Final Results for the year ended 31 December 2013
Strategic Minerals plc
("Strategic Minerals" or the "Company")
Final Results for the year ended 31 December 2013
Strategic Minerals plc (AIM: SML; USOTC: SMCDY) today announces its annual results for the year ended 31 December, 2013.
Chairman's Report and Strategic Review
Strategic Minerals is focused on generating shareholder value by profitably operating its existing mining operations and broadening its portfolio of cash generating projects.
The Company's strategy is to:
· Expand domestic sales at the Company's existing Cobre magnetite project in New Mexico and create long-term relationships that allow the operation to generate positive cash returns in all magnetite price scenarios.
· Build a portfolio of cash generating high quality operations and near term mining projects in jurisdictions where returns are commensurate with risk.
· Diversify the Company's revenue stream into other commodities such as tin, silver and gold.
· Operate all assets with a focus on safety and respect for environment and the communities in which we operate.
· Evaluate near term cash generating opportunities to ensure that returns are commensurate with the inherent risks and appropriate risk mitigation measures are considered. The opportunities currently under consideration are not limited to iron ore and include tin, silver and gold. The Company is also focused on realising the embedded value of its Australian exploration assets, whilst ensuring funds allocated to exploration activities are in line with the overall cash position of the Company
Financial Performance
The Company has amended its reporting currency to US dollars as the Company's revenues, expenses, assets and liabilities are predominately in US currency.
The Company made a loss before tax for the financial year of $28.9M (2012: $7.9M). The loss was mainly attributable to non-cash related charges for the year of $26.8M (2012: $1.6M). The total after tax loss for the year is $23.9M (2012: $6.9M). The non-cash charge of $26.8M was due to a number of factors including $9.6M as a result of normal depreciation and amortisation charges associated with the Cobre operation. In addition, $14.4M was as a result of an impairment charge to the book value of the intangible asset associated with the Cobre operation. A further non-cash charge was incurred as a result of a $2.3M impairment to the carrying value of the rail infrastructure.
On the acquisition of the Cobre asset in 2011, the Company recognised an intangible asset of $25.8M and this asset has been amortised on a per tonne basis of product since sales commenced in 2012. The non-cash intangible asset impairment of $14.4M is due to the export of material not being profitable at the current lower prevailing iron ore prices and the current focus on domestic sales only. Hence, as at 31 December 2013 the carrying value of this intangible asset is $1.5M which reflects the remaining magnetite reserves which are reasonably expected to be monetised during the renegotiated minimum term of the contract with Freeport-McMoRan Sales Company Inc. ("Freeport") as advised to shareholders on 4 March 2014.
The impairment of the rail infrastructure is as a direct result of the Company's decision in Q1 2014 to focus on sales to the domestic market, hence, the Company has fully impaired the remaining carrying value of the railway infrastructure. Domestic sales are not reliant on the railway, as all product is removed from the site utilising truck haulage. The Company will continue to review the possibility of re-starting sales to the export market but this will be dependent on improved iron ore prices and potential changes to the agreement with Freeport.
Administration costs decreased during the financial year to $3.5M (2012: $5.3M). This 34% reduction of $1.8M arose from a combination of reducing overheads and a significant amount of non-recurring expenditure compared to 2012. The most significant cost savings came from legal, professional and consultancy fees which fell to $0.8M (2012: $2.9M).
The Company's financing charges for the year to 31 December 2013 fell to $0.7M (2012: $1.1M). The financing charges relate mainly to the $4.9M short term financing facilities which was repaid in full from the $6.6M in net funds raised in February 2013. As at 31 December 2013 the Company had no outstanding loan liabilities.
The Company's taxation credit arises from two sources: the release of a deferred tax liability related to the intangible asset of the Cobre asset; and a write down in the carrying value of a deferred tax asset established in 2012. No tax liability existed at 31 December 2013 and the Company has substantial tax losses carried forward.
Operational Performance
The Cobre Magnetite tailings operation in New Mexico continued successful delivery of product to domestic and export customers and generated total revenues of $37.2M (2012: $5.9M) in the year to 31 December 2013. The majority of revenues were as a result of 423,000 dry metric tonnes ("DMT") (2012: 48,000 DMT) of magnetite product exported during the financial year from seven shipments which left the Port of Guaymas in Mexico.
The operation continued to service domestic magnetite customers but, due to the focus on export sales during the year, domestic sales decreased by 5,000 short wet tonnes ("SWT"). A variety of customers were supplied directly from the mine with total sales for the year of 15,000 SWT (2012: 20,000 SWT). Due to declining iron ore prices and hence lower margins on exports, the Company has renewed its focus on increasing domestic sales.
The overall gross margin for the operations of $2.0M (2012 - $1.4M) was impacted by a reduction in the realised price on export sales, which dropped from ~$90/DMT to ~$85/DMT. In addition, the cost of production increased from ~$77/DMT to $82/DMT due to iron ore price linked costs (which are fixed before final sales price is determined) and increases in rail costs.
In Q1 2014 the Company announced a new agreement with Freeport extending its rights at Cobre. The new agreement allows the Company to truck 11,000 short wet tonnes ("SWT") of magnetite per month, reflecting the renewed focus on the domestic market. In the 4 months to April 2014 the Company had sold 68% of the domestic tonnage achieved in 2013, the vast majority of which is to existing customers leaving plenty of scope to improve sales from the operation.
Safety
The substantial growth in the quantities of magnetite sold from Cobre was attained while operating the mine safely and with excellent stewardship. The site was incident free and incurred no environmental, regulatory, or operational violations during 2013. This incident free status is a continuation from 2012 and is a result of the high standards implemented at the operation by management personnel.
Australian Operations
The Company's Iron Glen and Jotanooka exploration properties in Australia hold significant potential for delivering value for the Company. Exploration programs have been formulated for these projects, however, expenditure needs to be managed in line with the Company's total cash position.
Iron Glen
The Iron Glen tenements are located approximately 40km from the deep water port of Townsville, Queensland, and are close to existing road and rail infrastructure. The Iron Glen project is within an established mining region and areas within the 2,100 hectare project area have been the subject of extensive magnetic and geochemical analysis.
To understand the potential extent of magnetite resources within these tenements and therefore their potential value it is essential that the Company test the extent of magnetic anomalies previously identified. In that regard a modest early stage exploration programme is planned, subject to available cash. The goal is to detail any buried magnetic features within the main magnetic anomaly including the area to the west where the presence of at surface magnetite was seen in June 2013 following a site visit by our retained advisers, Terra Search.
The Company's aim is to define and potentially develop an economically viable magnetite operation. There is also the possibility of realising additional value through the known base and precious metal anomalies that have been identified.
Jotanooka
The Jotanooka tenement is located in Western Australia, which is approximately 300 kilometres from a deep water port and which has existing modern rail infrastructure nearby. The project is neighboured by Sinosteel Midwest Corporation's Koolanooka project, which delivered 4Mt of direct shipment haematite ore to the Chinese steel markets over a three year mine life before closing in 2013. Prior evaluations of Jotanooka suggest that the project may house a significant iron ore discovery in the form of an extension of the SinoSteel deposit.
Consequently, a carefully defined and highly targeted exploration programme has been recommended by the Company's independent geologists to test the existence of this extension.
Outlook and Prospects
During the latter part of 2013 and early 2014 the Company has been focused on reviewing its operating costs, seeking to remove volatility in its gross margin, improving gross margins and managing the financial impact of the significant fall in iron ore price which occurred in Q1 2014.
Iron Ore Price Exposures
The Company completed a capital raise announced in April 2014 of $1,650,000 (£1,000,000), before costs, for additional working capital and enabled the Company to close out the iron ore price exposure under the contract with Glencore AG on the sales of iron ore from Cobre. In addition, 45,000,000 ordinary shares in the Company were issued to Glencore as part of the satisfaction of this debt. With the focus now on domestic sales at Cobre the Company does not currently have any open positions susceptible to the iron ore price.
Board Restructure
Recent developments have seen a restructure of the Board with Mr Julien McInally and Mr Lyle Hobbs taking on executive directorships with the Company and Mr Patrick Griffiths has now moved to a non-executive director role. The Company is currently seeking to appoint another non-executive director with suitable mining experience as soon as practical. The newly constituted board are looking forward to developing the business further and delivering shareholder value. The Company thanks the former board members for their efforts during a challenging period.
Corporate overheads
The Board has undertaken a corporate review resulting in the streamlining of its corporate overheads. The Company is targeting an overall corporate overhead of less than $1.2M on an annualised basis going forward excluding costs associated with reviewing new opportunities and other exceptional items.
New Mexico Operations
The last magnetite export shipment from the Cobre operation occurred in February 2014. The focus for the Cobre operation will be to continue to build on domestic sales, and operate with a consistent focus on safety and environmental stewardship.
The Company is investigating a business case for processing of the Cobre magnetite material to create a higher margin business. The Company will review this opportunity which will be dependent on the market price of an upgraded product, the ability of the Company to extend its contracts with Freeport, logistical requirements and the ability of the Cobre material to be easily upgraded.
Australian Operations
The Company will seek to undertake exploration on its Australian tenements subject to available funds and to ensure the value of these tenements is maintained. However, in the near term the focus remains one of bringing in other near term cash generating assets into the Company.
Summary
Strategic Minerals plc is well situated for growth in 2014 as compared to many of its peers in the exploration and minerals sector. The Company has:
· a cash-flow generating business in a low risk jurisdiction which is not dependent on prevailing iron ore prices,
· a strong cash position with cash and cash equivalents of $1,435,000 as of 30 April 2014,
· no debt and no material obligations beyond its trading commitments, and
· a re-invigorated board with substantial mining expertise.
The Board is focused on delivering value to its shareholders and is currently progressing the following priorities:
· pursue domestic sales of magnetite iron ore from the Company's Cobre Project in New Mexico, United States,
· increase the Company's portfolio of projects with additional near term, low capital cost opportunities in both iron ore and other strategic minerals including tin, silver and gold, and
· continue to reduce overheads to meet our corporate overhead targets.
The combination of strong shareholder support, self-sustaining operations, and a suite of mining assets under review bodes well for the Company to thrive in 2014 and beyond.
Julien McInally
Executive Chairman
29 May 2014
Annual Report and Notice of Annual General Meeting
The annual report will be posted to shareholders next week, along with a notice of the Annual General Meeting of Strategic Minerals plc ("AGM"), which will be held at the offices of BDO UK at 55 Baker Street, London, W1U 7EU at 11 a.m. on 27 June 2014. Copies of the annual report and notice of AGM will be available on the Company's website later next week.
One resolution that will be put to shareholders at the AGM concerns a serious loss of capital. Following production of the Company's audited financial statements for the financial period ended 31 December 2013, the net assets have fallen to US$4,073,000, which is less than half of US$40,731,000, being the value of the Company's called up share capital as at the date of this letter. Under the provisions of Section 656 of the Act such a position constitutes a serious loss of capital, which requires shareholders to be informed and a general meeting of the Company to be convened in order that shareholders may have an opportunity to consider the future direction of the Company. The Directors' therefore intend to consider this issue and discuss it with shareholders at the AGM, However, given that the company is currently in a positive cash flow position and has sufficient funds to meet its immediate needs the Directors are proposing that no further action needs to be taken at this time. The Company is not intending to raise additional capital until it has secured additional projects but the Company believes it needs the flexibility to raise additional funds should the need arise. Resolution 8 of the AGM, if passed, will provide the flexibility required to issue additional equity should it be required.
For further information, please contact:
|
Strategic Minerals plc Julien Mcinally Executive Chairman
|
+61 408 704 446
|
|
Allenby Capital Limited Nominated Adviser and Joint broker Jeremy Porter James Reeve
|
+44 20 3328 5656 |
|
Daniel Stewart & Company Plc Joint broker Martin Lampshire David Hart
|
+44 20 7776 6550 |
|
Tavistock Communications Financial PR Jos Simson Nuala Gallagher |
+44 20 7920 3150 |
STRATEGIC MINERALS PLC
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2013
|
|
|
Year to |
Year to |
Year to |
Year to |
|
|
|
31 December |
31 December |
31 December |
31 December |
|
|
Note |
2013 |
2013 |
2012 |
2012 |
|
|
|
$'000 |
$'000 |
$'000 |
$'000 |
|
|
|
|
|
|
|
|
Continuing operations |
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue |
|
|
37,242 |
|
5,959 |
|
Raw materials and consumables used |
|
|
(35,237) |
|
(4,516) |
|
|
|
|
________ |
|
________ |
|
|
|
|
|
|
|
|
Gross profit |
|
|
2,005 |
|
1,443 |
|
|
|
|
|
|
|
|
Exploration and evaluation expenditure |
11 |
- |
|
(1,334) |
|
|
Other expenses |
5 |
(3,541) |
|
(5,289) |
|
|
|
|
|
|
|
|
|
|
|
(3,541) |
|
(6,623) |
|
|
Non cash costs |
|
|
|
|
|
|
Depreciation of railway infrastructure |
13 |
(1,036) |
|
(138) |
|
|
Impairment to railway infrastructure |
13 |
(2,324) |
|
- |
|
|
Amortisation of intangible asset |
11 |
(8,578) |
|
(1,283) |
|
|
Impairment to intangible asset |
11 |
(14,366) |
|
- |
|
|
Share based payment |
|
(458) |
|
(151) |
|
|
|
|
|
|
|
|
|
Non cash costs |
|
(26,762) |
|
(1,572) |
|
|
Total expenses |
|
|
(30,303) |
|
(8,195) |
|
|
|
|
________ |
|
________ |
|
|
|
|
|
|
|
|
Loss from operations |
|
|
(28,298) |
|
(6,752) |
|
|
|
|
|
|
|
|
Finance expense |
7 |
|
(673) |
|
(1,133) |
|
|
|
|
________ |
|
________ |
|
|
|
|
|
|
|
|
Loss before taxation |
|
|
(28,971) |
|
(7,885) |
|
|
|
|
|
|
|
|
Income tax credit |
8 |
|
5,092 |
|
1,014 |
|
|
|
|
________ |
|
________ |
|
Loss for the period attributable to the owners of the parent |
|
|
(23,879) |
|
(6,871) |
|
|
|
|
|
|
|
|
Other comprehensive income |
|
|
|
|
|
|
Items that may be reclassified subsequently to profit or loss: |
|
|
|
|
|
|
Exchange gains/ (losses) arising on translation of foreign operations |
|
|
182 |
|
(168) |
|
|
|
|
________ |
|
________ |
|
Total comprehensive income attributable to the owners of the parent |
|
|
(23,697) |
|
(7,039) |
|
|
|
|
________ |
|
________ |
|
|
|
|
|
|
|
Loss per share attributable to the ordinary equity holders of the parent:
|
Continuing activities - Basic and diluted |
10 |
|
($0.044) |
|
($0.016) |
|
|
|
|
________ |
|
________ |
The accompanying accounting policies and notes form an integral part of these financial statements
STRATEGIC MINERALS PLC
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2013
|
|
|
2013 |
2012 |
2011 |
|
|
Notes |
$'000 |
$'000 |
$'000 |
|
Assets |
|
|
|
|
|
Non-current assets |
|
|
|
|
|
Intangible assets |
11 |
3,370 |
26,258 |
27,753 |
|
Property, plant and equipment |
13 |
4 |
3,368 |
2,349 |
|
Deferred tax asset |
19 |
- |
706 |
- |
|
|
|
________ |
________ |
________ |
|
|
|
|
|
|
|
|
|
3,374 |
30,332 |
30,102 |
|
|
|
________ |
________ |
________ |
|
Current assets |
|
|
|
|
|
Inventories |
14 |
2,223 |
2,782 |
- |
|
Trade and other receivables |
15 |
3,069 |
1,274 |
277 |
|
Cash and cash equivalents |
16 |
1,183 |
1,732 |
962 |
|
|
|
________ |
________ |
________ |
|
|
|
|
|
|
|
|
|
6,475 |
5,788 |
1,239 |
|
|
|
________ |
________ |
________ |
|
|
|
|
|
|
|
Total Assets |
|
9,849 |
36,120 |
31,341 |
|
|
|
________ |
________ |
________ |
|
Equity and liabilities |
|
|
|
|
|
Share capital |
20 |
884 |
719 |
640 |
|
Share premium reserve |
|
39,847 |
33,432 |
27,314 |
|
Merger reserve |
|
20,240 |
20,240 |
20,240 |
|
Foreign exchange reserve |
|
(160) |
(342) |
(174) |
|
Share options reserve |
21 |
2,478 |
2,163 |
2,012 |
|
Other reserves |
|
(23,023) |
(23,023) |
(23,023) |
|
Retained earnings |
|
(36,193) |
(12,457) |
(5,586) |
|
|
|
________ |
________ |
________ |
|
|
|
|
|
|
|
Total Equity |
|
4,073 |
20,732 |
21,423 |
|
|
|
________ |
________ |
________ |
|
Liabilities |
|
|
|
|
|
Non-current liabilities |
|
|
|
|
|
Loans and borrowings |
17 |
- |
1,536 |
- |
|
Deferred tax liability |
19 |
324 |
6,122 |
6,443 |
|
|
|
________ |
________ |
________ |
|
|
|
|
|
|
|
|
|
324 |
7,658 |
6,443 |
|
|
|
________ |
________ |
________ |
|
Current liabilities |
|
|
|
|
|
Loans and borrowings |
17 |
- |
3,326 |
2,316 |
|
Trade and other payables |
18 |
5,452 |
4,404 |
1,159 |
|
|
|
________ |
________ |
________ |
|
|
|
|
|
|
|
|
|
5,452 |
7,730 |
3,475 |
|
|
|
________ |
________ |
________ |
|
|
|
|
|
|
|
Total Liabilities |
|
5,776 |
15,388 |
9,918 |
|
|
|
________ |
________ |
________ |
|
|
|
|
|
|
|
Total Equity and Liabilities |
|
9,849 |
36,120 |
31,341 |
|
|
|
________ |
________ |
________ |
These financial statements were approved and authorised for issue by the Board of Directors on 29 May 2014 and were signed on its behalf by:
Julien McInally
Director
The accompanying accounting policies and notes form an integral part of these financial statements
STRATEGIC MINERALS PLC
COMPANY STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2013
|
|
Notes |
2013 |
2012 |
2011 |
|
|
|
$'000 |
$'000 |
$'000 |
|
|
|
|
|
|
|
Assets |
|
|
|
|
|
Non-current assets |
|
|
|
|
|
Investments |
12 |
3,279 |
50,238 |
45,752 |
|
Property, plant and equipment |
13 |
4 |
7 |
- |
|
Deferred tax asset |
19 |
- |
565 |
- |
|
|
|
________ |
________ |
________ |
|
|
|
|
|
|
|
|
|
3,283 |
50,810 |
45,752 |
|
|
|
________ |
________ |
________ |
|
Current assets |
|
|
|
|
|
Trade and other receivables |
15 |
3,179 |
4,319 |
1,464 |
|
Cash and cash equivalents |
16 |
438 |
582 |
425 |
|
|
|
________ |
________ |
________ |
|
|
|
|
|
|
|
|
|
3,617 |
4,901 |
1,889 |
|
|
|
________ |
________ |
________ |
|
|
|
|
|
|
|
Total Assets |
|
6,900 |
55,711 |
47,641 |
|
|
|
________ |
________ |
________ |
|
Equity and liabilities |
|
|
|
|
|
Share capital |
20 |
884 |
719 |
640 |
|
Share premium reserve |
|
39,847 |
33,432 |
27,314 |
|
Merger reserve |
|
20,240 |
20,240 |
20,240 |
|
Foreign exchange reserve |
|
298 |
32 |
71 |
|
Share options reserve |
21 |
2,478 |
2,163 |
2,012 |
|
Retained earnings |
|
(59,674) |
(6,838) |
(3,686) |
|
|
|
________ |
________ |
________ |
|
|
|
|
|
|
|
Total Equity |
|
4,073 |
49,748 |
46,591 |
|
|
|
________ |
________ |
________ |
|
Liabilities |
|
|
|
|
|
Non-current liabilities |
|
|
|
|
|
Loans and borrowings |
17 |
- |
1,536 |
- |
|
|
|
________ |
________ |
________ |
|
Current liabilities |
|
|
|
|
|
Loans and borrowings |
17 |
- |
3,326 |
226 |
|
Trade and other payables |
18 |
2,827 |
1,101 |
824 |
|
|
|
________ |
________ |
________ |
|
|
|
|
|
|
|
|
|
2,827 |
4,427 |
1,050 |
|
|
|
________ |
________ |
________ |
|
|
|
|
|
|
|
Total Liabilities |
|
2,827 |
5,963 |
1,050 |
|
|
|
________ |
________ |
________ |
|
|
|
|
|
|
|
Total Equity and Liabilities |
|
6,900 |
55,711 |
47,641 |
|
|
|
________ |
_______ |
________ |
These financial statements were approved and authorised for issue by the Board of Directors on 29 May 2014 and were signed on its behalf by:
Julien McInally
Director
The accompanying accounting policies and notes form an integral part of these financial statements
STRATEGIC MINERALS PLC
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2013
|
|
|
Year to |
Year to |
|
|
|
31 December |
31 December |
|
|
|
2013 |
2012 |
|
|
|
$'000 |
$'000 |
|
|
|
|
|
|
Cash flows from operating activities |
|
|
|
|
|
|
|
|
|
Loss before tax |
|
(28,971) |
(7,885) |
|
Adjustments for: |
|
|
|
|
|
|
|
|
|
Depreciation of property, plant and equipment |
|
1,039 |
138 |
|
Impairment to intangible assets |
|
14,366 |
- |
|
Impairment to property, plant and equipment |
|
2,324 |
- |
|
Amortisation of intangible assets |
|
8,578 |
1,283 |
|
Exploration and evaluation expenditure |
|
- |
1,334 |
|
Loss on disposal of property, plant and equipment |
|
1 |
18 |
|
Decrease / (increase) in inventory |
|
559 |
(2,782) |
|
(Increase) in trade and other receivables |
|
(1,795) |
(1,121) |
|
Increase in trade and other payables |
|
1,047 |
4,084 |
|
Share based payment expense |
|
458 |
151 |
|
|
|
_______ |
_______ |
|
|
|
|
|
|
Net cash used in operating activities |
|
(2,394) |
(4,780) |
|
|
|
_______ |
_______ |
|
|
|
|
|
|
Investing activities |
|
|
|
|
Acquisition of intangible fixed assets |
|
- |
(179) |
|
Acquisition of property, plant and equipment |
|
(50) |
(1,175) |
|
|
|
_______ |
_______ |
|
|
|
|
|
|
Net cash used in investing activities |
|
(50) |
(1,354) |
|
|
|
_______ |
_______ |
|
|
|
|
|
|
Financing activities |
|
|
|
|
Net proceeds from issue of equity share capital |
|
6,580 |
4,869 |
|
Net (repayment) / proceeds from borrowings |
|
(4,696) |
2,017 |
|
|
|
_______ |
_______ |
|
|
|
|
|
|
Net cash from financing activities |
|
1,884 |
6,886 |
|
|
|
_______ |
_______ |
|
|
|
|
|
|
Net (decrease) / increase in cash and cash |
|
(560) |
752 |
|
equivalents |
|
|
|
|
|
|
|
|
|
Cash and cash equivalents at beginning of year |
|
1,732 |
962 |
|
Effects of exchange rate changes on the balance of cash held in foreign currencies |
|
11 |
18 |
|
|
|
_______ |
_______ |
|
|
|
|
|
|
Cash and cash equivalents at end of year |
|
1,183 |
1,732 |
|
|
|
_______ |
_______ |
The accompanying accounting policies and notes form an integral part of these financial statements
STRATEGIC MINERALS PLC
COMPANY STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2013
|
|
|
Year to |
Year to |
|
|
|
31 December |
31 December |
|
|
|
2013 |
2012 |
|
|
|
$'000 |
$'000 |
|
|
|
|
|
|
|
|
|
|
|
Cash flows from operating activities |
|
|
|
|
|
|
|
|
|
Loss before tax |
|
(52,414) |
(2,761) |
|
Adjustments for: |
|
|
|
|
Impairment to receivables from subsidiary undertakings |
|
48,477 |
911 |
|
Depreciation |
|
3 |
- |
|
(Increase) in trade and other receivables |
|
(1,469) |
(1,051) |
|
Increase in trade and other payables |
|
1,727 |
396 |
|
Share based payment expense |
|
458 |
151 |
|
|
|
_______ |
_______ |
|
|
|
|
|
|
Net cash flows from operating activities |
|
(3,218) |
(2,354) |
|
|
|
_______ |
_______ |
|
|
|
|
|
|
Investing activities |
|
|
|
|
Acquisition of tangible fixed assets |
|
- |
(7) |
|
Receipts from / (advances to) subsidiary undertakings |
|
1,181 |
(4,498) |
|
|
|
_______ |
_______ |
|
|
|
|
|
|
Net cash flows from investing activities |
|
1,181 |
(4,505) |
|
|
|
_______ |
_______ |
|
|
|
|
|
|
|
|
|
|
|
Financing activities |
|
|
|
|
Net proceeds from issue of equity share capital |
|
6,580 |
4,869 |
|
Net (repayment) / proceeds from borrowings |
|
(4,696) |
2,128 |
|
|
|
_______ |
_______ |
|
|
|
|
|
|
Net cash from financing activities |
|
1,884 |
6,997 |
|
|
|
_______ |
_______ |
|
|
|
|
|
|
Net (decrease) / increase in cash and cash equivalents |
|
(153) |
138 |
|
|
|
|
|
|
Cash and cash equivalents at beginning of year |
|
582 |
425 |
|
Effects of exchange rate changes on the balance of cash held in foreign currencies |
|
9 |
19 |
|
|
|
_______ |
_______ |
|
|
|
|
|
|
Cash and cash equivalents at end of year |
|
438 |
582 |
|
|
|
_______ |
_______ |
The accompanying accounting policies and notes form an integral part of these financial statements
STRATEGIC MINERALS PLC
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2013
|
|
Share capital |
Share premium reserve |
Merger reserve |
Share options reserve |
Other Reserves |
Foreign exchange reserve |
Retained earnings |
Total equity |
|
|
$'000 |
$'000 |
$'000 |
$'000 |
$'000 |
$'000 |
$'000 |
$'000 |
|
|
|
|
|
|
|
|
|
|
|
Balance as at 31 December 2011 |
640 |
27,314 |
20,240 |
2,012 |
(23,023) |
(174) |
(5,586) |
21,423 |
|
|
|
|
|
|
|
|
|
|
|
Loss for the year |
- |
- |
- |
- |
- |
- |
(6,871) |
(6,871) |
|
Foreign exchange translation |
- |
- |
- |
- |
- |
(168) |
- |
(168) |
|
|
|
|
|
|
|
_______ |
_______ |
_______ |
|
Total comprehensive income for the year |
|
|
|
|
|
(168) |
(6,871) |
(7,039) |
|
|
|
|
|
|
|
|
|
|
|
Shares issued in the year |
79 |
6,473 |
- |
- |
- |
- |
- |
6,552 |
|
Expenses of share issue |
- |
(355) |
- |
- |
- |
- |
- |
(355) |
|
Share based payments charge |
- |
- |
- |
151 |
- |
- |
- |
151 |
|
|
_______ |
_______ |
_______ |
_______ |
_______ |
_______ |
_______ |
_______ |
|
Balance at 31 December 2012
|
719 |
33,432 |
20,240 |
2,163 |
(23,023) |
(342) |
(12,457) |
20,732 |
|
|
_______ |
_______ |
_______ |
_______ |
_______ |
_______ |
_______ |
_______ |
|
|
|
|
|
|
|
|
|
|
|
Loss for the year |
- |
- |
- |
- |
- |
- |
(23,879) |
(23,879) |
|
Foreign exchange translation |
- |
- |
- |
- |
- |
182 |
- |
182 |
|
|
|
|
|
|
|
_______ |
_______ |
_______ |
|
Total comprehensive income for the year |
|
|
|
|
|
182 |
(23,879) |
(23,697) |
|
|
|
|
|
|
|
|
|
|
|
Shares issued in the year |
160 |
7,073 |
- |
- |
- |
- |
- |
7,233 |
|
Expenses of share issue |
- |
(658) |
- |
- |
- |
- |
- |
(658) |
|
Exercise of options |
5 |
- |
- |
(143) |
- |
- |
143 |
5 |
|
Share based payments charge |
- |
- |
- |
458 |
- |
- |
- |
458 |
|
|
_______ |
_______ |
_______ |
_______ |
_______ |
_______ |
_______ |
_______ |
|
Balance at 31 December 2013 |
884 |
39,847 |
20,240 |
2,478 |
(23,023) |
(160) |
(36,193) |
4,073 |
|
|
_______ |
_______ |
_______ |
_______ |
_______ |
_______ |
_______ |
_______ |
All comprehensive income is attributable to the owners of the parent Company.
The accompanying accounting policies and notes form an integral part of these financial statements
STRATEGIC MINERALS PLC
COMPANY STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2013
|
|
|
Share |
|
Share |
|
|
|
|
|
Share |
premium |
Merger |
Options |
Foreign |
Retained |
Total |
|
|
capital |
reserve |
reserve |
Reserve |
exchange reserve |
earnings |
equity |
|
|
$'000 |
$'000 |
$'000 |
$'000 |
$'000 |
$'000 |
$'000 |
|
|
|
|
|
|
|
|
|
|
Balance at |
|
|
|
|
|
|
|
|
31 December 2011 |
640 |
27,314 |
20,240 |
2,012 |
71 |
(3,686) |
46,591 |
|
Loss for the year |
- |
- |
- |
- |
- |
(3,152) |
(3,152) |
|
Foreign exchange translation |
- |
- |
- |
- |
(39) |
- |
(39) |
|
|
|
|
|
|
_______ |
_______ |
_______ |
|
Total comprehensive income for the year |
|
|
|
|
(39) |
(3,152) |
(3,191) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares issued in the year |
79 |
6,473 |
- |
- |
|
- |
6,552 |
|
Expenses of share issue |
- |
(355) |
- |
- |
- |
- |
(355) |
|
Share based payments charge |
- |
- |
- |
151 |
- |
- |
151 |
|
|
_______ |
_______ |
_______ |
_______ |
_______ |
_______ |
_______ |
|
Balance at 31 December 2012 |
719 |
33,432 |
20,240 |
2,163 |
32 |
(6,838) |
49,748 |
|
|
_______ |
_______ |
_______ |
_______ |
_______ |
_______ |
_______ |
|
|
|
|
|
|
|
|
|
|
Loss for the year |
- |
- |
- |
- |
- |
(52,979) |
(52,979) |
|
Foreign exchange translation |
- |
- |
- |
- |
266 |
- |
266 |
|
|
|
|
|
|
_______ |
_______ |
_______ |
|
|
|
|
|
|
|
|
|
|
Total comprehensive income |
|
|
|
|
266 |
(52,979) |
(52,713) |
|
for the year |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares issued in the year |
160 |
7,073 |
- |
- |
|
- |
7,233 |
|
Expenses of share issue |
- |
(658) |
- |
- |
- |
- |
(658) |
|
Exercise of share options |
5 |
- |
- |
(143) |
- |
143 |
5 |
|
Share based payments charge |
- |
- |
- |
458 |
- |
- |
458 |
|
|
_______ |
_______ |
_______ |
_______ |
_______ |
_______ |
_______ |
|
|
|
|
|
|
|
|
|
|
Balance at 31 December 2013 |
884 |
39,847 |
20,240 |
2,478 |
298 |
(59,674) |
4,073 |
|
|
_______ |
_______ |
_______ |
_______ |
_______ |
_______ |
_______ |
All comprehensive income is attributable to the owners of the parent Company.
The accompanying accounting policies and notes form an integral part of these financial statements.
STRATEGIC MINERALS PLC
CONSOLIDATED AND COMPANY STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2013
Share capital is the amount subscribed for shares at nominal value.
Share premium reserve represents the excess of the amount subscribed for share capital over the nominal value of these shares net of share issue expenses.
Merger reserve arises from the 100% acquisition of Ebony Iron Pty Limited on 2 September 2011 whereby the excess of the fair value of the issued ordinary share capital issued over the nominal value of these shares is transferred to this reserve, in accordance with section 612 of the Companies Act 2006.
Share option reserve relates to increases in equity for services received in equity-settled share based payment transactions and on the grant of share options.
Other reserves consist of an adjustment arising from the Group reorganisation in 2011 being the formation of a new holding Company for Iron Glen Holdings Limited by way of a share for share issue, and is the difference between consideration given and net assets of the Company at the date of acquisition.
Foreign exchange reserve occurs on consolidation of the translation of the subsidiaries balance sheets at the closing rate of exchange and their income statements at the average rate.
Retained earnings represent the cumulative loss of the Group attributable to equity shareholders.
STRATEGIC MINERALS PLC
NOTES FORMING PART OF THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2013
1. Significant accounting policies
Basis of preparation
In preparing these financial statements the presentational currency has been changed to US dollars, whereas in prior years the presentational currency was Pounds Sterling. As the entire group's revenues and majority of its costs, assets and liabilities are denominated in US dollars it is considered appropriate to report in this currency.
The principal accounting policies adopted in the preparation of the financial statements are set out below. The policies have been consistently applied to all the years presented, unless otherwise stated.
These financial statements have been prepared in accordance with International Financial Reporting Standards, International Accounting Standards and Interpretations (collectively IFRSs) issued by the International Accounting Standards Board (IASB) as adopted by the European Union ("adopted IFRSs").
The preparation of financial statements in compliance with adopted IFRS requires the use of certain critical accounting estimates. It also requires Group management to exercise judgment in applying the Group's accounting policies. The areas where significant judgments and estimates have been made in preparing the financial statements and their effect are disclosed in note 2.
Going concern basis
These financial statements have been prepared on the assumption that the Group is a going concern.
When assessing the foreseeable future, the Directors have looked at the Group's working capital requirements for the period to 30 June 2015 being the period for which projections have been prepared and the minimum period the Directors are required to consider. At 31 December 2013 the Group had cash balances of $1,183,000 of which $500,000 were restricted cash, net current assets of $1,023,000 and no borrowings. On 10 April 2014 the Company announced it had raised approximately $1,650,000 before expenses (approximately £1,000,000 at exchange of 1.65) through the subscription of 125,000,000 new ordinary shares. In addition 45,000,000 shares were issued to settle an obligation owed by the Company and included within Trade Payables at 31 December 2013. As at 30 April 2014 the Group had cash and cash equivalents of $1,435,000.
After making enquiries, the Directors believe that the Company has adequate resources to continue in operational existence for the foreseeable future. Accordingly, they continue to adopt the going concern basis in preparing the financial statements.
New and amended standards adopted by the Company
The Group has adopted the following standards, amendments to standards and interpretations which are effective for the first time this year. The impact is shown below:
|
New/revised International Financial Reporting Standards |
Effective Date |
EU adopted
|
Impact on Group |
|
|
IFRS 7 |
Financial Instruments: Disclosures - Offsetting Financial Assets and Financial Liabilities |
1 January 2013 |
Yes |
No impact |
|
IFRS 13
|
Fair Value Measurement
|
1 January 2013 |
Yes |
Minor changes to disclosures |
|
|
Annual Improvements to IFRSs (2009-2011 Cycle) |
1 January 2013 |
Yes |
This Amendment clarifies the requirements of IFRSs and eliminate inconsistencies within and between Standards |
Standards, interpretations and amendments to published standards that are effective
At the date of authorisation of these consolidated financial statements, the IASB and IFRS Interpretations Committee have issued standards, interpretations and amendments which are applicable to the Group. Whilst these standards and interpretations are not effective for, and have not been applied in the preparation of, these consolidated financial statements, the following may have an impact going forward (standards not expected to have any impact on the Group are not included):
|
New/Revised International Financial Reporting Standards |
Effective Date: Annual |
EU |
Impact on |
|
|
IAS 32
|
Financial Instruments: Presentation - Offsetting Financial Assets and Financial Liabilities |
1 January 2014 |
Yes |
Disclosure only |
|
IAS 36
|
Impairment of Assets - Recoverable amount disclosures for non-financial assets |
1 January 2014 |
Yes |
Disclosure only |
|
IFRS 9
|
Financial Instruments: Classification and Measurement |
Currently no effective date |
No |
Classification and measurement of financial instruments |
|
IFRS 10 |
Consolidated Financial Statements |
1 January 2014 |
Yes |
Presentation and preparation of consolidated financial statements |
|
IFRS 12 |
Disclosure of Interests in Other Entities |
1 January 2014 |
Yes |
Disclosure only |
|
|
Annual Improvements to IFRSs (2010-2012 Cycle) & Annual Improvements to IFRSs (2011-2013 Cycle) |
1 January 2014 |
No |
These Amendments clarify the requirements of IFRSs and eliminate inconsistencies within and between Standards |
Basis of consolidation
Where the Company has the power, either directly or indirectly, to govern the financial and operating policies of another entity or business so as to obtain benefits from its activities, it is classified as a subsidiary. The consolidated financial statements present the results of the Company and its subsidiaries ("the Group") as if they formed a single entity. Intercompany transactions and balances between Group companies are therefore eliminated in full.
The consolidated financial statements incorporate the results of business combinations using the purchase method. In the statement of financial position, the acquiree's identifiable assets, liabilities and contingent liabilities are initially recognised at their fair values at the acquisition date. The results of acquired operations are included in the consolidated statement of comprehensive income from the date on which control is obtained. They are deconsolidated from the date control ceases.
Impairment of non-financial assets (excluding inventories)
Impairment tests of intangible assets with indefinite useful economic lives are undertaken annually at the financial year end. Other non-financial assets are subject to impairment tests whenever events or changes in circumstances indicate that their carrying amount may not be recoverable. Where the carrying value of an asset exceeds its recoverable amount (i.e. the higher of value in use and fair value less costs to sell), the asset is written down accordingly.
Where it is not possible to estimate the recoverable amount of an individual asset, the impairment test is carried out on the smallest Group of assets to which it belongs for which there are separately identifiable cash flows: its cash generating units ('CGUs').
Impairment charges are included in the statement of comprehensive income, except to the extent they reverse gains previously recognised in other comprehensive income.
Externally acquired intangible assets
Externally acquired intangible assets are initially recognised at cost and subsequently amortised over their useful economic lives.
Intangible assets are recognised on business combinations if they are separable from the acquired entity or give rise to other contractual or legal rights. The amounts ascribed to such intangibles are arrived at by using appropriate valuation techniques (see section related to critical estimates and judgements below).
The significant intangibles recognised by the Group, their useful economic lives and the methods used to determine the cost of intangibles acquired in a business combination are as follows:
Exploration and evaluation assets
The Group has continued to apply the 'successful efforts' method of accounting for Exploration and Evaluation ("E&E") costs, having regard to the requirements of IFRS 6 'Exploration for the Evaluation of Mineral Resources'.
The successful efforts method means that only the costs which relate directly to the discovery and development of specific mineral reserves are capitalised. Such costs may include costs of license acquisition, technical services and studies; exploration drilling and testing but do not include costs incurred prior to having obtained the legal rights to explore the area. Under successful efforts accounting, exploration expenditure which is general in nature is charged directly to the statement of comprehensive income and that which relates to unsuccessful exploration operations, though initially capitalised pending determination, is subsequently written off. Only costs which relate directly to the discovery and development of specific commercial mineral reserves will remain capitalised and to be depreciated over the lives of these reserves. Exploration and evaluation costs are capitalised within intangible assets. Costs incurred prior to obtaining legal rights to explore are expensed immediately to the statement of comprehensive income.
All lease and licence acquisition costs, geological and geophysical costs and other direct costs of exploration, evaluation and development are capitalised as intangible or property, plant and equipment according to their nature. Intangible assets comprise costs relating to the exploration and evaluation of properties which the Directors consider to be unevaluated until reserves are appraised as commercial, at which time they are transferred to tangible assets as 'Developed mineral assets' following an impairment review and depreciated accordingly. Where properties are appraised to have no commercial value, the associated costs are treated as an impairment loss in the period in which the determination is made.
Costs are amortised on a Tenement by Tenement unit of production method based on commercial proven and probable reserves.
Contractual relationship
The contractual relationship recognised as a result of the acquisition of Ebony Iron Pty Limited has been valued using estimated discounted cash flow and is being amortised over the term of the contract at a rate to match the sale of magnetite.
Property, plant and equipment
Items of property, plant and equipment are initially recognised at cost. As well as the purchase price, cost includes directly attributable costs.
Depreciation is provided on all items of property, plant and equipment so as to write off their carrying value over their expected useful economic lives. It is provided at the following rates:
Office equipment - 3 years straight line
Leasehold improvements - 10 years straight line
Rail infrastructure - on a per ton basis for inventory transported by rail in the year
The carrying value of tangible fixed assets is assessed annually and any impairment is charged to the statement of comprehensive income.
Investments
Investments are stated at cost less provision for any impairment in value.
Trade receivables
Trade receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less provision for impairment. A provision for impairment is established when there is objective evidence that the Group will not be able to collect all amounts due according to the original terms of the receivables. Significant financial difficulties of the debtor, probability that the debtor will enter bankruptcy or financial reorganisation, and default or delinquency in payments are considered indicators that the trade receivable is impaired.
Cash and cash equivalents
Cash and cash equivalents include cash in hand, deposits held on call with banks, other short-term highly liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities on the statement of financial position.
Revenue
Revenue from the sale of magnetite is recognised when the Group has transferred the significant risks and rewards of ownership to the buyer and it is probable that the Group will receive the previously agreed upon payment. These criteria are considered to be met when the goods are delivered to the buyer, being the point of shipment for export sales and the point of leaving the mine gate for domestic sales to the US market.
Inventories
Inventories are initially recognised at cost, and subsequently at the lower of cost and net realisable value. Cost comprises all costs of purchase, costs of conversion and other costs incurred in bringing the inventories to their present location and condition.
Taxation
Income tax
Income tax expense represents the sum of the tax currently payable and deferred tax.
The tax currently payable is based on taxable profit for the year. Taxable profit differs from profit as reported in the same income statement because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The Company's liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the statement of financial position date.
Deferred tax
Deferred tax assets and liabilities are recognised where the carrying amount of an asset or liability in the consolidated statement of financial position differs from its tax base, except for differences arising on:
· the initial recognition of an asset or liability in a transaction which is not a business combination and at the time of the transaction affects neither accounting or taxable profit; and
· investments in subsidiaries and jointly controlled entities where the Group is able to control the timing of the reversal of the difference and it is probable that the difference will not reverse in the foreseeable future.
Recognition of deferred tax assets is restricted to those instances where it is probable that taxable profit will be available against which the difference can be utilised.
The amount of the asset or liability is determined using tax rates that have been enacted or substantively enacted by the reporting date and are expected to apply when the deferred tax liabilities/(assets) are settled/(recovered).
Deferred tax assets and liabilities are offset when the Group has a legally enforceable right to offset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority on either:
· the same taxable Group Company; or
· different Group entities which intend either to settle current tax assets and liabilities on a net basis, or to realise the assets and settle the liabilities simultaneously, in each future period in which significant amounts of deferred tax assets or liabilities are expected to be settled or recovered.
Fair values
The carrying amounts of the financial assets and liabilities such as cash and cash equivalents, receivables and payables of the Group at the statement of financial position date approximated their fair values, due to the relatively short term nature of these financial instruments.
Share-based compensation
The fair value of the employee and suppliers services received in exchange for the grant of options and warrants is recognised as an expense. The total amount to be expensed over the vesting year is determined by reference to the fair value of the options and warrants granted, excluding the impact of any non-market vesting conditions (for example, profitability and sales growth targets). Non-market vesting conditions are included in assumptions about the number of options and warrants that are expected to vest. At each statement of financial position date, the entity revises its estimates of the number of options and warrants that are expected to vest. It recognises the impact of the revision to original estimates, if any, in the statement of comprehensive income, with a corresponding adjustment to equity.
The proceeds received net of any directly attributable transaction costs are credited to share capital (nominal value) and share premium when the options and warrants are exercised.
The fair value of share-based payments recognised in the statement of comprehensive income is measured by use of the Black Scholes model, which takes into account conditions attached to the vesting and exercise of the equity instruments. The expected life used in the model is adjusted; based on management's best estimate, for the effects of non-transferability, and exercise restrictions. The share price volatility percentage factor used in the calculation is based on management's best estimate of future share price behaviour and is selected based on past experience.
Equity instruments
Ordinary shares are classified as equity.
Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from proceeds.
Provisions
Provisions are recognised when the Group has a present obligation as a result of a past event, and it is probable that the Group will be required to settle that obligation. Provisions are measured at the Directors' best estimate of the expenditure required to settle the obligation at the statement of financial position date, and are discounted to present value where the effect is material.
Financial instruments
Non-derivative financial instruments comprise investments in equity, trade and other receivables, cash and cash equivalents, loans and borrowings, and trade and other payables.
Non-derivative financial instruments are recognised initially at fair value plus, for instruments not at fair value through profit or loss, any directly attributable transactions costs.
A financial instrument is recognised when the Group becomes a party to the contractual provisions of the instrument. Financial assets are derecognised if the Group's contractual rights to the cash flows from the financial assets expire or if the Group transfers the financial assets to another party without retaining control or substantially all risks and rewards of the asset. Regular purchases and sales of financial assets are accounted for at trade date, i.e. the date that the Group commits itself to purchase or sell the asset. Financial liabilities are derecognised if the Group's obligations specified in the contract expire or are discharged or cancelled.
Financial assets
The Group classifies its financial assets into one of the categories discussed below, depending on the purpose for which the asset was acquired. The Group has not classified any of its financial assets as held to maturity.
Fair value through profit or loss
This category comprises only in-the-money derivatives. They are carried in the statement of financial position at fair value with changes in fair value recognised in the consolidated statement of comprehensive income in the finance income or expense line.
Loans and receivables
These assets are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They arise principally through the provision of goods and services to customers (e.g. trade receivables), but also incorporate other types of contractual monetary asset. They are initially recognised at fair value plus transaction costs that are directly attributable to tier acquisition or issue, and are subsequently carried at amortised cost using the effective interest rate method, less provision for impairment.
Available-for-sale
Non-derivative financial asset not included in the above categories are classified as available-for-sale and are carried at fair value.
Financial liabilities
The Group classifies its financial liabilities into one of two categories; depending on the purpose for which the liability was acquired.
Fair value through profit or loss
This category comprises only out-of-the-money derivatives. They are carried in the consolidated statement of financial position at fair value with changes in fair value recognised in the consolidated statement of comprehensive income.
Other financial liabilities
Other financial liabilities include bank borrowings, liability components of convertible loan notes and trade payables and other short-term monetary liabilities which are initially recognised at fair value and subsequently carried at amortised cost using the effective interest method.
Foreign currencies
Transactions entered into by Group entities in a currency other than the currency of the primary economic environment in which they operate (their "functional currency") are recorded at the rates ruling when the transactions occur. Foreign currency monetary assets and liabilities are translated at the rates ruling at the reporting date. Exchange differences arising on the retranslation of unsettled monetary assets and liabilities are recognised immediately in profit or loss, except for foreign currency borrowings qualifying as a hedge of a net investment in a foreign operation, in which case exchange differences are recognised in other comprehensive income and accumulated in the foreign exchange reserve along with the exchange differences arising on the retranslation of the foreign operation.
Exchange gains and losses arising on the retranslation of monetary available for sale financial assets are treated as a separate component of the change in fair value and recognised in profit or loss. Exchange gains and losses on non-monetary available for sale financial assets form part of the overall gain or loss recognised in respect of that financial instrument.
On consolidation, the results of overseas operations are translated into US Dollars at rates approximating to those ruling when the transactions took place. All assets and liabilities of overseas operations, including goodwill arising on the acquisition of those operations, are translated at the rate ruling at the reporting date. Exchange differences arising on translating the opening net assets at opening rate and the results of overseas operations at actual rate are recognised in other comprehensive income and accumulated in the foreign exchange reserve.
On disposal of a foreign operation, the cumulative exchange differences recognised in the foreign exchange reserve relating to that operation up to the date of disposal are transferred to the consolidated statement of comprehensive income as part of the gain or loss on disposal.
Management of capital
The Group's policy is to ensure that it will always have sufficient cash to allow it to meet its liabilities when they become due. The principal liabilities of the Group arise in respect of the costs of financing working capital as inventory is built up prior to sale.
The Board receives periodic cash flow projections as well as information on cash balances. The Board will not commit to material expenditure prior to being satisfied that sufficient funding is available to the Group to finance the planned programmes.
2. Critical accounting estimates and judgements
The Group makes certain estimates and assumptions regarding the future. Estimates and judgements are continually evaluated based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. In the future, actual experience may differ from these estimates and assumptions. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below.
Judgements
(a) Revenue recognition
The eventual price invoiced for export sales is determined based on a formula linked to the Platts IODEX 62% Fe CFR China in months following the month of sale and quality analysis post loading. For 2013 the amount recorded as revenue is the final agreed invoice value so no judgement has been applied in recording revenue for the year.
Estimates and assumptions
(b) Carrying value of intangible assets
In assessing the continuing carrying value of the exploration and evaluation costs carried the Company has made an estimation of the value of the underlying tenements and exploration licenses held for which further details are given in Note 11.
In assessing the continuing carrying value of the other intangible asset, being the contractual relationship acquired on the acquisition of Ebony Iron Pty Limited, the key estimate and assumption made in the valuation model adopted has been the expected level of product which the Company will be able to sell.
(c) Share based payments
The fair value of share based payments recognised in the statement of comprehensive income is measured by use of the Black Scholes model, which takes into account conditions attached to the vesting and exercise of the equity instruments. The expected life used in the model is adjusted based on management's best estimate, for the effects of non-transferability, exercise restrictions and behavioural considerations. The share price volatility percentage factor used in the calculation is based on management's best estimate of future share price behaviour based on past experience.
|
|
|
|
|
|
|
|
3 |
Financial instruments - Risk management |
|
|||
The Group is exposed the following financial risks:
· Credit risk
· Foreign exchange risk
· Other market price risk
· Liquidity risk
In common with all other businesses, the Group is exposed to risks that arise from its use of financial instruments. This note describes the Group's objectives, policies and processes for managing those risks and the methods used to measure them. Further quantitative information in respect of these risks is presented throughout these financial statements.
There have been no substantive changes in the Group's exposure to financial instrument risks, its objectives, policies and processes for managing those risks or the methods used to measure them from last year unless otherwise stated in this note.
Principal financial instruments
The principal financial instruments used by the Group, from which financial instrument risk arises, are:
· Trade and other receivables
· Cash and cash equivalents
· Trade and other payables
A summary of the financial instruments held by category is provided below:
Financial assets
|
|
|
|
|
Loans and receivables |
|||
|
|
|
|
|
|
|
2013 |
2012 |
|
|
Group |
|
|
|
|
$'000 |
$'000 |
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
|
|
|
1,183 |
1,732 |
|
|
Trade and other receivables |
|
|
|
|
2,829 |
1,059 |
|
|
|
|
|
|
|
_______ |
_______ |
|
|
|
|
|
|
|
|
|
|
|
Total financial assets |
|
|
|
|
4,012 |
2,791 |
|
|
|
|
|
|
|
_______ |
_______ |
|
|
Financial liabilities |
|
|
|
|
||
|
|
|
|
Financial liabilities at amortised cost |
|
|||
|
|
|
|
|
2013 |
2012 |
||
|
|
Group |
|
|
$'000 |
$'000 |
||
|
|
|
|
|
|
|
||
|
|
Trade and other payables |
|
|
5,168 |
4,373 |
||
|
|
Loans and borrowings |
|
|
- |
4,862 |
||
|
|
|
|
|
_______ |
_______ |
||
|
|
|
|
|
|
|
||
|
|
Total financial liabilities |
|
|
5,168 |
9,235 |
||
|
|
|
|
|
_______ |
_______ |
||
|
3 |
Financial instruments - Risk management (continued) |
|
|
Financial assets |
|
|
Loans and receivables |
|||
|
|
|
|
|
|
|
2013 |
2012 |
|
|
Company |
|
|
|
|
$'000 |
$'000 |
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
|
|
|
438 |
582 |
|
|
Trade and other receivables |
|
|
|
|
2,319 |
905 |
|
|
Amounts owed by subsidiary undertakings |
|
|
|
|
633 |
3,242 |
|
|
|
|
|
|
|
_______ |
_______ |
|
|
|
|
|
|
|
|
|
|
|
Total financial assets |
|
|
|
|
3,390 |
4,729 |
|
|
|
|
|
|
|
_______ |
_______ |
|
|
Financial liabilities |
|
|
|
|
||
|
|
|
|
Financial liabilities at amortised cost |
|
|||
|
|
|
|
|
2013 |
2012 |
||
|
|
Company |
|
|
$'000 |
$'000 |
||
|
|
|
|
|
|
|
||
|
|
Trade and other payables |
|
|
2,550 |
1,078 |
||
|
|
Loans and borrowings |
|
|
- |
4,862 |
||
|
|
|
|
|
_______ |
_______ |
||
|
|
|
|
|
|
|
||
|
|
Total financial liabilities |
|
|
2,550 |
5,940 |
||
|
|
|
|
|
_______ |
_______ |
||
General objectives, policies and processes
The Board has overall responsibility for the determination of the Group's risk management objectives and policies and, whilst retaining ultimate responsibility for them, it has delegated the authority for designing and operating processes that ensure the effective implementation of the objectives and policies to the Group's finance function. The overall objective of the Board is to set policies that seek to reduce risk as far as possible without unduly affecting the Group's competitiveness and flexibility. Further details regarding these policies are set out below:
Credit risk
Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual obligations. The Group is mainly exposed to credit risk from credit sales. It is Group policy, implemented locally, to assess the credit risk of new customers before entering contracts. Such credit assessments are taken into account by local business practices.
Credit risk also arises from cash and cash equivalents and deposits with banks and financial institutions. For banks and financial institutions, only independently rated parties with minimum rating "A" are accepted.
Further disclosures regarding trade and other receivables, which are neither past due nor impaired other than shown, are provided in Note 15. Of the total of Trade receivables at 31 December 2013, 81% was due from one customer (2012 - 76%).
Fair value and cash flow interest rate risk
All of the Group's and Company's borrowings were at fixed rate. At 31 December 2013 the Group had no external borrowings.
Foreign exchange risk
Foreign exchange risk arises when individual Group entities enter into transactions denominated in a currency other than their functional currency. The Group's policy is, where possible, to allow Group entities to settle liabilities denominated in their own functional currency (being Pound Sterling, US dollar and Australian dollar) with the cash generated from their own operations where possible in that currency. Where Group entities have liabilities denominated in a currency other than their functional currency (and have insufficient reserves of that currency to settle them), cash already denominated in that currency will, where possible, be transferred from elsewhere within the Group.
The parent Company maintains US dollar and Pounds sterling bank accounts. Sales to the export market are invoiced by the parent Company in US dollars, and in 2011 and 2012 the parent Company entered into loans denominated in both US dollar and Australian dollars.
All receivables and payables are settled at the prevailing spot rate; no forward contracts or other hedging instruments are currently entered into. The Board monitors the total foreign exchange risk on a periodic basis but given the major in and out flows of cash are in US dollars there is a natural hedge in place which minimises the overall exposure.
As of 31 December the net exposure to foreign exchange risk was as follows:
|
|
|
Functional currency of individual entity |
|||||
|
|
|
Sterling |
Australian dollar |
Total |
|||
|
|
|
2013 |
2012 |
2013 |
2012 |
2013 |
2012 |
|
|
|
$'000 |
$'000 |
$'000 |
$'000 |
$'000 |
$'000 |
|
|
Group |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net foreign currency financial |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
assets/(liabilities) |
|
|
|
|
|
|
|
|
Australian dollar |
- |
(412) |
- |
- |
- |
(412) |
|
|
US Dollar |
2,420 |
827 |
500 |
500 |
2,920 |
1,327 |
|
|
|
_______ |
_______ |
_______ |
_______ |
_______ |
_______ |
|
|
|
|
|
|
|
|
|
|
|
Total net exposure |
2,420 |
415 |
500 |
500 |
2,920 |
915 |
|
|
|
_______ |
_______ |
_______ |
_______ |
_______ |
_______ |
|
|
|
Functional currency of individual entity |
|||||
|
|
|
Sterling |
|
Total |
|||
|
|
|
2013 |
2012 |
|
|
2013 |
2012 |
|
|
|
$'000 |
$'000 |
|
|
$'000 |
$'000 |
|
|
Company |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net foreign currency financial |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
assets/(liabilities) |
|
|
|
|
|
|
|
|
Australian dollar |
- |
(412) |
|
|
- |
(412) |
|
|
US Dollar |
2,420 |
827 |
|
|
2,420 |
827 |
|
|
|
_______ |
_______ |
|
|
_______ |
_______ |
|
|
|
|
|
|
|
|
|
|
|
Total net exposure |
2,420 |
415 |
|
|
2,420 |
415 |
|
|
|
_______ |
_______ |
|
|
_______ |
_______ |
Other market price risk
The Group's sale of magnetite to the export market, as opposed to US domestic customers, is priced by reference to the market quoted Platts IODEX 62% Fe CFR China price over which the Group has no influence. Market prices in 2013 were particularly volatile.
The market price achieved for sales in the year ranged from a low of $111 to a high of $134. A 5% movement in the market price achieved for all export sales in the year would have adjusted revenue and gross profit by $2,600,000.
Liquidity risk
Liquidity risk arises from the Group's management of working capital and the finance charges and principal repayments on its debt instruments. It is the risk that the Group will encounter difficulty in meeting its financial obligations as they fall due.
The Group's policy is to ensure that it will always have sufficient cash to allow it to meet its liabilities when they become due. To achieve this aim, it seeks to maintain cash balances to meet expected requirements for a period of at least 30 days. The Group also seeks to reduce liquidity risk by fixing interest rates (and hence cash flows) on its long-term borrowings.
The Board receives periodic cash flow projections as well as information regarding cash balances. The Group does not have any overdraft or other credit lines in place. The liquidity risk of each Group entity is managed centrally by the finance function. In the year to 31 December 2013 the Group settled in full the loans and borrowings outstanding at 31 December 2012.
The following table sets out the contractual maturities (representing undiscounted contractual cash-flows) of financial liabilities:
|
|
|
|
Between |
Between |
Between |
|
|
|
Group |
Up to 3 |
3 and 12 |
1 and 2 |
2 and 5 |
Over |
|
|
|
months |
months |
year |
years |
5 years |
|
|
At 31 December 2013 |
$'000 |
$'000 |
$'000 |
$'000 |
$'000 |
|
|
|
|
|
|
|
|
|
|
Trade and other payables |
3,609 |
1,559 |
- |
- |
- |
|
|
Loans and borrowings |
- |
- |
- |
- |
- |
|
|
|
_______ |
_______ |
_______ |
_______ |
_______ |
|
|
|
|
|
|
|
|
|
|
Total |
3,609 |
1,559 |
- |
- |
- |
|
|
|
_______ |
_______ |
_______ |
_______ |
_______ |
|
|
|
|
|
|
|
|
|
|
|
|
Between |
Between |
Between |
|
|
|
Group |
Up to 3 |
3 and 12 |
1 and 2 |
2 and 5 |
Over |
|
|
|
months |
months |
year |
years |
5 years |
|
|
At 31 December 2012 |
$'000 |
$'000 |
$'000 |
$'000 |
$'000 |
|
|
|
|
|
|
|
|
|
|
Trade and other payables |
3,907 |
466 |
- |
- |
- |
|
|
Loans and borrowings |
3,195 |
153 |
1,690 |
- |
- |
|
|
|
_______ |
_______ |
_______ |
_______ |
_______ |
|
|
|
|
|
|
|
|
|
|
Total |
7,102 |
619 |
1,690 |
- |
- |
|
|
|
_______ |
_______ |
_______ |
_______ |
_______ |
|
|
|
|
Between |
Between |
Between |
|
|
|
Company |
Up to 3 |
3 and 12 |
1 and 2 |
2 and 5 |
Over |
|
|
|
months |
months |
year |
years |
5 years |
|
|
At 31 December 2013 |
$'000 |
$'000 |
$'000 |
$'000 |
$'000 |
|
|
|
|
|
|
|
|
|
|
Trade and other payables |
991 |
1,559 |
- |
- |
- |
|
|
Loans and borrowings |
- |
- |
- |
- |
- |
|
|
|
_______ |
_______ |
_______ |
_______ |
_______ |
|
|
|
|
|
|
|
|
|
|
Total |
991 |
1,559 |
- |
- |
- |
|
|
|
_______ |
_______ |
_______ |
_______ |
_______ |
|
|
|
|
|
|
|
|
|
|
|
|
Between |
Between |
Between |
|
|
|
Company |
Up to 3 |
3 and 12 |
1 and 2 |
2 and 5 |
Over |
|
|
|
months |
months |
year |
years |
5 years |
|
|
At 31 December 2012 |
$'000 |
$'000 |
$'000 |
$'000 |
$'000 |
|
|
|
|
|
|
|
|
|
|
Trade and other payables |
1,078 |
- |
- |
- |
- |
|
|
Loans and borrowings |
3,195 |
153 |
1,690 |
- |
- |
|
|
|
_______ |
_______ |
_______ |
_______ |
_______ |
|
|
|
|
|
|
|
|
|
|
Total |
4,273 |
153 |
1,690 |
- |
- |
|
|
|
_______ |
_______ |
_______ |
_______ |
_______ |
Capital Disclosures
The Group monitors "adjusted capital" which comprises all components of equity (i.e. share capital, share premium, merger reserve, and retained earnings).
The Group's objectives when maintaining capital are:
· to safeguard the entity's ability to continue as a going concern, so that it can continue to provide returns for shareholders and benefits for other stakeholders, and
· to provide an adequate return to shareholders by pricing products with the level of risk.
The Group sets the amount of capital it requires in proportion to risk. The Group manages its capital structure and makes adjustments to it in the light of changes in economic conditions and the risk characteristics of the underlying assets.
|
4 |
Segment information |
The Group has three main segments:
· Southern Minerals Group LLC (SMG) - This segment is involved in the sale of magnetite to both the US domestic market and transport of magnetite to port for onward export sale.
· Head Office - This segment incurs all the administrative costs of central operations and finances the Group's operations. A management fee is charged for certain of these expenses.
· Australia - This segment holds the tenements in Australia and incurs all related operating costs.
Factors that management used to identify the Group's reportable segments
The Group's reportable segments are strategic business units that carry out different functions and operations and operate in different jurisdictions.
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker. The chief operating decision maker has been identified as the management team including the Executive Chairman, Chief Executive Officer, and the Finance Director.
Measurement of operating segment profit or loss, assets and liabilities
The Group evaluates segmental performance on the basis of profit or loss from operations calculated in accordance with EU Adopted IFRS but excluding non-cash losses, such as the amortisation of intangible assets, and the effects of share-based payments.
Segment assets exclude tax assets and assets used primarily for corporate purposes. Segment liabilities exclude tax liabilities. Loans and borrowings are allocated to the segments in which the borrowings are held. Details are provided in the reconciliation from segment assets and liabilities to the Group's statement of financial position.
|
|
|
|
|
Head |
|
|
|
|
|
|
SMG |
Office |
Australia |
Total |
|
|
|
|
2013 |
2013 |
2013 |
2013 |
|
|
|
|
$'000 |
$'000 |
$'000 |
$'000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues |
|
37,242 |
- |
- |
37,242 |
|
|
|
|
|
|
|
|
|
|
Cost of sales |
|
(35,237) |
- |
- |
(35,237) |
|
|
|
|
_______ |
_______ |
_______ |
_______ |
|
|
|
|
|
|
|
|
|
|
Gross profit |
|
2,005 |
- |
- |
2,005 |
|
|
|
|
|
|
|
|
|
|
Administrative expenses |
|
(874) |
(2,416) |
(251) |
(3,541) |
|
|
|
|
_______ |
_______ |
_______ |
_______ |
|
|
Segment profit / (loss) from operations |
|
1,131 |
(2,416) |
(251) |
(1,536) |
|
|
|
|
|
|
|
|
|
|
Finance expense |
|
- |
(673) |
- |
(673) |
|
|
|
|
_______ |
_______ |
_______ |
_______ |
|
|
|
|
|
|
|
|
|
|
Segment profit / (loss) before taxation |
|
1,131 |
(3,089) |
(251) |
(2,209) |
|
|
|
|
_______ |
_______ |
_______ |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
Amortisation of intangible asset |
(8,578) |
||||
|
|
Depreciation of railway infrastructure |
(1,036) |
||||
|
|
Impairment to railway infrastructure |
(2,324) |
||||
|
|
Impairment to intangible asset |
(14,366) |
||||
|
|
Share based payments charge |
(458) |
||||
|
|
|
|
||||
|
|
|
_______ |
||||
|
|
|
|
||||
|
|
Group loss before taxation |
(28,971) |
||||
|
|
|
|
|
|
|
_______ |
|
|
|
|
|
Head |
|
|
|
|
|
|
SMG |
Office |
Australia |
Total |
|
|
|
|
2012 |
2012 |
2012 |
2012 |
|
|
|
|
$'000 |
$'000 |
$'000 |
$'000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues |
|
5,959 |
- |
- |
5,959 |
|
|
|
|
|
|
|
|
|
|
Cost of sales |
|
(4,516) |
- |
- |
(4,516) |
|
|
|
|
_______ |
_______ |
_______ |
_______ |
|
|
|
|
|
|
|
|
|
|
Gross profit |
|
1,443 |
- |
- |
1,443 |
|
|
|
|
|
|
|
|
|
|
Exploration and evaluation expenditure |
|
- |
- |
(1,334) |
(1,334) |
|
|
Administrative expenses |
|
(955) |
(1,939) |
(2,395) |
(5,289) |
|
|
|
|
_______ |
_______ |
_______ |
_______ |
|
|
|
|
|
|
|
|
|
|
Segment profit /(loss) from operations |
|
488 |
(1,939) |
(3,729) |
(5,180) |
|
|
Finance expense |
|
- |
(1,133) |
- |
(1,133) |
|
|
|
|
_______ |
_______ |
_______ |
_______ |
|
|
|
|
|
|
|
|
|
|
Segment profit / (loss) before taxation |
|
488 |
(3,072) |
(3,729) |
(6,313) |
|
|
|
|
_______ |
_______ |
_______ |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
Amortisation of intangible asset |
(1,283) |
||||
|
|
Depreciation of railway infrastructure |
(138) |
||||
|
|
Share based payments charge |
(151) |
||||
|
|
|
_______ |
||||
|
|
|
|
||||
|
|
Group loss before taxation |
(7,885) |
||||
|
|
|
|
|
|
|
_______ |
|
|
|
|
|
Head |
|
|
|
|
|
|
SMG |
office |
Australia |
Total |
|
|
As at 31 December 2013 |
|
$'000 |
$'000 |
$'000 |
$'000 |
|
|
|
|
|
|
|
|
|
|
Additions to non-current assets (excluding deferred tax) |
|
- |
- |
50 |
50 |
|
|
|
|
_______ |
_______ |
_______ |
_______ |
|
|
|
|
|
|
|
|
|
|
Reportable segment assets (excluding deferred tax) |
|
7,222 |
786 |
1,841 |
9,849 |
|
|
|
|
_______ |
_______ |
_______ |
_______ |
|
|
|
|
|
|
|
|
|
|
Reportable segment liabilities |
|
(4,727) |
(683) |
(42) |
(5,452) |
|
|
|
|
_______ |
_______ |
_______ |
|
|
|
|
|
|
|
|
|
|
|
Deferred tax liabilities |
(324) |
||||
|
|
|
_______ |
||||
|
|
|
|
||||
|
|
Total Group liabilities |
(5,776) |
||||
|
|
|
_______ |
||||
|
|
As at 31 December 2012 |
|
$'000 |
$'000 |
$'000 |
$'000 |
|
|
|
|
|
|
|
|
|
|
Additions to non-current assets (excluding deferred tax) |
|
1,168 |
7 |
1,090 |
2,265 |
|
|
|
|
_______ |
_______ |
_______ |
_______ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reportable segment assets (excluding deferred tax) |
|
32,529 |
1,061 |
1,824 |
35,414 |
|
|
|
|
_______ |
_______ |
_______ |
_______ |
|
|
|
|
|
|
|
|
|
|
Reportable segment liabilities |
|
(2,083) |
(5,963) |
(1,220) |
(9,266) |
|
|
|
|
_______ |
_______ |
_______ |
|
|
|
|
|
|
|
|
|
|
|
Deferred tax liabilities |
(6,122) |
||||
|
|
|
_______ |
||||
|
|
|
|
||||
|
|
Total Group liabilities |
(15,388) |
||||
|
|
|
_______ |
||||
|
|
|
External revenue by |
Non-current assets |
||
|
|
|
location of customers |
by location of assets |
||
|
|
|
2013 |
2012 |
2013 |
2012 |
|
|
|
$'000 |
$'000 |
$'000 |
$'000 |
|
|
|
|
|
|
|
|
|
Other |
1,032 |
1,634 |
1,545 |
27,990 |
|
|
Switzerland |
36,210 |
4,325 |
- |
- |
|
|
Australia |
- |
- |
1,825 |
1,770 |
|
|
United Kingdom |
- |
- |
4 |
572 |
|
|
|
_______ |
_______ |
_______ |
_______ |
|
|
|
|
|
|
|
|
|
|
37,242 |
5,959 |
3,374 |
30,332 |
|
|
|
_______ |
_______ |
_______ |
_______ |
Revenues from one customer totalled $36,210,000 (2012 - $4,325,000).
|
5 |
Operating loss |
Costs by nature
|
|
|
Year to |
Year to |
|
|
|
31 December |
31 December |
|
|
|
2013 |
2012 |
|
|
|
$'000 |
$'000 |
|
|
Operating loss is stated after charging: |
|
|
|
|
|
|
|
|
|
Directors' fees and emoluments (Note 6) |
1,163 |
781 |
|
|
Auditor's remuneration - current Group auditors |
44 |
- |
|
|
Auditor's remuneration - previous Group auditors |
- |
82 |
|
|
Auditor's remuneration - subsidiary auditors |
- |
87 |
|
|
Staff costs (Note 6) |
476 |
729 |
|
|
Operating lease - land and buildings |
84 |
94 |
|
|
Legal, professional and consultancy fees |
839 |
2,873 |
|
|
Travelling and related costs |
252 |
222 |
|
|
Foreign exchange loss |
55 |
102 |
|
|
Other expenses |
628 |
319 |
|
|
|
________ |
________ |
|
|
|
|
|
|
|
|
3,541 |
5,289 |
|
|
|
|
|
|
|
Depreciation of railway infrastructure |
1,036 |
138 |
|
|
Impairment to railway infrastructure |
2,324 |
- |
|
|
Amortisation of intangible asset |
8,578 |
1,283 |
|
|
Impairment to intangible asset |
14,366 |
- |
|
|
Share based payments charge |
458 |
151 |
|
|
|
________ |
________ |
|
6 |
Directors and employees |
|
|
|
|
|
|
|
|
|
Staff costs during the year |
|
|
|
|
|
Year to |
Year to |
|
|
|
31 December |
31 December |
|
|
|
2013 |
2012 |
|
|
|
$'000 |
$'000 |
|
|
|
|
|
|
|
Directors' remuneration including consultancy fees |
1,163 |
781 |
|
|
Wages and salaries |
359 |
723 |
|
|
Social security costs |
117 |
6 |
|
|
|
________ |
________ |
|
|
|
|
|
|
|
Total staff costs |
1,639 |
1,510 |
|
|
|
________ |
________ |
The average number of people (including executive Directors) employed during the year was:
|
|
|
2013 |
2012 |
|
|
|
Number |
Number |
|
|
|
|
|
|
|
Total |
8 |
8 |
|
|
|
________ |
________ |
|
6 |
Directors and employees (continued) |
|
|
Remuneration of the Directors in the period is summarised as follows:
|
|
|
Directors' fees |
Salary and consultancy fees |
Benefits in kind |
Share based payments |
Total |
|
|
|
2013 |
2013 |
2013 |
2013 |
2013 |
|
|
|
$ |
$ |
$ |
$ |
$ |
|
|
|
|
|
|
|
|
|
|
S. Sanders |
23,963 |
- |
- |
- |
23,963 |
|
|
P. Griffiths |
- |
174,191 |
- |
- |
174,191 |
|
|
G Cardona |
- |
- |
- |
- |
- |
|
|
J Fyfe |
- |
375,408 |
- |
36,754 |
412,162 |
|
|
P Harrison |
- |
375,408 |
- |
36,754 |
412,162 |
|
|
D Anderson |
- |
187,704 |
23,816 |
17,353 |
228,873 |
|
|
P Stephens |
2,046 |
- |
- |
- |
2,046 |
|
|
|
________ |
________ |
________ |
________ |
________ |
|
|
|
|
|
|
|
|
|
|
Total |
26,009 |
1,112,711 |
23,816 |
90,861 |
1,253,397 |
|
|
|
________ |
________ |
________ |
________ |
________ |
|
|
|
Directors' fees |
Salary and consultancy fees |
Benefits in kind |
Share based payments |
Total |
|
|
|
2012 |
2012 |
2012 |
2012 |
2012 |
|
|
|
$ |
$ |
$ |
$ |
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
M.D. Bonthrone |
37,862 |
- |
- |
- |
37,862 |
|
|
S. Sanders |
27,732 |
- |
- |
- |
27,732 |
|
|
P. Griffiths |
- |
186,390 |
- |
- |
186,390 |
|
|
M.A. Borrelli |
27,608 |
- |
- |
- |
27,608 |
|
|
J Fyfe |
- |
222,278 |
- |
- |
222,278 |
|
|
P Harrison |
- |
222,278 |
- |
- |
222,278 |
|
|
D Anderson |
- |
48,168 |
8,641 |
- |
56,809 |
|
|
|
________ |
________ |
________ |
________ |
________ |
|
|
|
|
|
|
|
|
|
|
Total |
93,202 |
679,114 |
8,641 |
- |
780,957 |
|
|
|
________ |
________ |
________ |
________ |
________ |
Directors' remuneration shown above comprises all of the salaries, Directors' fees, consultancy fees and other benefits and emoluments paid to the Directors.
The salary and consultancy fees to P Griffiths during the period were paid by the Company's subsidiary Iron Glen Holdings Pty Limited.
Each Director is also paid all reasonable expenses incurred wholly, necessarily and exclusively in the proper performance of his duties.
|
7 |
Finance expense |
|
|
|
|
|
Year to |
Year to |
|
|
|
31 December |
31 December |
|
|
|
2013 |
2012 |
|
|
|
$'000 |
$'000 |
|
|
|
|
|
|
|
Loan interest and finance charges |
673 |
1,133 |
|
|
|
________ |
________ |
|
|
|
|
|
|
|
|
673 |
1,133 |
|
|
|
________ |
________ |
|
8 |
Taxation |
|
|
|
|
|
Year to |
Year to |
|
|
|
31 December |
31 December |
|
|
|
2013 |
2012 |
|
|
|
$'000 |
$'000 |
|
|
|
|
|
|
|
Current tax expense |
|
|
|
|
Deferred tax credit on amortisation and impairment of intangible |
5,798 |
321 |
|
|
Deferred tax credit/ (charge) |
(706) |
693 |
|
|
|
________ |
________ |
|
|
|
|
|
|
|
|
5,092 |
1,014 |
|
|
|
________ |
________ |
|
|
|
|
|
|
|
Reconciliation of effective tax rates |
$'000 |
$'000 |
|
|
|
|
|
|
|
(Loss) before tax |
(28,971) |
(7,885) |
|
|
Tax using UK domestic rates of corporation tax of 23% (2012 - 24%) |
(6,663) |
(1,892) |
|
|
|
|
|
|
|
Effect of: |
|
|
|
|
Expenses not deductible for tax purposes |
113 |
38 |
|
|
Losses carried forward |
6,550 |
1,854 |
|
|
Deferred tax credit, net |
5,092 |
1,014 |
|
|
|
________ |
________ |
|
|
|
|
|
|
|
|
5,092 |
1,014 |
|
|
|
________ |
________ |
The Group has excess management expenses of $653,000 (2012 - $653,000) and unused losses to carry forward of $14,265,000 (2012 - $8,792,000). No deferred tax asset has been recognised for losses as their full recovery is not probable in the foreseeable future.
|
9 |
Parent Company loss |
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 loss for the year was $52,979,000 (2012 - $3,152,000).
|
10 |
Loss per share |
Losses per ordinary share have been calculated using the weighted average number of shares in issue during the relevant financial year. The weighted average number of shares in issue during the year was basic 542,430,126 (2012 - 434,531,331) adjusted for the historic share reorganisation and consolidation. Fully diluted the weighted average was 542,430,126 (2012 - 434,531,331). The loss for the financial period was $23,879,000 (2012 - loss $6,871,000).
Due to the Group's results for the period, the diluted earnings per share is deemed to be the same as the basic earnings per share.
|
11 |
Intangibles |
Group
|
|
|
|
Exploration/ |
Other |
|
|
|
|
Mining |
evaluation |
intangible |
|
|
|
|
tenements |
costs |
asset |
Total |
|
|
|
$'000 |
$'000 |
$'000 |
$'000 |
|
|
Cost |
|
|
|
|
|
|
At 31 December 2011 |
310 |
1,671 |
25,772 |
27,753 |
|
|
Additions in the year |
- |
179 |
- |
179 |
|
|
Acquisition from Quadrio Resources Pty Limited |
- |
911 |
- |
911 |
|
|
Relinquished |
(310) |
(1,024) |
- |
(1,334) |
|
|
Foreign exchange |
- |
32 |
- |
32 |
|
|
|
________ |
________ |
________ |
________ |
|
|
|
|
|
|
|
|
|
At 31 December 2012 |
- |
1,769 |
25,772 |
27,541 |
|
|
|
|
|
|
|
|
|
At 1 January 2013 |
- |
1,769 |
25,772 |
27,541 |
|
|
Additions in the year |
- |
50 |
- |
50 |
|
|
Foreign exchange |
- |
6 |
- |
6 |
|
|
|
________ |
________ |
________ |
________ |
|
|
|
|
|
|
|
|
|
At 31 December 2013 |
- |
1,825 |
25,772 |
27,597 |
|
|
|
________ |
________ |
________ |
________ |
|
|
|
|
|
|
|
|
|
Amortisation and impairment |
|
|
|
|
|
|
At 31 December 2011 |
- |
- |
- |
- |
|
|
Amortisation |
- |
- |
(1,283) |
(1,283) |
|
|
|
________ |
________ |
________ |
________ |
|
|
|
|
|
|
|
|
|
At 31 December 2012 |
- |
- |
(1,283) |
(1,283) |
|
|
|
|
|
|
|
|
|
At 1 January 2013 |
- |
- |
(1,283) |
(1,283) |
|
|
Amortisation |
- |
- |
(8,578) |
(8,578) |
|
|
Impairment |
- |
- |
(14,366) |
(14,366) |
|
|
|
________ |
________ |
________ |
________ |
|
|
|
|
|
|
|
|
|
At 31 December 2013 |
- |
- |
(24,227) |
(24,227) |
|
|
|
________ |
________ |
________ |
________ |
|
|
|
|
|
|
|
|
|
Net book value |
|
|
|
|
|
|
At 31 December 2011 |
310 |
1,671 |
25,772 |
27,753 |
|
|
|
________ |
________ |
________ |
________ |
|
|
|
|
|
|
|
|
|
At 31 December 2012 |
- |
1,769 |
24,489 |
26,258 |
|
|
|
________ |
________ |
________ |
________ |
|
|
|
|
|
|
|
|
|
At 31 December 2013 |
- |
1,825 |
1,545 |
3,370 |
|
|
|
________ |
________ |
________ |
________ |
Other intangible
The other intangible asset arises from the contractual relationship entered into by Southern Minerals Group LLC ('SMG'), an entity wholly owned by Ebony Iron Pty Limited, with a third party for the rights to a magnetite stockpile held at that party's Cobre mine in New Mexico, USA. Under the terms of the contract SMG has exclusive rights to market approximately 1,500,000 tons of magnetite. The intangible asset is being amortised on a per ton basis as the magnetite is sold.
In view of the volatility in the price of iron ore sold to the export market both during 2013 and early 2014 the Company performed a detailed operational review and announced its decision on 4 March 2014 to focus on the US domestic market. These facts also gave rise for the need to consider the carrying value of the intangible asset. In making an assessment of the impairment charge the Directors only considered the sales to the domestic US market as a decision to resume sales to the export market would be dependent upon a more favourable and sustainable improvement in the Platts IODEX 62% Fe CFR China price, the timing of which cannot be forecasted with sufficient certainty. The price of product sold to the domestic market is not dependent upon the Platts IODEX 62% Fe CFR China price and thus less volatile. The other key factor taken into account in assessing the impairment charge was the likely quantity of product to be sold during the expected life of the contract for the exclusive rights to the magnetite. As a conclusion an impairment charge of $14,366,000 was assessed to be necessary, with a consequent release of $3,651,000 from the related deferred tax liability. The quantum of the impairment charge has been determined by considering the expected future cash flows within the contract term and comparing to the carrying value. The variance between the two balances is the impairment charge for the period. The cash flows are based on the fair values less cost to sell and have not been discounted as this would not have a material impact on the impairment calculations.
Mining tenements and exploration and evaluation costs
Exploration and evaluation costs are not currently being amortised as there is no revenue being generated given that these assets are still in an early exploration phase. In 2012 the Group acquired certain tenements, known as the Western Australia tenements, by the issue of shares to Quadrio Resources Pty Limited on 25 January 2012. This did not represent the acquisition of a business, but the acquisition of these assets only. The Company issued 6m shares at a market price of 9.75p, totalling $911,000 in consideration. The recoverability of the remaining carrying amount of the deferred exploration and evaluation expenditure is dependent on successful development and commercial exploitation, or alternatively the sale, of the respective areas of interest.
|
12 |
Investments |
|
|
Company |
Loans to |
Shares in |
|
|
|
|
Subsidiary |
subsidiary |
|
|
|
|
Undertakings |
undertakings |
Total |
|
|
|
$'000 |
$'000 |
$'000 |
|
|
Cost |
|
|
|
|
|
At 31 December 2012 |
4,486 |
45,752 |
50,238 |
|
|
Movement in year |
1,518 |
- |
1,518 |
|
|
|
________ |
________ |
________ |
|
|
At 31 December 2013 |
6,004 |
45,752 |
51,756 |
|
|
|
________ |
________ |
________ |
|
|
|
|
|
|
|
|
Impairment |
|
|
|
|
|
At 31 December 2012 |
- |
- |
- |
|
|
Charge for the year |
(6,004) |
(42,473) |
(48,477) |
|
|
|
________ |
________ |
________ |
|
|
|
|
|
|
|
|
At 31 December 2013 |
(6,004) |
(42,473) |
(48,477) |
|
|
|
________ |
________ |
________ |
|
|
|
|
|
|
|
|
Carrying Value |
|
|
|
|
|
|
|
|
|
|
|
At 31 December 2012 |
4,486 |
45,752 |
50,238 |
|
|
|
________ |
________ |
________ |
|
|
|
|
|
|
|
|
At 31 December 2013 |
- |
3,279 |
3,279 |
|
|
|
________ |
________ |
________ |
In the opinion of the Directors, the aggregate value of the Company's investment in its subsidiary undertakings is not less than the amount included in the balance sheet.
Holdings of more than 20%
The Company holds more than 20% of the share capital of the following companies:
|
|
|
|
|
|
|
|
|
Subsidiary undertakings |
Country of |
Principal |
Class of |
% |
|
|
|
Incorporation |
activity |
share |
Owned |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Iron Glen Holdings Pty Limited |
Australia |
Holding |
Ordinary |
100% |
|
|
|
|
Company |
|
|
|
|
|
|
|
|
|
|
|
Ebony Iron Pty Limited |
Australia |
Holding Company |
Ordinary |
100% |
|
|
|
|
|
|
|
|
|
Iron Glen Pty Limited (i) |
Australia |
Assets held for exploration |
Ordinary |
100% |
|
|
|
|
|
|
|
|
|
Southern Minerals Group LLC (ii) |
USA |
Sale of magnetite |
Ordinary |
100% |
|
|
|
|
|
|
|
|
|
Jotanooka Iron Pty Limited (i) |
Australia |
Assets held for exploration |
Ordinary |
100% |
|
|
|
|
|
|
|
|
|
Dragon Rock Minerals Pty Limited (i) |
Australia |
Assets held for exploration |
Ordinary |
100% |
(i) Held by Iron Glen Holdings Pty Limited
(ii) Held by Ebony Iron Pty Limited
|
13 |
Tangible fixed assets |
|
|
|
|
|
|
|
Railway |
Office |
Leasehold |
|
|
|
|
infrastructure |
equipment |
improvements |
Total |
|
|
Group |
$'000 |
$'000 |
$'000 |
$'000 |
|
|
|
|
|
|
|
|
|
Cost |
|
|
|
|
|
|
At 31 December 2011 |
2,330 |
19 |
2 |
2,351 |
|
|
Additions |
1,168 |
7 |
- |
1,175 |
|
|
Disposals |
- |
(19) |
- |
(19) |
|
|
|
________ |
________ |
________ |
________ |
|
|
|
|
|
|
|
|
|
At 31 December 2012 |
3,498 |
7 |
2 |
3,507 |
|
|
|
|
|
|
|
|
|
At 1 January 2013 |
3,498 |
7 |
2 |
3,507 |
|
|
Disposals |
- |
- |
(2) |
(2) |
|
|
|
________ |
________ |
________ |
________ |
|
|
|
|
|
|
|
|
|
At 31 December 2013 |
3,498 |
7 |
- |
3,505 |
|
|
|
________ |
________ |
________ |
________ |
|
|
|
|
|
|
|
|
|
Depreciation |
|
|
|
|
|
|
At 31 December 2011 |
- |
1 |
1 |
2 |
|
|
Charge in the year |
138 |
- |
- |
138 |
|
|
Eliminated on disposals |
- |
(1) |
- |
(1) |
|
|
|
________ |
________ |
________ |
________ |
|
|
|
|
|
|
|
|
|
At 31 December 2012 |
138 |
- |
1 |
139 |
|
|
|
|
|
|
|
|
|
At 1 January 2013 |
138 |
- |
1 |
139 |
|
|
Charge in the year |
1,036 |
3 |
- |
1,039 |
|
|
Impairment |
2,324 |
- |
- |
2,324 |
|
|
Eliminated on disposals |
- |
- |
(1) |
(1) |
|
|
|
________ |
________ |
________ |
________ |
|
|
|
|
|
|
|
|
|
At 31 December 2013 |
3,498 |
3 |
- |
3,501 |
|
|
|
________ |
________ |
________ |
________ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Carrying value |
|
|
|
|
|
|
At 31 December 2011 |
2,330 |
18 |
1 |
2,349 |
|
|
|
________ |
________ |
________ |
________ |
|
|
|
|
|
|
|
|
|
At 31 December 2012 |
3,360 |
7 |
1 |
3,368 |
|
|
|
________ |
________ |
________ |
________ |
|
|
|
|
|
|
|
|
|
At 31 December 2013 |
- |
4 |
- |
4 |
|
|
|
________ |
________ |
________ |
________ |
The tangible assets of the Company relate to office equipment only.
The impairment to the railway infrastructure arises from the decision taken post year end to focus on sales to the US domestic market. These sales are all made by truck.
|
14 |
Inventories |
|
|
|
|
|
2013 |
2012 |
|
|
|
$'000 |
$'000 |
|
|
|
|
|
|
|
Finished goods held for sale |
2,625 |
2,782 |
|
|
Less stock provision |
(402) |
- |
|
|
|
________ |
________ |
|
|
|
|
|
|
|
|
2,223 |
2,782 |
|
|
|
________ |
________ |
The amount of inventory which has been recognised as an expense during the year is $35,237,000 (2012 - $4,516,000).
|
15 |
Trade and other receivables |
|
|
|
|
|
2013 |
2012 |
|
|
Group |
$'000 |
$'000 |
|
|
|
|
|
|
|
Trade receivables |
2,709 |
790 |
|
|
Other receivables |
360 |
552 |
|
|
Less: provision for impairment of receivables |
- |
(68) |
|
|
|
________ |
________ |
|
|
|
|
|
|
|
|
3,069 |
1,274 |
|
|
|
________ |
________ |
|
|
Company |
|
|
|
|
|
|
|
|
|
Trade receivables |
2,203 |
605 |
|
|
Amounts owed by subsidiary undertakings |
633 |
3,242 |
|
|
Other receivables |
343 |
472 |
|
|
|
________ |
________ |
|
|
|
|
|
|
|
|
3,179 |
4,319 |
|
|
|
________ |
________ |
There were no Trade or Other receivables that were past due or impaired beyond the charge reflected above. The Trade and Other receivables are categorised as loans and other receivables and are not materially different to their carrying values.
|
16 |
Cash and cash equivalents |
|
|
|
|
|
2013 |
2012 |
|
|
Group |
$'000 |
$'000 |
|
|
|
|
|
|
|
Bank current accounts - unrestricted |
683 |
1,232 |
|
|
Bank - restricted |
500 |
500 |
|
|
|
________ |
________ |
|
|
|
|
|
|
|
|
1,183 |
1,732 |
|
|
|
________ |
________ |
The restricted cash relates to a cash deposit held for a Standby Letter of Credit as security for a supplier. Subsequent to the year end the amount held was reduced to $100,000.
|
|
|
2013 |
2012 |
|
|
Company |
$'000 |
$'000 |
|
|
|
|
|
|
|
Bank current accounts |
438 |
582 |
|
|
|
________ |
________ |
The Group's balances are held with well-known and highly rated UK, USA and Australian banks.
|
17 |
Borrowings |
The carrying values of the borrowings and their maturity are as follows:
|
|
|
2013 |
2012 |
|
|
Group |
$'000 |
$'000 |
|
|
|
|
|
|
|
Current |
|
|
|
|
Repayable within one year: |
|
|
|
|
Other loans |
- |
3,326 |
|
|
Repayable more than one year: |
|
|
|
|
Other loans |
- |
1,536 |
|
|
|
________ |
________ |
|
|
|
|
|
|
|
|
- |
4,862 |
|
|
|
________ |
________ |
|
|
|
2013 |
2012 |
|
|
Company |
$'000 |
$'000 |
|
|
|
|
|
|
|
Current |
|
|
|
|
Repayable within one year: |
|
|
|
|
Other loans |
- |
3,326 |
|
|
Repayable more than one year: |
|
|
|
|
Other loans |
- |
1,536 |
|
|
|
________ |
________ |
|
|
|
|
|
|
|
|
- |
4,862 |
|
|
|
________ |
________ |
|
18 |
Trade and other payables |
|
|
|
|
|
2013 |
2012 |
|
|
Group |
$'000 |
$'000 |
|
|
|
|
|
|
|
Trade payables |
4,795 |
2,468 |
|
|
Other payables |
442 |
522 |
|
|
Accruals and deferred income |
215 |
1,414 |
|
|
|
________ |
________ |
|
|
|
|
|
|
|
|
5,452 |
4,404 |
|
|
|
________ |
________ |
|
|
|
|
|
|
|
Company |
$'000 |
$'000 |
|
|
|
|
|
|
|
Trade payables |
2,209 |
298 |
|
|
Other payables |
436 |
45 |
|
|
Accruals and deferred income |
182 |
758 |
|
|
|
________ |
________ |
|
|
|
|
|
|
|
|
2,827 |
1,101 |
|
|
|
________ |
________ |
Book values approximate to fair value at 31 December 2013 and 2012.
Included in trade payables is an amount of $601,000 (2012 - $Nil), which subsequent to the year-end has been settled in shares.
|
19 |
Deferred tax |
Deferred tax is calculated in full on temporary differences under the liability method using a tax rate of 21% (2012 - 25%). The reduction in the main rate of corporation tax to 23% was substantively enacted in July 2012. This new rate will be applied to deferred tax balances which are expected to reverse after 1 April 2013, the date on which that new rate becomes effective.
The deferred tax liability arises from the fact that the other intangible asset (see Note 11) has no tax base and thus the deferred tax liability represents the total tax credit that would be available if the amortisation of the intangible asset was tax deductible in an entity. The deferred tax asset arises from tax losses which are expected to be recovered in the foreseeable future.
The movement on the deferred tax account is as shown below:
|
|
|
2013 |
2012 |
|
|
Deferred tax liability |
$'000 |
$'000 |
|
|
|
|
|
|
|
At 1 January |
6,122 |
6,443 |
|
|
|
|
|
|
|
Recognised in profit and loss |
|
|
|
|
Tax credit |
(5,798) |
(321) |
|
|
|
________ |
________ |
|
|
|
|
|
|
|
At 31 December |
324 |
6,122 |
|
|
|
________ |
________ |
|
|
|
2013 |
2012 |
|
|
Deferred tax asset |
$'000 |
$'000 |
|
|
|
|
|
|
|
At 1 January |
706 |
- |
|
|
|
|
|
|
|
Recognised in profit and loss |
|
|
|
|
Tax (charge) / credit |
(706) |
693 |
|
|
Foreign exchange |
- |
13 |
|
|
|
________ |
________ |
|
|
|
|
|
|
|
At 31 December |
- |
706 |
|
|
|
________ |
________ |
Of this total deferred tax asset, $Nil (2012 - $565,000) arises in the Company.
|
20 |
Share capital |
|
|
|
|
|
|
|
|
|
|
|
|
Number |
Price |
Value $ |
|
|
|
|
|
|
|
|
At 1 January 2012 |
399,396,393 |
|
640,119 |
|
|
|
|
|
|
|
|
Issued on acquisition |
3,700,000 |
10.00p |
5,705 |
|
|
Issued on acquisition |
6,000,000 |
9.75p |
9,343 |
|
|
|
|
|
|
|
|
Placement on 2 May 2012 |
39,062,500 |
8.00p |
63,367 |
|
|
|
__________ |
|
__________ |
|
|
|
|
|
|
|
|
At 31 December 2012 |
448,158,893 |
|
718,534 |
|
|
|
|
|
|
|
|
Placement on 7 February 2013 |
102,666,667 |
4.50p |
160,745 |
|
|
|
|
|
|
|
|
Exercise warrants on 27 March 2013 |
3,000,000 |
0.01p |
4,551 |
|
|
|
__________ |
|
__________ |
|
|
|
|
|
|
|
|
At 31 December 2013 |
553,825,560 |
|
883,830 |
|
|
|
__________ |
|
__________ |
On 10 April 2014 the Company issued a further 170,000,000 ordinary shares - see Note 25.
|
21 |
Share based payments |
The Group has a share-ownership compensation scheme for senior executives of the Group whereby senior executives may be granted options to purchase ordinary shares in the Company.
The Group has on occasion issued warrants as detailed below to third parties in settlement of liabilities to strategic suppliers. Each share warrant converts into one ordinary share of Strategic Minerals Plc upon exercise. No amounts are paid or payable by the recipient of the warrant for the warrant. The warrants carry neither rights to dividends nor voting rights at shareholders meetings.
Warrants
The estimated fair value of the warrants issued during the year was calculated by applying the Black-Scholes option pricing model. Expected volatility was originally stated at 10% but has been revised to 55% as this is considered more appropriate given the Company does not have a long representative period to consider and therefore the Directors have also looked at comparable companies. The assumptions used in the calculation were as follows:
|
|
|
March 2011 warrants |
March 2011 warrants |
1 June 2011 warrants |
May 2012 warrants |
March 2012 warrants |
|
|
|
|
|
|
|
|
|
|
Share price at date of grant |
5.00p |
5.00p |
7.25p |
8.80p |
10.75p |
|
|
Exercise price |
1.86p |
0.10p |
5.00p |
12.00p |
12.00p |
|
|
Expected volatility |
55% |
55% |
55% |
55% |
55% |
|
|
Expected dividend |
Nil |
Nil |
Nil |
Nil |
Nil |
|
|
Contractual life |
3 years |
2 years |
3 years |
2 years |
3 years |
|
|
Risk free rate |
4% |
4% |
4% |
0.22% |
0.39% |
|
|
Estimated fair value of each warrant |
3.12p |
4.51p |
3.32p |
0.29p |
3.2p |
Number of outstanding Warrants at 31 December 2013:
|
|
Date of |
|
Exercised/ |
|
At |
Exercise |
Exercise/ |
|
|
|
grant |
Granted |
vested |
Lapsed |
31.12.13 |
price |
Vesting date |
|
|
|
|
|
|
|
|
|
From |
To |
|
|
|
|
|
|
|
|
|
|
|
|
31.03.11 |
23,369,988 |
- |
- |
23,369,988 |
1.86p |
31.03.11 |
31.03.14 |
|
|
31.03.11 |
3,000,000 |
(3,000,000) |
- |
- |
0.1p |
31.03.11 |
31.03.13 |
|
|
30.06.11 |
8,421,416 |
- |
- |
8,421,416 |
5p |
30.06.11 |
29.06.16 |
|
|
01.03.12 |
4,000,000 |
- |
(4,000,000) |
- |
12p |
01.06.12 |
01.03.13 |
|
|
01.03.12 |
4,000,000 |
- |
- |
4,000,000 |
16p |
01.06.13 |
01.03.14 |
|
|
01.03.12 |
4,000,000 |
- |
- |
4,000,000 |
20p |
01.06.14 |
01.03.15 |
|
|
03.05.12 |
39,062,500 |
- |
- |
39,062,500 |
12p |
03.05.12 |
30.04.14 |
|
|
|
_________ |
_________ |
_________ |
_________ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
85,853,904 |
(3,000,000) |
(4,000,000) |
78,853,904 |
|
|
|
|
|
|
_________ |
_________ |
_________ |
_________ |
|
|
|
Options
Number of outstanding options at 31 December 2013:
|
|
Date of |
|
|
At |
Exercise |
Exercise/ |
|
|
Grant |
At 31.12.12 |
Granted |
31.12.13 |
price |
period |
|
|
|
|
|
|
|
|
|
|
31.03.11 |
26,639,956 |
- |
26,639,956 |
3.1p |
31.03.11 to 31.03.14 |
|
|
06.11.13 |
- |
31,000,000 |
31,000,000 |
5.0p |
27.6.13 to 27.6.16 |
|
|
06.11.13 |
- |
16,500,000 |
16,500,000 |
7.5p |
27.6.13 to 27.6.16 |
|
|
06.11.13 |
- |
12,500,000 |
12,500,000 |
10.0p |
27.6.13 to 27.6.16 |
|
|
|
_________ |
_________ |
_________ |
|
|
|
|
|
|
|
|
|
|
|
|
Total |
26,639,956 |
60,00,000 |
86,639,956 |
|
|
|
|
|
_________ |
_________ |
_________ |
|
|
At 31 December 2013 the 26,639,956 and 31,000,000 options had fully vested. Of the 16,500,000 options at 7.5p, 14,000,000 vest on 30 June 2014 and 2,500,000 vest on 1 October 2014. Of the 12,500,000 options at 10,0p, 10,000,000 vest on 30 June 2015 and 2,500,000 vest on 1 October 2015. There are no performance conditions attaching to these options, the only condition being that the individuals are employed by the Group on the relevant dates.
The estimated fair value of options issued is calculated by applying the Black-Scholes option pricing model. The assumptions used in the calculation were as follows:
|
|
|
March 2011 options |
June 2013 options |
June 2013 options |
June 2013 options |
|
|
|
|
|
|
|
|
|
Share price at date of grant |
5.00p |
0.013p |
0.013p |
0.013p |
|
|
Exercise price |
3.10p |
5.00p |
7.50p |
10.00p |
|
|
Expected volatility |
55% |
76% |
76% |
76% |
|
|
Expected dividend |
Nil |
Nil |
Nil |
Nil |
|
|
Contractual life |
3 years |
3 years |
3 years |
3 years |
|
|
Risk free rate |
4% |
0.58% |
0.58% |
0.58% |
|
|
Estimated fair value of each option |
2.44p |
0.002p |
0.001p |
0.001p |
Expected volatility was determined based on the historic volatility of the Company's shares. The expected life used in the model has been adjusted, based on management's best estimate, for the effects of non-transferability, exercise restrictions and behavioural considerations.
The share options outstanding at the year-end had a weighted average remaining contractual life of 410 days (2012 - 730 days)
The total number of warrants and options outstanding at 31 December 2013 were 155,493,860. As of 1 May 2014, 93,072,444 warrants and options had lapsed.
|
22 |
Commitments |
(a) Operating lease commitments
The future aggregate minimum lease payments under non-cancellable operating leases are as follows:
|
|
|
2013 |
2012 |
|
|
Group |
$'000 |
$'000 |
|
|
|
|
|
|
|
Within one year |
86 |
86 |
|
|
|
________ |
________ |
(b) Capital expenditure commitments
At 31 December 2013, no capital commitments existed (2012 - $Nil).
|
23 |
Controlling party |
There is no ultimate controlling party of the Group.
|
24 |
Related party transactions |
Transactions in 2013
Directors' remuneration has been disclosed in Note 6 and other relevant transactions with Directors are stated below.
During the year, a key manager in the Group invoiced $120,000 from Lazy Cane LC for his services, a company in which he had a material interest.
During the year $23,963 was paid to Sanders Ortoli Vaughn-Flam Rosenstadt LLP, a firm in which S Sanders is a member, in respect of Directors' fees. During the year $84,000 was paid to RiverWide Capital Partners Limited, a Company in which J Fyfe and P Harrison have a material interest, for provision of the Company's London office facilities.
Transactions in 2012
Directors' remuneration has been disclosed in Note 6 and other relevant transactions with Directors are stated below.
During the year, a key manager in the Group invoiced $130,000 from Lazy Cane LC for his services, a company in which he had a material interest.
During the year $47,091 was paid to Sanders Ortoli Vaughn-Flam Rosenstadt LLP, a firm in which S Sanders is a member, in connection with legal advice provided to the Company. An amount of $27,732 was also incurred in respect of Directors' fees.
During the year $31,694 and $42,787 was paid to RiverWide Capital Partners Limited, a Company in which J Fyfe and P Harrison have a material interest, for consultancy services and the provision of the Company's London office facilities respectively.
During the year $27,608 was paid to M A Borelli, a director of the Company for Directors' fees. $37,862 was paid to M D Bonthrone, a director of the Company, for Directors' fees. An amount of $186,390 was paid to P Griffiths, a director of the Company for director and consultancy fees. An amount of $222,278 each paid to J Fyfe and P Harrison, Directors of the Company, for director and consultancy fees.
At 31 December 2012 an unsecured loan of $258,000 was due to Walter Doyle, a shareholder of the Company on which interest of 10% is charged.
|
25 |
Events after the reporting period |
On 4 March 2014 Southern Minerals Group LLC ("SMC"), a wholly owned subsidiary of the Company, entered into a new agreement with Freeport-McMoRan Sales Company, Inc. (the "Seller") extending its rights at the Cobre magnetite stockpile near Hanover in New Mexico, initially for up to two years (the "Agreement"). The new agreement replaced the existing agreement which was due to expire in April 2014.
On 10 April 2014 the Company announced that it has raised approximately $1,650,000 (£1,000,000) before expenses from new investors through subscription to 125,000,000 ordinary shares (the "Subscription Shares") at a price of £0.008 per Subscription Share (the "Subscription Price"). Further, the Company had issued 45,000,000 ordinary shares (the "Glencore Shares") in the Company to Glencore AG at the Subscription Price, in exchange for an obligation owed to them.
- ENDS -
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