REG - Central Asia Metals - Proposed acquisition of Lynx Resources Limited <Origin Href="QuoteRef">CAML.L</Origin> - Part 9
22/09/2017 07:08
- Part 9: For the preceding part double click ID:nRSV5104Rh
1,240,687 63,815,239
22. Related party transactions
SASA has related party transactions with subsidiaries of its parent company during its normal course of business
activities. All transactions with related parties are conducted under normal trading and commercial terms at mutually
agreed terms. The tables bellow provides information for the volume and balances of the related party transactions as of
and for the years ended 31 December 2015 and 2014.
(i) Year-end balances arising from sales of commodities
2015 2014
Receivables from related parties
Subsidiaries of the Ultimate parent company...................................................... 6,021,705 -
At 31 December....................................................................................................... 6,021,705 -
(ii) Year-end balances arising from short term loan
2015 2014
Receivables from related parties
Short-term loans to the parent company.............................................................. - 55,500,372
At 31 December....................................................................................................... - 55,500,372
(iii) Sales of commodities and services
2015 2014
Sales of finished goods
Subsidiaries of the Ultimate parent company...................................................... 70,424,600 82,725,595
At 31 December....................................................................................................... 70,424,600 82,725,595
(iv) Interest expense/income
2015 2014
Interest income from related party loan
Parent company....................................................................................................... 264,520 1,446,868
(v) Key management compensation
Key management includes all directors within SASA. The compensation paid or payable to key management for services is shown
below:
2015 2014
Salaries............................................................................................................................ 197,038 221,992
Taxes and contributions 99,573 112,180
......................................................................................................................................... 296,611 334,172
23. Contingencies
Legal proceedings
From time to time and in the normal course of the business, claims against SASA may be received. On the basis of its own
estimates and both internal and external professional advice, the management of SASA is of the opinion that no material
losses will be incurred in respect of claims and accordingly no provision has been made in this financial information.
24. First time adoption of IFRS
This is company financial information prepared in accordance with International Financial Reporting Standards (IFRS). The
date of transition to IFRS is 1 January 2014.
SASA's IFRS accounting policies presented in note 2 have been applied in preparing the financial information for the year
ended 31 December 2015, the comparative information and the opening statement of financial position at the date of
transition.
SASA has applied IFRS 1 First-time Adoption of International Financial Reporting Standards (as revised in 2008) in
preparing these first IFRS financial information. The effects of the transition to IFRS on equity and total comprehensive
income are presented in this section and are further explained in the notes that accompany the tables.
24.1 First time adoption exemptions applied
Upon transition, IFRS 1 permits certain exemptions from full retrospective application. SASA has applied the mandatory
exceptions and certain optional exemptions. The exemptions adopted by SASA are set out below.
Mandatory exceptions adopted by SASA:
• Financial assets and liabilities that had been de-recognised before 1 January under previous GAAP have not been
recognised under IFRS.
• SASA has used estimates under IFRS that are consistent with those applied under previous GAAP unless there is
objective evidence those estimates were in error.
Optional exemptions applied by SASA:
• SASA has elected to use cost value as deemed cost at the date of transition for some items of property, plant
and equipment.
24.2 Reconciliation of equity as reported under Macedonian GAAP to IFRS
The following is a reconciliation of SASA's total equity reported in accordance with Local GAAP to its total equity under
IFRS at the transition date 1 January 2014 and at 31 December 2014 as follows:
Own capital Statutory reserves Other reserves Retained earnings Total equity
Balance at 1 January 2014 under Local GAAP.................................... 4,672,933 934,596 137,866,132 91,960,227 235,433,888
IFRS Policy Impacts - - - (368,1790 (368,179)
Provisions for employee benefits
(Note a)............................................
Balance at 1 January 2014 under IFRS 4,672,933 934,596 137,866,132 91,592,048 235,065,709
Balance at 31 December 2014 under Local GAAP..................... 4,672,933 934,596 (15,267,166) 79,059,027 69,399,390
IFRS Policy Impacts - - - (51,443) (51,443)
Provisions for employee benefits
(Note a)........................................
Provisions for rehabilitation and environment and depreciation - - - (248,020) (248,020)
(Note b)........................................
Balance at 31 December 2014 under IFRS.................................. 4,672,933 934,596 (15,267,166) 78,759,564 69,099,927
a) Provisions for employee benefits
RETIREMENT BENEFITS
The Sasa mine operates a retirement benefit plan, whereas all employees will receive a one- off payment in the amount of
two average monthly salaries paid in the Republic of Macedonia in the period coinciding with the event of an employee's
retirement. Based on the provisions of IFRS 19, contributions to the plans by Sasa take into consideration the results of
actuarial assumptions, which will incorporate estimates about demographic and financial variables. At the end of the
closing period Sasa will review the ultimate cost of the benefit and discount it to its present value, to determine the
balance of the net benefit liability in its balance sheet. An increase in the present value of the obligation ("current
service cost") will be recognised as an expense in the Profit and Loss statement.
JUBILEE AWARD
The Sasa mine recognises an award to its employees who have accrued at least 10 years of service at the company, in the
amount of one average monthly salary paid in the Republic of Macedonia in the three months prior to the achievement of the
10th working year, pursuant to the Collective Employment Agreements. IFRS 19 requires the expected liability (which is
subjected to significant uncertainty, due to the need to estimate average duration of employment) to be discounted to
Present Value, with a charge to the Profit and Loss statement for any increase of the expected liability.
b) Asset retirement obligation
Effective 1 January 2014, Sasa adopted IFRS 37.40, ("Provisions, Contingent Liabilities and Contingent Assets"), which
provides accounting and disclosure requirements for retirement obligations associated with long-lived assets. Based on the
pronouncements of IFRS 37.40, an Asset Retirement Obligation liability is recorded for an amount equivalent to the total
Present Value of all remediation and retirement costs, as estimated by a third party expert based on their most current and
reliable expectations at the reporting period. Present Value is calculated using a pre-tax discount rate that reflects
current market assessments of the time value of money and the risks specific to the liability. IFRS 37 requires that the
Present Value of asset retirement costs for which Sasa has a legal obligation be recorded as liabilities, with an
equivalent amount added to the asset cost. The liability is accreted (increased) to its present value each period and the
capitalized cost is depreciated over the useful life of the related asset. Upon settlement of the liability, Sasa will
settle the obligation for its recorded amount or record a gain or loss if it is settled at a different amount.
c) Income tax
Under previous GAAP income tax arising from declared dividends is presented as part of the Dividends distribution in the
Statement of changes in equity.
Under IAS 12 Income tax, which specifies that the income tax arising from distribution of retained earnings should be
presented as Income tax expense in the period in which the distribution is declared. The effect is increase the accumulated
profit and decrease the current year profit for year 2015 in the amount of USD1,128,945 and for the year ended 31 December
2014 for the amount of USD 6,957,370.
Furthermore, during 2013, SASA declared distribution from retained earnings arising from years 2008 to 2011, to other
reserves in the amount of USD 143,987,596 and paid related income tax in the amount of USD15,896,332. During 2014, SASA
declared and paid dividend in the amount USD 136,876,645 including related withholding tax in the amount of USD 14,398,768.
The effect is increase the accumulated profit and decrease the current year profit for year 2013 in the amount of
USD15,896,332.
24.3 Reconciliation of Comprehensive income
The following is a reconciliation of SASA's comprehensive income reported in accordance with Macedonian GAAP to its net
income under IFRS for the period ending 31 December 2014:
Total comprehensive income - As reported under Local GAAP................... 42,297,989
IFRS Policy Impacts 12 (7,543,967)
Income tax expense................................................................................................
Provisions for employee benefits........................................................................ 19 (56,004)
Provisions for rehabilitation and environment.................................................. 19 (270,008)
Total comprehensive income - As reported under IFRS................................ 34,428,010
Total comprehensive income - As reported under IFRS................................
34,428,010
25. Events after the reporting period
There are no events after the reporting period that would have an impact on the 2015 statement of comprehensive income,
statement of financial position or statement of cash flows.
SECTION B: UNAUDITED HISTORICAL FINANCIAL INFORMATION OF LYNX RESOURCES
FOR THE FINANCIAL PERIOD FROM 19 JUNE 2013 TO 31 DECEMBER 2015
AND THE FINANCIAL YEAR ENDED 31 DECEMBER 2016
Lynx Resources Limited
Historical Consolidated Financial Information for the periods ended 31 December 2016
(all amounts are in USD unless otherwise stated)
Consolidated statement of comprehensive income (loss)
Notes 2016 For the period from 19 June to 31 December 2015
Revenue......................................................................................... 65,760,476 8,317,549
Presented as:
Gross revenue............................................................................... 6 78,508,182 8,622,911
Marketing costs........................................................................... (9,372,696) -
Silver purchases for silver stream.............................................. (1,598,619) -
Freight cost................................................................................... (1,776,391) (305,362)
Revenue......................................................................................... 65,760,476 8,317,549
Inventory movement................................................................... 11 211,580 180,854
Consumed raw materials............................................................. 9 (13,358,222) (1,671,366)
Salaries/payroll expenses............................................................ 10 (8,086,260) (1,181,70)
Cost value of tools and consumable goods............................ 11 (3,964) (862)
Concession expenses.................................................................. (2,225,214) (306,849)
Other operating expenses........................................................... 12 (9,618,452) (1,740,970)
Write-off of PPE and other financial assets............................. 15, 19 (2,585,517) (19,568)
Depreciation expenses................................................................ 15, 16 (14,575,757) (2,327,142)
Other operating income............................................................... 8 205,058 18,405
Total operating profit.................................................................. 15,723,728 1,268,347
Finance income............................................................................. 13 3,793,886 510,060
Finance costs................................................................................ 13 (6,494,081) (689,565)
Finance costs - net...................................................................... (2,700,195) (179,505)
Profit before income tax............................................................. 13,023,533 1,088,842
Income tax expense...................................................................... 14 (2,245,173) (280,561)
Profit for the year........................................................................ 10,778,360 808,281
Exchange differences on translation of foreign operations... 21 (5,391,277) (771,695)
Total other comprehensive income (loss) for the year......... (5,391,277) (771,695)
Total comprehensive income for the year............................... 5,387,083 36,586
Lynx Resources Limited
Historical Consolidated Financial Information for the periods ended 31 December 2016
(all amounts are in USD unless otherwise stated)
Consolidated statement of financial position
As at 31 December
Notes 2016 2015
ASSETS
Non-current assets
Intangible assets............................................................................... 16 9,891,105 10,838,648
Property, plant and equipment (PPE)............................................. 15 174,591,239 188,455,146
Total non-current assets................................................................ 184,482,344 199,293,794
Current assets
Inventories......................................................................................... 18 1,569,050 1,892,664
Trade receivables.............................................................................. 19 3,691,173 5,305,224
Income tax receivable....................................................................... 1,825,687 157,742
Other receivables.............................................................................. 19 3,213,367 1,765,360
Cash and cash equivalents............................................................. 20 29,294,201 7,292,004
Deferred tax assets........................................................................... 17 120,920 -
Total current assets........................................................................ 39,714,398 16,412,994
TOTAL ASSETS.............................................................................. 244,196,742 215,706,788
EQUITY AND LIABILITIES
Equity
Capital................................................................................................. 21 97,454,015 173,454,015
Other reserves................................................................................... 21 (6,162,972) (771,695)
Retained earnings............................................................................. 11,586,641 808,281
Total equity........................................................................................ 102,877,684 173,490,601
Non-current liabilities
Borrowings........................................................................................ 25 62,571,429 25,000,000
Deferred revenue received advances for silver delivery............ 23 19,603,463 -
Provision for liabilities and charges............................................... 24 2,949,132 2,410,167
Total non-current liabilities.......................................................... 85,124,024 27,410,167
Current liabilities
Trade payables.................................................................................. 22 3,409,396 2,087,467
Loans and borrowings..................................................................... 25 28,752,611 11,162,321
Deferred revenue received advances for silver delivery............ 23 1,970,092 -
Provision for liabilities and charges............................................... 24 66,284 136,703
Other financial liabilities.................................................................. 22 1,996,651 1,419,529
Total current liabilities.................................................................. 36,195,034 14,806,020
TOTAL LIABILITIES AND EQUITY........................................... 224,196,742 215,706,788
Lynx Resources Limited
Historical Consolidated Financial Information for the periods ended 31 December 2016
(all amounts are in USD unless otherwise stated)
Consolidated statement of changes in equity
Balance at 19 June 2015........................ - - - -
Net profit (loss) for the period from 19 June 2015 to 31 December 2015......... - 808,281 - 808,281
Other comprehensive income (loss)...... - - (771,695) (771,695)
Total comprehensive income (loss)....... 808,281 (771,695) 36,586
Paid in capital........................................... 173,454,015 - - 173,454,015
Balance at 31 December 2015............... 173,454,015 808,281 (771,6950 173,490,601
Balance at 1 January 2016.................... 173,454,015 808,281 (771,695) 173,490,601
Net profit for the year............................... - 10,778,360 - 10,778,360
Other comprehensive income (loss)...... - - (5,391,277) (5,391,277)
Total comprehensive income (loss)....... - 10,778,360 (5,391,277) 5,387,083
Capital Reduction (Note 21)................... (76,000,000) - - (76,000,000)
Balance at 31 December 2016............... 97,454,015 11,586,641 (6,162,972) (102,877,684)
Balance at 31 December 2016...............
97,454,015
11,586,641
(6,162,972)
(102,877,684)
Lynx Resources Limited
Historical Consolidated Financial Information for the periods ended 31 December 2016
(all amounts are in USD unless otherwise stated)
Consolidated statement of cash flows
Operating activities
Profit before tax....................................................................................................... 13,023,533 1,088,842
Adjustments for:
Depreciation and Amortization (Notes 15 and 16)............................................. 14,575,757 2,327,142
Write-off of other receivables and PPE............................................................... 2,585,517 -
Amortization of deferred revenue - received advances for silver delivery.... (490,819) -
Gain from sale of property, plant and equipment............................................... (3,199) -
Unwind of discount provisions (Note 24).......................................................... 279,996 37,064
Unrealised foreign exchange (gain)/loss............................................................. (158,941) (583,776)
Interest expense...................................................................................................... 1,365,292 123,075
Interest income........................................................................................................ (287) (90)
Cash generated from operations before changes in working capital........... 31,176,849 2,992,257
Cash flow from operating activities
(Increase)/decrease in inventories....................................................................... 323,614 (1,892,664)
(Increase)/decrease in trade receivables............................................................. (1,614,051) (5,305,224)
(Increase)/decrease in other financial receivables............................................. (1,448,007) (1,923,101)
Increase/(decrease) in trade payables................................................................. 1,321,929 2,087,467
Increase/(decrease) in other financial liabilities................................................. 577,122 1,462,680
Cash generated from/(used in) operating activities........................................ 30,337,456 (2,578,585)
Interest and bank charges paid............................................................................ (1,408,443) (79,924)
Income taxes paid................................................................................................... (983,652) (438,302)
Net cash flow generated from/(used in) operating activities.......................... 27,945,361 (3,096,811)
Cash flow from investing activities
Acquisition of PPE................................................................................................. (5,331,885) (1,628,516)
Disposal of PPE (Note 15)..................................................................................... 3,421 19,223
Acquisition of intangible assets.......................................................................... - (10,959,031)
Acquisition of the subsidiary, net of cash acquired......................................... - (175,849,867)
Interest received..................................................................................................... 287 90
Net cash used in investing activities.................................................................. (5,328,177) (188,418,101)
Cash flow from financing activities....................................................................
Proceeds from loans and borrowings.................................................................. 95,509,318 31,884,234
Repayment of loans and borrowings................................................................... ................................................................................................................................... (20,124,305) (6,531,333)
Paid in capital.......................................................................................................... - 173,454,015
Reduction of capital (Note 21).............................................................................. (76,000,000) -
Net cash generated from financing activities................................................... (614,987) 198,806,916
Net increase in cash and cash equivalents........................................................ 22,002,197 7,292,004
Cash and cash equivalents at 1 January............................................................. 7,292,004 -
Cash and cash equivalents at 31 December (Note 20)..................................... 29,294,201 7,292,004
Non-cash supplemental disclosure:
Deferred revenue exchange for settlement of intercompany loan for silver stream (Note 23)...................................................................................................... 22,064,374 -
Deferred revenue exchange for settlement of intercompany loan for silver stream (Note
23)......................................................................................................
22,064,374
-
Lynx Resources Limited
Note to the Consolidated Financial Information for the periods ended 31 December 2016
(all amounts are in USD unless otherwise stated)
1. General information
Lynx Resources Limited ("Lynx Resources"), was incorporated on 19 June 2015 under the Companies Act 1981 of Bermuda. The
initial paid in capital amounted to $173,454,015. The registered office of Lynx Resources is located at Canon's Court, 22
Victoria Street, Hamilton HM12, Bermuda.
On 10 July 2015, Lynx Resources through its wholly owned subsidiary, Lynx Mining Limited, established Lynx Europe dooel
Skopje. As at 3 November 2015, Lynx Europe dooel Skopje acquired 100% of the shares of the zinc and lead mine Rudnik SASA
DOOEL Makedonska Kamenica (Sasa). The ultimate controlling party of the Lynx Group is Orion Fund JV Ltd., Hamilton,
Bermuda.
The primary activity of Lynx Resources Limited and its subsidiaries (collectively, the "Lynx Group") includes the
extraction of mineralized ores and the production and sale of zinc and lead concentrates.
As of 31 December 2016, the Lynx Group had 689 employees (2015: 680 employees).
The Management of the Lynx Group serving during the financial periods were:
Chris James-Chief Executive Officer
Stefan Peschke-Chief Financial Officer
Florian Dax-Chief Operating Officer
The activity of the Lynx Group is organized through the following organizational activities:
• Mine
• Flotation
• Laboratory
• Machine workshop
• General administration
• Wholesale and trade of zinc and lead concentrates
2. Summary of significant accounting policies
The principal accounting policies adopted in the preparation of these consolidated financial information are set out below.
These policies have been consistently applied to all the years presented, unless otherwise stated.
2.1 Basis of preparation
This historical consolidated financial information presents the financial track record of Lynx Resources Limited for the
year ending 31 December 2016 and the period from incorporation on 19 June 2015 to 31 December 2015 and is prepared for the
purposes of the re-admission of CAML to AIM. This special purpose financial information has been prepared in accordance
with the requirements of the AIM Rules for Companies and in accordance with International Financial Reporting Standards as
adopted by the European Union ("IFRS").
The financial information relating to the Lynx Group has been prepared in a form that is consistent with the accounting
policies adopted in CAML's latest annual accounts.
This historical consolidated financial information is presented in United States Dollars. This historical consolidated
financial information has been prepared on a going concern basis.
The preparation of the historical consolidated financial information in conformity with IFRS requires the use of certain
critical accounting estimates. It also requires management to exercise its judgment in the process of applying the
accounting policies. The areas involving a higher degree of judgment or complexity, or areas where assumptions and
estimates are significant to the financial information are disclosed in Note 4. Actual results may differ from those
estimated.
In order to maintain consistency with the current year presentation, where appropriate certain items have been reclassified
for comparative purposes. Such reclassifications, however, have not resulted in significant changes of the content and
format of the financial information as presented herein.
2.1.1 Standards, amendments and interpretations effective and adopted by the Lynx Group in 2016
No standards, amendments and interpretation have been adopted by the Lynx Group in 2016 with significant impact on the
consolidated financial information.
2.1.2 Standards, amendments and interpretations that are not yet effective and have not been early adopted by the Lynx
Group
IFRS 9 "Financial Instruments: Classification and Measurement" (amended in July 2014 and effective for annual periods
beginning on or after 1 January 2018).
Key features of the new standard are:
• Financial assets are required to be classified into three measurement categories: those to be measured
subsequently at amortized cost, those to be measured subsequently at fair value through other comprehensive income (FVOCI)
and those to be measured subsequently at fair value through profit or loss (FVPL).
• Classification for debt instruments is driven by the entity's business model for managing the financial assets
and whether the contractual cash flows represent solely payments of principal and interest (SPPI). If a debt instrument is
held to collect, it may be carried at amortized cost if it also meets the SPPI requirement. Debt instruments that meet the
SPPI requirement that are held in a portfolio where an entity both holds to collect assets' cash flows and sells assets may
be classified as FVOCI. Financial assets that do not contain cash flows that are SPPI must be measured at FVPL (for
example, derivatives). Embedded derivatives are no longer separated from financial assets but will be included in assessing
the SPPI condition.
• Investments in equity instruments are always measured at fair value. However, management can make an
irrevocable election to present changes in fair value in other comprehensive income, provided the instrument is not held
for trading. If the equity instrument is held for trading, changes in fair value are presented in profit or loss.
• Most of the requirements in IAS 39 for classification and measurement of financial liabilities were carried
forward unchanged to IFRS 9. The key change is that an entity will be required to present the effects of changes in own
credit risk of financial liabilities designated at fair value through profit or loss in other comprehensive income.
• IFRS 9 introduces a new model for the recognition of impairment losses-the expected credit losses (ECL) model.
There is a 'three stage' approach which is based on the change in credit quality of financial assets since initial
recognition. In practice, the new rules mean that entities will have to record an immediate loss equal to the 12-month ECL
on initial recognition of financial assets that are not credit impaired (or lifetime ECL for trade receivables). Where
there has been a significant increase in credit risk, impairment is measured using lifetime ECL rather than 12-month ECL.
The model includes operational simplifications for lease and trade receivables.
• Hedge accounting requirements were amended to align accounting more closely with risk management. The standard
provides entities with an accounting policy choice between applying the hedge accounting requirements of IFRS 9 and
continuing to apply IAS 39 to all hedges because the standard currently does not address accounting for macro hedging.
The application of the new standard and its amendments is required for annual periods beginning on or after 1 January 2018.
Earlier application is permitted. The adoption of the new standard and its amendments will likely result in changes in the
consolidated financial information of the Lynx Group, the exact extent of which management are currently analyzing.
IFRS 15, Revenue from Contracts with Customers (issued on 28 May 2014 and effective for the periods beginning on or after 1
January 2018). The new standard introduces the core principle that revenue must be recognized when the goods or services
are transferred to the customer, at the transaction price. Any bundled goods or services that are distinct must be
separately recognized, and any discounts or rebates on the contract price must generally be allocated to the separate
elements. When the consideration varies for any reason, minimum amounts must be recognized if they are not at significant
risk of reversal. Costs incurred to secure contracts with customers have to be capitalized and amortized over the period
when the benefits of the contract are consumed. The Lynx Group is currently assessing the impact of the new standard on its
consolidated financial information.
Amendments to IFRS 15, Revenue from Contracts with Customers (issued on 12 April 2016 and effective for annual periods
beginning on or after 1 January 2018). The amendments do not change the underlying principles of the Standard but clarify
how those principles should be applied. The amendments clarify how to identify a performance obligation (the promise to
transfer a good or a service to a customer) in a contract; how to determine whether a company is a principal (the provider
of a good or service) or an agent (responsible for arranging for the good or service to be provided); and how to determine
whether the revenue from granting a licence should be recognised at a point in time or over time. In addition to the
clarifications, the amendments include two additional reliefs to reduce cost and complexity for a company when it first
applies the new Standard. Management is currently assessing the impact of the amendment on its consolidated financial
information.
IFRS 16, Leases (issued on 13 January 2016 and effective for annual periods beginning on or after 1 January 2019). The new
standard sets out the principles for the recognition, measurement, presentation and disclosure of leases. All leases result
in the lessee obtaining the right to use an asset at the start of the lease and, if lease payments are made over time, also
obtaining financing. Accordingly, IFRS 16 eliminates the classification of leases as either operating leases or finance
leases as is required by IAS 17 and, instead, introduces a single lessee accounting model. Lessees will be required to
recognize: (a) assets and liabilities for all leases with a term of more than 12 months, unless the underlying asset is of
low value; and (b) depreciation of lease assets separately from interest on lease liabilities in the income statement. IFRS
16 substantially carries forward the lessor accounting requirements in IAS 17. Accordingly, a lessor continues to classify
its leases as operating leases or finance leases, and to account for those two types of leases differently. Management is
currently assessing the impact of the new standard on its consolidated financial information.
Disclosure Initiative-Amendments to IAS 7 (issued on 29 January 2016 and effective for annual periods beginning on or after
1 January 2017). The amended IAS 7 will require disclosure of a reconciliation of movements in liabilities arising from
financing activities.
The following other new pronouncements are not expected to have any material impact on the Lynx Group when adopted:
• Sale or Contribution of Assets between an Investor and its Associate or Joint Venture-Amendments to IFRS 10 and
IAS 28 (issued on 11 September 2014 and effective for annual periods beginning on or after a date to be determined by the
IASB).
• Recognition of Deferred Tax Assets for Unrealised Losses-Amendments to IAS 12 (issued on 19 January 2016 and
effective for annual periods beginning on or after 1 January 2017).
• Amendments to IFRS 15, Revenue from Contracts with Customers (issued on 12 April 2016 and effective for annual
periods beginning on or after 1 January 2018).
• Amendments to IFRS 2, Share-based Payment (issued on 20 June 2016 and effective for annual periods beginning on
or after 1 January 2018).
• Amendments to IFRS 4, Insurance Contracts (issued on 12 September 2016 and effective for annual periods
beginning on or after 1 January 2018).
Unless otherwise described above, the new standards and interpretations are not expected to affect significantly the Lynx
Group's consolidated financial information.
2.2 Basis for consolidation
The consolidated financial information comprise the financial information of Lynx Resources Limited and its subsidiaries as
at 31 December 2016. Subsidiaries are all entities over which the Lynx Group has control. The Lynx Group controls an entity
when the Lynx Group is exposed to, or has rights to, variable returns from its involvement with the entity and has the
ability to affect those returns through its power over the entity. Subsidiaries are fully consolidated from the date of
acquisition, being the date on which the Lynx Group obtains control, and continue to be consolidated until the date that
such control ceases.
The financial information of the subsidiaries are prepared for the same reporting periods as Lynx Resources, using
consistent accounting policies. All intra-group balances, income and expenses and unrealised gains and losses resulting
from intra-group transactions are eliminated in full.
2.3 Business combinations
Acquisitions of businesses are accounted for using the acquisition method. The consideration transferred in a business
combination is measured at fair value, which is calculated as the sum of the acquisition date fair values of the assets
transferred by the Lynx Group. The results of businesses acquired during the year are included in the consolidated
financial information from the effective date of acquisition. The identifiable assets, liabilities and contingent
liabilities of the business which can be measured reliably are recorded at provisional fair values at the date of
acquisition. This includes mineral properties and exploration, development and production licenses. Provisional fair values
are finalized within twelve months of the acquisition date. Acquisition-related costs are expensed as incurred.
Goodwill arising in a business combination is measured as the excess of the sum of the consideration transferred and the
amount of any non-controlling interest over the net identifiable assets acquired and liabilities assumed.
Intangible assets acquired in a business combination and recognized separately from goodwill are initially recognized at
their fair value at the acquisition date (which is regarded as their cost). Subsequent to initial recognition, intangible
assets acquired in a business combination are reported at cost less accumulated amortization and accumulated impairment
losses, on the same basis as intangible assets that are acquired separately.
The recoverable amount of the cash-generating unit to which goodwill has been allocated is tested for impairment at the
same time every year. Any impairment loss is recognized in net earnings immediately. Impairment of goodwill is not
subsequently reversed.
2.4 Foreign currency translation
(a) Functional and presentation currency
Items included in the consolidated financial information of each of the Lynx Group's entities are measured using the
currency of the primary economic environment in which the entity operates ('the functional currency'). The consolidated
financial information are presented in US Dollars (USD), which is Lynx Resources Limited's functional and presentation
currency.
(b) Transaction and balances
Foreign currency transactions are translated into the functional currency using the exchange rates at the dates of the
transactions or valuation where items are re-measured. Foreign exchange gains and losses resulting from the settlement of
such transactions and from the translation of monetary assets and liabilities denominated in foreign currencies at year end
exchange rates are generally recognized in profit or loss. Foreign exchange gains and losses that relate to borrowings are
presented in the consolidated statement of comprehensive income, within finance costs. All other foreign exchange gains and
losses are presented in the consolidated statement of comprehensive income on a net basis within other income or other
expenses.
Non-monetary items that are measured at fair value in a foreign currency are translated using the exchange rates at the
date when the fair value was determined. Translation differences on assets and liabilities carried at fair value are
reported as part of the fair value gain or loss.
(c) Lynx Group companies
The results and financial position of foreign operations that have a functional currency different from the presentation
currency (such as Macedonian Denar MKD) are translated into the presentation currency as follows:
• assets and liabilities for each balance sheet presented are translated at the closing rate at the date of that
balance sheet
• income and expenses for each statement of profit or loss and statement of comprehensive income are translated
at average exchange rates (unless this is not a reasonable approximation of the cumulative effect of the rates prevailing
on the transaction dates, in which case income and expenses are translated at the dates of the transactions), and
• all resulting exchange differences are recognized in other comprehensive income.
On consolidation, exchange differences arising from the translation of any net investment in foreign entities, and of
borrowings and other financial instruments designated as hedges of such investments, are recognized in other comprehensive
income/loss. Goodwill and fair value adjustments arising on the acquisition of a foreign operation are treated as assets
and liabilities of the foreign operation and translated at the closing rate.
2.5 Property, plant and equipment
Property acquisition costs are capitalized. Property, plant and equipment is stated at cost, as defined in IAS 16, less
accumulated depreciation and accumulated impairment losses.
2.6 Mineral properties and mine development cost
Development costs relating to specific properties are capitalized once management determines a property will be developed.
A development decision is made based upon consideration of project economics, including future metal prices, reserves and
resources, and estimated operating and capital costs. Capitalization of costs incurred and proceeds received during the
development phase ceases when the property is capable of operating at levels intended by management and is considered
commercially viable. Costs incurred during the production phase to increase future output by providing access to additional
reserves, are deferred and depreciated on a units-of-production basis over the component of the reserves to which they
relate. Expenditure other than that on land, buildings, plant, equipment and capital work in progress is capitalised under
"Mining Properties" together with any amount transferred from "Exploration and evaluation" expenditures. Ore reserves may
be declared for an undeveloped mining project before its commercial viability has been fully determined.
Development costs incurred after the commencement of production are capitalised to the extent they are expected to give
rise to a future economic benefit. The cost of mineral properties also includes the estimated close-down and restoration
costs associated with the asset.
Interest on borrowings related to qualifying assets for construction or development projects is capitalised, at the rate
payable on project-specific debt if applicable or at the Lynx Group's cost of borrowing, until the project becomes
commercially viable.
2.7 Depreciation
Property, plant and equipment is depreciated over their useful life, or over the remaining life of the operation if
shorter, to residual value. No depreciation is recorded until the assets are substantially complete and ready for
productive use. The major asset categories are depreciated as follows:
Mineral Properties, including capitalised financing costs, are depreciated on a Unit of Production basis (UoP), in
proportion to the volume of ore extracted in the year compared with total proven and probable reserves at the beginning of
the year. Assets within operations for which production is not expected to fluctuate significantly from one year to another
or which have a physical life shorter than the related mine are depreciated on a Straight-Line basis. This pertains to all
asset classes (as well as "Mineral Properties"), including:
• Buildings and mining infrastructure
• Machinery, Plant and other equipment
Depreciation calculated on a straight-line basis is as follows for major asset categories:
Office equipment......................................................................................... 20% - 37.5%
Furniture and fittings..................................................................................... 20% - 37.5%
Mining Infrastructure and buildings................................................................ 2.5% - 10%
Motor vehicles............................................................................................. 25% - 37.5%
Land is not depreciated.
Development costs expenditures are not depreciated. Depreciation on equipment utilized in the development of assets,
including underground mine development, is depreciated and recapitalized as development costs attributable to the related
asset.
The depreciation of property, plant and equipment shall start after expiration of the month of the start-up in the year in
which the utilisation of the property, plant and equipment started.
2.8 Exploration and development expenditure
Exploration and evaluation expenditure comprises costs that are directly attributable to:
• researching and analysing existing exploration data;
• conducting geological studies, exploratory drilling and sampling;
• examining and testing extraction and treatment methods; and/or
• compiling pre-feasibility and feasibility studies.
Evaluation expenditure relates to a detailed assessment
- More to follow, for following part double click ID:nRSV5104RjRecent news on Central Asia Metals
See all newsREG - Central Asia Metals Morgan Stanley - TR-1: Notification of major holdings
AnnouncementREG - Central Asia Metals - Total Voting Rights
AnnouncementREG - Central Asia Metals - Results of Extraordinary General Meeting
AnnouncementREG - Central Asia Metals Morgan Stanley - TR-1: Notification of major holdings
AnnouncementREG - Central Asia Metals - 2025 Full-Year Results
Announcement