TIDMKEFI
RNS Number : 3754A
KEFI Minerals plc
07 June 2016
7 June 2016
KEFI Minerals plc
("KEFI" or the "Company")
FINAL RESULTS FOR THE YEARED 31 DECEMBER 2015
KEFI Minerals (AIM: KEFI), the gold exploration and development
company with projects in the Kingdom of Saudi Arabia and the
Federal Democratic Republic of Ethiopia, announces its final
results for the year ended 31 December 2015.
2015 HIGHLIGHTS
-- Tulu Kapi gold project ("the Project"), Ethiopia:
Progress with Project
o Received Mining Licence, which is valid for a period of 20
years and fully permits the development and operation of the Tulu
Kapi gold project
o Completed Definitive Feasibility Study ("DFS") and proceeded
to further refine to bankable standards with preferred project
contractors
Progress with the mine
o Increased forecast gold production to 980,000ozover 10 years
with an average of 115,000oz per steady-state year at All-in
Sustaining Costs of US$746/oz
o Projected net operating cash flow has increased to US$58m per
annum at US$1,250/oz
o Updated resource reporting: Indicated Resource of 18.8 Mt at
2.67 g/t Au for 1.62Moz Au (JORC 2012) and Probable Ore Reserves of
15.4 Mt at 2.12 g/t Au for 1.05Moz Au (estimated using JORC Code
guidelines)
Progress with the operations and financing
o Selected preferred contractors for mining and process plant
and, post period, preferred senior secured lenders
o The combination of project design, contractual arrangements
and finance planning has reduced the net funding requirement to c.
US$130m
o The current focus is on mandating the senior secured lenders
for US$95m of project debt and a cost-overrun facility
o Government of Ethiopia confirmed, in May 2016, equity
investment of US$20m and the residual requirement for mezzanine
and/or equity finance of US$15m will be optimised in Q3-16
-- Gold & Minerals Ltd Joint Venture ("G&M"), Saudi Arabia:
Jibal Qutman
o Increased JORC Mineral Resource to 28.4 Mt at 0.80 g/t Au for
733,045oz Au
o Received favourable metallurgical heap leach test work
results
o Produced positive Preliminary Economic Assessment
o Studies to date have provided the information required for a
Mining Licence Application which is currently being discussed with
the Saudi regulators
Harry Anagnostaras-Adams, Executive Chairman of KEFI Minerals,
said:
"2015 was a game changer for KEFI Minerals as it made
substantial progress towards becoming a gold producer and continued
to make discoveries in one of the world's great under-developed
minerals provinces - the Arabian-Nubian Shield.
"In Ethiopia, we completed the DFS, received the Mining Licence
and received unprecedented support from the Government of Ethiopia
as it marked its approval of the Tulu Kapi project by committing a
US$20m equity stake. In Jibal Qutman, we increased the Mineral
Resource and produced a positive Preliminary Economic Assessment.
As a result, the Board is confident of our strategy and asset base.
We have the appropriate mix of technical and financial expertise to
prudently progress our projects into profitable gold mines with the
aim of maximising and returning value to shareholders via share
price appreciation and, ultimately, dividends."
ENQUIRIES
KEFI Minerals plc
Harry Anagnostaras-Adams (Executive
Chairman) +357 99457843
John Leach (Finance Director) +357 99208130
SP Angel Corporate Finance
LLP (Nominated Adviser)
Ewan Leggat, Jeff Keating +44 20 3470 0470
Brandon Hill Capital Ltd (Joint
Broker)
Oliver Stansfield, Alex Walker,
Jonathan Evans +44 20 7936 5200
Beaufort Securities Ltd (Joint
Broker)
Elliot Hance +44 20 7382 8300
Luther Pendragon Ltd (Financial
PR)
Harry Chathli, Claire Norbury,
Ana Ribeiro +44 20 7618 9100
Further information can be viewed on KEFI's website at
www.kefi-minerals.com
NOTES TO EDITOR
KEFI Minerals plc
KEFI is the operator of two advanced gold development projects
within the highly prospective Arabian-Nubian Shield, with an
attributable 1.93Moz (95% of Tulu Kapi's 1.72Moz and 40% of Jibal
Qutman's 0.73Moz) gold Mineral Resources (JORC 2012) plus
significant resource growth potential. KEFI targets that production
at these projects generates cash flows for further exploration and
expansion as warranted, recoupment of development costs and, when
appropriate, dividends to shareholders.
KEFI Minerals in Ethiopia
The Tulu Kapi gold project in Western Ethiopia is being rapidly
progressed towards development, with the Mining Licence granted in
April 2015.
KEFI's Definitive Feasibility Study was then completed and the
Company is now refining contractual terms for project construction
and operation. Latest estimates for annual gold production are c.
100,000oz pa for a 10-year period and All-in Sustaining Costs
(including operating, sustaining capital and closure) of
approximately US$724/oz to US$752/oz at a gold price range of
US$1,000/oz to US$1,400/oz. Tulu Kapi's Ore Reserve estimate totals
15.4Mt at 2.12g/t gold, containing 1.05Moz. The eight core
production years of the open pit are estimated to yield an average
of 115,000oz pa.
All aspects of the Tulu Kapi (open pit) gold project have been
reported in compliance with the JORC Code (2012) and subjected to
reviews by appropriate independent experts. These plans now also
reflect the agreed construction and operating terms with project
contractors, and have been independently reviewed by experts
appointed for the project finance syndicate.
A Preliminary Economic Assessment has been published that
indicates the economic attractiveness of mining the underground
deposit adjacent to the Tulu Kapi open pit, after the start-up of
the open pit and after positive cash flows have begun to repay
project debts.
At a gold price of US$1,250/oz, the projected cash flows
indicate a cash build-up in the first three production years of
US$173 million, which would be sufficient to repay all project
debts, fund the development of the underground mine and commence
paying dividends to shareholders.
KEFI Minerals in the Kingdom of Saudi Arabia
In 2009, KEFI formed G&M in Saudi Arabia with local Saudi
partner, Abdul Rahman Saad Al-Rashid & Sons Company Limited
("ARTAR"), to explore for gold and associated metals in the
Arabian-Nubian Shield. KEFI has a 40% interest in G&M and is
the operating partner. To date, G&M has conducted preliminary
regional reconnaissance and has had five exploration licences
("ELs") granted, including Jibal Qutman and the more recently
granted Hawiah EL that contains over 6km strike length of
outcropping gossans developed on altered and mineralised rocks with
all the hallmarks of a copper-gold-zinc VHMS deposit.
At Jibal Qutman, G&M's flagship project, Mineral Resources
are estimated to total 28.4Mt at 0.80g/t gold for 733,045 contained
ounces. The shallow oxide portion of this resource is being
evaluated as a low capital expenditure heap-leach mine
development.
ARTAR, on behalf of G&M, holds 23 EL applications that cover
an area of approximately 1,303km(2) . ELs are renewable for up to
three years and bestow the exclusive right to explore and to obtain
a 30-year exploitation (mining) lease within the area.
The Kingdom of Saudi Arabia has instituted policies to encourage
minerals exploration and development, and KEFI Minerals supports
this priority by serving as the technical partner within G&M.
ARTAR also serves this government policy as the major partner in
G&M, which is one of the early movers in the modern resurgence
of the Kingdom's minerals sector.
OPERATIONAL REVIEW
Democratic Republic of Ethiopia
Tulu Kapi gold project, Western Ethiopia
In 2015, the Tulu Kapi project in Ethiopia went through a
complete transformation. The Company achieved some significant
milestones including the signing of the Mining Agreement between
the Ethiopian Government and KEFI in April 2015, granting the
Company a 20-year Mining Licence covering an area of 7km(2) , with
full permits for the development and operation of the Tulu Kapi
gold project as well as a 5% Government free-carried interest.
Later in the year, the Ethiopian Government further cemented its
support for Tulu Kapi by announcing its intention to invest US$20m
and increase its stake from 5% to 25-30%, which was confirmed in
May of this year.
In June 2015, KEFI announced the completion of the 2015
Definitive Feasibility Study and funding plan for financier review,
on schedule and on specification. Based on a conventional open-pit
mining operation and a 12 Mtpa carbon-in-leach ("CIL") processing
plant, with gold recoveries averaging 91.5%.
During the year, KEFI continued to explore ways to reduce
capital expenditure, increase head grade of gold bearing ore and
improve estimated project returns. Progress over the past year
includes:
-- An updated Probable Ore Reserve which included a high-grade
portion of 12.0 million tonnes at 2.52g/t Au containing
980,000Moz
-- Independent technical experts reviewing the DFS on behalf of potential financiers
-- Mining contractor and processing plant construction contractor selected
-- Refinement of the 2015 DFS costs and mine plant
Post period, the Company reaffirmed that the capital estimate
for Tulu Kapi has been significantly reduced from c. US$145m to c.
US$130m due to further refinements to project contracting
arrangements and the project plans. The firming of the gold price
coupled with the Company's ability to maintain tight cost controls
has transformed an uneconomic project into one that is robust and
financially viable, even if the gold price drops to US$850/oz.
Overall, the project remains on track for commencing
construction by Q4-16 and to start production towards the end of
2017. Initial open pit gold production is projected at 115,000oz
per annum. Tulu Kapi's Ore Reserves of 1.0Moz and Mineral Resources
of 1.7Moz have significant upside potential.
Kingdom of Saudi Arabia
Jibal Qutman project, Saudi Arabia
Jibal Outman is the Company's second most advanced project.
Assuming the potential for development loans for up to 75% of capex
requirements, it may be possible for KEFI to fund its share of the
equity portion (40%) with under US$3m in equity or other forms of
finance.
In May 2015, KEFI provided the market with an updated Mineral
Resource estimate for Jibal Outman of 28.4 Mt at 0.80g/t gold,
containing 733,045oz. A Preliminary Economic Assessment, completed
in the same month, highlighted:
-- 1.5 Mtpa heap leach operation;
-- Gold production 139,000oz over an initial mine life of 4.5 years;
-- Oxide open-pit optimisation studies show a potential mineable
resource of 6.6 Mt at 0.95 g/t gold, for 201,600 contained
ounces;
-- Waste:ore ratio of 2.2:1.0;
-- Average gold recovery of 73%;
-- Cash operating cost of US$597/oz; and
-- Capital expenditure of US$30m.
Hawiah project, Saudi Arabia
KEFI is the operator and 40% owner of Gold & Minerals LLC
Limited, which wholly owns the Hawiah project. The initial focus at
Hawiah is on gold enrichment in surface gossans and large VHMS
copper-gold-zinc sulphide target at depth, associated with a 6km
long, north-south exposure of a highly silicified and variably
gossanous horizon.
In April 2015, KEFI carried out a self-potential (SP)
geophysical survey over the southern half of the 6km-long gold
mineralised system exposed at the surface. The results suggest the
possibility of a large metal-bearing body at depth (between 125
metres and 300 metres and on strike (800 metre strike length).
Accordingly, two large SP anomalies in the southern part of the
Hawiah site have been identified:
i) An intense anomaly (up to 400mV peak to peak) for a
longitudinal extent of 800m and for which preliminary inverse
modelling indicates a substantial (>300m) vertical continuity
with a steep westerly dip. This anomaly is located directly below
the gold bearing gossans. The intensity of the SP anomaly is
consistent with the presence of a massive sulphide source or with a
high and contiguous concentration of disseminated sulphides at
depth.
ii) A separate north-south trending anomaly, named Eastern
Corridor, located 600m to the East. The anomaly on the eastern
corridor has the same amplitude ("maxima" around 250-300 mV) and
wavelength of the main anomaly, but is less continuous and dips
steeply to the east.
Once the SP survey is completed, the final interpretation will
allow the optimal positioning and planning of further geophysical
surveys, either Induced Polarisation (IP) or Advance Tellurics, to
directly define drill targets. The IP survey is designed to test
for electrical conductors (i.e. massive sulphides) and will provide
vertical depths to the target, and will be tested by reverse
circulation and diamond drilling.
Drilling of large copper-gold-zinc targets will commence after
local community engagement has confirmed that G&M has secured
long-term access to Hawiah and other prospective ground in the
region on agreed terms. It is imperative that early engagement with
local stakeholders takes place to ensure KEFI's licence to operate
is robust both on the Hawiah Exploration Licence ("EL") and for
other Exploration Licence Applications ("ELAs) in the prospective
Wadi Bidah Mineral District.
OUTLOOK
The momentum achieved in 2015 carried through to the new year
and KEFI continues to make substantial advances with the Tulu Kapi
project. Projected cash flows are robust, with the first three
years of open pit production targeted to repay all debts, and fund
growth in the highly prospective Arabian-Nubian Shield. The Company
continues to enjoy financial and strategic support from its key
shareholders. The Board is confident of its strategy and asset
base. The Company has the appropriate mix of technical and
financial expertise to prudently progress its projects into
profitable gold mines with the aim of maximising and returning
value to shareholders via share price appreciation and, ultimately,
dividends.
Consolidated statement of comprehensive income
(All amounts in GBP thousands unless otherwise stated)
Year ended 31 December
Notes Year Year
Ended Ended
31.12.15 31.12.14
GBP'000 GBP'000
Revenue - -
Exploration costs (4) (100)
========== ==========
Gross loss (4) (100)
Administrative expenses (1,720) (2,083)
Share-based payments 17 (378) (335)
Share of loss from jointly controlled
entity 19 (735) (982)
========== ==========
Operating loss 6 (2,837) (3,500)
Foreign exchange loss (50) (50)
Finance costs 8 (319) (413)
========== ==========
Loss before tax (3,206) (3,963)
Tax 9 - -
========== ==========
Loss for the year (3,206) (3,963)
========== ==========
Loss attributable to:
-Owners of the parent (3,206) (3,848)
-Non-controlling interest - (115)
========== ==========
Loss for the period (3,206) (3,963)
Other comprehensive income:
Exchange differences on translating
foreign operations 56 70
========== ==========
Total comprehensive loss for
the year (3,150) (3,893)
Total Comprehensive Income attributable
to:
-Owners of the parent (3,150) (3,778)
-Non-controlling interest - (115)
========== ==========
(3,150) (3,893)
========== ==========
Basic and fully diluted loss
per share (pence) 10 (0.20) (0.40)
The Company has taken advantage of the exemption conferred by
section 408 of Companies Act 2006 from presenting its own statement
of comprehensive income. Loss after taxation amounting to GBP2.4
million (2014: GBP3.2 million) has been included in the financial
statements of the parent company.
The following notes are an integral part of these consolidated
financial statements.
Statements of financial position
(All amounts in GBP thousands unless otherwise stated)
31 December
The The The The
Group Company Group Company
Notes 2015 2015 2014 2014
--------- --------- --------- ---------
ASSETS
Non--current
assets
Property, plant
and equipment 11 81 3 160 2
Intangible assets 12 11,845 1,078 9,139 976
Fixed asset
investments 13.1 - 4,598 - 4,598
Investments
in jointly controlled
entities 13.2 - 181 - 181
--------- --------- --------- ---------
11,926 5,860 9,299 5,757
--------- --------- --------- ---------
Current assets
Available for
sale financial
assets 14 92 8 86 8
Trade and other
receivables 15 358 7,710 335 3,076
Cash and cash
equivalents 16 562 393 640 607
--------- --------- --------- ---------
1,012 8,111 1,061 3,691
--------- --------- --------- ---------
Total assets 12,938 13,971 10,360 9,448
========= ========= ========= =========
EQUITY AND LIABILITIES
Equity attributable
to owners of
the Company
Share capital 17 2,623 2,623 12,352 12,352
Deferred Shares 17 12,436 12,436 - -
Share premium 17 12,347 12,347 8,433 8,433
Share options
reserve 17 1,212 1,212 848 848
Foreign exchange
reserve (30) - (86) -
Accumulated
losses (17,645) (15,623) (14,389) (13,117)
--------- --------- --------- ---------
Total equity 10,943 12,995 7,158 8,516
Current liabilities
Trade and other
payables 20 1,995 976 3,202 932
--------- --------- --------- ---------
1,995 976 3,202 932
--------- --------- --------- ---------
Total liabilities 1,995 976 3,202 932
========= ========= ========= =========
Total equity
and liabilities 12,938 13,971 10,360 9,448
========= ========= ========= =========
The following notes are an integral part of these consolidated
financial statements.
Harry Anagnostaras-Adams
Executive Director
Company number: 05976748
Consolidated statement of changes in equity
(All amounts in GBP thousands unless otherwise stated)
Year ended 31 December 2015
Attributable to the owners of the Company
-----------------------------------------------------------------------
Share Deferred Share Share Foreign Accumulated Non-controlling
capital shares premium options exchange losses interest Total
reserve reserve
---------- --------- ---------- ---------- ---------- ------------ ---------------- --------
At 1 January
2014 8,535 - 7,660 794 (156) (10,062) 1,032 7,803
Loss for the
year - - - - - (3,848) (115) (3,963)
Other
comprehensive
income - - - - 70 - - 70
---------- --------- ---------- ---------- ---------- ------------ ---------------- --------
Total
Comprehensive
Income - - - - 70 (3,848) (115) (3,893)
Recognition
of share based
payments - - - 335 - - - 335
Cancellation
of options - - - (281) - 281 - -
Issue of share
capital 3,817 - 958 - - - - 4,775
Share issue
costs - - (185) - - (177) - (362)
---------- --------- ---------- ---------- ---------- ------------ ---------------- --------
Transactions
with owners
of the Company 12,352 - 8,433 848 (86) (13,806) 917 8,658
Acquisition
of
non-controlling
interest - - - - - (583) (917) (1,500)
========== ========= ========== ========== ========== ============ ================ ========
At 31 December
2014 12,352 - 8,433 848 (86) (14,389) - 7,158
Loss for the
year - - - - - (3,206) - (3,206)
Other
comprehensive
income - - - - 56 - - 56
---------- --------- ---------- ---------- ---------- ------------ ---------------- --------
Total
Comprehensive
Income - - - - 56 (3,206) - (3,150)
Recognition
of share based
payments - - - 378 - - - 378
Cancellation
of options - - - (14) - 14 - -
Issue of share
capital 2,707 - 4,293 - - - - 7,000
Restructuring
of share
capital (12,436) 12,436 - - - - - -
Share issue
costs - - (379) - - (64) - (443)
---------- --------- ---------- ---------- ---------- ------------ ---------------- --------
At 31 December
2015 2,623 12,436 12,347 1,212 (30) (17,645) - 10,943
========== ========= ========== ========== ========== ============ ================ ========
The following describes the nature and purpose of each reserve
within owner's equity:
Reserve Description and purpose
Share capital amount subscribed for share capital at nominal
value
Deferred shares on 16 June 2015, under the restructuring of
share capital, ordinary shares of 1p each in the capital of the
Company were sub-divided into one new ordinary share of 0.1p and
one deferred share of 0.9p
Share premium amount subscribed for share capital in excess of
nominal value, net of issue costs
Share options reserve reserve for share options granted but not
exercised or lapsed
Foreign exchange reserve cumulative foreign exchange net gains
and losses recognized on consolidation
Accumulated losses cumulative net gains and losses recognized in
the statement of comprehensive income, excluding foreign exchange
gains within other comprehensive income
Non-controlling interest (NCI) the portion of equity ownership
in a subsidiary not attributable to the parent company
The following notes are an integral part of these consolidated
financial statements.
Company statement of changes in equity
(All amounts in GBP thousands unless otherwise stated)
Year ended 31 December 2015
Share
Share Deferred Share options Accumulated
capital shares premium reserve losses Total
--------- ----------- ---------- --------- -------------- --------
At 1 January 2014 8,535 - 7,660 794 (10,006) 6,983
Comprehensive loss
for the year - - - - (3,215) (3,215)
Recognition of
share based payments - - - 335 - 335
Cancellation of
options - - - (281) 281 -
Issue of share
capital 3,817 - 958 - - 4,775
Share issue costs - - (185) - (177) (362)
--------- ----------- ---------- --------- -------------- --------
At 31 December
2014 12,352 - 8,433 848 (13,117) 8,516
Comprehensive loss
for the year - - - - (2,456) (2,456)
Recognition of
share based payments - - - 378 - 378
Cancellation of
options - - - (14) 14 -
Restructuring of
share capital (12,436) 12,436 - - - -
Issue of share
capital 2,707 - 4,293 - - 7,000
Share issue costs - - (379) - (64) (443)
--------- ----------- ---------- --------- -------------- --------
At 31 December
2015 2,623 12,436 12,347 1,212 (15,623) 12,995
========= =========== ========== ========= ============== ========
The following describes the nature and purpose of each reserve
within owner's equity:
Reserve Description and purpose
Share capital amount subscribed for share capital at nominal value
Deferred shares on 16 June 2015, under the restructuring of
share capital, ordinary shares of 1p each in the capital of the
Company were sub-divided into one new ordinary share of 0.1p and
one deferred share of 0.9p
Share premium amount subscribed for share capital in excess of
nominal value, net of issue costs
Share options reserve reserve for share options granted but not exercised or lapsed
Accumulated losses cumulative net gains and losses recognized in
the statement of comprehensive income
The following notes are an integral part of these consolidated
financial statements.
Consolidated statement of cash flows
(All amounts in GBP thousands unless otherwise stated)
Year ended 31 December 2015
Notes Year Year
Ended Ended
31.12.15 31.12.14
GBP'000 GBP'000
CASH FLOWS FROM OPERATING ACTIVITIES
Loss before tax (3,206) (3,963)
Adjustments for:
Depreciation of property, plant
and equipment 11 90 118
Share based payments 18 215 269
Issue of warrants 17 163 66
Share of loss from jointly controlled
entity 19 735 982
Exchange differences on borrowings - -
Exchange difference 37 (4)
================== =========
(1,966) (2,532)
Changes in working capital:
Trade and other receivables 29 320
Trade and other payables (1,111) (207)
================== =========
Net cash used in operating activities (3,048) (2,419)
================== =========
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of non-controlling interest - (750)
Deferred exploration costs (967) (1,263)
Project evaluation costs (1,739) (976)
Acquisition of property plant and
equipment (11) (26)
Advances to jointly controlled entity (790) (868)
================== =========
Net cash used in investing activities (3,507) (3,883)
================== =========
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issue of share capital 17 6,923 4,025
Issue costs 17 (443) (362)
================== =========
Net cash from financing activities 6,480 3,663
================== =========
Net decrease in cash and cash equivalents (75) (2,639)
Effect of cash held in foreign currencies (3) -
Cash and cash equivalents:
At beginning of the year 16 640 3,279
================== =========
At end of the year 16 562 640
================== =========
The following notes are an integral part of these consolidated
financial statements.
Non-cash transactions
On 5 September 2014, the Company issued 50,000,000 shares at
GBP0.01 at a price of GBP0.015 per share as part of the
consideration to acquire the 25% minority in its subsidiary KEFI
Minerals (Ethiopia) Limited.
Company statement of cash flows
(All amounts in GBP thousands unless otherwise stated)
Year ended 31 December 2015
Notes Year Year
Ended Ended
31.12.15 31.12.14
GBP'000 GBP'000
CASH FLOWS FROM OPERATING ACTIVITIES
Loss before tax (2,456) (3,215)
Adjustments for:
Share based payments 18 215 269
Issue of warrants 17 163 66
Impairment of loan to subsidiary 28 45
Impairment of amount receivable
from jointly controlled entity 720 1,020
Exchange difference 74 (148)
======== ========
(1,256) (1,963)
Changes in working capital:
Trade and other receivables 45 510
Trade and other payables 20 614
======== ========
Net cash used in operating activities (1,191) (839)
======== ========
CASH FLOW FROM INVESTING ACTIVITIES
Acquisition of property plant and
equipment (1) (2)
Project evaluation costs (587) (976)
Advances to jointly controlled
entity (790) (868)
Acquisition of minority interest - (750)
Loan to subsidiary (4,125) (2,852)
======== ========
Net cash used in investing activities (5,503) (5,448)
======== ========
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issue of share capital 17 6,923 4,025
Issue costs 17 (443) (362)
======== ========
Net cash from financing activities 6,480 3663
======== ========
Net decrease in cash and cash equivalents (214) (2,624)
Cash and cash equivalents:
At beginning of the year 16 607 3,231
======== ========
At end of the year 16 393 607
======== ========
The following notes are an integral part of these consolidated
financial statements.
Non-cash transactions
See Consolidated Statement of Cash Flows.
Notes to the consolidated financial statements
(All amounts in GBP thousands unless otherwise stated)
Year ended 31 December 2015
1. Incorporation and principal activities
Country of incorporation
KEFI Minerals PLC (the "Company") was incorporated in United
Kingdom as a public limited company on 24 October 2006. Its
registered office is at 27/28, Eastcastle Street, London W1W
8DH.
Principal activities
The principal activities of the Group for the year were:
-- To explore for mineral deposits of precious and base metals
and other minerals that appear capable of commercial exploitation,
including topographical, geological, geochemical and geophysical
studies and exploratory drilling.
-- To evaluate mineral deposits determining the technical
feasibility and commercial viability of development, including the
determination of the volume and grade of the deposit, examination
of extraction methods, infrastructure requirements and market and
finance studies.
-- To develop mineral deposits and market the metals produced.
2. Accounting policies
The principal accounting policies adopted in the preparation of
these financial statements are set out below. These policies have
been consistently applied throughout the period presented in these
financial statements unless otherwise stated.
Basis of preparation and consolidation
The Company and the consolidated financial statements have been
prepared in accordance with International Financial Reporting
Standards (IFRSs) as adopted by the European Union. They comprise
the accounts of KEFI Minerals PLC and all its subsidiaries made up
to 31 December 2015. The Company and the consolidated financial
statements have been prepared under the historical cost convention,
except for the revaluation of certain financial instruments.
Going concern
The Directors have formed a judgment at the time of approving
the financial statements that there is a reasonable expectation
that the Company and Group will be able to secure adequate
resources to continue in operational existence for the foreseeable
future.
The financial information has been prepared on the going concern
basis, the validity of which depends principally on securing
funding to develop the Tulu Kapi mine project as an economically
viable mineral deposit, and the availability of subsequent funding
to extract the resource, or alternatively the availability of
funding to extend the Company's and Group's exploration
activities.
These conditions indicate the existence of a material
uncertainty which may cast significant doubt about the Company and
Group's ability to continue as a going concern. The financial
statements do not include the adjustments that would result if the
Company and Group were unable to continue as a going concern.
Functional and presentational currency
Items included in the Group's financial statements are measured
using the currency of the primary economic environment in which the
entity operates ("the functional currency") which for the Company
is British Pounds (GBP). The financial statements are presented in
British Pounds (GBP).
Foreign currency translation
(1) Foreign currency translation
Foreign currency transactions are translated into the functional
currency using the exchange rates prevailing at the date of the
transactions. Gains and losses resulting from the settlement of
such transactions and from the translation of monetary assets and
liabilities denominated in foreign currencies are recognized in
profit or loss in the statement of comprehensive income.
(2) Foreign operations
On consolidation, the assets and liabilities of the consolidated
entity's foreign operations are translated at exchange rates
prevailing at the reporting date. Income and expense items are
translated at the average exchange rates for the period unless
exchange rates fluctuate significantly in which case they are
recorded at the actual rate. Exchange differences arising, if any,
are recognized in the foreign currency translation reserve and as a
component of other comprehensive income, and recognized in profit
or loss on disposal of the foreign operation.
Revenue recognition
The Group had no sales or revenue during the year ended 31
December 2015 (2014: GBPNil).
Notes to the consolidated financial statements (continued)
Year ended 31 December 2015
2. Accounting policies (continued)
Property plant and equipment
Property plant and equipment are stated at their cost of
acquisition at the date of acquisition, being the fair value of the
consideration provided plus incidental costs directly attributable
to the acquisition less depreciation.
Depreciation is calculated using the straight-line method to
write off the cost of each asset to their residual values over
their estimated useful life. The annual depreciation rates used are
as follows:
Furniture, fixtures and
office equipment 25%
Motor vehicles 25%
Plant and equipment 25%
Acquisitions and goodwill
The acquisition of subsidiaries is accounted for using the
purchase method. The cost of the acquisition is measured at the
aggregate of the fair values, at the date of exchange, of assets
given, liabilities incurred or assumed, and equity instruments
issued by the Group in exchange for control of the acquiree. Any
costs directly attributable to the business combination are written
off to the statement of comprehensive income. The acquiree's
identifiable assets, liabilities and contingent liabilities that
meet the conditions for recognition under IFRS 3 are recognized at
their fair values at the acquisition date. Where the Group acquires
a subsidiary for less than the fair value of its assets and
liabilities, this results in negative goodwill which is recognized
in profit and loss.
Purchased goodwill is capitalized and classified as an asset on
the statement of financial position. Goodwill arising on
acquisition is recognized as an asset and initially measured at
cost, being the excess of the cost of the business combination over
the Group's interest in the net fair value of the identifiable
assets, liabilities and contingent liabilities recognized.
Goodwill is reviewed for impairment on an annual basis. When the
directors consider the initial value of the acquisition to be
negligible, the goodwill is written off to the statement of
comprehensive income immediately. Trading results of acquired
subsidiary undertakings are included from the date of
acquisition.
Goodwill is deemed to be impaired when the present value of the
future cash flows expected to be derived is lower than the carrying
value. Any impairment is charged to the statement of comprehensive
income immediately.
Interest in jointly controlled entities
Joint venture arrangements that involve the establishment of a
separate entity in which each venturer has joint control are
referred to as jointly controlled entities. The results and assets
and liabilities of jointly controlled entities are included in
these financial statements for the period using the equity method
of accounting.
Finance costs
Interest expense and other borrowing costs are charged to the
statement of comprehensive income as incurred.
Tax
The tax payable is based on taxable profit for the period.
Taxable profit differs from net profit as reported in the statement
of comprehensive income because it excludes items of income or
expense that are taxable or deductible in other years and it
further excludes items that are never taxable or deductible. Tax is
payable in the relevant jurisdiction at the rates described in note
9.
Deferred tax is the tax expected to be payable or recoverable on
differences between the carrying amounts of assets and liabilities
in the financial statements and the corresponding tax bases used in
the computation of taxable profit and is accounted for using the
statement of financial position liability method. Deferred tax
liabilities are generally recognized for all taxable differences
and deferred tax assets are recognized to the extent that taxable
profits will be available against which deductible temporary
differences can be utilized. The amount of deferred tax is based on
the expected manner of realisation or settlement of the carrying
amounts of assets and liabilities, using tax rates that have been
enacted or substantively enacted at the reporting date.
Deferred tax assets and liabilities are offset when there is a
legally enforceable right to set off deferred tax assets against
deferred tax liabilities and when the deferred taxes relate to the
same fiscal authority.
Notes to the consolidated financial statements (continued)
Year ended 31 December 2015
2. Accounting policies (continued)
Investments
Investments in subsidiary companies are stated at cost less
provision for impairment in value, which is recognized as an
expense in the period in which the impairment is identified, in the
Company accounts. These investments are consolidated in the Group
accounts.
Exploration costs
The Group has adopted the provisions of IFRS 6 "Exploration for
and Evaluation of Mineral Resources".
Exploration, evaluation and development expenditure, including
acquisition costs of licences, in respect of each identifiable area
of interest is expensed to the statement of comprehensive income as
incurred, until the point at which development of a mineral deposit
is considered economically viable.
Once the Board decides on the development of a project,
development expenditure will be capitalized as incurred and
amortized over the estimated useful life of the area according to
the rate of depletion of the economically recoverable reserves or
over the estimated useful life of the mine, if shorter.
The directors consider that the stage of development of its
Licence areas in Saudi Arabia has not yet met its criteria for
capitalization. Capitalized development costs for the Group's
project in Ethiopia have been recognized on acquisition, and will
continue to be capitalised since this date, in accordance with IFRS
6.
A regular review will be undertaken of each area of interest to
determine the appropriateness of continuing to carry forward costs
in relation to that area of interest. Accumulated capitalized costs
in relation to an abandoned area of interest will be written off in
full against profit in the year in which the decision to abandon
the area is made. Capitalized development expenditure will be
amortized from the date at which production commences on a unit of
production basis over the lifetime of the ore reserves for the area
to which the costs relate.
Share--based compensation benefits
IFRS 2 "Share--based Payment" requires the recognition of
equity--settled share--based payments at fair value at the date of
grant and the recognition of liabilities for cash--settled
share--based payments at the current fair value at each statement
of financial position date. The total amount expensed is recognized
over the vesting period, which is the period over which performance
conditions are to be satisfied.
The fair value is measured using the Black Scholes pricing
model. The inputs used in the model are based on management's best
estimate, including consideration of the effects of
non-transferability, exercise restrictions and behavioural
considerations.
Financial instruments
Financial assets at amortized cost
Loans and receivables are recognized when the Group becomes
party to the contractual provisions of the financial instrument.
Trade receivables, loans, and other receivables that have fixed or
determinable payments that are not quoted in an active market are
classified as 'loans and receivables'. Loans and receivables are
measured at amortized cost using the effective interest method,
less any impairment. Interest income is recognized by applying the
effective interest rate, except for short-term receivables when the
recognition of interest would be immaterial.
Financial assets at fair value through profit or loss
Subsequent to initial recognition, when a financial asset is
designated as such on initial recognition, it is classified as held
at fair value through profit or loss. Assets other than held for
trading are designated at fair value through profit and loss when
the Group manages the holdings and makes purchase and sale
decisions based on fair value assessments and documented risk
management and investment strategies. Attributable transaction
costs and changes in fair value are recognized in profit or
loss.
Financial liabilities - equity
Financial liabilities are recognized when the Group becomes
party to the loan. Financial liabilities represent trade payables
and are initially measured at fair value and subsequently at
amortized cost.
Debt and equity instruments are classified as either financial
liabilities or as equity in accordance with the substance of the
contractual arrangement. An equity instrument is any contract that
evidences a residual interest in the assets of an entity after
deducting all of its liabilities. Equity instruments issued by the
Group are recognized at the proceeds received, net of direct issue
costs.
The Group derecognizes financial liabilities when, and only
when, the Group's obligations are discharged, cancelled or they
expire.
Notes to the consolidated financial statements (continued)
Year ended 31 December 2015
3. Financial risk management
Cash and cash equivalents
For the purposes of the cash flow statement, cash and cash
equivalents comprise cash at bank and in hand with an original
maturity date of less than three months.
Financial risk factors
The Group is exposed to market risk (interest rate risk and
currency risk), liquidity risk and capital risk management arising
from the financial instruments it holds. The risk management
policies employed by the Group to manage these risks are discussed
below:
Market risk - Interest rate risk
Interest rate risk is the risk that the value of financial
instruments will fluctuate due to changes in market interest rates.
The Group's income and operating cash flows are substantially
independent of changes in market interest rates as the Group has no
significant interest-bearing assets. Borrowings issued at variable
rates expose the Group to cash flow interest rate risk. Borrowings
issued at fixed rates expose the Group to fair value interest rate
risk. The Group's management monitors the interest rate
fluctuations on a continuous basis and acts accordingly.
At the reporting date the interest rate profile of
interest-bearing financial instruments was:
2015 2014
==== ====
Variable rate instruments
Financial assets 562 640
Sensitivity analysis
An increase of 100 basis points in interest rates at 31 December
2015 would have increased equity and profit or loss by the amounts
shown below. This analysis assumes that all other variables, in
particular foreign currency rates, remain constant. Given current
interest rate levels, a decrease of 25 basis points has been
considered, with the impact on profit and equity shown below.
Equity Profit Equity Profit
or Loss or Loss
2015 2015 2014 2014
------- --------- ------- ---------
Variable rate instruments
Financial assets - increase
of 100 basis points 6 6 6 6
Financial assets - decrease
of 25 basis points (1) (1) (2) (2)
======= ========= ======= =========
Currency risk
Currency risk is the risk that the value of financial
instruments will fluctuate due to changes in foreign exchange
rates. Currency risk arises when future commercial transactions and
recognized assets and liabilities are denominated in a currency
that is not the functional currency of the entity.
The Group is exposed to foreign exchange risk arising from
various currency exposures primarily with respect to the Euro,
Turkish Lira, US Dollar, Ethiopia ETB and Saudi Arabian Riyal.
Since 1986 the Saudi Arabian Riyal is pegged to the US Dollar, it
is fixed at USD/SAR 3.75. The Group's management monitors the
exchange rate fluctuations on a continuous basis and acts
accordingly.
The carrying amounts of the Group's foreign currency denominated
monetary assets and monetary liabilities at the reporting date are
as follows: The Saudi Arabian Riyal exposure is included in the USD
amounts.
Liabilities Assets Liabilities Assets
2015 2015 2014 2014
----------- ------- ------------ -------
Australian Dollar 24 - - -
Euro 276 2 16 4
Turkish Lira 1 40 1 49
US Dollar 663 266 156 240
Ethiopia ETB 779 354 2,023 204
=========== ======= ============ =======
Notes to the consolidated financial statements (continued)
Year ended 31 December 2015
3. Financial risk management (continued)
Sensitivity analysis
A 10% strengthening of the British Pound against the following
currencies at 31 December 2015 would have increased/(decreased)
equity and profit or loss by the amounts shown in the table below.
This analysis assumes that all other variables, in particular
interest rates, remain constant. For a 10% weakening of the British
Pound against the relevant currency, there would be an equal and
opposite impact on the loss and equity.
Equity Profit Equity Profit
or Loss or Loss
2015 2015 2014 2014
------ --------- ------- ---------
AUD Dollar 3 3 - -
Euro 27 27 1 1
Turkish Lira (4) (4) (5) (5)
US Dollar 40 40 (9) (9)
Ethiopia ETB 42 42 182 182
====== ========= ======= =========
Liquidity risk
Liquidity risk is the risk that arises when the maturity of
assets and liabilities does not match. An unmatched position
potentially enhances profitability, but can also increase the risk
of losses. The Group has procedures with the object of minimising
such losses such as maintaining sufficient cash and other highly
liquid current assets and by having available an adequate amount of
committed credit facilities.
The Group's contractual cash flows for its financial liabilities
are all due within 3 months or less. In January 2014 agreement was
made with the Ethiopian tax authorities to pay the VAT over a
period of three years (principal and interest).
Capital risk management
The Group manages its capital to ensure that it will be able to
continue as a going concern while maximizing the return to
shareholders through the optimization of the debt and equity
balance. This is done through the close monitoring of cash
flows.
The capital structure of the Group consists of cash and cash
equivalents of GBP 562,000 (2014: GBP640,000) and equity
attributable to equity holders of the parent, comprising issued
capital and deferred shares of GBP15,059,000 (2014: GBP12,352,000),
reserves of GBP13,529,000, (2014: GBP9,195,000) and accumulated
losses of GBP17,645,000 (2014: GBP14,389,000). The Group does not
use derivative financial instruments and has no long term debt
facilities.
Fair value estimation
The fair values of the Group's financial assets and liabilities
approximate their carrying amounts at the reporting date.
Carrying Fair Values
Amounts
2015 2014 2015 2014
------ ------ ------- ------
Financial assets
Cash and cash equivalents (Note
16) 562 640 562 640
Available for sale financial
assets (Note 14) 92 86 92 86
Trade and other receivables
(Note 15) 358 335 358 335
====== ====== ======= ========
Financial liabilities
Trade payables (Note 20) 1,995 3,202 1,995 3,202
====== ====== ======= ========
Available for sale financial assets are classified as Level 1
within the fair value hierarchy, except for Ethiopian Government
bonds, which are classified as Level 2. Level 1 items are derived
from quoted prices (unadjusted) in active markets for identical
assets or liabilities. Level 2 items are derived from inputs other
than quoted prices included within Level 1 that are observable for
the assets either directly or indirectly.
Other financial assets and liabilities are short term and their
carrying value is considered to approximate to their fair
value.
Notes to the consolidated financial statements (continued)
Year ended 31 December 2015
4. Use and revision of accounting estimates and judgements
The preparation of the financial report requires the making of
estimations and assumptions that affect the recognized amounts of
assets, liabilities, revenues and expenses and the disclosure of
contingent liabilities. The estimates and associated assumptions
are based on historical experience and various other factors that
are believed to be reasonable under the circumstances, the results
of which form the basis of making the judgments about carrying
values of assets and liabilities that are not readily apparent from
other sources. Actual results may differ from these estimates.
Significant judgements include:
Going concern
The going concern presumption depends principally on securing
funding to develop the Tulu Kapi mine project as an economically
viable mineral deposit, and the availability of subsequent funding
to extract the resource, or alternatively the availability of
funding to extend the Company's and Group's exploration
activities.
Significant estimates include:
Fair value of acquisitions
The 'acquisition method', which generally requires assets
acquired and liabilities assumed to be measured at their fair
values at the acquisition date. Fair value estimates are required.
In calculating the fair value estimates of net identifiable net
assets on acquisition significant judgements and estimates are
required.
Share based payments
In calculating the fair value at the grant date, the Black
Scholes model requires us to estimate the inputs to this model, in
particular in respect of volatility. This assessment is based on
historical share price movements assuming these will continue into
the future.
Impairment review of asset carrying values
Events or changes in circumstances can give rise to significant
impairment charges or reversals of impairment in a particular year.
Where the recoverable amounts of Group cash generating units are
assessed by analyses of discounted cash flows, the resulting
valuations are particularly sensitive to changes in estimates of
long term commodity prices, exchange rates, operating costs, the
grouping of assets within cash-generating units and discount
rates.
Notes to the consolidated financial statements (continued)
Year ended 31 December 2015
5. Operating segments
The Group has only one distinct operating segment, being that of
mineral exploration. The Group's exploration activities are located
in the Kingdom of Saudi Arabia (through the jointly controlled
entity), Ethiopia and its administration and management is based in
Cyprus.
Cyprus Turkey Bulgaria Ethiopia Total
-------- ------- --------- --------- --------
2015
Operating (loss)/profit (1,552) (33) 8 (525) (2,102)
Foreign exchange
profit/(loss) 13 (26) - (37) (50)
Interest (179) - - (140) (319)
-------- ------- --------- --------- ========
(1,718) (59) 8 (702) (2,471)
-------- ------- --------- ---------
Share of loss
from jointly
controlled
entity (735)
--------
Loss before
tax (3,206)
Tax -
--------
Loss for the
year (3,206)
========
Total assets 1,695 42 4 11,197 12,938
Total liabilities 976 2 4 1,013 1,995
Depreciation
of property,
plant and equipment - - - 90 90
======== ======= ========= ========= ========
Cyprus Turkey Bulgaria Ethiopia Total
--------- ------ -------- --------- -----------
2014
Operating loss (2,347) (51) (4) (116) (2,518)
Foreign exchange
profit/(loss) 152 (11) (30) (161) (50)
Interest - - - (413) (413)
--------- ------ -------- --------- =========
(2,195) (62) (34) (690) (2,981)
--------- ------ -------- ---------
Share of loss
from jointly controlled
entity (982)
---------
Loss before tax (3,963))
Tax - -
---------
Loss for the year (3,963)
=========
Total assets 1,784 48 4 8,524 10,360
Total liabilities 933 1 16 2,252 3,202
Depreciation of
property, plant
and equipment - - - 118 118-
========= ====== ======== ========= =========
Notes to the consolidated financial statements (continued)
Year ended 31 December 2015
6. Expenses by nature
Year Ended Year
31.12.15 Ended
GBP'000 31.12.14
GBP'000
Acquisition costs - 102
Exploration costs 4 100
Staff costs (Note 7) 513 367
Depreciation of property, plant and
equipment (Note 11) 90 118
Warrants issue costs (Note 17) 163 66
Share based benefits to employees
(Note 17) 69 69
Share of losses from jointly controlled
entity (Note 5) 735 982
Directors' fees and other benefits
(Note 21.1) 718 915
Consultants' costs 246 584
Auditors' remuneration - audit current
year 51 56
Other expenses 248 141
========== =========
Operating loss 2,837 3,500
========== =========
The Group's stages of operations in Saudi Arabia as at the
year-end and as at the date of approval of these financial
statements have not yet met the criteria for capitalization of
exploration costs. Direct development costs have been capitalized
for the operations in Ethiopia.
7. Staff costs Year Year
Ended Ended
31.12.15 31.12.14
GBP'000 GBP'000
Salaries 474 337
Social insurance costs and other funds 39 30
========= ==========
513 367
========= ==========
Average number of employees 46 44
========= ==========
Directors' remuneration is disclosed in note 21.1
8. Finance costs 2015 2014
---------- ----------
Interest paid to Ethiopian Revenue
and Customs Authority ("ERCA") - Note
20 140 413
Other finance costs 179 -
---------- ----------
319 413
========== ==========
9. Tax 2015 2014
---------- ----------
Loss before tax (3,206) (3,963)
---------- ----------
Tax calculated at the applicable tax
rates (515) (633)
Tax effect of non-deductible expenses 308 404
Tax effect of tax losses 280 325
Tax effect of items not subject to
tax (92) (122)
Tax effect of capital allowances 19 17
Tax effect of other timing differences - 9
Charge for the year - -
========== ==========
The Company is resident in Cyprus for tax purposes.
A deferred tax asset of GBP1,336,989 (2014: GBP1,056,460) has
not been accounted for due to the uncertainty over future
recoverability.
Notes to the consolidated financial statements (continued)
Year ended 31 December 2015
9. Tax (continued)
Cyprus
The corporation tax rate is 12.5%. Under certain conditions
interest income may be subject to defence contribution at the rate
of 15%. In such cases this interest will be exempt from corporation
tax. In certain cases, dividends received from abroad may be
subject to defence contribution at the rate of 20% for the tax year
2013 and 17% for 2014 and thereafter. Due to tax losses sustained
in the year, no tax liability arises on the Company. Under current
legislation, tax losses may be carried forward and be set off
against taxable income of the five succeeding years. As at 31
December 2015, the balance of tax losses which is available for
offset against future taxable profits amounts to GBP 7,795,644
(2014: GBP 7,203,371).
Bulgaria
Mediterranean Minerals (Bulgaria) EOOD, the 100% subsidiary of
the Company, is resident in Bulgaria for tax purposes. The
corporation tax rate is 10%. Due to tax losses sustained in the
period, no tax liability arises on the Mediterranean Minerals
(Bulgaria) EOOD. Under current legislation, tax losses may be
carried forward and be set off against taxable income of the
following five years. As at 31 December 2015, the balance of tax
losses which is available for offset against future taxable profits
amounts to GBP34,035 (2014: GBP171,146). The reduction in tax
losses from the prior year is due to losses passing the five year
threshold for their utilization.
Turkey
Do u Akdeniz Mineralleri Sanayi ve Ticaret Limited irket (Do u
Akdeniz Mineralleri), the 100% subsidiary of Mediterranean Minerals
(Bulgaria) EOOD, and ultimately 100% subsidiary of the Company, is
resident in Turkey for tax purposes. The corporation tax rate is
20%. Under local tax legislation, exploration costs are can only be
set off against income from mining operations. Tax losses may be
carried forward and be set off against taxable income of the five
succeeding years. As at 31 December 2015, the balance of
exploration costs that is available for offset against future
income from mining operations amount to GBP 948,764 (2014:
GBP908,198).
Ethiopia
KEFI Minerals Ethiopia Limited is subject to other direct and
indirect taxes in Ethiopia through its foreign operations. The
mining industry in Ethiopia is relatively undeveloped. As a result,
tax regulations relating to mining enterprises are evolving. There
are transactions and calculations undertaken during the ordinary
course of business for which the ultimate tax determination is
uncertain. The Group recognises liabilities for anticipated tax
audit 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
impact the current and deferred tax provisions in the period in
which such determination is made.
During 2013, the House of People's Representatives passed an
amendment to the Mining Income Tax Proclamation, reducing income
tax from 35% to 25% and had received an initial draft of proposed
amendments to the Mining Proclamation, which includes a reduction
in royalty on gold production from 8% to 7%.
10. Loss per share
The calculation of the basic and fully diluted loss per share
attributable to the ordinary equity holders of the parent is based
on the following data:
Year Year
Ended Ended
31.12.15 31.12.14
GBP'000 GBP'000
Net loss attributable to equity shareholders (3,206) (3,848)
Average number of ordinary shares
for the purposes of basic loss per
share (000's) 1,577,708 952,420
========== ==============
Loss per share:
Basic and fully diluted loss per share
(pence) (0.20) (0.40)
========== ==============
The effect of share options and warrants on losses per share is
anti-dilutive.
Notes to the consolidated financial statements (continued)
Year ended 31 December 2015
11. Property, plant and equipment
Motor Plant Furniture, Total
Vehicles and fixtures
equipment and
office
equipment
The Group
Cost
At 1 January 2014 60 180 53 293
Additions - 18 8 26
========== ================ =========== ======
At 31 December 2014
/ 1 January 2015 60 198 61 319
Additions - 7 4 11
Disposals (17) (70) (6) (93)
========== ================ =========== ======
At 31 December 2015 43 135 59 237
========== ================ =========== ======
Accumulated Depreciation
At 1 January 2014 31 - 10 41
Charge for the year 8 73 37 118
---------- ---------------- ----------- ------
At 31 December 2014
/ 1 January 2015 39 73 47 159
Charge for the year 5 67 18 90
Disposals (17) (70) (6) (93)
========== ================ =========== ======
At 31 December 2015 27 70 59 156
========== ================ =========== ======
Net Book Value at
31 December 2015 16 65 - 81
========== ================ =========== ======
Net Book Value at
31 December 2014 21 125 14 160
========== ================ =========== ======
The above property, plant and equipment is located in Turkey and
Ethiopia.
The Company has no significant property, plant and
equipment.
Notes to the consolidated financial statements (continued)
Year ended 31 December 2015
12. Intangible assets
Project Deferred
evaluation exploration
costs costs Total
The Group
Cost
At 1 January 2014 - 6,900 6,900
Additions 976 1,263 2,239
------------ ------------- --------------------------------------
At 31 December
2014 /
1 January 2015 976 8,163 9,139
------------ ------------- --------------------------------------
Additions 1,739 967 2,706
------------ ------------- --------------------------------------
At 31 December
2015 2,715 9,130 11.845
============ ============= ======================================
Accumulated
Amortization
and
Impairment
At 1 January - - -
2014
Charge for - - -
the year
At 31 - - -
December 2014
/
1 January
2015
------------ ------------- --------------------------------------
Charge for - - -
the year
------------ ------------- --------------------------------------
At 31 - - -
December 2015
============ ============= ======================================
Net Book Value at
31
December 2015 2,715 9,130 11,845
============ ============= ======================================
Net Book Value at
31
December 2014 976 8,163 9,139
============ ============= ======================================
Project Deferred
evaluation exploration
costs costs Total
The Company
Cost
At 1 January - - -
2014
Additions on
acquisition 976 - 976
------------ ------------- -------------------------------------
At 31 December
2014 /
1 January 2015 976 - 976
------------ ------------- -------------------------------------
Additions 587 - 587
Transfer to
subsidiary (485) - (485)
============ ============= =====================================
At 31 December
2015 1,078 - 1,078
============ ============= =====================================
Accumulated
Amortization
and Impairment
At 1 January - - -
2014
Charge for the - - -
year
At 31 December - - -
2014 /
1 January 2015
------------ ------------- -------------------------------------
Charge for the - - -
year
------------ ------------- -------------------------------------
At 31 December - - -
2015
============ ============= =====================================
Net Book Value at
31
December 2015 1,078 - 1,078
============ ============= =====================================
Net Book Value at
31
December 2014 976 - 976
============ ============= =====================================
Notes to the consolidated financial statements (continued)
Year ended 31 December 2015
12. Intangible assets
Deferred exploration costs are associated with the Tulu Kapi
mine in Ethiopia. The group recognized deferred exploration costs
with a fair value of US$ 6,900,000 on acquisition of the project in
December 2013. Further costs incurred by the Group since the
acquisition have been capitalized.
Management performed an impairment review for deferred
exploration costs, which relate to the Tulu Kapi license area, at
31 December 2015.The Net Present Value of the Tulu Kapi asset
exceeded the net book value at 31 December 2015 significantly.
The impairment review compared the recoverable amount of assets
to the carrying value. The recoverable amount of an asset is
assessed by reference to the higher of value in use ("VIU"), being
the net present value ("NPV") of future cash flows expected to be
generated by the assets, and fair value less costs to dispose
("FVLCD"). The FVLCD is based on an estimate of the amount that the
Company may obtain in a sale transaction on an arm's length
basis.
Project evaluation costs relating to work performed in assessing
the economic feasibility and the independent technical review of
the Tulu Kapi project have been capitalized by the Company. In
August 2015, the Company published the Tulu Kapi Definitive
Feasibility Study ("DFS") evaluating a conventional open-pit mining
operation and carbon-in leach ("CIL") processing plant.
Following completion of the DFS, the Company continued to
improve project economics. Based on feedback from project
contractors, financiers and independent technical consultants, the
company in January 2016 increased planned production at Tulu Kapi
to circa 115,000 ounces per annum at an estimated average AISC of
US$742/ounce over nine year. This increase is a result of a planned
increase in process plant capacity from 1.2Mtpa to 1.5-1.7Mtpa
which has strengthened the financial and technical feasibility of
the project.
The Tulu Kapi Mining Agreement between the Ethiopian Government
and the Company was formalized in April 2015. The terms include a
20-year Mining License, full permits for the development and
operation of the Tulu Kapi gold project and a 5% Government
free-carried interest. The Company is working towards funding the
development of the Tulu Kapi project.
The schedule remains on track for project finance syndicate
documentation and inter-creditor arrangements to be assembled and
approved by syndicate and National Bank of Ethiopia for full
drawdown by mid- 2016. Preferred banks selected and their mandates
are being finalized and processed for formal approval. The
Government of Ethiopia confirmed its intention to invest equity
capital of US$20 million.
KEFI Minerals Ethiopia also has other mining exploration
licenses in Ethiopia. The other licenses are Yubdo exploration
license, and the Ankore exploration license. None of these licenses
is considered core to the Group's operations in Ethiopia.
- The Yubdo exploration license 7(th) year extension period
expired on June 28(th) 2014. The Ministry of Mines has verbally
stated that they intend to extend the license period. KEFI has
lodged the application for extension of this license during
2016.
- The Billa Gulisso exploration license expired in December
2015, and KEFI received notification during 2016 that this license
has been terminated.
- Ankore exploration license: this area was included in the
Tulu-Kapi mine infrastructure area during 2015.
Notes to the consolidated financial statements (continued)
Year ended 31 December 2015
13. Investments
13.1 Fixed asset investments
The Company Year Ended Year
31.12.15 Ended
GBP'000 31.12.14
GBP'000
Cost
At 1 January 4,598 3,097
Acquisitions - 1,501
========== ==========
At 31 December 4,598 4,598
========== ==========
Date of Effective
acquisition/ Country of proportion
Subsidiary companies incorporation incorporation of
shares held
--------------------------- -------------- --------------- ----------------
Mediterranean Minerals 08/11/2006 Bulgaria 100%-Direct
(Bulgaria) EOOD
Do u Akdeniz Mineralleri 08/11/2006 Turkey 100%-Indirect
Sanayi ve Ticaret Limited
irket
KEFI Minerals Ethiopia 30/12/2013 United Kingdom 100%-Direct
Limited
KEFI Minerals Marketing 30/12/2014 Cyprus 100%-Direct
and Sales Cyprus Limited
On 8 November 2006, the company entered into an agreement to
acquire from Atalaya Mining PLC (previously EMED) the whole of the
issued share capital of Mediterranean Minerals (Bulgaria) EOOD, a
company incorporated in Bulgaria, in consideration for the issue of
29,999,998 ordinary shares in the Company.
Mediterranean Minerals (Bulgaria) EOOD owns 100% of the share
capital of Do u Akdeniz Mineralleri ("Dogu"), a private limited
liability company incorporated in Turkey, engaging in activities
for exploration and developing of natural resources.
The Company owns 100% of Kefi Minerals Ethiopia, which operates
the Tulu Kapi project in Ethiopia. The Government of Ethiopia is
entitled to a 5% free-carried interest in the Tulu Kapi Gold
Project. This entitlement is enshrined in the Ethiopian Mining Law
and the Ethiopian Mining Agreement between the Ethiopian Government
and KEFI Minerals Ethiopia. The implementation of this entitlement
is intended to issue 5% of the shareholding of KEFI Minerals
Ethiopia at the time of the final completion of the full project
finance of the Tulu Kapi Gold Project. Once all the relevant
documents are executed the intended arrangement would add 5% to the
shareholding paid by the Ethiopian Government.
The company owns 100% of KEFI Minerals Marketing and Sales
Cyprus, a company incorporated in Cyprus. The company was dormant
for the year end 31 December 2015 and 2014. KEFI Minerals Marketing
and Sales Cyprus had no assets or liabilities at the date of
acquisition. No additional disclosure is considered necessary, as
the entity is not significant to the financial statements. KEFI
Minerals Marketing and Sales Cyprus will provide sales and
marketing services for the Group once production commences. It is
planned that this company will act as agent and off-taker for the
onward sale of gold and other products in international
markets.
Notes to the consolidated financial statements (continued)
Year ended 31 December 2015
13.2 Investment in jointly controlled entity
Year Year
Ended Ended
31.12.15 31.12.14
GBP'000 GBP'000
========= ==========
The Company
At 1 January/31 December 181 181
========= ==========
Date of acquisition/ Country Effective
incorporation of incorporation proportion
Jointly controlled of shares
entity held
-------------------- -------------------- ----------------- -----------
Gold and Minerals 04/08/2010 Saudi Arabia 40%-Direct
Co. Limited (G&M)
14. Available for sale financial assets
Year Year
Ended Ended
31.12.15 31.12.14
GBP'000 GBP'000
---------- ----------
The Group
On 1 January 86 80
Change in value of available-for-sale
financial assets 6 6
---------- ----------
On 31 December 92 86
========== ============
Year Year
Ended Ended
31.12.15 31.12.14
GBP'000 GBP'000
---------- ----------
The Company
On 1 January 8 12
Change in value of available-for-sale financial assets - (4)
---------- ----------
On 31 December 8 8
========== ============
The Company successfully divested four Licences in Turkey in
July 2011 to AIM listed Ariana Resources (AIM:AAU) for a nominal
cash payment of 10,000 Turkish Lira, 910,747 new ordinary shares in
Ariana and a Net Smelter Royalty ("NSR") of 2%. The NSR is payable
by Ariana's wholly owned Turkish subsidiary Galata Madencilik San.
ve Tic. Ltd. ("Galata") to KEFI Mineral's Turkish Subsidiary, Dogu,
on commercial production of any mineral from the licences. No value
has been attributed in these financial statements for the NSRs, due
to uncertainty regarding when income from the NSRs will
commence.
Notes to the consolidated financial statements (continued)
Year ended 31 December 2015
15. Trade and other receivables
Year Year
Ended Ended
31.12.15 31.12.14
GBP'000 GBP'000
---------- ----------
The Group
Other receivables 45 43
Placing funds 207 130
Loan to Director (Note 21.2) - 20
Amount receivable from Saudi Arabia
Jointly controlled entity (Note
21.4) 6 32
VAT 95 96
Deposits and prepayments 5 14
---------- ------------
358 335
========== ============
Year Year
Ended Ended
31.12.15 31.12.14
GBP'000 GBP'000
---------- ---------
The Company
Deposits 3 13
Placing Funds 207 130
Loan to Director (Note 21.2) - 20
KEFI Minerals Marketing and Sales
Cyprus Limited (Note 21.4) 3 -
Advance to KEFI Minerals Ethiopia
Limited (Note 21.4) 7,417 2,807
Amount receivable from Saudi Arabia
Jointly controlled entity (Note
21.4) 80 106
---------- ---------
7,710 3,076
========== ===========
Amounts owed by group companies total GBP7,420,000 (GBP:
GBP2,807,000). Balances of GBP748,000 have been fully provided for
all projects except for Ethiopia due to the uncertainty over the
timing of future recoverability. The loans issued to the director
and the advance issued to KEFI Minerals Ethiopia Limited are
unsecured interest free and repayable on demand. At the reporting
date, no receivables were past their due date.
The Company raised GBP2,623,000 on 11 December 2015, of which an
amount of GBP207,000 was received after 31 December 2015.
16. Cash and cash equivalents
Year Ended Year Ended
31.12.15 31.12.14
GBP'000 GBP'000
---------- ----------
The Group
Cash at bank and in hand 562 640
========== ==========
The Company
Cash at bank and in hand 393 607
========== ==========
Notes to the consolidated financial statements (continued)
Year ended 31 December 2015
17. Share capital Number of shares '000 Share Capital Deferred Share premium
Shares Total
--------------------- ------------- --------- ------------- --------
Issued and fully paid
At 1 January 2014 853,670 8,535 - 7,660 16,195
Issued 16 June 2014 at
1.5p 141,667 1,417 - 708 2,125
Issued 5 September 2014
at 1.5p 50,000 500 - 250 750
Issued 2 December 2014
at 1p 80,000 800 - - 800
Issued 16 December 2014
at 1p 110,000 1,100 - - 1,100
Share issue costs - - - (185) (185)
---------
At 31 December 2014 1,235,337 12,352 - 8,433 20,785
Issued 20 March 2015 at
1p 80,000 800 - - 800
Issued 16 May 2015 at 1p 66,611 667 - - 667
Sub-division of shares
16 June 2015 0.1p - (12,436) 12,436 - -
Issued 16 June 2015 at
0.8p 362,500 363 - 2,538 2,901
Issued 11 December 2015
at 0.3p 877,191 877 - 1,755 2,632
Share issue costs - - - (379) (379)
--------------------- ------------- --------- ------------- -------
At 31 December 2015 2,621,639 2,623 12,436 12,347 27,406
===================== ============= ========= ============= =========
Share issue costs of GBP64,000 (2014: GBP177,000) relating to
the 146,610,600 shares issued at par value during 2015 have been
charged to equity. The remainder of share issue costs are charged
against share premium arising on issue.
Issued capital
2015
On 20 March 2015, 80,000,000 shares of 1p were issued at a price
of 1p per share.
On 16 May 2015, 66,610,600 shares of 1p were issued at a price
of 1p per share.
On 16 June 2015, 362,500,000 shares of 0.1p were issued at a
price of 0.8p per share. On issue of the shares, an amount of
GBP2,537,500 was credited to the Company's share premium
reserve.
On 11 December 2015, 877,191,422 shares of 0.1p were issued at a
price of 0.3 p per share. On issue of the shares, an amount of
GBP1,754,500 was credited to the Company's share premium
reserve.
2014
On 16 June 2014, 141,666,668 shares of 1p were issued at a price
of 1.5p per share. On issue of the shares, an amount of GBP708,333
was credited to the Company's share premium reserve.
On 5 September 2014, 50,000,000 shares of 1p were issued at a
price of 1.5p per share. On issue of the shares, an amount of
GBP250,000 was credited to the Company's share premium reserve.
On 2 December 2014, 80,000,000 shares of 1p were issued at a
price of 1p per share.
On 16 December 2014, 110,000,000 shares of 1p were issued at a
price of 1p per share.
Restructuring of share capital into deferred shares
On 16 June 2015 the Company's issued ordinary shares of 1p each
in the capital of the Company were sub-divided into one new
ordinary share of 0.1p and one deferred share of 0.9p. The deferred
shares have no value or voting rights. After the share capital
reorganization there were the same number of New Ordinary Shares in
issue as there are existing Ordinary Shares. The New Ordinary
Shares have the same rights as those currently accruing to the
existing Ordinary Shares in issue under the Company's articles of
association, including those relating to voting and entitlement to
dividends.
Notes to the consolidated financial statements (continued)
Year ended 31 December 2015
17. Share capital (continued)
Warrants
2015
On 18 March 2015, the Company issued 4,000,000 warrants to
subscribe for new ordinary shares of 1p each at 1p per share.
On 11 May 2015, the Company issued 1,680,530 warrants to
subscribe for new ordinary shares of 1p each at 1p per share.
On 15 June 2015, the Company issued 14,500,000 warrants to
subscribe for new ordinary shares of 0.1p each at 0.8p per
share.
On 11 December 2015, the Company issued 43,859,571 warrants to
subscribe for new ordinary shares of 0.1p each at 0.3p per
share.
No warrants were cancelled/expired or exercised in the period
from 1 January 2015 to 31 December 2015.
2014
On 16 June 2014, the Company issued 8,500,000 warrants to
subscribe for new ordinary shares of 1p each at 1.5p per share.
On 2 December 2014, the Company issued 4,000,000 warrants to
subscribe for new ordinary shares of 1p each at 1p per share.
On 16 December 2014, the Company issued 5,500,000 warrants to
subscribe for new ordinary shares of 1p each at 1p per share.
Details of warrants outstanding as at 31 December 2015:
Grant date Expiry date Exercise price Expected Life Years Number of warrants 000's
------------------ ------------------- ---------------- -------------------- -------------------------
22 February 2011 21 February 2016 5.00p 5 years 780
20 February 2012 19 February 2017 3.00p 5 years 2,917
4 July 2013 3 July 2018 2.10p 5 years 1,310
16 October 2013 15 October 2018 2.25p 5 years 1,111
27 December 2013 26 December 2016 2.00p 3 years 13,500
16 June 2014 15 June 2016 1.50p 2 years 8,500
2 December 2014 1 December 2017 1.00p 3 years 4,000
16 December 2014 15 December 2017 1.00p 3 years 5,500
18 March 2015 17 March 2018 1.00p 3 years 4,000
11 May 2015 10 May 2018 1.00p 3 years 1,680
15 June 2015 14 June 2018 0.80p 3 years 14,500
11 December 2015 10 December 2018 0.30p 3 years 43,860
=======================
101,658
=========================
Notes to the consolidated financial statements (continued)
Year ended 31 December 2015
17. Share capital (continued)
Warrants (continued)
The Company has issued warrants to advisers to the Group. All
warrants, as noted above expire between two to five years after
grant date and are exercisable at the exercise price.
Number of
warrants
000's
Outstanding warrants at
1 January 2015 37,618
- granted 64,040
Outstanding warrants at
31 December 2015 101,658
==========
The estimated fair values of the warrants were calculated using
the Black Scholes option pricing model.
The inputs into the model and the results for warrants granted
during the year are as follows:
11 Dec 15 June 11 May 18 16 Dec 2 16
2015 2015 2015 Mar 2014 Dec Jun
2015 2014 2014
Closing
share price
at issue
date 0.32p 0.90p 0.88p 1.33p 1.08p 1.08p 1.58p
Exercise
price 0.3p 0.8p 1.00p 1.00p 1.00p 1.00p 1.50p
Expected
volatility 79.1% 61.1% 60.9% 59% 48% 48% 50.3%
Expected 3yrs 3yrs 3yrs 3yrs 3yrs 3yrs 2yrs
life
Risk free
rate 0.39% 0.98% 0.98% 0.98% 0.59% 0.59% 0.87%
Expected Nil Nil Nil Nil Nil Nil Nil
dividend
yield
Estimated
fair value 0.17p 0.40p 0.33p 0.64p 0.32p 0.32p 0.43p
Expected volatility was estimated based on the historical
underlying volatility in the price of the Company's shares.
For 2015, the impact of issuing warrants is a net charge to
income of GBP163,000 (2014: GBP66,000). At 31 December 2015, the
equity reserve recognized for share based payments, including
warrants, amounted to GBP1,212,000 (2014: GBP848,000).
Year Year
Ended Ended
31.12.15 31.12.14
GBP'000 GBP'000
---------- ------------
Opening amount 848 794
Warrants issued costs (Note 6) 163 66
Share options issued to employees
(Note 6) 69 69
Share options issued to directors
(Note 6) 146 200
Cancelled options (14) (281)
---------- ------------
Closing amount 1,212 848
========== ==========
Notes to the consolidated financial statements (continued)
Year ended 31 December 2015
18. Share options reserve
Details of share options outstanding as at 31 December 2015:
Grant Expiry date Exercise price Number
date of shares
000's
----------- ------------- --------------- -----------
28-Feb-11 27-Feb-16 7.10p 100
29-Sep-11 28-Sep-16 3.78p 1,000
13-Sep-12 12-Sep-18 4.00p 14,150
24-May-13 23-May-19 2.915p 1,000
03-Sep-13 02-Sep-18 2.94p 1,000
08-Oct-13 07-Oct-18 2.27p 350
08-Jan-14 07-Jan-20 1.88p 400
16-Jan-14 15-Jan-20 1.99p 100
01-Feb-14 31-Jan-20 1.89p 100
27-Mar-14 26-Mar-20 2.30p 27,225
04-Apr-14 03-Apr-20 1.83p 100
12-Sep-14 11-Sep-20 1.76p 2,250
20-Mar-15 19-Mar-21 1.32p 27,000
16-Jun-15 15-Jun-21 1.32p 6,500
81,275
===========
Weighted
average ex. Number of
Price shares 000's
------------- -------------
Outstanding options at 1
January 2015 48,350
- granted 1.32p 33,500
- cancelled/forfeited 3.92p (575)
-------------
Outstanding options at 31
December 2015 81,275
=============
The Company has issued share options to directors, employees and
advisers to the Group.
On 28 February 2011, 550,000 options were issued which expire
five years after the grant date, and are exercisable at any time
within that period. On 29 September 2011, 2,000,000 options were
issued which expire five years after the grant date, and are
exercisable at the exercise price in whole or in part no more than
one half after one year from the grant date and one half two years
from the grant date.
On 13 September 2012, 15,500,000 options were issued which
expire six years after the grant date, and are exercisable at the
exercise price in whole or in part no more than one half after one
year from the grant date and one half two years from the grant
date.
On 27 March 2013, 100,000 options were issued which expire six
years after the grant date, and are exercisable at any time within
that period. On 24 May 2013 1,000,000 options were issued which
expire six years after the grant date and are exercisable in part
no more than one half after one year from the grant date and one
half two years from the grant date. On 3 September 2013 1,000,000
options were issued and on 8 October 2013, 350,000 options were
issued both which expire five after the grant date and are
exercisable in part no more than one half after one year from the
grant date and one half two years from the grant date
Notes to the consolidated financial statements (continued)
Year ended 31 December 2015
18. Share options reserve (continued)
During January 2014 and February 2014 600,000 options were
issued which expire six years after the grant date and are
exercisable in part no more than one half after one year from the
grant date and one half two years from the grant date.
On 27 March 2014, 22,000,000 options were issued to the
Directors and a further 5,400,000 options have been granted to
other non-board members of the senior management team. Of the
options issued, previously granted options over 22,100,000 Ordinary
shares which were due to expire during 2014 have all been cancelled
and the new grants of options have been made, in accordance with
the terms of the Scheme the options vest in equal annual
instalments over a period of 2 years and expire after 6 years.
On 4 April 2014, 100,000 options were issued which expire six
years after the grant date and are exercisable in part no more than
one half after one year from the grant date and one half two years
from the grant date.
On 12 September 2014, 2,250,000 options were issued which expire
six years after grant date and vest in equal annual instalments
over a period of two years.
On 20 March 2015, 27,000,000 options were issued which expire
six years after grant date and vest in equal annual instalments
over a period of two years.
On 16 June 2015, 6,500,000 options were issued which expire six
years after grant date and vest in equal annual instalments over a
period of two years.
The option agreements contain provisions adjusting the exercise
price in certain circumstances including the allotment of fully
paid Ordinary shares by way of a capitalisation of the Company's
reserves, a sub division or consolidation of the Ordinary shares, a
reduction of share capital and offers or invitations (whether by
way of rights issue or otherwise) to the holders of Ordinary
shares. The estimated fair values of the options were calculated
using the Black Scholes option pricing model. The inputs into the
model and the results are as follows:
Closing Exercise Expected Expected Risk Expected Discount Estimated
share price volatility life free dividend factor fair
price rate yield value
at issue
Date date
16-Jun-15 0.83p 1.32p 61.11% 6yrs 1.53% Nil 0% 0.38p
20-Mar-15 1.20p 1.32p 59.04% 6yrs 1.53% Nil 0% 0.64p
12-Sep-14 1.43p 1.76p 43.40% 6yrs 1.09% Nil 0% 0.52p
04-Apr-14 1.83p 1.83p 59.60% 6yrs 2.17% Nil 0% 0.94p
27-Mar-14 1.85p 2.30p 59.60% 6yrs 2.17% Nil 0% 0.94p
01-Feb-14 1.90p 1.89p 59.60% 6yrs 2.17% Nil 0% 0.94p
16-Jan-14 1.83p 1.99p 59.60% 6yrs 2.17% Nil 0% 0.94p
08-Jan-14 1.85p 1.88p 59.60% 6yrs 2.17% Nil 0% 0.94p
08-Oct-13 2.69p 2.27p 63.83% 5yrs 1.70% Nil 50% 0.80p
03-Sep-13 2.76p 2.94p 63.63% 5yrs 1.70% Nil 50% 0.75p
24-May-13 2.19p 2.92p 59.80% 6yrs 5.00% Nil 0% 1.18p
27-Mar-13 3.43p 3.43p 52.36% 6yrs 5.00% Nil 0% 1.90p
13-Sep-12 3.63p 4.00p 56.90% 6yrs 5.00% Nil 0% 2.05p
29-Sep-11 3.78p 3.78p 105.51% 5yrs 5.00% Nil 0% 2.99p
28-Feb-11 6.40p 7.10p 162.00% 5yrs 5.00% Nil 0% 5.98p
Expected volatility was estimated based on the historical
underlying volatility in the price of the Company's shares.
Notes to the consolidated financial statements (continued)
Year ended 31 December 2015
18. Share options reserve (continued)
For 2015, the impact of share option-based payments is a net
charge to income of GBP215,000 (2014: GBP269,000). At 31 December
2015, the equity reserve recognized for share option-based
payments, including warrants, amounted to GBP1,212,000 (2014:
GBP848,000).
19. Jointly controlled entities
19.1 Jointly controlled entity with Centerra Gold (KB) Inc.
On 22 October 2008, the Company entered into a Joint Venture
Agreement in respect of its 100%-owned Artvin Project with Centerra
Gold (KB) Inc ("Centerra KB"), a wholly-owned subsidiary of
Centerra Gold Inc. In August 2011, KEFI Mineral's subsidiary
holding these licences, was sold in return for a cash payment of
US$100,000 and a 1% Net Smelter Royalty on all future mineral
production from the Artvin licences.
19.2 Joint controlled entity with Gold and Minerals
Country Effective proportion
Company name Date of incorporation of incorporation of shares held
at 31 December
----------------- ------------------------- ------------------- --------------------
Gold & Minerals
Co. Limited 3 August 2010 Saudi Arabia 40%
SAR'000 GBP'000
Amounts relating to Year Year Year Year
the Jointly Controlled Ended Ended Ended Ended
Entity 31.12.15 31.12.14 31.12.15 31.12.14
========= ========== ========== ==========
Non-current assets 493 768 36 53
Current assets 1,473 1,885 106 129
========= ========== ========== ==========
1,966 2,653 142 182
========= ========== ========== ==========
Non-current liabilities 54,974 45,095 3,971 3,092
Current liabilities 1,048 916 76 63
========= ========== ========== ==========
56,022 46,011 4,047 3,155
========= ========== ========== ==========
Net liabilities (54,056) (43,358) (3,905) (2,973)
========= ========== ========== ==========
Share capital 2,500 2,500 181 171
Accumulated losses (56,556) (45,858) (4,086) (3,144)
========= ========== ========== ==========
(54,056) (43,358) (3,905) (2,973)
========= ========== ========== ==========
Exchange rates SAR to
GBP
Closing rate 0.1806 0.1714
In May 2009, KEFI announced the formation of a new minerals
exploration jointly controlled entity, Gold & Minerals Co.
Limited ("G&M"), a limited liability company in Saudi Arabia,
with leading Saudi construction and investment group Abdul Rahman
Saad Al-Rashid & Sons Company Limited ("ARTAR"). KEFI is the
operating partner with a 40% shareholding in G&M with ARTAR
holding the other 60%. KEFI provides G&M with technical advice
and assistance, including personnel to manage and supervise all
exploration and technical studies. ARTAR provides administrative
advice and assistance to ensure that G&M remains in compliance
with all governmental and other procedures. G&M is treated as a
jointly controlled entity and has been equity accounted and has
reconciled its share in G&M's losses.
The above figures reported represent cumulative exploration
activity incurred by G&M since its incorporation in 2009. The
accounting policy for exploration costs recorded in the G&M
audited financial statements is to capitalise qualifying
expenditure and review for impairment, if applicable. This is in
contrast to the Group's accounting policy relating to exploration
costs which is to expense costs through profit and loss until the
Board decides on the development of a project (Note 2).
Consequently, exploration costs of G&M at 31 December 2015
amounting to SAR56.6 million (2014: SAR45.8 million) have been
adjusted to bring the figures in line with the Group's accounting
policies.
Notes to the consolidated financial statements (continued)
Year ended 31 December 2015
19. Jointly controlled entities (continued)
19.2 Jointly controlled entity with Gold and Minerals
(continued)
A loss of GBP735,000 was recognized by the Group for the year
ended 31 December 2015 (2014: GBP 982,000) representing the Group's
share of losses in the year.
As at 31 December 2015 KEFI owed ARTAR an amount of GBP90,000
(2014: receivable GBP186,000) - Note 21.5.
As at 31 December 2015, G&M owed KEFI an amount of GBP6,000
(2014: GBP32,000) - Note 21.4.
20. Trade and other payables
The Group Year Year
Ended Ended
31.12.15 31.12.14
GBP'000 GBP'000
--------- ---------
Accruals and other payables 1,011 825
Other loans 236 229
Payable to shareholders (Note 21.3) 8 8
Payable to jointly controlled entity
(Note 21.5) 90 186
VAT Liability 650 1,954
1,995 3,202
========= =========
In January 2014 an agreement was made with Ethiopian Revenue and
Customs Authority ("ERCA") to repay the balance of the VAT
liability plus interest accruing on the unpaid principal amount
over a three-year payment plan in accordance with the relevant tax
proclamation, 25% of the assessed outstanding amount is payable
immediately and the balance under an agreed payment schedule. This
initial payment, of ETB 27,111,509 (approximately GBP848,590),
equivalent to 25% of the assessed tax amount outstanding, was made
in January 2014. The balance of the liability plus interest
accruing on the unpaid principal amount will be paid subject to a
three-year payment plan formally agreed with ERCA. During the year
an amount of ETB 45,100,000 (approximately GBP1,441,815), was paid.
The amount to be paid over the next year is ETB 20,063,350
(approximately GBP 647,832).
Other loans are unsecured, interest free and repayable on
demand.
The Company
Year Year
Ended Ended
31.12.15 31.12.14
GBP'000 GBP'000
---------- ---------
Accruals and other payables 886 746
Payable to jointly controlled entity
(Note 21.5) 90 186
---------- ---------
976 932
========== =========
The fair values of trade and other payables due within one year
approximate to their carrying amounts as presented above.
Notes to the consolidated financial statements (continued)
Year ended 31 December 2015
21. Related party transactions
The following transactions were carried out with related
parties:
21.1 Compensation of key management personnel
The total remuneration of key management personnel was as
follows:
Year Year
Ended Ended
31.12.15 31.12.14
GBP'000 GBP'000
---------- ----------
Directors' fees * 471 444
Directors' other benefits 51 164
Directors' bonus 50 107
Share option-based benefits to directors
(Note 17) 146 200
Other key management personnel fees
and other benefits 204 -
Other key management personnel bonus 37 -
Share option-based benefits other key
management personnel 11 -
970 915
========== ==========
* Part of the salary of the Exploration Director is paid
directly by the jointly-controlled entity G&M.
Share-based benefits
The Company has issued share options to directors and key
management. All options, except those noted in Note 18, expire six
years after grant date and are exercisable at the exercise price in
whole or in part no more than one third from the grant date, two
thirds after two years from the grant date and the balance after
three years from the grant date.
21.2 Receivable
from director Year Ended Year
31.12.15 Ended
GBP'000 31.12.14
GBP'000
----------------- ------------
Name Nature of transactions Relationship
Ian Rutherford Non-Executive
Plimer Loan to Director Director - 20
================= ============
No interest is payable by the director and the loan was repaid
in full in 2015.
21.3 Payable to
shareholders 2015 2014
----------- ------------
Name Nature of transactions Relationship
Atalaya Mining
PLC (previously
EMED) Finance Shareholder 8 8
=========== ============
21.4 Receivable
from related parties
The Group 2015 2014
---- --------------
Name Nature of transactions Relationship
Gold & Minerals Jointly controlled
Co. Limited Finance entity 6 32
6 32
==== ==============
The Company 2015 2014
----- ----------------
Name Nature of transactions Relationship
Gold & Minerals Jointly controlled
Co. Limited Finance entity 80 106
KEFI Minerals Marketing Finance Subsidiary 3 -
and Sales Cyprus
Limited
Kefi Minerals Ethiopia
Limited Advance Subsidiary 7,417 2,807
----- ----------------
7,500 2,913
===== ================
Notes to the consolidated financial statements
(continued)
Year ended 31 December 2015
21. Related party transactions (continued)
21.5 Payable to
related parties
The Group 2015 2014
---- -------------
Name Nature of transactions Relationship
Abdul Rahman Saad
Al-Rashid & Sons
Company Limited Jointly controlled
("ARTAR") Finance entity 90 186
90 186
==== =============
The Company 2015 2014
----- ---------------
Name Nature of transactions Relationship
Abdul Rahman Saad
Al-Rashid & Sons
Company Limited Jointly controlled
("ARTAR") Finance entity 90 186
----- ---------------
90 186
===== ===============
Name Nature of transactions Relationship 2015 2014
----- ---------------
Provision of
Atalaya Mining management and
PLC (previously other professional
EMED) services Shareholder 8 8
===== ===============
22. Contingent liabilities
22.1 Geological database
In 2006, Atalaya Mining PLC (previously EMED) acquired a
proprietary geological database that covers extensive parts of
Turkey and Greece and transferred to the Company that part of the
geological database that relates to areas in Turkey.
Under the agreement, the Company has undertaken to make a
payment of approximately GBP52,000 (AUD 105,000) for each tenement
it is subsequently awarded in Turkey and which was identified from
the database. The maximum number of such payments required under
the agreement is four, resulting in a contingent liability of up to
GBP210,000. These payments are to be settled by issuing shares in
the Company. To date, only one tranche of shares have been issued
under this agreement in June 2007 for GBP43,750 (AUD 105,000).
22.2 Charge issued
On 13(th) August 2015, the Company created a fixed charge in
favour of AIB Group (UK) Plc over amounts held in the Company's
deposit accounts with the bank. The charge is in regard to time
credit banking facilities provided by AIB Group (UK) Plc. At 31
December 2015, the balance in the deposit accounts was
GBP20,000.
22.3 Legal Allegations
Allegations were made against a subsidiary of the Company in
2015 by 39 persons in the Oromiya Regional State of Ethiopia, that
exploration drilling between 1998 and 2006 had caused damage to
land occupied (but not owned) by them, despite rehabilitation
having been completed, reported and accepted by the regulatory
authorities at that time. They allege damage of ETB 249,589,430
(approximately GBP8 million). The allegations were dismissed in
March 2014 but the plaintiffs have directed the allegations to
another arm of the judiciary. The Group's lawyers believe that the
allegations are spurious and that the chances of the judiciary
holding that there exists a bona fide damages case to be heard are
low.
Notes to the consolidated financial statements (continued)
Year ended 31 December 2015
23. Capital commitments
The Group has the following capital or other commitments as at
31 December 2015 0.03 Million (2014 0.8 Million),
Year Year
Ended Ended
31.12.15 31.12.14
GBP'000 GBP'000
========== ==========
Exploration programme commitments - 727
Property, plant and equipment 27 -
========== ==========
27 727
========== ==========
24. Events after the reporting date
On 19 January 2016, 48,114,000 options were issued to the
Directors and a further 31,886,000 options have been granted to
other non-board members of the senior management team. The options
have an exercise price of 0.42p, expire after 6 years, and vest in
two equal annual instalments.
The Company raised GBP1,747,759 before expenses on 22 March 2016
through a placing of 499,359,791 ordinary shares of 0.1p each at a
price of 0.35p per share. On this date, the Company also granted
warrants to subscribe for 24,967,989 ordinary shares of 0.1p each
at a price on 0.35p per share.
In May 2016 the Company received formal confirmation from the
Government of Ethiopia of its commitment to invest equity capital
of US$20 million in Tulu Kapi.
During June 2016 the funding requirement reduced from US$145
million to estimated US$130 million, after accounting for further
anticipated savings and project spending prior to project finance
completion in 2016.
In June 2016 the finance plan is based on Project Equity of
US$20 million from the Government of Ethiopia, Project Debt of
US$95 million which leaves a residual US$15 million to be optimised
for financial completion in the second half of 2016. KEFI has
received expressions of interest for equity investment from project
contractors and mezzanine-style financiers.
Notes to the consolidated financial statements (continued)
Year ended 31 December 2015
25. Adoption of new and revised International Financial
Reporting Standards (IFRSs)
During the current year the Group adopted all the new and
revised International Financial Reporting Standards (IFRS) as
adopted by EU that are relevant to its operations and are effective
for accounting periods beginning on 1 January 2015. This adoption
did not have a material effect on the accounting policies of the
Group. At the date of approval of these financial statements,
standards and interpretations were issued by the International
Accounting Standards Board which were not yet effective. Some, but
not all of these were adopted by the European Union. The Board of
Directors expects that the adoption of these accounting standards
in future periods will not have an impact on the financial
statements of the Group other than the following:
(i) Standards and Interpretations not adopted by the EU
New standards
IFRS 9 "Financial Instruments"
IFRS 9 makes substantial changes to the measurement of financial
assets and financial liabilities. There will only be three
categories of financial assets at either fair value through profit
and loss, fair value through comprehensive income or measured at
amortized cost. On adoption of the standard the Group will have to
re-determine the classification of its financial assets based on
the business model for each financial asset. This is not considered
likely to give rise to any significant adjustments, other than the
re-classification.
The principal change to the measurement of financial assets
measured at amortized cost or fair value through other
comprehensive income is that impairments will be recognized on an
expected loss basis, compared the current incurred loss approach.
As such, where there are expected to be credit losses, these are
recognized in profit or loss. For financial assets measured at
amortized cost, the carrying amount is reduced for the loss
allowance. For financial assets measured at fair value through
other comprehensive income, the loss allowance is recognized in
other comprehensive income and does not reduce the carrying amount
of the financial assets.
Financial liabilities of the Group are expected to continue to
be recognized at amortized cost.
IFRS 9 has not been adopted by the European Union, and
consequently there is no effective date.
IFRS 15 "Revenue from Contracts with Customers"
The standard has been developed to provide a comprehensive set
of principles in presenting the nature, amount, timing and
uncertainty of revenue and cash flows arising from a contract with
a customer. The standard is based around five steps in recognizing
revenue:
1. Identify the contract with the customer;
2. Identify the performance obligations in the contract;
3. Determine the transaction price;
4. Allocate the transaction price; and
5. Recognize revenue when a performance obligation is satisfied.
The Group is not currently generating income from gold sales
revenue, hence there is not considered to be any significant impact
at the Group's current stage of development. Management are
currently evaluating the impact of the standard on the financial
statements.
IFRS 15 has not been adopted by the European Union, and
consequently there is no effective date.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR EAAKKEFLKEAF
(END) Dow Jones Newswires
June 07, 2016 02:01 ET (06:01 GMT)
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