REG-Anglesey Mining PLC: Annual Report and Notice of AGM <Origin Href="QuoteRef">AYM.L</Origin> - Part 3
31/07/2017 07:05
- Part 3: For the preceding part double click ID:nPRrV294Fb
amount of any deferred tax assets is reviewed at each period end
date and reduced to the extent that it is no longer probable that sufficient
taxable profits will be available to allow all or part of the asset to be
recovered.
Deferred tax is calculated at the tax rates that are expected to apply in the
period when the liability is settled or the asset is realised. Deferred tax is
charged or credited in the income statement, except when it relates to items
charged or credited directly to equity, in which case the deferred tax is also
dealt with in equity.
The charge for current tax is based on the results for the year as adjusted
for items which are non-taxable or disallowed. It is calculated using rates
that have been enacted or substantively enacted by the balance sheet date.
Property, plant and equipment
The group’s freehold land is stated in the statement of financial position
at cost. The directors consider that the residual value of buildings, based on
prices prevailing at the date of acquisition and at each subsequent reporting
date as if the asset were already of the age and in the condition expected at
the end of its useful life, is such that any depreciation would not be
material.
Plant and office equipment are stated in the statement of financial position
at cost, less depreciation. Depreciation is charged on a straight line basis
at the annual rate of 25%. Residual values and the useful lives of these
assets are also reviewed annually.
Intangible assets - mineral property exploration and evaluation costs
Intangible assets are stated in the statement of financial position at cost,
less accumulated amortisation and provisions for impairment.
Costs incurred prior to obtaining the legal rights to explore a mineral
property are expensed immediately to the income statement. Mineral property
exploration and evaluation costs are capitalised until the results of the
projects, which are usually based on geographical areas, are known; these
include an allocation of administrative and management costs as determined
appropriate to the project by management.
Where a project is successful, the related exploration costs are amortised
over the life of the estimated mineral reserve on a unit of production basis.
Where a project is terminated, the related exploration costs are expensed
immediately. Where no internally-generated intangible asset can be recognised,
development expenditure is recognised as an expense in the period in which it
is incurred.
Impairment of tangible and intangible assets
The values of mineral properties are reviewed annually for indications of
impairment and when these are present a review to determine whether there has
been any impairment is carried out. They are written down when any impairment
in their value has occurred and are written off when abandoned. Where a
provision is made or reversed it is dealt with in the income statement in the
period in which it arises.
Investments
Investments in subsidiaries are shown at cost less provisions for impairment
in value. Income from investments in subsidiaries together with any related
withholding tax is recognised in the income statement in the period to which
it relates.
Investments which are not subsidiaries are shown at cost unless there is a
practical method of determining a reliable fair value, in which case that fair
value is used.
Impairment of investment
Financial assets are assessed for indicators of impairment at the end of each
reporting period. Financial assets are considered to be impaired when there is
objective evidence that, as a result of one or more events that occurred after
the initial recognition of the financial asset, the estimated future cash
flows of the investment have been affected.
For financial assets carried at amortised cost, the amount of the impairment
loss recognised is the difference between the asset's carrying amount and the
present value of estimated future cash flows, discounted at the financial
asset's original effective interest rate.
For an equity instrument that does not have a quoted price in an active
market, and that is not carried at fair value because its fair value cannot be
reliably measured, the amount of the impairment loss is measured as the
difference between the carrying amount of the financial asset and the present
value of estimated future cash flows discounted at the current market rate of
return for a similar financial asset.
Provisions
Provisions are recognised when the group has a present obligation as a result
of a past event and it is probable that the group will be required to settle
that obligation. Provisions are measured at the directors’ best estimate of
the expenditure required to settle that obligation at the end of the reporting
period and are discounted to present value where the effect is material.
Financial instruments
Financial assets and liabilities are initially recognised and subsequently
measured based on their classification as “loans and receivables”,
“available for sale financial assets” or “other financial
liabilities”.
Loans and receivables are non-derivative financial assets with fixed or
determinable payments that are not quoted in an active market. They are
included in current assets, except where they mature more than 12 months after
the period end date: these are classified as non-current assets.
(a) Trade and other receivables. Trade and other receivables are measured
at initial recognition at fair value and are subsequently measured at
amortised cost using the effective interest rate method. Appropriate
allowances for estimated irrecoverable amounts are recognised in the income
statement when there is objective evidence that the asset is impaired.
(b) Cash and cash equivalents. The group considers all highly liquid
investments which are readily convertible into known amounts of cash and have
a maturity of three months or less when acquired to be cash equivalents. The
management believes that the carrying amount of cash equivalents approximates
fair value because of the short maturity of these financial instruments.
(c) Available for sale financial assets. Unlisted shares held by the
group that are classified as being AFS are stated at cost on the basis that
the shares are not quoted and a reliable fair value is not able to be
estimated.
Dividends on AFS equity instruments are recognised in profit or loss when the
group’s right to receive the dividends is established.
The fair value of AFS monetary assets denominated in a foreign currency is
determined in that foreign currency and translated at the spot rate at the
balance sheet date. The foreign exchange gains and losses that are recognised
in profit or loss are determined based on amortised cost of the monetary
asset. Other foreign exchange gains and losses are recognised in other
comprehensive income.
(d) Trade and other payables. Trade payables are not interest bearing and
are initially recognised at fair value and subsequently measured at amortised
cost using the effective interest rate method.
(e) Deposits. Deposits are recognised at fair value on initial recognition
and are subsequently measured at amortised cost using the effective interest
rate method.
(f) Loans. Loans are recognised at fair value on initial recognition and are
subsequently measured at amortised cost using the effective interest rate
method.
Equity instruments
Equity instruments issued by the company are recorded at the proceeds
received, net of direct issue costs.
Leases
Leases are classified as finance leases whenever the terms of the lease
transfer substantially all the risks and rewards of ownership to the lessee.
All other leases are classified as operating leases.
Mining lease payments are recognised as an operating expense in the income
statement on a straight line basis over the lease term unless they relate to
mineral property exploration and evaluation in which case they are
capitalised. There are no finance leases or other operating leases.
New accounting standards
The group and company have adopted the amendments to the following accounting
standards interpretation:
Annual Improvements 2010 - 2012 cycle amendments to IFRS2, IFRS3, IFRS8,
IFRS13, IAS 16 and IAS24.
Annual Improvements 2012 - 2014 cycle amendments to IFRS5, IFRS7, IAS19 and
IAS34.
There has been no impact of adopting the amendments.
The group and the company have not applied the following IFRS, IAS and IFRICs
that are applicable and have been issued but are not yet effective:
*
Amendment to IAS 7 Statement of Cash Flows: Disclosure initiative. Effective 1
January 2017 and expected to be endorsed by the EU in Q2 2017. Early
application is permitted.
*
Amendment to IAS 12 Income Taxes: Recognition of deferred tax assets for
unrealised losses. Effective 1 January 2017 and expected to be endorsed by the
EU in Q2 2017.
Early Annual Improvements to IFRSs (2014 - 2016).
Effective 1 January 2017 and expected to be endorsed by the EU in Q3 2017.
*
Amendment to IAS 40 Investment Property: Transfers of investment property.
Effective 1 January 2018 and expected to be endorsed by the EU in Q3 2017.
Early application is permitted.
*
Amendment to IFRS 2 Share-based Payment: Classification and measurement of
share-based payment transactions. Effective 1 January 2018 and expected to be
endorsed by the EU in Q3 2017. Early application is permitted.
*
IFRS 9 Financial Instruments. Effective 1 January 2018. Early application is
permitted.
*
IFRS 15 Revenue from Contracts with Customers. Effective 1 January 2018. Early
application is permitted
*
Clarifications to IFRS 15 Revenue from Contracts with Customers. Effective 1
January 2018 and expected to be endorsed by the EU in Q2 2017. Early
application is permitted.
Annual Improvements to IFRSs (2014 - 2016).
Effective 1 January 2018 and expected to be endorsed by the EU in Q3 2017.
*
IFRIC 22 Foreign Currency Transactions and Advance Consideration. Effective 1
January 2018 and expected to be endorsed by the EU in Q3 2017. Early
application is permitted.
*
IFRS 16 Leases. Effective 1 January 2019 and expected to be endorsed by the EU
in Q4 2017. Early application is permitted with application of IFRS 15 Revenue
from Contracts with Customers.
The directors expect that the adoption of the above pronouncements (with the
possible exceptions of IFRS9 and IFRS16) will have no material impact to the
financial statements in the period of initial application other than
disclosure. IFRS 9 is still ongoing and yet to be adopted by the EU. The group
is not yet generating any revenue consequently the implementation of IFRS15
will have no impact at present. The directors have not yet assessed the full
impact IFRS16 on these financial statements.
The directors do not consider the adoption of the amendments resulting from
the Annual Improvements 2012 - 2014 cycle will result in a material impact on
the financial information of the group and company. These amendments to IFRS
5, IFRS 7, IAS 19 and IAS 34 are effective for accounting periods beginning on
or after 1 January 2016.
There have been no other new or revised International Financial Reporting
Standards, International Accounting Standards or Interpretations that are in
effect since that last annual report that have a material impact on the
financial statements.
Judgements made in applying accounting policies and key sources of estimation
uncertainty
The following critical judgements have been made in the process of applying
the group’s accounting policies:
(a) In determining the treatment of exploration and evaluation expenditures
the directors are required to make estimates and assumptions as to future
events and circumstances. There are uncertainties inherent in making such
assumptions, especially with regard to: ore resources and the life of a mine;
recovery rates; production costs; commodity prices and exchange rates.
Assumptions that are valid at the time of estimation may change significantly
as new information becomes available and changes in these assumptions may
alter the economic status of a mining unit and result in resources or reserves
being restated. Operation of a mine and the receipt of cashflows from it are
dependent on finance being available to fund the development of the property.
(b) In connection with possible impairment of assets the directors assess each
potentially cash generating unit annually to determine whether any indication
of impairment exists. The judgements made when doing so are similar to those
set out above and are subject to the same uncertainties. See note 10 for
further detail.
Nature and purpose of equity reserves
The share premium reserve represents the consideration that has been received
in excess of the nominal value of shares on issue of new ordinary share
capital, less any direct costs of issue. The currency translation reserve
represents the variations on revaluation of overseas foreign subsidiaries and
associates. The retained earnings reserve represents profits and losses
retained in previous and the current period.
3 Segmental information
The group is engaged in the business of exploring and evaluating the
wholly-owned Parys Mountain project in North Wales, managing its interest in
the Grangesberg properties and has an investment in the Labrador iron project
in eastern Canada. In the opinion of the directors, the group’s activities
comprise one class of business which is mine exploration, evaluation and
development. The group reports geographical segments; these are the basis on
which information is reported to the board. As yet there have been no site
expenses incurred in respect of the group’s interest in Grangesberg and
management expenses are included in the UK total.
Income statement analysis
2017 2016
UK Sweden Canada Total UK Sweden Canada Total
£ £ £ £ £ £ £ £
Expenses (141,022) - - (141,022) (112,279) - - (112,279)
Equity-settled employee benefits (9,479) - - (9,479) - - - -
Investment income 146 - - 146 335 - - 335
Finance costs (140,967) (16,824) - (157,791) (127,718) (14,749) - (142,467)
Exchange rate loss 136 42 - 178 (1,976) (63) - (2,039)
Loss for the year (291,186) (16,782) - (307,968) (241,638) (14,812) - (256,450)
Assets and liabilities
31 March 2017 31 March 2016
UK Sweden Canada Total UK Sweden Canada Total
£ £ £ £ £ £ £ £
Non-current assets 15,338,627 86,659 1 15,425,287 15,254,391 86,659 1 15,341,051
Current assets 414,655 1,241 - 415,896 43,069 1,194 - 44,263
Liabilities (3,282,725) (297,570) - (3,580,295) (3,038,460) (245,461) - (3,283,921)
Net assets/liabilities 12,470,557 (209,670) 1 12,260,888 12,259,000 (157,608) 1 12,101,393
4 Operating result
The loss before taxation for the year has been arrived at after charging/(crediting):
2017 2016
£ £
Fees payable to the group's auditor:
for the audit of the annual accounts 22,000 22,000
for the audit of subsidiaries' accounts 3,000 3,000
for other services - taxation compliance 2,000 2,000
for other services 800 800
Directors' remuneration - -
Foreign exchange (gain)/loss (178) 2,039
5 Staff costs
The average monthly number of persons employed (including executive directors) was:
2017 2016
Administrative 3 3
3 3
Their aggregate remuneration was: £ £
Wages and salaries 12,630 9,205
Social security costs 1,325 990
Other pension costs - -
13,955 10,195
Details of directors’ remuneration and share options are given in the
directors’ remuneration report.
6 Investment income
2017 2016
Loans and receivables £ £
Interest on bank deposits 6 63
Interest on site re-instatement deposit 140 272
146 335
7 Finance costs
2017 2016
Loans and payables £ £
Loan interest to Juno Limited 140,967 127,718
Loan interest to Eurmag AB 16,824 14,749
157,791 142,467
For both loans the interest shown is accrued and not required to be paid in
cash.
8 Taxation
Activity during the year has generated trading losses for taxation purposes
which may be offset against investment income and other revenues. Accordingly
no provision has been made for Corporation Tax. There is an unrecognised
deferred tax asset at 31 March 2017 of £1.3 million (2016 - £1.2 million)
which, in view of the group’s trading results, is not considered by the
directors to be recoverable in the short term. There are also capital
allowances, including mineral extraction allowances, of £12.5 million
unclaimed and available at 31 March 2017 (2016 - £12.5 million). No deferred
tax asset is recognised in respect of these allowances.
2017 2016
£ £
Current tax - -
Deferred tax - -
Total tax - -
Domestic income tax is calculated at 20% of the estimated assessed profit for the year.
In 2016 the rate used was 20%.
Taxation for other jurisdictions is calculated at the rates prevailing in the relevant
jurisdictions.
The total charge for the year can be reconciled to the accounting profit or loss as follows:
Loss for the year (307,968) (256,450)
Tax at the domestic income tax rate of 20% (2016 - 20%) (61,594) (51,290)
Tax effect of:
Expenses that are not deductible in determining taxable result: - -
Equity-settled employee benefits 1,896 -
Unrecognised deferred tax on losses 59,698 51,290
Total tax - -
9 Earnings per ordinary share
2017 2016
£ £
Earnings
Loss for the year (307,968) (256,450)
Number of shares
Weighted average number of ordinary shares for the purposes of basic earnings per share 164,276,544 160,608,051
Shares deemed to be issued for no consideration in respect of employee options
Weighted average number of ordinary shares for the purposes of diluted earnings per share 164,276,544 160,608,051
Basic earnings per share (0.2)p (0.2)p
Diluted earnings per share (0.2)p (0.2)p
As the group has a loss for the year ended 31 March 2017 the effect of the
outstanding share options is anti-dilutive and diluted earnings are reported
to be the same as basic earnings.
10 Mineral property exploration and evaluation costs - group
Parys Mountain
Cost £
At 1 April 2015 14,877,193
Additions - site 27,045
Additions - rentals & charges 22,388
At 31 March 2016 14,926,626
Additions - site 60,886
Additions - rentals & charges 23,310
At 31 March 2017 15,010,822
Carrying amount
Net book value 2017 15,010,822
Net book value 2016 14,976,059
Included in the additions are mining lease expenses of £16,366 (2016 -
£16,200).
Potential impairment of mineral property
Accumulated exploration and evaluation expenditure in respect of the Parys
Mountain property is carried in the financial statements at cost less any
impairment provision, the need for which is reviewed each year.
This year the directors carried out an impairment review with an effective
date of 26 March 2017. The directors determined that value-in-use was the
appropriate methodology for calculating the recoverable amount of the Parys
project, as they consider the asset to be at the development stage from a
project perspective, given the ongoing scoping study work, the existence of
site infrastructure, the existing 300 metre shaft, 900 metres of horizontal
underground development, completed metallurgical testing and current valid
planning permission and as they are considering various options regarding
developing the asset further which will lead to expected future cash inflows.
In calculating the value in use, the directors have included the cash outflows
that are expected to be incurred before the asset is ready for use. The
calculation of the recoverable amount was based on the pre-tax discounted
future cash flows from the development and operation of the project at a
throughput of 500 tonnes per day over the initial projected mine life of 16
years during which time the indicated resources of 2.1 million tonnes would be
mined. The financial model included an assumption of a two year delay before
construction activities commence. There may be unexpected further delays due
to adverse changes in future mineral prices or delays in respect of financing.
The directors used past experience and an assessment of future conditions,
together with external sources of information, to determine the assumptions
which were adopted in the preparation of the financial model used to estimate
the cashflows.
Key assumptions
*
Mine plan with development and mining of the indicated resources of 2.1
million tonnes only without inclusion of any of the 4.1 million tonnes of
inferred resources;
*
Capital costs estimated at current costs when the expenditure is planned to be
incurred. Revenues and operating costs do not take into account any inflation;
*
Long-term estimates of metal prices were made by the directors and were as
follows: zinc 1.25 US$/lb; copper 2.50 US$/lb; lead 1.00 US$/lb; silver
US$17.50 per ounce and gold US$1275 per ounce. Exchange rate US$1.25/£1.00;
*
A discount rate of 10% was considered by the directors to be appropriate and
has been applied to the estimated future cashflows. The discount rate was
selected by considering the estimated cost of capital and the time value of
money, reviewing discount rates applied by other mining companies, and finally
considering the risks associated with the project due to its location in the
United Kingdom with excellent access to existing infrastructure and readiness
for development, which were considered to be at the lower level, together with
the directors’ allowance for unforeseen risks.
Sensitivities
The sensitivity of the assumptions used in the cashflow model which would
significantly affect the pre-tax discounted net present value of the projected
Parys cashflows were tested. The sensitivities which follow are the variation
expressed in percent of each specific assumption which would, on its own,
reduce the calculated net present value to the carrying value of the
intangible asset in the accounts: copper price -36%, zinc price -10%, lead
price -24%, capital expenditure +15%, operating costs +18%, the discount rate
+16% (that is a 16% increase in the discount rate applied, not an increase of
16 percentage points) and a reduction in tonnage mined of 23%. The effect of
an increased delay before the commencement of project development would be to
decrease the net present value by 9% for each year of delay. The directors
consider the sensitivities resulting from the changes in assumptions stated
above to be reasonably possible.
Other than the typical mining industry risk factors already taken into
consideration in the mine plan underlying the net present value calculation
the directors are not aware of any other risks which it would be reasonable to
consider when reviewing these sensitivities.
There are significant inferred resources available to the project, the value
of which is not included in the cash flow model as the inferred resources were
not incorporated in the underlying mine plan. It is expected that a high
proportion of these inferred resources will be converted to indicated
resources, or probable reserves, once exploration drilling from underground
takes place. Development and mining of these additional resources would
increase the projected life of the mine.
Conclusion
Based on the above parameters the directors concluded that no impairment
provision is necessary or appropriate to the carrying value of the exploration
and evaluation expenditure in respect of the Parys Mountain project. However
estimates of the net present value of any project, and particularly one like
Parys Mountain, are always subject to many factors and wide margins of error.
The directors believe that the estimates and calculations supporting their
conclusions have been carefully considered and represent a fair representation
of value in use of the property.
11 Property, plant and equipment
Group Freehold land and property Plant & equipment Office equipment Total
Cost £ £ £ £
At 31 March 2015, 2016 and 2017 204,687 17,434 5,487 227,608
Depreciation
At 31 March 2015, 2016 and 2017 - 17,434 5,487 22,921
Carrying amount
At 31 March 2015, 2016 and 2017 204,687 - - 204,687
Company Freehold land and property Plant & equipment Office equipment Total
Cost £ £ £ £
At 31 March 2015, 2016 and 2017 - 17,434 5,487 22,921
Depreciation
At 31 March 2015, 2016 and 2017 - 17,434 5,487 22,921
Carrying amount
At 31 March 2015, 2016 and 2017 - - - -
12 Subsidiaries - company
The subsidiaries of the company at 31 March 2017 and 2016 were as follows:
Name of company Country of incorporation Percentage owned Principal activity
Parys Mountain Mines Limited (1) England & Wales 100% Development of the Parys Mountain mining property
Parys Mountain Land Limited (1) England & Wales 100% Holder of part of the Parys Mountain property
Parys Mountain Heritage Limited (1) England & Wales 100% Holder of part of the Parys Mountain property
Labrador Iron plc (2) Isle of Man 100% Holder of the company’s investment in Labrador Iron Mines Holdings Limited
Angmag AB (3) Sweden 100% Holder of the company’s investment in GIAB
Anglo Canadian Exploration (Ace) Limited (1) England & Wales 100% Dormant
Registered office addresses:
1. - Parys Mountain, Amlwch, Anglesey, LL68 9RE
2. - Fort Anne, Douglas, Isle of Man, IM1 5PD
3. - Angmag AB, Box 1703, 111 87 Stockholm, Sweden
13 Investments - company
Shares at cost Capital contributions Total
£ £ £
At 1 April 2015 104,025 14,013,001 14,117,026
Advanced - 27,101 27,101
At 31 March 2016 104,025 14,040,102 14,144,127
Advanced - 84,425 84,425
At 31 March 2017 104,025 14,124,527 14,228,552
The realisation of investments is dependent on finance being available for
development and on a number
of other factors. Interest is not charged on capital contributions.
14 Investments - group
Labrador Grangesberg Total
£ £ £
At 1 April 2015 1 86,659 86,660
Addition during period - -
At 31 March 2016 1 86,659 86,660
Addition during period - - -
At 31 March 2017 1 86,659 86,660
LIM
The group’s investment in LIM is now classified as ‘unquoted’. Based on
the difficulty of determining a fair market value the directors decided in
2015 to write down the value of the LIM shares to a nominal value of £1 and
to reclassify it as Level 3 rather than Level 1 under the IFRS fair value
hierarchy. This treatment has been continued in 2016 and 2017.
Grangesberg
The group has, through its Swedish subsidiary Angmag AB, a 6% ownership
interest in GIAB, a Swedish company which holds rights over the Grangesberg
iron ore deposits. This investment has been initially recognised and
subsequently measured at cost, on the basis that the shares are not quoted and
a reliable fair value is not able to be estimated. The group has a right of
first refusal (expiring on 30 June 2018) over a further 51% of the equity of
GIAB together with management direction of the activities of GIAB, subject to
certain restrictions. The group has significant influence over certain
relevant activities of GIAB however equity accounting has not been applied in
respect of this influence as the directors consider this would not have any
material affect.
15 Deposit
Group
2017 2016
£ £
Site re-instatement deposit 123,118 123,078
This deposit was required and made under the terms of a Section 106 Agreement
with the Isle of Anglesey County Council which has granted planning
permissions for mining at Parys Mountain. The deposit is refundable upon
restoration of the permitted area to the satisfaction of the Planning
Authority. The carrying value of the deposit approximates to its fair value.
16 Other receivables
Group Company
2017 2016 2017 2016
£ £ £ £
Other 23,603 32,759 12,759 15,433
The carrying value of the receivables approximates to their fair value.
17 Cash and cash equivalents
Group Company
2017 2016 2017 2016
£ £ £ £
Held in sterling 389,734 9,120 388,880 7,867
Held in Canadian dollars 1,318 1,190 - -
Held in US dollars 467 408 - -
Held in Swedish krona 774 786 - -
392,293 11,504 388,880 7,867
The carrying value of the cash approximates to its fair value.
18 Trade and other payables
Group Company
2017 2016 2017 2016
£ £ £ £
Trade payables (46,557) (77,465) (46,572) (64,142)
Other accruals (68,000) (58,794) (60,999) (53,293)
(114,557) (136,259) (107,571) (117,435)
The carrying value of the trade and other payables approximates to their fair
value.
19 Loans
Group Company
2017 2016 2017 2016
£ £ £ £
Loan from Juno Limited (3,118,168) (2,852,201) (3,118,168) (2,852,201)
Loan from Eurmag AB (297,570) (245,461) - -
(3,415,738) (3,097,662) (3,118,168) (2,852,201)
Juno: Apart from advances amounting to £125,000 there has been no change in
the loan principal during the year. The loan is provided under a working
capital agreement, denominated in sterling, unsecured and carries interest at
10% per annum on the principal only. It is repayable from any future financing
undertaken by the company, or on demand following a notice period of 367 days.
The terms of the facility were approved by an independent committee of the
board. The carrying value of the loan approximates to its fair value.
Eurmag: The loan arose in connection with the acquisition of the investment in
Grangesberg. It is the subject of a letter agreement, denominated in Swedish
Krona, is unsecured and carries interest at 6.5% per annum on the principal
only. It is repayable from any future financing undertaken by the company, or
on demand following a notice period of 367 days. The terms of the facility
were approved by an independent committee of the board. The carrying value of
the loan approximates to its fair value.
20 Long term provision
Group
2017 2016
£ £
Provision for site reinstatement (50,000) (50,000)
The provision for site reinstatement covers the estimated costs of
reinstatement at the Parys Mountain site of the work done and changes made by
the group up to the date of the accounts. These costs would be payable on
completion of mining activities (which is estimated to be more than 20
years’ after mining commences) or on earlier abandonment of the site. The
provision has not been discounted because the impact of doing so is not
material to the financial statements. There are significant uncertainties
inherent in the assumptions made in estimating the amount of this provision,
which include judgements of changes to the legal and regulatory framework,
magnitude of possible contamination and the timing, extent and costs of
required restoration and rehabilitation activity.
21 Share capital
Ordinary shares of 1p Deferred shares of 4p Total
Issued and Nominal Number Nominal Number Nominal
fully paid value £ value £ value £
At 31 March 2015 and 2016 1,606,081 160,608,051 5,510,833 137,770,835 7,116,914
Shares issued for cash 170,000 17,000,000 - - 170,000
At 31 March 2017 1,776,081 177,608,051 5,510,833 137,770,835 7,286,914
-
The deferred shares are non-voting, have no entitlement to dividends and have
negligible rights to return of capital on a winding up.
On 14 December 2016 12,000,000 ordinary shares with an aggregate nominal value
of £120,000 were issued for cash by way of a placing at 2.585 pence each and
on 20 March 2017 5,000,000 ordinary shares with an aggregate nominal value of
£50,000 were allotted for cash by way of a placing at 4.5 pence each.
22 Equity-settled employee benefits
The group has two share-based employee remuneration plans: the 2004 Unapproved
share option plan which plan has now closed (and no options were granted or
forfeited in the year) and the current 2014 Unapproved share option plan. The
terms of these are very similar; each plan provides for a grant price equal to
or above the average quoted market price of the ordinary shares for the three
trading days prior to the date of grant. All options granted to date have
carried a performance criterion, namely that the company's share price
performance from the date of grant must exceed that of the companies in the
top quartile of the FTSE 100 index. The vesting period for any options granted
since 2004 has been one year. Options are forfeited if the employee leaves
employment with the group before the options vest.
2017 2016
Options Weighted average exercise price in pence Remaining contractual life in years Options Weighted average exercise price in pence Remaining contractual life in years
Outstanding at beginning of period 4,500,000 19.27 6,050,000 17.06
Granted during the period 3,500,000 2.00 - -
Forfeited during the period - - - -
Exercised during the period - - - -
Expired during the period - - 1,550,000 4.13
Outstanding at the end of the period 8,000,000 11.72 2.5 4,500,000 19.27 1.9
Exercisable at the end of the period 4,500,000 19.27 0.9 4,500,000 19.27 1.9
The group recognised expenses of £9,479 in respect of equity-settled employee
remuneration in respect of the year ended 31 March 2017 (2016 – nil). The
inputs to the Black-Scholes model used in the calculation of this amount were
as follows:
2017
Weighted average share price in pence 1.30
Weighted average exercise price in pence 2.00
Expected volatility 75%
Expected life 3
Risk free rate 5%
Expected dividends -
Expected volatility was determined by calculating the historical volatility
of the share price over the previous three years. The expected life used in
the model has been adjusted, based on management’s best estimate, for the
effects of non-transferability, exercise restrictions and behavioural
considerations.
A summary of options granted and outstanding, all of which are over ordinary
shares of 1 pence, is as follows:
Scheme Number Nominal value £ Exercise price Exercisable from Exercisable until
2004 Unapproved 3,800,000 38,000 21.90p 26 November 2008 26 November 2017
2004 Unapproved 700,000 7,000 5.00p 27 March 2010 27 March 2019
2014 Unapproved 3,500,000 35,000 2.00p 30 September 2017 30 September 2021
Total 8,000,000 80,000
23 Results attributable to Anglesey Mining plc
The loss after taxation in the parent company amounted to £295,855 (2016
loss £242,692). The directors have taken advantage of the exemptions
available under section 408 of the Companies Act 2006 and not presented an
income statement for the company alone.
24 Financial instruments
Capital risk management
There have been no changes during the year in the group’s capital risk
management policy.
The group manages its capital to ensure that entities in the group will be
able to continue as going concerns while optimising the debt and equity
balance. The capital structure of the group consists of debt, which includes
the borrowings disclosed in note 19, the cash and cash equivalents and equity
comprising issued capital, reserves and retained earnings.
The group does not enter into derivative or hedging transactions and it is the
group's policy that no trading in financial instruments be undertaken. The
main risks arising from the group's financial instruments are currency risk
and interest rate risk. The board reviews and agrees policies for managing
each of these risks and these are summarised below.
Interest rate risk
The amounts advanced under the Juno loans are at a fixed rate of interest of
10% per annum and those from Eurmag are at a fixed rate of 6.5% per annum. As
a result the group is not exposed to interest rate fluctuations. Interest
received on cash balances is not material to the group’s operations or
results.
The company (Anglesey Mining plc) is exposed to minimal interest rate risks.
Liquidity risk
The group has ensured continuity of funding through a mixture of issues of
shares and the working capital agreement with Juno Limited.
Trade creditors are payable on normal credit terms which are usually 30 days.
The loans due to Juno and Angmag carry a notice period of 367 days. Juno, in
keeping with its practice since drawdown commenced more than 10 years ago, has
indicated that it has no current intention of demanding repayment. No such
notice had been received by 18 July 2017 in respect of either of the loans and
they are classified as having a maturity date between one and two years from
the period end.
Currency risk
The presentational currency of the group and company is pounds sterling. The
loan from Juno Limited is denominated in pounds sterling. As a result, the
group has no currency exposure in respect of this loan. Currency risk in
respect of the investment in LIM is no longer significant.
In respect of the investment in Grangesberg in Sweden if the rate of exchange
between the Swedish Krona and sterling were to weaken against sterling by 10%
there would be a loss to the group of £9,138 (2016 - £8,768) and if it were
to move in favour of sterling by a similar amount there would be a gain of
£11,168 (2016 - £10,716). Regarding liabilities denominated in Krona if the
rate of exchange between the Swedish Krona and sterling were to weaken against
sterling by 10% there would be a gain to the group of £27,052 (2016 -
£22,315) and if it were to move in favour of sterling by a similar amount
there would be a loss of £33,063 (2016 - £27,273). These gains or losses
would be recorded in other comprehensive income.
Potential exchange variations in respect of other foreign currencies are not
material.
Credit risk
The directors consider that the entity has limited exposure to credit risk as
the entity has immaterial receivable balances at the year-end on which a third
party may default on its contractual obligations. The carrying amount of the
group’s financial assets represents its maximum exposure to credit risk.
Cash is deposited with BBB or better rated banks.
Group Available for sale assets Loans & receivables
31 March 2017 31 March 2016 31 March 2017 31 March 2016
£ £ £ £
Financial assets
Investments 1 1 - -
Deposit - - 123,118 123,078
Other receivables - - 23,603 32,759
Cash and cash equivalents - - 392,293 11,504
- -
1 1 539,014 167,341
Company
Loans & receivables
31 March 2017 31 March 2016
£ £
Financial assets
Other receivables 12,759 15,433
Cash and cash equivalents 388,880 7,867
Financial liabilities
Trade & other payables - -
Loan - -
401,639 23,300
25 Related party transactions
Transactions between Anglesey Mining plc and its subsidiaries are summarised
in note 13.
Juno Limited
Juno Limited (Juno) which is registered in Bermuda holds 32.6% of the
company’s issued ordinary share capital. The group has the following
agreements with Juno: (a) a controlling shareholder agreement dated September
1996 and (b) a consolidated working capital agreement of 12 June 2002.
Interest payable to Juno is shown in note 7 and the balance due to Juno is
shown in note 19. Except as set out in note 19, there were no transactions
between the group and Juno or its group during the year. Danesh Varma is a
director and, through his family interests, a significant shareholder of Juno.
Grangesberg
Bill Hooley and Danesh Varma are directors of Grangesberg Iron AB and of the
special purpose vehicle Eurmag AB; Danesh Varma has been associated with the
Grangesberg project since 2007 when he became a director of Mikula Mining
Limited, a company subsequently renamed Eurang Limited, previously involved in
the Grangesberg project. He did not take part in the decision to enter into
the Grangesberg project when this was approved by the board. The group has a
liability to Eurmag AB a subsidiary of Eurang amounting to £297,570 at the
year end (2016 – £245,461) – see note 19.
Key management personnel
All key management personnel are directors and appropriate disclosure with
respect to them is made in the directors’ remuneration report.
There are no other contracts of significance in which any director has or had
during the year a material interest.
26 Mineral holdings
Parys
(a) Most of the mineral resources delineated to date are under the western
portion of Parys Mountain, the freehold and minerals of which are owned by the
group. A royalty of 6% of net profits after deduction of capital allowances,
as defined for tax purposes, from production of freehold minerals is payable.
The mining rights over and under this area, and the leasehold area described
in (b) below, are held in the Parys Mountain Mines Limited subsidiary.
(b) Under a lease from Lord Anglesey dated December 2006, the subsidiary Parys
Mountain Land Limited holds the eastern part of Parys Mountain, formerly known
as the Mona Mine. An annual certain rent of £10,866 is payable for the year
beginning 23 March 2016; the base part of this rent increases to £20,000 when
extraction of minerals at Parys Mountain commences; this rental is
index-linked. A royalty of 1.8% of net smelter returns from mineral sales is
also payable. The lease may be terminated at 12 months’ notice and otherwise
expires in 2070.
(c) Under a mining lease from the Crown dated December 1991 there is an annual
lease payment of £5,000. A royalty of 4% of gross sales of gold and silver
from the lease area is also payable. The lease may be terminated at 12
months’ notice and otherwise expires in 2020.
Lease payments
All the group’s leases may be terminated with 12 months’ notice. If they
are not so terminated, the minimum payments due in respect of the leases and
royalty agreement are analysed as follows: within the year commencing 1 April
2017 - £Error! Not a valid link.; between 1 April 2017 and 31 March 2023 -
£Error! Not a valid link.. Thereafter the payments will continue at
proportionate annual rates, in some cases with increases for inflation, for so
long as the leases are retained or extended.
27 Material non cash transactions
There were no material non-cash transactions in the year.
28 Commitments
Other than commitments under leases (note 26) there is no capital expenditure
authorised or contracted which is not provided for in these accounts (2016 -
nil).
29 Contingent liabilities
There are no contingent liabilities (2016 - nil).
30 Events after the period end
There are no events after the period end to report.
Glossary
AGM - the annual general meeting to be held on 1 September 2017.
GIAB - Grangesberg Iron AB, a privately owned Swedish company which has a 25
year mining permit covering iron deposits at Grangesberg in Sweden.
JORC - Australasian Joint Ore Reserves Committee - a set of
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