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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Tengri | LSE:TEN | London | Ordinary Share | KYG8760E1052 | ORD 0.1P (DI) |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 1.125 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
From Apr 2019 to Apr 2024
TIDMTEN
RNS Number : 5670F
Tengri Resources
29 July 2016
TENGRI RESOURCES - FINAL RESULTS
29 July 2016
Tengri Resources
("Tengri" or "the Company")
Final Results for the year ended 31 December 2016
Highlights
-- Agreed strategy for a two phase development of the Taldybulak project and to discontinue the farm-in of the Bahkol project;
-- Completed US$5 million fundraise in the form of convertible notes issued to Robust Resources, and to funds managed by Argyle Street Management Limited and TIH Limited; and
-- Completion of Scoping Study at Taldybuluk leading to the decision to discontinue operations in the Kyrgyz Republic
Post-Period Highlights
-- Completed disposal of Kyrgyz mining assets for total consideration of US$6 million; and -- Became AIM Rule 15 Cash Shell.
Extracts from the Company's Annual Report and Accounts appear below and the full version has been posted to shareholders and will be made available on the Company's website. It is now anticipated that trading of the Company's shares on AIM will be restored.
For further information, please visit www.tengriresources.co.uk or contact:
Tengri Resources Peter Moss +44 20 3301 9346 finnCap Ltd (Nomad) Christopher Raggett/Grant Bergman/James Thompson +44 20 7220 0500 Peterhouse Corporate Finance (Broker) Guy Miller/Eran Zucker +44 20 7496 0936
CHAIRMAN'S statement
Dear Shareholder,
I am pleased to present you with Tengri Resources' final results for the year ended 31 December 2015.
2015 commenced with the taking of the strategic decision to concentrate on the exploration of the Taldybuluk gold project and the discontinuance of the farm-in arrangement with KGL resources relating to the Bashkol project. This decision was based on the results of the 13 hole 2014 drilling programme.
The strategy with regards to the Taldybuluk project encompassed two phases, phase one would involve the development of a medium scale open pit mine processing higher grade near surface gold deposits, whilst phase two would involve the development of a larger scope mining project taking in the Andash deposit as a satellite mine. The purpose of the 2015 drilling programme was therefore to complete a Scoping Study for the phase one open pit mine.
With this in mind, in April 2015 a facility of up to US$5.000 million was raised via convertible notes to be issued to Robust Resources Limited, and to funds managed by Argyle Street Management Limited and TIH Investment Management Limited.
In December 2015, the Scoping Study for Taldybuluk and Andash projects were completed and concluded that under all studied development scenario's the projects did not meet the Company's investment criteria and the Board decided not to proceed with development of the phase 1 Taldybuluk project in the prevailing commodity price environment. Accordingly, the Board decided that the Company would not be applying for development licenses over either project but maintained its exploration licenses in the near-term while it considers what options may be available for both projects.
In April 2016, the Company announced that it had signed a conditional agreement with Socagest SA pursuant to which Socagest would acquire from Tengri the entire issued share capital of Kami Associates Limited and Tatianna Limited, being the subsidiaries of Tengri, that held the Company's mineral exploration and development operations in Talas, Kyrgyz Republic including the Taldybuluk and Andash projects, for a total consideration of US$6.000 million. The sales agreement was completed on 31 May 2016 and following on from the disposal of the Kyrgyz Republic interests Tengri became an "AIM Rule 15 cash shell" for the purpose of the AIM Rules and has until 1 December 2016 to make an acquisition or acquisitions which constitute a reverse takeover under Rule 14 of the AIM Rules or otherwise seek readmission as an "investing company" with the attendant requirement to raise at least GBP6.000 million on or immediately before such readmission.
In May 2016, Tengri also reached agreement with Gold Fields Oregon Holdings BVI Limited (Goldfields) whereby Tengri and its major shareholder Robust Resources would be released from all ongoing and future obligations owed to Goldfields relating to its formers operations in the Kyrgyz Republic thus effecting a clean break from the region.
During the course of 2015, there had been extensive revisions to the composition of the Tengri Board. Following Gary Lewis's resignation as Executive Chairman in October 2015, I resumed the role of Non-Executive Chairman. In December 2015, our Non-Executive Directors, Idris Khan and Joshua Crumb, both resigned from the Board in order to pursue their other business interests and I was joined on the board by Allen Wang, a representative of TIH Investment Management Limited and Argyle Street Management Limited. I would like to place on record my thanks to all my co-Directors who served on the Tengri Board and particularly Allen who has assisted me in guiding the Company through its exit from the Kyrgyz Republic.
I would like to express my sincere thanks to the Company's shareholders for their support and patience during a difficult year for Tengri. However, after reviewing the results of the Scoping Study your Board has acted decisively to curtail further exploration expense and to make a clean withdrawal from the Kyrgyz Republic by disposing of the assets for total consideration of US$6.000 million (net consideration US$4.447 million) leaving the Company as a clean cash shell that can now explore other opportunities that could restore shareholder value.
Regards,
Peter Moss
Non-Executive Chairman
strategic report
HIGHLIGHTS
-- Agreed strategy for a two phase development of the Taldybulak project and to discontinue of the farm-in of the Bashkol project;
-- Completed US$5.000 million fundraise in the form of convertible notes issued to Robust Resources Limited, and to funds managed by Argyle Street Management Limited and TIH Limited; and
-- Completion of Scoping Study at Taldybuluk leading to the decision to discontinue operations in the Kyrgyz Republic.
POST-PERIOD HIGHLIGHTS
-- Completed disposal of Kyrgyz mining assets for total consideration of US$6.000 million; and
-- Became AIM Rule 15 cash shell.
During 2015, the Company concentrated on its strategy of completing a Scoping Study for its Phase 1 project to develop a medium-scale open pit mining and processing of higher-grade, near-surface, gold-rich sheeted vein domain at Taldybuluk. The report was completed in December 2015 and concluded that the Taldybulak and Andash projects, under all studied development scenarios, did not meet the Company's investment criteria at the time. At the same time as the completion of the Scoping Study, Tengri extradited its employees from the Kyrgyz Republic due to ongoing disputes with local management.
Whilst the Company believe that Taldybulak and Andash host large resources with significant upside exploration potential, the Board decided not to proceed with the development of Taldybulak in the prevailing commodity price environment. The Company decided not to apply for development licenses over either project but agreed to maintain its exploration licenses in the near-term while it considers what options may be available for both projects.
In order to preserve shareholder capital, and due to the loss of operational control when Tengri employees were extradited. The Board of Tengri decided to suspend all material operational activities in the Kyrgyz Republic. Subsequently in May 2016, Tengri completed the disposal of its Kyrgyz mining assets by selling the entire issued share capital of Kami Associates Limited and Tatianna Limited, subsidiaries of Tengri which hold the Company's mineral exploration and development operations in Talas, Kyrgyz Republic for a total consideration of US$6.000 million (net consideration US$4.447 million) to Socagest SA.
The completion of the disposal represented a fundamental change of business under AIM Rule 15 and as such, the Company is now an "AIM Rule 15 cash shell" for the purpose of the AIM Rules and has until 1 December 2016 to make an acquisition or acquisitions which constitute a reverse takeover under Rule 14 of the AIM Rules or otherwise seek readmission as an "investing company" with the attendant requirement to raise at least GBP6.000 million on or immediately before such readmission.
The Board is now seeking potential reverse takeover opportunities that could restore shareholder value in the Company. We look forward to keeping you updated as we progress in the coming weeks and months.
BUSINESS REVIEW
The Company was in a net liability position at 31 December 2015 totalling US$171,756 (2014: US$25,375,812 net assets). The net liability per ordinary share as at 31 December 2015 was US$0.0016 (2014: US$0.2358 net assets). A more detailed review of the activity and progress of the business is contained in the Chairman's Statement.
KEY PERFORMANCE INDICATORS
The key performance indicators are set out below:
Hot Features
Premium
Company Statistics 31 December 31 December Change %
2015 2014
=========================== ============ ============ =========
Net asset/(liability)
value ($131,420) $25,375,812 (100.52)
=========================== ============ ============ =========
Net asset/(liability)
value - fully diluted
per share ($0.0012) $0.2358 (100.52)
=========================== ============ ============ =========
Closing share price 3.00p 5.38p (44.24)
=========================== ============ ============ =========
Current liabilities $4,709,483 $132,894 34.44
=========================== ============ ============ =========
Cash and cash equivalents $7,012 $795,463 (99.12)
=========================== ============ ============ =========
PRINCIPAL BUSINESS RISKS AND UNCERTAINTIES
The management of the business and the nature of the Company's strategy are subject to a number of risks. The Directors have set out below the principal risks facing the business. Where possible, processes are in place to monitor and mitigate such risks. The Company operates a system of internal control and risk management in order to provide assurance that the Board is managing risk whilst achieving its business objectives. No system can fully eliminate risk and, therefore, the understanding of operational risk is central to the management process.
ASSESSMENT OF BUSINESS RISK
Risk Factor Nature
================= =============================================
Regulatory The Company is now a AIM Rule 15 cash
risks shell. Accordingly it has until 1
December 2016 to make an acquisition
or acquisitions which constitute a
reverse takeover under Rule 14 of
the AIM Rules or otherwise seek readmission
as an "investing company" with the
attendant requirement to raise at
least GBP6.000 million on or immediately
before such readmission. Failure to
meet these regulatory requirements
will result in the Company's shares
being suspended from trading on AIM.
Should a further six months elapse
without the Company meeting the requirement
to complete a reverse takeover or
seek readmission as an investing company
the shares will be delisted from trading
on AIM.
================= =============================================
Commercial There can be no guarantee that the
risks Company will be able to make an acquisition
of another business that will constitute
a reverse takeover in accordance with
the AIM rules or any acquisition that
it makes will be commercially successful
for shareholders.
================= =============================================
Liquidity risk Having disposed of its exploration
assets, the Company is a cash shell
and there is the possibility that
it will need to seek additional funds
from existing investors or new investors
or a combination of both in order
to effect a reverse takeover. The
Company will also need to solvently
restructure its existing loan with
major shareholder and creditor Robust
Resources Ltd.
================= =============================================
Foreign currency The Company had operations in Kyrgyz
risk Republic where its operating expenses
are incurred in US dollars and accordingly
the majority of its cash was held
in US dollars. Now the Company is
a cash shell the majority of its operating
expenditure will be incurred in GBP
therefore the fluctuation of the US
dollar in relation to GBP will have
an impact upon the operations of the
Company and will also affect the value
of the Company's cash balances. The
Company has not entered into any agreements
or purchased any instruments to hedge
possible currency risks.
================= =============================================
The Board regularly reviews operating and strategic risks. The Company's operating procedures include a system for reporting financial and non-financial information to the Board including:
-- Reports from management with a review of the business at each Board meeting, focusing on any new decisions/risks arising;
-- Reports on the performance of investments; reports on selection criteria of new investments; and
-- Discussion with senior personnel; and consideration of reports prepared by third parties.
Kindest regards,
Peter Moss
Non-Executive Chairman
Sydney, dated this 28(th) day of July 2016
Directors' REPORT
THE PRINCIPAL ACTIVITIES AND REVIEW OF THE BUSINESS
The principal activity of the Company during the 2015 financial year was that of an investment company. Through its investments it acted as a Central Asian focused mineral developer and explorer, with a primary focus on the large-scale Taldybulak deposit in the Kyrgyz Republic. The Company's investments adopted a phased development strategy within their project portfolio, seeking low operating cost projects with a clear near-term path to production. The primary aim for 2015 was to produce a Feasibility and Scoping Study in relation to the establishment of a medium-scale open pit mining and processing of higher-grade, near-surface, gold-rich sheeted vein domain.
RESULTS AND DIVIDS
The results for the period are shown in the statement of comprehensive income. The loss for the year was US$25,507,798 (2014 loss: US$4,460,625). The Directors do not recommend the payment of a dividend.
EVENTS AFTER THE REPORTING PERIOD
The Company published the results of its Scoping Study in to the Stage 1 development of the Taldybulak deposit on 16 December 2015 and it was concluded that the Taldybulak and Andash projects, under all studied development scenarios, did not meet the Company's investment criteria at the time.
On 12 April 2016, the Company entered into a conditional agreement with Socagest SA to sell its Kyrgyz assets relating to the Taldybuluk and Andash projects for US$6.000 million. The sale provided that Tengri use US$0.553 million of the sales proceeds to repay trade creditor balances relating to its subsidiaries that formed part of the sale. The sale was completed on 31 May 2016. At the same time the Company and its majority shareholder Robust Resources Limited entered into an agreement with Gold Fields Orogen Holdings BVI Limited (Goldfields) to settle all ongoing and future obligations owed to Goldfields in respect of the Kyrgyz projects for a consideration of US$1.000 million allowing it to complete a full and clean exit from its activities in the Kyrgyz Republic.
The completion of the disposal represented a fundamental change of business under AIM Rule 15 and as such, the Company is now an "AIM Rule 15 cash shell" for the purpose of the AIM Rules and has until 1 December 2016 to make an acquisition or acquisitions which constitute a reverse takeover under Rule 14 of the AIM Rules or otherwise seek readmission as an "investing company" with the attendant requirement to raise at least GBP6.000 million on or immediately before such readmission.
In June 2016, the Company repaid in full the principal amounts outstanding to funds managed by TIH Limited and Argyle Street Management Limited of US$1.000 million. The Company also partly repaid US$2.250 million of the outstanding principal owing to Robust Resources Limited.
POLITICAL AND CHARITABLE DONATIONS
No political or charitable donations were made during the period.
DIRECTORS
The Directors who served during the year are set out below.
Peter Moss
Idris Khan (resigned 11 December 2015) John Levings (resigned 14 April 2015) Gary Lewis (appointed 14 April 2015, resigned 19 October 2015) Joshua Crumb (appointed 14 April 2015, resigned 11 December 2015) Allen Wang (appointed 11 December 2015)
SUBSTANTIAL SHAREHOLDINGS
The only interests in excess of 3% of the issued share capital of the Company which have been notified at 1 June 2016, were as follows:
Ordinary Shares Percentage
Number of Capital
%
================== ================ ============
Robust Resources
Limited 93,831,153 87.19
================== ================ ============
GOING CONCERN
The financial statements have been prepared on the going concern basis because, as set out in detail in Note 2 (Going Concern), the Directors have a reasonable expectation that the Company has adequate resources to continue in operational existence for the foreseeable future, with the support of its parent company.
Statement of Profit and Loss and other Comprehensive Income
for the yearED 31 December 2015
Year Ended Year Ended
31 December 31 December
2015 2014
Notes US $ US $
Revenue
Other income - 12,515
Total income - 12,515
Expense
Depreciation expense (25,378) (6,980)
Employee benefits expense (1,433,292) (473,614)
Foreign exchange loss (29,895) (291,339)
Fair value movement of financial 224,742 -
derivative
Impairment expense 4 (21,798,435) (1,185,033)
Professional fees (1,476,125) (1,900,766)
Public relations (213,009) (140,347)
Telecommunications expense (34,309) (38,575)
Rent expense (7,323) (46,183)
Travel expense (139,390) (225,438)
Other expense (386,359) (164,865)
Finance cost (189,025) -
Total expense (25,507,798) (4,473,140)
Loss before tax (25,507,798) (4,460,625)
Income tax benefit - -
Loss for the year (25,507,798) (4,460,625)
Other comprehensive income - -
Total comprehensive loss
for the year (25,507,798) (4,460,625)
Basic loss per share (0.24) (0.08)
Diluted loss per share (0.24) (0.08)
Weighted average number
of shares 107,618,497 57,409,772
No dividends were proposed or declared in respect of any of the periods presented above.
The accompanying notes on pages 21 to 38 form part of these financial statements.
Statement of Financial Position
AS AT 31 December 2015
As At As At
31 December 31 December
2015 2014
Notes US $ US $
Assets
Cash and cash equivalent 5 7,012 795,463
Current trade and other
receivables 6 - 324,318
Other receivables 7 - 7,790,442
Total current assets 7,012 8,910,223
Available for sale financial
assets 9 4,571,051 39,379
Other investments 11 - 16,511,152
Property, plant and equipment 12 - 47,952
Total non-current assets 4,571,051 16,598,483
Total assets 4,578,063 25,508,706
Liabilities
Trade and other payables 13 666,747 132,894
Interest bearing liabilities 14 3,395,232 -
Financial derivative liability 15 647,504 -
Total current liabilities 4,709,483 132,894
Total liabilities 4,709,483 132,894
Net assets/(liabilities) (131,420) 25,375,812
Shareholders' equity
Share capital 17 97,059,609 97,059,609
Share-based payments reserve 121,654 121,654
Capital redemption reserve 92,740 92,174
Accumulated losses (97,405,423) (71,897,625)
Total Shareholders' equity (131,420) 25,375,812
The accompanying notes form part of these financial statements.
Statement of Changes in Equity
for the yearED 31 December 2015
Share-Based Capital
Share Payments Redemption Accumulated
Capital Reserve Reserve Losses Total
US$ US$ US$ US$ US$
Balance at 31
December 2013 67,562,979 113,000 96,174 (67,437,000) 335,153
Issue of shares
on acquisition
of
Kyrgyz Companies 28,830,904 - - - 28,830,904
Issue of shares 665,726 - - 665,726
Share-based
payments - 8,654 - 8,654
Impairment of
reserve - - (4,000) - (4,000)
Total comprehensive
loss
for the year - - - (4,460,625) (4,460,625)
Balance at 31
December 2014 97,059,609 121,654 92,174 (71,897,625) 25,375,812
Other movement - - 566 - 566
Total comprehensive
loss
for the year - - - (25,507,798) (25,507,798)
Balance at 31
December 2015 97,059,609 121,654 92,740 (97,405,423) (131,420)
The accompanying form part of these financial statements.
Statement of Cash Flows
for the yearED 31 December 2015
Year Ended Year Ended
31 December 31 December
2015 2014
US $ US $
Cash flows from operating
activities
Net cash flows used by operating
activities 18 (3,165,077) (2,632,062)
Cash flows from investing
activities
Payment for exploration expenditure
in equity investments (1,732,342) (726,933)
Purchase of property, plant,
and equipment (37,575) (63,456)
Net cash flows from investing
activities (1,769,917) (790,389)
Cash flows from financing
activities
Proceeds from convertible 4,000,000 -
notes
Proceeds from unsecured loan 193,612 -
Repayment of unsecured loan - (42,426)
Cash acquired in reverse acquisition - 4,499,010
Net cash flows from financing
activities 4,193,612 4,456,584
Net (decrease)/increase in
cash and cash equivalents (741,382) 1,034,133
Cash and cash equivalents
at the beginning of the year 795,463 38,000
Effects of foreign exchange
rate changes on the balance
of
cash held in foreign currencies (47,069) (276,670)
Cash and cash equivalents
at the end of the year 5 7,012 795,463
The accompanying notes form part of these financial statements.
Notes to the Financial statements
1. GENERAL
The Company (Registration No. WK-143629) is incorporated and registered in the Cayman Islands, having been incorporated on 19 January 2005. The registered office of the Company is 190 Elgin Avenue, George Town Grand, Cayman KY1-9005, Cayman Island.
The Group consists of the Company and its wholly-owned subsidiaries, Kami Associates Limited, Tatianna Limited, Kaldora Company Limited, ACN 149 425 712 Pty Ltd, Andash Mining Company LLC and Talas Copper Gold LLC (collectively, the Kyrgyz Companies), and Mentum Services Limited.
These financial statements represent the individual company financial statements for Tengri Resources, as detailed in Note 2.
The principal activity of the Company is that of an investment company.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Accounting
The financial information has been prepared on an accruals basis and is based on historical costs modified by the revaluation of selected non-current assets, financial assets and financial liabilities for which the fair value basis of accounting has been applied.
The financial information is drawn in accordance with the provisions of the International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB) and adopted by the European Union
The financial information is presented in US dollars, rounded to the nearest dollar.
Consolidation
As at 31 December 2015 management concluded that the Company had lost operational control of the Kyrgyz Companies operating in the Kyrgyz Republic. Refer Critical Accounting Estimates and Judgments for further information.
A subsidiary of the Company is an entity for which the Company is exposed, or has rights, to variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. As the Company did not control the Kyrgyz Companies at 31 December 2015 these are not considered to be subsidiaries of the Company at that date.
Due to the Kyrgyz Companies ceasing to be treated as subsidiaries in the year, the Company has prepared individual company financial statements for the year ended 31 December 2015,
As these are the separate financial statements of Tengri Resources, the 31 December 2014 comparatives provides information on the financial position and performance for Tengri Resources only.
In these financial statements the investments in the Kyrgyz Companies were treated as Investments in Subsidiaries until the point that control was lost, at which point these were held as Available For Sale investments.
Going Concern
Subsequent to year end the Company divested its shareholdings in the Kyrgyz Companies for total consideration of US$6.000 million (net consideration of US$4.447 million).
These funds have been utilised by the Company to finalise a settlement with Goldfields and to repay the TIH Limited and Argyle Street Management Limited loan notes. The Company partly repaid the Robust Resources Limited loan note.
Further funds will be required to fund existing levels of corporate overheads and to repay the outstanding principal owing to Robust Resources Limited.
These factors indicate that the Company's ability to continue as a going concern is dependent upon the financial support received from its shareholders both in the form of additional funding and deferring the repayment of the outstanding loan balance.
Notwithstanding the above, the Directors are satisfied that it is appropriate to prepare the financial statements on a going concern basis having regard to the following factors:
- Tengri has significantly reduced expenses as a result of divesting the Kyrgyz Companies;
- Tengri has sufficient cash at the date of signing the financial statements to pay its trade creditors on normal commercial terms; and
- Tengri and Robust Resources Limited intend to use their best efforts to negotiate and effect a solvent restructuring of the outstanding loan note balance.
Should the Company not be able to manage the inherent uncertainties referred to above, there would be significant uncertainty as to whether the Company would be able to meet its debts as and when they fall due and thus continue as a going concern. The Directors believe that there is a reasonable prospect of a solvent restructuring being agreed and implemented with Robust Resources Limited and therefore it is appropriate to prepare the financial statements on a going concern basis.
If the Company is unable to continue in operational existence for the foreseeable future, adjustments would have to be made to reduce the values of the assets to their recoverable amounts, provide for further liabilities that might arise and reclassify non-current assets as current assets.
Cash and Cash Equivalents
Cash and cash equivalents include cash on hand, deposits held at call with banks, other short-term highly liquid investments with original maturities of 3 months or less.
Trade and Other Receivables
Trade receivables are recognised and carried at original invoice amount less an impairment for any uncollectible debts. An estimate for doubtful debts is made when collection of the full amount is no longer probable. Bad debts are written off as incurred.
Receivables from related parties are recognised and carried at the nominal amount due and are interest free.
Investments in subsidiaries
Investments in subsidiaries are held at the lower of cost and net realisable value.
Farm-in Interests
Payments towards farm-in interests are accumulated in respect of each farm-in interest. These amounts are only carried forward to the extent that they are expected to be recouped through the successful development of the interest area or where activities in the interest have not yet reached a stage that permits reasonable assessment of the existence of economically recoverable reserves.
Accumulated contributions in relation to an abandoned interest are written off in full against profit in the year in which the decision to abandon the interest is made. When production commences, the accumulated costs for the relevant interest are amortised over the life of the interest according to the rate of depletion of the economically recoverable reserves. A regular review is undertaken of each interest to determine the appropriateness of continuing to carry forward costs in relation to that farm-in interest.
Property, Plant and Equipment
Property, plant and equipment are stated at cost less accumulated depreciation and impairment losses.
Cost includes expenditure that is directly attributable to the acquisition of the asset. The cost of self- constructed assets includes the cost of materials and direct labour, any other costs directly attributable to bringing the asset to a working condition for its intended use, and the costs of dismantling and removing the items and restoring the site on which they are located. Purchased software that is integral to the functionality of the related equipment is capitalised as part of that equipment. Borrowing costs related to the acquisition, construction or production of a qualifying asset are capitalised as part of the cost of that asset.
When parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items (major components) of property, plant and equipment.
Gains and losses on disposal of an item of property, plant and equipment are recognised net in "other income". The cost of replacing part of an item of property, plant and equipment is recognised in the carrying amount of the item if it is probable that the future economic benefits embodied within the part will flow to the Company and its cost can be measured reliably. The carrying amount of the replaced part is derecognised.
Depreciation is recorded on a straight-line basis over the estimated useful lives of each part of an item of property, plant and equipment or over the remaining life of the mine if shorter. Depreciation commences when fixed assets are ready for its intended use. Land is not depreciated. The estimated useful lives of the assets are as follows:
-- Office equipment - 4-5 years -- Furniture and accessories - 5 years -- Other - 3-5 years.
Depreciation methods, useful lives and residual values are reviewed at each reporting date.
Trade and Other Payables
Liabilities are recognised for amounts to be paid in the future for goods and services received. Trade payables are normally settled between 30 and 60 days.
Provisions
Provisions are recognised when there is a present obligation (legal, equitable or constructive) as a result of a past event and 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.
Financial Instruments
Financial instruments are initially measured at fair value when the Company becomes a party to an agreement regarding a financial instrument. Transaction costs are included in the initial measurement of financial instruments, except financial instruments classified as at fair value through profit and loss (the FVTPL). The subsequent measurement of financial instruments is dealt with below.
A financial asset is derecognised when the right to receive cash flows from the asset has expired or the Company has transferred its rights to receive cash and either (a) has transferred substantially all the risks and rewards of the asset, or (b) has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the assets.
A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires.
On derecognition of a financial asset, the difference between the proceeds received or receivable and the carrying amount of the asset is included in the Statement of Profit or Loss and Other Comprehensive Income.
On derecognition of a financial liability, the difference between the carrying amount of the liability extinguished or transferred to another party and the amount paid is included in the Statement of Profit or Loss and Other Comprehensive Income.
Equity
An equity instrument is any contract that evidences a residual interest in the assets of the company after deducting all of its liabilities. Equity instruments issued by the Company are recorded at the proceeds received net of direct issue costs.
The share capital account represents the amount subscribed for shares.
The share based payment reserve represents the fair value, calculated at the date of grant, of warrants or options unexercised at the balance sheet date.
Accumulated losses includes all current and prior period results as disclosed in the statement of comprehensive income.
Financial Assets
Classification
The Company classifies its financial assets into one of the following categories: cash and cash equivalents, loans and receivables and investments available for sale. The Company has not classified any of its financial assets as held to maturity, held for trading or designated at fair value through profit or loss.
All financial assets are recognised when the Company becomes party to the contractual provisions of the instrument. All financial assets are initially recognised at fair value, plus transaction costs.
Cash and cash equivalents
Cash and cash equivalents comprise cash at hand and current and deposit balances at banks, together with other short-term, highly liquid investments that are readily convertible into known amounts of cash and which are subject to an insufficient risk of changes in value.
Loans and receivables
Loans receivable from third parties are initially recognised at fair value and subsequently carried at amortised cost using the effective interest rate method.
Available-for-sale investments
Investments are initially measured at fair value plus incidental acquisition costs. Subsequently, they are measured at fair value in accordance with IAS 39. In respect of quoted investments, this is either the bid price at the period end date or the last traded price, depending on the convention of the exchange on which the investment is quoted, with no deduction for any estimated future selling cost. Unquoted investments are valued by the Directors using primary valuation techniques such as recent transactions, last price or asset value.
Investments are recognised as available-for-sale financial assets. Gains and losses on measurement are recognised in other comprehensive income except for impairment losses and foreign exchange gains and losses on monetary items denominated in a foreign currency, which are recognised directly in profit or loss. Where the investment is disposed of or is determined to be impaired the cumulative gain or loss previously recognised in other comprehensive income is reclassified to profit or loss.
The Company assesses at each period end date whether there is objective evidence that a financial asset or group of financial assets classified as available-for-sale has been impaired. An impairment loss is recognised if there is objective evidence that an event or events since initial recognition of the assets have adversely affected the amount or timing of future cash flows from the asset. A significant or prolonged decline in fair value of a security below its cost shall be considered in determining whether the asset is impaired.
When a decline in the fair value of a financial asset classified as available-for-sale has been previously recognised in other comprehensive income and there is objective evidence that the asset is impaired, the cumulative loss is removed from other comprehensive income and recognised in profit or loss. The loss is measured as the difference between the cost of the financial asset and its current fair value less any previous impairment.
Revenue Recognition
Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured. Revenue is measured at the fair value of the consideration received or receivable.
Interest
Interest revenue is recognised on a proportional basis taking into account the interest rates applicable to the financial assets, using the effective interest rate method.
Income Tax
The charge for current income tax expense is based on the profit for the year adjusted for any non-assessable or disallowed items. It is calculated using the tax rates that have been enacted or are substantially enacted by the balance sheet date.
Deferred tax is accounted for using the balance sheet liability method in respect of temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. No deferred income tax will be recognised from the initial recognition of an asset or liability, excluding a business combination, where there is no effect on accounting or taxable profit or loss. Deferred tax is calculated at the tax rates that are expected to apply to the period when the asset is realised or liability is settled. Deferred tax is credited in the income statement except where it relates to items that may be credited directly to equity, in which case the deferred tax is adjusted directly against equity. Deferred income tax assets are recognised to the extent that it is probable that future tax profits will be available against which deductible temporary differences can be utilised. The amount of benefits brought to account or which may be realised in the future is based on the assumption that no adverse change will occur in income taxation legislation and the anticipation that the economic entity will derive sufficient future assessable income to enable the benefit to be realised and comply with the conditions of deductibility imposed by the law.
Indirect Tax
Revenues, expenses and assets are recognised net of the indirect taxes, except where the amount of indirect taxes incurred is not recoverable from the taxation authority. In these circumstances, the indirect taxes are recognised as part of the cost of acquisition of the asset or as part of the expense. Receivables and payables are stated as other receivable amounts. The net amount of indirect taxes recoverable from, or payable to, the taxation authorities are included as a current asset, or a liability in the Statement of Financial Position.
Impairment
The carrying values of property, plant and equipment are reviewed for impairment when events or changes in circumstances indicate the carrying value may not be recoverable.
For an asset that does not generate largely independent cash inflows, the recoverable amount is determined for the cash-generating unit to which the asset belongs.
Recoverable Amount of Assets
At each reporting date, the Company assesses whether there is any indication that an asset may be impaired. Where an indicator of impairment exists, the Company makes a formal estimate of recoverable amount. Where the carrying amount of an asset exceeds its recoverable amount the asset is considered impaired and is written down to its recoverable amount.
Recoverable amount is the greater of fair value less costs to sell and value in use. It is determined for an individual asset, unless the asset's value in use cannot be estimated to be close to its fair value less costs to sell and it does not generate cash inflows that are largely independent of those from other assets or groups of assets, in which case, the recoverable amount is determined for the cash generating unit (CGU) to which the asset belongs.
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.
Foreign Currency Transactions
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the date of the transaction. Foreign currency monetary items are translated at the year end spot exchange rate.
Critical Accounting Estimates and Judgments
The Directors evaluate estimates and judgments incorporated into the financial report based on historical knowledge and best available current information. Estimates assume a reasonable expectation of future events and are based on current trends and economic data, obtained both externally and within the Company.
Key Judgments - Control of the Kyrgyz Companies
The Directors believe that at 31 December 2015 the Company had lost control of the Kygyrz Companies, and as a consequence of this these have been included within the financial statements as available for sale investments, rather than investments in subsidiaries, and a consolidation has not been carried out. This judgment therefore has a significant impact on the figures presented in these financial statements.
The loss of control was due to the following factors occurring during the year:
- Its expatriate employees in Kyrgyz were relocated out of the country due to management disagreements with the Kyrgyz Companies' management during the period;
- Subsequent to the departure of its employees the Company decided to stop funding the Kyrgyz Companies as it had no control of the expenditure in country; and
- During this period, the Directors and management of the Kyrgyz Companies operated and controlled each entity without the direction of Tengri.
Key Judgments - Carrying Value of Investments
At each reporting period the Directors are required to assess the carrying value of its investments, and the investments which have the most significant impact on the financial statements were those in the Kyrgyz Companies.
At 31 December 2014 the carrying value of the investment in subsidiaries in the Kygyrz Companies was recognised at cost, as the cost of these was assessed by the Directors to be greater than the recoverable amount.
At 31 December 2015 the carrying value of its investment in the Kygyrz Companies, held as an available for sale investment, was recognized at the fair value. This was determined from the post year end sale of the Kyrgyz Companies for US$6 million.
Adoption of New and Revised Standards
New accounting standards adopted effective 1 January 2015.
The mandatory adoption of the following new and revised accounting standards and interpretations on 1 January 2015 had no significant impact on the Company's financial statements for the years presented:
Annual Improvements 2010-2012 Cycle with the exception of the improvement relating to IFRS 2 Share-based Payment applied to share-based payment transactions with a grant date on or after 1 July 2014, all other improvements are effective for accounting periods beginning on or after 1 July 2014. The Company has applied these improvements for the first time in these financial statements. They include:
IFRS 2 Share-based Payment
This improvement is applied prospectively and clarifies various issues relating to the definitions of performance and service conditions which are vesting conditions. The clarifications are consistent with how the Company has identified any performance and service conditions which are vesting conditions in previous periods. In addition, the Company had not granted any awards during the second half of 2014 and 2015. Thus, these amendments did not impact the Company's financial statements or accounting policies.
IFRS 8 Operating Segments
The amendments are applied retrospectively and clarify that:
-- An entity must disclose the judgements made by management in applying the aggregation criteria in paragraph 12 of IFRS 8, including a brief description of operating segments that have been aggregated and the economic characteristics (e.g., sales and gross margins) used to assess whether the segments are 'similar'
-- The reconciliation of segment assets to total assets is only required to be disclosed if the reconciliation is reported to the chief operating decision maker, similar to the required disclosure for segment liabilities
The Company has not applied the aggregation criteria in IFRS 8.12.
IAS 16 Property, Plant and Equipment and IAS 38 Intangible Assets
The amendment is applied retrospectively and clarifies in IAS 16 and IAS 38 that the asset may be revalued by reference to observable data by either adjusting the gross carrying amount of the asset to market value or by determining the market value of the carrying value and adjusting the gross carrying amount proportionately so that the resulting carrying amount equals the market value. In addition, the accumulated depreciation or amortisation is the difference between the gross and carrying amounts of the asset. This amendment did not have any impact to the revaluation adjustments recorded by the Company during the current period.
IAS 24 Related Party Disclosures
The amendment is applied retrospectively and clarifies that a management entity (an entity that provides key management personnel services) is a related party subject to the related party disclosures. In addition, an entity that uses a management entity is required to disclose the expenses incurred for management services. This amendment is not relevant for the Company as it does not receive any management services from other entities.
The Company has not early adopted any other standard, interpretation or amendment that has been issued but is not yet effective.
3. SEGMENT REPORTING
It is the opinion of the Directors that the operations of the Company represent one segment, as they are treated as such when evaluating the performance
4. IMPAIRMENT EXPENSE
As at As at
31 December 31 December
2015 2014
US$ US$
Bashkol farm-in agreement - 1,175,887
Investment in listed
shares 30,172 9,146
Investment in Kyrgyz 12,064,133 -
Companies
Loan receivable 39,233 -
Related party loans 16 9,604,747 -
Property, plant and 60,150 -
equipment
Impairment expense 21,798,435 1,185,033
The Company's investment in the Kyrgyz Companies and the related party loans from these companies were impaired as at 31 December 2015 due to the following indicators:
- The Company lost operational control of the companies prior to year end; and
- The Scoping Study completed on the Taldybulak project did not meet the Company's investment hurdles.
Subsequent to year end the Company divested its interests in the Kyrgyz Companies for consideration of US$6.000 million. The carrying value of the Kyrgyz Companies investment as at 31 December 2015 has been adjusted to reflect the net consideration subsequent to year end.
The Company's interests in the Bashkol project was fully impaired in the 2014 financial year due to the Company's decision to discontinue the farm-in. This decision was made as the project was considered non-core to the current business plan.
The impairment in listed shares was recognised due to a decline in market value.
5. CASH AND CASH EQUIVALENTS
As at As at
31 December 31 December
2015 2014
US$ US$
Cash at bank and in
hand 7,012 795,463
Cash and cash equivalents 7,012 795,463
6. TRADE AND OTHER RECEIVABLES
As at As at
31 December 31 December
2015 2014
US$ US$
Other receivables - 176,683
Prepayments - 147,635
Current trade and other
receivables - 324,318
7. OTHER RECEIVABLES
As at As at
31 December 31 December
2015 2014
US$ US$
Receivables from subsidiaries 16 9,604,747 7,790,442
Impairment (9,604,747) -
Other receivables - 7,790,442
8. FAIR VALUE MEASUREMENT
The table below sets out the fair value measurements using the IFRS 7 fair value hierarchy. Categorisation within the hierarchy has been determined on the basis of the lowest level of input that is significant to the fair value measurement of the relevant asset as follows:
Level 1 - valued using quoted prices in active markets for identical assets.
Level 2 - valued by reference to valuation techniques using observable inputs other than quoted prices included within Level 1.
Level 3 - valued by reference to valuation techniques using inputs that are not based on observable valuation data.
There were no transfers between levels in the 2014 or 2015 financial years.
9. AVAILABLE FOR SALE FINANCIAL ASSETS
As at As at
31 December 31 December
2015 2014
US$ US$
Investments at fair
value brought forward 39,379 102
Investments acquired
in the year 114,825 48,525
Investments in subsidiary 16,511,152 -
companies reclassified
(Note 11)
Disposal of investments - (102)
Impairment of investments 4 (12,094,305) (9,146)
Financial assets at
the end of the year 4,571,051 39,379
Level 1 investments
at the end of the year 9,025 39,379
Level 3 investments 4,562,026 -
at the end of the year
10. FARM-IN INTERESTS
As at As at
31 December 31 December
2015 2014
US$ US$
Farm-in interests -
Bashkol project
Farm-in interests acquired - 256,323
Payments for farm-in
interest during the
year - 919,564
Impairment expense during
the year - (1,175,887)
Farm-in interest at - -
end of the year
The Company's interest in the Bashkol project was fully impaired in the 2014 financial year due to the Company's decision to discontinue the farm-in. This decision was made as the project was considered non-core to the business plan.
11. OTHER INVESTMENTS
As at As at
31 December 31 December
2015 2014
US$ US$
Investments in subsidiaries
Investments at cost 16,511,152 -
brought forward
Investments acquired
in the year 16,511,152
Investments reclassified (16,511,152) -
as available for sale
investment (Note 9)
Investments in subsidiaries
at end of year - 16,511,152
Investments in subsidiaries relate to the Kyrgyz Companies that the Company lost control of during the year. At the point control was lost, these were reclassified as available for sale financial assets. The investment at 31 December 2015 has been adjusted based on the net consideration received for the divestment of the Kyrgyz Companies subsequent to year end. The divestment of the Kyrgyz Companies resulted in the Company receiving net consideration of US$4.447 million.
12. PROPERTY, PLANT AND EQUIPMENT
As at 31 December 2015 and 2014, property, plant and equipment consisted of the following:
Mining Office Equipment
Equipment and Furniture Total
US$ US$ US$
Cost
At 1 January 2014 - - -
Additions 35,538 19,395 54,933
Disposals - - -
At 31 December 2014 35,538 19,394 54,932
Additions 8,523 29,053 37,576
Disposals - - -
At 31 December 2015 44,061 48,447 92,508
Accumulated depreciation
At 1 January 2014 - - -
Depreciation for
the year 3,964 3,016 6,980
Disposals - - -
At 31 December 2014 3,964 3,016 6,980
Depreciation for
the year 13,332 12,046 25,378
Impairment 26,765 33,385 60,150 Disposals - - - At 31 December 2015 44,061 48,447 92,508 Carrying amounts At 31 December 2014 31,574 16,378 47,952 At 31 December 2015 - - -
Impairment
As at 31 December 2015 the Company had identified the following factors indicating a potential trigger for impairment:
- Scoping Study indicated the Kyrgyz projects didn't meet the Company's investment criteria; and
- All operational activities in Kyrgyz were suspended.
The carrying value of the Company's property, plant and equipment has been determined based on the higher of fair value less costs to sell and value in use. Under both methodologies it has been assessed that the carrying value is nil.
13. TRADE AND OTHER PAYABLES
As at As at
31 December 31 December
2015 2014
US$ US$
Trade and other payables 666,747 132,894
Trade and other payables 666,747 132,894
14. INTEREST BEARING LIABILITIES
As at As at
31 December 31 December
2015 2014
US$ US$
Convertible note liability 3,241,778 -
(i)
Unsecured loan 153,454 -
Interest bearing liabilities 3,395,232 -
(i) Convertible note liability
During the year the Company issued convertible unsecured loan notes to funds managed by Argyle Street Management Limited (ASML) and TIH Limited (TIH). The Company also issued convertible unsecured loan notes to its major shareholder Robust Resources Limited (Robust).
The convertible note liabilities have the following terms:
ASML Convertible TIH Convertible Robust Convertible
Note Note Note
=================== ================= ================ ===================
Amount $0.500 million $0.500 million $3.000 million
=================== ================= ================ ===================
Maturity 31 March 2018 31 March 2018 31 March 2018
=================== ================= ================ ===================
Coupon 5% cash paid 5% cash paid 5% cash paid
=================== ================= ================ ===================
Ranking Unsecured Unsecured Unsecured
=================== ================= ================ ===================
Conversion GBP0.05 GBP0.05 GBP0.05
price
=================== ================= ================ ===================
Conversion Conversion Conversion Conversion
price adjustment price adjusted price adjusted price adjusted
for dividends, for dividends, for dividends,
stock splits, stock splits, stock splits,
combinations combinations combinations
and similar and similar and similar
events events events
=================== ================= ================ ===================
Subsequent to initial recognition, the carrying value of the host debt contract associated with the convertible note liabilities is calculated by using the amortised cost method. These loan notes have been treated as current liabilities in these financial statements since no interest has been paid on these in accordance with the agreement in place, and so these were considered to be in default at 31 December 2015.
Reconciliation of the convertible note liabilities at inception:
ASML Convertible TIH Convertible Robust Convertible
Note Note Note
===================== ================= ================ ===================
Convertible
note liability 393,518 393,305 2,340,932
===================== ================= ================ ===================
Embedded derivative
associated
with convertible
note liability 106,482 106,695 659,068
===================== ================= ================ ===================
Proceeds 500,000 500,000 3,000,000
===================== ================= ================ ===================
Reconciliation of the convertible note liabilities movement during the year:
As at
31 December
2015
US$
Convertible note liability
at inception 3,127,755
Capitalise interest payable 267,477
Balance at 31 December 2015 3,395,232
15. FINANCIAL DERIVATIVE LIABILITY
As at As at
31 December 31 December
2015 2014
US$ US$
Financial derivative 647,504 -
associated with convertible
note liability
Financial derivative 647,504 -
liability
The convertible note liabilities issued by the Company contain an embedded option to convert the debt to ordinary shares. The embedded options have been separated from the host contract and accounted for as a derivative as the economic characteristics and risks of the embedded derivative are not closely related to the economic characteristics and risks of the host contract. The embedded derivatives are measured at fair value with changes in value being recorded in profit or loss.
Reconciliation of the financial derivative liability during the year:
As at
31 December
2015
US$
Balance at 1 January 2014 -
Financial derivative liability
at inception 872,246
Fair value of financial
derivative recognised in
profit or loss (224,742)
Balance at 31 December 2015 647,504
As at 31 December 2015, the value of the embedded derivative associated with the convertible note liabilities is US$0.648 million. The fair value of the financial derivative associated with the convertible note liabilities is valued using a Black-Scholes option pricing model that takes into account the exercise price, term, non-tradeable nature, share price at issue date and expected price volatility of the underlying share, the expected dividend yield and the risk-free rate for the term of the convertible note liabilities. This is then multiplied against the amount of securities that the Company would be required to issue. The table below summarises the model inputs for the financial derivative associated with the convertible note liabilities at 31 December 2015:
Financial Derivative
Conversion price per share GBP0.05
(GBP)
Valuation date 31 December
2015
Estimated exercise date 31 March 2018
Underlying security spot GBP0.03
price at valuation date
(GBP)
Estimated price volatility
of the Company's shares 71%
Expected dividend yield 0%
Risk-free interest rate 1.13%
Black-Scholes valuation GBP0.0081
per right (GBP)
16. RELATED PARTY DISCLOSURES
Control Relationships
Until 14 July 2014 the company did not consider there to be one single controlling party.
Robust Resources Limited became the immediate and ultimate parent company and controlling party from 14 July 2014 following a reverse takeover transaction.
On 29 October 2014, Robust Resources Limited was wholly acquired by Padiham Resources Pty Ltd. The ultimate controlling party following this transaction was the Salim Group which is controlled by Anthoni Salim.
Related Party Loans
As at As at
31 December 31 December
2015 2014
US$ US$
Loans from parent
Included in current
liabilities:
Convertible note liability 2,430,932 -
Unsecured loan 153,454 -
2,584,386 -
Loans to subsidiaries
Included in current
assets:
Loan to subsidiaries 7 9,604,747 7,790,442
Provisions made (9,604,747) -
- 7,790,442
The terms of the loans from the parent company are detailed in Note 14. The loans to subsidiaries are unsecured, interest free and repayable on demand.
During the year, Robust Resources Limited charged the company US$840,207 in relation to services provided to the company in respect of the operations of a branch office in the Kyrgyz Republic.
Key Management Personnel Remuneration
The remuneration of key management personnel is included in employee benefits expenses accounts within the Consolidated Statement of Profit or Loss and Other Comprehensive Income.
Directors and key management personnel remuneration for the 2015 and 2014 financial years were as follows:
Year ended Year ended
31 December 31 December
2015 2014
US$ US$
Directors of Tengri
Resources
Shahed Mahmood - 18,552
Charles Goodfellow - 18,552
Peter Moss 43,047 29,939
Gary Lewis
(appointed 14/04/2015,
resigned 19/10/2015) 92,020 17,086
David King - 29,286
Joshua Crumb 10,000 -
(appointed 14/04/2015,
resigned 11/12/2015)
Key Management Personnel
of Tengri Resources
Bruce Lumley
(Chief Executive Officer)
(resigned 15/12/2015) 304,500 161,855
Total 449,567 275,270
Shareholdings of Key Management Personnel
At the balance sheet date and at the date of this report, the following shares and options/warrants were held by Directors and their related entities.
Number Number Number
of Shares of Options of Warrants
Peter Moss - 10,000 -
Idris Khan
(resigned 11/12/2015) - 30,000 80,000
Gary Lewis 265,000 - -
(appointed 14/04/2015,
resigned 19/10/2015)
Joshua Crumb - - -
(appointed 14/04/2015,
resigned 11/12/2015)
John Levings
(resigned 14/04/2015) 100,000 40,000 -
Allen Wang - - -
(appointed 11 December
2015)
Total 365,000 80,000 80,000
The options and warrants have expiry dates of between September 2018 and July 2019, with exercise prices ranging between 22.5p and 23p.
17. SHARE CAPITAL
As at As at As at As at
31 December 31 December 31 December 31 December
2015 2015 2014 2014
Shares US$ Shares US$
(a) Issued and paid
up capital
Ordinary shares fully
paid 107,618,497 96,931,323 107,618,497 96,931,323
Partly paid shares 500,000 128,286 500,000 128,286
108,118,497 97,059,609 108,118,497 97,059,609
Number
of Shares US$
(b) Movement in contributed
equity
Balance at the 1
January 2014 580,037,345 67,562,979
Issue of shares 125,000,000 641,430
Share consolidation (690,936,598) -
Issue of shares for
the cost of acquisition 93,831,153 28,830,904
Issue of shares 186,597 24,296
Balance at 31 December
2014 108,118,497 97,059,609
Balance at 31 December
2015 108,118,497 97,059,609
(c) Terms and Conditions of Share Capital
Ordinary shares
Ordinary shares have the right to receive dividends as declared and, in the event of winding up of the Company, to participate in the proceeds from the sale of all surplus assets in proportion to the number of and amounts paid up on shares held. Ordinary shares entitle their holder to one vote, either in person or by proxy, at a meeting of the Company.
18. CASH FLOW STATEMENT RECONCILIATION
The table below is a reconciliation of the loss for the year to net cash flows from operations:
31 December 31 December
2015 2014
US$ US$
Loss after income tax (25,507,798) (4,460,625)
Adjustments for:
Depreciation 25,378 6,980
Non-cash finance expenses 189,025 -
Net foreign exchange
losses 35,727 291,339
Impairment 21,798,435 1,185,033
Fair value of derivative (224,742) -
Provision for non-recovery 300,415 -
Changes in assets and
liabilities
(Decrease) / increase
in trade and other receivables (176,682) 317,318
Decrease in prepayments (147,635) -
Increase in trade and
other payables 89,614 27,893
Increase in provisions 453,186 -
and other payables
Net cash used in operating
activities (3,165,077) (2,632,062)
19. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES
Policies
The Company's financial instruments comprise cash and cash equivalents, trade and other receivables, trade and other payables and loans payable to the ultimate parent company and other entities. The Company does not trade in derivatives or in foreign currency.
The main risks arising from the Company's financial instruments are interest rate risk, foreign currency risk and liquidity risks. The Company uses different methods to manage and minimise its exposure to risks. These include monitoring levels of interest rates fluctuations to maximise the return of bank balances and liquidity risk is monitored through the development of future rolling cash flow forecasts.
The final approval and monitoring of any of these policies is done by the Board which reviews and agrees on the policies for managing each of the risks as summarised below.
The primary responsibility to monitor the financial risks lies with the Managing Director under the authority of the Board. The Board agrees and approved policies for managing each of the risks identified below, including the setting up of approval limits for purchases and monitoring projections of future cash flow.
Risk Exposures
(a) Interest rate risk and maturity analysis
The Directors believe that the exposure to interest rate fluctuations is immaterial and therefore no interest rate sensitivity analysis has been disclosed. The borrowings disclosed in the Statement of Financial Position are the Company's fixed rate borrowings and therefore not subject to interest rate risk as defined in IFRS 7 Financial Instruments: Disclosures. The short-term loans from the controlling entities and trade creditors are not exposed to interest rate fluctuations.
(b) Liquidity risk
The Company's objective is to maximise its cash availability by evaluating current charges of various suppliers and the Company will seek additional funds from existing investors or new investors or a combination of both.
(c) Foreign currency risk
The Company had operations in Kyrgyz Republic where its operating expenses are incurred in US dollars and accordingly the majority of its cash was held in US dollars. Now the Company is a cash shell the majority of its operating expenditure will be incurred in GBP therefore the fluctuation of the US dollar in relation to GBP will have an impact upon the operations of the Company and will also affect the value of the Company's cash balances.
The Company has not entered into any agreements or purchased any instruments to hedge possible currency risks.
(d) Equity price risk
Equity price risk arises from the embedded financial derivative associated with the convertible note liabilities. For financial instruments not quoted in active markets, the Company uses valuation techniques such as present value techniques, comparison to similar instruments for which market observable prices exist and other relevant models used by market participants (Level 2). These valuation techniques use both observable and unobservable market inputs. The fair value of any equity conversion option is derived on the Black-Scholes valuation technique.
As at 31 December 2015, if the Company's share price had moved as illustrated in the table below, with all other variables held constant, (loss)/profit after income tax and equity would have been affected as follows:
Post Tax Equity
Profit 2015
2015 US$
US$
Tengri share price +10% 132,010 132,010
Tengri share price -10% (123,073) (123,073)
Reasonably possible movements in the Company's share price were determined based on observations of historical movements from the date of issue of the convertible note liabilities.
The reasonably possible movement was calculated by updating the share price input in a Black-Scholes valuation mode, keeping all other variables constant.
Credit Risk Management
Credit risk refers to the risk that the counterparty will default on its contractual obligations resulting in financial loss to the Company. The Company's exposure to, and the credit ratings of, its counterparties are continuously monitored and the aggregate value of transactions concluded is spread amongst approved counterparties. Periodic evaluation is performed on the financial condition of accounts and other receivables.
Capital Management
The Company's objective when managing capital is to ensure that adequate funding and resources are obtained to enable it to develop its projects through to profitable production, whilst in the meantime safeguarding the Company's ability to continue as a going concern. This is to enable the Company, once projects become commercially and technically viable, to provide appropriate returns for shareholders and benefits for other stakeholders.
Since admission to the AIM market of the London Stock Exchange plc, the Board intends to utilise financing sources, be that debt or equity that best suits the Company's working capital requirements and market conditions.
Fair Value
The fair value of the financial assets and financial liabilities of the Company, at each reporting date, approximates to their carrying amount as disclosed in the Consolidated Statement of Financial Position and in the related notes.
The fair value of the financial assets and liabilities are included at the amounts at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale. The cash and cash equivalents, other receivables, trade payables and other current liabilities approximate their carrying value amounts largely due to the short-term maturities of these instruments.
Set out below is a comparison of the carrying amounts and fair values of financial instruments as at 31 December 2015:
Carrying Fair Value
Amount 31 December
31 December 2015 US$
2015
US$
Financial assets:
Available for sale financial
assets 4,571,051 4,571,051
Total 4,571,051 4,571,051
Financial liabilities:
Payables 666,747 666,747
Financial derivatives 647,504 647,504
Convertible note liability 3,395,232 3,250,000
Total 4,709,483 3,916,747
All financial instruments for which fair value is recognised or disclosed are categorised within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole:
Level 1 - Quoted market prices in an active market (that are unadjusted) for identical assets or liabilities
Level 2 - Valuation techniques (for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable)
Level 3 - Valuation techniques (for which the lowest level input that is significant to the fair value measurement is unobservable).
For financial instruments that are recognised at fair value on a recurring basis, the Company determines whether transfers have occurred between levels in the hierarchy by re-assessing categorisation (based on the lowest level of input that is significant to the fair value measurement as a whole) at the end of each reporting period.
(a) Convertible note and financial derivative
As at 31 December 2015, the value of the financial derivative associated with the convertible notes is US$0.648 million. The fair value of the financial derivative has been determined using the techniques detailed in Note 15.
The following methods have been used for the Company's valuation derivatives:
Financial derivative Level 2
For financial instruments not quoted in active markets, the Company uses valuation techniques such as present value techniques, comparison to similar instruments for which the market observable prices exist and other relevant models used by market participants (Level 2). These valuation techniques use both observable and unobservable market inputs.
As at 31 December 2015 the Company held the following financial instruments measured at fair value:
Level Level Level3 Total
1 2 US$ US$
US$ US$
Financial liabilities
measured at fair
value:
Financial derivative - 647,504 - 647,504
Financial liabilities
for which fair
value is disclosed:
Convertible note
liability (i) - - 3,325,000 3,325,000
(i) The fair value of US$3.325 million has been estimated using inputs for the convertible note liability that are based on the Company's current net asset position. The fair value takes into account the total current assets and the current non-interest bearing liabilities of the Company.
20. AUDITORS' REMUNERATION
Year Ended As at
31 December 31 December
2015 2014
US$ US$
Lubbock Fine, Chartered
Accountants 48,918 38,835
21. EVENTS SUBSEQUENT TO BALANCE SHEET DATE
On 12 April 2016, the Company entered into a conditional agreement with Socagest SA to sell its Kyrgyz assets relating to the Taldybuluk and Andash projects for US$6.000 million. The sale provided that Tengri use US$0.553 million of the sales proceeds to repay trade creditor balances relating to its subsidiaries that formed part of the sale. The sale was completed on 31 May 2016. At the same time the Company and its majority shareholder Robust Resources Limited entered into an agreement with Gold Fields Orogen Holdings BVI Limited (Goldfields) to settle all ongoing and future obligations owed to Goldfields in respect of the Kyrgyz projects for a consideration of US$1.000 million allowing it to complete a full and clean exit from its activities in the Kyrgyz Republic.
The completion of the disposal represented a fundamental change of business under AIM Rule 15 and as such, the Company is now an "AIM Rule 15 cash shell" for the purpose of the AIM Rules and has until 1 December 2016 to make an acquisition or acquisitions which constitute a reverse takeover under Rule 14 of the AIM Rules or otherwise seek readmission as an "investing company" with the attendant requirement to raise at least GBP6.000 million on or immediately before such readmission.
In June 2016, the Company repaid in full the principal amounts outstanding to TIH Limited and Argyle Street Management Limited of US$1.000 million. The Company also partly repaid US$2.250 million of the outstanding principal owing to Robust Resources Limited.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR EALXPADDKEFF
(END) Dow Jones Newswires
July 29, 2016 02:00 ET (06:00 GMT)
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