Horizonte Minerals plc / Index: AIM and TSX / Epic: HZM / Sector: Mining
TORONTO, Feb. 20, 2014 /CNW/ - Horizonte Minerals Plc, (AIM: HZM) (TSX: HZM) ('Horizonte' or 'the
Company') the exploration and development company focused in Brazil, announces its
results for the year ended 31 December 2013.
Overview
-
Delivery of a number of major milestones during 2013, further de-risking
of 100%-owned Araguaia Nickel Project ('Araguaia') located south of the
producing Carajas mineral district, Brazil
-
Pre-Feasibility Study ('PFS') being conducted by Snowden Mining Industry
Consultants on track for completion in Q1 2014
-
Metallurgical test work completed - confirming Araguaia ore as suitable
for the proven Rotary Kiln Electric Furnace processing route for
ferro-nickel production
-
321 holes (9,309 metres) of the final Phase 3 infill drill programme
completed on time and within budget targeting five zones at Araguaia
with continual high grade intercepts including 20.21 metres grading
2.29% Ni
-
Results from Phase 3 drilling to feed into a new resource update as part
of the PFS aiming to convert sufficient resources to the Indicated
category to provide a minimum of 20 years mine life
-
Solid cash position following raising of £3.08 million underpinning the
continued support from major shareholders including Teck Resources and
Henderson Global Investors
Chairman's Statement
2013 was a highly active year for Horizonte with the prime focus on the
commencement and near completion of the Pre-Feasibility Study ('PFS')
on our 100%-owned Araguaia Nickel Project, located south of the Carajas
Mining District in northern Brazil ('Araguaia'). The PFS is a major
study aimed at further increasing the confidence that Araguaia is set
to become Brazil's next major nickel project. The completion of the
PFS, which is on budget and on schedule for Q1 2014, will be a
significant de-risking milestone for the project and add inherent value
for shareholders.
Key aspects of the project advancement during 2013 included the
completion of a 9,309m infill drilling programme at Araguaia, where a
total of 35,200m (1,412 holes) have now been drilled to date. The
recent drilling has continued to return high grade nickel results
including 20.21 metres at 2.29% nickel and show good vertical thickness
over the main target zone. These drilling results will feed into a new
resource statement, which will convert part of the current Inferred
resources into the Indicated category, and will be included as a part
of the PFS. A second key aspect, as well as a critical de-risking
milestone, was the completion of a metallurgical test programme at
Araguaia in May 2013. This has demonstrated that Araguaia ore can be
processed using the proven Rotary Kiln Electric Furnace ('RKEF')
process in order to produce a saleable ferronickel product that meets
the requirements of international stainless steel plants.
In June 2013, despite difficult market conditions, we successfully
completed a £3.08 million placing before expenses, to help support the
development at Araguaia. The placing underpinned the continued strong
support Horizonte has from its major shareholders, including Teck
Resources and Henderson Global Investors. Following this placing
Horizonte had a strong net cash position which will take the Company
through to the delivery of the PFS at Araguaia and 2014.
With the funding secured, in July 2013, Snowden Mining Consultants was
appointed to deliver a PFS at Araguaia. The study is looking at
preliminary pit optimisation and development of feed schedules for a
RKEF process plant for two options: the first, a single line at 900,000
tonnes per annum, the second with two lines at 2.7 million tonnes per
annum. The former of these options could offer lower capital
expenditure. Additional aspects necessary for the viability of Araguaia
will also be included in the PFS, such as project infrastructure
planning and a Social and Environmental Impact Assessment and we look
forward to the culmination of this study, targeted for Q1 2014, as we
progress the project up the development curve towards production.
One of the recurring question marks about Araguaia and future production
from the project is the nickel price. Mining has been and always will
be a cyclical business, but the need for metals will persist, and that
includes nickel. Nickel-containing materials play a major role in our
everyday lives - food preparation equipment, mobile phones, medical
equipment, transport, buildings, power generation, rechargeable
batteries - the list is almost endless. These materials are selected
because, compared with other materials, they offer better corrosion
resistance, strength at high and low temperatures, as well as a range
of special magnetic and electronic properties.
Most important are alloys of iron, nickel and chromium, of which
stainless steels (frequently 8-12% nickel) represent the largest
volume. Nickel based alloys - like stainless steel but with higher
nickel contents - are used for more demanding applications such as gas
turbines and some chemical plants. In addition, iron and nickel alloys
are used in electronics and specialist engineering, while copper-nickel
alloys are used for coinage and marine engineering. There are about
3,000 nickel-containing alloys in everyday use. About 90% of all new
nickel sold each year goes into alloys, two-thirds going into stainless
steel.
Nickel use is growing at approximately 4% to 5% each year while use of
nickel-containing stainless steel is growing at around 6%. The fastest
growth today is seen in the newly and rapidly industrialising
countries, especially in Asia. Nickel-containing materials are needed
to modernise infrastructure, for industry and to meet the material
aspirations of their populations.
China and India, the two leading emerging economies, are experiencing
roughly 10 times the economic acceleration of the Industrial
Revolution, on 100 times the scale, resulting in an economic force that
is over 1,000 times as big. In emerging market economies today, the
population of cities grows by 65 million people per year or the
equivalent of seven cities the size of Chicago. Over the next 15 years,
some 440 emerging market cities will generate nearly half of global GDP
and 40% of global consumption growth.
The rapid cut-back of expansion to slow long-term supply, will prolong a
super cycle scarcity premium for explorers. That is where Araguaia fits
in; an advanced major nickel project progressing towards the full
feasibility stage which can fill the gap that will inevitably appear in
the nickel supply and that will see us realise higher prices than those
currently in play.
The recent announcement by the Indonesian government, banning all
exports of direct shipping nickel ore, should have a positive effect on
the nickel price in the mid-term if the ban continues to be fully
implemented. Indonesia was estimated to account for around 18% to 20%
of all nickel ore imports to China. This growth from only 14% in 2007
has been driven by demand from China, to feed the country's increasing
consumption of nickel pig iron and latterly RKEF production.
The fundamental issue, even without the strict implementation of the
ban, is that beyond 2016 the nickel industry is facing a lack of new
projects to continue to supply the industry. This positions Horizonte
with its Araguaia project prominently to take advantage of this new
exciting nickel cycle. Metal forecasters predict that by the end of
2016 a switch will occur in the supply-demand dynamics of nickel
resulting in underlying demand outstripping supply and therefore an
upwards drive in nickel prices as we bring Araguaia on line.
Having completed a number of major de risking milestones at Araguaia
during 2013 in terms of geology and metallurgy and with nickel futures
in mind, we are eager to progress the project towards production. We
therefore look forward to detailing the results of the PFS as soon as
available and proving the potential viability of this major nickel
project for Horizonte as we continue along our clear path to generate
significant value uplift for shareholders.
The on-going support Horizonte Minerals has had from our loyal
shareholders and the hard work and dedication shown by our management
team and Board is greatly appreciated and I would like to take this
opportunity to thank you all, and I look forward to another positive
and successful period ahead.
David J. Hall
Chairman
The Annual Report for the year ended 31 December 2013, together with the
Management's Discussion and Analysis prepared as at 31 December 2013
and Notice of Meeting and Management Information Circular with Respect
to the Annual General Meeting of Shareholders to be held on 25 March
2014 will be posted to shareholders and are available on the Company's
website at www.horizonteminerals.com and on Sedar www.Sedar.com
The Annual General Meeting of the Company will be held at 2:30 pm on 25
March 2014 at FinnCap 60 New Broad Street London EC2M 1JJ
Financial Statements
Consolidated Statement of Comprehensive Income
For the year ended 31 December 2013
|
|
Year ended
|
Year ended
|
|
|
31 December
|
31 December
|
|
|
2013
|
2012
|
|
Notes
|
£
|
£
|
Continuing operations
|
|
|
|
Revenue
|
|
—
|
—
|
Cost of sales
|
|
—
|
—
|
Gross profit
|
|
—
|
—
|
Administrative expenses
|
|
(1,260,604)
|
(1,741,384)
|
Charge for share options granted
|
|
(171,277)
|
(321,400)
|
Toronto Stock Exchange listing and compliance costs
|
|
(28,154)
|
(114,426)
|
Changes in fair value of contingent consideration
|
19
|
46,940
|
545,439
|
Project and fixed asset impairment
|
7
|
(1,033,240)
|
(700,397)
|
Gain/(loss) on foreign exchange
|
|
(149,199)
|
(181,618)
|
Other operating income
|
6
|
—
|
125,229
|
Operating loss
|
7
|
(2,595,534)
|
(2,388,557)
|
Finance income
|
8
|
47,451
|
88,262
|
Finance costs
|
8
|
(165,138)
|
(189,186)
|
Loss before taxation
|
|
(2,713,221)
|
(2,489,481)
|
Taxation
|
9
|
—
|
—
|
Loss for the year from continuing operations
|
|
(2,713,221)
|
(2,489,481)
|
Other comprehensive income
|
|
|
|
Items that may be reclassified subsequently to profit or loss
|
|
|
|
Changes in value of available for sale financial assets
|
13
|
(174,985)
|
(55,291)
|
Currency translation differences on translating foreign operations
|
18
|
(4,124,364)
|
(3,039,094)
|
Other comprehensive income for the year, net of tax
|
|
(4,299,349)
|
(3,094,385)
|
Total comprehensive income for the year attributable to equity
holders of the Company
|
|
(7,012,570)
|
(5,583,866)
|
Earnings per share from continuing operations attributable to the
equity holders of the Company
|
|
|
|
Basic (pence per share)
|
21
|
(0.709)
|
(0.762)
|
Diluted (pence per share)
|
21
|
(0.709)
|
(0.762)
|
Consolidated Statement of Financial Position
As at 31 December 2013
|
|
31 December
|
31 December
|
|
|
2013
|
2012
|
|
Notes
|
£
|
£
|
Assets
|
|
|
|
Non-current assets
|
|
|
|
Intangible assets
|
10
|
20,041,937
|
20,417,739
|
Property, plant & equipment
|
11
|
107,451
|
145,564
|
Deferred tax assets
|
9
|
5,373,634
|
6,308,978
|
|
|
25,523,022
|
26,872,281
|
Current assets
|
|
62,127
|
|
Trade and other receivables
|
12
|
44,842
|
Other current financial assets
|
13
|
22,729
|
197,714
|
Cash and cash equivalents
|
14
|
3,091,880
|
5,887,174
|
|
|
3,176,736
|
6,129,730
|
Total assets
|
|
28,699,758
|
33,002,011
|
Equity and liabilities
|
|
|
|
Equity attributable to owners of the parent
|
|
4,011,395
|
|
Share capital
|
15
|
3,600,462
|
Share premium
|
16
|
26,997,998
|
24,384,527
|
Other reserves
|
18
|
1,139,550
|
5,438,899
|
Retained losses
|
|
(8,410,040)
|
(5,868,096)
|
Total equity
|
|
23,738,903
|
27,555,792
|
Liabilities
|
|
|
|
Non-current liabilities
|
|
2,477,310
|
|
Contingent consideration
|
19
|
2,359,112
|
Deferred tax liabilities
|
9
|
2,335,492
|
2,742,012
|
|
|
4,812,802
|
5,101,124
|
Current liabilities
|
|
148,053
|
|
Trade and other payables
|
19
|
345,095
|
|
|
148,053
|
345,095
|
Total liabilities
|
|
4,960,855
|
5,446,219
|
Total equity and liabilities
|
|
28,699,758
|
33,002,011
|
Company Statement of Financial Position
As at 31 December 2013
|
|
31 December
|
31 December
|
|
Notes
|
2013
|
2012
|
Assets
|
|
|
|
Non-current assets
|
|
|
|
Property, plant & equipment
|
11
|
5,137
|
5,455
|
Investment in subsidiaries
|
27
|
34,525,339
|
33,356,363
|
|
|
35,530,476
|
33,361,818
|
Current assets
|
|
|
|
Trade and other receivables
|
12
|
12,035
|
25,742
|
Cash and cash equivalents
|
14
|
2,756,368
|
5,154,986
|
|
|
2,768,403
|
5,180,728
|
Total assets
|
|
37,298,879
|
38,542,546
|
Equity and liabilities
|
|
|
|
Equity attributable to owners of the parent
|
|
|
|
Share capital
|
15
|
4,011,395
|
3,600,462
|
Share premium
|
16
|
26,997,998
|
24,384,527
|
Merger reserve
|
18
|
10,888,760
|
10,888,760
|
Retained losses
|
|
(7,551,817)
|
(3,344,872)
|
Total equity
|
|
34,346,336
|
35,528,877
|
Liabilities
|
|
|
|
Non-current liabilities
|
|
|
|
Contingent consideration
|
19
|
2,477,310
|
2,359,112
|
Current liabilities
|
|
|
|
Trade and other payables
|
19
|
475,233
|
654,557
|
Total liabilities
|
|
2,952,543
|
3,013,669
|
Total equity and liabilities
|
|
37,298,879
|
38,542,546
|
Statements of Changes in Equity
For the year ended 31 December 2013
|
|
Attributable to owners of parent
|
|
|
Share
|
Share
|
Retained
|
Other
|
|
|
capital
|
premium
|
losses
|
reserves
|
Total
|
|
£
|
£
|
£
|
£
|
£
|
Consolidated
|
|
|
|
|
|
As at 1 January 2012
|
2,795,600
|
18,772,797
|
(3,700,015)
|
8,533,284
|
26,401,666
|
Loss for the year
|
—
|
—
|
(2,489,481)
|
—
|
(2,489,481)
|
Other comprehensive income
|
—
|
—
|
—
|
(3,094,385)
|
(3,094,385)
|
Total comprehensive income for the year
|
—
|
—
|
(2,489,481)
|
(3,094,385)
|
(5,583,866)
|
Issue of ordinary shares
|
804,862
|
5,710,387
|
—
|
—
|
6,515,249
|
Issue costs
|
—
|
(98,657)
|
—
|
—
|
(98,657)
|
Share-based payments
|
—
|
—
|
321,400
|
—
|
321,400
|
Total transactions with owners
|
804,862
|
5,611,730
|
321,400
|
—
|
6,737,992
|
As at 31 December 2012
|
3,600,462
|
24,384,527
|
(5,868,096)
|
5,438,899
|
27,555,792
|
Loss for the year
|
—
|
—
|
(2,713,221)
|
—
|
(2,713,221)
|
Other comprehensive income
|
—
|
—
|
—
|
(4,299,349)
|
(4,299,349)
|
Total comprehensive income for the year
|
—
|
—
|
(2,713,221)
|
(4,299,349)
|
(7,012,570)
|
Issue of ordinary shares
|
410,933
|
2,671,066
|
—
|
—
|
3,081,999
|
Issue costs
|
—
|
(57,595)
|
—
|
—
|
(57,595)
|
Share-based payments
|
—
|
—
|
171,277
|
—
|
171,277
|
Total transactions with owners
|
410,933
|
2,613,471
|
171,277
|
—
|
3,195,681
|
As at 31 December 2013
|
4,011,395
|
26,997,998
|
(8,410,040)
|
1,139,550
|
23,738,903
|
|
|
Attributable to equity shareholders
|
|
|
Share
|
Share
|
Retained
|
Merger
|
|
|
capital
|
premium
|
losses
|
reserves
|
Total
|
|
£
|
£
|
£
|
£
|
£
|
Company
|
|
|
|
|
|
As at 1 January 2012
|
2,795,600
|
18,772,797
|
(2,786,938)
|
10,888,760
|
29,670,219
|
Loss for the year
|
—
|
—
|
(879,334)
|
—
|
(879,334)
|
Total comprehensive income for the year
|
—
|
—
|
(879,334)
|
—
|
(879,334)
|
Issue of ordinary shares
|
804,862
|
5,710,387
|
—
|
—
|
6,515,249
|
Issue costs
|
—
|
(98,657)
|
—
|
—
|
(98,657)
|
Share-based payments
|
—
|
—
|
321,400
|
—
|
321,400
|
Total transactions with owners
|
804,862
|
5,611,730
|
321,400
|
—
|
6,737,992
|
As at 31 December 2012
|
3,600,462
|
24,384,527
|
(3,344,872)
|
10,888,760
|
35,528,877
|
Loss for the year
|
—
|
—
|
(4,378,222)
|
—
|
(4,378,222)
|
Total comprehensive income for the year
|
—
|
—
|
(4,378,222)
|
—
|
(4,378,222)
|
Issue of ordinary shares
|
410,933
|
2,671,066
|
—
|
—
|
3,081,999
|
Issue costs
|
—
|
(57,595)
|
—
|
—
|
(57,595)
|
Share-based payments
|
—
|
—
|
171,277
|
—
|
171,277
|
Total transactions with owners
|
410,933
|
2,613,471
|
171,277
|
—
|
3,195,681
|
As at 31 December 2013
|
4,011,395
|
26,997,998
|
(7,551,817)
|
10,888,760
|
34,346,336
|
Consolidated Statement of Cash Flows
For the year ended 31 December 2013
|
|
31 December
|
31 December
|
|
|
2013
|
2012
|
|
Notes
|
£
|
£
|
Cash flows from operating activities
|
|
|
|
Loss before taxation
|
|
(2,713,221)
|
(2,489,481)
|
Interest income
|
|
(47,451)
|
(88,262)
|
Finance costs
|
|
165,138
|
189,186
|
Share-based payments
|
|
171,277
|
321,400
|
Gain on sale of fixed assets
|
|
—
|
(13,249)
|
Project impairment
|
|
1,048,282
|
639,505
|
Exchange difference
|
|
(27,424)
|
19,931
|
Change in fair value of contingent consideration
|
|
(46,940)
|
(545,439)
|
Depreciation
|
|
4,370
|
5,871
|
Operating loss before changes in working capital
|
|
(1,445,969)
|
(1,960,538)
|
(Increase)/decrease in trade and other receivables
|
|
(17,285)
|
128,064
|
(Decrease)/increase in trade and other payables
|
|
(177,040)
|
(157,789)
|
Net cash used in operating activities
|
|
(1,640,294)
|
(1,990,263)
|
Cash flows from investing activities
|
|
|
|
Purchase of intangible assets
|
|
(4,199,863)
|
(2,848,040)
|
Purchase of property, plant and equipment
|
|
(100,037)
|
(102,672)
|
Purchase of available-for-sale financial assets
|
|
—
|
(253,004)
|
Proceeds from sale of property, plant and equipment
|
|
91,247
|
16,673
|
Interest received
|
|
47,451
|
88,262
|
Net cash used in investing activities
|
|
(4,161,202)
|
(3,098,781)
|
Cash flows from financing activities
|
|
|
|
Proceeds from issue of ordinary shares
|
|
3,081,999
|
5,240,249
|
Issue costs
|
|
(57,595)
|
(98,657)
|
Net cash from financing activities
|
|
3,024,404
|
5,141,592
|
Net increase in cash and cash equivalents
|
|
(2,777,092)
|
52,548
|
Cash and cash equivalents at beginning of year
|
|
5,887,174
|
5,856,949
|
Exchange loss on cash and cash equivalents
|
|
(18,202)
|
(22,323)
|
Cash and cash equivalents at end of the year
|
14
|
3,091,880
|
5,887,174
|
Major non-cash transactions
During the year ended 31 December 2013 additions to intangible
exploration assets included £80,109 (2012: £73,664) in relation to
depreciation charges on property, plant and equipment used for
exploration activities.
On 7 February 2012 the Company issued 8,500,000 new ordinary shares of 1
pence per share each to Lara Exploration Limited at a premium of 14
pence per share in consideration for the acquisition of the Vila Oito
and Floresta nickel laterite projects.
Company Statement of Cash Flows
For year ended 31 December 2013
|
|
31 December
|
31 December
|
|
|
2013
|
2012
|
|
Notes
|
£
|
£
|
Cash flows from operating activities
|
|
|
|
Loss before taxation
|
|
(4,378,222)
|
(879,334)
|
Interest income
|
|
(45,075)
|
(79,424)
|
Share-based payments
|
|
171,277
|
321,400
|
Impairment of investment in subsidiaries
|
|
4,264,167
|
—
|
Depreciation
|
|
2,868
|
2,233
|
Operating loss before changes in working capital
|
|
15,015
|
(635,125)
|
Decrease in trade and other receivables
|
|
13,707
|
82,254
|
(Decrease)/increase in trade and other payables
|
|
(179,324)
|
18,324
|
Net cash flows used in operating activities
|
|
(150,602)
|
(534,547)
|
Cash flows from investing activities
|
|
|
|
Loans to subsidiary undertakings
|
|
(5,314,945)
|
(3,775,342)
|
Purchase of property, plant and equipment
|
|
(2,550)
|
(1,599)
|
Interest received
|
|
45,075
|
79,424
|
Net cash used in investing activities
|
|
(5,272,420)
|
(3,697,517)
|
Cash flows from financing activities
|
|
|
|
Proceeds from issue of ordinary shares
|
|
3,081,999
|
5,240,249
|
Issue costs
|
|
(57,595)
|
(98,657)
|
Net cash from financing activities
|
|
3,024,404
|
5,141,592
|
Net (decrease)/increase in cash and cash equivalents
|
|
(2,398,618)
|
909,528
|
Cash and cash equivalents at beginning of year
|
|
5,154,986
|
4,245,460
|
Cash and cash equivalents at end of the year
|
14
|
2,756,368
|
5,154,986
|
Major non-cash transactions
On 7 February 2012 the Company issued 8,500,000 new ordinary shares of 1
pence per share each to Lara Exploration Limited at a premium of 14
pence per share in consideration for the acquisition of the Vila Oito
and Floresta nickel laterite projects.
The non-cash movement in contingent consideration of £118,198 (2012:
£356,253) was charged to a subsidiary undertaking and adjusted for in
the loans to subsidiary undertakings balance.
Notes to the Financial Statements
1 General information
The principal activity of Horizonte Minerals Plc ('the Company') and its
subsidiaries (together 'the Group') is the exploration and development
of precious and base metals. The Company's shares are listed on the
Alternative Investment Market of the London Stock Exchange and on the
Toronto Stock Exchange. The Company is incorporated and domiciled in
the UK.
The address of its registered office is 26 Dover Street, London W1S 4LY.
2 Summary of significant accounting policies
The principal accounting policies applied in the preparation of these
Financial Statements are set out below. These policies have been
consistently applied to all the years presented.
2.1 Basis of preparation
These Financial Statements have been prepared in accordance with
International Financial Reporting Standards (IFRSs) as adopted by the
European Union (EU), IFRIC interpretations and those parts of the
Companies Act 2006 applicable to companies reporting under IFRS. The
Financial Statements have been prepared under the historical cost
convention as modified by the revaluation of certain subsidiaries'
assets and liabilities to fair value for consolidation purposes.
The preparation of financial statements in conformity with IFRS requires
the use of certain critical accounting estimates. It also requires
management to exercise its judgement in the process of applying the
Group's Accounting Policies. The areas involving a higher degree of
judgement or complexity, or areas where assumptions and estimates are
significant to the Financial Statements, are disclosed in Note 4.
2.2 Changes in accounting policy and disclosures
a) New and amended standards adopted by the Group
A number of new standards and amendments to standards and
interpretations are effective for the annual period beginning after 1
January 2013 and have been applied in preparing these financial
statements.
Amendment to IAS 1, 'Financial statement presentation' regarding other
comprehensive income became effective during the period. Items in the
consolidated statement of comprehensive income that may be reclassified
to profit or loss in subsequently periods are now presented separately
from items that will not be reclassified to profit or loss in
subsequent periods.
IFRS 13, "Fair value measurement" became effective during the period.
The standard requires specific disclosures on fair values, some of
which replace existing disclosure requirements in IFRS 7, "Financial
instruments: Disclosures". The fair values of cash and cash
equivalents, trade and other receivables and trade and other payables
approximate to their book values due to the short maturity periods of
these financial instruments. Available for sale financial assets
consist of equity investments whose fair value is determined by
reference to quoted market prices (level 1 in the fair value
measurement hierarchy).
b) New and amended standards, and interpretations mandatory for the
first time for the financial year beginning 1 January 2013, but not currently relevant to the Group
A number of new standards and amendments to standards and
interpretations are effective for annual periods beginning after 1
January 2013, and have not been applied in preparing these financial
statements. None of these is expected to have a significant effect on
the financial statements of the Company or Group.
IAS 19, 'Employee benefits' eliminate the option to defer the
recognition of gains and losses, known as the "corridor method"
streamline the presentation of changes in assets and liabilities
arising from defined benefit plans, including requiring re-measurements
to be presented in other comprehensive income; and enhance the
disclosure requirements for defined benefit plans, providing better
information about the characteristics of defined benefit plans and the
risks that entities are exposed to through participation in those
plans.
IFRS 7, 'Financial Instruments: Disclosures' was amended for asset and
liability offsetting. This amendment requires disclosure of information
that will enable users of financial statements to evaluate the effect
or potential effect of netting arrangements, including rights of
set-off associated with the entity's recognised financial assets and
recognised financial liabilities, on the entity's financial position.
Amendment to IFRS 1, 'First-time Adoption of International Financial
Reporting Standards' on government loans, addresses how first-time
adopters would account for a government loan with a below-market rate
of interest when transitioning to IFRS. It also adds an exception to
the retrospective application of IFRS, which provides the same relief
to first-time adopters granted to existing preparers of IFRS Financial
Statements when the requirement was incorporated into IAS 20
'Accounting for Government Grants and Disclosure of Government
Assistance' in 2008.
IFRIC 20, 'Stripping Costs in the Production Phase of a Surface Mine',
clarifies when production stripping should lead to the recognition of
an asset and how that asset should be measured, both initially and in
subsequent periods.
'Annual Improvements 2009 - 2011 Cycle' sets out amendments to various
IFRSs as follows:
-
An amendment to IFRS 1, 'First-time Adoption' clarifies whether an
entity may apply IFRS 1:
|
(a) if the entity meets the criteria for applying IFRS 1 and has applied
IFRS 1 in a previous reporting period; or
|
|
|
|
(b) if the entity meets the criteria for applying IFRS 1 and has
applied IFRSs in a previous reporting period when IFRS 1 did not exist.
|
-
The amendment to IFRS 1 also addresses the transitional provisions for
borrowing costs relating to qualifying assets for which the
commencement date for capitalisation was before the date of transition
to IFRSs.
-
An amendment to IAS 1, 'Presentation of Financial Statements' clarifies
the requirements for providing comparative information when an entity
provides Financial Statements beyond the minimum comparative
information requirements.
-
An amendment to IAS 16, 'Property, Plant and Equipment' addresses a
perceived inconsistency in the classification requirements for
servicing equipment.
-
An amendment to IAS 32, 'Financial Instruments: Presentation' addresses
perceived inconsistencies between IAS 12, 'Income Taxes' and IAS 32
with regard to recognising the consequences of income tax relating to
distributions to holders of an equity instrument and to transaction
costs of an equity transaction.
-
An amendment to IAS 34, 'Interim Financial Reporting' clarifies the
requirements on segment information for total assets and liabilities
for each reportable segment.
c) New and amended standards and interpretations issued but not yet
effective for the financial year beginning 1 January 2013 and not early
adopted
The standards and interpretations that are issued, but not yet
effective, up to the date of issuance of the financial statements are
disclosed below. The Company and Group intend to adopt these standards,
if applicable, when they become effective.
IAS 27, 'Separate Financial Statements', replaces the current version of
IAS 27, 'Consolidated and Separate Financial Statements' as a result of
the issue of IFRS 10. The revised standard includes the requirements
relating to separate financial statements. The revised standard becomes
effective for annual periods beginning on or after 1 January 2014.
IAS 28, 'Investments in Associates and Joint Ventures', replaces the
current version of IAS 28,'Investments in Associates', as a result of
the issue of IFRS 11. The revised standard includes the requirements
for associates and joint ventures that have to be equity accounted
following the issue of IFRS 1. The Group is yet to assess full impact
of the revised standard and intends to adopt IAS 28 (revised) no later
than the accounting period beginning on or after 1 January 2014.
Amendment to IAS 19, 'Defined Benefit Plans: Employee Contributions',
provides guidance added to IAS 19 Employee Benefits on accounting for
contributions from employees or third parties set out in the formal
terms of a defined benefit plan. The Directors do not believe that this
will have an impact on the Group however will be adopted no later than
accounting period beginning on or after 1 January 2014.
Amendment to IAS 32, 'Offsetting Financial Assets and Financial
Liabilities', add application guidance to address inconsistencies
identified in applying some of the criteria when offsetting financial
assets and financial liabilities. This includes clarifying the meaning
of "currently has a legally enforceable right of set-off" and that some
gross settlement systems may be considered equivalent to net
settlement. The Group is yet to assess the full impact of the amendment
to IAS 32 and intends to adopt the amended standard no later than the
accounting period beginning on or after 1 January 2014.
Amendment to IAS 36, 'Recoverable Amount Disclosures for Non-Financial
Assets', to reduce the circumstances in which the recoverable amount of
assets or cash-generating units is required to be disclosed, clarify
the disclosures required, and to introduce an explicit requirement to
disclose the discount rate used in determining impairment (or
reversals) where recoverable amount (based on fair value less costs of
disposal) is determined using a present value technique. The Group is
yet to assess full impact of the revised standard and intends to adopt
the amendment to IAS 36 no later than the accounting period beginning
on or after 1 January 2014.
Amendment to IAS 39, 'Novation of Derivatives and Continuation of Hedge
Accounting', make it clear that there is no need to discontinue hedge
accounting if a hedging derivative is novated, provided certain
criteria are met. The Group is yet to assess full impact and intends to
adopt the amendment to IAS 39 no later than the accounting period
beginning on or after 1 January 2014.
IFRS 9, 'Financial instruments', addresses the classification,
measurement and recognition of financial assets and financial
liabilities. IFRS 9 was issued in November 2009 and October 2010. It
replaces parts of IAS 39 that relate to the classification and
measurement of financial instruments. IFRS 9 requires financial assets
to be classified into two measurement categories: those measured as at
fair value and those measured at amortised cost. The determination is
made at initial recognition. The classification depends on the entity's
business model for managing its financial instruments and the
contractual cash flow characteristics for the instrument. For financial
liabilities, the standard retains most of the IAS 39 requirements. The
main change is that, in cases where the fair value option is taken for
financial liabilities, the part of a fair value change due to an
entity's own credit risk is recorded in other comprehensive income
rather than the income statement, unless this creates an accounting
mismatch. The Group is yet to assess IFRS 9's full impact and intends
to adopt IFRS 9 no later than the accounting period beginning on or
after 1 January 2014, subject to endorsement by the EU. The Group will
also consider the impact of the remaining phases of IFRS 9 when
completed by the Board.
IFRS 10, 'Consolidated financial statements', builds on existing
principles by identifying the concept of control as the determining
factor in whether an entity should be included within the consolidated
financial statements of the parent company. The standard provides
additional guidance to assist in the determination of control where
this is difficult to assess. The Group is yet to assess IFRS 10's full
impact and intends to adopt IFRS 10 no later than the accounting period
beginning on or after 1 January 2014.
IFRS 11, 'Joint Arrangements' provides for a more realistic reflection
of joint arrangements by focusing on the rights and obligations of the
arrangement, rather than its legal form. There are two types of joint
arrangement; joint operations and joint ventures. Joint operations
arise where a joint operator has rights to the assets and obligations
relating to the arrangement and therefore accounts for its share of
assets, liabilities, revenue and expenses. Joint ventures arise where
the joint venture has rights to the net assets of the arrangement and
therefore equity accounts for its interest. Proportional consolidation
of joint ventures is no longer allowed. The Group is yet to assess IFRS
11's full impact and intends to adopt IFRS 11 no later than the
accounting period beginning on or after 1 January 2014.
IFRS 12, 'Disclosures of interests in other entities', includes the
disclosure requirements for all forms of interests in entities,
including joint arrangements, associates, special purpose vehicles and
other off Statement of Financial Position vehicles. The Group is yet to
assess IFRS 12's full impact and intends to adopt IFRS 12 no later than
the accounting period beginning on or after 1 January 2014.
Amendments to IFRS 10, "Consolidated Financial Statements", IFRS 12,
"Disclosure of Interests in Other Entities" and IAS 27, 'Separate
Financial Statements', provide 'investment entities' (as defined) an
exemption from the consolidation of particular subsidiaries and instead
require that an investment entity measure the investment in each
eligible subsidiary at fair value through profit or loss in accordance
with IFRS 9 Financial Instruments or IAS 39 Financial Instruments:
Recognition and Measurement. The Group is yet to assess the full impact
of these amendments and intends to adopt the amended standards no later
than the accounting period beginning on or after 1 January 2014.
Amendments to IFRS 10 "Consolidated Financial Statements", IFRS 11
"Joint Arrangements" and IFRS 12 "Disclosure of Interests in Other
Entities" clarify the IASB's intention when first issuing the
transition guidance in IFRS 10, provide similar relief in IFRS 11 and
IFRS 12 from the presentation or adjustment of comparative information
for periods prior to the immediately preceding period, and provide
additional transition relief by eliminating the requirement to present
comparatives for the disclosures relating to unconsolidated structured
entities for any period before the first annual period for which IFRS
12 is applied. The Group plans to adopt these amendments no later than
the annual period beginning on or after 1 January 2014.
IFRIC 21, 'Levies', provides guidance on when to recognise a liability
for a levy imposed by a government, both for levies that are accounted
for in accordance with IAS 37 Provisions, Contingent Liabilities and
Contingent Assets and those where the timing and amount of the levy is
certain. It provides the following guidance on recognition of a
liability to pay levies:
-
The liability is recognised progressively if the obligating event occurs
over a period of time;
-
If an obligation is triggered on reaching a minimum threshold, the
liability is recognised when that minimum threshold is reached.
The Group is yet to assess the full impact and intends to adopt the
standard no later than the accounting period beginning on or after 1
January 2014, subject to endorsement by the EU.
"Annual Improvements 2010 - 2012 Cycle" sets out amendments to various
IFRSs and provides a vehicle for making non-urgent but necessary
amendments to IFRSs:
-
IFRS 2 "Share-based Payment": amendment to the definition of a vesting
condition.
-
IFRS 3 "Business Combinations": amendments to the accounting for
contingent consideration in a business combination.
-
IFRS 8 "Operating Segments": aments to the aggregation of operating
segments and the reconciliation of the total of the reportable
segments' assets to the entity's assets.
-
IFRS 13 "Fair Value Measurement": amendments to short-term receivables
and payables.
-
IAS 16 "Property, Plant and Equipment": amendments to the revaluation
method in relation to the proportionate restatement of accumulated
depreciation.
-
IAS 24 "Related Party Disclosures": amendments regarding key management
personnel.
-
IAS 38 "Intangible Assets": amendments to the revaluation method in
relation to the proportionate restatement of accumulated depreciation.
The Group intends to adopt the amended standards no later than the
annual period beginning on or after 1 July 2014, subject to EU
endorsement.
"Annual Improvements 2011 - 2013 Cycle" sets out amendments to various
IFRSs and provides a vehicle for making non-urgent but necessary
amendments to IFRSs:
-
IFRS 1 "First-time Adoption of International Financial Reporting
Standards": amendment to the meaning of 'effective IFRSs'.
-
IFRS 3 "Business Combinations": amendments to the scope exceptions for
joint ventures.
-
IFRS 13 "Fair Value Measurement": amendments to the scope of paragraph
52 (portfolio exception).
-
IAS 40 "Investment Property": amendments clarifying the
interrelationship between IFRS 3 and IAS 40 when classifying property
as investment property or owner-occupied property.
The Group intends to adopt the amended standards no later than the
annual period beginning on or after 1 July 2014, subject to EU
endorsement.
2.3 Basis of consolidation
Horizonte Minerals Plc was incorporated on 16 January 2006. On 23 March
2006 Horizonte Minerals Plc acquired the entire issued share capital of
Horizonte Exploration Limited (HEL) by way of a share for share
exchange. The transaction was treated as a group reconstruction and was
accounted for using the merger accounting method as the entities were
under common control before and after the acquisition.
Subsidiaries are all entities over which the Group has the power to
govern the financial and operating policies generally accompanying a
shareholding of more than one half of the voting rights. The existence
and effect of potential voting rights that are currently exercisable or
convertible are considered when assessing whether the Group controls
another entity. Subsidiaries are fully consolidated from the date on
which control is transferred to the Group. They are de-consolidated
from the date that control ceases.
Other than for the acquisition of HEL as noted above, the Group uses the
acquisition method of accounting to account for business combinations.
The consideration transferred for the acquisition of a subsidiary is
the fair value of the assets transferred, the liabilities incurred and
the equity interests issued by the Group. The consideration transferred
includes the fair value of any asset or liability resulting from a
contingent consideration arrangement. Identifiable assets acquired and
liabilities and contingent liabilities assumed in a business
combination are measured initially at their fair values at the
acquisition date. Acquisition-related costs are expensed as incurred
unless they result from the issuance of shares, in which case they are
offset against the premium on those shares within equity.
If an acquisition is achieved in stages, the acquisition date carrying
value of the acquirer's previously held equity interest in the acquiree
is remeasured to fair value at the acquisition date through profit or
loss.
Any contingent consideration to be transferred by the Group is
recognised at fair value at the acquisition date. Subsequent changes to
the fair value of the contingent consideration that is deemed to be an
asset or a liability is recognised in accordance with IAS 39 either in
profit or loss or as a change in other comprehensive income. The
unwinding of the discount on contingent consideration liabilities is
recognised as a finance charge within profit or loss. Contingent
consideration that is classified as equity is not remeasured, and its
subsequent settlement is accounted for within equity.
The excess of the consideration transferred and the acquisition date
fair value of any previous equity interest in the acquiree over the
fair value of the Group's share of the identifiable net assets acquired
is recorded as goodwill. If this is less than the fair value of the net
assets of the subsidiary acquired in the case of a bargain purchase,
the difference is recognised directly in profit or loss.
Inter-company transactions, balances and unrealised gains on
transactions between Group companies are eliminated. Accounting
policies of subsidiaries have been changed where necessary to ensure
consistency with policies adopted by the Group.
Investments in subsidiaries are accounted for at cost less impairment.
References to various joint venture arrangements in the Chairman's
Statement and the Operations Review do not meet the definition of joint
ventures under IAS 31 'Interests in Joint Ventures' and therefore these
Financial Statements do not reflect the accounting treatments required
under IAS 31.
The following 100% owned subsidiaries have been included within the
consolidated Financial Statements:
Subsidiary undertaking
|
Parent company
|
Country of incorporation
|
Nature of business
|
Horizonte Exploration Ltd
|
Horizonte Minerals Plc
|
England
|
Mineral Exploration
|
Horizonte Minerals (IOM) Ltd
|
Horizonte Exploration Ltd
|
Isle of Man
|
Holding company
|
HM Brazil (IOM) Ltd
|
Horizonte Minerals (IOM) Ltd
|
Isle of Man
|
Holding company
|
HM Peru (IOM) Ltd
|
Horizonte Minerals (IOM) Ltd
|
Isle of Man
|
Holding company
|
Horizonte Nickel (IOM) Ltd
|
Horizonte Minerals (IOM) Ltd
|
Isle of Man
|
Holding company
|
HM do Brasil Ltda
|
HM Brazil (IOM) Ltd
|
Brazil
|
Mineral Exploration
|
Araguaia Niquel Mineração Ltda
|
Horizonte Nickel (IOM) Ltd
|
Brazil
|
Mineral Exploration
|
Lontra Empreendimentos e
|
Arguaia Niquel Mineração Ltda/
|
|
|
Participações Ltda
|
Horizonte Nickel (IOM) Ltd
|
Brazil
|
Mineral Exploration
|
Mineira El Aguila SAC
|
HM Peru (IOM) Ltd
|
Peru
|
Mineral Exploration
|
Mineira Cotahusi SAC
|
Mineira El Aguila SAC
|
Peru
|
Mineral Exploration
|
South America Resources Ltd
|
Horizonte Minerals Plc
|
Isle of Man
|
Holding company
|
Brazil Mineral Holdings Ltd
|
South America Resources Ltd
|
Isle of Man
|
Holding company
|
PMA Geoquimica Ltda, a subsidiary of Brazil Mineral Holdings Ltd, was
dissolved during the year and South America Resources Ltd and Brazil
Mineral Holdings Ltd are in the process of being dissolved.
2.4 Going concern
The Group's business activities together with the factors likely to
affect its future development, performance and position are set out in
the Chairman's Statement on pages 4 and 5; in addition note 3 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 its exposure to
credit and liquidity risk.
The Financial Statements have been prepared on a going concern basis.
Although the Group's assets are not generating revenues and an
operating loss has been reported, the Directors consider that the Group
has sufficient funds to undertake its operating activities for a period
of at least the next 12 months including any additional payments
required in relation to its current exploration projects. The Group has
considerable financial resources which will be sufficient to fund the
Group's committed expenditure both operationally and on its exploration
projects for the foreseeable future. However, as additional projects
are identified and the Araguaia project moves towards production,
additional funding will be required. The amount of funding is estimated
without any certainty at the point of approval of these Financial
Statements and the Group will be required to raise additional funds
either via an issue of equity or through the issuance of debt. The
Directors are confident that funds will be forthcoming if and when they
are required.
The Directors have a reasonable expectation that the Group and Company
have adequate resources to continue in operational existence for the
foreseeable future. Thus they continue to adopt the going concern basis
of accounting in preparing these Financial Statements.
2.5 Intangible Assets
(a) Goodwill
Goodwill represents the excess of the cost of an acquisition over the
fair value of the Group's share of the net identifiable assets,
liabilities and contingent liabilities of the acquired subsidiary at
the date of acquisition. Goodwill arising on the acquisition of
subsidiaries is included in 'intangible assets'. Goodwill is tested
annually for impairment and carried at cost less accumulated impairment
losses. Impairment losses on goodwill are not reversed. Gains and
losses on the disposal of an entity include the carrying amount of
goodwill relating to the entity sold.
Goodwill is allocated to cash generating units for the purpose of
impairment testing. The allocation is made to those cash-generating
units or groups of cash-generating units that are expected to benefit
from the business combination in which the goodwill arose, identified
according to operating segment.
(b) Exploration and evaluation assets
The Group recognises expenditure as exploration and evaluation assets
when it determines that those assets will be successful in finding
specific mineral resources. Expenditure included in the initial
measurement of exploration and evaluation assets and which are
classified as intangible assets relate to the acquisition of rights to
explore, topographical, geological, geochemical and geophysical
studies, exploratory drilling, trenching, sampling and activities to
evaluate the technical feasibility and commercial viability of
extracting a mineral resource. Capitalisation of pre-production
expenditure ceases when the mining property is capable of commercial
production.
Exploration and evaluation assets arising on business combinations are
included at their acquisition-date fair value in accordance with IFRS 3
(revised) 'Business combinations'. Other exploration and evaluation
assets and all subsequent expenditure on assets acquired as part of a
business combination are recorded and held at cost.
Exploration and evaluation assets are assessed for impairment when facts
and circumstances suggest that the carrying amount of an asset may
exceed its recoverable amount. The assessment is carried out by
allocating exploration and evaluation assets to cash generating units,
which are based on specific projects or geographical areas.
Whenever the exploration for and evaluation of mineral resources in cash
generating units does not lead to the discovery of commercially viable
quantities of mineral resources or the Company has decided to
discontinue such activities of that unit, the associated expenditures
are written off to profit or loss.
2.6 Property, plant and equipment
All property, plant and equipment is stated at historic cost less
accumulated depreciation. Historic cost includes expenditure that is
directly attributable to the acquisition of the items.
All repairs and maintenance costs are charged to profit or loss during
the financial period in which they are incurred.
Depreciation is charged on a straight-line basis so as to write off the
cost of assets, over their estimated useful lives, using the
straight-line method, on the following bases:
Office equipment
|
25%
|
Vehicles and other field equipment
|
25% - 33%
|
An asset's carrying amount is written down immediately to its
recoverable amount if the assets carrying amount is greater than its
estimated recoverable amount.
Gains and losses on disposal are determined by comparing the proceeds
with the carrying amount and are recognised within 'Other
(losses)/gains' in the Statement of Comprehensive Income.
2.7 Impairment
Assets that have an indefinite useful life; for example, goodwill or
intangible exploration assets not ready to use, are not subject to
amortisation and are tested annually for impairment. Intangible assets
that are subject to amortisation and tangible assets are reviewed for
impairment whenever events or changes in circumstances indicate that
the carrying amount may not be recoverable. An impairment loss is
recognised for the amount by which the asset's carrying amount exceeds
its recoverable amount. The recoverable amount is the higher of an
asset's fair value less costs to sell and value in use. For the
purposes of assessing impairment, assets are grouped at the lowest
levels for which there are separately identifiable cash flows (cash
generating units). Non-financial assets other than goodwill that
suffered an impairment are reviewed for possible reversal of the
impairment at each reporting date.
2.8 Foreign currency translation
(a) Functional and presentation currency
Items included in the Financial Statements of the Group's entities are
measured using the currency of the primary economic environment in
which the entity operates (the 'functional currency'). The functional
currency of the UK and Isle of Man entities is Sterling and the
functional currency of the Brazilian and Peruvian entities is Brazilian
Real and Peruvian Nuevo Sol respectively. The Consolidated Financial
Statements are presented in Pounds Sterling, rounded to the nearest
pound, which is the Company's functional and Group's presentation
currency.
(b) Transactions and balances
Foreign currency transactions are translated into the functional
currency using the exchange rates prevailing at the dates of the
transactions or valuation where such items are re-measured. Foreign
exchange gains and losses resulting from the settlement of such
transactions and from the translation at year-end exchange rates of
monetary assets and liabilities denominated in foreign currencies are
recognised in profit or loss.
(c) Group companies
The results and financial position of all the Group's entities (none of
which has the currency of a hyperinflationary economy) that have a
functional currency different from the presentation currency are
translated into the presentation currency as follows:
(1)
|
assets and liabilities for each statement of financial position
presented are translated at the closing rate at the date of that
statement of financial position;
|
|
|
(2)
|
each component of profit or loss is translated at average exchange rates
during the accounting period (unless this average is not a reasonable
approximation of the cumulative effect of the rates prevailing on the
transaction dates, in which case income and expenses are translated at
the dates of the transactions); and
|
|
|
(3)
|
all resulting exchange differences are recognised in other comprehensive
income.
|
On consolidation, exchange differences arising from the translation of
the net investment in foreign entities, and of monetary items
receivable from foreign subsidiaries for which settlement is neither
planned nor likely to occur in the foreseeable future are taken to
other comprehensive income. When a foreign operation is sold, such
exchange differences are recognised in profit or loss as part of the
gain or loss on sale.
Goodwill and fair value adjustments arising on the acquisition of a
foreign entity are treated as assets and liabilities of the foreign
entity and translated at the closing rate.
2.9 Financial assets
Financial assets within the scope of IAS 39 are classified as loans and
receivables or available-for-sale financial assets, as appropriate. The
Group determines the classification of its financial assets at initial
recognition.
(a) Available-for-sale financial investments
Available-for-sale financial investments consist of equity investments
that are neither classified as held for trading nor designated at fair
value through profit or loss. After initial recognition,
available-for-sale financial investments are subsequently measured at
fair value with unrealised gains or losses recognised as other
comprehensive income in the available-for-sale reserve until the
investment is derecognised, at which time the cumulative gain or loss
is recognised in other operating income, or the investment is
determined to be impaired, when the cumulative loss is reclassified
from the available-for-sale reserve to the Income Statement in finance
costs. The fair value of financial instruments that are traded in
active markets at each reporting date is determined by reference to
quoted market prices.
(b) Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or
determinable payments that are not quoted in an active market. After
initial measurement, such financial assets are subsequently measured at
amortised cost using the effective interest rate method, less
impairment. The Group's loans and receivables comprise 'trade and other
receivables' in the Statement of Financial Position.
Derecognition
A financial asset is derecognised when the rights to receive cash flows
from the asset have expired.
2.10 Cash and cash equivalents
Cash and cash equivalents comprise cash at bank and in hand and demand
deposits with banks and other financial institutions, that are readily
convertible into known amounts of cash and which are subject to an
insignificant risk of changes in value.
2.11 Taxation
The tax credit or expense for the period comprises current and deferred
tax. Tax is recognised in the Income Statement, except to the extent
that it relates to items recognised in other comprehensive income or
directly in equity. In this case, the tax is also recognised in other
comprehensive income or directly in equity, respectively.
The charge for current tax is calculated on the basis of the tax laws
enacted or substantively enacted by the end of the reporting period in
the countries where the company and its subsidiaries operate and
generate taxable income. Management periodically evaluates positions
taken in tax returns with respect to situations in which applicable tax
regulation is subject to interpretation. It establishes provisions
where appropriate on the basis of amounts expected to be paid to the
tax authorities.
Deferred tax is accounted for using the liability method in respect of
temporary differences arising from differences between the carrying
amount of assets and liabilities in the financial statements and the
corresponding tax bases used in the computation of taxable profit.
However, deferred tax liabilities are not recognised if they arise from
the initial recognition of goodwill; deferred tax is not accounted for
if it arises from initial recognition of an asset or liability in a
transaction other than a business combination that at the time of the
transaction affects neither accounting nor taxable profit or loss.
In principle, deferred tax liabilities are recognised for all taxable
temporary differences and deferred tax assets are recognised to the
extent that it is probable that taxable profits will be available
against which deductible temporary differences can be utilised.
Deferred tax assets are recognised on tax losses carried forward to the
extent that the realisation of the related tax benefit through future
taxable profits is probable.
Deferred tax liabilities are recognised for taxable temporary
differences arising on investments in subsidiaries and associates, and
interests in joint ventures, except where the Company is able to
control the reversal of the temporary difference and it is probable
that the temporary difference will not reverse in the foreseeable
future.
Deferred tax assets and liabilities are offset when there is a legally
enforceable right to offset current tax assets against current tax
liabilities and when the deferred tax assets and liabilities relate to
taxes levied by the same taxation authority on either the same taxable
entity or different taxable entities where there is an intention to
settle the balances on a net basis.
Deferred tax is calculated at the tax rates (and laws) that have been
enacted or substantively enacted by the balance sheet date and are
expected to apply to the period when the asset is realised or the
liability is settled.
Deferred tax assets and liabilities are not discounted.
2.12 Share capital
Ordinary shares are classified as equity. Incremental costs directly
attributable to the issue of new ordinary shares or options are shown
in equity as a deduction, net of tax, from the proceeds.
2.13 Trade payables
Trade payables are obligations to pay for goods or services that have
been acquired in the ordinary course of business from suppliers.
Accounts payable are classified as current liabilities if payment is
due within one year or less. If not, they are presented as non-current
liabilities.
Trade payables are initially recognised at fair value and subsequently
measured at amortised cost using the effective interest method.
2.14 Operating leases
Leases of assets under which a significant amount of the risks and
benefits of ownership are effectively retained by the lessor are
classified as operating leases. Operating lease payments are charged to
the Income Statement on a straight-line basis over the period of the
respective leases.
2.15 Share-based payments and incentives
The Group operates equity-settled, share-based compensation plans, under
which the entity receives services from employees as consideration for
equity instruments (options) of the Group. The fair value of employee
services received in exchange for the grant of share options are
recognised as an expense. The total expense to be apportioned over the
vesting period is determined by reference to the fair value of the
options granted:
-
including any market performance conditions;
-
excluding the impact of any service and non-market performance vesting
conditions; and
-
including the impact of any non-vesting conditions.
Non-market performance and service conditions are included in
assumptions about the number of options that are expected to vest. The
total expense is recognised over the vesting period, which is the
period over which all of the specified vesting conditions are to be
satisfied. At the end of each reporting period the Group revises its
estimate of the number of options that are expected to vest.
It recognises the impact of the revision of original estimates, if any,
in profit or loss, with a corresponding adjustment to equity.
When options are exercised, the Company issues new shares. The proceeds
received net of any directly attributable transaction costs are
credited to share capital (nominal value) and share premium.
The fair value of goods or services received in exchange for shares is
recognised as an expense.
2.16 Segment reporting
Operating segments are reported in a manner consistent with the internal
reporting provided to the Chief Executive Officer, the Company's chief
operating decision-maker.
2.17 Finance income
Interest income is recognised using the effective interest method,
taking into account the principal amounts outstanding and the interest
rates applicable.
3 Financial risk management
3.1 Financial risk factors
The main financial risks to which the Group's activities are exposed are
liquidity and fluctuations on foreign currency. The Group's overall
risk management programme focuses on the unpredictability of financial
markets and seeks to minimise potential adverse effects on the Group's
financial performance.
Risk management is carried out by the Board of Directors under policies
approved at the quarterly Board meetings. The Board frequently
discusses principles for overall risk management including policies for
specific areas such as foreign exchange.
(a) Liquidity and related market risks
In keeping with similar sized mineral exploration groups, the Group's
continued future operations depend on the ability to raise sufficient
working capital through the issue of equity share capital. The Group
monitors its cash and future funding requirements through the use of
cash flow forecasts.
All cash, with the exception of that required for immediate working
capital requirements, is held on short-term deposit.
(b) Foreign currency risks
The Group operates internationally and is exposed to foreign exchange
risk arising from various currency exposures, primarily with respect to
the Brazilian Real, US Dollar and the UK pound.
Foreign exchange risk arises from future commercial transactions,
recognised assets and liabilities and net investments in foreign
operations that are denominated in a foreign currency. The Group holds
a proportion of its cash in US Dollars and Brazilian Reals to hedge its
exposure to foreign currency fluctuations and recognises the profits
and losses resulting from currency fluctuations as and when they arise.
The volume of transactions is not deemed sufficient to enter into
forward contracts.
At 31 December 2013, if the US Dollar had weakened/strengthened by 5%
against Pound Sterling and Brazilian Real with all other variables held
constant, post tax loss for the year would have been approximately
£58,809/£56,009 higher/lower mainly as a result of foreign exchange
losses/gains on translation of US Dollar denominated bank balances.
(c) Interest rate risk
As the Group has no borrowings, it is not exposed to interest rate risk
on financial liabilities. The Group's interest rate risk arises from
its cash held on short-term deposit for which the Directors use a
mixture of fixed and variable rate deposits. As a result fluctuations
in interest rates are not expected to have a significant impact on
profit or loss or equity.
(d) Price risk
The Group is exposed to commodity price risk as a result of its
operations. However, given the size and stage of the Group's
operations, the costs of managing exposure to commodity price risk
exceed any potential benefits. The Directors will revisit the
appropriateness of this policy should the Group's operations change in
size or nature. The Group's listed equity securities are susceptible to
price risk arising from uncertainties about future values of the
securities.
(e) Credit risk
Credit risk arises from cash and cash equivalents as well as exposure to
joint venture partners including outstanding receivables. The Group
maintains cash and short-term deposits with a variety of credit worthy
financial institutions and considers the credit ratings of these
institutions before investing in order to mitigate against the
associated credit risk. Management does not expect any losses from
non-performance by joint venture partners.
No debt finance has been utilised and if required this is subject to
pre-approval by the Board of Directors. The amount of exposure to any
individual counter party is subject to a limit, which is assessed by
the Board.
3.2 Capital risk management
The Group's objectives when managing capital are to safeguard the
Group's ability to continue as a going concern, in order to provide
returns for shareholders and to enable the Group to continue its
exploration and evaluation activities. The Group has no debt at 31
December 2013 and defines capital based on the total equity of the
Company. The Group monitors its level of cash resources available
against future planned exploration and evaluation activities and may
issue new shares in order to raise further funds from time to time.
As indicated above, the Group holds cash reserves on deposit at several
banks and in different currencies until they are required and in order
to match where possible with the corresponding liabilities in that
currency.
3.3 Fair value estimation
The carrying values of trade receivables and payables are assumed to be
approximate to their fair values, due to their short-term nature. The
fair value of contingent consideration is estimated by discounting the
future contractual cash flows at the Group's current cost of capital of
7% based on the interest rate available to the Group for a similar
financial instrument. As this is an observable input all fair value
estimates fall within level 2.
4 Critical accounting estimates and judgements
The preparation of the Financial Statements in conformity with IFRSs
requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosure of contingent
assets and liabilities at the end of the reporting period and the
reported amount of expenses during the year. Actual results may vary
from the estimates used to produce these Financial Statements.
Estimates and judgements are continually evaluated and are based on
historical experience and other factors, including expectations of
future events that are believed to be reasonable under the
circumstances.
Significant items subject to such estimates and assumptions include, but
are not limited to:
4.1 Impairment of exploration and evaluation costs
Exploration and evaluation costs have a carrying value at 31 December
2013 of £19,754,559 (2012: £20,074,974). Management tests annually
whether exploration projects have future economic value in accordance
with the accounting policy stated in note 2.5. Each exploration project
is subject to an annual review by either a consultant or senior company
geologist to determine if the exploration results returned to date
warrant further exploration expenditure and have the potential to
result in an economic discovery. This review takes into consideration
long-term metal prices, anticipated resource volumes and grades,
permitting and infrastructure. In the event that a project does not
represent an economic exploration target and results indicate there is
no additional upside, a decision will be made to discontinue
exploration. The Directors have reviewed the estimated value of each
project prepared by management and consider a full impairment charge
necessary for the El Aguila Project of £738,103 (2012: £nil) and the
Falcao Project as at 31 December 2013 of £310,179 (2012: £nil). In 2012
the Tangara Project was fully impaired, with a charge to the Income
Statement of £639,505.
4.2 Estimated impairment of goodwill
Goodwill has a carrying value at 31 December 2013 of £287,378 (2012:
£342,765). The Group tests annually whether goodwill has suffered any
impairment, in accordance with the accounting policy stated in note
2.5.
Management has concluded that there is no impairment charge necessary to
the carrying value of goodwill. See also note 10 to the Financial
Statements.
4.3 Contingent consideration
Contingent consideration has a carrying value of £2,477,310 at 31
December 2013 (2012: £2,359,112). The contingent consideration
arrangement requires the Group to pay the former owners of Teck Cominco
Brasil S.A (subsequently renamed Araguaia Niquel Mineração Ltda) 50% of
the tax effect on utilisation of the tax losses existing in Teck
Cominco Brasil S.A at the date of acquisition. Under the terms of the
acquisition agreement, tax losses that existed at the date of
acquisition and which are subsequently utilised in a period greater
than 10 years from that date are not subject to the contingent
consideration arrangement.
The fair value of this potential consideration has been determined using
the operating and financial assumptions in the cash flow model derived
from the Preliminary Economic Assessment published by the Company in
August 2012 in order to calculate the ability to utilise the acquired
tax losses, together with the timing of their utilisation. The Group
has used discounted cash flow analysis to determine when it is
anticipated that the tax losses will be utilised and any potential
contingent consideration paid. These cash flows could be affected by
upward or downward movements in several factors to include commodity
prices, operating costs, capital expenditure, production levels,
grades, recoveries and interest rates.
The carrying value of contingent consideration would not be affected
were the operating cash flows to vary by as much as 50% from
management's estimates, as the tax losses are utilised in the first
year of operations in either case.
4.4 Current and deferred taxation
The Group is subject to income taxes in numerous jurisdictions. Judgment
is required in determining the worldwide provision for such taxes. The
Group recognises liabilities for anticipated tax issues based on
estimates of whether additional taxes will be due. Where the final tax
outcome of these matters is different from the amounts that were
initially recorded, such differences will affect the current and
deferred income tax assets and liabilities in the period in which such
determination is made.
Deferred tax liabilities have been recognised on the fair value gains in
exploration assets arising on the acquisitions of Araguaia Niquel
Mineração Ltda (formerly Teck Cominco Brasil S.A) and Lontra
Empreendimentos e Participações Ltda. A deferred tax asset has been
recognised on acquisition of Araguaia Niquel Mineração Ltda for the
utilisation of the available tax losses acquired. Should the actual
final outcome regarding the utilisation of these losses be different
from management's estimations, the Group may need to revise the
carrying value of this asset.
4.5 Share-based payment transactions
The Group has made awards of options and warrants over its unissued
share capital to certain Directors and employees as part of their
remuneration package.
The valuation of these options and warrants involves making a number of
critical estimates relating to price volatility, future dividend
yields, expected life of the options and forfeiture rates. These
assumptions have been described in more detail in note 17.
Were the actual number of options that vest to differ by 10% from
management's estimates the overall option charge would increase/
decrease by £77,813.
4.6 Other areas
Other estimates include but are not limited to employee benefit
liabilities; future cash flows associated with assets; useful lives for
depreciation and fair value of financial instruments.
5 Segmental reporting
The Group operates principally in the UK and Brazil, with operations
managed on a project by project basis within each geographical area.
Activities in the UK are mainly administrative in nature whilst the
activities in Brazil relate to exploration and evaluation work. The
reports used by the chief operating decision-maker are based on these
geographical segments.
2013
|
UK
2013
£
|
Brazil
2013
£
|
Other
2013
£
|
Total
2013
£
|
Administrative expenses
|
(740,090)
|
(498,874)
|
(21,640)
|
(1,260,604)
|
Loss on foreign exchange
|
(59,916)
|
(89,283)
|
—
|
(149,199)
|
Project and fixed asset impairment
|
—
|
(295,137)
|
(738,103)
|
(1,033,240)
|
Other operating income
|
—
|
—
|
—
|
—
|
Loss from operations per reportable segment
|
(800,006)
|
(883,294)
|
(759,743)
|
(2,443,043)
|
Inter segment revenues
|
—
|
511,766
|
65,740
|
577,506
|
Depreciation charges
|
(2,869)
|
(1,501)
|
—
|
(4,370)
|
Additions to non-current assets
|
—
|
(4,241,762)
|
—
|
(4,241,762)
|
Reportable segment assets
|
3,342,399
|
25,354,609
|
2,750
|
28,699,758
|
Reportable segment liabilities
|
2,544,042
|
2,416,813
|
—
|
4,960,855
|
2012
|
UK
2012
£
|
Brazil
2012
£
|
Other
2012
£
|
Total
2012
£
|
Administrative expenses
|
(1,124,892)
|
(592,830)
|
(23,662)
|
(1,741,384)
|
Loss on foreign exchange
|
(79,976)
|
(101,642)
|
—
|
(181,618)
|
Project and fixed asset impairment
|
—
|
(700,397)
|
—
|
(700,397)
|
Other operating income
|
111,980
|
13,249
|
—
|
125,229
|
Loss from operations per reportable segment
|
(1,092,888)
|
(1,381,620)
|
(23,662)
|
(2,498,170)
|
Inter segment revenues
|
—
|
377,533
|
65,486
|
443,019
|
Depreciation charges
|
2,232
|
3,067
|
—
|
5,299
|
Additions to non-current assets
|
—
|
4,299,376
|
—
|
4,299,376
|
Reportable segment assets
|
6,377,678
|
25,798,664
|
825,669
|
33,002,011
|
Reportable segment liabilities
|
2,458,669
|
2,987,550
|
—
|
5,446,219
|
Inter segment revenues are calculated and recorded in accordance with
the underlying intra group service agreements.
A reconciliation of adjusted loss from operations per reportable segment
to loss before tax is provided as follows:
|
2013
£
|
2012
£
|
Loss from operations per reportable segment
|
(2,443,043)
|
(2,498,170)
|
Changes in fair value of contingent consideration (refer note 18)
|
46,940
|
545,439
|
Charge for share options granted
|
(171,277)
|
(321,400)
|
Toronto Stock Exchange Listing and compliance costs
|
(28,154)
|
(114,426)
|
Finance income
|
47,451
|
88,262
|
Finance costs
|
(165,138)
|
(189,186)
|
Loss for the year from continuing operations
|
(2,713,221)
|
(2,489,481)
|
6 Other operating income
Group
|
2013
£
|
2012
£
|
Project management fees
|
—
|
98,986
|
Gain on sale of property, plant and equipment
|
—
|
13,249
|
Other option fees
|
—
|
12,994
|
|
—
|
125,229
|
Other option fees in 2012 relate to non-refundable payments made for the
right to first refusal on the purchase of one of the Group's
exploration projects.
7 Operating loss
Loss from operations is stated after charging the following:
Group
|
2013
£
|
2012
£
|
Depreciation
|
4,370
|
5,299
|
Project and fixed asset impairment
|
1,033,240
|
700,397
|
Auditors' remuneration
|
|
|
- Fees payable for the audit of Parent and consolidated financial
statements
|
30,000
|
30,000
|
- Fees payable for audit related assurance services
|
7,500
|
13,603
|
- Fees payable for tax compliance
|
2,400
|
2,097
|
Operating lease charges
|
92,773
|
60,777
|
Project and fixed asset impairment costs in 2013 of £1,033,240 consist
of the impairment charge on intangible assets attributable to the El
Aguila and Falcao projects (refer note 10) of £738,103 and £310,179
respectively. A receipt of £15,042 (US$25,000) in connection with the
signing of a purchase and sale agreement for the Falcao project in
December 2013 was netted off against the impairment of that project so
that the net impact on profit or loss of the impairment of Falcao
amounted to £295,037 (see note 10 Intangible Assets). Project and fixed
asset impairment costs of in 2012 of £700,397 consist of the impairment
charge on intangible assets attributable to the Tangara project (refer
note 10) of £639,505 and the cost of an option over a licence which was
acquired and lapsed in that year of £60,892.
8 Finance income and costs
Group
|
2013
£
|
2012
£
|
Finance income:
|
47,451
|
88,262
|
- Interest income on cash and short-term bank deposits
|
|
|
Finance costs:
|
(165,138)
|
(189,186)
|
- Contingent consideration: unwinding of discount
|
|
|
Net finance costs
|
(117,687)
|
(100,924)
|
9 Taxation
Income tax expense
Group
|
2013
£
|
2012
£
|
Analysis of tax charge
|
|
|
Current tax charge
|
|
|
- UK Corporation tax charge for the year
|
—
|
—
|
- Foreign tax
|
—
|
—
|
Current tax charge for the year
|
—
|
—
|
Deferred tax charge for the year
|
—
|
—
|
Tax on profit/(loss) for the year
|
—
|
—
|
Reconciliation of current tax
Group
|
2013
£
|
2012
£
|
Loss before income tax
|
(2,713,221)
|
(2,489,481)
|
Current tax at 23.1% (2012: 28.6%)
|
(626,754)
|
(725,159)
|
Effects of:
|
|
|
Expenses not deducted for tax purposes
|
370,226
|
416,749
|
Tax losses carried forward for which no deferred income tax asset was
recognised - UK
|
207,143
|
301,371
|
Tax losses carried forward for which no deferred income tax asset was
recognised - Brazil and Peru
|
49,385
|
7,039
|
Total tax
|
—
|
—
|
No tax charge or credit arises on the loss for the year.
The weighted average applicable tax rate of 23.1% used is a combination
of the 23.25% effective standard rate of corporation tax in the UK, 34%
Brazilian corporation tax and 30% Peruvian corporation tax. During 2013
the Brazil registered subsidiaries elected to adopt the Actual Profit
system to determine income tax, as opposed to the prior year where as
during 2012, they adopted the Presumed Income method. As a result the
losses incurred during the current year are eligible for tax purposes.
Deferred income tax
An analysis of deferred tax assets and liabilities is set out below.
Group
|
2013
£
|
2012
£
|
Deferred tax assets
|
|
|
- Deferred tax asset to be recovered after more than 12 months
|
5,373,634
|
6,308,978
|
|
5,373,634
|
6,308,978
|
Deferred tax liabilities
|
|
|
- Deferred tax liability to be recovered after more than 12 months
|
(2,335,492)
|
(2,742,012)
|
|
(2,335,492)
|
(2,742,012)
|
Deferred tax asset (net)
|
3,038,142
|
3,566,966
|
The gross movement on the deferred income tax account is as follows:
Group
|
2013
£
|
2012
£
|
At 1 January
|
3,566,966
|
4,095,339
|
Exchange differences
|
(528,824)
|
(528,373)
|
At 31 December
|
3,038,142
|
3,566,966
|
The movement in deferred income tax assets and liabilities during the
year, without taking into consideration the offsetting of balances
within the same tax jurisdiction, is as follows:
Group
|
Deferred tax
liabilities
Fair value gains
£
|
Deferred tax
assets
Tax Losses
£
|
Total
£
|
At 1 January 2012
|
(3,148,185)
|
7,243,524
|
4,095,339
|
Exchange differences
|
406,173
|
(934,546)
|
(528,373)
|
At 31 December 2012
|
(2,742,012)
|
6,308,978
|
3,566,966
|
Exchange differences
|
406,520
|
(935,344)
|
(528,824)
|
At 31 December 2013
|
(2,335,492)
|
5,373,634
|
3,038,142
|
Deferred tax assets are recognised on tax losses carried forward to the
extent that the realisation of the related tax benefit through future
taxable profits is probable.
The Group has tax losses of approximately £17,750,903 (2012:
£18,479,270) in Brazil and excess management charges of approximately
£2,387,000 (2012: £2,199,000) in the UK available to carry forward
against future taxable profits. With the exception of the deferred tax
asset arising on acquisition of Araguaia Niquel Mineração Ltda
(formerly Teck Cominco Brasil S.A.) in 2011, no deferred tax asset has
been recognised in respect of tax losses because of uncertainty over
the timing of future taxable profits against which the losses may be
offset.
10 Intangible assets
Intangible assets comprise exploration and evaluation costs and
goodwill. Exploration and evaluation costs comprise acquired and
internally generated assets. Additions are net of funds received from
the Group's strategic partners under various former joint venture
agreements, amounting to £nil (2012: £1,056,131).
Group
|
Goodwill
£
|
Exploration and
evaluation costs
£
|
Total
£
|
Cost
|
|
|
|
At 1 January 2012
|
387,378
|
18,968,079
|
19,355,457
|
Additions - internally generated
|
—
|
2,921,704
|
2,921,704
|
Additions - acquired
|
—
|
1,275,000
|
1,275,000
|
Impairments
|
—
|
(639,505)
|
(639,505)
|
Exchange rate movements
|
(44,613)
|
(2,450,304)
|
(2,494,917)
|
At 31 December 2012
|
342,765
|
20,074,974
|
20,417,739
|
Additions - internally generated
|
—
|
4,241,762
|
4,241,762
|
Impairments
|
—
|
(1,048,282)
|
(1,048,282)
|
Exchange rate movements
|
(55,387)
|
(3,513,895)
|
(3,569,282)
|
Net book amount at 31 December 2013
|
287,378
|
19,754,559
|
20,041,937
|
Impairment charges in 2013 of £1,048,282 were included in profit or loss
as the intangible assets attributable to El Aguila and Falcao were
written off following suspension of exploration activities at El Aguila
and termination of the Falcao joint venture with AngloGold Ashanti plc.
Following the termination of the joint venture last year with Troy
Resources concerning the Tangara project, the Directors considered that
a full impairment was appropriate and as a result an impairment charge
to exploration and evaluation assets arose in 2012 of £639,505. The
charge was included in profit or loss.
In December 2013 the Company signed a sale and purchase agreement with
Falcao Mineradora Ltda, a Brazilian company. 25,000 US Dollars
(£15,042) was paid upon signature and offset against the £310,179
impairment charge in the year for Falcao. Further consideration of
140,000 US Dollars shall be paid to the Company in the event that the
Final Exploration Report for the Falcao project is accepted by the
Brazilian Department of Mines ('DNPM').
(a) Exploration and evaluation assets
Additions to exploration and evaluation assets are stated net of funds
received from the Group's various joint venture partners in accordance
with the terms of those agreements.
Impairment reviews for exploration and evaluation assets are carried out
either on a project by project basis or by geographical area. The
Group's exploration and evaluation projects are at various stages of
exploration and development and are therefore subject to a variety of
valuation techniques.
An operating segment-level summary of exploration and evaluation assets
is presented below.
Group
|
2013
£
|
2012
£
|
Brazil - Araguaia/Lontra/Vila Oito and Floresta
|
19,697,507
|
18,819,797
|
Brazil - Other
|
57,052
|
431,153
|
Peru - El Aguila
|
—
|
824,024
|
|
19,754,559
|
20,074,974
|
The adjacent Araguaia/Lontra/Vila Oito and Floresta exploration sites
('the Araguaia Project') comprise a resource of a sufficient size and
scale to allow the Company to create a significant single nickel
project. For this reason, at the current stage of development, these
two projects are viewed and assessed for impairment by management as a
single cash generating unit.
In August 2013 a Canadian NI 43 101 compliant Preliminary Economic
Assessment ('PEA') was published by the Company regarding the Araguaia
Project. The financial results and conclusions of the PEA clearly
indicate the economic viability of the Araguaia Project. The Directors
undertook an assessment of impairment through evaluating the results of
the PEA and judged that no impairment was required with regards to the
Araguaia Project.
Sensitivity to changes in assumptions
For the base case NPV8 of the Araguaia project of US$693 million as per
the PEA to be reduced to the book value of the Araguaia project as at
31 December 2013, the discount rate applied to the cash flow model
would need to be increased from 8% to 15%, or the assumed long-term
real nickel price of US$19,000 per tonne would need to be reduced to
approximately US$14,700 per tonne.
Other early stage exploration projects in Brazil are at an early stage
of development and no JORC/Canadian NI 43-101 or non-JORC/ Canadian NI
43-101 compliant resource estimates are available to enable value in
use calculations to be prepared. The Directors therefore undertook an
assessment of the following areas and circumstances which could
indicate impairment:
-
The Group's right to explore in an area has expired, or will expire in
the near future without renewal.
-
No further exploration or evaluation is planned or budgeted for, whether
by the Company directly or through a joint venture agreement.
-
A decision has been taken by the Board to discontinue exploration and
evaluation in an area due to the absence of a commercial level of
reserves.
-
Sufficient data exists to indicate that the book value will not be fully
recovered from future development and production.
(b) Goodwill
Goodwill arose on the acquisition of Lontra Empreendimentos e
Participações Ltda in 2011. The Directors have determined the
recoverable amount of goodwill based on the same assumptions used for
the assessment of the Lontra exploration project detailed above. As a
result of this assessment, the Directors have concluded that no
impairment charge is necessary against the carrying value of goodwill.
11 Property, plant and equipment
Group
|
Vehicles and
other field
equipment
£
|
Office
equipment
£
|
Total
£
|
Cost
|
|
|
|
At 1 January 2012
|
238,378
|
3,254
|
241,632
|
Additions
|
95,293
|
7,379
|
102,672
|
Disposals
|
(31,377)
|
—
|
(31,377)
|
Foreign exchange movements
|
(30,412)
|
—
|
(30,412)
|
At 31 December 2012
|
271,882
|
10,633
|
282,515
|
Additions
|
94,574
|
5,463
|
100,037
|
Disposals
|
(165,590)
|
—
|
(165,590)
|
Foreign exchange movements
|
(39,796)
|
(921)
|
(40,717)
|
At 31 December 2013
|
161,070
|
15,175
|
176,245
|
Accumulated depreciation
|
|
|
|
At 1 January 2012
|
101,111
|
1,257
|
102,368
|
Charge for the year
|
78,571
|
964
|
79,535
|
Disposals
|
(27,953)
|
—
|
(27,953)
|
Foreign exchange movements
|
(16,999)
|
—
|
(16,999)
|
At 31 December 2012
|
134,730
|
2,221
|
136,951
|
Charge for the year
|
81,489
|
2,990
|
84,479
|
Disposals
|
(132,555)
|
—
|
(132,555)
|
Foreign exchange movements
|
(19,903)
|
(178)
|
(20,081)
|
At 31 December 2013
|
63,761
|
5,033
|
68,794
|
Net book amount as at 31 December 2013
|
97,309
|
10,142
|
107,451
|
Net book amount as at 31 December 2012
|
137,152
|
8,412
|
145,564
|
Depreciation charges of £80,109 (2012: £73,664) have been capitalised
and included within intangible exploration and evaluation asset
additions for the year. Charges of £Nil (2012: £572) have also been
offset against the Anglo Gold spend on Falcao included within 'Trade
and other payables'. The remaining depreciation expense for the year
ended 31 December 2013 of £4,370 (2012: £5,299) has been charged in
'administrative expenses' under 'Depreciation'.
Vehicles and other field equipment include the following amounts used to
perform exploration activities:
|
2013
£
|
2012
£
|
Cost
|
161,070
|
267,844
|
Accumulated depreciation
|
(63,761)
|
(130,057)
|
Net book amount
|
97,309
|
137,787
|
Company
|
|
Field
equipment
£
|
Office
equipment
£
|
Total
£
|
Cost
|
|
|
|
|
At 1 January 2012
|
|
4,208
|
3,254
|
7,462
|
Additions
|
|
—
|
1,599
|
1,599
|
Disposals
|
|
—
|
—
|
—
|
At 31 December 2012
|
|
4,208
|
4,853
|
9,061
|
Additions
|
|
—
|
2,550
|
2,550
|
Disposals
|
|
—
|
—
|
—
|
At 31 December 2013
|
|
4,208
|
7,403
|
11,611
|
Accumulated depreciation
|
|
|
|
|
At 1 January 2012
|
|
116
|
1,257
|
1,373
|
Charge for the year
|
|
1,389
|
844
|
2,223
|
Disposals
|
|
—
|
—
|
—
|
At 31 December 2012
|
|
1,505
|
2,101
|
3,606
|
Charge for the year
|
|
1,389
|
1,479
|
2,868
|
Disposals
|
|
—
|
—
|
—
|
At 31 December 2013
|
|
2,894
|
3,580
|
6,474
|
Net book amount as at 31 December 2013
|
|
1,314
|
3,823
|
5,137
|
Net book amount as at 31 December 2012
|
|
2,703
|
2,752
|
5,455
|
12 Trade and other receivables
|
Group
|
|
Company
|
|
2013
£
|
2012
£
|
|
2013
£
|
2012
£
|
Other receivables
|
62,127
|
44,842
|
|
12,035
|
25,742
|
Current portion
|
62,127
|
44,842
|
|
12,035
|
25,742
|
Trade and other receivables are all due within one year. The fair value
of all receivables is the same as their carrying values stated above.
The carrying amounts of the Group and Company's trade and other
receivables are denominated in the following currencies:
|
Group
|
|
Company
|
|
2013
£
|
2012
£
|
|
2013
£
|
2012
£
|
Brazilian Real
|
12,898
|
19,030
|
|
—
|
—
|
UK Pound
|
49,229
|
25,812
|
|
12,035
|
25,742
|
US Dollar
|
—
|
—
|
|
—
|
—
|
|
62,127
|
44,842
|
|
12,035
|
25,742
|
As of 31 December 2013 the Group's and Company's other receivables of
£62,127 (2012: £44,842) were fully performing.
The maximum exposure to credit risk at the reporting date is the
carrying value of each class of receivable mentioned above. The Group
and Company do not hold any collateral as security.
13 Other financial assets
|
Group
|
|
Company
|
|
2013
£
|
2012
£
|
|
2013
£
|
2012
£
|
Available for sale investments
|
|
|
|
|
|
Quoted equity shares
|
22,729
|
197,714
|
|
—
|
—
|
Total Current
|
22,729
|
197,714
|
|
—
|
—
|
The Group has investments in listed equity shares. The fair of these
equity shares is determined by reference to published price quotations
in an active market. The Group purchased listed equity shares of £nil
(2012: £253,005). Total losses recognised in other comprehensive income
and fully attributable to Level 1 financial assets were £174,985 (2012:
£55,291).
Fair value hierarchy
The Group uses the following hierarchy for determining and disclosing
the fair value of financial instruments by valuation technique:
Level 1:
|
quoted (unadjusted) prices in active markets for identical assets.
|
Level 2:
|
other techniques for which all inputs that have a significant effect on
the recorded fair value are observable, either directly or indirectly.
|
Level 3:
|
techniques that use inputs that have a significant effect on the
recorded fair value that are not based on observable market data.
|
As at 31 December 2013 all other financial assets carried at fair value
in the Statement of Financial Position are categorised under Level 1
and denominated in Canadian Dollars.
14 Cash and cash equivalents
|
Group
|
|
Company
|
|
2013
£
|
2012
£
|
|
2013
£
|
2012
£
|
Cash at bank and on hand
|
1,602,206
|
2,589,759
|
|
1,266,694
|
1,857,571
|
Short-term deposits
|
1,489,674
|
3,297,415
|
|
1,489,674
|
3,297,415
|
|
3,091,880
|
5,887,174
|
|
2,756,368
|
5,154,986
|
The Group's cash at bank and short-term deposits are held with
institutions with the following credit ratings (Fitch):
|
Group
|
|
Company
|
|
2013
£
|
2012
£
|
|
2013
£
|
2012
£
|
A
|
1,490,199
|
3,240,254
|
|
1,266,694
|
2,591,228
|
BBB-
|
1,601,681
|
2,646,920
|
|
1,489,674
|
2,563,758
|
|
3,091,880
|
5,887,174
|
|
2,756,368
|
5,154,986
|
15 Share capital
Group and Company
|
2013
Number
|
2013
£
|
2012
Number
|
2012
£
|
Issued and fully paid
|
|
|
|
|
Ordinary shares of 1p each
|
|
|
|
|
At 1 January
|
360,046,170
|
3,600,462
|
279,559,980
|
2,795,600
|
Issue of ordinary shares
|
41,093,327
|
410,933
|
80,486,190
|
804,862
|
At 31 December
|
401,139,497
|
4,011,395
|
360,046,170
|
3,600,462
|
On 7 February 2012, 8,500,000 shares were issued to Lara Exploration Ltd
in consideration for the Acquisition of the Vila Oito and Floresta
licences, both located in the vicinity of Araguaia.
On 13 June 2012, 71,986,190 ordinary shares of 1p each were issued fully
paid for cash consideration at 7.25 pence per share to raise £5.2
million before expenses.
On 11 June 2013, 41,093,327 ordinary shares of 1p each were issued fully
paid for cash consideration at 7.5 pence per share to raise £3.1
million before expenses.
16 Share premium
Group and Company
|
2013
£
|
2012
£
|
At 1 January
|
24,384,527
|
18,772,797
|
Premium arising on issue of ordinary shares
|
2,671,066
|
5,710,387
|
Issue costs
|
(57,595)
|
(98,657)
|
At 31 December
|
26,997,998
|
24,384,527
|
17 Share-based payments
The Directors have discretion to grant options to the Group employees to
subscribe for Ordinary shares up to a maximum of 10% of the Company's
issued share capital. The options are exercisable two years from the
date of grant and lapse on the tenth anniversary of the date of grant
or the holder ceasing to be an employee of the Group. Neither the
Company nor the Group has any legal or constructive obligation to
settle or repurchase the options in cash.
Movements on number of share options and their related exercise price
are as follows:
|
Number of
options
2013
£
|
Weighted
average
exercise
price
2013
£
|
Number of
options
2012
£
|
Weighted
average
exercise
price
2012
£
|
Outstanding at 1 January
|
26,730,000
|
0.138
|
27,380,000
|
0.147
|
Forfeited
|
(870,000)
|
0.154
|
(4,150,000)
|
0.154
|
Granted
|
—
|
—
|
3,500,000
|
0.154
|
Outstanding at 31 December
|
25,860,000
|
0.148
|
26,730,000
|
0.147
|
Exercisable at 31 December
|
22,360,000
|
0.147
|
11,900,000
|
0.138
|
The options outstanding at 31 December 2013 had a weighted average
remaining contractual life of 7.55 years (2012: 8.38 years).
No options were granted in 2013.
The fair value of the share options was determined using the
Black-Scholes valuation model.
The parameters used are detailed below.
Group and Company
|
2012
options
|
2011
options
|
2010
options
|
2009
options
|
Date of grant or reissue
|
24/09/2012
|
21/09/2011
|
17/11/2010
|
25/09/2009
|
Weighted average share price
|
9.43 pence
|
13.94 pence
|
14.0 pence
|
8.00 pence
|
Weighted average exercise price
|
15.40 pence
|
15.40 pence
|
15.50 pence
|
9.5 pence
|
Expiry date
|
24/09/2022
|
21/09/2021
|
17/11/2020
|
01/09/2019
|
Options granted
|
3,500,000
|
14,380,000
|
10,100,000
|
4,050,000
|
Volatility
|
14.2%
|
17%
|
17%
|
50%
|
Dividend yield
|
Nil
|
Nil
|
Nil
|
Nil
|
Option life
|
10 years
|
10 years
|
10 years
|
10 years
|
Annual risk free interest rate
|
2.50%
|
2.50%
|
2.50%
|
3.3%
|
Forfeiture discount
|
—
|
—
|
—
|
—
|
Marketability discount
|
5%
|
5%
|
5%
|
5%
|
Total fair value of options granted
|
£29,315
|
£404,832
|
£313,228
|
£107,932
|
The expected volatility is based on historical volatility for the six
months prior to the date of grant. The risk free rate of return is
based on zero yield government bonds for a term consistent with the
option life.
The range of option exercise prices is as follows:
Range of exercise prices
(£)
|
2013
Weighted
average
exercise
price
(£)
|
2013
Number of
shares
|
2013
Weighted
average
remaining
life
expected
(years)
|
2013
Weighted
average
remaining
life
contracted
(years)
|
2012
Weighted
average
exercise
price
(£)
|
2012
Number of
shares
|
2012
Weighted
average
remaining
life
expected
(years)
|
2012
Weighted
average
remaining
life
contracted
(years)
|
0-0.1
|
0.095
|
2,850,000
|
4.0
|
6.0
|
0.095
|
3,400,000
|
4.9
|
6.9
|
0.1-0.2
|
0.133
|
23,010,000
|
6.6
|
7.6
|
0.154
|
23,330,000
|
6.5
|
8.3
|
18 Other reserves
|
Available for sale
|
Merger
|
Translation
|
Other
|
|
|
reserve
|
reserve
|
reserve
|
reserve
|
Total
|
Group
|
£
|
£
|
£
|
£
|
£
|
At 1 January 2012
|
—
|
10,888,760
|
(1,307,376)
|
(1,048,100)
|
8,533,284
|
Other comprehensive income
|
(55,291)
|
—
|
—
|
—
|
(55,291)
|
Currency translation differences
|
—
|
—
|
(3,039,094)
|
—
|
(3,039,094)
|
At 31 December 2012
|
(55,291)
|
10,888,760
|
(4,346,470)
|
(1,048,100)
|
5,438,899
|
Other comprehensive income
|
(174,985)
|
—
|
—
|
—
|
(174,985)
|
Currency translation differences
|
—
|
—
|
(4,124,364)
|
—
|
(4,124,364)
|
At 31 December 2013
|
(230,276)
|
10,888,760
|
(8,470,834)
|
(1,048,100)
|
1,139,550
|
Company
|
Merger
reserve
£
|
Total
£
|
At 1 January 2012 and 31 December 2012
|
10,888,760
|
10,888,760
|
At 31 December 2013
|
10,888,760
|
10,888,760
|
The other reserve as at 31 December 2013 arose on consolidation as a
result of merger accounting for the acquisition of the entire issued
share capital of Horizonte Exploration Limited during 2006 and
represents the difference between the value of the share capital and
premium issued for the acquisition and that of the acquired share
capital and premium of Horizonte Exploration Limited.
Currency translation differences relate to the translation of Group
entities that have a functional currency different from the
presentation currency (refer note 2.8(c)).
19 Trade and other payables
|
Group
|
|
Company
|
|
2013
|
2012
|
|
2013
|
2012
|
|
£
|
£
|
|
£
|
£
|
Non-current
|
|
|
|
|
|
Contingent consideration
|
2,477,310
|
2,359,112
|
|
2,477,310
|
2,359,112
|
|
2,477,310
|
2,359,112
|
|
2,477,310
|
2,359,112
|
Current
|
|
|
|
|
|
Trade and other payables
|
11,632
|
94,841
|
|
6,203
|
120,167
|
Amounts due to related parties (refer note 22)
|
—
|
—
|
|
413,930
|
458,610
|
Social security and other taxes
|
28,322
|
43,087
|
|
13,000
|
12,899
|
Accrued expenses
|
108,099
|
207,167
|
|
42,100
|
62,881
|
|
148,053
|
345,095
|
|
475,233
|
654,557
|
Total trade and other payables
|
2,625,363
|
2,704,207
|
|
2,952,543
|
3,013,669
|
Trade and other payables includes £nil (2012: £48,704) of cash advanced
by AngloGold Ashanti Holdings plc under the Exploration Alliance and
the Falcão Joint Venture.
Trade and other payables include amounts due of £72,694 (2012: £71,604)
in relation to exploration and evaluation activities.
Contingent consideration
The fair value of the potential contingent consideration arrangement was
estimated at the acquisition date according to when future taxable
profits against which the tax losses may be utilised were anticipated
to arise. The fair value estimates were based on the current rates of
tax on profits in Brazil of 34%. A discount factor of 7.0% was applied
to the future dates at which the tax losses will be utilised and
consideration paid.
As at 31 December 2013, there was a finance expense of £165,138 (2012:
£189,186) recognised in finance costs within the statement of
comprehensive income in respect of the contingent consideration
arrangement, as the discount applied to the contingent consideration at
the date of acquisition was unwound.
At 31 December 2012, Management reassessed the fair value of the
potential contingent consideration in accordance with the Group
accounting policy. The cash flow model used to estimate the contingent
consideration was adjusted, to take into account changed assumptions in
the timing of cash flows as derived from the Preliminary Economic
Assessment as published by the Company in August 2012. The key
assumptions underlying the cash flow model are unchanged as at 31
December 2013. The change in the fair value of contingent consideration
has generated a credit to profit or loss of £46,940 for the year ended
31 December 2013 due to exchange rate changes in the functional
currency in which the liability is payable. During 2012, the change in
fair value of £545,439 was due to exchange rate changes as well as
Management's assumptions.
20 Dividends
No dividend has been declared or paid by the Company during the year
ended 31 December 2013 (2012: nil).
21 Earnings per share
(a) Basic
The basic loss per share of 0.709p (2012 loss per share: 0.762p) is
calculated by dividing the loss attributable to equity holders of the
Company by the weighted average number of ordinary shares in issue
during the year.
|
2013
|
2012
|
Group
|
£
|
£
|
Loss attributable to equity holders of the Company
|
(2,713,221)
|
(2,489,481)
|
Weighted average number of ordinary shares in issue
|
382,737,815
|
326,725,469
|
(b) Diluted
The basic and diluted earnings per share for the years ended 31 December
2013 and 31 December 2012 are the same as the effect of the exercise of
share options would be anti-dilutive.
Details of share options that could potentially dilute earnings per
share in future periods are set out in note 17.
22 Related party transactions
The following transactions took place with subsidiaries in the year:
A fee totalling £183,241 (2012: £157,795) was charged to HM do Brazil
Ltda, £65,740 (2012: £65,486) to Minera El Aguila SAC and £368,344
(2012: £219,738) to Araguaia Niquel Mineração Ltda and £nil (2012:
£nil) to Brazil Mineral Holdings Ltd by Horizonte Minerals Plc in
respect of consultancy services provided and funding costs. The balance
due from HM do Brasil Ltda of £554,372, from Minera El Aguila SAC of
£1,283,978, from HM Brazil (IOM) Ltd of £2,000,000, to PMA Geoquimica
Ltda of £111,016 and from Brazil Mineral Holdings Ltd of £536,867 were
impaired through profit or loss during 2013. The balance due from
Mineira Cotahusi SAC of £17,730 was written off to profit or loss
during 2012.
Amounts totalling £3,828,388 (2012: £4,031,256) were lent to HM Brazil
(IOM) Ltd, HM do Brasil Ltda, Araguaia Niquel Mineraçao Ltda, PMA
Geoquimica Ltda, Minera El Aguila SAC and Minera El Cotahuasi SAC to
finance exploration work during 2013, by Horizonte Minerals Plc.
Interest is charged at an annual rate of 4% on balances outstanding
during the year.
Balances with subsidiaries at the year end were:
|
2013
|
2013
|
2012
|
2012
|
|
Assets
|
Liabilities
|
Assets
|
Liabilities
|
Company
|
£
|
£
|
£
|
£
|
HM do Brasil Ltda
|
—
|
—
|
160,460
|
—
|
PMA Geoquimica Ltda
|
—
|
—
|
—
|
44,680
|
Minera El Aguila SAC
|
—
|
—
|
1,325,769
|
—
|
Minera El Cotahuasi SAC
|
—
|
—
|
—
|
—
|
HM Brazil (IOM) Ltd
|
4,078,148
|
—
|
5,944,359
|
—
|
Horizonte Nickel (IOM) Ltd
|
25,158,763
|
—
|
21,150,454
|
—
|
Araguaia Niquel Mineração Ltda
|
2,687,382
|
—
|
2,049,946
|
—
|
Brazil Mineral Holdings Ltd
|
—
|
—
|
124,327
|
—
|
Horizonte Minerals (IOM) Ltd
|
253,004
|
—
|
253,004
|
—
|
Horizonte Exploration Ltd
|
—
|
413,930
|
—
|
413,930
|
Total
|
32,177,297
|
413,930
|
31,008,319
|
458,610
|
All Group transactions were eliminated on consolidation.
On 11 June 2013, 41,093,327 ordinary shares of 1p each were issued fully
paid for cash consideration at 7.5 pence per share to raise £3.1
million before expenses. As part of this private placement, Teck
Resources Limited subscribed for 20,000,000 shares representing 48.7
percent of the placing and Henderson Global Investors subscribed for
12,133,329 shares, representing 29.5 percent of the placing. By reason
of their existing shareholdings in the Company, the participation of
Teck Resources Limited and Henderson Global Investors in the private
placement each constitute a related party transaction under AIM Rule 13
of the AIM Rules for Companies.
On 27 June 2013 the Company signed an agreement for an £8 million Equity
Financing Facility ('EFF') with Darwin Strategic Limited ('Darwin'), a
majority owned subsidiary of Henderson Global Investors' Volantis
Capital. The EFF agreement with Darwin provides Horizonte Minerals with
an equity line facility which, subject to certain conditions and
restrictions, can be drawn on any time over 36 months. The floor
subscription price in relation to each draw down is set at the
discretion of the Company. Horizonte Minerals is under no obligation to
make a draw down and there are no penalty fees if the Company does not
use the facility.
On 13 June 2012, 71,186,190 ordinary shares of 1p each were issued fully
paid for cash consideration at 7.25 pence per share to raise £5.2
million before expenses. As part of this private placement, Teck
Resources Limited subscribed for 27,293,747 shares representing 37.9
percent of the placing.
23 Ultimate controlling party
The Directors believe there to be no ultimate controlling party.
24 Expenses by nature
|
2013
|
2012
|
Group
|
£
|
£
|
Staff costs
|
228,505
|
696,860
|
Indemnity for loss of office
|
77,847
|
55,709
|
Transaction costs (excluding staff costs)
|
—
|
118,816
|
Exploration related costs expensed (excluding staff costs)
|
188,438
|
243,399
|
Share-based payments
|
171,277
|
321,400
|
Depreciation (note 11)
|
4,370
|
5,299
|
Loss on foreign exchange
|
149,199
|
181,618
|
Change in fair value of contingent consideration
|
(46,940)
|
(545,439)
|
Project impairments
|
1,033,240
|
700,397
|
Toronto Stock Exchange listing and compliance costs
|
28,154
|
114,426
|
Other expenses
|
761,444
|
621,301
|
Total operating expenses
|
2,595,534
|
2,513,786
|
25 Directors' remuneration
|
|
|
Discretionary
|
|
|
Basic salary
|
Other
|
performance
|
|
|
and fees
|
benefits
|
related bonus
|
Total
|
Group 2013
|
£
|
£
|
£
|
£
|
Non-Executive Directors
|
|
|
|
|
Alexander Christopher
|
—
|
—
|
—
|
—
|
David Hall
|
47,870
|
—
|
—
|
47,870
|
William Fisher
|
24,000
|
—
|
—
|
24,000
|
Allan Walker
|
24,000
|
—
|
—
|
24,000
|
Owen Bavinton
|
24,000
|
—
|
—
|
24,000
|
Executive Directors
|
|
|
|
|
Jeremy Martin
|
146,000
|
45,754
|
—
|
191,754
|
|
265,870
|
45,754
|
—
|
311,624
|
|
|
|
Discretionary
|
|
|
Basic salary
|
Other
|
performance
|
|
|
and fees
|
benefits
|
related bonus
|
Total
|
Group 2012
|
£
|
£
|
£
|
£
|
Non-Executive Directors
|
|
|
|
|
Alexander Christopher
|
—
|
—
|
—
|
—
|
David Hall
|
71,454
|
—
|
17,500
|
88,954
|
William Fisher
|
24,000
|
—
|
—
|
24,000
|
Allan Walker
|
23,000
|
—
|
—
|
23,000
|
Owen Bavinton
|
23,011
|
—
|
—
|
23,011
|
Executive Directors
|
|
|
|
|
Jeremy Martin
|
145,625
|
38,827
|
40,000
|
224,452
|
|
287,090
|
38,827
|
57,500
|
383,417
|
The Company does not operate a pension scheme. Included in other
benefits for the year of £45,754 (2012: £38,827) are contributions to a
Defined Contribution pension plan held by Mr Jeremy Martin of £44,313
(2012: £37,561).
26 Employee benefit expense (including directors)
|
2013
|
2012
|
Group
|
£
|
£
|
Wages and salaries
|
999,956
|
1,204,957
|
Social security costs
|
286,990
|
299,627
|
Indemnity for loss of office
|
77,847
|
55,709
|
Share options granted to Directors and employees (note 17)
|
171,277
|
321,400
|
|
1,536,070
|
1,881,693
|
Average number of employees including Directors
|
43
|
53
|
Employee benefit expenses includes £1,058,441 (2012: £614,497) of costs
capitalised and included within intangible non-current assets. In 2013
no employee benefit expenses have been reimbursed by joint venture
partners (2012: £185,678).
Share options granted include costs of £101,918 (2012: £234,499)
relating to Directors.
27 Investments
|
2013
|
2012
|
Company
|
£
|
£
|
Shares in Group undertakings
|
2,348,042
|
2,348,044
|
Loans to Group undertakings
|
32,177,297
|
31,008,319
|
|
34,525,339
|
33,356,363
|
Investments in Group undertakings are stated at cost.
On 23 March 2006 the Company acquired the entire issued share capital of
Horizonte Exploration Limited by means of a share for share exchange;
the consideration for the acquisition was 21,841,000 ordinary shares of
1 penny each, issued at a premium of 9 pence per share. The difference
between the total consideration and the assets acquired has been
credited to other reserves.
28 Commitments
Operating lease commitments
The Group leases office premises under cancellable and non-cancellable
operating lease agreements. The cancellable lease terms are up to two
years and are renewable at the end of the lease period at market rate.
The leases can be cancelled by payment of up to three months rental as
a cancellation fee. The lease payments charged to profit or loss during
the year are disclosed in note 7.
The future aggregate minimum lease payments under non-cancellable
operating leases are as follows:
|
2013
|
2012
|
Group
|
£
|
£
|
Not later than one year
|
9,849
|
24,669
|
Later than one year and no later than five years
|
—
|
—
|
Total
|
9,849
|
24,669
|
Capital Commitments
Capital expenditure contracted for at the end of the reporting period
but not yet incurred is as follows:
|
2013
|
2012
|
Group
|
£
|
£
|
Intangible assets
|
421,051
|
847,006
|
Capital commitments relate to contractual commitments for metallurgical,
economic and environmental evaluations by third parties. Once incurred
these costs will be capitalised as intangible exploration asset
additions.
Other Commitments
On 12 January 2012 the Company signed an option agreement with Anglo
Pacific Group plc ('Anglo Pacific') for a future Net Smelter Royalty.
If Anglo chooses to exercise the option, which is exercisable upon
completion of a Pre-Feasibility Study on the site, it will pay
Horizonte US$12.5 million and shall receive a NSR. The NSR will be at a
rate of 1.5% of nickel revenue produced up to 30,000 tonnes per annum,
reduced by 0.02% for every 1,000 tonnes per annum above this rate. The
rate will be fixed at a minimum rate of 1.1% for production of 50,000
tonnes per annum and above.
29 Contingencies
The Group has received a claim from various trade union organisations in
Brazil regarding outstanding membership fees due in relation to various
subsidiaries within the Group. Some of these claims relate to periods
prior to the acquisition of the relevant subsidiary and would be
covered by warrantees granted by the previous owners at the date of
sale. The Directors are confident that no amounts are due in relation
to these proposed membership fees and that the claim will be
unsuccessful. As a result, no provision has been made in the financial
statements for the year ended 31 December 2013 for amounts claimed.
Should the claim be successful the maximum amount payable in relation
to fees not subject to the warranty agreement would be approximately
£50,000.
In 2013 the Group also received an infraction notice from the Brazilian
Environmental Agency's (IBAMA) district office in Conceição do Araguaia
in connection with carrying out drilling activities in an alleged legal
reserve in 2011. There is however no official or other evidence of the
past or present existence of the said legal reserve. The Group strongly
believes that it operated with all necessary permits and has initiated
legal proceedings to overturn the infraction notice and its associated
fine of approximately £33,000.
30 Parent Company Statement of Comprehensive Income
As permitted by section 408 of the Companies Act 2006, the statement of
comprehensive income of the Parent Company is not presented as part of
these Financial Statements. The Parent Company's loss for the year was
£4,378,222 (2012: £879,334 loss).
31 Events after the reporting date
No significant events have occurred since the reporting date.
CAUTIONARY STATEMENT REGARDING FORWARD LOOKING INFORMATION
Except for statements of historical fact relating to the Company,
certain information contained in this press release constitutes
"forward-looking information" under Canadian securities legislation.
Forward-looking information includes, but is not limited to, statements
with respect to the potential of the Company's current or future
property mineral projects; the success of exploration and mining
activities; cost and timing of future exploration, production and
development; the estimation of mineral resources and reserves and the
ability of the Company to achieve its goals in respect of growing its
mineral resources; and the realization of mineral resource and reserve
estimates. Generally, forward-looking information can be identified by
the use of forward-looking terminology such as "plans", "expects" or
"does not expect", "is expected", "budget", "scheduled", "estimates",
"forecasts", "intends", "anticipates" or "does not anticipate", or
"believes", or variations of such words and phrases or statements that
certain actions, events or results "may", "could", "would", "might" or
"will be taken", "occur" or "be achieved". Forward-looking information
is based on the reasonable assumptions, estimates, analysis and
opinions of management made in light of its experience and its
perception of trends, current conditions and expected developments, as
well as other factors that management believes to be relevant and
reasonable in the circumstances at the date that such statements are
made, and are inherently subject to known and unknown risks,
uncertainties and other factors that may cause the actual results,
level of activity, performance or achievements of the Company to be
materially different from those expressed or implied by such
forward-looking information, including but not limited to risks related
to: exploration and mining risks, competition from competitors with
greater capital; the Company's lack of experience with respect to
development-stage mining operations; fluctuations in metal prices;
uninsured risks; environmental and other regulatory requirements;
exploration, mining and other licences; the Company's future payment
obligations; potential disputes with respect to the Company's title to,
and the area of, its mining concessions; the Company's dependence on
its ability to obtain sufficient financing in the future; the Company's
dependence on its relationships with third parties; the Company's joint
ventures; the potential of currency fluctuations and political or
economic instability in countries in which the Company operates;
currency exchange fluctuations; the Company's ability to manage its
growth effectively; the trading market for the ordinary shares of the
Company; uncertainty with respect to the Company's plans to continue to
develop its operations and new projects; the Company's dependence on
key personnel; possible conflicts of interest of directors and officers
of the Company, and various risks associated with the legal and
regulatory framework within which the Company operates.
Although management of the Company has attempted to identify important
factors that could cause actual results to differ materially from those
contained in forward-looking information, there may be other factors
that cause results not to be as anticipated, estimated or intended.
There can be no assurance that such statements will prove to be
accurate, as actual results and future events could differ materially
from those anticipated in such statements. Accordingly, readers should
not place undue reliance on forward-looking information. The Company
does not undertake to update any forward-looking information, except in
accordance with applicable securities laws.
SOURCE Horizonte Minerals plc