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Bullion Resources PLC
20 August 2003
BULLION RESOURCES PLC
CHAIRMAN'S REPORT
FOR THE PERIOD ENDED 31 DECEMBER 2002
Bullion Resources PLC ("the Company") was listed on The Alternative Investment
Market of The London Stock Exchange on 10 June 2002. This followed a successful
private placing of 12,500,000 ordinary shares of 1p each at a price of 40p per
share. The Company has three subsidiaries - Black Reef Gold Limited and its two
mining operations in South Africa, Addeney Investment Holdings (Proprietary)
Limited and Drylands Goldmine (Proprietary) Limited, all of which were acquired
as set out in the Prospectus.
Significant excitement existed at the Board, Adviser, Broker and Investor level.
During the week of promoting the Company to the London investors the gold price
was at a five year high and the market was very bullish on gold. The South
African Rand was trading in excess of eleven Rand to the US Dollar. Market
belief was then that since the Company would be incurring costs in a soft
currency and paying dividends in a hard currency, the Company was ideally
positioned to benefit, on both the gold price and an expected further weakening
of the Rand.
It was envisaged that the Company would implement its vision speedily and
commence mining at Drylands by July 2002 and at both Palmietfontein and New
Machavie by April 2003. Full production was anticipated to be achieved by
December 2002 for Drylands and December 2003 for both Palmietfontein and New
Machavie.
Because of the envisaged low cost capital acquisition philosophy, a mill house
comprising nine complete used mills, of which seven were in good condition, was
acquired in July 2002 for an amount of R2.9m. This was at a cost lower than
budgeted.
Whilst earthworks and civils commenced for the plant comprising two mills at
Palmietfontein, surface rights owners created delays at New Machavie and the
Drylands plant commissioning ran into difficulties. During construction at
Palmietfontein an electrical accident occurred which tragically resulted in
a fatality. An official inquiry was held and the outcome is awaited.
The media reported in November 2002 that a complaint had been lodged against Dr.
Deon Vermaakt, the competent person who had produced the Competent Person's
Report contained in the Company's Placing Document. The complaint was eventually
submitted to Dr. Vermaakt on 23 April 2003 and he undertook to provide the
Company with details of the complaint and his response. Despite numerous
requests to both the Geological Society who allegedly lodged the complaint and
to The South African Council of Natural Scientific Professions, Dr. Vermaakt's
governing body, as well as to Dr Vermaakt personally, the Company has been
unable to determine details of the complaint as it is sub judice. Accordingly,
Dr. Vermaakt declined his previous undertaking to the Company to provide a copy
of the complaint and outline the details of his response. Dr. Vermaakt's
position remains that he stands by his report and denies all allegations. As a
result, as appears later in this Report, the Company resolved to carry out its
own investigations with respect to the Drylands and Palmietfontein properties.
At that stage a full mining authority had not been granted and mining at
Drylands was restricted to the previously mined heap leach pad dumps. Management
felt confident that they would overcome the difficulties and the Board announced
on 30 October 2002 that the Drylands plant would produce its first gold in
December 2002. However, only meagre gold recoveries emerged in January and
February 2003.
To compensate for the loss in late production at Drylands and for the loss of
planned production at New Machavie, construction of a second mill and Carbon in
pulp ("CIP") plant was commenced at Drylands. This was intended to also serve as
a back-up for the existing Drylands plant.
As a result of the various problems facing the Company, the Board met with the
Company's Advisers and Brokers on 28 January 2003, following which Mr. Mellett
resigned as a director. The executive responsibilities were realigned, an
experienced engineer appointed and various candidates interviewed to supplement
executive management. In addition, the Chairman commissioned a risk review to
identify and quantify all known and potential risks. A firm of metallurgical
consultants was appointed to reassess the metallurgy composition and advise on
recovery improvement. From this assessment it became clear that the initial
Drylands plant was inadequately and inappropriately constructed an a CIP plant
as opposed to a Carbon in leach ("CIL") plant and that metallurgy and grade were
issues that had to be addressed. As a result all further capital expenditure was
put on hold.
These issues were discussed with the Company's Advisers and Brokers following
which an announcement was made on 16 April 2003 that its operations at Drylands
and Palmietfontein had been put on hold, that the Managing Director, Mr. Van Den
Berg had resigned, and that Mr. Mellett who had resigned as a director had been
suspended from his duties. The Chairman was appointed to oversee the day-to-day
control of the Company. It was further announced that Lion Mining Finance of
London ("LMF") had been appointed to advise on the status of current operations,
their future potential and to assist the Board with evaluation of acquisitions
currently under discussion.
BULLION RESOURCES PLC
CHAIRMAN'S REPORT
FOR THE PERIOD ENDED 31 DECEMBER 2002
Following an initial report by LMF and after discussions with the Advisers and
Brokers, the Board voluntarily requested the suspension of the Company's shares
on The Alternative Investment Market on 25 April 2003.
The LMF report was finalised and concluded that in view of the operational and
construction difficulties, the marginal and complex grade of the resource and
the present economic conditions (strong Rand and a low gold price), it was
uneconomical to continue with the present resource base.
Since the LMF report the Company has sourced further information from companies
previously involved with Drylands and Palmietfontein including information on
drilling previously carried out. This information is presently being digitized
and interpolated and an appropriate report will be made to shareholders.
It was accordingly decided by the Board, after consultation with the major
investors and shareholders, together with the Company's Advisers and Brokers
that alternative investment opportunities would be pursued and existing cash
resources be conserved.
As a result, three major investments have been identified and discussions are
presently underway to reach an early conclusion with regard to the way forward.
Whatever investment the Company ultimately decides to embark upon the Directors
have resolved that it must be one of substance and one which will not involve
any unacceptable risk or significant outlay of the Company's funds in the
acquisition cost. Paramount in the Board's thinking is that shareholder value
must be restored as quickly as possible but also as safely as possible. The
Company is also mindful of the effects of any large dilution of its present
share base and this is being addressed as part of the negotiations.
The Company is further considering a substantial restructure of its Board of
Directors including the appointment of several new directors one of whom will
become the executive head of the Company. Announcements will be made as soon as
agreement is reached.
The Company is also cognizant of the need to keep its shareholders informed on
all matters and has resolved to issue regular bulletins as to all of the above
matters.
Full and final settlement agreements have now been completed with Messrs Mellett
and Van Den Berg with respect to both their involvement as directors and
employees of the Company. As part of the settlement each of them agreed to
enable the Company to make use of 80% of their shareholdings in the Company in
its sole discretion for the purposes of use in future acquisitions by the
Company, as part of incentive packages for new employees and directors and for
transfer to investors.
Under the rules of The Alternative Investment Market the Company was due to have
published its Annual Report by the 30 June 2003. Because of the decision to
cease the two mining operations the Board has decided to treat the accounts on a
discontinued operation basis, which has resulted in a significant diminution of
asset values. As a result the accounts needed to be reassessed in order to
incorporate this change. The net effect of this assessment is now reflected in
the Annual Report published herewith. This treatment can be re-adjusted should
operations recommence.
The Company's suspension has now served its purpose insofar as it has enabled
the Company to investigate the problems of its operations and management,
drastically cut costs and, accordingly, the Company has requested its Nominated
Adviser, Grant Thornton, to lift the suspension with immediate effect upon
publication of the Annual Report.
I wish to thank my other Board members for their assistance and co-operation
during this difficult period and specifically thank Patrick Kennedy for his
leadership and hard work in finalising the Annual Report. And for the hard work
by Daryl Bank in assisting your Chairman.
14 August 2003
Johan Meiring
Chairman
BULLION RESOURCES PLC
CONSOLIDATED PROFIT AND LOSS ACCOUNT
FOR THE PERIOD ENDED 31 DECEMBER 2002
Period
ended
31 December
Notes 2002
#
Administrative expenses (including exceptional
write downs of #1,474,747) (1,715,433)
-----------
Operating loss 5 (1,715,433)
Other interest receivable and similar income 52,334
Interest payable and similar charges 6 (90)
-----------
Loss on ordinary activities before taxation (1,663,189)
Tax on loss on ordinary activities 7 -
----------
Loss on ordinary activities after taxation 15 (1,663,189)
===========
Basic and Diluted loss per ordinary share 8 (6.16)p
===========
BULLION RESOURCES PLC
STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES
FOR THE PERIOD ENDED 31 DECEMBER 2002
Period
ended
31 December
Notes 2002
#
Loss for the financial period (1,663,189)
Currency translation differences on foreign
currency net investments 211,999
----------
Total recognised gains and losses relating to
the period (1,451,190)
==========
BULLION RESOURCES PLC
CONSOLIDATED BALANCE SHEET
AS AT 31 DECEMBER 2002
Notes 2002
#
Fixed assets
Deferred exploration costs - tangible assets 10 559,750
Current assets
Debtors 12 114,855
Cash at bank and in hand 2,671,763
---------
2,786,618
Creditors: amounts falling due within one year 13 (191,302)
---------
Net current assets 2,595,316
---------
Total assets less current liabilities 3,155,066
=========
Capital and reserves
Called up share capital 14 462,500
Share premium account 15 4,143,756
Other reserves 15 211,999
Profit and loss account 15 (1,663,189)
----------
Equity shareholders' funds 16 3,155,066
=========
The financial statements were approved by the Board on 14 August 2003.
D M Bank
Director
BULLION RESOURCES PLC
COMPANY BALANCE SHEET
AS AT 31 DECEMBER 2002
2002
Notes #
Fixed assets
Tangible assets 10 -
Investments 11 337,500
-------
337,500
Current assets
Debtors 12 24,317
Cash at bank and in hand 2,377,856
---------
2,402,173
Creditors: amounts falling due within one year 13 (34,107)
---------
Net current assets 2,368,066
---------
Total assets less current liabilities 2,705,566
=========
Capital and reserves
Called up share capital 14 462,500
Share premium account 15 4,143,756
Other reserves 15 -
Profit and loss account 15 (1,900,690)
----------
Equity shareholders' funds 2,705,566
==========
The financial statements were approved by the Board on 14 August 2003.
D M Bank
Director
BULLION RESOURCES PLC
CASH FLOW STATEMENT
FOR THE PERIOD ENDED 31 DECEMBER 2002
Period
ended
31 December
2002
# #
Net cash inflow from operating activities 62,434
Returns on investments and servicing of finance
Interest received 52,334
Interest paid (90)
----------
Net cash inflow for returns on investments and
servicing of finance 52,244
Capital expenditure
Payments to acquire intangible assets (1,156,937)
Payments to acquire tangible assets (555,337)
----------
Net cash outflow for capital expenditure (1,712,274)
Acquisitions and disposals
Cash acquired from acquisition of
subsidiary undertakings 603
----------
Net cash inflow for acquisitions 603
and disposals
Net cash inflow before management of liquid ----------
resources and financing (1,596,993)
Management of liquid resources
Bank deposits (2,367,856)
----------
(2,367,856)
Financing
Issue of ordinary share capital 5,000,000
Cost of share issue (731,244)
---------
Issue of shares 4,268,756
---------
Net cash inflow from financing 4,268,756
---------
Increase in cash in the period 303,907
=========
BULLION RESOURCES PLC
NOTES TO THE CASH FLOW STATEMENT
FOR THE PERIOD ENDED 31 DECEMBER 2002
1 Reconciliation of operating loss to net operating cashflow 2002
#
Operating loss (1,715,433)
Exceptional write down of intangible assets 2,012,612
Exceptional write back of goodwill on consolidation (537,865)
Decrease in debtors 18,517
Increase in creditors within one year 72,604
Net effect of foreign exchange differences 211,999
---------
Net cash inflow from operating activities 62,434
=========
2 Analysis of net funds 28 January Cash flow 31 December
2002 2002
# # #
Net cash:
Cash at bank and in hand - 303,907 303,907
---------- --------- -----------
Liquid resources:
Bank deposits - 2,367,856 2,367,856
---------- --------- -----------
---------- --------- -----------
Net funds - 2,671,763 2,671,763
========== ========= ===========
3 Reconciliation of net cash flow to movement in net funds 2002
#
Increase in cash in the period 303,907
Cash outflow from increase in liquid resources 2,367,856
---------
Movement in net funds in the period 2,671,763
---------
Closing net funds 2,671,763
=========
BULLION RESOURCES PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 DECEMBER 2002
1 Accounting policies
1.1 Accounting convention
The financial statements are prepared under the historical cost convention, and
in accordance with appropriate applicable Accounting Standards and the Statement
of Recommended Practice 'Accounting for Oil and Gas Exploration, Development,
Production and Decommissioning Activities (the SORP).
1.2 Goodwill
Acquired goodwill is written off in equal annual instalments over its estimated
useful economic life.
Goodwill arising on consolidation represents the excess of the fair value of the
consideration given, over the fair values of the identifiable net assets
acquired. Negative goodwill will be written back to the profit and loss account
over the life of the mine once commercial mining has commenced.
1.3 Mining rights and development costs
In accordance with the full cost method as set out in the SORP, expenditure
including related overheads on the acquisition, exploration and evaluation of
interests in licences not yet transferred to a cost pool is capitalised under
intangible assets. Cost pools are established on the basis of geographic area.
When it is determined that such costs will be recouped through successful
development and exploration or alternatively by sale of the interest,
expenditure will be transferred to tangible assets and depreciated over the
expected productive life of the assets. Whenever a project is considered no
longer viable the associated deferred exploration and development costs are
written off to the profit and loss account.
1.4 Tangible fixed assets
Tangible fixed assets other than freehold land are stated at cost less
accumulated depreciation and impairments. Depreciation is provided at rates
calculated to write off the cost less estimated residual value of each asset
over its expected useful life as follows;
Land and buildings Freehold Land is not depreciated Buildings are
depreciated using the lesser of their useful
life or unit-of production method based on
proved and probable mineral reserves.
Mining plant and machinery Depreciated using the lesser of their useful
life or units-of production method based on
proved and probable mineral reserves.
Computer equipment 3 to 5 years
Fixtures, fittings & equipment 3 to 5 years
Motor vehicles 4 years
1.5 Leasing
Rentals payable under operating leases are charged against income on a straight
line basis over the lease term.
1.6 Investments
Fixed asset investments are stated at cost less provision for diminution
in value.
1.7 Deferred taxation
Deferred tax is recognised on all timing differences where the transactions or
events that give the group an obligation to pay more tax in the future, or a
right to pay less tax in the future, have occurred by the balance sheet date.
Deferred tax assets are recognised when it is more likely than not that they
will be recovered. Deferred tax is measured using rates of tax that have been
enacted or substantively enacted by the balance sheet date.
BULLION RESOURCES PLC
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 31 DECEMBER 2002
1 Accounting policies (continued)
1.8 Foreign currency translation
Monetary assets and liabilities denominated in foreign currencies are translated
into sterling at the rates of exchange ruling at the balance sheet date.
Transactions in foreign currencies are recorded at the rate ruling at the date
of the transaction. All differences are taken to profit and loss account.
Financial statements of overseas subsidiaries are translated at the rate ruling
at the balance sheet date. Exchange differences arising are dealt with through
reserves.
1.9 Group accounts
The financial statements present the consolidated results of Bullion Resources
PLC and all its subsidiary undertakings drawn up to the balance sheet date. No
profit and loss account has been presented for Bullion Resources PLC as
permitted by section 230 of the Companies Act 1985. The results of subsidiaries
sold or acquired are included in the profit and loss account up to, or from the
date control passes. Intra-group sales and profits are eliminated fully on
consolidation.
1.10 Financial instruments
The group's financial instruments comprise cash and various items such as
debtors and creditors that arise directly from its operations. The group has
not entered into derivative transactions nor does it trade in financial
instruments as a matter of policy.
2 Loss on ordinary activities before taxation and Net Assets
All of the group's turnover and loss before taxation arose from the group's
principal activities.
The group operates in the following geographical segments;
Geographical market
Loss on ordinary activities
before taxation
2002
#
United Kingdom (242,440)
South Africa (1,420,749)
----------
(1,663,189)
==========
Geographical market
Net Assets
2002
#
United Kingdom 2,705,566
South Africa 449,500
---------
3,155,066
=========
BULLION RESOURCES PLC
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 31 DECEMBER 2002
3 Acquisition of subsidiary undertakings
On 30 May 2002, the entire share capital of Black Reef Gold Limited was acquired
by Bullion Resources PLC for which the consideration was satisfied by the
allotment and issue of 33,750,000 Ordinary Shares at par. Goodwill arising on
the acquisition of Black Reef Gold Limited has been capitalised and fully
amortised. The purchase of Black Reef Gold Limited has been accounted for by the
acquisition method of accounting.
Loss after taxation of Black Reef Gold Limited was as follows:
#
1 January 2002 to date of acquisition -
==========
Financial period ended 31 December 2002 (1,694,108)
==========
The net assets of Black Reef Gold Limited acquired were as follows:
Book Value Fair value to Fair value at
group date of
acquisition
# # #
Fixed assets
Tangible 4,413 4,413 4,413
Intangible 367,196 367,196 367,197
Goodwill 488,479 488,479 488,479
Current assets
Debtors 133,372 133,372 133,372
Cash at Bank 603 603 603
------- ------- -------
Total assets 994,063 994,063 994,063
Liabilities
Trade creditors (118,698) (118,698) (118,698)
-------- -------- --------
Total liabilities (118,698) (118,698) (118,698)
-------- -------- --------
Net Assets 875,365 875,365 875,365
======== ======== ========
Negative goodwill capitalised (537,865)
========
Satisfied by:
Issue of shares 337,500
========
BULLION RESOURCES PLC
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 31 DECEMBER 2002
The subsidiary undertakings acquired during the period made the following
contributions to and utilisation of group cash flow.
#
Net cash inflow from operating activities 293,333
Returns on investment and servicing of finance -
Taxation -
Capital expenditure and financial investment (1,712,274)
Management of liquid resources -
Financing from parent 1,712,248
---------
Increase in cash 293,307
=========
Analysis of net inflow of cash in respect of the purchase of the
subsidiary undertakings:
Cash at bank and in hand acquired 603
=========
4 Results of Parent Company
As permitted by section 230 of the Companies Act 1985, the profit and loss
account of the parent company is not presented as part of these financial
statements. The parent company's loss for the financial period was #1,900,690.
5 Operating loss 2002
#
Operating loss is stated after charging;
Provisions for diminution in value of intangible assets 1,474,747
Operating lease rentals 7,995
Auditors' remuneration 16,439
Remuneration of auditors for non-audit work 11,667
=========
In addition fees of #102,973 were paid to Grant Thornton for work done in
connection with flotation. These are charged to share premium account.
6 Interest payable 2002
#
Bank interest 90
========
BULLION RESOURCES PLC
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 31 DECEMBER 2002
7 Taxation
Current tax charge -
==========
Factors affecting the tax charge for the period
Loss on ordinary activities before taxation (1,663,189)
----------
Loss on ordinary activities before taxation multiplied
by standard rate of UK corporation tax of 30% (498,957)
Effects of:
Other tax adjustments 498,957
----------
Current tax charge -
==========
8 Loss per share
The calculation of basic loss per ordinary share is based on a loss after tax of
#1,663,189 and on 26,979,208 ordinary shares, being the weighted average number
of shares in issue during the period ended 31 December 2002.
There is no dilutive effect of share options on the basic loss per share.
BULLION RESOURCES PLC
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 31 DECEMBER 2002
9 Intangible fixed assets
Group
Mining rights Goodwill Mine Total
and development
development costs
costs
# # # #
Cost
At 28 January 2002 - - - -
Negative goodwill on acquisition - (537,865) - (537,865)
Additions 395,920 - 76,017 1,156,937
Acquired upon acquisition of
subsidiary 14,397 488,479 352,799 855,675
--------- -------- --------- ---------
At 31 December 2002 410,317 (49,386) 1,113,816 1,474,747
--------- -------- --------- ---------
Amortisation
At 28 January 2002 - - - -
Exception write down 410,317 (49,386) 1,113,816 1,474,747
--------- -------- --------- ---------
At 31 December 2002 410,317 (49,386) 1,113,816 1,474,747
--------- -------- --------- ---------
Net book value
At 31 December 2002 - - - -
========= ======== ========= =========
At 27 January 2002 - - - -
========= ======== ========= =========
In light of the review of the operations in the subsidiary undertakings,
goodwill arising on the acquisition of Black Reef Gold Limited, Addeney
Investment Holdings (Proprietary) Limited and Drylands Goldmine (Proprietary)
Limited are being fully amortised in 2002.
The parent company does not own any intangible assets.
BULLION RESOURCES PLC
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 31 DECEMBER 2002
10 Tangible fixed assets
Group
Land and Mining plant Fixtures, Motor Total
buildings and fittings & vehicles
Freehold machinery equipment
# # # # #
Cost
At 28 January 2002 - - - - -
Additions 71,985 417,086 4,941 61,325 555,337
Acquired upon acquisition of subsidiary 4,319 94 - - 4,413
-------- --------- ------- -------- ---------
At 31 December 2002 76,304 417,180 4,941 61,325 559,750
-------- --------- ------- -------- ---------
Depreciation
At 28 January 2002 & at 31 December
2002 - - - - -
-------- --------- ------- -------- ---------
Net book value
At 31 December 2002 76,304 417,180 4,941 61,325 559,750
======== ========= ======= ======== =========
The directors are of the view that the tangible fixed assets of the group should
realise at least the values reflected above.
The parent company does not own any tangible fixed assets
BULLION RESOURCES PLC
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 31 DECEMBER 2002
11 Fixed asset investments
Company
Investment in
subsidiary
#
Cost
At 28 January 2002
Additions 337,500
---------
At 31 December 2002 337,500
---------
Net book value
At 31 December 2002 337,500
=========
At 27 January 2002 -
=========
Company Country of Class of share Proportion
incorporation capital held held by
Parent company Group
% %
Subsidiary undertakings
Black Reef Gold Limited Bahamas Ordinary 100
Drylands Goldmine
(Proprietary) Limited South Africa Ordinary 100
Addeney Investment Holdings
(Proprietary) Limited South Africa Ordinary 100
Capital and Loss for the
reserves period
2002 2002
# #
Black Reef Gold Limited (803,685) (1,694,108)
Addeney Investment Holdings (Proprietary) Limited (62,470) (2,027,671)
Drylands Goldmine (Proprietary) Limited (803,176) (803,183)
========== ==========
The above figures have been extracted from the individual accounts of the
subsidiary undertakings and are not the consolidated figures and therefore do
not reflect the group position. The activities of the Company's subsidiary
undertakings have now ceased.
The principal activities of the subsidiary undertakings during the financial
period were as follows;
Black Reef Gold Limited - investment holding company
Addeney Investment Holdings (Proprietary) Limited - gold mining in South Africa
BULLION RESOURCES PLC
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 31 DECEMBER 2002
Drylands Goldmine (Proprietary) Limited - gold mining in South Africa
On 30 May 2002, the entire share capital of Black Reef Gold Limited was acquired
by Bullion Resources PLC for which the consideration was satisfied by the
allotment and issue of 33,750,000 Ordinary Shares at par.
On 23 May 2002, the entire share capital of Addeney Investment Holdings
(Proprietary) Limited was acquired by Black Reef Gold Limited in consideration
for the issue of 1,054,750 shares in Black Reef Gold Limited.
On 23 May 2002, the entire share capital of Drylands Goldmine (Proprietary)
Limited was acquired by Addeney Investment Holdings (Proprietary) Limited for
R12 million.
12 Debtors 2002
#
Group
Other debtors 114,855
=========
Amounts falling due after more than one year and included in the debtors
above are:
2002
#
Other debtors 6,845
========
2002
#
Company
Amounts advanced to subsidiary undertakings 1,712,250
Write down (1,712,250)
----------- -
Other debtors 24,317
--------
24,317
========
BULLION RESOURCES PLC
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 31 DECEMBER 2002
13 Creditors; amounts fulling due within one year 2002
#
Group
Trade creditors 154,349
Taxes and social security costs 9,137
Accruals and deferred income 27,816
--------
191,302
========
2002
#
Company
Trade creditors 5,130
Taxes and social security costs 1,158
Accruals and deferred income 27,819
--------
34,107
========
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 31 DECEMBER 2002
14 Share capital 2002
#
Authorised
400,000,000 Ordinary shares of 1p each 4,000,000
==========
Allotted, called up and fully paid
46,250,000 Ordinary shares of 1p each 462,500
==========
By an option deed dated 5 June 2002 the Company granted an option to
Anthony Thomas Ogilvie Thompson in respect of 400,000 ordinary shares at a
price per share of #0.40. The option vests over a period of two years from
Admission and must be exercised before the third anniversary of the date of
the option deed.
By an option deed dated 5 June 2002 the Company granted an option to
Patrick William Kennedy in respect of 400,000 ordinary shares at a price
per share of #0.40. The option vests over a period of two years from
Admission and must be exercised before the third anniversary of the date of
the option deed.
By an option deed dated 5 June 2002, the Company granted an option to
Insinger Townsley in respect of 1,200,000 ordinary shares at a price per
share of #0.40. The option must be exercised before the third anniversary
of the date of the option deed.
By an option deed dated 5 June 2003 the Company granted an option to
Anthony Thomas Ogilvie Thompson in respect of 400,000 ordinary shares at a
price per share of #0.40. The option vests over a period of two years from
Admission and must be exercised before the third anniversary of the date of
the option deed.
By an option deed dated 5 June 2002 the Company granted an option to
Patrick William Kennedy in respect of 400,000 ordinary shares at a price
per share of #0.40, The option vests over a period of two years from
Admission and must be exercised before the third anniversary of the date of
the option deed.
By an option deed dated 5 June 2002, the Company granted an option to
Insinger Townsley in respect of 1,200,000 ordinary shares at a price per
share of #0.40. The option must be exercised before the third anniversary
of the date of the option deed.
15 Statement of movements on reserves
Group Share Other Profit
premium reserves and loss
account (see below) account
# # #
Loss for the period - - (1,663,189)
Foreign currency translation
differences - 211,999 -
Premium on shares issued during
the period 4,875,000 - -
Cost of share issue written to
share premium account (731,244) - -
--------- --------- ----------
Balance at 31 December 2002 4,143,756 211,999 (1,663,189)
========= ========= ==========
Other reserves
Currency translation reserves
Currency translation reserve increase 211,999
---------
Balance at 31 December 2002 211,999
=========
Company
Share Profit
premium and loss
account account
# #
Balance at 28 January 2002 - -
Premium on shares issued during the
period 4,875,000 -
Cost of share issue written off to
share premium account (731,244) -
Loss for the period (1,900,690)
--------- ----------
Balance at 31 December 2002 4,143,756 (1,900,690)
========= ==========
16 Reconciliation of movements in shareholders' funds 2002
#
Group
Loss for the financial period (1,663,189)
Other recognised gains and losses 211,999
Issue of shares 5,337,500
Cost of share issue written off to share
premium account (731,244)
---------
Net addition to shareholders' funds 3,155,066
Opening shareholders' funds -
---------
Closing shareholders' funds 3,155,066
=========
17 Contingent liabilities
A VAT claim by the South African Revenue Service may arise should the South
African subsidiary companies' temporary cessation of operations continue
indefinitely. A liability for environmental rehabilitation will arise in
the event of the permanent closure of the mines. During construction at
Palmietfontein an electrical accident occurred which tragically resulted in
a fatality. An official inquiry was held and the outcome is awaited.
The directors are unable to quantify the value of the contingent
liabilities at present.
18 Financial instruments
The main risks arising from the group's financial instruments are interest
rate risk and foreign currency risk. At the year end the group did not have
any borrowings. Accordingly, the group does not have a liquidity risk.
The group is financed at present by cash balances held as a mixture of
current and deposit accounts, and currency accounts, as appropriate to the
group's operational needs. The group has transactional currency exposures
as any income is expected to arise in South Africa Rand, while its expenses
are expected to be payable in South Africa Rand, US Dollars and # Sterling.
At the year end, the group had three overseas subsidiary companies whose
revenue and expenses are denominated in foreign currencies. It is not the
group's policy to protect the group's sterling balance sheet or
transactional exposures from movements in exchange rates.
With the exception of the analysis of currency exposures, the disclosure
below excludes short-term debtors and creditors.
Financial assets
The interest rate risk and currency profile of the financial assets of the
group as at 31 December 2002 is as follows:
US Dollar # Sterling South Africa Total
# # # #
Cash at bank and at hand
- Fixed interest rate - - - -
- Floating interest rate - 2,367,856 258,579 2,626,435
- Non-interest bearing - 10,000 35,328 45,328
-------- --------- --------- ---------
- 2,377,856 293,907 2,671,763
======== ========= ========= =========
The benchmark for interest on the floating interest rate financial assets
is the UK Bank rate.
Financial liabilities
The group does not have any other financial liability.
Fair value of financial assets and liabilities
For all of the financial assets and financial liabilities above the fair
value equates to book value.
19 Financial commitments
At 31 December 2002 the group had annual commitments under non-cancellable
operating leases as follows:
Land and
buildings Other
2002 2002
# #
Expiry date:
Within one year 17,741 4,721
Between two and five years 69,487 17,840
-------- --------
87,228 22,561
======== ========
20 Directors' emoluments 2002
#
Emoluments for qualifying services 125,233
========
None of the directors are accruing retirement benefits under pension
schemes in respect of qualifying services.
By an option deed dated 5 June 2002 the Company granted an option to
Anthony Thomas Ogilvie Thompson in respect of 400,000 ordinary shares at a
price per share of #0.40. The option vests over a period of two years from
Admission and must be exercised before the third anniversary of the date of
the option deed.
By an option deed dated 5 June 2002 the Company granted an option to
Patrick William Kennedy in respect of 400,000 ordinary shares at a
price per share of #0.40. The option vests over a period of two years from
Admission and must be exercised before the third anniversary of the date of
the option deed.
21 Employees
Number of employees
The average monthly number of employees (including directors) during the
period was:
2002
Number
Administration 4
Management 6
Pre-production 29
-------
39
=======
Employment costs
#
Wages and salaries 117,747
Social security costs 370
---------
118,117
=========
Wage costs of #305,051 in subsidiary undertakings were originally
capitalised and subsequently written off.
22 Capital Commitments
There were no capital commitments as at 31 December 2002.
23 Related party transactions
The following related party transactions occurred during the period:
(i) Pumphrey Kennedy Chartered Accountants
During the period the company purchased accountancy services of
#6,000. Patrick Kennedy, a director of Bullion Resources PLC, was a
partner in Pumphrey Kennedy Chartered Accountants.
(ii) Accstar Financial Services (Proprietary) Limited
During the period, the group purchased secretarial services of
R100,000 from Accstar Financial Services (Proprietary) Limited. Daryl
Bank, a director of Bullion Resources PLC, is a director of Accstar
Financial Services (Proprietary) Limited.
(iii)Metarand Limited
During the period, the group purchased furniture at a cost of R10,000
from Metarand Limited. J B Meiring, a director of Bullion Resources
PLC, is a director of Metarand Limited.
(iv) J B Meiring
J B Meiring funded a series of working capital expenses of Drylands
(Proprietary) Limited amounting to R1.1m during the period 1 January
2002 to 22 May 2002.
(v) Black Reef Gold Limited
By an agreement dated 30 May 2002 as set out in the Prospectus, the
following directors were each directors of companies which vended
shares held by those companies in Black Reef Gold Limited to Bullion
Resources PLC in exchange for shares in Bullion Resources PLC: S F
Mellett, J Van Den Berg, J B Meiring, D M Bank, D R Davis and D D
Roodt.
(vi) S F Mellett
On 23 May 2002, an agreement was entered into between Addeney
Investment Holdings (Proprietary) Limited and S F Mellett whereby the
entire share capital of Drylands Goldmine (Proprietary) Limited was
acquired by Addeney Investment Holdings (Proprietary) Limited for
R12m. Per arrangement, Mr Mellett acted in his own right as well as in
the capacity of a trustee on behalf of himself and several parties
including the following related parties for 5% each: M A Mellett, S F
Mellett (junior), J Mellett. J B Meiring, J Van Den Berg. D M Bank,
B S Bank. D D Roodt and D R Davis.
(vii)Brackenjan Beleggings CC
Drylands Goldmine (Proprietary) Limited has a lease agreement with
Brackenjan Beleggings CC for a period of five years, for the premises
of its head office. The rent paid for the period amounted to R46,740.
S F Mellett, a former director of Bullion Resources PLC, is a major
member of Brackenjan Beleggings CC.
(viii)Waterkon Waterdigting en Konstruksie CC
During the period, Addeney Investment Holdings (Proprietary) Limited
paid R1,050,792 and Drylands Goldmine (Proprietary) Limited paid
R62,753 for building and civil services rendered by Waterkon
Waterdigting en Konstruksie CC, a corporation controlled by S F
Mellett's brother.
(ix) Denko Projects CC
During the period, Drylands Goldmine (Proprietary) Limited paid
R361,399 for office renovation services rendered by Denko Projects CC,
a corporation controlled by S F Mellett's brother.
24 Post balance sheet events
Material post balance sheet events are disclosed in the Chairman's Report
and Directors' Report.
Full and final settlement agreements were reached with S F Mellett and J
Van Den Berg, both as directors and executives. As part of the settlement
#35,000 was paid to Mr Mellett's nominee and R300,000 to Mr Van Den Berg,
their two year employment contracts were terminated and both of them agreed
to enable the Company at its sole discretion to utilise 80% of their
shareholdings in the Company, as incentive packages for new employees and
directors and for transfer to investors.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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