Rambler Metals and Mining Plc (AIM:RMM)(TSX VENTURE:RAB) ("Rambler" or the
"Company") -
Registered number: 05101822 (England and Wales)
RAMBLER METALS AND MINING PLC
CONTENTS OF THE FINANCIAL STATEMENTS
Page
Company Information 1
Chairman's Statement 2
Management's Discussion and Analysis 3
Report of the Directors 29
Directors' Responsibilities 32
Corporate Governance 33
Independent Auditor's Report 34
Consolidated Income Statement 36
Consolidated Statement of Comprehensive Income 37
Consolidated Statement of Financial Position 38
Consolidated Statement of Changes in Equity 39
Consolidated Statement of Cash Flows 40
Notes to the Consolidated Financial Statements 41
Company Statement of Comprehensive Income 71
Company Statement of Financial Position 72
Company Statement of Changes in Equity 73
Company Statement of Cash Flows 74
Notes to the Company Financial Statements 75
RAMBLER METALS AND MINING PLC
COMPANY INFORMATION
FOR THE YEAR ENDED JULY 31, 2013
Directors: T S Chan
E C Chen
D H W Dobson
L D Goodman
B Hinchcliffe
S Neamonitis
G Ogilvie
J S Thomson
Secretary: P Mercer
Registered office: Salatin House
19 Cedar Road
Sutton
Surrey
SM2 5DA
Registered number: 5101822 (England and Wales)
Auditor: BDO LLP
55 Baker Street
London
W1U 7EU
RAMBLER METALS AND MINING PLC
CHAIRMAN'S STATEMENT FOR THE YEAR ENDED JULY 31, 2013
We are pleased to report the results for the year ended July 31, 2013.
The principal activity of Rambler Metals and Mining plc ('the parent Company' or
'the Company') and its subsidiaries (the 'Group', or 'Rambler') is the
development, mining and exploration of the Ming Copper-Gold Mine ("Ming Mine")
in Newfoundland and Labrador and the exploration and development of other
properties located in Atlantic Canada.
The parent Company's Ordinary Shares trade on the London AIM market under the
symbol "RMM" and on the TSX Venture Exchange under the symbol "RAB".
The presentational currency of the Group's financial statements is Canadian
dollars ($).
OPERATIONAL HIGHLIGHTS
The Group reached considerable milestones and other key achievements during the
fiscal year. Highlights include:
-- Declared commercial production on November 1, 2012 resulting in profits
before tax of $3.7 million for the last three quarters of the year.
-- Generated cash of $12.6 million from operations since declaring
commercial production.
-- Continued its exploration activity at the Ming Mine and acquired
exploration and development rights to other local copper/gold
properties.
FINANCIAL HIGHLIGHTS
The consolidated profit after taxation of the Group in respect of the year ended
July 31, 2013 amounted to $9,053,000 (earnings per share of $0.063) versus a
loss of $3,367,000 for the year ended July 31, 2012 (a loss per share of
$0.026).
Following the declaration of commercial production on November 1, 2012 the Group
generated revenue of $34.7 million mainly from the sale of copper concentrate.
Prior to commercial production the Group generated revenue from saleable
material produced during commissioning of $9.5 million and offset this revenue
against the Mineral Property asset.
The gross assets of the Group amounted to $116.9 million as at the end of the
year. This included Mineral Properties of $49.3 million and Intangible assets of
$17.4 million which consisted of accumulated deferred exploration and evaluation
expenditures on the Lower Footwall Zone at the Ming Mine.
Reaching commercial production is a significant milestone for any exploration or
development project. My thanks to our employees, officers and directors for the
progress made during the year and I look forward to continued success in fiscal
2014.
DHW Dobson
Chairman
October 28, 2013
RAMBLER METALS AND MINING PLC
MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED JULY 31, 2013
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This MD&A, including appendices, is intended to help the reader understand
Rambler Metals and Mining plc ('the parent company') and its subsidiaries
(the 'Group' or 'Rambler'), our operations and our present business
environment. It has been prepared as of October 28, 2013 and covers the
results of operations for the quarter and year ended July 31, 2013. This
discussion should be read in conjunction with the audited Financial
Statements for the year ended July 31, 2013 and notes thereto. These
consolidated financial statements have been prepared in accordance with
International Financial Reporting Standards ("IFRS") and their
interpretations adopted by the International Accounting Standards Board
("IASB"), as adopted by the European Union and with IFRS and their
interpretations adopted by the IASB. The presentation currency is Canadian
dollars. These statements together with the following MD&A are intended to
provide investors with a reasonable basis for assessing the potential future
performance. See Forward Looking Statement disclosure in Appendix 5.
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GROUP OVERVIEW
The strategic vision of the Group is to become Atlantic Canada's leading mine
operator and resource developer. Its principal activity is the development,
mining and exploration of the Ming Copper-Gold Mine ('Ming Mine') in
Newfoundland and Labrador (see map referenced in Appendix 1) and the exploration
and development of other properties located in Atlantic Canada. The Company
declared commercial production on November 1, 2012 and the Group subsequently
reported revenue of $34.7 million from the sale of 14,634 dry metric tonnes
('dmt') of copper concentrate containing 3,947 tonnes of accountable copper
metal, 2,664 and 10,895 ounces of accountable gold and silver respectively and
further revenue from the sale of gold dore bars containing 270 ounces of gold,
generating an overall profit before tax of $2,985,000.
The parent Company's Ordinary Shares trade on the London AIM market under the
symbol "RMM" and the TSX Venture Exchange under the symbol "RAB".
The Group has established the following four strategic goals:
1. Continue as a profitable copper and gold producer by continuing to
produce a high grade concentrate at the Nugget Pond concentrating
facility then improving revenue through the integration of the gold
hydromet plant into the production stream.
2. Increase available resources and reserves through further exploration
both within the Ming mine and current land holdings.
3. Continue to investigate, through various optimization studies,
development of the Lower Footwall Zone creating organic growth.
4. Selectively pursue growth opportunities within Atlantic Canada including
joint ventures, acquisitions, strategic alliances and equity positions.
The Group's directors and management believe that focussing on these priorities
will instil a solid foundation for Rambler and its shareholders, while providing
the best opportunity to build a successful and long term mining company.
RAMBLER METALS AND MINING PLC
MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED JULY 31, 2013
HIGHLIGHTS OF THE YEAR ENDED JULY 31, 2013
This was a significant year following the declaration of commercial production
on November 1, 2012.
Highlights of the 2013 fiscal year included:
Production
-- For the first 9 months in commercial production the Group produced
13,802 tonnes of copper concentrate containing 3,953 tonnes of copper
metal, 3,137 ounces of gold and 23,958 ounces of silver. The average
feed grade during the period was 3.60% Cu, 1.31 g/t Au and 8.95 g/t Ag
followed by a mill recovery of 91%, 62% and 71% for copper, gold and
silver respectively.
-- During the fourth quarter produced a total of 5,244 dmt (Q3'13 - 4,575
dmt) of copper concentrate for a total of 18,299 dmt for fiscal year
ended July 31, 2013 and 20,524 dmt since the start of copper production
in May 2012. Concentrate produced during the fourth quarter averaged 30%
copper with 8 g/t gold and 59 g/t silver (Q3'13: 28% copper with 7 g/t
gold and 51 g/t silver) with milling recoveries for copper and gold
averaging 94% and 65% respectively (Q3'13: 91% and 62% respectively).
-- During the fourth quarter daily tonnage through the mill increased from
571 dmt during May, improved to 585 dmt in June and 610 dmt in July. The
continued increase in throughput was evident in the increased
concentrate produced during the fourth quarter, despite a 12 day
maintenance period in the copper concentrator between June and July
allowing the gold hydromet to be operated.
-- Delivered three shipments of concentrate during the year totalling
approximately 17,956 wet metric tonnes ('wmt') via the Group's port
facility at Goodyear's Cove, Newfoundland and Labrador.
Capital Development
-- Development into the high grade 1807 copper zone continued during the
year with ore being stockpiled as development progressed. With the
majority of tonnes for the 2013 fiscal year coming from this zone, ore
access on multiple levels was the main focus for underground development
crews.
-- A significant development milestone was reached during the year, being
the breakthrough of the independent 1807 ramp system. Ore from all
developed levels of this high copper grade zone can now be accessed with
larger 42 tonne haul trucks. Additional drill sites are also now
available for continued exploration and extension drilling of the known
mineralized areas.
Financing, Royalty and Investment
-- During the year repayments of US$1,454,129 (project to date
US$9,309,570) were made from the delivery of 949 ounces of gold thereby
satisfying requirements in the gold loan agreement to repay a minimum of
US$3.6 million in each of the first two 12 month periods of production
and partially meeting the requirements for the third 12 months.
-- Agreed terms for the extension of its $10 million secured credit
facility to March 31, 2014. Under the amendment agreement the Group paid
Sprott Resource Lending Partnership ('Sprott'), in shares, a 4%
extension fee. Interest will continue to accrue at 9.25% and any
drawdown on the facility will be subject to the 4% drawdown fee as per
the original agreement. Of the initial $10 million credit facility made
available, only $7.5 million was drawn with $500,000 repaid in November
2012. $3.0 million was made available under the amended credit facility
and was available until September 30, 2013. On April 30, 2013 and May
31, 2013 payments of $500,000 and $600,000 respectively reduced the
outstanding balance at year end to $5,900,000. As of the date of this
release the outstanding balance on the facility is $4,750,000.
-- Exercised an option for the acquisition of 588,230 shares of Maritime
Resources Corp (TSX VENTURE:MAE) ('Maritime') priced at $0.25 per share
for a total consideration of $147,000 bringing Rambler's equity stake to
18%. Maritime continues to advance the Green Bay portfolio of
properties, specifically the Hammerdown mine. Maritime filed a Technical
Report to accompany its NI43-101 compliant resource estimate released on
May 28, 2013 which showed 79,000 ounces in the measured category,
349,600 ounces in the indicated category (428,600 ounces of gold
combined) and 661,100 ounces in the Inferred category, at a 3g/t cut-off
grade. The reported grades for each of the measured, indicated and
inferred resource categories were 12.12 g/t, 8.27 g/t and 6.92 g/t gold
respectively.
-- Announced the purchase of a 1% net smelter royalty ('NSR') held over the
Ming Mine for a total consideration of $500,000. The mine was initially
encumbered by a combined 4.5% NSR held by four separate groups. Of the
four net smelter royalties, two included a buyout clause allowing the
Company to purchase 3% of the total NSR for a combined payment of
$1,100,000. This is the second royalty Rambler purchased since starting
commissioning leaving a combined net smelter royalty of 1.5% on the Ming
Mine.
Exploration and evaluation
-- Capital development continued with the 1807 zone ramp being driven down
gradient to the 481 and 485 levels. In the first half of fiscal 2014 the
Company intends to complete a program of in-fill drilling moving
inferred 1807 zone material into the measure and indicated categories
with the medium term intention of testing for new mineralization down
and up-plunge. All zones within the mine, including the 1807 Zone,
remain open both up and down plunge.
-- The Group finalized a purchase and sale agreement with a local
exploration company for the exclusive rights to explore and develop the
Krissy Buckle gold/copper property located within 40 kilometres of the
Group's Nugget Pond precious and base metal processing facility. The
Group has exclusive rights to explore and develop the property while
providing the vendors with a 2% net smelter royalty ('NSR') on any ore
extracted. 1% of the NSR can be bought out at any point in the future
for a fee of $1,000,000. In addition to the NSR, advance royalty
payments totalling $90,000 will be paid to the vendors over the first 4
years.
-- The Company received funding from the Research Development Corporation,
Newfoundland and Labrador ('RDC') to complete in depth research on two
separate projects associated with the advancement of Ming Mine. The
first is a gold liberation of historic tailings study for which RDC will
contribute $178,439, total project investment $239,169. The second
project involves an examination of various pre-concentration methods
with the goal of further improving the economic viability of the Lower
Footwall Zone. RDC is supporting this research by contributing $250,000
through its R&D Proof of Concept program to a total project cost of
$372,668.
Staffing
-- Announced the appointment of Mr. Robert McGuire, P.Eng., as the Group's
new General Manager at the Ming Copper-Gold Mine. Mr. McGuire has over
35 years' experience in underground mining with a diverse background in
supervisory and managerial positions. Mr. Tim Sanford, P.Eng., the
Group's previous General Manager was promoted to Vice President
Technical Services, a new executive position that will oversee the
preparation of Rambler's expansion plans of the Ming Mine and external
growth opportunities.
-- At the end of the year a total of 139 full time employees were employed
at the Ming Mine compared to 130 full time employees at July 31, 2012.
-- The Group continues to evaluate current employment levels and look for
opportunities to streamline its operations with the goal of improving
overall efficiency.
FINANCIAL RESULTS
-- Revenue
-- A total of 14,746 dmt of concentrate was provisionally invoiced
during the year at an average price of $3.38 per pound copper,
$1,530 per ounce gold and $27 per ounce silver, generating $35.6
million in combined revenue before final assay and weights were
agreed on the three delivered shipments. An additional $479,000 in
revenue was realized on the sale of 324 ounces of gold produced
mainly from the testing of floatation tails from the copper
concentrator being reprocessed through the Group's gold processing
facility.
-- Revenue associated with the sale of copper concentrate is recognised
when significant risks and rewards of ownership of the asset sold
are transferred to the Group's off-taker, which is when the group
receives provisional payment for each lot of concentrate invoiced.
Where a provisional invoice is not raised, risks and rewards of
ownership transfer when the concentrate passes over the rail of the
shipping vessel. Adjustments arising due to differences in assays,
from the time of provisional invoicing to the time of final
settlement, are adjusted to revenue. Adjustments arising due to
differences in commodity prices, from the time of provisional
invoicing to the time of final settlement, are adjusted to Gain or
Loss on Derivative Financial Instruments.
-- During the year the Group agreed final weights and assays on three
concentrate shipments with its off-take partner resulting in a
$941,776 reduction in revenue (112 dmt) bringing net revenue for the
period to $34.7 million. Throughout the year the Group fixed a
portion of its copper, gold and silver production with its off-take
partner to mitigate the risk of any significant commodity price
movements resulting in a net realized loss on derivative financial
assets of $73,703 being the difference in the commodity prices at
time of provisional invoicing, and actual commodity prices realized
on the fixed portion of the shipment. A further unrealized loss of
$250,755 resulted at year end being the difference in the commodity
prices at time of provisional invoicing and anticipated commodity
prices upon final settlement following the future shipment of
concentrates in the Group's warehouse at year end.
-- Revenue of $9.5 million realized in Q1/13 during the testing and
commissioning of the Ming Mine along with operating expenditures
were offset against the mineral property asset.
-- Profit
-- The net profit before tax for the year was $2,985,000 compared with
a loss of $3,367,000 for the year ended July 31, 2012. The net
profit for the quarter ended July 31, 2013 was $7,620,000
($1,579,000 before tax) or $0.053 per share which compares to
$193,000 for Q3/13 and a loss of $1,202,000 for Q4/12.
Rambler Metals and Mining Plc
-- Production costs
-- Average production costs (before depreciation and amortisation)
incurred since the declaration of commercial production were $145
per tonne of ore milled and $2.03 per equivalent pound of copper.
-- Cash flow and cash resources
-- Cash flows generated from operating activities were $11,468,000
compared with cash utilized of $1,209,000 in the previous fiscal
year. Cash flows generated from operating activities were $5,892,000
in Q4/13 compared to cash utilized of $380,000 in Q3/13 and cash
utilized of $1,211,000 in Q4/12. The increase in the cash generated
relates to the operating profit and changes in working capital.
-- Cash resources as at July 31, 2013 were $5.6 million and as of
October 28, 2013 had increased to $6.5 million.
OPERATIONAL SUMMARY
For the first 9 months in commercial production the Company produced 13,802
tonnes of copper concentrate containing 3,953 tonnes of copper metal, 3,137
ounces of gold and 23,958 ounces of silver. The average feed grade during the
period was 3.60% Cu, 1.31 g/t Au and 8.95 g/t Ag followed by a mill recovery of
91%, 62% and 71% for copper, gold and silver respectively.
PRODUCTION
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Total Q4/13 Q3/13 Q2/13
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Dry Tonnes Milled 137,397 47,027(ii) 43,907(i) 46,463
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Copper Recovery 94% 91% 89%
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Gold Recovery 65% 62% 58%
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Silver Recovery 73% 71% 68%
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Copper Head Grade (%) 4.05 3.59 3.14
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Gold Head Grade (g/t) 1.52 1.29 1.13
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Silver Head Grade (g/t) 10.95 8.68 7.19
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CONCENTRATE (Produced and Stored in Warehouse)
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Total Q4/13 Q3/13 Q2/13
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Copper (%) 30.0 27.9 27.6
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Gold (g/t) 7.7 6.7 6.7
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Silver (g/t) 58.6 51.4 51.0
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Dry Tonnes produced 13,802 5,244 4,575 3,983
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Copper Metal (tonnes) 3,953 1,574 1,278 1,101
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Gold (ounces) 3,137 1,297 987 853
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Silver (ounces) 23,958 9,873 7,557 6,528
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Note: (1) Tables show first three quarters in commercial production
(2) (i) Continual freezing of the course ore bin in February
(3) (ii) 12 day period where gold hydromet was operated instead of
copper circuit allowing annual maintenance in the copper
concentrator. The hydromet milled 7,247 dry tonnes giving a combined
total tonnage for Q4 of 54,274
HEALTH AND SAFETY
-- The Group completed the year with no lost time accidents and 7 medical
aid injuries. The lost time accident frequency rate and medical aid
frequency rate for the period and fiscal year to date was 0 and 4.3
respectively.
-- The Health and Safety of the Group's employees continues to be a high
priority with prevention and hazard recognition being key components of
the Group's strategy.
OUTLOOK
Management continue to pursue the following objectives:
-- Continue to utilize cash flow from operations to pay down credit
facility debt by the end of March 2014 maximizing shareholder value by
reducing the Group's expensive finance costs
-- Continue mining and milling the exposed 1807 workplaces for the
generation of copper concentrate revenue from the Ming Mine. Place
additional development focus into preparing this high grade zone for
further exploration both up-dip and down-dip for inclusion in future
resource and reserve estimates.
-- Open up mining horizons in the Ming South up and down plunge ore bodies.
-- Optimize the mining and processing of ores from the Ming Mine that would
allow an expansion to 1,000 mtpd; which in turn could allow the gold
hydromet to be operated independently and/or simultaneously with the
copper concentrator.
-- Continuing to evaluate Optimization Opportunities for a possible future
expansion into the Lower Footwall Zone.
-- Become a strategic long term low-cost producer in Atlantic Canada, by
selectively pursuing growth opportunities with joint ventures and
acquisitions, including the Group's investment in "The Little Deer
Project" and Maritime Resources Corp.
-- Increase exposure and liquidity both on London's AIM and on Toronto's
Venture Exchange through marketing and investor relations campaigns.
See 'Forward Looking Information' in Appendix 5 for a description of the factors
that may cause actual results to differ from forecast.
CAPITAL PROJECTS REVIEW
During the year the Group incurred expenditures of $15,142,000 on Mineral
Property which were offset by pre-commercial production revenue of $9,478,000
from gold and copper concentrate sales, $2,620,000 on property, plant and
equipment and $190,000 on exploration and evaluation of the Ming Mine.
Prior to the mine being considered substantially complete and ready for its
intended use, all direct operating costs, including costs associated with
stockpile ores, were capitalized within mineral property and offset by revenues
generated from on-going production.
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Total Q4/13 Q3/13 Q2/13 Q1/13
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$,000 $,000 $,000 $,000 $,000
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Mineral Property 5,664 1,267 1,766 2,147 484
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Property, plant and equipment 2,620 826 389 586 819
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Exploration and evaluation costs 190 131 1 - 58
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TOTAL CAPITAL 8,474 2,224 2,156 2,733 1,361
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Following the start of commercial production at the beginning of Q2/13 the
majority of expenditure on the mineral property relates to capital development
in the 1807 zone including the independent 1807 ramp system which will provide
access to 1807 stoping and access to lower levels of the Ming Mine ore body.
Property, plant and equipment includes $1.9 million on underground mobile
equipment and $0.6 million on storage and office buildings during the year.
Exploration and evaluation costs relate to exploration drilling on the 1806 and
1807 ore zones and the on-going Lower Footwall zone projects as outlined above
in the Highlights of the Year Ended July 31, 2013 section.
FINANCIAL REVIEW
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Fiscal 2013 Commentary
($000's) Comparatives
Fiscal 2012
($000's) B/(W)(i)
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Revenue of $34.7 million was generated
through the sale of 14,634 dmt of copper
concentrate containing 3,947 tonnes of
accountable copper metal and 2,664
ounces of accountable gold. This
34,669 compared with revenue of $1.2 million in 1,219 2,744%
the prior year from gold sales from the
Group's Tilt Cove East Mine and the
further refining of slag materials from
the Nugget Pond Crown Pillar satellite
deposits.
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Production costs relate to the
processing and mining costs associated
with Group's Ming Mine and include
processing costs of $5.4 million, mining
costs $15.5 million and depreciation and
amortisation of $6.7 million. Operating
costs associated with mining and
27,644 processing of Ming Mine ores were 674 (4,001)%
capitalized to Mineral Property prior to
commercial production being achieved. In
2012, operating costs of $674,000 relate
to the processing, mining, royalty and
general administrative costs associated
with the completion of the Group's Tilt
Cove satellite deposit.
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General and administrative expenses were
higher than the previous year by
$535,000. Employment costs increased
$256,000 as a result of key management
promotions and compensation changes and
the recruitment of additional
administrative staff, legal and
professional costs increased $79,000
3,557 which includes the costs of a strategic 3,022 (18)%
review carried out during the year,
travel and investor relation costs
increased $113,000 and security and
general office expenses increased
$112,000 due to the addition of security
personnel at the mine site and the move
to the new office and dry facility.
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Loss on derivative financial
instruments. Throughout the year the
Group fixed a portion of its copper,
gold and silver production with its off-
take partner to mitigate the risk of any
significant commodity price movements
resulting in a net realized loss on
derivative financial assets of $73,703
being the difference in the commodity
prices at time of provisional invoicing,
(323) and actual commodity prices realized on - -
the fixed portion of the shipment. A
further unrealized loss of $250,755
resulted at year end being the
difference in the commodity prices at
time of provisional invoicing and
anticipated commodity prices upon final
settlement following the future shipment
of concentrates in the Group's warehouse
at year end.
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Foreign exchange losses arising on the
Gold Loan reduced in the year as a
(513) result of the strengthening of the (959) 47%
Canadian dollar against the US dollar
during the year.
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Income tax credit. Following the
declaration of commercial production
during the year it has been concluded
6,068 that the Group has sufficient evidence - -
of future taxable profits to justify the
recognition of a deferred tax credit of
$6.1 million.
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Mineral Properties The group incurred
costs of $15.1 million in the year
offset by revenue on gold production of
$9.5 million (see further below). The
costs include labour of $4.6 million,
contractor and material costs of $0.3
million, underground development costs
of $4.5 million, depreciation of $1
million and finance costs of $1.1
million. Finance costs include $0.6
million in effective interest charges
arising on the gold loan due to higher
than estimated gold prices and actual
gold ounces delivered during the year as
well as changes to future gold pricing
and volume estimates. Finance costs
5,664 include actual cash cost of $0.6 million 9,596 41%
relating to interest on the Group's
Credit Facility and equipment capital
leases.
Ming Mine Revenue of $9.5 million was
realized in Q1/13 on the sale of 14,918
ounces of gold and 1,271 tonnes of
copper concentrate. Processing and ore
transportation costs of $5.5 million and
concentrated transportation & other
allowances of $241,000 were incurred to
generate this revenue. Revenue realized
during testing and commissioning was
credited against Mineral Properties
prior the declaration of commercial
production.
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Capital spending on property, plant and
equipment decreased significantly during
the year following the move to
2,620 commercial production with $1.9 million 10,451 75%
spent on underground mobile equipment
and $0.4 million on a storage facility.
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Capital spending on exploration and
evaluation relate to exploration
190 drilling on the 1806 and 1807 ore zones 633 70%
and the on-going Optimization Studies on
the Group's Lower Footwall Zone ore
body.
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(i)B/(W) = Better / (Worse)
SUMMARY OF QUARTERLY RESULTS
The quarterly results for the Group for the last eight fiscal quarters are set
out in the following table.
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Quarterly Results
(All amounts in 000s of Canadian
Dollars, except Loss per share 4th 3rd 2nd 1st
figures) Quarter Quarter Quarter Quarter
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Fiscal 2013
Revenue 13,175 10,087 11,407 -(i)
Net Income/ (loss) 7,620 193 1,958 (718)
Earnings/(loss) per Share (Basic &
Diluted) 0.053 0.001 0.014 (0.005)
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Fiscal 2012
Revenue -(i) -(i) -(i) 1,219
Net Income/ (loss) (1,202) (281) (1,039) (845)
Earnings/(loss) per Share (Basic &
Diluted) (0.009) (0.002) (0.008) (0.007)
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(i)gold and copper sales resulting from the testing and commissioning of the
Ming Mine were credited to Mineral Properties until commercial production was
achieved
Losses increased in first quarter of 2012 and further increased in the second
quarter of 2012 as a result of an exchange loss of $0.7 million and $0.30
million respectively and reduced sales activity due to the processing of the
Group's satellite deposits completed in the first quarter of 2012. The
fluctuation in losses in the third and fourth quarters of 2012 and the first
quarter of 2013 reflects exchange gains and losses on the retranslation of the
Gold Loan. The profit in the second quarter of 2013 reflects the successful move
into commercial production on November 1, 2012. The reduced profit in the third
quarter of 2013 was due to a decline in copper and gold prices and invoicing of
less copper concentrate when compared to the second quarter of 2013 and the
subsequent increase in profits in fourth quarter of 2013 was due to an increase
in production and the recognition of a deferred tax credit of $6,040,000.
LIQUIDITY, CAPITAL RESOURCES AND FINANCIAL POSITION
Since announcing commercial production, the Group has generated cash flows to
finance its operational and development requirements and repay loans. Prior to
Q2/13 the Group relied on private placement financings of equity securities, a
Gold Loan facility, capital leases and a credit facility (see 'Commitments and
Loans' section) to finance its development requirements. The Group generated
operating cash flows of $12.6 million since declaring commercial production on
November 1, 2012 with $5.9 million generated in Q4/13 and positive cash flows
are expected to continue. However, there is no guarantee that expenses will not
exceed income again during this mining phase. If this is the case, the liquidity
risk could be material, even with current cash resources.
The Group's holding of cash balances is kept under constant review. Given the
current climate, the Group takes a very risk averse approach to management of
cash resources and Management and Directors monitor events and associated risks
on a continuous basis. Cash and short-term investment resources (cash, cash
equivalents and short-term investments) were as follows:
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July 31, 2013 July 31, 2012
Resource $'000 $'000
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Cash $CDN 2,212 7,394
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Cash US$ 3,293 -
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Cash GBP 61 77
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Short-term Investments GBP - 355
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Total 5,566 7,826
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Sales of copper concentrate are in US dollars and the majority of the Group's
expenses are incurred in Canadian dollars. The Group's principal exchange rate
risk relates to movements between the Canadian and US dollar. The Gold Loan is
repayable in US dollars from future sales of gold mitigating the exchange risk.
Management will closely monitor exchange fluctuation and consider the use of
forward exchange contracts as required.
Interest rates on the capital leases and short term borrowings are fixed,
eliminating interest rate risk.
Cash flows utilised in investing activities amounted to $8.6 million for the
year. Net cash of $6.7 million was spent on the Group's Mineral Property ($9.5
million proceeds received from the sale of gold and copper concentrate less
$16.2 million in mine development). $1.6 million was spent on property, plant
and equipment, $0.2 million on Exploration and Evaluation of the Lower Footwall
Zone and $0.1 million invested in Maritime Resources Corp.
Cash flows utilized in financing activities during the year amounted to $5.1
million and included repayment of $1.6 million of the Group's credit facility
and repayments of the gold loan of $1.4 million and finance lease repayments of
$2.1 million.
The Group is required to hold Letters of Credit in favour of the Government of
Newfoundland and Labrador in respect of the reclamation and closure liability at
the existing Nugget Pond Mill and Ming Mine. At year end the Group holds bearer
deposit notes totalling $3.26 million.
Since the commencement of commercial production the Group has generated
operating cash flows of $12.6 million and reduced the working capital deficit
from $8.8 million at November 1, 2012 to $2.7 million at July 31, 2013. The
Group expects to remain cash flow positive based on current projections and
production forecasts generating a working capital surplus during the next 12
months including the repayment of the Sprott credit facility by the due date of
March 31, 2014. The current economic conditions do, however, create uncertainty
particularly over:
(a) the price of copper, gold and silver;
(b) the exchange rate between Canadian and US dollars and thus the
consequence for the cash generated from US dollar revenues;
(c) the production targets being met; and
(d) the terms of the Gold Loan being complied with.
The Group's forecasts and projections, taking account of reasonably possible
changes in trading performance, show that the Group should continue to be cash
flow positive and meet its repayment obligations under both the credit facility
and Gold loan.
Based on the above management concludes the Group has adequate resources to
continue in operational existence for the foreseeable future. Thus they continue
to adopt the going concern basis of accounting in preparing the annual financial
statements.
At October 28, 2013 the Group has $6.5 million in cash and cash equivalents.
Financial Instruments
The Group's financial instruments as at July 31, 2013 comprised of financial
assets, comprising available for sale investments, cash and cash equivalents and
trade and other receivables and financial liabilities comprised of trade
payables, other payables, accrued expenses and interest bearing loans and
borrowings.
All of the Group's financial liabilities are measured at amortised cost.
The Board of Directors determines, as required, the degree to which it is
appropriate to use financial instruments and hedging techniques to mitigate
risks. The main risks for which such instruments may be appropriate are foreign
currency risk, liquidity risk, credit risk, interest rate risk and commodity
price risk each of which is discussed in note 23 of the financial statements for
the year ended July 31, 2013.
COMMITMENTS AND LOANS
At July 31, 2013, there were no capital commitments made to third parties.
Gold Loan
In March 2010, the Group entered into an agreement ("Gold Loan") with Sandstorm
to sell a portion of the life-of-mine gold production from its Ming Mine. Under
the terms of the agreement Sandstorm made staged upfront cash payments for the
gold to the Group totalling US$20 million.
For this, in each production year following the first year of production, until
175,000oz of payable gold has been produced, the Group has agreed to sell a
percentage equal to 25% x (85% divided by the actual percentage of metallurgical
recovery of gold realized in the immediately preceding production year) provided
that, if the payable gold production in any production year after the third
production year is less than 15,000 ounces, then in each such production year,
Sandstorm payable gold shall not be less than 25% of the payable gold. In each
production year following the first year of production, after 175,000oz of
payable gold has been produced, the Group has agreed to sell a percentage equal
to 12% x (85% divided by the actual percentage of metallurgical recovery of gold
realized in the immediately preceding production year) provided that, if the
payable gold production in any production year after the third production year
is less than 15,000 ounces, then in each such production year, Sandstorm payable
gold shall not be less than 12% of the payable gold for the remainder of the
period ending 40 years after the date of the agreement. After the expiry of the
40 year term, the agreement is renewable in 10 year terms at the option of
Sandstorm.
The remaining circumstances in which the Gold Loan may be repaid earlier than by
the delivery of payable gold are as follows:
i. If within 24 months of the date that gold is first produced (28 November
2011), the Ming Mine has not produced and sold a minimum of 24,000oz
(6,000 ounces of Sandstorm payable gold) of payable gold (18,555 oz
produced to July 31, 2013; 5,723 ounces of Sandstorm payable gold) then
a portion of the US$20 million will be repayable based on the shortfall
of payable gold, and/or;
ii. Within the first 36 months of production of gold any shortfall in the
value of payable gold below the following amounts will be required to be
paid in cash:
-- within the first 12 months - US$3.6 million
-- within the second 12 months - US$3.6 million
-- within the third 12 months - US$3.1 million
Subsequent to the year end the Group has satisfied the requirement to deliver
6,000 ounces of Sandstorm payable gold.
During the first twenty months of production, repayments of US$9,309,570 were
made from the delivery of 5,723 ounces of gold thereby satisfying the
requirement to repay a minimum of US$3.6 million cash during the first and
second 12 month periods and partially meeting the requirements for the third 12
months.
Credit Facility
On September 29, 2011 the Group agreed a Credit Facility of up to $10 million
with Sprott Resource Lending Partnership ('Sprott') for use as additional
funding for the development of the Ming Mine. Subsequent to amending the
agreement in December 2011 the facility is available in three instalments; the
first instalment of $5 million was drawn on October 29, 2011, the second
instalment of $2.5 million was drawn on January 30, 2012 and the final
instalment for the balance up to $10 million was available until August 31,
2012. The Company did not draw on this $2.5 million final available instalment.
Interest will accrue at a fixed rate of 9.25% per annum. In connection with the
Credit Facility, a Structuring Fee of $100,000 and a 3% Commitment Fee of
$300,000 were paid to Sprott in cash. Pursuant to the terms of the Credit
Facility, the Company issued $300,000 of ordinary shares of 1p each in the
capital of the Company to Sprott in exchange for the repayment of the previously
paid cash Commitment Fee. In addition, a further 4% Drawdown Fee on all amounts
drawn under the Credit Facility was satisfied by the issuance of ordinary shares
by the Company. On November 30, 2012 the Group repaid $500,000. On March 26,
2013 this agreement was amended such that the principal is repayable by March
31, 2014 and secured by a fixed and floating charge over the assets of the
Group. Upon amending the credit facility an amendment fee of $400,000 was paid
to Sprott in ordinary shares of 1p each. On April 30, 2013 and subsequently on
May 31, 2013 the Group made repayments of $500,000 and $600,000 respectively
reducing the outstanding balance to $5,900,000 at July 31, 2013.
Loan and lease balances
At July 31, 2013, interest bearing loans and borrowings comprised a Gold Loan of
$18,791,000, finance lease commitments of $7,040,000, a Credit Facility of
$5,900,000 and a bank loan of $22,000. The Group entered into finance lease
commitments of $1,432,000 to finance the acquisition of a mine truck, scoop
trams and a loader in the year.
SUBSEQUENT EVENTS
On August 30, 2013 the Company announced an additional payment of $500,000 to
Sprott reducing the outstanding balance to $5.4 million.
On September 17, 2013 the Group announced that a conditional offer had been
accepted by Cornerstone Capital Resources Inc. for the Group to acquire their
50% interest in The Little Deer Copper Deposit and Whalesback Mine in
Newfoundland for $550,000 consisting of $200,000 in cash and $350,000 in shares.
The 50% interest is subject to a Joint Venture agreement with Thundermin
Resources Inc. On October 15, 2013 the Group announced that the conditions of
the offer had been satisfied.
On September 30, 2013 the Company made an additional payment of $650,000 to
Sprott reducing the outstanding balance to $4.75 million.
APPENDIX 1 - LOCATION MAP: http://media3.marketwire.com/docs/Location%20Map.pdf
APPENDIX 2 - SELECTED FINANCIAL INFORMATION & REVIEW OF OVERALL PERFORMANCE
----------------------------------------------------------------------------
Financial Highlights
(All amounts in 000s of Canadian
Dollars, unless otherwise stated) Year ended July 31,
------------------------------------
2013 2012 2011
----------------------------------------------------------------------------
Gold sales - gold dore (Ounces) 324(1) 15,613(2) 1,399
Average price (per ounce) 1,491(1) 1,654(2) 1,492
Concentrate sales pre commercial
production (dmt) 14,634(1) 1,271(2) -
Concentrate sales post commercial
production (dmt) 4,331(2) - -
Average provisional price ($ per tonne
Cu, Ag & Au concentrate) 2,382(1) - -
----------------------------------------------------------------------------
Revenue 34,669 1,219 3,523
Production Expenses (27,644) (674) (1,754)
Exploration Expenditure (26) (24) (79)
Administrative expenses (3,557) (3,022) (2,750)
Net Income (loss) 9,053 (3,367) (53)
Cash Flow generated from (used in)
operating activities 11,468 (1,209) (1,352)
Cash Flow used in investing activities (8,595) (7,075) (25,092)
Cash Flow (used in) from financing
activities (5,154) 5,903 28,623
Net (decrease) increase in cash (2,281) (2,381) 2,179
Cash and cash equivalents at end of
period 5,566 7,826 10,170
----------------------------------------------------------------------------
Total Assets 116,859 110,718 96,473
Total Liabilities (39,167) (43,317) (34,495)
Working Capital (2,753) (7,625) 7,804
----------------------------------------------------------------------------
Weighted average number of shares
outstanding (000s) 142,690 128,477 102,282
Earnings (loss) per share ($) 0.063 (0.026) (0.001)
----------------------------------------------------------------------------
(1) represents post commercial production, November 1, 2012 to July 31,
2013.
(2) gold and copper concentrate sales relating to the testing and
commissioning of the Ming Mine are credited to Mineral Properties until
commercial production is achieved.
APPENDIX 3 - FINANCIAL REVIEW FOR THE QUARTER ENDED JULY 31, 2013
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Q4/13
Results Commentary
($000's) Comparatives
Q3/13 B/(W)(i) Q4/12 B/(W)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Revenue in Q4/13 was generated
through the sale of 5,573 dmt
of copper concentrate
containing 1,610 tonnes of
accountable copper metal and
1,130 ounces of accountable
gold compared with $10.1
million from the sale of 4,274
dmt of copper concentrate in
13,175 Q3/13. The increase in revenue 10,087 31% - N/A
can be attributed to increased
concentrate production offset
by declining commodity prices
during Q4/13. Revenue realized
in Q4/12 during the testing
and commissioning of the Ming
Mine was credited against the
Mineral Property asset.
----------------------------------------------------------------------------
Production costs relate to the
processing and mining costs
associated with Group's Ming
Mine production and include
processing and mining costs of
$1.8 million (Q3/13: $1.7
million) and $5.4 million
(Q3/13: $4.7 million)
7,173 respectively and in line with 6,435 (11)% - N/A
the increased production noted
above. Operating costs
associated with mining and
processing of Ming Mine ores
were capitalized to Mineral
Property prior to commercial
production being achieved.
----------------------------------------------------------------------------
General and administrative
expenses were lower than the
previous quarter by $155,000.
Promotional and travel costs
reduced by $79,000 and legal
and professional costs by
$59,000. In comparison to
Q4/12 administrative expenses
843 increased by $58,000. Staff 998 16% 785 (7)%
costs increased by $62,000,
security and general office
expenses by $30,000 offset by
a reduction of $25,000 in
promotional and travel costs
and $14,000 in legal and
professional costs.
----------------------------------------------------------------------------
Loss on derivative financial
instruments. During Q4/13 the
net unrealized fair value gain
adjustment recognized was
$145,000 being the difference
in the commodity prices at
time of provisional invoicing
and anticipated commodity
prices upon final settlement
offset by a realized loss of
$192,000 on the final
settlement of the Group's
third concentrate shipment. In
Q3/13 as commodity prices
began to fall the Group fixed
a portion of its copper, gold
and silver concentrate to
reduce further losses ahead of
(47) final settlement on its second (858) 95% - N/A
concentrate shipment. A loss
of $385,000 was realized being
the difference in commodity
prices at the time of
provisional invoicing and
actual commodity prices
realized on the fixed portion
of the shipment. A further
unrealized loss of $473,000
was booked during the third
quarter being the difference
in commodity prices at the
time of provisional invoicing
concentrates in shipment three
(shipment subsequently on 28
May 2013) and the anticipated
future commodity price at time
of final settlement.
----------------------------------------------------------------------------
Foreign exchange differences
arising on the Gold Loan
resulted in a loss in Q4/13 as
(295) a result of the weakening of (243) (21)% (447) 34%
the Canadian dollar against
the US dollar during the
quarter.
----------------------------------------------------------------------------
Mineral Properties The group
incurred costs of $1.3 million
in the quarter. The cost
includes labour costs of $0.7
million and underground
1,266 development costs of $0.6 1,768 28% 2,501 49%
million. Mineral properties
expenditure reduced in Q4/13
in line with the completion of
the 1807 independent ramp
breakthrough in Q3/13.
----------------------------------------------------------------------------
Capital spending on property,
plant and equipment increased
during the quarter compared to
Q3/13 reflecting the
acquisition of two additional
828 underground scooptrams The 389 (112)% 189 (338)%
increase from Q4/12 is due to
the reasons outlined above and
the overall movement from
capital development into
production.
----------------------------------------------------------------------------
Capital spending on
exploration and evaluation
costs in Q4/13 relates to
exploration drilling on the
131 Group's 1807 and 1806 ore - N/A 10 (1,210)%
bodies as well as on-going
Optimization Studies on the
Group's Lower Footwall Zone
ore body
----------------------------------------------------------------------------
(i)B/(W) = Better / (Worse)
APPENDIX 4 - CRITICAL ACCOUNTING POLICIES AND ESTIMATES
The details of the Group's accounting policies are presented in accordance with
International Financial Reporting Standards as set out in Note 2 to the
financial statements. The preparation of financial statements in conformity with
IFRS requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and the disclosure of contingent
assets and liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the year.
The following estimates are considered by management to be the most critical for
investors to understand some of the processes and reasoning that go into the
preparation of the Group's financial statements, providing some insight also to
uncertainties that could impact the Group's financial results.
Going Concern
Since the commencement of commercial production the Group has generated
operating cash flows of $12.6 million and reduced the working capital deficit
from $8.8 million at November 1, 2012 to $2.7 million at July 31, 2013. The
Group expects to remain cash flow positive based on current projections and
production forecasts generating a working capital surplus during the next 12
months including the repayment of the Sprott credit facility by the due date of
March 31, 2014. The current economic conditions do, however, create uncertainty
particularly over:
(a) the price of copper, gold and silver;
(b) the exchange rate between Canadian and US dollars and thus the
consequence for the cash generated from US dollar revenues;
(c) the production targets being met; and
(d) the terms of the Gold Loan being complied with.
The Group's forecasts and projections, taking account of reasonably possible
changes in trading performance, show that the Group should continue to be cash
flow positive and meet its repayment obligations under both the credit facility
and Gold loan.
Based on the above management concludes the Group has adequate resources to
continue in operational existence for the foreseeable future. Thus they continue
to adopt the going concern basis of accounting in preparing the annual financial
statements.
Share-based payments
The Group calculates the cost of share based payments using the Black-Scholes
model. Inputs into the model in respect of the expected option life and the
volatility are subject to management estimate and any changes to these estimates
may have a significant effect on the cost. The assumptions used in calculating
the cost of share based payments are explained in note 5 of the financial
statements for the year ended July 31, 2013.
Gold Loan
The Group calculates the effective interest rate on the Gold Loan based on
estimates of future cash flows arising from the sale of payable gold (see note
21 of the financial statements for the year ended July 31, 2013). The cash flows
will be dependent on the production of gold and its selling price at the time of
delivery which have been estimated in line with the mine plan, future prices of
gold and resource and reserve estimates. Management's estimates of these factors
are subject to risk and uncertainties affecting the amount of the interest
charge. Any changes to these estimates may result in a significantly different
interest charge which would affect the income statement and the corresponding
Gold Loan liability.
Mineral Property and Exploration and Evaluation Costs
The directors have assessed whether there are any indicators of impairment in
respect of mineral property and exploration and evaluation costs. In making this
assessment they have considered the Group's business plan which includes
resource estimates, future processing capacity, the forward market and longer
term price outlook for copper and gold. Resource estimates have been based on
the most recently filed NI43-101 report and its opportunities economic model
which includes resource estimates and conversion of its inferred resources.
Management's estimates of these factors are subject to risk and uncertainties
affecting the recoverability of the Group's mineral property and exploration and
evaluation costs. Any changes to these estimates may result in the recognition
of an impairment charge with a corresponding reduction in the carrying value of
such assets. After consideration of the above factors, the directors do not
consider that there are any indicators that mineral property and exploration and
evaluation costs are impaired at the year end.
Closure Costs
The Group has an obligation to reclaim its properties after the minerals have
been mined from the site, and has estimated the costs necessary to comply with
existing reclamation standards. These estimates are recorded as a liability at
their fair values in the periods in which they occur. If the estimate of
reclamation costs proves to be inaccurate, the Group could be required to
increase the provision for site closure and reclamation costs, which would
increase the amount of future reclamation expense, resulting in a reduction in
the Group's earnings and net assets.
Revenue
Revenues are subject to variation after the date of sale due to assay, price and
foreign exchange fluctuations. Management monitors these changes closely and at
the end of the period the directors will consider whether the effect of these
variations are material on the whole and determine whether an adjustment is
therefore appropriate.
Available for sale investment
Management consider that they do not have significant influence over the
financial and policy decisions of Maritime and therefore have included the
investment as an available for sale investment.
Commercial production
The Group monitored the on-going testing and commissioning of its copper
concentrate milling facility to assess when commercial production had been
achieved. Commercial Production is the assessment that the mill is capable of
operating in the manner intended and was defined by management at the onset of
development to be 60 days of continuous production from both the mill and mine,
being 85% of target rates envisaged in the Group's Feasibility Study. Prior to
commercial production being declared, costs and revenues are offset to the
Mineral Properties asset and post commercial production will be charged to the
Group's income statement. Commercial production was achieved at November 1,
2012.
Deferred tax
The Group has incurred losses which will be available for offset against future
taxable profits and one of the subsidiaries has tax credits available to offset
against future tax liabilities. Following the declaration of commercial
production during the year it has been concluded that the Group has sufficient
evidence of future taxable profits to justify the recognition of a deferred tax
asset. If future taxable profits prove to be insufficient the Group could be
required to reduce the deferred tax asset which would result in a reduction in
the Group's earnings and net assets.
In the current year, new and revised standards which have been adopted have not
affected the disclosures presented in these financial statements with the
exception of the disclosure of the breakdown of other comprehensive income
between items that may be reclassified into profit or loss or not in accordance
with IAS 1 - Presentation of Financial Statements.
No standards issued but not yet effective have been adopted early.
International Financial Reporting Standards that have recently been issued or
amended but are not yet effective have not been adopted for the annual reporting
period ended July 31, 2013:
Nature of
change to Application
IFRS accounting date of Application
/Amendment Title policy standard date for Group
----------------------------------------------------------------------------
Various Annual No change to Various August 1, 2013
Improvements accounting
to IFRSs policy,
therefore, no
impact
----------------------------------------------------------------------------
IFRS 9 Financial No change to January 1, August 1, 2015
instruments: accounting 2015
Classification policy,
and therefore, no
Measurement impact
----------------------------------------------------------------------------
IFRS 10 Consolidated No change to January 1, August 1, 2013
Financial accounting 2013
Statements policy,
therefore, no
impact
----------------------------------------------------------------------------
IFRS 11 Joint No change to January 1, August 1, 2013
Arrangements accounting 2013
policy,
therefore, no
impact
----------------------------------------------------------------------------
IFRS 12 Disclosure of No change to January 1, August 1, 2013
Interests in accounting 2013
Other Entities policy,
therefore, no
impact
----------------------------------------------------------------------------
IFRS 13 Fair Value No change to January 1, August 1, 2013
Measurement accounting 2013
policy,
therefore, no
impact
----------------------------------------------------------------------------
Management have reviewed the impact of the above standards and interpretations
and have concluded that they will not result in any material changes to reported
results.
Details of the main accounting policies of the Group are included in note 2 of
the financial statements for the year ended July 31, 2013.
APPENDIX 5 - OTHER MATTERS
Outstanding Share & Option Data
As at the date of this MD&A the following securities are outstanding:
----------------------------------------------------------------------------
Weighted Average Exercise
Security Shares issued or Issuable Price
----------------------------------------------------------------------------
Common Shares 143,280,614 --
----------------------------------------------------------------------------
Options 4,087,334(i) $0.46
----------------------------------------------------------------------------
(i)if all options have fully vested
For further assistance Mr. Peter Mercer, Corporate Secretary can be reached
directly at +1-709-800-1929 ext.500 or pmercer@ramblermines.com.
Forward Looking Information
This MD&A contains "forward-looking information" ("FLI") which may include, but
is not limited to, statements with respect to the Group's objectives and
strategy, future financial or operating performance of the Group and its
projects, exploration expenditures, costs and timing of the development of new
deposits, costs and timing of future exploration, requirements for additional
capital, government regulation of mining exploration and development,
environmental risks, title disputes or claims and limitations of insurance
coverage. All statements, other than statements of historical fact, are
forward-looking statements. Often, but not always, statements containing FLI can
be identified by the use of words such as "plans", "expects", "is expected",
"budget", "scheduled", "estimates", "forecasts", "intends", "anticipates", or
"believes" or variations (including negative variations) of such words and
phrases, or state that certain actions, events or results "may", "could",
"would", "might" or "will" be taken, occur be achieved or continue to be
achieved. Statements containing FLI are necessarily based on a number of
estimates and assumptions that, while considered reasonably by the Company,
involve known and unknown risks, uncertainties and other factors which may cause
the actual results, performance or achievements of the Group to be materially
different from any future results, performance or achievements expressed or
implied by the FLI. Such factors include, among others, general business,
economic, competitive, political and social uncertainties; the actual results of
current exploration activities; conclusions of economic evaluations;
availability and cost of credit; fluctuations in Canadian dollar interest rates;
fluctuations in the relative value of United States dollars, Canadian dollars
and British Pounds; changes in planned parameters as plans continue to be
refined; fluctuations in the market and forward prices of copper, gold, silver
or certain other commodities; possible variations of ore grade or recovery
rates; failure of equipment; accidents and other risks of the mining exploration
industry; political instability, insurrection or war; delays in obtaining
governmental approvals or financing or in the completion of development or
construction activities, as well as those factors discussed in the section
entitled "Risks and Uncertainties" in the Report of Directors for the year ended
July 31, 2013. Although the Group has attempted to identify important factors
that could cause actual actions, events or results to differ materially from
those described in the FLI contained in this MD&A, there may be other factors
that cause actions, events or results to differ from those anticipated,
estimated or intended. Unless stated otherwise, statements containing FLI herein
are made as of the date of this MD&A.
Other than as required by applicable securities law, the Company disclaims any
obligation to update any forward-looking statements, whether as a result of new
information, future events or results or otherwise. There can be no assurance
that forward-looking statements will prove to be accurate, as actual results and
future events could differ materially from those anticipated in such statements.
All of the forward-looking statements made in this MD&A are qualified by these
cautionary statements. Accordingly, readers should not place undue reliance on
forward-looking statements. The following table outlines certain significant
forward-looking statements contained in this MD&A and provides the material
assumptions used to develop such forward-looking statements and material risk
factors that could cause actual results to differ materially from the forward
looking statements.
----------------------------------------------------------------------------
FLI statements Assumptions Risk Factors
----------------------------------------------------------------------------
Continued positive Actual expenditures from Expenditures exceeding
cash flow operations will not revenues resulting from
exceed revenues. fluctuations in the
market and forward prices
of copper, gold, silver
or certain other
commodities, or increased
costs of production
----------------------------------------------------------------------------
Repayment of credit Generation of sufficient Significant reductions in
facility by March cash flow from the sale price of copper and/or
31, 2014 of concentrate gold. Production
shortfalls. Increased
costs of production
----------------------------------------------------------------------------
Continued mining and Achieving the planned Development delays
milling the exposed capital and operating reducing access to
1807 workplaces and development and production ore
further up-dip and production targets; and,
down-dip timely completion of
exploration of 1807 drill bays to allow
zone commencement of
exploration drilling
----------------------------------------------------------------------------
Optimisation of the Successful completion of Economic viability
mining and a detailed engineering
processing of ores review of existing
from the Ming Mine infrastructure and
to allow expansion availability of finance
to 1,000 mtpd from cash flow from
operations or external
----------------------------------------------------------------------------
Open up mining Achieving the planned Development delays
horizons in the capital and operating reducing access to
Ming South up and development and production ore
down plunge ore production targets
bodies.
----------------------------------------------------------------------------
Become a strategic Identification and Availability of suitable
long term low cost acquisition of suitable mineral properties at an
producer by mineral properties, appropriate price and
selective pursuit investment opportunities adequate available
of growth and suitable partners for finance. Availability of
opportunities joint ventures. suitable acquisition and
joint venture
opportunities on
acceptable terms
----------------------------------------------------------------------------
Increasing stock Market reacts positively Failure to reach market
market exposure and to Group's results and expectations.
liquidity promotional activity Deterioration in market
conditions generally or
in the mining sector
----------------------------------------------------------------------------
Further information
Additional information relating to the Group is on SEDAR at www.sedar.com and on
the Group's web site at www.ramblermines.com.
RAMBLER METALS AND MINING PLC
REPORT OF THE DIRECTORS FOR THE YEAR ENDED JULY 31, 2013
The Directors present their report with the audited financial statements of the
Group for the year ended July 31, 2013.
PRINCIPAL ACTIVITY
The principal activity of the Group is the development, mining and exploration
of the Ming Copper-Gold Mine located in Newfoundland and Labrador and the
exploration and development of other properties located in Atlantic Canada. The
principal activity of the parent company is that of a holding company.
REVIEW OF BUSINESS
A review of the Group's business and prospects is set out in the Management's
Discussion and Analysis.
FUTURE DEVELOPMENTS
The Group is looking forward to:
1. Continuing as a profitable copper and gold producer by continued
optimization of concentrate production at the Nugget Pond concentrating
facility, improving revenue through the integration of the gold hydromet
plant into the production stream and focusing on the Group's operations
with the goal of reducing its overall operating costs.
2. Increasing available resources and reserves through further exploration
both within the Ming mine and current land holdings.
3. Continuing to investigate, through on-going optimization studies,
development of the Lower Footwall Zone creating organic growth.
4. Selectively pursuing growth opportunities within Atlantic Canada
including joint ventures, acquisitions, strategic alliances and equity
positions.
DIVIDENDS
No dividends will be distributed for the year ended July 31, 2013.
DIRECTORS
The Directors during the period under review were:
T S Chan
E C Chen (appointed September 24, 2012)
D H W Dobson
L D Goodman
B Hinchcliffe
S Neamonitis
G Ogilvie
J M Roberts (resigned February 20, 2013)
J S Thomson
POLICY ON PAYMENT OF CREDITORS
It is the Group's and Company's policy to settle all amounts due to creditors in
accordance with agreed terms of supply and market practice in the relevant
country.
The Group's average creditor payment period at July 31, 2013 was 53 days (2012:
74 days). The Company's average creditor payment period at July 31, 2013 was 51
days (2012: 62 days).
POLITICAL AND CHARITABLE CONTRIBUTIONS
During the year, the Group made charitable donations of $12,800 (2012: $2,950)
to various charities in the Baie Verte area, Newfoundland and Labrador.
SUBSTANTIAL SHARE INTERESTS
At October 28, 2013 the parent Company was aware of the following substantial
share interests:
Number of
Ordinary % of Share
Shares Capital
Henderson Global Investors 24,427,575 17.05%
Tinma International Ltd. 22,736,992 15.87%
Legal and General Investment Management 17,575,000 12.27%
Majedie Asset Management 9,043,597 6.31%
Whitmill Trust (Zila Corporation) 8,838,000 6.17%
Hargreaves Lansdown 4,564,543 3.19%
FINANCIAL INSTRUMENTS
The Board of Directors determines, as required, the degree to which it is
appropriate to use financial instruments and hedging techniques to mitigate
risks. The main risks for which such instruments may be appropriate are foreign
exchange risk, liquidity risk, credit risk, interest rate risk and commodity
price risk, each of which is discussed in note 23 to the financial statements.
SUBSEQUENT EVENTS
Details of subsequent events are set out in the Management's Discussion and
Analysis.
RISKS AND UNCERTAINTIES
An investment in Rambler should be considered highly speculative due to the
nature of its operations and certain other factors. An investment in Rambler's
securities should only be made by persons who can afford the total loss of their
investment. The risk factors which should be taken into account in assessing
Rambler's activities and an investment in securities of Rambler include, but are
not limited to, those set out below. Should any one or more of these risks
occur, it could have a material adverse effect on the value of securities of
Rambler and the business, prospects, assets, financial position or operating
results of Rambler, any one of which may have a significant adverse effect on
the price or value of any securities of Rambler.
The risks noted below do not necessarily comprise all those faced by Rambler and
are not intended to be presented in any assumed order of likelihood or magnitude
of consequences.
Mining risks
Mining operations are inherently risky. These operations are subject to all
hazards and risks encountered in the exploration for, and development and
production of underground ore, including formation pressures, seismic activity,
rock bursts, fires, power outages, cave-ins, flooding, explosions and other
conditions involved in the drilling and removal of material. Any of these events
could result in serious damage to the mine and other infrastructure, damage to
life or property, environmental damage and possible legal liability.
The Company's profitability will depend, in part, on the economic returns and
actual costs of developing its mining projects, which may differ from the
estimates made by the Company.
Copper and Gold Price Volatility
The Group's revenues are expected to be derived from the extraction and sale of
copper and gold concentrate. The prices of copper and gold have fluctuated
widely, particularly in recent years, and are affected by numerous factors
beyond the Group's control including international, economic and political
trends, expectations of inflation, currency exchange fluctuations, interest
rates, global or regional consumption patterns, speculative activities and
increased global production due to new extraction developments and improved
extraction and production methods. In recent years the price of copper has been
affected by changes in the worldwide balance of copper supply and demand,
largely resulting from economic growth and political conditions in China and
other major developing economies. While this demand has resulted in higher
prices for copper in recent years, if Chinese economic growth slows, it could
result in lower demand for copper. The effect of these factors on the price of
copper and gold cannot be accurately predicted. Any material decrease in the
prevailing price of copper in particular for any significant period of time
would have an adverse and material impact on the Group's economic evaluations
and on the Group's results of operations and financial condition.
Additional Requirement for Capital
The Group may need to raise additional capital in due course to fund anticipated
future development and on-going operations. Future development of the Ming Mine,
future acquisitions, base metal prices, environmental rehabilitation or
restitution, revenues, taxes, capital expenditures and operating expenses and
geological and processing successes are all factors which will have an impact on
the amount of additional capital required. Any additional equity financing may
be dilutive to shareholders and debt financing, if available, may involve
restrictions on financing and operating activities. There is no assurance that
additional financing will be available on terms acceptable to the Group. If the
Group is unable to obtain additional financing as needed, it may be required to
reduce the scope of its operations or anticipated expansion, forfeit its
interests in some or all of its properties, incur financial penalties and reduce
or terminate its operations.
Uncertainty in the estimation of mineral resources and mineral reserves
The calculation of mineral reserves and mineral resources and related grades
mined has a degree of uncertainty. Until such a time as the mineral reserves and
mineral resources are actually mined and processed, the quantity of grades must
be considered as estimates only. The mineral reserves estimates of the Company
have been determined based on assumed metal prices, cut-off grades and costs
that may prove to be inaccurate. Any material change in these variables, along
with differences in actual metal recoveries when compared to laboratory test
results, may affect the economic outcome of current and future projects.
STATEMENT AS TO DISCLOSURE OF INFORMATION TO AUDITOR
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 Group's Auditor
for the purposes of their audit and to establish that the Auditor is aware of
that information. The Directors are not aware of any relevant audit information
of which the Auditor is unaware.
AUDITOR
The auditor, BDO LLP, will be proposed for re-appointment in accordance with
Section 489 of the Companies Act 2006.
On Behalf of The Board:
P Mercer
Company Secretary
October 28, 2013
RAMBLER METALS AND MINING PLC
DIRECTORS' RESPONSIBILITIES
The directors are responsible for preparing the report of the directors 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 period. 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 and the group 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 on-going integrity of the financial
statements contained therein.
RAMBLER METALS AND MINING PLC
CORPORATE GOVERNANCE REPORT FOR THE YEAR ENDED JULY 31, 2013
In formulating the Group's corporate governance procedures the Board of
Directors takes due regard of the principles of good governance set out in the
UK Corporate Governance Code issued by the Financial Reporting Council in
September 2012 (as appended to the Listing Rules of the Financial Services
Authority) and the size and development of the Group. The Group also has regard
to the Quoted Companies Alliance (QCA) Guidelines on Corporate Governance for
AIM Companies.
The Board of Rambler Metals and Mining PLC is made up of one executive Director
and seven non-executive Directors. D H W Dobson is the senior non-executive
director and G Ogilvie is the Group's President and Chief Executive. It is the
Board's policy to maintain independence by having at least half of the Board
comprising non-executive directors. The structure of the Board ensures that no
one individual or group dominates the decision making process.
The Board ordinarily meets no less than quarterly providing effective leadership
and overall control of the Group's affairs through the schedule of matters
reserved for its decision. This includes the approval of budgets and business
plans, items of major capital expenditure, risk management policies and the
approval of the financial statements. Formal agendas, papers and reports are
sent to the directors in a timely manner, prior to Board meetings. The Board
delegates certain of its responsibilities to Board committees which have clearly
defined terms of reference. Between the Board meetings, the executive Director,
the Chief Financial Officer and some of the non-executive directors meet on a
regular basis to review and discuss progress.
All Directors have access to the advice and services of the company secretary,
who is responsible for ensuring that all Board procedures are followed. Any
Director may take independent professional advice at the Group's expense in the
furtherance of his duties.
The Audit Committee, which meets not less than quarterly and considers the
Group's financial reporting (including accounting policies) and internal
financial controls, is chaired by J S Thomson, the other members being L Goodman
and E C Chen. The committee receives reports from management and from the
Group's auditor. The Group has in place a series of procedures and controls
designed to identify and prevent the risk of loss. These procedures are formally
documented and are reported on regularly. The Audit Committee has reviewed the
systems in place and considers these to be appropriate.
The Remuneration Committee, which meets at least once a year and is responsible
for making decisions on directors' remuneration packages, is chaired by L
Goodman. T S Chan and J S Thomson are the other committee members.
Remuneration of executive Directors is established by reference to the
remuneration of executives of equivalent status both in terms of time
commitment, level of responsibility of the position and by reference to their
job qualifications and skills. The Remuneration Committee will also have regard
to the terms which may be required to attract an executive of equivalent
experience to join the Board from another company. Such packages may include
performance related bonuses and the grant of share options.
The Board attaches importance to maintaining good relationships with all its
shareholders and ensures that all price sensitive information is released to all
shareholders at the same time in accordance with AIM and Toronto Stock
Exchange-Venture market rules. The Group's principal communication is through
the Annual General Meeting and through the annual report and accounts, quarterly
and interim statements.
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF RAMBLER METALS AND MINING PLC
We have audited the financial statements of Rambler Metals and Mining PLC for
the year ended 31 July 2013 which comprise the consolidated income statement,
the consolidated and parent company statements of comprehensive income, the
consolidated and parent company statements of financial position, the
consolidated and parent company statements of changes in equity, the
consolidated and parent 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 the parent company financial
statements, as applied in accordance with the provisions of the Companies Act
2006.
This report is made solely to the company's members, as a body, in accordance
with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been
undertaken so that we might state to the company's members those matters we are
required to state to them in an auditor's report and for no other purpose. To
the fullest extent permitted by law, we do not accept or assume responsibility
to anyone other than the company and the company's members as a body, for our
audit work, for this report, or for the opinions we have formed.
Respective responsibilities of directors and auditors
As explained more fully in the statement of directors' responsibilities, the
directors are responsible for the preparation of the financial statements and
for being satisfied that they give a true and fair view. Our responsibility is
to audit and express an opinion on the financial statements in accordance with
applicable law and International Standards on Auditing (UK and Ireland). Those
standards require us to comply with the Auditing Practices Board's Ethical
Standards for Auditors.
Scope of the audit of the financial statements
A description of the scope of an audit of financial statements is provided on
the Financial Reporting Council'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 July 2013 and of the
group's profit 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.
Separate opinion in relation to IFRSs as issued by the IASB
As explained in Note 2 to the group financial statements the group, in addition
to applying IFRSs as adopted by the European Union, has also applied IFRSs as
issued by the International Accounting Standards Board (IASB).
In our opinion the group financial statements comply with IFRSs as issued by the
IASB.
Opinion on other matters prescribed by the Companies Act 2006
In our opinion the information given in the directors' report for the financial
year for which the financial statements are prepared is consistent with the
financial statements.
Matters on which we are required to report by exception
We have nothing to report in respect of the following matters where the
Companies Act 2006 requires us to report to you if, in our opinion:
-- adequate accounting records have not been kept by the parent company, or
returns adequate for our audit have not been received from branches not
visited by us; or
-- the parent company financial statements are not in agreement with the
accounting records and returns; or
-- certain disclosures of directors' remuneration specified by law are not
made; or
-- we have not received all the information and explanations we require for
our audit.
Jason Homewood (senior statutory auditor)
For and on behalf of BDO LLP, statutory auditor
London
United Kingdom
October 28, 2013
BDO LLP is a limited liability partnership registered in England and Wales (with
registered number OC305127).
RAMBLER METALS AND MINING PLC
CONSOLIDATED INCOME STATEMENT
For the Year Ended July 31, 2013
(EXPRESSED IN CANADIAN DOLLARS)
Note 2013 2012
$'000 $'000
Revenue 3 34,669 1,219
Production costs (20,936) (674)
Depreciation and amortisation (6,708) -
---------------------
Gross profit 7,025 545
Administrative expenses (3,557) (3,022)
Exploration expenses (26) (24)
---------------------
Operating profit/(loss) 4 3,442 (2,501)
---------------------
Exchange loss (513) (959)
Bank interest receivable 84 102
Loss on derivative financial instruments 6 (323) -
Finance costs 7 295 (9)
---------------------
Net financing income/(expense) (457) (866)
---------------------
Profit/(loss) before tax 2,985 (3,367)
Income tax credit 8 6,068 -
---------------------
Profit/(loss) for the year attributable to
owners of the parent 9,053 (3,367)
---------------------
---------------------
Earnings/(loss) per share
Note 2013 2012
$
Basic earnings/(loss) per share 19 0.063 (0.026)
---------------------
---------------------
Diluted earnings/(loss) per share 19 0.063 (0.026)
---------------------
---------------------
RAMBLER METALS AND MINING PLC
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the Year Ended July 31, 2013
(EXPRESSED IN CANADIAN DOLLARS)
2013 2012
$'000 $'000
Profit/(loss) for the year 9,053 (3,367)
----------------------
Other comprehensive income
Items that may be reclassified into profit or loss
Exchange differences on translation of foreign
operations (net of tax) (3) 8
Gain/(loss) on available for sale investment (net of
tax) 721 (422)
----------------------
Other comprehensive income/(loss) for the year 718 (414)
----------------------
Total comprehensive income/(loss) for the year and
attributable to the owners of the parent 9,771 (3,781)
----------------------
----------------------
Registered number: 05101822 (England and Wales)
RAMBLER METALS AND MINING PLC
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at July 31, 2013
(EXPRESSED IN CANADIAN DOLLARS)
Note
2013 2012
$'000 $'000
Assets
Intangible assets 9 17,450 17,260
Mineral properties 10 49,395 48,064
Property, plant and equipment 11 28,460 31,494
Available for sale investments 12 1,703 712
Deferred tax 8 5,916 -
-------------------
Total non-current assets 102,924 97,530
-------------------
Inventory 13 3,373 1,100
Trade and other receivables 14 1,096 718
Derivative financial asset 15 639 281
Cash and cash equivalents 16 5,566 7,826
Restricted cash 17 3,261 3,263
-------------------
Total current assets 13,935 13,188
-------------------
Total assets 116,859 110,718
-------------------
-------------------
Equity
Issued capital 18 2,613 2,599
Share premium 75,164 74,756
Merger reserve 214 214
Translation reserve 140 143
Fair value reserve 299 (422)
Accumulated losses (738) (9,888)
-------------------
Total equity 77,692 67,402
-------------------
Liabilities
Interest-bearing loans and borrowings 21 20,576 20,691
Provision 22 1,903 1,812
-------------------
Total non-current liabilities 22,479 22,503
-------------------
Interest-bearing loans and borrowings 21 10,898 14,827
Trade and other payables 20 5,790 5,986
-------------------
Total current liabilities 16,688 20,813
-------------------
Total liabilities 39,167 43,317
-------------------
Total equity and liabilities 116,859 110,718
-------------------
-------------------
ON BEHALF OF THE BOARD:
L D Goodman, Director
Approved and authorised for issue by the Board on October 28, 2013
RAMBLER METALS AND MINING PLC
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Share Share Merger Translation
capital Premium Reserve reserve
(EXPRESSED IN CANADIAN DOLLARS) $'000 $'000 $'000 $'000
Group
Balance at August 1, 2011 2,299 65,934 214 135
--------------------------------------------
Comprehensive income
Loss for the year - - - -
--------------------------------------------
Foreign exchange translation
differences - - - 8
Loss on available for sale
investments - - - -
--------------------------------------------
Total other comprehensive
income - - - 8
--------------------------------------------
Total comprehensive income for
the year - - - 8
--------------------------------------------
Transactions with owners
Issue of share capital 300 9,047 - -
Share issue expenses - (225) - -
Share-based payments - - - -
--------------------------------------------
Transactions with owners 300 8,822 - -
--------------------------------------------
Balance at July 31, 2012 2,599 74,756 214 143
--------------------------------------------
--------------------------------------------
Balance at August 1, 2012 2,599 74,756 214 143
--------------------------------------------
Comprehensive income
Profit for the year - - - -
--------------------------------------------
Foreign exchange translation
differences - - - (3)
Profit on available for sale
investments (net of tax) - - - -
--------------------------------------------
Total other comprehensive
income - - - (3)
--------------------------------------------
Total comprehensive income for
the year - - - (3)
--------------------------------------------
Transactions with owners
Issue of share capital 14 408 - -
Share-based payments - - - -
--------------------------------------------
Transactions with owners 14 408 - -
--------------------------------------------
Balance at July 31, 2013 2,613 75,164 214 140
--------------------------------------------
--------------------------------------------
Fair value Accumulated
reserve Losses Total
(EXPRESSED IN CANADIAN DOLLARS) $'000 $'000 $'000
Group
Balance at August 1, 2011 - (6,604) 61,978
---------------------------------------------
Comprehensive income
Loss for the year - (3,367) (3,367)
---------------------------------------------
Foreign exchange translation
differences - - 8
Loss on available for sale
investments (422) - (422)
---------------------------------------------
Total other comprehensive
income (422) - (414)
---------------------------------------------
Total comprehensive income for
the year (422) (3,367) (3,781)
---------------------------------------------
Transactions with owners
Issue of share capital - - 9,347
Share issue expenses - - (225)
Share-based payments - 83 83
---------------------------------------------
Transactions with owners - 83 9,205
---------------------------------------------
Balance at July 31, 2012 (422) (9,888) 67,402
---------------------------------------------
---------------------------------------------
Balance at August 1, 2012 (422) (9,888) 67,402
---------------------------------------------
Comprehensive income
Profit for the year - 9,053 9,053
---------------------------------------------
Foreign exchange translation
differences - - (3)
Profit on available for sale
investments (net of tax) 721 - 721
---------------------------------------------
Total other comprehensive
income 721 - 718
---------------------------------------------
Total comprehensive income for
the year 721 9,053 9,771
---------------------------------------------
Transactions with owners
Issue of share capital - - 422
Share-based payments - 97 97
---------------------------------------------
Transactions with owners - 97 519
---------------------------------------------
Balance at July 31, 2013 299 (738) 77,692
---------------------------------------------
---------------------------------------------
RAMBLER METALS AND MINING PLC
CONSOLIDATED STATEMENT OF CASH FLOWS
For the Year Ended July 31, 2013
(EXPRESSED IN CANADIAN DOLLARS)
2013 2012
$'000 $'000
Cash flows from operating activities
Operating profit/(loss) 3,442 (2,501)
Depreciation 6,813 131
Share based payments 97 80
Increase in inventory (145) (167)
(Increase)/decrease in debtors (379) 847
Increase in derivative financial instruments (962) -
Increase in creditors 3,431 410
----------------------
Cash generated from/(utilised in) operations 12,297 (1,200)
Interest paid (857) (9)
Tax received 28 -
----------------------
Net cash generated from/(utilised in) operating
activities 11,468 (1,209)
----------------------
Cash flows from investing activities
Interest received 84 102
Redemption of bearer deposit note 2 114
Acquisition of listed investment (148) (1,135)
Acquisition of evaluation and exploration assets (160) (658)
Acquisition of mineral properties - net (6,735) 4,508
Acquisition of property, plant and equipment (1,638) (10,006)
----------------------
Net cash utilised in investing activities (8,595) (7,075)
----------------------
Cash flows from financing activities
Proceeds from issue of share capital - 8,714
Payment of transaction costs - (225)
Proceeds from exercise of share options 22 38
Repayment of Gold Loan (note 21) (1,466) (7,888)
(Repayment)/proceeds of Credit Facility (1,625) 6,976
Capital element of finance lease payments (2,085) (1,712)
----------------------
Net cash (utilised)/from financing activities (5,154) 5,903
----------------------
Net decrease in cash and cash equivalents (2,281) (2,381)
Cash and cash equivalents at beginning of period 7,826 10,170
Effect of exchange rate fluctuations on cash held 21 37
----------------------
Cash and cash equivalents at end of period 5,566 7,826
----------------------
----------------------
RAMBLER METALS AND MINING PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1. Nature of operation and going concern
The principal activity of the Group is the development and exploration of the
Ming Copper-Gold Mine ("Ming Mine") located in Baie Verte, Newfoundland and
Labrador, Canada.
The Group's business activities, together with the factors likely to affect its
future development, performance and position, its financial position, cash
flows, liquidity position and borrowing facilities are set out in the Management
Discussion and Analysis on pages 3 to 28. In addition, note 23 to the financial
statements includes the Group's objectives, policies and processes for managing
its capital; its financial risk management objectives; details of its financial
instruments and hedging activities; and its exposures to credit risk and
liquidity risk.
Since the commencement of commercial production the Group has generated
operating cash flows of $12.6 million and reduced the working capital deficit
from $8.8 million at November 1, 2012 to $2.7 million at July 31, 2013. The
Group expects to remain cash flow positive based on current projections and
production forecasts generating a significant working capital surplus during the
next 12 months including the repayment of the Sprott credit facility by the due
date of March 31, 2014. The current economic conditions do, however, create
uncertainty particularly over
(a) the price of copper, gold and silver;
(b) the exchange rate between Canadian and US dollars and thus the
consequence for the cash generated from US dollar revenues ;
(c) the production targets being met; and
(d) the terms of the Gold loan being complied with.
The Group's forecasts and projections, taking account of reasonably possible
changes in trading performance, show that the Group should continue to be cash
flow positive and meet its repayment obligations under both the credit facility
and Gold loan.
Based on the above management concludes the Group has adequate resources to
continue in operational existence for the foreseeable future. Thus they continue
to adopt the going concern basis of accounting in preparing the annual financial
statements.
2. Significant accounting policies
Rambler Metals and Mining Plc (the "Company") is a company registered in England
and Wales. The consolidated financial statements of the Company for the year
ended July 31, 2013 comprise the Company and its subsidiaries (together referred
to as the "Group").
These financial statements are presented in Canadian dollars. Although the
parent company has a functional currency of GB pounds the majority of the
Group's operations are carried out by its operating subsidiary which has a
functional currency of Canadian dollars. Foreign operations are included in
accordance with the policies set out in note 2(d). At July 31, 2013 the closing
rate of exchange of Canadian dollars to 1 GB pound was 1.57 (July 31, 2012:
1.58) and the average rate of exchange of Canadian dollars to 1 GB pound for the
year was 1.58 (2012: 1.60).
(a) Statement of compliance
The consolidated financial statements of Rambler Metals and Mining plc have been
prepared in accordance with International Financial Reporting Standards ("IFRS")
and their interpretations issued by the International Accounting Standards Board
("IASB"), as adopted by the European Union and with IFRS and their
interpretations adopted by the IASB. There are no material differences on
application to the Group. The consolidated financial statements have also been
prepared in accordance with those parts of the Companies Act 2006 applicable to
companies reporting under IFRS.
New and revised standards which have been adopted during the year have not
affected the disclosures presented in these financial statements with the
exception of the disclosure of the breakdown of other comprehensive income
between items that may be reclassified into profit or loss or not in accordance
with IAS 1 - Presentation of Financial Statements.
The Group has not adopted any standards or interpretations in advance of the
required implementation dates. It is not expected that adoption of standards or
interpretations which have been issued by the International Accounting Standards
Board but have not been adopted will have a material impact on the financial
statements.
(b) Basis of preparation
The financial statements are presented in Canadian dollars, rounded to the
nearest thousand dollars.
The preparation of financial statements in conformity with IFRS requires
management to make judgements, estimates and assumptions that affect the
application of policies and reported amounts of assets and liabilities, income
and expenses. The estimates and associated assumptions are based on historical
experience and various other factors that are believed to be reasonable under
the circumstances, the results of which form the basis of making the judgements
about carrying values of assets and liabilities that are not readily apparent
from other sources. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an on-going basis.
Revisions to accounting estimates are recognised in the period in which the
estimate is revised if the revision affects only that period or in the period of
the revision and future periods if the revision affects both current and future
periods.
Judgements made by management in the application of IFRS that have a significant
effect on the financial statements and estimates with a significant risk of
material adjustment in the next year are discussed in note 26.
The accounting policies set out below have been applied consistently to all
periods presented in these consolidated financial statements.
The accounting policies have been applied consistently by Group entities.
(c) Basis of consolidation
(i) Subsidiaries
Subsidiaries are entities controlled by the Company. Control exists when the
Company has the power, directly or indirectly, to govern the financial and
operating policies of an entity so as to obtain benefits from its activities. In
assessing control, potential voting rights that presently are exercisable or
convertible are taken into account. The financial statements of subsidiaries are
included in the consolidated financial statements from the date that control
commences until the date that control ceases.
(ii) Transactions eliminated on consolidation
Intragroup balances and any unrealised gains and losses or income and expenses
arising from intragroup transactions, are eliminated in preparing the
consolidated financial statements.
(d) Foreign currency
(i) Foreign currency transactions
Transactions in foreign currencies are translated to the functional currency at
the foreign exchange rate ruling at the date of the transaction. Monetary assets
and liabilities denominated in foreign currencies at the balance sheet date are
translated to the functional currency at the foreign exchange rate ruling at
that date. Foreign exchange differences arising on translation are recognised in
the income statement. Non-monetary assets and liabilities that are measured in
terms of historical cost in a foreign currency are translated using the exchange
rate at the date of the transaction. Non-monetary assets and liabilities
denominated in foreign currencies that are stated at fair value are translated
to the functional currency at foreign exchange rates ruling at the dates the
fair value was determined.
(ii) Translation into presentation currency
The assets and liabilities of the UK parent are translated to Canadian dollars
at foreign exchange rates ruling at the balance sheet date. The revenues and
expenses of the parent company are translated to Canadian dollars at rates
approximating to the foreign exchange rates ruling at the dates of the
transactions.
(iii) Net investment in foreign operations
Exchange differences arising from the translation of the net investment in
foreign operations are taken to translation reserve. They are released into the
income statement upon disposal.
(e) Property, plant and equipment
(i) Owned assets
Items of property, plant and equipment are stated at cost. The cost of
self-constructed assets includes the cost of materials, direct labour and the
initial estimate of the costs of dismantling and removing the items and
restoring the site on which they are located, where an obligation to incur such
costs exists.
Where parts of an item of property, plant and equipment have different useful
lives, they are accounted for as separate items of property, plant and
equipment.
(ii) Leased assets
Leases in terms of which the Group assumes substantially all the risks and
rewards of ownership are classified as finance leases. All other leases are
classified as operating leases.
(iii) Subsequent costs
The Group recognises in the carrying amount of an item of property, plant and
equipment the cost of replacing part of such an item when that cost is incurred
if it is probable that the future economic benefits embodied with the item will
flow to the Group and the cost of the item can be measured reliably. All other
costs are recognised in the income statement as an expense as incurred.
(iv) Depreciation
Depreciation is charged to the income statement or capitalised as part of the
exploration and evaluation costs or Mineral Properties where appropriate, on a
straight-line basis over the estimated useful lives of each part of an item of
property, plant and equipment. Land is not depreciated. The estimated useful
lives are as follows:
= buildings 5 to 10 years
= plant and equipment 2 to 10 years
= motor vehicles 3 years
= computer equipment 3 years
= fixtures, fittings and equipment 3 years
The estimated useful lives and residual values of the assets are considered
annually and restated as required.
(f) Mineral Properties
Upon transfer of 'Exploration and evaluation costs' into 'Mineral Properties',
all subsequent expenditure on the construction, installation or completion of
infrastructure facilities is capitalised within 'Mineral Properties'.
Development expenditure is net of proceeds from all sale of gold and copper
concentrate extracted during the development phase and until commercial
production is declared.
Mineral properties are amortised on a unit of production basis.
(g) Intangible assets
(i) Exploration and evaluation costs
These comprise costs directly incurred in exploration and evaluation. They are
capitalised as intangible assets pending determination of the feasibility of the
project. When the existence of economically recoverable reserves and the
availability of finance is established, the related intangible assets are
transferred to Mineral Properties. Where a project is abandoned or is determined
not to be economically viable, the related costs are written off.
The recoverability of deferred exploration and evaluation costs is dependent
upon a number of factors common to the natural resource sector. These include
the extent to which the Group can establish economically recoverable reserves on
its properties, the ability of the Group to obtain necessary financing to
complete the development of such reserves and future profitable production or
proceeds from the disposition thereof.
(ii) Impairment of exploration and evaluation costs
Impairment reviews for exploration and evaluation costs are carried out on a
project by project basis, with each project representing a potential single cash
generating unit. An impairment review is undertaken when indicators of
impairment arise but typically when one of the following circumstances apply:
-- unexpected geological occurrences that render the resource uneconomic;
-- title to the asset is compromised;
-- variations in metal prices that render the project uneconomic; and
-- variations in the exchange rate for the currency of operation.
(h) Available for sale investments
Available for sale investments are recognised at fair value with changes in
value recorded in other comprehensive income. Subsequent to initial recognition
available-for-sale financial assets are stated at fair value. Movements in fair
values are recognised in other comprehensive income, with the exception of
impairment losses which are recognised in profit or loss. Fair values are based
on prices quoted in an active market if such a market is available. If an active
market is not available, the group establishes the fair value of financial
instruments by using a valuation technique, usually discounted cash flow
analysis. When an investment is disposed, any cumulative gains and losses
previously recognised in equity are recognised in profit or loss.
(i) Inventory
Stockpiled ore is recorded at the lower of production cost and net realisable
value. Production costs include all direct costs plus an allocation of fixed
costs associated with the mine site.
Operating supplies are valued at the lower of cost and net realisable value.
Cost is determined on an average cost basis.
(j) Trade and other receivables
Trade and other receivables are generally stated at their cost less impairment
losses. Receivables in respect of the sale of copper concentrate which contain
an embedded derivative linking them to future commodity prices are measured at
fair value through profit and loss and are treated as derivative financial
assets or liabilities. Receivables with a short duration are not discounted.
(k) Financial instruments measured at fair value through profit and loss
Financial instruments measured at fair value through profit and loss, which
includes all derivative financial instruments and receivables containing
embedded derivatives arising from sales of concentrate, are measured at fair
value at each balance sheet date with changes in value reflected directly within
the income statement.
(l) Cash and cash equivalents
Cash and cash equivalents comprise cash balances and call deposits. Bank
overdrafts that are repayable on demand and form an integral part of the Group's
cash management are included as a component of cash and cash equivalents for the
purpose of the statement of cash flows.
(m) Impairment
The carrying amounts of the Group's assets (except deferred exploration and
evaluation costs (see accounting policy (g)(ii)) and deferred tax assets (see
accounting policy 2(s)), are reviewed at each balance sheet date to determine
whether there is any indication of impairment. If any such indication exists,
the asset's recoverable amount is estimated (see accounting policy 2(m)(i)).
An impairment loss is recognised whenever the carrying amount of an asset or its
cash-generating unit exceeds its recoverable amount. Impairment losses are
recognised in the income statement.
Impairment losses recognised in respect of cash-generating units are allocated
first to reduce the carrying amount of any goodwill allocated to cash-generating
units (group of units) and then, to reduce the carrying amount of the other
assets in the unit (group of units) on a pro rata basis.
(i) Calculation of recoverable amount
The recoverable amount of other assets is the greater of their net selling price
and value in use. In assessing value in use, the estimated future cash flows are
discounted to their present value using a pre-tax discount rate that reflects
current market assessments of the time value of money and the risks specific to
the asset. For an asset that does not generate largely independent cash inflows,
the recoverable amount is determined for the cash-generating unit to which the
asset belongs
(ii) Reversals of impairment
An impairment loss is reversed if there has been a change in the estimates used
to determine the recoverable amount.
An impairment loss is reversed only to the extent that the asset's carrying
amount does not exceed the carrying amount that would have been determined, net
of depreciation or amortisation, if no impairment loss had been recognised.
(n) Financial liabilities and equity
Financial liabilities and equity instruments are classified according to the
substance of the contractual arrangements entered into. An equity instrument is
any contract that evidences a residual interest in the assets of the Group after
deducting all of its liabilities.
Financial liabilities include bank loans and the Gold Loan which are recognised
initially at fair value less attributable transaction costs. Subsequent to
initial recognition, interest-bearing borrowings are stated at amortised cost
with any difference between cost and redemption value being recognised in the
statement of comprehensive income over the period of the borrowings on an
effective interest basis except where the difference between cost and redemption
value qualify to be capitalised as part of the cost of a qualifying asset.
(o) Trade and other payables
Trade and other payables are stated at amortised cost.
(p) Revenue recognition
Revenue comprises the fair value of the consideration received or receivable for
the sale of goods and services in the ordinary course of the Group's activities.
Revenue is shown net of sales tax.
The group recognises revenue when the amount of the revenue can be reliably
measured, it is probable that future economic benefits will flow to the entity
and when specific criteria have been met as described below. Any revenues
generated during commissioning are treated as a contribution towards previously
incurred costs and are therefore credited against mining and development assets
accordingly.
Sale of gold
Revenue associated with the sale of gold dore bars is recognised in accordance
with contract terms negotiated with the refiner and when significant risks and
rewards of ownership of the asset sold are transferred to the refiner, which is
when the minimum determinable or agreed amount of gold has been determined and
title has passed to the refiner.
Sale of concentrate
Revenue associated with the sale of copper concentrate is recognised when
significant risks and rewards of ownership of the asset sold are transferred to
the Group's off-taker, which is when the group receives provisional payment for
each lot of concentrate invoiced. Where a provisional invoice is not raised,
risks and rewards of ownership transfer when the concentrate passes over the
rail of the shipping vessel. Adjustments arising due to differences in assays
and weights, from the time of provisional invoicing to the time of final
settlement, are adjusted to revenue.
(q) Expenses
(i) Operating lease payments
Payments made under operating leases are recognised in the income statement on a
straight-line basis over the term of the lease. Lease incentives received are
recognised in the income statement as an integral part of the total lease
expense.
(ii) Finance lease payments
Minimum lease payments are apportioned between the finance charge and the
reduction of the outstanding liability. The finance charge is allocated to each
period during the lease term so as to produce a constant periodic rate of
interest on the remaining balance of the liability.
(iii) Borrowing costs
Borrowing costs are recognised in the income statement where they do not meet
the criteria for capitalisation. Borrowing costs directly attributable to the
acquisition, construction or production of a qualifying asset are capitalised.
(r) Equity settled share based payments
All share based payments are recognised in the financial statements.
All goods and services received in exchange for the grant of any share-based
remuneration are measured at their fair values. Fair values of employee services
are determined indirectly by reference to the fair value of the share options
awarded. Their value is appraised at the grant dates and excludes the impact of
non-market vesting conditions.
All share-based remuneration is ultimately recognised as an expense in the
income statement with a corresponding credit to the accumulated losses in the
balance sheet.
If vesting periods apply, the expense is allocated over the vesting period,
based on the best available estimate of the number of share options expected to
vest. Estimates are subsequently revised if there is any indication that the
number of share options expected to vest differs from previous estimates. Any
cumulative adjustment prior to vesting is recognised in the current period. No
adjustment is made to any expense recognised in prior periods if the number of
share options ultimately exercised is different to that estimated on vesting.
Upon exercise of share options the proceeds received net of attributable
transaction costs are credited to share capital.
(s) Income tax
Income tax on the profit or loss for the year comprises current and deferred
tax. Income tax is recognised in the income statement except to the extent that
it relates to items recognised directly in equity, in which case it is
recognised in equity.
Current tax is the expected tax payable on the taxable income for the year,
using tax rates enacted or substantively enacted at the balance sheet date, and
any adjustment to tax payable in respect of previous years.
Deferred tax is provided using the balance sheet liability method, providing for
temporary differences between the carrying amounts of assets and liabilities for
financial reporting purposes and the amounts used for taxation purposes. The
following temporary differences are not provided for: goodwill not deductible
for tax purposes, the initial recognition of assets or liabilities that affect
neither accounting nor taxable profit, and differences relating to investments
in subsidiaries to the extent that they will probably not reverse in the
foreseeable future. The amount of deferred tax provided is based on the expected
manner of realisation or settlement of the carrying amount of assets and
liabilities, using tax rates enacted or substantively enacted at the balance
sheet date. A deferred tax asset is recognised only to the extent that it is
probable that future taxable profits will be available against which the asset
can be utilised. Deferred tax assets are reduced to the extent that it is no
longer probable that the related tax benefit will be realised.
3. Operating segments
The Group's operations relate to the exploration for and development of mineral
deposits with support provided from the UK and as such the Group has only one
operating segment.
Information about geographical areas
2013 2012
UK Canada Consolidated UK Canada Consolidated
$'000 $'000 $'000 $'000 $'000 $'000
Segment revenue - 34,669 34,669 - 1,219 1,219
------------------------------------------------------
Segment non-current
assets 1,357 101,567 102,924 - 97,530 97,530
------------------------------------------------------
Information about major customers
Revenues from transactions with a single customer exceeding 10% of total
revenues were as follows:
2013 2012
$'000 $'000
Customer A - 1,219
Customer B 34,190 -
Others 479 -
--------------------
34,669 1,219
--------------------
--------------------
4. Operating profit/(loss)
The operating profit/(loss) is after charging/(crediting):
2013 2012
$'000 $'000
Depreciation - owned assets 4,609 131
Amortisation 2,204 -
Directors' emoluments (see note 24) 413 338
Auditor's remuneration:
Audit of these financial statements 66 64
Fees payable to the auditor for other services:
Other assurance services 10 10
--------------------
--------------------
The Audit Committee reviews the nature and extent of non-audit services to
ensure that independence is maintained.
In addition to the depreciation charge shown above, depreciation of $1,045,000
(2012: $4,092,000) was capitalised within mineral properties.
5. Personnel expenses
Salary costs
Group Group
2013 2012
$'000 $,000
Wages and salaries 11,343 9,543
Compulsory social security contributions 1,644 1,367
Share based payments 325 79
--------------------
13,312 10,989
--------------------
--------------------
Salary costs of $4,638,000 (2012: $8,449,000) were capitalised as mineral
properties and $10,000 (2012: $948,000) as assets under construction costs
during the year.
Number of employees
The average number of employees during the year was as follows:
Group Group
2013 2012
Directors 8 7
Administration 13 10
Production and development 139 126
--------------------
160 143
--------------------
--------------------
During the year the Group granted share options to key personnel to purchase
shares in the entity. The options are exercisable at the market price of the
shares at the date of grant.
Share-based payments
The number and weighted average exercise prices of share options are as follows:
Weighted Weighted
average average
exercise Number exercise Number
price of options price of options
2013 2013 2012 2012
$ '000 $ '000
Outstanding at the beginning
of the year 0.46 3,937 0.48 4,167
Granted during the year 0.47 622 0.50 646
Exercised during the year 0.24 (117) 0.18 (202)
Cancelled during the year 0.63 (329) 0.54 (674)
----------- -----------
Outstanding at the end of
the year 0.45 4,113 0.46 3,937
----------- -----------
----------- -----------
Exercisable at end of year 0.45 3,339 0.45 3,313
----------- -----------
----------- -----------
The options outstanding at July 31, 2013 have an exercise price in the range of
$0.16 to $1.10 and a weighted average remaining contractual life of 7 years
(2012: 6 years).
The fair value of services received in return for share options granted are
measured by reference to the fair value of share options granted. The estimate
of the fair value of the services received is measured based on the
Black-Scholes model.
In the current year, new and revised standards which have been adopted have not
affected the disclosures presented in these financial statements with the
exception of the disclosure of the breakdown of other comprehensive income
between items that may be reclassified into profit or loss or not in accordance
with IAS 1 - Presentation of Financial Statements.
No standards issued but not yet effective have been adopted early.
International Financial Reporting Standards that have recently been issued or
amended but are not yet effective have not been adopted for the annual reporting
period ended July 31, 2013:
Nature of
change to Application
IFRS accounting date of Application
/Amendment Title policy standard date for Group
----------------------------------------------------------------------------
Various Annual No change to Various August 1, 2013
Improvements accounting
to IFRSs policy,
therefore, no
impact
----------------------------------------------------------------------------
IFRS 9 Financial No change to January 1, August 1, 2015
instruments: accounting 2015
Classification policy,
and therefore, no
Measurement impact
----------------------------------------------------------------------------
IFRS 10 Consolidated No change to January 1, August 1, 2013
Financial accounting 2013
Statements policy,
therefore, no
impact
----------------------------------------------------------------------------
IFRS 11 Joint No change to January 1, August 1, 2013
Arrangements accounting 2013
policy,
therefore, no
impact
----------------------------------------------------------------------------
IFRS 12 Disclosure of No change to January 1, August 1, 2013
Interests in accounting 2013
Other Entities policy,
therefore, no
impact
----------------------------------------------------------------------------
IFRS 13 Fair Value No change to January 1, August 1, 2013
Measurement accounting 2013
policy,
therefore, no
impact
----------------------------------------------------------------------------
Management have reviewed the impact of the above standards and interpretations
and have concluded that they will not result in any material changes to reported
results.
Details of the main accounting policies of the Group are included in note 2 of
the financial statements for the year ended July 31, 2013.
APPENDIX 5 - OTHER MATTERS
Outstanding Share & Option Data
As at the date of this MD&A the following securities are outstanding:
----------------------------------------------------------------------------
Weighted Average Exercise
Security Shares issued or Issuable Price
----------------------------------------------------------------------------
Common Shares 143,280,614 --
----------------------------------------------------------------------------
Options 4,087,334(i) $0.46
----------------------------------------------------------------------------
(i)if all options have fully vested
For further assistance Mr. Peter Mercer, Corporate Secretary can be reached
directly at +1-709-800-1929 ext.500 or pmercer@ramblermines.com.
Forward Looking Information
This MD&A contains "forward-looking information" ("FLI") which may include, but
is not limited to, statements with respect to the Group's objectives and
strategy, future financial or operating performance of the Group and its
projects, exploration expenditures, costs and timing of the development of new
deposits, costs and timing of future exploration, requirements for additional
capital, government regulation of mining exploration and development,
environmental risks, title disputes or claims and limitations of insurance
coverage. All statements, other than statements of historical fact, are
forward-looking statements. Often, but not always, statements containing FLI can
be identified by the use of words such as "plans", "expects", "is expected",
"budget", "scheduled", "estimates", "forecasts", "intends", "anticipates", or
"believes" or variations (including negative variations) of such words and
phrases, or state that certain actions, events or results "may", "could",
"would", "might" or "will" be taken, occur be achieved or continue to be
achieved. Statements containing FLI are necessarily based on a number of
estimates and assumptions that, while considered reasonably by the Company,
involve known and unknown risks, uncertainties and other factors which may cause
the actual results, performance or achievements of the Group to be materially
different from any future results, performance or achievements expressed or
implied by the FLI. Such factors include, among others, general business,
economic, competitive, political and social uncertainties; the actual results of
current exploration activities; conclusions of economic evaluations;
availability and cost of credit; fluctuations in Canadian dollar interest rates;
fluctuations in the relative value of United States dollars, Canadian dollars
and British Pounds; changes in planned parameters as plans continue to be
refined; fluctuations in the market and forward prices of copper, gold, silver
or certain other commodities; possible variations of ore grade or recovery
rates; failure of equipment; accidents and other risks of the mining exploration
industry; political instability, insurrection or war; delays in obtaining
governmental approvals or financing or in the completion of development or
construction activities, as well as those factors discussed in the section
entitled "Risks and Uncertainties" in the Report of Directors for the year ended
July 31, 2013. Although the Group has attempted to identify important factors
that could cause actual actions, events or results to differ materially from
those described in the FLI contained in this MD&A, there may be other factors
that cause actions, events or results to differ from those anticipated,
estimated or intended. Unless stated otherwise, statements containing FLI herein
are made as of the date of this MD&A.
Other than as required by applicable securities law, the Company disclaims any
obligation to update any forward-looking statements, whether as a result of new
information, future events or results or otherwise. There can be no assurance
that forward-looking statements will prove to be accurate, as actual results and
future events could differ materially from those anticipated in such statements.
All of the forward-looking statements made in this MD&A are qualified by these
cautionary statements. Accordingly, readers should not place undue reliance on
forward-looking statements. The following table outlines certain significant
forward-looking statements contained in this MD&A and provides the material
assumptions used to develop such forward-looking statements and material risk
factors that could cause actual results to differ materially from the forward
looking statements.
----------------------------------------------------------------------------
FLI statements Assumptions Risk Factors
----------------------------------------------------------------------------
Continued positive Actual expenditures from Expenditures exceeding
cash flow operations will not revenues resulting from
exceed revenues. fluctuations in the
market and forward prices
of copper, gold, silver
or certain other
commodities, or increased
costs of production
----------------------------------------------------------------------------
Repayment of credit Generation of sufficient Significant reductions in
facility by March cash flow from the sale price of copper and/or
31, 2014 of concentrate gold. Production
shortfalls. Increased
costs of production
----------------------------------------------------------------------------
Continued mining and Achieving the planned Development delays
milling the exposed capital and operating reducing access to
1807 workplaces and development and production ore
further up-dip and production targets; and,
down-dip timely completion of
exploration of 1807 drill bays to allow
zone commencement of
exploration drilling
----------------------------------------------------------------------------
Optimisation of the Successful completion of Economic viability
mining and a detailed engineering
processing of ores review of existing
from the Ming Mine infrastructure and
to allow expansion availability of finance
to 1,000 mtpd from cash flow from
operations or external
----------------------------------------------------------------------------
Open up mining Achieving the planned Development delays
horizons in the capital and operating reducing access to
Ming South up and development and production ore
down plunge ore production targets
bodies.
----------------------------------------------------------------------------
Become a strategic Identification and Availability of suitable
long term low cost acquisition of suitable mineral properties at an
producer by mineral properties, appropriate price and
selective pursuit investment opportunities adequate available
of growth and suitable partners for finance. Availability of
opportunities joint ventures. suitable acquisition and
joint venture
opportunities on
acceptable terms
----------------------------------------------------------------------------
Increasing stock Market reacts positively Failure to reach market
market exposure and to Group's results and expectations.
liquidity promotional activity Deterioration in market
conditions generally or
in the mining sector
----------------------------------------------------------------------------
Further information
Additional information relating to the Group is on SEDAR at www.sedar.com and on
the Group's web site at www.ramblermines.com.
RAMBLER METALS AND MINING PLC
REPORT OF THE DIRECTORS FOR THE YEAR ENDED JULY 31, 2013
The Directors present their report with the audited financial statements of the
Group for the year ended July 31, 2013.
PRINCIPAL ACTIVITY
The principal activity of the Group is the development, mining and exploration
of the Ming Copper-Gold Mine located in Newfoundland and Labrador and the
exploration and development of other properties located in Atlantic Canada. The
principal activity of the parent company is that of a holding company.
REVIEW OF BUSINESS
A review of the Group's business and prospects is set out in the Management's
Discussion and Analysis.
FUTURE DEVELOPMENTS
The Group is looking forward to:
1. Continuing as a profitable copper and gold producer by continued
optimization of concentrate production at the Nugget Pond concentrating
facility, improving revenue through the integration of the gold hydromet
plant into the production stream and focusing on the Group's operations
with the goal of reducing its overall operating costs.
2. Increasing available resources and reserves through further exploration
both within the Ming mine and current land holdings.
3. Continuing to investigate, through on-going optimization studies,
development of the Lower Footwall Zone creating organic growth.
4. Selectively pursuing growth opportunities within Atlantic Canada
including joint ventures, acquisitions, strategic alliances and equity
positions.
DIVIDENDS
No dividends will be distributed for the year ended July 31, 2013.
DIRECTORS
The Directors during the period under review were:
T S Chan
E C Chen (appointed September 24, 2012)
D H W Dobson
L D Goodman
B Hinchcliffe
S Neamonitis
G Ogilvie
J M Roberts (resigned February 20, 2013)
J S Thomson
POLICY ON PAYMENT OF CREDITORS
It is the Group's and Company's policy to settle all amounts due to creditors in
accordance with agreed terms of supply and market practice in the relevant
country.
The Group's average creditor payment period at July 31, 2013 was 53 days (2012:
74 days). The Company's average creditor payment period at July 31, 2013 was 51
days (2012: 62 days).
POLITICAL AND CHARITABLE CONTRIBUTIONS
During the year, the Group made charitable donations of $12,800 (2012: $2,950)
to various charities in the Baie Verte area, Newfoundland and Labrador.
SUBSTANTIAL SHARE INTERESTS
At October 28, 2013 the parent Company was aware of the following substantial
share interests:
Number of
Ordinary % of Share
Shares Capital
Henderson Global Investors 24,427,575 17.05%
Tinma International Ltd. 22,736,992 15.87%
Legal and General Investment Management 17,575,000 12.27%
Majedie Asset Management 9,043,597 6.31%
Whitmill Trust (Zila Corporation) 8,838,000 6.17%
Hargreaves Lansdown 4,564,543 3.19%
FINANCIAL INSTRUMENTS
The Board of Directors determines, as required, the degree to which it is
appropriate to use financial instruments and hedging techniques to mitigate
risks. The main risks for which such instruments may be appropriate are foreign
exchange risk, liquidity risk, credit risk, interest rate risk and commodity
price risk, each of which is discussed in note 23 to the financial statements.
SUBSEQUENT EVENTS
Details of subsequent events are set out in the Management's Discussion and
Analysis.
RISKS AND UNCERTAINTIES
An investment in Rambler should be considered highly speculative due to the
nature of its operations and certain other factors. An investment in Rambler's
securities should only be made by persons who can afford the total loss of their
investment. The risk factors which should be taken into account in assessing
Rambler's activities and an investment in securities of Rambler include, but are
not limited to, those set out below. Should any one or more of these risks
occur, it could have a material adverse effect on the value of securities of
Rambler and the business, prospects, assets, financial position or operating
results of Rambler, any one of which may have a significant adverse effect on
the price or value of any securities of Rambler.
The risks noted below do not necessarily comprise all those faced by Rambler and
are not intended to be presented in any assumed order of likelihood or magnitude
of consequences.
Mining risks
Mining operations are inherently risky. These operations are subject to all
hazards and risks encountered in the exploration for, and development and
production of underground ore, including formation pressures, seismic activity,
rock bursts, fires, power outages, cave-ins, flooding, explosions and other
conditions involved in the drilling and removal of material. Any of these events
could result in serious damage to the mine and other infrastructure, damage to
life or property, environmental damage and possible legal liability.
The Company's profitability will depend, in part, on the economic returns and
actual costs of developing its mining projects, which may differ from the
estimates made by the Company.
Copper and Gold Price Volatility
The Group's revenues are expected to be derived from the extraction and sale of
copper and gold concentrate. The prices of copper and gold have fluctuated
widely, particularly in recent years, and are affected by numerous factors
beyond the Group's control including international, economic and political
trends, expectations of inflation, currency exchange fluctuations, interest
rates, global or regional consumption patterns, speculative activities and
increased global production due to new extraction developments and improved
extraction and production methods. In recent years the price of copper has been
affected by changes in the worldwide balance of copper supply and demand,
largely resulting from economic growth and political conditions in China and
other major developing economies. While this demand has resulted in higher
prices for copper in recent years, if Chinese economic growth slows, it could
result in lower demand for copper. The effect of these factors on the price of
copper and gold cannot be accurately predicted. Any material decrease in the
prevailing price of copper in particular for any significant period of time
would have an adverse and material impact on the Group's economic evaluations
and on the Group's results of operations and financial condition.
Additional Requirement for Capital
The Group may need to raise additional capital in due course to fund anticipated
future development and on-going operations. Future development of the Ming Mine,
future acquisitions, base metal prices, environmental rehabilitation or
restitution, revenues, taxes, capital expenditures and operating expenses and
geological and processing successes are all factors which will have an impact on
the amount of additional capital required. Any additional equity financing may
be dilutive to shareholders and debt financing, if available, may involve
restrictions on financing and operating activities. There is no assurance that
additional financing will be available on terms acceptable to the Group. If the
Group is unable to obtain additional financing as needed, it may be required to
reduce the scope of its operations or anticipated expansion, forfeit its
interests in some or all of its properties, incur financial penalties and reduce
or terminate its operations.
Uncertainty in the estimation of mineral resources and mineral reserves
The calculation of mineral reserves and mineral resources and related grades
mined has a degree of uncertainty. Until such a time as the mineral reserves and
mineral resources are actually mined and processed, the quantity of grades must
be considered as estimates only. The mineral reserves estimates of the Company
have been determined based on assumed metal prices, cut-off grades and costs
that may prove to be inaccurate. Any material change in these variables, along
with differences in actual metal recoveries when compared to laboratory test
results, may affect the economic outcome of current and future projects.
STATEMENT AS TO DISCLOSURE OF INFORMATION TO AUDITOR
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 Group's Auditor
for the purposes of their audit and to establish that the Auditor is aware of
that information. The Directors are not aware of any relevant audit information
of which the Auditor is unaware.
AUDITOR
The auditor, BDO LLP, will be proposed for re-appointment in accordance with
Section 489 of the Companies Act 2006.
On Behalf of The Board:
P Mercer
Company Secretary
October 28, 2013
RAMBLER METALS AND MINING PLC
DIRECTORS' RESPONSIBILITIES
The directors are responsible for preparing the report of the directors 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 period. 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 and the group 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 on-going integrity of the financial
statements contained therein.
RAMBLER METALS AND MINING PLC
CORPORATE GOVERNANCE REPORT FOR THE YEAR ENDED JULY 31, 2013
In formulating the Group's corporate governance procedures the Board of
Directors takes due regard of the principles of good governance set out in the
UK Corporate Governance Code issued by the Financial Reporting Council in
September 2012 (as appended to the Listing Rules of the Financial Services
Authority) and the size and development of the Group. The Group also has regard
to the Quoted Companies Alliance (QCA) Guidelines on Corporate Governance for
AIM Companies.
The Board of Rambler Metals and Mining PLC is made up of one executive Director
and seven non-executive Directors. D H W Dobson is the senior non-executive
director and G Ogilvie is the Group's President and Chief Executive. It is the
Board's policy to maintain independence by having at least half of the Board
comprising non-executive directors. The structure of the Board ensures that no
one individual or group dominates the decision making process.
The Board ordinarily meets no less than quarterly providing effective leadership
and overall control of the Group's affairs through the schedule of matters
reserved for its decision. This includes the approval of budgets and business
plans, items of major capital expenditure, risk management policies and the
approval of the financial statements. Formal agendas, papers and reports are
sent to the directors in a timely manner, prior to Board meetings. The Board
delegates certain of its responsibilities to Board committees which have clearly
defined terms of reference. Between the Board meetings, the executive Director,
the Chief Financial Officer and some of the non-executive directors meet on a
regular basis to review and discuss progress.
All Directors have access to the advice and services of the company secretary,
who is responsible for ensuring that all Board procedures are followed. Any
Director may take independent professional advice at the Group's expense in the
furtherance of his duties.
The Audit Committee, which meets not less than quarterly and considers the
Group's financial reporting (including accounting policies) and internal
financial controls, is chaired by J S Thomson, the other members being L Goodman
and E C Chen. The committee receives reports from management and from the
Group's auditor. The Group has in place a series of procedures and controls
designed to identify and prevent the risk of loss. These procedures are formally
documented and are reported on regularly. The Audit Committee has reviewed the
systems in place and considers these to be appropriate.
The Remuneration Committee, which meets at least once a year and is responsible
for making decisions on directors' remuneration packages, is chaired by L
Goodman. T S Chan and J S Thomson are the other committee members.
Remuneration of executive Directors is established by reference to the
remuneration of executives of equivalent status both in terms of time
commitment, level of responsibility of the position and by reference to their
job qualifications and skills. The Remuneration Committee will also have regard
to the terms which may be required to attract an executive of equivalent
experience to join the Board from another company. Such packages may include
performance related bonuses and the grant of share options.
The Board attaches importance to maintaining good relationships with all its
shareholders and ensures that all price sensitive information is released to all
shareholders at the same time in accordance with AIM and Toronto Stock
Exchange-Venture market rules. The Group's principal communication is through
the Annual General Meeting and through the annual report and accounts, quarterly
and interim statements.
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF RAMBLER METALS AND MINING PLC
We have audited the financial statements of Rambler Metals and Mining PLC for
the year ended 31 July 2013 which comprise the consolidated income statement,
the consolidated and parent company statements of comprehensive income, the
consolidated and parent company statements of financial position, the
consolidated and parent company statements of changes in equity, the
consolidated and parent 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 the parent company financial
statements, as applied in accordance with the provisions of the Companies Act
2006.
This report is made solely to the company's members, as a body, in accordance
with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been
undertaken so that we might state to the company's members those matters we are
required to state to them in an auditor's report and for no other purpose. To
the fullest extent permitted by law, we do not accept or assume responsibility
to anyone other than the company and the company's members as a body, for our
audit work, for this report, or for the opinions we have formed.
Respective responsibilities of directors and auditors
As explained more fully in the statement of directors' responsibilities, the
directors are responsible for the preparation of the financial statements and
for being satisfied that they give a true and fair view. Our responsibility is
to audit and express an opinion on the financial statements in accordance with
applicable law and International Standards on Auditing (UK and Ireland). Those
standards require us to comply with the Auditing Practices Board's Ethical
Standards for Auditors.
Scope of the audit of the financial statements
A description of the scope of an audit of financial statements is provided on
the Financial Reporting Council'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 July 2013 and of the
group's profit 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.
Separate opinion in relation to IFRSs as issued by the IASB
As explained in Note 2 to the group financial statements the group, in addition
to applying IFRSs as adopted by the European Union, has also applied IFRSs as
issued by the International Accounting Standards Board (IASB).
In our opinion the group financial statements comply with IFRSs as issued by the
IASB.
Opinion on other matters prescribed by the Companies Act 2006
In our opinion the information given in the directors' report for the financial
year for which the financial statements are prepared is consistent with the
financial statements.
Matters on which we are required to report by exception
We have nothing to report in respect of the following matters where the
Companies Act 2006 requires us to report to you if, in our opinion:
-- adequate accounting records have not been kept by the parent company, or
returns adequate for our audit have not been received from branches not
visited by us; or
-- the parent company financial statements are not in agreement with the
accounting records and returns; or
-- certain disclosures of directors' remuneration specified by law are not
made; or
-- we have not received all the information and explanations we require for
our audit.
Jason Homewood (senior statutory auditor)
For and on behalf of BDO LLP, statutory auditor
London
United Kingdom
October 28, 2013
BDO LLP is a limited liability partnership registered in England and Wales (with
registered number OC305127).
RAMBLER METALS AND MINING PLC
CONSOLIDATED INCOME STATEMENT
For the Year Ended July 31, 2013
(EXPRESSED IN CANADIAN DOLLARS)
Note 2013 2012
$'000 $'000
Revenue 3 34,669 1,219
Production costs (20,936) (674)
Depreciation and amortisation (6,708) -
---------------------
Gross profit 7,025 545
Administrative expenses (3,557) (3,022)
Exploration expenses (26) (24)
---------------------
Operating profit/(loss) 4 3,442 (2,501)
---------------------
Exchange loss (513) (959)
Bank interest receivable 84 102
Loss on derivative financial instruments 6 (323) -
Finance costs 7 295 (9)
---------------------
Net financing income/(expense) (457) (866)
---------------------
Profit/(loss) before tax 2,985 (3,367)
Income tax credit 8 6,068 -
---------------------
Profit/(loss) for the year attributable to
owners of the parent 9,053 (3,367)
---------------------
---------------------
Earnings/(loss) per share
Note 2013 2012
$ $
Basic earnings/(loss) per share 19 0.063 (0.026)
---------------------
---------------------
Diluted earnings/(loss) per share 19 0.063 (0.026)
---------------------
---------------------
RAMBLER METALS AND MINING PLC
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the Year Ended July 31, 2013
(EXPRESSED IN CANADIAN DOLLARS)
2013 2012
$'000 $'000
Profit/(loss) for the year 9,053 (3,367)
----------------------
Other comprehensive income
Items that may be reclassified into profit or loss
Exchange differences on translation of foreign
operations (net of tax) (3) 8
Gain/(loss) on available for sale investment (net of
tax) 721 (422)
----------------------
Other comprehensive income/(loss) for the year 718 (414)
----------------------
Total comprehensive income/(loss) for the year and
attributable to the owners of the parent 9,771 (3,781)
----------------------
----------------------
Registered number: 05101822 (England and Wales)
RAMBLER METALS AND MINING PLC
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at July 31, 2013
(EXPRESSED IN CANADIAN DOLLARS)
Note
2013 2012
$'000 $'000
Assets
Intangible assets 9 17,450 17,260
Mineral properties 10 49,395 48,064
Property, plant and equipment 11 28,460 31,494
Available for sale investments 12 1,703 712
Deferred tax 8 5,916 -
-------------------
Total non-current assets 102,924 97,530
-------------------
Inventory 13 3,373 1,100
Trade and other receivables 14 1,096 718
Derivative financial asset 15 639 281
Cash and cash equivalents 16 5,566 7,826
Restricted cash 17 3,261 3,263
-------------------
Total current assets 13,935 13,188
-------------------
Total assets 116,859 110,718
-------------------
-------------------
Equity
Issued capital 18 2,613 2,599
Share premium 75,164 74,756
Merger reserve 214 214
Translation reserve 140 143
Fair value reserve 299 (422)
Accumulated losses (738) (9,888)
-------------------
Total equity 77,692 67,402
-------------------
Liabilities
Interest-bearing loans and borrowings 21 20,576 20,691
Provision 22 1,903 1,812
-------------------
Total non-current liabilities 22,479 22,503
-------------------
Interest-bearing loans and borrowings 21 10,898 14,827
Trade and other payables 20 5,790 5,986
-------------------
Total current liabilities 16,688 20,813
-------------------
Total liabilities 39,167 43,317
-------------------
Total equity and liabilities 116,859 110,718
-------------------
-------------------
ON BEHALF OF THE BOARD:
L D Goodman, Director
Approved and authorised for issue by the Board on October 28, 2013
RAMBLER METALS AND MINING PLC
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Share Share Merger Translation
capital Premium Reserve reserve
(EXPRESSED IN CANADIAN DOLLARS) $'000 $'000 $'000 $'000
Group
Balance at August 1, 2011 2,299 65,934 214 135
--------------------------------------------
Comprehensive income
Loss for the year - - - -
--------------------------------------------
Foreign exchange translation
differences - - - 8
Loss on available for sale
investments - - - -
--------------------------------------------
Total other comprehensive
income - - - 8
--------------------------------------------
Total comprehensive income for
the year - - - 8
--------------------------------------------
Transactions with owners
Issue of share capital 300 9,047 - -
Share issue expenses - (225) - -
Share-based payments - - - -
--------------------------------------------
Transactions with owners 300 8,822 - -
--------------------------------------------
Balance at July 31, 2012 2,599 74,756 214 143
--------------------------------------------
--------------------------------------------
Balance at August 1, 2012 2,599 74,756 214 143
--------------------------------------------
Comprehensive income
Profit for the year - - - -
--------------------------------------------
Foreign exchange translation
differences - - - (3)
Profit on available for sale
investments (net of tax) - - - -
--------------------------------------------
Total other comprehensive
income - - - (3)
--------------------------------------------
Total comprehensive income for
the year - - - (3)
--------------------------------------------
Transactions with owners
Issue of share capital 14 408 - -
Share-based payments - - - -
--------------------------------------------
Transactions with owners 14 408 - -
--------------------------------------------
Balance at July 31, 2013 2,613 75,164 214 140
--------------------------------------------
--------------------------------------------
Fair value Accumulated
reserve Losses Total
(EXPRESSED IN CANADIAN DOLLARS) $'000 $'000 $'000
Group
Balance at August 1, 2011 - (6,604) 61,978
---------------------------------------------
Comprehensive income
Loss for the year - (3,367) (3,367)
---------------------------------------------
Foreign exchange translation
differences - - 8
Loss on available for sale
investments (422) - (422)
---------------------------------------------
Total other comprehensive
income (422) - (414)
---------------------------------------------
Total comprehensive income for
the year (422) (3,367) (3,781)
---------------------------------------------
Transactions with owners
Issue of share capital - - 9,347
Share issue expenses - - (225)
Share-based payments - 83 83
---------------------------------------------
Transactions with owners - 83 9,205
---------------------------------------------
Balance at July 31, 2012 (422) (9,888) 67,402
---------------------------------------------
---------------------------------------------
Balance at August 1, 2012 (422) (9,888) 67,402
---------------------------------------------
Comprehensive income
Profit for the year - 9,053 9,053
---------------------------------------------
Foreign exchange translation
differences - - (3)
Profit on available for sale
investments (net of tax) 721 - 721
---------------------------------------------
Total other comprehensive
income 721 - 718
---------------------------------------------
Total comprehensive income for
the year 721 9,053 9,771
---------------------------------------------
Transactions with owners
Issue of share capital - - 422
Share-based payments - 97 97
---------------------------------------------
Transactions with owners - 97 519
---------------------------------------------
Balance at July 31, 2013 299 (738) 77,692
---------------------------------------------
---------------------------------------------
RAMBLER METALS AND MINING PLC
CONSOLIDATED STATEMENT OF CASH FLOWS
For the Year Ended July 31, 2013
(EXPRESSED IN CANADIAN DOLLARS)
2013 2012
$'000 $'000
Cash flows from operating activities
Operating profit/(loss) 3,442 (2,501)
Depreciation 6,813 131
Share based payments 97 80
Increase in inventory (145) (167)
(Increase)/decrease in debtors (379) 847
Increase in derivative financial instruments (962) -
Increase in creditors 3,431 410
----------------------
Cash generated from/(utilised in) operations 12,297 (1,200)
Interest paid (857) (9)
Tax received 28 -
----------------------
Net cash generated from/(utilised in) operating
activities 11,468 (1,209)
----------------------
Cash flows from investing activities
Interest received 84 102
Redemption of bearer deposit note 2 114
Acquisition of listed investment (148) (1,135)
Acquisition of evaluation and exploration assets (160) (658)
Acquisition of mineral properties - net (6,735) 4,508
Acquisition of property, plant and equipment (1,638) (10,006)
----------------------
Net cash utilised in investing activities (8,595) (7,075)
----------------------
Cash flows from financing activities
Proceeds from issue of share capital - 8,714
Payment of transaction costs - (225)
Proceeds from exercise of share options 22 38
Repayment of Gold Loan (note 21) (1,466) (7,888)
(Repayment)/proceeds of Credit Facility (1,625) 6,976
Capital element of finance lease payments (2,085) (1,712)
----------------------
Net cash (utilised)/from financing activities (5,154) 5,903
----------------------
Net decrease in cash and cash equivalents (2,281) (2,381)
Cash and cash equivalents at beginning of period 7,826 10,170
Effect of exchange rate fluctuations on cash held 21 37
----------------------
Cash and cash equivalents at end of period 5,566 7,826
----------------------
----------------------
RAMBLER METALS AND MINING PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1. Nature of operation and going concern
The principal activity of the Group is the development and exploration of the
Ming Copper-Gold Mine ("Ming Mine") located in Baie Verte, Newfoundland and
Labrador, Canada.
The Group's business activities, together with the factors likely to affect its
future development, performance and position, its financial position, cash
flows, liquidity position and borrowing facilities are set out in the Management
Discussion and Analysis on pages 3 to 28. In addition, note 23 to the financial
statements includes the Group's objectives, policies and processes for managing
its capital; its financial risk management objectives; details of its financial
instruments and hedging activities; and its exposures to credit risk and
liquidity risk.
Since the commencement of commercial production the Group has generated
operating cash flows of $12.6 million and reduced the working capital deficit
from $8.8 million at November 1, 2012 to $2.7 million at July 31, 2013. The
Group expects to remain cash flow positive based on current projections and
production forecasts generating a significant working capital surplus during the
next 12 months including the repayment of the Sprott credit facility by the due
date of March 31, 2014. The current economic conditions do, however, create
uncertainty particularly over
(a) the price of copper, gold and silver;
(b) the exchange rate between Canadian and US dollars and thus the
consequence for the cash generated from US dollar revenues ;
(c) the production targets being met; and
(d) the terms of the Gold loan being complied with.
The Group's forecasts and projections, taking account of reasonably possible
changes in trading performance, show that the Group should continue to be cash
flow positive and meet its repayment obligations under both the credit facility
and Gold loan.
Based on the above management concludes the Group has adequate resources to
continue in operational existence for the foreseeable future. Thus they continue
to adopt the going concern basis of accounting in preparing the annual financial
statements.
2. Significant accounting policies
Rambler Metals and Mining Plc (the "Company") is a company registered in England
and Wales. The consolidated financial statements of the Company for the year
ended July 31, 2013 comprise the Company and its subsidiaries (together referred
to as the "Group").
These financial statements are presented in Canadian dollars. Although the
parent company has a functional currency of GB pounds the majority of the
Group's operations are carried out by its operating subsidiary which has a
functional currency of Canadian dollars. Foreign operations are included in
accordance with the policies set out in note 2(d). At July 31, 2013 the closing
rate of exchange of Canadian dollars to 1 GB pound was 1.57 (July 31, 2012:
1.58) and the average rate of exchange of Canadian dollars to 1 GB pound for the
year was 1.58 (2012: 1.60).
(a) Statement of compliance
The consolidated financial statements of Rambler Metals and Mining plc have been
prepared in accordance with International Financial Reporting Standards ("IFRS")
and their interpretations issued by the International Accounting Standards Board
("IASB"), as adopted by the European Union and with IFRS and their
interpretations adopted by the IASB. There are no material differences on
application to the Group. The consolidated financial statements have also been
prepared in accordance with those parts of the Companies Act 2006 applicable to
companies reporting under IFRS.
New and revised standards which have been adopted during the year have not
affected the disclosures presented in these financial statements with the
exception of the disclosure of the breakdown of other comprehensive income
between items that may be reclassified into profit or loss or not in accordance
with IAS 1 - Presentation of Financial Statements.
The Group has not adopted any standards or interpretations in advance of the
required implementation dates. It is not expected that adoption of standards or
interpretations which have been issued by the International Accounting Standards
Board but have not been adopted will have a material impact on the financial
statements.
(b) Basis of preparation
The financial statements are presented in Canadian dollars, rounded to the
nearest thousand dollars.
The preparation of financial statements in conformity with IFRS requires
management to make judgements, estimates and assumptions that affect the
application of policies and reported amounts of assets and liabilities, income
and expenses. The estimates and associated assumptions are based on historical
experience and various other factors that are believed to be reasonable under
the circumstances, the results of which form the basis of making the judgements
about carrying values of assets and liabilities that are not readily apparent
from other sources. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an on-going basis.
Revisions to accounting estimates are recognised in the period in which the
estimate is revised if the revision affects only that period or in the period of
the revision and future periods if the revision affects both current and future
periods.
Judgements made by management in the application of IFRS that have a significant
effect on the financial statements and estimates with a significant risk of
material adjustment in the next year are discussed in note 26.
The accounting policies set out below have been applied consistently to all
periods presented in these consolidated financial statements.
The accounting policies have been applied consistently by Group entities.
(c) Basis of consolidation
(i) Subsidiaries
Subsidiaries are entities controlled by the Company. Control exists when the
Company has the power, directly or indirectly, to govern the financial and
operating policies of an entity so as to obtain benefits from its activities. In
assessing control, potential voting rights that presently are exercisable or
convertible are taken into account. The financial statements of subsidiaries are
included in the consolidated financial statements from the date that control
commences until the date that control ceases.
(ii) Transactions eliminated on consolidation
Intragroup balances and any unrealised gains and losses or income and expenses
arising from intragroup transactions, are eliminated in preparing the
consolidated financial statements.
(d) Foreign currency
(i) Foreign currency transactions
Transactions in foreign currencies are translated to the functional currency at
the foreign exchange rate ruling at the date of the transaction. Monetary assets
and liabilities denominated in foreign currencies at the balance sheet date are
translated to the functional currency at the foreign exchange rate ruling at
that date. Foreign exchange differences arising on translation are recognised in
the income statement. Non-monetary assets and liabilities that are measured in
terms of historical cost in a foreign currency are translated using the exchange
rate at the date of the transaction. Non-monetary assets and liabilities
denominated in foreign currencies that are stated at fair value are translated
to the functional currency at foreign exchange rates ruling at the dates the
fair value was determined.
(ii) Translation into presentation currency
The assets and liabilities of the UK parent are translated to Canadian dollars
at foreign exchange rates ruling at the balance sheet date. The revenues and
expenses of the parent company are translated to Canadian dollars at rates
approximating to the foreign exchange rates ruling at the dates of the
transactions.
(iii) Net investment in foreign operations
Exchange differences arising from the translation of the net investment in
foreign operations are taken to translation reserve. They are released into the
income statement upon disposal.
(e) Property, plant and equipment
(i) Owned assets
Items of property, plant and equipment are stated at cost. The cost of
self-constructed assets includes the cost of materials, direct labour and the
initial estimate of the costs of dismantling and removing the items and
restoring the site on which they are located, where an obligation to incur such
costs exists.
Where parts of an item of property, plant and equipment have different useful
lives, they are accounted for as separate items of property, plant and
equipment.
(ii) Leased assets
Leases in terms of which the Group assumes substantially all the risks and
rewards of ownership are classified as finance leases. All other leases are
classified as operating leases.
(iii) Subsequent costs
The Group recognises in the carrying amount of an item of property, plant and
equipment the cost of replacing part of such an item when that cost is incurred
if it is probable that the future economic benefits embodied with the item will
flow to the Group and the cost of the item can be measured reliably. All other
costs are recognised in the income statement as an expense as incurred.
(iv) Depreciation
Depreciation is charged to the income statement or capitalised as part of the
exploration and evaluation costs or Mineral Properties where appropriate, on a
straight-line basis over the estimated useful lives of each part of an item of
property, plant and equipment. Land is not depreciated. The estimated useful
lives are as follows:
= buildings 5 to 10 years
= plant and equipment 2 to 10 years
= motor vehicles 3 years
= computer equipment 3 years
= fixtures, fittings and equipment 3 years
The estimated useful lives and residual values of the assets are considered
annually and restated as required.
(f) Mineral Properties
Upon transfer of 'Exploration and evaluation costs' into 'Mineral Properties',
all subsequent expenditure on the construction, installation or completion of
infrastructure facilities is capitalised within 'Mineral Properties'.
Development expenditure is net of proceeds from all sale of gold and copper
concentrate extracted during the development phase and until commercial
production is declared.
Mineral properties are amortised on a unit of production basis.
(g) Intangible assets
(i) Exploration and evaluation costs
These comprise costs directly incurred in exploration and evaluation. They are
capitalised as intangible assets pending determination of the feasibility of the
project. When the existence of economically recoverable reserves and the
availability of finance is established, the related intangible assets are
transferred to Mineral Properties. Where a project is abandoned or is determined
not to be economically viable, the related costs are written off.
The recoverability of deferred exploration and evaluation costs is dependent
upon a number of factors common to the natural resource sector. These include
the extent to which the Group can establish economically recoverable reserves on
its properties, the ability of the Group to obtain necessary financing to
complete the development of such reserves and future profitable production or
proceeds from the disposition thereof.
(ii) Impairment of exploration and evaluation costs
Impairment reviews for exploration and evaluation costs are carried out on a
project by project basis, with each project representing a potential single cash
generating unit. An impairment review is undertaken when indicators of
impairment arise but typically when one of the following circumstances apply:
-- unexpected geological occurrences that render the resource uneconomic;
-- title to the asset is compromised;
-- variations in metal prices that render the project uneconomic; and
-- variations in the exchange rate for the currency of operation.
(h) Available for sale investments
Available for sale investments are recognised at fair value with changes in
value recorded in other comprehensive income. Subsequent to initial recognition
available-for-sale financial assets are stated at fair value. Movements in fair
values are recognised in other comprehensive income, with the exception of
impairment losses which are recognised in profit or loss. Fair values are based
on prices quoted in an active market if such a market is available. If an active
market is not available, the group establishes the fair value of financial
instruments by using a valuation technique, usually discounted cash flow
analysis. When an investment is disposed, any cumulative gains and losses
previously recognised in equity are recognised in profit or loss.
(i) Inventory
Stockpiled ore is recorded at the lower of production cost and net realisable
value. Production costs include all direct costs plus an allocation of fixed
costs associated with the mine site.
Operating supplies are valued at the lower of cost and net realisable value.
Cost is determined on an average cost basis.
(j) Trade and other receivables
Trade and other receivables are generally stated at their cost less impairment
losses. Receivables in respect of the sale of copper concentrate which contain
an embedded derivative linking them to future commodity prices are measured at
fair value through profit and loss and are treated as derivative financial
assets or liabilities. Receivables with a short duration are not discounted.
(k) Financial instruments measured at fair value through profit and loss
Financial instruments measured at fair value through profit and loss, which
includes all derivative financial instruments and receivables containing
embedded derivatives arising from sales of concentrate, are measured at fair
value at each balance sheet date with changes in value reflected directly within
the income statement.
(l) Cash and cash equivalents
Cash and cash equivalents comprise cash balances and call deposits. Bank
overdrafts that are repayable on demand and form an integral part of the Group's
cash management are included as a component of cash and cash equivalents for the
purpose of the statement of cash flows.
(m) Impairment
The carrying amounts of the Group's assets (except deferred exploration and
evaluation costs (see accounting policy (g)(ii)) and deferred tax assets (see
accounting policy 2(s)), are reviewed at each balance sheet date to determine
whether there is any indication of impairment. If any such indication exists,
the asset's recoverable amount is estimated (see accounting policy 2(m)(i)).
An impairment loss is recognised whenever the carrying amount of an asset or its
cash-generating unit exceeds its recoverable amount. Impairment losses are
recognised in the income statement.
Impairment losses recognised in respect of cash-generating units are allocated
first to reduce the carrying amount of any goodwill allocated to cash-generating
units (group of units) and then, to reduce the carrying amount of the other
assets in the unit (group of units) on a pro rata basis.
(i) Calculation of recoverable amount
The recoverable amount of other assets is the greater of their net selling price
and value in use. In assessing value in use, the estimated future cash flows are
discounted to their present value using a pre-tax discount rate that reflects
current market assessments of the time value of money and the risks specific to
the asset. For an asset that does not generate largely independent cash inflows,
the recoverable amount is determined for the cash-generating unit to which the
asset belongs.
(ii) Reversals of impairment
An impairment loss is reversed if there has been a change in the estimates used
to determine the recoverable amount.
An impairment loss is reversed only to the extent that the asset's carrying
amount does not exceed the carrying amount that would have been determined, net
of depreciation or amortisation, if no impairment loss had been recognised.
(n) Financial liabilities and equity
Financial liabilities and equity instruments are classified according to the
substance of the contractual arrangements entered into. An equity instrument is
any contract that evidences a residual interest in the assets of the Group after
deducting all of its liabilities.
Financial liabilities include bank loans and the Gold Loan which are recognised
initially at fair value less attributable transaction costs. Subsequent to
initial recognition, interest-bearing borrowings are stated at amortised cost
with any difference between cost and redemption value being recognised in the
statement of comprehensive income over the period of the borrowings on an
effective interest basis except where the difference between cost and redemption
value qualify to be capitalised as part of the cost of a qualifying asset.
(o) Trade and other payables
Trade and other payables are stated at amortised cost.
(p) Revenue recognition
Revenue comprises the fair value of the consideration received or receivable for
the sale of goods and services in the ordinary course of the Group's activities.
Revenue is shown net of sales tax.
The group recognises revenue when the amount of the revenue can be reliably
measured, it is probable that future economic benefits will flow to the entity
and when specific criteria have been met as described below. Any revenues
generated during commissioning are treated as a contribution towards previously
incurred costs and are therefore credited against mining and development assets
accordingly.
Sale of gold
Revenue associated with the sale of gold dore bars is recognised in accordance
with contract terms negotiated with the refiner and when significant risks and
rewards of ownership of the asset sold are transferred to the refiner, which is
when the minimum determinable or agreed amount of gold has been determined and
title has passed to the refiner.
Sale of concentrate
Revenue associated with the sale of copper concentrate is recognised when
significant risks and rewards of ownership of the asset sold are transferred to
the Group's off-taker, which is when the group receives provisional payment for
each lot of concentrate invoiced. Where a provisional invoice is not raised,
risks and rewards of ownership transfer when the concentrate passes over the
rail of the shipping vessel. Adjustments arising due to differences in assays
and weights, from the time of provisional invoicing to the time of final
settlement, are adjusted to revenue.
(q) Expenses
(i) Operating lease payments
Payments made under operating leases are recognised in the income statement on a
straight-line basis over the term of the lease. Lease incentives received are
recognised in the income statement as an integral part of the total lease
expense.
(ii) Finance lease payments
Minimum lease payments are apportioned between the finance charge and the
reduction of the outstanding liability. The finance charge is allocated to each
period during the lease term so as to produce a constant periodic rate of
interest on the remaining balance of the liability.
(iii) Borrowing costs
Borrowing costs are recognised in the income statement where they do not meet
the criteria for capitalisation. Borrowing costs directly attributable to the
acquisition, construction or production of a qualifying asset are capitalised.
(r) Equity settled share based payments
All share based payments are recognised in the financial statements.
All goods and services received in exchange for the grant of any share-based
remuneration are measured at their fair values. Fair values of employee services
are determined indirectly by reference to the fair value of the share options
awarded. Their value is appraised at the grant dates and excludes the impact of
non-market vesting conditions.
All share-based remuneration is ultimately recognised as an expense in the
income statement with a corresponding credit to the accumulated losses in the
balance sheet.
If vesting periods apply, the expense is allocated over the vesting period,
based on the best available estimate of the number of share options expected to
vest. Estimates are subsequently revised if there is any indication that the
number of share options expected to vest differs from previous estimates. Any
cumulative adjustment prior to vesting is recognised in the current period. No
adjustment is made to any expense recognised in prior periods if the number of
share options ultimately exercised is different to that estimated on vesting.
Upon exercise of share options the proceeds received net of attributable
transaction costs are credited to share capital.
(s) Income tax
Income tax on the profit or loss for the year comprises current and deferred
tax. Income tax is recognised in the income statement except to the extent that
it relates to items recognised directly in equity, in which case it is
recognised in equity.
Current tax is the expected tax payable on the taxable income for the year,
using tax rates enacted or substantively enacted at the balance sheet date, and
any adjustment to tax payable in respect of previous years.
Deferred tax is provided using the balance sheet liability method, providing for
temporary differences between the carrying amounts of assets and liabilities for
financial reporting purposes and the amounts used for taxation purposes. The
following temporary differences are not provided for: goodwill not deductible
for tax purposes, the initial recognition of assets or liabilities that affect
neither accounting nor taxable profit, and differences relating to investments
in subsidiaries to the extent that they will probably not reverse in the
foreseeable future. The amount of deferred tax provided is based on the expected
manner of realisation or settlement of the carrying amount of assets and
liabilities, using tax rates enacted or substantively enacted at the balance
sheet date. A deferred tax asset is recognised only to the extent that it is
probable that future taxable profits will be available against which the asset
can be utilised. Deferred tax assets are reduced to the extent that it is no
longer probable that the related tax benefit will be realised.
3. Operating segments
The Group's operations relate to the exploration for and development of mineral
deposits with support provided from the UK and as such the Group has only one
operating segment.
Information about geographical areas
2013 2012
UK Canada Consolidated UK Canada Consolidated
$'000 $'000 $'000 $'000 $'000 $'000
Segment revenue - 34,669 34,669 - 1,219 1,219
------------------------------------------------------
Segment non-current
assets 1,357 101,567 102,924 - 97,530 97,530
------------------------------------------------------
Information about major customers
Revenues from transactions with a single customer exceeding 10% of total
revenues were as follows:
2013 2012
$'000 $'000
Customer A - 1,219
Customer B 34,190 -
Others 479 -
--------------------
34,669 1,219
--------------------
--------------------
4. Operating profit/(loss)
The operating profit/(loss) is after charging/(crediting):
2013 2012
$'000 $'000
Depreciation - owned assets 4,609 131
Amortisation 2,204 -
Directors' emoluments (see note 24) 413 338
Auditor's remuneration:
Audit of these financial statements 66 64
Fees payable to the auditor for other services:
Other assurance services 10 10
--------------------
--------------------
The Audit Committee reviews the nature and extent of non-audit services to
ensure that independence is maintained.
In addition to the depreciation charge shown above, depreciation of $1,045,000
(2012: $4,092,000) was capitalised within mineral properties.
5. Personnel expenses
Salary costs
Group Group
2013 2012
$'000 $,000
Wages and salaries 11,343 9,543
Compulsory social security contributions 1,644 1,367
Share based payments 325 79
--------------------
13,312 10,989
--------------------
--------------------
Salary costs of $4,638,000 (2012: $8,449,000) were capitalised as mineral
properties and $10,000 (2012: $948,000) as assets under construction costs
during the year.
Number of employees
The average number of employees during the year was as follows:
Group Group
2013 2012
Directors 8 7
Administration 13 10
Production and development 139 126
--------------------
160 143
--------------------
--------------------
During the year the Group granted share options to key personnel to purchase
shares in the entity. The options are exercisable at the market price of the
shares at the date of grant.
Share-based payments
The number and weighted average exercise prices of share options are as follows:
Weighted Weighted
average average
exercise Number exercise Number
price of options price of options
2013 2013 2012 2012
$ '000 $ '000
Outstanding at the beginning
of the year 0.46 3,937 0.48 4,167
Granted during the year 0.47 622 0.50 646
Exercised during the year 0.24 (117) 0.18 (202)
Cancelled during the year 0.63 (329) 0.54 (674)
----------- -----------
Outstanding at the end of
the year 0.45 4,113 0.46 3,937
----------- -----------
----------- -----------
Exercisable at end of year 0.45 3,339 0.45 3,313
----------- -----------
----------- -----------
The options outstanding at July 31, 2013 have an exercise price in the range of
$0.16 to $1.10 and a weighted average remaining contractual life of 7 years
(2012: 6 years).
The fair value of services received in return for share options granted are
measured by reference to the fair value of share options granted. The estimate
of the fair value of the services received is measured based on the
Black-Scholes model.
Fair value of share options and assumptions
issued during the year 2013 2012
Fair value at measurement date $0.214 $0.288
------------------------
Share price (weighted average) $ 0.473 $ 0.503
Exercise price (weighted average) $ 0.473 $ 0.503
Expected volatility (expressed as weighted
average volatility used
in the modelling under Black-Scholes model) 50.8% 68.0%
Expected option life (years) 5 5
Expected dividends 0 0
Risk-free interest rate (based on national
government bonds) 1.55% 1.67%
------------------------
The expected volatility is based on the historical volatility (calculated based
on the weighted average remaining life of the share options), adjusted for any
expected changes to future volatility due to publicly available information.
There is no performance or market conditions associated with the share option
grants.
The share-based payment expense relates to the following grants:
2013 2012
$'000 $'000
Share options granted in 2009 - 17
Share options granted in 2010 - 4
Share options granted in 2011 17 36
Share options granted in 2012 26 22
Share options granted in 2013 54 -
--------------------
Total expense recognised as employee costs 97 79
--------------------
--------------------
6. Loss on derivative financial instruments
2013 2012
$'000 $'000
Loss on concentrate receivables from off-taker 323 -
--------------------
--------------------
7. Finance costs
2013 2012
$'000 $'000
Finance lease interest 319 -
Gold loan interest (1,750) -
Credit facility interest and charges 975 -
Off-take provisional payment interest 88 -
Mortgage interest 5 9
Unwinding of discount on reclamation provision 68 -
---------------------
(295) 9
---------------------
---------------------
Finance costs incurred prior to the declaration of commercial production were
generally capitalised in Mineral Properties.
8. Income tax credit
Recognised in the income statement
2013 2012
$'000 $'000
Current tax expense
Current year - -
----------------------
- -
Deferred tax credit
In respect of previously unrecognised tax losses (6,040) -
Tax losses surrendered for tax credit (28) -
----------------------
Total income tax credit in income statement (6,068) -
----------------------
----------------------
Reconciliation of effective tax rate 2013 2012
$'000 $'000
Profit/(loss) before tax 2,985 (3,367)
----------------------
----------------------
Income tax using the UK corporation tax rate of
23.67% (2012: 25.33%) 706 (853)
Effect of tax rates in foreign jurisdictions (rates
increased) 228 (105)
Non-deductible expenses 30 25
Foreign exchange differences (2) -
Effect of tax losses previously not recognised (7,030) 933
----------------------
(6,068) -
----------------------
----------------------
Recognised in other comprehensive income
2013 2012
$,000 $,000
Current tax expense
Current year - -
----------------------
- -
Deferred tax expense
Fair value re-measurement of available for sale
investments 122 -
----------------------
Total income tax expense in statement of other
comprehensive income 122 -
----------------------
----------------------
Recognised deferred tax assets and liabilities
Deferred tax assets and liabilities are attributable to the following:
Assets Liabilities Net
Balance Balance Balance Balance Balance Balance
July July July July July July
31, 31, 31, 31, 31, 31,
2013 2012 2013 2012 2013 2012
$'000 $'000 $'000 $'000 $'000 $'000
Property, plant and
equipment - - (1,413) (21) (1,413) (21)
Mineral property - - (1,228) (3,104) (1,228) (3,104)
Intangible assets - - (1,352) (1,327) (1,352) (1,327)
Available for sale
investment - 61 (61) - (61) 61
Gold loan - - (533) - (533) -
Tax value of loss carry-
forwards and credits
recognised 10,503 4,391 - - 10,503 4,391
---------------------------------------------------
Net tax assets /
(liabilities) 10,503 4,452 (4,587) (4,452) 5,916 -
---------------------------------------------------
---------------------------------------------------
Unrecognised deferred tax assets
Deferred tax assets have not been recognised in respect of the following
items:
2013 2012
$'000 $'000
UK tax losses - 1,126
Canadian losses and tax credits - 5,442
--------------------
- 6,568
--------------------
--------------------
The Group has incurred losses which will be available for offset against future
taxable profits and one of the subsidiaries has tax credits available to offset
against future tax liabilities. Following the declaration of commercial
production during the year it has been concluded that the Group has sufficient
evidence of future taxable profits to justify the recognition of a deferred tax
asset of $5.9 million.
Movement in recognised deferred tax assets and liabilities
Recognised in
Balance other Balance
Aug 1, Recognised in comprehensive July 31,
2011 income income 2012
$'000 $'000 $'000 $'000
Property, plant and
equipment 97 (76) - 21
Mineral properties 1,556 1,548 - 3,104
Intangible assets 1,556 (229) - 1,327
Available for sale
investment - (61) - (61)
Tax value of loss
carry-forwards and
credits (3,209) (1,182) - (4,391)
------------------------------------------------------
- - - -
------------------------------------------------------
------------------------------------------------------
Recognised in
Balance other Balance
Aug 1, Recognised in comprehensive Jul 31,
2012 income income 2013
$'000 $'000 $'000 $'000
Property, plant and
equipment 21 1,392 - 1,413
Mineral properties 3,104 (1,876) - 1,228
Intangible assets 1,327 25 - 1,352
Available for sale
investment (61) - 122 61
Gold loan - 533 - 533
Tax value of loss
carry-forwards and
credits (4,391) (6,114) 2 (10,503)
------------------------------------------------------
- (6,040) 124 (5,916)
------------------------------------------------------
------------------------------------------------------
9. Intangible assets
Exploration and
evaluation
costs
$'000
Cost
Balance at 1 August 2011 16,627
Additions 633
-------------------------
Balance at 31 July 2012 17,260
-------------------------
-------------------------
Balance at 1 August 2012 17,260
Additions 190
-------------------------
Balance at July 31, 2013 17,450
-------------------------
-------------------------
Carrying amounts
At 1 August 2011 16,627
-------------------------
-------------------------
At 31 July 2012 17,260
-------------------------
-------------------------
At 1 August 2012 17,260
-------------------------
-------------------------
At July 31, 2013 17,450
-------------------------
-------------------------
Consideration of impairment for exploration and evaluation costs
The directors have assessed whether there are any indicators of impairment in
respect of exploration and evaluation costs. In making this assessment they have
considered the Group's preliminary economic assessment which includes resource
estimates, future processing capacity, the forward market and longer term price
outlook for copper and gold. The directors do not consider that there are any
indicators that exploration and evaluation costs are impaired ay the year end.
10. Mineral properties
Mineral
property
$'000
Cost
Balance at August 1, 2011 38,468
Additions 9,596
---------------
Balance at July 31, 2012 48,064
---------------
---------------
Balance at August 1, 2012 48,064
Additions 5,664
Transfer to inventory on commercial production (2,129)
---------------
Balance at July 31, 2013 51,599
---------------
---------------
Amortisation
Balance at August 1, 2011 -
Amortisation charge -
---------------
Balance at July 31, 2012 -
---------------
---------------
Balance at August 1, 2012 -
Amortisation charge 2,204
---------------
Balance at July 31, 2013 2,204
---------------
---------------
Carrying amounts
At August 1, 2011 38,468
---------------
---------------
At July 31, 2012 48,064
---------------
---------------
At August 1, 2012 48,064
---------------
---------------
At July 31, 2013 49,395
---------------
---------------
The Group generated revenue from saleable material produced during commissioning
of $9.5 million (2012: $28.2 million) and offset this revenue against the
mineral property asset prior to commercial production being declared during the
year.
The Group capitalised borrowing costs of $1.1 million (2012: $4.6 million).
11. Property, plant and equipment
Assets
Land and under Motor Plant and
buildings construction vehicles equipment
$'000 $'000 $'000 $'000
Cost
Balance at August 1,
2011 2,941 15,310 153 14,165
Additions 733 6,189 59 3,378
Disposals - - - (189)
-----------------------------------------------------
Balance at July 31,
2012 3,674 21,499 212 17,354
-----------------------------------------------------
-----------------------------------------------------
Balance at August 1,
2012 3,674 21,499 212 17,354
Additions 30 131 47 2,349
Reclassification 613 (21,604) - 20,991
-----------------------------------------------------
Balance at July 31,
2013 4,317 26 259 40,694
-----------------------------------------------------
-----------------------------------------------------
Depreciation and impairment losses
Balance at August 1,
2011 926 - 71 6,452
Depreciation charge
for the year 333 - 58 3,755
Eliminated on
disposals - - - (189)
-----------------------------------------------------
Balance at July 31,
2012 1,259 - 129 10,018
-----------------------------------------------------
-----------------------------------------------------
Balance at August 1,
2012 1,259 - 129 10,018
Depreciation charge
for the year 399 - 54 5,087
-----------------------------------------------------
Balance at July 31,
2013 1,658 - 183 15,105
-----------------------------------------------------
-----------------------------------------------------
Carrying amounts
At August 1, 2011 2,015 15,310 82 7,713
-----------------------------------------------------
-----------------------------------------------------
At July 31, 2012 2,415 21,499 83 7,336
-----------------------------------------------------
-----------------------------------------------------
At August 1, 2012 2,415 21,499 83 7,336
-----------------------------------------------------
-----------------------------------------------------
At July 31, 2013 2,659 26 76 25,589
-----------------------------------------------------
-----------------------------------------------------
Fixtures,
fittings
and Computer
equipment equipment Total
$'000 $'000 $'000
Cost
Balance at August 1,
2011 90 670 33,329
Additions 3 89 10,451
Disposals - (6) (195)
------------------------------------------------------
Balance at July 31,
2012 93 753 43,585
------------------------------------------------------
------------------------------------------------------
Balance at August 1,
2012 93 753 43,585
Additions 17 46 2,620
Reclassification - - -
------------------------------------------------------
Balance at July 31,
2013 110 799 46,205
------------------------------------------------------
------------------------------------------------------
Depreciation and impairment losses
Balance at August 1,
2011 57 491 7,997
Depreciation charge
for the year 15 128 4,289
Eliminated on
disposals - (6) (195)
------------------------------------------------------
Balance at July 31,
2012 72 613 12,091
------------------------------------------------------
------------------------------------------------------
Balance at August 1,
2012 72 613 12,091
Depreciation charge
for the year 16 98 5,654
------------------------------------------------------
Balance at July 31,
2013 88 711 17,745
------------------------------------------------------
------------------------------------------------------
Carrying amounts
At August 1, 2011 33 179 25,332
------------------------------------------------------
------------------------------------------------------
At July 31, 2012 21 140 31,494
------------------------------------------------------
------------------------------------------------------
At August 1, 2012 21 140 31,494
------------------------------------------------------
------------------------------------------------------
At July 31, 2013 22 88 28,460
------------------------------------------------------
------------------------------------------------------
Leased plant and machinery
The Group leases surface and underground equipment under a number of finance
lease agreements. At the end of each lease the Group has the option to purchase
the equipment at a beneficial price. At July 31, 2013, the net carrying amount
of leased plant and machinery was $4,090,000 (2012: $5,542,000). The leased
plant and machinery secures lease obligations (see note 21). During the year
plant and equipment additions of $1,432,000 (2012: $2,422,000) were acquired
through finance lease arrangements.
12. Available for sale investments
Available for sale
investments
$'000
Cost or valuation
Balance at August 1, 2011 -
Acquisitions 1,134
Revaluation (433)
---------------------
Balance at July 31, 2012 712
---------------------
---------------------
Balance at August 1, 2012 712
Acquisitions 148
Revaluation 843
---------------------
Balance at July 31, 2013 1,703
---------------------
---------------------
Carrying amounts
At July 31, 2012 712
---------------------
---------------------
At July 31, 2013 1,703
---------------------
---------------------
Rambler holds an 18% equity stake in Maritime Resources Corp and a
representative on the Board of Directors. The market price at July 31, 2013 was
$0.30 (2012: $0.14 per share). The cost of the available for sale investments is
$1,282,000 (2012: $1,134,000).
13. Inventory
2013 2012
$'000 $'000
Metals in process 1,977 -
Operating supplies 1,396 1,100
--------------------
3,373 1,100
--------------------
--------------------
14. Trade and other receivables
2013 2012
$'000 $'000
Other receivables 372 72
Sales taxes recoverable 288 478
Prepayments and accrued income 436 168
--------------------
1,096 718
--------------------
--------------------
15. Derivative financial asset
2013 2012
$'000 $'000
Concentrate receivables from off-taker 639 281
--------------------
--------------------
The cost of the concentrate receivables is $865,000 (2012: $281,000).
16. Cash and cash equivalents
2013 2012
$'000 $'000
Short term deposits - 355
Bank balances 5,566 7,471
--------------------
--------------------
Cash and cash equivalents in the statement of cash
flows 5,566 7,826
--------------------
--------------------
17. Restricted cash
2013 2012
$'000 $'000
Bearer deposit notes 3,261 3,263
--------------------
--------------------
The Group is required to hold Letters of Credit in favour of the Government of
Newfoundland and Labrador in respect of the reclamation and closure liability
associated with the Ming Mine The bearer deposit notes mature on differing dates
throughout fiscal 2014 and have a nominal value of $3,300,000 (2012 -
$3,302,000) giving an effective yield of 1.2% (2012 - 1.1%).
18. Capital and reserves
Share capital and share premium - group and company
Number '000
In issue at 1 August 2011 123,315
Issued for cash 17,522
Issued in consideration for finance fees 1,321
Issued on exercise of options 202
---------------
In issue at 31 July 2012 142,360
---------------
---------------
In issue at 1 August 2012 142,360
Issued in consideration for finance fees 804
Issued on exercise of options 72
---------------
In issue at July 31, 2013 143,236
---------------
---------------
At July 31, 2013, the authorised share capital comprised 1,000,000,000 ordinary
shares of 1p each.
The holders of ordinary shares are entitled to receive dividends as declared
from time to time and are entitled to one vote per share at meetings of the
Company.
Details of shares issued during the year ended July 31, 2013 are as follows:
On October 24, 2012 the company received monies to subscribe for 39,000 shares
for $0.38 each raising a total of $14,820 following the exercise of options.
On November 23, 2012 the company issued 33,000 shares for $0.18 each raising a
total of $5,940 following the exercise of options.
On March 27, 2013 the company issued 803,374 shares for $0.4979 to satisfy
$400,000 of finance expenses.
Merger reserve
The merger reserve arose from the acquisition of Rambler Mines Limited by
Rambler Metals and Mining PLC. This acquisition was accounted for in accordance
with the merger accounting principles set out in UK Financial Reporting Standard
6 and the Companies Act 1985, which continue under the Companies Act 2006,
whereby the consolidated financial statements were presented as if the business
previously carried out through Rambler Mines Limited had always been owned and
controlled by the Company. The transition provisions of IFRS 1 allow all
business combinations prior to transition to IFRS to continue to be accounted
for under the requirements of UK GAAP at that time. Accordingly this acquisition
has not been re-stated in accordance with that standard.
Translation reserve
The translation reserve comprises all foreign exchange differences arising from
the translation of the financial statements of the parent company which has a
different functional currency from the presentation currency. Exchange
differences arising are classified as equity and transferred to the Group's
translation reserve. Such translation differences are recognised in the income
statement in the period of disposal of the operation.
Fair value reserve
The fair value reserve comprises cumulative adjustments made to the fair value
of available for sale investments.
Capital management
The Group's objectives when managing capital are to safeguard the entity's
ability to continue as a going concern so that it can continue to increase the
value of the entity for the benefit of the shareholders. Given the nature of the
Group's current activities the entity will remain dependent on a mixture of debt
and equity funding until such a time as the Group becomes self-financing from
the commercial production of mineral resources.
The Group's capital was as follows:
2013 2012
$'000 $'000
Cash and cash equivalents 5,566 7,826
Finance leases (7,040) (7,689)
Bank loan (22) (26)
Gold loan (18,791) (20,889)
Credit facility (5,621) (6,914)
----------------------
Net debt (25,908) (27,692)
Equity (77,692) (67,402)
----------------------
Total capital (103,600) (95,094)
----------------------
----------------------
Details of employee share options outstanding are set out in note 5.
19. Earnings/(loss) per share
Basic earnings per share
The calculation of basic earnings per share at July 31, 2013 was based on the
profit attributable to ordinary shareholders of $9,053,000 and a weighted
average number of ordinary shares outstanding during the period ended July 31,
2013 of 142,690,000 calculated as follows:
Profit/(loss) attributable to ordinary shareholders
2013 2012
$'000 $'000
Profit/(loss) for the period 9,053 (3,367)
---------------------
Profit/(loss) attributable to ordinary shareholders 9,053 (3,367)
---------------------
---------------------
Weighted average number of ordinary shares
Number '000
At August 1, 2011 123,315
Effect of shares issued during the year 5,162
---------------
---------------
At July 31, 2012 128,477
---------------
---------------
In issue at August 1, 2012 142,360
Effect of shares issued during year 330
---------------
Weighted average number of ordinary shares at July 31,
2013 142,690
---------------
---------------
There is no material difference between the basic and diluted loss per share. At
July 31, 2013 there were 4,113,000 (2012: 3,937,000) share options in issue of
which 1,079,397 (2012: N/A) were considered to be dilutive and may have a
dilutive effect on the basic earnings or loss per share in the future.
20. Trade and other payables
2013 2012
$'000 $'000
Trade payables 4,177 4,918
Non trade payables 287 65
Accrued expenses 1,326 1,003
--------------------
5,790 5,986
--------------------
--------------------
21. Interest-bearing loans and borrowings
This note provides information about the contractual terms of the Group's
interest-bearing loans and borrowings. For more information about the Group's
exposure to interest rate and foreign currency risk, see note 23.
2013 2012
$'000 $'000
Non-current liabilities
Bank loan 19 23
Finance lease liabilities 4,613 5,727
Gold Loan 15,944 14,941
--------------------
20,576 20,691
--------------------
--------------------
Current liabilities
Current portion of bank loan 3 3
Current portion of finance lease liabilities 2,427 1,962
Current portion of Gold Loan 2,847 5,948
Credit Facility 5,621 6,914
--------------------
10,898 14,827
--------------------
--------------------
Finance lease liabilities
Finance lease liabilities are payable as follows:
Minimum Minimum
lease lease
Payments Interest Principal Payments Interest Principal
2013 2013 2013 2012 2012 2012
$'000 $'000 $'000 $'000 $'000 $'000
Less than one year 2,759 332 2,427 2,189 227 1,962
Between one and five
years 4,867 254 4,613 6,361 634 5,727
-------------------------------------------------------
7,626 586 7,040 8,550 861 7,689
-------------------------------------------------------
-------------------------------------------------------
Under the terms of the lease agreements, no contingent rents are payable. The
finance lease liabilities are secured on the underlying assets. Total interest
of $101,000 (2012: $428,000) was charged to mineral properties during the year.
Gold Loan
In March 2010, the Group entered into an agreement ("Gold Loan") with Sandstorm
to sell a portion of the life-of-mine gold production from its Ming Mine.
Under the terms of the agreement Sandstorm made staged upfront cash payments for
the gold to the Group totalling US$20 million.
For this, in each production year following the first year of production, until
175,000oz of payable gold has been produced, the Group has agreed to sell a
percentage equal to 25% x (85% divided by the actual percentage of metallurgical
recovery of gold realized in the immediately preceding production year) provided
that, if the payable gold production in any production year after the third
production year is less than 15,000 ounces, then in each such production year,
Sandstorm payable gold shall not be less than 25% of the payable gold. In each
production year following the first year of production, after 175,000oz of
payable gold has been produced, the Group has agreed to sell a percentage equal
to 12% x (85% divided by the actual percentage of metallurgical recovery of gold
realized in the immediately preceding production year) provided that, if the
payable gold production in any production year after the third production year
is less than 15,000 ounces, then in each such production year, Sandstorm payable
gold shall not be less than 12% of the payable gold for the remainder of the
period ending 40 years after the date of the agreement. After the expiry of the
40 year term, the agreement is renewable in 10 year terms at the option of
Sandstorm.
A 4.5% cash commission was payable with each payment received under the agreement.
The remaining circumstances in which the Gold Loan may be repaid earlier than by
the delivery of payable gold are as follows:
i. If within 24 months of the date that gold is first produced (November
28, 2011), the Ming Mine has not produced and sold a minimum of 24,000oz
(6,000 ounces of Sandstorm payable gold) of payable gold (18,555 oz
produced to July 31, 2013; 5,723 oz of Sandstorm payable gold) then a
portion of the US$20 million will be repayable based on the shortfall of
payable gold, and/or;
ii. Within the first 36 months of production of gold any shortfall in the
value of payable gold below the following amounts will be required to be
paid in cash:
-- within the first 12 months - US$3.6 million
-- within the second 12 months - US$3.6 million
-- within the third 12 months - US$3.1 million
Subsequent to the year end the Group has satisfied the requirement to deliver
6,000 ounces of Sandstorm payable gold.
During the first twenty months of commissioning, repayments of US$9,309,570 were
made from the delivery of 5,723 ounces of gold thereby satisfying the
requirement to repay a minimum of US$3.6 million cash during the first and
second 12 months and partially meeting the requirements for the third 12 months.
The Gold Loan is accounted for as a financial liability carried at amortised
cost. In determining the effective interest rate implicit in the cash flows
arising from the loan the cash flows are forecast at each quarter end based on
management's best estimates of the time of delivery of payable gold, the total
amount of gold expected to be produced over the mine life and the timing of that
production.
Total interest of $1,169,000 was accrued during the period of which $581,000
(2012: $4,340,000) was charged to mineral properties.
The Gold Loan is secured by a fixed and floating charge over the assets of the
Group.
Credit Facility
On September 29, 2011 the Group agreed a credit facility of up to $10 million
with Sprott Resource Lending Partnership ("Sprott") for use as additional
funding for the development of the Ming Mine. Subsequent to amending the
agreement in December 2011 the facility was available in three instalments; the
first instalment of $5 million was drawn on January 29, 2012, the second
instalment of $2.5 million was drawn on January 30, 2012 and the final
instalment for the balance up to $10 million was available until August 31, 2012
but was not drawn. Interest accrues at a fixed rate of 9.25% per annum. In
connection with the credit facility, a structuring fee of $100,000 and a 3%
commitment fee of $300,000 were paid to Sprott in cash. Pursuant to the terms of
the credit facility, the Company issued $300,000 of ordinary shares of 1p each
in the capital of the Company to Sprott in exchange for the repayment of the
previously paid cash commitment fee. In addition, a further 4% drawdown fee on
all amounts drawn under the credit facility was satisfied by the issuance of
ordinary shares by the Company. On November 30, 2012 the Group repaid $500,000.
On March 26, 2013 this agreement was amended such that the principal is
repayable by March 31, 2014 and is secured by a fixed and floating charge over
the assets of the Group. Upon amending the credit facility an amendment fee of
$400,000 was paid to Sprott in ordinary shares of 1p each. On April 30, 2013 and
subsequently on May 31, 2013 the Group made repayments of $500,000 and $600,000
respectively to Sprott thereby reducing the outstanding balance to $5,900,000.
Total financing and interest charges of $392,000 (2012: $1,004,000) were charged
to mineral properties during the year.
22. Provision
2013 2012
$'000 $'000
Reclamation and closure provision
Opening balance 1,812 1,647
Provision utilised during the year - (121)
Unwinding of discount 91 286
---------------------
Ending balance 1,903 1,812
---------------------
---------------------
The reclamation and closure provision has been made in respect of costs of land
restoration and rehabilitation expected to be incurred at the end of the Ming
Mine's useful life. The provision has been calculated based on the present value
of the expected future cash flows associated with reclamation and closure
activities as required by the Government of Newfoundland and Labrador. The
provision relates to restoration of all three sites associated with the Ming
Mine project: mill, mine and port sites. The liability is secured by Letters of
Credit for $3,255,155.
23. Financial instruments
The Group's principal financial assets comprise: cash and cash equivalents,
restricted cash, available for sale investments, derivative financial
instruments and other receivables. In addition the Company's financial assets
include amounts due from subsidiaries. The Group and Company's financial
liabilities comprise: trade payables; other payables; and accrued expenses. The
Group's financial liabilities also include interest bearing loans and
borrowings.
All of the Group's and Company's financial liabilities are measured at amortised
cost and their financial assets are classified as loans and receivables and
measured at amortised cost with the exception of available for sale investments
and derivative financial instruments as described in notes 12 and 15
respectively.
The Group held the following categories of financial instruments at July 31, 2013:
2013 2012
$'000 $'000
Financial assets
Assets at fair value through profit and loss:
Derivative financial instruments 639 281
--------------------
Available for sale investments:
Investment in quoted equity securities 1,703 712
--------------------
Loans and receivables:
Other receivables 372 72
Sales taxes recoverable 288 478
Prepayments and accrued income 436 168
Cash at bank 5,566 7,826
Restricted cash 3,261 3,263
--------------------
9,923 11,807
--------------------
Total financial assets 12,265 12,800
--------------------
--------------------
Liabilities at amortised cost or equivalent: 2013 2012
$'000 $'000
Trade payables (4,177) (4,918)
Non trade payables (287) (65)
Accrued expenses (1,326) (1,003)
Loans and borrowings (31,474) (35,518)
--------------------
Total financial liabilities (37,264) (41,504)
--------------------
--------------------
The board of directors determines, as required, the degree to which it is
appropriate to use financial instruments and hedging techniques to mitigate
risks. The main risks for which such instruments may be appropriate are foreign
exchange risk, liquidity risk, credit risk, interest rate risk and commodity
price risk each of which is discussed below.
Foreign exchange risk
The Group's cash resources are held in Canadian dollars, GB pounds and US
Dollars and certain receivables and the Gold Loan are denominated in US dollars.
The Group has a downside exposure to any strengthening of the GB pound as this
would increase expenses in Canadian dollar terms. This risk is mitigated by
reviewing the holding of cash balances in GB pounds. Any weakening of the GB
pound would however result in the reduction of the expenses in Canadian dollar
terms and preserve the Group's cash resources. In addition, any such movements
would affect the Consolidated Balance Sheet when the net assets of the Parent
Company are translated into Canadian dollars. The Group has a downside exposure
to any strengthening of the US dollar as this would increase the amount
repayable on the Gold Loan in Canadian dollar terms. This risk, however, is
relevant only should the Gold Loan be repaid in cash under terms set out in note
21. Repayment is envisaged in payable gold which is denominated in US dollars.
Exposure to this foreign currency risk has been mitigated since the commencement
of production. Any weakening of the US dollar would however result in a
reduction in revenue and receivables in Canadian dollar terms. The Group has not
hedged its exposure to currency fluctuations.
The policy in relation to the translation of foreign currency assets and
liabilities is set out in note 2(d), 'Accounting Policies Foreign Currencies' to
the consolidated financial statements.
The Group does not hedge its exposure of foreign investments held in foreign
currencies. There is no significant impact on profit or loss from foreign
currency movements associated with the Parent company's assets and liabilities
as the foreign currency gains or losses are recorded in the translation reserve.
Exchange rate fluctuations may adversely affect the Group's financial position
and results. The following table details the Group's sensitivity to a 10%
strengthening and weakening in the GB pound against the Canadian/US Dollar. 10%
represents management's assessment of the reasonable possible exposure.
Equity
2013 2012
$'000 $'000
10% strengthening of GB pound (12) 24
10% weakening of GB pound 11 (22)
10% strengthening of US dollar (1,879) (1,734)
10% weakening of US dollar 1,708 1,576
----------------------
----------------------
Liquidity risk
With finite cash resources the liquidity risk is significant. This risk is
managed by controls over expenditure and concentrating on achieving the payment
milestones under the financing arrangement. Success will depend largely upon the
outcome of on-going and future exploration and development programmes. Given the
nature of the Group's current activities the entity will remain dependent on a
mixture of debt and equity funding in the short to medium term until such time
as the Group becomes self-financing from the commercial production of mineral
resources. The liabilities of the parent company are due within one year. The
parent company has adequate financial resources to meet the obligations existing
at July 31, 2013.
The Group's and Company's trade payables, other payables and accrued expenses
are generally due between one and three months and the Group's other financial
liabilities are due as follows:
Financial liabilities 2013 2012
$'000 $'000
Due within one year 11,621 16,174
Due within one to two years 5,865 5,667
Due within two to three years 4,732 4,795
Due within three to four years 3,764 4,778
Due within four to five years 3,404 3,168
Due after five years 16,576 16,240
--------------------
45,962 50,822
--------------------
--------------------
Fixed rate financial liabilities
At the year end the analysis of finance leases, hire purchase contracts and bank
loans which were all due in Canadian Dollars and are at fixed interest rates was
as follows:
Fixed rate liabilities 2013 2012
$'000 $'000
Due within one year 8,663 8,879
Due within one to two years 2,640 2,021
Due within two to three years 1,916 2,015
Due within three to four years 306 1,461
Due within four to five years 23 243
Due after five years - 10
--------------------
13,548 14,629
--------------------
--------------------
The average fixed interest rate for the finance leases and hire purchase
contracts outstanding at July 31, 2013 was 6.30%.
Credit risk
The Group generally holds the majority of its cash resources in Canadian dollars
given that the majority of the Group's outgoings are denominated in this
currency. Given the current climate, the Group has taken a very risk averse
approach to management of cash resources and management and Directors monitor
events and associated risks on a continuous basis. There is little perceived
credit risk in respect of trade and other receivables (see note 14). The Group
maximum exposure to credit risk at July 31, 2013 was represented by receivables
and cash resources.
Interest rate risk
The Group's policy is to retain its surplus funds on the most advantageous term
of deposit available up to twelve month's maximum duration. Details of the
Group's borrowings are described in note 21.
If the interest rate on deposits were to fluctuate by 1% there would be no
material effect on the Group's and Company's reported results.
Commodity price risk
Commodity price risk is the risk that the Group's future earnings will be
adversely impacted by changes in the market prices of commodities. The Group is
exposed to commodity price risk as its future revenues will be derived based on
contracts with customers at prices that will be determined by reference to
market prices of copper and gold at the delivery date.
As explained in note 26 the Group calculates the effective interest rate on the
Gold Loan based on estimates of future cash flows arising from the sale of
payable gold. In estimating the cash flows the following table details the
Group's sensitivity to a 10% increase and a 25% decrease in the price of gold.
These percentages represent management's assessment of the reasonable possible
exposure.
Gross assets
2013 2012
$'000 $'000
10% increase in the price of gold (1,843) (2,089)
25% decrease in the price of gold 4,609 5,222
----------------------
----------------------
Receivables in respect of the sale of copper concentrate which contain an
embedded derivative linking them to future commodity prices are measured at fair
value through profit and loss and are treated as derivative financial assets or
liabilities. In estimating the value of the derivative the following table
details the Group's sensitivity to a 5% increase and a 5% decrease in the price
of copper, gold and silver. These percentages represent management's assessment
of the reasonable possible exposure.
Gross assets
2013 2012
$'000 $'000
5% increase in the price of copper, gold and silver 441 157
5% decrease in the price of copper, gold and silver (441) (157)
----------------------
----------------------
Financial assets
The floating rate financial assets comprise interest earning bank deposits at
rates set by reference to the prevailing LIBOR or equivalent to the relevant
country. Fixed rate financial assets are cash held on fixed term deposit.
At the year end the cash and short term deposits were as follows:
Average
Average interest
Floating period for rates for
Fixed rate rate which rates fixed rate
At July 31, 2013 assets Assets Total are fixed assets
$'000 $'000 $'000 Months %
Sterling - 61 61 - -
US $ - 3,293 3,293 - -
Canadian $ - 2,212 2,212 - -
------------------------------------
- 5,566 5,566
------------------------------------
------------------------------------
At July 31, 2012
$'000 $'000 $'000 Months %
Sterling 355 77 432 1 0.25
Canadian $ - 7,394 7,394 - -
------------------------------------
355 7,471 7,826
------------------------------------
------------------------------------
Fair values
In the directors' opinion there is no material difference between the book value
and fair value of any of the group's financial instruments.
24. Related parties
Identity of related parties
The Group has a related party relationship with its subsidiaries and with its
directors and executive officers.
Transactions with key management personnel
The directors' compensations were as follows:
2013 2012
$'000 $'000
Salary - executive
G Ogilvie 330 270
Fees - non-executive
D H W Dobson - -
S Neamonitis 13 13
J M Roberts 7 13
L D Goodman 13 13
B D Hinchcliffe 13 13
T S Chan 13 3
J Thomson 13 13
E C Chen 11 -
--------------------
413 338
--------------------
--------------------
D H W Dobson waived his entitlement to director's fees for the current and
preceding periods. At July 31, 2013 fees of $12,000 (2012: $21,000) remained
outstanding.
Share options held by directors were as
follows: At 31.07.13 At 31.07.12
No. No.
'000 '000
G Ogilvie(1) 1,100 1,100
J Thomson(2) 400 400
D H W Dobson(3) 45 45
S Neamonitis(4) 100 100
J M Roberts(3) 45 45
L D Goodman(3) 45 45
B D Hinchcliffe(3) 45 45
------------------------------
1,780 1,780
------------------------------
------------------------------
(1) 200,000 options at an exercise price of $0.93 expiring on 7 December
2016, 150,000 options at an exercise price of $1.10 expiring on 12 November
2017 and 750,000 options at an exercise price of $0.19 expiring on 10
November 2018.
(2) 100,000 options at an exercise price of $0.93 expiring on 7 December
2016 and 300,000 options at an exercise price of $0.19 expiring on 10
November 2018.
(3) options at an exercise price of $0.19 expiring on 10 November 2018.
(4) options at an exercise price of $0.53 expiring on 22 March 2022.
Total key management personnel compensations were as follows:
2013 2012
$'000 $'000
Short term employee benefits 784 659
Social security costs 39 33
Share based payments - 17
--------------------
823 709
--------------------
--------------------
25. Subsequent events
On August 30, 2013 the Company announced an additional payment of $500,000 to
Sprott reducing the outstanding balance to $5.4 million.
On September 17, 2013 the Group announced that a conditional offer had been
accepted by Cornerstone Capital Resources Inc. for the Group to acquire their
50% interest in The Little Deer Copper Deposit and Whalesback Mine in
Newfoundland for $550,000 consisting of $200,000 in cash and $350,000 in shares.
The 50% interest is subject to a Joint Venture agreement with Thundermin
Resources Inc. On October 15, 2013 the Group announced that the conditions of
the offer had been satisfied.
On September 30, 2013 the Company made an additional payment of $650,000 to
Sprott reducing the outstanding balance to $4.75 million.
26. Critical accounting estimates and judgements
The details of the Group's accounting policies are presented in accordance with
International Financial Reporting Standards as set out in Note 2 to the
financial statements. The preparation of financial statements in conformity with
IFRS requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and the disclosure of contingent
assets and liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the year.
The following estimates are considered by management to be the most critical for
investors to understand some of the processes and reasoning that go into the
preparation of the Company's financial statements, providing some insight also
to uncertainties that could impact the Company's financial results.
Going Concern
The risks associated with going concern are explained in note 1.
Mineral Property and Exploration and Evaluation Costs
The directors have assessed whether there are any indicators of impairment in
respect of mineral property and exploration and evaluation costs. In making this
assessment they have considered the Group's business plan which includes
resource estimates, future processing capacity, the forward market and longer
term price outlook for copper and gold. Resource estimates have been based on
the most recently filed NI43-101 report. Management's estimates of these factors
are subject to risk and uncertainties affecting the recoverability of the
Group's mineral property and exploration and evaluation costs. Any changes to
these estimates may result in the recognition of an impairment charge with a
corresponding reduction in the carrying value of such assets. After
consideration of the above factors, the directors do not consider that there are
any indicators that mineral property and exploration and evaluation costs are
impaired at the year end.
Closure costs
The Group has an obligation to restore its properties after the minerals have
been mined from the site, and has estimated the costs necessary to comply with
existing reclamation standards. These estimates are recorded as a liability at
their fair values in the periods in which they occur. If the estimate of
reclamation costs proves to be inaccurate, the Group could be required to
increase the provision for site closure and reclamation costs, which would
increase the amount of future reclamation expense, resulting in a reduction in
the Group's earnings and net assets.
Share-based payments
The Group calculates the cost of share based payments using the Black-Scholes
model. Inputs into the model in respect of the expected option life and the
volatility are subject to management estimate and any changes to these estimates
may have a significant effect on the cost. The assumptions used in calculating
the cost of share based payments are explained in note 5.
Gold Loan
The Group calculates the effective interest rate on the Gold Loan based on
estimates of future cash flows arising from the sale of payable gold (see note
21).The cash flows will be dependent on the production of gold and its selling
price at the time of delivery which have been estimated in line with the mine
plan, future prices of gold and reserve estimates. Management's estimates of
these factors are subject to risk and uncertainties affecting the amount of the
interest charge. Any changes to these estimates may result in a significantly
different interest charge which would affect the carrying value of the
exploration and evaluation costs and the corresponding Gold Loan liability.
Revenue
Revenues are subject to variation after the date of sale due to assay, price and
foreign exchange fluctuations. Management monitors these changes closely and at
the end of the period the directors will consider whether the effect of these
variations are material on the whole and determine whether an adjustment is
therefore appropriate.
Available for sale investment
Management consider that they do not have significant influence over the
financial and policy decisions of Maritime and therefore have included the
investment as an available for sale investment.
Commercial production
The Group monitors the on-going testing and commissioning of its copper
concentrate milling facility to assess when commercial production has been
achieved. Commercial Production is the assessment that the mill is capable of
operating in the manner intended was defined by management at the onset of
development to be 60 days of continuous production from both the mill and mine,
being 85% of target rates envisaged in the Group's Feasibility Study. Prior to
commercial production being declared, costs and revenues are offset to the
Mineral Properties asset and post commercial production will be charged to the
Group's income statement. Commercial production was achieved at November 1,
2012.
Deferred tax assets
The Group has incurred losses which will be available for offset against future
taxable profits and one of the subsidiaries has tax credits available to offset
against future tax liabilities. Following the declaration of commercial
production during the year it has been concluded that the Group has sufficient
evidence of future taxable profits to justify the recognition of a deferred tax
asset. If future taxable profits prove to be insufficient the Group could be
required to reduce the deferred tax asset which would result in a reduction in
the Group's earnings and net assets.
RAMBLER METALS AND MINING PLC
COMPANY STATEMENT OF COMPREHENSIVE INCOME
For the Year Ended July 31, 2013
2013 2012
$'000 $'000
Profit/(loss) for the year 211 (1,232)
Other comprehensive income
Items that may be reclassified into profit or loss
Exchange differences on translation into
presentation currency (154) 361
----------------------
Other comprehensive (loss)/income for the year (154) 361
----------------------
Total comprehensive income/(loss) for the year 57 (871)
----------------------
----------------------
Registered number: 05101822 (England and Wales)
RAMBLER METALS AND MINING PLC
COMPANY STATEMENT OF FINANCIAL POSITION
As at July 31, 2013
(EXPRESSED IN CANADIAN DOLLARS)
Note
2013 2012
$'000 $'000
Assets
Investments C3 68,323 68,848
Deferred tax C4 1,375 -
----------------------
Total non-current assets 69,698 68,848
----------------------
Trade and other receivables C5 53 50
Cash and cash equivalents C6 66 437
----------------------
Total current assets 119 487
----------------------
Total assets 69,817 69,335
----------------------
----------------------
Equity
Issued capital 18 2,613 2,599
Share premium 75,164 74,756
Translation reserve (10,221) (10,067)
Retained profit 2,104 1,893
----------------------
Total equity 69,660 69,181
----------------------
Liabilities
Trade and other payables C7 157 154
----------------------
Total current liabilities 157 154
----------------------
Total liabilities 157 154
----------------------
Total equity and liabilities 69,817 69,335
----------------------
----------------------
ON BEHALF OF THE BOARD:
L D Goodman, Director
Approved and authorised for issue by the Board on October 28, 2013
RAMBLER METALS AND MINING PLC
COMPANY STATEMENT OF CHANGES IN EQUITY
Share Share Translation Accumulated
capital premium reserve losses Total
(EXPRESSED IN
CANADIAN DOLLARS) $'000 $'000 $'000 $'000 $'000
Balance at August
1, 2011 2,299 65,934 (10,428) 3,115 60,920
--------------------------------------------------------
Comprehensive
income
Loss for the year - - - (1,232) (1,232)
--------------------------------------------------------
Foreign exchange
translation
differences - - 361 - 361
--------------------------------------------------------
Total other
comprehensive
income - - 361 361
--------------------------------------------------------
Total comprehensive
income for the
year - - 361 (1,232) (871)
--------------------------------------------------------
Issue of share
capital 300 9,047 - - 9,347
Share issue
expenses - (225) - - (225)
Share-based
payments - - - 10 10
--------------------------------------------------------
Balance at July 31,
2012 2,599 74,756 (10,067) 1,893 69,181
--------------------------------------------------------
--------------------------------------------------------
Balance at August
1, 2012 2,599 74,756 (10,067) 1,893 69,181
--------------------------------------------------------
Comprehensive
income
Profit for the year - - - 211 211
--------------------------------------------------------
Foreign exchange
translation
differences - - (154) - (154)
--------------------------------------------------------
Total other
comprehensive
income - - (154) - (154)
--------------------------------------------------------
Total comprehensive
income for the
year - - (154) 211 57
--------------------------------------------------------
Issue of share
capital 14 408 - - 422
--------------------------------------------------------
Balance at July 31,
2013 2,613 75,164 (10,221) 2,104 69,660
--------------------------------------------------------
--------------------------------------------------------
RAMBLER METALS AND MINING PLC
STATEMENT OF CASH FLOWS
For the Year Ended July 31, 2013
(EXPRESSED IN CANADIAN DOLLARS)
2013 2012
$'000 $'000
Cash flows from operating activities
Operating loss (1,166) (1,232)
Share based payments - 6
Foreign exchange losses (135) 313
Increase in debtors (3) (3)
(Decrease)/increase in creditors 4 28
----------------------
Net cash utilised in operating activities (1,300) (888)
----------------------
Cash flows from investing activities
Interest received - 1
Loans repaid by/(advanced to) subsidiaries 907 (7,923)
----------------------
Net cash generated from/( utilised in) investing
activities 907 (7,922)
----------------------
Cash flows from financing activities
Proceeds from the issue of share capital - 8,714
Payment of transaction costs - (225)
Proceeds from exercise of share options 22 38
----------------------
Net cash from financing activities 22 8,527
----------------------
Net (decrease)/increase in cash and cash
equivalents (371) (283)
Cash and cash equivalents at beginning of period 437 713
Effect of exchange rate fluctuations on cash held - 7
----------------------
Cash and cash equivalents at end of period 66 437
----------------------
----------------------
RAMBLER METALS AND MINING PLC
NOTES TO THE COMPANY FINANCIAL STATEMENTS
C1. Accounting policies
The accounting policies of the company are consistent with those adopted by the
Group with the addition of the following:
Investments
Investments are stated at their cost less impairment losses.
C2. Profit/(loss) of parent company
As permitted by section 408 of the Companies Act 2006, the income statement of
the parent company is not presented as part of these financial statements. The
parent company's profit for the financial year was $211,000 (2012: Loss
$1,232,000).
C3. Investments
Investment
in
subsidiary Loans Total
$'000 $'000 $'000
Cost
Balance at August 1, 2011 376 59,909 60,285
Advances (net) - 8,523 8,523
Effect of movements in foreign exchange 2 38 40
--------------------------------
Balance at July 31, 2012 378 68,470 68,848
--------------------------------
--------------------------------
Balance at August 1, 2012 378 68,470 68,848
Repayments (net) - (508) (508)
Effect of movements in foreign exchange - (17) (17)
--------------------------------
Balance at July 31, 2013 378 67,945 68,323
--------------------------------
--------------------------------
The company has interests in the following material subsidiary undertakings,
which are included in the consolidated financial statements.
Name Class Holding Activity Country of
Incorporation
Rambler Mines Limited Ordinary 100% Holding England
company
Rambler Metals and Common 100% Exploration, Canada
Mining Canada Limited (indirectly) development
and mining
The aggregate value of shares in subsidiary undertakings is stated at cost.
The loans to the subsidiary undertakings are interest free.
RAMBLER METALS AND MINING PLC
NOTES TO THE COMPANY FINANCIAL STATEMENTS
C4. Deferred tax
The Company has incurred losses which will be available for offset against
future taxable profits. Following the declaration of commercial production
during the year by one of the Company's subsidiaries it has been concluded that
the Company has sufficient evidence of future taxable profits to justify the
recognition of a deferred tax asset of $1.4 million.
C5. Trade and other receivables
2013 2012
$'000 $'000
Other receivables 1 1
Sales taxes recoverable 13 23
Prepayments and accrued income 39 26
--------------------
53 50
--------------------
--------------------
C6. Cash and cash equivalents
2013 2012
$'000 $'000
Short term deposits - 355
Bank balances 66 82
--------------------
Cash and cash equivalents in the statement of cash
flows 66 437
--------------------
--------------------
C7. Trade and other payables
2013 2012
$'000 $'000
Trade payables 17 35
Non trade payables 9 1
Accrued expenses 131 118
--------------------
157 154
--------------------
--------------------
C8. Related party transactions
The Company has a related party relationship with its subsidiaries (see note C3)
and with its directors and executive officers (see note 24).
Transactions with subsidiary undertakings
Details of loans advanced to subsidiary undertakings are included in note C3.
Other related parties
Transactions with other related parties are detailed in note 24.
FOR FURTHER INFORMATION PLEASE CONTACT:
Rambler Metals and Mining Plc
Mr. Peter Mercer
Corporate Secretary
+1-709-800-1929 ext.500
pmercer@ramblermines.com
www.ramblermines.com
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