REG - Atalaya Mining PLC - Final Results <Origin Href="QuoteRef">ATYM.L</Origin> - Part 2
06/04/2017 07:06
- Part 2: For the preceding part double click ID:nRSF7360Ba
statements.
The Directors are responsible for maintaining proper accounting records, for safeguarding the assets of the Group and for
taking reasonable steps for the prevention and detection of fraud and other irregularities. Legislation in Cyprus
governing the preparation and dissemination of the financial statements may differ from legislation in other
jurisdictions.
Going concern
Operations at Proyecto Riotinto started in February 2016 and the Group has generated significant operational cash flows
during the year. Accordingly, the Directors have a reasonable expectation that the mining operation and the Group have
adequate resources to continue in operational existence for the foreseeable future. See Note 2.1 for further information.
Creditors' payment terms
The Company does not have a specific policy towards our suppliers and does not follow any code or standard practice.
However, terms of payment with suppliers are settled when agreeing overall terms of business, and the Company seeks to
abide by the terms of the contracts to which it is bound.
Political and charitable donations
The Group made no political and no charitable donations during the year ended 31 December 2016 (2015: Enil).
Corporate Social Responsibility
Our communities
Atalaya Mining is committed to being a responsible corporate citizen every day by managing the environmental and social
impact of its mining operations in a conscientious and sensitive manner.
Our strategy is to ensure that relations with institutions, society and the environment are led by transparency in our
commercial activities, the appropriate degree of interaction with stakeholders and the maximum responsibility and
accountability in all our operations.
Directors' report (continued)
Corporate Social Responsibility (continued)
Sustainable development
Atalaya Mining is committed to achieving development that provides benefits for those regions where it operates, without
compromising the ability of future generations to meet their own needs both economically and environmentally. Atalaya will
endeavour to achieve excellence in environmental performance abiding by environmental standards beyond those set by
international regulations.
Our people
Atalaya operates within a favourable framework for labour relations based on a non-discriminatory, equal opportunities
system that respects diversity and facilitates communication at all levels. The Company provides a healthy and safe working
environment by implementing the best available international practices and procedures.
Communication
Atalaya Mining advocates the establishment of broad communication channels and seeks opportunities for conversation with
the various stakeholders to ensure that business objectives remain in tune with social needs and expectations. The Company
will always seek to provide relevant, transparent and accurate information about its activities and encourage continuous
improvement.
Principal risks and uncertainties
The Company's principal risks and management objectives and policies are described in Note 2 and Note 3 to the financial
statements.
Board of Directors
There were no significant changes in the responsibilities or in the remuneration of the Board of Directors.
Events after the reporting period
Any significant events that occurred after the end of the reporting period are described in Note 35 to the financial
statements.
Auditors
The Group is currently reviewing its audit arrangements including the appropriateness of a tender for the year ended 31
December 2017, and an appropriate resolution will be proposed at the next Annual General Meeting.
By order of the board
Inter Jura CY (Services) Limited,
Secretary
Nicosia, Cyprus
5 April 2017
Independent Auditors' Report
To the shareholders of Atalaya Mining Plc
Report on the consolidated financial statements
We have audited the accompanying consolidated financial statements of Atalaya Mining Plc (the "Company") and its
subsidiaries (together with the Company, the "Group"), which comprise the consolidated statements of financial position as
at 31 December 2016 and 2015, and the consolidated income statements, statements of changes in equity and statements of
cash flows for the years then ended, and a summary of significant accounting policies and other explanatory information.
Management's responsibility for the consolidated financial statements
Management is responsible for the preparation and fair presentation of these consolidated financial statements in
accordance with International Financial Reporting Standards, and for such internal control as management determines is
necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud
or error.
Auditors' responsibility
Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted
our audits in accordance with Canadian generally accepted auditing standards. Those standards require that we comply with
ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements
are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated
financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of
material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk
assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the
consolidated financial statements in order to design audit procedures that are appropriate in the circumstances, but not
for the purpose of expressing an opinion on the effectiveness of the entity's internal control. An audit also includes
evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by
management, as well as evaluating the overall presentation of the consolidated financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit
opinion.
Opinion
In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of
Atalaya Mining Plc and its subsidiaries as at 31 December 2016 and 2015 and their financial performance and their cash
flows for the years then ended in accordance with International Financial Reporting Standards.
Chartered Professional Accountants
Licensed Public Accountants
Mississauga, Ontario
5 April 2017
Independent auditor's report
To the Members of ATALAYA MINING PLC
Report on the Audit of the consolidated financial statements
We have audited the consolidated and separate financial statements of Atalaya Mining Plc (the "Company"), and its
subsidiaries (the "Group"), which are presented in pages 22 to 71 and comprise the consolidated and separate statement of
financial position as at 31 December 2016, and the consolidated and separate statements of profit or loss and other
comprehensive income, the consolidated and separated changes in equity and the consolidated and separated statements of
cash flows for the year then ended, and the notes to the consolidated and separate financial statements, including a
summary of significant accounting policies.
In our opinion, the accompanying consolidated and separated financial statements give a true and fair view of the
consolidated financial position of the Company and the Group as at 31 December 2016, and of its consolidated and separate
financial performance and its consolidated and separate cash flows for the year then ended in accordance with International
Financial Reporting Standards (IFRSs) as adopted by the European Union and the requirements of the Cyprus Companies Law,
Cap. 113.
Basis for Opinion
We conducted our audit in accordance with International Standards on Auditing (ISAs). Our responsibilities under those
standards are further described in the Auditor's Responsibilities for the Audit of the Consolidated and Separate Financial
Statements section of our report. We are independent of the Group in accordance with the International Ethics Standards
Board for Accountants' Code of Ethics for Professional Accountants (IESBA Code) together with the ethical requirements that
are relevant to our audit of the consolidated and separate financial statements in Cyprus, and we have fulfilled our other
ethical responsibilities in accordance with these requirements and the IESBA Code. We believe that the audit evidence we
have obtained is sufficient and appropriate to provide a basis for our opinion.
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the
consolidated and separate financial statements of the current period. These matters were addressed in the context of our
audit of the consolidated and separate financial statements as a whole, and in forming our opinion thereon, and we do not
provide a separate opinion on these matters. The key audit matters noted below relate to the consolidated and separated
financial statements.
Key audit matter How our audit addressed the key audit matter
Deferred consideration for Proyecto Riotinto (note 27 in the financial statements)
Pursuant to the purchase of the Rio Tinto Copper Mine, the Group was contingently liable to pay an additional E53 million to the vendor. In October 2014, the Group obtained legal advice which stated that if the restart of the project is funded through issue of shares, this funding would not be considered as senior debt facility and therefore the conditions triggering the payment of the deferred consideration would not be satisfied. The case in the High Courts of Justice regarding the claim by Astor for the payment of deferred consideration has now been heard and the final judgment was issued on 6 March 2017. We have reviewed management's correspondence with legal advisors and communicated with the legal advisors directly and obtained
the approved judgment of the judge dated 6 March 2017. Based on the judgment received and discussions with the client, we have
ensured that the provision that the client has made in the financial statements, after the judgment was given, for the deferred
consideration is appropriate.
Impairment of PP&E and intangibles (note 13 and 14 in the financial statements)
The Group's two largest assets are its plant property and equipment (PP&E) along with the intangible assets related to the Rio Tinto Copper Mine, for which significant estimates and assumptions are required. Significant estimates and assumptions are required in the determination of the depreciation of PP&E. We focused our testing of the impairment of P&E and intangibles on the key assumptions made by management.Our audit procedures
included:Ø Reviewing management's impairment assessment and ensuring it is in line with IAS 36 Impairment of Assets.Ø We
referenced the geological reports on the Rio Tinto Mine in conjunction with the valuation model to ensure the book value of the
assets is recoverable.Ø We reviewed the depreciation calculations to ensure that they are accurate, that the useful life used
for each class of assets is appropriate and the allocation of depreciation to operating costs and inventory is appropriate.
Going Concern (note 2 (b) in the financial statements)
Although the Group started production in February 2016 and commissioning of expansion in May 2016, the results for the period 1 January 2016 to 30 September 2016 show losses. Commercial production was declared in February 2016 and the expansion project was declared mechanically complete in May 2016. We assessed and challenged the assumptions that management made in assessing the going concern with a focus on the adequacy of
the future cash flow projections to ensure viability of the project. This included:Ø Reviewing actual results and comparing them
to management budget for 2016 to assess reasonableness of management estimates and if the budget for 2017 prepared by management
is considered reliable.Ø Reviewing the appropriateness of the models utilised by management's expertØ Assessing the competence
and experience of management's expertØ Testing the inputs into the model and the reasonableness of the ranges to the sensitivity
of the inputs.Ø Analyzing the future projected cash flows used in the model to determine whether they are reasonable and
supportable given the current macroeconomic climate and expected future performance of the company.
Rehabilitation provision (note 13 and note 26 in the financial statements)
Recognition of rehabilitation provision and or provision for decommissioning is based on management estimates of future costs to remediate environmental disturbance. In considering the appropriateness of the rehabilitation provision we reviewed all recent information relating to the
rehabilitation provision and its reliable measurement. We reviewed management's rehabilitation calculations to ensure the
estimates and assumptions were reasonable. In addition, we assessed the need for separate disclosure in the year-end financial
statements of any adjustments that would have been necessary if the company had made rehabilitation costs adjustments at the
quarterly reports.
Deferred tax
The Company has recognised a deferred tax asset related to loss carry forwards in Spain which is based on management's estimate of the probability of future utilization of the assets against future taxable income. We evaluated the recognition and measurement of the deferred tax assets and liabilities as follows:Ø We reviewed management's assessment and ensured it is in compliance with IAS 12.Ø We analysed the current and deferred tax calculations for compliance with
the relevant tax legislation.Ø We evaluated management's assessment of the estimated manner in which the time differences, including the recoverability of the deferred tax assets, would be realised by comparing this to evidence obtained in respect of other
areas of the audit, including cash flow forecasts, business plans, minutes of directors meetings and our knowledge of the business.Ø We challenged the assumptions made by management for uncertain current and deferred tax positions to assess whether
appropriate current and deferred tax provisions have been recognised and are based on the most probable outcome with a focus on the Rio Tinto project.
Stripping costs (note 13 in the financial statements)
The Group is in the production phase of the Rio Tinto surface mine and it is subject to the requirements of IFRIC20 Stripping Costs which will require significant estimates and assumptions and highly technical calculations for the allocation of stripping costs between mineral asset, inventory and operations. We reviewed management's assessment and ensured it is in compliance with IFRIC 20 and assessed the assumptions and estimates made by management.We have also assessed the need for separate disclosure in the year-end financial statements of any adjustments
that would have been necessary if the company had made stripping cost adjustments at the quarterly reports.
Management override of controls
In terms of ISA240 the auditor shall presume that there is a significant risk in relation to management override of controls. Even though there are some controls in place we have not perform test of controls but we applied full substantive procedures. Also, we reviewed any controls implemented by management during our audit in client's office. In addition we performed unpredicted
procedures by including in the sample non material items, reviewed the journal entries and obtained explanations for any unusual or unauthorised entry, reviewed estimates made by management for reasonableness and assumptions used, and recorded and
understood the company's control environment.We have also performed a detailed recalculation of the consolidation entries.
Financial statements disclosures:
The Group has commenced trading operations in the year and there are sundry new areas in the financial statements for which disclosures may not be sufficient. We reviewed the company's consolidated financial statements and completed an IFRS disclosure checklist to ensure no omissions exist and results were satisfactory.
Other information
The Board of Directors is responsible for the other information. The other information comprises the information included
in the Directors Report and the Payments to Government Report, but does not include the consolidated financial statements
and our auditor's report thereon.
Our opinion on the consolidated financial statements does not cover the other information and we do not express any form of
assurance conclusion thereon.
In connection with our audit of the consolidated financial statements, our responsibility is to read the other information
and, in doing so, consider whether the other information is materially inconsistent with the consolidated financial
statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we
have performed, we conclude that there is a material misstatement of this other information, we are required to report that
fact. We have nothing to report in this regard.
Responsibilities of the Board of Directors for the Consolidated Financial Statements
The Board of Directors is responsible for the preparation of consolidated financial statements that give a true and fair
view in accordance with International Financial Reporting Standards as adopted by the European Union and the requirements
of the Cyprus Companies Law, Cap. 113, and for such internal control as the Board of Directors determines is necessary to
enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud
or error.
In preparing the consolidated financial statements, the Board of Directors is responsible for assessing the Group's ability
to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern
basis of accounting unless the Board of Directors either intends to liquidate the Group or to cease operations, or has no
realistic alternative but to do so.
The Board of Directors is responsible for overseeing the Group's financial reporting process.
Auditor's Responsibilities for the Audit of the Consolidated Financial Statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free
from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs
will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered
material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of
users taken on the basis of these consolidated financial statements.
As part of an audit in accordance with ISAs, we exercise professional judgment and maintain professional skepticism
throughout the audit. We also:
· Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to
fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient
and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud
is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions,
misrepresentations, or the override of internal control.
· Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group's
internal control.
· Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related
disclosures made by the Board of Directors.
· Conclude on the appropriateness of the Board of Directors' use of the going concern basis of accounting and, based
on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast
significant doubt on the Group's ability to continue as a going concern. If we conclude that a material uncertainty exists,
we are required to draw attention in our auditor's report to the related disclosures in the consolidated financial
statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence
obtained up to the date of our auditor's report. However, future events or conditions may cause the Group to cease to
continue as a going concern.
· Evaluate the overall presentation, structure and content of the consolidated financial statements, including the
disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner
that achieves a true and fair view.
· Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business
activities within the Group to express an opinion on the consolidated financial statements. We are responsible for the
direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.
We communicate with the Board of Directors regarding, among other matters, the planned scope and timing of the audit and
significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
We also provide the Board of Directors with a statement that we have complied with relevant ethical requirements regarding
independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on
our independence, and where applicable, related safeguards.
From the matters communicated with the Board of Directors, we determine those matters that were of most significance in the
audit of the consolidated financial statements of the current period and are therefore the key audit matters. We describe
these matters in our auditor's report unless law or regulation precludes public disclosure about the matter or when, in
extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse
consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.
Report on Other Legal Requirements
Pursuant to the additional requirements of the Auditors and Statutory Audits of Annual and Consolidated Accounts Laws of
2009 to 2016, we report the following:
· We have obtained all the information and explanations we considered necessary for the purposes of our audit.
· In our opinion, proper books of account have been kept by the Company, so far as appears from our examination of
these books.
· The consolidated financial statements are in agreement with the books of account.
· In our opinion and to the best of our information and according to the explanations given to us, the consolidated
financial statements give the information required by the Cyprus Companies Law, Cap. 113, in the manner so required.
· In our opinion, the management report has been prepared in accordance with the requirements of the Cyprus Companies
Law, Cap. 113, and the information given is consistent with the consolidated financial statements.
· In our opinion, and in the light of the knowledge and understanding of the Group and its environment obtained in the
course of the audit, we have not identified material misstatements in the management report.
Other Matter
This report, including the opinion, has been prepared for and only for the Company's members as a body in accordance with
Section 34 of the Auditors and Statutory Audits of Annual and Consolidated Accounts Laws of 2009 to 2016 and for no other
purpose. We do not, in giving this opinion, accept or assume responsibility for any other purpose or to any other person
to whose knowledge this report may come to.
The engagement partner on the audit resulting in this independent auditor's report is Constantinos Schizas.
Constantinos SchizasCertified Public Accountant and Registered Auditorfor and on behalf of
MOORE STEPHENS STYLIANOU & CO
CERTIFIED PUBLIC ACCOUNTANTS & REGISTERED AUDITORS
58 Arch. Makarios AvenueIris Tower, 6th Floor1076 Nicosia, Cyprus
Nicosia, 5 April 2017
Consolidated income statements
Years ended 31 December
(Euro 000's) Note 2016 2015
Gross sales 32.2 98,273 -
Realised gains on derivative financial instruments held for trading 28 495 -
Sales 98,768 -
Operating costs and mine site administrative expenses (77,848) -
Mine site depreciation and amortization (11,278)
Gross income 9,642 -
Corporate expenses (4,660) (4,176)
Corporate depreciation (14) (152)
Share based benefits (137) (152)
Care and maintenance expenses - (1,641)
Exploration expenses (1,022) (124)
Impairment charge (903) -
Operating profit/(loss) 2,906 (6,245)
Other income 5 292 135
Net foreign exchange loss (666) (4,721)
Finance income 8 41 38
Finance costs 9 (2,713) (4,332)
Share of results of associate - net 16 (10) -
Profit on disposal of subsidiaries 21 - 53
Profit on disposal of subsidiary/associate - 92
Loss before tax (150) (14,980)
Tax credit/(charge) 10 12,187 (30)
Profit/(loss) for the year attributable to owners of the parent 12,037 (15,010)
Earnings/(loss) per share from operations attributable to equity holders of the parent during the year :
Basic earnings/(loss) per share (expressed in cents per share) 11 10.3 (17.9)
Fully diluted earnings/(loss) per share (expressed in cents per share) 11 10.2 (17.9)
Profit/(loss) for the year 12,037 (15,010)
Other comprehensive income:
Change in value of available-for-sale investments 21 (41) (682)
Total comprehensive profit/(loss) for the year attributable to equity holders of the parent 11,996 (15,692)
The notes on pages 28 to 71 are an integral part of these consolidated financial statements.
Statements of financial position
As at 31 December As at 31 December
(Euro 000's) Note The Group2016 The Company 2016 The Group2015 The Company2015
Assets
Non-current assets
Property, plant and equipment 13 191,380 16 168,424 41
Intangible assets 14 59,715 - 20,158 -
Investment in subsidiaries 15 - 3,572 - 3,572
Investment in associate 16 - 4 10 4
Trade and other receivables 20 206 - - -
Deferred tax asset 18 12,196 - - -
263,497 3,592 188,592 3,617
Current assets
Inventories 19 6,195 - - -
Trade and other receivables 20 29,850 238,152 16,632 130,081
Available-for-sale investments 21 261 261 302 302
Cash and cash equivalents 22 1,135 320 18,618 4,246
37,441 238,733 35,552 134,629
Total assets 300,938 242,325 224,144 138,246
Equity and liabilities
Equity attributable to owners of the parent
Share capital 23 11,632 11,632 11,632 11,632
Share premium 23 277,238 277,238 277,238 277,238
Other reserves 24 5,667 5,667 5,508 5,508
Accumulated losses (105,975) (61,642) (118,012) (156,349)
Total equity 188,562 232,895 176,366 138,029
LiabilitiesNon-current liabilities
Trade and other payables 25 115 - 1,896 -
Provisions 26 5,092 - 3,971 -
Deferred consideration 27 44,346 7,359 - -
49,553 7,359 5,867 -
Current liabilities
Trade and other payables 25 62,608 2,071 41,911 217
Derivative instruments 28 215 - - -
62,823 2,071 41,911 217
Total liabilities 112,376 9,430 47,778 217
Total equity and liabilities 300,938 242,325 224,144 138,246
The notes on pages 28 to 71 are an integral part of these consolidated financial statements.
The consolidated financial statements were authorised for issue by the board of directors on 5 April 2017 and were signed
on its behalf.
Roger Davey Alberto Lavandeira
Chairman Managing Director
Consolidated statements of changes in equity
Years ended 31 December 2016 and 2015
Attributable to owners of the parent
(Euro 000's) Share capital Sharepremium Other reserves Accumulatedlosses Total Non-controllinginterest Total equity
At 1 January 2015 4,409 149,823 5,815 (103,002) 57,045 (116) 56,929
Loss for the year - - - (15,010) (15,010) - (15,010)
Issue of share capital 7,223 130,017 - - 137,240 - 137,240
Share issue costs - (2,920) - - (2,920) - (2,920)
Derivative element of conversion of convertible note - 440 - - 440 - 440
Purchase of minority interest shares - - - - - 116 116
Bonus shares issued in escrow - - 101 - 101 - 101
Change in value of available-for-sale investments - - (682) - (682) - (682)
Recognition of share based payments - - 152 - 152 - 152
Warrants issue costs - (122) 122 - - - -
At 31 December 2015/1 January 2016 11,632 277,238 5,508 (118,012) 176,366 - 176,366
Profit for the year - - - 12,037 12,037 - 12,037
Bonus shares issued in escrow - - 63 - 63 - 63
Change in value of available-for-sale investments -
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