
translation
differences - - 361 - 361
--------------------------------------------------------
Total other
comprehensive
income - - 361 361
--------------------------------------------------------
Total comprehensive
income for the
year - - 361 (1,232) (871)
--------------------------------------------------------
Issue of share
capital 300 9,047 - - 9,347
Share issue
expenses - (225) - - (225)
Share-based
payments - - - 10 10
--------------------------------------------------------
Balance at July 31,
2012 2,599 74,756 (10,067) 1,893 69,181
--------------------------------------------------------
--------------------------------------------------------
Balance at August
1, 2012 2,599 74,756 (10,067) 1,893 69,181
--------------------------------------------------------
Comprehensive
income
Profit for the year - - - 211 211
--------------------------------------------------------
Foreign exchange
translation
differences - - (154) - (154)
--------------------------------------------------------
Total other
comprehensive
income - - (154) - (154)
--------------------------------------------------------
Total comprehensive
income for the
year - - (154) 211 57
--------------------------------------------------------
Issue of share
capital 14 408 - - 422
--------------------------------------------------------
Balance at July 31,
2013 2,613 75,164 (10,221) 2,104 69,660
--------------------------------------------------------
--------------------------------------------------------
RAMBLER METALS AND MINING PLC
STATEMENT OF CASH FLOWS
For the Year Ended July 31, 2013
(EXPRESSED IN CANADIAN DOLLARS)
2013 2012
$'000 $'000
Cash flows from operating activities
Operating loss (1,166) (1,232)
Share based payments - 6
Foreign exchange losses (135) 313
Increase in debtors (3) (3)
(Decrease)/increase in creditors 4 28
----------------------
Net cash utilised in operating activities (1,300) (888)
----------------------
Cash flows from investing activities
Interest received - 1
Loans repaid by/(advanced to) subsidiaries 907 (7,923)
----------------------
Net cash generated from/( utilised in) investing
activities 907 (7,922)
----------------------
Cash flows from financing activities
Proceeds from the issue of share capital - 8,714
Payment of transaction costs - (225)
Proceeds from exercise of share options 22 38
----------------------
Net cash from financing activities 22 8,527
----------------------
Net (decrease)/increase in cash and cash
equivalents (371) (283)
Cash and cash equivalents at beginning of period 437 713
Effect of exchange rate fluctuations on cash held - 7
----------------------
Cash and cash equivalents at end of period 66 437
----------------------
----------------------
RAMBLER METALS AND MINING PLC
NOTES TO THE COMPANY FINANCIAL STATEMENTS
C1. Accounting policies
The accounting policies of the company are consistent with those adopted by the Group with the addition of the
following:
Investments
Investments are stated at their cost less impairment losses.
C2. Profit/(loss) of parent company
As permitted by section 408 of the Companies Act 2006, the income statement of the parent company is not
presented as part of these financial statements. The parent company's profit for the financial year was
$211,000 (2012: Loss $1,232,000).
C3. Investments
Investment
in
subsidiary Loans Total
$'000 $'000 $'000
Cost
Balance at August 1, 2011 376 59,909 60,285
Advances (net) - 8,523 8,523
Effect of movements in foreign exchange 2 38 40
--------------------------------
Balance at July 31, 2012 378 68,470 68,848
--------------------------------
--------------------------------
Balance at August 1, 2012 378 68,470 68,848
Repayments (net) - (508) (508)
Effect of movements in foreign exchange - (17) (17)
--------------------------------
Balance at July 31, 2013 378 67,945 68,323
--------------------------------
--------------------------------
The company has interests in the following material subsidiary undertakings, which are included in the
consolidated financial statements.
Name Class Holding Activity Country of
Incorporation
Rambler Mines Limited Ordinary 100% Holding England
company
Rambler Metals and Common 100% Exploration, Canada
Mining Canada Limited (indirectly) development
and mining
The aggregate value of shares in subsidiary undertakings is stated at cost.
The loans to the subsidiary undertakings are interest free.
RAMBLER METALS AND MINING PLC
NOTES TO THE COMPANY FINANCIAL STATEMENTS
C4. Deferred tax
The Company has incurred losses which will be available for offset against future taxable profits. Following
the declaration of commercial production during the year by one of the Company's subsidiaries it has been
concluded that the Company has sufficient evidence of future taxable profits to justify the recognition of a
deferred tax asset of $1.4 million.
C5. Trade and other receivables
2013 2012
$'000 $'000
Other receivables 1 1
Sales taxes recoverable 13 23
Prepayments and accrued income 39 26
--------------------
53 50
--------------------
--------------------
C6. Cash and cash equivalents
2013 2012
$'000 $'000
Short term deposits - 355
Bank balances 66 82
--------------------
Cash and cash equivalents in the statement of cash
flows 66 437
--------------------
--------------------
C7. Trade and other payables
2013 2012
$'000 $'000
Trade payables 17 35
Non trade payables 9 1
Accrued expenses 131 118
--------------------
157 154
--------------------
--------------------
C8. Related party transactions
The Company has a related party relationship with its subsidiaries (see note C3) and with its directors and
executive officers (see note 24).
Transactions with subsidiary undertakings
Details of loans advanced to subsidiary undertakings are included in note C3.
Other related parties
Transactions with other related parties are detailed in note 24.
-30-
FOR FURTHER INFORMATION PLEASE CONTACT:
Rambler Metals and Mining Plc
Mr. Peter Mercer
Corporate Secretary
+1-709-800-1929 ext.500
pmercer@ramblermines.com
www.ramblermines.com
-0-
Rambler Metals & Mining Plc
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