LONDON, UNITED KINGDOM--(Marketwired - March 17, 2017) - Horizonte Minerals Plc (AIM:HZM)(TSX:HZM)
('Horizonte' or 'the Company'), the nickel development company focused in Brazil, announces its final results for the year ended
31 December 2016.
Highlights
- Publication of PFS on Araguaia Nickel Project which demonstrated robust economics
- Post tax NPV8 of US$581 million at a nickel price of US$14,000/t and an NPV8 of US$328 million at US$12,000/t Ni
- Post tax IRR of 26.4% at US$14,000/t and 19.3% at US$12,000/t Ni
- High grade ore with average nickel grade of 1.96% for the first 10 years of production
- Project on the lower range of the global cost curve with C1 cash costs of US$3.15/Ib Ni (US$6,948/t Ni)
- £9 million fundraise, including key strategic institutions, completed in December 2016 to finance the Araguaia Feasibility
Study (FS) - cash of £9.3 million as at year end
- Strong balance sheet with net assets of £37 million
- Future demand for nickel looks robust with predicted growth running between 2% and 4% this year
- Feasibility Study underway with planned completion end of 2017
Chairman's Statement
2016 was a significant year for Horizonte which saw us achieve numerous major milestones at our Araguaia Nickel Project in
Brazil. These include the delivery of a Pre-Feasibility Study ('PFS'), the receipt of our Preliminary Environmental Licence,
and raising the funds to deliver a Feasibility Study in 2017. We are now focussed on taking this project up the value curve,
through the Feasibility Study process and into development as one of the lower cost ferronickel operations in the market,
benefitting from its high grade resource and low capital intensity.
Our updated PFS demonstrates that the enlarged Araguaia Project is one of the largest and highest grade undeveloped nickel
saprolite resources globally. It will generate US$1.3 billion in free cash flow over the Life of Mine ('LOM') considering an
estimation of US$12,000/t long term. Having combined Glencore's adjacent nickel project with our own Araguaia project in a
low-cost acquisition which was completed in 2016, the new compelling economics highlight a post-tax NPV of U$328 million and IRR
of 19% based on a long-term nickel price of US$12,000/t. Using the bank's consensus of a mid-term nickel price of
US$14,000/t, the NPV increases to US$581 million with an IRR of 26.4% showing the significant gearing that is available with any
future increase in nickel prices.
Once developed, Araguaia, is expected to produce around 14,500 tonnes of nickel per year, with a resource that is now a Tier 1
world class asset in terms of size and grade. The value is demonstrated in this updated PFS which now shows an average grade
for the first 10 years of mining of 1.96% nickel, and the life of mine grade over 28 years averaging 1.77% nickel. This
places the project firmly in the upper quartile of the global grade curve for this type of deposit.
Most significantly the PFS also demonstrates that Araguaia is cash flow positive at today's nickel prices, which puts the
project within a limited group of global assets that are considered viable in the current low nickel price environment. The
start of 2016 saw nickel prices at a 13 year low of US$7,750/t, however after base metals rallied in the last quarter of 2016,
many banks and analysts raised their 2017 forecasts for nickel. There are multiple reasons for this including the United
States of America's ambitious infrastructure spending plans which are expected to boost global metal demand growth over the
coming years, coupled with the closing of multiple nickel mines which will slow market growth and curtail supply.
Morgan Stanley and Credit Suisse both picked nickel as its number one metal for 2016. Wood Mackenzie have cited that the
"optimistically resurgent Chinese stainless market" will be the contributing factor to the predicted favourable pricing
fundamentals and Macquarie has stated that nickel use in batteries could more than double over the next 10 years. Now is the
time to be developing the next generation projects at the low-price range to create maximum value. We are targeting nickel
production from Araguaia by 2019 which aligns the project ideally with this predicted increase in nickel price over the mid-term,
offering leveraged exposure to one of the world's next major nickel mines at the optimum time.
Another testament to the quality of Araguaia, is that we successfully raised £9 million in November 2016 from institutions in
both the UK and Canada to fund the Feasibility Study. As a result, we were delighted to welcome two new significant
institutional investors, JP Morgan and Hargreave Hale, to our already strong shareholder register which also includes Teck,
Henderson, City Financial, Richard Griffiths. I believe that the calibre of this group of cornerstone investors is a strong
endorsement for a company of our size.
Eager to move forward we appointed a Feasibility Study Manager in January 2017. With a high calibre nickel development
team (ex Falconbridge; Xstrata; Anglo American) already in place we believe Wagner Oliveira will be a valuable addition to our
team, bringing considerable experience in the nickel arena having worked with Anglo American plc on its Barro Alto ferronickel
operation and prior to this at the Codemin ferronickel plant in Brazil. We have already finalised the selection of the
engineering groups to undertake the Feasibility Study with a view to delivering the full report by the end of 2017. Having
been granted the Preliminary Licence in 2016 which demonstrated the Pará State government's confidence in the credibility and
viability of Araguaia, we have been able to progress the work towards the Installation Licence which we will apply for this year,
the receipt of which will permit the construction of the project.
Conclusion
As a team, I am proud that we have taken Araguaia from a grassroots discovery up the development curve to where we stand
today, about to embark on a Feasibility Study for one of the largest nickel projects in the world. Despite difficult nickel
pricing, 2016 was a year of growth for Horizonte and the year ahead will see us transform into a near-term nickel producer,
taking advantage of the forecasted rise in the price of the metal. I would like to take this opportunity to thank the
Horizonte Board and Management team for their continued hard work towards the development of your company and I look forward to
the year ahead with great confidence.
David J Hall, Chairman
16 March 2017
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF HORIZONTE MINERALS PLC
We have audited the financial statements of Horizonte Minerals plc for the year ended 31 December 2016 which comprise the
consolidated statements of comprehensive income, the consolidated and company statements of financial position, the consolidated
and company statements of changes in equity, the consolidated and company statements of cash flows and the related
notes. The financial reporting framework that has been applied in their preparation is applicable law and International
Financial Reporting Standards (IFRSs) as adopted by the European Union.
This report is made solely to the company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act
2006. Our audit work has been undertaken so that we might state to the company's members those matters we are required to
state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or
assume responsibility to anyone other than the company and the company's members as a body, for our audit work, for this report,
or for the opinions we have formed.
Respective responsibilities of directors and auditors
As explained more fully in the statement of directors' responsibilities, the directors are responsible for the preparation of
the financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit and
express an opinion on the financial statements in accordance with applicable law and International Standards on Auditing (UK and
Ireland). Those standards require us to comply with the Financial Reporting Council's (FRC's) Ethical Standards for
Auditors.
Scope of the audit of the financial statements
A description of the scope of an audit of financial statements is provided on the FRC's website at www.frc.org.uk/auditscopeukprivate.
Opinion on financial statements
In our opinion the financial statements:
- give a true and fair view of the state of Group and Company's affairs as at 31 December 2016 and of the Group's loss for
the year then ended;
- have been properly prepared in accordance with IFRSs as adopted by the European Union; and
- have been prepared in accordance with the requirements of the Companies Act 2006.
Opinion on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of the audit:
- the information given in the strategic report and directors' report for the financial year for which the financial
statements are prepared is consistent with the financial statements; and
- the strategic report and directors' report have been prepared in accordance with applicable legal requirements.
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the group and the parent company and its environment obtained in the course
of the audit, we have not identified material misstatements in the strategic report or the directors' report.
We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if, in
our opinion:
- adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not
visited by us; or
- the financial statements are not in agreement with the accounting records and returns; or
- certain disclosures of directors' remuneration specified by law are not made; or
- we have not received all the information and explanations we require for our audit.
Stuart Barnsdall (senior statutory auditor)
For and on behalf of BDO LLP, statutory auditor
London, UK
Date: 16 March 2017
BDO LLP is a limited liability partnership registered in England and Wales (with registered number OC305127).
INDEPENDENT AUDITOR'S REPORT IN RESPECT OF CANADIAN NATIONAL INSTRUMENT 52-107 (ACCEPTABLE ACCOUNTING PRINCIPALS AND
AUDITING STANDARDS)
To the Shareholders of Horizonte Minerals PLC
We have audited the accompanying financial statements of Horizonte Minerals PLC for the year ended 31 December 2016 which
comprise the consolidated statement of comprehensive income, the consolidated and company statements of financial position, the
consolidated and company statements of changes in equity, the consolidated and company statements of cash flows for the year then
ended, and a summary of significant accounting policies and other explanatory information. The financial reporting framework that
has been applied in the preparation of the consolidated financial statements is applicable law and International Financial
Reporting Standards (IFRSs).
Management's Responsibility for the Consolidated Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements in accordance with the
applicable financial reporting framework, and for such internal control as management determines is necessary to enable the
preparation of financial statements that are free from material misstatement, whether due to fraud or error.
Auditor's Responsibility
Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in
accordance with Canadian Generally Accepted Auditing Standards (Canadian GAAS). Those standards require that we comply with
ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the consolidated financial
statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated
financial statements. The procedures selected depend on the auditor's judgement, including the assessment of the risks of
material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor
considers internal control relevant to the entity's preparation and fair presentation of the financial statements in order to
design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the entity's internal control. An audit also includes evaluating the appropriateness of accounting policies used
and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the
financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit
opinion.
Opinion
In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of
Horizonte Minerals PLC as at 31 December 2016 and its financial performance and its cash flows for the year then ended in
accordance with IFRSs.
Other matters
During the year ended 31 December 2016, the Company changed its auditor and as such the audit of the financial statements for
the year ended 31 December 2015 was performed by the Group's previous auditors, except for the restated amounts and disclosures
relating to the prior year adjustment described in note 21 which we have audited.
BDO LLP |
London |
United Kingdom |
16 March 2017 |
BDO LLP is a limited liability partnership registered in England and Wales (with registered number OC305127).
Consolidated Statement of Comprehensive Income
For the year ended 31 December 2016
|
|
Year ended
31 December
2016 |
|
Year ended
31 December
2015 (Restated) |
|
|
Notes |
£ |
|
£ |
|
Administrative expenses |
|
(1,009,623 |
) |
(864,892 |
) |
Charge for share options granted |
|
(324,890 |
) |
(100,248 |
) |
Changes in fair value of contingent consideration |
17 |
(260,632 |
) |
(26,969 |
) |
Gain/(loss) on foreign exchange |
|
65,241 |
|
(251,409 |
) |
Other losses - impairment of available-for-sale assets |
|
- |
|
(253,006 |
) |
Operating loss |
6 |
(1,529,904 |
) |
(1,496,524 |
) |
Finance income |
8 |
4,387 |
|
14,918 |
|
Finance costs |
8 |
(220,817 |
) |
(63,093 |
) |
Loss before taxation |
|
(1,746,334 |
) |
(1,544,699 |
) |
Income tax |
9 |
- |
|
- |
|
Loss for the year from continuing operations attributable to owners of the parent |
|
(1,746,334 |
) |
(1,544,699 |
) |
Other comprehensive income |
|
|
|
|
|
Items that may be reclassified subsequently to profit or loss |
|
|
|
|
|
Impairment in value of available-for-sale financial assets |
|
- |
|
253,006 |
|
Currency translation differences on translating foreign operations |
16 |
9,315,180 |
|
(6,354,056 |
) |
Other comprehensive income for the year, net of tax |
|
9,315,180 |
|
(6,101,050 |
) |
Total comprehensive income for the year attributable to owners of the parent |
|
7,568,846 |
|
(7,654,749 |
) |
Loss per share from continuing operations attributable to owners of the parent |
|
|
|
|
|
Basic and diluted (pence per share) |
19 |
(0.240 |
) |
(0.290 |
) |
The above Consolidated Statement of Comprehensive Income should be read in conjunction with the accompanying notes.
Consolidated Statement of Financial Position
Company number: 05676866
As at 31 December 2016
|
|
31 December
2016 |
|
31 December
2015 (Restated) |
|
1 January
2015 (Restated) |
|
|
Notes |
£ |
|
£ |
|
£ |
|
Assets |
|
|
|
|
|
|
|
Non-current assets |
|
|
|
|
|
|
|
Intangible assets |
10 |
32,017,796 |
|
20,351,355 |
|
21,075,565 |
|
Property, plant & equipment |
|
862 |
|
11,888 |
|
54,390 |
|
|
|
32,018,658 |
|
20,363,243 |
|
21,129,955 |
|
Current assets |
|
|
|
|
|
|
|
Trade and other receivables |
|
35,493 |
|
40,912 |
|
22,709 |
|
Cash and cash equivalents |
12 |
9,317,781 |
|
2,738,905 |
|
5,030,968 |
|
|
|
9,353,274 |
|
2,779,817 |
|
5,053,677 |
|
Total assets |
|
41,371,932 |
|
23,143,060 |
|
26,183,632 |
|
Equity and liabilities |
|
|
|
|
|
|
|
Equity attributable to owners of the parent |
|
|
|
|
|
|
|
Share capital |
13 |
11,719,343 |
|
6,712,044 |
|
4,924,271 |
|
Share premium |
14 |
35,767,344 |
|
31,252,708 |
|
31,095,370 |
|
Other reserves |
16 |
4,467,064 |
|
(4,848,116 |
) |
1,252,934 |
|
Retained losses |
|
(14,899,297 |
) |
(13,477,853 |
) |
(12,033,402 |
) |
Total equity |
|
37,054,454 |
|
19,638,783 |
|
25,239,173 |
|
Liabilities |
|
|
|
|
|
|
|
Non-current liabilities |
|
|
|
|
|
|
|
Contingent consideration |
17 |
3,643,042 |
|
3,161,592 |
|
335,327 |
|
Deferred tax liabilities |
9 |
282,450 |
|
193,665 |
|
273,238 |
|
|
|
3,925,492 |
|
3,355,257 |
|
608,895 |
|
Current liabilities |
|
|
|
|
|
|
|
Trade and other payables |
17 |
391,986 |
|
149,020 |
|
335,894 |
|
|
|
391,986 |
|
149,020 |
|
335,894 |
|
Total liabilities |
|
4,317,478 |
|
3,504,277 |
|
944,459 |
|
Total equity and liabilities |
|
41,371,932 |
|
23,143,060 |
|
26,183,632 |
|
The above Consolidated Statement of Financial Position should be read in conjunction with the accompanying notes.
The Financial Statements were authorised for issue by the Board of Directors on 16 March 2017 and were signed on its
behalf.
David J Hall, Chairman
Jeremy J Martin, Chief Executive Officer
Company Statement of Financial Position
Company number: 05676866
As at 31 December 2016
|
|
31 December 2016 |
|
31 December 2015 (Restated) |
|
1 January 2015 (Restated) |
|
|
Notes |
£ |
|
£ |
|
£ |
|
Assets |
|
|
|
|
|
|
|
Non-current assets |
|
|
|
|
|
|
|
Property, plant & equipment |
11 |
283 |
|
1,254 |
|
2,291 |
|
Investment in subsidiaries |
25 |
43,670,347 |
|
40,292,156 |
|
33,361,507 |
|
|
|
43,670,630 |
|
40,293,410 |
|
33,363,798 |
|
Current assets |
|
|
|
|
|
|
|
Trade and other receivables |
|
35,423 |
|
18,739 |
|
13,818 |
|
Cash and cash equivalents |
12 |
9,143,993 |
|
2,568,266 |
|
4,208,984 |
|
|
|
9,179,416 |
|
2,587,005 |
|
4,222,802 |
|
Total assets |
|
52,850,046 |
|
42,880,415 |
|
37,586,600 |
|
Equity and liabilities |
|
|
|
|
|
|
|
Equity attributable to equity shareholders |
|
|
|
|
|
|
|
Share capital |
13 |
11,719,343 |
|
6,712,044 |
|
4,924,271 |
|
Share premium |
14 |
35,767,344 |
|
31,252,708 |
|
31,095,370 |
|
Merger reserve |
16 |
10,888,760 |
|
10,888,760 |
|
10,888,760 |
|
Retained losses |
|
(9,915,498 |
) |
(9,637,561 |
) |
(10,159,288 |
) |
Total equity |
|
48,459,949 |
|
39,215,951 |
|
36,749,113 |
|
Liabilities |
|
|
|
|
|
|
|
Non-current liabilities |
|
|
|
|
|
|
|
Contingent consideration |
17 |
3,643,042 |
|
3,161,591 |
|
335,327 |
|
|
|
3,643,042 |
|
3,161,591 |
|
335,327 |
|
Current liabilities |
|
|
|
|
|
|
|
Trade and other payables |
17 |
747,055 |
|
502,873 |
|
502,160 |
|
|
|
747,055 |
|
502,873 |
|
502,160 |
|
Total liabilities |
|
4,390,097 |
|
3,664,464 |
|
837,487 |
|
Total equity and liabilities |
|
52,850,046 |
|
42,880,415 |
|
37,586,600 |
|
The above Company Statement of Financial Position should be read in conjunction with the accompanying notes, loss for the
period was £602,827 (2015: £421,479 profit).
The Financial Statements were authorised for issue by the Board of Directors on 16 March 2017 and were signed on its
behalf.
David J Hall, Chairman
Jeremy J Martin, Chief Executive Officer
Statements of Changes in Equity
For the year ended 31 December 2016
|
Attributable to owners of the parent |
|
|
Share |
Share |
|
Retained |
|
Other |
|
|
|
|
capital |
premium |
|
losses |
|
reserves |
|
Total |
|
Consolidated |
£ |
£ |
|
£ |
|
£ |
|
£ |
|
As at 1 January 2015 (previously reported) |
4,924,271 |
31,095,370 |
|
(9,526,869 |
) |
(321,601 |
) |
26,171,171 |
|
Refer note 22 c |
- |
- |
|
- |
|
1,574,535 |
|
1,574,535 |
|
Refer note 22 d |
- |
- |
|
(2,506,533 |
) |
- |
|
(2,506,533 |
) |
As at 1 January 2015 (Restated) |
4,924,271 |
31,095,370 |
|
(12,033,402 |
) |
1,252,934 |
|
25,239,173 |
|
Loss for the year |
- |
- |
|
(1,544,699 |
) |
- |
|
(1,544,699 |
) |
Other comprehensive income: |
|
|
|
|
|
|
|
|
|
Impairment of available-for-sale financial assets |
- |
- |
|
- |
|
253,006 |
|
253,006 |
|
Currency translation differences on translating foreign operations |
- |
- |
|
- |
|
(6,354,056 |
) |
(6,354,056 |
) |
Total comprehensive income for the year |
- |
- |
|
(1,544,699 |
) |
(6,101,050 |
) |
(7,654,749 |
) |
Issue of ordinary shares |
1,787,773 |
200,300 |
|
- |
|
- |
|
1,988,073 |
|
Issue costs |
- |
(42,962 |
) |
- |
|
- |
|
(42,962 |
) |
Share-based payments |
- |
- |
|
100,248 |
|
- |
|
100,248 |
|
Total transactions with owners, recognised directly in equity |
1,787,773 |
157,338 |
|
100,248 |
|
- |
|
2,045,359 |
|
As at 31 December 2015 (Restated) |
6,712,044 |
31,252,708 |
|
(13,477,853 |
) |
(4,848,116 |
) |
19,638,783 |
|
Loss for the year |
- |
- |
|
(1,746,334 |
) |
- |
|
(1,746,334 |
) |
Other comprehensive income: |
|
|
|
|
|
|
|
|
|
Currency translation differences on translating foreign operations |
- |
- |
|
- |
|
9,315,180 |
|
9,315,180 |
|
Total comprehensive income for the year |
- |
- |
|
(1,746,334 |
) |
9,315,180 |
|
7,568,846 |
|
Issue of ordinary shares |
5,007,299 |
5,005,321 |
|
- |
|
- |
|
10,012,620 |
|
Issue costs |
- |
(490,685 |
) |
- |
|
- |
|
(490,685 |
) |
Share-based payments |
- |
- |
|
324,890 |
|
- |
|
324,890 |
|
Total transactions with owners, recognised directly in equity |
5,007,299 |
4,514,636 |
|
324,890 |
|
- |
|
9,846,825 |
|
As at 31 December 2016 |
11,719,343 |
35,767,344 |
|
(14,899,297 |
) |
4,467,064 |
|
37,054,454 |
|
A breakdown of other reserves is provided in note 18.
|
Attributable to equity shareholders |
|
|
Share |
|
Share |
|
Retained |
|
Merger |
|
|
|
|
capital |
|
premium |
|
losses |
|
reserves |
|
Total |
|
Company |
£ |
|
£ |
|
£ |
|
£ |
|
£ |
|
As at 1 January 2015 previously reported |
4,924,271 |
|
31,095,370 |
|
(7,652,755 |
) |
10,888,760 |
|
39,255,646 |
|
Refer note 22 d |
- |
|
- |
|
(2,506,533 |
) |
- |
|
(2,506,533 |
) |
As at 1 January 2015 (Restated) |
4,924,271 |
|
31,095,370 |
|
(10,159,288 |
) |
10,888,760 |
|
36,749,113 |
|
Loss and total comprehensive income for the year |
- |
|
- |
|
421,479 |
|
- |
|
421,479 |
|
Issue of ordinary shares |
1,787,773 |
|
200,300 |
|
- |
|
- |
|
1,988,073 |
|
Issue costs |
- |
|
(42,962 |
) |
- |
|
- |
|
(42,962 |
) |
Share-based payments |
- |
|
- |
|
100,248 |
|
- |
|
100,248 |
|
Total transactions with owners, recognised directly in equity |
1,787,773 |
|
157,338 |
|
100,248 |
|
- |
|
2,045,359 |
|
As at 31 December 2015 (Restated) |
6,712,044 |
|
31,252,708 |
|
(9,637,561 |
) |
10,888,760 |
|
39,215,951 |
|
Loss and total comprehensive income for the year |
- |
|
- |
|
(602,827 |
) |
- |
|
(602,827 |
) |
Issue of ordinary shares |
5,007,299 |
|
5,005,321 |
|
- |
|
- |
|
10,012,620 |
|
Issue costs |
- |
|
(490,685 |
) |
- |
|
- |
|
(490,685 |
) |
Share-based payments |
- |
|
- |
|
324,890 |
|
- |
|
324,890 |
|
Total transactions with owners, recognised directly in equity |
5,007,299 |
|
4,514,636 |
|
324,890 |
|
- |
|
9,846,825 |
|
As at 31 December 2016 |
11,719,343 |
|
35,767,344 |
|
(9,915,498 |
) |
10,888,760 |
|
48,459,949 |
|
The above Statements of Changes in Equity should be read in conjunction with the accompanying notes.
Consolidated Statement of Cash Flows
For the year ended 31 December 2016
|
|
31 December
2016 |
|
31 December
2015 (Restated) |
|
|
Notes |
£ |
|
£ |
|
Cash flows from operating activities |
|
|
|
|
|
Loss before taxation |
|
(1,746,334 |
) |
(1,544,699 |
) |
Finance income |
|
(4,387 |
) |
(14,918 |
) |
Finance costs |
|
220,817 |
|
63,093 |
|
Impairment of Peruvian reserves |
|
- |
|
17,200 |
|
Impairment of available-for-sale financial assets |
|
- |
|
253,006 |
|
Charge for share options granted |
|
324,890 |
|
100,248 |
|
Gain on sale of property, plant and equipment |
|
- |
|
(24,453 |
) |
Exchange differences |
|
(177,940 |
) |
251,409 |
|
Change in fair value of contingent consideration |
|
260,632 |
|
26,969 |
|
Depreciation |
|
1,084 |
|
1,419 |
|
Operating loss before changes in working capital |
|
(1,121,238 |
) |
(870,726 |
) |
Decrease/(increase) in trade and other receivables |
|
22,588 |
|
(19,635 |
) |
Increase/(decrease) in trade and other payables |
|
242,965 |
|
(37,154 |
) |
Net cash used in operating activities |
|
(855,685 |
) |
(927,515 |
) |
Cash flows from investing activities |
|
|
|
|
|
Purchase of intangible assets |
|
(1,253,212 |
) |
(2,663,260 |
) |
Proceeds from sale of property, plant and equipment |
|
- |
|
26,734 |
|
Interest received |
|
4,387 |
|
14,918 |
|
Net cash used in investing activities |
|
(1,248,825 |
) |
(2,621,608 |
) |
Cash flows from financing activities |
|
|
|
|
|
Proceeds from issue of ordinary shares |
|
9,000,000 |
|
1,550,000 |
|
Issue costs |
|
(380,685 |
) |
(42,962 |
) |
Net cash generated from financing activities |
|
8,619,315 |
|
1,507,038 |
|
Net increase/(decrease) in cash and cash equivalents |
|
6,514,805 |
|
(2,042,085 |
) |
Cash and cash equivalents at beginning of year |
|
2,738,905 |
|
5,030,968 |
|
Exchange gain/(loss) on cash and cash equivalents |
|
64,071 |
|
(249,978 |
) |
Cash and cash equivalents at end of the year |
12 |
9,317,781 |
|
2,738,905 |
|
Major non-cash transactions
On 8 August 2016 the Company issued 50,729,922 new Ordinary shares in the company at a price of £0.0199 per share to Xstrata
as consideration for the acquisition of certain licences for the Glencore Araguaia Project from Xstrata Brasil Exploraçâo Mineral
Ltda.
The above Consolidated Statement of Cash Flows should be read in conjunction with the accompanying notes.
Company Statement of Cash Flows
For year ended 31 December 2016
|
|
31 December
2016 |
|
31 December
2015 (Restated) |
|
|
Notes |
£ |
|
£ |
|
Cash flows from operating activities |
|
|
|
|
|
(Loss)/profit before taxation |
|
(602,827 |
) |
421,479 |
|
Finance income |
|
(1,668 |
) |
(6,952 |
) |
Charge for share options granted |
|
324,890 |
|
100,248 |
|
Exchange differences |
|
283,555 |
|
(375,747 |
) |
Change in fair value of contingent consideration |
|
260,632 |
|
26,969 |
|
Depreciation |
|
971 |
|
1,037 |
|
Operating profit before changes in working capital |
|
265,553 |
|
30,212 |
|
Increase in trade and other receivables |
|
(16,683 |
) |
(4,921 |
) |
Increase in trade and other payables |
|
244,182 |
|
713 |
|
Net cash flows generated from operating activities |
|
493,052 |
|
167,034 |
|
Cash flows from investing activities |
|
|
|
|
|
Loans to subsidiary undertakings |
|
(2,573,088 |
) |
(3,321,742 |
) |
Interest received |
|
1,668 |
|
6,952 |
|
Net cash used in investing activities |
|
(2,571,420 |
) |
(3,314,790 |
) |
Cash flows from financing activities |
|
|
|
|
|
Proceeds from issue of ordinary shares |
|
9,000,000 |
|
1,550,000 |
|
Issue costs |
|
(380,685 |
) |
(42,962 |
) |
Net cash generated from financing activities |
|
8,619,315 |
|
1,507,038 |
|
Net increase/(decrease) in cash and cash equivalents |
|
6,540,947 |
|
(1,640,718 |
) |
Exchange loss on cash and cash equivalents |
|
34,779 |
|
- |
|
Cash and cash equivalents at beginning of year |
|
2,568,266 |
|
4,208,984 |
|
Cash and cash equivalents at end of the year |
12 |
9,143,993 |
|
2,568,266 |
|
Major non-cash transactions
On 8 August 2016 the Company issued 50,729,922 new Ordinary shares in the company at a price of £0.0199 per share to Xstrata
as consideration for the acquisition of certain licences for the Glencore Araguaia Project from Xstrata Brasil Exploraçâo Mineral
Ltda.
The above Company Statement of Cash Flows should be read in conjunction with the accompanying notes.
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 base metals. The Company's shares are listed on the AIM market of the London Stock Exchange and on
the Toronto Stock Exchange. The Company is incorporated and domiciled in England and Wales. 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') and
IFRS interpretations Committee ('IFRS IC') interpretations as adopted by the European Union ('EU') and with IFRS and their
interpretations issued by the IASB. The consolidated financial statements have also been prepared in accordance with 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 available-for-sale financial assets.
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
There are no IFRSs or IFRIC interpretations that were effective for the first time for the financial year beginning 1 January
2016 that have had a material impact on the Group or Company.
b) New and amended standards, and interpretations issued but not yet effective for the financial year beginning 1 January 2016
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 listed below. The Group intends to adopt these standards, if applicable, when they become effective. Unless
stated below, there are no IFRSs or IFRIC interpretations that are not yet effective that would be expected to have a material
impact on the Group.
Standard |
Effective Date |
IFRS 15 Revenue from Contracts with Customers |
01-Jan-18 |
IFRS 9 Financial Instruments |
01-Jan-18 |
IFRS 16 Leases * |
01-Jan-19 |
*Subject to EU endorsement
The only standard which is anticipated to be significant or relevant to the Group is IFRS 9 "Financial Instruments", the Group
is in the process of assessing the impact of the standards on the Financial Statements. Both IFRS 15 and IFRS 16 are not
expected to have a material impact on the Group at this stage of the Group's operations.
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 entities controlled by the Group. Control is achieved when the Group is exposed, or has rights, to variable
returns from its involvement with the investee and has the ability to affect those returns through its power over the
investee.
The Group considers all relevant facts and circumstances in assessing whether it has power over an investee, including:
- The contractual arrangement with the other vote holders of the investee.
- Rights arising from other contractual arrangements.
- The Group's voting rights and potential voting rights.
Consolidation of a subsidiary begins when the Group obtains control over the subsidiary and ceases when the Group loses
control of the subsidiary. Assets, liabilities, income and expenses of a subsidiary acquired or disposed of during the year are
included in the consolidated financial statements from the date the Group gains control until the date the Group ceases to
control the subsidiary.
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.
The following 100% owned subsidiaries have been included within the consolidated Financial Statements:
Subsidiary undertaking |
|
Held |
|
Registered Address |
|
Country of incorporation |
|
Nature of business |
Horizonte Exploration Ltd |
|
Directly |
|
26 Dover Street, London, W1S 4LY |
|
England |
|
Mineral Exploration |
Horizonte Minerals (IOM) Ltd |
|
Indirectly |
|
Devonshire House, 15 St Georges St, Douglas, Isle of Man |
|
Isle of Man |
|
Holding company |
HM Brazil (IOM) Ltd |
|
Indirectly |
|
Devonshire House, 15 St Georges St, Douglas, Isle of Man |
|
Isle of Man |
|
Holding company |
Cluny (IOM) Ltd |
|
Indirectly |
|
Devonshire House, 15 St Georges St, Douglas, Isle of Man |
|
Isle of Man |
|
Holding company |
Champol (IOM) ltd |
|
Indirectly |
|
Devonshire House, 15 St Georges St, Douglas, Isle of Man |
|
Isle of Man |
|
Holding company |
Horizonte Nickel (IOM) Ltd |
|
Indirectly |
|
Devonshire House, 15 St Georges St, Douglas, Isle of Man |
|
Isle of Man |
|
Holding company |
HM do Brasil Ltda |
|
Indirectly |
|
CNPJ 07.819.038/0001-30 com sede na Avenida Amazonas, 2904, loja 511, Bairro Prado, Belo Horizonte - MG.
CEP: 30.411-186 |
|
Brazil |
|
Mineral Exploration |
Araguaia Niquel Mineração Ltda |
|
Indirectly |
|
CNPJ 97.515.035/0001-03 com sede na Avenida Amazonas, 2904, loja 511, Bairro Prado, Belo Horizonte - MG.
CEP: 30.411-186 |
|
Brazil |
|
Mineral Exploration |
Lontra Empreendimentos e Participações Ltda |
|
Indirectly |
|
CNPJ 11.928.960/0001-32 com sede na Avenida Amazonas, 2904, loja 511, Bairro Prado, Belo Horizonte - MG.
CEP: 30.411-186 |
|
Brazil |
|
Mineral Exploration |
Typhon Brasil Mineração Ltda |
|
Indirectly |
|
CNPJ 23.282.640/0001-37 com sede Alameda Ezequiel Dias, n. 427, 20 andar, bairro Funcionários, Município de
Belo Horizonte, Estado de Minas Gerais, CEP 30.130-110. |
|
Brazil |
|
Mineral Exploration |
Trias Brasil Mineração Ltda |
|
Indirectly |
|
CNPJ 23.282.280/0001-73 com sede na Alameda Ezequiel Dias, n. 427, 20 andar, bairro Funcionários, Município
de Belo Horizonte, Estado de Minas Gerais, CEP 30.130-110 |
|
Brazil |
|
Mineral Exploration |
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 expenditure required in relation to its current
exploration projects. The Group has cash reserves which are considered sufficient by the Directors 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.
As a result of considerations noted above, 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 capitalises expenditure in relation to exploration and evaluation of mineral assets when the legal rights are
obtained. 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.
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 does not lead to the discovery of commercially viable
quantities of mineral resources or the Group 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.
Subsequent costs are included in the asset's carrying amount or recognised as a separate asset, as appropriate, only when it
is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be
measured reliably. 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% |
The asset's residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each reporting
period.
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.
2.7 Impairment of non-financial assets
Assets that have an indefinite useful life, such as 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 property,
plant and equipment 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 Pounds Sterling and the functional currency of the Brazilian entities is Brazilian Real. 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 retranslated at the end of each reporting period.
2.9 Financial assets
The Group classifies its financial assets as loans and receivables.
(a) 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' and 'cash and cash
equivalents' in the Consolidated Statement of Financial Position and loans to group undertakings in the Company 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
In the Statement of Financial Position and Statement of Cash Flows, 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 Impairment of financial assets
(a) Assets carried at amortised cost
The Group assesses at the end of each reporting period whether there is objective evidence that a financial asset or group of
financial assets is impaired. A financial asset or a group of financial assets is impaired and impairment losses are incurred
only if there is objective evidence of impairment as a result of one or more events that occurred after the initial recognition
of the asset (a 'loss event') and that loss event (or events) has an impact on the estimated future cash flows of the financial
asset or group of financial assets that can be reliably estimated.
For loans and receivables category, the amount of the loss is measured as the difference between the asset's carrying amount
and the present value of estimated future cash flows (excluding future credit losses that have not been incurred) discounted at
the financial asset's original effective interest rate. The carrying amount of the asset is reduced and the amount of the loss is
recognised in the Consolidated Income Statement.
If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an
event occurring after the impairment was recognised (such as an improvement in the debtor's credit rating), the reversal of the
previously recognised impairment loss is recognised in the Consolidated Income Statement.
2.12 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.
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 Statement of
Financial Position 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.
2.13 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.
2.14 Financial liabilities
The Group classifies its financial liabilities into one of two categories, depending on the purpose for which the liability
was acquired.
Fair value through profit or loss
This category comprises the contingent consideration which are carried in the consolidated statement of financial position at
fair value with changes in fair value recognised in the consolidated statement of comprehensive income.
Other financial liabilities
Trade payables and other short-term monetary liabilities, which are initially recognised at fair value and subsequently
carried at amortised cost using the effective interest method.
2.15 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.
2.16 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.
2.17 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.
2.18 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 ("CODM").
2.19 Finance income
Interest income is recognised using the effective interest method, taking into account the principal amounts outstanding and
the interest rates applicable.
2.20 Provisions and Contingent Liabilities
Provisions are recognised when the Group has a present legal or constructive obligation as a result of past events; it is
probable that an outflow of resources will be required to settle the obligation; and the amount can be reliably estimated.
Provisions are measured at the present value of the expenditures expected to be required to settle the obligation using a
pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the obligation. The
increase in the provision due to passage of time is recognised as finance cost.
Contingent liabilities are potential obligations that arise from past events and whose existence will only be confirmed by the
occurrence of one or more uncertain future events that, however, are beyond the control of the Group. Furthermore, present
obligations may constitute contingent liabilities if it is not probable that an outflow of resources will be required to settle
the obligation, or a sufficiently reliable estimate of the amount of the obligation cannot be made.
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 focusses 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 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 Pound Sterling.
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 2016, if the Brazilian Real had weakened/strengthened by 20% against Pound Sterling and US Dollar with all
other variables held constant, post tax loss for the year would have been approximately £41,448 lower/higher mainly as a result
of foreign exchange losses/gains on translation of Brazilian Real expenditure and 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
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.
(e) Credit risk
Credit risk arises from cash and cash equivalents and 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.
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 2016 and defines capital based on the total equity of the Group. 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 expected 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.
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 2016 of £31,737,737 (2015: £20,159,327 ). 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.
4.2 Estimated impairment of goodwill
Goodwill has a carrying value at 31 December 2016 of £280,059 (2015: £192,028) which is included in intangible assets. The
Group tests annually whether goodwill has suffered any impairment, in accordance with the accounting policy stated in note
2.7.
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 £3,643,042, at 31 December 2016 (2015: £3,161,591). there are two contingent
consideration arrangements in place as at 31 December 2016:
• |
A contingent consideration arrangement that 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 upon 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. |
|
|
|
This acquisition was accounted for as a business combination and an assessment of the fair value of the
contingent consideration was made at the date of acquisition. This fair value is reassessed in each subsequent accounting
period. In arriving at an estimate of the fair value management make an assessment of the probability of utilisation of all
or part of the tax losses by the end of the 10 year period which is August 2020. 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 movements in a number of factors including the timing of the
development and commissioning of the project, commodity prices, operating costs, capital expenditure, production levels,
grades, recoveries and interest rates. Because of the condition of the acquisition agreement to utilise tax losses prior to
August 2020 a critical assumption in the assessment of value of the contingent consideration is the timing of commencement
of profitable production. |
|
|
|
As explained in note 21, following a reassessment of the IFRS accounting requirements, management has
determined that the value attributed to the contingent consideration must be reviewed at the end of each reporting period
and adjusted to reflect the current best estimate. This review was not completed in prior years and accordingly, a
restatement of prior years' financial statements has been made. |
|
|
• |
A contingent consideration arrangement that requires the Group to pay Xstrata Brasil Mineração Ltda
US$1,000,000 after the date of issuance of a Feasibility Study comprising the Araguaia project and the Vale dos Sonhos
('VdS') and Serra do Tapa ('SdT') project areas ('GAP') (together the 'Enlarged Project'), to be satisfied in shares in the
Company (at the 5 day volume weighted average price taken on the tenth business day after the date of such issuance) or
cash, at the election of the Company; and remaining consideration of US$5,000,000 to be paid in cash, as at the date of
first commercial production from any of the resource areas within the Enlarged Project area. The critical assumptions
relating to the assessment of the contingent consideration of S$5,000,000 are similar to those described above for the
contingent consideration payable to the former owners of Teck Cominco Brasil S.A. |
|
|
|
The Contingent consideration is considered to be a level 3 hierarchy valuation, the following are
unobservable inputs for the valuation model: Discount rate and probability factor. In addition, the model includes the
foreign exchange rate. |
|
|
|
Management have sensitized the fair value calculation to reasonable changes in the unobservable inputs and
note that if the discount rate were to increase to 10% then the FV would decrease to £3,387,315. |
|
|
|
Management have sensitized the probability factor and note that a change in the probability weighting of
25% would cause the overall value of the contingent consideration to increase by £96,207. |
A contingent consideration arrangement that requires the Group to pay Xstrata Brasil Mineração Ltda US$1,000,000 after the
date of issuance of a Feasibility Study comprising the Araguaia project and the Vale dos Sonhos ('VdS') and Serra do Tapa ('SdT')
project areas ('GAP') (together the 'Enlarged Project'), to be satisfied in shares in the Company (at the 5 day volume weighted
average price taken on the tenth business day after the date of such issuance) or cash, at the election of the Company; and
remaining consideration of US$5,000,000 to be paid in cash, as at the date of first commercial production from any of the
resource areas within the Enlarged Project area. The critical assumptions relating to the assessment of the contingent
consideration of S$5,000,000 are similar to those described above for the contingent consideration payable to the former owners
of Teck Cominco Brasil S.A.
There has been no change in valuation technique during the period.
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 in respect of the losses has been recognised on acquisition of Araguaia Niquel Mineração Ltda to the extent that it can be
set against the deferred tax liability arising on the fair value gains. In determining whether a deferred tax asset in excess of
this amount should be recognized management must make an assessment of the probability that the tax losses will be utilized and a
deferred tax asset is only recognised if it is considered probable that the tax losses will be utilized.
As explained in note 21, following a reassessment of the IFRS accounting requirements, management has determined based on
information available at the time of preparation of the 2010 financial statements, the utilization of these losses had a lower
probability at the time of the acquisition in 2010 and a restatement derecognizing the deferred tax asset has been made.
Management review the position each financial period and this assessment remains.
4.5 Other areas
Other estimates include but are not limited to 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.
2016 |
UK
2016
£ |
|
Brazil
2016
£ |
|
Other
2016
£ |
|
Total
2016
£ |
|
Administrative expenses |
(802,409 |
) |
(207,214 |
) |
- |
|
(1,009,623 |
) |
Loss on foreign exchange |
46,454 |
|
18,787 |
|
- |
|
65,241 |
|
Loss from operations per reportable segment |
(755,955 |
) |
(188,427 |
) |
- |
|
(944,382 |
) |
Depreciation charges |
(970 |
) |
(114 |
) |
- |
|
(1,084 |
) |
Additions to non-current assets |
- |
|
11,578,410 |
|
- |
|
11,578,410 |
|
Reportable segment assets |
9,309,132 |
|
32,062,800 |
|
- |
|
41,371,932 |
|
Reportable segment non-current assets |
- |
|
32,018,658 |
|
- |
|
32,018,658 |
|
Reportable segment liabilities |
3,969,966 |
|
347,511 |
|
- |
|
4,317,477 |
|
|
|
|
|
|
|
|
|
|
2015 (Restated) |
UK
2015
£ |
|
Brazil
2015
£ |
|
Other
2015
£ |
|
Total
2015
(Restated)
£ |
|
Administrative expenses |
(662,305 |
) |
(189,234 |
) |
(13,353 |
) |
(864,892 |
) |
Loss) on foreign exchange |
(114,838 |
) |
(136,571 |
) |
- |
|
(251,409 |
) |
Loss from operations per reportable segment |
(777,143 |
) |
(325,805 |
) |
(13,353 |
) |
(1,116,301 |
) |
Depreciation charges |
(1,037 |
) |
(382 |
) |
- |
|
(1,419 |
) |
Additions to non-current assets |
- |
|
(645,313 |
) |
- |
|
(645,313 |
) |
Reportable segment assets |
2,687,317 |
|
20,455,743 |
|
- |
|
23,143,060 |
|
Reportable segment non-current assets |
- |
|
20,363,243 |
|
- |
|
20,363,243 |
|
Reportable segment liabilities |
3,249,980 |
|
254,296 |
|
- |
|
3,504,276 |
|
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:
|
2016
£ |
|
2015
(Restated)
£ |
|
Loss from operations per reportable segment |
(944,382 |
) |
(1,116,301 |
) |
Changes in fair value of contingent consideration (refer note 17) |
(260,632 |
) |
(26,969 |
) |
Charge for share options granted |
(324,890 |
) |
(100,248 |
) |
Impairment of available-for-sale asset |
- |
|
(253,006 |
) |
Finance income |
4,387 |
|
14,918 |
|
Finance costs |
(220,817 |
) |
(63,093 |
) |
Loss for the year from continuing operations |
(1,746,334 |
) |
(1,544,699 |
) |
6 Expenses by nature
|
2016 |
2015
(Restated) |
|
Group |
£ |
£ |
|
Charge for share options granted |
324,890 |
100,248 |
|
Depreciation (note 11) |
1,084 |
1,419 |
|
Operating lease charges |
36,053 |
95,182 |
|
Profit on disposal of property, plant and equipment |
- |
(24,453 |
) |
7 Auditor remuneration
During the year the Group (including its overseas subsidiaries) obtained the following services from the Company's auditor and
its associates:
Group |
2016
£ |
2015
£ |
Fees payable to the Company's auditor and its associates for the audit of the parent company and
consolidated financial statements (2015: PKF Littlejohn) |
32,000 |
37,500 |
Fees payable to the Company's auditor and its associates for other services: |
|
|
- Audit related assurance services (paid to PKF Littlejohn) |
5,000 |
7,000 |
- Tax compliance services |
2,000 |
1,900 |
8 Finance income and costs
Group |
2016
£ |
|
2015
(Restated)
£ |
|
Finance income: |
|
|
|
|
- Interest income on cash and short-term bank deposits |
4,387 |
|
14,918 |
|
Finance costs: |
|
|
|
|
- Contingent consideration: unwinding of discount |
(220,817 |
) |
(63,093 |
) |
Net finance costs |
(216,430 |
) |
(48,175 |
) |
9 Income Tax
Group |
2016
£ |
2015
(Restated)
£ |
Tax charge: |
|
|
Current tax charge for the year |
- |
- |
Deferred tax charge for the year |
- |
- |
Tax on loss for the year |
- |
- |
Reconciliation of current tax
Group |
2016
£ |
|
2015
(Restated)
£ |
|
Loss before income tax |
(1,746,334 |
) |
(1,544,699 |
) |
Current tax at 22.87% (2015: 32.52%) |
(399,387 |
) |
(502,336 |
) |
Effects of: |
|
|
|
|
Expenses not deducted for tax purposes |
9,080 |
|
46,319 |
|
Utilisation of tax losses brought forward |
- |
|
(150,480 |
) |
Tax losses carried forward for which no deferred income tax asset was recognised - UK |
- |
|
- |
|
Tax losses carried forward for which no deferred income tax asset was recognised - Brazil |
408,466 |
|
606,497 |
|
Total tax |
- |
|
- |
|
No tax charge or credit arises on the loss for the year.
The weighted average applicable tax rate of 22.87% used is a combination of the 20% effective standard rate of corporation tax
in the UK, 34% Brazilian corporation tax. The weighted average applicable tax rate has decreased from 32.52% to 22.87% as a
greater proportion of loss before income tax arose in the UK.
Deferred income tax
An analysis of deferred tax assets and liabilities is set out below.
Group |
2016
£ |
|
2015
(Restated)
£ |
|
Deferred tax assets |
4,744,885 |
|
6,920,143 |
|
|
|
|
|
|
Deferred tax liabilities |
|
|
|
|
- Deferred tax liability to be settled after more than 12 months |
(5,027,335 |
) |
(7,113,808 |
) |
|
|
|
|
|
Deferred tax liabilities (net) |
(282,450 |
) |
(193,665 |
) |
The movement on the net deferred tax liabilities is as follows:
Group |
2016
£ |
|
2015
(Restated)
£ |
|
At 1 January |
(193,665 |
) |
(273,273 |
) |
Exchange differences |
(88,785 |
) |
79,608 |
|
At 31 December |
(282,450 |
) |
(193,665 |
) |
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 in respect of fair value adjustments to the carrying value of intangible assets as a
result of the acquisition of such assets.
The Group has tax losses of approximately £18,132,502 (2015: £17,363,000) in Brazil and excess management charges of
approximately £2,492,408 (2015: £1,690,000) in the UK available to carry forward against future taxable profits. Deferred tax
asset have been recognised up to the amount of the deferred tax liability arising on the fair value adjustments potential
deferred tax assets of £6,663,532 have not been recognised.
10 Intangible assets
Intangible assets comprise exploration licenses, exploration and evaluation costs and goodwill. Exploration and evaluation
costs comprise acquired and internally generated assets.
Group |
Goodwill
£ |
|
Exploration
Licenses
£ |
|
Exploration
and
evaluation
costs
£ |
|
Total
£ |
|
Cost |
|
|
|
|
|
|
|
|
At 1 January 2015 (Restated) |
270,925 |
|
- |
|
20,804,640 |
|
21,075,565 |
|
Additions |
- |
|
3,174,275 |
|
2,540,833 |
|
5,715,108 |
|
Exchange rate movements |
(78,897 |
) |
- |
|
(6,360,421 |
) |
(6,439,318 |
) |
At 31 December 2015 (Restated) |
192,028 |
|
3,174,275 |
|
16,985,052 |
|
20,351,355 |
|
Additions |
- |
|
1,012,620 |
|
1,253,212 |
|
2,265,831 |
|
Exchange rate movements |
88,032 |
|
1,458,290 |
|
7,854,288 |
|
9,400,610 |
|
Net book amount at 31 December 2016 |
280,060 |
|
5,645,185 |
|
26,092,551 |
|
32,017,796 |
|
(a) Exploration and evaluation assets
No indicators of impairment were identified during the year.
In October 2016, a Canadian NI 43-101 compliant Pre-Feasibility Study ('PFS') was published by the Company regarding the
enlarged Araguaia Project which included the areas recently acquired from Glencore Xstrata. The financial results and conclusions
of the PFS clearly indicate the economic viability of the Araguaia Project. The Directors undertook an assessment of impairment
through evaluating the results of the PFS and judged that no impairment was required with regards to the Araguaia Project.
(b) Goodwill
Goodwill arose on the acquisition of Lontra Empreendimentos e Participações Ltda in 2010. 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.
Impairment reviews for exploration and evaluation assets are carried out either on a project by project basis or by
geographical area.
The adjacent Araguaia/Lontra/Vila Oito and Floresta exploration sites ('the Araguaia Project'), together with the Vale dos
Sonhos deposit acquired from Xstrata Brasil Mineração Ltda 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.
The mineral concession for the Vale dos Sonhos deposit was acquired from Xstrata Brasil Mineração Ltda, a subsidiary of
Glencore Canada Corporation, in November 2015.
The recoverable amount has been determined by reference to the PFS undertaken during the year on the Araguaia Project. The key
inputs and assumptions in deriving the value in use were, the discount rate of 8%, Nickel price of US$12,000/t and a life of mine
of 28years.
Sensitivity to changes in assumptions
For the base case NPV8 of the Araguaia Project of US$581 million using a nickel price of US$14,000/t and US$328 million using
US$12,000/t as per the PFS to be reduced to the book value of the Araguaia Project as at 31 December 2016, the discount rate
applied to the cash flow model would need to be increased from 8% to 21%.
11 Property, plant and equipment
Group |
Vehicles and
other field
equipment
£ |
|
Office
equipment
£ |
|
Total
£ |
|
Cost |
|
|
|
|
|
|
At 1 January 2015 |
152,089 |
|
14,730 |
|
166,819 |
|
Disposals |
(40,089 |
) |
- |
|
(40,089 |
) |
Foreign exchange movements |
(37,353 |
) |
(2,134 |
) |
(39,487 |
) |
At 31 December 2015 |
74,647 |
|
12,596 |
|
87,243 |
|
Foreign exchange movements |
31,657 |
|
1,802 |
|
33,459 |
|
At 31 December 2016 |
106,304 |
|
14,398 |
|
120,702 |
|
Accumulated depreciation |
|
|
|
|
|
|
At 1 January 2015 |
104,117 |
|
8,312 |
|
112,429 |
|
Charge for the year |
26,245 |
|
2,469 |
|
28,714 |
|
Disposals |
(26,916 |
) |
- |
|
(26,916 |
) |
Foreign exchange movements |
(37,807 |
) |
(1,065 |
) |
(38,872 |
) |
At 31 December 2015 |
65,639 |
|
9,716 |
|
75,355 |
|
Charge for the year |
11,766 |
|
2,614 |
|
14,380 |
|
Foreign exchange movements |
28,320 |
|
1,785 |
|
30,105 |
|
At 31 December 2016 |
105,725 |
|
14,115 |
|
119,840 |
|
Net book amount as at 31 December 2016 |
579 |
|
283 |
|
862 |
|
Net book amount as at 31 December 2015 |
9,008 |
|
2,880 |
|
11,888 |
|
Net book amount as at 1 January 2015 |
47,972 |
|
6,418 |
|
54,390 |
|
Depreciation charges of £13,296 (2015: £27,295) have been capitalised and included within intangible exploration and
evaluation asset additions for the year. The remaining depreciation expense for the year ended 31 December 2016 of £1,084 (2015:
£1,419) has been charged in 'administrative expenses' under 'Depreciation.'
Company |
Field
equipment
£ |
Office
equipment
£ |
Total
£ |
Cost |
|
|
|
At 1 January 2015 |
4,208 |
7,403 |
11,611 |
Additions |
- |
- |
- |
At 31 December 2015 and 2016 |
4,208 |
7,403 |
11,611 |
Accumulated depreciation |
|
|
|
At 1 January 2015 |
4,208 |
5,112 |
9,320 |
Charge for the year |
- |
1,037 |
1,037 |
At 31 December 2015 |
4,208 |
6,149 |
10,357 |
Charge for the year |
- |
971 |
971 |
At 31 December 2016 |
4,208 |
7,120 |
11,328 |
Net book amount as at 31 December 2016 |
- |
283 |
283 |
Net book amount as at 31 December 2015 |
- |
1,254 |
1,254 |
Net book amount as at 1 January 2015 |
- |
2,291 |
2,291 |
12 Cash and cash equivalents
|
Group |
Company |
|
2016
£ |
2015
£ |
2016
£ |
2015
£ |
Cash at bank and on hand |
9,250,281 |
2,676,160 |
9,094,308 |
2,519,018 |
Short-term deposits |
67,500 |
62,745 |
49,685 |
49,248 |
|
9,317,781 |
2,738,905 |
9,143,993 |
2,568,266 |
The Group's cash at bank and short-term deposits are held with institutions with the following credit ratings (Fitch):
|
Group |
Company |
|
2016
£ |
2015
£ |
2016
£ |
2015
£ |
A |
9,217,380 |
2,616,981 |
9,094,308 |
2,519,018 |
BBB- |
100,401 |
121,924 |
49,685 |
49,248 |
|
9,317,781 |
2,738,905 |
9,143,993 |
2,568,266 |
13 Share capital
Group and Company |
2016
Number |
2016
£ |
2015
Number |
2015
£ |
Issued and fully paid |
|
|
|
|
Ordinary shares of 1p each |
|
|
|
|
At 1 January |
671,204,378 |
6,712,044 |
492,427,105 |
4,924,271 |
Issue of ordinary shares |
500,729,922 |
5,007,299 |
178,777,273 |
1,787,773 |
At 31 December |
1,171,934,300 |
11,719,343 |
671,204,378 |
6,712,044 |
Share capital comprises amount subscribed for shares at the nominal value.
2016
On 8 August 2016, a total of 50,729,922 new ordinary shares were issued at the prevailing market price of £0.0199 per share in
consideration for the purchase of the Vale dos Sonhos mineral concession from Xstrata Brasil Mineração Ltda.
On 30 November 2016, a total of 374,000,000 shares were issued through a private placement at a price of £0.02 per share to
raise £7,480,000 before expenses.
On 2 December 2016, a total of 76,000,000 shares were issued through a private placement at a price of £0.02 per share to
raise £1,520,000 before expenses.
2015
On 2 October 2015, a total of 112,500,000 shares were issued through a private placement at a price of £0.01 per share to
raise £1,125,000 before expenses.
On 9 October 2015, a total of 42,500,000 shares were issued through a private placement at a price of £0.01 per share to raise
£425,000 before expenses.
On 25 November 2015, a total of 23,777,273 shares were issued at £0.0184 per share in consideration for the purchase of the
Vale dos Sonhos mineral concession from Xstrata Brasil Mineração Ltda.
14 Share premium
Group and Company |
2016
£ |
|
2015
£ |
|
At 1 January |
31,252,708 |
|
31,095,370 |
|
Premium arising on issue of ordinary shares |
5,005,662 |
|
200,300 |
|
Issue costs |
(490,685 |
) |
(42,962 |
) |
At 31 December |
35,767,344 |
|
31,252,708 |
|
Share premium comprises the amount subscribed for share capital in excess of nominal value.
15 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. One third of options are exercisable at each six months anniversary from the date of
grant, such that all options are exercisable 18 months after the date of grant and all lapse on the tenth anniversary of the date
of grant or the holder ceasing to be an employee of the Group. Should holders cease employment then the options remain valid for
a period of 3 months after cessation of employment, following which they will lapse. 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
2016
£ |
|
Weighted
average
exercise
price
2016
£ |
|
Number of
options
2015
£ |
|
Weighted
average
exercise
price
2015
£ |
Outstanding at 1 January |
48,760,000 |
|
0.124 |
|
38,300,000 |
|
0.119 |
Forfeited |
(8,450,000 |
) |
0.092 |
|
(2,790,000 |
) |
0.151 |
Granted |
15,000,000 |
|
0.030 |
|
13,250,000 |
|
0.040 |
Outstanding at 31 December |
55,310,000 |
|
0.079 |
|
48,760,000 |
|
0.096 |
Exercisable at 31 December |
36,760,000 |
|
0.102 |
|
30,693,333 |
|
0.124 |
The options outstanding at 31 December 2016 had a weighted average remaining contractual life of 7.28 years (2015: 7.45
years).
The fair value of the share options was determined using the Black-Scholes valuation model.
The parameters used are detailed below.
Group and Company |
2016
options |
|
2015
options |
|
Date of grant or reissue |
01/09/2016 |
|
10/06/2015 |
|
Weighted average share price |
2.03 pence |
|
2.63 pence |
|
Weighted average exercise price |
3.00 pence |
|
4.00 pence |
|
Expiry date |
31/08/2026 |
|
09/06/2025 |
|
Options granted |
15,000,000 |
|
13,250,000 |
|
Volatility |
64 |
% |
75 |
% |
Dividend yield |
Nil |
|
Nil |
|
Option life |
10 years |
|
10 years |
|
Annual risk free interest rate |
2.83 |
% |
2.83 |
% |
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 (GBP) |
2016
Weighted
average
exercise
price
(GBP) |
2016
Number of
shares |
2016
Weighted
average
remaining
life
expected
(years) |
2016
Weighted
average
remaining
life
contracted
(years) |
2015
Weighted
average
exercise
price
(GBP) |
2015
Number of
shares |
2015
Weighted
average
remaining
life
expected
(years) |
2015
Weighted
average
remaining life
contracted
(years) |
0-0.1 |
0.049 |
39,850,000 |
8.34 |
8.34 |
0.060 |
30,300,000 |
8.62 |
8.62 |
0.1-0.2 |
0.154 |
15,460,000 |
4.57 |
4.57 |
0.154 |
18,460,000 |
5.53 |
5.53 |
16 Other reserves
|
Available-for-sale
reserve |
|
Merger
reserve |
|
Translation
reserve |
|
Other
reserve |
|
Total |
|
Group |
£ |
|
£ |
|
£ |
|
£ |
|
£ |
|
At 1 January 2015 (As previously reported) |
(253,006 |
) |
10,888,760 |
|
(9,909,255 |
) |
(1,048,100 |
) |
(321,601 |
) |
Refer note 22 c |
- |
|
- |
|
1,574,535 |
|
- |
|
1,574,535 |
|
At 1 January 2015 (Restated) |
(253,006 |
) |
10,888,760 |
|
(8,334,720 |
) |
(1,048,100 |
) |
1,252,934 |
|
Permanent diminution taken to income |
253,006 |
|
- |
|
- |
|
- |
|
253,006 |
|
Currency translation differences |
- |
|
- |
|
(6,354,056 |
) |
- |
|
(6,354,056 |
) |
At 31 December 2015 (Restated) |
- |
|
10,888,760 |
|
(14,688,776 |
) |
(1,048,100 |
) |
(4,848,116 |
) |
Other comprehensive income |
- |
|
- |
|
- |
|
- |
|
- |
|
Currency translation differences |
- |
|
- |
|
9,315,180 |
|
- |
|
9,315,180 |
|
At 31 December 2016 |
- |
|
10,888,760 |
|
(5,373,596 |
) |
(1,048,100 |
) |
4,467,064 |
|
|
|
|
Company |
Merger
reserve
£ |
Total
£ |
At 1 January 2015 and 31 December 2015 |
10,888,760 |
10,888,760 |
At 1 January 2016 and 31 December 2016 |
10,888,760 |
10,888,760 |
The merger and other reserve as at 31 December 2016 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). Movements in the translation reserve are linked to the changes in the value of the
Brazilian Real against the Pound Sterling: the intangible assets of the Group are located in Brazil, and their functional
currency is the Brazilian Real, which increased in value against Sterling during the year.
The available for sale reserve represents changes in the fair value of assets that are held available for sale.
17 Trade and other payables
|
Group |
Company |
|
2016 |
2015
(Restated) |
2016 |
2015
(Restated) |
|
£ |
£ |
£ |
£ |
Non-current |
|
|
|
|
Contingent consideration payable to former owners of Teck Cominco Brasil S.A. |
115,100 |
354,713 |
115,100 |
354,713 |
Contingent consideration payable to Xstrata Brasil Mineração Ltda (refer note 27) |
3,527,942 |
2,806,878 |
3,527,942 |
2,806,878 |
Total contingent consideration |
3,643,042 |
3,161,591 |
3,643,042 |
3,161,591 |
Current |
|
|
|
|
Trade and other payables |
229,046 |
16,038 |
148,985 |
10,377 |
Amounts due to related parties (refer note 22) |
- |
- |
413,930 |
413,930 |
Social security and other taxes |
19,088 |
21,519 |
19,088 |
15,533 |
Accrued expenses |
143,851 |
111,463 |
165,052 |
63,033 |
|
391,985 |
149,020 |
747,055 |
502,873 |
Total trade and other payables |
4,035,027 |
3,310,611 |
4,390,097 |
3,664,464 |
Trade and other payables include amounts due of £65,053 (2015: £65,748) in relation to exploration and evaluation
activities.
Contingent Consideration payable to the former owners of Teck Cominco Brasil S.A.
The fair value of the contingent consideration arrangement with the former owners of Teck Cominco Brasil S.A. was estimated at
the acquisition date according to the probability and timing of when future taxable profits will arise against which the tax
losses may be utilised in accordance with the terms of the acquisition agreement.
As explained in note 21 the estimate of fair value has been restated and is now assessed to be £115,100 (2015: £354,713). The
critical assumptions underlying the fair value estimate are set out in note 4.3. Estimates were also based on the current rates
of tax on profits in Brazil of 34% and a discount factor of 7.0% was applied to the future dates at which the tax losses will be
utilised and consideration paid.
Contingent Consideration payable to Xstrata Brasil Mineração Ltda
On 28 September 2015 the Company announced that it had reached agreement to indirectly acquire through wholly owned
subsidiaries in Brazil the advanced high-grade Glencore Araguaia nickel project ('GAP') in north central Brazil. GAP is
located in the vicinity of the Company's Araguaia Project.
Pursuant to a conditional asset purchase agreement ('Asset Purchase Agreement') between, amongst others, the Company and
Xstrata Brasil Exploraçâo Mineral Ltda ('Xstrata'), a wholly-owned subsidiary of Glencore Canada Corporation ('Glencore'), the
Company has agreed to pay a total consideration of US$8 million to Xstrata, which holds the title to GAP. The consideration
is to be paid according the following schedule;
- US$2,000,000 in ordinary shares in the capital of the Company which as at 31 December 2016 had been settled by way of
issuing new shares in the Company.
- US$1,000,000 after the date of issuance of a joint Feasibility Study for the combined Araguaia & GAP project areas, to be
satisfied in HZM Shares (at the 5 day volume weighted average price taken on the tenth business day after the date of such
issuance) or cash, at the election of the Company; and
- The remaining US$5,000,000 consideration will be paid in cash, as at the date of first commercial production from any of
the resource areas within the Enlarged Project area. Following transfer of the concession for the VdS deposit area to a
subsidiary of the Company, this has been included in contingent consideration payable.
The critical assumptions underlying the treatment of the contingent consideration are set out in note 4.3.
As at 31 December 2016, there was a finance expense of £193,868 (2015: £14,505) 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.
18 Dividends
No dividend has been declared or paid by the Company during the year ended 31 December 2016 (2015: nil).
19 Earnings per share
(a) Basic
The basic loss per share of 0.240p loss per share (2015 loss per share: 0.290p) is calculated by dividing the loss
attributable to owners of the parent by the weighted average number of ordinary shares in issue during the year.
|
2016 |
|
2015 |
|
Group |
£ |
|
£ |
|
Loss attributable to owners of the parent |
(1,746,334 |
) |
(1,544,699 |
) |
Weighted average number of ordinary shares in issue |
727,096,642 |
|
531,868,151 |
|
(b) Diluted
The basic and diluted loss per share for the years ended 31 December 2016 and 31 December 2015 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 15.
20 Related party transactions
The following transactions took place with subsidiaries in the year:
A fee totalling £312,043 (2015: £232,829) was charged to HM do Brazil Ltda, £872,784 (2015: £639,814) to Araguaia Niquel
Mineração Ltda and £58,806 to Typhon Brasil Mineração Ltda by Horizonte Minerals Plc in respect of consultancy services provided
and funding costs.
Amounts totalling £782,926 (2015: £4,919,360) were lent to HM Brazil (IOM) Ltd, HM do Brasil Ltda, Araguaia Niquel Mineraçao
Ltda and Typhon Brasil Mineração Ltda to finance exploration work during 2016, by Horizonte Minerals Plc. Interest is charged at
an annual rate of 6% on balances outstanding during the year.
Balances with subsidiaries at the year end were:
|
2016 |
2016 |
2015 |
2015 |
|
Assets |
Liabilities |
Assets |
Liabilities |
Company |
£ |
£ |
£ |
£ |
HM do Brasil Ltda |
792,301 |
- |
845,808 |
- |
Minera El Aguila SAC |
- |
- |
- |
- |
HM Brazil (IOM) Ltd |
4,933,377 |
- |
4,725,314 |
- |
Horizonte Nickel (IOM) Ltd |
26,070,923 |
- |
24,340,018 |
- |
Araguaia Niquel Mineração Ltda |
6,074,517 |
- |
4,605,395 |
- |
Horizonte Minerals (IOM) Ltd |
253,004 |
- |
253,004 |
- |
Horizonte Exploration Ltd |
- |
413,930 |
- |
413,930 |
Typhon Brasil Mineração Ltda |
3,198,183 |
- |
3,174,275 |
- |
Total |
41,322,305 |
413,930 |
37,944,114 |
413,930 |
All Group transactions were eliminated on consolidation.
On 30 November 2016 a total of 374,000,000,000 shares were issued through a private placement at a price of £0.02 per share,
to raise £7,480,000 before expenses. As part of this private placement, Henderson Global Investors subscribed for 50,000,000
shares and Richard Griffiths subscribed for 62,235,000 shares representing 13.4 percent and 16.6 percent respectively of the
private placement. By reason of its existing shareholdings in the Company, the participation of Henderson Global Investors and
Richard Griffiths in the private placement of 30 November 2016 constituted a related party transaction under AIM Rule 13 of the
AIM Rules for Companies.
On 2 December 2016 a total of 76,000,000 shares were issued through a non brokered private placement in Canada, at a price of
C$0.04 per share. As part of this private placement, Teck Resources Limited subscribed for 21,517,250 shares representing 28.3
percent of the private placement. By reason of their existing shareholdings in the Company, the participation of Teck Resources
Limited 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 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 did
not utilise this facility during the period and it has now lapsed.
21 Restatements of contingent consideration and deferred tax asset
These financial statements reflect prior year adjustments in respect of a deferred tax asset, contingent consideration and
associated exchange differences and finance costs. Both the deferred tax asset and contingent consideration arose from the
acquisition of Teck Cominco Brasil S.A. in 2010, which was accounted for as a business combination. The initial recognition of
both of these items required management to make an assessment of the probabilities of the tax losses being utilised and the fair
value of the contingent consideration to be paid.
Following the recent review undertaken of the relevant recognition criteria, and conditions relating to both items it has been
concluded that the level of deferred tax recognised at the time of the acquisition requires re-calculation. The recognition of
the deferred tax asset at an early stage in the Araguaia project did not meet the criteria prescribed by IAS 12 - Income Taxes,
of it being probable that they could be utilised.
It has also been concluded that the fair value of the contingent consideration applied at time of acquisition similarly
requires re calculation. This liability relates to payments due to the vendors upon utilisation of brought forward tax losses of
Teck Cominco. The payments would be 50% of the tax effect of the losses utilised from the date of acquisition up to August
2020. The fair value originally calculated assumed 100% utilisation of the brought forward tax losses and was not a probability
weighted to reflect the underlying risks of the project and the requirement to utilise the losses within a set timeframe.
Management now believes that it would be appropriate to restate the Financial Statements to derecognize the deferred tax asset
and re-measure the contingent consideration as follows:
- Deferred tax asset
A deferred tax asset of £5,065,976 has been derecognised at 1 January 2015.
A deferred tax asset of £3,590,675 has been derecognised at 31 December 2015.
- Contingent consideration and finance costs
A contingent consideration liability has been reduced to £335,327 at 1 January 2015.
Finance costs are reduced by £275,336 in the year ended 31 December 2015 in respect of reversing the unwinding of the discount
on the contingent consideration.
A contingent consideration liability has been reduced to £3,161,591 at 31 December 2015.
- Foreign exchange translation reserve
An adjustment of £1,574,535 has been made to the foreign exchange translation reserve at 1 January 2015 in respect of the
above adjustments.
A further adjustment of £913,675 has been made to the foreign exchange translation reserve at 31 December 2015 in respect of
further movements of the deferred tax asset and contingent consideration during 2015.
- Retained losses
The net impact on retained losses at 1 January 2015 of the above adjustments is £2,506,533.
- Intangible assets
An increase in carrying value of intangible exploration and evaluation assets as at 1 January 2015 of £305,253.
22 Ultimate controlling party
The Directors believe there to be no ultimate controlling party.
23 Directors' remuneration (including Key Management)
|
Aggregate
emoluments |
Social Security
charges |
Other
emoluments |
Share based
payment
charge |
Pension
costs |
Total |
Group 2016 |
£ |
£ |
£ |
£ |
£ |
£ |
Non-Executive Directors |
|
|
|
|
|
|
Alexander Christopher |
- |
- |
- |
- |
- |
- |
David Hall |
29,000 |
3,312 |
- |
24,520 |
- |
56,832 |
William Fisher |
29,000 |
- |
- |
24,520 |
- |
53,520 |
Allan Walker |
29,000 |
4,002 |
- |
24,520 |
- |
57,522 |
Owen Bavinton |
- |
- |
- |
24,520 |
32,167 |
56,687 |
Executive Directors |
|
|
|
|
|
|
Jeremy Martin |
170,000 |
31,326 |
59,236 |
67,430 |
17,000 |
344,992 |
Key Management |
|
|
|
|
|
|
Jeffrey Karoly |
128,000 |
13,524 |
9,600 |
61,300 |
15,553 |
227,977 |
Simon Retter |
15,541 |
2,145 |
8,000 |
- |
- |
25,686 |
|
400,541 |
54,309 |
76,836 |
165,510 |
64,720 |
823,216 |
|
|
|
|
|
|
|
|
Aggregate emoluments |
Social Security
charges |
Other
emoluments |
Share based
payment
charge |
Pension
costs |
Total |
Group 2015 |
£ |
£ |
£ |
£ |
£ |
£ |
Non-Executive Directors |
|
|
|
|
|
|
Alexander Christopher |
- |
- |
- |
- |
- |
- |
David Hall |
33,600 |
- |
- |
4,128 |
- |
37,728 |
William Fisher |
24,000 |
- |
- |
4,128 |
- |
28,128 |
Allan Walker |
24,000 |
3,312 |
- |
4,128 |
- |
31,440 |
Owen Bavinton |
25,608 |
3,534 |
- |
4,128 |
- |
33,270 |
Executive Directors |
|
|
|
|
|
|
Jeremy Martin |
149,000 |
20,562 |
1,950 |
11,353 |
39,104 |
221,969 |
Key Management |
|
|
|
|
|
|
Jeffrey Karoly |
99,000 |
12,672 |
- |
10,321 |
48,656 |
170,649 |
|
355,208 |
40,080 |
1,950 |
38,188 |
87,760 |
523,184 |
The Company does not operate a pension scheme. Pension costs comprise contributions to Defined Contribution pension plans held
by the relevant Director or Key Management.
24 Employee benefit expense (including Directors and Key Management)
|
Group |
|
Company |
|
|
2016 |
2015 |
2016 |
2015 |
Group |
£ |
£ |
£ |
£ |
Wages and salaries |
809,954 |
844,343 |
627,155 |
524,501 |
Social security costs |
134,096 |
198,064 |
49,463 |
47,611 |
Indemnity for loss of office |
50,519 |
55,216 |
30,000 |
- |
Share options granted to Directors and employees (note 17) |
324,890 |
100,248 |
324,890 |
100,248 |
|
1,319,459 |
1,197,871 |
1,031,508 |
672,360 |
Management |
6 |
6 |
6 |
6 |
Field staff |
12 |
26 |
- |
- |
Average number of employees including Directors and Key Management |
18 |
32 |
6 |
6 |
Employee benefit expenses includes £393,712 (2015: £586,348) of costs capitalised and included within intangible non-current
assets.
Share options granted include costs of £165,510 (2015: £81,883) relating to Directors.
25 Investment in subsidiaries
|
2016 |
2015
(Restated) |
Company |
£ |
£ |
Shares in Group undertakings |
2,348,042 |
2,348,042 |
Loans to Group undertakings |
41,332,305 |
37,944,114 |
|
43,670,347 |
40,292,156 |
Investments in Group undertakings are stated at cost. The loans to Group undertakings are repayable on demand and currently
carry interest at 6%, however there is currently no expectation of repayment within the next twelve months and therefore loans
are treated as non-current.
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.
26 Commitments
Operating lease commitments
The Group leases office premises under cancellable and non-cancellable operating lease agreements. The cancellable lease terms
are up to one year and are renewable at the end of the lease period at market rate. The leases can be cancelled by payment of up
to one month's rental as a cancellation fee. The lease payments charged to profit or loss during the year are disclosed in note
6.
The future aggregate minimum lease payments under non-cancellable operating leases are as follows:
|
2016 |
2015 |
Group |
£ |
£ |
Not later than one year |
11,996 |
46,596 |
Total |
11,996 |
46,596 |
Capital Commitments
Capital expenditure contracted for at the end of the reporting period but not yet incurred is as follows:
|
2016 |
2015 |
Group |
£ |
£ |
Intangible assets |
- |
42,100 |
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.
27 Contingent Liabilities
(a) Glencore Araguaia Project
The SdT deposit area concessions are subject to on-going litigation with a Brazilian third party. Glencore has disputed
these claims. The parties have agreed certain protections including the receipt by HZM from Glencore of certain indemnities
in respect of such litigation.
The Asset Purchase Agreement contains customary warranties regarding the GAP project and the parties' ability to enter into
the Proposed Transaction and is subject to customary termination rights and confidentiality obligations.
(b) Other 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 warranties 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 claims will be unsuccessful. No
subsequent actions, claims or communications from the various trade union organisations have been received subsequent to the
requests for payment. As a result, no provision has been made in the Financial Statements for the year ended 31 December 2016 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 £64,000.
In 2013 the Group 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 2011 without the relevant permits. Drilling
equipment was furthermore impounded. The Group strongly believes that it operated with all necessary permits and has initiated
legal proceedings to overturn the infraction notice. The Group has secured cancellation of the injunction and has appealed the
associated fine and infraction notices of approximately £68,000 which has not been recognised in these financial statements.
In August 2014, the Group received a claim from a former employee in Brazil with regard to amounts allegedly due under the
terms of his employment. The Group is defending the claim and it is not currently practicable to estimate the extent of any
liability that may arise.
In December 2014, the Group received a writ from the State Attorney in Conceiçao do Araguaia regarding alleged environmental
damages caused by drilling activities in 2011. To ensure proper environmental stewardship, the Group conducts certified baseline
studies prior to all drill programmes and ensures that areas explored are properly maintained and conserved in accordance with
local environmental legislation. After drilling has occurred, drill sites and access routes are rehabilitated to equal or better
conditions and evidence is retained to demonstrate that such rehabilitation work has been completed. In January 2015, the Group
filed a robust defence against the writ. A court hearing was held in May 2015 at which documents were requested to confirm that
valid environmental authorisations were in place. These were subsequently submitted as requested. No substantive financial claim
continues to be made against the Group under the terms of the writ. The Group continues to believe that the writ is flawed and is
working towards having it withdrawn in due course. As a result no provision has been made in the Financial Statements for
the year ended 31 December 2016.
28 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 profit for the year was £602,827 loss (2015: £421,479
profit).
29 Events after the reporting date
No significant events have occurred since the reporting date.
This announcement contains inside information for the purposes of Article 7 of EU Regulation 596/2014.
For further information visit www.horizonteminerals.com.
About Horizonte Minerals:
Horizonte Minerals plc is an AIM and TSX-listed nickel development company focused in Brazil, which wholly owns the advanced
Araguaia nickel laterite project located to the south of the Carajas mineral district of northern Brazil. The Company is
developing Araguaia as the next major nickel mine in Brazil, with targeted production by 2019.
The Project has good infrastructure in place including rail, road, water and power.
Horizonte has a strong shareholder structure including Teck Resources Limited 17.9%, Henderson Global Investors 14.1%, Richard
Griffiths 14.5%, JP Morgan 8.4%, Hargreave Hale 6.4% and Glencore 6.4%.
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.