REG - Metminco Limited - Financial Report - 31 December 2016 <Origin Href="QuoteRef">MNC.AX</Origin>

Merino & CoAnnouncement

03/04/2017 07:06

RNS Number : 2832B
Metminco Limited
03 April 2017
ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED 31 DECEMBER 2016
Metminco Limited (ASX: MNC; AIM: MNC) is pleased to announce that it has today released its Financial Report for the year ended 31 December 2016. 
A summary of the Financial Report is set out below. The full report can be accessed from the below link:
http://www.rns-pdf.londonstockexchange.com/rns/2832B_-2017-4-3.pdf
FINANCIAL SUMMARY
Overview 
During 2016 Metminco Limited ("Metminco" or the "Company") achieved two major milestones in relation to its strategy to become a gold producer in the near term whilst maintaining a longer term interest in gold and copper within South America, in particular Colombia, Peru and Chile.
The Company acquired the Quinchia Gold Portfolio and then completed a Scoping Study demonstrating the robust economics for the potential development of the Miraflores Project (part of the Quichia Gold Portfolio) into a gold producing asset. The Quinchia Gold Portfolio, which is located in Colombia's Middle Cauca Belt, and has a NI 43-101 estimated Mineral Resource of 2.8 million ounces of gold and contains a number of gold deposits and significant exploration and development targets including Miraflores, Tesorito, Chuscal and Dosquebradas. 
In Peru the Company secured funding of up to US$45 million to advance the Los Calatos Project toward completion of a bankable feasibility study. The development prospects of the Los Calatos copper molybdenum project, located in Southern Peru near three large operating copper-molybdenum mines, namely Cuajone, Toquepala and Cerro Verde, have been significantly enhanced by the agreement with CD Capital Natural Resources Fund III LP (CD Capital) to fund the completion of the Pre-feasibility and Feasibility Studies.
As a result of achieving of these milestones the Company reported a Consolidated Group after tax loss for the year ended 31 December 2016. The loss of A$124,100,870 (2015: loss of $49,070,767), included a loss of A$121,540,173 on the loss of control of the Group's investment in Los Calatos Holding Limited (LCH) as determined by reference to the see-through value of the CD Capital Transaction (refer below) in accordance with applicable accounting standards. 
As well the Company incurred expenditure in relation to transitioning the Company towards being a gold producer in the near term whilst retaining a significant interest in copper through its Los Calatos Project and its wholly owned Chilean assets. Care and maintenance and legal costs at the Company's Chilean projects, Mollacas, Vallecillo and Loica and discontinued licences in Colombia were written off (A$407,300). As well the Company incurred normal overhead costs associated with corporate governance, compliance, and maintenance of ASX and AIM listings. 
Strategy
Metminco's growth strategy is to become a gold producer in the near term whilst maintaining a longer term interest in gold and copper within South America, in particular Colombia, Peru and Chile. To this effect, the Company purchased the Quinchia Gold Portfolio in Colombia in June 2016 which includes the Miraflores, Dosquebradas, Tesorito and Chuscal projects. 
The Company seeks to deliver growth in long term shareholder value by progressing the following objectives:
 Advance the feasibility study on the Miraflores Project with an expected completion date for the feasibility study The Miraflores Project is expected to produce 50,000 oz Au per annum over a life of mine of 9 years. Current estimate for commencement of construction is during the second quarter of 2018.
 Enhance anticipated future gold production from the Miraflores Project through exploration and development of high potential prospects in the Quinchia Gold Portfolio.
 With CD Capital, advance the Los Calatos Project through pre-feasibility and feasibility studies realising significant value for shareholders in this world class asset and taking advantage of strong copper fundamentals.
Metminco retains a 100% interest in a portfolio of gold, copper and other base metal projects that are located within well-constrained metallogenic belts associated with the Andean Cordillera in Chile which have the potential to contribute significantly to shareholder value in the future.
Acquisition of Miraflores Compania 
The Company completed the acquisition of Miraflores Compania from RMB Australia Pty Ltd (RMB) late June 2016 by the issue of 350 million Shares (at a deemed price of A$0.5 cents per Share) and reimbursement of approximately A$165,000 in Miraflores Compania's operating costs from date of signing the binding term sheet to 30 April 2016. Miraflores Compania is the owner of the Quinchia Gold Portfolio more fully described above.
As a result of the issue of the 350,000,000 Shares, RMB became a substantial shareholder of Metminco, holding 400,000,000 Shares. 
Under the purchase agreement, Metminco will make cash payments to RMB as follows:
(i) Payment of A$1.3 million (A$1 million initial payment plus A$0.3 million in reimbursement of operating expenditure prior to completion) on 20 June 2017;
(ii) Second payment of A$1.0 million on 20 June 2018;
(iii) Third payment of A$3.0 million on the earlier of a decision to mine at the Quinchia Gold Portfolio; or on 20 June 2019; 
(iv) Fourth payment of A$2.0 million on the earlier of a decision to mine at the Quinchia Gold Portfolio; or 20 June 2020; and
(v) A maximum of A$7 million in royalty payments to RMB from operating cashflows.
The timing of consideration for the acquisition, which is in total approximately A$16.5 million with minimal payable upfront, is structured to allow Metminco to focus on the development of the Miraflores Project and the drilling of the Tesorito target.
CD Capital Transaction
The Company entered into a subscription agreement with CD Capital whereby CD Capital committed an equity investment of up to US$45 million in relation to the Los Calatos Project. The equity contribution will be applied in 3 tranches over the next 3 - 4 years to complete the planned Pre-feasibility and Feasibility Studies on the Los Calatos Project.
In late October 2016 CD Capital subscribed for US$16 million worth of new shares in Los Calatos Holding Ltd (LCH) equivalent to 51% of the company (Tranche 1). Under the subscription agreement CD Capital will have the option to subscribe for additional shares in LCH over two additional Tranches of US$14.5 million each, which, subject to being exercised in full would increase CD Capital ownership of LCH to 65% after Tranche 2 and 70% after Tranche 3.
Cash Position and Funding 
During the year ended 31 December 2016, Metminco's cash position decreased from approximately A$0.9 million to A$0.1 million, excluding the Company's share of LCH cash reserves (A$9.6 million) due to expenditure being greater than capital raisings of approximately A$2.8 million after costs. 
Expenditure for the year was focused on completion of the Scoping Study and preparatory work for the planned Miraflores Feasibility Study including an updated JORC 2012 Mineral Resource estimate, analysis of development options, a gap analysis on the requirements to complete a Feasibility Study and the preparation of a preliminary mine plan and schedule.
Share Consolidation
Following the completion of the security consolidation on 4 January 2017 the Company had on issue 90,280,468 fully paid Shares and 100,000 unlisted options to acquire one share at A$1.51 per Share on or before 1 August 2017.
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 DECEMBER 2016
CONsolidated Group
31 December 2016
$
31 December 2015
$
Revenue
389
4,445
Finance costs on deferred consideration
(221,057)
-
Foreign exchange gain/(loss)
16,369
(74,202)
Administration expenses
(660,563)
(1,152,533)
Corporate expenses 
(975,800)
(655,191)
Occupancy expense
(199,537)
(260,984)
Exploration and evaluation expenditure impaired
(407,300)
(43,480,520)
Loss of control of subsidiary
(121,540,173)
-
Exploration, evaluation and due diligence expenses 
-
(626,568)
Provision for Chilean VAT receivable
-
(2,825,214)
Share of net loss of associate
(113,198)
-
Loss before income tax
(124,100,870)
(49,070,767)
Income tax expense 
-
-
Loss for the year
(124,100,870)
(49,070,767)
Other comprehensive income 
Items that may be reclassified subsequently to profit or loss:
Exchange differences on translating foreign controlled entities (net of tax)
423,051
8,617,997
Total Comprehensive Loss for the year
(123,677,819)
(40,452,770)
Loss for the year attributable to members of the parent entity:
(124,100,870)
(49,070,767)
Total comprehensive loss
attributable to members of the parent entity
from continuing operations:
(123,677,819)
(40,452,770)
Basic loss per share(cents)
(169.38)
(101.75)
Diluted loss per share
(169.38)
(101.75)
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2016
CONsolidated Group
31 December 2016
$
31 December 2015
$
ASSETS
CURRENT ASSETS
Cash and cash equivalents
71,548
949,790
Trade and other receivables
385,827
186,858
Other assets
21,060
21,815
TOTAL CURRENT ASSETS
478,435
1,158,463
NON-CURRENT ASSETS 
Trade and other receivables
-
2,180,893
Investment in associate
33,766,877
-
Property, plant and equipment
4,538,349
4,586,160
Exploration and evaluation expenditure
9,486,691
160,886,215
TOTAL NON-CURRENT ASSETS
47,791,917
167,653,268
TOTAL ASSETS
48,270,352
168,811,731
LIABILITIES
CURRENT LIABILITIES
Trade and other payables
3,425,242
317,058
Short term provisions
236,775
258,225
TOTAL CURRENT LIABILITIES
3,662,017
575,283
NON-CURRENT LIABILITIES
Long term provisions
79,903
83,155
Long term payables
4,893,628
-
TOTAL NON-CURRENT LIABILITIES
4,973,531
83,155
TOTAL LIABILITIES
8,635,548
658,438
NET ASSETS
39,634,804
168,153,293
EQUITY
Issued capital
329,032,074
324,037,464
Reserves
(30,142,687)
(18,208,268)
Accumulated losses
(259,254,583)
(137,675,903)
TOTAL EQUITY
39,634,804
168,153,293
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2016
Issued Capital
Accumulated
Losses
Option
Reserve
Foreign Currency Translation Reserve
Acquisition Reserve
Total
CONSOLIDATED GROUP
$
$
$
$
$
$
Total equity as at 1 Jan 2015
318,677,036
(88,790,974)
253,594
14,612,641
(41,506,662)
203,245,635
Loss attributable to members of the parent entity
-
(49,070,767)
-
-
-
(49,070,767)
Other comprehensive income
-
-
-
8,617,997
-
8,617,997
Total comprehensive loss 
-
(49,070,767)
-
8,617,997
-
(40,452,770)
Transactions with owners:
Shares issued during the period
5,625,590
-
-
-
-
5,625,590
Transaction costs
(265,162)
-
-
-
-
(265,162)
Options expired 
-
185,838
(185,838)
-
-
-
Balance as at 31 December 2015
324,037,464
(137,675,903)
67,756
23,230,638
(41,506,662)
168,153,293
Total equity as at 1 Jan 2016
324,037,464
(137,675,903)
67,756
23,230,638
(41,506,662)
168,153,293
Loss attributable to members of the parent entity
-
(124,100,870)
-
-
-
(124,100,870)
Other comprehensive income
-
-
-
423,051
-
423,051
Total comprehensive loss 
-
(124,100,870)
-
423,051
-
(123,677,819)
Transactions with owners:
Shares issued during the period
5,415,242
-
-
-
-
5,415,242
Transaction costs
(420,632)
-
-
-
-
(420,632)
Loss of control of subsidiary
-
2,509,120
-
(12,344,400)
-
(9,835,280)
Options expired 
-
13,070
(13,070)
-
-
-
Balance as at 31 December 2016
329,032,074
(259,254,583)
54,686
11,309,289
(41,506,662)
39,634,804
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2016
Note
CONSOLIDATED GROUP
31 December 2016
$
31 December 2015
$
CASH FLOWS FROM OPERATING ACTIVITIES
Payments to suppliers and employees
(1,121,361)
(1,988,210)
Exploration, due diligence and evaluation
-
(626,569)
Interest received
389
4,445
Net cash used in operating activities
22(b)
(1,120,972)
(2,610,334)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of plant and equipment
(931)
(3,977)
Payments for exploration expenditure
(2,335,294)
(2,928,374)
Recovery of VAT in Peru
-
13,555
Purchase of Miraflores Compania, net of cash acquired*
(253,637)
-
Net cash used in investing activities
(2,589,862)
(2,918,796)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issue of shares
3,185,207
5,625,590
Payments in respect to capital raisings
(381,677)
(265,162)
Net cash provided by financing activities
2,803,530
5,360,428
Net decrease in cash held
(907,304)
(168,702)
Cash and cash equivalents at the beginning of the year
949,790
1,192,693
Effect of exchange rates on cash holdings in foreign currencies
29,062
(74,201)
Cash and cash equivalents at the end of the year
22(a)
71,548
949,790
William Howe
Managing Director
Metminco Limited ABN 43 119 759 349
ASX Code: MNC.AX; AIM Code: MNC.L
Suite 401, 6 Help Street, Chatswood NSW, 2067
Tel: +61 (0) 2 9460 1856; Fax: +61 (0) 2 9460 1857
www.metminco.com.au
For further information, please contact:
METMINCO LIMITED
Phil Killen
Office: +61 (0) 2 9460 1856
NOMINATED ADVISOR AND BROKER
RFC Ambrian 
Australia
Will Souter / Nathan Forsyth
Office: +61 (0) 2 9250 0000
United Kingdom
Charlie Cryer
Office: +44 (0) 20 3440 6800
JOINT BROKER
SP Angel Corporate Finance LLP (UK)
Ewan Leggat
Office: +44 (0) 20 3470 0470
PUBLIC RELATIONS
Camarco
United Kingdom
Gordon Poole / Tom Huddart 
Office: + 44 (0) 20 3757 4997

This information is provided by RNS
The company news service from the London Stock Exchange
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