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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Vast Resources Plc | LSE:VAST | London | Ordinary Share | GB00BQ7WTT20 | ORD 0.1P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 0.415 | 0.40 | 0.43 | 0.415 | 0.415 | 0.415 | 6,324,884 | 07:36:40 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| Nonmtl Minrl Svcs, Ex Fuels | 3.72M | -10.51M | -0.0024 | -1.71 | 17.82M |
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Vast Resources plc / Ticker: VAST / Index: AIM / Sector: Mining
29 September 2016
Vast Resources plc
('Vast' or the 'Company')
Final Results
Vast Resources plc, the AIM-listed mining company with operations in
Romania and Zimbabwe, is pleased to announce its final results for year
ended 31 March 2016.
OVERVIEW OF THE YEAR
Vast transitioned into a mining production company during the year under
review, with commercial production commencing at two mines, the Manaila
Polymetallic Mine in Romania ('Manaila') and the Pickstone-Peerless Gold
Mine in Zimbabwe ('Pickstone-Peerless').
Financial
-- Maiden revenue of $7.2 million generated with the advent of mining at
Manaila and Pickstone-Peerless as mining production commences
-- Significant investment made into mining operations to achieve production
and improve operational efficiencies resulting in a loss of $6.9 million
from continuing operations (2015: $6.0 million)
-- Loss of $8.7 million from discontinued operations (2015: $1.0 million)
following discontinuance of all greenfield exploration projects
-- Cash balance at period end of $0.8 million (2015: $3.7 million)
Post period end:
-- Cash balance of $0.5 million, plus $1.8 million is held in Breckridge
Investments (Private) Limited in Zimbabwe as at 31 August 2016
Operational Development
-- Acquired a 50.1% interest and effective control in Sinarom Mining Group,
the operating company of Manaila, on 22 July 2015
-- Mining operations commenced at Manaila in August 2015, with
production output of 1,567 tonnes of concentrate in period to 31
March 2016
-- Construction of processing plant at Pickstone-Peerless in July 2015
-- Gold mining and processing commenced in August 2015; 5,406 Troy
Ounces of gold produced in period to 31 March 2016
-- Merger of Mineral Mining SA with African Consolidated Resources SRL
(Romania) completed in February 2016; final legal obstacles removed in
process to re-issue mining sub-licence to Baita Plai Polymetallic Mine
('Baita Plai') by Romanian state mining corporation
Post period end:
-- 4,542 Troy Ounces of gold produced at Pickstone-Peerless in first quarter
of FY17
-- 727 tonnes of concentrate produced at Manaila in first quarter of FY17
-- Significant enhanced JORC Resource declared at Manaila in September 2016
Funding
-- Fundraising share issues during the year:
Issue proceeds
Date US$ Sterling Shares issued Issued to
August 2015 $2,003,839 GBP1,292,415 107,701,662 Investors
August 2015 $54,840 GBP35,000 7,000,000 Warrants exercised
October 2015 $64,380 GBP42,000 7,500,000 Warrants exercised
Crede Capital Group
January 2016 $1,813,697 GBP1,250,000 156,250,000 *
Directors & Senior
Management of the
January 2016 $725,900 GBP500,000 62,500,000 Company
March 2016 $575,420 GBP400,000 50,000,000 Investors
* For full details of this arrangement see Note 22
Post period end:
-- Approximately $2.66M (GBP1,738,578) raised from issues of 610,027,669
shares to investors through placings and an open offer to shareholders in
July and August 2016
Management
-- Appointment of Graham Briggs as non-executive director on 22 December
2015
-- Post period end appointment of Carl Kindinger as chief financial officer
on 26 September 2016
CHAIRMAN'S REPORT
Strategic Highlights
During the financial year ended 31 March 2016 the Company succeeded in
commissioning two mines; the Pickstone-Peerless Gold Mine
('Pickstone-Peerless') in Zimbabwe, and the Manaila Polymetallic Mine
('Manaila') in Romania. Our ambition to begin production at a third mine,
the Baita Plai Polymetallic Mine in Romania ("Baita Plai"), has been
frustrated by unusual circumstances surrounding the issue of the
sub-licence, however it remains our objective to begin mining at this,
our third operation, in the near future.
In Romania, Manaila was acquired in July 2015 and has been in production
under Vast's control since August 2015. Since beginning production, the
Vast team has been monitoring performance and recoveries as there were
unexpected issues regarding processing efficiencies and relating to
problems associated with separating the zinc from the copper, despite
prior laboratory testing which showed more positive results. A copper
concentrate containing zinc results in penalties, hence lower prices
achieved for the copper concentrate sold and no value for the zinc,
which impacted the financial performance of the mine. However,
significant progress has been made post period end; we have upgraded our
production facilities in order to separate the copper and zinc, which
will yield full value for both metals. In addition, we have retained
the services of two consultancy companies to implement their proposed
solutions following their test work which replicated the original test
work undertaken in Romania. This will make a material difference to the
economics of the mine, which we expect to reach profitability during
August and September 2016. Moreover we have just declared a maiden JORC
resource at Manaila which replaces the resource previously reported
under the Russian system. The open pittable ore JORC resource is
approximately eight times larger than the previously estimated resources
under the Russian classification, thus securing much enhanced open pit
mine life.
As part of our strategy to increase our operational footprint in Romania,
we have continued to progress the grant of the Baita Plai sub-licence.
This has been a long and frustrating affair, however the executive team
has assured the Board that we are very close to success. As a
consequence, the cost of holding the mine and lack of expected income
stream has undermined our F2016 budget and resulted in the Company
having to raise funds to remain liquid. However, progress was made with
the grant of a prospecting licence over the 4.6Mt tailings dam at
Faneata, which is comprised of approximately 40 years of tailings from
the high grade Baita Plai mine located 7km away. This licence
constitutes a separate right from the right to mine at Baita Plai itself,
offering a relatively quick, cheap and technically simple route to
monetising our interests at this site. A 825m auger drilling campaign
is anticipated to commence at Faneata in the coming months.
In Zimbabwe, Pickstone-Peerless has been delivering outstanding results.
We are well ahead of budget, with both milling tonnages and gold yield
above target. There remain numerous opportunities in Zimbabwe, which we
are assessing whilst always being cognisant of the political situation
in Zimbabwe, which in isolation, presents both risk and opportunity.
The Giant Gold Mine ('Giant'), which is located about 50km from
Pickstone-Peerless, remains a target with significant potential value
for Vast, in addition to expansion efforts at Pickstone-Peerless itself,
in the form of the development of the high-grade sulphide mineralisation
below the oxidised ore on which mining is currently focussed.
Leadership group
Our CEO, Roy Pitchford, has been focussing his energies largely in
Romania, where he relocated during the year. Roy's key objective is to
secure the grant of the Baita Plai sub-licence, ensure Manaila continues
its positive operational trajectory and meet profit expectations, in
addition to the continued evaluation of further value accretive and
complementary opportunities.
Graham Briggs joined the business as a non-executive director on 22
December 2015. Graham, who was previously the CEO of JSE and NYSE listed
Harmony Gold Company Limited, and has extensive experience in mining.
Since his appointment, Graham has made a valued contribution both from
an operational and corporate standpoint.
Eric Diack continues to play a valued role as independent non-exec
director and chairman of the audit committee.
Moving forward, the board intends to appoint a full-time COO, to be
based in Romania. However we have made the decision to await the formal
grant of the Baita Plai sub-licence, and this, together with the uptick
in performance at Manaila, should deliver a strong financial platform
for future expansion.
Regrettably our CFO Pierre Joubert resigned in August 2016. As
announced on 26 September 2016, we are pleased to have now appointed
Carl Kindinger as Chief Financial Officer in his stead. Carl is a
well-experienced accountant and importantly has agreed to spend a good
deal of time in Romania, where we are short on high-level administrative
and managerial resources.
Roy Tucker will continue to serve on the Board as Finance Director, as
well as covering the Company Secretary role. Roy has indicated he
wishes to wind down his involvement in the company once Carl has settled
down and appropriate steps are taken to cover the secretarial role and
reposition of the company offices.
Funding
The period has been marked by number of small equity placings with
investors and directors/senior management in addition to the agreement
with Crede Capital ('Crede') to raise up to GBP5m. The deal with Crede
was not received well by shareholders and resulted in a significant drop
in share price and high dilution when Crede opted to cash in their
warrants using the Black Scholes valuation method. Subsequent to this,
the shareholders voted against issuing further head room to support
further funding by Crede, effectively terminating the contract.
Looking at our current cash resources and forecast expenditure, currency
shortages in Zimbabwe may cause delays in drawing income from Zimbabwe
notwithstanding our official permission to repatriate substantial sums.
However Vast plans to use its profits from Pickstone-Peerless to support
the on-going development in Zimbabwe.
The Group is not yet cash generative; Zimbabwe is currently
self-financing and will not require financial support until the
expansion at Pickstone-Peerless is approved; and/or the development of
Giant is approved. The performance of Pickstone-Peerless could
facilitate local debt financing if retained cash flow is insufficient
and this is certainly an area which we would explore at the appropriate
time.
There is a budgeted cost of approximately $3.0m (capital expenditure,
working capital and contingencies) to develop Baita Plai on receipt of
the sub-licence. Once the sub-licence is granted, the Board will
actively explore opportunities to source the funds required to develop
what will be the Group's third operational mine.
Romanian Medium Term Strategy
Whilst Romania has proved to be challenging, we have learned a great
deal about the operating environment and culture. Vast has proven to the
Romanian government we are a capable and committed mining investor and
operator, which we believe will pave the way for new opportunities. We
have identified four closed mines which have interesting ore resources
(under the Russian system) and significant infrastructure in place -
these mines are currently owned by the Government of Romania.
Discussions have commenced with the authorities to explore options on
how Vast may play a role in resurrecting these mines. We are optimistic
these talks will lead to some interesting prospects for the company.
Shareholding
I would like to thank the shareholders for their on-going support
through what has been a challenging year. Rest assured the Board are
doing their utmost to get the business to a cash positive position, from
where we can build long-term value. Further news regarding our progress
will be communicated to you during the course of the year.
William Battershill
Group Chairman
STRATEGIC REPORT
Principal activities, review of business and future developments
I am delighted to report that the transformation of the Company from a
junior exploration company to a junior mining company is now complete.
We now have two mining operations successfully underway and our sights
remain set on expanding our operational footprint and increasing
efficiencies, recoveries and financial performance. With the successful
progress of these two initial mines over recent months, the Company has
now moved into positive cash generation at the operating level at
current metal prices thus providing a solid platform for future
profitability.
The two mines are Peerless-Pickstone, which continues to return good
cash generation and Manaila which is moving towards efficient steady
state production. In line with our strategy to prioritise revenue
generative operations all green field exploration work has ceased with
the exception of our farmed-out rare earths interests at Nkombwa Hill in
Zambia. Mine site exploration work continues at Manaila and is due to
begin shortly at the Faneata Tailing Dam, located 7km from the Baita
Plai mine.
Our safety record has been very pleasing, without any lost time injuries
at either of the mines. Manaila now has a four-year record without any
injuries at the Manaila Open Pit or the Iacobeni Metallurgical Complex.
The cessation of exploration activities has resulted in management
reviewing the carrying cost of all former exploration assets. This
resulted in the impairment of the Blue Rock (gold) and the Chishanya
(phosphate) prospects in Zimbabwe, and the Nkombwa Hills rare earths and
phosphate project, although our earn-in partner is still developing this
prospect. Future results will therefore not be negatively impacted by
the impairment of exploration assets.
Romania remains the current focus of attention, although expansion at
Pickstone-Peerless and the possible development of Giant Gold Mine
(Giant) are also actively being reviewed by the Company and our
co-investor Grayfox Investments (Private) Limited (Grayfox).
While further investment opportunities are available in both Romania and
Zimbabwe, the Board's near term focus is squarely on increasing
efficiencies and achieving profitability at Manaila. An important
aspect of this will be the diversification of our product range.
Although to date Manaila has been selling a copper concentrate, the
physical zinc tonnage content is almost the same as the copper tonnage
content, and following commission of the zinc line the zinc concentrate
sales are expected to deliver a significant portion of future revenue.
In addition, a third revenue stream from Manaila is achievable through
the production of a silver and gold concentrate. Silver and gold
credits currently represent up to 30 per cent. of the current revenue
from Manaila, demonstrating the potential for this to represent a
considerable source of value once capitalised on.
In tandem with this, we will continue to seek to advance the issue of
the sub-licence at Baita Plai, whilst simultaneously making progress to
exploit the Faneata Dam.
The Zambian assets have been sold with the Company retaining a residual
minority interest in Nkombwa Hill. The exploration results at Nkombwa
Hill have been encouraging and Vast remains in regular contact with the
earn-in partner in evaluating the way forward for this project.
Improvements at Manaila and the development of Baita Plai in Romania are
designed to put the Company in a cash generative position that will
cover the operational and overhead costs relating to Romania and the UK,
while the cash generated at Pickstone Peerless in so far as it is not
used to repay our loan to Grayfox will be retained to fund expansion of
Pickstone-Peerless and future development work at Giant.
With regard to management, we are delighted to welcome Carl Kindinger to
the Company as Chief Financial Officer. He has 25 years Board level
experience of which the last ten have been in the resource sector with
AIM listed companies. He has proven experience in information systems,
cost saving, fund raising and corporate governance. We are confident
that Carl has the requisite skillset to support the Company's active
growth plans as we look to increase production and profitability at our
operational mines.
Significant transactions have been undertaken and are highlighted below.
The Directors consider the Group's key performance indicators to be:
-- Production volumes and recovery rates
-- On-going control of its mining costs and production facilities
-- The rate of utilisation of the Group's cash resources. This is discussed
further below.
Cash resources
As can be seen from the statement of financial position, cash resources
for the Group at 31 March 2016 were approximately $0.8 million (2015:
$3.1 million). During the year, the cash outflows from operations were
$1.8 million (2015: $4.2 million) and from investing activities were
$8.0 million (2015: $80,000). The Directors monitor the cash position of
the Group closely and seek to ensure that there are sufficient funds
within the business to allow the Group to meet its commitments and
continue the development of the assets. During the year to 31 March
2016, over 80 per cent. of all expenditure was spent on directly
developing the three mining properties in Romania and Zimbabwe.
The Directors closely monitor the development of the Group's assets and
focus in particular on ensuring that the regulatory requirements of the
licences are in good standing at all times and that any capital
expenditure on the assets is closely controlled and monitored. Details
of the Group's spend on capital items in the year are set out in notes
10 and 11 of the financial statements.
The loss after tax arising from continuing operations during the year
was $6.9 million (2015: $6.0 million). However, over the year the cash
absorbed by operations was only $1.8 million as a result of $5.1 million
of non-cash items, principally, depreciation, share option and other
share based payment charges and a deferred tax credit. The loss
recognised on discontinued operations did not involve any cash outflow.
The Group raised fresh share capital of $5.2 million and raised loan
finance of $2.4 million. Capital expenditure on the development on mine
properties was $8.6 million. The overall reduction in cash available to
the Group was therefore $2.3 million.
A summary of the cash movement in the holding company for the year is as
follows:
$'000
Opening cash balance 2,330
Source of cash
Issue of shares *5,008
Funds remitted from Zimbabwe 472
Total cash available 7,810
Utilisation of cash
Manaila Polymetallic Mine (capex and working capital) (3,048)
Baita Plai Polymetallic Mine (capex & care/maintenance
costs) (1,001)
Romania Overheads (641)
Zimbabwe and Zambia overheads (71)
UK overheads
Legal, audit, NOMAD and other professional fees (660)
Salaries (1,468)
Other overhead costs (233)
Net interest paid (73)
Total cash utilised (7,195)
Closing balance 615
* new share capital raised $5.2 million, but $5.008 million cash physically received during the period. Projects update Romania Manaila continues to improve the quality and quantity of the concentrates it produces. Post year-end, good progress has been made towards producing separate copper and zinc concentrates. Previously, an excessive amount of zinc was being recovered in the copper concentrate thereby incurring a penalty, while unrecovered zinc was being lost in the tailings disposal. As announced on 6 September 2016, zinc now has been successfully removed from the copper concentrate and the second phase of producing a zinc concentrate is now underway. The sale of two separate better quality concentrates will enhance revenues. Once the production of the copper and zinc concentrates has achieved steady state, the recovery of gold and silver not recovered in the copper and zinc concentrates will be evaluated. If successful this will provide Manaila with a third income stream. Manaila has, in March 2016, obtained a new prospecting licence which will provide a 20 fold increase in its prospecting area, and as announced on 26 September 2016 now has a maiden JORC Resource covering the original mining licence and exploration done on the extension. The JORC open pittable ore resource is 2.60Mt which replaces the previous Russian system resource of 0.35Mt thus securing a material increase in the open pit life of the mine. At Baita Plai the primary objective remains the securing of the association sub-licence from the state mining company S.C. Baita S.A. All legal and regulatory requirements have been fulfilled by Vast and the Company has a contractual right to receive the sub-licence. High-level discussions are now in place to resolve the quantum of the outstanding obligation between S.C. Baita S.A. and the Company's Romanian subsidiary. The courts have determined the final amount subject to a technical confirmation currently being completed. Vast remains confident that the sub-licence will follow in accordance with the contract. In the interim, expenditure at Baita Plai has been limited to the required care and maintenance requirements and some capital expenditure to comply with health and safety regulations that permit continued access to the important areas of the mine such as the pumping stations. Part of the capital expenditure has reduced the pumping costs at the mine by 50%. Further capital expenditure will be restricted in part until after receipt of the sub-licence, and in part until after the test work on the processing of the ore has been completed. The Company is planning to commission a drilling campaign targeting the Faneata Tailings Dam, which is comprised of approximately 40 years of tailings from the high grade Baita Plai mine. It is anticipated that Faneata could become a stand-alone mining operation with the application of enhanced processing technologies that have the ability to enable the economic extraction of the metalliferous content of the tailings. The experience and knowledge gained at Manaila will be invaluable when reopening Baita Plai. The success of the test-work undertaken by SGS (UK) and Minxcon at Manaila is likely to see these consultants actively involved in the reopening process at Baita Plai. The marketing experience of the Manaila concentrates will also be of value to the marketing of the Baita Plai concentrates. Zimbabwe Pickstone-Peerless Gold Mine The highly experienced management team running this mine have consistently improved its performance since operations commenced. The mine is now consistently milling circa 20,000 tonnes a month with a grade of greater than 2 grammes/tonne (g/t) of gold. Mine plan drilling has enhanced the understanding of the ore body derived from the resource drilling and in excess of two years mill feed at a grade exceeding 2g/t gold has been identified. Evaluation of the sulphide ore body and the processing of this expected higher-grade ore has commenced and will lead to detailed planning and costing of this next phase of development. The robust gold price gives further encouragement to investing and expanding Pickstone-Peerless. Giant Gold Mine Currently there is an inferred resource at Giant of circa 500,000 ozs gold for the mine. Historically, Giant was a significant producer and like Pickstone-Peerless it is believed that a world-class resource could be delineated at this mine. Artisanal mining at Giant, like Pickstone-Peerless, indicates significant mineralisation giving further encouragement to fully evaluate the gold resource potential of this prospect. Other: Significant new projects are potentially available in Zimbabwe, but limited efforts have been directed towards these due to constraints in resources, regarding both financial and personnel. Zambia The earn-in partner on Nkombwa Hill, who now holds a 50.6% interest in the prospect, has achieved good exploration progress. A JORC compliant resource statement will be released soon. Work on the second phase of the exploration programme is expected to begin shortly. When the earn-in reaches 65%, Vast will be entitled to retain this level of participation by contributing its share of future development funding for the project. Fund raising At the time of reporting, taking into consideration the Group's existing funds, the receipt of the Baita Plai sub-licence will trigger the process of restarting the mine requiring the Company to secure approximately $4 million in additional funding over the period to December 2016. Various funding options, including conventional debt finance, are being considered. Impairment of projects A comprehensive review for impairment on all the projects was undertaken. As the Group has ceased all greenfield exploration activities, all intangibles previously held have been classified as discontinued operations. Further details contained in note 10. Risk management The Board has identified the following as being the principal strategic and operational risks (in no order of priority) -- Risk - Going concern The Group will require more cash for its near term investment purposes - particularly for the development of the Baita Plai sub-licence, once it is received - but is confident that it will be able to raise cash from investors as it is required; $2.66 million (before issue costs) has already been raised from share issues since the year end. However, this position could be undermined by change of investor appetite, unforeseen delays, cost overruns or adverse commodity price movements and therefore indicate the existence of a material uncertainty which may cast significant doubt about the Group's ability to continue as a going concern. Mitigation/Comments The Board will continue to engage potential investors to aid understanding of the fundamental strength of the Group's business so as to be in a position to attract additional funding when required. The Board will also whenever possible retain sufficient cash margin to offset contingencies. -- Risk - Mining Mining of natural resources involves significant risk. Drilling and operating risks include geological, geotechnical, seismic factors, industrial and mechanical incidents, technical failures, labour disputes and environmental hazards. Mitigation/Comments Use of strong technical management together with modern technology and electronic tools assist in reducing risk in this area. Good employee relations are also key in reducing the exposure to labour disputes. The Group is committed to following sound environmental guidelines and is keenly aware of the issues surrounding each individual project. -- Risk - Commodity prices Commodity prices are subject to fluctuation in world markets and are dependent on such factors as mineral output and demand, global economic trends and geo-political stability. Mitigation/Comments The Group's management constantly monitors mineral grades mined and cost of production to ensure that mining output remains economic at all times. Once output stabilises beyond the initial development phase, it will be possible to hedge future price fluctuations by entering into forward selling contracts. Beyond that the Group aims to remain a low cost producer. -- Risk - Retention of Key Personnel The successful achievement of the Group's strategies, business plans and objectives depends upon its ability to attract and retain certain key personnel. Mitigation/Comments The Group is committed to the fostering of a management culture where management is empowered and where innovation and creativity in the workplace is encouraged. In order to retain key personnel, it has introduced a "Share Appreciation Right Scheme" for directors and senior executives, and will address a bonus scheme for others. -- Risk - Country and Political The Group's operations are based in Zimbabwe and Romania. Emerging market economies could be subject to greater risks, including legal, regulatory, economic and political risks, and are potentially subject to rapid change. These risks exist particularly in Zimbabwe where the Group is affected by that country's Indigenisation Regulations which are subject to change and are of uncertain effect. Further information on the Indigenisation Regulations is given in Note 27. Mitigation/Comments The Group's management team is highly experienced in its areas of operation. The Group routinely monitors political and regulatory developments in each of its countries of operation. In addition, the Group actively engages in dialogue with relevant Government representatives in order to keep abreast of all key legal and regulatory developments applicable to its operations. The Group has a number of internal processes and checks in place to ensure that it is wholly
compliant with all relevant regulations in order to maintain its mining
or exploration licences within each country of operation. In Zimbabwe
the Group will take the necessary steps to comply with the
Indigenisation Regulations. These country risks are further addressed in
the Notes to the Financial Statements.
-- Risk - Social, Safety and Environmental
The Group's success may depend upon its social, safety and environmental
performance, as failures can lead to delays or suspension of its mining
activities.
Mitigation/Comments
The Group takes its responsibilities in these areas seriously and
monitors its performance across these areas on a regular basis.
-- Risk - Impairment of intangible assets
The Group has licences or claims over a number of discrete areas of
exploration. Review of deferred exploration expenses involves
significant judgement and this increases the risk of misstatement.
Mitigation/Comments
It is the Group's policy for the Board to review progress every quarter
on each area in order to approve the timing and amount of further
expenditure or to decide that no further expenditure is warranted. If
no further expenditure is warranted for any area, then the related costs
will be written off. The board measures progression in each of its claim
areas based on a number of factors including specific technical results,
international commodity markets, claim holding costs and economic
considerations. Further details are included in Note 10 of the Financial
Statements.
Outlook
The period under review has seen significant progress from an operation
standpoint, with our team overcoming several hurdles which places us in
a strong position moving forward.
The excellent performance of Pickstone-Peerless is testament to the
expertise and hard work of the management team, often working in
difficult conditions. A comprehensive mine plan has been established
that will provide the mill with good grade ore for the next two to three
years. Longer term, the resource drilling and improved knowledge of the
ore body, has indicated the strong potential for a robust and
financially attractive mining operation for many years to come.
Exploration at Giant is expected to commence in the coming year and it
is hoped this will lead to the delineation of sufficient resources to
enable pre-feasibility study work to commence.
The programme to improve the quality, quantity, and variety of
concentrate produced at Manaila has begun to bear fruit. Separation of
copper and zinc into their respective concentrates has been achieved and
the mine is now building up its production volumes of copper and zinc
concentrates.
The award of the Baita Plai sub-licence will see the commencement of
certain refurbishment work on the mine and processing plant. The full
capital investment to restart the mine will be finalised once the
planned test work has been completed.
The continued good cash generation at Pickstone-Peerless, the steady
state production at Manaila, and the commencement of production at Baita
Plai is expected to put the Company into positive cash generation at
current metal prices.
To the management and staff at Pickstone-Peerless, a special vote of
thanks for the excellent results achieved at the mine this year. At
Manaila, the resilience and persistence of the staff and management
during a particularly difficult period of implementing new and
additional processes to achieve separate copper and zinc concentrates is
also much appreciated. The patience and commitment of the small team of
care and maintenance staff at Baita Plai is appreciated and it is hoped
that new members of staff will soon join them when the reopening of the
mine commences.
I am grateful to my fellow directors and senior management at Vast for
their continued support and commitment to the Company. The commitment
and support of the co-owners of Pickstone-Peerless, Grayfox, is also
appreciated and a special thank you for their contribution to the
success of the mine. The initial successes achieved by our earn-in
partners at Nkombwa Hill is due to their hard work and commitment to the
project, for which Vast is grateful.
On behalf of the Board
Roy A. Pitchford
Group Chief Executive Officer
REPORT OF THE DIRECTORS
for the year ended 31 March 2016
The Directors present their report together with the audited financial
statements for the year ended 31 March 2016.
Results and dividends
The Group statement of comprehensive income is set out below and shows
the loss for the year.
The Directors do not recommend the payment of a dividend (2015: nil).
Financial instruments
Details of the use of financial instruments by the Company and its
subsidiary undertakings are contained in note 21 of the financial
statements.
Directors
The Directors who served during the year and up to the date hereof were
as follows:-
Date of Appointment
Roy Tucker 5 April 2005
Roy Pitchford 7 April 2014
William Battershill 30 May 2014
Eric Diack 30 May 2014
Graham Briggs 22 December 2015
Directors' interests
The interests in the shares of the Company of the Directors who served
during the year were as follows:
31 March 2016 31 March 2015
Ordinary
Shares Share Options Ordinary Shares Share Options
William
Battershill 28,750,659 - 28,750,659 -
Graham Briggs 4,166,625 - - -
Eric Diack - - - -
Roy Pitchford - - - -
Roy Tucker 31,607,029 - 26,398,717 3,500,000
Total 64,524,313 - 55,149,376 3,500,000
Share Options
Outstanding at 31 Outstanding at 31
Exercise price March 2015 Movements during year March 2016
Issued Lapsed
Roy Tucker
5.0p 3,500,000 - 3,500,000 -
Total 3,500,000 - 3,500,000 -
Employee Benefit Trust
The following shares are held in an unapproved Employee Benefit Trust.
The Directors' beneficial interest in these shares is as follows:
Exercised Granted
Outstanding during during Outstanding
Subscription at 31 March last 12 last 12 at 31 March Exercise
price 2015 months months 2016 date
Roy 50% Jul
Tucker 8.75p 1,500,000 - - 1,500,000 2010
50% Jul
2011
50% Aug
9.00p 750,000 - - 750,000 2011
50% Aug
2012
50% Aug
6.00p 2,750,000 - - 2,750,000 2012
50% Aug
2013
Total 5,000,000 - - 5,000,000
See note 23 for further details of the EBT
Share Appreciation Rights Scheme
The following Directors have been granted rights under the Company's
Share Appreciation Rights Scheme (SARS):
Vesting period
Grant date SARs awarded Start Finish
William Battershill 1 Jun 2015 12,000,000 31 Mar 2016 31 Mar 2019
Eric Diack 1 Jun 2015 12,000,000 31 Mar 2016 31 Mar 2019
Roy Pitchford 1 Jun 2015 20,000,000 31 Mar 2016 31 Mar 2019
1 Jun 2015 12,000,000 31 Mar 2017 31 Mar 2020
Roy Tucker 1 Jun 2015 10,000,000 31 Mar 2016 31 Mar 2019
1 Jun 2015 8,000,000 31 Mar 2017 31 Mar 2020
See note 23 for further details of the SARS
Directors' remuneration
Termination
Salary/Fees Payments Pension Medical aid Total
2016 $'000 $'000 $'000 $'000 $'000
William
Battershill 75 - - - 75
Graham Briggs 8 - - - 8
Eric Diack 60 - - - 60
Roy Pitchford 210 - - - 210
Roy Tucker 187 - - - 187
Total 540 - - - 540
2015
Stuart Bottomley
* 16 - - - 16
William
Battershill 81 - - - 81
Eric Diack 73 - - - 73
Michael Kellow * 28 - 3 - 31
Neville Nicolau
* 11 - - - 11
Roy Pitchford 188 - - - 188
Roy Tucker 165 - - - 165
Total 562 - 3 - 565
* Former Director
Part of the remuneration of Roy Tucker represents payment for UK office
services that are provided by Roy Tucker under his consultancy contract
at his expense. His remuneration also includes irrecoverable VAT. No
part of the remuneration paid, (2015: $11,800) has been settled by
issuing shares.
The Company has qualifying third party indemnity provisions for the
benefit of the Directors.
Auditors
All of the current Directors have taken all the steps that they ought to
have taken to make themselves aware of any information needed by the
Company's auditors for the purposes of their audit and to establish that
the auditors are aware of that information. The Directors are not aware
of any relevant audit information of which the auditors are unaware.
The Company's auditor, Crowe Clark Whitehill LLP, was initially
appointed on 25 April 2016 and it is proposed by the Board that they be
reappointed as auditors at the forthcoming AGM.
Events after the reporting date
These are more fully disclosed in Note 29
By order of the Board
Roy C. Tucker
Secretary 28 September 2016
Statement of Directors' responsibilities
The Directors are responsible for preparing the Strategic Report, the
Directors' Report and the financial statements in accordance with
applicable law and regulations.
Company law requires the Directors to prepare financial statements for
each financial year. Under that law the Directors have elected to
prepare the financial statements in accordance with International
Financial Reporting Standards (IFRSs') as adopted by the EU and
applicable law.
Under company law the Directors must not approve the financial
statements unless they are satisfied that they give a true and fair view
of the state of affairs of the company and the group and of the profit
or loss of the group for that period. In preparing these financial
statements, the Directors are required to:
-- select suitable accounting policies and then apply them consistently;
-- make judgments and accounting estimates that are reasonable and prudent;
-- state whether applicable accounting standards have been followed, subject
to any material departures disclosed and explained in the financial
statements;
-- prepare the financial statements on the going concern basis unless it is
inappropriate to presume that the company will continue in business.
The Directors are responsible for keeping adequate accounting records
that are sufficient to show and explain the company's transactions and
disclose with reasonable accuracy at any time the financial position of
the company and enable them to ensure that the financial statements
comply with the Companies Act 2006. They are also responsible for
safeguarding the assets of the company and hence for taking reasonable
steps for the prevention and detection of fraud and other
irregularities.
They are further responsible for ensuring that the Strategic Report and
the Report of the Directors and other information included in the Annual
Report and Financial Statements is prepared in accordance with
applicable law in the United Kingdom.
The maintenance and integrity of the Company's website is the
responsibility of the Directors; the work carried out by the auditors
does not involve the consideration of these matters and, accordingly,
the auditors accept no responsibility for any changes that may have
occurred in the accounts since they were initially presented on the
website.
Legislation in the United Kingdom governing the preparation and
dissemination of the accounts and the other information included in
annual reports may differ from legislation in other jurisdictions.
INDEPENT AUDITOR'S REPORT TO THE MEMBERS OF VAST RESOURCES PLC
Independent Auditor's Report to the Members of Vast Resources Plc
We have audited the financial statements of Vast Resources Plc for the
year ended 31 March 2016 which comprise the Group Statement of
Comprehensive Income, the Group and Parent Company Statement of Changes
in Equity, the Group and Parent Company Statements of Financial Position,
the Group and Parent Company Statements of Cash Flow and the related
notes.
The financial reporting framework that has been applied in their
preparation is applicable law and International Financial Reporting
Standards (IFRSs) as adopted by the European Union and, as regards the
parent company financial statements, as applied in accordance with the
provisions of the Companies Act 2006.
This report is made solely to the company's members, as a body, in
accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our
audit work has been undertaken so that we might state to the company's
members those matters we are required to state to them in an auditor's
report and for no other purpose. To the fullest extent permitted by law,
we do not accept or assume responsibility to anyone other than the
company and the company's members as a body, for our audit work, for
this report, or for the opinions we have formed.
Respective responsibilities of directors and auditors
As explained more fully in the Statement of Directors' Responsibilities,
the directors are responsible for the preparation of the financial
statements and for being satisfied that they give a true and fair view.
Our responsibility is to audit and express an opinion on the financial
statements in accordance with applicable law and International Standards
on Auditing (UK and Ireland). Those standards require us to comply with
the Auditing Practices Board's Ethical Standards for Auditors.
Scope of the audit of the financial statements
An audit involves obtaining evidence about the amounts and disclosures
in the financial statements sufficient to give reasonable assurance that
the financial statements are free from material misstatement, whether
caused by fraud or error. This includes an assessment of: whether the
accounting policies are appropriate to the company's circumstances and
have been consistently applied and adequately disclosed; the
reasonableness of significant accounting estimates made by the
directors; and the overall presentation of the financial statements.
In addition, we read all the financial and non-financial information in
the Strategic Report, the Directors' Report and any other surround
information to identify material inconsistencies with the audited
financial statements and to identify any information that is apparently
materially incorrect based on, or materially inconsistent with, the
knowledge acquired by us in the course of performing the audit. If we
become aware of any apparent material misstatements or inconsistencies
we consider the implications for our report.
Opinion on financial statements
In our opinion:
-- the financial statements give a true and fair view of the state of the
group's and of the parent company's affairs as at 31 March 2016 and of
the group's loss for the year then ended;
-- the group financial statements have been properly prepared in accordance
with IFRSs as adopted by the European Union;
-- the parent company financial statements have been properly prepared in
accordance with IFRSs as adopted by the European Union as applied in
accordance with the provisions of the Companies Act 2006; and
-- the financial statements have been prepared in accordance with the
requirements of the Companies Act 2006.
Emphasis of Matter - Going Concern
In forming our opinion on the financial statements, which is not
modified, we have considered the adequacy of the disclosures made in the
statement of accounting policies in the financial statements concerning
the Group's and Company's ability to continue as a going concern.
Further funds will be required to finance the Group's and Company's
working capital requirements and the development of the Group's Romanian
assets. If cash flow from existing sources was not sufficient to meet
the Group's commitments the Directors are confident that additional
funds could be successfully raised from other sources. However, there
are no binding agreements in place to date. These conditions indicate
the existence of a material uncertainty which may cast significant doubt
about the Group's and Company's ability to continue as a going concern.
The financial statements do not include the adjustments that would
result if the Company was unable to continue as a going concern.
Emphasis of Matter - Indigenisation Regulation Zimbabwe
In forming our opinion on the financial statements, which is not
modified, we have considered the adequacy of the Directors' disclosure
of the impacts of the Indigenisation Regulation in Zimbabwe, (see basis
of preparation in the statement of accounting policies and in note 27 in
the financial statements). This Regulation, as set in its present format
would require transfer of 51% of all Zimbabwean projects to designated
local entities, and as explained in Note 27, this gives rise to a
significant uncertainty over the ability of the Group and Company to
realise the value of the Group's assets. The financial statements do not
include the adjustments that would result if 51% of the Zimbabwean
projects were required to be transferred. These adjustments would
principally be significant impairment of the Group's Zimbabwean
exploration assets and the Company's investment in subsidiaries.
Opinion on other matter prescribed by the Companies Act 2006
In our opinion the information given in the Strategic Report and the
Directors' Report for the financial year for which the financial
statements are prepared is consistent with the financial statements.
Matters on which we are required to report by exception
We have nothing to report in respect of the following matters where the
Companies Act 2006 requires us to report to you if, in our opinion:
-- adequate accounting records have not been kept by the parent company, or
returns adequate for our audit have not been received from branches not
visited by us; or
-- the parent company financial statements are not in agreement with the
accounting records and returns; or
-- certain disclosures of directors' remuneration specified by law are not
made; or
-- we have not received all the information and explanations we require for
our audit.
Stephen Bullock
Senior Statutory Auditor
For and on behalf of Crowe Clark Whitehill LLP
Statutory Auditor
St Bride's House
10 Salisbury Square
London EC4Y 8EH
Dated: 28 September 2016
Group statement of comprehensive income
for the year ended 31 March 2016
31 Mar 31 Mar
2016 2015
Group Group
Note $'000 $'000
Revenue 7,200 -
Cost of sales (5,608) -
Gross profit 1,592 -
Overhead expenses (9,615) (5,993)
Depreciation of property, plant and equipment (2,151) -
Loss on sale of property, plant and equipment (57) -
Share option (expense) / credit (3,368) 25
Other administrative and overhead expenses (4,039) (6,018)
Loss from operations (8,023) (5,993)
Finance income 4 1 3
Finance expense (509) -
Loss before taxation from continuing operations (8,531) (5,990)
Tax credit 5 1,658 -
Loss after taxation from continuing operations (6,873) (5,990)
Gain on business combination 14 41 169
Loss on discontinued operations, net of tax 14 (8,739) (1,033)
Total loss for the year (15,571) (6,854)
Other comprehensive income
Gain on available for sale financial assets 10 18
Exchange loss on translation of foreign operations (135) -
Total comprehensive loss for the period (15,696) (6,836)
Total loss attributable to:
- the equity holders of the parent company (16,100) (6,617)
- non-controlling interests 529 (237)
(15,571) (6,854)
Total comprehensive loss attributable to:
- the equity holders of the parent company (16,225) (6,599)
- non-controlling interests 529 (237)
(15,696) (6,836)
Loss per share - basic and diluted 8 (1.02) (0.75)
Loss per share from continuing operations - basic
and diluted (0.44) (0.68)
The accompanying accounting policies and notes form an integral part of
these financial statements.
Group Statement of Changes in Equity
for the year ended 31 March 2016
Foreign
Share currency Available
Share Share option translation for sale EBT Retained Non-controlling
capital premium reserve reserve reserve reserve deficit Total interests Total
$'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000
At 31 March 2014 14,075 62,893 504 (1,843) (31) (3,942) (39,078) 32,578 - 32,578
Total comprehensive
loss for the year - - - - 18 - (6,617) (6,599) (236) (6,835)
Share option charges - - (25) - - - - (25) - (25)
Interest in mining
asset - - - - - - (7,404) (7,404) 9,403 1,999
Acquired through
business combination
- Dallaglio Investments
(Pvt) Ltd - - - - - - - - 2,000 2,000
- Mineral Mining SA - - - - - - - - (198) (198)
Shares issued:
- for cash
consideration 715 3,089 - - - - - 3,804 - 3,804
- to settle liabilities 245 123 - - - - - 368 - 368
(including Directors)
At 31 March 2015 15,035 66,105 479 (1,843) (13) (3,942) (53,099) 22,722 10,969 33,691
Total comprehensive
loss for the year - - - (135) 10 - (16,100) (16,225) 529 (15,696)
Share options charge - - 3,368 - - - - 3,368 - 3,368
Share options lapsed - - (1,748) - - - 1,748 - - -
Acquired through
business combination
- Sinarom Mining Group
SA - - - - - - (20) (20) 20 -
Shares issued:
- for cash
consideration 796 4,364 - - - - - 5,160 - 5,160
- to settle liabilities 274 1,183 - - - - - 1,457 - 1,457
At 31 March 2016 16,105 71,652 2,099 (1,978) (3) (3,942) (67,471) 16,462 11,518 27,980
The accompanying accounting policies and notes form an integral part of
these financial statements.
Company Statement of Changes in Equity
for the year ended 31 March 2016
Foreign
Share currency Available
Share Share option translation for sale EBT Retained
capital premium reserve reserve reserve reserve deficit Total
$'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000
At 31 March 2014 14,075 62,893 504 (4,954) 1 (3,942) (36,000) 32,577
Total comprehensive
loss for the year - - - - 4 - (6,039) (6,035)
Share option charges
(credit) - - (25) - - - - (25)
Shares issued:
- for cash
consideration 715 3,089 - - - - - 3,804
- to settle liabilities 245 123 - - - - - 368
(including Directors)
At 31 March 2015 15,035 66,105 479 (4,954) 5 (3,942) (42,039) 30,689
Total comprehensive
loss for the year - - - - (5) - (5,807) (5,812)
Share option charges - - 3,368 - - - 3,368
Share options lapsed - - (1,748) - - - 1,748 -
Shares issued:
- for cash
consideration 796 4,364 - - - - - 5,160
- to settle liabilities 274 1,183 - - - - - 1,457
At 31 March 2016 16,105 71,652 2,099 (4,954) - (3,942) (46,098) 34,862
The accompanying accounting policies and notes form an integral part of
these financial statements.
Group and Company statements of financial position
As at 31 March 2016
31 Mar 31 Mar 31 Mar 31 Mar
2016 2015 2016 2015
Group Group Company Company
$'000 $'000 $'000 $'000
Assets Note
Non-current assets
Intangible assets 10 - 8,739 - 185
Property, plant and equipment 11 32,539 22,621 - 75
Investment in subsidiaries 12 - - 218 218
Loans to group companies 13 - - 33,963 29,256
Deferred tax asset 5 1,658 - - -
34,197 31,360 34,181 29,734
Current assets
Inventory 15 1,912 65 - -
Receivables 16 3,896 4,134 412 345
Available for sale investments 17 8 24 5 5
Cash and cash equivalents 831 3,090 615 2,330
Restricted cash - 637 - -
Total current assets 6,647 7,950 1,032 2,680
Total Assets 40,844 39,310 35,213 32,414
Equity and Liabilities
Capital and reserves attributable to equity holders
of the Parent
Share capital 22 16,105 15,035 16,105 15,035
Share premium 71,652 66,105 71,652 66,105
Share option reserve 2,099 479 2,099 479
Foreign currency translation reserve (1,978) (1,843) (4,954) (4,954)
Available for sale reserve (3) (13) - 5
EBT reserve (3,942) (3,942) (3,942) (3,942)
Retained deficit (67,471) (53,099) (46,098) (42,039)
16,462 22,722 34,862 30,689
Non-controlling interests 25 11,518 10,969 - -
Total equity 27,980 33,691 34,862 30,689
Non-current liabilities
Loans and borrowings 18 911 1,555 - -
Provisions 20 954 - - -
1,865 1,555 - -
Current liabilities
Loans and borrowings 18 2,504 1,229 - 1,229
Trade and other payables 19 6,729 2,835 351 496
Bank overdraft 1,766 - - -
Total current liabilities 10,999 4,064 351 1,725
Total liabilities 12,864 5,619 351 1,725
Total Equity and Liabilities 40,844 39,310 35,213 32,414
The accompanying accounting policies and notes form an integral part of
these financial statements. The financial statements were approved and
authorised for issue by the Board of Directors on 27 September 2016 and
were signed on its behalf by:
Roy C. Tucker Registered number 05414325
Director
28 September 2016
Group and Company statements of cash flow
for the year ended 31 March 2016
31 Mar 31 Mar 31 Mar 31 Mar
2016 2015 2016 2015
Group Group Company Company
$'000 $'000 $'000 $'000
CASH FLOW FROM OPERATING ACTIVITES
Loss before taxation for the year (8,531) (5,990) (5,812) (6,039)
Adjustments for:
Depreciation 2,151 465 10 40
Loss (profit) on sale of property, plant and
equipment 57 (120) 65 (168)
Liabilities settled in shares 1,457 368 1,457 368
Share option expense 3,368 (25) 3,368 (25)
(1,498) (5,302) (912) (5,824)
Changes in working capital:
Decrease (increase) in receivables 670 (654) (67) (322)
Increase in inventories (1,779) (4) - -
Increase (decrease) in payables 867 1,503 (145) 1,258
(242) 845 (212) 936
Cash used in operations (1,740) (4,457) (1,124) (4,888)
Investing activities:
Payments to acquire intangible assets (63) - (65)
Payments to acquire property, plant and equipment (8,718) (394) - -
Proceeds on disposal of property, plant and
equipment 5 1,536 - 1,508
Payments to acquire subsidiary company - (522) - -
Restricted cash movement 637 (637) - -
(Increase) decrease in loans to group companies - - (4,522) 1,504
Total cash used in investing activities (8,076) (80) (4,522) 2,947
Financing Activities:
Proceeds from the issue of ordinary shares, net of
issue costs 5,160 3,804 5,160 3,804
Proceeds from investment by Grayfox (Private)
Limited - 1,700 -
Movement in loans and borrowings 2,397 1,555 (1,229) -
Total proceeds from financing activities 7,557 7,059 3,931 3,804
Decrease in cash and cash equivalents (2,259) 2,522 (1,715) 1,863
Cash and cash equivalents at beginning of year 3,090 568 2,330 467
Cash and cash equivalents at end of year 831 3,090 615 2,330
The accompanying notes and accounting policies form an integral part of
these financial statements.
Statement of accounting policies
for the year ended 31 March 2016
General information
Vast Resources plc and its subsidiaries (together "the Group") are
engaged principally in the exploration for and development of mineral
projects in Sub-Saharan Africa and Eastern Europe. Since incorporation
the Group has built an extensive and interesting portfolio of projects
in Zimbabwe and more recently in Romania. The Company's ordinary shares
are listed on the AIM market of the London Stock Exchange.
Vast Resources plc was incorporated as a public limited company under UK
Company Law with registered number 05414325. It is domiciled at, and is
registered at Nettlestead Place, Nettlestead, Maidstone, Kent, ME18 5HA.
Basis of preparation and going concern assessment
The principal accounting policies adopted in the preparation of the
financial information are set out below. The policies have been
consistently applied throughout the current year and prior year, unless
otherwise stated. These financial statements have been prepared in
accordance with International Financial Reporting Standards (IFRSs and
IFRIC interpretations) issued by the International Accounting Standards
Board (IASB) as adopted by the European Union and with those parts of
the Companies Act 2006 applicable to companies preparing their accounts
under IFRS.
The consolidated financial statements incorporate the results of Vast
Resources plc and its subsidiary undertakings as at 31 March 2016.
The financial statements are prepared under the historical cost
convention on a going concern basis.
At the date of these financial statements the Directors expect that the
Group's Zimbabwean operations will provide it with sufficient cash flow
to support its capital requirements in Zimbabwe. However, the Group
will require further funding to finance the Group's and Company's
working capital requirements and the development of the Group's Romanian
assets. The Directors are confident that the Company will be able to
raise funds for such requirements from investors as required although no
binding funding agreement is in place at the date of this Report. These
conditions indicate the existence of material uncertainty which may cast
significant doubt about the Group's and Company's ability to continue as
a going concern. The financial statements do not include the adjustment
that would result if the Company were unable to continue as a going
concern.
The Zimbabwean Government's policy on indigenisation as set in its
present format creates an obligation for the Group. The full effect
that this legislation might have on the operations of the Group is yet
to be quantified and is subject to significant uncertainty over the
ability of the Group and Company to realise the value of the Group's
assets. Further details on indigenisation are contained in note 27.
Changes in Accounting Policies
At the date of authorisation of these financial statements, a number of
Standards and Interpretations were in issue but not yet effective. The
Directors do not anticipate that the adoption of these standards and
interpretations, or any of the amendments made to existing standards as
a result of the annual improvements cycle, will have a material effect
on the financial statements in the year of initial application.
Areas of estimates and judgement
The preparation of the Group financial statements in conformity with
generally accepted accounting principles requires the use of estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of revenues
and expenses during the reporting period. Although these estimates are
based on management's best knowledge of current events and actions,
actual results may ultimately differ from those estimates. The estimates
and assumptions that have a significant risk of causing a material
adjustment to the carrying amounts of assets and liabilities in the next
financial year are discussed below:
a) Useful lives of property, plant & equipment
Property, plant and equipment are depreciated over their useful economic
lives. Useful economic lives are based on management's estimates of the
period that the assets will be in operational use, which are
periodically reviewed for continued appropriateness. Due to the long
life of certain assets, changes to estimates used can result in
significant variations in the carrying value. More details, including
carrying values, are included in note 11 to the financial statements.
b) Impairment of intangibles and mining assets
The Group reviews, on an annual basis, whether deferred exploration
costs, acquired as intangible assets or PP&E, mining options and licence
acquisition costs have suffered any impairment. The recoverable amounts
are determined based on an assessment of the economically recoverable
mineral reserves, the ability of the Group to obtain the necessary
financing to complete the development of the reserves and future
profitable production or proceeds from the disposition of recoverable
reserves. Actual outcomes may vary. More details, including carrying
values, are included in note 10 to the financial statements.
c) Share based payments
The Group operates an equity settled and cash settled share based
remuneration scheme for key employees. Employee services received, and
the corresponding increase in equity, are measured by reference to the
fair value of equity instruments at the date of grant.
In addition, the Group may frequently enter into financial arrangements
that involve the convertibility of part or all of the liabilities
assumed under these arrangements into shares in the parent Company,
under an option arrangement.
The fair value of these share options is estimated by using the Black
Scholes model on the date of grant based on certain assumptions. Those
assumptions are described in note 23 and include, among others, the
expected volatility and expected life of the options.
d) Going concern and Inter-company loan recoverability.
The Group's cash flow projections, which have used conservative
assumptions on forward commodity prices, indicate that the Group should
have sufficient resources to continue as a going concern. Should the
projections not be realised the Group's going concern would depend on
the success of future fund raising initiatives. The recoverability of
inter-Company loans advanced by the Company to subsidiaries depends also
on the subsidiaries realising their cash flow projections.
e) Estimates of fair value
The Group may enter into financial instruments, which are required by
IFRS to be recorded at fair value within the financial statements. In
determining the fair value of such instruments the Directors are
required to apply judgement in selecting the inputs used in valuation
models such as the Black Scholes or Monte Carlo model. Inputs over which
the Directors may be required to form judgements relate to, et al,
volatility rates, vesting periods, risk free interest rates, commodity
price assumptions and discount rate. In addition, where a valuation
requires more complex fair value considerations the Directors may
appoint third party advisers to assist in the determination of fair
value.
The fair value measurement of the Group's financial and non-financial
assets and liabilities utilises market observable inputs and data as far
as possible. Inputs used in determining fair value measurements are
categorised into different levels based on how observable the inputs
used in the valuation technique utilised are (the 'fair value
hierarchy'):
Level 1: Quoted prices in active markets for identical items
(unadjusted)
Level 2: Observable direct or indirect inputs other than Level 1 inputs
Level 3: Unobservable inputs (i.e. not derived from market data).
The classification of an item into the above levels is based on the
lowest level of the inputs used that has a significant effect on the
fair value measurement of the item.
f) Provisions
The Group is required to estimate the cost of its obligations to realise
and rehabilitate its mining properties.
The estimation of the cost of complying with the Group's obligations at
future dates and in economically unpredictable regions, and the
application of appropriate discount rates thereto, gives rise to
significant estimation uncertainties.
Basis of consolidation
Where the Company has control over an investee, it is classified as a
subsidiary. The Company controls an investee if all three of the
following elements are present: power over the investee, exposure to
variable returns from the investee, and the ability of the investor to
use its power to affect those variable returns. Control is reassessed
whenever facts and circumstances indicate that there may be a change in
any of these elements of control.
De-facto control exists in situations where the Company has the
practical ability to direct the relevant activities of the investee
without holding the majority of the voting rights. In determining
whether de-facto control exists the Company considers all relevant facts
and circumstances, including:
-- The size of the Company's voting rights relative to both the size and
dispersion of other parties who hold voting rights.
-- Substantive potential voting rights held by the Company and by other
parties.
-- Other contractual arrangements.
-- Historic patterns in voting attendance.
The consolidated financial statements present the results of the Company
and its subsidiaries ("the Group") as if they formed a single entity.
Inter-company transactions and balances between Group companies are
therefore eliminated in full.
The consolidated financial statements incorporate the results of
business combinations using the acquisition method. In the statement of
financial position, the acquiree's identifiable assets, liabilities and
contingent liabilities are initially recognised at their fair values at
the acquisition date. The results of acquired operations are included in
the consolidated statement of comprehensive income from the date on
which control is obtained. They are deconsolidated from the date on
which control ceases.
Business combinations
The financial information incorporates the results of business
combinations using the purchase method. In the statement of changes in
equity, the acquirer's identifiable assets, liabilities and contingent
liabilities are initially recognised at their fair values at the
acquisition date. The results of acquired operations are included in the
Group statement of comprehensive income from the date on which control
is obtained. The assets acquired have been valued at their fair value.
Any excess of consideration paid over the fair value of the net assets
acquired is allocated to the mining asset. Any excess fair value over
the consideration paid is considered to be negative goodwill and is
immediately recorded within the income statement.
Where business combinations are discontinued, whether by closure or
disposal to third parties, any resultant gain or loss on the
discontinued operation is identified separately and dealt with in the
Group's consolidated income statement as a separate item.
Employee Benefit Trust ("EBT")
The Company has established an Employee Benefit Trust. The assets and
liabilities of this trust comprise shares in the Company and loan
balances due to the Company. The Company includes the EBT within its
accounts and therefore recognises an EBT reserve in respect of the
amounts loaned to the EBT and used to purchase shares in the Company.
Any cash received by the EBT on disposal of the shares it holds will be
recognised directly in equity. Any shares held by the EBT are treated as
cancelled for the purposes of calculating earnings per share.
Financial assets
The Group's financial assets consist of cash and cash equivalents, other
receivables and available for sale investments. The Group's accounting
policy for each category of financial asset is as follows:
Loans and receivables
These assets are non-derivative financial assets with fixed or
determinable payments that are not quoted in an active market. They are
initially recognised at fair value plus transaction costs that are
directly attributable to their acquisition or issue, and are
subsequently carried at amortised cost using the effective interest rate
method, less provision for impairment.
Impairment provisions are recognised when there is objective evidence
(such as significant financial difficulties on the part of the
counterparty or default or significant delay in payment) that the Group
will be unable to collect all of the amounts due under the terms
receivable, the amount of such a provision being the difference between
the net carrying amount and the present value of the future expected
cash flows associated with the impaired receivable. For receivables,
which are reported net, such provisions are recorded in a separate allowance account with the loss being recognised within administrative expenses in the statement of comprehensive income. On confirmation that the receivable will not be collectable, the gross carrying value of the asset is written off against the associated provision. The Group's loans and receivables comprise other receivables and cash and cash equivalents in the statement of financial position. Cash and cash equivalents Comprises cash on hand and balances with banks. Cash equivalents are short term, highly liquid accounts that are readily converted to known amounts of cash. They include short term bank deposits and short term investments. Any cash or bank balances that are subject to any restrictive conditions, such as cash held in escrow pending the conclusion of conditions precedent to completion of a contract, are disclosed separately as "Restricted cash". There is no significant difference between the carrying value and fair value of receivables. Available for sale Non-derivative financial assets not included in the categories above are classified as available-for-sale and comprise the Group's strategic investments in entities not qualifying as subsidiaries, associates or jointly controlled entities. They are carried at fair value with changes in fair value recognised directly in equity. Where a decline in the fair value of an available-for-sale financial asset constitutes evidence of impairment, for example if the decline is significant or prolonged, the amount of the loss is removed from equity and recognised in the profit or loss for the year. Financial liabilities The Group's financial liabilities consist of trade and other payables (including short terms loans) and long term secured borrowings. These are initially recognised at fair value and subsequently carried at amortised cost, using the effective interest method. Where any liability carries a right to convertibility into shares in the Group, the fair value of the equity and liability portions of the liability is determined at the date that the convertible instrument is issued, by use of appropriate discount factors. Foreign currency The functional currency of the Company and all of its subsidiaries is the United States Dollar, which is the currency of the primary economic environment in which the Company and all of its subsidiaries operate. Transactions entered into by the Group entities in a currency other than the currency of the primary economic environment in which it operates (the "functional currency") are recorded at the rates ruling when the transactions occur. Foreign currency monetary assets and liabilities are translated at the rates ruling at the date of the statement of financial position. Exchange differences arising on the retranslation of unsettled monetary assets and liabilities are similarly recognised immediately in profit or loss, except for foreign currency borrowings qualifying as a hedge of a net investment in a foreign operation. The exchange rates applied at each reporting date were as follows: -- 31 March 2016 $1.4367: GBP1 -- 31 March 2015 $1.4836: GBP1 -- 31 March 2014 $1.6642: GBP1 Goodwill Goodwill represents the excess of the cost of a business combination over the total acquisition date fair value of the identifiable assets, liabilities and contingent liabilities acquired. Cost comprises the fair value of assets given, liabilities assumed and equity instruments issued, plus the amount of any non-controlling interests in the acquiree plus, if the business combination is achieved in stages, the fair value of the existing equity interest in the acquiree. Contingent consideration is included in cost at its acquisition date fair value and, in the case of contingent consideration classified as a financial liability, re-measured subsequently through profit or loss. Any direct costs of acquisition are recognised immediately as an expense. Goodwill is capitalised as an intangible asset with any impairment in carrying value being charged to the consolidated statement of comprehensive income. Where the fair value of identifiable assets, liabilities and contingent liabilities exceed the fair value of consideration paid, the excess is credited in full to the consolidated statement of comprehensive income on the acquisition date. Intangible assets Deferred development and exploration costs Once a licence has been obtained, all costs associated with mining property development and investment are capitalised on a project-by-project basis pending determination of the feasibility of the project. Costs incurred include appropriate technical and administrative expenses but not general overheads. If a mining property development project is successful, the related expenditures are amortised over the estimated life of the commercial ore reserves on a unit of production basis. Where a licence is relinquished, a project is abandoned, or is considered to be of no further commercial value to the Group, the related costs are written off. Unevaluated mining properties are assessed at each year-end and where there are indications of impairment these costs are written off to the income statement. The recoverability of deferred mining property costs and interests is dependent upon the discovery of economically recoverable reserves, the ability of the Group to obtain necessary financing to complete the development of reserves and future profitable production or proceeds from the disposition of recoverable reserves. If commercial reserves are developed, the related deferred development and exploration costs are then reclassified as development and production assets within property, plant and equipment. Prior to any such reclassification costs are assessed for any potential impairment. Following re-classification as a development and production asset, the cost of these assets are then dealt with in accordance with the Group's policy for proved mining properties (see note on property, plant and equipment, below) Mining options Mineral rights are recorded at cost less amortisation and provision for diminution in value. Amortisation will be over the estimated life of the commercial ore reserves on a unit of production basis. Licences for the exploration of natural resources will be amortised over the lower of the life of the licence and the estimated life of the commercial ore reserves on a unit of production basis. Inventories Inventories are initially recognised at cost, and subsequently at the lower of cost and net realisable value. Cost comprises all costs of purchase, costs of conversion and other costs incurred in bringing the inventories to their present location and condition. Weighted average cost is used to determine the cost of ordinarily inter-changeable items. Mining inventory includes run of mine stockpiles, minerals in circuit, finished goods and consumables. Stockpiles, minerals in circuit and finished goods are valued at their cost of production to their point in process using a weighted average cost of production, or net realisable value, whichever is the lower. Low grade stockpiles are only recognised as an asset when there is evidence to support the fact that some economic benefit will flow to the Company on the sale of such inventory. Consumables are valued at their cost of acquisition, or net realisable value, whichever is the lower. Investment in subsidiaries The Company's investment in its subsidiaries is recorded at cost less any impairment. Leased assets Where assets are financed by leasing agreements that do not give rights approximating ownership, these are treated as operating leases. The annual rentals are charged to profit or loss on a straight-line basis over the term of the lease. Non-controlling interests For business combinations completed on or after 1 January 2010 the Group has the choice, on a transaction by transaction basis, to initially recognise any non-controlling interest in the acquiree which is a present ownership interest and entitles its holders to a proportionate share of the entity's net assets in the event of liquidation at either acquisition date fair value or, at the present ownership instruments' proportionate share in the recognised amounts of the acquiree's identifiable net assets. Other components of non-controlling interest such as outstanding share options are generally measured at fair value. The total comprehensive income of non-wholly owned subsidiaries is attributed to owners of the parent and to the non-controlling interests in proportion to their relative ownership interests. Pension costs Contributions to defined contribution pension schemes are charged to profit or loss in the year to which they relate. Production expenses Production expenses include all direct costs of production, including depreciation of property plant and equipment involved in the mining process, but excluding mine and Company overhead. Property, plant and equipment Land is not depreciated. Items of property, plant and equipment are initially recognised at cost and are subsequently carried at depreciated cost. As well as the purchase price, cost includes directly attributable costs and the estimated present value of any future costs of dismantling and removing items. The corresponding liability is recognised within provisions. Depreciation is provided on all other items of property and equipment so as to write off the carrying value of items over their expected useful economic lives. It is applied at the following rates: Buildings - 2.5% per annum, straight line Plant and machinery - 15% per annum, reducing balance
Fixtures, fittings & equipment - 20% per annum,
reducing balance
Computer assets - 33.33% per annum,
straight line
Motor vehicles - 15% per annum,
reducing balance
Proved mining properties
Depletion and amortisation of the full-cost pools is computed using the
units-of-production method based on proved reserves as determined
annually by management.
Capital works in progress
Property, plant and equipment under construction are carried at its
accumulated cost of construction and not depreciated until such time as
construction is completed or the asset put into use, whichever is the
earlier.
Provision for rehabilitation of mining assets
Provision for the rehabilitation of a mining property on the cessation
of mining is recognised from the commencement of mining activities. This
provision accounts for the full cost to rehabilitate the mine according
to good practice guidelines in the country where the mine is located,
which may involve more than the stipulated minimum legal commitment.
When accounting for the provision the Company recognises a provision for
the full cost to rehabilitate the mine and a matching asset accounted
for within the non-current mining asset. The rehabilitation provision is
discounted using a risk free rate, which is linked to the currency in
which the costs are expected to be incurred, and the applicable
inflation rate applied to the cash flows. The unwinding of the
discounting effect is recognised within finance expenses in the income
statement.
Revenue
Revenue from the sales of goods is recognised when the Group has
transferred the significant risks and rewards of ownership to the buyer
and it is probable that the Group will receive the previously agreed
upon payment. These criteria are considered to be met when the goods are
delivered to the buyer. Where the buyer has a right of return, the Group
defers recognition of revenue until the right to return has lapsed.
However, where high volumes of sales are made to established wholesale
customers, revenue is recognised in the period where the goods are
delivered less an appropriate provision for returns based on past
experience. The same policy applies to warranties.
Provided the amount of revenue can be measured reliably and it is
probable that the Group will receive any consideration, revenue for
services is recognised in the period in which they are rendered.
Share based payments
Equity-settled share based payments
Where share options are awarded to employees, the fair value of the
options at the date of grant is charged to profit or loss over the
vesting period. Non-market vesting conditions are taken into account by
adjusting the number of equity instruments expected to vest at each
reporting date so that, ultimately, the cumulative amount recognised
over the vesting period is based on the number of options that
eventually vest. Market vesting conditions are factored into the fair
value of the options granted. As long as all other vesting conditions
are satisfied, a charge is made irrespective of whether the market
vesting conditions are satisfied. The cumulative expense is not adjusted
for failure to achieve a market vesting condition.
Where the terms and conditions of options are modified before they vest,
the increase in the fair value of the options, measured immediately
before and after the modification, is also charged to profit or loss
over the remaining vesting period.
Where equity instruments are granted to persons other than employees,
the fair value of goods and services received is charged to profit or
loss, except where it is in respect to costs associated with the issue
of shares, in which case, it is charged to the share premium account.
Cash-settled share based payments
The Company also has cash-settled share based payments arising in
respect of the EBT (see below and Note 23). A liability is recognised in
respect of the fair-value of the benefit received under the EBT and
charged to profit or loss over the vesting period. The fair-value is
re-measured at each reporting date with any changes taken to profit or
loss.
Remuneration shares
Where remuneration shares are issued to settle liabilities to employees
and consultants, any difference between the fair value of the shares on
the date of issue and the carrying amount of the liability is charged to
profit or loss.
Tax
The major components of income tax on the profit or loss include current
and deferred tax.
Current tax
Current tax is based on the profit or loss adjusted for items that are
non-assessable or disallowed and is calculated using tax rates that have
been enacted or substantively enacted by the reporting date.
Tax is charged or credited to the statement of comprehensive income,
except when the tax relates to items credited or charged directly to
equity, in which case the tax is also dealt with in equity.
Deferred tax
Deferred tax assets and liabilities are recognised where the carrying
amount of an asset or liability in the balance sheet differs to its tax
base, except for differences arising on:
-- The initial recognition of goodwill;
-- The initial recognition of an asset or liability in a transaction which
is not a business combination and at the time of the transaction affects
neither accounting or taxable profit; and
-- Investments in subsidiaries and jointly controlled entities where the
Group is able to control the timing of the reversal of the difference and
it is probable that the differences will not reverse in the foreseeable
future.
Recognition of deferred tax assets is restricted to those instances
where it is probable that taxable profit will be available against which
the difference can be utilised.
The amount of the asset or liability is determined using tax rates that
have been enacted or substantively enacted by the reporting date and are
expected to apply when deferred tax liabilities/(assets) are
settled/(recovered). Deferred tax balances are not discounted.
Notes to financial statements
For the year ended 31 March 2016
1 Segmental analysis
The Group operates in one business segment, the development and mining
of mineral assets. The Group has interests in two geographical segments
being Southern Africa (primarily Zimbabwe) and Eastern Europe (primarily
Romania). The Group did not generate any revenue in the previous year
and therefore no disclosures are provided with respect to revenues in
the comparative figures.
The Group's operations are reviewed by the Board (which is considered to
be the Chief Operating Decision Maker ('CODM')) and split between
exploration and development and administration and corporate costs.
Exploration and development is reported to the CODM only on the basis of
those costs incurred directly on projects. All costs incurred on the
projects are capitalised in accordance with IFRS 6, including
depreciation charges in respect of tangible assets used on the projects.
Administration and corporate costs are further reviewed on the basis of
spend across the Group
Decisions are made about where to allocate cash resources based on the
status of each project and according to the Group's strategy to develop
the projects. Each project, if taken into commercial development, has
the potential to be a separate operating segment. Operating segments
are disclosed below on the basis of the split between exploration and
development and administration and corporate. Further information is
provided on the non-current intangible assets attributable to
exploration and development on a project by project basis in note 10.
Mining, exploration and Administration
development and corporate Total
Europe Africa
$'000 $'000 $'000 $'000
2016
Revenue 1,812 5,388 - 7,200
Production
costs (1,436) (4,172) - (5,608)
Gross profit
(loss) 376 1,216 - 1,592
Impairment of
intangible
assets - - - -
Project
evaluation
expenses - - - -
Depreciation (1,554) (582) (15) (2,151)
Share option
charge - - (3,368) (3,368)
Interest
revenues - - 1 1
Profit (loss)
for the year
from
continuing
operations (1,375) 949 (6,447) (6,873)
Loss for the
year from
discontinued
operations - (8,739) - (8,739)
Total assets 10,922 29,198 724 40,844
Total
non-current
assets 8,394 26,495 (692) 34,197
Additions to
non-current
assets 4,801 4,796 8 9,605
Total current
assets 2,529 2,703 1,415 6,647
Total
liabilities 6,086 4,449 2,329 12,864
2015
Impairment of
intangible
assets - - - -
Project
evaluation
expenses (130) - - (130)
Depreciation (35) (407) (23) (465)
Share option
credit - - 25 25
Interest
revenues - - 3 3
Loss for the
year from
continuing
operations (130) - (5,721) (5,851)
Loss for the
year from
discontinued
operations - - (1,033) (1,033)
Total assets 2,137 26,910 10,263 39,310
Total
non-current
assets 2,137 26,910 2,313 31,360
Additions to
non-current
assets 2,601 458 21 3,080
Total current
assets - - 7,950 7,950
Total
liabilities - - 5,622 5,622
There are no non-current assets held in the Company's country of
domicile, being the UK (2015: $nil).
2 Group loss from operations
2016 2015
Group Group
$'000 $'000
Operating loss is stated after charging/ (crediting):
Auditors' remuneration (note 3) 110 111
Depreciation 2,151 465
Employee pension costs 16 42
Share option expense / (credit) 3,368 (25)
Foreign exchange (gain)/loss (53) 217
Loss / (Profit) on disposal of property, plant and
equipment 56 (120)
3 Auditor's remuneration
2016 2015
Group Group
$'000 $'000
Fees payable to the Company's auditor for the audit
of the Company's annual accounts 40 65
Fees payable to the Company's auditor for other services:
- Audit of the accounts of subsidiaries 70 46
110 111
4 Finance income
2016 2015
Group Group
$'000 $'000
Interest received on bank deposits 1 3
5 Taxation
2016 2015
Group Group
$'000 $'000
Income tax on profits - -
Deferred tax credit (1,658) -
Tax charge (credit) (1,658) -
Deferred tax assets are only recognised in the Group where the company
concerned has a reasonable expectation of future profits against which
the deferred tax asset may be recovered.
The asset arises in a subsidiary company which has allowable tax losses
of $6.4 million, which are expected to be utilised in the immediate
forthcoming periods.
2016 2015
Group Group
$'000 $'000
The tax assessed for the year is lower than the standard
rate of corporation tax in the UK. The differences
are explained as follows:
Loss before taxation 15,696 6,836
Loss before taxation at the standard rate of corporation
tax in the UK of 20% (2015: 21%) 3,139 1,436
Expenses disallowed for tax (1,902) (9)
Difference in tax rates in local jurisdiction (1,900) 458
Loss carried forward 663 (1,885)
Income tax charge on profits - -
Factors that may affect future tax
charges:
Tax losses 2016 2015 2016 2015
Group Group Company Company
$'000 $'000 $'000 $'000
Accumulated tax losses 22,005 21,342 13,038 9,478
However, of this total, only $6.4 million are anticipated to be off
settable against profits in the immediate future. The balance will only
be recoverable against future profits, the timing of which is uncertain,
and a deferred tax asset has not been recognised in respect of these
losses. A deferred tax asset has not been recognised in respect of
accumulated tax losses for the Company.
6 Employees
Staff costs (including directors) consist of:
Wages and salaries - management 1,531 517
Wages and salaries - other 746 764
2,277 1,281
Consultancy fees 1,056 897
Social Security costs 160 14
Healthcare costs 131 -
Pension costs 67 42
3,691 2,231
The average number of employees (including directors)
during the year was as follows:
Management 13 9
Other operations 312 57
325 66
7 Directors' remuneration
2016 2015
Group Group
$'000 $'000
Directors' emoluments 540 562
Company contributions to pension schemes - 3
Directors and key management remuneration 540 565
Gain on share options exercised by directors (not - -
charged to profit or loss as explained below)
The Directors are considered to be the key management of the Group and
Company.
One Director (2015: one) accrued benefits under a defined contribution
pension scheme during the year. Four of the Directors at the end of the
period have share options receivable under long term incentive schemes.
The highest paid Director received an amount of $210,000 (2015: $
187,500).
Included within the above remuneration are amounts accrued at 31 March
2016; please refer to the Directors' Report for full detail.
8 Loss per share
31 Mar 2016 31 Mar 2015
Group Group
Loss per ordinary share has been calculated using
the weighted average number of ordinary shares in
issue during the relevant financial year.
The weighted average number of ordinary shares in
issue for the period is: 1,579,576,275 884,682,217
Losses for the period: ($'000) (16,100) (6,617)
Loss per share basic and diluted (cents) (1.02) (0.75)
The effect of all potentially dilutive share options
is anti-dilutive.
9 Loss for the financial year
The Company has adopted the exemption allowed under Section 408(1b) of
the Companies Act 2006 and has not presented its own income statement in
these financial statements. The Group loss for the year includes a loss
after taxation of $5.807 million (2015: $6.039 million) for the Company,
which is dealt with in the financial statements of the parent company.
10 Intangible assets
Group $'000 $'000 $'000
Cost at 31 March 2014 24,410 4,300 28,710
Additions during the year 63 - 63
Amount provided for impairment - - -
Reclassification of deferred costs (95) - (95)
Discontinued operations (1,132) - (1,132)
Transferred to property, plant and equipment (15,654) (3,153) (18,807)
Cost at 31 March 2015 7,592 1,147 8,739
Additions during the year - - -
Discontinued operations (7,592) (1,147) (8,739)
Cost at 31 March 2016 - - -
Company
Cost at 31 March 2014 1,191 389 1,580
Transfer to subsidiary (1,071) (389) (1,460)
Additions during the year 65 - 65
Cost at 31 March 2015 185 - 185
Recognition of intangibles 113 - 113
Discontinued operations (298) - (298)
Cost at 31 March 2016 - - -
2016 2015
Intangible assets by project Group Group
$'000 $'000
Gold
Blue Rock - 8,083
Phosphates
Chishanya - 542
Rare earths
Nkombwa Hill - 114
- 8,739
2016 2015
Discontinued operations Group Group
$'000 $'000
Gold
Blue Rock 8,083 -
Phosphates
Chishanya 542 -
Rare earths
Nkombwa Hill 114 -
8,739 -
The treatment of the exploration projects as discontinued operations is
as a result of the Group's decision to move away from green field
exploration development. For more detail please refer to the Strategic
Report.
There was no impairment of intangible assets during the previous year.
11 Property, plant and equipment
Fixtures,
fittings Buildings Capital
Plant and and Computer Motor and Mining Work in
Group machinery equipment assets vehicles Improvements assets progress Total
$'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000
Cost at 31 March
2014 2,718 141 216 419 1,490 - - 4,984
Additions during
the year - 1 - - - - 393 394
Acquired through
business
combination 481 2 1 17 2,121 - - 2,622
Transferred from
intangibles - - - - - 18,807 - 18,807
Disposals during
the year (706) (39) (3) (167) (1,418) - - (2,333)
Cost at 31 March
2015 2,493 105 214 269 2,193 18,807 393 24,474
Additions during
the year 3,908 77 62 188 376 3,372 1,622 9,605
Acquired through
business
combination 1,442 6 - 47 936 - - 2,432
Reclassification 392 - - - - - (392) -
Disposals during
the year (257) (23) (102) (30) (17) - - (429)
Foreign exchange
movements 18 - - 13 71 5 - 107
Cost at 31 March
2016 7,996 165 174 487 3,559 22,184 1,623 36,189
Depreciation at
31 March 2014 1,489 124 186 419 83 - - 2,301
Charge for the
year 432 10 15 - 8 - - 465
Disposals during
the year (626) (33) (1) (166) (87) - - (913)
Depreciation at
31 March 2015 1,295 101 200 253 4 - - 1,853
Charge for the
year 1,069 13 17 72 225 151 604 2,151
Disposals during
the year (214) (22) (101) (30) (1) - - (368)
Foreign exchange
movements 7 - - 1 6 - - 14
Depreciation at
31 March 2016 2,157 92 116 296 234 151 604 3,650
Net book value at
31 March 2015 1,198 4 14 16 2,189 18,807 393 22,621
Net book value at
31 March 2016 5,839 73 58 191 3,325 22,033 1,019 32,539
Fixtures,
fittings Buildings
Plant and and Computer Motor and
Company machinery equipment assets vehicles Improvements Total
$'000 $'000 $'000 $'000 $'000 $'000
Cost at 31
March 2014 323 19 89 11 1,400 1,842
Additions
during the
year - - - - - -
Disposals
during the
year (126) - - (11) (1,400) (1,537)
Cost at 31
March 2015 197 19 89 - - 305
Additions
during the
year - - - - - -
Disposals
during the
year (167) (14) (66) - - (247)
Cost at 31
March 2016 30 5 23 - - 58
Depreciation
at 31 March
2014 205 19 71 11 81 387
Charge for
the year 26 - 8 - 6 40
Disposals
during the
year (99) - - (11) (87) (197)
Depreciation
at 31 March
2015 132 19 79 - - 230
Charge for
the year - - 10 - - 10
Disposals
during the
year (102) (14) (66) - - (182)
Depreciation
at 31 March
2016 30 5 23 - - 58
Net book
value at 31
March 2015 65 - 10 - - 75
Net book - - - - - -
value at 31
March 2016
12 Investments in subsidiaries
2016 2015
Company Company
$'000 $'000
Cost at the beginning of the year 218 218
Disposal during the year - -
Cost at the end of the year 218 218
The principal subsidiaries of Vast Resources plc, all of which are
included in these consolidated Annual Financial Statements, are as
follows:
Proportion Proportion
Country of held by held by Nature of
Company registration Class group group business
2016 2015
African
Consolidated
Resources PTC Nominee
Limited (i) BVI -% -% company
African Mining
Consolidated exploration
Resources and
SRL(ii) Romania Ordinary 80% 100% development
Canape Mining
Investments exploration
(Private) and
Limited Zimbabwe Ordinary 100% 100% development
Dallaglio Mining
Investments exploration
(Private) and
Limited(iii) Zimbabwe Ordinary 50% 50% development
Mining
Fisherman exploration
Mining and
Limited Zambia Ordinary 100% 100% development
Millwall
International
Investments Holding
Limited BVI Ordinary 100% 100% company
Mining
exploration
Mineral Mining and
SA (ii) Romania Ordinary nil 80% development
Mining
exploration
Moorestown and
Limited BVI Ordinary 100% 100% development
Sinarom Mining Romania Ordinary 50.1% nil Mining
Group SRL exploration
(iv) and
development
The table above shows the principal subsidiaries of the Company. A full
list of all group subsidiaries is given in Note 30, at the end of this
report.
i The Company has effective control of this entity. The voting
rights are equal to the proportion of the shares held.
ii Mineral Mining was formally merged with African Consolidated
Resources SRL in February 2016 and the company was delisted with effect
from 19 February. An 80% shareholding in Mineral Mining was acquired in
March 2015 and was accounted for as a business combination in the year
to 31st March 2015. See also Note 14 for further details.
iii The Company has effective control of this entity by virtue of its
casting vote.
iv On 7 July 2015 the Group announced that it had concluded an
agreement to purchase 50.1% of the issued share capital of Sinarom
Mining Group SRL, a company which operates the open pit Manaila subject
to certain conditions precedent. Fulfilment of all conditions precedent
was announced on 22 July 2015. See also note 14 for more detail of this
transaction.
13 Loans to group companies
Loans to Group companies are repayable on demand, subject to relevant
exchange control approvals being obtained. The treatment of this
balance as non-current reflects the Company's expectation of the timing
of receipt.
14 Business combinations during the year
Sinarom Mining Group
On 22 July 2015 the Group acquired 50.1% of the voting equity
instruments of Sinarom Mining Group SA (SMG), a Romanian company whose
principal activity is ownership and operation of the Manaila in Romania.
The principal reason for this acquisition was to expand the Group's
mining operations.
Details of the fair value of identifiable assets and liabilities
acquired, purchase consideration and gain arising are as follows:
2016 2015
Sinarom Mining Group SA Mineral Mining SA
Book value Adjustment Fair value Fair value
$000's $000's $000's $000's
Property, plant and
equipment 1,448 985 2,433 2,621
Mining asset 943 (943) - -
Inventories 68 - 68 61
Receivables 432 - 432 -
Cash and cash
equivalents 1 - 1 -
2,892 2,934 2,682
Less: Payables (2,892) - (2,892) (1,244)
Net assets - 42 1,438
Fair value of
consideration paid
- Cash - 1,269
Gain on acquisition 42 169
Mineral Mining SA merger
As was reported in the Annual Report for the year to 31 March 2015, on
23 March 2015 the Group acquired 80% of the voting equity instruments of
Mineral Mining, a Romanian company which was in administration and whose
principal activity is ownership of the Baita Plai. The principal reason
for this acquisition was to reopen and operate Baita Plai.
Mineral Mining had been subject to insolvency proceedings and as a
result of those proceedings the mining licence was transferred to a
state company, Baita SA, through a protocol dated 6 August 2013 (the
Protocol). Under the Protocol it was provided that a sub-licence on
Baita Plai be granted back to Mineral Mining if Mineral Mining was not
declared as dissolved and bankrupt and could produce proof of its
financial position to demonstrate resources for the continuation of
mining.
Under specific provisions of Romanian insolvency law Mineral Mining had
entered a merger agreement (the Merger) with the Company's Romanian
subsidiary, African Consolidated Resources SRL (AFCR SRL) under which
all the assets and liabilities of Mineral Mining would be fused by
absorption into AFCR SRL, the bankruptcy of Mineral Mining formally
ended and Mineral Mining would cease to exist. After completion of the
Merger a sub-licence on Baita Plai should be granted to AFCR SRL under
the terms of the Protocol, AFCR SRL being a company whose financial
resources for the continuation of mining can be demonstrated.
This Merger was completed in February 2016 and on 19 February 2016
Mineral Mining was struck off the register. All assets and liabilities
of Mineral Mining have been taken over by ACR SRL and the
Non-Controlling Interest in Mineral Mining has been transferred to ACR
SRL.
There is now no legal barrier to the re-issue of the mining sub-licence
to ACR SRL but the bureaucratic process continues to cause delay.
There is a debt due to Baita SA, arising from the period of the
insolvency, payable on the grant of the sub-licence on Baita Plai to
Mineral Mining that now, as a result of the Merger, will be issued to
AFCR SRL. The precise amount of the debt is disputed but it has been
determined by the Judicial Administrator of Mineral Mining that it will
not exceed RON 2,500,000 (approximately US$625,000). The Group has
provided the full amount of RON 2,500,000 as a payable in the financial
statements.
Discontinued Operations
2016 2015
$'000 $'000
Cash consideration received - 100
Total consideration received - 100
Cash disposed of - -
Net cash inflow on disposal of discontinued
operation - 100
Net assets disposed (other than cash):
Property, plant and equipment - (1)
Intangibles (8,739) (1,132)
Pre- and post-tax loss on disposal of discontinued
operation (8,739) (1,033)
Earnings per share from discontinued operations
Basic earnings/(loss) per share (0.58)cents (0.07)cents
Statement of cash flows
The statement of cash flows includes the following
amounts relating to discontinued operations:
Investing activities - 438
Financing activities - (447)
Net cash used in discontinued operations - (9)
The discontinued operations consist of the former exploration projects
in Zimbabwe, which have been treated as a discontinued operation as a
result of the decision to move away from greenfield exploration
projects.
The loss on discontinued operations in 2015 relates to the disposal by
the Group of African Consolidated Resources Limited, in Zambia.
15 Inventory
2016 2015 2016 2015
Group Group Company Company
$'000 $'000 $'000 $'000
Minerals held for sale 595 - - -
Production stockpiles 510 - - -
Consumable stores 807 65 - -
1,912 65 - -
There is no material difference between the replacement cost of stocks
and the amount stated above.
16 Receivables
2016 2015 2016 2015
Group Group Company Company
$'000 $'000 $'000 $'000
Trade receivables 14 - - -
Other receivables 998 2,934 412 345
Prepayments 659 831 - -
VAT 2,225 369 - -
3,896 4,134 412 345
At 31 March Of Of which: not impaired as at 31 March 2016 and past
2016: which: due in the following periods:
Carrying
amount Neither More than
before impaired three
deducting nor past months and
any Related Net due on Not more not more
impairment Impairment carrying 31 March than three than six
loss loss amount 2016 months months More than six months
Trade
receivables 1,151 1,137 14 14 - - -
Other
receivables 1,198 200 998 998 - - -
2,349 1,337 1,012 1,012 - - -
Other receivables at 31 March 2015 included a call on subscribed capital
in a subsidiary of $2,300 representing the balance of the
Non-Controlling Interest's investment in Dallaglio Investments (Private)
Limited. This amount was received in full by 30 June 2015.
All other amounts were due for payment within one year. No receivables
at 31 March 2015 were past due or impaired
17 Available for sale investments
2016 2015 2016 2015
Group Group Company Company
$'000 $'000 $'000 $'000
Fair value at the beginning of the year 24 6 5 1
Movement in fair value (16) 18 - 4
8 24 5 5
Available for sale investments comprise shares in quoted companies
18 Loans and borrowings
2016 2015 2016 2015
Group Group Company Company
$'000 $'000 $'000 $'000
Non current
Secured borrowings 1,978 1,555 - -
Unsecured borrowings 127 - - -
less amounts payable in less than 12
months (1,194) - - -
911 1,555 - -
Current
Bank overdrafts 1,766 - - -
Unsecured borrowings 1,310 - - -
Convertible short term debt - 1,229 - 1,229
Current portion of long term borrowings 1,194 - - -
4,270 1,229 - 1,229
Total loans and borrowings 5,181 2,784 - 1,229
i The non-current secured borrowing is a loan from a third
party secured by a pledge of the Group's shareholding in its subsidiary
company, Canape Investments (Private) Limited. The loan bears interest
at a rate of 12% per annum. The loan is repayable in four equal
six-monthly amounts, commencing in April 2016 with the final payment
being in October 2017.
ii The current unsecured borrowing represent loans from the
non-controlling interest in Dallaglio Investments (Private) Limited, the
operating company for the Pickstone Peerless Gold Mine, and African
Consolidated Resources SRL, the holder of the rights to the Baita Plai
Mine. Both loans are interest free and have no fixed terms of repayment.
iii The convertible short term debt was repaid on 16th October
2015 by the issue of 154,649,140 shares at a value of 0.5p each.
19 Trade and other payables
2016 2015 2016 2015
Group Group Company Company
$'000 $'000 $'000 $'000
Trade payables 3,491 1,422 - -
Other payables 2,259 747 351 -
Other taxes and social security taxes 681 25 - 24
Accrued expenses 298 641 - 472
6,729 2,835 351 496
At 31 March
2016: Ageing of amounts payable: amounts due for:
150 days or
Amount 30 days 60 days 90 days 120 days more
Trade payables 3,491 1,988 237 30 146 1,090
Other payables 2,259 548 11 11 34 1,655
Of the total of Trade and other payables $2.289 million will only become
payable either on or in instalments after the grant of the Baita Plai
sub-licence
At 31 March 2015:
-- Trade payables all related to amounts payable by
Mineral Mining; of these amounts, $0.95 million falls due for payment on
the restitution of the Mineral Mining mining sub-licence. The balance
is payable by instalments commencing on the restitution of the mining
sub-licence.
-- Other payables related to the balance of the
purchase consideration for Mineral Mining, which is payable on the
restitution of the mining sub-licence.
-- Otherwise, all amounts fell due for payment within
30 days
20 Provisions
2016 2015 2016 2015
Group Group Company Company
$'000 $'000 $'000 $'000
Provision for rehabilitation of mining 954 - - -
properties
As more fully set out in the Statement of Accounting Policies above, the
Group provides for the cost of the rehabilitation of a mining property
on the cessation of mining. Provision for this cost is recognised from
the commencement of mining activities.
This provision accounts for the estimated full cost to rehabilitate the
mines at Manaila and Pickstone Peerless according to good practice
guidelines in the country where the mine is located, which may involve
more than the stipulated minimum legal commitment.
When accounting for the provision the Group recognises a provision for
the full cost to rehabilitate the mine and a matching asset accounted
for within the non-current mining asset.
21 Financial instruments - risk management
Significant accounting policies
Details of the significant accounting policies in respect of financial
instruments are disclosed in Note 1 to the financial statements. The
Group's financial instruments comprise available for sale investments
(note 18), cash and items arising directly from its operations such as
other receivables, trade payables and loans.
Financial risk management
The Board seeks to minimise its exposure to financial risk by reviewing
and agreeing policies for managing each financial risk and monitoring
them on a regular basis. No formal policies have been put in place in
order to hedge the Group and Company's activities to the exposure to
currency risk or interest risk, however the Board will consider this
periodically. No derivatives or hedges were entered into during the
year.
The Group and Company is exposed through its operations to the following
financial risks:
-- Credit risk
-- Market risk (includes cash flow interest rate risk and foreign currency
risk)
-- Liquidity risk
The policy for each of the above risks is described in more detail
below.
The principal financial instruments used by the Group, from which
financial instruments risk arises are as follow:
-- Receivables
-- Cash and cash equivalents
-- Trade and other payables (excluding other taxes and social security) and
loans
-- Available for sale investments
The table below sets out the carrying value of all financial instruments
by category and where applicable shows the valuation level used to
determine the fair value at each reporting date. The fair value of all
financial assets and financial liabilities is not materially different
to the book value.
2016 2015 2016 2015
Group Group Company Company
$'000 $'000 $'000 $'000
Loans and receivables
Cash and cash equivalents 831 3,090 615 2,330
Restricted cash - 637 - -
Receivables 3,896 4,134 412 345
Loans to Group Companies - - 33,963 29,256
Available for sale financial assets
Available for sale investments (valuation
level 1) 8 24 5 5
Other liabilities
Trade and other payables (excl short term
loans) 6,728 2,385 351 496
Loans and borrowings 3,415 2,784 - 1,229
Credit risk
Financial assets, which potentially subject the Group and the Company to
concentrations of credit risk, consist principally of cash, short-term
deposits and other receivables. Cash balances are all held at recognised
financial institutions. Other receivables are presented net of
allowances for doubtful receivables. Other receivables currently form
an insignificant part of the Group's and the Company's business and
therefore the credit risks associated with them are also insignificant
to the Group and the Company as a whole.
The Company has a credit risk in respect of inter-company loans to
subsidiaries. The recoverability of these balances is dependent on the
commercial viability of the exploration activities undertaken by the
respective subsidiary companies. The credit risk of these loans is
managed as the directors constantly monitor and assess the viability and
quality of the respective subsidiary's investments in intangible mining
assets.
Inter-company loan amounts between the holding company and its
Zimbabwean subsidiary, Canape Investments, are subject to credit risk in
so far as the Zimbabwe's exchange control regulations, which change from
time to time, may prevent timeous settlement.
Maximum exposure to credit risk
The Group's maximum exposure to credit risk by category of financial
instrument is shown in the table below:
2016 2016 2015 2015
Maximum Maximum
Carrying value exposure Carrying value exposure
$'000 $'000 $'000 $'000
Cash and cash
equivalents 831 831 3,090 3,090
Restricted
cash - - 637 637
Receivables 3,896 3,896 4,134 4,134
Loans and
borrowings 3,415 3,415 2,784 2,784
The Company's maximum exposure to credit risk by class of financial
instrument is shown in the table below:
2016 2016 2015 2015
Maximum Maximum
Carrying value exposure Carrying value exposure
$'000 $'000 $'000 $'000
Cash and cash
equivalents 615 615 2,330 2,330
Receivables 412 412 345 345
Loans to
Group
Companies * 33,963 33,963 29,256 29,256
Loans and
borrowings - - 2,784 2,784
*Net of impairment charges on advances to Group companies of $8.5
million (2015 - $8.5 million)
Market risk
Cash flow interest rate risk
The Group has adopted a non-speculative policy on managing interest rate
risk. Only approved financial institutions with sound capital bases are
used to borrow funds and to invest surplus funds in. The Group and the
Company had no borrowing facilities at either the current year end or
previous period end.
The Group and the Company seeks to obtain a favourable interest rate on
its cash balances through the use of bank deposits. At year-end the
Group had a cash balance of $0.831 million (2015: $3,727 million -
including restricted cash) which was made up as follows:
2016 2015
Group Group
$'000 $'000
Sterling 437 287
United States Dollar 351 2,765
Euro 1 671
Lei (Romania) 42 4
831 3,727
Included within the above are amounts of GBP304,276 ($437,160) (2015:
GBP193,128 ($286,531)) and US$176,862 (2015: $2,025,295)) held within
fixed and floating rate deposit accounts. Interest rates range between
1% and 2% based on bank interest rates.
The Group received interest for the year on bank deposits of $1,226
(2015: $2,511).
The effect of a 10% reduction in interest rates during the year would,
all other variables held constant, have resulted in reduced interest
income of $123 (2015: $251). Conversely the effect of a 10% increase in
interest rates during the year would, on the same basis, have increased
interest income by $123 (2015: $251).
At the year-end the Company had a cash balance of $0.615 million (2015:
$2,330 million) which was made up as follows:
2016 2015
Group Group
$'000 $'000
Sterling 437 287
United States Dollar 177 2,025
Euro 1 18
Lei (Romania) - -
615 2,330
The Group and the Company had interest bearing debts at the current year
end of $3,744 million (2015: $2,784 million). These are made up as
follows:
2016 2015 2016 2015
Interest rate Group Group Company Company
$'000 $'000 $'000 $'000
Convertible short term loan 15% - 1,229 - 1,229
Secured long term loan 12% 1,978 1,555 - -
Bank overdraft 12% 1,766 - - -
3,744 2,784 - 1,229
These loans are repayable
as follows:
- Within 1 year 2,651 1,284 - 1,229
- Between 1 and 2 years 1,093 750 - -
- In more than 2 years - 750 - -
Foreign currency risk
Foreign exchange risk is inherent in the Group's and the Company's
activities and is accepted as such. The majority of the Group's expenses
are denominated in United States Dollars and therefore foreign currency
exchange risk arises where any balance is held or costs are incurred, in
currencies other than the United States Dollars. At 31 March 2016 and 31
March 2015, the currency exposure of the Group was as follows:
Sterling US Dollar Euro Other Total
At 31 March 2016 $'000 $'000 $'000 $'000 $'000
Cash and cash equivalents 437 351 1 42 831
Other receivables 82 2,182 - 1,632 3,896
Trade and other payables (249) (1,108) - (6,840) (8,197)
Available for sale investments - 8 - - 8
At 31 March 2015
Cash and cash equivalents 287 2,765 671 4 3,727
Other receivables - 3,997 21 116 4,134
Trade and other payables (249) (2,210) - (1,611) (4,070)
Available for sale investments - 24 - - 24
The effect of a 10% strengthening of Sterling against the US dollar at
the reporting date, all other variables held constant, would have
resulted in increasing/(decreasing) post tax losses by $27,159 (2015:
$3,658). Conversely the effect of a 10% weakening of Sterling against
the US dollar at the reporting date, all other variables held constant,
would have resulted in decreasing/(increasing) post tax losses by
$27,159 (2015:($3,658)
At 31 March 2016 and 31 March 2015, the currency exposure of the Company
was as follows:
Sterling US Dollar Euro Other Total
At 31 March 2016 $'000 $'000 $'000 $'000 $'000
Cash and cash equivalents 437 177 1 - 615
Other receivables 82 330 - - 412
Loans to Group companies 69 32,779 1,115 - 33,963
Trade and other payables (250) (101) - - (351)
Available for sale investments - 5 - - 5
At 31 March 2015
Cash and cash equivalents 287 2,026 17 - 2,330
Other receivables - 324 21 - 345
Loans to Group companies - 28,488 768 - 29,256
Trade and other payables (247) (1,479) - - (1,726)
Available for sale investments - 5 - - 5
Liquidity risk
Any borrowing facilities are negotiated with approved financial
institutions at acceptable interest rates. All assets and liabilities
are at fixed and floating interest rate. The Group and the Company seeks
to manage its financial risk to ensure that sufficient liquidity is
available to meet the foreseeable needs both in the short and long term.
As set out in Note 19, of the consolidated trade and other payables
balance of $5.748 million, $3.852 million is due for payment within 60
days of the reporting date. Of the balance, $1.294 million are payables
conditional on the issue of the Baita Plai sub-licence.
Capital
The objective of the directors is to maximise shareholder returns and
minimise risks by keeping a reasonable balance between debt and equity.
In previous years the Company and Group has minimised risk by being
purely equity financed. In the current year, the Group has assumed debt
risk but has kept the net debt amount as low as possible.
The Group's debt to equity ratio is 15.5% (2015: -0.9%),
calculated as follows: 2016 2015
$000's $'000
Loans and borrowings 5,181 2,784
Less: cash and cash equivalents (831) (3,090)
Net debt 4,350 (306)
Total equity 27,980 33,691
Debt to capital ratio (%) 15.5% -0.9%
22 Share capital
Ordinary 1p Ordinary 0.1p Deferred 0.9p
Nominal Nominal No of Nominal Share
No of shares value No of shares value shares value premium
As at 31
March
2014 850,537,664 14,075 - - - - 62,893
Issued
during the
year 13,025,000 205 495,084,663 755 - - 3,212
Share
conversion (863,562,664) (14,280) 863,562,664 1,428 863,562,664 12,852 -
As at 31
March
2015 - - 1,358,647,327 2,183 863,562,664 12,852 66,105
Issued
during the
year * - - 721,261,269 1,072 - - 5,547
As at 31
March
2016 - - 2,079,908,596 3,255 863,562,664 12,852 71,652
* Details of the shares issued during the year are as shown in the table
below and in the Statement of Changes of Equity.
The number of shares reserved for issue under share options at 31 March
2016 was 13,970,022 (2015: 64,563,612). The number of shares held by the
EBT at 31 March 2016 was 32,500,000 (2015: 32,500,000), see note 22 for
additional details about the EBT.
The deferred shares carry no rights to dividends or to participate in
any way in the income or profits of the Company. They may receive a
return of capital equal to the amount paid up on each deferred share
after the ordinary shares have received a return of capital equal to the
amount paid up on each ordinary share plus GBP10,000,000 on each
ordinary share, but no further right to participate in the assets of the
Company. The Company may, subject to the Statutes, acquire all or any
of the deferred shares at any time for no consideration. The deferred
shares carry no votes.
The ordinary shares carry all the rights normally attributed to ordinary
shares in a company subject to the rights of the deferred shares.
As part of the transaction with Grayfox, in 2015 the Group granted an
option which allows Grayfox to convert its 50% shareholding in Dallaglio
Investments (Private) Limited to 288,333,333 shares in the Company,
which has now expired. The Directors have considered the value of the
conversion option is not material to the value of Grayfox's interest.
See also Note 29 for details of share issues after the reporting date.
Ordinary 1p Ordinary 0.1p
Date Issue Issue
of Number of price Number of price
issue shares (pence) shares (pence) Purpose of issue
2015
15 Dec
2014 10,025,000 2.0 Settle liabilities
15 Dec
2014 3,000,000 1.5 Settle liabilities
6 Jan Issued for cash; acquisition of Mineral Mining SA
2015 318,418,000 0.5 and development of other opportunities in Romania
Issued for cash; provision of additional funds for
9 Feb opportunities in Romania and for general corporate
2015 149,999,997 0.6 purposes.
10 Mar
2015 26,666,666 0.6 Settle liabilities
13,025,000 495,084,663
2016
Issued for cash - general placing; provision of additional
10 Aug funds for opportunities in Romania and for general
2015 107,701,662 1.2 corporate purposes.
20 Aug
2015 7,000,000 0.5 Exercise of warrants
12 Oct
2015 3,000,000 0.5 Exercise of warrants
12 Oct
2015 4,500,000 0.6 Exercise of warrants
16 Oct
2015 154,649,140 0.5 Settle loan repayment
16 Oct
2015 23,097,237 0.5 Settle liabilities
Issued for cash - Crede Capital; provision of additional
8 Jan funds for opportunities in Romania and for general
2016 156,250,000 0.8 corporate purposes. 1*
Issued for cash - managers' placing; provision of
11 Jan additional funds for opportunities in Romania and
2016 62,500,000 0.8 for general corporate purposes. 2*
Issued for cash - general placing; provision of additional
11 Mar funds for opportunities in Romania and for general
2016 50,000,000 0.8 corporate purposes. 3*
24 Mar
2016 52,509,000 0.1 Exercise of warrants. 1*
24 Mar
2016 81,535,714 0.1 Exercise of warrants. 3*
30 Mar
2016 18,518,516 0.1 Exercise of warrants. 2*
- 721,261,269
* see following notes below
Crede Capital financing agreement
On 4 January 2016 the Company announced that it had entered into a
financing agreement with Crede CG III Limited (Crede) by which Crede
would subscribe for new ordinary shares of 0.1p each in the Company in
order to raise up to GBP5.0 million. In addition to the new ordinary
shares Crede would also receive one warrant for each share issued, which
warrant would entitle it either to one share at a price of 130 per cent
of the issue price of the shares to which the warrant related or to a
number of shares to be determined by a calculation based on a Black
Scholes valuation of the shares at the time of exercise. The
subscription amount would be spaced over four tranches, taking effect on
4 January, 4 April, 4 July and 4 October 2016 respectively, and would be
for an amount of GBP1.25 million each for shares at the price equivalent
to the closing bid on the previous trading day.
The first tranche of 156,250,000 new Ordinary Shares were issued by the
Company on 4 January 2016, at an issue price of 0.8 pence per new
Ordinary share, resulting in a total amount raised of GBP1.25 million.
At the same time 156,250,000 warrants were also issued, such warrants
entitling the holder to acquire Ordinary Shares in the Company
exercisable at any time until 3 January 2021 at a price calculated
according to the provisions mentioned above.
Subsequent tranches of shares and associated warrants as part of the
financing were conditional, inter alia, on (i) Crede not holding more
than 25 per cent of the Company on a fully diluted basis at the time of
the relevant tranche and (ii) sufficient share issuance authorities
being in place.
On 24 March 2016 Crede elected to convert 32,200,000 warrants issued
under the initial subscription by exchanging them for 52,509,000 new
ordinary Shares in the Company. At 31 March 2016 Crede held 124,050,000
unexercised warrants, all of which were exercised subsequent to 31 March
2016, as follows:
Date Warrants exercised Ordinary Shares issued
01-Apr-16 38,545,774 120,000,000
06-Apr-16 21,074,198 60,140,493
13-Apr-16 26,281,209 60,000,000
12-May-16 38,148,819 84,284,277
Total 124,050,000 324,424,770
On 5 April 2016, the Company announced that it was withholding its
consent to the issue of the second tranche of shares and warrants, as
this would result in Crede exceeding the 25% shareholding limit
contained in the agreement.
On 1 July 2016, at the General Meeting of the Company held on that date
to seek approval from members for authority to issue further shares to
Crede in the course of the third tranche of the agreement, the
shareholders voted not to consent to the increase of capital required.
This gave the Company the right to terminate the agreement which right
the Company then exercised.
Directors and Management financing agreement
On 6 January 2016 the Directors of the Company, together with certain
senior managers, subscribed an aggregate amount of GBP0.5 million on the
same terms as agreed with Crede for its first investment tranche and
62,500,000 new Ordinary Shares were issued by the Company at an issue
price of 0.8 pence per new Ordinary share. At the same time 62,500,000
warrants were also issued, such warrants entitling the holder to acquire
Ordinary Shares in the Company exercisable at any time until 3 January
2021 at a price calculated on the same basis as in the Crede agreement.
On 30 March 2016 a senior manager elected to convert 11,356,077 warrants
by exchanging them for 18,518,516 new ordinary Shares in the Company.
At 31 March 2016 the Directors and senior managers held 51,143,923
unexercised warrants, none of which had been exercised at the date of
this report.
Existing shareholders financing agreement
On 4 March 2016 the Company entered into an agreement with a number of
existing shareholders (the "Investors") according to which they would
subscribe, in four tranches, for new ordinary shares and associated
warrants in order to raise up to GBP0.8 million, on similar terms as
agreed with Crede save that (i) the first tranche was at a fixed price
of 0.8p per share and (ii) the tranches were split GBP400,000 for the
first tranche and GBP133,333 for each subsequent tranche, due
respectively on 4 March 2016; 3 April 2016; 4 July 2016 and 3 October
2016.
The first tranche of GBP400,000 resulted in 50,000,000 new Ordinary
Shares being issued by the Company. The Company also issued 50,000,000
warrants to the Investors to acquire Ordinary Shares in the Company
exercisable at any time until 3 March 2021 at a price calculated on the
same basis as in the Crede Agreement.
On 24 March 2016 the Investors elected to convert 50,000,000 warrants
issued under the initial subscription by exchanging them for 81,535,714
new ordinary Shares in the Company. At 31 March 2016 the Investors had
no unexercised warrants remaining from the initial subscription.
23 Share based payments
Equity - settled share based payments
The Company has granted share options and warrants to directors, staff
and consultants.
In June 2015 the Company also established a Share Appreciation Scheme to
incentivise directors and senior executives. The basis of the Scheme is
to grant a fixed number of 'share appreciation rights' (SARs) to
participants. Each SAR is credited rights to receive at the discretion
of the Company ordinary shares in the Company or cash to a value of the
difference in the value of a share at the date of exercise of rights and
the value at date of grant. The SARS are subject to various performance
conditions.
The tables below reconcile the opening and closing number of share
options and warrants in issue at each reporting date:
Granted Lapsed Exercised
Outstanding during during during Outstanding Final
Exercise at 31 March last 12 last 12 last 12 at 31 March exercise
price 2015 months months months 2016 date
December
0.5p 8,403,709 - - 1,593,590 6,809,709 2016
0.5p 10,000,000 - - 10,000,000 -
December
0.5p 6,659,903 - - - 6,659,903 2017
0.6p 4,500,000 - - 4,500,000 -
March
0.8p - 57,000,000 - - 57,000,000 2019
March
0.8p - 40,000,000 - - 40,000,000 2020
December
2.0p 500,000 - - - 500,000 2016
4.0p 2,000,000 - 2,000,000 - -
5.0p 15,000,000 - 15,000,000 - -
5.0p 5,000,000 - 5,000,000 - -
5.0p 2,500,000 - 2,500,000 - -
5.0p 3,500,000 - 3,500,000 - -
5.0p 1,500,000 - 1,500,000 - -
10.0p 5,000,000 - 5,000,000 - -
64,563,612 97,000,000 34,500,000 16,093,590 110,969,612
Exercised Lapsed Granted
Outstanding during during during Outstanding Final
Exercise at 31 March last 12 last 12 last 12 at 31 March exercise
price 2014 months months months 2015 date
December
0.5p - - - 8,403,709 8,403,709 2016
January
0.5p - - - 10,000,000 10,000,000 2017
December
0.5p - - - 6,659,903 6,659,903 2017
February
0.6p - - - 4,500,000 4,500,000 2017
December
2.0p - - - 500,000 500,000 2016
March
4.0p 2,000,000 - - - 2,000,000 2016
August
5.0p 15,000,000 - - - 15,000,000 2015
December
5.0p 5,000,000 - - - 5,000,000 2015
December
5.0p 2,500,000 - - - 2,500,000 2015
August
5.0p 3,500,000 - - - 3,500,000 2015
December
5.0p - - - 1,500,000 1,500,000 2015
August
10.0p 5,000,000 - - - 5,000,000 2015
33,000,000 - - 31,563,612 64,563,612
2016 2015
Weighted Weighted
average average
exercise price exercise price
(pence) Number (pence) Number
Outstanding at
the beginning
of the year 3.28 64,563,612 5.67 33,000,000
Granted during
the year 0.70 365,750,000 0.80 31,563,612
Lapsed during
the year 5.67 34,500,000 - -
Exercised
during the
year 0.67 148,195,441 - -
Outstanding at
the end of the
year 0.70 248,618,171 3.28 64,563,612
Exercisable at
the end of the
year 0.70 207,618,171 5.67 33,000,000
The weighted average remaining lives of the share options or warrants
outstanding at the end of the period is 50 months (2015: 15 months). Of
the 248,618,171 (2015: 64,563,612) options and warrants outstanding at
31 March 2016, 40,000,000 (2015: nil) are not yet exercisable at 31
March 2016.
Fair value of share options
The fair values of share options and warrants granted have been
calculated using the Black Scholes pricing model that takes into account
factors specific to share incentive plans such as the vesting periods of
the Plan, the expected dividend yield of the Company's shares and the
estimated volatility of those shares. Based on the above assumptions,
the fair values of the options granted are estimated to be:
Share
Share price
Option at Risk
or date free
Warrant Grant Vesting of Dividend interest Fair
Value date periods grant Volatility Life yield rate value
0.93
2p Jan-15 Dec-16 0.68p 12% years Nil 0.63% 0.00p
0.93
0.5p Jan-15 Dec-16 0.68p 12% years Nil 0.63% 0.14p
0.95
0.5p Jan-15 Jan-17 0.68p 12% years Nil 0.63% 0.14p
1.04
0.6p Jan-15 Feb-17 0.68p 12% years Nil 0.63% 0.06p
1.85
0.5p Jan-15 Dec-17 0.68p 12% years Nil 0.63% 0.14p
3.83
0.8p Jun-15 Dec-19 1.08p 135% years nil 0.65% 0.91p
4.83
0.8p Jun-15 Dec-20 1.08p 135% years nil 0.65% 0.96p
5
0.8p Jan-16 immediate 0.80p 135% years nil 1.5% 0.69p
Volatility has been based on historical share price information
Based on the above fair values and the Group's expectations of employee
turnover, the expense arising from equity-settled share options and
warrants made was $1,154,347 (2015: $25,318 - credit).
Cash-settled share based payments
The directors of the Company have set up an Employee Benefit Trust (EBT)
in which a number of employees and directors are participants. The EBT
holds shares on behalf of each participant until such time as the
participant exercises their right to require the EBT to sell the shares.
On the sale of the shares the participant receives the appreciation of
the value in the shares above the market price on the date that the
shares were purchased by the EBT, subject to the first 5% in growth in
the share price, on an annual compound basis, being retained by the EBT.
The participant pays 0.01p per share to acquire their rights. The table
below sets out the subscription price and the rights exercisable in
respect of the EBT.
As set out in the EBT accounting policy note, the EBT has been included
as part of the Company financial statements and consolidated as part of
the Group financial statements.
Exercised Lapsed Granted
Outstanding during during during Outstanding Date
Exercise at 31 March last 12 Last 12 last 12 at 31 March exercisable
price 2015 months months months 2016 from
8.75p 6,000,000 - - - 6,000,000 July 2010
8.75p 6,000,000 - - - 6,000,000 July 2011
9.00p 2,500,000 - - - 2,500,000 August 2011
9.00p 2,500,000 - - - 2,500,000 August 2012
6.00p 7,750,000 - - - 7,750,000 August 2012
6.00p 7,750,000 - - - 7,750,000 August 2013
32,500,000 - - - 32,500,000
As at 31 March 2016 a total of 32,500,000 of the EBT
participation rights were exercisable.
Lapsed
Exercised during Granted
Outstanding during Last during Outstanding Date
Exercise at 31 March last 12 12 last 12 at 31 March exercisable
price 2014 months months months 2015 from
8.75p 6,000,000 - - - 6,000,000 July 2010
8.75p 6,000,000 - - - 6,000,000 July 2011
9.00p 2,500,000 - - - 2,500,000 August 2011
9.00p 2,500,000 - - - 2,500,000 August 2012
6.00p 7,750,000 - - - 7,750,000 August 2012
6.00p 7,750,000 - - - 7,750,000 August 2013
32,500,000 - - - 32,500,000
As at 31 March 2015 a total of 32,500,000 of the EBT
participation rights were exercisable.
Fair value of EBT participant rights
The fair values of the rights granted to participants under the EBT have
been calculated using a Monte Carlo valuation model. Based on the
assumptions set out in the table below, as well as the limitation on the
growth in share price attributable to the participants (as set out in
the table above) the fair-values are estimated to be:
Rights
exercisable
from: Jul 2010 Jul 2011 Aug 2011 Aug 2012 Aug 2012 Aug 2013
Grant date Aug 2009 Aug 2009 Oct 2010 Oct 2010 Sep 2011 Sep 2011
Validity of
grant 10 years 10 years 10 years 10 years 10 years 10 years
Aug 2009 Aug 2009 Oct 2010 Oct 2010
Vesting - Jul - Jul - Aug - Aug Sep 2011- Sep 2011-
periods 2010 2011 2011 2012 Aug 2012 Aug 2013
Share price
at date of
grant 8.75p 8.75p 9.00p 9.00p 6.00p 6.00p
Volatility 51% 51% 51% 51% 51% 51%
Dividend
yield Nil Nil Nil Nil Nil Nil
Risk free
investment
rate 0.65% 0.65% 0.65% 0.65% 0.65% 0.65%
Fair value Nil Nil Nil Nil Nil Nil
Volatility has been calculated by reference to historical share price
information
Share option expense
2016 Group $'000 2015 Group $'000
Share option expense:
- In respect of remuneration contracts 723 (25)
- In respect of financing arrangements 2,645 -
Total expense / (credit) 3,368 (25)
24 Reserves
Details of the nature and purpose of each reserve within owners' equity
are provided below:
-- Share capital represents the nominal value at 0.1p
each of the shares in issue.
-- Share premium represents the balance of consideration
received net of fund raising costs in excess of the par value of the
shares.
-- The share options reserve represents the accumulated
balance of share benefit charges recognised in respect of share options
granted by the Company, less transfers to retained losses in respect of
options exercised or lapsed.
-- The foreign currency translation reserve represents
amounts arising on the translation of the Group and Company financial
statements from Sterling to United States Dollars, as set out in the
Statement of Accounting Policies, prior to the change in functional
currency to United States Dollars.
-- The available for sale reserve represents the
gains/(losses) arising on recognising financial assets classified as
available for sale at fair value.
-- The EBT reserve has been recognised in respect of the
shares in the Company purchased by the EBT; the reserve serves to offset
against the increased share capital and share premium arising from the
Company effectively purchasing its own shares.
-- The retained deficit reserve represents the cumulative
net gains and losses recognised in the Group statement of comprehensive
income.
25 Non-controlling Interests
Breckridge Investments (Private) Limited is a 50% owned subsidiary of
the Company that has material non-controlling interests (NCI). Control
is exercised by the Group by virtue of a casting vote held by the
Chairman of the Company, who is the Chief Executive Officer of the
Group.
African Consolidated Resources SRL is an 80% owned subsidiary of the
Company which also has an NCI. This follows the merger of this company
with Mineral Mining in February 2016
Sinarom Mining Group SA is a 50.1% owned subsidiary of the Company which
also has an NCI.
Summarised financial information for these three entities, before
intra-group, eliminations, is presented below together with amounts
attributable to NCI:
Breckridge African Consolidated
Investments Resources SRL Sinarom Mining Group SA Total NCI
For the year ended
31 March 2016 $000's $000's $000's $000's
Revenue 5,388 - 1,812 7,200
Cost of sales (4,172) - (1,436) (5,608)
Gross Profit (loss) 1,216 - 376 1,592
Administrative
expenses (1,708) (630) (1,122) (3,460)
Operating loss (492) (630) (746) (1,868)
Finance expense (130) - - (130)
Loss before tax (622) (630) (746) (1,998)
Tax expense /
credit 1,658 - - 1,658
Profit (loss) after
tax 1,036 (630) (746) (340)
Total comprehensive
profit (loss)
allocated to NCI 473 432 (377) 528
Cash flows from
operating
activities (978) (509) (1,471) (2,958)
Cash flows from
investing
activities (5,395) (1,907) (1,759) (9,061)
Cash flows from
financing
activities 4,571 1,575 3,234 9,380
Net cash
inflows/(outflows) (1,802) (841) 4 (2,639)
As at 31 March 2016 $000's $000's $000's $000's
Assets:
Intangible assets - - - -
Property plant and equipment 5,418 4,463 3,929 13,810
Trade and other debtors 1,594 825 808 3,227
Deferred tax asset 1,658 - - 1,658
Inventory 1,091 126 695 1,912
Cash and cash equivalents 18 70 5 93
Liabilities:
Trade and other payables 1,533 2,885 2,985 7,403
Loans and other borrowings 2,916 127 86 3,129
Accumulated non-controlling
interests 11,614 260 (356) 11,518
Breckridge Investments Mineral Mining SA Total NCI
For the year ended 31
March 2015 $000,s $000's $000's
Revenue - - -
Administrative expenses (525) 129 (396)
Operating loss (525) 129 (396)
Finance expense (1) - (1)
Loss before tax (526) 129 (397)
Tax expense - -
Loss after tax (526) 129 (397)
Total comprehensive loss
allocated to NCI 263 (26) 237
Cash flows from
operating activities (412) - (412)
Cash flows from
investing activities (1,248) - (1,248)
Cash flows from
financing activities 1,714 - 1,714
Net cash
inflows/(outflows) 54 - 54
As at 31 March 2015 $000's $000's $000's
Assets:
Intangible assets 18,806 - 18,806
Property plant and equipment 1,222 2,621 3,843
Trade and other debtors 39 - 39
Inventory 4 61 65
Cash and cash equivalents 54 - 54
Liabilities:
Trade and other payables (145) (1,243) (1,388)
Loans and other borrowings (1,764) - (1,764)
Accumulated non-controlling interests 11,140 (172) 10,968
26 Related party transactions
Company
Directors and key management emoluments are disclosed in note 6.
A short term loan of $1.2 million was provided in June 2014 by a company
associated with the Chairman, for working capital requirements. This
loan was subject to interest at 15% and was repaid by the issue of
154,649,140 shares at a value of 0.5p each, in June 2015.
Group
The non-controlling interest in African Consolidated Resources SRL,
following the merger with Mineral Mining, where 20% of the shareholding
of the subsidiary is held by third parties (the "AP Group"), consisting
as to a majority of a director and senior executives of the group,
namely:
Roy Tucker (Director) 2%
Andrew Prelea (Executive) 8%
Senior Romania management 2%
Non related party 8%
At the reporting date there was an amount owing by African Consolidated
Resources SRL to Ozone Homes SRL (Ozone) of $89,428 (RON351,891), (2015:
$85,587) (RON351,891) in respect of transactions undertaken by Ozone in
2014. Ozone is a company controlled by Andrew Prelea, the senior Group
executive in Romania.
At the reporting date there was an amount owing by Breckridge
Investments (Private) Limited (Breckridge) to Hopina Investments (Private) Limited (Hopina) of $1,150,000 (2015: nil) in respect of plant and equipment disposed of to Breckridge at the commencement of operations at Pickstone Peerless Gold Mine. Hopina is a company controlled by the non-controlling interest in Breckridge. 27 Contingent liabilities and capital commitments Contingent liability - Zimbabwe Indigenisation Indigenisation regulations extant stipulate that all Zimbabwean registered mining companies, with a net asset value of $1 or more transfer not less than 51% of their issued shares to indigenous persons within a five-year period. These regulations are relevant to both Vast Resources Zimbabwe (Private) limited and Canape Investments (Private) Limited and their subsidiaries which are Group companies registered and operating in Zimbabwe. Following the investment agreement with the Group's partner in the Pickstone-Peerless Gold Mine, these regulations now come into effect in respect of the Group's subsidiary, Breckridge Investments (Private) Limited. Several announcements have been made in the local media of possible amendments to the current regulations which are intended to reassure foreign investors in the Mining Sector. These have included suggestions that local ownership of any mining company listed on the Zimbabwe Stock Exchange would be included in the calculation of any indigenous shareholding. Further, in April 2016 the President of Zimbabwe made a public statement that foreign mining companies operating in Zimbabwe would now comply with the Indigenisation law through retained earnings rather than through the transfer of a controlling 51% shareholding to locals. Compliance with the Indigenisation and Economic Empowerment Policy will now be the retention of value, in the form of wages, salaries, taxation, community ownership schemes and other activities such as procurement and linkage programmes. However, at the date of reporting these changes have not yet been incorporated into the relevant regulations and their final effect remains uncertain. All other Zimbabwean companies in the Group were or are in a net liability position at the reporting date, due to them being financed by loans from the holding or other group companies. As such the Directors believe that there is currently no compulsion to affect any transfer of shareholding in these subsidiaries to any third party. Counsel's opinion supports this view. The full effect that this legislation might have on the operations of the Group is yet to be quantified and is subject to some uncertainty. It is the Group's stated policy that it will comply with the Indigenisation Regulations once they are clarified and codified. 28 Litigation Marange In 2006 the Group registered several mining claims in Marange under shelf companies. At that time the Group was not aware that the shelf companies had not actually been registered. In Zimbabwe the registration process had started but the companies were only registered a short period after the claims were registered in their names. After the registration of the claims 120,031.87 carats of diamonds were acquired from the claims. The Zimbabwe Mining Commissioner subsequently cancelled the registration of the claims on the instructions of the Minister of Mines. The Group instituted proceedings in the Zimbabwe High Court challenging the cancellations of the registration of the claims. The Zimbabwe High Court handed down a judgement declaring that the cancellations were invalid and that the Group legally held the claims. The High Court also ordered that the diamonds, which had been seized from the Group's offices in Harare, should be returned. The Minister of Mines instructed the Attorney General to note an appeal to the Supreme Court. The appeal was noted but the Attorney General renounced agency because he considered that there were no valid grounds of appeal. The diamonds that were seized from the Group were not returned. They are being held in the vault of the Reserve Bank of Zimbabwe. The Minister of Mines subsequently wrote to the High Court judge asking him to rescind his judgement on the basis that the Group had fraudulently withheld information in order to get a favourable judgement. Although the Judge had no jurisdiction to deal with the matter because it was on appeal to the Supreme Court, he did issue a judgement rescinding his earlier judgement. The Group has appealed against that judgement. Legal opinion is to the effect that the Rescission Judgement is fatally flawed. The Minister withdrew his appeal to the Supreme Court so if the Supreme Court upholds the appeal against the Rescission Judgement the claims will revert to the Group. In 2010, soon after the issue of the Rescission Judgement, the Attorney General laid criminal charges against the Group the allegations being that registration of the claims in the names of the non- registered companies was prejudicial to the Ministry of Mines; alternatively, the Group was illegally in possession of the diamonds above. The Group applied to the High Court for the charges to be quashed. More than 2 years later, in May 2013, the Judge handed down his judgement. He ruled that he could not quash the charges and that the Group should have applied for a stay of proceedings until the appeal had been determined. The suggested application has since been made to the Attorney General. Legal opinion is to the effect that the possibility of conviction on any of the charges is very remote. However, the Attorney General has now withdrawn the charges because, instead of the charges being laid against the parent company or any active group subsidiary, they were laid against African Consolidated Resources (Private) Limited, a company registered in Zimbabwe, which is a shelf company and not a group company. It could not have been involved because it had no staff. Baita Plai Polymetallic Mine sub-licence During the year to 31 March 2015 the Group acquired an 80% interest in Mineral Mining, a Romanian entity which was in administration and which owned the Baita Plai Polymetallic Mine and which has now been merged with ACR SRL, as more fully explained in note 14. As previously reported, one of the debts due by Mineral Mining in the insolvency was a disputed amount to a State company, Baita SA. The precise amount of the debt is subject to an outstanding audit but the Judicial Administrator of Mineral Mining determined that it would not exceed RON 2,500,000 (approximately US$ 625,000). Baita SA has lodged an appeal against Mineral Mining (now ACR SRL) claiming that that the debt due should be determined as a definite sum of RON 2,500,000. Counsel to ACR SRL is of the opinion that the claim by Baita SA will fail. As previously reported, the Group has provided the full amount of RON 2,500,000 as a payable in the financial statements. There is a further sum of approximately $375,000 in respect of de-watering costs incurred by Baita SA in the period June 2014 to September 2015, claimed by Baita SA. Counsel to ACR SRL has advised that this claim is likely to fail. 29 Events after the reporting date Crede Capital financing agreement On 5 April 2016 the Company announced that it was withholding its consent to the issue of further shares and warrants in terms of the second tranche of the financing arrangement entered into with Crede Capital CGIII Ltd (Crede), more fully detailed in Note 22 above. On 1 July 2016 at the General Meeting of the Company held on that date, the shareholders voted not to consent to the increase of capital required to proceed with the third tranche of the agreement entered into with Crede. This gave the Company the right to terminate the agreement, which right the Company exercised. Fund raising On 12 April 2016 55,555,550 new ordinary shares were issued at a price of 0.24p; the net issue proceeds amounted to $180,093 (GBP133,333). In addition, a total of 55,555,550 warrants were also issued, exercisable at any time within five years, at an exercise price to be determined by a Black Scholes valuation of the share at date of exercise. On 6 July 2016 300,000,000 new ordinary shares were issued at a price of 0.285p: the total net issue proceeds amounted to $1.14 million (GBP855,000). In addition, a total of 300,000,000 warrants were issued, exercisable at 0.5p at any time up to 30 June 2019. The Company also agreed to issue to Brandon Hill Capital Ltd, subject to the granting of the relevant shareholder authorities, 5,701,754 warrants, being 5 per cent of the number of those shares issued under this placing, introduced by Brandon Hill Capital Ltd, entitling it to acquire one new Ordinary Share for each warrant at any time up to 30 June 2019 at an exercise price of 0.285p. Further, the Company has also agreed, subject to the granting of the relevant shareholder authorities, to issue a further 2,105,263 warrants on similar terms to an introducer of finance under the Subscription. On 8 July 2016 37,037,036 new ordinary shares were issued at a price of 0.36p; the net issue proceeds amounted to $174,717 (GBP133,333). In addition, a total of 37,037,036 warrants were also issued, exercisable at any time within five years, at an exercise price to be determined by a Black Scholes valuation of the share at date of exercise. On 14 July 2016 the Company announced an open offer to existing shareholders whereby the shareholders were offered 12,212 new ordinary shares for each 100,000 shares already held, at an issue price of 0.285p, together with one warrant for each new share issued, exercisable at a price of 0.5p at any time before 30 June 2019. On 1 August 2016 the Company announced that this offer had been successful and 51.87% of the offer had been taken up. Accordingly, 181,992,582 new shares and warrants were issued, realising gross proceeds from the offer of
$692,497 (GBP518,678).
On 11 August 2016 128,035,087 shares were issued at a price of 0.285p;
the issue proceeds amounted to $475,959 (GBP364,900). In addition, one
warrant was issued for each share issued, entitling the warrant holder
to acquire one new ordinary share at any time up to 30 June 2019, at an
issue price of 0.5p per share.
Exercise of warrants
Warrants were exercised, and shares issued, as follows:
Date Warrants exercised Shares issued
1 April 2016 38,545,774 120,000,000
8 April 2016 21,074,198 60,140,493
19 April 2016 26,281,209 60,000,000
13 May 2016 38,148,819 84,284,277
20 June 2016 55,555,550 76,111,100
Bridging finance arrangement
On 16 May 2016 the Company announced that it had executed a bridge loan
note with Darwin Capital Limited ("Darwin") for up to GBP1 million (the
"Bridge Loan Note"). An initial note of GBP650,000 ("Initial Loan Note",
"Principal Amount"), which would be used for ongoing working capital
requirements, was issued on 16 May 2016 ("Issue Date").
The note matures on two dates; 50 per cent. of the Principal Amount
(including all accrued and unpaid Interest on 50 per cent. of the
Principal Amount) on 10 July 2016 and the outstanding Principal Amount
(including associated accrued and unpaid interest) on 10 October 2016,
or earlier upon acceleration or early redemption. On 1 July 2016 the
Company announced that it had been agreed that the first maturity date
be extended to 30 July 2016; the first 50% of this facility (principal
amount and accrued interest) was repaid on 29 July 2016.
Interest shall accrue at a rate of 20 per cent. per annum, calculated
over a 365-day basis payable in arrears on the maturity dates.
The Company has the option of an early redemption of the notes and will
pay Darwin a redemption price equal to 105 per cent. of the then
outstanding Principal Amount plus all accrued and unpaid interest at any
time following the Issue Date.
If the Company fails to repay Darwin on either of the maturity dates,
the Principal Amount will be increased to 120 per cent. of all
outstanding payment obligations and the maturity dates will be changed
to 10 January 2017 in the event of a default in July 2016 or to 10 April
2017 in the event of a default on 10 October 2016 ("the Extension
Periods").
If the Company defaults and the maturity date or dates are extended,
then at any time during the Extension Periods Darwin would have the
right to convert all of the then outstanding and unpaid total Principal
Amount and accrued Interest into ordinary shares of 0.1p each in Vast
("Ordinary Shares"). The conversion price would be the lesser of the
average share price on the Issue Date or 90% of the arithmetic average
of the average share price for 5 trading days selected by Darwin during
the 20 trading days prior to and including the conversion date.
In order to cover the eventuality that part or all of the Bridge Loan
Note is converted into Ordinary Shares, the Company must keep available
for issue 600,000,000 authorised and unissued Ordinary Shares free of
pre-emption rights from 30 June 2016. If the Company had such
authorities over less than 600,000,000 shares on 30 June 2016, all
amounts outstanding to Darwin would be deposited into an escrow account
and would remain in escrow until the necessary authorities were granted
to enable the issue of up to 600,000,000 Ordinary Shares. The Company
did indeed hold these required authorities by 30 June 2016.
An additional drawdown of GBP350,000, repayable on 10 October 2016 and
otherwise on the same terms as for the Initial Loan Note as set out
above, can be made by the Company subject to Darwin's consent on any day
between 4 weeks and 12 weeks after the Issue Date.
The Bridge Loan Note is unsecured.
Grant of exploration rights at Baita Plai
On 11 May 2016, the Company announced that a new prospecting licence had
been granted to its Romanian subsidiary, African Consolidated Resources
SRL, over the Faneata tailings dam located 7km from Baita Plai in
western Romania. This licence constitutes a separate right from the
anticipated right to mine at Baita Plai itself, which has been the
subject of the merger process as previously reported.
The 4.6Mt tailings dam at Faneata is comprised of approximately 40 years
of tailings from the high grade Baita Plai. Historical data indicates
that the tailings contain economic quantities of minerals, including
gold, silver, copper, lead and zinc. The Faneata tailings dam has the
potential to be a stand-alone mining operation when enhanced processing
technologies, that have the ability to enable the economic extraction of
the metalliferous content of the tailings, are used.
A sampling programme undertaken by El Dore Mining Corporation Ltd ("El
Dore") in 2011 at the Faneata tailings dam, where 36 samples were
submitted to ALS Chemex in Romania for independent assay, estimated that
the 4.6Mt tailings facility contains 4,080 tonnes of copper, 6,640
tonnes of zinc, 3,100 tonnes of lead, 35 tonnes of silver and 309kg of
gold in-situ.
The Company intends to implement a confirmatory drill programme at the
beginning of the third quarter of 2016 on the El Dore estimates with an
825m auger drilling programme to prove up a JORC compliant Mineral
Resource. Thereafter, as part of a Feasibility Study on the Faneata
tailings dam, bulk samples compiled from the auger programme will be
sent for metallurgical test work to determine the recoveries of the
various metals contained within the tailings dam.
Changes in corporate brokers
On 17 June 2016 the Company announced that it had terminated its
brokerage agreement with Dowgate Capital Stockbrokers, effective 5
September 2016.
On 1 July 2016 the Company appointed Brandon Hill Capital Limited as
Joint Corporate Broker.
On 28 July 2016 the Company announced that it had terminated its
brokerage agreement with Daniel Stewart and Co Ltd, effective 30
September 2016, and that it had appointed Peterhouse Corporate Finance
Limited as Joint Corporate Broker.
30 Group subsidiaries
A full list of all subsidiary companies is given below:
Country of Proportion held
Company registration by group Nature of business
2016 2015
African
Consolidated
Resources SRL Romania 80% 100% Mining exploration and development
African
Consolidated
Resources PTC Ltd
* BVI nil nil Nominee company
ACR Nominees
Limited UK 100% 100% Nominee company
Breckridge
Investments
(Private) Limited Zimbabwe 50% 50% Mining exploration and development
Cadex Investments
(Private) Limited Zimbabwe 100% 100% Claim holding
Canape Investments
(Private) Limited Zimbabwe 100% 100% Mining exploration and development
Conneire Mining
(Private) Limited Zimbabwe 100% 100% Claim holding
Dallaglio
Investments Holding Company for Breckridge Investments (Private)
(Private) Limited Zimbabwe 50% 50% Limited
Dashaloo
Investments
(Private) Limited Zimbabwe 100% 100% Claim holding
Exchequer Mining
Services (Private)
Limited Zimbabwe 100% 100% Claim holding
Fisherman Mining
Limited Zambia 100% 100% Mining exploration and development
Heavystuff
Investment Company
(Private) Limited Zimbabwe 100% 100% Claim holding
Kleton Investments
(Private) Limited Zimbabwe 50% 50% Claim holding
Lafton Investments
(Private) Limited Zimbabwe 100% 100% Claim holding
Lescaut Investments
(Private) Limited Zimbabwe 50% 50% Claim holding
Lomite Investments
(Private) Limited Zimbabwe 100% 100% Claim holding
Lotaven Investments
(Private) Limited Zimbabwe 50% 50% Claim holding
Mayback Investments
(Private) Limited Zimbabwe 50% 50% Claim holding
Millwall
International
Investments
Limited BVI 100% 100% Holding company
Mineral Mining SA
** Romania nil 80% Mining exploration and development
Moorestown Limited BVI 100% 100% Mining exploration and development
Mystical Mining
(Private) Limited Zimbabwe 100% 100% Claim holding
Naxten Investments
(Private) Limited Zimbabwe 100% 100% Asset holding
Nivola Mining
(Private) Limited Zimbabwe 50% 50% Claim holding
Olebile Investments
(Private) Limited Zimbabwe 100% 100% Claim holding
Perkinson
Investments
(Private) Limited Zimbabwe 100% 100% Claim holding
Possession
Investment
Services (Private)
Limited Zimbabwe 100% 100% Claim holding
Rabame Investments
(Private) Limited Zimbabwe 50% 50% Claim holding
Sackler Investments
(Private) Limited Zimbabwe 100% 100% Claim holding
Schont Mining
Services (Private)
Limited Zimbabwe 100% 100% Claim holding
Sinarom Mining
Group SRL Romania 50.1% nil Mining exploration and development
Accufin Investments
(Private) Limited Zimbabwe 100% 100% Dormant
Aeromags (Private)
Limited Zimbabwe 100% 100% Dormant
Campstar Mining
(Private) Limited Zimbabwe 100% 100% Dormant
Chaperon
Manufacturing
(Private) Limited Zimbabwe 100% 100% Dormant
Charmed Technical
Mining (Private)
Limited Zimbabwe 100% 100% Dormant
Chianty Mining
Services (Private)
Limited Zimbabwe 100% 100% Dormant
Corampian Technical
Mining (Private)
Limited Zimbabwe 100% 100% Dormant
Deep Burg Mining
Services (Private)
Limited Zimbabwe 100% 100% Dormant
Deft Mining
Services (Private)
Limited Zimbabwe 100% 100% Dormant
Elfman Investment
Services (Private)
Limited Zimbabwe 100% 100% Dormant
Febrim Investments
(Private) Limited Zimbabwe 100% 100% Dormant
Filkins Investment
Services (Private)
Limited Zimbabwe 100% 100% Dormant
Gerry Investment
Company (Private)
Limited Zimbabwe 100% 100% Dormant
Gigli Investment
Services (Private)
Limited Zimbabwe 100% 100% Dormant
Hemihelp
Investments
(Private) Limited Zimbabwe 100% 100% Dormant
Isiyala Mining
(Private) Limited Zimbabwe 100% 100% Dormant
Katanga Mining
(Private) Limited Zimbabwe 100% 100% Dormant
Kengen Trading
(Private) Limited Zimbabwe 100% 100% Dormant
Kielty Investments
(Private) Limited Zimbabwe 100% 100% Dormant
Lucciola Investment
Services (Private)
Limited Zimbabwe 100% 100% Dormant
Lyndock Investment
Company (Private)
Limited Zimbabwe 100% 100% Dormant
Maglev Investment
Services (Private)
Limited Zimbabwe 100% 100% Dormant
Malaghan
Investments
(Private) Limited Zimbabwe 100% 100% Dormant
Methven Investment
Company (Private)
Limited Zimbabwe 100% 100% Dormant
Mimic Mining
(Private) Limited Zimbabwe 100% 100% Dormant
Monteiro
Investments
(Private) Limited Zimbabwe 100% 100% Dormant
Nedziwe Mining
(Private) Limited Zimbabwe 100% 100% Dormant
Nemies Investment
Services (Private)
Limited Zimbabwe 100% 100% Dormant
Notebridge
Investments
(Private) Limited Zimbabwe 100% 100% Dormant
Pickstone-Peerless
Mining (Private)
Limited Zimbabwe 100% 100% Dormant
Prudent Mining
(Private) Limited Zimbabwe 100% 100% Dormant
Rania Haulage
(Private) Limited Zimbabwe 100% 100% Dormant
Re-Energised
Investments
(Private) Limited Zimbabwe 100% 100% Dormant
Regsite Mining
Services (Private)
Limited Zimbabwe 100% 100% Dormant
Riberio Mining
Services (Private)
Limited Zimbabwe 100% 100% Dormant
Sullivan
Enterprises
(Private) Limited
*** Zimbabwe nil 100% Dormant
Swadini Miners
(Private) Limited Zimbabwe 100% 100% Dormant
Tamahine
Investments
(Private) Limited Zimbabwe 100% 100% Dormant
The Salon
Investments
(Private) Limited Zimbabwe 100% 100% Dormant
Vono Trading
(Private) Limited Zimbabwe 100% 100% Dormant
Warkworth
Investment
Services (Private)
Limited Zimbabwe 100% 100% Dormant
Wynton Investment
Company (Private)
Limited Zimbabwe 100% 100% Dormant
Zimchew Investments
(Private) Limited Zimbabwe 100% 100% Dormant
* The company has effective control of this entity
** Merged with African Consolidated Resources SRL on 29 February
2016
*** Disposed of in March 2016
Company information
William Lionel Battershill Non-Executive Chairman
Roy Aubrey Pitchford Chief Executive Officer
Roy Clifford Tucker Finance Director
Eric Kevin Diack Non-Executive Director
Directors Graham Paul Briggs Non-Executive Director
Roy Clifford Tucker, FCA
Nettlestead Place
Nettlestead
Secretary and registered Maidstone
office Kent, ME18 5HA
Country of incorporation United Kingdom
Legal form Public Limited Company
Website www.vastresourcesplc.com
Crowe Clark Whitehill LLP
St Bride's House
10 Salisbury Square
Auditors London EC4Y 8EH
Strand Hanson Limited
26 Mount Row
Mayfair
Nominated & Financial London
Adviser W1K 3SQ
Peterhouse Corporate Finance Limited
Eldon Street
London
EC2M 7LD
Brandon Hill Capital Limited
1 Tudor Street
London
Joint Corporate Brokers EC4Y 0AH
Standard Bank Isle of Man Limited
Standard Bank House
1 Circular Road
Douglas
Isle of Man
Bankers 1M1 1SB
Capita Registrars
The Registry
34 Beckenham Road
Beckenham
Kent
Registrars BR3 4TU
Registered number 05414325
**S**
For further information, please visit www.vastresourcesplc.com or
contact:
Roy Pitchford (Chief Executive Officer) +40 (0) 372 988 988 (O)
+40 (0) 741 111 900 (M)
+44 (0) 7793 909985 (M)
Strand Hanson Limited - Financial & Nominated Adviser www.strandhanson.co.uk
James Spinney +44 (0) 20 7409 3494
James Bellman
Brandon Hill Capital Ltd - Joint Broker www.brandonhillcapital.com
Jonathan Evans +44 (0)20 3463 5016
Peterhouse Corporate Finance Ltd - Joint Broker www.pcorpfin.com
Duncan Vasey +44 (0) 20 7469 0936
St Brides Partners Ltd www.stbridespartners.co.uk
Susie Geliher +44 (0) 20 7236 1177
Charlotte Heap
The information contained within this announcement is deemed by the
Company to constitute inside information as stipulated under the Market
Abuse Regulations (EU) No. 596/2014 ("MAR").
This announcement is distributed by Nasdaq Corporate Solutions on behalf
of Nasdaq Corporate Solutions clients. The issuer of this announcement warrants that they are solely responsible for the content, accuracy and originality of the information contained therein. Source: Vast Resources plc via Globenewswire http://www.acrplc.com/
(END) Dow Jones Newswires
September 29, 2016 02:00 ET (06:00 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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