REG-ECR Minerals plc Annual Financial Report <Origin Href="QuoteRef">ECRE.L</Origin> - Part 3
07/03/2016 07:01
- Part 3: For the preceding part double click ID:nBw13djgjb
2014 705 6,072 3,865 10,642
At 30 September 2015 565 4,048 3,092 7,705
The Group's property, plant and equipment are free from any mortgage or charge.
The comparable table for 2014 is detailed below.
Group Furniture
& Office Machinery and
fittings equipment equipment Total
Cost £ £ £ £
At 1 October 2013 2,740 12,020 660 15,420
Additions 705 6,072 3,865 10,642
Exchange differences arising on translation - (223) (218) (441)
At 30 September 2014 3,445 17,869 4,307 25,621
Depreciation
At 1 October 2013 2,740 11,599 370 14,709
Depreciation for the year - 181 177 358
Exchange differences arising on translation - (14) (252) (266)
At 30 September 2014 2,740 11,766 295 14,801
Net book value
At 1 October 2013 - 421 290 711
At 30 September 2014 705 6,103 4,012 10,820
Company
Furniture and Office Machinery and
fittings equipment equipment Total
Cost £ £ £ £
At 1 October 2013 2,740 11,342 - 14,082
Additions 705 6,072 3,865 10,642
At 30 September 2014 3,445 17,414 3,865 24,724
Depreciation
At 1 October 2013 2,740 11,342 - 14,082
Depreciation for the year - - - -
At 30 September 2014 2,740 11,342 - 14,082
Net book value
At 1 October 2013 - - - -
At 30 September 2014 705 6,072 3,865 10,642
9Investments
Investment in
subsidiaries
£
Cost as at 1 October 2014 624,008
Addition 79,732
Balance at 30 September 2015 703,740
The comparable table for 2014 is detailed below:
Investment in
subsidiaries
£
Cost as at 1 October 2013 451,893
Additions 172,115
Balance at 30 September 2014 624,008
Investment in subsidiaries
At 30 September 2015, the Company had interests in the following subsidiary
undertakings:
Description
Principal and effective
country of Principal country of Proportion of
Subsidiaries: incorporation activity operation shares held
Ochre Mining SA Argentina Mineral Exploration Argentina 100%
Mercator Gold Australia Pty Ltd Australia Mineral Exploration Australia 100%
Warm Springs Renewable Energy Corporation USA Dormant USA 90%
Copper Flat Corporation (formerly New Mexico Copper Corporation) USA Dormant USA 100%
Available for sale financial assets 2015 2014
£ £
Quoted investments
At 1 October 178,866 978,453
Additions 39,277 -
Disposals (54,287) (198,942)
Impairment (124,579) (600,645)
Fair value movements - -
At 30 September 39,277 178,866
The £178,866 represented the value of the Company`s holding of shares of THEMAC
Resources Group Ltd ("THEMAC") at 30 September 2014. The fair value was based on
quoted market prices at prior the year end. THEMAC`s common shares are listed on
TSX Venture Exchange (TSX-V: MAC).
At 30 September 2014, the Company beneficially held approximately 12% of
THEMAC`s issued common shares. The Company also held common share purchase
warrants, which if exercised would have potentially increased the Company`s
holding of common shares to approximately 14% on a fully diluted basis. The
Company did not have any representation on THEMAC`s board of directors, did not
have a right to participate in policy making decisions of THEMAC and had not
entered into any material transactions or interchanged managerial personnel with
THEMAC. Nor had the Company provided significant technical information to THEMAC
since the sale of the Company`s option to acquire Copper Flat project to THEMAC.
The investment in THEMAC had therefore never been accounted for as an investment
in an associate.
During the year ended 30 September 2015, the Company disposed of its entire
holding in THEMAC, both common shares and common share purchase warrants,
realising a loss on disposal of £124,579. £14,750 was held in retained reserves
at 30 September 2014. This was debited to the Income Statement on disposal.
On 24 November 2014, the Company purchased 358,000 common shares of Tiger
International Resources, Inc. ("Tiger") for consideration of £39,277. Tiger
shares are listed on Canada`s TSX Venture Exchange with the symbol TGR. ECR now
holds approximately 3.67% of Tiger`s issued share capital.
Other financial assets
2015 2014
£ £
Warrants in a listed entity
At 1 October 26,196 228,814
Disposals (13,736) -
Fair value movements (12,460) (202,618)
At 30 September - 26,196
The Company had acquired warrants as part consideration for the disposal of its
option to acquire the Copper Flat project to THEMAC in 2011. Changes in fair
values of the warrants were recorded in other gains / (losses) on revaluation of
investments in the Income Statement.
The fair value of these warrants was calculated using the Black Scholes model
with reference to the listed share price of THEMAC at the Statement of Financial
Position date. The inputs into the model and resulting fair values for 2014 were
as follows:
Share price (C$) 0.04
Exercise price (C$) 0.28
Expected volatility 123 %
Average option life in years 1.43
Expected dividends -
Weighted average risk-free interest rate (based on national government bonds) 1.07%
The expected volatility was based on the average historical volatility over the
previous 17 months of THEMAC common shares and those of two other similar
entities.
10 Exploration assets
Group Company
2015 2014 2015 2014
£ £ £ £
At 1 October 1,422,493 894,145 1,165,062 603,073
Additions 719,108 624,142 632,398 561,989
Translation difference (9,377) (95,794) - -
At 30 September 2,132,224 1,422,493 1,797,460 1,165,062
At Danglay, the work completed enabled a resource estimate and target for
further exploration to be disclosed in accordance with Canadian NI43-101,
leading to the publication of an NI43-101 technical report (the "Report")
regarding the project in December 2015. The Report confirms that Danglay has
robust exploration potential for both oxide and primary intermediate
sulphidation epithermal gold mineralisation. The following information
pertaining to the Danglay project should be read in conjunction with the Report.
It will be possible for exploration to resume on the ground once the application
by Cordillera Tiger Gold Resources, Inc. ("CTGR") for renewal of the exploration
permit which pertains to Danglay has been granted by MGB. The renewal is at the
discretion of MGB however, the Directors expect this to occur in due course. The
application was lodged in late September 2015 and it is normal for the
processing of such applications to take a number of months. The Directors expect
a wait of several more months before the renewed permit is received by CTGR.
When the timing of the exploration permit renewal is known with certainty,
decisions will be made as to further exploration by ECR at Danglay, and
investors will be updated accordingly.
11 Trade and other receivables
Group Company
2015 2014 2015 2014
£ £ £ £
Non-current assets
Amount owed by a subsidiary/(former subsidiary) - 3,228,390 10,907 3,228,390
Current assets
Prepayments and accrued income 74,233 174,051 35,674 147,154
74,233 174,051 35,674 147,154
The short-term carrying values are considered to be a reasonable approximation
of the fair value.
Amount owed by a subsidiary/former subsidiary
The amount of £3,228,390 due as at 30 September 2014 from a former subsidiary,
Mercator Gold Australia Pty Ltd ("MGA"), was the Directors` best estimate of the
amount recoverable and was stated after an impairment provision made in previous
years of £31,849,884 and in the context of the following.
It was estimated that the full amount of tax losses accumulated by MGA totalled
approximately A$80 million. Advice indicated that these tax losses were likely
to be available for use against future profits of MGA subject to certain
conditions. The success of work completed up to the date of the last report to
confirm the tax losses led the Directors to believe that in due course a
business project would be identified with the capacity to generate surplus funds
in MGA that would enable it to repay, in whole or in part (but not less than the
amount due net of the impairment), the amount due to the Company and the Group.
To recover the amount due from MGA, the Company and the Group were dependent on
MGA being able to generate sufficient surplus funds from future projects.
Control of MGA passed back to the Group in December 2014 and upon
reconsolidation the asset was reclassified as a deferred tax asset of the Group.
MGA is currently estimated to have tax losses of approximately A$66 million, and
advice continues to indicate that the tax losses are likely to be available for
use against future profits of MGA subject to certain conditions. The Directors
now consider that Australia has become a more attractive operating environment
for mineral projects following the substantial depreciation in the Australian
dollar against the US dollar and the GB pound which has occurred during 2015.
Accordingly, on 3 March 2016, the Company announced that its wholly owned
Australian subsidiary Mercator Gold Australia Pty Ltd has agreed to acquire 100%
ownership of the Avoca and Bailieston gold projects in Victoria, Australia.
However, in the absence of an immediately available profitable business activity
for MGA, the Directors have decided to make a further impairment provision
against the carrying value of the deferred tax asset. In the Company`s Statement
of Financial Position, the amount due from its subsidiary is now recorded, after
the impairment provision, as equal to MGA`s net asset value of £10,907.
12 Cash and cash equivalents
Group Company
2015 2014 2015 2014
£ £ £ £
Cash and cash equivalents consisted of the following:
Deposits at banks 89,873 639,803 80,857 607,311
Cash on hand 525 2,253 183 2,089
90,398 642,056 81,040 609,400
13 Share capital and share premium accounts
The share capital of the Company consists of three classes of shares: ordinary
shares of 0.001p each which have equal rights to receive dividends or capital
repayments and each of which represents one vote at shareholder meetings; and
two classes of deferred shares, one of 9.9p each and the other of 0.099p each,
which have limited rights as laid out in the Company`s articles: in particular
deferred shares carry no right to dividends or to attend or vote at shareholder
meetings. Deferred share capital of the 9.9p shares is only repayable after
ordinary shareholders have received 0.1p for each share. Deferred `B` share
capital of the 0.099p shares is only repayable after ordinary shareholders have
received £1m for each share.
a)Changes in issued share capital and share premium:
Number of Ordinary Deferred Deferred `B` Total Share
Shares shares shares shares shares premium Total
£ £ £ £ £ £
At 1 October 2014 3,288,349,158 3,288,350 7,194,816 - 10,483,166 40,131,118 50,614,284
Shares issued in payment of creditors 33,095,602 33,096 - - 33,096 14,332 47,428
Loan converted into shares 545,584,576 545,585 - - 545,585 176,142 721,727
3,867,029,336 3,867,031 7,194,816 - 11,061,847 40,321,592 51,383,439
Share conversion - (3,828,359) - 3,828,359 - - -
Issue of shares 655,555,553 6,556 - - 6,556 288,444 295,000
Shares issued in payment of creditors 24,152,970 240 - - 240 11,520 11,760
Loan converted into shares 295,976,777 2,959 - - 2,959 180,913 183,872
Balance at 30 September 2015 4,842,714,636 48,427 7,194,816 3,828,359 11,071,602 40,802,469 51,874,071
All the shares issued are fully paid up and none of the Company`s shares are
held by any of its subsidiaries.
Reorganisation of share capital
On 22 June 2015 each ordinary shares of 0.1p was subdivided into one ordinary
share of 0.001p and one deferred share of 0.099p to create a greater margin
between the price at which the Company`s ordinary shares were trading on AIM and
the nominal value of the ordinary shares.
b)Potential issue of ordinary shares
Share options
The number and weighted average exercise prices of share options valid at the
year-end are as follows:
Weighted Number of Weighted Number of
average options average options
exercise price exercise price
2015 2015 2014 2014
£ £
Exercisable at the beginning of the year 0.004 141,200,000 0.004 141,200,000
Granted during the year 0.003 208,940,427 - -
Exercisable at the end of the year 0.003 350,140,427 0.004 141,200,000
The options outstanding at 30 September 2015 have exercise prices of £0.025,
£0.002 and £0.00275 and a weighted average remaining contractual life of four
years (2014: four years).
Share-based payments
The fair value of services received in return for share options granted are
measured by reference to the fair value of share options granted. The estimate
of the fair value of the services is measured based on the Black Scholes
valuation model.
Fair value of share options and assumptions 2015 2014
£ £
Fair value at measurement date 288,831 -
Weighted average share price 0.00190 -
Weighted average exercise price 0.00275 -
Expected volatility 109% -
Average option life in years 5.0 -
Expected dividends - -
Weighted average risk-free interest rate (based on national government bonds) 1.178% -
The expected volatility is based upon the historical volatility of the Company
over the previous five years, and reflects the assumption that the historical
volatility is indicative of future trends, which may not necessarily be the
actual outcome.
There are service related conditions associated with share option exercises but
no market related conditions.
Critical estimate
The Directors have assumed a life of 5 years; however a material difference
would arise if the life were lowered to 2.9 years or below.
2015 2014
Share options granted 208,940,427 -
Total expense recognised as employee costs £288,831 -
Share warrants
Weighted Number of Weighted Number of
average warrants average warrants
exercise price exercise price
2015 2015 2014 2014
£ £
Exercisable at the beginning of the year 0.004 97,192,506 0.03 2,692,506
Granted during the year 0.014 85,553,224 0.003 94,500,000
Exercisable at the end of the year 0.009 182,745,730 0.004 97,192,506
All the warrants granted during the year were issued to YA Global Master SPV
Ltd. These warrants, which represent a direct cost of entering into a loan
financing agreement with YA Global Master SPV Ltd, have been valued and
recognised in other reserves, with the corresponding amount included in finance
costs (Note 7).
The assessed fair value of the warrants granted during the year was determined
using the Black Scholes model. The following inputs to the model were used:
Feb 2015 Mar 2015 Apr 2015
Fair value at measurement date £23,621 £23,708 £24,357
Share price at grant date £0.0019 £0.0015 £0.0012
Exercise price £0.0023 £0.0019 £0.0014
Expected volatility 101 % 101 % 102 %
Life in years 3 3 3
Expected dividends - - -
Weighted average risk-free interest rate (based on national government bonds) 0.777% 0.955% 0.694%
The expected volatility is based upon the historical volatility of the Company
over the previous three years, and reflects the assumption that the historical
volatility is indicative of future trends, which may not necessarily be the
actual outcome.
14 Trade and other payables - short-term
Group Company
2015 2014 2015 2014
£ £ £ £
Trade payables 6,585 23,647 6,585 22,661
Social security and employee taxes 9,057 52,311 7,197 50,862
Other creditors and accruals 336,208 208,861 336,208 208,516
351,850 284,819 349,990 282,039
15 Interest bearing liabilities
Group and Company 2015 2014
£ £
YA Global Master SPV Ltd loan - unsecured 451,104 794,061
Total 451,104 794,061
YA Global Master SPV Ltd loan
On 3 September 2014 the Company entered into an agreement in relation to a
convertible loan facility (the "Facility") of up to US$10 million to be made
available by YA Global Master SPV Ltd (the "Investor"), an investment fund
managed by Yorkville Advisors Global, LP. The Facility, which will be available
to the Company for three years, provided for an initial loan tranche of
principal amount US$1.5 million (the "Initial Tranche"), which was drawn down by
ECR in September 2014, and for future loans up to an aggregate principal amount
of US$10 million. A further loan under the facility, in three tranches totalling
US$750,000 in principal amount, was agreed in February 2015, and the three
tranches were drawn down as envisaged during the year ended 30 September 2015.
The Directors believe further loans are likely to be available under the
facility in future, should they be required, although neither the Company nor YA
Global is under any obligation to agree to any further loan.
The outstanding principal amount of a tranche (a "Loan") drawn down by ECR under
the Facility is convertible at YA Global`s option into ordinary shares of the
Company of 0.001p ("Ordinary Shares") on the following terms: (a) at 92.5% of
the average daily volume weighted average price (VWAP) of the Ordinary Shares
during the ten trading days preceding the conversion date, conversion on this
basis being restricted to a maximum amount of US$250,000 per calendar month; or
(b) at £0.003735 (0.3735p) in the case of the Initial Tranche or 150% of the
average daily VWAP of the Ordinary Shares during the five trading days preceding
drawdown of any subsequent Loan, conversion on this basis being subject to no
maximum amount.
On maturity of a Loan, which shall be two years from the date of drawdown
(extendable by up to one year at the option of YA Global) any outstanding
principal amount will be mandatorily converted to Ordinary Shares at the closing
price of the Ordinary Shares on or immediately prior to the maturity date.
Interest on the outstanding principal amount of a Loan will accrue at 10% per
annum, payable in Ordinary Shares at 92.5% of the average daily VWAP of the
Ordinary Shares during the ten trading days prior to the interest payment date.
An implementation fee of 7.5% of the principal amount of each Loan is payable to
YA Global upon drawdown of the relevant Loan.
The Company is entitled to prepay a Loan in cash, in whole or in part, by making
a payment to YA Global equal to the principal amount to be prepaid plus any
interest due and an additional amount of 10% of the principal amount to be
prepaid. The Facility provides for customary events of default, and following an
event of default the outstanding principal amount of a Loan plus interest may in
certain circumstances become immediately due and payable in cash. If an event of
default has been continuing for at least 30 calendar days, the outstanding
principal amount of a Loan may at YA Global`s option be converted in whole or in
part to Ordinary Shares at 80% of the VWAP of the Ordinary Shares for the five
trading days preceding the date of such a conversion.
In the event that the 30 day moving average closing price of the Ordinary Shares
falls below the nominal value of an Ordinary Share for a period of five
consecutive trading days, the outstanding principal amount of a Loan shall
become repayable in cash on a monthly basis over the remaining term of the Loan,
with interest also payable in cash. If the closing price of the Ordinary Shares
were to subsequently cease to be less than the nominal value of an Ordinary
Share for a period of ten consecutive trading days, the monthly cash repayments
would no longer be required and the Loan would revert to being convertible into
Ordinary Shares on the prior terms.
With respect to the Initial Tranche, YA Global received 94,500,000 warrants,
each exercisable to acquire one Ordinary Share for a price of £0.003 (0.3p) and
valid for three years. In connection with any subsequent Loan, YA Global will
receive a quantity of warrants equal to 25% of the principal amount of such Loan
(converted to £) divided by the closing price of the Ordinary Shares on the
trading day prior to the date of drawdown, each warrant to be valid for three
years and exercisable to acquire one Ordinary Share for a price equal to 125% of
the VWAP of the Ordinary Shares on the trading day prior to the date of
drawdown. In connection with the three tranches drawn down in the year ended 30
September 2015, YA Global received: 21,740,000 warrants exercisable at 0.2344p;
27,345,833 warrants exercisable at 0.1875p; and 36,467,391 warrants exercisable
at 0.1438p.
Loan extinguishment of debt by equity
IFRIC 19 extinguishing financial liabilities with equity instruments provides
guidance on the accounting for the extinguishment of a financial liability by
the issue of equity instruments. Under IFRIC 19, equity instruments issued under
such arrangement will be measured at their fair value, and any difference
between carrying amount of the financial liability extinguished and the
consideration paid will be recognised in the Income Statement. The settlement of
the convertible loan notes and the YA Global Master SPV Ltd loan as well as a
small number of other debts by the issue of shares resulted in an additional
amount of £Nil (2014: £Nil), being the difference between the fair value of
shares and transaction value being recognised as a loss in the Income Statement.
16 Capital management
The Group`s objective when managing capital is to safeguard the entity`s ability
to continue as a going concern and develop its mineral exploration and
development and other activities to provide returns for shareholders and
benefits for other stakeholders.
The Group`s capital structure comprises all the components of equity (all share
capital, share premium, retained earnings when earned and other reserves). When
considering the future capital requirements of the Group and the potential to
fund specific project development via debt, the Directors consider the risk
characteristics of the underlying assets in assessing the optimal capital
structure.
17 Related party transactions
Group Company
2015 2014 2015 2014
£ £ £ £
Amounts owed to Directors 125,500 - 125,500 -
Details of Directors` emoluments are disclosed in Note 6. The amounts owed to
Directors relate to accrued emoluments.
The Directors are the only key management. Transactions with the Directors are
disclosed in Note 18 and this note.
Amounts owed to former directors relate to overpayment in respect of
subscription for warrants and balance owing on consultancy fees.
During the year the Company subscribed for new shares of Ochre Mining SA
("Ochre") to the value of £79,732 in order to provide funding for Ochre`s
exploration activities. Ochre is a wholly owned subsidiary of the Company and
operates the SLM project in Argentina.
Details of the impairment provision by the Company in relation to MGA are
disclosed in Note 11.
During the year the Company capitalised £552,882 of exploration expenditure as
disclosed in Note 10 in relation to the joint venture agreement with Tiger
International Resources, Inc. and Cordillera Tiger Gold Resources, Inc.
18 Advances made to directors
2015 2014
£ £
S Clayson
Amount owed at start of the year 10,299 -
Advances - to cover business expenses - 32,917
Repayments achieved through expense claims (10,299) (22,618)
Amount owed at the year end - 10,299
19 Commitments and contingencies
Capital expenditure commitment
As at 30 September 2015, the Group had no commitments (2014: £Nil).
Operating lease commitments
Details of operating lease commitments are set out in Note 20 below.
20 Operating leases
The total amounts payable under:
Non-cancellable operating lease minimum payments of the Group and Company are as
follows:
2015 2014
Payable: £ £
Within 1 year 4,453 23,177
Within 2 years - 4,453
21 Financial instruments
Categories of financial instrument
2015 2014
£ £
Financial assets
Cash and cash equivalents 90,398 642,056
90,398 642,056
Available for sale financial assets 39,277 178,866
Other financial assets - 26,196
39,277 205,062
Financial liabilities
Trade and other payables 132,085 23,647
132,085 23,647
Borrowings 451,104 794,061
451,104 794,061
Risk management objectives and policies
The Group`s principal financial assets comprise cash and cash equivalents, trade
and other receivables, investments and prepayments. In addition the Company`s
financial assets include amounts due from its operating subsidiary, Mercator
Gold Australia Pty Ltd, which is held at cost less a provision for impairment.
The Group`s liabilities comprise trade payables, other payables including taxes
and social security, and accrued expenses.
The Board determines as required the degree to which it is appropriate to use
financial instruments, commodity contracts or other hedging contracts to
mitigate financial risks.
Credit risk
The Group's cash at bank is held with reputable international banks. Cash is
held either on current account or on short-term deposit at floating rates of
interest determined by the relevant prevailing base rate. The fair value of cash
and cash equivalents at 30 September 2015 and 30 September 2014 did not differ
materially from their carrying value.
Market risk
The Group`s financial instruments potentially affected by market risk include
bank deposits, and trade payables. An analysis is required by IFRS 7, intended
to illustrate the sensitivity of the Group`s financial instruments (as at period
end) to changes in market variables, being exchange rates and interest rates.
The Group`s exposure to market risk is not considered to be material.
Interest rate risk
The Company has no material exposure to interest rate risk.
Since the interest accruing on bank deposits was relatively immaterial and the
amount due from the subsidiary was interest free, there is no material
sensitivity to changes in interest rates.
Foreign currency risk
The Company is exposed to foreign currency risk in so far as some dealings with
overseas subsidiary undertakings are in foreign currencies and in that certain
of the Company`s holdings of listed securities are denominated in foreign
currencies, in particular Canadian dollars. The foreign currency exposure to the
impaired Australian subsidiary is not considered to be material in the context
of the provision made against it.
Fair value of financial instruments
The fair values of the Company`s financial instruments at 30 September 2015 and
30 September 2014 did not differ materially from their carrying values.
The Group measures fair values using the following fair value hierarchy that
reflects the significance of the inputs used in making the measurements:
• Level 1: quoted prices (unadjusted) in active markets for identical assets or
liabilities;
• Level 2: valuation techniques based on observable inputs either directly (i.e.
as prices) or indirectly (i.e. derived from prices);
• Level 3: valuation techniques that include inputs for the asset or liability
that are not based on observable market data (unobservable inputs).
The following table provides an analysis of financial instruments that are
measured subsequent to initial recognition at fair value, by the level in the
fair value hierarchy into which the measurement is categorised.
Group and Company
30 September 2015
Level 1 Level 2 Level 3 Total
£ £ £ £
Available for sale financial assets 39,277 - - 39,277
Other financial assets - - - -
39,277 - - 39,277
Group and Company
30 September 2014
Level 1 Level 2 Level 3 Total
£ £ £ £
Available for sale financial assets 178,866 - - 178,866
Other financial assets - 26,196 - 26,196
178,866 26,196 - 205,062
Liquidity risk
The Company finances its operations primarily through the issue of equity share
capital and debt in order to ensure sufficient cash resources are maintained to
meet short-term liabilities and future project development requirements.
Management monitors availability of funds in relation to forecast expenditures
in order to ensure timely fundraising. Funds are raised in discrete tranches to
finance activities for limited periods.
Funds surplus to immediate requirements may be placed in liquid, low risk
investments.
The Company`s ability to raise finance is subject to market perceptions of the
success of its projects undertaken during the year and subsequently. Due to the
uncertain state of financial markets there can be no certainty that future
funding will continue to be available.
The table below sets out the maturity profile of financial liabilities as at 30
September 2015.
2015 2014
£ £
Due in less than 1 month 351,850 174,885
Due between 1 and 3 months - -
Due between 3 months and 1 year 451,104 794,061
Due after 1 year - -
802,954 968,946
22 Segmental report
The Company is engaged in mineral exploration and development.
Management does not segment the mineral exploration activity by geographical
region when evaluating performance.
23 Consolidated cash flow statement
Group Company
Year ended Year ended Year ended Year ended
30 September 30 September 30 September 30 September
Note 2015 2014 2015 2014
£ £ £ £
Operating activities
Loss for the year before tax (1,502,738) (1,746,397) (4,674,506) (1,669,949)
Adjustments:
Depreciation expense property, plant and equipment 8 3,111 358 2,937 -
Provisions and impairments of investments and loans 14,750 585,895 14,750 585,895
Impairment of other current assets - - 3,217,484 -
Loss on available for sale assets 137,131 121,922 137,040 109,621
Interest income 7 (28) (654) (28) (654)
Loss on revaluation of investments - 202,618 - 202,618
Interest accrued on convertible loan notes 7 319,796 21,586 319,796 20,814
Other interest payable 7 1,384 - - -
Share based payments 288,831 - 288,831 -
(Decrease)/increase in accounts receivable 6,539 (20,785) 20,533 (23,987)
Decrease in taxation 543 17,319 543 17,319
Increase/(decrease) in accounts payable 67,103 (28,136) 67,924 (24,510)
Shares issued in lieu of expense payments 8,874 - 8,874 -
Net cash flow used in operations (654,704) (846,274) (595,822) (782,833)
Non-cash transactions
During the year £955,914 (2014: £64,226) of convertible loans and interest
thereon were converted into shares.
24 Post balance sheet events
* On 12 October 2015 the Company announced the issue of 124,095,238 new ordinary
shares of 0.001p each in the Company at a price of 0.0525p per share pursuant to
the conversion of US$100,000 of outstanding principal amount under the Company`s
convertible loan facility with YA Global Master SPV Ltd. A further 20,908,800
new ordinary shares of 0.001p each were issued at a price of 0.0525p per share
in settlement of accrued interest.
* On 20 October 2015, the Company announced details of an amendment to the
earn-in and joint venture agreement (the "Agreement") between the Company, Tiger
International Resources, Inc. ("Tiger") and Cordillera Tiger Gold Resources,
Inc. ("Cordillera Tiger"). The terms of the Agreement, which pertains to the
Danglay gold project (formerly known as the Itogon gold project) in the
Philippines, were summarised in ECR`s announcement dated 29 April 2013. The
effect of the amendment is that ECR may exercise the Earn-in Option, as that
term is defined in the Agreement, in the following manner: by ensuring the
completion of such work and the making of such expenditures as may be necessary
to obtain for Cordillera Tiger a mining licence in respect of the Itogon project
on or before the tenth anniversary (previously the fifth anniversary) of the
Commencement Date, subject to force majeure provisions. The Commencement Date is
6 December 2013.
* On 26 October 2015 the Company announced the issue of 186,309,751 new ordinary
shares of 0.001p each in the Company at a price of 0.0523p per share pursuant to
the conversion of US$150,000 of outstanding principal amount under the Company`s
convertible loan facility with YA Global Master SPV Ltd. A further 715,430 new
ordinary shares of 0.001p each were issued at a price of 0.0523p per share in
settlement of accrued interest.
* On 4 November 2015 the Company announced the issue of 244,293,785 new ordinary
shares of 0.001p each in the Company at a price of 0.0531p per share pursuant to
the conversion of US$200,000 of outstanding principal amount under the Company`s
convertible loan facility with YA Global Master SPV Ltd. A further 20,330,132
new ordinary shares of 0.001p each were issued at a price of 0.0531p per share
in settlement of accrued interest.
* On 5 November 2015 the Company announced a mineral resource estimate for the
Danglay gold project in the Philippines, along with a target for further
exploration.
* On 18 November 2015 the Company announced it had received firm commitments in
respect of a placing and subscription of 1,250,000,000 new ordinary shares of
the Company of 0.001p at a price of 0.02p each to raise gross proceeds of
£250,000. Subscribers in the placing were issued one warrant per placing share
(the "Warrants"). Each Warrant will entitle the holder to subscribe for one
ordinary share of 0.001p in the Company at a price of 0.04p per ordinary share
(the "Exercise Price"). Each Warrant shall be valid for three years from the
date the corresponding placing shares were admitted to trading on AIM. In the
event the Company announces that total mineral resources estimated at the
Danglay gold project in the Philippines have exceeded 500,000oz contained gold
equivalent in accordance with a Standard, the Exercise Price of the Warrants
shall be increased to 0.06p per ordinary share. The term "Standard" is defined
by the AIM Note for Mining and Oil & Gas Companies.
* On 21 December 2015 the Company announced the publication of an NI43-101
technical report in respect of the Danglay gold project in the Philippines
* On 12 January 2016 the Company announced the issue of 455,907,336 new ordinary
shares of 0.001p each in the Company at a price of 0.0227p per share pursuant to
the conversion of US$150,000 of outstanding principal amount under the Company`s
convertible loan facility with YA Global Master SPV Ltd. A further 58,039,184
new ordinary shares of 0.001p each were issued at a price of 0.0227p per share
in settlement of accrued interest.
* On 22 January 2016 the Company announced a collaboration with Metal Tiger plc
("MTR") in relation to ECR`s wholly owned Australian subsidiary Mercator Gold
Australia Pty Ltd ("MGA"). MGA, ECR and MTR have entered into a facilitation
agreement a framework for the introduction by MTR of potentially appropriate
opportunities for MGA.
* On 10 February 2016 the Company announced the issue of 537,618,001 new
ordinary shares of 0.001p each in the Company at a price of 0.0193p per share
pursuant to the conversion of US$150,000 of outstanding principal amount under
the Company`s convertible loan facility with YA Global Master SPV Ltd. A further
2,945,868 new ordinary shares of 0.001p each were issued at a price of 0.0193p
per share in settlement of accrued interest.
* On 3 March 2016, the Company announced that its wholly owned Australian
subsidiary Mercator Gold Australia Pty Ltd has agreed to acquire 100% ownership
of the Avoca and Bailieston gold projects in Victoria, Australia.
Please note that this document is important and requires your immediate
attention. If you are in any doubt as to the action to be taken, please consult
an independent adviser immediately. If you have sold or transferred or otherwise
intend to sell or transfer all of your holding of ordinary shares in the Company
prior to the annual general meeting of the Company to be held at the East India
Club, 16 St James`s Square, London SW1Y 4LH on 31 March 2016 at 9.30am, you
should send this document, together with the accompanying form of proxy, to the
(intended) purchaser or transferee or to the stockbroker, bank or other agent
through whom the sale or transfer was or is to be effected for transmission to
the (intended) purchaser or transferee.
ECR Minerals plc
(the "Company")
Company no. 05079979
Notice of Annual General Meeting
NOTICE IS HEREBY GIVEN THAT the annual general meeting of the Company will be
held at the East India Club, 16 St James`s Square, London SW1Y 4LH on 31 March
2016 at 9.30am in order to consider and, if thought fit, pass Resolutions 1 to 5
as ordinary resolutions and Resolution 6 as a special resolution:
Ordinary Resolutions
1. To receive, consider and adopt the directors` report and accounts of the
Company for the year ended 30 September 2015.
2. To re-appoint Nexia Smith & Williamson Audit Ltd of 25 Moorgate, London EC2R
6AY, as auditors of the Company and to authorise the directors to determine
their remuneration.
3. To re-elect as a director William Howell who is retiring in accordance with
Article 29 of the Company`s Articles of Association and who being eligible is
offering himself for re-election.
4. To re-elect as a director Richard Watts who is retiring in accordance with
Article 29 of the Company`s Articles of Association and who being eligible is
offering himself for re-election.
5. That the directors be generally and unconditionally authorised pursuant to
Section 551 of the Companies Act 2006 (the "Act") to allot shares in the Company
or grant rights to subscribe for or to convert any security into shares in the
Company ("Rights") up to an aggregate nominal amount of £300,000, provided that
this authority shall, unless previously revoked or varied by the Company in
general meeting, expire at the conclusion of the next annual general meeting of
the Company following the date of the passing of this resolution or (if earlier)
15 months from the date of passing this resolution, but so that the directors
may before such expiry make an offer or agreement which would or might require
relevant securities to be allotted after such expiry and the directors may allot
relevant securities in pursuance of that offer or agreement as if the authority
hereby conferred had not expired.
Special Resolution
6. That, subject to the passing of Resolution 5, the directors be given the
general power to allot equity securities (as defined by Section 560 of the Act)
for cash, either pursuant to the authority conferred by Resolution 5 or by way
of a sale of treasury shares, as if Section 561(1) of the Act did not apply to
any such allotment, provided that this power shall be limited to:
6.1 the allotment of equity securities in connection with an offer by way of a
rights issue:
6.1.1 to the holders of ordinary shares in proportion (as nearly as may be
practicable) to their respective holdings; and
6.1.2 to holders of other equity securities as required by the rights of those
securities or as the directors otherwise consider necessary, but subject to such
exclusions or other arrangements as the directors may deem necessary or
expedient in relation to treasury shares, fractional entitlements, record dates,
legal or practical problems in or under the laws of any territory or the
requirements of any regulatory body or stock exchange; and
6.2 the allotment (otherwise than pursuant to paragraph 6.1 above) of equity
securities up to an aggregate nominal amount of £300,000.
The power granted by this resolution will unless otherwise renewed, varied or
revoked by the Company, expire at the conclusion of the next annual general
meeting of the Company following the date of the passing of this resolution or
(if earlier) 15 months from the date of passing this resolution, save that the
Company may, before such expiry make offers or agreements which would or might
require equity securities to be allotted after such expiry, and the directors
may allot equity securities in pursuance of any such offer or agreement
notwithstanding that the power conferred by this resolution has expired.
This resolution revokes and replaces all unexercised powers previously granted
to the directors to allot equity securities as if Section 561(1) of the Act did
not apply, but without prejudice to any allotment of equity securities already
made or agreed to be made pursuant to such authorities.
By order of the board of directors of ECR Minerals plc
Stephen Clayson
Director & Chief Executive Officer
Registered office:
ECR Minerals plc
Peek House
20 Eastcheap
London
EC3M 1EB
4 March 2016
NOTES
1 A member entitled to attend and vote at the meeting is also entitled to appoint a proxy to attend and vote on a poll instead of him. A proxy may demand, or join in
demanding, a poll. A proxy need not be a member of the Company.
2 Completion and return of the form of proxy will not preclude ordinary shareholders from attending or voting at the meeting, if they so wish.
3 To be effective, this proxy form must be lodged with the Company`s registrars, Computershare Investor Services plc, The Pavilions, Bridgwater Road, Bristol BS99 6ZY,
United Kingdom not later than 48 hours before the time of the meeting or any adjournment thereof, together, if appropriate, with the power of attorney or other authority
(if any) under which it is signed or a notarially certified copy of such power or, where the proxy form has been signed by an officer on behalf of a corporation, a
notarially certified copy of the authority under which it is signed.
4 In the case of a joint holding, a proxy need only be signed by one joint holder. If more than one such joint holder lodges a proxy only that of the holder first on the
register of members will be counted. Any alterations made to this proxy should be initialled.
5 If you submit more than one valid proxy appointment, the appointment received last before the latest time for the receipt of proxies will take precedence.
6 In the case of a corporation this proxy must be given under its common seal or be signed on its behalf by an attorney or officer duly authorised.
7 Any power of attorney or any other authority under which this proxy form is signed (or a duly certified copy of such power or authority) must be included with the proxy
form.
8 A copy of the Statement of Financial Position and every document required by law to be annexed to it, which are to be laid before the above mentioned meeting, are
enclosed. The register of interests of the directors in the share capital of the Company and copies of contracts of service of directors with the Company will be
available for inspection at the registered office of the Company during normal business hours (Saturdays and public holidays excepted) from the date of this notice until
the conclusion of the annual general meeting.
9 Pursuant to Regulation 41 of the Uncertificated Securities Regulations 2001, entitlement to attend and vote at the meeting and the number of votes which may be cast
thereat will be determined by reference to the Register of Members of the Company at close of business on the day which is two days before the day of the meeting. Changes
to entries on the Register of Members after that time shall be disregarded in determining the rights of any person to attend and
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