REG - KEFI Minerals plc - Full Year Results 2016 <Origin Href="QuoteRef">KEFI.L</Origin> - Part 3
06/06/2017 07:06
- Part 3: For the preceding part double click ID:nRSF2063Hb
0.17p 0.17p 0.40p 0.33p 0.64p
Expected volatility was estimated based on the historical underlying volatility in the price of the Company's shares.
For 2016, the impact of issuing warrants is a net charge to income of £164,000 (2015: £163,000). At 31 December 2016, the
equity reserve recognized for share based payments, including warrants, amounted to £1,474,000 (2015: £1,212,000).
Year Ended31.12.16£'000 Year Ended31.12.15£'000
Opening amount 1,212 848
Warrants issued costs (Note 6) 164 163
Share options issued to employees (Note 6) 77 69
Share options issued to directors and key management (Note 6) 204 146
Cancelled options (183) (14)
Closing amount 1,474 1,212
Notes to the consolidated financial statements (continued)
Year ended 31 December 2016
18. Share options reserve
Details of share options outstanding as at 31 December 2016:
Grant date Expiry date Exercise price Number of shares 000's
13-Sep-12 12-Sep-18 4.00p 14,150
24-May-13 23-May-19 2.915p 1,000
03-Sep-13 02-Sep-18 2.94p 1,000
08-Oct-13 07-Oct-18 2.27p 350
08-Jan-14 07-Jan-20 1.88p 400
16-Jan-14 15-Jan-20 1.99p 100
01-Feb-14 31-Jan-20 1.89p 100
27-Mar-14 26-Mar-20 2.30p 27,125
04-Apr-14 03-Apr-20 1.83p 100
12-Sep-14 11-Sep-20 1.76p 2,250
20-Mar-15 19-Mar-21 1.32p 27,000
16-Jun-15 15-Jun-21 1.32p 6,500
19-Jan-16 18-Jan-22 0.42p 80,190
23-Feb-16 22-Feb-22 0.74p 3,000
05-Aug-16 05-Aug-22 0.60p 35,000
198,265
Weighted average ex. Price Number of shares 000's
Outstanding options at 1 January 2016 81,275
- granted 0.48p 118,190
- cancelled/forfeited/expired 3.94p (1,200)
Outstanding options at 31 December 2016 198,265
The Company has issued share options to directors, employees and advisers to the Group.
On 13 September 2012, 15,500,000 options were issued which expire six years after the grant date, and are exercisable at
the exercise price in whole or in part no more than one half after one year from the grant date and one half two years from
the grant date.
On 24 May 2013 1,000,000 options were issued which expire six years after the grant date and are exercisable in part no
more than one half after one year from the grant date and one half two years from the grant date. On 3 September 2013
1,000,000 options were issued and on 8 October 2013, 350,000 options were issued both which expire five after the grant
date and are exercisable in part no more than one half after one year from the grant date and one half two years from the
grant date
During January 2014 and February 2014 600,000 options were issued which expire six years after the grant date and are
exercisable in part no more than one half after one year from the grant date and one half two years from the grant date.
On 27 March 2014, 22,000,000 options were issued to the Directors and a further 5,400,000 options have been granted to
other non-board members of the senior management team. Of the options issued, previously granted options over 22,100,000
Ordinary shares which were due to expire during 2014 have all been cancelled and the new grants of options have been made,
in accordance with the terms of the Scheme the options vest in equal annual instalments over a period of 2 years and expire
after 6 years.
Notes to the consolidated financial statements (continued)
Year ended 31 December 2016
18. Share options reserve (continued)
On 4 April 2014, 100,000 options were issued which expire six years after the grant date and are exercisable in part no
more than one half after one year from the grant date and one half two years from the grant date.
On 12 September 2014, 2,250,000 options were issued which expire six years after grant date and vest in equal annual
instalments over a period of two years.
On 20 March 2015, 27,000,000 options were issued which expire six years after grant date and vest in equal annual
instalments over a period of two years.
On 16 June 2015, 6,500,000 options were issued which expire six years after grant date and vest in equal annual instalments
over a period of two years.
On 19 January 2016, 80,190,000 options were issued which expire six years after grant date and vest in normal
circumstances, vest in two equal annual instalments, the first upon the achievement of practical completion of the planned
processing plant at the Tulu Kapi Gold Project and the second upon the achievement of nameplate capacity for a twelve-month
period.
On 23 February 2016, 3,000,000 options were issued which expire six years after grant date and vest immediately.
On 5 August 2016, 35,000,000 options were issued which expire six years after grant date and vest in normal circumstances,
vest in two equal annual instalments, the first upon the achievement of practical completion of the planned processing
plant at the Tulu Kapi Gold Project and the second upon the achievement of nameplate capacity for a twelve-month period.
The option agreements contain provisions adjusting the exercise price in certain circumstances including the allotment of
fully paid Ordinary shares by way of a capitalisation of the Company's reserves, a sub division or consolidation of the
Ordinary shares, a reduction of share capital and offers or invitations (whether by way of rights issue or otherwise) to
the holders of Ordinary shares. The estimated fair values of the options were calculated using the Black Scholes option
pricing model. The inputs into the model and the results are as follows:
Date Closing share price at issue date Exercise price Expected volatility Expected life Risk free rate Expected dividend yield Discount factor Estimated fair value
05-Aug-16 0.56p 0.60p 87.20% 6yrs 0.75% Nil 0% 0.40p
23-Feb-16 0.33p 0.74p 82.65% 6yrs 0.90% Nil 0% 0.11p
19-Jan-16 0.34p 0.42p 83.18% 6yrs 0.90% Nil 0% 0.22p
16-Jun-15 0.83p 1.32p 61.11% 6yrs 1.53% Nil 0% 0.38p
20-Mar-15 1.20p 1.32p 59.04% 6yrs 1.53% Nil 0% 0.64p
12-Sep-14 1.43p 1.76p 43.40% 6yrs 1.09% Nil 0% 0.52p
04-Apr-14 1.83p 1.83p 59.60% 6yrs 2.17% Nil 0% 0.94p
27-Mar-14 1.85p 2.30p 59.60% 6yrs 2.17% Nil 0% 0.94p
01-Feb-14 1.90p 1.89p 59.60% 6yrs 2.17% Nil 0% 0.94p
16-Jan-14 1.83p 1.99p 59.60% 6yrs 2.17% Nil 0% 0.94p
08-Jan-14 1.85p 1.88p 59.60% 6yrs 2.17% Nil 0% 0.94p
08-Oct-13 2.69p 2.27p 63.83% 5yrs 1.70% Nil 50% 0.80p
03-Sep-13 2.76p 2.94p 63.63% 5yrs 1.70% Nil 50% 0.75p
24-May-13 2.19p 2.92p 59.80% 6yrs 5.00% Nil 0% 1.18p
13-Sep-12 3.63p 4.00p 56.90% 6yrs 5.00% Nil 0% 2.05p
Expected volatility was estimated based on the historical underlying volatility in the price of the Company's shares.
Notes to the consolidated financial statements (continued)
Year ended 31 December 2016
18. Share options reserve (continued)
For 2016, the impact of share option-based payments is a net charge to income of £281,000 (2015: £215,000). At 31 December
2016, the equity reserve recognized for share option-based payments, including warrants, amounted to £1,474,000 (2015:
£1,212,000).
19. Jointly controlled entities
19.1 Jointly controlled entity with Centerra Gold (KB) Inc.
On 22 October 2008, the Company entered into a Joint Venture Agreement in respect of its 100%-owned Artvin Project with
Centerra Gold (KB) Inc ("Centerra KB"), a wholly-owned subsidiary of Centerra Gold Inc. In August 2011, KEFI Mineral's
subsidiary holding these licences, was sold in return for a cash payment of US$100,000 and a 1% Net Smelter Royalty on all
future mineral production from the Artvin licences.
19.2 Joint controlled entity with Gold and Minerals
Company name Date of incorporation Country of incorporation Effective proportion of shares held at 31 December
Gold & Minerals Co. Limited 3 August 2010 Saudi Arabia 40%
Gold & Minerals Co. Limited has the following registered address: Olaya District. 659, King Fahad Road, Riyadh, Kingdom of
Saudi Arabia.
SAR'000 GBP'000
Amounts relating to the Jointly Controlled Entity Year Ended31.12.16 Year Ended31.12.15 Year Ended31.12.16 Year Ended31.12.15
Non-current assets 223 493 19 36
Current assets 685 1,473 59 106
908 1,966 78 142
Non-current liabilities 60,594 54,974 5,246 3,971
Current liabilities 667 1,048 58 76
61,261 56,022 5,304 4,047
Net liabilities (60,353) (54,056) (5,226) (3,905)
Share capital 2,500 2,500 217 181
Accumulated losses (62,853) (56,556) (5,443) (4,086)
(60,353) (54,056) (5,226) (3,905)
Exchange rates SAR to GBP
Closing rate 0.2165 0.1806
In May 2009, KEFI announced the formation of a new minerals exploration jointly controlled entity, Gold & Minerals Co.
Limited ("G&M"), a limited liability company in Saudi Arabia, with leading Saudi construction and investment group Abdul
Rahman Saad Al-Rashid & Sons Company Limited ("ARTAR"). KEFI is the operating partner with a 40% shareholding in G&M with
ARTAR holding the other 60%. KEFI provides G&M with technical advice and assistance, including personnel to manage and
supervise all exploration and technical studies. ARTAR provides administrative advice and assistance to ensure that G&M
remains in compliance with all governmental and other procedures. G&M is treated as a jointly controlled entity and has
been equity accounted and has reconciled its share in G&M's losses.
The above figures reported represent cumulative exploration activity incurred by G&M since its incorporation in 2009. The
accounting policy for exploration costs recorded in the G&M audited financial statements is to capitalise qualifying
expenditure and review for impairment, if applicable. This is in contrast to the Group's accounting policy relating to
exploration costs which is to expense costs through profit and loss until the Board decides on the development of a project
(Note 2). Consequently, exploration costs of G&M at 31 December 2016 amounting to SAR62.6 million (2015: SAR56.6 million)
have been adjusted to bring the figures in line with the Group's accounting policies.
Notes to the consolidated financial statements (continued)
Year ended 31 December 2016
19. Jointly controlled entities (continued)
19.2 Jointly controlled entity with Gold and Minerals (continued)
A loss of £726,000 was recognized by the Group for the year ended 31 December 2016 (2015: £ 735,000) representing the
Group's share of losses in the year.
As at 31 December 2016 KEFI owed ARTAR an amount of £170,000 (2015: receivable £90,000) - Note 21.5.
As at 31 December 2016, G&M owed KEFI an amount of £6,000 (2015: £6,000) - Note 21.4.
20. Trade and other payables
The Group Year Ended31.12.16£'000 Year Ended31.12.15£'000
Accruals and other payables 1,640 1,011
Other loans 257 236
Payable to shareholders (Note 21.2) - 8
Payable to jointly controlled entity (Note 21.4) 170 90
VAT Liability - 650
2,067 1,995
In January 2014 an agreement was made with Ethiopian Revenue and Customs Authority ("ERCA") to repay the balance of the VAT
liability plus interest accruing on the unpaid principal amount over a three-year payment plan in accordance with the
relevant tax proclamation, 25% of the assessed outstanding amount is payable immediately and the balance under an agreed
payment schedule. . The balance of the liability plus interest accruing on the unpaid principal amount was paid within the
three year payment period.
Other loans are unsecured, interest free and repayable on demand.
The Company Year Ended31.12.16£'000 Year Ended31.12.15£'000
Accruals and other payables 1,447 886
Payable to jointly controlled entity (Note 21.4) 170 90
1,617 976
The fair values of trade and other payables due within one year approximate to their carrying amounts as presented above.
Notes to the consolidated financial statements (continued)
Year ended 31 December 2016
21. Related party transactions
The following transactions were carried out with related parties:
21.1 Compensation of key management personnel
The total remuneration of key management personnel was as follows:
Year Ended31.12.16£'000 Year Ended31.12.15£'000
Directors' consultancy fees * 500 471
Directors' other consultancy benefits 49 51
Directors' bonus - 50
Share option-based benefits to directors (Note 17) 167 146
Other key management personnel fees and other benefits 323 204
Other key management personnel bonus - 37
Share option-based benefits other key management personnel (Note 17) 37 11
1,076 970
* Part of the salary of the Exploration Director was paid directly by the jointly-controlled entity G&M.
* Directors' fees paid to the Executive Director Chairman and Finance Director are paid to consultancy companies of which
they are beneficiaries.
Share-based benefits
The Company has issued share options to directors and key management. All options, except those noted in Note 18, expire
six years after grant date and vest in normal circumstances, vest in two equal annual instalments, the first upon the
achievement of practical completion of the planned processing plant at the Tulu Kapi Gold Project and the second upon the
achievement of nameplate capacity for a twelve month period.
21.2 Payable to shareholders 2016 2015
Name Nature of transactions Relationship
Atalaya Mining PLC (previously EMED) Finance Shareholder - 8
Name Nature of transactions Relationship
Atalaya Mining PLC (previously EMED) Provision of management and other professional services Shareholder 18 8
21.3 Receivable from related parties
The Group 2016 2015
Name Nature of transactions Relationship
Gold & Minerals Co. Limited Finance Jointly controlled entity 6 6
6 6
The Company 2016 2015
Name Nature of transactions Relationship
Gold & Minerals Co. Limited Finance Jointly controlled entity 45 80
KEFI Minerals Marketing and Sales Cyprus Limited Finance Subsidiary 3 3
Kefi Minerals Ethiopia Limited Advance Subsidiary 7,815 7,417
7,863 7,500
Notes to the consolidated financial statements (continued)Year ended 31 December 2016 21. Related party transactions (continued)
21.4 Payable to related parties
The Group 2016 2015
Name Nature of transactions Relationship
Abdul Rahman Saad Al-Rashid & Sons Company Limited ("ARTAR") Finance Jointly controlled entity 170 90
170 90
The Company 2016 2015
Name Nature of transactions Relationship
Abdul Rahman Saad Al-Rashid & Sons Company Limited ("ARTAR") Finance Jointly controlled entity 170 90
170 90
22. Contingent liabilities
22.1 Geological database
In 2006, Atalaya Mining PLC (previously EMED) acquired a proprietary geological database that covers extensive parts of
Turkey and Greece and transferred to the Company that part of the geological database that relates to areas in Turkey.
Under the agreement, the Company has undertaken to make a payment of approximately £61,400 (AUD 105,000) for each tenement
it is subsequently awarded in Turkey and which was identified from the database. The maximum number of such payments
required under the agreement is four, resulting in a contingent liability of up to £246,000. These payments are to be
settled by issuing shares in the Company. To date, only one tranche of shares have been issued under this agreement in
June 2007 for £43,750 (AUD 105,000).
22.2 Charge issued
On 13 August 2015, the Company created a fixed charge in favour of AIB Group (UK) Plc over amounts held in the Company's
deposit accounts with the bank. The charge is in regard to time credit banking facilities provided by AIB Group (UK) Plc.
At 31 December 2016, the balance in the deposit accounts was £20,000.
22.3 Legal Allegations
A claim for damages of £9,000,000 (approximately ETB249 million) had been lodged against the Company in 2014. The claim was
based on the impact of exploration field activities conducted between 1998 and 2006, a period which pre-dated the Company's
involvement in the Tulu Kapi project. These exploration activities comprised the construction of drill pads and access
tracks. No objections had been made until 2014 when certain parties from outside the Tulu Kapi district raised this matter
and initiated court action. Those parties have since been removed by the Court rulings from the list of plaintiffs. The
Oromia Regional Supreme Court in April 2017 rejected 95% of these claims as having no basis in fact or law and reduced
KEFI's potential liability to c.£435,000 (ETB12,762,721). Moreover, the Company has appealed to the Federal Supreme Court
with regards to the remaining ETB12,762,721 on the basis that it remains firmly of the belief, on legal advice and as
previously reported, that it has no contingent or actual liability, having already settled any obligations when the matter
was originally closed by both the regulators and the land occupiers. The Federal Supreme Court last week officially
admitted the Company's appeal after due review, and the case is expected to be heard within the next two years.
Notes to the consolidated financial statements (continued)
Year ended 31 December 2016
23. Capital commitments
The Group has the following capital or other commitments as at 31 December 2016 Nil (2015 0.03 Million),
Year Ended31.12.16£'000 Year Ended31.12.15£'000
Exploration programme commitments - -
Property, plant and equipment - 27
- 27
24. Events after the reporting date
Consolidation of Ordinary Shares
At the close of business, 1 March 2017, shareholders received one New Ordinary Share of nominal value 1.7 pence each for
every 17 Existing Ordinary Shares of nominal value 0.1 pence each. Immediately following the Consolidation (and prior to
the issue of the Fundraising Shares) the number of New Ordinary Shares in issue and admitted to trading on AIM was
228,407,085.
Placing and the Lanstead Subscription
The Company conditionally raised £5,620,000 million before expenses on 1 March 2017 through a placing of 104,295,888
ordinary shares of 1.7p each at a price of 5.61p per share. After the placing and the 17:1 consolidation approved on 1
March 2017 there are 332,702,973 shares on issue.
The Lanstead Subscription involves the issuance of 82,352,941 shares and is governed according to a 'sharing agreement' and
structured relative to a benchmark price, which has been set at 7.48p/share (0.44p/share pre-consolidation), such that KEFI
may receive more than £4,620,000 if the share price exceeds this level and vice versa if it does not. To this end, £693,000
was contributed in March 2017 by Lanstead, with the balance being paid in equal instalments of £218,000 per month (subject
to adjustment upwards or downwards) for 18 months commencing in April 2017.
Other
On 22 March 2017, 6,829,613 options were issued to persons who discharge director and managerial responsibilities ("PDMRs")
and a further 2,705,509 options have been granted to other non-board members of the senior management team. The options
have an exercise price of 7.5p, expire after 6 years, and vest in two equal annual instalments, the first upon the
achievement of practical completion of the planned processing plant at the Tulu Kapi Gold Project and the second upon the
achievement of nameplate capacity for a twelve-month period.
Notes to the consolidated financial statements (continued)
Year ended 31 December 2016
25. Adoption of new and revised International Financial Reporting Standards (IFRSs)
During the current year the Group adopted all the new and revised International Financial Reporting Standards (IFRS) that
are relevant to its operations and are effective for accounting periods beginning on 1 January 2016. This adoption did not
have a material effect on the accounting policies of the Group.
Up to the date of approval of the consolidated financial statements, certain new standards, interpretations and amendments
to existing standards have been published that are not yet effective for the current reporting period and which the Group
has not early adopted, as follows:
Issued by the IASB and adopted by the European Union New standards
· IFRS 9 ''Financial Instruments'' (effective for annual periods beginning on or after 1 January 2018).
· IFRS 15 ''Revenue from Contracts with Customers'' (effective for annual periods beginning on or after 1 January
2018).
IFRS 9 "Financial Instruments"
IFRS 9 makes substantial changes to the measurement of financial assets and financial liabilities. There will only be three
categories of financial assets at either fair value through profit and loss, fair value through comprehensive income or
measured at amortized cost. On adoption of the standard the Group will have to re-determine the classification of its
financial assets based on the business model for each financial asset. This is not considered likely to give rise to any
significant adjustments, other than the re-classification.
The principal change to the measurement of financial assets measured at amortized cost or fair value through other
comprehensive income is that impairments will be recognized on an expected loss basis, compared with the current incurred
loss approach. As such, where there are expected to be credit losses, these are recognized in profit or loss. For financial
assets measured at amortized cost, the carrying amount is reduced for the loss allowance. For financial assets measured at
fair value through other comprehensive income, the loss allowance is recognized in other comprehensive income and does not
reduce the carrying amount of the financial assets.
Financial liabilities of the Group are expected to continue to be recognized at amortized cost.
IFRS 15 "Revenue from Contracts with Customers"
The standard has been developed to provide a comprehensive set of principles in presenting the nature, amount, timing and
uncertainty of revenue and cash flows arising from a contract with a customer. The standard is based around five steps in
recognizing revenue:
1. Identify the contract with the customer;
2. Identify the performance obligations in the contract;
3. Determine the transaction price;
4. Allocate the transaction price; and
5. Recognize revenue when a performance obligation is satisfied.
The Group is not currently generating income from gold sales revenue, hence there is not considered to be any significant
impact at the Group's current stage of development. Management are currently evaluating the impact of the standard on the
financial statements.
Notes to the consolidated financial statements (continued)
Year ended 31 December 2016
25. Adoption of new and revised International Financial Reporting Standards (IFRSs) (continued)
Amendments
· Amendments to IFRS2: Classification and Measurement of Share-based Payment Transactions (effective for annual
periods beginning on or after 1 January 2018).
· Clarifications to IFRS 15 ''Revenue from Contracts with Customers'' (effective for annual periods beginning on or
after 1 January 2018).
· IAS 7 (Amendments) ''Disclosure Initiative'' (effective for annual periods beginning on or after 1 January 2017)
· IAS 12 (Amendments) ''Recognition of Deferred Tax Assets for Unrealised Losses'' (effective for annual periods
beginning on or after 1 January 2017).
· Annual Improvements to IFRSs 2014-2016 Cycle (issued on 8 December 2016) (effective for annual periods beginning on
or after 1 January 2017).
· Annual Improvements to IFRSs 2014-2016 Cycle (issued on 8 December 2016) (effective for annual periods beginning on
or after 1 January 2018).
New IFRICs
· IFRIC Interpretation 22 ''Foreign Currency Transactions and Advance Consideration'' (effective for annual periods
beginning on or after 1 January 2018).
The Group is currently evaluating the effect of these standards or interpretations on its consolidated financial
statements
This information is provided by RNS
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