REG - KEFI Minerals plc - Full Year Results 2016 <Origin Href="QuoteRef">KEFI.L</Origin> - Part 2
06/06/2017 07:06
- Part 2: For the preceding part double click ID:nRSF2063Ha
interest will be written off in full against profit in the year in which the decision to abandon the area is made.
Capitalized development expenditure will be amortized from the date at which production commences on a unit of production
basis over the lifetime of the ore reserves for the area to which the costs relate.
Notes to the consolidated financial statements (continued)
Year ended 31 December 2016
Share-based compensation benefits
IFRS 2 "Share-based Payment" requires the recognition of equity-settled share-based payments at fair value at the date of
grant and the recognition of liabilities for cash-settled share-based payments at the current fair value at each statement
of financial position date. The total amount expensed is recognized over the vesting period, which is the period over which
performance conditions are to be satisfied.
The fair value is measured using the Black Scholes pricing model. The inputs used in the model are based on management's
best estimate, including consideration of the effects of non-transferability, exercise restrictions and behavioural
considerations.
Financial instruments
Financial assets at amortized cost
Loans and receivables are recognized when the Group becomes party to the contractual provisions of the financial
instrument. Trade receivables, loans, and other receivables that have fixed or determinable payments that are not quoted
in an active market are classified as 'loans and receivables'. Loans and receivables are measured at amortized cost using
the effective interest method, less any impairment. Interest income is recognized by applying the effective interest rate,
except for short-term receivables when the recognition of interest would be immaterial.
Financial assets at fair value through profit or loss
Subsequent to initial recognition, when a financial asset is designated as such on initial recognition, it is classified as
held at fair value through profit or loss. Assets other than held for trading are designated at fair value through profit
and loss when the Group manages the holdings and makes purchase and sale decisions based on fair value assessments and
documented risk management and investment strategies. Attributable transaction costs and changes in fair value are
recognized in profit or loss.
Financial liabilities - equity
Financial liabilities are recognized when the Group becomes party to the loan. Financial liabilities represent trade
payables and are initially measured at fair value and subsequently at amortized cost.
Debt and equity instruments are classified as either financial liabilities or as equity in accordance with the substance of
the contractual arrangement. An equity instrument is any contract that evidences a residual interest in the assets of an
entity after deducting all of its liabilities. Equity instruments issued by the Group are recognized at the proceeds
received, net of direct issue costs. The Group derecognizes financial liabilities when, and only when, the Group's
obligations are discharged, cancelled or they expire.
3. Financial risk management
Cash and cash equivalents
For the purposes of the cash flow statement, cash and cash equivalents comprise cash at bank and in hand with an original
maturity date of less than three months.
Financial risk factors
The Group is exposed to market risk (interest rate risk and currency risk), liquidity risk and capital risk management
arising from the financial instruments it holds. The risk management policies employed by the Group to manage these risks
are discussed below:
Credit risk
Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to
meet its contractual obligations. The Group does not consider this risk to be significant.
Notes to the consolidated financial statements (continued)
Year ended 31 December 2016
3. Financial risk management (continued)
Market risk - Interest rate risk
Interest rate risk is the risk that the value of financial instruments will fluctuate due to changes in market interest
rates. The Group's operating cash flows are substantially independent of changes in market interest rates as the Group has
no significant interest-bearing assets. Borrowings issued at variable rates expose the Group to cash flow interest rate
risk. Borrowings issued at fixed rates expose the Group to fair value interest rate risk. The Group's management monitors
the interest rate fluctuations on a continuous basis and acts accordingly.
At the reporting date the interest rate profile of interest-bearing financial instruments was:
2016 2015
Variable rate instruments
Financial assets 410 562
Sensitivity analysis
An increase of 100 basis points in interest rates at 31 December 2016 would have increased equity and profit or loss by the
amounts shown below. This analysis assumes that all other variables, in particular foreign currency rates, remain constant.
Given current interest rate levels, a decrease of 25 basis points has been considered, with the impact on profit and equity
shown below.
Equity Profit or Loss Equity Profit or Loss
2016 2016 2015 2015
Variable rate instruments
Financial assets - increase of 100 basis points 4 4 6 6
Financial assets - decrease of 25 basis points (1) (1) (1) (1)
Currency risk
Currency risk is the risk that the value of financial instruments will fluctuate due to changes in foreign exchange rates.
Currency risk arises when future commercial transactions and recognized assets and liabilities are denominated in a
currency that is not the functional currency of the entity.
The Group is exposed to foreign exchange risk arising from various currency exposures primarily with respect to the Euro,
Turkish Lira, US Dollar, Ethiopia ETB and Saudi Arabian Riyal. Since 1986 the Saudi Arabian Riyal is pegged to the US
Dollar, it is fixed at USD/SAR 3.75. The Group's management monitors the exchange rate fluctuations on a continuous basis
and acts accordingly.
The carrying amounts of the Group's foreign currency denominated monetary assets and monetary liabilities at the reporting
date are as follows: The Saudi Arabian Riyal exposure is included in the USD amounts.
Liabilities Assets Liabilities Assets
2016 2016 2015 2015
Australian Dollar 215 - 24 -
Euro 205 2 276 2
Turkish Lira 1 40 1 40
US Dollar 1,025 318 663 266
Ethiopia ETB 187 2,943 779 354
Notes to the consolidated financial statements (continued)
Year ended 31 December 2016
3. Financial risk management (continued)
Sensitivity analysis
A 10% strengthening of the British Pound against the following currencies at 31 December 2016 would have
increased/(decreased) equity and profit or loss by the amounts shown in the table below. This analysis assumes that all
other variables, in particular interest rates, remain constant. For a 10% weakening of the British Pound against the
relevant currency, there would be an equal and opposite impact on the loss and equity.
Equity Profit or Loss Equity Profit or Loss
2016 2016 2015 2015
AUD Dollar 22 22 3 3
Euro 20 20 27 27
Turkish Lira (4) (4) (4) (4)
US Dollar 58 58 40 40
Ethiopia ETB (276) (276) 42 42
Liquidity risk
Liquidity risk is the risk that arises when the maturity of assets and liabilities does not match. An unmatched position
potentially enhances profitability, but can also increase the risk of losses. The Group has procedures with the object of
minimising such losses such as maintaining sufficient cash and other highly liquid current assets and by having available
an adequate amount of committed credit facilities.
The Group's contractual cash flows for its financial liabilities are all due within 3 months or less. In January 2014
agreement was made with the Ethiopian tax authorities to pay the reverse VAT over a period of three years (principal and
interest). The VAT amount was settled during 2016 and has given rise to a VAT refund.
Capital risk management
The Group manages its capital to ensure that it will be able to continue as a going concern while maximizing the return to
shareholders through the optimization of the debt and equity balance. This is done through the close monitoring of cash
flows.
The capital structure of the Group consists of cash and cash equivalents of £410,000 (2015: £562,000) and equity
attributable to equity of the parent, comprising issued capital and deferred shares of £16,319,000 (2015: £15,059,000),
other reserves of £17,923,000, (2015: £13,529,000) and accumulated losses of £18,695,000 (2015: £17,645,000). The Group
does not use derivative financial instruments and has no long-term debt facilities.
Fair value estimation
The fair values of the Group's financial assets and liabilities approximate their carrying amounts at the reporting date.
Carrying Amounts Fair Values
2016 2015 2016 2015
Financial assets
Cash and cash equivalents (Note 16) 410 562 410 562
Available for sale financial assets (Note 14) 95 92 95 92
Trade and other receivables (Note 15) 3,056 358 3,056 358
Financial liabilities
Trade payables (Note 20) 2,067 1,995 2,066 1,995
Available for sale financial assets are classified as Level 1 within the fair value hierarchy, except for Ethiopian
Government bonds, which are classified as Level 2. Level 1 items are derived from quoted prices (unadjusted) in active
markets for identical assets or liabilities. Level 2 items are derived from inputs other than quoted prices included within
Level 1 that are observable for the assets either directly or indirectly.
Other financial assets and liabilities are short term and their carrying value is considered to approximate to their fair
value.
Notes to the consolidated financial statements (continued)
Year ended 31 December 2016
4. Use and revision of accounting estimates and judgements
The preparation of the financial report requires the making of estimations and assumptions that affect the recognized
amounts of assets, liabilities, revenues and expenses and the disclosure of contingent liabilities. The estimates and
associated assumptions are based on historical experience and various other factors that are believed to be reasonable
under the circumstances, the results of which form the basis of making the judgments about carrying values of assets and
liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.
Significant judgements include:
Going concern
The going concern presumption depends principally on securing funding to develop the Tulu Kapi mine project as an
economically viable mineral deposit, and the availability of subsequent funding to extract the resource, or alternatively
the availability of funding to extend the Company's and Group's exploration activities.
Significant estimates include:
Fair value of acquisitions
The 'acquisition method', which generally requires assets acquired and liabilities assumed to be measured at their fair
values at the acquisition date. Fair value estimates are required. In calculating the fair value estimates of net
identifiable net assets on acquisition significant judgements and estimates are required.
Share based payments
In calculating the fair value at the grant date, the Black Scholes model requires us to estimate the inputs to this model,
in particular in respect of volatility. This assessment is based on historical share price movements assuming these will
continue into the future.
Impairment review of asset carrying values
Events or changes in circumstances can give rise to significant impairment charges or reversals of impairment in a
particular year. Where the recoverable amounts of Group cash generating units are assessed by analyses of discounted cash
flows, the resulting valuations are particularly sensitive to changes in estimates of long term commodity prices, exchange
rates, operating costs, the grouping of assets within cash-generating units and discount rates.
Capitalisation of exploration and evaluation costs
Under the Group's accounting policy, exploration and evaluation expenditure is not capitalised until the point is reached
at which there is a high degree of confidence in the project's viability and it is considered probable that future economic
benefits will flow to the Group. Subsequent recovery of the resulting carrying value depends on successful development or
sale of the undeveloped project. If a project does not prove viable, all irrecoverable costs associated with the project
net of any related impairment provisions are written off.
Contingent liabilities
A contingent liability arises where a past event has taken place for which the outcome will be confirmed only by the
occurrence or non-occurrence of one or more uncertain events outside of the control of the Group, or a present obligation
exists but is not recognised because it is not probable that an outflow of resources will be required to settle the
obligation. A provision is made when a loss to the Group is likely to crystallise. The assessment of the existence of a
contingency and its likely outcome, particularly if it is considered that a provision might be necessary, involves
significant judgment taking all relevant factors into account.
Notes to the consolidated financial statements (continued)
Year ended 31 December 2016
5. Operating segments
The Group has only one distinct operating segment, being that of mineral exploration. The Group's exploration activities
are located in the Kingdom of Saudi Arabia (through the jointly controlled entity), Ethiopia and its administration and
management is based in Cyprus.
Cyprus Turkey Bulgaria Ethiopia Consolidated
2016
Operating (loss)/profit (2,467) (34) (3) (255) (2,759)
Material non-recurring item (482) - - 2,994 2,512
Foreign exchange profit/(loss) (193) 70 - - (123)
Interest (136) - - - (136)
(3,278) 36 (3) 2,739 (506)
Share of loss from jointly controlled entity (726)
Loss before tax (1,232)
Tax -
Loss for the year (1,232)
Total assets 4,520 42 4 13,049 17,615
Total liabilities 1,617 2 4 443 2,066
Depreciation of property, plant and equipment 1 - - 54 55
Impairment of intangible assets - - - 266 266
Cyprus Turkey Bulgaria Ethiopia Consolidated
2015
Operating loss (1,552) (33) 8 (525) (2,102)
Foreign exchange profit/(loss) 13 (26) - (37) (50)
Interest (179) - - (140) (319)
(1,718) (59) 8 (702) (2,471)
Share of loss from jointly controlled entity (735)
Loss before tax (3,206)
Tax -
Loss for the year (3,206)
Total assets 1,695 42 4 11,197 12,938
Total liabilities 976 2 4 1,013 1,995
Depreciation of property, plant and equipment - - - 90 90
Notes to the consolidated financial statements (continued)
Year ended 31 December 2016
6. Expenses by nature
Year Ended31.12.16£'000 Year Ended31.12.15£'000
Exploration costs 125 4
Depreciation of property, plant and equipment (Note 11) 55 90
Material non-recurring item- vat refund (Note 15 and Note 20) (2,512) -
Impaired intangible assets (Note 12) 266 -
Warrants issue costs (Note 17) 164 163
Share based benefits to employees (Note 17) 77 69
Share of losses from jointly controlled entity (Note 5 and Note 19) 726 735
Directors' fees and other benefits (Note 21.1) 716 718
Consultants' costs 439 246
Auditors' remuneration - audit current year 62 51
Auditors' remuneration - associated firm 7 -
Other expenses 849 761
Operating loss 974 2,837
The Group's stages of operations in Saudi Arabia as at the year-end and as at the date of approval of these financial
statements have not yet met the criteria for capitalization of exploration costs. The Company only capitalises direct
development costs for the Tulu Kapi gold project in Ethiopia.
7. Staff costs Year Ended31.12.16£'000 Year Ended 31.12.15£'000
Salaries 550 474
Accumulated Leave Provision 49 -
Termination Package 126 -
Social insurance costs and other funds 32 39
757 513
Average number of employees 45 46
Excludes Directors' remuneration and fees which are disclosed in note 21.1. These staff costs are capitalised in
development exploration costs.
8. Finance costs 2016 2015
Interest paid to Ethiopian Revenue and Customs Authority ("ERCA") - Note 20 - 140
Other finance costs 136 179
136 319
9. Tax 2016 2015
Loss before tax (1,233) (3,206)
Tax calculated at the applicable tax rates (382) (515)
Tax effect of non-deductible expenses 248 308
Tax effect of tax losses 341 280
Tax effect of items not subject to tax (207) (92)
Tax effect of capital allowances - 19
Tax effect of other timing differences - -
Charge for the year - -
-
-
The Company is resident in Cyprus for tax purposes. A deferred tax asset of £1,242,770 (2015: £1,336,989) has not been
accounted for due to the uncertainty over future recoverability.
Notes to the consolidated financial statements (continued)
Year ended 31 December 2016
9. Tax (continued)
Cyprus
The corporation tax rate is 12.5%. Under certain conditions interest income may be subject to defence contribution at the
rate of 15%. In such cases this interest will be exempt from corporation tax. In certain cases, dividends received from
abroad may be subject to defence contribution at the rate of 20% for the tax year 2013 and 17% for 2014 and thereafter.
Due to tax losses sustained in the year, no tax liability arises on the Company. Under current legislation, tax losses may
be carried forward and be set off against taxable income of the five succeeding years. As at 31 December 2016, the balance
of tax losses which is available for offset against future taxable profits amounts to £ 9,942,163 (2015: £ 7,795,644).
Bulgaria
Mediterranean Minerals (Bulgaria) EOOD, the 100% subsidiary of the Company, is resident in Bulgaria for tax purposes. The
corporation tax rate is 10%. Due to tax losses sustained in the period, no tax liability arises on the Mediterranean
Minerals (Bulgaria) EOOD. Under current legislation, tax losses may be carried forward and be set off against taxable
income of the following five years. As at 31 December 2016, the balance of tax losses which is available for offset against
future taxable profits amounts to £25,476 (2015: £34,035). The reduction in tax losses from the prior year is due to losses
passing the five year threshold for their utilization.
Turkey
Doğu Akdeniz Mineralleri Sanayi ve Ticaret Limited Şirket (Doğu Akdeniz Mineralleri), the 100% subsidiary of Mediterranean
Minerals (Bulgaria) EOOD, and ultimately 100% subsidiary of the Company, is resident in Turkey for tax purposes. The
corporation tax rate is 20%. Under local tax legislation, exploration costs are can only be set off against income from
mining operations. Tax losses may be carried forward and be set off against taxable income of the five succeeding years. As
at 31 December 2016, the balance of exploration costs that is available for offset against future income from mining
operations amount to £ 811,471 (2015: £948,764).
Ethiopia
KEFI Minerals Ethiopia Limited is subject to other direct and indirect taxes in Ethiopia through its foreign operations.
The mining industry in Ethiopia is relatively undeveloped. As a result, tax regulations relating to mining enterprises are
evolving. There are transactions and calculations undertaken during the ordinary course of business for which the ultimate
tax determination is uncertain. The Group recognises liabilities for anticipated tax audit issues based on estimates of
whether additional taxes will be due. Where the final tax outcome of these matters is different from the amounts that were
initially recorded, such differences will impact the current and deferred tax provisions in the period in which such
determination is made.
During 2013, the House of People's Representatives passed an amendment to the Mining Income Tax Proclamation, reducing
income tax from 35% to 25% and had received an initial draft of proposed amendments to the Mining Proclamation, which
includes a reduction in royalty on gold production from 8% to 7%.
10. Loss per share
The calculation of the basic and fully diluted loss per share attributable to the ordinary equity holders of the parent is
based on the following data:
Year Ended31.12.16£'000 Year Ended31.12.15£'000
Net loss attributable to equity shareholders (1,233) (3,206)
Average number of ordinary shares for the purposes of basic loss per share (000's) 3,313,626 1,577,708
Loss per share:
Basic and fully diluted loss per share (pence) (0.037) (0.203)
The effect of share options and warrants on losses per share is anti-dilutive.
Notes to the consolidated financial statements (continued)
Year ended 31 December 2016
11. Property, plant and equipment
Motor Vehicles Plant and equipment Furniture, fixtures and office equipment Total
The Group
Cost
At 1 January 2015 60 198 61 319
Additions - 7 4 11
Disposals (17) (70) (6) (93)
At 31 December 2015 43 135 59 237
Additions 32 - 3 35
At 31 December 2016 75 135 62 272
Accumulated Depreciation
At 1 January 2015 39 73 47 159
Charge for the year 5 67 18 90
Disposals (17) (70) (6) (93)
At 31 December 2015 27 70 59 156
Charge for the year 6 46 3 55
At 31 December 2016 33 116 62 211
Net Book Value at 31 December 2016 42 19 - 61
Net Book Value at 31 December 2015 16 65 - 81
The above property, plant and equipment is located in Turkey and Ethiopia.
The Company has no significant property, plant and equipment.
Notes to the consolidated financial statements (continued)
Year ended 31 December 2016
12. Intangible assets
Projectevaluationcosts Deferred explorationcosts Total
The Group
Cost
At 1 January 2015 976 8,163 9,139
Additions 1,739 967 2,706
At 31 December 2015 2,715 9,130 11,845
Additions 1,224 1,189 2,413
At 31 December 2016 3,939 10,319 14,258
Accumulated Amortization and Impairment
At 1 January 2015 - - -
Charge for the year - - -
At 31 December 2015 - - -
Impairment Charge for the year - 266 266
At 31 December 2016 - 266 266
Net Book Value at 31 December2016 3,939 10,053 13,992
Net Book Value at 31 December 2015 2,715 9,130 11,845
Projectevaluationcosts Total
The Company
Cost
At 1 January 2015 976 976
Additions 587 587
Transfer from subsidiary (485) (485)
At 31 December 2015 1,078 1,078
Additions 1,225 1,225
Transfer to subsidiary 1,636 1,636
At 31 December 2016 3,939 3,939
Accumulated Amortization and Impairment
At 1 January 2015 - -
Charge for the year - -
At 31 December 2015 - -
Charge for the year - -
At 31 December 2016 - -
Net Book Value at 31 December 2016 3,939 3,939
Net Book Value at 31 December 2015 1,078 1,078
Notes to the consolidated financial statements (continued)
Year ended 31 December 2016
12. Intangible assets
Deferred exploration costs are associated with the Tulu Kapi mine in Ethiopia. The group recognized deferred exploration
costs with a fair value of US$ 6,900,000 on acquisition of the project in December 2013. Further costs incurred by the
Group since the acquisition have been capitalized.
Once the Board decides on the development of a project, development expenditure will be capitalized as incurred and
amortised over the estimated useful life of the area according to the rate of depletion of the economically recoverable
reserves or over the estimated useful life of the mine, if shorter.
As at 31 December 2016 management performed an impairment review for deferred exploration costs, which relate to the Tulu
Kapi licence area, at 31 December 2016.The Net Present Value of the Tulu Kapi asset exceeded the net book value
significantly.
The impairment review compared the recoverable amount of assets to the carrying value. The recoverable amount of an asset
is assessed by reference to the higher of value in use ("VIU"), being the net present value ("NPV") of future cash flows
expected to be generated by the assets, and fair value less costs to dispose ("FVLCD"). The FVLCD is based on an estimate
of the amount that the Company may obtain in a sale transaction on an arm's length basis.
Project evaluation costs relating to work performed in assessing the economic feasibility and the independent technical
review of the Tulu Kapi project have been capitalised by the Company. In August 2015, the Company published the Tulu Kapi
Definitive Feasibility Study ("DFS") evaluating a conventional open-pit mining operation and carbon-in leach ("CIL")
processing plant.
Feedback on the 2015 Definitive Feasibility Study ("2015 DFS") from project contractors, financiers and partners was
incorporated into an improved plan in early 2016. All refinements to the 2015 DFS were, in May 2017, incorporated into the
2017 DFS Update in preparation for financing. This reflects, among other things, the fixed price, lump-sum processing plant
construction contract with Lycopodium and a warranted ore processing rate of 1.5-1.7 million tonnes per annum.
The Tulu Kapi Mining Agreement between the Ethiopian Government and the Company was formalised in April 2015. The terms
include a 20-year Mining License, full permits for the development and operation of the Tulu Kapi gold project and a 5%
Government free-carried interest. The Company is working towards funding the development of the Tulu Kapi project.
The schedule remains on track for project finance syndicate documentation and inter-creditor arrangements to be assembled
and approved by syndicate and National Bank of Ethiopia for full drawdown by late- 2017. The Government of Ethiopia
confirmed its intention to invest equity capital of US$20 million.
KEFI Minerals Ethiopia also has no other mining exploration licences in Ethiopia. All development costs relating to Yubdo
and Billa Guilisso exploration licenses capitalised in previous years was impaired in the current year.
Notes to the consolidated financial statements (continued)
Year ended 31 December 2016
13. Investments
13.1 Fixed asset investments
The Company Year Ended31.12.16£'000 Year Ended 31.12.15£'000
Cost
At 1 January 4,598 4,598
Acquisitions - -
At 31 December 4,598 4,598
Subsidiary companies Date of acquisition/incorporation Country of incorporation Effectiveproportion ofshares held
Mediterranean Minerals (Bulgaria) EOOD 08/11/2006 Bulgaria 100%-Direct
Doğu Akdeniz Mineralleri Sanayi ve Ticaret Limited Şirket 08/11/2006 Turkey 100%-Indirect
KEFI Minerals Ethiopia Limited 30/12/2013 United Kingdom 100%-Direct
KEFI Minerals Marketing and Sales Cyprus Limited 30/12/2014 Cyprus 100%-Direct
Subsidiary companies The following companies have the address of:
Mediterranean Minerals (Bulgaria) EOOD 10 Tsar Osvoboditel Blvd., 3rd floor, Sredets Region, 1000 Sofia, the Republic of Bulgaria.
Doğu Akdeniz Mineralleri Sanayi ve Ticaret Limited Şirket Zeytinalani Mah. 4183 SK. Kapı No:6 Daire:2 UrlaA Izmir
KEFI Minerals Ethiopia Limited 27/28 Eastcastle Street, London, United Kingdom w1w 8DH
KEFI Minerals Marketing and Sales Cyprus Limited 23 Esekia Papaioannou Floor 2, Flat 21 1075, Nicosia Cyprus
On 8 November 2006, the company entered into an agreement to acquire from Atalaya Mining PLC (previously EMED) the whole of
the issued share capital of Mediterranean Minerals (Bulgaria) EOOD, a company incorporated in Bulgaria, in consideration
for the issue of 29,999,998 ordinary shares in the Company.
Mediterranean Minerals (Bulgaria) EOOD owns 100% of the share capital of Doğu Akdeniz Mineralleri ("Dogu"), a private
limited liability company incorporated in Turkey, engaging in activities for exploration and developing of natural
resources.
The Company owns 100% of Kefi Minerals Ethiopia, which operates the Tulu Kapi project in Ethiopia. The Government of
Ethiopia is entitled to a 5% free-carried interest in the Tulu Kapi Gold Project. This entitlement is enshrined in the
Ethiopian Mining Law and the Ethiopian Mining Agreement between the Ethiopian Government and KEFI Minerals Ethiopia. The
implementation of this entitlement is intended to issue 5% of the shareholding of KEFI Minerals Ethiopia at the time of the
final completion of the full project finance of the Tulu Kapi Gold Project. Once all the relevant documents are executed
the intended arrangement would add 5% to the shareholding paid by the Ethiopian Government.
The company owns 100% of KEFI Minerals Marketing and Sales Cyprus, a company incorporated in Cyprus. The company was
dormant for the year end 31 December 2016 and 2015. KEFI Minerals Marketing and Sales Cyprus had no assets or liabilities
at the date of acquisition. No additional disclosure is considered necessary, as the entity is not significant to the
financial statements. KEFI Minerals Marketing and Sales Cyprus will provide sales and marketing services for the Group once
production commences. It is planned that this company will act as agent and off-taker for the onward sale of gold and other
products in international markets.
Notes to the consolidated financial statements (continued)
Year ended 31 December 2016
13.2 Investment in jointly controlled entity
Year Ended31.12.16£'000 Year Ended31.12.15£'000
The Company
At 1 January/31 December 181 181
Jointly controlled entity Date of acquisition/incorporation Country of incorporation Effective proportion of shares held
Gold and Minerals Co. Limited (G&M) 04/08/2010 Saudi Arabia 40%-Direct
The company owns 40% of G&M more information in note 19.2.
14. Available for sale financial assets
Year Ended31.12.16£'000 Year Ended31.12.15£'000
The Group
At 1 January 92 86
Change in value of available-for-sale financial assets 3 6
On 31 December 95 92
Year Ended31.12.16£'000 Year Ended31.12.15£'000
The Company
At 1 January 8 8
Disposal of Investment (16) -
Profit on Sale 8 -
Change in value of available-for-sale financial assets - -
At 31 December - 8
The Company successfully divested four Licences in Turkey in July 2011 to AIM listed Ariana Resources (AIM:AAU) for a
nominal cash payment of 10,000 Turkish Lira, 910,747 new ordinary shares in Ariana and a Net Smelter Royalty ("NSR") of
2%. The NSR is payable by Ariana's wholly owned Turkish subsidiary Galata Madencilik San. ve Tic. Ltd. ("Galata") to KEFI
Mineral's Turkish Subsidiary, Dogu, on commercial production of any mineral from the licences. No value has been
attributed in these financial statements for the NSRs, due to uncertainty regarding when income from the NSRs will
commence.
Notes to the consolidated financial statements (continued)
Year ended 31 December 2016
15. Trade and other receivables
Year Ended 31.12.16£'000 Year Ended31.12.15£'000
The Group
Other receivables 38 45
Placing funds 198 207
Amount receivable from Saudi Arabia Jointly controlled entity (Note 21.3) 6 6
VAT Refund 2,809 95
Deposits and prepayments 5 5
3,056 358
The Company fully discharged the inherited VAT liability during August 2016 and is entitled to a £2.7 million (Birr
73,5000,000) VAT refund. The directors are of the opinion that the results of recent discussion with the VAT office that
the reverse VAT refund is been processed by the relevant VAT branch office for settlement. Post Balance sheet during April
2017, the company received c.£1 million of the £2.7 million VAT refund. The Company has come to an agreement with Ethiopian
Revenues and Customs Authority to receive the remainder of the funds by mid-2017.
Year Ended 31.12.16£'000 Year Ended31.12.15£'000
The Company
Deposits 8 3
Placing Funds 198 207
KEFI Minerals Marketing and Sales Cyprus Limited (Note 21.3) 3 3
Advance to KEFI Minerals Ethiopia Limited (Note 21.3) 7,815 7,417
Amount receivable from Saudi Arabia Jointly controlled entity (Note 21.3) 45 80
8,069 7,710
Amounts owed by group companies total £7,818,000 (2015: £7,420,000). Balances of £1,256,000 have been fully provided for
all projects except for Ethiopia due to the uncertainty over the timing of future recoverability. The advance issued to
KEFI Minerals Ethiopia Limited are unsecured interest free and repayable on demand. At the reporting date, no receivables
were past their due date.
16. Cash and cash equivalents
Year Ended31.12.16£'000 Year Ended31.12.15£'000
The Group
Cash at bank and in hand 410 562
The Company
Cash at bank and in hand 400 393
Notes to the consolidated financial statements (continued)
Year ended 31 December 2016
17. Share capital Number of shares '000 Share Capital DeferredShares Share premium Total
Issued and fully paid
At 1 January 2015 1,235,337 12,352 - 8,433 20,785
Issued 20 March 2015 at 1p 80,000 800 - - 800
Issued 16 May 2015 at 1p 66,611 667 - - 667
Sub-division of shares 16 June 2015 0.1p - (12,436) 12,436 - -
Issued 16 June 2015 at 0.8p 362,500 363 - 2,538 2,901
Issued 11 December 2015 at 0.3p 877,191 877 - 1,755 2,632
Share issue costs - - - (379) (379)
At 31 December 2015 2,621.639 2,623 12,436 12.347 27,406
Issued 22 March 2016 at 0.35p 499,360 499 - 1,248 1,747
Issued 29 July 2016 at 0.5p 761,922 761 - 3,048 3,809
Share issue costs - - - (364) (364)
At 31 December 2016 3,882,921 3,883 12,436 16,279 32,598
Share issue costs of £Nil (2015: £64,000) relating to the 146,610,600 shares issued at par value during 2015 have been
charged to equity. The remainder of share issue costs are charged against share premium arising on issue.
Authorized capital
That the articles of association of the Company were amended in 2010 and the liability of the members of the Company is
limited.
Issued capital
2015
On 20 March 2015, 80,000,000 shares of 1p were issued at a price of 1p per share.
On 16 May 2015, 66,610,600 shares of 1p were issued at a price of 1p per share.
On 16 June 2015, 362,500,000 shares of 0.1p were issued at a price of 0.8p per share. On issue of the shares, an amount of
£2,537,500 was credited to the Company's share premium reserve.
On 11 December 2015, 877,191,422 shares of 0.1p were issued at a price of 0.3 p per share. On issue of the shares, an
amount of £1,754,500 was credited to the Company's share premium reserve.
2016
On 22 March 2016, 499,359,791 shares of 0.1p were issued at a price of 0.35p per share. On issue of the shares, an amount
of £1,248,299 was credited to the Company's share premium reserve.
On 29 July 2016, 761,921,739 shares of 0.1p were issued at a price of 0.5p per share. On issue of the shares, an amount of
£3,047,687 was credited to the Company's share premium reserve.
Restructuring of share capital into deferred shares
On 16 June 2015 the Company's issued ordinary shares of 1p each in the capital of the Company were sub-divided into one new
ordinary share of 0.1p and one deferred share of 0.9p. The deferred shares have no value or voting rights. After the share
capital reorganization there were the same number of New Ordinary Shares in issue as there are existing Ordinary Shares.
The New Ordinary Shares have the same rights as those currently accruing to the existing Ordinary Shares in issue under the
Company's articles of association, including those relating to voting and entitlement to dividends.
Notes to the consolidated financial statements (continued)
Year ended 31 December 2016
17. Share capital (continued)
Warrants
2015
On 18 March 2015, the Company issued 4,000,000 warrants to subscribe for new ordinary shares of 1p each at 1p per share.
On 11 May 2015, the Company issued 1,680,530 warrants to subscribe for new ordinary shares of 1p each at 1p per share.
On 15 June 2015, the Company issued 14,500,000 warrants to subscribe for new ordinary shares of 0.1p each at 0.8p per
share.
On 11 December 2015, the Company issued 43,859,571 warrants to subscribe for new ordinary shares of 0.1p each at 0.3p per
share.
2016
On 22 March 2016, the Company issued 24,967,989 warrants to subscribe for new ordinary shares of 0.1p each at 0.35p per
share.
On 29 June 2016, the Company issued 38,096,087 warrants to subscribe for new ordinary shares of 0.1p each at 0.5p per
share.
During the period 1 January 2016 to 31 December 2016, 22,780,000 warrants were cancelled or expired.
Details of warrants outstanding as at 31 December 2016:
Grant date Expiry date Exercise price Expected Life Years 000's
20-Feb-12 19-Feb-17 3.00p 5 years 2,917
04-Jul-13 03-Jul-18 2.10p 5 years 1,310
16-Oct-13 15-Oct-18 2.25p 5 years 1,111
02-Dec-14 01-Dec-17 1.00p 3 years 4,000
16-Dec-14 15-Dec-17 1.00p 3 years 5,500
18-Mar-15 17-Mar-18 1.00p 3 years 4,000
11-May-15 10-May-18 1.00p 3 years 1,680
15-Jun-15 14-Jun-18 0.80p 3 years 14,500
11-Dec-15 10-Dec-18 0.30p 3 years 43,860
22-Mar-16 21-Mar-19 0.35p 3 years 24,968
29-Jul-16 28-Jul-19 0.50p 3 years 38,096
141,942
Notes to the consolidated financial statements (continued)
Year ended 31 December 2016
17. Share capital (continued)
Warrants (continued)
The Company has issued warrants to advisers to the Group. All warrants, as noted above expire between two to five years
after grant date and are exercisable at the exercise price.
Number of warrants 000's
Outstanding warrants at 1 January 2016 101,658
- granted 63,064
- cancelled/forfeited/expired (22,780)
Outstanding warrants at 31 December 2016 141,942
The estimated fair values of the warrants were calculated using the Black Scholes option pricing model.
The inputs into the model and the results for warrants granted during the year are as follows:
29 July 2016 22 March 2016 11 Dec 2015 15 June 2015 11 May 2015 18 Mar2015
Closing share price at issue date 0.56p 0.36p 0.32p 0.90p 0.88p 1.33p
Exercise price 0.50p 0.35p 0.3p 0.8p 1.00p 1.00p
Expected volatility 87.3% 80.3% 79.10% 61.10% 60.90% 59%
Expected life 3yrs 3yrs 3yrs 3yrs 3yrs 3yrs
Risk free rate 0.31% 0.31% 0.39% 0.98% 0.98% 0.98%
Expected dividend yield Nil Nil Nil Nil Nil Nil
Estimated fair value 0.32p
- More to follow, for following part double click ID:nRSF2063HcRecent news on KEFI Gold and Copper
See all newsREG - Kefi Gold and Copper - Tulu Kapi Community Resettlement Programme
AnnouncementRCS - Kefi Gold and Copper - Investor Presentation
AnnouncementREG - Kefi Gold and Copper - Notice of AGM and Investor Presentation
AnnouncementREG - Kefi Gold and Copper - Results for the year ended 31 December 2024
AnnouncementREG - Kefi Gold and Copper - Total Voting Rights
Announcement