REG - Goldstone Resources - Final Results <Origin Href="QuoteRef">GRL.L</Origin> - Part 2
16/07/2015 12:08
- Part 2: For the preceding part double click ID:nRSW8931Qa
diluted loss per share (0.019) (0.004)
The Group has the following instruments which could potentially dilute basic
earnings per share in the future:
in number of shares December 2014 February 2014
share options 1,370,000 13,850,000
warrants 2,265,083 0
11. Share based payment arrangements
At 31 December 2014, the Group has the following share-based payment
arrangements.
(a) share option programmes (equity-settled)
The Group adopted an Option Scheme in order to incentivise key management and
staff. Pursuant to the option scheme, a duly authorised committee of the Board
of Directors of the Company may, at its discretion, grant options to eligible
employees, including Directors, of the Company or any of its subsidiaries to
subscribe for shares in the Company at a price not less than the higher of (i)
the closing price of the share of the Company on the Stock Exchange on the
date of grant of the particular option or (ii) the nominal value of the
shares.
There were no market conditions within the terms of the grant of the options
therefore the main vesting condition for all the options awarded was that the
director or employee remained contracted to the Group at the date of exercise.
The movement on share options and their weighted average exercise price are as
follows for the reporting periods presented.
The conditions related to the grants of the share option programmes are as
follows:
grant date/employee entitled number of instruments exercise price vesting date
options granted to executive directors
on 27 June 2011 170,000 30.0p 22 February 2011
on 27 June 2011 170,000 50.0p 22 August 2011
on 31 March 2011 90,000 100.0p 31 March 2012
on 31 March 2011 90,000 120.0p 31 March 2013
on 31 March 2011 90,000 140.0p 31 March 2014
options granted to senior employees and other directors
on 27 June 2011 170,000 30.0p 22 February 2011
on 27 June 2011 170,000 50.0p 22 August 2011
on 31 March 2011 90,000 100.0p 31 March 2012
on 31 March 2011 90,000 120.0p 31 March 2013
on 31 March 2011 90,000 140.0p 31 March 2014
on 31 March 2011 50,000 90.0p 31 March 2012
on 27 September 2012 100,000 90.0p 6 February 2013
1,370,000
The terms relating to the grants of the share option programmes are that on
exercise date, the receiver of the options must still be employed by the
Company, or in the case of the receiver being retrenched or retired, before
three months thereafter, or in the case of the death of the receiver, before
six months thereafter.
On 30 October 2014 the Company effected the sub-division and 1 for 10
consolidation of the Company's issued ordinary shares into new ordinary shares
and deferred shares, which resulted in the amendment of the number of
instruments and exercise price of the options. The value of these options
remains unchanged.
(b) warrants
On 30 October 2014, the Group granted 20,833,333 warrants with an exercise
price of 7.0p vesting from 30 October 2014 up to 30 April 2016 to Stratex
International Plc. No warrants have been exercised during the period under
review.
All shares issued pursuant to the exercise of warrants rank pari passu in all
respects with the ordinary shares.
(c) measurement of fair value
The fair value of the rights granted through the share option programme was
measured based on the Black-Scholes formula. Expected volatility is estimated
by considering historical volatility of the Company's share price over the
period commensurate with the expected return.
The inputs used in measuring the fair values at grant date were as follows:
share options share options
27 September 2012 31 March 2011
share price at grant 3.57p 7.85p
option exercise price 9p 6.50p - 14.00p
expected life of options from exercise date 5 years 3 years
expected volatility 61.20% 61.20%
expected dividend yield 0.00% 0.00%
risk free rate 1.03% 1.03%
fair value per share option 0.41p - 0.55p 0.04p - 1.05p
exchange rate used 1.6466 1.6466
Volatility has been based on the Group's trading performance to 31 December
2014. The risk free rate has been determined based on 5 year government bonds.
The exercise date is 1 year after vesting date.
The closing price of the Group's shares on the date of grant for options
issued prior to 2010 was substantially lower than the exercise price. Thus,
the fair value of these options was negligible at the date of grant.
Total fair value as considered in share options and warrants reserve was US$
605,808 (February 2014: US$ 605,808).
(d) expense recognised in profit and loss
No options were granted to directors and employees during the period under
review.
No liabilities were recognised due to share-based payment transactions.
(e) reconciliation of outstanding share options
the number and weighted average exercise prices
number of optionsDecember 2014 weighted average exercise priceDecember 2014 number of optionsFebruary 2014 weighted average exercise priceFebruary 2014
outstanding as at 1 March 13,850,000 7.71p 17,850,000 6.74p
exercised during the year 0 0 0 0
expired during the year (150,000) 0 (4,000,000) 0
granted during the year 0 0 0 0
1 to 10 consolidation (12,330,000) 0 0 0
outstanding at 31 December (28 February) 1,370,000 77.00p 13,850,000 7.71p
exercisable at 31 December (28 February) 1,370,000 77.00p 12,050,000 6.78p
No share options were granted during the period under review.
The options outstanding at 31 December 2014 have an exercise price in the
range of 30.00p to 140.00p (February 2014: 3.0p to 14.0p) and a weighted
average life of 1.67 years (February 2014: 2.34 years).
12. Trade and other payables
in united states dollars December 2014 February 2014
trade payables 50,887 308,073
The Group's exposure to currency and liquidity risk related to trade and other
payables is disclosed in note 21 of the full accounts. The directors consider
that the carrying amount of trade payables approximates to their fair value.
13. Financial instruments
(a) financial risk management
The Group's principal financial instruments comprise of cash, receivables and
creditors. Financial risk management of the Group is governed by policies and
guidelines described in the Group's Financial Reporting Memorandum approved by
the board of directors. Group policies and guidelines cover interest rate
risk, foreign currency risk, credit risk and liquidity risk. The objective of
financial risk management is to contain, where appropriate, exposures in these
financial risks to limit any negative impact on the Group'sfinancial
performance and financial position.
(b) credit risk
Credit risk is the risk of financial loss to the Group if a customer or
counterparty fails to meet its contractual obligations. The Group'strade and
other receivable consists of amounts refundable to the Company for expenses
incurred on behalf of a third party and payments in advance to suppliers. The
Group'sexposure to significant concentration on credit risk on trade and other
receivables is considered low.
(c) liquidity risk
Liquidity risk is the risk that the Group will encounter difficulty in meeting
the obligations associated with its financial liabilities that are settled by
delivering cash or another financial asset when they fall due. Ultimate
responsibility for liquidity risk management rests with the board of
directors, which has established an appropriate liquidity risk management
framework for the management of the Group's liquidity management requirements.
The Group manages liquidity risk by continuously monitoring forecast and
actual cash flows, and by preserving cash resources through minimising the
cash burn out rate achieved through cost reduction. The financial liabilities
of the Group are mainly creditors which are payable on demand hence it is the
opinion of the board of directors that an analysis of liabilities by maturity
dates is not appropriate.
(d) market risk
Market risk is the risk that changes in market prices, such as foreign
exchange rates and interest rates will affect the Group's income or the value
of its holding of financial instruments. The objective of market risk
management is to manage and control market risk exposures within acceptable
parameters, while optimising the return.
(i) foreign currency risk
Currency risk is the risk that the fair value or future cash flows of a
financial instrument will fluctuate because of changes in foreign exchange
rates. The Group has cash assets denominated in Sterling, United States
Dollars, South African Rand, Ghana Cedis and West African CFA Francs and
incurs liabilities for its working capital expenditure in one of these
denominations. Payments are made in Sterling (GBP), United States Dollars
(USD), South African Rand (ZAR), Ghana Cedis (GHS), West African CFA Francs
(XAF), or Euro at the pre-agreed price and converted (if necessary) as soon as
payment needs to occur. Currency conversions and provisions for expenditure
are only made as soon as debts are due and payable. The Group is therefore
exposed to currency risk in so far as its liabilities are incurred in South
African Rand, Ghanaian Cedi and West African CFA Francs and fluctuations occur
due to changes in the ZAR/GBP, ZAR/USD, GHS/USD and XAF/USD exchange rates.
The Group's policy is not to enter into any currency hedging transactions.
The directors consider currency risk to be manifested in the expenditure made
on a day to day basis in Sterling, South African Rand and US Dollars. The
directors have undertaken a policy of holding cash raised in Sterling and US
Dollars and to convert funds to South African Rand as and when required.
The exchange rates converted to United States Dollars affecting the Group were
as follows:
average rateDecember 2014 reporting date spot rateDecember 2014 average rateFebruary 2014 reporting date spot rateFebruary 2014
Sterling for 1 US$ 1.647 1.553 1.577 1.675
South African Rand for 1 US$ 0.092 0.086 0.100 0.093
Ghana Cedis for 1 US$ 0.320 0.312 0.463 0.391
West African CFA Francs for 1 US$ 0.002 0.002 0.002 0.002
A strengthening (weakening) of GBP, ZAR, GHS or XAF against all other
currencies at 31 December 2014 would have affected the measurement of
financial instruments denominated in a foreign currency and increased
(decreased) equity and profit or loss by the amounts shown below. This
analysis is based on foreign currency exchange rate variances that the Group
considered to be reasonably possible at the end of the reporting period. The
analysis assumes that all other variables, in particular interest rates,
remain constant. The sensitivity analysis includes only outstanding foreign
currency denominated financial assets and liabilities and adjusts this
translation at year end for a percentage change in foreign currency rate thus
indicating the potential movement in equity. The analysis is performed on the
same basis for February 2014, albeit that the reasonably possible foreign
exchange rate might have been different, as indicated below.
in united states dollars equity strengtheningDecember 2014 equity weakeningDecember 2014 equity strengtheningFebruary 2014 equity weakeningFebruary 2014
Sterling 13% (Feb 2014: 13%) 783 (783) 2,330 (2,330)
South African Rand 20% (Feb 2014: 20%) 3,031 (3,031) 15,480 (15,480)
Ghana Cedis 10% (Feb 2014: 10%) 0 0 0 0
West African CFA Francs 10% (Feb 2014: 10%) 0 0 0 0
total 3,814 (3,814) 17,810 (17,810)
The percentage change in foreign currency rate used to adjust the translation
of outstanding foreign currency denominated financial assets and liabilities
is in the opinion of the directors appropriate.
(ii) interest rate risk
The risks caused by changes in interest rates are minimal since the Group's
only interest bearing financial asset pertains to cash. The Group is
therefore not subject to significant amount of risk due to fluctuations in the
prevailing levels of market interest rates and as such has not prepared a
sensitivity analysis.
14. Capital commitments
Operating lease payments represent rentals payable by the Group for certain of
its office properties.
15. Joint ventures
The Group has certain contractual obligations with respect to the Homase
license and the Manso Amenfi license arising from joint venture agreements. In
terms of the joint venture agreements all significant operating and financial
policy decisions are made by the Company to the extent that the respective
joint ventures, as a single purpose vehicle, has no significant independence
to pursue its own commercial strategy. For this reason the contractual
arrangements do not create an entity, partnership or body corporate. In
addition, in terms of these agreements the Company has the right to terminate
the agreements without bringing about further financial commitment or giving
rise to any legal consequences.
The consolidated financial statements of the Group include its share of the
assets, liabilities and cash flows in such joint arrangements, measured in
accordance with the terms of each arrangement, which is usually pro-rata to
the Group's interest in the joint arrangement. These are further detailed
below.
The Group entered into a contractual agreement with Cherry Hill Mining Company
Ltd ("Cherry Hill") on 10 September 2009 in respect of the Homase prospecting
licence and with Asasemu Mining Ltd ("Asasemu") on 8 October 2009 concerning
the Manso Amenfi prospecting licence. During the period ended, the Group holds
a 10% interest in the Manso Amenfi licence and a 90% in the Homase licence.
Under the terms of the agreements with Cherry Hill and Asasemu, the Group has
the right to earn an interest in the Licences respectively of up to 100% (post
an agreed buy-out) and 85% (post expending funds towards exploration costs or
reaching certain exploration targets).
16. Related parties
The interests of the Directors in the share capital of the Group, whether
beneficial or non-beneficial, are as follows:
ordinary shares under optionDecember 2014 ordinary shares under option February 2014
JH Wessels 760,000 7,600,000
Details of all share based payments are disclosed in note 18 of the full
accounts.
17. Group entities
Details of the Group's subsidiaries at the end of the reporting period are as
follows:
country of incorporation and operation principal activity ownership interest December 2014 ownership interestFebruary 2014
Goldstone Akrokerri (Ghana) Limited ghana Holder of the Akrokerri License 100% 100%
Goldstone Resources Limited Gabon S.A.R.L. gabon Holder of the Oyem and Ngoutou Licenses 100% 100%
Under Article 105(ii) of the Companies (Jersey) Law 1991, the directors of the
holding company need not prepare separate accounts (i.e. company only
accounts) if consolidated accounts for the company are prepared, unless
required to do so by the members of the company by ordinary resolution. The
members of the Company have not passed a resolution requiring separate
accounts and, in the Directors' opinion, the Company meets the definition of a
holding company. As permitted by the law, the Directors have elected not to
prepare separate accounts.
18. Ultimate controlling party
The directors believe that no shareholder has the ability to control the
constitution of the board which would result in such shareholder becoming the
controlling party of the Group.
19. Subsequent events
Following the period end, the Company completed an auger sampling programme
over eight high-priority gold targets close to and along strike from the
Homase/Akrokerri gold deposit in April 2015. During the program, 1,332 auger
holes were drilled to a maximum depth of 3m with results indicating the
existence of two new zones of mineralisation, namely a 1,500m anomaly and an
800m anomaly immediately south west and along strike of the Homase/Akrokerri
deposit. Both these prospects show promise to host additional bedrock gold
mineralisation which may potentially add to the existing resource. Infill
auger sampling was conducted to possibly define drill targets and results are
awaited.
In early June 2015 the Company signed an addendum agreement with its Homase
joint venture partner, Cherry Hill Mining. The import of the agreement is to
expedite the increase of the Company's interest in the Homase licence to 90%
from its previous interest of 65%. In return for US$25,000, the Company
raised its interest in the Homase licence to 90%, thereby adding attributable
mineral resources of 101,750 oz Au and clearing two significant contractual
hurdles.
On 2 March 2015 the Company appointed Strand Hanson Limited as its Nominated
Adviser and SI Capital Limited as its Broker.
Neil Gardyne was appointed as Non-executive Director to the Board on 12 March
2015.
20. Operating lease arrangement
The operating lease relates to the lease of an office building, which expired
on 28 February 2014 and not renewed. A new operating lease was entered into on
1 March 2014 for 14 months. The Group does not have an option to purchase the
leased land at the expiry of the lease period.
Payments recognised as an expense December 2014 February 2014
Minimum lease payments 15,026 44,876
Non-cancellable operating lease commitments December 2014 February 2014
Not later than 1 year 4,120 21,551
Later than 1 year and not later than 5 years 0 3,876
21. Annual general meeting
The Company's next Annual General Meeting ("AGM") will be held in H2 2015 and
formal notice of the AGM will be issued in due course.
22. Annual report
The annual report and accounts for the 10 months ended 31 December 2014 will
be posted to shareholders by 26 June 2015 and will be available from the
Company's website at www.goldstoneresources.com shortly.
This information is provided by RNS
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