Share Name Share Symbol Market Type Share ISIN Share Description
VI Mining Plc NEX:VIM NEX Ordinary Share JE00BDFKM100
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  -5.00 -25.0% 15.00 15.00 25.00 20.00 15.00 20.00 5,000 10:59:33
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VI Mining PLC Final Results

30/08/2019 4:06pm

UK Regulatory (RNS & others)


VI Mining (NEX:VIM)
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RNS Number : 7717K

VI Mining PLC

30 August 2019

VI MINING PLC

Annual Report and Accounts

For the 15 months ended 31 March 2019

 
 Directors 
 Jide Zeitlin                      Chairman 
                                  --------------------------------- 
 David Sumner                      Chief Executive Officer 
                                  --------------------------------- 
 Lucianno Giorffino                Chief Operating Officer 
                                  --------------------------------- 
 Allan Rowley                      Chief Financial Officer 
                                  --------------------------------- 
 Aamir Quraishi                    Non-Executive Director 
                                  --------------------------------- 
 Johnny Martin Smith               Non-Executive Director 
                                  --------------------------------- 
 
 Audit Committee                   Remuneration Committee 
                                  --------------------------------- 
 Johnny Martin Smith (Chairman)    Johnny Martin Smith (Chairman) 
                                  --------------------------------- 
 Aamir Quraishi                    Jide Zeitlin 
                                  --------------------------------- 
 
 Registered Office                 Principal place of business 
                                  --------------------------------- 
 28 Esplanade                      Calle Manuel de Falla Ndeg 295, 
  St. Helier                        Piso Ndeg 2 
  Jersey JE1 8SB                    Urbanización San Borja 
                                    Lima 41 
                                    Perú 
                                  --------------------------------- 
 
 Company Secretary                 Company Website 
                                  --------------------------------- 
 JTC plc                           www.vimining.com 
  JTC House 
  28 Esplanade 
  St. Helier 
  Jersey JE1 8SB 
                                  --------------------------------- 
 
 Auditor to the Company            Broker and NEX Corporate Advisor 
                                  --------------------------------- 
 Crowe U.K. LLP                    VSA Capital Limited 
  St Bride's House                  15 Eldon Street 
  10 Salisbury Square               London 
  London EC4Y 8EH                   EC2M 7LD 
  United Kingdom 
                                  --------------------------------- 
 
 Solicitor to the Company          Depositary 
                                  --------------------------------- 
 Gowling WLG (UK) LLP              Computershare Investor Services 
  4 More London Riverside           Limited 
  London SE1 2AU                    PO Box 82 
  United Kingdom                    The Pavilions 
                                    Bridgewater Road 
                                    Bristol BS13 8AE 
                                    United Kingdom 
                                  --------------------------------- 
 
 Share Registrar 
                                  --------------------------------- 
 Computershare Investor Services 
  Limited 
  Ordnance House 
  31 Pier Road 
  St Helier 
  Jersey JE1 1ES 
                                  --------------------------------- 
 

Summary

The strategic long-term objective of VI Mining plc (the "Company") is to become a leading Peruvian precious metals producer. The Company has a management team, technical team and relationships in Peru that have a wealth of experience in precious metal mining.

The Company changed its accounting reference date from 31 December to 31 March, to align the Company's accounting reference date with that of the ultimate parent company, Sumner Group Holdings Limited ("SGHL").

Accordingly, the Company has produced its audited final results for the 15 month period ending 31 March 2019.

The Company currently has three mining assets and one tolling asset in Peru:

 
                    Minaspampa and Rosario (acquired together 
   *    Mining -     in February 2018) and Cushuro (acquired 
                     in January 2019) 
                    Oro Pesa (acquired in August 2016). 
   *    Tolling - 
 

On 6 February 2018 the Company entered in to an agreement to acquire the Minaspampa and Rosario projects (located in the La Libertad region in the northwest of Peru) for combined consideration of 2 million nil par value ordinary shares in the Company and cash consideration of $51.3 million payable over 18 months (the final payment due in April 2019). As at 23 August 2019, $9.1 million has been paid to the vendors and $42.2 million is still owing and is in the process of finalizing the renegotiating of payment terms.

On 2 March 2018 the Company completed its initial public offering on London's NEX Exchange Growth Market raising $5.35 million in gross proceeds.

On 29 January 2019 the Company acquired the Cushuro gold project (which is located adjacent to Minaspampa) for an issue of 5.7 million nil par value shares, and deferred consideration from a 24 month "look back" adjustment in January 2021 (based upon the Company's weighted average share price in the proceeding thirty days), estimated to be $12.4 million on acquisition date. At 31 March 2019 this deferred consideration liability was estimated to be $4.6 million.

The Company is currently reliant on two debt facilities from David Sumner for funding:

-- a $10 million facility - at 31 March 2019 this has been drawn down in full

-- a GBP39 million term loan facility - at 31 March 2019 $1.7 million has been drawn down. At 23 August 2019 $3.3 million has been drawn down.

Sumner Group Holdings Limited ("SGHL"), the ultimate parent Company of VI Mining, is in the process of raising funds through a Security Token Offering ("STO"), the first phase of which is expected to complete in September 2019. Subject to the SGHL board and VI Mining board approvals, a proportion of the proceeds from the SGHL STO is intended to be used to finance VI Mining through a new SGHL debt facility.

Once the Company is re-financed, the Board's priorities will be to:

-- complete the Oro Pesa build out and move tolling in to production

-- finalise the renegotiated payment terms for the Minaspampa and Rosario purchase

-- restart the drilling and exploration work in the three mining assets.

Our long term strategy remains steadfast, which we aim to achieve this by:

-- acquiring quality assets with exploration acreage and the potential for attractive returns

-- operating with excellence, employing best in class operators, with a multidisciplinary board and management team

-- having the highest standards of accountability and responsibility, with a clear focus on community safety and environmental stewardship, working with stakeholders to create tangible and sustainable benefits; and,

-- maintaining capital discipline to create value, with a strong and healthy balance sheet and extensive reach to access capital markets.

The period under review has been challenging for the Company. Your board is confident that we will be able to work through our recent challenges and that your Company will emerge in a strong position to advance its strategic objectives.

Operational Review

Minaspampa and Rosario Projects

On 2 February 2018, the Company (through its subsidiary One-Valley Peru S.A.C.) entered into an agreement to acquire the Minaspampa and Rosario projects (both located in the La Libertad region in the northwest of Peru) for an aggregate consideration of $65.4 million, comprising 2 million ordinary shares of the Company and cash consideration totaling $51.3 million. The vendors were also given a charge over the shares of One-Valley Peru S.A.C.

The Minaspampa project is comprised of 3,500 Hectares, had the necessary mine infrastructure and processing plant built and had the majority of the requisite permits and licenses in place. Operations were suspended by the vendors in December 2017.

The Rosario project is comprised of a former working silver and gold open pit, heap leach operation with a Merrill Crowe plant. This concession totals 13,000 hectares. The project was temporarily suspended in December 2013 after five years of operation and has been in care and maintenance since.

Drilling campaign at Minaspampa and Rosario

The Company commenced a drilling campaign in August 2018. The initial plan was to drill 15,000 metres across both locations. By 16 October 2018, the Company had completed 1,150 metres of drilling at Rosario using a combination of Diamond Head and Reverse Circulation drilling, and then stopped all drilling activities due to funding constraints and delays, which then clashed with the rainy season as previously reported and as outlined further below.

Acquisition payments and renegotiations

In the period ended 31 March 2019, 2 million shares were issued and cash payments totaling $9.1 million were paid. A total of $42.4 million remains unpaid to the Vendors.

The Company and the vendors of Minaspampa and Rosario have been renegotiating the structure and timing of the remaining consideration payments for those projects. These discussions, which are proceeding positively remain ongoing and we are confident of a satisfactory outcome, with the expectation that a revised contract with the Vendors will be agreed shortly after receipt of new funds expected from SGHL.

Karmin Acquisition (Cushuro)

On 27 July 2018 the Company announced its intention to acquire Karmin Peru S.A.C, a wholly owned subsidiary of Karmin Exploration Inc. Karmin Peru owns a 100% interest in the Cushuro Gold Project located immediately adjacent to Minaspampa.

The Cushuro Project consists of five mining concession: Gaby 2, Gaby 3, Gaby 8, Pandereta 007 and Corona 3113 mineral concessions. The Gaby 2, Gaby 3 and Gaby 8 concessions comprise three contiguous claims totaling 2,477 hectares

This project is green-field and has never been explored or exploited.

The purchase price of $27.5 million was satisfied by the (a) the initial issue of 5,753,138 ordinary shares of VI Mining to the vendor; with (b) a deferred consideration "look-back" adjustment on the second anniversary of completion. The look-back adjustment is based upon the difference between the initial purchase price and volume weighted average price ("VWAP") of GBP2.50 per VI Mining share.

The transaction completed on 28 January 2019 and the VWAP was adjusted from GBP2.50 per share to GBP1.75 per share (recognizing the reduction in the Company's share price since the original acquisition date).

Drilling and exploration across all three concessions will be determined by the timing and amount of new funds received.

Tolling

Oro Pesa

The Company has a processing (tolling) plant at Oro Pesa, in the Arequipa region of Peru, which was purchased in August 2016 for an aggregate consideration of $200,000.

The Company has invested $1.1 million in plant and machinery construction, including access road, an initial accommodation block, the crushing circuit and had part completed cyanidation tank construction.

Construction stopped in October 2018 due to funding constraints as outlined below.

The Company intends to complete the plant and machinery build post refinancing, and commence tolling operations, with production targeted to reach 100 tons per day.

Jongos tolling operation (Option)

The vendors of Minaspampa and Rosario also owned a tolling business (Jongos) located adjacent to the Minaspampa project, and in the Minaspampa and Rosario purchase agreement granted the Company a 45 day nil cost option to acquire the trade and assets of Jongos for a purchase price of $3,000,000. The Company did not exercise this option.

Casma (terminated)

The Company previously held the Casma operation, which comprised three green-field projects, with no existing infrastructure, and requiring plant and machinery construction. In June 2018 the Company was informed that the vendor of the Casma project had cancelled the contract. The Company was advised that the vendor acted improperly with the escrow agent to exercise a charge over the shares of ZL Minera S.A.C. and that the warranty claims were valid. In 2018, the Company reviewed the financial impact of contesting the contract breach; the completion of the purchase payments and plant and machinery build; the relationship with the local community; its strategic direction and priorities for shareholders and its funding position, and determined not to pursue further legal action against the vendor.

Funding and Financing

The Company has been funded through a combination of (a) David Sumner's two funding facilities; (b) an external $2.5 million short term loan with Tassili Jewellery LLC; and (c) the $5.35 million equity raised in the NEX IPO.

In addition, SGHL, the majority shareholder of VI Mining plc, intends to provide a new funding facility to the Company following the funds raised from its STO which is currently in process.

David Sumner debt facilities

David Sumner, the CEO, founder and controlling shareholder of the Company has been the main funder to the group with two debt financing facilities:

-- a $10,000,000 term loan facility; and

-- a GBP39,000,000 term loan facility - for which David Sumner has signed two back-to-back funding agreements.

The Company was reliant on these facilities for the funding of the deferred consideration payments under the Minaspampa and Rosario acquisition agreements and to support the initial working capital requirements of the Company.

As outlined in the IPO Admission Document, the Company's funding strategy was to raise new finance once the Company's tolling commenced, and reduce the Company's reliance on the David Sumner loans.

On 4 January 2019 the Company announced that

-- In August 2018, the Company issued a draw down notice to David Sumner for $7,000,000 who in turn issued a back-to-back draw down request.

-- David Sumner advised that whilst he is confident that the draw down request will be met, he did not have visibility on the timing of its availability. David Sumner re-confirmed his intention to continue to provide financial support to the Company.

-- Following this, the Company began working on alternative funding strategies, including the commencement of discussions with SGHL, to assist with financing.

-- The vendors of Minaspampa and Rosario had been kept informed of the funding position and have shown their support to the Company by continuing to review the payment structure and terms of the deferred consideration payments which remain unpaid.

At 31 March 2019, the $10 million facility was fully drawn and $1.6 million had been drawn down against the GBP39 million facility.

At 23 August 2019, $3.3 million had been drawn down against the GBP39 million facility.

Tassili short term debt - $2.5 million

On 18 January 2018 the Company entered into a loan agreement with Tassili Jewelry LLC ("Tassili") for $2.5 million which was drawn down in full. Tassili's primary objective was to secure supply of gold for their operations.

Repayment terms included the delivery of gold at pre-agreed rates. Because the Company has been unable to enter into production, the repayment terms for the loan facility were renegotiated, and Tassili was given a charge over Tri-Valley International Limited (the group Company owning the shares of Minera Tres Valle S.A.C. which holds the Oro Pesa concession).

At 31 March 2019 a total of $1,156,000 has been repaid to Tassili with a balance due of $1,344,000. At 23 August 2019 the balance owed was $969,000.

Initial public offering

On 2 March 2018 the Company successfully completed its initial public offering on London's NEX Exchange Growth Market with a share placement which raised $5.35 million in gross proceeds. Pursuant to this, the Company issued 106,950,731 ordinary shares of no par value at an admission price of GBP5.00 each.

Refinancing - SGH Security Token Offering

On 2 October 2018 David Sumner transferred his entire shareholding in the Company to SGHL, a Company of which he is the Chairman, Chief Executive Officer and controlling shareholder.

David Sumner has confirmed to the Board that he, with the support of SGHL, will continue to support the working capital requirements of the Company, and post the SGHL STO close, it is intended that a new SGHL debt facility will be put in place to support the Company. The amount of the facility will be subject to the amount of funds raised by SGHL, and the board approvals from SGHL and VI Mining respectively.

Board Strengthening and NEX Corporate Advisor

The Company has strengthened its board. On 25 January 2019 Johnny Martin Smith joined as an independent non-executive director. Johnny has over 35 years of experience of mining, corporate governance and investor relations. On 19 July 2019 Allan Rowley joined the board as Chief Financial Officer. Allan Rowley is a UK chartered accountant with over 13 years' experience in public Company reporting and global operations.

On 8 March 2019 the Board strengthened its advisory arrangements and appointed VSA Capital, an investment banking firm with a specialism in natural resources, as its NEX Corporate Adviser.

Financial headlines

In the fifteen months ended 31 March 2019:

-- Total loss for the 15 months ended 31 March 2019 period was $6.1 million (12 months ended 31 December 2017: $6.1 million)

-- Cash outflow from operations (before changes in working capital) was $6.8 million (2017: $4.2 million); including changes in working capital this was $3.1 million (2017: $2.5 million)

-- Cash outflows for investing activities totalled $11.5 million (2017: $2.1 million)

-- Net cash received from funding activities totalled $11.0 million (2017: $8.6 million).

-- The balance on the David Sumner GBP39 million loan facility is $1.7 million (31 December 2017: $nil), which includes $1.6 million of capital (31 December 2017: $nil) and $0.1 million (31 December 2017: $nil) of accrued interest. The David Sumner $10 million facility was fully drawn down in the reporting period.

-- Net assets at 31 March 2019 were $19.8 million (31 December 2017: $2.6 million).

At 31 March 2019, $5.4 million (31 December 2017: $1.4 million) was owed to suppliers, staff and other third parties, excluding deferred consideration amounts, loan funding balances and amounts owed to directors. The amounts owed to David Sumner and other board members at 31 March 2019 was $2.8 million (31 December 2017: $0.8 million).

Concluding remarks

VI Mining's strategic objective is to become a leading Peruvian precious metals producer. The Company has a management team, technical team and relationships in Peru that have a wealth of experience.

Once the Company is re-financed, the Board's priorities will be to:

-- complete the Oro Pesa build out and move tolling in to production

-- finalise the renegotiated payment terms for the Minaspampa and Rosario purchase

-- restart the drilling and exploration work in the three mining assets.

We look forward to reporting on progress with this strategy.

I thank our employees, suppliers, partners and investors for their patient support and look forward to our work together.

David Sumner

Chief Executive Officer

David Sumner - Chief Executive Officer

David Sumner is a seasoned international entrepreneur with experience in sectors ranging from mining to healthcare and clean technology. He has served on numerous private and public Company boards in both an executive and non-executive capacity and has a track record of raising capital through debt and equity, pre-IPO and IPO. He is the founding shareholder of VI Mining.

Lucianno Giorffino - Chief Operating Officer

Lucianno Giorffino is a lawyer with more than 10 years of experience in the mining sector having worked alongside a number of national and multi-national companies serving world class projects such as Toromocho, Quellaveco, Pierina, La Granja, Cerro Lindo, Corani, and Santa Ana, amongst others.

Mr. Giorffino has also provided strategic services to the Mining Committee of Peru's National Investment Promotion Agency - PROINVERSION, where he frequently advises on mining-related matters. He has extensive knowledge of mining asset financing and capital markets. Mr. Giorffino has published two books on mining, has lectured at several universities, and has also trained the Peruvian authorities in mining-related subjects.

Allan Rowley - Chief Financial Officer

Allan Rowley is a UK Chartered Accountant with over 25 years' international experience in financial reporting, corporate governance, investor relations, business planning, international tax, group audits, M&A, project management and operations.

Mr. Rowley has more than 13 years' experience of CFO roles in various sectors coupled with in-depth knowledge of the mining sector. Allan is a Fellow of the Institute of Chartered Accountants in England & Wales, and holds a Masters of Philosophy and a BSc from Aberystwyth University College of Wales.

Jide Zeitlin - Chairman

Jide J. Zeitlin, an internationally renowned investor who is also Chairman of Coach, Inc., the American multinational luxury fashion Company, as well as Chairman of the Nigeria Sovereign Investment Authority and Chairman Emeritus of Amherst College. His investment office, The Keffi Group Ltd, has interests in the Middle East, the United States, and Africa.

Previously, Mr. Zeitlin was Global Chief Operating Officer of Goldman Sachs, where he held multiple senior management positions over the years in addition to serving in the firm's executive office. Mr. Zeitlin is member of Harvard Business School Board of Dean's Advisors, the boards of Affiliated Managers Group, the Doris Duke Charitable Foundation, the Montefiore Medical Center, Playwrights Horizons and Saint Ann's School.

Mr. Zeitlin holds an A.B. degree, magna cum laude, in Economics and English and a Ph.D., Doctor of Humane Letters, honoris causa, both from Amherst College and an M.B.A. degree from Harvard University.

Aamir Quraishi - Non - Executive Director

Aamir Quraishi has 20 years of investment banking experience in Europe, Asia and the Middle East. He joined the corporate finance advisory division of Dresdner Kleinwort Benson in London in 1996 with some time also spent in Tokyo. He joined Libertas Capital Group plc in 2003, successfully building its capital markets practice and then relocated to its Dubai office in late 2007.

Prior to his current role as a managing director of a New York headquartered advisory and investment banking firm, Mr. Quraishi worked with MAC Capital Limited, an investment bank operating out of the Dubai International Financial Centre. During his career, he has been involved in completed transactions with an aggregate value of over US$20 billion. He has advised a number of resources related companies globally including those involved in the mining of gold, silver, lead, zinc, copper and coal.

Mr. Quraishi began his career at PwC in London where he qualified as a chartered accountant. Between 2005 and 2010, Mr. Quraishi was a qualified nominated adviser for the purposes of admissions to AIM of the London Stock Exchange. Mr. Quraishi is an Economics graduate from the University of Cambridge.

Johnny Martin Smith - Non - Executive Director

Johnny Martin Smith has a long history in the mining industry, having started as a mining analyst with Davis Borkum Hare in 1983 in Johannesburg, before moving to London where he worked in specialist mining sales for SG Warburg and CSFB. He founded Smiths Corporate Advisory in 1999 which he developed into a leading investor relations business focused on the mining sector, and then sold to Westhouse in 2011, where he became head of mining. He is an Independent non-executive director of Hong Kong listed IRC Ltd.

Board Independence

Messr's Sumner, Zeitlin, Giorffino, Rowley and Quraishi have interests in the issued share capital of SGHL, the ultimate controlling shareholder of the Company.

Johnny Martin Smith has no interests in the equity of VI Mining plc or SGHL.

The Directors recognise the importance of sound corporate governance. The Company's independent Non Executive Director, Mr Johnny Martin Smith and CFO Mr Allan Rowley completed a review of its corporate governance policies and procedures.

VI Mining has adopted the QCA Corporate Governance Code (2018) ("the QCA Code") as its recognised corporate governance code and this statement, and other disclosures, is presented pursuant to that QCA Code.

The statement below considers how VI Mining applies the ten principles of the QCA Code.

Principle 1 - Establish strategy and business model to promote long-term value for shareholders

VI Mining is an emerging gold and silver producer focused on the development and operation of gold and silver projects in Peru. Details of the business and strategy are available in the Chief Executive Officer's report.

Principle 2 - Seek to understand and meet shareholders needs and expectations

VI Mining values the importance of interacting with our shareholders, explaining strategy and developments in the businesses and seeking shareholder views and opinions thereon.

We also value the input of our advisers, including our corporate adviser, lawyers, and auditors.

We are seeking to ensure good understanding and communication in a number of ways.

We seek to facilitate shareholder attendance at the Annual General Meeting by holding the meeting at a time and location that is convenient for as many as possible. We appreciate that attending a General Meeting for some shareholders can be impractical.

Within the constraints of the regulatory environment and time, directors are available to meet shareholders on release of half and full year results, and other times as requested.

Contacts for VI Mining and its advisers are provided on our website.

Principle 3 - Take into account wider stakeholder and social responsibilities

VI Mining sees interaction with the wider stakeholder community as vital for the well-being of the Group.

VI Mining operates in Peru - a highly regulated country and operational environment. Local regulation encompasses, inter alia: licensing to own mining concession; permits to explore for and process precious metals; regulations governing the safety and health of employees and contractors; and post-operation site restoration obligations.

As VI Mining restarts tolling and exploration activities, the Company will establish community relations teams at each of its operating sites to maximise the local value-add of its operations and to employ and train the local employees.

Principle 4 - Embed effective risk management, considering both opportunities and threats, throughout the organisation

The Board actively seeks to identify and mitigate risks to the group and its businesses. The principal risks identified by the Board are set out in the Directors' Report of the Annual Report.

In addressing perceived risks, the Board seeks to ensure that its employees are appropriately technically qualified; a constructive dialogue is maintained at all times with regulatory authorities; and there are appropriate financial and security controls covering our operations.

The Board has established an Audit Committee with formally delegated duties and responsibilities, details of which are included below.

Principle 5 - Maintain the Board as a well-functioning, balanced team led by the Chairman

The Board comprises six members: a non-executive Chairman and two further non-executive directors (one whom is considered independent), the Chief Executive Officer, the Chief Operating Officer and the Chief Financial Officer. Biographies of each director and their length of service and independence is shown in the Annual Report and the biographies are also on the website.

The Board holds regular meetings, at least four times a year, and will hold further meetings as required.

There are two subcommittees: the Audit Committee and the Nomination & Remuneration Committee, the constitution of each is provided on the website.

The Board is provided with financial and operational reports at each meeting.

Principle 6 - Ensure that between them the directors have the necessary up-to-date experience, skills and capabilities

Director's biographies, detailing their skills and experience are included on our website.

VI Mining's business involves exploration, mining and processing of precious metals. The executive directors' qualifications and experience encompasses mining, finance, equity capital markets and corporate governance.

Principle 7 - Evaluate Board performance based on clear and relevant objectives, seeking continuous improvement

The Board's performance is measured principally by the Group's financial results.

In considering the Board's performance and composition, consideration will be taken of likely future requirements and developments in the Group's operations.

Principle 8 - Promote a corporate culture that is based on ethical values and behaviours

VI Mining operates in Peru, in a highly regulated environment dealing with precious metals and the Board views a culture of openness and integrity as vital to operating successfully.

The Board complies to the fullest extent possible, with all applicable standards and regulations, and aims to exceed them where possible.

Regulation encompasses, inter alia: licensing to own mining concession; permits to explore for and process precious metals; regulations governing the safety and health of employees and contractors, and post operation site restoration obligations.

The Group also has and operates an anti-bribery policy and a no-child labour policy.

Principle 9 - Maintain governance structures and processes that are fit for purpose and support good decision-making

The Board has established an Audit Committee and a Nomination and Remuneration Committee with formally delegated duties and responsibilities.

Audit Committee

The Audit Committee has responsibility for ensuring that the financial performance, position and prospects of the Company are properly monitored and reported on, for meeting with the auditor and discussing their reports on the accounts and the Company's financial controls and for recommending the appointment of auditors.

The Audit Committee consists of Johnny Martin Smith (Chair) and Aamir Quraishi.

Nomination and Remuneration Committee

The directors have established a Nomination and Remuneration Committee. The Remuneration Committee will determine the terms and conditions of service of executive directors. The remuneration and terms and conditions of appointment of non-executive directors are set by the Board. No Director may participate in any discussions or decisions regarding his own remuneration.

The Remuneration Committee consists of Johnny Martin Smith (Chair) and Jide Zeitlin.

Share dealing code and NEX Rule compliance policy

The Company has adopted a model code for share dealings in Ordinary Shares which is appropriate for a NEX Company, including compliance with NEX Exchange Growth Market Rule 71, relating to the Board's and employees' dealings in Ordinary Shares.

UK City Code on Takeovers and Mergers

As an NEX traded, Jersey incorporated Company, VI Mining plc is subject to the UK City Code on Takeovers and Mergers.

Principle 10 - Communicate how the Company is governed and is performing by maintaining a dialogue with shareholders and relevant stakeholders

VI Mining maintains a regular dialogue with investors through the AGM, roadshows and direct communication. Additionally, VI Mining's operating entities maintain dialogue with other stakeholders in Peru through local management, employee arrangements, and dialogue with communities and the regulatory authorities.

Available on the website are copies of VI Mining's Annual Reports and copies of notices of General Meetings since incorporation.

The Directors present their report together with the audited consolidated financial statements of the Company and its subsidiary undertakings (the "Group") for the 15 months ended 31 March 2019.

Principal Activities

The Group is an emerging gold and silver producer in Peru focused on the development and operation of gold mining assets and processing (tolling) plants in the mineral-rich regions of northern, central Peru, close to other established global mining companies.

Accounting Reference Date

On 29 March 2019 the Company changed its accounting reference date from 31 December to 31 March, to align with that of the ultimate parent Company, SGHL.

Business Review and Future Developments

The Business Developments during the year and to the date of this report are highlighted in the Chief Executive Officer's statement.

Results and Dividends

The loss on ordinary activities of the Group after taxation for the 15 months ended 31 March 2019 were $6,124,000 (12 months ended 31 December 2017: $6,058,000). There were no dividends paid in either period.

Directors

The Directors who served to the date of this report are set out below:

 
 Director                   Title             Date of appointment 
-------------------------  ----------------  -------------------- 
 
 Executive Directors: 
 David Sumner               Chief Executive       6 May 2017 
                             Officer 
 Lucianno Giorffino         Chief Operating       6 May 2017 
                             Officer 
 Allan Rowley               Chief Financial      19 July 2019 
                             Officer 
 
 Non-Executive Directors: 
 Jide Zeitlin               Chairman             2 March 2018 
 Aamir Quraishi             Non-executive        2 March 2018 
                             Director 
 Johnny Martin Smith        Non-executive         25 January 
                             Director                 2019 
-------------------------  ----------------  -------------------- 
 

Directors Remuneration

Details of Directors' emoluments and payments made for professional services are:

 
                          15 months ended March 2019     December 
                                                             2017 
                       -------------------------------  --------- 
                           Fees and 
                             Salary     Bonus    Total    Total 
                               $000      $000     $000       $000 
                       ------------  --------  -------  --------- 
 
 David Sumner                 1,340        50    1,390      1,620 
 Lucianno Giorffino             665       200      865        325 
 Jide Zeitlin                   130         -      130          - 
 Aamir Quraishi                  65         -       65          - 
 Johnny Martin Smith              6         -        6          - 
 Feargal Leonard                  -         -        -         45 
 
                              2,206       250    2,456      1,990 
                       ------------  --------  -------  --------- 
 

Directors' Interests

In 2017 performance stock options were awarded to David Sumner and Jide Zeitlin all of which were cancelled on 2 March 2018 for nil consideration.

Messr's Sumner, Zeitlin, Giorffino, Rowley and Quraishi have interests in the issued share capital of SGHL, the controlling shareholder of the Company. David Sumner is the ultimate controlling shareholder of SGHL.

Johnny Martin Smith has no interests in SGHL.

Substantial shareholders

Based on the register of members as at 23 August 2019, individual registered shareholdings of more than 3% of the Company's issued capital were as follows:

 
                                               Percentage of issued 
 Name of Shareholder       Number of Shares    ordinary share capital 
------------------------  -----------------  ------------------------ 
 Lamb Mining Limited          81,072,487               71.9% 
 Karmin Exploration Inc       5,753,138                5.1% 
 

Lamb Mining Limited is a 100% subsidiary of SGHL. David Sumner is the ultimate controlling shareholder of SGHL and of the Company.

Principal Risks and Uncertainties

Set out below are the principal risks and uncertainties facing the Group:

Funding risk

The successful exploration of natural resources on any project will require very significant capital investment. The sources of financing available to the Group are through:

(1) the working capital facility provided to the Company from the Chief Executive Officer, David Sumner; and/or

   (2)   the issue of additional equity capital in the Company; and/or 
   (3)   through bringing in new funding partners to fund exploration and development costs. 

The Group's ability to raise further funds will depend on the success of its investment strategy and acquired operations. The Group is reliant on the David Sumner loan facilities and the funds expected to be received from SGHL's STO. Should the Group not receive sufficient funding, it may not be able to meet its current financial obligations (including payments to the Vendors and other creditors), or enable it to complete the planned exploration, investment and/or development of its projects.

Exploration risks

Exploration is a high-risk business and there can be no guarantee that any mineral discovered will result in proven and probable reserves or go on to be the basis for an operating mine. At every stage of the exploration process our projects are reviewed to determine if the results justify the next stage of the exploration expenditure, thereby ensuring that funds are only applied to high priority targets.

Licensing and title risks

The principal assets of the Group, comprising its mineral exploration licences, are subject to certain financial and legal commitments. If these commitments are not fulfilled the licences could be revoked.

Risks associated with the formalization process

Under Peruvian law small mining producers can only be classified as legal if they either comply with the provisions of the General Mining Law approved by Supreme Decree 014-92-EM or on the basis that the Formalization process has been completed, started or has not been cancelled. As a result, the formalization status of artisanal miners impacts on their ability to provide the Company's processing plants with legally-mined ore. Maintaining a suitable formalization status for the Company's mining concessions (where relevant) will be required to ensure the Group's status as a small mining producer under Peru law.

Environmental Issues

Mining operations are subject to environmental regulation (including regular environmental impact assessments and permitting). Such regulation covers a wide variety of matters, including, without limitation, prevention of waste, pollution and protection of the environment, labour regulations and worker safety. The Group may also be subject under such regulations to clean-up costs and liability for toxic or hazardous substances which may exist on or under any of its properties or which may be produced as a result of its operations. Environmental legislation and permitting are likely to evolve in a manner which will require stricter standards and enforcement, increased fines and penalties for non-compliance, more stringent environmental assessments of proposed projects and a heightened degree of responsibility for companies and their directors and employees.

Managing mineral supply for the tolling operations

The tolling operations require supply of mineral from artisanal miners.

Potential Political, Social and Economic Instability in Peru

The Group's mining and tolling businesses are all in Peru. The Group monitors any risk or uncertainties due to the political climate in the country.

Environmental Responsibility

The Group is aware of the potential impact that its operations may have on the environment. Accordingly, the Group ensures that all operations comply with applicable Peruvian regulatory requirements.

Employment Policy

The Group is committed to promoting policies to ensure that high calibre employees are attracted, motivated and retained for the ongoing success of the business. Employees and those who seek to work within the Group are treated equally regardless of sex, marital status, creed, colour, race or ethnic origin. The Group operates a policy of no child labour.

Health and Safety

The Group's aim is to maintain a high standard of workplace safety. In order to achieve this, the Group provides training and support to employees and sets demanding standards for workplace safety.

Insurance

The Company maintains insurance in respect of its Directors and Officers against liabilities in relation to the Company and the Group.

Current funding and going concern

In considering the appropriateness of the going concern basis of preparation, the Directors have reviewed the Group's working capital forecasts for a minimum of 12 months from the date of the approval of this financial information.

David Sumner, is the CEO, founder and controlling shareholder of the Company. Funding to the Group has come through three sources: (a) David Sumner's $10 million and GBP39 million debt facilities; (b) a short term loan $2.5 million loan from Tassili Jewellery; and (c) the $5.35 million new equity raised in the NEX IPO on 2 March 2018.

On 2 October 2018 David Sumner transferred his entire shareholding in the Company to SGHL, a Company of which he is the Chairman, Chief Executive Officer and controlling shareholder.

At 23 August 2019, $3.9 million was owed to suppliers, staff and other third parties; $970,000 was owed to Tassili Jewellery LLC; David Sumner and other directors were owed $3.5 million in unpaid salary and expenses; and $42.2 million was owed to the vendors of Minaspampas and Rosario.

On 28 August 2019, David Sumner confirmed to the Company that:

   a.     SGHL is expected to complete the first phase of its STO during September 2019; 

b. SGHL will provide a new funding facility on terms similar to the existing David Sumner facilities.

The Company continues to renegotiate the payment terms for the $42.4 million deferred consideration amounts owed to the Vendors of the Minaspampa and Rosario assets.

The Directors have considered and assessed:

   a.     the Company's current loan agreements and funding performance; 
   b.     the status of the SGHL STO fund raising and the expected allocation of funding to VI Mining; 

c. the confirmation from David Sumner and SGHL that he and they have the ability and intent to support the Company;

   d.     discussions with Tassili Jewellery LLC; 

e. discussions and proposed revised repayment terms with the Vendors of Minaspampa and Rosario for the $42.4 million still owed on these projects;

   f.      internally prepared financial projections. 

The Directors believe that the existing David Sumner debt facilities, together with the intended SGHL new financing to the Company, and the revised terms being discussed with the Vendors of Minaspampa and Rosario, will be sufficient to support the Company over at least the next twelve months from the date of signing these financial statements.

Following this assessment, the Directors have reasonable expectation that the Group is expected to have adequate resources to continue for the foreseeable future and that carrying values of intangible assets are supported.

Notwithstanding the loss incurred during the period under review, the Directors have a reasonable expectation that the Group will be able to raise funds to provide adequate resources to continue in operational existence for the foreseeable future. Thus, they continue to adopt the going concern basis of accounting in preparing these financial statements.

Statement of Directors' responsibilities

The Directors are responsible for preparing the Directors' Report and the financial statements in accordance with applicable law and regulations. Company law requires the Directors to prepare consolidated financial statements for each financial year.

Under Company law the Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Group and of the profit or loss of the Group for that period.

In preparing the Group financial statements, the Directors are required to:

-- select suitable accounting policies and then apply them consistently;

-- make judgements and accounting estimates that are reasonable and prudent;

-- state whether they have been prepared in accordance with IFRSs adopted by the EU; and

-- prepare financial statements on the going concern basis unless it is inappropriate to presume that the Group and the Company will continue in business.

The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Group's transactions and disclose with reasonable accuracy at any time the financial position of the Group and enable them to ensure that the financial statements comply with the Companies (Jersey) Law 1991. They are also responsible for safeguarding the assets of the Group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

The Directors are responsible for the maintenance and integrity of the Company's website. Legislation in Jersey governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

Auditor and disclosure of information to auditor

The Directors who held office on the date of approval of this Directors' Report confirm that, so far as they are aware, there is no relevant audit information of which the Company's auditor is unaware. The Directors have confirmed that they have taken all steps that they ought to have taken as Directors in order to make themselves aware of any relevant audit information and to establish that the Company's auditors are aware of that information.

On 25 June 2018, the Company's auditor, Crowe Clark Whitehill LLP, changed its name to Crowe U.K. LLP.

Crowe U.K. LLP indicated its willingness to be reappointed. A resolution for the re-appointment of Crowe U.K. LLP as auditor of the Company is to be proposed at the forthcoming Annual General Meeting.

This report was approved by the board and signed on its behalf by David Sumner.

By order of the Board of Directors

30 August 2019

Opinion

We have audited the financial statements of VI Mining Plc (the Company) and its subsidiaries (together the Group) for the fifteen month period ended 31 March 2019, which comprise:

   --      the consolidated statement of comprehensive income for the period ended 31 March 2019; 
   --      the consolidated statements of financial position as at 31 March 2019; 
   --      the consolidated statements of cash flows for the periods then ended; 
   --      the consolidated statements of changes in equity for the periods then ended; and 

-- the notes to the consolidated financial statements, including a summary of significant accounting policies.

The financial reporting framework that has been applied in the preparation of the financial statements is applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union.

In our opinion:

-- the financial statements give a true and fair view of the state of the Group's affairs as at 31 March 2019 and of the Group's loss for the period then ended;

-- the financial statements have been properly prepared in accordance with IFRSs as adopted by the European Union; and

-- the financial statements have been prepared in accordance with the requirements of the Companies (Jersey) Law 1991.

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the Group in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC's Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Material uncertainty related to funding arrangements and going concern

We draw attention to note 2(b), to the financial statements, which indicates that the Company is currently in default of its payment obligations to the vendors of the Minaspampa and Rosario projects, the Group did not receive any revenue in the period and recorded a loss after tax of $6.1 million (2017: loss of $6.1 million) and a net cash outflow from operating activities of $3.4 million (2017: $2.5 million) and requires substantial funding to enable it to continue on a going concern basis.

As stated in note 2(b), these events or conditions indicate that a material uncertainty exists that may cast significant doubt on the ability of the Company and the Group to continue as a going concern. Our opinion is not modified in respect of this matter.

Emphasis of matter - default and possible impact on carrying value of assets

We draw attention to the disclosure made in note 2(b) to the financial statements concerning the Group's commitments to make substantial cash payments to the vendors of Minaspampa and Rosario which have not been made in accordance with the agreement and the current default of obligations to the vendors of those projects.

Although the vendors of Minaspampa and Rosario are aware of the funding position and have shown their support to the Company by continuing to review the payment structure and terms of the deferred consideration payments which remain outstanding, at the date of approval of these financial statements no formal agreement to reschedule the payment obligations has been concluded and the Company remains in default. Under the terms of the purchase agreement the vendors could take back possession of the Minaspapma and Rosario assets.

Overview of our audit approach

Materiality

In planning and performing our audit we applied the concept of materiality. An item is considered material if it could reasonably be expected to change the economic decisions of a user of the financial statements. We used the concept of materiality to both focus our testing and to evaluate the impact of misstatements identified.

Based on our professional judgement, we determined overall materiality for the Group financial statements as a whole to be $300,000 (2017: 240,000), based on approximately 3% of the Group's estimated net assets at the planning stage, which we did not consider appropriate to subsequently amend. We took into account the stage of development of the Group, being the accumulation and development of mining and tolling assets, and the fact that the Group has not yet begun to trade and concluded that an asset based benchmark is appropriate and that this should be a multiple of net assets.

We use a different level of materiality ('performance materiality') to determine the extent of our testing for the audit of the financial statements. Performance materiality is set based on the audit materiality as adjusted for the judgements made as to the entity risk and our evaluation of the specific risk of each audit area having regard to the internal control environment.

Where considered appropriate performance materiality may be reduced to a lower level, such as, for related party transactions and directors' remuneration.

We agreed with the Audit Committee to report to it all identified errors in excess of $9,000. Errors below that threshold would also be reported to it if, in our opinion as auditor, disclosure was required on qualitative grounds.

Overview of the scope of our audit

The Group's financial reporting function is based in Dubai, United Arab Emirates ("U.A.E"). The main activities of the Group are accounted for from its operating location in Lima, Peru.

The primary audit engagement team led by the Senior Statutory Auditor was responsible for all aspects of the scope and direction of the audit process carried out in London and Lima, Peru. In establishing our overall approach to the Group audit, we determined the type of work that needed to be undertaken by us in relation to each of the components. We identified as significant components the Company and the Peru operating companies, which are accounted for on a common accounting system. For the significant components we carried out full scope audit procedures and for other components we determined the appropriate level of audit evidence to be obtained as a basis for our opinion on the Group as a whole.

Key Audit Matters

Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial statements of the current period and include the most significant assessed risks of material misstatement (whether or not due to fraud) that we identified. These matters included those which had the greatest effect on: the overall audit strategy, the allocation of resources in the audit; and directing the efforts of the engagement team. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

In addition to the matters described in the 'Material uncertainty related to going concern' and the 'Emphasis of matter - default and possible impact on carrying value of assets', we have determined the following key audit matter. This is not a complete list of all risks identified by our audit.

 
 Key audit matter                        How the scope of our audit addressed 
                                          the key audit matter 
======================================  ============================================== 
 Carrying value of mining concessions    We reviewed the accounting for acquired 
  and PPE assets                          mining assets during the period. We 
  The Group acquired significant          agreed the assets acquired to purchase 
  mining assets during the reporting      documentation and the fair value of 
  period.                                 consideration to cash paid and financial 
  The mining assets may be capitalized    instruments issued. 
  at inappropriate values. The            We reviewed the independent valuation 
  assets may be impaired.                 of PPE. 
  The Company is in default               We reviewed management's assessment 
  of its payment obligations              of the Group's obligations in relation 
  to the vendors of Minaspampa            to meet the cost of rehabilitation 
  and Rosario. Negotiations               and the estimate thereof provided 
  are ongoing to resolve the              by the independent valuers. 
  default but in the absence              We considered whether indicators of 
  of a settlement of this matter          impairment exist. Our procedures included, 
  the Group could lose title              but were not limited to, evaluating 
  to those assets.                        management's assessment that there 
                                          are no facts or circumstances that 
                                          suggest that the carrying value of 
                                          the Group's intangible non-current 
                                          assets exceeds the recoverable amount, 
                                          such impairment indicators including 
                                          expiring or imminently expiring concessions, 
                                          licences or rights, declining commodity 
                                          prices or decisions to discontinue 
                                          exploration activities due to lack 
                                          of mineral resource. In addition, 
                                          we reviewed the available information 
                                          and documentation which supports the 
                                          underlying economics of the Group's 
                                          mining projects. We also reviewed 
                                          and assessed the related disclosures 
                                          in the financial statements. 
                                          We considered the likely availability 
                                          of funding in the context of potential 
                                          impairment. 
                                          We considered the status of negotiations 
                                          with the vendors of Minaspampa and 
                                          Rosario and ensured disclosure of 
                                          the position and potential consequences 
                                          was appropriately dealt with in the 
                                          financial statements. 
======================================  ============================================== 
 

Our audit procedures in relation to these matters were designed in the context of our audit opinion as a whole. They were not designed to enable us to express an opinion on these matters individually and we express no such opinion.

Other information

The Directors are responsible for the other information. The other information comprises the information included in the annual report, other than the financial statements and our auditor's report thereon. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon.

In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether there is a material misstatement in the financial statements or a material misstatement of the other information. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.

We have nothing to report in this regard.

Matters on which we are required to report by exception

We have nothing to report in respect of the following matters where the Companies (Jersey) Law 1991 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 financial statements are not in agreement with the accounting records and returns; or 
   --      we have not received all the information and explanations we require for our audit. 

Responsibilities of the Directors for the financial statements

As explained more fully in the Directors' responsibilities statement set out on page 16, the Directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the Directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, the Directors are responsible for assessing the Group's and parent company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Directors either intend to liquidate the Group or the parent company or to cease operations, or have no realistic alternative but to do so.

Auditor's responsibilities for the audit of the financial statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council's website at: www.frc.org.uk/auditorsresponsibilities.This description forms part of our auditor's report.

Use of our report

This report is made solely to the company's members, as a body, in accordance with Article 113A of the Companies (Jersey) Law 1991. 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.

Stephen Bullock (Senior Statutory Auditor)

for and on behalf of

Crowe U.K. LLP

Statutory Auditor

London

30 August 2019

 
                                             31 March   31 December 
                                                 2019          2017 
                                     Note        $000          $000 
                                            ---------  ------------ 
 
 Non-current assets 
 Intangible assets                    10       83,032         2,046 
 Tangible assets                      11        6,175         1,254 
 Deferred tax asset                    9            -           284 
                                            ---------  ------------ 
                                               89,207         3,584 
                                            ---------  ------------ 
 Current assets 
 Trade and other receivables          13          787           388 
 Cash and cash equivalents            14            7         3,893 
 Amounts due from related parties     26           52             - 
 Corporation tax                                   14             - 
                                            ---------  ------------ 
                                                  860         4,281 
                                            ---------  ------------ 
 Current liabilities 
 Trade and other payables             15      (5,419)       (1,409) 
 Amounts due to related parties       26      (2,803)         (779) 
 Deferred consideration              23,24   (42,295)         (188) 
 Corporation tax                                    -          (15) 
 Short term debt                      19      (1,344)             - 
                                            ---------  ------------ 
                                             (51,861)       (2,391) 
                                            ---------  ------------ 
 
 Net current assets (liabilities)            (51,001)         1,890 
                                            ---------  ------------ 
 
 Non-current liabilities 
 Employee end of service benefits                (77)          (32) 
 Provisions                           18      (4,417)         (150) 
 Deferred tax liability                9            -         (309) 
 Deferred consideration              23,25    (4,557)         (283) 
 Debt - related party                 19      (9,364)       (2,140) 
                                            ---------  ------------ 
                                             (18,415)       (2,914) 
                                            ---------  ------------ 
 
 Net assets (liabilities)                      19,791         2,560 
                                            =========  ============ 
 
 Equity attributable to owners 
 Stated capital                       16       37,596        10,333 
 Shares to be issued                  16            -         3,908 
 Merger reserve                       17          279           279 
 Accumulated loss                     17     (18,084)      (11,960) 
 Total equity                                  19,791         2,560 
                                            =========  ============ 
 
 

The notes to the financial statements form an integral part of these financial statements.

The financial statements were approved by the Board of Directors and authorized for issue on 30 August 2019 and were signed on its behalf by David Sumner.

 
                                                  15 months   12 months 
                                                   ended 31    ended 31 
                                                 March 2019    December 
                                                                   2017 
                                         Note          $000        $000 
                                               ------------  ---------- 
 
 Revenue                                                  -           - 
 Cost of sales                                            -           - 
                                               ------------  ---------- 
 Gross profit                                             -           - 
 
 Listing costs                            16          (550)     (1,482) 
 Disposal of Casma                        23          (581)           - 
 Operating costs                          6         (8,637)     (4,500) 
                                               ------------  ---------- 
 Operating loss                                     (9,768)     (5,982) 
                                               ------------  ---------- 
 
 Finance income                                       7,857           - 
 Finance cost                                       (3,968)       (348) 
                                               ------------  ---------- 
 Net finance income (cost)                5           3,889       (348) 
                                               ------------  ---------- 
 
 Loss before taxation                               (5,879)     (6,330) 
 Income tax                               9           (245)         272 
                                               ------------  ---------- 
 Loss after tax                                     (6,124)     (6,058) 
                                                             ========== 
 
 
 Total comprehensive loss for the 
  year attributable to equity holders               (6,124)     (6,058) 
 
 Earnings per share 
 Basic and diluted loss per share 
  ($)                                     20       ($0.056)    ($0.308) 
 
 

The notes to the financial statements form an integral part of these financial statements.

All amounts are derived from continuing operations.

 
                              Stated    Shares     Merger   Accumulated 
                             capital     to be    reserve        losses     Total 
                                        issued 
                                $000      $000       $000          $000      $000 
                          ----------  --------  ---------  ------------  -------- 
 
 As at 1 January 
  2017                             -         -        279       (5,902)   (5,623) 
 
 Loss for the year                 -         -          -       (6,058)   (6,058) 
                          ----------  --------  ---------  ------------  -------- 
 Total comprehensive 
  loss                             -         -          -       (6,058)   (6,058) 
                          ----------  --------  ---------  ------------  -------- 
 
 Transactions with 
  owners 
 Shares issued (note 
  16)                         10,333         -          -             -    10,333 
 Monies received 
  in advance of shares 
  to be issued (note 
  16)                              -     3,908          -             -     3,908 
                          ----------  --------  ---------  ------------  -------- 
 As at 31 December 
  2017                        10,333     3,908        279      (11,960)     2,560 
 
 Loss for the year                 -         -          -       (6,124)   (6,124) 
                          ----------  --------  ---------  ------------  -------- 
 Total comprehensive 
  loss                             -         -          -       (6,124)   (6,124) 
                          ----------  --------  ---------  ------------  -------- 
 
 Transactions with 
  owners 
 Minaspampa and Rosario 
  Acquisition (note 
  24)                         14,148         -          -             -    14,148 
 Shares issued on 
  IPO (note 16)                7,168   (3,908)          -             -     3,260 
 IPO fees (note 16)            (109)         -          -             -     (109) 
 Karmin Acquisition 
  (note 25)                    6,056         -          -             -     6,056 
 
 As at 31 March 2019          37,596         -        279      (18,084)    19,791 
                          ----------  --------  ---------  ------------  -------- 
 
 

The notes to the financial statements form an integral part of these financial statements.

 
                                                       15 months   12 months 
                                                        ended 31    ended 31 
                                                      March 2019    December 
                                                                        2017 
                                              Note          $000        $000 
                                                    ------------  ---------- 
 Cash flows from operating activities 
 Loss for the period before taxation                     (5,879)     (6,330) 
 Adjustments for: 
 Depreciation and amortization                                52          26 
 Directors' remuneration                       26          2,003       1,750 
 Loss on disposal of Casma                     23            581           - 
 Fixed asset disposal                                        318           - 
 Finance income                                5         (7,857)           - 
 Finance costs                                 5           3,968         348 
 Provision for employees' end of 
  service benefits                                            45          32 
 Provision for site restoration adjustment                    15           - 
 Operating cash flow before working 
  capital changes                                        (6,754)     (4,174) 
 
 Movement in trade and other receivables                   (399)       (384) 
 Movement in trade and other payables                      4,110       2,032 
 Movement in amounts due to related                         (52)           - 
  companies 
 Cash flow from operating activities                     (3,095)     (2,526) 
 Less: interest paid                                       (281)           - 
                                                    ------------  ---------- 
 Net cash flow from operating activities                 (3,376)     (2,526) 
                                                    ------------  ---------- 
 
 Investing activities 
 Purchase of tangible assets                   11          (257)     (1,116) 
 Purchase of intangible assets                 10        (2,369)       (573) 
 Acquisition of Minaspampa and Rosario         24        (8,925)           - 
 Net cash flow on acquisition of 
  subsidiary                                   23              -       (450) 
 Net cash flow from investing activities                (11,551)     (2,139) 
                                                    ------------  ---------- 
 
 Financing activities 
 Short term debt financing                     19          2,500           - 
 Repayment of short-term debt                  19        (1,156)           - 
 Debt financing - related party                19          9,306       4,650 
 Monies received in advance of shares 
  to be issued                                 16              -       3,908 
 Equity financing from IPO                                   500           - 
 Share issue costs                                         (109)           - 
 Net cash flow from financing activities                  11,041       8,558 
                                                    ------------  ---------- 
 
 Net increase in cash and cash equivalents               (3,886)       3,893 
 Cash and cash equivalent - start                          3,893           - 
  of the year 
 Cash and cash equivalents - end 
  of the year                                                  7       3,893 
                                                    ============  ========== 
 

The notes to the financial statements form an integral part of these financial statements.

The material non-cash transaction relating to the unpaid Directors' remuneration during the reporting period (note 26) and the all-shares purchase of Karmin (note 25).

   1.    General Information 

The Company was incorporated in Jersey on 6 May 2017. The principal activity of the Company was investment holding and its registered address 28 Esplanade, St. Helier, Jersey, Channel Islands, JE1 8SB.

Accounting reference date

On 29 March 2019 the Company changed its accounting reference date to 31 March to align with its ultimate parent Company SGHL.

Group reorganisation

The Company entered into an agreement to acquire the entire issued share capital of Valley International Mining Limited ("VIM BVI") on 7 May 2017. The reorganisation was affected by way of a share for share exchange whereby VIM BVI and its subsidiary companies became a wholly-owned subsidiary of the Company forming the VI Mining PLC group of companies (the "Group").

Group companies

The Group comprises of the following entities:

 
 Name of subsidiary undertakings        Country        Interest   Principal activity 
                                    of incorporation 
--------------------------------  ------------------  ---------  ------------------------- 
 
 Valley International Mining              BVI            100%     Investment holding 
  Limited ("VIM BVI") 
 
 One-Valley International                 BVI           100%*     Investment holding 
  Limited ("BVI One") 
 Bi-Valley International Limited          BVI           100%*     Investment holding 
  ("BVI Bi") 
 Tri-Valley International                 BVI           100%*     Investment holding 
  Limited ("BVI Tri") 
 Four-Valley International                BVI           100%*     Investment holding 
  Limited ("BVI Four") 
 Five-Valley International                BVI           100%*     Investment holding 
  Limited ("BVI Four") 
 
 Tri-Valley International                 UAE           100%*     Corporate Administration 
  FZE ("VIM FZE") 
 VI Mining DMCC ("VIM DMCC")              UAE           100%*     Sales and Marketing 
 
 One-Valley Peru S.A.C. ("MOV")          Peru           100%**    Mining 
 Bi-Valley S.A.C. ("MBV")                Peru           100%**    Mining 
 Tri-Valley Peru S.A.C. ("TVP")          Peru           100%**    Mining 
 Minera Tres Valles S.A.C.               Peru           100%**    Mining 
  ("MTV") 
 Karmin Peru S.A.C.                      Peru          100%***    Mining 
 
 
   * Direct held by VIM BVI      ** Indirectly held by VIM BVI and nominees    ***Held by BVI One 

Principal activity

The principal activity of the Group is that of precious metal mining, exploration and tolling operations in Peru, with an initial focus on gold.

Currency

The functional currency of all entities is US dollars. Financial information is presented in US dollars ("$") and rounded to the nearest thousand ("$000").

   2.    Accounting policies 
   (a)   Basis of preparation 

The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards as adopted by European Union ("IFRSs").

As permitted by Companies (Jersey) Law 1991 only the consolidated financial statements are presented.

As described in note 1, the acquisition of VIM BVI by the Company on 7 May 2017 was by way of a group reorganization. The formation of the operating group headed by VIM BVI was affected by way of a re-organisation of entities which were under common control. As such, both combinations fall outside the scope of IFRS 3 "Business Combinations" (Revised 2008). The Directors have, therefore, decided that it is appropriate to reflect the combinations using the merger basis of accounting in order to give a true and fair view. No fair value adjustments were made as a result of that combination.

In accordance with IAS 8 - Accounting Policies, Changes in Accounting Estimates and Errors, in developing an appropriate accounting policy, the Directors have considered the pronouncements of other standard setting bodies and specifically looked to accounting principles generally accepted in the United Kingdom ("UK GAAP") for guidance (FRS 102) which does not conflict with IFRS and reflects the economic substance of the transaction.

Under UK GAAP, the assets and liabilities of both entities are recorded at book value, not fair value. Intangible assets and contingent liabilities are recognised only to the extent that they were recognised by the legal acquirer in accordance within applicable IFRS. No goodwill is recognised, any expenses of the combination are written off immediately to the income statement and comparative amounts, if applicable, are restated as if the combination had taken place at the beginning of the earliest accounting period presented.

Although the reconstruction of the Group completed in May 2017, these consolidated financial statements are presented as if the corporate structure has always been in place, including the activity from incorporation of the Group's principal subsidiary. All entities had the same management as well as majority shareholder.

   (b)   Going concern 

The financial statements are required to be prepared on the going concern basis. The key conclusions are summarised below.

Operating results

The Group did not receive any revenue in the period and recorded a loss after tax of $6.1 million (2017: loss of $6.1 million) and a net cash outflow from operating activities of $3.4 million (2017: $2.5 million).

Minaspampa and Rosario acquisition payments

Additionally, as set out in note 24, on 2 February 2018 the Group entered into an agreement to acquire the Minaspampa and Rosario projects. That agreement included commitments to make cash payments totaling $51.3 million, including $31.1 million due in the first 12 months.

As 31 March 2019 $8.9 million of has been paid to the vendors and under the current agreement $42.4 million is now due.

As a result, the Company is in default of its payment obligations to the vendors of Minaspampa and Rosario. The vendors of Minaspampa and Rosario are aware of the funding position and have shown their support to the Company by continuing to review the payment structure and terms of the deferred consideration payments which remain outstanding but in the absence of a settlement of this matter the Group could lose title to those assets.

David Sumner loan facilities

As set out in note 19, the Company is currently reliant on two loan facilities provided by David Sumner, a director, to support the funding of the further consideration payable under the various acquisition agreements and to support the working capital requirements of the Company and the Group as follows:

-- the VIM PLC Term Loan facility of $10 million - which was fully drawn at 31 March 2019 (with $2.8 million was converted during 2018 to ordinary shares of the Company on Admission); and

-- an unsecured term loan facility agreement with the Company for an amount of GBP39 million to help fund the acquisition of the Minaspampa and Rosario Projects, and for working capital, of which there was a balance drawn of $1.6 million at 31 March 2019.

In August 2018, the Company issued a draw down notice to Mr. Sumner for $7.0 million who in turn issued a back-to-back draw down request. The board has been advised by Mr. Sumner that whilst he is confident that the draw down request will be met, he does not have visibility on the timing of its availability. However, there is no certainty that the back to back facility will be available to Mr Sumner and, consequently, that Mr Sumner's facility will be available to the Company.

At 23 August 2019 a total of $3.3 million of funding had been received from Mr. Sumner under the GBP39 million facility.

David Sumner has confirmed to the board his intention, together with SGHL, to continue to provide financial support to the Company to meet short term working capital requirements.

Tassili loan facility

Also as set out in note 19, the Company has a $2.5 million short term loan from Tassili that was due for repayment on 31 July 2018 and was not repaid. On 19 November 2018 the repayment date was varied to 31 December 2018 and Tassili was given a charge over Tri-Valley International Limited (the group Company owning the shares of Minera Tres Valle S.A.C. which holds the Oro Pesa concession).

At 23 August 2019 $1.53 million has been repaid and $970,000 is still owing. The Company and Tassili continue in discussions on renegotiating this finance.

SGHL STO

On 20 March 2019 SGHL, the 71.9% shareholder of the Company (and a Company controlled by David Sumner) announced that it was launching a security token offering ("STO") fund raising, with the intention of providing financial support to its portfolio companies including VI Mining.

On 28 August 2019, David Sumner confirmed to the Company that SGHL is expected to complete the first phase of its STO during September 2019.

Impact on the business

The failure to provide funding on a timely basis has resulted in the Company failing to meet its day to day working capital commitments with consequential delays to bringing the Ora Pesa plant into production and the re-commencement of exploration and mining activities at Minaspampa, Rosario and Cushuro. The board anticipates that these delays will continue until the current funding issues are resolved.

At 23 August 2019, $3.9 million was owed to suppliers, staff and other third parties; $970,000 was owed to Tassili Jewellery LLC; David Sumner and other directors were owed $3.4 million in unpaid salary and expenses; and $42.2 million was owed to the vendors of Minaspampa and Rosario.

Future fund raising and current working capital considerations

With a potentially new debt facility in place from SGHL post its STO and once the Company has generated positive cash flows from the Tolling business at Oro Pesa, the Company intends to raise new institutional finance through debt and/or equity to reduce the Company's reliance on the related party loans and facilities.

In the meantime, the Group's working capital requirements are reliant upon the existing David Sumner facilities or successfully obtaining alternative means of funding.

Reliance on David Sumner continued funding

The Company's board of directors have relied upon the assurances given by David Sumner, the continuing good faith negotiations and understanding of the Minaspampa and Rosario vendors; Tassili; and general suppliers and creditors; and as a result, have prepared these financial statements on a going concern basis.

If the Group was unable to secure sufficient funding to enable it to continue on a going concern basis; or if the vendors of Minaspampa and Rosario made a demand for the amounts due; or if Tassili made a demand for the amounts due; or if creditors made a demand for amounts due; and the funds were not made available under these facilities, then:

-- the Minaspampa and Rosario projects could revert back to the vendors;

-- the Oro Pesa concession would revert to Tassili; and

-- adjustments would be necessary to write down remaining assets to their recoverable amounts, reclassify fixed assets and long-term liabilities as current and provide for additional liabilities.

If the STO fund raising by SGHL or the new facility from SGHL to the Company are not successfully concluded the Company and the Group would be unable to meet their obligations under the acquisition agreements or to fund their working capital requirements. This indicates the existence of a material uncertainty. If the Company and the Group were unable to secure sufficient funding to enable it to continue on a going concern basis then adjustments would be necessary to write down assets to their recoverable amounts, reclassify fixed assets and long-term liabilities as current and provide for additional liabilities.

   (c)    Basis of consolidation 

The consolidated financial information comprises the financial information of the VIM PLC and its subsidiaries as at, and for, the accounting reference date of each year. Subsidiaries are consolidated from the date at which control was obtained by the Group and cease to be consolidated from the date at which the group no longer retains control.

Control is achieved where the Company is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee.

All intra-group balances and transactions, including unrealised profits arising from intra-group transactions, are eliminated fully on consolidation.

   (d)   Business combinations and goodwill 

Business combinations are accounted for using the acquisition method. The cost of an acquisition is measured as the aggregate of the consideration transferred, measured at acquisition date fair value and the amount of any non-controlling Interest (NCI) in the acquiree. For each business combination, the Group elects whether to measure NCI in the acquiree at fair value or at the proportionate share of the acquiree's identifiable net assets. Acquisition related costs are expensed as incurred and included in administrative expenses.

Goodwill is initially measured at cost, being the excess of the aggregate of the consideration transferred and the amount recognized for NCI over the fair value of the identifiable net assets acquired and liabilities assumed. If the fair value of the identifiable net assets acquired is in excess of the aggregate consideration transferred (bargain purchase), before recognising a gain, the Group reassesses whether it has correctly identified all of the assets acquired and all of the liabilities assumed and reviews the procedures used to measure the amounts to be recognized at the acquisition date. If the assessment still results in an excess of the fair value of net assets acquired over the aggregate consideration transferred, then the gain is recognized in the statement of profit or loss and other comprehensive income.

   (e)   Transactions and balances 

Transactions in foreign currencies are initially recorded by the Group entities at their respective functional currency rates at the date the transaction first qualifies for recognition.

Monetary assets and liabilities denominated in foreign currencies are retranslated at the functional currency rate of exchange at the reporting date. All differences arising on settlement or translation of monetary items are taken to the Statement of Comprehensive Income.

Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates as at the dates of the initial transactions. Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value is determined. The gain or loss arising on retranslation of non-monetary items is recognized in other comprehensive income.

   (f)    Land 

Land is held at cost less any impairment charge. Land is not depreciated.

   (g)   Property, plant and equipment 

Property, plant and equipment are held at cost less accumulated depreciation and impairment charges.

Depreciation is provided at the following annual rates in order to write off the cost less estimated residual value over their estimated useful lives as follows:

-- Leasehold improvements - over remaining life of lease

-- Plant and Machinery - 3 to 10 years

-- Fixtures and fittings - 3 to 10 years

-- Computer equipment - 2 to 4 years

   (h)   Mining and Tolling Concessions 

Mining concessions are stated at cost and are amortized on units of production method, using as the basis of proven and probable reserves. Tolling concessions are amortized on a time based straight line bases. If the Group leaves these concessions, the costs associated are written off in the consolidated statements of profit or loss.

At the end of each year, the Group evaluates if there is any indicator of impairment in relation to the carrying value of mining and tolling concessions. If any impairment indicator exists, the Group estimates the asset's recoverable amount.

   (i)    Exploration and evaluation assets 

Exploration and evaluation activity involves the search for mineral deposits, the determination of technical feasibility and the assessment of commercial viability of an identified resource.

Exploration and evaluation activity includes:

-- acquisition of rights to explore;

-- researching and analyzing historical exploration data;

-- gathering exploration data through topographical, geochemical and geophysical studies;

-- exploratory drilling, trenching and sampling;

-- determining and examining the volume and grade of the resource;

-- surveying transportation and infrastructure requirements;

-- activities involved in evaluating the technical feasibility and commercial viability of extracting mineral resources.

All exploration and evaluation costs are capitalized as intangible assets in exploration and evaluation assets on a property by property basis pending determination of the technical feasibility and commercial viability of each project.

Costs incurred before the legal right to undertake exploration and evaluation activities on a project was acquired are recognized in the consolidated statement of comprehensive income as incurred.

No depreciation expense is recognized on these assets during the exploration and evaluation period.

All capitalized exploration and evaluation costs are recorded at acquisition cost less accumulated impairment losses.

Management monitors exploration and evaluation assets for indicators of impairment and when a potential impairment is indicated, an impairment test is performed.

Exploration areas in which mineral resources have been discovered, but that require major capital expenditure before production can begin, are continually evaluated to ensure that commercial quantities of mineral resource exist or to ensure that additional exploration work is under way or planned.

To the extent that capitalized expenditures are not expected to be recovered they are charged to the consolidated statement of comprehensive income.

When technical feasibility and commercial viability of extracting mineral resources are demonstrable, exploration and evaluation assets related to the mining property are transferred to property, plant and equipment in mining assets under construction.

Before the reclassification, exploration and evaluation assets are tested for impairment and any impairment loss is recognized in profit or loss before reclassification.

Impairment of non-financial assets

For the purpose of assessing impairment, assets are grouped at the lowest levels for which there are largely independent cash flows ("cash-generating unit" or "CGU"). As a result, some assets are tested individually for impairment and some are tested at a CGU level. Whenever events or changes in circumstances indicated that the carrying amount may not be recoverable, an asset or CGU is reviewed for impairment.

Impairment losses are recognized in the Consolidated Statement of Comprehensive Income. An impairment change is reversed if the asset's or CGU's recoverable amount exceeds its carrying value.

Non-financial assets that have suffered impairment are reviewed for possible reversal of the impairment at each reporting date when events or circumstances warrant such consideration.

   (j)    Revenue recognition 

Revenue is recognized at the point at which the Group has fulfilled relevant performance obligations under its contract with customers. Revenue is measured based on the consideration to which the Group expects to be entitled in a contract with a customer and excludes amounts collected on behalf of third parties. Revenue includes the sale of precious metals derived from the mining and ore processing operations. Sales of precious metals, based on spot metal prices, are recorded on delivery when rights and obligations related to the ownership are transferred to the purchaser and reasonable assurance regarding collectability of the consideration exists.

The Group has yet to generate any revenue from sales of gold, when it does the sale of gold is generally in separate identified contracts with customers in which the sale of gold is generally expected to be the only performance obligation, satisfied by delivery. Accordingly, the adoption of IFRS 15 had no impact on the reported results of the Group.

   (k)   Trade and other receivables 

Trade receivables are recognised and carried at original invoice amount and subsequently measured at amortised cost, less any impairment losses.

   (l)    Provisions and  closure and rehabilitation liabilities 

Provisions are recognized when a present legal or constructive obligation, as a result of a past event, will probably lead to an outflow of economic resources from the Group and amounts can be estimated reliably.

Provisions are measured at the estimated expenditure required to settle the present obligation, based on the most reliable evidence available at the reporting date, including the risks and uncertainties associated with the present obligation.

Provisions are discounted when the time value of money is significant.

All provisions are reviewed at each reporting date and adjusted to reflect the current best estimate.

The Group is subject to various laws and regulations regarding environmental restoration and closure provisions for which the Group estimates future costs.

To take account of estimated cash flows required to settle the obligations arising from environmentally acceptable closure plans (such as dismantling and demolition of infrastructures, removal of residual matter and site restoration), provisions are recognized in the period in which the obligation is incurred, that is when it is likely that an outflow will be required in settlement of the obligation and the obligation is reasonably determinable.

Asset retirement obligations are determined on the basis of the best estimates of future costs, based on information available on the reporting date.

Future costs are discounted at pre-tax rates that reflect current market assessments of the time value of money and the risks specific to the liability.

A corresponding asset is recognized in property, plant and equipment when establishing the provision.

The provision is reviewed at each reporting date to reflect changes in the estimated outflow of resources as a result of changes in obligations or legislation, changes in the current market-based discount rate or an increase that reflects the passage of time.

The accretion expense is recognized in comprehensive income as a financial expense as incurred.

The cost of the related asset is adjusted to reflect changes in the reporting period.

Costs of asset retirement is deducted from the provision when incurred.

Possible inflows of economic benefits to the Group that do not yet meet the recognition criteria of an asset are considered contingent assets and are not recognized.

(m) Financial instruments

A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity.

   a.     Financial assets 

Loans and receivables

Loans and receivables are initially recognised at fair value and are subsequently measured at amortised cost, less of any provision for impairment. Interest is recognized by applying the effective interest method, except for short-term receivables when the recognition of interest would be immaterial.

   b.     Financial liabilities and equity instruments 

Equity instruments

An equity instrument is any contract that evidences a residual interest in the assets of the Company after deducting all of its liabilities. Equity instruments are recorded at the proceeds received, net of direct issue costs.

Financial liabilities

Financial liabilities are classified as financial liabilities measured at amortised costs.

Other financial liabilities

Trade and other payables are initially measured at fair value, net of transaction costs, and are subsequently measured at amortised cost.

Financial instruments - interest bearing loans and borrowings

All loans and borrowings are initially recognized at fair value less directly attributable transaction costs. After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost using the effective interest method.

Borrowing costs are recognized as an expense when incurred.

Impairment of financial assets

Impairment provisions for current and non-current trade receivables are recognised based on the simplified approach within IFRS 9 using a historical provision matrix in the determination of the lifetime expected credit losses. During this process the probability of the non-payment of the trade receivables is assessed. This probability is then multiplied by the amount of the expected loss arising from default to determine the lifetime expected credit loss for the trade receivables. For trade receivables, which are reported net, such provisions are recorded in a separate provision account with the loss being recognised within administration costs in the consolidated statement of comprehensive income. On confirmation that the trade receivable will not be collectable, the gross carrying value of the asset is written off against the associated provision.

Impairment provisions for receivables from related parties and loans to related parties are recognised based on a forward looking expected credit loss model. The methodology used to determine the amount of the provision is based on whether there has been a significant increase in credit risk since initial recognition of the financial asset. For those for which credit risk has increased significantly, lifetime expected credit losses are recognised, unless further information becomes available contrary to the increased credit risk. For those that are determined to be permanently credit impaired, lifetime expected credit losses are recognised.

The adoption of IFRS 9 had no impact on the reported results of the Group.

   (n)   Operating segments 

The Group is organised into one main business segment - the mining and sales of precious metals in the Peru and UAE markets.

The Group determines and presents operating segments based on the information that internally is provided to the Board of Directors.

   (o)   Leases 

Leases where the lessor retains substantially all of the risks and rewards of ownership are classified as operating leases.

Rentals payable under operating lease rentals are charged to the Consolidated Statement of Comprehensive Income on a straight-line basis over the term of the lease.

Leases where the Group retains substantially all of the risks and rewards of ownership are classified as finance leases or hire purchase contracts.

Assets held under finance leases or hire purchase contracts are capitalized and depreciated over their useful economic lives. The capital element of the future obligations under finance leases and hire purchase contracts are included as liabilities. The interest elements of the rental obligations are charged to the Consolidated Statement of Comprehensive Income over the periods of the finance leases and hire purchase contracts and represent a constant proportion of the balance of capital outstanding.

   (p)   Post-employment benefits 

Contributions to personal pension schemes or amounts required by local statute for post-employment benefits are charged to the Consolidated Statement of Comprehensive Income in the period to which they relate.

   (q)   Taxation 

Current taxes are based on the results shown in the financial information and are a calculated according to local tax rules using tax rates enacted or substantially enacted by the balance sheet date.

Tax on the profit or loss for the year comprises current and deferred tax. Income tax is recognized in the Consolidated Statement of Comprehensive Income except to the extent that it relates to items recognized directly in equity, in which case it is recognized in equity.

Current tax is the tax currently payable based on taxable profit for the year, using tax rates enacted or substantively enacted at the balance sheet date, and any adjustment to tax payable in previous years.

Deferred income taxes are calculated using the balance sheet method. Deferred tax is generally provided on the difference between the carrying amounts of assets and liabilities and their tax bases. However, deferred tax is not provided on the initial recognition of goodwill, nor on the initial recognition of an asset or liability unless the related transaction is a business combination or affects tax or accounting profit. Deferred tax on temporary differences associated with shares in subsidiaries and joint ventures is not provided if reversal of these temporary differences can be controlled by the Group and it is probable that reversal will not occur in the foreseeable future. In addition, tax losses available to be carried forward as well as other income tax credits to the Group are assessed for recognition as deferred tax assets.

Deferred tax liabilities are provided in full, with no discounting. Deferred tax assets are recognized to the extent that it is probable that the underlying deductible temporary differences will be able to be offset against future taxable income. Current and deferred tax assets and liabilities are calculated at tax rates that are expected to apply to their respective period of realisation, provided they are enacted or substantively enacted at the balance sheet date.

Changes in deferred tax assets or liabilities are recognized as a component of tax expense in the Consolidated Statement of Comprehensive Income, except where they relate to items that are charged or credited directly to equity in which case the related deferred tax is also charged or credited directly to equity.

   (r)    Cash and cash equivalents 

Cash and cash equivalents comprise cash on hand and demand deposits and other short-term highly liquid investments that are readily convertible to a known amount of cash and are subject to an insignificant risk of changes in value.

   (s)    New standards, amendments to standards or interpretations 

At the date of authorisation of this financial information, the Directors have reviewed the standards in issue by the International Accounting Standards Board ("IASB") and IFRIC, which are effective for annual accounting periods ending on or after the stated effective date. In their view, none of these standards would have a material impact on the financial reporting of the Group in future period.

The Group does not expect a significant impact on its balance sheet or equity on the adoption of IFRS 16. IFRS 16 is likely to require the recognition of most operating lease commitments on the Group's balance sheet as assets and the recognition of a corresponding liability. At 31 March 2019 the present value of operating lease obligations was $192,000 (see note 29).

   3.    Key judgements and estimates 

The preparation of financial information under IFRS can require management to make estimates and assumptions that affect the amount of assets, liabilities and profit or loss reported in the financial information. The Group specifically makes estimates about the fair value of intangible assets and on the amortisation policy on such assets.

The Directors consider that the key judgements and sources of estimation made in preparation of the financial information are:

Consolidation of VIM BVI and its subsidiary companies

As detailed in note 1, judgement was applied in the reporting periods in determining the Group's accounting policy for the combination of the Company and VIM BVI, both entities in a transaction under common control prior to the group reorganisation.

Having considered the requirements of IAS 8 the transaction has been accounted for by combining both entities at their book value, with creation of merger reserve. No fair value adjustments have been made. This is a material accounting policy selection.

Carrying value of intangible and tangible mining assets

The Group's mining assets represent its most significant assets, comprising concession rights and exploration assets in Peru. Management is required to assess exploration and evaluation (E&E) assets for indicators of impairment and has considered the economic value of individual E&E assets. The carrying amount of the E&E asset are subject to a separate review for indicators of impairment, by reference to the impairment indicators set out in IFRS 6, which is inherently judgmental.

In performing impairment reviews, the Group assesses the recoverable amount of its operating assets principally with reference to the most recent independent competent person's report, estimates of future commodity prices, operating costs and capital expenditure necessary to extract those estimated reserves for the purpose of deriving a recoverable value.

The Directors have considered all the facts and circumstances in making their assessment as whether the carrying value of an E&E assets may exceed the recoverable amount.

Business combinations

Casma

As described in note 23, the group acquired the entire share capital of ZL Minera for a total consideration of $960,000. The acquisition was considered to be a business combination by management and therefore IFRS 3 was applied.

Minaspama and Rosario and Cushuro

As described in notes 24 and 25, the group acquired the mining concession and certain assets of Minaspama and Rosario for total consideration of $65.4 million and the mining concession Cushuro (in the legal entity Karmin Peru S.A.C.) for total estimated consideration of $12.5 million. Both of these purchases were for concession rights and some tangible assets but did not include labour force, mine operating plans or any documented inputs, processes or outputs. These acquisitions were considered to be asset purchases.

   4.    Segment reporting 

The Group applies IFRS 8 Operating Segments. Per IFRS 8 operating segments are based on internal reports about components of the group, which are regularly reviewed and used by the Board of Directors being the Chief Operating Decision Maker ("CODM") for strategic decision making and resource allocation, in order to allocate resources to the segment and to assess its performance.

The Directors consider there to be only one operating segment, the mining, tolling and selling of precious metals and only three geographical segments being the Jersey, Peru and the UAE.

There was no revenue in any segment in either period.

 
                          31 March   31 December 
                              2019          2017 
                              $000          $000 
                        ----------  ------------ 
 Non-Current Assets 
 Jersey                          8            12 
 Peru                       89,171         3,537 
 United Arab Emirates           28            35 
                            89,207         3,584 
                        ----------  ------------ 
 
   5.    Finance income and costs 

The following items have been included in net finance costs:

 
                                                     15 months   12 months 
                                                      ended 31    ended 31 
                                                    March 2019    December 
                                                                      2017 
                                                          $000        $000 
                                                  ------------  ---------- 
 
 Finance income 
 Change in fair value in deferred consideration          7,857           - 
  - Karmin (note 25) 
                                                         7,857           - 
 
 Finance cost 
 Short term loan finance charge (note 19)                  250           - 
 Debt interest on David Sumner $10m Loan 
  (note 19)                                                568         308 
 Debt interest on David Sumner GBP39m Loan                 111           - 
  (note 19) 
 Change in fair value of site restoration              15                - 
  obligation (note 18) 
 Change in fair value in deferred consideration                          - 
  -                                                    2,993 
  Minaspampa and Rosario (note 24) 
 Change in fair value of deferred consideration 
  - Casma                                               -               40 
 Other finance costs                                        31           - 
                                                         3,968         348 
                                                  ------------  ---------- 
 
 Finance income (cost)                                   3,889       (348) 
                                                  ------------  ---------- 
 
   6.    Operating loss 

The following items have been included in operating loss:

 
                                           15 months   12 months 
                                            ended 31    ended 31 
                                          March 2019    December 
                                                            2017 
                                                $000        $000 
                                        ------------  ---------- 
 
 People costs                                  4,691       2,697 
 Depreciation and amortization                    52          26 
 Fees payable to the Group's auditors            163         322 
 Office lease costs                              125          94 
                                        ------------  ---------- 
 
   7.    Fees payable to the Group's auditors 

Fees payable to the Group's auditors in respect of audit and other services:

 
                                   15 months   12 months 
                                    ended 31    ended 31 
                                  March 2019    December 
                                                    2017 
                                        $000        $000 
                                ------------  ---------- 
 
 Audit fees                               73          84 
 Transaction services for IPO             90         232 
 Tax advice                                -           6 
                                ------------  ---------- 
                                         163         322 
                                ------------  ---------- 
 
   8.    Employees and Directors 

Staff costs for all employees, including Directors, consists of:

 
                              15 months   12 months 
                               ended 31    ended 31 
                             March 2019    December 
                                               2017 
                                   $000        $000 
                           ------------  ---------- 
 
 Wages and salaries               4,388       2,664 
 Social security costs              133           1 
 End of service benefits            170          32 
                           ------------  ---------- 
                                  4,691       2,697 
                           ------------  ---------- 
 

The average number of employees during the 15 months ended 31 March 2019 was 50 (12 months ended December 2017: 16).

The Directors of the Company are considered to be the key management of the Group and their emoluments and benefits for the period were disclosed in the Directors' Report.

   9.    Taxation and deferred tax 

Recognized in the income statement

 
                                              15 months   12 months 
                                               ended 31    ended 31 
                                             March 2019    December 
                                                               2017 
                                                   $000        $000 
                                           ------------  ---------- 
 
 Corporation tax                                      -           - 
 Deferred tax - movement in deferred tax 
  assets                                          (284)         272 
 Deferred tax - other                                39           - 
                                                  (245)         272 
                                           ------------  ---------- 
 

Deferred tax asset

 
                                     31 March   31 December 
                                         2019          2017 
                                         $000          $000 
                                  -----------  ------------ 
 
 Balance as at 1 January                  284            12 
 Movement in deferred tax asset         (284)           272 
                                            -           284 
                                  -----------  ------------ 
 

Each Group company is regarded as tax resident in its country of incorporation. The Group's principal trading entities are based in Peru. The corporation tax rate in Peru is 29.5% (December 2017: 29.5%). Other Group entities are resident in jurisdictions which have no corporation taxes.

Deferred tax liabilities

 
                                         31 March   31 December 
                                             2019          2017 
                                             $000          $000 
                                      -----------  ------------ 
 
 Balance as at 1 January                      309             - 
 Acquisition of ZL Minera (note 24)         (309)           309 
 
                                                -           309 
                                      -----------  ------------ 
 

The deferred tax liabilities arose on the acquisition of mining concession rights during the year. These will be released to the income statement as the fair value of the related intangible asset is amortised.

Reconciliation of tax charge

 
                                                  15 months   12 months 
                                                   ended 31    ended 31 
                                                 March 2019    December 
                                                                   2017 
                                                       $000        $000 
                                               ------------  ---------- 
 
 Profit (loss) on ordinary activities before 
  taxation                                          (5,879)     (6,330) 
 Standard rate of tax in Peru                         29.5%       29.5% 
 Loss on ordinary activities at the standard 
  rate                                              (1,734)     (1,867) 
 Losses disregarded                                 (1,104)       1,492 
 Expenses not deductible                                171           - 
 Timing differences                                     955           - 
 Permanent disallowable                                 302           - 
 Deferred tax - losses - non recognised               1,655         103 
                                                        245       (272) 
                                               ------------  ---------- 
 

At 31 March 2019, the Group had a deductible temporary difference of approximately $5.9 million available to carry forward against future trading profits (December 2017: $0.3 million).

No deferred tax asset was recognised in respect to these accumulated tax losses as there is insufficient evidence that the amount will be recovered in future years.

10. Intangible assets

 
 
                                                      Concession     Exploration 
                                                          rights           costs     Software     Total 
                                                            $000            $000         $000      $000 
                                                   -------------  --------------  -----------  -------- 
 Cost 
 As at 31 December 2016                                      200              62            -       262 
 Acquisition of ZL Minera (note 23)                        1,246               -            -     1,246 
 Additions                                                   144             400           25       569 
                                                   -------------  --------------  -----------  -------- 
 As at 31 December 2017                                    1,590             462           25     2,077 
 Acquisition of Minaspampa and Rosario (note 24)          61,728               -            -    61,728 
 Acquisition of Cushuro (note 25)                         18,530               -            -    18,530 
 Disposal of ZL Minera (note 23)                         (1,246)           (126)            -   (1,372) 
 Additions                                                     -           2,366            3     2,369 
 Disposals                                                 (109)           (152)            -     (261) 
                                                   -------------  --------------  -----------  -------- 
 As at 31 March 2019                                      80,493           2,550           28    83,071 
                                                   -------------  --------------  -----------  -------- 
 
 Amortisation and impairment 
 As at 31 December 2016                                       20               -            -        20 
 Amortisation for the year                                     8               -            3        11 
                                                   -------------  --------------  -----------  -------- 
 As at 31 December 2017                                       28               -            3        31 
 Amortisation for the year                                     -               -            8         8 
                                                   -------------  --------------  -----------  -------- 
 As at 31 March 2019                                          28               -           11        39 
                                                   -------------  --------------  -----------  -------- 
 
 Carrying amounts 
 As at 31 December 2017                                    1,562             462           22     2,046 
 As at 31 March 2019                                      80,465           2,550           17    83,032 
-------------------------------------------------  -------------  --------------  -----------  -------- 
 

11. Tangible assets

 
                                                                 Office and       Leasehold 
                                        Land   Plant equipment    equipment    improvements   Motor vehicles     Total 
                                        $000              $000         $000            $000                       $000 
 Cost 
 As at 31 December 2016                    3                 -            -               -                -         3 
 Additions                                 -             1,138           73              55                -     1,266 
                                     -------  ----------------  -----------  --------------  ---------------  -------- 
 As at 31 December 2017                    3             1,138           73              55                -     1,269 
 Acquisition of Minaspampa and 
  Rosario 
  (note 24)                              243             4,772           11               -                -     5,026 
 Additions                                 -               221           20               -               16       257 
 Disposals                                 -             (297)         (21)               -                -     (318) 
                                     -------  ----------------  -----------  --------------  ---------------  -------- 
 As at 31 March 2019                     246             5,834           83              55               16     6,234 
                                     -------  ----------------  -----------  --------------  ---------------  -------- 
 
 Depreciation and impairment 
 As at 31 December 2016                    -                 -            -               -                -         - 
 Charge for the year                       -                 -           10               5                -        15 
                                     -------  ----------------  -----------  --------------  ---------------  -------- 
 As at 31 December 2017                    -                 -           10               5                -        15 
 Charge for the year                       -                 5           18              18                3        44 
                                     -------  ----------------  -----------  --------------  ---------------  -------- 
 As at 31 March 2019                       -                 5           28              23                3        59 
 
 Carrying amounts 
 As at 31 December 2017                    3             1,138           63              50                -     1,254 
 As at 31 March 2019                     246             5,829           55              32               13     6,175 
                                     -------  ----------------  -----------  --------------  ---------------  -------- 
 
 

Included in Plant Equipment is an amount of $4,417,000 representing the present value of the estimated cost of site restoration obligations at 31 March 2019 (December 2017: $150,000), see note 18.

12. Investments in subsidiaries

The group had the following investments in subsidiary undertakings at 31 March 2019:

 
 Entity                       Principal activity        Place of        Proportion     Proportion 
                                                      incorporation     of ownership    of voting 
                                                                          interest      power held 
---------------------------  ---------------------  ----------------  --------------  ------------ 
 
 Valley International         Investment 
  Mining Limited               holding                     BVI             100%           100% 
 
 One-Valley International     Investment 
  Limited                      holding                     BVI             100%           100% 
 Bi-Valley International      Investment 
  Limited                      holding                     BVI             100%           100% 
 Tri-Valley International     Investment 
  Limited                      holding                     BVI             100%           100% 
 Four-Valley International    Investment 
  Limited                      holding                     BVI             100%           100% 
 Five-Valley International    Investment 
  Limited                      holding                     BVI             100%           100% 
 
 Tri-Valley International 
  FZE                         Corporate admin              UAE             100%           100% 
 VI Mining DMCC               Sales and marketing          UAE             100%           100% 
 
 One-Valley Peru S.A.C 
  ("MOV")                     Mining                      Peru             100%*          100% 
                              Mining and 
 Bi-Valley S.A.C ("MBV")       tolling                    Peru             100%*          100% 
 Tri-Valley Peru S.A.C        Mining and 
  ("TVP")                      tolling                    Peru             100%*          100% 
 Minera Tres Vallles          Mining and 
  S.A.C. ("MTV")               tolling                    Peru             100%*          100% 
                              Mining and 
 Karmin Peru S.A.C.            tolling                    Peru             100%           100% 
 
 

*Shares held by nominees for and on behalf of the Group.

13. Trade and other receivables

 
                             31 March   31 December 
                                 2019          2017 
                                 $000          $000 
                           ----------  ------------ 
 
 Prepayments                       38           100 
 Sales taxes recoverable          687           288 
 Advances to suppliers             62             - 
                           ----------  ------------ 
                                  787           388 
                           ----------  ------------ 
 

The fair value of the Group's trade and other receivables approximates their carrying value.

14. Cash and cash equivalents

 
          31 March   31 December 
              2019          2017 
              $000          $000 
        ----------  ------------ 
 
 Cash            7         3,893 
        ----------  ------------ 
 

The Group holds cash balances predominantly in US dollars. The fair value of the Group's cash and cash equivalents approximates their carrying amount.

15. Trade and other payables

 
                               31 March   31 December 
                                   2019          2017 
                                   $000          $000 
                              ---------  ------------ 
 
 Trade payables                   2,964         1,063 
 Accruals and other               1,627           307 
 Wages and benefits payable         828            39 
                                  5,419         1,409 
                              ---------  ------------ 
 

The fair value of the Group's trade and other payables approximates their carrying value.

16. Stated capital and shares to be issued

 
                                                   Number of 
                                                      shares     $000 
                                                ------------  ------- 
 Issue and fully paid: 
 On incorporation                                          2        - 
 Shares issued to shareholders in VIM BVI                  2        - 
  on 6 May 2017 
 Shares issued on 23 June 2017                   100,000,000    8,664 
 Shares issued on 28 July 2017                       238,096    1,300 
 Shares issued on 13 November 2017                   600,000        - 
 Shares issued on 29 November 2017                 3,000,000      100 
 Shares issued on 2 December 2017                     40,000      269 
                                                ------------  ------- 
 As at 31 December 2017                          103,878,100   10,333 
 Acquisition of Minaspampa and Rosario on 
  6 February 2018 (note 24)                        2,000,000   14,148 
 Shares issued on the Initial Public Offering 
  on 2 March 2018                                  1,072,631    7,168 
 IPO related costs                                         -    (109) 
 Shares issued to acquire Karmin Peru S.A.C. 
  on 27 July 2018 (note 25)                        5,753,138    6,056 
                                                ------------  ------- 
 At 31 March 2019                                112,703,869   37,596 
                                                ------------  ------- 
 

2017 shares issues

The Company was incorporated on 6 May 2017 with 2 shares at nil par value. On 6 May 2017 2 nil par value shares were issued to the shareholders of VIM BVI to acquire the entire issue share capital of that Company.

On 23 June 2017, the Company issued 70,000,000 new ordinary nil par value shares to David Sumner and certain persons nominated by Mr. Sumner to redeem $8,663,827 of outstanding loan note stock held in the Company.

Also on 23 June 2017, the Company issued 9,296,457 new ordinary nil par value shares to Perko Ltd., 13,703,543 new ordinary nil par value shares to the minority shareholders and 7,000,000 new ordinary nil par value shares to Lucianno Giorffino.

On 28 July 2017, the Company issued 238,095 new ordinary nil par value shares to David Sumner for total consideration of GBP1,000,000, which was settled by the cancellation of $534,338 of the 2019 Loan Notes and by $765,662 of cash.

On 13 November 2017, the Company issued 600,000 new ordinary nil par value shares for a potential management hire to join the Company no later than 1 March 2018.

On 29 November 2017, the Company issued 3,000,000 new ordinary nil par value shares to Lucianno Giorffino in consideration for him introducing the Minas Pampa Project to the Company.

On 2 December 2017, the Company issued 20,000 new ordinary nil par value shares to each of David Sumner and Lucianno Giorffino in consideration for unpaid wages.

On 10 December 2017, David Sumner entered into a subscription agreement with the Company pursuant to which he agreed to convert the sum of GBP2,000,000 owed to him by the Company into 400,000 (four hundred thousand) ordinary shares at GBP5.00 per share to be issued on Admission.

At 31 December 2017 the Company had received advanced subscriptions for the initial public offering of $3,908,000. The IPO completed on 2 March 2018.

2018 and 2019 share issues

On 6 February 2018 The Company issued 2 million of ordinary share, amounting to $14.1million, in connection with the acquisition of the Minaspampa and Rosario Projects as described in note 24.

On 2 March 2018 the Group completed its initial public offering on the NEX Exchange Growth Market. 1,072,631 new ordinary nil par value shares were issued, for gross proceeds of $7,168,000 of which: $3,908,000 was received in advance of the IPO in 2017; $500,000 was received on completion and $2,760,000 was a conversion of David Sumner's term loan (note 19).

On 27 July 2018 the Company issued 5,753,138 ordinary shares to acquire 100% of the issued share capital of Karmin Peru S.A.C. Completion of the purchased occurred on 28 January 2019. The fair value of the 5,753,138 ordinary shares issued as consideration was $6,056,000 (see note 25).

Listing costs

The total listing costs incurred were $2,141,000 in the 2 March 2018 IPO, of which: $1,482,000 was expensed in the year ended 31 December 2017; $550,000 were expensed in the period ended 31 March 2019 and $109,000 were charged to Stated Capital.

17. Reserves

 
                       31 March   31 December 
                           2019          2017 
                           $000          $000 
                      ---------  ------------ 
 
 Merger reserve             279           279 
 Accumulated losses    (18,084)      (11,960) 
                      ---------  ------------ 
 

Merger reserve

The merger reserve arose on the acquisition of VIM BVI and its subsidiary undertakings by the Company.

18. Provisions

 
                                Site Restoration Provision 
                            --------------------------------- 
                             Oro Pesa   Minaspampas   Rosario   Total 
                                 $000          $000      $000    $000 
 
 1 January 2017                     -             -         -       - 
 Provision made                   150             -         -     150 
                            ---------  ------------  --------  ------ 
 31 December 2017                 150             -         -     150 
 Assumed in purchase                -         2,520     1,732   4,252 
 Provision made                     -             -         -       - 
 Unwind of discount (note 
  5)                               15             -         -      15 
                            ---------  ------------  --------  ------ 
 31 March 2019                    165         2,520     1,732   4,417 
                            ---------  ------------  --------  ------ 
 
 

Site Restoration

In accordance with Peruvian Law, the Group's subsidiaries in Peru are required to restore mining and tolling land to its original condition at the end of production activities. The Company is in the process of completing its mine closure plan.

Due to the long-term nature of the liability, the greatest uncertainty in estimating the provision is the costs that will be incurred. In particular, the Group has assumed that the site will be restored using technology and materials that are currently available.

Oro Pesa

The Group estimated that the total site restoration cost would be approximately $330,000. The provision has been calculated using a discount rate of 9%, which the directors estimate to be the discount rate most appropriate to the liability. The site restoration work is assumed to commence in 2028.

At 31 March 2019 the Group estimated that $165,000 (31 December 2017: $150,000) for the future cost of site restoration at Oro Pesa.

Minaspampa and Rosario

The Group contracted to acquire Minaspampa and Rosario Concessions on 2 February 2018 (note 24), both of which are former operating gold and silver mines. The Group did not acquire the mine closure plans for these concessions.

The Group estimated that the total site restoration cost in current costs terms would be approximately $2,520,000 for Minaspampa and $1,732,000 for Rosario.

19. Debt

The Group has one short term loan and two long term loans, as follows:

 
                                                     31 March   31 December 
                                                         2019          2017 
                                                         $000          $000 
                                                    ---------  ------------ 
 Short Term Loan 
 Tassili Jewellery LLC - $2.5m term loan facility       1,344             - 
                                                    ---------  ------------ 
 
 Long Term Loans (related party) 
 David Sumner - unsecured $10m term loan facility       7,702         2,140 
 David Sumner - unsecured GBP39m term loan              1,662             - 
  facility 
                                                    ---------  ------------ 
                                                        9,364         2,140 
                                                    ---------  ------------ 
 

David Sumner unsecured $10m term loan facility

On 7 August 2017 the Company authorised a $10m Loan Facility from David Sumner, with principal conditions of:

   a.     Term date of 30 June 2022 
   b.     Interest at 9% per annum paid on Term 
   c.     Non-redeemable and non-transferable. 

At 31 March 2019 $10 million has been drawn down in full, with $2,760,000 converted to nil par value ordinary shares in the Company's Initial Public Offering (note 16), and $134,500 converted to nil par value ordinary shares on 2 December 2017 (note 16).

At 31 March 2019 there was a loan balance of $7,702,000 (December 2017: $2,140,000), comprising capital of $7,105,000 (December 2017: $2,111,000) and accrued interest of $597,000 (December 2017: $29,000).

This Term Loan is unsecured.

David Sumner unsecured GBP39m term loan facility

On 6 December 2017 David Sumner entered into an unsecured term loan facility agreement with the Company for an amount of GBP39 million to be used for working capital requirements and the purchase of Minaspampa and Rosario (note 15) with principal conditions of:

   a.     Availability: from date of admission to 31 December 2019 
   b.     Term: the loan is repayable at any time by The Company, or on the earliest of: 

-- The fifth anniversary of first draw down

-- A new financing (debt or equity) of at least $60 million

-- The sale of the Company

   c.     Interest at 9% per annum (14% in case of default), paid on term 
   d.     Non-transferrable. 

At 31 March 2019 there was a loan balance of $1,662,000 (December 2017: nil), comprising capital of $1,552,000 (December 2017: nil) and interest of $111,000 (December 2017: nil).

The loan is unsecured.

Tassili Jewellery LLC - Short Term Loan

On 18 January 2018 the Group entered into a loan agreement with Tassili Jewellery LLC ("Tassili") for $2,500,000 which was drawn down in full. The loan was repayable on 31 July 2018.

Under this agreement:

a. the Company has agreed to deliver to Tassili 8,000 oz of gold bullion at a discount of 4% to London Bullion market Association ("LBMA") Gold Price (the "Production Call Off");

b. the loan facility is repaid out of 25 per cent. of the consideration payable for each consignment received by Tassili until the amount outstanding is repaid;

   c.     the loan was repayable in full by 31 July 2018.  This payment was not made. 

The Group incurred an arrangement fee of $250,000 which was charged to Finance Costs (note 5).

In November 2018, the loan terms were amended to:

   a.     a final cash payment of $2,194,200 due by 31 December 2018, this payment was not made; 
   b.     the Production Call Off volume increased to 24,000oz of gold production; 

c. Tassili were given a charge over Tri-Valley International Limited (the group Company owning the shares of Minera Tres Valle S.A.C. which holds the Oro Pesa concession).

At 31 March 2019, the Company repaid a total of $1,156,000 in total with no gold production yet delivered.

20. Earnings per share

Earnings per share has been included based on the relevant number of shares in the Company following the group reorganisation but prior to the issue of shares to raise new funds. The calculation of earnings per share is based on the following and number of shares in issue in VIM PLC:

 
                                                  15 months    12 months 
                                                   ended 31     ended 31 
                                                 March 2019     December 
                                                                    2017 
                                                       $000         $000 
 
 Loss for the year                                  (6,124)      (6,058) 
 
 Weighted number of ordinary shares             109,225,845   19,685,239 
 Loss per ordinary share - basic and diluted      ($ 0.056)    ($ 0.308) 
                                               ------------  ----------- 
 

Basic loss per share is based on the weighted average number of ordinary shares in issue during the period. Diluted loss per share would assume conversion of all potentially dilutive share options. The potential ordinary shares are anti-dilutive and therefore the diluted loss per share has not been calculated.

On 6 May 2017, VIM PLC acquired the Valley International Mining Limited group via a share for share exchange as a group reorganisation. It is of limited significance to calculate earnings per share on the historical equity of the companies forming the Group prior to the reorganisation.

21. Net Debt Reconciliation

 
                                             31 March   31 December 
                                                 2019          2017 
                                                 $000          $000 
                                            ---------  ------------ 
 
 Cash and cash equivalents                          7         3,893 
 Borrowings - due within one year             (1,344)             - 
 Borrowings - due after one year (related 
  party debt)                                 (9,364)       (2,140) 
 Net Debt                                    (10,701)         1,753 
                                            ---------  ------------ 
 
 
                                                        Liabilities from financing 
                                                                activities 
                                                   ----------------------------------- 
                                                                 Borrowings 
                                         Cash and   Due within    due after 
                                 cash equivalents    one year      1 year      Total 
                                             $000         $000         $000       $000 
                               ------------------  -----------  -----------  --------- 
 
 Net debt as at 31 December 
  2016                                          -            -      (5,750)    (5,750) 
 Cash flows                                  (15)            -            -       (15) 
 Receipts in advance of 
  shares to be issued                       3,908            -            -      3,908 
 Loan notes issued 
 - VIM BVI Loan Notes                           -            -      (1,351)    (1,351) 
 - VIM PLC Loan Notes GBP15m                    -            -      (1,188)    (1,188) 
 Loan drawn down 
 - VIM PLC Term Loan $10m                       -            -      (2,111)    (2,111) 
 Conversion to equity                           -            -        9,332      9,332 
 Other non-cash movements                       -            -      (1,072)    (1,072) 
                               ------------------  -----------  -----------  --------- 
 Net debt as at 31 December 
  2017                                      3,893            -      (2,140)      1,753 
 Cash flows                               (3,886)            -            -    (3,886) 
 VIM PLC Term Loan $10m 
 - Loan drawn down                              -            -      (7,754)    (7,754) 
 - Conversion to equity                         -            -        2,761      2,761 
 - Interest charge                              -            -        (568)      (568) 
 VIM PLC Term Loan GBP39m 
 - Loan drawn down                              -            -      (2,382)    (2,382) 
 - Interest charge                              -            -        (111)      (111) 
 - FX gain on revaluation                       -            -           80         80 
 - Repayment                                    -            -          750        750 
 Short term loan draw down 
 - Loan drawn down                              -      (2,500)            -    (2,500) 
 - Repayment                                    -        1,156            -      1,156 
 Net debt as at 31 March 
  2019                                          7      (1,344)      (9,364)   (10,701) 
                               ------------------  -----------  -----------  --------- 
 

22. Financial instruments

The Group's principal financial instruments comprise cash and cash equivalents, trade and other receivables and trade and other payable. The Group's accounting policies and method adopted, including the criteria for recognition, the basis on which income and expenses are recognized in respect of each class of financial assets, financial liability and equity instrument are set out in note 2.

The Group does not use financial instruments for speculative purposes.

The principal financial instruments used by the Group, from which financial instrument risk arises, are as follows:

 
                                               31 March   31 December 
                                                   2019          2017 
                                                   $000          $000 
                                              ---------  ------------ 
 
 Financial assets 
 Trade and other receivables                          -             - 
 Cash and cash equivalents                            7         3,893 
 Total financial assets                               7         3,893 
                                              ---------  ------------ 
 
 Financial liabilities measure at amortised 
  cost 
 Trade and other payables                         5,419         1,409 
 Amounts due to related parties                   2,803           779 
 Short term loan                                  1,344             - 
 Related party long term debt                     9,364         2,140 
 Deferred consideration                          46,852           471 
                                              --------- 
 Total financial liabilities                     65,782         4,799 
                                              ---------  ------------ 
 

Capital management

The Group manages its capital to ensure that it will be able to continue as a going concern while attempting to maximise the return to stakeholders through the optimisation of the debt and equity balance.

The capital structure of the group consists of issued capital and related party loans.

Risk management

The Group is exposed to financial risk due to the nature of its business and the financial assets and liabilities that it holds. The following discussion reviews material financial risks, quantifies certain of the associated exposures, and explains how these risks are managed.

Market risk

Market risk is the risk that the future cash flow of a financial instrument will fluctuate because of changes in market prices. For purposes of this disclosure the Group segregates market risk into three categories: fair value risk, interest risk and currency risk.

Fair value risk

Fair value risk is the potential for loss from an adverse movement, excluding movements relating to changes in interest rates and foreign exchange currency rates, because of changes in market prices. The Group does not have any significant exposure to fair value risk.

Interest rate risk

Interest rate risk relates to the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Group incurs interest rate risk in loan notes issued to a director and substantial shareholder as described in note 19.

Currency risk

Currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates. The Group periodically has accounts receivable and accounts payable denominated in foreign currencies, primarily in British Sterling (GBP), UAE Dirhams (AED) and Peruvian Soles (PEN).

The carrying amounts of the Group's financial instruments are denominated in the following currencies at each reporting year:

 
 31 March 2019                        PEN       GBP    AED        USD      Total 
                                     $000      $000   $000       $000       $000 
                                 --------  --------  -----  ---------  --------- 
 
 Financial assets 
 Trade and other receivables            -         -      -          -          - 
 Cash and cash equivalents              -         -      -          7      7 
                                        -         -      -          7          7 
                                 --------  --------  -----  ---------  --------- 
 
 Financial liabilities measure 
  at 
  amortised cost 
 Trade and other payables           3,548         -     13      1,858      5,419 
 Amounts due to related 
  parties                               -         -      -      2,803      2,803 
 Short term loan                                                1,344      1,344 
 Related party long term 
  debt                                  -     1,662      -      7,702      9,364 
 Deferred consideration                 -         -      -     46,852     46,852 
                                 --------  --------  -----  ---------  --------- 
                                    3,548     1,662     13     60,559     65,782 
                                 --------  --------  -----  ---------  --------- 
 
 Net asset (liability)            (3,548)   (1,662)   (13)   (60,552)   (65,775) 
                                 --------  --------  -----  ---------  --------- 
 
 
 31 December 2017                  PEN    GBP    AED       USD     Total 
                                  $000   $000   $000      $000      $000 
                                 -----  -----  -----  --------  -------- 
 
 Financial assets 
 Trade and other receivables         -      -      -         -         - 
 Cash and cash equivalents           -      8      9     3,876     3,893 
                                 -----  -----  -----  --------  -------- 
                                     -      8      9     3,876     3,893 
                                 -----  -----  -----  --------  -------- 
 
 Financial liabilities measure 
  at amortised cost 
 Trade and other payables            -     95      4     2,595     2,694 
 Loans and borrowings                -      -      -     2,140     2,140 
 Deferred consideration              -      -      -       471       471 
                                 -----  -----  -----  --------  -------- 
                                     -     95      4     5,206     5,305 
                                 -----  -----  -----  --------  -------- 
 
 Net asset (liability)               -   (87)      5   (1,330)   (1,412) 
                                 -----  -----  -----  --------  -------- 
 

The sensitivity analyses in the table below details the impact of changes in foreign exchange rates on the Group's post-tax profit for each reporting year.

It is assumed that the named currency is strengthening or weakening against all other currencies, while all the other currencies remain constant.

If the USD strengthened or weakened by 10% against the other currencies, with all other variables in each case remaining constant, then the impact on the group's post-tax profit would be gains or losses as:

 
         Strengthen   Weaken 
               $000     $000 
        -----------  ------- 
 
 2019 
 GBP            108    (108) 
 AED            100    (100) 
 PEN            154    (154) 
 
 
 2017 
 GBP              8      (8) 
 AED              1      (1) 
        -----------  ------- 
 

Credit risk

Credit risk is the risk that one party to a financial instrument will cause a financial loss for the other party by failing to discharge an obligation. Credit risk arises from cash held with banks and amounts receivable. The maximum exposure to credit risk is equal to the carrying value of these financial instruments.

Liquidity Risk

Liquidity risk is the risk that the Group will not be able to meet its obligations as they become due. The Group manages its liquidity risk by forecasting cash flows from operations and anticipating any investing and financing activities.

The Group's ability to develop its properties and recover their carrying values is dependent on the ability to raise the required funding through debt, joint venture opportunities and/or equity issuances.

The maturity profile of the Group's financial liabilities at the reporting dates based on contractual undiscounted payments are summarised below:

 
                                   31 March   31 December 
                                       2019          2017 
                                       $000          $000 
                                  ---------  ------------ 
 Within 1 year 
 Trade and other payables             5,419         1,409 
 Amounts due to related parties       2,803           779 
 Loans and borrowings                 1,344           188 
 Deferred consideration              42,295           188 
 
 Between 1 to 5 years 
 Loans and borrowings                 9,364         2,140 
 Deferred consideration                   -           283 
 
                                     61,225         4,987 
                                  ---------  ------------ 
 

*Deferred consideration excludes $4.56 million share consideration in relation to the acquisition of Karmin Peru S.A.C (note 25).

23. Purchase and disposal of ZL Minera (Casma)

In March 2017, the Group acquired, through its subsidiary Company Bi Valley Peru S.A.C ("BVP") the entire share capital of ZL Minera S.A.C ("ZLM") including the Ximenita de Casma mining concession for total consideration of $750,000: of which $250,000 was paid on 15 July 2017; $200,000 was payable on 15 January 2018; and the balance was due on 15 January 2019.

ZLM also entered into an Option Agreement to acquire the Ximenita de Casma II and III mining concessions for total consideration of $750,000, payable as: $150,000 due on 15 December 2017; $100,000 due no later than 15 July 2018; $100,000 due no later than 15 January 2019; and the balance of $400,000 due no later than 15 December 2020.

The identifiable assets and liabilities acquired were:

 
                                                                           Fair value 
                                            Net book     Fair value        recognized 
                                               value     adjustment    on acquisition 
                                                $000           $000              $000 
                                         -----------  -------------  ---------------- 
 
 Trade creditors and accruals                   (41)              -              (41) 
 Corporation tax liability                      (15)              -              (15) 
 Intangible asset: Mining concession 
  rights, permits and licenses                   200          1,046             1,246 
 Deferred tax liabilities                          -          (309)             (309) 
 Total identifiable net assets 
  acquired                                       144            737               881 
                                         -----------  -------------  ---------------- 
 
 Consideration                                                                    881 
 
 Goodwill arising from the acquisition                                              - 
                                                                     ---------------- 
 

The fair value of the consideration was $881,000 of which $450,000 was paid. The discounted fair value of the deferred consideration at 31 December 2017 is $471,000 and is included in the total deferred consideration at 31 December 2017 as follows:

 
                                   $000 
 Due within one year                188 
 Due more than one year             283 
                                  ----- 
 Total deferred consideration       471 
                                  ----- 
 

If the acquisition of ZL Minera had been completed on 1 January 2017, its contribution to the VI Mining Group's revenue and its loss for the year ended 31 December 2017 would have been approximately $nil and $nil respectively.

The effect of the acquisition on cash flows is as follows:

 
                                                  $000 
 Consideration settled in cash                     450 
 Less: cash and cash equivalent of ZL Minera         - 
                                                 ----- 
 Net cash flow on acquisition                      450 
                                                 ----- 
 

Disposal

In January 2018 the Group commenced a dispute with the seller of the three Ximenita de Casma mining concessions (together "the Concessions") regarding breach of warranty and has withheld all milestone payments. The seller issued a notice of claim in respect of the failure to make these payments.

The Group was subsequently informed that the seller had cancelled the Option Agreement in relation to the Concessions and has transferred the shares of ZL Minera S.A.C away from BVP. The Group understands that the seller acted improperly with the escrow agent to exercise his charge over the shares of the ZL Minera S.A.C. The seller has taken these actions due to non-payment of the consideration payments that were due. This was notwithstanding that the escrow agent and seller had been notified that the Company was holding the funds as a retention against claims for breach of warranty as it was entitled to do.

The Group no longer owns or control ZL Minera S.A.C. or the mining concessions, and has presented the details of the carrying value of identifiable assets and liabilities disposed of and sales consideration are as follows:

 
                                                          15 months 
                                                       period ended 
                                                           31 March 
                                                               2019 
                                               $000            $000 
                                             ------  -------------- 
 Consideration 
 
   *    Reversal of deferred consideration                      471 
 Less: net assets disposed of 
 Concession assets                            1,246 
 Deferred tax liabilities                     (309) 
 Reversal of other payables                     130 
 Corporation tax liability                     (15) 
                                             ------  -------------- 
                                                            (1,052) 
 
 Loss on disposal                                             (581) 
                                                     -------------- 
 

24. Purchase of Minaspampa and Rosario mining concessions and certain fixed assets

On 2 February 2018, the Group entered into an agreement to acquire, through its wholly owned subsidiary One Valley (Peru) S.A.C., the Minaspampa Project and the Rosario Project (located in the La Libertad region in the northwest of Peru) for a total undiscounted purchase consideration of $65.4 million payable in the mixture of cash and share consideration as:

-- $5.3 million in cash which was paid on 2 February 2018 which constituted completion;

-- the issue of 2,000,000 ordinary nil par value shares of The Company;

-- $2.5 million in cash which was paid on 9 February 2018;

-- $3 million in cash to be paid on or before 28 February 2018 (deferred until 5 March 2018) of which $1,125,000 has been paid at 31 March 2019;

-- $20.25 million in cash payable on 15 August 2018; and

-- $20.25 million in cash payable on 15 April 2019; summarised as follows:

The Company entered into a guarantee in favour of the Sellers in respect of the payment obligations of One Valley (Peru).

The acquisition agreements include a framework agreement which sets out the framework for the sale and purchase of the Rosario and Minaspampa projects and individual contracts for the transfer of each of the concessions, the granting of exploration rights, the transfer of assets, the transfer of land and rights over land.

Pursuant to the terms of the acquisition agreements, One-Valley (Peru) acquired the right to carry out exploration activities over all of the concessions constituting the Minaspampa and Rosario projects as from 2 February 2018 for a period of 18 months, i.e. until all Concessions have transferred.

At inception, the contract value and fair value of the total purchase consideration was:

 
                                        Contract     Fair 
                                           value    Value 
                                            $000     $000 
                                       ---------  ------- 
 
 Cash                                      8,925    8,925 
 2,000,000 ordinary shares                14,148   14,148 
 Deferred cash payment consideration      42,375   39,302 
                                       ---------  ------- 
 Total                                    65,448   62,375 
                                       ---------  ------- 
 

The fair value of the 2,000,000 ordinary shares issued as part of the consideration was based on the share price on 5 March 2018 of GBP5.125 per share (exchange rate of GBP: USD was $1.3803).

The identifiable assets and liabilities acquired were:

 
                                                                          Provisional 
                                            Net book     Fair value        fair value 
                                               value     adjustment        recognised 
                                                                       on acquisition 
                                                $000           $000              $000 
                                         -----------  -------------  ---------------- 
 
 Trade creditors and accruals                  (127)              -             (127) 
 Plant and machinery                             460          4,323             4,783 
 Land                                            243              -               243 
 Intangible assets: mining concession 
  rights, permits and licenses                64,748        (3,020)            61,728 
 Site restoration obligation                       -        (4,252)           (4,252) 
 Total identifiable net assets 
  acquired                                    65,324        (2,949)            62,375 
                                         -----------  -------------  ---------------- 
 
 Purchase consideration                                                        62,375 
 
 Goodwill arising from the acquisition                                              - 
                                                                     ---------------- 
 

The value of the deferred consideration payments at 31 March 2019 is:

 
                                        Contract     Fair 
                                           value    value 
                                            $000     $000 
                                       ---------  ------- 
 
 Deferred consideration payments due      42,375   42,295 
                                       ---------  ------- 
 
 Due within one year                      42,375   42,295 
 Due more than one year                        -        - 
                                       ---------  ------- 
                                          42,375   42,295 
                                       ---------  ------- 
 

The movement on the deferred consideration in the period is:

 
                                                  $000 
                                             --------- 
 31 December 2017                                    - 
 Total consideration due on signing             62,375 
 Shares issued                                (14,148) 
 Cash payments made                            (8,925) 
 Discount unwind finance charge (note 5)         2,993 
                                             --------- 
 31 March 2019                                  42,295 
                                             --------- 
 
 

25. Purchase of Karmin Peru S.A.C. - Cushuro

On 27 July 2018, VI Mining entered into a share purchase agreement with Karmin Exploration Inc. to acquire all the shares of its wholly-owned subsidiary Karmin Peru S.A.C., which holds 100% interest in the Cushuro Gold Project (which comprises the Gaby 2, Gaby 3, Gaby 8, Pandereta 007 and Corona 3113 mineral concessions).

The Gaby 2, Gaby 3 and Gaby 8 concessions comprise three contiguous claims totaling 2,477 hectares and are immediately adjacent to Minaspampa. Title and registration is pending on the Pandereta 007 and Corona 3113 concessions. Karmin Peru reported $nil revenues and profits for the years ended 30 April 2018 and 2017.

The acquisition completed on 28 January 2019.

The purchase price of $27.5 million was satisfied by:

a. Initial Consideration - the initial issuance of 5,753,138 nil par value ordinary shares of VI Mining; and

b. Deferred Consideration - calculated on the second anniversary of completion, based upon a "look back" formula, and satisfied by nil par value shares of the Company.

Initial Consideration

The fair value of the 5,753,138 ordinary shares issued on completion was $6,056,000, based on the share price on 28 January 2019 of GBP0.80 per share (exchange rate of GBP: USD was $1.3157).

Deferred Consideration

The potential deferred consideration shares to be issued on 29 January 2021 (the "Adjustment Date") will be calculated based on a predetermined formula of:

a. the volume weighted average price ("VWAP") of VI Mining ordinary shares for the 30 days prior to the Adjustment Date;

b. the number of additional ordinary shares to issue is calculated by dividing $27.5 million by the higher of the VWAP and the $ equivalent of GBP1.75p per share (the "Floor Price").

If the result is negative, no additional ordinary shares of VI Mining will be issued.

The Company considers the deferred consideration shares to be a financial liability until the Adjustment Date.

The fair value of the deferred consideration liability has been estimated using the Black Scholes valuation model up to the Adjustment Date.

The inputs used by management in the Black-Scholes valuation model as:

 
                            28 January    31 March 
                                  2019      2019 
                           -----------  ----------- 
 VI Mining share price             80p          40p 
 Exercise price                    Nil          Nil 
 Expected life                 2 years   1.83 years 
 Risk free rate                   2.1%         2.1% 
 Expected dividend yield           Nil          Nil 
 Expected volatility             54.4%        54.4% 
 

At inception, on January 28, 2019, the fair value of the deferred consideration was $12,414,000.

Initial acquisition accounting

The initial acquisition accounting for the purchase of Karmin Peru S.A.C. was:

 
                                                                           Fair value 
                                            Net book     Fair value        recognised 
                                               value     adjustment    on acquisition 
                                                $000           $000              $000 
                                         -----------  -------------  ---------------- 
 
 Trade creditors and accruals                   (60)              -              (60) 
 Intangible assets: mining concession 
  rights, permits and licenses                11,368          7,162            18,530 
 Total identifiable net assets 
  acquired                                    11,308          7,162            18,470 
                                         -----------  -------------  ---------------- 
 
 Purchase consideration 
 Initial consideration shares                                                   6,056 
 Deferred consideration                                                        12,414 
                                                                     ---------------- 
                                                                               18,470 
                                                                     ---------------- 
 
 Goodwill arising from the acquisition                                              - 
                                                                     ---------------- 
 

Karmin Peru S.A.C. did not own the land associated with the concession. There is no plant and machinery on site and the concession has never been explored or exploited, so no site restoration provision was required.

Deferred consideration at 31 March 2019

At 31 March 2019 the fair value of the deferred consideration was valued at $4,557,000.

The $7,857,000 decrease in the fair value has been recorded as a change in fair value of deferred consideration consolidated statement of comprehensive loss (note 5).

26. Related party disclosures

Key management

Key management personnel compensation has been disclosed in the directors' report. The amounts owed to the Directors are:

 
                             31 March   31 December 
                                 2019       2017 
                                 $000          $000 
                            ---------  ------------ 
 Amounts due to Directors 
 David Sumner                   2,069           779 
 Lucianno Giorffino               564        - 
 Jide Zeitlin                     114             - 
 Aamir Quraishi                    50             - 
 Johnny Martin Smith                6             - 
                                2,803           779 
                            ---------  ------------ 
 

David Sumner funding - $10 million and GBP39 million debt facilities

As set out in note 19 the Company is currently reliant on loans and facilities provided to it by David Sumner, a Director, to support the funding of the further consideration payable under acquisition agreements and to support the working capital requirements of the Company and the Group. GBP39 million of Mr Sumner's loans and facilities provided to the Company are supported by legally binding back to back loan agreements with third parties, one of whom, being a member of the Board, is related to the Company.

David Sumner - Green Sky Innovations DMCC

During 2017 the Company rented office space from Green Sky Innovations DMCC ("GSI"), a Company controlled by David Sumner, for a cost of $40,000 in the 15 months ended 31 March 2019 (year ended 31 December 2017: $nil). At 31 March 2019 there was $nil payable to GSI (December 2017: $nil).

David Sumner - SG Management DMCC

During the period ended 31 March 2019 the Company recharged $52,000 (2017: nil) of costs to SG Management DMCC. At 31 March 2019 $52,000 (2017: nil) was still to be received.

Lucianno Giorffino

Lucianno Giorffino is a partner at Vargas Pareja Abogados & Consultores ("Vargas") a law firm in Peru. In the 15 months ended year ended 31 March 2019 the Company incurred fees with Vargas of $50,000 (year ended 31 December 2017: $230,000). At 31 March 2019 there was an amount owed to Vargas of $37,000 (31 December 2017: $85,000).

Lucianno Giorffino is a lawyer for and a representative director of Proyectos La Patagonia S.A.C ("PLP") a mining exploration service Company in Peru. In the 15 months ended 31 March 2019, PLP provided the Company with exploration services $15,000 (year ended 31 December 2017: $188,000). At 31 March 2019 there was an amount owed to PLP of $18,000 (31 December 2017: $23,000).

Lucianno Giorffino has a financial interest in Crushers Peru SAC. Crusher Peru SAC provided the construction services to Minera Tres Valle S.A.C. (a group Company). In the 15 months ended 31 March 2019, Crushers provided the Company with construction services of $163,000 (year ended 31 December 2017: $666,000). At 31 March 2019 there was an amount owed to Crushers Peru of $196,000 (31 December 2017: $14,000).

Intragroup transactions

Transactions between the Company and its subsidiaries and between subsidiaries have been eliminated on consolidation.

27. Performance Share Options

On 23 June 2017 the Company granted 19,500,000 Performance Share Options to three of the directors of the Company, with an exercise price of GBP1.00 and a term of 10 years.

The Company used a Black-Scholes valuation model to estimate the grant date fair value of each Performance Share Option to be $0.52 per option.

The principal inputs in to the model were:

-- Share price: GBP0.76p

-- Exercise price: GBP1.00p

-- Risk free rate: 1.05%

-- Volatility: 50%

-- Term: 10 years.

The Performance Share Options had cliff vesting dates of 31 December 2018, 2019 and 2020; with vesting dependant on specific deliverables being met.

The Company formed the opinion that that first performance conditions for the 31 December 2018 vesting date would not likely be met and no accounting charge was recognised in the reporting period.

On 6 November 2017, 5,000,000 Performance Share Options were cancelled for nil consideration. On 1 March 2018 all remaining Performance Share Options were cancelled for nil consideration.

28. Capital Commitments

The Group had capital commitments of $nil (December 2017: nil for plant and machinery spend).

29. Operating lease commitment

The Company rents office premises in Lima and Dubai under non-cancellable operating leases. The future minimum rentals payable under non-cancellable operating leases are as follows:

 
                               31 March   31 December 
                                   2019          2017 
                                   $000          $000 
                              ---------  ------------ 
 
 Within one year                    126           123 
 Between one and five years          66           134 
 More than five years                 -             - 
                              ---------  ------------ 
                                    192           257 
                              ---------  ------------ 
 

30. Guarantees

The Company entered into a guarantee in favour of the vendors of Minaspampas and Rosario in respect of the payment obligations of One Valley (Peru).

Tassili were given a charge over Tri-Valley International Limited (the group Company owning the shares of Minera Tres Valle S.A.C. which holds the Oro Pesa concession).

31. Ultimate controlling party

At 31 March 2019, the Company's immediate parent undertaking is Lamb Mining Limited, a Company incorporated in British Virgin Islands, owning 71.9% of the issued share capital of the Company. The ultimate parent Company is SGHL, a Company incorporated in Jersey.

David Sumner is therefore considered the ultimate controlling party by virtue of his controlling interest of SGHL.

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.

END

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August 30, 2019 11:06 ET (15:06 GMT)

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