TIDMSMA
RNS Number : 7712G
Sovereign Mines of Africa PLC
01 June 2017
Sovereign Mines of Africa PLC
("SMA" or "the Company")
Sovereign Mines of Africa PLC (AIM:SML), the gold mining
exploration Company with properties in the Republic of Guinea in
West Africa, today announces its audited results for the year ended
31 December 2016.
Enquiries:
SOVEREIGN MINES OF AFRICA PLC
Giles Clarke - Chairman c/o Billy Clegg +44 20 3757 4983
SHORE CAPITAL - NOMINATED ADVISER & BROKER
Toby Gibbs/Bidhi Bhoma - Corporate Finance
Jerry Keen - Corporate Broking +44 207 408 4090
CAMARCO
Billy Clegg / Gordon Poole +44 20 3757 4983
SOVEREIGN MINES OF AFRICA PLC
CHAIRMAN'S STATEMENT
2016 was a year of transition for the Company as the Board
implemented a strategic review of the Company's assets and
activities. The review included changes to the Board's composition
as well as a decision not to continue funding the development of
its Guinean assets and resulted, post-period, in the successful
sale of its 75% interest in the Mandiana Gold Project ("Mandiana")
in Republic of Guinea, WA to Volcanic Metals Corp. ("Volcanic"), a
Canadian publicly listed mining company.
In consideration for the farm-out, the Company received
2,502,489 common shares in Volcanic representing 9.9% of the
outstanding share capital of Volcanic at the time of transaction.
It was an important step for the Company and realised immediate
value for shareholders whilst retaining an interest in the future
of Mandiana.
Following the successful farm out of its interest in Mandiana,
the Company is now deemed a cash shell under AIM Rule 15, pursuant
to which it is required to make an acquisition which constitutes a
reverse takeover under Rule 14, failing which the Exchange will
suspend trading in the Company's shares pursuant to AIM Rule 40.
Suspension of trading in the Company's shares is scheduled for 21
July 2017, if the Company's shares remain suspended for six months
they will be cancelled from trading on AIM on 21 January 2018
pursuant to AIM Rule 41.
Having previously pursued a wider strategy of targeting assets
in a number of sectors, the Company is now pursuing a more targeted
strategy, including pursuing acquisitions in the Indian consumer
goods sector. The Board is actively assessing acquisition
opportunities and is in preliminary discussions to acquire a
business operating in this sector. There can, at this time, be no
guarantee that any acquisition will complete. Further announcements
will be made in due course.
Finally I would like to thank Rupert Street for his service as
CEO of the Company. Rupert has today stepped down as CEO and
resigned as a Director of the Company. The Company intends to
appoint a new CEO in due course who will complement the anticipated
new direction of the Company and who it is planned will be based in
India.
Financial
The loss in the year of GBP201,547 represents the costs of
running the Company during this transitional phase compared with a
loss of GBP1,991,490 in 2015, which included the impairment of its
exploration assets of GBP1,278,059.
The Company had cash resources of GBP399,446 at 31 December 2016
which will provide sufficient finance to cover the Company's
ongoing expenditure for the foreseeable future
C G Clarke
(Chairman)
31 May 2017
SOVEREIGN MINES OF AFRICA PLC
CONSOLIDATED INCOME STATEMENT AND OTHER COMPREHENSIVE INCOME
Year ended 31 December 2016
Restated
------------------------------ ----- -------------------- ----------------
2016 2015
------------------------------ ----- -------------------- ----------------
Note GBP GBP
------------------------------ ----- -------------------- ----------------
Administrative costs
------------------------------ -----
Impairment of intangible
assets 11 - (1,278,059)
------------------------------ -----
Other administrative
expenses 6 (207,683) (713,988)
------------------------------ ----- -------------------- ----------------
(207,683) (1,992,047)
------------------------------ ----- -------------------- ----------------
Finance income 7 6,136 557
------------------------------ -----
Loss on ordinary activities
before taxation (201,547) (1,991,490)
------------------------------ ----- -------------------- ----------------
Taxation 8 - -
------------------------------ ----- -------------------- ----------------
Loss for the year (201,547) (1,991,490)
------------------------------ ----- -------------------- ----------------
Other comprehensive - -
income
----- -------------------- ----------------
Total comprehensive
loss for the year (201,547) (1,991,490)
----- -------------------- ----------------
Loss for the period
and total comprehensive
loss attributable
to:
------------------------------ ----- -------------------- ----------------
Owners of the parent (201,547) (1,991,490)
------------------------------ ----- -------------------- ----------------
Loss per ordinary
share (pence) from
continuing operations:
basic and diluted 10 (0.02)p (0.64)p
------------------------------ ----- -------------------- ----------------
SOVEREIGN MINES OF AFRICA PLC
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 31 December 2016
Restated
2016 2015
Note GBP GBP
NON CURRENT ASSETS
Intangible assets 11 - -
------------ ------------
CURRENT ASSETS
Other receivables 15 2,438 -
Cash at bank 399,446 501,170
Assets classified 13 - -
as held for sale
------------ ------------
401,884 501,170
------------ ------------
TOTAL ASSETS 401,884 501,170
------------ ------------
LIABILITIES
CURRENT LIABILITIES
Trade and other payables 14 49,883 37,443
------------ ------------
TOTAL LIABILITIES 49,883 37,443
------------ ------------
NET ASSETS 352,001 463,727
------------ ------------
EQUITY
Share capital 16 3,163,589 3,163,589
Share premium account 16 5,563,520 5,563,520
Reconstruction reserve (586,100) (586,100)
Share-based payment
reserve 17 690,126 600,305
Profit and loss account (8,479,134) (8,277,587)
------------ ------------
EQUITY ATTRIBUTABLE
TO OWNERS OF THE
PARENT 352,001 463,727
------------ ------------
SOVEREIGN MINES OF AFRICA PLC
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
2015 (restated) Share Share Reconstruction Share Profit Total
capital premium reserve based & loss
payment account
reserve
---------------------- ------------ ------------ --------------- ---------- -------------- --------------
GBP GBP GBP GBP GBP GBP
----------------------
Balance
at 1 January
2015 3,108,589 5,099,544 (586,100) 14,454 (6,286,097) 1,350,390
----------------------
Loss and
total comprehensive
income for
the year - - - - (1,991,490) (1,991,490)
---------------------- ------------ ---------- -------------- --------------
Share-based
payment
expense - - - 585,851 - 585,851
---------------------- ------------ ---------- -------------- --------------
Issue of
shares,
net of share
issue costs 55,000 463,976 - - - 518,976
---------------------- ------------ ------------ --------------- ---------- -------------- --------------
Balance
at 31 December
2015 3,163,589 5,563,520 (586,100) 600,305 (8,277,587) 463,727
---------------------- ------------ ------------ --------------- ---------- -------------- --------------
2016 Share Share Reconstruction Share Profit Total
capital premium reserve based & loss
payment account
reserve
---------------- ------------ ------------ --------------- ---------- -------------- ------------
GBP GBP GBP GBP GBP GBP
----------------
Balance
at 1 January
2016 3,163,589 5,563,520 (586,100) 600,305 (8,277,587) 463,727
----------------
Loss and
total
comprehensive
income
for the
year - - - - (201,547) (201,547)
---------------- ------------ ---------- -------------- ------------
Share-based
payment
expense - - - 89,821 - 89,821
----------------
Balance
at 31
December
2016 3,163,589 5,563,520 (586,100) 690,126 (8,479,134) 352,001
---------------- ------------ ------------ --------------- ---------- -------------- ------------
The Reconstruction reserve represents the difference between the
investment in the subsidiary and the share capital in the
subsidiary on acquisition.
SOVEREIGN MINES OF AFRICA PLC
CONSOLIDATED STATEMENT OF CASH FLOWS
Year ended 31 December 2016
Restated
2016 2015
--------------------------------- ---------------- ------------
GBP GBP
--------------------------------- ---------------- ------------
Cash flows from operating
activities
--------------------------------- ---------------- ------------
Loss before taxation (201,547) (1,991,490)
--------------------------------- ------------
Impairment losses on intangible
assets - 1,278,059
--------------------------------- ------------
Share-based payment expense 89,821 585,851
--------------------------------- ---------------- ------------
Increase in other receivables (2,438) -
--------------------------------- ---------------- ------------
Increase/(decrease) in
trade and other payables 12,440 (21,016)
--------------------------------- ---------------- ------------
Net cash from operating
activities (101,724) (148,596)
--------------------------------- ----------------
Cash flows from investing
activities
---------------------------------
Purchase of intangible
assets - (119,161)
--------------------------------- ---------------- ------------
Net cash used in investing
activities - (119,161)
--------------------------------- ---------------- ------------
Cash flows from financing
activities
---------------------------------
Issue of shares, net of
share issue costs - 518,976
--------------------------------- ---------------- ------------
Net cash flows from financing
activities - 518,976
---------------- ------------
(Decrease)/increase in
cash and cash equivalents (101,724) 251,219
---------------- ------------
Cash and cash equivalents
at beginning of year 501,170 249,951
---------------- ------------
Cash and cash equivalents
at end of year 399,446 501,170
---------------- ------------
1. BASIS OF ACCOUNTING
The financial information set out in this announcement does not
constitute the Group's statutory financial statements for the years
ended 31 December 2016 or 2015 but is derived from those financial
statements. Statutory financial statements for 2015 have been
delivered to the Registrar of Companies, and those for 2016 will be
delivered in due course.
The auditors have reported on the financial statements for the
year ended 31 December 2015; their report was unqualified and did
not contain statements under section 498 (2) or (3) of the
Companies Act 2006.
While the financial information included in this announcement
has been prepared in accordance with the recognition and
measurement criteria of International Financial Reporting Standards
(IFRSs) as endorsed for use in the European Union, this
announcement does not itself contain sufficient information to
comply with IFRSs.
The principal accounting policies adopted in the preparation of
the financial information in this announcement are set out in the
Company's full financial statements for the year ended 31 December
2016 and are consistent with those adopted in the financial
statements for the year ended 31 December 2015.
The Directors do not recommend the payment of a dividend (2015:
nil).
The Board approved this announcement on 31 May 2017.
2. OPERATING SEGMENTS
Operating segments are based on internal reports about
components of the Group, which are regularly reviewed by the
Chairman being the Chief Operating Decision Makers ("CODM") for
strategic decision making and resource allocation in order to
allocate resources to the segment and to assess its
performance.
The Group undertakes only one business activity as described in
the Director's report. All transactions between each reportable
segment are accounted for using the same accounting policies as the
Group uses, as set out in Note 3. Accordingly, the Group's
operating segments have been determined based on geographical
areas.
The Group has not generated revenue during the either of the
years ended 31 December 2016 or 31 December 2015. The Group's
results by reportable segment are as follows:
UK Guinea Group
As at 31 December GBP GBP GBP
2016
------------------- ---------- ------- ----------
RESULTS
Operating loss (207,526) (157) (207,683)
Interest income 6,136 - 6,136
UK Guinea Group
As at 31 December 2015 GBP GBP GBP
(restated)
------------------------ ---------- ------------ ------------
RESULTS
Operating loss (713,988) (1,278,059) (1,992,047)
Interest income 557 - 557
All transactions between each reportable segment are accounted
for using the same accounting policies as the Group uses, as set
out in Note 3. The Group's assets and liabilities by reportable
segment are as follows: -
UK Guinea Group
As at 31 December 2016 GBP GBP GBP
-------------------------- -------- ------- --------
ASSETS
Cash 399,446 - 399,446
Intangible assets - - -
Total assets 401,884 - 401,884
LIABILITIES
Trade and other payables 49,883 - 49,883
--------------------------- -------- ------- --------
UK Guinea Group
As at 31 December GBP GBP GBP
2015
------------------- -------- ------- --------
ASSETS
Cash 501,013 157 501,170
Intangible assets - - -
Total assets 249,795 - 249,795
LIABILITIES
Trade and other
payables 37,443 - 37,443
------------------- -------- ------- --------
3. STAFF COSTS
Restated
As at 31 December 2016 2015
GBP GBP
----------------------------- ------- ---------
Wages and salaries - 10,912
Social security costs - 2,811
Share based payment expense 89,821 585,851
89,821 599,574
----------------------------- ------- ---------
The average monthly number of Group employees during the year
was as follows:
2016 2015
As at 31 December Number Number
------------------- ------- -------
Directors 3 3
Employees - 5
3 8
------------------- ------- -------
All employees relating to the prior year were engaged in
exploration activities in Guinea. Accordingly, the employment costs
form part of the exploration costs included in the financial
statements as intangible assets.
No Directors' emoluments were paid during the year. Details of
transactions with Directors are set out in Note 18 to the financial
statements.
Jeremy Sparrow is not taking any fees in relation to his role as
Non-executive Director and has in lieu of such been granted
22,000,000 share warrants. Each warrant entitles him to subscribe
for one Ordinary Share at the price of 0.23 pence per share.
11,000,000 warrants may be exercised from 28 July 2016 until 29
July 2021. The remaining 11,000,000 warrants are exercisable on the
execution of a reverse takeover by the Company. See Note 17 for
further details.
4. TAXATION
2016 2015
As at 31 December GBP GBP
----------------------------------------- ----- -----
Analysis of the tax charge:
Current tax:
Tax
Total tax charge in the income statement - -
----------------------------------------- ----- -----
- -
----------------------------------------- ----- -----
Restated
2016 2015
As at 31 December GBP
GBP
----------------------------------- ---------- ------------------------
Reconciliation of the tax charge:
Current tax:
Tax
Loss before tax (201,547) (1,991,490)
Loss before tax multiplied by
standard rate of corporation tax
(20%)
in the UK of 20% (2015: 21%) (40,309) (398,298)
Effects of:
Non-deductible costs 18,169 372,906
Deferred tax not provided 22,140 25,392
----------------------------------- ---------- ------------------------
Total tax charge in the income -
statement -
----------------------------------- ---------- ------------------------
A deferred tax asset has not been recognised in respect of
deductible temporary differences relating to losses carried forward
at the year-end, as there is insufficient evidence that taxable
profits will be available in the foreseeable future against which
the deductible temporary difference can be utilised. The amount of
the asset not recognised is GBP569,446 (2015: GBP547,306).
A deferred tax asset has also not been recognised in respect of
deductible temporary differences relating to the cost of the equity
settled share based payments awards detailed in Note 16, as there
is insufficient evidence that taxable profits will be available in
the foreseeable future against which the deductible temporary
difference can be utilised. The amount of the asset not recognised
in 2016 is GBP162,526.
The assets would be recovered if the Group made taxable profits
in future years.
5. LOSS PER SHARE
Basic earnings per share is calculated by dividing the loss
attributable to ordinary shareholders by the weighted average
number of Ordinary shares outstanding during the period.
Restated
As at 31 December 2016 2015
Weighted average number
of ordinary shares in issue 860,858,955 312,363,590
Loss after taxation (GBP) (201,547) (1,991,490)
Loss per share (pence) (0.02) (0.64)
------------------------------ ------------ ------------
Due to there being a loss during the period there are no
dilutive transactions and therefore no diluted loss per share has
been presented.
6. INTANGIBLE ASSETS
Exploration
costs
GBP
--------------------------------------------- ------------
Cost
At 31 December 2015 4,972,103
Additions 119,161
At 31 December 2015 5,091,264
At 31 December 2016 5,091,264
Impairment
1 January 2015 3,813,205
Impairment charge 1,278,059
----------------------------------------- --- ------------
At 31 December 2015 5,091,264
----------------------------------------- --- ------------
At 31 December 2016 5,091,264
----------------------------------------- --- ------------
Net book value as at 31 December 2015 -
and 2016
---------------------------------------- ---- ------------
Exploration activities are deferred until a reasonable
assessment can be made of the existence or otherwise of
economically recoverable reserves. The Directors have reviewed the
carrying value of the exploration assets and an impairment
provision has been made to reflect their expected recoverable
value, in the light of discussions with potential strategic
partners.
The 2015 Impairment charges are included under "Administrative
expenses" in the Consolidated Statement of Comprehensive
Income.
7. ASSETS HELD FOR SALE
2016 2015
As at 31 December GBP GBP
------------------ ----- -----
Group
Intangible assets - -
------------------ ----- -----
As explained in the Directors Report, on 20 January 2017 the
Group sold its 75% interest in the Mandiana Gold Project to
Volcanic Gold Mines Inc ('Volcanic'), formerly Volcanic Metals
Corp, in exchange for 100% of the Company's shares in Sovereign
Mines of Africa Limited, the Company received 2,502,489 shares in
Volcanic, a company listed on TSX Venture Exchange, a stock
exchange in Canada. At the date of the transaction Volcanic's
shares had a share price of CAD$0.45 (approximately GBP0.28 per
share). This transaction meets the IFRS 5 'Non-current assets held
for sale and Discontinued operations' definition of held for sale
because the asset was available for immediate sale in its present
condition and the sale was highly probable at the balance sheet
date. There are no additional measurement differences on
reclassified to held for sale as the assets were fully impaired in
the prior year (see Notes 11 and 12).
8. TRADE AND OTHER PAYABLES
2016 2015
As at 31 December GBP GBP
------------------- ------- -------
Group
Accruals 49,883 37,443
------------------- ------- -------
9. SHARE CAPITAL
a) Share capital
The Company has one class of Ordinary share which carry no right
to fixed income nor have any preferences or restrictions
attached.
2016 2015
As at 31 December GBP GBP
--------------------------------- ---------- ----------
Issued and fully paid
860,859,050 Ordinary shares of
0.01p each (2015: 860,858,850) 3,163,589 86,086
310,858,850 Deferred shares of
0.99p - 3,077,503
--------------------------------- ---------- ----------
3,163,589 3,163,589
--------------------------------- ---------- ----------
b) Share issues during the year
Number Share Share Total
of shares capital premium
GBP GBP GBP
-------------------------- -------------- ---------- ---------- ----------
At 1 January 2015
(1.0p Ordinary shares) 310,858,850 3,108,589 5,099,544 8,208,133
Issue of shares during
year:
Ordinary shares (0.01p) 550,000,000 55,000 463,976 518,976
Subdivision of 1p 310,858,850 - - -
Ordinary shares into
0.99p Deferred shares
At 31 December 2015 1,171,717,700 3,163,589 5,563,520 8,727,109
Redemption of 0.99p (310,858,850) - - -
Deferred shares
Issue of Ordinary 200 - - -
shares (0.01p)
At 31 December 2016 860,859,050 3,163,589 5,563,520 8,727,109
-------------------------- -------------- ---------- ---------- ----------
On 30 June 2015, the Company's share capital was subdivided from
310,858,850 Ordinary shares of 1 pence each into 310,850,858
Ordinary shares of 0.1 pence each and 310,858,850 Deferred shares
of 0.99 pence each. On 30 December 2015, the Company raised
additional working capital of GBP550,000 through a placing of
550,000,000 new Ordinary shares with new and existing investors at
a price of 0.1p each.
On 22 June 2016, the Company redeemed all of the 310,858,850
deferred shares of 0.99 pence each (created as a result of the
subdivision in June 2015 of each of the Company's former ordinary
shares of 1.0 pence each into one ordinary share of 0.01 pence and
one deferred share of 0.99 pence) for 100 pence in aggregate, in
accordance with the rights attaching to such classes of shares. The
redemption was funded out of the proceeds of the subscription by
Lea Yeat Limited for 200 new Ordinary shares of 0.01 pence in the
Company for 0.5 pence each in cash, made for the purpose of such
redemption.
The Ordinary shares carry no right to fixed income nor have any
preferences or restrictions attached.
10. SHARE-BASED PAYMENTS
The Company has an unapproved share option scheme under which
options to subscribe for the Company's shares have been granted to
two directors. The vesting condition is the number of years'
service. The share options and warrants currently in existence were
granted and are exercisable as follows:
Share options
Date granted Exercise Number Vesting conditions Contractual
price of shares life remaining
(pence) (Years)
Between 28
28 June June 2013 and
2013 3 3,000,000 2018 June 2018 1.5
Between 18
November 2013
18 November and 18 November
2013 3 3,000,000 2018 1.9
Share warrants
Date granted Exercise Number Vesting conditions Contractual
price of shares life
(pence) remaining
(Years)
Upon execution
of a reverse
30 December takeover by
2015 0.1 125,000,000 the Company 4
Between 30
December 2015
30 December and 30 December
2015 0.1 125,000,000 2020 4
Between 28
18 July July 2016 and
2016 0.23 11,000,000 29 July 2021 4.6
Upon execution
of a reverse
18 July takeover by
2016 0.23 11,000,000 the Company 4
-------------- --------- ------------ ------------------- ----------------
The Directors did not exercise any share options or warrants
during 2016 (2015: none).
22,000,000 share warrants over Ordinary Shares were granted to
Jeremy Sparrow following his appointment as a Non-Executive
director on 18 July 2016. Jeremy Sparrow is not taking any fees in
relation to his appointment to the Board of the Company and has in
lieu of such been granted the 22,000,000 warrants. Each warrant
entitles him to subscribe for one Ordinary share at the price of
0.23 pence per share.
At the year-end, the market value of the Company's shares was
0.425p per share. The highest price during the year was 0.860p and
the lowest price was 0.225p. The share-based payment charge
relating to the share options and warrants granted to directors
amounted to GBP89,821 (2015 restated: GBP585,851).
The number and weighted average exercise prices of share options
and warrants are as follows:
Weighted average
Exercise
price (pence) Number of
shares
Granted in the year - -
Outstanding at year
end 0.17 256,000,000
Exercisable at the
year end 1.21 17,000,000
--------------------- ----------------- ------------
The estimated fair values of options and warrants which fall
under IFRS 2, and the inputs used in the Black-Scholes model to
calculate those fair values, are as follows:
At date
of grant
-------------------
Estimated Risk
Date fair Share Exercise Expected Expected Vesting free Expected
of value price price volatility Life period rate dividend
grant pence pence pence (%) (yrs) (yrs) (%) (%)
---------- ---------- ------- --------- ------------ --------- -------- ------ ----------
28.6.13 0.936 1.375 3.0 22 5 5 0.5 0
18.11.13 35 51 3.0 22 6 6 0.5 0
30.12.15 0.23 0.24 0.1 56 5 5 0.5 0
30.12.15 0.23 0.24 0.1 56 5 5 0.5 0
18.07.16 0.42 0.42 0.23 113 5 5 0.6 0
18.07.16 0.42 0.42 0.23 113 5 5 0.6 0
---------- ---------- ------- --------- ------------ --------- -------- ------ ----------
Expected volatility was determined by calculating the standard
deviation of daily continuously compounded returns of the Company's
share price calculated back from the date of grant. The expected
life used in the model has been adjusted, based on management's
best estimate, for the effects of non-transferability, exercise
restrictions, and behavioral considerations.
11. TRANSACTIONS WITH RELATED PARTIES
N A Steinberg, a former director and part-time Finance Director
who resigned during 2016, is a partner in Munslows LLP, a firm of
Chartered Certified Accountants. That firm charged fees of
GBP13,800 (2015: GBP20,000) excluding VAT to the Group in respect
of professional services in the period. Of the fees charged, GBPnil
(2015: GBP10,000 included in trade and other payables) was
outstanding at year end.
12. POSTING OF ACCOUNTS AND NOTICE OF AGM
The Report and Accounts for the period ended 31 December 2016
will shortly be available on the Company's website and will be sent
to registered shareholders by post shortly together with notice of
the Company's AGM.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR WGURCAUPMGQG
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