TIDMHZM
RNS Number : 9994I
Horizonte Minerals PLC
27 March 2018
NEWS RELEASE
27 March 2018
FINAL RESULTS
Horizonte Minerals Plc, (AIM: HZM, TSX: HZM) ('Horizonte' or
'the Company') the nickel development company focused in Brazil,
announces its final results for the year ended 31 December
2017.
Highlights
-- Agreement with Vale SA to acquire 100% of the advanced
Vermelho nickel-cobalt project in Brazil
-- Fundraise of GBP9.2 million completed in January 2018 (GBP7.0
million of which was raised in the United Kingdom and closed before
year end) - cash of GBP9.4 million as at year end
-- Contracts awarded for Araguaia Feasibility Study
-- Announcement of the limonite mineral resource at Araguaia of
20.7 million tonnes grading 1.13% Nickel and 0.12% Cobalt (0.9%
nickel cut off)
-- Completed and filed the Mine Construction Licence for
Araguaia to SEMAS, the Pará State authority responsible for
environmental licensing, for the construction of the Project,
including mine, associated infrastructure and pyro-metallurgical
processing plant
-- Improved nickel market fundamentals
-- Feasibility study well advanced completion planned for mid-year 2018
Chairman's Statement
Dear Shareholders
I am pleased to report on a transformational year for Horizonte,
as we continued to make excellent progress at our tier 1 Araguaia
Nickel Project in Brazil whilst in addition acquiring a second
major new asset with the acquisition of the nearby Vermelho
nickel-cobalt project.
The agreement to purchase Vermelho from Vale SA, will allow the
Company to fully take advantage of the electric vehicle (EV) market
by potentially supplying key battery ingredients into the industry
at a time when they are expected to be most in demand.
Nickel prices have continued to show recovery from the 13-year
low of US$7,750/t in early 2016, , touching US$14,000/t in a recent
rally before settling back to approximately US$13,000/t at the date
of this statement.
Sentiment towards nickel demand continues to be positive,
according to consultants Wood Mackenzie. This not only reflects
expected demand from the batteries/EV sector but also from the
current robust demand areas such as stainless steel, nickel alloys
and chemicals, especially from China.
Horizonte, with the advanced Araguaia ferro-nickel project
moving towards the development phase and Vermelho's potential to
produce nickel sulphate and cobalt, is uniquely positioned to take
advantage of the current demand forecast, in a space with little
competition.
Araguaia
Throughout 2017, a number of key milestones were achieved at
Araguaia, positioning the Company well for the upcoming completion
of a Feasibility Study ("FS") for the project.
The aim has always been to consolidate within the Araguaia
nickel belt and we have announced that we added to our land
position with the awarding of three new concessions totalling 1,748
ha, located in prospective locations containing ultramafic
intrusion of a similar type to those hosting the high grade nickel
resource at Araguaia's Vale dos Sonhos deposit.
We also submitted the Mine Plan to Brazil's National Mining
Agency as part of the process towards receipt of the principal
permits necessary to commence mine construction. Alongside the Mine
Plan was our submission of the Mine Construction Licence.
In September 2017, we announced a nickel-cobalt limonite
resource at Araguaia with the potential to supply the Electric
Vehicle ("EV") battery market. Limonite resources are treated to
produce products, such as nickel and cobalt hydroxides; suitable
for supplying the EV battery market. We are therefore mindful of
the future potential value of this resource in relation to the
current mine plan so that it will be mined and stockpiled
separately, with a view to extracting maximum value from the
resource in the future.
Community and social relationships remain a vital part of
Horizonte's social licence as the communities close to the project
are some of the Company's most important stakeholder groups. A
number of social investment activities were initiated, including
providing new libraries, education equipment and furniture for
selected schools within the project area. Araguaia has the
potential to create a number of jobs in a rural area where the
average family income ranges between US$2 - US$4 per day. As a
result, the Pará Government considers Araguaia to be a key economic
driver for the southern part of the State and we look forward to
working closely with the local and regional governments on
developing the project. We are focussed on building and maintaining
these strong partnerships as we progress Araguaia into Brazil's
next major nickel producing mine.
Post the year end, we announced the completion of the trial
excavation programme with all our technical objectives being met.
This programme will allow us to confirm a number of key variables
within the FS, to be published in 2018.
Vermelho
In December 2017, we announced a major deal for Horizonte with
the acquisition of the nearby Vermelho nickel-cobalt project from
Vale, which completed post year end. This acquisition has
transformed Horizonte into a multi-asset company bringing together
two large, advanced nickel assets located in the established mining
region in the Para State in northern Brazil.
In becoming a multi-asset company, we have started to de-risk
our business fundamentals. The acquisition of a project that
benefits from extensive and costly previous development will allow
us to fast track to resource definition and economic
assessment.
The Vermelho nickel project is located in the Carajas mining
district, within trucking distance from the northern part of
Horizonte's Araguaia project. The Carajas district is an
established mining region with well-developed infrastructure in
place, including rail, roads and hydro-electric power. An exciting
aspect of this acquisition is that the project also contains a
large cobalt resource which Vale planned to process alongside the
nickel. This gives us exposure to an additional commodity stream,
for which there is growing interest for use in the EV battery
market.
Alongside the acquisition, we successfully raised GBP9.2m, which
means the Company is fully funded for the next two years, for the
completion of the FS at Araguaia and a Preliminary Economic
Assessment for Vermelho.
Conclusion
We believe that with our continued progress at Araguaia and
becoming a multi-asset nickel and cobalt company we are currently
well placed to benefit from the improving nickel market
fundamentals, driven by the robust market for stainless steel
combined with the fast growing EV market.
On behalf of the Board, we would like to again thank all our
stakeholders for their continued hard work and support as we build
an exciting future for our Company.
David J Hall
Chairman
26 March 2018
INDEPENT AUDITOR'S REPORT TO THE MEMBERS OF HORIZONTE MINERALS
PLC
Opinion
We have audited the financial statements of Horizonte Minerals
plc (the 'parent company') for the year ended 31 December 2017
which comprise the consolidated statements of comprehensive income,
the consolidated and company statements of financial position, the
consolidated and company statements of changes in equity, the
consolidated and company statements of cash flows and notes to the
financial statements including a summary of significant accounting
policies. The financial reporting framework that has been applied
in their preparation is applicable law and International Financial
Reporting Standards (IFRSs) as adopted by the European Union and,
as regards the parent company financial statements, as applied in
accordance with the provisions of the Companies Act 2006.
In our opinion:
-- the financial statements give a true and fair view of the
state of the group's and of the parent company's affairs as at 31
December 2017 and of the group's loss for the year then ended;
-- the group financial statements have been properly prepared in
accordance with IFRSs as adopted by the European Union;
-- the parent company financial statements have been properly
prepared in accordance with IFRSs as adopted by the European Union
and as applied in accordance with the provisions of the Companies
Act 2006; and
-- the financial statements have been prepared in accordance
with the requirements of the Companies Act 2006.
Separate opinion in relation to IFRSs as issued by the IASB
As explained in note 2.1 to the group financial statements, the
group in addition to complying with its legal obligation to apply
IFRSs as adopted by the European Union, has also applied IFRSs as
issued by the International Accounting Standards Board (IASB).
In our opinion the group financial statements give a true and
fair view of the consolidated financial position of the group as at
31 December 2017 and of its consolidated financial performance and
its consolidated cash flows for the year then ended in accordance
with IFRSs as issued by the IASB.
Basis for Opinion
We conducted our audit in accordance with International
Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our
responsibilities under those standards are further described in the
Auditor's responsibilities for the audit of the financial
statements section of our report. We are independent of the company
in accordance with the ethical requirements that are relevant to
our audit of the financial statements in the UK, including the
FRC's Ethical Standard as applied to listed entities, and we have
fulfilled our other ethical responsibilities in accordance with
these requirements. We believe that the audit evidence we have
obtained is sufficient and appropriate to provide a basis for our
opinion.
This report is made solely to the company's members, as a body,
in accordance with Chapter 3 of Part 16 of the Companies Act 2006.
Our audit work has been undertaken so that we might state to the
company's members those matters we are required to state to them in
an auditor's report and for no other purpose. To the fullest extent
permitted by law, we do not accept or assume responsibility to
anyone other than the company and the company's members as a body,
for our audit work, for this report, or for the opinions we have
formed.
Conclusions relating to going concern
We have nothing to report in respect of the following matters in
relation to which the ISAs (UK) require us to report to you
where:
-- the directors' use of the going concern basis of accounting
in the preparation of the financial statements is not appropriate;
or
-- the directors have not disclosed in the financial statements
any identified material uncertainties that may cast significant
doubt about the group's or the parent company's ability to continue
to adopt the going concern basis of accounting for a period of at
least twelve months from the date when the financial statements are
authorised for issue.
Key audit matters
Key audit matters are those matters that, in our professional
judgment, were of most significance in our audit of the financial
statements of the current period and include the most significant
assessed risks of material misstatement (whether or not due to
fraud) we identified, including those which had the greatest effect
on: the overall audit strategy, the allocation of resources in the
audit; and directing the efforts of the engagement team. These
matters were addressed in the context of our audit of the financial
statements as a whole, and in forming our opinion thereon, and we
do not provide a separate opinion on these matters.
Carrying Value of Intangible Assets and Investments held by
Parent Company
Key Audit As detailed in notes 10 and 25, the
Matter Group holds intangible assets of GBP34.4m
and GBP51.2m of investments held by
the parent company in subsidiaries.
As detailed in note 2.5b, the Group's
intangible assets represent the legal
rights to explore for minerals together
with the expenditure incurred in its
exploration and evaluation of the mineral
assets.
The investments represent the funding
provided by the Parent Company to its
Brazilian subsidiaries to use over
the course of the exploration stage
and is the main source of funding for
the costs capitalised under intangible
assets.
Each year management are required to
assess whether there has been any indication
that the intangible assets may be impaired.
This is in accordance with the requirements
of IFRS 6 - Exploration for and evaluation
of mineral resources. Management have
carried out a review for indicators
of impairment and have not identified
any such indicators.
Management have also concluded that
no impairment provision is required
against the carrying value of investments
in subsidiaries.
Reviewing indicators of impairment
and assessment of carrying values often
require significant estimates and judgements
and therefore we identified this as
a key audit matter.
--------------- --------------------------------------------------------------------
Audit Response
Our audit work included, but was not
restricted to the following:
We reviewed Management's assessment
of the impairment indicators against
IFRS 6. The indicators in IFRS 6 include
but are not limited to:
* The period for which the entity has the right to
explore in the specific area has expired during the
period or will expire in the near future, and is not
expected to be renewed.
* Substantive expenditure on further exploration for
and evaluation of mineral resources in the specific
area is neither budgeted nor planned.
* Exploration for and evaluation of mineral resources
in the specific area have not led to the discovery of
commercially viable quantities of mineral resources
and the entity has decided to discontinue such
activities in the specific area.
* Sufficient data exists to indicate that, although a
development in the specific area is likely to proceed,
the carrying amount of the exploration and evaluation
asset is unlikely to be recovered in full from
successful development or by sale.
We considered Management's assessment
of the indicators of impairment (as
stated above) and we confirmed that
there is an ongoing plan to develop
the licence areas. This assessment
is supported by a pre-feasibility study
published in October 2016 and a feasibility
study which is currently in progress.
We reviewed the correspondence, contracts
and other documents regarding the licenses
to confirm that the Group has the relevant
contractual rights for exploration
in the stated areas such as Araguaia.
We agreed the validity of licences
held by Horizonte Minerals Plc to the
Brazilian Government's DNPM website.
We considered whether there were any
additional matters requiring consideration
when assessing the carrying value of
the parent company's investment in
subsidiaries.
--------------- --------------------------------------------------------------------
Valuation of Contingent Consideration
Key Audit In prior years, the Group acquired
Matter assets and licences relating to the
Araguaia nickel project gave rise to
contingent consideration. As at 31
December 2017, the contingent consideration
was GBP3.9m and details of this consideration
and the related critical judgements
and estimates are disclosed in notes
17 and 4.3.
The assessment of the contingent consideration
payable requires management to make
judgements and estimates in respect
of a significant number of factors
which influence the anticipated timing
and value of cash flows arising from
the Araguaia nickel project, which
in turn impact on the assessment of
the estimated consideration payable.
Management are also required to reassess
and adjust the contingent consideration
payable for any changes in the accounting
estimates as new information and events
arises.
--------------- ------------------------------------------------
Audit Response Our audit work included, but was not
restricted to the following:
We have reviewed the terms and conditions
of the acquisition agreements relating
to the contingent consideration amounts
payable and ensured that the calculation
of contingent considerations is in
accordance with them.
We have reviewed the contingent consideration
calculations and key judgements and
estimates made by management supporting
these calculations. We have challenged
the judgements and estimates, referring
to supporting documentation and considered
the sensitivity of the calculations
to changes in the judgements and estimates.
We have checked the accounting adjustments
for any change in estimates, foreign
exchange retranslation and the unwinding
of the discount factor.
We have considered the adequacy of
the disclosures.
--------------- ------------------------------------------------
Our application of materiality
We apply the concept of materiality both in planning and
performing our audit, and in evaluating the effect of
misstatements. We consider materiality to be the magnitude by which
misstatements, including omissions, could influence the economic
decisions of reasonable users that are taken on the basis of the
financial statements. In order to reduce to an appropriately low
level the probability that any misstatements exceed materiality, we
use a lower materiality level, performance materiality, to
determine the extent of testing needed. Importantly, misstatements
below these levels will not necessarily be evaluated as immaterial
as we also take account of the nature of identified misstatements,
and the particular circumstances of their occurrence, when
evaluating their effect on the financial statements as a whole.
Our basis for the determination of materiality has remained
unchanged from prior year. We consider total assets to be the most
significant determinant of the group's financial performance used
by shareholders. The benchmark percentage for calculating
materiality has remained unchanged from the prior year at 1.5%. We
consider this to be one of the principal considerations for members
of the parent company in assessing the financial performance of
this asset based group.
Whilst materiality for the financial statements as a whole was
GBP570,000 (based on 30 September 2017 total asset figure of
GBP38.1m) (2016:GBP470,000), each significant component of the
group was audited to a lower level of materiality. These
materiality levels were used to determine the financial statement
areas that are included within the scope of our audit work and the
extent of sample sizes during the audit.
Performance materiality is the application of materiality at the
individual account or balance level set at an amount to reduce to
an appropriately low level the probability that the aggregate of
uncorrected and undetected misstatements exceeds materiality.
Performance materiality was set at 75% (2016: 75%) of the above
materiality levels.
We agreed with the audit committee that we would report to the
committee all individual audit differences identified during the
course of our audit in excess of GBP28,500 (2016: GBP10,000). We
also agreed to report differences below these thresholds that, in
our view warranted reporting on qualitative grounds.
Materiality levels are not significantly different from those
applied in the previous year.
No revisions were made to materiality levels during the course
of the audit.
An overview of the scope of our audit
Our Group audit was scoped by obtaining an understanding of the
Group and its environment, including the group's system of internal
control, and assessing the risks of material misstatement in the
financial statements at the group level.
Whilst Horizonte Minerals plc is a Company registered in England
& Wales and its head office is located in the UK the Group's
principal operations are located in Brazil. In approaching the
audit, we considered how the Group is organised and managed. We
assessed the activities of the group as being principally a single
project (the Araguaia Nickel project) and primarily comprising a
number of Brazilian subsidiary entities each holding capitalised
exploration and evaluation costs and exploration licences and
permits.
The Group audit team performed audit work in respect of the
assessed risks. One subsidiary was assessed as significant due to
size and risk and three subsidiaries were classified as significant
due to specific risks. The group audit engagement team also engaged
BDO's network firm in Brazil to carry out certain specific audit
procedures.
The remaining non-significant subsidiaries of the group were
principally subject to analytical review procedures.
Other information
The other information comprises the information included in the
annual report, other than the financial statements and our
auditor's report thereon. The directors are responsible for the
other information. Our opinion on the financial statements does not
cover the other information and, except to the extent otherwise
explicitly stated in our report, we do not express any form of
assurance conclusion thereon.
In connection with our audit of the financial statements, our
responsibility is to read the other information and, in doing so,
consider whether the other information is materially inconsistent
with the financial statements or our knowledge obtained in the
audit or otherwise appears to be materially misstated. If we
identify such material inconsistencies or apparent material
misstatements, we are required to determine whether there is a
material misstatement in the financial statements or a material
misstatement of the other information. If, based on the work we
have performed, we conclude that there is a material misstatement
of this other information, we are required to report that fact.
We have nothing to report in this regard.
Opinion on other matters prescribed by the Companies Act
2006
In our opinion, based on the work undertaken in the course of
the audit:
-- the information given in the strategic report and directors'
report for the financial year for which the financial statements
are prepared is consistent with the financial statements; and
-- the strategic report and directors' report have been prepared
in accordance with applicable legal requirements.
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the group and
the parent company and its environment obtained in the course of
the audit, we have not identified material misstatements in the
strategic report or the directors' report.
We have nothing to report in respect of the following matters in
which the Companies Act 2006 requires us to report to you if, in
our opinion:
-- adequate accounting records have not been kept by the parent
company, or returns adequate for our audit have not been received
from branches not visited by us; or
-- the parent company financial statements are not in agreement
with the accounting records and returns; or
-- certain disclosures of directors' remuneration specified by law are not made; or
-- we have not received all the information and explanations we require for our audit.
Responsibilities of directors
As explained more fully in the directors' responsibilities
statement, the directors are responsible for the preparation of the
financial statements and for being satisfied that they give a true
and fair view, and for such internal control as the directors
determine is necessary to enable the preparation of financial
statements that are free from material misstatement, whether due to
fraud or error.
In preparing the financial statements, the directors are
responsible for assessing the group's and the parent company's
ability to continue as a going concern, disclosing, as applicable,
matters related to going concern and using the going concern basis
of accounting unless the directors either intend to liquidate the
group or the parent company or to cease operations, or have no
realistic alternative but to do so.
Auditor's responsibilities for the audit of the financial
statements
Our objectives are to obtain reasonable assurance about whether
the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an
auditor's report that includes our opinion. Reasonable assurance is
a high level of assurance, but is not a guarantee that an audit
conducted in accordance with ISAs (UK) will always detect a
material misstatement when it exists.
Misstatements can arise from fraud or error and are considered
material if, individually or in the aggregate, they could
reasonably be expected to influence the economic decisions of users
taken on the basis of these financial statements.
A further description of our responsibilities for the audit of
the financial statements is located on the Financial Reporting
Council's website at: www.frc.org.uk/auditorsresponsibilities. This
description forms part of our auditor's report.
Stuart Barnsdall (Senior Statutory Auditor)
For and on behalf of BDO LLP,
London, UK
Consolidated Statement of Comprehensive Income
For the year ended 31 December 2017
Year ended Year ended
31 December 31 December
2017 2016
Notes GBP GBP
------------------------------------------------------------------------------------- ----- ----------- -----------
Administrative expenses (1,093,132) (1,009,623)
Charge for share options granted (678,652) (324,890)
Changes in fair value of contingent consideration 17 621,545 (260,632)
(Loss)/Gain on foreign exchange (299,834) 65,241
Operating loss 6 (1,450,073) (1,529,904)
Finance income 8 15,854 4,387
Finance costs 8 (232,937) (220,817)
------------------------------------------------------------------------------------- ----- ----------- -----------
Loss before taxation (1,667,156) (1,746,334)
Income tax 9 - -
------------------------------------------------------------------------------------- ----- ----------- -----------
Loss for the year from continuing operations attributable to owners of the parent (1,667,156) (1,746,334)
------------------------------------------------------------------------------------- ----- ----------- -----------
Other comprehensive income
Items that may be reclassified subsequently to profit or loss
Currency translation differences on translating foreign operations 16 (3,479,050) 9,315,180
------------------------------------------------------------------------------------- ----- ----------- -----------
Other comprehensive income for the year, net of tax (3,479,050) 9,315,180
------------------------------------------------------------------------------------- ----- ----------- -----------
Total comprehensive income for the year attributable to owners of the parent (5,146,206) 7,568,846
------------------------------------------------------------------------------------- ----- ----------- -----------
Profit/(Loss) per share from continuing operations attributable to owners of the
parent
------------------------------------------------------------------------------------- ----- ----------- -----------
Basic and diluted (pence per share) 19 (0.142) (0.240)
------------------------------------------------------------------------------------- ----- ----------- -----------
The above Consolidated Statement of Comprehensive Income should
be read in conjunction with the accompanying notes.
Consolidated Statement of Financial Position
Company number: 05676866
As at 31 December 2017
31 December 31 December
2017 2016
Notes GBP GBP
--------------------------------------------- ------ ------------- -------------
Assets
Non-current assets
Intangible assets 10 34,308,278 32,017,796
Property, plant & equipment 2,051 862
34,310,329 32,018,658
--------------------------------------------- ------ ------------- -------------
Current assets
Trade and other receivables 153,105 35,493
Cash and cash equivalents 12 9,403,825 9,317,781
--------------------------------------------- ------ ------------- -------------
9,556,930 9,353,274
--------------------------------------------- ------ ------------- -------------
Total assets 43,867,259 41,371,932
--------------------------------------------- ------ ------------- -------------
Equity and liabilities
Equity attributable to owners of the parent
Share capital 13 13,719,343 11,719,343
Share premium 14 40,422,258 35,767,344
Other reserves 16 988,015 4,467,064
Retained losses (15,887,801) (14,899,297)
--------------------------------------------- ------ ------------- -------------
Total equity 39,241,815 37,054,454
--------------------------------------------- ------ ------------- -------------
Liabilities
Non-current liabilities
Contingent consideration 17 3,635,955 3,643,042
Deferred tax liabilities 9 253,205 282,450
--------------------------------------------- ------ ------------- -------------
3,889,160 3,925,492
--------------------------------------------- ------ ------------- -------------
Current liabilities
Trade and other payables 17 736,284 391,986
--------------------------------------------- ------ ------------- -------------
736,284 391,986
--------------------------------------------- ------ ------------- -------------
Total liabilities 4,625,444 4,317,478
--------------------------------------------- ------ ------------- -------------
Total equity and liabilities 43,867,259 41,371,932
--------------------------------------------- ------ ------------- -------------
The above Consolidated Statement of Financial Position should be
read in conjunction with the accompanying notes.
The Financial Statements were authorised for issue by the Board
of Directors on 26 March 2018 and were signed on its behalf.
David J Hall Jeremy J Martin
Chairman Chief Executive Officer
Company Statement of Financial Position
Company number: 05676866
As at 31 December 2017
31 December 31 December
2017 2016
Notes GBP GBP
------------------------------------------- ----- ----------- -----------
Assets
Non-current assets
Property, plant & equipment 11 - 283
Investment in subsidiaries 25 51,238,055 43,670,347
------------------------------------------- ----- ----------- -----------
51,238,055 43,670,630
------------------------------------------- ----- ----------- -----------
Current assets
Trade and other receivables 41,773 35,423
Cash and cash equivalents 12 9,238,827 9,143,993
------------------------------------------- ----- ----------- -----------
9,280,600 9,179,416
------------------------------------------- ----- ----------- -----------
Total assets 60,518,655 52,850,046
------------------------------------------- ----- ----------- -----------
Equity and liabilities
Equity attributable to equity shareholders
Share capital 13 13,719,343 11,719,343
Share premium 14 40,422,258 35,767,344
Merger reserve 16 10,888,760 10,888,760
Retained losses (8,960,902) (9,915,498)
------------------------------------------- ----- ----------- -----------
Total equity 56,069,459 48,459,949
------------------------------------------- ----- ----------- -----------
Liabilities
Non-current liabilities
Contingent consideration 17 3,635,955 3,643,042
------------------------------------------- ----- ----------- -----------
3,635,955 3,643,042
Current liabilities
Trade and other payables 17 813,241 747,055
------------------------------------------- ----- ----------- -----------
813,241 747,055
------------------------------------------- ----- ----------- -----------
Total liabilities 4,449,196 4,390,097
------------------------------------------- ----- ----------- -----------
Total equity and liabilities 60,518,655 52,850,046
------------------------------------------- ----- ----------- -----------
The above Company Statement of Financial Position should be read
in conjunction with the accompanying notes, profit for the period
was GBP275,945 (2016:GBP602,827 loss). As permitted by section 408
of the Companies Act 2006, the statement of comprehensive income of
the Parent Company is not presented as part of these Financial
Statements. The Financial Statements were authorised for issue by
the Board of Directors on 26 March 2018 and were signed on its
behalf.
David J Hall Jeremy J Martin
Chairman Chief Executive Officer
Statements of Changes in Equity
For the year ended 31 December 2017
Attributable
to owners
of the parent
========== ======================== ========================
Share Share Retained Other
capital premium losses reserves Total
Consolidated GBP GBP GBP GBP GBP
---------------------------- ---------- ---------- ------------ ----------- -----------
As at 1 January 2016 6,712,044 31,252,708 (13,477,853) (4,848,116) 19,638,783
---------------------------- ---------- ---------- ------------ ----------- -----------
Loss for the year - - (1,746,334) - (1,746,334)
Other comprehensive
income:
Currency translation
differences on translating
foreign operations - - - 9,315,180 9,315,180
---------------------------- ---------- ---------- ------------ ----------- -----------
Total comprehensive
income for the year - - (1,746,334) 9,315,180 7,568,846
---------------------------- ---------- ---------- ------------ ----------- -----------
Issue of ordinary
shares 5,007,299 5,005,321 - - 10,012,620
Issue costs - (490,685) - - (490,685)
Share-based payments - - 324,890 - 324,890
---------------------------- ---------- ---------- ------------ ----------- -----------
Total transactions
with owners, recognised
directly in equity 5,007,299 4,514,636 324,890 - 9,846,825
---------------------------- ---------- ---------- ------------ ----------- -----------
As at 31 December
2016 11,719,343 35,767,344 (14,899,297) 4,467,064 37,054,454
---------------------------- ---------- ---------- ------------ ----------- -----------
Loss for the year - - (1,667,156) - (1,667,156)
Other comprehensive
income:
Currency translation
differences on translating
foreign operations - - - (3,479,050) (3,479,050)
Total comprehensive
income for the year - - (1,667,156) (3,479,050) (5,146,206)
Issue of ordinary
shares 2,000,000 5,000,000 - - 7,000,000
Issue costs - (345,086) - - (345,086)
Share-based payments - - 678,652 - 678,652
Total transactions
with owners, recognised
directly in equity 2,000,000 4,654,914 678,652 - 7,333,566
---------------------------- ---------- ---------- ------------ ----------- -----------
As at 31 December
2017 13,719,343 40,422,258 (15,887,801) 988,015 39,241,815
---------------------------- ---------- ---------- ------------ ----------- -----------
Statements of Changes
in Equity (continued)
Attributable to
equity shareholders
========== =================================== ==========
Share Share Retained Merger
capital premium losses reserves Total
Company GBP GBP GBP GBP GBP
----------------------------- ---------- ---------- ----------- ---------- ----------
As at 1 January 2016 6,712,044 31,252,708 (9,637,561) 10,888,760 39,215,951
----------------------------- ---------- ---------- ----------- ---------- ----------
Loss and total comprehensive
income for the year - - (602,827) - (602,827)
----------------------------- ---------- ---------- ----------- ---------- ----------
Issue of ordinary shares 5,007,299 5,005,321 - - 10,012,620
Issue costs - (490,685) - - (490,685)
Share-based payments - - 324,890 - 324,890
----------------------------- ---------- ---------- ----------- ---------- ----------
Total transactions with
owners, recognised directly
in equity 5,007,299 4,514,636 324,890 - 9,846,825
----------------------------- ---------- ---------- ----------- ---------- ----------
As at 31 December 2016 11,719,343 35,767,344 (9,915,498) 10,888,760 48,459,949
----------------------------- ---------- ---------- ----------- ---------- ----------
Loss and total comprehensive
income for the year - - 275,945 - 275,945
----------------------------- ---------- ---------- ----------- ---------- ----------
Issue of ordinary shares 2,000,000 5,000,000 - - 7,000,000
Issue costs - (345,086) - - (345,086)
Share-based payments - - 678,652 - 678,652
----------------------------- ---------- ---------- ----------- ---------- ----------
Total transactions with
owners, recognised directly
in equity 2,000,000 4,654,914 678,652 - 7,333,566
----------------------------- ---------- ---------- ----------- ---------- ----------
As at 31 December 2017 13,719,343 40,422,258 (8,960,902) 10,888,760 56,069,459
----------------------------- ---------- ---------- ----------- ---------- ----------
The above Statements of Changes in Equity should be read in
conjunction with the accompanying notes.
Consolidated Statement of Cash Flows
For the year ended 31 December 2017
31 December 31 December
2017 2016
Notes GBP GBP
----------------------------------------------------- ----- ----------- -----------
Cash flows from operating activities
Loss before taxation (1,667,156) (1,746,334)
Finance income (15,854) (4,387)
Finance costs 232,937 220,817
Charge for share options granted 678,652 324,890
Exchange differences (117,606) (177,940)
Change in fair value of contingent consideration (621,545) 260,632
Depreciation 283 1,084
----------------------------------------------------- ----- ----------- -----------
Operating loss before changes in working capital (1,510,298) (1,121,238)
Decrease/(increase) in trade and other receivables (117,612) 22,588
Increase/(decrease) in trade and other payables 344,298 242,965
----------------------------------------------------- ----- ----------- -----------
Net cash used in operating activities (1,283,612) (855,685)
----------------------------------------------------- ----- ----------- -----------
Cash flows from investing activities
Purchase of intangible assets (5,102,852) (1,253,212)
Purchase of property, plant and equipment (2,236) -
Interest received 15,854 4,387
----------------------------------------------------- ----- ----------- -----------
Net cash used in investing activities (5,089,234) (1,248,825)
----------------------------------------------------- ----- ----------- -----------
Cash flows from financing activities
Proceeds from issue of ordinary shares 7,000,000 9,000,000
Issue costs (241,276) (380,685)
----------------------------------------------------- ----- ----------- -----------
Net cash generated from financing activities 6,758,724 8,619,315
----------------------------------------------------- ----- ----------- -----------
Net increase/(decrease) in cash and cash equivalents 385,878 6,514,805
----------------------------------------------------- ----- ----------- -----------
Cash and cash equivalents at beginning of year 9,317,781 2,738,905
Exchange gain/(loss) on cash and cash equivalents (299,834) 64,071
----------------------------------------------------- ----- ----------- -----------
Cash and cash equivalents at end of the year 12 9,403,825 9,317,781
----------------------------------------------------- ----- ----------- -----------
The above Consolidated Statement of Cash Flows should be read in
conjunction with the accompanying notes.
Company Statement of Cash Flows
For year ended 31 December 2017
31 December 31 December
2017 2016
Notes GBP GBP
----------------------------------------------------- ----- ----------- -----------
Cash flows from operating activities
(Loss)/profit before taxation 275,945 (602,827)
Finance costs 232,937 220,817
Finance income (13,882) (1,668)
Charge for share options granted 678,652 324,890
Exchange differences (255,717) 283,555
Change in fair value of contingent consideration (621,545) 260,632
Depreciation 283 971
----------------------------------------------------- ----- ----------- -----------
Operating profit before changes in working capital 296,673 486,370
Increase in trade and other receivables (6,351) (16,683)
Increase in trade and other payables 66,186 244,182
----------------------------------------------------- ----- ----------- -----------
Net cash flows generated from operating activities 356,508 713,869
----------------------------------------------------- ----- ----------- -----------
Cash flows from investing activities
Loans to subsidiary undertakings (6,821,063) (2,793,905)
Interest received 13,881 1,668
----------------------------------------------------- ----- ----------- -----------
Net cash used in investing activities (6,807,182) (2,792,237)
----------------------------------------------------- ----- ----------- -----------
Cash flows from financing activities
Proceeds from issue of ordinary shares 7,000,000 9,000,000
Issue costs (241,276) (380,685)
----------------------------------------------------- ----- ----------- -----------
Net cash generated from financing activities 6,758,724 8,619,315
----------------------------------------------------- ----- ----------- -----------
Net increase/(decrease) in cash and cash equivalents 308,050 6,540,947
Exchange gain/(loss) on cash and cash equivalents (213,215) 34,779
Cash and cash equivalents at beginning of year 9,143,993 2,568,266
Cash and cash equivalents at end of the year 12 9,238,827 9,143,993
----------------------------------------------------- ----- ----------- -----------
The above Company Statement of Cash Flows should be read in
conjunction with the accompanying notes.
Notes to the Financial Statements
1 General information
The principal activity of Horizonte Minerals Plc ('the Company')
and its subsidiaries (together 'the Group') is the exploration and
development of base metals. The Company's shares are listed on the
AIM market of the London Stock Exchange and on the Toronto Stock
Exchange. The Company is incorporated and domiciled in England and
Wales. The address of its registered office is Rex House, 4-12
Regents Street, London, SW1Y 4RG.
2 Summary of significant accounting policies
The principal accounting policies applied in the preparation of
these Financial Statements are set out below. These policies have
been consistently applied to all the years presented.
2.1 Basis of preparation
These Financial Statements have been prepared in accordance with
International Financial Reporting Standards ('IFRSs') and IFRS
interpretations Committee ('IFRS IC') interpretations as adopted by
the European Union ('EU') and with IFRS and their Interpretations
issued by the IASB. The consolidated financial statements have also
been prepared in accordance with and those parts of the Companies
Act 2006 applicable to companies reporting under IFRS. The
Financial Statements have been prepared under the historical cost
convention as modified by the revaluation of contingent
consideration and share based payment charges which are measured at
fair value.
The preparation of financial statements in conformity with IFRS
requires the use of certain critical accounting estimates. It also
requires management to exercise its judgement in the process of
applying the Group's Accounting Policies. The areas involving a
higher degree of judgement or complexity, or areas where
assumptions and estimates are significant to the Financial
Statements, are disclosed in Note 4.
2.2 Changes in accounting policy and disclosures
a) New and amended standards adopted by the Group
There are no IFRSs or IFRIC interpretations that were effective
for the first time for the financial year beginning 1 January 2017
that have had a material impact on the Group or Company.
b) New and amended standards, and interpretations issued but not
yet effective for the financial year beginning 1 January 2017 and
not early adopted
The standards and interpretations that are issued, but not yet
effective, up to the date of issuance of the financial statements
are listed below. The Group intends to adopt these standards, if
applicable, when they become effective. Unless stated below, there
are no IFRSs or IFRIC interpretations that are not yet effective
that would be expected to have a material impact on the Group.
Standard Effective Date
IFRS 9 Financial Instruments 01-Jan-18
IFRS 16 Leases 01-Jan-19
IFRS 15 Revenue from contracts with Customers 01-Jan-18
All endorsed by the EU
The only standard which is anticipated to be significant or
relevant to the Group is IFRS 9 "Financial Instruments", the Group
is in the process of assessing the quantitative implications of the
standards on the Financial Statements. It is expected that the
contingent consideration payable to both Glencore and following
completion of the transfer of legal title, Vermelho will be
effected as well as the intercompany loan receivable balance for
the Company only.
Both IFRS 15 'Revenue from Contracts with Customers' and IFRS 16
'Leases' are not expected to have a material impact on the Group at
this stage of the Group's operations. The Group presently has no
revenue and the only leases that it holds relates to a short term
lease held for office space in both the United Kingdom and its
office in Brazil. These total approximately GBP80,000 per year and
are renewed for a maximum of 12 months at a time.
2.3 Basis of consolidation
Horizonte Minerals Plc was incorporated on 16 January 2006. On
23 March 2006 Horizonte Minerals Plc acquired the entire issued
share capital of Horizonte Exploration Limited (HEL) by way of a
share for share exchange. The transaction was treated as a group
reconstruction and was accounted for using the merger accounting
method as the entities were under common control before and after
the acquisition.
Subsidiaries are entities controlled by the Group. Control is
achieved when the Group is exposed, or has rights, to variable
returns from its involvement with the investee and has the ability
to affect those returns through its power over the investee.
The Group considers all relevant facts and circumstances in
assessing whether it has power over an investee, including:
-- The contractual arrangement with the other vote holders of the investee.
-- Rights arising from other contractual arrangements.
-- The Group's voting rights and potential voting rights.
Consolidation of a subsidiary begins when the Group obtains
control over the subsidiary and ceases when the Group loses control
of the subsidiary. Assets, liabilities, income and expenses of a
subsidiary acquired or disposed of during the year are included in
the consolidated financial statements from the date the Group gains
control until the date the Group ceases to control the
subsidiary.
Other than for the acquisition of HEL as noted above, the Group
uses the acquisition method of accounting to account for business
combinations. The consideration transferred for the acquisition of
a subsidiary is the fair value of the assets transferred, the
liabilities incurred and the equity interests issued by the Group.
The consideration transferred includes the fair value of any asset
or liability resulting from a contingent consideration arrangement.
Identifiable assets acquired and liabilities and contingent
liabilities assumed in a business combination are measured
initially at their fair values at the acquisition date.
Acquisition-related costs are expensed as incurred unless they
result from the issuance of shares, in which case they are offset
against the premium on those shares within equity.
If an acquisition is achieved in stages, the acquisition date
carrying value of the acquirer's previously held equity interest in
the acquiree is remeasured to fair value at the acquisition date
through profit or loss.
Any contingent consideration to be transferred by the Group is
recognised at fair value at the acquisition date. Subsequent
changes to the fair value of the contingent consideration that is
deemed to be an asset or a liability is recognised in accordance
with IAS 39 either in profit or loss or as a change in other
comprehensive income. The unwinding of the discount on contingent
consideration liabilities is recognised as a finance charge within
profit or loss. Contingent consideration that is classified as
equity is not remeasured, and its subsequent settlement is
accounted for within equity.
The excess of the consideration transferred and the acquisition
date fair value of any previous equity interest in the acquiree
over the fair value of the Group's share of the identifiable net
assets acquired is recorded as goodwill. If this is less than the
fair value of the net assets of the subsidiary acquired in the case
of a bargain purchase, the difference is recognised directly in
profit or loss.
Inter-company transactions, balances and unrealised gains on
transactions between Group companies are eliminated. Accounting
policies of subsidiaries have been changed where necessary to
ensure consistency with policies adopted by the Group.
Investments in subsidiaries are accounted for at cost less
impairment.
The following 100% owned subsidiaries have been included within
the consolidated Financial Statements:
Subsidiary Registered Address Country Nature
undertaking Held of incorporation of business
-------------------------- ---------- ----------------------- ----------------- ------------
Rex House, 4-12 Regents
Horizonte Exploration Street, London SW1Y Mineral
Ltd Directly 4RG England Exploration
Devonshire House,
15 St Georges St,
Horizonte Minerals Douglas, Ilse of Isle Holding
(IOM) Ltd Indirectly Man, of Man company
Devonshire House,
15 St Georges St,
HM Brazil (IOM) Douglas, Ilse of Isle Holding
Ltd Indirectly Man, of Man company
Devonshire House,
15 St Georges St,
Cluny (IOM) Douglas, Ilse of Isle Holding
Ltd Indirectly Man, of Man company
Devonshire House,
15 St Georges St,
Champol (IOM) Douglas, Ilse of Isle Holding
ltd Indirectly Man, of Man company
Devonshire House,
15 St Georges St,
Horizonte Nickel Douglas, Ilse of Isle Holding
(IOM) Ltd Indirectly Man, of Man company
CNPJ 07.819.038/0001-30
com sede na Avenida
Amazonas, 2904, loja
511, Bairro Prado,
HM do Brasil Belo Horizonte - Mineral
Ltda Indirectly MG. CEP: 30.411-186 Brazil Exploration
CNPJ 97.515.035/0001-03
com sede na Avenida
Amazonas, 2904, loja
511, Bairro Prado,
Araguaia Niquel Belo Horizonte - Mineral
Metias Ltda Indirectly MG. CEP: 30.411-186 Brazil Exploration
CNPJ 11.928.960/0001-32
com sede na Avenida
Amazonas, 2904, loja
Lontra Empreendimentos 511, Bairro Prado,
e Participações Belo Horizonte - Mineral
Ltda Indirectly MG. CEP: 30.411-186 Brazil Exploration
CNPJ 23.282.640/0001-37
com sede Alameda
Ezequiel Dias, n.
427, 2 andar, bairro
Funcionários,
Município de
Typhon Brasil Belo Horizonte, Estado
Mineração de Minas Gerais, Mineral
Ltda Indirectly CEP 30.130-110. Brazil Exploration
CNPJ 23.282.280/0001-73
com sede na Alameda
Ezequiel Dias, n.
427, 2 andar, bairro
Funcionários,
Município de
Trias Brasil Belo Horizonte, Estado
Mineração de Minas Gerais, Mineral
Ltda Indirectly CEP 30.130-110 Brazil Exploration
2.4 Going concern
The Group's business activities together with the factors likely
to affect its future development, performance and position are set
out in the Chairman's Statement on pages 4 and 5; in addition note
3 to the Financial Statements includes the Group's objectives,
policies and processes for managing its capital; its financial risk
management objectives; details of its financial instruments and its
exposure to credit and liquidity risk.
The Financial Statements have been prepared on a going concern
basis. Although the Group's assets are not generating revenues and
an operating loss has been reported, the Directors consider that
the Group has sufficient funds to undertake its operating
activities for a period of at least the next 12 months including
any additional expenditure required in relation to its current
exploration projects. The Group has cash reserves which are
considered sufficient by the Directors to fund the Group's
committed expenditure both operationally and on its exploration
projects for the foreseeable future. However, as additional
projects are identified and the Araguaia project moves towards
production, additional funding will be required.
As a result of considerations noted above, the Directors have a
reasonable expectation that the Group and Company have adequate
resources to continue in operational existence for the foreseeable
future. Thus they continue to adopt the going concern basis of
accounting in preparing these Financial Statements.
2.5 Intangible Assets
(a) Goodwill
Goodwill represents the excess of the cost of an acquisition
over the fair value of the Group's share of the net identifiable
assets, liabilities and contingent liabilities of the acquired
subsidiary at the date of acquisition. Goodwill arising on the
acquisition of subsidiaries is included in 'intangible assets'.
Goodwill is tested annually for impairment and carried at cost less
accumulated impairment losses. Impairment losses on goodwill are
not reversed. Gains and losses on the disposal of an entity include
the carrying amount of goodwill relating to the entity sold.
Goodwill is allocated to cash generating units for the purpose
of impairment testing. The allocation is made to those
cash-generating units or groups of cash-generating units that are
expected to benefit from the business combination in which the
goodwill arose, identified according to operating segment.
(b) Exploration and evaluation assets
The Group capitalises expenditure in relation to exploration and
evaluation of mineral assets when the legal rights are obtained.
Expenditure included in the initial measurement of exploration and
evaluation assets and which are classified as intangible assets
relate to the acquisition of rights to explore, topographical,
geological, geochemical and geophysical studies, exploratory
drilling, trenching, sampling and activities to evaluate the
technical feasibility and commercial viability of extracting a
mineral resource.
Exploration and evaluation assets arising on business
combinations are included at their acquisition-date fair value in
accordance with IFRS 3 (revised) 'Business combinations'. Other
exploration and evaluation assets and all subsequent expenditure on
assets acquired as part of a business combination are recorded and
held at cost.
Exploration and evaluation assets are assessed for impairment
when facts and circumstances suggest that the carrying amount of an
asset may exceed its recoverable amount. The assessment is carried
out by allocating exploration and evaluation assets to cash
generating units, which are based on specific projects or
geographical areas.
Whenever the exploration for and evaluation of mineral resources
does not lead to the discovery of commercially viable quantities of
mineral resources or the Group has decided to discontinue such
activities of that unit, the associated expenditures are written
off to profit or loss.
2.6 Property, plant and equipment
All property, plant and equipment is stated at historic cost
less accumulated depreciation. Historic cost includes expenditure
that is directly attributable to the acquisition of the items.
Subsequent costs are included in the asset's carrying amount or
recognised as a separate asset, as appropriate, only when it is
probable that future economic benefits associated with the item
will flow to the Group and the cost of the item can be measured
reliably. All repairs and maintenance costs are charged to profit
or loss during the financial period in which they are incurred.
Depreciation is charged on a straight-line basis so as to write
off the cost of assets, over their estimated useful lives, using
the straight-line method, on the following bases:
Office equipment 25%
Vehicles and other
field equipment 25% - 33%
The asset's residual values and useful lives are reviewed, and
adjusted if appropriate, at the end of each reporting period.
An asset's carrying amount is written down immediately to its
recoverable amount if the assets carrying amount is greater than
its estimated recoverable amount.
2.7 Impairment of non-financial assets
Assets that have an indefinite useful life, such as goodwill or
intangible exploration assets not ready to use, are not subject to
amortisation and are tested annually for impairment. Intangible
assets that are subject to amortisation and property, plant and
equipment are reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount may not be
recoverable. An impairment loss is recognised for the amount by
which the asset's carrying amount exceeds its recoverable amount.
The recoverable amount is the higher of an asset's fair value less
costs to sell and value in use. For the purposes of assessing
impairment, assets are grouped at the lowest levels for which there
are separately identifiable cash flows (cash generating units).
Non-financial assets other than goodwill that suffered an
impairment are reviewed for possible reversal of the impairment at
each reporting date.
2.8 Foreign currency translation
(a) Functional and presentation currency
Items included in the Financial Statements of the Group's
entities are measured using the currency of the primary economic
environment in which the entity operates (the 'functional
currency'). The functional currency of the UK and Isle of Man
entities is Pounds Sterling and the functional currency of the
Brazilian entities is Brazilian Real. The Consolidated Financial
Statements are presented in Pounds Sterling, rounded to the nearest
pound, which is the Company's functional and Group's presentation
currency.
(b) Transactions and balances
Foreign currency transactions are translated into the functional
currency using the exchange rates prevailing at the dates of the
transactions or valuation where such items are re-measured. Foreign
exchange gains and losses resulting from the settlement of such
transactions and from the translation at year-end exchange rates of
monetary assets and liabilities denominated in foreign currencies
are recognised in profit or loss.
(c) Group companies
The results and financial position of all the Group's entities
(none of which has the currency of a hyperinflationary economy)
that have a functional currency different from the presentation
currency are translated into the presentation currency as
follows:
(1) assets and liabilities for each statement of financial
position presented are translated at the closing rate at the date
of that statement of financial position;
(2) each component of profit or loss is translated at average
exchange rates during the accounting period (unless this average is
not a reasonable approximation of the cumulative effect of the
rates prevailing on the transaction dates, in which case income and
expenses are translated at the dates of the transactions); and
(3) all resulting exchange differences are recognised in other comprehensive income.
On consolidation, exchange differences arising from the
translation of the net investment in foreign entities, and of
monetary items receivable from foreign subsidiaries for which
settlement is neither planned nor likely to occur in the
foreseeable future are taken to other comprehensive income. When a
foreign operation is sold, such exchange differences are recognised
in profit or loss as part of the gain or loss on sale.
Goodwill and fair value adjustments arising on the acquisition
of a foreign entity are treated as assets and liabilities of the
foreign entity and retranslated at the end of each reporting
period.
2.9 Financial assets
The Group classifies its financial assets as loans and
receivables.
(a) Loans and receivables
Loans and receivables are non-derivative financial assets with
fixed or determinable payments that are not quoted in an active
market. After initial measurement, such financial assets are
subsequently measured at amortised cost using the effective
interest rate method, less impairment. The Group's loans and
receivables comprise 'trade and other receivables' and 'cash and
cash equivalents' in the Consolidated Statement of Financial
Position and loans to group undertakings in the Company Statement
of Financial Position.
Derecognition
A financial asset is derecognised when the rights to receive
cash flows from the asset have expired.
2.10 Cash and cash equivalents
In the Statement of Financial Position and Statement of Cash
Flows, cash and cash equivalents comprise cash at bank and in hand
and demand deposits with banks and other financial institutions,
that are readily convertible into known amounts of cash and which
are subject to an insignificant risk of changes in value.
2.11 Impairment of financial assets
(a) Assets carried at amortised cost
The Group assesses at the end of each reporting period whether
there is objective evidence that a financial asset or group of
financial assets is impaired. A financial asset or a group of
financial assets is impaired and impairment losses are incurred
only if there is objective evidence of impairment as a result of
one or more events that occurred after the initial recognition of
the asset (a 'loss event') and that loss event (or events) has an
impact on the estimated future cash flows of the financial asset or
group of financial assets that can be reliably estimated.
For loans and receivables category, the amount of the loss is
measured as the difference between the asset's carrying amount and
the present value of estimated future cash flows (excluding future
credit losses that have not been incurred) discounted at the
financial asset's original effective interest rate. The carrying
amount of the asset is reduced and the amount of the loss is
recognised in the Consolidated Income Statement.
If, in a subsequent period, the amount of the impairment loss
decreases and the decrease can be related objectively to an event
occurring after the impairment was recognised (such as an
improvement in the debtor's credit rating), the reversal of the
previously recognised impairment loss is recognised in the
Consolidated Income Statement.
2.12 Taxation
The tax credit or expense for the period comprises current and
deferred tax. Tax is recognised in the Income Statement, except to
the extent that it relates to items recognised in other
comprehensive income or directly in equity. In this case, the tax
is also recognised in other comprehensive income or directly in
equity, respectively.
The charge for current tax is calculated on the basis of the tax
laws enacted or substantively enacted by the end of the reporting
period in the countries where the company and its subsidiaries
operate and generate taxable income. Management periodically
evaluates positions taken in tax returns with respect to situations
in which applicable tax regulation is subject to interpretation. It
establishes provisions where appropriate on the basis of amounts
expected to be paid to the tax authorities.
Deferred tax is accounted for using the liability method in
respect of temporary differences arising from differences between
the carrying amount of assets and liabilities in the financial
statements and the corresponding tax bases used in the computation
of taxable profit. However, deferred tax liabilities are not
recognised if they arise from the initial recognition of goodwill;
deferred tax is not accounted for if it arises from initial
recognition of an asset or liability in a transaction other than a
business combination that at the time of the transaction affects
neither accounting nor taxable profit or loss.
Deferred tax liabilities are recognised for all taxable
temporary differences and deferred tax assets are recognised to the
extent that it is probable that taxable profits will be available
against which deductible temporary differences can be utilised.
Deferred tax assets are recognised on tax losses carried forward to
the extent that the realisation of the related tax benefit through
future taxable profits is probable.
Deferred tax liabilities are recognised for taxable temporary
differences arising on investments in subsidiaries and associates,
and interests in joint ventures, except where the Company is able
to control the reversal of the temporary difference and it is
probable that the temporary difference will not reverse in the
foreseeable future.
Deferred tax assets and liabilities are offset when there is a
legally enforceable right to offset current tax assets against
current tax liabilities and when the deferred tax assets and
liabilities relate to taxes levied by the same taxation authority
on either the same taxable entity or different taxable entities
where there is an intention to settle the balances on a net
basis.
Deferred tax is calculated at the tax rates (and laws) that have
been enacted or substantively enacted by the Statement of Financial
Position date and are expected to apply to the period when the
asset is realised or the liability is settled.
Deferred tax assets and liabilities are not discounted.
2.13 Share capital
Ordinary shares are classified as equity. Incremental costs
directly attributable to the issue of new ordinary shares or
options are shown in equity as a deduction, net of tax, from the
proceeds.
2.14 Financial liabilities
The Group classifies its financial liabilities into one of two
categories, depending on the purpose for which the liability was
acquired.
Fair value through profit or loss
This category comprises the contingent consideration which are
carried in the consolidated statement of financial position at
fair value with changes in fair value recognised in the
consolidated statement of comprehensive income.
Other financial liabilities
Trade payables and other short-term monetary liabilities, which
are initially recognised at fair value and subsequently carried at
amortised cost using the effective interest method.
2.15 Trade payables
Trade payables are obligations to pay for goods or services that
have been acquired in the ordinary course of business from
suppliers. Accounts payable are classified as current liabilities
if payment is due within one year or less. If not, they are
presented as non-current liabilities.
Trade payables are initially recognised at fair value and
subsequently measured at amortised cost using the effective
interest method.
2.16 Operating leases
Leases of assets under which a significant amount of the risks
and benefits of ownership are effectively retained by the lessor
are classified as operating leases. Operating lease payments are
charged to the Income Statement on a straight-line basis over the
period of the respective leases.
2.17 Share-based payments and incentives
The Group operates equity-settled, share-based compensation
plans, under which the entity receives services from employees as
consideration for equity instruments (options) of the Group. The
fair value of employee services received in exchange for the grant
of share options are recognised as an expense. The total expense to
be apportioned over the vesting period is determined by reference
to the fair value of the options granted:
> including any market performance conditions;
> excluding the impact of any service and non-market performance vesting conditions; and
> including the impact of any non-vesting conditions.
Non-market performance and service conditions are included in
assumptions about the number of options that are expected to vest.
The total expense is recognised over the vesting period, which is
the period over which all of the specified vesting conditions are
to be satisfied. At the end of each reporting period the Group
revises its estimate of the number of options that are expected to
vest.
It recognises the impact of the revision of original estimates,
if any, in profit or loss, with a corresponding adjustment to
equity.
When options are exercised, the Company issues new shares. The
proceeds received net of any directly attributable transaction
costs are credited to share capital (nominal value) and share
premium.
The fair value of goods or services received in exchange for
shares is recognised as an expense.
2.18 Segment reporting
Operating segments are reported in a manner consistent with the
internal reporting provided to the Chief Executive Officer, the
Company's chief operating decision-maker ("CODM").
2.19 Finance income
Interest income is recognised using the effective interest
method, taking into account the principal amounts outstanding and
the interest rates applicable.
2.20 Provisions and Contingent Liabilities
Provisions are recognised when the Group has a present legal or
constructive obligation as a result of past events; it is probable
that an outflow of resources will be required to settle the
obligation; and the amount can be reliably estimated.
Provisions are measured at the present value of the expenditures
expected to be required to settle the obligation using a pre-tax
rate that reflects current market assessments of the time value of
money and the risks specific to the obligation. The increase in the
provision due to passage of time is recognised as finance cost.
Contingent liabilities are potential obligations that arise from
past events and whose existence will only be confirmed by the
occurrence of one or more uncertain future events that, however,
are beyond the control of the Group. Furthermore, present
obligations may constitute contingent liabilities if it is not
probable that an outflow of resources will be required to settle
the obligation, or a sufficiently reliable estimate of the amount
of the obligation cannot be made.
3 Financial risk management
3.1 Financial risk factors
The main financial risks to which the Group's activities are
exposed are liquidity and fluctuations on foreign currency. The
Group's overall risk management programme focusses on the
unpredictability of financial markets and seeks to minimise
potential adverse effects on the Group's financial performance.
Risk management is carried out by the Board of Directors under
policies approved at the quarterly Board meetings. The Board
frequently discusses principles for overall risk management
including policies for specific areas such as foreign exchange.
(a) Liquidity risks
In keeping with similar sized mineral exploration groups, the
Group's continued future operations depend on the ability to raise
sufficient working capital through the issue of equity share
capital. The Group monitors its cash and future funding
requirements through the use of cash flow forecasts.
All cash, with the exception of that required for immediate
working capital requirements, is held on short-term deposit.
(b) Foreign currency risks
The Group operates internationally and is exposed to foreign
exchange risk arising from various currency exposures, primarily
with respect to the Brazilian Real, US Dollar and the Pound
Sterling.
Foreign exchange risk arises from future commercial
transactions, recognised assets and liabilities and net investments
in foreign operations that are denominated in a foreign currency.
The Group holds a proportion of its cash in US Dollars and
Brazilian Reals to hedge its exposure to foreign currency
fluctuations and recognises the profits and losses resulting from
currency fluctuations as and when they arise. The volume of
transactions is not deemed sufficient to enter into forward
contracts.
At 31 December 2017, if the Brazilian Real had
weakened/strengthened by 20% against Pound Sterling and US Dollar
with all other variables held constant, post tax loss for the year
would have been approximately GBP17,287 lower/higher mainly as a
result of foreign exchange losses/gains on translation of Brazilian
Real expenditure and denominated bank balances.
(c) Interest rate risk
As the Group has no borrowings, it is not exposed to interest
rate risk on financial liabilities. The Group's interest rate risk
arises from its cash held on short-term deposit for which the
Directors use a mixture of fixed and variable rate deposits. As a
result, fluctuations in interest rates are not expected to have a
significant impact on profit or loss or equity.
(d) Price risk
Given the size and stage of the Group's operations, the costs of
managing exposure to commodity price risk exceed any potential
benefits. The Directors will revisit the appropriateness of this
policy should the Group's operations change in size or nature.
(e) Credit risk
Credit risk arises from cash and cash equivalents and
outstanding receivables. The Group maintains cash and short-term
deposits with a variety of credit worthy financial institutions and
considers the credit ratings of these institutions before investing
in order to mitigate against the associated credit risk.
The Company's exposure to credit risk amounted to GBP58,128,840
(2016: GBP50,476,298). Of this amount GBP48,890,013 (2016:
GBP41,332,305) is due from subsidiary companies, GBP9,238,827
represents cash holdings (2016: GBP9,143,993)
3.2 Capital risk management
The Group's objectives when managing capital are to safeguard
the Group's ability to continue as a going concern, in order to
provide returns for shareholders and to enable the Group to
continue its exploration and evaluation activities. The Group has
no debt at 31 December 2017 and defines capital based on the total
equity of the Group. The Group monitors its level of cash resources
available against future planned exploration and evaluation
activities and may issue new shares in order to raise further funds
from time to time.
As indicated above, the Group holds cash reserves on deposit at
several banks and in different currencies until they are required
and in order to match where possible with the corresponding
liabilities in that currency.
3.3 Fair value estimation
The carrying values of trade receivables and payables are
assumed to be approximate to their fair values, due to their
short-term nature. The fair value of contingent consideration is
estimated by discounting the future expected contractual cash flows
at the Group's current cost of capital of 7% based on the interest
rate available to the Group for a similar financial instrument.
4 Critical accounting estimates and judgements
The preparation of the Financial Statements in conformity with
IFRSs requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the end of the
reporting period and the reported amount of expenses during the
year. Actual results may vary from the estimates used to produce
these Financial Statements.
Estimates and judgements are continually evaluated and are based
on historical experience and other factors, including expectations
of future events that are believed to be reasonable under the
circumstances.
Significant items subject to such judgements include, but are
not limited to:
4.1 Impairment of exploration and evaluation costs
Exploration and evaluation costs have a carrying value at 31
December 2017 of GBP34,057,215 (2016: GBP31,737,737 ). Each
exploration project is subject to an annual review by either a
consultant or senior company geologist to determine if the
exploration results returned to date warrant further exploration
expenditure and have the potential to result in an economic
discovery. This review takes into consideration long-term metal
prices, anticipated resource volumes and grades, permitting and
infrastructure. In the event that a project does not represent an
economic exploration target and results indicate there is no
additional upside, a decision will be made to discontinue
exploration. The judgement exercised by management relates to
whether there is perceived to be an indicator of impairment and
that management have concluded that there is not, due to the
recovery in the Nickel prices, favourable economics of the PFS as
well as ongoing support from the equity markets to advance the
project by way of closing a fund raise at the end of 2017.
4.2 Estimated impairment of goodwill
Goodwill has a carrying value at 31 December 2017 of GBP251,063
(2016: GBP280,059 ) which is included in intangible assets. The
Group tests annually whether goodwill has suffered any impairment,
in accordance with the accounting policy stated in note 2.7.
Management has concluded that there is no impairment charge
necessary to the carrying value of goodwill. The judgements
exercised in arriving at this decision are the same as described in
4.1 above. See also note 10 to the Financial Statements.
Estimates and assumptions include, but are not limited to:
4.3 Contingent consideration
Contingent consideration has a carrying value of GBP3,635,955,
at 31 December 2017 (2016: GBP3,643,042). there are two contingent
consideration arrangements in place as at 31 December 2017:
-- A contingent consideration arrangement that requires the
Group to pay the former owners of Teck Cominco Brasil S.A
(subsequently renamed Araguaia Niquel Mineração Ltda) 50% of the
tax saving upon utilisation of the tax losses existing in Teck
Cominco Brasil S.A at the date of acquisition. Under the terms of
the acquisition agreement, tax losses that existed at the date of
acquisition and which are subsequently utilised in a period greater
than 10 years from that date are not subject to the contingent
consideration arrangement.
This acquisition was accounted for as a business combination and
an assessment of the fair value of the contingent consideration was
made at the date of acquisition. This fair value is reassessed in
each subsequent accounting period. In arriving at an estimate of
the fair value management make an assessment of the probability of
utilisation of all or part of the tax losses by the end of the 10
year period which is August 2020. The Group has used discounted
cash flow analysis to determine when it is anticipated that the tax
losses will be utilised and any potential contingent consideration
paid. These cash flows could be affected by movements in a number
of factors including the timing of the development and
commissioning of the project, commodity prices, operating costs,
capital expenditure, production levels, grades, recoveries and
interest rates. Because of the condition of the acquisition
agreement to utilise tax losses prior to August 2020 a critical
assumption in the assessment of value of the contingent
consideration is the timing of commencement of profitable
production, which for the financial year ending 31 December 2017
has been re-assessed as taking place after August 2020.
-- A contingent consideration arrangement that requires the
Group to pay Xstrata Brasil Mineração Ltda US$1,000,000 after the
date of issuance of a Feasibility Study comprising the Araguaia
project and the Vale dos Sonhos ('VdS') and Serra do Tapa ('SdT')
project areas ('GAP') (together the 'Enlarged Project'), to be
satisfied in shares in the Company (at the 5 day volume weighted
average price taken on the tenth business day after the date of
such issuance) or cash, at the election of the Company; and
remaining consideration of US$5,000,000 to be paid in cash, as at
the date of first commercial production from any of the resource
areas within the Enlarged Project area. Although a number of the
critical assumptions relating to the assessment of the contingent
consideration of US$5,000,000 are similar to those described above
for the contingent consideration payable to the former owners of
Teck Cominco Brasil S.A there is no linkage to utilisation of tax
losses by a fixed date.
The Contingent consideration is considered to be a level 3
hierarchy valuation, the following are unobservable inputs for the
valuation model: Discount rate and probability factor. In addition,
the model includes the foreign exchange rate.
Management have sensitized the fair value calculation to
reasonable changes in the unobservable inputs and note that if the
discount rate were to increase from 7% to 10% then the FV would
decrease by GBP269,255 to GBP3,366,700.
There has been no change in valuation technique during the
period.
4.4 Current and deferred taxation
The Group is subject to income taxes in numerous jurisdictions.
Judgment is required in determining the worldwide provision for
such taxes. The Group recognises liabilities for anticipated tax
issues based on estimates of whether additional taxes will be due.
Where the final tax outcome of these matters is different from the
amounts that were initially recorded, such differences will affect
the current and deferred income tax assets and liabilities in the
period in which such determination is made.
Deferred tax liabilities have been recognised on the fair value
gains in exploration assets arising on the acquisitions of Araguaia
Niquel Mineração Ltda (formerly Teck Cominco Brasil S.A) and Lontra
Empreendimentos e Participações Ltda. A deferred tax asset in
respect of the losses has been recognised on acquisition of
Araguaia Niquel Mineração Ltda to the extent that it can be set
against the deferred tax liability arising on the fair value gains.
In determining whether a deferred tax asset in excess of this
amount should be recognized management must make an assessment of
the probability that the tax losses will be utilized and a deferred
tax asset is only recognised if it is considered probable that the
tax losses will be utilized.
Other estimates include but are not limited to future cash flows
associated with assets, useful lives for depreciation and fair
value of financial instruments.
5 Segmental reporting
The Group operates principally in the UK and Brazil, with
operations managed on a project by project basis within each
geographical area. Activities in the UK are mainly administrative
in nature whilst the activities in Brazil relate to exploration and
evaluation work. The reports used by the chief operating
decision-maker are based on these geographical segments.
UK Brazil Other Total
2017 2017 2017 2017
2017 GBP GBP GBP GBP
-------------------------------------------- ----------- ---------- ----- -----------
Administrative expenses (1,093,132) - - (1,093,132)
Loss on foreign exchange (261,218) (38,616) - (299,834)
Loss from operations per reportable segment (1,354,350) (38,616) - (1,392,966)
-------------------------------------------- ----------- ---------- ----- -----------
Depreciation charges (283) - - (283)
Additions to non-current assets - 2,319,479 - 2,319,479
Reportable segment assets 9,359,155 34,508,104 - 43,867,259
Reportable segment non-current assets - 34,308,278 - 34,308,278
Reportable segment liabilities 4,029,066 596,378 - 4,625,444
-------------------------------------------- ----------- ---------- ----- -----------
UK Brazil Other Total
2016 2016 2016 2016
2016 GBP GBP GBP GBP
-------------------------------------------- --------- ---------- ----- -----------
Administrative expenses (802,409) (207,214) - (1,009,623)
Loss on foreign exchange 46,454 18,787 - 65,241
Loss from operations per reportable segment (755,955) (188,427) - (944,382)
-------------------------------------------- --------- ---------- ----- -----------
Depreciation charges (970) (114) - (1,084)
Additions to non-current assets - 11,578,410 - 11,578,410
Reportable segment assets 9,309,132 32,062,800 - 41,371,932
Reportable segment non-current assets - 32,018,658 - 32,018,658
Reportable segment liabilities 3,969,966 347,511 - 4,317,477
-------------------------------------------- --------- ---------- ----- -----------
Inter segment revenues are calculated and recorded in accordance
with the underlying intra group service agreements.
A reconciliation of adjusted loss from operations per reportable
segment to loss before tax is provided as follows:
2017 2016
GBP GBP
------------------------------------------------------------------ ----------- -----------
Loss from operations per reportable segment (1,392,966) (944,382)
Changes in fair value of contingent consideration (refer note 17) 621,545 (260,632)
Charge for share options granted (678,652) (324,890)
Finance income 15,854 4,387
Finance costs (232,938) (220,817)
------------------------------------------------------------------ ----------- -----------
Loss for the year from continuing operations (1,667,156) (1,746,334)
------------------------------------------------------------------ ----------- -----------
6 Expenses by nature
2017 2016
Group GBP GBP
---------------------------------------------------- ------- -------
Charge for share options granted 678,652 324,890
Depreciation (note 11) 283 1,084
Operating lease charges 55,421 36,053
Profit on disposal of property, plant and equipment - -
---------------------------------------------------- ------- -------
7 Auditor remuneration
During the year the Group (including its overseas subsidiaries)
obtained the following services from the Company's auditor and its
associates:
2017 2016
Group GBP GBP
--------------------------------------------------------------------------------------------- ------ ------
Fees payable to the Company's auditor and its associates for the audit of the parent company
and consolidated financial statements 35,350 32,000
Fees payable to the Company's auditor and its associates for other services:
* Audit related assurance services 11,250 5,000
* Tax compliance services 4,850 2,000
--------------------------------------------------------------------------------------------- ------ ------
8 Finance income and costs
2017 2016
Group GBP GBP
------------------------------------------------------------ --------- ---------
Finance income:
* Interest income on cash and short-term bank deposits 15,854 4,387
Finance costs:
* Contingent consideration: unwinding of discount (232,938) (220,817)
------------------------------------------------------------ --------- ---------
Net finance costs (217,084) (216,430)
------------------------------------------------------------ --------- ---------
9 Income Tax
2017 2016
Group GBP GBP
-------------------------------- ---- ----
Tax charge:
Current tax charge for the year - -
-------------------------------- ---- ----
Deferred tax charge for the year - -
-------------------------------- ---- ----
Tax on loss for the year - -
-------------------------------- ---- ----
Reconciliation of current tax
2017 2016
Group GBP GBP
--------------------------------------- ----------- -----------
Loss before income tax (1,667,156) (1,746,334)
Current tax at 19.25% (2016: 22.87%) (320,928) (399,387)
Effects of:
Expenses not deducted for tax purposes - 9,080
Utilisation of tax losses brought
forward - -
Tax losses carried forward for which
no deferred income tax asset was
recognised 320,928 408,466
Total tax - -
--------------------------------------- ----------- -----------
No tax charge or credit arises on the loss for the year.
The weighted average applicable tax rate of 19.25% used is the
effective standard rate of corporation tax in the UK, where all of
the current year losses originated. The corporation tax rate in
Brazil is 34%. The weighted average applicable tax rate has
decreased from 22.87% to 19.25% as all of the losses arose in the
UK.
Deferred income tax
An analysis of deferred tax assets and liabilities is set out
below.
2017 2016
Group GBP GBP
------------------------------------------------------------ ----------- -----------
Deferred tax assets 4,255,615 4,744,885
------------------------------------------------------------ ----------- -----------
Deferred tax liabilities
* Deferred tax liability to be settled after more than
12 months (4,508,820) (5,027,335)
------------------------------------------------------------ ----------- -----------
Deferred tax liabilities (net) (253,205) (282,450)
------------------------------------------------------------ ----------- -----------
The movement on the net deferred tax liabilities is as
follows:
2017 2016
Group GBP GBP
--------------------- --------- ---------
At 1 January (282,450) (193,665)
--------------------- --------- ---------
Exchange differences 29,245 (88,785)
--------------------- --------- ---------
At 31 December (253,205) (282,450)
--------------------- --------- ---------
Deferred tax assets are recognised on tax losses carried forward
to the extent that the realisation of the related tax benefit
through future taxable profits is probable.
Deferred tax liabilities are recognised in respect of fair value
adjustments to the carrying value of intangible assets as a result
of the acquisition of such assets.
The Group has tax losses of approximately GBP19,707,869 (2016:
GBP18,132,502) in Brazil and excess management charges of
approximately GBP3,779,062 (2016: GBP2,492,408) in the UK available
to carry forward against future taxable profits. Deferred tax asset
have been recognised up to the amount of the deferred tax liability
arising on the fair value adjustments potential deferred tax assets
of GBP6,700,675 have not been recognised.
10 Intangible assets
Intangible assets comprise exploration licenses, exploration and
evaluation costs and goodwill. Exploration and evaluation costs
comprise acquired and internally generated assets.
Exploration Exploration and
Goodwill Licenses evaluation costs Total
Group GBP GBP GBP GBP
------------------------------------ -------- ----------- ----------------- -----------
Cost
At 1 January 2016 192,028 3,174,275 16,985,052 20,351,355
Additions - 1,012,620 1,253,212 2,265,831
Exchange rate movements 88,032 1,458,290 7,854,288 9,400,610
------------------------------------ -------- ----------- ----------------- -----------
Net book amount at 31 December 2016 280,060 5,645,185 26,092,551 32,017,796
------------------------------------ -------- ----------- ----------------- -----------
Additions - - 5,740,740 5,740,740
Exchange rate movements (28,997) (479,656) (2,941,605) (3,450,258)
------------------------------------ -------- ----------- ----------------- -----------
Net book amount at 31 December 2017 251,063 5,165,529 28,891,686 34,308,278
------------------------------------ -------- ----------- ----------------- -----------
(a) Exploration and evaluation assets
No indicators of impairment were identified during the year.
In October 2016, a Canadian NI 43-101 compliant Pre-Feasibility
Study ('PFS') was published by the Company regarding the enlarged
Araguaia Project which included the areas recently acquired from
Glencore Xstrata. The financial results and conclusions of the PFS
clearly indicate the economic viability of the Araguaia Project.
Nothing material had changed with the economics of the PFS as at
the end of 2017 and the Directors undertook an assessment of
impairment through evaluating the results of the PFS along with
recent market information relating to capital markets and nickel
prices and judged that no impairment was required with regards to
the Araguaia Project.
(b) Goodwill
Goodwill arose on the acquisition of Lontra Empreendimentos e
Participações Ltda in 2010. The Directors have determined the
recoverable amount of goodwill based on the same assumptions used
for the assessment of the Lontra exploration project detailed
above. As a result of this assessment, the Directors have concluded
that no impairment charge is necessary against the carrying value
of goodwill.
Impairment reviews for exploration and evaluation assets are
carried out either on a project by project basis or by geographical
area.
The adjacent Araguaia/Lontra/Vila Oito and Floresta exploration
sites ('the Araguaia Project'), together with the Vale dos Sonhos
deposit acquired from Xstrata Brasil Mineração Ltda comprise a
resource of a sufficient size and scale to allow the Company to
create a significant single nickel project. For this reason, at the
current stage of development, these two projects are viewed and
assessed for impairment by management as a single cash generating
unit.
The mineral concession for the Vale dos Sonhos deposit was
acquired from Xstrata Brasil Mineração Ltda, a subsidiary of
Glencore Canada Corporation, in November 2015.
The recoverable amount has been determined by reference to the
PFS undertaken during the year on the Araguaia Project. The key
inputs and assumptions in deriving the value in use were, the
discount rate of 8%, Nickel price of US$12,000/t and a life of mine
of 28 years.
Sensitivity to changes in assumptions
For the base case NPV(8) of the Araguaia Project of US$581
million using a nickel price of US$14,000/t and US$328 million
using US$12,000/t as per the PFS to be reduced to the book value of
the Araguaia Project as at 31 December 2017, the discount rate
applied to the cash flow model would need to be increased from 8%
to 21%.
11 Property, plant and equipment
Vehicles and
other field Office
equipment equipment Total
Group GBP GBP GBP
--------------------------------------- ------------ ---------- --------
Cost
At 1 January 2016 74,647 12,596 87,243
Foreign exchange movements 31,657 1,802 33,459
--------------------------------------- ------------ ---------- --------
At 31 December 2016 106,304 14,398 120,702
--------------------------------------- ------------ ---------- --------
Foreign exchange movements (10,630) -(796) (11,426)
Additions 2,236 - 2,236
--------------------------------------- ------------ ---------- --------
At 31 December 2017 97,910 13,602 111,512
--------------------------------------- ------------ ---------- --------
Accumulated depreciation
At I January 2016 65,639 9,716 75,355
Charge for the year 11,766 2,614 14,380
Foreign exchange movements 28,320 1,785 30,105
--------------------------------------- ------------ ---------- --------
At 31 December 2016 105,725 14,115 119,840
--------------------------------------- ------------ ---------- --------
Charge for the year 358 283 641
Foreign exchange movements (10,224) (796) (11,020)
--------------------------------------- ------------ ---------- --------
At 31 December 2017 95,859 13,602 109,461
--------------------------------------- ------------ ---------- --------
Net book amount as at 31 December 2017 2,051 - 2,051
--------------------------------------- ------------ ---------- --------
Net book amount as at 31 December 2016 579 283 862
--------------------------------------- ------------ ---------- --------
Net book amount as at 1 January 2016 9,008 2,880 11,888
--------------------------------------- ------------ ---------- --------
Depreciation charges of GBP358 (2016: GBP13,296) have been
capitalised and included within intangible exploration and
evaluation asset additions for the year. The remaining depreciation
expense for the year ended 31 December 2017 of GBP283 (2016:
GBP1,084) has been charged in 'administrative expenses' under
'Depreciation.'
Field Office
equipment equipment Total
Company GBP GBP GBP
--------------------------------------- ---------- ---------- ------
Cost
At 1 January 2016 4,208 7,403 11,611
Additions - - -
At 31 December 2016 and 2017 4,208 7,403 11,611
---------------------------------------- ---------- ---------- ------
Accumulated depreciation
At 1 January 2016 4,208 6,149 10,357
Charge for the year - 971 971
At 31 December 2016 4,208 7,120 11,328
---------------------------------------- ---------- ---------- ------
Charge for the year - 283 283
At 31 December 2017 4,208 7,403 11,611
---------------------------------------- ---------- ---------- ------
Net book amount as at 31 December 2017 - - -
--------------------------------------- ---------- ---------- ------
Net book amount as at 31 December 2016 - 283 283
---------------------------------------- ---------- ---------- ------
Net book amount as at 1 December 2016 - 1,254 1,254
---------------------------------------- ---------- ---------- ------
12 Cash and cash equivalents
Group Company
-------------------- --------------------
2017 2016 2017 2016
GBP GBP GBP GBP
------------------------- --------- --------- --------- ---------
Cash at bank and on hand 7,903,861 9,250,281 7,738,863 9,094,308
Short-term deposits 1,499,964 67,500 1,499,964 49,685
------------------------- --------- --------- --------- ---------
9,403,825 9,317,781 9,238,827 9,143,993
------------------------- --------- --------- --------- ---------
The Group's cash at bank and short-term deposits are held with
institutions with the following credit ratings (Fitch):
Group Company
-------------------- --------------------
2017 2016 2017 2016
GBP GBP GBP GBP
----- --------- --------- --------- ---------
A 9,267,418 9,217,380 9,188,864 9,094,308
BBB- 136,407 100,401 49,963 49,685
----- --------- --------- --------- ---------
9,403,825 9,317,781 9,238,827 9,143,993
----- --------- --------- --------- ---------
13 Share capital
2017 2017 2016 2016
Group and Company Number GBP Number GBP
--------------------------- ------------- ---------- ------------- ----------
Issued and fully paid
Ordinary shares of 1p each
At 1 January 1,171,934,300 11,719,343 671,204,378 6,712,044
Issue of ordinary shares 200,000,000 2,000,000 500,729,922 5,007,299
--------------------------- ------------- ---------- ------------- ----------
At 31 December 1,371,934,300 13,719,343 1,171,934,300 11,719,343
--------------------------- ------------- ---------- ------------- ----------
Share capital comprises amount subscribed for shares at the
nominal value.
2017
On 22 December 2017, a total of 200,000,000 shares were issued
through a private placement at a price of GBP0.035 per share to
raise GBP7,000,000 before expenses.
2016
On 8 August 2016, a total of 50,729,922 new ordinary shares were
issued at the prevailing market price of GBP0.0199 per share in
consideration for the purchase of the Vale dos Sonhos mineral
concession from Xstrata Brasil Mineração Ltda.
On 30 November 2016, a total of 374,000,000 shares were issued
through a private placement at a price of GBP0.02 per share to
raise GBP7,480,000 before expenses.
On 2 December 2016, a total of 76,000,000 shares were issued
through a private placement at a price of GBP0.02 per share to
raise GBP1,520,000 before expenses.
14 Share premium
2017 2016
Group and Company GBP GBP
------------------------- ---------- ----------
At 1 January 35,767,344 31,252,708
Premium arising on issue
of ordinary shares 5,000,000 5,005,662
Issue costs (345,086) (490,685)
------------------------- ---------- ----------
At 31 December 40,422,258 35,767,344
------------------------- ---------- ----------
Share premium comprises the amount subscribed for share capital
in excess of nominal value.
15 Share-based payments
The Directors have discretion to grant options to the Group
employees to subscribe for Ordinary shares up to a maximum of 10%
of the Company's issued share capital. One third of options are
exercisable at each six month's anniversary from the date of grant,
such that all options are exercisable 18 months after the date of
grant and all lapse on the tenth anniversary of the date of grant
or the holder ceasing to be an employee of the Group. Should
holders cease employment then the options remain valid for a period
of 3 months after cessation of employment, following which they
will lapse. Neither the Company nor the Group has any legal or
constructive obligation to settle or repurchase the options in
cash.
Movements on number of share options and their related exercise
price are as follows:
Weighted Weighted
average average
Number of exercise Number of exercise
options price options price
2017 2017 2016 2016
GBP GBP GBP GBP
--------------------------- ----------- --------- ----------- ---------
Outstanding at 1 January 55,310,000 0.079 48,760,000 0.124
Forfeited (1,660,000) 0.065 (8,450,000) 0.092
Granted 41,000,000 0.03 15,000,000 0.030
Outstanding at 31 December 94,650,000 0.059 55,310,000 0.079
--------------------------- ----------- --------- ----------- ---------
Exercisable at 31 December 62,483,333 0.072 36,760,000 0.102
--------------------------- ----------- --------- ----------- ---------
The options outstanding at 31 December 2017 had a weighted
average remaining contractual life of 7.56 years (2016: 7.28
years).
The fair value of the share options was determined using the
Black-Scholes valuation model.
The parameters used are detailed below.
2017 2016
Group and Company options options
---------------------------------------------------- ---------- ----------
Date of grant or reissue 31/03/2017 01/09/2016
Weighted average share price 3.07 pence 2.03 pence
Weighted average exercise price 3.20 pence 3.00 pence
Weighted average fair value at the measurement date 2.02 pence 1.36 pence
Expiry date 31/3/2027 31/08/2026
Options granted 41,000,000 15,000,000
Volatility 68% 64%
Dividend yield Nil Nil
Option life 10 years 10 years
Annual risk free interest rate 1.19% 2.83%
---------------------------------------------------- ---------- ----------
The expected volatility is based on historical volatility for
the six months prior to the date of grant. The risk free rate of
return is based on zero yield government bonds for a term
consistent with the option life.
The range of option exercise prices is as follows:
2017 2017 2016 2016
2017 Weighted Weighted 2016 Weighted Weighted
Weighted average average Weighted average average
Range of average remaining remaining average remaining remaining
exercise exercise 2017 life life exercise 2016 life life
prices price Number of expected contracted price Number of expected contracted
(GBP) (GBP) shares (years) (years) (GBP) shares (years) (years)
----------- ----------- ---------- ------------ ------------ ------------ ---------- ------------ ------------
0-0.1 0.04 79,500,000 8.32 8.32 0.049 39,850,000 8.34 8.34
0.1-0.2 0.16 15,150,000 3.55 3.55 0.154 15,460,000 4.57 4.57
----------- ----------- ---------- ------------ ------------ ------------ ---------- ------------ ------------
16 Other reserves
Merger Translation Other
reserve reserve reserve Total
Group GBP GBP GBP GBP
--------------------------------- ---------- ------------ ----------- -----------
At 1 January 2016 10,888,760 (14,688,776) (1,048,100) (4,848,116)
---------------------------------- ---------- ------------ ----------- -----------
Other comprehensive income - - - -
Currency translation differences - 9,315,180 - 9,315,180
---------------------------------- ---------- ------------ ----------- -----------
At 31 December 2016 10,888,760 (5,373,596) (1,048,100) 4,467,064
---------------------------------- ---------- ------------ ----------- -----------
Other comprehensive income - - - -
Currency translation differences - (3,479,050) - (3,479,050)
---------------------------------- ---------- ------------ ----------- -----------
At 31 December 2017 10,888,760 (8,852,646) (1,048,100) 998,014
---------------------------------- ---------- ------------ ----------- -----------
Merger
reserve Total
Company GBP GBP
--------------------------------------- ---------- ----------
At 1 January 2016 and 31 December 2016 10,888,760 10,888,760
--------------------------------------- ---------- ----------
At 1 January 2017 and 31 December 2017 10,888,760 10,888,760
--------------------------------------- ---------- ----------
The merger and other reserve as at 31 December 2017 arose on
consolidation as a result of merger accounting for the acquisition
of the entire issued share capital of Horizonte Exploration Limited
during 2006 and represents the difference between the value of the
share capital and premium issued for the acquisition and that of
the acquired share capital and premium of Horizonte Exploration
Limited.
Currency translation differences relate to the translation of
Group entities that have a functional currency different from the
presentation currency (refer note 2.8). Movements in the
translation reserve are linked to the changes in the value of the
Brazilian Real against the Pound Sterling: the intangible assets of
the Group are located in Brazil, and their functional currency is
the Brazilian Real, which decreased in value against Sterling
during the year.
The available for sale reserve represents changes in the fair
value of assets that are held available for sale.
17 Trade and other payables
Group Company
-------------------- --------------------
2017 2016 2017 2016
GBP GBP GBP GBP
------------------------------- --------- --------- --------- ---------
Non-current
Contingent consideration
payable to former owners
of Teck Cominco Brasil
S.A. - 115,100 - 115,100
Contingent consideration
payable to Xstrata Brasil
Mineração Ltda
(refer note 26) 3,635,955 3,527,942 3,635,955 3,527,942
------------------------------- --------- --------- --------- ---------
Total contingent consideration 3,635,955 3,643,042 3,635,955 3,643,042
------------------------------- --------- --------- --------- ---------
Current
Trade and other payables 271,967 229,046 99,486 148,985
Amounts due to related
parties (refer note 20) - - 413,930 413,930
Social security and other
taxes 15,804 19,088 15,804 19,088
Accrued expenses 448,513 143,851 284,021 165,052
------------------------------- --------- --------- --------- ---------
736,284 391,985 813,241 747,055
------------------------------- --------- --------- --------- ---------
Total trade and other
payables 4,372,239 4,035,027 4,449,196 4,390,097
------------------------------- --------- --------- --------- ---------
Trade and other payables include amounts due of GBP222,925
(2016: GBP65,053) in relation to exploration and evaluation
activities.
Contingent Consideration payable to the former owners of Teck
Cominco Brasil S.A.
The fair value of the contingent consideration arrangement with
the former owners of Teck Cominco Brasil S.A. was estimated at the
acquisition date according to the probability and timing of when
future taxable profits will arise against which the tax losses may
be utilised in accordance with the terms of the acquisition
agreement.
The estimate of fair value has been restated and is now assessed
to be GBPnil (2016 GBP115,100). The critical assumptions underlying
the fair value estimate are set out in note 4.3. Estimates were
also based on the current rates of tax on profits in Brazil of 34%
and a discount factor of 7.0% was applied to the future dates at
which the tax losses will be utilised and consideration paid.
Contingent Consideration payable to Xstrata Brasil Mineração
Ltda
On 28 September 2015, the Company announced that it had reached
agreement to indirectly acquire through wholly owned subsidiaries
in Brazil the advanced high-grade Glencore Araguaia nickel project
('GAP') in north central Brazil. GAP is located in the vicinity of
the Company's Araguaia Project.
Pursuant to a conditional asset purchase agreement ('Asset
Purchase Agreement') between, amongst others, the Company and
Xstrata Brasil Exploraçâo Mineral Ltda ('Xstrata'), a wholly-owned
subsidiary of Glencore Canada Corporation ('Glencore'), the Company
has agreed to pay a total consideration of US$8 million to Xstrata,
which holds the title to GAP. The consideration is to be paid
according the following schedule;
-- US$2,000,000 in ordinary shares in the capital of the Company
which as at 31 December 2017 had been settled by way of issuing new
shares in the Company.
-- US$1,000,000 after the date of issuance of a joint
Feasibility Study for the combined Araguaia & GAP project
areas, to be satisfied in HZM Shares (at the 5 day volume weighted
average price taken on the tenth business day after the date of
such issuance) or cash, at the election of the Company; and
-- The remaining US$5,000,000 consideration will be paid in
cash, as at the date of first commercial production from any of the
resource areas within the Enlarged Project area. Following transfer
of the concession for the VdS deposit area to a subsidiary of the
Company, this has been included in contingent consideration
payable.
The critical assumptions underlying the treatment of the
contingent consideration are set out in note 4.3.
As at 31 December 2017, there was a finance expense of
GBP222,836 (2016: GBP193,868) recognised in finance costs within
the Statement of Comprehensive Income in respect of the contingent
consideration arrangement, as the discount applied to the
contingent consideration at the date of acquisition was
unwound.
18 Dividends
No dividend has been declared or paid by the Company during the
year ended 31 December 2017 (2016: nil).
19 Earnings per share
(a) Basic
The basic loss per share of 0.142p loss per share (2016 loss per
share: 0.240p) is calculated by dividing the loss attributable to
owners of the parent by the weighted average number of ordinary
shares in issue during the year.
2017 2016
Group GBP GBP
---------------------------------------------------- ------------- -----------
Loss attributable to owners of the parent (1,667,156) (1,746,334)
Weighted average number of ordinary shares in issue 1,177,413,752 727,096,642
---------------------------------------------------- ------------- -----------
(b) Diluted
The basic and diluted loss per share for the years ended 31
December 2017 and 31 December 2016 are the same as the effect of
the exercise of share options would be anti-dilutive.
In January 2018 the Group issued a further 60,587,500 new
ordinary shares raising gross cash proceeds of GBP2.2 million, had
this occurred prior to the end of the year this would have impacted
the basic and diluted earnings per share figures.
Details of share options that could potentially dilute earnings
per share in future periods are set out in note 15.
20 Related party transactions
The following transactions took place with subsidiaries in the
year:
A fee totaling GBP350,652 (2016: GBP312,043) was charged to HM
do Brazil Ltda, GBP980,108 (2016: GBP872,784) to Araguaia Niquel
Mineração Ltda and GBP55,894 (2016: GBP58,806) to Typhon Brasil
Mineração Ltda by Horizonte Minerals Plc in respect of consultancy
services provided and funding costs.
Amounts totaling GBP2,243,832 (2016: GBP782,926) were lent to HM
Brazil (IOM) Ltd, HM do Brasil Ltda, Araguaia Niquel Mineraçao Ltda
and Typhon Brasil Mineração Ltda to finance exploration work during
2017, by Horizonte Minerals Plc. Interest is charged at an annual
rate of 6% on balances outstanding during the year. The amounts are
repayable on demand.
Balances with subsidiaries at the year end were:
2017 2017 2016 2016
Assets Liabilities Assets Liabilities
Company GBP GBP GBP GBP
----------------------------------------- ---------- ----------- ---------- -----------
HM do Brasil Ltda 1,263,644 - 792,301 -
HM Brazil (IOM) Ltd 5,405,662 - 4,933,377 -
Horizonte Nickel (IOM) Ltd 31,021,684 - 26,070,923 -
Araguaia Niquel Mineração Ltda 6,594,120 - 6,074,517 -
Horizonte Minerals (IOM) Ltd 253,004 - 253,004 -
Horizonte Exploration Ltd - 413,930 - 413,930
Typhon Brasil Mineração Ltda 3,224,179 - 3,198,183 -
Trias Brasil Mineração Ltda 1,012,620 - - -
----------------------------------------- ---------- ----------- ---------- -----------
Total 48,890,013 413,930 41,322,305 413,930
----------------------------------------- ---------- ----------- ---------- -----------
All Group transactions were eliminated on consolidation.
21 Ultimate controlling party
The Directors believe there to be no ultimate controlling
party.
22 Directors' remuneration (including Key Management)
Post Cost to Company Non-Cash
Short term employment
benefits benefits
Social Share Based
Aggregate Other Pension Security Payment
emoluments emoluments costs Total costs Charge Grand Total
Group 2017 GBP GBP GBP GBP GBP GBP GBP
---------------- --------------- ----------- -------------- ------- --------------- --------------- -----------
Non-Executive
Directors
Alexander - - -
Christopher - - - -
David Hall 31,200 - - 31,200 3,203 90,395 124,798
William Fisher 26,400 - - 26,400 - 75,919 102,319
Allan Walker 26,400 - - 26,400 3,163 75,919 105,482
Owen Bavinton - - 29,332 29,332 - 75,919 105,251
Executive
Directors
Jeremy Martin 190,400 68,876 - 259,276 34,055 119,293 412,624
Key Management
Simon Retter 39,997 54,250 23,999 118,246 5,290 43,428 166,964
--------------- ----------- -------------- ------- --------------- --------------- -----------
314,397 123,126 53,331 490,854 45,711 480,873 1,017,438
---------------- --------------- ----------- -------------- ------- --------------- --------------- -----------
There are no other long term or termination benefits granted to
key management.
Social Share Based Payment
Aggregate Other Pension Security Charge
emoluments emoluments costs Total costs Grand Total
Group 2016 GBP GBP GBP GBP GBP GBP GBP
------------------------ ----------- ----------- ------- ------- --------- ------------------- ------------
Non-Executive Directors
Alexander Christopher - - - - - - -
David Hall 29,000 - - 29,000 3,312 24,520 56,832
William Fisher 29,000 - - 29,000 - 24,520 53.520
Allan Walker 29,000 - - 29,000 4,002 24,520 57,522
Owen Bavinton - - 32,167 32,167 24,520 56,687
Executive Directors
Jeremy Martin 170,000 59,236 17,000 246,236 31,326 67,430 344,992
Key Management
Jeffrey Karoly 128,000 9,600 15,553 153,153 13,524 61,300 227,977
Simon Retter 15,541 8,000 - 23,541 2,154 - 25,695
----------- ----------- ------- ------- --------- ------------------- ------------
400,541 76,836 64,720 542,097 54,309 226,810 823,216
------------------------ ----------- ----------- ------- ------- --------- ------------------- ------------
The Company does not operate a pension scheme. Pension costs
comprise contributions to Defined Contribution pension plans held
by the relevant Director or Key Management.
23 Employee benefit expense (including Directors and Key
Management)
Group Company
2017 2016 2017 2016
Group GBP GBP GBP GBP
------------------------------------------------------------------- --------- --------- --------- ---------
Wages and salaries 1,144,253 809,954 588,498 627,155
Social security costs 216,242 134,096 63,979 49,463
Indemnity for loss of office 49,817 50,519 - 30,000
Share options granted to Directors and employees (note 15) 678,652 324,890 678,652 324,890
------------------------------------------------------------------- --------- --------- --------- ---------
2,088,964 1,319,459 1,331,129 1,031,508
------------------------------------------------------------------- --------- --------- --------- ---------
Management 10 6 6 6
Field staff 15 12 - -
--------- --------- --------- ---------
Average number of employees including Directors and Key Management 25 18 6 6
------------------------------------------------------------------- --------- --------- --------- ---------
Employee benefit expenses includes GBP1,062,396 (2016:
GBP393,712) of costs capitalised and included within intangible
non-current assets.
Share options granted include costs of GBP437,445 (2016:
GBP165,510) relating to Directors.
24 Investment in subsidiaries
2017 2016
Company GBP GBP
----------------------------- ---------- ----------
Shares in Group undertakings 2,348,042 2,348,042
Loans to Group undertakings 48,890,013 41,332,305
----------------------------- ---------- ----------
51,238,055 43,670,347
----------------------------- ---------- ----------
Investments in Group undertakings are stated at cost. The loans
to Group undertakings are repayable on demand and currently carry
interest at 6%, however there is currently no expectation of
repayment within the next twelve months and therefore loans are
treated as non-current.
On 23 March 2006 the Company acquired the entire issued share
capital of Horizonte Exploration Limited by means of a share for
share exchange; the consideration for the acquisition was
21,841,000 ordinary shares of 1 penny each, issued at a premium of
9 pence per share. The difference between the total consideration
and the assets acquired has been credited to other reserves.
25 Commitments
Operating lease commitments
The Group leases office premises under cancellable and
non-cancellable operating lease agreements. The cancellable lease
terms are up to one year and are renewable at the end of the lease
period at market rate. The leases can be cancelled by payment of up
to one month's rental as a cancellation fee. The lease payments
charged to profit or loss during the year are disclosed in note
6.
The future aggregate minimum lease payments under
non-cancellable operating leases are as follows:
2017 2016
Group GBP GBP
------------------------ ------ ------
Not later than one year 54,444 11,996
Between 1 - 5 years - -
Greater than 5 years - -
------------------------ ------ ------
Total 54,444 11,996
------------------------ ------ ------
Capital Commitments
Capital expenditure contracted for at the end of the reporting
period but not yet incurred is as follows:
2017 2016
Group GBP GBP
----------------- ---- ----
Intangible assets - -
----------------- ---- ----
Capital commitments relate to contractual commitments for
metallurgical, economic and environmental evaluations by third
parties. Once incurred these costs will be capitalised as
intangible exploration asset additions.
26 Contingent Liabilities
(a) Glencore Araguaia Project
The SdT deposit area concessions are subject to on-going
litigation with a Brazilian third party. Glencore has disputed
these claims. The parties have agreed certain protections including
the receipt by HZM from Glencore of certain indemnities in respect
of such litigation.
The Asset Purchase Agreement contains customary warranties
regarding the GAP project and the parties' ability to enter into
the Proposed Transaction and is subject to customary termination
rights and confidentiality obligations.
(b) Other Contingencies
The Group has received a claim from various trade union
organisations in Brazil regarding outstanding membership fees due
in relation to various subsidiaries within the Group. Some of these
claims relate to periods prior to the acquisition of the relevant
subsidiary and would be covered by warranties granted by the
previous owners at the date of sale. The Directors are confident
that no amounts are due in relation to these proposed membership
fees and that the claims will be unsuccessful. No subsequent
actions, claims or communications from the various trade union
organisations have been received subsequent to the requests for
payment. As a result, no provision has been made in the Financial
Statements for the year ended 31 December 2017 for amounts claimed.
Should the claim be successful, the maximum amount payable in
relation to fees not subject to the warranty agreement would be
approximately GBP64,000.
In 2013 the Group received an infraction notice from the
Brazilian Environmental Agency's ('IBAMA') district office in
Conceição do Araguaia in connection with carrying out drilling
activities in 2011 without the relevant permits. Drilling equipment
was furthermore impounded. The Group strongly believes that it
operated with all necessary permits and has initiated legal
proceedings to overturn the infraction notice. The Group has
secured cancellation of the injunction and has appealed the
associated fine and infraction notices of approximately GBP68,000
which has not been recognised in these financial statements.
In December 2014, the Group received a writ from the State
Attorney in Conceiçao do Araguaia regarding alleged environmental
damages caused by drilling activities in 2011. To ensure proper
environmental stewardship, the Group conducts certified baseline
studies prior to all drill programmes and ensures that areas
explored are properly maintained and conserved in accordance with
local environmental legislation. After drilling has occurred, drill
sites and access routes are rehabilitated to equal or better
conditions and evidence is retained to demonstrate that such
rehabilitation work has been completed. In January 2015 the Group
filed a robust defence against the writ. A court hearing was held
in May 2015 at which documents were requested to confirm that valid
environmental authorisations were in place. These were subsequently
submitted as requested. No substantive financial claim continues to
be made against the Group under the terms of the writ. The Group
continues to believe that the writ is flawed and is working towards
having it withdrawn in due course. As a result no provision has
been made in the Financial Statements for the year ended 31
December 2017.
27 Events after the reporting date
On 11 January 2018, the Company issued 60,587,500 new ordinary
shares at a price of CAD$0.06 raising gross cash proceeds of
$3,635,250 (GBP2,163,839).
Agreement to acquire the Vermelho project
On 19 December 2017 the Company announced that it had reached
agreement with Vale S.A ("Vale") to indirectly acquire through
wholly owned subsidiaries in Brazil, 100% of the advanced Vermelho
nickel-cobalt project in Brazil ("Vermelho").
The terms of the Acquisition require Horizonte to pay an initial
cash payment of US$150,000 with a further US$1,850,000 in cash
payable on the second anniversary of the signing of the asset
purchase agreement.
A final payment of US$6,000,000 in cash is payable by Horizonte
within 30 days of first commercial sale of product from
Vermelho.
In addition to the purchase price, the Company has granted a 1%
Net Smelter Royalty ("NSR") to Vale on any nickel produced during
the first 10 years of commercial production up to a maximum of
15,000 t/a, which then reduces to a 0.5% NSR thereafter.
As part of the acquisition of the Vermelho project, the Company
will acquire Vale's rights under a mining licence application in
respect of the project comprising an area covering 2,000 hectares.
Further development of the Vermelho project will be subject,
amongst other things, to the Company being granted the required
mining licence and other customary licences and permits.
As at the date of this report the transfer of legal title had
been completed and the agreement is therefore unconditional.
This announcement contains inside information for the purposes
of Article 7 of EU Regulation 596/2014.
* * ENDS * *
For further information visit www.horizonteminerals.com or
contact:
Horizonte Minerals
plc
Jeremy Martin (CEO) +44 (0) 20
/ David Hall (Chairman) 7763 7157
finnCap Ltd (NOMAD
& Joint Broker)
Christopher Raggett/
James Thompson / Anthony +44 (0) 20
Adams / Emily Morris 7220 0500
Numis Securities Ltd
(Joint Broker)
John Prior / Alamgir +44 (0) 207
Ahmed 260 1000
Shard Capital (Joint
Broker)
Damon Heath / Erik +44 (0) 20
Woolgar 7186 9952
Tavistock (Financial
PR)
Jos Simson / Barney +44 (0) 20
Hayward 7920 3150
About Horizonte Minerals:
Horizonte Minerals plc is an AIM and TSX-listed nickel
development company. The Company is developing Araguaia as the next
major ferronickel mine in Brazil.
Horizonte has a strong shareholder structure including; Teck
Resources Limited 14.7%, Canaccord Genuity Group 10.5%, JP Morgan
8.3%, Lombard Odier Asset Management (Europe) Limited 8.1%, City
Financial 7.6%, Richard Griffiths 6.7% and Glencore 5.2%.
CAUTIONARY STATEMENT REGARDING FORWARD LOOKING INFORMATION
Except for statements of historical fact relating to the
Company, certain information contained in this press release
constitutes "forward-looking information" under Canadian securities
legislation. Forward-looking information includes, but is not
limited to, statements with respect to the potential of the
Company's current or future property mineral projects; the success
of exploration and mining activities; cost and timing of future
exploration, production and development; the estimation of mineral
resources and reserves and the ability of the Company to achieve
its goals in respect of growing its mineral resources; and the
realization of mineral resource and reserve estimates. Generally,
forward-looking information can be identified by the use of
forward-looking terminology such as "plans", "expects" or "does not
expect", "is expected", "budget", "scheduled", "estimates",
"forecasts", "intends", "anticipates" or "does not anticipate", or
"believes", or variations of such words and phrases or statements
that certain actions, events or results "may", "could", "would",
"might" or "will be taken", "occur" or "be achieved".
Forward-looking information is based on the reasonable assumptions,
estimates, analysis and opinions of management made in light of its
experience and its perception of trends, current conditions and
expected developments, as well as other factors that management
believes to be relevant and reasonable in the circumstances at the
date that such statements are made, and are inherently subject to
known and unknown risks, uncertainties and other factors that may
cause the actual results, level of activity, performance or
achievements of the Company to be materially different from those
expressed or implied by such forward-looking information, including
but not limited to risks related to: exploration and mining risks,
competition from competitors with greater capital; the Company's
lack of experience with respect to development-stage mining
operations; fluctuations in metal prices; uninsured risks;
environmental and other regulatory requirements; exploration,
mining and other licences; the Company's future payment
obligations; potential disputes with respect to the Company's title
to, and the area of, its mining concessions; the Company's
dependence on its ability to obtain sufficient financing in the
future; the Company's dependence on its relationships with third
parties; the Company's joint ventures; the potential of currency
fluctuations and political or economic instability in countries in
which the Company operates; currency exchange fluctuations; the
Company's ability to manage its growth effectively; the trading
market for the ordinary shares of the Company; uncertainty with
respect to the Company's plans to continue to develop its
operations and new projects; the Company's dependence on key
personnel; possible conflicts of interest of directors and officers
of the Company, and various risks associated with the legal and
regulatory framework within which the Company operates.
Although management of the Company has attempted to identify
important factors that could cause actual results to differ
materially from those contained in forward-looking information,
there may be other factors that cause results not to be as
anticipated, estimated or intended. There can be no assurance that
such statements will prove to be accurate, as actual results and
future events could differ materially from those anticipated in
such statements.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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(END) Dow Jones Newswires
March 27, 2018 02:01 ET (06:01 GMT)
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