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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Premier African Minerals Limited | LSE:PREM | London | Ordinary Share | VGG7223M1005 | ORD NPV (DI) |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 0.195 | 0.19 | 0.20 | 0.1975 | 0.1875 | 0.1925 | 166,819,831 | 14:15:47 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| Minrls,earths-ground,treated | 0 | -5.36M | -0.0002 | -9.50 | 43.39M |
From Apr 2019 to Apr 2024
TIDMPREM
RNS Number : 5580K
Premier African Minerals Limited
10 July 2017
For immediate release
10 July 2017
The following replaces the final results announcement released at 7am under RNS number 5204k. The original announcement contained incorrect strike throughs.
Premier African Minerals Limited
("Premier" or "the Company")
Final Results
Premier African Minerals Limited, the AIM-quoted multi-commodity mining and resource development company focused on Southern and Western Africa, today announces its audited results for the year ended 31 December 2016.
The Board expects to distribute the annual report for the financial year ended 31 December 2016 ("Accounts") to all shareholders during the course of 11 July 2017 and will be available for download on the Company's website www.premierafricanminerals.com from that date. A further announcement will be made to confirm when the Accounts have been posted to shareholders.
This announcement contains inside information for the purposes of Article 7 of EU Regulation 596/2014.
For further information please visit www.premierafricanminerals.com or contact the following:
Hot Features
Premium
Premier African Minerals
Fuad Sillem Limited Tel: +44 (0)7734 922074
------------------ ---------------------------- -------------------------
Michael Cornish Beaumont Cornish Limited Tel: +44 (0) 207 628
/ Roland Cornish (Nominated Adviser) 3396
------------------ ---------------------------- -------------------------
Jerry Keen/Edward Shore Capital Stockbrokers Tel: +44 (0) 207 408
Mansfield Limited 4090
------------------ ---------------------------- -------------------------
Tel: +44 (0) 20 7382
Jon Belliss Beaufort Securities Limited 8300
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Charles Goodwin/
Harriet Jackson Yellow Jersey PR Limited Tel: +44 (0) 7747 788221
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Executive Chairman and CEO's Statement
"The year under review has continued to be transformational for Premier African Minerals Limited ("Premier" or "PREM") as we progress along the development path from exploration to development and production. A year of review and further development at RHA, the acquisition of an interest in TCT in Mozambique and the confirmation of our expectations at Zulu Lithium serve both as a template for our business model and a pillar of our resilience and determination to complete the transformation cycle and see Premier as self-sustaining and cash generative later in 2017.
The London AIM market is an incubator market that serves to provide companies like PREM, with access to capital to help enable our projects to be advanced through capital market funding facilities, to the point where like RHA, they can become sustainable or be advanced to the point where they become attractive to another strategic investor that can create an event that will serve to return value back to our shareholders.
Naturally, as we engage in our business strategy, we inevitably have to raise capital in a process which can often serve to dilute our shareholders and or depending on the type of funding we undertake, have the impact to dampen our share price.
I can assure you that as your chairman, and someone who has a significant shareholding in PREM, I am completely motivated to make sure all the funding arrangements we secure are designed to lead to the creation of value, rather than depress value. I take the opportunity of this year's annual report to make this point to both our existing shareholders and also to any new potential shareholders and that as we progress and develop value in our assets, finance through debt will become the preferred option.
Since the global financial crisis and following a slowing of economic growth in China, the mining sector has faced some difficult challenges when it comes to managing a depressed commodity pricing market.
Premier African Minerals joined London's AIM market in December 2012 and we have managed to ride this difficult cycle within the market, to emerge as a company that offers investors and our shareholders a bright future, where our portfolio of assets is now beginning to benefit from increased market demand and pricing upturn, especially across the tungsten, lithium and associated automotive battery metals market, and also where during the period under review we added gold and limestone to our portfolio.
As we move into 2017, PREM is well positioned to continue to offer our shareholders a balanced risk portfolio of strategic metals and resources that are at different stages of the development curve, but in all cases, have solid supply, demand and pricing fundamentals behind them.
The year under review is one where your board and management team have proven that we can deliver on our stated strategy and we look forward to the year ahead with significant optimism.
I take this opportunity of thanking our shareholders for their support and also to Pamela Hueston, our former finance director who did a sterling job during her tenure and also to Mr. Russel Swarts who has joined the board for his work in supporting a smooth transition within this vital function of our company. I also wish to thank Anthony Michalec for joining us and taking up the helm as our new Chief Operating Officer at RHA. In addition, I want to pay tribute to all our contractors and consultants, particularly those working at RHA, who have tirelessly worked on helping to deliver a producing tungsten mine and who have played a huge role in making this annual reporting period a notable one in our history.
Fundraising and Capital
During the reporting period we raised gross proceeds of $5,528,000, including;
- $3,178,000 in direct subscriptions, and - $2,350,000 through the issue of Loan Notes,
In addition $247,000 of outstanding loans to George Roach were converted to shares.
RHA also increased its working capital facilities by the granting of a US$200,000 general credit facility from a local bank, which can be utilised for payment of direct operating expenses associated with the production of wolframite concentrates. The facility bears interest at the bank's costs of funds plus a margin of 8.75% and is guaranteed by Premier.
George Roach
Chief Executive Officer & Executive Chairman
The Directors' Report and audited financial statements are reproduced below. References to page numbers are to page numbers in the Accounts.
NON-STATUTORY INDEPENT AUDITOR'S REPORT TO THE MEMBERS OF PREMIER AFRICAN MINERALS LIMITED
Opinion on non-statutory financial statements
We have audited the group non-statutory financial statements for the year ended 31 December 2016 on pages 25 to 65. The financial reporting framework that has been applied in their preparation is International Financial Reporting Standards (IFRSs) as adopted by the European Union.
In our opinion the group non-statutory financial statements:
-- Give a true and fair view of the state of the group's affairs as at 31 December 2016 and of its loss for the year then ended; and
-- Have been properly prepared in accordance with IFRSs as adopted by the European Union.
Emphasis of matter - carrying value of property, plant and equipment and going concern
In forming our opinion on the financial statements, which is not modified, we have considered the adequacy of the disclosures made in notes 4 and 5 of the financial statements concerning the recoverability of mine assets included in property, plant and equipment and the Group's ability to continue as a going concern.
-- Carrying value of property, plant and equipment ("PPE") - note 4 describes the key assumptions that management have made in the value in use calculation for the RHA mine cash generating unit in concluding that the carrying amount of its PPE of $9.4 million is not impaired. The key assumptions include production volumes, grade and wolframite prices, as well as discount rate and mine life. As the mine is at an early stage of production, there can be no certainty over these assumptions, which indicates the existence of a material uncertainty in respect of the carrying value of property, plant and equipment.
-- Going concern - note 5 describes the uncertainty over production volumes and sales prices achievable at the RHA mine on which the cash flow forecasts are based and the need for additional fund-raising in the next 12 months, on which the Group is dependent in order to continue operating as a going concern. These factors indicate the existence of a material uncertainty which may cast significant doubt about the group's ability to continue as a going concern.
The financial statements do not include the adjustments that would result if the group was unable to continue as a going concern or adjustments were required to the carrying value of property, plant and equipment.
Emphasis of matter - identification and valuation of intangible assets acquired in a business combination
In forming our opinion on the financial statements, which is not modified, we have considered the adequacy of the disclosures made in notes 4 and 14 of the financial statements concerning the identification and valuation of intangible assets acquired in the acquisition of TCT.
The fair values of the limestone exploration license and forestry concession have been determined on a provisional basis because management have not yet completed the fair value exercises. Any subsequent change in identification of assets acquired or the valuation of these assets will impact the fair value of intangible assets and also goodwill, deferred tax and non-controlling interests arising in respect of the business combination.
Scope of the audit of the non-statutory financial statements
A description of the scope of an audit of financial statements is provided on the Financial Reporting Council's website at http://www.frc.org.uk/auditscopeukprivate.
Matters on which we are engaged to report by exception
We have nothing to report in respect of the following matters where we are engaged to report to you, if in our opinion:
-- We have not received all the information and explanations we require for our audit.
Respective responsibilities of directors and auditor
As more fully explained in the Directors' Responsibilities Statement set out on page 21, the directors are responsible for the preparation of the group non-statutory financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit and express an opinion on the group non-statutory financial statements in accordance with International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices Board's (APB's) Ethical Standards for Auditors.
This non-statutory report is made solely to the company's members, as a body, in accordance with the terms of our engagement dated 11 March 2016. Our non-statutory audit work has been undertaken so that we might state to the company's members those matters we are required to state to them in a non-statutory auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company's members as a body, for our non-statutory audit work, for this non-statutory report, or for the opinions we have formed.
RSM UK AUDIT LLP
Chartered Accountants
25 Farringdon Street
London
EC4A 4AB
7 July 2017
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
2016 2015
$ 000 $ 000
For the year ended 31 December Notes
2016
Revenue 192 103
Cost of sales 7 (650) (1,556)
----------- -----------
Gross loss (458) (1,453)
Administrative expenses 8 (2,869) (3,132)
Depreciation and amortisation
expense 16 (1,584) (714)
Impairment of exploration and
evaluation assets 13 - (844)
----------- -----------
Operating loss (4,911) (6,143)
Finance costs 10 (721) (1,719)
----------- -----------
(721) (1,719)
Loss before income tax (5,632) (7,862)
Income tax expense 11 - -
----------- -----------
Loss for the year (5,632) (7,862)
----------- -----------
Other comprehensive income:
Items that may be subsequently
reclassified to profit or loss:
Gain arising on available-for-sale
financial asset 15 - 1,500
Foreign exchange translation (65) 50
----------- -----------
(65) 1,550
----------- -----------
Total comprehensive income
for the year (5,697) (6,312)
----------- -----------
Loss attributable to:
Owners of the parent (3,405) (5,992)
Non-controlling interests (2,227) (1,870)
----------- -----------
Loss for the year (5,632) (7,862)
----------- -----------
Total comprehensive income
attributable to:
Owners of the parent (3,470) (4,442)
Non-controlling interests (2,227) (1,870)
----------- -----------
Total comprehensive income
for the year (5,697) (6,312)
----------- -----------
Loss per share (expressed in
US cents)
Basic and diluted loss per
share 12 (0.2c) (0.1c)
The notes on pages 28 to 65 are an integral part of these consolidated financial statements.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
For the year ended 31 December 2016
2016 2015
Notes $ 000 $ 000
ASSETS
Non-current assets
Intangible exploration and evaluation
assets 13 5,436 3,192
Other intangible assets 13 1,022 -
Goodwill 14 1,034 -
Investments 15 4,250 4,000
Property, plant and equipment 16 9,585 9,918
Other receivables 19 196 255
-------- ---------
21,523 17,365
-------- ---------
Current assets
Inventories 18 335 183
Trade and other receivables 19 268 426
Cash and cash equivalents 399 45
-------- ---------
1,002 654
-------- ---------
TOTAL ASSETS 22,525 18,019
-------- ---------
LIABILITIES
Non-current liabilities
Other financial liabilities 21 (937) (180)
Borrowings 22 - (259)
Deferred tax 11 (983) -
Provisions 23 (809) (735)
-------- ---------
(2,729) (1,174)
-------- ---------
Current liabilities
Bank overdraft (155) (62)
Trade and other payables 20 (2,615) (3,049)
Other financial liabilities 21 (1,370) (10)
Borrowings 22 (566) (549)
Loan notes 24 (1,874) (1,230)
Derivative financial instruments 24 - (194)
-------- ---------
(6,580) (5,094)
-------- ---------
TOTAL LIABILITIES (9,309) (6,268)
-------- ---------
NET ASSETS 13,216 11,751
-------- ---------
EQUITY
Share capital 25 26,856 21,469
Merger reserve 26 (176) (176)
Foreign exchange reserve 27 284 349
Share based payment reserve 28 1,284 1,079
Loan note warrants 24 562 -
Retained earnings (12,878) (9,473)
-------- ---------
Total equity attributable to
the owners of the parent company 15,932 13,248
Non-controlling interests 33 (2,716) (1,497)
-------- ---------
TOTAL EQUITY 13,216 11,751
-------- ---------
These financial statements were approved and authorised for issue by the Board on 7 July 2017 and are signed on its behalf.
George Roach
Chief Executive Officer
CONSOLIDATED STATEMENT OF CASH FLOWS
As at 31 December 2016
2016 2015
$ 000 $ 000
Notes
Net cash outflow from operating
activities 30 (3,486) (3,099)
------- -------
Investing activities
Property, plant and equipment expenditure 16 (1,078) (4,365)
Exploration and evaluation expenditure 13 (276) (885)
Purchase of available-for-sale
financial assets (250) -
Cash acquired TCT 25 -
Proceeds from sale of investment
in Joint Venture - 1,000
Net cash used in investing activities (1,579) (4,250)
------- -------
Financing activities
Proceeds from borrowings 22 - 800
Net proceeds from issue of loan
notes 24 2,350 4,142
Net proceeds from issue of share
capital 25 3,178 2,218
Finance charges (168) -
Repayment of finance lease (36) -
Net cash from financing activities 5,324 7,160
------- -------
Net increase /(decrease) in cash
and cash equivalents 259 (189)
Cash and cash equivalents at beginning
of year (17) 174
Effect of foreign exchange rate
variation 2 (2)
Net cash and cash equivalents at
end of year 244 (17)
------- -------
The notes on pages 28 to 65 are an integral part of these consolidated financial statements.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY As at 31 December 2016
Share Total
Foreign based Loan attributable Non-controlling
Share Merger exchange payment note Retained to owners interest Total
capital reserve reserve reserve warrants earnings of parent ("NCI") equity
$ 000 $ 000 $ 000 $ 000 $000 $ 000 $ 000 $ 000 $ 000
At 1 January
2015 14,792 (176) 299 1,118 - (6,076) 9,957 373 10,330
Loss for the
year - - - - - (5,992) (5,992) (1,870) (7,862)
Foreign exchange
translation - - 50 - - - 50 - 50
Gain on
available-for-sale
asset - - - - - 1,500 1,500 - 1,500
-------- -------- --------- -------- ---------- --------- ------------- ---------------- --------
Total comprehensive
income for
the period - - 50 - - (4,492) (4,442) (1,870) (6,312)
Transactions
with owners
Issue of equity
shares 6,757 - - - - 6,757 - 6,757
Share issue
costs (80) - - - - (80) - (80)
Share based
payment - - (39) 1,095 1,056 - 1,056
-------- -------- --------- -------- ---------- --------- ------------- ---------------- --------
At 1 January
2016 21,469 (176) 349 1,079 - (9,473) 13,248 (1,497) 11,751
-------- -------- --------- -------- ---------- --------- ------------- ---------------- --------
Loss for the
year - - - - - (3,405) (3,405) (2,227) (5,632)
Foreign exchange
translation - - (65) - - - (65) - (65)
Total comprehensive
income for
the period - - (65) - - (3,405) (3,470) (2,227) (5,697)
Transactions
with owners
Acquisition
of TCT - - - - - - - 1,008 1,008
Issue of equity
shares 5,640 - - - - - 5,640 - 5,640
Share issue
costs (253) - - - - - (253) - (253)
Share based
payment - - - 205 - - 205 - 205
Loan note warrants - - - - 562 - 562 - 562
-------- -------- --------- -------- ---------- --------- ------------- ---------------- --------
At 31 December
2016 26,856 (176) 284 1,284 562 (12,878) 15,932 (2,716) 13,216
-------- -------- --------- -------- ---------- --------- ------------- ---------------- --------
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1. General information
Premier African Minerals Limited ('Premier' or 'the Company'), together with its subsidiaries (the 'Group'), was incorporated in the Territory of the British Virgin Islands under the BVI Business Companies Act, 2004. The address of the registered office is Craigmuir Chambers, PO Box 71, Road Town, Tortola, British Virgin Islands.
The Group's operations and principal activities are the mining and development of mineral reserves on the African continent.
Premier's shares were admitted to trading on the London Stock Exchange's AIM market on 10 December 2012.
2. Basis of preparation
These consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) in issue and as endorsed by the European Union. IFRS includes interpretations issued by the IFRS interpretations Committee (formerly IFRIC).
The consolidated financial statements have been prepared under the historical cost convention with the exception of available-for-sale financial assets and derivative financial instruments which are included at fair value, and on a going concern basis. The preparation of financial statements in conformity with EU adopted IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Group's accounting policies.
The accounting policies set out below are consistent across the Group and to all periods presented in these financial statements.
3. Significant accounting policies
Basis of consolidation
Subsidiaries are all entities (including special purpose entities) over which the Group has control. The Group controls an entity when it is exposed to, or has the rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the Group controls another entity. The Group also assesses existence of control where it does not have more than 50% of the voting power but is able to govern the financial and operating policies by virtue of de-facto control.
This is evidenced with RHA Tungsten (Private) Limited which the Group owns 49% of but is consolidated into the Group (refer note 4).
De-facto control may arise in circumstances where the size of the Group's voting rights relative to the size and dispersion of holdings of other shareholders give the Group the power to govern the financial and operating policies.
Subsidiaries are consolidated, using the acquisition method, from the date that control is gained and non-controlling interests are apportioned on a proportional basis.
Inter-company transactions, balances and unrealised gains on transactions between group companies are eliminated. Unrealised losses are also eliminated. When necessary amounts reported by subsidiaries have been adjusted to conform with the Group's accounting policies.
Business combinations and goodwill
The Group applies the acquisition method to account for business combinations. The consideration transferred for the acquisition of a subsidiary is the fair values of the assets transferred, the liabilities incurred to the former owners of the acquiree and the equity interests issued by the Group. The consideration transferred includes the fair value of any asset or liability resulting from a contingent consideration arrangement. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date. The Group recognises any non-controlling interest in the acquiree on an acquisition-by-acquisition basis, either at fair value or at the non-controlling interest's proportionate share of the recognised amounts of the acquiree's identifiable net assets.
Goodwill is measured as the excess of the sum of the consideration transferred, the amount of any non-controlling interests in the acquiree, and the fair value of the acquirer's previously held equity interest in the acquiree (if any) over the net of the acquisition-date amounts of the identifiable assets acquired and the liabilities assumed.
Goodwill is tested for impairment as at the reporting date. Goodwill is allocated for the purpose of impairment testing to cash generating units and then the recoverable amount of each cash generating unit at the period end is assessed on the basis of value in use, or if higher the fair value less costs of disposal. If the recoverable amount exceeds the carrying values no impairment loss is recognised.
Transactions with non-controlling interests that do not result in loss of control are accounted for as equity transactions - that is, as transactions with the owners in their capacity as owners. The difference between fair value of any consideration paid and the relevant share acquired of the carrying value of net assets of the subsidiary is recorded in equity. Gains or losses on disposals to non-controlling interests are also recorded in equity.
Adoption of new and revised standards
At the date of authorisation of these financial statements, the following Standards and Interpretations, which have not been applied in these financial statements, were in issue, but not effective for the year ended 31 December 2016:
Title Subject Effective
date
------------- ---------------------------------------------- --------------
All IFRS Annual Improvements to IFRSs 2014-2016 1 January
and IFRS Cycle 2017 &
12* 1 January
2018
Amendments Recognition of Deferred Tax Assets for 1 January
to IAS 12*: Unrealised Losses 2017
Amendments Disclosure Initiative 1 January
to IAS 7* 2017
Amendments Classification and Measurement of Share-based 1 January
to IFRS Payment Transactions 2018
2*
IFRIC 22* Foreign Currency Transactions and Advance 1 January
Consideration 2018
IFRS 9 Financial Instruments 1 January
2018
IFRS 15 Revenue from Contracts with Customers 1 January
(IFRS 15 clarifications not EU-endorsed) 2018
IFRS 16* Leases 1 January
2019
*Not yet endorsed in the EU
The Directors anticipate that the adoption of these Standards and Interpretations as appropriate in future periods will have no material impact on the financial statements of the Group
Revenue
Revenue from the sale of wolframite concentrate is recognised in profit or loss when the product is sold. A sale occurs when the significant risks and rewards of ownership have been transferred to the buyer. Ownership is transferred when the concentrate is delivered to the buyer's designated port and a certificate of delivery is obtained.
Foreign currencies
The Group's presentation currency and the functional currency of each of the group's entities is US Dollars.
Foreign currency transactions are recorded at the exchange rate ruling on the date of transaction. Foreign exchange gains and losses resulting from the settlement of such transactions, and from the retranslation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies, are recognised in profit or loss.
Taxation
The Group has no taxable profit during the year.
Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities in the consolidated financial statements and the corresponding tax bases used in the tax computations, and is accounted for using the balance sheet liability method. Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised.
Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in profit or loss, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity.
Exploration and evaluation assets
The Group applies the full cost method of accounting for Exploration and Evaluation ('E&E') costs, having regard to the requirements of IFRS 6 Exploration for and Evaluation of Mineral Resources. Under the full cost method of accounting, costs of exploring for and evaluating mineral resources are accumulated by reference to appropriate cost centres being the appropriate licence area and/or licence areas held under option agreements. An option agreement grants the option holder the right to explore and evaluate mineral resources, and to acquire the licences at a later date at the discretion of the option holder. Exploration and evaluation assets are tested for impairment as described further below. Where appropriate, licences may be grouped into a cost pool.
All costs of E&E are initially capitalised as E&E assets, such as payments to acquire the legal right to explore, including option payments, costs of technical services and studies, seismic acquisition, exploratory drilling and testing. Intangible costs include directly attributable overheads together with the cost of other materials consumed during the exploration and evaluation phases.
Costs incurred prior to having obtained the legal rights to explore an area are expensed directly to profit or loss as they are incurred.
E&E costs are not amortised prior to the conclusion of appraisal activities.
E&E assets related to each exploration licence or pool of licences are carried forward, until the existence (or otherwise) of commercial reserves has been determined. Once the technical feasibility and commercial viability of extracting a mineral resource is demonstrable, the related E&E assets are assessed for impairment on an individual licence or cost pool basis, as appropriate, as set out below and any impairment loss is recognised in profit or loss. The carrying value, after any impairment loss, of the relevant E&E assets is then reclassified as property, plant and equipment.
E&E assets are assessed for impairment when facts and circumstances suggest that the carrying amount may exceed its recoverable amount. Such indicators include, but are not limited to, those situations outlined in paragraph 20 of IFRS 6 Exploration for and Evaluation of Mineral Resources and include the point at which a determination is made as to whether or not commercial reserves exist.
The aggregate carrying value is compared against the expected recoverable amount, generally by reference to the present value of the future net cash flows expected to be derived from production of commercial reserves.
When a licence or pool of licences is abandoned or there is no planned future work, the costs associated with the respective licences are written off in full.
Any impairment loss is recognised in profit or loss and separately disclosed.
The Group considers each licence, or where appropriate, a pool of licences, separately, for the purposes of determining whether impairment of E&E assets has occurred.
Intangible asset - forestry concession
The forestry concession has been provisionally valued using a discounted future cash flow earning approach. The recognition of the intangible asset fulfils the conditions of being identifiable and separable and is owned by the Mozambican company acquired during the period.
Amortisation will be charged on a straight line basis of 10 years.
Inventory
Inventory is valued at the lower of cost and net realisable value. The cost of inventories is based on the cost of consumables and cost of production. Net realisable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and selling expenses.
Property, plant and equipment
Property, plant and equipment ('PPE') is stated at cost less accumulated depreciation and any accumulated impairment losses. Depreciation is provided on all PPE to write off the cost less estimated residual value of each asset over its expected useful economic life on a straight-line basis at the following annual rates:
-- Land & buildings - 10 years -- Plant & equipment - 4/5 years -- Mine - depreciated over the life of the mine currently assessed at eight years
-- Assets under construction - not depreciated and will be transferred to the appropriate category of PPE and depreciated when fully ready to use.
At each reporting date, the Group reviews the carrying amounts of its property, plant and equipment to determine whether there is any indication that those assets have suffered an impairment loss.
If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where the asset does not generate cash flows that are independent from other assets, the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs. Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset (or cash-generating unit) for which the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised as an expense immediately.
Where an impairment loss subsequently reverses, the carrying amount of the asset (cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (cash-generating unit) in prior years. A reversal of an impairment loss is recognised in profit or loss immediately.
Financial instruments
Non-derivative financial instruments
Non-derivative financial instruments comprise cash and cash equivalents, trade and other receivables, investments in shares, borrowings, other financial liabilities and trade and other payables.
There is no material difference between the book value and fair value of the Group's financial instruments.
Financial assets
The Group classifies all its financial assets as loans and receivables or as available-for-sale investments. Management determines the classification of financial assets at initial recognition.
Loans and receivables are classified as current assets or non-current assets based on their maturity date. Loans and receivables comprise "Trade and other receivables" and "Cash and cash equivalents" in the statement of financial position. Loans and receivables are recognised initially at fair value and subsequently carried at amortised cost less any impairment.
A provision for impairment of receivables is established when there is objective evidence that the Group will not be able to collect all amounts due. Indicators of impairment would include financial difficulties of the debtor, likelihood of the debtor's insolvency, default in payment or a significant deterioration in credit worthiness. Any impairment is recognised in profit or loss.
Subsequent recoveries of amounts previously written off are credited in profit or loss.
Available-for-sale investments are non-derivative financial assets that are either designated in this category or not classified in any other category of financial asset. They are included in non-current assets unless management intends to dispose of the investment within 12 months of the reporting date. Available-for-sale investments are initially recognised at fair value plus transaction costs and subsequently carried at fair value. Changes in fair value are recognised in equity. When available-for-sale investments are sold or impaired, the accumulated fair value adjustments recognised in equity are included in profit or loss as gains or losses from available-for-sale investments.
Available-for-sale investments are assessed for indicators of impairment at the end of each reporting period. They are considered to be impaired when there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows of the investment have been negatively affected.
Financial liabilities
Borrowings and other financial liabilities are recognised initially at fair value, net of transaction costs incurred and are subsequently stated at amortised cost. Any difference between the amounts originally received (net of transaction costs) and the redemption value is recognised in profit or loss over the period to maturity using the effective interest method.
Borrowings and other financial liabilities are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least 12 months after the statement of financial position date.
Trade payables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method.
Convertible loan notes and derivative financial instruments
The presentation and measurement of loan notes for accounting purposes is governed by IAS 32 and IAS 39. These standards require the loan notes to be separated into two components:
-- A derivative liability, and -- A debt host liability.
This is because the loan notes are convertible into an unknown number of shares, therefore failing the 'fixed-for-fixed' criterion under IAS 32. This requires the 'underlying option component' of the loan note to be valued first (as an embedded derivative), with the residual of the face value being allocated to the debt host liability (refer financial liabilities policy above).
Valuation method
The fair value of the derivative liability is determined in accordance with IFRS 13 using an appropriate valuation methodology.
Valuation of the embedded derivative
The embedded derivative represents the additional value of the conversion features on the note. The value depends on the probability of the conversion triggers being triggered and the expected payoff under that scenario.
The valuation of the embedded derivative requires the estimation of the probability of default and the probability of the conversion triggers being triggered at each date where the company is contracted to redeem the notes. The value of the embedded derivative is the discounted probability weighted payoff under the different conversion trigger scenarios.
Provisions
Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation.
An obligation to incur environmental restoration, rehabilitation and decommissioning costs arises when disturbance is caused by the development or on-going production of a mining property. Such costs arising from the decommissioning of plant and other site preparation work, discounted to their net present value, are provided for and capitalised at the start of each project, as soon as the obligation to incur such costs arises. These costs are recognised in the income statement over the life of the operation, through the depreciation of the asset and the unwinding of the discount on the provision. Costs for restoration of subsequent site damage which is created on an ongoing basis during production are provided for at their net present values and recognised in the income statement as extraction progresses.
Changes in the measurement of a liability relating to the decommissioning of plant or other site preparation work (that result from changes in the estimated timing or amount of the cash flow, or a change in the discount rate) are added to or deducted from the cost of the related asset in the current period. If a decrease in the liability exceeds the carrying amount of the asset, the excess is recognised immediately in the income statement. If the asset value is increased and there is an indication that the revised carrying value is not recoverable, an impairment test is performed in accordance with the accounting policy above.
Equity
Equity comprises the following:
-- Issued share capital - 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 the proceeds.
-- Merger reserve represents the difference between the nominal value of shares issued by the Company to the shareholders of ZimDiv Holdings Limited and the nominal value of the ZimDiv shares taken in exchange.
-- Foreign exchange reserve represents the differences arising from translation of investments in overseas subsidiaries.
-- Share-based payment reserve represents equity-settled share-based payments until such share options are exercised and the fair value of warrants issued.
-- Retained earnings represent retained profits less retained losses.
-- Non-controlling interests represents the share of retained profits less retained losses of the non-controlling interests.
Share based payment transactions
The Group operates an equity-settled share option plan and issues warrants from time to time either with direct subscriptions in equity or as finance related packages. The fair value of the service received in exchange for the grant of options or issue of warrants is recognised as an expense or recognised as a deduction from equity or an addition to intangible assets depending on the nature of the services received. The fair value of warrants issued as part of a finance related package is charged as finance costs in the profit or loss.
Share based payments are measured at fair value (excluding the effect of non-market-based vesting conditions) at the date of grant. The fair value determined at the grant date of equity-settled share based payments is expensed on a straight-line basis over the vesting period, based on the Group's estimate of shares that will eventually vest and adjusted for the effect of non-market-based vesting conditions.
Fair value is measured by use of the Black Scholes model. 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 warrants issued as part of the loan note agreements are also subject to certain reset provisions. The terms of the warrant agreements allow for an adjustment to the exercise price or the quantum of warrants issued depending on a number of circumstances. The fair value of the warrants under any re-pricing event is also valued by use of the Black Scholes model at their current and new price. The difference in fair value is charged to profit or loss as and when a re-pricing event occurs.
Operating leases
Leases in which a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases. Payments made under operating leases are charged to profit or loss on a straight-line basis over the period of the lease.
Finance leases
Leases where the lessee acquires the economic benefits of the use of the leased asset for the major part of its economic life in return for entering into an obligation to pay for that right are classified as finance leases. At commencement of the lease term, finance leases are recognised as assets and liabilities in the statement of financial position at amounts equal to the fair value of the leased asset or, if lower the present value of the minimum lease payments, determined at the inception of the lease. The discount rate is the interest rate implicit in the lease. Initial direct costs are added to the amount recognised as an asset.
Minimum lease payments are apportioned between the finance charge and the reduction of the outstanding liability. The finance charge shall be allocated to each period during the lease term so as to produce a constant periodic rate of interest on the remaining balance of the liability.
Operating segments
Segmental information is provided for the Group on the basis of information reported internally to the chief operating decision-maker for decision-making purposes. The Group considers that the role of chief operating decision-maker is performed by the Group's board of directors.
4. Significant accounting judgements, estimates and assumptions
In applying the Group's accounting policies, the Directors are required to make judgements, estimates and assumptions about the carrying amounts of the assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The key estimates and assumptions that have a significant risk of causing material adjustments to the carrying amounts of certain assets and liabilities recognised in these consolidated financial statements within the next financial year and key judgements are:
Recoverability of exploration and evaluation assets
Determining whether an exploration and evaluation asset is impaired requires an assessment of whether there are any indicators of impairment, including by reference to specific impairment indicators prescribed in IFRS 6 Exploration for and Evaluation of Mineral Resources. If there is any indication of potential impairment, an impairment test is required based on value in use of the asset. The carrying amount of exploration and evaluation assets at 31 December 2016 was $5,436,000 (2015: $3,192,000). No impairment charge was recognised in 2016 because the directors' judgement is that there is no indication of impairment (2015: $844,000 impairment recognised in respect of the Katete and Tinde licenses).
Recoverability of mine assets
Determining whether a mine asset is impaired requires an assessment of whether there are any indicators of impairment, including by reference to specific impairment indicators prescribed in IAS36 Impairment of Assets. If there is any indication of potential impairment, an impairment test is required based on value in use of the asset. The value in use calculation requires the entity to estimate the future cash flows expected to arise from the cash-generating unit and a suitable discount rate in order to calculate present value.
During 2016 the operating losses at RHA were higher than predicted due to operations in the open pit failing to deliver ore at the anticipated grade, suspension of operations during April and May 2016 and September to December 2016 to permit hoist rehabilitation and reinstallation and upgrade of the underground shaft. The operating losses were an indicator of potential impairment and management completed an impairment review.
Key assumptions used in generating the discounted cash flow analysis included: 11,500 mtu concentrate production per month; 8 year mine plan; APT price of $220 per metric ton unit ('mtu'); 26% discount rate; and a zero growth rate in operating cash flow after the plant is fully operational, forecast to be for the full year 2018. Other key factors include attainment of forecast grade as set out in our resource statement and plant operating parameters being achieved. The XRT sorter installation is a significant element in increasing confidence in RHA in that 70% of the anticipated run of mine feed target of 40,000 ton per month is passed through the sorter, which is able to recover approximately 95% of the mineralisation in a mass pull of some 5%. This is expected to significantly reduce operating costs per mtu of concentrate and provide a much higher overall mining rate once grade, recoveries and plant throughput meet expectations. There is no certainty that these assumptions will be achieved.
Sensitivity analysis was conducted on the volume, grade, concentrate production per month and APT price assumptions in the model.
A 10% reduction in the volumes mined from 40,000 tons per month assumed in the model to approximately 36,000 tons per month would not incur an impairment charge if all other assumptions were met.
A 10% decrease in the grade from those assumed in the model (5.5kg per ton for underground and 2.2 kg per ton for open pit) would not incur an impairment charge if all other assumptions were met.
A decrease in concentrate production per month from the 11,500 mtu included in the model to 10,000 mtu would not incur an impairment charge if all other assumptions were met.
A 10% reduction in the APT price from $220/mtu as included in the model $200/mtu would not incur an impairment charge if all other assumptions were met. The model currently uses an APT price of $220/mtu and current prices are $214-223/mtu.
The model assumes annual revenues of $19.5m from 2018. Revenue generation is dependent on a number of inter-linked assumptions and a combination of changes in those assumptions that reduced annual revenue to less than approximately $14.0m per annum from 2018 would result in an impairment charge.
The carrying amount of mine assets at 31 December 2016 was $9,412,000 (2015: $9,918,000). The mine assets relate to the RHA Tungsten Mine in Zimbabwe. The assessment indicates that no impairment charge was needed for 2016.
Estimation of useful life for mine assets
Mine assets are depreciated /amortised on a straight-line basis over the life of the mine concerned. Judgement is applied in assessing the mine's useful life and in the case of RHA Tungsten, the Group's only operating concern, is based on the initial Preliminary Economic Assessment ('PEA') first published in August 2013 that initially modelled an 8 year life of mine.
Basis of consolidation
RHA Tungsten (Private) Limited
During 2013, Premier concluded a shareholders' agreement with the National Indigenisation and Economic Empowerment Fund ('NIEEF') whereby NIEEF acquired 51% of the shares of RHA Tungsten (Private) Limited ('RHA'). The principal terms of the agreement are as follows:
-- ZimDiv Holdings Limited ('ZimDiv'), a wholly owned subsidiary, is appointed as the Manager of the project for an initial 5 year term.
-- ZimDiv has marketing rights to the product.
-- Each shareholder can appoint up to two directors each, with a 5(th) director who is rotated between each shareholder. The 5(th) director will not have a vote.
-- Although the local Zimbabwean company is responsible for financing and repayment of such, Premier has secured the funding to advance RHA to production.
-- There has been no operational change since the agreements were signed and Premier continues to fund RHA until it becomes cash generative.
At the financial year-end, two directors of RHA were from the Premier Group and two from NIEEF. A fifth board appointee has not yet been made. There is no majority vote at board level and Premier still retains operational and management control through its shareholders' agreement. Following the assessment, the Directors concluded that Premier, through its wholly owned subsidiary ZimDiv, retained control and should continue to consolidate 100% of RHA and recognise non-controlling interests in the consolidated financial statements.
TCT Industrias Florestais Limitada
During 2016, Premier concluded the public deeds for the assignment of quotas to acquire a 26% interest in TCT IF from Transport Commodity Trading Mozambique Limitada ("TCTM") and a further 26% interest from GAPI Sociedade de Investimentos S.A. ("GAPI"), in aggregate amounting to 52% for a total consideration of US$2.1 million. Despite not holding legal title to the quotas, the directors have concluded that Premier has control of TCT by virtue of irrevocable power of attorney to permit Premier to participate and vote in all General Assembly meetings on behalf of both parties.
At the financial year-end, one director of TCT was from the Premier Group and two directors from TCT. There is no majority vote at board level and Premier still retains operational and management control. Premier has further been appointed as the manager of TCT.
Following the assessment, the Directors concluded that Premier should consolidate 100% of TCT and recognise non-controlling interests in the consolidated financial statements.
Valuations
-- Valuation of inventory - judgement was applied in calculating the initial carrying value of inventory and judgement continues to be applied in assessing the net realisable value. See accounting policy regarding inventories.
-- Available-for-sale investment - Premier's investment in Circum Minerals Limited ('Circum') is classified as an available-for-sale investment and as such is required to be measured at fair value at the reporting date. As Circum is unlisted there are no quoted market prices. In previous years the fair value of the Circum shares was derived using the most recent placing price. In the absence of placings during 2016, the directors have sought to update the latest placing price of $2 per share in August 2015 with reference to share price movements of comparable listed companies and have concluded that there is no change in fair value as at 31 December 2016.
-- Valuation of warrants, share options and ordinary shares issued as consideration - judgement is applied in determining appropriate assumptions to be used in calculating the fair value of the warrants, shares and share options issued. Refer accounting policy note and note 29.
-- Valuation of the embedded derivative in the convertible loan notes - judgement is applied in determining appropriate assumptions to be used in calculating the fair value of derivatives associated with the convertible loan notes. Refer accounting policy note and note 31.
Identification and valuation of intangible assets acquired in a business combination
Judgement has been applied in the identification and valuation of the forestry, lodge and limestone assets acquired in the acquisition of TCT - refer to note 13 for details of the assumptions and estimates made. Fair values have been determined on a provisional basis because management have not yet completed the fair value exercise. Any subsequent change in identification and valuation of these assets during the measurement period will impact the fair value of intangible assets and also goodwill, deferred tax and non-controlling interests arising in respect of the business combination.
Going concern
Judgement is applied in assessing the likelihood and timing of future cash flows associated with the Group's activities. Judgement is also applied in assessing the likelihood of receiving future funding.
5. Going concern
These consolidated financial statements are prepared on the going concern basis. The going concern basis assumes that the Group will continue in operation for the foreseeable future and will be able to realise its assets and discharge its liabilities and commitments in the normal course of business. The Group has incurred significant operating losses and negative cash flows from operations as the Group continued to move from a development and exploration company into operations during the year under review.
During the year, the Group raised $5.528 million in net funding through share and warrant subscriptions to fund further investment in the RHA Tungsten Mine to improve production, exploration at Zulu, to acquire a minor stake in the unlisted Casa Mining and to fund working capital.
Immediately subsequent to the year-end, the Group raised a further $615,000 (GBP550,000) through the further issue of Loan Notes. In January 2017, the Group raised a further $1.277 million (GBP1.020 million) through a direct subscription for new shares, whilst in March 2017; the Group raised further gross proceeds of $2.512 million (GBP2.0 million) through an underwritten offer through PrimaryBid.com. There remains an active and very liquid market for the Group's shares.
The Directors have prepared cash flow forecasts for the period ended 31 December 2018, taking into account forecast operating cash flow and capital expenditure requirements for its RHA Tungsten mine, operating cash flows at TCT, available working capital and forecast expenditure for the rest of the Group including overheads and other development costs. The forecasts include additional funding requirements which the directors believe will be met.
In the event that RHA fails to meet revenue predictions from the end of Q3, and any other relevant risk factor discussed in regard to RHA arises, the Group will need to obtain additional debt finance or equity to fund its operations and other project development activities for the period to 31 December 2018. The cash flow forecast is as much dependent on production targets being met at RHA, as the price of APT remaining stable during the period to 31 December 2018.
The Board believes it has a valuable asset in the Zulu Lithium and Tantalum exploration project and is considering a number of approaches that have been made that may result in a sale of all or part of this asset and a resultant liquidity event.
The Board also believes that it has a valuable asset in the Circum shares whose estimated fair value at 31 December 2016 remained at $4 million.
After careful consideration of those matters set out above, the Directors are of the opinion that the Group will be able to obtain adequate resources to enable it to undertake its planned activities for the period to 31 December 2018 from production and from additional fund raising and have prepared the consolidated financial statements on the going concern basis. Nevertheless due to the uncertainties inherent in meeting its revenue predictions and obtaining additional fund raising there can be no certainty in these respects. The financial statements do not include any adjustments that would result if the Group was unable to continue as a going concern.
6. Segmental reporting
Segmental information is presented in respect of the information reported to the Directors.
For the purposes of the current financial year, segmental information has been changed to separately report the revenue generating segments of RHA Tungsten (Private) Limited that operates the RHA Tungsten Mine and TCT IF.
The RHA Tungsten Mine segment derives income primarily from the production and sale of wolframite concentrate whilst the TCT segment includes a forestry concession and an exploration asset. All other segments are primarily focused on exploration and on administrative and financing segments.
Segmental results, assets and liabilities include items directly attributable to a segment as well as those that can be allocated on a reasonable basis.
RHA Tungsten
Unallocated Mine* Exploration TCT IF**
By operating segment Corporate Zimbabwe Zimbabwe Mozambique Total
2016 $ 000 $ 000 $000 $000 $ 000
Result
Revenue (1) - 135 - 57 192
Impairment of exploration
and evaluation assets - - - - -
Operating loss (2,274) (2,499) (149) 9 (4,912)
Loss before taxation (2,328) (3,214) - 9 (5,632)
-------------- ------------- -------------- ------------- --------
Assets
Exploration and
evaluation assets - - 3,468 1,968 5,436
Other intangible
assets 1,022 1,022
Goodwill - - - 1,034 1,034
Investments 4,250 - - - 4,250
Property, plant
and equipment - 9, 412 - 173 9,585
Inventories - 221 - 114 335
Trade and other
receivables 216 241 - 7 464
Cash 352 38 1 7 399
-------------- ------------- -------------- ------------- --------
Total assets 4,818 9,912 3,469 4,327 22,526
-------------- ------------- -------------- ------------- --------
Liabilities
Other financial
liabilities 2,127 179 - - 2,306
Borrowings 566 - - - 566
Bank overdraft - 155 - - 155
Trade and other
payables 1,037 2,165 8 214 3,424
Deferred tax - - - 983 983
Loan notes 1,874 - - - 1,874
Total liabilities 5,604 2,499 8 1,197 9,308
-------------- ------------- -------------- ------------- --------
Net assets (786) 7,414 3,462 3,130 13,216
-------------- ------------- -------------- ------------- --------
Other information
Depreciation - (1,566) - (18) (1,584)
Exploration and
evaluation additions - - 276 1,968 2,244
Other intangible
asset additions - - - 1,022 1,022
Property, plant
and equipment additions - 1,070 - 8 1,078
Property, plant
and equipment additions
- TCT - - - 173 173
*Represents 100% of the results and financial position of RHA Tungsten (Private) Limited ("RHA") whereas the Group owns 49%. Non-controlling interests are disclosed in note 33.
**Represents 100% of the results and financial position of TCT Industrias Florestais Limitada ("TCT IF") whereas the Group controls 52%. Non-controlling interests are disclosed in note 33.
(1) RHA Revenue is generated from sales to one customer, in line with RHA's off-take agreement, whilst TCT Revenue is generated from the sale of forestry products and the provision of hospitality services.
Exploration
Unallocated RHA Tungsten Zimbabwe
By operating segment Corporate Mine, Zimbabwe* Total
2015 $ 000 $ 000 $000 $ 000
Result
Revenue (1) - 103 - 103
Impairment of exploration
and evaluation assets - - (844) (844)
Operating loss (2,356) (2,910) (877) (6,143)
Loss before taxation (4,018) (2,967) (877) (7,862)
-------------- ----------------- ------------ --------
Assets
Exploration and evaluation
assets - - 3,192 3,192
Investment 4,000 - - 4,000
Property, plant and
equipment - 9,918 - 9,918
Inventories - 183 - 183
Financial assets 328 353 - 681
Cash 44 - 1 45
-------------- ----------------- ------------ --------
Total assets 4,372 10,454 3,193 18,019
-------------- ----------------- ------------ --------
Liabilities
Bank overdraft - 62 - 62
Segment liabilities 584 3,164 36 3,784
Other financial liabilities 190 - 190
Borrowings 505 303 - 808
Loan notes 1,230 - - 1,230
Derivative financial
liability 194 - - 194
-------------- ----------------- ------------ --------
Total liabilities 2,513 3,719 36 6,268
-------------- ----------------- ------------ --------
Net assets 1,859 6,735 3,157 11,751
-------------- ----------------- ------------ --------
Other information
Depreciation - (714) - (714)
Exploration and evaluation
additions - 885 - 885
Property, plant and
equipment additions - 5,937 - 5,937
*Represents 100% of the results and financial position of RHA Tungsten (Private) Limited whereas the Group owns 49%. Non-controlling interests are disclosed in note 33.
(1) Revenue is generated from sales to one customer, in line with RHA's off-take agreement.
2016 2015
$ 000 $ 000
7. Cost of sales
Mining contractor 378 868
Staff costs 239 319
Consumables 87 203
Equipment hire and maintenance 100 130
Mining services 8 60
Plant services 9 46
Selling costs 37 51
E&E development costs 11 -
Inventory adjustment (219) (121)
650 1,556
----- -----
Cost of sales comprises production costs in both RHA Tungsten (Pvt) Limited and TCT Industrias Florestais Limitada.
8. Administrative expenses
2016 2015
$ 000 $ 000
Staff costs 462 655
Consulting and advisory fees 726 804
Directors' fees 59 145
Audit, accounting and legal fees 550 433
Marketing and public relations 99 107
Travel 273 265
Security costs 58 40
Vehicle operating costs 26 31
Insurance 61 40
Office and administration 290 264
Foreign exchange losses 61 16
Exploration costs expensed - 24
Share based payment (notes 28 and
29) 204 308
------ ------
2,869 3,132
------ ------
9. Directors' remuneration
Directors' remuneration 300 487
----------------- -------------
Directors' Consultancy Total
Fees Fees $ 000
2016 $000 $ 000
Executive Directors
George Roach - 180 180
Pamela Hueston (*) - 85 85
Non-Executive Directors
John (Ian) Stalker 20 - 20
Michael Foster 15 - 15
35 265 300
------------- ------------ ---------
Directors' Consultancy Total
Fees Fees $ 000
2015 $000 $ 000
Executive Directors
George Roach - 180 180
Pamela Hueston 5 180 185
Non-Executive Directors
John (Ian) Stalker 75 - 75
Neil Herbert 21 - 21
Michael Foster (*) 26 - 26
127 360 487
----------- ------------ -------
(*) These directors were not employed during the full financial year.
The Directors' fees disclosed in note 8 herein include $23,750 (31 December 2015: $15,000) being the fees paid to Directors of RHA Tungsten (Pvt) Limited, who are not directors of the parent company.
The 2016 Directors fees noted above remain unpaid at the financial year-end.
No pension benefits are provided for any Directors.
10. Finance costs
2016 2015
$ 000 $ 000
Interest charged by suppliers 138 57
Interest on borrowings 81 35
Derivative financial liability transaction
costs 423 1,567
Unwinding of discount on provisions 74 35
Interest on finance lease 5 25
721 1,719
------ ------
11. Taxation
Taxation charge for the year - -
There is no taxation charge in the year ended 31 December 2016 (31 December 2015: Nil). As the Group is an international Business Group, the British Virgin Islands imposes no corporate taxes or capital gains tax. However, the Group may be liable for taxes in the jurisdictions of the underlying operations.
There are no recognised tax assets in respect of accumulated losses in West Africa or Zimbabwe. The Group has incurred tax losses; however a deferred tax asset has not been recognised in the accounts due to the unpredictability of future profit streams.
Deferred tax
2016 2015
$ 000 $ 000
Deferred tax TCT 983 -
983 -
------ ------
12. Earnings (Loss) per share
The calculation of earnings (loss) per share is based on the income (loss) after taxation divided by the weighted average number of shares in issue during the year:
2016 2015
Net loss attributable to owners of
the parent ($000) (3,405) (5,992)
Weighted average number of Ordinary
Shares in calculating basic earnings
per share ('000) 1,798,808 655,650
Basic income (loss) per share (US
cents) (0.2c) (0.1c)
Diluted income (loss) per share (US
cents) (0.2c) (0.1c)
As the Group incurred a loss for the year, there is no dilutive effect from share options and warrants in issue or the shares issued after the reporting date.
13. Intangible assets excluding goodwill
2016 2015
$ 000 $ 000
Exploration and evaluations assets 5,436 3,192
Other intangible assets 1,022 -
---------------------------- -------------
6,458 3,192
---------------------------- -------------
Exploration Other intangible
& Evaluation assets
assets $000 Total
$000 $000
Opening carrying value 2015 6,806 6,806
Expenditure on exploration and
evaluation 885 - 885
Transferred to property, plant
and equipment ** (3,655) - (3,655)
Impairment * (844) - (844)
---------------- ------------------- -------------
Opening carrying value 2016 3,192 - 3,192
Expenditure on exploration and
evaluation 276 - 276
Acquisition - limestone license 1,968 - 1,968
Acquisition - forestry concession - 1,022 1,021
---------------- ------------------- -------------
Closing carrying value 2016 5,436 1,022 6,458
---------------- ------------------- -------------
Exploration costs not specifically related to a licence or project or on speculative properties are expensed directly to profit or loss in the year incurred. During the year $ Nil (31 December 2015: $24,000) exploration costs were expensed.
Exploration and evaluation assets at 31 December 2016 relate to the Zulu Lithium and Tantalite Project located in Zimbabwe and the provisional valuation of the limestone licence in Mozambique (2015: Zulu Lithium and Tantalite Project only).
During the year $276,000 (2015: $ Nil) was capitalised to the Zulu Lithium and Tantalite Project. In the prior year $885,000 capitalised to Katete and Tinde was impaired. Exploration work conducted during the year indicated that both lithium and tantalum recovery may be a viable option. The Group views this project as strategic and exploration work will be continued in the future, cash flow permitting.
The group acquired a limestone licence as part of the TCT acquisition. The value of this asset has been estimated on a provisional basis because management are assessing the geological potential of the license and determining an appropriate valuation method.
During the year within the TCT acquisition, a forestry concession was acquired, which has been provisionally valued at $1,022,000 (2015: $ Nil) and is further described in note 14 herein.
* In the prior year capitalised costs relating to the Katete ($717,000) and Tinde ($127,000) assets located in Zimbabwe were impaired. The Tinde Project holds 9 mineral block claims mainly prospective for fluorspar. The Company plans to retain the claims however there are no immediate or future plans for development whilst the Group focuses its attention on other more prospective projects. The Katete Project holds 25 mineral block claims mainly prospective for rare earth elements. The Group has maintained the four key blocks of claims in the expansive area. The Board of Directors may decide at some future date to explore the properties however as at this time there is no formal exploration plan in place or funding allocated for future development.
** In the prior year, on the date of commercial viability and technical feasibility the carrying amount of exploration and evaluation assets related to the RHA Tungsten Project was transferred to Property, Plant and Equipment.
14. Business combination and goodwill
Acquisition
In October 2016 the company completed the acquisition of a 52% interest in Mozambique based TCT Industrias Florestais Limitada. TCT owns a substantial limestone deposit located on rail in the Sofala Province of Mozambique and is the holder of the exploration licence together with significant forestry operations.
In accordance with our stated strategy, Premier's business objective is to find, invest and acquire interests in low capex potentially near-term production assets. The TCT limestone project provides this opportunity in a region that the company currently operates and TCT's limestone and timber interests complement the company's current portfolio of natural resource interests.
In accordance with IFRS 3 Business Combinations, all acquired assets and liabilities were recognised at their fair values or provisional fair values on the date of acquisition, with the residual excess of the fair value of the consideration over net assets being recognised as goodwill.
The following table summarises the consideration and fair and provisional fair values of assets acquired and liabilities assumed at the date of acquisition:
$ 000
Property, plant and equipment * 188
Intangible assets - limestone exploration
license ** 1,968
Intangible assets - forestry concession
*** 1,022
Inventories * 72
Trade receivables and prepayments
* 34
Cash and cash equivalents * 25
Trade and other payables * (225)
Deferred tax liabilities **** (983)
-------
Fair value of net assets acquired 2,101
Non-controlling interest (1,008)
Goodwill 1,034
-------
Acquisition cost 2,127
-------
* These assets and liabilities are carried at their fair value
** The value of this asset has been estimated on a provisional basis because management are assessing the geological potential of the license and determining an appropriate valuation method
*** The value of this asset has been estimated on a provisional basis because management have not yet completed the fair value exercise
**** The deferred tax liability has been calculated based on the applicable tax rate applied to the intangible assets valuation
The acquisition cost will be satisfied by either cash or shares, which will be determined by the seller's request (see note 21.2).
Net cash outflow arising on acquisition:
$ 000
Cash consideration paid (less cash -
retention)
Acquisition related costs (25)
Cash and cash equivalents within
the TCT business on acquisition 25
Total net cash outflow on acquisition -
-------
Other costs relating to the acquisition have not been included in the consideration cost. Directly attributable acquisition costs include external legal and accounting costs incurred in compiling the acquisition legal contracts and the performance of due diligence activity amounted to $25,000. These costs were converted to equity as per note 25. TCT has a 31 December calendar year end. In the period between acquisition and 31 December 2016, TCT contributed revenue of $57,000 and net loss before taxation of $13,000.
15. Investments
2016 2015
$ 000 $ 000
Opening carrying value 4,000 2,500
Fair value of shares on acquisition 250 -
Fair value adjustment - 1,500
Closing carrying value 4,250 4,000
------ ------
Reconciliation of movement in investments
Investment in Circum Minerals Limited
* 1,400 1,400
Fair value adjustment ** 1,100 1,100
Fair value adjustment *** 1,500 1,500
Investment in Casa Mining Limited
**** 250 -
------ ------
Closing carrying value 4,250 4,000
------ ------
The shares are considered to be level 3 financial assets under the IFRS 13 categorisation of fair value measurements.
* Represents 2 million shares in unlisted entity Circum Minerals Limited ('Circum').
** As Circum is unlisted there are no quoted market prices. Fair value of the shares was therefore estimated using the price at which warrants in Circum shares were exercised by a third party in February 2015 at $1.25 per share.
*** Fair value of the shares was adjusted to the most recent placing price of $2 per share during August 2015.
**** Represents a 4.5% interest in Casa Mining Limited acquired in October 2016. Due to the recent purchase date, no change in fair value has been recognised
The fair value of these available-for-sale investments at 31 December 2016 amounted to $4,250,000 (31 December 2015: $4,000,000). The Directors consider that the carrying amount of investments approximates their fair value.
Subsequent to the yearend Circum Minerals Limited announced a 4.9 billion ton potash resource with seismic data suggesting further potential total resources. Annual low cost, low risk solution mining, scalable production plan, mine gate cash costs projected to be amongst the lowest in the world and the potential for the lowest capital intensity production indicate that potash recovery may be a viable option.
16. Property, plant and equipment
Assets under Plant & Land &
Mine construction equipment buildings Total
$000 $000 $000 $000 $000
Cost
At 1 January 2015 284 688 165 30 1,167
Additions 3,001 - 2,165 771 5,937
Transfers 3,615 (688) 728 - 3,655
------- -------------- ----------- ----------- -------
At 31 December
2015 6,900 - 3,058 801 10,759
Additions 842 - 228 8 1,078
Acquisition of
TCT - - 169 4 173
------- -------------- ----------- ----------- -------
At 31 December
2016 7,742 - 3,455 813 12,010
------- -------------- ----------- ----------- -------
Depreciation
At 1 January 2015 - - 119 8 127
Charge for the
year 431 - 242 41 714
------- -------------- ----------- ----------- -------
At 31 December
2015 431 - 361 49 841
Charge for the
year 1,161 - 343 80 1,584
At 31 December
2016 1,592 - 704 129 2,425
Net Book Value
At 31 December
2016 6,150 - 2,751 685 9,585
At 31 December
2015 6,469 - 2,697 752 9,918
------- -------------- ----------- ----------- -------
17. Subsidiaries
Premier had investments in the following subsidiary undertakings as at 31 December 2016, which principally affected the losses and net assets of the Group:
Country of incorporation Proportion
Name and operation of voting
interest Activity
%
------------------------ ---------- ----------------
ZimDiv Holdings Limited Mauritius 100 Holding Company
RRCC Ltd BVI 100 Holding Company
Regent Resources Capital Corporation Togo 100 Exploration
SAU
G and B African Resources Benin 100 Exploration
Benin SARL
Zulu Lithium Mauritius Holdings Mauritius 100 Holding Company
Limited
R.H.A. Tungsten Mauritius Mauritius 100 Holding Company
Limited
Kavira Minerals Holdings Limited Mauritius 100 Holding Company
Tinde Fluorspar Holdings Limited Mauritius 100 Holding Company
Lubimbi Minerals Holdings Mauritius 100 Holding Company
Limited
Gwaaii River Minerals Holdings Mauritius 100 Holding Company
Limited
Zulu Lithium (Private) Limited Zimbabwe 100 Exploration
RHA Tungsten (Private) Limited Zimbabwe 49* Development
Katete Mining (Private) Limited Zimbabwe 100 Exploration
Tinde Fluorspar (Private) Zimbabwe 100 Exploration
Limited
LM Minerals (Private) Limited Zimbabwe 100 Exploration
BM Mining & Exploration (Private) Zimbabwe 100 Exploration
Limited
TCT Industrias Florestais Mozambique 52** Forestry and
Limitada Exploration
* Accounted as a controlled subsidiary, refer note 4 significant accounting judgements, estimates and assumptions - Basis of consolidation.
** Accounted for as a subsidiary, refer note 3 Basis of consolidation and note 21.2 explaining power of attorney and right to appoint director.
18. Inventories
2016 2015
$ 000 $ 000
Wolframite concentrate and ore work-in-process 119 120
Mine consumables 102 63
Forestry raw material 20 -
Forestry work-in-progress 74 -
Forestry finished goods 20 -
335 183
------ ------
19. Trade and other receivables
2016 2015
$ 000 $ 000
VAT input tax receivable 199 303
Other receivables 213 284
Prepayments 52 94
------ ------
464 681
------ ------
Current 268 426
Non-current 196 255
------ ------
464 681
------ ------
Other receivables at 31 December 2016 include $196,000 (31 December 2015: $255,000) receivable from AgriMinco Corp ('AgriMinco'). The AgriMinco receivable is due on settlement of the Agriminco loan (refer note 22). The Directors consider that the carrying amount of other receivables and prepayments approximates their fair value.
In note 34.5 Events after the balance sheet date a settlement agreement has been reached with regard to this receivable and the loan payable.
20. Trade and other payables
2016 2015
$ 000 $ 000
Trade payables * 937 1,270
Accruals ** 1,443 1,618
Payroll liabilities 235 161
2,615 3,049
------ ------
All trade and other payables at 31 December 2016 are due within one year, non-interest bearing, and comprise amounts outstanding for mine purchases and on-going costs, except as described further below. The Directors consider that the carrying amount of trade and other payables approximates their fair value.
* Trade payables include an amount owing to Senet (Pty) Ltd. ("Senet"), for EPCM services relating to the construction of the infrastructure supporting the RHA Tungsten processing plant. The Company signed an Acknowledgment of Debt and Agreement to Pay on 16 April 2015 on behalf of RHA Tungsten (Private) Limited ("RHA") for all amounts due. All invoices are due within 30 days, after which interest will accrue at an annual interest rate of 25%, compounded daily, with all amounts due by 31 August 2015. On 26 October 2015, the Company agreed an extension of the payment terms with monthly repayments beginning 1 October 2015 and ending 30 April 2016. Senet agreed a reduction in the interest rate charged from the period 1 October 2015 until final settlement at the South African prime lending rate. As at 31 December 2015, the amount owing to Senet is $160,586, including accrued interest.
The full debt to Senet plus interest was settled during the current year.
** In the prior year, amounts owing to JR Goddard Contracting (Pvt) Ltd ("JRG"), the open pit mining contractor for RHA, were co-guaranteed by the Company and attracted interest at a rate of 12% per annum, compounded monthly. The Company entered into an agreement with JRG in September 2015 that JRG would receive no less than $50,000 per month in settlement of outstanding liabilities. At 31 December 2015, the amount owing to JRG was $533,032 including accrued interest.
On 10 March 2016, the contact with JRG was terminated and the Company entered into a Memorandum of Agreement to settle all outstanding amounts under the contract which was entered into on 9 March 2015. The parties agreed to terminate the open pit contract from 10 March 2016. Amounts owing to JRG as at 11 March 2016 amount to $851,312 including a $247,000 termination benefit and interest but excluding VAT of 15% with first payment deferred to 1 May 2016. Interest is charged at 12% per annum, compounded monthly. Repayments are agreed at $54,626 per month for a period of 20 months. At the year-end $655,512 (31 December 2015: $533,032) was outstanding in terms of this Memorandum of Agreement.
21. Other financial liabilities 21.1 Finance lease
During 2015, the Company entered into a finance lease with Board Market Trading 258 (Pty) Ltd for the purchase of two generators with net book value of $148,779 (31 December 2015: $181,336) to be used at the RHA Tungsten Mine. The finance lease is for a term of 48 months with interest charged at 19.5% per annum with monthly repayment of $5,960 beginning from 1 August 2016. Depreciation charged on the assets financed by leases during the year was $19,457 (31 December 2015: $19,457).
The agreement is classified as a finance lease as the rental period amounts to the estimated useful economic life of the assets concerned and the Group has the right to purchase the assets outright at the end of the minimum lease term by paying a nominal amount.
Future lease payments are due as follows:
Minimum lease Interest
payments $000 Present value
2016 $000 $000
Not later than one year 50 11 61
Between one year and five
years 130 29 159
Later than five years - - -
------------- --------- --------------
180 40 219
------------- --------- --------------
Minimum lease Interest
payments $000 Present value
2015 $000 $000
Not later than one year 10 25 35
Between one year and five
years 180 40 220
Later than five years - - -
------------- --------- --------------
190 65 255
------------- --------- --------------
21.2 Acquisition of TCT Industrias Florestais Limitada
2016 2015
$ 000 $ 000
Purchase price of 52% interest (see
note 14) 2,127 -
------ ------
Current 1,320 -
Non-current 807 -
------ ------
2,127 -
------ ------
On 31 October 2016 the Company announced it had concluded the public deeds for the assignment of quotas to acquire a 26% interest in TCT IF from Transport Commodity Trading Mozambique Limitada ("TCTM") and a further 26% interest from GAPI Sociedade de Investimentos S.A. ("GAPI"), in aggregate amounting to 52% for a total consideration of US$2.1 million.
Pursuant to the agreement with TCTM as announced on 27 April 2016, and announced as completed in October 2016, the Group obtained control over TCTM's 26% interest in TCT IF (the "TCT Agreement") for a consideration of US$1.1 million, payable in four tranches in either new Premier Ordinary Shares or cash at the election of TCTM.
-- The amended payment tranches are as follows: the first tranche now amounts to US$220,000 and is payable within five working days to TCTM following pending approval by the Mozambican authorities;
-- The second tranche amounts to US$440,000 and is payable within 60 days following the first tranche;
-- The third tranche amounts to US$220,000 and is payable within 90 days following the first tranche;
-- The final tranche amounts to US$220,000 and is payable within 120 days following the first tranche.
Pursuant to the agreement with GAPI, the Group obtained GAPI's 26% interest (the "GAPI Agreement") for a consideration of US$1.0 million, payable in five tranches in either new Premier Ordinary Shares or cash at the election of GAPI.
-- The first tranche amounts to US$220,000 and is payable within five working days to GAPI following pending approval by the Mozambican authorities;
-- The second tranche amounts to US$195,000 and is payable within 13 months following the first tranche;
-- The third tranche amounts to US$195,000 and is payable within 21 months following the first tranche;
-- The fourth tranche amounting to US$195,000 is payable within 29 months following the first tranche;
-- The final tranche amounting to US$195,000 is payable within 36 months following the first tranche.
The Original Public Deed Certificates ("Certificates") for both the TCTM Agreement and the GAPI Agreement shall remain in the care of Premier's elected solicitors, until written confirmation is received from either GAPI or TCTM confirming that the final instalment of the purchase price has been received, thereafter, the Certificates will be released to Premier whereby final procedural registration of the assignment of quotas as well as the publication of the amendment of the articles of association of the TCT IF shall be enacted.
Furthermore, the Parties have acknowledged and agreed that during the period, Premier shall have an irrevocable power of attorney to permit Premier to participate and vote in all General Assembly meetings on behalf of both parties. Premier shall also be allowed to appoint a representative to the TCT IF's Board of Directors. The company has elected George Roach to TCT IF's Board of Directors. Premier has further been appointed as the manager of TCT IF.
22. Borrowings
2016 2015
$ 000 $ 000
As at 1 January 808 767
Loans received (1) (2) (3) - 800
Loans repaid through conversion to
equity (1) (247) -
Loans capitalised as equity (4) - (794)
Accrued interest 5 35
------ ------
As at 31 December 566 808
------ ------
Current 566 549
Non-current - 259
------ ------
566 808
------ ------
Borrowings comprise loans from a related party and a non-related party. Loans from a related party are further disclosed in Note 32, Related Party Transactions.
(1) On 9 April 2015, the CEO and Chairman George Roach provided a $250,000 bridge loan facility and agreed the repayment and conversion terms of the loan outstanding at 31 December 2014. Together the loans with any accrued interest will become repayable by the Company as soon as all other third party indebtedness has been repaid in full or with the prior consent of all third party lenders. The loans are unsecured and interest will accrue at the rate of LIBOR plus 3%. George Roach may elect to convert all or part of the loans into new ordinary shares in the Company at a conversion price that is the lesser of the volume-weighted average price of the ordinary shares for the five trading days immediately prior to the date of conversion or the closing price of the ordinary shares on the date of the loans.
On 29 January 2016, the Company issued 47,479,109 shares at an issue price of 0.364p per share for a total value of GBP172,824 ($247,000) to George Roach for conversion of this loan refer note 25 (27).
(2) On 27 April 2015, AgriMinco Corp ("AgriMinco") provided a $250,000 loan facility. The loan with any accrued interest will become repayable by the Company in 24 months or earlier with the prior consent of all third party lenders. The loans are unsecured and interest will accrue at the rate of 5% per annum. AgriMinco may elect to convert all or part of the loan into new units when the loan facility becomes payable. One unit comprises one new ordinary share and one new warrant. The conversion price will be the lesser of the fifteen day volume-weighted average price of the ordinary shares for the two business days immediately prior to the maturity date and the date of a repayment notice, if any. Each new warrant would entitle the unit holder to subscribe for one new ordinary share at an exercise price equivalent to a 20% premium to the conversion price for a period of two years.
(3) On 15 September 2015, the CEO and Chairman George Roach provided a $300,000 loan direct to RHA Tungsten (Pty) Limited ('RHA'). The loan with any accrued interest will become repayable by RHA as soon as all other third party indebtedness has been repaid in full or with the prior consent of all third party lenders. The loans are unsecured and interest will accrue at the rate of LIBOR plus 3%.
(4) On 4 December 2015 George Roach converted $650,000 of his loans to Premier into new ordinary shares and on 11 December 2015 Mr Roach converted a further $144,119 of his loans into new ordinary shares (refer note 25).
23. Provisions
2016 2015
$ 000 $ 000
Rehabilitation provision As at 1
January 735 700
Unwinding of discount 74 35
As at 31 December 809 735
------ ------
A provision is recognised for site restoration and decommissioning of current mining activities based on current environmental and regulatory requirements. The net present value of the provision at a discount rate of 10% over an 8 year life of mine amounts to $809,000 (31 December 2015: $735,000) and has been capitalised as an addition to mine costs and depreciated in PPE as explained in the accounting policy note.
24. Loan notes and derivative financial liabilities
2016 2015
$ 000 $ 000
Convertible loan notes
As at 1 January 1,230 -
Loans notes issued 2,920 4,005
Loan notes converted (note 25) (1,523) (2,495)
Premium on notes converted - 35
Foreign exchange (39) 10
Deferred finance costs (714) (324)
As at 31 December 1,874 1,230
------- -------
2016 2015
$ 000 $ 000
Derivative financial instruments
Derivative financial liability on
issue of loan notes 194 1,151
Loan notes issued - -
Loan notes converted (note 25) (199) (968)
Premium on notes converted - 5
Foreign exchange (5) 6
As at 31 December - 194
------- -------
Loan notes
On 23 August 2016, the Company entered into an agreement with Darwin whereby Darwin could subscribe for a total of GBP3.5 million in convertible loan notes in which the Company would receive 90% of the par value of the notes. The loan notes were to be issued in three tranches on fulfilment of certain milestones. The notes will redeem 12 months from the subscription date unless repaid or converted. As at the reporting date, only tranches 1 and 2 were drawn down and during the year $220,000 of these were converted into equity (refer note 25). The gross amount of the loans issued can be converted between 105% and 100% of principal into ordinary shares at 90% of the traded share price when certain conditions are met. This conversion option represents a derivative liability of the company that is separately presented on the statement of financial position and fair valued through profit or loss. The directors have concluded that the value of the conversion option is not material and accordingly there is no value presented above.
During the year under review Darwin converted, in total, $1,523,000 (31 December 2015: $2,495,000) into equity.
The loan notes are secured by a put option held by the loan note holder that would require George Roach to purchase the shares held in Circum Minerals Limited at $2 per share, representing the carrying value of the investment in note 15. This represents a guarantee given by the director and the put option has been valued by a third party at approximately $1.6m.
For details of the fair value hierarchy, valuation techniques, and significant observable inputs related to determining the fair value derivative financial instruments, which are classified in level 2 hierarchy, refer to note 31.
Warrant liabilities
The Darwin instruments were issued with warrants equal to 30% of the aggregate par value of the loan notes issued on each of the relevant issue dates with the right to purchase one newly issued ordinary share for each warrant. The warrants have an exercise price of 125% of the initial market price and can be issued within three years and 7 days of the issue date. During the year ended 31 December 2016 Darwin were issued with 77,777,778 warrants in respect of issue date one and 44 million in respect of warrants issued on issue date 2.
For details of the fair value hierarchy, valuation techniques, and significant observable inputs related to determining the fair value derivative financial instruments, which are classified in level 2 hierarchy, refer to notes 29 and 31.
25. Share capital
Authorised share capital
4 billion (31 December 2015: 2 billion) ordinary shares of no par value.
Issued share capital
Number of Shares
'000 $ 000
As at 1 January 2015 503,117 16,283
Shares issued on exercise of share
options (1) 12,206 -
Shares issued on conversion of loan
notes (2) 20,086 229
Shares issued for employee share award
(3) 4,000 50
Shares issued on conversion of loan
notes (4) 18,519 384
Shares issued on conversion of loan
notes (5) 44,444 914
Shares issued on exercising of warrants
(6) 9,000 172
Shares issued on exercising of warrants
(7) 35,000 688
Shares issued under subscription agreement
(8) 22,500 700
Shares issued on exercise of share
options (9) 5,537 -
Shares issued on exercise of share
options (10) 7,500 135
Shares issued under subscription agreement
(11) 21,000 434
Shares issued under indigenisation
agreement (12) 6,596 100
Shares issued on conversion of loan
notes (13) 81,572 768
Shares issued on conversion of loan
notes (14) 118,536 854
Shares issued under indigenisation
agreement (15) 7,017 50
Shares issued on conversion of loan
(16) 79,945 650
Shares issued under subscription agreement
(17) 30,000 171
Shares issued on conversion of loan
(18) 21,088 144
Shares issued on conversion of loan
notes (19) 57,586 314
As at 31 December 2015 1,105,249 23,040
---------------- ------
Shares issued on conversion of loan
notes (20) 40,000 189
Shares issued on conversion of loan
notes (21) 30,303 144
Shares issued under subscription agreement
(22) 4,615 17
Shares issued under subscription agreement
(23) 7,692 29
Shares issued under subscription agreement
(24) 3,000 11
Shares issued under subscription agreement
(25) 50,000 190
Shares issued under subscription agreement
(26) 54,000 205
Shares issued on conversion of loan
(27) 47,479 247
Shares issued on conversion of loan
notes (28) 77,954 267
Shares issued on conversion of loan
notes (29) 53,976 204
Shares issued on conversion of loan
notes (30) 25,703 97
Shares issued on conversion of loan
notes (31) 42,818 240
Shares issued on conversion of loan
notes (32) 59,898 462
Shares issued on conversion of loan
notes (33) 36,860 285
Shares issued under subscription agreement
(34) 100,000 696
Shares issued under subscription agreement
(35) 146,667 1,584
Shares issued under subscription agreement
(36) 93,750 366
Shares issued on conversion of loan
notes (37) 79,397 221
Shares issued on conversion for fees
(38) 25,763 88
Shares issued on conversion for fees
(39) 19,214 75
Shares issued on conversion for fees
(40) 7,273 24
--------- ------
As at 31 December 2016 2,111,611 28,680
--------- ------
(1) On 10 February 2015, the Company issued 12,206,271 shares on exercise of share options under the Group's share option plan. The share options had an exercise price of $nil. The fair value of the share options has been credited to retained earnings.
(2) On 4 March 2015, the Company issued 20,085,699 shares to Darwin Strategic Limited on conversion of GBP150,000 of loan notes (refer note 23) at an issue price of 0.7468p per share.
(3) On 13 March 2015, the Company issued 4,000,000 shares at nil cost to the Company's Chief Operating Officer in conjunction with an employee share award. The average price of the Company's shares on issue date was 0.85p per share valuing the award at GBP34,000 ($50,170).
(4) On 30 April 2015, the Company issued 18,518,518 shares to Darwin Strategic Limited on conversion of GBP250,000 of loan notes (refer note 23) at an issue price of 1.35p per share.
(5) On 5 June 2015, the Company issued 44,444,444 shares to Darwin Strategic Limited on conversion of GBP600,000 of loan notes (refer note 23) at an issue price of 1.35p per share.
(6) On 5 June 2015, the Company issued 9,000,000 shares to YAGM on the exercising of warrants at an exercise price of 1.25p per share.
(7) On 24 June 2015, the Company issued 35,000,000 shares to Darwin Strategic Limited on the exercising of warrants at an exercise price of 1.25p per share.
(8) On 9 July 2015, the Company issued 22,500,000 shares under a subscription agreement at a price of 2p per share.
(9) On 10 July 2015, the Company issued 5,536,864 shares on exercise of share options under the Group's share option plan. The share options had an exercise price of $nil. The fair value of the share options has been credited to retained earnings.
(10) On 29 July 2015, the Company issued 7,500,000 shares on exercise of share options under the Group's share option plan. The share options had an exercise price of 1.15p per share.
(11) On 22 September 2015, the Company issued 21,000,000 shares under a subscription agreement at a price of 1.35p per share.
(12) On 2 October 2015, the Company issued 6,596,300 shares to the National Indigenisation Economic and Empowerment Fund ('NIEEF') in settlement of the first tranche payment of $100,000 on the RHA Tungsten Project reaching commercial production. The shares were issued at a price of 1p per share.
(13) On 23 October 2015, the Company issued 81,572,190 shares to Darwin Strategic Limited on conversion of GBP500,000 of loan notes (refer note 23) at an issue price of 0.613p per share.
(14) On 30 November 2015, the Company issued 118,535,383 shares to Darwin Strategic Limited on conversion of GBP567,500 of loan notes (refer note 23) at an issue price of 0.47876p per share.
(15) On 2 December 2015, the Company issued 7,017,447 shares to NIEEF in settlement of the second payment of $50,000 in respect of the RHA Tungsten Project. The shares were issued at a price of 0.47p per share.
(16) On 4 December 2015, the Company issued 79,945,167 shares at an issue price of 0.538p per share for a total value of GBP430,105 ($650,000) to George Roach for conversion of a portion of his loans (refer note 21).
(17) On 10 December 2015, the Company issued 30,000,000 shares under a subscription agreement at a price of 0.375p per share.
(18) On 11 December 2015, the Company issued 21,087,680 shares at an issue price of 0.4505p per share for a total value of GBP95,000 ($144,119) to George Roach for conversion of a portion of his loans (refer note 21).
(19) On 16 December 2015, the Company issued 57,586,206 shares to Darwin Strategic Limited on conversion of GBP208,750 of loan notes (refer note 23) at an issue price of 0.3625p per share.
(20) On 13 January 2016, the Company issued 40,000,000 shares to Darwin Strategic Limited on conversion of GBP132,000 of loan notes (refer note 23) at an issue price of 0.33p per share.
(21) On 13 January 2016, the Company issued 30,303,030 shares to Darwin Strategic Limited on conversion of GBP100,000 of loan notes (refer note 23) at an issue price of 0.33p per share.
(22) On 29 January 2016, the Company issued 4,615,386 shares under a subscription agreement at a price of 0.26p per share.
(23) On 29 January 2016, the Company issued 7,692,308 shares under a subscription agreement at a price of 0.26p per share.
(24) On 29 January 2016, the Company issued 3,000,000 shares under a subscription agreement at a price of 0.26p per share.
(25) On 29 January 2016, the Company issued 50,000,000 shares under a subscription agreement at a price of 0.26p per share.
(26) On 29 January 2016, the Company issued 54,000,000 shares under a subscription agreement at a price of 0.26p per share.
(27) On 29 January 2016, the Company issued 47,479,109 shares at an issue price of 0.364p per share for a total value of GBP172,824 ($247,000) to George Roach for conversion of a portion of his loans (refer note 21).
(28) On 12 February, the Company issued 77,954,475 shares to Darwin Strategic Limited on conversion of GBP210,000 of loan notes (refer note 23) at an issue price of 0.269388p per share.
(29) On 17 February, the Company issued 53,975,695 shares to Darwin Strategic Limited on conversion of GBP157,500 of loan notes (refer note 23) at an issue price of 0.291798p per share.
(30) On 17 February, the Company issued 25,702,712 shares to Darwin Strategic Limited on conversion of GBP75,000 of loan notes (refer note 23) at an issue price of 0.291798p per share.
(31) On 19 February, the Company issued 42,817,855 shares to Darwin Strategic Limited on conversion of GBP175,000 of loan notes (refer note 23) at an issue price of 0.408708p per share.
(32) On 22 February, the Company issued 59,897,676 shares to Darwin Strategic Limited on conversion of GBP325,000 of loan notes (refer note 23) at an issue price of 0.542592p per share.
(33) On 24 February, the Company issued 36,860,109 shares to Darwin Strategic Limited on conversion of GBP200,000 of loan notes (refer note 23) at an issue price of 0.542592p per share.
(34) On 29 February 2016, the Company issued 100,000,000 shares under a subscription agreement at a price of 0.5p per share.
(35) On 26 April 2016, the Company issued 146,666,667 shares under a subscription agreement at a price of 0.75p per share.
(36) On 18 October 2016, the Company issued 93,750,000 shares under a subscription agreement at a price of 0.32p per share.
(37) On 23 November, the Company issued 79,396,838 shares to Darwin Strategic Limited on conversion of GBP250,000 of loan notes (refer note 23) at an issue price of 0.314874p per share.
(38) On 21 December 2016, the Company issued 25,763,185 shares at an issue price of 0.275p per share for a total value of GBP70,849 ($87,684) for conversion of Directors fees.
(39) On 21 December 2016, the Company issued 19,213,580 shares at an issue price of 0.3162p per share for a total value of GBP60,753 ($75,190) to Afmine for conversion of fees.
(40) On 22 December 2016, the Company issued 7,272,727 shares at an issue price of 0.275p per share for a total value of GBP20,000 ($24,513) to Sam Levy for conversion of fees.
Reconciliation to balance as stated in the consolidated statement of financial position
2016 2015
$ 000 $ 000
As at 1 January 21,469 14,792
Issued share capital 5,640 6,757
Share issue costs (253) (80)
----------------- -----------
As at 31 December 26,856 21,469
----------------- -----------
26. Merger reserve
2016 2015
$ 000 $ 000
Merger reserve * (176) (176)
------ ------
* Relates to the agreement to issue shares to acquire 100% of the shares in ZimDiv Holdings entered into on 4 December 2012.
27. Foreign exchange reserve
2016 2015
$ 000 $ 000
As at 1 January 2015 349 299
Change in reserves during the year (65) 50
As at 31 December 2016 284 349
--------------- -------
28. Share based payment reserve and warrant options
2016 2015
$'000s $'000s
Share options and warrants outstanding
beginning of year 1,079 1,118
Share options granted 78 258
Share options exercised - (662)
Warrant options granted 127 797
Warrant options exercised - (432)
Share options and warrants outstanding
end of year 1,284 1,079
------- -------
No share options or warrants expired during
the year.
29. Share based payments
Under IFRS 2 "Share Based Payments", the Group determines the fair value of shares, options and warrants issued to Directors and Employees as remuneration and Consultants and Advisors as consideration for their services, and recognises an expense in profit or loss, a deduction from equity or an addition to intangible assets depending on the nature of the services received. A corresponding increase is recognised in equity in the share based payment reserve.
Details of share issues are provided in note 25 and details of share options and warrants are set out below.
Share Options
The Company adopted a new incentive share option plan (the 'Plan') during 2012. The essential elements of the Plan provide that the aggregate number of common shares of the Company's capital stock issuable pursuant to options granted under the Plan may not exceed 15% of the issued and outstanding Ordinary Shares at the time of any grant of options. Options granted under the Plan will have a maximum term of 10 years. All options granted to Directors and management are subject to vesting provisions of one to two years.
The Company has granted the following share options during the years to 31 December 2016:
Issued to Date Granted Vesting Number of Exercise Expiry Date Estimated
Term Options Granted Price Fair Value
'000
Employees
and consultants 10/02/2011 1 year 2,250 1.135c 09/02/2014 0.87c
Directors 04/12/2012 See 1 below 20,386 Nil 03/12/2022 1.11p
Directors 04/12/2012 See 2 below 20,386 2p 03/12/2022 1.85p
Employees
and associates 04/12/2012 See 3 below 5,536 Nil 03/12/2022 1.85p
Directors 29/07/2014 See 4 below 6,000 1.15p 28/07/2024 1.15p
Directors 29/07/2014 See 5 below 6,000 1.50p 28/07/2024 1.15p
Management 29/07/2014 See 4 below 6,500 1.15p 28/07/2024 1.15p
Management 29/07/2014 See 5 below 6,500 1.50p 28/07/2024 1.15p
Directors 13/03/2015 See 4 below 2,000 0.9p 12/03/2025 0.67p
Directors 13/03/2015 See 5 below 2,000 1.17p 12/03/2025 0.64p
Management 13/03/2015 See 4 below 3,250 0.9p 12/03/2025 0.67p
Management 13/03/2015 See 5 below 3,250 1.17p 12/03/2025 0.64p
Totals 84,058
----------------
1. These share options vest on the two-year anniversary of the grant date. The options are exercisable at any time after vesting during the grantee's period as an eligible option holder, and must be exercised no later than 10 years after the date of grant, after which the options will lapse.
2. These share options vest in equal instalments annually on the anniversary of the grant date over a two year period. The options are exercisable at any time after vesting during the grantee's period as an eligible option holder, and must be exercised no later than 10 years after the date of grant, after which the options will lapse.
3. These share options vested on the grant date. The options are exercisable at any time after vesting during the grantee's period as an eligible option holder, and must be exercised no later than 10 years after the date of grant, after which the options will lapse.
4. These share options vest on the one-year anniversary of the grant date. The options are exercisable at any time after vesting during the grantee's period as an eligible option holder, and must be exercised no later than 10 years after the date of grant, after which the options will lapse.
5. These share options vest on the two-year anniversary of the grant date. The options are exercisable at any time after vesting during the grantee's period as an eligible option holder, and must be exercised no later than 10 years after the date of grant, after which the options will lapse.
No options were granted during the year ended 31 December 2016 (31 December 2015: 10,500,000), however due to the two year vesting period a $78,000 charge (31 December 2015: $258,000) was recognised in respect of the above option schemes.
The fair value of the options granted during the year ended 31 December 2016 was $ nil (31 December 2015: $102,000). The assessed fair value of options granted to directors and management was determined using the Black-Scholes Model that takes into account the exercise price, the term of the option, the share price at grant date, the expected price volatility of the underlying share, the expected dividend yield and the risk-free rate interest rate for the term of the option.
The Group has the following share options outstanding:
Grant Date Expiry Date Exercise Price Number of options Number of options
outstanding vested and exercisable
'000 '000
04/12/2012 03/12/2022 Nil 2,013 2,013
04/12/2012 03/12/2022 2p 12,458 12,458
29/07/2014 28/07/2024 1.15p 3,000 3,000
29/07/2014 28/07/2024 1.50p 10,500 10,500
13/03/2015 12/03/2025 0.9p 5,250 5,250
13/03/2015 12/03/2025 1.17p 5,250 -
38,471 33,221
----------------- -----------------------
A summary of the status of the Group's share options as of 31 December 2016 and changes during the year are as follows:
2016 2015
---------------------------- ----------------------------
Weighted Weighted Average
Shares Average Exercise Shares Exercise Price
'000 Price '000
-------- ------------------ -------- ------------------
Options outstanding, beginning
of year 38,471 1.15p 53,215 1.05p
Granted - - 10,500 0.41p
Exercised - - (25,244) 0.34p
-------- ------------------ -------- ------------------
Options outstanding, end
of year 38,471 1.15p 38,471 1.15p
-------- ------------------ -------- ------------------
No share options were cancelled and expired during the year.
Warrants
During the year the Company granted 144,777,778 warrants (31 December 2015: 83,684,382) over Ordinary Shares.
Issued to Date Granted Number of Warrants Exercise Expiry Date
Issued Price
'000
Advisors 04/12/2012 7,017 4p 03/12/2017
Funders 28/01/2014 9,000 1.25p 27/01/2017
Funders 02/02/2015 40,000 1.25p 09/02/2018
Funders 28/04/2015 16,674 2.96875p 04/05/2018
Subscribers 09/07/2015 1,500 3p 08/07/2018
Funders 15/09/2015 3,559 1.4047p 22/09/2017
Funders 09/10/2015 21,951 1.025p 16/10/2018
Funders 23/08/2016 77,778 0.8437p 29/08/2019
Advisors 20/09/2016 23,000 0.8p 19/09/2019
Funders 19/12/2016 44,000 0.375p 26/12/2019
Totals 200,479
------------------
The fair value of the warrants granted to advisors during the year ended 31 December 2016 was $127,000 (31 December 2015: $715,000). The fair value of the warrants issued to funders for the year ended 31 December 2016 was $562,000 and is shown separately on the statement of financial position (31 December 2015: nil).
The following table lists the inputs into the valuation model for the year to 31 December 2016:
23 August 20 September 19 December
2016 2016 2016
issue issue issue
Dividend yield - - -
(%)
Expected volatility
(%) 203.0 206.0 214.0
Risk-free interest
rate (%) 0.56 1.05 1.40
Share price at
grant date 0.475p 0.475p 0.250p
Exercise price 0.8437p 0.375p 0.800p
Re-set provisions
The warrants attached to the Darwin loan notes issued in 2016 contain certain re-set provisions as to exercise price and/or number of warrants issued depending on certain conditions. Any share subscriptions priced at a price lesser than the warrant exercise price will trigger a re-set of the exercise price to the lower share subscription price. This occurred on 19 December 2016. Therefore, the warrants exercise price was re-set for all remaining Darwin warrants issued under the loan notes to a new exercise price of 0.375p being the lowest subscription price on 16 December 2016.
A summary of the status of the Company's share warrants as of 31 December 2016 and changes during the year are as follows:
2016 2015
'000 '000
------- ---------
Warrants outstanding, beginning of
year 55,701 16,017
Granted 144,778 83,684
Expired - -
Exercised - (44,000)
------- ---------
Warrants outstanding, end of year 200,479 55,701
------- ---------
30. Notes to the statement of cash flows
2016 2015
$ 000 $ 000
Loss before tax (5,632) (7,862)
Adjustments for:
Depreciation and amortization 1,584 714
Impairment of exploration and evaluation
assets - 844
Share of Joint Venture results - -
Foreign exchange - 16
Finance costs 721 1,719
Fees settled in shares 187 -
Share based payments 204 308
------- -------
Operating cash flows before movements
in working capital (2,936) (4,261)
Increase in inventories (152) (183)
Decrease/(increase) in receivables 217 (409)
(Decrease) / increase in payables (615) 1,754
------- -------
Net cash (outflow) from operating activities (3,486) (3,099)
------- -------
Cash and cash equivalents comprise cash at bank, bank overdrafts and short term bank deposits with an original maturity of three months or less. The carrying value of these assets is approximately equal to their fair value.
31. Financial instruments
The Group uses financial instruments comprising cash, receivables, available-for-sale assets (investments in Circum and Casa shares), bank overdraft, payables, borrowings, loan notes, and other financial liabilities. Cash balances are held in Sterling, US Dollars and the Euro.
The Group has a policy of not hedging and therefore takes market rates in respect of foreign exchange risk. However, rates are monitored closely by management.
Financial assets and liabilities
Financial Financial
Available-for-sale Loans and liabilities liabilities
financial receivables at amortised at fair value Total
assets $ 000 cost through profit $ 000
$ 000 $ 000 or loss
2016 $ 000
Trade and other receivables - 464 - - 464
Available-for-sale assets 4,250 - - - 4,250
Cash and cash equivalents - 399 - - 399
-------------------- ------------- ------------- --------------- -------
4,250 863 - - 5,113
Bank overdraft - - 155 - 155
Trade payables - - 937 - 937
Accrued liabilities - - 1,443 - 1,443
Payroll liabilities - - 235 - 235
Borrowings - - 566 - 566
Loan notes - - 1,874 - 1,874
Other financial liabilities - - 2,307 - 2,307
-------------------- ------------- ------------- --------------- -------
- - 7,517 - 7,517
-------------------- ------------- ------------- --------------- -------
Available-for-sale Loans and Financial Financial Total
financial receivables liabilities liabilities $ 000
asset $ 000 at amortised at fair value
$ 000 cost through profit
$ 000 or loss
2015 $ 000
Trade and other receivables - 284 - - 284
Investment 4,000 - - - 4,000
Cash and cash equivalents - 45 - - 45
-------------------- ------------- ------------- --------------- -------
4,000 329 - - 4,329
Bank overdraft - - 62 - 62
Trade payables - - 1,270 - 1,270
Accrued liabilities - - 1,618 - 1,618
Payroll liabilities - - 161 - 161
Borrowings - - 808 - 808
Loan notes - - 1,230 - 1,230
Derivative financial
liability - - - 194 194
Other financial liabilities - - 190 - 190
-------------------- ------------- ------------- --------------- -------
- - 5,339 194 5,533
-------------------- ------------- ------------- --------------- -------
Valuation techniques and assumptions applied for the purposes of measuring fair value
The fair value of cash and receivables and liabilities approximates the carrying values disclosed in the financial statements.
The fair value of available-for-sale financial assets is estimated by using other readily available information. As the Circum and Casa shares are in privately held exploration companies, the fair values were estimated using observable placing prices where available or movements in the share price of comparable listed companies.
The fair value of the derivative instruments is calculated using the value of the convertible loan note in the absence of the conversion features and the likelihood of default. This bond component of the convertible loan note has a value equal to the sum of the discounted interest payments and capital redemptions on the note. These cash flows are typically discounted using a risk free discount rate.
The embedded derivative represents the additional value of the conversion features on the note. The value depends on the probability of the conversion triggers being triggered and the expected payoff under that scenario. The valuation of the embedded derivative requires the estimation of the probability of default and the probability of the conversion triggers being triggered at each date where the company is contracted to redeem the notes. The value of the embedded derivative is the discounted probability weighted payoff under the different conversion trigger scenarios.
Capital management
The Group manages its capital resources to ensure that entities in the Group will be able to continue as a going concern, while maximising shareholder return.
The capital structure of the Group consists of equity attributable to shareholders, comprising issued share capital and reserves. The availability of new capital will depend on many factors including a positive mineral exploration environment, positive stock market conditions, the Group's track record, and the experience of management. There are no externally imposed capital requirements. The Directors are confident that adequate cash resources exist or will be made available to finance operations but controls over expenditure are carefully managed.
Foreign currency risk
The Group undertakes certain transactions denominated in foreign currencies. Hence, exposures to exchange rate fluctuations arise.
The carrying amounts of the Group's foreign currency denominated monetary assets and monetary liabilities at the reporting date are as follows:
Liabilities Assets
2016 2015 2016 2015
$ 000 $ 000 $ 000 $ 000
Sterling 275 350 21
Euro (EUR) 163 168 1 1
Canadian dollar (CDN$) - 21 - -
South African Rand (ZAR) 32 51 - -
Mozambique metical (MZM) 234 - 3
618 515 354 22
------------------ ----------- --------- --------
The presentation currency of the Group is US dollars.
The Group is exposed primarily to movements in USD, the currency in which the Group receives most of its funding, against other currencies in which the Group incurs liabilities and expenditure.
Sensitivity analysis
Financial instruments affected by foreign currency risk include cash and cash equivalents, other receivables, trade and other payables and convertible loan notes. The following analysis, required by IFRS 7 Financial Instruments: Disclosures, is intended to illustrate the sensitivity of the Group's financial instruments (at year end) to changes in market variables, being exchange rates.
The following assumptions were made in calculating the sensitivity analysis:
-- All income statement sensitivities also impact equity
-- Translation of foreign subsidiaries and operations into the Group's presentation currency have been excluded from this sensitivity as they have no monetary effect on the results
Income Statement / Equity
2016 2015
$'000s $'000s
Exchange rates:
+10% US$ Sterling (GBP) 23 38
-10% US$ Sterling (GBP) (23) (38)
+10% US$ Euro (EUR) 17 18
-10% US$ Euro (EUR) (17) (18)
+10% US$ South African Rand (ZAR) 0.2 0.3
-10% US$ South African Rand (ZAR) (0.2) (0.3)
+10% US$ Canadian dollar (CDN$) 0 2.1
-10% US$ Canadian dollar (CDN$) (0) (2.1)
+10% Mozambique metical (MZM) 23 -
-10% Mozambique metical (MZM) (23) -
The above sensitivities are calculated with reference to a single moment in time and will change due to a number of factors including:
-- Fluctuating other receivable and trade payable balances -- Fluctuating cash balances -- Changes in currency mix
Credit risk
Financial instruments that potentially subject the Group to a significant concentration of credit risk consist primarily of trade debtors and cash and cash equivalents. The Group limits its exposure to credit loss by placing its cash with major financial institutions. As at 31 December 2016, the Group held $399, 000 in cash and cash equivalents (2015: $45,000) and had a $155,000 bank overdraft (2015: $62,000).
Liquidity risk
Some of the Group's financial liabilities are classified as current and some are non-current. The Group intends to settle these liabilities from revenue generated from sales production, sale of assets and working capital.
Market risk
The Group's investments in available-for-sale financial assets comprise small shareholdings in unlisted companies. The shares are not readily tradable and any monetisation of the shares is dependent on finding a willing buyer.
32. Related party transactions
Borrowings
1. On 9 April 2015, the CEO and Chairman George Roach provided a $250,000 bridge loan facility and agreed the repayment and conversion terms of the loan outstanding at 31 December 2014. Together the loans with any accrued interest are repayable by the Company as soon as all other third party indebtedness has been repaid in full or with the prior consent of all third party lenders. The loans are unsecured and interest will accrue at the rate of LIBOR plus 3%. George Roach may elect to convert all or part of the loans into new ordinary shares in the Company at a conversion price that is the lesser of the volume-weighted average price of the ordinary shares for the five trading days immediately prior to the date of conversion or the closing price of the ordinary shares on the date of the loans.
On 29 January 2016, the Company issued 47,479,109 shares at an issue price of 0.364p per share for a total value of GBP172,824 ($247,000) to George Roach for conversion of this loan refer note 25 (27).
2. On 15 September 2015, through the Company the CEO and Chairman George Roach provided a $300,000 loan direct to RHA Tungsten (Pty) Limited ('RHA'). The loan with any accrued interest will become repayable by RHA as soon as all other third party indebtedness has been repaid in full or with the prior consent of all third party lenders. The loans are unsecured and interest will accrue at the rate of LIBOR plus 3%.
The balance of the loans to Premier at 31 December 2016 was $566,000 (refer note 22).
Subsequent to the reporting date, Mr. Roach converted the balance of his loans plus accrued interest to Premier into equity (refer note 34). During the 2016 financial year, Mr. Roach earned a total of $7,000 (31 December $27,000) in interest on his loans.
Supplies and Services
During 2016 administration fees of $36,500 (2015: $35,500) were paid by Premier to a trading business in which Mr G Roach, Director is the beneficial owner. Administration fees comprised allocated rental costs and administrative support services. At the financial year-end nothing remains outstanding of this amount (31 December 2015: $8,500).
During 2016 capital goods, consumables and small equipment for RHA totalling $38,380 (31 December 2015: $36,624) was purchased on behalf of RHA by a business in which Mr G Roach, Director is a beneficial owner. At the financial year end $20,016 remains in creditors.
Put option
Premier entered into a put option agreement in respect of its holding of shares in Circum Minerals Limited (Circum) with George Roach. Under the Circum Agreement, in the event that:
-- Premier fails to meet its obligations under the JRG Memorandum; -- JRG exercises its rights under the surety against George Roach and; -- Premier fails to find an alternative buyer for its Circum shares,
Then the company may require George Roach to purchase such number of Circum shares at a price of US$2 per Circum Share (being the fair market value of the Circum shares in the audited results for the year ended 31 December 2015) equal to the total amount then owed to JRG.
Remuneration of key management personnel
The remuneration of the Directors and other key management personnel of the Group are set out below for each of the categories specified in IAS 24 Related Party Disclosures.
2016 2015
$ 000 $ 000
Consulting fees 265 360
Staff costs 80 206
Directors' fees 35 127
Share based payments - 50
------ ------
380 743
------ ------
33. Non-controlling interests
2016 2015
$ 000 $ 000
At 1 January (1,497) 373
Non-controlling interest at acquisition 1,008 -
Non-controlling interest in share of losses
for the year - RHA (2,209) (1,870)
Non-controlling interest in share of losses (18) -
for two months ended December 2016 - TCT
-------------------- ----------
At 31 December (2, 716) (1,497)
-------------------- ----------
The share of losses in the year represents the losses attributable to non-controlling interests in RHA Tungsten for the year and for the two months ended 31 December 2016 for TCT IF.
34. Events after the reporting date 34.1 Conversion of loan note and issue of equity
-- On 3 January 2017 the company received a notice of exercise by Darwin Capital Limited ("Darwin") to convert 19 loan notes with an aggregate value of GBP475,000 into equity ("Conversion Notice"). As a result, the Company issued 204,121,975 new ordinary shares to Darwin at an issue price of 0.232704p per Share.
-- On 19 January 2017 the Company issued 20 Loan Notes of the available 48 Loan notes as part of the Issue Date Two and Three of the Loan Note agreement with Darwin, full terms of which were set out in the announcement dated 22 August 2016. Darwin was issued with 42,857,143 warrants at 0.35 pence per warrant as part of the subscription.
-- On 31 January 2017 the Company converted 16 loan notes with an aggregate par value of GBP400,000 into equity in relation to the convertible loan notes announced on 23 August 2016. The Conversion Notice was received in aggregate for GBP400,000 of the loan notes. The Company therefore issued 196,430,851 new ordinary shares to Darwin at an issue price of 0.203634p per Share.
-- On 1 February 2017 the Company announced that it had received a notice of exercise by Darwin to convert a further 16 loan notes with an aggregate par value of GBP400,000 into equity in relation to the convertible loan notes announced on 22 August 2016. The Conversion Notice was received in aggregate for GBP400,000 of the loan notes. The Company therefore issued 196,430,851 new ordinary shares to Darwin at an issue price of 0.203634p per Share.
-- On 3 February 2017 the Company announced that it had received a notice of exercise by Darwin to convert a further 24 loan notes with an aggregate par value of GBP600,000 into equity in relation to the convertible loan notes announced on 22 August 2016. The Conversion Notice was received in aggregate for GBP600,000 of the loan notes. The Company therefore issued 294,646,277 new ordinary shares to Darwin at an issue price of 0.203634p per Share.
-- On 7 February 2017 the company, announced that it had received a notice of exercise by Darwin to convert the remaining 27 loan notes with an aggregate par value of GBP675,000.00 into equity in relation to the convertible loan notes announced on 22 August 2016. The Conversion Notice was received in aggregate for GBP675,000.00 of the loan notes the Company therefore issued 317,844,496 new ordinary shares to Darwin at an issue price of 0.212368p per Share.
34.2 Settlement of Loan Facility with AgriMinco
As announced on 27 April 2015 the Company had entered into a two year US$250,000 loan facility with AgriMinco Corp. ("Loan Facility"). On 19 January 2017, Premier and AgriMinco agreed to settle the Loan Facility, subject to TSX Exchange approval, whereby the outstanding amount owed by Premier under the Loan Facility (amounting to US$260,922.39 including accrued interest) would be offset by the historic amounts owed by AgriMinco (amounting to US$195,578.88). The net balance owed by Premier amounted to US$65,343.51 and Premier agreed to repay AgriMinco in four equal instalments of US$12,335.88 from 15 March 2017, with an initial amount of US$16,000 on execution of the settlement agreement.
34.3 Placings
On 30 January 2017 the company issued 536,842,105 new ordinary shares to raise GBP1,020,000 before costs (the "Placing") through a subscription.
On 24 March 2017 the company announced that it had raised gross proceeds of GBP2,011,396.27 via an offer on PrimaryBid.com through the issue of 402,279,254 ordinary shares at an issue price 0.5p each
34.4 Loan Agreement with George Roach and Loan Agreement Conversion Rights
On 15 September 2015, George Roach provided a US$300,000 loan direct to Premier for the use at RHA Tungsten (Pty) Limited ("RHA"). The loan is unsecured and accrues interest at a rate of 3% per annum. As at 28 March 2017, the loan and accrued interest totalled US$ 309,457. On 28 March 2017 the Company announced that it had amended the terms of the existing loan agreement ("Loan") with George Roach through the grant of conversion rights. The Board granted conversion rights in respect of the Loan, which can now be converted into new ordinary shares at a price of 0.5p per new ordinary share.
34.5 Conversion of Directors fees into equity
On 31 March 2017 the company announced that certain of its Directors (the "Relevant Directors") have accepted new ordinary shares in the Company ("Ordinary Shares") as payment for their services ("Director Fees") from year ending December 2016 (the "Relevant Period"). The Company approved the conversion of GBP30,000, representing Director Fees owed to the Relevant Directors covering the Relevant Period into 6,000,000 new Ordinary Shares which were issued at 0.5p per Ordinary Share.
35. Ultimate controlling party
There is no single ultimate controlling party.
ENDS
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR OKKDKFBKKNOD
(END) Dow Jones Newswires
July 10, 2017 04:39 ET (08:39 GMT)
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