TIDMHUN
RNS Number : 5859R
Hunter Resources PLC
30 June 2015
30 June 2015
Hunter Resources plc
("Hunter" or the "Company")
(AIM: HUN)
Final Results for the year to 31 December 2014
The board of directors of Hunter (the "Board") is pleased to
announce the Company's annual results for the year to 31 December
2014. which are published below. The Company's annual report and
audited accounts for the year have been published on the Company's
website http://www.hunter-resources.com/ in accordance with the
Company's articles of association, and are available to
shareholders.
Chairman's Statement
Dear Shareholder,
I am pleased to announce the results of the Hunter Resources Plc
('Hunter' or the 'Company') group (the 'Group') for the year ended
31 December 2014.
This is the first full set of audited financial statements
following the Company's successful Re-admission to AIM on 4 July
2014. As set out in the Admission Document published on 6 June 2014
(available on the Company's website at www.hunter-resources.com)
the Company acquired 100% of the issued share capital of Gold
Hunter SAC in Peru through a reverse takeover. Gold Hunter had
entered into a joint venture agreement with the owners of the
Pampamali Project in Peru, which is a potentially high grade gold
and silver project with base metal credits.
In connection with the Re-admission and as more fully described
in note 17, the Company raised GBP925,000 (before expenses) to
provide the working capital necessary to carry out exploration and
evaluation activities on the Pampamali Project.
The Pampamali Project consists of 8 exploration concessions with
a total area of 3,500 hectares and is located in central Peru in
the Department of Huancavelica, approximately 550 km by road from
the City of Lima. The Pampamali project is a potentially high grade
gold, silver and base metal project, consisting of 36 mineralised
veins identified to date from surface outcrops. Outcrops of between
100 and 2,000 metres in length exist with mineralised widths
ranging from 0.20 to over 3.00 metres.
Progress
Various sampling exercises have been carried out at Pampamali
with encouraging results announced in August and December 2014 and
February 2015. As previously advised we are continuing our
negotiations with the communities in the Pampamali region to ensure
that we have support on a wider basis.
In addition the Company announced on 19 June 2015 that,
following further regional exploration in the Pampamali area in
Peru, the Company has lodged applications for additional tenements
covering 5,000 hectares to the north west of the Pampamali Project,
to be named the Prospero Project. The Prospero Project is close to
the Pampamali Project and could potentially share future facilities
and infrastructure. This application has been accepted and the
tenements will be owned 100% by Hunter's wholly owned subsidiary,
Gold Hunter. The application is now progressing through the normal
Peruvian mining tenement application process.
The ground under application is directly along strike of the
Company's Pampamali Project from which the trend of mineralisation
continues into this new area. Preliminary mapping of the Prospero
Project by the Company's technical team has identified prospective
geological structures and quartz veining with associated
hydrothermal activity and breccias.
Improved terms of acquisition with the owners of Pampamali
We announced on 8 April 2015 that we had revised our agreement
with the owners of the Pampamali project to enable us to acquire
51% in one step and on a cheaper basis than anticipated. The
original deal would have seen us acquire a 20% interest within 12
months of re-listing for a payment of US$100,000 following an
investment of at least US$150,000 in exploration. This would have
been followed by a further payment in year 2 of US$200,000 and an
exploration commitment of US$500,000 to acquire an additional 31%.
Under the revised deal, Hunter has the right to acquire a 51%
interest in the Pampamali Project at any time, but no later than 12
months from the receipt of the DIA (an environmental impact
assessment), for a payment of US$90,000 to the current owners,
without the exploration commitment of US$500,000. As part of the
improved terms Hunter has agreed to assume certain 2014 tenement
costs totalling US$34,000, previously payable by the current
owners.
Financial Review
The Group's loss for the year ended 31 December 2014 was
GBP476,000 including share based payments charge of GBP148,000
(2013: loss of GBP220,000 including share based payments charge of
GBP76,000).
Exercise of Option on the Pampamali Project
The Board can confirm that it is its intention to exercise its
option on the Pampamali Project and meet the admission conditions
under Rule 9 of the AIM Rules for Companies as previously set out
in the Company's announcement of 3 July 2014. A further
announcement will be made shortly.
For further information, please contact:
Hunter Resources PLC Allenby Capital Limited
Simon Hunt (Nominated Adviser and
(Chairman) Broker)
+44 7733 337 755 Nick Harriss/Nick Naylor
Andrew Richards +44 20 3328 5656
+61 423 044 879
www.allenbycapital.com
www.hunter-resources.com
------------------------- -------------------------
HUNTER RESOURCES Plc
Consolidated and Company Income Statements
and Consolidated and Company Statements of Comprehensive
Income
for the year ended 31 December 2014
2014 2014 2013
Group Company Group and Company
Note GBP'000 GBP'000 GBP'000
---- ------- -------- ------------------
CONTINUING OPERATIONS
Administrative expenses (320) (307) (138)
Share based payments 18.2 (148) (148) (76)
Investment revenues 8 - 3 -
Finance costs 8 (8) (8) (6)
------- -------- ------------------
Loss before taxation 5 (476) (460) (220)
Taxation 10 - - -
------- -------- ------------------
LOSS FOR THE YEAR ATTRIBUTABLE TO OWNERS OF THE PARENT COMPANY (476) (460) (220)
------- -------- ------------------
LOSS PER SHARE
Basic and diluted loss per share 11 (0.56) (0.54) (0.59)
------- -------- ------------------
2014 2014 2013
Group Company Group and Company
Note GBP'000 GBP'000 GBP'000
------- -------- ------------------
Loss for the year (476) (460) (220)
Items that may be reclassified subsequently to profit or loss:
Foreign exchange translation differences 17.5 (1) - -
------- -------- ------------------
Other comprehensive income for the year (1) - -
------- -------- ------------------
Total comprehensive income for the year attributable to owners of
the parent Company (477) (460) (220)
------- -------- ------------------
HUNTER RESOURCES Plc
Consolidated and Company Statements of Financial Position
as at 31 December 2014
2014 2013
2014 Group Company Group and Company
Note GBP'000 GBP'000 GBP'000
----- ----------- --------- -------------------
ASSETS
Non-current assets
Investment in subsidiary undertakings 12 - 199 -
Exploration and evaluation assets 13 353 - -
Amounts due from subsidiary undertakings 14 - 172 -
----------- --------- -------------------
353 371 -
----------- --------- -------------------
Current assets
Prepayments 13 9 8
Other receivables 25 16 5
Cash and cash equivalents 478 471 14
-----------
516 496 27
----------- --------- -------------------
TOTAL ASSETS 869 867 27
----------- --------- -------------------
LIABILITIES
Current liabilities
Convertible loan notes 16 - - 26
Trade and other payables 15 80 61 21
----------- --------- -------------------
TOTAL LIABILITIES 80 61 47
----------- --------- -------------------
NET CURRENT ASSETS / (LIABILITIES) 436 435 (20)
----------- --------- -------------------
NET ASSETS / (LIABILITIES) 789 806 (20)
----------- --------- -------------------
Share capital 17 2,170 2,170 1,216
Share premium 17 5,406 5,406 5,187
Convertible loan note reserve 16 - - 5
Currency translation reserve 17.5 470 471 471
Accumulated losses (7,257) (7,241) (6,899)
----------- --------- -------------------
EQUITY / (DEFICIT) ATTRIBUTABLE TO EQUITY HOLDERS OF THE
PARENT COMPANY 789 806 (20)
----------- --------- -------------------
These financial statements were approved by the Board of
Directors and authorised for issue on 29 June 2015. Signed on
behalf of the Board of Directors by:
Simon Hunt
Director and
Executive Chairman
29 June 2015
in HUNTER RESOURCES Plc
Company Statement of Changes in Equity
for the year ended 31 December 2014
Convertible Currency
loan note translation Accumulated
Note Share capital Share premium reserve reserve losses Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
----- -------------- -------------- -------------- --------------- ------------ --------
GROUP
Balance at 1
January 2013 932 5,202 - 471 (6,755) (150)
Loss and total
comprehensive
income for
the year - - - - (220) (220)
Share based
payments 18.2 - 151 - - 76 227
Issue of
Ordinary
Shares 17 284 - - - - 284
Expenses
incurred in
issuing
Ordinary
Shares 17 - (166) - - - (166)
Allocation of
proceeds
received from
the issue of
convertible
loan notes 16 - - 5 - - 5
Balance as at
31 December
2013 1,216 5,187 5 471 (6,899) (20)
Loss for the
year - - - - (476) (476)
Other
comprehensive
income:
Exchange
translation
loss on
foreign
operations - - - (1) - (1)
-------------- -------------- -------------- --------------- ------------ --------
Total
comprehensive
income for
the year - - - (1) (476) (477)
Share based
payments 18.2 - 93 - - 108 201
Issue of
Ordinary
Shares 17 954 464 - - - 1,418
Expenses
incurred in
issuing
Ordinary
Shares 17 - (338) - - - (338)
Allocation of
proceeds
received from
the issue of
convertible
loan notes 16 - - 5 - - 5
Transfer to
accumulated
loss on
conversion of
convertible
loan notes 16 - - (10) - 10 -
Balance as at
31 December
2014 2,170 5,406 - 470 (7,257) 789
-------------- -------------- -------------- --------------- ------------ --------
COMPANY
Balance at 1
January 2013 932 5,202 - 471 (6,755) (150)
Loss and total
comprehensive
income for
the year - - - - (220) (220)
Share-based
payments 18.2 - 151 - - 76 227
Issue of
Ordinary
Shares 17 284 - - - - 284
Expenses
incurred in
issuing
Ordinary
Shares 17 - (166) - - - (166)
Allocation of
proceeds
received from
the issue of
convertible
loan notes 16 - - 5 - - 5
Balance as at
31 December
2013 1,216 5,187 5 471 (6,899) (20)
Loss and total
comprehensive
income for
the year - - - - (460) (460)
Share based
payments 18.2 - 93 - - 108 201
Issue of
Ordinary
Shares 17 954 464 - - - 1,418
Expenses
incurred in
issuing
Ordinary
Shares 17 - (338) - - - (338)
Allocation of
proceeds
received from
the issue of
convertible
loan notes 16 - - 5 - - 5
Transfer to
accumulated
loss on
conversion of
convertible
loan notes 16 - - (10) - 10 -
Balance as at
31 December
2014 2,170 5,406 - 471 (7,241) 806
-------------- -------------- -------------- --------------- ------------ --------
.
HUNTER RESOURCES Plc
Consolidated and Company Cash Flow Statements
for the year ended 31 December 2014
2014 2014 2013
Group Company Group and Company
Note GBP'000 GBP'000 GBP'000
----- -------- --------- -------------------
Cash flows from operating activities
Loss for the year (476) (460) (220)
Adjustments for:
Share based payments 18 148 148 76
Investment revenues 8 - (3) -
Finance costs 9 8 8 6
Foreign exchange gain (7) (7) -
Operating cash flows before movements in working capital (327) (314) (138)
Increase in receivables (26) (13) -
Increase / (decrease) in trade and other payables 53 34 (165)
-------- --------- -------------------
Cash used in operating activities (300) (293) (303)
-------- --------- -------------------
Cash flows from investing activities
Advances to subsidiary undertakings - (159) -
Acquisition of intangible exploration and evaluation assets (154) - -
Net cash used in investing activities (154) (159) -
-------- --------- -------------------
Cash flows from financing activities
Proceeds from the issue of new Ordinary Shares 17 883 883 284
Issue expenses of new Ordinary Shares 17 (164) (164) (15)
Proceeds from the issue of Convertible loan notes 16 190 190 26
Issue expenses of Convertible loan notes 16 - - (1)
Net cash provided by financing activities 909 909 294
-------- --------- -------------------
Net increase / (decrease) in cash and cash equivalents 455 457 (9)
Effects of exchange rate changes on the balance of cash held
in foreign currencies 9 - -
Cash and cash equivalents at the beginning of the year 14 14 23
-------- --------- -------------------
Cash and cash equivalents at the end of the year 478 471 14
-------- --------- -------------------
HUNTER RESOURCES Plc
Notes to the Financial Statements
1. GENERAL INFORMATION
Hunter Resources Plc is a company incorporated and domiciled in
the Isle of Man, under the Companies Acts 1931 to 2004, with
registered number 115011C. Further details, including the address
of the registered office, are given in the section of this report
entitled 'Company Information and Advisers'. The nature of the
Company and Group's operations and its principal activities are set
out in the Directors' Report. Details of the Company's subsidiary
undertakings, including the name, country of incorporation,
operation and ownership interest are given in note 12.
As permitted by the AIM Rules for Companies, the financial
statements have been prepared in accordance with IFRSs as issued by
the IASB as they apply to the financial statements of the Company
and Group for the year ended 31 December 2014.
The consolidated financial information is a consolidation of the
Company and its subsidiary. These financial statements are
presented in thousands of GBP. Foreign operations are included in
accordance with the policies set out in note 3.5.
2. ADOPTION OF NEW AND REVISED STANDARDS AND INTERPRETATIONS
2.1. New Standards and Interpretations adopted with no
significant effect on the financial statements
The following new and revised Standards and Interpretations have
been adopted in these financial statements. Their adoption has not
had any significant impact on the amounts reported in these
financial statements, but may impact the accounting for future
transactions and arrangements.
IAS 32 Amendment 2011 Offsetting financial
assets and financial
liabilities
IAS 36 Amendment 2013 Recoverable amount disclosures
for non-financial assets
IAS 39 Amendment 2013 Novation of derivatives
and continuation of hedge
accounting
IFRS 10, IFRS 12 Amendment 2012 Investment entities
and IAS 27
IFRIC 21 New 2013 Levies
2.2. New Standards and Interpretations in issue but not yet effective
At the date of authorisation of these financial statements, the
following Standards and Interpretations are in issue but not yet
effective (and in some cases had not yet been adopted by the
EU):
IAS 16 Amendment 2014 Acceptable methods of
depreciation and bearer
plants
IAS 19 Amendment 2013 Defined benefit plans:
Employee contributions
IAS 38 Amendment 2014 Acceptable methods of
amortisation
IAS 41 Amendment 2014 Amendment to bring bearer
assets into IAS 16
IFRS 9 New 2009, Amendment Financial instruments
2010, 2011, (Hedge Accounting and
2013 and 2014 amendments to IFRS 9,
IFRS 7 and IAS 39)
IFRS 10, IFRS 12, Amendment 2014 Sale or contribution
IAS 27 and IAS 28 of assets and application
of the consolidation
exemption
IFRS 11 Amendment 2014 Acquisition of an interest
in a joint operation
IFRS 14 New 2014 Regulatory deferral accounts
IFRS 15 New 2014 Revenue from Contracts
with Customers
Improvements to IFRS Amendments 2013 Annual improvements 2010-2012
Improvements to IFRS Amendments 2013 Annual improvements 2011-2013
Improvements to IFRS Amendments 2014 Annual improvements September
2014
Disclosure initiative Amendments 2014 Amendments resulting
from the disclosure initiative
The Directors do not anticipate that the adoption of these
Standards and Interpretations will have a material impact on the
Group's financial statements in the period of initial
application.
3. SIGNIFICANT ACCOUNTING POLICIES
3.1. Basis of preparation
The Group's and the Company's financial statements are prepared
on the historical cost basis, except for certain share based
payments. The Group's and the Company's accounting policies have
been consistently applied to the results, gains and losses, assets,
liabilities and cash flows of entities included in the financial
statements.
HUNTER RESOURCES Plc
Notes to the Financial Statements
3.2. Critical accounting judgments and sources of estimation uncertainty
The preparation of financial statements in conformity with IFRSs
requires the Directors to make judgements, estimates and
assumptions that affect the application of policies and the
reported amounts of assets and liabilities, income and expenses.
The estimates and associated assumptions are based on historical
experience and various other factors that are believed to be
reasonable under the circumstances, the results of which form the
basis of making the judgements about carrying values of assets and
liabilities that are not readily apparent from other sources.
Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an
on-going basis. Revisions to accounting estimates are recognised in
the period in which the estimate is revised if the revision affects
only that year or in the year of the revision and future periods if
the revision affects both current and future years. Other than as
discussed below in this note there are no critical accounting
judgments or estimates that are considered to be material by the
Directors.
The following are the critical judgements and estimates that the
Directors have made in the process of applying the Group's
accounting policies and that have the most significant effect on
the amounts recognised in the financial statements.
3.2.1.1. Going concern
The Company (and by extension the Group) financial statements
have been prepared on a going concern basis, which contemplates the
continuity of business activity. As described in the Chairman's
Statement and note 20, the Company, through Gold Hunter, obtained
an interest in the Farm In agreement during the period. The Farm In
agreement was subsequently amended in March 2015 as more fully
described in note 20 and 23. In accordance with the Farm In
agreement (as amended), the Group has the option, but not the
obligation, to acquire a staged economic interest in Project
Pampamali. Funding of GBP925,000 was raised in connection with the
acquisition of Gold Hunter and the Re-admission (refer to note
17).
As at the date of this report the Company has available cash
balances of approximately GBP262,000 which are sufficient to fund
the implementation of the Farm In agreement (as amended) for the
next twelve months. For the full implementation of the Farm In
agreement (as amended), the Company would require additional new
funding, which, in all likelihood, will involve the issue of
additional new Ordinary Shares or convertible loan notes. The
attractiveness of the Company's Ordinary Shares and convertible
loan notes as an investment opportunity will depend on a number of
factors, including but not limited to, the quality and experience
of its management team, the nature of the projects it identifies,
the liquidity of the Company's equity instruments and the
anticipated return available to Shareholders.
Subject to its ongoing exploration and evaluation activities,
the Directors believe that Project Pampamali will provide
attractive returns to investors and, having consulted with the
Company's financial advisers, the Directors believe that the
Company will be able to raise the additional funding to continue to
implement the Farm In agreement (as amended). If the Directors are
unable to raise the additional funding, or if the exploration and
evaluation activities do not support continuing investment in
Project Pampamali, then the Group will not complete the final
option under the Farm In agreement (as amended).
As a result of the above factors the Directors have a reasonable
expectation that the Group and the Company will have adequate
resources to continue in operational existence for the foreseeable
future. For these reasons, they continue to adopt the going concern
basis in preparing the annual report and financial statements.
3.2.1.2. Convertible Loan Notes - initial measurement
During 2014, the Company issued approximately GBP190,000 of
convertible loan notes. While in legal form the convertible loan
notes are a liability of the Company, IFRSs requires the Group to
identify the equity and liability component parts of the instrument
and assign a value to each. Identification and valuation of the
components requires management to exercise judgment. Further
details are provided in note 16.
3.2.1.3. Warrants
Warrants issued in the period to the Directors and certain
providers of services, or instruments that have been modified in
the period, are accounted for as share based payments. The fair
value of the warrants is measured at their grant date or date of
modification using a valuation model. The valuation is sensitive to
the inputs in the valuation model, some of which require judgment.
The warrants do not create any obligation on the Company other than
to deliver Ordinary Shares in the Company for a fixed price at the
option of the holder, over the life of the warrants. Further
details are provided in note 18.
3.2.1.4. Exploration and evaluation activities
The application of the Group's accounting policy for exploration
and evaluation expenditure requires judgement to determine whether
future economic benefits are likely, from either future
exploitation or sale, or whether activities have not reached a
stage that permits a reasonable assessment of the existence of
reserves.
In addition to applying judgement to determine whether future
economic benefits are likely to arise from the Group's exploration
and evaluation assets or whether activities have not reached a
stage that permits a reasonable assessment of the existence of
reserves, the Group has to apply a number of estimates and
assumptions. The estimates directly impact when the Group defers
exploration and evaluation expenditure. The deferral policy
requires management to make certain estimates and assumptions about
future events and circumstances, particularly, whether an
HUNTER RESOURCES Plc
Notes to the Financial Statements
economically viable extraction operation can be established. Any
such estimates and assumptions may change as new information
becomes available. If, after expenditure is capitalised,
information becomes available suggesting that the recovery of
expenditure is unlikely, the relevant capitalised amount is written
off to profit or loss in the period when the new information
becomes available.
No impairment has been recorded against the Group's Exploration
and evaluation assets as at 31 December 2014 due to the early stage
of exploration of those assets and the initial work completed at
Pampamali which provides comfort on the existence of an
economically viable resource.
3.3. Basis of consolidation and discontinued operations
The Consolidated financial statements (comprising the balances
and transactions identified as 'Group' within these financial
statements) incorporate the financial statements of the Company and
entities controlled by the Company (its subsidiaries) made up to 31
December. Control is achieved where the Company has the power to
govern the financial and operating policies of an investee entity
so as to obtain benefits from its activities.
The results of subsidiaries acquired or disposed of during the
year are included in the Consolidated Statement of Profit or Loss
and Other Comprehensive Income from the effective date of
acquisition or up to the effective date of disposal, as
appropriate. Where necessary, adjustments are made to the financial
statements of subsidiaries to bring the accounting policies used
into line with those used by the Group.
All intra-group transactions, balances, income and expenses are
eliminated on consolidation.
The acquisition of subsidiaries is accounted for using the
purchase method. The cost of the acquisition is measured at the
aggregate of the fair values, at the date of exchange, of assets
given, liabilities incurred or assumed, and equity instruments
issued by the Group in exchange for control of the acquiree, plus
any costs directly attributable to the business combination. The
acquiree's identifiable assets, liabilities and contingent
liabilities that meet the conditions for recognition under IFRS 3
are recognised at their fair value at the acquisition date, except
for non-current assets (or disposal groups) that are classified as
held for resale in accordance with IFRS 5, Non-Current Assets Held
for Sale and Discontinued Operations, which are recognised and
measured at fair value less costs to sell.
Goodwill arising on acquisition is recognised as an asset and
initially measured at cost, being the excess of the cost of the
business combination over the Group's interest in the net fair
value of the identifiable assets, liabilities and contingent
liabilities recognised. If, after reassessment, the Group's
interest in the net fair value of the acquiree's identifiable
assets, liabilities and contingent liabilities exceed the cost of
the business combination, the excess is recognised immediately in
profit or loss.
3.4. Revenue recognition
The Group did not recognise any revenue from the sale of goods
or services in either period presented. Interest income is accrued
on a time basis, by reference to the principal outstanding and at
the effective interest rate applicable, which is the rate that
exactly discounts estimated future cash receipts through the
expected life of the financial asset to that asset's net carrying
amount.
3.5. Foreign currencies
In preparing the financial statements of the individual
companies in the Group, transactions in currencies other than the
entity's functional currency (foreign currencies) are recorded at
the rates of exchange prevailing on the dates of the transactions.
At each balance sheet date, monetary assets and liabilities that
are denominated in foreign currencies are retranslated at the rates
prevailing on the balance sheet date. Non-monetary items carried at
fair value that are denominated in foreign currencies are
translated at the rates prevailing at the date when the fair value
was determined. Non-monetary items that are measured in terms of
historical cost in a foreign currency are not retranslated.
Exchange differences are recognised in profit or loss in the
year in which they arise except for:
-- exchange differences which relate to assets under
construction for future productive use, which are included in the
cost of those assets when they are regarded as an adjustment to
interest costs on foreign currency borrowings; and
-- exchange differences on monetary items receivable from or
payable to a foreign operation for which settlement is neither
planned nor likely to occur, which form part of the net investment
in a foreign operation, and which are recognised in the foreign
currency translation reserve and recognised in profit or loss on
disposal of the net investment.
For the purpose of presenting consolidated financial statements,
the assets and liabilities of the Group's non GBP functional
currency entities are translated at exchange rates prevailing on
the balance sheet date. Income and expense items are translated at
the average exchange rates for the year, unless exchange rates
fluctuate significantly during that year, in which case the
exchange rates at the date of transactions are used. Exchange
differences arising, if any, are classified as other comprehensive
income and transferred to the Group's translation reserve. Such
translation differences are recognised as income or as expenses in
the year in which the operation is disposed of, or abandoned.
Goodwill and fair value adjustments arising on the acquisition
of a foreign entity are treated as assets and liabilities of the
foreign entity and translated at the closing rate.
HUNTER RESOURCES Plc
Notes to the Financial Statements
3.6. Taxation
The tax expense represents the sum of the tax currently payable
and deferred tax.
The tax currently payable is based on taxable profit for the
year. Taxable profit differs from net profit as reported in the
Income statement because it excludes items of income or expense
that are taxable or deductible in other years and it further
excludes items that are never taxable or deductible. The Group's
liability for current tax is calculated using tax rates that have
been enacted or substantively enacted by the balance sheet
date.
Deferred tax is the tax expected to be payable or recoverable on
differences between the carrying amounts of assets and liabilities
in the financial statements and the corresponding tax bases used in
the computation of taxable profit, and is accounted for using the
balance sheet liability method. Deferred tax liabilities are
generally 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. Such assets and
liabilities are not recognised if the temporary difference arises
from the initial recognition of goodwill or from the initial
recognition (other than in a business combination) of other assets
and liabilities in a transaction that affects neither the tax
profit nor the accounting profit.
Deferred tax liabilities are recognised for taxable temporary
differences arising on investments in subsidiaries and associates,
and interests in joint ventures, except where the Group 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.
The carrying amount of deferred tax assets is reviewed at each
balance sheet date and reduced to the extent that it is no longer
probable that sufficient taxable profits will be available to allow
all or part of the asset to be recovered.
Deferred tax is calculated at the tax rates that are expected to
apply in the year when the liability is settled or the asset is
realised. Deferred tax is charged or credited in the Income
statement, except when it relates to items charged or credited
directly to equity, in which case the deferred tax is also dealt
with in equity.
Deferred tax assets and liabilities are offset when there is a
legally enforceable right to set off current tax assets against
current tax liabilities and when they relate to income taxes levied
by the same taxation authority and the Group intends to settle its
current tax assets and liabilities on a net basis.
3.7. Exploration and evaluation
3.7.1. Pre-licence costs
Pre-licence costs relate to costs incurred before the Group has
obtained legal rights to explore in a specific area. Such costs may
include the acquisition of exploration data and the associated
costs of analysing that data. These costs are expensed in the
period in which they are incurred.
3.7.2. Exploration and evaluation expenditure
Exploration and evaluation activity involves the search for
mineral resources, the determination of technical feasibility and
the assessment of commercial viability of an identified resource.
Exploration and evaluation activities include, inter alia:
i. Licence costs paid in connection with a right to explore in
an existing exploration area
ii. Researching and analysing historical exploration data
iii. Gathering exploration data through geophysical studies
iv. Exploratory drilling and sampling
v. Determining and examining the volume and grade of the resource
vi. Surveying transportation and infrastructure requirements
vii. Conducting market and finance studies
Once the legal right to explore a license areas has been
acquired, exploration and evaluation expenditure is capitalised,
and classified according to its nature as either a tangible or an
intangible asset.
Exploration and evaluation assets are subsequently assessed for
impairment when facts and circumstances indicate that the carrying
amount of the Exploration and evaluation asset may exceed its
recoverable amount. The impairment review is conducted in
accordance with the policy disclosed below in 3.9.
When the technical and commercial feasibility of a project is
determined, the related Exploration and evaluation asset is
transferred to property, plant and equipment and depreciated on a
units of production basis.
HUNTER RESOURCES Plc
Notes to the Financial Statements
3.8. Investment in subsidiary
The investment in subsidiary undertakings in the Company only
financial statements is stated at cost, less any provision for
impairment.
3.9. Impairment of assets
At each reporting date, the Group reviews the carrying amounts
of its tangible and intangible assets (including Exploration and
evaluation assets), and the Company further reviews the carrying
amount of its investment in subsidiary undertakings, to determine
whether there is any indication that those assets have suffered an
impairment loss. If any such indication exists, the recoverable
amount of the asset is estimated in order to determine the extent
of the impairment loss (if any). Where the asset does not generate
cash flows that are independent from other assets, the Group
estimates the recoverable amount of the cash-generating unit to
which the asset belongs.
Goodwill, intangible assets with indefinite useful lives and
intangible assets not yet available for use are tested for
impairment annually and whenever there is an indication that the
asset may be impaired. An impairment of goodwill is not
subsequently reversed.
Recoverable amount is the higher of fair value less costs to
sell and value in use. In assessing value in use, the estimated
future cash flows are discounted to their present value using a
pre-tax discount rate that reflects current market assessments of
the time value of money and the risks specific to the asset for
which the estimates of future cash flows have not been
adjusted.
If the recoverable amount of an asset (or cash-generating unit)
is estimated to be less than its carrying amount, the carrying
amount of the asset (cash-generating unit) is reduced to its
recoverable amount. An impairment loss is recognised in profit or
loss immediately.
Where an impairment loss subsequently reverses, the carrying
amount of the asset (cash-generating unit) is increased to the
revised estimate of its recoverable amount, but only to the extent
that the increased carrying amount does not exceed the carrying
amount that would have been determined had no impairment loss been
recognised for the asset (cash-generating unit) in prior years. A
reversal of an impairment loss is recognised in profit or loss
immediately.
3.10. Financial instruments
Financial assets and financial liabilities are recognised on the
balance sheet when the Group becomes a party to the contractual
provisions of the instrument.
3.10.1. Loans and other receivables
Trade receivables, loans and other receivables, including
amounts due from subsidiary undertakings, that have fixed or
determinable payments that are not quoted in an active market are
classified as 'loans and receivables'. Loans and receivables are
measured at amortised cost using the effective interest method,
less any impairment. Interest income is recognised by applying the
effective interest rate, except for short-term receivables when
recognition of interest would be material.
All of the Group's financial assets are classified as 'loans and
receivables'.
3.10.2. Other financial liabilities
Trade payables and other payables are carried at amortised cost
and represent liabilities for goods and services provided to the
Group prior to the end of the financial year that are unpaid and
arise when the Group becomes obliged to make future payments in
respect of the purchase of these goods and services.
3.10.3. Compound instruments
The component parts of compound instruments, comprising
convertible loan notes issued by the Company, are classified
separately as financial liabilities and equity in accordance with
the substance of the contractual arrangement. At the date of issue,
the fair value of the liability component is estimated. For
convertible loan notes, this amount is recorded as a liability on
an amortised cost basis using the effective interest method until
extinguished upon conversion or at the instrument's maturity date.
The equity component is determined by deducting the amount of the
liability component on initial measurement from the fair value of
the compound instrument as a whole. This is recognised and included
in equity and is not subsequently re-measured.
3.10.4. Impairment of financial assets
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.
HUNTER RESOURCES Plc
Notes to the Financial Statements
For the 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. 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, the reversal of the previously
recognised impairment loss is recognised in the consolidated income
statement.
3.11. Share-based payments
Equity-settled share-based payments with employees and others
providing similar services, which include share options, warrants
and other similar instruments, are measured at the fair value of
the equity instrument at the grant date. Fair value is measured by
use of an appropriate valuation model, generally Black-Scholes. The
expected life used in the model is adjusted, based on management's
best estimate, for the effects of non-transferability, exercise
restrictions and behavioural considerations.
The fair value determined at the grant date of the
equity-settled share-based payments is expensed on a straight-line
basis over the vesting period, based on the Group's estimate of
equity instruments that will eventually vest. Where there is no
vesting period, the fair value is expensed immediately.
At each reporting date, the Group revises its estimate of the
number of equity instruments expected to vest. The impact of the
revision of the original estimates, if any, is recognised in profit
or loss over the remaining vesting period, with corresponding
adjustment to the equity-settled employee benefits reserve.
Equity-settled share-based payment transactions with other
parties are measured at the fair value of the goods and services
received, except where the fair value cannot be estimated reliably,
in which case they are measured at the fair value of the equity
instruments granted, measured at the date the entity obtains the
goods or the counterparty renders the service.
For cash-settled share-based payments, a liability equal to the
portion of the goods or services received is recognised at the
current fair value determined at each reporting date.
4. SEGMENT REPORTING
IFRS 8, Operating Segments, requires operating segments to be
identified on the basis of internal reports of the Group that are
regularly reviewed by the Group's chief operating decision maker
('CODM'). The CODM of the Group is considered to be the Board. The
Directors considered there to be one business segment, being the
exploration and evaluation of mineral resources, currently
undertaken exclusively in Peru through the Company's subsidiary
undertaking, Gold Hunter. All income and expenditure is allocated
to this activity which accounts for all of the Group's assets and
liabilities as at 31 December 2014 and 31 December 2013 and all of
the Group's results and cash flows for the 12 month periods then
ended.
5. LOSS BEFORE TAXATION
Loss before taxation is stated after (crediting) / charging:
2014 2014 2013
Group Company Group and Company
GBP'000 GBP'000 GBP'000
-------- --------- -------------------
Exchange gain (7) (7) -
Staff costs (note 6) 95 95 75
Operating lease rentals 1 - -
Auditor's remuneration - audit services 19 19 15
Auditor's remuneration - non audit services 35 35 -
-------- --------- -------------------
The Company's Ordinary Shares were re-admitted to trading on AIM
on 4 July 2014 following the acquisition of Gold Hunter and the
Company securing new funding of GBP925,000 (before issue expenses)
through the July 2014 Funding (refer to note 17.3.1).
During 2014 the Company incurred expenditure of GBP345,000
(2013: GBPnil) in connection with the Re-admission (excluding
commissions related directly to the funds raised), principally
comprising legal, geological, reporting accountants, corporate
finance and other related fees and expenses. Of this expenditure,
GBP115,000 was settled by the issue of 7,666,666 new Ordinary
Shares in the Company (note 17) and GBP10,000 represents the fair
value of 1,327,784 warrants issued to Allenby (note 18.4.2). As
required by IFRS, this expenditure has been allocated pro-rata to
the issue of new Ordinary Shares under the July 2014 Funding, and
the re-admission of the Ordinary Shares in issue immediately
preceding the July 2014 Funding. Accordingly, GBP118,000 (of which
GBP43,000 was settled through the issue of new Ordinary Shares or
warrants) has been expensed to profit
HUNTER RESOURCES Plc
Notes to the Financial Statements
and loss and GBP227,000 (of which GBP82,000 was settled through
the issue of new Ordinary Shares or warrants) has been recorded
within the Share Premium account.
6. STAFF NUMBERS AND COSTS
The average number of persons employed (including Executive
Directors) during the year, by category, was as follows:
2014 2013
Group and Company Group and Company
No. No.
------------------- -------------------
Executive Directors 1 1
------------------- -------------------
The costs incurred in respect of this employee were:
2014 2013
Group and Company Group and Company
No. No.
------------------- -------------------
Wages and salaries 61 37
Share based payments (note 18.2) 34 38
------------------- -------------------
95 75
------------------- -------------------
Staff costs exclude non-executive Director's emoluments.
Information on the remuneration of the Directors, including
executive and non-executive Directors is provided in note 7.
7. REMUNERATION OF DIRECTORS AND KEY MANAGEMENT
The Directors' remuneration (who are the key management
personnel) in respect of both the Group and the Company is as
follows:
Basic Total Total
Salary Fees Share based payments 2014 2013
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
---------------- -------- --------------------- -------- --------
Executive Directors:
Simon D Hunt(1) 36 25 34 95 75
Non-executive Directors:
John Molyneux 12 - 13 25 27
David Paull 12 - 13 25 27
Andrew Richards 6 - 14 20 -
---------------------
66 25 74 165 129
---------------- -------- --------------------- -------- --------
(1) Of the amounts reported above, GBP36,000 (2013: GBP36,000)
was in respect of executive fees, GBP20,000 was in
respect of fees in connection with the Company's
re-admission to AIM in July 2014 and GBP5,000 was
in respect of additional days. All amounts were paid
to Cornerstone Capital Limited, a company of which
Mr S Hunt is both a Director and shareholder (refer
to note 21.3).
8. Investment revenues
2014 2013
Company Group and Company
GBP'000 GBP'000
--------- -------------------
Interest income on loans to subsidiary companies 3 -
--------- -------------------
9. FINANCE COSTS
2014 2013
Group and Company Group and Company
GBP'000 GBP'000
------------------- -------------------
Effective interest rate expense on Convertible loan notes (note 16) 8 6
------------------- -------------------
HUNTER RESOURCES Plc
Notes to the Financial Statements
10. INCOME TAX EXPENSE
10.1. Company
The Income Tax (Amendment) Act 2006 provides that a standard
zero rate of income tax applies to the Company in the Isle of Man
for 2006/07 and subsequent years of assessment. Therefore no
provision for liability to Isle of Man income tax has been included
in these accounts for the Company.
10.2. Group
2014 2013
Group Group
GBP'000 GBP'000
--------- ---------
Loss before tax (476) (220)
Tax at the Peru corporation tax rate of 32% applicable to extractive industries 152 70
Tax effect of different tax rates (147) (70)
Tax effect of losses not recognized (5) -
--------- ---------
Tax expense - -
--------- ---------
The tax reconciliation has been prepared using a 32% tax rate,
the corporate income tax rate in Peru applicable to mining and
extractive industries, as this is where the Group's principal
assets are located. As at 31 December 2014, the Group has
unrecognised taxable losses in Peru which may be available for
offset against future taxable profits amounting to approximately
GBP16,000 (31 December 2013: GBPnil), with a tax value of
approximately GBP5,000 (31 December 2013: GBPnil). No deferred tax
asset has been recognised for these tax losses as the requirements
of IAS 12, 'Income taxes', have not been met.
11. LOSS PER ORDINARY SHARE
There is no difference between the diluted loss per share and
the basic loss per share presented as the Group and Company are
loss making in all periods presented and instruments that are in
issue which could result in the issue of new Ordinary Shares, being
the warrants disclosed in note 18, are anti-dilutive.
The calculation of basic and diluted loss per share is based on
the following data:
2014 2014 2013
Group Company Group and Company
(represented for the Share Consolidation
- note 17.1)
Loss for the year - GBP'000 (476) (460) (220)
Weighted average number of Ordinary Shares 84,800,486 84,800,486 37,262,612
----------- ----------- -----------------------------------------
Basic and diluted loss per Ordinary Share
- pence (0.56) (0.54) (0.59)
----------- ----------- -----------------------------------------
12. INVESTMENTS IN SUBSIDIARY UNDERTAKINGS - COMPANY
As at 31 December 2014, the Company has the following direct
investments in subsidiary companies:
Subsidiary undertaking Proportion held Country of incorporation Nature of business
-----------------------------
Green Energy Madagascar sarl 100% Madagascar Dormant
Gold Hunter SAC 100% Peru Minerals exploration and evaluation
HUNTER RESOURCES Plc
Notes to the Financial Statements
Movements in the carrying value of investments in subsidiary
undertakings during the year were as follows:
GBP'000
Cost
At 1 December 2012 and 1 December 2013 2,169
Investment in the period in Gold Hunter SAC 199
At 31 May 2014 2,368
--------
Provision for irrecoverable amounts
At 31 December 2012, 31 December 2013 and 31 December 2014 2,169
--------
Net book value
31 December 2014 199
--------
31 December 2013 -
--------
The investment in Gold Hunter SAC during the year was satisfied
by the issue of 13,277,838 new Ordinary Shares in the Company, with
a fair value on the date of issue of GBP199,000.
The Company's investment at cost in Green Energy Madagascar sarl
amounts is GBP2,169,000. The investment is fully provided against
in all periods presented.
13. Exploration and evaluation assets
Intangible assets
GBP'000
------------------
COST AND NET BOOK VALUE
At 1 December 2012 and 1 December 2013 -
Additions 353
At 31 December 2014 353
------------------
Exploration and evaluation assets comprise the Group's initial
investments to participate in Project Pampamali, related legal and
other expenditure, and expenditure incurred by the Group in the
initial exploration and evaluation of the resource at Pampamali.
Initial exploration and evaluation expenditure includes, inter
alia, the initial geological assessment and environmental impact
assessment of the project.
In future periods, expenditure incurred which is directly
attributable to the exploration and evaluation of the Group's
license sites will be capitalised within 'Exploration and
evaluation assets', such as geological analysis, drilling,
trenching, sample analysis and similar expenditure.
Expenditure incurred in the Group's general administrative
activities in Peru is expensed to profit and loss as incurred.
14. Amounts due from subsidiary UNDERTAKINGS - COMPANY
'Amounts due from subsidiary undertakings' represents amounts
due to the Company from Gold Hunter. The amounts due are unsecured,
bear interest at 5% per annum, and are repayable by 31 December
2016. Movements in the carrying value during the period are as
follows:
GBP'000
--------
At 1 December 2012 and 1 December 2013 -
Advances made in the year 159
Interest income 3
Foreign exchange gain 10
At 31 December 2014 172
--------
15. TRADE AND OTHER PAYABLES
2014 2014 2013
Group Company Group and Company
GBP'000 GBP'000 GBP'000
--------- --------- -------------------
Trade payables 36 17 2
Other payables 8 8 -
Accrued expenses 36 36 19
--------- --------- -------------------
80 61 21
--------- --------- -------------------
HUNTER RESOURCES Plc
Notes to the Financial Statements
The amounts reported above principally comprise amounts
outstanding for recurring expenditure of the Group, such as audit,
accounting and company secretarial fees. The amounts are stated at
their invoiced value, or amount payable based on the Directors
assessment of obligations incurred but not yet invoiced.
16. CONVERTIBLE LOAN NOTES
16.1. Carrying value
The following summarises the movements in the convertible loan
notes liability and equity components during the year:
Liability Equity Total
GBP'000 GBP'000 GBP'000
---------- -------- --------
At 1 January 2013 - - -
Initial measurement 21 5 26
Allocation of issue expenses (1) - (1)
Interest charge 6 - 6
---------- -------- --------
At 31 December 2013 26 5 31
Initial measurement 185 5 190
Interest charge 8 - 8
Interest transferred to accruals upon conversion (4) - (4)
Conversion of loan notes (215) (10) (225)
---------- -------- --------
At 31 December 2014 - - -
---------- -------- --------
16.2. Convertible Loan Notes in Issue
During the year the Company had three convertible loan notes in
issue with Marine, the principal terms of which are summarised
below. The convertible loan notes were all converted into Ordinary
Shares of the Company on re-admission of the Company's Ordinary
Shares to AIM on 4 July 2014 resulting in the issue of 15,223,601
new Ordinary Shares (refer to note 17.3).
16.2.1. The First Loan Note
In January 2013, the Company secured the placing of The First
Loan Note raising gross proceeds of GBP26,000 before expenses. The
First Loan Note, as amended, carried no interest charge, was
unsecured and repayable by 31 December 2014 and was convertible (in
part or in full) into Ordinary Shares in the Company at the holders
request at any time and at a conversion price equal to the par
value per Ordinary Share.
Upon Re-admission the First Loan Note was converted in full into
2,586,800 new Ordinary Shares.
16.2.2. The Second Loan Note
In March 2014 the Company issued The Second Loan Note with a
face value of GBP100,000, which was drawn down in full during the
year. The Second Loan Note, as amended, carried interest at the
rate of 8% per annum (such interest to be accumulated and paid in
cash upon conversion or repayment of The Second Loan Note), was
unsecured and repayable, if not converted, on Re-admission. The
Second Loan note was convertible in whole or in part at the note
holder's request into Ordinary Shares at the price at which new
Ordinary Shares were issued pursuant to the fundraise completed
upon Re-admission.
Upon Re-admission the Second Loan Note was converted into
6,666,667 new Ordinary Shares. In accordance with the terms of the
Second Loan Note, upon conversion, the Company issued the note
holder with warrants over one new Ordinary Share for every 1.25 new
Ordinary Shares issued on conversion of The Second Loan Note,
exercisable at a price per warrant equal to the price at which new
funds are raised on AIM upon Re-admission plus 15%, for three years
from the date of conversion of the New Loan Notes.
16.2.3. The Third Loan Note
In March 2014 the Company issued The Third Loan Note with a face
value of $150,000, which was drawn down in full during the year.
Other than for the face value of the instrument, The Third Loan
Note, as amended, has the same terms as The Second Loan Note.
Upon Re-admission $150,000 of the Third Loan Note was converted
into 5,970,134 new Ordinary Shares at an agreed exchange rate of
$1.675 per GBP1.0. Warrants were also issued under the same basis
as for The Second Loan Note.
16.3. Measurement and conversion
While in legal form the Loan Notes were liabilities of the
Group, the Loan Notes included components with liability and equity
features as defined under IFRS. IAS 32, 'Financial Instruments:
Presentation', required the Group to identify the equity and
liability component parts of the instruments
HUNTER RESOURCES Plc
Notes to the Financial Statements
and assign a value to each. In each of the Loan Notes the
material components were identified as the host debt contract and a
holder call option to convert to Ordinary Shares. The fair value of
the host debt component was determined for each Loan Note based on
the present value of the contractual stream of future cash flows
(being the redemption amount and interest due where applicable)
discounted at the market rate of interest that would have applied
to an instrument of comparable credit quality with substantially
the same cash flows, on the same terms, but without the conversion
feature. The relevant market interest rate applicable to the
Company was estimated at 25%. The balance of the gross proceeds
received was established as the equity component of the Loan Notes.
Where applicable, issue expenses were allocated pro-rata to the
initial carrying value of each component. The liability component
was subsequently measured at amortised cost using the effective
interest rate method and an effective interest rate of between 25%
and 31.58%. The equity component was not re-measured.
Upon conversion, the carrying value of the Loan Notes liability
at that date (which equated to the face value of the Loan Notes)
was transferred to the share capital and share premium accounts.
The balance on the Convertible loan note reserve was reclassified
to accumulated losses.
17. SHARE CAPITAL, SHARE PREMIUM AND RESERVES
17.1. Share consolidation
On 30 June 2014 the Company completed the Share Consolidation
pursuant to which the Company's:
1. 377,296,778 issued Ordinary Shares of GBP0.001 each at that
date were consolidated into 37,729,678 Ordinary Shares of GBP0.01
each on a one for ten basis; and
2. 93,164,834 issued Deferred Shares of GBP0.009 each at that
date were consolidated into 9,316,483 Deferred Shares of GBP0.09
each on a one for ten basis.
17.2. Authorised share capital and rights attaching to shares
The authorised share capital of the Company is comprised of the
following:
At 31 December 2014 At 31 December 2013
No. GBP No. GBP
------------ ---------- ------------ ----------
Ordinary Shares of GBP0.001 each - - 700,000,000 700,000
Deferred Shares of GBP0.009 each - - 200,000,000 1,800,000
Ordinary Shares of GBP0.01 each 300,000,000 3,000,000 - -
Deferred Shares of GBP0.09 each 20,000,000 1,800,000 - -
------------ ---------- ------------ ----------
320,000,000 4,800,000 900,000,000 2,500,000
------------ ---------- ------------ ----------
The Company's Ordinary Shares carry no right to fixed income.
Each Ordinary Share carries the right to one vote at the general
meetings of the Company. The Company's Deferred Shares do not carry
voting rights or a right to receive a dividend. The holders of
Deferred Shares do not have the right to receive notice of any
general meeting of the Company, nor have any right to attend, speak
or vote at any such meeting. In addition, holders of Deferred
Shares will only be entitled to a payment on a return of capital or
on a winding up of the Company after each of the holders of
Ordinary Shares has received a payment of GBP100,000 in respect of
each Ordinary Share. Accordingly, the Deferred Shares have no
economic value. The Deferred Shares are not admitted to trading on
any stock exchange.
17.3. Shares in issue, Share capital and Share premium
The table below presents a reconciliation of the Company's
Ordinary Shares and Deferred Shares in issue and the Company's
Share capital and Share premium accounts, adjusted for the share
consolidation:
Number of Ordinary Number of Deferred Share
Shares Issued and Fully Shares Issued and Fully capital (1) Share premium
Paid Paid GBP'000 GBP'000
Balance at 1 January 2013 9,316,484 9,316,483 932 5,202
Issue of Ordinary Shares
at GBP0.001 each (2) 28,413,194 - 284 -
Cost of capital raising - - - (15)
Balance at 31 December
2013 37,729,678 9,316,483 1,216 5,187
New Ordinary Shares
issued in July 2014:
Subscription 36,408,467 - 364 182
Placing 22,472,133 - 225 112
Conversion of the Loan
Notes 15,223,601 - 152 63
Marine Mandate 5,333,333 - 53 27
Commission and other
Re-admission fees
settled in Ordinary
Shares 2,749,985 - 27 15
HUNTER RESOURCES Plc
Notes to the Financial Statements
Acquisition of Gold Hunter 13,277,838 - 133 66
Cost of capital raising, net of share based payments credits - - - (246)
Balance at 31 December 2014 133,195,035 9,316,483 2,170 5,406
------------ ---------- ------ -------
(1) The amounts reported for Share Capital include the nominal value of the Ordinary Shares and
Deferred Shares issued by the Company.
17.3.1. The Subscription and Placing
On 4 July 2014 the Company's Ordinary Shares were re-admitted to
trading on AIM. On that date the Company completed the Subscription
of 36,408,467 new Ordinary Shares at GBP0.015 each and the Placing
of 22,472,133 new Ordinary Shares at GBP0.015 each raising gross
proceeds before issue expenses of GBP883,000. At the same time, the
Company, by agreement with Marine, completed the final drawdown on
the Third Loan Note providing additional funds of GBP42,000
bringing the total for The July 2014 Funding to GBP925,000 of new
monies. Total fees and expenses incurred in connection with the
Re-admission and The July 2014 Funding, including fees due to
Marine under the Marine Mandate Agreement (refer below) were
approximately GBP479,000 of which GBP121,000 was settled through
the issue of 8,083,333 new Ordinary Shares, GBP112,000 represents
the fair value of warrants issued to Allenby and Marine, and
GBP246,000 was settled in currency. The total fees and expenses
were allocated directly to equity or profit and loss where
appropriate, with common fees and expenses allocated pro-rata to
equity and profit and loss as more fully described in note 5.
17.3.2. Conversion of Loan Notes
On 4 July 2014, at Marine's election and in accordance with the
terms of the Loan Notes (refer to note 16):
1. the First Loan Note, the Second Loan Note and the Third Loan
Note were converted into new Ordinary Shares in the Company
resulting in the issue of 15,223,601 new Ordinary Shares to
extinguish the outstanding amounts on the Loan Notes, excluding
accrued interest, of GBP215,000 at that date; and
2. the Company issued Marine with warrants over 7,880,596 new
Ordinary Shares at a price of GBP0.01725 per Ordinary Share (being
the price equal to the price at which new funds were raised under
the Subscription and Placing plus 15%) for a period of three
years.
17.3.3. Marine Mandate
On 4 December 2012, the Company had entered into an agreement
with Marine under which the Company agreed (i) to pay a fee of
GBP50,000 to Marine, and (ii) to issue 2,000,000 Ordinary Shares
(as adjusted for the Share Consolidation) to Marine, if Marine
introduced a project or transaction to the Company which resulted
in:
a) the acquisition by the Company of an asset considered by the
Board to be valued at GBP500,000 or more; or
b) a reverse takeover by the Company (as defined in Rule 14 of the AIM Rules).
Given the terms of the acquisition of Gold Hunter, the Company's
obligations under this agreement with Marine were triggered at
Re-admission. The Company issued an aggregate of 5,333,333 Ordinary
Shares to Marine at the Subscription Price in settlement of such
obligations being (1) 2,000,000 new Ordinary Shares contractually
due and (2) 3,333,333 new Ordinary Shares through mutual agreement
with Marine to pay the GBP50,000 referred to above in Ordinary
Shares rather than in cash.
17.3.4. Acquisition of Gold Hunter
On 4 July 2014 the Company acquired the entire issued share
capital of Gold Hunter SAC through the issue of 13,277,838 new
Ordinary Shares in the Company, with a fair value on the date of
issue of GBP199,000. Refer to note 12.
17.4. Share Premium reserve
The Share Premium reserve represents the premium over the
nominal value of Ordinary Shares raised on the issue of Ordinary
Shares by the Company, less expenses incurred directly in
connection with the issue of new Ordinary Shares.
17.5. Currency translation reserve
For the purpose of presenting consolidated financial statements,
the assets and liabilities of the Group's non GBP functional
currency entities are translated at exchange rates prevailing at
the balance sheet date. Income and expense items are translated at
the average exchange rates for the period, unless exchange rates
fluctuate significantly during that period, in which case the
exchange rates at the date of the transactions are used. Exchange
differences arising are taken to the 'Currency translation
reserve'.
18. SHARE-BASED PAYMENTS
18.1. Equity-settled share options and warrants
HUNTER RESOURCES Plc
Notes to the Financial Statements
The Company and Group have two share option schemes for
Directors and executives of the Group. Options and warrants over
Ordinary Shares in the Company are also issued to Directors for
services rendered and certain service providers. These instruments
are not granted under the terms of the Share Plan. There are no
share options in issue as at 31 December 2013 and 31 December
2014.
18.2. Charge in the period
The total charge recorded in profit and loss for share based
payments in the year ended 31 December 2014 was GBP148,000 (31
December 2013: GBP76,000) of which GBP74,000 (31 December 2013:
GBP69,000) arises in respect of the Directors Warrants (refer to
note 18.4.3 below), GBP6,000 (31 December 2013: GBP7,000) arises in
respect of the Allenby Warrants and the pro-rata allocation of the
Allenby Re-admission Warrants (refer to note 18.4.2 below),
GBP29,000 (31 December 2013: GBPnil) arises in respect of the
Marine Consultancy Warrants, and GBP39,000 (31 December 2013:
GBPnil) arises in respect of the allocation to profit and loss of
expenses incurred in relation to the Re-Admission which were
settled in Ordinary Shares. A further GBP185,000 (31 December 2013:
GBP151,000) was charged to the Share premium account, representing
GBP109,000 for the fair value of the Underwriting Warrants, the
Marine Convertible Warrants and the pro-rata allocation of the
Allenby Re-admission Warrants, and GBP76,000 for the allocation to
profit and loss of expenses incurred in relation to the
Re-Admission which were settled in Ordinary Shares (31 December
2013: incurred in respect of the Subscription for underwriting
services provided by Marine (refer to note 18.4.1 below)).
18.3. Summary of share options and warrants accounted for as share based payments
Details of the number of Ordinary Shares that may be issued to
satisfy warrants which are accounted for as share based payments
are as follows:
Weighted average exercise price
No.(1) GBp
At 1 January 2013 - -
Granted in the period 10,100,000 4.822
------------- --------------------------------
At 31 December 2013 - -
Issued in the period 32,937,224 1.725
Terminated in the period (10,100,000) 4.822
At 31 December 2014(2) 32,937,224 1.725
------------- --------------------------------
(1) Where applicable, the number of Ordinary Shares that
may be issued to satisfy warrants has been adjusted
for the Share Consolidation (refer to note 17.1).
(2) As at 31 December 2014, all warrants are exercisable.
The outstanding and exercisable options and warrants and bonus
shares that are accounted for as share based payments could result
in the issue of new Ordinary Shares at the following prices:
Total Exercisable
31 December 31 December 2013 31 December 31 December 2013
2014 No. 2014 No.
Price - GBp Expiry No. No.
0.5 8 January 2018 - 65,000,000 - 65,000,000
0.45 28 February 2018 - 36,000,000 - 18,000,000
0.1725 3 July 2017 32,937,224 - 32,937,224 -
32,937,224 101,000,000 32,937,224 83,000,000
------------ ----------------- ------------ -----------------
18.4. Warrants issued during the period
18.4.1. Warrants issued to Marine
On 4 December 2012, the Company entered into an underwriting
agreement with Marine in accordance with which, on 28 February
2013, the Company issued Marine with the Underwriting Warrants,
being 6,200,000 warrants (as adjusted for the Share Consolidation)
over new Ordinary Shares. Each Underwriting Warrant conferred the
right (but not the obligation) to subscribe for one new Ordinary
Share prior to 8 January 2018 at a price of GBP0.05 per Ordinary
Share (as adjusted for the Share Consolidation).
Pursuant to an agreement dated 6 June 2014, and conditional upon
Re-admission, the Company agreed with Marine that with effect from
Re-admission the Underwriting Warrants would be cancelled and
replaced with 6,200,000 warrants over New Ordinary Shares
exercisable at a price of GBP0.01725 per Ordinary Share (being the
price equal to the price at which new funds were raised under the
Subscription and Placing plus 15%) for a period of three years from
Re-admission.
HUNTER RESOURCES Plc
Notes to the Financial Statements
In addition, in June 2014, the Company entered into an agreement
with Marine to (1) procure the services of Mr Peter Lalor to
conduct due diligence on new projects and acquisitions, (2) review
the Company's exploration and production programs, (3) assist the
Board in all matters relating to exploration for and production of
and marketing of minerals designated by the Company, (4) provide
the Board with the benefit of his knowledge of the mining industry
and (5) evaluate the performance of Global Pearl (and the
Management Team) under the Global Pearl Consultancy Agreement,
including monitoring when payment milestones have been achieved and
when payments should be made as against the agreed budget. In
consideration for providing these services to the Company, and
following Re-admission, the Company granted Marine 4,000,000
warrants (the 'Marine Consultancy Warrants') to subscribe for new
Ordinary Shares at a price of GBP0.01725 per Ordinary Share (being
the price equal to the price at which new funds were raised under
the Subscription and Placing plus 15%) for a period of three
years.
Further, and in connection with the conversion of the Loan Notes
(refer to note 16), the Company issued Marine with warrants over
10,109,440 new Ordinary Shares at a price of GBP0.01725 per
Ordinary Share (being the price equal to the price at which new
funds were raised under the Subscription and Placing plus 15%) for
a period of three years (the 'Marine Convertible Warrants').
18.4.2. Warrants issued to Allenby
On 25 February 2013 the Company issued Allenby the Allenby
Warrants, being 300,000 warrants (as adjusted for the Share
Consolidation) over new Ordinary Shares, as part of the fee
agreement between the Company and Allenby. The Allenby Warrants had
the same terms as the Underwriting Warrants.
Pursuant to an agreement dated 6 June 2014, and conditional upon
Re-admission, the Company agreed with Allenby that with effect from
Re-admission the Allenby Warrants would be cancelled and replaced
with 300,000 warrants over New Ordinary Shares exercisable at a
price of GBP0.01725 per Ordinary Share (being the price equal to
the price at which new funds were raised under the Subscription and
Placing plus 15%) for a period of three years from
Re-admission.
In addition to the above warrants, In addition the Company
issued Allenby with warrants over 1,327,784 new Ordinary Shares,
being equal to 1% of the Company's issued Ordinary Share capital
immediately following Re-admission, exercisable at a price of
GBP0.01725 per Ordinary Share (being the price equal to the price
at which new funds were raised under the Subscription and Placing
plus 15%) for a period of three years (the 'Allenby Re-admission
Warrants').
18.4.3. Directors' Warrants
On 25 February 2013 the Company issued 3,600,000 warrants (as
adjusted for the Share Consolidation) to the Directors (the
'Directors Warrants'), as follows:
a) Simon Hunt (through Cornerstone Capital Limited) - 2,000,000 warrants;
b) David Paull - 800,000 warrants; and
c) John Molyneux - 800,000 warrants.
Each Directors Warrant conferred the right (but not the
obligation) to subscribe for one Ordinary Share prior to 28
February 2018 at a price of GBP0.045 (as adjusted for the Share
Consolidation). Half of the Directors Warrants could only be
exercised if, in addition, (i) the Company has first completed
either a reverse takeover (as defined in Rule 14 of the AIM Rules)
or acquired an asset valued in excess of GBP500,000 (at the date of
the acquisition), and (ii) the 30-day average VWAP of the Ordinary
Shares (as calculated in accordance with the warrant instrument) is
equal to or in excess of GBP0.0625 pence per share at the time of
exercise (as adjusted for the Share Consolidation).
Pursuant to an agreement dated 6 June 2014, and conditional upon
Re-admission, the Company agreed with each of the Directors that
with effect from Re-admission the Directors Warrants would be
cancelled and replaced with 9,000,000 warrants over new Ordinary
Shares exercisable at a price of GBP0.01725 per Ordinary Share
(being the price equal to the price at which new funds were raised
under the Subscription and Placing plus 15%) for a period of three
years from Re-admission (the 'New Directors Warrants'), allocated
as follows:
a) Simon Hunt (through Cornerstone Capital Limited) - 5,000,000 warrants;
b) David Paull - 2,000,000 warrants; and
c) John Molyneux - 2,000,000 warrants.
In addition, 2,000,000 warrants were issued to Andrew Richards
with effect from Re-admission, with the same terms as the New
Directors Warrants.
18.5. Fair value
The cancellation and replacement of the Underwriting Warrants,
the Allenby Warrants and the Director Warrants has been accounted
for as a modification to the terms of those warrant instruments.
Accordingly, the fair value of the modified instruments has been
determined at the date of effective modification (being the
Re-admission date) and compared to the fair value, at that date, of
the instruments had they not been modified. The difference has been
expensed immediately to profit and loss for the Allenby Warrants
and the Director Warrants, and to Share Premium for the
Underwriting Warrants. This reflects the fact that all service
vesting conditions have been met and the nature of the services
provided.
HUNTER RESOURCES Plc
Notes to the Financial Statements
The fair value of the Marine Consultancy Warrants, the Marine
Convertible Warrants and the Allenby Re-admission Warrants has been
determined at the date of grant (i.e. the Re-admission date) and
expensed immediately to the Share Premium account for the Marine
Convertible Warrants, to profit and loss account for the Marine
Consultancy Warrants and pro rata allocated between profit and loss
and Share Premium for the Allenby Re-admission Warrants. This
reflects the fact that all service vesting conditions have been met
and the nature of the services provided.
The fair value of the all of the warrants granted, or modified,
in the year, and the fair value of the Director's Warrants
immediately under the original conditions, has been determined
using a Black-Scholes valuation model with the following
inputs:
Warrants granted or modified Directors' Warrants under
original conditions
----------------------------- --------------------------------
Weighted average share price - GBp 1.60 5.00
Weighted average exercise price - GBp 1.73 1.60
Expected volatility - %(2) 70.9 89.1
Expected life - years(1) 3 1.65
Risk free rate - % 1.49 0.91
Expected dividend yield - % - -
----------------------------- --------------------------------
(1) Where relevant, the expected life used in the model has been adjusted based on management's
best estimate for the effects of non-transferability, exercise restrictions and behavioural
considerations.
(2) The volatility assumption has been determined based on the historical volatility of the Company's
Ordinary Share price, where applicable adjusted for periods of abnormal volatility.
19. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES
19.1. Financial risk management objectives
The Company and Group manage the risks arising from their
operations, and financial instruments at Board level. The Board has
overall responsibility for the establishment and oversight of the
risk management framework and to ensure that the Company and Group
have adequate policies, procedures and controls to manage
successfully the financial risks that they face.
While the Group does not have a written policy relating to risk
management of the risks arising from any financial instruments
held, the close involvement of the Executive Chairman in the day to
day operations of the Group ensures that risks are monitored and
controlled in an appropriate manner for the size and complexity of
the Group. Financial instruments are not traded, nor are
speculative positions taken. The principal risks that the Group
faces as at 31 December 2014 and 31 December 2013 with an impact on
financial instruments are summarised below.
19.2. Risk exposure
The principal risks arising from financial instruments that
affect the Group and Company are credit risk on its balances held
at bank and liquidity risk. The Group and Company have no
significant exposure to market risk, where market risk is the risk
that changes in interest rates, foreign exchange rates, equity
prices and other rates, prices, volatilities, correlations or other
market conditions, will have an adverse impact on the Group and
Company's financial position or results.
19.2.1. Credit risk
The Group and the Company's principal financial assets are bank
balances and cash, and recoverable VAT assets. In addition the
Company has receivable balances from its subsidiary companies. The
Group and Company has two significant concentrations of credit risk
being (1) cash balances held with its bank and, (2) recoverable VAT
assets from Her Majesty's Revenue and Customs in the United
Kingdom. Credit risk on liquid funds is limited because the
counterparties are banks with high credit-ratings assigned by
international credit-rating agencies. Credit risk on VAT
recoverable assets is limited because of the credit standing of the
counterparty. The Company has further concentration of credit risk
on its balances with its subsidiary companies - the Company does
not hedge this risk which is considered limited as the Company
controls its subsidiaries.
19.2.2. Liquidity risk and managing capital
Liquidity risk is the risk that the Company and Group will not
be able to meet their financial obligations as they fall due. The
Company raises funds as and when required on the basis of forecast
expenditure and inflows. When funding is required, the Company
balances the costs and benefits of equity and debt financing. When
funds are received they are deposited with banks of high standing
in order to obtain competitive market interest rates. The Company
aims to optimise the Group's capital structure by holding an
appropriate level of debt relative to equity in order to maximise
shareholder value. The appropriate level of debt is set with
reference to a number of factors and financial ratios including
expected operating and capital expenditure cash flows, contingent
liabilities and the level of unrestricted cash as well as the
general economic environment. The Company aims to control its
capital structure by issuing new Ordinary Shares and raising debt
finance to the extent that it is possible on commercially
acceptable terms. The Group's developing nature and the economic
conditions prevailing are restricting the Company's ability to
raise traditional
HUNTER RESOURCES Plc
Notes to the Financial Statements
bank debt finance and exert any significant degree of control
over its gearing ratio. As a result, the Company is currently
financed exclusively from equity.
As at 31 December 2014, the Group and Company have limited
liquidity risk with net current assets in excess of the current and
short term forecast cash requirements. The Group and Company's
liabilities are due as follows:
Group Company
2014 2013 2014 2013
GBP'000 GBP'000 GBP'000 GBP'000
-------- -------- -------- --------
1 month 77 21 58 21
2 to 3 months - - - -
3 to 6 months 3 26 3 26
-------- -------- -------- --------
80 47 61 47
======== ======== ======== ========
Note 3.2.1.1 provides further information on the planned future
liquidity and the Going Concern basis of the Company and Group.
19.2.3. Currency risk
On its on-going trading activities the Company and Group
undertake a small number of transactions in currencies other than
GBP but there is limited currency risk. At the end of both periods
presented, all of the Group's material financial assets and
liabilities are denominated in the functional currency of the
relevant group entity and accordingly the Group has no material
exposure to currency risk. The Company's balance receivable from
subsidiary undertakings is denominated in US$ and accordingly the
Company is subject to currency risk on fluctuations in the US$ to
GBP exchange rate on this balance. As at 31 December 2014, a 10%
increase / decrease in the US$ to GBP exchange rate would result in
a foreign exchange loss / gain of GBP16,000 and a corresponding
decrease / increase in equity of GBP16,000.
19.2.4. Interest rate risk
Interest rate risk arises when interest rates move. Neither the
Group nor the Company have any interest bearing borrowings (refer
to note 16 for details on the Company's convertible loan notes
outstanding during the year). The Group and Company hold cash
balances on deposit but do not hedge or fix these rates given the
scale and nature of the Group and the Company's operations. All
amounts are carried at amortised cost, and, other than cash in
hand, are interest bearing assets, with interest rates arranged
with counterparty financial institutions based on commercial
negotiations, reflecting the term, currency and amount of each
deposit. As at 31 December 2014 and 31 December 2013 all bank
balances were held in current accounts or deposit accounts with a
maturity of less than one month. Interest income or expense and the
related changes in interest rates are accordingly insignificant to
the carrying value of the Company and Group's financial instruments
and interest rate risk is not material to the Company or Group.
19.3. Categories and classes of financial instruments
19.3.1. Financial assets
The Group's financial assets comprise the amounts disclosed in
the Statement of Financial Position as 'Cash and cash equivalents'
and 'Other receivables'. The Company has further financial assets
in the balance of 'Amounts due from subsidiary undertakings'. Based
on the application of the accounting policies with respect to
financial instruments, these financial assets are accounted for as
loans and receivables. The financial assets are considered one
class of financial instrument based on the risk profile to which
they expose the Company and Group, being credit risk. The maximum
exposure to credit risk is the carrying value of the class. Further
details are provided in note 19.2.1. None of the Group's and
Company's financial assets are past due, or impaired, nor has the
Group or Company provided against any financial assets.
19.3.2. Financial liabilities
The Company's and Group's financial liabilities comprise the
amounts disclosed in the Statement of Financial Position as 'Trade
and other payables' and 'Convertible loan notes'. Based on the
application of the accounting policies with respect to financial
instruments, these financial liabilities are accounted for as
financial liabilities at amortised cost.
'Trade and other payable' are considered one class of financial
instrument based on the risk profile to which they expose the
Company and Group, being liquidity risk. Further details are
provided in note 19.2.2.
'Convertible loan notes' were considered a separate class of
financial instrument. While in legal form a liability of the
Company and Group which exposed the Company and Group to liquidity
risk, the Directors considered this class of financial instrument
to be similar to equity because it was provided by Marine, the
Company's largest shareholder, with which the Company maintains
good working relationships. This was corroborated in the year ended
31 December 2014 when Marine converted the balance due on the
Convertible loan notes into new Ordinary Shares.
19.3.3. Fair value of financial assets and financial liabilities
The carrying amount of the Company's and Group's financial
instruments approximates to their fair value due to their short
maturity.
HUNTER RESOURCES Plc
Notes to the Financial Statements
20. ACQUISITION OF GOLD HUNTER
On 4 July 2014 and pursuant to a sale and purchase agreement
dated 2 June 2014 and Re-admission, the Group acquired 100 per cent
of the issued share capital of Gold Hunter S.A.C.. Gold Hunter is
registered and operates in Peru, and was acquired to provide the
Group with access to the Pampamali Project through the Farm In
agreement between Gold Hunter, Compania Minera Pampamali ('CMP'),
H&P Contratistas Mineros S.A.C. ('H&P), American Gold
S.A.C. and Sociedad Minera de Responsbilidad Limitada Desiree
(collectively the 'Farm In agreement parties'). Gold Hunter was
established by Global Pearl for the sole purpose of entering into
the Farm In agreement and as at 4 July 2014 had no assets or
liabilities, other than the right to participate in the Pampamali
project through the Farm In agreement (refer below). The
consideration paid for the acquisition of Gold Hunter was
13,277,838 new Ordinary Shares in the Company which, at the
acquisition date, had a fair value of GBP199,000 based on the
market price of the Company's Ordinary Shares on Re-admission,
being a Level 1 fair value measurement in the IFRS 13 fair value
hierarchy. For Group purposes, this fair value is reported within
Exploration and Evaluation Assets which, as at 31 December 2014,
relate solely to Project Pampamali. There were no direct cash flows
pertaining to the acquisition of Gold Hunter.
Gold Hunter contributed GBP13,000 (2013: GBPnil) to the Group's
loss for the period. Had the acquisition been completed on 1
January 2014, the contribution would have been unchanged.
The acquisition of Gold Hunter was completed in connection with
the Re-admission. The direct acquisition costs of Gold Hunter were
immaterial. The aggregate costs related to Re-admission are
disclosed in note 5.
The Farm In agreement
The Farm In agreement provides Gold Hunter with the right, but
not the obligation, to obtain an interest in the Pampamali Project.
The Farm in agreement was renegotiated by the Group in March
2014.
Under the terms of the initial Farm In agreement and in the
first year, Gold Hunter was granted the right to earn a 20 per
cent. interest in the mining concessions comprising the Pampamali
Project. To exercise this option, Gold Hunter was required to pay
$40,000 to CMP and H&P (which was paid during the year) and
incur aggregate expenditure of not less than $150,000 during the
first year of operations, to include at least one thousand metres
of drilling. If and when this option was exercised, Gold Hunter was
required to make payments of in aggregate a further $100,000 to CMP
and H&P to acquire the 20 per cent. interest. This interest
would be acquired and held through a joint venture company which
would be established at this time for this purpose ('HOLDCO'). The
option would terminate if Gold Hunter did not exercise it within
the specified period or if it is otherwise terminated by Gold
Hunter in accordance with the Farm In Agreement; Gold Hunter could
terminate the mining option on giving notice at any time before
HOLDCO is incorporated. In the second year, and subject to
exercising the first year option, Gold Hunter would, during a
period of one year from the date on which the Pampamali Project
concessions were transferred to HOLDCO, have the right but not the
obligation to earn a further 31 per cent. interest in HOLDCO,
taking its aggregate interest in HOLDCO to 51 per cent. To acquire
this additional interest, Gold Hunter would have been required to
carry out works of at least $500,000 on the Pampamali Project
during the option period and pay CMP and H&P in aggregate
$200,000 upon exercise of the option.
Due principally to delays in completing the necessary
environmental impact assessment, reflecting delays in obtaining the
necessary community approvals to permit access by the Group, the
drilling activities have not yet started. Due to this, and other
factors, the Farm In agreement was amended in March 2015. Under the
Farm In agreement (as amended), Gold Hunter has the option to
acquire a 51% in HOLDCO in one step by paying to the CMP and
H&P $90,000 and agreeing to take on the obligation to pay
$34,000 by way of outstanding 2014 tenement costs. This is in
addition to showing that it has incurred at least $150,000 in
expenditure on the project but without the commitment for one
thousand metres of drilling. Once Gold Hunter owns 51% of HOLDCO it
has the option to acquire an additional 49% on completion of a
feasibility study and a payment of $1,500,000 to CMP and H&P as
before.
Gold Hunter will be the operator at the Pampamali Project
concessions during the period covered by the Farm In agreement (as
amended) afterwards so long as it is the largest shareholder in
HOLDCO. If Gold Hunter, CMP or H&P wishes to dispose of an
interest in the JV Agreement or shares in HOLDCO, it must first
give the others a right to purchase before offering such interest
or shares to any third party. Should CMP's, Gold Hunter's or
H&P's shareholding in HOLDCO fall below five per cent., that
shareholder shall be deemed to have transferred its shares in
HOLDCO to the other shareholders pro rata to their respective
holdings and in return it will receive a net smelter royalty. The
royalty is for one per cent. of gross proceeds received from the
sale of minerals less any deductions for the costs associated with
further processing of those minerals. In the event that more than
one party becomes entitled to the royalty, the aggregate amount of
the royalty will remain at one per cent. and it will be shared
between those parties pro rata to their respective shareholdings in
HOLDCO before they transferred them.
21. RELATED PARTIES
21.1. Subsidiary undertakings
Details of the Company's subsidiary undertaking are provided in
note 12.
21.2. Remuneration of key management personnel
HUNTER RESOURCES Plc
Notes to the Financial Statements
Remuneration of key management personnel of the Company and
Group, which comprise the Directors of the Company, is provided in
note 7. Details of warrants issued to the Directors' are provided
in note 18.
21.3. Other transactions with related parties
Trading transactions
The Company paid GBP61,000 (2013: GBP37,000), by way of salary
and fees for Mr S Hunt's services under an agreement with
Cornerstone Capital Limited ('Cornerstone'), a company in which Mr
S Hunt is a shareholder and a director. The contract is based on
normal commercial terms. As at 31 December 2014, the Company owed
Cornerstone Capital Limited GBP4,000 (2013: GBPnil).
The Company paid GBP8,000 (2013: GBPnil) to ARC Resources (Pty)
Ltd for geological services rendered in connection with the
Pampamali project, and GBP6,000 (2013: GBPnil) for the
re-imbursement of expense incurred. ARC Resources (Pty) Ltd is a
company in which Mr A Richards is a shareholder and director. The
transaction was on normal commercial terms. The balance due to ARC
Resources (Pty) Ltd at the period end was GBP2,000.
Loans and Subscription of Ordinary Shares
There are no outstanding loans granted or guarantees provided by
the Company to or for the benefit of any of the Directors, nor are
there any outstanding loans or guarantees provided by the Directors
to or for the benefit of the Company.
During the year and as more fully described in notes 16 and 17,
Marine subscribed for GBP190,000 of Convertible Loan Notes under
the Second and Third Loan Notes. Collectively with the First Loan
Note, GBP215,000 outstanding under the Loan Notes were converted
into 15,223,601 new Ordinary Shares on 4 July 2014. As at 31
December 2014, GBP3,000 is outstanding to Marine in respect of
interest due in cash on the Loan Notes. In addition to the
conversion of the Loan Notes, Marine subscribed for an additional
1,000,000 new Ordinary Shares for GBP15,000, and the Diana Lalor
Superannuation Fund subscribed for an additional 666,667 new
Ordinary Shares for GBP10,000 in the July 2014 Subscription. Diana
Lalor is a close family member of Peter Lalor who controls Marine.
Further, the Company issued the Marine Consultancy Warrants and the
Marine Convertible Warrants, as well as modifying the terms of the
Underwriting Warrants, with a collective fair value of GBP115,000
(refer to note 18). During the financial year ended 31 December
2013, Marine subscribed for 107,631,944 new Ordinary Shares in the
Company in exchange for cash consideration of GBP108,000. In
addition Marine provided GBP26,000 of funding to the Company
through the subscription of the Loan Note. Fees due to Marine in
connection with the Subscription and the Loan Note totalled
GBP16,000 which were settled in currency. As further consideration
for the underwriting of the Subscription, Marine was issued with
62,000,000 Underwriting Warrants, with a fair value at the date of
issue of GBP151,000.
In July 2014 and as part of the Subscription, Mr Simon Hunt, Mr
J Molyneux, Mr D Paull and Mr A Richards subscribed for
respectively 433,333, 22,500,000, 1,278,599 and 350,000 new
Ordinary Shares.
22. ULTIMATE CONTROLLING PARTY
As at the date of this report, the Directors are of the opinion
that there is no ultimate controlling party of the Company.
23. EVENTS SUBSEQUENT TO THE BALANCE SHEET DATE
Since the balance sheet date, Gold Hunter entered into the Farm
In agreement (as amended) as described more fully in note 20
HUNTER RESOURCES Plc
Terms used in this report
'2014 Financial Statements' the Group and Company audited financial statements for the year ended 31 December
2014;
'AIM' the market of that name operated by the London Stock Exchange;
'AIM Rules' the rules which set out the obligations and responsibilities in relation to
companies whose
shares are admitted to AIM as published and amended from time to time by the
London Stock
Exchange;
'Allenby' Allenby Capital Limited, the Company's nominated advisor and broker;
'Allenby Re-admission warrants' warrants issued to Allenby over 1,327,784 new Ordinary Shares as more fully
described in note
18.4.2;
'Allenby Warrants' warrants issued to Allenby over 300,000 new Ordinary Shares as more fully
described in note
18.4.2;
'Bankable Feasibility Study' a study completed in accordance with industry standards that is of a standard
suitable to
be submitted to a financial institution as the basis for lending of funds for the
development
and operation of the mine contemplated in the study and is capable of supporting a
decision
to commence mining operations;
'Board' or 'Directors' the directors of the Company;
'Company' or 'Hunter' Hunter Resources PLC;
'Deferred Shares' Deferred shares of GBP0.009 each in the share capital of the Company, or,
following the Share
Consolidation, Deferred shares of GBP0.09 each in the share capital of the
Company;
'Directors Warrants' warrants issued to the Directors over 11,000,000 new Ordinary Shares as more fully
described
in note 18.4.3;
'Farm In agreement' the agreement dated 26 May 2014, full details of which are provided in the
Admission Document
dated 6 June 2014) and note 20;
'Farm In agreement (as amended)' the Farm In agreement as amended in March 2015, full details of which are provided
in note
20;
'First Loan Note' the GBP26,000 loan note issued by the Company to Marine, further details of which
are provided
in note 16.2.1;
'Global Pearl' Global Pearl Limited, a company incorporated in the British Virgin Islands, with
company number
1744814 and controlled by the Management Team;
'Gold Hunter' Gold Hunter S.A.C., a company incorporated in Peru with certificate number
13164856;
'Group' the Company and its subsidiary undertakings;
'Interim report' the Interim financial statements, collectively with the Report of the Executive
Chairman;
'JORC Code' 'The Australasian Code for Reporting of Exploration Results, Mineral Resources and
Ore Reserves'
published by the Australasian Joint Ore Reserves Committee;
'July 2014 Funding' the new funding obtained by the Company in July 2014 through the Subscription,
Placing and
final drawdown on the Third Loan Note;
'Loan Notes' collectively the First Loan Note, the Second Loan Note and the Third Loan Note;
'Management Team' the Global Pearl team comprising David Fowler, Sam Pierce and Tim Adams (further
details of
whom are given in the Admission Document dated 6 June 2014);
'Marine' Marine Investments (WA) Pty Limited, a company incorporated in Western Australia,
with (ABN
number 57 315 206 483);
'Marine Consultancy Warrants' warrants issued to Marine over 4,000,000 new Ordinary Shares as more fully
described in note
18.4.1;
HUNTER RESOURCES Plc
Terms used in this report
'Marine Convertible Warrants' warrants issued to Marine over 7,880,596 new Ordinary Shares as more fully
described in note
18.4.1;
'Ordinary Shares' ordinary shares of GBP0.001 each in the share capital of the Company, or,
following the Share
Consolidation, ordinary shares of GBP0.01 each in the share capital of the
Company;
'Pampamali Project' the 8 Pampamali mineral exploration concessions located in central Peru in the
department
of Huancavelica;
'Placing' the July 2014 placing of 22,472,133 new Ordinary Shares at 1.15 pence per new
Ordinary Shares,
such new Ordinary Shares admitted to trading on AIM on 4 July 2014;
'Re-admission' re-admission of the Company's Ordinary Shares to trading on AIM becoming effective
in accordance
with Rule 6 of the AIM Rules, on 4 July 2014;
'Second Loan Note' the GBP100,000 loan note issued by the Company to Marine, further details of which
are provided
in note 16.2.2;
'Share Consolidation' the one for ten consolidation of the Company's Ordinary Shares and Deferred
Shares, effective
30 June 2014;
'Shareholders' holders of the Company's Ordinary Shares and / or Deferred Shares;
'Subscription' the July 2014 subscription of 36,408,467 new Ordinary Shares at 1.15 pence per new
Ordinary
Shares, such new Ordinary Shares admitted to trading on AIM on 4 July 2014;
'Third Loan Note' the $150,000 loan note issued by the Company to Marine, further details of which
are provided
in note 16.2.3;
'Underwriting Warrants' warrants issued to Marine over 6,200,000 new Ordinary Shares as more fully
described in note
18.4.1;
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR SEMEEUFISEFM
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