TIDMVAST
Vast Resources plc / Ticker: VAST / Index: AIM / Sector: Mining
15 September 2015
Vast Resources plc
("Vast" or "the Company")
Final Results
Vast Resources plc, the AIM listed resource and development company,
announces its final results for the period ended 31 March 2015.
HIGHLIGHTS
Financial
-- Loss of $6.8 million to 31 March 2015 as mine development programme
continues (2014: $11.7 million)
-- Cash balance of $3.7 million as at 31 March 2015 (2014: $0.6 million)
Post period end:
-- Cash balance of $2.9 million as at 26 August 2015
Management
-- New board completes the change of focus of the Group from exploration to
production
Mine Development
-- Local investor acquired a 50% interest in Pickstone-Peerless Gold Mine
and Giant Gold Mine to enable Pickstone-Peerless Gold Mine to be put into
production. The Group maintains management control
-- Pickstone-Peerless Gold Mine development well advanced with mining
operations having commenced in June 2015 and commissioning of plant in
August 2015. First bullion sales expected within days
-- Expansion in Romania continues with acquisition of 80% interest in Baita
Plai Polymetallic Mine (formerly known as Baita Bihor Polymetallic Mine)
and, post period end, 50.1% interest in Manaila Polymetallic Mine
-- Output achieved at Manaila Polymetallic Mine on 13 August 2015 and
anticipated at Baita Plai Polymetallic Mine by late 2015.
Zambia
-- Zambian copper interests disposed of. Earn in agreement completed on
rare earth project
Funding
-- Additional equity raised during period $3.8 million, and $2.0 million
raised post period end
For further information visit www.vastresourcesplc.com or please
contact:
Vast Resources plc +44 (0) 1622 816918
Roy Tucker (Finance Director) +44 (0) 7920 189012
Roy Pitchford (Chief Executive Officer) +263 (0) 7721 69833
+40 (0) 7411 11900
+44 (0) 7793 909985
Strand Hanson Limited - Financial & Nominated Adviser www.strandhanson.co.uk
James Spinney +44 (0) 20 7409 3494
James Bellman
Daniel Stewart and Company plc - Joint Broker www.danielstewart.co.uk
Martin Lampshire +44 (0) 20 7776 6550
David Coffman
Dowgate Capital Stockbrokers Ltd - Joint Broker www.dowgatecapitalstockbrokers.co.uk
Jason Robertson +44 (0)1293 517744
Neil Badger
St Brides Partners Ltd www.stbridespartners.co.uk
Charlotte Heap +44 (0) 20 7236 1177
Hugo de Salis
CHAIRMAN'S REPORT
Strategic Highlights
At the outset of the fiscal year ending March 2015, we set a programme
to make the transition from exploration to mining, and ultimately, to
cash generation.
Our programme is on track. In Romania we have acquired a 50.per cent.
interest in the operating opencast Manaila Polymetallic Mine and have
commenced a number of projects to improve the efficiency and
productivity of the mine. It may also be possible to extend the life of
this mine by extending the open cast mine over the existing licence
boundary and by developing underground mining operations. We are also
awaiting the transfer of the mining licence for our 80 per cent. owned
underground Baita Plai Polymetallic Mine (formerly known as Baita Bihor
Polymetallic Mine).
Our 50 per cent. owned Pickstone-Peerless Gold Mine (PPGM) project in
Zimbabwe is well advanced and we expect first gold production in Q3
2015.
Overhead costs in Zimbabwe have been materially reduced.
The name-change from African Consolidated Resources plc to Vast
Resources plc has been well received. I believe it supports an important
psychological change as the company moves into a new era.
Leadership group
We have a small Board of dedicated and suitably seasoned operators. The
Board has gelled well and we operate as an effective team.
Roy Pitchford has settled in well and his expertise and knowledge of the
industry are highly valued. Roy continues to explore interesting
strategic opportunities, which will bear fruit for us in the years
ahead. He is also building a strong operational team to ensure our
mining operations are efficient and effective.
Roy Tucker continues to play an important role, covering a number of
important bases. He plays a supportive role to Roy Pitchford, along with
the finance, legal and secretarial roles.
Eric Diack provides strong financial support and expertise, as well as
valued strategic input. Eric continues to devote considerable time to
the Company, well beyond that of a typical NED.
As things stand, we are thin on executive firepower. As a result, the
Board members are under pressure, including specifically Roy Tucker, who
puts in many long hours. Once the business is generating cash, we will
need to increase the size of the executive team. We will be looking for
a suitably qualified and experienced CFO and COO during the latter half
of the year.
I would like to thank all of the Directors for the unstinting dedication
and hard work to date under extremely trying circumstances. Their
resilience under fire has been truly heartening.
Funding
We are pleased to have secured funding for our immediate requirements.
One of the Romanian mines should start generating cash in September
2015. In addition PPGM is expecting to be cash generative in the same
period. We are exploring debt finance as an alternative funding
instrument, being mindful of the significant dilution we have endured
over the last year.
Shareholding
As I thank the Directors, so too I thank the shareholders, both new and
old for their support. We remain wholly committed to bringing our assets
to fruition and acting in the best interests of our shareholders at all
times.
William Battershill
Group Chairman
STRATEGIC REPORT
Significant progress has been made during the year in transforming the
Company from an exploration company to a mining company. Romania has
developed into a major area of operation and Zambia has declined in
significance. Zimbabwe remains an area of focus, but is constrained by
negative investor sentiment at present.
Additional mining opportunities in both Romania and Zimbabwe are now
available to the Company and will be evaluated to determine whether they
are complementary and value adding to the current portfolio of mining
operations. The growth opportunities of the state mining company in
Romania, Remin SA, remain a key objective of Vast following the due
diligence exercise previously carried out by the Group on Remin's chain
of precious metal and polymetallic mines. This awaits near term new
mining legislation which will facilitate the process.
Significant transactions have been undertaken and are highlighted below.
Cash spent and projects update
The Group opened the financial year with cash of $0.6 million and closed
it with $3.7 million. The issue of 508 million new ordinary shares
raised $3.8 million. The total cash utilised in operating the Group was
$2.9 million.
During the year the Group has disposed of a number of assets,
principally the Harare office ($1.4 million - July 2014) and the
exploration aircraft ($0.2 million - February 2015). The cash realised
from these sales has been utilised in meeting the running costs of a
radically streamlined operation. $0.3 million was spent in Romania and
$1.0 million in Zimbabwe while a total of $0.1 million was spent in
Zambia before the disposal of this project in March 2015 (see below).
A further analysis of KPIs monitored by the Group is given in the
Directors' report.
Romania
The acceleration of the evaluation of the mining opportunities in
Romania, referred to in the September 2014 interim report, has borne
fruit as the Company now has two polymetallic mining projects in its
portfolio, whilst retaining its interest in other opportunities through
the work that has already been undertaken in the state mining company,
Remin SA.
The first major development in Romania is the acquisition of the Baita
Plai Polymetallic Mine (BPPM), through the purchase of 80 per cent. of
the shares of Mineral Mining SA, which is in administration (MMSA). Due
to the fact that MMSA was in administration, the mining licence had been
transferred to a state owned company. The state mining company is
required to transfer the licence back to MMSA provided MMSA becomes
solvent and properly funded. The funding made available to the Company
achieves this. The transfer back of the licence is currently awaited,
and good practical progress has recently been made in order to
facilitate this. Details of the acquisition and of the mine licence
process are further described in note 15.
The mine licence area contains eight skarn pipes, the first two of which
currently contain the majority of the 1.8 million tonnes of mineral
resource, in situ grading 2.19% copper; 128 g/t silver; 3.46% zinc;
3.07% lead and 1.41 g/t gold.
This mine is fully developed to 18 levels with all the necessary mining
equipment, ore transport and hoisting facilities in place. Milling and
flotation circuits are in place enabling the Company to recommission
operations reasonably quickly and cost effectively. Some of the
equipment is old, but serviceable, and will be replaced through an
orderly modernisation programme.
Significant areas of the unexplored skarn pipe are accessible, subject
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to re-entry procedures, and will enable the resources of the Company to
be increased and upgraded in future.
Following completion of the transfer of the mining licence BPPM is
expected to enter production in late 2015.
In addition, the Group has acquired, after the year-end and subject to
registration at the Romanian Trade Registry, a majority interest in
Sinarom Mining Group SRL, a company that holds the mining rights in the
Manaila Polymetallic Mine (MPM) in Suceava County, northern Romania. The
mine has 1.8 million tonnes of mineral resource, in situ grading 1.17%
copper; 45.9 g/t silver; 1.86% zinc; 0.95% lead; and 0.63 g/t gold. This
is a working mine which will underpin the metamorphosis of the Group
into a fully-fledged mining operation. Production commenced in August
2015. A sale of the first concentrate batch is now being negotiated
between different buyers.
The successful operation and expansion of these two mines will be an
excellent precursor to the negotiations and securing of the larger mines
contained in the Remin SA group of mines.
Zimbabwe Operations
- Pickstone-Peerless Gold Mine (PPGM)
A significant development in Zimbabwe has been the involvement of a
partner in the PPGM. In November 2014 the Group received a major capital
injection into Dallaglio Investments (Private) Limited, the Zimbabwean
subsidiary which, through subsidiaries, holds the mining rights to the
PPGM claims. This has enabled the development of the mine to be
completed and the mine to be put into production. At the date of
reporting the construction of the new facilities is substantially
finished, mining operations have commenced and the plant has been
commissioned and is in operation. First sales are expected within days
and this will complete the transformation of the Group's activities in
Zimbabwe from exploration to production.
- Dalny Gold Mine
Vast was not able to proceed with this transaction under which it sought
to acquire the Dalny Mine proximal both to Pickstone-Peerless Gold Mine
and to Giant Gold Mine from Falgold for $8.5 million due to insufficient
funding. Falgold was due to repay $500,000 to the Group from the initial
deposit payment made to it. $417,000 of this amount remains outstanding
and is secured by a charge undertaking on the Dalny Gold Mine. Dalny
Gold Mine remains an option for a future development. Of interest is the
fact that another gold mining company in Zimbabwe has successfully
implemented this process and is currently processing its ore through the
Dalny plant. This is a temporary measure and so Vast may be able to
revisit this option for gold resources it currently holds or may secure
in the future.
- Staff rationalisation
The transformation from an exploration venture into a mining Company has
not been achieved without some social cost. While as many staff as
possible have been transferred to the new project, inevitably the
termination of exploration has resulted in further redundancies. A final
tranche of eight staff were retrenched during the year which brings the
complement of staff in the country not directly involved in mining
operations to one. Coupled with the disposal of the Harare office
building this has radically reduced the Group's overhead expenditure in
Zimbabwe.
Zambia
The Kalengwa Kasempa copper project has been disposed of and the details
of the disposal are contained in note 13. The Group retains ownership of
the Nkombwa Hill rare earth project and agreement has been reached with
the new owners of ACR Zambia to facilitate the development of this
property over the next three years. In doing so, the Group's ownership
will be diluted to 35% of that held currently, but in a project which
should develop materially.
Fund raising
At the time of reporting prior to providing for contingencies and new
opportunities we have identified an additional requirement of $1.5
million working capital following the acquisition of our interest in
MPM. This has resulted in a cash raising of $2.0 million before costs
through equity placement and subscriptions announced on 27 July and 7
August 2015. In the event of any contingencies or limited scale new
opportunities that may arise our first preference will be to raise debt
finance.
Impairment of projects
A comprehensive review for impairment on all the projects was
undertaken. No impairment was considered necessary. Further details of
the projects and split are contained in note 11.
Risk management
The Board has identified the following as being the principal strategic
and operational risks (in no order of priority)
-- Risk - Going concern
The Group considers it has sufficient cash for its immediate purposes.
This position could be undermined by unforeseen delays, cost overruns or
adverse commodity price movements which could impact the Group's going
concern status.
Mitigation/Comments
The Board will continue to engage potential investors to aid
understanding of the fundamental strength of the Group's business so as
to be in a position to attract additional funding if required. The
Board will also whenever possible retain sufficient cash margin to
offset contingencies.
-- Risk - Mining
Mining of natural resources involves significant risk. Drilling and
operating risks include geological, geotechnical, seismic factors,
industrial and mechanical incidents, technical failures, labour disputes
and environmental hazards.
Mitigation/Comments
Use of strong technical management together with modern technology and
electronic tools assist in reducing risk in this area. Good employee
relations are also key in reducing the exposure to labour disputes. The
Group is committed to following sound environmental guidelines and is
keenly aware of the issues surrounding each individual project.
-- Risk - Commodity prices
Commodity prices are subject to fluctuation in world markets and are
dependent on such factors as mineral output and demand, global economic
trends and geo-political stability.
Mitigation/Comments
The Group's management constantly monitors mineral grades mined and cost
of production to ensure that mining output remains economic at all
times. Once output stabilises beyond the initial development phase, it
will be possible to hedge future price fluctuations by entering into
forward selling contracts. Beyond that the Group aims to remain a low
cost producer.
-- Risk - Retention of Key Personnel
The successful achievement of the Group's strategies, business plans and
objectives depends upon its ability to attract and retain certain key
personnel.
Mitigation/Comments
The Group is committed to the fostering of a management culture where
management is empowered and where innovation and creativity in the
workplace is encouraged. In order to retain key personnel it has
introduced a "Share Appreciation Right Scheme" for Directors and senior
executives, and will address a bonus scheme for others.
-- Risk - Country and Political
The Group's operations are based in Zimbabwe and Romania. Emerging
market economies could be subject to greater risks, including legal,
regulatory, economic and political risks, and are potentially subject to
rapid change.
Mitigation/Comments
The Group's management team is highly experienced in its areas of
operation. The Group routinely monitors political and regulatory
developments in each of its countries of operation. In addition, the
Group actively engages in dialogue with relevant Government
representatives in order to keep abreast of all key legal and regulatory
developments applicable to its operations. The Group has a number of
internal processes and checks in place to ensure that it is wholly
compliant with all relevant regulations in order to maintain its mining
or exploration licences within each country of operation. In Zimbabwe
the Group will take the necessary steps to comply with the
Indigenisation Regulations. These country risks are further addressed in
the Notes to the Financial Statements.
-- Risk - Social, Safety and Environmental
The Group's success may depend upon its social, safety and environmental
performance, as failures can lead to delays or suspension of its mining
activities.
Mitigation/Comments
The Group takes its responsibilities in these areas seriously and
monitors its performance across these areas on a regular basis.
-- Risk - Impairment of intangible assets
The Group has licences or claims over a number of discrete areas of
exploration. Review of deferred exploration expenses involves
significant judgement and this increases the risk of misstatement.
Mitigation/Comments
It is the Group's policy for the Board to review progress every quarter
on each area in order to approve the timing and amount of further
expenditure or to decide that no further expenditure is warranted. If
no further expenditure is warranted for any area then the related costs
will be written off. The board measures progression in each of its claim
areas based on a number of factors including specific technical results,
international commodity markets, claim holding costs and economic
considerations. Further details are included in notes 2 and 11 of the
financial statements.
Outlook
The establishment of PPGM, BPPM and MPM as operating and cash generating
mines will complete the transformation of Vast into a metals mining and
production company. New mining opportunities will enable the Company to
expand and grow. Romania and Zimbabwe are both developing very good
technical and financial management teams whose commitment has made the
transformation of the Company possible.
The advice and support of fellow Directors, both at Vast and at
subsidiary levels, has been invaluable. The cordial and positive
relationship that has developed with our joint venture partners, Grayfox,
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in Zimbabwe, augers well for the future development of the PPGM and the
Giant Gold Mine.
A special note of thanks to the operational management teams in both
Romania and Zimbabwe who have significantly contributed to the
transformation of Vast into a mining company. They have worked to very
tight timelines, often in difficult circumstances, but delivered what
was required.
On behalf of the Board
Roy A. Pitchford
Group Chief Executive Officer
Report of the Directors
for the year ended 31 March 2015
The Directors present their report together with the audited financial
statements for the year ended 31 March 2015.
Results and dividends
The Group statement of comprehensive income is set out below and shows
the loss for the year.
The Directors do not recommend the payment of a dividend (2014: nil).
Principal activities, review of business and future developments
The Group is engaged in the exploration for and development of mineral
projects in Sub-Saharan Africa and Eastern Europe. Since incorporation
the Group has built an extensive and interesting portfolio of projects
in Zimbabwe and more recently in Romania. Both the Chairman's and
Strategic Reports provide further information on the Group's projects
and a review of the business.
The Directors consider the Group's key performance indicators to be the
rate of utilisation of the Group's cash resources and the on-going
control of its mining costs and production facilities. These are
detailed below.
Cash resources
As can be seen from the statement of financial position, cash resources
for the Group at 31 March 2015 were approximately $3.7 million (2014:
$0.6 million). During the year the cash outflows from operations were
$2.9 million (2014: $4.1 million) and from investing activities was $1.4
million (2014: $6.3 million). The Directors monitor the cash position of
the Group closely and seek to ensure that there are sufficient funds
within the business to allow the Group to meet its commitments and
continue the development of the assets. The net monthly cash expenditure
in the year to March 2015 was approximately $325,000 (2014: $870,000).
Much of the cash spent was on Pickstone-Peerless Gold Mine with the
objective of creating cash-generative operations in the near term.
The Directors closely monitor the development of the Group's assets and
focus in particular on ensuring that the regulatory requirements of the
licences are in good standing at all times, that any capital expenditure
on the assets is closely controlled and monitored and that, as the Group
nears first production from its Pickstone-Peerless Gold mine, the
forward price of gold is reviewed. Details of the Group's spend on
capital items in the year are set out in notes 8 and 9 of the financial
statements.
The loss arising from activities during the year of $6.8 million ($11.7
million differs from the cash outflows mainly due to the loss on
discontinued operations in Zambia. The business continues to focus on
its key assets.
Financial instruments
Details of the use of financial instruments by the Company and its
subsidiary undertakings are contained in note 21 of the financial
statements.
Directors
The Directors who served during the year and up to the date hereof were
as follows:-
Date of Appointment Date of Resignation
Roy Tucker 5 April 2005 -
Roy Pitchford 7 April 2014 -
William Battershill 30 May 2014 -
Eric Kevin Diack 30 May 2014 -
* Stuart Bottomley 27 May 2005 29 May 2014
* Michael Kellow 22 March 2006 29 May 2014
* Neville Nicolau 24 April 2013 29 May 2014
* Former Director
Directors' interests
The interests in the shares of the Company of the Directors who served
during the year were as follows:-
Ordinary
Ordinary Shares
Shares held held at 31 Share Options
at 31 March Share Options held at 31 March held at 31
2015 March 2015 2014 March 2014
William
Battershill 70,913,375 - 15,700,395 -
* Stuart
Bottomley 8,026,000 500,000 8,026,000 -
Eric Diack - - - -
* Michael
Kellow 9,704,509 3,500,000 9,704,509 3,500,000
*Neville
Nicolau 400,000 2,000,000 400,000 2,000,000
Roy
Pitchford - - - -
Roy Tucker 26,398,717 3,500,000 9,668,417 3,500,000
Total 115,442,601 9,500,000 27,798,926 9,000,000
Share Options
Outstanding Lapsed Outstanding Final
Exercise at 31 March Movements during at 31 March Vesting exercise
price 2014 / Issued year 2015 date date
*Stuart
Bottomley
2.0p - 500,000 - 500,000 Jan - 15 Dec - 16
*Michael
Kellow
50% Aug-12
50%
5.0p 3,500,000 - - 3,500,000 Aug-13 Aug-15
*Neville
Nicolau
4.0p 2,000,000 - - 2,000,000 May-14 Mar-16
Roy
Tucker
50% Aug-12
50%
5.0p 3,500,000 - - 3,500,000 Aug-13 Aug-15
Total 9,000,000 500,000 - 9,500,000
* Former Director
Employee Benefit Trust
The following shares are held in an unapproved Employee Benefit Trust.
The Director's beneficial interest in these shares is as follows:
Exercised Granted
Outstanding during during Outstanding
Subscription at 31 March last 12 last 12 at 31 March
price 2014 months months 2015 Exercise date
50% Jul 2010
*Stuart and 50% Jul
Bottomley 8.75p 1,500,000 - - 1,500,000 2011
50% Aug 2011
and 50% Aug
9.00p 750,000 - - 750,000 2012
50% Aug 2012
and 50% Aug
6.00p 1,000,000 - - 1,000,000 2013
3,250,000 - - 3,250,000
50% Jul 2010
*Michael and 50% Jul
Kellow 8.75p 2,000,000 - - 2,000,000 2011
50% Aug 2011
and 50% Aug
9.00p 1,000,000 - - 1,000,000 2012
50% Aug 2012
and 50% Aug
6.00p 3,500,000 - - 3,500,000 2013
6,500,000 - - 6,500,000
50% Jul 2010
Roy and 50% Jul
Tucker 8.75p 1,500,000 - - 1,500,000 2011
50% Aug 2011
and 50% Aug
9.00p 750,000 - - 750,000 2012
50% Aug2012 and
6.00p 2,750,000 - - 2,750,000 50% Aug 2013
5,000,000 - - 5,000,000
Total 14,750,000 - - 14,750,000
See note 23 for further details of the EBT
* Former Director
Directors' remuneration
Salary/ Termination
Fees Payments Pension Medical aid Total
2015
2015 $'000 $'000 $'000 $'000 $'000
* Stuart Bottomley 16 - - - 16
William Battershill 81 - - - 81
Eric Diack 73 - - - 73
* Michael Kellow 28 - 3 - 31
* Neville Nicolau 11 - - - 11
Roy Pitchford 188 - - - 188
Roy Tucker 165 - - - 165
562 - 3 - 565
2014
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* Stuart Bottomley 60 60
* Craig Hutton 228 340 568
* Michael Kellow 280 19 4 303
* Lloyd Manokore 71 71
* Neville Nicolau 60 60
Roy Tucker 220 220
919 340 19 4 1,282
* Former Director
Part of the remuneration of Roy Tucker represents UK office services
which are provided by Roy Tucker under his consultancy contract at his
expense. His remuneration also includes irrecoverable VAT. Of the
remuneration paid, $11,800 (2014: $55,692) has been settled by the issue
of shares.
Of the remuneration to Michael Kellow, $6,296 (2014: $59,533) has been
settled by the issue of shares.
The Company has qualifying third party indemnity provisions for the
benefit of the Directors.
Auditors
All of the current Directors have taken all the steps that they ought to
have taken to make themselves aware of any information needed by the
Company's auditors for the purposes of their audit and to establish that
the auditors are aware of that information. The Directors are not aware
of any relevant audit information of which the auditors are unaware.
Events after the reporting date
These are more fully disclosed in note 29.
By order of the Board
Roy Tucker
Secretary
11 September 2015
Statement of Directors' responsibilities
The Directors are responsible for preparing the Strategic and Directors'
reports and the financial statements in accordance with applicable law
and regulations.
Company law requires the Directors to prepare financial statements for
each financial year. Under that law the Directors have elected to
prepare the Group and Company financial statements in accordance with
International Financial Reporting Standards (IFRSs) as adopted by the
European Union. 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 Company and of the
profit or loss of the Group for that year. The Directors are also
required to prepare financial statements in accordance with the rules of
the London Stock Exchange for companies trading securities on the
Alternative Investment Market.
In preparing these 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 as adopted
by the European Union, subject to any material departures disclosed and
explained in the financial statements;
-- prepare the financial statements on the going concern basis unless it is
inappropriate to presume that the Company will continue in business.
The Directors are responsible for keeping adequate accounting records
that are sufficient to show and explain the Company's transactions and
disclose with reasonable accuracy at any time the financial position of
the Company and enable them to ensure that the financial statements
comply with the requirements of the Companies Act 2006. They are also
responsible for safeguarding the assets of the Company and hence for
taking reasonable steps for the prevention and detection of fraud and
other irregularities.
Website publication
The Directors are responsible for ensuring the annual report and the
financial statements are made available on a website. Financial
statements are published on the Company's website in accordance with
legislation in the United Kingdom governing the preparation and
dissemination of financial statements, which may vary from legislation
in other jurisdictions. The maintenance and integrity of the Company's
website is the responsibility of the Directors. The Directors'
responsibility also extends to the ongoing integrity of the financial
statements contained therein.
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF VAST RESOURCES PLC
We have audited the financial statements of Vast Resources Plc for the
year ended 31 March 2015 which comprise the group statement of
comprehensive income, the group and company statement of changes in
equity, the group and company statements of financial position, the
group and company statements of cash flows and the related notes. The
financial reporting framework that has been applied in their preparation
is applicable law and International Financial Reporting Standards
(IFRSs) as adopted by the European Union and, as regards to the parent
company financial statements, as applied in accordance with the
provisions of the Companies Act 2006.
This report is made solely to the Company's members, as a body, in
accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our
audit work has been undertaken so that we might state to the Company's
members those matters we are required to state to them in an auditor's
report and for no other purpose. To the fullest extent permitted by law,
we do not accept or assume responsibility to anyone other than the
Company and the Company's members as a body, for our audit work, for
this report, or for the opinions we have formed.
Respective responsibilities of Directors and auditors
As explained more fully in the statement of Directors' responsibilities,
the Directors are responsible for the preparation of the financial
statements and for being satisfied that they give a true and fair view.
Our responsibility is to audit and express an opinion on the financial
statements in accordance with applicable law and International Standards
on Auditing (UK and Ireland). Those standards require us to comply with
the Financial Reporting Council's (FRC's) Ethical Standards for
Auditors.
Scope of the audit of the financial statements
A description of the scope of an audit of financial statements is
provided on the FRC's website at www.frc.org.uk/auditscopeukprivate.
Opinion on financial statements
In our opinion:
-- the financial statements give a true and fair view of the state of the
Group's and the parent company's affairs as at 31 March 2015 and of the
Group's loss for the year then ended;
-- the Group financial statements have been properly prepared in accordance
with IFRSs as adopted by the European Union;
-- the parent company financial statements have been properly prepared in
accordance with IFRSs as adopted by the European Union and as applied in
accordance with the provisions of the Companies Act 2006; and
-- the financial statements have been prepared in accordance with the
requirements of the Companies Act 2006.
Emphasis of matter - Going concern
In forming our opinion on the financial statements, which is not
modified, we have considered the adequacy of the disclosures made in
Note 1 to the financial statements concerning the Group's and Company's
ability to continue as a going concern. Further funds will be required
to finance the Group's and Company's working capital requirements and
the development of the Group's Romanian assets. If cash flow from
existing sources was not sufficient to meet the Group's commitments the
Directors are confident that additional funds could be successfully
raised from other sources. However, they have no binding agreements in
place to date. These conditions indicate the existence of a material
uncertainty which may cast significant doubt about the Group's and
Company's ability to continue as a going concern. The financial
statements do not include the adjustments that would result if the
Company was unable to continue as a going concern.
Emphasis of Matter - Indigenization Regulation Zimbabwe
In forming our opinion on the financial statements, which is not
modified, we have considered the adequacy of the Directors' disclosure
of the impacts of the Indigenisation Regulation in Zimbabwe, (see basis
of preparation in note 1 and note 27). This Regulation, as set in its
present format would require transfer of 51% of all Zimbabwean projects
to designated local entities, and as explained in note 27, this gives
rise to a significant uncertainty over the ability of the Group and
Company to realise the value of the Group's assets. The financial
statements do not include the adjustments that would result if 51% of
the Zimbabwean projects were required to be transferred. These
adjustments would principally be significant impairment of the Group's
Zimbabwean exploration assets and the Company's investment in
subsidiaries.
Opinion on other matters prescribed by the Companies Act 2006
In our opinion the information given in the Strategic report and
Directors' report for the financial year for which the financial
statements are prepared is consistent with the financial statements.
Matters on which we are required to report by exception
We have nothing to report in respect of the following matters where the
Companies Act 2006 requires us to report to you if, in our opinion:
-- adequate accounting records have not been kept by the parent company, or
returns adequate for our audit have not been received from branches not
visited by us; or
-- the parent company financial statements are not in agreement with the
accounting records and returns; or
-- certain disclosures of Directors' remuneration specified by law are not
made; or
-- we have not received all the information and explanations we require for
our audit.
Scott McNaughton (senior statutory auditor)
For and on behalf of BDO LLP, statutory auditor
London
United Kingdom
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11 September 2015
BDO LLP is a limited liability partnership registered in England and
Wales (with registered number OC305127).
Group statement of comprehensive income
for the year ended 31 March 2015
31 March 2015 31 March 2014
Group Group
Notes $'000 $'000
Share option credit/(expense) 23 25 (173)
Other administrative expenses (5,888) (4,331)
Impairment of intangible assets 11.1 - (6,712)
Project evaluation expenses 11.2 (130) (438)
Administrative expenses (5,993) (11,654)
Operating loss 3 (5,993) (11,654)
Finance income 5 3 4
Loss before and after taxation from continuing
operations (5,990) (11,650)
Loss on discontinued operation, net of tax 13.v (1,033) -
Gain on business combination 15 169 -
Total loss for the year (6,854) (11,650)
Other comprehensive income/(loss)
Items that maybe reclassified subsequently to profit
or loss
Gain/(loss) on available for sale financial assets 18 (62)
Total other comprehensive income/ (loss) 18 (62)
Total comprehensive loss for the year (6,836) (11,712)
Total comprehensive loss attributable to:
- the equity holders of the parent company (6,599) (11,712)
- non-controlling interests (237) -
(6,836) (11,712)
Loss per share - basic and diluted 9 (0.77)cents (1.48) cents
The accompanying accounting policies and notes below form an integral
part of these financial statements.
Group Statement of Changes in Equity
for the year ended 31 March 2015
Attributable to owners of the parent company
Foreign
Share currency Available
Share Share option translation for sale EBT Retained Non-controlling
capital premium reserve reserve reserve reserve deficit Total interests Total
$'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000
At 31 March 2013 14,004 62,751 331 (1,843) 31 (3,944) (27,428) 43,902 - 43,902
Loss for the year - - - - - - (11,650) (11,650) - (11,650)
Other comprehensive
losses - - - - (62) - - (62) - (62)
Total comprehensive
loss for the year - - - - (62) - (11,650) (11,712) - (11,712)
Share option charge - - 173 - - - - 173 - 173
Shares issued:
- to settle
liabilities
(including
Directors) 71 142 - - - - - 213 - 213
At 31 March 2014 14,075 62,893 504 (1,843) (31) (3,944) (39,078) 32,576 - 32,576
Loss for the year - - - - - - (6,786) (6,786) (237) (7,023)
Other comprehensive
income - - - - 18 - 169 187 - 187
Total comprehensive
loss for the year - - - - 18 - (6,617) (6,599) (237) (6,836)
Share option credit - - (25) - - - - (25) - (25)
Interest in mining
asset - - - - - - (7,404) (7,404) 9,403 1,999
Acquired through
business combination
- Dallaglio
Investments (Pvt)
Ltd - - - - - - - - 2,000 2,000
- Mineral Mining SA - - - - - - - - (198) (198)
Shares issued:
- for cash
consideration 715 3,089 - - - - - 3,804 - 3,804
- to settle
liabilities
(including
Directors) 245 123 - - - - - 368 - 368
At 31 March 2015 15,035 66,105 479 (1,843) (13) (3,944) (53,099) 22,720 10,968 33,688
The accompanying accounting policies and notes below form an integral
part of these financial statements.
Company Statement of Changes in Equity
for the year ended 31 March 2015
Foreign
Share currency Available
Share Share option translation for sale EBT Retained
Company capital premium reserve reserve reserve reserve deficit Total
$'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000
At 31 March 2013 14,004 62,751 331 (4,954) 14 (3,944) (24,300) 43,902
Loss for the year - - - - - - (11,699) (11,699)
Other comprehensive
income - - - - (13) - - (13)
Total comprehensive
loss for the year - - - - (13) - (11,699) (11,712)
Share option charge - - 173 - - - - 173
Shares issued: - - - - - - - -
- to settle
liabilities
(including
Directors) 71 142 - - - - - 213
At 31 March 2014 14,075 62,893 504 (4,954) 1 (3,944) (35,999) 32,576
Loss for the year - - - - - - (6,039) (6,039)
Other comprehensive
income - - - - 4 - - 4
Total comprehensive
loss for the year - - - - 4 - (6,039) (6,035)
Share option credit - - (25) - - - - (25)
Shares issued:
- for cash
consideration 715 3,089 - - - - - 3,804
- to settle
liabilities
(including
Directors) 245 123 - - - - - 368
At 31 March 2015 15,035 66,105 479 (4,954) 5 (3,944) (42,038) 30,688
The accompanying accounting policies and notes below form an integral
part of these financial statements.
Group and Company statements of financial position
As at 31 March 2015
2015 2014 2015 2014
Group Group Company Company
Note $'000 $'000 $'000 $'000
ASSETS
Non-current assets
Intangible assets 11 8,739 28,710 185 1,580
Property, plant and equipment 12 22,621 2,683 75 1,455
Investment in subsidiaries 13 - - 218 218
Loan to group companies 14 - - 29,256 29,300
31,360 31,393 29,734 32,553
Current assets
Inventory 65 1 - -
Receivables 16 4,134 1,180 345 23
Available for sale investments 17 24 6 5 1
Cash and cash equivalents 18 3,090 568 2,330 467
Restricted cash 21 637 - - -
Total current assets 7,950 1,755 2,680 491
Total Assets 39,310 33,148 32,414 33,044
EQUITY AND LIABILITIES
Capital and reserves attributable to equity holders
of the Parent
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Share capital 22 15,035 14,075 15,035 14,075
Share premium 22 66,105 62,893 66,105 62,893
Share option reserve 24 479 504 479 504
Foreign currency translation reserve 24 (1,843) (1,843) (4,954) (4,954)
Available for sale reserve 24 (13) (31) 5 1
EBT reserve 24 (3,944) (3,944) (3,944) (3,944)
Retained deficit 24 (53,099) (39,078) (42,038) (35,999)
22,720 32,576 30,688 32,576
Non-controlling interests 25 10,968 - - -
Total equity 33,688 32,576 30,688 32,576
Noncurrent liabilities
Secured borrowings 19 1,555 - - -
Current liabilities
Trade and other payables 20 4,067 572 1,726 468
Total liabilities 5,622 572 1,726 468
Total Equity and Liabilities 39,310 33,148 32,414 33,044
The accompanying accounting policies and notes below form an integral
part of these financial statements. The financial statements were
approved and authorised for issue by the Board of Directors on 11
September 2015 and were signed on its behalf by:
Roy C Tucker Registered number 05414325
Director
11 September 2015
Group and Company statements of cash flows
for the year ended 31 March 2015
2015 2014
Group Group 2015 2014
Note $'000 $'000 Company $'000 Company $'000
CASH FLOW FROM OPERATING ACTIVITES
Loss for the year (6,854) (11,650) (6,039) (11,699)
Adjustments for:
Depreciation 465 50 40 28
Impairment charge on intangible assets 11.1 - 6,712 - 1,459
Impairment charge on advances to group companies - - - 8,503
Unrealised exchange loss/(gain) 217 (55) 234 (55)
Write-off of financial assets 18 - 22 - -
Profit on sale of property, plant and equipment (120) (52) (168) -
Gain on business combination 15 (169) - - -
Loss on discontinued operations 13 1,033 - - -
Liabilities settled in shares 368 213 368 213
Share option (credit) /charges 23 (25) 173 (25) 173
(5,085) (4,587) (5,590) (1,378)
Changes in working capital:
(Increase)/decrease in receivables (654) 725 (322) 151
(Increase)/decrease in inventories (4) 10 - -
Increase/(decrease) in payables 1,503 (265) 1,258 220
845 470 (936) 371
Cash used in operations (4,240) (4,117) (4,654) (1,007)
Investing activities:
Payments to acquire intangible assets (63) (6,050) (65) (104)
Payments to acquire property, plant and equipment 12 (394) (335) - (23)
Proceeds on disposal of property, plant and equipment 1,536 53 1,508 -
Payments to acquire subsidiary company (522) - - -
Restricted cash movement (637) - - -
Increase in loan to group companies - - (1,504) (8,826)
(80) (6,332) 2,947 (8,953)
Financing activities:
Proceeds from the issue of ordinary shares, net of
issue costs 3,804 - 3,804 -
Proceeds from investment by Grayfox Investments (Pvt)
Ltd 1,700 - - -
Proceeds from Secured loan 1,555 - - -
7,059 - 3,804 -
Increase/(decrease) in cash and cash equivalents 2,739 (10,449) 2,097 (9,960)
Cash and cash equivalents at beginning of year 568 10,962 467 10,372
Exchange (loss)/gain on cash and cash equivalents (217) 55 (234) 55
Cash and cash equivalents at end of year 3,090 568 2,330 467
The accompanying notes and accounting policies below form an integral
part of these financial statements.
Statement of accounting policies
for the year ended 31 March 2015
1 Accounting Policies
Basis of preparation and going concern assessment
The principal accounting policies adopted in the preparation of the
financial information are set out below. The policies have been
consistently applied throughout the current year and prior year, unless
otherwise stated. These financial statements have been prepared in
accordance with International Financial Reporting Standards (IFRSs and
IFRIC interpretations) issued by the International Accounting Standards
Board (IASB) as adopted by the European Union and with those parts of
the Companies Act 2006 applicable to companies preparing their accounts
under IFRS.
The consolidated financial statements incorporate the results of Vast
Resources plc and its subsidiary undertakings as at 31 March 2015.
The financial statements are prepared under the historical cost
convention on a going concern basis.
At the date of issue of these financial statements the Group has
sufficient cash resources to support minimum spend requirements and
general overheads for the next twelve months. However further funds
will be required to finance the Group's and Company's working capital
requirements, and the development of the Group's Romanian assets. If the
cash flow from such sources does not provide the Group with sufficient
cash flow to meet the Group's commitments the Directors are confident
that additional funds could be successfully raised from other sources.
However, the Company does not have any binding agreement in place to
date. These conditions indicate the existence of material uncertainty
which may cast significant doubt about the Group and Company's ability
to continue as a going concern. The financial statements do not include
the adjustment that would result if the Company was unable to continue
as a going concern.
The Zimbabwean Government's policy on indigenisation as set in its
present format creates an obligation for the Group. The full effect
that this legislation might have on the operations of the Group is yet
to be quantified and is subject to significant uncertainty over the
ability of the Group and Company to realise the value of the Group's
assets. Further details on indigenisation in note 27.
Changes in Accounting Policies
New and amended Standards effective for 31 March 2015 year-end adopted
by the Group:
The following new standards and amendments to standards are mandatory
for the first time for the Group for financial year beginning 1 April
2014. Except as noted, the implementation of these standards is not
expected to have a material effect on the Group.
1. New standards, interpretations and amendments effective from 1 April 2014
The following new standards, interpretations and amendments, which are
effective for period beginning 1 April 2014:
Annual Improvements to IFRSs 2010-2012 Cycle (2)
Annual Improvements to IFRSs 2011- 2013 Cycle (3)
IFRS 10 Consolidated Financial Statement
IFRS 11 Joint Arrangement
IFRS 12 Disclosure of Interest in Other Entities
IAS 27 Investment Entities
IAS 28 Investment in Associate and Joint Venture
(2) Effective for periods beginning on or after 1 February 2015
(3) Effective for periods beginning on or after 1 January 2014
No other IFRS issued and adopted are expected to have an impact on the
Group's financial statements. All other new standards and
interpretations that were effective for the year ended 31 March 2015
have been adopted, but have not had a material effect on the Group.
1. New standards, interpretations and amendments not yet effective
The following new standards, interpretations and amendments, which are
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not effective for periods beginning 1 April 2015 and which have not been
early adopted, will or may have an effect on the Company's statements:
IFRS 9 Financial Instruments(5)
IFRS 11 (Amendments) Accounting for Acquisitions of Interests in Joint
Operations(3)
IFRS 14 Regulatory Deferral Accounts(3)
IFRS 15 Revenue from Contracts with Customers(4)
IAS 16 (Amendments) Clarification of Acceptable Methods of Depreciation
and Amortisation(3)
IAS 19 (Amendments) Defined Benefit Plans: Employee Contributions(1)
IAS 38 (Amendments) Clarification of Acceptable Methods of Depreciation
and Amortisation(3)
Improvements to IFRSs Annual Improvements 2010-2012 Cycle(2)
Improvements to IFRSs Annual Improvements 2011-2013 Cycle(1)
Improvements to IFRSs Annual Improvements 2012-2014 Cycle(3)
(1) Effective for annual periods beginning on or after 1 July 2014
(2) Effective for annual periods beginning, or transactions occurring,
on or after 1 July 2014
(3) Effective for annual periods beginning on or after 1 January 2016
(4) Effective for annual periods beginning on or after 1 January 2017
(5) Effective for annual periods beginning on or after 1 January 2018
The above standards, interpretations and amendments are not expected to
significantly affect the Group's results or financial position. The
adoption of IFRS 9 will eventually replace IAS 39 in its entirety and
consequently may have a material effect the presentation, classification,
measurement and disclosures of the Group's financial instruments.
Areas of estimates and judgement
The preparation of the Group financial statements in conformity with
generally accepted accounting principles requires the use of estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of revenues
and expenses during the reporting period. Although these estimates are
based on management's best knowledge of current events and actions,
actual results may ultimately differ from those estimates. The estimates
and assumptions that have a significant risk of causing a material
adjustment to the carrying amounts of assets and liabilities in the next
financial year are discussed below:
1. Useful lives of property, plant & equipment
Property, plant and equipment are depreciated over their useful economic
lives. Useful economic lives are based on management's estimates of the
period that the assets will be in operational use, which are
periodically reviewed for continued appropriateness. Due to the long
life of certain assets, changes to estimates used can result in
significant variations in the carrying value. More details, including
carrying values, are included in note 12 to the financial statements.
1. Impairment of intangibles and mining assets
The Group reviews, on an annual basis, whether deferred exploration
costs, acquired as intangible assets or PP&E, mining options and licence
acquisition costs have suffered any impairment. The recoverable amounts
are determined based on an assessment of the economically recoverable
mineral reserves, the ability of the Group to obtain the necessary
financing to complete the development of the reserves and future
profitable production or proceeds from the disposition of recoverable
reserves. Actual outcomes may vary. More details, including carrying
values, are included in note 11 to the financial statements.
1. Share based payments
The Group operates an equity settled and cash settled share based
remuneration scheme for key employees. Employee services received, and
the corresponding increase in equity, are measured by reference to the
fair value of equity instruments at the date of grant.
In addition, the Group may frequently enter into financial arrangements
which involve the convertibility of part or all of the liabilities
assumed under these arrangements into shares in the parent company,
under an option arrangement.
The fair value of these share options is estimated by using the Black
Scholes model on the date of grant based on certain assumptions. Those
assumptions are described in note 21 and include, among others, the
expected volatility and expected life of the options.
1. Going concern and intercompany loan recoverability.
The Group's cash flow projections which have used conservative
assumptions on forward commodity prices indicate that the Group should
have sufficient resources to continue as a going concern. Should the
projections not be realised the Group's going concern would depend on
the success of future fund raising initiatives. The recoverability of
inter-company loans advanced by the Company to subsidiaries depends also
on the subsidiaries realising their cash flow projections.
1. Estimates of fair value
The Group may enter into financial instruments which are required by
IFRS to be recorded at fair value within the financial statements. In
determining the fair value of such instruments the Directors are
required to apply judgement in selecting the inputs used in valuation
models such as the Black Scholes or Monte Carlo model. Inputs over which
the Directors may be required to form judgements relate to, et al,
volatility rates, vesting periods, risk free interest rates, commodity
price assumptions and discount rate. In addition where a valuation
requires more complex fair value considerations the Directors may
appoint third party advisers to assist in the determination of fair
value.
The fair value measurement of the Group's financial and non-financial
assets and liabilities utilises market observable inputs and data as far
as possible. Inputs used in determining fair value measurements are
categorised into different levels based on how observable the inputs
used in the valuation technique utilised are (the 'fair value
hierarchy'):
Level 1: Quoted prices in active markets for identical items
(unadjusted)
Level 2: Observable direct or indirect inputs other than Level 1 inputs
Level 3: Unobservable inputs (i.e. not derived from market data).
The classification of an item into the above levels is based on the
lowest level of the inputs used that has a significant effect on the
fair value measurement of the item.
Basis of consolidation
Where the company has control over an investee, it is classified as a
subsidiary. The company controls an investee if all three of the
following elements are present: power over the investee, exposure to
variable returns from the investee, and the ability of the investor to
use its power to affect those variable returns. Control is reassessed
whenever facts and circumstances indicate that there may be a change in
any of these elements of control.
De-facto control exists in situations where the company has the
practical ability to direct the relevant activities of the investee
without holding the majority of the voting rights. In determining
whether de-facto control exists the company considers all relevant facts
and circumstances, including:
-- The size of the company's voting rights relative to both the size and
dispersion of other parties who hold voting rights
-- Substantive potential voting rights held by the company and by other
parties
-- Other contractual arrangements
-- Historic patterns in voting attendance.
The consolidated financial statements present the results of the company
and its subsidiaries ("the Group") as if they formed a single entity.
Intercompany transactions and balances between group companies are
therefore eliminated in full.
The consolidated financial statements incorporate the results of
business combinations using the acquisition method. In the statement of
financial position, the acquiree's identifiable assets, liabilities and
contingent liabilities are initially recognised at their fair values at
the acquisition date. The results of acquired operations are included in
the consolidated statement of comprehensive income from the date on
which control is obtained. They are deconsolidated from the date on
which control ceases.
Business combinations
The financial information incorporates the results of business
combinations using the purchase method. In the statement of changes in
equity, the acquirer's identifiable assets, liabilities and contingent
liabilities are initially recognised at their fair values at the
acquisition date. The results of acquired operations are included in the
Group statement of comprehensive income from the date on which control
is obtained. The assets acquired have been valued at their fair value.
Any excess of consideration paid over the fair value of the net assets
acquired is allocated to the mining asset. Any excess fair value over
the consideration paid is considered to be negative goodwill and is
immediately recorded within the income statement.
Where business combinations are discontinued, whether by closure or
disposal to third parties, any resultant gain or loss on the
discontinued operation is identified separately and dealt with in the
Group's consolidated income statement as a separate item.
Employee Benefit Trust ("EBT")
The Company has established an Employee Benefit Trust. The assets and
liabilities of this trust comprise shares in the Company and loan
balances due to the Company. The Company includes the EBT within its
accounts and therefore recognises an EBT reserve in respect of the
amounts loaned to the EBT and used to purchase shares in the Company.
Any cash received by the EBT on disposal of the shares it holds will be
recognised directly in equity. Any shares held by the EBT are treated as
cancelled for the purposes of calculating earnings per share.
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Financial assets
The Group's financial assets consist of cash and cash equivalents, other
receivables and available for sale investments. The Group's accounting
policy for each category of financial asset is as follows:
Loans and receivables
These assets are non-derivative financial assets with fixed or
determinable payments that are not quoted in an active market. They are
initially recognised at fair value plus transaction costs that are
directly attributable to their acquisition or issue, and are
subsequently carried at amortised cost using the effective interest rate
method, less provision for impairment.
Impairment provisions are recognised when there is objective evidence
(such as significant financial difficulties on the part of the
counterparty or default or significant delay in payment) that the Group
will be unable to collect all of the amounts due under the terms
receivable, the amount of such a provision being the difference between
the net carrying amount and the present value of the future expected
cash flows associated with the impaired receivable. For receivables,
which are reported net, such provisions are recorded in a separate
allowance account with the loss being recognised within administrative
expenses in the statement of comprehensive income. On confirmation that
the receivable will not be collectable, the gross carrying value of the
asset is written off against the associated provision.
The Group's loans and receivables comprise other receivables and cash
and cash equivalents in the statement of financial position.
Cash and cash equivalents
Comprises cash on hand and balances with banks. Cash equivalents are
short term, highly liquid accounts that are readily converted to known
amounts of cash. They include short term bank deposits and short term
investments.
Any cash or bank balances that are subject to any restrictive conditions,
such as cash held in escrow pending the conclusion of conditions
precedent to completion of a contract, are disclosed separately as
"Restricted cash".
There is no significant difference between the carrying value and fair
value of receivables.
Available for sale
Non-derivative financial assets not included in the categories above are
classified as available-for-sale and comprise the Group's strategic
investments in entities not qualifying as subsidiaries, associates or
jointly controlled entities. They are carried at fair value with changes
in fair value recognised directly in equity. Where a decline in the fair
value of an available-for-sale financial asset constitutes evidence of
impairment, for example if the decline is significant or prolonged, the
amount of the loss is removed from equity and recognised in the profit
or loss for the year.
Financial liabilities
The Group's financial liabilities consist of trade and other payables
(including short terms loans) and long term secured borrowings. These
are initially recognised at fair value and subsequently carried at
amortised cost, using the effective interest method. Where any liability
carries a right to convertibility into shares in the Group, the fair
value of the equity and liability portions of the liability is
determined at the date that the convertible instrument is issued, by use
of appropriate discount factors.
Foreign currency
The functional currency of the Company and all of its subsidiaries is
the United States Dollar, which is the currency of the primary economic
environment in which the Company and all of its subsidiaries operate.
Transactions entered into by the Group entities in a currency other than
the currency of the primary economic environment in which it operates
(the "functional currency") are recorded at the rates ruling when the
transactions occur. Foreign currency monetary assets and liabilities are
translated at the rates ruling at the date of the statement of financial
position. Exchange differences arising on the retranslation of
unsettled monetary assets and liabilities are similarly recognised
immediately in profit or loss, except for foreign currency borrowings
qualifying as a hedge of a net investment in a foreign operation.
The exchange rates applied at each reporting date were as follows:
-- 31 March 2015 $1.4836:GBP1
-- 31 March 2014 $1.6642:GBP1
-- 31 March 2013 $1.5209:GBP1
Goodwill
Goodwill represents the excess of the cost of a business combination
over the total acquisition date fair value of the identifiable assets,
liabilities and contingent liabilities acquired. Cost comprises the fair
value of assets given, liabilities assumed and equity instruments issued,
plus the amount of any non-controlling interests in the acquiree plus,
if the business combination is achieved in stages, the fair value of the
existing equity interest in the acquiree. Contingent consideration is
included in cost at its acquisition date fair value and, in the case of
contingent consideration classified as a financial liability,
re-measured subsequently through profit or loss. Any direct costs of
acquisition are recognised immediately as an expense.
Goodwill is capitalised as an intangible asset with any impairment in
carrying value being charged to the consolidated statement of
comprehensive income.
Where the fair value of identifiable assets, liabilities and contingent
liabilities exceed the fair value of consideration paid, the excess is
credited in full to the consolidated statement of comprehensive income
on the acquisition date.
Intangible assets
Deferred development and exploration costs
Once a licence has been obtained, all costs associated with mining
property development and investment are capitalized on a
project-by-project basis pending determination of the feasibility of the
project. Costs incurred include appropriate technical and administrative
expenses but not general overheads. If a mining property development
project is successful, the related expenditures are amortised over the
estimated life of the commercial ore reserves on a unit of production
basis. Where a licence is relinquished, a project is abandoned, or is
considered to be of no further commercial value to the Group, the
related costs are written off.
Unevaluated mining properties are assessed at each year end and where
there are indications of impairment these costs are written off to the
income statement. The recoverability of deferred mining property costs
and interests is dependent upon the discovery of economically
recoverable reserves, the ability of the Group to obtain necessary
financing to complete the development of reserves and future profitable
production or proceeds from the disposition of recoverable reserves.
If commercial reserves are developed, the related deferred development
and exploration costs are then reclassified as development and
production assets within property, plant and equipment. Prior to any
such reclassification costs are assessed for any potential impairment.
Following re-classification as a development and production asset, the
cost of these assets is then dealt with in accordance with the Group's
policy for proved mining properties (see note on property, plant and
equipment, below).
Mining options
Mineral rights are recorded at cost less amortisation and provision for
diminution in value. Amortisation will be over the estimated life of the
commercial ore reserves on a unit of production basis.
Licences for the exploration of natural resources will be amortised over
the lower of the life of the licence and the estimated life of the
commercial ore reserves on a unit of production basis.
Inventories
Inventories are initially recognised at cost, and subsequently at the
lower of cost and net realisable value. Cost comprises all costs of
purchase, costs of conversion and other costs incurred in bringing the
inventories to their present location and condition. Weighted average
cost is used to determine the cost of ordinarily inter-changeable items.
Investment in subsidiaries
The Company's investment in its subsidiaries is recorded at cost less
any impairment.
Leased assets
Where assets are financed by leasing agreements that do not give rights
approximating ownership, these are treated as operating leases. The
annual rentals are charged to profit or loss on a straight line basis
over the term of the lease.
Non-controlling interests
For business combinations completed on or after 1 January 2010 the Group
has the choice, on a transaction by transaction basis, to initially
recognise any non-controlling interest in the acquiree which is a
present ownership interest and entitles its holders to a proportionate
share of the entity's net assets in the event of liquidation at either
acquisition date fair value or, at the present ownership instruments'
proportionate share in the recognised amounts of the acquiree's
identifiable net assets. Other components of non-controlling interest
such as outstanding share options are generally measured at fair value.
The total comprehensive income of non-wholly owned subsidiaries is
attributed to owners of the parent and to the non-controlling interests
in proportion to their relative ownership interests.
Pension costs
Contributions to defined contribution pension schemes are charged to
profit or loss in the year to which they relate.
Property, plant and equipment
Land is not depreciated. Items of property, plant and equipment are
initially recognised at cost and are subsequently carried at depreciated
cost. As well as the purchase price, cost includes directly attributable
costs and the estimated present value of any future costs of dismantling
and removing items. The corresponding liability is recognised within
provisions.
Depreciation is provided on all other items of property and equipment so
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as to write off the carrying value of items over their expected useful
economic lives. It is applied at the following rates:
Buildings - 2.5% per annum,
straight line
Plant and machinery - 25% per annum, straight
line
Fixtures, fittings & equipment - 25% per annum, straight line
Computer assets - 33% per annum, straight
line
Motor vehicles - 20% per annum, straight
line
Proved mining properties
Depletion and amortisation of the full-cost pools is computed using the
units-of-production method based on proved reserves as determined
annually by management.
Capital works in progress
Property, plant and equipment under construction are carried at its
accumulated cost of construction and not depreciated until such time as
construction is completed or the asset put into use, whichever is the
earlier.
Provision for abandonment costs
Provision for abandonment costs are recognised when an obligation for
restoration arises which is usually at the commencement of mining. The
amount recognised is the present value of the estimated future
expenditure determined in accordance with local conditions and
requirements. The present value is calculated by discounting the future
cash flows at a pre-tax rate that reflects current market assessments of
the time value of money at that time. A corresponding property, plant
and equipment asset of an amount equivalent to the provision is also
created. This is subsequently depreciated as part of the capital costs
of production. Any change in the present value of the estimated
expenditure is reflected as an adjustment to the provision and the
property, plant and equipment assets. As at the reporting date the Group
had no such provision.
Share based payments
Equity-settled share based payments
Where share options are awarded to employees, the fair value of the
options at the date of grant is charged to profit or loss over the
vesting period. Non-market vesting conditions are taken into account by
adjusting the number of equity instruments expected to vest at each
reporting date so that, ultimately, the cumulative amount recognised
over the vesting period is based on the number of options that
eventually vest. Market vesting conditions are factored into the fair
value of the options granted. As long as all other vesting conditions
are satisfied, a charge is made irrespective of whether the market
vesting conditions are satisfied. The cumulative expense is not adjusted
for failure to achieve a market vesting condition.
Where the terms and conditions of options are modified before they vest,
the increase in the fair value of the options, measured immediately
before and after the modification, is also charged to profit or loss
over the remaining vesting period.
Where equity instruments are granted to persons other than employees,
the fair value of goods and services received is charged to profit or
loss, except where it is in respect to costs associated with the issue
of shares, in which case, it is charged to the share premium account.
Cash-settled share based payments
The Company also has cash-settled share based payments arising in
respect of the EBT (see below and Note 23). A liability is recognised in
respect of the fair-value of the benefit received under the EBT and
charged to profit or loss over the vesting period. The fair-value is
re-measured at each reporting date with any changes taken to profit or
loss.
Remuneration shares
Where remuneration shares are issued to settle liabilities to employees
and consultants, any difference between the fair value of the shares on
the date of issue and the carrying amount of the liability is charged to
profit or loss.
Tax
The major components of income tax on the profit or loss include current
and deferred tax.
Current tax
Current tax is based on the profit or loss adjusted for items that are
non-assessable or disallowed and is calculated using tax rates that have
been enacted or substantively enacted by the reporting date.
Tax is charged or credited to the statement of comprehensive income,
except when the tax relates to items credited or charged directly to
equity, in which case the tax is also dealt with in equity.
Deferred tax
Deferred tax assets and liabilities are recognised where the carrying
amount of an asset or liability in the balance sheet differs to its tax
base, except for differences arising on:
-- The initial recognition of goodwill;
-- The initial recognition of an asset or liability in a transaction which
is not a business combination and at the time of the transaction affects
neither accounting or taxable profit; and
-- Investments in subsidiaries and jointly controlled entities where the
Group is able to control the timing of the reversal of the difference and
it is probable that the differences will not reverse in the foreseeable
future.
Recognition of deferred tax assets is restricted to those instances
where it is probable that taxable profit will be available against which
the difference can be utilised.
The amount of the asset or liability is determined using tax rates that
have been enacted or substantively enacted by the reporting date and are
expected to apply when deferred tax liabilities/(assets) are
settled/(recovered). Deferred tax balances are not discounted.
2 Segmental analysis
The Group operates in one business segment, the development and mining
of mineral assets. The Group has interests in two geographical segments
being Southern Africa (primarily Zimbabwe) and Eastern Europe (primarily
Romania). The Group has not generated any revenue to date and therefore
no disclosures are provided with respect to revenues.
The Group's operations are reviewed by the Board (which is considered to
be the Chief Operating Decision Maker ('CODM')) and split between
exploration and development and administration and corporate costs.
Exploration and development is reported to the CODM only on the basis of
those costs incurred directly on projects. All costs incurred on the
projects are capitalised in accordance with IFRS 6, including
depreciation charges in respect of tangible assets used on the projects.
Administration and corporate costs are further reviewed on the basis of
spend across the Group.
Decisions are made about where to allocate cash resources based on the
status of each project and according to the Group's strategy to develop
the projects. Each project, if taken into commercial development, has
the potential to be a separate operating segment. Operating segments
are disclosed below on the basis of the split between exploration and
development and administration and corporate. Further information is
provided on the non-current intangible assets attributable to
exploration and development on a project by project basis in note 11.
Administration and
Exploration and development corporate Total
Europe Africa
$'000 $'000 $'000 $'000
2015
Impairment of
intangible assets - - - -
Project evaluation
expenses 130 - - 130
Depreciation 35 407 23 465
Share option
credit - - (25) (25)
Interest revenues - - (3) (3)
Loss for the year
from continuing
operations 130 - 5,721 5,851
Loss for the year
from discontinued
operations - - 1,033 1,033
Total assets 13,083 15,964 10,263 39,310
Total non-current
assets 13,083 15,964 2,313 31,360
Additions to
non-current
assets 2,601 458 21 3,080
Total current
assets - - 7,950 7,950
Total liabilities - - 5,622 5,622
2014
Impairment of
intangible
assets 2,901 3,811 - 6,712
Project evaluation
expenses 438 - - 438
Depreciation - - 50 50
Share option
charge - - 173 173
Interest revenues - - (4) (4)
Loss for the
period 2,848 3,864 4,938 11,650
Total assets 11,503 18,524 3,121 33,148
Total non-current
assets 12,642 17,386 1,365 31,393
Additions to
non-current
assets 6,883 - 33 6,916
Total current
assets - - 1,755 1,755
Total liabilities - 35 537 572
There are no non-current assets held in the Company's country of
domicile, being the UK (2014: $nil).
3 Group loss from operations 2015 2014
Group Group
$'000 $'000
Operating loss is stated after charging/crediting):
Auditors' remuneration 111 84
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Depreciation 465 50
Employee pension costs 42 19
Employee share option (credit)/expense (25) 173
Foreign exchange loss/(gain) 217 (55)
Impairment of intangibles - 6,712
Profit on disposal of property, plant and equipment (120) (52)
4 Auditors' remuneration
Remuneration receivable by the Company's auditors
or an associate of the Company's auditor for the audit 111 84
of the Group and subsidiaries
5 Finance income
Interest received on bank deposits 34
2015 2014
Group Group
6 Taxation $'000 $'000
There is no tax charge arising for the Group for the
year.
The tax assessed for the year is lower than the standard
rate of corporation tax in the UK. The differences
are explained below
Loss before taxation 6,836 11,650
Loss before taxation at the standard rate of corporation
tax in the UK of 21% (2014: 23%) 1,436 2,680
Expenses disallowed for tax 9 34
Difference in tax rates in local jurisdiction 458 241
Loss carried forward (1,903) (2,995)
Tax charge for the year - -
Factors that may affect future tax charges:
2015 2014 2015 2014
Group Group Company Company
Tax losses $'000 $'000 $'000 $'000
Accumulated tax losses 21,342 19,383 9,478 8,092
The tax losses are only recoverable against future profits, the timing
of which is uncertain and no deferred tax asset for the Group or Company
has been recognised in respect of these losses.
2015 2014
Group Group
7 Employees $'000 $'000
Staff costs (including Directors) consist of:
Wages and salaries - management 517 1,589
Wages and salaries - other 764 1,482
1,281 3,071
Consultancy fees 894 966
Termination fees - 340
Social Security costs 14 24
Healthcare costs - 8
Pension costs 42 19
2,231 4,428
The average number of employees (including Directors)
during the year was as follows: 2015 2014
Management 9 14
Other operations 57 100
66 114
8 Directors' remuneration Group and Company Group and Company
2015 2014
$'000 $'000
Directors' emoluments 562 919
Company contributions to
pension schemes 3 19
Healthcare costs - 4
Termination payments - 340
Directors and key
management remuneration 565 1,282
The Directors are considered to be the key management of the Group and
Company.
One Director (2014: one) accrued benefits under a defined contribution
pension scheme during the year. Four of the Directors at the end of the
period have share options receivable under long term incentive schemes.
The highest paid Director received an amount of $187,500 (2014: $
302,972).
Included within the above remuneration are amounts accrued at 31 March
2015, please refer to the Directors' Report for full detail.
2015 2014
9 Loss per share Group Group
Loss per Ordinary Share has been calculated using
the weighted average number of Ordinary Shares in
issue during the relevant financial year and excludes
shares issued to the Employee Benefit Trust.
The weighted average number of Ordinary Shares in
issue for the year is 884,682,217 785,537,664
$'000 $'000
Losses for the Group for the year are: $(6,854) $(11,650)
Loss per share - basic and diluted: (0.77c) (1.48c)
- In respect of discontinued operations: (0.09c) (0.03c)
- In respect of continuing operations: (0.68c) (1.45c)
The effect of all potentially dilutive share options
is anti-dilutive. Details of the share options which
may dilute the loss per share are disclosed in note
23 in the financial statements.
10 Loss for the financial year
The Company has adopted the exemption allowed under Section 408(1b) of
the Companies Act 2006 and has not presented its own income statement in
these financial statements. The Group loss for the year includes a loss
after taxation of $6.039 million (2014: $11.699 million) for the Company,
which is dealt with in the financial statements of the parent company.
Deferred
exploration Licence acquisition costs and mining
11 Intangible assets costs Options Total
Group $'000 $'000 $'000
Cost and net book value
at 31 March 2014 24,410 4,300 28,710
Reclassification of deferred
costs (95) - (95)
Discontinued operations (1,132) - (1,132)
Transfer to property, plant
and equipment (15,654) (3,153) (18,807)
Additions during the year 63 - 63
Cost and net book value
at 31 March 2015 7,592 1,147 8,739
Cost and net book value at
31 March 2013 24,245 4,596 28,841
Additions during the year 6,581 - 6,581
Amount provided for
impairment (6,416) (296) (6,712)
Cost and net book value
at 31 March 2014 24,410 4,300 28,710
Company
Cost and net book value
at 31 March 2014 1,191 389 1,580
Transfer to subsidiary (1,071) (389) (1,460)
Additions during the year 65 - 65
Cost and net book value
at 31 March 2015 185 - 185
Cost and net book value
at 31 March 2013 2,209 685 2,894
Additions during the year 145 - 145
Amount provided for impairment (1,163) (296) (1,459)
Cost and net book value
at 31 March 2014 1,191 389 1,580
Includes depreciation as per note 12
2015 2014
Group Group
Intangible assets by project $'000 $'000
Gold
Blue Rock
Pickstone-Peerless Gold Mine/Giant Gold Mine
(transferred to mining assets)
Phosphates
Chishanya 8,083 8,083
Copper - 19,532
Kalengwa/Kasempa 542 542
Rare earths - 479
Nkombwa Hill 114 74
8,739 28,710
2015 2014
Group Group
11.1 Impairment of assets by project $'000 $'000
Gold
Pickstone-Peerless Gold Mine- dumps only
Pickstone-Peerless Gold Mine/Giant Gold Mine
Diamonds
Diamond Regional - 1,123
Marange - -
Copper - 3,294
Kalengwa/Kasempa - 1,411
Polymetallic - 242
Baita Plai Polymetallic Mine - 642
- 6,712
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2015 2014
Group Group
11.2 Project evaluation expenses $'000 $'000
Romania - Remin 130 438
Plant, Fixtures,
machinery fittings Capital
Property, plant and equipment and and Motor Mining Work in
12 Group aircraft equipment Computer assets vehicles Buildings assets progress Total
$'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000
Cost at 31 March 2014 2,718 141 216 419 1,490 - - 4,984
Additions during the year - 1 - - - - 393 394
Acquired through business
combination 481 2 1 17 2,121 - - 2,622
Transferred from intangibles - - - - - 18,807 - 18,807
Disposals during the year (706) (39) (3) (167) (1,418) - - (2,333)
Cost at 31 March 2015 2,493 105 214 269 2,193 18,807 393 24,474
Depreciation at 31 March 2014 1,489 124 186 419 83 - 2,301
Charge for the year 432 10 15 - 8 - - 465
Disposals during the year (626) (33) (1) (166) (87) - - (913)
Depreciation at 31 March 2015 1,295 101 200 253 4 - - 1,853
Net book value at 31 March 2015 1,198 4 14 16 2,189 18,807 393 22,621
Cost at 31 March 2013 2,418 138 184 643 1,490 - - 4,873
Additions during the period 300 3 32 - - - - 335
Disposals during the period - - - (224) - - - (224)
Cost at 31 March 2014 2,718 141 216 419 1,490 - - 4,984
Depreciation at 31 March 2013 1,003 110 173 601 58 - - 1,945
Charge for the year 486 14 13 42 25 - - 580
Disposals during the year - - - (224) - - - (224)
Depreciation at 31 March 2014 1,489 124 186 419 83 - - 2,301
Net book value at
31 March 2014 1,229 17 30 - 1,407 - - 2,683
Net book value at
31 March 2013 1,415 28 11 42 1,432 - - 2,928
The depreciation on assets utilised directly for exploration activities
is capitalised as deferred exploration costs amounting to $nil
(2014:$530,074). Depreciation in respect of all other assets is charged
to administrative expenses in the statement of comprehensive income
amounting to $464,867 (2014: $50,037).
Plant, Fixtures,
machinery fittings
Property, plant and equipment and and Computer Motor
Company aircraft equipment assets vehicles Buildings Total
$'000 $'000 $'000 $'000 $'000 $'000
Cost at 31 March 2014 323 19 89 11 1,400 1,842
Additions during the year - - - - - -
Disposals during the year (126) - - (11) (1,400) (1,537)
Cost at 31 March 2015 197 19 89 - - 305
Depreciation at 31 March 2014 205 19 71 11 81 387
Charge for the year 26 - 8 - 6 40
Disposals during the year (99) - - (11) (87) (197)
Depreciation at 31 March 2015 132 19 79 - - 230
Net book value at 31 March
2015 65 - 10 - - 75
Cost at 31 March 2013 323 19 66 11 1,400 1,819
Additions during the period - - 23 - - 23
Disposals during the period - - - - - -
Cost at 31 March 2014 323 19 89 11 1,400 1,842
Depreciation at 31 March 2013 164 19 65 11 58 317
Charge for the year 41 - 6 - 23 70
Disposals during the year - - - - - -
Depreciation at 31 March 2014 205 19 71 11 81 387
Net book value at 31 March
2014 118 - 18 - 1,319 1,455
Net book value at 31 March
2013 159 - 1 - 1,342 1,502
The depreciation on assets utilised directly for exploration activities
is capitalised as deferred exploration costs amounting to $26,938
(2014:$41,572). Depreciation in respect of all other assets is charged
to administrative expenses in the statement of comprehensive income
amounting to $13,483 (2014: $28,154).
2015 2014
Company Company
13 Investments in subsidiaries $'000 $'000
Cost at the beginning and end of the year 218 218
The principal subsidiaries of Vast Resources plc,
all of which are included in these consolidated Annual
Financial Statements, are as follows:
Proportion Proportion
Country of held by held by
Company registration Class group group Nature of business
2015 2014
African Consolidated Resources PTC Limited (i) BVI -% -% Nominee company
African Consolidated Resources SRL Romania Ordinary 100% 100% Mining exploration and development
African Consolidated Resources (Zambia) Limited (ii&
v) Zambia Ordinary nil 100% Mining exploration and development
Canape Investments (Private) Limited Zimbabwe Ordinary 100% 100% Mining exploration and development
Dallaglio Investments (Private) Limited (iii) Zimbabwe Ordinary 50% 100% Mining exploration and development
Fisherman Mining Limited Zambia Ordinary 100% 100% Mining exploration and development
Millwall International Investments Limited BVI Ordinary 100% 100% Holding company
Mineral Mining SA (iv) Romania Ordinary 80% nil Mining exploration and development
Moorestown Limited BVI Ordinary 100% 100% Mining exploration and development
The above table shows the principal subsidiaries of the Company. A full
list of all group subsidiaries is given in Note 30, at the end of this
report.
i Previously 'Touzel Holdings Limited'. The Company has
effective control of this entity. The voting rights are equal to the
proportion of the shares held.
ii In March 2015 the Company concluded an agreement whereby it
disposed of the whole of its interest in African Consolidated Resources
(Zambia) Limited while retaining full ownership of the Nkombwa Hills
rare earth project, through continued ownership of Fisherman Mining
Limited, subject to an earn-in agreement with the purchaser whereby the
purchaser will acquire up to 65% interest in this project over the next
three years provided that a stipulated monetary amount is expended by
way of development of the project. The proceeds from the sale of the
company was $100,000 plus a further $1,000,000 conditional on the
purchaser obtaining full unfettered access to the Kalengwa Mine
property.
iii In November 2014 the Company, through its principal
subsidiary in Zimbabwe, entered into an investment agreement with a
local company, Grayfox Investments (Private) Limited, by which funding
was provided to enable the Pickstone-Peerless Gold Mine to be put into
production. In terms of this agreement, the investor acquired a 50%
interest in Dallaglio Investments (Private) Limited, the Zimbabwean
subsidiary which is the holding company for Breckridge Investments
(Private) Limited, the operating subsidiary which owns the mining rights
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to the project.
iv In March 2015 the Company acquired an 80% shareholding in
Mineral Mining SA which owns the Baita Plai Polymetallic Mine in
Romania. See also note 15 for more detail of this transaction.
2015 2014
v Discontinued operations $'000 $'000
Cash consideration received 100
Total consideration received 100 -
Cash disposed of - -
Net cash inflow on disposal of discontinued operation 100 -
Net assets disposed (other than cash):
Property, plant and equipment (1)
Intangibles (1,132) -
Pre- and post-tax loss on disposal of discontinued
operation (1,033) -
Earnings per share from discontinued operations
Basic earnings/(loss) per share (0.00)cents (0.03)cents
Statement of cash flows
The statement of cash flows includes the following
amounts relating to discontinued operations:
- Operating activities 438 -
- Investing activities (447) -
- Financing activities - -
Net cash from discontinued operations (9) -
14 Loan to Group Companies 2015 2014
Company Company
$'000 $'000
Loan to Group Companies 29,256 29,300
Loans to Group companies are repayable on demand,
subject to relevant exchange control approvals being
obtained. The treatment of this balance as non-current
reflects the Company's expectation of the timing of
receipt.
15 Business combinations during the year
On 23 March 2015 the Group exercised an option to acquire 80% of the
voting equity instruments of Mineral Mining SA (MMSA), a Romanian
company which is in administration and whose principal activity is
ownership of the Baita Plai Polymetallic Mine (BPPM). The principal
reason for this acquisition was to reopen and operate BPPM.
MMSA is subject to insolvency proceedings and as a result of these
proceedings the mining licence was transferred to a state company, Baita
SA, through a protocol dated 6 August 2013 (the Protocol). Under the
Protocol it was provided that a sub-licence on BPPM be granted back to
MMSA if MMSA was not declared as dissolved and bankrupt and could
produce proof of its financial position to demonstrate resources for the
continuation of mining.
Under specific provisions of Romanian insolvency law MMSA has entered a
merger agreement (the Merger) with the Company's Romanian subsidiary,
African Consolidated Resources srl (AFCR SRL) under which all the assets
and liabilities of MMSA will be fused by absorption into AFCR SRL, the
bankruptcy of MMSA will be formally ended, and MMSA will cease to exist.
The Merger is irrevocable and requires no further consent from any
outside authority, but completion remains subject to certain
bureaucratic processes. After completion of the Merger a sub-licence on
BPPM should be granted to AFCR SRL under the terms of the Protocol, AFCR
SRL being a company whose financial resources for the continuation of
mining can be demonstrated.
There is a debt due to Baita SA payable on the grant of the sub-licence
on BPPM to MMSA or, as a result of the Merger, to AFCR SRL. The precise
amount of the debt is disputed but it has been determined by the
Judicial Administrator of MMSA that it will not exceed RON 2,500,000
(approximately US$ 625,000). The Group has provided the full amount of
RON 2,500,000 as a payable in the financial statements.
Details of the fair value of identifiable assets and liabilities
acquired, purchase consideration and capital reserve arising are as
follows:
Fair value
$000's
Property, plant and equipment 2,621
Inventories 61
Payables (1,244)
Net assets 1,438
Fair value of consideration paid - Cash 1,269
Gain on acquisition 169
The assets of Mineral Mining SA were revalued by professional
valuers in the course of the administration of the
company, in January 2015.
The gain resulting from this acquisition arises from
the fact that the company is in administration. The
gain acquisition has been accounted for in the income
statement in accordance with IFRS 3.
2015 2014 2015 2014
Group Group Company Company
16 Inventory $'000 $'000 $'000 $'000
Material and supplies 65 1 - -
There is no material difference between the replacement
cost of stocks and the amount stated above. The amount
of inventory recognised as an expense during the year
was $16,142 (2014 - $119,030).
2015 2014 2015 2014
Group Group Company Company
17 Receivables $'000 $'000 $'000 $'000
Other receivables 634 560 345 23
Call on subscribed capital in
subsidiary 2,300 - - -
Prepayments 831 10 - -
VAT 369 610 - -
4,134 1,180 345 23
The call on subscribed capital in subsidiary represents
the balance of the Non-Controlling Interest's investment
in Dallaglio Investments (Private) Limited (see note
13). This amount was received in full by 30 June 2015.
All other amounts are due for payment within one year.
No receivables are past due or impaired.
2015 2014 2015 2014
Group Group Company Company
18 Available for sale investments $'000 $'000 $'000 $'000
Fair value at the beginning of the year 6 90 1 15
Write off - (22) - -
Movement in fair value 18 (62) 4 (14)
24 6 5 1
Available for sale investments comprise shares in
quoted companies.
2015 2014 2015 2014
Group Group Company Company
19 Secured borrowings $'000 $'000 $'000 $'000
Loan to third party 1,555 - - -
The loan is secured by a pledge of the Group's shareholding
in the subsidiary company at interest rate of 12%
per annum. The loan is repayable in four equal six-monthly
amounts, commencing in April 2016 with the final payment
being in October 2017.
The loan contains a conversion option; therefore in
the case of default the loan will be converted into
Vast Shares, therefore there is no accounting impact
of the conversion option. The Directors have concluded
that the conversion is unlikely, based on the Group
current cash flow position.
20 Trade and other payables
Trade payables 1,423 - - -
Other payables 748 34 - 5
Other taxes and social security taxes 25 2 24 5
Short term loans 1,229 - 1,229 -
Accrued expenses 642 536 473 458
4,067 572 1,726 468
Trade payables all relate to amounts payable by Mineral
Mining SA (MMSA); of these amounts, $0.95 million
falls due for payment on the restitution of the MMSA
mining licence. The balance is payable by instalments
commencing on the restitution of the mining licence.
Other payables relate to the balance of the purchase
consideration for MMSA, which is payable on the restitution
of the mining licence.
The short term loan falls due on 30(th) June 2015
and carries conversion rights. There is no equity
apportionment of the loan and the full amount of the
loan is dealt with as a liability. See further detail
in notes 26 and 29.
Otherwise, all amounts fall due for payment within
30 days.
21 Financial instruments - risk management
Significant accounting policies
Details of the significant accounting policies in
respect of financial instruments are disclosed in
Note 1 to the financial statements. The Group's financial
instruments comprise available for sale investments
(note 18), cash and items arising directly from its
operations such as other receivables, trade payables
and loans.
Restricted cash
A cash amount of $636,519 (2014: nil) was, at the
reporting date, held in an escrow account for the
benefit of Baita SA in order to provide proof of ability
to pay a debt that would become due to Baita SA following
transfer of a mining sub-licence to Mineral Mining
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SA under the terms of the Protocol (see note 15).
As at 2 June 2015 the escrow conditions restriction
governing this cash fell away and the full amount
then reverted to the beneficial use of the Group.
Financial risk management
The Board seeks to minimise its exposure to financial
risk by reviewing and agreeing policies for managing
each financial risk and monitoring them on a regular
basis. No formal policies have been put in place in
order to hedge the Group and Company's activities
to the exposure to currency risk or interest risk,
however this will be considered periodically by the
Board. No derivatives or hedges were entered into
during the year.
The Group and Company is exposed through its operations
to the following financial risks:
-- Credit risk
-- Market risk (includes cash flow interest rate risk
and foreign currency risk)
-- Liquidity risk
The policy for each of the above risks is described
in more detail below.
The principal financial instruments used by the Group,
from which financial instruments risk arises are as
follow:
-- Receivables
-- Cash and cash equivalents
-- Trade and other payables (excluding other taxes
and social security) and loans
-- Available for sale investments
The table below sets out the carrying value of all
financial instruments by category and where applicable
shows the valuation level used to determine the fair
value at each reporting date. The fair value of all
financial assets and financial liabilities is not
materially different to the book value.
2015 2014 2015 2014
Group Group Company Company
$'000 $'000 $'000 $'000
Loans and receivables
Cash and cash equivalents 3,090 568 2,330 467
Restricted cash 637 - - -
Receivables 4,134 1,180 345 23
Loans to Group Companies - - 28,019 29,300
Available for sale financial assets
Available for sale investments
(valuation level 1) 24 6 5 1
Other liabilities
Trade and other payables (excl short
term loans) 2,838 572 497 468
Loans and borrowings 2,784 - 1,229 -
Credit risk
Financial assets which potentially subject the Group
and the Company to concentrations of credit risk consist
principally of cash, short term deposits and other
receivables. Cash balances are all held at recognised
financial institutions. Other receivables are presented
net of allowances for doubtful receivables. Other
receivables currently form an insignificant part of
the Group's and the Company's business and therefore
the credit risks associated with them are also insignificant
to the Group and the Company as a whole.
The Company has a credit risk in respect of inter-company
loans to subsidiaries. The recoverability of these
balances is dependent on the commercial viability
of the exploration activities undertaken by the respective
subsidiary companies. The credit risk of these loans
is managed as the Directors constantly monitor and
assess the viability and quality of the respective
subsidiary's investments in intangible mining assets.
Inter-company loan amounts between the holding company
and its Zimbabwean subsidiary Canape Investments,
are subject to credit risk in so far as the Zimbabwe's
exchange control regulations, which change from time
to time, may prevent timeous settlement.
Maximum exposure to credit risk
The Group's maximum exposure to credit risk by category
of financial instrument is shown in the table below:
2015 2015 2014 2014
Carrying value Maximum exposure Carrying value Maximum exposure
$'000 $'000 $'000 $'000
Cash and
cash
equivalents 3,090 3,090 568 568
Restricted
cash 637 637 - -
Receivables 4,134 4,134 1,180 1,180
Loans and
borrowings 2,784 2,784 - -
The Company's maximum exposure to credit risk by class
of financial instrument is shown in the table below
:
Cash and cash equivalents 2,330 2,330 467 467
Receivables 345 345 23 23
Loan to Group Companies* 29,256 29,256 29,300 29,300
Loans and borrowings 2,784 2,784 - -
*Net of impairment charges on advances to Group companies of $8.5
Million (2014 - $8.5 million)
Market risk
Cash flow interest rate risk
The Group has adopted a non-speculative policy on
managing interest rate risk. Only approved financial
institutions with sound capital bases are used to
borrow funds and to invest surplus funds in. The Group
and the Company had no borrowing facilities at either
the current year end or previous period end.
The Group and the Company seeks to obtain a favourable
interest rate on its cash balances through the use
of bank deposits. At year end the Group had a cash
balance of $3.727 million (including restricted cash)
(2014: $0.568 million) which was made up as follows:
2015 2014
Group Group
$'000 $'000
Sterling 287 130
United States Dollar 2,765 416
Euro 671 22
Lei (Romania) 4 -
3,727 568
Included within the above are amounts of GBP193,128
($286,531) (2014: GBP78,226 ($130,184)) and US$2,025,295
(2014: $335,100)) held within fixed and floating rate
deposit accounts. Interest rates range between 1%
and 2% based on bank interest rates.
The Group received interest for the year on bank deposits
of $2,511 (2014: $4,105).
The effect of a 10% reduction in interest rates during
the year would, all other variables held constant,
have resulted in reduced interest income of $251 (2014:
$411). Conversely the effect of a 10% increase in
interest rates during the year would, on the same
basis, have increased interest income by $251 (2014:
$411).
At the year end, the Company had a cash balance of
$2.330 million (2014 : $0.467 million) which was made
up as follows:
2015 2014
Company Company
$'000 $'000
Sterling 287 130
United States Dollar 2,025 337
Euro 18 -
2,330 467
The Group and the Company had interest bearing debts
at the current year end of $2.784 million (2014: nil).
These are made up as follows:
Interest 2015 2014 2015 2014
rate Group Group Company Company
$'000 $'000 $'000 $'000
Convertible short term loan 15% 1,229 - 1,229 -
Secured long term loan 12% 1,555 - - -
2,784 1,229
These loans are repayable as
follows:
- Within 1 year 1,284
- Between 1 and 2 years 750
- Within 2 years 750
Foreign currency risk
Foreign exchange risk is inherent in the Group's and
the Company's activities and is accepted as such.
The majority of the Group's expenses are denominated
in United States Dollars and therefore foreign currency
exchange risk arises where any balance is held or
costs are incurred, in currencies other than the United
States Dollars. At 31 March 2015 and 31 March 2014,
the currency exposure of the Group was as follows:
Sterling US Dollar Euro Other Currencies Total
At 31 March 2015 $'000 $'000 $'000 $'000 $'000
Cash and cash
equivalents 287 2,765 671 4 3,727
Other receivables - 3,997 21 116 4,134
Trade and other
payables (249) (2,210) - (1,611) (4,067)
Available for sale
investments - 24 - 24
At 31 March 2014
Cash and cash equivalents 130 417 21 - 568
Other receivables - 1,180 - - 1,180
Trade and other payables (354) (218) - - (572)
Available for sale investments - 6 - - 6
The effect of a 10% strengthening of Sterling against
the US dollar at the reporting date, all other variables
held constant, would have resulted in increasing/(decreasing)
post tax losses by $3,658 (2014 : ($22,400)). Conversely
the effect of a 10% weakening of Sterling against
the US dollar at the reporting date, all other variables
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held constant, would have resulted in decreasing/(increasing)
post tax losses by $3,658 (2014 : ($22,400)).
At 31 March 2015 and 31 March 2014, the currency exposure of the Company
was as follows:
Sterling US Dollar Euro Other Currencies Total
At 31 March 2015 $'000 $'000 $'000 $'000 $'000
Cash and cash
equivalents 287 2,026 17 - 2,330
Other receivables - 324 21 - 345
Loans to Group
companies - 28,488 768 - 29,256
Trade and other
payables (247) (1,479) - - (1,726)
Available for
sale
investments - 5 - - 5
At 31 March 2014 -
Cash and cash
equivalents 130 337 - 467
Other receivables 3 20 - 23
Loans to Group
companies - 29,300 - 29,300
Trade and other
payables (357) (111) - (468)
Available for
sale
investments - 1 - 1
Liquidity risk
Any borrowing facilities are negotiated with approved
financial institutions at acceptable interest rates.
All assets and liabilities are at fixed and floating
interest rate. The Group and the Company seeks to
manage its financial risk to ensure that sufficient
liquidity is available to meet the foreseeable needs
both in the short and long term.
As set out in note 20 the consolidated trade and other
payables balance of $4.1 million (2014: $0.6 million)
is all due for payment within 45 days of the reporting
date, except for $3.4 million (2014: $0.1 million)
in respect of the Trade and Other payables and the
Short term loan. Various measures have been put in
place to contain costs including placing staff on
half salaries, retrenchment of excess staff and cessation
of exploration activities to focus on mine development.
Capital
The objective of the Directors is to maximise shareholder
returns and minimise risks by keeping a reasonable
balance between debt and equity. In previous years
the Company and Group has minimised risk by being
purely equity financed. In the current year, the Group
has assumed debt risk but has kept the net debt amount
minimal.
The Group's debt to equity ratio is (0.9%) (2014:
0%), calculated as follows: 2015
$'000
Loans and borrowings 2,784
Less: cash and cash equivalents (3,090)
Net debt (306)
Total equity 33,688
Debt to capital ratio (%) (0.9%)
Share
22 Share capital Ordinary 1p Ordinary 0.1p Deferred 0.9p premium
Number of Nominal Number of Nominal Number of Nominal
shares value shares value shares value
Issued $'000 $'000 $'000 $'000
As at 31 March 2013 845,922,924 14,004 - - - - 62,751
Issued during the year 4,614,740 71 - - - - 142
As at 31 March 2014 850,537,664 14,075 - - - - 62,893
Issued during the year 13,025,000 205 495,084,663 755 3,212
Share conversion (863,562,664) (14,280) 863,562,664 1,428 863,562,664 12,852 -
As at 31 March 2015 - - 1,358,647,327 2,183 863,562,664 12,852 66,105
Details of the shares issued during the year are as
shown in the table below and in the Statement of Changes
of Equity.
On 30 December 2014 the Company converted each ordinary
share of 1p each, into one ordinary share of 0.1p
and one deferred share of 0.9p each.
The number of shares reserved for issue under share
options at 31 March 2015 was 64,563,612 (2014: 33,000,000).
The number of shares held by the EBT at 31 March 2015
was 32,500,000 (2014: 32,500,000), see note 21 for
additional details about the EBT.
The deferred shares carry no rights to dividends or
to participate in any way in the income or profits
of the Company. They may receive a return of capital
equal to the amount paid up on each deferred share
after the ordinary shares have received a return of
capital equal to the amount paid up on each ordinary
share plus GBP10,000,000 on each ordinary share, but
no further right to participate in the assets of the
Company. The Company may, subject to the Statutes,
acquire all or any of the deferred shares at any time
for no consideration. The deferred shares carry no
votes.
The ordinary shares carry all the rights normally
attributed to ordinary shares in a company subject
to the rights of the deferred shares.
As part of the transaction with Grayfox, the Group
granted an option which allows Grayfox to convert
its 50% to 288, 333,333 shares in Vast. The Directors
have considered the value of the Grayfox option and
concluded that interest is immaterial.
Ordinary 1p Ordinary 0.1p
Issue Issue
Date of Number of price Number of price
issue shares (pence) shares (pence) Purpose of issue
2014
24 July
2013 2,848,387 2.0 Settle liabilities
24 July
2013 833,333 3.0 Settle liabilities
24 July
2013 933,020 3.5 Settle liabilities
4,614,740
2015
15
December
2014 10,025,000 2.0 Settle liabilities
15
December
2014 3,000,000 1.5 Settle liabilities
6 January Issued for cash; acquisition of Mineral Mining SA
2015 318,418,000 0.5 and development of other opportunities in Romania
9 Issued for cash; provision of additional funds for
February opportunities in Romania and for general corporate
2015 149,999,997 0.6 purposes.
10 March
2015 26,666,666 0.6 Settle liabilities
13,025,000 495,084,663
23 Share based payments
Equity-settled share based payments
The Company has granted share options and warrants to Directors, staff
and consultants. The tables below reconcile the opening and closing
number of share options and warrants in issue at each reporting date:
Exercised Lapsed Granted
Exercise Outstanding during during during Outstanding
price at last last last at Final exercise date
31 March 12 31 March
2014 12 months months 12 months 2015
.0.5p - - - 8,403,709 8,403,709 December 2016
.0.5p - - - 10,000,000 10,000,000 January 2017
0.5p - - - 6,659,903 6,659,903 December 2017
0.6p - - - 4,500,000 4,500,000 February 2017
2.0p - - - 500,000 500,000 December 2016
4.0p 2,000,000 - - - 2,000,000 March 2016
5.0p 15,000,000 - - - 15,000,000 August 2015
5.0p 5,000,000 - - - 5,000,000 December 2015
5.0p 2,500,000 - - - 2,500,000 December 2015
5.0p 3,500,000 - - - 3,500,000 August 2015
5.0p - - - 1,500,000 1,500,000 December 2015
10.0p 5,000,000 - - - 5,000,000 August 2015
33,000,000 - - 31,563,612 64,563,612
31 March 12 31 March
2013 months 12 months 12 months 2014
March
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4.0p - - - 2,000,000 2,000,000 2016
August
5.0p 15,000,000 - - - 15,000,000 2015
December
5.0p 8,000,000 - (3,000,000) - 5,000,000 2015
December
5.0p 2,500,000 - - - 2,500,000 2015
August
5.0p 3,500,000 - - - 3,500,000 2015
March
10.0p 25,500,000 - (25,500,000) - - 2015
August
10.0p 5,000,000 - - - 5,000,000 2015
59,500,000 - (28,500,000) 2,000,000 33,000,000
2015 weighted 2014 weighted
average average
exercise price exercise price
(pence) 2015 number (pence) 2014 number
Outstanding at
the beginning
of the year 5.7 33,000,000 7.6 59,500,000
Granted during
the year 0.8 31,563,612 4.0 2,000,000
Lapsed during
the year - - 9.5 (28,500,000)
Exercised during
the year - - - -
Outstanding at
the end of the
year 3.3 64,563,612 5.7 33,000,000
Exercisable at - - - -
the end of the
year
The weighted average remaining lives of the share
options or warrants outstanding at the end of the
period is 15 months (2014: 18 months).Of the 64,563,612(2014:
33,000,000) options outstanding at 31 March 2015,
Nil (2014: 7,000,000) are not yet exercisable at 31
March 2015.
Fair value of share options
The fair values of share options and warrants granted
have been calculated using the Black Scholes pricing
model that takes into account factors specific to
share incentive plans such as the vesting periods
of the Plan, the expected dividend yield of the Company's
shares and the estimated volatility of those shares.
Based on the above assumptions, the fair values of
the options granted are estimated to be:
Share
Share price
Option at Risk
or date free
Warrant Grant Vesting of Dividend interest Fair
Value date periods grant Volatility Life yield rate value
1.83
5p Oct-13 Aug-15 2.75p 54% years Nil 0.23% 0.50p
1.92
5p Jan-14 Dec-15 3.5p 54% years Nil 0.29% 0.80p
1.75
5p Mar-14 Dec-15 4.88p 54% years Nil 0.38% 1.68p
1.42
5p Mar-14 Aug-15 5.12p 54% years Nil 0.38% 1.74p
1.75
5p Mar-14 Dec-15 5.12p 54% years Nil 0.38% 0.72p
1.42
10p Mar-14 Aug-15 5.12p 54% years Nil 0.38% 1.84p
1.92
4p Apr-14 Mar-16 3.38p 62% years Nil 0.38% 2.28p
0.93
0.5p Jan-15 Dec-15 0.68p 12% years Nil 0.63% 0.21p
1.93
2p Jan-15 Dec-16 0.68p 12% years Nil 0.63% 0.00p
1.93
0.5p Jan-15 Dec-16 0.68p 12% years Nil 0.63% 0.14p
1.95
0.5p Jan-15 Jan-17 0.68p 12% years Nil 0.63% 0.14p
2.04
0.6p Jan-15 Feb-17 0.68p 12% years Nil 0.63% 0.06p
2.85
0.5p Jan-15 Dec-17 0.68p 12% years Nil 0.63% 0.14p
Volatility has been based on historical share price
information.
Based on the above fair values and the Group's expectations
of employee turnover, the expense arising from equity-settled
share options and warrants made was $25,318 (credit)
(2014: $173,211 charge).
Cash-settled share based payments
The Directors of the Company have set up an Employee
Benefit Trust (EBT) in which a number of employees
and Directors are participants. The EBT holds shares
on behalf of each participant until such time as the
participant exercises their right to require the EBT
to sell the shares. On the sale of the shares the
participant receives the appreciation of the value
in the shares above the market price on the date that
the shares were purchased by the EBT, subject to the
first 5% in growth in the share price, on an annual
compound basis, being retained by the EBT. The participant
pays 0.01p per share to acquire their rights. The
table below sets out the subscription price and the
rights exercisable in respect of the EBT.
The Company funded (directly and indirectly through
another subsidiary) an amount of $Nil (2014 - $Nil)
to the EBT in order to enable the purchase of shares
in the Company. At the year end, the Company had an
outstanding loan to African Consolidated Resources
(PTC) Limited (under the effective control of Vast
Resources plc and trustee of the EBT) of $Nil (2014:
$ Nil) and Millwall International Investments Limited
had an outstanding loan to the same entity for $217,777
(2014: $217,777). As set out in the EBT accounting
policy note, the EBT has been included as part of
the Company financial statements and consolidated
as part of the Group financial statements.
Lapsed
Exercised during Granted
during Last during Date
EBT Outstanding last 12 12 last 12 Outstanding exercisable
Exercise price At 31 March 2014 months months months At 31 March 2015 from
8.75p 6,000,000 - - - 6,000,000 July 2010
8.75p 6,000,000 - - - 6,000,000 July 2011
9.00p 2,500,000 - - - 2,500,000 August 2011
9.00p 2,500,000 - - - 2,500,000 August 2012
6.00p 7,750,000 - - - 7,750,000 August 2012
6.00 7,750,000 7,750,000 August 2013
32,500,000 - - - 32,500,000
As at 31 March 2015 a total of 32,500,000 of the EBT
participation rights were exercisable.
Lapsed Granted
Exercised during during
during prior prior
Outstanding prior 12 12 12 Outstanding
At 31 March 2013 months months months At 31 March 2014
July
8.75p 6,000,000 - - - 6,000,000 2010
July
8.75p 6,000,000 - - - 6,000,000 2011
August
9.00p 2,500,000 - - - 2,500,000 2011
August
9.00p 2,500,000 - - - 2,500,000 2012
August
6.00p 7,750,000 - - - 7,750,000 2012
August
6.00p 7,750,000 7,750,000 2013
32,500,000 - - - 32,500,000
As at 31 March 2014 a total of 24,750,000 of the EBT
participation rights were exercisable.
Fair value of EBT participant rights
The fair values of the rights granted to participants
under the EBT have been calculated using a Monte Carlo
valuation model. Based on the assumptions set out
in the table below, as well as the limitation on the
growth in share price attributable to the participants
(as set out in the table above) the fair-values are
estimated to be:
Rights
exercisable July July August August August August
from: 2010 2011 2011 2012 2012 2013
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Grant date Aug 2009 Aug 2009 Oct 2010 Oct 2010 Sep 2011 Sep 2011
Validity of
grant 10 years 10 years 10 years 10 years 10 years 10 years
Aug 2009 Aug 2009 Oct 2010 Oct 2010
Vesting - Jul - Jul - Aug - Aug Sep 2011- Sep 2011-
periods 2010 2011 2011 2012 Aug 2012 Aug 2013
Share price
at date of
grant 8.75p 8.75p 9.00p 9.00p 6.00p 6.00p
Volatility 51% 51% 51% 51% 51% 51%
Dividend
yield Nil Nil Nil Nil Nil Nil
Risk free
investment
rate 0.65% 0.65% 0.65% 0.65% 0.65% 0.65%
Fair value Nil Nil Nil Nil Nil Nil
Volatility has been based on historical share price
information.
2015 2014
Group Group
Share options expense $'000 $'000
Share option (credit)/expense (25) 173
24 Reserves
Details of the nature and purpose of each reserve
within owners' equity are provided below:
-- The Share capital denotes the nominal value at 0.1p
each of the shares in issue.
-- The Share premium holds the balance of consideration
received net of fund raising costs in excess of the
par value of the shares.
-- The share options reserve represents the accumulated
balance of share benefit charges recognised in
respect of share options granted by the Company, less
transfers to retained losses in respect of options
exercised or lapsed.
-- The foreign currency translation reserve comprises
amounts arising on the translation of the Group and
Company financial statements from Sterling to United
States Dollars, as set out in Note 1, prior to the
change in functional currency to United States
Dollars.
-- The available for sale reserve holds the
gains/(losses) arising on recognising financial
assets classified as available for sale at fair
value.
-- The EBT reserve has been recognised in respect of the
shares purchased in the Company by the EBT; the
reserve serves to offset against the increased share
capital and share premium arising from the Company
effectively purchasing its own shares.
-- The retained deficit reserve represents the
cumulative net gains and losses recognised in the
Group statement of comprehensive income.
25 Non-controlling Interests
Breckridge Investments (Private) Limited is a 50% owned subsidiary of
the Company that has material non-controlling interests (NCI).
Mineral Mining SA is an 80% owned subsidiary of the company which also
has a non-controlling interest.
Summarised financial information for these two entities, before
intra-group, eliminations, is presented below together with amounts
attributable to NCI:
Breckridge Investments Mineral Mining Total NCI
For the year ended 31 March 2015 2015 2015
$000,s $000's $000's
Revenue - - -
Administrative expenses (525) 129 (396)
Operating loss (525) 129 (396)
Finance expense (1) - (1)
Loss before tax (526) 129 (397)
Tax expense - -
Loss after tax (526) 129 (397)
Total comprehensive loss
allocated to NCI 263 (26) 237
Dividends paid to NCI - - -
Cash flows from operating
activities (412) - (412)
Cash flows from investing
activities (1,248) - (1,248)
Cash flows from financing
activities 1,714 - 1,714
Net cash inflows/(outflows) 54 - 54
As at 31 March 2015 2015 2015
$000's $000's $000's
Assets:
Intangible assets 18,806 - 18,806
Property plant and
equipment 1,222 2,621 3,843
Trade and other debtors 39 - 39
Inventory 4 61 65
Cash and cash equivalents 54 - 54
Liabilities:
Trade and other payables (145) (1,243) (1,388)
Loans and other borrowings (1,764) - (1,764)
Accumulated non-controlling
interests 11,140 (172) 10,968
26 Related party transactions
Company
Directors and key management emoluments are disclosed in note 8.
A short term loan of $1.2 million was provided in June 2014 by a company
associated with the Chairman, for working capital requirements. This
loan bears interest at 15% and is repayable on 30 June 2015. The
principal is convertible, at the lender's election, into new ordinary
shares of the Company at an issue price of 1.5p or the lowest price at
which the Company secures new funding prior to the repayment date
whichever is the lower.
The loan is included in current liabilities at an amount of $1,229,096.
At the date of reporting it had been agreed that the conversion rights
would be exercised and, subject to the appropriate resolutions being
passed by the Company in a general meeting, the principal will be repaid
by the issue of 154,649,140 shares at a value of 0.5p each.
Group
The non-controlling interest in the Mineral Mining SA acquisition,
referred to in Note 13, where 20% of the shareholding of the subsidiary
is held by third parties (the "AP Group"), consist principally of a
Director and senior executives of the Group, namely:
Roy Tucker (Director) 2%
Andrew Prelea (Executive) 10%
Michael Kellow (Executive) 6%
Senior Romanian management 2%
In December 2014 the Company entered an option agreement with the AP
Group (the "Option Agreement") which was augmented in February 2015 to
acquire an 80% interest in MMSA, the AP Group having by February 2015 a
contract to acquire the whole of the issued share capital of MMSA from
former owners.
Under the Option Agreement, should the Option be exercised the Company
would be required to pay up to $3.6 million partly for contractual sums
due to the former owners, partly to retire existing debts of MMSA, and
partly towards due diligence costs, operational overheads and mine
rehabilitation (the "Obligation"). On exercise of the Option any
payments by the Company in respect of matters covered by the Obligation
made prior to exercise would be treated as a payment on account of the
Obligation. The Option was duly exercised on 23 March 2015, as a result
of which the Company acquired an 80% interest in MMSA.
27 Contingent liabilities and capital commitments
Contingent liability - Zimbabwe Indigenisation
The Indigenisation regulations stipulate that all Zimbabwean registered
companies, with a net asset value of $500,000 or more transfer not less
than 51% of their issued shares to indigenous persons within a five year
period. These regulations are relevant to Canape Investments (Private)
Limited and its subsidiaries which are Group companies registered and
operating in Zimbabwe.
Following the investment agreement with the partner in the
Pickstone-Peerless Gold Mine, these regulations now come into effect in
respect of Dallaglio Investments (Private) Limited. The method of
implementation of these regulations is unresolved, and the Group intends
to await government guidance on this issue.
All other Zimbabwean companies in the Group, principally Canape
Investments (Private) Limited but also other claim holding subsidiaries,
were or are in a net liability position at the reporting date, due to
them being financed by loans from the holding or other group companies.
As such the Directors believe that there is currently no compulsion to
effect any transfer of shareholding in these subsidiaries to any third
party or to enter into any plan to do so. Counsel's opinion supports
this view.
The full effect that this legislation might have on the operations of
the Group is yet to be quantified and is subject to some uncertainty.
Capital commitment - Pickstone-Peerless Gold Mine
At 31 March 2015 the Group, through its Zimbabwean subsidiary Breckridge
Investments (Private) Limited, had authorised, but not contracted,
capital expenditure amounting to $2,771,589 in respect of the
Pickstone-Peerless Gold Mine. This expenditure will be incurred between
the reporting date and the end of September 2015.
28 Litigation
Marange
In 2006 the Group registered several mining claims in Marange under
shelf companies. At that time the Group was not aware that the shelf
companies had not actually been registered. In Zimbabwe the
registration process had started but the companies were only registered
a short period after the claims were registered in the company names.
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After the registration of the claims 120,031.87 carats of diamonds were
acquired from the claims. The Zimbabwe Mining Commissioner subsequently
cancelled the registration of the claims on the instructions of the
Minister of Mines. The Group instituted proceedings in the Zimbabwe
High Court challenging the cancellations of the registration of the
claims. The Zimbabwe High Court handed down a judgement declaring that
the cancellations were invalid and that the claims were legally held by
the Group. The High Court also ordered that the diamonds which had been
seized from the Group's offices in the Harare should be returned.
The Minister of Mines instructed the Attorney General to note an appeal
to the Supreme Court. The appeal was noted but the Attorney General
renounced agency because he considered that there were no valid grounds
of appeal. The diamonds that were seized from the Group were not
returned. They are being held in the vault of the Reserve Bank of
Zimbabwe.
The Minister of Mines subsequently wrote to the High Court judge asking
him to rescind his judgement on the basis that the Group had
fraudulently withheld information in order to get a favourable
judgement. Although the Judge had no jurisdiction to deal with the
matter because it was on appeal to the Supreme Court, he did issue a
judgement rescinding his earlier judgement. The Group has appealed
against that judgement. Legal opinion is to the effect that the
Rescission Judgement is fatally flawed. The Minister withdrew his
appeal to the Supreme Court so if the Supreme Court upholds the appeal
against the Rescission Judgement the claims will revert to the Group.
In 2010, soon after the issue of the Rescission Judgement, the Attorney
General laid criminal charges against the Group the allegations being
that registration of the claims in the names of the non- registered
companies was prejudicial to the Ministry of Mines; alternatively the
Group was illegally in possession of the diamonds above. The Group
applied to the High Court for the charges to be quashed. More than 2
years later, in May 2013, the Judge handed down his judgement. He ruled
that he could not quash the charges and that the Group should have
applied for a stay of proceedings until the appeal had been determined.
The suggested application has since been made to the Attorney General.
Legal opinion is to the effect that the possibility of conviction on any
of the charges is very remote. However the Attorney-General has now
withdrawn the charges because, instead of the charges being laid against
the parent company or any active group subsidiary, they were laid
against African Consolidated Resources (Private) Limited, a company
registered in Zimbabwe, which is a shelf company and not a group
company. It could not have been involved because it had no staff.
Baita Plai Polymetallic Mine licence
As set down more fully elsewhere in this report, during the year the
Group acquired an 80% interest in Mineral Mining SA (MMSA), a Romanian
entity which is in administration and which owns the Baita Plai
Polymetallic Mine. As set out in Note 15, one of the debts due by MMSA
is a disputed amount to a State company, Baita SA. The precise amount
of the debt is subject to an outstanding audit but the Judicial
Administrator of MMSA has determined that it will not exceed RON
2,500,000 (approximately US$ 625,000). Baita SA has lodged an appeal
against MMSA and claims that that the debt due should be determined as a
definite sum of RON 2,500,000. Counsel to MMSA are of the opinion that
the claim by Baita SA will fail.
As stated in Note 15, the Group has provided the full amount of RON
2,500,000 as a payable in the financial statements.
29 Events after the reporting date
Repayment of convertible loan
In June 2014 a convertible loan for $1.2 million, secured on the
Pickstone-Peerless Gold Mine, was provided from a company associated
with the Chairman for working capital requirements. This loan was
repayable by 30 June 2015 and is disclosed in note 20 as a current
liability and note 26 as a Related Party Transaction. At the date of
reporting it has been agreed that this loan will be repaid by the issue
of ordinary shares in the company, subject to the appropriate
resolutions being passed by the Company in a general meeting.
Manaila Polymetallic Mine acquisition
On 7 July 2015 the Group announced that it had concluded an agreement to
purchase 50.1% of the issued share capital of Sinarom Mining Group SRL,
a company which was currently operating the open pit Manaila
Polymetallic Mine (MPM) subject to certain conditions precedent.
Fulfilment of all conditions precedent was announced on 22 July 2015 and
at the date of reporting the Group has taken over management of MPM, and
completion of the acquisition is only subject to the registration of the
sale at the Romanian Trade Registry. Due to the proximity of the
completion of the transaction to the publication of the Group's results
the Directors have not yet determined the accounting treatment for this
transaction.
Share Appreciation Scheme
In June 2015 the Company established a Share Appreciation Scheme to
incentivise Directors and senior executives. The basis of the Scheme is
to grant a fixed number of 'share appreciation rights' (SARS) to
participants. Each SAR is credited rights to receive at the discretion
of the Company ordinary shares in the Company or cash to a value of the
difference in the value of a share at the date of exercise of rights and
the value at date of grant. The SARS are subject to various performance
conditions. The aggregate number of SARS awarded was 87,000,000.
Appointment of joint corporate broker
In June 2015 the Company appointed Dowgate Capital Stockbrokers Ltd as
joint broker.
Fund raising
In July 2015 the Company raised approximately GBP1.26 million
(approximately $1.96 million) through a placing and a subscription at a
price of 1.2p per share to further the Company's opportunities in
Romania and for general corporate purposes, and in August 2015 raised a
further GBP27,500 (approximately $42,500) for similar purposes.
Exercise of warrants
In August 2015 an adviser to the Company exercised warrants for the
allotment of 7,000,000 ordinary shares in the Company at an exercise
price of 0.5p per shares.
30 Group subsidiaries
A full list of subsidiary company is given below:
Proportion Proportion
Country of held by held by
Company registration group group Nature of business
2015 2014
African Consolidated Resources SRL Romania 100% 100% Mining exploration and development
African Consolidated Resources (Zambia) Limited Zambia nil 100% Mining exploration and development
African Consolidated Resources (PTC) Limited* BVI nil nil Nominee company
ACR Nominees Limited (change of name to Vast Resources
Nominees Ltd post reporting date) UK 100% 100% Nominee company
Breckridge Investments (Private) Limited Zimbabwe 50% 100% Mining exploration and development
Bottompit Mining Limited Zambia nil 100% Claim holding
Cadex Investments (Private) Limited Zimbabwe 100% 100% Claim holding
Canape Investments (Private) Limited Zimbabwe 100% 100% Mining exploration and development
Conneire Mining (Private) Limited Zimbabwe 100% 100% Claim holding
Holding Company for Breckridge Investments (Private)
Dallaglio Investments (Private) Limited Zimbabwe 50% 100% Limited
Dashaloo Investments (Private) Limited Zimbabwe 100% 100% Claim holding
Exchequer Mining Services (Private) Limited Zimbabwe 100% 100% Claim holding
Fisherman Mining Limited Zambia 100% 100% Mining exploration and development
Heavystuff Investment Company (Private) Limited Zimbabwe 100% 100% Claim holding
Kleton Investments (Private) Limited Zimbabwe 50% 100% Claim holding
Lafton Investments (Private) Limited Zimbabwe 50% 100% Claim holding
Lescaut Investments (Private) Limited Zimbabwe 50% 100% Claim holding
Lomite Investments (Private) Limited Zimbabwe 100% 100% Claim holding
Lotaven Investments (Private) Limited Zimbabwe 50% 100% Claim holding
(MORE TO FOLLOW) Dow Jones Newswires
September 15, 2015 10:35 ET (14:35 GMT)
Copyright (c) 2015 Dow Jones & Company, Inc.
African Consolidated (LSE:AFCR)
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